Next year’s best male actor Oscar winner is a dead cert. That nice President Barack Obama will take it going away. The calm and confident manner in which he delivers his lines makes one think that he really believes every word of the script that is scrolling up on those neat screens set up to port and starboard of his podium. His audience are with him every step of the way and completely forget that he is simply playing a part. The part of saving America and the world from the excesses that resulted from cheap money and overpriced assets. They are also not yet aware that despite getting in for free they will have to buy tickets to get out and the prices are soaring with every sentence that Obama utters. They will probably have to call the kids sitting outside in the car park to go home and fetch their piggy banks and to ask grandpa to stop taking all those expensive medicines. Two trillion is a lot of anything. Especially a deficit. Even US dollars.
The standard and obvious question for every share market investor is whether the market bottom has yet been reached. My view is that it has not. Amongst the events that I think we will see before we can look for the tunnel let alone the light is acknowledgment that the idea of governments throwing freshly printed and newly borrowed money at the credit crunch is a poor one. There is simply no point in trying to rescue companies and industries whose business models and management led them into failure. And the greater insult is that the very regulators and legislators who claimed to be in charge while this slide into disaster took place, are the ones who are now going to supervise the rescue operations. I am not in the least impressed by their pleas that just a few a few more buckets of someone else’s cash will change everything.
Even in the industries with the worst problems, there are thriving and surviving enterprises and citizens who are battling away beneath the radar screens making things that people need and want. Just look at the crop of company results this week. Some doubled earnings compared to last year while others lost both money and the plot. Within moments of the collapse of even those businesses that are considered to be too big or too important to fail, survivors will be scrambling through the wreckage risking their own money to snap up worthwhile assets at sensible prices. It is undoubtedly sad and in some cases desperate that some parts of the failed business will find no buyers. For example it may be a while before there is any significant demand for Hummer assembly lines (tough one for SA that) or for teams of traders in financial derivatives. And if indeed the failed company had nothing or no one that a competitor thinks is worth buying or hiring then why should the public own it?
This question is especially painful today, which is the last day to make provisional tax payments. Has no one at SARS yet noted the delightfully apt yet dodgy name they have come up with for their virtual tax man? (s) arse filing? I ask you.
A week or so ago some official in Zimbabwe was reported to have denied any plans for the “randification” of their alleged economy and suggested that it may be necessary to float the Zim dollar. I would suggest that this poor currency is long past floating and has sunk without trace. At the Tongaat Hulett investor presentation this week it was said that the move to allow companies operating in that country to use foreign exchange freely was a very encouraging step and may well signify the turning point for that beleaguered land.
At least Ellis Park might be 10 degrees cooler than Kings Park. Lions are not good in the heat. Shame.
James Greener
27th February 2009.
