The eye-catching
data item in a week which promised much more is the oil price which is leading
many dollar priced commodities downwards. Not many forecasts got this right, focussing
naturally on the numbers which suggest that some economies are starting to warm
up. But maybe it’s like the sun after this week’s solstice. Even if the sun is
on its way back south, the coldest days of our winter still lie ahead.
The claim
attributed to Number One that the Gupta emails were deliberately leaked in the
interests of transparency must surely be fake news put out by Gupta network “sockpuppet”
accounts. Or merely the response of a confident
president? But investigative journalists sifting through the trove of
incriminating emails are eliciting fewer “golly gosh” responses. The world is
now at the scene of a gory collision between the timeless phenomena of
self-serving avarice and instant communication. Even the bona fides of the
survivors are suspect and most witnesses are unreliable. The perfidy and unscrupulousness
of our companions on this globe is not new. It’s just that we find out sooner
and move on more quickly.
Few people
really understand how banks work. Most of us still probably cherish the notion
that they have vaults piled high with sacks of cash neatly labelled with each depositor’s
name. It’s quite a step to appreciate that in fact they have speedily lent that
money out to borrowers who pay interest to the bank at a far higher rate than
the bank pays its depositors. But it’s far more complex than that and concepts like
fractional reserve banking – not to be confused with Central Banking – enable
banks to create money that doesn’t actually exist as notes or coins. Lending
this type of money can be immensely lucrative, provided of course that the debt
is serviced and repaid on schedule. Which is why banking licences are valuable and
Number One’s Indian mates have been trying to get one.
Politicans
and their staff are particularly unhelpful in aiding a better understanding of
the topic. They assure their constituents that it is possible to change banking
so that the wealth stored in the system can be given to the deserving poor.
History and mathematics shows that this is not possible to achieve sustainably.
Fortunately, in South Africa we also have constitutional barriers to tinkering
with the Reserve Bank and other important institutions. But the rhetoric does
fire up the hot heads who phone the spin-masters for another glib phrase to
chant as they dance down town with songs and demands.
This week a
terrifying pie chart graphic was released which shows that the number of
taxpayers is now less than the number of social grant recipients. Of course,
the amount of tax paid is far larger than the total amount of grants made, and
that difference is used for civil servant salaries, servicing of the national
debt and paying the private sector for providing goods and services to the government.
Since looting grants, salaries and debt repayment would be quickly discovered
and very unpopular, the pillaging is concentrated on the contracts awarded by
tender. A chart illustrating the cash flows in this aspect of our nation would
be even more scary.
“Balance-sheet Aid” is a delightful euphemism now being used
by the utterly bankrupt State-Owned Enterprises who are in serious need of
plain hard cash to pay their bills. The national airline has received a “Dear
John” letter from a bank which not only won’t lend them any more, but has even asked
that the present loans be repaid now. Panic! Surely it’s time for a “Headcount Cull”?
Someone chose
a bad week to tell South Africans about an exciting new T20 global tournament.
That’s a format in which many of us are quickly losing interest. A 9-wicket
loss to England! Really? It’s also been sad to watch AB reach the end of his glory
days with the Proteas. The GP venue in Baku is strangely sterile and without
character. How about that odd two-dimensional castle in the middle of the track?
Oh well Silverstone and Spa are coming. And if you need something really
different what about sailing craft touching 50knots at the America’s Cup.
Barely a rope in sight.
James Greener
Friday 23rd June 2017. Olympic Day apparently.
