The world of money has fallen deeply in
love with all things American. The US dollar just keeps on getting stronger. Many
of those dollars are being used to buy government bonds. Lenders are seemingly
satisfied that getting a return of just 2%pa for the next 10 years beats just
about anything else available. Presumably the sentiment is that the US is in peak
economic health with everyone employed and manufacturers and producers eagerly
satisfying consumer demand. Or perhaps it’s just the ceaseless assurances from
Federal Reserve Governor Janet Yellen that she and her cronies are far smarter
than markets in determining the price of money and that there’s nothing to
worry about. For more than 6 years short term interest rates in the USA have been
kept at nearly zero. One probable consequence of this policy is that it has distorted
price setting and signalling mechanisms all over the world. Even here in SA
share investors have to pay more than 20 times annual average earnings for a company
on the industrials or financials board. Over many years of testing this
particular metric, it is clear that real value is available only when that
multiple is half that number – as it was in 2008.
By Christmas time our Reserve Bank had
put R134bn in cash notes and coins out there in circulation. Now some of this
is lost for ever down the back of the sofa and quite a bit is being used up in
Zimbabwe as well, but that still is a great deal of money that’s spread amongst 53million of us. Say
five grand each, excluding the children. Interestingly this figure is almost
11% greater than last year’s total so even allowing for inflation and
population growth, on average we all had more cash on hand than ever before. There’s a huge cash only economy going on
below the official radar. This will be confirmed by anyone who has watched a
so-called “bakkie-builder” at the hardware store paying for their materials with
notes peeled off a roll the size of a polony. School fees also frequently call
for settlement in the amount of several thousands and reportedly cash payments
are not uncommon. A plastic shopping bag is the purse of choice for such large
amounts of cash and the car boot acts as the ATM.
Dignitaries simply love to fill their
days with events where they are invited to open things, make a speech, get
photographed shaking hands with grateful and beaming lesser beings and then
adjourn for refreshments. The news that there is to be an official opening of a piece of beach down the south coast which
has been set aside for those who like to get their kit off when at the seaside, suggest that this one
hasn’t been researched fully. What will happen? Will the adoring throng be
naked? Will the politico cut the ribbon and then undress and plunge into the
briny or play a spot of volleyball? Where will he or she put her notes when
clutching the glass and plate of nibbles?
Will there be media coverage? This could be great fun. What most
definitely is not fun is the sight of Transport Minister Dipuo Peters and her
“entourage” of more than half a dozen officials holding a press conference to
announce how badly her department is doing its job. The number of casualties on
our roads will undoubtedly have risen even further before she reaches the usual
and meaningless platitudes and assurances that in future there will be trained,
incorruptible and diligent traffic policing. I wonder if there was a lunch
afterwards.
There is something vaguely sinister and
disquieting about the decision to publish the school leaver’s exam results by
candidate number and to omit the names. Is this a precursor to the government
using just numbers to refer to office bearers at the failed and dysfunctional
state owned enterprises? After all, we already know that our leader is Number
1. Will we be told that Number 32 has stolen all the money at SAA? Or that the
dog has eaten that Number 113’s degree
certificate.
I used to really enjoy watching the TV
coverage of the Dakar Rally. Somehow now that its in South
America it rather different. Still very dangerous though. The
pyjama games against West Indies begin
tonight. Hopefully these will be tighter than the tests turned out to be.
James Greener
Friday 9th January 2015
