Category: Economics

Predictive test

Billy/ / Australia; Frontier Nation, Climate Bollocks, Despite Brexit, Economics, General, Transgender Regret Industry (c), Wokepac

Predictions for 2021 incoming later today.

In the meantime, it’s end of year report time. On January 1st we made the following ridiculous suggestions:

Australian Politics

Politicians of all sides of the aisle increase the warnings against reliance on China. There will be noises made by the Federal government to have closer trade and defence links with the USA (particularly following the USA election).

A Westpac executive is jailed for the AUSTRAC issues. Probably Lynn Cobley.

Hindsight score – 7/10. As with the Victorian hotel quarantine fuck up, it’s looking unlikely anyone will be found accountable for the Wokepac kiddy-fiddling scandal.

Global Politics

The UK will reach a WTO+ deal (ie closer to WTO terms than a full trade deal) with the EU and negotiations won’t be extended. Boris will call their bluff.

Congress won’t send the impeachment papers to the Senate. The GOP will make political hay about this all the way to the election.

Hindsight score – 8/10. As anyone who has ever negotiated anything could have predicted, when faced with a credible threat of a walk away, the EU blinked.

The impeachment went to the Senate and we all yawned.

Zeitgeist

Sentiment turns against Saint Greta. There’s a financial scandal involving her parents or handlers.

A judge in the USA finds a single mother of a transgender child guilty of abuse. The Supreme Court supports this finding on appeal.

Hindsight score – 5/10. St Greta has been relatively quiet this year, so we can be thankful for small mercies.

Sentiment and the courts are turning against the child abusers masquerading as transgender allies.

Sport

Six Nations table:

1 England

2 Ireland

3 Wales

4 France

5 Scotland

6 Italy

Australia finishes bottom of the Rugby Championship table.

Hindsight score – 6/10. I correctly called the winner and loser of the disrupted Six Nations, and Australia did indeed come last in the amended Tri Nations.

Economy

Gold to temporarily breach all time high ($1,895).

The Dow to breach 30,000.

Hindsight score – 10/10. Expect more of this to come, we are truly living in the “everything bubble”.

Bill’s Opinion

Not bad, all things considered.

Everything needs a bail out

Billy/ / Australia; Frontier Nation, Climate Bollocks, Corporate Welfare, Economics, General, Too much government

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

Billy/ / Australia; Frontier Nation, Corporate Welfare, Economics, General, Incentives Matter, Whither Aussie House Prices

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.

As the applause dies down…

Billy/ / China Flu, Economics, General, Whither Government?

A few short months ago, people all across the UK were coerced by peer pressure to stand outside their homes one evening a week and give a round of applause “for the NHS”.

For those of you unfamiliar with those three letters in that order; National Health Service, the UK’s biggest employer, the state run, centralised health service.

Everyone from the Prime Minister to babes in arms were out there every Thursday doing impressions of performing circus seals to celebrate a massive bureaucracy overseeing a clinical negligence bill that is increasing at a worrying rate (doubling over the previous four years).

And then there’s this:

What’s the likely consequence of that, do we think?

Bill’s Opinion

The Cancer Research charity estimates 350,000 urgent cancer appointments were missed or delayed. They speculate this might translate to 35,000 additional deaths.

That speculation is obviously as scientific and as credible as the original Imperial College model that got everyone into this mess, of course; can a subsequent cancer death really be proven to have been avoidable or was it just earlier than might have been reasonably predicted?

But nonetheless, the absolute number of increased deaths from cancer isn’t zero.

Repeat that for all manner of treatable diseases and conditions.

Then close your eyes and repeat the mantra, “we cannot make trade offs, one life lost to covid is one too many” until you forget all the inconvenient evidence to the contrary.

When the facts change

Billy/ / Australia; Frontier Nation, China Flu, Climate Bollocks, Economics, General, Incentives Matter, Whither Government?

“……I change my opinion. What do you do, sir?”.

If not for Kung Flu, we’d have spent last week skiing down this slope and its neighbours:

That photo was from today via the webcam here.

At this time of year, there’s usually about a metre of snow where you can see grass.

Interesting. Shocking, actually.

The trap to avoid here is falling into the confirmation bias fallacy.

There’s several possible explanations that may be all playing a part.

1. Climate change. So much, in fact, that over a metre of snow hasn’t arrived compared to last year. We’re definitely into Al Gore/Saint Greta territory, if so.

2. It’s a cyclical bad snow season. Again, though, so bad that a metre’s worth hasn’t fallen? Sceptical.

3. Something else.

Bill’s Opinion

A little research suggests option 3 carries most of the blame: the resort manufactures most of the snow for the ski season (via those red machines in the picture). Because the resort is in Victoriazuela, Chairman Dan has shut it down for the season. That’s what the slopes look like without the machines running every night.

I’m actually shocked by this; I’d always assumed the machines topped up a pre-existing base level of snow, but certainly weren’t responsible for layering a metre of depth onto the slopes.

I don’t have the subject matter expertise to calculate this but it would be fascinating to learn what the emissions per skier are to make all this snow compared to, say, flying that skier to a natural snow field in New Zealand or Japan?

If a politician were genuinely concerned about climate change, that’s the sort of data they’d be seeking to publish to enable people to make the correct environmental choice.

Don’t take your financial advice from Mumsnet

Billy/ / Australia; Frontier Nation, China Flu, Economics, General, Legacy Press (c), The “Are we there yet, Mum?” index, Whither Aussie House Prices

Jessica “big smarty pants” Irvine has written another blog post on Mumsnet again this week.

This time she’s woman-splaining to us all about three topics; how financially astute she is, how she can lose weight by the magical discovery of eating fewer calories than she burns and how she likes a good stationery order from Office Works.

No, seriously; without a hint of irony, The Sydney Morning Herald has published an article under “economics” where this type of self-indulgent guff is written:

…..I was completing my daily paper-tracking sheet for my food consumption and energy expenditure.

At the end of the day, after I’ve finished eating and calculated my daily calorie deficit, I get to enjoy the immense satisfaction of emblazoning the day’s tracker with a depressible ink stamp that says “ENTERED”.

It continues in the style of a low IQ Jordan Peterson self-help guru:

The desk contains six wooden pigeon holes that house my stamp, my highlighters, my paper receipts for the month and my three paper-based journals.

They are an appointments diary, a gratitude journal and a thoughts journal, into which I periodically spill all my deepest, darkest thoughts. Exposed to the crisp, white pages, these thoughts lose their power. Having identified the thoughts – and the resulting emotions – I journal new, more helpful thoughts to hold.

She also reminds us that she is considerably more intelligent than you and I:

I don’t know about you, but my brain definitely runs faster than my ability to write. By committing to writing things down by hand, therefore, you force your distracted monkey brain to sit.

Hands up who else suspects her lips still move when she reads, though?

The thing is, her Mumsnet post is just a rehash of this self-indulgent shite from two years ago. The only difference is the admission of a love of a tidy desk and coloured pencils.

That’s fair enough, I suppose, the SMH can publish whatever guff they want, but it does seem somewhat tin-eared to print Jessica’s verbosity about her ability to save money during a once in multiple generations recession while there are a record number of Australians registered as unemployed and many more about to join them. Saving money must seem a luxurious memory for those souls.

Not to worry though, we can amuse ourselves with the knowledge that Jessica is stuck inside a shitty two bedroom apartment that she bought at the very top of the property market and is now staring down the barrel of that most depressing of financial situations, negative equity. She hasn’t realised that, if she loses her job now, she’s homeless.

Bill’s Opinion

We’ve learned a lot of things during these months of Kung Flu. In addition to the incompetence of experts and the cowardice of politicians, we can also finally put to rest the notion that anyone employed in the media understands graphs and statistics.

That’s probably why Jessica is writing about crayons and coloured paper, like some teenage girl in a bedroom full of cuddly toys and posters of ponies.

We can’t blame Jessica for not wishing to write about economic reality though, as this updated chart is what it looks like before the government wage subsidies taper off and the unemployment figures start to more accurately reflect what’s been going on since March:

Don’t look down, Jessica.

“On the beach” in Australia and New Zealand

Billy/ / Australia; Frontier Nation, China Flu, Economics, General, The end is nigh, Too much government

Here is the plot summary of a 1959 film you may not have watched or indeed heard of. It has a stellar cast, including Gregory Peck, Ava Gardner, Fred Astaire, and Anthony Perkins.

I have a vague memory of watching this on BBC 2 one rainy Sunday afternoon in the late 1970s.

On The Beach

In early 1964, in the months following World War III, the conflict has devastated the entirety of the Northern Hemisphere, killing all humans after polluting the atmosphere with nuclear fallout. Air currents are slowly carrying the fallout south; the only areas still habitable are in the far reaches of the Southern Hemisphere.

….The Australian government arranges for its citizens to receive suicide pills or prepared injections so they may end their lives quickly before there is prolonged suffering from radiation sickness.

…..Within a few days, the last pockets of humanity are dead. The empty, windblown streets of Melbourne are punctuated by the rise of dramatic, strident music over a single powerful image of a previously seen Salvation Army street banner: “There is still time…Brother”.

“How, pray tell, does this have any relevance today?”, you may ask.

Well, the movie is based on a time disparity between the Southern and Northern Hemispheres in terms of their consequences from the nuclear war. It’s happened up north and they’ve taken the pain, whilst the south is watching and waiting for the inevitable impact to arrive.

At the time of writing, Australia’s official death toll from Covid19 is 208 and New Zealand has had just 22 deaths. The USA, meanwhile, is 157,000.

Well done Antipodeans, eh?

Hmm. Depends, doesn’t it.

The first point to note is ALL data on Covid19 is utterly unreliable for the purpose of comparison. Not only are deaths reported differently across countries, but rates of testing is nowhere nearly equal, and local circumstances are wildly different too.

The USA numbers with New York removed are very similar to other countries with good health care systems. What happened in New York? Only the minor issue of old people being relocated from hospital to aged care facilities without being confirmed as free from infection.

Imagine the movie On The Beach with a slightly changed plot where the north didn’t get wiped out but took a bad (say about 200,000 deaths) and immediate hit and then the south were told they would have to suffer the same relative fate (so, about 5,500 deaths in Australia and about 1,200 for New Zealand) BUT must decide when they would take it.

What would Australia and New Zealand decide?

Bill’s Opinion

A friend of mine recently posted the economic data from Sweden on social media, claiming that people who were happy to kill off the old and infirm for the sake of the economy had been proved wrong.

That’s the false dichotomy fallacy. I’ve never met anyone who wants to sacrifice members of the community for the sake of the economy.

I’m aware, therefore, my question above asking what Australia and New Zealand might do if told they’d have to accept 5,500 and 1,200 deaths respectively is also a fake dichotomy. By delaying the pain, both countries have learned lessons from Governor Andrew Cuomo other countries and could now make a third choice of re-opening their economies with very specific and targeted actions to protect the vulnerable.

However, we aren’t seeing this level of nuanced discussion being had in either country. Instead, we are still acting as if a tacit target of zero infections exists. It is my opinion this is delaying the inevitable.

Meanwhile, a new report in Science Magazine suggests T cell immunity to coronavirus already exists in many people and therefore the “herd immunity” (remember that policy?) could be far lower than previously thought.

So, while Head Girl Jacinda and Property Scotty vacillate on how to break bad news, please don’t gas yourself in the garage with your sports car.

Eliminator

Billy/ / Australia; Frontier Nation, China Flu, Economics, General, Whither Government?

….was a great album by ZZ Top. Their first

three albums are their best, however.

Tap, tap, is this thing on?

Apologies for the hiatus. I suspect, as for all of us, life has been a little strange recently. But I’m ok, and so is everyone I hold dear.

I hope you are also still close to the top of the Hierarchy of Kung Flu.

Over a month ago, we discussed the tacit scope creep that had occurred since the lockdown commenced.

If you recall, “flattening the curve” was the mission statement in order to not overwhelm the health services. Nobody in authority ever stated a policy of total elimination, probably because that’s a metric that’s guaranteed to be missed.

In the meantime, there’s been much handwringing in Australia at every new case that discovered, domestic borders closed, out of state visitors shunned, etc.

Reading the media, one could have been mistaken in thinking the tacit mission for a while back there was to get to zero cases.

Thank goodness then, somebody has said the quiet part out loud:

There, that wasn’t so hard, was it?

Bill’s Opinion

We’ve mentioned several times here that l:

1. The decision to close an economy is far easier than the subsequent decision to re-open it.

2. That decision was made using a cost/benefit analysis without really understanding the full costs.

The true costs are going to start revealing themselves soon. This report in the UK suggests 200,000 early deaths might occur as a consequence of lockdown, not Kung Flu.

Let’s hope it is wildly inaccurate, like all the other expert models we’ve been subject to recently.

Lastly, sorry again for the absence. I’ll get my mojo back now.

Hubris in a “post experts” age

Billy/ / Australia; Frontier Nation, Economics, General, Legacy Press (c)

Experts, eh?

Remember when we outsourced so much of our key life decisions to “experts”?

“We lied about the effectiveness of masks, sorry ’bout that”.

“The USA will be 6 degrees warmer by 2020”.

“The USA housing crisis is contained”.

Etc. etc.

So, ladies and gentlemen, drum roll please….

Here’s the “experts” who will guide you out of these difficult and febrile times:

Stop laughing at the back.

The beard on the left is Ross “dress for the job you want, not the job you have” Gittins, of whom we’ve written previously.

Pole position is Jess “I’m smarter than you proles” Irvine. Again, she’s not escaped our attention, in fact on multiple occasions we’ve laughed at her ridiculous Facebook posts masquerading as journalism and her heavy reliance on feelings over data.

I’ve no idea who the other chap is, so I assume he’ll be the one made redundant in the next round just like the nameless crew member who is transported to the planet with Captain Kirk.

Bill’s Opinion

Seriously, who in their right mind would listen to anything these clowns say?

They’ve predicted nothing other than sunrise and sunset. Worse, they’ve had no actual useful experience of a recession outside of the lecture theatre of a university.

Jess Irvine bought her first property at what was clearly the very tippety top of the market. She needs an excel spreadsheet to lose weight and run a marathon at a pace that put her behind the team clearing up.

No, but thanks Sydney Morning Herald, our economic advice is in safe hands. What next, Pirate Pete lecturing us on virtue signalling?

Send in the clowns. Oh look, they’re already here.

The Dreamtime Phoney War

Billy/ / Australia; Frontier Nation, China Flu, Economics, General, Incentives Matter, The “Are we there yet, Mum?” index, Too much government, Whither Aussie House Prices

On the June 1st episode of the podcast, TRIGGERnometry, Peter Hitchens made an interesting observation on the the current attitude of many people in the UK (but it applies equally to any other country undergoing government Kung Flu largesse):

He describes many people as living in a happy dreamtime where most, if not all, of their wages are being paid for by government relief schemes, the weather is pleasant and the consequences of incurring the biggest peacetime national debt have not yet been felt.

His opinion is this cannot continue and, when the plug is pulled on these various furlough schemes, there will be a difficult and tragic reckoning to be had.

The likely timeline for this mean reversion differs by jurisdiction but the 3rd and 4th quarters of 2020 is generally when these government cash drops are due to either finish or begin to taper off.

I say this without any hint of glee, but there are individuals and entire industries that are going to experience the financial equivalent of cold turkey.

What’s cold turkey feel like? Let’s ask a professional:

I can’t imagine what other people think cold turkey is like. It is fucking awful. On the scale of things, it’s better than having your leg blown off in the trenches. It’s better than starving to death.

But you don’t want to go there. The whole body just sort of turns itself inside out and rejects itself for three days. You know in three days it’s going to calm down. It’s going to be the longest three days you’ve spent in your life, and you wonder why you’re doing this to yourself when you could be living a perfectly normal fucking rich rock star life.

And there you are puking and climbing walls. Why do you do that to yourself? I don’t know. I still don’t know. Your skin crawling, your guts churning, you can’t stop your limbs from jerking and moving about, and you’re throwing up and shitting at the same time, and shit’s coming out your nose and your eyes, and the first time that happens for real, that’s when a reasonable man says, “I’m hooked.” But even that doesn’t stop a reasonable man from going back on it.

Keith Richards

Bill’s Opinion

Governments and central banks are about to discover restarting an economy is a significantly different prospect to stopping one.

I have no doubt our money, our children’s money and our grandchildren’s money will be generously thrown at the problem.

Some of it may even stick.

In fact, the Australian Government is mooting plans to throw figures like $20,000 at new home builds or to renovate existing homes. Obviously, this will have the effect of increasing the price of everything by a leveraged ratio of $20,000.

I understand the Keynsian theory is it doesn’t matter what the money is spent on but, now we’ve just run the biggest experiment to prove most people don’t need to live 8km from the CBD to be productive, why are we installing granite kitchen worktops in Mosman rather than building high speed rail links to an open plain in the middle of nowhere for developers to build around?

In the meantime, this organ has been sadly missing a previous regular commentator from Brisbane who frequented this place with gleeful tales of his investing prowess and acumen.

If he were to return, we might ask him to review this updated chart and answer the question, “what happens next?“.