Tonight’s Halloween ghosts, gremlins and ghouls are going to have a hard time finding people to scare. Anyone watching the markets in the last few months has been experiencing the most terrifying times ever seen on the planet. A spot of ectoplasm oozing across the floor, bat wings brushing the face, skeletons in the closet and candle-lit faces inside vegetables are trivial compared to what we have witnessed. This week’s bounce was incredibly sharp and the phones lit up with investors worried that they had missed the bottom. No they have not. I feel that the bottom is still a long way off in time if not necessarily all that far in price.
But this last conjecture could also be woefully incorrect if any of the dire possible threats gracing the newspapers comes true. Did you see that FIFA have taken out insurance against having to relocate the 2010 world cup tournament from South Africa? That’s alarming. You can be sure that none of the claim money would appear down here if they pulled the plug. And then there’s the matter of the government-in-waiting’s so-called economic policy. While correctly identifying unemployment as the biggest ill their belief that more and bigger government will fix the problem is terrifyingly wrong. You think the rand is weak now? Just wait.
Now let me see if I have this right. The big problem in America is that people were encouraged to borrow money to buy things that they were told to think that they could not do without. In far too many cases the loan was structured to disguise from often naïve customers the unpalatable truth that not only would plenty of interest need to be paid over the life of the loan but that the principal sum would also one day need to be returned. Adding to this alarming situation is the fact that many of the goods bought with this borrowed money quickly became worth substantially less than was paid for it. In dire cases the goods were consumed and now have no value.
On the lending side the footwork was swifter and niftier than any seen on “Come Dancing” The original lenders were all too aware that it would end in tears and shucked their tuxedos and strapless frocks in a heartbeat, to chains of buyers each eager not to be holding the parcel when the music stopped. And stop it did. In the last six months the financial markets and players have been plunged into a process of finding out who amongst them actually has any real money. To answer that question with certainty has in many cases necessitated that paper assets be sold for cash and has also brought to a near dead stop all other normal banking business. Alarmed by this stasis which threatens to derail the best laid plans of the politicians they have come up with a genius plan to make money even cheaper! Not only have they doled the stuff out to anyone with a pulse and a Wall Street address, they have now cut rates to a mere 100bp above zero! They believe that it is their duty to get the merry-go-round to start up again even though the fair-goers are exhausted and bankrupt. Eish.
This business of unearthing academic and other records of your rival has now popped up here on the southern tip. And deeply embarrassing it is going to be. I thought I would get in first by admitting that it took me four years to do a three year degree and that I never made the cut in the Throwing the Cricket Ball event from U9 all the way to U13 at prep school. Fortunately my woodwork was considered too bad for me to consider it as a matric subject so I had to do Latin instead. Malum malus. (Malema?)
I am certainly hoping for a home town victory at the final Grand Prix of the year on Sunday. Last weekend’s one was certainly very popular around here. And cricket season has started. When am I going to get a chance to go fishing?
James Greener
31st October 2008.
