OUT TO LUNCH

South African politics being what it usually is I had rather assumed that the Dollar/Rand exchange rate would have plummeted to R20/$ by now. I based this on the fragmentation of our political parties and the desire among some of them to tear up the constitution, adopt a political feudal system, expropriate land (violently if necessarily), throttle the free market economy and deliver the Venezuelan Nirvana that so many have been dreaming of. Oh yes and, time permitting, slit the throat of whiteness.

But here we are with a Dollar/Rand exchange rate at the time of writing of R17.90 to the greenback and signs that it may further strengthen. This is the ‘market’ that the so called ‘progressive caucus’ seem to fear. To them it’s just a bunch of white imperialists fixing things so that black dudes will look bad. It’s economic racism if you like. ___STEADY_PAYWALL___

For example if a bunch of political no hopers such as MK are perceived as a potential political threat a whole load of guys in Brooks Bros shirts and Savile Row suits call a Zoom meeting and decide to fix the markets. They can do this in any number of ways apparently. If they don’t much like the cut of the political jib of a particular party they can immediately cause the currency of a bit player like South Africa to plummet thereby bringing in inflationary pressures and punishing the entire country,

But if you do something pleasing to them, then the same cabal of shirts and suits can express their pleasure by decreeing that your previously sick currency is now healed and is much stronger. This is the enormous hold the ‘markets’ have over countries like South Africa and partly explains why it is impossible for us to escape colonial oppression and a lack of service delivery to the poor.

It doesn’t really explain how those who claim to want to uplift the poor while leading lives of unimagined luxury manage to do so but that’s a subject for another day.

All this nonsense is the genuinely held belief of some of our more left inclined political leaders, of the likes of Mr Irwin Jim and, therefore, of those who really don’t have the insight to realise that this is all the most colossal pile of horse manure.

When Trevor Manuel (our finest Finance Minister by far) was first appointed in 1996 he also had a thing about these all powerful markets and how they need to be appeased. What are these ‘amorphous markets’? he sneered. Before long he was on an extended overseas trip with SARB governor Chris Stals who were “trotting around some of the major financial capitals hoping to persuade foreigners to invest before we offend them further by inviting their political enemies over for tea” (Sunday Times ‘Out to Lunch’ column 29-9-1996). Manuel realised very quickly that cosying up to the likes of Col Gaddafi wasn’t a strong selling point when it came to attracting investors.

The Stals/Manuel odd couple act obviously worked and the South African economy benefited over the next decade. But, as I pointed out in that column almost twenty eight years ago, foreigners buying SA fixed interest bonds is not really the reward you want.

Those who buy on Monday can sell again on Wednesday but that’s the nature of capital markets. What this country desperately needs is quality, long term foreign investment. That’s unlikely to happen if we persist with our idiotic labour laws, if BBBEE insists that a sleeping partner has to have a large shareholding and if the constant threat of crime and asset seizure hangs over businesses.

Manuel was technically right in that global markets are ‘amorphous’ and that is why they are almost impossible to predict or to control. This is what clearly troubles the control freaks in the various political parties.

How well have Cuba, Venezuela or Zimbabwe shrugged off the effects of the ‘market’ to the benefit of their long suffering citizens?

So while it’s great to see the Rand strengthen against the Dollar for once it is by no means certain that the trend will continue. And, of course, there are pluses and minuses to a strengthening currency.

While the cost of our imports may drop our exports become more expensive in hard currency terms. I would suggest, however, that we have a long way to go before our exchange rate starts deterring foreign tourists looking for a bargain holiday destination.

If, as News24 reported over the weekend, the future of the GNU is threatened over haggling about cabinet positions, then we can expect the Rand to slip back into its comfort zone of R19.20/$ if nothing is resolved.

If, as seems increasingly possible, those of dubious reputation such as impeached judge John Hlophe are sworn in as members of parliament then that sends a clear signal that nothing much has changed and it’s dodgy business as usual. The step aside rule also appears not to be taken too seriously if corruption accused Zizi Kodwa is also sworn in as a member of parliament.

Then there is the bubbling cauldron of resentment known as Jacob Zuma to consider. Despite the MK party winning seats in the House of Assembly Zuma and his family members have made it quite clear that they are prepared to resort to the 2021 tactics again if things don’t go their way.

So intelligent debate, consensus and discussion are largely irrelevant when dealing with MK and, to a certain extent, the comically revolutionary EFF who urge that “a revolutionary must be a cold killing machine motivated by hatred”.

I’m not sure that even the perverse SA Human Rights Commission could put a positive spin on that.

So, as often happens in South Africa, things could go well or we could snatch defeat from the jaws of victory. My suggestion is take the maximum you can afford out now at the current exchange rate and put it in a dollar denominated account.

If the Rand does fall then you will have made a very good short term profit and if it doesn’t at least you have hedged your bets with an offshore investment while enjoying a rejuvenated SA economy.

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Paul Hoffman SC very gently upbraided me in his excellent column last week.

While I have been trying to work out how I can bring the Latin term ‘aberattio ictus’ into everyday conversation (it does sound vaguely sexual) I am indebted to him for clearly pointing out the failures within the system since the all too easy abolition of the Scorpions.

His erudite condemnation of the National Prosecuting Authority doesn’t fill me with hope but at least my frequent reference to them as the ‘National Procrastinating Authority’ now carries some authoritative weight. I also have a new found respect for Hugh Glenister, the man who very bravely brought the application which changed the law regarding the independence of corruption busting entities but, alas, not its application.