Enjoy Wry & Dry: a cynical and irreverent blend of politics, economics and life.
Seven stories you may have missed
- Sorcerer Albo saves Apprentice Jim, twice
- Ssssuper shot, that. But watch for submerged logs
- Besties across the ditch: UK & EU hold hands
- Tsar Vlad: earns more than $140,000 p.a. Yes, really.
- G-20: curtain raiser
- Twittered: Musk’s lemon
- Finland on the cusp: Sweden next, subject to the Sultan
Sssssuper shot, that Part I: Apprentice saved by the Sorcerer
Sorcerer Albo’s 27 years in parliament have taught him many things, not least of which is: if there is a flesh wound, cauterise it.
Three and a half weeks ago, Apprentice Jim Chalmers presented to the world his pleasant sounding but really vague ‘objectives of superannuation’ paper. But as each new subsequent morning dawned, he found that he had become the Sorcerer’s Apprentice1. It started as a theoretical ‘shoot-the-breeze’ exercise that would lead to a rational way to increase taxes on some superannuation investors. It soon turned into a media circus, the RPM of which was daily increasing.
The media were having a wonderful time at the Apprentice’s moonshot of superannuation reform: their daily quota of political/ economic/ finance content was being filled by midday. “Ssssssuper shot, that,” Richie might have said, 2 “Pity he was caught.”
Each day Apprentice Jim was on the back foot, fending off a barrage of bumpers from angry bowlers. It turned out that he had little idea of how complex was the superannuation system, especially for self managed funds. And his explanations for his changes were risible and inaccurate sound bites.
And the anger was about what? Err, well, Apprentice Jim lives in a bubble of theory. His earlier worlds of academia and political public service were full of vague-speak and alternatives and possibilities and coodabeens. If it doesn’t work in theory, it doesn’t work in practice. And so, his ‘objectives of superannuation’ paper sounded fine in theory.
But he had forgotten lessons that he should have learnt from William Shorten’s failed tilt at both windmills and living in The Lodge: don’t mess with people’s superannuation/franking credits/etc.
After three and a half weeks, Sorcerer Albo saw only that the situation had become like the flesh wound of the Black Knight in Monty Python and the Holy Grail.3 And he had had enough of his breakfast mood being discombobulated. Last weekend, he told Apprentice Jim to fix the problem in two days and get it off the front pages.
Federal Treasury came to the rescue with The Plan that met the requirements: (a) have the number $3m in it and (b) more tax for some punters. And a relieved Apprentice Jim announced The Plan on Tuesday. [However, The Plan was a submerged log – see more, below].
But then on Wednesday, appearing on breakfast television4, Apprentice Jim repeatedly would not rule out CGT on the family home. And got himself in a self-tied Gordian knot5. Sorcerer Albo, watching in his dressing gown and slippers, almost choked on his Bircher muesli with honey, Greek yoghurt and fresh berries. His breakfast had become a dog’s breakfast.
He speed-dialed his direct line to ABC Radio to get an immediate interview. Eight minutes later he was on the air. And stated categorically that, “we are not going to impact the family home.”
Presumably, he means “tax” the family home. Readers will hope so. Back to breakfast.
1 A symphonic poem by French composer Paul Dukas, based on a poem by Goethe. Its most notable appearance was in Disney’s 1940 animated classic Fantasia, where Mickey Mouse as the apprentice brings broomsticks to life to undertake his chores as the Sorcerer sleeps. But with each moment, the broomsticks multiply, and the plan goes horribly wrong. The Sorcerer rescues his apprentice.
2 Richie Benaud, that is. Doyen of cricket commentators.
3 “‘Tis but a flesh wound” was said after he had his arms chopped off by King Arthur, refusing to give up their duel. The line is now used ironically to downplay a type of damage and deny someone or something’s advantage.
4Wry & Dry does not watch morning or daytime television. He read the account in the AFR.
5 Gordian knot: a Greek legend of an impossibly tangled knot, often used as a metaphor for an intractable problem. Alexander the Great is alleged to have solved the matter, but not by slicing it with his sword.
Sssssuper shot, that Part II: the submerged log6
Apprentice Jim and his Treasury boffins have come up with a superannuation tax arrangement that appears simple. Once a Reader’s member account goes over $3m, the income on any excess will be taxable at 30%, rather than 15%. Simple?
No. Readers should note the following:
- Yes, it’s a broken election promise, but, well, really. Get a grip. This is politics.
- The legislation or regulations remain on the drawing board – the changes will not come into effect until FY-25. Yes, there is time to prepare. But Readers should start taking advice. Stuff can be done before 30 June this year.
- The $3m threshold will not be indexed. Over time, more and more investors will pay 30% tax. This is a form of bracket-creep.
- Albo has said that the government would “look into” increasing the notional tax on defined benefit schemes, which includes his, when he retires. Delightfully vague. This is self-interest. Imagine a newly elected politician at his/her financial adviser:
- The new tax will be on both realised and unrealised capital gains! This has extraordinary consequences.
- What to do 1. There will be a special edition of Wealth Intelligence (Wry & Dry’s sister publication) next week. It will review the changes and canvas what Readers might do.
- What to so 2: Keep calm. And carry on.
6 This is not personal financial advice.
Besties across the ditch
Any Brexit deal involving Northern Ireland was always going to be difficult. Not least of which because of geography.
The Brexit Irish problem was that the South was in the EU, the North not. But the Good Friday peace deal (of 1998, that ended the 30 years of ‘Troubles’) had a critical element that there should be no hard border between South and North. This meant, among many matters, no customs. So, the UK customs border with the EU effectively became the Irish Sea.
Four UK Prime Ministers effectively ignored the problem. PM Hooray Henry David Cameron, whose idea was the Brexit vote, found that his Remain campaign had sunk, and so gave himself the DCM. The earnest Teresa May then found herself in the deep end of an EU negotiating pool in which she couldn’t swim. Borisconi dived into Ms. May’s shoes,7 and at least understood how to negotiate. And he agreed with his Irish counterpart a deal called the Northen Ireland Protocol. But his inability to run a bath, much less a country became evident.
Next in line was the I-lived-less-than-a-lettuce Liz Truss. The world will never know if she was aware that there was a problem, much less how she might have solved it.
So, the intractable problem of the Northern Ireland Protocol was left unsolved. Until this week. And solved by neither the South nor the North of Ireland.
The very smart and very pragmatic Rishi Sunak took over where four of his predecessors had failed. With patience and a willingness to entertain an outcome that meant surrendering some matters to gain others, he worked with EU chief Ursula von der Leyen. The deal is complex, but smarter people than Wry & Dry say it’s an outcome that will work.
Wry & Dry says that it seems that the EU was quite happy to accede to the UK’s demands. The reality is that the EU got what it wanted from Brexit a long time ago: this was merely tying up loose ends.
The champagne (French, perhaps?) was opened on Tuesday.
Why the outbreak of lurv?
To Wry & Dry’s rheumy eyes, it’s less about Northen Ireland, and more about each of the EU and UK deciding that each needs the other more than each realised.
It’s got a little to do with Ukraine; the EU needing the UK brainpower and research for the massive so-called Horizon science program; the UK needing less trade paperwork; the US banging their heads together; etc, etc.
Brexiters can move on; the last jigsaw is in place. But the EU had long ago moved on. Be careful for what you wish: the UK and EU will now drift back together over many years. Bre-renter will occur in another form.
7 Well, almost. One of Ms May’s successes was wearing shoes of magnificent fashion that would have pleased King Louis XIV..
Tsar Vlad’s millions come to light
There was much made in the media this week that Tsar Vlad had given his girlfriend8 a property empire worth some $150 million. And built a love nest for themselves on his estate on Lake Valdai, about 350 kilometres north-west of Moscow.
Wry & Dry considers this might be true. Or it might not. But there is more concrete evidence of Tsar Vlad’s wealth.
Yesterday, prosecutors in Switzerland charged four bankers with helping to hide tens of millions of Swiss francs on his behalf.
Accounts were opened by and in the name of the godfather to Tsar Vlad’s daughter, Sergei Roldugin. The indictment indicated that Roldugin had unexplained assets of more than $50m and planned to funnel more than $10m into Switzerland.
Wry & Dry is not sure how this was possible. Tsar Vlad has told Wry & Dry’s man in Moscow that he has an annual income of only $140,000.
But perhaps the Swiss police are more believable.
8 Allegedly Alina Kabaeva, a former Olympic rhythmic gymnast champion.
G-20 curtain raiser
Readers will recall that Australia hosted the G-20, in Brisbane in 2014. It seemed as though the whole of Australia knew, especially as PM Tony Abbott had told the whole of Australia that he would ‘shirtfront’9 Tsar Vlad over Russia’s shooting down of a Malaysian Airlines plane that killed 27 Australians (and 193 Dutch, 43 Malaysians, amongst others).
Abbott failed to fulfill his threat. And G-20 Brisbane passed into history, its achievements buried as the world moved on and the organisers moved on to arrange the next event.
This year, the G-20 is being run by India and the leaders’ meeting will be in New Delhi in September. And this week was the curtain-raiser: the foreign ministers of the G-20 met, also in New Delhi. Aside from getting more stamps in their passports, the foreign ministers mostly met off the grid to solve bilateral issues. Of course, there were plenary sessions, where predictably, 18 of the 20 condemned Russia’s invasion of Ukraine. And equally predictably, two did not. The two were Russia and China.
As a curtain-raiser to September’s meeting, when Sleepy Joe, Albo, Rishi, M Macron, et al will meet, it was a tame affair.
But Wry & Dry awaits a bold statement from a G-20 Leader that will galvanise attention in September. Without an Abbott-like injection of excitement, Wry & Dry fears the event will pass as yet another talk-fest, where much is said and little done.
9 ‘Shirtfront’: A term from Australian football whereby one player rams an opponent front on, using his shoulder to strike the chest and inevitably the head. Readers may wish to view:
Some Readers may not be aware of Twitter. Apparently, it’s an app that allows a person to make pronouncements (‘tweets’) to anyone who wishes to read. It has become a way for politicians to communicate directly with their acolytes, without the interference or editing by media.
There was a time when it seemed the whole world was tweeting. It became the mouthpiece of the Trumpster and Hong Kong’s pro-democracy movement. And it caught the eye of Elon Musk, of Tesla/electric vehicles fame. In an impulsive moment last year, he decided to buy it for $44 billion. At the peak of the share market.
Trouble was that Twitter was just not reliably profitable. It has made a net profit in only two years since listing in 2012. Elon Musk had bought a lemon.
Four months ago, it employed 7,500 people. Today that figure is 2,000. The company is dying. It is losing users and advertisers. And outages are becoming commonplace.
And this notwithstanding its named names. Its largest user is not the Trumpster, but former US president O’Bama (133m followers), followed by Musk himself (117m), Justin Bieber (113m) and Katy Perry (108m).
But in the world of social media, with just 330m users, Twitter is ranked 17th, well behind:
- Facebook 2,740m users
- YouTube 2,300m
- WhatsApp 2,000m
- Instagram 1,380m
- WeChat 1,242m
- TikTok 1,000m
As Twitter loses money, it is not clear how Musk will pay the interest bill on the massive debt he incurred to buy it.
When will the tweet become a swan-song?
Finland on the cusp
Tsar Vlad and his apologists have often said that one of the reasons for invading Ukraine was to further prevent Russia’s encirclement by NATO.
Well, he got that one wrong. One of the unintended consequences of his invasion of Ukraine was that Sweden and Finland signed up to join NATO. And are going through the process.
On Wednesday, Finland’s parliament overwhelmingly passed all the legislation necessary for joining NATO, subject only to the ratification of its bid by the parliaments of Turkey and Hungary (which should proceed).
Sweden’s ratification is a little more problematic, as Sultan Recip Erdogan, is, for now, opposing Sweden joining. The reason, apparently, is Sweden harbours Kurdish terrorists.
Readers will know that the Sultan couldn’t give two figs from the Grand Bazaar for the Kurds in Sweden. He wants to (a) pretend that is the case until after the upcoming election (which he might lose); and (b) use his veto to gain concessions of some sort from anybody.
The Swedes are pondering a face-saving legislative manoeuvre. The Sultan’s face is the one that needs saving.
Unclear on the concept
Princess Princess and Princess Harry have been
evicted from asked to leave Frogmore Cottage, their home in Windsor. They rent it from the Crown Estate.
Three years ago, they announced that they were leaving the UK and quitting all royal duties. Last year, King Charles asked them to vacate (but well before Princess Harry’s magnum opus).
Readers should weep. The Princess and Princess are not happy with the decision, having “made that place their home.” Well, it was their pied-à-terre in the UK, after all. And it gave Princess Harry domicile in the UK, which has advantages. ‘Ardship.
And here’s a radical thought. If they wish for a base in the UK, they don’t have to wait to be given another one by the Firm. They might want to buy one themselves. Now there’s a radical thought.
Of course, the $20m, nine-bedroom, 16-bathroom home in California in which they spend almost 95% of their time is not their home. Really.
Sleepy Joe not only wants to spend they-the-taxpayer’s billions on American domestic semiconductor manufacturing, he wants to use the funds to change corporate behaviour.
Consider that if a semiconductor manufacturer wants a slice of the $40 billion in aid, it will need to:
- provide childcare for employees
- run their plants on low-emission sources of energy
- pay union wages and conditions for construction workers
- share excess profits with the government.
- ideally be minority or female owned
- invest in local communities to “address barriers to economic inclusion”
Hold the phone. The deal was sold as a security measure i.e. promote domestic manufacturing so as not to rely on imported chips. But it seems that Sleepy Joe’s agenda is a lot broader.
Snippets from all over
A Norwegian pensioner has decided to protest the invasion of Ukraine by blasting the sound of an air raid siren through the bedroom windows of Russian diplomats in Oslo. (UK Telegraph).
Wry & Dry comments: Doubtless Tsar Vlad will now reconsider his next move.
2. Tsar Vlad to run out of dosh
An oligarch with close ties to the Kremlin has warned that Russia’s ailing economy could run out of money next year as it struggles to replace western investors. (The Times)
Wry & Dry comments: Oleg Deripaska, 55, an energy and metals tycoon, also offered veiled criticism of President Putin, saying the government should “stop dreaming about some special place for Russia in the world and go about its own business”. Perhaps Mr Deripaska should stay on the ground floor of any building.
Rivian, a maker of electric trucks, said on Tuesday that it lost $1.7 billion in the final three months of last year as it struggled with production difficulties. (New York Times)
Wry & Dry comments: Which makes total losses for 2022 to $6.8 billion. The electric world doesn’t belong to Tesla. Readers will hear more about Rivian in years ahead; it makes an electric pick-up truck (i.e. ute), an SUV and a delivery van.
4. North Korea’s food shortage
Regularly on the verge of a shortage, North Korea’s food situation has deteriorated due to adverse weather and three years of almost total isolation after Covid-19 emerged in neighboring China. On Monday, leader Kim Jong-un called for a “radical change” and “stable and sustainable development” of agriculture. (Le Monde)
Wry & Dry comments: Emperor Xi is happy to keep North Korea as an impoverished client state, as a buffer with South Korea.
5. M Macron on tour
President Macron will deploy a new, humble French approach to central Africa to counter Russian and Chinese influence in the region when he starts a tour of mainly French-speaking nations today. (The Times)
Wry & Dry comments: “Humble French approach.” Surely oxymoronic?
6. Barbed wire curtain
Finland has begun constructing a 200km fence on its border with Russia to boost security. The Border Guard said it will be 3m tall with barbed wire on top. (BBC)
Wry & Dry comments: Finland shares the longest European Union border with Russia, at 1,340 kilometres. Only 1,140 kilometres to go.
- Eurozone inflation fell to 8.5% from 8.6%.
- Australia’s GDP grew at 2.7% last year.
- Australia’s savings rate fell to 4.5% of income, the lowest since 2017.
- Australia’s inflation rate fell to 7.4% from 8.4%.
- Australia’s approvals to build new homes fell by 28% in January, the most on record.
And, to soothe your troubled mind…
“Ukrainian forces have carried out a terrorist raid in Russia.”
- Tsar Vlad, speaking angrily on news that allegedly one Russian had been killed near the border with Ukraine.
Err, no. The Russian Volunteer Corps, a group of Russians who are fighting against Putin alongside the Ukrainian army, have claimed responsibility for the attack. And no mention made of the Russian forces in Ukraine.
PS The comments in Wry & Dry do not necessarily reflect those of First Samuel, its Directors or Associates.