The coming crypto reckoning
The lure of being lucky and striking it rich is a powerful opiate in America. From our very foundation as a place of refuge for the unluckiest of Europe, the self-made millionaire has a place of reverence in American lore. Very few attain that status, but millions have exhausted that dream and put themselves in an early grave working to attain it.
The chase for American riches has taken many forms, from the California Gold Rush to endless swindles, and the latest destination is cryptocurrency. Cryptocurrency is digital currency that can be exchanged for other currencies. Bitcoin is the most famous but there are more of them than I care to count.
There is absolutely a place in the world for a digital currency, but many of the current crop of these currencies defy what a currency needs to be: a stable unit of value measurement. If Bitcoin can lose 22% of its value in the matter of days, or drop precipitously in the course of a morning based on the whims of Chinese regulators, it is missing an essential element of being a usable currency.
And there will be a time when crypto currencies are real and have real value and usefulness. It’s important to note that in some totalitarian countries like China, the use of crypto currencies have been a force for good, enabling people to do business without oppressive government interference. But we are in such early days of the cryptocurrency world that the safe and regular use of cryptocurrencies is still years away.
There are cryptocurrencies pegged to regular currencies—such as Tether, which tracks the U.S. dollar—known as Stablecoins. In the future, some kind of Stablecoin may be used globally that would enable secure, anonymous use with the kind of stability that a currency needs.
But that kind of legitimate use is a long way away from the rampant speculation that is captivating the imaginations of get-rich-quick investors. What’s worse, the same kind of faux populism that gave us the GameStop rush of a year ago has been de rigueur in the crypto world.
And this rampant, pure speculative increase in value is based on hopeful dreams and nothing more. Even stocks that are widely overvalued are supported by an understandable business model. With crypto, you can lose your shirt in the course of an afternoon and have no one to blame but yourself. Most world currencies – U.S. Dollars, French or Swiss Francs, Euros, British Pounds—are backed by powerful governments that have a vested interest in maintaining a stable currency. You can argue that U.S. Dollars are propped up by the Federal Reserve Bank or even an Illuminati conspiracy, but they are doing a better job than they keyboard commandos, Russian bots and other shady characters running the crypto world.
What is so shameful about the current state of crypto is that people are being drawn in who otherwise would invest in something more constructive. Hard-working people who find it hard to get ahead and save for their kids’ college tuition are plowing money into the latest online toy money when they could be investing in something real. At this point I’d be happier with these people stuffing money into mattresses rather than putting it into the latest cryptocurrency that’s being talked up by social media shysters.
But like major speculative rushes of the past, the crypto world will experience a “shakeout,” where those that don’t have real values drop quickly and investors lose money. It could be quick and violent. There will be stories of people losing their life savings because they were told they could double their money in months.
Crypto currency speculation is going to be one of those things future generations read about and ask why people of our generation didn’t do something about this global boondoggle. The reckoning is coming; please don’t get burned.
Labor’s Love Lost
This past Easter Sunday, my family ate heartily and discussed some of the current political and economic issues of the day. There may be better ways to wash down a tasty Easter ham than a lamentation on the state of the republic, but we haven’t found it yet. Our conversation settled on how many pension holders have been screwed by their municipal or corporate overlords.
The unofficial conclusion we reached over our Easter meal was that the United States is long overdue for a resurrected organized labor movement.
Labor unions represent only about 11% of the American workforce, and a majority of union members today are government workers who can’t strike. The upside to this is that a lot of government workers have very good, stable jobs that are safer and more lucrative than their non-government worker counterparts. But most workers are continually getting screwed.
The labor movement was spurred on by the large impact of industrialization and it was designed to protect industrial laborers and tradesmen. It has not adapted to the changing economy. The majority of American workers today are not industrial tradesmen.
If there was a viable labor movement in the U.S., I would have a real union to join. I work as a financial journalist. The company I work for actually cut our salaries years ago during the financial crisis. They technically restored the salary cuts years later, but haven’t given raises since and continued to cut our pay in other ways, such as stopping all matching 401k contributions, gutting healthcare benefits, and the like. They’ve also done a lot of outsourcing. Employees with many years of service to the company under their belts were shown the door, their jobs shipped off to India.
A labor union would have fought all of those things, but there is no labor union representing us. We are considered too “professional” to join a union, though not professional enough to be tossed aside like yesterday’s garbage if someone outsourcing shyster can save the company a few dollars. But we don’t have much recourse since there is no collective bargaining going on. People vote with their feet and while people are leaving the company in droves, the rest of us are there are spending our energies looking for other work rather than fighting a good fight (and since I need my job and have four mouths to feed, I’ll kindly not mention the name of the company I work for here).
I dream of the day when the outsourcing C.E.O. gets a brick through his living room window and four flat tires on his way to work. There should be real unions to contend with when companies want to cut pay, cut benefits or cut jobs. This isn’t because I think the answer is some kind of socialist worker’s paradise. To paraphrase what Winston Churchill said about democracy: Capitalism is the worst economic system there is except for all of the others.
There seems to be a great illness of myopathy among our current class of capitalists. They think only in the short term and only in terms of the bottom line. I have no problem with businesses making hard decisions and scoring a healthy profit, but a lot of executives are not thinking ahead much farther than the next quarterly report. Sure, the slash-and-burn fiscal ass-fucking they’ve been giving American workers has increased profits now, but what kind of company are they going to have in five years?
But our companies have pursued these policies and the results are predictable. American capitalism no longer means industriousness and hard work, but rather golden parachutes and amorality.
Just as democracy doesn’t work without real political opposition, real capitalism doesn’t work without American workers having some kind of say over their working lives. Labor unions were once the source of that power. They can be again.
Save the Tourists (and Airbnb)
Tourists: No other form of life on the New York sidewalks and subways is more simultaneously loved and despised. We love that they are here spending their money and enjoying the wonderment of our city while we hate how they slow us down with their clueless wanderings and slow gait unfamiliar with the pace of city life.
New York needs tourists. Tourism is a central part of the city’s economy and messing with the flow of tourists to New York is effectively kicking the Big Apple squarely in its big balls.
So the New York State Attorney General’s office threatens to throw cold water on this essential industry with its subpoena of Airbnb’s New York State records.
Airbnb is a web site that connects visitors with private hosts who rent out private rooms or apartments, usually for significantly less than hotels cost. The N.Y. Attorney General’s office claims that the platform is being abused by people operating illegal hotels and avoiding hotel taxes.
I did a quick search for hotel room rates in New York City for the first week of March 2014. Prices are higher around the holidays in November and December and the second week of March might see abnormally high rates for people coming for the St. Patrick’s Day Parade. This study was unscientific, and there are web sites like Priceline.com and others that can help you find discounts.
Starting with a non-luxury, well-known hotel chain, the Marriot Marquis in Times Square charges an average of more than $360 per night for one room for two adults with no children. That jumps to more than $430 per night if you want such luxuries as a sofa bed in your room. A Marriott on East 40th Street got a rate of $206 per room.
Going to the cheaper hotels, Days Inn offered a rate of $131 per night on 94th Street. The chain charges $95 per night to stay at their hotel at JFK Airport. Nothing at JFK Airport is worth $95 a night unless it comes with a free strippers and cocaine.
A similar search on Airbnb gets you $175 a night for a room near Times Square in Manhattan and as low as $57 per night near JFK. The offerings were scattered and not as numerous to put too much of a dent in the hotel business, judging by the search I did on the web site.
No doubt there are people using Airbnb who are running illegal hotels outside of the legitimate regulation of the law, but there is a way to differentiate between these groups and the people making a few extra bucks renting a room to budget-conscious tourists. And about 90% of the Airbnb hosts are people renting out rooms in the homes they live in.
For whatever its faults, Airbnb is American capitalism and New York ingenuity at its best. Even with the abuses as they are the city and state gain more than they lose by enabling more tourism. The money tourists don’t spend on hotels they spend on Broadways shows, Yankee games, hot dogs and hookers. Let them.
Standing Strong on Pier 17
Fried food is the last thing I need to eat, but I needed to eat at a seafood restaurant at the South Street Seaport just to give them my business.
As I approached the Pier 17 mall, I found it surrounded by barricades with the only entrance guarded by a security guard turning people away. He admits that the restaurant is open, but calls it a “café” when it clearly is not.
“I understand there’s one restaurant still open inside,” I said to the guard, who was discouraging someone from entering.
“Well it’s not a restaurant, it’s a café. If you want to check it out it’s on the third floor.”
The restaurant that remains open among dozens of empty storefronts is called ‘Simply Seafood’ and it’s clearly a restaurant like any other food court restaurant in any food court, only this one is the only business left in a large three-level mall at the South Street Seaport.
The restaurant is the lone holdout in a large mall that a developer is trying to tear down. They have a lease and expect it to be honored. The landlord has used illegal and very underhanded tactics to try to remove them, such as locking the doors to the mall and reporting that the restaurant had closed, and is still using dirty tricks today. With shady developers normally getting away with their violations of private property rights in the name of economic development and the city normally either turning a blind eye or helping out in with corrupt deals, the urge to score one for the little guy is immense and well worth the price of fried shrimp.
Howard Hughes Corp. owns the property and wants to build another, fancier mall there. I would hope that if Howard Hughes were alive today he’d throw a jar of his collected urine at the people running this namesake corporation. Howard Hughes didn’t need to harass small business owners; he flew airplanes and banged Katherine Hepburn.
Security guards pace the otherwise empty mall eyeing customers suspiciously. There are bathrooms open on the second floor, but otherwise the mall is a ghost town of abandoned stores, makeshift barricades, ‘No Trespassing’ signs and caution tape.
Despite the best efforts of the rent-a-cops, people continued to come for seafood. The restaurant’s struggle with the landlord generated publicity that has brought some people; it’s why I was there. The allure of touring a mostly-abandoned place brings more, and hopefully the chance to stick it to a real estate Goliath will bring more. New Yorkers can’t help but respect and admire the people who fight for their rights even against overwhelming force.
New York landlords are notorious for their unscrupulous behavior. The price of real estate is so high and both the expenses and potential profits so huge, a hold-out tenant can cost an owner lots of money. In the case of a prime commercial real estate in New York’s tourist-heavy downtown, developers stand to lose millions of dollars if they have to maintain a mostly abandoned building for the next seven years.
A small group of tourists asked the men working why they were the only business still open at the mall.
“We’ve got a lease,” said one of the men. “We’ve have a lease until 2020.”
I had a lunch of friend shrimp and fries. What made it such a delicious meal was helping a determined small business stick to their guns.
As I left the mall, the security guard at the entrance was turning away another group of potential customers, wrongly calling the restaurant a café. But not everyone was turned away, many continued through and moved on to give the restaurant their business, and I hope Simply Seafood is there for a very long time.
The Fine Art of Not Belonging
One of the perks of working as a financial journalist is that you sometimes get to go to parties in nice places where food and drink are free. It doesn’t make up for working for years without a raise and being in constant fear of being laid off, but it’s nice nonetheless.
Last evening was one such party, a charity event put on by people in finance.
Ostensibly my coworker and I were there to meet people that would help us do our job. Schmoozing with financial people is part of my job, but it’s a part of the job that I am bad at.
I dressed well enough and was pleasant and polite and still had no hopes of blending in. Members of the financial class are their own race, though they are made of different races. They can look through you as if you are not there and walk with a confidence that bristles with a condescending hostility and feels perpetually offensive and false. I wore a nice suit but maybe there was something in the way I said thank you to the caterers, or the fact I thanked them at all, that gave me away as decidedly not one of the financial class.
There’s nothing wrong with finance, but the people who work in the higher echelons of finance today are not cut from the same material as the people who invent things or pioneered and forged new industries. They are custodians of other people’s money and often speak in a gloating jargon that moves lots of money but creates little of value. I’m sure many of them are decent people and good at their job, but they do not possess the fire of the technology entrepreneurs or venture capitalists I met during previous jobs.
After thirteen years of working in financial journalism, I have actually gotten worse at the art of fitting in at these types of gatherings. My motivation for the easy smile and the glad-handed talk has waned. But I am glad not to fit in among this alien class. Somehow I feel that in the important calculus of life I’ll have more to show for it at the unspoken reckoning at the verge of the great beyond.
I ate as many miniature lobster rolls as I could without making a spectacle of myself and made my discreet exit after putting in a respectable amount of time at the event. I briefly enjoyed the sights of the city on the first really warm evening of the spring before making my descent to the subway for home.