Ghost Town San Francisco

The City by the Bay continues to die:

The owner of two of San Francisco’s largest hotels has stopped making mortgage payments on the properties and will let them go into foreclosure as historic crime rates continue to deter tourists.

Park Hotels and Resorts announced on Monday that it stopped making payments on its $725 million loan due in November for the Hilton San Francisco Union Square and Parc 55 — the largest and fourth-largest hotels in the city, respectively.

‘After much thought and consideration, we believe it is in the best interest for Park’s stockholders to materially reduce our current exposure to the San Francisco market,’ CEO Thomas Baltimore Jr said in a statement.

‘Now, more than ever we believe San Francisco’s path to recovery remains clouded and elongated by major challenges — both old and new’ as the city becomes a ghost town with empty storefronts.

Out of 203 retailers open in 2019 in the city’s Union Square area, just 107 are still operating, a drop of 47 percent in just a few pandemic-ravaged years.

Among the heavy hitters, Brooks Brothers, Ray Ban, Christian Louboutin, Lululemon and Marmot have all packed it in.

Another 12 new retailers have opened in the area since the pandemic began in 2020 but already two have them have either closed or plan to shut down.

Williams-Sonoma also announced it will shut down in 2024.

San Francisco is a harbinger of the urban US future. Few US cities combine extremes of ideology, diversity, and immigration in as perfect a mixture as San Francisco. Just as Detroit is the poster city for pure vibrancy, San Francisco is the poster city for left-wing ideals. And it is demonstrating, in real-time, the inevitable consequences of those ideals.

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It’s Not the Taxes

Norway’s wealthiest are fleeing the country:

A record number of super-rich Norwegians are abandoning Norway for low-tax countries after the centre-left government increased wealth taxes to 1.1%.

More than 30 Norwegian billionaires and multimillionaires left Norway in 2022, according to research by the newspaper Dagens Naeringsliv. This was more than the total number of super-rich people who left the country during the previous 13 years, it added. Even more super-rich individuals are expected to leave this year because of the increase in wealth tax in November, costing the government tens of millions in lost tax receipts.

Many have moved to Switzerland, where taxes are much lower. They include billionaire fisher turned industrial tycoon Kjell Inge Røkke who moved to the Italian-speaking city of Lugano, just over the border from his favoured hangout Lake Como and the fashion capital Milan.

Røkke, 64, is the fourth-richest Norwegian, with an estimated fortune of about NOK 19.6bn (£1.5bn). In an open letter, he said: “I’ve chosen Lugano as my new residence – it is neither the cheapest nor has the lowest taxes – but in return, it is a great place with a central location in Europe … For those close to the company and to me, I am just a click away.”

His relocation will cost Norway about NOK 175m in lost tax revenue a year. Last year, Røkke was the country’s highest taxed individual. Dagens Næringsliv calculated that he has paid about NOK 1.5bn in tax since 2008.

His move to Switzerland follows a relatively small increase in tax aimed at the country’s super-rich, who face wealth taxes at both the local and state level. That includes a municipal tax of 0.7% on assets in excess of NOK 1.7m for individuals, or NOK 3.4m for couples. There is also a state wealth tax rate of 0.3% on assets above NOK 1.7m. In November, the government raised the state rate to 0.4% for assets above NOK 20m for individuals, and NOK 40m couples, taking the maximum wealth tax rate to 1.1%.

Ole Gjems-Onstad, a professor emeritus at the Norwegian Business School, said he estimated that those who had left the country had a combined fortune of at least NOK 600bn.

This is a fascinating article, because for decades, the media has aggressively denied that wealthy people adjust their behavior in response to tax increases. I remember, in particular, a three-part series published by the St. Paul Pioneer Press in the late 1990s that lamented the fact that new corporations were not growing up to replace the great Minnesota companies of the 1950s through 1970s, the Honeywells, the 3Ms, and the Control Datas, but didn’t once mention the fact that Minnesota then had some of the highest income taxes in the country.

The omission was rather remarkable, given the way in which the vast majority of the members of the Minnesota corporate boards at the time were erstwhile Minnesotans who were Florida residents.

But I don’t think that’s what’s happening here. Especially considering that the Norwegians are disproportionately opting to move to Switzerland, where the wealth taxes are even higher. For once, I don’t think these decisions are being driven by tax rates. Instead, I strongly suspect that the wealthy Norwegians are electing to move to a country that is going to remain neutral in the Russian-NATO war, knowing that when the proxy war goes direct, Norway and its oil supplies are almost certainly going to be a target for occupation by NATO and invasion by Russia.

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The PGA Surrenders

The PGA Tour waved the white flag and merged with LIV Golf:

In the bitter civil war between the tradition-steeped PGA Tour and its filthy-rich, Saudi-backed rival LIV over the future of golf, the money has come out on top. Leaders of the two organizations delivered a bombshell announcement on Tuesday that they will merge through a deal that will drag global golf into a ‘new era’ – whether the players, fans and sponsors like it or not.

The news, which blindsided players and executives on both circuits, follows years of bitter disputes that have pitted the sport’s leading figures against each other over money, power and ethics in the gentleman’s game.

While LIV poached some of golf’s biggest stars – including Brooks Koepka, Dustin Johnson and Phil Mickelson – with deals totaling hundreds of millions of dollars, those loyal to the PGA, including Rory McIlroy and Tiger Woods, have had the rug pulled out from under them after snubbing eyewatering paydays on moral grounds.

Ultimately, the PGA was unable to keep up with the relentless investment of oil money in a circuit bankrolled by Saudi Arabia’s sovereign wealth fund, the investment arm of a nation with a dismal human rights record. Something had to give.

I strongly suspect that LIV Football (aka Soccer) is next. In the aftermath of the failure of the European Super League and the massive offers being made to iconic players like Cristiano Ronaldo and Lionel Messi, it appears obvious to me that the strategy will be to first buy the players, then use that leverage to force advantageous mergers with the existing powers.

Whenever money or power become central, the richest and the most ruthless are guaranteed control. Keep that in mind when you set your own priorities.

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Nothing Works Anymore: German Edition

A reader writes to share his recent experience attempting to get his car serviced.

Thought I would share my experiences with trying to get my car serviced in Germany.

I booked the appointment online at a major car garage chain, unfortunately when I booked I clicked the wrong service type, my bad, but the non-German guy at the garage gave me another appointment slot about 1 week later and confirmed it as he was clicking his computer. I ring up the day before to confirm that I can drop the car off that evening as I had to do a business trip. There was no record in the system that I have an appointment tomorrow. Now our holiday is approaching and we need the car serviced, I find a garage on their website that can do the service that week. It is a town about 80km away. I go there on the day and they told me that the IT system is not working and it´s allowing people to book services when there is no mechanic available. Fortunately, they were able to fit me in a day later. I caught the train 1.5hrs to fetch my car, on the day it was ready, and there is a big sign out the front of the shop that their IT system has problems so we cannot pay with card. I argued with the guy, another non-German, to let me drive my car to the nearest ATM instead of walking there and wasting 2hrs time. We finally negotiated that I leave my ID there. This is where they tell me they cannot give me an invoice as the entire IT system crashed but it will be back on line on Monday.

This was 3 weeks ago and needing the receipt to claim on my company they told me it will be another 2 to 4 weeks. Is it a coincidence that there has been a huge influx of Indian IT workers in Germany? My friend in IT says it´s almost 100 percent due to Indian programming and management.

Then, as I park in an underground garage, I found out about a day later before our holiday that they had scratched the shit out of the entire right back side of the car.

Apparently the German dirt is not magic either. And not being German, I can’t even imagine the full extent of how much this sort of inefficiency and incompetence must infuriate them. This is really just another lesson in the obvious:

  • Pick your own damn cotton.
  • Build your own platforms.
  • Utilize your own services.
  • Marry your own kind.

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Omitting the Obvious

Peter Turchin is doing some valuable work analyzing the whys and wherefores of societal breakdowns:

All human societies experience recurrent waves of political crisis, such as the one we face today. My research team built a database of hundreds of societies across 10,000 years to try to find out what causes them. We examined dozens of variables, including population numbers, measures of well-being, forms of governance, and the frequency with which rulers are overthrown. We found that the precise mix of events that leads to crisis varies, but two drivers of instability loom large. The first is popular immiseration—when the economic fortunes of broad swaths of a population decline. The second, and more significant, is elite overproduction—when a society produces too many superrich and ultra-educated people, and not enough elite positions to satisfy their ambitions.

These forces have played a key role in our current crisis. In the past 50 years, despite overall economic growth, the quality of life for most Americans has declined. The wealthy have become wealthier, while the incomes and wages of the median American family have stagnated. As a result, our social pyramid has become top-heavy. At the same time, the U.S. began overproducing graduates with advanced degrees. More and more people aspiring to positions of power began fighting over a relatively fixed number of spots. The competition among them has corroded the social norms and institutions that govern society.

The U.S. has gone through this twice before. The first time ended in civil war. But the second led to a period of unusually broad-based prosperity. Both offer lessons about today’s dysfunction and, more important, how to fix it.

However, being an immigrant, he naturally averts his eyes from one obvious contributing factor. It’s not an accident that the periods in which the crises were created were periods of high immigration, and it’s also not an accident that the way in which the second crisis was averted was during a time of very strict limits on immigration.

And since there is no appetite whatsoever for reversing the mass foreign invasion of the USA, there will be no fixing the current dysfunction.

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The Rape Factories

If, at this point, you are still putting your children in public schools, you are committing child abuse by proxy:

US public school employees who sexually abuse children are typically moved to different schools three times before they are finally arrested, preying on as many as 73 victims before they are eventually punished, according to a new report by a conservative think tank.

Published last week by the Defense of Freedom Institute, the report details hundreds of cases in which teachers in public school districts were accused of abuse, but had their records scrubbed before being moved to new positions, where the abuse continued.

Citing earlier research by the Government Accountability Office, the report noted that firing teachers can be a costly process for school districts. As such, the districts often negotiate confidentiality agreements with unions whereby a teacher can resign or be demoted to avoid disciplinary action, before being transferred to another school with a clean slate.

The average employee accused of abuse is passed to three different school districts before facing legal consequences, and can abuse up to 73 children in this time.

This system has allowed sexual assault to proliferate, the report claimed. According to the most recent Department of Education data, 13,799 cases of sexual violence and 685 cases of rape or attempted rape were recorded in schools during the 2017-2018 school year, up from 9,649 and 394 in 2015-2016.

Homeschooling your children should be your #1 first priority. It doesn’t matter if you have to move, add a side-hustle on top of your primary job, or lower your standard of living. Just do it! Neither your nor your children will ever regret it.

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Showtime

The Russians report the long-awaited Ukrainian offensive has finally begun.

Ukrainian forces have attacked the Russian troops along five sections of the frontline in Donbass during their “large-scale offensive,” the Russian Defense Ministry said in the early hours of Monday. According to the MOD, the assault began on Sunday morning. “The enemy’s goal was to breach our defenses in what they assumed was the most vulnerable section of the frontline,” the ministry said in a statement carried by the Russian media.

It will be interesting to see the shape of the Russian response. As I was discussing with William S. Lind the other day, the historical Russian response has been to launch a counteroffensive with far more forces than had been anticipated. That may not be possible anymore in the day of satellite flyovers, but it’s worth noting for the record.

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