It would not have taken Minister Gordhan long to guess his predecessor’s password (either “maria” or “all blacks”) to log on to the department network and hack into Trevor’s files. Thereafter, a quick bit of copy and paste followed by a little tampering with the numbers and he toddled off to deliver the national budget. The result was condemned by many for being unimaginative and lacking surprises. The success of the budget relies a lot on a speedy end to the recession and also on everyone behaving properly and patriotically. The forecasts for both income and expenditure imply huge reversals to present trends
The belief that taxpayers will scoot along to the nearest SARS office and confess their past sins is heart-warming. Everyone was politely reminded that corruption was a bad thing. In the light of recent revelations about the opulence of a junior office bearer in the ruling party it would only be fair if the rest of us stand aside and let the one-time woodworker have the first opportunity to explain his income to the tax man. And thereafter let’s hear from the two so-called A-list Celebrities who crashed their Lamborghini and Ferrari into each other during a show of machismo and poor driving on the main street of a sleepy village in the kingdom.
In the meantime we wait for the deluge of riches that the World Cup will deliver in mid-year. But before that arrives, the bureaucrats are taking care that their own needs are ensured. For example, there’s the proposal that any bar that dares to switch on the TV for customers to watch “the beautiful game” must buy a R50 000 licence and pay a turnover levy for the duration of the tournament. The cherry on the top of this outrage is that the levy will be used to fund courses in avoiding alcohol abuse. Too late. This blatant piece of revenue-raising has already raised abuse levels.
Is there a dawning realisation that the World Cup is a FIFA boondoggle with only limited short term benefits to a few small segments of the host nation? More important, however, is the likelihood of long-term liabilities that we all will bear. The soccer itself will doubtless be amazing, and the South African people, stadia, and host cities are all eager to be welcoming and friendly, but is there really demand for a stretcher in a tent pitched on a school playing field in June in Johannesburg at R600 per night? Are people staring to panic that the circus will sweep through and leave them no better off?
Last night the Federal Reserve in Washington unexpectedly increased the discount rate by 25bp to 75bp. This 50% increase in the price of the money that the central bank lends to the commercial banks was accompanied by the clearly silly contention that: “…The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy." The immediate market response was for the dollar to grow even stronger and it has now gained more than 8% over the euro this year. In currency markets that is huge and it will be upsetting plenty of business plans.
The JSE decided, however, that this rate hike was threatening and curtailed the rally it had been enjoying. The index will end the week near 27 000. Reporting season is in full spate and around 30 companies reported half year results this week. Worryingly, less than half of these reports were able to show earnings growth. One-time giant Anglo American again skipped its dividend. Shareholders will therefore have endured a period of at least 24 months without any income.
As feared, the Proteas encountered serpents in Eden Gardens. Here in Durban, the Shark faithful were all for introducing NZ referee Keith Brown to a snake or two after losing to the Chiefs in the dying seconds. They still have one more point than the Lions though.
James Greener
19th February 2009.
