Friday, 3 March 2017


There is no reason yet to worry that RSA is going to default on its debt payments and therefore it remains investment grade (see below) but it would be foolish to ignore the fact that state revenue collections have slowed down dramatically. This may form some of the background to the acrimony between Minister Gordhan and SARS boss Moyane. The collection rate is running at only R1.1 trillion a year which is R130bn below budget! This a very big number and a hard gap to close, so is doubtless the reason we are seeing depurate measures like charges of collusion which might yield some fines money.
The Competition Commission is now hunting Unilever and threatening them with a fine of 10% of their turnover. There may or may not be a case for their suspicion but frankly most instances of real collusion would soon be laid low by competitors if the state did its job and made it simple and cheap to start and operate new businesses. Juicy profits always attract emulators. If whistle blowers could rely on state protection and support, someone with inside information is way more effective at exposing lawbreakers than any building full of envious socialists. These attacks are not really about protecting the consumer but about raising revenue.
The revenue shortfall is probably also why the rumbling about forming a BRICS ratings agency has started up again. Presumably the assumption is that a home referee is more likely to maintain us at investment grade even if we are clearly drifting offside. The traditional ratings agencies are analysts who tend to believe in their own myth that they are better at forecasting the future than anyone else and so deserve respect. Their record is not at all perfect. There are many cases when the traditional agencies have got it totally wrong, just like mere ordinary analysts.  It’s not widely remembered that most borrowers pay the agency a fee for the rating and that no matter where in the lingerie department spectrum from AAA to DD a rating falls, the lender is the sole risk taker. The arbitrary distinction between investment grade and junk status lies between BBB and BB but this, together with plus and minus signs and “outlooks statements” just disguises what is fundamentally a yes or no decision. While a tame hometown agency might dispense “A” all round, it will matter nothing if the interest payment is not made or the capital is not repaid.
No matter what the economic environment might be, businesses that provide catering and clothing to political parties must be doing well. Event organisers understand clearly that  policies and rhetoric are rarely enough to ensure a decent turnout and that handouts and feeding are expected.  Everyday there are pictures of folk wearing garments that reflect their allegiances and the purpose and date of their current exciting gathering. Later in the day either pieces of a brightly decorated cake the size of a house or buckets of deep fried battered chicken from Kentucky signal the end of proceedings. It is puzzling to outsiders that government didn’t play a more prominent role in the job-destroying squabble about the chicken industry.
Now it’s the lorry drivers who deliver coal to power stations who are objecting to Eskom buying power from the renewable energy businesses. Probably correctly, they reason that less demand for coal threatens their jobs. They claim that 1 million workers could be affected.  Leaving aside the matter that we really ought not to be using roads for doing too much steam coal delivery, this number seems a bit fanciful but they nevertheless made a great nuisance of themselves by severely disrupting the traffic in Pretoria to draw attention to their views. So far, the objectors to the forthcoming sugar tax who also claimed massive job losses have not taken to the streets but wait until they feel the effect of the tax on their lunchtime staple energy source.
Sadly cricket has a tarnished history when it comes to insider trading and the astonishing sequence of massive defeats and wins for the Proteas in New Zealand dusts off memories. Is it really such a funny game? I expect to hear a lot of muttering down at the bar this evening about the Sharks, but I’ll try and cheer them up by reminding them about the Lions win. And then hopefully we’ll all have good news  coming from the Las Vegas 7s. Now that’s a funny place for rugby.

James Greener
Caitlin’s birthday 2017