And still the markets surge northwards.
Unless company results or news are really shocking, investors appear happy to
support share price growth that is far greater than earnings growth. Buyers are
tempting sellers to part with their shares by bidding a price higher than the
previous trade. The JSE in particular has seen almost no new large companies
apply for listings for several years and so the total number of listed shares
on the market has been fairly constant. This also must be contributing to the
price rises. At some point, however, something will trigger a widespread
concern about the disconnect between price and value and a critical number of
sellers will offer their shares at the last record high price and the buyers
will stand politely back. Matters could then easily turn ugly.
The restrictions on ministers spending
public money for personal items are very welcome but the effect is more
cosmetic and vote-catching than financial. Remember that the government now
whistles through well over one trillion rand a year (that’s a thousand billion),
so savings of a few million show up only in the seventh decimal place! The state’s real budgetary problems are
numerous and elsewhere. Not least is the fact that they appear to be running
out of people and businesses to tax. The
sponge has been squeezed dry. There are probably now few significant tax
evaders and there is not much capacity left to increase the take from those who
are irrevocably entered into SARS’s little black book of names. A lot of faith
is being placed on the misguided forthcoming Carbon Tax. Please don’t anyone tell
the politicians that Oxygen is also very common and dangerous and needs to be
controlled.
National Treasury’s now customary praiseworthy
and amazing transparency about their planning also reveals worrying
developments arising from spending more than they collect. This year the expenditure
on State Debt is R100bn. In three years time it is forecast to be R135bn which
is annualised growth of more than 10%pa. Not much else in this country is growing
at that rate. Except for regulatory authorities. Minister Gordhan squeezed in
the news that two new ones for the financial sector are coming soon. Oh dear.
A delightful frostiness is developing
around the world as it turns out that President Obama’s spooks have been
listening into the phone calls of national leaders who they decided were
significant. Firstly there is indignation about their implied minnow status from
those who weren’t bugged. Probably Obama had scant interest in JZ’s calls to
Nkandla to alert the clan about which wife he would dine with that night. Then
there is the outrage from those who were spied on at the arrogance and
effrontery of such an unethical and despicable breach of trust. Identical
charges made against Mr Snowdon, the alleged US whistleblower who revealed what
the spooks were up to, should now be seen in a rather different context.
Even or own leader’s minders failed to
steer him away from making a speech about how we should discard our African
attitudes and learn to accept the costs of living in a vibrant and exciting
world-class city. In particular his comparison between the undeniably fine
freeways around Joburg and the supposedly inferior roads in Malawi has gone
down very badly. Particularly in Malawi. Pleasingly, however, the
gaffe caused the reappearance of presidential spokesman Mac to tell us what JZ
really wanted to say. These explanations are always great fun. It seems,
however, that JZ meant exactly what he said.
Why won’t the International Cricket
Council grasp the concept that test cricket rubbers need to comprise an odd
number of matches? Also annoying is their hypocrisy of allowing a country with
an unsavoury political regime to host home matches in a third country. The pair
of tests being played out against Pakistan
by the Proteas at venues around the Persian Gulf
is nearly meaningless. Without the ground staff and players’ families, the
crowds would number in single figures. Also pretty unsavoury are the people at
the ICC responsible for tampering with the test match calendar for matches
between SA and India.
James Greener
25th October 2013
