#innovation

RACGP alarmism should be driving the AMA not climate

AMA.pngThe Royal Australian College of General Practitioners logo

Now it all makes sense. The Australian Medical Association’s (AMA) latest push on climate change doesn’t appear to be about saving the planet but looking to safeguard its own survival. AMA’s main rival association, the Royal Australian College of General Practitioners (RACGP) seems to be on the right prescription medication as far as membership growth and revenue goes. 

The AMA’s climate push seems to be a concerted effort to lock in future revenues by appealing to students. AMA ‘Associate Medical Student Members‘ have ballooned in the last two years from 8,664 to 15,311 to offset the (pardon the pun) flatline in regular members which have hovered a shade under 30,000 members since 2016. Previous AMA annual reports (AR) make no mention of hard membership numbers. The 2015 AR made reference to 30,000+ members which suggest it wasn’t 31,000+. Students, who now represent over 1/3rd of members, can join for free. Undoubtedly the strategy lies in the hope those students roll over to become fully paid members when they start to practice.

Last year, Dr Bill Coote, former Secretary-General of the AMA (1992-98) wrote in Medical Republic,

In 1962, more than 95% of doctors belonged to the AMA. By 1987 it was 50%. AHPRA reports that in 2016 there were 107,179 registered medical practitioners. The 2016 AMA annual report notes a membership of 29,425. That is 27% of doctors.

Since 2012, AMA annual membership collections have shown relatively anaemic growth from around $11m in 2012 to $12.4m in 2018 from its 29,659 full paying members. Revenues have shown similarly slow growth. Revenues (ex any asset sales) have grown from $20.29m in 2012 to $22.35m in 2018. 10% growth over 6 years.

What of the RACGP?

The RACGP has 35,385 full members and 5,493 student members. Moreover, the group collected $34.6m in membership fees in 2018, near as makes no difference three times the AMA.

Isn’t this just a classic case of customers appreciating what they pay for? Will those AMA student members work out – when forced to shell out hard dollars on membership – as they embark on their medical career that the RACGP is the go-to organisation? Any manner of conference cocktail parties will undoubtedly whisper the realities of membership benefits of both organisations. Surely the more seasoned doctors will make their preferences known. After all, students are more likely to pin their formative years to guru practitioners in the profession rather than lean on the musings of an association that provides cheaper hire car tariffs and frequent flyer club perks.

Revenues for the RACGP have more than doubled from $38.6m in 2012 to $83.1m in 2018.

Maybe Dr. Coote has found the problem when he wrote, ”

AMA members’ fees fund the Medical Journal of Australia. The MJA is uniquely positioned to promote serious commentary on the policy, regulatory and economic changes reshaping Australian medical practice, but now seems to prioritise the interests of academic doctors...The decline in AMA membership penetration from 95% to 50% to 27% of doctors is a significant historical trend.  A US management guru once suggested, organisations are at risk if they respond to a changing environment by redoubling their efforts to do things the way they have always done them…Let’s hope the AMA does not become the Kodak of Australian medical history.”

Climate change might seem to be a woke avenue to do things differently at the AMA, but surely it stands to learn a lot more by studying why the RACGP is surgically keeping it in the ICU rather than pursue fields it has no expertise in an attempt to revive itself. If the AMA board pursues such amputated strategies it is bound to find itself running out of bandages before its members realise that cauterizing membership cash flow is the only viable long term option.

Climate change – as should be taught to school kids

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Thank you SMcK.

“Attention, students. Because so many of you missed Friday’s classes, what with your little climate party and all, today I’m assigning extra work.

Let’s begin with mathematics. 558,400,000 is a really big number. Can anyone here tell me what it might represent? No?

Well, that’s the amount in tonnes of carbon dioxide that Australia emitted last year.

I’ll just pause here for a minute until Samantha stops crying. By the way, Samantha, your sign at the climate rally needed a possessive apostrophe and “planet” was spelt incorrectly, so I’m putting you back in remedial English again.

Where were we? Oh, yes. 558,400,000 tonnes of carbon dioxide.

Let’s see how we can reduce that number. Ban coal mining? That’ll knock off a big chunk.

Ban petrol-powered vehicles? Good call. That’s another slab of emissions gone.

Does the class believe we should ban all mining? You do. Interesting. For your homework tonight, I want you all to design batteries that contain no nickel or cadmium.
Good luck getting to school in electric cars without those.

And there’ll be no more steel wind turbines once the iron ore mines are closed. It’s just the price we’ll have to pay, I suppose.

Even with all those bans, however, Australia will still be churning out carbon dioxide by the magical solar-powered truckload. Cuts need to go much further.

More people means more human activity which means more carbon dioxide, so let’s permanently ban immigration. Is the class agreed?

Hmmm. You’re not quite so enthusiastic about that one. Come on, students. Sacrifices must be made.

Speaking of which, how many of you have grandparents? Not any more you don’t.
And Samantha is crying again. Can someone please take her to the school safe space and let her “process some emotions”, or whatever the hell it is you kids do in there? Thank you.

Sing along with Kim Carnes: “All the world knows of her charms/She’s got/Stop Adani arms”

Who agrees we need to simplify our lives in order to reduce emissions? Returning to earlier times, when emissions were much lower, might help save our earth.

So goodbye to air travel, the internet and your cell phones. People got by without them in the past and they’ll survive without them in our sustainable future.

Still, those emissions will be way too high. Just for fun, let’s ban Australia and see what happens.

All factories, houses, streets, farms – gone. All people gone. Every atom of human presence on this land mass, completely erased.

At that point we’ll have finally cut our emissions to nothing. We’ve subtracted an annual 558,400,000 tonnes of carbon dioxide from the atmosphere.

Congratulations, children. By eliminating Australia, you’ve just reduced the world’s yearly generation of carbon dioxide from 37,100,000,000 tonnes to just … 36,541,600,000 tonnes.

Still, every tiny reduction helps, right? Maybe not. Let’s have a quick geography lesson. Tyler, please point out China on this map. No; that’s Luxembourg. China is a bit bigger. Try over here. There you go.

Here’s the thing about China. How long will it take for China to produce the equivalent amount of carbon dioxide that we’ve slashed by vanishing Australia? One year? Two years? Five years?

Not quite. Start the carbon dioxide clock on China right now, and that one enormous nation will have matched our annual output in 20 days, for China adds a whole Australia to the global emissions total in that time.

For that matter, China will have added another 1,190,953 tonnes by the end of this one-hour class.

Even a tiny increase in China’s output puts Australia in the shade. Various experts last year estimated that China was on course for a five per cent carbon dioxide boost.
This would mean an extra 521,637,550 tonnes – or basically what Australia generates. Our total is the same as China’s gentle upswing.

So maybe your protest was in the wrong country. Here’s another assignment: write letters to the Chinese government demanding it stops dragging people out of poverty.
Make sure you include your full name and address, because the Chinese government is kind of big on keeping records. Send a photograph of yourself standing in front of your parents’ house.

You might repeat this process in India. In fact, rather than going to Europe for your next big family holiday, prevail upon your parents to visit India instead. The tiny village of Salaidih would be the perfect place to tell slum-dwelling residents they shouldn’t have electricity.

They’ll probably thank you for it. Or they should, if they aren’t stupid climate deniers. Indian paupers must avoid making the same tragic affluence mistakes as us, so we must keep their carbon footprints as tiny as possible.

Can you imagine how terrible is would be for the earth if all of India’s one billion-plus population owned cars and air-conditioners? It really doesn’t bear thinking about.
One further assignment: tonight, locate a clean, green alternative source for $66 billion in exports. That’s how much was raised last year by the Australian coal industry.
Working it out won’t be too much of a challenge, I’m sure. After all, you know science and stuff. About half of your signs on Friday claimed you know more about all these things than does the Prime Minister.

Show him how advanced your brains are by devising a brand-new multi-billion export bonanza.

Hey, look who’s back! Feeling better, Samantha? That’s nice. Feelings are the most important thing of all.”

Was Tesla/Maxwell deal smart?

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Tesla (TSLA) has bought Maxwell (MXWL) for an all-stock transaction at US$288m notional value. The question is why any company would accept an all share transaction from a chronic loss-making company to buy its supposedly “amazing” futuristic dry capacitor technology? Are shareholders of MXWL as hooked into the EV cult as those at Tesla? Clearly not all of them. A group of MXWL investors launched a class action to block the deal. Sadly they failed.

If the management of Maxwell truly believed this deal was a winner and the technology was game-changing, why not demand cash? Why didn’t Tesla invite Panasonic’s battery boffins to assess whether the technology had merit? One must question how good is Maxwell’s IP to only find one buyer and for an all share deal? Where were the private equity (PE) vultures circling? How little confidence in one’s product or how much faith in Musk’s cult-like status to fall for such terms?

Maxwell at the 9 month FY2018 stage reported US$91.6mn (-8%YoY) in revenue and a net loss of $30.2mn. Cash halved from $50.122m in 9M 2017 to $23.561mn 9M 2018. The company did sell its high voltage product line to Renaissance Investment Foundation for $55mn with a 2-year $15mn earn out. That involved an upfront payment of $48m making pro-forma cash as at Sep 30, 2018, total $69mn. The company has an accumulated deficit of $277mn.

While the two companies had been in conversation for several years, Musk seemed to get serious in December 2018.

Forget the technological merits of Maxwell. It is easy to work out the quality of the deal based on the structure and the lack of appetite from the mega battery makers or PE firms to validate it. There is no way that MXWL didn’t show its wares to the majors. Given the deal was announced in February 2019, the EV battery and PE world would have at the very least done some back of the envelope calculations to value the business.

All that Musk has done has absorbed another loss-making business into the same cult and give himself another “dream” to add to the smoke and mirrors story.

Maxwell’s management must have channeled Don Adams, “good thinking, 99” but will undoubtedly end up saying, “sorry about that, Chief!”

How to predict market bubble tops?

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Triumph Motorcycle is about to launch the 750 unit limited edition Rocket 3 TFC. The bike will sport the largest engine ever fitted to a production motorcycle – a 2,500cc 3-cylinder behemoth. 170ps power and 221Nm of torque. Triumph has really got its act together with its motorcycle line up. In 2012 the UK maker sold 49,000 units. In 2018 that topped 60,697. There must be customers who wish to tow caravans. The bike is sure to annoy every environmentalist.

Although there is something of a pattern with “limited edition specials” and economic cycle tops. Honda released a homologation special 3000-unit RC-30 in 1987 ahead of the stock market crash. At the height of the tech bubble in 2000, Ducati sold a 2000-unit limited edition MH900e replica on the internet for 15,000 euro ahead of market collapse. CM bought one. Ducati sold the 1,500-unit US$72,500 limited edition Desmosedici RR in 2007/8 right ahead of the Global Financial Crisis (GFC). Triumph’s Rocket 3 TFC will retail for US$36,000. Has Triumph signalled the top?

The idea of buying one to annoy climate alarmists is desperately tempting.

Credit card with a carbon limit

Here is a credit card business model bound to fail. Johan Pihl, one of the founders of Doconomy, is launching a new credit card in collaboration with the UN Climate Change Secretariat and Mastercard. It cuts your ability to spend when you’ve hit your “carbon” limit, not your financial one.

To CM, the pricing is wrong. It should allow one to spend beyond their carbon limit and pay penalties on exceeding it straight into the UNIPCC’s coffers. Or perhaps we should ask all UN staffers to use it as a corporate credit card. If it lived up to its promises, most would have their carbon limit triggered when paying for flights to the next COP summit halfway around the globe. That would be a plus!

Pihl said, “we realized that putting a limit that blocks your ability to complete the transaction is radical…but it’s the clearest way to illustrate the severity of the situation we’re in

It is such a dopey idea. Presumably, if you wish to purchase something that you want and your Doconomy cuts you off, you’ll use another card to complete the transaction. The carbon footprint limit will initially be based off a random calculation tied to the industry aggregate. So it is wildly inaccurate from the get go.

Imagine if the consumer would pick up our app and actually look at their footprint and that’s the basis for whether they buy something or not,”

If history is a guide we can look to carbon offset schemes have failed. Aircraft carbon offsets may provide some idea as to how hard this card might be to sell.

In its 2017 Annual Report, Qantas boasts,

We have the world’s largest airline offset program and have now been carbon offsetting for over 10 years. In 2016/17, we reached three million tonnes offset.”

Carbon calculators tend to work on the assumption of 0.158kg CO2/passenger kilometre.

In the last 10 years Qantas has flown around 1 trillion revenue passenger kilometres. While the literature in the annual report denotes one passenger offsets every 53 seconds, the mathematical reality is simple – 2% of miles are carbon offset. So that means that 98% of people couldn’t care less.

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Another example was a cryptocurrency named LivingOffset, which tried to conduct an initial coin offering (ICO) 12 months ago.

LivingOffset notes on its web page,

Let’s say you buy a cup of coffee. You know that producing the coffee has created carbon emissions.  Now, you can offset that damage with a contribution that matches the value of the carbon cost, 5c for a cup of coffee…Your 5c contribution is matched with an equal corporate contribution.  Turning your 5c offset into 10c. Just think, if everyone having coffee did the same… how quickly we could start to make a real difference…All the contributions go to projects that have proven to have a positive impact on the environment by reducing carbon emissions. And, you can track and verify that your money is going exactly where it is meant to go.

To the best of CM’s knowledge, the ICO didn’t succeed and is currently priced at $0. That despite its lofty goals of 128% returns. Perhaps using Wikipedia as a source in the prospectus did not help matters.

CM is not sure about his readers, but to have the card reject a payment based on spurious mathematics would undoubtedly frustrate after a while.

Probably says much about MasterCard to sign up for this virtue signalling rubbish given it is lagging behind Visa. If they looked at Gillette, Colgate-Palmolive and other “woke” corporations, they would learn the value of sticking to their lane and allowing consumers to have the freedom to spend how they choose.

MasterCard 1Q 2019 report showed

Transaction Volume: 19.2 billion

Gross Dollar Value: $1.484 trillion

Cards in Circulation: 2.537 billion

Quarterly Revenue: $3.889 billion

Market Cap: $251 billion

Visa 2Q 2019 report revealed

Transaction Volume: 47.4 billion

Gross Dollar Value: $2.197 trillion

Cards in Circulation: 3.358 billion

Quarterly Revenue: $6.972 billion

Market Cap: $355 billion

Elon Musk’s golden chocolates are already melting

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What is it with Elon Musk that keeps making up such fictitious dreams about the future? So even assuming his $2bn capital raise all goes smoothly, his dream of up to 1,000,000 robo-taxis, Tesla cars doubling in value and a market cap of $500bn is just barking mad. It reminds CM of a time when a mobile phone retailer in Japan, Hikari Tsushin, had Y100 trillion (c.US$1 trillion) market cap gold coin chocolates produced as a hubristic internal target in 2000. 19 years later the shares are only 9% of the peak price reached and 1% of the value of the prophecy embossed on the chocolate. It is up to the market to decide how much a company is worth, not the CEO. A CEO obsessed with the share price is always a dangerous game.

According to CNBC Musk said at his Autonomy Day,

that autonomous driving will transform Tesla into a company with a $500 billion market cap, these people said. Its current market cap stands around $42 billion. He also said that existing Teslas will increase in value as self-driving capabilities are added via software, and will be worth up to $250,000 within three years.

Musk reiterated that because Teslas can be upgraded “over-the-air” with new software-enabled features and functionality, they will appreciate in value, unlike nearly every other car on the market. A Tesla will be worth $150,000 to $250,000 in 3 years, he claimed. He also said that a full self-driving upgrade will increase the value of any Tesla by a half order of magnitude, or five times.

Tesla expects to have 1 million vehicles on the road next year that are able to function as “robo-taxis,” Musk said, reiterating statements made at Autonomy Day and on the company’s Q1 earnings call. Each car should be able to do 100 hours of work a week for its owner, making money as a robo-taxi he told investors.

So if Musk’s cars would be worth $150,000-$250,000 how does that reconcile with a sticker price of $35,000~$124,000? A used 2018 Model S 100D with 18,588 miles on the clock is $60,990. So the above used car could technically be worth c.2.5x higher in Musk’s thought bubble. Where is the stampede of people running to used car lots to hoard compatible Teslas? That has to be one of the best investments out there – forget buying Tesla shares! Buy the used cars. Sadly, about the only cars that appreciate are limited edition classic cars. A mass-market electric car in abundant supply will not be worth a 100% mark-up, even if one takes into account the hypothesis is driven by the revenue uplift of one’s car doing the rounds of a taxi while you sleep.

If Musk truly believes his robo-dream, he should move to immediately raise the price of his cars to the price range he thinks his cars will be worth. Why not bring back residual value guarantees (RVG)? That’s right, he had to take a $121m write-down on existing RVGs this quarter just gone. Guess how many of his current line up he will sell at $150,000-250,000? Zero. That shows us the true value of Tesla. Appreciating Teslas and $500bn market caps. Some of the best comedy going. So is $240/share.

More digital diplomacy

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More digital diplomacy from Israel to Iran. This time using Iran’s solid performance against Portugal in the World Cup. The last time digital diplomacy was used by the Israeli PM was to push free drip irrigation technology to prevent farmers suffering any more from drought. Bibi Netanyahu is a polarizing figure at home, but his message here seems to be resonating with Iranians too.