Sunday, September 27, 2020

Carbon Markets: "102.39-Carat Flawless White Diamond Will be Unprecedentedly Offered ‘Without Reserve’ in Hong Kong"

From The Value:
Sotheby’s Hong Kong autumn auction is scheduled to be held in early October. After unveiling its highlights for the modern and contemporary art sales, the auction house has just revealed another leading lot this season: a 102.39-carat D-colour flawless oval diamond, which will be offered without reserve in a single-lot auction.

So far, only seven D colour Internally Flawless or Flawless white diamonds over 100 carats (in regular shapes) have been sold at auction and many fetched over HK$100m (about US$12.9m). Now the eighth diamond will be offered without reserve, meaning the winning bid is the highest bid regardless of its amount or the intrinsic value of the diamond itself. Why is Sotheby’s offering such a valuable diamond with this unprecedented approach?

....MUCH MORE, but hurry, previews October 3 - 5, auction immediately after the Modern Art evening sale.

"How to blur your house on Google Street View (and why you should)"

Very popular in Germany where even ordinary volk have a heightened sense of privacy.
From Mashable:
Google Street View offers up a window to the world in all its bizarre, intimate, and often raw glory. 

That window just so happens to peek into your home, as well. What that peek reveals may be more than you've bargained for — think views into bedroom windows, potential fodder for stalkers, and more. 

Thankfully, there is something you can do about it. Specifically, you can ask Google to permanently blur your house out — leaving only a smeared suggestion of a building in its place. The entire process is surprisingly easy. 

As the name would suggest, Street View, launched in 2007, provides a street-level view of many cities and towns around the world. Captured by roving vehicles and individual photographers equipped with camera-laden backpacks, the service has been controversial from the start — both in the ways you might imagine, and ways you might not. 

In 2008, the Minnesota suburb of North Oaks decided it didn't want pictures of it up on Google's service, and threatened to cite Google for trespassing. Google pulled the images down.
In 2009, the lobbying organization Privacy International filed a formal complaint to the UK's Information Commissioner's Office (ICO) alleging that Google failed to properly de-identify the people it captured. As a BBC report at the time noted, that type of failure could have serious repercussions. 

"Among them were a woman who had moved house to escape a violent partner but who was recognisable outside her new home on Street View," read the article, describing complaints made to Privacy International. "Also complaining were two colleagues pictured in an apparently compromising position who suffered embarrassment when the image was circulated at their workplace."

And that's just the obvious stuff....

Granted, if your crib is one of the places in the post immediately below, the blur itself is going to be a tell-tale but that's where your pre-positioned sound cannons and nausea inducing LED lamps come into play. Just to keep the intrusive Google guy on his toes.

"The 22 Most Expensive Homes in the World for Sale"

This list is from January and I didn't have time to check if any had been sold.
Additionally, since these are pre-pandemic prices you may find sellers to be more, ah, flexible.

From The Robb Report, January 2:

From Bel Air to Barbados, from Hong Kong to the Hamptons, here are the priciest listings on the planet. 
No, it’s not a great time to be selling a mega-priced mega mansion. A cooling global economy, concerns over stock market volatility, over-ambitious expectations on pricing. It’s all resulting in a global slowdown. But those with the resources are going to find an astonishing choice of remarkable properties—many now with huge price reductions. Here are 22 of the most amazing homes that lots of money can buy.
22. The Pinnacle, Woolworth Tower, New York – $79 Million

Pinnacle Woolworth
The Pinnacle in NYC’s Woolworth building  Photo: Courtesy of Williams New York 
It is literally the crowning glory of the iconic Woolworth Building residential conversion in Manhattan. Housed in the neo-Gothic skyscraper’s green, pointy, copper-clad peak 700 feet above bustling Broadway, this vast 9,710-square-feet penthouse takes up the top five floors of the landmark building and features a 408-square-foot, open-air observatory with 360-degree views of the city. There’s a private elevator to whisk you between the five floors, or down to F.W. Woolworth’s original basement swimming pool or to the building’s 29th floor Gilbert Lounge entertainment suite, wine cellar and tasting room. Alchemy Properties have been converting the top 33 floors of the Woolworth into residences, with the Pinnacle hitting the market in late 2017.
21. Hackwood Park, Hampshire, England – $85 Million

Hackwood Park
Hackwood Park, Hampshire, England  Courtesy of Christie’s International
With Downtown Abbey—aka Highclere Castle—off the real estate market right now, your next-best option of grabbing a slice of Merrie Olde England might well be handing over the estimated $85 million—or £65 million—to buy the truly palatial Hackwood Park estate. Built in 1680, the main residence boasts 24 bedrooms and 20 bathrooms and is surrounded by 260 lush acres of Hampshire countryside, a 50-mile drive from central London. Secrecy surrounds the sale of the home: all that’s known of the current owner is that it’s a ‘foreign billionaire’ who has carried out a substantial restoration of the estate. And don’t even dream of popping round for a walk-through; potential buyers first have to prove their financial status and sign a confidentiality agreement before being allowed a viewing.
20. 12 East 69th Street, New York – $88 Million 

12 east 69th
12 East 69th Street, New York  Courtesy of Brown Harris Stevens
Currently the second-most-expensive listing in New York City—after the $98 million Le Penthouse—this spectacular 18-room, 20,000-square-feet Upper East Side Mansion is being sold by billionaire Vincent Viola, owner of the Florida Panthers. Originally commissioned in 1883 for a silk trader, the townhouse was bought by coal mining tycoon James Ellsworth in 1913 and redesigned by famed Golden Age architect William Bosworth. Its size is beyond expansive; covering five floors, it has a 3,400-square-foot basement, a 2,650-square-foot roof terrace and two 40-foot-long bedrooms. Jaw-dropping features include a saline swimming pool, a 12-seat movie theater, a double-height library, a formal dining room with seats for 40, 28-foot ceilings on a third-floor rotunda and, for those icy New York mornings, a heated sidewalk. Not so long ago, the mansion was listed for $114 million....

"The Mysterious London Traders Accused of Manipulating Oil Markets — and the Anonymous Hedge Fund, Rare- Coin Expert, and Day Traders Who Are Fighting Back"

From Institutional Investor:

Tracking the culprits behind April 20.
obert Mish is not an oil trader. He’s a numismatist — an expert in rare coins, precious metals, and currencies. Growing up in Brooklyn, he began by collecting stamps and playing cards at the age of four. From there, he moved on to coins and, eventually, valuable antiquities, heading out to California to start his own business in Menlo Park, Mish International Monetary. He traveled the world attending coin shows and became an authority on commodities such as gold, silver, platinum, and palladium, writing and contributing to a number of books. 
This year, two months after his 73rd birthday, Mish found himself trading U.S. crude oil futures at perhaps their most inopportune moment: On April 20, the price of oil fell to zero — and kept falling. Mish, an expert in commodities, was holding ten oil contracts as the market went over the edge.
After 50 years of inspecting currencies and stores of value from the Americas to Europe to Asia, Mish can also claim another expertise: He is an expert in counterfeit detection. That day, as he watched his oil trades go south, he picked up the phone and called one of the best market-manipulation lawyers in the country.

While much of Wall Street was on vacation in August, the battle lines were drawn in what is increasingly shaping up to be a fight over whether oil prices in April were manipulated and, if so, who was responsible.

The dominant question hanging over the debate is who will have to pay.

“I have done manipulation cases since 1976,” says Christopher Lovell, partner at New York-based law firm Lovell Stewart Halebian Jacobson, which is now representing Mish. “We have looked at the pricing patterns and done the analyses. And we have ruled out that this was the result of normal market activity. This is a classic example of manipulation.”

According to a class-action suit filed jointly last month by Lovell’s firm and Chicago law firm Miller Law on behalf of Mish, crude oil futures on the New York Mercantile Exchange traded at levels too extraordinary to be true.

The prices, which Lovell says in no way reflected any kind of “competitive market activity,” vacillated more than $55 a barrel on April 20, plunging at one point to minus $40.32 a barrel to mark the lowest intraday handle ever witnessed in the most liquid crude oil contract in the world. If that was not enough to raise doubts, the speed at which prices fell that day, the suit alleges, defied reason, with oil prices dropping more than $25 a barrel in the final two minutes of trading alone to settle at minus $37.63 — an anomaly that has yet to be satisfactorily explained.

The suit also notes that, the next day, the very same contract suddenly turned positive, rising more than $47 a barrel in the final hours of trading to expire at $10.01 a barrel, moving into positive territory and casting further suspicion on the prior 24 hours of mysterious trading.
All told, the price swings were tantamount to a 40-standard-deviation event, according to the suit.  In other words, explains Lovell, without manipulation, such an event “would not happen in the life of the universe.” He adds, “Supply and demand fundamentals do not change to that degree in just minutes, and they certainly don’t slingshot between $50 and $60 in one day. This was unprecedented in the history of the oil market.”

Mish, like many market participants, was caught in the undertow of collapsing prices, losing $92,490 when he was forced to sell his long position in May oil futures at negative prices. Unlike many market participants, however, the veteran commodities trader is refusing to swallow his losses. Instead, he’s leading a class action to identify and hold accountable the players who sought to drive the market below zero. The suit alleges that Vega Capital London, a trading firm registered in Essex, England, and a cohort of its traders acted intentionally to manipulate oil prices lower, minting as much as $500 million in a single day....

The Day Oil Went Subzero
"Oil’s Plunge Below Zero Was $500 Million Jackpot for a Few London Traders"

"September 16, 1920: Bomb in Horse-Drawn Wagon Kills 38 on Wall Street and Injures Hundreds More!"

From History & Headlines:

A Brief History

On September 16, 1920, years before the great stock market crashes of 1929 and 2008, some unknown, disaffected malcontents showed the fat cats of Wall Street some serious financial terrorism of their own by setting off a bomb in a horse-drawn wagon in front of J.P. Morgan Bank in New York’s financial district....

The Brothel Boss Lady Who Helped Build Seattle

Another repost, this one from 2018:

Entrepreneurs: Before There Was Bezos, The Woman Who Helped Build Seattle
We haven't visited Vanessa in a while and have a queue of links built up.

From Messy Nessy Chic, August 30:
The Brothel Boss Lady who Helped Build Seattle

Madame Lou’s parlor
Like many West Coast settlements, Seattle is a city built on sin. As a logging town and port city their main industry might have been lumber, but the businesses that kept them competitive were the ones that could keep the sailors and other labourers entertained. Madame Lou Graham was a businesswoman through and through, and while she might have been notorious for the business that went on inside her mansion, she was also responsible for financing a lot of the infrastructure that allowed the city to grow into what it is today.

Lou must have been especially good at what she did to have convinced the city leaders to let her set up shop. Just a few years prior to her entering the scene, Seattle had allowed women the right to vote– and it had almost bankrupted the city. Women elected uncorrupted officials who enforced the laws of the land and cleaned up the streets.
Brothels and gambling dens were shut down, and with them gone, so too were the sailors who frequented them, moving along the coast to greener pastures. Seattle’s budget, which relied heavily on fines and licenses from those establishments, disappeared, and the city very quickly revoked women’s suffrage, not to make an appearance again until the 1919 constitutional amendment 30 years later.

When she entered the scene in the 1880s the men of the city were set against having to “deal” with women. But Lou convinced them otherwise, she proposed a luxury building for the needs of the finer men in the city. A place to take visiting dignitaries to relax and unwind....MUCH MORE
Seattle could probably use more of those women and fewer of the Mayor Jenny Durkan types who, before the murders, was referring to the CHAZ/CHOP as the "Summer of Love."

Previously from Messy Nessy:
For Sale: "An Abandoned Overgrown Estate is the Last of its Kind in the Heart of Paris"
"The Louvre’s Secret Apartments"
There's Realism, There's Hyperrealism, There's Photo-Realism and Then There's This
Construction Used to Be More Labor Intensive (and other pictures you may not have seen before) CMB
Now It Can Be Told: Mohammed bin Salman Was the Mystery Buyer of the $300 Million French Château
Picasso Pics For Sale, Cheap (chateau included)
The Man Who Sold The Eiffel Tower, Twice and A (bath) Room With A View
Art Institute of Chicago Recreates Van Gogh's Bedroom, Puts it On Airbnb
Huh, Apparently The Barbie Doll Began Life As a High-end German Call Girl Named Lilli  

"How to Escape A Bore "

A repost from 2017 that may be helpful now that the Thursday afternoon salon is back on the calendar.
From the New York Post:

Secret code the Queen uses to escape awkward conversations
Most people have a strategy for getting out of boring conversations at parties — but Queen Elizabeth II has a whole secret code and trained staff to help her escape from sticky social situations, according to reports.

When Her Majesty is done talking to a guest, she simply moves her iconic Launer London handbag from one arm to another, and her aides swoop in to end the conversation.

If the company is really dire, she puts the bag on the ground or spins her wedding ring around to summon an emergency intervention.

“It would be very worrying if you were talking to the queen and saw the handbag move from one hand to the other,” royal historian Hugo Vickers told People magazine. “Someone would come along and say, ‘Sir, the archbishop of Canterbury would very much like to meet you.’ ”...MORE
His Grace wants to see me?

HT: Economic Policy Journal

Alternatively :

"The Magical Art of Selling Soap"

From Lapham's Quarterly:

The trends and tactics of the nineteenth-century wellness industry
In his sweeping 1929 history of advertising from ancient Babylonia on, industry pioneer Frank Presbery waxed poetic about advertising as a progressive, rationalizing force. Properly deployed, advertising would not only evenly distribute earthly goods to the masses but would make knowledge universally available as well. “If everybody had all the knowledge that exists and is available, and applied it, there would be very little unhappiness,” Presbery concludes sunnily.

But American advertising—and cosmetic advertising in particular—traces its origins to the decidedly less-than-rational hodgepodge of science, magic, and faith that formed the culture of medicine and “wellness” in the late nineteenth century. The first efforts at national advertising were launched by patent-medicine manufacturers, whose elixirs, pills, drops, and ointments promised customers miraculous physical and mental transformations. For all of its purported down-to-earth rationality, the advertising industry had deep roots in magical thinking. This was a past it would never completely leave behind: that was, in fact, integral to its cultural success.

“Patent” medicines—so-called because in seventeenth- and eighteenth-century England, one had to acquire a government license to peddle them—had a guaranteed place on every apothecary’s shelf in colonial America. Such English imports as Daffy’s Elixir, Dr. Bateman’s Pectoral Drops, and a specially patented “Oyl extracted from a Flinty Rock for the Cure of Rheumatick and Scorbutick and other Cases” were stocked side by side with the druggist’s more standard materia medica.
Nineteenth-century medicine lagged notably behind other scientific fields, with the average doctor’s practical knowledge barely advanced beyond the medical wisdom of the second-century Greek physician Galen. The average physician’s principal weapon for fighting illness—induced vomiting/diarrhea and copious bleeding of patients with lancets and leeches—remained of dubious aid. Those desperate to see themselves and their loved ones well were naturally tempted by alternative remedies.

Before the scientific revolution, science and magic—including the science of healing—were separated by only the finest of lines. Medicine men were stock characters at carnivals, markets, and fairs, peddling their cures alongside palm readers, acrobats, magicians, and animal trainers. Indeed, the pairing of “showmanship and dental surgery” was a bizarrely popular genre, spawning a number of dentist-puppeteers and dentist-acrobats who, presumably, found that, in the absence of anesthesia, their surgery went more smoothly when performed on distracted patients. They and their heirs attracted an audience as much for their entertainment value as for their medical adventuring.
In this vein, nineteenth-century American patent-medicine manufacturers mounted elaborate “Medicine Shows,” sent out to travel the highways and byways of the country. The Wizard Oil Company, founded by magician John Hamlin, is illustrative of the genre, whose popularity peaked in the 1870s and ’80s. The Chicago-based company combined a canny modern distribution model with the ancient lure of spectacle: Hamlin sent out fleets of horse-drawn wagons, with colorful ads for Wizard Oil and equipped with a stage and parlor organ. The performers not only conducted open-air entertainments and point-of-service sales but stocked village pharmacies throughout the Midwest with bottles of Wizard liver pills, cough remedy, and liniment oil.

Despite the appeal of these theatrical extravaganzas, American patent-medicine manufacturers got their greatest boost from the rapid spread of literacy and print media in the nineteenth century. In 1800 the United States counted twenty daily newspapers; by 1860 that number had shot to four hundred, thanks in part to steam-powered presses and cheaper paper.

Patent-medicine companies were among the earliest and most cash-flush investors in the new advertising medium. True to form, patent-medicine print advertisements were flamboyant and theatrical. “There is no Sore it will Not Heal, No Pain it will not Subdue,” promised one newspaper advertisement for Hamlin’s Wizard Oil. “The Great Medical Wonder…Magical in its Effects,” the company assured health-conscious consumers. “The bones are sold with the beef,” sighed one small-town editor when readers objected to the quantity of advertising in the paper. He knew that without ad revenue, the paper would require a paid circulation of two thousand, rather than its current two hundred, to survive....

I'll say this for the old-time patent medicine hucksters, nasty as they were they didn't subject folks to stories like this:
For Goop team, smelling Gwyneth Paltrow's vagina was just another day at the office  

We'll have more—soap, not Gwyneth—next week.

When Asbestos Was a Gift Fit for a King

From JSTOR Daily:
File under: “don’t try this at home.”
According to legend, Charlemagne liked to lay out his lavish banquets on a sparkling-white tablecloth spun from pure asbestos. After his guests had eaten their fill, the king would pluck the tablecloth off the table and fling it into the hearth. In the blaze, the cloth turned fiery red, but did not burn. When it was plucked out, it was cleaner than ever, with the debris of the meal roasted away.

Long before asbestos was recognized as a health hazard, it was a near-mythical wonder material, a gift fit for kings and emperors. One Han dynasty general apparently put on an even better show than Charlemagne: he would wear an asbestos jacket to dinner and “accidentally” spill wine over it. Feigning a fit of rage, he would rip off the garment and throw it into the fire, only to pull it out moments later, perfectly clean and unharmed.

Nobles were cremated in asbestos shrouds, so that their ashes would not mix with the cinders of the fire. The eternal flames that burned in the temples of Vesta, watched over by the Vestal virgins, were kindled on asbestos wicks.

But asbestos was also turned to less scrupulous uses. The wondrous properties of the material made it a prime tool for the creation of false relics: its incombustibility served as proof of authenticity. Scammers passed off chunks of asbestos as fragments of the True Cross, and the monks of Monte Cassino bought an asbestos towel under the impression that it was the cloth Jesus had used to wash his disciples’ feet....

People are so creative.

Saturday, September 26, 2020

"Mayhem in the Bank of England's Clerk's Office"

From Delancey Place, September 15:

Today's selection -- from Till Time's Last Sand: A History of the Bank of England 1694-2013 by David Kynaston.
Perhaps humans were never really intended for 9 to 5 office work. At the very least, in the mid-1800s in prim and proper Victorian England, clerks were having trouble remaining staid and genteel during that span, even at the esteemed Bank of England. One even wrote that his department was like a "big school playground":
"In reality, moreover, the [Bank of England] was never, whether before or after 1850, as orderly and purposeful as those in charge might have wished. Between 1837 and 1845 alone, at least three acrimonious disputes between clerks were noted in the Court minutes: in one, an argument about the quality of the food led to post-prandial blows and a nosebleed; in another, the hurling of a large bill case, accompanied by 'very gross & low abuse', resulted from the refusal to part with an inkstand; and in a third, the tussle over an office stool led to a severe blow in the face, rendering the recipient 'incapable of resuming his work for the remainder of the day'. 
Or take the formative impressions of W. Courthope Forman and C. H. Goodman, both of whom started work in 1866 in the Private Drawing Office. A 'busy hive', indeed, found Forman, but with 'a good many quaint insects':
There was a youngish gentleman on the ledgers, who made remarkably clever caricatures and sketches in pen and ink, sometimes even upon the covers of the sacred books. There was a little rotund, elderly gentleman, with a short temper and a colossal skull, who frequently murdered the Queen's English in a manner that was a real delight....

 Previously on the clerks:
Wage Slaves at the 18th Century Bank of England

And more generally:
The first nine years of the Bank of England. An enquiry into a weekly record of the price of bank stock from August 17, 1694 to September 17, 1703 (1887)

The Grand-Père Of Option Pricing Theory: Louis Bachelier

We've looked at the work of young Mr. Bachelier, most recently in February 2020's "Following Up on "Emanuel Derman: 'Trading Volatility'" which linked to a letter to the editor of Inference Review by gadabout theoretical physicist Jeremy Bernstein.
The letter begins:

On Louis Bachelier

To the editors:
In Emanuel Derman’s essay on the Black–Scholes Equation, the French mathematician Louis Jean-Baptiste Alphonse Bachelier is mentioned in passing. Published at the turn of the twentieth century, Bachelier’s PhD thesis was the foundation for the later work of Fischer Black, Myron Scholes, and Robert Merton.1 Scholes and Merton were jointly awarded the 1997 Nobel Prize in Economics for developing “a pioneering formula for the valuation of stock options.”2 Black had passed away in 1995. While brief sketches of Bachelier’s life can be found, no one, as far as I know, has written a full biography. Since Bachelier’s only lasting contribution to mathematics seems to have been his thesis, it is not clear what one would say in such a biography. It is a curious and rather sad story.

Bachelier was born in Le Havre on March 11, 1870.3 His father was a wine merchant. Bachelier would certainly have been headed for one of the grandes écoles, but in 1889 both his parents died. He took over the family wine business and then did his compulsory military service. It was not until 1892 that he was able to begin his studies at the Sorbonne. During this period, he may have worked at the Bourse, although the details remain elusive. In any event, he became interested in the question of how to predict the future price of a stock. It is not clear whether he had heard of Brownian motion, or if he simply invented the idea for himself. He assumed that, on its next move, it was equally likely for the price of a stock to go up or go down. This is Brownian motion. Upon hearing of it for the first time, a natural reaction is to inquire how the price goes anywhere. Of course, after the first move, it is as likely for a price to advance further as it is to go backwards. This results in the random walk that is characteristic of Brownian motion....MORE
And I forgot to point out that Bernstein's letter linked to both Bachelier's 1900 thesis:


Translated by D. May from Annales scientifiques de l’Ecole Normale Superieure

The influences which determine the movements of the Stock Exchange are innumerable. Events past, present or even anticipated, often showing no apparent connection with its fluctuations, yet have repercussions on its course.

Beside fluctuations from, as it were, natural causes, artificial causes are also involved. The Stock Exchange acts upon itself and its current movement is a function not only of earlier fluctuations, but also of the present market position.
The determination of these fluctuations is subject to an infinite number of factors: it is therefore impossible to expect a mathematically exact forecast.
Contradictory opinions in regard to these fluctuations are so divided that at the same instant buyers believe the market is rising and sellers that it is falling.

Undoubtedly, the Theory of Probability will never be applicable to the movements of quoted prices and the dynamics of the Stock Exchange will never be an exact science.
However, it is possible to study mathematically the static state of the market at a given instant, that is to say, to establish the probability law for the price fluctuations that the market admits at this instant. Indeed, while the market does not foresee fluctuations, it considers which of them are more or less probable, and this probability can be evaluated mathematically.

Up to the present day, no investigation into a formula for such an expression appears to have been published: that will be the object of this work....
....MUCH MORE (47 pages on Google Drive)

Now what Bachelier was about to do wasn't quite at the level of Leibniz or Newton inventing the calculus but it was orders of magnitude beyond the state of the art as practiced by Russell Sage, who amassed one of the greatest Wall Street fortunes of his day, $3 billion or so in 2020 dollars, based on simple put/call parity to evade New York state usury laws.

Here's the introduction to a 2012 post where I decided to go with Bachelier rather than Sage:  
The Guy Who Discovered Black-Scholes Before Mssrs. Black and Scholes
Okay, not all of B-S but enough that if anyone had been paying attention they could have made money off the young man's work.

I was going to do a post on the King of 19th century put and call brokers but you may find this more interesting.....
But back to Professor Bernstein's letter, he notes that the B-man's thesis advisor was Henri Poincaré, which is a pretty good start but additionally links to

On the centenary of Théorie de la Spéculation 
which begins:
Centenary of mathematical finance
The date March 29, 1900 should be considered as the birthdate of mathematical fi nance ....
Alrighty then, a pretty big deal. If interested see also:
"Pricing the Future: Finance, Physics, and the 300-Year Journey to the Black-Scholes Equation "

Variables: σ = volatility of returns of the underlying asset/commodity;
S = its spot (current) price; δ = rate of change; V = price of financial derivative;
r = risk-free interest rate; t = time.
Finally a cautionary tale from a very smart guy: 
"Volatility as the new Black-Scholes" (VIX; VXX; CVOL)

Peter Thiel on Ross Douthat's "The Decadent Society: How We Became the Victims of Our Own Success"

Mr. Thiel writing at First Things:
When Boeing introduced its flagship 707 jet airliner in 1958, the power to cruise at 977 kilometers per hour did more than enable routine transcontinental commercial flights. It fed the optimistic self-understanding of a society proud to have entered the Jet Age. More than sixty years later, we are not moving any faster. Boeing’s latest plane, the 737 MAX, has a cruising speed of just 839 kilometers per hour—to say nothing of its more catastrophic limitations.

The since-retired 707 was a success. The new MAX looks like a failure. As for the 747 jumbo jets that we are still flying today fifty years after their 1969 debut, they are a sign of what Ross Douthat calls decadence. By “decadence” he does not mean delicious sensuality or over-the-top indulgence (think Margot Robbie’s Sharon Tate dancing mid-flight in the upper-deck cocktail bar of a 747 in last year’s Once Upon a Time . . . in Hollywood) but stagnation and complacency, a dissipation of creative energy, a jaded will merely to muddle through.

Douthat’s book is well-timed. The fiftieth anniversary of the ­Apollo 11 moon landing and ­Quentin ­Tarantino’s painstaking recreation of the year 1969 summon the same nagging question: How far have we come since then? Few men in the street would be able to ­evaluate the ­progress of, say, physics as ­instantiated in string theory. But everyone should be able to tell whether or not the streets around us, and the expectations of life, have been transformed for the better.

Are we making progress? Not so much, Douthat answers. Baby boomers will wince at his title, since “decadence” sounds to them like the complaint of an old curmudgeon. They cannot stand to think of themselves as old, nor can they bear to think of the society they dominate as dysfunctional. But this is a young man’s book. Douthat can see our sclerotic institutions clearly because his vision is not distorted by out-of-date memories from a more functional era.

Douthat outlines four aspects of decadence: stagnation (technological and economic mediocrity), sterility (declining birth rates), sclerosis (institutional failure), and repetition (cultural exhaustion).
Stagnation is the most evident. Look up from your phone, and compare our time to 1969. “Over the last two generations,” Douthat writes, “the only truly radical change has taken place in the devices we use for communication and entertainment, so that a single one of the nineteenth century’s great inventions [running water] still looms larger in our every­day existence than most of what we think of as technological breakthroughs nowadays.”

Sterility is not immediately obvious outside of a few places like San Francisco. In public debates, low birth rates are treated as a matter of personal preference. If they mean anything more, it is as a drag on future economic performance—hence an argument for immigration. Douthat goes beyond economistic abstractions to point out that missing kids weaken a society’s connection to the future.

He thus explains a key current in “populist” skepticism of the elite consensus: “[Immigration] replaces some of the missing workers but exacerbates intergenerational alienation and native-immigrant friction because it heightens precisely the anxieties about inheritance and loss that below-replacement fertility is heightening already.” Douthat does not ignore racism, but he focuses on the dynamics that explain our unique moment instead of inveighing against an age-old evil.
“Sclerosis” refers to our diseased institutions, especially the inability of our government to get anything done. Assessing the record of rule by experts, Douthat again emphasizes historical contingency rather than doctrinaire ideology:
Time makes these problems worse, as popular programs become part of an informal social contract that makes them nearly impossible to reform; as the administrative state gets barnacled by interest groups that can buy off and bludgeon would-be reformers; and as the proliferation of regulations handcuffs administrators and deprives them of the room to respond to changing times.
In other words, the New Deal could only happen once, and whatever competence prevailed at its experimental dawn no longer exists.

“Repetition” names the condition of our culture, endlessly remaking remakes of remakes. Whereas the fifties, the sixties, the seventies, and the eighties all had distinctive by-the-decade styles in design, clothing, music, and art, from the nineties to now feels like one big remix. We are stuck in a boomer culture loop, explains Douthat, from J. J. Abrams remaking George Lucas’s Star Wars to Martin Scorsese remaking himself:
The boomers were the last rebellious generation to come of age not only with various traditional edifices still standing but also with a sense, in the Eisenhower fifties, that those edifices had actually been strengthened by the experiences of the Depression and World War II. This gave the rebel culture of the sixties a real adversary to struggle against: the old bourgeois norms refreshed by suburbanization and prosperity; a Christianity that had just ­experienced a sustained revival; a patriotic narrative of history that had been burnished by victory in the Second World War; a common culture that had become more binding through the ­influence of radio, television, mass-market periodicals, and movies.
Now the old family structure has been smashed, religion is in decline, patriotism is passé, and the cultural marketplace is fragmented. Because there is no longer a healthy dominant culture, would-be rebels have nothing to resist. So they playact the battles of a previous age....

"The disruption con: why big tech’s favourite buzzword is nonsense"

From The Gueardian:

How one magic word became a way of justifying Silicon Valley’s unconstrained power 
There are certain phrases that are central to the sway the tech industry holds over our collective imagination: they do not simply reflect our experience, they frame how we experience it in the first place. They sweep aside certain parts of the status quo, and leave other parts mysteriously untouched. They implicitly cast you as a stick-in-the-mud if you ask how much revolution someone is capable of when that person represents billions in venture capital investment. Among the most influential of these phrases is undoubtedly “disruption”.

The concept of disruption is a way for companies, the press or simply individuals to think about questions of continuity and discontinuity – what lasts and what doesn’t, what is genuinely new and what is just the next version of something older. There is a lot at stake in how we think about these issues. Are the changes the tech industry brings about, or claims to bring about, fundamental transformations of how capitalism functions, or are they an extension of how it has always functioned? The answers to such questions will determine what regulatory oversight we believe is necessary or desirable, what role we think the government or unions should play in a new industry such as tech, and even how the industry and its titans ought to be discussed.

When we speak of disruption, we are usually thinking about the perils of continuity; we express the sense that continuity works fine until it doesn’t. To some extent, this sense that things staying the same for too long is dangerous and makes us risk falling behind, is characteristic of modernity – not in the sense of a specific time period so much as the condition of being modern, living in a modern age. As the poet Charles Baudelaire wrote in the 19th century, when the world around him was modernising at a breakneck pace: “The form of a city / changes faster, alas, than a mortal’s heart.” Keep living the way you’re living, and soon enough you’ll find yourself living in the past.

More specifically, though, disruption resonates with our experience of capitalism. Think of all the companies and products that you remember treating as seemingly permanent, inextricable fixtures of your everyday life, that nevertheless slid right out and disappeared with time. Recall, if you’re of the right age, the act of respooling a cassette tape with your pinkie finger, or the phrase “Be kind, please rewind”. Or, for a slightly younger generation, the whistles of a dial-up modem or the mastication of a floppy disk drive. Disruption tells a story that explains how things that seem as if they will last forever nevertheless come to be short-lived.

Neither those who argue for continuity nor those who are in favour of discontinuity are disinterested parties – everyone has a stake in these things. I have to include myself in this. I confess to being very wary of claims of disruption, but then again, as a professor of literature, I’m in a profession that pretty much depends on the idea that the past matters a lot and that messing with it in any meaningful sense entails spending a lot of time studying it. As Mandy Rice-Davies put it when she was told that the politician Lord Astor denied having an affair with her: “He would say that, wouldn’t he?” And I would argue that stewardship of the past is more important than riding roughshod over it, wouldn’t I?

Nonetheless, I think at least some of the rhetoric of disruption depends on actively misunderstanding and misrepresenting the past. We can call this the infomercial effect. You don’t see quite so many of them today, but they were once ubiquitous, and they would follow the same template: “Don’t you hate it when,” they would ask, and name an extremely minor problem with some mundane task you honestly couldn’t say you had ever encountered. Then they’d offer their revolutionary solution to the problem they had invented about 30 seconds prior. The infomercial deliberately misinterpreted whatever it was seeking to disrupt. One of the greatest works of collective satire of the internet age are the 6,069 and counting Amazon reviews for the Hutzler 571 banana slicer, which mock exactly the mania for buzzy solutions in search of a problem – “No more paying for those expensively sliced fruits- i can just stay at home,” joked one user.
The reason infomercials use this template is that it taps into a pretty pervasive sense of boredom. We get excited when things get shaken up, for the big and powerful to get taken down a peg. There is a joy in seeing “the system” shaken up, old hierarchies up-ended, Goliaths falling to Davids. Such narratives play to our impatience with structures and situations that seem to coast on habit and inertia, and to the press’s excitement about underdogs, rebels, outsiders. If you look back at coverage of Theranos, until the fateful article by John Carreyrou in the Wall Street Journal that brought the company down, few journalists really bothered to ask whether or not Theranos could do what it claimed to be able to do – they asked what would happen if it could. Disruption is high drama. The claim that “things work the way they work because there’s a certain logic to them” is not.

The idea of disruption has a particularly strange backstory. Probably its oldest ancestors are Karl Marx and Friedrich Engels, who wrote in the Communist Manifesto that the modern capitalist world is characterised by “constant revolutionising of production, uninterrupted disturbance of all social conditions”, so that, as they put it, “all that is solid melts into air”. Whereas the premodern world was defined by a few stable certainties, by centuries-old tradition, and governed by ancient habits of thought, in modernity all fixed relations “are swept away, all new-formed ones become antiquated before they can ossify”. You can sense their giddiness, even though the situation they describe is disorienting and ultimately nightmarish. And yet they are giddy, because they feel that this accelerating cycle of constant destruction and replacement ultimately destroys itself.

This idea made its way from the Communist Manifesto into business jargon by way of the economist Joseph Schumpeter, who, in a 1942 book, coined the phrase “creative destruction”. Although hardly a communist himself, Schumpeter derived the term from Marx and intended it to be descriptive rather than affirmative. Born in Austria in 1883, Schumpeter was steeped in both Marxian economics and in the work of classical liberal economists such as Ludwig von Mises. He became one of the great analysts of the business cycle, but also of its social ramifications. In 1932, he became a professor at Harvard. Schumpeter thought that capitalism would almost gradually lead to some kind of state socialism, a fact that he didn’t exactly welcome but thought inevitable....

News You Can Use: "How to Escape From a Volcano Eruption"

Today's word is alacrity, alac·​ri·​ty:  
promptness in response : cheerful readiness 
From Wired:
Let’s say you were visiting the Roman town of Pompeii on the morning of August 24, 79 AD. And let’s say you arrived sometime between the hours of 9 and 10 am. That should give you enough time to explore the port town and maybe even grab a loaf of bread at the local bakery (see map below for directions). But it would also put you in Pompeii in time to experience a 5.9 magnitude earthquake, the first of many, and watch the black cloud rise from Mount Vesuvius as the mountain began to erupt 1.5 million tons of molten rock per second and release 100,000 times the thermal energy of the bomb dropped on Hiroshima. All while you were standing a mere 6 miles away.

Your situation would seem challenging–but, surprisingly, not hopeless! When I emailed Pier Paolo Petrone, a forensic anthropologist at the University of Naples Federico II, asking if any Pompeiians survived the eruption, he wrote back to say that many did. “But likely only those who took immediate action.”

Unfortunately, instead of immediately evacuating, some Pompeiians took shelter from the falling ash. This may seem prudent, but it is a mistake. Buy that bread. And get it to go.

You have some time, because the initial stages of Vesuvius’ eruption were not the most dangerous. The pressurized magma beneath Vesuvius contains dissolved gasses, and cracking Vesuvius’ vent has the same effect as cracking a gargantuan can of soda. The hot gases rush out of solution and through the narrow vent. The effect is like a jet engine. The forceful eruption blows lava pieces and gas a few miles high, sucking in and heating surrounding air to create a light, hot cloud lifting high into the atmosphere.

This is good. The cloud is hot enough to melt lead, and the high atmosphere is the safest place for it. The molten rock chunks blasted up and out will eventually cool and fall, and because the wind at both lower and higher altitudes over Vesuvius on August 24 blew south-southwest, they will drop on Pompeii. Though the initial pieces are small and will fall like rain, eventually these pieces of pumice come down with enough size and ferocity to collapse houses–but not yet. You still have time.

But do not linger. Within Mount Vesuvius, a dangerous process is beginning to take place. Because the gassiest magma exits first, as the eruption enters its later phases, less gas is forced through Vesuvius’ vent and its jet loses power. This may sound like a positive development. It is not. Instead of rising miles into the atmosphere, the dense mix of searing hot ash and gas will rise only a few hundred yards and then fall, picking up velocity so that when it reaches the ground, it hugs and flows like a superheated sandstorm moving at autobahn speeds. These “pyroclastic flows” can be 1,800 degrees F, dense enough to suffocate you, and they flow for miles. In the early morning hours of the 25th, a surge will kill everyone remaining in Pompeii. You need to leave long before then.

As to where to go, you have two choices. Mountains block your path to the east, and the Mediterranean Sea blocks your escape to the west. You could try to wait for a boat at the beach, but (a) archaeologists have found a large group of bodies in a boathouse in nearby Herculaneum who appear to have attempted that, (b) the prevailing winds are against you, and (c) tsunamis.
That leaves north, toward the volcano and eventually Naples, or south, toward the town of Stabia. These are your only two viable options Petrone tells me, though he says even then there are issues with both.
Fortunately, none of those issues involve melting in a river of lava.

This fear is natural in any eruption, but generally misplaced. Depending on its composition, lava ranges from 10,000 to 100 million times as viscous as water. This means even the runniest molten rock has the viscosity of room temperature honey. Unless you’re on a very steep slope, you can generally outrun it. Stationary objects like houses can be flattened by these fiery rivers, but “usually people can move out of the way,” says Stephen Self, a volcanologist at UC Berkeley.

Instead, it’s the magma beneath the mountain, and its precise composition, that should deeply concern you. The more viscous the magma, the more gases it contains and the more explosively it will erupt. Unfortunately for you, the magma inside Vesuvius was unusually viscous, which partly explains why its eruption registered as a formidable 5 out of 8 on the logarithmically scaled volcanic explosivity index....

TL;dr: You can do it

Coronavirus May Be Evolving To Defeat Mask Wearing, Handwashing

From the New York Post:
A new COVID-19 mutation appears to be even more contagious, according to a study — and experts say it could be a response by the virus to defeat masks and other social-distancing efforts.

Scientists in a paper published Wednesday identified a new strain of the virus, which accounted for 99.9 percent of cases during the second wave in the Houston, Texas, area, the Washington Post reported.
The paper, which has not been peer-reviewed, said people with the strain, known as the D614G mutation, had higher loads of virus — suggesting it is more contagious.

Though the strain isn’t more deadly, researchers said it appeared to have adapted better to spread among humans....MORE
And in other 2020 news:
Massive pack of hungry raccoons taking over San Francisco park

"Moments in money: The first tax haven"

From Spear's Magazine:
Some academics believe that tax havens have existed almost as long as the concept of tax. The earliest example appeared in 166 BC, during the reigns of Emperors Marcus Aurelius and Lucius Verus (they overlapped), in the Aegean island of Delos. The Romans set it up as a free port with no taxes or customs duties, in order to undercut nearby Greek island of Rhodes, which had not yet submitted to the Pax Romana.

As a result Delos prospered as a centre for trade in ivory, textiles, wine, wheat and spices from Africa and the Middle East, and Rhodes took a slide. The real ascent of tax havens began after the First World War, however, when European countries in particular began raising levels of tax to pay for the war and reconstruction. While in the US New Jersey and Delaware introduced attractions for ‘non-resident’ companies, it was neutral Switzerland that emerged in the 1920s as the world’s favourite tax haven.

In 1913, Swiss banking holdings were 26 per cent those of France; by 1929 that was 79 per cent. A League of Nations report noted that the banking assets per head of population in Switzerland were $714, compared to $438 in the US and $292 in the UK. In fact, the true fi gure was perhaps twice that, as many assets were held off-balancesheet – small wonder this has been described as the ‘golden age’ of Swiss banking....

Friday, September 25, 2020

Risk: What They Call Market Making Sure Smells Like Prop Trading

From FT Alphaville:

The prop trading that got away
The Bank of England’s proprietary trading review came out this week, but it has largely gone under the radar. That’s a shame because among its findings is this (our emphasis):
There is evidence that other activities falling within the statutory definition of proprietary trading are substantial for some firms, but these activities arise in the context of the wider business needs of the firms concerned. Many firms, especially larger firms, continue to serve their clients through market making and related activities. Firms’ liquid asset buffers (LABs) hold material amounts of financial instruments, although these are largely cash, central bank reserves, or low risk government bonds, and interest rate risk in the LAB is often largely hedged. Furthermore, firms hedge the risks arising from serving clients in both trading and banking books through own-account positions in financial instruments and commodities.
The Bank’s conclusion is that this sort of activity is AOK because new capital and liquidity requirements for banks, as well as tougher internal controls, have diminished most associated systemic risks.

But to those in the know, especially with respect to how traders themselves view market-making risk, that feels like a regulatory a cop out sitting in plain sight.

In the exact same report the BoE also finds that there is evidence of substantial activities falling “within the statutory definition of proprietary trading” precisely under the market-making name. It goes on to disclose that it remains hard to separate market making from proprietary trading, since both activities involve holding positions for the bank’s own trading account, with the only real distinction being intent.
In case you’re confused about what falls under that statutory definition of proprietary trading, here’s a convenient diagram from the Bank:

Worryingly, the BoE says firms’ hedging activities and liquidity investments (the fuel that powers the market-making desk) are substantial and have not declined even as market risk has. But, again, the BoE is not worried because hedging is supposed to reduce risk -- and there’s some evidence from both regulatory and firms’ own risk measures that they do, they say....

"Corporate Profit Strategies and U.S. Economic Stagnation"

Some seriously deep thinking on what ails the U.S. economy
From American Affairs Journal:
Government responses to Covid-19 will reshape the U.S. economy for the next decade. But why did America’s economy deliver such slow growth during the previous decade, as well as before the 2008 global financial crisis? Why has the U.S. economy consistently generated rising income inequality and sluggish investment for so long? Answering these questions helps establish the baseline for understanding how the Covid shock might change economic structures and outcomes.

Most explanations for slow growth, both before and after the financial crisis, focus on singular causes—like aggregate income inequality, or the rise of a shareholder value model for corporate governance, or increased trade competition (globalization), or the financial sector’s disproportionate power and profitability (financialization). These explanations are important, and in many respects correct. Yet they are also largely incomplete because they ignore the sources of profit, even when they discuss the rising share of profits relative to wages, or of “financial sector” profits relative to “manufacturing sector” profits.

In understanding American capitalism, the origin of—and distributional conflict over—profits matters as much as the distributional conflict between profits and wages. Looking at firms’ profit strategies, and the organizational structures they construct to pursue profit, explains the dynamics and malaise of the U.S. economy.

Put simply, changes in corporate strategy and structure from the postwar era to the current era changed the distribution of profits among and within firms and led directly to our present problems. While the distribution of profits across firms was highly unequal in both eras, changes in corporate strategy and structure have concentrated profits in firms with small labor head counts, a low marginal propensity to invest, and relatively easy tax avoidance. Reduced investment and worsening income inequality in turn slow GDP growth and aggravate social and regional tensions. While these changes are generic to the rich countries, they have gone furthest in the United States. As William Gibson has put it, “The future is already here—it’s just not evenly distributed.”

From Fordism to the Information Economy
Broadly speaking, firms in the mass-production era (or as academics like to call it, “Fordism”) sought oligopoly profits by controlling asset-specific physical capital—that is, machinery that could not easily or profitably be redeployed to other uses. This specialized equipment was extraordinarily productive relative to more generic machinery, enabling huge economies of scale. High productivity deterred potential competitors from entering the market, because incumbent firms could easily ramp up production and lower prices, starving potential rivals of profits. Yet with asset-specific physical capital, profitability, to say nothing of profit maximization, required uninterrupted production at near full capacity. Otherwise a firm would have expensive equipment sitting idle and suffer diseconomies of scale. This imperative of uninterrupted production had three important consequences.

First, firms vertically integrated—or brought production of components going into final products in house—to assure a continuous and timely flow of the parts they needed. Even something as simple as a can of soup requires a wide range of inputs. More sophisticated products like the automobiles eponymous of Fordism typically require ten thousand discrete parts. Missing any single part could halt production. After the 2011 Tohoku earthquake and tsunami, for example, shortages of plastic speedometer needles, among other things, caused car assembly factories worldwide to halt production. As late as the 1970s, GM was making 70 percent of the value of its cars inside its own factories.

Second, as a consequence, these large, vertically integrated firms necessarily had many direct employees. But in-house production of components, and even more so the need to run assembly lines continuously, gave workers a credible threat to firms’ profitability: strikes that interrupted production. Sit-down strikes in the 1930s, legislation legalizing collective bargaining, and a second wave of strikes immediately after World War II produced a temporarily stable bargain. Basically, firms agreed to share oligopoly profits with direct employees if workers ceded control over production to management. The 1950 “Treaty of Detroit” between the UAW and GM exchanged a five-year, no-strike contract for wage hikes in line with average productivity growth and inflation.

Third, big capital investments and big unionized workforces had positive macroeconomic consequences. Gross domestic product is conventionally divided into consumption (including government transfer payments, like Social Security), government spending net of transfers, and investment. GDP growth is thus the growth of any or all of these components. Firms’ high labor head counts combined with unionization to flatten the income distribution, boosting aggregate demand as workers consumed more each year. Firms’ strategic use of large fixed investments in physical capital, which served as a barrier to entry, generated continuous investment. This had strong multiplier effects, again bolstering aggregate demand. Finally, as John Kenneth Galbraith argued in 1967, firms’ desire for stable inputs and demand in largely national markets oriented their political behavior towards seeking macroeconomic stability and predictability.1

Capitalism has winners and losers, though; not all firms succeeded in creating an oligopoly or inserting themselves into the public or corporate planning routines that Galbraith charted. Fordist-era firms thus tended to polarize into two groups: larger, more profitable firms with stable markets, and smaller, less profitable firms in unstable or marginal markets. In a complementary fashion, markets and employers also sorted workers into two groups: largely male, white workers with stable, higher-wage employment in large firms, and largely minority, immigrant, and female workers with unstable, lower-wage employment in smaller, less profitable firms.

Planning, rent sharing, and a dual labor market generated tensions that undid the mass-production era. To be sure, advances in automation and communication technologies enabled some of the changes described below, but the major drivers of change were social and political conflicts in the late 1960s and early 1970s. Compliance with corporate routines and the status quo broke down in a wave of strikes and social movements. Put simply, young workers entering factories rejected mindless production routines and constant assembly line speedup; women rejected confinement to marginal labor markets and marriage; African Americans rejected exclusion from normal American civil and economic life; and newly independent oil producers rejected subservience to giant U.S. and British oil firms.

Strikes and resource price shocks in food and energy disrupted corporate planning, highlighting the vulnerabilities of production strategies that relied on large volumes of fixed, product-specific equipment. Of the two, the strikes were more important in motivating firms to change strategies, and companies began looking for ways to shift labor risks away from themselves and onto to other firms.

From 1964 to 1974, the wage share of value-added per U.S. manufacturing employee rose by 5.9 percentage points.2 Firms responded with public and private strategies to reduce the wage share and regain control over the factory floor. U.S. firms became more politically active in promoting business interests, following a strategy outlined in the 1971 Powell Memo, and in supporting the economic policy agenda embraced by the Republican Party over subsequent decades.3 Privately, firms began to disperse concentrated production and shed legal responsibility for their workers by de-merging, moving production offshore, contracting out (both on- and offshore), dispersing production geographically, and adopting variants of the franchise format.

IBM, for example, shed 40 percent of its workforce between 1990 and 1994, abandoning most manufacturing in favor of R&D, software, and patent licensing.4 Similarly, both GM and Ford spun out their parts production as the independent firms Delphi and Visteon in 1999 and 2000. By 2008, both Delphi and Visteon had more Mexican than American employees.5 Where the old GM had generated 70 percent of final value in house, and Ford 50 percent, almost all automobile firms were down to 20 percent by the 2000s. Contracting out created smaller firms and smaller factories, both of which are harder to unionize. Furthermore, the franchise format removed the legal responsibility to provide benefits and protected an emergent group of highly profitable firms from liability for abuses.

Firms’ new profit strategy sought monopoly profit via control over intellectual property (IP) via intellectual property rights (IPRs), like patent, brand, copyright, and trademark, while ejecting workers and physical capital. IPRs convey an exclusive right to extract value from a given production chain. For example, Qualcomm’s patents on the technologies linking cellphones to cell towers and Wi-Fi enable it to levy a 2 to 5 percent royalty on the average selling price of almost all cellphones.

Unfortunately, to steal a phrase, the more IPRs we come across, the more problems we see. These corporate and political responses transformed the two-tier Fordist economy into a new three-tier economy. Since not all firms can succeed in capturing oligopoly or monopoly profits via IPRs, competition produced three different generic firm types: (1) human-capital-intensive, low-head-count firms whose high profitability stems from robust IPRs; (2) physical-capital-intensive firms whose moderate profitability stems from investment barriers to entry or tacit production knowledge; and (3) labor-intensive, high-head-count firms producing undifferentiated services and commodities with low volumes of profit.

Naturally, some firms blend characteristics of each level. Intel, for example, blends the top two levels of IP ownership and a massive physical capital footprint in its semiconductor fabs.

“Tech” is the obvious epicenter of the new, IPR-based economy. But two caveats matter here. First, IPRs are nothing new. Formal IP was also present in the Fordist era and, indeed, before that.

Critically, IP was embedded in large organizations, and generated by the dedicated internal research labs that former RCA Labs engineer Henry Kressel has described.6 Second, many firms outside of tech have pursued an IPR-based strategy. Franchised restaurant chains are the most obvious “low-tech” example, with a high-profit brand owner licensing the use of its brand and production methods to smaller, lower-profit owner-operators in the bottom tier. In both high-tech and low-tech industries, the general pattern is vertical disintegration and the segregation of IP ownership into a small number of legally distinct and highly profitable firms. This largely involves a rearrangement of legal boundaries, not production as such.

The best way to see this is to imagine two different automobile factory tours, one in 1965 and one in 2015. During the 1965 factory tour you would see many different people doing direct and indirect production tasks. The iconic semiskilled workers on the assembly line would loom large. But surrounding them were specialist toolmakers, engineers, designers, janitorial staff, and logistics workers. Farther out—caterers, guards, groundskeepers, accountants, white-collar management, and a second set of logistics workers unloading parts coming from components factories. All these workers were typically legally inside the firm as employees and, white-collar workers aside, union members.

The 2015 tour reveals many of the same kinds of workers—with more racial and gender diversity—doing similar jobs. Automation would have replaced many semiskilled workers, but the logistics personnel, caterers, security, accountants, designers, engineers, and so on remain. The critical differences are largely legal and organizational: where everyone used to be an employee of the core firm, workers doing logistics now might be employees of XPO Logistics, DHL, or UPS; security guards might be employees of Securitas or G4S; caterers might be employees of Aramark or perhaps small local firms. Astoundingly, between 20 and 30 percent of line workers are now typically contracted-in or temporary employees who are technically not employees of the automobile firm, and certainly not unionized. Where firms once did much of the component production in house, they now buy in many parts, some design work, and a considerable volume of the software and electronics (which now constitute about 20 percent of a vehicle’s total cost) from external suppliers. From a production point of view, these essentially legal changes have not impeded increases in productivity.

But from a macroeconomic point of view, or with an eye towards income inequality, the shift in the legal boundaries around workers is enormously consequential.

Franchise-based industries provide an even clearer example....

"Kids can play with Alexa in their very own $300 pretend kitchen and grocery store CNET reports"

Isn't that a dream come true.
This is date February 22, 2020 but got lost in the queue, probably something to do with the pandemic.
From c|net:
The first Alexa toy is a $300 kitchen for kids, packed with dad jokes
We check out a prototype at New York Toy Fair to see how Amazon's voice assistant plays with preschoolers.

Kids can play with Alexa in their very own $300 pretend kitchen and grocery store, with the Amazon voice assistant dishing out cooking advice, shopping help and plenty of goofy toddler humor. The Alexa 2-in-1 Kitchen and Market, from toymaker KidKraft, is making its debut at this weekend's New York Toy Fair .  

The deluxe wooden play set will be sold on next year and includes dozens of accessories that prompt various reactions from Alexa. Not included: Alexa itself, which would come from parents' Echo smart speaker, designed to sit at the center of the play set...MORE 
Headline from and HT to the geeks at SlashDot.
And if you are desirous of a more comprehensive abdication of your life to Bezos, RT informs us:

Amazon Ring unveils tiny IN-HOME DRONE to spy on your property while you’re out
Amazon’s home security subsidiary Ring has released a tiny drone to watch over users’ possessions while they’re gone – capitalizing on paranoia and laziness while further cementing the presence of Big Brother in the home. 
The Ring Always Home Cam is a pint-sized drone that syncs up with the user’s Ring home security system to fly around checking on things whenever the user is away. Homeowners can watch it do its thing on their smartphones, but can’t manually control it – which must be frustrating in the event the flying spy does actually catch someone breaking in.

The drone is apparently outfitted with “collision-avoidance technology,” meaning it won’t crash into walls or knock over priceless vases, and hums loudly in order to announce its presence to anyone nearby. When it’s dormant, its camera is supposed to be hidden by the charging station....MORE

Guided-Missile Destroyer "USS Kidd Arrives in Washington Flying a Pirate Flag. Here’s Why It’s Authorized to Actually Do That"

From gCaptain, September 24:
Guided-missile destroyer USS Kidd (DDG 100) pulls into its homeport of Naval Station Everett (NSE), 
September 21, 2020. U.S. Navy Photo
The arrival of the U.S. Navy’s guided-missile destroyer USS Kidd at its homeport in Everett, Washington this week drew quite a bit of attention online, but it wasn’t because of the millions worth of drugs it had seized during its counter-narcotics deployment.

Instead, it was the giant “Jolly Roger” pirate flag it was flying from its mast.

The USS Kidd (DDG-100) arrived at Naval Station Everett on September 21 following its deployment to the U.S. 4th Fleet area of operations for enhanced counter-narcotics operations missions in the Caribbean Sea and eastern Pacific Ocean.

During their deployment, Kidd’s sailors aided in the recovery of 805 kilograms of suspected cocaine worth over an estimated wholesale value of $30 million; rendered assistance to a fishing vessel in distress, towing the vessel over 200 nautical miles to safety; battled a bout of COVID-19; and participated in a passing exercise (PASSEX) with the El Salvadoran navy.

So why the skull and crossbones?
The story actually dates back to the first voyage of the original vessel to bear the Kidd name, USS KIDD DD-661, Fletcher-class destroyers launched in 1943 by the Federal Shipbuilding & Dry-dock Company in Kearny, New Jersey....

National Hurricane Center: The Atlantic Basin Map Is Blank

A rarity this season.
From the NHC:

"Amazon takes another major step to abandon Seattle" (AMZN)

Sooner or later the politicians in Seattle, Portland, Minneapolis, Chicago and the rest of the northern cities are going to realize they've destroyed the goose that laid the golden eggs and in particular the last two cities, that they have been coasting on the fumes of past glory.
But the realization will come too late.

From MyNorthwest (KTTH Radio 770 Seattle), September 10:
Tech giant Amazon is taking additional steps to abandon Seattle, choosing not to renew its lease for the top eight floors of an office building in South Lake Union. The space reportedly totals over 180,000 square feet.
An Amazon source tells the Jason Rantz Show of the decision to abandon the space at 2201 Westlake. (Update: Amazon confirms to the Jason Rantz Show on KTTH that they are leaving this property in December of this year.)

Citing three sources, the Puget Sound Business Journal first confirmed the details.
Rumors have swirled that moves like this were going to happen, but few predicted it would happen this quickly. And, a source suggests more actions by Amazon may happen in the coming months.

Amazon’s slow farewell to Seattle
Amazon, which leases over six million square feet of office space in Seattle, recently announced another significant move. In addition to the 15,000 previously announced jobs, Amazon said it will be bringing another 10,000 jobs to Bellevue....

If interested see also:
May 2018
Gillian Tett: "Tech lessons from Amazon’s battle in Seattle" (AMZN)
There are a lot of moving parts in this story.

The rising use of opioids and all the other predisposing factors that culminate in homelessness combined with the hollowing-out of the middle-class/economic stratification seen in boom cities, San Francisco, London, Seattle et al combined with local policy/politics which in Seattle means the spendthrift city council juxtaposed with Amazon's strategy of not having taxable income and Chairman Bezos' spearheading the fight against the Washington state 2010 personal income tax measure along with house price increases that guarantee a permanent underclass that will never get on the first rung of the inter-generational wealth building ladder, which price increases are caused in great part by city and regional policy against "sprawl" and well, it's complicated....
March 2019
"Seattle Is Dying"
November 2019
"Big Tech’s battle with Seattle is just getting started — and it could have implications nationwide" (AMZN; MSFT; EXPE)
Microsoft is in Redmond but close enough....

August 2020
"Palantir and Amazon pick Denver"
Not Portland or Minneapolis?
Sarcasm aside, I'm starting to think Bezos is fed up with Seattle....

And many more, use the 'search blog' box upper left if desirous of the whole schmear.

"A New Era of Media Begins With Tokenization"

CoinDesk is nothing if not persistent in their search for a cryptocurrency use-case.
I suppose it's the old "Throw enough **** against the wall and some of it will stick" approach but I'm not sure this is the use-case that sticks. Some very smart people have worked on micro-payments-for-media for the last 15-20 years but to-date the public is still resisting.

From CoinDesk, September 25:
Media on the incumbent web is in crisis. It turns out that paying publishers for clicks, endless loops of “content” and ads, all served on platforms far beyond their maximum-viable scale is ideal for misinformation, disinformation and the decay of trust. 

The solution, according to various media innovation prognosticators, is the “passion economy.” The argument goes that, since anyone can create content now, it follows that the lumbering media institutions of the past will be unbundled and replaced with a swarm of individuals: Smart, sharp, upstart newsletter writers, podcasters and maybe even TikTokkers. Substack will save us… hopefully. 
Joon Ian Wong is a member of Seed Club, the social token incubator. He started the Consensus conference in 2015 and has been a reporter at CoinDesk, Quartz and elsewhere. This post is part of CoinDesk's "Internet 2030" series about the future of the crypto economy.
But there’s just one problem. The tooling of the legacy web isn’t fit to usher in this new era of publishing. If we believe that first we make our tools, and then they make us – that aphorism so often misattributed to Marshall MacLuhan – we must examine each layer of tooling involved in creating and distributing our stories. This is the media stack, as the polymath provocateur Balaji Srinivasan calls it.
And the media stack as it exists today is found wanting. The most powerful layers of distribution, payment and production remain entangled in oligopolistic platforms where the platform’s owners – not the creators fueling those systems profit the most....

"...A Massive Bubble Is Forming In The Rare Plant Market"

Who knew?
From ZeroHedge:
It isn't just the stock market that's experiencing a "rising tide" of both trillions in liquidity and inflation - it has now found its way to the rare plant market. 

Plants had been booming with millennials prior to the pandemic, as we noted in this piece last year. Now, with people cooped up in their house due to Covid, their popularity has skyrocketed. And where prices rise, speculators show up.

Jerry Garcia, who is 27 and collects tropical plants, told the Wall Street Journal  he had been "besieged" by people looking to buy his collection. He has sold cuttings of one ariegated Monstera Adansonii plant for $2,000 each. People pay can even pay up to $250 per leaf for the plant.

Garcia told the Journal: “It’s better than the stock market. I got a bunch of these plants when they were in the double digits, and now they are in the four-digit realm.”

One grower in Plantation, Florida, said she was working 12 hour days, 7 days a week to keep up with the "highest volume of orders" she has seen in two decades....
....MORE (pics)