Last week we published our newsletter for the final quarter of 2020. In this first weekly version for 2021, we look at some of the ironic parallels between US politics over the last few months, especially the last two weeks, and of those traditionally closer to home. Indeed, the failure of political systems is most often associated with African, Middle Eastern, Central and South American, and select Asian countries. Certainly not with the Western world’s most powerful democracy.
With Donald Trump having the distinction this week of becoming the first US president to be impeached twice, this time for his incitement of last week’s unprecedented violence on the Capitol, some would question the merits of pursuing further action against him post his exit from the White House next week. They might suggest that it would be more pragmatic to be rid of the distraction and let his successor focus on the mammoth tasks at hand, which include the continuing Covid-19 health crisis and the state of the US economy.
Like with our Zondo Commission, it may take years, come at huge expense and leave many citizens feeling unimpressed by the ultimate outcome, but we agree that there needs to be retribution to send the moral message to future leaders that their actions have consequences and that they are not above the law. With ten members of the Republican party crossing the aisle in this week’s vote, it shows that the reckoning may also become important in eliminating the threat of Trump’s potential return in 2024 and allowing the GOP to move beyond the last four years.
Trump has not only succeeded in polarising the US as a country, but also dividing his party. Similarly, we continue to face factional politics in SA as the ANC is not unified. We too need reprisal for State Capture and hope that in 2021, unlike in 2020, the ANC will abide by its code and suspend those members who are facing charges of corruption. It might not fully reset moral compasses, but it is a start.
“The first principle of value that we need to rediscover is this: that all reality hinges on moral foundations. In other words, that this is a moral universe, and that there are moral laws of the universe just as abiding as the physical laws. (from ‘Rediscovering Lost Values’)”
– Martin Luther King Jr., an American Baptist minister and activist
- US President Donald Trump became the first president in US history to be impeached twice. The House of Representatives approved the charge of incitement of insurrection against the President, voting 232 to 197, as ten Republicans joined Democrats in voting for impeachment.
- Is impeaching President Trump so close to the end of his reign “pointless revenge” or is there more to it? Michael Blake, a professor at the University of Washington who writes about the moral justifications of social and legal institutions, argues that there is justification for the impeachment as moral condemnation. Blake argues that the impeachment is a way to set the moral limits of the presidency – and, thereby, send a message to future presidents who might be tempted to follow in President Trump’s footsteps. Follow this link for the full article.
- US President-elect Joe Biden has proposed a stimulus package of $1.9 trillion. This would be the third Covid-19 rescue bill since the pandemic’s outbreak and the first test of the Democratic-controlled Congress. This would seem to be the first phase of a two-phase plan, with a broader program to be introduced in the coming weeks which will be focused more on longer-term goals such as infrastructure and the climate crisis.
- European and US stock actually slipped on Friday, post the Thursday’s news of Biden’s stimulus package, as traders were seemingly disappointed relative to what had been baked into the market.
- Cities and companies are distancing themselves from the Trump brand since the attacks on the Capitol. New York City will cancel all contracts with Trump’s business. Others who will stop working with Trump are: Deutsche Bank, PGA of America, Real estate firm Cushman Wakefield, and the British Open, which will not be held at Trump’s Turnberry course for the foreseeable future.
- The UK and the European Union (EU) have started talks on how regulators will cooperate over financial services now Brexit has been completed. The financial services industry was largely sidelined in the trade deal struck with the bloc by Prime Minister Boris Johnson just before Christmas, but the two parties agreed to broker a Memorandum of Understanding on regulatory cooperation by March.
- Covid-19 vaccinations have been rolling out globally over the last couple of weeks with more than 15.9 million doses having already been administered. For more information on the different types of coronavirus vaccinations, how they work, and how they are being distributed, follow this link.
- As of last Friday, Elon Musk became the richest person in the world and recorded the biggest net worth ever of $209.3 billion. On receiving the news, he asked advice on how to give it away. While often viewed as eccentric, Musk seemingly has some aspect of his moral compass pointing in the right direction as he is a signatory of the Giving Pledge, an initiative co-foundered by Bill Gates and Warren Buffet which urges the ultra-wealthy to donate at least half their fortunes.
- Bitcoin is as volatile as ever. Over last week it notched one of its best weeks on record, surging by 40%, over the seven days through Friday. Only to plunge 25% in the week, before recovering somewhat on Thursday.
- It was a busy week at the Zondo Commission: it was found that Eskom paid McKinsey and Trillian R1.6 billion for “completely unnecessary” work; in a statement to the Zondo Commission former Eskom chief executive Brian Molefe blamed President Ramaphosa for Eskom’s troubles saying that the President sold the power utility and the country down the river for the sake of his business interests; and lastly, Jacob Zuma’s lawyer informed the Commission that the ex-president would not be appearing before the judicial panel next week to answer for his role in the state’s capture during his time as President.
- The mortality surveillance report from the Burden of Disease Research Unit at the South African Medical Research Council (SAMRC) has a widely different number of Covid-19 related mortality in SA than the stats from Department of Health. Follow this link for the SAMRC estimate of Covid-19 deaths, and the reasons supporting the higher number.
- China’s economy has recovered remarkably since the Covid-19 outbreak. This is good news for its emerging market peers, including South Africa, as it signals a potential rebound in 2021 led by Asian emerging markets.
- Global bank BNP Paribas has revised its forecast for SA’s 2021 gross domestic product upwards to 2.5% – partly because of China’s rebounding economy. This would still put us significantly behind 2019’s disappointing GDP levels for years to come.
- Aspen Pharmacare performed well over the week as Johnson & Johnson look to submit their Covid-19 vaccine trial data to US regulators on 21 January. Aspen will manufacture 300 million doses a year in South Africa if approved. Unfortunately, this is not earmarked for local requirements.
- While there is an ongoing concern among wealthy South Africans that wealth taxes are inevitable to assist in closing the fiscal gap, there may be little solace in knowing that, as per this article, they are increasingly becoming a global phenomenon. Based on input from experts, we do not feel that new forms of wealth taxes are imminent in SA as they are very tricky to implement and enforce. We do, however, remain concerned, despite assurances from Treasury to the contrary, that existing taxes which are skewed towards the wealthy, will be increased in time. These include estate duty, donations tax, capital gains tax and dividend withholding tax.
Sources: Dynasty, Reuters, Bloomberg Markets, The New York Times, Daily Maverick, and Moneyweb, etc