Europe and President Trump

A benefit of having President Trump in office is that the USA can now clearly see what the US means to Europe. The US is there to pay for the party, that's it. Nothing more than that. Wise up America.

Trump Tells NATO

Another one of those I never thought I'd see the day moments has occurred with President Trump telling NATO members they have to front up and pay their share. About time. The look on the assembled faces was hilarious.

It never ceases to amaze me how the US taxpayer pays to protect Europe, then Europe gets to sell their cars in the USA, which puts American auto workers out of jobs. It's true and the Europeans with only a few exceptions have developed this sense of entitlement. With any luck, no longer.

Rocket Lab Launch Successful

New Zealand has entered the space race on a shoestring budget. The NZ-USA company has successfully launched its first Electron rocket which is rated to carry a 150 kg payload when it enters service.

http://spacenews.com/rocket-lab-reaches-space-but-not-orbit-on-first-electron-launch/

One thing the rocket failed to do was enter orbit. I put this down to the following problem - reaching an orbit speed. What is required to enter orbit is described here:

https://what-if.xkcd.com/58/

The article says reaching orbital speed takes much more fuel than reaching orbital height. By this reckoning I'm guessing they ran out of fuel before reaching orbital speed. But it's a great start, the engine and critical pump are made in Auckland and the launch pad is located on the Mahia Peninsula south of Gisborne. The location was likely chosen because the site is surrounded by sea on almost all sides and there is very little commercial flight traffic.

Investing in a Container

Sensible or a scam? I've received an email from someone wanting to know, does it make sense to invest in a shipping container, managed offshore by some company with a dubious reputation.

The short answer is, it makes no sense at all. But not for the reason you may be thinking, that it's all a scam and whoever is selling you the idea is going to run off with your money (but they might, you have to be careful). Container transportation has been around for a while and these containers do have numbers and they can be insured. Large companies do own fleets of them and they do manage containers as well. If you buy one or many, this container will disappear into the fleet and become just another number, being hired out to house cargo travelling the world.

But what happens to that container when no longer needed or the management company goes bust? At worst you'll lose the container all together, but the best that may happen is you'll have to pay for it to be delivered to you and then what will you do with it? It gets worse if you own several.

There are many angles, claiming depreciation on the container, whether the container is leased long term to a shipping company, what condition it is maintained in, how it is handled and what kind of container exactly; high cube, flat rack, 20 foot, 40 foot, open sided, open topped, all these have a demand and risk factor attached and differing returns.

Why do this to yourself when you can simply invest in a container company? For the purpose of illustration, consider Royal Wolf who are listed on the Australian Securities Exchange:

https://www.google.com/finance?cid=8109809

Currently they sit on a dividend yield of 3.70%, with a market capitalisation of AUS$135 million. They're active selling and hiring out containers and with a P/E of 18.33 are not expensive by any means. I'd suggest that investing in this company would be safer and provide returns that are better than directly owning the container itself. Think capital gains. But heh, I'm not pumping this stock, just pointing out there are safer ways to go that would be more financially rewarding.

Rocket Lab Launch

New Zealand is about to enter the space age with the launch of Rocket Lab's vehicle into orbit:

http://www.stuff.co.nz/business/92884290/rocket-lab-test-launch-postponed-a-second-time

Ethical Fund or Not?

What is an ethical fund and does anyone really care? An ethical fund is a pool of money taken from many individual investors, the fund then invests in so-called ethical companies. According to this model, tobacco is out but alcohol may be okay because it can be consumed safely if done so within limits.

Then weapons manufacturers are off limits too, because they make products that can kill. Also off-limits is the gaming industry. It's a vice don't you know.

But hang on, does such a fund do any good? What about all those liquor and off-licence vendors being robbed and killed, shouldn't alcohol be on the banned list? For some funds it is, but not others. Strange I'd say, alcohol should be off the list if the fund manager is being consistent.

Tobacco has become the evil of the modern age. But if we ban tobacco and its cultivation, what happens to African countries relying on income from that one crop? Malawi is an example.

And weapons, does anyone really think for one second that because you don't invest in companies that manufacture weapons,  that your neighbour who hates you, wants to kill you or take your property won't use those same weapons you eschewed against you? You're not paranoid if the gun is pointing at your head.

Gaming, it's a vice, but what about people who eat meat? They kill animals and consume them, is that any more excusable considering that to live healthy and fruitful lives (see what I did there?) we don't need any meat? And what about pest eradication businesses, don't all living things have a right to live peacefully (channelling Over The Hedge and weapons of mass destruction illegal in every state except Texas).

The point I'm making is that any business model that invents a moral compass based on poor logic, will ultimately fail. It must. I say, invest in good, legal businesses, that are boring, old-fashioned, dominant in their market, deliver quality not too expensively; and if they make nuclear weapons then it's all good, nuclear deterrent works fine by me. Get off your high horse.

According to the Ken Horlor Law of Investment Choices (patent pending), if everyone was right then they'd all be rich but they aren't so they must mostly be wrong most of the time. And given they're nearly always wrong, not doing what they do must be a good idea. So according to this logic, tobacco, hard liquor, nuclear weapons, handguns, casinos and brothels must be the way to go. I'm just pointing out you won't find many bankrupt casino owning nuclear weapons manufacturers. But you'll find a lot of investors tapped out by the latest whizz-bang fund management scheme.

Predictions

Here are my three main predictions for what will happen technologically within the next 40 or so years. Of course country borders will change, most likely in Africa, but also Europe and North America. If there is a new Dark Age then all bets are off, the Dark Ages were very real and we must guard our knowledge well, Knowledge can be destroyed and often is. Okay, so here goes:

1. We'll be able to fly anywhere very quickly. That is rapid passenger transport. How this will be done is by planes flying very high, out into space before descending to their destination. I've seen the International Space Station racing across the sky and it's an incredible sight, this speed of travel will become commonplace.

2. Communications and entertainment will advance so we can actually experience the movie or have our relatives in the room visiting without them actually being there for real. This could be an experience delivered chemically if not using telecommunications or some such (chemical rather than electronic engineering).

3. Freight will be transported rapidly using ground effects shipping. These will be very large ships that hover rather than sit in the water. Being fast, they'll displace air freight and most container cargo vessels.

What do you think?

In sport, the All Blacks will become so dominant they'll be banned and continue on as a Rugby version of the Harlem Globetrotters (just joking).

New Zealand Prime Minister Simon English

Here is a photo of the weak and ineffective New Zealand Prime Minister Simon English, looking silly as always:

Maybe he should work on the housing crisis instead of living in cloud cuckoo land.

Fix or Float?

It's been mentioned again, should New Zealand's exchange rate be fixed or float as it does now? Comparison has been made with Singapore. There is no doubt that Singapore has done an excellent job, Lee Kuan Yew is one of the great men of the modern age. But whether New Zealand should copy Singapore is open to debate. The NZ Treasury discuss this here: http://www.treasury.govt.nz/publications/research-policy/wp/2011/11-01/10.htm

Those with a long memory will remember NZ had the crawling peg model, which sounds similar to Singapore's basket of currencies.

But what about fixing? For me the advantage of fixing the exchange rate is it provides certainty. Businesses can plan effectively. The problem NZ has, and this has been the case since it floated its currency, is the exchange rate is volatile and the Kiwi dollar is often grossly overvalued. A consistently overvalued currency hurts exporters and leads to cheap imports which hurt local manufacturers producing for the domestic market. Fixing the exchange rate and linking its value to infrastructure spend, or possibly a balance of gold and silver prices, infrastructure and the five major currencies (US, Euro, Yen, Sterling and Swiss Franc) provides certainty, industry can forecast.

Doing a rough back of the envelope calculation; the NZ Dollar should be worth about US$0.62, but today it's quoted at US$0.69; more than 10% overvalued in other words. That's my point, this pattern of overvaluing seriously undermines economic potential, stifling local production and exporters.

Australia Kicks New Zealand Again

It's time to say goodbye to Australia. The latest outrage is they've stopped Kiwis at Australian universities from receiving domestic fees, the same fees Australians face.

Many don't know that New Zealanders in Australia generally earn much more than Australians. They're the go-getters, while Australians are shiftless. Think about this; Kiwis in Australia pay more tax, a lot more, but receive few if any services in return.

My answer is it's about time NZ pointed out to Australia that they're surrounded, their only ally is NZ. Why would they constantly blame Kiwis for every ill in their stagnant country?

The answer to this is very basic and may even shock. Winston Peters, leader of NZ First, has it wrong. He says that because NZ allowed a back door into Australia for decades (this is where people gained NZ citizenship solely for the purpose of getting into Australia), that Australia is paying the favour back. No, that's not it. What has happened is that Australians have got used to Kiwis beating them up all the time. In Australia, the boss is often a Kiwi. And then on the sports field, the All Blacks always beat Australia. Well not always but of the last 20 games played, NZ has won 15, Australia 4 with 2 drawn encounters. It must suck to live in a country where draws are your closest rival. And it is likely no coincidence that in the same year as the rug was pulled on these fees, that it is also a year when no Australia team has beaten a NZ rugby franchise is Super Rugby. If any Australian team does win a game against a NZ team the Australians will likely hold a street parade, that's how bad they are.

The NZ Prime Minister, the weak and ineffective Simon English, of course he will kowtow. He's such a horrible little man.

New Zealand Environment and MMP

New Zealand has a major flaw with its economy and that is it has an anaemic secondary manufacturing sector. NZ does make some things, but not enough of its national income derives from secondary industry. This has a major impact on the environment. To maintain its position as a fully developed OECD economy NZ finds itself having to do two things in the absence of manufacturing; it must flog the land to exhaustion and pollute the rivers.

The intensification of agriculture has got to the breaking point. You will find commentators saying the answer is the service sector and Kiwis doing things smarter. Yes, fine, but NZ is small and isolated, it's hard to get noticed. Its all very well trying to be the next Microsoft or Google but how realistic is that? Not very realistic is my reply, and NZ does not have really big global scale service sectors and I'm thinking banking and insurance. NZ relies on overseas funds from banking and overseas owned insurance companies.

For little NZ, the answer is to extract mineral ores and transform them into metals. Then take those metals and make products from them. Then sell those products worldwide. And if feasible, make those same products in other countries with the design aspect handled in Kiwiland. You may think of Toyota when I say this but I'm thinking Scania. Scania are Swedish heavy trucks and made in factories around the world. But Sweden only has a population of 9 and a bit million. Less than twice the size of NZ. And they have Volvo construction equipment to boot, and on and on. NZ should try to emulate their example.

Will this happen with the current political set-up? Never. The German style of Mixed-member Proportional (MMP) voting introduced in the mid 1990's ensures NZ is stuck with the way it is. The country has professional naysayers in the Greens, refusing to lead or take any responsibility, hogging positions that could be occupied by more able parliamentarians. And contrary to what NZ was promised, the country has rarely had majority governments, instead being led by minority governments hanging on by pleasing the myopic middle ground in order to survive in office. NZ has ended up with the worst of all worlds.

And it will get worse. The day could come where MMP delivers tyranny. One example is where a party receives, say, 60% of the vote but all others fail to get to the 5% threshold. This means all Parliamentary seats would go to the one party making the threshold (in theory but with some seats being won without many party votes, there would be one hell of an overhang in that Parliament). Or how about the ultimate minority party, say one with 35% but the rest unable to garner much more than 10% each, with a large number of votes wasted on parties not making the 5% threshold; meaning the government would rule a country where the overwhelming majority had not voted for it. Incredible, it could actually happen. Who were the fools that foisted this system on the NZ people.

John Key and Pike River

Now we know why John Key suddenly resigned. The Pike River mine disaster victims families have 30 hours of video footage from inside the access tunnel to the mine. This footage was kept from the inquiry and the New Zealand public until now. The National Party government have been lying to the NZ public all this time. The mine is safe to enter, so what has the government got to hide?