HEY ALEXA – FIRE THE GOVERNMENT

A prominent opposition politician has suggested that a tax boycott might catch the government’s attention. Wouldn’t it just! Already words like treason are being bandied about – a term not once mentioned when the outright theft of public money is the topic. We have all however, been placed in the very uncomfortable position of recognising that probably almost 20 million citizens are now hugely dependent on a regular state stipend and if that were to cease, insurrection would be very likely.

800 000 American civil servants are being remarkably tolerant of the selfish and stupid behaviour of their employers in sacrificing their well-being to score political victories. Not a single toyi-toyi down the streets of Washington? How quaintly restrained. With all the talk of what computer based Artificial Intelligence can achieve, it is time to boot out most of the world’s seated paper-shuffling tax eaters. Those like teachers and nurses who stand when serving customers get to keep their jobs and a pay rise.

A perfect example of clueless government was aired this week by Home Affairs Minister Siyabonga Cwele, who announced the introduction of a National Identity System (NIS) which will replace the current national population register. “NIS would be supported by a multimodal automated biometric identification system”. This would be my sixth ID document, but the multimodal bit has me worried.

So, stuff in December was a tad cheaper than in November? Well that’s what Stats SA says. Particularly for the non-durable goods group which presumably is largely all about food and fuel and on average comprises 35% of our expenditure. This and hundreds of other fascinating figures can be found in a monthly official publication – just one in a series of amazingly detailed and candid documents about the nation and its behaviour, that are available. It’s a very laudable and almost unexpected product from a government that the news reports would like you to believe is utterly consumed with stealing from the public purse.  As usual, however, the inflation numbers hardly ever agree with what we remember happened when it was time to settle the credit card bills.

A similar document reveals that our penchant for imported goods is picking up again after a period when the trade balance (the difference between imports and exports) narrowed almost to zero. This statistic too is hard to reconcile with personal experience and observation and on a monthly basis is astonishingly volatile. However, when one reads that illegal gold mining volumes are now possibly on a par with formal production, it suggests that certain mining production statistics need quite large error bars.

President Cyril made some astonishing claims in Davos about inward investment flows which will have sent bankers scurrying off to check the deposits ledgers to see where its all gone. Before he could give some more details the buffalo farmer raced off to India for more chin wags. One idly wonders if the name “Gupta” ever comes up in these meetings? After all, this was the family that saw to it that SAA closed down its route to India in favour of an Indian airline in which Zuma’s pals had an interest.  Certainly, the now ancient and increasingly irrelevant Mahatma Gandhi link between the countries is wearing out as a discussion topic.

The tennis coming to us from the Australian Open in Melbourne is a frenetic razzmatazz. The organisers do battle with time zones and some incredibly hot weather to try to reach the big overseas TV audiences when they are home from work and settled down with a beverage. And to fill the gaps there’s an unsettling mixture of dramatic highlights and odd scheduling. Also annoying is the obsession shared by doubles players for continual personal contact. The game for four people is a very entertaining format but the rapid sequence of touching, signalling and whispering is distracting and irritating. More serious though is the Proteas’ habit of taking the long way around to secure victory. Relying on the middle to lower order to set batting records is very nerve wracking.

James Greener

Burns Nicht 2019

ANOTHER CROOKED MAN IN A LITTLE CROOKED HOUSE

A US investment guru has declared that the bear is now finished with the markets and it’s happiness all round from here on. Well that’s rather nice, but the bottom of a bear market is rarely that obvious and often happens only once all the wise men have declared that it’s the end of shares as we have known them and it’s time to go and grow vegetables. Another typical indicator is when dividend yields, as opposed to their more flaky younger brother, earnings yields, rise to be comparable with government bond yields and other near riskless investments. As always, however, this time it’s different. We are at a place where news travels at the speed of light between people who might have huge holdings of currencies that don’t exist but have value because the computer says so. And the world’s largest economy is headed by a man who believes that his allocation of assets (usually to people who are already well off) is better than what a truly free market would deliver. We have had “stress tests” and all manner of snooping through the numbers and once again the notion that some organisations are “too big to fail” is being believed.

And so, another ANC linked outfit that most of us had never heard of, gets exposed as a conduit for distributing mostly public funds in unusual directions. Its website claims that the Bosasa Group is “a multi-functional group of companies that has developed many of its own specialized techniques for business services”.  No kidding! This might be a tad untruthful since bribery and corruption have been around for millennia. But it has become apparent in the last few years that down here on the southern tip these activities have reached gold medal standards. The amount of folding money that is being sloshed about in secret (presumably the aforementioned “specialized techniques”) must comprise a significant fraction of the Reserve Bank’s published total of notes and coin in circulation. And if these transactions were to be recorded, the nation’s GDP would also be appreciably larger.

It is rather embarrassing for those of us who made careers in financial research to learn how naive we were to believe that it is possible to understand, analyse, interpret, and what’s more forecast, the future levels of significant economic parameters and company results. The old dictum of “follow the money” is as true as ever but when the money is rolls of cash that would choke a whale let alone a horse, it is foolish to trust most published numbers. And now that so many of the gatekeepers and umpires have misplaced their arithmetic skills and moral compass it is even worse. So many of the source documents really are “fake news”.  More telling and useful is the length of the price list in the motoring pages of luxury car models. The beneficiaries of these illegal and unrecorded flows use their cash to buy not only a comfortable life. They spend huge amounts to buy votes. T-shirts and KFC for eighty thousand makes a hole in anyone’s wallet, so it’s just as well there are sympathetic business contacts who understand how things work.

Now that Donald Trump and Theresa May aren’t going to Davos there is going to be more space for delegations like our own to send even more folk to fly the flag (in fact, the scarf) and shake the slotted tin. There have apparently been training sessions for delegates to ensure that they all sing from the same song sheet. Lots of uplifting verses about poverty alleviation and job creation. Not a line about the need for bribes to secure a contract. The fact that not a single conviction of anyone suspected of corruption has yet been made will however catch the attention of the many shady characters haunting the bars of the World Economic Forum. The perfect investors.

It seems that the Protea’s coach Ottis Gibson has written into his contract the explicit requirement that he and the lads win the World Cup this year. Wow. No pressure then? Judging by the way they blasted through the Test matches, Ottis seems to have got the team already thinking about the 50-over format.

James Greener

Friday 18^th January 2019

WHO’S YOUR DADDY?

This letter has far more trivia than investment insights simply because the markets are consistently unpredictable, while celebrities and luminaries are consistently foolish. The unpredictability arises from the markets being the sum of an uncountable number of human decisions each of which is taken in the hope of delivering a beneficial and rewarding outcome. And this is why so much and too much legislation and regulation fail. Even before the intention and effect of a leader’s attempt to improve something is understood, individual’s reactions will begin to nibble away at the foundations of that decision and alter the outcome in an unpredictable way.

Take for example South Africa’s failed bid to be the replacement host for the AFCON soccer tournament this year. It seemed like a given simply because we have all those underused World Cup venues waiting, while the original host Cameroon wasn’t making enough progress in getting stuff ready. But out there was a committee waiting to exact revenge for our government backing totally the wrong horse in a messy and distant political squabble. Egypt is the host .

It is indeed all very civilised and modern to suggest that fathers need time off work to bond with their new-borns and apparently legislation now obliges employers to grant fathers at least 10 days of paternity leave. In a country where around half the mothers don’t know the whereabouts or even the identity of their infant’s father this is going to be interesting. At least two consequences come to mind. Unless the law insists on the leave claimant proving monogamy, those active and virile chaps (like our ex-president) are going to be permanently on paternity leave. The good news though is that this might provide a method for abandoned single mothers to put in a child-support claim on the salary of the new-found dad. So maybe there’s a natural limit that will come into play. But equally it might provide an incentive for the timeous registration of new births which is another area where we as a nation are failing to keep up. It’s just about this time of year when we read of schools having to cope with many more new pupils than the Home Affairs records suggest would pitch up.

The ANC is 107 years old, a fact that for some reason it is especially keen to make here in the Durban area despite it being probably amongst its safest for a majority in the forthcoming election. As well as flying a helicopter, which towed a huge banner portraying President Cyril’s face, past the estimated 1million beach goers on New Year’s Day, a sculpture garden of party worthies has been opened. A bakers-dozen life-size statues of the illustrious names are arranged in a well-tended garden alongside a busy freeway that leads into the city from the north. The presence of some discretely positioned portable toilets shows that the organisers expect and welcome visitors to stop and visit the tableau. And this they are doing in numbers, parking in the emergency lane on both the carriageways on this arterial route. So far this invitation to break several laws about freeway driving has escaped the notice of the traffic department but hopefully nothing more serious than road rage will occur while this hazard is in place. Our national road death statistic is deeply concerning. The latest idea on solving this problem is to introduce driver testing at the time of the five-yearly driver’s licence renewal, though how this will be accomplished when there are insufficient testers to cater even for the newcomers to the driver’s pool has not been explained.

An undeniable benefit of paying outlandish sums of money to people who are very good at their sport but not much else is that they are bound to reveal the absurdities of life. In this case that there is a restaurant which serves steak coated in 24-carat gold and that a French footballer ordered and ate one simply because he could. No word so far about the medicinal benefits if any of such a repast but it sure stirred up a fine outrage amongst those immune to irony and worried about how other people spend their money.

James Greener

Friday 11^th January 2019

PS. Have you seen the gold price easing up?