Drug addiction

Tarzan of the Ocean

This brave member of the US Coast Guard leapt onto the top of a drug smuggling submarine used by the cartels and politely knocked on the hatch for a quick chat.

For all those who disrespect the flag, here is another good reason why they shouldn’t. Brave souls putting their own lives on the line to keep a country safe.

This chap helped seize $232m worth of narcotics.

Video here.

RBA should expect a dead cat bounce from the rate cut

The RBA has cut rates to a record low 1.25%. The irony here is people and businesses invest because they see a cycle, not because interest rates are low. Lowering rates will do little to spur investment, especially as the global economy cools.

Post the Hayne Royal Commission, the banks will likely pass on the full amount which will only impact margins and weaken them given the high reliance on wholesale funding.

The other problem the RBA faces is that banks have become so reluctant to lend post the RC that the net impacts of the rate cut will be negated by the unwillingness to lend at levels we have seen in the past given the penalties associated with it.

CM still contends that the Aussie banks tread a perilous path given their leveraged balance sheets. CM thinks part nationalization or worse is a real prospect if the slowdown is severe enough. The equity buffers are tiny relative to the real estate portfolio. All contained in the above link.

The rate cut is unlikely to boost confidence other than loosen the noose around stretched borrowers’ necks.

Climate change to percolate coffee prices?

Climate change is such a force of nature. CM’s local newspaper said it affected household pets, a university study said it created toxic masculinity and now the Daily Mail reports that coffee prices could soar due to climate change! The thought our ritual cup of Joe in Australia could cost as much as $7! Torn asunder.

Never mind that coffee bean commodities trade at 1/3rd peak prices of 8 years ago. Bit of a buffer, wouldn’t you say? Ironically coffee retail prices have only crept higher in Sydney meaning that rent and wages have been a larger factor on our morning kick starter than the beans themselves.

The Mail reports,

Mark Dundon, 57, co-owns Seven Seeds cafe in Carlton, an inner-north suburb of Melbourne, and has been a part of the cafe scene for 18 years. 

He says climate change is making it harder for farmers in South America and South-East Asia to grow coffee and once they sell their product to major companies, the price they receive is often below the production costs.  

He believes prices could explode because producers are abandoning the industry for better work.”

He needn’t worry. The 16yo pig-tailed high priestess of the global climate emergency movement can lead worldwide protests to make sure her band of teenagers don’t acquire such a filtered caffeine habit. That way we poor adults won’t have excess demand pressures to keep us struggling through the day.

What will likely happen is a lot of consolidation driven by the majors like Nestle who will keep a lid on prices so we won’t need to sacrifice several cups a day habits.

Perhaps until Mr Dundon joins the “die-in” climate emergency protests in central Melbourne we can remain safely assured his business is doing ok, especially now that he has probably overheard his customers thinking of booking their ski trip to Falls Creek a month early due to the massive snow dumps!!

If worst comes to worst Baldrick can always find us substitutes.

Thanks to Simon F. for the flag on this story.

Aussies pay more tax than Japanese and Shorten wants to raise them higher!

CM is repulsed by the confetti blowing promises being made ahead of May 18. This election is about cost of living to be sure. It is not about climate change and not about resettling refugees. Yet there has to be a limit on the free give away with a growing deficit. Where is the fiscal responsibility? Do politicians run their own household budgets like this? Not in a million years.

Our federal tax receipts are A$430bn this year. Did you know Japan collects $A750bn at the national level? So Aus is 1/5th the population and raises 1/2 the coin of Japan. Having said that the Japanese government must raise A$500bn EVERY YEAR to plug the national deficit! That’s what happens with poor fiscal management. So doing the math including the debt financing, we still raise 31% the revenues than the Japanese on 20% of the population. We might argue our economy is 1/4 Japan’s but we’re following an unsustainable trajectory. It’s insane. How can we tax people more? Yet that is what Shorten will do.

We can debate til the cows come home about how GST is funneled back to the states from federal coffers but we need to wake up to our relative costs! Our budget deficit is c.$600bn yet here we see Labor throw confetti promises around everywhere. $1.18bn in new aid to foreign countries over the next 4 years. PNG spent our aid money on 40 new Maseratis. Shorten pledged $1bn to acquire land to put the VFT in place. Surely the private sector can deal with that. $2bn for a Melbourne metro. We can go on and on.

Everyone seems like a winner until everyone becomes a loser. The sad fact is that we must wake people up to reality. We need to spend smarter, not chuck more money and hope it has impact. Neither government will see a surplus. Take it to the bank. The economic growth projections aren’t there. No matter who wins this election, the global economy is slowing and either party will be handed a basket case of economy controlled by external forces which includes a slowing US and China. It won’t be pretty. The question is who can best manage that? Not Labor. Climate change will be so irrelevant in this downturn.

It gets worse. The Reserve Bank and APRA are asleep at the wheel. Instead of navigating sensible policies to thwart the largest recession we will face in almost 30 years which will decimate housing, both are discussing climate change compliance reporting by corporates. Seriously? It is so telling they are focusing on the wrong message. Have they seen that the world’s central banks have printed $140 trillion in extra debt since 2008 and got $20 trillion extra in GDP. Shockingly poor returns. $7 of debt gets us $1 of GDP.

Yet our political system has only one pair of rose tinted spectacles where the prescription is 27 years out of date. They are equally as oblivious to the oncoming onslaught where our Aussie banks face a real risk of part of whole nationalization. Their position is as bad as the Japanese ahead of the collapse of their bubble.

Do not be fooled. CM personally believes that the Coalition is not deserved of government but the alternative is even worse. The last thing we need is to rest on that old Aussie saying of “time to give the others a go!” because this is a time when we can least afford change. It will be buyer’s remorse + alpha.

Drinking the UnKool-Aid

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It appears President Trump has been bullying the US Federal Reserve to drop rates by 1% and get them to reopen the spigots on QE. What he is failing to grasp is that businesses invest because they see a cycle, not because interest rates fall.

Trump tweeted,

China is adding great stimulus to its economy while at the same time keeping interest rates low. Our Federal Reserve has incessantly lifted interest rates, even though inflation is very low, and instituted a very big dose of quantitative tightening. We have the potential to go…up like a rocket if we did some lowering of rates, like one point, and some quantitative easing. Yes, we are doing very well at 3.2% GDP, but with our wonderfully low inflation, we could be setting major records &, at the same time, make our National Debt start to look small!

This is a frightening proposal. Rates are at 2.25~2.50%. Although it masks a more important reality. Can Trump avoid a market calamity ahead of the next election? The real engine of the economy is slowing.

Despite the headline US GDP print of 3.2%, consumer spending and business investment slumped to the lowest levels under his presidency. Business investment spending was dominated by “intellectual capital” (soft) which is a pretty hard metric to put a reliable number next to. Equipment and structures (hard) contribution to business investment was near as makes no difference zero. Personal consumption of durable goods slumped to their lowest reading since 2011. Wholesale inventories (ex-autos/petroleum) surged ahead of sales.

Trump might argue China is adding stimulus. He is right. China’s Aggregate Financing (approximately system Credit growth less government borrowings) jumped 2.860 billion yuan, or $427 billion – during the 31 days of March ($13.8bn/day or $5.0 Trillion annualised (a Japanese GDP)). This was 55% above estimates and a full 80% ahead of March 2018. This pump priming added 8% to the Chinese stock indices but since then the market has been rolling off.

The world does not need more debt to be inflated away to get us out of the current mess we are in. A recession is inevitable. To put it into context, the world, since GFC, has added $140 trillion in debt for a grand total of $20 trillion in global GDP growth. That is right. $7 of debt only got us $1 of GDP. So if the Fed acquiesces President Trump he will probably get even worse metrics.

Then again perhaps we can take the words of a venture capitalist, Chamath Palihapitiya, who said on CNBC that “central banks have created an environment where major downturns and expansions are almost impossible.” It is statements like this that almost guarantee that central banks have lost control. Central banks have one role – ensure that markets maintain “confidence”. Powell’s latest move to cut rates after such a shallow peak tells us that “confidence” is waning. 

Dill Testing

Pill testing. Yes, it is difficult to stop the youth of today popping drugs at rave concerts. If certain drugs like MDMA are illegal, why is it OK to turn a blind eye at the concert gate? If there is medical evidence to say taking MDMA is harmless then change the law. Sadly the tragic deaths of a handful of kids has shown this not to be the case. Overdoses and bad batches dispensed by nefarious actors.

Is the desire to resort to hallucinating narcotics so great that the government should back legislation to allow young kids to have their risky tablets tested?  Imagine if those asking for their pills to be tested were required to put their name down against the test? None would test! There would be outrage over a violation of privacy. Yet we the tax payer invariably foot the bill of the reckless behaviour should things go wrong. Perhaps attendees should be required to file their Medicare number alongside the pill test and pay higher premiums for willingly taking higher risks? Again, none would line up.

The arguments for pill testing surround removing the potentially deadly drugs off the market by creating a virtuous circle of warnings within the drug taking community. The idea is that they could make informed choices were pill testing made available and inform each other what to avoid. Research from Austria showed that 50% of those that got pill testing changed their consumption behaviours.  Sadly the other 50% did not. Other examples of positive outcomes from pill testing revolve around wider knowledge about what drug compounds are popular which helps medical and emergency services better prepare. There is a company in America which sells NARCAN which revives those that overdose from the dead. You can read more about that here.

The arguments for pill testing seem so strong that it is any wonder the government doesn’t go the whole hog and set up its own narcotic stall at these concerts to sell controlled substances directly to the public. Two MDMA tablets and a foil of heroin please. Are those bongs on special?

The stupidity with pill testing is in the word – “ILLEGAL”. If CM gets caught speeding, why shouldn’t I be as justified in saying I was acceleration testing my potentially lethal BMW to make sure the speedometer was accurate? No NSW Highway Patrol officer will grant clemency. I will be fined for breaking the law. Quite right too.

Then we get Greens MP Cate Faehrmann admitting she’s taken MDMA since her 20s. In her doing so we can now have an honest and open debate. Fantastic to have an elected official out herself as an illegal drug user. Is this the type of lived experience we should be basing policy off? How ironic she lambasts the zero tolerance policies of the NSW Government? It may well be costing lives but the measures to combat are proving ineffective.  That is the issue. Time to think outside the box.

Why not just have police controlled mandatory swab tests at exit, fully funded by the event organizer, who can impute that in the cost of the ticket? Those that show a positive sign to ‘illegal drugs’ are arrested and criminally charged. Simple. Make it clear well in advance that those caught for breaking the law go on a national register. Why shouldn’t employers be able to better screen their employees’ behaviours or and health insurers be able to more accurately assess their customers? If you are clean there is zero to worry about.

If we want to create a culture of stopping drugs, we won’t do it by applying soft measures. Rave concerts are a captive audience where drugs are smuggled in often unsavory ways to escape detection. Make it clear that the swabs are mandatory and one of two things will happen; the attendance will only be enjoyed by those prepared to be clean or the rave concerts will end.

Some will argue there will be a risk that rave concerts will go underground but in the day and age of cyber technology, it won’t be hard to track such events going forward. Make the penalties for organizers failing to register and apply for such concerts punishable by jail terms and multi million dollar fines.

If we truly don’t like the law, then let’s change it. Let’s not have two tier judicial systems that openly favour dangerous behaviour because it infringes on someone’s subjective right to listen to a rave concert completely off their rocker. Maybe that is the test – make these kids recall 50% of the music that were played. One can be rest assured most of them didn’t hear a thing.

2019 Golden Globe ratings down again

It is no surprise to learn that the initial ratings for the Golden Globes In 2019 were down on 2018 which were down on 2017…which were down on…Get the picture? It was the worst showing in a decade.

It seems the formula is so bust that even deliberately leaving Trump mocking out of the corny gag lines saw another 5% drop this year. Despite little competition in the time slot and following on straight after the Chicago Bears vs Philadelphia Eagles (38mn viewers), 20mn switched channels to something other than the Golden Globes.

Who actually took the time to watch The Oscars last year? Viewers voted with their eyes sending ratings down 16% on 2017 and 40% on 5 years ago. Perhaps The Oscars could take a lessson from 90 years ago and stick to silent movies!

From Nielsen:

The 8 p.m.-11 p.m. portion of ABC’s telecast averaged an 18.9 household rating and 32 share in Nielsen’s metered market overnight ratings, which cover about 70% of U.S. TV households. That’s down about 16% from the 22.5/37 rating generated by the 2017 Oscars.

Same with the Emmys.

Neilsen noted the 2018 Emmy awards show pulled in 10.172 million viewers (-4%) and a 2.4 rating among adults 18-49, it’s lowest ever. The 2000 Emmy’s drew in 21.8mn by comparison.

Some may talk to modern day luxuries of streaming which might flatline these dreadful numbers but the reality is Hollywood’s obsession with shaming its intended viewers is the more likely culprit.

Perhaps ABC & NBC need to host these events at a local Hollywood pensioners club from here on in. Save the millions lavished on sets and award movies based on a Bingo wheel. Celebrities can go in smart casual (Cate Blanchett insists on recycling clothes) and dine on a sumptuous smorgasbord with complimentary soft drinks at the beverage bar. Now that would be worth watching.