New York City
America's #1 landlord may be private equity giant Blackstone, but closing in rapidly is none other than America's very own arch nemesis and ascendent superpower, China. But while until recently China's grand ambitions on US multi-family housing had largely flown under the radar, the recent sale of the Waldorf Astoria to a Chinese company has finally put the US on "China is coming" alert... and reincarnated a lot of the same jokes that swept the country by storm in the mid-80s when it appeared Japan, itself nursing a massive asset bubble, would run over Manhattan (everyone knows how that ended).
"Did a few loose strands of Ebola seep into the organs and tissues of global finance last week? The US equity markets sure enough puked, the Nikkei bled out through its eyeballs, all the collagen melted out of Greek bonds, and treasuries bloated up grotesquely on a putrid stream of terrified “liquidity” that led two Federal Reserve proctologists to maunder about the possibility of a QE-4 laxative, out of which, in due time, will surely gush explosive bloody fluxes of deeper financial sickness."
The level of micro-management by the Fed appears to have reached a new shockingly high plateau. Recently prices have been driven more by liquidity, fear, greed, and Fed policy, than by valuation. It is time that the Fed stops being a source of interference and confusion. There are also two less obvious or less discussed economic reasons why the Obama administration may be urgently focusing more on the Ebola crises.
Regardless of the origins of the Ebola crisis, whether it be conspiracy or gross incompetence, there are a number of aspects to the entire situation which simply do not add up. While one would not argue that preparedness on the part of the federal government regarding a possible pandemic is a bad thing, its behavior thus far has exuded anything but preparedness. Considering America’s sordid history with national emergency exercises, the ongoing FEMA pandemic exercise cannot help but raise red flags.
"I see deflation flirting with America." Retail sales equals consumer spending equals velocity of money. And unless the money supply is rising, hardly likely in the taper, less spending is deflation by definition. Forget about PMI and all that kind of data, it’s much simpler than that. Central banks can do all kinds of stuff, but they can’t make us spend our money on things we don’t want or need. Let alone make us borrow to do so. And if we don’t, deflation is an inevitable fact. That doesn’t mean prices for some items won’t go up, but that’s not what counts. It’s about how fast we either spend the money we have – if we have any left – or how much we borrow. And if time is money, then borrowed money is borrowed time. So we really shouldn’t.
“The Census Bureau estimates that 30 percent of all apartments in the quadrant from 49th to 70th Streets between Fifth and Park are vacant at least ten months a year.” There is absolutely nothing healthy about this reality. When such a high percentage of properties are built solely to serve as bank accounts, and not a space to live in, you’ve got a severe case of malinvestment on your hands. If you are an oligarch and you didn’t see this coming, we don’t know what to tell you. The pied-à-terre tax is now on the agenda in New York City.
Another day, another HFT firm busted for manipulating the market. Today's participant: Athena Capital, which did what every other algorithmic, HFT firm does - rig the market of course, but at least it had a sense of humor about it: Athena called the market-rigging algorithm that "manipulated the closing prices of tens of thousands of stocks during the final seconds of almost every trading day during the Relevant Period" by the very amusing name "Gravy." But remember: HFTs are really your friend - they just provide liquidity and stuff.
Nanny State Can't Be Bothered Protecting Us from Ebola?
The fiat dollar harms us in many ways, but rising prices is the least of them. There is no limit to prices, but credit abuse can only continue so long, before the dollar fails.
President Obama: "Chance of Ebola outbreak in US 'extremely low'"
CDC Director Frieden: "I've been working in public health for 30 years... The only thing like this has been AIDS. And we have to work now so that this is not the world's next AIDS."
SOUTHCOM Commander: "The nightmare scenario, I think, is right around the corner."
In terms of purchasing power, China now has the largest economy on the entire planet, but that is not the only area where China has surpassed the United States. China also accounts for more total global trade than the U.S. does, China consumes more energy than the U.S. does, and China now manufactures more goods than the U.S. does. In other words, the era of American economic dominance is rapidly ending.
Holding the line of America's political leaders with regard the risk of an Ebola outbreak in the US, NY Mayor Bill de Blasio explained today "there is no cause for alarm." However, in his next breath, as Bloomberg reports, he announced that America's most-populous US city is increasing vigilance against the Ebola virus by involving every agency that interacts with the public. De Blasio called the meeting after the death yesterday in Dallas of Thomas Eric Duncan, "to make sure that if anyone does present themselves with symptoms, we have a clear protocol on how to handle the situation." Meanwhile, New Jersey Governor Chris Christie told reporters today in Trenton, "we're not ready at airports yet but we will be."
From an alarming increase in government seizure of private property under the guise of eminent domain, to blatant disregard for the property rights of bondholders during bailouts, the US has plunged to #36 in the world in respecting property rights (from 9th in 2005). The decline of economic freedom in the US has destroyed opportunities, growth, and wealth creation along with it. Is this as bad as Argentina, Equatorial Guinea, or Venezuela? No. But it’s not about where you’re at. It’s about where you’re going. And the trajectory is clearly negative.