Today’s Rational Perspective takes a look at renewed concerns about Chinese distressed debt; sexual abuse allegations that threaten the enormous wealth and impeccable reputation of comedian Bill Cosby; Australian slashing of renewable energy subsidies; funding of the new radical Islamic State ISIS (or ISIL – whichever you prefer); Yahoo’s deal with Mozilla; and the impact on South Africa’s ANC of the new trade union-inspired United Front. – AH
ALEC HOGG: Good morning. It’s Thursday. It’s the 20th of November. I’m Alec Hogg from Biznews and here’s the news that happened while we were all sleeping.
Starting off in international markets – not much going on there, very small changes, and in most of the areas around the world.
There’s an interesting story though, coming out of China about the depressed levels of distressed debt. A company in the United States has done some analysis on this, an asset management company that focuses on distressed debt – that’s where they play. They’ve said that because of (perhaps) cultural reasons, the Chinese continue to prop up bankrupt companies and people, and keep them going long after the time that they should have been closed down. This company believes that it’s inevitable that the distressed levels of debt in China will rise at some point in the future, and it’s weighed a little heavy on the markets. The Chinese markets are down a little bit this morning, but it isn’t a new story. It’s just a reinforcement of a story, which we’ve known for quite some time.
A new story though, and a very sad one, comes out of the United States and it involves the billionaire comedian, Bill Cosby (centre in pic on right) . Here in South Africa, people (of my generation, anyway) grew up on The Cosby Show. It was the number one sitcom in the world, for four years in a row in the 1980’s, focused primarily on family values. What’s happened is that 77-year old Bill Cosby is looking to come back into the mainstream. He has a very good business. In fact, he’s worth about R3bn. His business is a R400m-valued business and his comeback has now hit some very serious obstacles because just as he was coming back into the public arena, allegations have surfaced that he was involved in some sexual abuse 20, 30, or even 40 years ago. There are a few of these claims. One doesn’t know if they’re coordinated by competitors. Cosby himself has completely dismissed them.
He says there’s no truth to it whatsoever and it’s not the first time that these claims have surfaced. On the other hand, if you throw enough mud at the wall, some of it’s going to stick. Netflix has already pulled The Cosby Show from its offering and the other supporters of Bill Cosby have withdrawn. I guess this is something that we will only know the reality about as time passes, but it’s very sad. I’m not sure if you’ve read the book, but there was a wonderful book that Bill Cosby wrote years ago, called ‘Fatherhood’ that I relied on quite heavily when I was bringing up my children.
Moving onto other issues, in Australia there is a kickback against Green Energy. Australia has always been a little bit out of line with the rest of the world on things like the Kyoto Protocol. Well, this time they are now becoming pretty aggressive against renewables. Tony Abbott, the Prime Minister there, is cutting the subsidy for renewables by half and this is primarily aimed at wind farms, which currently seem to be springing up all over in South Africa. The story there is that the Australians believe that wind farms or the windmills themselves (remember the 40/50 metre high concrete slabs with a big aeroplane propeller at the end). They say that they’re appallingly ugly and ‘we don’t want them blotting our landscape’. I guess that in South Africa, we don’t have that luxury quiet yet.
It might however, be politically motivated because the Australians do possess nine percent of the world’s coal reserves and clearly, if they’re moving aggressively towards renewables, it doesn’t say a whole lot for the exportation of their own coal, which would last them hundreds of years. Interesting development there though, that this country that is perceived to be so green and ‘go ahead’ in many respects is dragging its heels very much on global moves towards renewables.
We have a terrific story on Biznews this morning on the emergence of ISIL/ISIS. It depends on which anagram you want to use. This is the radical Muslim state that has been created in the Middle East. It now, already, encompasses something like ten million people, but how is it all funded? That’s what this story has a look at – where the money comes from, for this richest terrorist organisation in the world. It’s really, well worth reading. There’s a big business behind the creation of a new state in the Middle East. In addition, rockets cost money, don’t they?
Also on Biznews this morning, there’s a story that is well worth reading. It’s an analysis by Bloomberg’s Marc Cohen on the new union movement’s breakaway from the ANC and its new political party, which is perceived to be even more of a threat than the EFF. The EFF has 6.4 percent of the vote. The suggestion in this article and certainly from experts is that the creation of the new United Front (as it’s going to be called) would be able to push the ANC’s vote percentage below 50 percent in the next big election. Well, we have a test to that coming up in 2016 in the Municipal Elections. What, exactly, is this going to mean for economic policy in South Africa given that the unions are angry at the ANC’s acceptance of the National Development Plan, which people who are hoping to see things happening, believe has actually stalled it’s lovely piece of paper.
I’ll refer to what Pravin Gordhan’s cousin Ketso Gordhan said, when he was on our television program earlier this week. He said ‘you can have lots of pieces of paper, but you need to implement them to actually make them happen’. Well, the RDP hasn’t really been implemented well, but with the break in the union support of the ANC, all kinds of political implications are apparent.
Finally, on the business front, a bit of good news from Marissa Mayer’s Yahoo!. Remember, she joined Yahoo! a while ago, from Google. She’s managed to land her first big fish, Mozilla, which is the biggest independent web browser, has jettisoned its Google relationship and has brought Yahoo! on, in its place. The default browser on Mozilla in future, will be Yahoo!. It’s a big step for Yahoo!, which only has about ten percent of the search engine traffic in the world but by picking up the Mozilla relationship, that will grow in future. It’s an independent organisation, which is supported through donations, primarily. Yahoo! is listed on the stock market. If you think that Marissa’s first step is going to turn into a giant leap in future, Yahoo’ shares are still pretty easy to buy.
That’s it from us this morning. I’ll be back tomorrow – chat then.
