Friday, 24 October 2014


A chart of the various JSE sector indices for October so far, resembles a bowl of spaghetti with no emerging trends after the sharp decline last month. Despite the mild panic that broke out last month, it is interesting to note that very few prices have lost more than their gains since April this year. Real bears can wipe out years of work. We have yet to learn if this is a real bear.
Although it is customary to wail about the weak rand, the fact is that our currency is presently at just about its best levels this year against all the major currencies. But not of course against the US dollar which continues to be the beneficiary of some form of “flight to safety”. It’s fair to assume that the dollar’s strength is a consequence of the end of the Federal Reserve’s policy of flooding the market with crisp new notes. In the meantime the foreigner’s cash, after being converted to US dollars, is being loaned to the US government, a conclusion that can be drawn from the rather steep fall in bond yields in that country. Investors now have to be content with a 10 year interest rate of less than 2.25%. It’s hard being a saver in this world.
For some unknown reason, what should be a rather simple and low key mid-year update of the fiscal scorecard has blossomed into a grand event that requires the Finance Minister to buy a new tie and plonk down a 63-page “thud report” (plus annexures) on the parliamentary podium. The main Budget speech is only 4 months away so it seems all quite unnecessary. Only the saddest of economics wonks will wade through this tome which Minister Nene promised was full of strategic frameworks and road maps. The fact is that if the numbers can be trusted, out of every R100 that the government collects it spends about R114. The difference is obviously covered by borrowing and if nothing changes the total debt gets ever larger and people begin to notice and point fingers. The worst fingers belong to the ratings agencies who can at the jab of a keyboard alert the world to what’s going on and cause lenders to be more demanding.
A great deal of airtime and newsprint has been sacrificed on the news that the Minister feels he has no option but to make pips squeak all round. Taxes up and state spending down is the message. Very interesting is the threat to cut off at the knees many of the appallingly run parastatals and even sell off the family silver. The Post Office strike may seem like a picnic when the public service unions get the gist of this one.
Strangely, little seems to be made of the fact that while expenditure is increasing at around 8% pa, the revenue figure is showing almost 11%pa growth, so given time (about 7 years) the gap should close anyway. Presumably real economists have reasons for discarding such a simplistic yet optimistic sum. Nevertheless any attempt to curtail state expenditure – particularly the suspected massive sums lost to corruption and inefficiency -- must be welcomed, and we shall all watch Minister Nene’s new career with interest.
Here in Durban a dozen years ago it was decided that ratepayers, residents and anyone wanting to find their way around the city needed to be punished and seriously inconvenienced for their alleged previous crimes against humanity. The street names of most of the important thoroughfares were changed. While the significance of the new names (like indeed the old ones) is generally unknown to anyone except students of local politics, the nominees probably deserve their recognition. However, a wise authority would have allocated them to new developments and not thrust them onto the existing network. Further, it should be expected that the promoters of the new names will take care to get the details of their heroes correct. But Durban’s main city boulevard now requires yet another set of even longer street signs. Research and custom has revealed that Dr Pixley kaSeme Street should correctly be Dr Pixley ka-Isaka Seme Street. Can’t we just find the old West Street signs? Nobody now recalls if it is named after a local worthy or a merely a compass direction. It really is not offensive and is easy to remember.
I think I can safely wear my Lions cap for the Currie Cup final tomorrow.

James Greener
24th October 2014