tag:blogger.com,1999:blog-336132542024-03-11T00:15:30.131-06:00The Business Law SpotKnute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.comBlogger211125tag:blogger.com,1999:blog-33613254.post-36602199902667380242023-11-08T15:58:00.000-07:002023-11-08T15:58:06.768-07:00This Looks Like the Opposite of an Opportunity<p><span style="font-family: georgia;">Saw</span><span style="font-family: georgia;"> </span><a href="https://finance.yahoo.com/news/meredith-whitney-housing-prices-are-due-for-a-fall-starting-in-2024-100042234.html" style="font-family: georgia;" target="_blank">this </a><span style="font-family: georgia;">today.</span></p><p><span style="font-family: georgia;">First, Whitney didn't predict squat. She "predicted" that Citigroup was in trouble in Fall 2007 a week before Chuck Prince resigned and that Merrill Lynch and Lehman were in trouble two weeks before they collapsed. That's called being Captain Obvious. I started telling people to get out of real estate in December 2005, ratcheted it up in December 2006, and set off flares in April 2007. Where's my genius award?</span></p><p><span style="font-family: georgia;">Second, given the cost of financing and the lack of regulation of buyers, all this opportunity is going to do is going to do is concentrate yet more wealth in the hands of the 1%.</span></p>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-7000609229376570122023-07-04T20:48:00.001-06:002023-07-04T21:56:10.601-06:00Putin in Dresden<p><span style="font-family: georgia;">OK, let's see if we can connect a few dots. We know Bad Vlad was in Dresden in the late 80s (just what his brief was remains an open question). We know the KGB was running revolutionary groups out of Dresden (Red Army Faction, Baader-Meinhoff, PLFP). We know the KGB was running out of Dresden rather than Berlin because they thought there were no prying, Western eyes in Dresden (It probably kept the operation away from prying, GRU eyes as well. And Stasi. Apparently much of this was done without Stasi's approval or even knowledge. At the very least, it gave Stasi plausible deniability.). We know they kept the operation records in Dresden, close to the vest (only summaries going to Berlin and Moscow), and the operations included bombings and assassinations in the West. We know that in the late 80s a number of KGB officers saw the writing on the wall and started preparing for their personal futures by setting up entities in the West and skimming Soviet money into them.</span></p><p><span style="font-family: georgia;">And we know that in December 1989, Bad Vlad suddenly emerges from behind the curtain in full hero mode. The Berlin Wall had fallen the month before, and an angry mob that had been busily tearing apart the Dresden Stasi HQ started turning its attention to the nearby KGB HQ. Putin bluffed the mob into jogging on, protecting the facility (Accounts differ on whether he was brandishing a pistol. Putin himself has never claimed to have been armed.).</span></p><p><span style="font-family: georgia;">Now we get to the speculative parts. Just what was Putin doing there? Actual information is thin on the ground (more on that in a bit). This lack of information has led the usual suspects to conclude Putin deliberately destroyed the records to hide he was chief of Black Ops at the Dresden station. Ahem. People, sometimes a cigar is just a cigar. Putin's career before and immediately after Dresden does not support this grandiose conspiracy theory. Bad Vlad was the guy who carried the briefcase for the actual players. Did he work with the officers who handled the foreign revolutionaries? Yes. Was he himself the show runner, or even <i>a</i> show runner. Let's just call it unlikely and leave it at that.</span></p><p><span style="font-family: georgia;">As to the lack of documents, Putin himself has said he along with everyone else was burning documents as fast as they could, which appears to be true as far as it goes. There is very little documentation concerning <i>anyone</i> who was operating at the Dresden station. Most of our information on Dresden comes from three types of sources: 1) KGB associates of various sorts who flipped prior to Putin's being there and so could not have known about Putin's activity; 2) KGB associates of various sorts who are selling memoirs and such; and 3) people who may or may not have been in the revolutionary groups and may or may not have been to Dresden but who are more than willing to talk about it in an effort to rehabilitate themselves. Little of this information can be corroborated, and even less can stand on its own without corroboration. Except perhaps for those who just want to attract readers and viewers, as opposed to those trying to parse actual information from fool's gold.</span></p><p><span style="font-family: georgia;">So what happened in Dresden in December 1989-January 1990? All evidence indicates a massive amount of documents were destroyed. But suppose that isn't the whole story (Try to contain your shock.). Suppose an ambitious, reasonably intelligent, and in his mind underappreciated KGB officer saw a number of those documents and didn't see "security risk" but "leverage". Here were a pile of Soviet officials, including who knows who many KGB officers, with their fingerprints all over "third-party" wet operations in the West. Officials and officers who were now trying to make nice with the West, even find soft landings there. Landings that would get a whole lot bumpier if Western authorities learned of their parts in killing Western citizens.</span></p><p><span style="font-family: georgia;">So this KGB officer packages up these gold nuggets, perhaps with the assistance of a couple of close associates, but how to move them? Certainly not through KGB channels. Enter Major General Horst Boehm, Stasi chief for the Dresden district and the KGB officer's long-standing local contact. Unlike Putin, Boehm had been unable to protect Stasi HQ, and it was royally trashed to his chagrin and shame. It was apparent to Boehm the game was up and he needed friends in other places. Whatever the KGB officer threw at him, Boehm slurped it up with a big spoon. So he moved the documents to Destination Unknown on one of Stasi's rapidly crumbling and therefore unsupervised mule trains. Probably via Rotterdam, but that's experience talking, not evidence.</span></p><p><span style="font-family: georgia;">Corroboration? None. You see, in February 1990 Boehm and two of his district chief colleagues became so depressed and ashamed over everything that they "committed suicide". Am I alleging our KGB officer had them whacked after their services were delivered? Absolutely not; there's no way he had that kind of pull. Boehm was terminated with extreme prejudice because, among his efforts to cultivate friends in the West, he devised a plan to leverage his knowledge of the complicity of Dutch and Swedish officials in East Germany's international arms smuggling. Boehm's two colleagues were probably in on it, but that's fuzzier. The only question is how anyone with sufficient muscle to hit three secure targets in an East Germany still crawling with Soviet military and security forces found out about Boehm's plan.</span></p><p><span style="font-family: georgia;">His documents secured and Dresden station being cooked, our KGB officer is transferred to Leningrad. From there he blackmails his way up the ladder, builds a coterie of cronies around him, and takes command. And becomes filthy rich in the process.</span></p><p><span style="font-family: georgia;">The interesting question before us now is, "What has changed?" Why is Putin no longer concerned about burning down whole wings of the house, ranging from foreign relations to former friends? I figure the options are as follows, and they aren't mutually exclusive: 1) He figures he's so powerful he no longer has to rely on the Dresden docs; 2) He figures he's so powerful the gang he built around himself using the Dresden docs is expendable; 3) The people who could have been threatened by the Dresden docs are now all gone, the docs are now irrelevant, and any part of his power still based on those docs needs shifted. I recommend that intelligence agencies focus on researching those points.</span></p>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-17888661703139242942023-06-24T12:54:00.001-06:002023-06-24T13:06:59.508-06:00Russia 24.06.2023, Noon, What We Know<div style="line-height: 16px; margin-bottom: 0in;"><span style="font-family: georgia;">1) Yesterday Prigozhin said he was fed up with the Russian Army attacking Wagner Group and intended to overthrow the Ministry of Defense. FSB announced what must actually have been going on for several months, namely a criminal investigation of Prigozhian.</span></div><div style="line-height: 16px; margin-bottom: 0in;"><span style="font-family: georgia;"><br /></span><span style="font-family: georgia;">2) Last night Putin gave FSB free rein to deal with Prigozhian. Putin then flew out of Moscow. The destination was ostensibly St. Petersburg, but the flight turned off all tracking on takeoff and undoubtedly went to Valdai. That Putin flew rather than taking the armored train on his private rail line would indicate a certain urgency.</span></div><div style="line-height: 16px; margin-bottom: 0in;"><span style="font-family: georgia;"><br /></span><span style="font-family: georgia;">3) Earlier today Wagner Group captured Rostov-on-Don and headed up the M4 for Moscow, meeting little resistance. Wagner Group has since captured Voronezh. At least one of Wagner Group's original positions yesterday was adjacent to a GU battalion, but the GU did not interdict.<br /></span><span style="font-family: georgia;">4) While Wagner Group has supplies and anti-aircraft weapons, it does not have air or logistical support. From this it is reasonable to conclude Wagner Group must attain quick successes with resulting defections and civil unrest.</span></div><div style="line-height: 16px; margin-bottom: 0in;"><span style="font-family: georgia;"><br /></span><span style="font-family: georgia;">5) Yesterday a possible propaganda campaign for Prigozhian may have been to claim he was trying to remove the incompetent and criminal generals so Russia could have an honorable peace. With Putin having acted, Prigozhian must aim higher, perhaps manipulating those generals to state publicly they were only following orders that came directly from the top of the government. This might undermine the popular image of Putin and his circle.</span></div><div style="line-height: 16px; margin-bottom: 0in;"><span style="font-family: georgia;"><br /></span><div style="text-align: left;"><span style="font-family: georgia;">6) Given FSB's brief from Putin, if Wagner Group reaches Moscow, it must immediately seize FSB headquarters along with the Ministry of Defense.</span></div><div style="text-align: left;"><span style="font-family: georgia;"><br /></span></div><div style="text-align: left;"><span style="font-family: georgia;">Update 1300: Prigozhian has agreed to stand Wagner Group down. One of two things will now happen: A) Wagner Group will be sandbagged; B) Putin will purge the Ministry of Defense and General Staff. Whichever happens, it will not preclude the other from eventually happening.</span></div></div>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-40910123550535223402023-03-15T13:05:00.003-06:002023-05-03T15:45:54.820-06:00Yet More Bank Garbage<p><span style="font-family: georgia;">Trump and his minions are claiming the recent bank failures were caused because those banks were "woke". As with everything else having to do with their use of that word 1) it's meaningless, and 2) it's just being thrown out there to provide cover for the accusers' wrongdoings.</span></p><p><span style="font-family: georgia;">Immediately after taking office, Trump took steps to "relieve community banks" from the evils of Dodd-Frank. SVB was a community bank the way Elim Garak was a plain, simple tailor. Once again Der Drumpfenfuehrer and the Reich Wing Media are lying. There is no way they can connect these dots so they have meaning for anyone other than their tin-foil-hat minions. The actual dots lead straight to Trump. In standard GOP form, Trump lifted a bunch of Dodd-Frank liquidity regulations for no reason other than "Regulations BAD!" (If I were to let my more cynical side run, I could say he also did so to facilitate grift by financial executives, but....). SVB, which had become Deposit and Clearing Central for a number of crypto companies, now had effectively all of its cash reserve requirements removed. SVB took the newly freed cash and put it with most of its other investments, buying long Treasury bonds (This was actually a fairly prudent move. Under normal circumstances.). Then FTX failed, and seismic shock waves moved through the crypto community. People decided to cash out of crypto, and the crypto companies had to make large withdrawals from their SVB accounts to cover. So the run wasn't actually on SVB; it was on the cryptos, who then made withdrawals on their accounts. The problem was SVB didn't have the cash on hand. It had to raise it, and that meant selling its Treasury bond positions. Unfortunately, the Fed has been raising interest rates, and when that happens the value of older bonds goes down because they have the older, lower rates. SVB had to sell its bond positions at a discount, which left it short. Also unfortunately, much of the rest of its investment positions were loans back to its depositors, and since those loans had been made with the deposits that were now being drawn on, SVB had a liquidity loop going nowhere. On top of that SVB was going to have to mark these investments to market, and since they had lost value, that meant its assets would have to be written down. It was teetering on insolvency when DFPI and FDIC walked in. This doesn't address some the shadier insider moves, nor does it address just how much cash reserve would have been needed to shield SVB from its crypto positions, but Trump's moves definitely let SVB's executives bury it roof-deep in a mud hole.</span></p>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-46459973205812857032022-12-21T13:32:00.001-07:002022-12-21T13:32:50.904-07:00And So This Is Christmas<p><span style="font-family: georgia;">I have to admit I'm not a big fan of Christmas Season. The overwhelming commercialism is bad enough. We start with a guy who preached continually about the dangers of materialism and celebrate his birthday with an orgy of materialism that props up our entire capitalist system. Unlike the list of things Alanis Morissette sings about, that actually</span><span style="font-family: georgia;"> </span><i style="font-family: georgia;">is</i><span style="font-family: georgia;"> ironic.</span></p><p><span style="font-family: georgia;">For me, though, the real nightmare is the music. Let's skip over the carols. They're overwhelmingly schlock, and as Bob Rivers in American Comedy Network sang it, "I think I'd rather have you shove a chainsaw in my ear." But at least they're short and have no pretensions. I have to note, though, that one of the best of them, "Carol of the Bells", is actually the Ukrainian New Year song "Shchedryk", dating from back when New Year was in Spring. Then New Year got moved back to January, and some Anglophone got hold of it, wrote new lyrics, and voila it was a Christmas carol. Just another example of Christmas flopping its bloated carcass all the way across every stage it lands on.</span></p><p><span style="font-family: georgia;">Anyway. The real disappointment is the classical side, where the worst is held up as the best. Menotti's worst opera, <i>Drivahl and the Nut Visitors</i>, becomes his only work anyone knows. I swear if I hear one more audience chuckle nostalgically when "This Is My Box" starts, I'm going to take a flame thrower to the place. <i>Crutnacker</i> is Tchaikovsky's worst ballet. I have to admit I have little use for dance, and ballet is definitely dance, but musically...come on. An evening of Tchaikovsky will give you hyperglycemia, and the Second Act Endless Parade of Horribles is excruciating even by Tchaikovsky Second Act Endless Parade of Horribles standards.</span></p><p><span style="font-family: georgia;">And then there's Handel's worst oratorio, <i>The Mess</i>. Thirty minutes of material crammed into two-and-a-half hours. I've performed the thing more times than I care to think, both choir and orchestra. I'll take orchestra. At least hiding in there you can use all that down time to do something constructive, like re-reading <i>Война и мир</i>. Up in the choir you have to just sit there with a pious, enraptured look on your face while you stare into the abyss.</span></p><p><span style="font-family: georgia;">As I do every year, I'll just be glad when it's over.</span></p>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-36382736405114918072022-12-21T08:59:00.000-07:002022-12-21T08:59:39.749-07:00No, Old Friend, China Is Not Taking Over<p><span style="font-family: georgia;">I have an Old Friend (OF) who, like everyone else I went to law school with, is smarter than me. That doesn't mean they're always right and I'm always wrong though. This is one of those cases.</span></p><p><span style="font-family: georgia;">On 9 December China formally invited the Arab nations to trade oil and gas in yuan on the Shanghai Exchange. There has been much pearl-clutching about this being the end of the dollar as the world's reserve currency and China taking over, and OF is one of the big clutchers. "The oil-dollar link is gone, so Bretton Woods II is now gone, and the yuan is about to take the throne." No. Just no.</span></p><p><span style="font-family: georgia;">Admittedly OF knows more about the Gulf these days than I do, having been based there for several years recently. Unfortunately OF also seems to now be "highly influenced" by certain entities in the Gulf. I know OF was in a bit of a jam, OF went to the Gulf, and OF was no longer in a jam. I believe there is something of a Professor Quirrell-Voldemort thing going on. Besides that, I know more about China than OF. And Russia. And the general train wreck of 1973-74.</span></p><p><span style="font-family: georgia;">The collapse of Bretton Woods I in 1971 and the rise of Bretton Woods II in 1974 are convenient fairy tales economists like to tell, but that is what they are: fairy tales. First, saying that Nixon killed Bretton Woods I when he pulled the plug on gold in 1971 (not 1972 OF) is about like saying Paul broke up the Beatles even though John, George, and Ringo had already called it quits. Johnson recognized in 1967 that there wasn't enough gold to back enough currency to support the global economy (Oddly enough the same problem that pitched the US into a quarter-century of rolling recession from 1875 to the arrival of the first gold shipment from the Alaska-Yukon Rush, the blessed "one ton of gold", but then who says we can be taught.) and started acting on it. By the time Nixon took office, the London Gold Pool was dead and De Gaulle was getting his petty revenge for not being treated like the Emperor of the World after WW II (As far as I'm concerned, France will owe us for time and eternity for red-baiting our brilliant leaders into taking over its failed recolonization efforts in Indochina.) by blocking domestic exchange of dollars for francs and hording gold at the dollar's expense, which proved once and for all that gold had to go. All Nixon did in 1971 was code the patient. Any resulting panic was due to the usual lack of preparation for the inevitable.</span></p><p><span style="font-family: georgia;">Then there is the myth of how the US brutally strong-armed everyone into Bretton Woods II. It's a popular story in the Middle East now, understandably so in light of the Afghanistan and Iraq wars and US clandestine operations everywhere else in the region, but let's take a look at July 1974, shall we? We'd just pulled out of Vietnam with our tails between our legs. We were in our worst recession since the Depression. The political scene was a mess; Nixon would be gone in a month. We honestly felt like we'd had our stuffings kicked out. Granted, we now had a military with nothing to, and we had lots of unemployed people to feed into that machine. Granted, we were all really pissed off at OPEC because it was now really expensive to drive our 8 mpg Detroit land battleships in a society built around getting in your car just to visit the neighbors. But we just weren't up for it. Sure we could have sent in our professional hitters for some wet work, but putting the requisite boots on the ground to occupy and operate the oil fields? Wasn't gonna happen, and everybody knew it. Aside from everything else, it would have put "paid" to Kissinger's efforts in China and the Soviet Union. So no.</span></p><p><span style="font-family: georgia;">OK, so speaking of China, there's something you really need to know: Everything China does that is outward-facing is theater. Whether it's the economy, the military, the space program, or whatever, it's propaganda with questionable substance behind it. And China likes using Westerners to shill for it and has gotten really good at recruiting them. If you want details, <a href="https://www.youtube.com/@serpentza" target="_blank">here </a>is a good site to go to, run by someone who has been there. I'll just share a personal anecdote. Once upon a time, I was on a multi-discipline team China had brought in to advise it on an environmental issue. In its drive to industrialize, China had turned a number of its rivers into things that made the lower Cuyahoga look like a bubbling, mountain brook. Yet people were still living by and using the water from these rivers. China had been receiving heat from international watchdogs and investors, and so they brought in international experts to help it solve the problem. Over three years we presented several solutions. All were declared unfeasible by the Chinese authorities. In reality they were not interested in solving the problem; they were interested only in presenting an outward-facing appearance of trying to solve the problem. That's the way it works there. And that's what the latest dog-and-pony show in Riyadh is all about.</span></p><p><span style="font-family: georgia;">For a currency to be used for exchange or as a reserve, it needs a couple of things. First, it needs to be issued by a sovereign. The yuan meets that. (The euro, BTW, doesn't. Think the EU is sovereign? When the US wanted to enforce school desegregation, it sent the US Marshals and the 101st Airborne into the Cracker States to do it. Ask the EU what it would do if Germany or France told it to pound sand.) Second, it can't be pegged to another currency, because then any exchange would actually be in the peg. The yuan doesn't meet this. "But," you say, "Didn't China remove its dollar peg in 2005?" Yeah, that's what they said they did. But since then they've held the yuan in such a tight band around the dollar it might as well be pegged to it. Again, appearance vs. reality. Again, image. China can say it is trading in yuan all it wants, but so long as the yuan's value depends on the dollar, the trades are really in dollars.</span></p><p><span style="font-family: georgia;">One last note. OF remarks the US can do little to intervene in China's plans because Biden has drained the Strategic Petroleum Reserve to reduce domestic prices. I'm not a fan of Biden, but I think he's actually done a creditably crafty job here. He has used the Reserve exactly for its stated purpose, cushioning against supply shocks such as the one created by Bad Vlad. The Reserve has been drawn down significantly, but it certainly hasn't been drained. And Biden sold at the top of the market and is now resupplying at the current, much lower price. If Biden were a Republican, I suspect OF would be calling this a genius business move. At any rate, the current level of the Reserve does not hamper any steps the US may need to take concerning China's plans. Should any substantive consequences actually materialize from those plans.</span></p>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-10121375916293582592022-10-06T01:03:00.002-06:002022-10-07T07:32:59.639-06:00Nord Stream Pipelines Sabotage<p><span style="font-family: georgia;">There has been a lot of silliness bandied about concerning last week's sabotaging of the Nord Stream pipelines off Germany. First I would note I'm a Norwegian-American and maintain connections in the Old Country; I lived in Germany and maintain connections there; and once upon a time I could read Russian pretty fluently for reasons I shall not go into here other than to say it was the late 70s and early to mid 80s, so go figure it out.</span></p><p><span style="font-family: georgia;">The problem is something Sherlock Holmes warned against repeatedly: People are jumping to conclusions without facts. I expect this kind of crap from mainstream media. They have deadlines to meet, and the little problem that they have no idea what they're talking about or their sources are entirely Russian trolls is at best a secondary concern.</span></p><p><span style="font-family: georgia;">For a level-headed analysis of the matter, I recommend you watch <a href="https://www.youtube.com/watch?v=hk-0qJXyido" target="_blank">Anders Puck Nielsen</a>. More on this later.</span></p><p><span style="font-family: georgia;">More of a problem than misreporting by mainstream media is that sites that used to be go-to for solid analysis are now shoveling barnstuff with big shovels. One example is Eurotrib, which I've been on for some time and which used to be a home for a number of significant European policy analysts. Now it's virtually swamped by drivel from Oui from the Netherlands and Cat from...Planet Claire, two people who know far less about things than they think they do. On 1 October Oui dumped one of his word salads on this topic, a mishmash of "supporting cites" from legit sources that don't necessarily apply or aren't necessarily consistent (and many of which are 10, 15, or more years old), nonlegit sources such as Kim Dotcom and the Chinese government, and people who used to know better but apparently no longer do such as Pepe Escobar and Yves Smith (nom de plume for Susan Webber). Oui's conclusion: The US must have done it to stop German activists from reopening the pipelines, and Russia couldn't do it because it would only hurt them. Ahem. More on this below.</span></p><p><span style="font-family: georgia;">Speaking of Ms. Webber, she did a dump on her site, Naked Capitalism. I used to be a regular at NC back in its heyday during the financial crisis, but it has gone steeply downhill since then to the point that the bulk of its writers are there because they have nowhere else, and they don't even write under their real names. The heavy hitters, such as the MMT scholars like Bill Black, are long gone. Anyway, Ms. Webber made a blog post supported by such totally legitimate sources as the Chinese government and retired diplomat M.K. Bhadrakumar (most of whose postings were in the USSR/Russia and whose father was a very active member of the Communist Party of India) to conclude the US must have done it. She actually wrote, "On top of that, the area of the attack was heavily monitored by both Sweden and Denmark, and the Baltic generally is also well surveilled…by NATO members. And as many have pointed out, on top of Russia having at best limited opportunity, it lacks apparent motive." Impressive, every word in those sentences was wrong. First, yes NATO surveils the Baltic, and so does Russia. Second, Russia has tons of opportunities. Finally, Russia has tons of motive. More later.</span></p><p><span style="font-family: georgia;">The next day NC doubled down with Conor Gallagher's post. It takes Russian and Chinese sources at face value (In fairness it quotes Nielsen, but not on a matter that matters.) and then trots out true tinfoil-hattery with John Helmer's allegation that Poland did it on behalf of the US. Wow. Just wow.</span></p><p><span style="font-family: georgia;">If you haven't yet, go watch Nielsen's YouTube. It lays things out really well. Nielsen starts from the rational position that Russia is losing in the Ukraine. And that's the crux of the problem. The people who think the US did it and Russia couldn't have, also think Russia is winning. The pace of the attack is just Russia biding its time. The recent withdrawals in the east were completely orderly and strategic. Russia is about to unleash 300,000 well trained, well equipped, highly motivated troops on Ukraine. Why would Russia blow up the pipelines when Ukraine is about to be KO'ed, and the EU is about to lift sanctions and buy Russian again? It's like listening to MAGAts talk about how Trump won the 2020 election.</span></p><p><span style="font-family: georgia;">The truth is that Russia is losing. Badly. It was routed out of areas it had just illegally claimed sovereignty over. Civil unrest is growing. A quarter-million potential draftees have already fled, with more on the way. And the ones who will ultimately be sent will be about as effective as the Afghan Army.</span></p><p><span style="font-family: georgia;">Could the US have done it? Of course. It certainly had the opportunity and the means. But did it really have a motive? US intelligence and the military have made a lot of stupid moves over the last 75 years, but this would have been a whole 'nother smoke. Supposedly the US blew the pipelines to prevent Germany from reopening them. This ignores that there were no forces in Germany that could make the government lift the sanctions. AfD and Die Linke? Are you kidding me? So of course, let's risk the progress of the war by blowing up the pipelines, the only inevitable consequence of which will be increased turmoil in Europe.</span></p><p><span style="font-family: georgia;">Further, as Nielsen point out, none of this makes operational sense. The US could have used a fully clandestine attack, such as a cyber attack planting a seed to be triggered if someone actually <i>did</i> try to lift sanctions. If it had been a US covert attack, it would have been closer to Vyborg. It certainly would <i>not</i> have been so close to the Baltic pipeline, and the Poles would never have signed off on it.</span></p><p><span style="font-family: georgia;">Now consider Russia. Bad Vlad and his rat pack are in a corner, and they know it. They are losing on the battlefield, so they need to find a way to disrupt the opposition, break it apart, make it want to stop supporting Ukraine. So perform an act of sabotage, and use the sock puppets to blame the US. Putin's Ardennes Offensive (Not the Steiner Offensive. Yet.). Opportunity and means? With the Baltic bases right there, definitely. Motive? Oh yes. But the pipelines are Russian! Well they twarn't usin' 'em none. Remember, Putin and his people are in trouble. They need solutions immediately. They may as well get some return on the pipelines now, because there may be no tomorrow.</span></p><p><span style="font-family: georgia;">And so far, courtesy the sock puppets, the plan is working. How long it will continue to work only Winter can tell. But there's one more thing to toss in. As I mentioned above, Russia surveils the Baltic as well. Do you really think that, if Russia had spotted a US submarine operating in the sabotage area, it wouldn't have already broadcast it to the world by now? Yeah, I didn't think so. Consequently, unless a bunch of evidence rolls in actually implicating the US, I'll view anyone pointing the finger this way as tools and fools.</span></p>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-67452385072555191572022-07-17T23:09:00.004-06:002022-07-17T23:09:57.694-06:00Yet More "Financial Advice"<p><span style="font-family: georgia;">I have written <a href="https://businesslawspot.blogspot.com/2019/04/investment-advisors.html" target="_blank">previously </a>about "financial advisors" who are actually the worst sort of pitch men out for nothing more than emptying your pockets to line their own. Lately I've been tracking yet another one: Mikkel Thorup and his minions at ExpatMoney.</span></p><p><span style="font-family: georgia;">This outfit raises every red flag possible. No one has a license to provide investment advice, which is unsurprising given Thorup is a Randonazi libertardian who claims Adam Smith was opposed to all government regulation, ignoring Smith's clear statement that, if government did not stop the natural, bad acts of entrepreneurs, capitalism would collapse. So either he's never read Smith, or he's read him well enough to lie as facilely about him as the Cato Institute, the AEI, the Universities of Stanford and Chicago, the von Mises Institute, etc. No license means they can't give actual financial advice, they can only sell stuff, typically the worst sort of barn stuff (BS). They also engage in circular promotion. This week they appear on a friend's podcast where their friend declares them the greatest thing ever, and they make a sales pitch for some raging pantsload of an "investment". </span><span style="font-family: georgia;">Next week their friend appears on their podcast where they call their friend the greatest thing ever, and their friend makes a sales pitch for some raging pantsload of an "investment". And the spin keeps spinning.</span></p><p><span style="font-family: georgia;">Specifics? The major investments they're shilling are 1) real estate developments in Ambergris Cay in Belize, and 2) teak in Belize. They also have a couple other pieces of "advice" I'll get to. I'll get to Ambergris Cay in a bit too. First, teak. I will grant you, teak is a valuable wood. So long as squillionaires keep ordering yachts, there will be demand for teak. And it's really nice to work with. But none of their pitches for investments in teak plantations in Belize disclose that a commercial crop requires at least 20 years from planting to logging. That means you need at least 20 years of political and economic stability in the country where your plantation is. Belize has had at least five bond defaults or restructurings in the last 15 years. The most recent was last year, which was so bad Belize engaged in open extortion, threatening to stop all environmental protection, especially of its coral reefs, unless it could renegotiate its foreign debt. The debt was rewritten last September, underwritten by, get this, the Nature Conservancy, and the bond holders still took a 60% haircut. Reeks of stability, no?<br /></span></p><p><span style="font-family: georgia;">Ambergris Cay. Oh man. About 20 years ago the usual sorts started promoting a luxe development on the coast of Belize. Funds were raised funds went down a rat hole, and about 15 years ago it all collapsed. You can read the details in a lawsuit a guy named Haugen brought against the principal finance company, Caye International Bank, Ltd. (CIB). Haugen invested in Ambergris and thought CIB had ripped him off. That's probably true, although I can't sympathize much with Haugen, who probably thought he'd found a way to rip a bunch of people off and ended up being the rippee instead of the ripper. Unfortunately for Haugen, the investment disclosure laws throughout the libertardian paradise that is the Caribbean are nonexistent. Caveat emptor, baby. The history of the case would be a great law review article since the Caribbean Court of Appeal (aka Caribbean Court of Justice or CCJ) dumped the Belize trial court's opinion and came out in favor of CIB in a demonstration of pretzel logic worthy of Injustice Alito. The presiding justice was Justice Wit. You can't make this stuff up. It's further evidence you should never expect an honest court ruling in the Caribbean (and you may largely thank the ever-corrupt UK crown for that).</span></p><p><span style="font-family: georgia;">Oh, and the main hawnyawk for CIB was a guy named John Nagel, who was also sued. Aside from misrepresenting on his website that he'd been completely cleared (No, CCJ remanded to the Belize trial court for a determination of damages and costs.), he was Belize's ambassador to Austria during all this. That is until 2017 when Austria kicked him out for doing damn all in the way of ambassadorial duties and spending all his time on private deals. So apparently he was too much of a libertardian even for the land of von Mises and Hayek.</span></p><p><span style="font-family: georgia;">The point? ExpatMoney is promoting a revival of the Ambergris Cay development. And who's banking it? Yep, CIB. Anybody disclosing the prior collapse, or the lawsuits, or Nagel's issues? Are you kidding me? If anyone wants you to invest in this, take your money and run before they do.</span></p><p><span style="font-family: georgia;">And then there's their other "advice". First, you need to run off to someplace like Belize or Panama. Because they won't "regulate you to death". Which is code for "you can exploit the living Hell out of them". You can bring nothing, soak up resources while paying no taxes, and ultimately contribute nothing. In other words, you can impose neocolonialism. Ayn Rand wonderland.</span></p><p><span style="font-family: georgia;">And then there's the unregulated paradise they're promoting: The Free Republic of Liberland. They're trying to convince you to get your second citizenship from there, touting it as a bastion of freedom. The problem is, it doesn't exist. It's a scam by the Czech crypto-fascist </span><span style="font-family: georgia;">Vít Jedlička, who grabbed a slice of vacant land in one of the areas in dispute between Croatia and Serbia and called it his own. No place recognizes Liberland or its "citizens". But if you want to blow your money on, that's your call.</span></p><p><span style="font-family: georgia;">One other thing. ExpatMoney is based in Panama. Which means if you make the mistake of taking their "advice" and lose your shirt and your shorts, which you will, don't expect to be recover your losses. Panama has a paucity of those pesky regulation things for you to recover under. You'll just be another sap who broke on a Caribbean rock.</span></p>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-38098192841995379212021-10-16T12:32:00.001-06:002021-10-16T12:32:49.447-06:00A New Rant<p> <span style="font-family: georgia;">A new rant just posted at</span><span style="font-family: georgia;"> </span><a href="https://www.pacemaker.global/post/evergrande-was-a-margin-call-on-leveraged-real-estate-globally?postId=32d200de-99ec-47da-be36-008e937789e8" style="font-family: georgia;" target="_blank">Pacemaker</a><span style="font-family: georgia;">:</span></p><p><span style="font-family: georgia;">Real estate crashes are built into the plan and are not a bug but a feature. And with every crash, assets are further concentrated at the top of the wealth scale. Let's look at the last crash. The end of the boom was signaled Thanksgiving 2006 when Chase and Wells simultaneously (But certainly without collusion. It's a miracle!) converted the lines of credit that were an essential part of their mortgage programs into 60-month amortized loans, closing off access to credit for thousands of small businesses. Why? Well after spending the boom dead to the world, SEC and DOJ had been politically forced into semi-comatose states and had given Chase and Wells taps on the shoulders. They hurriedly solidified their LOC positions into conventional loans before throwing a few of their lackeys under the bus the following Spring to placate the regulators. By then the cat was out of the bag. But the crash didn't happen. Because the players still had too much Quatsch on their books, and their shovels were only so big. They had to find marks to unload it to. Failing that, they had to find marks to hedge it. And they had to position for post-crash opportunities. It took a year. There was turbulence along the way. New Century and American Home Mortgage went Chapter 11, a bunch of funds either closed or froze withdrawals, and B of A snapped up Countrywide, ostensibly as a bailout of Countrywide, but really to shore up B of A's balance sheet. Then the players pulled the plug, and the spring unwound. IndyMac, Bear, and Lehman folded up; Chase pushed WaMu off a cliff so it could grab its assets and shore up its balance sheet; a bunch of players, but especially Chase and Goldman, broke AIG and the Greatest Balance Sheet on Earth by loading it with rigged CDSs and other hedge positions; the houses that had put enough lipstick on their positions to keep from folding got absorbed, so B of A got Merrill Lynch, and MUFG got Morgan Stanley; and Wells got a seat at the big-boy table by winning the Wachovia sweepstakes. Then it spread to other industries, and to the rest of the world, and everyone got a nice Mike Tyson square in the face.</span></p><p><span style="font-family: georgia;">And since then? Let's just say China is not the only bubble out there. For example, right here in Salt Lake City we've been frantically tearing down commercial property and slapping up 5-8 story apartment and condo blocks. And the financing makes no sense, even with tax weirdness thrown in. Rates of return that should only acceptable on government securities, but here they are on real estate. But with interest rates effectively at zero, I guess anything is preferable. And with that we can see the game is once again afoot. Build it, then flip it out in the current inflated market to marks who are desperate for any return above 0%, then sit on your cash and wait for the next crash so you can buy it all back on the cheap. And are the regulators looking into any of this? Don't be silly. They'd rather be looking at every mortgage and rent payment in the country than at which financial institutions have all their money tied up in cash, waiting to throw the switch on the next collapse. And the grift goes on.</span></p>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-9689628307550014702021-08-06T20:11:00.000-06:002021-08-06T20:11:31.933-06:00Speaking of Shills<p><span style="font-family: georgia;">I just have to shake my head at this</span><span style="font-family: georgia;"> </span><a href="https://www.cnn.com/2021/08/06/perspectives/housing-market-home-prices/index.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fcnn_topstories+%28RSS%3A+CNN+-+Top+Stories%29" style="font-family: georgia;" target="_blank">flack piece</a><span style="font-family: georgia;"> </span><span style="font-family: georgia;">by Dana Peterson, EVP and Chief Economist for The Conference Board. First a bit about Ms. Peterson. She was appointed to her position a year ago after doing undergrad and grad in economics (*SNORT*), a stint at the DC Fed, and several years as an economist at Citi. In other words she has no real-world knowledge of real estate of business and only a selective and pigeon-holed knowledge of finance. And she's wholly owned by The Powers That Be (TPTB). As for The Conference Board, it was founded over a century ago by leading industrialists and financiers as the National Industrial Conference Board, and its job was to block labor organization and promote open-shop laws. In spite of the name change, nothing has really changed there. It has been declared "a trusted source" by the usual suspects (*COUGH*</span><i style="font-family: georgia;">Chicago Tribune</i><span style="font-family: georgia;">*COUGH*</span><i style="font-family: georgia;">Wall Street Journal</i><span style="font-family: georgia;">*COUGH*) but really just cranks out "research" designed to show that everything is proceeding smoothly and to keep regulators and media from looking into what TPTB are doing at the expense of the rest of us. Which brings us to this article.</span></p><p><span style="font-family: georgia;">Ms. Peterson's thesis is we're not in a real estate bubble. First off, she gets the dates of the prior bubble wrong. In 2005 the bubble was already late-stage, and as I noted in my prior post, it lasted until 2008 due to the machinations of the perpetrators. Second, she says fraud isn't driving the market increases this time, basic supply and demand are. This is true in a narrow and frankly sick sort of way. As she states, there is a percentage of Millennials who are moving into the housing market. She doesn't state this is a decided minority of Millennials who overwhelmingly into two groups: those who've hit the jackpot and landed stable, well-paying jobs, and those whose parents can boost them (There is of course significant overlap.). The bulk of Millennials are either scraping by in rentals they can barely afford or are still in the folks' basements (And by the way, there are plenty of folks older than Millennials scraping by with barely affordable rentals, right up to those of us on the cusp of retirement. But TPTB like to flog us for not having $1,000,000 saved away. We really do live in a bottomless crock.).</span></p><p><span style="font-family: georgia;">So I don't agree with Ms. Peterson that there is some youth parade driving the market. The reason is the same as it has been to some extent all the way back to the 70s: There aren't enough stable, living wage jobs to support a healthy single-family residence market. Since so much of our economy is dependent on that market, we've invented unhealthy ways of keeping it going, such as all the mortgage fraud 15 years ago. These methods invariably produce bubbles, and the bubbles invariably pop.</span></p><p><span style="font-family: georgia;">I would also note Ms. Peterson is wrong about there being a big change in the mortgage market from fifteen years ago (There is one exception I'll look at below.). The same banks (or their successors) are at play, the same secondary market, and the same securitization model funneling into REITs. And if you think Dodd-Frank really makes a difference, I have some oceanfront property in Yuma, Arizona to sell you.</span></p><p><span style="font-family: georgia;">So if the kids aren't alright and we don't have a bunch of mortgage fraud going on, what is driving the market? The answer actually lies in Ms. Peterson's article. Fifteen years ago there weren't enough good borrowers, so they were manufactured via fraud. Lots of creative financing: no down payment, no documentation, high loan-to-value (even over 100%), and variable interest rates everywhere. As Ms. Peterson notes, the mortgages this time are overwhelmingly conventional. Now ask yourself who can get these loans? One group is the fortunate few who have either made it or whose parents did. The other group is the one really driving this market: corporate landlords. And that's not good. Corporate landlords have deep pockets for obtaining financing, and they're using it to snap up single family residences to convert to rentals and older commercial properties to tear down and redevelop into mid-rise apartments and condos. There are entire housing subdivisions being built out there to be flipped as a package to a corporate landlord, and the entire subdivision will then be rental houses. So the housing supply is shrinking, which in turn drives prices up, which makes TPTB and their kids the only ones who can afford to buy, causing another shift of assets from ordinary people to the top. So everyone has to rent, and rents are sky-rocketing as a result. Bye bye affordable housing.</span></p><p><span style="font-family: georgia;">So what is TPTB's game? What happens to their investments if only the top 10% can afford to live in them? Are they really making a sucker's bet? I don't think so. I think they believe we've hit End Game. They know everyone has to live somewhere and they can always count on their pet government entities to bulldoze homeless camps as needed. I think they believe the next crash, and it <i>will</i> happen, will result in neofeudalism with them as the lords and ordinary people as serfs, exchanging their freedom for some hovel to live in.</span></p><p><span style="font-family: georgia;">So keep putting lipstick on that pig, Ms. Peterson. But until you have some actual evidence for what you're shoveling, I'm not buying a bit of it.</span></p>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com1tag:blogger.com,1999:blog-33613254.post-68055022335581344252021-07-14T17:57:00.003-06:002021-08-06T08:43:46.632-06:00Another Post For Idiots To Ignore<p><span style="font-family: georgia;">As I have noted</span><span style="font-family: georgia;"> </span><a href="http://realestatespot.blogspot.com/2005/12/" style="font-family: georgia;" target="_blank">elsewhere</a><span style="font-family: georgia;"> </span><span style="font-family: georgia;">(and many other elsewheres too), I started blowing the whistle on the real estate bubble in December 2005. The market was too hot, there was obvious fraud, mortgage rates were going up, etc. I didn't know when the bubble would pop because I had not yet identified the forces driving it, but I figured it had to be soon, say in the next year or so. Frankly it should have, and I guess I'll relate that tale whilst I am at it.</span></p><p><span style="font-family: georgia;">Thanksgiving 2006 Wells Fargo and JP Morgan Chase froze a pile of business lines of credit and converted them to straight loans with 60-month amortizations. When I contacted Chase, not one but two EVP/AGCs informed me Chase had done this pursuant to a clause in the LOC agreement that had been fully disclosed. While the clause did exist, the allegation it had been in any way disclosed was patently false. I then knew something strange was going on, but I did not yet know what. It took me awhile to dig up the puzzle pieces and fit them together. What was happening was that the levels of fraud in the mortgage market had become so obvious it was no longer politically feasible to continue ignoring them, and so the regulators had been awakened from their previously mandated slumbers and were now on the move. Wells, Chase, Goldman Sachs, and all the other players needed to spread some chicken feed to keep the regulators distracted while they got on with the business of lining up a nice collection of marks (AIG, Bear Stearns, Lehman Bros., pension funds, and mortal schmucks who believed the rating agencies were playing a straight game) to take the garbage off their books. The regulators pounced on the chicken feed in Spring 2007, which gave the players enough time to keep playing. And then in 2008 everything conveniently hit the fan. Wells got a seat at the big-boy table via taking over Wachovia, Chase got a new lease on life via its sandbag takeover of Washington Mutual and its sweetheart takeover of Bear (I imagine Barclays wishes it had gotten a deal like that for Lehman,), those with cash (And in spite of, or more likely because of, all the illiquidity, certain players had piles of cash.) snapped up piles of assets on the cheap (Because after all the purpose of bubbles is to pop them to allow further asset concentration in the hands of Those Who Matter.), and we hit the reset button for the next bubble. So the evidence indicates the bubble pop was delayed by over a year to protect certain players that had created the bubble in the first place.</span></p><p><span style="font-family: georgia;">Anyway. In the middle of all this, August 2006 to be precise, Peter Schiff concluded the real estate party was over and things were heading down. In December he noted the market had peaked the prior December (Now when was it again that I called my shot?) and would crash in 2007. It's apparent he was just looking at market fundamentals (as was I) and thought the market would behave according to those fundamentals (as did I), having no real knowledge of the market manipulation going on that would stall the inevitable for over a year (knowledge I did not have either). But unlike me, Schiff became a major talking head and got lots of influence and money. But I'm not bitter. At least not much. Because I can point to Schiff as an example of how even a broken clock is right twice a day.</span></p><p><span style="font-family: georgia;">Because since then he has a record of being spectacularly wrong. He thinks Medicare should be slashed, demonstrating a fundamental ignorance of how Medicare works, how it could work if expanded, and how it would be better than our current system of no one seeking medical care and when they do they have to file bankruptcy. He thinks we should replace the current income tax system with either a sales tax (which would be regressive and hit hardest those least able to afford it) or a flat tax (which would be little better). And in a doozy of pretzel logic, the US went from being a creditor nation to a debtor nation in the 1970s because people stopped saving. Yes, that must be it. Let's ignore the October 1973 OPEC embargo that ended the US's energy price advantage that had kept its products competitive around the world. Let's ignore the resulting recession that destroyed millions of jobs. Let's ignore that most people had no options allowing them to adapt to this new normal because our entire society was based on urban sprawl and the automobile. Let's ignore that productivity kept increasing, but instead of any of that gain going to wages, it was all syphoned off to pad corporate profits. Let's ignore that in spite of the recession, expenses were still going up even though wages weren't. Let's ignore that families had to get second, third, and fourth incomes to try and make ends meet. Let's ignore that that didn't work any better then than it does now. And let's ignore that people stopped saving simply because there was nothing left over to save. Schiff's positions are designed to keep moving public and private money from all of us to the 1%. He ought to change his name from "Schiff" to "Shill".</span></p><p><span style="font-family: georgia;">But he must be getting desperate, because with his latest move, he has outdone himself. He has teamed up with none other than Jim Rickards. I've noted the credibility, or lack of same, of Rickards's "financial advice" <a href="http://businesslawspot.blogspot.com/2019/04/" target="_blank">elsewhere</a>. Now they've partnered up and doubled down. And what they're selling is no better than ever. As I've said more times than I care to count, just because you've seen somebody on TV or YouTube doesn't mean you should listen to them.</span></p>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com1tag:blogger.com,1999:blog-33613254.post-74166406052217056312021-03-10T18:37:00.000-07:002021-03-10T18:37:30.085-07:00Long, Strange Trip<p><span style="font-family: georgia;">What a year. First, I'll admit straight out of the gate I was wrong about having a vaccine in Q1. The lab folks pulled a minor miracle, and we have several. I was still right about other things, though: 1) We're at the end of Q1 and have barely made a dent on the number of people vaccinated, 2) there is no end in sight for the mess the economy is in regardless of what the stock market is doing, and 3) always verify claims of expertise.</span></p><p><span style="font-family: georgia;">And of course we have had plenty of messes so far this year. Our worst was 6 January. It shouldn't have come as a surprise to anyone, but you must remember that people in general and Americans in particular don't like to notice warning signs. Everybody was surprised by 9/11 even though everyone knew you could fly a plane into a building without much trouble. Everyone was surprised by the 2008 recession even though everyone knew what goes up must come down (and had with a vengeance just eight years earlier). Everyone was surprised by the pandemic even though everyone knows viruses are out there constantly reinventing themselves. If you refuse to see what's right in front of you, expect to be punched in the nose. A lot.</span></p>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com1tag:blogger.com,1999:blog-33613254.post-60906466422314990452020-05-06T17:19:00.000-06:002020-05-06T17:19:15.691-06:00Beware Experts Who Aren't<span style="font-family: Georgia,"Times New Roman",serif;">Campbell Harvey, finance professor at the Duke business school, is an expert. He must be, it says so right on his CV. He also <a href="https://www.marketwatch.com/story/economic-expert-with-perfect-record-calling-recessions-is-betting-this-one-will-be-over-by-the-end-of-2020-2020-05-06?mod=article_inline" target="_blank">supposedly </a>has a perfect track record for calling recessions. He just put that record at serious risk. He thinks the current economic crater will be over by the end of the year. And he thinks that largely because he believes the world will know by then that we'll have a vaccine for SARS-COV-2 in Q1 2021.</span><br />
<br />
<span style="font-family: Georgia,"Times New Roman",serif;">Folks, there isn't an epidemiologist on Earth who believes we'll have a vaccine that quickly. The good professor may know a lot about business finance, but he knows so little about epidemiology he doesn't even know how little he knows (See Dunning-Kruger Effect.). I've helped a few biotech companies get started, but that in no way makes me an expert in research pathology. So the next time some supposed expert starts giving an opinion, do what we do in court (or at least what we're <i>supposed</i> to do in court): Determine whether the opinion fits within the expert's field of expertise. If it doesn't, you might as well be getting an opinion from the next person you meet on the street. Or one of my cats. Probably the brain-damaged one.</span>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-20223109396539253612020-05-06T16:53:00.002-06:002020-05-06T16:53:45.998-06:00Brighton High School Redux<span style="font-family: Georgia, "Times New Roman", serif;">As I mentioned <a href="https://businesslawspot.blogspot.com/2019/07/enough-death.html" target="_blank">previously</a>, Brighton High School (Deep Space Brighton) is being torn down and replaced by a generic box. The process is now well under way, and it really is shaping up to be just the sort of thing you eyes will slide right off of. This sort of thing has become so pervasive, I have adopted a new standard for architectural aesthetics: the Ruin Test. When the building falls to ruin, what will the people living then think of it? Will it still be interesting like the ones we now have in Greece, Egypt, Thailand, or Mexico? Or will it be something they'll want to scrape off into a dump as quickly as possible? I have a good idea where all our ugly boxes are heading. The only question is whether there will be enough landfill space.</span>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-54575351173621856392020-05-06T16:40:00.000-06:002020-05-06T16:40:10.670-06:00Law Enfarcement<span style="font-family: Georgia,"Times New Roman",serif;">OK, I'm going to pitch in on the general train wreck surrounding us, but first I have to make this comment based on a recent case. A word of advice to law enforcement people: Before you write up another creative report trying to make the subject of a traffic stop look like the worst thing since Ted Bundy and claiming he threatened you by spinning his wheels and spraying gravel at you, you might want to remember that the days of rear-wheel-drive vehicles are gone and look into the spray patterns of front-wheel-drive. Otherwise some defense counsel is going to get you on the stand and make you look like an idiot. A lying idiot.</span>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-2507906878327913732020-01-17T18:41:00.000-07:002020-01-17T18:41:19.360-07:00A Store Closing That Hurts<span style="font-family: Georgia, Times New Roman, serif;">Mountain Gear in Spokane is <a href="https://www.spokesman.com/stories/2019/dec/22/off-belay-mountain-gear-is-closing-after-37-years-/" target="_blank">closing</a>. If you needed technical gear, that was THE place to go. Now it's gone. Roskelley and I have had disagreements over a few things, notably the Oregon Episcopal School disaster on Mt. Hood, but we are of one mind here: The world is about to be a lesser place.</span>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-24543817608817130452019-11-07T15:00:00.000-07:002019-11-07T15:00:10.399-07:00New Bankruptcies<span style="font-family: Georgia, Times New Roman, serif;">So Murray Energy has <a href="https://www.dispatch.com/business/20191029/coal-producer-murray-energy-files-for-bankruptcy" target="_blank">filed</a> a Chapter 11. A few points here. First, anyone connected to the Crandall Canyon Mine Disaster knows that Robert Murray shouldn't be in bankruptcy court, he should be in prison. That place was one, big, deliberate safety violation, and nine people died. Second, for anyone who has a lick of sense, this ought to put the lie once and for all to Trump's promise to bring the coal industry back, which is no surprise at all to those of us who have spent the last four decades or so following how well Trump has kept his "promises". Third, watch out for another big load dumped on taxpayers. Perhaps the biggest reason corporations file Chapter 11 is to shed pension plans and foist them on the Pension Benefit Guarantee Corporation. Ordinarily, PBGC can refuse to take over an underfunded pension, but that authority is overcome by a confirmed Chapter 11 plan. So the PBGC ends up with yet another underfunded pension, and one of two things happens: 1) PBGC cuts benefits down to the funds available, leaving the pensioners impoverished and compelled to seek public assistance, or 2) PBGC gets a special bail-out from Congress. Either way, the bankrupt company shifts its private debt onto the general public.</span><br />
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<span style="font-family: Georgia, Times New Roman, serif;">Also filing Chapter 11 is <a href="https://www.bizjournals.com/sanantonio/news/2019/10/07/major-eagle-ford-player-declares-bankruptcy.html" target="_blank">EP Energy</a>, one of the biggest players in the Eagle Ford Shale (Full disclosure: I represented EP Energy in the III Exploration II, LP bankruptcy.). I think it is apparent that everyone in the oil shale play is hurting and the hot money that has been propping it up is cooling. So is this why gas prices just bumped up? Doubt it. EP filed a month ago, and it was already common knowledge then there was trouble in Oil Shale City, so all that should have been factored into prices some time ago. No, I think it's far more likely, as I've commented <a href="https://businesslawspot.blogspot.com/2019/07/this-is-market.html" target="_blank">before</a>, that gas prices just jumped for no other reason than that they can. Don't expect gas prices to be affected by anything that happens in that place called Reality.</span>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-17829346019574448402019-08-05T15:07:00.000-06:002019-08-05T15:07:15.251-06:00More Market Craziness<span style="font-family: georgia, "times new roman", serif;">As I recently <a href="https://businesslawspot.blogspot.com/2019/04/more-vacancies.html" target="_blank">blogged</a>, </span><span style="font-family: georgia, "times new roman", serif;">markets are not making sense. One of the things I noted was gas prices, which are jumping back up a full month before Labor Day and without any change in the threat posturing in the Middle East. Prices are going up because they just can. I also commented about the crazy money going into multi-family housing. This week I learned it's worse than I thought. The cap rates on these projects are running as low as 4%. There is much debate about what all goes into a cap rate, but for our purposes it is the annual rate of return an investor expects from an investment. A high cap rate indicates a risky, volatile, short-term investment. The investor needs a high rate of return to get its return and quickly flip the investment. In contrast, a low cap rate indicates a safe, stable, long-term investment. 4% is low. In fact to get lower, you have to go into the world of government and high-grade corporate bonds. Serious buy-and-hold strategies with almost guaranteed returns. Is multi-family construction that stable? Not hardly. Which means Mr. Market has a fire hose of money aimed at a sector that can't give adequate returns. Just like the Dotcom Boom. Just like mortgage-backed securities. Just like oil shale and tar sands. Which means we're just pumping up another bubble. When people talk about markets, what they are really talking about is marks. Don't be their next mark.</span>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com1tag:blogger.com,1999:blog-33613254.post-16759372612553853392019-07-27T17:43:00.000-06:002019-07-27T17:43:22.469-06:00Enough Death...<span style="font-family: Georgia, Times New Roman, serif;">...time for some simple destruction. Last Saturday was a farewell open house at Brighton High School. They're going to tear down Deep Space Brighton and replace it with, of course, another generic box. In other words, they're tearing down yet another architecturally significant structure and replacing it with yet another pile of brick and glass that will slide right off your eyes and mind. I got ripped on the local message board for this opinion, but I will hold to it: This is the sort of planning and design "thinking" that gave us the abomination that is the Abandoned Borg Cube we now have for a federal courthouse. Keep it up, folks, and we'll end up with a structural environment that will make Soviet-era housing blocks look dynamic and exciting.</span>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-17913198676562289702019-07-24T13:33:00.000-06:002019-07-24T13:33:19.758-06:00And Now Rutger Hauer...<span style="font-family: Georgia, Times New Roman, serif;">...is <a href="https://www.theguardian.com/film/2019/jul/24/rutger-hauer-star-of-blade-runner-dies-aged-75" target="_blank">gone</a>. And all these memories will be washed away like tears in the rain.</span>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-68823724690076260602019-07-23T11:47:00.001-06:002019-07-23T11:47:36.468-06:00Unfortunately,...<span style="font-family: Georgia, Times New Roman, serif;">...Chris Kraft has <a href="https://www.npr.org/2019/07/22/509400570/chris-kraft-one-of-the-architects-of-the-u-s-space-program-dies-at-95" target="_blank">died</a>.</span>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-59729826098439381462019-07-20T17:36:00.001-06:002019-07-20T17:36:54.477-06:00Apollo 11<span style="font-family: Georgia, Times New Roman, serif;">And let's not overlook that today is the 50th anniversary of the first Moon landing. I remember it well, sitting in the living room with the folks, Dad's folks, and my kid sister, staring at our black & white console TV, trying to decipher those fuzzy images (The ghostly images inspired the name of the Apollo 16 command module <i>Casper</i>.). The exact time was 2156 CDT. I'd long since given up my early dream of being an astronaut because everyone knew NASA didn't take guys with glasses (and thereby setting off on the course that eventually led to law; maybe I should have stayed with plumbing and electric) but I was still deeply interested. We were watching Huntley and Brinkley because we always watched NBC News (Imagine short-attention-span theater news programs these days using Beethoven for their theme music.) unless I got it switched over to ABC because a I needed a Jules Bergman fix.</span><br />
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<span style="font-family: Georgia, Times New Roman, serif;">And now Neil Armstrong is seven years dead, Buzz Aldrin is 89, and Michael Collins will turn 89 later this year. I went back through the astronaut lists, and most are gone. John Glenn was the last of the Mercury astronauts when he died in 2016. Gemini has survivors: In addition to Collins and Aldrin there are Jim McDivitt (90), Frank Borman (91), Jim Lovell (91), Tom Stafford (89 in September), and David Scott (87). For Apollo: In addition to the Gemini survivors, there are Walt Cunningham (87), William Anders (86 later this year), Rusty Schweickart (84 later this year), Fred Haise (86 later this year), Alfred Worden (87), Ken Mattingly (83), Charles Duke (84 later this year), and Harrison Schmitt (84). Keep on keeping on, guys.</span>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-64973257687668223232019-07-20T17:01:00.001-06:002019-07-20T17:01:47.426-06:00This is a Market?<span style="font-family: Georgia, Times New Roman, serif;">I <a href="https://businesslawspot.blogspot.com/2019/04/more-vacancies.html" target="_blank">commented</a> recently about how the real estate market seems to be perpetually warped. Investment money is supposed to pursue a return, preferably the best one available, but what we in fact have is money being frantically thrown at one bubble after another, twisting supply and demand into unrecognizable states and consequently twisting the market into something that isn't really a market, at least not one of any use, unless by "use" you mean "running serial con games."</span><div>
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<span style="font-family: Georgia, Times New Roman, serif;">Real estate is not unique in this. Look at gas prices. Historically, gas prices come down after Memorial Day. This year, they've come down a ton. And they've done so in the face of a major piece of news: tensions between the US and Iran that could shut down the Strait of Hormuz. If markets were actually functioning, oil speculators would take this news and jump into the spot and futures markets with both feet, driving prices up Memorial Day be hanged. But that isn't happening. And even stranger, no one is commenting on this. I'm left singing Led Zeppelin, "And it makes me wonder."</span></div>
Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-48659019143411925392019-07-20T16:36:00.001-06:002019-07-20T16:36:36.759-06:00Bankruptcy Attorneys<span style="font-family: Georgia, Times New Roman, serif;">If you watch late-night infomercials and rely on other such sources, you might believe filing bankruptcy is a simple thing. As with most things presented as simple on such programs, such as real estate investing, the only simple thing is the mind of anyone who buys the sales pitch. It simply isn't that simple.</span><br />
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<span style="font-family: Georgia, Times New Roman, serif;">First, the Bankruptcy Code is complex. It isn't just convoluted; at points it's internally contradictory because, well, Congress. I think the BAPCPA, the big revision in 2005, was actually written by chimps pounding on typewriters with mislabeled keys. Then there are the Bankruptcy Rules, which ostensibly implement the Code but frequently leave you going, ""Wait, what?" Then there are the local rules, which change frequently and are notorious for the messes they leave behind. And on top of it all, there is "local practice", the aggregated quirks of the judges, clerks, and trustees in each court. Many of these were first crafted to deal with a particular problem and have since been conflated into a "one-size-fits-all" approach. And in many of these situations, I'm left quoting Eleanor of Aquitaine in <i>The Lion in Winter</i>, "You're clever, but I wonder if you're right."</span><br />
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<span style="font-family: Georgia, Times New Roman, serif;">If you find yourself up against a financial wall, don't try digging through the wall yourself; it's likely to collapse on you. Go to the professionals and get real advice. It's worth it.</span>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0tag:blogger.com,1999:blog-33613254.post-67627299452794423152019-04-08T12:04:00.001-06:002019-07-20T15:53:42.347-06:00More Vacancies<span style="font-family: "georgia" , "times new roman" , serif;">And once again I am left scratching my head over local real estate management practices. First, though, a moment of silence for the downtown Baskin-Robbins. It's closed, and it sports a fatuous sign inviting you to the Sugarhouse location, a wholly useless alternative for anyone downtown. All that's left for ice cream downtown is chi-chi shops with such high fat content your arteries clog just walking by and inhaling.</span><br />
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<span style="font-family: "georgia" , "times new roman" , serif;">Anyway. Also closed now are all but one of the Firestone service centers in the valley. Apparently, they couldn't agree on a new master lease. I imagine Bridgestone (Firestone's parent) was driving a pretty hard bargain, and I imagine the landlord did not want taken advantage of, but now the landlord is stuck with a bunch of vacant properties and no revenue stream to cover the expenses. Not a good business model. Apparently Burt Bros. is expanding into a few of them, but don't expect me to darken their door any time soon, given that they borked two of my cars on three separate occasions.</span><br />
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<span style="font-family: "georgia" , "times new roman" , serif;">At least the landlord doesn't have to worry about a pile of similar buildings being slapped up in competition. The hot money is now in multi-family residential. Man, I would like to be able to follow the tax and accounting tricks that make chronic overbuilding make sense. There must be <i>something </i>there. All I know is that we have medium-rise condos and apartments popping up like mushrooms on the Olympic Peninsula. And don't think they're taking advantage of affordable housing programs. A $400,000 condo or $2,000/month apartment isn't affordable housing. Makes you wonder if there are enough people who can afford all this new space. Probably aren't. In which case, here comes the next bubble, everyone get ready for a big POP!</span>Knute Rifehttp://www.blogger.com/profile/02345893660115107054noreply@blogger.com0