HAPPY NEW YEAR

Number One spent a very happy festive season in his Zululand home. There were several occasions when he and his mates were able to don the pelts of endangered species and dance the night away. Even his ex-wife pitched up in the province to make a pointless speech about her current job in Addis Ababa. And undoubtedly, she popped round for a chat with JZ to discuss the idea of a dynastic presidential succession. An unappealing idea for the rest of us.

About the only steady number in the markets at the moment is the demand for US dollars. Owning a few of those appears to be preferable to just about everything else. Even the mysterious Bitcoin which enjoyed a great 2016 has been hammered in the early days of the new year. Puzzled investors (i.e. all of us) can choose from the complete range of available forecasts being confidently issued by the seemingly omniscient. Bull or bear? You choose.

Matric results season is a good time for newspapers. They can fill acres of space with pictures of high achieving candidates, jaw-flapping politicians and in some cases, both together. Although how they persuade the ex-pupils to get dolled up in their school kit again is a mystery. Then there are the words. Words of congratulation, commiseration and platitudes and clichés. In what even one youth group so correctly derided as fruitless expenditure our local municipality paid for an all-night “vigil to pray for positive matric results”. Way too late perhaps? But the real story lies in the dozens of pages of individual grades which starkly highlights the irrelevancy of fussing about mark adjustment and pass rate percentages. More than 150 000 candidates have been told that they are good enough to enter a degree course at a university. This is manifestly false and callous. For most of them the truth will be very different.  

In fact, these enormous numbers also reveal that our national model of making a single minister of education responsible for so many “customers” is doomed to fail. Even splitting by province is no help. Here in KZN more than 1700 schools entered pupils for the school leaving exam and 12% of them had fewer than 10 candidates. Even the most competent CEO on the planet can’t manage that kind of client base, so it is unsurprising the business fails to succeed. It is a big and difficult mess to clean up especially given that many parents are content to pass the buck for educating their offspring onto someone else.

So Exxaro, the listed mining company that supplies a great deal of the coal that Eskom burns to provide our electricity, seems to have become fed up with the government’s efforts to impose a politically based system of asset allocation. Dressed up in a melee of Bs and Es and other jargon the policy seems to promise that ownership is a guaranteed route to wealth. This is not truthful. Only a few enterprises make sufficient money to cover all their costs and then still provide enormous income for the owners. While being a shareholder sounds all sophisticated and clever it may take many years before the flow of profits covers the cost of the shareholding. It does of course help enormously if that cost is paid by someone else – a feature of many of these schemes – but a listing on the JSE for many firms is largely about acquiring a list of people to approach next time you need some cash. The JSE’s mining sector – a particular target of the state for these “transformation” deals – has failed to deliver any return for an investor who has toughed it out for the past 10 years. Individual companies have of course soared and crashed over shorter time scales and there will be smug speculators amongst us but overall it has been a poor industry in which to grow rich as an owner.

National selectors have a hard enough job in picking the best on form sportsmen (and presumably women) for the national sides. Understandably the athletes choose to go where their medium and long term benefits are best. Undeniably it is hard to match overseas salaries. But if the guy is eligible and keen to play why is the task made more complicated by the various rules and regulations because of those choices?  Sad and frustrating. Just what is Kolpak anyway?

James Greener

Friday 6^th January 2017

FUNNY MONEY

Just two months ago the price of a single euro was around USD 1.12. These days it is a mere USD 1.04. Simply put, people now want dollars and don’t want euros. And this is despite all the waffle and panic about the US president-elect who, it has been alleged, will lead that nation into ruin. So far the markets don’t agree. Somehow, without much fanfare the world has slipped into a new normal (dread phrase) with at last US interest rates rising. Just this week the Federal Reserve risked another 25 basis points increase – the last one was a year ago – but at this pace and the mind-set of absolute control we may never learn what the true cost of money ought to be. In the meantime, US share prices are off to the races and with the notable exception of gold most other commodities including oil are rising.

Back home it is amazing to watch the value of exports slowly closing on the value of imports. Despite the interminable interference of know-it-all government, the private sector is getting stuff done. This is also showing up as the resources sector being the best performer of the year with the banks coming a close second. However, the hard pressed consumer sector (a difficult idea to grasp for anyone who has visited a shopping mall in the last few days) will drag the overall JSE performance in 2016 to no more than about 1%. In other words it has been a difficult year for investment. Just like all the others!

A useful number to keep in mind when reading about all the cash that seems to slosh about in the SA economy is that total notes and coins in circulation is in the region of R120 to R140 bn. The variability is a well-established monthly pay day effect. So stories of the neighbour paying cash for the new Ferrari or the gent on his way to Dubai with seven suitcases of folding money are small fry. Undoubtedly though millions of us are getting through the day without banking facilities like savings accounts, credit cards and EFTs. Now Venezuela has followed the example of India and declared their largest currency note valueless to throttle this sort of untraceable and probably untaxable business but have caused unexpected consequences everywhere. Fascinating. This governing business is difficult.

The current parliamentary investigation into just what has been going on at SABC, the national broadcaster, has established only one thing for certain. No one has a clue. The chief politico in charge of the farrago, who is misleadingly titled the minister of communication, demonstrated award-winning skills in denying responsibility and buck-passing. Her performance made it abundantly clear why the SABC and the country’s overdue so-called digital migration project are in chaos. Complicated technical issues such as bandwidth, broadcast spectrum and signal encryption are obviously secondary to ensuring maximum benefits for insiders including Number One and his puppet masters. Minister Faith Muthambi has, to quote her official profile, “a string of qualifications” of which only a Certificate in Computer Training might be even vaguely relevant to her current post. However, as an Advocate of the High Court she undoubtedly knows how to find and argue a loophole.

Anyone venturing into the world wide web swamps at the moment is deluged with ideas for what the advertisers claim are last-minute gifts. Come on guys. There are 8 more days to Christmas. Last-minute is just that and with almost round the clock store openings it’s possible to get stuff to put under the Christmas tree just moments before the recipients pitch up! It’s a boy thing.

It's hard to believe that an extended talk-shop is the solution to SA rugby’s woes. What might be more successful is having far fewer administrators being paid to talk and diverting that money towards players who are paid to perform. Everyone in the business should be in fear of losing their place if the results don’t improve.

James Greener

Dingaans Day 2016

UNABRIDGED IDIOCY

Every three months Stats SA informs the nation how hard it worked in that period. The latest announcement was “Not very at all” and promises of meetings to arrange improvements blossom everywhere. Some consolation was squeezed from the news that the “analysts who should be feared” (aka ratings agencies) have surprisingly held off from downgrading South Africa’s credit rating. Nevertheless, the GDP figures were terrible with most economic sectors producing less value than previously. Most shocking (although being used by Eskom to boast about their overcapacity) is the observation that Utilities output has declined in five of the last six quarters. Is it just coincidence that the Financial and Government sectors are the sole ones to have grown without a pause in the last six years? All that wasteful and unaccounted expenditure must go somewhere!

Deputy president Cyril has been getting all dewy eyed at how wonderful the latest round of minimum wage legislation is going to be for the poor. For a man who can, at a glance, price a buffalo bull to around the nearest million, his grasp of this aspect of the economy is very poor. The total amount of money available for paying the lowliest workers doesn’t increase just because the government says so, and therefore the consequence of a higher minimum wage is mostly fewer wage earners.

If government fiat could indeed make everyone richer then why not just increase this magic number to the desired level in one move? Even the buffalo king must be uneasy with that logic. The only way for the country to grow richer is to stop paying salaries and grants to all those people and students who have nothing to show for their presence but a warm chair seat and dirty tea cups. We, the paymasters, want to see useful deliverables and amazing results from our beneficiaries.

A fellow was tossed off a plane here in Durban only after he had boarded and checked through seven suitcases stuffed with many millions in SA currency. This raises a few questions including what the x-ray image of that sort of luggage looks like and if anyone looked at it. Another is where in the world is there a bank teller prepared to accept without question a very large number of leopards and buffalos, as our two largest denomination notes are affectionally called? Perhaps the answer to the second question lies in the fact that the plane was going to Dubai where Number One’s best friends have built a luxury home.

Claims that a recent court judgement has cleared up the difficulties about the proposed new liquor licensing legislation are not entirely true. The learned judge’s geometry has let him down as he rattled on about an exclusion zone of 500m circumference when he should have been talking about radii. What is still not clear however, is how the lawmakers decided that pupils and churchgoer would regard half a kilometre as too far to travel to get a drink.

The rapid approach of the Christmas season is affecting thinking in all corners of the nation. A think tank tasked with making it easier for foreign visitors to enter South Africa came up with the breath-taking idea to demand abridged birth certificates for minors instead of unabridged ones. The sole difference is in the adjective. But the real genius of the plan however, is that this announcement will not be publicised until after the holiday season.

Over at the schools, the chickens of a broken system are roosting. To keep the conveyor belt of pupils moving through the public “education” system, passing standards are again being compressed. In maths, at some senior levels, getting just one out of five sums correct is now a pass. Herein lies the real tragedy of this country. Just because our leader is innumerate does not mean that we can abandon all our youngsters to the same fate. Pleasingly, however, private enterprise is finding ways to enter the field and satisfy customer expectations while still making money.  This sits uneasily with the militant, incompetent, unionised, bullet-proof layabouts insultingly calling themselves teachers.

Thank goodness for the Bliztbokke! Is there any substance to the rumour that 5 SA taxi drivers have applied to fill the seat at Mercedes vacated by Nico Rosberg?

James Greener

Friday 9^th December 2016