Wry & Dry: a cynical and irreverent review of the week in politics, economics and life. For intelligent Readers who disdain the trivial.
But first, a snapshot of this week’s Investment Matters
Company profit reporting season has finished. Today, First Samuel gives its thoughts on…
- Worley
- Inghams
- Woolworths
- Ventia
… and others. To read Investment Matters, just click on the link at the bottom of Wry & Dry.
Don’t like your weight? Well…
… just change the scales. That is what the government has done with the latest inflation figures. Sshh. No-one will notice.
The cunning plan was to give1 we-the-people electricity rebates, commencing in July, which caused electricity prices to fall by 6.4%. Without the rebates, electricity bills would have increased by 0.9%, a 7.3% happy turnaround.
A top result said Treasurer Grim Jim. Inflation only rose by 3.5% in the year to end July. High 3.5s all round!
And inflation might fall below 3% in August because of the subsidies. Happier days. But here’s the rub: once the subsidies wash through, inflation will shoot back up by December next year.
Not surprisingly, the RBA is alive to the cunning plan. Its Chief Teller, “this lady’s not for turning” Michelle Bullock, has made it clear that she will ignore the artificial inflation moderating tactics. Interest rates will not go down before February at the earliest, she intimated.
Losing weight by rigging the scales. Subsidising one’s way out of inflation. What’s the difference?
1 The ‘givers’ were the federal government and the governments of Queensland and Western Australia.
Greens hit peak nutzo
All doubt has been removed. The federal Greens have hit peak nutzo.
Firstly, on Wednesday the Greens’ leader announced with as much seriousness as an unserious man could muster that it wants to raise $514 billion in “excess profits” corporate taxes.
“The problem is that big corporations do not pay their fair share of tax,” he opined, expecting people to believe him. Wry & Dry didn’t, Australia’s relatively high levels of company tax (30%) prop up the budget.
This is clearly a publicity stunt, but all it did was to publicise how economically idiotic these people are.
Smarter people realise that the true reason for Mr. Brandt’s announcement was to try to re-establish the Greens’ credentials as the Robin Hood & Renewable Party. That moniker has recently been obscured in the Greens recent affirmation as the Anti-Semite Party.
Secondly, Max Chandler-Mather, a Greens’ House representative from Queensland (electorate of Griffith) confirmed that Tories do not have a monopoly on hyphenated names. He also joined the CFMEU protest rally in Brisbane on Tuesday. And spoke at it. Thereby affirming his own credentials as a supporter of people who are protesting against efforts to make them law abiding. Really.
Mind Readers, it’s not the first time that the electorate of Griffith has returned a narcissistic nutter. The Ruddster was elected from there in 1998.
Twitter trouble
Readers will recall that Elon Musk bought Twitter in October 2022 for $44bn, in what is known as a leveraged buyout. He and some mates put in $31bn. He had to borrow the last $13bn.
And that’s where the problem is. Y’see the $13bn was borrowed via junk-rated floating-rate loans from seven banks. Those banks intended to immediately on-sell those loans because they’re too risky to carry on their balance sheets (at because 23% of them are unsecured).
But that was almost two years ago, and the banks haven’t been able to sell without taking massive losses.
Of course, there were huge incentives for the seven banks to enter into a deal they wouldn’t otherwise have contemplated. Consider doing business with the richest man in the world and getting a foot into the door with his six companies and the fee bonanza that would come with them.
The banks are enjoying the interest income, though: 10.08% and 15% for the two tranches, respectively about 5% and 10% above their cost of funds. Musk is paying about $1.5bn p.a. in interest. The banks’ problem is not only that $3bn of the loans are unsecured, but also that the balance is secured by Twitter shares, now valued at less than half of Musk’s purchase price.
The banks are praying that Musk doesn’t phone up one day and say, “Sorry, lads, but the news is bad…” Actually, he wouldn’t pick up the phone. The news would be announced on Twitter. Oops, X. And it would be an X.
Trumpster – so presidential
The Trumpster has released a series of 50 trading cards. A purchase of 75 would gain a ticket to a galah dinner with the Trumpster at his National Golf Club. Readers can see a modest example, below.
Source: UK Telegraph
Are these Trump cards:
- an attempt to raise funds for his campaign (US$99 each);
- an attempt to raise funds to pay his legal bills;
- a pun of trump cards that he doesn’t understand; or
- a reflection of how the man honestly sees himself?
Close, but no cigar. It’s all of the above. And just consider alternative Trump cards…
it certainly is refreshing to have a presidential candidate taking running for the top job on the planet with such, well, honesty. Tsar Vlad, Emperor Eleven, Rocket-Man, and Sultan Tayyip Erdoğan must be laughing in their sleeves.
Germany: the Fourth Reich
Be afraid. Be very afraid. There is a good chance that a far-right government will emerge in the German states of Saxony and Thuringia,2 where an election is being held tomorrow. It has over 30% in the latest polls, enough to control government.
The AfD3 party is a populist latter-day neo-Nazi party. Its main platform is anti-immigration, especially Muslim immigration. It vehemently rejects a multi-cultural Germany.
Its environmental policy is based on denial of human-caused climate change. It is anti-EU, economically liberal and socially conservative. It rejects same-sex marriage.
Sound like the Trumpster?
According to a 2019 study, while 2% of the German population agreed with the statement that “the Holocaust is propaganda of the Allied Powers,” that proportion was 15% among AfD supporters.
Sigh.
2 Both states are in eastern Germany. Saxony’s capital is Dresden, it borders Poland and Czech. Saxony should not be confused with Old Saxony, the latter being the home of those nasty peoples who, with the Angles from Denmark, settled in/invaded England from the 5th century. Thuringia abuts Saxony.
3 Alternative für Deutschland, Alternative for Germany.
Incentives
The State of Infrastructure Project Overruns (aka Victoria) needs to finish one of its signature budget overrun projects well before the next state election.
The contractors of the Metro Tunnel have been offered incentives of up to $888m to finish the tunnel to a proposed new schedule. This includes a $100m bonus payment for ‘’Day One Train Operation’ (DOTO). Rather like Toto being told that “we are not in Kansas anymore,”4 Victorians are being told that “we are not in the sane world anymore.”
But, wait! There’s more! The contractors will have future legal action waived if all outstanding issues can be solved.
Hold the phone. We-the-Victorian-taxpayers are going to pay the contractors and extra $888m to do what they have been contracted to do? Really?
A reminder, the tunnel was first costed at $11bn. It is now expected to cost in excess of $14bn. Trains were supposed to run at 2 minute intervals, but will now run at five minute intervals because they have to slow down beneath hospitals that have super-sensitive medical technology.
Allow Wry & Dry give Readers the whisper. Much of the $888m will find its way into the pockets of those who have the greatest leverage over the contractors. And that would be…
But wait! There’s even more! These incentive arrangements will create a precedent for other behind-schedule-and-over-budget projects.
4 Judy Garland as Dorothy, in the Wizard of Oz.
Living longer
Australians, like any other folk, decry most government provided services. But the complaints suffer from personal experience bias that finds itself in the media, both social and news.
Which is why government departments spend so much on their media relations departments, hosing down the sensational story about auntie Flo’s hernia operation caused her to stay a week longer in hospital and miss her daughter’s fairy tale wedding.
Aggregating the data of a health system gives a clearer picture. For example, something is working to give Australians a decent life expectancy.
The Economist this week had a lightweight (for the Economist) but interesting article on how Australians have the longest life expectancy in the Anglosphere. And compared to 14 other high-income countries, it ranks fourth for men and sixth for women.
The detail is that Australians suffer from fewer pregnancy complications and births, and are less likely to die from drug overdoses and chronic diseases. And less likely to die in road accidents.
It’s not as though Australia spends lots on health. At 10.5% of GDP, it’s less than UK, US or Canada. And has considerably lower rates of avoidable deaths.
Wry & Dry is tempted to say “stop yer whingeing” about the health system. But he won’t. Instead, he will observe that men die on average four years earlier than women.
It’s tough being a man.
CFMEU’s DCM
The three CFMEU directors on the board of industry superannuation fund CBUS have been given the DCM.
Well, not quite. Two of them were asked to resign and did. The third responded as any good CFMEU official would… And so, he was given the DCM. The axe fell at the hand of the federal government-appointed CFMEU administrator, Mark Irving KC.
Readers will recall that the CFMEU’s nefarious and criminal activities were recently made more public.
Wry & Dry’s spies in the industry suggest that nothing will change.
Shopping list
Wry & Dry presents the below data without comment. Other than there is not any mention of… cost.
The Victorian government has just released a document, snappily titled Cheaper, Cleaner, Renewable: Our Plan for Victoria’s Electricity Future, to tell us what has to be done. That is, for Victoria’s power mix to be the planned 95% renewable by 2035.
- 27 million additional solar panels
- 900 onshore wind turbines
- 1.4 million electric vehicle chargers
- 3,600 battery packs
Perhaps Amazon or ebay?
Snippets from all over
1. Can’t please all the investors all of the time
Shares in Nvidia fell more than 6 per cent on Thursday as the chipmaker’s latest earnings report failed to exceed Wall Street’s lofty expectations, despite revenue more than doubling in the last quarter. (Financial Times)
Wry & Dry comments: Nah. A fall of 6%? Really. The stock is up 140% since Christmas.
2. “I was spared by God”
Donald Trump said that God spared him from an assassin’s bullet so that he could save the United States, and maybe the world, as he echoed the belief of fervent supporters that his survival was down to divine intervention. (The Times)
Wry & Dry comments: Nuh. God spared the Trumpster because she wanted to see the Trumpster lose the election.
3. Sorry, Australia is closed
The number of spare prison places in male jails in the UK fell to 83 on Tuesday, the lowest figure on record. (UK Telegraph)
Wry & Dry comments: That’s an occupancy rate of 99.9%. Where are the property developers?
4. New Zealand reverses bans
New Zealand said it would pass laws by the end of this year to reverse a ban on offshore oil and gas exploration, and take urgent steps to remove regulatory hurdles to import LNG amid energy shortages. (The Macro Strategy)
Wry & Dry comments: “The lakes are low, the sun hasn’t been shining, the wind hasn’t been blowing, and we have an inadequate supply of natural gas to meet demand” New Zealand’s Energy Minister.
5. Canada’s tariffs
Canada will impose 100% tariffs on imports of Chinese-made electric vehicles, and a 25% levy on Chinese steel and aluminium. (The Economist)
Wry & Dry comments: Emperor Eleven’s empire heavily subsidises its EV industry.
Data
- Australia: inflation fell to 3.5% in July, from 3.8%.
- Germany: inflation fell to 2% in August, from 2.6%.
And to soothe your troubled mind…
‘It’s a bit unsettling with her staring down as you like that.”
Sir Kier Starmer, newbie UK PM, requesting that a portrait of Margaret Thatcher, hanging in 10 Downing Street, be removed.
Wry & Dry comments: The portrait was actually commissioned by former Labor PM, Gordon Brown, when he lived (and worked) in 10 Downing Street.