Media Worth Consuming – November 2023

Top Five Articles

Nine things the Australian government should do to reduce inflation.

Politicians have no business regulating disinformation when they regularly propagate it.

In the lead up to the Banking Royal Commission, CBA executives lied to politicians, journalists and victims to cover up the bank’s defrauding of hundreds of its customers.

How to prepare and respond if you lose your mobile phone.

How people manage to hold down multiple full time jobs.

Finance

The US leading economic indicators index has declined for 19 consecutive months, but the US economy is doing fine. The world’s biggest shipping company is cutting 9% of its workforce as shipping demand drops off. The US VIX is at its lowest level since Covid began. De Beers has throttled supply to halt the plunge in diamond prices.

Goldman Sach has lost its gravitas, with some blaming increased regulation. An American investment banking analyst was fired weeks after requesting permission for eight to nine hours of sleep each night. Short sellers are giving their research to the SEC to gain a share of the fines levied when the SEC successfully prosecutes.

Private equity firms are struggling to justify their business models as the returns on senior debt rival the forecast returns on equity investments. As senior debt becomes more expensive, private equity owned businesses are issuing more PIK debt that pays 14-16%. Private equity firms are blocking secondary sales of debt in the businesses they own. As more leveraged loans are being made privately, CLOs of private loans are a rapidly growing asset class.

The interest paid on US government debt now exceeds $1 trillion per year, more than doubling in the last two years. The percentage of companies rated B3 or lower has risen from 11% to 16% in the last year, pointing to a solid increase in sub-investment grade defaults ahead.

WeWork has filed for bankruptcy, with shareholders expected to be left with nothing from the $13.8 billion in equity they invested. Some are predicting that WeWork’s bankruptcy “will be a bloodbath for the office sector” with 40 leases in New York City set to be abandoned. The US CMBS market is worse than after the Financial Crisis as many existing borrowers can’t roll their loans or find buyers for their buildings at prices high enough to repay the debt. The world’s largest producer of wood pellets is close to bankruptcy amid claims of greenwashing. Issuance of sustainability linked loans is down 80% in the US this year on the back of the anti-ESG politics.

China is considering allowing banks to lend working capital to struggling property developers, increasing the risk that banks are brought down in the ongoing property collapse. Shares and bonds issued by China Vanke rebounded after words of support from the regional regulator, who is also the largest shareholder. Bankrupt Chinese wealth manager, Zhongzhi, has admitted it has a massive financial shortfall.

Foreign direct investment in China is negative for the first time since the data has been available. Vanguard pulling out of China demonstrates the difficulties many asset managers have had in building profitable outposts in China. Private equity firms are finding that selling out of their Chinese investments is much harder than elsewhere.

Politics & culture

After 80 years of statists wrecking the Argentinian economy, the country has elected a libertarian as President. Despite the popular media narrative, he isn’t a populist but promotes an anarcho-capitalist economy, leading many to ask what is anarcho-capitalism? However, after winning the election, he quickly backtracked on key campaign promises.

The German Constitutional Court has ruled that government spending breached the maximum deficit level, but the government quickly suspended the limit to allow larger deficits to resume. Colorado generally leans to the left politically, but over 60% of its residents voted down a tax increase after also rejecting a similar proposal in 2019.

After sacking military employees who failed to get vaccines, the US Government is now asking them to come back as hiring shortages grow. If governments and public health officials want to rebuild their credibility, they could start by owning up to their Covid mistakes. The Declaration of Independence founded a theistic republic.

At a gala dinner with American business leaders, President Xi made no effort to encourage investment in China preferring instead to ask American business leaders to lobby American politicians on his behalf. Joe Biden’s diplomacy skills were again questioned after he called President Xi a dictator while the Chinese President was still in US. The leaders of Hamas are billionaires, living off funds meant for the largely impoverished Palestinian population.

The team owners of the Washington Commanders are being sued by a group native Americans who want the name changed back to the Washington Redskins. Several states in India have made bus rides free for women. 4% of deaths in Canada are caused by assisted suicide.

Economics & work

Economic freedom is diverging among American states with the most free states experiencing the highest growth rates. Corporate tax cuts in the US have resulted in increased investment and higher productivity. The EU needs to reduce the size of government if it wants to stop falling behind the US. Argentina’s economic history provides another lesson on the benefits of economic freedom and small government. Venezuela, Zimbabwe, Sudan and Argentina all have inflation rates over 100%. Debt is not free money; it reduces future economic growth and increases the severity of downturns.

America has the largest number of workers on strike since 2000. As people live longer and healthier lives, they are working longer as well. Excessive population growth is dragging down Australia’s productivity and living standards. Wage increases in Australia are likely to be playing catch-up until 2025. Claims of widespread poverty in America don’t withstand basic analysis. Increasing the supply of any type of housing puts downward pressure on all rents. 24 charts that demonstrate that American life is generally improving.

Miscellaneous

The strong progress made on reducing acid rain and ozone depletion provides hope that significant action can occur for carbon reduction. Sodium batteries could displace lithium batteries for some applications. Electric bikes and mopeds are far better for the environment than electric cars.

Kenyans dominate long distance running, but they have had 270 athletes banned in the last eight years for doping violations. The bizarre story of how $110,000 worth of Kit Kats was stolen twice in freight scams. Towels, bathrobes and hangers top the list of things stolen from hotels. A bankrupt property developer has been sentenced to 42 months in prison after he directed his earnings to an entity name DTMM Constructions, an acronym for “don’t touch my money”. A Colorado business attempted to pay a court order with three tons of coins.

The former head chef of Noma is reshaping the menu at school cafeterias. Refrigerating cooked pasta and rice increases the fibre content and reduces the amount of sugar digested. The science of beer bellies. Five things that can be good in moderation but bad in extreme.

What’s it like to be an extra in a movie. A cargo plane had to make an unscheduled landing in New York after a horse broke loose from its stall. A mattress company in the Philippines now holds the world record for human dominos at 2,355. An electric hypercar has smashed a world speed record by travelling at 275km per hour in reverse.