If dividends are included, the JSE All Share index is standing on a
year to date performance of 20%. Of course it is like the parson’s egg where
some sectors have been excellent performers but others have been stinking. The
index itself seems content to lurk
around the 37 000 level at present but
assuredly some news whether good or bad will happen along in due course and
probably push things up some more, This
week it was revealed that consumer inflation had climbed a bit and so the
attraction of keeping cash in the bank diminished again.
Unlike the USA,
it is not really company reporting season here but some very pleasing numbers
have been released. The smart and nimble are still finding customers and
clients who need their goods and services and, importantly, are actually paying
for them.
How they are paying came back into the spotlight as it seems that
many consumers are faced with the dreadful need to have to borrow to put food
on the table. There is an enormous socio-economic catastrophe brewing up here,
and if and when the government tries to do something about it, their likely
recourse will be to grow their programs of redistribution. However, as revealed
yesterday, there is a problem with that plan. The goose’s golden eggs are
shrinking and revenue is not flowing in as strongly as hoped. Capacity and
interest in funding the increasingly corrupt and inept state is on the wane.
During the so-called medium term budget Minister Gordhan rearranged
the departmental money allocations and revealed some interesting trends. Losers
included Trade and Industry, Human Settlements and Public Works. These last two
presumably are surely where the “massive” infrastructural spend is supposed to
be coming from, so that’s a puzzle. Biggest winner proportionally was Sport and
Recreation who obviously had been round at National Treasury with a very good
story about why government should help fund a tournament for the continent’s
football players. Failure by the sportsmen to sell enough tickets or squeeze
sufficient from their sponsors seems like a poor reason to cosh the taxpayers The Department of Transport was assigned an
extra R820m and without reading the fine print I wonder if this might have
something to do with the ongoing Gauteng toll road debacle. That one seems to
be reaching some sort of resolution as the trade unions are backing off, but
still the mini-bus taxis appear to be exempt.
Alarmingly, the government believes that the number of cases
deserving social grants will grow by nearly half a million a year for the next
several years. By 2015 over 17 million hands will be outstretched towards the 5
million odd taxpayers. It’s notable that this is the item of government
expenditure that Gordhan believes will grow the fastest. Also growing fast are
the numbers of state employees, many of whom, except for the size of their
monthly stipends, are largely indistinguishable from the grantees. Wouldn’t it
be wonderful if governments stopped trying to do everything for everyone and
just let us all get on with our lives.
The pleasure of the internet as a source of information is that one
can filter out all views counter to ones own prejudices and revel in reading
the ranting of like-minded cynics. This week I was able to unearth a really
powerful and substantiated analysis of the US share market. Much of the
document concerned the quality and reliability of the data we use to make our
decisions – a very dear topic of my own. Things, the writer concluded, are not
as all-fired wonderful as the populists would have us believe and there are
still massive financial tensions in the USA which Federal Reserve rescue
programs like the current QE3 only disguise but don’t cure. Ultimately buyers
of shares will realise that the future streams of income they hope to be buying
into are turning out to be far less than they were told to expect and asset
prices will fall.
Now that the Lions have fallen ignominiously from the SA rugby scene
until who knows when, it is necessary to inform readers that the Currie Cup
like me is moving to Durban.
James Greener
26th October 2012
