A chart of the various JSE sector indices
for October so far, resembles a bowl of spaghetti with no emerging trends after
the sharp decline last month. Despite the mild panic that broke out last month,
it is interesting to note that very few prices have lost more than their gains
since April this year. Real bears can wipe out years of work. We have yet to
learn if this is a real bear.
Although it is customary to wail about
the weak rand, the fact is that our currency is presently at just about its
best levels this year against all the major currencies. But not of course
against the US dollar which continues to be the beneficiary of some form of
“flight to safety”. It’s fair to assume that the dollar’s strength is a
consequence of the end of the Federal Reserve’s policy of flooding the market
with crisp new notes. In the meantime the foreigner’s cash, after being
converted to US dollars, is being loaned to the US government, a conclusion
that can be drawn from the rather steep fall in bond yields in that country. Investors
now have to be content with a 10 year interest rate of less than 2.25%. It’s
hard being a saver in this world.
For some unknown reason, what should be a
rather simple and low key mid-year update of the fiscal scorecard has blossomed
into a grand event that requires the Finance Minister to buy a new tie and
plonk down a 63-page “thud report” (plus annexures) on the parliamentary
podium. The main Budget speech is only 4 months away so it seems all quite
unnecessary. Only the saddest of economics wonks will wade through this tome
which Minister Nene promised was full of strategic frameworks and road maps. The
fact is that if the numbers can be trusted, out of every R100 that the
government collects it spends about R114. The difference is obviously covered
by borrowing and if nothing changes the total debt gets ever larger and people
begin to notice and point fingers. The worst fingers belong to the ratings
agencies who can at the jab of a keyboard alert the world to what’s going on
and cause lenders to be more demanding.
A great deal of airtime and newsprint has
been sacrificed on the news that the Minister feels he has no option but to
make pips squeak all round. Taxes up and state spending down is the message.
Very interesting is the threat to cut off at the knees many of the appallingly
run parastatals and even sell off the family silver. The Post Office strike may
seem like a picnic when the public service unions get the gist of this one.
Strangely, little seems to be made of the
fact that while expenditure is increasing at around 8% pa, the revenue figure
is showing almost 11%pa growth, so given time (about 7 years) the gap should
close anyway. Presumably real economists have reasons for discarding such a
simplistic yet optimistic sum. Nevertheless any attempt to curtail state
expenditure – particularly the suspected massive sums lost to corruption and
inefficiency -- must be welcomed, and we shall all watch Minister Nene’s new career
with interest.
Here in Durban a dozen years ago it was
decided that ratepayers, residents and anyone wanting to find their way around
the city needed to be punished and seriously inconvenienced for their alleged
previous crimes against humanity. The street names of most of the important
thoroughfares were changed. While the significance of the new names (like
indeed the old ones) is generally unknown to anyone except students of local
politics, the nominees probably deserve their recognition. However, a wise
authority would have allocated them to new developments and not thrust them
onto the existing network. Further, it should be expected that the promoters of
the new names will take care to get the details of their heroes correct. But Durban’s main city
boulevard now requires yet another set of even longer street signs. Research
and custom has revealed that Dr Pixley kaSeme Street should correctly be Dr
Pixley ka-Isaka Seme Street. Can’t we just find the old West Street signs? Nobody now recalls if it
is named after a local worthy or a merely a compass direction. It really is not
offensive and is easy to remember.
I think I can safely wear my Lions cap for
the Currie Cup final tomorrow.
James Greener
24th October 2014
