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Taibbi: Everything Is Rigged: The Biggest Price-Fixing Scandal Ever
Another must read article from Matt Taibbi. Yes, Taibbi still won’t go after the Federal Reserve and the biggest fixer club of them all, the FOMC at the Federal Reserve. But he has done some excellent work over the past 5 years exposing the inner workings of a financial system which is deeply flawed. (To be kind.)
His critique often gives one the impression that he thinks the market is to blame for the fraud which permeates the world economy. That greed and self interest are the reason for the abuse we see. But in a market fraud is unacceptable. If someone lies to gain an advantage unfairly this is a form of theft and the prosecution of this theft is an entirely legitimate role for a regulating authority. (If the market doesn’t uncover it first, which it often does.)
Of course fraud and theft will always happen. But it is the Federal Reserve which makes it particularly easy these days for the “cigar chomping cabals” to operate with its constant flow of easy money and never ending enabling. Add a Treasury and Justice Department which has said explicitly that some firms are too big to prosecute and it’s pretty easy to see how the state, not the market, is the primary reason for the sorry state of high finance. The crash of 2008 and the rampant crony capitalism we see in finance now simply could not have happened without the state. In a free market crooks, once uncovered are dealt with swiftly. In our current system the crooks are able to short circuit the market mechanism.
Cheap, fiat money breeds immoral behavior. It breeds debt. It breeds derivatives which are built on other derivatives which are then built on yet other derivatives into a colossal daisy chain of financial dysfunction. It concerns me deeply how absolutely out of hand the fiat money experiment has gotten. The collapse of this unsustainable system will shake the world on a level beyond what we saw in 2008. I have no idea when it will happen but I am pretty sure it one day will.
Hopefully it will come in fits and starts. Hopefully the market will overwhelm the system in stages. We should pray that this is the case. A sudden unwinding would be unlike anything the world has seen in a very long time, perhaps ever.
(From Rolling Stone)
The only reason this problem has not received the attention it deserves is because the scale of it is so enormous that ordinary people simply cannot see it. It’s not just stealing by reaching a hand into your pocket and taking out money, but stealing in which banks can hit a few keystrokes and magically make whatever’s in your pocket worth less. This is corruption at the molecular level of the economy, Space Age stealing – and it’s only just coming into view.
View full post on AgainstCronyCapitalism.org
Everything You Need to Know About the Ryan Budget
Daniel J. Mitchell
Sigh. Even when they’re sort of doing the right thing, Republicans are incapable of using the right argument.
Rep. Paul Ryan (R-WI), chairman of the House Budget Committee, has unveiled his proposed budget and he and other Republicans are bragging that the plan will balance the budget in 10 years.
That’s all fine and well, but good fiscal policy is achieved by reducing the burden of government spending, and that means restraining the budget so that federal outlays grow slower than the private sector.
It’s good to balance the budget, of course, but that should be a secondary goal.
Now for the good news. The Ryan Budget does satisfy the Golden Rule of fiscal policy. As you can see in the chart, federal spending grows by an average of 3.4 percent annually, and that modest bit of fiscal discipline is enough to reduce the burden of government spending to 19.1 percent of economic output by 2023.
It’s also good news that the Ryan Budget calls for structural reform of entitlement programs, including Medicaid block grants and Medicare premium support. The budget also assumes the repeal of the costly Obamacare program.
And there’s also some good tax policy. Not bold tax reform like a flat tax, but top tax rates would be reduced to 25 percent and many forms of double taxation, like the death tax and capital gains tax, presumably would be reduced or eliminated.
Let’s be clear, though, that this is not a libertarian budget. Federal spending will still be far too high. Indeed, the budget will consume a larger share of the economy than it did when Bill Clinton left office.
And while Republicans do a good job of restraining spending in the first couple of years of the new Ryan Budget, outlays rise far too rapidly beginning around 2016.
Moreover, there’s no Social Security reform.
Equally worrisome, the budget assumes that the federal tax burden should remain at about 19 percent of GDP, higher than the long-run average of 18 percent of GDP and—for all intents and purposes—permanently enshrining Obama’s fiscal cliff victory.
And it’s depressing to see that the Ryan Budget has gotten weaker each year.
- Two years ago, he put forth a budget that limited spending so that it grew 2.8 percent per year.
- Last year, he put forth a budget that limited spending so that it grew 3.1 percent per year.
- Now, spending will climb 3.4 percent per year.
At this rate, it won’t be that long before the GOP budget and Obama budget converge.
Okay, that’s an exaggeration. But the moral of the story is that the Ryan Budget is a step in the right direction, but much more will be needed to restore limited, constitutional government.
View full post on Cato @ Liberty
International News • The Week That Changed Everything I Thought I Knew About Afgh
The Week That Changed Everything I Thought I Knew About Afghanistan
http://www.businessinsider.com/photos-l … an-2012-12
Geoffrey Ingersoll|Dec. 5, 2012, 12:15 PM|546,871|31
G. Ingersoll
People told me I was crazy for doing it.
I hadn’t even opened the package containing my shiny new NYU Master’s in Journalism and I was already heading to Afghanistan. It had been a couple of years since I ended my service as a U.S. Marines combat correspondent, and I wanted to get back to the war.
Traveling as a civilian, I paid my own way and had hardly any support, but I also had more freedom to travel than when I was in uniform.
Skip to the photos >
I took the following photos during the time between my arrival in Kabul and my official embed date (until which, no military unit will give you refuge, regardless of your citizenship). For these few days I played tourist; found a nice little guest house, contracted a driver and an interpreter, and headed on daily road trips around the area.
What I saw was a country hardened by decades of war and poverty — but also filled with sympathetic people whom you’ll rarely see in Western media. People who, in the midst of chaotic street life, insisted I take my shoes off and get comfortable, drink tea and eat candy prior to doing business. Kids living in squalor who still dreamed of becoming doctors and engineers — and were thrilled to pose for pictures and beat me in impromptu soccer matches.
I’ve already published an essay and put up photo spreads of the trip, but I saved these shots of Afghan life for last. Away from the war is where things get complicated. There is no moral and no ending, happy or otherwise. There are a lot of problems, and they’re only getting worse.
Read more: http://www.businessinsider.com/photos-l … z2EYLhdf2r
Click here to see the pictures >
http://www.businessinsider.com/photos-l … d-driver-1
Statistics: Posted by DIGGER DAN — Sun Dec 09, 2012 5:29 am
View full post on opinions.caduceusx.com
Gold and Silver • The Monetization of Everything
The Monetization of Everything
By Gary North Jul 30th, 2012
What the Federal Reserve System can do and what it will do are two different things.
The Federal Reserve System can monetize anything. It can create digital money and buy any asset it chooses to buy. There are no legal restrictions on what it is allowed to monetize.
If it were to do this, and it continued to do this, the dollar would fall to zero value. This would produce hyperinflation. The result would be the destruction of all dollar-based creditors. Debtors could pay off their loans with the sale of an egg or a pack of cigarettes. This is what farmers did in 1923 in Germany and Austria.
The economists who advise the Federal Reserve System know this. The bankers who run the banks that own the shares of the 12 regional FED banks know this. Bernanke knows this.
The day will come when the decision-makers on the Federal Open Market Committee will have to fish or cut bait. They will have to decide: mass inflation (20%) or hyperinflation (QEx). They will have to decide: recession or hyperinflation.
Will they see that it’s really Great Depression 2 (not just mass inflation) vs. hyperinflation? I don’t think so. They have been able to manipulate the economy for over 90 years between recessions and booms. Only once did it become a depression: 1930-40. That depression became deflationary, 1931-34, because the Federal Deposit Insurance Corporation (1934) did not exist. Depositors took their money out and did not redeposit it. That created monetary deflation through the bankruptcy of banks. The fractional reserve process imploded.
The FED inflated the monetary base in order to prevent this, contrary to the account by Friedman and Schwartz in their famous book, “A Monetary History of the United States” (1963). Depositors thwarted the FED, 1931-33. A chart produced by a senior official at the St. Louis FED should forever silence those economists who think that Friedman and Schwartz proved the case of FED “complacency.” It won’t, of course. The Friedman/Schwartz story is just too convenient for pressuring the FED to inflate. Friedman and Schwartz wrote the single most important book favoring FED inflation ever written, because it is universally believed in academia. The only section of the book ever cited by mainstream economists is the section on the FED in the early 1930s. That story is analytical and historical bunk. Here are the facts.
Today, depositors could do it again. If the FDIC were not backed up by a $600 billion line of credit from Congress, we might see it happen again. But there is a line of credit. That calms depositors.
The creditor – Congress – is the world’s biggest debtor. Congress is running a $1.2 trillion deficit each year. But it has central banks to cover the debt: Japan’s, China’s, America’s. So, the depositors believe that Congress can save the FDIC, which will save the banks. They leave their money in banks. If they pull money out of bank A, they deposit it in bank B. The system does not lose deposits. There is no deflation. The fractional reserve system survives.
The system has worked for a long time. The day of ultimate reckoning has been delayed. I think this has given central bankers a sense of confidence. They will think that one more refusal to go to hyperinflation will succeed. They will not believe that the refusal to pump new digital money into the system will bring on Great Depression 2. They will believe in their ability to manipulate the system one more time.
The system overcame the collapse of Lehman Brothers. They will assume that credit liquidation will be orderly. If it isn’t, they can intervene one more time.
The European banking system is being propped up by monetary inflation. There are signs that this cannot go on much longer, but the central bankers have enormous self-confidence. They believe that fiat money can delay any major crisis. They believe that fiat money is the ultimate ace in the hole. So do Keynesians. So do politicians. They really do believe that the exclusive government monopoly authority to supervise the creation of digits is the basis of prosperity.
Investors invest digits called money. They are convinced that the ability of central banks to create digits has created a failsafe for investors’ digits. They believe that a prudent mixture of digit-generating investments will gain them a positive rate of return, as measured in digits, just so long as the total number of digits is always increasing. This is the key to every investment strategy that is tied to “digits invested now, more digits to invest later”: an ever-increasing supply of digits.
You might think that investors would judge their success in investing by increased real income: stuff, not digits. But the vast majority of investors assume that stuff will inevitably take care of itself, if only the supply of digits is increasing. Here is the mantra of this generation: “The system of stuff production depends on a steady increase in the supply of digits.”
This is why there is no resistance to central bank monetization. On the contrary, there is cheering. The journalists follow the economists. The economists have adopted the mantra of digits with the zealous commitment of any priesthood. Milton Friedman is their high priest.
FRIEDMAN, NOT KEYNES
Keynes argued for government spending to save the system. This is universally believed by academic economists. But there is a problem with this scenario: interest rates. Governments must borrow. From whom? At what rates?
Keynes had little to say analytically about central banks, yet central banking is at the heart of government debt. Economists can intone the mantra, “government spending,” but this does not answer the economist’s universal question: “At what price?”
That is where Friedman enters the picture. Keynes was the prophet of government spending. Friedman was the guy with the green eyeshade in the back room. He ran the books. Without Friedman, Keynes & Company would have folded during World War II.
Keynes was the academic prophet of big government. Friedman was the high priest of big central banking. The high priest raises the money. Every prophet needs a high priest, or else the religion disappears.
Friedman argued for decades that the banking system need only create money at a rate of 3% to 5% per annum for the economy to prosper.
I never saw anyone make this observation: 5% is 66% more than 3%, so Friedman was not recommending anything like stable money. Nevertheless, the monetarists adopted his mantra. So, the free markets’ best-known academic defenders universally accepted the legitimacy of a government monopoly, central banking, as well as a government-licensed cartel, fractional reserve commercial banking. Only the Austrian School economists rejected this legal arrangement, and there were few of them. None had any influence.
Keynes gets the credit as the supreme economist of the era, but Friedman was more important operationally. Keynes promoted government spending, but said little about central banking. In contrast, Friedman provided the theoretical justification for the funding of government deficits by central bank purchases of government debt.
The trouble was this: the deficits during major recessions were so large that a steady 3% to 5% increase in the money supply did not suffice. More was needed. The central bankers then took their monopoly and put it to immediate use: unlimited expansion of money. That was what the FED did in 2008.
The predictability of steady monetary inflation never was honored. Friedman’s defense of central banking was well-received by the Keynesian economists. His limit of 3% to 5% was of course ignored. The central banks did not adhere to the limit, any more than the Internal Revenue Service adhered to the 1943 withholding tax law as a temporary wartime measure. Friedman provided the intellectual support for that law, too.
Once you consecrate the priesthood, you will find that the limitations which you specified are no longer taken seriously by the priesthood. Call this the Nadab and Abihu factor. Call it the sons of Eli factor. It always appears.
Friedman gave repeated theoretical justifications for the actions of the federal government, based on an official position of limited government. In the two most important areas of economic policy, income taxation and central bank legitimacy, he stood squarely behind the federal government.
Once consecrated, the government agencies paid no attention to his practical restrictions on the exercise of power. This is the curse of everyone who recommends a government policy to make government more efficient. This merely furthers the expansion the power of government into new areas of the economy. Then the politicians and central bankers ignore the recommended practical limits that were supposed to guarantee liberty and its blessings. The camel’s supposedly efficient nose becomes its entry point into the tent.
LIMITS TO HYPERINFLATION
The main limit is a currency unit of zero value. The idea behind hyperinflation is for the government to be able to buy goods and services without raising visible taxes. This policy ceases to function when the monetary unit falls to zero value. At that point, the currency unit has only one practical economic function: to pay off debt.
Once the state overcomes its debts through hyperinflation, the benefits to the state of further inflation cease to exist. It can no longer buy anything of value.
The economy goes to barter before hyperinflation reaches its theoretical limit of zero purchasing power. The tax authorities cannot easily assess taxes in barter transactions. Most barter transactions are not recorded. If a business must report these transactions, it pays its taxes at the end of the tax period. By then, the purchasing power of the monetary unit has fallen. A tax bill is a debt. Hyperinflated money is excellent for paying debts.
So, the government starts over. It kills the old currency. It knocks off lots of zeroes. Then the process begins anew. But, in the meantime, the middle class was wiped out. Pension funds are gone. Bonds are worthless. The political system has had a major defeat. The government promised security and justice, and it delivered insecurity and injustice.
Western Europe experienced hyperinflation in only two nations in peacetime: Germany and Austria, 1921 through 1923. Hungary had the worst inflation ever recorded immediately after World War II. But it was not an industrial economy. Israel had hyperinflation in the mid-1980s, but pulled back short of the destruction of the shekel. Argentina had hyperinflation in the late 1980s.
My point is this: central bankers are aware of the short-term effects of hyperinflation. These effects cause losses in production. They disrupt the banks, especially the large banks. Banks lend money; then they are repaid in money of vastly depreciated value.
The capital base of the nation is undermined. The lenders of long-term money are wiped out. They have no money to lend after the period of hyperinflation is over. If they saw it coming and bought hard assets such as real estate, as few do, then in the recessionary period after hyperinflation they have illiquid assets. If they bought foreign currencies, they are sitting pretty, but few investors buy foreign currencies.
Central bankers are trained in the basics of banking. They recognize the threat that hyperinflation poses to the banking system. The social order is threatened. Their pensions are threatened. They resist hyperinflation.
IS HYPERINFLATION POSSIBLE?
In the early 1970s, a debate broke out in the hard-money camp between deflationists, who argued that hyperinflation is no longer possible, and the inflationists, who said it was inevitable. Both positions have yet to be proven. Both positions still have their defenders.
In the 1970s, the positions were best represented by John Exter (deflationist) and Franz Pick (inflationist). Pick was the first person I ever heard refer to government bonds as certificates of guaranteed confiscation.
Exter argued that the financial structure is leveraged to such a degree that central bank inflation could not save it from massive de-leveraging in a panic. So, despite the attempts of central banks to re-liquify the economy, the collapsing financial structure would produce price deflation.
I do not recall that he brought up the issue of excess reserves. This may be a problem with my memory rather than Exter’s analysis. But what we have seen since 2008 seems to confirm one part of his thesis, namely, the lack of effect on consumer prices of Federal Reserve monetary base inflation. But there has not been a collapse of financial asset prices. So far, his case is not proven.
He said there would be a massive run on gold in this deflation. Why? Because gold is the ultimate liquid asset. He came up with a pyramid of increasing liquidity. Gold was at the bottom. We still see this pyramid in economic analysis. You can see it here.
Yet gold fell by 25% in 2008, contrary to his prediction. This calls into question his theory of over-leveraged financial markets as the cause of deflation.
What he never showed was this: how the total money supply could contract in a world in which banks are protected from collapse by central banks. If the money supply does not fall, then there is no reason for consumer prices to fall. Asset prices could fall, but that has nothing directly to do with consumer prices.
Those of us who were anti-deflationists kept coming back to this argument. The price movements within the capital markets are not the same as price movements in the consumer goods markets.
Then there is this. The Federal Reserve is legally allowed to monetize anything. It can monetize stocks, bonds, commodities – anything.
The FED can buy the S&P 500. It can buy S&P futures. It can buy individual shares. If there were ever a collapse of share prices as a result of fears over Federal Reserve deflation, the FED could monetize the entire stock market.
The FED can enter markets in a panic sell-off and buy any asset class that it chooses. It can head off the panic by serving as the buyer of last resort, not simply the lender of last resort.
There is no seller of an asset who would not take the FED’s money. There is no lack of trust in the FED so great that a frightened seller of an asset will say, “Sorry, but your money’s no good here.” The sellers will sell for dollars.
CONCLUSION
I do not believe that hyperinflation is inevitable. I think it is unlikely. I do think that a Great Default is inevitable. Governments will default when the workers who are paying into Social Security and Medicare finally figure out that (1) this is not in their self-interest and (2) they outnumber the geezers.
Central bankers are arrogant. They really do think they have the upper hand. They really do think fiat money creation by central planners (themselves) is more powerful than free market forces (investors). They really do believe that they can find a suitable middle/muddle road between deflationary collapse and hyperinflation. So, they will not pull out all the stops. They will not hyperinflate unless Congress compels this.
Paul Volcker is the model. He reversed the policies of the ill-equipped G. William Miller, who was persuaded to resign by Carter after only 18 months in office. Volcker stuck to his guns from the fall of 1979 until August 13, 1982. By then, the public had lost its fear of inflation. It had gone through back-to-back recessions.
Volcker saved the dollar and the bond market. He let the politicians pay the price: first Carter, then Reagan. Reagan weathered the storm because the economy had turned back up by 1984. He smashed Walter Mondale.
The leverage is much greater today. The leverage of the big banks is much greater. The public still trusts Bernanke and Draghi. The investors think the central banks can save the system from a catastrophe. I don’t. But I think the central banks have their choice of catastrophes: deflation/depression vs. hyperinflation/depression. I think they will try to navigate a middle ground, but when push comes to shove, they will risk a controlled deflation, with selective bailouts for the largest banks.
The central banks are not there to save the governments, which come and go. They are there to save their clients: the largest banks. They know where their bread is buttered.
But if Congress ever nationalizes the FED, then hyperinflation is a real possibility.
Regards,
Gary North
http://whiskeyandgunpowder.com/the-mone … verything/
Statistics: Posted by yoda — Mon Jul 30, 2012 11:39 pm
View full post on opinions.caduceusx.com
Other • The Grand Cycle Top in Everything
The Grand Cycle Top in Everything
July 30, 2012
We are on the downslope side of the Grand Cycle Top in Everything.
Our Chartist Friend From Pittsburgh has assembled an epic collection of 31 charts illustrating what I call the Grand Cycle Top in Everything: Destruction Of The Dome.
http://chartistfriendfrompittsburgh.blo … -dome.html
The collection demonstrates his charting system, Curvilinear Wave Analysis: A Charting Method For The 21st Century.
Here are two examples:
I highly recommend viewing all 31 charts, as they provide a context for what lies ahead in the economy and the stock market
http://chartistfriendfrompittsburgh.blo … -dome.html
http://www.oftwominds.com/blog.html
Statistics: Posted by yoda — Sun Jul 29, 2012 6:20 pm
View full post on opinions.caduceusx.com
Gold and Silver • Buffett and everything else versus gold
Buffett and everything else versus gold
Steve Saville
email: sas888_hk@yahoo.com
Posted Jun 19, 2012
Below is an excerpt from a commentary originally posted at www.speculative-investor.com on 14th June 2012.
We discussed Warren Buffett’s illogical opinions about gold in our 15th February 2012 report under the heading "Buffett’s Blind Spot". Today we are going to take a quick look at Buffett’s personal war against gold from a different angle and arrive at conclusions that might surprise you.
Some gold bulls have cited the performance of Berkshire Hathaway (NYSE: BRK/B) relative to gold as proof of Buffett’s cluelessness about gold. They have underlined their point using charts such as the one displayed below.
A chart like this says that it was right to be bullish on gold versus BRK ten years ago, but what does it say right now? After all, didn’t eager participants in the NASDAQ bubble use similar charts/reasoning in 1999-2000 to ‘prove’ that Buffett was out of touch?
With regard to the correct positioning right now, the chart says either nothing at all or that BRK is now cheap relative to gold and will likely outperform in the future. What it absolutely does not say is that this is a good time to favour gold over BRK.
In general terms, great past performance by any investment is NEVER a good reason to buy that investment in the present. It could, however, be a good reason to sell. Additionally, when bears cite a long-term historical decline or bulls cite a long-term historical rise to justify their current stance, a major trend reversal could be just around the next corner. Always keep in mind that the last cycle’s big loser stands a good chance of being the next cycle’s big winner, and that one of the surest ways to generate bad investment performance is to apply during the current cycle the approach that worked the best during the preceding cycle.
Further to the above, we confess that when we see gold bulls citing gold’s terrific past performance against Buffett’s BRK or against anything else as a reason to be bullish on gold today, our inner contrarian gets a little nervous. It’s almost a 180-degree turn from the late-1990s and early-2000s when many commentators would cite gold’s lousy 20-year record as a reason to be bearish about the metal’s future prospects. It didn’t occur to them that lousy performance over the preceding 20 years was a large part of what made gold a wonderful long-term investment opportunity in the present. And it doesn’t seem to occur to many gold bulls today that great performance over the past 10 years is, if anything, a reason to be circumspect when considering gold’s likely future performance.
In addition to the BRK/gold comparison displayed above, we’ve looked at many long-term charts showing how gold has performed relative to other items. For example, we’ve looked at charts showing how gold has performed relative to industrial and agricultural commodities, stock market indices, houses, and the average hourly earnings of the labour force. These charts all suggest that on a scale that goes from dirt cheap at the far left to incredibly expensive at the far right, gold is now well to the right of centre. Thanks to a long period of substantial relative strength, gold is not the value proposition it once was.
That being said, there is no evidence that gold’s long-term bull market has gone through a mania phase characterised by massive enthusiasm on the part of the general public. It seems to us that the public has dipped its toe into the gold pool, but hasn’t yet jumped in.
It would be extremely unusual and perhaps even unprecedented for a long-term bull market in an investment to end before the general public fell in love with that investment, so gold is probably going to become a lot more expensive over the years ahead. This is especially so considering that the monetary and fiscal recklessness that is driving the bull market shows no sign of abating. However, don’t be fooled into believing that gold is still cheap.
###
Steve Saville
email: sas888_hk@yahoo.com
http://www.321gold.com/editorials/savil … 61912.html
Statistics: Posted by yoda — Tue Jun 19, 2012 6:00 am
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International News • Rip-off Britain: why is everything so expensive?
Gas
Ian Peters, chief operating officer, British Gas
Guardian Weekend: Last August, British Gas raised electricity prices by 16% and gas by 18%. In January, you cut electricity by 5%, but kept gas on hold. Given that the price has fallen significantly and many of your rivals have cut prices, why is your gas so expWhyensive?
IP: Let me start by explaining what makes a typical gas bill. Around 56% is wholesale commodity costs. About 21% is transportation. About 10% is government obligation and taxes. So about 85% of the total components of the bill are outside our control. Then there is 8%, which is our operating costs. And about 5% is our profit margin.
Generally, we import about half of our gas, and we’re competing on an open market. Last year was particularly unusual. We had Fukushima, which forced Japan to turn their nuclear plants off and start importing gas. We saw demand rise as the Germans and Italians backed out of nuclear. And the trend on wholesale gas is for demand to rise, as emerging economies switch from coal. We buy gas in a number of ways: a week ahead, a month ahead, anything up to two or three years ahead. We do that to smooth out volatility in our prices. So prices reflect what’s going on in the market, but also how we bought the gas.
So, to answer your question: in January, the price dropped, but we’d effectively bought all that gas, so we weren’t able to pass that on to customers.
GW: If that’s the case, how come npower, EDF and Scottish & Southern managed to cut prices?
IP: We have very different businesses. We have around twice the number of gas customers.
GW: Other companies have committed to buying less gas in advance to keep prices down, but you haven’t made that commitment.
IP: The markets are not a one-way bet… if the price goes up, their customers will potentially suffer from that.
GW: The criticism of the way you do it, though, is that you put up prices when there are market rises, but you don’t cut them when they fall.
IP: Ofgem has not been able to produce any conclusive evidence to back up that assertion.
GW: One other criticism is that when Ofgem asked you to make tariffs more straightforward, you did, but in the process you snuck in a little price rise for the cheapest deal. Is that correct?
IP: I’m not aware we’ve increased prices.
GW: I have the report here – the headline says, "British Gas promises to simplify bills and tariffs (but puts cheapest tariff up in process)".
IP: Ah, I know what that relates to. We acted to simplify our range of tariffs. There was criticism about some of our competitors having very cheap online offers to entice new customers, and customers have effectively bill shock when [the offer] runs out. We withdrew those very cheap online offers. It wasn’t an increase, we just withdrew the tariffs that were being criticised.
GW: Centrica, the company that owns British Gas, made a pre-tax profit of £2.4bn. Sam Laidlaw, its CEO, earned £2m and 250K into his pension pot, with extra shares worth £2m. British Gas itself made £550m profit. MD Phil Bentley had a salary of £1.3m, with share gains of £2.7m. Compare that with a recent study from Age UK that found 2 million elderly people had to move into one room or go to bed early in winter to keep energy costs down. And a quarter of all UK households fell into fuel poverty over steep increases in bills. You can see why people are annoyed, can’t you?
IP: Executive remuneration is clearly an issue generally. We have responsibility for half the homes in Britain, we look after 35,000 people to keep them in jobs. Remuneration is assessed by independent remuneration committees. It’s for them to decide what’s fair and reasonable. But these are responsible jobs.
Water
Le Gavroche, David Galetti, head sommelier
GW: I understand that Le Gavroche stocks Speyside Glenlivet?
LG: Yes, still and sparkling.
GW: How much is it priced at in the restaurant?
LG: Do you mean on the table? It depends. At lunchtime, we have a set menu that includes water and a bottle of wine, so people don’t pay for them. At dinner, it’s £3 a bottle.
GW: Given that you can buy it from Ocado for £1 a bottle, why has Le Gavroche decided on £3?
LG: Ohhh, it’s er… how it’s, well, how can… It’s… how can I say that? I don’t know, it’s quite delicate to give a specific reason as to why it is that price. I don’t even know if there is a certain level that is correct. Some restaurant prices are £5 to £6 a bottle, which is overpriced. Well, in the other way, £3 is not cheap, but in certain places, you’ve got a certain level of standing. And I believe it is where the difference is coming from.
GW: Is that the only water you stock?
LG: No, we do Evian. It’s 50p more. The cost for Evian is much more because it’s coming from France. The Badoit is the same. And after, we have Chateldon at £5 a bottle. It’s delicious. If you take for the wine the top cru, for a sparkling water it would be the same. It’s extremely expensive for a water.
GW: How’s that justified?
LG: It will be based on the rarity of the product. They don’t export it to the UK any more. The spring is getting smaller and smaller, so that’s why they have cut back in Europe. It’s sold now only in France. We had the chance to ship some over, but the cost of that is extremely high.
GW: How much do you pay per bottle, presumably to £5 a bottle?
LG: Off the top of my head, £1.50.
GW: So you mark it up by £3.50?
LG: Yup.
GW: Do you feel that the price is justified because there is the option of free water?
LG: Yeah, well, we don’t force people, because we provide filtered water. I have to say, compared with some other waters, it can be very similar.NJ: And how much do you pay for the Glenlivet when you buy it in?
LG: Er, I don’t know….
NJ: Less than £1 would you day?
LG: I believe so yes. It’s in the country so it shouldn’t exceed that.
NJ: Thank you You were incredibly helpful. And you are the head sommelier?
LG: Yes.
NJ: What’s your name?
LG: David Galetti.
Face cream
Rachel Simmonds, skincare training manager, La Prairie, whose Cellular Platinum Cream costs £656 for 50ml
RS: The high cost is because of the platinum colloidal water we use. It is magnetically charged particles of platinum, so it has an impact on the electrical balance of the skin. It helps to realign the water molecules so you have a better receptivity to nutrients. But it also stops vital hydration from being lost.
GW: Does the cost reflect the research that has gone into that? Or the cost of producing it?
RS: A bit of both. Every ounce of platinum has a higher cost than every other metal.
GW: How much platinum do you use in the cream?
RS: I can’t tell you the exact amount unfortunately.
GW: Has it been scientifically tested?
RS: Yes, in the laboratory in Switzerland and on human volunteers. We don’t publish the results.
GW: Dermatologists say precious metals can have beneficial effects, but not in the tiny quantities used in these creams.
RS: Because of the magnetic charge each particle contains, it’s symmetrical within the product and the way those tiny particles – they’re submicrons, so they’re really, really tiny – that’s how it spreads evenly on the skin, and that’s why it is able to shift water molecules and change the electrical balance.
GW: So it’s not penetrating the skin, more having an effect on the surface?
RS: Yes, it’s as simple as opposites attract, because the positive charge of the water molecules in the skin stand up on the right end because they’re attracted to the product, and that’s how you get your protective buffer zone back intact. Platinum is also classed as a super-antioxidant.
GW: So would there be a lasting effect?
RS: Yes. You’ve got better hydration, it also stops the environment getting into the skin.
GW: But if you don’t publish your scientific research, it’s hard to prove or disprove any of that?
RS: Yes, it’s one of those things. We launched Platinum in 2009, in the recession, but our customers felt confident it was going to be the best technology and it still does amazingly well for us.
GW: How long would a 50ml pot last?
RS: If you’re using a pea-sized amount morning and evening, it should last three months.
GW: How much of the price is down to packaging?
RS: We sell this as "the skincare masterpiece of the decade", so it had to be presented in a way that reflected that. The applicator is in the chemical symbol of platinum – so you have the sun, which is the gold, and the moon, which is the silver, then there is a Swarovski crystal in the moon – but the focus is paying for the colloidal platinum.
GW: For £656 you could buy a course of injected fillers, so why should someone buy this instead?
RS: La Prairie has always been known as the last resort before cosmetic procedures. And not everybody wants something invasive. Likewise, we have customers who have cosmetic work, and use La Prairie between treatments. But all our products work deep within the skin. Not only the colloidal platinum, but other ingredients like peptides and carnosine, which helps to restructure the dermal matrix, smooth out wrinkles, so it’s the same effect you’d have injecting hyaluronic acid.
GW: Looking at the progression of La Prairie face creams over the years, from caviar to gold to platinum, aren’t you just putting tiny amounts of expensive ingredients into creams to justify a very high price?
RS: It is a luxurious, pioneering brand, but it’s all about the scientific innovation, so it’s not just about expensive ingredients i. It’s about how they work.
GW: Do you think any face cream is worth £656?
RS: I honestly do. Inevitably, it is going to be for the privileged few, but we do have the 30ml size, around £450, so there’s a lower price point. LS: So you’d say, if you can afford it, buy this rather than 50ml of Olay Total Effects for £8?
RS: I mean it’s not to say that not any other product is good, it’s just that if you want the very best that money can buy, La Prairie always offers that. LS: In your material you say, "the rarest metal on earth is impervious to time. Shouldn’t you be too?" But everyone ages, so it seems a bit of an unfair claim.?
RS: Yeah, I mean La Prairie scientists have always said that out of 100 per cent why you age, 20 per cent is chronological aging, and down to your genes, which leaves a whole 80 per cent down to extringic aging, which is what we do to ourselves. So there’s a lot you can do to prevent that accelerated aging: protect the skin, wear an SPF, use ingredients that protect against free radicals and environmental attacks – and look after yourself internally as well. The way they word it in there – that’s the science behind the meaning.
LS: How long would I see the effect for after stopping use?
RS: It’s hard to say because everyone’s skin cells turn over and renew every 28 days roughly. If you stop using it, the benefits will continue for a certain period but that will vary from one person to another depending on their renewal cycle. But skincare is like diet and exercise, you do need to maintain it, otherwise it’s not going to work forever.
Train fares
Richard Gibson, head of communications, CrossCountry
GW: I tried to book a CrossCountry train journey from St Austell to Macclesfield. The only available ticket was £147.50, eight weeks ahead. Train companies boast about low advance fares – the trade-off for pricey walk-on fares. What’s going on?
RG: Not all journeys have an advance fare. We set the fare between St Austell and Birmingham, so we can offer an allocation of advance fares for that part of the journey. But Birmingham to Macclesfield is set by another operator.
GW: But both segments of the journey are aboard CrossCountry trains.
RG: The way fares are set, we cannot provide allocation of advance fares on the second part.
GW: Why?
RG: Because that is the way the system is set.
GW: Who sets the system?
RG: The Association of Train Operating Companies (Atoc). They would be quite happy to explain the national fare structure.
GW: I then booked the two parts of my journey separately on your website. I bought one ticket from St Austell to Birmingham, and one from Birmingham to Macclesfield, on the same CrossCountry trains I’d been quoted £147.50 for. The new price was £65. That’s £80 cheaper.
RG: Yeah.
GW: How can you justify that?
RG: If you choose to buy multiple tickets for a simple journey, you may find it’s considerably cheaper. But you’re not getting the guarantee of the service all the way through. If your train from A to B was delayed, and you missed the train from B to C, you’d have to buy a new ticket.
GW: Do you think that’s a fair way to treat your customers?
RG: This is the industry system and you’d need to contact Atoc.
GW: Do you think it’s fair that one person could pay £147.50, but another could split the tickets and pay £65 for the same journey on the same trains?
RG: I think the fare of £147.50, at less than 50p per mile, is a fair price for the 300-mile journey.
GW: But in the end I paid just £65!.
RG: I think that £147.50 to travel from St Austell to Macclesfield is a fair price for the journey.
GW: You keep telling me it’s fair, but when people read this they’re going to say: it’s absurd and you’re ignoring my question. Why can’t CrossCountry write on their ticket site, "It may be cheaper to book your journeys separately."
RG: Because not every customer wishes to do what you’ve tried to do.
GW: Not every customer wishes to save money? It is a hassle, but you should still tell them. Why won’t you?
RG: Because that would be confusing to customers.
GW: I think customers would like to save money.
RG: I think we disagree on what we think our customers would prefer.
GW: In an ideal world, would the fare system be different?
RG: I have no idea what an ideal world would look like, I’m afraid.
GW: Do you think CrossCountry should be transparent about the fact they can’t control all of their ticket prices?
RG: I don’t think it would be useful for customers to put a section on our website to explain how the fare system works. I think it’s providing a level of complication.
GW: I think the customers are grown up enough to understand it.
RG: I tell you what, I will pass your suggestion on to the revenue team and the commercial director to see if they are able to do anything with it.
GW: Please do.
Stamps
James Eadie, Royal Mail spokesman
GW: Why are first-class stamps going up by 30% to 60p?
JE: I think most of the questions you are asking are covered in the press release.
GW: I know Royal Mail have said they are being forced to put up the price because they have to ensure a universal service. It appears the government is going to allow 90% of the Royal Mail to be privatised by 2014. Are Royal Mail putting up prices to make Royal Mail more desirable?
JE: Any issues of future ownership are a matter for the government. Mail volume is in decline – it has fallen by 25% since 2006. And over the last four years we’ve lost around £1bn of our core letters, so price rises are needed now.
GW: But a 30% rise for first-class and a staggering 39% on second-class stamps. Why so much?
JE: Ofcom itself has said the Royal Mail’s financial position has put the viability of the service at severe risk. It recognised that material price increases were needed.
GW: Did Ofcom specify that it needed to be a 30% rise on first-class stamps and a 39% rise on second?
JE: In their decision document, they set a cap of the price of second-class stamps at 55p.
GW: Surely Royal Mail must be concerned that, in bringing up the price so spectacularly, they are going to lose customers? Why would I spend 60p when an email is free?
JE: We know how hard it is for households and businesses. We thought very carefully about this, but regretfully we have no option.
Jeans
Lucy Pinter, Superfine Jeans
LP: Ouur jeans are at the high end. There’s a good reason for that. We have personalised zips, and each has a different colour from the wash. We have pocket linings, which we personalise and print ourselves, whereas most other brands just use a basic calico. And everything is made in Italy.
GW: The low-rise legging-style jeans, for example, are £260 on net-a-porter.com?I think you’re right. I think people look at £260 and think yikes that is a lot. Could you talk me through how you cost it?.
LP: It’s funny you should call now, because we’re working on pricing – our spring/summer prices were the highest we’ve ever had. Our autumn/winter prices are a great deal better.
GW: A pair of Moto jeans from Topshop cost £38.
LP: I don’t know how they do that. Obviously they manufacture in massive bulk, and when you do that, your price comes down dramatically. My label is relatively small, so we are working with a maximum of perhaps 1,000 on a run. And I also imagine they are doing it in some place in China. In my old factory, I knew the people sewing my jeans. One season we went to China; that season was a disaster for us because the quality was bad.
GW: What was the difference?
LP: They fell apart. The fit wasn’t as good.
GW: Have you thought of doing a cheaper line?
LP: I considered it, but people see it as a high-end label and don’t want a cheap Superfine jean.
GW: Would you say in some part people are paying for the label?
LP: Bear in mind what it takes to make a pair of trousers from the cut to the sew: sometimes five different processes. You’re not paying for the label, you’re paying for the "made in Italy": the fabric, the wash, the treatment and the dye, all being done in Italy.
GW: So, do you make a profit?
LP: Yes, but I’m under licence, so I take a royalty from my label and they run the business, so it might be more a question for them. But I imagine there is one because we’re still going.
http://www.guardian.co.uk/money/2012/ap … -expensive
Statistics: Posted by yoda — Sat Apr 14, 2012 1:51 am
View full post on opinions.caduceusx.com
Everything Is Going To Be Alright?
Is the U.S. economy going to be okay? Well, if the only source you listened to was the mainstream media, you would be left with the distinct impression that the U.S. economy is heading toward a full recovery and that everything is going to be alright. Unfortunately, that is not the case at all. The United States is rapidly becoming poorer as a nation and less competitive in the global marketplace. At the same time, consumer debt levels are rising, corporate debt levels are rising, state and local government debt levels are rising and the U.S. government is indulging in a debt binge unlike anything the world has ever seen. Considering the insane amount of money the U.S. government has been pumping into the economy, we should have seen a much more robust recovery by now. Instead, the employment statistics have barely moved and government dependence is at an all-time high. That is really sad, because this is as good as “the recovery” is going to get. The next major economic downturn is just around the bend, and in future years millions of us will desperately yearn for the “good old days” of 2012.
Below, I have compiled a list of things that I have entitled “Everything Is Going To Be Alright?”
It is composed in the form of a song, but it really isn’t meant to be sung. It is probably actually more of an economic horror poem than it is a song. What I have tried to do is to point out the absurdity of what we are all being told by our politicians and by the media. Hopefully you will enjoy reading it as much as I enjoyed writing it….
—–
Yahoo is going to be laying off thousands of workers starting next work.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
Best Buy has just announced plans to close 50 stores.
Don’t worry about a thing - JPMorgan Chase CEO Jamie Dimon says everything is going to be alright.
The mayor of Los Angeles has announced that the city will be laying off “a large number of employees“.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
Baltimore is so broke that it has decided to look into selling off some of the most famous historical landmarks in the city.
Don’t worry about a thing - the mainstream media says everything is going to be alright.
The city of Costa Mesa, California is so broke that is has decided to sell off its police helicopters.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
The city of Trenton, New Jersey is so broke that it has decided to indefinitely postpone buying more toilet paper for city buildings.
Don’t worry about a thing - Joe Biden says everything is going to be alright.
The capital city of Pennsylvania is so broke that it has decided to start skipping debt payments.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
The state of Nevada has a 12.3 percent unemployment rate.
Don’t worry about a thing - the pretty people on television say everything is going to be alright.
Total student loan debt in America has now passed the 1 trillion dollar mark, and about 270 billion dollars of those loans are at least 30 days delinquent.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
The savings rate in the United States has fallen back to pre-financial crisis levels.
Don’t worry about a thing - Harry Reid says everything is going to be alright.
Home prices in the United States hit a 10 year low in the month of January. They are now down 34.4 percent from the peak in 2006.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
The average price of a gallon of gasoline in the United States is rapidly approaching the $4.00 mark.
Don’t worry about a thing - Anderson Cooper says everything is going to be alright.
Median household income in the United States is down 7.8 percent since December 2007 after adjusting for inflation.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
When Barack Obama first took office, the number of “long-term unemployed workers” in the United States was approximately 2.6 million. Today, that number is sitting at 5.6 million.
Don’t worry about a thing - Nancy Pelosi says everything is going to be alright.
The BRICS countries (Brazil, Russia, India, China and South Africa) are publicly declaring that it is time to move away from the U.S. dollar as the primary reserve currency of the world.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
One out of every five Americans will be 65 or older by 2030 and nobody has any idea where all the money is going to come from to pay them the benefits that they have been promised.
Don’t worry about a thing - Rachel Maddow says everything is going to be alright.
More Americans are dependent on the government right now than at any other time in all of U.S. history.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
The number of Americans on food stamps has increased by 14 million since Barack Obama became president and is sitting at an all-time record high.
Don’t worry about a thing - Hillary Clinton says everything is going to be alright.
The U.S. government will add more to the national debt in 2012 than it did from the time that George Washington became president to the time that Ronald Reagan became president.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
The U.S. national debt is currently increasing by about 150 million dollars every single hour.
Don’t worry about a thing – Federal Reserve Chairman Ben Bernanke says everything is going to be alright.
The Federal Reserve bought approximately 61 percent of all government debt issued by the U.S. Treasury Department in 2011. This is a Ponzi scheme that will completely collapse at some point.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
—–
So what is your opinion?
Do you believe that everything is going to be alright?
Please feel free to leave a comment with your thoughts below….
View full post on The Economic Collapse
Other • Everything Is Going To Be Alright?
Everything Is Going To Be Alright?
Is the U.S. economy going to be okay? Well, if the only source you listened to was the mainstream media, you would be left with the distinct impression that the U.S. economy is heading toward a full recovery and that everything is going to be alright. Unfortunately, that is not the case at all. The United States is rapidly becoming poorer as a nation and less competitive in the global marketplace. At the same time, consumer debt levels are rising, corporate debt levels are rising, state and local government debt levels are rising and the U.S. government is indulging in a debt binge unlike anything the world has ever seen. Considering the insane amount of money the U.S. government has been pumping into the economy, we should have seen a much more robust recovery by now. Instead, the employment statistics have barely moved and government dependence is at an all-time high. That is really sad, because this is as good as "the recovery" is going to get. The next major economic downturn is just around the bend, and in future years millions of us will desperately yearn for the "good old days" of 2012.
Below, I have compiled a list of things that I have entitled "Everything Is Going To Be Alright?"
It is composed in the form of a song, but it really isn’t meant to be sung. It is probably actually more of an economic horror poem than it is a song. What I have tried to do is to point out the absurdity of what we are all being told by our politicians and by the media. Hopefully you will enjoy reading it as much as I enjoyed writing it….
—–
Yahoo is going to be laying off thousands of workers starting next work.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
Best Buy has just announced plans to close 50 stores.
Don’t worry about a thing – JPMorgan Chase CEO Jamie Dimon says everything is going to be alright.
The mayor of Los Angeles has announced that the city will be laying off "a large number of employees".
Don’t worry about a thing – Barack Obama says everything is going to be alright.
Baltimore is so broke that it has decided to look into selling off some of the most famous historical landmarks in the city.
Don’t worry about a thing – the mainstream media says everything is going to be alright.
The city of Costa Mesa, California is so broke that is has decided to sell off its police helicopters.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
The city of Trenton, New Jersey is so broke that it has decided to indefinitely postpone buying more toilet paper for city buildings.
Don’t worry about a thing – Joe Biden says everything is going to be alright.
The capital city of Pennsylvania is so broke that it has decided to start skipping debt payments.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
The state of Nevada has a 12.3 percent unemployment rate.
Don’t worry about a thing – the pretty people on television say everything is going to be alright.
Total student loan debt in America has now passed the 1 trillion dollar mark, and about 270 billion dollars of those loans are at least 30 days delinquent.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
The savings rate in the United States has fallen back to pre-financial crisis levels.
Don’t worry about a thing – Harry Reid says everything is going to be alright.
Home prices in the United States hit a 10 year low in the month of January. They are now down 34.4 percent from the peak in 2006.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
The average price of a gallon of gasoline in the United States is rapidly approaching the $4.00 mark.
Don’t worry about a thing – Anderson Cooper says everything is going to be alright.
Median household income in the United States is down 7.8 percent since December 2007 after adjusting for inflation.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
When Barack Obama first took office, the number of "long-term unemployed workers" in the United States was approximately 2.6 million. Today, that number is sitting at 5.6 million.
Don’t worry about a thing – Nancy Pelosi says everything is going to be alright.
The BRICS countries (Brazil, Russia, India, China and South Africa) are publicly declaring that it is time to move away from the U.S. dollar as the primary reserve currency of the world.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
One out of every five Americans will be 65 or older by 2030 and nobody has any idea where all the money is going to come from to pay them the benefits that they have been promised.
Don’t worry about a thing – Rachel Maddow says everything is going to be alright.
More Americans are dependent on the government right now than at any other time in all of U.S. history.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
The number of Americans on food stamps has increased by 14 million since Barack Obama became president and is sitting at an all-time record high.
Don’t worry about a thing – Hillary Clinton says everything is going to be alright.
The U.S. government will add more to the national debt in 2012 than it did from the time that George Washington became president to the time that Ronald Reagan became president.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
The U.S. national debt is currently increasing by about 150 million dollars every single hour.
Don’t worry about a thing – Federal Reserve Chairman Ben Bernanke says everything is going to be alright.
The Federal Reserve bought approximately 61 percent of all government debt issued by the U.S. Treasury Department in 2011. This is a Ponzi scheme that will completely collapse at some point.
Don’t worry about a thing – Barack Obama says everything is going to be alright.
http://theeconomiccollapseblog.com/arch … be-alright
Statistics: Posted by yoda — Fri Mar 30, 2012 7:27 pm
View full post on opinions.caduceusx.com
Other • When Money Is Everything
When Money Is Everything
By Graydon Carter
As someone who came to New York in the 1970s, I was, like so many of my friends, a certified member of what we now call the 99 percent—and I was a lot closer to the bottom than to the top of that 99 percent. At some point during the intervening years, I moved into the 1 percent. Then came the towering wave of upper-tier wealth that washed over America and particularly New York over the past 25 years. I’m still in the 1 percent, but in the 99 percent of that 1 percent. And again, I’m probably a lot closer to the bottom than to the top.
The city I moved to back then was a livable stew made up of the well-off, the nearly broke but upwardly mobile, the bedrock blue collar, the working poor, and the indigent. New York, they used to say, was a city in which the rich and the poor lived cheek by jowl. And, golly, they did back then. New York also used to produce things. Pianos, for instance—a century ago, New York was one of the biggest piano manufacturers in the world. Where once we had foundries and factories on Manhattan island, men now make muffins. New York has arguably become the quintessential 1 percent city, a city that has been so given over to the rich that you now have to be rich to live here. Or not live here: New York’s also a preferred destination for foreign money spent on vast, lifeless apartments in the sky that are occupied a couple of weeks a year at most.
My first apartment was a beguiling Greenwich Village studio off lower Fifth Avenue with towering ceilings and a wall of leaded glass overlooking an untended garden. I paid $225 a month for it, which was about a tenth of my monthly salary. I still live in the same general area, in a narrow house where Christopher Plummer once lived when he was a struggling actor. It’s also where Village lefties organized rallies to free the immigrant anarchists Sacco and Vanzetti, following their conviction for murder in 1927. When I moved to the house, I was, by my reckoning, the only person on the street who went to work in a jacket and tie. Now I’m surrounded by tech moguls, movie producers, and hedge-fund tyros, many of whom are there because they don’t want to live on the Upper East Side. What was once a haven for otherwise dispossessed artists, writers, and other assorted misfits is now one of the most expensive Zip Codes in the nation. I couldn’t afford the house I live in now if I had to buy it at market rates. I couldn’t even afford to buy the apartment I lived in 20 years ago.
Somewhere along the way, New York became all about money. Or rather, it was always about money, but it wasn’t all about money, if you know what I mean. New York’s not Geneva or Zurich yet, but we’re certainly heading in that direction. London is, too. With every passing year, London is a city that becomes less English and more international—“international” being code these days for business and finance. At some point, even the money people will begin to blanch. The last thing businessmen want to do is sit in a room filled with other businessmen. A room full of money is a pretty boring sight—unless it’s yours, of course. A friend of mine has a theory that what billionaires really want to do is pile all their money in their swimming pools and dive in like Scrooge McDuck.
The super-rich express themselves in many ways, chief among them procuring housing commensurate with their income and their perception of their position on the socio-economic food chain. Big houses used to be 10,000 square feet—and for that you got more bedrooms and bathrooms than you would ever need, a kitchen that a Michelin-ranked chef would envy, and, over the past quarter-century, a “great room” for watching television. But, as with wristwatches, much bigger is now apparently better than merely bigger. The Wall Street Journal recently ran a photograph of the house New England Patriots quarterback Tom Brady and his wife, Gisele Bündchen, built in Los Angeles. You’d think you were looking at pictures of the main building of a country club. And yet, at just under 19,000 square feet, the Brady-Bündchen spread could fit inside the guesthouse of some of America’s new monster mansions.
The Journal also ran an aerial photograph of the Los Angeles home of Anthony Pritzker, one of the Hyatt-hotel heirs. It looks like a headquarters building in an office park, and at nearly 50,000 square feet, it’s almost as big. Nearby, one of the sons of King Abdullah of Saudi Arabia is waiting for approvals to build his 70,000-square-foot house. The fellow’s original plans called for 85,000 square feet. And then there’s the 100,000-square-foot complex that mining operator Ira Rennert built in the potato fields of Sagaponack, out on Long Island. In the last gilded age, houses even a fraction of this size became famous—like the Breakers, the 65,000-square-foot Newport cottage built by the railroad heir Cornelius Vanderbilt II, or William Randolph Hearst’s fanciful castle at San Simeon, a legendary folly that is a mere 68,500 square feet.
Sunnylands, the midcentury gem commissioned by publisher and philanthropist Walter Annenberg, is relatively demure by comparison to all this excess. Designed by A. Quincy Jones, the house itself has 20,000 square feet of living space. It also has 22 guest bedrooms, 11 lakes, a tennis court, and, being near Palm Springs—God’s waiting room for well-heeled mandarins of politics and show business—a nine-hole golf course. As Vanity Fair special correspondent Bob Colacello, who was once a guest at the house, recounts in “Return to Sunnylands” on page 202, it was used well. And since the death of Annenberg and his wife, Lee, the family has transformed Sunnylands into a sort of “Camp David of the West” for visiting world leaders, a place to get away from the hubbub with like-minded nabobs. Give those old Republican 1-percenters their due: they really knew how to live.
http://www.vanityfair.com/magazine/2012 … don-201204
Statistics: Posted by yoda — Sat Mar 03, 2012 9:11 am
View full post on opinions.caduceusx.com