Tax

National Bloody Nuisance

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If anyone is surprised about the cost blowouts of the National Broadband Network (NBN)  they must have been hibernating. For as much as $91,000 to connect one home this sum would probably cover one’s fixed line, mobile, internet, wifi and FOXTEL subscription for life. It doesn’t take a rocket scientist to work out that in this day and age of ‘health & safety’ that to put in underground optic fibre requires 8 people – 5 to supervise, 2 females with traffic paddle pops and one bloke in the ditch with a shovel. Then multiply by 100s of thousands. The economics could be written in crayon such is the elementary nature of the formula.

I recall listening to talk back radio around the time NBN was launched when the sunshades at schools program was underway. Not a word of a lie, the government was shelling out near as makes no difference $1mn per school. Dozens of builders were calling in to say they could erect these structures with all of the concrete, steel poles, roofing materials and labour for 1/10th the cost. So digging holes and inserting optic fibre which will rapidly become redundant across a country with such massive distances between places was only ever going to be a white elephant.

Yet as ever governments are only too happy to cost things on the back of an envelope and tell us all of the rosy scenarios as to how it will come in on budget. If the taxpayer asks for clarity on the math, they are conveniently fobbed off. It is not unreasonable for taxpayers to want to receive full disclosure on how things are to be funded. If a CEO told his shareholders to take a hike when they requested the costings of major capex spending they’d be summarily fired. Every citizen has the right to transparency. Yet why is it the South Australian government celebrates clearly failed renewable policy with an extra $600m bill quickly drawn up on a Friday night? Instead of accountability we are told to use electricity more sparingly (even paid to stay off the grid).

So the NBN is another abject failure. Better to admit defeat and cauterize the gaping wound than to keep filling it with more limited taxpayer funds. At least Turnbull can blame the former government on implementing it in the first place, just as the incoming government can blame him for the disaster that is the $50bn submarines programme which is already running intro huge production issues before the design is even completed. We deserve better.

When will the media get a life?

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When will the mainstream media get a proper life? Now Melania Trump’s fashion is supposedly revealing the true secrets of the inner circle. While The Guardian focus on her swatting the President’s hand or wearing pumps to help hurricane victims and a Missoni dress they completely overlook that the UN has passed a resolution on sanctions over North Korea that even Russia & China have agree to. Isn’t it funny that maybe all the pressure that The Donald has put on the world community by not acting like the weakling that was his predecessor on foreign policy has got the world smartening up its act. Someone made criticism of his exit from the Paris Accord the other day. Isn’t this a stroke of genius? It is effectively the reverse of NATO funding. If European governments are willing to fill in for America’s lack of compliance on climate change by burning more of their own taxpayer’s money, let them. America First aided and abetted by Europe’s political class. Besides where is the noise made over the other 3 huge polluters (China, Russia & India) whose climate commitments are nothing short of action sometime in the undefined future. Yep, Trump derangement syndrome.

As a parting message to the liberals, I happen to think Melania has wonderful dress sense. From the pussy-bow at the second debate, the stunning inauguration outfit to a Missoni dress. If the petty media coverage now comes down to FLOTUS rebelling in the wardrobe as a way to signal that the President’s package maybe smaller than he’d like to portray then you’re getting to a point where you will comfortably assure he is returned to a second term. Interesting how journalists these days think being a potty mouth will increase ‘hits’…then again catering to those that love to patronize is it any wonder? Those who can’t be bothered to look objectively at anything he may do that is actually worthy of praise. Indeed if he was as reckless and unhinged as made out, wouldn’t he have already attacked North Korea? Surely a much more effective way to show the size of one’s genitalia.

Tesla – zero emissions and zero registrations

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An eagle eyed reader spotted this article in the South China Morning Post today showing that private EV registrations in Hong Kong fell to ZERO in April 2017 from 2,964 in March. The SCMP noted; “Since the April 1 introduction of the first registration tax on EVs, vehicle prices have shot up by 50 to 80 per cent, depending on the model, with tax relief now capped at HK$97,500. A Tesla S was HK$570,000 (under the new tax regime, the price is more than HK$900,000)…the domination of Tesla means zero-emissions motoring in Hong Kong has been largely an elitist activity.” HK is 6% of Tesla’s global volume yet the share price is pricing in blue sky.

Yet more evidence that Tesla product can’t stand on its own without massive subsidies. In previous Tesla dispatches the argument has been the car is an ostentatious fashion accessory to show the world one’s commitment to climate change but only if the price is right.

Are the Aussie major banks as greedy as made out?

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One would imagine that Turnbull and Morrison would consult the Treasury or the Reserve Bank of Australia (RBA) to get a feel for the true state of bank greediness. Of course as a political point scorer it is an easy one because Aussie mortgage debt stress is so high and any relief that absolves their own accountability is a plus. Turnbull doesn’t worry about reality and given his supposed business acumen saw no need to consult the banks. Just Mug them in a back alley. Then wonder why they say in response to the proposed tax slug why employees, customers and shareholders will suffer in some way or another. Any conservative government knows that nearly all financial institutions operate for shareholders over customers. In a round about way customers can always choose to switch institutions if they find a better deal. Market forces keep some level of competition but the above chart shows that the return to shareholders for the evil major banks is at 24 yr lows. Profitability is well off the highs. So shareholders aren’t getting the spoils they are accused of. Of course low interest rate environments place extra pressure on net interest margins and they too are hovering at post GFC lows. Never mind. When trying to arrest disastrous polling Turnbull will happily put himself ahead of country. Even if it means dynamiting the tracks of the one sector that greases the wheels of the economy.

Pathetic – that’s the best they’ve got?

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Talk about the boy (girl) who cried wolf. I’m not sure why Rachel Maddow bothered to create a storm over him paying $38mn in 2005.  Go back to sleep. If she had an expose over evasion that would be something. Once again, people will switch off to click bait which promises everything and delivers nothing. So much for a gotcha moment. Maddow just kicked an own goal. Ahh the politics of envy. One question for Maddow – does she claim every tax deduction she’s entitled to? Given the White House released before she did took the wind from her sales leaving her story as powerful as an asthmatic blowing through a straw

Trump’s tax returns – the biggest danger

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MSNBC’s Rachel Maddow claims to have President Trump’s tax returns. Apart from the legality of such leaks, the question remains whether he’s done anything illegal. If he’s used every legal loophole to his advantage to AVOID taxes then good on him. If he’s abused the sysyem and EVADED taxes then that is a problem and the law should be applied appropriately. The question is what level of detail has Maddow got? A couple of pages of his ‘1040’ or his entire filings? I would imagine his tax filings are complex enough littered with tax loss carry forwards, write-offs, deductions and so on.

The risk is binary.

If he is only shown to have avoided tax then it will be a non issue and the Democrats will bury themselves deeper in the politics of envy. Voters didn’t care much for the original leak during the election campaign.

If Trump is charged with tax fraud and impeached be careful what you wish for. The amount of market chatter I hear from the same pundits who said he had no chance of winning the White House are the ones believing his tax cuts aren’t yet priced in.  That was priced in a while back but such are global markets clinging to any hope things don’t fall apart that deposing the one person that is fueling it will cause massive risk on.

For all of the hero status Maddow expects to garner she may end up doing the greatest disservice. That doesn’t condone illegal activity rather exposing what happens when the inevitable Chinese whisper problems rear up because we’re all US tax code experts.

Poverty in America +16mn since 2000. +9mn since 2008

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Remember the feel good video Obama proudly displayed alongside his White House economics flunky. Poverty had fallen by the fastest rate since the 1960s. What a crowning achievement. While much praise was heaped upon this shift on searching through the St Louis Fed’s FRED stats database, the picture is disturbing. It is actually little to do with partisan politics but a cry from the disaffected to get anything to change their fortunes.

Let’s take a look at Ohio, a key swing state at the election. While Democrats were patting themselves on the back and staring at the huge drop in the unemployment rate…

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…poverty was climbing sharply. In fact ever since the tech bubble collapse, the plight of Ohioans has just gotten worse. From 1.1mn in poverty it is now over 1.8mn.

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On a national level there is little reason to cheer either. Since the tech bubble collapse America has added 16mn to the poverty queue. 7mn under Bush and another 9mn under Obama. This still remains a monstrous challenge for Trump to fix.

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When looking at poverty on a country level America (15%) fairs better than the UK (23%), EU (26%) and Greece (37%). One table that sends chills down my spine is unemployed persons. This trend has been rock solid for almost 70 years. When unemployed persons hit the following line, the US economy tends to head into recession (the grey shaded areas).

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With the Fed putting the brakes on low interest rates and the world economy drunk on debt there comes a time for payback. The press can be critical of his appointees and ridicule his executive orders but there is no question as to why he won. He answered the call to the increasingly impoverished people that missed out on the fruits of low interest rates and asset bubbles (incl 20,000 Dow). With more political turmoil awaiting us throughout Europe in the form of elections in France, Holland and Italy we are staring down the barrel of high risk geopolitical stakes.

We better hope he makes America great again with his policies of deregulation and downsizing government. The more the media and shocked liberals protest, loot, pillage and divide the more they trigger exactly what they do not want. For those calling for his impeachment be careful what you wish for. The world will not handle destabilized American politics. The world is well overdue a massive slap in the face. It needs to wake up. We are at a far more important economic juncture than at any time in the past 90 years. Victimology won’t help us. Virtual signaling is pointless. This has nothing to do with race, gender, sexual orientation or religion. These charts show we’ve been drinking our own Kool-Aid for too long. Governments have ignored your wishes and covered up gross negligence along with group think central banks via decades of crony-capitalism.

Trump has much to prove but a larger part of America is well behind the ‘change’ his administration could bring that decades of GOP and Democrat governments have failed to. Yet I ask all those who who litter social media and ask Americans to rise up and do their patriotic duty to resist Trump, “exactly what solutions do you have in mind?” As far as I can see your protesting  is little more than moral preening. You complain yet have nothing to offer in return. We are no longer living in a world where things are free. Eventually someone has to take a haircut. One things is a certainty though. The liberals that cry equality will be the first to cut and run if they become the target of common sense. Let that sink in.