BOTTOMLINE: Desperate times call for desperate measures. For that matter, desparate times call for desparate measures. 

These times are desparate, desperate times, despite what you read in the financial pages about green shoots and financial legumes.

One thing you would certainly not – yet – have read, but Bottomline alerts you to it now, is of a certain secret Federal Government plan to introduce a marvellous new growth tax, temporarily of course. 

It’s all about taxing losses. No, not tax losses – taxing losses.

You may have heard this term ‘marvellous new growth tax’ before: Malcolm Fraser described the Petrol Price Parity scheme in much the same fashion – and look how well that did.

Paul Keating and then John Howard also described the GST as a ‘marvellous new growth tax’. Look how well that did.

Taxes are described in this positive way not because they promote economic growth but because they grow their take irrespective of whether the economy improves.

But how do you find a marvellous new growth tax in a time of GFC in the wake of the FCUK up in the Northern Hemisphere? (see story panel for acronymic explanation).

How do you find a marvellous new growth tax in a time of falling prices, low interest rates, rising unemployment and massive government spending that needs to be paid off within about 80 years?

You go with the flow. That flow is downhill.

Here at Bottomline, we can reveal the super secret plan by Federal, State and Local Governments, plus a few statutory bodies and at least one airport, to tax losses instead of profits.

A hallmark of the GFC has been the massive losses most corporations have drummed up. Even those making money have massive drops in profit. Hardly enough left to tax.

Now that the secret is out, it seems bleedingly obvious. Tax losses become taxed losses.

The greater the losses, the greater the windfall. So, greater become government revenues to pay off the infrastructure spending and the tax bonuses.

Sure, moves by the Federal Government to tax losses instead of profits may be howled down as misguided and unfair by the Opposition and human rights activists including the Federation Against Retrospective Tax (FARTAX). But this is as much about attitude and building confidence in the marketplace as it is about government revenues.

The psychology is clear: businesses won’t want to make losses because of their tax liabilities.

But the government needs to strike an important balance here, or it won’t work. Tax on losses needs to be much larger than taxes on profits.

In this way, business will see the sense in making profits because losses will mean a much larger tax liability.

This is where the plan may unravel as it is believed more than half the members of Caucus want to stick to established principles of taxing profits heavily and letting companies run rampant with untaxed losses.

Another area of disagreement is the ‘grey area’ of companies that break even and, therefore, are not subject to tax on profits or losses. A retrospective ‘break even’ tax is mooted.

FARTAX has already announced it will oppose any break even tax, except in the case of a company wind-up. FARTAX is pressing for an amendment it calls the break-wind-up clause.

Is this a good idea, or are we all simply at a loss? ♦

GFC or KFC?

We are still not out of the Global Financial Crisis (GFC, as it is referred to, incessantly) yet. Things are bad, but perhaps not as bad as the International Monetary Fund thinks.

They tried unsuccessfully to re-brand the GFC as the Great Recession, but most media wouldn’t buy it. Recession doesn’t sound scary enough, compared with Depression. After all, you don’t hear of anyone going on anti-recessants.

So it doesn’t matter what size it is, Recession doesn’t sound Great, ever. Not Great-bad and certainly not Great-good.

Depression is what you have to go with, in times like these.  From that point on, it’s just a matter of scale.

Perhaps they should have gone for the Not-So-Great Depression instead – the NSGD – but probably catchier would have been the Second Greatest Depression, SGD. A canned meat manufacturer apparently still has dibs on the Sub-Prime American Meltdown.

It’s all too late to upgrade the branding, now that the GFC has won its place in prime time history – which means it will be forgotten in about three months. 

Be aware, though, that originally the IMF was working on its crisis branding when the situation was known in banking circles as the Known Financial Crisis. But KFC had already been taken by some old US military guy.

Similarly, in Britain, the Financial Crisis United Kingdom showed promise, but amazingly some crazed fashion label beat the IMF and the World Bank to the IP. And they just couldn’t wear it.

Or maybe the penny dropped.  Pigs can’t fly, even if they happen to hold money. ♦

e-mail WARNING:

If you receive an email from the Department of Health telling you not to eat tinned pork because of swine flu ... ignore it ...

It’s just spam. ♦

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IF MONEY was fruit, would we have the same problems with the GFC? Just say we were in the grip of the Global Fruit Crisis instead of the Global Financial Crisis.

How did the GFC get to be so critical? A quick overview:

It all started when US President Bill Clingdon decided to legislate that people who had traditionally not shown an interest in fruit, or did not have the resources to service a regular fruit bill, should have better access to fruit.

US Government Legislation ensured fruit markets had to set aside boxes of fruit specifically for those disadvantaged people – even though they may not be able to pay for it, all the time.

Meanwhile, the Fruity Reserve, chaired by Alan Greenspurt, was delighted with the amount of fruit it was able to get out into the marketplace, by keeping interest rates lower for longer. Things were going well.

Fruity Banks, meanwhile, were busily trying to get all that new fruit, being steadily piled up at the back door, out there to buyers.

To do so, they were finding they had to smarten up the packaging and offer some extra bananas or tangerines to ensure that fruit went out before it went off.

Even though some of the fruit was on the verge of going off before it left the bank, which they called Sub Prime Fruit, a packaging spruce up with luscious fruit pictures on the boxes reassured the market. Buyers that President Clingdon had legislated in favour of got first dibs at these very appealing cut-price fruit boxes – and all was very well indeed.

Things began to move even faster. US fruit markets and traders thought they could modernise the way the fruit industry works by creating some new products and ‘instruments’ known in the trade as Fruity Instrument Tailoring (FIT).

This accelerated the whole process, fruit markets earned big bonuses on the turnover of their fruit and soon all the major fruit financiers were having FITs.

Seeing these events, fruit financiers and investors all around the world began to buy into this burgeoning market as Walnut Street developed new Fruity Annuity Funds (FAFs) and Fruity Activity Reserve Trusts (acronym withheld – Editor) with high rates of growth.

None of this seemed to trouble the IMF (International Melon Fund), or the Fruity Reserve, which bathed in the glory of unprecedented fruit growth,  because everybody seemed happy.

These august institutions felt we had reached a new fruit markets paradigm where everybody who wanted fruit could get it, farmers could grow fruit on demand, everybody who wanted to sell more fruit could and none of this modern fruit ever seemed to go off.

This was a revelation. For hundreds of years, fruit had traded more or less in the same fashion on Walnut Street. You asked for a ripe banana, you got a ripe banana. You asked for a ripe orange, you got a ripe orange. You asked for a raw banana, you also got what you asked for. Forget pineapples.

However, some of the traders got some advice on the possibilities of GM (greed modified) fruit – guaranteed to be bigger, more colourful and even ‘straighter’, in the case of bananas – and realised these would appeal to even more unsophisticated investors.

They started a whole marketing and publicity campaign based around GM fruit that began to fire the public’s imagination. These fruits were not, of course, modified in any particular way other than to go through another stage of personal handling from the markets. In the case of bananas, they were tugged a few times before going in the box, to help straighten them out.

The bewildered public loved the concept of straighter bananas, it seemed, and soon fruit market providers all over the world were tugging themselves. (It would later be alleged by psychologists studying the GFC that the entire problem was driven by male testosterone that led to greedy competitive decisions among the men on Walnut Street, who could see nothing at all out of the ordinary in tugging bananas).

But then somebody in the fruit media pointed out that things were turning rotten. Delays in getting the fruit stockpile to market meant a rise in pre-packaged GM fruit going bad almost immediately it was unwrapped.

Some consumers saw through the pre-packaged banana tugging scam. They became tired of the bent untruths – and the fruit, since it began to smell and taste bad – and they sent their now rotten boxes of sub-prime fruit back to the banks.

This impacted other fruit markets, as people began to fear that other fruit had also been GM-ed which, of course, most had.

Unfortunately, a few of the major fruit trading houses, some of them generations old like Leafman Brothers, had put too many of their resources into these new fruits and FITs, never imagining they would turn bad, leaving an abundance of worthless rotting fruit.

Soon, fruit traders everywhere were hit by bad fruit and a surplus of all the most unpopular fruit.

A couple of the big international trading houses went bust before the government stepped in and started giving them good fruit from the government’s own supply, a vast majority of it actually grown in China.

So, here we are today and the Global Fruit Crisis is far from over.

In Australia, where most of our fruit goes to China before it is put into tins and sent to the US, our Government has wisely guaranteed the fruit supply for our banks, who may or may not sell it on at a fair profit to Australian business, depending on their appetite for risk.

If only the GFC was the Global Fruit Crisis. At least then our currency would be edible and we could make jam instead of being in a jam.

The prime lesson from both GFCs is: if you’ve got a bunch of yellow things that look like bananas, feel like bananas and are bent like bananas, no amount of GM science, re-packaging or delicate manipulation by the markets will set them straight.

It’s all still just bananas.

 - Mike Sullivan, 2012. 

Sometimes, what sporting people intend to say is not what they mean and what it means is no mean feat. Or something like that … just ask these American Football linguistic legends.

Chicago Cubs outfielder Andre Dawson on being a role model:
“I wan’ all dem kids to do what I do, to look up to me. I wan’ all the kids to copulate me.”

New Orleans Saint running back George Rogers when asked about the upcoming season:
“I want to rush for 1,000 or 1,500 yards, whichever comes first.”

And, upon hearing Joe Jacobi of the ’Skins say, “I’d run over my own mother to win the Super Bowl,” Matt Millen of the Raiders said,
“To win, I’d run over Joe’s Mom, too.”

Torrin Polk, University of Houston receiver, on his coach, John Jenkins: “He treats us like men.
He lets us wear earrings.”

Football commentator and former player Joe Theismann, 1996: “Nobody in football should be called a genius. A genius is a guy like Norman Einstein.”

Senior basketball player at the University of Pittsburgh: “I’m going to graduate on time, no matter how long it takes.”

Bill Peterson, a Florida State football coach: “You guys line up alphabetically by height.”
And, “You guys pair up in groups of three, and then line up in a circle.”

Boxing promoter Dan Duva on Mike Tyson going to prison: “Why would anyone expect him to come out smarter? He went to prison for three years, not Princeton.”

Stu Grimson, Chicago Blackhawks left wing, explaining why he keeps a colour photograph of himself above is locker: “That’s so when I forget how to spell my name, I can still find my clothes.”
Lou Duva, veteran boxing trainer, on the Spartan training regime of heavyweight Andrew Golota: “He’s a guy who gets up at six o’clock in the morning, regardless of what time it is.”

Chuck Nevitt, North Carolina State basketball player, explaining to coach Jim Valvano why he appeared nervous at practice: “My sister’s expecting a baby, and I don’t know if I’m going to be an uncle or an aunt.”

Frank Layden, Utah Jazz president, on a former player: “I told him, ‘Son, what is it with you? Is it ignorance or apathy?’ He said, ‘Coach, I don’t know and I don’t care.’”

Shelby Metcalf, basketball coach at Texas A&M, recounting what he told a player who received four Fs and one D: “Son, looks to me like you’re spending too much time on one subject.”

Amarillo High School and Oiler coach Bum Phillips when asked by Bob Costas why he takes his wife on all the road trips, Phillips responded: “Because she is too damn ugly to kiss good-bye.”

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