Just about every market index is bouncing
around like a yo-yo. On the bull side are floods of cash washing over many
economies from frantic central banks desperate to make people feel rich again.
On the bear side is the plain fact that the supply of almost all commodities,
especially energy and even the food ones, seem to be swamping demand and prices
have fallen sharply. Producers of these things are feeling the pinch and it
shows in the share prices. As always the sensible thing to do is mostly nothing
other than keep an eye out for buying opportunities when a particularly bad
dose of pessimism washes across the companies that are well managed and have
great brands.
Broadly speaking the “austerity” that
everyone keeps moaning about, especially along the bottom edge of Europe, is
just a government decision to reduce the amount of money that they can give
away to those citizens who claim the loudest that they deserve it. This decision
is not the result of careful debate and consultation, but instead is the
consequence of that government running out of money!
A very recent development in Greece where
“austerity” had become especially unpopular is that a political party, with an
identical lack of arithmetic and economic skills as our own EFF fellows, has
been elected to power. Unconcerned by the paucity of tax receipts compared to
desired spending programs, the new government has enthusiastically resumed the
business of giving money away and thus has banished “austerity”. The reaction
is that anyone who has recently lent money to Greece (most notably the diligent
and prudent Germans) has quickly decided a) that they won’t do so any more and
b) to sell at any price the IOUs (aka Bonds) they bought from the previous Greek
government. This sell-off has caused Greek debt prices to collapse which is the
same as saying that yields are soaring. Contagion is being felt in may other
wobbly economies and even our own debt yields are pushing higher – though that
may also be a result of the difficulties in our electricity supply and an
absence of sensible political leadership.
This Euro zone debacle might be fun to
watch from the distance of the southern tip was it not for the fact that our
TVs don’t work. The
power failures, caused by the ineptitude of the national electricity utility
Eskom, have moved up several notches in their frequency and duration. Large
swathes of the nation are without electricity for hours on end. There is
something quite soothing about preparing to cook supper on the braai and to sip
wine by candle light without the background hum of appliances but it will soon
get annoying when the drinks get hot. Businesses and others who need power all
the time are not so chilled and it is especially irritating to learn that
nothing is being done about the widespread and blatant theft of electricity.
More than one person has suggested that authorities should simply shut down
supplies to any substation that has even one illegal connection trailing away
across the veld. That should also occur in areas where electricity accounts are
being simply ignored. Let's see if peer pressure by the law-abiding has any
effect. Or are we all simply content to grub around in the dark at the level of
the thieves and malcontents?
Apparently
last year about R320m was spent in SA on "super-luxury" watches. For
a nation where time and punctuality are not thought particularly important that
seems rather odd.
Matters got rather rowdy at the AFCON
tournament in Equatorial
Guinea when the home side lost the
semi-final (which by some accounts they were lucky to reach). It may however be
mild compared to the sports we could witness next week in parliament when JZ is
scheduled to deliver a State of the Nation Address. In a rather boring repeat
of the demonstrable falsehood that they have come to the chamber to work,
Julius Malema and his rabble will likely disrupt proceedings again. In itself
this may be no bad thing because SOMA too is likely to be full of lies about
achievements and progress the government have chalked up. It would be fitting if the lights went out
somewhere during the expected melee.
James Greener
Friday 6th February 2015
