In sport, business, and politics, the game is greater than the player.
Adapted from The Strathfield Golf Club motto, translated from the Latin.
Golf is unique. It is a game played by individuals who, with the aid of specially designed sticks, are wholly responsible for their own success or failure in manoeuvring a ball into a defined hole in the ground. The developments that have taken place also reminds us that each group of club members by their efforts and achievements leave a legacy on which lasting and fine traditions are built.
R J Edmends 2003 Club Captain, The Flinders Golf Club.
He did not admit explicitly to cheating on his wife. But Tiger Wood’s image as a perfect family man and faultless ambassador for golf was in tatters on Wednesday night, after he issued a lengthy apology for "personal sins" that had "let his family down".
Tom Leonard, The Sydney Morning Herald, 5/12/2009.
It is pretty easy to have a high opinion of yourself when you get to be PM. One of John Howard’s great qualities was that I think it took him 11 years to suffer from hubris and I think this mob had it after about 11 minutes.
Tony Abbott, on radio 2GB with Chris Smith, Sydney, 4/12/2009.
Don’t be buffaloed by experts and elites. Experts often possess more data than judgement. Elites can become so inbred that they produce haemophiliacs who bleed to death as soon as they are nicked by the real world. Great leaders are almost always great simplifiers, who can cut through argument, debate and doubt, to offer a solution everybody can understand.
Extracts from Colin Powell’s 18 lessons, former US General and Secretary of State.
Many people do not believe in the global warming problem, and many do. Many people who believe in the problem do not believe in the Trading Scheme as the best solution. Many people who believe, or who are sceptical, or disbelieve, do not like the people who are leading the political debate where egos are elevated, hyberbole heightened towards Churchillian proportions, zealotry has replaced enthusiasm, giving support to the thesis that elected officials believe they have been ordained.
Ecinya editor on a clear morning in the Mornington Peninsula 2/12/2009.
We face two possible states of the world. One is a world in which our economic problems are largely solved, profits are on the mend, and things will soon be back to normal, except for a lot of unemployed people whose fate is, let’s face it, of no concern to Wall Street. The other is a world that has enjoyed a brief intermission prior to a terrific second act in which an even larger share of credit losses will be taken, and in which the range of policy choices will be more restricted because we’ve already issued more government liabilities than a banana republic, and will steeply debase our currency if we do it again. It is not at all clear that the recent data have removed any uncertainty as to which world we are in.
John Hussman, Hussman Funds Management, December 2009
SUMMARY OF THIS WEEK’S INSIGHT
When egos soar, taxpayers have a chance to be poor, or poorer, or less rich. Last week was psychologically disturbing at home and abroad. Tiger Woods became a metaphor for the fundamental dysfunctionality that ails America – the twin sisters, the cults of crony capitalism and celebrity; Mr Obama was confused over productivity, but took a reasoned and correct gamble on Afghanistan; Mr Swan gave a dissertation on Reserve Bank independence but denied the four pillars their independence; papal fallibility rebounded thrice on Mr Rudd as he rushed off to brief Mr Obama on climate change; Mr Turnbull lost the opportunity to do the job he has not yet demonstrated any sustainable capacity to hold; and Ken Henry made a speech that was exceptionally disappointing on fiscal policy at the 2009 Whitlam Institute Symposium on 30 November.
What a week!
Unfortunately, some of the elements surrounding some of the happenings have implications for the development of our outlook for 2010, which is currently in process of formulation for publication on 13 January 2010.
A GLIMPSE AT 2010
Firm predictions are out of the question, but we believe we are in a volatile market recovery in context of either a muted or fragile economic recovery. Our strategy will be to invest and trade (Cactus), but also to start a longer-term fund (Bamboo) using real money of course which enforces needed discipline and teaches us humility on a regular basis. Overall, our current view is that in fiat money system and if Obama moves from the soft-left towards the centre, and some progress is made in relation to global discord, then risks are to the upside.
TIGER AND OBAMA
Winston Churchill (who had an American mother) once famously said: “You can always rely on America to do the right thing, once it has exhausted the alternatives". America needs a reality check and Mr Obama needs to do it sooner rather than later. Perhaps the January 2010 State of the Union address will be an appropriate forum. Many of the things we get from America are not as they seem: the dot.com bust, the banking system, the weapons of mass destruction, the Reagan years and its economic and foreign affairs exaggerations, etc. But now we have Tiger who was the icon of the gentlemen’s game, golf, who has let his family, friends, and fans down by being relatively normal. We suggest he should go on TV with the alleged 5-10 lovers, charge an excessive fee, and then give it all to Muhammad Yunus of Bangladesh.
What concerns us from this episode is that Tiger was unaware of his broader responsibilities to look after the game, rather than himself. In similar vein we were disturbed that Mrs Obama appeared on the front cover of Vogue shortly after the inauguration and last night in Washington at the Kennedy Centre did a high-five with Mr Obama at a performing arts concert to celebrate American culture. In Australia and New Zealand we like our heroes to be somewhat modest and self-effacing. Mr Obama needs to be a good economic manager more than anything else, and not a big-issue celebrity. He has the rhetorical and intellectual skills to be a great President of the United States (the world’s largest economy) and like Tiger needs to recognise his broader responsibilities and approach them with focus, purpose, and balance. He does a lot of good things. He should be spending a lot of time with Mr Volcker and some time with Paul O’Neil and ask each of them to remind him constantly that Afghanistan is being fought on Mastercard, Diners, American Express, ChinaCard, and BernankeBank.
When some better numbers came out last week on US employment (though many consider the numbers grossly understated) Mr Obama said the good news was the ‘increase in productivity’. Productivity increases if you reduce the denominator. You do the math. If you have the same level of activity (bolstered by home grants and cash for clunkers incidentally) and divide it by 90 workers instead of 100, because 10% are officially unemployed, then the 90 workers now concerned about job security only have to work 11.1% harder to make up for the workers who have lost their jobs.
If God had meant politicians to lie he would not have needed to invent spin, misleading and deceptive conduct, innuendo and obfuscation.
WAYNE SWAN
Peter Walsh, our editor’s favourite post-war politician, said recently that Mr Rudd was an economic illiterate. When Walsh waxes lyrical, Ecinya listens. But Mr Swan appears not to be far behind Mr Rudd in terms of economic literacy. Last week Mr Swan said that 3 out of the 4 major banks were wrong in raising rates beyond the cash rate increase from the Reserve Bank because the RBA was the ‘independent arbiter’. Now if the RBA is ‘independent’, surely the major 4 banks are even more independent. He could have said he was disappointed and had sought and received explanation which he understood and disagreed with for a variety of sober economic reasons. Sometimes you don’t have to play politics in your lunch-hour.
EMISSIONS TRADING
We don’t like the emissions trading scheme and wrote about it on 13 October 2009 under our Insights article ‘Exercise caution in your approach to carbon credits’. Global warming is about much more than Mr Rudd and Mr Turnbull. It is a lesser issue than the GST but we did receive fulsome explanations from Messrs Howard and Costello. When leaders get too far ahead of their constituents, embracing the warm delights of Kirribilli House with chardonnay in hand, the grandeur of Washington and the splendour of Copenhagen, their learned discourse can cause them, unwittingly, to overlook the basics of their indulgence of the public purse.
THE EMISSIONS TRADING SCHEME AND MR RUDD
Thrice rebuked: Just as he endorses Nathan Rees, Nathan gets the sack. Just as he embraces Mr Turnbull, who renegotiates an ambit claim on the ETS intended to create the appearance of win-win, Mr Turnbull gets the sack. Just as he looks forward to a stoush with the Liberals’ Mr Beazley in Joe Hockey (perception: great blokes, but too soft), the Liberal coalition opts for Abbott and Barnaby. Papal fallibility reigns supreme. We can probably now expect that Mr Rudd will cease his door-stop interviews as he leaves church each Sunday as God is a broad church and not on Labor’s front bench even in symbolic terms. In the words of The Desiderata: "And whether or not it is clear to you, no doubt the universe is unfolding as it should. Therefore be at peace with God, whatever you conceive Him to be. And whatever your labours and aspirations, in the noisy confusion of life keep peace with your soul. With all its sham, drudgery and broken dreams, it is still a beautiful world. Be cheerful. Strive to be happy."
KEN HENRY
Mr Henry is no doubt a hard-working and sincere man as well as being a great friend of the hairy-nosed wombat. However, Ecinya was disturbed to see him embracing the fiscal policy initiatives developed under Whitlam. Messrs Hawke, Keating and Walsh undid much of the damage inflicted upon the Australian economy by Mr Whitlam and Mr Malcolm Fraser and now we find that Mr Henry wants to take us back to the future. We quote part of his paper, but recommend a full reading
"Well-being and the Size of Government
What about the size of government?"
"The Whitlam Government came to power with a broad ranging policy agenda – the implementation of which had the effect of increasing both the scope and size of Australian government. The agenda included real increases in social welfare payments, free university education, universal medical coverage, new departments of Aboriginal Affairs, Environment and Urban and Regional Development, and significant public sector real wage rises.
"Unemployment benefits to individuals more than doubled in real terms; widows pension expanded to supporting mothers; disability pensions expanded."
"The policy initiatives were reflected in strong growth in the level of government outlays over the course of the Whitlam Government."
"Australian Government expenditure grew from 18.9 per cent of GDP in 1971-72, the last full budget year before the Whitlam Government came to power, to 24.8 per cent of GDP in 1975-76, the last budget delivered by the Whitlam Government, representing spending growth of around 56 per cent in real terms."
"In the three and a half decades since, while there have been significant annual fluctuations, the average level of spending by the Australian government has changed little, to be around 25.25 per cent of GDP.
The Whitlam Government was, therefore, responsible for an enduring increase in the size of government. That is, the close to 6 percentage points of GDP expansion in government."
"Expenditure during the Whitlam Government has never been reversed. And I think I can safely say that it never will be."
"Initially, the increase in government expenditure was not matched by a commensurate increase in government revenue, with revenue increasing by only two percentage points of GDP over the term of the Whitlam Government (from 20.9 per cent of GDP in 1971-72 to 22.9 per cent of GDP in 1975-76). Subsequent governments chose to fund the increased expenditure through increased taxation rather than ever growing levels of public debt; that is, to make larger government fiscally sustainable."
Ecinya comment: The real losers out of the Whitlam-Fraser years was middle Australia and far from promoting real opportunity, The Whitlam-Fraser legacy has created a permanent under-class, a permanent and protected elite who are advantaged by access to government via their political donations capacity (serial tax dodgers inhabit this space), a strong bias towards high-inflation outcomes, non transparent and dodgy public accounting (occasionally saved by Auditors General of integrity and courage), a difficult operating environment for small business, and high nominal interest rates. Additionally nurses, teachers, and police officers are still significantly underpaid and devalued.