On the Twitter thingie. Folks called it just after six this morning, I only turned the TV's on here at work at around 6:30, the rest of the "news" that I got was via twitter. Yes. I "watched" the whole thing on twitter. I made a concerted effort of reading the tweets of the folks that I choose to follow. Not the networks who have guests and spew the stuff that they think their audience wants. There are some personalities that are never going to appear on Fox news, invited on, or accept the invitation. Perhaps that is not fair to directly attack that station, but you get what I am trying to say, they (Fox) seem like a soft enough target for liberals. Still, nearly two hours after it had been called, nobody said that it was official.
Mitt Romney then conceded just before eight o'clock local time in the morning, saying that he had called Barack Obama and wished him well, and good luck! And as the Fly on twitter said, Romney went to spend more time with his 200 million Dollars. That is not fair, the US that I know champions business. But that is changing, I think that the big issues that conservative Americans and Republicans hold dear needs a rethink. For crying in a bucket guys, two states basically legalized pot! And a fairly significant (I think, as a liberal anyhow) that Tammy Baldwin won the senate seat in Wisconsin. She tweeted: "And I’m well aware that I will be the first openly gay member of the United States Senate." I am not one to believe that anything about your personal makeup detracts from how you perform your job. If you are good at your job I don't care what or who you are. That is me, but these are ordinary folks from Wisconsin, that have decided that it doesn't matter either. Change happening in front of our eyes.
The president ended off with exactly that sentiment, it did not matter who you were or what you were, you were American. And that it was his job to work together with everyone to tackle the real problems. If you didn't watch it, look for the victory speech, you will be moved. And if you are not, then I am afraid that very little will break through your shell!! Four more years. At least that uncertainty is removed somewhat. Oh yes, and Bo (the Portuguese water dog) does not get a friend, Obama said that one dog was enough. I am pretty sure there are enough folks to engage with his ball on those amazing lawns.
The last thing that I want to add to this great democratic process is how quick it is. And, more importantly, yesterday was a normal working day in the USA. The markets were open, businesses were open and everyone had their chance still to go and vote. That is what productive people do, they do both. Too many holidays, not enough performance measures here, not enough productivity measures, too rigid in our ways. We should embrace the American model, as flawed as it may seem to many red book and budenovka cap wearers. Sigh, that is another debate with no end in sight.
Jozi, Jozi 26o 12' 16" S, 28o 2' 44" E. We managed to hang on to some gains in the dying moments of trade here in Jozi, as the US markets started to point to bigger gains than initially anticipated. There were again some stocks that touched 52 week highs, of course that would be natural. There were a number of results yesterday, a lot of smaller companies were reporting results, but there was also Mediclinic, a stock that we will look at tomorrow. Running short of time here in Jozi! The weather at least is much cooler today, we have had a couple of days where I swear I saw some people melt. Well, not quite melt, but you know what I mean. Phew, my thermometer on my dashboard registered 40 degrees Celsius plus after five o'clock in the evening. Yip, that hot!
Democracy. It is something that we take for granted. But what does it actually mean to many people outside of the USA? Well, I saw a "poll" which suggested that most people outside of America preferred Obama as a US president over Romney. Seemingly the folks on twitter here locally did too. But do the people outside of the US enjoy democracy in the same way that they do? It turns out, at least according to the Economist Intelligence Unit (EIU), that only 15 percent of the countries globally, which represent only 11.3 percent of the global population enjoy "full democracy". So, according to the EIU, 85 percent of the worlds population do NOT enjoy full democracy. Amazing. I for one am then very glad that we watch these US elections and not see anyone take to the streets with their army, or some such other violent actions that sadly go along with some elections.
There was some commentary about the "situation" in Europe and how that has eroded democracy: "In 2011 the decline was concentrated in Europe. Seven countries in western Europe had a decline in their democracy score in 2011; none had an increase. The main reason has been the erosion of sovereignty and democratic accountability associated with the effects of and responses to the euro zone crisis (five of the countries that experienced a decline in their scores are members of the euro zone--Greece, Italy, Portugal, Spain and Ireland). Most dramatically, in two countries (Greece and Italy) democratically elected leaders have been replaced by technocrats. The near-term political outlook for Europe is disturbing."
Right at the bottom of the pile are countries like North Korea. Chad. Turkmenistan. Uzbekistan. Myanmar and Equatorial Guinea. Not places you are likely to visit in a hurry. North Korea, people have been known to starve to death, eat bark (evidence of chopped down trees and stories of folks escaping) and generally have a much lower standard of living than their Southern peers. Who have enjoyed the fruits of a liberalized economy. South Korea is one of the only 25 countries that enjoy "full democracy". The point that I am trying to make is that there is a direct link between democracy and better performing economies. In North Korea they have a single self important person surrounding themselves with equally self important people. Secrecy, gruesome acts of the most wicked kind against fellow citizens. In the South they have K-pop, Samsung and PSY. Long live democracy, may it spread like wildfire.
- Byron's beats
Now that we know the outcome of the US presidential elections, focus will shift to China where the ruling Communist Party of China will hold their 18th congress. During this congress nearly 3000 delegates representing more than 80 million members will elect their leader who will inevitably run the country. It is much like what is going to happen in Mangaung later this year where a leader for the ruling party needs to be elected.
This system is very different to what we have seen in the United States where individuals campaign. Like here in South Africa the ruling party elects the premier of the country. Over the last ten years Hu Jintao has been general secretary of the party and therefore premier of the country. That is the most powerful decision making position. However his tenure is over and it is already a foregone conclusion that the new man for the job is a fellow called Xi Jinping. You should learn that name because behind the re-elected Obama he is going to be the second most powerful man in the world and as China's economy grows, that gap will decrease.
So what do we expect from Xi Jinpang, a member of one of China's most powerful families? This article from The Economist does a nice evaluation the political situation in China and how it will react to this leadership change when Xi Jinping takes his post in March next year.
The article points out that over the last few years there has been a growing unrest in China despite all the growth they have seen. Lives are certainly better then what they were. 95% of all Chinese have some sort of medical coverage, up from 15% in 2000. Hundreds of millions of people have been housed, farmers have been subsidized and insured and people have generally seen their lot improve.
The unrest is coming from people's ability to connect with the rest of the world through social networks and the likes. Even though Facebook and Twitter are banned there are just too many loopholes to keep the now massive middleclass in the dark. We have already seen this in the economy as workers demand higher wages and better working conditions. Mr Xi will have to work very hard at controlling this unrest. Personally I don't think a bit of unrest is a bad thing. People want to explore and learn and be free. Especially considering China's dynamics as they shift to a consumer based economy. Having these people roaming the planet will be good for the global economy as a whole.
He will have to be very delicate however and make sure that a Chinese revolution doesn't occur. But again, read the above economist article. Chinese politics is not very well known, especially when you consider the weight they pull on the globe.
I was struck the other day by a statistic that I saw on the telly, it was Power Lunch on CNBC and there was a monthly review of Motor vehicle sales in South Africa with a regular guest by the name of Sydney Soundy. Sydney seems to have moved to Standard Bank from ABSA, but of course he has continued to appear on the show. Soundy said that passenger vehicles represent 70 percent of the overall new vehicle sales. Find the video here: SA October Vehicle Sales Boosted by Low Interest Rates. The part that struck me, possibly between the eyes, was that part about the average loan per vehicle finance deal being up 8 percent to 313,124 Rands.
313 thousand ZAR sounds like a "nice" car. I found online on autotrader the following vehicle: 2012 VOLKSWAGEN JETTA 6 2.0 Tdi Highline for sale. Nice set of wheels as they say in the classics. But what does a car like that cost to finance? So, I found a wonderful Vehicle repayment calculator on the Wesbank/FNB website. I plugged in the 316,570 ZAR purchase price over a 54 month period. The interest that you are going to pay on that, provided interest rates stay the same is 95012.91 ZAR. I included an insurance option of 585.65 ZAR per month, seemed a little light to me. But the monthly repayments would be 8285.67 ZAR per month. I would suggest that there are not too many South Africans who can afford this. Oh, did I mention that the interest rate was 12 percent, I am presuming that is the "average" finance rate.
After the 54 month payment period, you would have shelled out 447,426.25 ZAR. Just short of 100 thousand ZAR per annum. Phew, when you put it like that. But what would you have left, i.e. if you sold that motor vehicle, what would you get for it? Well, I did a search, and found a similar model 2007 VOLKSWAGEN JETTA 2.0 TDi Sportline for sale, for 119,950 ZAR. 26 percent of the price now, granted the fact that the thing is used over five years and has clocked up 128 thousand kilometres. I trust that the drive has been awesome.
Now, I am not advocating that you do not own or buy a car, but in South Africa we have a problem with people saving. People buy expensive cars, don't service longer term debt and don't save nearly enough money. Now I am going to do a simple calculation. What would have happened if you had saved that money? Over 54 months? If you had bought equities. Well, I am going to generalise here. Imagine that you reversed it, and started with the lump sum of 119,950 ZAR. And you stuck that into a market tracker, with the last decades average returns (around 16 percent) for 48 months, six months less than the financing period, what would you end up with? Well, 227 thousand ZAR.
BUT, if you had taken those same payment amounts, 8285.67 ZAR and invested it, at that return of only 10 percent per annum (being generous here to ourselves) you would have ended up with 556 thousand ZAR after 54 months. Yes. At ten percent per annum. Even if you stuck it into a cash type product that yielded 3.75 percent you would have ended up with 488 thousand Rands. You could have paid cash for your new Jetta and you would have been left with 230 thousand ZAR, which you can continue to add to that pot, instead of trading in and trading up. A simple exercise to show you how to think about financing a motor vehicle and how much money you could save yourself. Check out my math. I am still amazed every day at how people finance expensive vehicles and yet say that they have no savings. Balance people, balance. But who wants to wait four and a half years, right?
Crow's nest. Markets are flat to start with, the Rand has firmed considerably, perhaps a Dollar weakness story. You know, loose monetary policy to continue and all that. Lower rates for longer and all that. Running up more debt and all that.
Sasha Naryshkine and Byron Lotter
Follow Sasha and Byron on Twitter
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