Friday 24 June 2016

CARBON CAPTURE



That’s a sharp lesson in democracy. If just 634 751 people (a mere 1.4% of the voters roll) had voted Remain instead of Leave that would have changed the outcome of the British referendum. Whew. Proof that everyone’s vote counts even when you believe the result is a given. Hopefully the folk in SA are going to get that message and in August will do something to shake up the far too cosy status quo here. So now what’s going to happen? Of course no one knows precisely, but some fleet footed traders are having a fine old time taking advantage of the immediate reactions of unwarranted panic and indecision. Massive price swings taking place in currency and share markets and unfortunately some innocents are going to get injured when their “advisors” run them in and out of positions.  The markets will soon settle down into yet another “new normal” status as the private sectors look to confirm and perpetuate their profitable arrangements with counterparties regardless of which region they hail from. The closing down of those relationships which exist only because of political expediency, bureaucratic fiat and other people’s money should be welcomed.
South Africa is about to feel all grown up and responsible. It is introducing its very own Carbon Tax just like the big boys have. Despite the very tenuous evidence connecting the apparent changes in global weather patterns to the small increase in the carbon dioxide fraction in the air, the alleged risks have been a boon to revenue hungry governments. It is unlikely that very much of the money collected by a Carbon Tax will be used to research if there is really any modification to human development that might slow or reverse that growing fraction. But it is certain that public money will be spent funding jaunts for officials to fly first class to distant locations to discuss chemistry and engineering with peers who will be equally clueless. National Treasury has just revealed its draft regulations about how those wicked industries belching carbon dioxide may, through good behaviour towards other forms of this much maligned sixth element, reduce their tax liabilities. So yet more pages for the tax schedules and big fat carbon footprints on the nice clean rugs. Please recall that governments on the southern tip have been taxing carbon since the 1860s though. Diamonds. Just saying.
The Automobile Association believes that as many as 800 000 vehicles on our roads are either unregistered or not roadworthy. Surely not! How can this be when just this year car owners were told to take that giant step in the cause for road safety and prove where they live before renewing their vehicle licence. That’s just as effective in reducing the appalling accident rate as the appointment of a fellow convicted for drunken driving as the head of safety and security in Port Elizabeth.
How difficult and expensive can it be in this age of programmable computer controlled switch gear for the phone network to implement an integrated emergency number program? Twenty years ago we were watching TV programs showing Americans calling 911 for help and thinking that is good. Earlier than that even, Boy Scouts were taught how to find 999 on a rotary dial in the dark. But now comes the story that Wi-Fi rollout has higher priority for state money. Free internet coverage for everyone? That’s one to watch. Mind you after seeing (not on SABC though!) the unimpeded progress of looters in Pretoria demonstrating their rejection of a mayoral candidate maybe there is little point in having a number to call the cops. They aren’t much interested.
Bringing on in-form Lions players used to the Ellis Park oxygen deficit was a game-winning strategy last weekend for the ‘bokke. Coach Coetzee boasted of his experience of taking Cape teams to the Highveld over the years and he was correct. The air in PE however is not thin and the Irish are pretty steamed up. Maybe those of us with cardiac complaints should spend tomorrow afternoon listening to Mozart (proven to be therapeutic apparently) and not watching what will be a very tense affair. The cricket from Barbados tonight may be no less worrying though.

James Greener
Friday 24th June 2016

BRITISH LEAVE



This time next week we will all know whether the citizens of Great Britain have decided to remain in or leave the European Union. To the extent that any lists of economic and financial benefits and drawbacks of either decision are accurate and unbiased, the question is very complex and can be hotly argued. The simplest targets for those who want to leave are the numerous and sometimes wilfully misinterpreted raft of directives about everyday items and situations that people have coped with on their own for centuries. Any European taxpayer should rightly question for example the need for an official regulation that distinguishes between a jam, a fruit spread and a conserve. However, no one would like to end any or all of the beneficial trading and business relationships that have been forged in the last few decades of EU membership.  Provided of course that those links were mutually beneficial and not profitable for either party because of public subsidy, there seems to be no reason why the parties cannot simply agree to buy and sell in future without the blessing of Brussels. The one thing that is clear however is that a vote to remain indicates an acceptance of a totally unnecessary and unwarranted layer of politicians and bureaucrats. This is the real reason why the Leave vote must succeed.
Anyway this so-called Brexit business is providing a wonderful explanation for the recent bout of market weakness. The London index shed a few pounds more than anyone one else this week and demand for so-called safer assets has seen “investors” choosing to lend money to the US government for 10 years at a measly 1.6%pa. Surely no good can come of that? The price of gold has also been nudging up and recently sellers have been demanding and getting more than R20 000 a Krugerrand. Just think. Fifty of those coins is now a million rand!
There is a growing tendency to treat lightly all the days of the week in which a public holiday falls and nothing seems to happen for quite a long time! Except that politicians leap on to platforms to dance, sing and talk a lot of often inflammatory nonsense. Certainly the events 40 years ago in Soweto were dreadful and even today inexplicable and painful, but perhaps the theme of Youth Day should be one of looking forward expectantly. Not backwards resentfully.
With a mathematically guaranteed margin, maybe the casinos ought not to be sticking their head over the parapet to complain that the government has granted a 41st licence. Dragging out the 1995 Wiehahn Commission report smacks of scraping the barrel for excuses to deny a competitor who must have done the research to believe that they will attract sufficient punters. Mind you the government spokesman’s claim that they wished to “prevent the overstimulation of the demand to gamble” also looks funny. Does that mean our government wants to stimulate us a little bit to gamble?
It was inevitable that a compromise over the Voter’s Roll failing to meet constitutional standards would be made. Despite most voters having no address recorded on the Roll, the Local Government elections have to go ahead. The problem remains, however, that the boss of the outfit charged with running the election is a Zuma buddy and quite able to overlook discrepancies in the ruling party’s favour. It’s going to be a dirty, noisy and fierce scrap which should all but confirm the near irrelevance of white voters in the governance of this country.
Now that the northern hemisphere is warming up (next week is the solstice – just saying) and their sports season is well underway, choosing which Supersport channel is getting tough again. Some spectacularly savage scrapping among soccer supporters alerted me to the big competition in France. Then there’s the US Open, Formula 1 in a country I won’t try and spell and our Proteas making heavy weather of things in the Caribbean. Anything else? Oh yes. Wait. Springboks. Or rather 15 assorted chaps in green and gold ambling round a rugby field looking for something to do. Last weekend’s gathering at the TV to witness the humiliation against the Irish became rather messy when interest in the debacle waned in favour of removing bottle tops and corks.
James Greener
Friday 17th June 2016

Friday 10 June 2016

GRATING RATINGS



Ever since economists devised a method for measuring the pulse and temperature of a country the fellows in charge have promised that they know how to make it even healthier. The mere fact that every nation experiences ups and downs in this parameter (usually termed the GDP) glaringly demonstrates that this promise is impossible to fulfill and must be ignored for the bluster it really is. Largely oblivious and indifferent to the government’s hand waving and finger pointing, economies lumber on as the gross effect of every citizen’s private effort to improve their own circumstances. There are many shocking results in the detailed report of how our nation’s GDP declined by 1.2% in the first three months of the year but perhaps the most frightening is the admission that “General government services grew by 1.1% due to an increase in employment reported for central government.” Unsurprisingly all these extra tax eaters utterly failed to impress the wealth creators and so the second alarming figure in the report is that the country is using less power and water than before. The picture of our minister for public enterprises releasing a flock of white doves to mark the launch of an Eskom project shows just how clueless politicians are about what really has to be done.

Mind you, confusion is not restricted to the public services. The Lesotho Institute of Accountants has bought a pricy advertisement in the SA papers calling for expressions of interest in their programme for the “Operationalisation of Lesotho(‘s) Professional Accountancy”. Just what this might mean is unknown but there are warning signs that bureaucrats night be at work when it is revealed that this “programme” forms part of Phase II of the European Development Fund Poverty Reduction Budget Support (sic). Businesses interested in this task must submit a fewer than 15-page document electronically as well as six hard-copies, with both submissions to arrive on the same day in Maseru. Undoubtedly this will reduce the Institute’s paper and printer ink bill but it does raise questions about the understanding the accountants have about this modern interwebs thingy.

After all the anxiety followed by public expressions of relief that another ratings agency has deferred their decision about downgrading South Africa, it is worth recalling what this is all about. The key point is that like most counties SA borrows money in foreign currencies – principally the US dollar. The “rating” published by these outfits is just their (frequently wrong) judgement of the borrowing country’s intention and ability to service that loan. This means it must earn enough foreign currency from its trade with other nations to cover the interest and principal payments at the appropriate times. While this is a rather obviously binary process (pay / don’t pay) the ratings agencies, to their benefit, have drawn it out into a lengthy scale from triple A down to Cs and Ds with an alphabet soup in between. At some arbitrary point on this scale a line is drawn and ratings below that line are termed “junk status”. The sole impact of any rating on a borrower is that it provides a guide to what level of interest a lender will demand. The painful irony is that high risk borrowers are asked to pay higher rates which only exacerbates their situation. But clearly if a payment is skipped, it matters not a jot what the borrower’s rating was. The lender is left whistling for his money and darting dirty looks at the ratings agency.  Those who remember our infamous “debt standstill” appreciate that South Africa has form in the “don’t pay” arena and our rehabilitation from then shows it is possible to regain the lenders’ trust.

Did AB Inbev have a chat with Walmart about their Massmart deal in South Africa before making a play for SAB? This latest mega merger is also wading into crocodile infested swamps over employees’ demands. South African labour laws and worker expectations are not for the faint hearted foreigner and undoubtedly battalions of document-toting lawyers are racking up substantial chargeable hours and air miles.

At least the Newlands test tomorrow against Ireland will not be played with a pink ball although it looks as if the Proteas might be about to meet the Aussies in Adelaide with one. It’s all so difficult for us traditionalists. Formula 1 racing under lights is also horrible.

James Greener

Friday 10th June 2016
I saw a leprechaun in Griquastad!