Reportedly, Eskom is presently able to supply less than 80% of its peak capacity. Something big has definitely broken down. Not least of which are the lines of communication. The government has called the mess a “national emergency” and this morning, the big gold and platinum mines in the country shut down their operations. In the meantime, there is news of a private gas turbine generator being constructed that will supply an aluminium smelter yet to be built in Coega. The deal looks as if it will be loss-making for Eskom. We are in real trouble folks. The power situation is way deeper that the euphemistically named Brown Level 3 we are supposed to be in.
One useful way we could save power is to stop spending any time, newsprint or TV broadcasts on the supremely stupid statements issuing from clueless politicians. Their claims that the economy will be unaffected by these blackouts is utterly devoid of reality. These dolts presumably do not get trapped for hours in traffic jams, have tax-payer funded generators installed at work and home and can be certain that their salary will be paid regardless. Most have no experience of earning a living by providing goods or services to customers. They have not yet grasped that the slow down will show up in reduced VAT and income tax collections. And when they do, you can be sure that it will not be their own salary and bonus pool that gets trimmed! I fear that the infant government budget surplus could be turning into a strapping deficit again.
It looked as if it would never stop falling. The rain here in Joburg that is. The market in fact has staged a very robust reversal just when we bears were starting to preen. I do not believe that there is much stamina in this new bull, however. We may be watching no more than a deceased feline, bouncing. At its deepest, the 2007/8 trough has been not even half as deep as the one experienced in the emerging market crisis of 1998/9. I am anxiously awaiting the upcoming season of company reports. Even if results for the period ending December 2007 were respectable, which companies can be expecting good growth into 2008?
The frantic actions by the US authorities to try and reinvigorate their utterly exhausted and indebted consumers are unlikely to work. The patient is beyond recovery and no amount of life-support will avoid the inevitable. I have always been amazed and amused by the arrogance of the rating agencies who loftily declaim on the ability of a financial entity to meet its bills. Once again, they have failed to spot until too late that a number of bond insurance businesses have put up the “Gone Fishing” signs. The ramifications of this latest development have yet to be properly calculated. They will not be trivial.
Another place where the sums were not being done carefully was at a French bank where a single trader is reported to have lost $7bn. I think that it is unfair to describe him as a “rogue”. Deeply talented is more accurate. Even some of the snow-covered talking heads at Davos appear to be impressed by this achievement. None however, appeared to be either shareholders or clients of the stricken bank.
I was delighted to see the national soccer team put the ball in the back of the net (and not their own) during their first match at the Cup of Nations. That’s a good start. Do that again, please chaps. We are in dire need of something to show FIFA that we are worthy hosts of the world cup. Simply renaming the host cities so that the fans get confused and lost is not enough.
James Greener
25th January 2008
