Everyone has been certain for so long that Governor Mboweni would lop another 100bp off the repo rate today, that when he actually did so, nothing much happened in the markets. Another certainty for me is that central bank actions almost never have desired results. For example now that interest rates are being cranked down again are we to gather that inflation is under control and back in the target range – which for some unfathomable reason is not simply zero. There are quite a few folk who would dispute this idea, starting with some angry trade unionists who say that the food companies are making too much profit. If this is the case then instead of making a fuss they should rather be having a quiet word with whoever is running their pension fund portfolio to top up on Spar and Pioneer and Tiger Brands and share in these profits.
On the topic of inflation did you see that the one rand hike in the cost of buying a lottery ticket helped to raise the inflation rate via the category of “recreation and culture”? Leaving aside the question of just how so small a sum can have any impact on the overall cost of living for the man in the street (does Mr Average buy 100 tickets a week?) I would be interested to know if having a stock broking account is also classified as either recreation or culture.
The current craze among real economists is to spot the “green shoots’ of recovery that signal that the recession is over. There have been several of these sightings recently, but we bears are not impressed by the excitement that was caused when the “second derivative” of US house prices turned positive. I think this is easily outweighed by the idea that Chrysler is probably bust and that US shoppers are staying at home. The report that in 2009 the world will use 15% less steel than last year is yet another statistic that passes through the screens but it is quite a horrifying decline.
The first results of the so called stress testing of the US banks were sort of published in a way that was supposed not to alarm anyone. Nevertheless they reveal that several of these establishments have insufficient cash truthfully to call themselves banks in future. Concern and embarrassment all round until some compliant and gullible donors can be located. Taxpayers are always a good first call.
Almost as terrifying was the idea to strafe Manhattan with Air Force One in order to get good photos of President Obama’s new wings. Understandably they are pretty jumpy about low flying airplanes down there. The organisers of our very own presidential inauguration party are phoning around for prices on a spectacular fly-past over Pretoria at some suitable moment in the proceedings. However, given the length of the guest list and the banquet menu there may not be much money left for more than a microlight and a small flag painted on the pilot’s forehead.
The strength of the rand continues to amaze almost everyone except for exporters who are complaining that it is making life difficult. The best the government can do for them is to point out that the textbooks say that lower interest rates should weaken the currency and that the MPC are sure to smack them down again when they next meet after the IPL final. In the meantime perhaps we all should be turning out supporter’s kit to flog to the amazing crowds who are pitching up to watch the circus.
Am I alone in wondering what our old nemesis Umpire Darryl Hair would make of the rubbish that is being passed off as legal bowling action at this tournament? The sub-continent already got the rule book edited a few years ago to admit some pretty dodgy stuff, now it seems that the whole chapter on bowling has been scrapped.
James Greener
30th April 2009.
