The markets were quick to see that the
Federal Reserve’s planned reduction in the rate of cash injection into the
system was actually so small as to pose absolutely no threat to the continuing
binge. The taper was a tiddler. And so the share price bull trots onward and
upward even here on the southern tip. The currency, however, is experiencing a
quiet but very severe mauling from the bear. The rand will now buy just 80% as
much foreign currency as it did a year ago. It is superfluous to say this is
alarming. People clearly no longer want or need rands.
This development has prompted brought the
rating agencies to threaten or even hand out downgrades. Just to remind
ourselves, these agencies are commercial businesses often paid by the very
institutions they are rating. In general they have access to no more data about
the financial health of that institution than you and I could find with a bit
of effort. Their track record and integrity are not spotless and they have a
weird multipoint scale to forecast what is actually a simple yes or no event,
i.e.: Will the institution be able to repay the capital and interest on loans
made to it? That said, it is probably
true that the financial landscape ahead is getting rather rocky. Particularly
for public institutions whose customers (ratepayers and utilities consumers)
are becoming really bad about paying their bills. To what extent this is a
result of that well worn phrase “culture of entitlement” or is a simple
consequence of the reality that costs are outstripping incomes is not easy to
determine. The amount of the outstanding payments to municipalities is very
large and there is no hope of it ever being collected.
Already the pre-election political
squabbling has begun and no one is putting forward any plans about getting the
country onto an economic growth path involving a far smaller government and a
cherished and supported private sector. So far the differences seem to be about
the fine details of equally ruinous and stupid policies of confiscation,
retribution and distribution. Even those who should be capable of doing the
simple sums involving wealth, population and number of taxpayers are choosing
to ignore the facts.
In this atmosphere there is scant chance
that the excellent recommendations of the Independent Commission for the Remuneration
of Public Office Bearers will get adopted. The Commission feel that any public
employee earning above a million rand per year should not receive an annual
increase. What they should have added was that any minister or mayor objecting
to this would be welcome to exercise their economic freedom and seek a private
sector employer able and prepared to pay them what they believe they are
worth. There might be some terrible
surprises in store.
Those dreaded gantries looming over the
roads in Gauteng
must be spewing out gigabytes of data. Reportedly it is possible to interrogate
a website and for any registration number get a report of gantries passed and
tolls incurred. If so, this must be providing very interesting information for
anyone wanting to check up on who has been where and when. So far, however, the
comments about the operation are mainly that some travellers are getting legal
threats to pay before even receiving an invoice. And when will some revenue-hungry
traffic department realise that the system can easily be used also to calculate
average speeds and target motorists for that as well?
Main item for discussion at the bowling
club this evening will surely be the report that the Sharks are thinking about
adding fellow Eastern Cape
native Luke Watson to their squad. Those who have already proudly paid for
their season tickets to Kings
Park might be rethinking
their purchase. Hopefully by this evening as well the scenes from Wanderers on
the TV in the bar will be more optimistic. Five wickets for 16 runs is not what
one expects of the world’s top test side. The Aussies must be licking their
lips.
James Greener
Friday 20th December 2013
