Cursed project in Saigon

Saigon One Tower

See: http://www.bloomberg.com/news/2012-11-25/vietnam-empty-office-towers-show-dreams-turned-to-rubble.html

The Saigon One [aka Saigon M&C] project was originally conceived in the 1990's.  "In 1997, just after the hotel's foundations were laid, the Asian financial crisis broke out and put what was hoped to be a temporary hold on the project. A lack of capital has left the site dormant ever since [as of 2005]. The new owners estimate the cost of the mall and 40 story tower at USD$60 million."

Construction began again in 2008, and it was supposed to be completed in 2010, with a construction budget of $228 million.  But as of January 2010, only a few floors had been built. Finally in late 2010 and early 2011, construction picked up speed.  By mid-2011, it topped out at 42 floors, but construction halted.  Now it may never be completed.

"On the bank of Ho Chi Minh City’s Saigon River, the construction site for the 40-story Saigon M&C Tower is deserted except for two security guards. Today, ropes dangle from the first six floors, originally designed to incorporate a 23,000-square-meter commercial space, while glass paneling is incomplete on the remaining floors." --Bloomberg

Lincoln memorial covered with algae

"The National Park Service is trying to remove a thick layer of green algae from the reflecting pool in front of the Lincoln Memorial less than a month after a $34 million overhaul was completed.
Workers desperately used nets to try to remove the build-up of algae and scum that covered one entire end of the pool Friday while tourists walked by puzzled by the slimy sight.
The reflecting pool was just re-engineered to be shallower in order to use less water, but the conditions have also proven to be perfect for an algae bloom."

Read more: http://www.dailymail.co.uk/news/article-2209197/It-aint-easy-green-Lincoln-Memorial-reflecting-pool-covered-algae--just-weeks-34MILLION-renovation.html

So they spent $34 million to make the reflecting pool shallower to save water, which causes the water to be warmer. EPIC FAIL!

Philadelphia likes its trashy vacant lots

A Philadelphia real estate developer has a coffee shop next door to a trash-strewn vacant lot.  He calls 24 separate times to complain and offers to buy it but the city ignores him.  So he decides to take matters into his own hands and - horror of all horrors! - cleans it up himself. He halls 40 tons of trash away.


After

For his efforts, he gets threatened with a lawsuit and is told to return it to its prior condition.

The City of Philadelphia .. EPIC FAIL!

The beatings will continue until morale increases

"The Fed just changed the game.  Whereas in the past, the Fed always set a defined amount of Fed purchases, this time they're saying that the easing will continue until morale improves."

--http://www.businessinsider.com/why-this-fed-decision-is-a-huge-change-from-every-decision-the-fed-has-made-in-the-past-2012-9

The recently announced QE3, which will buy mortgages, will only continue the economic morass that we are in, and I will explain why.

But first, look at what we would need for a true recovery, which requires only 2 things: 1) sound money, and 2) clearing off the over hang of bad debt either through repayment, forgiveness or default.  By sound money, I don't necessarily mean the gold standard, but a currency that would depreciate only about 10% per year against gold, plus would provide interest to savers to make up for the loss.  If savers could get 5% guaranteed, that would go a long way towards restoring investor confidence.

Instead this program will reduce returns on investment even further.  It is declaring war on investors and savings.  It doesn't clear off the mountain of debt, instead it makes it easier to maintain which will cause it to grow.  Which means the crash, when it comes, will be even more disastrous.

Reducing the interest rates on mortgages will help nobody but the zombie banks.  Nobody thinks that mortgage rates are too high. ("Honey, the rate is now 2.875% but that's too much.  If it were only 2.5%").  Banks can't afford to lend at that low a rate, because there is too much risk, so this will result in the Fed taking over the entire mortgage industry.

This may not even help real estate prices.  Nobody wants to buy real estate because it isn't a good investment, and because people are worried about losing their jobs.

One thing this will do is increase inflation by increasing the money supply.  Look at how gold has jumped.  It was below 1600 just a couple of months ago and now it is above 1770.  It will increase speculation and help stock prices.  It  will create new bubbles, which will then inevitably pop.

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Update:  Long-term interest rates soared after this announcement.  The 10-year treasury yield jumped almost immediately from 1.72% to 1.80%, because of expectation of inflation.   EPIC FAILURE.

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"Our quote of the week award recipient is none other than Atlanta Fed's Dennis Lockhart for the following pearl of wisdom:

• LOCKHART SAYS FED WILL BUY BONDS UNTIL U.S. EMPLOYMENT IMPROVES.

Considering that employment is bad because of Fed "bond buys", which are preventing price clearing and discovery, and perpetuating the worst capital misallocation environment in the history of the world (if not for Apple's professional line waiters), one should just replace "buy bonds" with "continue beatings" and "U.S. employment" with "morale."
--http://www.zerohedge.com/news/quote-week-1

Berlin Airport Fail

"Now, though, it looks as though the opening of the new Berlin Brandenburg Airport Willy Brandt (BER) -- already thrice delayed -- will be pushed back yet again. Amann, who has plenty of experience constructing airports, is unable to say with certainty whether the airport will be ready for prime time in March. Sources close to the supervisory board say that he intends to ask for an additional month to evaluate the state of the airport's construction.
The delay is not without consequences. As long as no date has been fixed for the facility's opening, it is impossible to finalize financing efforts to cover the at least €1.2 billion ($1.5 billion) in cost overruns. And that means that the situation of the state airport operating company, which is already slowly running out of money, has become even more precarious.
...Furthermore, it is not even clear if the federal government is prepared to grant additional funding to the airport project. "Given the chaotic situation and jurisdictions, there can be no additional financial concessions granted to the new capital city airport … in the upcoming negotiations for the 2013 federal budget,"
--http://www.spiegel.de/international/germany/new-berlin-airport-opening-delayed-again-amid-financing-chaos-a-850396.html

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Update 1/18/2016
http://www.bloomberg.com/news/features/2015-07-23/how-berlin-s-futuristic-airport-became-a-6-billion-embarrassment
Now the airport might not open until 2018.

Itanium - Epic Fail

Itanium was a 64-bit chip designed by HP and Intel. at a cost of billions, that supported parallel processing.  Sales were supposed to reach $38 billion/year in sales in 2001.  Instead, only a few thousand servers were sold that year.

HP did manage to sell $4.4 billion of Itanium servers in 2008, but sales have declined ever since. HP is a true believer, having paid Intel nearly a billion dollars to keep making new versions.  The new Poulson version will be released this year, but it will probably be the end of the road.

The problem?  It is way too complex.  The x86-64 competing designs by AMD and Intel were a simple (at least in comparison) update of the venerable x86 architecture.

" From a technical perspective, Itanium was, and still is, a vast improvement over x86. How could it not be? It includes all the latest thinking about CPU architecture; it had the input of the best minds in the business; it had Intel's awesome financial and marketing resources behind it. Absolutely everything was new and improved. It was a technical tour de force. And yet what people wanted was a faster x86."
--http://www.eejournal.com/archives/articles/20110309-itanium/

The lesson?  Don't try to reinvent the wheel.  Instead, find something that works, and make incremental improvements.  If something isn't working - let it go.

Failbook

IPOs are typically priced to provide about a 30% pop on the first day.  Instead, the underwriters had to step in to support the $38/share price.  Epic fail.

Epic Failure - Fontainebleau

Fontainebleau Las Vegas was a massive 3900 room casino that originally was supposed to open in October 2009.  More than $1.6 billion has already been spent on the project.

However, the developer ran out of money in 2009.  Carl Icahn purchased the project at a bankruptcy sale for only $150 million.  It will cost at least $1 billion to finish the project.

Construction was halted with only a couple of floors left to enclose the curtain wall at the top.  Birds have infiltrated the top 2 floors.  Extensive water damage has occurred.  The building will likely sit for about 10 years before it is demolished.

Epic failure!