FIRE SALE TIME

Despite all the handwringing that was triggered by the incredibly long awaited increase to short term US interest rates late last year, the long bond yield in that puzzled land has fallen steadily. If you like, you can now lend dollars to the US government at just 1.7%pa for a period that will cover at least two more presidential terms. The consensus amongst savers must be that inflation is extinct. Brave call. The equivalent instrument for rand savers is priced around 9%. That may also be unattractive for reasons that include one mentioned later.

Those who believe that future prices can be forecast by recognising patterns in charts of past ones, have been especially excitable in recent weeks. The substantial corrections and recoveries in the prices of many shares have prompted a blizzard of buy and sell recommendations. Less technical methods of analysis, however, have yet to uncover any really intriguing situations on the JSE. Even if the global recovery in commodity prices begins soon, the usual connections with local demand, activity and profitability could be obscured by the smoke from burning common sense and lost opportunities.

The budget turned out to be one for the button pushers. The devil is definitely in the detail.  A haze of calculator dust could be seen hovering over the research departments late into Wednesday night. Not to be left out, Tidemarks has also been prodding a few keys in order to offer the following morsels for thought. The first is that despite what finance ministers say and do the long term trends of government income and expenditure cash flows don’t change markedly or frequently. There is huge momentum in the collecting and spending of government cash.

Next, the income data is the more variable of the two because unforeseen external factors beyond the control of the poor chap in front of the microphone can have a big impact, particularly on the downside. The global credit crunch in 2008 is the classic of this genre and caused our government to reach the end of fiscal 2010 with R30bn less income than it collected a year previously. The immediate consequence of that was a ballooning of the deficit which has never yet been burst. But it also delivered a shock which appears still to be echoing through the halls of National Treasury. Since that time annual expenditure growth has remained in single figures (currently around 8.6%pa). In the first decade of this century, that number exceeded 20%pa on several occasions

And lastly, our political masters remain committed to spending way more than is collected in revenue and even assuming that his colleagues carry out the suggested belt-tightening, Gordhan expects to have to borrow about R139bn to make ends meet this year. Whoops! This is perilously close to the R148bn that is required to pay the interest on the existing debt. It really is time to for Number 1 to open an eBay account and see what he can get for SAA and most other state owned enterprises. That debt needs to be reduced or else the doubts about our ability to service our loans will become even more widespread. And bond yields will probably have to rise some more.

The Super Rugby season begins today and local rugby bosses will be congratulating themselves on a format and schedule designed to baffle and alienate just about every South African rugby supporter. Yesterday many of the suits gathered in Joburg to discuss “… raising rugby to a higher moral ground”. Really? What’s wrong with the old favourites like Newlands, Kings Park, and Loftus?

Meanwhile the bureaucrats have cricket by the throat. The budget revealed that the ministry of sport employs more than 200 people spending over a billion rand a year on rent, salaries and travel. A recent meeting between the high-ups in the game and these spooks resulted in the assurance that “The minister’s office will be presented with updates every step of the way”. Did none of them see the ecstatic multi-coloured polyglot crowd at Wanderers last Sunday? All that cricket – or indeed any sport needs – is a national team which hands out hidings to other top teams, and the sponsors and fans will be there.

James Greener

Friday 26^th February 2016

UP THE CREEK IN A BARBED WIRE CANOE

Many of the professional commentators have been nodding wisely at the news that Number One is taking the threat of a downgrade seriously. He has, we are assured, plans. Everyone from the cabinet up, has been told to be rein in spending. But it won’t make any difference. The population as a whole neither knows nor cares for concepts such as prudence, frugality, debt control and all those things that distinguish a winning country from the rest. The president himself is hopeless with money and he has a history of choosing financial advisors who have been exposed as dodgy in the extreme. This government will never balance the books. It has no idea what that means. As long as there are taxpayers out there, all is just great. And if the state has to borrow and pay interest, well that’s the next generation’s problem.

But that lot aren’t showing much concern either. Their contempt for the norms and standards of a civilised and intelligent society was terrifyingly illustrated this week by the worsening behaviour of people claiming to be students intent on gaining an education. The deliberate and wanton destruction of art, artefacts, furniture and property in order to display their unhappiness was stupid and terrifying. This riotous spree has attracted world-wide attention and deepened the suspicion that this part of Africa is just the same as the rest. The ratings agencies will note that these future leaders reject civic responsibility and treat the suggestion that loans whether personal or institutional need to repaid as ludicrous and threatening. Junk status is probably too generous. Our parental, education and civil systems have created a generation for whom the likelihood of real productive employment is small. The frustration is understandable. The behaviour is not.

The University authorities have been bleating that they do not condone violence but that bird has long since flown the coop. They caved in last year when the students were finding something other than swotting to do. That was a big mistake and gave the youth the idea that they were all-powerful and infallible. The mystery in South Africa is why swift and appropriate action is not taken against vandals whether they are jiving in parliament or defacing and destroying public property.

And yet people have to eat and survive and thankfully there are many wise and sensible souls who ignore the politics which they know they can’t influence. Instead they continue to find ways to grow. A very heartening report tells of a substantial growth in factory investment, and several companies have been coming out with quite acceptable results. Consumers are still able to find the money for booze for example. Unfortunately, some of this expenditure is sourced from ill-informed decisions about saving. Because it is terrified of alienating voters ahead of local government elections later this year, the government, at the insistence of the trade unions, has withdrawn proposed regulations about contractual savings. Workers will not be forced into buying retirement products but instead can take their money and run. The yawning gap between what the government is expected to provide (in this case pensions) and the ability and inclination of those supplying the cash is one of South Africa’s really big problems.

And on the topic of really big, a buffalo bull named Horizon deserves a mention. Much of his fame rests on the record-setting spread of his horns. Whether or not these weapons are in the 25% portion of the beast that was purchased this week for R44m was not mentioned. The sentimental amongst us shudder at the thought of how the owners of this also record-setting R176m worth of buffalo will generate a return. Horizon himself probably has an opinion on this matter which might emerge only as he grows older and cantankerous.

It’s one of those weekends when the preferred mode of transport from Pietermartizburg to Durban is a canoe. This also means that the areas around the bowling club bar tonight will be filled with fit men and women wielding paddles. It might be difficult to get the barman’s attention so perhaps it will be best to stay at home and watch the cricket on TV

James Greener

Friday 19^th February 2016

NURSING GRUDGES

The markets are looking unafraid and even quite strong in places today. Obviously investors took to their beds early last night and didn’t watch the broadcast from Cape Town. The displays of disgraceful and childish behaviour both inside and outside the parliament building were far more revealing about our nation than a speech from Number 1. Anyone living in this country already knows or at least has an opinion about the State of the Nation. Those with a season ticket to the first class suites on the gravy train will undoubtedly say it is good. For the rest of us our estimations will range from the desperate through hurt and bafflement to the deeply saddened and disappointed. It must take a special kind of blinkered obstinacy not to see that we are in a really bad place and in dire need of wise leadership.

The century old compromise of using two different cities for the executive and legislative centres of national government has always been an expensive luxury. The semi-annual traditionally named “zoo-train” to transport the grand panjandrums from Pretoria to Cape Town and back are now a distant memory. It was inevitable that consolidation ought one day to happen and last night JZ told us that MPs will no longer have to fear the Cape winters. To what extent this is a cost-saving exercise and not really a punishment on the Western Cape Province for not supporting the ruling party is debatable. One piece of good news should be that the government will be able to demonstrate its solidarity with the asinine #Rhodesmustfall campaign and rid itself of Cecil John’s magnificent estate in the mother city. Cape Town should immediately begin lobbying for the return of Groote Schuur since there is now no call for a presidential palace under the mountain.

It’s rather scary that the Young Nurses Indaba can display so much ignorance and hatred in one statement. In rejecting the traditional white nurses’ uniform, their spokesman and founder asserted that Florence Nightingale’s work ethic robbed nurses of the professional courtesy they demand from their bosses. What this actually means is anyone’s guess but the further claim that the absence of colour in their uniform was holding the profession back from transformation is pretty clear. The Indaba wants neither their uniform nor the nurses wearing them to be white.

The rapid recent escalation of anti-white hate-speech is intolerable and alarming and to a great extent pointless. Except when disguised as tax-payers, whom the masses certainly can’t currently do without, white people are a small and shrinking minority in the country with little influence and almost no powers. In vain we await a stern government response to demands that whites must either leave or die and presumably take our malign inventions and chattels like science and technology with us. Demographic trends show that it won’t be all that long until the wishes of these extremists are granted and the paradise that could have been shared and enjoyed by all South Africans of whatever origin will no longer exist. How very very sad.

Who is suddenly buying gold? In dollars it is at a one year high and compared to all other commodities (of which, the purists insist, gold is merely one) it is blasting into the stratosphere. Thanks to our dodgy currency the rand price of the metal is well into all-time high territory. A Krugerrand will now cost you R19 000, double what it was just 6 years ago. This is a very interesting development and one to watch.

It is always interesting when the cameraman aims at the rows of padded seats outside the presidential box at the cricket stadium. The first reaction is just who are all those guys and what do they do for the game? The next is to weigh up whether the benefits of a free seat in the shade behind the wicket plus complimentary bar and buffet outweighs the misery of having to wear a tie all day. Hmm. It would be worth trying.

James Greener

Friday 12^th February 2016