THE REDS EMERGE FROM UNDER THE BEDS

Maybe it’s the rather emphatic display of global cooling that is sweeping across many parts of the northern hemisphere that has diverted attention but most markets there are failing to regain the bullish tone they enjoyed for so long. Here too the optimism that perhaps our new president understood money and markets better than his predecessor has ebbed a bit. His cabinet shuffle has posed a huge puzzle. Trying to find the message buried in who was in and who was out and who was moved to where is as hard as a fiendish Sudoku. The undercurrents of the faction fighting in the ANC are clearly enormously strong and bodies are washing up in lots of odd places. Of course, the fact remains that within the acceptable pool of candidates for public office, there are minimal levels of talent, experience and knowledge.

Further, there are plans afoot to conduct so-called lifestyle audits. Given the rather disappointing recent record of auditors in their speciality of unearthing financial foul-ups perhaps we ought not to expect much from this new area either. But not even politicians should be subjected to the indignities and intrusion that a full analysis of how they obtain and spend their money entails. There’s an air of guilty until proven otherwise about it.  A far simpler method would be to require that they use only public schools, public health care, public security and public transport during their period in office. This might ensure that they apply their minds to delivering the services they promised the electorate. Just imagine the embarrassment of the minister of transport in a minibus taxi caught using the emergency lane on a freeway. Oh. Well maybe perhaps not.

The real deal however should be to require that political decision makers place all their investments and savings into government bonds. This will ensure that they swiftly get to understand about the other side of running a deficit. This would have wiped several percent off their net worth this last few days as the bond market reacted to the expropriation story.

Almost two dozen years ago the job of running the country passed to people, most of whom are of the firm opinion that nothing good has happened here on the southern tip since the arrival in 1652 of a homesick Hollander with a large flag and an unsuitable hairstyle. Except maybe for Mercedes Benz and Johnny Walker Blue whisky. Many are fervent supporters of the Communist party, so we ought not be surprised that the idea of confiscating assets (in particular, land) without compensation is once again being given airtime. In the company of many other left-wing crazies all over the world these are people who also point to Venezuela as a success story.  We can however be disappointed that all the frightening and investor-scaring issues that come with that process have not been addressed first. At the outset there is no accurate easily available land ownership registry. Many in the industry complain that deeds offices are inefficient and claim that this is one area where the fancy new block-chain IT technology could be installed to everyone’s benefit. Just knowing the amount and extent of development of all land owned by the various layers of government and kingdoms (a very contentious matter here on the shores of the Indian Ocean!) is critical. And then of course the hottest potato of all is the fact that much of the privately-owned land is mortgaged with the banks. Only those who are free of economic intelligence can dismiss that issue as irrelevant. The expropriation without compensation program could be far more damaging to balance sheets that anything the Guptas managed in their heyday.

A rather aggrieved Cape Town cricket fan made the valid observation that even the Aussies had scored more runs before lunch than there were Durban spectators at Kingsmead yesterday. Just why this should be, is hard to explain. Certainly, a lot of people need to be at work on a Thursday. Has the emigration of traditional cricket fans been so large of late? Or is it that we just feel disconnected from the Proteas where the twin forces of quota selection and player indifference spawn disinterest?  It will be interesting to see the turnout for the Sharks tomorrow at their first Super 15 home game. And the Blitzbokke will mostly be playing after bedtime in the Las Vegas 7s this weekend.

James Greener

Friday 2^nd March 2018

NEXT YEAR IT WILL BE BETTER. PROMISE

It was common knowledge that our government would have to extort more money from us than last year. That it would increase the effective taxes, levies, duties and other euphemisms for theft by so much was a surprise. This year’s Budget has revealed that citizens will cough up an extra R137bn. Much of it with new and higher stealth taxes. The increase in the VAT rate as well as to fuel and booze levies are particularly nasty. The sugary beverages tax has made a quiet entrance. The medical tax credit system will receive below-inflation adjustments to fund national health insurance, but this will be noticed only in 18 months’ time when the 2019 income tax assessments begin to arrive.

This works out at an average R20 000 more for each of the 7 million or so taxpayers in the nation. That really is a lot of money for anyone to find and hand over without much hope of any visible return. Particularly when not very much is being said or done about reductions on the expenditure side of the budget. For example, the Budget Review (a 300-page doorstopper of a book) has charts that show the huge growth in government employee numbers over the past few years but depict only trivial planned reductions in head counts in the future. There is not one line in the Review about the possibility of selling off state assets (privatisation – dread word) to raise the cash so desperately needed. The view from the Union Buildings is a sea of upturned palms belonging to all the people who have become conditioned into believing that the government must and will and can provide. Anxiously watching this show from the side-lines are the investors and savers who have lent money to the government and are now wondering about the safety of their capital. Their palms are also open.

This Budget is the inevitable consequence of decades of retributive and unimaginative socialist policies increasing state control in all spheres of human endeavour. National Treasury is deeply concerned that the rich might not be paying their share towards keeping this leaky tub afloat and seeks on every page to identify these culprits and punish them. Therefore, the zero-rated VAT status on Rye and low GI bread has been removed. Cosmetics, electronics (particularly “smart phones”), golf-balls and motor vehicles are deemed to be luxuries unused by the poor (really?) and therefore the ad valorem excise duties on these items are to be increased “in-line with the progressive tax system”. “Sin” taxes are up. A rather trivial use of this word considering the crimes that are being committed with our money.  Why do we have to pay the salaries of the mental midgets who spend their days coming up with this dross?

Adding to the fear and scepticism that this budget isn’t seizing the real nettle is the realisation that its modest targets will be attained only if some rather optimistic economic growth takes place immediately and forever.

A lot has been said about how well National Treasury has fielded the “hospital pass” lobbed at them by JZ as he sidled towards the Exit. This was the assurance that poorer families will not be expected to pay university fees in future. So this year R57bn will be provided for so-called Higher Education where perhaps 2 million students spend about 4 years each, studying subjects many of which have limited value for prospective employers.  Meanwhile just R230bn is allocated for supplying a dozen years of schooling to around 15 million youngsters. (Amazingly, no one is sure about this number.) Since SA now consistently comes last in almost every international educational ranking, it should be clear to everyone that these ratios are wrong. Obviously, the authorities don’t know how to fix it so maybe that most of the education budget ought to be returned to the taxpayers to let them decide how to educate their children?

A satisfactory Lions win over the Sharks last weekend will ensure grumbling at the bowling club bar this evening about who was doing what wrong. Meanwhile flicking over to watch the Proteas labouring to bowl out the Indians, there are so many new faces that one feels like a stranger in one’s own country. Which takes us back to the Budget.

James Greener

Friday 23^rd February 2018

AT LAST JZ GETS TIME IN HIS FIREPOOL

As the popular saying has it. “My, but that escalated quickly!” JZ has gone. Arrests have been made. Dodgy characters have vanished. And all on Valentine’s Day, while the rest of us were dealing in roses and chocolates and basking in a spirit of love and tenderness. A president who, if nothing else, has just one wife is a great improvement and the markets are enjoying a burst of exuberant optimism. It’s really unkind to suggest that JZ’s rather sudden departure long before the time frame he seemed to have in mind only last week has anything to do with his notorious inability to count.

President Ramaphosa already has a packed diary and a huge task ahead of him doing what the Americans have termed “draining the swamp.” Most of us believe we can identify the ministers and officials who ought to get an immediate and large boot. However, Cyril will have to be careful about how many enemies he can afford to make. Further, finding competent replacements will not be simple. Anyway, just as soon as he makes a start, there will be a nice government contract out there to supply new framed portraits of the top guys for thousands of government offices. Apparently civil servants need the beady eyes of their superiors peering down at them from the wall in order to carry out their job of being servile and civil.

It’s surely too late for the new man to have any influence on the contents of the Budget due to be delivered on Thursday. The finances of the state are so dire that drastic measures are needed immediately and there’s probably scant wiggle room even for someone who understands finance.  It will take several years of prudent and incorrupt presidency to get matters back under control. The current Minister of Finance is either so clueless about the situation or resigned to being fired soon that he is comfortable whiling away the long boring hours in parliament playing computer games.

Anyone who takes a look at the motoring supplement of the newspaper must surely be struck by the fact that there are about 1700 new car models on offer in SA. And a very high proportion of these, based on price alone, are undeniably in the super luxury class. There are nearly 40 different models of Porsche, 14 Maseratis, 13 Bentleys, 9 Aston Martins, 9 Rolls Royces and 8 Lamborghini for the well-heeled to consider. Not to mention the literally dozens of Mercedes, BMW and Audi models available. Obviously, the world’s car manufacturers have pegged SA as a hot target market for wheels that mere wage earners can never even think of.   Juxtaposing these observations with the many guilt-inducing measures of just how desperate and poor most South Africans are, leaves one wondering about the depth of the pool of ill-gotten gains.

Frankly the compromise reached by the Olympic high-ups to permit sportsmen and women from Russia to compete in the Winter Games provided none actually says they are Russian, is hypocrisy of the highest order. Why was this ruse not used 40 years ago when South African athletes achieved Olympic qualifying standards but were banned from attending because the world wanted to “punish” the government?

So far, the winner by a country mile for the noisiest winter sport is women’s curling. Two teams of 4 girls on a rink in a hall with 4 rinks adds up to bedlam. Can all that shouting really alter the course of a large lump of stone sliding majestically over the ice? And the Super 15 season opens with that allegiance-testing match between the Lions and the Sharks. Usual compromise: Lions cap, Sharks shirt and a nice bottle of wine for the host. Did someone mention cricket?

James Greener

Friday 16^th February 2018