I hope it is just a printing error on the front page picture and not his new wife’s cooking that appears to have turned Minister Manuel’s skin a bright yellow colour. I am also alarmed by the way he has his hands in the air in a gesture of surrender. Has he given up the battle? Certainly it looks as if he has with his proposal to spend R105bn more than last year. By increasing the plastic bag levy and taxing allegedly inefficient electric light bulbs he hopes to raise some of the cash needed for all this extra expenditure. However, he conceded that that the state will still need to borrow the record amount of R95bn to balance the books. That’s a lot of money. It is going to be very interesting to see what happens when Governor Mboweni’s determination to reduce interest rates comes up against the need to borrow all this cash. The yield curve is already undergoing some big shifts.
But this terrifyingly large local borrowing requirement is nothing when compared to the new unit of currency that is now being used quite widely overseas. This unit is the Bail-Out and it solves the puzzle of what Zimbabwe’s Central Bank Governor Gono did with the dozen or so zeros that he lopped off his dollars the other day. He exported them! They have pitched up in the northern hemisphere where President Obama was only too pleased to use them to stick on the end of his brand of dollars to create these Bail-Outs. Our measly deficit of less than 10billion USD would not even earn a thank you note from the CEO of any self respecting failed bank or motor company.
From what I understand the difference between a recession and a depression is spelling, depth and term. The latter is deeper and longer than the former. It is the word that is becoming more common in the commentary about developments in the US and now even in some parts of Europe. Undoubtedly this economic situation is different from any that we have experienced before with the sole exception that like other slow-downs, it will end at some point. This is the factor that causes my view that occasional small forays into the share market to buy fundamentally sound but perhaps currently bombed out companies is a realistic strategy. Do, however, remember my other suggestion which is not even to open the share prices pages for a month following each foray.
Tidemarks is early this week not because I knew that you required another ten thousand word analysis of Trevor’s talk. I am going to wrest myself away from this sea view for a few days to go and sample the mountain parts of the kingdom. I may even attempt to rig a rod and cast a fly. I shall certainly wrestle the top off a bottle. I do hope that I shall not interact with any of these so-called VIP convoys on the roads. The only reason that any politician, bureaucrat or state layabout needs to get somewhere else is to make a speech, sleep in a meeting and have a free meal. There is nothing life or death about their presence. None of these events need anything more than decent diary diligence to ensure that the allegedly very important person arrives no later than 4 hours after the scheduled time, otherwise known as “on time”. Gun-wielding bodyguards prepared to shoot mere citizens out of the path of these convoys are unnecessary and poor form. And poor form is not what the Lions need this weekend.
James Greener
12th February 2009.
