More utterly misguided criticism of medical schemes

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I wish this would be the last time I say this (or the first or the second):

“Medical Schemes are non-profit entities are don’t make profits for shareholders.” There are administration companies that charge administration fees that have shareholders and make profits. However, if my medical scheme pays me a greater benefit, they will be removing a benefit from someone else or making everyone pay more in contributions.

It really is a simple idea, but clearly this misguided “GP” doesn’t understand the first thing about the organisation he is criticising.  Note that I’m not commenting on a particular medical scheme’s practices, but rather the universal reality of medical schemes.

Dangerous information

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Land Restitution is an emotional issue.

It’s not really a practical issue since recent history has shown that not all beneficiaries of land restitution ultimately want to work the land. This is also entirely reasonable given the change of our economy from a primary economy to a secondary and tertiary economy over the last 50 years.

So when I read that the SA Institute of Race Relations states that more land could have been returned to black beneficiaries if money was not offered instead, I just wonder what the point is.

If people are accepting cash rather than land, it may well be because they want the cash rather than the land. Given land, I’m not aware that there is a prohibition on selling that land (which would be a poorer form of property right than they originally had so surely can’t be allowed) so we could end up in the same situation.

The danger for me is that the measures of land restitution could so easily, accurately and misleadingly, refer to the amount of land that has been restituted, or the amount of land currently in the hands of black South Africans, when this is clearly not an accurate measure of what progress has been achieved.

 

SAM and Basel III deadlines

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Seems like the SARB is requiring South African banks to adopt Basel III (or the tweaks to Basel II that people are calling Basel III) in line with international developments.

Meanwhile, it seems the FSB is still committed to a 2014 deadline for SAM. Given the range and size of stumbling blocks still to be traversed, I expect if we do go live in 2014 it will be with some transitional measures.

Telecoms firms entering profitable segment of insurance market

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Telecoms firms entering profitable segment of insurance market.  What’s interesting here is that Vodacom have obtained a licence to sell insurance and MTN apparently already has a licence. With all the regulatory change (SAM, TCF, POPI et al) going on in the insurance market it requires view of significant volumes and profits to warrant the complexity and costs of a new licence.

UK vs France: Fight!

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UK Gilt yields are at their lowest since the 1890s. Now that’s a long time ago. This reflects concerns about UK economic growth and inflation, which will require low short term interest rates from the Bank of England for an extended period. It also reflects the relatively safe-haven status of the Pound Sterling in this age of Euro-fragility. No matter what the French may try to say about the UK debt situation, I’d rather be in Pounds than Euros at the moment.

The UK isn’t going to default in the next 10 years (hey, I have no idea what will happen beyond then) and the short term prospects for the currency are more likely for appreciation than depreciation.  The very low yields don’t offer much protection against depreciation for non-UK investors over the next 10 years, but inflation risks are pretty minimal for an extended period due to the liquidity trap the UK also finds itself in.

Meanwhile, across the pond, French unemployment is at a 12 year high. For the meantime, French borrowing costs aren’t being overly hurt by investor concerns about the future of the Euro, but I’m not entirely convinced this possibility is off the table during the course of 2012. The practicalities of what happens to Euro-denominated French bonds are not exactly attractive to risk-averse, certainty-desiring investors.