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 2nd October 2015
