A third of ASX companies are Zombies! Eat your brains!

Adam: [00:00:25] Hello and welcome to Comedian versus Economist. We demystify the world of money and help you get a handle on the bigger picture. My name's Adam and we're joined, as always, by my little older brother and real life economist Thomas. Hi, Thomas. 

Thomas: [00:00:38] Yeah. Gday. Adam, how are you going?

Adam: [00:00:40] Doing very well. Thank you. Big shout out to all the dads out there. It was Father's Day yesterday as we record here on a monday night. You have a good Father's Day time.

Thomas: [00:00:48] I did. I did. I had a good sleep in.

Speaker 1: [00:00:50] And of itself.

Adam: [00:00:52] It's Father's Day. Yeah, I get to sleep in on Father's Day. 

Thomas: [00:00:57] Yeah. You know, there might be breakfast and a very cold coffee. 

Adam: [00:01:01] On us. 

Thomas: [00:01:02] First thing in the morning. Yeah, yeah. And then let me go back to bed. So it's Best Father's Day ever. [00:01:07][5.0]

Adam: [00:01:09] Good. I took mine to the salvage yard and asked me what I want to do on Father's Day, and I said, I want to go to the salvage. I love going, That's my favourite. It's one of my it's my happy place, the salvage yard that just stuff from everywhere. And the kids have a good time too. They just find junk, comply with it. It's probably quite dangerous, but hey, everyone's having fun. All right. Massive show coming up. Zombie companies are on the march. It's no use hiding in the old abandoned warehouse down by the docks. That's exactly the kind of asset a zombie company would own. We'll find out what you can do. Have Nfts run their course. Maybe I'm going to create an NFT to celebrate the end of Nfts as a hedge. And Japan wants to boost its economy by getting more people to drink alcohol. Opponents say this is not the solution to the baby formula shortage. But first, last week we climbed mount unemployment and reached the Jobs and Skills Summit. What did we learn? [00:02:07][58.3]

Thomas: [00:02:09] Yeah, we had the much hyped March covered Jobs and Skills Summit last week in Canberra. The Labour Government pulled that one together. Little bit of a vintage move. [00:02:22][13.0]

Adam: [00:02:23] So when we go for a classic summit. [00:02:27][4.7]

Speaker 1: [00:02:28] Yeah. [00:02:28][0.0]

Thomas: [00:02:29] Yeah. Well like one of the, the glory achievements of the Labour Party was the accord which Hawke which came in after the Hawke election and he got, he got the unions together and got the got the accord up with a summit of a kind there. So I think they're trying to like hark back to those glory days. [00:02:49][20.2]

Adam: [00:02:50] What was the what was the accord? Is it something something to do with jobs? [00:02:53][3.1]

Thomas: [00:02:55] Yeah, wages. It was an agreement for the unions to sort of put a put a handbrake on wages. Right. To sort of help get inflation under control. Right. That was the theme of the party. No big achievements. [00:03:06][11.4]

Adam: [00:03:07] Nothing. Did anyone go fancy dress just as a treat. This is misinterpreted the fact that it had a theme of jobs and skills. So dressed as a hammer. Oh, this is all good. [00:03:24][16.3]

Speaker 1: [00:03:27] Yeah. [00:03:27][0.0]

Adam: [00:03:29] Right. Well, what did it. What did achieve anything? [00:03:31][2.6]

Thomas: [00:03:32] Not much, I don't think. I mean, disappointing. Yeah. I mean, the thing with these summits is like like all sort of these international conferences, like the G8, G7, G20, it's all decided beforehand and then you kind of just pretend to talk about it on the day. That seems to be the case with this one as well. The conclusions or lack of the of the session came out at 5:00 on the Friday just after it finished. So I turn that around pretty quick. [00:04:00][28.0]

Speaker 1: [00:04:00] And. [00:04:00][0.0]

Adam: [00:04:01] They had the drinks in. Yeah. [00:04:02][1.1]

Speaker 1: [00:04:03] Really good excuse.

Adam: [00:04:05] It's good to thrash out this report. 

Speaker 1: [00:04:07] Right quick.

Adam: [00:04:10] Whip around. Right. Any highlights, anyone? What we do about the bar over the years? There's a. 

Thomas: [00:04:15] Few things. Nothing, nothing, nothing to impressive or amazing. The key the sort of the key thing to take away. And probably the one thing of note was a big increase in the immigration intake. So yeah. So that they announced that and they've been talking about this for a while. So that was nice. There was no surprise to that. But yeah, but permanent the permanent immigration intake up from 160000 to 195000 a year. Now going forward. 

Adam: [00:04:45] Yeah. What's the what's the logic with that number 195 that they couldn't they couldn't go round it up to 100. 

Thomas: [00:04:52] I think I think it's a bit like when you buying something that shops for. 

Thomas: [00:04:57] And into the high, it's under ten bucks. 

Speaker 1: [00:04:59] And it's like.

Adam: [00:05:00] Oh, it's.

Thomas: [00:05:01] 100,000. 

Adam: [00:05:03] Something. You get 5000 immigrants cash back. Yes.

Speaker 1: [00:05:11] No, no

Thomas: [00:05:11] But it is like that, I think like it's because it's a big increase. So that's the first permanent immigration intake. And then you've got the humanitarian on top of that, which is probably another 20 to 30. And then temporary visa holders and student visa holders. So it ends up being quite a big a big lift. 

Adam: [00:05:28] So was 160 like down from like as a result of COVID kind of situation or and we've been tracking it 160 for a while and this is now quite a big uptick. 

Thomas: [00:05:39] Yeah. Yeah, well, we went to zero through COVID, so the 195 or the 160, that's a cap. So it's up to that. Okay. But then when with COVID, we didn't get anywhere near that. It was zero for a couple of years. Yeah. So yeah. So it's a cap in that sense. Right. And 195. Yeah. Like that's, that's, that's a big number. It does change around year to year. That's at the high end of the sort of range of the last 20 years. You know, like having that 195 trying to make it, keep it under 200. Like, yeah, the home affairs minister Claire O'Neill said that there is nothing in this room with universal support, but an area where almost everyone agrees is that we need to lift the permanent migration numbers this year. The thing about that is that the last survey I saw said that there was only 6% of Australians wanted to restart immigration at a higher level here. It seems that most of that 6% were at the jobs and skills. So it's not a popular move. No one the yeah. People, people aren't caught, the voters aren't calling for it. It's more coming from the business community. 

Adam: [00:06:46] Is that to help with the employee shortage at the moment like as you know it's yeah. 

Thomas: [00:06:52] I mean. 

Adam: [00:06:52] Those workers. 

Thomas: [00:06:53] Yeah I mean that's yeah that's the thing though. I mean that's when we talk about the skills shortage, no one can really identify where those skill shortages are. But yeah, this is this is what we need to bring workers in to help businesses because there's an epic skills shortage. But, you know, you look at that like if I was to say to you, someone coming on on a skilled worker visa, how much do you think they'd have to earn a year to be classified as a skilled worker to get a skilled worker visa? [00:07:20][26.8]

Adam: [00:07:21] Oh, wouldn't even know it would have been based on price. [00:07:23][2.4]

Thomas: [00:07:24] Yeah. Most of the skilled worker salaries. [00:07:25][1.1]

Adam: [00:07:25] Thought it would have been more skills based. I don't know, maybe 80,000. [00:07:30][4.4]

Thomas: [00:07:30] Yeah, 53,000. It's low. It's low. Yeah, it's not. It's not high. And so, so it's kind of like and this is this is one thing the unions were pushing for. They wanted to they wanted to increase it and saying, like the skilled migration visa is, is a way for businesses to bring in workers from overseas rather than paying and competing on on local workers. So that necessarily keeps your wages down. So if you're bringing in skilled workers who are earning $54,000 a year, that's keeping the wages down for people with those skills low. And then that discourages skilling up because you're not going to you know, they're bringing in accountants who are earning $54,000 a year. So why study accounting? Because, you know, there's no upside to your wages because as soon as there's a penny wages, pressure, they're just going to bring bring people in overseas to keep the wages down. So that's sort of what the unions will push saying. That's what that's how this and that's seems to be by and large how the skilled migration programmes used the the ACTU they wanted to, one of the things they were pushing for at the summit, it didn't get out but it's still on the table is they wanted to cap that that floor earning floor to go up to 92,000 a year. [00:08:43][72.1]

Adam: [00:08:43] The 53,000. So from 53 to 92. [00:08:45][2.4]

Thomas: [00:08:45] Yeah, yeah, yeah. They want it designed like if it's, if it's genuinely a skilled. [00:08:49][3.7]

Adam: [00:08:50] Position. [00:08:50][0.0]

Thomas: [00:08:51] Vocation that's yeah. That's really a really rare set of skills that you can't train someone up in Australia to do. And, and it's a little bit hard to imagine what skill is so rare that you can't give someone with a year or two years worth of training, you can't skill them up. But imagine that there is something such a specific skill set if it is that you. [00:09:11][20.9]

Adam: [00:09:11] See a few like surgery. [00:09:13][1.6]

Speaker 1: [00:09:14] Yeah. [00:09:14][0.0]

Thomas: [00:09:16] Sure, maybe. But like what? Surgery? Three or four years. It's like it's it's. [00:09:20][3.6]

Adam: [00:09:22] You're going to get. Oh, like what? Surgery. I could just change a patient. Anyone who is gavel to gavel. I actually just give you that knife over there. [00:09:30][8.2]

Thomas: [00:09:30] Yeah, but I mean, the surgery is a good case in point. Like you're talking about doctors giving him another I don't know what it is. So it's like 6 to 10 years of training. Yeah. So the wage should be the signal to a doctor to invest in the training to get to become a surgeon. But it's a short term tweak two years ago like, ah, let's not worry about it, let's just bring someone in from overseas. And so it means that wages don't act as a signal in the economy the way they should, the way that everything else acts in the economy. Like if there's a shortage of pencils, then pencil supplies know they can. The price goes up and then can supply more pencils. Hmm. So yeah, the price sort of the signal gets gets diluted there. But yeah. So the ACTU wants to push it up to 92,000 employee groups saying that that would wreck the system because 70% of applicants would get knocked out by that 92,000. So we know that. [00:10:22][51.9]

Adam: [00:10:23] 50, 70%. [00:10:23][0.4]

Thomas: [00:10:24] 70%. So 70%. The floor is 54. It's very low. But 70% of people coming in on skilled visas are coming in at under 92,000 a year. [00:10:34][9.5]

Adam: [00:10:34] Well, cash registers are getting harder to work these days. There are electronic there. So maybe, you know, not enough. Maybe you need certain skills to the ring up, ring the two. So, I mean. [00:10:46][12.0]

Thomas: [00:10:47] The unions were sort of on board with this. And I think it's coming from like particularly with nursing and aged care like this, there are shortages in those sectors and that's creating big problems. And people and people in those sectors are really stressed and it'll help those people to bring in more workers. But again, the price of that is you you suppress the wages. If you're bringing them in at low wage rates, you suppress the wages in that sector. [00:11:11][24.3]

Adam: [00:11:12] Yeah. Like if you're a nurse and you're getting paid, I don't I don't know what the average salary of a nurse is, but let's say it's 80,000 and we start bringing in nurses at 60,000. That's not good for you, because then people in our business are looking at you going, well, you're you're an expensive nurse. We could just get a cheaper one. [00:11:29][17.0]

Thomas: [00:11:29] Yeah, that's right. That's right. Yeah, that's how it's working. And really, really the long term solution should be if we need more nurses, we should pay more with the nurses should get more. And that and we should encourage people to look at nursing as a career and go hire nurses, get good money, which they deserve because it's hard work. Yeah. And if there's a shortage of nurses, pay nurses more and encourage more people into the, into the field set that sort of that's the classical kind of economic argument that, you know, that's that's the weird thing is that's the free market argument of how that that market should work. [00:12:05][36.3]

Adam: [00:12:06] Mm. [00:12:06][0.0]

Thomas: [00:12:06] But we have this intervention, this heavy handed intervention from the government, kind of the seemingly designed to sort of squash wages. [00:12:14][7.7]

Adam: [00:12:15] Right. Well, yeah, maybe you should go to the next Jobs and Skills Summit. I'll see if I can see if we can get you a seat. Yeah. You got some good ideas? Yeah. All the. [00:12:24][9.7]

Thomas: [00:12:24] Big ideas. [00:12:25][0.3]

Adam: [00:12:28] All right, Thomas, we got to talk zombies now. What is a zombie company? [00:12:31][3.1]

Thomas: [00:12:32] Yeah, a zombie is a company that is not earning enough to cover its interest expenses on its debt. Right? Yeah. This is one of these things that sort of morphed from being just the sort of a vague insult into a specific financial term. So there's two tests that it has that it's that it's existed for more than ten years. [00:12:53][21.3]

Adam: [00:12:54] Mm hmm. [00:12:54][0.1]

Thomas: [00:12:54] And that, yeah, its interest coverage ratio is less than one, which you get basically just it's just not is income before interest and tax isn't enough to pay its interest or not even the principle. Just just interest. [00:13:08][13.5]

Adam: [00:13:09] Just interest. So why are we talking about it? [00:13:11][2.1]

Thomas: [00:13:11] Well, yeah. So it was interesting to Christopher Joye at the cool about capital put out a report saying he's updated his quantitative zombie detection model. [00:13:20][9.2]

Adam: [00:13:22] I like it. This is. Yeah. And what kind of economics? Yeah, right. Yeah. You know, getting that. [00:13:27][5.3]

Thomas: [00:13:27] New art history podcast. [00:13:28][0.8]

Speaker 1: [00:13:31] Yeah. [00:13:31][0.0]

Adam: [00:13:31] What? This zombie detection model? Yeah, yeah, yeah, yeah. [00:13:34][2.8]

Thomas: [00:13:35] I mean, basically just sort of just crunches the numbers on on all the companies there. But so what he found that in Australia, 195 companies in the ASX or 13% of companies on the ASX. Zombies by that definition. Interestingly, that compares with 10% of the American in the New York Stock Exchange and Nasdaq together. 10% of those are zombies. Hmm. But then he sort of says like, well, the ten, the ten year rule doesn't make all that much sense. [00:14:00][25.7]

Adam: [00:14:01] Right. [00:14:01][0.0]

Thomas: [00:14:02] Because it's like if you're a young company and you can't, you know, earning enough to pay your debt, you're still in trouble on that. Sorry, that and that. Not paying that debt, not not paying the interest. That's for three years in a row. So it's a it's a reasonably high hurdle. It's not that you've just had a bad year, even three years in a row, where you haven't earned enough to pay the interest on your debt. [00:14:22][20.5]

Adam: [00:14:22] Yeah. So even though you're a young company, you could still be you could still be kind of struggle straight for three years. [00:14:28][5.2]

Thomas: [00:14:28] Yeah. Yeah. If you three years in a row, not paying, not covering enough to pay interest, you're in trouble. [00:14:34][5.1]

Adam: [00:14:34] And if you've ever watched zombie movies, it's the kids that are the scary ones. You see the kid zombies and, you know, four year old zombie walking around. That's that's scarier than the adult zombies. [00:14:44][9.8]

Thomas: [00:14:45] Yeah, yeah, yeah. No one's scared of Grandma Zombie. [00:14:47][2.2]

Adam: [00:14:47] But he did punch Grandma right in the face. Move on. That kid walking around with a creepy doll and a buyer on the Shin Bet on the go to watch. Yeah. [00:14:58][10.7]

Thomas: [00:14:59] So he drops the age limit and this as any any age company and then it's 34% of the ASX. So one in three companies. Well yeah. Yeah. [00:15:11][11.9]

Adam: [00:15:11] So a third of the ASX is a. [00:15:13][1.5]

Speaker 1: [00:15:15] Fund. [00:15:15][0.0]

Adam: [00:15:15] Is a zombie. Yeah. It's it's worried. Yes. Is that, is that a new thing. Is that is that up or down or like is this a code? David Rizzo I don't try and tie everything back to COVID, but it's been a pretty great rock and roll. [00:15:30][14.5]

Thomas: [00:15:30] Sort of time. It didn't actually say, I don't I don't know. I think it is up. I think it's it's it's up because and because probably as an interest rate story. I mean, that's why you're saying it's worrying that it's already one in three and interest rates are rising. The RBA met yesterday by the time this is coming out and they're probably hiking rates 50 basis points again. So interest rates are up. So that means that interest expense is rising and already one in three companies on the ASX are not earning enough to just just to cover interest. [00:15:59][29.4]

Adam: [00:16:00] Right. [00:16:00][0.0]

Thomas: [00:16:01] Yeah. [00:16:01][0.0]

Adam: [00:16:02] So how do they do they do they live very long. They zombie companies. I mean how do they survive if they're not they can't pay their way. [00:16:09][6.7]

Thomas: [00:16:09] The concept of zombie companies came, came about with, with quantitative easing the first round back after the GFC and kind of saying like when interest rates are so low, it's easy for zombie companies just to keep kicking along and really they should be wound up and their resources should be allocated somewhere else. [00:16:27][18.1]

Adam: [00:16:27] I think we talked about maybe it was very briefly a while ago about zombie companies. I think in the context of Budget Rent-A-Car back in the early days of covered or early days of meme stocks or early days of something recently. And yeah. And I think because they were considered a zombie company. Mhm. [00:16:47][19.3]

Thomas: [00:16:47] Mhm. Yeah. So that's, yeah, that's, that's true. You know the concept has been around for a while and, and it's one of the criticisms of super cheap money is that it keeps these zombie companies going much longer than they should. And that's what and that's what Christopher Joyce saying is saying like we were moving into this right height cycle and then we could be looking at the first default cycle in Australia since 1991. Like we haven't really had a shake out of the corporate sector in Australia since 1991. And yeah, we could be looking at a situation that as interest rates rise, more and more of these zombies just can't keep going anymore and and fall over. [00:17:24][36.5]

Adam: [00:17:25] Right. So, so what does this mean for the for the outlook then for the ASX. Is it. It's a bit pessimistic. [00:17:30][5.4]

Thomas: [00:17:31] Is a little doom and gloom. Yeah, it's a bit, it's a bit. Christopher Joye tends to be a bit on the bearish side, but he's very good. I've a lot on him. He's, he's, he's very sharp. Um, yeah. I mean the other interesting thing, he, he breaks it down and saying it's really bipolar, the distribution. So you've got a lot of companies that are zombies are on the edge of being zombies more you've got companies that are that are really in really good position. He's saying that kind of looks like there are a lot of deep value stocks and also loads of junk like growth wannabees. Right. That's how he's so he classifies ASX. Yeah, but yeah, like I mean that away on the indices like those deep value companies they'll be alright but like if you're, you know, looking at it you're ETF and a whole bunch of those start going going bust that's that's not going to be good for the for the overall. [00:18:27][55.6]

Adam: [00:18:27] Indices even worse I guess if those zombie companies start biting the healthy. [00:18:31][4.5]

Speaker 1: [00:18:32] Company. [00:18:32][0.0]

Adam: [00:18:37] I think that's that's a signal for me if. [00:18:40][3.4]

Speaker 1: [00:18:43] Just. [00:18:43][0.0]

Adam: [00:18:43] That it's the someone's that's chomping on CommBank just have a little I'm a little it's a little neo bank just that and know that's that's a sales signal from ready to come out. All right. Let's take a break there. We'll grab a word from our sponsors this week. We're back with more Canadian versus economist right after this. Welcome back here on Canadian versus economist. Don't forget, you can catch Finn Fest happening October 15th. Head to Equity Mates dotcom forward slash Finn Fest for all the details. Thomas No, I'll be there. It will be a hell of a time, no doubt. Thomas Neff, tease what's going on with NAFTA? Yeah. [00:19:26][43.0]

Thomas: [00:19:26] Apparently the trade of NFT dried up. There's no liquidity in the NFT market anymore. Yeah, this is dappradar and not exactly what they do. [00:19:37][11.0]

Adam: [00:19:39] I think they can participate. Symptomatic of its NFT ecosystem is this company. We don't know what they do, but they're involved in NFT, so. Yeah. Oh, right. Yeah. [00:19:53][13.3]

Thomas: [00:19:54] But they analyse the data on opensea, which is the NFT marketplace and saying that transactions volumes are now down in dollar values are down 99% in four months, more down from 2.7 billion to just 9.3 million. Hmm. Yes. A massive, massive drop drop in value of transactions on on opensea. Yeah. Users are down by about a third as well. Yeah. And then the NFT prices themselves. Uh yeah. Tanking as well. Bought eight yacht clubs down 53%. Cryptopunks is down 19% from peak. So yeah. [00:20:39][45.9]

Adam: [00:20:40] So what's his name? Seth Green. To be spewing money. In spite of that money he had lost, that board had to pay. He would have paid top dollar to get him to back. So he's, he's bought it twice. [00:20:49][9.2]

Speaker 1: [00:20:50] Twice. [00:20:50][0.0]

Adam: [00:20:51] Right the high. And now even if he wants to he got sell it. Uh that's uh let's hope his TV show that he makes with it goes well. [00:21:00][8.9]

Thomas: [00:21:01] Yeah you know you know what's surprising about the the collapse of the NFT market? [00:21:05][3.9]

Adam: [00:21:06] No. [00:21:06][0.0]

Speaker 1: [00:21:07] Nothing of. [00:21:14][7.2]

Thomas: [00:21:14] These things. It just looks dumber and dumber the more you look at it like JPEGs of apes, which, you know, I get there's a there's a blockchain based identity system attached. Do you want each one? But it's like that doesn't increase the utility of the jpeg by anything. It just makes it kind of seemingly unique. And fundamentally, is this the fad? [00:21:35][20.3]

Adam: [00:21:35] Well, there were those pet rocks as well. I mean, if you saw those pet rocks, you could buy a lot rock ID number 23. And it was just a different shade of the same rock. It wasn't even the thing that annoyed me about that. It wasn't even a good looking wrong guy. I don't want I don't want to get Ovide and start judging rocks like I am some sort of rock expert, but it's just a picture of a rock and that. Yeah. Yeah. And then it stopped even being unique amongst the NFT space because it was just like more of the same rock as different IDs. Like Whoever did it or genius. I hope they cashed out and made squillions because it was. That's like the big short of the kind of genius that work. Work takes to do that in the NFT market is just to go. This is ridiculous. I'm going to make like a thousand rocks and sell them for heaps of money each even though the same thing and just take money from idiots basically. So other than being able to just pick up like a cheap JPEG monkey, now what else does this mean? [00:22:41][66.4]

Thomas: [00:22:42] Is it. But this is thing. This do they still trading in $110,000 each, us each. [00:22:48][6.2]

Adam: [00:22:48] Are they though or are they just listed? It's like when you go on eBay and you want to buy something, you're like, you just trying to, you know, get a feel for how much something is worth. And you check on eBay like, whoa. It's like, you know. [00:22:59][11.3]

Thomas: [00:23:00] Like my. [00:23:01][0.6]

Adam: [00:23:01] Grandfather clocks like $1,000 is that know someone's just asking $1,000 for you know whether that. [00:23:06][5.7]

Thomas: [00:23:07] Right open opensea to be to be fair they're disputing the analysis right. Yeah. Because they say that that volume shouldn't be measured in fiat. It should be measured in Aether. [00:23:16][9.4]

Adam: [00:23:16] Oh, okay. All right. [00:23:17][1.0]

Thomas: [00:23:18] So even on that measure, it's still down 62%. [00:23:20][2.0]

Speaker 1: [00:23:23] It's tis but a scratch. Well, that's. [00:23:26][2.8]

Thomas: [00:23:26] Right. [00:23:26][0.0]

Adam: [00:23:27] Like, yeah, we're in for the long haul. Yes. [00:23:29][2.0]

Thomas: [00:23:29] There's you know, market moves in cycles. [00:23:31][2.2]

Adam: [00:23:33] Mm. [00:23:33][0.0]

Thomas: [00:23:33] All of that crypto winters here. Yeah. [00:23:35][2.3]

Adam: [00:23:37] Is it. That is the crypto winter here. [00:23:38][1.5]

Thomas: [00:23:39] Well I think there's a no I think people are clinging to the narrative of a crypto winter because it implies a crypto summer. [00:23:45][6.2]

Adam: [00:23:47] Where you get to have crypto spring first. I very much look forward to crypto spring. [00:23:51][3.9]

Speaker 1: [00:23:52] Yeah. [00:23:52][0.0]

Adam: [00:23:53] But there's. [00:23:54][0.2]

Thomas: [00:23:54] There's no guarantee, you know it hasn't, there's not like it could just crash and go to nothing. [00:24:00][5.6]

Adam: [00:24:00] What does this NFT story teach us about about value and how much things are worth anything? [00:24:06][5.6]

Thomas: [00:24:06] I look at it like a look at. Crypto and a look at nfts. And it's obvious that there's a lot of hype. You know, like there's clearly things there like Dogecoin, for example, parody coin. There's obviously people trading on it knowing that it's a parody, but like just taking that gamble I'm buying now and I'm just going to gamble that it goes up and I'll sell out later. So it's pure speculate. That's a purely speculative trade. And there are nfts and there are crypto coins that are purely speculatively driven. And I think it just gets increasingly hard to make the argument that, yes, there's all this speculative trade going on in these shit coins and ridiculous nfts, but over here there's some fundamental value that, you know, it's like, where's price discovery? When you've got Dogecoin doing what it's doing, how do you determine what Bitcoin is actually worth when it's for now? It's a purely speculative vehicle. You still are hoping that it proves its usefulness at some point, but I think yeah, like and in that sense, like any price is rational in my mind. Like, I mean there's a floor that's set by the mining costs I guess for Bitcoin, but this is still well low then what, what, what bitcoin is currently trading at. But like until the market locked until until you have some mechanism of price discovery which leverages off some utility, it's just anyone's game. So I think, okay. [00:25:34][88.3]

Adam: [00:25:35] I did see a website somewhere on credit of that. I think it's called Is El Salvador Down? And it's just tracking how much El Salvador's government is down after buying and trading Bitcoin, as are you trying to use it as a utility, as a currency? They bought tons of it. Right. Well, what to do now then, I guess if there's no bitcoin and no nfts, I did see crypto horses. You could you can buy a crypto horse now. You can you can raise them. So I think that's for me, that's where all we take. That's the way the smart money is heading. I think that's got a real future. All right, Thomas, finally, Japan wants more people drinking alcohol. What's going on in Japan? [00:26:22][47.1]

Thomas: [00:26:23] Yeah, this story is all sorts of nuts. Yeah. So the National Tax Agency said Japan's equivalent of the ATO have launched a competition trying to solicit ideas about how to boost alcohol sales. [00:26:37][14.0]

Adam: [00:26:38] Yes. Excellent. [00:26:38][0.7]

Speaker 1: [00:26:39] In Japan? Yeah. [00:26:41][1.5]

Thomas: [00:26:42] Alcohol. The tax revenue from from alcohol has has tanked by ¥110 billion, which is almost 800 million. Hmm. Yes, almost, almost $1,000,000,000. That's the revenue on alcohol sales is down almost a billion in 2020. So that's partly demographics. It's partly, I think, COVID and people being at homes and not drinking at bars where the booze is more expensive, I guess. Yes. There's a big drop in tax revenue coming from alcohol and so the ATO. So the National Tax Agency's gone. You know, we need to get people drinking more. So that's the. [00:27:19][36.3]

Adam: [00:27:19] Situation, isn't it? It is bought taxes and there's a lot of people smoking either I think we could maybe free cigarettes at schools. I don't know, just. [00:27:31][12.5]

Speaker 1: [00:27:35] Get. [00:27:35][0.0]

Adam: [00:27:35] The kids hooked early. I think that's how we're going to drive tax revenue. I thought it. [00:27:41][5.9]

Thomas: [00:27:42] Like really is weird. It really is. [00:27:44][2.1]

Adam: [00:27:44] We really like it. Come out with something that doesn't rely on causing harm to people to like. That's not the solution here. It bothers me in like I drive past the Glenelg Footy Club here in Adelaide all the time and you'd be forgiven for thinking it was a casino like and the front there's just like gaming rooms open 8 a.m.. There's like, like those road signs, the LED road signs sharing, you know, gaming rooms and new poker machines. And it's like. It's just like. Like, I get it. It keeps the price of is down right. If you're running like a pensioner dairy at the back just milking people of their of their pensions but like there's got to be a better business model to to creating that kind of that harm like, you know, gambling, smoking, drinking. It's if that's if that's what you're relying on, then the system's broken. Sure. [00:28:42][57.3]

Thomas: [00:28:42] Yeah. Yeah. No, that's right. I mean, a lot of the logic with like the taxation on cigarettes is that cigarettes have a big health impact that you end up paying for anyway. So you're kind of making smokers pay for their health care in some ways by taxing them at the point of sale is a there's a cost to the health system down the line. And so you want to discourage it, be also raising revenue to pay. Pay for the health care down the line. So this kind of looks like I can imagine, like the National Health Agency in Japan's is going like the ATO is doing what? [00:29:16][34.2]

Adam: [00:29:20] Oh, sorry. Can we have a meeting. [00:29:21][0.8]

Speaker 1: [00:29:24] Just before. [00:29:25][0.2]

Adam: [00:29:25] We go live with the Let's Drink More campaign? This has got a few, few concerns from the Health Department. We wouldn't mind just workshopping. [00:29:33][8.3]

Speaker 1: [00:29:34] Yeah, yeah. [00:29:36][1.3]

Thomas: [00:29:36] The drink driving. [00:29:37][0.7]

Adam: [00:29:37] Taskforce with like the. [00:29:38][1.0]

Speaker 1: [00:29:39] Would actually. [00:29:39][0.8]

Adam: [00:29:42] I think they might be tackling out of the wrong end like the problem because they're trying to target young people right there they're like aiming this campaign more worryingly at like what is a 20 to 39 year olds is saying yeah, yeah, that's you got. [00:29:55][13.1]

Thomas: [00:29:55] To be you got to be under 39 to enter the competition. Yeah. [00:29:57][2.5]

Adam: [00:29:59] That's not the right I think like it's not that there's not enough young people drinking. I think it's that older people keep dying, presumably from alcohol related causes. So, you know, maybe if instead of trying to woo young people, they just get like better treatments for the older people and then maybe start dishing out like free blood transfusions with these with the next bottle of whisky. Just keep those people who are already in, keep them sticky. [00:30:27][28.0]

Thomas: [00:30:28] See as much customer retentions. Much cheaper than customer acquisition. [00:30:31][3.1]

Adam: [00:30:31] Exactly. Exactly right. It's simple business. You shouldn't you. [00:30:34][2.8]

Thomas: [00:30:34] Should into. [00:30:35][0.2]

Adam: [00:30:35] This. I know that. [00:30:36][0.7]

Speaker 1: [00:30:36] Yeah. [00:30:36][0.0]

Adam: [00:30:37] So, yeah. So there's a competition. [00:30:38][1.1]

Thomas: [00:30:39] They want young people to come up with ideas about how to boost sale of alcoholic beverages. Hmm. Closes in on Friday, September the ninth. The winners. There's going to be a gala awards ceremony in Tokyo on November 10th. [00:30:50][11.5]

Adam: [00:30:51] Free drinks. [00:30:51][0.2]

Speaker 1: [00:30:52] Which. Uh. [00:30:57][4.6]

Adam: [00:30:58] But the Tax Office is. [00:30:59][0.9]

Thomas: [00:30:59] Going to support the commercialisation of any ideas that come out of the. [00:31:03][3.6]

Adam: [00:31:03] Competition. The Tax Office is going to get. [00:31:05][2.4]

Speaker 1: [00:31:07] In the. [00:31:08][0.5]

Adam: [00:31:09] Tax offices, food and liquor. Um. [00:31:11][2.4]

Thomas: [00:31:16] The slush fund is ready with a bit of venture capital. If you've come up with the right idea. [00:31:20][4.3]

Adam: [00:31:21] It's like, Yeah, I did read to you that they want to they particularly want to leverage AI and the metaverse somehow they didn't I didn't say how it is like it would be great if when you're coming up with ideas and how I can get everyone in the country drinking more if we can somehow shoehorn AI and the metaverse into your proposal or API. I mean, it makes sense. Everyone can own a bar in the metaverse though, because you so you won't have any difficult problems getting to the front of the queue to get you to get your next drink. Everyone gets their own bar, just becomes very hard to convert data into psyche or whatever it is, whatever it is you're drinking. But the I bit, though, the way I've been, I think is a bit easier because I don't know what Japan's major search engine is. Probably Google, but you could just get the Internet searches to return results just relating to drinking instead of whatever you were searching for. So, like, if you search for, like, cherry blossoms, you get. Did you mean whisky? Uh, I don't. I really it really feels like there was just. [00:32:29][68.6]

Thomas: [00:32:30] There was a working group of accountants that is tasked with coming up with strategies for boosting alcohol sales. And they just went, we got nothing yet lets out the sources to some young people then something something I've met a this is I have a competition. All right, we're done. [00:32:47][17.3]

Adam: [00:32:48] Uh, you know what I'd like to say? I'd like to see more alcohol in sports. I think. I think if we switch out Gatorade for distilled liquor, how good would sumo wrestling? They in Japan just cover the big fellas both out of skin food. What they that you and I we visit Japan. You have to do that the pre bout ceremony where it's all very it's all very kind of historic. [00:33:14][26.5]

Thomas: [00:33:15] Yeah. They throw the salt. [00:33:16][1.1]

Adam: [00:33:17] It's yeah they throw the salt and just make you a lemon and tequila is. [00:33:21][3.6]

Speaker 1: [00:33:21] Asking for man is. [00:33:30][9.1]

Adam: [00:33:30] Instead of they they just replace the ceremony with with more of you. Pub pub brawl style gybes back and forwards bit of you know when you look at it like. [00:33:40][9.2]

Speaker 1: [00:33:41] You. [00:33:41][0.0]

Adam: [00:33:41] Call them fat. [00:33:42][0.4]

Speaker 1: [00:33:42] Well well, it's, um. [00:33:45][2.4]

Adam: [00:33:46] Yeah, I got. I got that. I got nothing else. That's ridiculous. It's literally the dumbest idea I've had him in weeks that I hear some pretty dumb ideas in my life. All right. Thank you so much for joining us on the show. Once again. We hope you enjoyed today's episode and we look forward to your company next time on comedian versus economist. Bye for now.