Negative interest rates are an odd concept. Deposit money in the bank and once a month the bank charges interest, which they deduct from the deposit so now the deposit is less than before. If this goes on for long enough the deposit falls to zero. Not a good investment idea. In some places commercial banks are now being charged negative interest on certain funds that they have on deposit at the central bank. The powers that be hope that this penalty will encourage the banks to take up a sort of reverse crime and anti-mug their clients by stuffing folding money into their purses and wallets. The next step of the plan calls for the bank clients to return to their old habits and become consumers once again. But that is not what is happening. People are paying off debts and building up savings instead of spending. Large and chunky spanners are appearing in the works.
Almost all indicators of growth are still getting worse, although in some cases at a slower rate. As I write, the talking heads on the screens are getting very excited by a US data release about how many jobs were lost last month. Whether the number was better or worse than expected tells us no more than that the expectations were wrong! The real point is that fewer people are at work in productive jobs and it may be a long time before that situation reverses. It will be even longer before the situation regains the old peaks. Investment bears like myself are pretty sure that the time is coming when the markets realise that they are priced for an altogether much happier and quicker outcome than is actually taking place and they need to go through a big correction again.
The Handbook that reportedly allows for a minister to spend upwards of a million rand each on a brace of cars is in dire need of revision. The current tax regime ensures that most ordinary folk have to fund their own wheels, so why not a cabinet minister. By all means have a smart landau and four round at the state stables for the odd ceremonial jaunt where you want to expose yourself and your guests to the exciting sights, sounds and smells of an African city. But for tooling over to the ministry from home (also state provided) why not one of these Rea Vaya things or maybe a Corolla that you can wash in the driveway at weekends? Only when, as they all claim, their meagre packages expose them to temptation of being lured away from the sweat and toils of public service, should they experience the joy of true executive travel, including charter jets that do not run short of fuel. What exactly happened there in the DRC to our Dep. Pres. Coming back from a junket in Libya? Did the Colonel refuse to accept the national petrocard?
Forget the Niagara Falls. The Canadians have opened a much bigger deluge. What’s the saying about lunatics running the asylum? That Brandon Huntley chap has found one warming a chair up there in the 51st state who clearly had little clue about where or what South Africa is. I’ll bet he is finding out now. The courier services have had to lay on extra flights to Toronto to handle the applications that are pouring in from the southern tip. Not mine though. I have seen the photos of the thermometers pointing at the big negative numbers and think I’ll stay here in the kingdom thanks. It was well over 30 degrees here on Tuesday. But maybe what we are seeing is a ploy that will allow Canada to field a rather more threatening rugby team at the next world cup and someone who will understand Victor’s line-out calls.
I am a bit alarmed by the rather boastful claims about sheer perfection that are coming from the ‘bokke camp. Let’s wait for the clean sweep chaps, before getting that cocky.
James Greener
4th September 2009.
