Australia’s lack of ambition

Stars lobby for Netflix to face 20 per cent local content quota.

Seriously? Just 20%? You’re selling your talent short, guys.

Why not 50% or even 75%? If “Australian content” is so good, surely we should be pushing for more of it? Who doesn’t like “Australian content”?

In fact, why not 89.56161 (recurring) %?

Who on earth wouldn’t want to be faced with pages and pages of Netflix options of shows featuring stars and A listers such as Simon Baker, Marta Dusseldorp, Bryan Brown and Justine Clarke?

We’ve all enjoyed their back catalogues, haven’t we?

Well, at least you’ve heard of these people, right?

Clue: Baker has starred in a USA TV crime series. As for the others, your guess is as good as mine; it’s probably safe to assume they’re panellists on some crappy quiz shows on the ABC.

Anyway, we digress.

This call for legislation mandating the origin of the entertainment offered by Netflix raises many questions. Questions such as:

  • Why is there so little Australian content on Netflix?
  • Of the existing Australian content, how popular is it with the Australian public relative to content from other countries?
  • What’s the international worth of this Australian content? Are other countries lining up to buy it off us faster than we create it?
  • Who the fuck are these so called “stars” and couldn’t they even get Huge Ackman to join them, given his track record of turning up to the opening of anything more significant than an electricity bill?

Bill’s Opinion

There’s a few things going on here. Firstly, this is a very Australian response to the reality and impact of market forces; seek government intervention in the form of protectionism, regulation and subsidies.

From car manufacturing to baked beans, there isn’t an industry in the country that, even before the luxury communism of covid, didn’t benefit from taxpayer largesse. Australia went from being a nation of ex-convict sheep farmers without a chance of leaving to a nation of farmed sheep without a chance of leaving.

More amusingly though, this is the type of lunacy we get when people who get paid to play “let’s pretend” for a living try to interfere in economics and business. That they’ll even get an audience in Canberra for this stupidity also tells us much about the IQ and real life experience of the political class.

In the meantime, anyone with an understanding of economics or recent experience with paging through reams of unpalatable viewing options of woke, race baiting, climate change pushing, unfunny, uninteresting and, frankly, preachy bollocks on Netflix, will be able to tell you what the likely unintended consequences of this will be; cancelled subscriptions.

If your “Australian content” is so good, sell it to us and the world like France does with series like Bureau des Legendes or Dix Pour Cent. Don’t force it on us like medicine.

Toot toot chugga chugga big red car….

Dine and discover unintended consequences

There’s a trial underway in New South Wales which apes Boris Johnson’s “Eat out to help out” stimulus from earlier in the year.

The NSW version is the “Dine and discover” programme.

It’s being trialled in The Rocks area of Sydney, later to be rolled out to the rest of the state.

It differs from the UK version however, as the business categories eligible for the stimulus are far greater, including “scenic and sightseeing transport”, “recreational activities such as go-karting, indoor climbing, mini-golf, billiards, bowling or ice-rinks”, “outdoor adventures”, and “travel agencies and tours.

Can anyone see a flaw in the scope of the trial and what do we think happens next?

Bueller? Anyone?

There are plenty of pubs and restaurants in The Rocks, but go-karting and outdoor adventures? Not so many. Similarly, there’s not a huge number of travel and touring businesses based out of the small historic part of Sydney.

Why is this a problem?

Well, what won’t be tested as these $25 vouchers are rolled out is whether there’s an opportunity for misuse and fraud.

Anyone who’s ever previously met another human will instinctively know the axiom, if fraud is possible and a large enough number of people are involved, fraud will occur.

Bill’s Opinion

It’s an absolute certainty there will be multiple cases of newly-registered or previously dormant businesses making a load of free money from innovative use of these vouchers.

At its simplest, a scam might simply launder part of the $25 back to the consumer, say, $20 in cash back to you while my “scenic tour business” pockets a fiver and nobody says anything.

More imaginative minds than mine will be working on various elaborate and profitable versions of this idea right now.

This is little league stuff compared with some of the Bernie Madoff-esque scams surely underway already in financial markets, though.

2021 is going to be the “everything bubble” party. Perhaps 2022 is when the hangover kicks in?

2021 surely can’t be any worse?

Gonna sleep down in the parlor

And relive my dreams

I’ll close my eyes and I wonder

If everything is as hollow as it seems

When you think that you’ve lost everything

You find out you can always lose a little more

I been to Sugar Town, I shook the sugar down

Now I’m trying to get to heaven before they close the door

Bob Dylan

Last year’s predictions weren’t too far off the mark, with the minor exception of missing a global pandemic and subsequent complete overreaction by practically every national government…..

“Other than that, Mr Waite, how was your holiday in Beirut?”

On to this year’s predictions then:

Australian Politics

Internal borders will continue to open and close like a hooker’s legs throughout the year. The two week quarantine for international travellers will remain all year.

An Australian university will threaten to declare bankruptcy and will be bailed out by the federal or a state government.

An interviewee will point out to a Sky News Australia talking head that they can’t simultaneously berate Dan Andrews for his response to Kung Flu whilst complaining the rest of the world are overreacting to a virus with a 99.93% survival rate.

Global Politics

Kamala Harris will take over the presidency from a medically-impaired Joe Biden. For this selfless act of bravery, she will will receive the Nobel Peace Prize.

A proxy war between China and the western powers will be fought in SE Asia.

The USA will return to the Iran nuclear deal. Somewhat related, mysterious explosions will continue to occur at various locations in Iran followed by an innocent face and shrug of the shoulders in Jerusalem.

The UK will have a new Prime Minister, most likely Dishy Rishi Sunak or Liz Truss.

An EU-sceptic party will win an election outright or by enough to form a coalition government in one of the 27 states.

The trial of Ghislaine Maxwell will result in weasely apologies and withdrawal from public life of several high profile figures.

A Black Lives Matter leader will be arrested for embezzlement and fraud.

Zeitgeist

The new “Trump TV” internet channel will overtake CNN’s viewing figures within a week of being launched.

As crowds return to sports matches, nobody will kneel before kick off for fear of ridicule.

A new hedonistic and illegal music/dance/drugs genre will emerge as teenagers and twentysomethings kick out against the societal restrictions. It will be inspirational for about as long as the northern hemisphere summer lasts and then it will crash and burn.

Alec Baldwin launches a charity with Rachel Dolezal and Shaun King to help sufferers of the newly identified condition, TransEthnic.

Harry and Megan Windsor-Markle’s podcasts and Netflix output is quietly dropped due to awful listening/viewing figures.

Sport

England wins the Grand Slam in the Six Nations.

The British and Irish Lions tour will go ahead in empty stadia and will be won 2-1 by South Africa.

The Olympics will also go ahead but will be a dull collection of the sports you wouldn’t normally pay to watch, as always.

Economy

Gold will reach new highs and stay above $2,100 an ounce all year.

Bitcoin will reach $35,000 and also fall to $18,000 and back again.

Tesla will reach a market capitalisation of $1 trillion but you still won’t personally know anyone who owns one.

All major stock indices will have and maintain major rises.

Several major airlines will be nationalised.

Bill’s Opinion

Some serious, some jokingly serious.

On verra, on verra.

Everything needs a bail out

Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it.
Ronald Reagan
I learned something today; there is a 1c per litre tax on the petrol in my car’s tank used to subsidise Australian oil refineries.

Wait. WHAT???

Worse, the unions and Opposition think this isn’t going far enough.

Primarily, the reason given is the usual “to protect jobs” bollocks.

The government argues keeping refineries open will suppress the price of fuel and modelling suggests wholesale prices would increase by almost 1¢ per litre if production ended, adding up to $4.9 billion over a decade.

Oh good; they’ve got a model.

Well, why didn’t you say so earlier?

We love models in 2020, they’re such a great way to build our confidence in an argument, and they’ve got such a good track record, they’ve never lets us down previously…..

Interestingly, the part not being said aloud in this article is the national security argument. It is referenced by the union though, here.

….our politicians now seem to understand the significance that refineries have to our national and economic security and how difficult the operating environment has been.

A similar low bow was drawn before the car manufacturers took the taxpayers’ money and scarpered.

It was never quite made clear how the ability to build a shitty Holden Commodore would dissuade or slow President Xi and the PLA Navy from steaming into Sydney Harbour and Port Philip Bay with all guns blazing. An allergy to garish paint jobs and shaded windows?

Bill’s Opinion

Putting aside the hilarious concept of Australia needing a refinery for reasons of national security, the protection of refinery jobs is a classic example of the Broken Window Fallacy, best described by Henry Hazlitt.

It’s probably only fair we subsidise fuel refining, after all, we chuck money at wind farms, solar energy and the coal mining industry. Why not oil refineries?

2020; the year we all stopped worrying and learned to love being Keynesians.

A fool and their money

In news that can’t have improved their experience of 2020, it would seem some less than diligent Australians have discovered they’d been “investing” with a female Bernie Madoff.

In the words of Leonard Cohen when he discovered his manager had walked off with much of his wealth, “that can tend to take the shine off your day“.

Whenever one reads of these Ponzi schemes, the depths of gullibility always astound. This one is no exception; statements of investment accounts that were simply the CBA bank logo cut and pasted on to a fake statement and not even the correct number of digits in the bank accounts.

The inference being, none of these “investors” could have ever logged on to their accounts to confirm the balance.

That’s a level of trust bordering on insane.

Speaking of trust, if you believe her husband knew nothing about the fraud, I’ve got a bridge across the river Thames you might like to buy:

You’re not in trouble“. Riiight.

What was the inflight service like on the private jet to the month long holiday in Aspen, Anthony?

Anthony’s professional life seems to consist of not much activity for several years as a “music producer“. The more cynical and cruel amongst you might suspect he’s been spending a lot more time assisting his wife with her “business” than making shitty bleep bleep music.

Anyway, as we start to run out of new content on Netflix and the cinema while the 2020 break in production flows through to us, this case will be a welcome distraction.

See also, the recent arrest of Joe Anderson and Derek Hatton in the UK’s capital of grief and victimhood, Liverpool. Now that’s a Christmas present worth savouring.

Bill’s Opinion

Stupid and mendacious investments will always find willing suckers and, as long as we don’t fall for them, we get to enjoy the schadenfreude.

However, sometimes one just needs to accept the irrationality and embrace the opportunity. After all, a Ponzi scheme still makes money for some of the initial investors.

Which brings us to this prediction; 2021 will see asset bubbles springing up all over the place. All that easy money being hosed at everything that moves will find a home.

Which asset classes do I think are about to take off?

Gold, silver, the NASDAQ, energy stocks and residential property.

We may as well learn to stop worrying and love the bomb.

Bird? Plane? No, Superhubris!

Pension funds in Australia (or “Super”, in the vernacular) are, obviously, a big deal.

To a large degree, they are a captured market as legislation requires all employers to contribute 9.5% of salary into an employee’s chosen fund.

Typically, there isn’t much movement between funds, you are offered one when you start work and many people don’t pay attention to which is good, bad or mediocre.

Similarly, and like passive investors the world over, people don’t tend to pay much attention to what investment choices their Super fund is making on their behalf. One occasionally hears horror stories about people close to retirement in 2008 suddenly discovering they were all in on USA CDOs.

One such Super fund is Hostplus, the “industry” fund for people working in hospitality. Obviously, one doesn’t have to sign up to Hostplus, but I assume it’s one of the main options offered when you start a job.

Hostplus’ members are worst hit by this virus-induced recession and presumably most likely to want to take advantage of the changed rules allowing early access to $20,000 of their money.

Hostplus have a problem though;

They’ve slipped a clause into their product disclosure statement preventing members from withdrawing funds. It’s not clear whether this is even allowed under legislation such as the Corporations Act, but regardless, it’s a bad precedent and one that won’t give people much comfort in the security of their pensions.

There is a some mild amusement to be had at the directors’ expense (well, ultimately the members’ expense, poor bastards);

This from those heady days of January 2020;

Bill’s Opinion

What follows is not financial advice, and you should never seek financial advice from pseudonymous bloggers on the internet.

However if you are young enough for this current crisis to not completely destroy your imminent retirement plans, may I suggest taking a far more active interest in the following elements of your finances;

  1. Is a single managed fund really the best option for you, or should you consider diversifying across funds (e.g. via a self-managed fund)?
  2. If you are staying in a managed fund, are you really invested in diverse (asset class and geography) assets?
  3. Are the management fees fair value?
  4. How quickly can you pivot your investments if required?
  5. How is your financial advisor paid and by whom?

Feed the birds, tuppence a bag“.

You gotta know when to Holden

Prime Minister Scott Morrison has declared Australians will be fuming after Holden allowed its business to “wither away” even as it pocketed $2 billion in taxpayer-funded subsidies.

For non-Australian readers, Holden is was the brand name for General Motors in Australia and New Zealand, just like Vauxhall in the UK and Opel in Europe.

And, just like all the other brand names, the build quality of the vehicles was woeful. By which I mean, when compared to the overseas competitors’ products, the vehicles were like British Leyland’s Austin Allegro compared to the Toyota Corolla of the time; expensive, fewer features, less reliable, lower prestige.

Given the choice between a German, Japanese, Korean or even a French or Italian car, nobody with the mental age above a fish would choose to buy a Holden. Those few who did, did so out of some bizarre patriotic pride…. bizarre, because what’s the point of being proud of a shite product built by a foreign company?

Of course, this axiom played out over the decades in the Australian car market while market share declined annually as consumers bought every other vehicle brand rather than those locally-produced.

Politicians being, by their nature and the system within which they operate, incentivised only in the short term, pumped ever greater sums of taxpayers’ money into subsidising a company those same taxpayers (as consumers) were voting against.

Both sides of the political spectrum were guilty of this pointless profligacy, citing various fallacious arguments to justify their buying of votes with other people’s money; “saving Aussie jobs”, “ensuring the survival of adjacent industries”, etc.

Perhaps the most laughable reason was “strategic nationally”, by which people meant, “if China or Indonesia ever decide to invade, we can repurpose the Holden factories to make tanks in time to mount a credible defence”.

Yeah, just as long as the tank drivers had been trained in how to replace a faulty gear box ten minutes after driving out of the barracks.

Bill’s Opinion

Holden lingered on in stasis for at least 25 years longer than it should have been allowed. Every taxpayer dollar pumped into the balance sheet of General Motors or added on to the import cost of a foreign competitor, delayed the inevitable and cost Australians twice; once in tax and again in increased prices for a better quality Mitsubishi or Toyota.

Given a choice, politicians always do what’s expedient rather than what’s right.

Did we stop you beating your wife?

Probably not.

Speaking personally, I was only vaguely aware of The White Ribbon Foundation through seeing a poster in the kitchen area of an office in which I was recently working.

Some male colleagues had signed their names on the poster under statements pledging to not hit their partners and to speak up should they see someone they know committing domestic violence or abuse.

My reaction was to think it was a pointless exercise but also a good scam; trick and bully corporates into paying the White Ribbon “protection fee” to have a representative come in and give a day’s awareness and have the company name added to the online register of organisations that don’t encourage their staff to beat up their spouses.

Domestic violence and abuse is one of those unopposable causes isn’t it? “What, you don’t agree we shouldn’t beat women up? What kind of a monster are you?”.

I’m somewhat surprised therefore by the financial collapse of the charity. Prima facie, this was a business model that should have been simplicity itself to maintain and earn a good living from.

Bill’s Opinion

In recent years, the corporate world has become a target for charity shakedown operations of which the White Ribbon Foundation seems to have been one of the more obvious.

The model seems to work along the lines of;

  1. Define a worthy cause and frame it in terms that are incapable of being opposed without risk of catastrophic publicity,
  2. Offer corporate “training” at an inflated fee,
  3. Request “donations” in return for being named as a partner/ally/supporter.
  4. Rinse and repeat.

Examples I can think of operating right now include all our favourite subjects; climate change, LGBTQptanyangkipperbang, indigenous businesses, gender equity, etc.

The credit for the original idea seems to be due to the infamous American race-baiting politician, Jesse Jackson, as described in the book “Shakedown” (the customer reviews are entertaining).

One wonders whether Jackson has ever thought to claim royalties from the numerous copycat charities operating around the world these days? Perhaps that’s a level of chutzpah too far even for him.

King Merdeus

…everything he touches turns to shit.

There is a pattern that can be observed occasionally and, as long as you’re not exposed to the consequences, can be quite amusing once you’ve seen it.

Firstly, a British example:

Many years ago, a chap by the name of Derek Wanless was the Chief Executive of Natwest Bank for 7 years during the 1990s. At the commencement of his stewardship, Natwest was one of the four largest “high street” (i.e. retail) banks and was a solid performer, taking customer deposits and issuing mortgages.

Wanless’ entire experience, from leaving school, was in the retail sector, having come up through the ranks of the branches. So, he put this expertise gained in just one sub-sector of banking to another, opening up an investment arm and taking the bank into the USA (a market already awash with investment banking services, one presumes).

Guess what happened next?

Huge losses for Natwest which resulted in his defenestration by the board…with just a 7 figure payout to comfort him. Not long after, the bank was bought in a hostile and hugely embarrassing takeover by a far smaller rival, the Royal Bank of Scotland.

Hot on the heels of this success, he was asked by the then Chancellor of the Exchequer (i.e. the UK’s Treasurer), Gordon Brown, to review the National Health Service. Ponder that for a moment; his previous experience was, to put it as kindly as possible, to destroy a profitable bank and drive it into the arms of a smaller rival so, obviously, he would have been the perfect candidate to look at the profligate and failing health service. To be fair to Wanless, this wasn’t Gordon Brown’s first or indeed last major failure of judgement, have a look at his record on the UK’s gold reserves to understand what a disaster his tenure was.

Finally, Wanless made a return to banking as an executive director to Northern Rock, overseeing the first UK retail bank to experience a bank run since the Great Depression.

Wanless died 5 years later, fortunately without having accepted any further positions in public life.

What’s the point I’m trying to make here? That Wanless was in “The Club”.

It’s a club you and I aren’t allowed to join. The rules of The Club are varied and changeable, but one rule remains constant; once you’re in The Club, there are very few occasions when consequences will ever catch up with you.

There are many examples of the Australian chapter of the The Club but today’s goes by the name of Peter Beattie.

I first learned of Peter during the 2013 Federal Election when he was parachuted into a seat by another member of The Club, Kevin Rudd. Some basic research unearths a disaster zone of a curriculum vitae, not unlike that of Derek Wanless. From a child protection scandal to a health service crisis, through to tying his colours to the mast of a desperate narcissist’s attempt to remain politically-relevant in the federal election, Peter has an enviable track record of mediocrity.

He also seems to either edit his own Wikipedia entry or have a sycophant do it on his behalf. We really must chuckle at the unintentional irony of a statement such as, “As was his style, Beattie faced the crisis head on”, which is then followed by a list of all the ministers who fell on their swords while he survived. As befitting a full member of The Club, the buck stopped just short of Beattie.

The latest chapter in the Peter Beattie show is a forthcoming defenestration from his role as Chairman of Australia’s Rugby League sporting code. The details of his golden parachute have yet to be disclosed but nobody would be surprised to learn of another 7 figure payout as a reward for mediocrity. After all, he’s in The Club.

Bill’s Opinion

I’m not a conspiracy theorist, I don’t really believe The Club exists.

It is far more likely that, once you’re in the circle of people who appoint and are appointed to senior positions on company boards and in government, as long as you can glad-hand the right people and you don’t wipe your snot on your shirt sleeves, you’re in The Club.

Why? You might be completely incompetent and a total narcissist but you’re a known, albeit a bit useless, quantity. Nobody is going to take a risk on someone they don’t know, are they?

“Completely mystified”

The responses below the tweet are priceless, but before you click the link, let’s look at the supporting article.

Apparently, the most likely explanation to the phenomenon of lowering costs for some expenses yet rising costs for others is something I’d not previously heard of; Baumol Cost Disease.

From Bloomberg’s helpful description:

The theory of Baumol cost disease, developed in the 1960s by economist William Baumol, states that some things rise in price even as productivity goes up. When society gets better at making cars, electronics, food and clothing, wages go up. But as wages go up, industries that don’t find ways to use less labor to produce the same service — for example, a string quartet — rise in price as well.

Which, prima facie, sounds reasonable and rational.

However, I would caveat that feeling of reasonableness with the statement that Malthusianism also sounds reasonable and rational when it’s first described, possibly for similar reasons.

What Malthus has been wrong about for the last 291 years is the Industrial Revolution. Or, more specifically, human inventiveness. Oscar Wilde touched on the solution we found to Malthus’ problem with this pithy quote;

Civilization requires slaves. Human slavery is wrong, insecure and demoralizing. On mechanical slavery, on the slavery of the machine, the future of the world depends.

As the wags and wits on Twitter were fast to point out, the costs that have experienced the most price inflation are, in a suspicious coincidence, the things that have most benefited from government “help” in terms of regulation and subsidies.

Correlation isn’t causation but there’s clearly something worth further enquiry here.

Bill’s Opinion

The most interesting part of the Baumol description is this:

….industries that don’t find ways to use less labor to produce the same service….

The obvious question that prompts is, “why don’t they find ways to use less labour?”.

Perhaps the range of possible answers are as simple as these two:

  1. Because the work involved is impossible to automate or make any more efficient, and/or
  2. There isn’t a great enough incentive to automate or make more efficient.

Anyone who has ever spent any time working in a government or quasi-government department and the private sector will recognise the critical difference immediately; there is no personal reward for for a manager to find a way to deliver the government service with fewer or with lower-skilled employees.

It is extremely rare for a government minister’s stated desire for improved efficiency to be translated into meaningful incentives down the organisation to a level where they will have any material effect.

As Ronald Reagan so eloquently put it:

Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

Or, as an anonymous quote (no, it wasn’t Milton Friedman) goes:

If you put government in charge of the Sahara desert there will be a shortage of sand in five years.

But remember, “economists are completely mystified“.