This all seems to be like the Kubus rotten milk scam. The US government – the largest debtor on earth – is trying to get permission from the politicos to lend money – which it will have to borrow or print – to citizens and organisations who are in trouble because they in turn lent money to citizens and organisations to spend on items which were not worth the prices paid. And delving even deeper into the mess one discovers that the meagre documentation that recorded those loans became the “foundation” for multi-storey castles in the air constructed by so-called financial engineers. The collapse of this folly is now happening rapidly.
I am intrigued that the US politicians are dithering about giving the go-ahead for this latest (but undoubtedly not last) “rescue” plan. Are they also not certain just who deserves to be bailed out? That is definitely a very difficult question. But I suggest that their inclination would be to let the money flow in those directions where it will have the greatest impact on the largest number of voters and also to places from where it will more easily find its way home to their own “fighting funds”. Undoubtedly an amount like USD700bn is spawning advisors and consultants at record speed. Many of these will of course be the people who have just had to leave their previous employer because they helped it to turn belly up.
The markets have been alternately soaring and crashing as each revelation about the status of these rescues and support packages reaches the news. Personally I am unimpressed and can not see how or why the hastening of the slide of the US currency and financial dominance can be bullish. The only real thing that is changing short term is that the massive US debts are being restructured. I was wondering if and when they will send Governor Bernanke down to Fort Knox with the key and a stout trolley? Maybe he already tried that a few weeks ago and that is what caused the gold price to crash.
Against this loud and insistent backdrop we of course have our own market-influencing drama unfolding. The departure of a president under unhappy circumstances is a very significant event especially when followed by a cascade of both principled and opportunistic other high level resignations. Unfortunately, in common with many other nations these days, there are not legions of top calibre replacement candidates waiting in the wings and I suppose that the inevitable “restructuring” that will follow, will detract from the sorely needed service delivery.
It was delightfully ironic that Heritage Day arrived in the middle of all this decidedly ill-tempered squabbling about who had been doing what in the past. Incontrovertibly, however, much time had been spent practicing dancing and hunting leopards. The range of natural fur garments on display was distressing. Personally I failed even to light a braai so my contribution to the holiday was deplorable. For my mother’s sake I suppose I ought to have gone and tossed a few cabers, but I feel nervous in a kilt.
I am so anxious about the prospect of Formula 1 racing in the dark that I am going fishing this weekend at a place that has no TV. What if the Singaporean version of Eskom has a load shedding event at the first corner! Eish. I shall also avoid the game that will take place at the Coca-Cola Stadium, wherever that is.
James Greener
26th September 2008
