October, 2016: Is That A Wrap?

From CNBC's Carl Quintanilla:

30 days have Sept, April, June & November.
All the rest have 31.
Except for October, which has 4,857.

— Carl Quintanilla (@carlquintanilla) October 28, 2016

Halloween, 2016: "Is there anything scarier than the Internet of Thiiiiiiiiingsssss??"

From MIT's Technology Review:

The Haunted Smart-House on the Hill (A Halloween Comic)

Smart gadgets can wake us up in the mornings, make us coffee, heat our homes, and even control the lights. But do you ever get the feeling that there's something ... notright ... about them?

...MORE

See also Friday's "Hook Your Stuff To The Internet and It Will be Hacked". 

Der Spiegel On the Downfall of Deutsche Bank.

From Spiegel Online, Oct. 28: 

The Deutsche Bank Downfall How a Pillar of German Banking Lost Its Way

 

For most of its 146 years, Deutsche Bank was the embodiment of German values: reliable and safe. Now, the once-proud institution is facing the abyss. SPIEGEL tells the story of how Deutsche's 1990s rush to join the world banking elite paved the way for its own downfall.

Greed, provincialism, cowardice, unfocused aggression, mania, egoism, immaturity, mendacity, incompetence, weakness, pride, blundering, decadence, arrogance, a need for admiration, naiveté: If you are looking for words that explain the fall of Deutsche Bank, you can choose freely and justifiably from among the above list.

The bank, 146 years after its founding, has become the target for all manner of pejoratives, and not just from outside observers. All of the above terms were used in interviews held during months of reporting into the causes of the downfall of Germany's largest financial institution. They popped up over the course of several hours of interviews with four Deutsche Bank CEOs, three former and one current. And they were uttered in interviews with eight additional senior bank managers and board members conducted over the course of several years, from the 1990s until today, and in meetings with captains of industry who know the bank well and during encounters with major stakeholders. More than anything, the disparaging words come up frequently in interviews with those who have worked or still work at the bank as customer service advisors, as branch managers or in positions lower down on the food chain.

What we have found in the course of these myriad interviews -- combined with the hours spent analyzing bank balance sheets, thousands of pages of files, committee meeting minutes and archive material -- is that the collapse of Deutsche Bank is the result of years, decades, of failed leadership, culminating in the complete loss of control of the company by top managers during the period between 1994 and 2012.

It is a story about how Hilmar Kopper, Rolf E. Breuer and Josef Ackermann, the leaders of Deutsche Bank during those fateful years, essentially turned over the bank to a hastily assembled group of Anglo-American investment bankers before Anshu Jain, the prince of these traders, rose to the top and spent three more years sailing the bank full-speed-ahead into the shoals.

It is also a story of how these bank heads, along with numerous other members of the management and supervisory boards, stood aside as Jain and the many other new investment banking heroes modified the staid German financial institution to serve their own purposes -- essentially looting it and robbing it of its very soul -- without leaving behind a better, stronger bank.

The subject is vast and convoluted, given the many aspects and paradoxes that come with the decline of such a large financial institution. One of those is the fact that, even as Deutsche Bank is rapidly losing value, it is still seen today as the largest systemic risk for the global finance world. Every detail in the sequence of its decline is controversial, partially because the financial world still considers it normal that nobody take responsibility for anything but themselves. All of them are most concerned with painting their own role in the best light possible and presenting the decisions they made as the only ones possible at the time.

But their claims must be examined critically. When looking back at past decisions, one can easily seem like a know-it-all, but it's just as inappropriate to fall prey to historical relativism. When a bank like Deutsche, once an icon of respectability and solidity, transforms into a caricature of "The Wolf of Wall Street," something must have gone wrong and someone must have been responsible.

And there are people who deserve blame: management board spokesmen (the bank's equivalent to a CEO before a true CEO leadership model was introduced in the 2000s), members of senior management and advisory board members over the course of several years. Their leadership failures were not primarily the result of professional incompetence, since the people involved were and are extremely well educated, often proven professionals with significant amounts of experience. The source of their mistakes lies elsewhere, in cultural factors and psychological disposition.

The German-ness of Deutsche Bank also had a significant role to play over the years. It looks as though Deutsche Bank managers wanted to free themselves from Germany's reputation for provincialism -- and went so overboard the consequences can still be felt today. Because once they successfully managed to expunge everything that was German about the bank, it suddenly seemed helpless and empty, aimless and confused.

Deutsche Bank is broken. It might be able to extract itself from the 7,800 lawsuits it is currently involved in, or it may shrink to the point that it will no longer pose a systemic risk, or it may manage to find investors to help it scrape together sufficient capital to fulfill legal requirements. In the most extreme case, it may even be bailed out by the German state. But it is broken nonetheless when compared to that which it once was: a brand, a symbol, a German icon....MUCH MORE

HT: Longform
I was just told that FT Alphaville's Further Reading post dropped out of the feedreader first.

"Investors Pile Into TIPS as Inflation Looms" (TIP)

Since February* our favorite vehicle for folks who absolutely, positively must have some bond exposure is the iShares TIPS Bond ETF:

FinViz

The ETF is currently at $115.75 up 11 cents.
From the Wall Street Journal:

Investors who have craved inflation seem close to getting some, and they are preparing 

The inflation trade is back on Wall Street.

With signs of rising prices around the globe, investors who for long craved inflation finally seem close to getting some, and they are preparing.

Demand is rising for a broad swath of financial assets that typically gain ground when consumer prices are expected to rise. The winners include inflation-protected government bonds in the developed world as well as commodities such as, oil, zinc, iron ore and aluminum.

U.S. mutual funds and exchange-traded funds targeting inflation-protected Treasurys, known as TIPS, drew $6.2 billion in new cash this year through Wednesday, headed for the biggest calendar-year inflow since 2011, according to fund tracker Lipper. The sector attracted $384.5 million new cash for the latest week, the most on a weekly basis since April. It has logged net inflows nine of the last 10 weeks.

TIPS increase their payout to holders if inflation measures exceed certain thresholds.

Market-based inflation expectations, reflecting yields on TIPS subtracted from the yields on nominal government bonds, hit their highest level in more than a year Thursday. In the U.S., the 10-year break-even rate—the yield premium investors demand to hold the 10-year Treasury note relative to the 10-year TIPS, hit 1.73%, indicating investors are banking on annual inflation in that range for a decade.

It hovered around that level Friday after a solid report on U.S. economic growth essentially matched the high expectations of bond investors. Faster growth generally should help lift prices of goods and services.

Nominal government bonds are bonds whose payouts aren’t adjusted for inflation. Inflation chips away fixed returns on bonds over time and is the main threat to long-term government bonds. So higher inflation expectation saps these bonds’ appeal.

The month-long selloff has sent the yield on the benchmark 10-year Treasury note to 1.852% Friday from 1.605% at the end of September, closing in on 2% for the first time since March.

“The bigger picture is that central banks around the world are actively trying to push inflation higher, so why not fight on the same side as the player with an unlimited balance sheet,” said Donald Ellenberger, head of multisector strategies at Federated Investors, which had $367.2 billion in assets under management at the end of June. Mr. Ellenberger said he is “overweight” TIPS, meaning he holds a greater portion than some bond indexes tracking this asset class, a typical way for portfolio managers to express a bullish view.

The market has begun shifting its focus toward the risks of rising prices, after several years dominated by fears of falling prices, or deflation. When price levels are rising, investors typically sell nominal bonds and purchase TIPS in a bid to protect purchasing power over time.

Though it has been years since rising prices were a problem for policy makers, there are signs the picture is growing more complicated. Wholesale inflation in China turned positive last month for the first time since 2012. The U.K.’s consumer-price index rose at the fastest pace last month in nearly two years. In the U.S., the CPI gained 1.5% in September, the biggest year-over-year increase since October 2014. The recovery of oil prices is helping to support higher inflation after two years of steep declines.

Adding to inflation-wary sentiment, top central-bank officials on both sides of the Atlantic, including Federal Reserve Chairwoman Janet Yellen, have signaled that they might tolerate inflation running slightly above target.

Investors say the uptick in inflation expectation should be welcomed by central banks that have been struggling for years to meet their inflation targets. It has been more than four years since the price measure watched by the Fed exceeded its 2% target.

The risk, say some analysts, is that inflation may continue to rise while economic growth stagnates, at a time when monetary stimulus is reaching limits....MUCH MORE

*Previously:
Pimco Says Market Underestimates Fed Rate Path, Recommends TIPS
"U.S. Sells 5-year TIPS at Negative Yield"
Consumer Inflation Comes In Lower Than Expected, TIPS Fall Like Cherry Blossoms In Gentle Spring Rain (TIP)
"TIPS Are King in Good Quarter for U.S. Fixed Income"
"Janet Yellen reiterates need for interest rates caution" (TIP)
The Fed Is Going to Let Price Inflation Run Hot
Bring On the Stagflation: "Atlanta Fed’s ‘GDP Now’ Plunges; Predicts Just 0.6% Q1 Growth"
"LPL: ‘Modest Stagflation’ Would Benefit TIPS"
"After Fed-Induced Spike, TIPS Auction Proves Weak" (TIP)
Today's Inflation Report Puts the Core Rate At Its Highest Since 2008 (and 2012)
BlackRock: "Why Now May Be the Time for TIPS"
"Is US inflation (finally) rising?"
Inflation: TIPS Breakevens Start to Rise as Economic Data Improves
No Inflation? Look At This (#3 will shock you)
"The Treasury Market Raises Its Inflation Outlook" (buy TIPS) 

And many more. 

"The Long Term Outlook For Natural Gas"

Truth be told, we're not sure what to make of the recent action:

FinViz

Hence the paucity of posts on natty so far this season.
December futures $3.112  +0.007

From Forbes:

It is hard to overstate the impact of the shale gas revolution in the U.S. In 2005, U.S. natural gas production had dropped below 50 billion cubic feet per day (Bcf/d), and it was widely believed that the U.S. was set to become a growing importer of liquefied natural gas (LNG). In fact, a company called Cheniere Energy built a massive complex at Sabine Pass on the coast of Louisiana to handle what was expected to be a deluge of LNG imports.

Fast forward a decade, and natural gas production in the U.S. has surged by 50%, natural gas prices have fallen from $13 per million British thermal unit (MMBtu) to ~$3/MMBtu, and Cheniere Energy is now exporting LNG. (See How Cheniere Energy Got First In Line To Export America’s Natural Gas). In 2009 the U.S. jumped past Russia to become the world’s top natural gas producer:

These developments weren’t widely foreseen a decade ago, highlighting the difficulty of trying to make long-range predictions. Nevertheless, long-range forecasting is critical for organizations and investors alike. Thus, today I would like to give my outlook for how I see the U.S. natural gas market developing over the next few years.

As I have indicated in recent articles, the short-term outlook for natural gas is most heavily influenced by the weather. While recent projections of a very cold winter are bullish for natural gas prices, the amount of natural gas currently in storage is near a seasonal record. This makes it even more challenging to forecast prices over the next few months, but as I recently argued I would be especially cautious with natural gas prices above $3/MMBtu and with very high inventories. (Natural gas prices have recently retreated since I first urged caution).

The longer term, however, is a different matter.

I believe that there are a number of drivers on the demand side of natural gas that are likely to keep upward pressure on prices in the long term. Natural gas producers will have to aggressively expand production in order to keep up with growing demand. This, I believe, will create many opportunities for natural gas producers and infrastructure providers....MORE

The Uber Drivers Guild, Funded By Uber, Promises Not To Strike

From Bloomberg:

If your Uber driver ever seems excessively paranoid about not getting a five-star rating or outright begs you for one, there’s a reason. Drivers who find their accounts deactivated by the company have long complained that the appeals process seems opaque and tough to resolve in their favor. That may be about to change: Uber says that by the end of the year, drivers in New York City will be able to appeal deactivations to panels of other drivers in meetings refereed by the American Arbitration Association. Professional labor representatives will argue their cases at no cost to the drivers.

“We don’t have a successful business if we don’t have enough happy, productive, motivated drivers,” says David Plouffe, the Uber adviser who guided Barack Obama’s 2008 presidential campaign. “We’re listening.”

There’s more than one catch. The drivers’ advocates will be provided by a quasi union called the Independent Drivers Guild, which Uber funds. Uber and the IDG will determine which drivers can sit on the panels.

Uber unveiled the IDG in New York this spring in partnership with the International Association of Machinists and Aerospace Workers (IAM), a union that has organized other black-car drivers. The machinists say the IDG represents all 40,000-plus Uber drivers in the city. Besides arbitration, it offers them such perks as discounted legal assistance and chances to air grievances at monthly meetings with Uber officials.

The IDG isn’t a traditional union. Drivers didn’t vote for it. It has no formal collective-bargaining rights. And its very existence helps the company resist formal unionization, says Arun Sundararajan, a business professor at New York University who researches the economics of the tech industry. “This is just them planting something in the ground that might deter more contentious forms of labor organizing,” he says.

Uber says the guild boosts its efforts to attract and retain drivers. The IDG successfully advocated for the arbitration association’s role in the New York deactivation hearings; in Seattle, only Uber oversees the hearings. James Conigliaro Jr., the IDG’s founder and regional general counsel for the machinists’ union, says the guild has won more concrete benefits for Uber drivers than any formal union. The guild has helped bring Uber management to the table, says driver and IDG organizer Muhammad Barlas. “When they are more comfortable, it’s easier to try and negotiate with them,” he says.

In return, the IDG won’t instigate strikes or try to get the government to treat drivers as employees with the right to unionize. (Uber says they’re independent contractors, with no such right.) If a government official grants the drivers those rights, the IDG can pull out of the agreement; otherwise, it has agreed it won’t try to form a traditional union before the deal expires in 2021. Uber and the guild say they’ll jointly lobby the state legislature for more favorable tax treatment for Uber rides. If the taxes fall, Uber says, it will return the savings to drivers, including by contributing to a new IDG-managed benefits fund....MORE

Sodom, LLC: The Marquis de Sade and the Modern Office Novel

Circling back around, the band doing the cover of Eno's Baby's on Fire in What Do You Consider The Most Interesting Recent [Scientific] News? What Makes It Important? is Venus in Furs (Radiohead's Thom Yorke, Roxy Music's Andy Mackay et al) which is also the name of one of Sacher-Masoch's books, so this is sort of the psychological bookend to the earlier post.
Sort of.

From Lapham's Quarterly:

In the mid-eighteenth century, the term bureaucracy entered the world by way of French literature. The neologism was originally forged as a nonsense term to describe what its creator, political economist Vincent de Gournay, considered the ridiculous possibility of “rule by office,” or, more literally, “rule by a desk.” Gournay’s model followed the form of more serious governmental terms indicating “rule by the best” (aristocracy) and “rule by the people” (democracy). Yet bureaucracy quickly developed a nonsatirical life of its own once the French Revolution got under way. The Terror was, of course, infamously bureaucratic, with dossiers the way to denunciation, condemnation, and execution.

On July 2, 1789, as legend has it, a voice rang out from the interior of the Bastille into the street below: “They are killing prisoners in here!” Two weeks later, citizens stormed the Bastille, inaugurating the long and complex series of events that would constitute the French Revolution. The alleged yeller, one Donatien-Alphonse-François de Sade, had been removed to the insane asylum at Charenton ten days before the siege, thus having miraculously galvanized his potential liberators or murderers and evaded them. It is a singular piece of luck that Sade was not present for the storming, for it is likely that, descending upon the marquis’ luxuriously appointed cell, the sansculottes would have had some difficulty differentiating Sade from his oppressors, much less from their own.

As this series of apocryphal events intimates, the Marquis de Sade occupies an unusual place in French letters. He is at once the paradigmatic aesthete to end all aesthetes, a supreme materialist and spendthrift, an aristocrat determined to organize his life around complexly choreographed orgies (and the eccentrically appointed locations necessary for these performances), and an iconoclast, if not a revolutionary. Though the paper trail that emerges from his early life includes at least three accusations of flaying, stabbing, poisoning, and other unusual forms of physical and emotional abuse—leveled by prostitutes and other women poorly protected by the law—Sade has been held up as a beacon of sexual liberation during an era benighted by Christian repression and hypocrisy. Susan Sontag and Julia Kristeva have praised the freedom of his writing and thought. As the myth of his cry to action from within the Bastille indicates, Sade’s readers are willing, in spite of his title, to receive him as an anarchist hell-bent on upending the feudal order of his day.

But for all Sade’s aristocratic indulgence of peculiar whims and profligate spending on whips and whores, he is also one of the first major authors of what we might term modern bureaucratic literature. His writings are extraordinarily, pruriently concerned with acts that can be accomplished only by people working in groups who follow, in an orderly fashion, arbitrary rules and regulations. These secular constraints not only defy common sense but fly in the face of what we usually think of as basic respect for the sensations and lives of others. Thus another neologism: sadism. The writings of the Marquis de Sade describe dispassionate intimacy in the plural. In this sense, they foreshadow the social world of the contemporary office.

Like the word bureaucracy, sadism is a neologism that has taken on a life of its own. Today, according to the Oxford English Dictionary, sadism is an “enthusiasm for inflicting pain, suffering, or humiliation on others.” Yet Sade’s notion of dispassionate intimacy is quite particular. His sadism is less concerned with pleasure in the pain of others than with a lack of feeling regarding the pain of others. Though many of Sade’s writings describe characters who engage in cruel and murderous acts of sexual congress, few if any seem to enjoy the pain of others, no matter how necessary the mutilation of flesh to the act in question. Sade’s embodied economic processes, his sometimes rather less than mutually consenting coworkers, labor to produce orgasm—which is really just a route to apathy. After orgasm, Sade’s libertines are briefly freed from the confusing sensation of need. The libertine looks dispassionately down upon the flayed corpse in which he has just succeeded in ejaculating and experiences clarity. The corpse cannot, reasonably, be the object of affections or emotion; it holds no spell of either generosity or dependency over the Sadean character who has just made use of it. A corpse, even if nominally endowed with life, can inspire nothing other than apathy in the libertine. And apathy is the aesthetic mode that, for Sade, correlates with the best forms of agency, since it demonstrates the libertine’s freedom from Christian sympathy and its attendant hypocrisies. An absolutely liberated, absolutely impersonal pleasure testifies to the libertine’s refusal of insincere social bonds. “Virtue suffers the punishment of crime,” wrote Simon-Nicolas-Henri Linguet in 1771, “even as crime enjoys with impunity the pleasures that should be the rewards of virtue.” Sadean sex is, to inject a contemporary term, the fuck of the spreadsheet, in which all markers of identity and sentimentality are like the footlong dildo the eponymous libertine heroine of The History of Juliette uses to impale a nine-year-old girl: detachable, iterable, and sortable by size. Anyone can be a libertine, provided she or he is willing to be systematic.

The most famous of Sade’s narratives, 120 Days of Sodom, is also the most explicit about the Sadean protagonist or sadist. Here again liberation through apathy, rather than through cruelty or enjoyment, is key. The four friends who convene at Château de Silling for a four-month debauch are not so much interested in harming others as they are in orchestrating an experience that will be beyond anything they have previously enacted. This experience will, therefore, culminate in their absolute liberation from moral order. Drafted during Sade’s incarceration at the Bastille in microscript on a forty-foot roll of paper pieced together from smuggled scraps, 120 Days was a physical labor of desperation, passion, and personal and political rage, the composition of which was apparently accompanied by elaborate masturbation rituals. Sade never completed the manuscript, so we do not know what will happen to the libertines on day 120—but it seems to be a matter of little difference if they were to walk away from their fortress of horrors with plans to reconvene the following year or if the secluded castle were spontaneously engulfed in flames, taking all occupants to their deaths. (Manuscript notes suggest that sixteen people will survive the events at Silling and return to Paris, but who knows what, in a final draft, might have occurred.) Our own ambivalence regarding the book’s actual ending, which Sade sketches out in his notes as a series of coordinated imprisonments and executions, is not accidental. It results from Sade’s skillful cultivation of simultaneous prurient interest and utter apathy in the reader of 120 Days of Sodom.

We are fascinated by the four libertine friends’ stats, by their personal deterioration or fortitude, by their ability to orgasm repeatedly or not at all, by the revolting details of body hair and the shapes of their buttocks. But beyond their appetites, appearances, and aristocratic titles, we know little of the friends save what they do in the fortress. And because what they do in the fortress is determined by a set of laws drawn up at the outset of their macabre vacation, plus narratives supplied by ancient procuresses invited expressly to narrate acts of debauchery, our psychological understanding of the four friends remains limited. We know that they are very rich, highly sexed, extraordinarily well organized, and thoroughly apathetic. Of the victims we know significantly less: they are young, beautiful, soft-skinned.

Within this desert of spiritual detail, one piece of familial backstory is supplied. At the opening of 120 Days, we learn that each of the friends has raped his own daughter and that each has married the unfortunate daughter of another one of the four friends. This arrangement guarantees that Christian marriage has been reimagined as an enterprise of debauchery. Yet this brief peek at a previous arrangement among the four provides a key to the meaning of other relentlessly formal coital permutations set up later on: 120 Days of Sodom is not a novel about the apathy of institutions and how they dehumanize and anonymize their members. It is not about marriage, unless we understand the four friends’ relationship as a kind of marriage. It is, rather, a novel about the apathy of coworking, a description of how individuals collaboratively create codes for behavior and imagine actionable scenarios in an enclosed space—i.e., office, another relative neologism derived from the Latin word for “obligation”—all the while guaranteeing that their actions will be impersonal. This is the sense in which 120 Days of Sodom can be considered an “office novel.” It is also, bizarrely, a comedy; it is the story of a highly successful office and how it works.

If, as in Tolstoy’s formulation, all successful offices are the same, what are the universal qualities of Sodom, LLC? What does this happy office have that other offices also share?...

...MORE

HT: Arts & Letters Daily (also on blogroll at right)

"What is the New Snobbery?"

From the Guardian:

^“I’m afraid we’ve become terrible salt snobs,” joked the late food writer Alan Davidson when he and his wife Jane had me round for lunch one day in the early 2000s. On the table were a panoply of special salts, from pink Himalayan to damp, grey fleur de sel from France. Announcing himself as a salt snob was a form of gentle self-mockery, something Alan was good at. He knew how absurd it was to have all these salts, when he could have made do with a cheap tub of Saxa. But it was also a modest kind of boastfulness. Alan wanted me to notice how superior his salt collection was, which I duly did.

The concept of snobbery is deeply complex, as the literary critic and biographer DJ Taylor cleverly explores in his “definitive guide” to snobs. Snobbery is a form of social superiority, but it can also be a moral failing. Snobs may laud it over others, but we, in turn, despise and punish them for it. Taylor starts his book with the “Plebgate” affair of 2012, in which the government chief whip Andrew Mitchell was forced to resign his official post, and later pay substantial damages, after it emerged that he had rebuked a police officer who asked him not to cycle through the gates of 10 Downing Street with the words: “Best you learn your fucking place … You’re fucking plebs.” As Taylor notes, Mitchell’s sin was not to swear, but his use of the word “plebs”, which, in ancient Rome, simply meant the common people.

In modern times, very few snobs are snobs all the time. To be a salt snob does not necessarily mean that you will be a snob in any other area of your life. Taylor confesses that he becomes a snob whenever he hears Adele on the radio or hears a Channel 4 presenter “tumbling over her glottal stops”, but hopes that he is not a snob per se. He is the son of a grammar school boy from a council estate and feels that he knew “all about petty social distinctions from an early age”. He is fascinated by the many forms snobbery takes, from the garden snobs who despise hanging baskets and patios (the correct word, apparently, is terrace) to the inverse snobs who feel superior to anything that smacks too much of “middle-class” behaviour. Taylor also identifies the film snob, a perverse individual who may consider Brian de Palma’s Body Double wildly underrated and sees no point in Meryl Streep.

In his The Book of Snobs (1846-7), the novelist WM Thackeray noted that some people were snobs “only in certain circumstances and relations of life”. Others, however, were what Thackeray called positive snobs, who were “snobs everywhere, in all companies, from morning to night, from youth to grave”. Thackeray argued that in the Victorian society in which he lived, many people could not help being positive snobs, because the whole of British national life was founded on the principle of hereditary privilege. The true snob, in Thackeray’s book, would find, as Taylor explains, that “his entire existence is governed by its logic: wife, house, career, recreations”. The Victorian snobs depicted by Thackeray might ruin themselves to pay for a fashionable hat or a pianoforte in the back parlour or an absurdly expensive truffle-laden dinner. This was because they felt it was social death to dine with people of the wrong class, such as doctors or lawyers, instead of “the country families”....MORE

Probably related:

Trifecta: We Have a Hot Sauce Sommelier To Go Along With The Mustard Sommelier and the Water Sommelier

Yes, ma'am, the Satan's Saliva small barrel Special Reserve sauce is made from Scotch Bonnet peppers grown exclusively on a tiny island off the coast of another island,  Antigua.

The peppers are picked at the peak of their short lives to ensure the characteristic citrus and battery acid top notes contrast with the charred peat and road tar bottom to create a complex tease, flamboyant enough to be called the scamp of the vineyard pepper pot but finishing as cigar box and C4.

In case of overdose the usual cold milk treatment is insufficient and one should go deeper into the butterfat realm, whipping cream at minimum, preferably a hunk of cream cheese to gnaw on as you search for the nearest burn unit.

Perfect when paired with artisanal small batch lard or any of the kicky tallows now making the scene.

From the Globe and Mail:...

Or does this type of mockery make me the snob?
Entering that wilderness of mirrors is the slow road to snooty madness so I'll just answer 'no'.

"What If the Newspaper Industry Made A Colossal Mistake?"

The headline is from a link in the Stratechery essay, which only uses it as a take off point to explore far beyond that question into the greater questions posed by information technology.

From Stratechery, Oct. 19:

The IT Era and the Internet Revolution

I like to say that I write about media generally and journalism specifically because the industry is a canary in the coal mine when it comes to the impact of the Internet: text shifted from newsprint to the web seamlessly, completely upending the industry’s business model along the way.

Of course I have a vested interest in this shift: for better or worse I, by virtue of making my living on Stratechery, am a member of the media, and it would be disingenuous to pretend that my opinions aren’t shaped by the fact I have a personal stake in the matter. Today, though, and somewhat reluctantly, I am not just acknowledging my interests but explicitly putting Stratechery forward as an example of just how misguided the conventional wisdom is about the Internet’s long-term impact on society, in ways that extend far beyond newspapers (but per my point, let’s start there).

What Killed Newspapers
On Monday Jack Shafer, the current dean of media critics, asked What If the Newspaper Industry Made a Colossal Mistake?:

What if, in the mad dash two decades ago to repurpose and extend editorial content onto the Web, editors and publishers made a colossal business blunder that wasted hundreds of millions of dollars? What if the industry should have stuck with its strengths — the print editions where the vast majority of their readers still reside and where the overwhelming majority of advertising and subscription revenue come from — instead of chasing the online chimera?

That’s the contrarian conclusion I drew from a new paper written by H. Iris Chyi and Ori Tenenboim of the University of Texas and published this summer in Journalism Practice. Buttressed by copious mounds of data and a rigorous, sustained argument, the paper cracks open the watchworks of the newspaper industry to make a convincing case that the tech-heavy Web strategy pursued by most papers has been a bust. The key to the newspaper future might reside in its past and not in smartphones, iPads and VR. “Digital first,” the authors claim, has been a losing proposition for most newspapers.

Shafer’s theory is that the online editions of newspapers is inferior to print editions; ergo, people read them less. To buttress his point Shafer cites statistics showing that most local residents don’t read their local newspaper online.

The flaw in this reasoning should be obvious to any long-time Stratechery reader: people in the pre-Internet era didn’t read local newspapers because holding an unwieldy ink-staining piece of flimsy newsprint was particularly enjoyable; people read local newspapers because it was the only option. And, by extension, people don’t avoid local newspapers’ websites because the reading experience sucks — although that is true — they don’t even think to visit them because there are far better ways to occupy their finite attention.

Moreover, while some of those alternatives are distractions like games or social networking, any given newspaper’s real competitors are other newspapers and online-only news sites. When I was growing up in Wisconsin I could get the Wisconsin State Journal in my mailbox or I could go to a bookstore to buy the New York Times; it didn’t matter if the latter was “better”, it was too inconvenient for most. Now, though, the only inconvenience is tapping a different app. Of course most readers don’t even bother to do that: they just click on whatever is in their Facebook feed, interspersed with advertisements that are both more targeted and more measurable than newspaper advertisements ever were.

The truth is there is no one to blame for the demise of newspapers — not Google or Facebook, and not 1990s era publishers. The entire linchpin of the newspaper business model was controlling distribution, and when that linchpin was obliterated by the Internet it was inevitable that the entire apparatus would collapse.

The IT Era
Make no mistake, this sucks for journalists in particular; newsroom employment has plummeted over the last decade:

Still, just for a moment set aside those disappearing jobs and look at what happened from roughly 1985 to 2007: at a time when newspaper revenue continued to grow jobs didn’t grow at all; naturally, newspaper companies were enjoying record profits.

What had happened was information technology: copy could be made on computers, passed on to editors via local area networks, then laid out digitally. It was a massive efficiency improvement over typewriters, halftone negatives, and literal cutting-and-pasting:...MUCH MORE

"What Do You Consider The Most Interesting Recent [Scientific] News? What Makes It Important?"

That's the Edge.org question for 2016.

And just to give a quick pic of what's rattling around in my head, we had planned to post this piece last spring but some disaster or other came up and it got set aside until this morning when the post immediately preceding mentioned Brian Eno who is one of Edge's go-to brainiacs (see links below), I had an "oh crap" moment and here we are.

To cut to the chase, here's Edge.org, slightly dusty from sitting around in a seldom used server but worth the read. I'll just link to some of the responders, their mini-bios, and answer titles. Persue or not as you choose. Special Bonus after the jump.

From Edge.org:

Robert Sapolsky
Neuroscientist, Stanford University; Author, Monkeyluv
A Collective Realization—We May All Die Horribly 

David Haig
Associate Professor of Biology in Harvard's Department of Organismic and Evolutionary Biology; author, Genomic Imprinting and Kinship
Human Chimera

Gloria Origgi
Philosopher and Researcher, C.N.R.S. Paris; Author, Qu’est-ce que la confiance?
How To Be Bad Together: Antisocial Punishment of Pro-social Cooperators

Andrei Linde

Theoretical Physicist, Stanford; Father of Eternal Chaotic Inflation; Inaugural Recipient, Fundamental Physics Prize

Energy Of Nothing

 

Steven Pinker

Johnstone Family Professor, Department of Psychology; Harvard University; Author, The Sense of Style

Human Progress Quantified

 

Freeman Dyson

Physicist

Doing More With Less

 

Kai Krause

Software Pioneer; Philosopher; Author, "A Realtime Literature Explorer"

Complete Head Transplants

 

Matt Ridley

Science Writer; Fellow, Royal Society of Literature and the Academy of Medical Sciences; Author,The Evolution of Everything

The Epidemic Of Absence

 

Joscha Bach

Cognitive Scientist, MIT Media Lab, Harvard Program for Evolutionary Dynamics

Everything Is Computation

 

Noga Arikha

Historian of ideas; Author, Passions and Tempers: A History of the Humours

Neuro-news

 

Stewart Brand

Founder, The Whole Earth Catalog; Co-founder, The Well; Co-Founder, The Long Now Foundation; Author, Whole Earth Discipline

Self-Driving Genes Are Coming

 

Jonathan Haidt

Social Psychologist; Professor, New York University Stern School of Business; Author, The Righteous Mind

The Strongest Prejudice Was Identified

 

Max Tegmark

Physicist, MIT; Researcher, Precision Cosmology; Scientific Director, Foundational Questions Institute; President, Future of Life Institute; Author, Our Mathematical Universe

The Wisdom Race Is Heating Up 

 

Yuri Milner

Physicist; Entrepreneur & Venture Capitalist; Science Philanthropist

Tabby's Star

Those are the first 14 answers, there are 184 more HERE. 

Here are the Question homepage and Index.

And from the Climateer archives, February 15, 2015: 

Brian Eno: "Just A New Fractal Detail In The Big Picture"

In yesterday's "187 Big Thinkers Answer the Question: What Do You Think About Machines That Think?" I went on about how interesting blah, blah, blah Eno's response to the Edge Big Question was and it wasn't until this morning, while reading Alphaville's Further Reading post (thanks for the h/t Mr. Keohane!) that I realized I hadn't actually linked to Mr. Eno's take on the query.

So here it is, From Edge (note, the credits in the mini bio are almost ridiculously trivial compared to the reality)...

Also, 2013's "Brian Eno Answers Nassim Taleb": 

Mr. Eno is an autodidactic polymath.
Mr. Taleb is a comedian:
Climateer Line of the Day: The Modesty of Nassim Taleb Edition 

...MORE

Finally, one of the better covers of an Eno tune, from the movie Velvet Goldmine (BAFTA for the glam-rock costumes):

Q&A With Undercover Economist Tim Harford (with a drive-by from Eno)

From Abnormal Returns, Oct. 26:

Q&A with Tim Harford author of “Messy: The Power of Disorder to Transform Our Lives”

I am an unabashed Tim Harford fan. That is why I was so excited when he agreed to do a Q&A with me about his newly published book Messy: The Power of Disorder to Transform Our Lives. You can read Tim in the FT and is the author of the Undercover Economist books, a successful TED speaker and radio host, to boot.

His prior book, Adapt: Why Success and Failure Always Start With Failure, is a great read. In the book he makes the case for “adaptive trial and error” and is a helpful counterweight to Silicon Valley’s penchant for ‘failure porn.’ Messy: The Power of Disorder to Transform Our Lives is a successful follow-up and will make anybody think about the relationship between unexpected events and success differently.

In addition to the Q&A with Tim below you can hear him on Slate Money with Felix Salmon and with FT Alphachat with Cardiff Garcia. An excerpt from the book was also recently published on Time. Without any further ado below you can see my questions in bold. Tim’s answers follow.

---

AR: Adam Grant, author of the excellent Originals, in his blurb makes the comparison between the phenomena that is Marie Kondo’s The Life Changing Magic of Tidying Up and your book. Is it possible to hold these two ideas, radical simplicity and messy, in our minds simultaneously?

TH: Certainly they’re not as contradictory as they seem. Marie Kondo’s book warns people that organisational systems are a “trap” – they don’t really help us get on top of all our stuff. I agree with that. And I’m generally a fan of Marie Kondo if we’re talking about tidying up a sitting room or a kitchen: she preaches a minimalist gospel and it works for me.

But then what about your email inbox or your office desk? That’s a different kind of problem altogether: we’re dealing with a constant inflow of new information. The final chapter of Messy argues that most of us cannot organise our way out of this problem with clever folder structures. If we try, we’ll fall prey to what the psychologist Steve Whittaker calls “premature filing” – we tidy our stuff away into neatly-labelled folders but we don’t really know what we’ve got, or what it means. It’s often better to let it accumulate on your desk or in an email folder labelled “action”. And the nice thing about piles of paper on a desk is that they organise themselves, with less-used stuff sinking slowly to the bottom. It looks messy but it’s actually quite efficient.

AR: Messy in many ways seems like the logical follow-up to Adapt. For example adaptive organizations have to be comfortable with some measure of ‘mess’ in order to find and exploit certain opportunities. Did you have Adapt in mind when you were writing Messy?

TH: Not explicitly, but I agree that the books are in sympathy with each other. One of the things I enjoyed about writing Adapt was the challenge of weaving rigorous ideas together with stories that made you keep turning the page to find out what happened next. I wanted to take that narrative style forward with Messy and perhaps do it better. It was a lot of fun trying.

AR: The story you tell about Amazon in the book is at both exhilarating and frightening. For a company that is in the top 5 in market capitalization it was alarmingly close to going under at its outset. Is Amazon the poster child for the power of messy in business?

TH: Perhaps. The founder, Jeff Bezos, sailed to close to bankruptcy that with a little less luck we might be telling a very different story. But what struck me about Bezos’s approach was that he was very calculating in his embrace of chaos: he understood that if he moved slowly and carefully he would be crushed by Barnes and Noble – or if not them, Wal Mart. So he moved very fast and as a result made a lot of mistakes and caused a tremendous amount of stress for his employees. The results speak for themselves – he took a calculated risk that the mess would pay off.

AR: The investment world, at least in the US, is distressingly homogenous. I have argued in the blog for greater diversity in investment teams. How could investors use ‘oblique strategies’ to make better investment decisions?

TH: Okay – now that’s a question I’ve never been asked!
The Oblique Strategies are cards developed by the composer and producer Brian Eno (and his friend, the late Peter Schmidt) to deliberately provoke and disrupt people facing a creative block. They were used to great effect in his work with David Bowie and I can say from personal experience they’re amazing at getting you to see a problem from a different angle. You can buy them online, or just see a few by visiting various websites or downloading an app. Give it a try and see if it doesn’t suggest some new questions.


AR: In the financial market where we are awash in data, investors have a tendency to overfit the data when model-making. In Messy you tell the story of Nobel-prize winner Harry Markowitz and the surprising robustness of a 1/N asset allocation model....

...MORE

arXive: "What Counts as Science?"

We like arXive.
A lot.*
From Nautil.us:

The arXiv preprint service is trying to answer an age-old question.

xxx.lanl.gov. The address was cryptic, with a tantalizing whiff of government secrets, or worse.

The server itself was exactly the opposite. Government, yes—it was hosted by Los Alamos National Laboratory—but openly accessible in a way that, in those early Internet days of the 1990s, was totally new, and is still game-changing today.

The site, known as arXiv (pronounced “archive,” and long since decamped to the more wholesome address “arXiv.org” and to the stewardship of the Cornell University Library), is a vast repository of scientific preprints, articles that haven’t yet gone through the peer-review process or aren’t intended for publication in refereed journals. (Papers can also appear, often in revised form, after they have been published elsewhere.) As of July 2016, there were more than a million papers on arXiv, leaning heavily toward the hardest of the hard sciences: math, computer science, quantitative biology, quantitative finance, statistics, and above all, physics.

ArXiv is the kind of library that, 30 years ago, scientists could only dream of: totally searchable, accessible from anywhere, free to publish to and read from, and containing basically everything in the field that’s worth reading. At this golden moment in technological history, when you can look up the history of atomic theory on Wikipedia while waiting in line at Starbucks, this might seem trivial. But in fact it was revolutionary.

Practically, arXiv has leveraged new technologies to create a boon for its community. What is less visible, though, is that it has had to answer a difficult philosophical question, one which resonates through the rest of the scientific community: What, exactly, is worth reading? What counts as science?

Before arXiv, preprint papers were available only within small scientific circles, distributed by hand and by mail, and the journals in which they were ultimately published months later (if they were published at all) were holed up in university libraries. But arXiv has democratized the playing field, giving scientists instant access to ideas from all kinds of colleagues, all over the world, from prestigious chairs at elite universities to post-docs drudging away at off-brand institutions and scientists in developing countries with meager research support.

Paul Ginsparg set up arXiv in 1991, when he was a 35-year-old physicist at Los Alamos. He expected only about 100 papers to go out to a few hundred email subscribers in the first year. But by the summer of 1992, more than 1,200 papers had been submitted. It was a good problem to have, but still a problem. While Ginsparg had no intention of giving incoming papers the top-to-tail scrutiny of peer review, he did want to be sure that readers could find the ones they were most interested in. So he started binning the incoming papers into new categories and sub-categories and bringing on more and more moderators, who took on the work as volunteers, as a service to their scientific community.

Will unclassifiable papers get lost in the muck of the truly incoherent?

The arXiv credo is that papers should be “of interest, relevance, and value” to the scientific disciplines that arXiv serves. But as the site and its public profile grew, it began attracting papers from outside the usual research circles, and many of those papers didn’t pass the test. They weren’t necessarily bad science, says Ginsparg. Bad science can be examined, tested, and refuted. They were “non-science”—sweeping theories grandly claiming to overturn Einstein, Newton, and Hawking; to reveal hidden connections between physics and ESP and UFOs; and to do it all almost entirely without math and experiment.

The arXiv’s default stance is acceptance—papers are innocent “until proven guilty,” Ginsparg says—but the non-science papers were a waste of scholarly readers’ time. And if they were allowed to share the same virtual shelf space with legitimate science, they could create confusion among arXiv’s growing audience of journalists and policymakers. So, paper by paper, moderators had to make the call: What is and isn’t science?...MORE

It just struck me that I missed a chance at a "Questions America Wants Answered" headline with the pull-quote: "Will unclassifiable papers get lost in the muck of the truly incoherent?"

*Here is a quick search of the blog for arXive and some posts sourced to same:

Computer Simulations Reveal Benefits of Random Investment Strategies Over Traditional Ones
In the Case of Airbnb, Uber et al: Time To Break Out The Algorithmic Regulation
So You Think Your Computer Is Fast? Update on Google, D-Wave and the Quantum Computer
Sorry Fact Checkers, The Robots Are Coming For Your Jobs
"Two centuries of trend following"
Making A Better Model of the Market: Are Financial Markets an Aspect of the Quantum World?
"Leverage effect in energy futures"
Here Is The Paper "How Unlucky Is 25 Sigma?" (25 Standard Deviation Moves Basically Don't Happen)
"The Interrupted Power Law and The Size of Shadow Banking"
"The Illusion of the Perpetual Money Machine"
"How A Private Data Market Could Ruin Facebook" (FB)

And, if I haven't yet made the point, here's 2012's "Super Physics Smackdown: Relativity v Quantum Mechanics...In Space":

Some of the more interesting finance papers of the last few years have ended up at the arXive, we are fans.
From the Physics arXiv blog:...

Use the 'search blog' link if interested in more.

Alphaville Does Architecture Criticism

From FT Alphaville's Markets Live post 28Oct16:

...11:22AM

PM Roddy mentioned Bloomberg’s “shiny new HQ”

PM But it’s not shiny, is it?

PM It’s big and dull (appropriately)

BE The one across the bridge? It’s a classy burnished copper I thought.

PM

 

PM I don’t think it’s very classy

BE………… that’s not its best angle.

...MORE

Hook Your Stuff To The Internet and It Will be Hacked

It's pretty much the first rule of cyber-security. If you have information or data* that must not be accessed  by outsiders it absolutely must not be accessible from the www.
From The Atlantic:

The Inevitability of Being Hacked
We built a fake web toaster, and it was compromised in an hour.

Last week, a massive chain of hacked computers simultaneously dropped what they were doing and blasted terabytes of junk data to a set of key servers, temporarily shutting down access to popular sites in the eastern U.S. and beyond. Unlike previous attacks, many of these compromised computers weren’t sitting on someone’s desk, or tucked away in a laptop case—they were instead the cheap processors soldered into web-connected devices, from security cameras to video recorders. A DVR could have helped bring down Twitter.

Great, I thought as I read the coverage last week. My DVR helped bring down Twitter. (Probably not, at least this time—the targeted products were older than what you’d find in most American homes, and less protected.) But the internet is huge! There are around a couple billion public IPv4 addresses out there; any one of those might have a server, a desktop computer, or a toaster plugged in at the other end. Even if the manufacturer of my gadget gave it a dumb and easily guessed password, wouldn’t it be safe in this sea of anonymity? How would the hackers find me?

I don’t actually own a wireless toaster. But I devised a test. Renting a small server from Amazon, I gussied it up to look like an unsecured web device, opening a web port that hackers commonly use to remotely control computers. Instead of allowing real access, though, I set up a false front: Hackers would think they were logging into a server, but I’d really just record their keystrokes and IP addresses. In cybersecurity circles, this is called putting out a honeypot—an irresistible target that attracts and ultimately entraps hackers and the scripts they use to find vulnerable servers.
Here’s what my particular honeypot looked like, if you tried to log in:

I switched on the server at  1:12 p.m. Wednesday, fully expecting to wait days—or weeks—to see a hack attempt.

Wrong! The first one came at 1:53 p.m....MUCH MORE

*As a side note, a few years ago we posted a handy flow chart of the hierarchy of knowledge management:

We prefer the chart to the usual pyramid presentation popularized by Akerlof because it includes characteristics at the bottom and the value-added required to get to the next level of complexity in the top panel.