Well now something has undeniably
changed. The repo rate has been lifted by 50 basis points by the wise men and
women who met at the Reserve Bank earlier this week. Unfortunately for them but
unsurprisingly for the rest of us omniscient beings, this move so far has had
the exact opposite desired effect on the markets. The bond market has swooned,
share prices have slipped and the rand has barely paused in its slide into
invisibility. The level of 20 to the British pound is not far off.
As suggested before, this rather
tentative official interest rate increase, while welcome for those of us who
are savers, is way too small to hide the damage being done by the political rhetoric
and posturing ahead of this year’s general election. Foreign and local players
will continue to sell rands and buy other currencies so as to avoid the large
doses of stupid that our leaders seem to be taking.
Talking of which, why is the election date
not being announced? Is the ruling party so appalled at the way in which events
are unfolding and potentially eroding their support base that it is nervous
about setting a date? Do they first need to think up and hold some sort of
block-busting vote-catcher pyrotechnic display of threats and promises?
Certainly their selection of a highly
dodgy, killer-bomb detonating ex-terrorist to head the Independent Police
Investigative Directorate is setting off alarm flares among the more sensible
folk of this land. As is the selection of many convicted criminals for the party
lists which totally explodes the claim of having no tolerance for corruption.
Connoisseurs of irony have so many examples to choose from here on the southern
tip.
In the US the Federal Reserve has turned
down the volume on the money hose another small notch and merely the news of
this move has caused all kinds of people to catch a dose of the vapours. For
those of us who firmly believe that most official interventions in markets are
unwarranted and ultimately damaging, this behaviour is the finest sort of
supporting evidence for our views. Way back in 2008 banks were lending
ridiculous sums to obvious deadbeats because they knew they could parcel up and
sell those loans to naïve and unsuspecting investors. By the time the borrowers
defaulted, the banks were far away. Instead of forcing the banks to unwind
their messes and if necessary go bust, the politicians doled out taxpayers
money to paper over the cracks. But now, once again, the poultry is looking for
somewhere to settle down. Only when it is clear that governments will no longer
try to protect most voters from the consequences of their own decisions can the
markets perhaps return to historically sensible valuations.
Company results season has come around
again and this time there are indications that there are not as many free
spending shoppers as we have become used too. Tones of caution and warning are
in the air. Some companies are reducing staff numbers and selling off
unprofitable divisions. Maybe this time the market has really peaked?
If it wasn’t for the news that Rear
Admiral Samuel Hlongwe has been named as chief of the navy we would probably
have never learned that Azerbaijan
also has a navy. It is reported that the admiral received naval navigation
training in Azerbaijan.
Since that country is land-locked presumably the practical lessons took place out
on the Caspian Sea where conditions are likely quite different from the Cape of Storms. The admiral must be delighted
that he now has only a desk in Pretoria
to steer.
Even if the Proteas are the best test
cricket team in the world most of us find a reason not to go to the stadium and
watch them. And so those empty seats have provided our foes with the excuse
they need to relegate us and just about every other country to a test B
division. Our sole rejoinder to this insult is to give the Aussies a hiding
when they deign to pitch up here next month. Unfortunately that is unlikely to
change any minds in the lofty heights of world cricket administrators but it
will still be very satisfying.
James Greener
31st January 2014
