Cees Bruggemans: How to survive Eskom (and other challenges) in 2015

Election results. One of South Africa’s sharpest economists, Cees Bruggemans, explores what is next for markets, interest rates and business conditions.
Election results. One of South Africa’s sharpest economists, Cees Bruggemans, explores what is next for markets, interest rates and business conditions.

Our favourite economist Cees Bruggemans has compiled his “Skinny Dipper’s Survival Kit” for 2015. Something we all need, but especially those without generators – Cees has strong advice for us – and excessive US Dollar debt (shame). Unique insights. From the very best. – AH

It would appear that if you have standby generators, don’t belong to a crippling union or have one on the premises, have geographically diversified income streams, don’t have excessive dollar debt, and don’t swim naked (unhedged) but use enough shark repellent, you will be fine in 2015.

It is called the Skinny Dipper’s Survival Kit. It is presumably easy to see why.

Being dependent on Eskom as it implements rolling mass action before it blacks out everything is like medicine that is worse than the disease. Allegedly planned, its unplanned disruptions are the costliest indulgence possible in a society being invited back into the Stone Age.

If blackouts graduate from being a few hour episodes daily to a few days weekly, failing cell phone, iPad and laptop chargers will definitely shut you up, failing garage batteries will lock you up, and downed security systems may take you out. That’s aside of becoming marooned in stationary building lifts.

Inexplicably, the SA labour department has started to enforce its regulations. Budding new radical unions, readying to further unhinge public sector space and the metalworking space, are being told their constitutions are not acceptable unless containing a secret strike ballot clause.

This is apparently coming as a rude surprise. Why insist on something you have no intention of using, some unionists want to know? Indeed, what a question.

Worse, the labour department is making it known that existing unions also need one of those things in their constitutions. This obviously may take time arranging (imagine anyone obliging), but the writing appears to be on the wall.

Change is coming, if snail-like, and by the backdoor.

Something seems to be stirring in this governance space, as Eskom and union blackouts are now increasingly inviting employers to close up shop, and foreign companies to cancel supply contracts with small SA suppliers.

It is the labour equivalent of Eskom. Catastrophic failure increasingly coming to a space near you. In a broader sense, it is encouraging strategic business restructuring (prudently seeking out more growth diversification abroad).

Also, some state-owned enterprises appear to be for the chop, with either deep board upheavals or the seeking of strategic partners, being the SA equivalent of socialism with Chinese characteristics (in our case known as partial or full privatization).

I don’t think too many SA corporates have overborrowed in dollars or are unhedged, given the notorious volatility of the rand supposedly serving as a deterrent against such ills.

But as in the 1990s, other countries may have such exposures. It then becomes a question of how fast the dollar rises before detonating such landscapes. And we are likely to feel the backwash. If so, it presumably couldn’t come soon enough for our struggling gold, platinum and iron ore producers. A much weaker rand against the dollar (though not necessarily on trade-weighted, as almost everyone bar the Americans and Swiss would be in the same boat?) would be manna from heaven for all of them.

It struck me over the weekend, reading yet another tirade, that we do have a remarkable President. In his time we have implemented not one but TWO economic plan visions without having the foundation for either, yet both led by Cape boikies.

What was that supposed to achieve, except paralysis? Another Eskom equivalent.

There was the New Growth Path of Ebrahim Patel, but without the experienced, trained high-skill cadres manning the public service to implement it, while rolling mass action among failing infrastructure and disruptive union strikes ensured the capitalists to take a distant view, spiking any new growth.

There was the National Development Plan of Trevor Manuel, but without the education reform to give us high quality manpower, without infrastructure juice, and with a rudderless public sector also not inspiring business confidence, preventing both public investment and private investment taking off, and also failing to safeguard our trade competitiveness.

How about doing without any plans? Just getting on with it? Isn’t that what skinny dippers do, especially late at night when sufficiently intoxicated?

Which reminds me. Beer & wine stocks are running low this Xmas. That would never do. As so  much else.

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