Friday 31 December 2010

BRIC A BRAC


 It looks as if the All Share index will end 2010 about 1000 points short of topping the all time peak attained in 2007. Nevertheless the bulls claim that this is the perfect platform from which to soar off and up into the New Year. Indeed share prices can and do go just about anywhere but some of us old curmudgeons believe that when valuations do so, there are messages to be read. An All Share dividend yield of 2.2%pa is not attractive.
A consequence of the compression of interest rates into an ever narrower band above zero is that the differences between the various yields offered by different products become smaller. I have uttered this particular piece of stockbroker heresy before but repeat that the 2-year RSA retail bond paying 7.50%pa seems attractive for those who feel that inflation will not be a threat in that period and that Governor Marcus will continue to lean on the “repo down” lever.
A few years ago Analyst O’Neill decided that Brazil, Russia, India and China displayed sufficiently similar economic and social characteristics that a pithy term would be useful when referring to this class of significant but not yet fully developed countries. He coined the acronym BRIC as a sort of collective noun. It has now turned into some sort of club which this week invited SA to join. Why this is important or good is not immediately obvious but it sure made the rand improve yet further and at R6.75/$, the latest annual GDP figure of R2.6tr converts to $380bn.which places us around 20th on the world leader board – next to Switzerland! Many other developing nations appear much higher up the board with scores of more than double this figure so they are puzzled and hurt at being ignored by the self-appointed BRIC selectors. Now our own President Zuma was hanging out in China just recently, so we can conclude that he must have been handing out  glossy pamphlets highlighting the many attractive snow-free venues available in SA for future BRIC luncheon dates. It obviously worked.
Tidemarks tries to avoid making forecasts even on tempting occasions like the start of the year. As usual, the proper analysts are moaning that this time it is harder than ever to see what the future holds. Nonsense.  Any dive into the future always carries exactly the same degree of difficulty – impossible. However, I do think that next year’s implementation of the long promised change to the way that dividends are to be taxed may cause alarm and despondency amongst investors.
Basically the switch from the current 10% Secondary Tax on Companies to a 10% Withholding Tax on Shareholders should provide work only for accountants and similar species. The amount of tax collected by the National Treasury as dividends flow from companies to local shareholders ought not to alter materially. However, there are numerous potential sources for confusion and misinformation lurking in this landscape, and just one alarmist headline could easily lead to panic. As already discussed, dividend yields are thin enough and any threat of further trimming will be unpopular. My belief is that companies will need to declare their dividends both pre- and post the Withholding Tax and I, for one, expect that the post-tax figure will be the one to use when comparing prior years and dividends. As I said, there are ample sources for confusion.
But I am not confused when I wish all my readers a very happy, safe and healthy New Year. Prosperous will be good too.
Even while the Proteas were making a total mess of the test at Kingsmead the local newspaper was treating Sharks fans to pictures of their boys stripped down and training in the equally muggy stadium next door. Seriously guys, it is still December, just.
James Greener
31st December 2010.

Tuesday 21 December 2010

WHAT A LOTTO I GOT


There are a few more trading days left in 2010 and it looks as if the All Share may just fall short of  breaching the 33 309 peak set in May 2008. Mind you, one Christmas-tide many years ago the Russians suddenly decided that they needed to learn about Afghanistan the hard way and that popped 5% on the index overnight. So far the overall market index has delivered around 17% total return for the year. That will be way better than most investors were hoping for or pundits were forecasting which probably means that most of us will have missed much of the rise by being too liquid. And interest rates came down too. This is a very difficult and weird game.
It may be worth pointing out that the actual quantum of earnings being reported by the Top 40 companies today is about the same as was being declared way back in 2007. In the intervening period, after one more quarter of excitement the credit crunch snapped down, earnings collapsed and it has taken many months of hard work to recover even this far. But share prices today are nearly 15% higher that they were then, which implies that buyers are expecting a very significant improvement in company profitability into 2011. In my view there is little evidence to support such a development. There is a rather too much hope and faith resting on the promise that the government’s infrastructural spending plan is well underway. Indeed construction has been one sector where earnings have not improved in recent years.  My own suspicion is that because of corruption and maladministration much of budgeted expenditure has been diverted directly into private consumption without first having travelled through professional services, procurement and fabrication. It is alarming how many businesses appear able to declare director’s bonuses before actually starting the task they have been appointed and paid to do. This model neatly deals with the expected profit margin up front without the tiresome and messy task of doing and completing the job and then preparing accounts to see if there is any profit left over.
It is just too easy to poke fun at the World Youth Festival which appears to have been particularly successful in attracting rain if not the advertised celebrities to drop off in Pretoria. The theme of the festival is “Let’s defeat Imperialism” - a term which my reference suggests is not easy to define today and which is now often used as a term of abuse. Nations practicing “true” imperialism are rather thin on the ground in the early 21st century although some particularly skilled and well trained youth claim to be able to detect “ideological imperialism” just about everywhere.. I would have thought that gambling and lotteries were despicable Imperialistic practices, nevertheless the festival organisers were extremely efficient in liberating a useful R40m from the Lotto, an act that has proved to be just about the last thing they have managed to do successfully. The defeat of imperialism has given way to the more bourgeois matters of shelter, warmth and food. The good news for the rest of us is that it cost taxpayers way less than a single world cup match and some of the delegates might actually like the place and return one day as rich tourists. The KZN delegation, however, has already returned as grumpy kids.
All year two quite big and sometimes excitingly violent rows have been taking place where the only people interested are the participants and the newspapers, thankful for something to fill their pages with. Both concern organisations known by their four letter acronyms which if they settled down and worked properly might make a huge contribution to the country. In the mean time the rest of us will continue to have no interest in either the SABC or COPE.
The way the third Ashes test is going, I think all 22 players might be asked to undergo a lie-detector test or donate a sample for analysis. It’s a funny game cricket – but not weird.
James Greener
17th December 2010
 

Friday 10 December 2010

HOW DO YOU TURN OFF THIS INTERWEB THINGY?

After two weeks of news isolation while exploring a corner of the Kruger Park, it has been great fun to return to the absolute furore being caused by Wikileaks. This is yet another wonderful example of how people – especially those who claim to be in charge – utterly fail to grasp how the internet is completely changing the way the world works. If these documents that are now public really are as sensitive as the spooks claim, then perhaps they ought to have done the job for which we pay them and kept the darn things properly secret. As it is, so far all the documents have revealed really is the unsurprising truth that politicians, diplomats and bureaucrats are just as grubby, self-interested, clueless and fond of gossip as all the rest of us. Their attempts to prevent us mere plebeians and taxpayers from finding this out are almost as amusing as watching the stammering denials that anyone ever wrote that the president of a neighbouring country was mad.
The JSE, and indeed most other share markets are enjoying almost the complete opposite of free fall as investors and speculators search for alternatives to keeping money in the bank. They are also not buying bank shares and that sector continues to fall away relative to resources and stocks with more direct exposure to consumers. The Transvaal holidaymakers have appeared in the kingdom in their thousands and a trip to the malls shows no sign of shopper’s shyness. A newly listed instrument that offers buyers exposure to the price of crude oil in units of rands per barrel is yet another currency hedge vehicle to consider for the time that our dear rand falls from grace.
Do we not have more productive things for people to do than trawl through company reports counting how many women work in the place?  Presumably it is us taxpayers who employ these folk to howl with outrage at their discovery that “companies demonstrate a lack of coherent gender transformation […] polices, with little evidence of […] designated responsibility measured through performance management mechanisms”.  No one trying to run a business where people are employed on the basis that they add more value than they get paid, have any desire or time to understand let alone implement nonsense like this. I wonder what will happen to the small firm that they found that did not have any men on board.
Not only has the pres generously cancelled the R1.1bn debt that Cuba owes us for kit bought more than ten years ago, he has lent a further R1.4bn to this obviously high risk borrower and in return the younger Castro pinned a medal to his chest. Hey! That’s our money you are dishing out sir, even if it is a lovely gong.
I also missed the third quarter GDP announcement – not all that encouraging  – and Minister Patel’s magnum opus on how to get the country growing by getting more government officials to offer advice and give instructions on how the rest of us should do stuff. That’s not much good either. A good research piece in Biz Day by Annabel Bishop points out that public sector remuneration is growing by almost 30% pa because of both higher salaries and new hires. There’s your first problem right there minister. And please also note the calculation that adding the proposed health scheme to the spending side of the budget might require marginal tax rates of around 70%. Oh dear me, no.
Equally disturbing is the picture of a man in loin cloth who was trying to raise awareness of some doubtless critical issue at the climate talking shop in Cancun this week. Please note sir that despite its reputation for balmy weather there can still be some unseasonably cold spells in Durban in December and you might need to pack more gear for your next appearance.
I am delighted to report that I was watching a pack of wild dogs at the time when I could have been witnessing the Scots feasting on Springbok.
James Greener
10th December 2010

Thursday 18 November 2010

MORE BAD NEWS FOR SAVERS

Governor Marcus and her team of whiz kids have come to the conclusion that 5.5% is the correct price for money. Two years ago her predecessor and his bunch selected 12% as the ideal price You sort of wonder why it has taken them two years to get here because there is no evidence that the step by step progress from there to here has had any impact on the old enemy of inflation, which in fact has led rates down by quite a distance. Neither growth, employment or the currency has behaved according to plan so what is the point? Faithful readers will know that I am deeply suspicious of committee decisions and this repo rate is a good example of how they usually don’t work. You have to be almost as old as I am to remember a brief period when the nation flirted with letting market forces set the repo rate. It was exciting and volatile in the beginning as everyone learned how to game the system. Fortunes were made and lost but in the end I think it was settling down nicely. The Reserve Bank, however, suspected that the quiescence reflected collusion between the major players. So instead of trying to cure that, they quickly returned to the system of letting a committee set the price of what is used to price everything else. Unsatisfactory.
From what I can make out, the Irish nation is being urged to borrow money they don’t really need right now so that other countries that really have to borrow now will be able to do so cheaply. What’s happening here apparently is that bureaucrats are trying to influence the price of a type of money that undoubtedly is determined by market forces. That is the money that investors lend to national governments for lengthy periods like 5 to 10 years – usually called the bond market. This is just one of the shenanigans taking place in the global financial scene each of which may be having its own influence on what happens here.
The G-20 meeting ended with a communiqué that was as meaningless as the delegates hoped to get away with. The worthies of the G-20 invited those countries who felt their currencies were over valued to respond with “macroprudential” measures. In the predictable brouhaha that broke out among the talking heads of the rent-a-response industry and the media scrum about what on earth this might mean, the suits slipped away. I am sure that word in not in any real dictionary. Perfect.
A local shenanigan receiving too little attention is the news that in August the managing director of the company that prints the bank notes for us and other nearby countries was found to be rather remiss about keeping records and counting the stock. He was suspended but not charged. That must have been fun while it lasted.
Ms Middleton and Prince William were responsible for several terabytes of digital picture stock this week when they announced their engagement. Presumably her expectations of her future husband’s income once he is crowned king are well above the level recently announced by President Zuma for our local royalty. On not even R71 000 a month, kings lag both premiers (R135 000) and even executive mayors (R75 000) in the income tables. You wouldn’t cover even the Palace’s Corgi food bill with that. Perhaps we have a lot of kings?
You can be sure that there will be hordes of executive mayors, premiers and perhaps even kings turning up in Durban in 12 months time when unhappily we host an international climate change conference. Once again throngs of carbon-based life forms with zero knowledge about science will gather to demand in voices filled with carbon dioxide that the rather vital 6th member of the periodic table be banned from the globe. It will be a mess and another bill for ratepayers.
So what exactly is it that the ‘bokke have been eating with their cornflakes? If it is all that potent it barely worked against the Welsh.
James Greener
18th November 2010

Sunday 14 November 2010

FEATHERING OUR NESTS

While most of us have been fretting about strong rands, quantitative easing and other diversionary events, the bull has supplied the All Share index with a very impressive 20% boost since Spring Day. It has been the resurgent resources which have contributed most of the oomph. Financials as a sector are battling, and in my view will probably continue to do so until demand for their product – money – picks up. Even in rand terms the rise in the international commodity price indices has been very useful and one wonders what would happen if the currency one day did do a swallow dive and bolster local earnings even further.
Most of the great and not so good talking heads are gathered in South Korea for a knees-up where currency strength is definitely a huge agenda item coming closely below the lunch menu and the pecking order for the group photo. The delegates and their prejudices, policies and proposals are generally unchanged and indistinguishable from those present at every previous meeting. If they really do have an influence on the way things work then the current mess is therefore their fault and there is really no sense in letting them try to fix it again. More probably the economic situation is and always will be the result of about 6 billion people looking out for number one. The best thing the heads can do is go home, slash government spending and interference, which distorts the proper allocation of resources, and then retire to write their memoirs about how they for once did something really useful for the planet.
Government was warned that their RICA policy of getting every cell phone owner to register would be tricky. And so of course it has been. The mania for governments to compile databases of its citizens has reached a particularly high pitch here in SA. “Combating Crime” is almost always the offered reason for the exercise and sadly that is definitely not working. In fact most of us suspect that criminals themselves have easy access to these schedules of who owns what and where they live, thus providing not only targets but identities to be purloined for their own fraudulent registrations.
The state itself seems uncertain about the value and whereabouts of what it owns. Within minutes of promising to sell R20bn of its assets in order to lend the cash to Eskom, it announced that it wouldn’t be doing that anymore. The reason for this about turn has not been revealed but my guess is that the asset register was a disappointment.
Our new minister of sport says that he is worried that boxing appears to be run out of a car boot and that other sports are in similar administrative disarray.  Without exploring how any minister can even identify poor administration, politicians ought not to be involved in what we boys and girls do for recreation, fun and exercise. Unless we are really lucky or talented, the costs are usually borne from our own pockets and so a car boot is undoubtedly cheap office space. Some sports, however, are so popular that commercial sponsors, eager to be associated with potential winners and to get the attention of their fans and spectators have found it beneficial to wave their chequebooks. But Minister Mbalula is now determined to use taxpayers money to “ruffle a lot of feathers” This is not a minority sport involving birds. It is a program that will demonstrate that when policy  replaces talent, skill and effort the outcome is  anger, disappointment and disillusion for just about everyone in the nation who yearns to wave the flag and celebrate a victory.
The ‘bokke substitution policy in action in Ireland last week looked suspiciously like an early case of feather ruffling. It must be very unsettling for the captain to see valuable and on-form players whisked off the field for no better apparent reason that there is someone on the bench who deserves a cap.  Wales is going to be a very tough one. Go ‘bokke. And go Alonso.

James Greener
12th November 2010


Friday 5 November 2010

UNBLOCKING THE RAND

The largest ever container ship to visit our ports glided past my window a few minutes ago and into Durban harbour. From what I could see it was pretty much empty and the news is that she will sail on Monday after loading 7000 containers destined for foreign parts. Well that’s a nice sign. Exports greater than imports, but that does mean more upward pressure on the rand which seems to worry lots of people.
Federal Reserve Governor Bernanke in Washington also caused a great deal of worry in some parts of the world by confirming that he has ordered the printing presses to roll off $600bn worth of crisp new paper money. This, he will lend to the US government who have decided that they will do the spending that their citizens have very annoyingly declined to do ever since they lost their jobs and the value of their homes collapsed. Although, as some commentators have pointed out, $600bn these days is not really such a large sum of money, (really?!) it has to go somewhere and maybe a good chunk of it will flow into the stock market. Therefore we have seen some hefty buying on Wall Street as speculators fill up with shares so as to have something to sell at much higher prices when the fresh money arrives. And then of course with more US dollars in the world that means that fewer units of everyone else’s money are needed to buy a dollar which is another way of saying their currencies strengthen. So here we go around again!
Soon after entering the stock broking world I received an unforgettable lecture from my mentor and boss all about the various rands that existed. In particular it was important to know about the financial rand – now sadly deceased, it was great source of broker’s revenue – and the blocked rand, which Minister Gordhan seems to have just killed off as well. As the years passed fewer people in the industry knew about the blocked rand and what you were not supposed to do with it. Being a great believer in human ingenuity and self-interest I was never convinced that the total sum of blocked rands languishing here in SA was as large and threatening as some calculations suggested. I was sure that leakage was rife and that most emigrants had long since found ways to get their money to join them in Perth or Toronto. Our quaint triple currency is now just a topic for some eager researcher to turn into a thesis.
I am appalled by the news that the JSE has effectively created a mini-board where investors of only a certain racial classification will trade shares that are similarly classified. Even if the listed companies feel compelled to go along with government’s terrible and wealth-destroying program of resource allocation by race, the bourse ought to be at the forefront of insisting that shareholders are equal.
The huge penalty slapped on Pioneer Foods for allegedly colluding to set the price of bread is very alarming. They must have really annoyed someone’s relative. For starters, doesn’t it take at least two to collude so why not treat all parties equally? Next, the fine extends far beyond a simple cash payment to the state. The company must pay a sum into an “Agro-processing Competitiveness Fund” which will quickly be plundered if only because no one has any idea what that means. The authorities have also told the company how to run its business in the next few years so that the punishment will be long lasting. They are delighted to show off with terms and concepts like “capital expenditure” and “margins” – clearly in the belief that the bread and milling markets can be controlled by edict. The company’s eagerness to settle and get the matter behind them is understandable and the share price seems certain that the company intends quickly to move on.
The Sharks may have won their last Currie Cup at Kings Park. Now the boss of SA rugby has turned engineer and declared the stadium to be deteriorating. This is merely code for “the owners of the unused soccer stadium next door have a problem.”
James Greener
Guy Fawkes Day 2010

Saturday 30 October 2010

FIFTH WEDDING AND A FINAL


Almost all of this month’s rather modest 3% total return from the All Share index occurred in the first few weeks. Thereafter the market has put on a virtuoso performance of matching ups with downs, mixed with copious indecision. The banking sector has found the going particularly tough. But mining houses and rand sensitive resource exporters appear to be benefiting from all the waffle about currency wars. The steadily rising prices of commodities suggest that someone somewhere is always keen to buy something either to eat or to make into something else. One particularly interesting segment of this market are the so-called rare-earths of which China seems to have an inordinate share and which recently they have declined to sell to anyone. Many of today’s essential electronic gadgets need tiny but critical amounts of these elements. Watch this space.
Minister Gordhan stepped up to the podium in Parliament with the exciting news that he will be collecting R30bn more in tax from us this year than he originally anticipated. But all he can think to do with this windfall is to buy some foreign currency. Not a great idea in my opinion. First prize would definitely be to give it back to us tax payers, so we can individually decide what to do with it. I, for one, would not buy any greenbacks. There are just far too many of them. However, I am not convinced that there really is a problem of excessive revenue. There was way too much dependence on expressing everything in terms of GDP which in turn depends on assumptions of how much it might grow. If there are indeed any extra rands in the National Treasury they will be quickly mopped up by those enthusiastic and spendthrift ministers who just recently have signed declarations that they will do their jobs and deliver services from now on. The president’s office has already claimed a 10% increase on their original allocation in order to meet “unforeseeable and unavoidable expenditure”. Is that a warning that we have another wedding to pay for soon?
Consumer price inflation is exactly that. Each consumer has a different experience depending on his or her pattern of consumption. The just released and much celebrated multi-year low of 3.2% for September was definitely not my experience. My electricity bill claims a considerably greater proportion of my total monthly expenditure than the 1.9% that the Stats SA model uses. And this item is up 18.3% year on year. Add to this the 7% increase in beer prices which also impacted me more than the model’s 1.6% weighting of expenditure. Those readers paying school fees will be amazed to learn that Stats SA feels that they comprise just 1.3% of one’s outgoings. These fees are up 10.2% year-on-year, the second highest after electricity. These figures go a long way to explaining why spending on other consumer items is under pressure. Apparently bread and cereals are down 1% in price since last year and telecommunications equipment is 30% cheaper. For all its importance in economic debate the inflation rate is a dreadfully suspect number.
The world is very relieved that Warner Brothers and New Zealand have agreed that those cold and soggy islands will be used as the location for another Hobbit movie. Taxpayers there are even paying $10m towards the film company’s marketing costs. The director also has his eye on the All Black training camp when it comes to casting for those fearsome huge and ugly creatures who lurk in the background just offside.
Flag sellers, whose business took a dive in July, are back in droves at the kingdom’s traffic lights, offering any item you can imagine plastered with the Shark logo. The intrepid few who have travelled from Province for the final will struggle to find much in blue and white hoops.  Despite my great grandfather having married a Cape Town girl in 1881 I shall be supporting the black and white tomorrow.
James Greener
29th October 2010

Friday 22 October 2010

THE COMPUTER SAYS WHOA

So there is the All Share index above 30 000, offering a slender 2.28% dividend yield  - assuming everyone maintains last year’s dividends of course - and a rather off-putting 17.2 price earnings ratio. This index is now fewer than 3000 points below the all time high and if and when we breach that level there excitement will be high with few bothering to point out that it has taken about two and a half years to get back here. I can’t see a good case for any but the most timid of buying programs at this stage.
Further revelations about the foetid mess that is the US mortgage-backed securities business have come to light. Substantial fraud and gross negligence aside, the key issue in this debacle is that a very large number of people who borrowed money to buy a home in recent years are now faced with the unsettling fact that the current resale value of their house is very much lower than the outstanding mortgage debt. Under these circumstances and with a government inclined to be sympathetic to their plight, the urge to stop paying is strong. This really messes up the cash flows down the food chain and now some of the folk in that chain don’t want to play anymore. These threatened sell-outs are only helping reveal the extent of the administrative mess which has failed to keep track of who owes what to whom.
The bureaucrat who came up with the idea of “Multi-disciplinary Roadblocks” will be in line for a big fat bonus. The plan is that a motorist pulled to the side of the road is in a near defenceless position that provides a wonderful opportunity for the agents of the state to probe their victim on any number of topics other than mere driving and vehicle fitness. Modern communications technology will be used to beam down to the roadside officer your most intimate details. Just imagine the amount of the bribe needed to dissuade him from checking on your tax status, your citizenship, your indebtedness, or your wife’s photo against your passenger. They will probably also be able to embarrass you further by revealing how long it was since your last dental check up.
The news channels are trying to get excited about the rumour that President Zuma is in the midst of a cabinet reshuffle.  There certainly are a number of ministers who should be removed from power as soon and as far as possible but it is unlikely that Mr Nice Guy will do much to bruise egos or offend friends. My own view is that it far more likely that the  Christmas liquor special catalogues have caught the president’s eye and he is rearranging the booze cabinet to make space for that Macallan single malt at a mere R150 000 a bottle. With only three available he had better move quickly if he going to be a good host at the party after next week’s medium term budget which may or may not make changes to exchange controls.
There is lots of talk about something called a “currency war” in which the next battle will take place during this weekend’s G20 meeting in South Korea. It is not easy to understand what this means but it entails people claiming loudly that theirs ought to be weaker than yours. Adding to the confusion is the fact that within each country there is also a difference of opinion about whether their currency unit is actually over or undervalued and even worse whether or not that is a good or a bad thing. The Economist has their wonderful Big Mac index that tries to help mere mortals make some sense of it all. On that basis it turns out that our dear rand is undervalued. A burger in SA costs almost $1.00 less than in the USA. In China, it is $1.53 cheaper. This really annoys American politicians and prompts them to lecture China about how to run their economy. Lectures that the Chinese wisely ignore. In fact this week they nudged their interest rates up a notch.
With a week to go before the Currie Cup final there has been space in the press for the apparently shocking news that some FIFA officials can be bribed and someone called Wayne no longer wants to play for Manchester United. Troubling stuff indeed.
James Greener
22nd October 2010

Friday 15 October 2010

RAND RAMPANT


Investors world-wide appear to have no doubts. The rand is the must-have currency. At present a single US dollar will buy 680 SA cents. Whatever those investors are choosing to do with the rands – buying shares appears to be one idea – they must be assuming that when the time comes to take their money home, the price of a dollar will be not very different from these levels. However, it tends to be in the nature of markets that this assumption is usually false if only because most people will leave the moment they see weakness developing and then a bit of a scrum forms at the exit. This only speeds up the collapse. Locals who have not yet used up their foreign currency allowances might think about taking advantage of this period of rand strength.
Much of the current optimism in the markets has been caused by the near certainty that the US Federal Reserve will soon launch what is being called QE2. This is not an ocean liner but the second tranche of a so-called quantitative easing program. The innocuous name refers to the process where the Fed prints money with which it buys equally freshly minted bonds issued by the US government. The government then doles the cash out to its citizens in the form of salaries, payment for goods and services and on welfare programs. QE1 failed to launch the US economy into a noticeable recovery so they are going to try again. QE2 is a trillion dollar bet that this time the consumers will be more obedient and spend rather than pay off debt or save. The Chinese with $2.65 trillion in foreign currency reserves must be watching this program of dollar sacrifice with growing alarm.
One of the austerity measures being taken by the UK government has been to shut down dozens of tax eating organisations that provide little value. This is a great idea. Sadly the same cuts are not yet evident here despite being woefully overdue. The National Youth Development Agency has an annual budget of R370m. It pays R11m a year in salaries to a 12 member Operating Executive Committee who rely on input from a 63 member Advisory Board. Just the tea and biscuit bill for a meeting this large will leave precious little money out of the budget for any other youth development – whatever that is. Over at the misnamed Road Accident Fund, which is actually a R43bn deficit not a fund, the CEO was awarded a bonus amounting to almost half his already outrageous salary of R4.3m. Reports failed to indicate the reason for the award but clearly it can’t have been performance. The Competition Commission has delivered an opinion on the staffing complement for the proposed forthcoming merger of two life assurance companies. This change of focus from consumer protection to employment policies is alarming and typical of unchecked bureaucracies. And Stats SA sent a charming young lady armed with a blunt pencil and well used eraser to my house to ask questions and complete a huge census form. She treated my refusal to identify my race group on the grounds that we had stopped all that nonsense 16 years ago with polite amusement and then went on to record that I wear glasses and own a variety of consumer durable items that will undoubtedly catch the attention of any potential burglar who sees the document as it travels through the system. She forgot to ask about the Rottweiler though.
Good news this week included drawings for a ship that could house a brewery which could sail to places where shortages threatened. With my house being just 800 m from the beach I shall keep an eye on this development. Also developing is a black and white blizzard of Sharks support ahead of tomorrow’s semi-final against the Blue Bulls. The early kick-off provides a marvellously long post-match period in which to braai while watching the other game. Expect poor visibility in the Durban region tomorrow evening.
James Greener
15th October 2010.

Friday 8 October 2010

WRESTLING WITH THE RAND

Pretty much everyone it seems is keen to see the rand weaken. That is they think it would be a good thing if a unit of foreign currency were to cost more than it does at present. Quite how this can be made to happen is not clearly explained beyond a bit of arm waving and muttering about lower interest rates. Presumably the fact that our rates have been coming down precisely over the period when the currency has been going up is an embarrassment best left unexplored. The rand is strong because people with other currencies (except in fact the Yen) can see attractive things to do with rands. This includes the so-called carry trade which admittedly does rather depend on interest rates in South Africa being higher than elsewhere. Observe that the theory that after the world cup, demand for the rand would diminish has also been shown to be wrong. Sometimes the attraction of another nation’s money evaporates when the authorities in that country begin to behave erratically. This theory too is being disproved as the lunacy levels in the corridors of power rise. About the only sure thing is that when the currency does once again hit the skids and dollars cost R10 each, the moaning will be just as intense as at present with calls for someone to do something about it.
Equally puzzling is the strength of the equity market where the All Share index has been making a credible attack on the 30 000 level, a number it last enjoyed – on the way down - in July 2008. It is puzzling because the current round of company reports revealed no exceptional growth stories and some decidedly downbeat outlook statements. Very few companies or industries seem to think that business is undoubtedly getting better. Our largest bank is going to fire some staff. That’s not an indicator of things getting better. There is of course a world-wide scramble for yield and income and news of a blue chip company downsizing does cruelly suggest that they are doing what they can to keep shareholder earnings stable.
Talking of stable, all these headlines about SAB and Castel were a little worrying until it turns out that it had nothing to do with Castle, Mr Charles Glass’s finest brew. Groupe Castel is a brewery company that SAB are thinking about adding to their portfolio in their quest for world domination of thirsty folk. This share is always expensive but always worth buying!
It should also never be confused with SABC, which is a horror show pretending to be a national broadcaster. In actuality it is a device for transferring tax payers’ money to lucky individuals whose first task on assuming executive office is to submit a resignation letter along with a claim for large sums of money. Anyone sitting tight and displaying skill or interest in providing licence payers with a service is dismissed, but is still eligible for the going away presents. The SABC revolving door staffing policy provides newspapers with 5% of their daily content, none of which is ever read by anyone.
On the other hand there is great interest in reading where and when our president jetted off to, and particularly who went with him. Sadly, however, this information has now been classified and we shall just have wait until an overseas photographer snaps a picture of the fortunate fiancée before we know that we shall have to start saving for another wedding.
It is a small thing I know, but how do the teachers find the time to traipse off to their union conference just weeks before their pupils’ year end exams? The conference anyway seems to have developed into an acrimonious battle between political factions rather than a discourse about how to rescue the children from the failed experiment of OBE.
As usual these games events provide unmissable viewing for those of us unaware that girls did Greco-roman wrestling or that hockey was played in a shallow swamp or that SA has a strong archery squad or that synchronised swimmers wore water-proof makeup. The Sharks might need some of that stuff if the rain promised for Newlands tomorrow shows up.
James Greener
8th October 2010.

Friday 1 October 2010

INDECENT WORK?

The All Share index delivered a magnificent total return of 8.7% in September. A substantial portion of the heavy lifting was provided by the Consumer Services group. However the sad news is that year to date the All Share return is also 8.7% which means that the market has churned away for really very little effect for some time. Naturally there are huge variations around this dull average. Expectation of consumers returning to the checkout lines and a possible foreign takeover has pushed the general retailers sector up an astonishing 50%. The deadweight was been platinum mining, down 11%. The strong currency is thrashing this industry.
In June 997 960 foreign tourists arrived in SA of whom 16 368 were mystifyingly classified as non-visitors. More than a quarter of the other sort of visitors came into the country for less than a day. The 721 311 folk who visited and stayed for at least one night will obviously include world cup teams and fans. Not a lot is it? Slowly we are piecing together the full picture of that event. It was undoubtedly a whole lot of fun, but financially, nothing like the forecasts.
Another interesting statistic is that there are 10 million vehicles on the roads but just 6 million driver’s licenses. In a typically touching display of naivety, the transport minister declared that this gap was too large and that 1 million new licences would be issued in the next 12 months. Personal experience of assisting a learner driver to book for the official tests confirms that this target will be met only by heroic levels of bribery and little actual driver testing. Meanwhile the implication that no one is driving those other 4 million vehicles is manifestly false as anyone using the roads can confirm.
The Chinese are now such great new best friends that we have sent them models of our finest hominin fossils. But the news that Wal-Mart, which is China’s largest private customer, is looking to come here and sell stuff so cheap that even the poor can afford it has caused alarm. Allegedly the retailer has an archaic view about paying employees what they are worth. Union leaders are warning that if this attitude were to catch on amongst other employers, workers might choose not to pay Union subscriptions. And thousands of civil servants would be paid nothing.
I have failed not to get really angry at the complete nonsense of the celebratory announcement that our dear leaders have identified 12 national “outcomes” that all cabinet ministers will sign as part of service delivery agreements. Leaving aside the worthlessness of a politician’s signature on anything – he or she isn’t committing a cent of their own resources – the requirements of good government have been known for centuries, even if rarely practiced. In similar vein, another bunch of tax eaters has come up with South Africa's first ever Decent Work Country Programme. The only work this scheme will ever create is ever more forms for employers to complete to justify why they dared to offer a part-time cleaner’s job with no medical aid benefits or personal development program to a desperate man standing at the front of a long line at the factory gate.
It is worth recalling that the ABSA CEO who has been clubbing the South African Rugby Union with her handbag is married to a government minister who has declared his preference for the All Blacks over the ‘bokke. And then ABSA’s parent is Barclays in the UK, who are unlikely to be ‘bok supporters. Mind you SARU probably deserve a bashing for permitting irrelevant and extraneous factors to affect their sole job which is to create a rugby environment from which can emerge a Springbok side that beats everyone. And that goes for the people who run soccer in this country as well.
I suppose that the Sharks fans in the pub will be far too preoccupied with tonight’s match against the Leopards to want to talk about the Transvaal score line from last week.
James Greener.
1st October 2010

Thursday 23 September 2010

STOKING THE FIRES OF BUREAUCRACY

It really is very odd. Every day the anti-capitalist debate ratchets up another notch and the masses demand that the state should do more and yet every day demand for the rand also increases. Do foreigners really want to own South African assets in the belief that the state will buy them out at better prices quite soon? A further error in this model is that even if this were vaguely possible, the scrum at the currency exit doors thereafter would presumably soon erode any putative profits. And while the data suggests that exports are growing faster than imports, is the currency effect of this really overwhelming the ingrained habit of South Africans to get money offshore at every opportunity? Like everyone else I just shrug and mutter about the “carry trade”. But even that needs more players or money to be joining the game all the time in order to explain the strengthening rand.
Oh and the gold price keeps going up.
Some alarmingly influential voices are starting to agree with the crazies that nationalization is perhaps not such a dirty word after all. What is going on? Are they putting something in the water? Name just one area – other than tax collection – where the state shows the least aptitude or ability or even interest in running an effective and efficient organization. And even tax collection is tending to degenerate into shrill threats akin to extracting money with menaces. I wonder when someone at SARS will spot the terrifying idea being floated in Britain that salaries and pensions ought all be paid directly to the Receiver of Revenue who will subtract what he feels is due before sending the balance on to the mugs. Really, governments world-wide are getting far too large and self-important. Remember, THEY work for US.
This sad decline has been quantified by the announcement that South Africa has in the last 10 years fallen 40 places to 82nd in the world economic freedom rankings. The ranking process scores dozens of different areas and sectors before aggregating them to obtain the overall position. In the areas where the government has so far not managed to interfere too much our rankings are rather good and the JSE’s settlement systems even scored first place. But in places where the state either needs to or has chosen to operate, like the regulation of business, security of property rights, health and education this nation is vying with some very dodgy and failed regimes for the bottom of the league tables.
Current contributions in the race to the bottom are being made not far from here, where catering with talking opportunities has been arranged for the party elite and crowds of hangers on in a large conference centre. The city council has closed the streets around the venue to traffic. Blue-light convoys wail along the freeways at all hours. The perceived threat to delegate comfort is clearly more important than ratepayer convenience. Ever since the world cup, the traffic cops are eager to try their skills at traffic disruption at any opportunity. Pigspotter, the splendidly named addition to cyberspace, now has associates in the kingdom.  Few will believe that the authority’s anger at people using technology to alert each other to speed traps and road blocks has anything to do with road safety. More likely it is a reaction to the threat of disrupting both formal and informal revenue collection.
I was delighted with the news that Sasol is now producing a fuel from coal feedstock that is good enough for aircraft to use. I remember a vintage cartoon, lampooning the new fangled aviation industry, depicting a sweating engineer frantically shovelling coal into a boiler in order to raise enough steam to keep a string and paper plane-like contraption aloft. And now it happens. I wonder what fuel the military jets and helicopters showing off over the conference venue are using? Come to think of it what are they doing there anyway? It’s just a party talk-shop.
New events at the Commonwealth games include concrete mixing and pouring, stadium seat installing and pin the blame on the donkey.
James Greener
23rd September 2010.

Sunday 19 September 2010

TAXING THE FAMILY JEWELS

Feature of the week is the dollar gold price which just keeps on trucking upwards. The business channel screens are full of well brought up economists insisting that the decade-long rise is short lived and that gold bulls will regret swapping fiat paper money for lumps of cold yellow metal. They are eager to point out that amongst its many shortcomings, gold pays no interest and can be used to avoid tax. Locally our enjoyment in this excitement is muted but hopefully only delayed by an obstinately strong rand. This strength was not helped by the Japanese authorities, exasperated by their own strong currency, giving it a few swipes with a samurai sword and making it leak a bit. Buyers outnumber sellers in almost all the world’s share markets and our own All Share is sniffing at the heels of 29 000 again.
COSATU’s suggestion that the country needs a state bank (that)… “will ensure that interest rates are low enough to finance productive economic activity" raises a few questions. Does the author of these words understand that banks normally only lend money at rates higher than they can borrow it for?  Like most old reactionary cynics I shall not be reading “A Growth Path towards Full Employment”. The document is reportedly keenly supportive of the view that government employees alone have the skills and training to control the allocation of a nation’s resources. For me there already is far too much evidence that anything the state tries to run is bound to fail. Simply the issue is that people look after their own assets best and when entrusted to administer assets which have no immediately obvious and watchful owner, rarely resist the temptation to steal them. Corruption is the usual term.
This week’s saddest example of the state’s failure is the demand by pupils who lost out during the teachers strike for a guaranteed year end examination pass. Pupils themselves are now reportedly on strike and armed police have been deployed against the threat. . No one in authority has the courage to point out that an exam pass is totally distinct from acquiring the skills and knowledge that these so-called “learners” will desperately need to compete with the other entrants to the labour market all over the world. Many of them I suppose still believe that the state will provide a living even if they can not read or write. After all, who has ever seen pictures of our president deep in concentration poring over a policy document while making annotations in the margin?
 Another community that the government is unwilling to confront with the truth is mini-bus taxi drivers. AARTO is the rather ugly name for yet another scheme to cajole drivers into obeying the traffic laws. It final but risible sanction is the withdrawal of a driving licence – a document that many never legally obtain anyway. AARTO’s implementation has now been postponed because of “public panic”. This panic was actually an unruly traffic-disrupting gathering in Pretoria that had the familiar effect of demonstrating which side is the more heavily armed.  
Those of you not living here in the kingdom may have missed the story about the unfortunate woman who was robbed of more than R200 000 worth of jewellery. This dreadful crime took place in a shopping centre as the lady was returning to her car after having had the jewels weighed. The purpose of this odd practice was, she explained, in order to “pay taxes on it”.  It is indeed tax return season, and most of us are currently wrestling with the dreaded forms, but I must admit to having missed the levy based on the weight of one’s trinkets. Mind you, the lady concerned is a close relative of the man who used to be the president’s financial advisor so maybe she is privy to some forthcoming announcement. As far as I know the tax man’s recent communication to several thousand of his customers did no more than leak his email address book to the astonished and in some cases delighted recipients looking to expand their own client base.
My Shark supporting friends are getting anxious about the resurgent and mighty Transvaal.
James Greener
19th September 2010.

Friday 10 September 2010

BULLS EVERYWHERE

In common with investors worldwide, those on the JSE became overexcited at yesterday’s news that only 451 000 Americans were claiming unemployment relief and indulged in a buying spree. Shortly afterwards the Bloomberg’s news service announced that the SA  repo rate had been cut 50 basis points from 6.5% to 6.0%. 20 minutes later Governor Marcus confirmed this in her TV broadcast and even more frantic buying ensued. But before the market closed, the sad fact that all of this actually has scant immediate impact on the valuation of companies wiped out much of the exuberance and prices slumped. Day trading is for the brave and nimble only.
Some research suggests that changes in the price of money can take months before any measurable effect can be detected in the various measures of economic activity. Presumably now that cash is cheaper than it has been for decades, borrowers must be pleased, but whether they will now borrow and spend more than they had already planned is unknown. I suspect that matters such as threatening political instability, excessive and unpredictable regulation and bureaucratic interference provide somewhat more important considerations for financial  decisions than interest rates.
That would seem certainly to be the case with the currency, where notwithstanding the rate cut and ever more strident shrieking about nationalisation and land ownership, demand for the rand is maintained. In addition to the widely believed story that foreigners just love buying our still quite high yielding bonds. Notwithstanding the demand for super luxury watches and whisky from President Zuma’s fortunate and capable friends and relations, other data also indicate that the value of exports is recovering faster than the value of imports Whatever the reasons, it does look as if quite soon just seven rands will buy you one US dollar. Mind you that also says something about the dollar getting cheaper.
Reporting and dividend season is now upon us and good news results outnumber the bad. The people running the real economy are doing a good job for themselves and their shareholders. This doubtless is one reason for the trade unions demanding that the government “tax the super rich”.  Assuming – incorrectly – that each of the 400 or so listed companies is able to pay say 10 directors and executives R10m a year each, that R40bn, even if taxed at 100% (!)  would cover just 19 days of government expenditure.
If your travels ever land you at our new King Shaka airport down here in the kingdom, take a minute to find and view the smallest of the delightful family of bronze bovines that stand outside the terminal building,. The recumbent calf is easily overlooked but is very appealing. The bull, however, is rapidly acquiring a shiny nose as visitors adopt the custom of rubbing it as they pass. The figure of the herd’s minder, King Shaka himself is absent. It has been removed following complaints that it failed to radiate sufficient power and gravitas. An official committee has been convened to instruct the sculptor
The folk who run cricket will be delighted that they have at last managed to rid themselves of any support from old duffers like myself. After studying a full page colour advertisement for a so-called Champions League Twenty 20 tournament that is about to start here on the southern tip, I am no wiser about how many South African teams or players might be participating. The organiser’s transformation of the game from employing boring yet identifiable regional and national teams into natty contemporary franchises is complete. Who on earth are the Wyamba?
And come to think of it, who are the Pumas?  The hint is that the Sharks are going to Witbank tonight so I guess someone in the Eastern Transvaal thought an American cat was an appropriate name for their rugby team.
James Greener
10th September 2010.

Friday 3 September 2010

DANCING QUEENS – IN WAITING

Sadly the strikes appear to be continuing. The union leaders expressed little interest in the government’s complaint that taxes and borrowing will both need to increase if their demands are to be met. There is obviously a huge problem with the state’s pay scales and staffing policies. The national department of arts and culture – surely together with sport, an area that has no need for government presence – this week advertised five Chief Director posts all offering salaries over R60 000 per month. The successful appointees will direct, in chiefly fashion, departments dedicated to “Investing in Culture” and “Arts and Culture in Social Cohesion”. That these jobs even exist let alone will soon be filled by dark-suited laptop-bag toting airport concourse denizens on their way to meetings and lunch is offensive. The department is also seeking to fill the obviously very lowly but hopefully vital post of Assistant Director: Budget Planning and Expenditure Control with someone skilled, qualified and experienced and who will be content with R16 000 a month. I expect the previous incumbent has joined the skilled, qualified and experienced nurses and teachers on the streets.
However, the KZN department of arts and culture has been busy doing some real work. They have been counting maidens and announced today that at least 26 000 are available to take part in the annual Reed Dance. The Dance is a sort of shop window for the king and his buddies to conduct a stock take of potential marriage partners. President Zuma usually attends. The rest of the world is either amused or aghast. It seems an incredibly large number.
Do politicians never share a meal or sit down with their family and discuss the triumphs and tragedies of the day? Do they really have no interest in what their flesh and blood is up to? Durban’s Mayor Mlaba claimed he had no idea that his daughter’s company was working for the city. You would have thought that a R3m contract might just have been exciting enough to mention to Dad between the soup and the main course. Apparently officials are usually “so busy formulating policy” that they forget to check if any family members are breaking the rules. Believing this makes you as naïve as the bookies who quoted odds against Pakistan bowling no balls to order.
In the meantime Governor Marcus has explained that interest rate decisions are “complex”. This presumably is code for “don’t expect us to cut rates next week”. Actually the decision is difficult not complex. It is merely up, down or nothing. Up will cause so much uproar that the sky will fall down. Leaving rates unchanged will attract scorn and accusations of timidity. So they may as well cut 50 bp. The only sufferers in the short term are a handful of elderly savers who won’t say much, and it is unlikely that anything the Reserve Bank can do at this stage will revive the near moribund lending market.
The All Share index is now exactly where it began the year having excited both bulls and bears in turn. The performance has however, been unevenly distributed with the modest uptrends in financials and industrials offset by a fading resources sector. Now mining was supposed to be the sector that was going to make us rich in 2010 as we pinned our hopes on China’s seemingly insatiable demand for raw materials to build stuff with.
Pretty much anytime the ‘bokke players or coach spot a microphone, they feel compelled to say things that later almost everyone would rather they had not. Apparently coming second in the tri-nations is now regarded as both inevitable and a good thing. Oh dear me no.
James Greener
3rd September 2010

Friday 27 August 2010

MAID IN CHINA


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

Friday 20 August 2010

THE BEAR STRIKES

So far this month the all share index has given back almost two thirds of last month’s amazing gains. Volume, however, is rather muted.  Bonds on the other hand are in great demand as investors scramble to lend money to the government. The long bond price index has traced out one of its steepest rises in recent history, gaining 4.5% in a week. I certainly never expected this but it makes me very worried about buying now. The so-called GOVI exchange traded fund is the easiest way for the small investor to get this exposure and you may have noted that it has appeared in the new highs column almost every day recently.
Even after the election of a worker-friendly government sixteen years ago, this country has continued with its policy of paying most of its civil servants rather poorly. Of course the new government has enthusiastically continued the program of rewarding loyal cadres with an appointment to an ever growing upper echelon of bureaucrats who are definitely paid far more than they are worth, which in many cases is zero. However, perhaps because politicians are jealous of their skills, professionals appear to be particularly ill treated by the state. The present unresolved wage negotiations have triggered strike action. A quiet and dignified silent picket line is neither the South African way nor all that effective at attracting reporters and cameramen. Singing and dancing is more our style. Unfortunately a few of the teachers – and probably a number of rent-a-crowd – have been mobilised by union leaders and are travelling the city in busses from school to school. Their objective at each venue is to terrify the school into closing and it has been successful. Several of my family are in the teaching business and the stress of dealing with rumours and stories of where the mobs will next appear has been just as bad as the actual confrontation and police presence in helicopters and vans. The sole light-hearted point is that some of the chanting throng are armed with golf-clubs rather than pick handles. Presumably they have a tee off time booked for later in the day.
The tragedy of the SA mining industry gets ever more dreadful. This week saw the government admitting that even it could not understand the tangle of laws and regulations that it has imposed and it has (illegally even!) suspended the whole shebang until it can sort it out. No exploration or mining permit applications will be processed until the clowns at the department of mines grasp that exploring for minerals on a property where a mine has been operating for decades does not make any sense.
In the meantime it is reported that the government is “devising a labour-absorbing economic growth strategy” that will provide growth of about 7% per year. Oh dear. The sole thing a government can grow is its level of interference and regulation neither of which promote or encourage individuals to try and start a business of providing a product or service that they can sell to others. Just look at what the forthcoming carbon tax will do to the car industry and will not do for carbon dioxide.
Tomorrow, when events unfold in Soweto and John Smit collects his 100th cap I shall be on holiday. I really can’t face the ordeal of watching the ‘bokke these days. It is just too stressful. I shall either be fishing or if too windy, as seems likely, I shall fly my kite. I can only hope that the Ellis Park curse on the All Blacks extends to the FNB stadium. Only late tomorrow will I call somebody and ask them for the score. Here in the kingdom the logistics of getting from the test match on TV at home to Kings Park for the Province clash in just 10 minutes is causing much anxiety.
James Greener
20th August 2010

Friday 13 August 2010

WHO’S STEALING THE STEEL?

All over the world governments and similar meddlesome and larcenous organisations have for decades felt that their nation’s iron and steel businesses are too strategic to be left to the whim of market forces. Locally the appalling policy of political resource allocation, together with an incomprehensible loyalty points system of Bs and Es are extra factors facing the industry. This week ArcelorMittal published a self-congratulatory announcement from which it appears they are going for double platinum status in that loyalty program. The deal itself is worth R9bn and the list of beneficiaries include impeccably well-connected names, some of whom may well prove useful in the small matter of a difficulty that the company has over some mineral rights.
One rather timid “proper” analyst has suggested that this deal might perhaps dilute existing shareholder earnings a tad! This improper analyst assures you that it already has. Who do you think has paid for the expensive advisors and sponsors who, after a full year on the job, have come up with a deal that still refers to vague entities such as “a women-led consortium”? This suggests that the scrap for the spoils will go on for some time yet. Interestingly, the document also asks the government to guarantee that all the loyalty points that Mittal should earn with this deal will not be cancelled if, at some stage in the future, the prize-winners sell their shares and run.
With even the Standard Bank worrying that “pressure on public finance will escalate” those folk who enhance their lifestyles by nibbling on the public purse will have to take larger bites as the purse begins to shrink. This development has been noted by the numerous civil service employees who have been striking and marching and dancing in pursuit of better salaries. Their posters and spokesmen have pointed out the very large gap between even the official incomes of ministers and workers, although their complaint that a policeman’s wage packet weighs less than his service pistol is a bit puzzling.
Again the element carbon is grabbing the headlines. This story concerns a grubby bag of dirty-looking stones of dubious origin that was passed around at a dinner party. The party was held in South Africa in 1997 and was attended by grubby celebrities of equally dubious origin who are now squabbling in a Dutch court about whose motives and intentions was the purest when it came to dealing with these stones. Facts are in short supply.
Given the possible failure of global wheat harvests in the coming months perhaps there is an opportunity for those municipalities wondering what to do with that large area of well-irrigated flat space inside their new but little used world cup stadium. The local soccer sides have declared that most of the stadiums are too large for their purposes and they will be returning to their old familiar playing fields. A similar disappointing comment was made by City Lodge Hotels in their report this week. They are unhappy with the way FIFA’s buddies reneged on their promise to send hordes of fans to stay with them. Gradually the evidence is accumulating that playing host to the World Cup has not delivered untold riches to everyone.
Sentimentally, of course my supporter’s heart lies with the teams of Eastern Province whose Colours for shooting I hold with pride, but whose sporting representatives are today alas invisible. Therefore my more than 30 years of living and paying taxes in the Transvaal seem a worthy reason to support the teams of that province. But they do make it hard. For a moment there I thought they had the Sharks by the tail fin. Maybe in a year or so I shall be forced to make another change.
James Greener
13th August 2010