A recent "Money Talk" article by Matthew Lester stated some very pertinent facts about the so-called National Development Plan by Trevor Manuel.

1. By 2030 - all the current politicians will be in retirement - good one Manuel - again we cannot hold any of you accountable.
   

   

   All a load of Hot Air?

2. 11 million new jobs at a growth rate of 5% plus - we haven't seen those rates since the glory days pre 2007 and are unlikely to see them for at least the next 10 years. Our illustrious Finance Minister Gordhan says our growth rates will be determined by the world economy and as Lester points out - "that's in tatters."
3. 2 million of the new jobs must come from Public Works - double what is there at the moment!!
4. The NDP also calls for wage subsidies - whilst the Unions do not agree at this stage with that concept - the article confirms this will result in more delays in implementation of this plan. But more importantly how on earth will this tiny social country be able to finance these subsidies? We already have +- 30m people on social benefits from a tax base of some 5-6m tax payers - unemployment is rising out of this small base so the fairytale of the goose that layed the golden eggs is a lot more pertinent.
5. All of this points to tax rates that must rise - so beware gooses you might have to return to the wild to survive!!

This looks rather like another un-implementable pie-in-the-sky "dream" by the Government, and we will now waste another few million Rand's worth of taxpayers money debating and discussing this for a year or two.
Watch this become the govt's golden sceptre for the run-up to 2014 elections.

Greece's Debt problems...versus SA's?

Time Magazine Nov 21, 2011 reported that; "No financial rescue plan alone can fix the political and social problems that are the true source of Greece's debt".

The article continues; "After Greece emerged from military rule in 1974, its politics calcified into a system of institutionalised cronyism, with party leaders using control of the public sector to extract bribes in exchange for jobs and political favours. Corruption at the top helped foster a culture of unaccountability that permeates all levels of society. Many Greeks dodge their taxes, shorting the public coffers of some 22 billion euros in revenue every year. Powerful public unions have procured unsustainably costly and generous benefits for public workers.

Now if I did not lead the article by stating that this was about Greece, what would you have thought?.........South Africa? well it sounds just like this corrupted state of ours does it not? We are continually increasing borrowings to fund a gradually widening deficit, which is based upon ever-increasing social benefits rather than subsidising economic growth. Unemployment continues to rise, government interference in regulation is on the increase, corruption by cronyism continues unabated and public sector wages and employment is ballooning, whilst Unions continue to defend high labour costs to the detriment of employment, productivity and competitiveness.

Is this going to get better soon? Well the answer is emphatically NO!! We do not need 2 successive quarters of almost zero growth for economists to shout hooray we are "recovering"!!, we now need 6, yes SIX quarters of successive REASONABLE growth rates before we can say we are then RECOVERING!, and that will still mean caution should prevail.
The largest developed economy continues to deteriorate; Citigroup is to layoff 4,500 workers in next quarter, this is equivalent to 25% of the employees of each of our large banks. Whilst the  lack of recovery remains a crises in the US, we little minnows down here will continue to plough backwards. So keep the buckles tight on the trousers, we are in for a 5 year low period and at least a ten year stretch before we are back at, or better than, levels of 2007.

We didn't start the fire.............

If I listen to the words of the Billy Joel song that spews chaos all around at various junctures in history, then there must be a great follow up available if adapted to South Africa as we stand today.
Jacob Zuma, Cele Beke, Jacky Selebi, Glen Agliotti, Shaik Shabir, justice system, media suppression, wow wonderful set of words to set in such a song tune. "Rock 'n Roll, the colour wars, I cant take this any more, we didn't start the fire".......(Sound vaguely familiar?)

World renowned author John Demartini, a behavioural specialist, has stated rather succinctly:

"The key is education. Educating people on what their goals and values are. Educating people on how to set goals that are congruent. Educating people that you must have service and reward to obtain fulfilment. Educating people that you must contribute in the economic game".

DIRECT-LINE-OF-SIGHT

Aside from the obvious, i.e. the education of the largely illiterate voters roll of this country, why shouldn't this be the SA govt's mission statement for themselves?

It is only when everyone has a direct-line-of-sight to the objectives that the ship begins to steer in the right direction.

Duck the pooh.........

Latest Stats SA employment stats show another decline in unemployment if we ignore the pubic sector (only area to have employed people). Researchers state unemployment looks gloomy for the ensuing rest of this year. Earlier reports implied we would lose another 400,000 jobs from July to December 2011. This now looks like it is on the cards as we nefariously appear to retrench people towards the end of the year.

Overseas, large corporates are again announcing massive retrenchments, yet the politicians tell us we are not heading for a double-dip recession! If you have followed my comments on this blog from the outset, you will have noticed that I pleaded for sustainable signs in recovery around employment and GDP growth, none of which we have seen since the financial crash 2008. Talk of green shoots have been simply that: talk. Despite massive dollar printing, this has all gone into rescue packages all over the world. These receipients remain in limbo with regard to recovery, cannot therefore service these ballooning debts, thus placing more lenders in larger economies under further stress. How does it end?

Well the only way out is for developed economies to splurge infrastructure spending, to get the construction industries going (these must be on financially viable projects, and regretfully this would include toll roads), create financial incentives for cash flush businesses to invest - look for example at China that subsidises factory rentals to allow for lower cost exporting, lower business taxes and in SA particularly shrink ever-increasing public sector employment.

These are immediate actions that can take place that would in essence lift public sentiment, a key driver for investment activity. Yes we will have to deal with rising inflation as a result, but that can be treated in due course with gentle normal economic tools.

Watch this space............

The Storm Continues.......

Well the US eventually politicked their way into printing more dollars, ensuring that lower dollar values would not precipitate any bond holders calling for dollar repayments, which in essence they cannot afford to repay!

The global debt crises worsens daily and with market sentiment at an all time low, investors are panicking as evidenced by very volatile bourses. The various country unrests that we are experiencing, ala Libya, Middle East etc are making matters worse along with the deeply indebted nations such as Greece, Portugal, Ireland, Italy, Spain, etc all giving off negative indicators of not being able to service their massive debt obligations. It would appear that there is no possibility of avoiding a double-dip recession and we had better brace ourselves.

Back home we need to focus on our own job creation crisis as unemployment continues to rise with more negative employment data expected over the next few months.

Self-indulgent politicians and their parties need to wake up to critical priorities and to begin to spend budget allowances urgently in order to start mobilising the construction industry, that in turn will commence re-employment and create some positive spin-off. There is no other place to begin, so focus on what is immediately possible and get this done before the festive season shut-down.

The Super 15 Rugby competition has not helped sentiment with regard to support of our national team and with the Rugby World Cup now looming, the last thing we need is a Springbok disaster in New Zealand. The nation will go into cardiac arrest!!

Stormfront Brewing

An article by Leon Alberts in the publication "Blue Chip - The South African Journal of Financial Planning", states some very disturbing facts. Namely that other cities of the world such as Florence, Barcelona, Madrid and Venice are in trouble. The article states that 100 US cities are over-indebted to the tune of US$2 Trillion!! The municipalities within these cities are expected to declare bancruptcy, which in essence means that these local goverments will default on debt obligations!!. The Federal Reserve has stated that they have no intention of bailing out these local governments, which has resulted in the commencement of massive cost cutting, selling off of state assets, and the result will be further significant retrenchments.
This is the US - what chance do we have down here?

What is so different from our country???********

On the global front, the SA Reserve Bank cautions that banking exposure worldwide is at an all-time high and looking rather perilous. At the end of 2010, exposure to Portugal, Ireland, Greece and Spain (PIGS), stood at $2,3trillion!! With the UK having an additional exposure to Ireland of $190Bn!! Gill Marcus has intimated that a large default in any of these areas could have devastating knock-on effects which could include South African banks. “This sort of derailment could have disastrous effects for our domestic economy as well and export markets could collapse”.
 

At least we read that the cost of cheap labour in China is on the decline, with manufacturing moving north to Cambodia, Vietnam and India, and in some cases back to the USA believe it or not!! This seems to me to be an ideal opportunity for SA exporters to become more aggressive.

The overall economic circumstances are in need of a Hallmark; “Get well soon” Card.

Time article May 30,2011 talks about the 5 steps to bring unemployment down.

1) Manufacturing - German example of focus on technical education, technical institutes and polytechnics, as well as apprenticeship programs. Specialize in high-end, complex manufactured products that can command a premium price. Their BMW and Daimler Chrysler modesl are fine examples of this strategic initiative. Germany is the only European country that has survived the economic crisis.

2) Retraining - millions of Americans are in industries like automobile parts in which lost jobs are unlikely to ever come back, certainly not at the pay they once commanded. Many of these people, most in their 40's or 50's need to find new jobs through massive re-training programs.

3) Growth Industries - efforts to create jobs when in crisis should be directed at those industries/products where the country already has a competitive position, and to double the efforts in that area. In the US for example they export great amounts of culture; movies, TV programs songs etc. Health-care in the US, considered of the best in the world, they should concentrate efforts to increase the amount of people coming to the US for such treatment.

4) Small Businesses - improve the eco-system for small businesses, by funding research, streamlining patent process, limiting regulation and encouraging venture-capital like entities. Take a chip from China and their small business industry.

5) Jobs for Now - Construction industries have lost thousands of jobs, and despite Govt's huge debt burden, the accent shouild be on govt and private collaboration infrastructure spending in order to get these people re-employed and working on all crumbling infrastructure.

Back home, we are grappling with Govt infrastructure spending to get going - Where are South Africa's other steps?

Strategy Fails when Execution Fails....blah, blah, blah

It is an often spoken cliche that failure to execute/follow through is the reason why so many strategies fail. Well by now we all know that, but what exactly does that mean?

Norton and Kaplan identify the primary causes of failure of strategy implementation as follows:

1. Only 5% of the workforce understands the strategy
2. Only 25% of Managers have incentives linked to strategy
3. 85% of executive teams spend less than 1 hour per month discussing strategy 
4. 60% of organisations do not link budgets to strategy

These are succinctly the summation of why strategies fail, and 90% of such failures can be linked to these points.

COMMUNICATION

How different is organisational strategy planning down at everyday levels as compared to say Global Strategy planning, such as Europe and the common currency strategy?
Well if you think carefully about what Kaplan and Norton say, then the fundamentals are precisely the same.

We have been talking about communication since the 2nd World War; when will we get this right? How useless can we be in this fantastic modernised world if after almost 100 years we still have the same problem - Communication?

We'lll chat again..............