GENEAOLOGY SILLINESS

Top Aussie tennis player Ashleigh Barty is of indigenous heritage, so we are told by the media. Why? It’s not true. In fact she’s of English ancestry but through a great grandmother, is one 64th aboriginal.

So too with Trump who was right to taunt Democrat Presidential candidate Elizabeth Warren as ‘Pocahontas’ after she idiotically claimed to be the first native American member of Congress. Once when filling out a form for her bar admission in Texas she identified herself as “American Indian”. On another occasion, contributing to a celebrity cookbook, she described herself as Cherokee. In fact according to her DNA records one must go back between 9 to 10 generations to find a trace of native American. That far opens up tens of thousands of different ancestors.

Warren is an intelligent woman with an impressive back-story. Why would she mar her record with this scatterbrain nonsense?

“REVEALED: Parts of New Zealand to be hit hardest by our next big quake”

That heading is currently the lead item on the New Zealand Herald’s website. I think you will agree it’s unequivocal.

But does it reveal parts of New Zealand to be hit hardest by our next big quake as the heading proclaims? No, instead in a detailed account it outlines current efforts to do so and includes this line: “Presently, there’s no way to predict where, when or with what force a large earthquake will be unleashed in the future.”

The article was written by the Herald’s Science Reporter Jamie Morton. If Jamie bowls into the Herald’s office and viciously attacks, indeed even murders, the drooling halfwit responsible for that heading, no court in the land would convict him. Go to it Jamie. Do your duty.

THE AUSSIE SPIRIT

What an amazing gesture by Aussie bookmaker Sportsbet in refunding nearly half a million to punters backing the Black caps in the World cup final. Who else in the world would have done that?

It’s indisputable that on two counts New Zealand was robbed and nothing evidences that more than Sportsbet’s magnanimous action. “It wouldn’t be fair to take money off New Zealand fans after the Black caps technically didn’t lose”, their spokesman was quoted.

My only quarrel with that are the words “technically didn’t lose”. In fact, “technically” is superfluous. Under the rules which are quite clear, New Zealand won.

CENTRAL BANK SILLINESS

Central banks everywhere, or at least everywhere that counts, are lowering interest rates to absurd levels, in some European cases, minus 1% which means, paying the top debt issuers such as Governments, a fee to keep your money.

And why? Because outside of America, albeit there’s some negative economic indicators coming from there, they’re worried about recession fears. In my view they’re totally wasting their time. The days when raising or lowering the base rate by a quarter of one percent has an impact are long gone. Obviously a business working on an overdraft is hardly going to spring into expansion mode because of this relatively small shaving off their interest bill.

There are clear recessionary signs in Australia and in Auckland in particular in New Zealand. They shouldn’t be a concern. Periodic downturns are valuable purges of waste and lead to greater efficiencies and thus form a solid foundation for the next upturn. Recessions affect confidence and become self-fulling. But so be it as that’s the market economy acting as it should and the efforts of central banks to level things out are unhealthy.

Following the 2008 banking crisis an unprecedented amount of cash was created which led in due course to booming economies. But not without disgruntlement as employees complained of static incomes. In fact that wasn’t so, rather large numbers of hitherto unheard of high paying jobs in the burgeoning new tech fields were created while the surviving, still standing traditional jobs of waiters, drivers, teachers and nurses etc gained job security but comparatively little income growth.

With so much cash sloshing around looking for an outlet share-markets soared and became self-fulling as they drove up prices. So too with commercial property markets, these having appeal as absorbers of large lumps of idle cash. With record low interest rates, as always, this the yield benchmark, on face value accepting small dividend returns from shares and commercial property made sense. In fact it didn’t as interest rates are a very bad indicator of value, particularly with commercial property, given their volatility over time. Nevertheless, these booming markets led to some commentator’s disgruntlement that such enormous gains were falling unearned into share-market and commercial property investors pockets. This was naïve. Here’s why.

The vast majority of share-market investing is by Funds, being entities tracing back to mum and dad pension purchasers. So too with commercial property. My company owns a prime Sydney CBD office tower, once the 4th tallest in the city. I’m told that when we bought it 16 years ago we were one of 64 private CBD building owners. Today we’re one of four, the rest being owned by investment Funds, tracing back to mum and dad de facto owners.

All of that said I return to my central proposition, namely that trying to prevent an inevitable cyclical economic downturn by tiny shifts in interest rates is simply silly and won’t work. What always works though is meaningful tax cuts. Trump fired up the US economy by large corporate tax reductions. The Australians will achieve the same result with their planned across-the-board tax cuts putting more cash into everyone’s pockets. This is the much derided Laffer curve theory but despite the derision it will work.

The criticism applies to the claim by Laffer curve proponents that cutting direct taxes ultimately causes no loss of government revenue. The claim is correct, depending on the degree of the tax cuts and more important, the existence of sales taxes.

There’s another factor currently driving the recession concern and that’s Trump’s ignorant anti-trade economic nationalism, slapping tariffs here, there and everywhere. The result is something we last saw in the early 1970s which I well recall. That is a competitive drive by nations to devalue their currencies.

Trump has just woken to this reaction and is bawling unfair, despite he being both solely responsible and helpless to do anything about it. And the inevitable unavoidable result. That’s easy as there’s only one and that’s the return of cost inflation.

THE NEW SUNDAY STAR-TIMES

Last week, writing of the decline in newspaper readership and Fairfax’s dilemma wanting to quit its New Zealand stable, I made a huge mistake. Referring to the Sunday Star Times which saw a 13% drop in sales over the last year to a still meaningful 60,000, I branded it a disgrace and admitted to being one of their lost subscribers during the year.

Well on Sunday one of my daughters turned up and said I’d better rethink on that and she handed me that day’s copy. My God, I couldn’t believe it. What a massive change and totally for the better, even including its new tabloid size. Basically, it was like a very good version of The Dominion-Post.