Flash Briefing: WC secession call; Eskom property millionaires – EC nuclear scandal; MK protects Zuma; Tesla

  • The Cape Independence Advocacy Group has issued a statement urging public consultation in the Western Cape for secession of the province. It says President Cyril Ramaphosa’s State of the Nation address last week is a ‘surreal pantomime’. Since 2006, South Africa has fallen from 28th place in the global Ease of Doing Business rankings to 84th. Economic growth hasn’t been above 4% since 2008 and unemployment – even using government’s own narrow definition – has jumped from 23% in 2009 to 31%. It also slammed the president for suggesting that the foundations have now been laid for an improved energy system, saying Eskom employs 24% more people than it did in 2009  – and between them all they generate 8% less electricity.
  • Power utility Eskom has made property owners instant millionaires in a nuclear land grab. That’s according to an investigation by the City Press, which revealed that Eskom bought land at exorbitant prices for the development of a new nuclear power station between Oyster Bay and Cape St Francis Bay between 2012 and 2018. The  plan was then scrapped in 2018. MyBroadband cites the examples of a farm that was purchased for R87,000 and sold 12 years later for R12m and a portion of a farm valued at R500,000 sold for R18m.
  • South Africans are not alone in their disappointment with the way politicians have been handling economic policy in the Covid-19 crisis. Britains’ economy is worse than its weather, notes Morning Brew. The Bank of England has warned that 2020 contraction of 10% of GDP is the worst in 300 years – and more than double the shrinkage after the 2008 Financial Crisis. It’s also a steeper drop than most other wealthy countries – largely because of tight restrictions on movement and business. Despite the tough lockdown to curb the spread of the Coronavirus, the UK has recorded the highest death toll in Europe.
  • uMkhonto we Sizwe military veterans are ready to do their level best to prevent former president Jacob Zuma being arrested in connection with corruption. That’s according to the association’s spokesperson Carl Niehaus. The Sunday Times reports that about 200 soldiers are being deployed outside Zuma’s Nkandla homestead following Zuma’s open defiance of a court order to appear before the Zondo Commission of Inquiry into State Capture.
  • Will the excess in today’s story stocks – electric cars, clean power and cannabis in particular – surely poses a threat to the wealth of their shareholders? Maybe not, says The Wall street Journal. The experience of the past few decades suggests the opposite. Japan is still scarred by the 1980s property and stock bubble, the dot-com bubble led to massive losses and the subprime crash created a global crisis. But not all bubbles are equal. The economic dangers of a stock bubble come from people taking on debt to buy shares and from companies over investing. When the bubble pops, overextended shareholders have to cut spending or go bankrupt. Companies suddenly faced with investors demanding a return have to lay off workers and slash investment. None of this is an issue for the obvious bubbles under way in the fashionable stocks of the moment. Tesla is valued so highly it is now the US’s fifth-biggest company by market capitalisation. Even if the electric-car maker vanished tomorrow, it would have an insignificant effect on the economy, as Tesla’s operations are tiny. It is mostly equity-financed, so its failure wouldn’t start a domino line of bank failures. And while shareholders would be hurt, there’s no reason to think that would lead to a collapse in spending across the country.

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