Friday 27 March 2020

LOST IN LOCKDOWN


I thought that by now I would be out of reach of the internet and separated from all news deserving of consideration and comment. Obviously, the Lockdown changed all my travel plans and so to stave off my own (and hopefully your) boredom for a moment here is another Tidemarks.
It takes years of study and experience before mere mortals attain the sublime levels of understanding how central banks work to control liquidity. For those of us for whom this idea involves simply opening a tap, central bankers do things like “accommodate”, “offer repos” and, the newest toy in the box, carry out “quantitative easing” The objective allegedly is to ensure that credit – the oil that makes commercial activity slip along smoothly -- is freely and easily available to those who need it. And, of course, pay for it.
This week has seen the largest amounts of such monetary intervention in history as governments have been desperately prodding their central banks indeed to open the taps and stave off the economic calamity of COVID 19. The USA, whose government is arguably pro-rata even more indebted than our own, have announced USD 2 trillion (now that’s real money) stimulus package. Details of where this money will come from are hazy, but presumably the Federal Reserve Governor has been invited to the White House for cookies, coffee and a chat. All this interfering in the markets is undoubtedly an attempt to get the stock and other US markets to resume the soar away bull run they have been enjoying because of President Trump’s alleged wisdom. But not even Greta Thunberg – the world’s current favourite prophet – saw this Bear Market coming.  
Meanwhile our president Cyril has ordered a supply of slotted collecting tins to be labelled Solidarity Fund and distributed where passing folks (foreigners especially) might drop their spare change. The government set the ball rolling with a donation of exactly zero. Two wealthy local individuals who are forever being pilloried by the lunatic fringe for not doing more with their money – besides paying tax and employing people – have each pledged a billion rand donation but notably not to this Solidarity Fund. Too many people know where the tin openers are.
Funding woes aside there is no doubt that our government’s response to the pandemic has been breath taking and commendable in its speed and comprehensiveness. Unfortunately, the powers now made available to some of the less bright and politically vindictive officials are a bit worrying but also even amusing. The squabble about whether taking a dog for a walk would be allowed (it isn’t) was among the best. Banning the sales of things that people like and maybe need to pass the time does seem rather silly. Also, the attempt by government to control all the news about the pandemic is alarming and these days totally fruitless. Indeed, the minister responsible for this sort of thing has told us that she and her staff are working hard at this time to release more spectrum (gobbledegook for radio channels) and improve internet connectivity.
Its also very sad that while they are doing so well in coping with what is for everyone an unprecedented event, the government appears still to be insisting that their demonstrably ineffective and damaging racist dogma and policies be integrated with the relief measures. Despite the crisis, the bureaucrats are still producing forms to be completed to ensure that as few of the minorities as possible will benefit from any of the government’s generosity, mostly supplied by those same minorities. It’s also interesting that it seems as if all the benefits and payment holidays being proposed are just postponements and when, as the saying goes, we “get through” all this, the bailiffs will be back.
It should have been the University Boat Race in London this week end. I’ll just have to ask you to accept that Cambridge wins.
James Greener
Day 1. SA  COVID 19 National Lockdown

Friday 20 March 2020

GOING VIRAL

By and large our authorities have reacted rather well to what is an unprecedented event which is turning quickly into a crisis. The infection incidence and fatality counts don’t always balance from day to day but it seems as if the majority of the infected are being detected and treated while the search goes on for more victims. It is amazing how many people have been overseas in high risk areas. The testing process remains tedious, uncomfortable and costly. Although most medical aids will refund you if you test positive, turning the term aid into the word lottery. The supremely irritating development is the rising numbers of con artists and fraudsters offering fake cures and solace for huge sums of money.
Certainly, the market movements are unprecedented with some prices (like the US dollar / Euro exchange rate) behaving like a yo-yo with leaps of 7% both up and down. and the Dow Jones index down more than 30% in just a few days. Of course, some of our own indices have crashed more than this. The financial sector index has lost almost half its value presumably because even before the current Corona virus story loomed large, the banks were being hit with fears of what land confiscation might mean for mortgage repayments. The large and mostly unexpected large cut in the repo interest rate announced by the Reserve Bank this week will also squeeze bank profits. And Sasol, that onetime bluest of blue chips has turned into a pile of nasties pulverising most portfolios.
Worldwide, central bankers have reacted to arrival of this virus (whose name has become a political hot potato) by making money cheaper. Supposedly this will help those businesses struggling to grow sales in the absence of customers who are sheltering from the virus at home. Unfortunately, it is also hitting the cohort of the elderly relying on fixed incomes and savings.
In general though, the usual loudmouths have been rather quiet although there has been the requisite attempt to pin the blame for the virus on white folk or Jan van Riebeek. Perhaps like many of us, people are really scared and have no time for frivolous nonsense.
This week’s big theme following the President’ speech at the weekend was consideration of the financial implications of enforced curtailment of economic activity. Official notices are doing to rounds where it is clear that most state services and functions are going to be suspended, but so far no civil servant will lose their job and pay check. The same is not true in the private sector and the limitation of gatherings to fewer than 100 people is having a widespread impact. Most of us do not have the level of internet connectivity which affords the luxury of “live streaming”.
Among the many tax eaters who deliver negligible value for most of those who contribute to their income is a royalty class among whom is numbered a king named Buyelekhaya Dalindyebo. Unfortunately, he tends to become a little erratic and violent towards those whom he feels are not showing him sufficient respect. In fact he has just been released from prison after serving a four years of a far longer year sentence following convictions for the rather common crimes of assault with intent to cause grievous bodily harm, kidnapping and defeating the ends of justice. Apparently, he lives in what is known as the Bumbane Great Place Palace in the Eastern Cape. But on going back there he discovered that his son, Azenathi was in residence and King Dalindyebo set about evicting him which somewhat inevitably has resulted in the King being again charged with malicious damage to property and assault. The story rolls on with various Princes joining the shouting match and even blaming the SA Constitution for not protecting the king, when it looks as if it his subjects and family who are in need of the protection. 
Probably the best (clean) internet joke on the topic of the boredom of self isolation at home is the floor plan of a small apartment with the caption:   “So where shall we go to this weekend?” I’m going away with a carry-on full of sanitiser and masks and so there probably won’t be any Tidemarks for a few weeks. Keep safe and enjoy the Easter break.
James Greener
Friday 20th March 2020

Friday 13 March 2020

A WEEK TO REMEMBER


The combination of crashing stock markets, increased rationing of electrical power and utter confusion about the COVID 19 viral infection spreading across the world, have pushed us all into a very different place from where we were just a few weeks ago. Worth particular mention is that while the gold price has soared, the oil price has plunged and for the first time ever, oil producers need to deliver more than 45 barrels of oil to be able to afford just one measly ounce of gold. The very long-term average for this ratio is around 20. The internet chat-meisters are muttering about a tussle over this commodity between Russia and the USA. Trump has closed his borders though it’s doubtful that the virus worries much about passports and visas. 
No one will have found any shelter from this storm even if the man at the end of the bar is boasting about hedge fund strategies and his stash of Krugerrands. The fact is that all the various metrics that try to capture volatility and unpredictability of day to day moves of the various prices and indices this past week have gone off scale. If the prices weren’t going down fast they were going up before turning around again. Even so called “circuit breakers” which automatically halt trading on some markets to allow everyone to catch their breath and take stock of the situation weren’t slowing the plunges appreciably. This will be a memorable bear. The sole winners will have been those whose entire hoard is in Krugerrands buried in the garden!  
Its little wonder that SA Business Confidence Index has dropped to an all time low. All we can hope for is that it will one day turn around. For that to happen it will need a significant change in attitude and mindset of our leaders who continue to hassle our already badly damaged wealth and employment creators. A very large fraction of what passes for news reporting today is the rehash of  press handouts in which yet another minister issues a foolish and superfluous edict. This will be accompanied by assurances that their staff are “working round the clock” shufflimg the requisite papers. Ha!
The other entertainment put on by the authorities designed to amuse and distract us is the holding of commissions of enquiry. While they have fancy names and terms of reference all we want them to do is to establish who stole how much and then put them in prison for a long time. But the evidence is growing that this is not going to happen. Words and more words and fake sick notes and slimy excuses and buck passing, and unsigned extradition treaties are all that has really happened. The opportunity to punish those who have plundered the nation’s resources is slipping away.  All that these commissions have revealed is that to many, a billion rand is not a big sum of money! And that our current public protector is clueless about who she is supposed to protect.
A small item which may have escaped your notice is the idea being discussed in Dar es Salaam that employers must deduct 40% of men’s monthly salary and pay it directly to their wives. Reaction to this obvious play for the female vote has not been reported. This is however a perfect example of how the appallingly low calibre of leaders worldwide who chose public service because the pay was good have little to contribute except to tell us how to run our lives. The corona virus has elevated every bureaucrat and politician to the level of expert epidemiologist, able, without hesitation, to demonstrate how to wash one’s hands.
 Its increasingly hard to find a sports event to watch as the virus threat has caused organisers either to cancel fixtures altogether (like the Australian Grand Prix) or close the venue to spectators which renders the match and the TV coverage rather boring. I have discovered that the annual DJ Run between Joburg and Durban for motorcycles made before 1937 is happening now. The finish is at Shongweni Polo club tomorrow. Those old leathers that the riders will be wearing will see off any corona virus!
James Greener
Friday 13th March 2020