EASTER TIME. BUNNY OR EGG. WHO CAME FIRST?

A slew of different economic statistics for various periods in the recent past don’t signal that economic growth is about to sweep us all forwards and upwards anytime soon. The only increases are in the numbers of people who depend on the taxpayer’s money for their salary, grant or stipend. The thousands of private businesses who together with their employees are the payers of most of that tax, battle at this time of the year when working hours are impacted by the sequence of shortened working weeks that our calendar serves up. This year it’s exacerbated by the election day holiday.

As an aid to those managers who have set aside the Easter weekend for crafting a message to shareholders, Tidemarks offers the following useful paragraph used to great effect by the CEO of a company in which the PIC has recently increased its shareholding.

“We know the road ahead isn’t going to be easy, given the amount of work to be done around entrenching sound business practices and critical (…….[1]) basics within the company. We’re constantly challenging ourselves to find the best solutions to move (…….[2]) forward and remain firmly committed to turning the ship around despite the economic environment being unsupportive and weak industry fundamentals.”

Plenty for them to mull over there. And perhaps better than the bold “Surprises at Eskom are over” from Phakamani Hadebe, the CEO.  One would think that the message to keep one’s head down and mouth shut would by now be carved into the large mahogany desk in the corner office at Megawatt Park. Or just scrawled in lipstick on the mirror in the en-suite bathroom. There are just so many skeletons in so many cupboards in that business that surprises are never over. What about the company’s debt book? A huge concern both for Eskom and the whole nation’s credit rating.

Now its our turn to be surprised by President Cyril who has been listed by Time Magazine as one of the worlds top 100 influential leaders. Wow. That’s a big call for a chap who seems to be dancing on eggs trying not to offend the powerful panjandrums in his own party. Affable and likeable certainly but its hard to recall anything influential Cyril has done since inauguration. Like discarding the many crooks and incompetents from his cabinet. What influence has he wielded to shift SA from its Bloomberg ranking as the world’s 3^rd most miserable economy?

We have remarked before about the pleasant-sounding name Sagamartha for a company that wanted to list on the JSE but failed to pass some or other trivial accounting condition.  According to its founder and fervent champion Dr Iqbal Surv, this was because South African investors totally failed to grasp the opportunities offered by a loss-making company that is very highly valued (mainly by himself it should be said). Now he is off to try and list it elsewhere, so clearly there is a pressing need for some cash inflow into his stable of interests which most of us prefer to watch from afar.

The joke that a fan who called about the availability of places at Kings Park for the Sharks match against the Reds did the rounds this week. The punch line is that the pleasant young lady on the switch board assured the caller that there were plenty available and in which position would the caller like to play! Utterly unpredictable is the only pertinent phrase to describe the performance of the SA teams this year. Charges of nepotism, racism and financial mismanagement all have validity in trying to unscramble the mess. And this scribe is not about to try, beyond repeating my age-old cry that the state has no part to play in sport of any kind and that the ministry must be closed immediately.

Already the traffic flows are building for this long weekend and any number of worthies with the word transport in their title are boast warning about “round the clock policing” and “pulling out the stops” to ensure safety on the roads. We all hope they are successful. Please take care of yourselves.

James Greener

Maundy Thursday 2019

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[1] Insert name of industry here

[2] Insert name of company here

REVENUE DEPRIVED

Trawling through a selection of possibly significant price charts of securities such as the price of money, major shares and share indices and some commodities, it looks as if the bear which scared us  6 months ago has been forgotten. Hats off to those analysts, especially in the US who called that right. Even in SA with its looming election, bulls appear to believe that company earnings and the government deficit are under control or at least already priced into the markets. Eish!

It turns out the phrase “Son of the Soil” that appears on the EFF election banners next to the portrait of Julius Malema beneath his trademark red beret is packed with meaning, only some of which might be humble beginnings. It also refers to using the native language of the region and shows that the Economic Freedom Front is spending money not just on classy posters but on advisors who ironically have a fine grasp of English. Meanwhile serious sedimentologists are flocking to a traffic island on the M4 here in Durban North to view the wonderful example of bedding taking place on a row of flagpoles. As each new posse of party workers adds their own flimsy cardboard mounted poster to the top of the pole it soon slides down compressing those beneath it and after some rain there is a perfect layering of portraits and promises at the base of each pole. Wind weathering is adding to the geologic processes. It is interesting to record that the face of Mangosuthu Gatsha Buthelezi, now 90 years old has appeared on posters for every election since 1994. The lower levels could be nearly fossilised by now.

In Tanzania it is illegal to deprive the government of revenue and currently there are five Vodacom employees who have been arrested for this vile crime. Here in RSA, government is also anxious that we are depriving them of revenue hence we are obliged to report just about everything we do from putting up solar panels and rain water tanks to drilling boreholes. They already know about our sugar consumption and carbon dioxide emissions. Just as soon as they hear that we all must use oxygen they’ll be on it like a pack of dogs.

For a book which is described by its protagonist as utterly inaccurate it seems rather odd that his acolytes took the trouble to go down to the book store and tear up a few copies. That suggests it’s not fiction after all and even the secretary general of the ANC Ace Magashule is anxious about the skeletons in the cupboard. But not even a man of his power can prevent the electronic copies of this controversial book by Pieter-Louis Myburgh from whizzing about.

Its very pleasing to watch the commissions probe and hear the whistles blow and have these books get published, as it means a far healthier democracy than the crooks would like to see. However, the missing piece in the puzzle remains lost. When can we expect a successful prosecution of these thieves?

If Brexit were to mean British people exiting their country, then it is in full swing. The lazy London accent was everywhere in the Hluhluwe Game Reserve this week, with the locals working flat out at taking Pounds in exchange for hospitality and views of wildlife. Very pleasing when the media would have you believe that everyone on that soggy island is digging bunkers and laying in stocks of gin and pork pies.

So Ebat is the newest device to be used to identify drunken drivers and reduce the road accident rate. That’s fine, but without seeing a single traffic cop in 500km on the N2, except for those plonked on a chair behind a radar speed trap gun one hopes something else will change. The prizewinning driving display witnessed on my recent trip was the fellow who came down the off-ramp, crossed in front of two south-bound lanes of traffic and the central reserve to merge with the fast outer north-bound lane.

The story used to be that not even members of Augusta National Golf Club were allowed on the hallowed course in the weeks leading up to the Masters. And yet a week ago there were women amateurs having a tournament! Surely that signals the end of something? Discrimination perhaps?  And no one is to talk about Lions rugby please.

James Greener

Friday 12th April 2019

IS THE HIGGS BOSON A SECURITY-CLUSTER?

Don’t look now but there is a calf-sized bull market going on. Even the rand seems enthusiastic about the future, now that a ratings agency has not as feared downgraded our credit rating.  Do be reminded, however that similar to the situation where a company pays for an auditor to pass judgement on their accounts, the agency also charges RSA a hefty fee for the rating opinion. Both these processes can be and are corruptible. Nevertheless, buyers of SA shares and bonds and currency outnumber sellers at the moment and that’s always a nice thing. There are sparkles of reasonable relative value glinting in the dark corners. For those of us of a pessimistic turn though, the stories of outlandishly high salaries being paid to both private and public managerial level employees are worrying. In the private sector especially the income gap between cleaner and CEO is alarmingly wide It is very unlikely that the top guys are really worth that much to the business. The remedy is simple, we can move both our custom and our investments elsewhere. No such route is available when it comes to buying power or water or all the other things that politicians insist only they can supply.

In the 1940s a very smart theoretical physicist named Richard Feynman invented a simple looking but immensely helpful diagram to illustrate what happens in the nucleus of an atom. What is far more difficult however is constructing a diagram that will illustrate what exactly is going on in this nation’s so-called “security cluster”. The first problem is to understand what are the threats and risks to who and what, that require the dozens of opaquely named outfits that infest our civil service and feed on the taxpayer. For instance, are there really foreign forces at work plotting an invasion and seizure of our land and the minerals buried beneath it? They certainly wouldn’t be coveting our workforce or infrastructure, both of which are mostly in poor shape. The presence of all these assorted agencies and acronyms generally comes to light only when they squabble and bicker amongst themselves. Undoubtedly in a nation as politicised and tribalized as ours, there are scores of factional fracas bubbling beneath the surface. Here in KZN political assassination is sadly commonplace. And the high taxes and duties levied on so many consumable items have spawned huge schools of smugglers and secret salesmen. So, in theory it looks as if there is no shortage of work for government paid spooks at every level. Nevertheless, it would be nice for the rest of us to be assured that we are getting value and for that we sorely need one of Prof Feynman’s diagrams. 

It seems as if only one parliamentarian has made the crucial point in the shouting match about the Public Investment Commissioner’s “failure” to uplift the poor. Simply that it’s not their job! The PIC is the custodian and manager of an immense pool of wealth that belongs to hundreds of thousands of other people and which will in due course be returned to them. And if it is an able, wise and honest manager the amounts returned to these clients will be greater than the amounts deposited. That’s the simple model of a retirement fund and it is not suited to be a vehicle for investments that embody a high risk of failure. Unfortunately, this fact is poorly understood even it seems by the PIC itself. There are many vehicles and methods for matching people with an appetite and capacity for risk to entrepreneurs, start-ups and other identified deserving causes but the PIC is not one of them.

The rise and rise of sports betting businesses is noteworthy as is their appearance as team sponsors. There’s something just a tad disturbing about it all and the increase in suspicions and accusations of match fixing suggests I am right. What a curmudgeon!  Every four years I am surprised by the realisation that the rugby and cricket world cups are happening almost back to back. What a treat. Now what’s the odds on a ‘bok win at both events? All these new names and faces on the F1 circuit are tricky to keep up with now that the newspapers no longer print those handy guides to teams, drivers and calendar. And have Ferrari run out of their traditional red paint? The replacement tomato orange colour is dreadful. So too is that so-called light blue worn by the Cambridge crew at the Boat Race. You’d think an ancient establishment like that would by now have seen the colour of the sky.

James Greener

Friday 5^th April 2019