IT’S MORALLY REPUGNANT THAT THE BOKS ARE NOT IN THE FINAL

Exactly as everyone suspected, the US Federal Reserve left interest rates unchanged but did pop a somewhat thin and mangy cat into the pigeon loft by muttering the dreaded words “Next time….”! Share prices, however, are so determined to go up, that adverse reactions were meagre. Developments in SA though are turning many an analysts’ mind towards further rand weakness and a touch of the inflations perhaps. Hence the scramble to own more shares, which in theory, should offer some protection against currency calamity – especially if the company has a forex earnings stream. This doesn’t get away from the fact that almost all of those companies are expensive by any traditional valuation measure. Just closing one’s eyes and buying doesn’t feel like a strategy.

If you don’t pay careful attention it is easy quickly to lose track of all the different mechanisms the government has for spending our money.  Now in the news, because of course it has dried up, is a fund under control of Minster Red Rob Davies called the Manufacturing Competitiveness Enhancement Program or MCEP to its mates. The very name is chilling, implying that there are bureaucrats who are able to judge Competitiveness and distribute cash accordingly. Reportedly about 1250 companies have shared in the R5bn of taxpayer’s money that was used to launch the program half a dozen years ago. That of course was the time of the great “global financial crisis” when banks realised rather belatedly that lending to people who were very unlikely to repay the money was a poor business model and closed their doors to any more similar borrowers. Hence the government decided that it would then play the role of banker, and predictably the chickens are now roosting. The massive student support fund is suffering an identical fate.

Student Ms Anele Nzimande is obviously not yet up to date with her swatting program for the end of year exams. As leader of an outfit named the National Shutdown Coalition she has been offering her opinions about the protest movement. Apparently she believes that “People listen when students speak.” But when they say things like it would be “morally repugnant” for students to give up their protests and write their exams, most people probably stop listening. What we all would really like to see and hear from our future leaders is a clear and simple proposal of where the R20bn that the universities need will come from.  Frankly, those threatening newspaper adverts being placed by the Taxman about not trying to hide one’s wealth isn’t going to rustle up that kind of cash.

And Comrade Dr Blade Nzimande (no relation?) hasn’t come up with anything very good yet either. He has spoken about raiding a few caches of unspent funds in various training budgets and maybe slap a tax on graduates. Rather revert to Plan A which is to cut down on corruption, wastage, and grandiose schemes that the country just can’t afford. Like having one of the largest diplomatic corps in the world.

And now in the wake of unwinding the disastrous changes to the visa rules, the government is offering a R1m a year salary to someone who will set up and run a Socio-Economic Impact Assessment System (SEIAS). This outfit will check proposed legislation for “unexpected” reactions to proposed laws It would of course be a whole lot cheaper and more effective if the lawmakers listened to and heeded the comments and criticisms that they actually invite the private sector to make before sending the dog’s breakfast to parliament for approval.

The main concern at the bowling club bar is that laws of the sport don’t envisage a result where both teams in the Rugby World Cup Final can lose. The best we green and gold supporters can hope for is that the ref dishes out a royal flush of yellow and red cards and the resulting brawl sees the match abandoned! And the Cup is then awarded to the team that comes third, which tonight will be the ‘bokke.

James Greener

Friday 30^th October 2015

Thank you to the many readers who sent words of comfort and outrage about our burglary last week. A common theme in those messages was how many of you had suffered similar experiences.

LOTS OF LOSSES ALL ROUND

Last week our home became an entry in the nation’s house break-in statistics. Fortunately, no one was home or harmed in the mid-morning invasion which revealed that brute force can defeat even the costliest and well installed security devices. The usual clutch of electronic goodies was stolen including of course the laptop on which Tidemarks is crafted each week and which hosted the mailing list of recipients. The necessary conversion to a new computer operating system and recovery from some patchy backups has been incredibly trying but here is a belated comment bashed out on a brand new computer thingy.

Because of the aforementioned imperfect mailing list reconstruction process this letter will be reaching people who may have never seen Tidemarks before and unless you object, your name will remain on the list. More complicated is the recovery of those names who were added to my list since the last back up. If you recall asking me in the last six weeks or so to add a friend or even an enemy, please just send me that request again.

And meanwhile, our poor nation was having its own problems with revolting students. Some hyperbolic opinions have been aired but it certainly seems possible that our leaders are paralysed with fear. No one has emerged to be willing to confront the mobs and impose some discipline and order. With so many in government, from Number 1 down, largely ignorant of arithmetic, economics or indeed what universities are for, the rhetoric and appalling hash tag sloganeering has not produced any sound and sensible debate. The ruling party seems to be in panic mode and frantically trying to distance themselves from government. An impossible task, as the two have been inseparable for a couple of decades.

It appears that the tertiary education sector has now joined the schools and most state-owned and operated enterprises on the scrap heap of broken institutions. The desperation of young people to get into a university is probably based on their earnest but misguided belief that a degree is the sole route to employment. The number of powerful positions occupied by people who have lied about their qualifications is testimony to this. But actually peaceful competence in almost any field including just driving a broom is a saleable skill. The cruel fact is that university is indeed a privilege open to far fewer candidates than our dysfunctional school leaving system promises. If student numbers were restricted to the truly worthy, the university funding issues would diminish and scholarships, bursaries and loans could operate as intended.

All of this submerged poor Finance Minister Nene’s semi-annual trip to the parliamentary podium and any plans he might have for allocating resources were trashed by just about everyone. It seems likely that his peers will insist that he raises more tax from those who are so “obviously” able to afford it. The air is thick with the noise of calculator buttons as the pundits demonstrate yet again the impossibility of raising significant amounts of money from insignificant fractions of the population. Retirement and emigration has thinned the ranks of  the so-called previously advantaged male citizens that the socialists are so pleased to bludgeon and blame. They are going have to find new and wealthier people to tax.

In the end the three-point shortfall was heart-breaking for the ‘bokke and us fans. Unfortunately, the lads can’t even come home now as they have to play that silly third place decider next weekend.

With luck this communique will resume normal service next week.

James Greener

Sunday 25^th October 2015

HOW GREEN AND GOLD IS OUR VALLEY

Forget about Angela Merkel or Hillary Clinton. The most influential and powerful woman in the world is Federal Reserve Bank Governor Janet Yellen. All she had to do was express the slightest reluctance to raise US interest rates and the bear has been sent packing with high-fives in dealing rooms everywhere. Well except for those who were short and whose burned fingers are all bandaged up. Because of the gyrations of a couple of big contributors to the All Share index, the reading that the market is more than 10% above its August lows is not very representative. Nevertheless there are widespread recoveries throughout the market with the mining counters doing particularly well.

The dollar is showing a tendency to weaken and so even our poor battered Rand is crawling out of the gutter a bit. It can also be remarked that a single Krugerrand will cost you now about R16 400. This is a record and undoubtedly reveals that there is underlying reluctance to hold all one’s eggs in the equity basket.

Would it be mean to juxtapose the two stories about student funds? The first is the protest about intolerably high fees -- anything rather than get down to some swotting. And the second is the news that there’s little hope that the National Student Financial Aid scheme will recover any more than  about 10% of the outstanding R56bn it has distributed in the past 20 years or so. It’s interesting to note that the fund expects that any beneficiary who goes on to get a job paying more than about R2500 a month should make a start on repayment. That’s a really tough ask. The conclusion is that in fact many students are not actually paying their own fees at all and that the scheme is simply a roundabout way for the government to finance the universities. This is a seriously broken system.

National Police Commissioner Riah Phiyega is not the only one that Number 1 should have bulleted this week. He ought also to have fired whoever it was that prepared  the speech about party membership for him.  It is well known that our Pres can’t do six digits and he really ought to have been spared the embarrassment of once again stumbling over trying to say a big number. But perhaps the speechwriter planned it so that in the confusion and mirth the fact that Party membership is down went unnoticed. Once again it highlights that our leader is probably innumerate and that involving him in any discussion with amounts greater than the price of a wife is unwise.

Equally at sea with large monetary values are most journalists. One day there is a large and breathless headline about the council losing a million or so in a dodgy deal and the next page the planned expenditure of billions on a city improvement scheme is whistled through without a nod. So far, however, there has been no mention of any plans to build the urgently needed enclosures for the flocks of golden-egg laying geese that the city fathers obviously believe must accompany the awarding of the Commonwealth Games in 2022. The flow of grandiose and ridiculous developments grows stronger by the day. Though not the most expensive, the plan to replace Virginia Airport with a luxury housing development has a distinct whiff of corruption about it if only for the secrecy that has attended all details. The location of an airstrip capable of handling modest sized business jets just ten minutes from the city’s financial and commercial centres is an advantage unmatched by any other South African city. Scrapping that is very short-sighted. Has everyone already forgotten the embarrassment caused at the time of the Soccer World Cup semi-final when even scheduled flights were turned away from the single runway and meagre apron facilities of King Shaka International?

While we should all be bold enough to plan for Welsh leeks on toast for supper tomorrow it will be more sensible just to stick with chops and boerie I suppose.

James Greener

Friday 16^th October 2015

BAD IDEA WEEK

One of the largely unpredicted global developments has been the huge and ongoing collapse in demand for commodities. Whether scratched from below the surface of the planet or grown on it, the prices of most of these things have plunged. Selling less of something at a lower price than before is a dreadful way to run a business, and share prices of the companies in this line of work are reflecting that. It is reasonable to expect that the downstream businesses of manufacturing and consumption should also weaken. But as yet there have been few really significant share price corrections despite a noticeable slow down in earnings growth in some sectors. It’s really hard to make a good case for buying very much at the moment. About the sole hot spot though seems to be London accommodation markets where allegedly R10 000 a month will secure you a single bed under the stairs in someone else’s house.

The utter lack of interest in owning any rands has intensified and our poor currency has ticked even lower in the past few weeks. The reasons for this are as numerous as the sellers but the rather complicated and aggressive implications for local and non-resident investors carried in a raft of further and forthcoming legislation are undoubtedly very important. The terrible effectiveness of corruption to circumvent existing legislation was recognised by thousands of people who took to the streets in protest marches this week. But without severe sanction for the practice more regulation to control the bad guys will merely have the effect of sending the good(ish) guys elsewhere.

It’s a pity that Thomas Piketty, the socialist’s poster boy economist, managed to get around the visa issues that temporarily prevented him visiting SA. Once here, however, he has been spreading his message which is that someone else can always spend your money better than you can. This incredibly bad idea is accompanied by a special one for SA, which is that the nation needs a wealth tax albeit at a low rate. Allegedly the point of this would be to collect data of who has what. Well Commissioner Tom over at SARS must be smarting at that blow. His data base is as good as it gets and starting another one isn’t going to snare anymore of the nation’s astute tax evaders. Further, will Prof Piketty please just do the simple arithmetic of dividing the amount he thinks the wealth tax will raise by the number of poor people he is going to give it to. Less than a month’s taxi fare is probably the answer. Mind you he does have a very valid point about how rural land management so urgently needs to allow for proper individual ownership.

The picture of Number 1 with a phone pressed to his ear and seated while shaking President Obama’s hand raises so many questions. Not least of which is who on earth was he talking to? Rude and puzzling. Obama himself must have been surprised as well and wondered who was more important than him! In fact whenever grand panjandrums of our government are shown out and about meeting the people, many in the official party, including the VIP, are on the phone. Since nobody ever seems to make a decision or do any actual work presumably these are mostly private calls to make a dental appointment or a restaurant reservation.

R14.5bn is a pretty impressive loss for just 12 months. This is what PetroSA, the state owned oil company has reported and seemingly this has triggered arguments about who is responsible. Well the CEO would be a shrewd guess. Apparently most of this amount resulted from unsuccessful exploration wells looking for gas to bolster supply to the Mossgas plant. It would have been way cheaper if they had gone mining in their own archives from the days when it was called SOEKOR to see that 20 years ago we had pretty much ruled out any chance of massive reserves in reasonably exploitable locations. The taxpayer has had a simply dreadful return on his money with this venture

I am half  Scots. But not the half that is interested in rugby. Come on ‘bokke. Oh and come on England too.

James Greener

Friday 2^nd October 2015