Regulation

A deadly problem: should we ban SUVs from our cities?

Activists, including one wearing a Angela Merkel mask, outside the Frankfurt International Auto, holding signs reading ‘gas guzzling vehicles off the road’ and ‘Stop petrol and diesel’.

More junk journalism from The Guardian. Why can’t the paper make sensible commentary on the auto industry? Essentially it pushes a narrative that we should ban SUVs, a long term growth market for automakers because they advertise the segment too much. Shame on trying to act in the interests of shareholders. The article encourages the movement to push for a ban of SUVs in cities. Why? The socialisation of transport!

The article makes the early assertion that passengers are 11% more likely to die in an SUV accident than a regular passenger car. Unfortunately, it cited an article written 15 years ago. In that time, SUVs have evolved leaps and bounds. A far greater proportion of SUVs are made using a monocoque chassis as opposed to the old ladder frames. Even those SUVs with ladder chassis hold 5-star safety NHTSA ratings in 2019:

2019 Jeep Grand Cherokee – 5 star (ladder) vs 2004 Jeep Grand Cherokee – 3 star

2019 Ford Expedition – 5 star (ladder) – 2004 Ford Expedition – 5 star

2019 GMC Acadia – 5 star (ladder) – 2007 GMC Acadia – 4 star

2019 Toyota RAV4 – 5 star (monocoque) – 2004 Toyota RAV4 – 4 star

2019 Mazda CX-9 – 5 star (monocoque) – 2007 Mazda CX-9 – 4 star.

Some may recall in the early 2000s when the Ford Explorer/Firestone tyre rollover incident killed 261 people. Since then, carmakers have installed so many safety items – passive and active. Automatic braking, lane departure detection, forward collision warning, electronic brakeforce distribution (which prevents rollovers). SUVs are safer than ever, including pedestrian facing features.

Never mind the huge leap in safety. Let’s shame the automakers and buyers instead.

The Guardian noted, “In Germany, in 2018 they spent more on marketing SUVs than on any other segment; they actually spent as much as they spent on other segments together” says Stephan von Dassel, the district mayor of Berlin-Mitte. “This is not some accident that people suddenly are really into these cars, they are heavily pushed into the market.”

Wow, so carmakers actually made a sensible advertising budget allocations and convinced new buyers to voluntarily select their SUVs. Those wicked capitalists. They should be burnt at the stake for being in touch with their customers. Perhaps politicians could learn from the carmakers about being in touch with their constituents?

The Guardian then noted the following,

In Europe, sales of SUVs leapt from 7% of the market in 2009 to 36% in 2018. They are forecast to reach nearly 40% by 2021. While pedestrian deaths are falling across Europe, they are not falling as fast as deaths of those using other modes of transport.

So even though the sales of these vehicles have skyrocketed, pedestrian deaths are falling. Reading the paper published by the Insurance Institute for Highway Safety, stated

“A total of 5,987 pedestrians were killed in crashes in 2016, accounting for 16 percent of all crash fatalities. The number of pedestrians killed each year has declined 20 percent since 1975…”

Surprisingly, The Guardian waits till the end to point the finger at the pet issue facing SUVs – emissions.

“Transport, primarily road transport, is responsible for 27% of Europe’s carbon emissions. A decade ago the EU passed a law with a target to reduce carbon emissions to 95g/km by 2021 but a recent report by campaign organisation Transport and Environment highlights what is calls it “pitiful progress”. “Sixteen months from before the target comes into force carmakers are less than halfway towards their goals,” the report adds. The car industry faces hefty fines in Europe of €34bn in a few months for failing to meet emissions targets.”

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How is it that diesel engines, the increasingly preferred powerplant in SUVs, have had emissions cut 97% over the last 25 years? That is monumental progress.

Yet why have legislators tried to ban petrol and diesel cars and looking to force adoption of dirtier EVs which have done 150,000km equivalent CO2 emissions before leaving the showroom? Because ideology distorts reality. Even Schaeffler AG, an auto supplier, admitted it is almost impossible for automakers to comply with the different demands of over 200 cities in Europe with EV rules. No common standards and the quest of woke city councils trying to outdo each other on being climate-friendly. Then governments need to consider the 5% of total tax revenue that fill the coffers they would be giving up, although already in the US, Illinois is looking to impose a $1,000 a year EV tax.

Shouldn’t the EU and other countries face the realities that consumers (taxpayers) like the utility these SUVs provide for their individual needs over and above saving the planet? Shouldn’t politicians realise that consumers make conscious decisions when making the second largest purchase for the household?

One can absolutely bet that if some maker came out with a Hummer sized EV, these cities that want to ban SUVs from driving in them would grant the monster truck an exemption and special parking zones.

Julia Poliscanova, director of clean vehicles and e-mobility at Transport and Environment, says regulators must step in to force car manufacturers to produce and sell zero-emission and suitably sized vehicles, for example, small and light cars in urban areas.”

What if consumers don’t want to buy small and light cars? Force car makers to produce cars their customers don’t want? That is a winning strategy. If carmakers must sell zero-emission vehicles, why on God’s earth are politicians with absolutely no engineering pedigree dictating technology to the experts? Why not let necessity be the mother of invention? If carmakers can get fossil fuel-powered vehicles to be zero-emission and keep their brand DNA at the same time, imagine the billions that could be saved on reckless waste rolling out often unreliable charging infrastructure? Maybe then carmakers could build cars its customers wanted and make money to literally fuel the economy. Politicians would still be able to virtue signal! Win-win.

Maybe the modus operandi is to socialise transport. Poliscanova said, “Smart urban policies are also key to drive consumers towards clean and safe modes…Mayors should reduce space and parking spots for private cars and reallocate it to people and shared clean mobility services.

That is the ticket – force everyone off the road. That is a sure vote winner!

Portland municipal building bans urinals

Image result for urinals

Well, apparently one way to remove “arbitrary barriers in our community” is to get rid of urinals at the newy designed Portland administrative building. Not to worry, Democrats control both houses as well as the Governor in Oregon. 

Portland Chief Administration Officer, Tom Rinehart, believes this will lead to more inclusivity. Just wait for the blowback when men who identify as men start using the women’s bathrooms and leave the seat up! Talk about barriers in our community!!

Perhaps the focus should be on things that truly matter to staff. The Oregon Public Employees Retirement Scheme (PERS), of which Portland public servants are a part of manages a $76.7 billion is still suffering a $22.3 billion shortfall, according to the fund’s most recent update. In 2019 it is expected to be $26bn. The pension system’s current annual rate of return is 7.2%. It is currently hitting at 1.5%.

Several ideas on how to bolster Oregon’s pension system are floating around. One is to move members into a 401(k)-style plan but this is tricky for several reasons. First, the state’s Supreme Court dissolved previous PERS measures in 2015and ruled that existing benefits were untouchable. Another problem is that Oregon has the only public defined benefit plan in the country without an employee contribution requirement.

Naturally removing urinals will go great lengths in solving the pension problem which looks to be a busted flush.

The Grim Repo

What a surprise to see markets show little reaction to the negative repo (repurchase agreements) market in the past week. So much nonchalance and complacency remain in financial markets. It is as if there is this false belief that the authorities can keep the ship afloat with magical modern monetary theory. Not a chance. The tipping points in the financial markets are quantum levels bigger than any that Sir David Attenborough could conjure up in his wildest pessimistic dreams. If we want to cut carbon emissions, the coming economic slump will take care of that.

On average there are $1 trillion of overnight repo transactions every day, collateralised with US Treasuries. Yet many missed that the repo market seized up late last week. Medium-term repos surged from the normal band of around 2.00~2.25% to around 5.25% on Monday. Some repo rates hit 10% on Tuesday.

Essentially what this said was that a bank must have seen that it was worth borrowing at an 8% premium overnight in return for pledging ‘risk-free’ US Treasuries at 2%. In any event, it allowed that particular bank to survive for another day. Banks use the repo market to fund the loans they issue and finance trades that are executed. It is like an institutional pawn shop.

Looking at it another way, why weren’t other banks willing to lend and take an 8% risk-free trade? A look at the global bank’s share price action would suggest that these bedrock financial institutions that grease the wheels of the economy are not in good shape. We just pretend they are. We look at the short term performance but ignore the deterioration in underlying balance sheets. The Aussie banks are future crash test dummies given the huge leverage to mortgages. As CM has been saying for years, the Big 4 risk whole or part nationalisation.

This recent repo action is reminiscent of that before the GFC. The Fed stepped in with $75bn liquidity per day to stabilise markets by bringing rates into the target range. The question is whether the repo action is a short-term aberration or the start of a longer-term quasi QE programme which turns into a full-blown QE programme.

The easiest way to look at the repo market action is to say the private markets are struggling to be self-funding, requiring central bank intervention. Bank of America believes the Fed may have to buy upwards of $400bn of securities to back the repo market this year alone.  This is another canary in the coal mine.

CM wrote a long piece back in July 2016 titled, “Dire Straits for Central Bankers.” In that report, we described how the velocity of money in the system was continuing to drift. As of now, central banks have printed the equivalent of $140 trillion since 2008 but have only managed to eke out $20 trillion in GDP growth. That is $7 of debt only generates $1 of GDP equivalent.

This is the problem. Companies are struggling to grow. US aggregate after-tax profits have gone sideways since 2012. We have been lulled into a false sense of security by virtue of aggressive share buyback programs that flatter EPS, despite the anaemic trend.

Despite the asset bubbles in stocks, bonds and property, pension funds, especially public sector retirement schemes, are at risk of insolvency given the unrealistic return assumptions and nose bleed levels of unfunded liabilities in the trillions.

Also worthy of note is the daily turnover of the gold derivatives market which has hit $280bn in recent months, or 850x daily mine production. This will put a lot more pressure on the gold physical market and also to those ETFs that have promissory notes against gold, as opposed to having it properly allocated.

We live in a world of $300 trillion of debt, $1.5 quadrillion in derivatives – until this is expunged and we start again, the global economy will struggle. That will also require the “asset” values to be similarly wiped out. Equity markets will plunge 90-95% relative to gold. That suggests a 1929 style great depression. The debt bubble is too big. Central banks have lost control.

Buy Gold.

Greta, the poster child for a dysfunctional education system

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You have to hand it to the left. They truly have indoctrination down pat. While there is a sense of awe at the sheer number of kids who attended Friday’s protests around the world at the expense of school (in some cases even exams), 16yo Swedish teenager Greta Thunberg, the poster child for ‘climate change’, has exposed how dysfunctional our educational system has become. Forget discipline. Dismiss reasoned discussion. Conform and get rewarded for it.

CM has always felt sorry for Greta’s exploitation. She typifies the style of propaganda used over generations. The way that the UN, EU or World Economic Forum hang off her every word. It is deeply embarrassing. Made worse by the hypocrisy of 1,500 private jets used to fly to hear her speak in Davos.

Many teachers and parents of these kids are no better. Often espousing patronizing and sanctimonious sermons about the intelligence of the youth today. Not to worry, Extinction Rebellion has even published a piece on hypocrisy. Thomas Sinclair wrote,

Someone who doesn’t know the evidence might perhaps be persuaded to review it. But someone who thinks I’m a hypocrite may suppose that I’ve reviewed the evidence and am acting on it — so she can skip the review herself and take my actions as her guide.” Take that!

He goes on,

However, XR can do better than the standard response. The most important point is this. There is no hypocrisyDriving to XR protests, or using vinyl banners, or eating a Pret sandwich at an XR roadblock — these are not hypocritical actions. Hypocrisy is a matter of preaching one thing but practising another. But what XR preaches is a radical change of the system within which we must make our choices, not of the choices we make within the system as it stands.

What infallible logic! How could we be so obtuse? Those kids CM found eating McDonald’s before the climate strike were completely aware of their actions. They were “highlighting” the problem of the fast-food chain’s utter disdain for the planet to serve food in single-use plastics and paper packaging. It was a cry to get McDonald’s to change its wicked ways. Or was it they were just oblivious to the fact that, while gorging on hamburgers, fries and thick shakes, were unable to fathom their own double standards. Lucky for them, Sinclair has a get out of jail free card. Who knew?

It wasn’t so long ago that a CIS study in Australia revealed that 58% of millennials had a favourable view of socialism. Unfortunately, 51% did not know who Chairman Mao was. Another 32% did not know Stalin and 42% hadn’t heard of Lenin. If we combine with “know but not familiar” with “don’t know” we see almost 80%, 66% and 74% respectively. Oh, how wonderful to learn in school about three men whose social policies led to the deaths of 10s of millions. Unbeknownst to them, many of their teachers follow the same Marxist mindset.

What more proof do you need when an RMIT senior lecturer tweeted he’d award full marks for 5% of the course for those that attended provided they sent in a selfie. Presumably, those that didn’t submit a selfie would be secretly docked marks. RMIT made a glib response to the professor’s tweet which went along the lines of defending the indefensible. Pathetic. He should be severely reprimanded or sacked for completely unprofessional conduct.

Corporations often complain about the difficulty in hiring the skills they need to grow. Shouldn’t they now be extra wary that the degrees awarded to those they are looking to hire have been issues on the basis of aligned participation, not academic effort? Qantas CEO Alan Joyce and Virgin Australia CEO Paul Scurrah might make noise about having to be big on social justice to attract the next generation but if they attend schools which openly support activism quite frankly they are all theirs! CM would prefer investing in companies that hire kids who got their education that cost $2.50 in late charges at the public library.

CM has written before on the slipping standards in Aussie education. Is it any wonder when a growing number of teachers are radical activists. Our education system needs a massive overhaul. Our ranks in maths, science and literacy have all been heading south. We aren’t teaching our kids that the real world out there is a touch place. Wrapping them in cotton wool will not serve them at all in later life. That will ironically be the real impact of chasing climate change agendas and the misguided policy that was enacted due to weak-willed authorities.

Although don’t get too excited about a sea change in thinking to fix this awful course. The latest 2019 OECD report has been captured by the warming cult, justifying worsening trends in education on shifts in society, even going so far as to quote (p.16) Decca Records rejecting The Beatles back in 1962 as evidence of how we can get it wrong.

Justifying – although not admitting – the slip (denoted as a “shift”) in education standards on climate change is insane in the extreme. Lucky for us there is a summary version written by the OECD. The full report is here. 479 pages of blather.

There are too many examples of schools around the globe folding to this Marxist nonsense. In the past, student bodies embracing Marxism as a fad were par for the course. Now the university faculties are the drivers. For example:

Posters from the University of San Francisco (uSF) point at white students so they appropriately check their privilege. Karl Marx may have recently turned 200 but his legacy lives and breathes in California. So much for universities being the cradle of free and open thinking.

The Inclusive Communications Task Force at the Colorado State University has introduced an appropriate language guide and it has deemed the words “America” and “Americans” might prove offensive to some and have discouraged their use on campus.

The University of Texas launched, “MasculinUT”, a program which was organized by the school’s counselling staff with a poster series encouraging students to develop a “healthy model of masculinity.” The program is built around “restrictive masculinity” and tries to encourage men to drop traditional gender roles to “act like a man”, be “successful” or “the breadwinner.”

Dr. Aaron Brough of Utah State University conducted a study to see if there is a correlation between toxic masculinity and climate change. His assumptions ran the line that men see environmentalism as more feminine and get triggered if forced to make ecological choices if they feel threatened.

The University of Melbourne allowed an artistic performance that required “paying” white customers access on the basis of signing an acknowledgement of white privilege. The $600mn+ taxpayer-funded University of Melbourne’s motto is Postera Cescam Laude, which is Latin for “We shall grow in the esteem of future generations.” It is not clear whether the founders of the UoM had Marxist theories at the forefront of their minds in 1853. Growing the esteem of future generations was not to come by cutting down those whose passions as individuals cause them to strive for greatness. Yet the radical leftists believe esteem comes, not from effort, but allocation.

Don’t think that the indoctrination begins in secondary or tertiary education. From tender ages, in the Democratic People’s Republic of Victoria, some educational apparatchiks believe a grandparent kissing their grandchild can violate them and can be considered assault. In what world does a grandparent showing affection to their own flesh and blood have incest on their minds? Most likely never.

It would seem to CM that the most important Royal Commission to be conducted is on our education system. From Safe School programs to universities, Australia’s long term future is being seriously impacted by utterly valueless indoctrination. We will not be the lucky country for much longer because this garbage is already seeping into corporate board rooms.

Note CM in no way thinks Greta Thunberg is associated with Nazis.

What are banned but addicted vapers going to smoke now?

Image result for smoking many cigarettes

Tobacco companies fall foul of most ESG (environment/social/governance)/CSR (corporate social responsibility) measures. Good. Give that so much money is already loaded into corporations that focus on financial virtue signalling, tobacco companies remain forgotten. They look a great mean reversion trade.

British American Tobacco (BTI) is trading at $36 almost half the level of two years ago. Now at 1.02x book value and a 7.3% yield.

Philip Morris Int’l (PM) is at $72.60, down from $122.90 in 2017. A 6.4% dividend yield.

Imperial Brands (IMBBY) at $26.73 down from $55.55 in 2016. A 9.2% yield.

JT is less than half its 2016 number trading at $21.44. A 6.45% yield.

Philip Morris doesn’t have a vaping business but it appears with all these bans in NY etc that nicotine-addicted vapers will switch back to the old school.

Old habits die hard and cigarette smoking is pretty inelastic. Even in bonkers $40 a packet Australia, the ABS records men continued to be more likely than women to smoke daily (16.5% compared to 11.1%). Rates for both men and women have declined since 1995 when 27.3% of men and 20.3% of women smoked daily. However, these rates have remained similar since 2014-15 (16.9% for men and 12.1% for women). Therefore taxes haven’t killed off the habit.

So start underweighting the rubbish in your portfolio that has a penchant for banning plastic straws in the staff canteen to those corporates that allow yourself the opportunity to kill you!

Let’s not forget that governments aren’t going to terminate the monster taxes from this either, especially that so many national and state budgets around the world are looking seriously sick.

Adult candy dispensers

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Only in America. The Alpine Shooting Range has taken Walmart’s decision not to sell handgun ammo into its own hands. It is now selling it by the pound from a dispenser like we used to buy candy.

Yet what of the stats of gun crime in America?

There are 50,000 (mostly individual) gun stores in the US. 95% of firearm related murders are committed with handguns. Statistically, America would be better off banning sales of pistols rather than AR-15s. Say automatic rifles are banned from today. What will change? Handgun murders will move closer to 100%. Good luck buying back 300m+ guns in America.

According to the Crime Prevention Research Center, murders in US appear to be very concentrated: 54% of US counties (representing 11% of the population) in 2014 had zero murders, 2% of counties made up 51% of the murders, ironically in states with the strictest gun controls – Illinois, NY and California.

Yet America has had decades of periods where governments had majorities in both houses and nothing was done on gun control. We’ve experienced Orlando, Las Vegas, Sandy Hook, Columbine, Parkland, Fort Hood, El Paso, Dayton, San Bernardino, Virginia Tech, Geneva County, Aurora…the list goes on.

Moves by sporting goods stores like Dick’s to ban AR sales and raise the age limit to 21yo looked sensible from the outside. However, they had multiple massacres over decades to make that call. The current CEO has been in charge since 1984. Why the u-turn in his conscience? Indeed the company did temporarily suspend sales of ARs after Sandy Hook in 2012 but kept retailing them at the company’s Field & Stream outlets before selling them again at Dick’s. Inconsistent.

Recall the Parkland, Florida school shooting. At the time media outlets went all guns blazing on the National Rifle Association (NRA), CM warned that it most likely would cause a knee jerk reaction in the opposite direction. We speculated that the hike in membership fee likely reflected a surge in members. As tragic as the Parkland massacre was, CM said that ‘shaming’ NRA members en masse would only make them dig in deeper. As it turns out searches for NRA membership surged 4900% immediately after the tragedy. People are sick and tired of being bullied into feeling guilty about things they haven’t caused.

39,773 died from gun-related death in America in 2018. The highest number in 20 years. Statistically speaking ‘massacres’ accounted for only 106 deaths in 2018 or 0.27% of the total. Yet media attention focuses on it.

To put it into perspective the total number of overdose deaths involving heroin from 2002 to 2015 jumped 6.2-fold in the US. Automobiles killed around 32,000 people last year or a little over 2x that of heroin overdoses. When adding non-methadone opioids (illicit fentanyl) overdose that number surged to 20,000, a 33% YoY jump on 2014 and 5.9x 2002. Why is it happening? The problem for many prescription painkiller users is that once their bottle ends, the addiction doesn’t stop meaning many switch to heroin to get the same ‘opioid’ hit.

We armchair politicians can sit back and shake our heads at America. Yet until there is a will of the people to change the laws, expect more massacres to happen. Name an American politician that is willing to repeal 2A as a cornerstone election campaign policy. There is your answer. Will the Democrat nominees raise their hands for the repeal of 2A? Safer to raise hands at free healthcare for illegal immigrants. 2A is toxic to touch. Sadly innocent people are dying for no reason.

As for Alpine Shooting Range, it is doing the auld American thing of embracing capitalism within the law.

Cannibalism the cure to climate change?

Is cannibalism the way to cure climate change? According to one Swedish scientist, Magnus Soderlund, eating humans after they die could be an effective way to cut down on Greenhouse gas emissions. Instead of breeding cattle or sheep, we just eat the dead instead of burying them.

I’m not quite sure the grandkids will want to know that grandma’s old recipe is not so much made by her but of her.

Yet more climate change lunacy. Maybe Soderlund can enlist the services of fellow Swede, 16yo climate activist Greta Thunberg, to legitimize the activity.