America’s Most Strategic City

Welcome to This Week’s Leyendecker View

You’re braver than you believe, and stronger than you seem, and smarter than you think.
– A.A. Milne

A BIG THINK

What is the most strategically important city in the United States? 

Is it Washington DC? Given how much regulation Washington has created, it certainly ranks high. Industries can only operate within the bounds of Washington’s regulation. Step out of line, and it can cost you dearly. Although when we read about big banks or big tech companies being fined millions for bad behavior, it doesn’t seem to put them out of business.

Is it New York City? This is where the wheels of money turn. No question our economy can’t function without money, but then maybe money is just a lubricant for the overall economy. Money smooths over the workings of industries and companies. And today money has certainly become one of the biggest and most powerful industries in the country. But then it is called a “financial service” industry.

Is it San Francisco and Silicon Valley? This is certainly an obvious choice given how deeply committed our country and the whole world are to electronic technology. Today when we hear the word “innovation,” we naturally think of something happening in Silicon Valley or another part of the West Coast. Yet there is innovation happening in all manner of industries outside of electronic devices.

Is it Los Angeles? The two largest ports in the US are Los Angeles and Long Beach, which is only a short drive from LA. These ports process close to 50% of the goods coming in from Asia, the region that makes so many of our consumer goods. Los Angeles is also the home to our entertainment industry, one that provides us leisure but also implants the ideas that shape our cultural values.

Is it Dallas, Atlanta, Chicago, Detroit, Miami, or Seattle? All are fine cities in their own right but probably don’t compete with the above in terms of strategically important.

Maybe the best way to answer this question is to ask ourselves, if our enemies were to take one US city out, which one would cause the most economic destruction?

Could that city be Houston? But, what? Huh? It’s not the center of government. It’s not the center of finance. It’s not the center of technology. It’s not the center of trade. But Houston is the center of energy. And no other city, town, industry, company or person could operate without access to reliable and reasonably priced energy. There is no goods production without energy. There is no service providing without energy.

No one on Wall Street can turn on their Bloomberg screens without energy. No West Coast electronics will work without energy. No ships can transport cargo in and out of Los Angeles, or anywhere, without energy. No movies can be made or seen without energy. No agriculture can be grown, processed or transported to your grocery store without energy. Can Washington DC operate without energy?

With energy, we can rebuild all systems and infrastructures. Without energy, we cannot. Of course any destruction of our energy infrastructure would eventually get rebuilt, but all the rest of our cities and industries would be waiting in line to get the energy needed to do so.

Yeah yeah yeah…I’m cheerleading for my hometown, but…hey…is what it is. 

By the way, in case you didn’t know Texas leads the nation by far in the generation of renewable energy.

THE ECONOMIC VIEW

Hiring far exceeded expectations
The Fed won’t be happy.

Nobel laureate offers biting critique of economics
We are not improving people’s lives.

Americans are still spending
Like there’s no tomorrow
While credit card delinquency rates rise

THE INFLATION BOGEYMAN

Inflation is coming down.
But consumers are mad it happened

Surge pricing is coming
To all manner of products and services.

Car insurance keeps getting more expensive.
More drivers are opting out
Home insurance is also more expensive.
So homeowners decide to take risks

THE LABOR VIEW

Health care workers poised to strike
California increases food workers’ minimum wage
Will prices in these industries rise?

Jamie Dimon foresees 3.5-day workweek
Awesome, more time to spend money!

Employers budget smaller 2024 raises
Do they see recession coming?

The unspoken rules on getting promoted
From a Harvard-trained career coach.

MEANWHILE IN EUROPE

Europeans love green policies.
Until the bill comes due

Germany brings back coal plants
In preparation for winter.

On the edge of bankruptcy a decade ago
Greece has really turned its economy around

GLOBAL

Global housing bubble risk
The world’s most expensive cities

The Caspian Sea is shrinking
Who is stealing that water?

Is the US dollar losing relevance?
Not so far

PLAYING WITH FIRE

Russia keeps killing civilians
What century do they live in?

Russia withdraws Black Sea fleet
Are they feeling the heat?

EU foreign ministers meet in Kyiv
German foreign minister hints Ukraine will join NATO
Wonder how Russia feels about this.

EVOLVING GEOPOLITICS

China and Brazil to trade in local currencies
Trying to squeeze out the dollar.
But the dollar addiction is hard to kick

Japan about to acquire US tomahawks
Now why would they need tomahawks?

India wants US drone IP
Will they give it to China or Russia?

FINANCE

A new rate regime has begun.
Here are the winners and losers

Today’s tough PE environment
Is starting to consolidate

Can private equity be nice?
KKR takes a different approach.

Alternative investment companies
Have a lot more regulatory compliance coming

REAL ESTATE

The state of the American mall
It’s in better shape than you’d think.

McKinsey opines on office real estate
It has to be repriced.

The apartment boom is slowing down
What’s the next real estate boom?

TECHNOLOGY

Amazon gamed the system
So they could make more money.

VCs tell portcos to hold off on IPOs
The market isn’t quite there yet.

What comes after the smartphone
More screens or no screens?

THE CHAT ON AI

The AI jobs of the future
Can just anyone do these?

Companies to make wearable AI
The relevance of humans declines.

What is prompt engineering?
McKinsey tells us.

THE NEXT NORMAL

Americans are losing trust in science
Why might that be?

Why is religion on the decline?
Has technology replaced it?

Plastic recycling has not been working
California tries to change that

THE WAR ON CARBON

Europe’s carbon border tax goes live
Will it be inflationary?

The world needs more diesel.
But can’t seem to make enough

A car, dairy and meat ban by 2030
This is what global mayors are calling for.

THE NEW ENERGY TRANSITION

Green hydrogen’s potential
Has created energy transition’s first unicorn

EU to ban greenwashing by 2026
Janet Yellen is on the same page
They’d prefer higher energy costs and inflation.

Who is riding public transportation?
South Korea is #1 in the world

THE EV DREAM

China will dominate EV production
There really is no catching up.

Tesla vehicle sales fall 6.7%
Uh oh, spaghetti-Os.
While ICE automakers notch healthy gains

The China EV price war
Might be coming to an end

THE CHINA SYNDROME

China’s housing crisis grows
How will they survive the bubble collapse?

World Bank lowers 2024 China GDP forecast
The rest of Asia is also troubled.

China may now be competitive in air transport
Its C9191 is on par with Boeing and Airbus.

THE WASHING-TONE

Biden cancels $9B of student debt
When will they start canceling mortgage debt?

The House removes its speaker
Welcome to third-world politics.

The US Navy is about to scrap ships
That cost us billions but don’t work

A huge threat to the US budget is subsiding
Why aren’t Medicare costs rising more?

MAKING A BETTER YOU

Signs you may be burned out

And how to bounce back.

Reducing your chance of dementia

Might be through regular short naps

What’s your food carbon footprint?

Take this test

HOW ABOUT A BREAK

The richest billionaire in each state
‘Cause we all need to know, right?

20 delightful slang terms
From the 1930s.

TAKE SOME TIME OFF

The history of Oktoberfest
Was there a genius behind it?

10 great Texas state parks
For cooler temperatures.

The lesser-known fall scenic byways
In case you’re still planning a trip.

SONG OF THE WEEK

“Can’t Help Falling in Love”
Elvis’s version
6-year-old Claire’s version
Some lyrics are sweet poetry.

CASTING AROUND THE PODS

Has McKinsey made the world worse?
A look under the hood of management consulting.

VIDEOS OF THE WEEK

The Wonderful World of Henry Sugar
Wes Anderson channels Roald Dahl.

The Boy and the Heron trailer.
The Mozart of animation’s new film

Michael Mann channels Adam Driver.
In the coming Christmas film, Ferrari.

FROM THE HEADHUNTER’S KITCHEN

When weather cools, it’s time to talk pie.
Here are some savory tasties

But it’s also time to make soup.
Here’s some good recipes to try

What is pozole?
Yummy good soup.

THE RANDOMS

People may soon live on the moon or Mars. So Earth isn’t pretty enough or good enough?

The NYT has an article about how Central Park’s Great Lawn suffered so much damage at a recent outdoor concert that it will now be closed until April. The story did not mean much to me, but the lead photograph seems to tell us a lot about our current society.

The Writer’s Guild Union agreement with producers ensures they have more say in how AI is used, particularly with derivatives of their work. This reminds me of that old saying, It’s easier to ask for forgiveness than permission. This is Hollywood, right?

For several decades, the financial world has been penalizing conservative savers. There have been no worthwhile fixed-income opportunities to invest in for many years. And worthwhile fixed-income investments are especially important to people living on a fixed income. Well, maybe the tide has turned. If rates are higher for longer, then the fixed- and lower-income earners will get some economic relief, and the investor class may have a harder time turning rich into richer.

Why are natural disasters so much more costly for insurers these days? Do you think it has anything to do with inflation in real estate values? This article suggests home prices (just one real estate metric) have increased by 1,608% since 1970, while inflation has increased by 644% since then.

There’s an old saying: The squeaky wheel gets the grease. Most everyone has heard this. But what we also need to keep in mind is, if the wheel squeaks too loudly or too often, it will get thrown in the trash. 

IN CASE YOU MISSED IT

The Keynesian Trap
September 29, 2023

Adios, Human Intelligence
September 22, 2023