Thursday Night Links

• Owning a tiny slice of a fund that owns larger slices of pipelines no one knows about but power our economy at a fundamental level is much less interesting and ego-gratifying than “owning” tangible stores across rural America. I’m always happy when I observe other people being irrational, as it makes it less likely that I’m the crazy one. [The Tom File]
  
• Fossil-fuel billionaire Kelcy Warren is about to land a knockout punch on Greenpeace. The pipeline magnate’s company, Energy Transfer, is behind a lawsuit that Greenpeace says could bankrupt the environmental group’s U.S. affiliate. A courtroom victory, which some Greenpeace officials fear is likely, would be a coda in the nearly decadelong battle between the two sides over one of Warren’s signature projects: the Dakota Access Pipeline. In 2016, Greenpeace, Native American tribal groups and thousands of other activists camped in a remote corner of North Dakota to block the project. The months long protests impeded the oil pipeline’s completion and became a flashpoint in the fight over fossil fuels. Images of sometimes violent confrontations between protesters and law enforcement made international news. Warren ultimately completed the conduit, but the fight wasn’t over for him. Warren sees green activists, who he once said should be “removed from the gene pool,” as a serious threat to the industry. Starting with protests of Keystone XL, which successfully derailed that project, activists have targeted pipelines across the country. [WSJ]
• Whereas in his early political and military career all of Napoleon’s strengths proved to be an uncannily perfect fit for the weaknesses of his opponents, the environmental factors shifted such that Napoleon faced a political-evolutionary dead end. Having mistook his earlier luck for fate, he mismeasured (or was simply unaware of) the enormous risks he was taking in this new, hostile environment and committed himself in such a way that he was doomed to be defeated. [A House Rises]
• So that’s Napoleon’s life.  It is fascinating, but it seems to me that the wrong conclusions and lessons are frequently drawn from that life.  For example, Napoleon is often viewed as an avatar of the Enlightenment, in contradistinction to prior monarchic darkness, but that is obviously wrong.  He certainly didn’t want the Bourbons back, because they would have executed him, and he didn’t want the social structure of pre-Revolutionary France back, either.  Too many encrustations and decadences make a society sclerotic, something on full display in late monarchical France.  (This is something modern conservatives often fail to recognize—political systems do reach the end of the line, and there is no Burkean solution to revive them at that point.)  But you wouldn’t catch Napoleon believing in the Rights of Man.  He wasn’t interested in expanding liberty in the abstract, much less atomized liberty untethered to virtue.  John Locke held no interest for him (his political reading tended to the Roman classics).  Emancipation of the supposedly oppressed wasn’t on his list of things to do, except to achieve instrumental gain for himself.  Utopia was not a goal; he would have sneered at anyone who suggested that to him.  Instead, he wanted realistic glory for France, a modicum of virtue for the people, and for everyone, order and the rule of law.  These are profoundly conservative, or more accurately in context, Reactionary, sentiments.  That Napoleon was not an avatar of the Enlightenment is easy to prove by mere modern observation—if he really were such an avatar, the Left would love him.  But they hate him, especially in France, where very little praise is lavished on Napoleon—he has two statutes in Paris, and one small street named after him. [Charles Haywood]
• Majorities of residents in blue states (70%), battleground states (64%), and even red states (57%) support the legality of abortion. Nearly two-thirds (64%) of residents in the battleground states of Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania, and Wisconsin say that abortion should be legal in all or most cases. [PRRI]
• On the Redemption Date, the Partnership paid the holders of the preferred units $31,666,000 in cash, plus any accrued and unpaid distributions with respect of such units. Following the redemption, the preferred units were retired and are no longer outstanding, and all rights of the holders thereof have ceased with respect to the preferred units.  Of the originally issued 250,000 preferred units, after giving effect to this redemption and all prior redemptions, no preferred units remain outstanding. [Natural Resource Partners L.P.]
• The result is that there are now extraordinary opportunities emerging in global markets for the volatility-tolerant long term investor. The world has a vastly excessive abundance of low-volatility capital, but a growing and acute shortage of high-volatility capital. Like all opportunities in markets, however, the magnitude of the opportunity is proportional to the challenges of successfully exploiting it at scale - it is in this respect that markets are both highly inefficient, and offer no free lunch (something the academics missed). The opportunity is large because it's hard to attract a lot of money at the moment to implement such a strategy - most of the funds doing so are currently suffering redemptions. If it were easy exploit, the opportunity would disappear. That's how markets work. [Lyall Taylor]
• Gelatin is a health food. Collagens make up 30% of your protein bodyweight. Unless you subsist on a diet of pork rinds or you have bones boiling in your kitchen at all times, you’re probably not eating that much collagen. There’s a huge amount of literature on health promoting effects of glycine which is a 30% of gelatin mass (along with proline and argenine). Since I don’t care for test tube remedies, and I don’t presently have a slow cooker, it’s gelatin for me. Makes the aches and pains go away, and you sleep better. Various nutritional halfwits gabble on about how it’s not a complete protein; yes, that’s true: neither is the collagen in your body: how do you think that got there? Eat whey for muscles, gelatin and collagen for the rest of your meat sack. I remember people used to look in horror at all the old American pre-1970s dishes with aspic and gelatin in them. I think, though, our ancestors knew something we forgot: gelatin is part of the cow and you should eat that too. Lots of old research on its benefits, but it’s just common sense eating the rest of the animal is a good idea. [Scott Locklin]
• In the French revolution, once it got rolling, who was the person or group of people you most wanted to be, if you could? The answer is the Emigres. The best choice you could have picked is to not be there, if you had the resources. Doing this was easy at the start, and increasingly hard as the revolution began to devour more and more of its children. Part of the problem, I think, is that in situations of social decline, people end up being the frog getting boiled. Things get worse, and some minor previous compromise gets breached, and then some escalation happens, and then some counter escalation, but then things cool off for a bit, and maybe it’s not so bad. And then before you know it, you’re in the middle of Sulla’s proscriptions, or The Terror, or other equivalent disasters. And then it’s too late. The best method I have found to stop yourself being thus boiled is that you need to identify trigger points ahead of time that will tell you when things have crossed an acceptable threshold. You can’t just hope to identify it from gut feel at the time, because your gut will probably be like everyone else’s gut, and only really get twisted and panicked once things have already become catastrophic. [Shylock Holmes]
• I can tell you this, though. If the White House had actually gotten burned to the ground, or Trump got color revolutioned out of power that week, I would have begun planning my life around it being time to leave America. The good news is that, historically, you actually have a decent amount of time to do this. Things don’t tend to go completely bananas in the next day, week, month, or often even year. But after the first revolution, you are much better off being an Émigré, waiting to see whether the next big change is a reaction from the right, or further leftward. High political volatility is great if you’re a young, clever, ambitious man looking to quickly advance up the ranks. It is a disaster for everyone else though. [Shylock Holmes]
• This significant difference highlights the additional equity embedded in the homeowner's "short bond" position due to the lower interest rate. The homeowner has an intuitive sense that they are losing when they sell the home because they will have to pay the bank $356k to close the loan when it’s only worth $262k. Eww. The additional $94k of equity that the homeowner has at prevailing interest rates represents almost 20% of the value of the $500k home! If mortgage rates fall, the conventional wisdom that marginal demand to buy should increase is a fair assumption. However, rates falling cuts directly into this shadow equity that owners feel compared to a high-rate environment. I suspect this will actually “loosen” a bunch of trapped supply as the bid/ask spread narrows as the homeowners embedded equity in their “bond short” shrinks. [Moontower]
• It was a multi-armed bandit problem. This problem, which, under a different name, had first been studied by the biologist William R. Thompson in 1933, centers on a rather surreal thought experiment. A gambler faces a slot machine (“a one-armed bandit”), except this machine doesn’t have one arm—following some twisted dream logic, it has k arms, arms sticking out in every direction. Some of these arms have a high probability of paying out the jackpot, others are worse. But the gambler does not know which is which. The problem is pulling the arms in an order that maximizes the expected total gains. ("Gains" could be anything. Early on, the problem was used to design drug trials. There, the jackpot was defined as finding a successful treatment. If you are looking for a partner, talking to people is how you pull the multi-armed bandit and the resonance (or lack thereof) is the payoff.) The gambler needs to learn new knowledge about the machines and simultaneously use what they have already learned to optimize their decisions. In the literature, these two activities are referred to as exploring and exploiting. [Henrik Karlsson]
• Humans have been using tobacco for longer than civilizations have existed. Every Indian tribe was using it when Europeans made contact with the Americas (the ones who could not grow it because of climate traded for it), and tobacco was a sensation everywhere that Europeans took it. This universality surpasses other widely-desired but not quite ubiquitous intoxicants like ethanol and cannabis. As a novel substance with psychoactive effects, it was also controversial everywhere it went, leading to moral panics and futile attempts at prohibition. [Credit Bubble Stocks]