Wry & Dry: a cynical and irreverent review of the week in politics, economics and life. For intelligent Readers who disdain the trivial.
But firstly…
No matter which child of Abraham you are, or if your faith is personal, may Christ’s blessing of love and peace be with you and your family this Christmas.
… and secondly…
Wry & Dry received some, err, strong feedback about last Friday’s article concerning anti-Semitism. And Upgrade Albo’s shameful dilatory response.
Might Wry & Dry repeat that the article was about the terrorising of Jewish Australians who have no say in Israel’s policies. There was no reference to Gaza.
Wry & Dry stands by his article. And with Jews, everywhere. And prays for peace for all.
And thirdly, a snapshot of this week’s Investment Matters:
- Our investment approach for 2025
- The MYFEO – what does it mean?
To read Investment Matters, just click on the link at the bottom of this week’s Wry & Dry. Or here.
Now to Wry & Dry’s bumper Christmas edition…
…where the focus is on the serious and consequential government changes of 2024. But, fourthly…
1. Red is the new black
In a blend of Keystone Cops and Yes, Minister, the government of we the Australian people is going to spend another $1 billion to employ more people to help cap the growth of the NDIS at 8% p.a. The extra spending will wipe out most of the $1.4 billion budgeted saving on the scheme over the next four years.
This one risible item buried in a sea of red ink tells the story of the shambles of the government’s fiscal management. The irony would be lost on Upgrade Albo, who was nowhere to be seen as Grim Jim announced the headline numbers: the FY-25 budget deficit would be $22bn worse than that which he forecast just 7 months ago.
But wait! There’s more! Government spending growth was an unhappy 2.9% in FY-24. For FY-25 it will be 5.7%. Howzat that for growth in growth. Government debt will soon exceed $1 trillion.
The disastrous numbers are endless. This is shameful fiscal management for which Grim Jim is seemingly proud. But the problem is not his alone. Certainly, this is exactly what was predicted from Upgrade Albo’s government. No surprise, really. The problem is also Uncle Fester Dutton’s.
The weird thing is that in all the recent polls, the Coalition is perceived to be a better economic manager than the government, by between 15 and 30%. That is a massive difference.
So, the expectations on Uncle Fester and his wannabe Treasurer Angus Taylor are massive. But Uncle Fester hasn’t said a word about what his wannabe government would do.
Let Wry & Dry give Readers the whisper. Do not expect anything from them, other than faffing around the edges. If for no other reason than Uncle Fester has no understanding of economics or of business. And will use up all of his political courage on a nuclear power station near you.
There will be no courage left to undertake meaningful taxation reform and budget repair.
2. Musk loses it completely
Elon Musk has gone nutzo. He tossed squillions of his hard earned at the Trumpster’s re-election and in return received the Trumpster’s blessing and a place in his cabinet. He has now turned his mind across the Atlantic. And said that with the new Labour government, the UK was “going full Stalin.”
And so he wants to help run the UK.
Well, not quite. He is really concerned about the UK’s Online Safety Act, which requires social media companies to regulate their content. Musk owns a very large social media company.
His chosen political vehicle is the far right, nationalistic ‘Reform UK’ party, which is led by Nigel Farage, the nutter man who initiated Brexit. Musk and Farage have become besties.
Farage, a man whose ambition far exceeds his ability, wishes Reform to take votes from the Conservatives and become Prime Minister. And Musk is now talking with Farage about making a massive donation to Reform, so as to help defeat both the Conservatives and Labour.
The trouble is that Reform holds only five seats in the House of Commons. Which is somewhat behind Labor (402), Conservatives (121), Liberal Democrats (72), Scottish nutters (9), and Northern Irish nutters (7).
Wry & Dry dares to suggest that even Musk’s billions would not achieve Farage’s aims. And with the UK voting system, Farage’s additional seats would likely come at the expense of the Conservatives, thereby making Labour’s position even stronger.
Once Musk reads the fine print, he will return to his side of the Atlantic.
As for Farage, he probably hasn’t realised the irony – his mantra for years has been to defend British sovereignty, now he is asking an American zillionaire for money.
3. Falling governments: Exhibit A Germany – to turn right?
Chancellor Scholz called a confidence vote. And lost. He had established a three-party coalition government in 2021. All was well, until he tried to use 60 billion euros earmarked for the pandemic for other purposes.
That drew attention to the sclerosis that was underlying Germany’s economy. Germans have now woken up and found that (a) China has eaten Germany’s car industry; (b) green regulation was stifling industry; and (c) they are fed up with illegal immigrants.
Elections in February.
4. Falling governments: Exhibit B Canada – 51st state?
PM Trudeau was once the darling of the world’s centre-left. But astoundingly liberal immigration policies and cost-of-living pressures have eaten away at his popularity. On Monday, his once loyal Finance Minister gave herself the DCM.
And then, worst of all, the Trumpster announced on Wednesday that Canadians want their country to become the 51st state of the US. Faintly ridiculous, indeed. But it stung.
The real problem is the Trumpster’s threat of 25% tariffs on Canadian imports. He is floundering in response.
Elections will be held before November, but Trudeau might give himself the DCM this week. He’s already 20 percentage points behind in the polls.
5. Falling governments: Exhibit C South Korea – political Squid Game1
This is the weirdest of all. President Yoon declared martial law two weeks ago. The decree was overturned by parliament, which decided to impeach him. He might spend time in the slammer.
The announced reason for the martial law declaration was to do with state security. But now it seems he did so to protect his glamorous and much younger wife (a former bar hostess) from investigation for corruption, stock manipulation and bribery.
Yoon had become deeply unpopular. He found he had to choose between his wife and his presidency.
He chose badly.
1 Squid Game is a South Korean dystopian survival thriller horror television series, where 456 players, all of whom are in deep financial hardship, risk their lives to play a series of deadly children’s games for the chance to win a $50m equivalent prize.
6. Falling governments: Exhibit D France – L’Emperor’s last days?
Just before the Paris Olympic Games, L’Emperor Macron called a general election. The gamble failed: he lost his parliamentary majority. With the far-left and far-right parties unwilling to think beyond self-interest, he struggled.
The struggle became a battle, when his chosen Prime Minister presented a sensible but austere budget. But the French voter is a prickly creature. Sensible austerity is not in the French lexicon. The left and right decided to reject the budget. The government collapsed.
Last week, L’Emperor Macron appointed a new Prime Minister. But last Saturday, credit rating agency Moody’s surprisingly downgraded France’s rating to Aa3, three levels below the highest rating. France is without a functioning budget. And is humiliated.
L’Emperor Macron says he will see out his presidential term, i.e. until May 2027. His DCM may come sooner: Marine Le Pen, leader of a far-right party smells blood.
7. Falling governments: Exhibit E USA – most interesting
The control of the US Presidency, of the Senate, of the House of Representatives and of the Supreme Court by one person is now complete.
Enough words have already been written and said, so Wry & Dry will not add to the verbiage pile.
Except to ask how much of what the Trump promised will actually happen? Wry & Dry predicts not as much as people think.
8. Falling governments: Exhibit E Syria – most consequential
To an extent, the government problems/changes of Germany, Canada, South Korea, France and the US are more or less self-contained. Each country has decent institutions that can operate with government instability. And there are few extra-territorial consequences for government problems.
That is not the case in Syria. It has borders with Jordan, Iraq, Turkey, Lebanon and Israel. It has been funded by Iran and defended by Russia. It is an illogical geographical expression born from the collapse of the Ottoman Empire in 20182 and enclosing a variety of ethnicities, tribes and vengeances.
The end of the brutal regime of Assad is the most consequential event of 2024. Even larger than the election of the Trumpster. It remains to be seen how the new leadership will manage all of the internal divisions, each with extra-territorial alliances.
2 The Sykes–Picot Agreement was a 1916 secret treaty between the UK and France, to define their mutually agreed spheres of influence in an eventual partition of the Ottoman Empire. The agreement allocated to the UK control of what is today southern Israel and Palestine, Jordan and southern Iraq. France was to control southeastern Turkey, the Kurdistan Region, Syria and Lebanon.
The agreement is seen by many as a turning point in Western and Arab relations. It reneged upon the UK’s promises to Arabs regarding a national Arab homeland in the region of Syria in exchange for supporting the British against the Ottoman Empire. The secret agreement, along with others, was made public by the Bolsheviks in Moscow and in The Manchester Guardian in 1917, such that “the British were embarrassed, the Arabs dismayed and the Turks delighted.” The agreement’s legacy has led to much resentment in the region, among Arabs in particular but also among Kurds who were denied an independent state
The agreement was an exemplar of colonial idiocy.
9. The Banana Republic of Victoria
The Treasurer of Victoria gave himself the DCM on Monday. There were few eulogies. Just one chart tells the story of why:
Victoria has the worst debt-per-capita of any state, the highest taxes, and now has net debt to GSP of 25% (up from 6% when he took the reins).
Mr Pallas was complicit in the fiscal recklessness of former Premier Andrews and that of the incumbent.
Doubtless, after a respectful pause, he will be offered appropriate positions in a variety of taxpayer funded positions.
10. Raygun3 and art
A small Sydney comedy club had planned to stage a show called ‘Raygun the Musical’. Proceeds from the show were to be given to a women’s shelter.
Not so fast, said Rachael Gunn’s lawyers. They first demanded the show be halted because of its possible use of her intellectual property: “her story, personal history, Olympic videos and choreography.”
The lawyers then demanded $10,000 for their legal costs associated with the preparation of the claim on behalf of Ms Gunn. The letter of claim said that the dancer’s Olympic routine was “the culmination of over 10 years of training.”
Which is true, it is not possible for Ms Gunn to do worse that the zero points she received for her routine.
The show has been rebuilt, to exclude any reference to Ms Gunn.
3 Aka Rachael Gunn, Australia’s representative in the Paris Olympic Games, in the Breakdance event. Her PhD thesis was ‘Deterritorializing Gender in Sydney’s Breakdancing Scene: A B-girl’s Experience of B-boying’.
11. Invade between the flags
It’s a good thing that, as tempting as it might be, Fiji doesn’t want to invade Australia. Or any tiny Pacific island. That is because there’s not much standing in their way. At least for the next two years.
Y’see, Australia’s top 21 defence procurements are on average each two years late. And total $18bn over budget. The sad news was quietly announced by the Auditor General. And the bad news will become even more quiet news.
The government has moved to prevent scrutiny of individual projects because so doing would “cause damage to the security, defence or international relations of the commonwealth.”
The situation is so bad that even the Greens have taken time away from its more ideological battles to attack the government. The government is “fundamentally mismanaging Defence major projects.”
Ouch. Nasty words.
Readers will remember that soon after taking office, the new Defence Minister said, “Labor would actively manage defence procurement after a lost decade of negligence on the part of the former government.”
Make that a lost 14 years.
12. UK joins Asia Pacific trade pact
The UK has become the first European country to join the Asia Pacific free trade agreement, more easily known by its formal name: The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (a name chosen by an inter-governmental committee).
TPP-12 evolved from the Trans-Pacific Partnership, which was never ratified because Trumpster v 1.0 spat the dummy.
Wry & Dry… [nods] forecasts that the UK’s move is a first step in distancing itself from its ties to Europe. And prompts him to suggest that the English on that sceptred isle4 should change their residential addresses. It’s a shambles of a country.
So, all the English should depart the British Isles (leaving the Welsh and Scots to fight for what’s left) and be allocated an area that has the same weather as England: south-western Tasmania. The new state will be called Old England.
Australia will be renamed Anglostralia. And the Royal House of Windsor, except for Prince Andrew and his line who will become sovereign of the UK, will relocate to Timbertop.5
[Wry & Dry wakes up…].
4 Readers of Shakespeare will recognise John of Gaunt’s words from Richard III:
This royal throne of kings, this sceptred isle,
This earth of majesty, this seat of Mars,
This other Eden, demi-paradise,
But those Readers also know that he is speaking of England’s demise:
England… is now bound in with shame
With inky blots and rotten parchment bonds:
That England, that was wont to conquer others,
Hath made a shameful conquest of itself.
England, for John, is finished. And England has been destroyed or conquered, not by some foreign army, but by itself, from within.
5 A place in the Victorian High Country, where King Charles attended Geelong Grammar School.
Snippets from all over
1. Royal Mail sold
The parent company of Royal Mail, Britain’s state-owned postal service, was sold for £3.6bn ($4.5bn) to EP Group, which is owned by Daniel Kretinsky, a Czech billionaire. (Financial Times)
Wry & Dry comments: Royal Mail began in 1516, when Henry VIII established a ‘Master of the Posts’.
2. Russian general assassinated in Moscow
The carefully calculated assassination of Lt Gen Igor Kirillov, the head of Russia’s nuclear, biological and chemical protection troops, by Ukrainian special forces was designed to spread fear and loathing. (UK Telegraph)
Wry & Dry comments: The FSB has arrested an Uzbek man for the assassination. Apparently the Ukrainian intelligence services offered $100,000 and a safe passage to the EU for delivering the ultimate DCM.
3. Nissan and Honda to merge?
Nissan and Honda are in exploratory talks about a merger of the two carmakers that would create a $52bn Japanese behemoth, said people briefed on the matter. (Financial Times)
Wry & Dry comments: The reality is that there is just one Chinese car maker.
4. How to fold an Apple
Apple is preparing a series of major design and format changes to its lineup of iPhones and potentially other products, a bid to revive growth after years of offering largely incremental upgrades. (Wall Street Journal)
Wry & Dry comments: Wait for a folding Apple television.
5. Tsar Vlad’s invoice to Syria
Bashar al-Assad’s central bank airlifted around $250mn in cash to Moscow in a two-year period when the then Syrian dictator was indebted to the Kremlin for military support and his relatives were secretly buying assets in Russia. (Financial Times)
Wry & Dry comments: Banknotes weighing nearly two tonnes in $100 bills and €500 notes were flown into Moscow’s Vnukovo airport in 2018 and 2019.
It figures
- 4.25%: USA – interest rates. The Federal Reserve lowered interest rates by 0.25% points.
And to soothe your troubled mind…
“Many Canadians want Canada to become the 51st State. They would save massively on taxes and military protection. I think it is a great idea. 51st State!!!”
The Trumpster, in a media post.
Wry & Dry comments: A Leger poll suggests 13% of Canadians would want the country to become a state of the US.
Disclaimer
The comments in Wry & Dry do not necessarily reflect those of First Samuel, its Directors or Associates.
Vacation
Wry & Dry and Investment Matters will be on vacation in January. Publication will resume on Friday 7 February.
Cheers!