Friday, 3 October 2014


This bear is growing up rapidly. Just a couple of weeks old and already he is inflicting some terrible damage and has clawed 7% out of the JSE’s All Share. Furthermore he has brothers who are ripping apart other markets including bonds and commodities both here and overseas. The reasons being offered for this change in attitude by investors are as numerous as they are inventive. A particularly interesting one is the sudden fall from grace of a man who managed the world’s largest bond fund in the US. Somewhat inevitably his market timing luck eventually ran out and the departure of both him and very many investors from that fund is said to be weakening the bond markets globally. Less easy to explain is why the dollar price of gold is weakening so swiftly.
In its current mood the market treats just about every published data point as bearish, no matter that a few weeks ago that same number might have been hailed as wonderful news. Against this trend however was the reaction to the news that almost 61 000 new vehicles were sold last month. Intriguingly rental companies absorbed almost a quarter of them. If they are seeing customer growth why can’t our national airline make money flying people to places to rent those cars?
Probably a number of those new vehicles were minibus taxis being delivered to the Western Cape. In that province fines for traffic related offences, such as unroadworthy vehicles have been raised very substantially. Naturally there has been an outcry about this, with claims that the fines will “cripple” the industry. The method that taxi drivers can use to avoid this painful outcome is obvious. However the news that the province has yet to collect R3bn in unpaid fines suggests that most tickets are utterly ignored anyway.
The slew of data this week included the government’s cash flow numbers which revealed that there is still absolutely no attempt being made to trim expenditure and that out of every R100 the state spends, R17 of that has to be borrowed. While on a personal scale that seems rather uncomfortable, economists have a variety of techniques for disguising this fiscal deficit so that it doesn’t appear all that bad. Great store is put on the fact that the government (unlike the rest of us) has no difficulty repaying loans because if needs be it can simply print the interest and capital money – provided of course they are in rands. Foreign loans are far trickier 
Another data point which was definitely worrisome concerned the so-called trade balance. The good news is that the nation’s appetite for imported goods has stabilised a bit, but the income received for exports has contracted. In aggregate over the past 12 months we received about R187bn less than the imports cost and this figure too is growing steadily. It would be so refreshing if for once politicians joined the dots and noted that their interventions are not working and that it was time to try something different. Like not telling everyone what to do and how to do it.
There are many aspects to the news that Johannesburg wants to introduce owls into areas of their World Class African City to try and control the exploding rat infestation. The first is that the rats must be particularly nasty and unpalatable for if they were not, the owls would long ago have moved in all on their own. Secondly it is disgraceful that the authorities are delinquent in executing this core responsibility of keeping the city clean and free of rubbish. Municipal service is undeniably humdrum and mundane but it is essential which is why the rest of us agree to pay rates and employ someone to do those jobs.
I am so glad I ignored medical advice and watched the final 20 minutes of the Wallaby game last weekend. I’m not sure if there will be an equivalent opportunity to switch on the All Black match tomorrow.
James Greener
World Smile Day 2014