Reportedly there is real panic in
some of the shorter corridors of power where those who know what’s happening
have their offices. It’s all to do with looking for things to sacrifice in order
to appease the mighty Ratings Agencies and stop them declaring that our nation’s
fiscal state is Junk. This “junk” thing is actually way more important than it
deserves to be. It is a harsh term for an arbitrary level about two-thirds of
the way down a subjectively constructed ranking table of an organisation’s
(including countries) supposed ability to pay interest and repay capital on its
borrowings. Actually the payment versus non-payment of monies due is pretty
much a binary thing as anyone with experience of debt will know. However, the
agencies have constructed a very tidy niche for themselves from where they proclaim
a range from “Definitely” to “No Chance” with many degrees of “Possible” and “Probable”
in between. Their record on these matters is not without severe mistakes in
both directions.
Nonetheless many investors still
place great store by these rankings and will sell off any holdings which fall
below the junk level. Furthermore, organisations and nations with a junk rating
will normally have to pay much higher interest rates for any money they borrow.
The panic is therefore understandable. Regrettably the remedy which is to reduce
government interference quickly and drastically is unpalatable to a leadership
dominated by communists and socialists who always know better than markets.
The news that our president has
changed his mind and has offered to refund the taxpayers the costs of some of
the upgrades to his private home in the heart of Zululand, raises even more
questions than before. Even on his reported official salary of almost R5m a
year before tax and the demands from of a flock of wives and children, JZ would
find it hard going to make any real dent in the R300m odd that the public
protector thinks he ought to pay back. This will be a challenge for his current
personal financial advisor.
Once again it is necessary to
follow the money in this dreadful business of the Eskom coal supply contracts.
A colliery, which faces a heavy fine for delivering under specification coal to
an Eskom power station, has been sold. The seller claims to be unable to make a
profit at the agreed contract price. The new owners, who have good friends in
high places are presumably confident that they can do so. Just how that
friendship can raise the standard of the coal as well as allegedly the price,
remains to be seen.
A real mystery however, is why so
many people have applied for tickets to attend next week’s State of the Nation
Address (SONA to the cognoscenti) to be delivered by Number 1 in parliament. Historically
his formal speeches are soporific affairs but presumably applicants are willing
to risk being caught on camera dozing in the chamber in order to flaunt their
talents for the gaudy and gauche on the red carpet outside before the start.
It’s a far cry from the olden days when all there was to marvel at were the
selection of frocks and hats. And doubtless there will be excellent catering on
offer in the parish hall afterwards.
It’s the time of year when the
Super Rugby coaches with the biggest problems tend to made the wildest claims
about their prospects for the season. It seems likely that several SA teams
will languish near the foot of the overall log all season. We simply don’t have
the players to field six competitive franchises whatever the suits and the
politicians claim about our “depth of talent”. We are also apparently battling
even to pay them. It’s also looking grim in the Proteas camp especially in the
bowling department. Another case for the term junk perhaps. Losing to England
in Bloemfontein was terrible even if it was because of collusion between Lewis,
Duckworth and the weather.
James Greener
Friday 5th February 2016
