Thursday, September 9, 2021

Thursday Night Links

  • If you look at a chart of a “Real Asset”-heavy Oddball like Pardee, Keweenaw, Beaver Coal,or J.G. Boswell, they basically went nowhere in terms of share price appreciation for about fifteen years, from 2005-2020. Not for nothing, the beginning of that period was a time when “everyone had to allocate” to commodities. Would you agree with our thesis that over-investment in these types of industries has led to low profits and bad times, low profits and bad times have led to recent under-investment, and the current under-investment is going to lead to high profits and good times? [Oddball Stocks]
  • During a five-year renovation of Big Boy No. 4014, the railroad replaced unsound parts, converted from coal to oil, and installed Positive Train Control (PTC) electronics for safety. Just as Union Pacific successfully employs technology to allow Big Boy to ply the rails in modern times--while retaining the charm of a bygone era 80 years ago—the oldest financial institutions in America are constantly updating their technology while upholding their heritage as banking evolves. [Oddball Stocks]
  • If you’re reading this in your 20s, my biggest tip for cultivating more “power” in work relationships (aside from hanging out on the right Discords and buying the right, uh, NFTs) is to keep fixed costs of living so low you can say no to that bad contract without crippling yourself financially. Aside from when I lived in Palo Alto for three years (where I paid an unbelievable $1000 in rent), I never paid more than … ~$750 in rent in Tokyo. And, in fact, most of the time I was paying about ~$600. I was thirty-five before I finally felt like I could pay more without sacrificing my ability to protect work-freedom. (My obsession with maximally low-cost living was, most definitely, a pathology I probably could have shed a few years earlier.) [Craig Mod]
  • Now a bank account is not a security, but that is not because banks have found some clever loophole to avoid the securities laws that Coinbase can copy. A bank account is not a security because the securities laws, ever since they were written in the 1930s, exempt bank accounts. And the basic reason for that is that banks are subject to banking regulation, which is generally much stricter than securities regulation. You don’t have to file a prospectus, but you do have to meet capital requirements and have bank examiners and all the rest. A bank account is regulated as a bank account, so you don’t have to regulate it as a security. It must be tempting for Coinbase here to say “look this thing isn’t a security, this is just like a savings account at a bank, and that isn’t a security is it?” Which is quite right! But Coinbase obviously does not want to be regulated as a bank; it does not want to be subject to bank capital requirements (which require essentially 100% equity capitalbacking Bitcoin positions) or prudential regulation by bank regulators who like crypto about as much as the SEC does but have even more tools to crack down. [Matt Levine]
  • It is helpful to take today’s inflation numbers with a grain of salt because it makes the rest of the data⁠⁠—the figures that are adjusted for inflation⁠—a bit easier to explain. For example, the Bureau of Economic Analysis (BEA) estimates that the economy has grown larger than ever before, and we are consuming more and better goods and services than ever. BEA data shows real GDP per capita—that is, output adjusted for inflation and population growth—is at an all-time high. I certainly don’t feel that the second quarter of 2021 was our most prosperous or productive quarter. When it comes to overall welfare as a consumer, I would take the economic circumstances of 2019⁠—and its ostensibly smaller consumption bundle⁠—without second thought. I bet you would too. If the official statistics miss quality changes and therefore understate recent inflation, then using those statistics for inflation adjustment will lead us to overstate progress in measures like real GDP per capita or real consumption per capita. This insight also casts doubt on the idea of a COVID productivity boom. [Alan Cole]
  • British agricultural prices began their drop in the mid-1870s for several reasons, from the development of US railroads and prairies to the advent of steamships, all of which led to the UK market being flooded with cheap prairie wheat. Meanwhile, in the US, high society shunned the families of the newly rich businessmen making their fortunes during the Gilded Age. East Coast high society was the jealously guarded preserve of families who could trace their ancestry back to the earliest Dutch or English settlers, and who socially ostracised the nouveau riche business magnates and their families. So, what were these newly rich families to do? They married into the British aristocracy as a means of establishing a social pedigree, whatever the cost. The trend likely started with the 1874 marriage of Jennie Jerome, the daughter of New York financier Leonard Jerome, and a younger son of the 7th Duke of Marlborough, Lord Randolph Churchill – a union that produced Winston Churchill. Leonard Jerome settled a dowry of £50,000 on the marriage, which is about $6.5 million today if one adjusts by consumer price inflation (CPI) or around $30 million if the inflation adjustment is made using movements in real wages (aristocrats employed large retinues of servants). Two years later, Consuelo Yznaga, the daughter of Antonio Yznaga – who had made his fortune in West Indian sugar plantations before relocating to Newport, Rhode Island – married the heir to the Duke of Manchester, thereby proving that the highest social rank below royalty was not beyond the scope of an American business family’s daughter. The dowry settlement was £200,000 (about $26 million today CPI adjusted or around $130 million real-wage adjusted). Perhaps the most celebrated (or notorious) American-aristocratic marriage of the period took place at the height of the trend, in 1895, when the family of the US railroad magnate William K. Vanderbilt became allied to one of Britain’s most prestigious aristocratic families with the marriage of his daughter Consuelo to the 9th Duke of Marlborough. The dowry settlement was $2.5 million, which is a CPI-adjusted $82 million today, or over $400 million in real-wage adjusted terms: money that restored the family fortunes and, quite literally, the palatial Marlborough ancestral seat of Blenheim Palace in Oxfordshire. Figure 1 shows the percentage of marriages between British aristocrats and non-aristocrats (‘out-marriages’) for British males born in 20-year cohorts between 1700 and 1899, as well as the 20-year average real price of wheat in London 33 years later (33 being the average age at which British aristocrats married during the 18th and 19th centuries). The positive correlation between the decline in the price of wheat and the percentage of brides from landed families marrying into the aristocracy is striking, as is the rise in the percentage of ‘out-marriages’ to foreigners as wheat prices fell. [Mark Taylor]
  • Since Covid hit the headlines the running gag among myself and a couple online friends has been that everything on my vitamin and supplement shelf is eventually shown to treat Covid. The first OTC Covid recommendation was vitamin D and zinc as immune boosters, and NAC to keep the lungs clear. I thought to myself, “Wow, didn't know that about zinc or NAC. Cool!” I was taking them based on what I'd read in P.D. Mangan's “Best Supplements for Men.” It was a pleasant surprise that they would be associated with improved immune function. As time went on, more and more of my “stack” got mentions as Covid prophylaxes: selenium, berberine, citrulline, iodine. While it's a little bit funny, it shouldn't be too surprising. Everything's correlated. It stands to reason that the supplements that lead to strong, vigorous health are going to benefit the immune system. [@pdxsag]
  • It appears without substantial dispute that if deviation is not permitted the accomplishment of the purposes of the trusts will be substantially impaired because of changed conditions due to inflation since the trusts were created; that unless deviation is allowed the assets of the trusts, within the next 20 years, will, in all likelihood, be worth less than one-fourth of the value they had at the time of the donor's death. To avoid this we conclude that in equity the trustees should have the right and be authorized to deviate from the restrictive provisions of the trusts by permitting them, when and as they deem it advisable, to invest a reasonable amount of the trust assets in corporate stocks of good, sound investment issues. Through an investment in bonds and mortgages of the type designated by the donor, plus corporate stocks of good, sound investment issues, in our opinion, the trusts will, so far as possible, be fortified against inflation, recession, depression, or decline in prices. [In Re Trusteeship Under Agreement With Mayo]
  • "Inflation or deflation?" is a political question; you can't determine the outcome from modeling of macroeconomic variables without reference to what the people who control the central bank want. In the past when we have had deflationary episodes, elites were much more conservatively invested. The book The Framers' Coup (see notes) by Michael Klarman (brother of Seth) says that the supporters of ratification of the U.S. constitution were creditors who were "determined to suppress state debtor relief laws and inflationary monetary schemes." In other words, the wealthiest colonists with political power were fixed income investors. They felt that their economic interests as wealthy people would have been hurt by inflation, and so the overriding goal of the constitution was to prevent inflation and legal abrogation of debt contracts, while also preserving the existing balance of power between north and south and big and small states. Later on in the country's history, the rich were invested in government debt issued and also enterprises like railroads and canals that had big fixed costs and operating costs. Forget about owning equity in something that would go bust during the next panic, the old money wanted a first mortgage so they could get their principal back with reasonable interest. When money was sound, that really meant something. It even looks like deflationary panics were deliberate squeezes of the middle class, by the rich, who could relieve them of their assets at cheap prices at the height of the panic. In order for this to work, the rich had to be conservatively invested. Up until the mid-20th century, it was not even considered appropriate for trustee fiduciaries to invest in common stocks. It was only the inflationary post-war era that changed this, as limitations in trust instruments to fixed income investments became inconsistent with preserving the trust corpus. That conservatism is long gone. Our elite - the politicians and the people who back them - have continually upped the financial risk they take as real interest rates have fallen. [CBS]
  • “I want a labor market so tight that you don’t even have to cover up your tattoos to get a job. I want employers camped out in front of my office begging for my help in how to hire people getting out of federal prison.” [WSJ]
  • Some of the world’s biggest economies are seeing oil consumption turn the corner and even surpass pre-pandemic levels as falling Covid-19 infection rates drive a recovery in activity. Oil demand in China, the world’s top energy consumer, will be 13% higher next quarter than in the same period in 2019 before the pandemic, according to SIA Energy. Indian fuel sales extended a rebound last month, while American consumption of petroleum products just hit a record high. Europe has also just had its best August for gasoline demand in 10 years, IHS Markit said. [Bloomberg]
  • Smart people with low time-preference and good impulse control are generally just better at everything. They also tend to choose attractive, stable, and similarly smart mates, and their children carry less mutational load. Much of this is hereditary and is greatly boosted by a stable, pro-family environment. Of course, we're getting into crimethink here, so Cutler and Cowen deftly handspring to Education! as if handing out college degrees (and student loans) will turn the unstable and pathological into people like their neighbors. Not coincidentally, both men make a good living off education. [MR]
  • The US occupation of Afghanistan was rationalized based on an entire edifice of lies. At its foundation lay the lie of Nineleven. Above it towered the lie of fighting terrorism (while training and equipping the terrorists). Somewhere along the way the lie of aiding Afghanistan’s development into a vibrant, modern democracy with gender equality and other bells and whistles was added to this already stupendous structure (while the only actual development was that of the heroin trade). And, of course, overlaying all of the above was a truly staggering amount of corruption and theft. If you believe the official narrative, Osama bin Laden was a sort of latter-day Jesus who repeated the miracle of loaves and fishes except with skyscrapers, knocking down three of them (WTC 1, 2 and 7) using just two airplanes. Another of his miracles was to make an entire passenger jet, piloted by an amateur, pull some truly stunning aerobatics that no passenger jet has pulled before or since, then ascend unto heaven through a wall of the Pentagon, engines, seats, luggage, bodies and all, leaving behind a small charred opening plus a part of a cruise missile that apparently had been hidden on board and that was subsequently carried away wrapped in a tarp on the shoulders of some very nervous and displeased-looking gentlemen in office attire. [Orlov]


Anonymous said...

You're a battalion commander in 2ID. For nine months you've been tasked with keeping I84 open between Portland and Boise.
It's a ridiculous area for one battalion, but every maneuver unit in the military is tasked.
There is no rotation out on the horizon.

Your companies are strung out in platoon COPs across 500 miles of mostly remote highway.
Most of your HHC is in ad hoc platoons covering sectors as well.
The supply line is absolutely vital to keep the rest of your brigade sustained as it tries to secure Idaho.

Just as important is keeping it open westbound, to supply Portland, Seattle, and the areas in between. The insurgency played hell with the supply chain.
FEMA is rationing food and necessities in urban areas, and every load is needed.

Early on you mostly dealt with occasional harrassment and clearing logs from the roadway.
Turns out one guy with a chainsaw can snarl traffic through Umatilla National Forest for hours.
Tracking them on logging roads and ATV trails is a nightmare.

You quickly learned that if you sent out road crews without escort, they would take harassing fire immediately.
After one crew had their equipment torched and was forced to walk back in underwear, they refuse to work without a security element.

The problem is that when security is with the road crews, the insurgents just flex a few miles away and either create another roadblock, or sometimes hijack and burn a few loads stuck in the traffic.
They especially seem to love hitting your fuelers.

You've tried sending up UAVs to catch them at it, but they seem to have uncanny awareness of when you're setting a trap and rarely bite.
Those few you do roll up are sent north to the massive camp near Moses Lake.

What you really need are SOF assets hunting the enemy while your forces hold key terrain.
Unfortunately, those assets are stretched thin and hard to come by.
It doesn't help that the army lost 35% of long tabs in the Vax Purge of '21.

Anonymous said...

It also doesn't help that half of 1st group is considered "politically unreliable" and is kept on Rear D at JBLM. Rumor is at least a dozen of those guys have up and vanished with their families, but solid info is kept close. You just know getting SOF assets in your AO is dicey.

SOF aren't the only ones with personnel issues. You left 28 natives of Oregon and Idaho on rear D, to avoid any conflicts. Just last month CID rolled up an E4 who was passing convoy manifests and schedules to an old battle buddy in Lakewood, who was passing it to the insurgents.

Now your entire rear D is in segregated barracks and closely watched, and you've had to confiscate phones across the battalion.
Your soldiers get one monitored call per week to their families.
You've already signed 7 NJPs for guys who got caught with burners.

The best intel you get, at least at first, was from social media companies providing data based on algorithms that identified insurgent activity.
The first round of mass arrests got hundreds. That dried up quickly, as they stopped using the platforms.

It also scooped up hundreds of people based on social media history who are being held without charges, and are a constant PR nightmare. You have family members at your CP every day demanding due process, though you have nothing to do with detainee ops.

The biggest headache in your life, though, is the "volunteers".
When the proud boys tried to make a stand in Vancouver, and were immediately crushed, hundreds of "antifascists" showed up to "help".
You've been ordered to treat them as partner forces, but they're worse than ANA.

Half of them wheeze when they climb out of their subarus, and the other half can't hold high ready for more than 10 seconds.
They don't follow orders, and after a few complaints about looting and some proud boy families going missing, the gloves came off locally.

They still won't engage your forces directly, but any "volunteers" who leave the wire on their own are likely to be found nailed to a tree.
Of course local property crime and rape seems to correlate directly to their presence.
They don't want to fight, but they'll harass civvies.

You get your morning brief and find that some of Idaho NGs missing Stingers surfaced last night and you're down a chinook.
You thank your lucky stars that Americans with ARs can't fight the military.