The Market Ticker
Commentary on The Capital Markets
2017-06-23 07:00 by Karl Denninger
in Editorial , 47 references
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This is a nasty indictment of so-called "sharing economy" entities.

We found that 85% of side-gig workers make less than $500 a month. And of all the side-gig platforms we examined, Airbnb hosts earn the most by far.

In other words there's not a prayer in hell you can make a living doing any of this; excluding AirBNB the average person was making under $400 and the median person is making under $200!

What's worse is that none of this appears to account for costs.

If you make $200 driving for Uber but spend $100 of that on fuel then how much an hour are you actually making?

Oh, and you must account for the deterioration of your vehicle (each mile has a cost in maintenance, deterioration of and consumption of the engine, transmission, suspension parts, tires, etc) as well.

And let's cut the crap on the name of this thing too.  You share something you would already be doing.  If I'm driving to work and your home and office locations are between where I would otherwise travel then we could be sharing a ride to work.  If you page me on some sort of app and I make a trip I would otherwise not make I'm not sharing anything -- I'm selling you the service of carting your ugly ass from one place to another.  Likewise, the premise of "Task Rabbit" or "Doordash" has nothing to do with sharing; I would never bring you food or deliver your package without being paid to do it because there's no part of my daily life that involves performing some random task for you.

Note that since this data set comes from people applying for loans the error, if any, is likely to be in overstating their income and expenses are not asked for.

When you consider the tens or even hundreds of billions of so-called "market value" these various "spring-ups" have in the so-called "sharing" space you have to shake your head at the gullibility of the general public -- those who are providing said services.

There's another possible explanation, incidentally, that's even worse: These firms may be exploiting people at the margin of economic survival to the point that they're "willing" to accept 50 cents/hour of real compensation.  Why? Because it beats zero -- and literal starvation.

I cannot argue that as a consumer having Uber and Lyft available as an alternative to monopolistic medallion-endowed Taxis has benefit.  However if the facts are that these so-called "firms" are simply a way to bring third-world, 10 cent/hour style wages to America, and many of these firms are additionally trying to create an indenture model to go with it (e.g. Uber and "leasing" the cars to be driven at usurious interest rates and inflated financed prices) then what we have here is an outrageous, ridiculous and intentional circumvention of laws that are supposed to protect American workers - - specifically, wage and hour law, with the firms involved being nearly the sole economic beneficiary of the actions performed.

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From the AP:

When U.S. Senate Republicans unveil their plan to overhaul America's healthcare system, they will face a skeptical public that already does not buy the justification for an earlier version that passed the House of Representatives, according to a Reuters/Ipsos poll released on Wednesday.

They're right to be "skeptical"; Obamacare did exactly nothing to address cost, which is where the real issue resides, and the House bill, as I analyzed, would actually make it worse (which is hard to believe, but true.)

The Senate "attempt" will do the same.

The problem is not "insurance" or "coverage" -- it's cost.

Then there's this sort of nonsense, which IMHO argues for locking up doctors en-masse as drug pushers:

Nearly one in four people on Medicaid, the U.S. health program for the poor, received powerful and addictive opioid pain medicines in 2015, according to research by a drug-benefits management firm.

One person in four?

Folks, these drugs are responsible for some 20,000 deaths due to overdoses a year which wildly outranks other means of accidental death, save one: car accidents (~35,000)

There is only one way to address health care cost: Attack the monopolist practices of the industry and you need no new laws to do it, since we have a 100+ year old body of said law which, I remind you again, drug and medical firms have tried to shoot down twice at the US Supreme Court (in the 1970s timeframe) and they lost both times.

It requires only an executive either at the state or federal level, which again I remind you has responsibility for enforcing the law, to stand up and do their ******ned job, leveling indictments against everyone involved in this industry that attempts to promote monopolies or restrain trade.

That's all it will take and the entirety of the health scam will collapse in an afternoon, crashing prices by 80% or more.

You can look right here for what this would mean, and what it would do.

You will note that there is not one hint of any of this in the House proposal, and there won't be in the Senate version either.  Nor has my phone rang despite the fact that I've been to the Hill in the past and spoken with Senate staffers on exactly this point; they know damn well what's coming, why, and how to stop it.

The US Congress and President Trump are both engaged in intentionally destroying your health and bankrupting you at the same time.  These people need to be run out of town on a rail -- all of them -- and if you cheer on either political party or any of the existing political class at either state or federal level who have all refused to enforce existing law and solve this problem you are a direct contributor to and promoter of the destruction of this nation and her people.

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2017-06-22 07:00 by Karl Denninger
in International , 212 references
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I'm all for travel.

I'm all for adventure.

But there are third-world ****holes, never mind nations with zero respect for human rights, that are flatly unsafe to travel to.  Some are unsafe for everyone.  Some are unsafe for women (e.g. majority Muslim nations) traveling alone.  Some are unsafe for particular religious or ethnic groups.  Some are unsafe for certain nationalities and since your Passport bears your nationality prominently.....

Otto Warmbier violated rule #1 by taking such a trip -- to North Korea.  Then he did something even worse, apparently -- he stole a political propaganda piece.

Look folks, even in non-third-world ****holes there is one way to get trounced and at best be seen as an "Ugly American" -- inject yourself into the local political process.  In many nations it's actually illegal for you to do so.  It should be illegal here too for someone who is not a citizen to do so, but heh, we seem to have this snowflake thing in that regard and what's worse is that we think we can shove our particular bit of sensibility down other people's throats.

This young man paid for that first with a hard labor sentence and ultimately his life.

I will note that at least as of now despite everyone and their brother claiming he was "probably" tortured there is zero physical evidence to support that, and torture usually leaves physical evidence of some sort.  The doctors have looked for it too.  But it's not even slightly surprising, however, that if he had a medical issue in said third-world ****hole, after being arrested, that he wouldn't get much of anything in the way of care.

Inhumane?  Well, what part of third-world ****hole did you miss?

Look folks there are risks when it comes to international travel.  It's simply a fact that in a very large part of the world what we consider to be basic values regarding protection of human life don't mean a damn thing.  Those nations and people look at life as disposable and people are too.  If you expect anything approaching a United States level of care and comfort in those parts of the world you're at grave risk of ending up dead.

I hate reading stories like this one, but the fact remains that if you put yourself in a third-world situation like this that is known to be hostile, particularly to Americans, then you need to be prepared to accept the consequences -- and especially to be on your best behavior so as to tilt the odds, such as you can, toward a safe exit from said territory.

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Go over on over and have a look at both my view and those of a few others..

My central point was this, which is what I've said for a long time (and made quite-clear in Leverage as well):

When you underprice a loan (or overpay for a bond -- same thing) the loss happens at that instant.  You can shift who eats the loss down the road, but you can't unbreak the egg.

As such "unwinding" QE and its unwind is an amusing exercise because it simply transfers the when and who on the bad transaction -- but doesn't "undo" it -- because it can't.

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2017-06-21 09:09 by Karl Denninger
in Company Specific , 730 references
[Comments enabled]  

Yes, the CEO is gone.

That should be good, not bad, right?

Wrong, and it has nothing to do with the CEO leaving.  It in fact has everything to do with the change in their app to "allow" in-app tipping.

Why would this be bad rather than good?

Because Uber has drivers rating riders, and unlike a hailed taxi you're not anonymous; you are identified and the driver can refuse you as a customer based on previous "ratings."

The combination of these two factors will result in tips effectively becoming mandatory, especially in high-taxi-cost, high-traffic areas.

Since there is no way to prove whether a poor rating for a rider is deserved or not there is no check and balance available or possible on the coercive abuse of such ratings to extract tips from riders and the coercive implied pressure now and will forevermore exist.

Some have pointed out that while the tip is "in-app" the driver has to rate to end the trip first.  While that may blunt the impact (in that it makes blatant coercion difficult) if you think drivers won't "softly" urge tipping -- and perhaps push back against negative responses by riders -- you're nuts.

It'll take a while before this destroys the desire of customers to use the platform but it will happen and it will be unrecoverable, because since UBER has "allowed" in-app tips removing them will now engender a driver revolt.

"In-app" tips were basically a sop to drivers for Uber reducing rates and thus driver compensation.  The problem is that if Uber is reducing rates it's to increase usage and when you add tips back there goes the reduction from the user's perspective, effectively canceling it out.  This will in turn force a further reducing in rates (and thus payouts to drivers!)

When I go out to eat the "expected" tip for good service is part of the price.  A restaurant that adopts a "no tips allowed" policy can charge a bit more for their food and the hit to my wallet from eating there is the same as one that "encourages" tips but charges a bit less; all-in after tip it's the same money.  This is no different.

Pick how you want to die Uber, but die you shall.

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