Wednesday Briefs – 21 April 2021

Follow populyst to receive this commentary in your inbox every Wednesday.

THIS WEEK: The Billionaires’ Skyline; Troop Movements in Ukraine and Afghanistan; Immunity and Secrecy.

The Billionaires’ Skyline

New York’s most visible tributes to the global wealthy are nearing completion just now, as the City struggles to shake off the pandemic and its damaging sequels. Five years ago, we wrote in Manhattan Ultra-Luxury “Battling the Serpent of Chaos” that the City’s developers were probably overbuilding in the ultra-luxury high-rise category. This view was supported at the time by leading research firm Miller Samuel who worried that the inventory of new units was being built up to excessive levels. That was all before the Trump presidency, before the trade war with China, before the crackdown on immigration, and before the pandemic.

The Same View of Midtown in October 2014 and April 2021. Five of today’s tallest buildings were added after 2014.

Once these new projects were launched years ago, they were carried to fruition on their own momentum irrespective of intervening political or economic events. The result is seen in a transformed midtown skyline. The eight tallest buildings in the lower picture did not exist a decade ago. They are from left to right: 520 Park Avenue, 432 Park Avenue, One Vanderbilt, 53W53, 111 W 57th, One 57, Central Park Tower and 220 Central Park South. Of the eight, all except One Vanderbilt are residential. One 57 also houses the Park Hyatt Hotel in its lower floors.

So far in 2021, real estate sales have picked up again in New York City, bouncing rapidly from the long pandemic lull. The City’s ability to reduce the inventory of high-end units would be more evidence of its fabled resilience. In the past, these towers were marketed to wealthy foreign investors, who were often buying anonymously under the cover of shell companies. The next year will tell whether these investors are coming back to Manhattan as they have many times after other crises, or whether the inventory overhang will be absorbed in different ways.

Troop Movements in Ukraine, Afghanistan

The massing of Russian troops on Ukraine’s border now exceeds its level of 2014. That year, Russia annexed Crimea and invaded Donbas in the east of the country. Could a similar scenario unfold now? It is possible. Russia is feeling pressure from United States sanctions, from uproar over the detention of Alexei Navalny, from the pandemic and from energy prices that are still too low. In addition, its armed forces may feel renewed confidence after their effective campaign of shoring up the regime in Syria. Most observers do not see an imminent renewal of fighting. But a new incursion into Ukraine cannot be ruled out.

President Biden announced the withdrawal of American troops from Afghanistan, twenty years after the terror attacks of 9/11. America’s hopes of planting the seeds of democracy in that long-suffering country have been dashed for a variety of reasons: economic, cultural, social, ethnic. Afghanistan is a complex country with a complex ethnic composition and social structures. But does a withdrawal increase the risks of another 9/11? Not necessarily. There are many more mitigating technologies today that were not available in 2001, for example drones and high-tech surveillance. Further, terrorists have established bases in many other countries. There seems to be little about Afghanistan today that would make it a likelier staging ground for a massive attack.

Immunity and Secrecy

Agents of the state, in this case the police, are immune to civil suits from citizens due to the principle of qualified immunity. Qualified immunity per Pierson v. Ray (1967) provides the police with sufficient protections to enable them to carry out their duties without fear of lawsuits against individual officers. This was later amended through 42 USC 1983 and in Bivens (1971) to allow suits for violations of constitutional or civil rights.

After several incidents of police abuse including the murder of George Floyd, talk of reforming the police, or even of defunding it, is all the rage. Some police departments have started reforming. Some have recognized that complaints against individual police officers should be made public or be made available to watchdog groups. Last year, New York state repealed a law that had kept police disciplinary records secret. This is a step in the right direction. The combination of immunity and secrecy has been detrimental because it has diluted accountability and led to abuses. The removal of secrecy adds some safeguards while keeping in place the immunity needed for the police to do their job.

Access all Wednesday Briefs™ here.

Wednesday Briefs™ is a pending trademark of populyst and its owner. Copyright © 2020, 2021 populyst. All Rights Reserved.

Wednesday Briefs – 14 April 2021

Follow populyst to receive this commentary in your inbox every Wednesday.

THIS WEEK: Most People are Very Smart; Back to the Border; Podcast: Lebanon in Crisis.

Read more

Lebanon in Crisis, with Joe Issa El Khoury

“Historically, Lebanon prospered as a result of inflows of people and funds – people who came to take refuge in Lebanon and also funds. If we look at the post World War 2 period when modern Lebanon became independent and also at previous periods that Lebanon went through – and I mean over the past 100 or 200 years – one thing that was common to all these eras is its liberal economic system that was adopted by all who lived on this land. The constant was the liberal economic system.”____ Joe Issa El Khoury

Sami J. Karam speaks with Joe Issa El Khoury, a Beirut-based financier, about the tragic events that have unfolded in Lebanon since 2019. A sharp fall in the currency, a banking freeze, a political crisis, hyperinflation, and widespread street protests made 2019 a difficult year. But these events were then compounded by the Covid-19 pandemic and the explosion in the port of Beirut in 2020.

Issa El Khoury explains the sequence of events that led to the present, and offers a possible way forward.

Topics include:

  • 0:00 Introduction of Joe Issa El Khoury
  • 2:25 What is it like right now on the ground in Beirut?
  • 8:33 Why did Lebanon have a golden period in 1945-75; why was it later so prone to crisis?
  • 17:40 The Rafik Hariri era and the return of growth 1990-2005
  • 20:00 What explains the weakness of the Lebanese state: geography and demographics
  • 26:30 Lebanon’s diversity as a source of wealth; Example of Lebanese cuisine
  • 30:40 Crossing the line from a laissez-faire economy to a crony economy
  • 35:05 The real estate boom of 2007-11
  • 36:55 The impact of the Syrian civil war
  • 39:10 Crowding out the private sector
  • 44:10 The proximate factors that led to the meltdown
  • 46:15 The current condition of the banking sector; Role of the Central Bank
  • 51:00 Will depositors suffer a haircut? The Lazard and other plans
  • 54:45 Talk of privatization of state assets
  • 59:45 Political patronage in the public sector
  • 1:01:50 “All roads lead to Washington DC and the acronym IMF”
  • 1:05:20 Political reform and the role of the diaspora

TO HEAR THE PODCAST, CLICK HERE OR ON THE TIMELINE BELOW:

Wednesday Briefs – 31 March 2021

Follow populyst to receive this commentary in your inbox every Wednesday.

THIS WEEK: Suez – Container Shipping; VolTswagen; New York Coronavirus; Triumphing on the Venom of a Snake.

Read more

Peak Tesla?

This article first appeared in National Review.

Investors are finally beginning to hit the brakes on the sky-high electric-vehicle stock.

In the end, the needles that likely pricked the bubble were those used to inoculate millions of Americans starting last November. For the stock market, there was before November 9, the date of Pfizer’s vaccine announcement, and after November 9. The news that vaccines developed by Pfizer and Moderna were safe and effective fired a shot signaling that the pandemic would soon be controlled and that the economy would return to normal before long.

The market rotation since then has been rapid, with former leaders stalling or losing ground and former laggards recovering rapidly. Since that November date, the FAANG (Facebook, Amazon, Apple, Netflix and Google) stocks that led the way in 2020 have averaged a return of 3.1 percent, gaining mainly thanks to Google, which was up 15.7 percent (the FAAN without Google averaged a negative 0.1 percent return). Microsoft did better, up 5.5 percent. Zoom Communications and Peloton Interactive, the 2020 icons of work at home and exercise at home, were down 34.3 percent and 12.7 percent respectively. (Returns are as of the March 22 close.)

On the other side of the tracks, the old and unsexy names, which fell in March 2020 and could not sustain a decent recovery through the remainder of the year, have all soared. Since November, “ok boomer” companies Exxon and Valero are up 70.6 percent and 89.4 percent; Carnival Cruise, Delta Airlines, and Marriott International are up 98.8 percent, 52.7 percent, and 45.8 percent; Gap, Darden Restaurants, and Ulta Beauty are up 40.9 percent, 33.9 percent, and 46.5 percent.

But then there was Tesla. Tesla, the maker of fortunes and dreams. Tesla, the rocket, the star, the supernova. Continue Reading >>>