Mama Marcus to the rescue
If the politicians can address us in borrowed gowns, why can’t the masses get drunk on borrowed money? After all, Mama Gill Marcus will always be there to pick up the tab. Like the mother of an alcoholic, she’ll do it to cover the shame – in her case to protect the banking system, the way she picked up the tab for African Bank – or she’ll do it because she loves the “poor”. Either way, she will do it.
The role of the columnist is to be an honest broker. It is not to advance the cause of friends or to demonise those with whom we disagree. Our sworn enemies should be ignorance, injustice and unrestrained self-interest.
In this column I have argued against rating agencies such as Moody’s, Fitch and Standard & Poor’s. When people argue against these established bodies, often they are dismissed as being emotional and lacking an understanding of economics. Such tactics are only a defence mechanism.
Moody’s down graded Capitec Bank last week, and its share price spiralled downwards. The Reserve Bank and sympathetic analysts were up in arms. Well done on your spin, Capitec, your share price recovered nicely.
In the past I have argued that the ratings agencies failed to caution the world against the 2008 financial meltdown. Moody’s didn’t caution investors about the imminent failure of African Bank. It was only after the event that it downgraded Capitec. A ratings agency is like a township ambulance. It is always late.
Sadly, this time, I agree with Moody’s. In my opinion, Capitec will follow African Bank and Saambou. An ardent reader, Themba Nhlapho, reminded me that on page 84 of my book, Black Man’s Medicine, I predicted the situation in which African Bank and Capitec find themselves. I don’t claim to know the future, I only apply gravel economics.
A few years ago, I noticed that the staffin my shops were moving their bank accounts from “traditional banks” to Capitec. The reason, I soon discovered, was because they could get loans more easily. These were what I call “bragging loans”, which basically means: “I’m hot and I’m monied.”
Surprisingly, this new-age bank was opening oldschool branches everywhere. The big banks, on the other hand, were trying to reduce them by moving their customers online, because branches cost money to set up and maintain. Something didn’t add up.
My belief in Capitec’s size and capability ended when some of my staff members told me they hadn’t been receiving their salaries. This was before the festive season. I became worried because I had personally released the salaries.
It was a bad way to close the year – people going home to their loved ones without their pay. But the next day some told me they had been paid double.
I called my accountant. We double-checked with our bank and found no mistake on our side. It turned out the fault was Capitec’s. It corrected the mistake, but by then the beers had been pissed down the toilet. Suddenly, my staff were in debt.
Moody’s is watching this drinking through the comfort of its air-conditioned offices. I am looking at it from the ground. It doesn’t matter which way it will end. Mama Marcus is always there for us.