The writing is on the wall for the thousands of us who have tried to make a living from convincing other people that we know what is happening in the world’s markets. The truth is they are incomprehensible to everyone. Who, for example can explain why anyone would lend money to the massively indebted and probably bankrupt US government for 10 years at a mere 2.5% interest per year? Closer to home there is the puzzle about why a bunch of folk in Geneva would agree to a deal which the counterparty – a rather dodgy mining house – have described as being “very difficult to explain to the public”. It also doesn’t help when the house cheerful admits that they will be using the initial $2m of the deal to “clean our dirty laundry”. And in a different sector yet another giant international bank has been lured into believing that the South African business of lending money to poor people is profitable, and has offered to relieve Old Mutual of their shares in Nedbank. The share prices of both companies rose satisfactorily.
So where can we put our money in the hope and expectation that it will enjoy capital growth and provide income for life’s little necessities like beer and fishing rods? This week the inflation statistics were published and it does rather look as if that particular enemy of savings is dormant at present. This suggests that both growth and income expectations should probably be adjusted downwards to this “new normal”. This has in fact taken place and for almost a year the All Share has meandered along in a relatively narrow channel occasionally teasing us with the promise of a healthy bull, and yet always letting the bear out when things got too heated. The inflation numbers also did nothing to help the cause of the strikers whose leaders continue to sacrifice their member’s jobs and incomes in return for political recognition and seats at the high table. The cruel fact – dreadful examples of profligacy and lavish executive excess aside – is that labour is in oversupply and therefore its aggregate cost can not rise. Some of us believe that the oversupply is almost entirely an effect of government meddling in the market. But that is another whole debate.
Also in serious oversupply are our president’s consorts. Emerging from the luxurious sharp end of the SAA plane that took him to China, the pres was followed by a lady described as his fiancée. Undoubtedly the welcoming committee had been briefed beforehand with an already lengthy list of names, pictures and details of the several women who are already the clients of the South African President’s Spousal Support Office. The arrival of another candidate must have caused a flap even amongst the inscrutable hosts waiting on the tarmac. Presumably after the pleasantries were over they managed to ship President Zuma and his entourage safely into the city without encountering the amazing 100km long traffic jam that is reported to have gridlocked Beijing for days.
I was less fortunate. An unknown but presumably serious incident resulted in the need to close completely the south bound carriage way of the very busy N2. Traffic was directed down a small and little-used off ramp and a massive tail-back ensued. Immediately, the emergency lane was adopted by drivers who believed their journey was more important than everyone else’s. This forced the minibus taxis on to the grassy shoulder where progress was somewhat but not totally impeded by the concrete culvert. Adding to the delay was a toll booth of only two lanes that guarded the off-ramp. Every vehicle was obliged to stop and pay the appropriate but unusually tiny toll. Not one of the myriad of uniformed officials witnessing this stupidity had the wit or authority to notice that the economic cost of a 5 km traffic back up on a major arterial was far greater than the loss of revenue that opening the tollgate would cause.
I will be watching this week’s Test against the Wallabies as it happens but only because good friends have promised support and strong drink. These are dark and terrible times for SA rugby.
James Greener
27th August 2010
