Nothing can be a more pungent metaphor for today's investment climate than the headline, “Macau gambling revenue hits record $45 bn in 2013.”
"Rich Will Keep Getting Richer In 2014" - In 2013, Top 300 Billionaires Added Half A Trillion In Net WorthSubmitted by Tyler Durden on 01/02/2014 13:22 -0400
All the pundits who preach an economic recovery in the US always fall strangely silent when asked to share their thoughts on the following chart (taken from the St. Louis Fed), showing the annual change in real disposable income per capita in the US. What seems to stump them most is that aside from the 2012 year end aberration (due to accelerated distribution of dividends ahead of the 2013 tax hikes) is that in November the series finally posted its first Y/Y decline (-0.1%) since the Lehman collapse. But as the chart notes, the data is "per capita" and as everyone knows, under the New Normal, some "per capitas" are more equal than other "per capitas." Enter the billionaires. As Bloomberg summarizes, "The richest people on the planet got even richer in 2013, adding $524 billion to their collective net worth, according to the Bloomberg Billionaires Index, a daily ranking of the world’s 300 wealthiest individuals. The aggregate net worth of the world’s top billionaires stood at $3.7 trillion at the market close on Dec. 31, according to the ranking. "The rich will keep getting richer in 2014," John Catsimatidis, the billionaire founder of real estate and energy conglomerate Red Apple Group Inc., said in a telephone interview from his New York office.
Risk is an ever-present characteristic of life; it cannot be eliminated, it can only be masked or hedged. We know this intuitively, yet we blithely accept official assurances that risk can be eliminated by the monetary machinations of the Federal Reserve, the Central Bank of China, the Bank of Japan and the European Central Bank. To confuse masking risk with the elimination of risk is the acme of hubris and the perfect setup for disaster.
Many Ponzi schemes work for a while, but it is only a matter of time before the tide goes rolling out to Sea.
What would we do without Zero Hedge? Does anyone else notice the rapid deterioration of financial news media, especially in the US? OK, we are not naive, there are biases in the media, traders from big ibanks talking up their positions, and trading is all about information arbitrage. But financial news used to be really serious. Traders could turn on a TV to see what the markets were doing.
With still more than half the homeowners with a mortgage in the state of Nevada underwater on their mortage and a hoped for recovery in prices now petering out as 'investors' realize banks have completed foreclosures and are set to unload their huge inventories, fear is growing that Las Vegas (and for that matter Atlantic City) could be the next Detroit. However, as FoxNY reports, the nascent dreams of the good old days face an even bigger headwind - that of gambling regulation easements (online gambling for instance) and globalization which are impacting their biggest industries. Time will tell if these two cities will end up like Detroit.
"Step right up and try your luck...spin the wheel and watch where she lands...everybody's a winner" - sometimes if you listen hard enough you can almost hear the Carney coaxing unwary investors to step up and try their luck in a game that has been rigged against them. During the last two decades, we have been amazed to watch as individuals strolled through the doors of the Wall Street casino to try their luck by betting "against the house" for a dream of riches. Just as with anyone who has ever gone to Vegas - you will win sometimes but the "house" wins most of the time. However, there are always the "professional gamblers" that can do better than the average most of the time. Why? Because they understand "risk" in its various forms...
The so-called Volcker Rule for policing banking practices, approved by a huddle of federal regulating agency chiefs last week, is the latest joke that America has played on itself in what is becoming the greatest national self-punking exercise in world history. The Glass Steagall Act of 1933 was about 35 pages long, written in language that was precise, clear, and succinct. It worked for 66 years. The Volcker rule comes in the form of nearly 1,000 pages of incomprehensible legalese written with the “help” of lobbyist-lawyers furnished by the banks themselves. Does this strain your credulity? Well, this is the kind of nation we have become: anything goes and nothing matters. There really is no rule of law, just pretense.
- J.P. Morgan to Pay Over $1 Billion to Settle U.S. Criminal Probe Related to Madoff (WSJ)
- Ford board aims to pin down CEO Mulally's plans (Reuters)
- Raising Minimum Wage Is a Bad Way to Help People (BBG)
- Japan Lawmakers Demand Speedy Pension Reform (WSJ)
- EU reaches landmark deal on failed banks (FT)
- In which Hilsenrath repeats what we said in August: Fed Moves Toward New Tool for Setting Rates (WSJ)
- Senators Vow to Add to Iran Economic Sanctions in 2014 (BBG)
- Centerbridge in $3.3bn LightSquared bid (FT)
- Banks, Agencies Draw Battle Lines Over 'Volcker Rule' (WSJ)
- Wall Street Exhales as Volcker Rule Seen Sparing Market-Making (Bloomberg)
- GM to End Manufacturing Down Under, Citing Costs (WSJ)
- U.S. budget deal could usher in new era of cooperation (Reuters)
- Ukraine Police Back Off After Failing to Stop Protest (WSJ)
- First Walmart, now Costco misses (AP)
- Dan Fuss Joins Bill Gross Shunning Long-Term Debt Before Taper (BBG)
- China New Yuan Loans Higher Than Expected (WSJ)
- China bitcoin arbitrage ends as traders work around capital controls (Reuters)
- Blackstone’s Hilton Joins Ranks of Biggest Deal Paydays (BBG)
And so it is done (as we detailed here)... and due to be put in place as of April1st 2014 (rather ironically). The 100-plus-pages of rules and regulations prohibit two activities of banking entities: (i) engaging in proprietary trading; and (ii) owning, sponsoring, or having certain relationships with a hedge fund or private equity fund. But the kicker...
"requires banking entities to establish an internal compliance program designed to help ensure and monitor compliance with the prohibitions and restrictions of the statute and the final rule."
Great! Because self-regulation worked so well in the past for the financial services industry.
The too big to fail banks have a larger share of the U.S. banking industry than they have ever had before. So if having banks that were too big to fail was a "problem" back in 2008, what is it today? The total number of banks in the United States has fallen to a brand new all-time record low and that means that the health of the too big to fail banks is now more critical to our economy than ever. In 1985, there were more than 18,000 banks in the United States. Today, there are only 6,891 left, and that number continues to drop every single year. That means that more than 10,000 U.S. banks have gone out of existence since 1985. Meanwhile, the too big to fail banks just keep on getting even bigger.
Japan – Like the U.S. – Turns to Censorship
More than 100,000 protesters congregated at Democracy Monument in Bangkok yesterday to protest Thai PM Yingluck Shiniwatra’s consideration of an amnesty bill to pardon her banned brother Thaksin Shiniwatra, the former Thai PM ousted from the country in a 2006 coup.
- When it fails, do more of it - Bank of Japan hints at extending ultra-loose monetary policy (FT)
- PBOC Says No Longer in China’s Interest to Increase Reserves (BBG)
- Fed casts about for endgame on easy-money policy (Hilsenrath)
- Big trucks still rule Detroit in energy-conscious era (Reuters)
- Debt Limit Rise May Not Be Needed Until June, CBO Says (BBG)
- Some Insurance Regulators Turn Down White House Invitation (WSJ)
- Say Goodbye to the Car Salesman (WSJ)
- U.S. drone kills senior militant in Pakistani seminary (Reuters)
- French business sector contracts sharply (FT)
- How Germany's taxman used stolen data to squeeze Switzerland (Reuters)
- Fed casts about for endgame on easy-money policy (WSJ)
- France, Italy call for full-time Eurogroup chief (Reuters)