IT'S NOT IN THE BUDGET. GO AWAY!

A year ago we were proudly preparing to do our bit and “flatten the curve” to help our health services deal with something that had been declared to be a pandemic. We had no idea what any of this jargon meant and more importantly what it would do to our lives and economic wellbeing. Now we can see that it resulted in the destruction of nearly 50% of the earnings of the shares comprising the Financial and Industrial index on the JSE. For tens of thousands of small businesses, this figure was 100%. Currently we are equally in the dark about how long it will take for those businesses to recover. And even if they ever will. The wild-eyed and left-leaning of the commentariat are promising a “Great Reset”, in which recovery will come in an hitherto unrecognised form. Old curmudgeonly bears like Tidemarks are certain, however, that if it does not also reduce public service headcount and salaries to far less than half the current levels, then widespread personal success, growth and prosperity will be a “Great Chimera”. The main impression gained while trying to watch the Budget Speech is that our leaders are old, weary, overweight, bored and totally uninterested in learning what a modern state should be doing for its population. Let alone vigorously guiding us towards that vision. Their collective grasp of any topic which is not about the alleged historical and social causes for their grumpy and suspicious mien is zero. They waffle about technology revolutions, smart cities, universal broadband access and more recently, viruses and vaccines without the slightest clue what they are talking about. Pleasingly, the younger energetic educated citizens are disinclined to get sucked into the maelstrom of corruption and preferment which is all that our political landscape has become. Unless of course they have blood ties with the appropriate families. However, their numbers are few and growth in the size of the diaspora of talented and able young South Africans seems to be limited only by airline departures being hampered by the corona virus, and visa issues. As usual our National Treasury did a sterling job on keeping us in touch with the Budget numbers. Precisely as the information embargo was lifted so too was the portcullis on the gateway to the website, and a range of well-produced documents were released for our reading pleasure. Some are shortish pamphlets a few pages long that try in very basic language to explain the budgetary process and the way the government decides where to spend the tax money it collects There are nuggets of information for even the most careworn and cynical analyst tucked away in these pages but by and large, precedent is the strongest driver. The real meat is published in a hefty tome named the Budget Review. In any well-run enterprise, well-thumbed documents like these are referred to frequently. Especially when an excited underling bursts in with an idea for a project for which he needs a few hundred million to give to a mate who just happens to have number of oversized train sets for sale. Unbudgeted, unauthorised, and wasteful expenditure? This year’s Budget would best be described as devoid of originality and merely “pie-in-the-sky” unreality. Tito is long past his “sell by” date. The insensitivity and stupidity of those provincial officials in the drought stricken Eastern Cape who obviously had long been planning to spend a big chunk of their department’s share of the budget expenditure on renaming places which already have useful and inoffensive names, is beyond belief. Defenders of the proposal miss the key points which are that it is a waste of (a surprisingly large amount) money and deeply off-putting to travellers and tourists who are following ideas and recommendations from earlier times. As is frequently the case, looking up the new names reveals largely unknown corners of about our nation’s very interesting past and a measure of agreement that they could well be memorialised. But choose something new and currently nameless for the honour. Formula 1 are talking about holding a Grand Prix race in Africa. The last one was at Kyalami in 1993. Since then, minibus taxis have been required to display a 100kph maximum speed limit sticker. It is merely advisory. James Greener Friday 26th February 2021

WHERE DID SARS FIND SO MUCH MONEY?

There are quite a few signs that interest rates here in SA are uncomfortably low and that money is a bit cheap. The ability of all tiers of government to collect revenue is under threat from many sides. Quite simply most citizens simply don’t have the money with which to pay the rates and tax bills being presented. PAYE is a major tax collection method and with fewer people “E-ing”, less of that tax is being collected. Next, the featherbedding of civil servants throughout the Covid calamity has reduced their already awful productivity levels and people are rebelling against paying for services unrendered. The “working from home” model, even for private enterprise, rarely meets all client expectations. And then of course the unashamedly blatant uncontrolled blight of theft and corruption has hollowed out the intentions and goodwill of many of the diligent citizens left standing. Tidemarks ceaselessly chunters on about the urgent need of the public service to reduce expenditure and give the poor dead horse named Taxes a break from flogging. Without that, there is mothing else left but to borrow. Which pushes interest rates up. Recently our government dragged the Minister of Finance away from his stove to rearrange the budget for the rest of the fiscal year. He was instructed to find yet more money to keep SAA alive. This demonstrated clearly that the state rated resuscitation efforts on a moribund and unlamented state asset(?) above things like buying enough Covid vaccine to get the nation back to work. This week a confirmation of this appalling choice of priorities fell dreadfully flat. The special SAA flight, assigned to fly to Brussels to collect a second rather paltry batch of vaccine was grounded for some kind of compliance reason and sat on the runway at ORT with full tanks, forbidden to take off. Another airline brought the stuff in and President Cyril manned up for one of the first jabs. Meanwhile the first batch of a vaccine made in India, which a couple of weeks ago merited its own reception committee of a platoon of politicians, poltroons, and parasols, has been deemed unfit for purpose and too close to expiry to be used on our people. Attempts to return it to the seller for a full refund are so far unsuccessful. You’d have hoped a call to the Guptas might have been useful. Unfortunately, this country has bad form in trying to turn medical events into musical comedy, but one feels that there is a blockbuster in this story somewhere. The sequel is already writing itself in the news that President Squirrel has asked the Minister of Higher Education to “put together a team of scientists to begin the process of developing our own vaccines to deal with this and future pandemics.” “Cadres in Camouflage” is another operetta in need of a score. The story of young people, desperate for a proper paying job and a sense of worth, who dress up in camouflage uniforms, call themselves Veterans and find venues at which to dance and act out their faux military manoeuvres in the dark. This week they pitched to “defend” ex-president Zuma as he hangs out in his palace in Nkandla ignoring orders to come and chat to the headmaster. Another batch camped out in Bloemfontein for an overnight vigil in support of a senior party member who is due in court there sometime. So much energy. So poorly developed and directed. Shame on you ANC. The folk at National Treasury deserved to pop open a bottle of something fizzy a few weeks ago when they reported an all-time monthly record revenue collection of R180bn. This was the December figure, and it was even R11bn greater that the expenditure of R169bn.The was the first monthly surplus since June last year! Well done. Tennis, which for ever has probably been the sport with one of the highest umpires to player ratios has used the virus as a reason to ship in the technology and ditch all but one of the on-court officials. Reportedly there have been few complaints about errors. Meanwhile the unsafe tackle law in rugby is proving contentious. James Greener Friday 19th February 2021

FIRE IN THE HOLE

The price of money in the form of 10-year borrowings by the US government has doubled in the past 6 months. For a country with so much debt that ought to be a seriously worrying statistic. The actual numbers are small (1.16%pa now versus 0.54%pa in September) but the impact on the borrower is huge. Their interest costs have soared. An extra 62cents per $100 borrowed. Just scale that up to the billions and feel the pain! Watch this space. The other interesting space is the optimism that seems to have surged through the JSE investors now that we are enjoying a much more lenient lockdown regime. It’s not at all easy to tease out the specific points of optimism while watching the government appear to make yet another mess of the Covid-19 program. The simplest of sums like how many patients could at best be “jabbed” in a day, divided into the number of people we need to vaccinate = years! And we have yet to start. The prioritising of candidates and the electronic record keeping systems are both genuinely tricky tasks. The dodgy power supply is playing its malevolent part as well. The idea of holding an annual State of the Nation event (SONA) seems to have been borrowed from an era long past and a world where a president had things to boast about. Frankly, here and now, a single short sharp odoriferous word would suffice to describe the current state of this nation. Replete with all the usual wish lists and waffle, the only different item was that he emulated minister Tito Mboweni by introducing a botanical metaphor. Our parttime gonzo chef and finance minister has invoked the common aloe ferox in his recent budget speeches and has even on occasion brought one to parliament in a pot. Cyril chose the fynbos, a uniquely Western Cape biome that requires severe wildfire events in order to regenerate itself, to illustrate the nation’s future. Wisely he refrained from bringing a sample and setting it alight. The pile of resulting ash would probably not have been as illustrative as he wished. In his speech President Cyril assured us that 2021 would be as a year of ‘change, for progress and for rebirth’. He placed fighting Covid-19 as the most pressing priority, alongside rebuilding and restarting South Africa’s flailing economy. One day a smart person is going to find a way of publicly and swiftly matching political promises with outcomes in real time and blowing appropriately themed raspberries. The sole good news about President Cyril’s SONA last night was that someone beforehand must have decided that our local strain of these nasty covid bugs is highly attracted to pageantry and posturing. Consequently, the customary amusing and alarming fashion parade of the great and good, accompanied by the usual complement of crooks, idiots and clowns, was cancelled. There’s a lot of space-related excitement at present as so far this week two craft have arrived at Mars to begin orbiting that planet. A third and much more sophisticated one from NASA will soon attempt to land a rover on the planet. Privacy and quality of life for Martians have gone out the window. Astronomers have discovered the most distant object ever found in our solar system and it has been nicknamed "Farfarout," after the previous record-holder, "Farout," which was discovered by the same astronomers in 2018. Isn’t it nice to know that there are folk for whom the terms load shedding and lockdown appear to have no impact. Unless tagged under weightlifting, the news that three suspects were detained at OR Tambo International Airport at the start of the year after gold bars weighing 73.5kg were allegedly discovered in their hand luggage is not really sport related. But anyone able to hoist 25kg of hand luggage into the overhead locker deserves respect. What did the cop on duty at the X-Ray machine make of that? James Greener Friday 12th February 2021

MONEY FOR NOTHING

Those of us with a bearish inclination are on average wrong most of the time because fortunately bear markets last for shorter periods than the bull markets that separate them. For example, the rand was very week at the start of this year but has now recovered at least half that loss. Obviously, the alarming rise in lawlessness especially amongst our lawgivers and their cronies that currently dominates the news channels has no impact on sentiment. The previous president has declined a high court order to come and tell a commission his side of the state capture story. And the current one has firmly reiterated that building unity within the ruling party is his highest priority. Anyone coming into financial markets for the first time may be puzzled by why the “science” is not more exact and forecasting more accurate. Time-series of prices in financial markets comprise one of the longest and most accurate data bases of any kind in the world. And yet no one has managed to tease out unambiguous signals about future movements. To this end it is instructive to learn that there are 417 economists on the US Federal Reserve Board of Governors. Attending a meeting of this lot must be tedious and repetitive. There can be barely a single “fact” that we have been told about the dreaded virus that has not subsequently been adjusted or scrapped. This highlights the tricky and ever evolving nature of medical research and understanding but disappoints those who are used to the modern world having effective and immediate solutions to most problems. Less worried however are the leaders who have even said how this Covid-19 pandemic has provided a great opportunity for political interventions. A feature of the past year has been the undisguised delight with which naturally inclined authoritarian regimes made up rules as they went along. At every stage in the unfolding crisis, funds earmarked for helping the victims of the disease and the even more lethal economic lockdown programs have been looted and stolen. These crimes have often been carried out at the very moment when our President has been assuring us that corruption was under control. The imminent initiation of a vaccination program already has spawned schools of sharks and bottom feeders. Our leaders missed a perfect opportunity to cheer us all up a little when they were ferried out to the airport, on to the apron and right up to the plane that was delivering the first consignment of vaccinations. The bigwigs emerged into the rain, each under cover of a brolly handled by a personal umbrella jockey. They gazed at a bundle of cargo on a pallet. Which may or may not have been all or part of the consignment since none of us know what a million doses of vaccine look like. Words were said and hands were shaken but no one cracked the joke that this scene could easily have been crafted by the Monty Python comedy team. It was all profoundly serious but ended in farce when President Cyril also used the occasion to nominate the Cuban doctors (a mercenary team who arrived 9 months ago to help with the pandemic and who have been spotted at work only rarely) for the Nobel Peace Prize. Another weekend, another series of power cuts plague the nation. The inference is that there are just too few experienced and competent maintenance engineers capable of fixing stuff at a rate faster than it breaks down. Presumably, there is also the wet coal excuse available since the nation has enjoyed substantial rains recently. It has been pointed out by others even more cynical than I that local suppliers of sandpaper are devastated by the news that the Australian Cricket team have decided that it would be foolish to come here for a Test series. The Aussies have cited Covid-19 as the reason not to come to SA. But it is more likely to do with being one of the “Big Three” in world cricket (Australia, England & India) demonstrating that they can determine their own schedules. Or maybe it is just that they hate being reminded about being caught cheating. James Greener Friday 5th February 2021