DREAM ON MR. PRESIDENT

The little mentioned truth about investing is that there are no truths. All the wonderful sayings, rules of thumb, conventional wisdom and the rest have as many examples of failing as of succeeding. For example, the yield of the government’s long dated bond ought to signal something about confidence in that nation. Allegedly lenders demand higher yields from borrowers that might in the worst case not be around some time in the future. From all the whining and rhetoric about President Trump one could be led to believe that he was running that nation into the ground (and there are some numbers which support this view) but today the  US 10 year bond yield is a mere 2% -- the lowest in 3 years and a sign of confidence? Meanwhile our equivalent bond is yielding around 8% -- hardly a warning signal that this a nation which may be soon be rated “junk”.

State of the Nation is really a highly misleading title for the sort of speeches that our Presidents make from time to time. Aside from giving people an excuse to get togged up in the most amazing garb, by its very name its content should be delivered entirely without using the future tense. We want to hear what our government has managed to do for us and as a result exactly where we are now. Instead we are treated to a celebration of what it is going to do – which experience suggests is never going to happen anyway. Last night we were offered a selection of President Cyril’s dreams. These included “…a South Africa where the first entirely new city built in the democratic era rises, with skyscrapers, schools, universities, hospitals and factories,”. Hmm well yes that sounds like fun, but first can we please hear from the erstwhile chairman of the Eskom War Room what has been done to provide enough electricity for the existing cities. The sole interesting but unsurprising item he told us of the future was that Eskom was going to gets its wodge of taxpayer’s money earlier than budgeted. And by the way, isn’t the reference to skyscrapers endearingly quaint.?

Whatever one thinks about the advisability of public figures using social media internet platforms to communicate with their audience and bypass the more conventional news channels, the phenomena is alive and growing apace. While it certainly is a great tool for the immediate dissemination of facts and real news, leaders and officials who take to Twitter to offer their opinions, prejudices and preconceptions constitute a proper hazard. This is because of the preponderance of what President Trump famously derides as “fake news” and also, just as importantly, it can showcase the author’s shortcomings and ignorance (another supposed Trump claim to fame). This week our ambassador to Denmark illustrated her utter lack of talent for a post in diplomacy by heaping scorn, invective, lies and insults on a minority group in her country. That President Cyril has not responded with an immediate recall of this disappointing civil servant also strengthens our impression that he fears something and is unsure of his legitimacy.

An interesting contribution to the debate about the state of SA sport is the assertion that sport is just as corrupt as any other enterprise Allegedly most of the money that is destined for the recognition and development of young talent is adroitly repurposed by the governing bodies of the various sports .. Many sports men and women are poor or reluctant administrators and the task of negotiating the lucrative TV rights falls upon administrators capable of doing so. Sadly, many are untrustworthy and with few actual athletes on governing bodies redirecting cash flow to flying one’s family first class to the tiddly winks World Cup in Las Vegas attracts scant attention.  Tidemarks has long campaigned for government to withdraw entirely from sport. After all it doesn’t have the money nor frankly the skills nor interest beyond demographics. This year, in a budget shared with arts, culture and recreation and in which a third went to civil servant salaries the allocation was R11bn.  Allowing taxpayers to claim rebates up to that total amount on a first come first served basis against suitable proof of donation would work far better.

James Greener

Winter Solstice 2019

SHOOTING FOR THE POT

Perhaps two of the more alarming developments of the week are the suspension of the Tongaat listing and the news that someone is trying to sink oil tankers in the Straits of Hormuz. Both raise the question of is there more to come? The utter failure of accounting standards and lackadaisical auditing practices have once again failed to give timeous warning of a corporate collapse and the possibility of massive oil price rises are both important factors to be considered by anyone looking for a place to invest. Krugerrands are once again above the R20 000 per coin level.

In the meantime, the largest pension fund in the country – the one belonging to most of the civil servants – has quite rightly complained to the Public Investment Commissioner, the organisation that manages most of that fund’s assets, about its investment policies. They (the fund’s trustees) seem to think that maybe far too much of their pensioner’s money is going into dodgy investments particularly those which do not have the relative comfort and transparency of being listed on a recognised exchange. There is of course no 100% safe investment. Time was when lending to Eskom was considered “blue chip” but no longer. But some of the “investments” that the PIC is currently choosing are very dubious. And no one needs to have this fund running into difficulties

However, the Gupta family seemingly has no money worries thanks to their highly successful hijacking of a whole national economy. Ours! The leaking of their plans for yet more lavish weddings (not in Sun City this time) is clearly a deliberate ploy to show off their success in circumventing just about every anti-fraud and foreign exchange regulation that exists in South Africa.

President Cyril’s suspected lack of business acumen and understanding continue to worry the markets. Instead of allowing SAA to bleat on about how much money they need to keep the doors open he should be instructing them to focus of getting the outfit ready for immediate sale. There is simply not enough money in the country for the nation to keep all these albatrosses alive. And so far neither he nor Eskom have explained how breaking it into 3 parts will save money without selling anything.

At least two unions have now called for teachers who own guns, to take them to work. This follows several violent and deadly incidents on school premises in recent weeks where the official reaction has been the usual limp-wristed conciliatory auto babble about parental control and guidance. In my day teachers were armed with a fine line in cutting sarcasm and a bamboo cane. Both punishments smarted badly and encouraged behaviour that would not draw undue attention to one’s attitude and scholastic efforts.  Thankfully playground violence rarely escalated into a Wild West style shootout although we were all avid devotees of the movie genre and so would have been delighted to learn that there exists a South African Sheriff Society (SASS) which is “the voluntary sheriff organization of choice and is representing the most sheriffs in South Africa” (sic). Presumably their service to members includes a list of wide brimmed hat suppliers and tips on keeping one’s badge and Colt 45 in good condition. Speedy draw classes on every second Saturday?  Grammar optional. We citizens need our sheriffs to be on top of their game as the government is reportedly planning to disarm all private security guards.

There’s also precious little being done to slow down the scourge of luggage theft at our airports, where we could also do with some mean-eyed sharpshooter with four-day growth of beard, itchy trigger finger and a disinclination to ask many questions of a luggage handler delving into a pile of neatly folded shirts though the smashed side of Louis Vuitton’s finest.

The proponents of the idea of using drones to deliver goods – particularly fast food— must be blissfully unaware of the sharp-shooting skill of those with Boer ancestry and the deadly accurate stone throwing ability of most of the others. Bring it on Mr Pizza! We can’t wait.

Isn’t Pebble Beach the most beautiful golf course? That landscape looks seismically active though.

James Greener

Friday 14^th June 2019

WHAT WILL THE IMF SAY?

In April (the latest month for which figures are available) our government spent almost twice as much as it collected in taxes. This is not a record. Every July, for some reason, often shows an even worse comparative result, but this latest number caused the rolling 12-month deficit to breach the quarter trillion-rand mark (R253bn) for the first time. And our finance minister is posting You Tube videos of How to Cook. Folks, this is way beyond Mickey Mouse territory.

Except against the pound sterling – which is having its own woes as the Brits try to decide something or other important to do with their nation – the rand is at an 8-month low as the Saffers realise that their brand-new government is just like all previous ones. Pretty clueless on monetary matters but right up to speed on wrecking and looting. Unlike most of us who eventually grasped that banks are not like they appear in the cartoons with vaults full of money and gold, many of our leaders are sure that if they could only get the keys to the Reserve Bank they need never work again. There’s a dreadful squabble going on about who should “own” this institution with precious little understanding of what that means. In the slightly more learned halls of industry and finance there is an equally silly discussion about whether interest rates should be nudged a smidgen up or down. What is desperately needed is for everyone to understand that the money has run out, the government is on the verge of being unable to service its debt let alone bail out any insolvent basket cases. At some stage they will be faced with choosing between paying civil service salaries or distributing the social grants. The sole solution is very painful and political suicide but requires that every law, directive, diktat and regulation that attempts to control the supply, demand and price of labour be suspended. Immediately. In a far shorter time than the talking heads will have us believe, lights will appear at the end of tunnels as people discover that they and not the state are the only ones truly interested in their welfare. Whew.

Once again the quarterly release of the GDP number for the now far distant period of the first three months of this year caused widespread dismay to anyone who believes that the numbers are accurate and that President Cyril could lead the nation as successfully as he used to run his own private ventures. Officially the level of economic activity declined more than 3% from the previous quarter. Seasonal effects such as Christmas are supposedly removed from the raw data so this number -- the worst since the global debt crisis 10 years ago -- is properly terrible.  A third of this decline was provided by the manufacturing sector, while only government (naturally) and the financial sectors showed any upside. Deeply worrying.

The outbreak of deadly and fiery attacks on transport trucks using the N3 toll road between Durban and Joburg has caused the folk who run that road to recommend that it is inadvisable to travel long distances at night. This is something many of us have tried not to do for many years and official acknowledgement that it is foolish is very alarming. Increasingly normal law-abiding behaviour is being closed down and the criminals are winning. Most of the highway incidents seem to be part of a well organised strategy, which some transport operators suspect is officially ignored (if not exactly sanctioned). And while the crime rate soars a recent official response has been the old whine about security guard’s uniforms being too like the police. Now avoirdupois is often a better guide  to whether it is a cop (large) or a security guard (thin) who has turned up to help but regardless of who it is, the baddies will be disappointed, and the good guys will be pleased.  However, the key point is that if the police and the courts were as effective as we all need and want them to be then demand for private armed response would diminish.

Since it is not Women’s Beach Volleyball season, Tidemarks has no interest in sport at this time.

James Greener

Friday 7^th June 2019