The great
sport in investing is to mock and deride confident predictions that go wrong. How,
for example does one explain the rand on a 12-month high when there are so many
(apparently) bad news stories to scare off buyers of rands – and equally -- sellers
of dollars. The share and bond market indices (as opposed to the suspect
foreign purchases and sales numbers) suggest that it is the latter the
foreigners are going for. Seeking yield
perhaps?
Anyone
looking for our army must come to Durban. Judging by the number of blue light
motorcades whizzing along the freeway, all VIPs including Number One are doing
just that. Our city is hosting a military jamboree culminating in Armed Forces Day
next Tuesday. There’s great excitement in the town although the troopies
billeted in a vast tent city down at the beach front will be hoping that
Tropical Storm Dineo doesn’t come too far south and flood them all out. Preparations
have included the nation’s submarine cruising past the beaches its fighter jet
whizzing past and a flight of seven helicopters circling for hours over
Virginia airport. Even the Silver Falcons aerobatic team have turned up after
reportedly being grounded last year because of lack of funds for fuel.
Fortunately
for the generals, funds for the shindig are coming out of this year’s Budget. The
very next day Minister Gorhan will present the 2017/18 budget and this kind of
showing off could well be axed. Acres of newsprint and screen space have been
devoted to pointing out that there is scant wriggle room on the Revenue side
and taxes targeting the “rich” are inevitable. It’s not of course popular to
suggest that reducing spending is also a strategy. But the non-job civil
servants won’t leave unless there are higher paying private sector jobs. So here’s
an idea. Place the lowest paid one third of all civil servants on the much-hailed
new minimum wage and reduce the top paid wage bracket to just five times that
level -- a ratio much touted for the private sector by the theorists. Use the
money saved to train the many who quit to begin filling the 180 000 empty
skilled posts. Let’s see how these
liberal notions work in practice hey?
But the
alarming development in the real world is the move to raise revenue through punishments
and fines for impossibly vague “crimes” by private sector enterprises. Recently
there was the attack on the construction industry for supposedly ripping us off
while building the many stadia required for the 2010 Soccer World Cup. No one
responded to the patient explanation that without at least some co-operation
between the companies the huge project was never going to be completed on time.
The state was far more interested in netting the R1.5bn “non-admission of guilt”
payments from the players. Shareholders did not do too badly either. Prices at
the time rose agreeably.
And now the Competition
Commission is shocked to learn that banks have traders dealing in the most
transparent and liquid market in the country who are driven by “unbridled greed”.
Well yes. That’s how private enterprise works. Admittedly a market trading room
is an extreme example and in the absence of honest, experienced and informed supervisors,
competitors and clients, dealers will often push their luck. Even if counterparties
and competitors are at first complicit in the dodgy deals someone will in the
end become even more greedy and blow the show apart. Bank management and
shareholders also benefit from ridiculously profitable trades and are reluctant
to ask questions in case they get an answer they can’t understand. Banks do
have a poor record in detecting rogue traders timeously but they catch up eventually.
Interestingly, the SA Reserve Bank and the Financial Services Board have said
that they found no evidence of serious and widespread misconduct in the South
African foreign exchange market. Is the Commission more interested in a possible
multi-billion rand penalty than in facts?
Since it has
worked spectacularly in today’s T20 victorym one must not be too scathing about
the new pyjama outfit for the Proteas. But what happened to the green? Why try to
make our lads look Australian? Other good sporting news is that it seems
certain that the Commonwealth games will not come to Durban in 2020 and the
Umgeni is infested with paddlers taking part in the Dusi canoe marathon. It
must be hot in the valley though.
James
Greener
Friday
17/2/17
