Category Archives: Business

Here’s why the wealthiest city in America is screwed, by Simon Black

New York City used to be synonymous with wealth and opulence. Not any more if it keeps demonizing wealth and promoting socialism. From Simon Black at sovereignman.com:

Last month, Chicago hedge fund billionaire Ken Griffin spent $238 million on a condo in New York City.

It was the most expensive home ever sold in the US (but only one piece of Griffin’s massive, luxury real estate portfolio).

Good for Ken… he’s incredibly wealthy and can spend his money however he wants. But most of society hates this kind of behavior.

Even if a guy has earned $10 billion through hard work and ingenuity, they don’t believe he can spend it freely… and those feelings have only been growing recently with the widening wealth gap and the rising, leftist presidential contenders.

And New York City is gunning for Griffin…

He’ll no doubt pay millions of dollars a year in real estate taxes and employ a team of people just to manage that property… and his investment firm, Citadel, has an office in NYC employing hundreds of people.

But NYC wants more, specifically for Griffin to pay more tax to fund the city’s affordable housing program.

Griffin’s purchase was the perfect backdrop for the government to bring up the “pied-a-terre tax”… the proposed tax would be up to 4% per year for people who own properties above $5 million in NYC but don’t permanently reside there.

So Griffin would be out an extra $9 million a year (on top of the 1% mansion tax New Yorkers already pay on home purchases above $1 million – mind you, $1 million in New York gets you a few hundred square feet)… and normal real estate taxes.

It’s an all-out war on the rich in New York… because the city (and state) are broke.

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The New American Nightmare, by Doug Casey

Americans have to come to terms with the fact that they are living in a country run by sociopaths. From Doug Casey at internationalman.com:

An International Man lives and does business wherever he finds conditions most advantageous, regardless of arbitrary borders. He’s diversified globally, with passports from multiple countries, assets in several jurisdictions, and his residence in yet another. He doesn’t depend absolutely on any country and regards all of them as competitors for his capital and expertise.

Living as an international man has always been an interesting possibility. But few Americans opted for it, since the U.S. used to reward those who settled in and put down roots. In fact, it rewarded them better than any other country in the world, so there was no pressing reason to become an international man.

Things change, however, and being rooted like a plant – at least if you have a choice – is a suboptimal strategy if you wish to not only survive, but prosper. Throughout history, almost every place has at some point become dangerous for those who were stuck there. It may be America’s turn.

For those who can take up the life of an international man, it’s no longer just an interesting lifestyle decision. It has become, at a minimum, an asset saver, and it could be a lifesaver. That said, I understand the hesitation you may feel about taking action; pulling up one’s roots (or at least grafting some of them to a new location) can be almost as traumatic to a man as to a vegetable.

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The Corporate Lemmings Who Rushed into Mobile/Social Media Ads Are Running off the Cliff, by Charles Hugh Smith

Click bots don’t buy anything, as many advertisers are finding out. From Charles Hugh Smith at oftwominds.com:

Now the corporate lemmings have rushed into mobile advertising.
Given that corporations are run by people, and people are social animals that run in herds, it shouldn’t surprise us that corporations follow the herd, too.Take the herd move to forming conglomerates in the go-go late 1960s: corporations suddenly started buying companies in completely different sectors in businesses they knew nothing about, because the herd was forming conglomerates–not because it made any business sense but because it was the hot trend.
Oil companies bought Hollywood studios, and so on. (Ling-Temco-Vought was one of the conglomerates whose success inspired the herd.)
Few if any of the conglomerates hastily assembled in the 1960s survived the 1970s intact. Once the lemming-like frenzy to assemble conglomerates wore off, managers discovered the conglomerates were mostly financial disasters: rarely did the expected synergies or economies of scale emerge, and inexperienced, tone-deaf hubris-soaked corporate managers often destroyed the acquired companies through ill-advised strategies or acquisitions.
In many cases, success was ephemeral: once the economy slumped, growth reversed and debt-laden conglomerates were forced to liquidate, often at a loss.
The dissolution of the conglomerate herd mentality set up the early 1980s frenzy of leveraged buy-outs as predatory financiers staked out the remaining carcasses of flailing conglomerates, bought the conglomerate and profited by selling off its constituent companies piecemeal. The stripped entity was then loaded with debt and sold to the public as an initial public offering (IPO).
Fast-forward to the late 1990s and early 2000s, when the corporate herd was offshoring production to east Asia. On one of my trips to China in the early 2000s, I sat next to a youthful corporate manager in the semiconductor equipment sector. The flight being long (10-11 hours), we were able to have an in-depth conversation about his company’s dismal experience with offshoring production from the U.S. to China and other nascent manufacturing hubs in east Asia.

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Energy Dominance Isn’t Just a Trump Obsession, by Tom Luongo

The world jockeys for oil. From Tom Luongo at tomluongo.me:

Energy Dominance should be the catchphrase of the day. It’s on the minds of every political figure, and the focus of every economy.

This is especially true of those vulnerable to a change in the status quo, namely Saudi Arabia.

While some continue to believe the gyrations of the oil market over the past few months are evidence of our running up against the limit of the petroleum based global economy, I disagree.

The world is awash in decades of easily-extracted oil and gas. The supply of it has been kept off the market due to its centrality in the grand game of geopolitics. But, it has nothing to do with the amount of oil and gas out there.

Peak oil has become a religion among its adherents. Decrying the U.S. shale boom, rightly, for its profligacy has more to do with it being a consequence of disastrous central bank inflation rather than some grand plan of the ‘cabal’ because we passed peak EROEI some time ago.

When you drop interest rates to zero and flood the world with liquidity that can only find a home in equity markets, the natural result is malinvestment into unsustainable business practices.

The first wave of the shale boom in the U.S. occurred during this period and created the dynamic we have today. It’s groundwork was laid when oil prices spiked during Greenspan’s post-9/11 reflation and the Iraq War took a lot of marginal supply off the table.

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Journalism Isn’t Dying, It’s Returning to its Roots, by Antonio Garcia Martinez

In the good old days, nobody pretended journalists were objective. From Antonio Garcia Martinez at wired.com:

THE PAST FEW weeks have brought bad news to the hardworking scribes of the news business. Three leading digital outlets—BuzzFeed, the Huffington Post, and Vice—announced layoffs that left many accomplished journalists unemployed. The fingers of blame quickly pointed to the great bogeymen of our media age—Facebook and Google—and warned about a threat to democracy. After all, if the most savvy and avant-garde of the new digital journalists can’t make a living, what hope is there for old-school newspapers? To many, the health of our democracy is inextricably tied to the health of our journalism: If the latter begins to die, the former must immediately follow.

That’s a curious sentiment, because if you were to magically teleport the architects of our democracy—men like Ben Franklin or Samuel Adams (newspapermen, both of them)—to today, they’d find our journalistic ecosystem, with its fact-checked both-sides-ism and claims to “objectivity,” completely unrecognizable. Franklin wrote under at least a dozen pseudonyms, including such gems as Silence Dogood and Alice Addertongue, and pioneered the placement of advertising next to content. Adams (aka Vindex the Avenger, Philo Patriae, et al.) was editor of the rabidly anti-British Boston Gazette and also helped organize the Boston Tea Party, when activists dumped tea into Boston Harbor rather than pay tax on it. Adams duly covered the big event the next day with absolute aplomb. They’d have no notion of journalistic “objectivity,” and would find the entire undertaking futile (and likely unprofitable, but more on that soon).

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Brexit Iceberg, Dead Ahead, by Tom Luongo

The Eurocrats and British Remainers are dancing on the deck of the Titanic. From Tom Luongo at tomluongo.me:

This is the attitude of those opposed to it. Any real separation of the U.K. from the European Union would result in a catastrophe which knows no bounds.

They have ratcheted up Project Fear to the point now of saying there will be food shortages and permanent supply problems for fresh fruit if a hard Brexit occurs.

Things like this defy all reason. They are based on the stupidest interpretation of how humans react to changing situations. It is like saying the only potential suppliers for the U.K. of certain fruits and vegetables are those from the European Union.

Because people don’t respond to incentives and there aren’t other suppliers ready to take up the slack if the Eurocrats keep their panties in a twist over this.

Parliamentary Deck Chairs

And yet, after another major session of Parliament in which Remainers were supposed to scuttle the entire process we see Brexit moving steadily towards its obvious conclusion.

The six amendments which were on the table yesterday ranged from virtue signaling about not wanting a No-Deal Brexit to parliament wresting control of the law-making process from the Government, over-turning nearly 40 years of tradition.

Four of them, all of the terrible ones, failed.

Because what finally happened is that these corrupt and venal MP’s finally ran up against the reality that they hold what power they have at the pleasure of the people they represent.

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The “Working Rich” Are Not Like You and Me–or the Oligarchs, by Charles Hugh Smith

Charles Hugh Smith’s hypothesis about income inequality is probably all wet, but he makes some good points about the working rich, wealth, and taxes in the US. From Smith at oftwominds.com:

Rising income inequality may be a reflection of the changing nature of work.

F. Scott Fitzgerald’s story The Rich Boy included this famous line: “Let me tell you about the very rich. They are different from you and me.” According to a recent paper published by the National Bureau of Economic Research (NBER), Capitalists in the Twenty-First Century (abstract only), the “working rich” are different from you and me, and from the Oligarchs above them who pay little in U.S. income taxes due to offshore tax havens and philanthro-capitalist tax avoidance scams.

Before we start complaining about the rich not paying their fair share, let’s note that the top 3% of taxpayers–mostly “working rich”– pay more than 50% of all income taxes. The latest available IRS data is from the 2016 tax year, as reported by Bloomberg: Top 3% of U.S. Taxpayers Paid Majority of Income Tax in 2016.

The top 1% paid 37% of all income tax collected,the top 5% paid almost 60% and the top 10% paid about 70%. What’s striking is the progressive nature of taxes compared to the income of each bracket: the top 1% earned about 20% of total income but paid 37% of the income tax, the top 5% earned 35% and paid almost 60% of the income tax and the top 10% earned 46% of the income and paid 70% of the tax.

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