Friday, 6 February 2015


Just about every market index is bouncing around like a yo-yo. On the bull side are floods of cash washing over many economies from frantic central banks desperate to make people feel rich again. On the bear side is the plain fact that the supply of almost all commodities, especially energy and even the food ones, seem to be swamping demand and prices have fallen sharply. Producers of these things are feeling the pinch and it shows in the share prices. As always the sensible thing to do is mostly nothing other than keep an eye out for buying opportunities when a particularly bad dose of pessimism washes across the companies that are well managed and have great brands.
Broadly speaking the “austerity” that everyone keeps moaning about, especially along the bottom edge of Europe, is just a government decision to reduce the amount of money that they can give away to those citizens who claim the loudest that they deserve it. This decision is not the result of careful debate and consultation, but instead is the consequence of that government running out of money!
A very recent development in Greece where “austerity” had become especially unpopular is that a political party, with an identical lack of arithmetic and economic skills as our own EFF fellows, has been elected to power. Unconcerned by the paucity of tax receipts compared to desired spending programs, the new government has enthusiastically resumed the business of giving money away and thus has banished “austerity”. The reaction is that anyone who has recently lent money to Greece (most notably the diligent and prudent Germans) has quickly decided a) that they won’t do so any more and b) to sell at any price the IOUs (aka Bonds) they bought from the previous Greek government. This sell-off has caused Greek debt prices to collapse which is the same as saying that yields are soaring. Contagion is being felt in may other wobbly economies and even our own debt yields are pushing higher – though that may also be a result of the difficulties in our electricity supply and an absence of sensible political leadership.
This Euro zone debacle might be fun to watch from the distance of the southern tip was it not for the fact that our TVs don’t work. The power failures, caused by the ineptitude of the national electricity utility Eskom, have moved up several notches in their frequency and duration. Large swathes of the nation are without electricity for hours on end. There is something quite soothing about preparing to cook supper on the braai and to sip wine by candle light without the background hum of appliances but it will soon get annoying when the drinks get hot. Businesses and others who need power all the time are not so chilled and it is especially irritating to learn that nothing is being done about the widespread and blatant theft of electricity. More than one person has suggested that authorities should simply shut down supplies to any substation that has even one illegal connection trailing away across the veld. That should also occur in areas where electricity accounts are being simply ignored. Let's see if peer pressure by the law-abiding has any effect. Or are we all simply content to grub around in the dark at the level of the thieves and malcontents?
Apparently last year about R320m was spent in SA on "super-luxury" watches. For a nation where time and punctuality are not thought particularly important that seems rather odd.
Matters got rather rowdy at the AFCON tournament in Equatorial Guinea when the home side lost the semi-final (which by some accounts they were lucky to reach). It may however be mild compared to the sports we could witness next week in parliament when JZ is scheduled to deliver a State of the Nation Address. In a rather boring repeat of the demonstrable falsehood that they have come to the chamber to work, Julius Malema and his rabble will likely disrupt proceedings again. In itself this may be no bad thing because SOMA too is likely to be full of lies about achievements and progress the government have chalked up.  It would be fitting if the lights went out somewhere during the expected melee.
James Greener
Friday 6th February 2015