Wry & Dry

The sky is falling! Budget: you have to pay back the good news. Hungarian goulash.

The sky is falling!

Err, maybe not. Good grief! A statistically aberrant US inflation figure caused discombobulation in investors this week, causing the S&P500 to drop 2%.

Sure, the 0.9% 'core' CPI increase for April was the highest since 2009. And almost twice that forecast (which probably says more about the ability to forecast in crazy economic times, and less about inflation itself). Indeed, the sky is falling.

Hang on.  Smart Readers will know that it's all about the 'base effect'. That is, prices for some months and over (northern) winter have been held covidly low. This realisation dawned on investors within 24 hours. And the market recovered more than half its losses.

That is not to say that inflation will not be a problem. The reality is that no-one will accurately predict 2021. 

cartoon ball breaker       

Budget: you have to pay the good news back

Wry & Dry lost interest in Treasurer Josh's budget when he scanned the media's list of Budget Winners. His name wasn't there.

All he saw was a billion here, a billion there, a billion to this, a billion to that.  

Cartoon good news

All too confusing. Except for a standout failure.  

Spending on education has doubled in the last six years. And yet educational outcomes for Australian 15-year-old students have gone backwards by almost an educational year in maths, science and reading, when compared to international peers [1]. 

This is what statisticians call an inverse relationship. But, almost $300 billion is going to be spent on education in the next decade.  Which suggests that Australian secondary students will continue to go backwards. 

Cartoon sudents

Given the clear failure of educational outcomes from increasing spending on education, Wry & Dry will write to Treasurer Josh and suggest that he decreases expenditure on education.

[1] See last week's Wry & Dry on PISA.

Hungarian goulash

Hungary has its equivalent to a Queensland politician. Hungarian Prime Minister Viktor Orban [1] has threatened to veto the EU's censure motion against China's treatment of Hong Kong.

Mr Orban's motives are not pure. He needs to keep in China's very good books: Hungary is the staging post for Emperor Xi's largest European Belt and Road Initiative: the Budapest-Belgrade Railway.

Seven years after its proposal, the project is still at a standstill. This is a classic China-Debt-Trap: it will take 2,500 years for the debt to China to be repaid. This is a classic Viktor corruption project: the co-builder of the Hungarian end of the railway is a company controlled by one of Viktor's school friends.  This is a classic Viktor secrecy project: the government has decided to classify for 10 years all information about the project. 

Hungary is the second most corrupt country in the EU, according to Transparency International.

Wry & Dry would hesitate to suggest that Viktor is in the pocket of both Emperor Xi and his school friends. But he will not.

And how long before the wealthier EU countries will have to chip in the bail out Hungary?

[1] Wry & Dry might be forgiven for thinking of "That hairy hound from Budapest...Never have I known a ruder pest." 

Republicans don't get martyrdom

On Wednesday, Republicans in the House gave outspoken colleague Liz Chaney the DCM from her leadership position.

This decision lacks all logic: Ms Cheney is a quintessential Republican, a conservative hawk with a sharp brain and charisma. Her rival and soon victor for the leadership role, Elise Stefanik, has lesser measures in each characteristic. 

Ms Cheney got the DCM because she publicly disagreed with former President Trumps' conspiracy theories. The Republican's fealty to Trump is complete.

Cartton god trump

And so is Cheney's martyrdom. The Republicans have forgotten (a) the comment of former President Lyndon Johnson [3]; and (b) that the media thrives on (a) conflict and (b) Trump - with Ms Chaney they get both. 

Readers might wish to compare Trump's de facto leadership (i.e. holding no official position in the party or government, but yet pulling strings) with that of Deng Xiaoping [4]. Or not.

Either way, Wry & Dry ponders that Trump is waiting for the results of next year's mid-term elections: one third of the Senate and all of the House is up for re-election. If the Republicans regain control of either the Senate or House he will commence plans for re-entering politics. Either actually or sponsoring a puppet. 

Be afraid. Be very afraid.

[3] "It’s probably better to have him inside the tent p***ing out, than outside the tent p***ing in," speaking of FBI Director J Edgar Hoover.  Wry & Dry is unsure how the analogy would apply to Ms Chaney. 
[4] Deng never held office as either China's Head of State or Head of government, however, the canny survivor of the Long March effectively ran China from 1978 to 1989. He modernised China and took it from a rigid centralised communist system to one in which free enterprise was allowed to flourish. 

China: baby bust 

China's statisticians hold a podium position for data manipulation. This might bring a knowing smile from Emperor Xi Jinping: he and his mandarins can pick and choose numbers to suit the announcement of the week.

And so this week China released the results of last years' census, to some surprise. Taken at face value, the population increase (to 1.41 billion) when compared to the annual birth figure suggested that, amazingly, no-one in China died last year.

Wry & Dry, with the milk of human kindness by the quart in every vein, is prepared to give the Chinese census people some slack. The pandemic must have caused some data collection problems. That said, the more accurate count of births presents a prarblem. See the below chart from the Economist:

Chart China births

China's fertility rate is now 1.3 children per woman, well below the replacement rate of 2.1. Australia's rate, at 1.66, is also below par, but at least Australia has hundreds of thousands of migrants wishing to settle here. Only about 1,000 people per annum legally migrate to China [1].

Cartoon china contraception

Perhaps Emperor Xi should ask himself: why is it that no-one wants to move to China? 

[1] In 2016, China issued 1,576 permanents residency cards.  There is also between 20,000 to 100,000 Africans who have overstayed their visa and living in Guangzhou.

Meanwhile, in the bedrooms of the Yoo-Ess-Ay...

...not much is happening. Births in the Yoo-Ess-Ay in 2020 fell for the sixth consecutive year, to the lowest level since 1979. Readers who blame the 2020 result on covid need to go back to Sex Education 101. That is, the 2020 outcome was mostly driven by 2019, err, dalliances.

Cartoon us contraception

Or consider another reality: in four of those years Donald Trump as president would have caused ED in most men.  

And that any covid coquettishness won't show up until the 2021 data is released.

Paid not to work

There was some gnashing of teeth in the Yoo-Ess-Ay last week. The April Jobs Report showed the economy added just 266,000 jobs. Economists had predicted almost 1,000,000.

What went wrong?

There might be a kernel of truth in the suggestion that the new Biden handouts are incentives not to work. That is, some people can live quite happily on the benefits now paid by the Biden administration, when combined with state unemployment benefits. By way of comparison, in Australia, a single person without dependents can receive A$310 per week (JobSeeker).

Whilst American benefits vary from state to state, in Massachusetts for example, a similar person would receive the equivalent of A$1,087 per week. The average across all US states is A$811.

Time for a Netflix binge, Mr and Mrs American.

Update 1

Wry & Dry's man person in The Maldives has reported that the uncontrolled re-entry of the Chinese Long March 5B rocket (see Wry & Dry #38) uncontrollably plunged nearby, into the Indian Ocean on Sunday. No whales were killed or injured in the uncontrolled re-entry.

Update 2

Readers will recall Wry & Dry's prognostication a month ago that Senator Eric Abetz would lose his number one spot on the Liberal party's Tasmanian Senate ticket.

And so it came to pass. Eric now finds himself at the number three spot, which might be winnable in 2022. The fall at the last election was two Liberal, two Labor, one Green and one Jackie Lambie. But Ms Lambie's time isn't up until 2025. So Eric might take the third spot because of his profile.  Or maybe not. 

Senator Abetz, aged 63, has been a Senator for Tasmania for 27 years. The Senator, who sits comfortably to the right of those to the right of the soup spoon, rose without trace to be in The Abbott's Cabinet.   

Update 3

Last week, Wry & Dry expressed pejorative sentiments about Dogecoin, the crypto-currency that was created as a joke. Investors must have listened, as its price has fallen 40% this week.

Update 4

Disgraced retiring Queensland MP Andrew Laming has retained his position as Chair of a parliamentary committee that pays him an extra $23,237 annually. The government voted down a Labor motion to give him the DCM. This is government self-interest at work: $23,237 was a cheap price for we-the-taxpayer to bear for government's one seat majority to be maintained.  

Snippets from all over 

1.  Hackers paid $5m ransom

Colonial Pipeline Co. paid nearly $5 million to Eastern European hackers on Friday, contradicting reports earlier this week that the company had no intention of paying an extortion fee to help restore the country’s largest fuel pipeline.

Wry & Dry comments: Readers can bet two things: Firstly, it paid a lot more than $5m. Secondly, the ransomware floodgates are now wide open.

2.  UK EU trade normalises

UK exports to the EU have almost recovered to levels before Brexit. The March figure was GBP12.7 billion, compared to an unseasonably high GBP13.7 billion in December.

Wry & Dry comments: WTF? (Why The Fuss)  

3.  No gas

It will take at least two weeks to restore fuel flows after last week's cyberattack on the critical fuel pipeline in east coast America.

Wry & Dry comments: The price of gas (i.e. petrol) in the south east rose above the 'politically sensitive' $3 per gallon. This is A$0.89 per litre - not quite 'ardship.   

4.  AAA

"Credit ratings agencies expect the government’s fiscal strategy to boost economic growth, as Australia maintains its AAA credit rating despite forecasts of structural deficits that are set to persist into the next decade."

Wry & Dry comments: However, the rub is in the fine print. Both S&P Global Ratings and Fitch Ratings have maintained their 'negative outlook'.

5.  More boom

"Australia’s business sentiment broke new records in April in a result National Australia Bank Ltd’s Alan Oster described as “simply stunning,” with the employment, profitability and trading indicators all surging." 

Wry & Dry comments: Business confidence climbed to 26 points from an upwardly revised 17 in March.

And, to soothe your troubled mind...

Last words...

“Spousal support is not needed."

 -  Words on Melinda Gates' divorce petition.  

Mrs Gates gets about 50% of her husbands $US$130 billion fortune because she married him. Nice work, if you can get it.

 

PS A reminder that the opinions in Wry & Dry do not necessarily represent those of First Samuel, its employees or directors.

 

Cheers

Anthony