Wry & Dry

Dog catches car. Law hits front page. From AAA to SBV.

I.  Dog catches car

Borisconi, like a dog who caught the car it was chasing, caught the Brexit car.  And now has to wonder what to do.

Does he (a) swallow his pride and accept a less than perfect deal that compromises UK sovereignty but works on 75% of the issues; or (b) fight for a better, 90% deal and risk a no-deal?  Either way, he will be seen to have lost.

It was all so easy, when he captured the mood of the nation and won the election with a massive majority.  The optimistic, cheerful and slightly eccentric Borisconi now has found that winning the election was the easy part. 

The reality is that dealing with pessimistic, solemn and leaden negotiators of the EU is a Sisyphean [1] task.   Borisconi yesterday agreed with Ursula von der Leyen, EC President and a German whose sense of humour was crafted in a bunker, to give their negotiators until Sunday to avoid a no-deal. 

Cartoon boris germany vaccination

Borisconi has told the Brits to prepare for a no-deal Brexit.  The eurocrats in Brussels will rub their hands with glee at the thought. 

Borisconi's shoulders were already stooped in a Churchillian manner before the last leg of the EU negotiations begun.  Now they look, well, Sisyphean.  But the boulder being pushed up the hill is now likely to roll down and crush some European manufacturers.  For example, VW's and BMW's largest market is the UK.

[1] In Greek mythology Sisyphus was the king of Ephyra (now known as Corinth). He was punished for his self-aggrandising craftiness and deceitfulness by being forced to roll an immense boulder up a hill only for it to roll down every time it neared the top, repeating this action for eternity. Tasks that are both laborious and futile are therefore described as Sisyphean. 

II.  Law hits front page I: ANZ

There is nothing like a dramatic trial to bring out the barrack room lawyer.  Movies have the advantage of concertina-ing all the drama of days and months into three hours or less of posturing, bullying and emotional outpourings.

Older readers may remember the amazing Twelve Angry Men or To Kill a Mockingbird.  Those younger might prefer A Few Good Men [2].  But the movies miss the day-to-day unfolding drama of actual trials.  Which takes Wry & Dry past recent high-profile cases, such as those involving a Cardinal of a church or an ageing actor.  And indeed past the defamation action brought by Elaine Stead, the aggrieved Chairman of a failed investment fund (Blue Sky [3]), against Australian Financial Review journalist Joe Aston.  This case has been gleefully reported on the front pages of the AFR's competitor, The Australian. 

But of more significance is the committal for trial of five investment bankers, one banker and their employers (Citigroup, Deutsche Bank, ANZ) on charges of a criminal cartel.  It all has to do with a $2.5 billion capital raising for ANZ in 2015.  The conduct is alleged to breach s45 of the Competition and Consumer Act.  The case commenced in 2018.

Make no mistake, this will be a lawyers' picnic.  Citigroup, Deutsche Bank and ANZ will raise every possible argument (and technicality) all the way to the High Court, as they should. 

cartoon bankers in the dock

The drama here will not be the emotion or tabloid appeal of a Pell or a Rush trial.  But the hard, cold facts of involving bankers that will have far reaching implication for the finance industry.  And for the individuals [4].

[2]  An occasion where a very good flick has a woeful performance by its lead actor.  The height-disadvantaged Tom Cruise was so far outshone by Jack Nicholson and Demi Moore as to be embarrassing.
[3In mid-2018 short seller Glaucus Research published allegations that Blue Sky had overvalued its assets under management by almost $3.5 billion.  Glaucus also alleged Blue Sky had misrepresented the performance of its investments and gouged investors with high fees.  Following the publication of the report, Blue Sky’s share price crashed, and the company was eventually placed in administration and delisted from the ASX.
[4] Disclosure: one of the defendants is well known to Wry & Dry.  So Wry & Dry's observations on the case will be biased. 

III.  Law hits front page II: Facebook

Astute Readers will remember Wry & Dry's prescient article on 9 October.

"It's enough to make John D Rockefeller turnover in his gilded grave.  The US House Judiciary Committee said on Tuesday 6 October that "Amazon, Apple, Facebook and Google had exercised and abused their monopoly power" and called for the most sweeping changes to antitrust laws in half a century."

Well, might John D be rotating six feet under the modest headstone that sits atop his grave [4].  The US Federal Trade Commission and 46 states have brought 'antitrust' cases against Facebook, accusing the company of using its social-media dominance to crush competition and calling for penalties that could include a forced break-up.   

Facebook, much to the delight of its lawyers, has lawyered up.  It took 5 years for the case against Rockefeller's oil monolith to get to the Supreme Court and be decided [5].  The lads and lasses will be salivating at the second and third ski lodges that will be bought with the fees.

Of course, the Supreme Court has an embarrassment of Republican nominated judges.  What chance at least five of the six votes with Facebook?   

[4]  But the nearby memorial (also in Lakeview Cemetery, Ohio) is not so modest:  

Image result for john d rockefeller burial site

[5] Readers of history will remember the 1890 Sherman Anti-Trust Act, which drove the breakup of, especially tobacco, railway and oil, monopolies.  Notable in the latter was the famous case: Standard Oil Co. of New Jersey v. United States (1911).  This forced Standard Oil (John D. Rockefeller's company) to dispose of the companies it begat: Esso (which became Exxon, which later merged with Mobil to become ExxonMobil); Marathon; Mobil; Chevron; Amoco; Conoco and 11 other oil companies.  Plus 22 other major pipeline and related companies.

IV.   Free speech win

The woke have had a loss.  Cambridge University has been forced to drop rules requiring students, lecturers and visitors to 'be respectful of... others' opposing views.  Quite right, too.

cartoon cambridge

This follows a teacher at Eton getting the DCM for daring to challenge (i.e. 'disrespecting') views of radical feminists.  The response to the DCM-ing has been quaintly British: letters to The Times, cancelling of endowments, rather than a more intellectual defence of free speech. 

V .  Fertility loss

Readers will know that Wry & Dry has an abiding interest in matters of fertility.  And so it is with sadness that he reports that Australia's fertility rate has dropped to its lowest level in more than a century.

The average number of children per woman dropped to 1.66.  As the rate required to maintain a population in 2.1, that means Australia will continue to rely on immigration for its population to grow.

The only good news is that the fertility rate in Canberra, Australia's lowest, is just 0.62.  Suggesting a future with fewer public servants.

Fertility

Just kiddin'.

VI.  Powerful women 

It should come as no surprise that Angela Merkel, the German Chancellor has, once again (10 years in succession), been named as the world's most powerful woman.  Europeans occupy three of the top four places, with Christine Lagarde (ECB president) at #2 and Ursula von der Leyen at #4.  Kamala Harris came in at #3 to represent the former British colonies.

The list had the usual American bias.  But Wry & Dry was pleased to see Tsai Ing-wen, the President of Taiwan, getting the #37 guernsey.  It's not only her success in tackling covid that was worthy, but also her standing up to Emperor Xi.

Curiously, Forbes also publishes a list of the world's most powerful people (but not in 2019 or 2020) [6].  Wry & Dry is all for equality.  And hence wonders why there is no list of the most powerful men.

[6] In 2018, the list was headed by Emperor Xi, Tsar Vlad, I-Won-The-Election-I-Really-Did-Trump and then Angela Merkel. 

VII.  AAA to SBV

Readers would have noticed that, as Wry & Dry exclusively forecast, S&P Global Ratings has taken a knife to the AAA credit ratings of each of New South Wales and Victoria.  NSW has gone to AA+ and Victoria even worse, to AA.

Victoria's Treasurer, Mr Tim Pallas, fooled no-one when he said that the downgrade, "reflects the impact coronavirus is having on economies around the world."  The reality is there should be a second part to the sentence: "...and that we have gone on an extra borrowing binge to ensure that we win the next two elections."

Mr Pallas could have chosen another route that would avoid borrowing overseas at the higher rates that a lower credit rating causes.  Under section 51 (xiii) of the Australian constitution, he could set up State Bank of Victoria II.   This would accept deposits and lend them to fabulous Victorian projects. 

cartoon andrews pallas

Wry & Dry remembers the great success that the original State Bank Victoria had in lending to amazing projects, especially via its subsidiary, Tricontinental [7].    

[7]  The state government controlled State Bank of Victoria collapsed because of grossly irresponsible lending made in the 1980s.  The collapse was a key factor in the defeat of the state Labor government and the election of the Liberal Party.  The carcass of the SBV was sold to the CBA.

VIII.  Chinese grow Mt Everest

Mt Everest is on the border of Nepal and China.  And for many years, China had measured its height as nearly four metres lower than Nepal.  To avoid this ongoing slight towards the Chinese people and, especially, to Emperor Xi, the mountain has been re-measured.  

The updated height is 8,848.86 metres.

If the mountain is re-measured, perhaps it should also be re-named.  Readers should now wait for the Chinese to demand that the mountain be re-named... Mount Emperor Xi.

Snippets from all over 

1.  Airbnb flies

Airbnb Inc. shares more than doubled in their trading debut, propelling the home-rental company to about a $100 billion valuation and one of the biggest first-day rallies on record.

Wry & Dry comments:  The shares closed last night at $144.71 up 113% from the $68 initial public offering price.      

2.  Is Tesla's battery running down?

Tesla continues to sell off following a blistering rally that's pushed shares up nearly 60% since the announcement in mid-November of its inclusion in the S&P 500. The stock has fallen over 7% this week.  

Wry & Dry comments: Dramatically overvalued? JPMorgan thinks so. Analyst Ryan Brinkman cited a stock price that trades at 1,325 times its long-term PE multiple and 291 times its 2020 estimate, and lifted its price target to just $90 (shares are currently trading around $600).

3.  UK home prices up

House prices in Britain rose at their fastest pace in more than four years last month.

Wry & Dry comments:  Prices were 7.6% higher than a year earlier at £253,243 (A$455,000).   

4.  6G spot

While 5G networks are still in their infancy, with 100 wireless carriers worldwide deploying the service in limited areas, the preparation for 6G development is getting started in several regions around the world. Nokia is leading a group of companies and universities in an EU-funded wireless project called Hexa-X to help jump-start a new generation of the mobile technology.

Wry & Dry comments:  Just as Wry & Dry was getting used to 4G...

5.  China's record trade surplus

China's November exports were up 21% from a year earlier, according to the General Administration of Customs, while imports were 4.5% higher, resulting in a $75.42B trade surplus that topped records set in May.

Wry & Dry comments:  While President Trump has focused on the trade deficit with China, Joe Biden said he would concentrate on IP theft, illegal subsidies and forced "tech transfers," though he wouldn't immediately remove the tariffs that remained on about $370B of Chinese goods.

And, to soothe your troubled mind ...

Last words ...

Great. Most corrupt Election in history, by far. We won!!!” 

 -  I-Won-I-Really-Won-Trump, in a tweet last night.

Still waiting for those men in white coats to arrive. 

A lightly salted absurdity ...

The survey from The Associated Press-NORC Center for Public Affairs Research shows about a quarter of U.S. adults aren’t sure if they want to get vaccinated against the coronavirus. Roughly another quarter say they won’t.

  -  Fox43.com.

Cheers

Anthony