All other prices are skyrocketing so far and so fast that another hike of a mere 25basis points in the repo rate was hardly noticed. Big important banks will now pay 4.25% pa to borrow cash from the Reserve Bank. This lowest rate in the money market, signals that this transaction is maybe the least risky in the nation. Interest rates rise for loans which are considered to be riskier. Near the top of the scale are loans perhaps between a “loan shark” and an individual with no collateral. The loan of R100 for a day (common in street vendor markets) may attract a R200 repayment. This translates into an interest rate of 100%! Perhaps the most watched interest rate in the world is the price of US 10year money which currently at 2.4%pa is soaring through three-year highs. This rise is an expected response to the very recent doubling by the US Federal Reserve of the Fed Funds rate to 0.5%pa. If nothing else, this displays a drawback of manipulating administered rates to unrealistically low levels. In the absence of letting the market set these short-term interest rates, no one really knows what the economy could bear.
Markets are on the move everywhere. And few are as positive as the SA Rand. Just why our wee “runt” is being used as a haven while a nasty war is developing is unclear and puzzling. Are we suddenly being re-evaluated because we mine gold? Or is it our BRICS relationship with some bad boys that’s making a difference? Dozens of “woke” limp-wristed heads of state who have taken a break from pontificating on climatology and virology and are trying their hand at the real and really hard task of international statesmanship. So far the West have yet to produce any plausible hard men (or women) who seem capable of getting the measure of Putin.
The suggestion is that our fearless leaders and their medical advisors might lift the State of Disaster in April. About time too. There really is scant evidence to suggest that there is any state of disaster in South Africa at the present. Or at least one arising from a respiratory infection. There are indeed disasters getting worse by the day in almost every other area of where the state is trying to control our activities. Newest of these is apparently the port system that is reportedly so dysfunctional that export volumes of everything we need to sell and deliver overseas are falling steadily. Businesses dependant on imported components are in deep trouble also. Every day there are revelations of how incompetence and ignorance are grinding down what remains of functioning government services. However, lurking in the background to take effect once the State of Disaster is repealed, is a raft of regulation which fails to consider almost anything learned about Covid in the last 2 years. Why for example waste ink on the nonsense about reducing social distancing from 1,5m to 1m, except when queuing to enter a shop! The fact is that the public appetite for having their daily behaviour stipulated is now zero. None of it worked much and it is distressing to see that only those who never missed a single paycheque these past 2 years can’t recognise that fact.
For a number of reasons, the forthcoming important national conference of the ANC, the nation’s alleged ruling party will probably be held as a virtual gathering. Which raises several points, not least the question that in the absence of throwing chairs, how will delegates know when a session is over? Has anyone had a word with the team at the Reserve Bank who are working on developing a digital currency for South Africa? Will that not cause great difficulties for the practitioners in that other important party conference skill? The slick and seamless transfer of brown envelopes stuffed with folding money. Promising an EFT and obtaining banking details is so so …public! Especially if one has forgotten how the “Mute” button works.
Two interesting issues for consideration. The Proteas Women are in with a decent chance at their World Cup. And the science of automotive aerodynamics is far from solved. Just don’t ask Mercedes how to spell “porpoising”.
James Greener
25th March 2022
