The world of money has fallen deeply in love with all things American. The US dollar just keeps on getting stronger. Many of those dollars are being used to buy government bonds. Lenders are seemingly satisfied that getting a return of just 2%pa for the next 10 years beats just about anything else available. Presumably the sentiment is that the US is in peak economic health with everyone employed and manufacturers and producers eagerly satisfying consumer demand. Or perhaps it’s just the ceaseless assurances from Federal Reserve Governor Janet Yellen that she and her cronies are far smarter than markets in determining the price of money and that there’s nothing to worry about. For more than 6 years short term interest rates in the USA have been kept at nearly zero. One probable consequence of this policy is that it has distorted price setting and signalling mechanisms all over the world. Even here in SA share investors have to pay more than 20 times annual average earnings for a company on the industrials or financials board. Over many years of testing this particular metric, it is clear that real value is available only when that multiple is half that number – as it was in 2008.
By Christmas time our Reserve Bank had put R134bn in cash notes and coins out there in circulation. Now some of this is lost for ever down the back of the sofa and quite a bit is being used up in Zimbabwe as well, but that still is a great deal of money that’s spread amongst 53million of us. Say five grand each, excluding the children. Interestingly this figure is almost 11% greater than last year’s total so even allowing for inflation and population growth, on average we all had more cash on hand than ever before. There’s a huge cash only economy going on below the official radar. This will be confirmed by anyone who has watched a so-called “bakkie-builder” at the hardware store paying for their materials with notes peeled off a roll the size of a polony. School fees also frequently call for settlement in the amount of several thousands and reportedly cash payments are not uncommon. A plastic shopping bag is the purse of choice for such large amounts of cash and the car boot acts as the ATM.
Dignitaries simply love to fill their days with events where they are invited to open things, make a speech, get photographed shaking hands with grateful and beaming lesser beings and then adjourn for refreshments. The news that there is to be an official opening of a piece of beach down the south coast which has been set aside for those who like to get their kit off when at the seaside, suggest that this one hasn’t been researched fully. What will happen? Will the adoring throng be naked? Will the politico cut the ribbon and then undress and plunge into the briny or play a spot of volleyball? Where will he or she put her notes when clutching the glass and plate of nibbles? Will there be media coverage? This could be great fun. What most definitely is not fun is the sight of Transport Minister Dipuo Peters and her “entourage” of more than half a dozen officials holding a press conference to announce how badly her department is doing its job. The number of casualties on our roads will undoubtedly have risen even further before she reaches the usual and meaningless platitudes and assurances that in future there will be trained, incorruptible and diligent traffic policing. I wonder if there was a lunch afterwards.
There is something vaguely sinister and disquieting about the decision to publish the school leaver’s exam results by candidate number and to omit the names. Is this a precursor to the government using just numbers to refer to office bearers at the failed and dysfunctional state owned enterprises? After all, we already know that our leader is Number 1. Will we be told that Number 32 has stolen all the money at SAA? Or that the dog has eaten that Number 113’s degree certificate.
I used to really enjoy watching the TV coverage of the Dakar Rally. Somehow now that its in South America it rather different. Still very dangerous though. The pyjama games against West Indies begin tonight. Hopefully these will be tighter than the tests turned out to be.
Friday 9th January 2015