Wry & Dry

"What, me worry?" Italy begins to gurgle. Negative CPI.

What, me worry? [1]

The only consolation for Virus-What-Virus-Trump on news that the US economy fell by 9.5% [2] in the June quarter was that Germany's fell by 10.1%.  The irony of schadenfreude might be lost on V-W-V-Trump.

But V-W-V-Trump is not worried about the economy.  He's worried about the election. 

Readers will be aware of V-W-V-Trump's monumental incompetence at managing the coronavirus pan-Yoo-Ess-Ay-demic.  Tens of thousands of deaths, the economy in tatters (see above) and a country riven.  Allow Wry & Dry to now reveal, below, that this is all part of a fiendish election scheme, at which last night's tweet from V-W-V-Trump hinted.

Cartoon trump lets move the goalposts

But it's not about his own re-election, but the election of a Republican to the presidency: Chuck Grassley.  Charles Earnest Grassley is aged 86 and is President of the US Senate. Chuck has the experience needed for the gig - he first entered politics in 1959.

Work with Wry & Dry on this.  V-W-V-Trump knew months ago that he would lose the election.  But he hates the Democrats so much that he will do anything to see a Republican in the White House.  So, he cleverly played to his strength, incompetence, and ensured as much chaos as possible with the coronavirus pandemic.  One of the outcomes is the inability of people to vote as normal.  So he arranges the election to be delayed.  Hence last night's tweet: "Delay the election until people can properly, securely and safely vote."

As Wry & Dry was first to point out to Readers, if there is no election by 20 January, the presidential order of succession kicks in. That is, the Vice President (Michael Pence, who would be ineligible as his term lapses), Speaker of the House (Nancy Pelosi, who would be ineligible as she is up for re-election and if the entire federal election is delayed she would not be elected back to the House), and then President of the Senate (Chuck, who is eligible as he is not up for re-election this time).

President Chuck.  Wow.  Can V-W-V-Trump pull it off?  Watch this space.

[1] Younger Readers might remember Mad magazine and its fictitious character Alfred E. Neuman.
[2] Readers should ignore the tabloid headlines that it shrank by 32.9%.  That is an annualised rate. Annualised rates are useful when comparing periods greater than one year.  For periods less than one year their use is mischievous and misleading.  But, well, that is what tabloids are all about.

Italy begins to gurgle

Last week Wry & Dry explained to Readers the EU's €750 billion giveaway.  And that 20% of the loot was going to Italy.  Time to open the 2014 Bolgheri Sassacaia DOC?

Err, no.  Brussels, we have a problem.  Those funds don't hit the vault in Rome until 2021 and even then will be paid over three years.  The prablem is that Italy will probably have to pay out close to €500 billion in interest costs in 2020 [3].  And that is dosh it just doesn't have.

Italy has hitherto refused bailout funds.  It feels that conditions imposed by the European Central Bank will be too harsh.  However, things are so bad that Wry & Dry suggests the Italian government will end up having bailout funds imposed on it.

Otherwise...the sound of the gurgle becomes louder.  Or is that the noise of the can being kicked down the road?  Again.

This might be worse than Greece in 2011.

[3] Italy has government debt of €2.3 trillion, which amounts to 134% of the country’s GDP.  The problem with this metric is that Italy's GDP is going down and the debt isn't.

Negative CPI

This coronavirus pandemic is a statistician's delight.  Much like a cricket match [4], every day a new record is broken.  Across the globe.  Wry & Dry is not writing about the coronavirus tests/cases/deaths data, but all of the economic and business data. 

This week, Readers will have read that Spain's unemployment rate hit 15%; the price of gold almost hit $2,000 per ounce; Boeing delivered 20 aircraft in the March quarter (77% down on last year); and that the price of cocoa beans has fallen by 25% since February.

The most compelling news was that Australian consumer prices fell by 1.9% in the June quarter.  This is only the third time since 1948 that prices have fallen.  And for some economists the sky is falling.

Cartoon the sky is falling

Sigh.

The reality is that most of the falls in the constituents of the index are one-off.  And these will rebound in the September quarter.  The sky is not falling.  Well, not yet.  The only problem is if the low inflation leads to lower real wage growth, which increases real debt held by Australians.

But a week is a long time in statistics. As soon as one statistic is a week old, another comes along, and the first is forgotten.  Much like the forecasts that follow every statistic that is published.

[4] The Wuhan Dan Lockdown is an opportunistic time for Readers to reacquaint themselves with some of the more arcane cricket statistics.  And may wish to glance through click here. And be excited by the details of Oman's (2/250) defeat of (Nepal 8/249) at Kirtipur, Nepal in February.  

Thatcher, Reagan and ... 

Twitterati refers not to frequent and assertive users of Twitter.  Twitterati is, in fact a sort of portmanteau, of twit (an insignificant, bothersome person) and glitterati (social elites).  Of course, the Twitterati might very well use Twitter as the vehicle for their emotional outpourings.  In addition to methods with which Wry & Dry is more familiar, such as the wireless.

Which brings Wry & Dry to the Twitterati backlash against Jericho Josh for referring to Thatcher and Reagan when considering 'supply side' changes to boost Australia's economy.  This backlash is Ignorance Hall of Fame stuff.

Cartoon josh thatcher

Thou shalt not be ignorant of history is not to be found on one of the tablets that Moses found on the mountain top.  But a modern Moses would request that God re-write the commandments and put it in Ten Commandments v 2.0. 

Thatcher and Reagan each certainly made some stupid mistakes in office (respectively: poll tax and the Iran-Contra scandal).  But their economic prescriptions when their countries needed considerable change worked amazingly well.  Wry & Dry will not engage Readers with their remarkable economic successes, which they can research for themselves, and simply focus on what they-the-people thought. 

Reagan won his second term with the most lop-sided election result since Roosevelt (F) and left office with the highest approval rating (68%), matched only by Roosevelt (F) and Bill Clinton. Thatcher was re-elected twice. Her views on communism and Europe were remarkably prescient.  

UK Historians [5] have ranked Thatcher in top five UK Prime Ministers of all time, with Churchill, Lloyd-George, Gladstone and Attlee. 

American historians generally have Reagan at # eight, the top five being: Lincoln, Roosevelt (F), Roosevelt (T), Washington and Jefferson.

A comprehensive 2018 poll by the American Political Science Association (APSA) among political scientists specialising in the American presidency [6] had Virus-What-Virus-Trump appearing for the first time, in 44th position. There have been 44 presidents of the Yoo-Ess-Ay.

[5] The Times
[6] Click here

Unclear on the concept 

CCTV is most useful in assisting police track down perpetrators.  The Derbyshire (UK) police are hoping that CCTV photos of two males and two females will help them in their inquiries about an attack on a 15-year-old-boy.  And so they released a series of photos.

However, in the interest of privacy, the police blurred the faces of the perps. Thereby making it impossible to identify them.

Wry & Dry guesses that double KPIs for the day were reached: (a) successfully protecting the privacy of citizens and (b) successfully releasing CCTV photos of perps.  They remain at large.

High fives all round.  

US coal consumption lowest since 1973 

Readers will be pleased that the US is weaning itself off coal.  The US Energy Information Agency said that coal consumption by US power plants fell to the lowest level since 1973.  Looking at the chart, Readers can see that this is not just a coronavirus outcome.

The energy source that has mostly replaced coal is natural gas.  Natural gas is still carbon-based, but it has a thermal efficiency of 65%, compared with coal's 40%. And it pollutes a lot less.

Cartoon portland burning

The other good news is that energy consumption in the Yoo-Ess-Ay has been static for the past 10 years.  This is notwithstanding a booming economy.  It's all about efficiency in industrial and residential energy use.

And, of course, this has recently been helped by the White House, where the lights go out early.  No-one there is working late, with power consumption just enough to run one mobile phone.   

Americans just not fertile enough

What's going on? 

A few weeks ago, Wry & Dry reported that forecasts were that the world's population would max-out later this century.  It all had to do with the increasingly large number of countries having fertility rates of less than 2.1 (2.1. being the replacement rate of a population, i.e. the number of babies a woman will have).

Well, the focus is now on the Yoo-Ess-Ay.

Chart US births

Since 2007 the number of babies born in the Yoo-Ess-Ay has been dropping steadily. 

Cartoon these are your dependants

And it is now expected that there will be 500,000 fewer babies born in 2021 than in 2020.  This will have far-reaching outcomes, not least of which will be a greater dependence on immigration to increase the number of taxpayers required to pay off the deficit.

Demographers had forecast in 2007 that the sudden drop in births that year was all about the GFC and women deciding to delay having children and that the number of babies born in 2009 would revert to increasing.  Nuh.  And the coronavirus pandemic outcome might hasten the already downward trend. 

So much for the 'blackout babies' theory [7].  

[7] The theory being that humans will copulate, as it were, if there is nothing else to do; and therefore have babies.  The theory falls at the first hurdle: spare time may lead to opportunity but opportunity doesn't determine outcome.  And the oft-cited mini-baby-boom that happened nine-months after New York's Great Power Blackout of 1965 was within the trend of the previous five years. 

A win/ lose

Winner: US investment bank Goldman Sachs will pay US$2.5 billion to the government of Malaysia for its role in the theft of billions of dollars from 1MDB, a government investment fund.  Wow, Readers may think that's quite a punishment.

Err, no.  The government had asked for $7.5 billion.  And the government agreed to drop criminal charges against the bank and cease legal proceedings against 17 current and former Goldman directors. 

Cartoon goldman

Loser: This was part of the scandal that led to the downfall of former Malaysian Prime Minister Najib Razak, who has just been tried for, inter alia, money laundering charges.  The media were more interested in his wife, from whom the police rescued 284 boxes of designer handbags, 2,200 rings, 1,400 necklaces, 14 tiaras, 423 watches, and 234 pairs of designer sunglasses.  

On Tuesday, Najib was found guilty by a Malaysian court of criminal breach of trust, money laundering and abuse of power.  He was sentenced to 12 years in the slammer, but has appealed.  No news on the fate of the booty.

Pretty chart that tells an ugly story

The venerable Financial Times published the below chart on Tuesday.  The story is not a good one: Some 86% of the $60 trillion global bond market (the blue parts of the chart) trades with yields under 2%.

Giant pool of low-yielding debt pushes investors into riskier assetsAs recently as 20 years ago, over 75% of the bond market traded at yields above 5%.  The central banks' response to the GFC to slash interest rates and undertake massive bond buying programmes forced interest rates to these record lows.

Readers will know of the trio of problems of ultra low rates.  

Firstly, governments, companies and individuals can borrow at rates between 3% and 8% points lower than historically, tempting excess borrowing.  Rather than prudent fiscal management.   

Secondly, excess borrowing is a problem when either, or both, of two events happen.  The revenue goes down because of something like coronavirus.  Or the expense goes up because interest rates go up, which will happen eventually.  Excess borrowing leads to vulnerable balance sheets.

Thirdly, investors seek more risky investments to substitute for the lack of interest income. This might be a trap for younger players.  Take advice.

Useless but interesting fact

Readers would have noticed a lot of media this week about the death of Olivia de Havilland, the last surviving actor from Gone With The Wind, one of the great movies. And on an inflation adjusted basis, the greatest grossing movie of all time.

Wry & Dry's Ubif is that Ms de Havilland's cousin, Geoffrey de Havilland, was the founder of the de Havilland Aircraft Company and designer of the Flying Moth and the famous Mosquito aircraft. The latter, innovatively made mostly of balsa wood, played a critical role in the Second World War.  The company was taken over by Hawker Siddley in 1960.

So annoying, these talented families.  

Snippets from all over 

1.  China behind

At the end of June, China has imported just 23% of its promised 2020 purchase target of $170 billion of goods from America.  

Wry & Dry comments:  Any trade deal works, until it doesn't.  Then re-negotiation starts.

2.  China ahead

Chinese electronics company Huawei has overtaken Samsung to become the No. 1 mobile phone player in the world, after taking second place from Apple back in 2018. 

Wry & Dry comments:  It is questionable if Huawei's position is sustainable: 70% of its sales are in China. 

3.  No dividends

The European Central Bank extended a request that EU banks make zero dividend payments, until January 2021. 

Wry & Dry comments:  The central bank first asked lenders in March to not make dividend payments until October in an effort to conserve capital.  APRA has told the Australian banks to cap their payout at 50% of net profit.  

4.  Apple's calendar

Apple's update calendar will begin on August 19 with a new iMac, AirPods Studio, HomePod 2 and HomePod Mini, followed by an event on September 8 that will unveil the iPhone 12 line, iPad, Apple Watch Series 6 and AirTags.  Another special event on October 27 will show off the Apple Silicon MacBook and MacBook Pro 13", iPad Pro and Apple TV 4k.   

Wry & Dry comments:  The above is an Apple community service announcement, for those Readers who have nothing else to do in lockdown other than update their Apple technology.  

5.  First US REIT bankruptcy since 2009

CBL & Associates Properties Inc., the owner of more than 100 shopping malls across the U.S., is preparing to file for bankruptcy. 

Wry & Dry comments:  CBL has high debt, is receiving just 27% of billed rent from retail tenants and skipped its June debt interest payments.  This will not be the last. 

And, to soothe your troubled mind ...

Miscellany 

Last words ...

1.  Small feet?

I noticed then that he had abnormally small hands. Small hands and large cufflinks, a strange combination...  He also had small feet.”

 -  Graydon Carter, former editor of Vanity Fair, writing earlier this week on meeting Donald Trump in Trump's "stretched limo and mauve suits period" (i.e. the early 1980s).

Readers will know what is said about men with small feet...

2.  Losing a few

"The British monarchs have fought a successful popularity battle since 1066 and can afford to lose a few dukes and HRHs on the way."

 -  Nigel Cawthorne, British author, on the latest saga involving Prince Harry and Princess Princess.

Why can't the Brits send in the SAS to rescue Harry from his imprisonment?

A lightly salted absurdity ...

Deepak, Wry & Dry's Uber driver ... 

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

“Do I dare ask how many people now under your roof, Deepak? Has the Sugar Daddy arrived yet from the quarantine hotel?” asked Wry & Dry.

“My father-in-law-to-be is arriving next week, apparently,” responded Deepak.

“And what of Damshi, Anjali and the palaver over the pre-nup?” asked Wry & Dry.

“All they do is argue about woman’s rights. I live in a den of feminists! My mother-in law is a feminist, my wife is a feminist, and Amulya, my daughter, is under careful instruction on that which the feminist elders agree.  It is rare that they agree on anything at all,” Deepak quipped.

“Isn’t feminism all the same?” inquired a thoughtful Wry & Dry.

“Not at all! Anjali is more, how we say, a modern feminist. And Damshi is very traditional.”

“How does that play out?” asked Wry & Dry, his curiosity peaking.

“When it comes to husbands, Anjali dominates, while Damshi disposes,” Deepak said matter-of-factly.

“I did flick through Germaine Greer, that book on Eunuchs, and I don’t think murder is a core belief of feminism, traditional or modern. Something about castration perhaps, but definitely not decapitation. Or maybe I just got it all wrong.” 

“You got it wrong. I should know, Amulya marches around the house repeating the words: "dignity, integrity, freedom, emancipation and pride." There is nothing yet about chopping bits off but …”

"Isn’t she only 3? How dangerous could she be?” spluttered Wry & Dry.

“Yes, well they start them young. You remember Trunk and Sanders?”

“Yes, Amulya’s toy elephant Sir Donald Trunk, and the unfortunate bear Bernie Sanders,” recalled Wry & Dry.

“She tried to flush them both down the toilet while Nancy, the plastic brunette with the long legs, stood guard. Flooded the upstairs bathroom.  Huge mess.  Had to get the plumbers. Amulya insisted that Nancy did it,” said a non-plussed Deepak.

“A Watergate moment to be sure,” Wry & Dry giggled.

“Watershed, do you mean?” said Deepak.

“Can’t blame everything on Pelosi, unlike Tricky Dick. Speaking of such matters, I’ve an idea which just may save you from a flushing of your own kind.”

“What?” said Deepak now utterly confused.

“Why don’t you look up the new Finnish Prime Minister: Sanna Marin? Do your homework, the ladies will be super impressed. It’s not all bad this feminism stuff. Not bad at all,” ruminated Wry & Dry has he hopped out of the car.

Deepak was staring deeply into the screen of his google machine, as a flush of pink crept into his cheeks. “Maybe I could get to like this feminism stuff after all…”

“That’s the spirit Deepak, always a silver lining!” said Wry & Dry as he wandered up the street chuckling.

 -  From the quill of Mrs Wry & Dry.

 

Cheers

Anthony