Wry & Dry

The Italian job. Westpac: we win! Err, no. Pauline's back.

Westpac: we win!  Err, no. 

W&D has been pondering Australia's colourful corporate history.  Particularly when outrage at a company is such that the company finds its name not only in the depths of the finance pages, but embarrassingly on the front pages.

This ponderment is not about corporate collapses.  W&D has observed the villains of Australia's corporate landscape since the 1970s.  The failures of HIH Insurance, Associated Securities (ASL), ABC Learning, Bond Group, Mineral Securities, Reid Murray, etc caused losses to individuals, some considerable.  But the outrage was mostly confined.  

And W&D's hand-wringing about the failure of Ansett Airlines was more about the loss of his frequent flyer points than anything else.  

But W&D has not seen anything close to the current widespread public outrage at the Australian banks.  The Banking Royal Commission has uncovered the most appalling corporate behaviour.  Indeed, if Jim Cairns [1] were alive today, there would be people marching in the streets, demanding heads on spikes at the city gates.

And yet, at least one bank CEO, Westpac's Brian Hartzer, is doing his best to pretend that this outrage doesn't exist.  Readers will be aware that yesterday, quite separately from the Banking Royal Commission, the Federal Court found that ASIC failed in its case that Westpac had manipulated the key market interest rate benchmark, 'BBSW'.

It also found that Westpac employees' use of language was, well, colourful.  W&D imagines the following:

Cartoon Westpac tell someone who cares

But more seriously, the Court found that Westpac had:

  1.  engaged in unconscionable conduct; and

  2.  breached its financial service licence obligations.

The fact that the Court found that Westpac had 'engaged in unconscionable conduct' didn't stop Mr Hartzer winding back the clock with the attitude that banks, especially Westpac, can do no wrong.  This is the Australian version of Papal infallibility.

"We don't think we've done anything wrong," Pope Brian I said yesterday, ex cathedra.

Oh, spare W&D!  Read the judgment again, Pope Brian.  And then read the media reports.  This is just the sort of arrogant attitude that has led to the banks being the most reviled companies in Australia.  

Pope Brian I just doesn't get it.  Westpac just lost.  Again.  But the Westpac bankers will survive.  Somehow.

Cartoon Westpac helicopter

The Italian (con) Job (& why Brexit is a good idea)

As W&D was packing his and Mrs W&D's bags for a visit to see Emperor-for-Life Xi Jinping (which is why there will not be a Wry & Dry on Fri-1-Jun or Fri-8-Jun), he watched with alarm the unfolding political situation in Italy.

Mama mia!

If there were a reason why Readers should think that Brexit is a good idea, then look no further than Italy.  W&D's thesis has always been the UK is, in the long term, better off outside the EU.  This is because by staying inside it was being in an increasingly weird balloon of economic and political idealism rising against the gravity of reality.  Sooner or later the EU balloon will descend into the grave of good intentions.

Readers will recall that Italy went to the polls 11 weeks ago.  And that there was not a winning party.  And so the Five Star Movement (the populist anti-establishment party) and the Northern League (the populist far-right party) have been negotiating.  And have come up with a government of a mix of... populist anti-establishment and far-right policies. 

This tragedy of Shakespearean proportions is that, looking at what parts of the country voted for which parties, the poorest Italians have overwhelmingly voted for what W&D sees as the most pro-rich, pro-business government in Italy’s history.  Consider the policies:

  • flat tax of 15% (or maybe 20%)
  • 'citizens income' of €780 per month
  • cancel recent pension cuts
  • cancel €250 billion in Italian government debt owed to the European Central Bank
  • possibly exit the euro
  • expulsion of 500,000 illegal immigrants

If implemented, these policies will mean at least a massive increase in government deficit and public debt and an increased probability of rating downgrades

Consider that Italy already has weak macro-fundamentals: high public debt; low potential growth; a banking sector with a large stock of non-performing loans; and deterioration in the outlook for public finances.

Let W&D give Readers the reassuring whisper, Italy will not leave the euro and/or the EU.  To leave the euro would cause a collapse in the value of whatever the new currency might be (the berlusconi?), exploding Italy's foreign debt and inflation.  Interest rates would leap.

W&D ponders that the new Italian government will, fiscally, talk in a hairy-chested manner.  But act like gelato in the heat of a Roman summer.

Pauline: the gift that keeps giving

W&D has always marveled at photos of members of the Chinese politburo, showing men aged up to late 60s.  And not a trace of grey hair among them.  W&D would have thought that some grey hair might add an image of wisdom and perspicacity.

Which brings W&D to Pauline Hanson.  The Wicker Witch of the North turns 64 next week.  And not a grey hair in sight.  W&D is not wishing to speak poorly of women, or men, who choose to choose a hair colour than enhances their countenance.  And they stick with it.  Freedom of choice.  Much like women who want to choose their age - and stick to it.

But, really, Ms Hanson is in desperate need of appearing to be wise and perspicacious.  And a few traces of grey amongst the red might help, W&D ponders.

Y'see, this week Ms Hanson gave every indication of losing any sense of intelligence whatsoever.  Having previously given her and her party's support to the government's company tax cuts, she has turned Quisling [2].  It's all got to do with the upcoming by-election in the very marginal Labor seat of Longman, in Queensland.  And comments by Bill Shorten that her support of the tax cuts was manna for the banks.  Oh, no.  Ms Hanson couldn't have that.  This issue meant so much to her that she flew from the warmth and comfort of Queensland to chilly Melbourne (a gutsy effort, it must be said), to sit in on the Banking Royal Commission.  And then give a bank-bashing presser (press conference) outside the Commission.  

A few grey hairs might have given an air of sagacity.  And added much needed weight to her words. But no.  Her stunt showed extraordinary disrespect to the Commission.  This woman has no idea.     

W&D surmises that her understanding of what was going on in the Royal Commission ended soon after the words, "All rise" were uttered by the stony-faced bailiff at 9.30am.  Nonetheless, her stunt got the headlines she wished.  And she flew back north, to warmer, grey-hairless, One Nation climes.

Cartoon One Nation 

Banking Royal Commission: an award?

W&D wonders if there might be an Award for the bank (or AMP) that provides the best entertainment of ongoing corporate villainy at the Banking Royal Commission.  Sort of like Oscar, Emmy, Brownlow or BAFTA.  For day-after-day, week-after-week and what will become month-after-month, we-the-public have been entertained by the full range of corporate villainy shattering human emotions.

Readers will remember the famous American bank robber, Willie Sutton, who when asked why he robbed banks, replied, "Because that's where the money is." Perhaps the modern reality is different:

Cartoon banks robbing customers

 

Drama, tragedy, lies, deception.  It's all there.  (How about yesterday's comment from a senior CBA executive that it was "poor judgement" to delay letters to those whom had been overcharged so as to avoid scrutiny by a parliamentary committee.  And that it took on average 960 days for CBA's customers to be compensated.)

So what should the Award be named?  W&D suggests The Bernie.  This would be to immortalise the contribution of Bernie Madoff to the pantheon of corporate villainy. 

Cartoon banking award 

Madoff's ponzi scheme [3] was a fraud amounting to some US$64.8 billion, that ended with him being sentenced to 150 years in the slammer.  W&D is not suggesting fraud by the Australian banks of such a scale.  Merely the same drama, tragedy, lies, deception and villainy. 

W&D considers that it will be a close race to a podium finish for The Bernie.

Property boom?

Readers will have seen that former AustPost CEO, Ahmed Fahour, is selling his Melbourne home, with an asking price of $40-$44m.  He bought the house in 2013 for $22m. 

Don't get excited and say, wow, what a great investment!  W&D is keen to point out that, in what has been regarded as a booming property market in Melbourne, this is only a fair investment return for the big man.   Considering the $1.2m in purchase stamp duty and other costs, if he gets the $40m, the investment return is about 11% p.a.

The share market, currently somewhat beaten up by the banks and Telstra going south, has returned just over 9% p.a. over the same time period.

Sure, W&D would take the 2% p.a. margin over an index fund.  But you cannot sell a bedroom. 

"A man shall leave his father and his mother..." [4]

But he didn't.  And won't.  And he's only 30 years-old.

Cartoon millennials get a job

W&D notes with interest that a New York judge has ordered that a 30 year-old man leave home.  Why?  It's just that his parents think that it's time for him to live away from them.

In addition to the weird situation of parents suing their son, W&D salutes the only outcome that is possible in the Yoo Ess Aye.

The man has lawyer-up again.  And will appeal the decision.  

Deepak, W&D's Uber driver, was talking about Turkey...

... and its collapsing currency.  "I've heard it's currency is tanking.  Anjali and I were thinking of going there on vacation.  What's going on?" Deepak asked, as W&D hopped into his jalopy.

"I'm pleased you are still reading Wry & Dry," was the response.  "But the situation has become worse."

"How so?" asked Deepak.

"Well, the currency was falling so quickly that the Turkish Central Bank had to act.  In spite of Sultan-for-life Erdoğan telling the bank not to raise interest rates, it had to.  On Wednesday.  By a massive 300 basis points, to 16.5%."

"Wow," exclaimed Deepak.  "That's a big pill for the Sultan to swallow."

"I'm pleased you're picking up the essence of Sultan-for-life Erdoğan.  He's up for re-election on 24th June.  And he doesn't want interest rates raised, as it will harm borrowers.  But inflation, at over 10%, is almost out of control.  He mentioned neither in his campaign launch yesterday."

Deepak looked less worried.  "A weak currency is good for tourists, though.  Isn't it."

"Certainly," reassured W&D.  "You can buy more Turkish lira with each Australian dollar.  But remember that inflation in Turkey is pushing up prices.  Things may not be as cheap as you think."

"So, Anjali may not buy as much in the Grand Bazaar?" 

"A fatal conclusion," W&D muttered as he got out of Deepak's car. "Never stand between a woman and what she sees as a bargain.  Especially when travelling.  Istanbul is a magic place - it conveys a sense of both the west and east.  It's almost intoxicating.  And you know what Anjali is like.  I cannot see you getting out of this cheaply.  But, it will be worth it.  She will love you even more.  And perhaps for more than a short time."

"But this will be expensive," wailed Deepak. 

"As it should be", concluded W&D as he strode off.  "Deepak, get with the programme.  Women want to be treated specially.  You want the love to last more than 'a short time'.  Spend some money, allow her to shop.  And stay in a nice hotel.  You never know your luck in a big city.  And Istanbul is a big city"   

And, to soothe your troubled mind...  

Miscellany 

Last words...

"The reason rich people get big tax cuts is because rich people pay most of Australia's personal income taxes.  It's not evil – it's just maths."

 -   Chris Richardson, Deloitte Access partner.

But Readers know that Bill Shorten is not good at maths.

First Samuel client events calendar

Date 

Description

Details

2018 Events  

Tue-29-May-18

Eat Street - food & wine fest - Invitations sent

Sofitel

Wed-18-Jul-18

NGV Winter Masterpieces Exhibition

Masterworks from Moma (New York)

NGV

Tue-14-Aug-18

Forum - guest speaker TBA

Leonda

Some lightly salted absurdities from all over...

At the extreme left-hand end of the Bell Curve

The chain of dumbness:

1.  Breaking into a car, and...

2.  Sitting in the car and smoking pot, and...

3.  Not realising that the car is in a car yard, and...

4.  It's a Saturday morning.

19 year-old Jacob Anaya and his friend were arrested after being found by possible car buyers in Ben's Auto Sales on N.W. 39th Street in Oklahoma City.

(Oklahoma News 4)

Guess what he did next?

Franklin Tomes got upset over the noise his neighbour's children were making.  What did he do? 

a.  Complain to the parents;

b.  Complain to the police;

c.  Yell at the kids to shut up; or

d.  Open fire with an AK-47.     

Close.  But no cigar.  d. is correct.  He fired over a dozen rounds from his AK-47. Two adults were taken to hospital with gunshot wounds. The children were okay.  Tomes faces two counts of first-degree assault, two counts of pointing a firearm at another, unlawful use of a weapon, four counts of reckless endangering and two counts of attempted murder.

(Some Guy)

Bonus: after the shooting, Tomes holed up in his apartment.  It took a SWAT team to get him out. 

Tip for new players: don't brag on Facebook that you 'got away' from police

19-year-old Kayla Irizzary was a passenger in a car pulled over by police.  The driver was charged with a number of offences.  Kayla went home and then boasted on the police's Facebook page that whilst the driver was charged, she had 'gotten away' from police.

Kayla, a convicted felon, was still in possession of the pistol, heroin, etc, when the police came knocking at her door.

(Q13fox)

Bonus: but Kayla, being just 19 and a little faster than the, err, tubby coppers, fled.  She outran them.  But then the police cheated and brought in police cars.

Have a Wry & Dry weekend. 

And remember that W&D is on vacation for the next two Fridays.  Back Fri-15-Jun.

Cheers!

Anthony

[1]  Jim Cairns was a charismatic and colourful left-wing Australian politician, who arranged and led anti-Vietnam war marches, called 'moratoriums'.  Cairns later became Deputy Prime Minister in Gough Whitlam's government (1972-5), as well as being federal treasurer.  As the latter, Cairns was a disaster, with his left-wing idealism overwhelming any pragmatism.  His affair with Junie Morosi, his staffer some 20 years his junior, added scandalous headlines that Barnaby Joyce might only dream about. 

[2]  Quilsing: a traitor.  Named for Vidkun Quisling, a Norwegian officer and politician who collaborated with the occupying Nazi forces in the Second World War.   

[3]  Bernard Madoff, former NASDAQ Chairman, was the principal of a wealth management company that contrived and ran the world's largest ever Ponzi scheme.  He ended up being charged in 2009 with securities fraud, investment adviser trust fraud, mail fraud, wire fraud, money laundering, false statements, perjury, making false filings with the SEC and theft from an employee benefit plan. His guilty plea didn't help.  In addition to 150 years in jail he was ordered to pay US$170 in restitution.

[4]  Ephesians 5:31.