It seems to have gone all quiet in Europe
for the moment. There have been no promises to “fix” economies, no bailouts
worth mentioning, just the steady background hum of bankers fixing things and leaving. Have the problems all dried up? Has everyone,
especially in the warmer regions of the continent, agreed to work harder,
retire later, save more, borrow less and pay their taxes? Very unlikely. Perhaps it’s the holiday season
taking hold. There is still plenty of unease knocking about. Yields on short
term German bonds are now negative. That means that investors are so relieved
to find somewhere safe for their money that they are now actually paying a
government to use it. It is in fact ominously peaceful on the markets worldwide.
In the US
a volatility measure is way down.
We bears are sure that it will soon become more widely recognised
that most of the planet is slipping back into a slowdown where activity levels
will be lower than they were a year previously. And those levels were not all that
high to begin with anyway. The excited headlines about local construction
companies starting to see light at the end of the tunnel may simply mean they
are digging the tunnel rather than being paid to do so. Outrageously a large
construction company went bust this week, sunk by unpaid bills owed by the
government.
On the JSE we are still learning about the new dividend tax and how
discouraging it is especially for small savers. Our tax regime can’t be far off
from loading the last straw onto the back of the camel.
You can’t get decent service anywhere. Even if you own a Maserati,
the number plates just keep falling off. Don’t you hate it when that happens?
And then the cops stop you and discover that you are a politician with a
history of pricy car problems and the press gets hold of the story and now
everyone wants to know how you can afford to drive a set of wheels like that.
As if it’s any of their business. I mean how else do you deliver services to
your constituents if you don’t have transport?
Banking is obviously a really difficult business. No one who is not
a banker seems to understand how hard it is to take deposits and lend money. On
the one side there are depositors who
believe that, if they put their cash into the care of a bank, it will be there
when they want it back again And the
other side is a matter of making folk understand that if they borrow money,
they must at some stage pay it back. Keeping both sides of this deal happy is a
nightmare. Just this week Minister Nzimande told the banks that they should
invest in low cost housing. Why he picked on the banks is unclear. He probably
does not understand either banks or investing. Few depositors would be keen to
see their bank using their savings to build or buy cheap houses. While putting
roofs over the heads of poor people is a noble project, it is not often seen as
an investment. Investing normally suggests that a return will be available.
Those unfortunate folk who are in need of low cost housing are rarely able to
offer much in the way of what might be called an acceptable return. That is why
governments step in and use taxpayer’s money to placate voters who need
shelter. Where, I wonder, does Comrade Nzimande keep his own spondulicks and
what would he say when his bank explained that his cash had been invested and
now was all gone? Perhaps as a Communist he would set us all a good example and
say that housing people was an excellent investment. He would have a point.
There’s nearly 12 hours of back to back Super rugby tomorrow. Die-hards
have plumped up the cushions on the couch and laid in stocks of refreshment and
healing unguents for bruised buttocks. My own interest is diluted by the
realisation that not even complex arithmetic using imaginary numbers can help
the Lions now. So go Sharks.
James Greener
Friday 13th July 2012
