IT’S MORALLY REPUGNANT THAT THE BOKS ARE NOT IN THE FINAL

Exactly as everyone suspected, the US Federal Reserve left interest rates unchanged but did pop a somewhat thin and mangy cat into the pigeon loft by muttering the dreaded words “Next time….”! Share prices, however, are so determined to go up, that adverse reactions were meagre. Developments in SA though are turning many an analysts’ mind towards further rand weakness and a touch of the inflations perhaps. Hence the scramble to own more shares, which in theory, should offer some protection against currency calamity – especially if the company has a forex earnings stream. This doesn’t get away from the fact that almost all of those companies are expensive by any traditional valuation measure. Just closing one’s eyes and buying doesn’t feel like a strategy.

If you don’t pay careful attention it is easy quickly to lose track of all the different mechanisms the government has for spending our money.  Now in the news, because of course it has dried up, is a fund under control of Minster Red Rob Davies called the Manufacturing Competitiveness Enhancement Program or MCEP to its mates. The very name is chilling, implying that there are bureaucrats who are able to judge Competitiveness and distribute cash accordingly. Reportedly about 1250 companies have shared in the R5bn of taxpayer’s money that was used to launch the program half a dozen years ago. That of course was the time of the great “global financial crisis” when banks realised rather belatedly that lending to people who were very unlikely to repay the money was a poor business model and closed their doors to any more similar borrowers. Hence the government decided that it would then play the role of banker, and predictably the chickens are now roosting. The massive student support fund is suffering an identical fate.

Student Ms Anele Nzimande is obviously not yet up to date with her swatting program for the end of year exams. As leader of an outfit named the National Shutdown Coalition she has been offering her opinions about the protest movement. Apparently she believes that “People listen when students speak.” But when they say things like it would be “morally repugnant” for students to give up their protests and write their exams, most people probably stop listening. What we all would really like to see and hear from our future leaders is a clear and simple proposal of where the R20bn that the universities need will come from.  Frankly, those threatening newspaper adverts being placed by the Taxman about not trying to hide one’s wealth isn’t going to rustle up that kind of cash.

And Comrade Dr Blade Nzimande (no relation?) hasn’t come up with anything very good yet either. He has spoken about raiding a few caches of unspent funds in various training budgets and maybe slap a tax on graduates. Rather revert to Plan A which is to cut down on corruption, wastage, and grandiose schemes that the country just can’t afford. Like having one of the largest diplomatic corps in the world.

And now in the wake of unwinding the disastrous changes to the visa rules, the government is offering a R1m a year salary to someone who will set up and run a Socio-Economic Impact Assessment System (SEIAS). This outfit will check proposed legislation for “unexpected” reactions to proposed laws It would of course be a whole lot cheaper and more effective if the lawmakers listened to and heeded the comments and criticisms that they actually invite the private sector to make before sending the dog’s breakfast to parliament for approval.

The main concern at the bowling club bar is that laws of the sport don’t envisage a result where both teams in the Rugby World Cup Final can lose. The best we green and gold supporters can hope for is that the ref dishes out a royal flush of yellow and red cards and the resulting brawl sees the match abandoned! And the Cup is then awarded to the team that comes third, which tonight will be the ‘bokke.

James Greener

Friday 30^th October 2015

Thank you to the many readers who sent words of comfort and outrage about our burglary last week. A common theme in those messages was how many of you had suffered similar experiences.

LOTS OF LOSSES ALL ROUND

Last week our home became an entry in the nation’s house break-in statistics. Fortunately, no one was home or harmed in the mid-morning invasion which revealed that brute force can defeat even the costliest and well installed security devices. The usual clutch of electronic goodies was stolen including of course the laptop on which Tidemarks is crafted each week and which hosted the mailing list of recipients. The necessary conversion to a new computer operating system and recovery from some patchy backups has been incredibly trying but here is a belated comment bashed out on a brand new computer thingy.

Because of the aforementioned imperfect mailing list reconstruction process this letter will be reaching people who may have never seen Tidemarks before and unless you object, your name will remain on the list. More complicated is the recovery of those names who were added to my list since the last back up. If you recall asking me in the last six weeks or so to add a friend or even an enemy, please just send me that request again.

And meanwhile, our poor nation was having its own problems with revolting students. Some hyperbolic opinions have been aired but it certainly seems possible that our leaders are paralysed with fear. No one has emerged to be willing to confront the mobs and impose some discipline and order. With so many in government, from Number 1 down, largely ignorant of arithmetic, economics or indeed what universities are for, the rhetoric and appalling hash tag sloganeering has not produced any sound and sensible debate. The ruling party seems to be in panic mode and frantically trying to distance themselves from government. An impossible task, as the two have been inseparable for a couple of decades.

It appears that the tertiary education sector has now joined the schools and most state-owned and operated enterprises on the scrap heap of broken institutions. The desperation of young people to get into a university is probably based on their earnest but misguided belief that a degree is the sole route to employment. The number of powerful positions occupied by people who have lied about their qualifications is testimony to this. But actually peaceful competence in almost any field including just driving a broom is a saleable skill. The cruel fact is that university is indeed a privilege open to far fewer candidates than our dysfunctional school leaving system promises. If student numbers were restricted to the truly worthy, the university funding issues would diminish and scholarships, bursaries and loans could operate as intended.

All of this submerged poor Finance Minister Nene’s semi-annual trip to the parliamentary podium and any plans he might have for allocating resources were trashed by just about everyone. It seems likely that his peers will insist that he raises more tax from those who are so “obviously” able to afford it. The air is thick with the noise of calculator buttons as the pundits demonstrate yet again the impossibility of raising significant amounts of money from insignificant fractions of the population. Retirement and emigration has thinned the ranks of  the so-called previously advantaged male citizens that the socialists are so pleased to bludgeon and blame. They are going have to find new and wealthier people to tax.

In the end the three-point shortfall was heart-breaking for the ‘bokke and us fans. Unfortunately, the lads can’t even come home now as they have to play that silly third place decider next weekend.

With luck this communique will resume normal service next week.

James Greener

Sunday 25^th October 2015

HOW GREEN AND GOLD IS OUR VALLEY

Forget about Angela Merkel or Hillary Clinton. The most influential and powerful woman in the world is Federal Reserve Bank Governor Janet Yellen. All she had to do was express the slightest reluctance to raise US interest rates and the bear has been sent packing with high-fives in dealing rooms everywhere. Well except for those who were short and whose burned fingers are all bandaged up. Because of the gyrations of a couple of big contributors to the All Share index, the reading that the market is more than 10% above its August lows is not very representative. Nevertheless there are widespread recoveries throughout the market with the mining counters doing particularly well.

The dollar is showing a tendency to weaken and so even our poor battered Rand is crawling out of the gutter a bit. It can also be remarked that a single Krugerrand will cost you now about R16 400. This is a record and undoubtedly reveals that there is underlying reluctance to hold all one’s eggs in the equity basket.

Would it be mean to juxtapose the two stories about student funds? The first is the protest about intolerably high fees -- anything rather than get down to some swotting. And the second is the news that there’s little hope that the National Student Financial Aid scheme will recover any more than  about 10% of the outstanding R56bn it has distributed in the past 20 years or so. It’s interesting to note that the fund expects that any beneficiary who goes on to get a job paying more than about R2500 a month should make a start on repayment. That’s a really tough ask. The conclusion is that in fact many students are not actually paying their own fees at all and that the scheme is simply a roundabout way for the government to finance the universities. This is a seriously broken system.

National Police Commissioner Riah Phiyega is not the only one that Number 1 should have bulleted this week. He ought also to have fired whoever it was that prepared  the speech about party membership for him.  It is well known that our Pres can’t do six digits and he really ought to have been spared the embarrassment of once again stumbling over trying to say a big number. But perhaps the speechwriter planned it so that in the confusion and mirth the fact that Party membership is down went unnoticed. Once again it highlights that our leader is probably innumerate and that involving him in any discussion with amounts greater than the price of a wife is unwise.

Equally at sea with large monetary values are most journalists. One day there is a large and breathless headline about the council losing a million or so in a dodgy deal and the next page the planned expenditure of billions on a city improvement scheme is whistled through without a nod. So far, however, there has been no mention of any plans to build the urgently needed enclosures for the flocks of golden-egg laying geese that the city fathers obviously believe must accompany the awarding of the Commonwealth Games in 2022. The flow of grandiose and ridiculous developments grows stronger by the day. Though not the most expensive, the plan to replace Virginia Airport with a luxury housing development has a distinct whiff of corruption about it if only for the secrecy that has attended all details. The location of an airstrip capable of handling modest sized business jets just ten minutes from the city’s financial and commercial centres is an advantage unmatched by any other South African city. Scrapping that is very short-sighted. Has everyone already forgotten the embarrassment caused at the time of the Soccer World Cup semi-final when even scheduled flights were turned away from the single runway and meagre apron facilities of King Shaka International?

While we should all be bold enough to plan for Welsh leeks on toast for supper tomorrow it will be more sensible just to stick with chops and boerie I suppose.

James Greener

Friday 16^th October 2015

BAD IDEA WEEK

One of the largely unpredicted global developments has been the huge and ongoing collapse in demand for commodities. Whether scratched from below the surface of the planet or grown on it, the prices of most of these things have plunged. Selling less of something at a lower price than before is a dreadful way to run a business, and share prices of the companies in this line of work are reflecting that. It is reasonable to expect that the downstream businesses of manufacturing and consumption should also weaken. But as yet there have been few really significant share price corrections despite a noticeable slow down in earnings growth in some sectors. It’s really hard to make a good case for buying very much at the moment. About the sole hot spot though seems to be London accommodation markets where allegedly R10 000 a month will secure you a single bed under the stairs in someone else’s house.

The utter lack of interest in owning any rands has intensified and our poor currency has ticked even lower in the past few weeks. The reasons for this are as numerous as the sellers but the rather complicated and aggressive implications for local and non-resident investors carried in a raft of further and forthcoming legislation are undoubtedly very important. The terrible effectiveness of corruption to circumvent existing legislation was recognised by thousands of people who took to the streets in protest marches this week. But without severe sanction for the practice more regulation to control the bad guys will merely have the effect of sending the good(ish) guys elsewhere.

It’s a pity that Thomas Piketty, the socialist’s poster boy economist, managed to get around the visa issues that temporarily prevented him visiting SA. Once here, however, he has been spreading his message which is that someone else can always spend your money better than you can. This incredibly bad idea is accompanied by a special one for SA, which is that the nation needs a wealth tax albeit at a low rate. Allegedly the point of this would be to collect data of who has what. Well Commissioner Tom over at SARS must be smarting at that blow. His data base is as good as it gets and starting another one isn’t going to snare anymore of the nation’s astute tax evaders. Further, will Prof Piketty please just do the simple arithmetic of dividing the amount he thinks the wealth tax will raise by the number of poor people he is going to give it to. Less than a month’s taxi fare is probably the answer. Mind you he does have a very valid point about how rural land management so urgently needs to allow for proper individual ownership.

The picture of Number 1 with a phone pressed to his ear and seated while shaking President Obama’s hand raises so many questions. Not least of which is who on earth was he talking to? Rude and puzzling. Obama himself must have been surprised as well and wondered who was more important than him! In fact whenever grand panjandrums of our government are shown out and about meeting the people, many in the official party, including the VIP, are on the phone. Since nobody ever seems to make a decision or do any actual work presumably these are mostly private calls to make a dental appointment or a restaurant reservation.

R14.5bn is a pretty impressive loss for just 12 months. This is what PetroSA, the state owned oil company has reported and seemingly this has triggered arguments about who is responsible. Well the CEO would be a shrewd guess. Apparently most of this amount resulted from unsuccessful exploration wells looking for gas to bolster supply to the Mossgas plant. It would have been way cheaper if they had gone mining in their own archives from the days when it was called SOEKOR to see that 20 years ago we had pretty much ruled out any chance of massive reserves in reasonably exploitable locations. The taxpayer has had a simply dreadful return on his money with this venture

I am half  Scots. But not the half that is interested in rugby. Come on ‘bokke. Oh and come on England too.

James Greener

Friday 2^nd October 2015

TICKET TO RIDE

In case you missed it, SARB left the repo interest rate unchanged but the local markets were much more interested in planning for an extra-long weekend and heaping scorn on the Springboks. This allowed the rand to test the waters north of 14 to the USD and look comfortable at worse than 21 to the GBP. Without the huge contribution from SAB responding to the takeover talks, the All Share index performance would be negative instead of the misleading 1% positive it may record. It is distressing to note that the platinum sector index lost as much ground in the month as the beverage sector index (in fact just SAB) gained. That is more than 20% in each direction.

The sole simple fact to emerge from this incident about Volkswagen diesel engines coughing out far more nasty gasses than the rules allow them to, is that simply no one wants to pay tax. Governments world wide with near zero understanding of the sometimes rather complicated relationship between the waste products of an industrial economy and the health of our planet have nevertheless been delighted to have been handed something to regulate and tax. Because of this aforementioned (and quite understandable and reasonable) ignorance they have relied on the easily targeted emitters like car manufacturers to report just how much gas and tax they are responsible for. The outcome was obvious, and interestingly much of the global official fuss has been about the missing revenue not the filthy fumes. Now will the smug US regulators will turn their attention to Yellowstone Park where the geysers belch perhaps as much as 20million tonnes of carbon dioxide every year. Dreadful!

Very little is known about our brand new minister of mining. He may have a teaching qualification and has worked at as a teacher, a politician and was the Free State Provincial Minister for Agriculture. Mosebenzi Zwane is supposedly friendly with the Gupta family who have benefited enormously from in turn being close friends of Number 1. But the worst thing about the man is that he is prepared to dress himself in the skins of endangered animals. It remains to be seen if he hastens, slows or even reverses the fortunes of our desperately endangered mining sector.

The government officials responsible for steering the new contentious Promotion and Protection of Investment Bill through parliament have been forced to agree that the proposed legislation is mostly silent on the first word of the name and so have agreed to drop it. The problem is that most of us in the private sector think that it is the second word which is the real problem. In particular the bill can be interpreted as in fact decreasing protection for foreign investors and we all know what happen when they feel unhappy. Cue more rand weakness.

Clearly many municipalities are finding it hard to tempt anyone to lend them money. Presumably all the usual lenders are already “full on the name” and are wondering if they will ever see their cash again. Hence the bright idea being floated that someone (presumably the taxpayers) should start a new bank dedicated to lending just to municipalities. This is rather like the Brics Bank idea but without the deep pockets of China and India. Avoid.

As usual Heritage Day spawned an outbreak of burning boerewors, colourful costumes and popular presentations. Transnet, the somewhat disgraced state owned utility that recently bought trains that don’t fit through all the tunnels, seized the day to direct our attention elsewhere. Bravely it linked heritage to the ports that it operates in the Eastern Cape. Among the historical gems it offered is the news that Port Elizabeth was once known as “The Liverpool of the Cape”. This is easily the most interesting thing to emerge from the public holiday. Clearly the similarity dimmed, especially when the Beatles appeared.

There is nothing left to say about either the ‘boks or the Sharks. The score line is all that matters now. I really don’t like these Grand Prix raced under floodlights. Fortunately, though Ferrari do.

James Greener

Friday 25^th September 2015

BEER AND TV TIME

Anyone who doubted that we have been celebrating Recycling Week hasn’t been paying attention to what the media was been regurgitating about either US interest rates or the Rugby World Cup. On both topics the pundits have been forced to fill screen time and columns with history, conjecture and waffle.

 In the end Governor Janet decided that the price of money in the USA at 0.25%  is just as perfect now as it was almost ten years ago when the last adjustment was made by her predecessor Helicopter Ben. We must all be grateful to these omnipotent and omniscient people who know what’s right for us. Just look how well the world works.

Also significant this week was the news that the world’s biggest brewer is keen to buy the world’s second biggest brewer which is of course the erstwhile employer of Charles Glass, the legendary creator of Castle lager. This exciting news caused the market value of SAB to increase by more than 25%. This added R260bn to the JSE’s total market capitalisation and caused the All Share index to tick up markedly and confuse people who weren’t paying attention to the details. In fact this month, except for the Consumer Goods sector which is home to SAB, almost all other major sectors are well down for the month.

Predictably, however, the regulators have appeared on the scene muttering that this merger of giants might not be a good thing and could harm consumer’s interests.  However, beer drinkers are a very discerning bunch and the astonishing growth of the so-called craft beer industry shows that many folk have already decided that big is not beautiful. Surely this is one of the most price and quality sensitive consumer markets in the world and both parties will tread very carefully. Messing with a man’s (and woman’s) beer is not a good idea.

Another unsurprising development is that all the published plans for getting the nation’s viewers into the 21^st century and equipped to receive digital TV signals have turned out to be nonsense. Mysteriously the market is already swamped with cheap set-top boxes. Outrage and finger pointing has broken out as this was a project earmarked as a nice little earner for selected cronies. Interestingly the region identified for the first installation of this kit is that surrounding the large and growing radio telescope installations in the Karoo. Astronomers are not keen on watching SABC when trying to listen for messages from deep space.

R9.4m is the astonishing price which someone has paid for Hercules, a seven year old Kudu bull with 1.7m horns, It does seem to be a great deal of money for what in the end will probably be biltong and a gloomy stuffed head on a wall.

Meanwhile another bull has also grown (much smaller) horns and the rand has very slightly reversed its headlong plunge into oblivion. The prospect of a large and sustained recovery is quite poor while our politicians and their cronies continue to display woeful ignorance of economic realities.

Already some shifty and oleaginous characters have appeared in the frame to reassure us that the Commonwealth Games won’t hurt Durban ratepayers a bit. It’s all going to be assembled on a shoestring and will be so much fun. Well that may be but one wonders if the country’s rather stringent new visa regulations will have been relaxed by then otherwise all the overseas athletes under 18 will have to bring Mom and Dad along just to get through immigration. But perhaps that’s the plan. You sell more hotel rooms that way. And we sure need the money. A recurring theme in the local press is that the city is battling to make ends meet.

Finally the Rugby World Cup begins today and spirits will soar and crash over the next few weeks. The Russians, who are not taking part in this tournament, have arranged a counter celebration for tonight. The 2018 Soccer World Cup will kick off in their nation in exactly 1000 day’s time so that outranks any old rugby game.

James Greener

Opening Day of the 2015 Rugby World Cup