CFA

When climate alarmists start trusting bankers

If global warming alarmists ever wanted to pick an industry as steeped in unreliable forecasts as climate scientists, one would find it hard to beat investment banking. Having been in that industry for two decades, the list of woefully misguided and poorly researched puff pieces is endless. There is a reason global banks are trading at fractions of their former peaks. They don’t add much value and most never picked the GFC of 2008. If they were smarter, greed wouldn’t require recessions.

Never mind. When JP Morgan economists are portending climate doom, why not hitch them to your global warming wagon? There is a kind of conflict of interest. Evil, greedy fat bonus paying tax avoiding corporates preaching virtue on climate.

By the way, you won’t find a research analyst who believes they don’t deserve air travel at the pointy end and luxury limousine transfers to and from the airport.

Yet they are aligned with the hypocrites at the Bank for International Settlements (BIS) which told us at the 1500 private jet junket at Davos that it’s central bank members are “climate rescuers of last resort.” This despite their monetary policies having played a major part in fueling overconsumption via the debt bubble. Ultra low interest rates will ultimately have a profound effect on carbon emissions – a global economic crisis of epic proportions which won’t require one wind turbine or solar farm to achieve. They’ll save the climate by destroying the wellbeing of so many in the process.

On the one hand, JP Morgan can now claim some kudos for allowing such free thinking which isn’t at the behest of the investment banking team.

Maybe it’s worth pointing out that most banks keep meticulous (but useless) data on the readership of such reports. Much like the media chasing advertising dollars through clickbait, research analysts strive for internal point scoring to boost their year end review chances to push for bigger bonuses to their excel spreadsheet obsessed line managers who look at quantity, not quality. So if a warmest piece can create noise, irrespective of the quality of the content, then that serves a purpose for internal bosses.

Such has been the hollowing out of investment banking research teams, the last remaining life jackets are in short supply. It was only last year that Deutsche Bank closed its entire global equity platform. While regulation is part of the problem, there is simply very little value add to convince clients to pay for.

While the report supposedly chastised the bank’s lending of $75bn to the fossil fuel industry, in a world of ESG, which puts ideology ahead of risk assessment, JP Morgan can now claim it has seen the light so it can hopefully fool green tech companies in need of cash that they are worthy environmentally friendly financiers. This will also give the public relations team a welcome talking piece to the media and ESG retirement fund managers that they practice social responsibility.

Back to the report. On what pretense do the JP Morgan analysts have for the climate crisis threatening the human race? Citing the IPCC (where scientists have slammed the processes which prioritize gender and ethnicity over ability and qualification) and the IMF (which couldn’t pick economic growth it it tried) are hardly the sort of data one would gladly source as gospel to compile a report.

It seems everyone is an expert on climate change nowadays. Central banks, ASIC, APRA, RBA, the Australian Medical Association and now investment banks. As we pointed out earlier in the week, where were the scientists who made a b-line to speak at the National Climate Emergency summit in Melbourne? That’s right 2/3rds were activists, lobbyists, left-wing media and academics with no scientific background.

You know when alarmists are channeling bankers, that they are running out of credible evidence. Even worse, most banks have an uncanny ability to act as contrarian indicators.

We can be sure that a whole lot of malinvestment will continue thanks to governments trying to declare emergencies to justify infrastructure spending to replace sensible business friendly structural reforms that would have a far better chance of keeping them in power for longer.

In closing, it seems even the media has lost faith in investment bank research, choosing to channel NY Mets baseball pitchers for commentary on stocks instead.

“Senior management of the Fire Services act like a Mafia”

We have been lucky to speak to one of the brave volunteers (pseudonym Fred, a 25yr veteran in the RFS) who has spoken out about the utter incompetence of the administration within fire services HQ. You should be furious after reading this. You are being lied to and the media is complicit by failing to do basic investigative journalism.

Instead of all of the glowing praise being heaped on the senior management of the fire services, here are some brutal comments that contradict the current media narrative.

What you will read are some of the direct quotes from our conversation which throw more light on some of our earlier suspicions.

FNF Media has been questioning the competence of senior management in the HQs. We have been demanding that the fire services are thoroughly investigated when this is all over. At the moment senior fire management teams are being deified in ways that almost seek to make them exempt from any wrongdoing. If there is nothing to hide, they should welcome the clean bill of health that would arise from an audit.

Putting it down to climate change, as some of our former chiefs suggest, is just way too convenient a scapegoat to cover up for what looks more and more like poor management practice.

We noted last week that budgets and salaries have been rising at NSWRFS, but equipment levels falling. How is that that with $140mn extra dollars last fiscal year, a 78% jump on 2014/15 levels, can this be? Fred mentioned,

there has been a massive effort in restricting bushfire hazard reduction burning by the fire services. Also, the senior management of the fire services act like a mafia. I don’t know how they get away with it.

Scarily we’re told that no resources are being refused. Unfortunately, we have evidence to the contrary. Fred said,

Premier, Minister and Commissioner all lied when they said that all resources were being used and no offers of assistance were ever refused.

Fred has asked FNF Media to withhold the proof of the conversation with RFS and it is damning, to say the least. It is toxic.

Recall our post which discussed the frustration within the Volunteer Fire Fighters Association (VFFA) with respect to restricted burning. The VFFA said,

“Hazard reduction is the only proven management tool rural firefighters have to reduce the intensity and spread of bushfires and this has been recognised in numerous bushfire enquires since the Stretton enquiry into the 1939 Victorian Bushfires…The amount of ‘green tape’ we have to go through to get a burn approved is beyond frustrating; says Peter Cannon. The VFFA is calling on the NSW State Government to reduce the amount of green tape involved in planning and conducting hazard reductions so that our Volunteer Firefighters can get on with the job of conducting fire prevention works in the cooler months to prevent the inevitable summer bushfire disasters…Remember that it’s far more cost-effective, say around 66 to 100 times more cost-efficient, to prevent wildfires through hazard reduction than it is to have reactionary fire response, which is what we have at the moment. With the great number of lost homes and decreasing property values through these wildfires, what then will the total fiscal amount be…when it could have all been prevented by effective Hazard reduction!”

Fred’s comments with us sing the same tune.

They spend such huge amounts of money on tech, equipment and salaries and yet achieve bugger all bushfire hazard reduction works. If I had half the budget of the FRNSW Bushfire Section I could do at least 4 times more burning. They are so inefficient.

My volunteer brigade did Zero burning last 12 months…volunteers are having to purchase their own uniforms and PPE… RFS senior management lies constantly and the media go along with them.

In the most recent fires, Fred commented,

The state government, RFS and FRNSW all declined our assistance, even as homes burned down with no trucks to save them.

The back burn on Bells Line of Road SW of Mt Wilson. It ended of pushing East and took out Mt Wilson and then went into the Blue Mountains National Park. Media reported that fire as part of Gospers Mountain but it was a wholly separate fire lit by RFS in exactly the wrong spot.

This is commentary from an experienced veteran volunteer with a quarter-century of under his belt, not some rookie with a garden hose who will just get in harm’s way. Yet Fred’s well-trained services were refused. Period. We have the evidence. He went further,

Very poor use of available volunteers. 70,000 are on the books but less than 7,000 are being used????

They [management] should be investigated and sacked. Not given medals and bigger budgets.

I am hoping I will be a witness in the inquiries or Royal Commission after…This all needs to come out.”

I have emails from RFS and FRNSW already shared with the Minister and Premier. They are well aware of the problem. But the RFS Commissioner is like Santa at Christmas right now.

Will our mainstream media going out of its way to ask probing questions instead of having the likes of Karl Stefanovic rant on morning TV about the PM’s shortcomings while blowing wind up the backside of the fire chief? Apparently not. Too simple to report on easy clickbait, devoid of any facts.

Let us pray that when all the fires have died down, the post-mortem avoids arse covering and blame-shifting. Although we know that is exactly what will happen.

Remember climate change is an irrelevant argument as we pointed out in our study here. FR NSW mentions the word ‘climate change‘ once in the last 6 years of annual reports. Even then it was in reference to fire stations voluntarily switching off non-essential lighting for Earth Hour. Hardly pointing to detailed statistics derived from their own experience. On the flip side, the Victorian CFA mentions ‘inclusion‘ 56 times in the last 6 years of annual reports. Priorities don’t seem to lie where the core business lies.

Money does not seem to be the major problem even though a further $2bn is being committed for relief. It is increasingly looking like mismanagement. If the volunteers, who do it without compensation, are screaming at the desk jockeys who orchestrate the controlled burn-offs (or lack thereof) doesn’t it make one curious as to why the fires got so ridiculously out of control?

We have every right to be angry. We should settle for nothing less. FNF Media is astonished at the generosity of the $40m in donations raised for bushfire relief. However, we worry that the fire services don’t appear to have a lot of skill in allocating vital funds where needed if volunteers like Fred are to be believed and as we wrote in previous discussions. Given we have the proof, he should be and the cover-up will be found out.

VIC CFA statistics – no wonder the UFU voted for Dan Andrews

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No wonder Premier Dan Andrews had the support of the United Firefighters Union in the 2014 election. Once put into office he pushed the Victorian Country Fire Authority (CFA) under its wing. Since elected, over 850 new FT jobs have been added to the CFA which stand at nearly 3x that of the NSW RFS. The CFA budget, according to the annual reports (here) has ballooned from $484mn to $657m over the same period.

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CFA employee benefits have grown from 48.7% of the budget since Andrews took over to 56.7%. To put that in perspective, NSW RFS went from 30.4% to 22.3%. Average salaries at the CFA have also grown from $123,806 average to $134,435.

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We also note that under Dan Andrews, the number of volunteers has fallen from 59,700 immediately before he took office to 54,621 today. Volunteers were none too impressed to be told their selfless service would be controlled by a union.

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So do we immediately implore PM Scott Morrison to start splashing out the cash in Victoria? What has Victoria got for its money in terms of equipment?

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In terms of fire trucks, the CFA has less than half the number that the NSW RFS has in its fleet. Only on water carriers does the CFA trump the RFS with 286 vs 63.

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Unfortunately, the CFA has very limited data on controlled burn-offs and data that is useful in making a comparison. We will need to dig deeper into the bowels of the CFA statistics.

Within the annual reports, the CFA spends far more time discussing LGBT Pride, gender equality and diversity. Which probably goes some way in explaining why so much of the CFA budget is directed at jobs, not equipment.

Once again, FNF Media thinks the grounds for auditing the fire services is a necessary evil to get to the heart of how such devastating bushfires got out of control and burnt for so long. The data here simply throws up too many questions. As a consolation, the NSW RFS looks far more efficient than the CFA. Then again, in the Democratic People’s Republic of Victoria, this should surprise nobody.

Another good reason to rehash Thomas Sowell’s apt quote,

Those who cry out that the government should ‘do something’ never even ask for data on what has actually happened when the government did something, compared to what actually happened when the government did nothing.”

The most important initials to have after your name are?


What is the value of an education? It seems that students are ploughing more and more into getting more letters after their name and racking up ever deeper debts. For what?

Take finance. The CFA is a pig to pass. 80% drop out mid course. Three years of blood sweat and tears. Now there are computer programs that can replicate all that hard work. Is it any wonder?

How much do these tiny letters after your name really mean?  Those hoping it would launch their salaries into orbit are clearly delusional.

“Global turnout for the CFA exam surged after the 2008 credit crisis, with young financiers looking to burnish resumes as banks slashed jobs. Almost 142,000 candidates were tested that year, a 30 percent increase from 2007.” This only highlights how the financial services industry has progressed that younger and younger people are replacing those with battlefield experience of brutal cycles. No degree can ever be a better lesson than the school of hard knocks. This is also why I think markets to some degree are failing to see the obvious trends.

As the old saying goes, “Experience is a hard teacher. You get the test first and the lesson afterwards.”

I’ve read quite a lot of articles recently suggesting the educated elite know best. That the youth of today have more letters than their forebears thus carrying intellectual superiority. However the lack of ability to critically think is what worries me. More and more schools and universities are betraying the very nature of open thought, especially the latter. We see it in our journalism too. The blatant group think we read in media today is alarming. How can so many people fall for such poorly thought out diatribe which anyone who thought for 5 seconds would realize it couldn’t pass the sniff test?

It is the same rhetoric we hear from our central banks who profess to know more than us. I don’t doubt the academic records of the model makers who can apply a theory. However these people don’t live in the real world. They don’t understand how their economic experiments aren’t like mixing chemicals in a test tube. They are completely involved in trying to steer billions of lives in one direction without taking into account the most important factor – free markets. With all the manipulation by authorities trying to support markets it is driving up fear not quelling it. Why can’t markets be allowed to find natural support? That is like ripping hot wax off your eyebrows. It hurts but the pain quickly subsides. Still our mighty establishment drip feed us that prosperity is upon us when the increasingly number of those living in poverty know it isn’t true. It is this falling level of trust by those educated by the University of Life who know far better than those who carry letters.

That’s why the most important initials after your name are EQ not IQ.

Hedge fund closures accelerate

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The easiest thing about understanding trends in markets is following the money. 291 hedge funds closed their doors in Q1 2016, up from 217 in Q1 2015.

As I’ve said repeatedly and in today’s report, the markets are heavily manipulated by authorities. Whether in Japan it is buting 58% of the ETF market or c. 100% of bond auctions, these distortions make it harder to make money. Not to mention hedge funds now are saddled with so much red tape that to run one requires so much legal & compliance without $1bn assets under management you wouldn’t cover costs. So these figures probably represent ‘too hard basket’ than just poor performance.

As an old industry hack, many acquaintances still in the industry know the writing is on the wall. They are drifting in their corporate driftwood waiting to be thrown a lifeboat package. That is a bigger signal. There is no real money left in a lot of financial services companies as we traditionally know it.

While many may cheer at the death of many banksters, note among the bad ones, we also lose a lot of creative, intelligent and smart people the world really could do with. We should be careful of what we wish for.

Experience is a hard teacher. You get the test first and the lesson afterwards.

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How much do these tiny letters after your name really mean? I know many colleagues who have sat the CFA over three gruelling years. The sight of this chart is rather depressing. Those hoping it would launch their salaries into orbit are clearly delusional.

“Global turnout for the CFA exam surged after the 2008 credit crisis, with young financiers looking to burnish resumes as banks slashed jobs. Almost 142,000 candidates were tested that year, a 30 percent increase from 2007.” This only highlights how the financial services industry has progressed that younger and younger people are replacing those with battlefield experience of brutal cycles. No degree can ever be a better lesson than the school of hard knocks. This is also why I think markets to some degree are failing to see the obvious trends I wrote about earlier in the week.

As the old saying goes, “Experience is a hard teacher. You get the test first and the lesson afterwards.”

Still it is worth the read. Four out of five people that start with the CFA drop out.