I am sorry if I am getting boring about this but the Government’s finances are getting ever more messy. Once a month the National Treasury releases an update and the latest figures confirm that the Zuma regime has no concern for, or perhaps more worryingly, any idea of what they are doing with the fiscus. In the last three months of 2009 the state needed to borrow an average of more than R400m per day in order to cover the shortfall between its out-of-control spending and the severely recession-squeezed income flow. This is a massive amount and suggests that the government would find it very useful if the cost of money could be reduced a bit.
Already we have heard the odd mutterings about perhaps ditching inflation targeting as a guideline for the Reserve Bank and indeed money market interest rates have sort of drifted down in last few weeks. I wonder if Governor Marcus is being encouraged to get her “rate cutting” frock over to the dry cleaners in preparation for the next meeting of the committee?
The other aspect of this matter is of course the question of where all the spending is going. As 2010 related construction projects wind down, there has been an increase in the stories about the now jobless workers wondering if that was all that the World Cup had for them. The answer seems sadly to be yes. All that remains for most of us seems to be to pick up the litter once the fans leave.
President Zuma has returned from his jaunt to the northern hemisphere and awarded himself a long weekend to recuperate. In spite of his pleas for privacy I am afraid that we now all know what he does to relax and young women are advised to be alert. It is now very obvious why the President always has a grin on his face no matter where he is photographed.
Tax season is drawing near and it has been interesting to note the vehement insistence of clients that any profit-taking sales are out of the question because capital gains tax in particular is especially unpopular. I too share this attitude even if the maximum rate is no more than 10% of the profit. Is this new antagonism towards paying tax a result of the suspected undisciplined and uncontrolled spending spree already discussed?
Tempers are running high in Europe over the suspicion that the Greeks may not have been telling their new EU companions the complete truth about how much money they have and to whom they owe what. I doubt they are the first or last to massage figures in order to get in line for a hand out from Robin Hood. It is just that as winter lingers on in Europe, Athens must be one of the warmer capitals for the suits to visit and chat about things. Nevertheless this crisis is being blamed for worldwide equity market weakness and today the JSE All Share index has sliced through the 26 000 level. In about another 4000 points or so I might start to get interested in suggesting that investors resume a program of nibbling away at their liquidity levels.
The six nations tournament kicks off this weekend but I regret that the Super 14 which starts the following week tends to occupy fully the space in my brain devoted to the oval ball. I tried to care that Egypt won the Cup of Nations but I was more than a bit disgusted by the soccer chiefs’ decision to punish Togo for withdrawing after their team were hit by deadly gunfire. Is it a numbers thing? How many team members have to be killed before official sympathy and understanding can be expressed? Soccer is a hard game to love.
James Greener
5th February 2010.
