Wry & Dry

Bank on the Wales. "You're no Jack Kennedy." Wile E. Coyote.

I.  "You can bank on the Wales" 

Older Readers will recall that slogan from an earlier incarnation of Westpac.  The Bank of New South Wales was Australia's first bank (formed in 1817) and grew to the point that it was large enough to takeover Australia's then fourth largest bank, the Commercial Bank of Australia, in 1982.  It then changed its name to Westpac.  'Westpac' is a portmanteau of Western and Pacific.  Readers will recall that in the early 1990s it was technically broke [1].

Yesterday it was announced that Westpac would have to cough up a $1.3 billion fine for its money laundering transgressions.  This is an achievement of Hall of Fame level.  Legend status, in fact.

Cartoon Westpac

The 'agreed statement of claim' showed that, amongst some 22 million breaches of regulations, 262 suspected paedophiles used Westpac to transfer funds to, principally, The Philippines and South East Asia.

Western Pacific by name.  Western Pacific by destination, of paedophilic funds.

No mistake, Westpac has already moved on from these sins, notwithstanding there were the expected statements of contrition from the current CEO and the task of a lowly teller to count out the $1.3 billion in $100 notes and convey to the general coffers in Canberra.

Y'see, this morning the Treasurer announced that the regulatory 'responsible lending' rules will be abolished.  Wry & Dry suspects this was part of a deal done months ago when the banks agreed, because of the coronavirus, to defer home loan repayments.  Westpac and the other banks have been waiting for the starter's gun.

Readers can expect the offers of additional credit cards and lending facilities to hit the inbox this afternoon.

[1]  In 1992 Westpac had only $6.7 billion of equity supporting $110 billion of loans.  The $5 billion of property bad debts in 1992-4 almost wiped out its equity.

II.  "You're no Jack Kennedy"

It's been a long year.  And it's still only September.  But the US presidential election campaign really begins next week with the candidates' debate.  Wry & Dry won't be sitting on a sofa on a Sunday afternoon [2], but rather watching at his desk on Wednesday.

Much will be written between now and then about how the debates shape the election outcome.  Examples will be Kennedy v Nixon in 1960; Reagan v Carter in 1980 or George W Bush v Gore in 2000. 

But for serious gotcha moments, Readers should look no further than 1988 election between George H Bush (Republican) and Michael Dukakis (Democrat).  There was a vice-presidential debate between Democratic vice-presidential candidate Senator Lloyd Bentsen and Republican vice-presidential candidate Senator Dan Quayle. 

Quayle had been under pressure because of his lack of experience. So in the debate he said, "I have as much experience in the Congress as Jack Kennedy did when he sought the presidency."  Click the link to see the video of Bentsen's brilliant riposte: Click here.  And watch out for the final word from Ronald Reagan.  Hilarious.

But Quayle had the last laugh.  Bush wiped the floor with Dukakis and Quayle got the gig as Veep.  Quayle achieved as much as Veep as he did as a Senator.

[2]  Mrs Robinson, by Simon & Garfunkel, from The Graduate.  The song was actually about Eleanor Roosevelt, wife of former US President Franklin D Roosevelt.

III.  Like Wile E. Coyote...

The Economy's Wile E. Coyote Moment?

On 4 June, an American electric truck company called Nikola Motor was listed on Nasdaq (the technology stock exchange in the Yoo-Ess-Ay). 

On 9 June, its market capitalisation hit $29 billion.

On 8 September, General Motors, the iconic and massive US vehicle manufacturer announced it was taking an 11% stake in Nikola (by way of a non-cash contribution of offsets, IP, supply contracts, etc.).

On 10 September, the delightfully named Hindenburg Research [3], issued an extensive report claiming that Nikola "is an intricate fraud built on dozens of lies."  

The reality: Nikola hasn't made a single truck.  And not even a working prototype. Readers wishing the full story should Click here.  Not even a reality television producer could make up this sort of stuff.

Cartoon electirc tankers

Trevor Milton, Nikola's Executive Chairman, Chief Executive Officer and Founder (who has a very wide business card), was given the DCM by his Board last weekend.  

Nikola's stock is down 65% from its June peak.  GM has notionally lost at least $1 billion.  And the day traders who bought the glamour story have been hammered.

Like Wile E. Coyote, there comes a point when the inevitability of gravity takes over.

[3]  Named after the Hindenburg airship.  The company's website says:
"We view the Hindenburg as the epitome of a totally man-made, totally avoidable disaster. Almost 100 people were loaded onto a balloon filled with the most flammable element in the universe. This was despite dozens of earlier hydrogen-based aircraft meeting with similar fates. Nonetheless, the operators of the Hindenburg forged ahead, adopting the oft-cited Wall Street maxim of “this time is different”. 

IV.  Sticks and stones...

An outspoken Beijing property tycoon [4] has been sentenced to 18 years in jail, for calling Emperor Xi Jinping 'a clown'.  As the perp is 69 years old, it looks to Wry & Dry like a life sentence.

Good thing he didn't throw a really nasty insult.  Otherwise the jail sentence might have been serious.

[4]  Mr Ren Zhiqiang.

V.  Big oil - last chance saloon

Many Readers were taken by Wry & Dry's exclusive article last week on BP's dire forecasts for oil prices.  And that BP will move from being an oil and gas company to a renewable energy company.  Shell might follow suit (see Snippets, below).

Cartoon big oil big arab

Wry & Dry now places ExxonMobil under the microscope.  Exxon, formerly the world's largest company, was two weeks ago given the DCM (after 92 years!) from the Dow Jones Index.

Readers will recall that Exxon is a descendant of Standard Oil, the company that made John D Rockefeller the wealthiest person in the world in the late 19th century.  Well, the company is now looking at a $48 billion cash shortfall next year.  The global demand for oil has cratered.  Exxon's aggressive plans for expansion into shale and LNG are looking, well, risky.

Its stock price has fallen 44% this year, pushing up its dividend yield to a massive 8.9%.  Something has to give.  All bets are on a dividend truncation. Or Exxon might borrow the dosh.

Readers will know that companies go broke not because they run out of profits, but because they run out of cash.  Exxon's cash from operations, estimated at about $17.4 billion, is still $20 billion below this year's investment plan and promised dividend. 

Exxon is not going to die this year or next.  But eventually the numbers will speak for themselves.  Join the dots.   

VI.  Italy downsizes 

Wry & Dry couldn't believe his eyes.  The Italian parliament is being downsized.  From 945 representatives to 600.

Good grief!  In a referendum earlier this week 70% of Italians voted to slash the number of the "overpaid, over-privileged and under-worked" representatives.

Cartoon italian government

Now, turning to Canberra, Macquarie Street and Spring Street...

VII.  Trump TV?

What do ex-Presidents do? 

Jimmy Carter worked for humanitarian causes.  George W Bush played golf.  Willy Clinton went on the speakers' circuit.  Richard Nixon retired to his Californian home, still wondering what went wrong. 

What if Virus-What-Virus-Trump gets the DCM in November and he, V-W-V-Trump, concedes his loss [5]?

Wry & Dry predicts that he will return to television: Trump TV.  This will be a history television station, a joint venture between V-W-V-Trump and Fox Corporation.  It will focus solely on the Life and Times of Donald J. Trump. Its aim will be to present an open and honest portrayal of, and to correct any misconception about, V-W-V-Trump.

It will be compared by... V-W-V-Trump.

[5]  By no means a certainty.  He has linked the appointment of a new Supreme Court judge (see below) to the possibility of a contested result.  

VIII.  RBG

Wry & Dry always considered that RBG referred to electrical circuitry: Red (active wire), Black (neutral/ return), Green (earth).

Well, in some circles it does.  But in the Yoo-Ess-Ay, it refers to the late US Supreme Court Justice Ruth Baden Ginsberg, who died this week.  RBG was a left-leaning justice, eulogised for her active championing of women's and civil rights.  The problem now is that RBG must be replaced.  And in the Yoo-Ess-Ay this is a big issue.

In Australia, the nomination of justices to the High Court sometimes raises a paragraph on page 5 of The Oz, page 7 of the Spencer Street Soviet and page 16 of the Herald-Sun.  And nothing on social media.

In the Yoo-Ess-Ay, this is an issue almost as big as the election of a president.  The reason is that the US Supreme Court (equivalent to Australia's High Court) is the last chance saloon in the most litigious society on earth.  Blend a constitooshun reshaped by judicial activism, the polarity of states' rights and pre-eminence of judicially-driven social issues (abortion, gay marriage, etc) and there is a recipe for, well, chaos.

In the US, the President nominates a candidate for appointment.  And the Senate confirms or rejects the nomination.  Virus-What-Virus-Trump wishes to fill the RBG vacancy before the election, so as to appoint a conservative judge. 

Cartoon trump where does it say they have to be lawyers

And so does the Republican leadership in the Senate; the dreaded and manipulative Mitch McConnell.

Readers will remember that in April 2016, McConnell refused to allow then President O'Bama's nomination of Merrick Garland to the Supreme Court to proceed.  “The American people should have a voice in the selection of their next Supreme Court justice,” McConnell said then. “Therefore, this vacancy should not be filled until we have a new president.”  This became known as the McConnell Rule.

Fast forward to 2020, and even closer to an election, McConnell has changed his view of the McConnell Rule.  And wants the vacancy filled by the old President.

The epitome of US politics at its best. 

XI.

Wry & Dry sadly notes the passing of Dean Jones, former exciting Australian test and one-day cricketer of the 1980s.

In his younger years, Wry & Dry played in a social match with Jones [6].  Jones might have dominated the game.  But he generously farmed the strike away from himself, to give a cricket-Renaissance-man (JDCA) the strike and to hit the winning run.

After the game, Jones told stories not of himself, but of others.  He understood the lore and spirit of the game.   

[6] In the heyday of The 500 Club.  At a delightful cricket ground inside a vineyard at Romsey.

Snippets from all over 

1.  Promises, promises

At its 'Battery Day', Tesla promised a US$25,000 car (with full autonomy), as well as plans to halve the cost of batteries, but the three year timeline disappointed investors. 

Wry & Dry comments:  The stock fell 10%... to a P/E of 978.

2.  Tiffany v LVMH 

A Delaware judge has expedited the trial date for Tiffany's lawsuit against LVMH, which backed out of a $16.2B takeover of the U.S. jeweler earlier this month.

Wry & Dry comments:  Thereby expediting the lawyers' purchases of expensive second and third homes.

3.  Deutsche-leaks

Deutsche Bank appears to have facilitated more than half of the leaked $2 trillion of suspicious transactions that were flagged to the U.S. government over nearly two decades

Wry & Dry comments:  Whaaaaat!  Over one trillion dollars!

4.  Small oil: follow the leader

Shell is jumping on the bandwagon of its European rivals BP and Eni, which have both announced plans to reduce their focus on oil and gas in the coming decade. 

Wry & Dry comments:  Shell is looking to slash up to 40% off the cost of producing oil and gas so it can overhaul its business and focus more on renewable energy and power markets.

5. A trillion here, a trillion there...

Democrats in the US House of Representatives are assembling a new economic stimulus package with a price tag of $2.4 trillion. 

Wry & Dry comments:  They originally proposed $3 trillion.  The Republicans propose $500 billion.

And, to soothe your troubled mind ...

Miscellany 

Last words ...

I’m not a fan of hers and I would say this, and she probably has heard that. But I wish a lot of luck to Harry, because he’s going to need it.”

 -  Virus-What-Virus-Trump, commenting on a joint video message by the Duke of Sussex and Princess Princess, where the young couple urged Americans to vote in the upcoming election because of "hate speech, misinformation, and online negativity."

One of the few points on which V-W-V-Trump and Wry & Dry agree. 

A lightly salted absurdity ...

Deepak, Wry & Dry's Uber driver ... 

...grinned as Wry & Dry jumped into the jalopy.

“How is Mrs. Wry & Dry?” asked Deepak in reference to her near arrest last week.

“Shaken by not stirred, and certainly not amending her behaviour either. And how are the women in your household?” asked Wry & Dry.

“Not forgetting my son,” quipped Deepak.

“Or the Feather Duster” interjected Wry & Dry, rummaging his pocket for his comb to run through his locks.

“The women for once are all getting along and at peace with the world, and as you call my father-n-law, “the Feather Duster”, he also has a jauntiness to his stride, albeit a very short stride.”

“Dangerous,” reflected Wry & Dry.

“Calm before the storm, you think?”

“Sure, those feisty women are never quiet for long, unless of course they are plotting,” stirred Wry & Dry.

“No, not this time, I am done with the regular weekly crisis! I’ve told them once and for all, enough is enough. On important matters, do you want to hear about the nuptials?”

“What? I thought it was illegal to join in matrimony in the lock-down state of Victoria!”

“Ah well yes, but not so in Saint-Denis, on the island of Réunion. Some mate of the Feather-Duster is a celebrant of a kind and the knot has been tied, over Zoom of course.”

“Amazing what one can do over Zoom these days and imagine the savings!” said Wry & Dry thoughtfully.

“And a honeymoon, in the great land of Cockaigne?” chortled a probing Wry & Dry.

“Never heard of Cockaigne, but I’ll check it out when we can when we are all allowed out. Cheap and cheerful, a romantic night or two in a country town, then strolling around the vineyards hand-in-hand.”

“Sounds ideal, maybe that is what you and Anjali need, a little romance, to spice things up.”

“No, I’m done with romance,” said Deepak flatly.

“Why?” said Wry &Dry.

“Only leads to trouble with Anjali,” said Deepak as he pulled neatly into the curb outside Wry & Dry's almost empty office building.

“That’s only when it’s not with Anjali,” quipped Wry & Dry with a grin as he hopped out, glad to have finally found his comb in his pocket, just where he had left it.

  -    From the quill of Mrs Wry & Dry 

 

Cheers

Anthony