Wry & Dry #13-27

1. Wry & Dry’s ponderings…

IKEA-like tax legislation. Middle East understudy takes the stage. Ukraine’s Starshield. Peace in our diesel time. Greta’s back! Greens support Ukraine with Savlon.

2. IKEA legislation

Grim Jim’s trusts’ tax legislation has been introduced to parliament, which is brave, since it isn’t finished.

Caps, residency, integrity rules, exemptions, capital gains interactions: all to be filled in later, many by the toothsome Treasurer by ministerial instrument, out of parliament’s sight. There are twelve such rules, five of which can only work against taxpayers, and not one has been released, even in draft.

It’s IKEA legislation: flat-packed, missing screws, with the instructions arriving after you’ve paid.

Federal Treasury puts compliance with Grim Jim’s tax changes at $939m. CPA Australia reckons professional advice alone will cost $2bn or more, before a single restructure. Family firms using bucket companies face tax of 60%, one sure way to learn that the top marginal rate is merely a suggestion.

Grim Jim has shown that he still hasn’t mastered his brief, especially on tax on small business and families, as evidenced by his frequent backdowns since his budget.

Chalmers should mind his history. The last Dr Jim at Treasury, Jim Cairns,¹ also didn’t master his brief; he got the DCM from his Prime Minister in 1975. A doctorate, it seems, is no protection.

¹ _{Jim Cairns was briefly federal Treasurer and the fourth deputy PM under Whitlam, in the mid 1970s. He was given the DCM for stating that he hadn’t signed a letter authorising a 2.5% commission to be paid to a Melbourne businessman to arrange loans for the government. He is perhaps better known for his affair with Juni Morosi, who worked for him.}

3. Greta’s back!

Of course she is. Greta Thunberg has travelled to Paris to join the student protests sweeping France.

Readers will recall that she became famous for skipping school. Now she’s protesting outside one, demanding more of school. Somewhere, a truancy officer is weeping with pride.

The speech, too, has come full circle. In 2019, she said that world leaders stole her childhood. In 2026, she said that someone is robbing French pupils of their future. Greta has never met a grievance she couldn’t phrase as theft, nor a camera she couldn’t find.

Her qualifications for reforming French education are unclear: she is Swedish, 23, and left school three years ago. But the omnicause requires no expertise, only a keffiyeh, now worn so permanently it may qualify for residency.

The pupils, meanwhile, have shown admirable commitment to better school buildings by setting fire to them. In Marseille, they torched the fire engine too.

Even Greta might call that a carbon footprint.

4. The understudy takes the stage

The Middle East abhors a vacuum. With Hamas nursing Gaza and its terrorist agency in rubble, Hezbollah held back by Lebanon’s truce with Israel, and Iran’s missiles grounded over Saudi Arabia since April, the stage looked suspiciously quiet. Enter the Houthis: the axis’ understudy; word-perfect and over-eager.

In three months, they have shredded a four-year truce with Riyadh, seized much of Yemen’s Red Sea coast, killed 13 at Riyadh’s airport and set Aramco’s² headquarters alight. Embarrassingly, this was during the World Petroleum Congress, no less.

Exxon, Chevron and Shell sent their apologies; the Houthis sent missiles.

Trumpster, forever thinking it’s all about him, suspects Iran is pulling the strings to push up oil before the midterms. Tehran, presumably, can’t imagine why anyone would think so, even as its own navy sinks container ships in Hormuz.

Nuh, the Houthis hate the Saudis almost as much as they hate Israel.

Quiet, then, is relative. The IRGC hasn’t retired; it has delegated. And kept the maritime portfolio for itself. Iran’s proxies aren’t silent. They’re taking turns.

2. _{Saudi Aramco is the world’s largest oil company, and is 82% owned by the Saudi government.}
   

5. Ukraine’s weakened Starshield

Elon Musk, never one to share the credit, has now generously shared the blame. Y’see, somehow, Starshield’s³ connectivity speed has been slowed in Ukraine, restricting its use in intercepting Tsar Vlad’s missiles and drones. Starshield, Musk notes, belongs to the government, and its limits are set “ultimately” by POTUS. For once, the buck has been posted straight to Trumpster’s desk.

There it finds a man who has never forgiven Volodymyr Zelensky for declining to dig up dirt on Sleepy Joe in 2019. The vendetta has been relentless ever since: the Oval Office ambush, the “dictator” jibe, the paused weapons, the threatened intelligence, the demand that Ukraine find “a new leader.” Now, mid-bombardment and without warning, comes a speed restriction on the drones that Ukraine uses to shoot down Tsar Vlad’s.

Tsar Vlad’s drones, naturally, remain unrestricted. Nor has his “work” on Ukraine’s power grid been troubled by Trumpster’s “energy ceasefire,” a truce observed only by the side Trumpster dislikes.

This isn’t policy; it’s pettiness with a satellite network. One wonders whether, at 80, Trumpster can still tell a strategy from a grudge. Or ever could.

Zelensky warned that people would die. Fifteen did on Wednesday. Trumpster has finally found a way to make Ukraine pay for 2019, and the currency is lives.

³ _{Starshield is a division of Musk’s SpaceX’s Starlink subsidiary creating purpose-built low-Earth-orbit (LEO) satellites designed to provide new military space capabilities to U.S. and allied governments. Starshield was adapted from the global communications network Starlink but brings additional capabilities such as target tracking, optical and radio reconnaissance, and early missile warning.} 

6. Peace in our diesel time

Chamberlain⁴ at least came home waving a piece of paper. Trumpster has come home waving a fuel docket.

To shave a few cents off diesel prices before the midterm elections, he has driven a truck through his own sanctions, bought Tsar Vlad’s fuel, and told Ukraine to stop bombing the refineries that pay for the missiles falling on Kyiv. His demand that Zelensky be replaced completes the set: Munich’s appeasement with a dash of Quisling’s helpfulness.⁵

The economics are as threadbare as the morals. The first purchase is of about 2.3 million barrels. Americans burn 3.6 million a day. Putin’s diesel would be gone by mid-afternoon on day one, roughly when Moscow’s invoice clears.

Congress banned purchase of Tsar Vlad’s diesel in 2022: until the war ends and Tsar Vlad’s troops withdraw. Neither has happened, but the law, like Ukraine, is apparently negotiable.

Trumpster joins a long line of presidents that Tsar Vlad has read like a menu: naïve Bush, cowardly O’bama and vacillating Sleepy Joe.

This is the Trumpster peace method in its purest form: flatter the aggressor, squeeze the victim, and keep one eye on Oslo. The Nobel committee, at least, has not yet been offered any diesel.

⁴ _{UK PM Chamberlain allowed Hitler to annexe Czechoslovakia (as it then was) in exchange for Hitler not invading any other countries. Chamberlain returned to London from Munich waving a piece of paper signed by Hitler, and saying “Peace in our time.”}

⁵ _{‘Quisling’ is a name that refers to a traitor. Named for Vidkun Quisling a Norwegian politician and Nazi collaborator who headed the country’s puppet government when under Nazi occupation during the Second World War.}

7. Greens support Ukraine with Savlon

The Greens’ new leader, David Shoebridge, has unveiled his priorities: scrap AUKUS, evict the Americans from Pine Gap, legalise cannabis and stop arming Ukraine. The environment will presumably be addressed, err, later.

Shoebridge would happily send Ukraine weapons, mind you, if only the UN Security Council approved. He seems unaware that Tsar Vlad sits on it, veto in hand. Seeking Tsar Vlad’s permission to arm his enemy is a novel legal theory, even for a former barrister.

Ukraine, meanwhile, can expect “basic humanitarian assistance” from the Greens: bandages and Savlon are Shoebridge’s policy guarantees.

He opposes Tsar Vlad’s invasion, of course. He simply opposes resisting it more.

8. Inflation? What inflation?

Trumpster promised to beat inflation on day one. Inflation seems to have taken it as an invitation.

Annual inflation hit 3.7% in September, driven by fuel, driven by Iran, and driven by Trumpster. Few policies have ever been so efficiently self-defeating.

Trumpster’s rescue plan, roughly 31 hours’ worth of Russian diesel, has yet to reach the bowser, though it has reached the Kremlin’s accounts.

Real wages have now fallen for six straight months, which may explain why voters are watching the campaign ads with such rapt attention.

Worse, the Fed is raising rates, the one thing Trumpster hates more than Zelensky. Three weeks from the midterms, the only thing Republicans can count on falling is their majority.

9. UK’s strongly worded surrender

Iran’s Revolutionary Guard plotted to strike RAF Fairford and the American bombers parked on it. Britain retaliated with the full fury of the Foreign Office: a summons, a frown, and sanctions on two men Washington had already sanctioned. Tehran must be trembling, presumably with laughter.

Iran returned the favour by summoning Britain’s ambassador. When a terror state starts lecturing you on protocol, deterrence has left the building.

MI5 reported more than 50 Iran-linked arrests in a year, and analysts count over 20 foiled IRGC plots since 2022, from arson against Jewish targets to designs on military ones. London’s answer is to keep Iran’s embassy open, leave the IRGC un-proscribed, and let the Supreme Leader’s UK office carry on, perhaps with a business-rates discount.

UK’s Foreign Minister Ed Miliband says Britain won’t tolerate threats on its soil. Weeks earlier, he was shaking hands with Iran’s foreign minister. The plotters evidently took it as an invitation.

At least Australia expelled Iran’s local ambassador. Britain just keeps offering its tea.

10. When r exceeds g: misery

Government debt dynamics turns on maths:

Happiness = r < g

Misery = r > g

…where r is the interest rate on government debt and g is nominal GDP growth.

Uncle Albo and Grim have forgotten Wilkins Micawber’s famous quote.⁶ Y’see, when the interest rate on government debt (r) exceeds nominal GDP growth (g), the debt-to-GDP ratio rises (unless the government runs a primary surplus). An increasing debt-GDP ratio is not a good thing.

For a decade of cheap money, r < g flattered rich-world balance sheets, including Australia. That era has ended.

The early-October bond-market sell-off pushed 10-year yields to multi-decade highs: 5.3% in the United States (the highest since 2002); 5.5% for UK gilts (the highest since 2007); almost 5% in France; 4.7% in Italy; and 3.1 per cent in Japan, a market once synonymous with zero.

Australia is no longer a bystander. With the 10-year yield at 5.3% and nominal growth slowing to roughly 4.5–5%, r – g has turned positive.

For debt/GDP to at least stabilise Uncle Albo and Grim Jim must be intentional. The problem is that 10 years ago, the government borrowed at 2.8%. As that debt matures, it must be refinanced at 5.3%.

Result: misery.

⁶ _{“Annual income twenty pounds, annual expenditure nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds and six, result misery”}

_{– Charles Dickens, David Copperfield.}

Snippets from all over

AfD leader wants Germany to ditch Ukraine

Alice Weidel, the co-leader of the hard-right Alternative for Germany party (AfD), said her country should withdraw its support for Ukraine.  (The Economist 16 October).

Wry & Dry comments: Frau Alice has always seen Tsar Vlad and a ‘friend’.

Firmus makes WSJ headlines

‘Failure of Australia’s Largest IPO in Decades Sends Tremors Through AI Trade’. (Headline in Wall Street Journal 13 October).

Wry & Dry comments: Firmus’ CEO wanted headlines in the WSJ, but not quite like these.

Online sellers in UK to collect VAT (i.e. GST)

Under plans to be announced by the chancellor, multibillion-pound online marketplaces such as Amazon, eBay and Temu will for the first time be made responsible for collecting tax owed by retailers selling on their platforms. (The Times 14 October).

Wry & Dry comments: It seems that Chinese retailers use online marketplaces to systematically evade the UK’s 20% VAT. Would Readers believe it…

Trumpster’s Greek ambassador gets the DCM]

The White House has asked US ambassador to Greece, Kimberly Guilfoyle, to step down in the wake of a series of reports of improper conduct. (Financial Times 14 October).

Wry & Dry comments: Ms. Guilfoyle was engaged to Trumpster’s son Don Jnr. Of course, that had no bearing on her appointment. Her resume could be used for a Netflix series. In May, Don Jnr. married a fresher, younger partner; without a past.

Nobel economics

The Nobel prize for economics was awarded to American professors Robert E Hall and Michael Woodford, for their work on the “microeconomic foundations of ​macroeconomic ‌stabilisation”. (The Economist, 13 October).

Wry & Dry comments: Grim Jim missed out. Again.

It figures

1. 
   Australia: 4.7%; unemployment rate in September, a five-year high.
   
2. 
   UK: 1.3%; expected GDP growth in 2026, up from 1% forecast in July (IMF), second highest in G-7.
   

And to soothe your troubled mind…

“She is uniquely qualified…”

Steven Cheung, White House spokesman, speaking of new White House press secretary, Katie Zacharia amid a squall about her qualifications.

Wry & Dry comments: …but not qualified as a lawyer, as she had represented.

Disclaimer

The comments in Wry & Dry do not necessarily reflect those of First Samuel, its Directors or Associates.

Cheers!