Wry & Dry

Banking bastards. Sultan of swing. Smashing avocados.

Pillories

Wry & Dry had a weird dream last night.  It was of rotten-fruit smothered senior banking and AMP executives being unshackled from a row of pillories [1], to the jeers of the madding crowd.  And led to the slammer.

Cartoon AMP Wing F Wing 

Sadly, W&D's butler woke him and proffered a piccolo latte just as the cell door in the dream slammed.  

The Banking Royal Commission has brought out the most heinous of behaviors by fiduciaries. 

Cartoon AMP handshake

But it will not be the scaffold, metaphorical or otherwise, for those responsible for the almost unbelievable treatment of customers by ANZ, CBA, NAB, Westpac and AMP.  As W&D noted two weeks ago: the thieves have scarpered.

There is so much about which to write, and the news keeps on breaking, W&D will confine himself to some early conclusions.

1.  No-one will go to jail

Readers will recall for all the damage caused by the financial thieving, mis-management and greed of the GFC, only one person in the entire financial community of the Yoo. Ess. Aye. ended up in jail.  All the well-paid executives escaped punishment.  And many continue to thrive.

And so it will be with the outcome of this Royal Commission.  Threats from the Treasurer that 'bankers can go to jail' are nothing more than headline obfuscation to draw attention from the fact that the government fought for two years not to have this Commission.

To date, no senior executives have been fired for all of the thievery.  AMP's CEO 'stood down' this morning.  But it is unclear whether he was jumped or not.  But he's got his dosh: $4.8m in 2017.

Cartoon AMP CEO

And those named will move on.  One of the named and shamed prominent Westpac financial planners now has a financial planning business, where his website says he is 'an award winning private-wealth adviser' and "my previous accolades include being named St George Bank Private Client Adviser of the Year four years in a row."  Good grief.

2.  Banks will fight behind the scenes, whilst grovelling in public

Readers should not be fooled by the seeming contrition of banks.  Anyone who has tried to make a claim against a bank knows how difficult it is.   Their lawyers will fight every case, every claim, every allegation with a view to either exhausting or financial ruining complainants.  Recall this week's case of the nurse before the Commission, who was fiscally raped by Westpac.  No matter how obvious or deserved the claim, Westpac refused compensation and she had to go to the Financial Ombudsman for redress.  Two years later she got some.

One of ASIC complaints has been how uncooperative the banks have been in handling matters that were reported to it.  The banks stalled ASIC at every turn.  And argued, fought, dissembled (see Quote of the Week, below) and delayed. 

Readers should ignore the ads, the PR campaigns.  The leopard spots will not change.

3.  Banks are thieves

CBA made $10 billion last year.  And yet one of its executives had the temerity to tell the Commission that it didn't have the resources to properly track how its financial planners were treating its clients.  Rather than invest in decent technology and systems, the banks' executives rewarded themselves and made handsome profits.  The banks could have been securely profitable and still invested in corporate infrastructure to meet their legal obligations and look after their clients.

Cartoon CBA thats how it works

4.  None of this is a surprise

W&D spent a good deal of this week watching a live stream of the Banking Royal Commission.  And as shocking as were the revelations, W&D was not surprised.  Readers will know that W&D has been associated with a wealth management company called First Samuel.  That company has been banging the drum for almost 20 years about the deleterious effect that commissions have on behaviour.   It has had people come to it from elsewhere ruined by rapacious financial planners and seeking a lifeline, hoping there was one. 

To bring to mind just one case, of a retired couple from regional Victoria.  A nest egg from years as a country GP had led to some $1.5m in savings.  By the time their financial planner had finished the couple had minus $500,000.  They were advised to mortgage their home to 100% to invest in leveraged investments.  They had leverage upon leverage.  They lost everything, their savings, their home, the lot.  And are on the pension in a rented cottage.  The planner retired, his licensor closed.  

5.  Where was ASIC? 

W&D has for years termed ASIC as the 'corporate Labrador'.  Only half jokingly.  This government body has appallingly failed to enforce the Corporations Act against the banks and AMP.  Small fry often get their comeuppance.  But the banks and AMP have broken the law again and again and again.  And either a blind ASIC eye was turned and or the sanction was so small for such large companies that it could be paid out of petty cash.

6.  What now, my love?

The banks and AMP will:

a.  Say we "are truly sorry for our sins";

b.  Say all of the rotten apples have gone;

c.  Say "we now have systems and processes in place to ensure that all customers are treated not only in accordance with law but to the highest ethical standards";

d.  Allow the dust to settle; and

e.  Find another way to rob their customers.  

[Special thanks to Patrick Cook, our resident cartoonist, for his amazing imagery.  And at short notice.]

Oh, the thought...

W&D was in the bush during the week.  And stopped at a café in Finlay (between Tocumwal and Jerilderie) for some local fare.  And on the menu was the inner-suburban breakfast of poached eggs and smashed avocados.  W&D was delighted that the country folk have immersed themselves in such temptations.

This caused W&D to more than notice a snippet in one of the national dailies: avocados came to the world from Central America.  The word is derived from the Nahuatl (Aztec) ahuacatl, which means testicle.

Which brings a whole new understanding to the words ‘smashed avocados’...

Smashed ahuacatls

Continuing that line of thinking... poor Tsar Trump must think that his ahuacatls are being squeezed.  And it’s not by the respective leaders of Russia, Syria, China, Iran or North Korea.  It’s local. 

It's former FBI Director James Comey (whose book is not kind to Tsar Trump) and also a lass named Stormy Daniels (whose allegation of an, err, encounter with Tsar Trump is not kind to him). 

The big issue, of course, is the court of public opinion.  This week, Mr Comey explained his book in an interview on ABC News (the American broadcaster, not Australia’s), whereas last month, Ms Daniels chose 60 Minutes (the American show, not Australia’s) for her recollection of events of a personal nature. 

Cartoon Stormy Daniels FBI 

W&D was moved to consider which interview would be more interesting to the average American: that of the former Director of the FBI? Or that of a then attractive young lady of, shall W&D say, versatile occupations? 

Stormy Daniels

Say no more.   

Facebook's zillion man

Nice work, if you can get it.  Own 16% of the stock (i.e. shares) in a company and yet have 60% of the voting stock.  This is how Mark Zuckerberg manages his world. [2]

 Zuckerberg at the congressional hearing

"I don't care what they say.  I think you look really handsome." 

IKEA meets the future

There are few higher domestic embarrassments than, after assuring Mrs W&D that, "of course it can be assembled," of W&D spending 4 hours assembling a piece of IKEA furniture only to have the door handles facing inwards.

And so it is with great relief that W&D read that a group of researchers at Nanyang Technological University in Singapore have managed to assemble a piece of IKEA furniture using robots. 

Cartoon IKEA

Imagine the end to domestic disputation if in future a robot did all the IKEA assembling instead of the hapless husband.  This is the stuff of a Nobel Peace Prize.

Speaking of controlling the future...

...Turkey.  Sultan Recep Erdogan has announced an early election, to be held at the end of June.  This is 15 months ahead of schedule.  Mr Erdogan said in a televised speech the country needed the new election to rid it of "the diseases of the old system".

Cartoon Turkey round up the usual voters 

Err, no.  It's an opportunistic move to grab five more years in power before (a) they-the-Turkish-people realise how bad, and getting worse, is the Turkish economy; (b) the newly formed right-wing party of Meral Aksener gathers steam; and (c) something unforeseen goes wrong in the Syrian war that might adversely affect his chances later.  

Readers will also remember that the massive new powers given to the President (passed by a narrow margin in last year's referendum) only take effect after the upcoming election.  Sultan Erdogan wants his enlarged powers earlier.

This man (who first gained power in 2003) will vie with Russia's Tsar Putin; China's Emperor Xi Jinping and Cricket Australia's James Sutherland for the podium finish in the race for the longest living despot.

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

...borrowing.  "What should I do?" wailed Deepak as W&D got into his car.  "Anjali wants a new dress.  But I need to buy a new computer so I can better manage my business.  I'm afraid she might withdraw privileges if I don't get her the dress." 

"Ah, it's tough being a man.  And even tougher being a husband," sympathised W&D. "Especially to Anjali."

"If only you knew, sir," Deepak laughed. 

W&D continued, "The problem with borrowing is that you have to pay interest and also repay the loan.  But if you are borrowing to invest, such as for your computer, that investment is going to provide you with future profits.  So, generally, borrowing to invest is okay.  Borrowing to spend is not.  Better to use today's income or savings for today's spending."

"It's like governments.  Just have a look at the situation Tsar Trump and Congress has got the US into.  They have cut taxes, but not expenses.  So the government will have to borrow to keep spending on the economy.  But most of that spending is not an investment for tomorrow, it is spending for today.  There's nothing wrong with spending for today, as long as that spending is being paid for by today's people.  But borrowing for today means that future taxpayers have to pay for today's taxpayers."

"So how big is the problem with America's debt?" Deepak asked.

"Well, it's big and getting bigger," responded W&D. "A common way to measure debt problems across countries of different sizes is to compare government debt to the size of the economy.  So Australia's government debt divided by GDP (the size of the economy) is about 42%.  In the US it's about 108%.  It's not that Australia's debt should increase.  It shouldn't as we do not have a diversified economy that can withstand long term economic changes.  It's that America's is growing rapidly."

W&D showed Deepak a chart of America's debt compared to Italy's.

Flags us italy debt

"For example, consider America's debt in 2023.  It's now expected to shoot up to 117% of GDP, whereas Italy's is expected to fall to 116% from the current 129%."

"Well, I think I've decided, then," said Deepak thoughtfully.  "I'll borrow the money to invest in the computer and use cash to buy Anjali a new dress.  She will be happy.  And I will be well privileged."

"A fatal conclusion," W&D muttered as he got out of Deepak's car. "A new dress might buy one-off happiness.  Surely you want ongoing happiness without having to buy a new dress every time."

"Oh, me miserum!" wailed Deepak, using his only-known Latin words, as W&D strode off.  "You are wise, sir.  I need to try the cup-of-tea-in-bed-every-morning approach."

"Indeed", thought W&D.  "But it might be too late."  

And, to soothe your troubled mind...  

Miscellany 

Last words...

"Ms Perkovic, is the reason that you are dissembling in the way that you are dissembling because you are trying to pre-emptively explain why it took Commonwealth Bank Financial Planning more than two years to notify ASIC of its breach?

-   Michael Hodge QC, Senior Counsel assisting the Royal Commission, losing patience with CBA witness Marianne Perkovic.

[Dissemble: verb. To conceal or disguise]   

So long, Marianne... (with apologies to the late Leonard Cohen).

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

29-year-old Johnathan Curtis Bentley had just been released from jail.  But didn't have a lift back to his home.  The prison authorities phoned the local police, who thought it a good idea to help give the man a new start and they would pick him up.

As the police drove toward the prison, they saw a cyclist going the other way who matched the description they had been given of Bentley.

They turned around and picked him up.  Yes, theft of a bicycle.

(USA Today)

No news of whether he got home...

Guess what happened next

A man from Blaxland Ridge in New South Wales was getting the barbecue ready, and the flames were well alight.  But, just to make sure, he tossed on a box of firelighters.  What happened next?

a.  It was just what the fire needed.  It all settled beautifully and the steaks were superb;

b.  It wasn't fire-lighters in the box, but manure pellets.  The BBQ was ruined;

c.  It wasn't fire-lighters in the box, but bath bombs.  The BBQ was ruined, but everything smelled lovely; or

d.  The whole barbecue exploded.    

Close.  But no cigar.  Correct.  The man ended up in hospital.  See here for the link to the video.

(Daily Mail)

Severe burns, hospital.     

Only in Yoo-Ess-Aye... 

A motorcyclist involved in a crash in East Central Florida was shot by his own gun last Thursday.  The motorcyclist had a gun on his hip when the bike crashed on the 3800 block of New Haven Avenue near West Melbourne.

The gun discharged, shooting him, the Florida Highway Patrol said.  Both the motorcyclist and a passenger on the bike were taken to hospital.  They were wearing helmets, troopers said.

(Spectrumnews 13)

Whew, good thing they were wearing helmets, just in case the bullet went upwards...instead of smashing his femur.

Have a Wry & Dry weekend. 

Anthony

[1] Pillory: a wooden framework with holes for the head and hands, in which offenders were formerly imprisoned and exposed to public abuse.

[2] He's not the only one.  There is this family named Murdoch....  By the way, the practice is not legal in Australia.