Election Night Links

• Ford's perspicacity in the 1880's formed the basis of what is now the Beaver Coal Corporation. His work of rounding up the lands comprised in its holdings was finished in 1891.…" The current internet website for Beaver Coal Company, Limited, under the  "About Us/History" tab,  provides confirmation:  "In 1889, Anthony Drexel, Logan Bullitt and J.P. Morgan, three prominent men from Philadelphia, PA, sent their land agent, Azel Ford, to Raleigh County, WV, to purchase approximately 50,000 acres of property in and around the Beckley area. The acquired property was later placed under the banner of Beaver Coal Corporation, the predecessor to Beaver Coal Company, Limited, …" The names of Mr. Bullitt's partners mentioned here will be familiar:  Anthony Drexel was a partner in his family's banking and investment company, Drexel & Co., in 1891 he founded Drexel Institute, now Drexel University; J. Pierpont Morgan was Drexel's protégé and partner who went on to develop another important corporate giant which today is known as J.P. Morgan and Chase. [William & Mary Libraries]
•  JD Vance was originally a product of the Obama-Chicago-Pritzker Democrat machine and that he was designed to be a Democrat Presidential candidate. JD Vance came out of the network which is now attacking him. Behind the scenes, all of these people know each other, and it's all intensely personal. He was supposed to be Bill Clinton 2.0, a moderate Democrat candidate. That's what the multiracial marriage was about. It was supposed to be a symbolic political marriage union between America's 2 key groups, America's past and America's future: the white working class (traditional Blue Dog Democrat Bill Clinton voters) and the immigrant Obama voter base (Usha Vance, as a credentialed second-generation immigrant brown woman who clerked for Supreme Court Chief Justice John Roberts, and as a woman who attended Cambridge and Yale Law School, was supposed to represent an aspirational rolemodel of an immigrant family rising to be an American elite). It was the Democrat media which promoted JD Vance. It was the Democrat media which promoted his book "Hillbilly Elegy" and turned it into a Netflix big budget film directed by Ron Howard and starring Amy Adams. [@ThomBrady5]
• The creatures! The creatures! Every sort on this earth, inching along, inching along, inching along, shafts of blue denim, inching along, blue denim legs, tight blue denim bottoms, blue denim buckled underneath ponderous guts, with T-shirts covering all but a bottommost bulge of tallow over the belt, denim pants ending midcalf with T-shirt to just above the knee with shirttail to mid-thigh with North Face jacket to just below the waist, miles of hurricane hair, so long it conceals the tiny texting keyboards held close to assisted breasts—to the tintinnabulation of aluminum walkers, the human tide carries us inch by inch toward a barrier of staggered metal detectors manned by a whole platoon of zookeepers whose word, we gather, is law. [Tom Wolfe]
• Stephen D’Ambrisi: Just a quick one. Most of my questions have been asked and answered, but just a quick follow-up on the TSMC announcement. Obviously, the ramp rate is a critical factor. But just given the commentary that TSMC's previously announced investment represented more than a gigawatt of demand. Can we use that prior $165 billion for greater than 1 gigawatt as like a rule of thumb for potential power demand from the incremental $100 billion? And just -- or if there's anything you could highlight that would potentially change the intensity per dollar of capital invested in this announcement versus prior announcements? Theodore Geisler: Yes, Steve, I think directionally, that's probably a fair general assumption, but we're still working through the details of what each fab will require as well as the ramp schedule of that. And certainly, the fabs do differ with respect to the type of chips they manufacture and the energy intensity. The more advanced the chips tends to be, the more energy intensive. And so I think there could be variation to that rule, and we'll be prepared to detail more about that when we finalize things with TSMC and hopefully able to put those details in the IRP as well. But for the purpose of just a general directional estimate, I think the way you outlined it may make sense. [Pinnacle West Capital Corp.]
• We study empirical scaling laws for language model performance on the cross-entropy loss. The loss scales as a power-law with model size, dataset size, and the amount of compute used for training, with some trends spanning more than seven orders of magnitude. Other architectural details such as network width or depth have minimal effects within a wide range. Simple equations govern the dependence of overfitting on model/dataset size and the dependence of training speed on model size. These relationships allow us to determine the optimal allocation of a fixed compute budget. Larger models are significantly more sample-efficient, such that optimally compute-efficient training involves training very large models on a relatively modest amount of data and stopping significantly before convergence. [Dario Amodei]
• Electric trucks made up 50.3% of all heavy trucks sold in China in September. That’s 33,100 electric big rigs in a single month, up 37% from a year ago, while the overall heavy-truck market shrank by 21%. And it’s showing up in the oil data. China’s diesel demand is on track to fall by about 230,000 barrels per day this year, and trucks running on batteries and natural gas are doing most of the work. [electrek]
• “Based lesbian” Katie Herzog, host of the Blocked and Reported podcast, has reported on Last Ditch since it opened. She describes it as a radical queer bar as opposed to a lesbian bar: lesbians drink beer, listen to NPR, and vote reliably Dem while radical queers do meth, live in their vans, and don’t vote at all. Western Massachusetts used to be the lesbian belt of the country, now it’s the “queer belt” of the country. Completely different things. Western Mass is home to old school lesbian colleges such as Smith and Mount Holyoke, and has always been an incubator for rich kid communism. [MAMA Magazine] 
• You are an election official who is not being closely monitored. There is a list of eligible voters in your precinct. Suppose it is a normal year, with relatively few absentee/mail ballots. You have hidden a genuine ballot box of pre-filled in ballots, with genuine ballot papers, that you know contains 1000 votes total, of which 97% are for your candidate. All registered voters in your precinct are on a list, and get crossed off as they come in. You wait until polls close, and you can see the list of everyone who hasn’t voted. You cross 1000 names off the list, and bring in your pre-filled in box of ballots, mingling it with the main ones. [Shylock Holmes] 
• Dauntism—a set of precepts about the best way to stock, shelve, and display books, the best way to cultivate and promote booksellers, and the best way to appeal to readers—has radiated out to the whole of the U.K. and now, through Barnes & Noble, to places such as Wichita and Skokie, nurturing a spirit of renaissance in the trade. “I think many of us can remember a time, not so long ago, when Barnes & Noble briefly appeared to be evolving into a glorified toy store,” Jordan Pavlin, the publisher of Knopf, told me. “Now they’re bookstores again.” [The New Yorker] 

Thursday Night Links

• The book of my enemy has been remaindered, and I am pleased. In vast quantities it has been remaindered. Like a van-load of counterfeit that has been seized and sits in piles in a police warehouse, my enemy’s much-praised effort sits in piles in the kind of bookshop where remaindering occurs. Great, square stacks of rejected books and, between them, aisles one passes down reflecting on life’s vanities. [Clive James]
• Kansas City’s favored quarter is immediately visible on nearly every kind of thematic map of the region you could draw. Indeed, it is one of the cleanest representations of the concept anywhere in the country. A clear wedge of high-income neighborhoods starts in the vicinity of the Country Club Plaza and stretches to the southwest, pulling in a thin wedge of KC to 75th Street and all of urbanized Johnson County. [Kansas City Urbanism]
• Everything was fine until 2007, when Hershey, along with several other industry groups, did in fact lobby the FDA to change the standard. They did so under the banner of the Grocery Manufacturers Association, perhaps so some of the chocolatiers wouldn’t know what was happening until it was already underway. Hershey’s then-spokesman Kirk Saville defended the choice, telling Pennsylvania’s Patriot-News that “there are high-quality oils available which are equal to or better than cocoa butter.” Shortly after, the chocolatier Gary Guittard began a countercampaign called “Don’t Mess With Our Chocolate.” [Grub Street]
• Rumsfeld in his pre-Iraq years pushed this concept of operations around speed of maneuver and battlefield transparency. The whole idea was that you wouldn't need protection because your decision making cycle would be so short, and your battlefield picture so accurate, that you'd be able to destroy the enemy before they had a chance to fire back. Of course, it didn't turn out that way. The US army massively up-armored during the Afghan and Iraq wars. All these hulking purpose built vehicles were introduced with heavy plate and thick glass and remote turrets. Units in the field would add on aftermarket protection of their own by welding steel sheets to their side doors and whatever. Now this same logic is being applied to bases in the rear and critical infrastructure. In the 21st century, to survive, you must get smarter, more furtive (hide) and - as a last resort - grow armor. [@TheMindScourge]
• One midwit trap many fail to avoid is the belief that military operations are planned around elections, or that elections matter at all when it comes to the continuity of the geopolitical agenda of the ruling class. That is formulated by think tanks and enacted over decades. [@FoolOfD]
• "Our natural gas business in particular is benefiting from increasing LNG exports, rising power demand, and industrial expansion and is capitalizing on significant opportunities for investment across our footprint," said Kinder. "We expect those investments to generate attractive returns, driving future earnings and cash flows to support a growing dividend and maintain a strong balance sheet, all while helping meet growing energy demand in the United States and the world." [Kinder Morgan, Inc.]
• "As uncertainty intensified in Q3, clients turned to CME Group in record numbers to manage risk and capitalize on opportunities," said CME Group Chairman and Chief Executive Officer Terry Duffy. "Our average daily volume reached 29.4 million contracts, the highest Q3 ADV on record. With double-digit volume growth across all six asset classes, Q3 was our second highest quarter ever for revenue and adjusted net income. We launched several innovative new products and generated a new high of $100 billion in average daily capital efficiencies. We also made strong progress in our cloud migration, making CME Group the only exchange to offer clients the choice of both co-location and cloud-managed services to expand access to our markets for years to come." [CME Group Inc.] 

Thursday Night Links

• European ruling elites from England to Poland, whether in the 19th Century or 12th Century would have replaced their proud uppity native peasantry with docile Hindu migrant labourers if they could have. The technology simply wasn't yet there. [@haravayin_hogh]
• Ultimately, Claude used 12 design tools to generate 318,484 designs, filtering out any that resembled a toxin or a known protein. Claude co-folded and screened 553,052 design-toxin pairs, predicting each pair’s structure as one complex. Sixty-four hours after we gave Claude our initial prompt, it produced its final list of 180 designs. The campaign used on the order of 10,000 GPU hours. [Anthropic] 
• Imagine if Trump had not been seduced by Bibi into the harebrained scheme to attack Iran. Imagine instead that he had gone with Rubio's idea of expanding the empire in the Western hemisphere. Cuba, Greenland, maybe Nicaragua. Wrap up the empire in the old world. Make a deal with China and Russia. Articulate a stable world of spheres of influence. Return to hemispheric defense. This is hardly an outlandish counterfactual. It really could've been. He had all the right instincts for it. Even if it would've pissed off Western supremacists, it had a certain brutal realism to it. But no. He had to listen to the lobby boys. Now the empire has been exposed as a paper tiger. And either it dies on this hill or withdraws with its tail between its legs, leaving the gulf under Iranian hegemony for all to see. All glorious options have been foreclosed by a single strategic error. One can already picture him turning to antisemitism later in life to make sense of the catastrophe. How could this happen to him? There must've been a conspiracy! [@policytensor]
• Irvine is the last city in the world, the largest and best managed master-planned community in the world, on the most valuable real estate in the world, and the most controlled in America, the closest you can get in pre-collapse to a fascist city-state—the great anonymous overlords of the Irvine Company is the LDS Church of real-estate—they will master-plan an exact duplicate of Irvine on the Moon and Mars and on the infinite ringworlds. Irvine is also the strongest concentration of "design" in the world, it's Brasilia and Chandigargh but actually successful; because the academics of architecture is perverted and corrupt, karmically cursed from abandoning Christopher Alexander for Peter Eisenenman's postmodernism, they cannot see it, but it is a masterpiece of urbanism and landscape design, a strongest collection of designed architecture and landscape of anywhere on the planet. Irvine is boring by design; Fallout 1's cut content had Irvine renamed Utopia, with the perfect white fence America suburbia encircled by a great Israeli grade wall and its denizens enforced into perfect order at gunpoint in a robot police state. This is a good thing, and the city is being flooded with high caste asians simply because they have good taste and real-estate sense; and the bet will pay off when commonplace autonomous cars solves "public transport" and all of tax-paying America hapa flights into enclave exit suburbias. [@CharlotteFang77]
• Stephen Kotkin has called Joseph Stalin “the gold standard of power.” Napoleon holds the same place in war. He remains the standard of martial excellence against which later commanders measure themselves and which they seek to emulate, notwithstanding, as Smith points out, his parallel reputation for personal vanity and tyrannical government. Smith describes his book as “an examination of how Civil War commanders did what they did,” set within the commanders’ own understanding of how modern war ought to be fought. For many generals in the war, Napoleon was the lodestar, whether or not they said so. The volunteer officers, many of whom rose to the rank of general, also knew of Napoleon’s great victories. Even the literate private soldier, Smith points out, could make references to the emperor and his battles that were crude but broadly accurate. [Rubicon]
• Anthropic plans to spend $111 billion on Google cloud computing contracts, $110 billion with Amazon Web Services, and $31 billion on Microsoft, “regardless of actual usage.” The firm also agreed to spend up to $86 billion renting Nvidia chips from smaller AI cloud providers Nscale and Lambda through 2033 and 2034, respectively, in addition to other cloud deals. Including its more than $160 billion obligation to lease Google chips in a deal with Broadcom, Anthropic’s future infrastructure costs top $600 billion. The firm is negotiating additional computing deals that could see its commitments rise by as much as $150 billion, the materials show. While most of its capacity comes from large cloud providers—including Amazon Web Services, Google and Microsoft—Anthropic is hitting limits. The company said it has sought access to more capacity than “those partners were willing to provide” and they increasingly see it as a competitor, according to the prospectus. [WSJ]

Thursday Night Links

• Perpetual futures, or "perps," require some explanation before an informed judgment can be made about their threat to the regulated securities exchanges. To date, their sole allure seems to be with retail investors. The best way to understand why is to compare perpetuals with actual futures contracts, which to a retail investor are prohibitively cumbersome at every step of the process. First, the primary use for a futures contract is to hedge a legitimate business exposure. A made-up for-instance: a South Korean buyer of a tanker’s worth of oil from the U.S., perhaps a distributor who will simply sell the oil to its local customers, could be a temporary owner of 500,000 barrels of oil. The problem is that the transit time can be as long as three weeks. That’s $40 million of oil subject to daily price risk. This distributor needs the price paid in the U.S. to be the same as when it arrives in South Korea. Otherwise the intended profit margin of the transaction could become a loss. Distributors don’t have much of a profit margin anyway. If the departure date for that trip happened to be this past May 31, the buyer’s selling price by trip's end could have been 20% lower. That ruinous possibility needs to be hedged, and it is done by selling an equivalent amount of oil at the then-current price for delivery in three weeks. The loss on the purchase would be offset by the gain on the futures contract. This contract can’t work without a specific date upon which both parties commit to deliver and take receipt of that oil. It can’t work unless the contract is executed on a regulated exchange that enforces that both parties maintain sufficient collateral to perform. In contrast, a perpetual has no expiration date. And there is no delivery of the underlying physical asset. Therefore, it can’t be used to hedge a business commitment or exposure, and is therefore useless for a commercial customer—and, more broadly, for the economy. It’s a user-friendly, phone-click wager or trading instrument that is very popular among certain retail traders. It’s designed to be. It’s referred to as market gamification. [Horizon Kinetics]
• Just as the government is unlikely to stop printing money, nothing is likely to be done about the proliferation of addictions that displace family life. As Scott Greer points out, voters Left and Right largely want freedom to indulge, and our rentier politicians won’t do anything about it independently when the vice industries are well-funded with lobbyists. In other words, we're going to step on the evolutionary gas and redline natural selection. [The Tom File]
• Everything is going to be ok. Eventually. The Iran war might cause some oil prices to go up, which might cause fertilizer prices to go up, which might cause food prices to go up. But, eventually, in five years or so, assuming the war ends soonish, the Gulf States will have finished repairing their infrastructure. It’s gonna be ok. In the meantime, more people, especially in Australia and Europe will take nice walks to work and / or work from home. And we already need less food these days because Ozempic made people eat less. The economy might have fewer jobs, but on the plus side, that means less fuel for commuters. Wo-hoo! We are going to speedrun a transition to solar power and save the planet from emissions. Thankfully, China makes a lot of cheap solar panels, and they are happy to sell to everyone. [Pasha Kamyshev] 
• Google and Constellation Energy agreed to a sweeping, 20-year nuclear-power deal that would boost output at 11 existing reactors, the latest tie-up between the tech and energy industries to power new data centers. The 890-megawatt power-purchase agreement unveiled by the companies Tuesday involves improvements to Constellation-owned reactors in Illinois, Pennsylvania and New Jersey. The upgrades will provide additional power to the grid that is roughly equivalent to building a new large reactor. The deal is the largest-ever “uprate” project, one that squeezes more power out of existing reactors, between a nuclear power provider and a tech company. [WSJ]
• Base rent for the Data Center Site Area is $6,000 per acre per year, and base rent for the Solar Site Area is $1,000 per acre per year. Base rent for each site area begins only upon the start of construction on that area. The Ground Lease does not require the Company to begin construction by any particular date, and the decision whether and when to begin construction on each site area rests solely with the Company, allowing the Company to secure tenants and financing before rent begins. If construction has not begun on a site area within 48 months after the effective date, the Landlord’s remedy is to terminate the Ground Lease and the purchase option as to that site area. Rent is subject to annual escalation based on a five-year rolling average increase in the Consumer Price Index. The Ground Lease is structured as an absolute triple net lease. [Zone Frontier Inc.]
• But one place Mississippi's Lovely Old Families, and Fine Old Families, whether or not they still had money, were loathe to move to, was Jackson. Jackson was considered to be a backwater, full of crude, crooked, murderous, religion-obsessed descendants of Reconstruction Era Carpetbaggers and Scalawags. Those unsavory types had succeeded in sending the Antebellum Aristocracy fleeing the Capital, following the Civil War. And, until the construction, in the Nineteen Sixties/Seventies, of two large malls, 'The Rest of Mississippi' avoided Jackson, as much as was possible. Until Dallas and Atlanta became "Yankee Cities", Mississippians who were from good families, but who had heavy accents, used to move to those cities, to begin their careers. But when heavy accents became crippling liabilities, those who could not alter their speech, tended to be trapped inside Mississippi, where they would NOT be perceived as ignorant Goobers. After Integration (and the need for private schools - tuition taking all discretionary income, and eating through savings) began killing the state's smaller towns, many young people from Old Families were forced to move to the Jackson area, to get decent jobs. Those young people were horrified by the meanness, social paranoia, crudeness, crookedness, and obsessive religiosity of 'Upper Class' Jacksonians. "Well, some of us moved to Belhaven, which was OK, until 'typical rednecky Jackson social climbers' caught-on, and started moving in around us." But a great many scions of the state's better families began moving out to the wilds of Madison County - planting tall hedges, and basically HIDING. About that time, The Chapel of the Cross (Episcopalian) became THE chic place for young aristos. And Mayor Mary was making Madison into the nicest place in the entire 'Ark-La-Miss' (and truly, the nicest place between Mountain Brook, Alabama, and Highland Park, Texas). [Grandview Gloria]

Books - Q3 2026

• Lunch with the FT: A Second Helping (3/5) Followup to the first edition, which we read last quarter. This edition has the best lunch so far, a decade ago with Nigel Farage. It is a reminder that the FT has two types of Lunch interviews: Great men who they think are “scoundrels,” and scoundrels who they think are great men. One Lunch, with Isabelle Huppert, was at Arpège in Paris, a Michelin 3 star. That's rare for the Lunches. (Chef Alain Passard says, "I want to elevate the humble vegetable to a grand cru.") In the appendix is a profound letter to the editor: "I am sure that the poet Homer would have appreciated an invitation to Lunch with the FT. As he showed in the Iliad and the Odyssey, food, wine, laughter, conversation and friendship were essential for a meaningful life. Somewhere in the Elysian Fields, this wondrous poet must be feeling somewhat envious of Murad Ahmed’s lunch with Demis Hassabis and Gillian Tett’s with Ginni Rometty. Artificial intelligence was the central topic of conversation at both meals. This is not a new idea. As Homer wrote of Hephaestus/Vulcan: 'There were golden handmaids also who worked for him, and were like real young women, with sense and reason, voice also and strength, and all the learning of the immortals.' I hope there are copies of Homer in the offices of DeepMind and IBM." Also see, Lunch with the FT, with the FT. You realize reading the Lunches what a strong connection the British still feel to Africa. Lots of Lunches with Nigerians like Aliko Dangote. This year's Lunches have included Dario Amodei, Erik Prince, and Doug Wilson.
• The Powerful and the Damned: Private Diaries in Turbulent Times (3/5) Memoir by the previous editor of the Financial Times, Lionel Barber (b 1955), who compiled the two "Lunch with the FT" books that we read earlier. Confirms that he is a globalist midwit. Sad to have a financial newspaper with really no theory of economics, let alone a sound theory. He wonders why the FT missed the 2008 crisis. Were they going to offend their advertisers and story contacts? (The Guardian describes it: "tension between the need to suck up to the very rich and the imperative to expose their depredations.") Great case study of an "elite" member who is supposed to be paying attention, but exhausts himself by flying all over the world, and never reads anything substantive. (He was invited to Davos, Sun Valley, and state dinners in the UK and US.) Barber quotes a Daily Mail description of himself as a “weapons-grade social climber and name-dropper extraordinaire” and that is absolutely apt. The book makes it very clear that in Europe, nationalism is low status and globalism is high status. Barber brags, "my children were educated overseas." The Brexit discussions support the thesis of The Populist Delusion, that populism will never work because the marginal are too incapable, by definition.
• Now It Can Be Told: The Story Of The Manhattan Project (4/5) Leslie Groves (1896-1970) was a West Point graduate who built the Pentagon office building and then ran the Manhattan Project from 1942-1947, when it was turned over to the Atomic Energy Commission. The current moment with AI/LLM model development is our era's Manhattan Project: it is an arms race with China. I think that the government would do anything to win this arms race, so it is worth looking at what they did to win the original one. Example: "We had always made a determined effort to withhold all information on the atomic bomb project from everyone, including members of the Executive Department, military personnel and members of Congress, except those who definitely needed it and who were authorized to receive it. As a result our methods of obtaining funds had always been rather unorthodox." "[A]rranging for me to be paid by the United States $37,500,000, a sum sufficient to cover the expected obligations. I then deposited this money in a personal account at the U.S. Treasury. From this I made withdrawals as necessary." "It was further agreed that no information would be given to the press on the removal of the silver, and that the Treasury would continue to carry it on their daily balance sheets." Wouldn't surprise us if the Fed buys the hyperscalers' debt if they have any difficulty financing their data centers. Something not mentioned in the book is that Groves had a son (Richard) who was at West Point during WWII and the bomb saved him from going to Japan. Richard (1923-2011) had four children. Groves' other child was a daughter (Gwen) who had three children. So Groves had 7 grandchildren which is respectable but maybe a little light for someone born in 1896. He was a competitive military career man. His son hardly ever saw him.
• The Takeover Game (3/5) Written by New Yorker contributor and financial journalist John Brooks (1920-1993) and published in 1987. He wrote other books including Once in Golconda, about the 1929 crash, and The Go-Go Years, about the 1960s. This one is about takeovers and buyouts, and while there was a crash in October 1987, he was wrong to try to foment a moral panic about them. With 40 years of hindsight, nothing in here is as imperative as Brooks was trying to make it seem. The 1980s takeovers - at big premia to market prices - were a sign that stocks were cheap. What is surprising is that corporate managers were willing to let their companies get taken over, and lose their own jobs, rather than return capital to shareholders! A company is a lot less inviting as a takeover target if it does a leveraged recapitalization to buy back stock or pay a dividend. How about that instead of the dubious takeover defenses, like the "poison pill"?  Moran v. Household International, Inc. (1985) is the Delaware Supreme Court case that upheld a poison pill. A board of directors may adopt a shareholder rights plan (a "poison pill") under the business judgment rule, provided it meets initial standards of reasonableness. Note that Martin Lipton is still around, age 95, and so is Herbert Wachtell, age 94. This was written before Barbarians at the Gate, about the RJR Nabisco MBO/LBO, which is the better book about the time period. Still, there are some good bits. "The old investment-banking prejudice against securities trading, as opposed to underwriting, was not all arbitrary snobbery. It is true enough that, in general, underwriters were and are more gently bred, well educated, gentlemanly of demeanor, and soft of speech, traders more brash, overly competitive, and loud. But the prejudice has a firm basis in social utility." Another observation is that the antitrust movement in the earlier 20th century caused the conglomerate mess of the middle part, because the more logical and efficient horizontal and vertical mergers were essentially banned. (Until Reagan dismantled antitrust enforcement.) George Stigler used the terms "merging for monopoly" and "merging for oligopoly" to contrast the structural drivers and goals of the first two great U.S. corporate merger waves. The first wave sought direct dominant control, while the second wave aimed for shared industry leadership under stricter antitrust laws. Some other interesting parts were about the Martin Marietta / Bendix and St Regis Paper Company battles and transactions. (He is a little lazy in not reporting details like valuation and company performance, which are now extremely difficult to figure out.)
• Temples of Chance: How America Inc. Bought Out Murder Inc. to Win Control of the Casino Business (3/5) This is an anti-gambling polemic written at the beginning of an upward inflection in gambling. Casinos seem positively quaint now that we have smartphone sports betting, cryptocurrencies, and zero day options. It is distasteful but seems like a durable trend because in a cornucopian world, status is one of the things that is really scarce, and a certain proportion of people are psychologically wired to risk it all to try to be on top. Quite a bit of the book is about Donald Trump's casino investments in Atlantic City. When Trump was opening the Taj Mahal casino, a sell side analyst said that "it would break every record in the book. And that strong business would continue during May, June and July, but when the cold winds of October came, it wasn't going to make it." Trump threatened to sue Janney Montgomery Scott and demanded an apology. But when the cold winds of October came, the casino missed its first debt payment.
• Empire of Pain: The Secret History of the Sackler Dynasty (4/5) The Sackler family fought an opium war against the United States - and won! That's how weak the state was twenty years ago, so we shouldn't be surprised that it is now losing a war to Iran. They were so arrogant and careless that they did lose the company (Purdue) and had to pay billions of dollars out of pocket (in installments), but the family members were never charged with crimes and had enough left over that they still have significant family offices. The founder of the family, Arthur Sackler (1913-1987), basically invented pharmaceutical advertising and was an early and aggressive practitioner of direct sales to physicians using reps. He took over a medical advertising agency (William Douglas McAdams), he organized his brothers' purchase of a pharmaceutical manufacturer (Purdue), and he also became a publisher and started a weekly medical newspaper in 1960, the Medical Tribune. He was also a silent owner of the other competing medical ad agency (L. W. Frolich) and other medical publications. The family was very secretive about what they owned, but at the same time they liked having their name slathered all over art museums and educational institutions. They were very frank about how philanthropy is different than charity - it was an investment in status and power. (And buying protection against criticism.) Of course, the publications shilled the products that his pharma company and ad agency clients were selling. The family was very good at regulatory capture. Purdue hired the FDA reviewer who approved OxyContin right after he "retired." Arthur Sackler was married three times, unceremoniously abandoning his first two wives when he spotted something better. His younger brother Mortimer was married three times and had children with all three. The other brother Raymond only had one wife, but his son Richard (b 1945) is the main villain in the story. Richard is the boomer who took over from his father and got the family into opiates. Highlights: Arthur's daughter asking him to play with her. "I'm going to wait until you're an adult. Then I'll have a conversation with you." "[T]he commercial life span of a branded drug is the short interval between when you start marketing it and the point when you lose patent exclusivity. Roche and Arthur didn't need to fight off regulation forever; they just needed to hold it off until the patents had run out." "The Sackler empire is a completely integrated operation. They could develop a drug, have it clinically tested, secure favorable reports from the doctors and hospitals with which they had connections, devise an advertising campaign in their agency, publish the clinical articles and the advertisements in their own medical journals, and use their public relations muscle to place articles in newspaper and magazines." The Republican presidential administrations - Reagan, George W. Bush, and Trump - were particularly malleable when Sacklers needed forbearance. Also, the Republican state attorneys general were more interested in quickly settling the Purdue lawsuits. There were also Republicans like Rudolph Giuliani who took money to intervene for Purdue at key moments and keep the racket going. "A doctor who wrote a lot of painkiller prescriptions was a priceless commodity. Like casino employees talking about an especially profligate gambler, the sales reps referred to these doctors as 'whales.'" Another Sackler family strategy was to fund advocacy groups for pain patients. "On the very day that the patent for the original formulation [of OxyContin] was set to expire, the FDA, ever obliging, declared that the benefits of the old version of OxyContin 'no longer outweigh' the risks," which meant that no one could produce a generic version! "The Sacklers' impulse to slap their name on any bequest, no matter how large or small, might have found its surreal culmination at the Tate Modern... in which a silver plaque informs visitors that they happen to be riding on the Sackler Escalator." "One unadvertised hazard in the life of a plutocrat is that the people around you can be prone to yes-man sycophancy. In theory, you should be able to avail yourself of state-of-the-art counsel. But instead, you often get lousy advice, because your courtiers are careful to tell you only what they think you want to hear." 
• The Puzzle Palace: Inside the National Security Agency, America's Most Secret Intelligence Organization (3/5) Published in 1982, this is seriously out of date. One interesting thing, though, is that even back then the NSA spoke of computers in terms of acres. The agency was established in 1952 by a secretive presidential directive - not by legislation! They've had continual problems with employees defecting to foreign countries. Intelligence agencies are really in the business of maintaining state power domestically and not in competition with foreign intelligence agencies, who are their friends and colleagues, regardless of whether the foreign countries are friends or not. (Remember our observation about Tinker, Tailor, Soldier, Spy: the real enemy is within.)
• Prediction Machines, Updated and Expanded: The Simple Economics of Artificial Intelligence (2/5) Thesis is that what AIs/LLMs do is predict, and they are going to decrease the cost of prediction, which increases the value of anything that complements prediction. Highlights: "The rise of the internet was a drop in the cost of distribution, communication, and search." "From an economist’s perspective, Google made search cheap. When search became cheap, companies that made money selling search through other means (e.g., the Yellow Pages, travel agents, classifieds) found themselves in a competitive crisis. At the same time, companies that relied on people finding them (for example, self-publishing authors, sellers of obscure collectibles, homegrown moviemakers) prospered." "A pioneer of this field, Frederick Jelinek (1932-2010) remarked, 'Every time I fire a linguist, the performance of the speech recognizer goes up.'" "In 1993, Michael Hammer and James Champy, in their book Reengineering the Corporation, argued that to use the new general-purpose technology—computers—businesses needed to step back from their processes and outline the objective they wanted to achieve." "Like classical computing, AI is a general-purpose technology. It has the potential to affect every decision because prediction is a key input to decision-making."
• Unruly Americans and the Origins of the Constitution (3/5) Similar perspective to The Framers’ Coup by Michael J. Klarman (see 2020 notes). The Constitution was a conservative counter-revolution to protect creditors against irresponsible populist economic measures enacted by a majority of state legislatures in the mid-1780s. The irresponsible economic measures were a response to a post-Revolutionary economic depression: "per capita gross national product plummeted nearly 50 percent in the fifteen years after Americans declared their independence." Charles Beard's economic interpretation of the founding was that the supporters of ratification who were creditors "determined to suppress state debtor relief laws and inflationary monetary schemes, as well as speculators in government securities who stood to make a fortune from the creation of a powerful national government possessed of sufficient taxing power to pay off its debt at face value. Antifederalists, according to Beard, were mostly debtor farmers." What is most striking is that the post-revolutionary rich were absolutely determined to protect their wealth from a currency devaluation, but it was not long at all before the elite were generating schemes for currency devaluation that they could control. As usual with a historian, the book is weak on data and prices. It seems like the big problem was a deflationary recession in the wake of independence, and as usual the debt contracts did not account for this, leading to a conflict between creditors on one side and taxpayers and debtors on the other. (A good political lesson is that both sides were perpetually unhappy, the creditors always thinking that state legislatures were too populist and the debtors thinking they weren't populist enough, until the constitution settled the issue.) The surprising thing about the 1787 constitution is that the creditors won, decisively! The rich really liked the Article 1 Section 10 Clause 1 prohibition on state laws "impairing the Obligation of Contracts," which really meant any type of debtor relief. Something we never knew was that Abigail Adams was buying states' war debt for 15 cents on the dollar. One big thing has changed since the 1780s: then the poor wanted inflation and the rich wanted deflation (because they were net creditors). Now, the rich want inflation. ("The optimal capital structure in America is have just enough liquidity to survive until the bailouts.") In 1769, George Washington supported the idea of a boycott of British goods: "The extravagant & expensive man has the same good plea to retrench his Expenses. He is thereby furnished with a pretext to live within bounds, and embraces it." Which reminds us of our interpretation of 20th Century threadbare WASP frugality as really a mutual sumptuariness limitation treaty as a response to confiscatory income and estate taxes, and inflation.
• Departures and Arrivals (3/5) Collection of travel essays by Eric Newby (1919-2006, previously). The first half were really good, especially the ones about his childhood in England, which remind me of Paul Johnson (who was born nine years later). Newby spent a lot his post-war life traveling in exotic, far-flung places like India, Afghanistan, South America. I wonder whether he thought that England in mid-20th century was "boring"? If so, he did not know how good he had it. That England is gone, never to return, and now it looks like all the "global south" countries he was busy exploring. There would be no place in the world that you could travel to today that would be like early 20th century England. Eric and Wanda Newby had two children and two grandchildren. (Eric was an only child but Wanda was one of 11!) Eric seemed to define himself as a "traveler" and I think that preoccupation is a low-TFR trait.
• Something Wholesale (4/5) Autobiographical Eric Newby, this one about his post-war career as a traveling salesman at his father's garment firm ("the rag trade"). Newby's father was unusually old (45) when he was born, so you get a great depiction of what an Englishman born in 1874 was like. His father loved to row a skiff on the Thames, which must have looked something like this. The firm couldn't keep up with changing fashions in the 1950s and so dissolved. His father's half century owning an independent business did not seem to leave much of a surplus for one child to inherit. This is what ultimately pushed Newby into writing, and into far-flung adventures so that he would have something to write about.
• The Unanchored Central Banker: Demography, Fiscal Instability, and an Erosion of the Central Bank's Inflation-Fighting Ability (3/5) This is a sequel to The Great Demographic Reversal (review), by economists Charles Goodhart and Manon Pradhan. The thesis is that central banks in advanced economies won't be able to fight the inflation that is a consequence of societies aging. Too much discussion of China, which is not a factor in the key question, the provision of health care to older generations in the U.S. Some highlights: "Basel regulations tended to incentivise banks to hold public sector debt, for example, by treating public sector bonds as risk-free and ignoring interest rate risk, relative to credit risk. This is financial repression, plain and simple, and it has encouraged banks to hold more public sector bonds than they would have done under a more even handed system." They come up with the idea of taxing land, because it is an immobile factor of production. (Georgist!) Most interesting thing was a pointer to John H. Cochrane's work on the fiscal theory of the price level. Theory: "the price level adjusts so that the real value of government debt (including money) equals the present value of the primary fiscal surpluses that will repay the debt." Cochrane just published a new paper in August: Inflation and Debt. (His theory is that debts and deficits per se are not inflationary. They are inflationary when they are not credibly backed by future repayment. Higher rates and fiscal tightening can reduce inflation, but higher rates + unchanged fiscal policy need not reduce inflation and can ultimately increase it. Ultimately, the U.S. will need to either increase the present value of future primary surpluses—through growth, spending restraint, or revenue—or reduce the real value of the claims against those surpluses, through inflation or default.) This Goodhart and Pradhan book is pretty slapped together, Cochrane's paper is more interesting.
• A Traveller’s Life: A Witty and Inspirational Memoir of a Lifetime Spent Exploring the Globe (3/5) Something emerges from our Eric Newby reading program, which is that travel is boring. His writing is best when he is writing about his life in England, or during WWII, or sailing on the clipper ship to Australia. The travelogue writing is not as good. Funny highlight: "the truth is that babies do not like travel, and I was no exception. Babies are unadventurous. Babies act as grapnels to prevent 'the family' dragging its  ground. That is why they were invented. Perversely, their desire for fresh horizons comes much later when they have already begun to 'attract' fares, and can no longer travel free; by which time they are no longer babies at all."

Thursday Night Links

• Another response, however, is to import new congregants from more backwards societies that have not yet secularized. For this reason, a common refrain from religious figures is that without migrants no one would fill the pews. For example, Pope Leo XIV has praised migrants for revitalizing the Church with their “spiritual enthusiasm and vitality.” Catholic Archbishop Edward J. Weisenburger similarly advocates migration in order to “revitalize parishes.” This sentiment is not limited to the Catholic Church; Protestant figures make the same argument in the United States and Europe, and so do Mormon ones. By making this argument, these institutions damn themselves. Claims that migrants are required to revitalize churches are admissions that these churches are incapable of inspiring faith in Americans or Europeans, and that the United States and Europe truly are post-Christian rather than merely in an impious era. Moribund religious organizations don’t just resort to mortmain migration to supply parishioners, they also do so to acquire money. The funding model for many religious organizations has gone from tithes or donations or fees from congregants, which requires organic appeal, to farming government grants for providing services to asylum seekers. As usual with mortmain migration, this does not work in the long run. The children of immigrants are exposed to all the same national and global influences as their native peers, and abandon the faith themselves. Plus, the source countries are secularizing or converting to more vital faiths capable of proselytizing and retaining believers. Long-run survival of these churches and denominations requires successfully grappling with 21st century secularism. But it’s much easier to avoid innovation by putting the day of reckoning off for a decade through mass migration. [Aporia Magazine]
• What people think about Jesus Christ is far more important to me than what people think about Republicans or conservatives, and pandering to white nationalists reinforces the worst stereotypes about the Christian faith. The Bible doesn’t say that immigrants, minorities, or neoconservatives alone need forgiveness; the Bible says “all have sinned and come short of the glory of God.” The Bible doesn’t say that only Anglo-Americans can be saved by faith in Jesus Christ, but that “whosoever shall call upon the name of the Lord shall be saved.” Nationalist populism, with its emphasis on bigger government helping friends and harming enemies, is bad enough; nationalist populism whose fixation on racial identity politics drives people away from Jesus Christ’s admonition that “no man cometh unto the Father but by me” is much worse. [The UnPopulist] 
• 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. In the long run, this would make you worse rather than better off, despite feeling wealthier in the short run. Conversely, if markets were to melt down and trade at cheap levels, it would feel painful for a while. But you would be better off long term. Bond investors understand reinvestment risk, but most stock investors do not seem too. [Lyall Taylor]
• Kushner, who is forty-five, has little regard for the craft of diplomacy. In his view, it is less important to know a region’s history or the details of the partisans’ negotiating positions than to simply hear the sides out and split the difference. Peace deals are like real-estate deals, he has said. Both involve hard bargaining and, at times, bluffing. The fact that so many diplomats before him have struggled is a testament not to the intransigence of international problems but to the mediocrity of his predecessors. [The New Yorker]
• Canada’s status as an effective American protectorate benefits both parties, but some of Canada’s elite aspire to independent great power status and see immigration as a path to it. The logic is that with a tenth of America’s population, Canada must accommodate its larger southern neighbor, but with a quarter or a third would have much more leverage to act against US interests. This is wrong because people are not interchangeable. Canada with the population, prosperity, and stability of Mexico can harm the USA but not oppose it. In any case, the aspiration alone is a hostile act against the United States and should be treated as such. [Aporia Magazine]

Thursday Night Links

• Thank you. It's great to be here again and to see so many familiar faces. I've been looking forward to this weekend—what better place to mark my 100th day as Chairman? For the fine hospitality, everyone here is in debt to President Jeff Schmid and his colleagues at the Federal Reserve Bank of Kansas City. Jeff, our thanks to you all. Jeff and the other planners have some recreation options lined up for later today. And I'd advise you to be very careful with your choices. As I learned years ago, you can take two different kinds of hikes on the trails around Jackson Hole. I can sum up my hikes with former Vice Chairman Don Kohn in two words: I survived. These steely marathon death marches revealed a side of Don I wasn't ready for. There's another kind of hike—one I associate with Chairman Ben Bernanke, my old colleague. With Ben, it's a much more leisurely pace, an easy stroll along the wandering trails at the Rockefeller Preserve. [Warsh]
• The cement plant, then known as River Cement Company, took advantage of the vast reserves of Kimmswick and Plattin limestone that follows the banks of the Mississippi River.  These formations of limestone have been referred as the “White Cliffs of Selma” in writings of Mark Twain.  Also, in Mark Twain’s “Innocents Abroad,” he compared the bluffs to the Pyramid of Cheops. [Buzzi Unicem USA]
• Democratizations lower stock valuations and raise risk premia substantially across several proxies in data covering 90 countries over 200 years. These results cannot be explained by increased macroeconomic risk nor do other periods of high political or regime transition risk have the same effect. Exogenous variation coming from a change in Catholic church doctrine confirms that risk premia rise with the probability of a successful democratization. Redistribution risk can explain these results. In the data, redistribution follows successful democratizations: the size of the public sector and measures of economic competition rise, and income inequality and measures of corruption fall. Moreover, democratizations with higher redistribution risk see a substantially larger rise in risk premia than other democratizations. A redistribution-based model of democratic transitions with asset prices and incomplete markets can fully explain the results. [Max Miller]
• The acquisition will be funded through a $9 billion nonvoting minority equity investment in ONEOK's existing business. The investment carries an internal rate of return (IRR) that is capped at 7.0% for the first nine years of the investment, which is lower than ONEOK's cost of publicly traded equity. Distributions in excess of the capped IRR will reduce the minority equity capital balance over time, which increases the economic value attributable to ONEOK common shareholders. In addition to funding the acquisition, ONEOK intends to extinguish approximately $5 billion of existing indebtedness, immediately reducing expected pro forma 2027 leverage to approximately 3.25 times debt-to-EBITDA. [Oneok, Inc.] 
• As we discussed last quarter, we have seen increased interest from data center developers here recently. And I'd say that interest has been pretty varied. It ranges from developers looking to purchase maybe a few hundred acres for the actual data center footprint, other developers looking for several thousand acres for data center co-located power and perhaps even a buffer zone to address community concerns. But needless to say, the site requirements and the due diligence for data center development are even more stringent than what we see for solar development. So these types of opportunities are invariably going to take longer to materialize. With that said, we're certainly focused on identifying these types of opportunities within our land base and really capturing some of that momentum that we see in data center development. We put together a cross-functional team internally to identify what we think are higher potential sites within the portfolio. We've also listed some outside experts to help us with identifying those opportunities as well as marketing the potential side. So optimistic that we'll see this type of use contribute to our portfolio of HBU opportunities. But still a little early to speculate on just orders of magnitude in terms of pricing or number of acres that might ultimately be sold into that use. [Rayonier Inc.]
• Shareholders usually do not care so much about a particular company since they have invested widely across the economy. Instead of dying company A making a bold bet and potentially collapsing, much better for company A to just keep plodding along giving good but not amazing returns while they simultaneously invest in company B which is new and innovative and doing all sorts of crazy risky things. The shareholders can diversify across these risks while the management and leadership of company A cannot. This idea is the core of Clayton Christensen’s disruption theory. That incumbents have many advantages of scale, size, resources, etc, but their actual existing successes often become hindrances in the long run because they also entail a lock-in to the current way of doing things. The opportunity costs for doing anything else are just too high. And so, in a nonstationary environment, eventually there open up opportunities for newer firms, without high opportunity costs, to seize these opportunities, grow, and become the incumbents in their turn. These opportunities often (but not always) emerge at the lower end of the market, which the incumbents do not compete in as fiercely because the opportunity costs of further maximizing their existing business vs undercutting themselves to cater to the lower end are too high. [Beren Millidge]
• Poor is the person without Slack. Lack of Slack compounds and traps. Slack means margin for error. You can relax. Slack allows pursuing opportunities. You can explore. You can trade. Slack prevents desperation. You can avoid bad trades and wait for better spots. You can be efficient. Slack permits planning for the long term. You can invest. Slack enables doing things for your own amusement. You can play games. You can have fun. Slack enables doing the right thing. Stand by your friends. Reward the worthy. Punish the wicked. You can have a code. Slack presents things as they are without concern for how things look or what others think. You can be honest. You can do some of these things, and choose not to do others. Because you don’t have to. Only with slack can one be a righteous dude. Slack is life. [Zvi]
• On a positive note it is likely the case that the lives of many former aristocrat descendants are not worse than they would have been in the counterfactual with no Industrial Revolution. While their relative power has massively declined, they now have access to modern amenities, modern medicine, much more accessible travel, and in general it is likely just better to be a minor rich person today with a family house out in the country than a powerful lord several hundred years ago. The positive case for the singularity would look something analogous to this — as a human your economic power relative to other agents would be vastly diminished compared to today, but at the same time you would have access to many amenities unimaginable to billionaires today — such as a post-scarcity world for almost any good, biological immortality and digital backups, the ability to comprehend and understand the universe at a much deeper level, access to truly immersive VR simulations, and the possibility of interstellar travel. [Beren Millidge]
• We get clean and predictable scaling laws when we have removed all bottlenecks that would prevent further scaling. Once all bottlenecks are removed, then the generality of neural networks provides us a direct and predictable way to convert compute into amortized compressions of increasingly rare features of the training dataset. The hard part, of course – and the reason why figuring out ‘scaling’ took so long historically – is that removing enough bottlenecks to enter this ‘scaling regime’ is hard. [Beren Millidge]
• This latter point is the core argument of the bitter lesson. At small scales we do not have the capacity to properly model the entire distribution, so using a bias that encodes part of the structure ‘by hand’ can speed up training, increase sample efficiency, and generally improve performance. However, no real-world data distribution perfectly matches our hand-coded biases, so in the long run with sufficient compute and data it is better to encode the most minimal prior that sufficiently covers the hypothesis space. [Beren Millidge]
• Surprising detail is a near universal property of getting up close and personal with reality. You can see this everywhere if you look. For example, you’ve probably had the experience of doing something for the first time, maybe growing vegetables or using a Haskell package for the first time, and being frustrated by how many annoying snags there were. Then you got more practice and then you told yourself ‘man, it was so simple all along, I don’t know why I had so much trouble’. We run into a fundamental property of the universe and mistake it for a personal failing. [John Salvatier]