Wry & Dry

Abbott escapes his cave. Trump's next POs. Malaysia pushes China.

Upcoming Photo Opportunities

Just when Readers thought they were safe from politicians, their worst nightmares both happened and are about to happen.

Firstly, Tony Abbott has escaped from his winter cave: see below.

Secondly, Tarzan Trump remains unbounded and seeking Photo Opportunities.  And there are two upcoming.

1.  NATO: Brussels - 11th & 12th July

This is probably the one (and only) issue on which Tarzan Trump is correct.  And that is getting the NATO countries to pay more for their own defence (the agreement is 2% of GDP spent on defence, only UK, Poland, Greece and Estonia meet the target).  Germany in particular is a woeful contributor (1.2%), especially given its significant budget surplus and technological capabilities.

W&D expects Tarzan Trump to harangue his allies not only about NATO, but also about tariffs.

But there will be amazing photographs. 

2.  Tsar-for-life-Vlad: Helsinki - 16th July

Tarzan Trump's man-crush on Tsar-for-life-Vlad will again be on show. 

Trump and Putin golf

W&D expects Tarzan Trump:

  1. will make promises or commitments concerning Russia and Europe, without consulting his allies, as he did with North Korea
  2. to pretend that Crimea's annexation, Russian troops fighting in Ukraine, the poisoning of two English people and the downing of a Malaysian Airlines plane didn't actually happen

But there will be amazing photographs.     

Abbott escapes from...

...his cave.

No sooner had W&D predicted that former PM Tony Abbott would run interference in the upcoming Super Saturday By-Elections, than, guess what?

Untitled

Thanks to David Rowe of the AFR

The Mad Monk has fired off about energy prices, the Paris Agreement and the government's pragmatic National Energy Guarantee. Err, why?

After all, he was PM when Australia signed the Paris Agreement (“There’s a definite commitment to 26 per cent but we believe under the policies that we’ve got, with the circumstances that we think will apply, that we can go up to 28 per cent”); kept the renewable energy target and spent billions on 'Direct Action'.  Now he has become a socialist and wants the government to build three coal-fired power stations, ditch the Paris Agreement and shaft the National Energy Guarantee.  Like the Greens, he can come up with policies that are tempting (to some) but are totally unrealistic for any government to adopt.

And, most weirdly of all, and no mistake, W&D is really diving into the weird, Abbott wants Australia to pull out of the Paris Agreement because ... Tarzan Trump has.  Oh, spare W&D.

Abbott's Trump-like purveying of populist, simplistic and appealing policies are not really about Make Abbott Great Again.  Like Trump, he enjoys the headlines.

But, in reality, it's about destroying Croesus Turnbull.    

At the coal face

Why is W&D not surprised that...

... a bank CEO is going to blame an upcoming increase in mortgage rates on the Banking Royal Commission?  Because these turkeys still don't get it.

On Wednesday, Andrew Thorburn, CEO of NAB, told a businessperson's lunch that the Royal Commission was one of a number of factors responsible for a new risk premium. 

NAB go fund me

Had he considered that the increased regulatory 'burden' was a cost of doing business and should be borne by shareholders?  Or did he really think that the extraordinary return on equity enjoyed by the banks was going to continue?

Sigh. 

Malaysia - pushing back China

Readers will recall the arrest last week of former Malaysian PM Najib Razak for (allegedly) stealing billions from Malaysia's sovereign wealth fund so that his wife could spend gazzillions on jewelry and shoes.  Najib's corruption was part of the reason for him losing the last election.

The other was the spiralling government debt.  Najib had enthusiastically put himself, and his country, in the pocket of China, especially by embracing China's 'Belt and Roads' initiative.  His successor, former PM Mahathir Mohamad, wants to put an end to China's influence.  And has suspended three of its largest China-backed projects, worth some $22 billion.  The projects in question are the East Coast Rail Link, which would connect Malaysia’s less-developed east coast to southern Thailand and Kuala Lumpur, and two massive pipeline projects.   

China loan sharks

At last someone is pushing back against China (however, the rail project is well underway - it should proceed but costs will be slashed). 

Snippets from all over 

1.  Peking muck

Some 10 million Chinese final-year school students received results from the nationwide university entrance exam: gaokaoGaokao is an unholy blend of NAPLAN, Who Wants to be a Millionaire and social conditioning.  One of this year's tasks was to write an essay about the thoughts of Xi Jinping (the new Emperor-For-Life).

W&D comments: Craft those brains whilst they are still malleable.  As is now increasingly happening in Australian universities, where academic freedom and critical thought is no longer welcome.  And seven members of the "Group of Eight" Australian universities now use gaokao instead of internationally recognised exams, such as SAT.  Sigh.

2.  "Drop that gun!  Oh, okay.  Keep it."

North Korea is continuing to develop a key missile manufacturing plant, as satellite photos shown to W&D of a plant that makes sold fuel ballistic missiles make clear.  Readers will recall a recent Photo Opportunity in Singapore...

W&D comments: What will be Tarzan Trump's excuses when, somehow, the whole dismantling of North Korea's weapons of mass destruction is delayed?  

3.  Don't mention the war

Apparently there is a sporting event going on in Russia, from which title-holders Germany have been eliminated.  And matters are not so joyful on the domestic front.  After a fall in GDP growth in the March quarter, consumer spending and industrial production fell in May.  Is a German economic contraction coming?

W&D comments:  Germany hasn't had a fall in GDP since 2014.  And a recession hasn't occurred since 2009.  Tarzan's Trump's national security tariffs will not help.

4.  Rule Britannia.  Well, for now.

On the other hand, the English team has made it through to the quarter-finals of the world-cup (Sunday). 

Germany leaving Russia for the 3rd time

And somehow the economy rebounded with the news.  Well, sort of.  UK GDP (which includes the Scots and the Welsh) doubled to 0.4% in the quarter.

W&D comments: Frankly, m'dear, I don't give a damn.  Until the terms of Brexit are finalised. 

5.  Italy's new government...

... will have both tax cuts and a universal basic income in its very first budget to show financial markets the coalition isn't backing down from its agenda, according to Finance Minister Giovanni Tria. 

W&D comments:  Very generous, this new government.  But from where is the money to come?  

GST pie re-cooked 

With a one-seat majority and Mad Monk Abbott determined to sabotage any initiative of Croesus Turnbull, the government was not going to undertake anything fiscally risky.  Such as serious reform of the GST-goodies-allocation-amongst-the-states.

And so Treasurer Jimmy Morrison has come up with an expensive solution that should keep the states happy.  Especially the smaller states, which will remain well subsidised by the larger states.

W&D won't put Readers to sleep with the complexity of details.  But suggests that there are three problems with all of this.

Firstly, there was no bargaining from Morrison, e.g. we will give these GST guarantees only if you do away with economically absurd state taxes (such as stamp duty).

Secondly, there remains little incentive for smaller states to become more self-sufficient.

Thirdly, Western Australian is now free to go on another spending spree with mining royalties, as it did under the disastrous Liberal government of Colin Barnett.

Sigh.  But politics is the art of the possible.

It's T-Day

As of midnight tonight, Trump Time (i.e. in Washington), US customs officials will start collecting 25% tariffs on $34 billion of imports from China.  Tarzan Trump says the figure could reach $550 billion, which is faintly ridiculous as that figure is larger than all US imports from China.  But the lad is not known for accuracy.

W&D has lost the score in the tariff tit-for-tat match: Yoo Ess Aye v. Rest of the World XI (China, Canada, Mexico, UK, France, Germany, Italy, Spain, Brazil, South Korea, Russia).  But there will come a time when unemployment starts going up, GDP growth slows and companies around the globe find they have little certainty about where next to invest.

There is, of course, a simple solution.  For the ROW XI to form their own free trade federation, excluding the Yoo Ess Aye.

Ah, if you can dream and not make dreams your master [1].

Deepak, W&D's Uber driver, wanted to hear all about ...

... the failed privatisation of Air India.  "I don't understand why it failed.  It's a great airline in a massive market.  What is going on?"

"Well, India is certainly a massive market.  But the national airline is a bloated, poorly run, union suffocated company," W&D responded.

"Bloated?  That's how Anjali says she feels. How can an airline be bloated?" Deepak looked puzzled.

Air India

"It's a figure of speech," replied W&D patiently.  "Anyway, the government didn't receive a single bid for the airline as the terms of the bid were absurd.  Those included retaining $5 billion of debt, inability to retrench or fire for 12 months any of its 18,089 employees and after when any redundancies must be voluntary; the government retaining a 24% share; and other restrictions."

"They all sound perfectly sensible," said Deepak.

"Not at all," said W&D, warming to his theme.  "Not withstanding the huge domestic market, Air India loses massive amounts.  It's had a decade of losses.  Its average employee costs are 10% higher than IndiGo, India's largest private domestic airline.  But the government doesn't have the stomach for a fight with the unions."

"So, what now?"

"Well," resumed W&D, "Nothing will happen to Air India.  But the bigger problem is the overall government plans to sell the 331 companies that it owns.  These companies sell everything from tea to telecoms to sex-toys.  And they hold about $700 billion of assets.  But the will to privatise is not great."

W&D paused to collect his thoughts.

"The example of Air India is illustrative.  The desire for the sale was more about generating revenue than improving the operating efficiency of the companies.  And so other public sector enterprises, such as public sector banks, are likely to remain inefficient.  And costly to the tax-payer."

"So," mused Deepak, "The issue is like you said last week.  Government ownership damages the entire economy, hurting taxpayers and consumers by more in total than the possible loss of employment by a small group.  Who would be compensated in any case for losing their jobs."  

"Exactly," replied W&D.  "By the way, speaking of people matters, how is Anjali?"

"Ah," beamed Deepak at last.  "She's much better.  She's about 9 weeks pregnant, my son is due in the middle of February!"

"Excellent, but how do you know it's a boy.  I thought that it's only possible to assess the baby's sex at the 20-week scan."

"Well, she hasn't had a scan yet.  But, of course, my first-born will be a boy. My mother had only sons, six of us.  So it follows it will be male." 

"A fatal conclusion," laughed W&D as he stepped from Deepak's car.  "Certainly, the sex of the baby is determined by the father.  But by genetic and biological factors, not by its father's wishes or the sex of his siblings."

"But if I have a son I receive a dowry from his future bride's family," wailed Deepak, "It's a winner."

"Oh, dear.  Firstly, that's planning too far ahead.  Secondly, if you have a son he may wish to marry a non-Indian.  And thirdly, the dowry system doesn't work in Australia.  And it's been illegal in India, since 1961, although widely ignored.  If your child is a girl, be happy.  Remember, someone has to look after you when you are 80.  Anjali won't.  And daughters tend to look after their ageing fathers, more so than sons.   And you should focus on the important matter," obliquely responded W&D.

"What's that?" yelled Deepak to the receding W&D.

W&D turned: "The important matter? Immediately, put his or her name down to be a member of the Melbourne Cricket Club."      

And, to soothe your troubled mind...  

Miscellany 

Last words...

"I'm sure it's times for the national indigenous"

 - Bryn Jones, the 32-year-old CEO of Aboriginal Community Benefit Fund, a funeral insurer, at the Banking Royal Commission, in response to a question from senior counsel assisting the commission Rowena Orr QC.

Ms Orr had asked Mr Jones if he is aware of the National Indigenous Times (an online indigenous affairs publication).

W&D senses an IQ gap.  Of some magnitude.

First Samuel client events calendar

Date 

Description

Details

2018 Events  

Wed-18-Jul-18

NGV Winter Masterpieces Exhibition

Masterworks from MoMa (New York)

Invitations sent

NGV

Tue-14-Aug-18

Annual Forum and Cocktail Party

"Who is giving whom ... the coal shoulder?"

Hear Tony Sennitt, CEO of Diamond Energy, argue the case for renewables

Guests are invited to argue for coal

Invitations sent

Leonda

Various

Chief Investment Officer Dinners

FY-18 was a Year of Harvest and Sowing Seeds for the Next Five Years

Invitations to be sent

Various

Some lightly salted absurdities from all over ...

At the extreme left-hand end of the Bell Curve

A student in Louisville, Kentucky was asked in a maths test: What is 5 x 3? And to use the 'repeated addition strategy'.  The primary school student answered 5 x 3 = 15    5 + 5 + 5 = 15.  Err, wrong.  The correct answer was 5 x 3 = 15   3 + 3 + 3 + 3 + 3 = 15.  Fail.

(whas11.com)

Guess what happened next?

A man licensed to carry a handgun had his gun fall from its holster as he was trying to break up a bar room fight.  As he bent down to pick it up, the police arrived.   What happens next?

a.  The police break up the fight and the man can pick up his gun;

b.  The police break up the fight but the man is told to leave his gun on the floor;

c.  The police were not needed, as the man picked up the gun and used its butt to break up the fight; or

d.  The police shot the man, killing him.     

Close.  But no cigar.  d. is correct.  A policeman fired and killed the man.  The man was navy veteran.

(The Oregonian)

Chariots of fire, err, embers

John Samuel Bond, 26, was about to be hauled off to jail when he asked the judge if he could kiss his wife.  The judge agreed.  John went into the body of the court and was about to kiss his wife when he bolted out the courtroom door.

But his dash for freedom was thwarted when he was run down from behind by a suit-and-tie clad court clerk, Chad Welford, who also happened to be Mississippi's champion triathlete.  Chad ran behind John until John collapsed in the heat.  The police soon arrived (in a patrol car).  

(The Times Picayune)

 

Have a Wry & Dry weekend. 

Cheers!

Anthony

[1]  If you dream and make dreams your master/ If you can think and not make thoughts your aim; etc: from If by Rudyard Kipling