Investment

32% more honey in Smokey Bear’s fire fighting budget

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Utterly unnecessary comments from Trump when he threatened to slash the Forestry Service budget due to supposed Forestry Management incompetence being behind the devastating fires in California. The budget of the US Department of Agriculture Forestry Service does prove that he has a point in that monies directed at “preparedness” and “suppression” will have risen 32% since he took office. No fire is alike and there have been plenty of deaths and property destruction from the terrible conditions. What is to be gained by knocking the leadership of the Forestry Service when the brave fire fighters and volunteers still put their lives on the line to prevent the spread of fires? Hardly motivational. While there maybe grounds to improve operational efficiency, the timing couldn’t have been more inappropriate.

Does the data show Donald in the dumpster?

Midterm

This is a simple schematic of first term presidents and the results at the ballot box of their first mid term. Since 1910, the incumbent parties have invariably lost ground. More interestingly, Democrats had control of either/both House of Reps and Senate during Nixon, Ford, Reagan and Bush Sr – all Republicans. Republican Presidents Taft, Harding, Hoover, Eisenhower and Trump lost the House at the midterms. Truman, Clinton and Obama suffered the same fate for the Democrats.

Trump achieved the highest number of Senate seats taken by a first term Republican president for over 100 years. George W Bush achieved rising numbers for HoR/Senate  post 9/11 but only Democrats have achieved the feat – Woodrow Wilson, FDR and JFK. Perhaps the irrelevance of the outcomes in the mid-terms is that despite the floggings Wilson, Truman, Ike, Reagan, Clinton, Bush Jr and Obama all were comfortably reelected for a second term.

Given the headwinds Trump was facing from the mainstream media, his unorthodox outbursts, twitter tirades and so forth, the electorate didn’t grant the Democrats a huge gift  they were expecting. Even worse they gave Trump a bigger authority to appoint SC justices should an opportunity arise by bumping his numbers in the Senate. Not surprising given the shocking gutter level political theatre over Justice Kavanaugh, vindicated by  victims confessing they had lied.

The Democrats should still be concerned that the $70mn spent on Beto O’Rourke came to nothing.  Beyonce also endorsed Beto. Oprah endorsed Abrams in Georgia – who is likely to lose. Taylor Swift endorsed Bredesen – who also lost. All four candidates openly supported by Obama lost. So much for celebrity power swaying electorates. It probably had a counter effect.

Even worse, in Nevada a brothel owner and reality TV star won his race despite dying last month. It is hard to work out what is the bigger tragedy. Voting for someone dead or being the competing Democrat to lose to a dead person. A Republican is to be appointed to the seat by county officials.

We shouldn’t forget that the Republicans had the highest number of sitting member retirements at a first midterm in the House of Representatives for 88 years. 25 seats had a new face. Republicans won re-election as governors in New Hampshire, Vermont, Massachusetts and Maryland – three of them deep blue states. Where was the mainstream media on that?

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Turnout was good (for a mid term). 48.1% voted in 2018. In the last 100 years the average has been 41%. Only in 1966, did the first midterm of LBJ exceed this level at 48.7%. So much for either party causing a red or blue wave. Less than half of eligible voters showed up on November 6th 2018. More cared, but not enough.

Felons make for an interesting outlier subset. While it is hard to know their exact voting intentions, for the Gubernatorial in Georgia, would 219,431 felons have made a difference for Abrams? She trails Kemp by just under 100,000 votes. So if 55% of felons (the Georgia midterm turnout ratio) voted, 120,687 votes were up for grabs. Were it legal for Georgian state felons to vote, she would have been wise to campaign there.

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Now that the Democrats have the lower house, one wonders why they have put Nancy Pelosi in charge of the House? This is possibly to be contested. Up to fifty Democrat congressmen might oppose her for Speaker. Trump couldn’t wish for a better adversary as her litany of gaffes will undoubtedly embarrass her party. Pelosi represents pretty much everything Americans have come to despise about the Democrats.

More worryingly, Maxine Waters is being put in charge of the Financial Services Committee. At a point in the cycle where financial acumen is probably most required, this is an embarrassment, made worse by her open calls for payback.

The Democrats need fresh faces. Ones that will look for bipartisan support. If the Democrats embark upon a cocktail of revenge politics and look to push for investigation after investigation in order to impeach Trump but end up with nothing they will be seen for what they are – a party completely self-absorbed with petty vendettas. The toxic Senate debacle should have given them warning enough that voters won’t tolerate more political roadkill like that going forward.  Yet Pelosi will likely use her subpoena powers to drag everything through the gutter instead of working to improve things for Americans. Failure here will only lead the electorate to conclude they wasted two years and gift wrap 2020 for Trump.

This mid-term election was anything but a slam dunk. Put aside personal hatred of Trump, look at the data and see that Americans did not write him off as many pundits predicted. It should be more scary to realise that he is probably more Teflon-Don than he was in 2016. Second biggest mid-term turnout in history, highest net gain of seats in the Senate in 100 years for a first term GOP president, record dollars thrown at Democrat candidates backed by Trump-hating billionaires. At the end of the day folks, this is just the data talking.

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It costs HOW MUCH?

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The mind boggles. War is expensive to conduct. Once wars finish, the cost of looking after veterans is massive. In 2000, the Department of Veteran Affairs (VA) in America spent $43.6bn to look after returned servicemen and women. In 2020 it is expected to exceed $212bn (c. 5x), the equivalent of what the Chinese currently spends on its military.  Digging deeper into the data reveals that the cost of the aftermath of Operation Iraqi Freedom (OIF), Operation Enduring Freedom (OEF) and Operation New Dawn (OND) on veteran treatment keeps growing in a straight line.

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Total obligations for OIF/OEF/OND patients has grown 19-fold in the last 14 years to over $7bn. Total veterans from those campaigns now totals 965,000 and is expected to hit 1.1mn by 2020. Cost per veteran patient over the 2006-2020 period will virtually treble.

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Expenditure on prosthetic devices (e.g. limbs, hearing aids) has near as makes no difference quadrupled in that period.

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Spending on pharmaceutical products is up 1.9x since 2006.

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Drugs such as Oxycontin which contain opioids have found their way to creating problems in the US armed forces. 15% of Army troops admitted to taking illicit drugs (cocaine, heroin, marijuana) and opioids back in 2008.

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Spending on programs to prevent substance abuse is up 1.8x since 2006.

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The VA notes key clinical metric trends from Quarter Four of 2012 to Quarter Four of 2017 show:

• 67% reduction in Veterans receiving opioid and benzodiazepine together;
• 44% reduction in Veterans on long-term opioid therapy (> to 90 days);
• 38% reduction in Veterans receiving opioids;• 56% reduction in Veterans receiving > 100 Morphine Equivalent Daily Dose;
• 51% increase in Veterans on long-term opioid therapy with a Urine Drug Screen
(UDS) completed within last year to help guide treatment decisions.

Spending on mental health programs is up almost 4x since 2006. The VA plans to promote the development of skills in VA providers to diagnose and assess PTSD
by developing a computer-based training using simulated virtual patient
technology that will allow clinicians to practice and receive customizable feedback
on giving CAPS-5 to a lifelike virtual patient.

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The 2019 VA Budget requests $8.6 billion for Veterans’ mental health services, an increase of 5.8% above the 2018 current estimate. It also includes $190 million for suicide
prevention outreach. VA recognizes that Veterans are at an increased risk for suicide and
implemented a national suicide prevention strategy to address this crisis. Veteran suicide in the US is at a 22/day clip.

The price of freedom. All said and told the US over the last 20 years will have spent the equivalent of $2.476 trillion with a “T” on veterans. That is the equivalent of one entire year of UK GDP.

Smart technologies are an absolute must for the VA. The cost of veteran health is the equivalent of 29% of what the US spends on defence, up from 14.8% two decades ago. Asking for yearly increases is a band aid solution.

Banned documentary – Let There Be Light, 1946

In compiling the book of letters from the battlefields of WWII by Lt. Norman Peterson, researching PTSD in that era has unearthed some interesting facts. A documentary made by John Huston in 1946, which chronicled the treatment of troops suffering from neuro-psychiatric conditions, was banned by the Army from release to the public until 1981. The excuse made was that it was necessary to protect the identity of the patients, despite Huston having received signed waivers. It would seem the top brass did not want to have the extent of the problem acknowledged by the broader public.

The first published book related to what we now know as PTSD was the Diagnostic and Statistical Manual of Mental Disorders of 1952. It listed the condition as “gross stress reaction.” It wasn’t until 1980 that PTSD was properly recognized as a psychological issue. After WWII, veterans were told to just tough it out.

WWII British Army veteran, Victor Gregg, wrote the following in The Telegraph newspaper article on 9th November 2015 with respect to PTSD like conditions.

“I remember one day during the Battle of Alamein when my friend Frankie Batt, a man I had enlisted with in 1937, was blown to pieces. I recall trying in vain to put the bits together, to somehow bring Frankie back to life. As I picked up what was left of him I could feel the hate burning inside me. For the next three or four weeks our section never brought in a single prisoner, in spite of the fact that the battle was nearly over and the enemy were surrendering in droves. So long as no officer was there to witness, we shot as many as we could until our anger died its own death…by the time I got home I had witnessed things that I had not thought possible, and my brain was filled with images of suffering that were to haunt me for the next forty years…When I was demobbed, people didn’t talk about what was going on in their minds. It just was not the done thing; you straightened your shoulders and got on with life. The men who did try to raise the subject were treated with scorn…It was only after many years that I realised how much heartache and misery my anger caused to those I loved. 

The Cambridge History of the First World War contains an article by Jay Winter, Professor of History at Yale University, where he suggested that shell shock in WWI comprised around 20% of all troops, not the 5% often reported. His contention was that the truth was deliberately suppressed otherwise sufferers would not have received a disability pension if not accompanied by physical wounds.

In 1993, MA Kidson, JC & BJ Holwill wrote in the Medical Journal of Australia a piece titled, ‘Post-traumatic stress disorder in Australian World War II veterans attending a psychiatric outpatient clinic’. Out of 108 veterans who participated in the study 45% were shown to carry symptoms of PTSD – as defined by DSM-III – 48 years after it had ended. The study claimed, The presence of PTSD was significantly associated with the taking of casualties (an indicator of severity of war stress as reported by the veterans themselves) and with combat stress as rated by their treating doctors.”

A 2007-08 study at the University Michigan looked at 78 WWII veterans being treated for depression and discovered that 38% of them had significant PTSD symptoms.

Dr. Helen Kales, principal investigator of the geriatric psychiatry section at the University of Michigan wrote,

World War II veterans come from a generation in which expressing psychological symptoms or distress was pretty stigmatized. So these cases may have gone untreated as the vets did not seek treatment and were able to somehow suppress their symptoms and function.

Reading into Traumatic Brain Injury (TBI) reveals even more concerns about the problems we face dealing with returning soldiers.

While PTSD does not necessarily require physical damage to occur, TBI, in the military, tends to occur when exposed to blast-related injuries such as artillery, improvised explosive devices (IED), land mines and rock-propelled grenades (RPG).

TBI can be the result of occurrences where an object (bullet, bomb fragments) causes the scalp/skull to break or fracture. Sometimes it is a closed injury where the outside force impacts the head but no objects manage to penetrate. Even in the case of closed injuries, the brain can experience such considerable force that it can result in torn tissues, bleeding and other physical damage which can be irreversible in severe cases.

TBI was better recognized in Operation Enduring Freedom (OEF) and Operation Iraqi Freedom (OIF) where 1.64 million served. 60% of blast injuries in those conflicts resulted in TBI. According to the US Veteran Affairs (VA), 59,000 (c.10%) Iraq and Afghanistan veterans who used the Veterans Health Administration (VHA) from 2009 to 2011 were diagnosed with TBI.

VA now records that 4.3mn receive disability benefits, up 2mn from 2000. The total budget for the VA in 2019 will total $198.6bn, up from $97.7bn in 2009. It was $43.6bn in 2000. The VA is asking for $212bn for 2020. The VA budget relative to the defense spending budget was 14% in 2000. It is now 30%. The cost of war is obscene. The cost of looking after veterans is hot on defence spending heels.

Why didn’t GE use the $45bn in buybacks to take care of the $31bn negative equity?

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After GE’s monster $22bn goodwill impairment charge, the company remains in negative equity to the tune of $31.3bn. $79.2bn in goodwill remains on the balance sheet with $31.5bn in shareholders equity and $16.4bn in non-controlling interests. To think GE spent $45bn on buy backs over 2015 & 2016. Imagine if the company had used those funds to shore up the balance sheet and go back to positive equity?

While the kitchen sinking of GE Power should be deemed a positive (although somewhat expected) it is interesting to see the reaction to the shares (-9%) which flirted with April 2009 lows. Cutting the 1 cent dividend from 12 cents in the grand scheme of things was optics.

Although the goodwill charge is a non cash item on the balance sheet, she is clearly not in a position to deal with the rest of the goodwill just yet.

The brand new CEO has done the right thing to restructure the former largest company in the world but he has drawn attention to the most gangrenous wound that needs to be cauterized.

It is still a rough ride from here for an industrial stock at the top of the megacycle to have such a dreadful balance sheet.

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Trump mid term victory more probable than not

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Actions not words. Forget all of one’s personal opinions (hatred) of Trump and analyze the facts.  This is a picture of Obama trying to rally Democrats in Nevada this week. Despite the small audience, Obama mentioned himself 92 times in 38 minutes as opposed to talking up the candidate he was there to support. Sounded like a desperate attempt to save his own legacy. The following pictures are of Trump’s rally for Ted Cruz in Houston, Texas.

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Conventional wisdom tells us that the party in opposition tends to get the House in the mid terms. Politics is in such a funk, why would we for one second believe that consensus should be the default in November 2018? How did that work out on 2016?

Ahh yes, but the Democrats have learned from treating the prior election as a coronation for Hillary Clinton. They’ll be out in droves. No doubt they will but after the Kavanaugh debacle in the Senate and over 10,000 strong Honduran caravan surging to the US southern border (the Dems have been eerily quiet over this) it only plays to Trump’s domestic agenda. What many overlook is that ICE records indicate there are  474,000 illegal immigrants still in the queue for processing. Four hundred and seventy four thousand. Think of the costs to process that.

So to the polls? They were wildly inaccurate at the 2016 election. Largely because they are telephone polls to 1,000 people with landlines. Hardly an accurate assessment. Only old folk have landlines now don’t they?

A MSN (left leaning) online poll conducted last month showed 76% of 73,000 would lean Republican in the mid terms. How valuable are polls? Let’s be honest, a Fox poll leaning to conservatives and and a CNN poll swaying to liberals Shouldnt shock anyone. It is the anomaly that should cause us to question a mood as this MSN poll did. Are 73,000 people representative of the 250mn eligible to vote? More than 1,000 would be that is for sure.

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Once again, forget personal dislikes for Trump. If a p*ssy grabbing, racist, xenophobic, bigoted, nationalist silver back Nazi orange buffoon as he is often referred to as can get this many people to a gathering imagine if he had none of the baggage? Potentially less people because there is not as much shock value.

CM has said for ages that the mainstream media is his best ally. The constant one-eyed bias against him only gives more air time. He is a showman. The White House has become  a reality TV program. All the MSM does is feed his exposure. Sadly ratings reflect that he is winning. The media can only tell the public that Trump is the antithesis of the establishment so many times before it wears thin and people tune out.

Then again perhaps it is more telling that the average American doesn’t look to him as a spiritual leader. Or put that another way, the mid terms will be a measure of how successful he has been to date (even if blasted Russian bots meddling in the voting machines are behind it).

If he has genuinely helped put Americans on a better financial footing in their minds that is all that matters to them. Call Stormy ‘Horseface’, slag off Blasey-Ford for her amnesia and bash CNN at a rally for “fake news”. None of it matters. It appears Americans are less likely to be intimidated by thuggery (chasing Republicans out of restaurants or shooting them) of the left than to join their ranks as the #WalkAway campaign has demonstrated.

Trump is the most left field curve ball President in US history.  So unconventional in his diplomacy. He has shown that pushing back can get results. Whether smashing NATO members for failing to execute on  their own self imposed military spending targets, stopping Rocketman testing nukes or getting Juncker to sign an FTA a week after he stumbled blind drunk at a NATO summit there is some method to the madness.

In two weeks time we’ll get a result which will reflect the mood of America. The observation of CM is that the Dems are playing all the same party tricks as the 2016 election albeit at 11.

CM may be well off the reservation on this but those same vibes from Nov 2015 suggest Trump may well upset decades of history. Fake views? Allie Stuckey did a rather amusing parody of the Democrats here.

We’ll know soon enough.

Sayonara Japan

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Today CM leaves Japan after 20 years. This was the first time I’d actively seen passport control beg me to keep my permanent residency. For 5 minutes she painstakingly asked her senior colleagues and tried to reason with me. My comment to her was “don’t worry, I’m not drunk” after repeatedly checking whether I was sure about the decision. She asked what were the reasons. “Where do I start?”

First of all I want to thank the Japanese for their custom, politeness and privilege to stay in their country. It has been truly amazing and life changing.

Sure the honest service drives one batty with its inflexibility but to those who whine about it can always choose to live somewhere else. Respecting a culture is true of any land one visits. Note to Western civilizations. It’s up to others to fit in with the host, not the other way around. Japan has this nailed.

What was the lasting memory of Japan? Simple really. The earthquake, nuke explosion  and tsunami of 2011. What it allowed was a clear cut look at a society that is so well bonded. People didn’t loot. Nor did they greedily hoard essentials. People just took what they needed. Had this been HK or anywhere else it would have been pandemonium. Keep calm and carry on typified Japan.

The lasting photo memory was during a motorcycle trip to MinamiSanriku. This image of a tsunami darkened Minnie Mouse sent chills down my spine. Staring up at the trees on the hillside, the leaves had turned purple because of the sea water which had risen almost 20 metres high. Car wrecks ragdolled in the rip. Windows smashed out of all levels of a 5 storey apartment block. Mother Nature was angry.

When my kids begged to go to Hawaii, they protested about my suggestion to see the devastation first hand. To see with their own eyes. Video and pictures do no justice, I told them. It turns out they appreciated the experience. I gave my younger daughter – then 7 years old – my camera because I wanted to capture images through her eyes. Amazing results.

There is too much to write about with 20 years under the belt.

As the sun sets in the land of the rising sun for me personally journey it shines brightly 9,000km south.

The next stage was a no brainer. So much for dealing with alpha types in finance, many of who’d sell their grandmother given half a chance. I’m overwhelmed with excitement about the prospects of saving the lives of people who know sacrifice and have protected our freedoms. The small team I will work with are as dedicated, hungry and inspired as I am.

My life needed a reboot. Sometimes there is a touch of Tom Cruise in Risky Business in our lives where we must make hard decisions and simply say, “what the f”

Writing this novel about my grandfather’s experiences in WW2 has inspired me to think of living life to the full. How most of us have got it so easy even though some pretend we’ve never had it so bad.

I will always have a soft spot for Japan. Handing back a permanent residency might seem mad in the overall scheme of things but it was the right decision. You can’t make a new start holding onto the past.

Sayonara Japan.