This is suddenly starting to look and feel like a proper bear market. The All Share is off almost 2000 points in three days and has tested the November lows. Nothing especially scary has happened at home, so presumably sellers are taking their cue from the amazing developments offshore. US Federal Reserve Governor, Helicopter Ben Bernanke, has cranked up the chopper and is about to begin his promised flight over the country dropping money. He has also arranged to scramble several other members of Central Bank Squadron and even the Swiss have joined the European Central Bank, the Bank of England, and the Bank of Canada in showering their nations with cash at bargain prices. These unprecedented activities are a desperate attempt to unblock the credit squeeze that is slowing things up so badly. Investors are obviously not convinced that this will work and believe that company profits will plunge regardless and they would therefore rather not own any shares. It is all looking very messy.
Recall that the trigger for this crisis was the coming home to roost of US chickens who unsurprisingly decided that they would prefer to spend their meagre earnings on food before servicing their complicated and newly expensive mortgages. Most of us believed that there was no similar problem of “sub-prime” lending happening down here on the southern tip. However, I was very alarmed to read this week that a local bank had securitised R2.4bn worth of “low-cost” housing loans. These were sold with boastful ease to a number of eager fund managers. The mystery is solved when you learn that these bundles of potential ‘toxic waste” come with a colourful certificate to hang in the foyer and a number of Brownie Points that can be added to the buyer’s financial sector charter obligation scorecard. All this state-allocation of resources is going to end in tears, I am sure.
Without commenting further on the quaint global practice of giving female names to machines that bore, it was fun to see the pictures of hard-hatted and reflecting-jacketed worthies peering into a large hole in Rosebank. They were there to bestow the name Imbokodo on Gautrain’s very own boring machine. Whether or not this is a woman’s name I am not sure and neither it seems does anyone else. There was, however, quite a lot about struggle heroines and striking rocks and I am sure that dear Imbokodo has a lot of both ahead of her.
It was also a struggle doing business in South Africa this week as Eskom decided to show off its inability to supply sufficient power by organising “load shedding” events across the country. Even the aluminium smelting plants in Richards Bay were not immune to being cut off and they are among Eskom’s favoured customers. I am still amazed at the official insistence that another big plant like these will definitely soon be announced for the Coega area. In the meantime, however, the chaps down there in the Eastern Cape have hedged themselves by signing up an American aquaculture outfit who they say will open a prawn farm. I doubt that the reported figure of more than 11 000 employees can be correct, but if so, we should soon all be dining on crustaceans rather than mielies.
Power problems at home this week were exacerbated when cable thieves ripped several lengths of copper cabling from the distribution poles in the street and left us in candlelight. Fortunately, I was able to transfer the beer to a gas camping fridge so it was not a total catastrophe.
The week in the Kruger was very calm and relaxing. There were no once in a lifetime sightings but I did enjoy a pair of ground hornbills. The Jane Goodall chimpanzee refuge near Nelspruit is fantastic.
James Greener
14th December 2007
