Inequality

NFL – seat prices at the back of the discount rack

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NFL has been off the main headlines recently. Interesting to see that seats for certain games are selling for as little as $3 each. Of course better games starring more popular teams show firmer (albeit deeply discounted) pricing but one can’t help but think this is a continuation of the backlash against the kneeling saga. Regardless of the views of the players, their employers (aka the fans) are evaluating them by their wallets. Seems like the message hasn’t got through. If they wish to continue to kneel deep discounts which incorporate the social cost to the fan have to be provided until the ultimate financial impact to the players is reached.

This can’t wait

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John Mauldin has written an informative piece entitled “this can’t wait” which sums up a lot of pieces I’ve written on the sickening state of public pension unfunded liabilities and the debt super cycle that is facing us. While Mauldin is trying to sell his investment services on the back of this, I wasn’t when I wrote mine. Public service announcement? Maybe but the stats of the black holes we face in pensions and central bank QE which has failed to boost money velocity will bite. Hard. There will be no “I told you so” glory because almost everyone will lose big.

Even if people want to criticize me for being a perma-bear there is no harm in being aware of what is likely coming.

Well done Senator Leyonhjelm for inviting Milo to Parliament

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Full marks to Senator David Leyonhjelm for inviting Milo Yiannopolous to Parliament House. Despite the Greens Party leader Senator Richard Di Natale doing his best to ban him as a hate preacher, bigot, racist etc etc Milo had a pretty full audience. It is not whether one agrees with what he says but it is important to let any ideas out in the marketplace of free speech and debate the issues rather than shut them down. Indeed one would hope that Di Natale has such a strong case he could pin the Armani suited Milo’s arguments in person. That’s the thing. If Di Natale is convincing enough people will back his views on the sheer weight of  merit.

As an Australian citizen (even from afar) I watch the painful political correctness in the West that seems to turn a blind eye to almost anything that even remotely runs up against an identikit. We mustn’t offend this group or that group.

To be honest, as an example our government, in its quest to prevent on the fringe Islamophobia actually creates the environment for a worse time for Muslims. The majority of Muslims probably don’t care if we celebrate Christmas with trees in Martin Place but our political class decide to strip the tree of its significance in order to pander to something that just isn’t relevant. “Merry Christmas” is replaced with “Seasons Greetings.” In turn, some think that Muslims are behind it which means governments push for “hate speech laws” to cover up for their own stupidity and short-sightedness. Celebrate Australian traditions. Just like Aborigines seeking umbrage over statues of Cook and Phillip – the overwhelming majority don’t care but our politicians are all too busy trying to cater to another minority whose arguments and grievances are usually trivial to say the least.

Even the lunatic torch and swastika flag bearers in Charlottesville should be able to protest. Sunlight (torchlight) is the best disinfectant. Let these people go on parade for all to see. One can see for themselves they have no platform. The KKK (the former militia of the Democratic Party) has dwindled from 4mn members to less than 6,000. Out of a population of 330mn people they represent less than 0.02% of the population.

Probably some of the best footage of ‘like minds thanks to open platforms’ came when a BLM protest was given time on a stage at a Trump supporters event. BLM were told you’ve got several minutes and if you don’t like it then tough!

Still some in the political class feel the need to introduce all manner of laws to cover up their own weakness. At least some voices in parliament are not afraid to speak out and defend free speech. So credit to Senator Leyonhjelm for encouraging Milo to talk to our lawmakers.

It is not whether one thinks Milo is palatable (although a sellout tour in Australia is indicative) it is that he has a view. We don’t have to agree with it but again the left who try to shut him down will find far more backers of their cause if they combat him with concise and constructive arguments based on facts and truths. Said with authority and authenticity and watchMilo’s support wane. Indeed shutting him down actually helps Milo sell more tickets so it ends up being an own goal.

It really makes me want to join the political class in Australia to shore up the tide that is flowing toward feeble policy, further inaction and muzzling what they’re too gutless to admit. I want peace and harmony as much as the next person but it doesn’t come about by silencing dissenting voices. Embracing those voices is a tenet of democracy. Perhaps if the country was being run competently then people like Milo would be a footnote rather than front page.

Now Clinton lost the 2016 election because sexual harassers like Matt Lauer were the problem

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Just when the lame excuses couldn’t get any worse, the NY Times’ Jill Filipovic, in ‘The Men who cost Clinton the Election’ thinks that Clinton lost because of the male journalists (recently fired for claims of sexual harassment) were too tough on her and too easy on Trump. We are 12 months on from the election and despite the 10,000 excuses we’ve heard as to why she lost, this one is truly grasping at straws.

Filipovic wrote,

Many of the male journalists who stand accused of sexual harassment were on the forefront of covering the presidential race between Hillary Clinton and Donald Trump. Matt Lauer interviewed Mrs. Clinton and Mr. Trump in an official “commander-in-chief forum” for NBC. He notoriously peppered and interrupted Mrs. Clinton with cold, aggressive, condescending questions hyper-focused on her emails, only to pitch softballs at Mr. Trump and treat him with gentle collegiality…Mr. Charlie Rose, after the election, took a tone similar to Mr. Lauer’s with Mrs. Clinton — talking down to her, interrupting her, portraying her as untrustworthy. Mr. Halperin was a harsh critic of Mrs. Clinton, painting her as ruthless and corrupt, while going surprisingly easy on Mr. Trump.”

So Matt Lauer went for the jugular? Isn’t that the point of these debates or commander-in-chief forums – to make the politician squeam under pressure? So her deleting and bleaching 30,000 emails was not a relevant topic?

Mr Halperin painted her as a ruthless and corrupt candidate, when her foundation was exposed for pay to play, the hiring of Debbie Wassermann-Schulz as her campaign director after she brazenly knifed Bernie Sanders during the DNC run-off or receiving the debate questions in advance from Donna Brazile?

Indeed, it is hard to see how Charlie Rose had an impact on the 2016 election when he was tough on her post the event.

Still one can’t escape the fact that for however horrible Trump might have been as a inarticulate, vulgar and bullying GOP candidate, all the more reason she should have smashed it. Had she not taken the election as a coronation, actually visited the areas most in hardship instead of sticking to the $1,000 plate dinner fund raisers in the hubs of NY, LA and San Francisco maybe she would have learnt that it wasn’t a formality. Instead she stuck to identity politics and in the end lost to a candidate who openly stared down the barrel of a camera lens to tens of millions after the ‘grab the p*ssy’ episode and said “no one respects women more than I do” in debate two. Even women saw this and still voted for him.

What Filipovic fails to realize is that gender is an irrelevant benchmark for politics. All that matters is ability in the eyes of the electorate. For Michelle Obama to shame women who voted for Trump is part of the problem. Whether ability is delivered is another question but for millions of struggling Americans not living the dream they took a risk to vote for someone that wasn’t intertwined in the political machine that had failed to get them out of financial squalor. They may not have money but a vote is a great equalizer. Sure, Trump’s complete lack of political experience is telling with the constant cabinet reshuffles and both parties trying to distance themselves from his firebrand style of politics.

So indeed had Lauer been exposed as a sexual harasser before the event then would the outcome of Clinton’s 2016 campaign really have changed? Unlikely as Hillary Clinton was carrying so much baggage that even blind Freddie could have seen through the fact that for as horrible Trump was, she was even worse on so many levels.

Indeed if Filipovic wants to indirectly promote the idea that it was time for a ‘woman’ president, at least give we mere males (and females) some faith that you have a deeper bench than Hillary Clinton. Does a cake store put anything less than its best and delicious looking product in the shop windows on the grand opening day? No. As much as you may wish to point the fingers at a misogynist, sexist bro culture as the blame for her loss, make no mistake that most men (and women) will happily endorse competence over gender because it is in their rational best interests for the long term to do so. So instead of blaming men, perhaps look inside at what women exist in US politics (or any country for that matter) that can carry the torch of freedom on merits alone.

On a final point, while the feminists are at it, where was the outrage at the gushing over the hunky Canadian PM Justin Trudeau when he won his election? How many tweets and messages of teenage crush were seen which focused on his physical characteristics rather than his political acumen (which sadly are missing since being in office). It is a great pity that the Conservative Party in Canada didn’t elect Rona Ambrose over Andrew Scheer as leader. Go on YouTube and watch her decimate Justin Trudeau in every debate. If I was Canadian I would have voted for her given she had raw ability, intelligence and unwavering strength. She just happens to be a woman too.

Healthcare in America – more hospitals going bankrupt

The Affordable Care Act (Obamacare) is often lauded by some as noble legislation. Yet according to bankruptcy lawyers, Polsinelli, the changes made to reimbursements that used to help cover hospitals who treated uninsured patients were pulled under ACA and have sent many hospitals to the bankruptcy A&E ward. The law firm said in its report,

The Health Care Services Distress Research Index was 223.33 for the third quarter of 2017. The Health Care Distress Index increased 15 points from last quarter. The index has experienced record or near-record highs in 5 of the last 6 quarters. Compared with the same period one year ago, which was a record high at that time, the index has increased 60 points. Compared with the benchmark period of the fourth quarter of 2010, the index is up over 123 percent…Unlike the public markets, the Polsinelli/TrBK Distress Indices include both public and private companies, creating a broader economic view and one which may show developing trends on Main Street before they appear on Wall Street….Health care distress is high and it seems to be getting worse…

…The business of health care is unlike other industries, such as manufacturing, real estate, or retail. Health care faces all the traditional business challenges, such as competition, the impact of technology on services, and increasing wages. But more, the health care industry is needing to adapt to increasing regulations, changes in reimbursement rates from government or private payors, and a shift from traditional fee-for-service to value-based models that impact profitability…There is unprecedented pressure of major systemic changes to the existing health care system, particularly the implementation of the Affordable Care Act over the last several years and the current status of the program, which is alternately being repealed, repealed and replaced, phased out, or simply defunded…The administration’s recent decision to terminate cost sharing reduction payments will also directly impact the health care market. Insurance companies may continue to provide insurance at a higher premium or decide to exit the markets. Eliminating these payments and the resulting premium increases may increase the cost to the government through premium subsidies.”

In short many Americans saw a doubling of premiums (an average increase of 113%) under Obamacare inside of 4 years causing many to forgo the insurance. The reimbursements under the old system (which helped compensate hospitals administering emergency treatment for the uninsured) that were stopped on the proviso people would take up ACA plans backfired. Not enough people signed up and more hospitals running on a days cashflow have been forced to close because the reimbursements designed to protect them against uninsured patients disappeared. When Jonathan Gruber, the architect of Obamacare, testified to Congress he candidly said,

The Affordable Healthcare bill was written in a tortured way to make sure the (Congressional Budget Office) did not score the mandate as taxes…If CBO scored the mandate as taxes, the bill dies, OK? Lack of transparency is a huge political advantage … call it the stupidity of the American voter or whatever … that was really, really critical to get the thing to pass … I wish … we could make it transparent, but I’d rather have the law than not.”

Insider trading as a politician is ok?

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Watching a session of Canadian Parliament yesterday, the opposition Conservative party asked for a simple ‘yes’ or ‘no’ answer to a question to Trudeau’s Finance Minister Bill Morneau on whether he sold $10m in shares in Morneau-Shepell a week before a new capital gains tax on securities was introduced in parliament. The accusation was that Morneau made $500,000 by insider trading in full knowledge of the tax change that was to be introduced. Morneau spent the entire 20 minutes talking of how his party is defending the middle class with tax cuts. If he was not the person that sold, how easy to openly admit so. So far he’s said nothing.

Insider trading is a punishable offense in the private sector. Yet are politicIans free to make half a million by trading ahead of the event? How can Morneau not resign? Even worse was  Speaker of the House Greg Regan was asking why the question from Paul Pollievre was relevant in question time? Are you kidding me?

Clearly ethics training for Trudeau’s cabinet seems far more pertinent than reintegration of returning ISIS tourists. Then again we shouldn’t forget that Trudeau was actually involved in the appointment of the Ethics Commissioner (without consulting the opposition) indeed at a time when his own ethics had been openly called into question.

If everything is so great then why is our political scene so broken?

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Queensland’s state election said it all. Both the incumbent parties lost massively even though the incumbent Labor Party looks like holding on to power. While Pauline Hanson’s One Nation party looks like it fared poorly in terms of seats it still got 13.8% of the vote from 1% in 2015. Forget the headline results but think of what the political turmoil In local, state and federal levels is telling us more broadly.

Think logically about it all. If the economy is booming, jobs are abundant and prosperity is on the march then there is little need for governments to be running deep deficits let alone facing hung parliaments and acts of desperation. Surely the incumbent governments of the day can laud their own achievements and their constituents would happily keep returning the status quo. The majority should continue to be happy. More by rights should be winners in such a world of record housing prices, steady wage growth, low unemployment and 25 years of economic growth as experienced in Australia.

Yet PM Turnbull turned on many of the traditional supporters of the conservative wing of his Liberal National Party (LNP) coalition who turned their back on him to hand Labor the victory in Queensland. Not so fast Prime Minister. They didn’t leave the party. The party under your incompetent stewardship left them. At all levels the LNP is divided. There are some quarters suggesting that the Nats may split from the Coalition in the next election in Queensland to leave the stench of the Liberal Party to themselves. This is when personal ambition trumps wish to serve a nation.

While the LNP was handed the most valuable and recent lesson of the disaster that was the Rudd-Gillard-Rudd internal factional knifing during their time in power, it completely buried its judgement and started following a left leaning press, weak poll numbers and copied Labor’s folly. Now we have a hung parliament (not withstanding the dual citizenship fiasco) with chronically weak and misguided leadership. One that tells voters that they have no clue rather than introspection that the party may indeed be the problem.

It used to be said that Australia enjoyed the most stable politics in the Asia Pacific region. That encouraged foreign investment and gave Australia low interest rates, a superior credit rating and a regulatory platform that ensured trust (important for corporations), the envy of many nations. Yet inside a decade we have had 5 (soon to be 6) prime ministers which has thrown that ‘reputation’ in the toilet. In a world where international capital is more mobile than ever and asset prices are peaking, instability in government eventually carries severe financial market penalties.

For Aussie banks, levered up to the gills with inflated mortgage books on their balance sheets, such things have negative implications for the 40% reliance on global wholesale credit markets to fund themselves in the face of a tightening US interest rate cycle. Do not underestimate the negative connotations of a federal government that has lost its way, no matter which major party is in power. Where the average Aussie can’t bear anymore on the mortgage, a third admitting they can’t pay the home loan if they lose their job for 3 months or more. Almost 1,000,000 Aussie households would be in severe mortgage stress if rates moved 150bps(1.5%). Think of the spill-over effects on consumption which would only lead to a recession and lay offs, exacerbating a cycle, all the while bashing the currency making international funding even more biting. If only we had a stable government that had a decent fiscal position to weather that storm. Oh, that is right we squandered that in 2008.

One Nation in Australia, AfD in Germany, Party for Freedom in The Netherlands, Front National in France, 5 -Star Movement in Italy, Fidesz in Hungary, FPO in Austria, the Sweden Democrats, Vlaams Belang in Belgium,  Progress Party in Norway, Trump, Brexit…these patterns aren’t random. It isn’t just populism but protest votes to establishment parties that aren’t delivering. While we are constantly told how great our lot is, sadly the gap between haves and have nots is widening globally. Politicians who are ditching political correctness and making waves on publicly uncomfortable issues are thriving. Why could that be?

Donkey (informal) votes in Australia have seen numbers soar from 2.2% in the 1950s to over 5.0% in the 2016 election. Some electorates in NSW saw as high as 14% informal votes. These are powerful messages in a country that has compulsory voting, which has slid to 90.9%.

The sad reality is that the electorate is making louder noises every election that things are not pointing in the right direction yet the muppets are still being returned to their box seats on a dwindling majority. Why? Because not enough voters are heeding the warning signs that are sounding in front of them. Of course politicians still continue to sell comforting lies backed by ever more unaffordable promises to keep themselves in power for as long as possible when we all need to be facing the unpleasant truths that will happen whether we like it or not.

Indeed those deplorables who voted One Nation might have spurned the LNP but not without good reason. In time, they will be viewed as the wiser ones. Not because they necessarily believe in Pauline Hanson’s platform but because they believe in Turnbull and Shorten’s even less. It all rings like a Premier League football coach making a litany of excuses for his team’s woeful performance that ignores the fact that the collection of individuals have absolutely no cohesion as a team. All the fans can do is bury their heads in their hands until the point they can’t bear to watch another game until the coach is sacked.