Weekend Reading

News we just did not have time to dissect during the week but still deserve notice

Bloomberg: Former Federal Reserve Governor Lawrence Meyer Sees No Return to "Full Employment" Until 2015. I find it remarkable how much more prescient some of these former government officials are once they leave public office and have to face the real world i.e. not spin everything with a happy face. It makes me wonder what Mr. Bernanke's real opinion is as he stares at the ceiling at night. It is nice to see some realists out there - unfortunately in the private sector. These views are consistent with my views of a jobless recovery ex-government transfers of money to create false prosperity and until which time the US government decides what the next bubble it is going to be behind to hide the horrific policy decisions the past few decades have wrought.

The U.S. won’t see a return to “full” employment for another six years, helping to hold down inflation, according to former Federal Reserve Governor Laurence Meyer. “I think there’s going to be a long legacy of the financial crisis and the deep recession,” Meyer said in an interview.

The economy is “a very, very long way off” from its potential growth rate, Meyer said. While the expansion will probably be “modestly above trend next year” and “significantly above trend in 2011,” that won’t help restore the nation to a “normal” job-market, he said. “Full” employment -- or a jobless rate around 5 percent -- won’t return until 2015, he said. “We’re staring in a hole; we’re going to start from a 10 percent unemployment rate,” Meyer said. “The unemployment rate is going to come down very slowly.”

Baccarat, a card game sometimes described as a simpler version of blackjack, is significant as it's the only game that's played in the special rooms that cater to high-roller VIPs and is the top earner in Macau casinos.

And when it comes to baccarat, the Wynn Macau casino's winning percentage, otherwise known as the "hold rate," has been abnormally high for nine straight quarters. Wynn's winning streak has puzzled both gambling experts and analysts who cover casino companies in the former Portuguese colony. They say a month or two of above-average hold isn't unusual. But what Credit Suisse labeled a "supernormal win percentage," and which has lasted for all but the first two quarters since Wynn opened its doors in 2006, just doesn't add up. "There is no scientific answer," said Gabriel Chan, Credit Suisse's casino analyst based in Hong Kong.

In a footnote to its financial results on Tuesday, Goldman said that for the first time it was including consultants and temporary staff in its overall employee figures. This had the result of increasing its official staffing levels by 2,000 jobs or so in both the first and second quarters. Earlier this year, for example, Goldman said it had 27,898 workers at the end of the first quarter, but now it says that number was 29,800.

... the statistical change also had the effect of reducing Goldman’s compensation per employee number. Coincidence? Or useful in a quarter when it knew it was going to get political heat for returning to big bonuses so soon after taking all that government aid to see it through last year?

Unwinding the ties of matrimony is rarely simple or inexpensive, but for many couples, the sour economy is complicating the process further. Divorce lawyers say many couples are delaying the decision to dissolve marriages and are staying in unpleasant situations for fear of being on their own at a time of economic uncertainty.

Others are being forced to live together after the divorce is final for financial convenience. That can strain the emotions and result in awkward negotiations about subjects like dating.

"People are saying, 'I've put up with it for the last 10 years, I can put up with it for another year,'" says Gary Nickelson, president of the American Academy of Matrimonial Lawyers. In a poll of 1,600 of its members, the group says, respondents estimated that divorce cases in the six months through March were off 40% from normal levels.

The rent-to-own industry has a history few retailers would envy but recent sales most would covet. Aaron's, the second-largest retailer in the $6.3 billion industry, plans to open 200 stores in 2010 on the heels of an 18% increase in same-store sales last year. Aaron's recent growth is almost unheard of in this economy.

Rent-to-own stores lease electronics, appliances and other household items by the week or month. Payments can be applied toward a purchase. Critics say the industry has taken advantage of vulnerable customers for years by making rental payments so high that a product's ultimate purchase price is exorbitant.

While not growing at the rate Aaron's is, the largest rent-to-own chain, Rent-A-Center, is also thriving. Same-store sales were up 2.3% last year, thanks in part to a higher-income client base that's expanding in the recession. Both chains say it's not uncommon these days to have customers with household incomes topping $50,000, which used to be the highest incomes they served.

For years, Beazer Homes USA was much more than a builder of houses. It was a veritable crime wave. The company defrauded buyers, particularly poor people being sold homes they could not afford. It defrauded the federal government by getting government-guaranteed mortgages for those buyers. It created subdivisions now dominated by dozens of foreclosed homes.

Beazer lied to shareholders about how much money it was making. First, it lied by claiming it was making less than it was. Then it lied by hiding losses when the housing bubble began to burst. To keep the lies going, the government says, the company prepared fraudulent documents to mislead its auditors.

Last week, Beazer settled the legal problems stemming from its crimes. It entered into a remarkably generous deferred prosecution agreement with the Justice Department, in which the company will pay $15 million, and perhaps more if it manages to earn profits enough and does not decide to file for bankruptcy.

The bucks have continued to flow to the top, but the company thinks the responsibility for the crimes lies elsewhere. Heads rolled among lower-level officials, but the chief executive and chief operating officer have kept their jobs.

The board — all of whose members were there when the crime wave was under way — has not changed at all. After the directors learned of the crimes, they did take some action. In 2008, a disastrous year for the company, the board gave the chief executive, Ian McCarthy, a bonus for his efforts in “communicating the importance of compliance by employees.”

If a boss can preserve his deniability about crimes committed by his company — perhaps by showing little curiosity about just how the profits are being earned when he is taking in millions from cashing in stock options — then he can escape being held accountable if the crimes are eventually uncovered.

Taxes on travel are soaring as states and cities target the wallets of tourists and business travelers for new revenue. Hotel taxes, car rental fees and other charges were jacked up in many states in an effort to balance budgets by last week, when the fiscal year started in 46 states.

Among places where taxes rose:

•Hawaii. The hotel room tax increased from 7.25% to 8.25% on Wednesday and will rise to 9.25% in July 2010.
•Nevada. The room tax will increase up to 3 percentage points, to a maximum of 12%. In Las Vegas, the hotel tax jumps from 9% to 12%. Reno's tax was already 12% and is not scheduled to change.
•New Hampshire. The tax on rooms and restaurant meals rose from 8% to 9% and was extended to include recreational vehicles at campgrounds.
•Massachusetts. Cities were given authority to raise the hotel tax from 4% to 6%, in addition to the state tax of 5.7%. Taxes on eating out will rise from 5% to 6.25% statewide, plus another 0.75% if cities choose.
•New York City. The city, which raised its hotel tax March 1 to 14.25%, not counting other fees, will start charging more for Internet reservations.

Daredevils sprinting with one-ton fighting bulls swallow an exhilarating cocktail of adrenalin and fear. Now, a new brand of jitters has set in at one of the world's great fiestas as businesses ponder the partypooping impact of economic woe.

....... it is mainly merchants who are feeling the pinch of the world's economic downturn. Rates on hotel rooms are down because of slacker demand, big-spending American and other foreign visitors are harder to find, and bars that usually make a killing off hordes of thirsty patrons from around the globe expect to serve up less booze.

"We thought San Fermin would always fill up," said local entrepreneur Mikel Ollo. "We created a fictitious bubble, and that bubble has burst."

Lifestyle arbitrage, baby! The word got out, and the party built on itself, making the fantasy it offered all the more intoxicating: Come spend a month—or four—in Buenos Aires, where you really are a master of the universe, where nights are sleepless and potential business deals are all scams and the clubs teem with unemployed expat bankers looking for their identities in piles of cocaine and the bloodshot eyes of hookers and thieves.

Jason got to the party four months early. That's not his real name. This is his story.