Posted by Peter on 06/05/2020

How are we going to repay all this debt?

The world is already drowning in debt and governments are now borrowing and spending as if there is no tomorrow. The amount of money being spent is eye-watering. Where is it coming from and how are we (or more likely future generations) going to repay it?

The Institute of International Finance calculate that global debt at the end of 2019 was US$255 trillion (that’s 12 zeros). Global debt increased by US$3.3 trillion in 2018 and by US$10.8 trillion in 2019. 2020 will dwarf these figures. Global debt is now US$87 trillion higher than it was before the 2008 financial crisis. The world has simply been flooded with cheap money and this, in part, is the reason for stock markets climbing to record highs.

Household debt has been no exception, it has grown from US$35 trillion in 2007 to US$48 trillion at the end of 2019. Most of this has been in the developed world where households have used cheap money to fund extravagant lifestyles. Household debt – mortgages, auto loans, credit card and student debt – in the USA stood at US$14.15 trillion at the end of 2019. Switzerland has the world’s largest household debt to GDP (basically everything the country produces in a year), with Australia a close second. Australian household debt is now 120% of GDP.

How did you go bankrupt?” Bill asked. “Two ways,” Mike said. “Gradually and then suddenly.” The dialogue is from Ernest Hemingway’s 1926 novel, The Sun Also Rises. I fear there are many around the world who are just about to enter the ‘suddenly’ phase of going bankrupt. At some point the piper has to be paid.

As the Covid-19 crisis has unfolded, governments have tried to solve the resulting financial crisis by throwing huge amounts of money at the problem. In March and April the USA spent US$2.8 trillion on numerous stimulus packages and there is already talk of another. The US Treasury Department said it would borrow US$2.99 trillion (from who?) between April and June to deal with the fallout from Covid-19. This is more than it would normally borrow in a year. Government debt for the USA is nearly US$25 trillion.

The IMF has stated that it “stands ready to mobilize its US$1 trillion lending capacity to help [its] membership.” Most governments have introduced similar measures. Some countries will be better placed than others but it is safe to assume that no-one had billions of dollars tucked away for such an emergency – unless of course those countries that have healthy Sovereign Wealth Funds decide to raid them.

In addition to governments borrowing and spending (or simply printing new money), their incomes have been decimated. Consumption is down and with it VAT revenues, jobs have been lost at an alarming rate affecting payroll taxes and company profits have been hard hit with the resultant loss in tax payable. A major source of income – tax on fuel – has also been badly affected. The full effect of the loss of income to governments will only be known in the months to come. Those countries that rely heavily on oil for their revenues will be severely affected. As the world placed itself in a coma so the demand for oil dried up. Those countries that rely heavily on tourism and immigration (like Australia and New Zealand) will also be severely affected.

The reasons for governments doing what they have done have been debated and discussed at length. It has been about saving lives. But at what cost?

I recently came across an open letter from the CEO of PSG Group, Piet Mouton, to President Cyril Ramaphosa in South Africa titled ‘Silence is no longer an option. He makes some very valid points that apply not only to South Africa, but the world in general.

To put PSG Group into perspective, their 2019 Annual Report notes, “Our market capitalisation (net of treasury shares) is approximately [ZAR] R57bn, [US$3bn] while we have strategic influence over companies with a combined market capitalisation of approximately [ZAR] R212bn. [US$11.2bn] I have over the years interviewed many of the senior staff of the Group and have the highest respect for them as a company.

Mouton states that South Africa does not have ‘the luxury’ or remaining in lockdown and that the only viable alternative is “a continued lockdown of the elderly and frail until the virus is contained or a vaccine becomes available, while the economy operates as close to normal as possible.

He makes the point that he is “… NOT arguing economy over lives. BUT the truth is that lives are inextricably linked to the economy. Our survival and wellbeing depend on whether and how quickly our economy recovers.

President Donald Trump (of whom I am not a fan) made the point, “We can’t have the cure be worse than the problem,” He later tweeted, “We have to open our country because that causes problems that, in my opinion, could be far bigger problems.” He was no doubt referring to the economy and the possibility of a depression – I think everyone agrees that a worldwide recession is a foregone conclusion.

It is a very difficult situation. On the one hand we have hundreds of thousands of people dying but on the other hand we have tens of millions of people who have lost their jobs (and their ability to look after their families); many millions in poorer third world countries will starve; millions will go bankrupt and future generations will take decades to pay off the debt we are now incurring. We cannot keep the world locked up for much longer without a real risk the whole system will collapse.

There is a clear link between unemployment and suicide. In February 2015 the World Economic Forum dealt with this in an article titled ‘The link between unemployment and suicide’. The article dealt with a study carried out by Carlos Nordt and colleagues from the University of Zurich which explored the link between increases in rates of unemployment and suicide.

The study “attribute[s] 45,000 – or one in five – suicides a year worldwide to unemployment, with a further 5,000 deaths caused by the economic crisis.” They noted “There were an estimated 233,000 suicides a year between 2000-11, of which around 45,000 could be attributed to unemployment. In 2007, the year before the crash, there were 41,148 identified cases of suicide. In 2009, this number had risen to 46,131 – an increase of 4,983 or 12%”

On 19 March 2020 the International Labour Organization ( noted, “Initial ILO estimates point to a significant rise in unemployment and underemployment in the wake of the virus. Based on different scenarios for the impact of COVID-19 on global GDP growth, preliminary ILO estimates indicate a rise in global unemployment of between 5.3 million (“low” scenario) and 24.7 million (“high” scenario) from a base level of 188 million in 2019. The “mid” scenario suggests an increase of 13 million (7.4 million in high-income countries).” I think it is clear they vastly under-estimated the extent of the problem.

CNBC ( on 30 March 2020 noted “The coronavirus economic freeze could cost 47 million [American] jobs and send the unemployment rate past 32%, according to St. Louis Fed projections.” and, “There are nearly 67 million Americans working in jobs that are at a high risk of layoffs, according to the analysis.

By 23 April 2020, 26.5 million Americans had registered for unemployment benefits. For the week ending 23 April 2020, 4.4 million Americans registered for unemployment benefits – the weekly average prior to the Covid-19 crisis was 210 000. It is no different elsewhere in the world.

Many developed country governments are now paying companies to keep their employees on their payrolls. They cannot do so for an extended period.

A continued lockdown of the world will result in a significant increase in suicides over the next few years in addition to all the other issues.

Mouton’s comment that South Africa does not have ‘the luxury’ of remaining in lockdown applies to the world. He is, in my opinion, absolutely right when he says that the only viable alternative is “a continued lockdown of the elderly and frail until the virus is contained or a vaccine becomes available, while the economy operates as close to normal as possible.” We have to find some way to protect the elderly and the vulnerable but also allow businesses to open and the economy to return to some measure of normality.

Right now we need bold leaders who can come up with creative solutions. Simply trying to go back to a pre-Covid-19 world is not an option. As to who is going to pay for all this debt that we are creating, I hope that future generations will not judge us too harshly.

Posted by Peter on 29/04/2020

A nasty little virus!

Virus: A micro-organism that is smaller than a bacterium that cannot grow or reproduce apart from a living cell. A virus invades living cells and uses their chemical machinery to keep itself alive and to replicate itself. ( This Covid-19 virus simply sees the human race as “chemical machinery to keep itself alive and replicate itself”.

Who would ever have thought that something so small could be so deadly and wreak so much havoc on the world. It certainly has turned our world upside down.

We had hoped to be sailing from Wyee to Airlie Beach now to spend winter in Queensland. We are however stuck here for the foreseeable future in partial lockdown. There are worse places to be in lockdown. The numbers in Australia are really good even though we are only in a partial lockdown. At the time of writing this Australia has 6 747 Covid-19 cases and 89 deaths.

In anticipation of the trip to Airlie Beach I put a post on the Crew Finder website looking for crew to help us get the boat to Airlie Beach. As the crisis developed we have been swamped with offers to crew. All of them had one thing is common, they were really just looking for somewhere to stay. We have had to withdraw the post. We even had two Americans offer us money to get them to one of the Pacific Islands.

We are in lockdown in our on-site caravan in Jasmine Lakside Village. We are fortunate, we can still go to the local shopping centre to do shopping and we can move around the park quite freely subject to the social-distancing requirements.

We still need to do some essential repairs to the boat and have permission from the Australian Police to go to the boat to do the necessary repairs.

Being in partial lockdown has given me some time to reflect on where we are and where we are going. There is no doubt that the world is in serious trouble and it is going to be a very long time before we go back to the way we were. That is of course assuming that the world financial system doesn’t collapse. Right now the world leaders are trying to buy us out of this financial problem but I somehow doubt that we, as a society, have enough money to buy our way out of this. The numbers being thrown around are simply staggering and I have no idea where all this money is coming from.

I somehow suspect the governments are simply printing money and we know how this worked out for Zimbabwe. Time will tell how this ends. The markets are extremely volatile but it seems to me the current volatility is all sentiment, we will have to wait to see what effect the lockdowns around the world are having on companies earnings. My personal view is that there are many companies who will not survive. Those individuals and companies that have survived the past few years on the back of cheap credit will find the next few months very difficult.

I have a great deal of sympathy for those who have spent many years building their business only to have it all fall apart now through no fault of their own. I remember only too well the sacrifices I made to build my businesses. 

I sold my last business just over 10 years ago and have spent the last 10 years traveling and seeing the world. Many of my peers have spent the last 10 years building their businesses at great sacrifice only to now see the business fall apart. Life is about choices I guess. I have paid a price for the last 10 years of freedom but given where we are right now I am certainly glad I made the choices I did 10 years ago.

There is no doubt that the world leaders will have to open their countries up again – the world simply cannot stay in lockdown much longer without a real risk of everything collapsing. There will however be a price to pay for doing so. They are going to have to make some very difficult decisions.

Our on-site caravan is fairly small and was designed as a holiday home, not ideal for a lockdown. We have converted the carport into an outdoor area so that we can spend time outside and have a little more space to live in.

The Australian government have been really good at providing support to their citizens and residents but have made it very clear that they will only support Australian citizens and residents – an “Australia first” approach. The are hundreds of thousands of New Zealanders and foreign students who are in dire straits but who do not qualify for support from the Australian government. Given that the borders are now closed they cannot go home even if they wanted to. I am not sure how they are going to cope in the next few months.

There are difficult times ahead.

Posted by Peter on 28/02/2020

Back to Maintenance

With the Cordalga trip now just a distant memory and a few trips to New Zealand since the trip, it is now time to seriously think about getting Great Escape somewhere warm for the winter that is fast approaching.

There are still however a few repairs that need to be done before we can leave. The last thing we want is a repeat of the Adelaide to Wyee trip. That trip saw us fixing something every time we stopped. Glenn had a similar experience with the Cordalga trip. We want to enjoy the trip and that means getting all the outstanding maintenance sorted out before we leave.

One of the things that needs to be fixed is the windows in the aft cabin. We did know one of the windows was a problem (the previous owner has simply applied a layer of what looked like glue to seal the window) and while living on the boat, the perspex in the other window came loose and popped out of the frame. They would both have to be resealed. This is not our favourite job, it requires getting rid of all the previous sealant and applying a new layer of Fix 15 – our preferred sealant.

It takes hours to properly clean the frames.

We have learnt the hard way that it is best to tape up every area where you don’t want Fix 15 – the specification sheet states that once it has dried the only way to remove it is through ‘mechanical removal’ – what they really mean is that you have to remove it with great difficulty.

And then the messy business of applying the sealant and getting rid of all the excess sealant.

It is for us a 2 day job but well worth it.

While doing this job we had a really bad storm and discovered that the hatch in the aft cabin is also leaking. It will also have to be resealed. Better now than after we leave.

Posted by Peter on 12/10/2019

Delivering Cordalga – Peter says Goodbye

Saturday dawned overcast and the weather forecast was for rain and thunderstorms. It would be Peter’s last day on Cordalga, he had other commitments and needed to get home. Geoff had planned to leave the Gold Coast but with the weather the way it was, Cordalga couldn’t go anywhere.

Before leaving a good friend, Debbie, invited us around for dinner. It was a great evening with much laughter, good food and good wine. Thanks for having us Debbie!

The trip so far in numbers:

Days since departure: 18

Distance covered: 873 NM

Total time: 129 Hours

Overnight passages: 2

Before Peter left he did take a picture of his next boat. He is off to start a GoFundMe page to pay for it.

Thanks Geoff and Glenn for letting me be part of this adventure!

Posted by Peter on 11/10/2019

Delivering Cordalga – Ballina to the Gold Coast

“Okay, Houston, we’ve had a problem here.”  These are the actual words used by Jack Swigert during the Apollo 13 spaceflight. Hollywood changed them to the now popular ‘Houston, we have a problem’ for the movie. We too can now say ‘We’ve had a problem here’. Another one.

The weather on Tuesday was anything but ideal for a journey out at sea and Cordalga remained firmly tied up to the public boardwalk outside the RSL for the day. During the course of the afternoon Geoff descended into the black hole to do the normal pre-trip checks during the course of which he attempted to start the engine. You did notice the use of the word ‘attempted’. For some or other reason the batteries were dead. It didn’t make sense. Everything had been fine the day before and the batteries had never given any trouble. A flurry of calls ensued between Geoff and Glenn and Glenn arranged for an electrician to come and look at the problem.

The electrician’s view was that many of the leads were old and corroded and needed to be replaced. New parts were made and fitted and we spent a few hours cruising up and down the river charging the batteries. I’m sure some of locals thought we were lost as we cruised up and down going nowhere in particular.

The plan was for an early start on Thursday – up at 03H30 for a 04H30 departure. Once the obligatory early morning coffees had been consumed, Geoff attempted to start the engine – yes, there it is, the ‘attempted’ word again. Zero, zilch, zip, nada, nothing! The batteries were again dead. Geoff tried a few things but eventually gave up and it was back to bed. I’m sure the electrician would have been unimpressed if we had called him at that time in the morning.

The electrician was back on the boat by 08H00 and got the motor going. There was a technical explanation for what had happened but it went way over our heads. And so, by 09H00 we were on our way again. Headed for the Gold Coast.

The bar crossing proved to be an interesting experience. There were some waves breaking over the bar and as we powered through the water Cordalga’s bow would soar high into the air and you just know what goes up must come down – and it did with a great deal of force. Everything that wasn’t firmly bolted down in the wheelhouse went flying in all directions and there were a few tense minutes as we powered through the breaking waves. Geoff made the comment, ‘we may not be laughing at these conditions but Cordalga is, she spent most of her life in Bass Straight and has dealt with much worse’. Sure enough, she never missed a beat and we cleared the bar and then tidied up the wheelhouse. The Skipper even had to change – he was standing in the doorway when a wave came crashing over and gave him an unexpected shower.

The wind and swell on the trip to the Gold coast were from the south which meant that we had a following sea which was great. For most of the journey we were at over 7 knots. We had thought we might arrive at the Gold Coast at about 22H00 but by 18H00 we were tied up to a swing mooring and enjoying the scenery. We had covered 75 nautical miles in 10 hours. For those who don’t know, a nautical mile is based on the circumference of the earth, and is equal to one minute of latitude. A nautical mile is 1.852 km.

On Friday morning we booked a pen at the Southport Yacht Club to do some laundry and general housekeeping.