Europe

Six F-1 drivers take a stand against hypocrisy

Before the Austrian F-1 GP, Max Verstappen, Antonio Giovinazzi, Daniil Kvyat, Carlo Sainz, Charles Leclerc and Kimi Raikkonen chose to stand while 14 other drivers took the knee in support of BLM.

Good to see that some sports stars aren’t prepared to be shamed into political stunts especially one driven (no pun intended) by one of the biggest hypocrites in the paddock, who drives for a manufacturer with a history of slavery.

As we pointed out last week, Aussie driver Daniel Ricciardo perfectly summed up the fear of being cancelled for not speaking up.

Here’s betting all 14 kneelers haven’t even read the reprehensible Marxist manifesto of #BLM movement they knelt for.

We can’t wait for the next woke cause. It will probably be surrounding climate change. Just think of how mothers dropping their kids off to soccer practice in a second hand SUVs will be chastised by these F-1 kneelers as they whiz around tracks in 5mpg race cars. Never mind that they came to the circuit in helicopters after landing at a nearby airport on private jets post spending half the season in coronavirus lockdown on 300ft super yachts with bikini clad supermodels.

Aunt Jemima name to be removed. The history is more interesting than the syrup

Quaker Oats announced on Wednesday that it recognizes that “Aunt Jemima’s (syrup) origins are based on a racial stereotype.” For context, the term “Aunt Jemima” is sometimes used colloquially used as a female version of the derogatory label “Uncle Tom”. The question is did the term predate the syrup or not? Or was it related at all?

Presumably, those that like Aunt Jemima syrup must be racists too. Or could it be they just like the taste?

If it was a purely commercial decision to change the name because sales of the brand were plummeting that would be one thing. What will Quaker Oats do if there is a sudden rush on the remaining stocks of the brand? It is rank hypocrisy based on appeasing the mob. Pathetically weak. Quaker Oats had no issues promoting the brand for decades while all this “systemic racism” was at play.

Well well, what do you know?

Anna Short Harrington began her career as Aunt Jemima in 1935. So she could support her five children, she relocated from South Carolina with her family to Syracuse, New York and began to cook for a living. Quaker Oats discovered her when she was cooking at a fair and signed her on.

On August 5, 2014, her descendants filed a lawsuit against plaintiffs Quaker Oats and PepsiCo for $2 billion. They accused the companies of failing to pay Harrington and her heirs an “equitable fair share of royalties” from the recipes Quaker benefitted from. They lost.

Before the woke mob seize on the racism card, isn’t it interesting that her descendants had no issue with the brand name whatsoever. They had an issue with the economics of it. Imagine if the cancel culture were ahead of the curve. We imagine the descendants might have pushed back.

EU commissioned pandemic comic book scarily accurate

Infected

In 2012, the EU commissioned and published a comic book titled ‘Infected‘. It tells the tale of the magic of unelected globalists saving the world from a pandemic. It is eerily close to what we are experiencing today, apart from the fact that unelected globalists have bungled the response as evidenced by the resignation of the EU’s top scientist who criticised Brussel’s response to the Covid-19.

On page 3, the comic starts out inside a lab in China experimenting with deadly pathogens which have no cure. We are assured in the following pages as to the security, safety and surveillance measures in place to avoid any outbreak of a virus.

On page 5, a time traveller goes back to warn them of the catastrophe in the future caused by a pandemic. He seems to be wearing a suicide vest which actually holds vials of the vaccine which can save the planet.

On page 11, evil capitalists look at ways of exploiting the virus to profit from a pandemic. One individual working with an underworld group wants to sell the vaccine to the highest bidder among pharmaceutical manufacturers. He guns down the armed escort holding the captured time traveller (who was time warped inside the secure lab) to get hold of a test tube so they can sell it for mass manufacture.

On page 20, the comic sets the scene of an interview with the UN Special Envoy on Influenza, Pandemics, Food Security and MOI, Mr De La Mancha in a wet market in Asia. He tells a group of reporters that we can trace the origin of most pandemics back to animals which are then spread unknowingly by people jet-setting around the world.

Our fearless UN envoy is suddenly attacked by a monkey who scratches  his skin and infects him. Hours later he starts seeing the effects of the virus from his hotel room. De La Mancha knows he must ‘self-isolate.’ Unfortunately, before he could do so so it spread to the camera crew and journalists who flew home.

On page 35 our time traveller tells de la Mancha’s assistant, Chang Wenling, about the future where the media reports that the international health organisations failed to act quickly enough to prevent the spread.

On page 37 the comic book tells of how self-isolation led to depression and that after years of lockdown people started to break the law and meet up with each other.

Chang and the time traveller fly to Asia to find de la Mancha to give him the vaccine and he is saved. He reports back to the globalist bodies to convince them of his recovery. The globalists at the EU and UN then pat themselves on the back and talk of ‘One Health’ and the importance of it.

The High Representative for Foreign Affairs & Security Policy says to the journalists assembled,

One Health belongs to its actors and builds upon existing capabilities and resources: key political actors, UN technical agencies, the World Organisation for Animal Health, regional bodies, academia, development partners and others. Its success will depend on flexible networking…

One journalist questions the additional burden on the EU taxpayer. She replies,

One Health is not about adding an additional layer of external actions – which would indeed require additional funding. It is basically about working for health in a more integrated way and thinking differently at the policy-making and planning stage.

The comic ends with virologist Chang falling in love with the time traveller. She is heartbroken with the prospect that he must return back to where he came from soon only to learn that it was a one-way journey and that he’ll die before he was born. They embrace and kiss.

How strange that fiction in 2012 has turned out to be so real. Had the EU commissioned this comic in 2018, we can be assured the comic wouldn’t have been approved unless the time traveller had been non-binary asylum seeker instead of a a blonde haired, blue-eyed white hetero toxic male. Don’t scoff. Marvel Comics has already headed down the path of identity politics with its latest characters, Safespace and Snowflake.

Who left the currency printer on?

CBs

This chart shows how fast he printing presses have been flying to boost the “asset” line of the Bank of Japan (blue), the US Federal Reserve (red) and the ECB (green).

The BoJ has grown its “assets” from ¥100 trillion in 2008 to ¥585 trillion today. Yes, that is right the Japanese central bank has printed so much money that the assets on the book are the equivalent of 100% of GDP, 5x that of 12 years ago.

Does MMT predicate that it is ok to print another 100%? After all the existing Japanese national debt pile is ¥1000 trillion. So who is counting?

We note that the shares in Japan’s biggest currency printing press maker Komori (6349) quadrupled during the boom and only tapered off as the BoJ slowed the rate in early 2018. Maybe coronavirus will get the BoJ back to its wicked ways as it buys up even more of the stock market??? It already owns 58% of outstanding ETFs and by stealth has become a top 10 shareholder in almost 50% of listed stocks. In a sense, we have a trend which threatens to turn Japan’s largest businesses into quasi-state-owned enterprises (SoE) by the back door.

The US Fed has grown “assets” from just shy of US$1 trillion at the time of GFC when the economy was worth US$15.7 trillion or around 6%. There was a nice breathing period between 2014 and 2018 before tapering started.

However, in October 2019 we noted that the Fed was getting a LOT more active in the repo market. Now with coronavirus upon us and the volatility in capital markets at the start of 2020 we can see that another $1.6 trillion has been added to the asset line to a record $5.8 trillion or around 30% of current GDP.

The European Central Bank (ECB) has powered up its balance sheet too from around Eur 1.4 trillion to Eur 4.7 trillion. or 40% of Europe 19’s Eur 10.7 trillion GDP. At the time of the GFC, Europe 19’s combined GDP was Eur 9.3 trillion meaning ECB assets were only 15% of the total. Note the ECB has discontinued reporting its assets.

The point is with the world economy about to hit a brick wall, will markets just face more central bank distortion? Surely no one honestly believes that central banks have got this under control with such an appalling record.

To be honest, if modern monetary theory (MMT) was truly working to date, there should be no unemployment, no poverty, no taxes and we could have easily funded all that renewable energy without even having a debate. Just print and spend.

Therein lies its fatal flaw of MMT. Eventually, conjuring money out of thin air hits terminal velocity. Truth be told the tales above show that each asset that the central banks have bought has created less and less impact in the real economy. Velocity has been sliding for decades.

It is a bit like taking morphine to kill the pain. Take too much and the side effects are:

  1. nausea and vomiting
  2. constipation
  3. itching
  4. loss of appetite
  5. lower body temperature
  6. difficulty urinating
  7. slow breathing
  8. sleepiness
  9. changes in heart rate
  10. weakness
  11. dizziness upon standing up
  12. confusion
  13. nervousness
  14. erectile dysfunction
  15. osteoporosis and risk of fractures

Not unlike the symptoms being shown by the global economy today.

Only one you can’t stop crashing at your place during COVID19 is the economy

Warning Signs Investors Ignored Before the 1929 Stock Market Crash ...

Brace yourself.

COVID19 will be defeated but the cure is turning out to be way worse than the disease.

Unfortunately, the sad reality is that at the rate governments are tightening legislation to keep us in shut down mode, we are day-by-day staring at a great depression.

While some will praise governments for throwing the kitchen sink at the economy with all manner of stimulus packages, the relief will be temporary because all of the ammunition for a sustainable recovery had been depleted years earlier. It is like supplying an alcoholic on rehab with an all-you-can-drink open bar.

Our feckless RBA has just embarked on QE, a mission that has failed every other central bank that has tried it. The velocity of money has been falling for decades. Who will be given access to borrowing at zero interest rates when the economy is in freefall? Which banks will lend against properties that will likely implode in value? 50% down? To think of all the reckless “first home buyer” schemes that loaded young people at the top of the property market. The RBA has been complicit. Not wanting to put pressure on the government to reform, it just kept cutting rates to keep housing afloat. It was totally negligent in its duty even though it will signal its role as a rescuer of last resort.

When will banks be forced to mark to book the value of mortgages on their balance sheet? Equity is thin as it is. 15-20% equity buffer to mortgages is pretty wafer-thin. They need to do this immediately so we can properly assess risk. Forget stress tests by APRA. They’re meaningless. Our housing market will collapse with higher unemployment. 50% falls from here are possible. Remember there will be hardly any buyers. Prices fell up to 90% in Japan after its property bubble popped.

Worse our regulators have been asleep at the wheel chasing financial institutions on their commitment to climate change, the absolute least relevant metric to save them from here. It shows how complacent they became.

Australia has made some interesting crisis policy choices. For instance, PM Scott Morrison is trying to pass rent moratoriums where landlords suspend payments from tenants until things return to normalcy. It is not enshrined in law yet. In principle that is a nice gesture even if the government is subsidizing the banks for forgone interest due to short term loan repayment moratoriums. Let’s assume this continues for 6 months. Apart from the astronomical size of the subsidy, who will ultimately end up sacrificing the 6 months? Landlords? It won’t be the tenants.

Shouldn’t landlords be free to choose whether they are prepared to forgo rent or not as a purely rational business proposition? Shouldn’t a landlord be free to enforce a rental agreement? Will contracts matter anymore?

At some stage, the free market must be allowed to function and the government will hit a tipping point of weighing stopping economic armageddon by allowing businesses to function and the marginal risk of infections. The people will be crying for this if shutdowns remain.

Landlords may be labelled un-Australian or worse but in 6 months time, if unemployment has surged to nose bleed levels well above the 6% we saw during GFC at what point will disposable income be able to support a daily coffee at a cafe?

A cafe might soldier on for a further 3 months on skeleton staff before realising that they can’t cover costs. A landlord would be well within reason to demand that early cancellation clauses and fees are enforced.

Then what of all the invoices to coffee suppliers, bakeries who provide muffins and croissants and utilities? Who misses out? What about the invoices of the coffee supplier? Will the bakery get called on by its flour supplier to pay upfront for future deliveries when it has no operating cash flow, instead of the long-standing 60-90 day terms? That happens overnight. It isn’t a managed outcome. Cash is king.

The question is why hasn’t the government taken advice from the banks on business lending so it can better assess the risks involved from those that deal every day with small companies?

We can’t just shut an economy down for 6 months and expect a return to normal when it is all over. Unemployment rates are likely to surge well above 10%.

As we wrote in an earlier piece, there are 13.1 million Australians employed as of February 2020. Full-time employment amounted to 8,885,600 persons and part-time employment to 4,124,500 persons. Retail trade jobs come in at a shade over 1.2 million jobs. Construction at 1.15 million. Education 1.1 million. Accommodation/restaurants /bars etc at 900,000. Manufacturing another 900,000. Noticing a trend in our employment gearing?

We can fudge the unemployment figures however we like. We can pay $1,500 a fortnight for 6,000,000 workers to pretend they still have a job. That is $18bn a month. The PM can talk about how this will help us bounce on the other side. If it continues for just over 6-months can the budgeted $130 billion will be spent. This is separate to NewStart payments too.

Yet, will people lavishly spend or pay down debt and economise as best they can? We think the latter unless moral hazard has truly sunk in.

What people need to understand is that our Treasury expects to raise $472.8 billion in taxes for FY2019-20. Throw in sales of services, interest and dividend income and that climbs to a total of $511 billion. Expenses are forecast at $503 billion. In the following three years Treasury anticipates $490.0 billion,  $514.4 billion and $528.9 billion in taxes. Expect those totals to be cut significantly.

So if ScoMo’s JobKeeper rescue package for workers goes beyond 6 months, that is equivalent to 27% of annual tax revenues. That doesn’t take into account the slug to tax collections of lower GST and vastly lower income tax for individuals and corporates. That is just at the federal level.

Note, states such as NSW have recently waived payroll taxes for small businesses in a  $2.3bn stimulus package. We shouldn’t forget that the NSW Government is the largest employer in the Southern Hemisphere at 327,000 staff.

We remind readers that according to the RBA small businesses employ 47% of the workforce. Medium enterprises employ 23%. That is 70% of the entire workforce who are most at risk from a slowdown.

In 2019-20 income tax collections will make up $220 billion. Company tax was forecast to generate $99.8 billion. GST $67.2 billion. Excise taxes (petrol, diesel, tobacco etc) $44.7 billion. This data can be found on page 21 here.

Local cafes are reporting a 60~80% fall in revenue. Pretty much all casuals have been let go. It is a bit hard to survive on coffee when a lot of stores aren’t stocking pastries for fear of spoilage.

It is not hard to assume a scenario where government income taxes fall to $160 billion (-28%) due to mass layoffs. One assumes many people will be able to get a tax rebate come June 30th. So this number may end up being conservative on an annualised basis.

Company tax could plunge to $40 billion annualised due to the drastic fall in revenues as customers change the manner of contracts and reign in their own spending. Anyone that thinks that business will resume as normal is crazy. The ripple effects will be huge.

Excise taxes may drift to $35 billion as people cut back on drink (currently $7bn in tax revenue), are limited in places to drive negating the need to fill up (currently $18bn in total tax take). The $17 billion in tobacco excise may weather the storm better than most.

GST could fall to $50 billion. People just aren’t spending much outside of food. Massive retail discounts will not make much difference. GST will be the best indicator of how much the economy has slowed. Even if we start to see a massaging of the GDP numbers, GST won’t lie. It will be the safest indicator.

If our assumed tax revenue sums to $285 billion annualised from the budgeted $472 billion that equates to a 40% haircut.

Trim the ‘other revenue’ column to $30 billion from $39 billion and we have $315bn. Will the government then chop away at the $503 billion in expenses? All of the stimuli doesn’t arrive at once but a lot of it in relatively short order. Surely a $300~400 billion deficit is a fait accompli?

We should also anticipate forward year tax revenues be cut c.30% for several years after. The question is when does the government realise that it must cut the public service and scrap wasteful projects like French submarines and other nice-to-have quangos? We won’t see a budget surplus for decades.

We must careful not to fall into the trap Japan finds itself in. It has a US$1 trillion budget funded by US$600bn in taxes and US$400bn in JGB issuance. Every. Single. Year.

Nothing short of drastic tax and structural reform will do. Instead of behaving more prudently by cutting budgets when we had the chance, instant gratification created by governments desperate to stay in power has only weakened our relative position. Since 2013, the Coalition has been responsible for 46% of the total amount of all debt issued since 1854.

States should quickly realise that the $118 billion in federal grants going forward will also be curtailed. NSW will likely fare the worst because its financial position is by far the best.

If the government had a proper plan, it would be looking to what essential industries have been given up to the likes of China that we need to onshore. Medical equipment, masks or sanitiser. For cricketer Shane Warne to be converting his Seven Zero Eight gin factory to produce hand sanitiser shows how much of a joke our local manufacturing has become.

We must never forget that a Chinese government-owned company displayed the Communist Party’s mercenary credentials by (legally) buying 3,000,000 surgical masks, 500,000 pairs of gloves and bulk supplies of sanitiser and wipes. So not only was it responsible for covering up the truth surrounding the virus in the early stages of the pandemic, we openly let it compromise our ability to combat the virus when it hit our shores.

China has shown it doesn’t give a hoot for ordinary Australians. So why should we continue to fold to its whims and cowardly surrender our industries for fear it’ll stop dealing with us? It is nonsense. We have some of the highest quality mineral resources which it depends on. We can bargain. We have chosen to appease a bully.

Our Foreign Investment Review Board (FIRB) needs to be far more vigilant to prevent takeovers by Chinese businesses. We should openly accept the way China conducts business practices and recognise that it is often incompatible with ours when national security is at stake. Surely this crisis has highlighted the true colours of the political system in Beijing.

That leads us to Japanese companies. Many are seriously cashed up, have a favourable exchange rate and have a long-standing history of partnering with local businesses. We should be prioritising our relationship with Japan and look to have them invest in our inevitable capital works programs – specifically high-speed rail. It is the type of project that has meaning for the future and a long enough timeline to turn an economy around.

People need to be prepared for the reckoning. There is no point softening the blow. The brutal truth will eventually arrive and we will have only put ourselves in an even weaker position with the policy suite enacted so far. Time to be rational about risk/reward. Whether we like it or not, the minimum wage will need to be cut substantially in order to get the jobs market alive again. Don’t worry, unemployment will be so high that people will demand minimum wages are cut because it is far superior to the alternative!

(Time to ditch your industry super and start shovelling your superannuation into gold)

Political expediency will trump Coronavirus market rout. Await market manipulation

MARKETS YTD

Share markets have been decimated in recent weeks across the globe. This year to date (YTD) chart above shows the extent. It shouldn’t really have taken Coronavirus or plunging oil prices to lead to this. We’ve been living high on the sauce for two decades and even though GFC in 2008 was a rude hangover, our authorities thought doubling down on all those free money excesses would work again.

Let’s not get too carried away. On a 5-yr basis, shares haven’t exactly blitzed with the exception of the S&P500. The ASX has put on just under 7% in 5 years. Germany, Japan and Italy have gone down. So if one is 45% higher than 5-yrs ago with an S&P fund, is that a mass hysteria moment?

INDEX 5YR

Automotive stocks have been dud investments over the last 5 years. It didn’t take Coronavirus to expose the underlying trends. BMW is don 52% on 5 yrs ago. Ford down 60%. Volkswagen -40%.

Car stocks

Industrial bellwethers like Caterpillar and GE have also not escaped stagnation. YTD, all of these stocks have bloody noses. Boeing has held up surprisingly well despite the MAX problems.

Industrials

Yet if we look at the FAANGs (Facebook, Apple, Amazon, Netflix & Google), we can see that over 5 years, investors have made a bundle.

FAANGAs these 5 stocks make up 15% of the S&P500 Index by weight, if they fall the impact is greater. With the exception of Netflix, these monsters are down 15~20%.

FAANG 1M

Worried?

Fear not, our heavily indebted incompetent political class and complicit central bankers will concoct a new potion of even lower rates, more QE and further fiscal spending on wind farms, solar panels and roads to nowhere to keep the ship afloat. It may be a hapless task in the long run but just watch the printing presses move to full speed. The ride is about to get interesting.

We’ve been bearish for years based on the underlying tenet that financial market manipulation by authorities has merely distorted the most efficient clearing mechanism -free markets. The invisible hand will eventually win. Just not quite yet.

Italian Senator and former Deputy PM Matteo Salvini has called for a ban on short selling. Why? All he’ll do is exacerbate the sell-off by diverting capital from Milan to London. The politicians just don’t get it. That is why Milan FTSE All-Share index fell by 10.75% overnight. That market is down 23% YTD.

When the pandemic hit the economy, we should have known from last month that it would spread and impact global travel, trade and oil prices. Why did it take so long?

We wrote last week that the explosion in market chasing (especially levered) ETFs would exacerbate distortions on the downside. The main reason being is that options markets that hedge levered products see heavy delta bleed (pricing blowing out) during routs. The reason is in bull markets human nature is more comfortable taking risk. In bear markets, people panic hence needing larger insurance premiums to protect against the madness of crowds.

Essentially what that means is that when ETFs were a far smaller chunk of the market, today’s 7.8% drubbing may only have been -4% in equivalent terms. That is because the ETFs chase, not lead markets because their product design is to replicate the immediate past. Yet our first instincts are to compare these apples with oranges and equate them to 2008. Wrong. Furthermore, a larger part of the market is dominated by a smaller

So the question is, do we liquidate all of our shares into the falling knife or take the view that some wonderful opportunities will present themselves to get exposure to what we hopefully viewed as sensible long term investments.

We take the latter view. We need to separate Coronavirus (the disease) and the hysteria (eg hand sanitizer and toilet paper panic buying).

While the disease is problematic and will hit the economy hard in the coming quarters, the question is market hope pinned to government response will come back. The measures should continue to grow and grow until they have cauterized the wound. After all, we live in a market where financial TV programs are summoning the opinions of NY Mets baseball pitchers for their ideas on stocks.

Of course, it will be all academic, but confidence is the only thing that matters from here. As soon as we get on top of Coronavirus, markets will swing back into action and many will simply fall for the same tricks like Pavlov’s dog and the short squeeze will send stocks powering back.

Governments now have a legitimate excuse to blow out deficits and borrow to save us. In that sense, this pandemic is a blessing in disguise. That isn’t to trivialize Coronavirus but to note that politicians will do almost anything to stay in power, even if the long term consequences will linger long after they’re out of office.

Where will they spend? The automotive sector has been in the doldrums for ages. Expect to see EV related subsidies which will be a boon for the EV battery plays – we’ve bought Jervois Mining (JRV.AX) which is about to start a cobalt mine in Idaho.

Think of support to the aviation industry when the crisis is under control. Boeing and Airbus. Don’t forget that American Airlines renewed 900 aircraft soon after it announced Chapter 11 bankruptcy back in 2011.

Think construction – cement companies and construction machinery companies tend to benefit from public works programs. We continue to hold gold (have done since 2001) as the ultimate insurance policy when the whole system can no longer heal with band-aids.

So get ready to buy some bargain-basement names with cash flow survivability, especially if you have a self-managed super fund.

Yes the underlying economic backdrop is dreadful but there will be one last hurrah!

Know your history

BBC reports that the UK intends to introduce E10 ethanol based fuel. Before going ahead they should reflect on the disaster that befell Germany when it introduced the eco-friendly gasoline.

The German authorities went big for bio-fuels in 2008 forcing gas stands to install E-10 pumps to cut CO2. However as many as 3 million cars at the time weren’t equipped to run on it and as a result consumers abandoned it leaving many gas stands with shortages of the petrol and gluts of E-10 which left the petrol companies liable to huge fines (around $630mn) for not hitting government targets.

Claude Termes, a member of European Parliament from the Green Party in Luxembourg said in 2008 that “legally mandated biofuels were a dead end…the sooner It disappears, the better…my preference is zero…policymakers cannot close their eyes in front of the facts. The European Parliament is increasingly skeptical of biofuels.” Even ADAC told German drivers to avoid using E10 when traveling in other parts of continental Europe.

But governments always know best. Apparently.

BoJo’s EV adventure by 2035 is risky

Image result for ev charger nullarbor

There is a lot of irony when studying electric vehicles (EVs) and government policy. The lack of consultation with the very industry it seeks to regulate is mind-boggling. This picture of an EV charging station powered by a diesel generator along the Nullarbor highlights how poor the thought processes are. The problem governments face is that they are starting with a narrative and trying to reverse engineer the data to fit it. Sadly, the market will ultimately decide – that means consumers.

3 years ago we met with an EV parts supplier, Schaeffler AG, which openly admitted the task to meet the government EV demands was being impeded by their own desire to out virtue signal each other.

Schaeffler said, 200 cities across Europe had EV policies as distinct as the other. Therefore carmakers were struggling to meet all of the non-standardised criteria which was driving up production costs and making EVs even further out of reach. Instead of all working for the “same” outcome, the parts suppliers were saying until governments came to a sensible balance, the delays would continue.

The irony is that the broad range of EVs available in the market is too narrow. Of course we can argue in 15 years that will have vastly changed. The question is whether production can keep up.

First of all, governments around the world tend to generate around 5% of total tax revenues from fuel excise. You’d be a fool to think that EVs won’t end up being stung with a similar registration tax to offset it. It is already happening. Cash strapped Illinois has proposed the introduction of a $1,000 annual registration fee (up from $17.50) to account for the fact EVs don’t pay such fuel taxes.

Secondly, the UK government may well have to introduce cash-for-clunkers style subsidies to entice people to ditch their petrol power for an EV. Because, unless someone owns a classic car, the second most expensive household asset will be near worthless meaning many may not bother to switch by 2035. That will put huge pressure on the auto industry and dealers to convert sales.

Third, the infrastructure to be able to charge millions of EVs overnight will need significant upgrades, especially to the power grid. If the UK wants to go down the renewables path good luck in meeting the surges in demand because EV charging will be highly random. People won’t be happy to be sitting at home waiting for a charge and realising that 200,000 others want to do so at the same time on a cloudy day with no wind.

Then there are the automakers. While they are all making politically correct statements about their commitments to go full EV, they do recognise that ultimately customers will decide their fate. A universal truth is that car makers do their best to promote their drivetrains as a performance differentiator to rivals. Moving to full EV removes that unique selling property. Volkswagen went out of its way to cheat the system which not only expressed their true feelings about man-made climate change but hidden within the $80bn investment is the 3 million EVs in 2042 would only be c.30% of VW’s total output today. Even Toyota said it would phase out internal combustion in the 2040s. Dec 31st, 2049 perhaps? Mercedes have vowed to keep diesel and petrol on the menu out to 2050.

Put simply, why is the government trying to dictate the technology to an industry that has made such amazing advancements in safety and technology? By all means, have a zero-emissions target by 2035 but offer the industry complete technological freedom to achieve it. The consumers will ultimately decide and if carmakers are forced to meet a target that was based on ill-advised government policy, we shouldn’t be surprised if dealers are forced to close or car makers requiring bailouts.

Also at 2m vehicles a sold annually in the UK, it won’t get to dictate where car makers allocate their global EV inventory. If easier market conditions – based on the available output and cost per vehicle to meet the standards – are found in the US, China or Germany, the costs to Brits to make the shift will make the 2035 target even more pointless. Pricing themselves out of the market.

However, it won’t much matter because many of the politicians making the move won’t be in government come 2035 to clean up the mess.

Global Coal-fired power statistics – Diary of a Wimpy Kid

What is it with the self-flagellation over coal-fired power? The announcement that the Morrison government intends underwriting “ONE” coal-fired power plant brings with it the hysteria of publicly force-feeding kindergarten kids with highly radioactive sludge at recess time. Naturally, none of this outrage is based on facts. It is all tokenism.

Here are the stats for coal-fired power stations globally:

Coal Capacity

Australia has only 2.5% of the coal-fired capacity of China. Versus our total of 58, China has almost 3,000 in service.

Coal Operation

Coal-fired plants that have been announced, are under construction, permitted and pre-permit stage around the globe total 1,046. Where are the climate activists in China, India, Vietnam, Pakistan, Indonesia, Bangladesh, Philippines, Japan, Russia, Mongolia, Botswana, Nigeria, Zimbabwe, South Korea, Thailand, Malawi, Serbia, Bosnia & Herzegovina, Turkey, Egypt, Poland and South Africa?

New Coal

The mt CO2-e output of each country is as follows. Note China produces 36x more CO2.

Coal CO2

So China and India are responsible for 58% of coal-fired power generated emissions and will be 50% of all new capacity additions going forward.

Coal CO2 Contrib

China has 100x more coal-fired power on the drawing board than Australia yet we behave as though we are the biggest climate sinners on the planet! China and India have consistently been 70%+ of all new coal-fired plant capacity additions since 2006.

Coal Capa

So do Australian activists honestly think that canning one domestic new coal-fired power plant will have the slightest effect on global temperatures when our Asian and African neighbours are full speed ahead?

There have also been arguments made by activists that our coal exports should be counted against our totals in terms of emissions. Fine. Then by that logic, FNF Media expects the total emissions of every car sold in Australia (including fuel consumed) to be charged back to Japan, China, Korea, America and Europe. Every aircraft, every electronic device, every imported building material, crane, bulldozer, wind turbine, solar panel and truck that transports it. It would equal itself out pretty quickly.

Our global neighbours seem to be prioritizing national growth over climate alarmism. For it would appear they do not have the same level of brain-washed fanatics telling our kids that they have inherited a planet that will make them the last people on earth to survive.

The quickest route for Australia to end its prosperity is to cower to this insanity. To fall in line to the idea that renewables are cheaper (they aren’t) and more green is preposterous. Wind turbine blades are being put into landfill and solar panels are toxic to recycle and likely to end in the same place. Germany is giving us a great beta test case of how renewables are failing them. Indulge yourself here.

Coal-fired plants in Australia are forced to run sub-optimally to cater to the demands of the fluctuations in renewables which must be given priority to the grid. Ask anyone in large scale manufacturing how being forced to run at fluctuating levels destroys efficiency. It really is that simple.

Coal Price

Thermal coal prices are far from going out of control. So our power plant electricity generation isn’t becoming pricier due to input costs.

We have to stop becoming emotional about numbers and data and look at what they are telling us rather than build a narrative and reverse engineer the results. It always catches up to us in the end.

Our government needs to show some backbone and provide easy to understand data about reality. Rather than fold at the confected outrage which appears backed by crony capitalists.

Now that former PM Turnbull is weighing in on the debate (contradicting comments made while PM) saying that it is lunacy to pursue coal. Given his record of poor judgment, it stands to reason building cleaner coal-fired power plants is a sensible way to lower energy prices and remain a competitive global economy.

As FNF Media likes to say, the numbers will always be right in the end. Fiddle them at your peril.

Extinction Rebellion trashes Auto Show

These climate activists are unhinged lunatics. This is the justification that Extinction Rebellion (XR) used for trashing the Brussels Autosalon was as follows,

The truth is, no car is green…The private car is no longer compatible with the Climate and Ecological Crisis….Governments must stop pouring billions into roads and instead make mass public transport affordable, accessible, reliable and convenient.

The Brussels Times reported that 187 were arrested and charged €2,000 each. Febiac, the auto show organizer, said XR’s display at the event caused a whopping €367,829 in damages.

There is a difference between protesting and breaking the law by trashing private property.

Febiac, to its credit, gave XR approval to protest under certain guidelines. The organizer’s Joost Kaesemans said, “We sat together with people from Extinction Rebellion for the salon, we told them they could hold a demo, sing songs and hand out brochures...But we also told them that if they bothered visitors and wreaked havoc, we would take measures. They did not stick to that, so there are consequences.”

So even when the organizers play ball, the fools of XR think they have carte blanche to act as they please. Hopefully XR protestors are forced to pay up, serve time and get handed a bill for wasting the time of the police.

If only XR protests were about saving the planet and not seek to control the way others live their lives.

One final question – does XR have a strategy to re-employ the 15mn that work in auto related industries? Of course not.