Politics

Darkest Hour

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Saw Darkest Hour yesterday. Extremely well cast movie. Oldman plays Churchill impeccably well. Great storyline and is actually more relevant today than ever. The portrayal of Chamberlain after his disastrous run as PM is so indicative of the weak and feckless political class we have today across the Western democracies. Despite Chamberlain’s gross incompetence, out of power he still tries to undermine Churchill who ultimately roasts him alive. Well worth seeing. If only we had more Churchills today.   As there are more than enough dictators to stand up against.

The only thing that spoilt the film was the health and safety ‘environmentally friendly film making’ rubbish during the credits and an advisory that Churchill smoking cigars like a chimney was only a portrayal and people should be aware of the health risks of tobacco. Yet more evidence of the PC culture that overwhelms every walk of life,

If only politicians put as much energy into policy as they do in the bedroom

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Everywhere we turn, social media is tagging another politician who can’t keep “it” behind closed zippers. It is nothing new. While not condoning extra-marital affairs, the media seems more intent on reporting infidelity in nauseating  detail than things that actually matter on the policy front. Growing deficits, unsustainable household debt, eye-popping unfunded pension and healthcare liabilities should be front and centre but the mainstream media (feeding junkies on social media) thinks it gets more mileage by pointing out bedroom antics. Who needs steamy soap operas with expensive stars? Politicians literally offer the best “bang” for the buck going for networks and media outlets. It is endless clickbait. We are also to blame for feeding this nonsense.

Perhaps that is what is meant by “moving with the times?” While we’re all told on one hand how we must behave and talk without causing offense in the new world, the thirst for reporting/sharing secrets from the bedroom seems to tell the real story of the sorry state of journalism. Our level of “being out of touch” has never been higher. We’d be well advised to wake up to the warning signs ahead. Sadly it will be too late when reality finally dawns. Watch social justice issues like climate change and identity politics slide to the very bottom as people realize prioritizing such nonsense doesn’t pay the mortgage or feed a family.

In recent times, Australian Deputy Prime Minister Barnaby Joyce has been in the spotlight for getting a staffer pregnant. How he chooses to conduct his private life is his (and her) business alone. Indeed another dysfunctional family is born. The main problem seems more about giving high paying jobs  on the taxpayers’ purse to his lover with the tacit approval of the PM. If the timeline is true then the actions by the Deputy PM were unethical to be sure and no amount of song and dance to defend it will find a comforting ear. Allegations of expense abuse only adds to the growing list of reasons to ditch mainstream parties.

Consenting adults should bear personal responsibility. It is not a question of Joyce’s infidelity but politicians (not limited to himself) taking taxpayers for mugs is an issue. Joyce only recently won back his seat of New England in an expensive by-election. At the time he must have been hoping his lover’s bun could stay in the oven.

If anything the manner in which our political class is handling this scandal only re-enforces the abysmal level of moral authority our government has. Even before Joyce’s issues came to light.

Prior to this fiasco we voted in a near as makes no difference hung parliament with a feral Senate. In recent times we’ve had by-elections over dual citizenship (still it did violate the constitution although PM Turnbull preempting the High Court’s ruling was daft), the Dastyari scandal with respect to leaking secrets to China or Foreign Minister Julie Bishop frittering away multi millions in aid dollars without any due diligence on the back of pop-star Rihanna’s Twitter account.

We are being run by clowns (not limited to Australia mind you) who clearly put their own survival above all else. Despite the polls showing a clear and present danger of the incumbent government being turfed out at the next election there seems to be a level of complacency within the Coalition’s ranks that believes that being less worse than the opposition is somehow virtuous and believing a self created myth that disenchanted voters will somehow reelect them again.

Infidelity doesn’t reflect well for politicians preaching family values. However  it would be fair to say that many voters would turn a blind eye to these indiscretions if those same bureaucrats would exercise the same amount of vigor in putting through sensible policy (that betters their constituents) as they do between the sheets.

Perhaps the media should be doing more biopsies on things that truly matter. That way there will be fewer autopsies. As it stands delving into the privacy of others seems far more important to ratings.

Ultra High Net Worth Individuals (by country)

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In an ever growing world of haves vs have nots, Elliman has released an interesting update on the statues of global wealth and where it is likely to head over the next decade. It suggests North America has 73,100 UNHWIs at an average of $100mn each or $7.31 trillion. To put that in perspective 73,100 North Americans have as much wealth as Japan & France’s annual output combined. Over the next decade they expect 22,700 to join the ranks.

Europe has 49,650 UHNWI also at the magical $100mn mark (presumably the cut off for UHNWI or the equivalent of Japan.

Asia is growing like mad with $4.84 trillion split up by 46,000 or $105mn average. In a decade there are forecast to be 88,000 UHNWIs in Asia.

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I am not sure what the World Bank was smoking when coming up with the coming forecasts I’ve rthe next decade but the figures smel fishy.  Then it all comes down to this chart.

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1) Political uncertainty? Everywhere you look – Trump, Brexit, Catalonia, Australia, France, Germany, Austria, Czech Republic, The Netherlands, Hungary, Poland etc etc

2) Potential fall in asset values – looks a very high chance of that. Current asset bubbles are almost everywhere – bonds, equities, real estate etc

3) Rising taxes – maybe not the US or Canada (if you follow the scrutiny over Finance Minister Morneau), but elsewhere taxes and or costs of living for the masses are rising

4) Capital controls – China, India etc

5) Rising interest rates – well the US tax cuts should by rights send interest rates creeping higher. A recent report showed 57% of Aussies couldn’t afford an extra $100/month in mortgage – a given if banks are forced to raise lending rates due to higher funding costs (40% is wholesale finance – the mere fact the US is raising rates will only knock on to Aus and other markets).

Surely asset prices at record levels and all of the other risk factors seemingly bumping into one another…

So while UHNWIs probably weather almost any storm, perhaps it is worth reminding ourselves that the $100mn threshold might get lowered to $50m. It reminds me of a global mega cap PM who just before GFC had resplendent on his header “nothing under $50bn market cap”. Post GFC that became $25bn then eventually $14bn…at which point I suggested he change the header entirely.

I had an amusing discourse on LinkedIn about crypto currencies. The opposing view was that this is a new paradigm (just like before GFC) and it would continue to rise ( I assume he owns bit coins). He suggested it was like a promissory note in an electronic form so has a long history dating back millennia. I suggested that gold needs to be dug out of the ground – there is no other way. Crypto has huge risk factors because it is ultimately mined in cyber space. State actors or hackers can ruin a crypto overnight. There have already been hacking incidents that undermine the safety factor. It does’t take a conspiracy theory to conjure that up. To which he then argued if it all goes pear shaped, bitcoin was a more flexible currency. Even food would be better than gold. To which I suggested that a border guard who is offering passage is probably already being fed and given food is a perishable item that gold would probably buy a ticket to freedom more readily as human nature can adapt hunger far more easily in the fight for survival. I haven’t heard his response yet.

In closing isn’t it ironic that Bitcoin is now split into two. The oxymornically named Bitcoin Gold is set to be mined by more people with less powerful machines, therefore decentralizing the network further and opening it up to a wider user base. Presumably less powerful machines means fewer safeguards too although it will be sold as impervious to outsiders. Of course the idea is to widen the adoption rate to broaden appeal. Everyone I know who owns Bitcoin can never admit to its short comings. Whenever anything feels to be good to be true, it generally is. Crypto has all the hallmarks of a fiat currency if I am not mistaken? While central banks can print furiously, they will never compete with a hacker who can digitally create units out of thin air. Fool’s Gold perhaps? I’ll stick to the real stuff. I’ll take 5,000 years of history over 10 years any day of the week.

Is PM Abe’s at risk of a health relapse with yet more voter backlash?

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Yet more voter backlash for PM Shinzo Abe and the LDP. The scandals and shenanigans are causing some glaring results at the local and prefectural level. Last month’s Tokyo Municipal Assembly elections saw the LDP experience its worst ever outcome. The Sendai Gubernatorial elections this Sunday saw the LDP stench continue. Japan has been pushing the Abenomics revival theme but given the stress from a plummeting approval rating (26% heading into the Kake Gakuen hearings in parliament) will his health issues kick up forcing him to resign? The July 22-23 Mainichi newspaper poll showed that 56% did not back his government, +12 points from the previous survey in June.

Independent candidate Kazuko Kori (right) promised education reform and a quick resolution to the problem of long child care waiting lists. Her LDP competition in the form of  Hironori Sugawara (left),ironically a president of a funeral services operator, was defeated.

PM Abe’s left his first term after just 12 months in 2006-2007 being diagnosed with an illness known as chronic ulcerative colitis — a type of inflammatory bowel disease which according to the Bungei Shunju monthly magazine in Feb 2008:

“He would rush to the toilet in pain…he felt the urge to evacuate every half hour or so.

While in the 2012 campaign Abe assured us he’d been cured, the question is whether the current crop of scandals (involving him and his wife Akie) will see a relapse of this condition, rendering him out of action. Markets are not yet forecasting Abe to resign but whatever one thinks about “Abenomics” it has brought some long overdue semblance of stability in Japanese politics. Should an event occur we could see some financial evacuations.

The sorry state of public pensions that are about to explode

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Perhaps the most disturbing fact that so many are choosing to overlook is the level of pension underfunding. Promises upon promises have been made and the nest eggs so many were expecting to retire on are likely to disappear or in the best case scenario be a mere fraction of what was originally thought. What a nightmare to wake up to. Decades of hard work gone up in smoke due to pension administrators sticking to unrealistic returns. Last year I wrote, ” US Pension Tracker assumes that public pension funds have a market based unfunded pension deficit of $4.833 trillion. The actuarial base (using a discount rate of 7.5%) of the pension deficit is approximately $1.041 trillion. This assumes an unfunded portion of $3.8 trillion. Using the 2016 20-year US Treasury bond yield of 1.71% the market based pension deficit explodes to over $8.8 trillion or a $7.5 trillion unfunded portion equating to around $74,000 per American household. For California alone this would push the pension debt per person above $135,000.”

Zero Hedge provides an interesting update on the coming crisis:

“We’ve written quite a bit over the past couple of months about the pending financial crisis in Illinois which will inevitability result in the state’s debt being downgraded to “junk” at some point in the near future (here is our latest from just this morning: “From Horrific To Catastrophic”: Court Ruling Sends Illinois Into Financial Abyss).

Unfortunately, the state of Illinois doesn’t have a monopoly on ignorant politicians…they’re everywhere. And, since the end of World War II, those ignorant politicians have been promising American Baby Boomers more and more entitlements while never collecting nearly enough money to cover them all…it’s all been a massive state-sponsored scam.

As we’ve noted frequently before, some of the largest of the many entitlement ‘scams’ in this country are America’s public pension funds. Up until now, these public pension have been covered by stealing money set aside for future generations to cover current claims…it’s a ponzi scheme of epic proportions…$5-$8 trillion to be exact.

Of course, the problem with ponzi schemes is that eventually you get to the point where the ponzi is so large that you can’t possibly steal enough money from new entrants to cover redemptions from those trying to exit…and, with a tidal wave of baby boomers about to pass into their retirement years, we suspect that America’s epic ponzi is on the verge of being exposed for the world to see.

And when the ponzi dominoes start to fall, Bloomberg has provided this helpful map to illustrate who will succumb first…”

Know how many public servants there are?

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I was fascinated to know how many public servants are employed around the globe given the reckless central bank debt monetisation. The OECD data shows that in many countries the % of total workforce employed by the government continues to climb. Is this just a sign of how over-regulation is creating more and more departments?

Acceptance into the EU almost seems like an excuse to create more quangos. Greece is case in point. Greece’s public service had only 7.5% employed by the gov’t in 2001. Latest figures show that number at 22.6% (i.e. 203%).

Of course certain public service jobs are necessary (medical, healthcare, welfare etc). I do note that Services NSW in Wynyard has fantastic service. However since the EU has taken over public sector roles seem to have exploded. See the rate of change between 2013 and 2001. Is this yet another sign that the private sector has become more breathless.

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Despite this youth unemployment across the globe continues to climb. Sadly raising taxes and raiding the rich doesn’t seem the way forward…

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