The bankers' scaffold is this way, sir. Tsar Putin pushes. Like a large family wedding ...
A trio of highlights
The week promised so much. And delivered.
The Report of the Banking Royal Commission and its exhaust gas; the exhaust gas of I-Wanna-Wall-Trump's SOTU and Tsar Putin's winding back the clock to the Cold War were just three of the week's highlights.
Royal Commission's limpet mine
The RC Report was handed by Commissioner Hayne to Treasurer Frydenberg. Spot the politician in the photo.
Spot the politician
The Report (released on Monday afternoon) was received with mixed reviews But it attached a limpet mine to the NAB. And the mine exploded on Thursday.
Initial reaction to the report from many was disappointment. The many would have preferred a scaffold be erected in Collins Street. And bankers brought, two-by-two, to met Hangman Hayne's noose. With a hooded Rowena Orr QC (but one could tell it's her by the shoes) close at hand, with an alternative of axe-and-block at the ready. Following the efficacious use of which the bankers' heads then impaled with due ceremony upon spikes at the city gates.
W&D parsed the Report for Readers and observed that it was a subtle, clever report, with sensible recommendations that will be introduced. Better than revolutionary ones that wither on the vine.
But some banks have moved quickly on to cost cutting...
The Commission was always as much about the gardeners as the weeds. If you follow W&D.
And the gardeners (ASIC, APRA) have been hung, drawn and quartered in the Report.
And the weeds? Hopes from the industry superannuation funds for the banks to be excused from providing superannuation products were never going to be realised. Transparency, performance and fees will eliminate the laggers, regardless of provenance.
Hopes for recommendations about regulation of bankers' compensation were never going to be realised. The number of snouts in the trough was small, not withstanding the capaciousness of the trough. But a bit of shame goes a long way.
W&D was most curious to see if Commissioner Hayne's eloquent limpet mine that NAB's Chairman (Ken Henry) and CEO (Andrew Thorburn) should get the DCM was too subtle.
Well, it took until Thursday for it to explode. Thorburn, who is at least an honourable man, fell on his sword. Henry, who has a very, very high opinion of his own ability, took a bit of convincing.
And for the Nth time in a decade, where N is a large number, the NAB logo was splashed across the front pages of the media for the wrong reasons.
And allow W&D to make it clear. Henry and Thorburn are not going just because of a few lines on page 411 of the Report. The Report was the last straw for the NAB's board. The other curiosity is why it (the board) took so long to act. The answer is that Readers should be disabused of the idea that large company boards are harmonious bastions.
The bigger the company, the more its board resembles the federal government under Croesus Turnbull. Alliances, plotting, feuding, preferments, etc. And Henry's board allies have fought an ongoing battle to keep their man in charge.
But the ghost of Ken Henry will linger. He is staying on as Chairman until he (and a small committee) has chosen a new CEO. Oh, dear. He still doesn't get it.
Tell 'em they're dreaming
Part of the emotional response to the release of the Report of the Royal Commission was an emotional response by the share-market. Bank stocks rose by an average of 3% on Tuesday.
Dream: the banks are back!
Reality #1: on Wednesday the CBA announced that on-going profit i.e. stripping out all of the one-off nasty stuff arising from Rowena Orr QC's surgical implements, rose a mere 1.7%.
Reality #2: W&D would like to provide Readers with some context:
Tsar Putin called out
“The policy and practice of the Russian Government has always been to push forward its encroachments as fast and as far as the apathy or want of firmness of other Governments would allow it to go, but always to stop and retire when it met with decided resistance and then to wait for the next favorable opportunity.”
Readers will be familiar with this quote from Lord Palmerston, mid-19th century British Prime Minister and arguably its greatest foreign minister . It is quite apposite in view of the less than subtle build up of Tsar Putin's military muscle.
The latest is his response to I-Wanna-Wall-Trump's withdrawal from the 1987 Intermediate-range Nuclear Forces Treaty between the Soviet Union and the Yoo Ess Ay. Trump withdrew because of Russia's ongoing violation of the treaty. The entire known world has been aware of Putin's barefaced malfeasance, going back at least 10 years, when Russia restarted building and testing nuclear capable medium range missiles outlawed by the treaty.
Putin said Russia had done no such thing (see Mandy Rice-Davies observation on such observations, below), but would also withdraw from the treaty.
Which brings W&D to Lord Palmerston's observation about Russia. For 10 years nothing was done to push back against Russia. That most cowardly of Yoo Ess Ay presidents, Barack Obama, did nothing (as he did when he silently watched China create military bases out of disputed-territory atolls in the South China Sea) for eight years.
On this issue, W&D fully supports I-Wanna-Wall Trump.
 His more famous quote was about the complex Schleswig-Holstein Question (about two Danish duchies and the German Federation): “Only three people have ever really understood the Schleswig-Holstein business—the Prince Consort, who is dead—a German professor, who has gone mad—and I, who have forgotten all about it."
A family wedding
It was all rather like a large southern European family wedding. Everyone invited. Special seating for some. Speeches. Some formality. Food and booze. Some people get frocked-up. And the modern touch of everything being videoed.
It is, in fact, the State of the Union Address, given by the President of the Yoo Ess Ay. Readers will know that the Constitooshun (Article II Section 3) requires the President to periodically "give to the Congress Information of the State of the Union, and recommend to their Consideration such measures as he shall judge necessary and expedient."
The Constitooshun clearly doesn't contemplate a female president. And neither does it direct the facilitation of the SOTU. But the whole thing has now become a theatre, equivalent to a wedding planner's heaven. Each member of Congress can bring one guest, for example. And the President may invite up to 24 guests, as can the Speaker of the House. The Cabinet, Supreme Court justices, members of the Diplomatic Corps, and the military leaders constituting the Joint Chiefs of Staff have reserved seating. Otherwise, it is first come, first served seating.
After the formalities, the President gives a speech. Which is usually long, predictable, whimsical and preachy. With an attempt at humour.
All just like the wedding. And everyone goes home with a warm and happy glow. And will forget it all by the following week.
Property price hand-wringing
"Property prices fall 6% in six months."
"Australia might experience year-on-year declines exceeding 10%."
"Warnings of a drop of 11% in Melbourne values this year."
And so it goes on. All in large font normally reserved for the death of princess (or, more accurately, the wife of a prince).
Is this Armageddon? The apocalyptic end?
Three years' ago property prices were booming, up 10% p.a. or more. Large trophy homes were bid up as Asian investors sought haven abodes. Banks and others lent dosh to anyone who could read or write. Apartment investors were suckered into deals at low interest rates. Interest-only loans boomed.
This reminded W&D of the Tech-Wreck stock market boom of the early 2000s. Or of the 2017 Bitcoin boom. Rather like the coyote chasing the roadrunner and finding himself off the edge of the cliff, suspended in mid-air. Just for a moment. Before falling into the abyss.
Well, not quite for the Australian property market. But the boom had to be followed by a little bust.
So, why the media panic? The property market is just reverting to its long-term growth rate. And surely, lower prices are good for those youngsters trying to enter the market.
A "special place in hell"
The European Council President, Donald Tusk, has added some rhetorical spice to the Brexit debate. He spoke of a "special place in hell for those who promoted Brexit without even a sketch of a plan to promote it safely."
As Readers would expect, the UK media, united in a rare moment of nationalism, went nuttzo. As did Brexiters of all shades.
But, somewhere in there, is a kernel of truth. There are 49 days before the UK leaves the EU. Aside from the remote possibility of deferral, there are two alternatives:
a. PM May's Deal - or a variation
b. No Deal
W&D has always favoured 'No Deal' as the better long-run alternative. But, obviously, such a course would indeed need "a plan to promote it safely."
W&D hopes that somewhere in bowels of 10 Downing Street those very plans exist, ready to be unrolled and rolled out.
Snippets from all over
The Chief Teller of the Reserve Bank has decided to leave interest rates unchanged (at 1.5%). He coincidentally stated that the RBA expected GDP growth in 2019 to be 3%, down from the 3.25% forecast three months ago.
W&D comments: "If the facts change, I change my forecasts. What do you do, Sir?" 
 J.M. Keynes, a useful economist.
2. A moving pole
The University of Colorado has said that the Earth's north magnetic pole is moving at about 55 kilometres per year. It is moving from the Canadian Arctic towards Siberia.
W&D comments: Greens will blame it on global warming; I-Wanna-Wall-Trump on illegal immigrants from Mexico and Tony Abbott on gay marriage. Err, none of the above. It's been moving for millennia, and is due to 'flip' with the south pole in about 180,000 years. Don't say Readers weren't warned.
3. Down at the car wash
Usage of cable pay-TV in the Yoo Ess Ay has fallen by 10% percentage points in just two years. And the use of on-line TV (e.g. Netflix) has increased by 27% over the same period.
W&D comments: This is why, in Australia, cable pay-TV operator Foxtel is focussing on sports. It knows that armchair sports fans cannot understand how to work online-TV.
4. The CBA ...
... boasted in its six-month profit report (Wednesday) that it had "a leading Net Promoter Score." W&D will give the bank a little hats-off: its mobile banking app had an NPS of 37.8 and its Internet banking 31.3. But, overall, the banks's NPS was negative.
W&D comments: First, catch your hare .
 That is to say, first get your customer. A recipe for hare pudding in the 1747 English cookery book, "The Art of Cookery Made Plain and Easy" by Hannah Glasse, opened with the words: "First, catch your hare." The book is still in print and available online. Readers may not be familiar with the 13th century treatise by Henry of Bratton: "and the common folk say that you must first catch your stag and after it has been caught skin it."
5. Europe slides
Italy and France slid deeper into an economic slump in January as their services sectors began to crumble, pushing the eurozone uncomfortably close to its third recession in a decade. Italy is in its steepest downturn for over five years.
W&D comments: And the EU is worried about Brexit.
Tool of the Week
Podium finish goes to ... Anna Bligh, CEO of the Australian Banking Association. Readers will recall that Ms Bligh's high-water mark in public life was when the Brisbane River hit its high-water mark in the floods of January 2011. She was Queensland Premier at the time and to W&D's thinking gave an outstanding leadership performance during the flood crisis.
But that was the only example of success in her political life. She led the Labor party to what was then the largest ever defeat in Australian political history: Labor was left with just 7 seats, to the Liberal National party's 78.
On the morning-after the Royal Commission Report was released, Ms Bligh (a direct descendant of William Bligh, against whom his crew on the good ship HMS Bounty mutinied), responded to nasty comments that Commissioner Hayne made about the Chairman and the CEO of National Bank. She said that Dr Henry and Mr Thorburn were not “resistors” of change and took responsibility for the bank’s misconduct.
As Ms Bligh bosses were (on Tuesday) Henry and Thorburn (and their peers), W&D might very well say what Mandy Rice-Davies would have said: "Well, she would say that, wouldn't she." 
 In a 1963 UK trial, a Stephen Ward was charged with pimping, including arranging Miss Rice-Davies for Lord Astor. When Ms Rice-Davies was giving evidence, James Burge, the defence counsel, pointed out that Lord Astor denied an affair or having even met her, she dismissed the denial by stating, "Well, he would say that, wouldn't he?". The quote was entered into the Oxford Dictionary of Quotations. The trial of Ward was part of the infamous Profumo scandal, which effectively brought down the UK Macmillan government in 1964.
Deepak, W&D's Uber driver ...
... was grumpy when W&D asked, "what news of Anjali and her mother. And have her cousins now left?"
"No," responded W&D grumpily. "It was and is a disaster."
"How so? I thought it was now plain sailing."
"Anjali's mother is getting more bossy. And, wait for it, Anjali's six cousins this morning decided to become asylum seekers after their tourist visas expire. They rather like Melbourne. And they are sharing my bedroom! My world is ending."
"A fateful conclusion," said W&D optimistically as he unbuckled his seat belt. "You have lots to live for."
Deepak's gloom deepened. "Yes, I guess you are right. But I still have enough problems as it is."
"Ah, that's true," observed W&D as he strode off. "Upcoming baby. Mother-in-law. MSB. The six cousins in your bedroom. And the price of Bitcoin."
Deepak's jaw dropped, "I had forgotten about my Bitcoin investment."
W&D paused and turned. "Well, Anjali won't if she finds out. And it might get worse. You need to know that about $200 million has been lost in crypto currency storage scam, because only the company's CEO held the passwords of the digital storage company. And only on his laptop computer. He suddenly died. He had sole responsibility for handling the crypto currency and its security. Now the passwords have gone to their grave with him. Investors cannot get to their crypto-currency from the company's digital wallets. Look it up; the company is Canadian-based: QuadrigaCX.  You should check that your Bitcoin wallet is accessible."
Deepak went white. https://cointelegraph.com/news/ceo-of-canadian-crypto-exchange-quadrigacx-filed-will-12-days-before-death
And, to soothe your troubled mind...
Last words ...
"I thought it telling that in the very week that NAB's CEO and Chair were to give evidence before the commission, one of its staff should be emailing bankers urging them to sell at least five mortgages each before Christmas."
- Ken Hayne, Royal Commissioner, in the Commission's Final Report, eloquently continuing the slow roast of NAB and its leaders so forensically begun by Rowena Orr QC and her colleague.
W&D thinks it telling that the NAB CEO and Chair have now been given the DCM.
First Samuel client events calendar
Events for 2019
Special CIO Client Forum - 26th February 2019
Invitations to clients have been sent
Contact Jess at firstname.lastname@example.org to RSVP
Some lightly salted absurdities from all over ...
At the extreme left-hand end of the Bell Curve
A thief stole an expensive diamond ring from All That Glitters pawn shop in Portland, Oregon. He returned 24 hours later and tried to pawn it back.
On his return he wasn't wearing a hoodie, and so could readily be seen by the surveillance camera. He claimed he bought the ring in Las Vegas.
"Tell it to the judge, son."
Guess what happened next?
The man entered the Popeye's takeaway chicken restaurant in the 8700 block of Chef Menteur Highway in New Orleans East, just before noon on Monday. And attempted to steal money from the register. But the register wouldn’t budge. What did he do next?
a. Tear up and leave the restaurant;
b. Grab the register and run with it under his arm;
c. Grab Olive Oyl and take her hostage; or
d. Grab some fried chicken and flee.
Close. But no cigar. d. is correct. Police found him minutes later, around the corner, eating the chicken.
It's a weird world