Stepsnin

The stock market, for all of its seeming mystery, is more of an emotional barometer for the rich than a reflection of material production. Abstracted from the lived experiences of those it exploits, it reflects the jubilation and depression of the wealthy. On Monday, the Dow dropped 1,600 points the largest point decline in one day in history. The historic stock market dip was primarily caused by the news that wages had improved slightly for workers. You would think that rising wages would be something they investors would celebrate, justifying their long-time trickle-down promises. Instead, they panicked clutching their pocketbooks. Why? Because the capitalists know the logic of the game: suppress wages, make profit. Despite the claims of wonks and centrists in the capitalist’s casino, when we win, they lose.

In one day, all of the Dow’s gains from 2018 disappeared. The NASDAQ did not fare much better. The VIX rate, which monitors market volatility, jumped 17 points. For comparison, the VIX rate only jumped 10 points after the Brexit shock. It is unclear whether or not the drop will reverberate into other markets, but the negative reaction of the market to slightly improved conditions for workers is worrying enough.

One of the largest fears of investors is that increased wages mean that the Federal Reserve will likely raise the rates it charges banks for loans. This crash is an excellent example of the fact that the American economic system celebrates when workers suffer and convulses when workers win gains.

The report from the Bureau of Labor Statistics that sparked the crisis showed a meager improvement for workers averaging around .09 cents an hour. The pessimism of the market in reaction to this news exposes the rot in our system: wage gains for workers are seen as a bad sign for the economy. Despite the altruistic claims of Democrats who line their pockets with corporate money, Wall Street will always react badly to increased conditions for the poor, unless there is an opportunity to profit from them in some way.

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The “lender of last resort,” the Federal Reserve, is much more interested in reducing the rate of inflation than increasing the share of wealth enjoyed by workers. Rather than encourage policies from major financial institutions that would benefit the vast majority of Americans, our government has allowed the financial institutions to make a market out of poverty, trading the large sums on the growing debt of the working class. In our immoral system, the degradation of the worker is seen as a sign of a healthy economy, while benefits for the working class as are seen as a detriment.

The fundamental contradiction of the neoliberal era is the rate of increase in productivity, which has exploded, while compensation for the productivity has remained stagnant. According to the Economic Policy Institute, productivity has grown 5.9 times faster than wages. People are working more and earning less, but profits aren’t disappearing. Instead, the concentration of wealth at the top has exploded. The extra money has fueled a jubilant financial market that is further abstracted from the lives of most people. This status quo is threatened by any material gains for the working class. The pages of the NYT and the Wall Street Journal are littered with screeds against universal healthcare and minimum wage increases. A less desperate population won’t toil away into the new drudgery of contract work.

In addition to poor wages and conditions, there has been a massive accumulation by a few companies into new markets; the Uberization of food, laundry, and delivery just to name a few. While these companies capture huge parts of the market, more Americans need multiple jobs to survive and are forced into contract work. Americans are entering the “gig economy” to pay off medical, educational, and credit debt, creations of the financial class.

No longer confined to normal business hours, we are free to toil all the time. No longer confined to an office we can work wherever we chose. The desperation of workers takes a different form from the drudgery of the factory, but the long hours and the reduction of life to labor power for capitalists to exploit continues. The worker has been removed from the factory; the world is now our factory.

The technocratic impulse to use stock indexes to tell us about the state of our society is misguided. What is captured in these measures is the success of the ruling class to sell themselves on themselves — and they love to sell to themselves.

Take the new favorite game of roulette popular on Wall Street: trading derivatives tied to VIX. Simply put, VIX is “the stock market’s fear gauge” that monitors the volatility in the market. Its first iteration began in 1973, but its current form was introduced around the late 1980s. In 2004, the Chicago Board Options Exchange offered futures contracts on the index exclusively to traders, but in 2009 ETFs (exchange-traded funds) were created that were tied directly to VIX rates. These became easily accessible to general traders and the public. VIX was an easy bet in the era of central bank subsidies and bailouts and quickly became one of the most traded 34th in the ranking of US shares.

Now, to make money trading on VIX you are betting that market volatility will continue to decrease. For historical context, the VIX rate always remained low up until major financial crisis. The VIX rate was low up until the dotcom bubble and the Asian market crisis in 1995. It also reached new lows before the 2006 financial crisis. But since trading financial products directly tied to the VIX rate was not popular then we do not know what its effects on the market will be after Monday’s crash.

A few days after its eruption, the crisis seems to have avoided the credit markets and major banks. If the crisis does spread, there will be larger consequences. Still, even if it does not spread we should be worried. The VIX speculation is only one of the major schemes that Wall Street is tied too. Wall Street is already lobbying to repeal the meager protections put into place after the Great Recession (that it helped write). If we are not vigilant the next crisis could be much worse. This, of course, will be hard to do, with only our enemies in power.

The 2008 crisis is a reminder that a stock market collapse is not necessarily good for the working class. But as we have seen, the recovery of Wall Street is not good for the working class either. The economic system is designed to hold the majority down and it sees even a slight improvement to live of the many as a threat to the few. Reform and regulation without a commitment to addressing the fundamental contradiction of economic life will not last. The capitalist casino is always creating new games, and they write the rules.

While the working class does not trade on Wall Street, the indebtedness of most Americans and the unequal distribution of property brings us too close to their games. Financial crises devastate the poor, eradicating their savings and devaluing whatever assets they have. While a portfolio may drop for an investor, the real cost of irresponsible financial markets is increased unemployment and a lack of access to capital for the middle class. Until money and power are redistributed in this society, we all are living in the rigged capitalist casino. It’s time to rewrite the rules.

Chinese tycoon Yang Zhihui recently turned a 200% profit on the famous London casino, Les Ambassadeurs in Mayfair. Now, Yang Zhihui is going all-in on his biggest investment yet: The $2.4 billion Jeju Shinhwa Resort.

Not everyone believes in the Jeju Shinhwa Resort, because it depends on a steady influx of foreigner visitors — especially Chinese high rollers. That is a problem for Yang Zhihui, due to international politics and economic tensions.

Yang believes it will all pay off in dramatic ways, which is why he sold Les Ambassadeurs — site of one of James Bond: 007’s famous casino scenes — for $350 million. He also sold for a profit a 19-passenger Bombardier Global 6000 jet he bought in 2013. The Bombardier jet had been used to transport VIP customers to Jeju Island for free.

Of course, Yang Zhihui had reasons to give high rollers free passage to Jeju Island, off the coast of South Korea. He has the largest development on the island, which is known as a foreigners-only gambling destination. Jeju Island offers gambling, shopping, fine dining, theme park entertainment, and many forms of leisure.

Angel Investor Vs Venture Capitalist

Jeju Shinwa Resort

Jeju Shinhwa Resort is a massive integrated casino-resort. In fact, Jeju Shinwa is more than a casino-resort. The complex has a theme park which is its main attraction. The Jeju Shinhwa development also has 5 hotels, including a Four Seasons and a Marriott.

The site is a wonder to behold. It includes a cafe designed by K-Pop star G-Dragon, along with 40 other restaurants, cafes, and bars. The resort includes a shopping mall, while the whole complex is enhanced with 3D holographic landscape features.

The remarkable part of Jeju Shinhwa might be the way Yang Zhihui has built up the resources to become the controlling owner.

Joint Venture with Genting

The Jeju Shinhwa Resort began as a joint venture with Genting Group, the Malaysian multinational conglomerate famous for its Resorts World casinos in Singapore, New York City, Manila, and (soon-to-be) Las Vegas.

In 2016, Yang’s casino company, Hong Kong-listed Landing International Development Ltd., bought out Genting’s share of the Jeju Shinhwa Resort. The plan was to open the resort in stages in April 2017. Most expected the casino-resort to be a smash hit, despite the foreigners-only policy.

The development had so much to draw mass market visitors, both from China and South Korea.

March 2017 Chinese Embargo

Then China’s President Xi Jinping began to make his displeasure known about the THAAD missile defense system, which the United States military was installing in the South Korea. The ostensible reason for the THAAD missile defense was the threat posed by North Korea’s unpredictable dictator, Kim Jong-un.

President Xi and his advisers believe the missile defense had a dual purpose: to pose a challenge to China’s growing and modernizing armed forces. To send a message, the Chinese government severely limited the movement of Chinese to South Korea. Businesses reliant on Chinese tourists suffered greatly.

The Chinese embargo could not have come at a worse time for Yang Zhihui and the Jeju Shinhwa Resort. Suddenly, a month before the first grand opening at the development, the main customer base was banned from visiting.

Jeju Shinwa Resort’s Wealthy Investors

Where To Find Venture Capitalist

Yang Zhihui is not alone in doubling down on his Jeju Island investment. Over the years, Yang Zhihui has developed an impressive list of investors in Landing International Development and the South Korean casino. Yao Jianhua, the brother of wealthy insurer Yao Zhenhua, is a key investor.

Yao’s well-funded China Goldjoy investment company increased its in Landing Development recently and is now a top shareholder. When asked about the investment, Yao JianHua said he believed in “China’s cultural tourism”.

Risky Casino Investment?

One would expect the tensions between China and South Korea to end eventually. This is no longer the Cold War; the two countries have been strengthening economic ties for years. South Korea and China now do 40 times the trade that North Korea and China do. The two have a huge economic bond.

But President Xi’s 2017 embargo is a sign that the prospects and profits of Jeju Shinhwa Resort could turn on the whims of a single person who might have very different motives. Certainly, the resort is going to generate huge revenues, but the question is whether it will generate the kind of revenues to justify a $2.4 billion investment.

The China-South Korea standoff over missile defense underscores a larger factor in the Jeju Island casino’s future. Due to the increasing nuclear showdown on the Korean Peninsula between the great powers, any number of international incidents cloud the future of Jeju Shinwa Resort.

Yang Zhihui is an optimist, though. Yang Zhihui also has a world-class destination resort, so if his bold idea works, it could make him one of China’s biggest venture capitalists.