Friday, 16 September 2016


Someone in the US who might have an influence on these things -- i.e. Federal Reserve Governor Janet Yellen – muttered that the price of money in the USA might just perhaps be a tad low. This sparked a mild panic in several markets including the JSE and sellers dominated proceedings for a few days. No big deal yet but it does reveal that markets and economies are rather anxious. The past decade at least has seen massive interference and intervention in the pricing of risk by self-confident politicians and administrators. Hazardous concepts such as “too big to fail” and “bad bank” and practices such as “quantitative easing” have had strange consequences. Not least of which are negative interest rates where the lender pays the borrower for the privilege of making a deposit. The message that someone is trying to send us is that saving is useless and will we please all just get back into the shops and do our civic duty and buy stuff.
Central banks have fire-hosed massive amounts of cash into economies, all with the objective of getting consumers to spend. For reasons which are unclear to most of us (but will provide research topics for graduate students in the coming years) the interventions haven’t much worked and the global slowdown has been very painful. Even Richemont, the SA-owned seller of luxury goods, has recently reported that profits are down by almost half. Normally their customers are largely immune to difficult times but the suggestion that a clamp-down on corruption in the Chinese government offices is having an effect, leads one to wonder about developments closer to home. Keep an eye on luxury car sales numbers.
Despite the electoral successes of the political party with the same name, South Africa has slipped 12 places in the Economic Freedom rankings. The point here, however, is that the compiler of the ranking table and the red-overalled politicians almost certainly have different views about what economic freedom means. As they say: It’s complicated.
Whenever one watches a news report where government panjandrums are out and about, most of the party will have a cell phone pressed to their ear. Even when gravely inspecting the site of a tragedy they are often simultaneously talking to someone (presumably) far away. Who, for goodness sake? So it’s not really much of a surprise to read that the state spends R3.2bn annually to provide its 1.3 million employees with telecommunications services. This amount includes the costs of data connections for computers and those fixed-line phones that ring incessantly and unanswered in empty offices. But it still seems like a lot of money for a business that usually demands that most of its customers present themselves in person.
There was quite a bit of excitement this week when it was revealed that Number One had paid the government the R7million odd that it had been decided should be his somewhat risible contribution towards the costs of the substantial improvements to his private home in Zululand. The tale of the journey to this point and amount is very long and reeks of bad faith and corruption and now the refund itself is extremely odd. Reportedly the president – despite having friends and relatives for whom this sum is merely “walking about money” -- has borrowed the cash from a small and unknown Mutual Bank (one of only 3 in the country) in the form of a mortgage bond. Just what terms our president was able to negotiate are rightfully confidential. Nevertheless, it’s fun to run the numbers which suggest that JZ may be paying a very large fraction of his current pre-tax salary every month, right until he is 94! Curious. And it’s odd that the ANC haven’t complained that the Banks’s logo is an elephant, because the party has form in worrying about stuff like that.
For many reasons the Paralympics events can be hard to watch but it seems as if most participants are having a great deal of fun even while achieving astonishing personal and global milestones. The South African medal count is currently 13 versus 18 by New Zealand. ‘bok supporters would be almost grateful if we manage this score line tomorrow morning in Christchurch.
James Greener
Friday 16th September 2016 (Harvest Moon lunar eclipse day)