So far this month the all share index has given back almost two thirds of last month’s amazing gains. Volume, however, is rather muted. Bonds on the other hand are in great demand as investors scramble to lend money to the government. The long bond price index has traced out one of its steepest rises in recent history, gaining 4.5% in a week. I certainly never expected this but it makes me very worried about buying now. The so-called GOVI exchange traded fund is the easiest way for the small investor to get this exposure and you may have noted that it has appeared in the new highs column almost every day recently.
Even after the election of a worker-friendly government sixteen years ago, this country has continued with its policy of paying most of its civil servants rather poorly. Of course the new government has enthusiastically continued the program of rewarding loyal cadres with an appointment to an ever growing upper echelon of bureaucrats who are definitely paid far more than they are worth, which in many cases is zero. However, perhaps because politicians are jealous of their skills, professionals appear to be particularly ill treated by the state. The present unresolved wage negotiations have triggered strike action. A quiet and dignified silent picket line is neither the South African way nor all that effective at attracting reporters and cameramen. Singing and dancing is more our style. Unfortunately a few of the teachers – and probably a number of rent-a-crowd – have been mobilised by union leaders and are travelling the city in busses from school to school. Their objective at each venue is to terrify the school into closing and it has been successful. Several of my family are in the teaching business and the stress of dealing with rumours and stories of where the mobs will next appear has been just as bad as the actual confrontation and police presence in helicopters and vans. The sole light-hearted point is that some of the chanting throng are armed with golf-clubs rather than pick handles. Presumably they have a tee off time booked for later in the day.
The tragedy of the SA mining industry gets ever more dreadful. This week saw the government admitting that even it could not understand the tangle of laws and regulations that it has imposed and it has (illegally even!) suspended the whole shebang until it can sort it out. No exploration or mining permit applications will be processed until the clowns at the department of mines grasp that exploring for minerals on a property where a mine has been operating for decades does not make any sense.
In the meantime it is reported that the government is “devising a labour-absorbing economic growth strategy” that will provide growth of about 7% per year. Oh dear. The sole thing a government can grow is its level of interference and regulation neither of which promote or encourage individuals to try and start a business of providing a product or service that they can sell to others. Just look at what the forthcoming carbon tax will do to the car industry and will not do for carbon dioxide.
Tomorrow, when events unfold in Soweto and John Smit collects his 100th cap I shall be on holiday. I really can’t face the ordeal of watching the ‘bokke these days. It is just too stressful. I shall either be fishing or if too windy, as seems likely, I shall fly my kite. I can only hope that the Ellis Park curse on the All Blacks extends to the FNB stadium. Only late tomorrow will I call somebody and ask them for the score. Here in the kingdom the logistics of getting from the test match on TV at home to Kings Park for the Province clash in just 10 minutes is causing much anxiety.
James Greener
20th August 2010
