Monday, February 18, 2019

President's Day Links

  • Molycorp provides a helpful framework for thinking through treatment of administrative claims in the range of Chapter 11 cases. It also serves as a warning to lender's counsel, as Oaktree's counsel appears to have believed that any fee objection to Paul Hastings' application would be upheld and Oaktree neglected to require a cap on the firm's fees in either the settlement agreement or in the plan itself. By neglecting to obtain Paul Hastings' express consent in the settlement or at plan confirmation, Oaktree's lawyers doomed its objection. [link]
  • Linoleic acid (LA) is a bioactive fatty acid with diverse effects on human physiology and pathophysiology. LA is a major dietary fatty acid, and also one of the most abundant fatty acids in adipose tissue, where its concentration reflects dietary intake. Over the last half century in the United States, dietary LA intake has greatly increased as dietary fat sources have shifted toward polyunsaturated seed oils such as soybean oil. We have conducted a systematic literature review of studies reporting the concentration of LA in subcutaneous adipose tissue of US cohorts. Our results indicate that adipose tissue LA has increased by 136% over the last half century and that this increase is highly correlated with an increase in dietary LA intake over the same period of time. [link]
  • [T]he patient began on some but not all of the system: (1) she eliminated all simple carbohydrates, leading to a weight loss of 20 pounds; (2) she eliminated gluten and processed food from her diet, and increased vegetables, fruits, and non-farmed fish; (3) in order to reduce stress, she began yoga, and ultimately became a yoga instructor; (4) as a second measure to reduce the stress of her job, she began to meditate for 20 minutes twice per day; (5) she took melatonin 0.5mg po qhs; (6) she increased her sleep from 4-5 hours per night to 7-8 hours per night; (7) she took methylcobalamin 1mg each day; (8) she took vitamin D3 2000IU each day; (9) she took fish oil 2000mg each day; (10) she took CoQ10 200mg each day; (11) she optimized her oral hygiene using an electric flosser and electric toothbrush; (12) following discussion with her primary care provider, she reinstated HRT (hormone replacement therapy) that had been discontinued following the WHI report in 2002; (13) she fasted for a minimum of 12 hours between dinner and breakfast, and for a minimum of three hours between dinner and bedtime; (14) she exercised for a minimum of 30 minutes, 4-6 days per week. [NLM]
  • While it is acknowledged that the DSM-IV is not a nosology based on etiology, the implicit premise of the chemical imbalance perspective is that certain DSM-IV -defined " disorders" are lacking a given neurotransmitter in a particular part of the brain that is somehow related to the disorder. In the gray area are expansions of the basic illness with so-called spectrum disorders. Presumably, there is a genetic or biological link that explains the usefulness of certain medications across the entire spectrum of the related disorders. The weakness of this formulation is that medications such as the selective serotonin reuptake inhibitors (SSRIs) are proving efficacious in so many Axis I and Axis II disorders that to consider all of these forms of misery as part of the same biological spectrum is stretching credulity. Occam's razor demands a more parsimonious approach. I would argue that there are certain psychological effects of medications that make them useful in a variety of DSM-IV -defined disorders not because they are necessarily correcting a chemical imbalance, but because the psychological effect is useful. Rat pups that are isolated from their mother and littermates produce ultrasonic sounds that are indicative of stress. SSRIs reduce these sounds (Oliver, 1994). Is a chemical imbalance being corrected? I doubt it. [Psychiatric Times]
  • The forge is designed to use raw wood as a fuel but it is actually the partially combusted wood--charcoal--that supplies the intense heat as it completes combustion. You can make the charcoal ahead, or do as we do and just use raw wood. [link]
  • I also introduced an intermediate category between constant flux and permanent stasis: the symbiosis, a term I borrowed from the great evolutionary biologist Lynn Margulis. I hypothesized that pretty much any object will experience five or six symbioses during its lifespan: irreversible changes that moves the object to a new stage of existence before it eventually stabilizes, rises, declines, and dies. This has some interesting corollaries. One of the ways we can be sure that the Dutch East India Company is a real object is because it has many early failures: a failure, as long as it does not destroy us, means that we are something real that does not yet fit easily into our environment. Something that immediately succeeds, by contrast, is often just a spare part for something that already exists perfectly well. Notice that important intellectuals often had a very rough time as students, while the "teacher's pet" often has a thoroughly mediocre post-school career. I think the symbiosis model is a powerful tool, one that –among other things– allows us to determine that a great number of supposed objects aren't real objects at all. [Hong Kong Review of Books]
  • At 8:22 a.m., the divers raised Sonar Technician 3rd Class Ngoc "Tan" Truong Huynh, 25, of Oakville, Connecticut. He was found beneath a television, though the divers assessed that he had not been trapped there. [link]
  • The allegedly-firm aircraft order from Emirates was set to keep the A380 production line open until 2029. By then, Airbus hopes gate congestion may make planes like the A380 capable of carrying massive amounts of passengers more desirable. Airbus claims, 80 percent of today's 58 megacities with more than 50,000 long-haul travelers a day already have significant airport congestion. By 2036 there will be 95 such megacity hubs, presumably with congestion issues as well. Not surprisingly, the Airbus exec tasked with marketing the A380, Frank Vermiere, says the cure for such congestion is having the A380 fly to such gate-limited destinations. [Forbes]
  • "They have his soul, who have his bonds," observed Jonathan Swift. This has been truth for thousands of years, and it still is truth today. How could any creditor hold anything of such value, if my bonds that I sold him are essentially worthless, and I can simply print more dollars to pay my debts when I have the need? This is something fundamental to money and debt, though I've come to increasingly understand that it's not broadly understood. Debt is purchased by someone with money, and that someone purchases that debt only if he believes that value will be derived by the purchase. [American Thinker]
  • I've got a few hundred photos of vacant lots where homes and businesses used to be. The vestiges of steps, curb cuts, and garden retaining walls still linger as a reminder that people used to live here. How long do you think it takes for an oak tree to grow in the middle of a driveway? How long ago do you think the buildings remained empty and rotting before they disappeared entirely? How long before that do you think the buildings limped along in a halfway habitable condition? Notice the grass is cut. That's part of a city policy that fines property owners if the vegetation is more than six inches high. Glad they're on top of that. We wouldn't want things looking seedy now would we? We need to keep up appearances. Scattered throughout the neighborhood are remnants of what used to be here. Grand buildings once dominated the landscape. Poor people didn't build these homes and churches. Somehow a few have persisted against all odds. They're magnificent. [Granola Shotgun]
  • You might think that the proposed State of Jefferson might solve problems for people like my neighbor – or myself – looking for lebensraum. But it's not that simple. I have friends in a distant county who own a 31 acre parcel in rolling hill country. Their neighbors are continually at war with them over every imaginable perceived slight and incursion. It appears that the people who self select in to a remote lifestyle far from the unwashed masses of city folk are hyper sensitive to just about everything anyone ever does anywhere near them. No amount of physical space can solve that dilemma. [Granola Shotgun]
  • Suppose that a dystopian science fiction novel published in the 1950s had imagined a city in which fabulously rich people lived in new gleaming towers, getting marijuana delivered to them by runners on electric skateboards. The rich people who work stroll on sidewalks that are half covered in tents in which the "homeless" (but not "tentless") reside. When they get to work they're in a bullpen that is packed tighter than a commodities trading pit. If they need to make a phone call while at work they'll duck into a soundproof transparent pod. People who read a book like that circa 1950 would have said "This author has a great imagination, but none of this could ever happen. Even in the Great Depression people didn't simply pitch tents on downtown sidewalks. And an employer wouldn't have valuable workers distracted by noise and crowding." [Phil G]
  • Los Angeles architect Tim Smith was sitting on a Hawaiian beach, reading through the latest building code, as one does, when he noticed that it classified wood treated with fire retardant as noncombustible. That made wood eligible, he realized, for a building category—originally known as "ordinary masonry construction" but long since amended to require only that outer walls be made entirely of noncombustible material—that allowed for five stories with sprinklers. [Bloomberg]
  • The waterproof breathable concept is not new, and in the late 1970's GoreTex waterproof breathable clothing appeared on the market. Today there are many iterations of waterproof breathable clothing, the most popular are GoreTex and the more breathable eVent, not to mention dozens of proprietary twists on the subject. I have quite a bit of experience with these and the bottom line is: A waterproof breathable jacket will leak in prolonged rain and you will get soaked on the inside from perspiration. [link]
  • There is this odd misnomer amongst generalists that a trade war is bad for shipping. Maybe it is bad for containerships (though rates have not seen much impact yet), but generally speaking, trade wars are good for shipping. How do US soybeans get to China? They get transported to Brazil, offloaded, reloaded and then transported to China as Brazilian beans. All of this means more ton-miles and more time tied up in port. Almost by definition, a trade war is going to be bullish. It disrupts existing trade routes that operate at maximum economic efficiency and instead inserts government mandated inefficiency. In the end, products will be shipped to where they’re needed—it will just involve more ton-miles and more idling in ports. As we enter the era of strongmen (as my friends at Capitalist Exploits have noted many times), I suspect that there will be more political grandstanding and less financial logic in terms of arbitrary trade restrictions and subsidies. This will almost always increase total ton-miles. An increase in ton-miles is bullish for shipping rates. Absolute quantities of GDP and global trade aren’t the metrics that are relevant. [AiC]
  • The two courts spent less than two pages describing a result that was obvious to them, but it took us two years of uncertainty and cost to get there. Federal court litigation doesn't make anything easy. Even if Blackbird had won the case, it is not clear they would have been able to collect significant damages. Our allegedly infringing use was not a product or feature that we charged for or made money from – it was essentially posting interstitial messages for various errors. Even though we were able to win this case early in the legal process and keep our costs as low as possible, it's possible we spent more money resolving this matter than Blackbird would have been able to collect from us after trial. This is the dysfunction that makes patent trolling possible. It is why the option for a quick settlement, in the short term, is always so appealing to parties sued by patent trolls. [link]
  • The basketball team quickly left to occupy an even larger more expensive $250 million publicly funded stadium down the road. There's a reason these projects get built. It's a big pie. Lots of important people get a slice: engineering firms, construction companies, concrete and steel suppliers, the banks that cobble together the financing packages and float the municipal bonds... And since the costs are widely distributed and stretched out over many years in a nebulous fashion well connected business leaders lobby hard for these silver bullet projects. They really do create jobs and generate economic activity in the short term. I never interpret these dynamics as corruption. It's human nature. Who doesn't want a big upfront bonus right now in exchange for some vague bill that will arrive years in the future – especially if you personally don't even live in the district that's responsible for the debt repayment schedule? [Granola Shotgun]
  • Lennar (LEN): As the lumber market dropped from $650 to $330 per 1,000 board feet in the fall of 2018, we aggressively renegotiated lumber pricing for our fourth quarter starts. We'll begin to see the benefits of these lower prices with deliveries in – late in the first quarter and receive the full benefit of this lower pricing in the second half of the year. [Cinnamond]
  • This study found that push-up capacity was inversely associated with 10-year risk of CVD events among men aged 21 to 66 years. Thus, push-up capacity, a simple, no-cost measure, may provide a surrogate estimate of functional status among middle-aged men. Participants able to perform 11 or more push-ups at baseline had significantly reduced risk of subsequent CVD events. To our knowledge, this is the first study to report the inverse relationship between push-up capacity at baseline and subsequent CVD-related outcomes in an occupationally active male cohort. Previous cross-sectional studies have incorporated push-ups in the assessment of muscular fitness and its correlation with cardiometabolic risk markers. In those studies, the authors found that a higher level of muscular strength was associated with lower cardiometabolic risk independent of cardiorespiratory fitness in the cohorts observed. Muscular strength has been shown to have an independent protective effect for all-cause mortality and hypertension in healthy males and is inversely associated with metabolic syndrome incidence and prevalence. [JAMA]

Monday, February 11, 2019

February 11th Links

  • Birding is a life-long lesson in biology, distribution and geography, and keeping a list of all the birds I have seen in my life pushes me to find new places and habitats on the road. A birdwatcher learns to see in a very different way than non-birders; making anybody who pursues birds on the road much more likely to observe things about a place than those who don't. I talk about this in my notes from the Bahia Palace in Marrakech, Morocco. [Notes from the Road]
  • A superior man, in regard to what he does not know, shows a cautious reserve. If names be not correct, language is not in accordance with the truth of things. If language be not in accordance with the truth of things, affairs cannot be carried on to success. When affairs cannot be carried on to success, proprieties and music do not flourish. When proprieties and music do not flourish, punishments will not be properly awarded. When punishments are not properly awarded, the people do not know how to move hand or foot. Therefore a superior man considers it necessary that the names he uses may be spoken appropriately, and also that what he speaks may be carried out appropriately. What the superior man requires is just that in his words there may be nothing incorrect. [Confucius]
  • Let's say you have a family and you love performance cars, but you can't have two cars. You need one car that'll do it all. That'll take the kids to school, the family to dinner, get stuff from Home Depot, and something that's fun to drive. You have very few options that'll tick all those boxes. Sure, you could buy a fast SUV or crossover, but do you really want to do that? Everyone has crossovers these days, and they just aren't that much fun to drive no matter how quick they are. A fast sedan might work, but not if you want to haul a lot of people and things. No matter, Mercedes has the solution for you with this, the E63 S Wagon. [Road And Track]
  • The difficulty people have with getting rid of items is so tough to overcome that she has to set a high bar for these clients to merit keeping them. Sparks joy might as well be top five. What is your top five of anything? Keep those. Junk the rest. It is junk. Kondo comes in and brings order to these homes filled with junk. The ritual matters. This is basic maintenance of a home, yet the rich and poor alike of California all fail to keep orderly homes. If you watch this, you will see pricey looking homes cluttered with kitsch and crap. There are entire rooms of shoes like Imelda Marcos. [American Sun]
  • On ZH one finds a catechism of victimhood where it's "the Fed," "the Banksters," etc. who choreograph the entire macabre dance. Just this day one comment stated that low interest rates drove people to load up on debt. That is, of course, irrational. Interest rates are set by debt PRICES. Interest rates are thus simply a product of the meeting between people who want to buy debt and people willing to go into debt. It's simply another way to state a price. And what did low rates tell us? That the desire to buy other people's IOU's was nearly insatiable for a time. Is this not, like enthusiasm for foreigners, migrants, immivaders, and political promises hither and yon, simply an expression of giddy optimism and openness? It sure seems like it to me. [K]
  • There's a sort of prisoner's dilemma now facing a federal judge in the ongoing Harvard race discrimination court battle. As you know, the prisoner's dilemma is a game theory that suggests self-interest will compel two confederates to betray each other when cooperation would benefit their mutual self-interests. For those unfamiliar with the court proceeding, in it plaintiffs allege that Harvard's diversity regime is racially discriminatory against Asians rather than merely the whites against whom it was intended to be racially discriminatory. As a result a race other than whites was denied legal protections, which runs counter to the country's principles. [K]
  • The first indictment of a war criminal is losing the war. Some generals understand this innately and so endeavor to keep their morality pristine by plowing over as many corpses as their infantry can burn. By this measure William Tecumseh Sherman may have been the most ethical fighter of his age. One of his most famous assertions was that War is Hell. It was a quote he strived to uphold. [K]
  • Ethereum sucks. Either the devs are too incompetent to make the code work or they are being bribed to forestall upgrades; either way is bad news for Ethereum. This bodes poorly for future upgrades such as Caspar and Sharding. Ethereum will continue to fall relative to Bitcoin and other coins as people lose faith in the project. A trade that is 'short' Ethereum and long a combination Bitcoin, Tron, Stellar, Monero, Ripple should be successful. [Grey Enlightenment]
  • Remove TV, news and social media from your daily routine or limit them each to five minutes per day. Then when you feel the inevitable pull to check in, use this as a "keystone habit" to grab your paper to-do list and start working on something from the list – even if it's just ten push-ups, or picking up an old-fashioned paper book you are working through. [MMM]
  • Before the bear market in 2000 began, Lancaster Colony was trading at 13x earnings and was priced as a value stock. Given its relatively low valuation, Lancaster Colony's stock provided investors with a healthy margin of safety heading into the bear market of 2000-2002. In fact, its stock was so attractively priced, it actually increased 58% while the Russell 2000 declined -44% from the 2000 peak to 2002 trough! During this period, owning Lancaster Colony and quality worked magnificently. Currently trading at 35x earnings, I no longer consider Lancaster Colony a value stock. And that of course is the big difference between high-quality this cycle and when quality worked in the past – valuation! In the case of Lancaster Colony, the difference between 13x and 35x earnings is considerable. From a risk management perspective, it's the difference between swimming with a life jacket and a bag of cement. [Cinnamond]
  • Assuming the current market cycle's peak is behind us, it appears the 2-year yield that caused something in the financial markets to crack was approximately 2.75%. Not long after stocks began to fall, the 2-year yield peaked at 2.98% (November 8, 2018). It's not exactly a high yield for a cycle peak, but one needs to keep things in perspective. The fed funds rate was between 0-1% for nine years! A tremendous amount of debt accumulation, asset inflation, and capital allocation occurred while rates were pegged near 0%. As such, it didn't take many rate hikes (along with QT) to cause investors to revise their "lower for longer" valuation assumption. [Cinnamond]
  • We were too tired to think much about it that evening, but the next day we – Brad and the two remaining members of the coding team – had a meeting. We talked about what we had. Blake gave it its name: Shiri's Scissor. In some dead language, scissor shares a root with schism. A scissor is a schism-er, a schism-creator. And that was what we had. We were going to pivot from online advertising to superweapons. We would call the Pentagon. Tell them we had a program that could make people hate each other. Was this ethical? We were in online ads; we would sell our grandmothers to Somali slavers if we thought it would get us clicks. That horse had left the barn a long time ago. It's hard to just call up the Pentagon and tell them you have a superweapon. Even in Silicon Valley, they don't believe you right away. But Brad called in favors from his friends, and about a week after David and Shiri got fired, we had a colonel from DARPA standing in the meeting room, asking what the hell we thought was so important. [SSC]
  • The representativeness heuristic (RH) has been proposed to be at the root of several types of biases in judgment. In this project, we ask whether the RH is relevant in two kinds of choices in the context of gambling. Specifically, in a field experiment with naturalistic stimuli and a potentially extremely high monetary pay-out, we give each of our subjects a choice between a lottery ticket with a random-looking number sequence and a ticket with a patterned sequence; we subsequently offer them a small cash bonus if they switch to the other ticket. In the second task, we investigate the gambler's fallacy, asking subjects what they believe the outcome of a fourth coin toss after a sequence of three identical outcomes will be. We find that most subjects prefer "random" sequences, and that approximately half believe in dependence between subsequent coin tosses. There is no correlation, though, between the initial choice of the lottery ticket and the prediction of the coin toss. Nonetheless, subjects who have a strong preference for certain number combinations (i.e., subjects who are willing to forgo the cash bonus and remain with their initial choice) also tend to predict a specific outcome (in particular a reversal, corresponding to the gambler's fallacy) in the coin task. [link]
  • I see Ferraris drive by and I think, "That's neat." I see a W8 AWD 6sp Passat wagon, snap my neck hard enough to induce whiplash, and think, "WHOA this guy is a glutton for punishment and/or knows his stuff. How can I be friends with him?" [Opposite Lock]
  • In 2010 or so, VW had exactly no – zero, zilch, nada – new W8 engines in stock (at least in the US warehouses). When they were available, they listed out at $24,000 for a long-block. We replaced none of them out of warranty. [Jalopnik]
  • Yes, that's the friggin' trunk hinge, not a piece of sculpture. Those hinges were made by Campagnolo, the bicycle company. They commissioned an Italian bike company as a vendor to make just the hinges! I had not seen anything like this before and have not seen anything like it since. [Jalopnik]

Monday, February 4, 2019

February 4th Links

  • Maybe you've heard of Buran, the Soviet space shuttle. But maybe you didn't know the story behind why it was built. NASA screwed up the space shuttle design process so completely that it was a bad match for pretty much all of its stated goals. The Soviets figured the Americans couldn't really be that stupid, and so the shuttle project must just be a cover story for some amazing secret military capability America expected from having a space plane. They decided to build an exact replica so that after the amazing secret military capability was revealed, they could do whatever it was too. [SSC]
  • Here is an anecdote about the genius Von Neumann: Neumann married twice. He married Mariette Kövesi in 1930. When he proposed to her, he was incapable of expressing anything beyond "You and I might be able to have some fun together, seeing as how we both like to drink." [GNXP]
  • The only explanation for this fact is that humans in societies with a long history of agriculture have developed genetic adaptations to digest alcohol, while people with shorter histories of agriculture have not. This doesn't mean that people slowly developed an adaptation while merrily drinking their wine. No, that means that every single alcoholic in France or Italy who couldn't hold their liquor died, while the few (at the beginning *very* few) who didn't become addicted were able to survive and leave descendants. I have no idea what percentage of the population of early farmers in Southern Europe had to die in order for widespread adaptation to wine to spread, but given how Amerindians hold their liquor, it may have been in the order of 80%. Legalizing drugs would start the process all over again. Sure, some people can get high on coke or meth and still be productive. The vast majority can't. If we legalized coke and meth, we would be basically killing off the 80% of the population who would get addicted and waste away. Is that a reasonable price to pay for "liberty"? [Shovel]
  • It is a bad day for any FBO when a piston-powered aircraft shows up and that's especially true at Teterboro (do you want to sell 15 gallons of 100LL to Joe CFI in the flight school Cessna or 2000 gallons of jet fuel to Gulfstream Al (Gore) or the Clinton Foundation?). Meridian has always been friendly and helpful, even keeping midget chocks around for those of us who fly Cirrus or similar. This was a business trip and my departure was set for Official Polar Vortex Panic Day. It was 3 degrees overnight on the ramp and warmed up only to about 12 by mid-day. Starting an aluminum aircraft engine after it has been cold-soaked does a lot of damage. Meridian kept the plane in their warm maintenance hangar overnight and until our 2 pm departure. It is ground-support folks like this that make personal aviation practical in the U.S. [Phil G]
  • Never buy cast iron anvils! Buy only steel anvils or anvils with a steel face and wrought iron body - do NOT buy cast iron anvils. Steel anvils are a solid homogenous block of steel which reflect nearly all of the force of the hammer blows back into the work being forged. Wrought iron anvils with steel faces work as well as steel anvils. Quick test for determining if an anvil is cast iron or steel. The hammer bounce test is the easiest way determine if an anvil is cast iron or steel. Bouncing a hammer off the center of the face of the steel anvils, the hammer will bounce back up almost as high as it was dropped. Bouncing a hammer off the middle of a cast iron anvil, the hammer will bounce only about half as high. Steel anvils reflect hammer blows in a way that cast iron cannot. [link]
  • Blacksmithing projects that use stock any larger than 1/4" will need a serious unit upon which to hammer... whatever you do, avoid the imported ones that experts derisively refer to as "anvil-shaped objects." They claim to be steel, but they almost never are, and when a real craftsman works with them for a while, it's an easy lie to debunk. [link]
  • Working out is another form of conspicuous consumption: Affluent people do it and, especially if muscular exertion is already part of their job, lower-class people tend to avoid it. There are exceptions like the working-class male body builders—"meatballs"— who can be found in places like Gold's Gym, as well as the lower-class women who attempt to shed pounds at Curves (a descendant of the women's-only gym where I started my workout career). By and large, though, working out is a reliable indicator of social status. [Phil G]
  • Our business may be adversely impacted by helium shortages. Although not used in the actual manufacture of our products, helium gas is currently used to inflate the majority of our metallic balloons. We rely upon the exploration and refining of natural gas to ensure adequate supplies of helium as helium is a by-product of the natural gas production process. Helium shortages can adversely impact our financial performance. [PRCY]
  • "To get more cobalt you have to mine more nickel and copper, and to get more helium, you need more big, conventional oil and gas projects that happen to have a helium component. But frankly, most of those mega oil and gas projects aren't economic anymore because of the advent of shale gas," says Nicholas Snyder, chairman, CEO and founder of privately held North American Helium. [Northern Miner]
  • Stanley Kubrick read an article Schelling wrote that included a description of the Peter George novel Red Alert, and conversations between Kubrick, Schelling, and George eventually led to the 1964 movie Dr. Strangelove or: How I Learned to Stop Worrying and Love the Bomb. [Wiki]
  • A couple of years ago, Jackie was telling me about a patient. In passing, she said something like, Of course he'd been smoking pot his whole life. Of course? I said. Yes, they all smoke. So marijuana causes schizophrenia? [link]

Monday, January 28, 2019

January 28th Links

  • Have the idle rich replaced the working rich at the top of the U.S. income distribution? Using tax data linking 11 million firms to their owners, this paper finds that entrepreneurs who actively manage their firms are key for top income inequality. Most top income is non-wage income, a primary source of which is private business profit. These profits accrue to working-age owners of closely-held, mid-market firms in skill-intensive industries. Private business profit falls by three-quarters after owner retirement or premature death. Classifying three-quarters of private business profit as human capital income, we find that most top earners are working rich: they derive most of their income from human capital, not physical or financial capital. The human capital income of private business owners exceeds top wage income and top public equity income. Growth in private business profit is explained by both rising productivity and a rising share of value added accruing to owners. [Eric Zwick]
  • Over 140,000 pass-through owners with over $1.6M in income. That is the threshold for the top 0.1%. Is there any significant amount of workers in that bracket who are not pass-through owners? I guess a few tens of thousands of pro athletes, artists, public executives and bankers? I kind of new this bracket of people was a substantial untold part of the top 0.1%, but had no idea it was such an overwhelming percentage. [Marginal Revolution]
  • More than 130 years after their debut at the ceremonial entrance to the University of Notre Dame's Main Building, murals illustrating the life of Christopher Columbus will soon be covered up. To many, the 12 murals were "blind to the consequences of Columbus' voyage," university President Rev. John Jenkins said in a letter Sunday announcing his decision. At their worst? "Demeaning." [CNN]
  • The fact that people are going to college for vocational reasons goes completely against the liberal ideal of college as a humanist place where minds are expanded, and you can self-actualize by studying the world's greatest works of literature, philosophy, etc. What college students really want is to major in something like plumbing or HVAC, but less blue-collar. [LoTB]
  • The range of these devices varies with topography. In a perfectly flat landscape with no obstructions (a corn field in Nebraska – or across San Francisco Bay) it could reach about five miles. In hilly terrain or a city with lots of buildings it might be as little as half a mile. I live in the center of San Francisco which is seven miles wide. There are existing goTennas all around and they daisy chain encrypted text messages from one to another until the texts reach their intended destination. It's possible to communicate across the city in this completely mobile ad hoc network – or MANET – without ever interacting with a cell tower or WiFi. And unlike established infrastructure that becomes slow or stops entirely when too many users pile on, the Mesh actually gets better the more people join in. [Granola Shotgun]
  • I don't see the Chinese government allowing their economy to simply unravel. In the longer run, the economy will have to shift towards a more services-oriented economy—however, this take time. Short term, the Chinese will go with Plan A, the only plan they seem to know—bridges to nowhere funded by risky loans to dubious SOEs, facilitated by lax government oversight and money printing. How do you play this? You own the stuff that goes into this infrastructure; commodities. You want coking coal, iron ore, copper and all the other components of heavy infrastructure. You want natural gas as LNG which will be the preferred fuel-source for this growth. The switch from coal to natural gas electrification certainly qualifies as a giant make-work program—with the added benefit that cleaner air means fewer citizen protests. Finally, you want to own the supply chain—the pipelines, rail and boats that will transport all this stuff. [AiC]
  • Cons of Boeing: All real engineering (in my group) was outsourced to subcontractors. LOTS of dead wood. Very, very, very specialized. I know people who spent their entire careers on hydraulic brackets. Or landing gear actuators. Or whatever. In a massive company, it pays to specialize. As a young engineer, I hated the lack of variability. Frustratingly flat pay structure & slow promotional opportunities. [Bogleheads]
  • He was, in the best sense of the word (truly the best to an interviewer anxious to learn the innermost secrets of political maneuverings), totally amoral. He cared for nothing. Once, on a morning that we had an interview scheduled, I picked up the Washington Post over breakfast in my hotel room to see his name in big headlines and read a huge story about his role in a truly sordid Washington scandal. I expected to find a broken, or at least a dejected, man when I was ushered into his office. Instead, he gave me a big grin—he had the most infectious grin—and, when I didn't bring up the subject of the story but he could tell it was on my mind, he said, "It's just free advertising, kid, free advertising. Just as long as they spell my name right." [Robert Caro]
  • You get a Keurig, and you hate it, but Vine keeps sending K-cups, and so you keep drinking them. "Eventually, I think Vine caught on that I wanted a Nespresso from my search history," she wrote, "and I was finally offered a Nespresso." [NY Times]
  • Let me start off by saying: I love the car. Buying a Tesla seemed like the logical step at that time. But honestly I am regretting the fact that I did not do due diligence. I am entirely to blame but would still like to share my experience of 6 weeks with the Model 3. I work in a different city about 75 miles away from home. Mostly highway miles. So I felt Tesla might be perfect for the $150 mile round trip. Now I had heard that in cold weather, you might get 10-20% less from battery. So I got the long range. I figured that even if I use 90 battery miles one way, I'm good. Boy was I wrong. First of all they recommend not to "full charge" battery because it reduces battery life. I still charged above recommended level, at 293 miles overnight. Temperature was -5 today morning when I left for work. By the time I reached work, I was down to 140 battery miles from 293! Which means that the car consumed 153 battery miles to cover 75 miles! When I decided to leave work in the evening, the battery miles had further decreased from 140 to 127 miles due to the cold. Now I knew there is no way I could reach home with 127 battery miles. So I decided to head to local supercharger. Here's the next kicker. I was hoping to charge at 480 miles/hr. But due to extreme cold, it won't even start charging for 20 min after plugging despite of keeping heat running per Tesla's recommendations. Finally, the car started charging at super slow rate. Gradually picked up to 80 miles/hr. I was annoyed. I wanted to get home. I thought this is not normal. Called Tesla support. They told me that in fact for the current temperature, charging speed I am getting is fine! Seriously, 80 mph supercharging speed is fine?! After 2 hours at the supercharger, I finally left for home. [Reddit]
  • Mercedes is somehow getting people to part with $130,000 for an experience that I'd liken to an old Jeep with a 454 V8 greased-and-rammed into the engine bay. Oh, hell yeah it rips if you jump on the throttle. But it can't corner safely, it's not comfortable, and just about everyone is laughing at you or giving you the finger when you roll by. The G 63 does one thing really, really well; tells the world you're fuckin' rich and superior to everyone in earshot of its four side-exiting exhaust tips. Yeah, nobody is happy to see a G 63 AMG. Peace-loving country folk shake their heads in disappointment, city traffic honks mercilessly and figures you've paid for your vehicle by stepping on the backs of the working man. [Jalopnik]
  • Legalization advocates have squelched discussion of the serious mental health risks of marijuana and THC, the chemical responsible for the drug's psychoactive effects. As I have seen firsthand in writing a book about cannabis, anyone who raises those concerns may be mocked as a modern-day believer in "Reefer Madness," the notorious 1936 movie that portrays young people descending into insanity and violence after smoking marijuana. A strange disconnect has resulted. With large studies in peer-reviewed journals showing that marijuana increases the risk of psychosis and schizophrenia, the scientific literature around the drug is far more negative than it was 20 years ago. Comparing two major reports from the National Academy of Medicine, the nonprofit group that advises the federal government on health and medicine, makes the difference clear. [NY Times]
  • To set the stage, the specific energy of gasoline—measured in kWh per kg, for instance—is about 400 times higher than that of a lead-acid battery, and about 200 times better than the Lithium-ion battery in the Chevrolet Volt. We should not expect batteries to rival the energy density delivered by our beloved fossil fuels—ever. [...] Rephrasing: the physics we currently understand is not sufficient to deliver the kind of battery we need to make the future work without fossil fuels. Red flags go up for me when it is our understanding of physics rather than practical engineering challenges standing in the way—as serious as the latter can be. Physics limitations instantly present a much taller order to overcome. [Do The Math]
  • From the data, I see that the battery capacity is at about 85% of its original condition. While extrapolation is highly risky, it would seem that I can expect zero capacity on the scale of six years, based on its accelerating decline. At this point, we have put about 500 full-cycle-equivalent charges on the battery in about 700 charge events (just shy of one per day, typically about 70% depth). So perhaps it's not surprising: few batteries can withstand more than 1–2000 charge cycles before giving out. [Do The Math]
  • Table 2 describes the ED evaluation and injury characteristics of patients presenting with injuries associated with standing electric scooter use. The majority of patients (200 [80.3%]) received imaging in the ED, with the most common imaging studies being radiographs or computed tomography of the distal upper extremity (36.5%), computed tomography of the head (29.7%), and radiographs or computed tomography of the distal lower extremity (20.1%). A total of 8.4% of patients underwent a trauma-protocol computed tomography scan (head, cervical spine, chest, abdomen, and pelvis), indicating high concern for serious injury. Two hundred thirty-four patients (94.0%) were discharged home from the ED. [JAMA]

Saturday, January 26, 2019

W. A. Mozart - Die Zauberflöte, K. 620: Ouverture

The 263rd birthday of Mozart tomorrow.

Wednesday, January 23, 2019

Why Doesn't Tesla Raise Capital?

The market capitalization of Tesla is now $49 billion - in December it was as high as $65 billion. Tesla still has not raised capital, even though it used to tap the capital markets multiple times per year. Also, I suspect that if Musk could raise $5 or 10 billion (even now at the lower valuation) the stock would probably go UP.

He could instill so much hope with cash: avoid layoffs, pay off current liabilities, pay off some long-term debt, build more supercharger locations and add supercharger stalls, keep supercharging free, get people their repair parts, get vehicle buyers their registrations, poach some autonomous vehicle people from Uber or Google, put LIDAR in new models and make noise about gathering that data, make some real prototypes of a new model and have them out getting road tested and photographed, hire enough customer service people to keep the email inbox from filling up, and expand the service network.

Being well capitalized is essential to maintaining appearances as a growth company. And I think that Musk knows this. It's embarrassing that he doesn't have autonomous test vehicle fleets cruising the streets like Waymo or Uber. At a $65 billion valuation there ought to be tons of cash to support hobby experiments, each of which could then plug into a sum-of-parts megabullish valuation case at $10-50 billion valuations.

Instead, we are now seeing stingy cost cutting. They just raised prices on supercharging, initially by about a third. The normal VC/startup model (which is how Musk operates) would be to undercharge or give away something like that - to drive sales growth - and pay for it with expensive equity.

The higher prices may not even be a "gouge" - the superchargers cost more than just their marginal cost of electricity to build, install, and maintain. It's amazing to think - the charging process is so slow (especially in cold weather), that the throughput / utilization of the stations is very low, and so the breakeven cost (full cycle for the stations and power) per kWh might be as expensive as gasoline!

The existing auto manufacturers aren't as dumb as Silicon Valley people think - pure battery EVs just don’t make economic sense! To avoid range anxiety, you need a huge amount of heavy, expensive batteries that lower efficiency.

Smaller vehicles make sense, but we have stupid tax policy that encourages gigantic and fuel inefficient vehicles. Hybrid vehicles make sense. Diesel engines - like the great VW TDIs that the government crushed - make sense.

Monday, January 21, 2019

Long Weekend Links

  • Modern Monetary Theory is the theoretical justification for the economic policies of every potential Democratic presidential candidate in 2020. Because with MMT, you CAN have it all. You can pay for wars without end. You can pay for universal single-payer healthcare. You can pay for everyone to go to college. You can pay for a universal basic income. I mean... why not? A caring sovereign's gotta do what a caring sovereign's gotta do. So yeah, you're going to hear a lot more about Modern Monetary Theory. And you're almost certainly going to get it. [Epsilon Theory]
  • You could be in a Japanese daydream of what America is, or you could be lost in a pocket of fantasy where an America of yore has remained intact. [Bon Appetit]
  • What's the lifetime value of a Netflix customer and how much does Netflix spend to acquire her? The company doesn't say. What's the share of people who quit Netflix every month, and how is that trending? Netflix doesn't say. What's the average time subscribers spend watching Netflix, and what are the company's costs for each hour of programming? The company doesn't say. Those metrics would help investors assess whether Netflix's strategy is working — far more than simple growth of new people coming on board to Netflix while it's engaged in wild spending. [Bloomberg]
  • For years, black Lululemon yoga pants and Uggs were the axis of the mom uniform, until the media cruelly shamed women out of them. Then last year, a pair of deliberately beaten-up-looking $500 Golden Goose sneakers and what is known as simply the "Amazon jacket," a $130 parka, was seen on moms in Chappaqua and Short Hills alike. [NY Times]
  • I certainly wouldn't want to own a company with a $55-billion market cap and $12 billion in debt if it had a CEO who can't legally deny having committed securities fraud who then put out forward guidance modifying the word 'profit' with the words 'hopefully, great difficulty, luck, target, and tiny.' [LA Times]
  • As someone too old and unhip to have a beard, I've been a loyal Gillette customer for decades. Now it seems that there is a virtue offset bonus. Gillette will take some of its spectacular gross margin on every blade and use it to educate un-woke men on how to behave. What about for the guys who aren't happy to support Gillette's new crusade? Can they buy a blade system that is actually as good or better? If so, what is it and who makes it? [Phil G]
  • In general, English is rather lacking in family words. For example, we have "siblings" as a somewhat rare but convenient word for brothers and sisters, but we don't have any similar word for nephews and nieces. My impression is that the English tended to less interested in extended families than just about anybody, and not even very interested in them: e.g., the rather horrifying English goal is to be rich enough to pack your children off to boarding school when they reach 7 or 8. [Sailer]
  • I learned from a patent litigator (one of the perks of being an expert witness is talking to these smart folks!) that the U.S. Patent and Trademark Office is going full steam ahead. They have money left over from the previous fiscal year so they're good through February and, should those funds run out, the Patent Trial and Appeal Board will declare that the folks who accept filings are "essential". Ergo, we live in a country where we can still fight about patents, but we can't visit the Smithsonian exhibits that celebrate our patent system. [Phil G]
  • The actual measurement process was exceptionally clever. The primary measurement point, what Michelson called "Mount San Antonio" (today known as Lookout Mountain) was 22 miles away to the northeast. The light pulses sent from Mount Wilson to San Antonio were created by reflecting the arc light off a spinning, multifaceted mirror with either 8, 12 or 16 sides. The time it took a pulse of light to travel from Mount Wilson to Mount San Antonio and back to Mount Wilson (44 miles) was 0.00023 seconds. This happened to be the same amount of time it took a 16 faceted mirror, turning at 264 revolutions per second, to move one facet. When all was adjusted just so, the light pulse went out on one mirror facet and returned on the next one presenting what appeared to be a single image to the observer. [Tom Mahood]
  • That's right: the company that sells an astounding total of ten different and unique sport-utility vehicles across two brands says that putting a stick-shift into its $53,000 coupe would somehow damage the sales prospects of its $27,000 coupe. Wasn't it just a few years ago that Toyota was selling three separate Prius-branded vehicles with extremely similar drivetrains, all priced within a few grand? [Jack Baruth]
  • Perfectly reasonable hypotheses get attacked as conspiracy theories, derailing the discussion into arguments over when you're allowed to use the phrase. These arguments are surprisingly tough. Which of the following do you think should be classified as "conspiracy theories"? Which ones are so deranged that people espousing them should be excluded from civilized discussion? [SSC]
  • Upon my first encounter it was clear to me that object oriented programming is something that appeals to algebraists. So if you're a programmer and found Design Patterns: Elements of Reusable Object-Oriented Software to be a revelation, it is highly likely that you lean towards algebra and eat your corn in neat rows. Going the other way, if the techniques described in On Lisp appeal, then you might be on the analytic side of the fence and eat your corn in spirals. This is particularly true if you found yourself agreeing with Paul Graham's thoughts in Why Arc Isn't Especially Object-Oriented. There was a period that I thought that the programming division might be as simple as functional versus object oriented. Then I encountered monads, and I learned that there were functional programmers who clearly were algebraists. (I know someone who got his PhD studying Haskell's type system. My prediction that he ate corn in rows was correct.) Going the other way I wouldn't be surprised that people who love what they can do with template metaprogramming in C++ lean towards analysis and eating corn in spirals. (I haven't tested the last guess at all, so take it with a grain of salt.) [Ben Tilly]