The Bizarre and Corrupt World of Prediction Markets

This is an excellent overview of the latest fad in online gambling.

US Shipbuilding and the Jones Act

Last month, I had the chance to sit down with 60 Minutes correspondent Lesley Stahl for a piece on the moribund state of US commercial shipbuilding. That story, “Turning the Ship Around,” aired last weekend, and having now seen it, I’d like to offer a few thoughts.

The segment opens with Stahl describing the US commercial shipbuilding industry as “nearly extinct.” The numbers back her up. As she points out, US shipyards produce around three ships per year. That’s less than what South Korean shipbuilder Hanwha produces in a month. But even that may be too charitable. Three is the US average over the last 25 years. This decade, US shipyards are on track to average roughly one per year.

But that’s just oceangoing cargo ships. Widening the aperture to include other vessel types does little to improve the picture. The most recent data show that the United States, the world’s second-largest manufacturing country, accounts for just 0.04 percent of global commercial shipbuilding output—good enough for 19th place. Over the past decade, the US has averaged 0.24 percent of global output. And it’s trending down.

South Korean firm Hanwha, however, says it will reverse the matter. According to the CEO of its Philly Shipyard, which the company purchased in 2024 for $100 million, the yard is set to transform into a 21st-century enterprise...

Read the rest here.

The UK is a Warning to the Rest of the World

HT Blog reader Kurt.

I had never heard of this guy before but found the arguments presented to be cogent and well backed by sources and statistics. 

The US Stock Market is shrinking. Should we be worried?

The number of publicly traded companies in the United States is shrinking. Jamie Dimon, one of the world’s most influential business leaders, is worried.

At their peak in 1996, there were 7,300 publicly traded companies in the US. Today there are about 4,300.

It’s not that America has 40% fewer companies than it did 30 years ago, it’s that companies are increasingly staying private, largely outside the scrutiny of the public eye.

“The total should have grown dramatically, not shrunk,” wrote Dimon, CEO of JPMorgan Chase, in his annual shareholder letter on Monday.

The PE boom: The shrinking public market has private equity to blame — funds that pool money from investors to acquire or invest in companies.

When a PE fund buys a public company, it takes that company private. When it buys a company that isn’t yet public, it is kept that way. That means these funds have complete control over their companies and can encourage them to boost their profits as quickly as possible for a quick sale later down the line.

The number of private companies in the US backed by PE firms has grown from 1,900 to 11,200 over the last two decades, according to JPMorgan data.

Publicly listed companies are subject to regulatory oversight and disclosure requirements, which help ensure transparency and maintain investor confidence. With fewer companies listed, there may be a decrease in overall transparency and investor trust in the market, said Matthew Kennedy, head of data and content at Renaissance Capital.

Additionally, a company owned by PE can obfuscate ownership, what the company actually does and its profit the public and from regulators.

Dimon’s company, of course, makes a huge amount of money from taking companies public, so he’s not exactly an impartial observer. But Dimon said his concerns are broader than JPMorgan’s bottom line: If this trend continues, our understanding of the US economy could become hazier, he argued.

Read the rest here.

Irony

New York's Democratic Socialists have run afoul of the state's infamously byzantine red tape and may be on the hook for hundreds of thousands of dollars. This could put a serious strain on the party's finances.

Why San Francisco Flushed $1.7 Million Down A Toilet They Couldn't Build

...Fifteen months after city officials were ready to throw a party in the Noe Valley Town Square to celebrate funding for a tiny bathroom with a toilet and sink, nothing but mulch remains in its place.

The toilet project broke down the minute taxpayers realized the city was planning an event to celebrate $1.7 million in state funds that local politicians had secured for the lone 150-square-foot structure. That’s enough to purchase a single-family home in San Francisco — with multiple bathrooms.

Even more confounding was the explanation that the tiny bathroom would take two to three years to install because of the city’s labyrinthine permitting and building process. City leaders quickly canceled their potty party, and Gov. Gavin Newsom of California took back the funds.

Read the rest here.

You know that you have lost it when even the New York Times is roasting your city for its dysfunctional moonbat government that can't build a single seater public relief station with a budget of more than a million and half and spends another half million on designer trash bins that run $12k a pop. (They decided not to go ahead with that one either.)

California’s minimum wage woes are a cautionary tale for the nation

As people rushed to do holiday shopping and prepare meals for family gatherings last month, it was impossible not to notice the rise in prices in recent years. The same is true for the price of labor, particularly for low-wage workers in California — and this is not coincidental.

California’s minimum wage increased from $15.50 an hour to $16 an hour on Jan 1. But some workers will see an even bigger hike. 

Fast food workers will enjoy a $20 per hour minimum wage — a 29 percent increase over the previous rate — beginning in April, and certain health care employees will see a jump to as much as $23 an hour in June, rising to $25 an hour in 2026. Notably, the latter includes not only what one might usually think of as health care workers, but also medical facility support staff, including janitors and cleaning crews, security guards and hospital gift shop cashiers.

The economic implications are all too familiar, as we have seen this scenario play out over and over again. A portion of the increase in labor costs for minimum wage workers will be passed along to consumers through higher prices. Indeed, within weeks of the fast food minimum wage bill, Assembly Bill 1228, being signed into law in September, McDonald’s and Chipotle announced that they would be forced to raise food prices in California.

Some workers will benefit, but many others will see their hours cut and benefits slashed or end up losing their jobs to compensate for the higher costs. Pizza Hut restaurants across the state are already planning on eliminating more than 1,200 delivery driver positions (a number that is likely to grow) in response. And in New York City, which just raised its minimum wage to $17.96 an hour last month, companies such as Uber and DoorDash are compensating by imposing higher delivery fees, and food delivery workers are seeing fewer tips and reduced hours and scheduling flexibility. 

Read the rest here.

In Congress a Bipartisan Push to Rein in Big Tech

House lawmakers proposed a raft of bipartisan legislation aimed at reining in the country’s biggest tech companies, including a bill that seeks to make Amazon.com Inc. and other large corporations effectively split in two or shed their private-label products.

The bills, announced Friday, amount to the biggest congressional broadside yet on a handful of technology companies—including Alphabet Inc.’s Google, Apple Inc. and Facebook Inc. as well as Amazon —whose size and power have drawn growing scrutiny from lawmakers and regulators in the U.S. and Europe.

If the bills become law—a prospect that faces significant hurdles—they could substantially alter the most richly valued companies in America and reshape an industry that has extended its impact into nearly every facet of work and life.

One of the proposed measures, titled the Ending Platform Monopolies Act, seeks to require structural separation of Amazon and other big technology companies to break up their businesses. It would make it unlawful for a covered online platform to own a business that “utilizes the covered platform for the sale or provision of products or services” or that sells services as a condition for access to the platform. The platform company also couldn’t own businesses that create conflicts of interest, such as by creating the “incentive and ability” for the platform to advantage its own products over competitors.

A separate bill takes a different approach to target platforms’ self-preferencing. It would bar platforms from conduct that “advantages the covered platform operator’s own products, services, or lines of business over those of another business user,” or that excludes or disadvantages other businesses.

The proposed legislation would need to be passed by the Democratic-controlled House as well as the Senate, where it would likely also need substantial Republican support.

Each of the bills has both Republicans and Democrats signed onto it, with more expected to join, congressional aides said. Seven Republicans are backing the bills, with a different group of three signing on to each measure, according to a person familiar with the situation.

“Unregulated tech monopolies have too much power over our economy,” said Rep. David Cicilline (D., R.I.), the top Democrat on the House Antitrust Subcommittee. “They are in a unique position to pick winners and losers, destroy small businesses, raise prices on consumers, and put folks out of work. Our agenda will level the playing field.”

Rep. Ken Buck (R., Col.), the panel’s top Republican, said he supports the bill because it “breaks up Big Tech’s monopoly power to control what Americans see and say online, and fosters an online market that encourages innovation.”

Read the rest here.

Anti-trust laws have largely fallen into a coma over the last forty or so years and the new tech economy urgently needs some regulation. I haven't read any of these bills, but in principle I support doing something to check the dangerous level of power these monster companies now wield. The fact that both parties, that otherwise can't seem able to agree on what time their committees should take a bathroom break, seem to be moving in the same direction here, is encouraging. 

India mulling ban on Bitcoin and other cryptocurrencies

India’s government plans to introduce a bill in the country’s lower house that would ban private cryptocurrencies such as bitcoin and create a national cryptocurrency. 

The so-called “Cryptocurrency and Regulation of Official Digital Currency Bill” moves “to create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India.” 

Additionally, “the bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.”

Fronted by Prime Minister Narendra Modi, the right-wing Bhartiya Janata Party currently have control of India’s two houses of Parliament (the Lok Sabha and the Rajya Sabha), giving the legislation a strong possibility of passing.

Bitcoin’s value jumped more than 20% to $38,566 on Friday after Elon Musk changed his personal Twitter bio to #bitcoin.

Read the rest here.

This is one of the main reasons cryptos will never replace gold as the ultimate currency hedge. Governments can effectively regulate or throw the off switch on any or all crypto-currencies at will and there is basically nothing that anyone can do about it. 

California to require solar panels on all new dwellings

California has a major housing crisis and people at the lower end of the socio-economic scale are leaving in droves because of the high cost of living in the Golden State. A large part of that is the result of high taxes on just about everything and one of the most unfriendly environments for business in the Union. Adding around $10k to the price of a new house doesn't strike me as likely to help with that.

USDA Threatens To Shut Down Farm For Conservative Article In Break Room

Maybe it’s just nostalgia talking, but the slaughtering, processing, packaging, and distribution of animals used to be so much simpler.

For hundreds of years, the meat-packing industry bore the responsibility for transforming Bessie the Cow into carnivores’ favorite source of protein, and more recently the Food Safety and Inspection Service inspectors of the U.S. Department of Agriculture ensured that the finished product was “safe, wholesome, and correctly labeled and packaged.”

Not so anymore. Due to agency rules issued during the Obama era, FSIS inspectors enjoy expanded duties, including monitoring facilities for any “disrespectful” or “insult[ing]” communication (no, not among the animals). Should they uncover any such communication, inspectors are empowered to take “corrective action,” even if that involves slicing and dicing fundamental freedoms guaranteed by the First Amendment.

The Fateful Day Don Put an Article in the Break Room

Predictably, unleashing meat inspectors to police the exercise of free speech—with guidelines that provide only vague directional prodding—is the equivalent of releasing a bull in a china shop. At least, it was for Don and Ellen Vander Boon, the owners of West Michigan Beef Company. (To be fair, Mythbusters found that bulls can be surprisingly respectful of grandma’s china. The same cannot be said for the USDA and the First Amendment.)

The USDA threatened to shut down this family-owned company, not because of health concerns, or because short ribs were incorrectly labeled as plate ribs (incidentally, you would not believe the labeling requirements), or because People for the Ethical Treatment of Animals infiltrated their ranks in some sort of hostile takeover bid. Rather, the so-called offense consisted of an article Don placed in the breakroom.

The breakroom at West Michigan Beef includes tables that essentially serve as a repository for newspapers, magazines, articles, and other forms of literature that employees or the owners wish to share with those who care to read them. Think of it as a pre-technological Facebook. Importantly, no one is required to read the materials, any more than I am required to flip through a two-year old copy of People while sitting in my dentist’s lobby, or to read my friend’s Facebook post about replacing smoke detector batteries (true story).

In 2015, following the Supreme Court decision in Obergefell v. Hodges that purported to redefine marriage for the entire country, various employees shared articles and information related to the decision. Don participated by sharing an article that expressed the traditional Christian view that God designed marriage as a union between a man and a woman and set forth reasons for that position.

When a USDA public health veterinarian, the on-site inspector, saw the article in the breakroom, well, he had a cow. He removed the article and reported it to his USDA supervisor. The pair stampeded into Don’s office and threatened to remove USDA inspectors—effectively shutting down the facility—if Don returned the article to the breakroom, stating the article was offensive and harassing under expanded agency rules.

Read the rest here.

Some Rare Good News for Investors (and bad news for Wall Street)

Any day now, the U.S. Department of Labor is expected to finalize new rules that would change the way financial advisors are allowed to give advice to their clients.

The controversial changes are meant to reduce the conflict of interest among broker-dealers and financial advisors who advise consumers on how to invest their savings. And the rules would apply to both major firms like Fidelity and Vanguard as well as smaller independent ones. As it stands, broker-dealers receive commissions based on the products they sell their clients, which critics say creates an inherent conflict of interest. Under the new rules, broker-dealers would be required to act in their clients’ best interest rather than encouraging money moves that directly benefit the broker’s bottom line. The fancy word for this is “fiduciary duty.”

Read the rest here.

Republican Congress Plans to Dilute Regulation of Wall Street

WASHINGTON, Jan 7 (Reuters) - The U.S. House of Representatives expects to vote Wednesday on legislation retooling a series of financial regulations, an early sign that Republican leaders will attack President Barack Obama's Wall Street reforms this year.

Scaling back reforms including the so-called Volcker rule on banks is a top Republican priority as stated on the website of House Majority Leader Kevin McCarthy of California

.

The proposal is one of the first votes House lawmakers will take this year after the Republican Party formally took control of both chambers of the U.S. Congress this week following last November's congressional elections.

Read the rest here.

Ignoring the fact that this is just plain wrong, it's also stupid politics. The GOP is playing into the hands of Obama. The mega  banks are as crooked as my dog's hind legs and pretty much everybody knows it. Obama will veto anything along the lines of what the GOP is planning thus coming across as a hero for the folks on Main Street who are sick of the preferential treatment that the Wall Street banksters get.

Big Banks Warned to Clean Up Their Act

Federal Reserve Bank of New York President William Dudley delivered a stern warning to the largest banks in a speech earlier this week. Either clean up your illegal and unethical behavior through "cultural change" from within, he said, or be broken into smaller, more manageable pieces. 

In his conclusion, the warning was direct and explicit:

Read the rest here.

Going Dutch: How to run a functional pension system

Imagine a place where pensions were not an ever-deepening quagmire, where the numbers told the whole story and where workers could count on a decent retirement.

Imagine a place where regulators existed to make sure everyone followed the rules.

That place might just be the Netherlands. And it could provide an example for America’s troubled cities, or for states like Illinois and New Jersey that have promised more in pension benefits than they can deliver.

“The rest of the world sort of laughs at the United States — how can a great country like the United States get so many things wrong?” said Keith Ambachtsheer, a Dutch pension specialist who works at the University of Toronto — specifically at its Rotman International Center for Pension Management, a global clearinghouse of information on how successful retirement systems work.

Read the rest here.

Yet another great court ruling

Here's to another great decision from the courts for personal freedom, and a black eye for the nanny state.

The Bloomberg big-soda ban is officially dead.

The state’s highest court on Thursday refused to reinstate New York City’s controversial limits on sales of jumbo sugary drinks, exhausting the city’s final appeal and handing a major victory to the American soft-drink industry, which bitterly opposed the plan.

In a 20-page opinion, Judge Eugene F. Pigott Jr. of the New York State Court of Appeals wrote that the city’s Board of Health “exceeded the scope of its regulatory authority” in enacting the proposal, which was championed by former Mayor Michael R. Bloomberg.

Read the rest here.

OK. Let's be brutally honest here. Soda is one of the worst things sold for human consumption that doesn't come with a health warning label attached. But while the government is within its rights to warn the citizenry about the health risks of certain products, in the end what people choose to eat or drink is their own business. So for those craving a super sized cup of liquid diabetes, drink up and rejoice! It's still a semi free country, even in New York.

Feds prepare tougher rules for banks

Federal regulators are poised to approve a tougher-than-expected version of the so-called Volcker Rule, adopting a harder line in recent weeks against Wall Street risk-taking, according to a copy of the rule reviewed by The New York Times.

The rule, which comes to a vote on Tuesday, is a symbol of the Obama administration’s post-financial-crisis crackdown on Wall Street. In particular, it bans banks from trading for their own gain, a practice known as proprietary trading.

In doing so, the Volcker Rule takes aim at the sort of risk-taking responsible for a $6 billion trading blowup last year at JPMorgan Chase. The bank claimed it was trading to hedge its broader risks, but instead built a position that racked up large profits before spinning out of control.

To prevent such blowups, the rule will require banks to deploy “independent testing designed to ensure that the positions, techniques and strategies that may be used for hedging may reasonably be expected to demonstrably reduce” the risks, according to the version reviewed by The Times. And the risks, the rule says, must be “specific, identifiable” rather than theoretical and broad.

Read the rest here.

New York: Bad News For The Food Fascists

(Reuters) - New York City Mayor Michael Bloomberg's controversial plan to keep large sugary drinks out of restaurants and other eateries was rejected by a state appeals court on Tuesday, which said he had overstepped his authority in trying to impose the ban.

The law, which would have prohibited those businesses from selling sodas and other sugary beverages larger than 16 ounces (473 ml), "violated the state principle of separation of powers," the First Department of the state Supreme Court's Appellate Division said.

The decision, upholding a lower court ruling in March that struck down the law, dealt a blow to Bloomberg's attempt to advance the pioneering regulation as a way to combat obesity. Beverage makers and business groups, however, challenged it in court, arguing that the mayoral-appointed health board had gone too far when it approved the law.

A unanimous four-judge panel at the appeals court agreed, finding that the board had stepped beyond its power to regulate public health and usurped the policy-making role of the legislature.

Read the rest here.

For the record, I don't encourage people to drink soda. It really is just horrible stuff and a major contributing factor to all kinds of health problems. But it's a semi-free country, even in New York for the moment. So if you've got a craving for a super sized container of liquid sugar, knock yourself out.

North Carolina May Ban Tesla Sales To Prevent “Unfair Competition”

No. I'm not making this up.

From the state that brought you the nation’s first ban on climate science comes another legislative gem: a bill that would prohibit automakers from selling their cars in the state.

The proposal, which the Raleigh News & Observer reports was unanimously approved by the state’s Senate Commerce Committee on Thursday, would apply to all car manufacturers, but the intended target is clear. It’s aimed at Tesla, the only U.S. automaker whose business model relies on selling cars directly to consumers, rather than through a network of third-party dealerships.

The bill is being pushed by the North Carolina Automobile Dealers Association, a trade group representing the state’s franchised dealerships. Its sponsor is state Sen. Tom Apodaca, a Republican from Henderson, who has said the goal is to prevent unfair competition between manufacturers and dealers. What makes it “unfair competition” as opposed to plain-old “competition”—something Republicans are typically inclined to favor—is not entirely clear. After all, North Carolina doesn’t seem to have a problem with Apple selling its computers online or via its own Apple Stores.

Read the rest here.

France Drowns Itself In Regulation

ALBARET-SAINTE-MARIE, FRANCE — Although he is rich with 25 years of experience as mayor of this little town in the wooded hills of central France, Michel Therond gets advice from the bureaucrats in Paris almost every time he opens the mail.

One day’s delivery brings a directive stipulating that the sidewalks must be widened to permit two wheelchairs to cross paths without bumping. Another says the school cafeteria must be made accessible by elevator. Trees must be trimmed of branches six feet up their trunks, the orders go, and only government-certified technicians can change a light bulb on city property.

“We are being strangled,” Therond complained, sifting through a pile of rules and regulations on his desk that he largely ignores — and many of which he does not even understand.

Read the rest here.