Whatever you think of gambling, its regulations are mesmerizing. Gambling is outlawed in one way or another in all 50 states, but almost all — except Hawaii (surprisingly) and Utah (less so) — have exceptions. Most offer state-run lotteries. Thirty allow Indian casinos. Seventeen have full-scale non-Indian casinos (New York and Massachusetts are poised to join that group.) In each case, government officials limit the number of casinos and determine where they will be located. … Economically speaking, these anticasino regulations are the single greatest profit generator for casino operators. By limiting the number and location, and therefore artificially keeping the market underserved, governments essentially guarantee outsize profits for those in business. (The New York City Taxi and Limousine Commission, which limits cab licenses, ensures a similar regulatory oligopoly, as do many state liquor-distribution regulators.) If there were unlimited licenses, each casino operator would have to compete — like every restaurant or movie theater — with all the others.
It was a typical workday morning at Wanjia Asset Management Co. in Shanghai's downtown financial district, but the firm's star bond trader Zou Yu was not at his desk. … Zou, 31, had mysteriously failed to report for his job as head of Wanjia's fixed-income department. And his whereabouts remained unknown until five days later when the firm, on April 16, announced that the police had taken Zou into custody for alleged, unspecified financial crimes. … Zou thus joined a growing list of allegedly unsavory bond traders, securities brokers, bankers and fund managers nabbed by authorities this year in their effort to stop illegal deal-making on the nation's interbank bond market.
Why the search leader’s antitrust deal fell apart ... The more Europeans rely on Google, however, the more they’ve come to fear it, making it an easy target for politicians. Last November members of the European Parliament voted 384 to 174 for a symbolic proposal to break up the search giant into two separate pieces—its monolithic search engine and everything else. In Spain, Google has been forced to shut down Google News over copyright issues. In Germany, it has stopped collecting images for its Street View navigation service because of privacy concerns. The memory of Stasi secret police surveillance in the former East makes such issues especially sensitive. More recently, Google has been forced to comply with an EU “right to be forgotten” ruling and to remove embarrassing items from its search database at the behest of users. ... Critics now draw from a wealth of evidence about the decision-making inside the Googleplex during this period, owing to perhaps the strangest twist in the entire case. Earlier this year every other page of a staff memo written by the Federal Trade Commission’s Bureau of Competition was mistakenly included in the response to a Freedom of Information request made by the Wall Street Journal. The 169-page FTC document quotes liberally from internal e-mails and memos, during the time when Google’s partners were noticing many of these changes to the search engine—and what they contained seemed incriminating.
Economists are always right, even when they are not, aren’t they? Fat chance. The reality is very different. Writing these letters is akin to being constantly exposed, and – at times - looking rather silly. But I still enjoy it, so allow me to stick my neck out again and go against the consensus, because that is, at the end of the day, how you make money in this industry. ... The broad consensus is that DM countries are finally returning to some sort of normality (often called the New Normal), following years of Zombie-like conditions. There is, admittedly, a growing recognition that GDP growth is likely to disappoint for quite a while to come, but I believe that ‘quite a while’ should be measured in decades and not, as most seem to believe, in years ... In the following, I will argue that GDP growth will disappoint for a very long time to come, and that will obviously have an effect on corporate earnings growth as well. As I see things, most investors are still way too optimistic on GDP growth and corporate earnings growth for the next many years. ... There are in reality not one but at least four reasons why returns on financial assets will1 disappoint in the years to come, and they are (in no particular order):
1. Regulatory changes.
2. The end of the debt super-cycle.
3. Wealth-to-GDP to normalise.
4. A deteriorating demographic outlook.
One particular section of Chapter 3 caught Bloom’s attention. There, the SEC suggested that “an alternative approach be examined” and posited that if well-capitalized specialists and supplementary market makers could have turned to a single “product” for trading baskets of stocks, the market damage—and volatility—may have been significantly smaller. Indeed, such a product might even have prevented the crash by providing a liquidity buffer between the futures market and individual stocks. “I walked into Nate’s office and said, ‘Here’s an opening we could drive a truck through,’ ” Bloom says. ... Of course, today we do have what the report refers to as basket-trading products. We call them exchange-traded funds, or ETFs, and they’re a $3 trillion global industry, with more than 6,780 products on 60 exchanges to choose from. In the U.S. last year, ETFs traded about $20 trillion worth of shares—more than the country’s gross domestic product. ... “We were essentially reverse-engineering what the SEC called for in their report,” Bloom says. “We viewed it as a product proposal being made by the regulators.”
Since we’re in the midst of election season, with promises of cures for our economic woes being thrown around, this seems like a particularly appropriate time to explore what can and can’t be achieved within the laws of economics. Those laws might not work 100% of the time the way physical laws do, but they generally tend to define the range of outcomes. It’s my goal here to point out how some of the things that central banks and governments try to do – and election candidates promise to do – fly in the face of those laws. ... Let’s start with central banks’ attempts to achieve monetary stimulus. When central banks want to help economies grow, they take actions such as reducing the interest rates they charge on loans to banks or, more recently, buying assets (“quantitative easing”). In theory, both of these will add to the funds in circulation and encourage economic activity. The lower rates are, and the more money there is in circulation, the more likely people and businesses will be to borrow, spend and invest. These things will make the economy more vibrant. ... But there’s a catch. Central bankers can’t create economic progress they can only stimulate activity temporarily. ... In the long term, these things are independent of the amount of money in circulation or the rate of interest. The level of economic activity is determined by the nation’s productiveness. ... Much of what central banks do consists of making things happen today that otherwise would happen sometime in the future. ... the truth is, this “tyranny of the majority” is an unhealthy development. First, society does better when able members have strong incentive to contribute. Second, upward aspiration and mobility will be constrained when taxes become confiscatory. Finally, taxpayers aren’t necessarily powerless in the face of rising tax rates.
The problem stretches well beyond one tainted probiotic. Dietary supplements—vitamins, minerals, herbs, botanicals, and a growing list of other “natural” substances—have migrated from the vitamin aisle into the mainstream medical establishment. Hospitals are not only including supplements in their formularies (their lists of approved medication), they’re also opening their own specialty supplement shops on-site and online. Some doctors are doing the same. According to a Gallup survey of 200 physicians, 94 percent now recommend vitamins or minerals to some of their patients; 45 percent have recommended herbal supplements as well. And 7 percent are not only recommending supplements but actually selling them in their offices. ... Consumers are buying those products in droves. According to the Nutrition Business Journal, supplement sales have increased by 81 percent in the past decade. The uptick is easy to understand: Supplements are easier to get than prescription drugs, and they carry the aura of being more natural and thus safer. Their labels often promise to address health issues for which there are few easy solutions. ... It’s tough to say what portion of those products pose a risk to consumers. A 2013 report from the Government Accountability Office (GAO) found that from 2008 through 2011, the FDA received 6,307 reports of health problems from dietary supplements, including 92 deaths, hundreds of life-threatening conditions, and more than 1,000 serious injuries or illnesses. The GAO suggests that due to underreporting, the real number of incidents may be far greater.
In December 2014, Presnell became the first person in North Carolina to be convicted of felony ginseng larceny on private property. He joined other thieves across Appalachia — the mountainous strip of territory extending from southern New York through the Carolinas down into Mississippi — who’ve been arrested, fined, even imprisoned for various ginseng-related crimes, including poaching, illegal possession, and unlawful trade across state lines. ... Cornett went into business for the same reason poachers are keen to rob him. The global market for ginseng root, popularly used as an herbal supplement, is estimated at more than $2 billion. Long a staple of traditional Chinese medicine, ginseng products are also ubiquitous in Korea and increasingly popular in Singapore, Malaysia, and other countries with large ethnic Chinese populations. These days, most ginseng is mass-produced on large, pesticide-sprayed farms under the artificial shade of wood and fabric canopies. Wild ginseng, which tends to grow in temperate forests, is considered more potent and fetches a higher price. Plants like Cornett’s, cultivated in the woods, are closer to wild than to conventionally farmed ginseng. ... Dwindling supply and robust demand have inflated wild American ginseng’s value. In 2014, according to public and academic data, the 81,500 pounds that were legally exported commanded an average wholesale price of $800 per dried pound. That was almost 15 times more than the going rate for farmed roots. Nearly all exports go to China, where a burgeoning middle class is willing to pay marked-up retail prices — sometimes even thousands of dollars per pound. ... Scientists believe ginseng is native to both East Asia and North America because some 70 million years ago, the two land masses were part of a single megacontinent known as Laurasia
My time in China has taught me the pleasure and value of craftsmanship, simply because it’s so rare. To see somebody doing a job well, not just for its own reward, but for the satisfaction of good work, thrills my heart; it doesn’t matter whether it’s cooking or candle-making or fixing a bike. ... the prevailing attitude is chabuduo, or ‘close enough’. It’s a phrase you’ll hear with grating regularity, one that speaks to a job 70 per cent done, a plan sketched out but never completed, a gauge unchecked or a socket put in the wrong size. ... implies that to put any more time or effort into a piece of work would be the act of a fool. China is the land of the cut corner, of ‘good enough for government work’. ... sometimes there’s a brilliance to chabuduo. One of the daily necessities of life under Maoism was improvisation; finding ways to keep irreplaceable luxuries such as tractors or machine tools going, despite missing parts or broken supply chains. ... More usually, chabuduo is the domain of a village uncle who grew up with nothing and can whip up a solution to anything out of two bits of wire and some tape.
Smash an old TV, and you risk spewing lead into the air. Crack open an LCD flatscreen, and you can release mercury vapor. Mobile phones and computers can contain dangerous heavy metals such as cadmium and toxic flame retardants. Mexican workplace regulations, like those in the U.S., require e-waste shops to provide such safety equipment as goggles, hard hats, and masks. There’s little of that in Renovación. ... In much of the world, a place like Renovación couldn’t exist, and not only because business owners wouldn’t be allowed to employ people in those conditions. Twenty-five U.S. states and Washington, D.C., home to 210 million Americans, have laws establishing what’s known as extended producer responsibility, or EPR. That means electronics makers must collect, recycle, and dispose of discarded equipment rather than allow it to enter the waste stream. Parts of Europe also have this system. ... Manufacturers don’t do this work themselves. Typically, a state, county, or town establishes an e-waste collection program. Then recycling companies come to haul away the junk. The manufacturers pay some or all of the bill. The e-waste can be of any provenance. ... The lack of a formal, regulated recycling industry is one of many reasons Mexico has become a magnet for spent electronics. ... A ton of mobile phone circuit boards can produce 30 ounces of gold, worth about $39,000 at current prices.
The overuse of antibiotics has transformed what had been a hypothetical menace into a clear and present one: superbugs, bacteria that are highly resistant to antibiotics. By British government estimates, about 700,000 people die each year from antibiotic-resistant infections worldwide. If trends continue, that number is expected to soar to 10 million a year globally by 2050—more people than currently die from cancer. ... Research has found that as much as 90 percent of the antibiotics administered to pigs pass undegraded through their urine and feces. This has a direct impact on farmed seafood. The waste from the pigpens at the Jiangmen farm flowing into the ponds, for example, exposes the fish to almost the same doses of medicine the livestock get—and that’s in addition to the antibiotics added to the water to prevent and treat aquatic disease outbreaks. The fish pond drains into a canal connected to the West River, which eventually empties into the Pearl River estuary, on which sit Guangzhou, Shenzhen, Hong Kong, and Macau. The estuary receives 193 metric tons (213 tons) of antibiotics a year, Chinese scientists estimated in 2013. ... distribution networks that move the seafood around the world are often as murky as the waters in which the fish are raised. Federal agencies trying to protect public health face multiple adversaries: microbes rapidly evolving to defeat antibiotics and shadowy seafood companies that quickly adapt to health regulations to circumvent them, moving dirty seafood around the world in much the same way criminal organizations launder dirty money. ... China’s rates of drug resistance remain among the highest in the world. ... harvested in China but was passed through Malaysia, where it acquired Malaysian certificates of origin. This illegal transshipping, as the maneuver is called
We view Donald Trump’s ascendancy to the Presidency of the U.S. as confirmation of a political and economic paradigm shift that started with Brexit but is likely to continue for the foreseeable future, including elections across Europe in 2017. Consistent with this view, we believe that there are four major potentially secular changes that all investment professionals must consider: fiscal stimulus over monetary, domestic agendas over global ones, deregulation over reregulation, and a broadening of outsized volatility from the currency markets to include global interest rate markets. The good news is that many of our highest conviction investment themes for 2016, including the ongoing slowdown in global trade, had already begun to capture this sea change in macro and geopolitical trends. At the same time, however, in certain areas our macro preferences have evolved of late in response to the “new” reality that we now live in. As such, we have used this outlook piece to challenge conventional investment wisdom, and in some instances, “adjust our sails.” In terms of asset allocation preferences for 2017, we are still probably most excited by what we see in Private Credit on a risk-adjusted basis. We also believe that Real Assets, particularly those with yield and growth, can prosper in the macro backdrop that we envision. Meanwhile, we are now balanced in our outlook on Equities versus Credit, but in both asset classes, we continue to suggest selling Simplicity and buying Complexity. Overall, though, we do not lose sight of the fact that we are undergoing a paradigm shift, and often these types of regime changes do not always transition smoothly. As a result, we maintain our long-held approach of seeking to monetize aggressively the periodic dislocations that inevitably occur in a world of increasing geopolitical uncertainty and macro instability.
Although robotic ships of this sort are some ways off in the future, it’s not a question of if they will happen but when. My colleagues and I at Rolls-Royce anticipate that the first commercial vessel to navigate entirely by itself could be a harbor tug or a ferry designed to carry cars the short distance across the mouth of a river or a fjord and that it or similar ships will be in commercial operation within the next few years. And we expect fully autonomous oceangoing cargo ships to be routinely plying the world’s seas in 10 or 15 years’ time. ... Remotely controlled ships, piloted by people on shore, and autonomous ships, which can take actions for themselves, are the latest beneficiaries of increasing digital connectivity and intelligence. These developments in electronic sensors, telecommunications, and computing have sparked interest in a range of autonomous vehicles including cars, planes, helicopters, trains, and now ships. ... That people should be seriously interested in robotic ships is easy enough to explain: Such ships are expected to be safer, more efficient, and cheaper to run. According to a report published by the Munich-based insurance company Allianz in 2012, between 75 and 96 percent of marine accidents are a result of human error, often a result of fatigue.
A mathematical prodigy, he worked out how to “beat the dealer” at blackjack while a postdoctoral student at MIT. After he published a book in 1962 revealing how to count cards, he became so famous that casinos banned him from playing — he says one even resorted to drugging him. Many changed their rules to thwart people using his counting system. ... Next came an attempt to beat roulette, using a contraption tied to his foot that is now described as the world’s first wearable computer; after that, an expedition into Wall Street that netted hundreds of millions of dollars. ... Thorp’s then revolutionary use of mathematics, options-pricing and computers gave him a huge advantage. ... “Adam Smith’s market is a whole lot different from our markets. He imagined a market with lots of buyers and sellers of things, nobody had market dominance or could impose things on the market, and there was a lot of competition. The market we have now is nothing like that. The players are so big that they control the levers of financial policy.” ... “One of the things that’s served me very well in life is having an extraordinary bullsh*t detector.”
The regulator closed almost 100 banks in 2016, and in a cleanup with few precedents, Nabiullina has shut almost 300 over the past three years. This may be only the beginning. There are about 600 banks left across the world’s largest country, but Fitch Ratings analyst Alexander Danilov, adjusting for population, calculates that as an emerging market Russia would be fine with about 1 in 10 of those. ... she runs what in Russia is called a “megaregulator.” When it comes to the economics behind Putin’s overarching goal of restoring Russia’s place in the world, there’s no one more influential. ... As central bank governor, she’s in charge of a banking system whose weak links are an economic burden, driving up the cost of financing so badly needed in the face of stagnant growth. She’s also the chief guardian of Russia’s foreign currency reserves. Those holdings are more than just a tool of monetary policy; according to several senior officials, Putin views them as a vital safeguard of the country’s sovereignty. ... The full picture only becomes clear when they’re shut down and regulators have to track the assets. In those cases, only about 40 percent of what the banks claimed was on their books actually existed
Financial markets accommodate both prudent insurers and reckless gamblers. They provide investors with an opportunity to diversify their portfolios, and allow gamblers to bet on future movements in interest rates. The coexistence of the two can allow speculators to make profits by stabilising prices—buying when markets are fearful, and selling when they are greedy. But when the gambling motive overwhelms the insurance motive, speculation becomes destabilising and then risk, far from being minimised by careful management, becomes concentrated in the hands of those who understand least what they are doing. And when regulators perceive insurance when they should see wagering, their actions magnify a crisis rather than minimise it. Such destabilising speculation, mischaracterised by regulatory authorities as prudent risk assessment, is what caused the global financial crisis of 2008. ... The coexistence of insurance and gambling goes back to the earliest days of markets in risk, and the interaction of the two has been central to financial history. But it was four developments in the second half of the 17th century that combined to frame the way we think about risk, and the institutions we have for dealing with it, through to the present day.
Parking can seem like the most humdrum concern in the world. Even planners, who thrill to things like zoning and floor-area ratios, find it unglamorous. But parking influences the way cities look, and how people travel around them, more powerfully than almost anything else. Many cities try to make themselves more appealing by building cycle paths and tram lines or by erecting swaggering buildings by famous architects. If they do not also change their parking policies, such efforts amount to little more than window-dressing. There is a one-word answer to why the streets of Los Angeles look so different from those of London, and why neither city resembles Tokyo: parking. ... For as long as there have been cars, there has been a need to store them when they are not moving—which, these days, is about 95% of the time. Washington, DC, had a parking garage in 1907, before Ford produced its first Model T. But the most important innovation came in 1923, when Columbus, in Ohio, began to insist that builders of flats create parking spaces for the people who would live in them. “Parking minimums”, as these are known, gradually spread across America. Now, as the number of cars on the world’s roads continues to grow (see chart), they are spreading around the world. ... Free parking represents a subsidy for older people that is paid disproportionately by the young and a subsidy for the wealthy that is paid by the poor.