There is no reason yet to worry that
RSA is going to default on its debt payments and therefore it remains
investment grade (see below) but it would be foolish to ignore the fact that
state revenue collections have slowed down dramatically. This may form some of
the background to the acrimony between Minister Gordhan and SARS boss Moyane.
The collection rate is running at only R1.1 trillion a year which is R130bn
below budget! This a very big number and a hard gap to close, so is doubtless
the reason we are seeing depurate measures like charges of collusion which
might yield some fines money.
The Competition Commission is now hunting
Unilever and threatening them with a fine of 10% of their turnover. There may
or may not be a case for their suspicion but frankly most instances of real
collusion would soon be laid low by competitors if the state did its job and
made it simple and cheap to start and operate new businesses. Juicy profits
always attract emulators. If whistle blowers could rely on state protection and
support, someone with inside information is way more effective at exposing
lawbreakers than any building full of envious socialists. These attacks are not
really about protecting the consumer but about raising revenue.
The revenue shortfall is probably also
why the rumbling about forming a BRICS ratings agency has started up again. Presumably
the assumption is that a home referee is more likely to maintain us at
investment grade even if we are clearly drifting offside. The traditional ratings
agencies are analysts who tend to believe in their own myth that they are
better at forecasting the future than anyone else and so deserve respect. Their
record is not at all perfect. There are many cases when the traditional
agencies have got it totally wrong, just like mere ordinary analysts. It’s not widely remembered that most
borrowers pay the agency a fee for the rating and that no matter where in the
lingerie department spectrum from AAA to DD a rating falls, the lender is the
sole risk taker. The arbitrary distinction between investment grade and junk
status lies between BBB and BB but this, together with plus and minus signs and
“outlooks statements” just disguises what is fundamentally a yes or no
decision. While a tame hometown agency might dispense “A” all round, it will matter
nothing if the interest payment is not made or the capital is not repaid.
No matter what the economic environment
might be, businesses that provide catering and clothing to political parties
must be doing well. Event organisers understand clearly that policies and rhetoric are rarely enough to
ensure a decent turnout and that handouts and feeding are expected. Everyday there are pictures of folk wearing
garments that reflect their allegiances and the purpose and date of their
current exciting gathering. Later in the day either pieces of a brightly
decorated cake the size of a house or buckets of deep fried battered chicken
from Kentucky signal the end of proceedings. It is puzzling to outsiders that
government didn’t play a more prominent role in the job-destroying squabble
about the chicken industry.
Now it’s the lorry drivers who deliver
coal to power stations who are objecting to Eskom buying power from the
renewable energy businesses. Probably correctly, they reason that less demand
for coal threatens their jobs. They claim that 1 million workers could be
affected. Leaving aside the matter that
we really ought not to be using roads for doing too much steam coal delivery,
this number seems a bit fanciful but they nevertheless made a great nuisance of
themselves by severely disrupting the traffic in Pretoria to draw attention to
their views. So far, the objectors to the forthcoming sugar tax who also
claimed massive job losses have not taken to the streets but wait until they
feel the effect of the tax on their lunchtime staple energy source.
Sadly cricket has a tarnished history
when it comes to insider trading and the astonishing sequence of massive
defeats and wins for the Proteas in New Zealand dusts off memories. Is it
really such a funny game? I expect to hear a lot of muttering down at the bar
this evening about the Sharks, but I’ll try and cheer them up by reminding them
about the Lions win. And then hopefully we’ll all have good news coming from the Las Vegas 7s. Now that’s a
funny place for rugby.
James Greener
Caitlin’s birthday 2017
