Enjoy Wry & Dry: a cynical and irreverent blend of politics, economics and life.
Seven stories you may have missed
- Albo channels Sir Humphrey
- Crisis, what crisis?
- Net-zero delayed
- Put-down of the week
- Useless information department
- More taxes
- Chairman Dan’s new house
Albo channels Sir Humphrey
“No Minister, I beg you,” replies Sir Humphrey. “A basic rule of government is never look into anything you don’t have to, and never set up an inquiry unless you know in advance what its findings will be.”1
And with this exemplar of responsible government at the forefront of his mind, Albo has set up an inquiry into Covid that is without teeth, ears and eyes. It won’t look into stuff that Albo doesn’t have/ want to look into: actions of state premiers. The inquiry’s terms of reference unambiguously state that “actions taken unilaterally by state and territory governments” would be excluded. This wording is one of those “for the avoidance of doubt” statements that lawyers love to use. It is a clear signpost to whom Albo wishes to protect.
The glaring statistical anomaly of the responses to Covid is that Victoria was locked down harder and longer (and meaner: remember the use of riot police?) than any other state and yet had the worst rate of infection, more deaths and worst fiscal outcomes. No-one will now ask why? And if they did, would key people remember?
Albo has also set up the inquiry as an emasculated beast: no public hearings, no compulsion to appear. He has also appointed a former Labor staffer as one of its three members.
Readers will recall that Albo set up a Royal Commission (public hearings, appearance compulsion) into the so-called Robodebt Scheme. Other recent Royal Commissions include Aged Care; Banking & Superannuation Misconduct; and Child Sexual Abuse. Each of these had wide terms of reference. And the reports of each fully justified their establishment and set out sensible and far-reaching recommendations.
Yet, Covid inflicted exponentially more human cost, disruption and sheer dollar cost than any of the subjects of these worthy Royal Commissions.
Regretfully, Wry & Dry must say that Albo has shown himself to be a man of straw, beholden to others and wilfully placing the sectional interests above we-the-people.
1 Readers may wish to view:
Crisis. What crisis?
The crisis is that the government of the USA is about to run out of money.
Well, not quite – it’s not going broke. It’s just that Congress has not yet, as one might say in Australia, approved the budget. This could get very messy.
The problem? Some extremist House Republicans have again rejected a deal their own leader (Kevin McCarthy) made with Sleepy Joe in May to smooth the passage of the 12 appropriation bills. Readers would know that the budget is the President’s, but it has to get through Congress. And the House is controlled by Republicans and the Senate by Democrats.
Republicans are rightly concerned by the massive increase in US government debt. Even more so at a time of increasing interest rates. Just consider that the average interest rate paid on US government debt rose to 2.9% in August (the highest since 2011), from 1.6% in February. This is all about old debt maturing and being replaced at higher interest rates. Just ponder the interest bill on a $33 trillion loan.
So, who cares? Well, the world should. It’s not about the money. The five recalcitrant Republicans are archetypical Trumpster acolytes. This brinkmanship is the way government in the US has evolved. Politics is no longer the art of the possible. It’s the science of the gun at the head.
Net-zero delayed
Readers would have found it hard to miss the outcry that greeted UK PM Rishi Sunak’s decision to roll-back deadlines for phasing out petrol/diesel cars and carbon-based home heating.
The most contentious decision was to change the date to 2035 from 2030 from which only new zero-emission cars could be sold. This delay actually puts the UK in line with Germany, France, Sweden and California and New York. The reasoning was pragmatic:
- the financial burden on the Brit-on-the-street was too much, too soon
- the EV charging network was simply not going to be built
- the original 2030 deadline was made up by Borisconi, just to be five years ahead of the EU
Wry & Dry applauds proportionality. The UK emits about 1% of total global emissions of CO2 (about the same as Australia, both declining). Until China (33% and increasing), US (12% – declining), India (7% – increasing) and Russia (5% – increasing) make serious inroads into emission reduction, there is merit in pragmatism.
Put-down of the week
The scene: the UN Security Council2.
The Chairman: Albanian PM Edi Rama.
The guest speaker: Ukrainian President Volodymyr Zelensky.
The protester: Russia’s ambassador to the UN, Vasily Nebanzya, complaining that Mr. Zelensky had been invited to speak ahead of member countries, which was against the rules.
The putdown, from the Chairman: “I must say, coming from you, this lecture about violating the rules is quite impressive. But there is a solution to this. If you agree to stop the war, President Zelensky will not take the floor.”
2 The Security Council is made up of five permanent members (each of which has a veto): China, Russia, France, UK, USA and 10 elected members (which serve two-year terms): Albania, Brazil, Ecuador, Gabon, Ghana, Japan, Malta, Mozambique, Switzerland and UAE.
Useless information department
Wry & Dry was taught French and Russian at school. Which shows the optimism of the education system. And of the suffering teachers. It’s a better question to ask what did he learn? And living in Tokyo for a few years didn’t translate into anything deeper than instructions to taxi drivers.
So, he was heartened to read in The Economist that his seeming linguistic incompetence was not without good reason. French might have been successfully tackled with more enthusiasm. But both Russian and Japanese represented a bridge too far.
More taxes
It continues to astound Wry & Dry that politicians think they can put lipstick on a taxation pig and no-one notices.
Now Chairman Dan has joined the fashion of let’s-create-more-rental-housing-by-taxing-short-stay-accommodation. And has injected the pig’s lips to make them even bigger by stating that the tax would go to providing more social housing.
Chairman Dan is smart – he wins twice the plaudits. Or, as Alan Bond would have said, “It’s a win-win. I win twice.”
But, firstly, allow Wry & Dry to remind Readers that a short-stay landlord is not going to change to being a long-stay landlord unless the short-stay tax is greater than the benefit of being short-stay rather than long-stay. The 7.5% ‘levy’ is not even close to being a disincentive. It is just another tax.
Secondly, any proposed hypothecation of taxes (i.e. to impose a tax and say the proceeds will be directed to a specific purpose, e.g. Medicare levy) is misleading. And always has been. The funds will just go into the pot, to be spent at the will of the taxer.
But doubtless Chairman Dan will get away with it. And then move on. Meanwhile the Leader of the Opposition will be earnestly trying get media attention, but the media caravan will also have moved on.
Chairman Dan’s new house
This is a first.
Wry & Dry dips his lid to Chairman Dan. And his new housing policy, especially him putting the acid onto local councils for their planning delays and a let’s-reject-it-first attitude. And the abolition and rebuilding of the multi-story eye-sore vertical slums called social housing.
Of course, the proof of the pudding will be in the eating.
Age shall not weary them, as long as they have a job
The media battle between Sleepy Joe (80 at the next election) and The Trumpster (77) for the presidency is not about policies. It’s about age. And the discussion sometimes trickles down to Nancy Pelosi, who will be 84 when the next US election occurs.
Sadly, it’s not just the three stooges. The Financial Times has undertaken a study of congresspeople, and compared their median age to that of other job categories. It should not be a surprise that congressperson is one of the US’ most elderly professions: aged 60 for Representatives and 65 for Senators.
The median age of the US population is 39 years.
The study also compared the median age of lower house representatives of G-8 countries. US politicians must be again congratulating themselves on American exceptionalism: exceptional gerontocracy.
What’s in a name?
The US financial markets’ regulator (the Securities and Exchange Commission) is getting grumpy with product names.
The old rule was that 80% of investments in a product had to match the label. But that rule applied to asset classes (e.g. equity) not to ‘themes’ (e.g. ESG: Environmental, Social, Governance).
The industry has 30 days to get 80% of the investments in its portfolios to match the label, whatever is on the label. And that will mean selling investments for many funds. The industry is not happy.
Well, too bad. History shows that many ‘value’ funds became ‘growth funds’ when interest rates were falling and the market booming. And don’t get Wry & Dry stated on ‘ESG’.
In Australia, the regulator’s focus has, so far, been on ESG labels and risk descriptors such as ‘conservative’.
Perhaps the same rule should apply to political parties: 80% of Liberal politicians should be liberal, 80% of Labor politicians to have worked in labouring jobs and 80% of Green politicians should be green.
Global Financial Centres: snakes and ladders
Concerning global financial centres, it’s ladders for New York, Singapore and others. It’s snakes for London, Hong Kong and others.
And especially long snakes for Sydney and Melbourne.
An outdated version of the below table appeared in Monday’s AFR. Wry & Dry was taken by the data and so updated it. Like all global rankings of anything, it all depends on the factors used and their weights. This ranking has five factors (each with a range of sub-factors):
- business environment
- human capital
- infrastructure
- financial sector development
- reputational & general
What does the data show? In simple terms, the failure of Australian federal and state governments to provide a dynamic framework for the financial sector. And the finance sector itself to think beyond the next 12 months.
For example, a replacement for the ASX’s creaking back office (CHESS) was launched in 2015. It crashed on the rocks of incompetence in 2022.
What does it mean? Unless Australia can change the factors to include weather and sport, each of Sydney and Melbourne will continue to slide. Until each competes with Lagos.
Snippets from all over
1. F-35s in the workshop
The Pentagon’s costly fleet of F-35 fighter jets can only fly a little over half the time, as maintenance issues keep the aircraft on the ground despite the growing reliance on the planes by the US and its allies. (Financial Times)
Wry & Dry comments: The plane’s ‘mission-capable’ rate was 55% in March 2023, somewhat lower than the manufacturer’s warranty of 85%. The RAAF has 72 of the aircraft. Each aircraft costs about US$160m. Batteries not included.
2. Tsar Vlad takes control of Wagner
The Kremlin has moved to take direct control of the Wagner group’s operations in the Central African Republic after the death of Yevgeny Prigozhin in a plane crash last month. (The Times)
Wry & Dry comments: Tsar Vlad to become not just Tsar of All Russians, but also Tsar of All Central African Republicans.
3. US autoworkers extend strikes
The United Auto Workers union said workers would walk out of more plants on Friday if it didn’t make progress in talks with General Motors, Ford and Stellantis. (New York Times)
Wry & Dry comments: The workers want a 40% wage increase over 4 years, the makers have offered 20%. Each of Sleepy Joe and the Trumpster will milk this for all it’s worth.
4. German tanks defective
Ukraine has rejected a delivery of Leopard tanks from Germany, after discovering they were defective. (UK Telegraph)
Wry & Dry comments: Don’t mention the… oh, never mind.
5. Languages
EU ministers have snubbed Spain’s request to add Catalan, Basque and Galician to the bloc’s list of official languages, in a setback for Prime Minister Pedro Sánchez’s efforts to form a new government. (Financial Times)
Wry & Dry comments: No EU country has more than one language on the EU’s official language list. The only exception is Ireland, which has both English and Irish.
6. Sleepy Joe’s son fights back
Hunter Biden, President Joe Biden’s son, sued the Internal Revenue Service, America’s tax agency, alleging that it had violated his privacy. The suit claims that IRS agents targeted Hunter by leaking his tax returns to the media. (The Economist)
Wry & Dry comments: He needs to change advisers. When your wagons are circled there is little point in complaining that the Indians told the media of their attack.
Data
- UK: the Bank of England left interest rates unchanged at 5.25%.
- USA: the Federal Reserve Board left interest rates unchanged at 5.25%-5.5%.
- USA: the benchmark 10-year Treasury (i.e. government bond) yield reached 4.37%, the highest since 2007.
And, to soothe your troubled mind…
“It’s not about . . . jacking up prices, it’s about making the decisions that are right when we have the data.”
Prince Abdulaziz bin Salman, the Saudi Arabia’s energy minister, speaking after Saudia and Russia agreed to cut oil output.
Hmm, let’s see. Economics 101: If I cut supply, then, all other things being equal, prices will rise.
PS The comments in Wry & Dry do not necessarily reflect those of First Samuel, its Directors or Associates.
PPS Patrick Cook, Wry & Dry’s resident cartoonist and lampoonist is taking a vacation. His amazing wit will return on Friday 3 November. In the meantime, it is possible that the odd magnum opus might reappear.
Cheers!
Anthony Starkins