Someone in
the US who might have an influence on these things -- i.e. Federal Reserve
Governor Janet Yellen – muttered that the price of money in the USA might just
perhaps be a tad low. This sparked a mild panic in several markets including
the JSE and sellers dominated proceedings for a few days. No big deal yet but
it does reveal that markets and economies are rather anxious. The past decade
at least has seen massive interference and intervention in the pricing of risk
by self-confident politicians and administrators. Hazardous concepts such as
“too big to fail” and “bad bank” and practices such as “quantitative easing”
have had strange consequences. Not least of which are negative interest rates
where the lender pays the borrower for the privilege of making a deposit. The
message that someone is trying to send us is that saving is useless and will we
please all just get back into the shops and do our civic duty and buy stuff.
Central banks
have fire-hosed massive amounts of cash into economies, all with the objective
of getting consumers to spend. For reasons which are unclear to most of us (but
will provide research topics for graduate students in the coming years) the
interventions haven’t much worked and the global slowdown has been very painful.
Even Richemont, the SA-owned seller of luxury goods, has recently reported that
profits are down by almost half. Normally their customers are largely immune to
difficult times but the suggestion that a clamp-down on corruption in the
Chinese government offices is having an effect, leads one to wonder about
developments closer to home. Keep an eye on luxury car sales numbers.
Despite the electoral
successes of the political party with the same name, South Africa has slipped
12 places in the Economic Freedom rankings. The point here, however, is that the
compiler of the ranking table and the red-overalled politicians almost
certainly have different views about what economic freedom means. As they say:
It’s complicated.
Whenever one
watches a news report where government panjandrums are out and about, most of
the party will have a cell phone pressed to their ear. Even when gravely
inspecting the site of a tragedy they are often simultaneously talking to
someone (presumably) far away. Who, for goodness sake? So it’s not really much
of a surprise to read that the state spends R3.2bn annually to provide its 1.3
million employees with telecommunications services. This amount includes the
costs of data connections for computers and those fixed-line phones that ring incessantly
and unanswered in empty offices. But it still seems like a lot of money for a
business that usually demands that most of its customers present themselves in
person.
There was
quite a bit of excitement this week when it was revealed that Number One had
paid the government the R7million odd that it had been decided should be his somewhat
risible contribution towards the costs of the substantial improvements to his
private home in Zululand. The tale of the journey to this point and amount is
very long and reeks of bad faith and corruption and now the refund itself is
extremely odd. Reportedly the president – despite having friends and relatives
for whom this sum is merely “walking about money” -- has borrowed the cash from
a small and unknown Mutual Bank (one of only 3 in the country) in the form of a
mortgage bond. Just what terms our president was able to negotiate are
rightfully confidential. Nevertheless, it’s fun to run the numbers which suggest
that JZ may be paying a very large fraction of his current pre-tax salary every
month, right until he is 94! Curious. And it’s odd that the ANC haven’t complained
that the Banks’s logo is an elephant, because the party has form in worrying
about stuff like that.
For many
reasons the Paralympics events can be hard to watch but it seems as if most
participants are having a great deal of fun even while achieving astonishing
personal and global milestones. The South African medal count is currently 13
versus 18 by New Zealand. ‘bok supporters would be almost grateful if we manage
this score line tomorrow morning in Christchurch.
James
Greener
Friday 16th
September 2016 (Harvest Moon lunar eclipse day)
