It
is time for the suits to assemble at the Reserve Bank in Pretoria, squabble
about the seats with a view and the choicest biscuits on the plate and decide
what to write on the price tag for money. If these decisions actually do have an
effect on the economy, they surely take a very long time to be felt. Only the youngest
and keenest of analysts will watch the broadcast announcement and call clients
with suitable snippets of autobabble in the hope of getting an order. Frankly
the rand’s steady slide signals that inflation is likely to become a problem
again in the next year or so and quarter point rises in the repo rate will have
negligible effect in arresting that. The name of the game is rand hedge
investing and reducing pure currency holdings while the government continues to
show as few clues about what is happening and what to do about it as a (brine
filled) headless chicken.
The
man who coined the acronym BRIC worked for Goldman Sachs. Then South Africa felt offended that it had
been ignored and excluded from this club unfairly and shouldered itself into
the group and supplied the terminal S. This week that investment bank closed
its BRICS fund after a record of losing spectacular amounts of the investor’s money.
Happily, no fund managers were harmed in the event as fees were still collected.
It turns out that despite the catchy word there are few linkages between the
economic fortunes of those countries and busts and booms were more or less
unsynchronised. Probably the main lesson to be learned from this incident is
that investment ideas are seldom as good as they sound. Another slick phrase
that cost innocents dearly was the utterly dishonest “too big to fail” adage. Lenders who indeed were about to fail because
of ignoring every prudent rule of client adoption, were rescued with truckloads
of taxpayer’s cash. Naturally this move was warmly received by the errant banks.
Now this thesis too is under
investigation. Despite the earnest endeavours of the world’s do-gooders it is
not possible to rid the planet of risk and things will go wrong and people will
lose money. Also being shut down is the not so sleekly named Kopano ke Matla investment
company. This was supposed to make money for Cosatu, the troubled trade union
federation but reportedly things have gone seriously awry. Even communists find
it hard to pick the winners.
Aeroplanes
have been much in the news recently. The national airline, already effectively
utterly insolvent, has apparently ignored a government instruction and has
signed a deal to buy a fleet of Airbuses. There’s far too much haste and glib
hand waving happening here for this to be a clean deal. It is after all nearly
Christmas time and lavish presents are in order. Hopefully someone in Europe
will take notice. Now presumably these aircraft will enjoy a luxurious first class
cabin and so that makes the suggestion that the air force has spent an
egregious sum of money to buy another personalised jet for Number 1 all the
more annoying. As usual his response is that it had nothing to do with him
because the decision was made by the military. Yet more evidence that JZ’s
ranking as the worst value for money president in the world is richly deserved.
What
do the students actually want the universities to look like after the
transformation they demand? Do they want higher standards, harder courses and exams
and longer terms so that they can compete more aggressively in the
international job markets? Do they want the
salaries of the academic staff that deliver this education to be frozen or even
reduced? Do they want the grounds and premises they trashed while making these demands
to be restored and maintained? Do they want the laws of gravity,
thermodynamics, supply and demand and the country repealed? But that transformation word has such a
different meaning here in SA that it is unlikely they will get any of these
things for a very long time.
Anyone
who can recall the ladies (?) who emerged from the eastern bloc to claim the
gold medals in the bad old days will be unsurprised by the claim that the
Russians are once again busy with their chemistry sets. It’s all about the
money. As it is with the Kings who again have not been paid salaries. Obviously
despite the government’s insistence, the nation is just not yet ready to have 6
sides in the Super Rugby tournament.
James Greener
Friday 13th November 2015
