Economic Review

There is little new in the way of new insights into what may be expected of our national economic performance this year. A few niggles have surfaced, such as:

Our Reserve Bank’s leading indicator indicates that our economy will continue to stagnate;
The market has priced in an expected downgrade to junk status of our credit risk in that the cost of insuring South African government bonds against default is now as expensive as countries whose sovereign credit ratings have fallen to that status.
The pace at which capital is flowing out of our equity and bond markets is accelerating with foreigners offloading these at the rate of R 16 billion a month for the past three months.
The World Bank projects further declines in major commodity prices indices this year.

The inflation predictions are that our inflation rate will rise above 6% in the 3^rd and 4^th quarters of this year, returning to within the target range of 3-6% in the 1^st quarter of 2017.

Who to believe? More on China’s expected economic growth rate has surfaced, with George Soros weighing in with an expected 3.5% versus the official figures showing 6.8% growth in that country. This against scepticism of the “official” figures.

An interesting development is that the competition commission has launched an investigation against several, mainly foreign banks, which it believes was involved in a cartel for the manipulation of our currency, causing the Rand to drop like a stone. If this produces a credible result this will be a skandaal of substance.

Business Review

Our post office is staggering from crisis to crisis. Its latest review records a loss of R1.4bn last year. Not to worry; there is much talk of a turnaround. The state will give a guarantee etc., etc.

Inevitably, what is happening further north in Europe is worse in Greece: the Schengen border is set to move towards central Europe as Greece is overwhelmed by the influx of migrants. In other words, like the Northernmost European countries, the rest of Shengen Europe is uncomfortable with its open borders where the Greek borders are that porous to migrants.

The 4^th Industrial Revolution? The 1^st began in Britain in the late 1700s, its key elements were factories, railways, steamships and so on. Thereafter, in the final years of the 19^th century the 2^nd Industrial Revolution got underway with factories driven by electricity producing mass consumer goods, cars and so on. The 3^rd, from the 1970s, produced personal computers, the Internet, various e-technologies and so on. Speculation has arisen as to whether we are now entering a 4^th revolution, characterised by connectivity-technology. In the United States, services based on high tech developments, accounts for a huge chunk of the economy (some 8-16%). Each of the past revolutions produced generalised affluence. The key to getting richer today is to use technology to improve the efficiency of service industries and so on.

Property Review

A business park is set to be developed within the confines of the former Clairwood race course, Durban.

As could be predicted, the hike in lending rates is expected to result in fewer mortgage applications, fewer house purchases and the like. ”Prime minus” loans are expected to be rare. Ooba says that lenders charge, on average, the current prime rate plus about 0.24% on home loans.

Lightstone has gone further than others to predict a real deflation in home values, given the expected rise of inflation above 6% later in the year. It predicts house price growth at about 3.5%, which is approximately half of our current expected inflation rate.

Some good news: For the 7^th time in the past 11 years, our listed property outperformed bonds, cash and equities last year. Catalyst says that listed property last year provided a return of 7.99%.

Practice Review

On January 15 SPLUMA bylaws for all municipalities falling with in the Umgungundlovu municipality, aside from Umsunduzi, were published. Town planning issues will now no longer be dealt with in terms of the PDA.

It is reported that the Department of Justice is in the process of reviewing the rules of court dealing with sales in execution of immovable property in order to introduce greater fairness to the process. This follows on a spate of court rulings, dealing with the practice of selling houses at a fraction of their market value. One of the proposals holds that no writ against fixed property shall be issued unless the court orders such execution. Debtors Defence claims that we have probably the worst sale in execution laws in the world and that the percentage of defaulters using losing their homes in South Africa is more than 10 times that of countries such as the UK.

Cases

Non-compliance with section 189 A (8) of the Labour Relations Act

The purpose of section 189 A is to enhance the effectiveness of consultation in large-scale retrenchments by reducing friction. It gives employees, affected by mass retrenchments, a choice between industrial action and adjudication in order to resolve a dispute. It also introduces the option of facilitation at an early stage in such a dispute. In this case the employer did not comply with the time limits set by the above section. The question was whether the dismissals were therefore unfair. The minority judgement held that non-compliance resulted in a nullity and that dismissals were therefore not legal. The majority, however, held that because in subsection 13 special remedies for non-compliance with a fair procedure is specified, non-compliance does not result in a nullity. Such non-compliance may, however, result in an un-fair dismissal which has financial consequences and could lead to reinstatement.

Steenkamp Cons Court Case numbers 46 & 47/15

Section 118 (3) of the Municipal Systems Act – hypothec in favour of municipality

Yawn: is the security provided for in section 118 (3) in favour of a municipality extinguished if the property is sold at a sale in execution and subsequently transferred? No. However, before a municipality can look to an owner for payment, it has to comply with its own bylaws. In this case deal with occupiers of the property and so on.

Tshwane/Mitchell SCA case 38/15

Intestate succession and unmarried couples

In this case the parties lived in a same-sex permanent relationship and had undertaken reciprocal duties of support. This partnership was not solemnised in terms of the Civil Union Act. One died. The other sought to inherit. The court eventually decided that it was bound to a prior decision which had provided that section 1 (1) of the Intestate Succession Act should be read to include a partner in a permanent same-sex life partnership. Resultantly, the court ordered that the remaining party would inherit in terms of section 1 (1) (a) of the Intestate Succession Act.

Duplan [2015] ZAGPPHC 849

Options & renewals

In this case the lease provided for a right of renewal following on notice by the tenant to the landlord. The tenant wrote to the landlord and said that it wished to renew the lease and asked for a rental proposal for consideration. The tenant felt that the letter was clear and unambiguous. The landlord disagreed on the basis this that the letter was intended to lead to a renegotiation of the terms of the lease. The court found that the letter did not constitute an unambiguous exercise of the option.

Clicks/Killarney [2015] ZAGPPHC 841

Quotables

Winners build on mistakes. Losers dwell on them. Mori ex twitter.

If you want something new, you have to stop doing something old. Drucker

Weird and wonderful

“Lekker verjaar Oom Paul!” “The DA MP’s unashamed glorification and admiration of such a reprehensible figure is a tacit endorsement of the heinous crimes against humanity he perpetrated against black South Africans.” (Quite probably we will shortly discover that Kruger was related to Terre Blanche) Mothapo, Chief Whip.

To be Arabic, well almost: The Eritrean government has reportedly ordered local men to marry more than one wife or risk being sent to prison for life. One life sentence compared with two?

All boxed up? The nude statues in Rome’s city museum complex has been covered by white boxes pending a visit by Iran’s president. Remarkable.

Rivonia triallist, Dennis Goldberg: “My current comrades in government…have followed the example of British colonialism and apartheid oppression in creating a crony (economy) where political access to power means (financial prosperity).” Eina, sommer all three past governments in one go!

Lighten up

This fellow is driving down the N3 when his cellphone rings.

It is his wife.

“I’ve just heard on the news that there is a car going the wrong way on the N3.”

“Heck, he says, it’s not just one car. It’s hundreds of them!”

Some really good economic advice has come our way. It is based on the premise that if one buys petrol, the money therefrom goes to the Arabs, a computer, it goes to India, a car and the money goes to Germany and so on. The only way, our wag suggests, to keep money at home is to spend it on prostitutes, dagga, wine and beer, since these are the only things still produced in South Africa. This is called mercantilism.

Q. How does a man show that he is planning for the future?

A. He buys two cases of beer.

Q. What is the difference between men and government bonds?

A. Bonds mature.