Wednesday, June 20, 2018

Thank You, Federal Reserve: Silicon Valley Law Firms Set All-Time Salary For 2017 Associates

The Silicon Valley legal orgy in one chart:

The Federal Reserve money-pumping spigot is in full force blasting out newly created money in Silicon Valley.

Above-the-Law reports:
 [ Robert V. Gunderson Jr., chairman and founding partner of] Silicon Valley powerhouse Gunderson Dettmer notified associates that the firm would be matching the Cravath’s salary scale [$190,000 for 2017associates.] and Simpon Thacher’s bonuses across the country. Who’s your daddy now, associates?
Of course, it is doubtful most of the associates could correctly answer the "Who’s your daddy now, associates?," question, even with a DNA test from a Silicon Valley genetics firm.

The correct answer is Federal Reserve Chairman Jay Powell.


(ht James Gourley)

Tuesday, June 19, 2018

The Cronyism Angle to the Separation of Kids at the Border $$$$

The Trump administration plans to pay a Texas nonprofit nearly half a billion dollars this year to care for immigrant children who were detained crossing the U.S. border illegally, reports Bloomberg.

The nonprofit, Southwest Key Programs Inc., is to be paid more than $458 million in fiscal 2018, according to the data -- the most among the organizations, government agencies and companies that run a detention and care system for immigrant children on behalf of the Department of Health and Human Services.

In 2010, Southwest CEO Juan Sanchez earned $269,000, in 2015 more than $786,000 and in 2016 more than $1.5 million.

The federal government paid the group about $286 million in 2017 and $211 million in 2016, according to the ACF data, reports Bloomberg.

Bloomberg also notes the potential crony leases on the properties housing the kids:
The former WalMart store in Brownsville that Southwest Key converted into a detention center is owned by a local limited liability corporation, Chacbak LLC, according to property records. The company owns at least one other local building also leased by Southwest Key, a former hospital converted into a detention center for immigrant children in 2013, according to the Brownsville Herald.

Hey Millennials: Here’s the Truth About Socialism

By Lawrence McQuillan 
A recent story in the New York Times discussed the increasing willingness of political candidates in the United States to run as socialists. Times reporter Farah Stockman wrote that the Democratic Socialists of America (DSA) is surging, even in conservative-leaning states. “Since November 2016, DSA’s membership has increased from about 5,000 to 35,000 nationwide,” Stockman wrote. “The number of local groups has grown from 40 to 181, including 10 in Texas. Houston’s once-dormant chapter now has nearly 300 members.”
Franklin Bynum, a 34-year-old attorney, avowed socialist, and DSA member, won the Democratic nomination for criminal court judge in Houston. At least 16 other socialists appeared on the ballot in primary races across Texas.
Many of the candidates and much of the support come from millennials, the largest generation of Americans in history. In part, millennials’ attraction to socialism can be traced back to

Lobster is on China's List of Retaliatory Tariffs

Chinese officials have announced a planned lobster tariff along with hundreds of other tariffs, reports the Press Herald.

Maine’s four members of Congress have expressed their concerns and wrote to President Trump last month about how the administration’s trade policies could hurt the state’s $1.5 billion-a-year lobster industry.

In the world of tariff distorted ramifications, Chinee consumers will be hurt by this tariff, as well as Maine lobstermen, but it will be a plus for U.S. consumers as more lobster will remain here.

The retaliation by China will only hurt China.

Trade war retaliation is as dumb as is the policy of tariffs launched by tariff initiators such as Trump.


A West Point Grad Wrote ‘Communism Will Win’ in His Cap

On Monday, the Army’s 10th Mountain Division accepted the resignation of 2nd Lt. Spenser  Rapone less than a year after he posted photos of himself at his 2016 graduation, posing in a Che Guevara shirt under his uniform, along with a fist salute to underline a message written in his cap: “Communism will win.”

 An investigation concluded that he advocated for a socialist revolution while insulting senior military officials.

He received an "other than honorable" discharge.

The kid needs an economics lesson.


(via Washington Post)

Trump Threatens Tariffs on Another $200 Billion of Chinese Imports

More trade war escalation from the dumb mercantilist.

Donald Trump has ordered his administration to draft plans for tariffs on a further $200bn in Chinese imports if Beijing does not abandon its intention to retaliate against US duties on imports announced last week, reports the Financial Times.

In a statement issued late on Monday, Trump said he had asked US trade officials to identify the further $200bn in goods from China to be subject to a 10 per cent tariff, and that he was prepared to impose tariffs on an additional $200bn beyond that.

China’s commerce ministry claimed the threat was “blackmail” and warned of “strong countermeasures”.


The Art of the Brushoff

By Andy Kessler

While watching the Washington Capitals hoist the Stanley Cup, I had to chuckle. I was reminded of an old boss. When I first started at his small brokerage firm, I was told that if he didn’t like someone in a meeting, he would pick up the person’s business card and pick his teeth with it. The meeting would end soon thereafter. A lot of people don’t want to say no, nor do they know how to. It’s an art.

Some people have brushoffs down pat. A decade ago, I heard activist Ward Connerly explain Bill Clinton’s premeditated move. Headed to the White House in 1997, Mr. Connerly learned that Mr. Clinton’s signal that he didn’t like someone—so his staff shouldn’t bother—was to compliment his tie. Mr. Connerly was amused until Mr. Clinton approached him to tell him how much he liked his tie.

I’ve been brushed and hushed. In the mid-1990s, after much hassle, my colleagues and I landed a meeting with Jeff Berg, who ran one of Hollywood’s top talent agencies. We were in his lavish office pitching him on getting his clients to invest in our fund. Technology was disrupting music, television and movies, and we were the perfect hedge. I thought the meeting was going pretty well until his secretary walked in saying John F. Kennedy Jr. was on the line. Mr. Berg gave us the eyebrow lift and took the call. As we were ushered out, we heard him yelling, “Yes, I know everything in this town.” Great theater—no deal.

Maybe a year later, I was on a panel at an investment conference with Mike Milken. We had a great discussion about finding value, which ended with him saying he was extremely interested in our fund. Could we please send him materials and follow up? I’m still waiting for his call back. Countless others have used this tactic.

Read the rest here.

Will Seattle Become the Next Detroit?

By Randall Holcombe
This article says “Seattle is struggling to find a path forward to deal with a crisis that’s exploded in recent years.” What is that crisis? An economic boom!
The article says, “unemployment in the county is at 3%, the lowest in the state... Housing is becoming less affordable, leading to more homelessness. At the same time, Washington’s tax laws gave cities few options when it comes to raising funds for more housing. ... Those rent increases have been partly driven up by an influx of well-paid tech workers.”
The article focuses heavily on Amazon, noting, “Amazon has about 45,000 employees in the city, where it is it’s largest private employer. Those employees tend to earn good salaries, allowing landlords to bid up the price of scarce housing and causing rental costs across the area to rise.”
So, the article says, “Seattle looked for new ways to raise money to address the problems those same workers were causing in the housing market.” The city’s solution was a corporate head tax, which the article says “was hugely unpopular among businesses.” The result was that the city backed down on the tax. But, the article says, “Unresolved is the issue of how cities can deal with the huge urban impacts of unmitigated tech growth.”
Seattle has to look no further than Detroit for its answer. Once the prosperous home to the thriving American automobile industry, Detroit (with some help from the UAW) made itself so unfriendly to business that American auto manufacturing has migrated to more business-friendly locations, largely in the American South. Unlike Seattle, housing in Detroit is very affordable, and there is an excess of housing, to the extent that the city is paying to demolish abandoned homes. 

I should give Seattle’s City Commission some credit for figuring this out. They did propose the corporate head tax to make Seattle less business-friendly. They’ve just been (temporarily?) thwarted by local opposition.

The political leadership in Seattle sees rock-bottom unemployment, rising incomes, a booming housing market, and a tech boom as a crisis and are “struggling to find a path forward to deal” with it. The political leadership in Detroit figured out how to deal with this type of “crisis” decades ago, and despite Seattle’s recent failed attempt to be more like Detroit, there’s a good chance that Seattle’s political class will eventually succeed.

Randall Holcombe is a Research Fellow at the Independent Institute and co-editor of the book Housing America.

The above originally appeared at the Independent Institute.

Monday, June 18, 2018

BREAKING Senate Blocks Trump's Effort to Revive ZTE

The Senate has just voted 85-10 to block the Trump administration from lifting the “death penalty”   imposed on ZTE, a Chinese cell phone giant.

 The amendment to the defense spending bill forces the Commerce Department to reverse its reprieve on penalties imposed on ZTE for violating U.S. sanctions aimed at isolating Iran and North Korea, then lying about it. It also bans government agencies from buying or leasing equipment from ZTE and another major Chinese firm, Huawei.

Commerce banned ZTE from buying American parts--including Qualcomm computer chips--that it depends on to manufacture its products. President Donald Trump ordered the Commerce Department to revisit the issue following talks with Chinese President Xi Jingping. “Too many jobs in China lost,” Trump tweeted.

Commerce Secretary Wilbur Ross announced a deal to keep ZTE in business June 7, calling it a component of Trump’s trade negotiations with China.



Rand Paul, supporting the free market position, was heroically one of the ten "NAY" votes.

The other "NAY" votes came from the left, including Bernie Sanders, Elizabeth Warren and Diane Feinstein.

Mercatus Center Against Including Russia Into an Expanded G7

Cato says "No."
Daniel Griswold, Senior Research Fellow and Co-Director, Trade & Immigration Project, Mercatus Center at George Mason University, writes:
Russia had been part of the group, redubbed the G8, but it was kicked out in 2014 after the Russian army invaded the Crimea and eastern Ukraine. Nothing has changed that should cause the G7 members to revisit that decision.
Foreign policy aside, there’s another good reason why Russia should not be a member of a G7+. The current G7 countries have two things in common — large economies, and pluralistic democratic political systems that respect the rights of the individual. Russia has a large economy, the 12th largest in the word, but it fails the test of political and civil liberty.

Yes, since the G7 is about expanded trade (albeit crony--which is better than no trade) and better relations, let's screw the Russian population by limiting trade and better relations that would develop by Russian entry into what would be the G8.



A Ground Zero Report From the People's Republic of San Francisco

By Tyler Durden

Syringes were visible, people were staggering, others had wide aggressive eyes.
San Francisco - a Democratic stronghold known for cable cars, quaint architecture and its diverse culture, has become a bastion of squalor and crime as city dwellers and visitors alike dodge aggressive, drug-addled vagrants. And it's beginning to scare the tourists...
 An Australian couple visiting the city were shocked by what they saw after deciding to walk back to their hotel:

New President of the Federal Reserve Bank of New York Issues Statement

John Williams

Statement from President Williams

I am pleased to be starting my tenure today as president and CEO of the Federal Reserve Bank of New York. As someone who has dedicated his career to public service, I can think of no better place from where to continue to support the nation’s economic well-being.
The New York Fed plays a unique role in the Federal Reserve System, with responsibilities for implementing monetary policy, managing a critical payments system, overseeing a large number of complex financial institutions and managing international relationships. I take each of these responsibilities with the utmost seriousness and am committed to executing my role as president of the New York Fed and on the Federal Open Market Committee (FOMC) to the absolute best of my ability.  
So what can you, the public, expect of me?
  • Openness and transparency. I am dedicated to learning from a wide range of perspectives and experiences from across the District. Openness flows both ways, and we have a duty to explain the reasoning behind our actions. I am committed to acting in as transparent a manner as possible.
  • Objectivity and independence of thought. I will continue to make monetary policy recommendations based on what I believe is in the best interest of our economy. Throughout, I will strive to explain my reasoning, particularly when my views may differ from those of others.
  • Commitment to the diverse needs of families and businesses across our District. Understanding the varied financial and economic needs of families, businesses, and communities, and advocating for them at the policy table is a critical component of my role. I am equally committed to building a diverse and inclusive workforce and workplace at the New York Fed, which will help us better serve our communities.
I start my first day with a deep commitment to securing the stability of our financial system and prosperity for our economy. I look forward to engaging with and learning from members of our communities and stakeholders throughout the District and beyond.

John C. Williams became the 11th president and chief executive officer of the New York Fed on June 18, 2018.

RW note: I will soon test his leadership ability at the New York Fed. Stay tuned! 

Russia to Raise Retirement Age Above Male Life Expectancy

Well, here's one way to solve a retirement payout funding crisis.

Prime minister Dmitry Medvedev announced last Thursday that the Russian state pension age would be hiked from 60 to 65 for men by 2028 and from 55 to 63 for women by 2034.

The World Bank estimates Russian male life expectancy at 66, while the CIA’s World Factbook had it at 65. Women can expect to live to about 77.

The Russian Confederation of Labour said official statistics showed the average life expectancy of men was less than 65 in more than 60 regions of Russia.

It estimated around 40 per cent of men and 20 per cent of women may not live long enough to claim their pensions under the new rules.


(via The Independent)

The Craziest Bitcoin Theory

A greater Silicon Valley money manager and bitcoin fanboy, who travels in libertarian circles, recently told a group that because of bitcoin the time would come when machines and not humans would earn money.  He specifically named Uber cars and vending machines as potential non-human earners.

How idiotic can you get?

A machine is going to earn money for itself?

Mind you, he is not talking about a piece of capital equipment that creates income for an owner, he made very clear that he believed machines would earn income for themselves---without owners.

He did not discuss what the machines would spend the money on.


Thomas Markle: Prince Harry Thinks Brexit is an Experiment We Have to Try

Meghan Markle’s father, Thomas Markle, has broken royal protocol and has discussed the political leanings of his son-in-law, Prince Harry, during a media interview.

The interview took place with Piers Morgan and the key snippet went this way:

TM: It was just a loose conversation about something we have to try. There was no real commitment to it.

PM: Do you think he was in favor of it?

TM: I think he was open to the experiment.


Elon Musk Declares Himself a Socialist

What a dangerous clown. His words above have been used by every tyrant from Mao to Lenin to Stalin.


(ht Luis Rivera)

Sunday, June 17, 2018

Tyler Cowen on the Asian Student Admissions Question

NYT sets the scene:
Harvard consistently rated Asian-American applicants lower than others on traits like “positive personality,” likability, courage, kindness and being “widely respected,” according to an analysis of more than 160,000 student records filed Friday by a group representing Asian-American students in a lawsuit against the university.

Asian-Americans scored higher than applicants of any other racial or ethnic group on admissions measures like test scores, grades and extracurricular activities, according to the analysis commissioned by a group that opposes all race-based admissions criteria. But the students’ personal ratings significantly dragged down their chances of being admitted, the analysis found...

Alan Greenspan: We're On The Edge Of A Trade War

Alan Greenspan (92), the former Federal Reserve chairman, speaks with CNBC's Sara Eisen about the Trump administration's trade policies.


Sunday Morning Economic History: The Economic Suicide of Rome

Ancient Rome went from a thriving civilization to a dystopia before its eventual collapse. Lawrence Reed and Marc Hyden, co-authors of the essay“The Slow-Motion Financial Suicide of the Roman Empire,” discuss the rise and fall.