Thursday Night Links

• Private investing (historically private equity and increasingly recently private credit) has arguably delivered attractive returns over the period we’re discussing (I say arguably, as there are lots of issues with figuring out what the average investor really made net of massive fees and compared to the right beta x the market). Of course, at the start of this period, it was viewed as a “bug” to have illiquidity, opacity, and valuation that wasn’t marked to market. A bug is something you get paid extra for bearing, i.e., you get a higher expected or average return. Well, it is very clear that modern investors now mostly view each of these things as a “feature.” In a world of volatile markets and crazy ups and downs for rational strategies relative to markets, many investors clearly enjoy being able to say—as many did—in a terrible year like 2022 that their private investments were “flat to slightly down.” Of course, that was never true. Privates can be marked-to-market any time private managers want to. [Clifford S. Asness]
• Consider the light metals in the top right quadrant in the electrochemistry figure. Al and Mg both have far higher strength/weight ratios than steel; they resist corrosion much better; their production is already electrified; and their ores are arguably easier to find– Al is the most common metal in the earth’s crust, Mg is extractable directly from seawater. Both metals are more expensive than Fe today, primarily because they take much more energy to produce. But in a world with cheaper clean electricity – the world we need if we want to decarbonize steel production anyway—in the future we want, we should expect more use of Al and Mg, and much less use of steel. As you can see with these 'idiot indices' (cost of metal divided by cost of ore plus energy of reduction), these light metals have vastly more room to come down in cost too. So why are hundreds of startups looking to electrify steel production, but you can count the enhanced Ti or Mg projects on the fingers of one hand? [Ian McKay]
• The part of the South known as Languedoc, by contrast, was isolated. It was isolated from the North by the enormous Massif Central, and it was isolated from itself by an undulating landscape of dense forests, narrow ravines, and hidden coves. The culture of the South was one of fiercely independent cities and towns, and a whole crazy kaleidoscope of minor nobles plotting against each other and against their suzerain, the Count of Toulouse. That’s right. They were hill people. Even the peasants had rights — Roman law still held sway through much of the South, which meant that tenant farmers had to be paid for their work, and could move to a different area if they didn’t like their local lord. Secluded places always hold onto the old ways for longer, and the great barbarian invasions that sloshed over Europe lost much of their violence by the time they made it over the mountains. Other signs of this: the Roman architecture that still stood in many a place (you can still go see it today), the Occitan language lacking much of the Germanic vocabulary that made it into French, and the locals cooking with olive oil rather than butter. [Mr. and Mrs. Psmith’s Bookshelf]
• A road is how you get from one place to another: it creates value by transporting people as quickly and easily as possible between places. A street, on the other hand, is the framework for building a place: it creates value by being a site for people to build, maintain, and improve their human environment. But the awkward middle ground, the “stroad,” is too fast to provide an effective platform to build a real place and yet too slow to connect places efficiently. But America is full of them! [Mr. and Mrs. Psmith’s Bookshelf]
• Despite the variety of composers who have written them, and despite too the breadth of his non-fugal output (though the idiom is rarely far distant), Bach is the writer of fugues par excellence, and the fugue is perfectly brought to consummation in his compositions. All fugues start with a theme or “subject” that is successively introduced by each of the voices, every voice being an independent and equal line. As the second and following voices state the subject, the voices that have previously done so utter complementary material, typically called a “counter-subject.” When all the voices have spoken—in Bach fugues between two and seven, most often three or four—the so-called exposition is completed. What follows is a slight relaxation of the preceding rigor, in which the subject is given a rest and other, related material, still in strict counterpoint, acts as an “episode” before the next iterations of the subject, now usually in a different key. [The New Criterion] 
• Consider that we have already reached that situation in the bond market. You cannot invest money in most bond markets today and make a reasonable return (the risk-free return has been recast as return-free risk). In addition, we are at or are approaching that point in many real estate markets as well. In many capital cities today, you’re lucky to be able to get more than a 4% gross rental yield on residential real estate (25x sales). After costs (including property management) and tax, that’s somewhere in the order of 40x earnings. Stocks are currently one of the last bastions of reasonable returns. But there is no inevitability that that situation will persist. Opportunity does not exist just because it is needed or desired. If markets were to melt up to 50x, it would feel good for a while (if you were invested). However, your future stream of dividends would not have increased, so in truth you would be no wealthier, and furthermore, you would be confronted with the reality of poor reinvestment returns on dividends and corporate stock buybacks. [The LT3000 Blog]

Guest Post: @PdxSag Summer Road Trip

[It's summer and that brings out travel blogs. Our Credit Bubble Stocks correspondent, @PdxSag, went on a two week road trip out west and sends the following to share.]

“Travel would be to drive an aged automobile with doubtful tires through Romania or Afghanistan without hotel reservations and to get by on terrible French. One who has hotel reservations and speaks no French is a tourist. Let the tourist be cushioned against misadventure, your true traveler will not feel that he has had his money’s worth unless he brings back a few scars.”

- from Abroad: British Literary Traveling between the Wars by Paul Fussell

Background
It has been nine years since we last went on a family extended road trip (not to be confused with an extended-family road trip, which seems not advisable). The biggest change this time compared to last time is that we are down a kid. The oldest is out of the house now and has a regular adult job. The second biggest change is the kids are teenagers, not sweet little rug-rats. Other than that, most things are the same. We have the same rig – a Sprinter with a DIY bed frame in place of two of the three rows of passenger seats – and we travel in the same manner: secondary roads, camping off-grid, and cooking most our own meals ourselves as we go.

There is an old saw about a certain class of sailboats to describe their size as “Drinks for six, dinner for four, sleeps two.” Adapting that for the Sprinter, I call it “Field trips for ten, road trips for four, sleeps two.”

I'm not gonna lie, having two kids instead of three was a far smoother operation. As Bob Metcalfe (father of two, ahem) would explain, removing one kid (33%) halves the drama factor from an 8 to a 4 (2^3 vs. 2^2). Plus, it means while underway there is now enough space that no one is ever forced to sit next to someone when they don't want to be next to that someone. One kid could be on the bed while the other could spread out on the bench seat.

For sleeping, we pitched a tent next to the van and the kids shared that. Again, two in a tent is a much smoother arrangement than three. It did mean we always had to stop where one could pitch a tent. When they were really small, in a pinch we could all fit three plus ourselves inside the van for the night. Sadly, those days are long gone.

Regarding the Sprinter, on the internet it's cool to have an RV conversion, whether DIY or factory. In real life, the passenger van with a bed temporarily installed on a raised platform/frame is superior. It is true that the passenger van gives up a closet and some drawers (meh), as well as the ability to cook and eat inside the van (not as great as it sounds), and a very cramped shower & toilet (gross). All that extra weight from a conversion kills driving performance and fuel economy. Then, the rest of the year the RV conversions are not hauling a gaggle of kids on a field trip, or a troop of scouts on a camping trip, or a cross country team to an out-of-town meet like the passenger Sprinter can. Anti-natalists don't want you to know this, but it's actually a lot of fun being the go-to guy for field trips, camp-outs, and cross-country meets.

Regarding the bed, this is the big compromise. It's just a twin. A twin doesn't take up the whole width of the van, which allows for more storage since you can stack more totes and coolers next to it than you could fit underneath it. It's also a lot easier to access frequently used items next to the bed than having them always stuffed underneath it. Being able to move from the front to the back of the van by walking instead of crawling over a bed is more convenient too. The compromise is obviously a twin is not as comfortable as a full size mattress. Fortunately, the missus and I are not Ameri-fats. If we sleep on our sides we fit well enough. Hey, it's a road trip. As Paul Fussell said, a little discomfort is part of the adventure.

Itinerary
I had never been to the Grand Canyon. Last year a friend who does a lot of outdoors-ing and grew up in Arizona couldn't believe it and said I had no idea what I was missing. I was also recommended to visit the North Rim. It has better summer weather and much, much smaller crowds. So I designed a road trip around visiting the North Rim of the Grand Canyon.

Our route was to go through southeastern Oregon, the Nevada Great Basin, Utah, hitting Zion National Park, then the Grand Canyon North Rim. After the GC we would go around the east side of the canyon to Flagstaff, then a couple nights in Sedona with hotel reservations, and finally Phoenix, to visit some
family friends.

The Great Basin is enormous. I generally like driving through flat, wide-open empty land with the road stretching ahead like a ribbon for as far as you can see. It's what I love most about Oregon east of the Cascades. But the Great Basin kind of broke me. I think half of it was the difference between 4-6 hours and 12-14 hours just hits different. The other half was it wasn't our destination. It was in the way of our destination, and I was feeling impatient about getting there. (And for getting home on the return leg.) Normally I'm pretty relaxed about getting to where I'm going and happy to make the journey part of the destination, but for a few reasons I didn't have as much time for the journey part as I would have preferred. Plus, 1400 miles from Portland to Phoenix by way of the Grand Canyon, and 1200 miles return taking the slightly more direct route via Las Vegas is A LOT of driving no matter how you slice it.

Zion National Park feels like a tourist trap. The west side, Kolob Canyons, was nice. But for the main park there is one way in and it is full of tacky signage for restaurants and lodging and paid parking. Once you are inside the park, the one road has a number of pull-offs for parking, but they are nearly all full. About 2/3rds of the way through there is a long tunnel, which is one of the focal points of the park. Past the tunnel traffic falls off by 80%. ("Where did all the people go?" was a common feeling I had on this trip.) If the park before the tunnel had been like the park after the tunnel, crowd-wise, I would have liked it a lot more and would rate it as worth going to again. As it stands, it's not high on my list of places I want to go out of my way to visit again. Maybe in the shoulder season with a backcountry permit would get me back.

The Grand Canyon is absolutely awesome. It's like the pictures, but so much bigger and so much more stunning in real life. Obviously, but still. It is definitely worth it to build a two-week road trip around visiting. Outside of the lodge and the campground we didn't see a lot of “Normies Americanus.” The most popular walking trails had people on them, but they weren't crowded by any means. Go 20 yards off the paved paths and you could climb out on some rocks and feel perfectly alone. Dry camping in the Kaibab National Forest was also super easy and I thought better than being in the park's campground.

Sedona has some incredible vibes. Despite the main drag being too California and too tourist-centered, the striking red rocks, the multitude of hiking trails with gorgeous scenic overlooks, and Oak Creek winding through the city as a literal oasis made me forget about the tourist-town feel. Like the Grand Canyon, I got the feeling I was suddenly inside pictures I'd seen my whole life. Unlike the Grand Canyon, with these ones I never realized where they were before now. Beyond that and despite all the woo-woo fools and hucksters, the area does have a great vibe. I've been to one other place with such an immediate and noticeable vibe. I'm sure there are more. That's just those that I've been to. I plan to go back. I wish it were closer and easier to get to from Portland.

The scenic back-way from Sedona to Phoenix, going through Jerome, is a great drive and well worth the extra travel time. I think it would have been neat to spend a few hours in Jerome walking around, but we didn't stop this time. We did stop at Arcosanti, an intentional community (aka hippie commune) still in operation from the 1970's. It was interesting, but didn't give off an energy like anyone with options would want to live there. It felt like an abandoned inner city skate park had been inhabited by a small group of survivor hold-outs in a Mad Max-like wasteland. For sure, the people were nice. We did the tour and bought a bell. But still. Something felt off. Too hot and too isolated. Felt like its purpose for the people there was to ignore the rest of the world. I could be wrong.

Earth itself has vibes. You want to live in a place with good vibes, not force it by trying to build something in a place with a bad vibe just because that's where you can find land that is cheap and available.

Phoenix in the summer is nuts. By 9:30 AM it was too hot to be outside. The daytime highs in June were 105 to 110+ F everyday. That a place so unfit for human habitation has grown by leaps and bounds for three decades and counting really makes one wonder. Is Phoenix the revealed preference for what whites will endure to live in proximity of a mestizo underclass instead of a black one? Fun fact: the one black person we saw in Phoenix, which we bumped into at the gas station, was a retiree from Oregon.

Post-travel Musings
I've always loved the Paul Fussell quote distinguishing between tourists and travelers. It is yet another illustration of one of the running themes at the CBS blog: high agency people are qualitatively different from most other people. What we recognize as high agency, Paul Fussell termed travelers.

Fifty years later and after 3000 miles across four states, I think I'm qualified to update his description to the present time:

A tourist has 4WD, GPS, and hotel or campground reservations.
Travelers have 2WD, bad photocopies of USGS maps, and no campground reservations.

It really was that stark.

Our first night at the Grand Canyon we were given a campground site from a random couple we met in line. They were not able to hang around and use their site and didn't want to see go to waste. After being on the road for three days and two nights at that point, it was quite a welcome gift.

The campground was full of new RV's of various sizes and levels of fanciness and a few very skookum overlanding rigs. In contrast, our 15 year old passenger Sprinter seemed quite pedestrian. (Empty America calls this phenomenon Mass Affluence.)

Our second night we dry-camped in the Kaibab National Forest which surrounds the North Rim National Park. Like all national forests, it has free dispersed camping. I was slightly worried we'd have a tough time finding a spot in the forest since the Grand Canyon, like all national parks, is notorious for being fully reserved months and months in advance. I figured there would be tons of people like us visiting the park and free-camping in the national forest just outside. I needn't have worried. We saw three other campers.

My favorite were these two guys in a loaded-down Prius with a couple mountain bikes on back. They rolled in at about 9 or 10 PM, pitched their tent using the car's headlights for light and then were up and back on the road in the morning before 7:00.

Another guy we saw, Boomer, parked in a small clearing well back from the road. He was sitting in a lawn chair in front of an older 4-door hatchback with a small tent pitched behind it. He was just sitting there, watching the road (with virtually no cars on it). He was either a serial killer, or wasn't able to hike like he could in the old days but still enjoyed coming out for the nature and solitude. In either case, definitely not a tourist type.

The third set of campers were a young couple with a diaper-less toddler, a yellow dog, and a 4 year old riding a miniature BMX bike. They were from Flagstaff, but could just as easily have been from Portland or Hood River. Definitely traveler people.

~~~

I started a joke with my kids about “Asian trails” and “Anglo trails.” Whenever they started complaining about maybe we weren't supposed to be hiking where we were, I would say, “no, it's perfectly fine. This is the Anglo trail. The Asian trail is the one we used to get to this one. You don't want to only hike on Asian trails do you?”

It was especially funny the one time in the Grand Canyon we crossed paths with a guided tour-group of Boomers. They all had walking sticks, water bottles, binoculars, and name cards hanging around their necks. About 1/3 of them had their ankles and knees wrapped up like an NFL linebacker. They stood out because they were the only whites we saw on that trail (a short hike along the rim from the campground to the lodge). The three other groups we crossed paths with were Indian (dots, not feathers) and Asian.

This applied to roads too. When we were on some rough dirt forest service roads with signs giving  warnings about only high-clearance 4WD vehicles, I would tell the kids these are the Anglo roads. Those 4WD warnings are for the Asians, so they know not to drive here.

~~~

Much to my chagrin, because of course their website hasn't been updated to tell of the new system, the in-person lottery for back-country permits is dead and gone. It ended in August 2023. It is replaced by an exclusively on-line system, which in theory allows for last-minute bookings but in practice cannot because when you're off-grid in a parking lot you can't be re-loading a web page every 10 minutes all-day to see if something new has opened up. Plus, the old system was easy to schedule your day around: get a lottery number anytime before close for the next morning. Be there at 8:00AM and make your pick first-come, first-served based on yesterday's numbers. If you didn't get what you wanted, you are given a new number and come back tomorrow at the same time and at the front of the line.

This was the biggest FUBAR of the whole trip. I had planned (and rushed!) to get to the Grand Canyon  by 4:00PM Wednesday so that we'd be in Thursday's lottery. This was strategic. I didn't expect to get any of the campsites I really wanted on Thursday, but it would give us first or nearly first dibs the next day on Friday. Well, the lottery system is dead and gone. All sites are only available via recreation.gov. Even the ranger office uses it. (They have a Starlink subscription.) If/when a cancellation occurs the campsite goes back up on recreation.gov immediately and it's first-reload-first-serve for the entire online public. If someone makes a reservation and no-shows, well, that's certainly a bummer for the on-site public that could have gone out in their place, but don't worry, the no-show pre-paid online so the parks service still gets their money. No refunds. (They still use the old-style wait list for a few spots in one campground below the rim, but all the above rim sites are exclusively online.)

~~~

Acrosanti has these massive 60 foot tall arches of cast concrete. Knowing what we know now about aging steel reinforced concrete structures and Boomer maintenance habits, I couldn't help but think if CBS knew I was standing under hundreds of tons of concrete built by a bunch of untrained volunteer hippies 50 years ago, he'd be laughing his butt off at me.

~~~

The most noticeable difference this time versus nine years ago was how people reacted to us in the Sprinter. When I got it in 2008 most Sprinters were white, contractor vans. While everyone could see the obvious potential as a camping/travel rig, very few were on the road being used that way. Whenever people saw us and our young family pile out of one, they smiled and waved and sometimes came over to talk and look. On the road people were polite and chill. Boy, have the Cali-bros and social media “influencers” burned through  goodwill. At best other people treated like just another car on the road, at worst they were openly rude. Sad!

~~~

Shifting gears slightly before ending, I'll offer a quick shout-out for Oakleys Prizm Road sunglasses. I hate Oakley's mark-up, but, a lot like Apple OS, what are you gonna do. There just aren't any other comparable options. Mitigating the cost is that I have the relatively good luck of only losing a pair of sunglasses on average about once every 8 years.

Last year was a lose year (forgot and left them on my head while jumping into a river from an overhead rock), so right before this trip I replaced them with a pair of Oakleys with the Prizm Road lenses. The thing I like most about Oakleys is the selection of tints. When it's overcast in the Pacific NW and I'd normally just want to stay in and hibernate, the right tint fools my brain into thinking it's a sunny day and I should be outside. On this trip, under the dazzeling and oppressive Arizona sun, the prizm road lenses made me forget how bright it was. I had no problem driving for hours on end, and it always looked and felt like a great day to be outside. Strong endorsement.

~~~

All in all, we had a great time. There were reasons, but I shouldn't have waited so long to do another one of these. I won't wait nine years for the next one.

Saturday Links

• We are a very data-driven company. Now, most companies say that, and everybody goes by that old saying that “in God, we trust; everybody else, bring data.” But we really live it. And we’ve lived it for a very, very long time. A/B testing was our mantra really. A lot of people weren’t doing that. A lot of people were doing stuff where it was the old style based on the highest-paid person’s opinion — we never believed in that. We always believed “show us the data” because digital commerce is really one of the greatest experimental bench tables you could ever play with. And you can see right away, if I do this, what happens? If I do that, what happens? And we’ve been very fortunate, and that’s really how we came from, really nothing, to be the size that we are — by continuing to look at what is actual real in terms of data versus just what is somebody’s opinion. [Booking Holdings]
• Topology is the study of spaces in the most abstract sense, so abstract that they may not even support a well-defined notion of distance (if your spaces are guaranteed to have distances, then you are now doing geometry rather than topology). Topology takes a coarser view of space: forget about curvature, distance, or really anything involving numbers at all. To a topologist, two points can be “near” each other or not, “connected” or not, and beyond that it doesn’t matter. This is the source of all the jokes about topologists mistaking donuts for coffee cups, but the kind of topology that studies multi-holed donuts, algebraic topology, is actually comparatively tame and normal. Also relatively normal is differential topology, which is the next neighborhood over from differential geometry, and which produces cool videos like this. No, the scary part of town, the place where the true freaks and degenerates hang out, is general topology. [Mr. and Mrs. Psmith’s Bookshelf]
• The real world is just a lot more complicated and interesting than anything even the best of us can pull out of thin air. Robert E. Howard knew it, and so did Tolkien, which is why they both drew so heavily on history — and why their works are so enduring and beloved. Really, just about any nonfiction book interesting enough to read to the end will contain the seed of at least one cool story, and probably many more. Patrick Stuart, for example, drew more than a dozen ideas from the late James C. Scott’s The Art of Not Being Governed (which we reviewed here). Actually many of the other books we’ve reviewed could inspire: my vote would be for the samurai-bureaucrats from MITI and the Japanese Miracle or the “cult of the undead ancestor in your back yard” from The Ancient City, and the post-apocalyptic world imagined by The Knowledge would make a great setting. Alas, it’s probably cheating for me to point to Howard’s Conan stories (reviewed here) or The High Crusade, since they have already been gamified in an obscure little number called Dungeons & Dragons… [Mr. and Mrs. Psmith’s Bookshelf]
• The longest discussion in the book is headed “Latte vs. Flat White vs. Cappuccino vs. Cortado,” to which my only response was the instantaneous impression that anyone who has ever publicly uttered the words “flat white”—a phrase so acutely and cloyingly precious, so knowingly, smugly tedious, so redolent of the sort of faux sophistication and moral foppishness that aroused Swift’s righteous hatred—to a poor uniformed server deserves to be expertly beaten up. [The Lamp] 
• Trist's negotiation was controversial among expansionist Democrats since he had ignored Polk's instructions and settled on a smaller cession of Mexican territory than many expansionists wanted and felt he could have obtained. A part of this instruction was to specifically include Baja California. However, as part of the negotiations, Trist drew the line directly west from Yuma to Tijuana/San Diego instead of from Yuma south to the Gulf of California, which left all of Baja California a part of Mexico, and Polk was furious. [Nicholas Trist]
• In spite of the increased demand, silver prices were checked by the fact that the Treasury would redeem silver certificates: paper money exchangeable for silver dollars (or the bullion equivalent, 0.7734 troy ounces), thus placing a ceiling of $1.29 per ounce on the market. Without government as the supplier of last resort, silver would rise in price, likely making it profitable to melt not only silver dollars, but the subsidiary silver coins as well. In 1963, the gap between production and consumption by the non-communist world amounted to 209 million ounces. Just lower than world production (210 million ounces), this gap was filled by the sale of Treasury silver at $1.29 per ounce. [Coinage Act of 1965]
• On May 10, 2024, we acquired the East Stateline Ranch, consisting of approximately 103,000 surface acres and associated surface use contracts, from a private third-party seller for aggregate cash consideration of approximately $360.0 million pursuant to the East Stateline Acquisition. In connection with the East Stateline Acquisition, we entered into a partial assignment and assumption agreement with WaterBridge, pursuant to which we assigned our rights to acquire certain produced water and brackish supply water assets to WaterBridge prior to the closing of the East Stateline Acquisition, and in exchange WaterBridge funded purchase consideration of $165.0 million at closing of the transaction. In accordance with the partial assignment, we also acquired the associated surface use contracts. [LandBridge Company LLC]
• Harris is a flesh-and-blood avatar of a much more numerous, powerful, and radically dissatisfied demographic: never-married and childless American women between the ages of 20 and 45. Aside from mass immigration, the most striking demographic development of the past decade is the large cohort of American women who have embraced the helping hand of the state in place of the increasingly suspect protections of fathers, brothers, boyfriends and husbands. In doing so, they have become the Democratic Party’s most enthusiastic and decisive constituency. According to a recent Pew survey, these Brides Of The State (BOTS) support Democrats over Republicans by a whopping 72-24%, providing the Party with its entire advantage in both national and most state elections. Married American women, by contrast, support Republicans by 50-45, which more or less matches the pro-Republican margin in every other age and gender demographic. Without the overwhelming support of BOTS for the Democrats, in other words, America would be a solid-majority Republican country in which Trump would win a likely electoral landslide. [David Samuels]
• After having been forced to leave the Soviet Union 1929 Trotsky has ended up in Mexico 1940. He is still busy with politics, promoting socialism to the world. Stalin has sent out an assassin, Frank Jacson. Jacson befriends a young communist and gets an invitation to Trotsky's house. [The Assassination of Trotsky (1972)]
• Employing household-level transaction data and a staggered difference-in-differences framework, we find sharp increases in sports betting following legalization. This increase does not displace other gambling activity or consumption but significantly reduces households' savings allocations, as negative expected value risky bets crowd out positive expected value investments. These effects concentrate among financially constrained households, who become further constrained as credit card debt increases, available credit decreases, and overdraft frequency rises. [Gambling Away Stability: Sports Betting's Impact on Vulnerable Households]
• Arnott embraces index funds, which tend to beat most active managers over the years, but he is a luminary in the world of finance nerds constantly trying to build a better mousetrap. A paper he wrote in 2005 with Jason Hsu and Philip Moore helped ignite the smart beta trend that now guides more than one trillion dollars in assets. Research Affiliates, founded just three years earlier, says it has created strategies now used by funds with about $150 billion under management. The basic idea of Arnott’s original paper was to create an index based on fundamental factors such as profitability instead of market value. Its main U.S. stock index beat a standard capitalization-weighted one by 1.8 percentage points a year from 1992 through 2022—a substantial edge. The one tracking small companies was even better, edging the comparable index by 2.7 points a year. [WSJ]
  

Friday Afternoon Links

• The anti-Israel reaction to the attacks of October 7th, 2023 reveal the rotten roots of these contradicting approaches. The Biological Left, while still committed to “anti-fascism,” sees Israel as fascist because she is, while unique, still more a part of Western Civilization than not. Since modern Jews are genetically 80% European, on average, the Left correctly perceives them as white, which means they can only ever be oppressors, and Palestinians can only ever be victims. Meanwhile, the very online young right is aware of the raw deal conservatives have gotten over the years, the hypocrisy of ethnonationalism for me but not for thee, and largely lack the religious commitments to Israel typical of the geriatric audience of Fox News. Like Google, elite supporters of Israel find themselves with few friends in a democracy. The smartest and most entrepreneurial American Jewish supporters of Israel, like Bill Ackman, now understand the short-sighted foolishness of promoting race-based communism to own the czars when a century of freedom in America has made Jewish people the world’s most successful ethnic group. Ackman is unusually prescient as a professional trader, and knows the optimal move when he changes his thesis is to unwind the position as quickly as possible. [The Tom File]
  
• Land is the most enduring and, possibly, continually productive investable asset one can own. It can develop new higher use cases over time. On a per capita basis, the supply of land has been shrinking since the dawn of civilization (according to some, that would be Mesopotamia 6,000 years ago). The primary difference between the LandBridge and TPL land—and which was a strategic choice that creates a different asset exposure and growth profile—is LandBridge created as large a set of contiguous-acreage footprints as it could. There’s a two-fold purpose. The primary one is for growth through water management services. The private equity firm that sponsored this venture, Five Point Energy, controls one of the largest water infrastructure businesses in the Permian Basin, called WaterBridge. Permian wells generate water cuts (the water-to-oil ratio) of 3:1 to 5:1, which continue through the end of well life, which could be 30 years. [Horizon Kinetics]
• The foundation for the revolution going on with increasing computing capacity and AI comes down to four things: renewable power, data centers, design and fabrication of chips, and computing capacity. Each of these forms part of the backbone of this AI revolution, and we are fortunate to be at the center of most of these. Combined, we have by far the largest development pipeline of anyone globally. The next 20 years will be an unprecedented period for electricity build-out. The electrification of industrial capacity, automobiles, heating for houses, and other uses is driving unprecedented growth in the demand for electricity. On top of that, the world is adding data centers for AI and cloud computing at a stunning pace. To put this in perspective, the global installed capacity for electricity is approximately 8,000 gigawatts. To meet expected demand, this installed capacity will need to expand to more than 20,000 gigawatts in the next 20 years. In addition, nearly half of what exists today will need to be retired, as it is very carbon-intensive. Said differently, we need to more than double the current capacity (which was largely built over the past 50 years) while also replacing approximately 50% of what we have. Nothing like this has ever been attempted, but it is essential in order to reach the world’s net-zero goals and drive the AI revolution. The increase in demand for power to run data centers used in computing capacity for AI is only starting to be understood and is largely excluded in the above calculations. [Bruce Flatt]
• It is important to remember that Genesis was never a 2024 story, but instead more a story of a company our size becoming increasingly closer to the inflection point where we stop spending growth capital and start harvesting upwards of $250 - $350 million or more of cash flow per year starting as early as next year that will allow us to simplify our capital structure, lower our overall cost of capital, optimize our leverage ratio and have the ability to opportunistically create long-term value for all stakeholders in our capital structure. [Genesis Energy, L.P.]
• All of which makes the Santa Fe pretty easy to recommend. But more than anything: a warranty—Hyundai’s 10-year/100,000-mile limited powertrain warranty, including the lithium-ion battery. My friends, I remain deeply skeptical of/terrified by the emerging class of tiny turbocharged engines that automakers are fielding in order to meet stricter consumption and emissions standards. If you are like me, and I know I am, such a warranty would make a difference. [WSJ]
• Chipotle has said it isn’t skimping on portions. But last month, the company said it had investigated more thoroughly, and it had a beef with around 10% of restaurants in their allotting beef. The company is working on training, telling workers to err on the side of generosity. [WSJ]
• Pauling argued that because humans lack a functional form of L-gulonolactone oxidase, an enzyme required to make vitamin C that is functional in most other mammals, plants, insects, and other life forms, humans have developed a number of adaptations to cope with the relative deficiency. These adaptations, he argued, ultimately shortened lifespan but could be reversed or mitigated by supplementing humans with the hypothetical amount of vitamin C that would have been produced in the body if the enzyme were working. [Vitamin C megadosage]
• Most of the traits of left-wing authoritarians more or less apply to all kinds of authoritarians. Authoritarians of every ilk tend to be intellectually apathetic, show an obsession with misinformation, trade in principles for groups, and exhibit cognitive simplicity. The specific domains attached to those traits do change, of course—for example, liberal authoritarians are especially simple about race, conservative authoritarians less so—and there are always exceptions we could make to those rules. But in general one would expect authoritarians everywhere to demonstrate traits such as resistance to change, cognitive rigidity in attitude formation, opinion certainty, sweeping biases, and racism. However, the authoritarian motivational blind spot is something that is unique to left-wing authoritarians. And this blind spot makes liberal authoritarianism uniquely dangerous. [Luke Conway] 
• The knowledge—and with luck occasional touches of wisdom—that one acquires through reading novels differs from that acquired reading history, biography, science, criticism, scholarship, and all else. For one thing, it is less exact; for another it has no use outside itself. The knowledge provided by the best novels is knowledge that cannot be enumerated nor subjected to strict testing. Wider, less confined, deeper, its subject is human existence itself, in all its dense variousness and often humbling confusion. Reading great novels comports well with the best definition of education I know, that set out by the poet and Eton master William Johnson Cory, which runs: "A certain amount of knowledge you can indeed with average faculties acquire so as to retain; nor need you regret the hours you spent on much that is forgotten, for the shadow of lost knowledge at least protects you from many illusions." [The Lamp] 
• The point, of course, is to show off how rich you are by showing off how much crystallized labor you are able to destroy. This pattern is not an uncommon one across human societies — a lot of human and animal sacrifice, while ostensibly religious in motivation, has this sort of showing off as an undertone. But what makes the potlatch especially interesting is its competitive nature. The Indians believe that as the goods are consumed by the blaze, every other wealthy man is “shamed” unless he comes back and burns objects of equal or greater value. It’s value destruction as a contest, like a dollar auction for status where the final price is set on fire rather than being paid to somebody, a negative-sum machine for destroying economic surplus. Good thing our culture is way too civilized to do anything like that. [Mr. and Mrs. Psmith’s Bookshelf]
  

Thursday Night Links

• A roughly accurate way to think about financial structure is that bonds and loans monetize stability, converting some predictable future stream of cash flows from the company into liquidity that's available now. Equity monetizes growth, converting hypothetically higher earnings in the future into cash today. You might think that convertible bonds split the difference, by functioning as bonds when the company does poorly and stock when it does well, but given their embedded option, they're actually closer to a way for companies to monetize their volatility. And they are eager to do this right now ($, WSJ); year-to-date convertible bond issuance is just 20% below where it was in 2021, while US IPO issuance for the first half of this year was ~$18bn, down from $84bn in 2021. The most pleasant way to think about this is that stocks are cheaper than they were at the peak of the excesses a few years ago, and that companies don't want to give up their equity that easily. The less cheerful possibility is that whether or not valuations are high, companies recognize that uncertainty about their own future can turn into more certainty about their cash position, and they'll take that opportunity when it's offered. [The Diff]
• Should Vance become the Vice-President, Justices Clarence Thomas, Samuel Alito, Brett Kavanaugh, and Amy Coney Barrett—all conservative Catholics—would have a Catholic ally of like mind in the executive branch. (President Biden’s Catholicism leans progressive, and is more devotional than doctrinal.) For now, Vance’s presence on the ticket represents the union of Trumpism and a movement that sees Catholicism as the embodiment of tradition, stability, and a top-down ordering of society, which would be enshrined through regime change. That’s a lot of symbolism to lay on a commitment of faith that a thirty-nine-year-old man made just five years ago, but Vance’s embrace of Catholicism is deeply bound up with his stated belief that religion has the power to shape the country. [New Yorker]
• On the menu today: A new report contends that Minnesota governor Tim Walz is on the short list to be Vice President Kamala Harris’s running mate. This is almost laughable when you look at Walz’s record running the state government, which somehow manages to combine the honesty of former Illinois governor Rod Blagojevich, the competence of former Louisiana governor Kathleen Blanco, and the sharp-eyed ethical-watchdog instincts of soon-to-be-former New Jersey senator Bob Menendez. A whole lot of shady and unethical people in Minnesota see the state government as a giant pile of money just waiting to be taken, with a sleepy guard in the form of the governor. [National Review]
• The Legislative Building houses the chambers of the Washington State Legislature and offices of several elected officials. This building is the dominant feature of the capitol grounds, with its dome 287 feet (87 m) high, making it the tallest self-supporting masonry dome in the United States, and fifth tallest in the world, surpassed only by St. Peter's Basilica in Rome, St. Paul's Cathedral in London, Global Vipassana Pagoda in Mumbai, and Santa Maria Del Fiore in Florence. [Washington State Capitol]
• Based on the above, is it fair to conclude that the inevitable End Stage of European Christianity is Rainbow Flagism and/or Queers for Palestine? Spaniards were willing to fight for centuries to make the Iberian peninsula completely Christian. Now Spain is covered in the sacred symbols of Rainbow Flagism and is on track for a conversion to Islam via immigration demographics. [Phil Greenspun]
  
• The opening ceremonies of the Olympic Games have given scandal, not only because of the arrogant display of the ugly and the obscene, but because of the infernal subversion of Good and Evil, the insane claim to be able to blaspheme and desecrate everything, even what is most sacred, in the name of an ideology of death, ugliness, and lies that defies Christ and scandalizes those who recognize Him as Lord and God. It is no coincidence that the one sponsoring this revolting carnival is an emissary of the World Economic Forum, Emanuel Macron, who passes off a transvestite as his own wife with impunity, just as Barack Obama is accompanied by a muscular man in a wig. [Msgr. Carlo Maria Viganò]

Thursday Night Links

• Texas, in aggressively growing metro suburbs across several economic powerhouse regions across the state, enables a very achievable driving distance proximity. It’s possible here, and common given the critical mass of the state’s economy, for extended families to be no more than 3-4 hours apart with no compromise on economic opportunities. On net, in its emphasis on jobs in highly technical sectors, Texas seems to be getting smarter, if comparable standardized test scores are analyzed. Perhaps the achievable ideal for professional extended families is frequent, doable road trips, between equally nice suburbs in DFW, Houston, San Antonio, and Austin. Demographers call this economically dense super-region the “Texas Triangle,” and right at its beating heart, nearest its population-weighted center, sits College Station. It’s a compromise that certainly beats the hell out of cross-country Thanksgiving flights. [The Tom File]
• I’ve long been in the “higher for longer” camp, insisting that the US Federal Reserve must hold short-term interest rates at the current level or higher to get inflation under control. The facts have changed, so I’ve changed my mind. The Fed should cut, preferably at next week’s policy-making meeting. [Bill Dudley]
  
• Scott is sometimes described as an anarchist, and he was influenced by a number of anarchist thinkers (especially Colin Ward). But he was ambivalent about whether abolishing the state entirely was a practical goal—to quote one of his book titles, he gave just Two Cheers for Anarchism. Nor would he describe himself as a free-market libertarian: While there was obvious overlap between his thinking and, say, Friedrich Hayek's ideas about dispersed knowledge, Scott saw his work as a critique of large-scale corporate capitalism as well as of the state. In an oral history interview conducted in 2018, he remembered William Niskanen of the Cato Institute calling to ask if he would speak at a libertarian event: "I remember my partner was with me and I put my hand over the phone and said to her, 'What have I done wrong that the Cato Institute is calling me and wants me to sort of talk at their conference?'" [Reason]
  
• "As escalating uncertainties drove an increased need for risk management across all asset classes, CME Group achieved record Q2 volume and generated record revenue, adjusted net income and adjusted earnings per share," said CME Group Chairman and Chief Executive Officer Terry Duffy. "During the quarter, and for the first time in more than a decade, our volume and open interest grew in every asset class, with overall ADV up 16% in commodities and 13% in financial markets. We also reached significant records in many of our U.S. Treasury products where ADV increased 36% to 8.2 million contracts." [CME Group Inc.] 
• Under this metric, a number of counties in Pennsylvania have extremely unlikely distributions of voter birthdays. Seven counties representing almost 1.4 million votes total (Northumberland, Delaware, Montgomery, Lawrence, Dauphin, LeHigh, and Luzerne) have suspicious birthdays above the 99.5th percentile of plausible distributions, even when using conservative assumptions about what these distributions should look like. These suspicious birthdays also matter significantly for election outcomes. While there are suspicious counties that vote Republican overall, in general more suspicious birthdays in a county are strongly associated with a larger Biden vote share, and a higher Biden vote share relative to all Democrat presidential candidates since 2000. More suspicious birthdays are also associated with a higher vote share for Jorgensen relative to Trump (consistent with a fraud scheme aiming to get Biden high but not “too high”, while simultaneously giving as few votes to Trump as possible). [Revolver]
• In the Telecommunications Act of 1996, Congress delegated its taxing power to the Federal Communications Commission. FCC then subdelegated the taxing power to a private corporation. That private corporation, in turn, relied on for-profit telecommunications companies to determine how much American citizens would be forced to pay for the “universal service” tax that appears on cell phone bills across the Nation. We hold this misbegotten tax violates Article I, § 1 of the Constitution. [United States Court of Appeals for the Fifth Circuit]
• Donald J. Trump long ago decided he wanted a very different Republican Party platform in 2024. The delegates who arrived in Milwaukee early last week before the Republican National Convention, with grand plans of drafting a sweeping document of party principles, quickly found out just how determined he was. Within minutes of their arrival, their cellphones were confiscated and placed in magnetically sealed pouches. There would be no leaks of information. It was only then that the delegates received a copy of the platform language the Trump team had meticulously prepared, which slashed the platform size by nearly three-quarters. “This is something that ultimately you’ll pass,” Mr. Trump told the delegates by phone and made audible to the room, according to a person who was there and who was not authorized to speak publicly. “You’ll pass it quickly.” [NY Times]
• Here the inexpert reader must note an important detail about the British undercover world. Cornwell’s reports on Mitchell had been going to an organization often called MI5, whose real name is the British Security Service. Lazy or incurious journalists frequently suggest that its employees are spies. But this is an evasion at best. The only proper description of MI5 is that it is a secret police force. Though it has no powers of arrest, it knows people who do. And its job has always been to snoop on those whom the current government regards as potential enemies. It once snooped on me, because it thought I was too left-wing, and I suspect it may soon snoop on me again because it thinks I am too conservative. Thanks to his most famous books, Cornwell is generally associated with the supposedly more reputable and romantic MI6 (properly the Secret Intelligence Service or SIS), which does employ spies. But this is not quite right. MI5 and MI6 dislike and mistrust each other, and it is quite unusual for anyone to serve in both, but Cornwell did. And in his letters, he confesses to German friends that he viewed MI5, the Secret Police, as “ultimately more rewarding, more obviously necessary, more vocational” than MI6, the spies. [Peter Hitchens]

Thursday Night Links

• There’s also something in evangelicalism that’s just off-putting to a lot of people like Vance. It’s not just the working class Pentecostal congregations like the one I was raised in (which was very similar to Vance’s experience). The average suburban megachurch is also incredibly cringe. I like to distinguish between middle class and striver class. Evangelicalism appeals to the middle class, but much less so to the striver class. And the elites of our society are either people from the upper classes, or strivers like Vance. [Aaron Renn]
• Priests ordained since 2010 “are clearly the most conservative cohort of priests we’ve seen in a long time,” said Brad Vermurlen, an assistant professor of sociology at the University of St. Thomas in Houston, who has studied the rightward shift of the American priesthood. Surveys tracking the opinions of priests have found that, starting in the 1980s, each new wave of priests in the United States is noticeably more conservative than the one before it, Dr. Vermurlen said. [NY Times]
  
• Everyone gets married young. Women constantly have children without committed men. Men beat and cheat on their partners. Women stay with their abusive partners, at least until the men get bored and leave. Everyone eats junk food and drinks soda for every meal. Everyone screams all the time, or they punch each other. People buy stuff they can’t afford. Everyone heavily drinks. Drug abuse is everywhere, especially of prescription painkillers. Few people want to work, and those who do are terrible employees. Yet nothing is ever anyone’s fault. Or rather, every bad thing is the fault of the economy, the government, Obama, the industrial companies, the Japanese, the Chinese, or some other mysterious malevolent force somewhere in the universe. [Matt Lakeman]
• I wonder why this became so popular? The message of the book is that Appalachian whites are totally hopeless. It is true that they behave very differently than Germanic or Scandinavian whites (e.g. Minnesota and Wisconsin, see Sailer): more violent and less future oriented. But rural whites would be doing much better if the country had not been deliberately deindustrialized. All the more reason for Trump's tariff program. The problem is that for reindustrialization to occur, tariffs would need to be perceived as permanent, and Trump will be gone after one term. (Also, Trump is not smart enough to win Oval Office debates about this against his globalist staffers.) So, the 2019 crash will be blamed on Trump (because he was desperate to claim credit for the final years of bubble), and therefore blamed on populism and nationalism. [CBS]
• The good news is there are lots of opportunities to find great value outside of the mega-caps currently (see a few examples in my recent archives). I think there is an interesting valuation gap emerging between the largest 25-50 stocks and everything else. This has happened numerous times in the past where the large high-quality stocks became expensive while bargains existed elsewhere, most famously in the early 1970’s and the late 1990’s. Both of these periods were followed by a multi-year correction where the expensive stocks fell and the cheapest stocks soared. [John Huber]
• In early days some argued that the obligations of the Constitution operated directly on the conscience of the legislature, and only in that manner, and that it was to be conclusively presumed that whatever was done by the legislature was constitutional. But such a view did not obtain with our hard-headed, courageous, and far-sighted statesmen and judges, and it was soon settled that it was the duty of judges in cases properly arising before them to apply the law and so to declare what was the law, and that if what purported to be statutory law was at variance with the fundamental law, i.e., the Constitution, the seeming statute was not law at all, was not binding on the courts, the individuals, or any branch of the Government, and that it was the duty of the judges so to decide. This power conferred on the judiciary in our form of government is unique in the history of governments, and its operation has attracted and deserved the admiration and commendation of the world. [William Howard Taft]
• In materials science, a disappearing polymorph is a form of a crystal structure that is suddenly unable to be produced, instead transforming into a different crystal structure with the same chemical composition (a polymorph) during nucleation. Sometimes the resulting transformation is extremely hard or impractical to reverse, because the new polymorph may be more stable. It is hypothesized that contact with a single microscopic seed crystal of the new polymorph can be enough to start a chain reaction causing the transformation of a much larger mass of material. Widespread contamination with such microscopic seed crystals may lead to the impression that the original polymorph has "disappeared." [wiki]
• We’ve been looking for historic cases of discontinuously fast technological progress, to help with reasoning about the likelihood and consequences of abrupt progress in AI capabilities. We recently finished expanding this investigation to 37 technological trends. This blog post is a quick update on our findings. See the main page on the research and its outgoing links for more details. We found ten events in history that abruptly and clearly contributed more to progress on some technological metric than another century would have seen on the previous trend. Or as we say, we found ten events that produced ‘large’, ‘robust’ ‘discontinuities’. [Less Wrong]