It is now about six weeks since most stock markets were setting multi-year lows and the bears were riding high. The recovery since then has been almost as sharp as the decline and the price charts are displaying a fine example of a V shaped pattern. Excitable analysts are citing this as evidence for a similar recovery for the world economies and that the recession will be equally short lived. I don’t think so. Unlike the immediacy of share market prices, all the measures of economic activity take absolute ages to be collected, massaged and published. Officially determined slowdowns will be declared only long after those of us in the real world are trying to cope with the absence of credit, customers and clients. There are precious few signs that any of those are surging back yet. V shaped it is not.
I was fascinated to see that Goldman Sachs, that incubator of many of the US government’s economic brains, managed to sell $5bn worth of brand new shares. Apparently they located investors who are eager to participate in the anticipated wonderful profits of that will flow from that business once it uses the newly raised cash to pay off the state loan that it needed a couple of months ago to keep solvent. The new investors may have failed to notice the remark that the bank wished to resume its practice of paying breathtaking bonuses to the “talent” and that it could not do so until it repaid the government bail-out. I trust the talent will send suitable thank you notes to the new shareholders in due course.
Two of the more prominent issues on the globe these days are piracy and toxic assets. I am amused and delighted by the suggestion that there might be a joint solution to both scourges. That is to load a suitable vessel with not only these probably worthless pieces of paper but then to put aboard the originators and ratings agencies that once believed otherwise. Tow this tempting prize to the Horn of Africa and await developments. The ransom negotiations will take years.
Even 18 working days this month is too many and I am off to the ‘berg for a long weekend. The next edition of Tidemarks will be published under a new political regime here on the southern tip. Pre-election promises and manifestos are usually discarded as soon as the last ballot box is sealed so we have no idea what awaits us. Our likely new president is a jolly man much given to singing and dancing and I don’t recall any pictures of him sitting at a desk, writing or signing stuff. In this way his public appearances are much more entertaining than the rather metronomic side-to-side head movements of President Obama as he reads yet another beautifully crafted speech from the autocues. I do suspect, however, that even without the polished delivery, our new man is also strongly socialist and is confident that his plans for distributing money are far superior to the ideas of those who actually earn it. In other words expect to pay more tax.
The rand has been one of the strongest performing currencies in the last 6 months or so. This can only be because money is flowing into the country. Are we seeing the effect of people returning home after being forced to leave the rapidly slowing previous growth nodes like Dubai? Curious.
Sports pages carry a picture of a Bollywood personage soliciting my support for his team in the forthcoming IPL because they are “the best looking”. That pretty well sums up the dilemma I have with franchise sport. And there are Australians in most of the teams. Yes I know. There is an American playing for the Lions.
James Greener
16th April 2009.
