Friday, March 18, 2022

Friday Night Links

  • Manchin, the centrist Democrat who serves as chair of the Senate Committee on Energy and Natural Resources, said in a statement on Monday he would not support Raskin’s nomination to the Federal Reserve in light of her prior public statements on the role of climate risk in financial regulation. [American Banker
  • First, oil sands require hefty investment upfront but output holds steady for decades with relatively modest maintenance capital expenditures. The opposite is true for shale deposits, which take less upfront spending but, due to quick decline rates, require continuous investment into drilling and well completion to keep oil flowing. Capital expenditures have stayed relatively consistent for Canadian oil producers over the years—through boom and bust cycles—compared with U.S. producers, whose spending has fluctuated wildly. Thomas Liles, analyst at Rystad Energy, notes that, given the maturity of the oil sands sector, reinvestment rates, or the percentage of cash from operations spent on capital expenditures, should be in the 20%-30% range this year and next. That frees up a lot of cash for dividends and repurchases. [WSJ]
  • The amount of waste generated by the inability to farm out services is staggering and I've seen it everywhere I've worked. An example from another industry: when I worked at a small chip startup, we had in-house capability to do end-to-end chip processing (with the exception of having its own fabs), which is unusual for a small chip startup. When the first wafer of a new design came off of a fab, we'd have the wafer flown to us on a commercial flight, at which point someone would use a wafer saw to cut the wafer into individual chips so we could start testing ASAP. This was often considered absurd in the same way that it would be considered absurd for a small software startup to manage its own on-prem hardware. After all, the wafer saw and the expertise necessary to go from a wafer to a working chip will be idle over 99% of the time. Having full-time equipment and expertise that you use less than 1% of the time is a classic example of the kind of thing you should outsource, but if you price out having people competent to do this plus having the equipment available to do it, even at fairly low volumes, it's cheaper to do it in-house even if the equipment and expertise for it are idle 99% of the time. More importantly, you'll get much better service (faster turnaround) in house, letting you ship at a higher cadence. I've both worked at companies that have tried to contract this kind of thing out as well as talked with many people who've done that and you get slower, less reliable, service at a higher cost. [Dan Luu]
  • This isn't to say that software isn't hard, it's just a different kind of hard: the sort of hard that can be attacked with genius and perseverance, even without experience. But, if you want to build a ship, and you "only" have a decade of experience with carpentry, milling, metalworking, etc., well, good luck. You're going to need it. With a large ship, “minor” fixes can take days or weeks, and a fundamental flaw means that your ship sinks and you've lost half a year of work and tens of millions of dollars. By the time you get to something with the complexity of a modern high-performance microprocessor, a minor bug discovered in production costs three months and five million dollars. A fundamental flaw in the architecture will cost you five years and hundreds of millions of dollars. Physical mistakes are costly. There's no undo and editing isn't simply a matter of pressing some keys; changes consume real, physical resources. You need enough wisdom and experience to avoid common mistakes entirely – especially the ones that can't be fixed. [Dan Luu]
  • Among Putin's four military interventions in the former Soviet space, three targeted Christian and Orthodox countries. The direct aggression against Georgia was to the benefit of the Muslim Abkhazians. During the last conflict in Nagorno-Karabakh, the French far right and the Republicans (Les R├ępublicains) called for Christian solidarity against the Turkish-Muslim threat. I had reminded them in an article (Le Monde, 18 November 2020) that the Russians were on Azerbaijan's side and not at all on the Armenians' side. They let the Azeris take over Karabakh and then pretended to intervene. In the wake of the war in Chechnya, Putin supported the Chechen leader Ramzan Kadyrov. The only place in geographical Europe where Sharia law is applied is in the Republic of Chechnya, in Russia. The attack on another Orthodox nation, Ukraine, will further accentuate the divisions in the Orthodox world but also in the Christian world in general (the Ukrainian Catholic Uniates are a bastion of Ukrainian patriotism). The only Ukrainian patriarch who still recognises the supremacy of Patriarch Cyril of Moscow, Onuphre, has just called on the faithful to defend the Ukrainian homeland. Putin has lost his claim to represent the Orthodox world. [link]
  • The incomprehensible thing about this war is that Russia is not a belligerent young nation in need of expansion; it is not filled with frustrated young men hoping to assert themselves in conflict, as with Syria, Afghanistan or the world’s other conflict zones; it is already elderly, ageing quickly and in some parts heading for oblivion. Some 20,000 Russian villages have been completely abandoned in recent years, and 36,000 others have fewer than ten inhabitants left and will follow them soon. A third of land once farmed in the former USSR has now been abandoned. [Ed West]
  • The shopkeeper is not motivated by an intention to communicate his enthusiasm for unity of the workers of the world. Nor was his superior seized by such desire. And the leaders of the authoritarian system in which the sign is displayed know that their power would not long survive unity of the workers of the world. In fact, it is unlikely that anyone who sees the sign gives attention to its substantive content. The real meaning is not conveyed by the printed words. The greengrocer’s intention is to signal conformity and avoid trouble. Havel translates the slogan as: “I am afraid and therefore unquestioningly obedient.” [FT]
  • Just bought some hot shares in Alibaba? Actually, you didn’t. The entity listed on Nasdaq, with a market capitalization of $443 billion, is a Cayman Islands company with no hard assets or earnings. It is linked to the real Alibaba Group Holding, Jack Ma’s Hangzhou-based e-commerce juggernaut, by a web of contracts that could prove unenforceable in China. Alibaba (ticker: BABA) is not alone. More than 80 Chinese firms have issued shares on U.S. exchanges using a legal structure called a variable interest entity, according to the Council of Institutional Investors in Washington, D.C. Most of them are in the internet space. With 20 announced initial public offerings of VIEs, 2017 set a record. That prompted a CII report in December titled, “Buyer Beware,” which warns that “investors’ participation in China’s emerging companies is precarious and may ultimately prove illusory.” The root of this precariousness is Chinese law, which prohibits foreign ownership of internet companies. [Barron's]
  • The news does not matter. It has little, if any real impact on your life besides what you allow it to have. Like a vampire, The news- whether mainstream, alternative, printed or screen-based- is a parasitic force that will drain you of your energy, happiness and rationality if you welcome it over your threshold and in to your life. The key is to simply never invite it in. [Thomas J Bevan]
  • Russia as China’s Canada gives them control of the World Island and thus nullifies America’s sea power ability to blockade China. Anyway, Xi (whose father was a powerful general and then deft diplomat praised by Mao for pacifying rebels with generous policies) is rather obviously going to help Russia a little bit then broker a peace in Ukraine. China will then be the world-ordering settler of disputes, and Russia will be integrated into the Middle Kingdom. It is already happening with the Power of Siberia 2 pipeline and the $300 billion high speed Moscow to Beijing high speed rail link with profound implications for the supply chain, plans that are being finalised as I write. Aid to Russia now will never be forgotten by the Russians, and they will subtly lulled into thinking of China as benevolent forever after. Meanwhile, every other white country is calling Putin a fascist leading a country of baby killers while most of deaths in Ukraine are Russian soldiers being hunted like hares by Ukrainians armed with inexhaustible supplies of American, German, and Swedish technologically advanced weaponry, including long range anti aircraft weapons, and maybe swarms of deadly ‘switcblade’ drones. What an absolute disaster for the West. [Sailer]
  • Cuisine in colonial America was cuisine for the wealthy, and, at its peak, the Carolina Rice Kitchen possessed ingredients that would thrill any chef today: local estate-grown olive oil (and oil from benne, peanut, chestnut, walnut, pecan, and sunflower); locally produced and imported wines; fresh and lagered ales and alembic spirits; fine herbs and spices; abundant vegetables and legumes; seasonal nuts, berries, mushrooms, seeds, and greens; wild game and fish; rice-fed beef, pork, lamb, and poultry; creole charcuterie; wheat, corn, rye, oats and barley—and, let us not forget, Carolina Gold rice. [Anson Mills]


Anonymous said...

The linked Sailer article is interesting, but it is not the source of the excerpt. I'm interested in whatever is the source article of that excerpt. Thanks.

Anonymous said...

Found it.