Worst case scenario, that’s the scene painted by Garth Mackenzie. He pens a dire looking future, where all President Jacob Zuma’s plans bear fruit, and Treasury gets looted.
And while Mackenzie doesn’t think Gordhan will be convicted, when he’s formally charged on November 2 it will ignite a cabinet reshuffle which sees Zuma’s right hand man Brian Molefe assume lead position at Treasury, and control of the country’s finances.
It’s a tale of IMF bailouts, junk status and a road like Zimbabwe’s.
It’s always important to lay out the worst case scenario because then at least there’s enough opportunity to play against it. And maybe this scenario will shift the gears into action because it won’t be pleasant for any South African, bar the President’s henchmen, if it comes true. – Stuart Lowman
By Garth Mackenzie*
We’ve once again been thrown another curve ball to create confusion in the market. The announcement that Pravin Gordhan had been summoned to appear in court on 2 November saw the currency weaken sharply.
That served to prop up the market the morning after but selling pressure was evident in the afternoon session. Many have said that the rand’s reaction was not as negative as might have been expected.
If I have to write the script for the rest of this story, it goes like this:
Pravin Gordhan is formally charged in court on 2 November for the flimsy charges of fraud relating to an early retirement package for Ivan Pillay (Was this really the best they could come up with after all their digging? This tells us just how squeaky clean Gordhan really is).
Jacob Zuma will suspend Gordhan and allow him the opportunity to prove his innocence in court. The country can’t have a Finance Minister who is under investigation for fraud.
A cabinet reshuffle will occur and a new Finance Minister will be appointed – Brian Molefe seems to be the most likely candidate. He’s a Zuma man and a friend of the Guptas.
Brian Molefe will be maleable to the Zupta’s will. He will approve the nuclear build program (wasn’t it ironic that Tina Joemat-Petersson, Energy Minister, chose to announce that Eskom will seek to be the preferred procurer of the nuclear build program).
The nuclear build programme will cripple the country economically. We just cannot afford it. We will be downgraded by the ratings agencies and our relegation to Junk status will be secured. It will be expensive to borrow money in the international markets and our shrinking tax base will have a further burden to bare.
Deficits will balloon and RW Johnson’s forecast that SA will require an IMF bail out will come true. It will be very, very difficult to come back from that economic situation. Particularly when the global economy is fragile.
Gordhan will eventually have his day in court. That’s if the court doesn’t throw the matter out first as it is just so ridiculous. But the wheels of justice turn slowly. Zuma’s strategy here is really just to neutralise Gordhan for a while so that he and his friends can loot the Treasury while he is still in office. They need Gordhan out of the way to allow this to happen and their plan is taking shape.
We live in a country where the President has gone rogue. That’s the bottom line here. He couldn’t care less about the people he serves. He couldn’t care less about the economic damage he is doing. He couldn’t care less about the fact that he will always be remembered as the worst President that this country has ever had.
All he cares about is serving his own interests and those of his slimy friends. His main ambition seems to be to loot the state as hard as possible while he is still in office. It is indeed a very sad state of affairs. How did the miracle country of Nelson Mandela get here?
- Garth Mackenzie is the founder of www.traderscorner.co.za. He trades his own capital for a living and runs a trading advisory and education service. He is the founder and editor of BusinessDay TV’s Traders Corner show. Garth trades his own capital on the show and donates the profits to charity at the end of each year.He fell in love with the stock market at the age of 14 after he and his father began trading a fictitious account of select shares on the JSE. He graduated from RAU in 2001 with a BCom Economics degree. After running a successful derivatives trading desk for BoE from 2003 to 2009 he left the corporate world to trade his own capital and become an entrepreneur. Garth is a no-nonsense guy and likes to portray trading in a realistic light – unlike the glitz and glamour that trading is often portrayed as. He also loves to write about topics that are real and affect every South African in some way.