#clueless

Who uses a fax machine?

How can anyone have confidence in Victorian Premier Dan Andrews when the government had been relying on a contact tracing method which utilized pen, paper and a fax machine? What happened to the super computer that has spat out the ridiculous numbers that have impacted so many Victorians?

Pretty much every other state uses QR codes to register when people have visited certain establishments. Only now Victoria plans to enter the digital age. Why didn’t Andrews call up NSW Premier Gladys Beijiklian and asked who developed hers?

Presumably Andrews can hire people to manually input the names, numbers and emails of those establishments and be able to trace after 3 weeks.

What could possibly go wrong? Johannes Leak’s cartoon is so on point.

Bill DeBlasio introduces gun buyback program

Where will NYC Mayor Bill De Blasio’s genius end? As gun crime spikes in his city, he thinks a gun buyback will solve it. Maybe cutting $1bn from the police budget might be a factor in rising crime? When his own police officers are quitting in droves and making spoof videos about the new rules he has set for interacting with suspects.

Perhaps gangsters can hand in the guns of their victims and start a side business. Who knew the mayor might end up subsidizing criminals?

Sadly, despite shootings up 253% in NYC in mid-July, the studies on gun buybacks in the US have all returned the same result – ineffective.

We are struggling to work out who is the worst mayor in America. De Blasio must be in the running. The field of incompetent Democrat mayors is deep. – Lightfoot, Durkan, Bottoms, Bowser, Wheeler, Garcetti… the list goes on.

Lori Lightfoot puts her slipper down in Chicago as crime skyrockets

Chicago

Chicago Mayor Lori Lightfoot lambasted the idea that Trump might send federal troops to protect federal property as crime skyrockets in her city. In 2020, murders up 51%. Shootings are up 47%. But hey, never mind that over a dozen people were shot in broad daylight outside a funeral home.

She tweeted, “Mr. President or not—I don’t care one bit what your name is. I will not allow troops in Chicago, and I will do everything in my power to stop you.

She claimed the federal troops would have no idea how to navigate Chicago. If we took several of her aldermen at their word, it is Lightfoot who has no idea about her city.

Maybe if she was more proactive in stemming the violence, Mr Trump would have no requirement to send troops. The irony came from an MSNBC interview with local Chicago residents who openly said, “federal help” would be most welcome to put an end to the warzone conditions. Who knew? We guess that Lightfoot’s own taxpayer-funded private security allows her to sleep soundly at night.

Sounds more like Lightfoot’s well-documented TDS as opposed to her utter lack of leadership.

Perhaps she needs to deputize the Census Cowboy to law enforcement instead?

Trillion Dollar Baby?

What will it take to wake the media up to the fact that the way our government is spending it won’t be long before we are a $1 trillion net debt baby?.

Our current federal liabilities (p.121) stand at $1.002 trillion (which is pre COVID19). Have the media bothered to look at the state of the budget accounts? Or are they too busy lavishing praise on rescue packages which have a finite lifespan.

We pointed out yesterday that the “revenue” line could be decimated by the disruption – huge cuts should be anticipated in the collection of GST, income, company and excise taxes. Not to mention huge rebates to be paid to now unemployed workers. On an annualized basis the revenue line could get thumped 30-40% if this continues for 6 months.

So on the back of an envelope, it is not very hard to work out that with a current $511 billion revenue line looking to fall towards the early to mid $300 billion mark against a projected expense bill of $503 billion a deficit of $150bn will open up. Throw on c$150bn of COVID19 stimuli arriving by June 30th and we get a $300 billion budget deficit. Our net financial worth would grow from minus $518 billion to negative $818 billion.

Rolling into next year, it is ludicrous to think that hibernated businesses will have resumed as normal. This means that the following year’s tax revenue line will look as sick as the previous period. The government will be torn shredding the expense line as unemployment shoots higher so assuming minimal budget cuts, it could face another $200 billion deficit taking it north of $1 trillion net liabilities in a jiffy.

Let’s not forget what the states may face. Severely lower handouts from the federal government via GST receipts which will balloon deficits, a trend we’re already seeing.

The states currently rely on around 37-62% of their revenue from the federal government by way of grants. The balance comes through land/property taxes, motor vehicle registration, gambling and betting fees as well as insurance and environmental levies.

All of those revenues lines can dry up pretty quickly. 40% of state budgets are usually spent on staff. Take a look at these eye watering numbers.

NSW spends $34 billion on salaries across 327,000 employees.

Victoria spends $27 billion across 239,000 public servants.

Queensland uses 224,000 staff which costs $25 billion per annum.

WA’s state workforce is 143,000, costing $12.6 billion.

SA has 90,000 FT employees costing $8.5 billion.

Tasmania 27,000 setting taxpayers back $2.7 billion.

Just the states alone employ over 1.05 million people at a cost of $110 billion pa!! The territories will be relative rounding errors.

A lot of the states have healthy asset lines which are usually full of schools, hospitals, roads and land). These are highly illiquid.

Unfortunately, one of the golden rules often forgotten in accounting is that liabilities often remain immovable objects when asset values get crucified in economic downturns. When markets become illiquid, the value of government assets won’t come at prices marked in the books.

How well will flogging a few public hospitals go down politically to financially stressed constituents?? This is why gross debt is important.

The states have a combined $202 billion outstanding gross debt including leases.

Throw on another $150 billion for unfunded superannuation liabilities. Good luck hitting the “zero by 2035” targets some state have amidst imploding asset markets. It simply won’t happen. If only these liabilities were marked to market rather than suppressed by actuarial accounting. The WA budget paper (p.42) notes the 0.4% bump to the discount rate to lower the pension deficit figure. To be fair, they are far less outrageous than US state pension deficits.

How must the State Gov’t of Queensland be praying that Adani keeps plowing ahead? How Greyhound must regret terminating a contract to ferry construction workers to the mine? We doubt the incumbent government will have a climate change bent in the upcoming Oct 31 state election. See ya.

The trillion dollar federal debt ceiling seems like a formality especially as the chain reaction created by the states puts on more pressure for the federal government to inject rescue packages to prop up their reversal of fortune budgets. It is that trillion with a T headline that will get people’s attention.

In short, we ain’t seen nothing yet.

Unlimited QE and a reminder of discontinued series

Just when you thought it couldn’t get crazier, the Fed has announced that it will buy unlimited sizes of treasuries, mortgage-backed securities and corporate bonds. Recall our comments in 2018 when the Fed discontinued its reporting of assets. We noted that the Fed discontinued M3 money stock in 2006, two years before the GFC. Coincidence?

We were always struck by former Fed Chair Janet Yellen’s comments in 2016:

Monetary and fiscal policy is far better prepared for large positive shocks than negative ones

and 2017:

Don’t expect another financial crisis in our lifetime

The only thing left is to buy equities outright which would require an act of Congress. Such moves once again only highlight just how bad the situation has become. The Bank of Japan can hardly be credited with success over its ETF based equity purchases. It has now lost $30bn in this recent market rout. We should mention that the BoJ is a top 10 shareholder in almost 50% of listed stocks, creating an overhang of epic proportions should it ever announce it wants to reduce holdings. It now owns $300bn and due to be $400bn by year-end.

SBS impartiality & Amanda McKenzie’s colossal clumsiness

Image may contain: 1 person, text

Good to see the SBS has made sure it has an impartial position on topics such as climate change remains steadfastly in line with its charter. It not only avoided enlargening the font in bold of certain choice words spoken by Climate Council CEO Amanda McKenzie but it also refrained from putting a picture of the broadcaster’s ultimate boss holding a lump of coal. The irony is that the Climate Council guru’s facts were, unfortunately, wrong.

PM Scott Morrison’s facts were by and large correct. Never mind that they disagreed with McKenzie’s narrative. Good to see that SBS followed up with a rigorous line of questioning to get her to point out exactly where the PM was out of line. Sadly, that was a bridge too far for the alarmist journalists.

Presumably “colossal bullshit” should have been evidence enough. The Climate Council did release a statement but instead of countering fact, it just produced its own interpretation of what it wanted to hear, rather than point out where Morrison had blatantly told porky pies.

For instance the Climate Council stated:

Morrison statement: “Australia is responsible for just 1.3 per cent of global emissions. Australia is doing our bit on climate change and we reject any suggestion to the contrary.”

Fact-check: Australia is the 17th largest polluter in the world, bigger than 175 countries.  We are the third-largest exporter of fossil fuels in the world. 

CM: It is irrelevant. Australia’s GHG as measured by the IPCC, IEA and Eurostat are 1.3% of human-made CO2. It is the truth from sources that align with the Climate Council. It only shows that the previous 16 countries absolutely dwarf us by comparison. China is 29.3% on its own.

Furthermore to make statements that our coal exports should be counted in our emissions number is the same argument as saying that every imported passenger car, transport truck and commercial jet should have emissions docked against America, Japan, Korea and the EU.  That would be consistent

Morrison statement: “And our Great Barrier Reef remains one of the world’s most pristine areas of natural beauty. Feel free to visit it. Our reef is vibrant and resilient and protected under the world’s most comprehensive reef management plan.”

Fact-check: In 2016 and 2017, the Great Barrier Reef was severely damaged through back-to-back bleaching events which killed half of all corals on the planet’s largest living structure. Australia’s current goal, if followed by other countries, would sign the death warrant of the Great Barrier Reef. 

CM: Maybe she should speak to Professor Peter Ridd and question why the James Cook University faculty lost (although still not completely settled due to an appeal) all aspects of the unfair dismissal case against it for Ridd’s refusal to buckle to the cabal’s orthodoxy. The reef is not dying. It is thriving. So much so that Greenpeace needed to use a picture of bleached coral in The Philippines to distort the truth because the GBR presented no such photographic opportunities.

Morrison statement: “Our latest estimates show both emissions per person and the emissions intensity of the economy are at their lowest levels in 29 years.”

Fact-check:  Australia has the highest emissions per capita in the developed world. It is true that Australia’s emissions per capita have fallen more than most countries [is that colossal bullshit?], but this is from an extraordinarily high baseline [so what?] and has largely been driven by rapid population growth. Even with this drop, we still have the highest per capita emissions in the developed world. Our emissions per capita are higher than Saudi Arabia, a country not known for its action on climate change. Ultimately, our international targets are not based on per capita emissions. 

CM: Australia’s CO2 emissions per unit of GDP since 1990 have fallen 33.9%. Wrong Amanda, Canada has higher emissions per capita at 16.85 vs our 16.45. Unless under Justin Trudeau Canada has lost developed nation status which is highly possible! Saudi Arabia is 19.39. So, in fact, your comments are incorrect.

We could go on. So if Amanda McKenzie wants to throw the PM under the bus with profanity it helps if she actually provided accurate figures.

Perhaps the most colossal bullshit to come from McKenzie was this,

Over the winter we saw bushfires burning across Australia while the Amazon rainforest and the Arctic were on fire. A major new report shows that suburbs in Sydney, Perth and Melbourne could experience serious sea level disasters every year on our current trajectory.

It would appear that the Australian seaside property prices aren’t at (excuse the pun) fire-sale prices and that the bushfires in the Amazon, Australia and the Arctic are not related to climate change. The truth is that the acreage lost to bushfires have fallen 24% over the last 18 years. Unless NASA is lying.  Maybe the Climate Council has been channelling the Sierra Club CEO Aaron Mair?

 

Justin Trudeau explains his plastics ban

Canadian PM Justin Trudeau put forward his case for cutting down on plastics with such eloquence. How could one not be sold?

Note CM has discussed the stupidity of plastic bag bans here.

Ocasio-Cortez took bank bashing to new levels

Congresswoman Alexandria Ocasio-Cortez took bank bashing to new heights yesterday. While questioning Wells Fargo CEO Timothy Sloan she suggested that the banks that financed fossil fuel companies which cause environmental damage should pay for cleanups. Sloan correctly said WF doesn’t “operate” the pipelines of their customers.

She also accused Sloan of Wells Fargo lending to publicly listed corrections companies which operate ICE detention centers which detain children.

So basic is her level of understanding of how banks work, perhaps she might understand the ridiculousness of her own attacks better if she is told she has to accept financial punishment for any failures that are a result of implementing the Green New Deal.

The Democratic leaders really need to rein her in before she damages the brand any further. Left to her own devices she’ll provide hours of video gaffes come election time. Attacking Sloan had no basis let alone substance.

Meanwhile serial social justice warrior Trudeau hits new poll lows

FCF15B1F-4C6D-49BE-8980-9C6B66F6AD33.jpeg

Meanwhile, as the supposedly most hated and despised bully of the West is likely to see his approval move sharply higher over North Korea, serial appeaser and social justice warrior Prime Minsiter Trudeau of Canada saw his approval rating sink to 33%, his lowest number ever recorded.  A Forum poll also noted a majority of the voters surveyed (43%) said they would support the Conservatives while 30% believe they would back Trudeau’s Liberal party.

Based on the poll results, Forum Research predicts a Conservative majority government taking 207 seats. The Liberals would take 110 seats, while the NDP would likely garner 23 seats. The Bloc Quebecois would end up with six seats and the Greens with two.

It is surprising to see Trudeau’s slump when he has the full support of people like his Environment Minister Catherine “Climate Barbie” McKenna who said recently not only will she refuse to debate with those that disagree with her on climate change but that Canadians have a $30 trillion (yes you read right) opportunity by 2020 because of the Liberal’s carbon tax and associated environmental policies. Who wouldn’t vote for a party that can 20-bag an economy in 2 years?

If it does go pear-shaped with mathematics like that she can always sign up for the Greens leadership.

Funniest thing I’ve heard all week if it wasn’t so serious

unemp“The FOMC is not a body that suffers from group think” – Fed Chair Janet Yellen. Normally I have to wait to read the FOMC Minutes some 3 weeks after the FOMC meeting to be stunned at the ridiculous language used to cover up the fact they have no idea. I reported last time that the Fed said “The risks to the forecast for real GDP were seen as tilted to the downside, reflecting the staff’s assessment that both monetary and fiscal policy appeared to be better positioned to offset large positive shocks than adverse ones.”

In the press conference Yellen said “Why didn’t we raise”? It does not reflect a lack of confidence in the economy…let me try to set out again…we are generally pleased with how the US economy is doing… evidence is that the economy is expanding more strongly…we don’t see the economy as overheating now…we continue to progress toward our objectives”.” The last sentence beggars belief. If the FOMC keeps lowering forecasts I would argue the objectives are progressing toward you. That’s right you have to cut forecasts to make it sound as though you have credibility.

If things are so peachy why has the Fed lowered its 2016 and  long term GDP growth target to 1.8%? One reporter sensibly asked “if you’re cutting growth predictions, where is the inflation coming from?”  Yellen suggested that the risk of labour market tightness with a healthy hiring outlook but lower productivity.

I thought the use of the word “overheat” by Yellen several times was mind boggling. If the US economy is at risk of overheating on 0.37% rates and you’ve just cut forecasts to 1.8% long term growth, what does that suggest for a normal operating GDP level? There is no way anyone can take central bankers seriously. The language she used in the press conference was a total fiction.

I updated the following chart on US unemployed persons which shows ominous signs of picking turning points of economic weakness over the last 60+ years. Since May 2016, the number is up over 400,000. It will be interesting to see if the September labour stats due in early October show unemployed rising north of 8mn. We’ll know soon enough.