#capitalism

This can only end in tears

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As Sweden’s economy slows to the worst economic growth rate in 5 years under a negative interest rate policy, one would think the Swedish Central Bank (Riksbank) would be seeking to prudently manage its asset book on the basis of appropriate risk/reward as opposed to lecturing Australia and Canada on their respective carbon footprints. What we are witnessing is yet another discrete move by authorities to manipulate markets based on fantasy rather than fact.  The hypocrisy is extreme as we shall discover.

While the Riksbank should have complete freedom in how it wishes to deploy capital, we should view this is a pathetic sop to the cabal at the European Central Bank (ECB). Since when did central bankers become experts on climate change? The RBA is no better. Deputy Governor, Guy Debelle, gave a speech in March 2019 on the risks posed by climate change which based prophecies on the data accident-prone IPCC and Bureau of Meteorology. Why not seek balance? Easier to fold to group think so as not to be outed as a pariah. Utterly gutless. Our own APRA is also pushing this ridiculous agenda on climate change reporting. It is willful negligence.

While it is true that on a per capita basis, Australia and Canada’s emissions are higher than the global average, why doesn’t the Riksbank give us credit for lowering that amount 11.4% since 2000? Even Canada has reduced its carbon emissions by 7.3% over the last 18 years. Admittedly Sweden’s emissions per capita have fallen 21.9% according to the IEA. Greta will be happy.

Why hasn’t the Riksbank taken China or India to task for their 169.9% or 94.7% growth in CO2 emissions respectively? There are plenty of oil-producing nations – Qatar, UAE, Bahrain, Saudi Arabia and Oman that have worse per capita outcomes than Australia or Canada. Do these countries get special dispensation from the wrath of the Riksbank? Clearly.

The US has pulled out of the Paris Climate Accord. If the US has marginally lower emissions per capita (15.74t/CO2-e) than Australia (16.45t/CO2-e), isn’t a double standard to write,

The conditions for active climate consideration are slightly better in our work with the foreign exchange reserves. To ensure that the foreign exchange reserves fulfil their purpose, they need to consist of assets that can be rapidly converted to money even when the markets are not functioning properly. Our assessment is that the foreign exchange reserves best correspond to this need if they consist of 75 per cent US government bonds, 20 per cent German and 5 per cent British, Danish and Norwegian government bonds.

Essentially Riksbank commitment to climate change is conditional. The US which is responsible for 13.8% of global emissions can be 75% of holdings. Australia at 1.3% can’t. No doubt sacrificing Queensland Treasury Corp, WA Treasury Corp and Albertan bonds from a Riksbank balance sheet perspective will have little impact on the total. In short, it looks to be pure tokenism. The Riksbank has invested around 8% of its foreign exchange reserves in Australian and Canadian central and federal government bonds. So perhaps at the moment, it is nothing but substitution from state to federal. Why not punish NSW TCorp for being part of a state that has 85%+ coal-fired power generation?

At the very least the Riksbank admits its own hypocrisy.

The Riksbank needs to develop its work on how to take climate change into consideration in asset management. For instance, we need a broader and deeper analysis of the issuers’ climate footprint. At the same time, one must remember that the foreign exchange reserves are unavoidably dominated by US and German government bonds. The Riksbank’s contribution to a better development of the climate will, therefore, remain small. This is entirely natural. The important decisions on how climate change should be counteracted in Sweden are political and should be taken by the government and the Riksdag (parliament).

Still, what hope have we got when Benoît Cœuré, member of the Executive Board of the ECB, lecturing those on “Scaling up Green Finance: The Role of Central Banks.” He noted,

2018 has seen one of the hottest summers in Europe since weather records began. Increasing weather extremes, rising sea levels and the Arctic melting are now clearly visible consequences of human-induced warming. Climate change is not a theory. It is a fact.

Reading more of this report only confirms the commitment of the ECB to follow the UN’s lead and deliberately look to misallocate capital based on unfounded claims of falling crop yields and rising prices (the opposite is occurring) and rising hurricane and drought activity (claims that even the IPCC has admitted there is little or no evidence by climate change). Sweden is merely being a well-behaved schoolboy.

Cœuré made the explicit claim, “The ECB, together with other national central banks of the Eurosystem, is actively supporting the European Commission’s sustainable finance agenda.

CM thinks the biggest problem with this “agenda” is that it risks even further misallocation of capital within global markets already drowning in poorly directed investment. It isn’t hard to see what is going on here. It is nothing short of deliberate market manipulation by trying to increase the cost of funding to conventional energy using farcical concocted “climate risks” to regulate them out of existence.

Cœuré made this clear in his speech,

once markets and credit risk agencies price climate risks properly, the amount of collateralised borrowing counterparties can obtain from the ECB will be adjusted accordingly.

What do you know? On cue, Seeking Alpha notes,

Cutting €2bn of yearly investments, the European Union will stop funding oil, natural gas and coal projects at the end of 2021 as it aims to become the first climate-neutral continent.

All CM will say is best of luck with this decision. Just watch how this kneeling at the altar of the pagan god of climate change will completely ruin the EU economy. The long term ramifications are already being felt. The EU can’t escape the fact that 118mn of its citizens (up from 78m in 2007) are below the poverty line. That is 22% of the population. So why then does Cœuré mention, in spite of such alarming poverty, that taking actions (that will likely increase unemployment) will be helped by “migration [which] has contributed to dampening wage growth…in recent years, thereby further complicating our efforts to bring inflation back to levels closer to 2%.

Closer to home, the National Australia Bank (NAB) has joined in the groupthink by looking to phase out lending to thermal coal companies by 2035. The $760 million exposure will be cut in half by 2028. If climate change is such a huge issue why not look to end it ASAP? This is terrible governance.

Why not assess thermal coal companies on the merits of the industry’s future rather than have the acting-CEO Philip Chronican make a limp-wristed excuse that it is merely getting in line with the government commitment to Paris? If lending to thermal coal is good for shareholders in 2036, who cares what our emissions targets are (which continue to fall per capita)? Maybe this is industry and regulator working hand-in-hand?

The market has always been the best weighing mechanism for risk. Unfortunately, for the last two decades, global central bank policy has gone out of its way to prevent the market from clearing. Now it seems that the authorities are taking actions that look like collusion to bully the ratings agencies into marking down legitimate businesses that are being punished for heresy.

This will ironically only make them even better investments down the track when reality dawns, just as CM pointed out with anti-ESG stocks. Just expect the entry points to these stocks to be exceedingly cheap. Buy what the market hates. It looks as though the bureaucrats are set to make fossil fuel companies penny stocks.

MUST WATCH: US Democratic Socialist Convention

Not sure if this is the saddest or funniest thing ever? The cost of safe spaces must have been astronomical given the plethora of identities, pronouns and genders that needed to be catered for. They’ll definitely need capitalism to fund it.

Economic growth is an unnecessary evil, Jacinda Ardern is right to deprioritise it

This was the headline of an article CM spotted today. Of course CM wouldn’t dream of writing something that daft. To think social wellness can be achieved, let alone sustained without attention to economic growth. Magic pixie dust perhaps? Even though CM debunked the relative aspects of the Wellness Budget being considerably inferior to Australia, the left were quick to lavish praise on the the new matriarch of the woke. She is like the Obama of the Southern Hemisphere. Even regressives are progressive in the eyes of the left.

Note the NZ budget forecasts a 25% lift in tax revenues out to 2023. Income tax will rise 29.9% over the same period. Indirect taxes will jump 28.3%. That on a slowing economy and a rising unemployment rate will mean incremental taxes sting at the margin. Their data, not CMs.

Of course if the idea is to de-prioritize the economy, it can only mean that taxes as a % of GDP rise. Indeed they do from 30.6% this year to 31.1% by 2023. Compare that to 25.2% falling to 25.0% in Australia over the same period.

Effectively Australia gets way more bang for the buck on providing wellness initiatives with lower burdens on the taxpayer because that’s what happens when the economy IS prioritized. Spending on social wellbeing rises as the economy expands.

If unemployment rises (as forecast by the NZ budget) over coming years, one can imagine that wellbeing by its strictest definition should fall. One loses a job, household income falls and wellbeing declines with it, unless welfare is on a par.

Presumably if Ardern’s deprioritized economic growth leads to worse economic outcomes, she can be guaranteed that wellbeing won’t be sustainable without more shared misery in terms of debt (rising) and deficits.

As Friedrich von Hayek once said, “if socialists understood economics they wouldn’t be socialists.”

Such is the madness of the left that they believe yet again that feelings are more important than facts. Even though as “woke” as many paint Ardern, her neighbour across the ditch is already there and expected to continue to outperform. That’s because economic growth is the priority. Yet don’t expect Scott Morrison to receive any praise. He is the wrong gender, skin colour and religious affiliation for starters.

Ardern is unlikely to stop the 35,000 odd Kiwis that migrated to Australia last year but she maybe lucky in doubling the 40 (yes, forty) Aussies who left the land down under to live in NZ in 2018.

Vegan feminist cafe closes & Trip Advisor comments priceless

A vegan feminist cafe, Handsome Her, has closed its doors for good. It had imposed an 18% gender surcharge for men to account for the ‘wage gap’ and given women priority seating. Perhaps if the cafe focused on service in the normal fashion it might have flourished. Take these 1 star Trip Advisor reviews.

This from John P.

I was in Melbourne on business recently and a friend of mine recommended this cafe. What a shame I listened to her. It took 5 minutes to get the attention of a waitress who seemed to be more interested in chatting to her friends, rather than serving a customer who’d just walked through the door. I was eventually seated and chose the gnocchi paired with the suggested pinot noir. The gnocchi arrived and I was bitterly disappointed. The gnocchi was very undercooked and had a floury texture, the mushrooms were burnt and the dish lacked any real flavour. The only enjoyable part of the meal was the wine. I left most of my meal on the plate and finished my wine.

When I asked for the bill, the waitress asked if there was a problem with my meal, since I’d left most of it on my plate. When I told her of my dissatisfaction with the meal, she morphed into an aggressive and irate woman who then started dispatching some rather vile language. Not wanting to cause a scene, I subsequently left the requisite cash on the table, which included a 15% tip, and promptly walked out. As I was walking past the register on the way out, I could hear the same woman telling the other waitress working with her that I was a “vile beast” and that I “wasn’t welcome here again”.

I certainly won’t be coming back. One of the worst experiences I’ve had in quite some time.

Date of visit: August 2017

Cuban_American from Englewood, Colorado wrote

This place is a giant turd. Nobody in their right mind should eat at such a horrid place. Your sexism and gender attacks are cancer to society. Be gone forever.
Date of visit: April 2019
Jack from Adelaide wrote “Get Woke, Go Broke”
“Went there to see what the hype was all about. The conditions were dirty and unclean. The people working there looked like they hadn’t had a wash in days. The food was overpriced for what you got and the plate presentation was sloppy.”
Date of visit: January 2019
Fast Food Reviews wrote,

“A terrible cafe that has no respect for either equality or the law, with horrible staff that I swear the owner had to scour the scum of the earth to find. Spend half an hour trying to get a waitress to come over and when they finally showed up they told me I’d have to wait because I was a “cis gendered white man” and there were women who needed to be served first. According to the waitress I’d have to wait until ALL women in the shop were served before they’d take my order, even those who came in after me. I left at that moment and will never return.

Date of visit: February 2019

Good Tenks suggested,

“What a disgrace that in 2019 in Australia we allow a restaurant to discriminate against a group of people based on something they cannot change.
I went to handsome her with 3 girls who are close friends (I’m a male) and was spoken to like a second class citizen, the attitude and demeanour of the employees is abhorrent.
The food wasn’t bad, the coffee was terrible but the attitudes are disgusting, I was spoken down and made to feel like garbage.

Myself and the ladies all agreed this is promoting discrimination and against what we believe in which is equality.
What a joke, avoid at all costs there is much better around.”
Date of visit: November 2018
Do look up Handsome Her Cafe reviews on Trip Advisor. Sadly those that don’t pay attention to customer needs face the wrath of evil capitalism.

Failing to grasp capitalism

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Good to see that the alarmists have moved the “saving the planet” argument to repairing 5yo washing machines. 35 years ago, repairing a VHS deck was worth the money. A new deck would set one back multiples of the repair. Can one honestly say they would bother repairing a 5yo deck when the replacement is likely to be near as makes no difference the same, if not cheaper than the repair?

Did the BBC think to measure that a brand new washing machine might consume a quarter of the electricity and half the water of a 5yo one? Over 100s or washes it would pay for its own environmental footprint many times over.

Perhaps the regulators trying to gather momentum behind this ‘grand’ proposal  might let the free market determine whether people would bother to repair a broken appliance based on cost. If they felt compelled to revive a 5yo for the cost of a replacement then so be it. Chances are, like flat screen TVs, capitalism will have brought the cost of a like for like new LED 4K to a quarter of what it cost 5 years ago.

Perhaps Brussels can establish an entire building dedicated to subsidized repair jobs. Spend billions in infrastructure to cater to a question no one is asking

The EU regulators are trying to force manufacturers to make appliances last longer. If a consumer wants to buy a cheap Chinese made fridge and run the risk of it dying too soon, why stop them? If another shopper thinks paying 3x for a fancy Made in Japan fridge on the basis it might last longer, why not let them choose?

Going by the EU directive surely car makers should offer 20 year warranties. Although doesn’t it contradict the push to eradicate fossil fuel sales by 2040. Doesn’t forcing child slave labour in Africa to mine the cobalt to go in batteries propose deeper ethical questions?

Ultimately market forces can quickly determine whether repair is feasible. No need to mandate makers to build equipment that consumers aren’t demanding.

Rest assured people! The EU once launched multi year study on whether water rehydrated or not. Instead of accepting it, the EU introduced laws which prosecuted companies that claimed its water products did! Go figure? It’s journalism like this that makes one think they’re all eating Tide pods.