Some bears
are undoubtedly starting to waken from their hibernation. Folk are perhaps
starting to become concerned about the astonishingly high valuations that many
companies emjoy. Particularly ones with terrific products but scant revenue.
Bonds too are being revalued and yields are firmly shifting higher. The total
amount of debt in many important economies, nations and industries has long
been expressed in units too large for the average investor to grasp and so has
been ignored because those who should have been expressing concern didn’t seem
to be worried. But maybe now at last words like trillion are starting to be
understood. This may not be just another bear trap. It could well be the start
of a full-blooded correction and shake out. Tread carefully now.
Finance
minister Gigaba told an audience that the bail-out of SAA with R2bn was
“fiscally neutral”. Just what this means is uncertain but what is known is that
tax payer’s money has been transferred to an offshore bank to settle a debt.
The press dutifully recorded the distinction between repaying the loan from the
National Revenue Fund (NRF) because SAA had “defaulted” and the NRF providing
funds to SAA under instruction from a minister authorising “exceptional expenditure”.
Oh yes? Is this the fellow who will defend the Reserve Bank from the forces of
nationalisation?
Grammar
fiends should soon start to get worked up about the latest purveyor of deep
fried chicken. Popeyes (sic) Louisiana Kitchen has just launched in South
Africa, eager to benefit from this country’s insatiable demand for this kind of
fast food. It will take a great deal of very skilful marketing to shift KFC
from its near iconic status as both a food and an incentivising agent but Popeyes
arrival is a great confirmation of free market action. Students of colonial
history are wondering if a further four dozen flavours of fried fowl are still
to come.
Presumably
the example set by an innumerate president is the basis for the education bureaucrats
to suggest reducing yet further the required standards of maths in the nation’s
schools. This and similar earlier decrees are frankly criminal and deny children
any chance of entering a workforce. There is only a limited number of vacancies
for presidents unable to add and subtract. At the same time, the quite
reasonable idea that most pupils would benefit from learning an African
language (of which of course Afrikaans is one) was weakened by not being
accompanied by an explanation of where and when suitable teachers would be available.
The state really is not the right organisation for delivering education.
Even the name
raises concerns. Dongfang. This is the outfit that shaved a billion off their
opening price to supply Eskom with a huge piece of kit and yet was still way
over what the opposition quoted. Nevertheless, they got the job and a “secret”
R800m to be getting on with. No prizes for guessing where most of that contingency
fee is going to end up.
Definitely
none of it will have been used to pay for the tea and biscuits served at the
“launch party” for the 2018 income tax season. South Africa must surely be
alone with this bizarre idea made all the more so by the Soweto venue. How many
taxpayers do you know who were invited? The added insult is that the nation is
in the midst of an ongoing deluge of revelations about the serious misuse of
government money.
All manner of
big name international firms are discovering that despite looking and acting
like a 3rd-world dictatorship, SA still has a wonderfully free press
and dogged and excellent investigative journalists. And, of course, a
vituperative social media community. Outfits like KPMG, Bell Pottinger and now
McKinsey must be having second thoughts about their foray into Africa. There
are many citizens in this nation who don’t like others pretending not to notice
that they are supporting and abetting dangerous, hurtful and malign activities.
There is a
lot of excitement about tomorrow’s series-deciding clash between the All Blacks
and the British and Irish Lions (such an unwieldly name). But it’s definitely
not a world cup final as some claim but a great way to start a very full
weekend of couch surfing. Super Rugby, Wimbledon, Le Tour, a GP and a test
match at Lords where we have some local interest I believe. Oh dear, who can
fix the Proteas?
James Greener
Friday 7th July 2017
