AT LEAST THE SARDINES ARE ARRIVING

Our currency appears not very enthusiastic about the motley crew that President Cyril has picked for his cabinet. It has weakened noticeably in the last few days probably initially because the delay in making the announcement suggested that there was plenty of last-minute horse-trading taking place. Sadly, the expectation of a lean and clean government has not been met, with far too many ministers and even more deputy ministers being allocated a place at the trough. Among the list are some dubious deadbeats and the presence of JZ’s ex-wife sends a disturbing message. Off-setting this somewhat is the appointment of “Aunty” Pat(ricia de Lille) the epitome of a feisty lady from the opposition benches. In SA we have a long tradition of having a nosy, noisy and competent dame in the chambers of power keeping everyone on their toes.

Already the office bearers of the new governments, both central and provincial have been making promises of hard work and achievement. But its old news. We want leaders who say “We have…” not “We will…”  and don’t think that opening a new toilet in the veld is a cause for celebration..

The processes through which the so-called green house gasses are believed to be having a dangerous impact on the planet are far from clear, but this hasn’t stopped a great number of people and governments from turning the issue into a career and money spinner. Governments are especially receptive to any idea that can be taxable and have seized on the opportunity to raise money from the air that we breathe. Or exhale to be exact. From tomorrow South Africans will start paying a so-called carbon tax levied at a rate of R120 per ton of Carbon Dioxide (CO2) emission. Or to be exact again, per ton of CO2 equivalent.  Doubtless the legislation clearly defines what is meant by the terms emitted and equivalent. And it presumably explains how to measure the weight of a gas, since virtually every member of the animal kingdom exhales this apparently noxious fume and needs to be able to calculate their liability. Tidemarks has no intention to enter the debate about the proposed links between concentrations of CO2 and other compounds and their effects on the world’s climate beyond opining that not one penny of the collected levy in this country will be spent on confirming that it’s true. It must be noted that as a sop to the nation, the rate will initially be discounted to a mere R48 a ton but will rise at the rate of inflation plus 2%. This unexplained link of a tax rate to a consumer price index alone discloses at least one aspect of the utter ignorance that most of us bring to what is an extremely complicated physical chemistry problem.

An outfit named the Alternative Information and Development Centre sounds as if it also will have an opinion on the climate change question, but for the moment, they are lobbying to get the tax returns of every citizen published. This, together with a public registry of beneficial ownership of “all types of companies and land and assets” sounds as if the AIDC are on the hunt for tax evaders and indeed they calculate that more than R30bn a year is lost to the tax man from deliberately distorted disclosure. Fair and good but totally unlikely to get the nod from the benchwarmers in parliament who should in fact all lead the way with voluntary disclosure. But this is chump change compared to the money wasted on the expenditure side and realistically the only area from which to launch a significant attack on the huge deficit.

Hopefully the drubbing that the Proteas took from England in the opening match of the Cricket World cup will be their worst result of the tournament. It definitely will have alarmed the other teams, who thought a summer playing cricket in England could be fun! Meanwhile the Blitzbokke need to have a decent tournament in Paris this week.

James Greener

Friday 31^st May 2019

Today used to be a public holiday and while we now have far more days off than when the 31^st May was celebrated as the anniversary of the creation of the Union of South Africa, it must still to be remembered as our nation’s actual birthday.

CABINET COUNTDOWN

Academics are renowned for finding research topics that will prise open the purses of philanthropists who rather fancy the idea of having a building or even a chair named in their honour. And the concept of Political Arithmetic is pure genius since it recognises that about the only real weapons (barring ceremonial maces, hard hats and well-polished brogues) a politician can wield to bolster up their image or besmirch the opposition are numbers. From the easily counted like toilets built, libraries closed, airlines saved, power stations broken and money stolen. To the controversial and theoretical, like inflation lowered, GDP raised, unemployment solved, currencies picked up and services delivered. All these items are grist to the mill of a Political Arithmetician, the best part of which is that they avoid the taint of being called an economist.

There is a department of Political Arithmetic at the University of Amsterdam. Our previous president JZ might profitably have registered for a few semesters there as his counting was none too sharp. In fact most of the people who haunt our halls of democracy could do with a refresher course in long division with particular emphasis on statistics denominated in units of “per capita”. This is the unit that socialists always ignore when they contemplate, with envy, the assumed wealth of the relatively few well-off high-profile citizens. Their plan as always is to take from the rich and give to the poor after, of course, deducting a modest commission. Now assuming that these well-meaning do-gooders have a reliable method for identifying deserving poor (would for example, possession of a mobile phone exclude someone from this category?) the task of dividing the total confiscated wealth by the number of beneficiaries yields a disappointingly small number. Somewhere in the region of the cost of a very careful single trip to a supermarket. And then it’s gone. And in all likelihood, so too are many of the wealthy, reluctant to play that game again.

But why does a SA Cabinet Minister need further education to see that a quick way to solve some of the government’s financial woes is to sell everything that’s not nailed down. While there might be a few exceptions amongst the very long list of State-owned enterprises, the vast majority can go under the hammer. The bad news is that they are not worth very much and the large numbers of immediately unemployable deadwood will be very unhappy, but if coupled with a relaxing of labour law it might just save our bacon. Everyone relax. It won’t happen.

We have commented before about the timeous and transparent torrent of statistics produced by our government. Sadly, however, rather like the private sector’s equivalent of company reports, the professional glossiness of the well-crafted webpages are concealing probable problems in the raw data. This week’s publication of the consumer price index for April (4.4% pa) is hard to reconcile with personal experience and one wonders if the folk at Stats SA ever give their own numbers a hard look. How can it be that recreational equipment absorbs 1.2% of an average consumer’s spending while the weighting for public transport is 2.3% ? Do those poor souls waiting for the minibuses in the dark and cold go home and work out with their own set of dumbbells? And do they spend 5 times more on insurance than on that taxi fare? Interestingly, despite all forms of government intervention, we still spend 2% of our money on tobacco. Far more than on vegetables (1.3%). Certainly, the spending habits of the author and readers of these words in no way resemble the average consumer but still there’s a worry that the data is misleading.

Suddenly the CEO of Old Mutual is on the streets! Will he call Theresa May for a mutual commiseration? Goodness but there’s a lot of strange news out there.

Watching Sevens Rugby requires a strong heart as the lead can switch in an instant and there is little time to recover. Arithmetically the Blitzbokke can win the series but the idea of the USA being the top nation in this format is intriguing. Now its time to arrange the furniture so it will feel more like being on a yacht in Monaco for the GP. And then to find the Sharks shirt and Lions cap in order to avoid being made to walk the plank.

James Greener

Friday 25^th May 2019

CYRIL JUST ABOUT JUNKS THE JUNKET

One has a certain sympathy for journalists in search of a headline grabbing story and the older the better because it saves a great deal of new research. This time it’s Moody’s, the ratings agency who waited until after the election to warn anyone who’ll listen that there are big problems with classifying South Africa as financially healthy. In fact, because of the skeletons tumbling out of cupboards, particularly at Eskom, the nation is right on the brink of being ranked as “junk”. Which means that Moodys would then recommend that prudent lenders should cross Pretoria off their list. Which means that to borrow money we will have to pay higher interest rates. Which is a big problem for President Cyril and his new government. Which is why it’s an important story, but not an easy problem.

Long term US interest rates have now decisively fallen below short-term rates. Simply put it means that the return on a money market deposit is higher than on a 10-year bond – something most of us are unused to and unsure what to do about it.  Theoretically though it also means that borrowing long term money is becoming cheaper than say an overdraft and this is supposedly good for entrepreneurs. But these rules of thumb rarely work out as expected and anyway most people in the US at the moment are getting ready to fret about the presidential election which takes place next year.  It seems as if every time someone shakes a tree in Washington DC, another Democratic Party hopeful falls out.

This surfeit of candidates in opposition to the incumbent is something we in SA have just learned all about. We were offered candidates from 47 different parties many of which hoped that the electorate were by now totally fed up with where 25 years of ANC rule had taken both the country and themselves. However, it seems that most of those who managed to vote without spoiling their ballot paper are amazingly quite happy and satisfied and appear to be looking forward to another 5 years of the same uninspiring, incompetent and larcenous leadership.

To those of us who are certain that there has to be a far better, happier and critically, an economically successful way forward for our beloved country, this is a shattering result which suggests that promises of patronage and ties to the tribe outweigh common sense and self-interest when it comes to politics on the southern tip. Those who are confident that President Cyril is capable and willing to wield a large broom and cleanse his administration should be having doubts. Reducing the budgeted cost of his forthcoming inauguration is a characteristic clever attention-getting stunt. But the next really important indicator will be the makeup of the cabinet. Fellow Rhodian, and Grahamstonian, Rob Davies seems not to have made the cut. We shall miss his stubborn adherence to the Eastern Cape sense of style. But, so far, the signs are that many of the” tainted” gang will be back to slumber on the leather seats of parliament.

Climbing to the top of Mount Everest is a very praise-worthy but somewhat extreme way to avoid being in South Africa through election time. Nevertheless, hearty congratulations to Saray Khumalo who has just successfully completed this epic climb. Meanwhile the possibility of SA getting back on the F1 Grand Prix calendar is under consideration. A night-time street race in Durban would be fantastic. Ferraris already dominate the informal version of this racing and the Mercedes cars will be stolen during the load-shedding. A lot is being written about the exodus of South African rugby players to Europe that will take place after the world cup this year. The state of the economy and weakness of the rand is blamed but it would be interesting to see a schedule of just where the sport’s money flows. How much gets snared in the long corridors of administrators?

The video of 75-year-old Mick Jagger literally bouncing around the studio after his recent heart valve replacement operation is a great advertisement for the benefits of a sex, drugs and rock and roll lifestyle. This Rolling Stone has certainly not gathered any moss.

James Greener

Friday 17^th May 2019