HIGHS AND LOWS

The rand has improved, share indices are up and bond yields are softening.  It’s almost as if South Africans feel much happier now that not only has President Cyril come back early from his overseas junket to solve our power crisis, but also ex-president JZ has returned from allegedly taking medical advice in Cuba and looks fit enough to share his State Capture Secrets with the Zondo Commission.

Cyril surprised many with the claim that sabotage was a factor in why Eskom has to ration our electricity; but cancelling all leave at the state owned enterprise may not do much for keeping the lights on. Very few people working at that utility have any clue about the real-world, hands-dirty business of converting (wet) coal into 230 volts. So instead of cancelling leave why not fire them along with all the supernumeraries on the state payroll.

The one government policy that needed to work in the last two dozen years of the so-called democratic era has turned out brilliantly. Known as Black Economic Empowerment (BEE) it all but legislates that wherever large money flows are happening – particularly if the state or one of its agencies is a party in that transaction – a layer of loyalists must be “inserted” in order to supervise that a suitable share of the proceeds be skimmed off and then made to disappear swiftly and without trace. The irony is that simultaneously with BEE, the government leaned heavily on the formal regulated financial industry to beef up compliance and anti-money-laundering activities. Not only was FICA very costly but it has failed spectacularly to throttle the flows of stolen and corruptly obtained money flows. One day research will demonstrate that in return for pretending to keep an eye open for suspicious cash movements and parachuting “cadres” into high paying but powerless positions, the banks were mostly left alone to do as they pleased.

An outcome for BEE has been to oblige consumers and taxpayers – who in the beginning were mostly white citizens -- to pay too much for goods and services. One measure of the success of the policy is the exciting growth of the black middle class, which is probably now the most significant demographic group in the nation. They certainly are the target audience of most advertising! Especially luxury liquors. But thy are also taxpayers and will be wondering how long it can last if 34% of the tax they pay is used in turn to pay them!

A secondary effect of rampant corruption and paying people more than the post that they fill earns, is that prices are now hopelessly distorted. In a land with record joblessness those who do have jobs are often paid far too much. And with governments paying egregious amounts for nearly worthless goods like trains that don’t fit tunnels and boilers that can’t burn coal none of us know anymore how much to pay for a Chappies bubble gum.

The changeover of the All Black’s coach from the more or less cheerless Steve Hansen to Ian Foster seems to have gone well. The new guy also doesn’t smile. Let’s hope that we can keep him glum for another 4 years. And if you have never watched Sevens Rugby give it a try. No matter who is playing its entertaining. It does help when the Blizbokke are on song though. Even Danie Craven would laugh at the sight of green and gold dreadlocks streaking down the touchline.

This will be the last Tidemarks for the year and indeed the decade. The highlight of the year was the birth in August to my younger daughter in Edinburgh of my first grandchild Penelope Nora Young. The nadir was the death just a fortnight later from liver failure, probably a result of chemotherapy side effects, of Christine, my beloved wife and best friend. Therefore, accompanied by my elder daughter from Franschhoek and a pile of unfamiliar but reportedly “warm” clothing, I am going to meet Penny and on behalf of Chris and myself welcome her into the family. Please have a wonderful festive season yourself and try to ensure that I have a country to come back to and prod gently

Merry Christmas and a Happy and Safe New Year

James Greener

Friday 13^th December 2019

TECH LESSON

The Gross Domestic Product statistic for the third quarter was published this week. After the usual jiggery-pokery it turned out to be 0.6% lower than the second quarter statistic. But allegedly there is good news. Convention states that a nation’s economy must shrink for at least six months before a recession be declared and so because the September result was +3.2% it’s OK for the moment.  We are doing dandy. However, yesterday’ s -0.6% is the fourth negative growth rate in just seven quarters. Can it really be possible that something as huge and inertial as a nation’s economy can swing so wildly from up to down and back again?  Similar peculiarities abound in all the tables provided by Stats SA. Odd. And still the population grows faster than any enterprise or activity or business. Its that old bugbear discussed many times in these polemics, that per capita statistics are a mystery for those for whom a 30% maths pass rates is OK.

If you use your “smart” mobile phone for anything other than making a normal telephone call or sending an SMS, the phone has to be connected to a so-called “data” network. Preferably this connection is via “Wi-Fi” which is a short distance radio signal connecting your device to a nearby “router” which in turn is connected to the outside world via a number of different possible methods, of which a fibre optic line is the newest and fastest and ADSL is the oldest.  If, however, you are out of reach of any friendly Wi-Fi routers for which you have permission and  a password to use, then you must enable your phone to connect to the internet via a “data” link. (often colloquially known as 3G or 4G or even LTE) For many folks, especially those in rural areas, this data link offered by a mobile (cell) phone service provider (chiefly either Vodacom or MTN) is their sole method for connecting to the internet. Hence the political interest in the cost of this service which this week culminated in government ordering those costs be reduced or else. Globally, mobile phone network operators have often been caught taking advantage of public ignorance and misunderstanding of their product and become avaricious and, dare one say it, collusion prone with their pricing. Travellers are frequently unpleasantly surprised by the costs incurred when “roaming” in other countries. This will be an interesting squabble to watch unfold. As usual, lawyers are flipping through the Exotic Car catalogues.

For a moment it was thought that Eskom had scooped up the only fellow crazy enough to want to try and fix an ailing SOE. Now SAA has found one to head up their Business Rescue. Like the lawyer who has been retained by the EFF deputy head one Mr Shivambu, these appointments are all from the much reviled and despised pale male category of citizens. If only we could export hypocrisy – but there’s plenty out there already! Now is there another poor fool keen to fix SA Cricket please? And suddenly we are short of mayors who are jumping ship everywhere.

14 months ago, we cynics viewed the news that SA had signed an extradition treaty with UAE with suspicion. This is the country where the Indian family who effectively ran the South African Government while shovelling cash into sacks, has gone to enjoy their spoils. Unsurprisingly there’s a glitch (translation error apparently) with the treaty which has not yet been ratified by UAE and so no one has been able to go to Dubai with a large net and leg irons to bring any of the Guptas back to answer a few questions and show where the rest of the money is buried in the gardens of the at the Saxonwold Shebeen.

President Trump managed to ruin even a reception held by the Queen at her London home, Buckingham Palace simply by turning up. Obviously, facts are scant but reportedly groups of world leaders behaved like schoolgirls and gathered in whispering groups throwing glances at the US leader and giggling. Very dignified and diplomatic sort of stuff! Trump got huffy and went home early.

And already its Sevens season and the Blitzbokke are off to a fine start in Dubai

James Greener

Friday 6^th December 2019.

MORAL COMPASSES GONE HAYWIRE

Supposedly President Trump is a very bad thing for America and the world. Also supposedly the share prices of companies in a nation will go up only when the companies are making money and growing their businesses in a favourable economic climate. US share prices are at all time highs. At least one of these statements must therefore be wrong. Unless of course investors are ignoring politics which is a good idea anywhere. Recently our own President, who continues to disappoint those who hoped he knew a thing or two about the real world, berated the private sector for failing to transform. This is a code word for making skin colour the sole criteria for employment and promotion. A technique which has stunningly failed the public sector, although when it was called apartheid it did manage to keep the lights on.

A commercially clueless cadre has proposed that the idea of shopping malls signing up “anchor tenants” is probably a bad thing and leads to unjustifiable profits at the expense of the poor.  The practice of a mall owner signing a discounted lease with a branch of a large retail business boasting a loyal customer base in return for refusing space to that store’s competitors does indeed appear to show little concern for shoppers. In fact, the mall owner can probably squeeze rents up for all the other tenants citing the drawcard of the big store. But these are merely the consequences of market forces being the primary driver of the industry. And South Africa claims to be a global leader in many measures of shopping mall design, operation and customer acceptance. On their own the “shut out” stores are already leaning on mall owners about this practice. But still the regulators are worried that small and start up shop keepers are excluded from the becoming mall tenants. They therefore want to interfere, instead of just going shopping.

Years ago the in-group joke amongst scientists was that the growth in number and pages of research journals was such that they were accelerating along the library shelf space, approaching the speed of light. Today it’s Books about Crooks in South Africa that are swamping us. They are appearing faster than we can even grasp who it is that has been exposed and how widespread and bad the thievery, corruption and influence peddling has become. Soon we’ll need genealogical type wall charts.   

The woes in the dead tree media sector continue. The glory days of owning a newspaper are over Even the slightest of taps on the wainscoting at Independent Newspapers sends the vermin scuttling. But nevertheless, in the proud tradition of proprietors world-wide, Dr Iqbal Surve, the head honcho down there, continues to use his titles to put his own (increasingly crumbling) case. Meanwhile Business Day is behaving like a chain store and trying to entice subscribers with Black Friday specials. We all know about loss leaders in retail but it’s quite different in a newspaper one would think.

Presumably there are many SAA employees who having just been paid only half their November salaries are requesting to meet with their Union Leaders. These are the chaps who emerged beaming from pay negotiations just weeks ago and announced satisfactory increases all round. Not a word was said then about the fact that there simply was no money in the SAA bank account. It is desperately sad that leaders from the president down are rarely called to explain and account for the obvious untruths they use to buy adulation and support from their followers. Many years ago in the Dilbert cartoon one of the characters who had been promoted to management was required to undergo “surgery” to disconnect her “moral compass” before assuming high office. A clever meme.

It seems rather sacrilegious to be discussing Rassie’s replacement already. There’s surely no need to emulate the boardroom at Cricket SA where the volume for a game of musical chars has been turned way up to drown the sounds of the backstabbing and buck passing. And on the topic of fast publishing, Eddie Jones’ autobiography is now ready for us to buy our English friends for Christmas.

James Greener

Friday 29^th November 2019

BAD GUYS BEWARE?

Market turmoil at Christmas time is not unknown. There are plenty of folk who aren’t that fussed about 25^th December and may try a quick foray when others are snoozing off the feasts. While individually there will doubtless have been portfolios and individuals who have had exceptional returns both up and down in 2019 the overall picture is pretty staid. Even the large unbundling activity around the Remgo stable seems relatively benign but keep a close eye. When behemoths like that shake off the water like a Labrador after a swim, it may be that they found something in the river. The 3.7%pa consumer price inflation print was rather interesting. But it didn’t impress enough members of the Monetary Policy Committee who as usual took 2 days to decide to do nothing. At almost 300 basis points the gap between the repo rate and inflation is bouncing along at a 10 year high. Which if nothing else signals that cash is not the worst thing to own at present.

The pictures of Andre de Ruyter the newly appointed CEO for Eskom show him to be eager and youthful. And we the electricity users of the nation wish him all the very best as he steps through the revolving door and takes the stairs (no lifts – power cuts) to the top floor corner office at Megawatt Park. There, waiting for him will be the usually behatted Chairman Jabu Mabuza, who, having heard that the new man also doesn’t have an engineering background, will be keen to show him how a coal conveyor belt works. And what happens when it breaks. Mr Mabuza recently honed this little lecture at a press conference.  Sadly, Mr de Ruyter will have little time to absorb these critical technical facts before having to deal with malevolent racist politicians who believe him to be culturally unsuited for such an important post. Reportedly, though he has experience in getting customers to pay what they owe and success in that area will be a huge step forward for his new employer.

Perhaps the acts of retribution against the people who really have stolen our future here in South Africa are just starting to take place. So far, it’s mostly only private sector alleged felons who are feeling the lash. A gratifyingly fierce asset forfeiture unit order has been dished out to the folk who operated under the name of the decidedly dodgy Regiments Capital. We are longing for the sound of clanging prison doors.

Pity poor Tlali Tlali the spokesman for SAA. He has had to trot out all the usual guff about turnaround strategy to steer it out of the financial quagmire and bleeding cash because of fierce competition not to mention cash flow challenges. As if these are all amazing new management discoveries and tools. Nosy journalists armed with calculators keep on pointing out that SAA’s main problem is simply that there are far too many people working for the airline and that it’s unsurprising that staff salaries in November are expected to be paid late. Its not been revealed which bank(s) have been talked into lending “working capital” of R3.5bn but the fine print suggests that we that taxpayers have issued some sort of surety. This really wont end well. Are the Unions about to learn a long overdue lesson in economics?

Why is the government so coy about when construction will begin on a new fuel refinery to be in Richards Bay?  It will require around 21 000 people to build it and when operational in 2027 (don’t buy tickets to be there for the opening yet) will need 5000 people to operate it. But these numbers have been lost in the far more interesting issue of who will own it. Its unlikely that SA will be able to afford very much and their partner is slated to be Saudi Arabia. Who presumably is also pencilled in to supply the crude oil feedstock?  What with the Brulpadda condensate field discovery announcement, South Africa is about to become like Texas in the 60’s.

There are people in high places in sport both here and abroad who really don’t like to see our sports teams do well. Why else then schedule the new rugby world champions to meet Scotland (twice) and Georgia in home tests in July?

James Greener

56^th anniversary of JFK’s assassination.