We’ve had to use phones to talk to people (not in person, thank god) about the situation. Our determination: it’s “not good.” Especially for people that appreciate the service that banks provide wherein they hold your money for you, write it down on a list or whatever, and then give it back to you when you ask for it. This service that banks provide is known as “banking.”

As it turns out, this romanticized version of banking service was not how it always worked out. Sometimes there were panics or runs and you couldn’t get your money out. These panics used to happen from time to time until most of civilization adopted deposit insurance schemes wherein the national government a nation insures all depositors in a nation’s banks up to a certain amount. Deposit insurance is one reason why North Korea’s banking industry has been so stable the last decade; the other reason is that North Korea’s banking industry doesn’t exist (known in some circles as “Too Small To Fail,” research to follow).

Ok, so now this whole banking thing is fine, right? Panics hardly ever happen now, so no worries? Yes! But also, unfortunately, no. Because markets are weird and adaptive and respond to incentives, and regulations of various kinds have made it such that banks had (and have!) an asymmetrical relationship with risk AND incentives to do things like lend gobs of money at low rates to Greece because it’s “riskless.” In an unforeseeable tragedy that could be called Greek, these things have led to banking instability, one that deposit insurance can’t address.

But there is an even better way to ensure banking stability, even better than deposit insurance or banks not making terrible loans with no repercussions. Banks can simply take their depositors money. This is the most exciting Zimbabweconomic development since Zimbabwe itself pioneered even freer trader. So while the situation in Cyprus is “not good,” you could also say it could lead to something “really great.” Like this:

The core problem facing the world is banking instability. But banks have the means to enhance their stability right inside their vaults and on their electronic ledgers. In Cyprus, they wimped out and deployed half measures by taking something like 40% or 50% of depositors’ deposits. Wouldn’t the banks, and in turns the world, be a lot more stable if they took 100% of depositors’ deposits? This would maximize banking stability and minimize banking instability’s impactfulness on bondholders. We’re not scientists, we’re economists, and this looks Mugabe Optimal to us.

Recommendation: We recommend that banks seize all of their depositors’ deposits. Be sure to call the act something harmless like “lollipops” or “haircuts” or “puppies”.

“The bank bestowed 100% puppies to all its fortunate, stability-loving customers.”

“I went into get my money from the bank and got a trim! I look great! Thanks, Banco Unioni di Cyprus.”

This seizure will be Mugabe Optimal according to the paper we won’t publish featuring the proof we didn’t do about the assumption-heavy autarky we modeled using the math we mostly made up.

Given the world’s likely move to a Mugabe Optimal banking state, Long or Short investors ought exercise caution when depositing money in anything called a “bank.” Safer places for your money include Dangerous Fund I, Dangerous Fund II, any mattress, any resource, any box, any location in your house either hidden or in the open, on your person, hanging out of your pants pocket, pre-buying with your drug dealer, a stripper’s g-string, diamonds, real estate in Zimbabwe, a vanity license plate for your mega-yacht, a vanity license plate for your deep-sea submersible vehicle (the new mega yacht, research to follow), a tar pit, that thing from Star Wars that ate Boba Fett, etc.

Today most advanced industrial economies remain, to varying extents, in the grip of slow recoveries from the Great Recession. With inflation generally contained, central banks in these countries are providing accommodative monetary policies to support growth. Do these policies constitute competitive devaluations? To the contrary, because monetary policy is accommodative in the great majority of advanced industrial economies, one would not expect large and persistent changes in the configuration of exchange rates among these countries. The benefits of monetary accommodation in the advanced economies are not created in any significant way by changes in exchange rates; they come instead from the support for domestic aggregate demand in each country or region. Moreover, because stronger growth in each economy confers beneficial spillovers to trading partners, these policies are not “beggar-thy-neighbor” but rather are positive-sum, “enrich-thy-neighbor” actions.

Did you notice it? That speech was less than 1% capitalistic. Shocking, I know, but it’s not a new trend.

Here is an excerpt from President Bush’s September 2008 speech on the financial crisis:

Financial assets related to home mortgages have lost value during the house decline, and the banks holding these assets have restricted credit. As a result, our entire economy is in danger.

So I propose that the federal government reduce the risk posed by these troubled assets and supply urgently needed money so banks and other financial institutions can avoid collapse and resume lending.

This rescue effort is not aimed at preserving any individual company or industry. It is aimed at preserving America’s overall economy.

Bush does a little better but is still less than 1.5% capitalistic. It’s less capitalistic than this communist scrawl:

Никита Сергеевич Хрущёв

We can find few if any world leaders who resemble true capitalists. Most only deploy capitalism when it’s mandated by structure, like right after things have hit a full stop, or in situations wherein to not do so would be an embarrassing faux pas, like in America.

Recommendation: It’s time to return capitalism to its roots. It’s time to shuck off the tyranny of lower-case letters and embrace capitalism in its purest form. THE TIME IS NOW. IF WE CAN START BELIEVING IN CAPITALISM AGAIN, WE WILL GET THIS COUNTRY (AND THE WORLD IT CONTROLS/OWNS/EXPLOITS/”TRADES WITH”) GOING IN THE RIGHT DIRECTION. ASK YOURSELF: AM I A CAPITALIST? IF THE ANSWER IS “YES,” THE ONUS IS ON YOU TO PROVE IT BY YOUR ACTIONS AND YOUR WORDS. LONG CAPITALISM.

Diversifying Fund I will specialize in offering the purest form of diversification available to investors. Tinderbox Capital will allocate physical cash into a physical box that we’ve painted black. This box will be known as the Black Box of Diversification. After that, no one knows what will happen to that physical cash. Anything could happen to it. It could double. It could halve. It could triple. It could third. It could N. It could 1/N. It could become sentient, take all your money and bet it on 17 at a roulette wheel and make you crazy rich. No one knows what happens in the Black Box of Diversification. That inability to know what returns your cash will generate provides you with an investment product that has no correlation to any other investment or asset class. Tinderbox Capital’s due diligence process for Diversifying Fund I has consisted mainly of practicing typing “diversifying” really quickly (seriously, try it, not as easy as it looks).

Tinderbox Spokesman Johnny Debacle:

“Assets in the investment universe are crazy correlated. There is probably a way to quantify this, but that seems difficult. Difficult does not fit our business model. As things get especially bad or as market participants pile into the same formerly exotic and diversified assets in the endless quest for yield, cross asset correlations push ever higher. What people need is the ability to truly diversify their portfolios. They need Diversifying Fund I.

Our last two funds, Dangerous Fund I and Dangerous Fund II, filled the niches they sought to plug. Each has been panacea to investors who were overweight return and underweight risk. “Riskless risk” is the most efficient risk producing innovation that any investment management company has designed yet, despite how hard Paulson & Co have been working at their own proprietary solution(s). Now it’s time for us to do for Diversification what we did for Risk. Also, Dangerous Fund II is a smoldering pit of dollar bills from which we’ve already harvested all our fees, and we need to feed our families…really expensive platinum-plated snow leopard sushi designed by Apple.

Diversifying Fund I will offer the fullest diversification available to investors. Tinderbox Capital will charge a traditional 2 and 20 fee structure for managing Diversifying Fund I. 98% of investor subscriptions will be allocated to the Black Box of Diversification and 2% to the Reserve Box. Management fees will be collected from the Reserve Box. The Reserve Box will be painted green to assure that we do not confuse the Reserve Box with the Black Box of Diversification. We make no guarantees that we will not either intentionally or unintentionally confuse the two boxes. This lack of guarantees offers another layer of diversification. Performance fees will be determined by applying 20% to arbitrary amounts taken by management from the Black Box of Diversification. Any investor who wants to redeem their investment from Diversifying Fund I is free to make such a request at any time. Upon the receipt of such a request, we will stick our hands into the Black Box of Diversification and remove some cash. Then we will likely put the cash back into the Black Box of Diversification because our management agreement gives us discretion as to whether we honor redemption requests. This discretion provides yet another layer of diversification. See the prospectus for more details.

We know that young risk-seeking investors demand places to put their money to work, places where they can allocate $10,000 and potentially lose it all. This is the niche that Dangerous Fund I filled. We also know that young risk-seeking investors demand places to put their money to work, places where they can allocate $10,000 and certainly lose it all. This is the niche that Dangerous Fund II filled. Dangerous Fund I and II are appropriate for investors whose portfolios are overweight return and underweight risk and are thus seeking proper balance. Now that these young investors have portfolios that are perfectly balanced with respect to risk/return, they need diversification. Diversifying Fund I is appropriate for investors who portfolios don’t have enough diversification

This fund may not be appropriate for everyone, but for you it’s perfect.”

Tinderbox Capital LLC is an investment firm that offers a focused set of investment products to a global institutional and high net worth client base. Tinderbox Capital LLC is currently structured to directly manage strategies in so-called “dangerous” trades, to literally light money on fire, and to allocate physical cash into a physical black box where anything could happen. Despite this structure Tinderbox Capital is uniquely unqualified to manage your money well and uniquely qualified to manage your money poorly.

This wealth effect has radically changed how we evaluate investment opportunities. Never in my life would I have considered buying a CCC junk bond at 110 to yield 7% (quick ratings guide: BBB = investment grade, BB = fine company, B = either a fine or a sketchy company the ratings agencies have no clue which, CCC = this will default just give it a few years, D = this defaulted like we said when we rated it BB uhhhh we’re not good at this). Today? Shit, I’ll take it at a 6% yield. I mean my alternative is earning 0% on basically everything else. Plus I feel wealthy, isn’t this what wealth affected people do? Buy dumb shit?

The universe of potential investments has never looked larger. Anything that hasn’t had all the yield squeezed out of it is acceptable. And we do mean anything. Do you have any CLOs made out of REITs on offer (in all seriousness that doesn’t sound half bad)? Does Hollywood need any money to help make Mystery Men 2? Just send me whatever form I need to fill in, my permanent wealth is in.

Recommendation: Don’t hate the theory, hate the game. Long the Wealth Effect.

Since securing the Republican party’s mandate, Romney had hovered near a coin-flip to beat The Obama. Then Romney made the unfortunate mistake of personally insulting half the country in attempt to secure votes, an unconventional and seemingly unsuccessful strategy. Romney’s odds have subsequently cratered down to near 20% per Intrade, while FiveThirtyEight has him at less than 15%.

His performance in general suggests nothing more than a guy who wears laundry emblazoned with a big ol’ “R“, under which he has some sweet special pajamas. Romney has shown himself to be a phony suit who is bad at talking, an unfortunate status when running against a cynically empty suit who is good at talking. It’s easy to get caught up in the negatives of Romney’s candidacy and his situation.

As abstract value investors, we can’t help but look at the positives. Namely, Romney’s outstanding fundamentals: his strong chin, his fantastic hair, his above average height, and, most importantly, his maleness. The fundamental ratios are off the charts, no matter how you look at them. ChinHair:Age-35, Height:Avg Height, Trailing Acute Angles Outstanding, etc. The man seems like he should be the President. Seriously, look at him.

Recommendation: Long Romney. Investors in Romney’s Initial Presidential Offering bought in at a price of Likely President; the sell-side threw out consensus targets of Two-term President as soon as publishing began. That’s the past — those investors’ portfolios have so much red in them, they look like the punchline of a Kermit-in-a-blender joke. And it’s ridiculous to project that Romney will ever trade up to President. But his fundamentals are so strong that there is a floor in how badly he can trade; we still think he can bounce back to Yeah, You Can Kinda Imagine Him Having Been President.

“Baby, I just had an idea.”

Her eyes stared back, empty just like her head.

“Baby, my idea is really true.”

It was then that I realized that I hadn’t actually been staring at her eyes but at her breasts, her perfectly shaped, amply proportioned breasts, the ones I got to play with every single night — if I cared to. I turned my gaze upwards, towards her pretty little face.

“Baby, this humblebrag shit is really just a way for the user of the term to show his or her audience that they themselves are ‘cool’ enough to be up-to-date on hipster crap and memes — the tired act of labeling something a ‘humblebrag’ is itself a ‘humblebrag’ of sorts.”

She stared back, a gaze still empty just like her head, an empty head that now nodded in dumb consent. Then she fed me a hamburger which my buddy, Bobby Flay, had been preparing in my kitchen. I removed my hands from her breasts, their usual location on Tuesday nights like this, and walked towards the window, still chewing delicious bites of my buddy Bobby’s burgers.

I surveyed Central Park through the floor to ceiling windows, taking it all in. Behind me, Kate hadn’t moved, but her eyes now devoured the burger that remained half-eaten in her hand. I pulled out my iPhone 7SG, the one Steve Jobs left me in his will along with the words “Only you can follow in my footsteps, JD, take this future phone and change the world [by selling overstretched global consumers luxury phones that have a closed ecosystem which lock them into your company forever]“, and placed a call.

“Hey Gosling, what’s up. No, I’m here with Kate and Bobby. No, Upton not Beckinsale. It’s Tuesday, dude. Yeah, just chilling. How are things with you? Cool cool. So I was thinking, don’t you think this humblebrag shit is played out? Like it’s a weird obsession, because is it really a bad thing to humblebrag? Isn’t it preferable to humblebrag then to brag? Usually it’s just a way of being factual for someone who has a much better life than you, or even someone who had a marginally better situation happen to them than you. How else can you ever share any good news? Or anything that is cool? And the person calling out humblebrags is being hypocritical and douchey. Yeah, I knew you’d agree with me 100% Gosling — that is why we’re best friends, I guess, hunh? Anyways, good talk. I have to go finish the rest of Flay’s burger before Kate does. You know how Kate can get! Also, see you at Jay-Z’s white party next week. Ok, cool, later man.”

Recommendation: Short the Humblebrag. It’s been around for a year and it’s as tired as the Kanye meme. We’d be overweight the vanilla Brag, but we’re too busy racing each other in the flying cars we bought with the bonuses we paid ourselves from successfully raising Dangerous Fund II.

My own country is hopeless. It was almost better under the czars. At least the czar didn’t have to strain his empty head over a lot of theory. Lenin took whatever he could understand of Marx’s theory and used it to his own advantage, and Stalin took whatever he could understand of Lenin’s theory (which wasn’t much) and used it to his own advantage. The narrower a man’s intellectual grasp, the more power he is able to grab in this country.
-Boris from The Wind-Up Bird Chronicle

Past Quotes Entirely Relevant to Investing

Dangerous Fund II will specialize in lighting money on fire. Tinderbox Capital will allocate physical cash into positions in which it will ignite. These positions will include the log cabin, the teepee, the lean-to, the obscene pile, the model bonfire, and the Scrooge McDuck. Tinderbox Capital’s due diligence process has consisted of earning merit badges in the arcane arts of fire-making at Camp Cedar, where the fund managers were also prepared for life in the real world by their indoctrination into Camp Cedar’s so-called “Color Wars.”

Tinderbox Spokesman Johnny Debacle:

“The investment management universe is inefficient at providing risk. We find this to be the case because the investment management universe is structurally obsessed with return. Our last fund, Dangerous Fund I, has performed very well, we think, losing so much money and doing so in such complicated fashion that it’s been difficult for us to calculate just how much it’s lost (rest assured, investors, you lost a lot and did so very riskily), so difficult that we may have just given up and started focusing on launching our new product, Dangerous Fund II. As an aside, our lifestyles are incredibly expensive, so expect the cadence of new products to increase and the quality of our management of old products to necessarily decrease. New products are where we make money, old products are those that we neglect.

We’ve learned several lessons from Dangerous Fund I, lessons we plan on incorporating into new products.

First, if your funds’ returns are improperly calculated because of complexity, sloth, or indifference, the investors are receiving another layer of risk on top of the risk they have in the underlying investment. This risk would be known in some circles as “Reporting Risk,” if those circles were dull and uninspired; since those circles aren’t square, that risk is known as “Nauditing Risk.” The creation of Nauditing Risk is something that can be marketed and sold. More on that later, probably in 2015.

Second, there is excess demand from investors for so-called “simple risk,” e.g. risk that generates no return whatsoever and does so with certainty. This is known in some circles as “The Keno Certainty Principle” or “Riskless Risk.” Dangerous Fund II is designed to mine this rich vein of risk appetite.

Dangerous Fund II will seek to disintermediate the middleman from the process of lighting money on fire by physically igniting investors’ dollars for them. It will generate the highest levels of Riskless Risk in the industry. It will charge a traditional 2 and 20 fee structure, which fees will be collected from the Five Year Fee Reserve, which reserve will be set aside whenever investors put money into Dangerous Fund II. See the prospectus for more details.

We know that young risk-seeking investors demand places to put their money to work, places where they can allocate $10,000 and potentially lose it all. This is the niche that Dangerous Fund I filled. But we also know that young risk-seeking investors demand places to put their money to work, places where they can allocated $10,000 and certainly lose it all. This is the niche that Dangerous Fund II will fill. We give you all the risk you will ever need and guarantee that we will either potentially or certainly lose it all. Dangerous Fund I and II will be appropriate for investors whose portfolios are overweight return and underweight risk and are thus seeking proper balance.

We just need your money to fuel our fires.”

Tinderbox Capital LLC is an investment firm that offers a focused set of investment products to a global institutional and high net worth client base. Tinderbox Capital LLC is currently structured to directly manage strategies in so-called “dangerous” trades and also to literally light money on fire. Despite this structure Tinderbox Capital is uniquely unqualified to manage your money well and uniquely qualified to manage your money poorly.

It is increasingly apparent that everyone — investors, politicians, businessmen, consumers, etc. — have mistaken cyclical trends to be structural in many different areas. We are now at a crescendo as the long arc of history turns and heads back down in the other direction. This is a great opportunity to take advantage of people for whom the short term (the last 1 year, the last 3 years, the last 10 years, the last 30 years, depending on context) is the only relevant term. This is most everyone. It’s a rather large opportunity.

Some facts:

• Global interest rates are not in secular decline. They have been in a 30yr cyclical decline and the 30yr reversal is now in process.
• China is not locked in a structural vendor financing agreement with the US & EU. They are ending a long, cyclical run with an under-priced currency.
• Europe’s imbalances are not the result of a structurally strong, responsible Germany and spendthrift periphery. They are the result of a cyclical trade imbalance due to domestic policies that increased German exports and savings rates while the inverse was true in Span, Greece, etc. The swing is coming back the other way now.
• Keynesian intervention was not a structural improvement in the operation of the modern fiscal and monetary apparatus. It was a cyclical increase in leverage, starting from a time of low leverage and great demographics. Prepare for the payback.

To quote myself from The Model Business Model: “What is that expression? How does it go? Shit’s way different at this point in history, dude?” Maybe, just maybe, it’s not so different. Maybe we’re just lacking the benefit of the full context.

Recommendation: Short the so-called structural trends. Get long the true, underlying cycle.

Previous Rating Greece: BFFAE (Best Friends Forever and Ever)
New Rating Greece: Whore

Ratings Rationale: Just when you think you found the one, you realize that the one is not…the one. He was so hot. A beautiful specimen. OMG, he was a god, a Greek God, an actual Greek God. He went by Helios. I wanted to prove my independence after I graduated college, so I drew down on my parents’ savings to finance a 6 week back-packing trip across Europe’s five star hotels in such exotic places as the Riviera, Croatia, Cinque Terre (too cute for words), and lastly, and amazingly, Mykonos.

This is where I met him, my Helios, the perfect man. He had long dark hair, Helios did, and so much charisma. He showed me around town, me with arms wrapped around his waist as he steered his scooter along sea roads. He lavished me with drinks, booked us in a lovely little hotel where our room had a balcony that looked out on the water. And in bed, let’s just say my world was his oyster. Or maybe his oyster was my world? I’m really bad at metaphors like he was really good in bed. No austerity anywhere to be seen.

But one morning I woke up and he was gone. He had retired to some location unknown, maybe to put in some face time at the “job” which he’d mentioned once in passing but which he never seemed to have to go to — not unlike how the married men I’ve slept act towards their families. In his place on the bed was one thing: the bill. He was asking me to finance his romancing of…me! He’d LITERALLY left me with the bill! I felt used, betrayed, like our entire relationship — his trade of money and time and hotness for my trade of young, female and American attentions — was for naught. So frustrating!

When he came back, after spending two hours at his “job,” a glass of ouzo in one hand, I confronted him, waving the bill in his face. He said some stuff in Greek to me. I stared back blanky. It was actual Greek. 10 years of boarding school and I only knew classical Greek. Then, in his bedeviling broken English, he said: “Look, toots, we both got something out of this, so let’s drop the naive kitten act and start calling a spade a spade. What we had was swell, baby, while it lasted. But I’m no Croesus, baby. You’re American, so you’re probably not cultured enough to know who he is, but Croesus had real money, mega bucks, baby. But me, I don’t have a pot to piss in or a window to throw it out. I just have an unfinished (for tax purposes) condo in Athens, a vacation home in Mykonos, an investment property in Turkish Cyprus, and an 8 hour per week job that pays peanuts, only €150,000 per year under the table. So, see, I can’t handle the bills for our little fling, these threads, or even these digs.”

I had never noticed that his bedeviling broken English took all its euphemisms and structure from 1940′s B movies. I looked him in those rich chestnut eyes. “This has to stop now, Helios. I can’t afford to continue to subsidize us. Either you leave this union, or pay me back.”

“Ok, it’s going to be ok, baby. We’ll work something out, you can bank on it. Just give it a little time, a few more days, or months, or years, or decades. I’ll put up some of my assets. Maybe my yacht or this little island I own. The whole kit and caboodle. But before I do that, why don’t you and me and a bottle of ouzo go for a weekend in Athens. We’ll take in the sights, we’ll see the people, I’ll take you for a spin, a real wild time, kitten.”

2 years of daily back and forth and amazing moments — moments even better than my JYA — later I came to my senses. Melissa Moody realized Helios wasn’t going to pay her back. He was my Greek God and he was great. But he was an irresponsible debtor, with no interest in austerity and less interest in repaying debt. He could, maybe, but he wouldn’t. And my parents are super rich relative to what money of mine he spent, so it didn’t really represent any systemic Moody family threat; we just wrote it off. But it was the principle of the thing, and I’d say it set a really bad precedent for my other more expensive long-term flings with Joao, Donal, and Sergio.

Ratings Methodology:
Hey everyone! It’s me, Melissa Moody…not that other Moody, Moody’s, you have been reading about. Actually that’s why I’m here I’m just so sick and tired of that other Moody! Their ratings stink, and they don’t know nearly as much as I do about debt, it’s true, I’m maxed out on 4 out of 7 credit cards I know I have a problem but I just can’t stop,ha ha. I can do a better job than Moody’s and that is what I’m gonna do! And let’s face it, their old ratings were too complicated. I mean Aa3, Baa1, Caa2, B1 who knows what that means? My ratings will be simple:

• BFFAE (Best Friends Forever and Ever)
• BFF
• BFFLAF (Best Friends For Like Almost Forever)
• BFFBAS (Best Friends Forever But Also a Slut)
• BFFBIHH (Best Friends Forever But I Hate Her)
• Whore

Notwithstanding its conservative investment portfolio, the central bank remains highly profitable because of its unique business model. Rather than paying for funding, it simply creates the money that it needs at no cost. The return on its investments, as a result, almost all flows directly to the bottom line.
-NY Times

So simple and so beautiful. What kind of genius entrepreneur would invent such a perfect business model? “Economist” John Law of the 17th and 18th centuries. Not only did he invent the perfect business model, but he also made significant advances in the business of Bubbles. How did his business model innovation turn out? Like most incredibly brilliant men who come up with bold ideas too early, John Law “ultimately fled the country disguised as a woman for his own safety.” 10 years later, Law “contracted pneumonia and died a poor man.” This is all according to Wikipedia, which, according to Wikipedia, is the source for the unvarnished and unbiased truth.

In the twenty-teens, our central bankers are much more advanced, more ethical, and more American. Importantly, they also look way less good in drag and wouldn’t “pass”. There should be no way this ends as badly as all the other times this has been done. What is that expression? How does it go? Shit’s way different at this point in history, dude.

Recommendation: Long the best business model, short all inferior business models, as the former will compete away the latter.

HT to the Paleofish

Most people are small-minded and only consider what is lost, which, in this case, is sick people. But think of all the savings! It’s a difficult pill to swallow that things get expensive when there isn’t enough of them, so it’s difficult to swallow that there isn’t enough healthcare for the amount of sick people. Historically, society has dealt with expensive healthcare by increasing the amount of it; classic 20th century thinking and demonstrably too expensive. The right way to cure this ill, to make healthcare cheaper, is to decrease demand by ridding ourselves of the (almost) dead weight that the sick represent. The absence of the needy sick will make hospitals, doctors, pill-makers, breast implanters, and the whole healthcare system compete for customers, healthy customers who have practically no ailments whatsoever. Prices will plummet, affordability will skyrocket.

It’s time to live in the future, the future that is now, the now in which a modern healthy consumer can no longer afford the continued living of the unhealthy consumer. How else can a healthy modern consumer afford $15k per year to tutor each kid on top of the $50k he spends to send each to private nursery schools starting in pre-pre-pre-K? How else can he belong to three golf clubs (each with $1500 minimum monthly spends at the snack bar or clubhouse, mind you), have season tickets to the Knicks, and have a reasonable summer home in a 2nd tier vacation spot like Martha’s Vineyard? How else can he always pay a homeless person $50 in cough syrup to wait in line to get him the new iPad (which is actually called the new iPad) on the first day it comes out? The modern healthy consumer shouldn’t be asked to forgo the bare necessities of life to subsidize the sick. We can dick around with these please everyone solutions or we can get serious about healthcare and simply kill the sick.

Machem Raiser heads a consultancy shop, MLR Associates, which is “renowned” for providing “bold, clear-thinking” white papers to industry leading businesses. His ideas have had “a devil of a time” getting traction, but, per MLR Associates, “not one person has disputed that [MLR's] solutions make sense.” The firm’s motto is: “The world can be better. Let’s make it so. Simply.” LoS has negotiated a pretty sweet deal for all MLR research, research which we are providing to our clients gratis, which means “free” in some old language, probably Babylonian or whatever they spoke in Ur (was it Babylonian?).

This is quite literally the most ridiculous article and comment thread I have ever read. Are you men really so afraid of a little competition that you have to kill it before it becomes a serious threat? I suggest that you spend less time bashing women and more time getting an education and getting out of your tiny elitist and anti-female bubbles. I am so embarrassed for your gender reading these comments…

My reply:

You are LITERALLY the most ridiculous poster in that entire thread, Eliza. Literally! As successful men, we are always “killing it.” So your implied suggestion — let’s call it what it is, Beth, a rebuke — that we NOT “kill it” is offensive. Literally offensive. But the embarrassment you, Lizzie, feel for our gender (I usually fill out all Government forms that ask for my “Sex” as “Yes,” just to make it harder for the Government to know what my gender is. But I digress, I LITERALLY digress) is nothing compared to the embarrassment that we feel for not only your gender, but for your Common App safety school, and for your parents, and for that time you read A Modest Proposal and thought “Gee this Dr. Swift guy is practically the antichrist, how does he think can solve poverty and the ills of the underclass by eating their babies, I am so embarrassed for his gender, profession, language, countrymen, yadda yadda, et alia and cetera.”

LITERALLY,
Mr. Juggles

PS Chin up, the world needs coffee-makers, too. Human ones. With skirts.

PPS But it wouldn’t hurt to learn to type.

Recommendation: Do not own stock of, or hold prime brokerage balances at, companies run by mullet-toting executives.

(Aside: yes we have a BLACKboard. Funny story because see last election cycle we realized that voting for Obama was a sweet get out of racism card, like buying carbon offsets so you feel ok about how much “damage” you do every time you fly in a plane, and while this came in very handy as a guilt hedge, based on his performance we don’t think we can vote for him again, plus it wont be nearly as “urban cool” to vote for a candidate with the slogan “Change, Again, Seriously.” So we thought, what else could we do to show cultural diversity? And we came up with installing a blackboard as the most obvious answer.)

After furious sessions, much chalkyness and vigorous eraser banging, what did we come up with? Qualitative Easing. As mentioned in our last Easy piece math is hard, almost as hard as lifting weights (which are VERY heavy by the way, just found this out). But Ben, the Bernank, is a hard man, capable of bearing an Atlassian load without so much as a shrug.

Qualitative Easing will have no math (rejoice!), it will just be a touchy, feely, sensual qualitative description of how the Bernank is going to increase prices for things that you OWN (stocks, bonds, homes) and keep prices the same for things you BUY a lot (gas, food, chia pets, viagra, tickets to Japanese hologram concerts).

Assuming he accepts my draft of his Qualitative Easing announcement speech (practically a fait accompli), it would go something like this:

Dear Americans,

I, the Bernank, am going to buy all of your assets from you at much higher prices and, like a hot shower with mango body wash, it is going to feel so good for both of us. I know you’re worried about the fact that the cost of everything is going up more than your income, but worry not: it is always darkest before dawn, and a beautiful dawn it will be with the prices of all the things you want to be more valuable growing like the rising hot solar star in space that we call the sun. Simultaneously, congruently, and coincidentally, the price of everything you want to be lower will fall like the delicate summer rain which wets the earth and promulgates the freshest of smells: moisty asphalt.

My warmest and kindest and biggest love to you,
Ben Bernanke

In the second article, George Soros explains how to prevent a “Second Great Depression.” Mr. Soros is an investing genius and a very smart man. Perhaps too smart. Because I have no f**king idea what he is talking about.

“This is how it would work. Since a eurozone treaty establishing a common treasury would take a long time to conclude, in the interim the member states have to appeal to the ECB to fill the vacuum….

It would require a newly created intergovernmental agency to enable the EFSF to cooperate with Europe’s central bank. This would have to be authorised by Germany’s Bundestag and perhaps by the legislatures of other states as well….

The EFSF would be used primarily to guarantee and recapitalise banks. The systemically important banks would have to sign an undertaking with the EFSF that they would abide by the instructions of the ECB as long as the guarantees were in force. Banks that refused to sign would not be guaranteed. Europe’s central bank would then instruct the banks to maintain their credit lines and loan portfolios while closely monitoring the risks they run for their own account…

To relieve the pressure on the government bonds of countries such as Italy, the ECB would lower its discount rate. It would then encourage the countries concerned to finance themselves entirely by issuing treasury bills and encourage the banks to buy the bills. The banks could rediscount the bills with the ECB but they would not do so as long as they earned more on the bills than on the cash.”

Ok, so I skipped a bunch of parts but WTF George? What are you talking about? I read this article excited to learn the solution to our woes but now I just need a stiff drink. I have literally no idea what he is talking about.

Neither do the regulators. Unfortunately, that will not stop them from implementing some inferior version of his plan. After all, they love complicated stop-gap measures that buy them a few more days/weeks/months and pass the buck to the next unlucky legislator.

As a society, we have outsmarted ourselves. Things are too complicated. No one — not George Soros, not The Bernank, not The Maestro — can understand how all the pieces fit together and where all the unintended consequences will pop up. And yet we add more towers to our castle built on sand.

Recommendation: Initiate a complication index spread trade. Get long short-term complication and confusion while shorting the out-year complication basket. Things are going to simplify, one way or the other.

Wynn on Obama:

Well, here’s our problem. There are a host of opportunities for expansion in Las Vegas, a host of opportunities to create tens of thousands of jobs in Las Vegas. I know that I could do 10,000 more myself, and according to the Chamber of Commerce and the visitors and convention bureau, if we hired 10,000 employees, it would create another 20,000 additional jobs for a grand total of 30,000.
I believe in Las Vegas, I think its best days are ahead of it, but I’m afraid to do anything in the current political environment in the United States. You watch television and see what’s going on on this this debt ceiling issue, and what I consider to be a total lack of leadership from the President, and nothing is going to get fixed until the President himself steps up and wrangles both parties in Congress.

But everybody is so political, so focused on holding their job for the next year that the discussion in Washington is nauseating. And I’m saying it bluntly that this administration is the greatest wet blanket to business and progress and job creation in my lifetime. (our emphasis) And I can prove it and I could spend the next three hours giving you examples of all of us in this marketplace that are frightened to death about all the new regulations, our health care costs escalate, regulations coming from left and right, a President that seems, you know – that keeps using that word redistribution. Well, my customers and the companies that provide the vitality for the hospitality and restaurant industry, in the United States of America, they’re frightened of this administration.

And it makes you slow down and not invest your money. Everybody complains about how much money is on the side in America. You bet. And until we change the tempo and the conversation from Washington, it’s not going to change. And those of us who have business opportunities and the capital to do it, are going to sit in fear of the President. And you know, a lot of people don’t want to say that. They say “oh, God, don’t be attacking Obama.” Well, this is Obama’s deal. And it’s Obama that’s responsible for this fear in America. The guy keeps making speeches about redistribution, and maybe we ought to do something to businesses that don’t invest, they’re holding too much money.

You know, we haven’t heard that kind of talk except from pure socialists. Everybody is afraid of the government. And there’s no need – there’s no need, you know, soft pedaling it. It’s the truth. It is the truth. And that’s true of Democratic businessmen and Republican businessmen, and I am a Democratic businessman and a – I support Harry Reid, I support Democrats and Republicans, and I’m telling you that the business community in this country is frightened to death of the weird political philosophy of the President of the United States. And until he’s gone, everybody is going to be sitting on their thumbs.

Wynn on taxation on capital abroad:

If the government – if the administration in Washington isn’t frightening the dickens out of those of us who create jobs and build buildings and make lives for their employees, they’re attacking China where in the case of my company, the vitality of capital to improve Las Vegas has come from.

You know, it’s the double whammy. American companies that have ventured abroad to broaden their markets are bringing money – have reinvested much of that in America. And so the rhetoric about offshore capital, there would be a lot more of it brought back here if the government did intelligent and encouraging things to bring capital back. But this is a very business, job creating unfriendly administration and that’s the plain truth of it. And so you know, you want to build condominiums? Why? You want to protect yourself in this environment. Everybody is in a defensive crouch, except for Jeff Immelt, who is sort of a Judas goat. (emphasis ours)

Wynn on TSA:

Coming to the United States is tougher than going almost anywhere else in the world. Homeland Security has, you know, we seem to have been safe more or less but so much of it is excessive and irrational, you know, like patting down babies and old ladies and stuff like that. But it is very difficult – it’s more difficult today to get to the United States for people who have been coming here for years, for decades.

Our customers that are big businessmen that have been coming to America for 10, 15, 20 years, are asking us for help to relieve the bureaucratic congestion of government overregulation in this area. We’ve talked to Homeland Security. They’re aware of the problem. So is Customs and Immigration and the State Department. And you know, when we talk to any given individual in those organizations, in those bureaucracies, they’re very sympathetic. And they know the truth of the complaint.

And they know the truth of the fact that these things are very often excessive and unnecessary. But yet there seems to be a tremendous amount of inertia to move government in America, whether it’s the deficit management and coming to some kind of logical conclusion before August 2 or whatever it is, or whether it’s getting visas. Everybody has a clear understanding of the problem, but when it comes to our government it seems to be getting more and more sclerotic, more and more inflexible. By its own device, it keeps growing and growing and getting more and more onerous, more and more sluggish in its responses to real problems, and sluggish in its ability to take advantage of real opportunity. And it’s frustrating for me because I got a front row seat.

Update: While Wynn failed to mock investors or competitors, we were remiss not to include his mocking of some (past) customers.

We did not lower our rates like some of our competitors did. We’ve come to the conclusion here, incidentally, I’d like to add this parenthetically, having tried this before and failed, we don’t want to make the mistake again. This place is not set for price cutting. We lower the price, we can fill the rooms in an instant because they’re such fancy rooms. But we get people that carry their beer in from 7-Eleven, move their own bags, and don’t eat in our fine dining. We can’t use them. This is not a place for folks that have that kind of economy mentality. (our emphasis) This is a place for people who expect superior service, higher quality food, beverage and everything else.

But what hasn’t changed is how much people hate things being hard. I know I do. And in spending time with my calculator, furiously pushing her buttons, I realized that QE I and II were just too hard for me. And in receiving a deluge of explicit and implicit inquiries from the market about when QE would end, what would happen when it did end, why QE wasn’t just blowing bubbles for the sake of blowing bubbles, I realized that QE I and II were just too hard for you all, too. So I sat down and said to my calculator, “Calculator, markets are too hard. Let’s make them easy. Let’s help boost assets prices with a new program called, Quantitative Easy.” My calculator didn’t reply but I could tell from the light reflecting off her display that she loved the idea.

So here we go everyone. Quantitative Easy. I know there will be a rush of people asking questions, so let me answer some obvious ones for you now:

What is Quantitative Easy? Quantitative Easy will be a program run by me, Ben Bernanke, that will make asset prices go up. This in turn will lead people to be happy. It will get their juices flowing, their animal spirits will stir in their hearts, and they will buy things. If we all agree to buy things, even if we we can’t afford to, then everyone will get rich. Easy.

How will it work? Asset prices, all of them, will go up. Like I said: QE I and II were too hard, people were constantly trying to figure out which assets would go up and when. Worse, people were worried that asset prices might actually go down at some point. Crazy, I know. Quantitative Easy is going to be easy. Everything is going to go up. Forever.

What should I buy? A horse. A rainbow. Mykonos (which is for sale fyi). Netflix stock. A mansion in Vancouver. A 1987 Topps Mark McGwire card. A slightly used Japanese nuclear plant. US Treasuries. Portuguese bonds. The only limit is your own creativity.

How can the Fed afford to do this given its balance sheet? That’s a good question. Next question, please.

Where will the money come from? We have a very complex process, involving machinery and paper, too complex to get into here. Make it easy for yourself and don’t try to understand it. Just trust us.

This sounds to good to be true. Is there a catch? No. Would I lie to you?

Except that I didn’t stop getting various RGE emails. No, no, no, into my inbox, Roubini still snuck. Email types received include: “The RGE MONITOR,” “The RGE Content Weekly Roundup,” “Welcome to the New EconoMonitor,” “New and Improved RGE Newsletters,” “From Nouriel’s Blackberry,” and “From the Desk of Nouriel Roubini.” I unsubscribed over and over and over and Nouriel did not go away. And he was a goddamned sneak about it, too. Like, for a couple weeks, I’d be in the clear and think: “Finally, this unsubscription took! I’m a-OK and Roubini free!” Then boom I’d get an email like: “From Nouriel’s Blackberry: Greek Contagion Risks – Much Ado About Relatively Little”; Roubini’s way of saying: “I’m not done with you yet, I’m economic hepatitis.”

And like in my lifetime fight against hepatitis, I roared and I raged. The whole thing gave me pause. What does it mean that since 2008 I have been unable to unsubscribe from Nouriel Roubini’s bearish soothsaying? Maybe it’s not the RGE that is unsubscribeable at all. Maybe, just maybe, what is really unsubscribeable is doom. You, one, me, we, WE cannot unsubscribe from doom.

Recommendation: You cannot escape doom.

Any approach to scientific inference which seeks to legitimise an answer in response to complex uncertainty is, for me, a totalitarian parody of a would-be rational learning process.
-Sir Adrian Frederick Melhuish Smith

Past Quotes Entirely Relevant to Investing

Despite its Liar Liar alienated father angle, Mr. Popper’s Penguins is shaping up to be a miss for Jim Carrey, who used to knock this kind of movie out of the park. The movie seems like an odd duck for June, and the live penguins aren’t as warm and inviting as other critters, anthropomorphized or otherwise. Animated penguins have had some success in Happy Feet and as supporting players in the Madagascar movies, but Surf’s Up wiped out in June 2007. Live-action penguins are untested outside of March of the Penguins, but Mr. Popper still is no Ace Ventura or Doctor Dolittle or even Evan Almighty.

Recommendation: Live-action penguins are “untested” so only those who can stomach not only the volatility, but the substantial downside risk are playing in those names. We’re short live-action penguins and underweight animated penguins. A catalyst for a change in our opinion would be the onset of another Ice Age or alternatively a substantial increase in the popularity of Italian Spiderman, the latter of which would result even more calls (e.g. demand) for pinguini.

“OER [editor's note: "owners' equivalent rent"] is expected to jump to 1.2% year-on-year in December from 0.6% in February, despite a sluggish housing market.”

1.2%!! This is getting serious.

So what should we do?

“Some suggest alternative inflation measures.”

Oh ok. Well, what are “some” proposing?

“A ‘supercore’ alternative excludes not just food and energy but shelter, too, to gauge underlying trends.

There is great opportunity for the Govt to reduce CPI by excluding more items. In fact, this looks eerily reminiscent of another highly successful endeavor in metrics improvement: LoS’s change from GAAP to SAAP (Seldom Accepted Accounting Principles). By changing our standard, we could change our metrics, and by changing our metrics from EBITDA to EBE (Earnings before Everything aka “supercore earnings”), we greatly improved our profitability.

As visionaries in the SAAP space and masters in specious metrics, LoS would like to be included in the “some” who are suggesting alternatives ways to measure CPI. Considering that the evolved goal of the CPI is to show a slight and consistent level of inflation, we propose that the CPI no longer include any components that are increasing in price level more than 1.5%. These items will be increasing as a percentage of the index, thus throwing off its accuracy. Similarly, items that are increasing in price level less than 1.5% or even decreasing should also be excluded since a) we are not interested in deflation and b) the accuracy of the model depends on items maintaining a consistent (rather than falling) proportion of the total index. It’s important to note that any price changes greater or less than 1.5% could skew the whole thing we are trying to measure and render the CPI not just unreliable, but practically useless.

This new CPI, CPI-F (flat), will provide data on all changes in the prices paid by urban consumers for a representative basket of goods and services whose prices demonstrated a slight and consistent level of inflation. We expect it to have the most consistent and consistently low inflation readings of all the CPI measures. Its current reading is 1.5%. In the future, the monthly CPI-F level will be reported on the 5th of the following month, unless there is no change to the index, in which case you can continue to use the prior month’s reading. Here is a pro forma chart that demonstrates what inflation would look like as measured by CPI-F since 1900.

Ultimately, we are not ideologues; we are handsome and incredible investors who lean towards real-world based pragmatism when investing our real fake dollars. And if you can’t break up a trust, you gotta go long it. We have been long women and their various body parts for years: ideas for “Pink Dollar” products for female drivers, long legs, short breast cancer (basically), short penis, playing the menstrual cycle, short girl-on-girl, sexual harassment arbitrage and probably most appropos, an analysis of high-end female assets. Hell, in a 2006 piece of research we did for MSFT, gratis, we exhorted the company to “change the packaging of [their products to appeal to women]“:

Change the packaging of your products. Very few women buy your products, Mr. Ballmer, and you are missing out on their money, or as we like to call it “the Pink Dollar.” You may assume that the key to attracting the Pink Dollar is to improve the content of your offering or to tailor your content to women. WRONG! Substance matters little to the average female. Focus instead on the superficial aspects. Make all your packaging pink, and have a little bow. They eat this crap up. Something that has worked for us on occasion is to put in a little note that says “Sorry.” You don’t have to specify what you are sorry for. It’s important to note that while it’s tempting to enclose a $100 bill, this will only insult and irritate the average female consumer.

Net-net women are a fantastic investment (with the caveat that if the baby making monopoly is broken up or the cephalopods enslave the human race (2026 is our best estimate for the latter), multiples will come in substantially). So we do not begrudge the me-too boutique bank/research firm, Bank of America (NYSE: BAC), agreeing with our genius; we quibble instead with their failure to recognize and properly cite our genius. A sample of their report:

In continuing to focus on the “long-on-women” investment theme that explores the growing importance of female [assets], David Bianco, head of U.S. equity strategy research, said that [womenfolk's illegal and terrible monopoly on baby production is]increasing discretionary income for women, which should benefit companies that sell specifically to women.

“Women may increasingly become the higher-income earners of U.S. households, and since they [tyrannically] make the bulk of household spending decisions as it is, we think their stronger purchasing power relative to men bodes well for spending on a wide range of categories from vacations to cosmetic procedures to home furnishings,” said Bianco.

Not a single mention of LoS or the other firms whose research they have cribbed.

Recommendation: Short BofA, for being bitches. Maintain long on women, for having all the power.

[It] also seems like there will be a high likelihood of these vehicles making their way to high-end rental destinations.

Sounds great! Product X will almost definitely be better off if a rental infrastructure develops around it that allows the product to be consumed in small increments by people who otherwise wouldn’t be able to afford it. Think movies (back when they were $100+ to buy), or timeshares, or NetJets, or Netflix (NASDAQ: NFLX), or whatever it is that Rent-A-Center (NASDAQ: RCII) does for poor people, or the idea of…renting as a business model. It works.

But after I tell you that “Product X” is a jet pack (btw “Product X” is a jet pack, rad I know) I think it’s important to note that there is an important caveat in this whole “jet packs being bought by high-end rental firms” thing. Let’s read the unabridged portion of that quote (from this article):

Assuming the first few owners don’t die horribly, it also seems like there will be a high likelihood of these vehicles making their way to high-end rental destinations.

I have bolded the important caveat for the benefit of unsophisticated investors, as well as the Japanese. When evaluating a product’s feasibility in the market place, and the returns one hopes to generate from an investment in such a product, it is crucial to ascertain the percentage probability that the first few owners die horribly. I can’t stress enough how bad the first few owners dying horribly would be — I mean it would be horrible to your investment. So try and avoid that.

Advanced sophisticated investors may also try to map out the percentage probabilities that the last owners will die horribly (see “Segway, The”). If the last owners were to die horribly, it’s likely your investment’s value will similarly fall right off a cliff.

HT to DWL

I once spent an inexplicable amount of time with an Inuit who told me that you can “reason” with a brown bear or a grizzly bear. If you happen upon either type of bear, you simply bargain – i.e., “Look, bear, I have so much salmon, you want so much salmon. Let’s be reasonable and cut a deal.” This Inuit claimed, however, that a Polar Bear was the one type of bear with whom “you cannot reason.” I hope that this is so, if Soros is indeed being pursued by such a bear.

Any amount of time with an Inuit is inexplicable. There is a reason the Quebecois detest them.

But it’s true, we are eminently pragmatic. And our desire for pragmatism is only boosted by our physicality. The carrot looks pretty good to your counterparty when your stick is a 1500lb bear that can knock your head off with one swipe. Hence, pragmatic, reasonable solutions to problems tend to happen. The government knows what I’m talking about. There is nothing else you will need to know.

The Soros’* and Icahns of the world liken the salmon run to particularly memorable days in the market like Black Monday. Days when fortunes and reputations were made, and fortunes and reputations were lost. That works for me, being both a bear and a master of markets. And there resides an apropos lesson in that delicious little swimmer, the salmon.

Salmon are born in the shadows of the mountains. They swim downstream out into the ocean and flourish for years. Normal stuff, stuff you’d expect from any animal. But then they do a crazy thing, something oppositional to common sense. They swim BACK upstream. They fight for every inch up these fast-moving currents, just to spawn. All this takes so much out of them, they die right after. Science calls this semelparous. Bears call this fucking crazy.

But this taught me an important lesson about markets. Markets go with the flow for the most part and do the sensible thing. But eventually they will swim upstream, spawn and die. There is nothing else you will need to know.

*Last I saw George, he was being stalked by a particularly ornery Polar Bear with an appetite for FX speculators.

Anyhow, I don’t know where the jokers who kept me in this cave are. I am mostly sure I didn’t eat them but the timing of my nap compared to the timing of their departures…and the fullness of my belly…and these human bones scattered about…that all begs some mighty serious questions. But fuck’em, I’m here and they’re not. It’s great for you because now I have the run of the place, and perfect timing based on what’s been going down.

So by way of proper introduction, I am Bear and I have an MBA from the “Harvard of Grizzly Maze.” Here is a shot of me at my desk. There is nothing else you will need to know.

Steve on Wynn’s geographic mix:

Listen, we’re more of a Chinese company than American company today as we’re having this call. I love it. Thank God for being outside the United States today. There isn’t an executive in the world that isn’t thrilled about being outside the United States today. What are we supposed to do, draw great hope and satisfaction from the behavior of the senate and the house of representatives? If that isn’t enough to give you heartburn, I don’t know what it is.

Steve on the political process:

I don’t think anybody in America is arguing. There’s a furious-ness in the country about the irresponsibility. $100 million a month we’re supposed to borrow? $100 billion a month we’re supposed to borrow for the next five or six years? Why, it’s totally unsustainable. It’s lunacy. I remember the nexus to Tocqueville, I think it was around 1909, the great political philosopher from France wrote, “The American system of democracy will thrive until that moment when the politicians discover they can bribe the electorate with their own money”. And those (expletive) fools have done it.

Steve on the administration’s impact on Las Vegas and the hospitality industry:

If you’re talking about strictly convention bookings, you can say that 2010 is better than ’09. And you can say you see trend of increased bookings. It is totally irresponsible and naive to say based upon this life trend, we project this infinitely into the future and give you some rosy baloney story about what’s going to happen in 20’11. I am warning my investors that may be on the call, to the extent that you hear any of that from our competitors, beware. There are more questions afoot in this market, in America, that will impact 2011 that I have hair on my head, I’m happy to say, and I still have a full head of hair. No, you will not get any of that us. I don’t see it. I have more questions that answers, I have more pessimism that I had before, and it’s based upon the political environment in which we are living today. And it definitely is impacting Las Vegas.

The President of the United States hasn’t missed one single opportunity to squelch Las Vegas. In our particular case, it’s cost us millions of dollars from companies affected by the President’s remarks that have no connection whatsoever to federal bailouts. But we get phone calls, and I’m not going to mention the names of the companies, from chairman who say we don’t want to appear to be profligate because Barack Obama said this or that about Las Vegas. But it’s had an effect on us. The hospitality industry in the United States of America as a whole has suffered disproportionately during this recession. Maybe automobile workers got a break.

But all of the hundreds and hundreds of thousands of people that work in hotels, restaurants and bars in the United States of America have been totally and completely overlooked in this aborted rescue attempt that has squandered billions of dollars in the United States.

Steve on the state of taxation and the US dollar:

It is preposterous that businesses are under attack in the United States of America. Anybody that makes over $250,000 in the form of a personal income tax return is now, by Washington definition, a rich person, when everybody who has got a college degree knows that the personal income tax rate in the United States of America is the business tax of America. Every sub-chapter S, every individual proprietorship and every partnership in the United States of America files tax returns as individuals. And when they do, and they show that they made $2 million or $3 million or God forbid $4 million, they pay the income tax rate, they deduct their working expenses, their living expenses, and then they invest in a new store, a new shop, and most of the time, 25% of their “profits” are tied up in accounts receivable or inventory.

But all of a sudden, all of those people who make over $250,000 are rich folks to be fleeced. And if that’s job formation stimulation in America, I’m Mary Poppins. And if I sound angry about it and disgusted, I am disgusted and angry at the apparent ignorance of the administration and the congress to recognize the fact that the individual tax rate in the United States of America is, in fact, the business tax of America. And if you keep banging on that, you will you destroy the incentive for job formation in the United States of America. And that’s simple truth. Simple truth. And whether politicians like it or don’t like it means nothing to me.

And that’s why I’m pessimistic about Las Vegas, because those are our customers! Those people out there hustling their businesses and God forbid, showing they made a million dollars as partnership or as an individual, yes, they’re the enemy now, they’re the rich folks. Well, until we get over this, America is in for hard times. Because what’s going to happen is, the people that are going to suffer from what’s going on are the working class of America. My 15 to 20,000 employees, they’re the ones that are in trouble. The reason they’re in trouble is this demolition of the dollar is going to reduce the buying power of the working class of America assure as (expletive) as if we gave them a salary cut of 25%.

Steve honestly assessing a bad decision to build the Encore casino in Las Vegas:

Good question. No, it’s not what I thought it would be. I thought that it would add at least $200 million or $250 million of EBITDA to our bottom line, and nothing remotely like that has happened. Of course, it was conceived in a market that was entirely different today, as you’ve just pointed out. It is a beautiful thing that cost $2.3 billion…Or would we just be better off because we would have had $2.3 billion in cash more than we do now?
…So would I build Encore if I had to do it today? No, I’d keep my money. Fortunately we had enough money that we don’t sweat it…