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Daily briefing - 11 September 2019


What a world. In place of workplace solidarity and a clear understanding of the difference between labour and capital, these days we have replaced union membership with co-working arrangements. Union membership in California has dropped from 30 percent in the 1960s to around 10 percent today but it remains a union stronghold, and has been ever since Hollywood's early movie stars moved to seize control of the industry and set up their own studios and guilds. The California senate has passed a bill that strengthens worker protections and will make it more difficult for companies such as Uber and Lyft to maintain that its workers are contractors, and not entitled to other protections. "This is a huge win for workers across the nation!" said the California Labor Federation in a tweet. "It's time to rebuild the middle class and ensure ALL workers have the basic protections they deserve." Bob Schoonover, president of SEIU California, a coalition of over 700,000 workers, said the Senate's passage "has set the stage for a major breakthrough for workers that are excluded from basic pay and protections no matter how hard they work".

California is the origin of the "sharing economy", which usually means sharing your house with strangers so you can make up the rent (aka Airbnb), sharing a ride with strangers (Uber) or sharing an office with strangers (aka co-working). WeWork's acquisition of expensive and iconic city centre properties which it turns into short-term tranches of desk space. It's a kind of toxic mix of collateralised workspace property obligations mixed with regulatory arbitrage and dressed up as a technology company. Now venture fund Softbank is urging WeWork to delay its IPO after too many investors looked under the hood of the technology company and found a property rental company. And who is selling this wonderful business? The bookrunners are Goldman Sachs and JPMorgan, both of which, incidentally, claim to be technology companies so are presumably well equipped to understand this type of thing. WeWork's swift response to such rude questioning is to promise to add a woman to its board and for founder Adam Neumann to return $5.9 million to the company which he previously claimed for branding the word 'We'.

"In the long term, negative interest rates ruin the financial system," said Christian Sewing of Deutsch Bank, who is now thought to be spending his days scrolling through ZeroHedge, Dealbreaker and other dark comedy sites. But he's not wrong to point out that the ECB's interest-rate policy is an enormous burden. "Lenders including Deutsche Bank AG and UBS Group AG are bracing for another blow to their profitability after five years of sub-zero monetary policy," reports Bloomberg. "While the ECB's strategy is to boost growth and inflation by lowering borrowing costs for companies and households, squeezing banks too much could hamper their ability to supply the credit that fuels the economy." And indeed, the ECB is planning to drop rates now to 0.5 percent. Sympathy for banks in Germany is close to zero, as the German police march regularly in and out of banks, with Commerzbank the latest to be raided as police investigate the decade-long tax fraud thought to have cost billions of euros.

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