I always maintained that “nationalisation” isn’t necessarily appropriation of assets without compensation, although the popular views and worst fear-mongering viewed this as the only possibility. It’s refreshing to hear that “nationalisation” was considered on its merits against private operation of firms rather than just as a way to redistribute wealth. (Ok, at least one article wasn’t mad panic.)

The increase in taxes is also basically expected. Although new and changing taxes does add uncertainty, it provides a sense that the rules are being followed.  Tax rates on energy companies in many Middle Eastern countries is high – sometimes near 50%. So the government fiscus does benefit from the energy that belongs to all its citizens.

It’s also a, slightly sneaky, way of re-settting historical land ownership and mineral right royalties and licensing. If “we got it wrong and sold them too cheaply in the past, we can always recoup through higher or new taxes”. Maybe a little cynical but not surprising.

The real free market fanatics will no doubt be in uproar about higher taxes destroying jobs and misallocating resources. There is a debate here, but the free market fanatics all too quickly forget that it’s hard to argue that the value of the minerals under our country have been fairly priced. Those markets can easily be described as “failed markets” with a number of externalities involved.

Even the hardest neoclassical economist will recognise these are very real limitations on Adam Smith’s invisible hand.

“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.

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.

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.

I’m continually disappointed that Moneyweb continues to partner with this distraction.

As I’ve done in the past, I’ve analysed very quickly some of the results of the most recent competition. As background to that, the basic rules are:

1. Put up R20,000 of your own money
2. Trade over three months in currencies, commodities single stock futures and some index trackers.
3. Whoever has the most at the end wins a million rand
4. Everyone keeps what is left of their initial “investment”

So let’s be clear, there are no long-term investment learnings here.

The winner did return 165.5% over 3 months, which is not an impressive performance even though it might look like it.  The point is, given the volatility of the investment universe available for the competition and the encouragement towards rampant risk-taking, it’s entirely pedestrian performance.  It’s very likely an individual’s performance will be good given the wide range of possible outcomes.

Let’s look at some other statistics

These are not performance statistics of which to be proud. They are similar to the losses incurred in prior competitions.

So in short, the competition cost the entrants in total just over a million rand. Losing a million rand is a great way to Make a Million.

US yields are around 2.09%  and are looking mighty far away from the point where S&P downgraded them (2.56%).  I’m feeling pretty comfortable on this one.

Part of the deal is a “50% loss for private investors”. Which is part true and part nonsense but will be an effective Greek default when enacted / agreed. (I don’t care how “voluntary” it may be, it’s a default and almost all definitions of default include restructuring of debt in any way that isn’t what was originally promised.)

Why is it only partly true? Well it’s not necessarily a “loss” for private investors. The probability of default on Greek bonds has been just about 100% for a while now. This probability of default is derived from market prices for Greek bonds and market spreads on Greek Credit Default Swaps (CDS) and an assumed Loss Given Default or Recovery Rate for investors when the bonds do default. Actual Recovery Rates vary widely, but often analysts plug in the average Recovery Rate over most of this century on unsecured debt which is around 40%.

So if market prices for Greek bonds assumed 100% default probability and a 40% recovery, then a 50% recovery doesn’t sound so bad. The potential downside is that Greece may still (need to) default on these written-down bonds at some point in the next two decades.

So the real question is what will the new probability of default be? Then we will know whether investors “took a loss” and perhaps gain the market’s view on how successful the deal really will be.

It’s worth reading the entire article, but the main message is that we cannot use the dream or story or fairy tale of imminent migration into space and other planets as an excuse not to deal with the very real problems we have on Earth right now. The misconceptions, Hollywood induced and otherwise, about the ease of space travel or even the extent of our current capabilities, are massive.

As with so many things, the stories that fill our society can be very different from the harsh reality.