Dr Moz can explain these things so dont be shy to ask him.
Ex Business Day - a very good source of news oaks.
QUANTITATIVE easing (QE), the US Federal Reserve’s strategy to pump liquidity into the American economy after the financial crisis of 2007, was a missed opportunity for SA. More than $1-trillion was created via the mechanisms of QE, and lots of it, almost perversely, found its way into emerging markets, including ours.
But we looked the other way. Our friends Rob Davies and Ebrahim Patel actually tried to stop a large foreign investment (by Walmart) into the country. Remember all that noise? Sadly, money not being invested doesn’t make a sound.
Instead of seizing the opportunity to really mop up some of the investment dollars floating around, we let them go. Make a quick turn on local equities, then flee. We squabbled about the past while a future was knocking at the door.
I know colonialism and apartheid are always with us, but we seem incapable of imagining ourselves in a bright and prosperous future as a free people, calculating what it is we have to do to get there, and then just doing it. President Jacob Zuma’s woeful administration spends so much time bending the knee to the Chinese you’d have thought they’d learned to think like the Chinese. Long term. But they haven’t.
QE could have gone a long way towards financing our infrastructure needs. We’d have been able to use it to finance a lot of the infrastructure we need. We could have invited the Indians in to build a few coal-fired power stations. They build fast, those guys. But we didn’t roll out the welcome mat, and now QE’s gone.
But America now offers us another opportunity to act for our future. Not only is it recovering economically, but it is (or soon will be) the biggest oil producer in the world. Thanks to shale gas and oil and advances in fracking technology, it is entirely independent of fuel imports. Even more interesting is that US law forbids the export of oil. That will change, and when it does, the US economy will be immensely strong.
Soaring US oil production is one of the main reasons the oil price has fallen. Normally you could rely on oil producer cartel Opec to manipulate the price by cutting or raising production, but with fuel-hungry America independent of them these days it is all a bit academic. American fuel production changes global economics and politics. If it could supply Europe it could hobble the Russian economy, which makes most of its money piping gas to the continent.
It also changes the China-will-soon-be-the-world’s-biggest-economy conventional view of the world. China is an importer of oil but is spreading the search for its own — often in the waters of its neighbours, which leads to regional tension.
Our opportunity lies not necessarily in cosying up to the Americans but in understanding that whatever the price of oil, it remains a geopolitical weapon. The price of oil will rise again, if only because nonfrackable reserves lie deeper and are more expensive to get at. But for the moment, oil’s a relatively benign necessity.
And it’s our moment. We must use the money we save on a falling oil price to make ourselves energy independent. I know Eskom is in an impossible situation, but that won’t last forever.
Try that forward-imagining thing I mentioned. Put yourself in 2035. We import no oil because we don’t need to. That is because for the past 10 years we’ve been fracking shale gas in the Karoo. Most cars have converted to gas. Eskom, now chiefly just the owner of the electricity grid, also has at hand 10 shiny new gas-fired power plants it uses to top up the system when it is under strain.
As a side effect, we’ve become an important source of gas-to-petrol and diesel conversion technology, and fracking equipment. We export this competitively because, freed from oil imports, inflation is under much better control than it used to be in 2014. And that means we can lower interest rates, to the benefit of an "exporting" currency.
...SADLY, none of this will happen. Or, if it does, we shall probably miss the cheap oil moment. That is because of the mess we are in back here in 2014. I said last week we are not in crisis, and despite some argument I still believe that. Everything is relative. But in a mess we most certainly are.
At its heart is a profound, but profound, leadership problem. It isn’t just a president who has no understanding of how the economy works or how even one little job might be created. The malaise has spread. At so many levels now, people can simply not do their jobs.
As we’re talking about energy, that man who walked into the Business Day editor’s office last week and harassed him until escorted out of the building was none other than the now former chairman of PetroSA. It plans to spend a vast amount of money (not only buying the Malaysians out of Engen but on building a whole new refinery near Port Elizabeth) to make itself relevant. Not a cent of that spend — wherever it may come from — is necessary.
The energy minister indulging all of this is none other than Tina Joemat-Pettersson, a politician so compromised by bad decisions it beggars belief she should be in charge of the one department most obviously responsible for securing our economic future. The African National Congress (ANC) has truly lost its marbles if it thinks this appointment is okay.
There are two peaceful ways to set things right. The first is to successfully challenge, in the courts, the parts of the constitution that allow the president, unfettered, to appoint or anoint everyone from the chief justice to the mayor of Blikkiesdorp. Every appointment he makes should be subject to parliamentary (public) ratification so that if you’re a criminal, a suspect or just plain mad, there’s at least a chance we’d know before you get your big job. You may still get the job, but we’d know.
The second is for the black middle classes, first created and now being impoverished by poor ANC socioeconomic management, to teach the party a lesson in future elections. Either abstain or cast a vote for an opposition party, even if you have to hold your nose while you make your cross. Nothing will concentrate the minds of the ANC more than the prospect of losing power.
A possible third avenue requires money. Johann Rupert made a timely (and typically colourful) statement about the state of the country and corruption when he spoke at the Remgro annual general meeting this week. He can do something about it. He could fund Hugh Glenister’s fight for the re-creation of an independent crime unit such as the Scorpions. Perhaps he already does.
The thing is, everybody sort of knows Zuma has to go. His own party knows it. But how? As long as there are more middle-class people profiting from the Zuma chaos than being damaged by it, expect little movement. But I suspect the numbers are beginning to turn.
Are we going to move into a period of global prosperity based on cheap oil?
As for us poor buggers here in SA we can only hope somehow a better government emmergres for all our sakes.
Sometimes I do wonder if the oaks are right about the world revolving around Morne being our flyalf or even wee matfiled messing up our tight five so horribly!
