South Africa - be pragmatic

NO investment is fool-proof. The hedging [protecting] against a loss on an investment is easy, cheap and an essential ingredient in effective management. Yes, at face value, I believe the US market is in for a correction. Notwithstanding, turn over any forgotten stone and you’ll find a dooms-day forecaster proven wrong.

Here’s the gist of it:

1. The fall in oil is stimulatory and the market knows this ie: the market is building extra profits into company projections. Given this prognosis investors are paying more for stock, currently, than they would have / should be. Why? Investors are discounting high prices on the expectation of improved profits sometime in the future. The flip-side of this stratagem is just as Grampie told us on his knee – 'don’t count ‘em before they hatch…' What would happen if OPEC cut supply, drastically? We know the US shale industry is a dark-pool of goo filed 'not for your eyes' under SES [State Economic Security] or 'policy' for short. There are countless other layers to this onion which we don’t have the time to peel. Managers lump these under ‘market risk’; a catch-all for ‘we just don’t know’.
2. The ECB has mooted / announced a 1.2 trillion approx. euro rescue package; supporting European sovereign bonds in the main ie: the ECB will buy up to 30% of all sovereign bonds [paper countries issue to borrow money]. It’s a backstop other investors like and on that basis only, will continue to buy the paper even though the paper is inherently risky. These governments then have access to cheap money and will continue to bolster their respective economies by spending. Spending isn’t mending and those chickens will come home; soon. Paradoxically Greece is our shining beacon for the future. Push ‘the people’ hard enough, for the economic ineptitude of their government, ie: reckless public-spending and the government is soon replaced by the far-left advocating social change & or defiance of the status quo. It’s Capitalism feeding on itself. Denying the fact is as stupid as sweeping Greece under the table by excommunication, on the sin of delinquency, when the son is the product of the father..
3. China’s growth hasn’t stalled but is slowing; that’s if you chose to believe the data that is. Their socio-economic troubles are just beginning.  
4. If the global consumer treadmill breaks down, we, the human race, are in for the high-jump whichever way you want to spend it. The oil which soothes the grind is a media-controlled process ie: through advertising and cajoling consumers to replace / buy / ‘need’ / aspire to etc. If that bias swings in favour of logic [We’re consuming resources at a grossly UNDERSTATED rate] then ‘consumerism’ or ‘anti-consumerism', more accurately, will be the catalyst for a financial Armageddon no one wants. It’s a hamster’s wheel of dread which keeps the lights on and we’re all on it. Make no mistake.
5. SA’s corruption is entrenched and it’s difficult to see how that can change for the better, certainly not under the current circumstances. The international perception is equally trite. Infrastructural decay; a paucity of foresight / planning and an ever-widening wealth-gap concludes as follows: - SA is on the road to becoming another failed state. It is the perception, at least, we surmise from international cash flow. The fall in the rand will tell you much the same.

In the end I’m pragmatic more than optimistic. We live in SA. We save / spend / and earn our crust in SA currency. Outside of SA most rand-based savings wouldn’t buy you a pregnant goat. The fiasco that is hyper-inflation, under conditions of a currency negatively out of control, is emblazoned on the psyches of most Africans and a sad state of reality for most ex-Zimbabweans. So we’re damned if we do and damned if we don’t. Whilst we’re here and living under this hatchet, all we do is what we can. The first step is to have your wealth invested in the correct instruments and in such a way that the vagaries of the future don’t impact too negatively because when the US goes we all go too.

The South African Rand

Somebody suggested that the South African Rand [USDZAR] would strengthen ['significantly'] in the short to medium term and as these things normally pan out I asked why. 'Significant' is subjective at best so I'll assume he mean't 'return to the mean'. His definition of 'short to medium term' was from a few weeks to a month or two. In that context then:

Here's his take -

I'm not going to prattle on about the techs. but within his parameters / definitions / time-constraints / whatever... he's likely to be correct; maybe.. Who knows?

Here's my take -

My idea of short-term is three (3) years and my understanding of 'medium' is 5 years +. Asked if the South African Rand [USDZAR] would strengthen against the cross over the term, by my definition, the answer is clearly NO; almost certainly, probably..

If investments are a balance of risk and return would you risk your return on a maybe or a probably?

Cogito ergo sum

Cogito ergo sum - I think, therefore I am. [Descartes]


Africa has lost her pride. Dehumanized, patronized, colonized, enslaved, stripped of her resources and flayed in the international trade-markets, it's a betrayal of a continent's people; a scar on the collective conscience.

Unless all Africans participate meaningfully in their domestic economies, Africa will remain the pitiful, aid-slaves of international charity.

Only the weak cannot forgive and in South Africa the outlook is no less absurd. Ethnic perversion is pervasive in leadership and manifest in the consciousness of our people. We claim our own ethnicity and turn a blind-eye to the misappropriation of the collective trust.



                  First they came for the Socialists, and I did not speak out
                  Because I was not a Socialist.
                 Then they came for the Trade Unionists, and I did not speak out
                 Because I was not a Trade Unionist.
                 Then they came for the Jews, and I did not speak out
                 Because I was not a Jew.
                 Then they came for me .... and there was no one left to speak for me. 

[Pastor Martin Niemöller on national complacency when the Nazis came to power]

Ours is a country sickened by public-incompetence. The systemic abuse of political power is premised on personal enrichment. We're a nation hijacked and held ransom by a sponsored tenderpreneur-cartel. In these conditions it's difficult to hope. Under this pall of corruption we, the South African people, all her people irrespective of tribe or ethnic-claim, remain enslaved to our exclusionary past. We say what we don't believe.

“For to be free is not merely to cast off one’s chains, 
but to live in a way that respects and enhances the freedom of others.” - [Nelson Mandela]

Yes we live in sad times. In backyards some pay homage to yesterday's flag; a fluttering symbol of false-entitlement and a moral abomination. Children, born a blank canvas of hope, are khaki-trained, an armed perversion - morally flawed and a false economy premised on mistrust. Others, our young ones, flee this land, some locked-out of the formal markets, a legal penance for the sins of their fathers. More render themselves useless, mercilessly beating themselves on the cross of guilt. Those who will not bend to this whip of self-loathing are declared false-prophets; harbingers of insincerity.

We live in sad times. On gilded podiums some bask in false victory; a perverted shout for freedom 20 years past. It's a rendered, context-poor homily designed to mould the economically-disenfranchised; an army dehumanized still, made desperate in chains of poverty and a green branch, compliant against the agenda of the very few. Children, born a blank canvas of hope, are denied their rights, gather in the pock-marked streets and are forced to the begging bowl and out of the classrooms as their mentors idle under trees of despair. In the dark of night behind high walls of neighboring wealth lies a false illegal financial freedom; a theft of the collective moral conscience of a people forgotten.

These are sad times. In the backstreets of sub-urban hell some suffer a despair-dependent narcotics-induced coma. Gun-toting gangs press children, born a blank canvas of hope, into acts of violent confrontation. Fathers mourn sons dead, in cold blood and mothers become mothers, children themselves.

'When a hyena wants to eat some of its children, it first accuses them of smelling like goats' - an African proverb.

Industry is a shadow of failed planning, state-interference and poor skills' development. Parastatal jobs are an exercise of executive cronyism. Our mineral wealth is a low-skilled, low-paying extraction; an international export, at cost, and for the benefit of multinational stakeholders domiciled elsewhere. Up-skilled, value-add, commodity-processing is an international monopoly from which Africa is politely excused. Trade-deficit is an unintended import and priced at the currency-gap; rated arbitrarily by the free-market controlled for 'political risk'; an economic boon for Asian and Western surplus.

Education is mostly a logistics conundrum for the administratively incompetent. Public schools wait two-to-a-desk for books destined ultimately for the black market. Teachers, qualified at the University of No Name, claim salaries from schools they've never seen. Nurses and doctors queue at emigration for a working wage.

Law enforcement is a toy of public office where the rule of law is a yellow card of restraint rather than grounds for immediate dismissal. Yes it's true. Corruption flows richly in our veins.

Cheap labour underpins a process of exploitation. The boardroom's Eton-acolytes sign-off a 200 x [20000%] wage-gap ratio; paid in sterling, at the executive-suite, but paid in South African rand at the face; substantively absurd in productivity alone. High-fenced lands lie agriculturally dormant; home to aberrant game for the trophy-pleasure of foreign dignitaries, owned and hosted by absentee lords of the manor.

Here 1:3 people persist on - $1.25 pppd; 40000 days equivalent to hunt a cage-bred lion.

In our streets indebted graduates beg a meal; engineers, mostly; denied their place by transitory Asian construction-gangs, hired on a secret handshake or at the logging-table. Elsewhere Asian-dumped steel, forged from African ore, risks 30000 jobs at the local smelter. Downstream energy-costs treble on 'generators' down'; a catch-all for 'unscheduled  maintenance'.

Our economic prognosis is terminal. It's a lethal cocktail of complacency, incompetence and corruption. Unemployment is rising at rates unprecedented in any other comparable, middle-income, developing economy. Labour-market restrictions are tightening. Inefficiencies and falling productivity is pervasive throughout the manufacturing, mining and agricultural sectors. Labour Unions, the current voting base, are more militant, less approachable. In the public sector salaries rise at levels 10 x the inflation-rate whilst 1:3 live below the international poverty-line. Trade & budget deficits are unsustainable. Domestic / foreign capital flight is real; without restraint.

An inherited infrastructure belies a political indifference to the needs of the unemployed. Political priorities / agendas are largely premised on accumulation rather than selfless service. Social grants are predicated on growth rates currently / inevitably unattainable. The debt-trap is unavoidable. These are dangerous times.

Africa stands cap-in-hand, pliant and open for renewed, unprecedented levels of exploitation; a co-authored misery and an inevitable harvesting of resources from which we can never return. It's a future bereft of dignity. The incumbent leadership-structure pays homage to the self-styled African Emperor, an Eastern phoenix. It's a morally-defunct empire of intimidation - by design; and predicated on the silence of the voiceless and perpetuated by state-corruption, national complacency and our tolerance for incompetence.

South Africa on the cusp of organised anarchy

When the rules of engagement are rewritten, protagonists must adapt or they lose relevance. South Africa's economic seesaw is teetering in favour of the school-yard bully.

Militant inter-union tension, tantamount to a declaration of war and fought in mine-shafts around the country, is a significant change of emphasis beyond the usual wage-negotiation techniques the investment world has become accustomed to. That's particularly pertinent at this time of the year when wage-negotiation plays an important role in local media headlines. Freedom of association and collective bargaining is one thing; violence and intimidation is another animal altogether. When unions, motivated by membership revenue, resort to intimidation and violence, then by definition, the legitimacy of collective bargaining, a concept entrenched in law, becomes forfeit. Against this economic anarchy is the equal and opposite force imposed by a mature society which demands the moral legitimacy imposed by law and order. Law and order requires a reciprocal political will to succeed. 

As an interim measure, whilst the broader labour complexities are addressed, corporate South Africa must address the productivity risk associated with labour unrest. In South Africa's mining industry, where operational security is broadly at risk from external pressures imposed by organised labour, mitigating that risk justifies a moral departure in the boardroom and more expenditure on mechanisation. The subsequent socio-economic consequences of an inactive workforce is a risk to the political status quo the country simply can't afford. Given South Africa's reliance on the mining industry as a whole, protecting that industry is, therefore, essential to the country's economic and social fabric. 

It's time collective-bargaining revisits its roots and returns to the negotiating table in its legitimate form. The alternative is unimaginable.  

Romney & Obama - a dearth of riches

In the US it's another bout of Let's get ready to ramble* (* with apologies to Michael Buffer) and let's agree, to date at least, not much has been forth-coming from either Presidential-hopeful; the incumbent or the challenger..US voters, ordinary men and women in the main, are faced with a damned if you do, damned if you don't leadership conundrum.

Yes it's easy, as an outsider, to point fingers. There are, of course, many constraints, mostly real, some imagined. Even so, there are too many inherent failures on both sides of the political-farce to lend much hope for a US economic revival in either the short or medium -term. The combination of party ineptitude and the untidy, less-than-witty presentations of their chosen presidential - spokesmen doesn't fill many with much enthusiasm and therein lies the rub.

Perhaps less articulate than he's given credit for, most market-participants grudgingly agree, in broad terms perhaps, with Marc Faber's assertion that the Fed's policy of printing money will 'destroy the world'. The FED therefore, by definition, cannot lend-lead the US economy out of decline. I say lead because that's whats needed here. Leadership is seemingly a global commodity in short supply... Sound political leadership; effective government; restraint on political-pandering and a good deal of strategic forethought is the only hope for the millions of Americans who find themselves either unemployed or under-employed.

Half-way around the world, in South Africa, we face a similar situation, only less dynamic. Leadership, as a concept, is a premise long since lost. Entitlement, corporate ineptitude in the face of crisis and political philandering is commonplace, if not entrenched. It's symptomatic of self-absorbed-largesse, the excesses of the elite and like everything else and without belaboring the point, usually at the expense of the ordinary citizen.

What's your legacy?

South Africans and our friends around the globe celebrate the birthday of Mr Nelson Rolihlahla Mandela (aka MADIBA), a Statesman, our National Treasure, a global icon and a gentleman extraordinaire. His is a living legacy, a beacon of hope, past and present and most importantly, proof sufficient that triumph in adversity is the sweetest of them all.

Today's politicians would do well to lead, follow or get out of the way. 






It always seems impossible until it's done - Nelson Mandela