Indiana

Whenever the beltway bandits run low on excuses to run-up the national debt they trot out florid tales of crumbling infrastructure - that is, dilapidated roads, collapsing bridges, failing water and sewer systems, inadequate rail and public transit and the rest. This is variously alleged to represent a national disgrace, an impediment to economic growth and a sensible opportunity for fiscal “stimulus”. But most especially it presents a swell opportunity for Washington to create millions of “jobs”. One thing is clear. There is no case for adding to our staggering $17 trillion national debt in order to replace the bridges of Madison county; or to fix state and local highways or build white elephant high speed rail systems; or to relieve air travelers of paying user fees to upgrade local airports or local taxpayers of their obligation to pay fees and taxes to maintain their water and sewer systems. At the end of the day, the ballyhooed national infrastructure crisis is a beltway racket of the first order. It has been for decades.

One of the most consistent debates emanating out of Washington in the past 6 years has been that dealing with income tax. Whether high, low, "fair" or "unfair", said discussions, however, focus solely on tax paid at the Federal level, and largely ignore that "other" key tax: state. Which is surprising, considering some states such as California demand a total contribution amounting to a third of the highest marginal Federal tax bracket, which could make some wonder if those bracing sea breezes are really worth it. But what about the other states? Here is the full breakdown of the states with the top income tax rates, those with the lowest, and all the states inbetween.

The market may still be amused by Amazon's latest forward P/E boosting gimmick in the form of its entertaining (and stock price boosting if only briefly) proposal to deliver packages (some of which haven't even been ordered) by drone, but some US towns, tired of this endless invasion of just in time violators, are already taking aim at the messenger. Case in point: Deer Trail, Colorado, a city of 563, which Bloomberg reports, may approve today a measure that allows the town to issue hunting licenses for unmanned aerial vehicles, i.e., drones. Apparently some luddites people still place civil rights over the potential of bottom line profits achieved through increasingly more intrusive technology. People like Phillip Steel, a 49-year-old welding inspector, who wrote the proposed law as a symbolic protest after hearing a radio news report that the federal government is drafting a plan to integrate drones into civilian airspace, he said. The measure sets a bounty of as much as $100 for a drone with U.S. government markings, although anyone who shoots at one could be subject to criminal or civil liability, according to the Federal Aviation Administration.

"Either way you look at it, it's time for the Fed to stop inflating housing assets, and stop buying mortgages" is how Alex Pollock introduces the following live streamed event by AEI. With speakers such as Chris Whalen we suspect, as the moderator explains, they will explain why "financial markets never seem to grow smarter when it comes to real estate."

In what many thought was a miracle of modern money-printing-driven yield-chasing, Puerto Rico managed to get $3.5 billion of bonds off last week with no problem (albeit at a 8.73% yield). The issue (while perhaps not as surprising as the low yield issues of Uganda we have reflected on previously) raised some eyebrows and in the trading since its release, FINRA noticed something concerning.  The bonds, as Bloomberg reports, are supposed to 'minimum denomination $100,000' blocks and yet 75 trades this week have been for no more than $25,000 violating regulations which deem these for "institutional purchasers" and strongly suggesting the heavy hedge fund demand was nothing more than a pump-and-dump scheme to unsophisticated retail investors. PR bonds have plunged from par to $92 this week.

When Arthur Levitt's SEC adopted Rule 2a-7 in 1998, it handed the TBTF banks and GSEs a mortgage monopoly on a silver platter.  

Would you like to buy a house for one dollar? If someone came up to you on the street and asked you that question, you would probably respond by saying that it sounds too good to be true. But this is actually happening in economically-depressed cities all over America. Of course there are a number of reasons why you might want to think twice before buying any of these homes...

Most are aware of Alan Greenspan’s 1966 essay - written when he was an acolyte of Ayn Rand - in which he sang the praises of the gold standard. Obviously, that early work would later prove awkward for Greenspan, as he held the reins of the fiat money engine known as the Federal Reserve. However, a reporter for Barron's unearthed a copy of Greenspan’s NYU doctoral dissertation, which he took great pains to bury, showing that when his professional ambition wasn’t involved, Greenspan could understand perfectly well  (a) the virtues of a commodity money and (b) the dangers of a housing bubble. If the Austrians are right in laying the blame for the housing bubble on Greenspan’s loose monetary policy following the dot-com crash, then Greenspan can’t plead ignorance: He knew what he was doing.

Now that even Bridgewater has joined the Twitter craze and is using user-generated content for real-time economic modelling, and who knows what else, the scramble to determine who has the most market-moving, and actionable, Twitter stream is on. Because with HFT algos having camped out at all the usual newswire sources: Bloomberg, Reuters, Dow Jones, etc. the scramble to find a "content edge" for market moving information has never been higher. However, that opens up a far trickier question: whose information on the fastest growing social network, one which many say may surpass Bloomberg in terms of news propagation and functionality, is credible and by implication: whose is not? Indeed, that is the $64K question. Luckily, there is an algo for that.

The economist Herbert Stein once said that if something can't go on forever, it will stop. The pattern of the last few decades, in which higher education costs grew much faster than incomes, with the difference made up by borrowing, can't go on forever... There is no point in trying to preserve the old regime as "working your way through college" is now impossible. For an 18-year-old, investing such a six-figure sum in an education without a payoff makes no more sense than buying a Ferrari on credit.

The St. Joseph Lighthouse on North Pier, Lake Michigan, on Jan. 6, 2014; Photographer: HotSpot/Landov

As more and more amateurs have piled into Twitter, the data stream has been subject to the "Yahoo Finance effect" - there is far too much noise, and not nearly enough actionable signal, especially when one tries to strip away the bias behind any given message (see "Trading Twitter: Where Noise Becomes Signal"). Yet one entity that appears to have found significant functionality in Twitter is none other than the world's biggest hedge fund: Bridgewater.

As an experiment, Bloomberg Businessweek typed the names of the 50 states into Google to see what people most frequently ask about them. The questions range from dumb (well, mostly dumb) to revealing, both about the states and about the people doing the searching. Lots of questions about carrying a gun, buying alcohol, getting divorced, and fighting union organizers. Whether a state is in the Midwest or South seems to be a particular obsession. But the most common question about the states is even more basic: Is it a state? or Is it racist?

Obamacare's health exchanges opened on October 1. Hopefully you weren't one of the unlucky guinea pigs who attempted to sign up with a system so crummy that even the Washington Post is calling it a disaster. It's been clear to anyone paying attention that the October "rollout" of Obamacare has been a turbulent, confusing mess. Sloppy IT systems and technological failures combined to cripple Obamacare's sign-up systems. Security flaws put Americans at risk for identity theft. Like a parasite taking over its host, Obamacare will commandeer almost 20% of our economy, crowding out private options. With 2014 fast approaching, what should we expect in its next phase?

Over two years after Zero Hedge first accused Goldman and JPMorgan of becoming monopolists in the commodity warehousing business (see "Goldman, JP Morgan Have Now Become A Commodity Cartel"), and two weeks after the NYT's reminder the world of just this leading to the latest Kangaroo Court congressional hearing on the matter, which may or may not have resulted in JPMorgan announcing it would exit the physical commodities business, the long overdue legal fight began this Friday when lead plaintiff Superior Extrusion sued Goldman and London Metal Exchange owner HKEx for engaging in "anticompetitive and monopolistic behaviour in the warehousing market in connection with aluminium prices" and accusing the firms of violating the Sherman anti-trust act. Precisely what Zero Hedge said, some 26 months ago.