Is that the sound of a SuperBubble bursting?

Adam: [00:00:25] Hello and welcome to comedian versus economist, we are back for 2022. 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: [00:00:42] G'day, Adam. Isn't it good to be back? 

Adam: [00:00:43] Certainly is. Look, if you need a new to the show, basically we try to give you something interesting to talk about with your friends besides Covid. I don't know about you, Thomas. I'm so sick of talking about Covid, let alone Covid itself. But I feel like it's all that we talk about at the moment. Like, I meet someone new in the first thing we do is like, discuss the current COVID situation, so I'm sick of it. I've even resorted to like asking people boring questions like what you do for a job just to avoid talking about Covid. But then they tell me that they're working from home now because of COVID. So let's so let's have no Covid Covid free zone, if we can. Thomas Yeah,

Thomas: [00:01:21] it's not having much bearing on markets at the moment. 

Adam: [00:01:26] Well, maybe we could shine a light on some of the other reasons that the markets might be down, that that's your job. Anyway, welcome back for 2022. It really is great to have your company and we do thank you for your support. A lot to get through in the first show back. As you can imagine, we've had some time off. We've been crunching the numbers. Thomas have ways of overdoing it, so we had a lot to get through. We're going to have an Aussie economics data wrap, a wrap, which unfortunately does not include fat beats and rhymes, but instead inflation and jobs data. We'll take a look at how Wesfarmers being bloody massive has helped them during the downturn. We're going to check in with China because apparently they might still have a problem or two to solve. And there's a group of billionaires, Thomas, who are asking to be taxed more. Apparently, they've decided they could afford to pay maybe more than zero tax. So good on them. But first, Thomas, look, we did take a few weeks off and now the world is on fire. So is it just that we've been away or is there something else possibly dragging down the markets?

Thomas: [00:02:36] Yeah, didn't. Didn't they go to shit over the break, went camping and then it turned quickly like there was there was a real sudden U-turn in the sentiment.

Adam: [00:02:47] Well, it felt slow, but it in hindsight, was really quick. Like, I didn't notice like, well, I noticed my shares kind of just being eaten away a little bit more each day. But it wasn't like the Covid crash of 2020, where it just kind of fell off a cliff. But I think in hindsight, it might look a bit like that, but it didn't. I didn't. I mean, I must admit I wasn't. I wasn't probably paying enough attention over the break, but it didn't feel like there was this big crash. It just all of a sudden I sort of woke up, you know, in January and went with all my money gone. 

Thomas: [00:03:24] I think I think because you've lived through Covid or you're paying attention through Covid, which is one of the worst downturns in history. Yeah, you have an overinflated idea of what a what a crash or what a downturn actually looks like. Yeah, it's much more like what we've just experienced. This is sort of you average downturn, and it's not clear that we're done yet. Right? Yes. Markets into peak in the first week of January. And yeah, and it was it was a sudden shift in the narrative and there were a few data points that really caused that shift. The first was the inflation data out of the US and that that came in at seven per cent annualised. So our annual year on year, which is a very high rate of inflation, do you think the RBA is going to target band two to three per cent fits around the back two and a half percent around that mark? So it's well over what the Fed is comfortable with and we got there much quicker than people were expecting. Yeah, we went from a situation where the markets were pretty relaxed about the Fed's tightening cycle to one where they expected it to be very rapid. The Fed met last week and did not hike rates so that the meeting was live. They thought they might, but they didn't. But Powell is now saying it's definitely on the cards will probably have a hike in March and then up to five or six further rate hikes this year. So, yeah, so there has been a pivot in in the outlook and particularly the Fed's tightening cycle. And that sort of seemed to bring about the idea that the bull run that was caused by all the Covid stimulus by record low interest rates, massive government spending that was now done and that's caused a bit of a sell off, maybe a bit of people taking profits at that point, saying, yep, well, all the stimulus is done with the tide going out and it's time to take some money off the table or people just panicking a bit.

Adam: [00:05:06] So the stimulus was the quantitative easing, the money printing. Then we saw that happen throughout Covid and and sort of seemingly well after it as well. So that's all. That's all the stimulus that was that was being pumped in and now they're turning the tap off. Is that right? 

Thomas: [00:05:21] Yeah. Yeah, that's right. That's right. So yeah, raising rates and. Adding to quantitative tightening, I think at the moment they're still printing money, right, and they will keep doing that for a little while, but they'll start hiking rates and yes, starting to win back the money printing

Adam: [00:05:36] because some people, Thomas did say with quantitative easing and money printing that that might bring about inflation. And a lot of people, a lot of other people said, Nah, nah, we're on at this time. And now everyone's talking about inflation going through the roof.

Thomas: [00:05:52] Yeah, well, it is. It is. But I mean, it's it's still an open question. It's not. It's not entirely settled yet, still. But it's an open question as to whether that inflation is coming from too much money in the system or whether it's coming through the supply chain disruptions, which is still constipated across the world, thanks to thanks to Covid. So, yeah, yeah, so supply costs are rising. And so it's still a question about whether that is temporary or permanent. It now seems to be shifting, at least in the Fed's mind, to being something more permanent and something that they're going to have to do something about. But I think that's that's sort of they need it. They need to be a bit pre-emptive because they don't want inflation expectations to lock in, which then drives wage gains, which creates that sort of inflationary spiral. So they don't want they don't want that to set insulin now need to get ahead of the curve. And I think they're feeling that they're where they're at right now is just too far behind the curve. 

Adam: [00:06:50] And so what does this mean for Australia? So Australia's going to follow the US's lead. I mean, inflation's not seven per cent in Australia yet. 

Thomas: [00:06:58] No, but it is. It is ahead of schedule. So, yeah, headline inflation in Australia. Yeah, it came in at three and a half per cent, which was way over what people are expecting that the trimmed mean which is sort of the measure of underlying inflation that the RBA focuses on. That was at 2.6 per cent. So that's sort of now over halfway into their their target band. Mm-Hmm. Um, but sort of importantly, like the two things there so that the RBA publishes their forecasts, they didn't forecast inflation getting to two point six per cent into two years from now. 

Adam: [00:07:30] Mm-Hmm. I'm disappointed in Phil Lowe. I'm going to put it out there. You heard it first on this podcast. Hey, he said. Now this is we're not raising rates to 2024, and we talked about on the show how everyone was like, now you definitely will. And he was like, I don't know why you don't believe me, but we're not going to do it. And here we are. Surely we're going to. He's going to raise rates before 2024. [00:07:54][24.6]

Thomas: [00:07:55] Now it's going to be interesting that the markets are now putting 100 per percent probability of getting a rate hike by June, raising at least one by June. They're so non-committal. These people, really, they've 

Adam: [00:08:13] gone with 100 percent, probably like how we decide it's definitely going to happen. We still have to talk about probability when we're talking about 100 percent. 

Thomas: [00:08:20] Yeah, I mean, yeah, you can. You can you can back out probabilities from from where the money markets are at. So it's rising and gets to 100 per cent around June. That's right. There's something you can do in economics. But yeah, we're getting to these markets yet locked in by June, the RBA meets, so we're releasing it on Wednesday. The RBA will have met yesterday. It's probably not likely that they hiked yesterday, but it is most likely that they ended their money printing programme yesterday. That seems to be the seems to be the view. It'll be surprising if they don't. Given given where we're at because we are, we're two years ahead of schedule on inflation unemployment. We also got out during the last week or the week before that came in at 4.2 per cent. That's that's a very low number, a very strong number again a year ahead of schedule where that's supposed to be. So it does now seem that the RBA is forecasting well behind the curve as well, and the RBA is going to have to bring forward that tightening cycle. So the key the key one to data point to watch next month will be the wages, because RBA has said for a while now that their plan to hike rates really swings on whether you get wages growth above three percent and kind of the way that wages have set in Australia with our awards system in that it tends to be a wages tend to be a bit sticky here, so they don't immediately jump when inflation jumps. But that'll be the one to watch that will be if we get a strong wages print next month, then yeah, then it could be on for young and old with rate hikes this year. But yeah, on and I'm still not convinced this this year. 

Adam: [00:09:52] But right, but it's 2022, he said. It's not going to happen till 2024. Yeah, it was not. 

Thomas: [00:09:58] This year is definitely not 2024 anymore. I don't think, I think 

Adam: [00:10:01] 1000 percent probability it will be next year. 

Adam: [00:10:05] Yeah, take that to the bank. And just quickly on the housing market then is the is is the housing market going to burst next? That's been on a tear. 

Thomas: [00:10:17] There has been the house price growth does seem to be slowing. We ended the year up 25 per cent year on year. Somehow that. Mark, in 2021, which is a huge, you know, that's that's really strong growth. Yeah, a lot of that has come through record low rates. Fixed rates are already rising. So fixed rates through the RBA's term funding facility, they went super low like into the ones one point something's that you could you could get a rate like that. Those fixed rates are now rising. So we've had sort of like a full percentage point increase in fixed rates. Variable rates are starting to drift up as well before we get into the the RBA hiking rates. So the market and market growth is slowing, it's not falling and we're not seeing anything like that. And it'll probably plateau. And maybe if we see some, some strong rate hikes later in the year, then that might that might take that might knock the market on the head a bit because I have overrun potentially quite a lot like it's been been pretty phenomenal growth. 

Adam: [00:11:16] Is there anything we can learn from the share market and what's happening there to apply to the housing market? Or are they just totally separate sort of asset classes and and therefore you can't you can't take what's happening the share market now and extrapolate that on the housing market, 

Thomas: [00:11:31] they're very different markets because the liquidity is so different. So, you know, the liquidity on houses is a slow, very slow asset class compared to stocks. Stocks trade very quickly, high volumes. You get big, sell a lot quickly, you get short, holds the housing market. It's you don't the transaction. There's a lot of transaction costs involved. You don't you don't have high volumes of transactions that often. Yeah. So it's a bit hard to say. But to the extent that both my both bull runs in both markets were driven by super cheap money, then you could expect the shakeout that we're seeing in the share market to translate into a bit of a shake out in in the housing market. But it's also interesting in the sense that this there's not a consensus around why share markets are wobbly right now. There's sort of three views. So there's like the Goldman Sachs view is that, yeah, it's a bit of a wobble. Maybe we're blowing off a bit of froth, but it'll it'll sort itself out rate hikes. We'll sort of it's just a normalisation of things and the underlying economy strong. It's going to be alright. So we remain pro risk in asset asset allocation this year and recommend overweight in equities and commodities. That's that's pretty broad. Obviously, you might have to subscribe to get the detail about what what equities have three three commodities, please and the side of equities. So. So that's one view in the markets that it's like, yeah, there's a bit of froth to blow off. People are worried, like it's just the people of people have been sort of a bit whiplash by the pace of change. So we've gone very quickly. From easy money to a tightening money. The monetary cycle has turned very quickly and much more quickly than people expected, and that's caused markets to freak out a bit. But once they digest all of that, it'll be OK. So that's that's one view that's sort of like maybe the Goldilocks kind of view. The second view is I'm really enjoying it. Morgan Stanley's they're talking about a classic. yeah, they're talking about fire and ice.And so saying that there's two there's two challenges for the economy and the sharemarket this year as fire and there's ice fire is the rate hikes and the tightening cycle. And that's going to that's going to knock the wind out of markets because the massive run in run up in equities we saw in 2020 and 2021 that was all driven on the premise of super cheap money and and massive stimulus spending. And now that's starting to unwind is just a natural consequence that the valuations will will fall as well. So that's a fire. But then they're talking about what happens after that is ice and saying that there's there's a lot of troubles in in the underlying economy when you look at it, particularly once you start taking away the stimulus stimulus spending that you've seen typically in the US economy and little retail sales, retail sales were down three percent in December versus expectations of zero of no change. And so that's much weaker than expected. Consumers seem to be tapping credit so they're not as flush with cash as as we might have thought they were. There's still a lot of dislocations coming through. You're going to get sort of stagflation coming in with high inflation and enduring supply side shocks. And so you're going to get fire and then you're going to get ice and you're going to end up with a bit of recession. And then I think that you're going to see a lot the the Fed be able to execute all of their rate hike agenda because the markets is going to crash before they do that and you're going to end up in a recession. So you've got an inflationary shock in the first half of the year, followed by a recessionary shock in the second half of the year. And they see trouble for markets all through 2022. 

Adam: [00:15:13] I can't believe fire and ice were both bad. That's like when he told me Morgan Stanley got subscribing to the fire and ice idea and you start talking. At fire, and it's like it was like a bushfire spreading through the markets and burning everything in its path. I was expecting ice was going to be like, but don't worry, because they're also predicting that maybe ice will come in and just kind of chill everything out of it. But then he came in with ice is also bad. And like, so now we're screwed whichever way we go, right? And so I was. The third view 

Thomas: [00:15:47] with a third view is the Jeremy Grantham view, said Jan Jeremy Grantham at GMA. He's a he's a famous Burmese pair perma bear. This concept constantly calling bubbles. 

Adam: [00:15:59] You're trying to get the rhyming slang for bear, and it's it's not Burmese. Pair is never catching on. Okay, the strong Burmese pair perma bear. 

Thomas: [00:16:08] It's my my plan for 2020 to launch rhyming slang of financial markets. Big Gov. Yeah. 

Thomas: [00:16:15] But he said he'd be here. He's he's he's famous for calling bubbles and he does it every four or five years. But he has called some bubbles successfully. Japan in 1989, the US in 2000. And I think the US in 89 as well. So yeah, so he does have runs on the board and he's also a massively successful fund manager that he reckons that we're now in super bubble territory. So it's gone from both from bubble to super bubble, and it's on for young and old. He reckons that super bubbles always correct in history. You go through a back, you know, 200 years. Every super bubble has corrected back to trend. The checklist for a super bubble running through its phases is now complete, and the wild rumpus can begin at any time. And that's where the wild things are reference, yeah, that's cute, wasn't it? Yeah, yeah. So so the three narratives that seem to be going doing the rounds one, it's it's it's yes, it's a it's wobbly right now, but it's going to be OK. Two is that there are serious challenges and it's going to be a bit of a rough year. And then three, it's it's all coming down, it's all crashing down around us. That seems to be the three narratives that I'm reading. I guess the notable absence there is that it's going to be a boom year for markets. I'm not. I'm not seeing anyone saying that, but you look a bit silly in the middle of a crash talking about being and being in boom year for markets that maybe once things settle down, we might hear more of those voices. But for the moment, yeah, that seems to be where, where, how markets are interpreting things, right? 

Adam: [00:17:50] Well, you never know. Maybe we'll all wake up tomorrow and our supper will still be waiting for us. Still will for anyone who has read where the wild things are. All right, Thomas. We're going to narrow the focus a little bit and look at Wesfarmers. They put out a trading update in the wake of Covid, and they've been helped by being huge. Can you explain maybe for the listeners out there why that might be beneficial? Yes. 

Thomas: [00:18:19] I think they've got a market cap of 61 billion to the big. Yeah, yeah. But they've got a conglomerate model going for them. So Wesfarmers includes the retail arm, Kmart, Target Catch Group and Officeworks. Yeah, didn't do well. Haven't done well over. Yeah, you should say like the revenue for those guys is down, but that's being offset by strong performances from Bunnings and Wesfarmers chemicals energy in the fertiliser businesses that they own. So it's sort of it sort of says it's a good it's kind of what you want a conglomerate model to do. It's that you have enough moving parts that when some aren't doing well, the others are doing well. And you? Yeah, you net net everything else. 

Adam: [00:19:01] Can we infer anything like so Kmart and Target were down, but Bunnings and fertiliser groups were killing it? Hmm. Can we infer anything from this about the attitudes of men and women to Covid like women? Maybe much more cautious kind of time to hunker down. Look after the nest. Take care of the family. Certainly no time for like frivolous homewares and managers like, Oh man, the lawns looking a bit stretched back in to this dark and inviting you to get some fertiliser. Yeah, I don't know if that's my lawn has suffered through Covid as much as anyone. 

Thomas: [00:19:44] I don't know if there's a gender dimension to these things. Okay? The CEO didn't really mention that in the call, 

Adam: [00:19:50] I thrown another lens over it and thought, Hmm, yeah,

Thomas: [00:19:54] yeah, yeah. So yeah, so the people you know, there has been a bit of criticism of Wesfarmers in the past saying, like the you know, there's no natural synergy between Kmart and the energy and fertiliser businesses. But this sort of is a sort of saying, Well, this is what you want a conglomerate to do, protect your earnings in in volatile times. So sort of a vindication of that. But what's interesting, I think in the Wesfarmers results is the light that it shines on the economy. So Kmart and Target have been smashed. It is this, you know, they did close sixty two Target stores as a bit of that going on. But looking through that? Yes. And like the the retail arm is going to deliver earnings before tax of about one hundred and seven hundred and eighty billion for the first half of the financial year, and that's down from over 480 million. So I said I'm talking million. Seventy million, that's down from over 400, almost four hundred ninety million in the year earlier. So that's almost a third of what they were earning in 2021. So that, yeah, they're getting they're getting smashed around, but 

Adam: [00:20:59] you could see it. You could see it in like the the Boxing Day sales like, we grew up with crowds outside department stores, you know, like Boxing Day rolled around and there was like, you couldn't see the end of the crowd waiting for the doors to open and people pour in. This year, it was just like one lady out of the front of David Jones, doors flying over and it is like, Oh Christ, the toilet is summed up how we all feel as a nation limping into this into this new year. 

Thomas: [00:21:29] Yeah, lockdown to really influence their foot traffic, which was way down. That was the one big thing that the three big things that was the first. Second was rising costs. Inflation was getting to them, especially their freight costs that was really messing their business group around. And then the third was difficulty managing their inventories because they had huge absenteeism in their shipping departments. So they couldn't. We didn't have enough workers to send stock to the shops. And so and the absenteeism at the shops because so many of their staff were. Off sick, they had to reduce trading hours, even even if people were out shopping, which they weren't. They had to reduce shopping hours because they just didn't have the staff, which are. And I think that's a pretty typical you hearing a lot of anecdotal evidence of that. A lot of firms are struggling to keep to stay open, particularly in the retail space, because they just have just having trouble finding workers.

Adam: [00:22:22] All right. We want to take a break there. Don't forget, you can always send us an email CV at Equity Mates dot com or head over to the website Equity Mates dot com forward slash CV. And of course, you can find us on Facebook and Instagram at CBC Podcasts. But right now we're going to take a short break, grab a word from our sponsor and be back with more comedian vs. economist right after this. Welcome back here on comedian versus economist and Thomas, we left last year with China in a little bit of trouble. Evergrande was the collapse of Evergrande was talking about doing widespread destruction to the economy and economies around the world. Can you give us an update on where we're at now?

Thomas: [00:23:05] Yeah, this is this is one thing that hasn't changed much since we've been away. So Evergrande is still in big trouble, so they owe $300 billion to the deposit. They are technically in default now and trying to return to work things out with their creditors. That's getting pretty messy. 

Adam: [00:23:24] That's a difficult conversation when you 300 billion in the hole. Yeah, yeah, I'm good for it, honestly. 300 billion. Yeah, yeah, yeah.

Thomas: [00:23:40] No, it's not good. And yeah, and it's bringing them more and more, developers say to the credit markets for the entire Chinese development sector, seem to be frozen even good companies. Yeah, there is too much demand group that an investment grade rating in December that's now started a fire sale in its assets, joining a whole bunch of others now. So the whole sector's in trouble now. So it started with every grand and took in a couple of others, and now it's pretty much the whole sector. Look, you just can't get funding right now. Goldman Sachs estimates that there was in December there was 6.3 billion US dollars worth of bonds maturing in January. They reckon about 15 percent of those that have been defaulted on. 

Adam: [00:24:26] Wow. So is this we we talked about ever problems filtering through to the rest of the world's economies? Is any of this, you know, cause for the downturn that we're seeing in the rest of the world? Or are they unrelated? 

Thomas: [00:24:40] I think it's unrelated for the moment. Look, it's definitely not helping markets, but I don't I don't think we're seeing any contagion yet. But it's still early days. Like Evergreen has a lot of overseas bondholders. They'll be. They'll be nervous. What happens, you know? So I wonder if ever gone everyone does go into full default and gets wrapped up, then their creditors, they need to to manage their liabilities, which then so gets passed on back down the chain. And that's when you might start to see contagion start to spread, but we're not seeing it yet. It's not. It's not there yet. 

Adam: [00:25:13] When what had happened, though, like 

Thomas: [00:25:14] if I think once it's formally wound up, if it goes into the Chinese equivalent of receivership and gets an administrator appointed to sort of wind up the assets, you know, so then it would go to like a Oaktree Capital, whatever, and say, OK, Evergrande owes you $160 million. We're suggesting you get five. So then. And if that's what they've got to swallow, then she's got to go to their creditors or have a gives them money and say, Okay, we've just lost 155 million or something. Mm hmm. The interesting thing story that I saw is that auditors have been called in to help with, you know, because the foreign bondholders want auditors involved to sort of help restructure these debts. Like you, companies are asking for the creditors to restructure debts or give them more time. The bondholders say, Well, we want to get older and involve auditors have got involved and then quitting because they don't want, don't like what they're seeing. So. Hobson. Hobson Development Holdings said its auditor, PricewaterhouseCoopers, has resigned because it didn't couldn't get enough information. China, our young group, said Deloitte Touche Tohmatsu had also resigned as an auditor, so the auditors have 

Thomas: [00:26:25] studied how to look. And you know what? I think don't want to get involved in this. They just close that door. Yeah, just slip away quietly. 

Adam: [00:26:34] It's not. It's just not for me, although I could say a little bit of what's going on in here, but is that is that these companies not being forthright and open with their with their books and these are the auditors are kind of going, Look, we can't, you know, you have to show us the books you can, you know? Yeah, and who knows? Who knows what's going on there? 

Thomas: [00:26:56] Yeah, I mean, that's sort of what they're saying is the cause. But then like, why are they not sharing that? What are the like? It's politically as sensitive as well, because you go to the local governments in Beijing involved in all of this? Yeah, it's tricky. It's tricky

Adam: [00:27:10] The Wild Rumpus has started over there. Yeah. Did you see that story about about Scott Morrison and his WeChat account? That's what I'm thinking about China. I mean, it's got worse than had a had an unofficial WeChat because, you know, allowed as a as a foreign political person, you can't have a WeChat account in China like it's not allowed. So like you just kind of ask someone to start an account for him and then that person got bored of looking out as a covers and wage etiquette. So he sold it. And it goes like, we don't know each other cat. It is crickets, Ren these guys I got rid of, it was boring

Adam: [00:27:56] and they were going to wait and wait. It's like, you know, you wouldn't let it happen in the first place. You can just have a WeChat account. Let's registered to someone else and get around it that way. And so now is this kind of uproar. So trouble. 

Thomas: [00:28:08] I think it was a sophisticated phishing attack on Scott Morrison. Was someone pretending to be a Nigerian prince? [00:28:14][5.2]

Adam: [00:28:15] All right. Well, I guess we'll just kind of keep an eye on it. See what happens? Keep an eye on it, which is more than the auditors have been able to do, but we'll see what happens. Lastly, Thomas and this is a story I cannot believe, but some billionaires have apparently said they would like to pay more tax.

Thomas: [00:28:33] What's going on? Yeah. So at a virtual World Economic Forum in Davos, which I guess wasn't actually in Davos, it was on the internet with Davos. When they're saying it's in Davos, Sweden, I think Sweden or Switzerland. So the funny thing with World Economic Forum's is they used to have them in Seattle and then Melbourne and then much other places, and then they kept being beset by protests. If you remember the battle for Seattle and like ninety eight or nine or something, 

Adam: [00:29:01] I remember the grunge scene here, and that time was pretty cool.

Thomas: [00:29:04] Yeah, closely connected it. Yeah. So it was only when they said, Well, we're a bit sick of being protested. Let's go to this virtual fortress in Davos, which is a ski village somewhere. So that's where the World Economic Forum's met there for the last 20 years. 

Adam: [00:29:19] I mean, it just sounds a lot like it's a city that would exist in, like Rome and the Roman Empire times. Like she would be like, I just imagine Davos being taken by like the 300 or whatever, you know? Yeah, yeah. Yeah, it has fallen. So it's a little I decided a little disappointing that it seemed like it's such a nice country like Sweden's sweet and that it's virtual was even worse, like since I was so much less interested. 

Thomas: [00:29:46] Yeah, I think it was in Decentraland. I think it was because there was in the central. And anyway, there's a group called the Patriotic Millionaires Group, which had more than 100 billionaires and millionaires. Uh, yeah, no. But they I sent an open letter saying that we need to pay more tax. Millionaires and billionaires need to pay more tax. I say as millionaires, we know that the current tax system is not fair. Most of us can say that while the whole world has gone through an immense amount of suffering in the last two years, we have actually seen our wealth rise during the pandemic. Yet few, if any, of us can honestly say that we pay our fair share in taxes.

Adam: [00:30:21] It's noble, isn't it? But its size feels a little light. 

Thomas: [00:30:25] Yeah, after you've made your billions, it's easy to say 

Adam: [00:30:28] like, what are they sitting around at the country club? You know, and 

Thomas: [00:30:33] I think we could afford to pay more tax. What gives you that idea? Like, just 

Adam: [00:30:41] just feel so token like it 

Thomas: [00:30:43] is a bit is a bit, I think. But also I think it's it's pretty clear that inequality has got a lot worse since Covid happened. So Oxfam, Oxfam and the Patriotic Billionaires Group got together and did a study and found that the ten richest individuals have seen their wealth rise by one point five trillion dollars since Covid started or by $15000 a second. I read 

Adam: [00:31:06] that and I was disgusted 

Thomas: [00:31:10] $15000. 

Adam: [00:31:12] I did the maths. You replace the nine $15000. A second is $900000 per minute. It's 54 million dollars an hour, $54 million an hour. So if you slave on average, eight hours or not, while they were asleep in one, not billionaires, the top 10 were earning a combined four hundred and thirty two million dollars. In one night's sleep, yeah, I sometimes have trouble sleeping, which, yeah, you know, very well, I'm worried about the stresses of work and family and mortgages and whatever. Ah, I cannot sleep pretty well if I knew I was going to wake up the $432

Thomas: [00:31:56] million every day, every day, that's the thing.

Adam: [00:32:00] It's not like they want to go to bed every day while on a ticket. Go to bed. I hope I win. They wake up every day and I've made another thirty million dollars. It's insane.

Thomas: [00:32:11] What was this that also recently that you could win Powerball like $25 million every day for 200 years, like win win 25 million every day for 200 years and still not have that huge wealth is Elon Musk. I know it's pretty nuts. I read 

Adam: [00:32:28] I read this. I like to mainly focus on the sports pages, but there was a guy as NFL quarterback. I forget who it might have been. Patrick Mahomes. Maybe he just signed a deal and his new deal was equivalent to the entire net worth of Cristiano Ronaldo. 

Thomas: [00:32:47] Wow. Which I don't know if you

Adam: [00:32:50] know Cristiano Ronaldo and I don't know what his net worth is, but Google it because it'll probably be somewhere around four hundred and thirty two million 

Thomas: [00:32:56] dollars. 

Adam: [00:32:57] And so this guy has just signed a new deal to play American football, and he's going to be getting as much as Cristiano Ronaldo is worth right now over his the life of his contract. It's just it's just crazy money that most of us can't even comprehend, and most of us can't even fathom how much the richest people in the world economy. But so then they come out, these people come out and say, I think we could pay more tax and they should just be met with. Surely it is people going well, the obvious? Yeah, you should. Yeah. Because they're also the ones who seem to be the best at avoiding tax. 

Thomas: [00:33:35] Yeah, that's right. That's right. And that's what Oxfam reckons. And she had a two percent wealth tax for those with more than five million rising to five percent wealth tax for billionaires. That could raise 2.5 trillion enough to live, lift 2.3 billion people out of poverty and guarantee health care and social protection for individuals in lower income countries. Pretty significant. I mean, it's issue because Ray Dalio, who's the, you know, hedge fund guru he's been, he's been. He talks about the big challenges facing the West right now, and inequality is always at the top of his list because he reckons that inequality always leads to political instability. And right now, inequality is getting worse, and that gives you reactionaries on the far right and the far left you get military strongmen come out of that inequality you get democracies fail when when they get too unequal. And he sees that as one of the big risks facing the US economy right now. 

Adam: [00:34:31] Oh man, I'm thinking of taking to the 

Thomas: [00:34:33] streets of $54 million an hour. And yeah, yeah,

Thomas: [00:34:41] I mean, it's reasonable. I think I mean, I think there's, you know, if you wanted to stir up discontent, not that we've got the, you know, interest in doing that. We've got kids busy. 

Thomas: [00:34:52] But the last thing we need is discontent on the streets. No more, more discontent or discontent. Our kids are never happy, the complaining all the time. 

Adam: [00:35:01] Well, that's the I needed to escape that, go outside and find discontent on the streets. 

Thomas: [00:35:06] It just gives give you kids some Molotov cocktails to take them down to baby. You look at what the Covid response is. 

Thomas: [00:35:16] You know, it has the wealth. You have got a lot wealthier. That sort of seems to be the nature of crises responses. But even JobKeeper in Australia, it was some pretty egregious rorting of that. Yeah, yeah. Even had I think Jennifer Westacott was the head of the Australian Council, Chamber of Commerce and Industry, she sort of came out and said like, Oh, guys, like, it's not really okay to be pocketing JobKeeper and then giving yourself big bonuses, which a 

Thomas: [00:35:43] lot of people were doing. 

Thomas: [00:35:45] But you know, if you, you know, if you're a frontline

Thomas: [00:35:47] health worker, then coming out and saying, I think we could pay tax. Yeah, we had a bit of a windfall from the government who used all taxpayers money to give us some extras that we didn't need. So we 

Adam: [00:36:01] pocketed that. And now that we took all the taxpayers money I've got, I think we could do the right thing and pay a little bit more. Thanks. 

Thomas: [00:36:09] Yeah, that'd be nice. All right. On that positive 

Adam: [00:36:12] note, I think we might leave it there. Thank you for joining us. It's going to be a massive year here on comedian versus economist in 2022. Lots, lots more to come your way, including we're actually going to be teaming up with the ASX this year, which is really exciting and help going. We're going to be running a sharemarket trading game in partnership with ASX, so we can't wait for that. Stay tuned for more details to follow, including. Special episode we're going to do with Bryce and Alec from Equity Mates as we as we launch that, so stick around for that one. Also, don't forget to check out all the other great podcasts from the Equity Mates network. Get Started Investing feed Equity Mates Investing Podcast. You're in Good Company. Took money to me. Crypto curious lots to lots to listen to. Everyone's coming back from the holidays. There's definitely a good vibe going on, so hopefully we can bring you some good vibes. We thank you again for tuning in and look forward to speaking to you next time on comedian versus economist. Bye for now.