Tag: news

Are *You* Worth Double Your Salary? Nick Gillespie on Fast-Food Wage Strikes

Last Thursday, writes
Nick Gillespie, protesters in over 100 cities stood outside of
fast-food joints and called for doubling the wages of burger
flippers and fry-vat operators from $7.25 an hour (the current
federal minimum) to at least $15.

Regardless of how much solidarity or sympathy you might feel
about the people who assemble your Triple Steak Stack or
your Cheesy Gordita Crunch, this sort of demand is economic
fantasy at its most delusional and counterproductive. Doubling the
wages of low-skilled workers during a period of prolonged
joblessness is a surefire way not just to swell the ranks of the
reserve army of the unemployed but to increase automation at your
local Taco Bell.

If you’re reading this on the job, take a look around and ask
yourself if your workplace could soak up twice
its labor costs without seriously trimming the number of employees.
While you’re at it, ask yourself if you’re worth
twice your current salary.

View this article.

from Hit & Run http://reason.com/blog/2013/12/08/are-you-worth-double-your-salary-nick-gi
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Philadelphia Police Reviving Practice of Transporting Suspects Recklessly in “Nickel Rides,” Lawsuits Allege

no such thing as a free rideReporting by the Philadelphia
Inquirer in 2001 about so-called “nickel rides,” the practice
of Philadelphia police throwing suspects into police vans without
any seatbelts or other restraints and then driving recklessly with
the intent to cause suspects harm,
led at the time to an internal investigation by the police
department and a promise to quit it. The term “nickel ride” comes
from a time when amusement rides cost a nickel, and the practice is
apparently as old.

The Inquirer noted that these rides led to “massive
civil settlements,” including one case in which a man who alleged
he was paralyzed during a “nickel ride” was paid out $1.2 million.
Twelve years later, the Inquirer
reports the practice may still be alive and well, focusing on
three recent lawsuits alleging injury from police van rides,
including one that began with an altercation between an off-duty
cop and the subsequently injured victim.
Via the Inquirer:

[Officer James] O’Shea was off duty and in plainclothes
at the time. He says he was forced to subdue [James] McKenna and
arrest him after McKenna punched a bartender in a Center City
tavern.

“He was highly intoxicated and highly aggressive,” O’Shea said in
an interview.

McKenna denies hitting a bartender. He said the incident began
after he saw a woman he knew at the bar and sent her and a friend a
drink. When the women refused the drinks, McKenna said he went over
to ask why.

At that point, he said, O’Shea flashed his badge and told him to
leave. As he started to walk away, McKenna said, the officer jumped
him from behind.

O’Shea summoned police and they arrived in an emergency patrol
wagon.

“F- this guy up,” McKenna said O’Shea told his fellow
officers.

O’Shea denied that. “That’s completely false, 100 percent,” he
said.

Handcuffed, McKenna was put in the back of a police wagon. He said
he wasn’t strapped in.

He said the van took off, taking turns at high speeds, then braking
suddenly, throwing him from the seat and to the floor.

McKenna was charged with simple assault, a misdemeanor. At a trial,
the bartender testified that McKenna had struck him, but McKenna
said he had not seen the bartender that night. The judge found
McKenna not guilty.

McKenna withdrew his lawsuit last year when his attorney dropped
out after McKenna’s neck surgeon said he planned to testify it was
possible for McKenna to have injured himself. McKenna tells the
Inquirer he wants to refile his lawsuit, asking “”What if
I’d broke an officer’s neck?” Read the rest of the
Inquirer article, which includes the story of one suspect
who died two weeks after allegedly being taken on a “nickel ride,”

here. Philadelphia’s police commissioner, who
previously invited the FBI to review his department’s use of
deadly force, did not offer the newspaper any comment.

from Hit & Run http://reason.com/blog/2013/12/08/philadelphia-police-reviving-practice-of
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The 1% Also Don't Pay Their Bills: 10 Ultra Luxury Properties In Foreclosure

As we reported yesterday, something odd is happening in the US, which supposedly is deep in a “housing market and economic recovery” – foreclosures on ultraluxury homes, those worth $5 million and over, have soared by 61% in 2013 (even as overall foreclosures continue to decline due to the well-known and much discussed “foreclosure stuffing” process, which means millions of properties are held in bank shadow inventory just waiting for the moment to be unleashed and end the implicitly home price subsidy abused by banks for the past three years). Granted, the overall sample is relatively small, with fewer than 200 properties in the ultraluxury category compared to 1.2 million for all properties tracked, but as RealtyTrac notes, “each of these high-value properties represents a much bigger potential loss for the foreclosing lender compared to a median priced property.”

Additional thoughts from RealtyTrac:

This trend may indicate lenders are now financially stable enough to more comfortably weather the big-ticket losses that these properties potentially represent. In addition, an improving housing market means more prospective buyers, even for these ultra high-end homes. A bigger buyer pool translates into higher sales prices on these properties, allowing lenders to recoup more of their losses on these jumbo loans gone bad.

 

“A home selling for $5 million or above represents the ultra-luxury end of the market, and so far in 2013 we’ve had 34 properties close over that price with the average sale being $7.7 million,” said Emmett Laffey, CEO of Laffey Fine Home International, covering the five boroughs of New York.  “Any foreclosure properties in this type of ultra-luxury market usually get purchased very quickly since there is one thing all super rich buyers want – an outstanding deal on a real estate transaction, and in most cases foreclosures of this magnitude come with several million more dollars of built-in value.”

Regardless of the arbitrage opportunities available to “all cash” buyers, who would be happy to park some cash in real estate, the fact that ultraluxury foreclosures are soaring also means that even the “1%” is starting to succumb to reality and beginning to feel the pressure of a financial reality in which only the “too biggest” can never fail.

So what are the properties in question? The photo gallery below, courtesy of RealtyTrac, shows just where any given $5 million + property stopped making its mortgage payments.

MONTAGE, IRVINE, CA 92614

This home nestled on a bluff overlooking the ocean was listed for sale at $15.9 million but the foreclosure judgment amount at the foreclosure auction scheduled in November was $12.8 million.

PACIFIC COAST HWY, MALIBU, CA 90265

This foreclosure auction property is located right on the water on Pacific Coast Highway in Malibu. It features two detached units and was listed for $9.5 million, but the opening bid at the foreclosure auction in November was $8.8 million.

CUESTA LINDA, PACIFIC PALISADES, CA 90272

Built in 1990, this 5 bed, 6 bath estate was scheduled for foreclosure auction in November with an opening bid of $4.1 million, although the assessed value of the property is $5.5 million.

 

KIMRIDGE RD, BEVERLY HILLS, CA 90210

This beautifully remodeled 5 bed, 7 bath estate was scheduled for foreclosure auction in October with a foreclosure judgment amount of $7.5 million. The grounds feature panoramic views of the ocean, a putting green, and stunning pool area.

 

COLONY VIEW CIR, MALIBU, CA 90265

A beach lover’s dream! This pre-foreclosed, 5 bed, 5.5 bath single-family residence was custom built in 2001. A Notice of Default was filed in October with a default amount of $200,000, meaning the owner was behind that amount on mortgage payments.

 

BUSCH DR, MALIBU, CA 90265

This pre-foreclosed French Country hillside residence features 6 beds, 7 baths and sits on 8 acres.A Notice of Default was filed on this property in June, and at that time the homeowner was an estimated $125,000 behind on mortgage payments.

 

S OCEAN BLVD, DELRAY BEACH, FL 33483

Listed for sale at $13.5 million, this exquisite single-family residence in Florida is in the first stage of foreclosure. A dramatic and elegant floor plan makes this 6 bed, 9.5 bath home perfect for entertaining. The initial foreclosure notice was filed in July.

 

SANCTUARY DR, BOCA RATON, FL 33431

Beautiful single-family “sanctuary” in pre-foreclosure. It features 5 beds, 10 baths and has a fantastic pool and patio area with tranquil views. The pre-foreclosure notice was filed in September with an estimated total outstanding loan balance of $8.1 million.

 

SEA RIDGE DR, LA JOLLA, CA 92037

This 5 bed, 4.5 bath fully-furnished home was scheduled for foreclosure auction in November with an estimated total outstanding loan balance of $5.5 million. It features remarkable panoramic views and is located near many of La Jolla’s unique shops.

 

ARROWWOOD CIR, HOUSTON, TX 77063

This bank-owned property was repossessed by the bank via foreclosure back in April 2013 for an estimated $6.3 million. It features 8 bedrooms, 13 baths and is situated on over 23,000 sq/ft.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/m1p6G6y5Ekw/story01.htm Tyler Durden

The 1% Also Don’t Pay Their Bills: 10 Ultra Luxury Properties In Foreclosure

As we reported yesterday, something odd is happening in the US, which supposedly is deep in a “housing market and economic recovery” – foreclosures on ultraluxury homes, those worth $5 million and over, have soared by 61% in 2013 (even as overall foreclosures continue to decline due to the well-known and much discussed “foreclosure stuffing” process, which means millions of properties are held in bank shadow inventory just waiting for the moment to be unleashed and end the implicitly home price subsidy abused by banks for the past three years). Granted, the overall sample is relatively small, with fewer than 200 properties in the ultraluxury category compared to 1.2 million for all properties tracked, but as RealtyTrac notes, “each of these high-value properties represents a much bigger potential loss for the foreclosing lender compared to a median priced property.”

Additional thoughts from RealtyTrac:

This trend may indicate lenders are now financially stable enough to more comfortably weather the big-ticket losses that these properties potentially represent. In addition, an improving housing market means more prospective buyers, even for these ultra high-end homes. A bigger buyer pool translates into higher sales prices on these properties, allowing lenders to recoup more of their losses on these jumbo loans gone bad.

 

“A home selling for $5 million or above represents the ultra-luxury end of the market, and so far in 2013 we’ve had 34 properties close over that price with the average sale being $7.7 million,” said Emmett Laffey, CEO of Laffey Fine Home International, covering the five boroughs of New York.  “Any foreclosure properties in this type of ultra-luxury market usually get purchased very quickly since there is one thing all super rich buyers want – an outstanding deal on a real estate transaction, and in most cases foreclosures of this magnitude come with several million more dollars of built-in value.”

Regardless of the arbitrage opportunities available to “all cash” buyers, who would be happy to park some cash in real estate, the fact that ultraluxury foreclosures are soaring also means that even the “1%” is starting to succumb to reality and beginning to feel the pressure of a financial reality in which only the “too biggest” can never fail.

So what are the properties in question? The photo gallery below, courtesy of RealtyTrac, shows just where any given $5 million + property stopped making its mortgage payments.

MONTAGE, IRVINE, CA 92614

This home nestled on a bluff overlooking the ocean was listed for sale at $15.9 million but the foreclosure judgment amount at the foreclosure auction scheduled in November was $12.8 million.

PACIFIC COAST HWY, MALIBU, CA 90265

This foreclosure auction property is located right on the water on Pacific Coast Highway in Malibu. It features two detached units and was listed for $9.5 million, but the opening bid at the foreclosure auction in November was $8.8 million.

CUESTA LINDA, PACIFIC PALISADES, CA 90272

Built in 1990, this 5 bed, 6 bath estate was scheduled for foreclosure auction in November with an opening bid of $4.1 million, although the assessed value of the property is $5.5 million.

 

KIMRIDGE RD, BEVERLY HILLS, CA 90210

This beautifully remodeled 5 bed, 7 bath estate was scheduled for foreclosure auction in October with a foreclosure judgment amount of $7.5 million. The grounds feature panoramic views of the ocean, a putting green, and stunning pool area.

 

COLONY VIEW CIR, MALIBU, CA 90265

A beach lover’s dream! This pre-foreclosed, 5 bed, 5.5 bath single-family residence was custom built in 2001. A Notice of Default was filed in October with a default amount of $200,000, meaning the owner was behind that amount on mortgage payments.

 

BUSCH DR, MALIBU, CA 90265

This pre-foreclosed French Country hillside residence features 6 beds, 7 baths and sits on 8 acres.A Notice of Default was filed on this property in June, and at that time the homeowner was an estimated $125,000 behind on mortgage payments.

 

S OCEAN BLVD, DELRAY BEACH, FL 33483

Listed for sale at $13.5 million, this exquisite single-family residence in Florida is in the first stage of foreclosure. A dramatic and elegant floor plan makes this 6 bed, 9.5 bath home perfect for entertaining. The initial foreclosure notice was filed in July.

 

SANCTUARY DR, BOCA RATON, FL 33431

Beautiful single-family “sanctuary” in pre-foreclosure. It features 5 beds, 10 baths and has a fantastic pool and patio area with tranquil views. The pre-foreclosure notice was filed in September with an estimated total outstanding loan balance of $8.1 million.

 

SEA RIDGE DR, LA JOLLA, CA 92037

This 5 bed, 4.5 bath fully-furnished home was scheduled for foreclosure auction in November with an estimated total outstanding loan balance of $5.5 million. It features remarkable panoramic views and is located near many of La Jolla’s unique shops.

 

ARROWWOOD CIR, HOUSTON, TX 77063

This bank-owned property was repossessed by the bank via foreclosure back in April 2013 for an estimated $6.3 million. It features 8 bedrooms, 13 baths and is situated on over 23,000 sq/ft.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/m1p6G6y5Ekw/story01.htm Tyler Durden

ReasonTV Replay: Drew Carey on NAFTA

On the
20th anniversary of the North American Trade Agreement, it’s a
great time to revisit one of ReasonTV’s earliest productions –
Mexicans and Machines: Drew Carey on NAFTA.

Here is the orginal text from the June 28, 2008 video:

Campaign season is just getting warmed up, but looking
back on the primaries we’ve already seen plenty of the usual fare:
candidates shaking hands, hanging out at diners, and scaring voters
about foreigners who are
taking your jobs.

Sometimes the threat comes from China, Japan, or
outsourcing to India. Today, it’s NAFTA, the North American Free
Trade Agreement-you know, all those Mexicans taking our
jobs.

Senator Barack Obama joins the likes of CNN’s Lou Dobbs
in decrying NAFTA. So many free trade foes fret about cheap foreign
labor, yet they rarely holler about competitors who will work for
far less than any foreigner. Politicians don’t pay much attention
to it, but-from Terminator toIce
Pirates-Hollywood films have been warning us about humanity’s
inevitable war against the machines.

“Now, think about it,” says Reason.tv host Drew Carey.
“How are we supposed to compete against something that doesn’t get
paid, doesn’t get health insurance, and never goes on
breaks?”

Today, we don’t need human workers to book our travel,
do our banking, or file our taxes. From factory workers to symphony
conductors, countless workers are locked in battle with soulless
job stealers known as computers, websites, and
robots.

“No job is safe from the robot threat!” warns Carey. Of
course, the warning is more than a little tongue-in-cheek. There’s
no need to take a sledgehammer to a robot, because, although
technology shakes up the labor market, it ends up giving us higher
living standards as well as more and better job
opportunities.

Like technology, trade gives us more good stuff than
bad-yet Americans are likely to cheer technology and fear trade. No
doubt TV talkers and White House wannabes will keep stoking our
fears of foreigners until voters and viewers stop buying it-or
until robots snag their jobs, too.

from Hit & Run http://reason.com/blog/2013/12/08/reasontv-replay-nafta
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Guest Post: The Shale Oil Boom is More "Mirage" than "Miracle"

Submitted by Adam Taggart of Peak Prosperity,

Gail Tverberg, is a professional actuary who applies classic risk assessment procedures to global resources: studying issues such as oil & natural gas depletion, water shortages, climate change, etc. She is widely known in the Peak Cheap Oil space for her reports issued across energy websites over the years under the penname "GailTheActuary".

In this week's podcast, Chris asks Gail to assess the merits of the shale oil "revolution". Does it usher in a new Golden Age of American oil independence?

With her actuarial eyeshade firmly in place, Gail quickly begins discounting the underlying economics behind the shale model:

We have to ask: At what price is the oil available? Is this shale oil available because prices are high and in fact, because interest rates are low, as well? Or is it available if it were cheap oil with interest rates at more normal levels?

 

I think what we have is a very peculiar situation where it is available ,but it is available only because of this peculiar financial situation we are in right now with very high oil prices and very low interest rates.

 

…

 

The shale oil plays are going to be probably much less than a 10-year flash in the pan. They are very dependent on a lot of different things, including low interest rates and the ability to keep borrowing – which could turn around very quickly. Lower oil prices would tend to do the same thing. But even if you hypothesize that we can keep the low interest rates and that the oil price will stay up there, under the best of circumstances, the Barnett data says they probably will not go for very long.

 

You know, when you take how long the payout really is on those wells, I think the companies drilling these plays have been very optimistic as to how long those wells are going to be economic. There was a recent study done saying just that: 10 years or 5 years; but certainly not 40 years.

 

And so these companies put together optimistic financial statements that have the benefit of these extremely low interest rates. They keep adding debt onto debt onto debt. How long can they continue to get more debt to finance this whole operation? It's not a model that anybody who is very sensible would follow.

Similar to many energy experts Chris has interviewed prior, Gail looks at the math and concludes that humans (especially those in the West) have been living on an energy subsidy that is beginning to run out. We have been living outside of our natural budget, and will be forced to live within what remains going forward. As a result, she expect great changes in store for the next several decades: socially, politically and lifestyle-wise.

Click the play button below to listen to Chris's interview with Gail Tverberg (38m:07s):

 

 

A further excerpt:

….

Chris Martenson: Okay. So which comes first, then – low oil prices or low oil supplies leading to higher prices? Which do you see is driving the future here?

Gail Tverberg: I see government problems that are being brought on by oil as being the next step. And the government problems will bring the oil prices down. So as oil prices come down, then that brings the supply down. But it is the government problems that are the intervening step in there. It is the fact that the governments are put in a position where they need to support all of these people who cannot find work, and this is related to the high price of oil. And also, it is supporting promises that we have made over the years.

There is also the debt part of it. We depend on very low interest rates to keep the cost of that debt low right now. But the debt has been escalating since 2008, the federal debt has. And so the government is in a very tight situation, and it is the government problems that have the potential to spill over into the rest of the world situation. And it is through that mechanism that we will see the decline in oil supply. That is the way I see it going.

Chris Martenson: All right, so make sure I have got this: Because the government has taken on a whole lot of debt, it is trying to support a lot of people who are out of work; the economy is basically moribund because of high oil prices, so there is a little self-feedback loop in there. But ultimately, it is going to be the fiscal condition of the government – let’s say the U.S. government?

Gail Tverberg: It is going to be the fiscal condition of the U.S. government, and it is going to be all of the debt outstanding. It is going to be the fact that we cannot keep those interest rates low permanently. We cannot keep this quantitative easing up. And what is going to happen is the interest rates will rise, and that will cause a big problem. Or at least that is one scenario. There are so many different scenarios that could cause a problem. That is just one of them, anyhow.

Chris Martenson: You are talking about all of this leading to a deflationary outcome at some point. The Federal Reserve obviously is working double-overtime to prevent that outcome exactly. A lot of people have staked complete faith that the Fed has this all in hand and will lead to an inflationary outcome, I believe. World bond market prices, equity pricings, resurgence in real estate values, things like that are all collectively telling me that the bet has been made. The Fed will not lose this battle. Do you think they might?

Gail Tverberg: What happens is all of the extra money from the quantitative easing is going into speculation. And it is pumping up the prices of the stock market, the bond market, housing prices, farm prices, you name it. And so it is off in these places where it is not Main Street, it is not doing things that are getting people jobs. And so we have this temporary bubble on assets that cannot stay there if interest rates go up.

Chris Martenson: That is the big “if” in this story. Well, for me, it is a “when” – when interest rates go back up. We have hundreds of years of history on interest rates. And right now, I believe the U.K. or English gilts are at a 400-year low in terms of interest rates. So you might say there is a small chance of reversion to the mean in that story.

Good chance that might happen, and yet, we have this collective bet on such an outcome not happening. People are really hoping for something other. This is, I think, the heart of what you write about a lot – this idea that capital formation is a very different process from printing money. And I have seen otherwise very well-credentialed economists mixing those two things up, using the words interchangeably, that the Fed is basically creating capital. In my mind, capital is something that happens after you have performed some useful economic activity and there is a surplus left over. And then, that capital can be saved and that savings can go back into investment. That loop seems to be pretty well broken, as far as I can tell.

When we look at capital expenditures by corporations, we look at infrastructure spent by the Federal government. Very much a decade of lows. So we are not plowing any of this money back in. It is being used instead for speculation.

But the common story right now says that hey, high asset prices are a cure; they work. High housing prices, prices going up, that cr
eates a wealth effect.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/38WvU3hO6Hg/story01.htm Tyler Durden

Guest Post: The Shale Oil Boom is More “Mirage” than “Miracle”

Submitted by Adam Taggart of Peak Prosperity,

Gail Tverberg, is a professional actuary who applies classic risk assessment procedures to global resources: studying issues such as oil & natural gas depletion, water shortages, climate change, etc. She is widely known in the Peak Cheap Oil space for her reports issued across energy websites over the years under the penname "GailTheActuary".

In this week's podcast, Chris asks Gail to assess the merits of the shale oil "revolution". Does it usher in a new Golden Age of American oil independence?

With her actuarial eyeshade firmly in place, Gail quickly begins discounting the underlying economics behind the shale model:

We have to ask: At what price is the oil available? Is this shale oil available because prices are high and in fact, because interest rates are low, as well? Or is it available if it were cheap oil with interest rates at more normal levels?

 

I think what we have is a very peculiar situation where it is available ,but it is available only because of this peculiar financial situation we are in right now with very high oil prices and very low interest rates.

 

…

 

The shale oil plays are going to be probably much less than a 10-year flash in the pan. They are very dependent on a lot of different things, including low interest rates and the ability to keep borrowing – which could turn around very quickly. Lower oil prices would tend to do the same thing. But even if you hypothesize that we can keep the low interest rates and that the oil price will stay up there, under the best of circumstances, the Barnett data says they probably will not go for very long.

 

You know, when you take how long the payout really is on those wells, I think the companies drilling these plays have been very optimistic as to how long those wells are going to be economic. There was a recent study done saying just that: 10 years or 5 years; but certainly not 40 years.

 

And so these companies put together optimistic financial statements that have the benefit of these extremely low interest rates. They keep adding debt onto debt onto debt. How long can they continue to get more debt to finance this whole operation? It's not a model that anybody who is very sensible would follow.

Similar to many energy experts Chris has interviewed prior, Gail looks at the math and concludes that humans (especially those in the West) have been living on an energy subsidy that is beginning to run out. We have been living outside of our natural budget, and will be forced to live within what remains going forward. As a result, she expect great changes in store for the next several decades: socially, politically and lifestyle-wise.

Click the play button below to listen to Chris's interview with Gail Tverberg (38m:07s):

 

 

A further excerpt:

….

Chris Martenson: Okay. So which comes first, then – low oil prices or low oil supplies leading to higher prices? Which do you see is driving the future here?

Gail Tverberg: I see government problems that are being brought on by oil as being the next step. And the government problems will bring the oil prices down. So as oil prices come down, then that brings the supply down. But it is the government problems that are the intervening step in there. It is the fact that the governments are put in a position where they need to support all of these people who cannot find work, and this is related to the high price of oil. And also, it is supporting promises that we have made over the years.

There is also the debt part of it. We depend on very low interest rates to keep the cost of that debt low right now. But the debt has been escalating since 2008, the federal debt has. And so the government is in a very tight situation, and it is the government problems that have the potential to spill over into the rest of the world situation. And it is through that mechanism that we will see the decline in oil supply. That is the way I see it going.

Chris Martenson: All right, so make sure I have got this: Because the government has taken on a whole lot of debt, it is trying to support a lot of people who are out of work; the economy is basically moribund because of high oil prices, so there is a little self-feedback loop in there. But ultimately, it is going to be the fiscal condition of the government – let’s say the U.S. government?

Gail Tverberg: It is going to be the fiscal condition of the U.S. government, and it is going to be all of the debt outstanding. It is going to be the fact that we cannot keep those interest rates low permanently. We cannot keep this quantitative easing up. And what is going to happen is the interest rates will rise, and that will cause a big problem. Or at least that is one scenario. There are so many different scenarios that could cause a problem. That is just one of them, anyhow.

Chris Martenson: You are talking about all of this leading to a deflationary outcome at some point. The Federal Reserve obviously is working double-overtime to prevent that outcome exactly. A lot of people have staked complete faith that the Fed has this all in hand and will lead to an inflationary outcome, I believe. World bond market prices, equity pricings, resurgence in real estate values, things like that are all collectively telling me that the bet has been made. The Fed will not lose this battle. Do you think they might?

Gail Tverberg: What happens is all of the extra money from the quantitative easing is going into speculation. And it is pumping up the prices of the stock market, the bond market, housing prices, farm prices, you name it. And so it is off in these places where it is not Main Street, it is not doing things that are getting people jobs. And so we have this temporary bubble on assets that cannot stay there if interest rates go up.

Chris Martenson: That is the big “if” in this story. Well, for me, it is a “when” – when interest rates go back up. We have hundreds of years of history on interest rates. And right now, I believe the U.K. or English gilts are at a 400-year low in terms of interest rates. So you might say there is a small chance of reversion to the mean in that story.

Good chance that might happen, and yet, we have this collective bet on such an outcome not happening. People are really hoping for something other. This is, I think, the heart of what you write about a lot – this idea that capital formation is a very different process from printing money. And I have seen otherwise very well-credentialed economists mixing those two things up, using the words interchangeably, that the Fed is basically creating capital. In my mind, capital is something that happens after you have performed some useful economic activity and there is a surplus left over. And then, that capital can be saved and that savings can go back into investment. That loop seems to be pretty well broken, as far as I can tell.

When we look at capital expenditures by corporations, we look at infrastructure spent by the Federal government. Very much a decade of lows. So we are not plowing any of this money back in. It is being used instead for speculation.

But the common story right now says that hey, high asset prices are a cure; they work. High housing prices, prices going up, that creates a wealth effect.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/38WvU3hO6Hg/story01.htm Tyler Durden

Eyewitness to Fast-Food Strikes: Another Reason to Support REASON!

 

Here’s yet another reason to support Reason during our annual webathon: We’re
out on the streets covering all sorts of events that matter.

Consider last Thursday, when the Service Employees International
Union (SEIU) coordinated “wage strikes” in over 100 cities and
called for a minimum wage of $15 an hour for fast-food workers.
Reason TV covered the event held in New York City and filed a
report that you didn’t see on your evening news.

Take a look by clicking above and read the original writeup of
our coverage by going below the fold.

If you appreciate this sort of thing, please consider giving us
a tax-deductible donation. Details on all that here.

Yesterday, Naomi Brockwell and I attended a demonstration
demanding that fast-food restaurants boost their minimum wage to
$15 per hour, or a little more than double the current federal
minimum wage. The strike, which was led by a group
called Fast Food
Forward that’s affiliated with the Service Employees International
Union (SEIU), was one of more than a 100 similar
demonstrations held in cities across the country.

The New York demonstration had about 150 people, but the number
of actual fast food employees participating in the strike was
small. It was business as usual at every restaurant we dropped
by yesterday morning and, at a McDonald’s restaurant on 23rd
Street and Madison Avenue in Manhattan, employees behind the
counter said they had heard nothing about a strike.

We caught up with the protesters in front of a Wendy’s in
downtown Brooklyn, where the crowd consisted of union organizers,
fast-food workers, and their sympathizers. An estimated one-third
of the demonstrators were fast-food employees, meaning that less
than one-tenth of 1 percent of New York City’s 57,000 fast-food
workforce participated in the strike.A protester marching near Foley Square in Lower Manhattan. |||

The group was traveling from one fast-food restaurant to
another, before winding up at Foley Square in Manhattan around
1pm.

Multiple strikers told us they had received compensation through
a union strike fund to appear, but declined to say the amount they
were paid.

Artificially doubling wages to $15 an hour would change many
things in the fast food industry, including the easy path it
provides for low-skilled employees to break into the labor market.
Substantially higher wages would mean that existing employees would
be less apt to look for other positions, and senior staffers would
be more inclined to hog shift hours. Franchisees would likely move
more aggressively to replace human service workers with automated
cash registers, which is already
happening in European McDonald’s. Evidence of how
artificially boosting wages destroys opportunities for entry level
workers was best documented in a 2006 study by
economists David Neumark and William Wascher, which
was updated in
2013. 

Shenita Simon, a shift supervisor at KFC, who participated in the strike. |||In interviews, several striking
workers described how it had been relatively easy for them to get a
job in fast-food service. Shenita Simon, who works as a shift
supervisor at KFC, told us that she doesn’t know where else
she would have been able to find a position, because fast food is
the only industry that “will allow you to have minimum
education.” Isaac Wallace, a Burger King employee, described
how he was able to get his job immediately after moving to New York
from Jamaica by simply walking into a Burger King in Brooklyn
and approaching the manager. 

Once the strike moved to Foley Square, organizers from Fast Food
Forward began obstructing our efforts to talk with protesters.

For more on why doubling wages for fast food workers would hurt
entry-level workers, read Nick Gillespie’s “Big
Labor’s Big Mac Attack” at The Daily
Beast.

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from Hit & Run http://reason.com/blog/2013/12/08/eyewitness-to-fast-food-strikes-another
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Ronald Bailey Reviews The Cure in the Code by Peter Huber

RIPFDAWe are at a turning point in
medicine, Peter Huber explains in his new book, The Cure in the
Code. Knowledge of the individual’s genetic makeup will soon
allow molecular medicine to reach deep inside each of us to cure
most of the maladies that afflict us—and perhaps even slow the rate
at which we age. First we will learn to understand each person’s
genome; then we will learn to craft treatments tailored to his or
her genetic constitution. But it may not be so easy—and not for
purely scientific reasons. Timid regulators at the Food and Drug
Administration stand in the way of dramatic medical progress.
Reason Science Correspondent Ronald Bailey’s review first
appeared in the Wall Street Journal.

View this article.

from Hit & Run http://reason.com/blog/2013/12/08/ronald-bailey-reviews-the-cure-in-the-co
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The Bitcoin Derivatives Market Has Arrived

Having discussed the advantages and disadvantages of the crypto-currency and noted the extreme volatility of the last few weeks, it seemed only a matter of time before some ambitious entrepreneur tried to monetize the volatility. What better way to “manage the risk” of your virtual currency horde than buying (or selling) options (in a more levered way). Predictious, the Dublin-based prediction market, this week unveiled Bitcoin Option Spreads enabling both long- and short-positions to be constructed on the already extremely volatile ‘asset’. Regulatory clamp-down in 3..2..1…

 

The basic mechanism is the same as every option spread market – a fixed payoff for getting the “bet” correct, in this case 10.

In the case below, the bet was that Bitcoin will (or will not) close at $1400 on Wednesday January 1st at 12:00am,

if you believe it will (close at or above $1400) you “buy” the contract at 3.49 (and should you be proven correct you are paid 10 – thus gaining 6.51, similar to buying a call option)…

if you believe it will not reach $1400, you “sell” the contract at 0.55 (and should you be proven correct you pocket the 0.55 and pay out 0.00 – just like writing a call option)

 

Quite a skew has developed already…

As Predictious notes,

Predictious is now bringing this to the next level by offering a new type of derivative contract: option spreads on the price of Bitcoin. In the past couple of weeks, Bitcoin has been extremely volatile, and it is important for traders to be able to reduce risk, and hedge their Bitcoin position. They can now do so in an easy and cost efficient way by using option spreads.

 

Option spreads are very versatile, while still offering limited risks. A bullish investor can use a vertical spread to benefit from Bitcoin gains, while limiting risks if the price crashes.

 

On the other hand, bearish investors can use them to short Bitcoin. Predictious is currently one of the most reliable way to do so. Since losses are limited with option spreads, investors are not exposed to counterparty risks, like they would be when trading futures on competing services.

 

Aside from Bitcoin traders, miners can also use spreads on the Bitcoin difficulty to reduce risks associated with investing in mining hardware.

 

…

 

To date, Predictious users have deposited over $300,000 in Bitcoin on the website.

 

“Traders are obviously very interested in Bitcoin derivatives, but the number of businesses accepting payments in Bitcoin has surged in the past few months”, said Flavien Charlon, Founder of Pixode, “those businesses have expenses in US Dollar, or Euro, and need to hedge their Bitcoin position. The type of derivatives we are offering will be very useful to them as well”.

 

The bottom-line is that while we can see the ‘use’ of such a market to enabling some lower cost hedging of any wealth one might have gathered in Bitcoin, we suspect – just as in the case of many other assets – that the underlying asset will see its volatility rise as the derivative (and levered) markets becomes the tail that wags the dog.


    



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