A16Z: "Why There Will Never Be Another Red Hat: The Economics of Open Source" (RHAT; IBM)

This article is a few years old but I had not seen it until it was sent to me yesterday.
A good companion piece to this morning's "IBM’s Old Playbook" (RHAT) by Ben Thompson at Stratechery.

From Andreessen Horowitz, February 2014:

Open source software powers the world’s technology. In the past decade, there has been an inexorable adoption of open source in most aspects of computing. Without open source, Facebook, Google, Amazon, and nearly every other modern technology company would not exist. Thanks to an amazing community of innovative, top-notch programmers, open source has become the foundation of cloud computing, software-as-a-service, next generation databases, mobile devices, the consumer internet, and even Bitcoin.

Yet, with all that momentum, there’s a vocal segment of software insiders that preach the looming failure of open source software against competition from proprietary software vendors. The future for open source, they argue, is as also-ran software, relegated to niche projects. It’s proprietary software vendors that will handle the really critical stuff.

So which is it? The success of technology companies using open source, and the apparent failure of open source is a head scratcher. Yet both are true, but not for the reasons some would have you believe. The success or failure of open source is not the software itself  – it’s definitely up to the tasks required of it – but in the underlying business model.

It started (and ended) with Red Hat
Red Hat, the Linux operating system company, pioneered the original open source business model. Red Hat gives away open source software for free but charges a support fee to those customers who rely on Red Hat for maintenance, support, and installation. As revenue began to roll into Red Hat, a race began among startups to develop an open source offering for each proprietary software counterpart and then wrap a Red Hat-style service offering around it. Companies such as MySQL, XenSource, SugarCRM, Ubuntu, and Revolution Analytics were born in this rush toward open source.

Red Hat is a fantastic company, and a pioneer in successfully commercializing open source. However, beyond Red Hat the effort has largely been a failure from a business standpoint. Consider that the “support” model has been around for 20 years, and other than Red Hat there are no other public standalone companies that have been able to offer an alternative to their proprietary counterpart. When you compare the market cap and revenue of Red Hat to Microsoft or Amazon or Oracle, even Red Hat starts to look like a lukewarm success. The overwhelming success of Linux is disproportionate to the performance of Red Hat. Great for open source, a little disappointing for Red Hat.

There are many reasons why the Red Hat model doesn’t work, but its key point of failure is that the business model simply does not enable adequate funding of ongoing investments. The consequence of the model is minimal product differentiation resulting in limited pricing power and corresponding lack of revenue. As shown below, the open source support model generates a fraction of the revenue of other licensing models. For that reason it’s nearly impossible to properly invest in product development, support, or sales the way that companies like Microsoft or Oracle or Amazon can.

And if that weren’t tough enough, pure open source companies have other factors stacked against them. Product roadmaps and requirements are often left to a distributed group of developers. Unless a company employs a majority of the inventors of a particular open source project, there is a high likelihood that the project never gains traction or another company decides to create a fork of the technology. The complexities of defining and controlling a stable roadmap versus innovating quickly enough to prevent a fork is vicious and complex for small organizations.

To make matters worse, the more successful an open source project, the more large companies want to co-opt the code base. I experienced this first-hand as CEO at XenSource, where every major software and hardware company leveraged our code base with nearly zero revenue coming back to us. We had made the product so easy to use and so important, that we had out-engineered ourselves. Great for the open source community, not so great for us.

If you think this is past history and not relevant, I see a similar situation occurring today with OpenStack, and it is likely happening with many other successful open source projects. As an open source company, you are not only competing with proprietary incumbents, you are competing with the open source community itself. It’s a veritable shit-show....MORE

"Worst Case Wednesday: How to Avoid a Vampire Attack"

From Quirk Books:

Thanks to Twilight, people have ceased to believe that vampires are blood-thirsty murderers. Bella Swan would have been long dead if she tried dating Dracula.

Anyways, anyone watching Breaking Dawn Part 2 is far more vulnerable to being attacked by vampires after leaving the midnight showing. Who knows if vampires are studying popular culture’s opinion of vampires, and changing their disarming disguise accordingly?

It’s best not to go to the cinema unprepared, as your vampire killer might very well be wearing body shimmer! Here is some insider advice from The Worst Case Scenario Survival Handbook: Extreme Edition by David Borgenicht and Joshua Piven that will help you avoid these intelligent killers.

How to Avoid a Vampire Attack

Garlic, Garlic, Garlic: Wear a necklace of strung garlic, which vampires despise. A hearty meal of pasta with garlic sauce and garlic bread will also help to ward them off. A garlic garland on a doorway will prevent a vampire from entering, even if he’s been invited.

Stay outside during daylight hours: While sunlight will not kill vampires, it will severely burn them. Most vampires sleep during daylight hours and avoid direct sunlight whenever possible, preferring to hunt for victims in the dark of night....MORE

"Six scary charts to keep investors up at night this Halloween"

From Bond Vigilantes:

If you are looking for something really scary this Halloween, there is no need to reach out for blockbuster thrillers or monster figures – just look at these six spooktacular financial charts.

This generation looks different

US Federal Reserve (Fed) Chairman Jerome Powell recently warned about the ever-increasing amount of US student debt outstanding: “You do stand to see longer-term negative effects on people who can’t pay off their student loans. It hurts their credit rating, it impacts the entire half of their economic life.”

Student debt also impacts the overall economy: as graduates seek to repay their loans, they are forced to make concessions to their financial consumption, leading to an ever-growing drag on the economy. They buy fewer goods and services and are delayed in joining the housing ladder, with many choosing (or having) to rent instead. On top of this, student debt sees the highest 90+ day delinquency rate of all US consumer credit.

The anaconda moment?

The long-end of the US Treasury market has often been described as a giant anaconda: it draws little attention as it sleeps most of the time, but the minute it wakes up, everybody around shakes. US 30-year bonds don’t bite, but their moves can be as poisonous as they basically determine millions of mortgage rates, as well as the price that governments and companies around the world pay for debt.

The 30-year Treasury yield has remained within the support and resistance level shown for over 30 years, rallying 6% over the period and giving investors a long bull run. Does the recent breach through this level mean that the anaconda is beginning to stir?

And you thought investors were more protected after the crisis...

...MORE

Bwaaahahahahaaa!

Brazil: What Investors Expect From Bolsonaro's First 100 Days

From Forbes, Oct. 29:

As everyone now knows, Jair Bolsonaro has pulled Brazil to the right. Wall Street has gone overweight since.

After weeks of mostly foreign headlines about Bolsonaro's racism, misogynism, fascism, and other 'isms, the electorate in Brazil shrugged it off and gave him about 10.7 million more votes than his challenger Fernando Haddad from the beleaguered Workers' Party (PT). In percentage terms, it was the PT's worst showing since 1986.

The market reacted positively on Monday morning but has since corrected as investors cash in after a meteoric rise in Brazilian securities. Over the last month, while the S&P 500 and the MSCI Emerging Markets Index are in negative territory, the MSCI Brazil is up 16.8%. Petrobras shares are up 30%.

Mutual fund firm Neuberger Berman is overweight Brazil, mainly focusing on the currency and the local bond market.

"The real remains undervalued even after its recent rally," say Neuberger Berman analysts led by Conrad Saldanha. "Brazil lacks any Argentina-style external funding pressures." They also think interest rates are coming down thanks to low inflation at around 3% and two-year bond yields still high at 8.5%. Bond yields fell on Monday, in fact....MORE

"So Far, the Big Trade War Loser Is China, Not the U.S."

From naked capitalism, October 30:

By Marshall Auerback, a market analyst and commentator. Originally produced by the Independent Media Institute

Trade wars are neither easy nor costless, in spite of the insouciant assertions of President Trump to the contrary. But it is also the case that those who predicted that the far-sighted mandarins who guide China’s economic policy would win this battle might be similarly guilty of misplaced confidence.

It’s early days, but so far the constellation of economic data that has come out of both countries suggests that it is China, not the U.S., which is bearing the brunt of this particular skirmish. And so long as the U.S. economy continues to grow, the corollary is that we should stop regarding these protectionist measures as temporary aberrations in America’s internationalist policies, especially on free trade. Rather, this is the new normal: an expression of a rabid 19th-century-style nationalism, reversing decades of globalization and shifting the worldwide economy into a series of competing regional blocs and alliances in the process. Maybe even a new Cold War (with China this time, not Russia).

Beijing has just reported its weakest quarterly official growth figure in a decade, and its currency has recently fallen to its lowest level since 2017. The 6.5 percent year-on-year growth reported for the third quarter is the official figure, and Chinese officials themselves have long conceded that many of their economic measuring sticks are doctored (which means that the unofficial, but real, number is probably much worse).

By contrast, the U.S. economy has remained relatively robust and shows little sign of a slowdown yet. The fact that the recently imposed tariffs in this growing trade war have not yet caused any significant economic dislocation domestically will likely embolden Trump and his trade team to up the ante as far as sustaining additional pressure on China, or to consider similarly aggressive action against other countries that conduct policy in a manner Trump considers deleterious to American trade interests. This will play well in swing states considered crucial to the president’s ongoing political success.

In the post-World War II period, the U.S. economy has remained the largest and most powerful in the world. Certainly it has long been the most developed consumer market, access to which has represented the crown jewel for any aspiring exporting nation. But until Trump, previous administrations have been somewhat more circumspect in resorting to aggressive protectionism to bludgeon better reciprocal terms for American businesses. Yes, the Reagan administration demanded export quotas from Japan’s automobile manufacturers, and George W. Bush and Barack Obama occasionally resorted to anti-dumping measures against China, notably after its entry into the World Trade Organization (WTO), which wrought devastation on the American manufacturing sector (particularly in the Rust Belt states). But these were all considered temporary measures; the underlying ideological assumptions of globalized free trade, and the so-called “Washington Consensus,” remained largely unchallenged as benign ends in and of themselves.

The focus of liberalization and deregulation of trade, however, began to change in the 1990s, reflecting Washington’s changing policy preferences, notably privileging finance over manufacturing via increased services liberalization, in exchange for continued access to the U.S. consumer goods market. Fighting for manufacturing interests basically went out the window after the Plaza Accord, under which then-Treasury Secretary James Baker managed to secure a devaluation of the dollar in order to improve America’s export position.

By the time Robert Rubin became Treasury Secretary, he regularly articulated a strong dollar policy, evincing little concern for U.S. manufacturing interests. Rubin espoused this belief on the grounds that a strong dollar attracted more portfolio flows to the U.S. capital markets, thereby sustaining the boom in American bond and equity markets, (a primary objective of the former Goldman Sachs co-chairman). Certainly the hardline stance adopted by “The Committee to Save the World” at the height of the 1997–98 Asian Financial Crisis, for example, was in part motivated to ensure that the emerging Asian markets crisis could be exploited in order to lever open their markets to the likes of Goldman Sachs, JPMorgan Chase, Citi, and a host of other financial interests. Nary a word for U.S. manufacturers. Indeed, America’s Asian Cold War allies were shocked at the manner in which the U.S. ruthlessly exploited the crisis for the benefit of Wall Street (failing to appreciate that the end of the Cold War had essentially eviscerated the basis of the bargain whereby American trade policy accommodated a huge increase of Southeast Asian exports to the U.S., to underwrite the latter’s ongoing prosperity and ensure that its bloc remained firmly within the U.S. sphere of interest as it fought to contain the spread of global communism).

The substantial falls of the Asian countries’ currencies relative to the greenback during 1997 considerably added to their dollar-based funding requirements (which exacerbated their economic distress). Blowback came later for U.S. manufacturers, as the greenback’s strength significantly eroded the position of U.S. exporters, resulting in a massive increase in the American current account deficit by the early 2000s. Furthermore, the hardline stance of the Treasury and Fed reinforced the Asian Tigers’ mercantilist instincts. Having seen Rubin, and then Larry Summers, hang them out to dry at the height of the 1997–98 crisis, these countries were determined never to be put in that position again and therefore deliberately kept their currencies weak well after their economies had recovered, building up huge trade surpluses and further obliterating what was left of U.S. manufacturing competitiveness (prompting yet another commissionto examine the after-effects, but without actually implementing a change in trade policy)....

...MORE

Crypto Conferences, 2018 Style

With this teaser:

Anarchists give way to Tory parliamentarians; free lunch gives way to "self-organized lunch."

how can one not make further enquiries?

From FT Alphaville:

Crypto conferences ain't what they used to be

This week, in the grand surroundings of the Methodist Central Hall in London's Westminster, a conference was convened with a rather noble title: "Blockchain and the Future of Humanity: Economy. Environment. Ethics."

The proximity of the Crypto Challenge Forum to the Houses of Parliament's corridors of power didn't seem purely incidental. Among the speakers at the conference were not one but two Tory parliamentarians, who took to the stage to espouse the glory of the distributed ledger.

We've written about the Conservative party's love affair with all things blockchain and crypto before -- so much, in fact, that we last week began a series on the subject. Readers might remember one of the conference speakers, Eddie Hughes, MP for North Walsall, who in the summer was pushing for a "blockchain for Bloxwich" -- one of the towns in his constituency -- because "blockchain for Walsall North wouldn’t have the same ring to it". More on him later.

Another of the conference speakers was Lord Chris Holmes of Richmond, a nine-time Paralympic medal-winner and now lifetime Tory peer. He put out a paper last year on the use of distributed ledger technology "for public good", in which he talked about blockchain as a "game-changer" (he released an update to the report this week).

Monday's speech was in a similar vein, with the technology pitched as a central part of the Fourth Industrial Revolution -- "4IR" -- and the presentation delivered with plenty of enthusiasm as well as a few good jokes. The problem -- as so often in the world of blockchain -- was trying to make sense of any of it. Lord Holmes told the audience:

Reasons to be cheerful - we know everything we need to know to make a success of blockchain, of AI, of all of the elements of 4IR. We know everything we need to know because we know economics, politics, psychology, social theory, behavioural theory, on and on and on. We know all of it, we just have to optimise it, and to understand that these things aren’t to be afraid of.

Yeah! When did everyone stop optimising stuff? He continued:...

...MUCH MORE

"IBM’s Old Playbook" (RHAT)

A first-rate backgrounder on Big Blue/Red Hat.
I promised myself I wouldn't start singing Both Sides Now but, but...

I've looked at clouds from both sides now
From up and down and still somehow
It's cloud's illusions I recall
I really don't know clouds at all

Sorry.

From Stratechery, Oct.  29:

The best way to understand how it is Red Hat built a multi-billion dollar business off of open source software is to start with IBM. Founder Bob Young explained at the All Things Open conference in 2014:

There is no magic bullet to it. It is a lot of hard work staying up with your customers and understanding and thinking through where are the opportunities. What are other suppliers in the market not doing for those customers that you can do better for them? One of the great examples to give you an idea of what inspired us very early on, and by very early on we’re talking Mark Ewing and I doing not enough business to pay the rent on our apartments, but yet we were paying attention to [Lou Gerstner and] IBM…

Gerstner came into IBM and got it turned around in three years. It was miraculous…Gerstner’s insight was he went around and talked to a whole bunch IBM customers and found out that the customers didn’t actually like any of his products. They were ok, but whenever he would sit down with any given customer there was always someone who did that product better than IBM did…He said, “So why are you buying from IBM?” The customers were saying “IBM is the only technology company with an office everywhere that we do business,” and as a result Gerstner understood that he wasn’t selling products he was selling a service.

He talked about that publicly, and so at Red Hat we go, “OK, we don’t have a product to sell because ours is open source and everyone can use our innovations as quickly as we can, so we’re not really selling a product, but Gerstner at IBM is telling us the customers don’t buy products, they buy services, things that make themselves more successful.” And so that was one of our early insights into what we were doing was this idea that we were actually in the services business, even back when we were selling shrink-wrapped boxes of Linux, we saw that as an interim step to getting us big enough that we could sign service contracts with real customers.

Yesterday Young’s story came full circle when IBM bought Red Hat for $34 billion, a 60% premium over Red Hat’s Friday closing price. IBM is hoping it too to can come full circle: recapture Gerstner’s magic, which depended not only on his insight about services, but also a secular shift in enterprise computing.

How Gerstner Transformed IBM

I’ve written previously about Gerstner’s IBM turnaround in the context of Satya Nadella’s attempt to do the same at Microsoft, and Gerstner’s insight that while culture is extremely difficult to change, it is impossible to change nature. From Microsoft’s Monopoly Hangover:

The great thing about a monopoly is that a company can do anything, because there is no competition; the bad thing is that when the monopoly is finished the company is still capable of doing anything at a mediocre level, but nothing at a high one because it has become fat and lazy. To put it another way, for a former monopoly “big” is the only truly differentiated asset. This was Gerstner’s key insight when it came to mapping out IBM’s future…In Gerstner’s vision, only IBM had the breadth to deliver solutions instead of products.

A strategy predicated on providing solutions, though, needs a problem, and the other thing that made Gerstner’s turnaround possible was the Internet. By the mid-1990s businesses were faced with a completely new set of technologies that were nominally similar to their IT projects of the last fifteen years, but in fact completely different. Gerstner described the problem/opportunity in Who Says Elephants Can’t Dance:

If the strategists were right, and the cloud really did become the locus of all this interaction, it would cause two revolutions — one in computing and one in business. It would change computing because it would shift the workloads from PCs and other so-called client devices to larger enterprise systems inside companies and to the cloud — the network — itself. This would reverse the trend that had made the PC the center of innovation and investment — with all the obvious implications for IT companies that had made their fortunes on PC technologies.
Far more important, the massive, global connectivity that the cloud depicted would create a revolution in the interactions among millions of businesses, schools, governments, and consumers. It would change commerce, education, health care, government services, and on and on. It would cause the biggest wave of business transformation since the introduction of digital data processing in the 1960s…Terms like “information superhighway” and “e-commerce” were insufficient to describe what we were talking about. We needed a vocabulary to help the industry, our customers, and even IBM employees understand that what we saw transcended access to digital information and online commerce. It would reshape every important kind of relationship and interaction among businesses and people. Eventually our marketing and Internet teams came forward with the term “e-business.”

Those of you my age or older surely remember what soon became IBM’s ubiquitous ‘e’:

IBM went on to spend over $5 billion marketing “e-business”, an investment Gerstner called “one of the finest jobs of brand positions I’ve seen in my career.” It worked because it was true: large enterprises, most of which had only ever interacted with customers indirectly through a long chain of wholesalers and distributors and retailers suddenly had the capability — the responsibility, even — of interacting with end users directly. This could be as simple as a website, or e-commerce, or customer support, not to mention the ability to tap into all of the other parts of the value chain in real-time. The technology challenges and the business possibilities — the problem set, if you will — were immense, and Gerstner positioned IBM as the company that could solve these new problems.

It was an attractive proposition for nearly all non-tech companies: the challenge with the Internet in the 1990s was that the underlying technologies were so varied and quite immature; different problem spaces had different companies hawking products, many of them startups with no experience working with large enterprises, and even if they had better products no IT department wanted to manage and integrate a multitude of vendors. IBM, on the other hand, offered the proverbial “one throat to choke”; they promised to solve all of the problems associated with this new-fangled Internet stuff, and besides, IT departments were familiar and comfortable with IBM....MUCH MORE

Here’s What the Quantum Internet Has in Store

From Scientific American, Oct. 27:

Physicists say this futuristic, super-secure network could be useful long before it reaches technological maturity

A future ‘quantum internet’ could find use long before it reaches technological maturity, a team of physicists predicts.
Such a network, which exploits the unique effects of quantum physics, would be fundamentally different to the classical Internet we use today, and research groups worldwide are already working on its early stages of development. The first stages promise virtually unbreakable privacy and security in communications; a more mature network could include a range of applications for science and beyond that aren’t possible with classical systems, including quantum sensors that can detect gravitational waves.

The quantum difference
The researchers argue that the technology, which would complement rather than replace the existing Internet, could eventually become widespread both for large users, such as university laboratories, and for individual consumers, although they do not give a time scale.

This stands in contrast with quantum computers, they say—another futuristic technology that physicists are feverishly working on, aiming to build machines that can outperform classical computers. “In the quantum-computing domain, it’s much more all or nothing,” says theoretical physicist Stephanie Wehner, who co-authored the paper with her Delft colleagues David Elkouss and Ronald Hanson.

Stefanie Barz, a quantum physicist at the University of Stuttgart in Germany, agrees. It’s difficult to predict which technology will come first, she and others say—a widely adopted quantum internet or useful quantum computers. But quantum networks have a big advantage, Barz says, in that “such a network can be built step by step, and different functionality can be added in each step”.

The roadmap also aims to establish a common language for a field that involves researchers with disparate backgrounds, including information technology, computer science, engineering and physics. “People talk about quantum networks to mean vastly different things,” says Hanson, an experimental physicist who is co-leading the Delft group’s push to build a quantum-internet demonstration that will link four Dutch cities.

Rodney Van Meter, a quantum network engineer at Keio University in Tokyo, says that the paper helps to clarify the field’s goals. “It gives us a new vocabulary for understanding what we are developing.” And the way the document spells out the applications can also help researchers explain their proposals to potential investors, he says. “With this roadmap, we can have this conversation.”

Six stages
Quantum networks and quantum computing share many concepts and techniques. Both take advantage of phenomena that have no analogue in classical physics: for example, a quantum particle such as an electron or a photon can be in one of two well-defined states of spinning, clockwise or anticlockwise—but also in a simultaneous combination of both, called a superposition. And two particles can be ‘entangled’, in which they share a common quantum state. This makes them act in seemingly coordinated ways (such as spinning in opposite directions) even when they are separated by vast distances.

The Delft team has laid out six stages for the evolution of the quantum internet.

The first—which they say is a sort of stage 0 because it does not describe a true quantum internet—is a network that enables users to establish a common encryption key, so that they can share their (classical) data securely. The quantum physics occurs only behind the scenes: the service provider uses it to create the key. But the provider also knows the key, which means that users have to trust it. This type of network already exists, most notably in China, where it extends over some 2,000 kilometres and connects major cities including Beijing and Shanghai.

In stage 1, users will start getting into the quantum game, in which a sender creates quantum states, typically for photons. These would be sent to a receiver, either along an optical fibre or through a laser pulse beamed across open space. At this stage, any two users will be able to create a private encryption key that only they know.

The technology will also enable users to submit a quantum password, for example, to a machine such as an ATM. The machine will be able to verify the password without knowing what it is or being able to steal it.

Stage 1 has not been tried on a large scale, but it is already technologically feasible at the scale of small cities, Wehner says, although it would be very slow. A group led by Pan Jian-Wei at the University of Science and Technology of China in Hefei made the world record for this kind of transmission in 2017, when they used a satellite to link two laboratories more than 1,200 kilometres apart.

In stage 2, the quantum internet will harness the powerful phenomenon of entanglement. Its first goal will be to make quantum encryption essentially unbreakable. Most of the techniques that this stage requires already exist, at least as rudimentary lab demonstrations....MUCH MORE

"The Economics of Dracula"

This ain't no party, this ain't no disco.
If thou art searching for last minute costume ideas we're simply not that kind of place (at the moment)

From Mises.org, October 31, 2012:

Vlad the Impaler, and his literary incarnation, Count Dracula, are rooted in a dark period of monetary inflation and economic nationalism.

Another Halloween is upon us, bringing its late autumnal burst of costumes, candy, and merriment. Ghosts, witches, mummies, zombies, Frankenstein's monster, film and television characters, and others will make appearances, as will the quintessential Halloween figure: Dracula.

Most people are familiar with Count Dracula's first literary appearance in Bram Stoker's 1897 Gothic horror novel Dracula. And many are also aware that the undead villain was loosely based on a real historical figure, Vlad Tepes III — "Vlad the Impaler" (sometimes "Vlad Dracula") — who ruled mid-15th century Wallachia, a region of modern day Romania.

Incredibly, though, there is a real but lesser-known horror story behind Dracula — a story of the long-term effects of inflationary policies and a consequent campaign of economic nationalism, rather than of a mythic, powerful undead creature: interventionism pursued terrifyingly, diligently, to its logical ends.

The Real Dracula
In 1431, Vlad Tepes III, the man who would become the inspiration for Count Dracula, was born in Transylvania. With his father, Vlad II, on the Wallachian throne, early in life he and his brother were sent to the Ottoman court of Mehmet the Conqueror to act as living guarantors of their father's fidelity ("loyalty hostages"). While his brother, Radu, flourished, Vlad III was insolent and regularly experienced beatings and imprisonment.

Typical for that time, a host of intrigues swirled about the court of Vlad II, compounded by Wallachia's critical location as a buffer kingdom between the Ottoman and Holy Roman Empires; changes in leadership could bring about changes in policy, swiftly impacting trade and fortunes. In December of 1447, Vlad II was murdered during a coup. The Ottomans responded swiftly, appointing young Vlad III to his father's former throne. A Hungarian force in turn responded, driving Vlad to flee to Moldavia where he undertook diplomatic duties alongside his uncle.

In 1453, Constantinople fell, and Ottoman forces surged through the Balkans. When the Hungarian occupiers left Wallachia to support their allies and help staunch the flow of invaders, Vlad III, now 23, leapt into action, organizing and leading a successful invasion of his native land.

Wreckage
On retaking the throne, Vlad was stunned to find Wallachia in a state of utter social and economic decay. Where once a brisk trade in "salt, cattle … honey, wine … wax" and many other goods had prospered, the economy was now utterly destroyed.1

In fact, throughout the century prior to Vlad III's return, the Wallachian economy had been systematically destroyed by liberal use of a well-known policy strategy: currency manipulation. Previous rulers of Wallachia had repeatedly implemented monetary "reform,"

each [of which] led to the introduction of a more debased … lighter weight type of ducat … [in order to] increase of the amount of the coinage needed by … expanding political payments.2

The previous Wallachian leaders' motives were timeworn as well: "Wallachia was confronted, almost permanently, with excessive military expenses … as well as an active international policy."

Thus, there were "serious threats … [to] the monetary stability in Wallachia during the entire 14th–15th century."3
Consistent expansion of the money supply had created insecurity within the realm, and Vlad immediately took action to create security, making his ruling objectives clear:

My sacred mission is to bring order.… There must be security for all in my land.… When a prince is powerful at home, he will be able to do as he wills. If I am feared by the right people, [we] will be strong.4

Over the next six years, he implemented policies according to three rough tenets: class warfare/redistribution, protectionism, and welfare statism. Accounts of Vlad III's murderous efforts in these pursuits rival, in their sanguineous ingenuity, the most nightmarish accounts of both La Terreur of revolutionary France and the concentration camps of Nazi Germany. In Roumania Past and Present, historian James Samuelson notes, regarding the legends surrounding Vlad Tepes III, "if one-tenth of what has been related to him [is] true … [he is] one of the most atrocious and cruel tyrants who ever disgraced even those dark ages."5

However, Vlad III was more than just a sadist; his victims were chosen according to their usefulness with respect to fulfilling his vision for a revitalized Wallachia. Indeed, several historians agree that "it is beyond any doubt that [among other] reasons, Vlad the Impaler was … guided by economic ones."6

Class Warfare
A bulwark of the social and economic landscape of Wallachia — and most of Eastern Europe, at this time — was the boyar class: a social rank of landowners, merchants, and military elites one level below the ruling nobility. Vlad III blamed the merchants and elites for the economic troubles of the time. Consequently, a centerpiece of his plan to right the economic ship of Wallachia focused on persecuting the boyars and seizing their property: leveraging the masses' schadenfreud to harness the considerable power of envy and, in turn, greater breadth to the reach of his throne.
The implicit message behind Vlad III's policy was an enduring one, as states go: that the wealthy and productive live off and at the expense of the multitude. In fact, governments are the true vampires, clandestinely siphoning the productive output of all citizens while pitting them against each other through propaganda and prevarication.

In Easter 1456, Vlad III invited a number of prominent boyars to his castle, some of whom he suspected of taking part in the conspiracy to murder his father. Suddenly, without warning, the

able-bodied were chained together and forced to march for sixty miles through the rugged countryside to the ruins of Poienari in the Argest valley. Many of them died enroute.… The prisoners were forced to form a human chain under the whip to convey building materials up the mountainside. The restoration work lasted for two months and very few of the captives survived the ordeal.7

Throughout the remainder of his reign, Vlad III decimated the landowning and merchant population and at the same time seized their wealth and property. Throughout his reign, in fact, he devoted extensive time and effort to "systematically eradicate the old boyar class of Wallachia."8 In August of 1459, one account reports that he "had thirty thousand merchants and boyars" killed.9....

...MUCH MORE

Russia's only aircraft carrier damaged after crane falls on it—and the drydock sank

From Reuters:

Russia’s only aircraft carrier was damaged while undergoing repairs in the north of the country after the floating dock holding it sank in the early hours of Tuesday and a crane crashed onto its deck, tearing a gash up to 5 meters wide.

The Admiral Kuznetsov has seen action in Russia’s military campaign in Syria in support of President Bashar al-Assad with its planes carrying out air strikes against rebel forces.
It was being overhauled on one of the world’s biggest floating docks in the icy waters of the Kola Bay near Murmansk close to where Russia’s Northern Fleet is based and was due to go back into service in 2021.

Maria Kovtun, Murmansk’s governor, said in a statement that a rescue operation had been launched and 71 people evacuated after the floating dock holding the ship had begun to sink.

The warship had been successfully extracted from the dock before it completely sank, she said....MORE

Ahead of Today's Earnings Report: "Facebook exodus: Nearly half of young users have deleted the app from their phone in the last year, says study" (FB)

Just a reminder from CNBC, September 10:

• A new survey of more than 3,400 U.S. Facebook users finds that 44 percent of users ages 18 to 29 have deleted the app from their phones in the past year.
• Overall, 26 percent have deleted the app, while 42 percent have taken a break of several weeks or more.
• The survey does not measure usage of Facebook's Instagram, WhatsApp and Messenger, all of which remain popular overseas, and does not measure Facebook's continuing growth overseas.

Facebook's year of scandals is driving young users away from the platform, according to a Pew survey.

Pew surveyed more than 3,400 U.S. Facebook users in May and June, and found that a whopping 44 percent of those ages 18 to 29 say they've deleted the app from their phone in the last year. Some of them may have reinstalled it later.

Overall, 26 percent of survey respondents say they deleted the app, while 42 percent have "taken a break" for several weeks or more, and 54 percent have adjusted their privacy settings....

...MORE

Whether the stock has fallen enough to cushion any disappointment is an open question: Here's the daily action for the last three quarters:

FinViz 

And an odd little tidbit from Business Insider:

Millennial investors are loading up Facebook ahead of its earnings (FB)

• Facebook shares have been tumbling since the social-media giant reported second-quarter earnings on July 25 — but investors on the free-trading app Robinhood have been snapping up the stock.
• CFO David Wehner warned in July that the company expected a significant slowdown in its revenue growth in the years ahead.
• Facebook is set to report earnings after Tuesday's closing bell..

Facebook shares have plunged 35% since July 25 — when the company reported disappointing second-quarter results — but investors on Robinhood, a free trading platform popular among younger investors, appear to be betting on a turnaround following the tech giant's third-quarter results, which are due after Tuesday's closing bell.

According to weekly data tracked by Business Insider, a net of more than 60,000 Robinhood investors have added Facebook to their portfolio since the company reported its second-quarter earnings. There are now 175,541 investors holding Facebook shares on Robinhood's platform, making the social media company the third most-popular stock on the app. It's up nine spots since Facebook's last quarterly report....MORE

I'm guessing the question: "Will advertisers continue paying up while the key demographic  doesn't seem as engaged" will prove more important for investors than what's being bought via Robinhood.

Meet Sierra: Lawrence Livermore National Laboratory’s New Supercomputer (IBM; NVDA)

From the Mercury News:

With Livermore’s Sierra, the U.S. now holds two of the top three most powerful computers

Suddenly, your smart phone feels really dumb.

Meet Sierra, Lawrence Livermore National Lab’s’ new supercomputer that can perform 125 quadrillion calculations per second — think 125 followed by 15 zeroes — and will guard our nation’s nuclear stockpile.

To match that, every person on Earth would have to do one calculation every second, for 24 hours a day – for an entire year.

Unveiled Friday, the $150 million Sierra gives the United States bragging rights to two of the top three positions in global supercomputing. The new machine ranks behind Oak Ridge National Lab’s Summit and China’s Sunway TaihuLight.

It’s not just powerful, it has a stunning memory. There’s enough storage space to hold every written work of humanity, in all languages – twice.

“But it is not how big or where it ranks, it’s the science it will support,” said Bronis de Supinski, Livermore Computing’s chief technology officer and head of Livermore Lab’s Advanced Technology systems.

Sierra was conceived in a hotel room near Chicago’s O’Hare Airport at the end of 2012, in a U.S. Department of Energy collaboration between Livermore, Oak Ridge and Argonne. But over its four years of construction, the project encountered logistical hiccups, technical challenges and one major surprise: The surging cost of memory, tied to the global demand for smart phones. It caused prices to double in the final three months of 2016, said de Supinski. After negotiations, IBM made changes to its network to compensate, keeping the project on budget.

Despite our advances, the National Security Agency and the Department of Energy have warned that China is poised to outrank America in high-performance computing.

Built by IBM and NVIDIA, Sierra is desiged to support the nation’s three nuclear security laboratories: Lawrence Livermore, Sandia National Laboratories and Los Alamos National Laboratory.

And that support is critical. As North Korea continues to pursue nuclear-weapon technologies, our system is aging. Not even a bicycle is engineered to sit inactive for decades and still be able to spring into action at a moment’s notice. But that’s what is expected of a nuclear weapon.

For example, how would a hairline crack affect the life of a nuclear warhead? Without detonation, Sierra helps us find out. It can process the data needed to create a 3D picture, modeling and simulating a growing fracture in the deadly device.

“It enables simulations 100,000 times more realistic than is possible on a desktop,” said Fred Streitz, director of the Lab’s Institute for Scientific Computer Research....MUCH MORE

We'll have more on this next week.
If interested see also:

June 28 
New GPU-Accelerated Supercomputers Change the Balance of Power on the TOP500
June 28
"NVIDIA Chief Scientist Bill Dally on How GPUs Ignited AI, and Where His Team’s Headed Next" (NVDA) 
With the publication of the latest Top500 list (next post), the talk of the High Performance Computing world is the convergence of AI and HPC, both of which are facilitated by Graphics Processing Units.
So let's go to the source. From the NVIDIA blog:...
June 15 
Sandia National Lab to Install First Petascale Supercomputer Powered by ARM Processors (Masayoshi Son smiles)
June 6
"IBM builds world’s most powerful supercomputer to crack AI" (IBM; NVDA)
January 2018
With the Summit Supercomputer, U.S. Could Retake Computing’s Top Spot (NVDA)
We've been babbling about this 'puter for three years, usually in the context of its use of NVIDIA GPU's and NV Link connections, more after the jump....
September 2017
"The Astonishing Engineering Behind America's Latest, Greatest Supercomputer"

And many more. Use the 'search blog' box, keywords: Oak Ridge.

The Parker Solar Probe Just Became the Fastest Spacecraft, Ever

From NASA and the Johns Hopkins University Applied Physics Lab:

Posted on 10/30/2018 05:56:58

---

At about 10:54 p.m. EDT, Parker Solar Probe surpassed 153,454 miles per hour — as calculated by the mission team — making it the fastest-ever human-made object relative to the Sun. This breaks the record set by the German-American Helios 2 mission in April 1976.

Parker Solar Probe will repeatedly break its own records, achieving a top speed of about 430,000 miles per hour in 2024.

Illustration of Parker Solar Probe approaching the Sun.

Credit: NASA/Johns Hopkins APL/Steve Gribben
High-Res Image

"China’s Coming Financial Crisis and the National Security Connection"

The author of this piece seems to know what he's talking about.
And then I read his mini-bio:

Stephen Joske was senior adviser to the Australian Treasurer during the 1997–98 Asian crisis. He later worked as the Senior Treasury Representative at the Australian Embassy in Beijing, and also worked on Chinese economic issues at the Office of National Assessments. After leaving government he ran the Economist Intelligence Unit’s China Forecasting Service in Beijing and then spent six years with AustralianSuper, Australia’s largest pension fund, in Beijing looking at financial market implications of Chinese macroeconomic issues. 

Ah, been doing this stuff for a while.

From War on the Rocks:

China is more economically vulnerable to a confrontation with the United States than it likes to admit. However, that weakness is not driven primarily by a budding trade war with America. China’s export volume growth has begun to slow with all major trading partners, not just the United States. A decade of reckless domestic credit growth is the primary source of China’s vulnerability. And that credit growth only temporarily abated in early 2018. There are already signs of more stimulus on the way. Over the past decade, China has been pursuing excessive GDP growth targets using massive injections of credit. China may respond to U.S. tariffs by pumping even more money into the economy, thereby exacerbating the underlying credit bubble. However, a renewed stimulus is going to occur anyway. Slow loan growth in 2017 has caused weaker GDP growth in 2018. To meet its GDP growth target for 2019, China again needs stronger credit growth.

Valid questions hanging over Chinese economic data have important implications for national security. I do not subscribe to the view that China’s GDP is vastly overstated or that its economy is actually on the verge of collapse. However, a better reading of Chinese data, particularly on disguised lending, points to a very high probability of a Chinese financial crisis in the next three to five years. China’s disguised lending is hard to measure. But it can be measured and compared to other countries that experienced a financial crisis. Such an analysis shows China is not in danger next year but probably will be soon after.

We commonly hear that China cannot have a financial crisis because the government owns all the banks and can control them. It is true government ownership is a stabilizing factor. If the entire Chinese financial system was just the Bank of China, then it would be easy enough to control. But there is a tectonic shift already well under way in the financial sector as major banks lose market share to a proliferation of shadow and smaller provincial banks. The IMF 2016 Article IV report on China warned of “the increasing role of smaller and provincial banks, especially city commercial banks, which have greater exposure to shadow credit products and have grown rapidly.” It is in the funding of these smaller banks and shadow banks that the risks lie. The Chinese financial system cannot have a crisis today, but in three years’ time it will be exposed. Comparisonswith the many other countries that have had a financial crisis indicates that China’s risky funding is not quite at a threshold that would merit a panic, but it is only a few years away.  While the Chinese government also regulates these smaller banks and shadow banks, the task becomes harder as they proliferate. We have already seen a delay of about two years between the rise of disguised lending in 2015 and a regulatory response in 2017.

Ten years ago, the five largest banks in China accounted for most of the country’s financial system. They have already shrunk to around a quarter of the system. This change continues and shows why the old assumptions about government control of the system should be questioned.
In theory, government control is good for stability. In practice, however, two things have to happen to avoid a crisis: First, the government has to use its power to make the right policy choice, and second, it has to avoid making a Lehman-style regulatory mistake.

Rather than making the right choice to tackle the root of the problem by engineering a structural slowing of credit growth, with a much lower GDP growth target as a foundation, China has been dithering and taking half-measures. As we have seen over the past year, it is easy to do some cyclical slowing in credit growth when the economy is doing well. But credit was still growing and the government bent over backwards to keep interest rates low. Now that the economy is growing, talk has quickly switched to stimulus and maintaining GDP growth. This is the opposite of what China has to do if it is going to avert a crisis.

While the government owns the banks, that does not stop officials from making regulatory mistakes. We have already seen regulatory mistakes such as mishandling of RMB market volatility in 2015. We have also seen well-handled, timely, and complex crisis management failing financial companies. But that does not mean they always handle every crisis well and will continue to do so. The law of probability indicates that eventually something will go wrong and, like every other country, China will have a financial crisis....MUCH MORE

"Google slams News Corp ‘algorithm review board’ hopes"

That's pretty funny.
The media companies should push for review of the platforms and their algos.
Turnabout being fair play and all.

From the Sydney Morning Herald:

Google has slammed News Corp's proposal for the government to introduce a review panel to scrutinise algorithms used by digital platforms, telling the competition regulator the publisher's idea was "unnecessary and ill-conceived".

In a second submission to the Australian Competition and Consumer Commission's (ACCC) inquiry into digital platforms, the search giant claimed that an algorithm review board would not be practical, and more transparency could expose the search engine to being manipulated by bad actors.

It said “mandating disclosure of Google's algorithms would conflict with long-standing legal protections for trade secrets and other intellectual property" and would prompt "serious" questions as to how a review scheme would operate and its purpose.

The ACCC is in the final weeks of preparing a preliminary report for the government as part of a world-first inquiry about the impact of the digital platforms, such as Facebook and Google, on media publishers and their advertising revenues.

Google's additional comments to the regulator comes after months of forums, submissions and scathing criticism from media companies. Fairfax Media (owner of The Sydney Morning Herald and The Age) has an advertising partnership with Google....MORE

The "Review Board" will never happen but it's fun to see the GOOG's reaction to even a hint of looking at what they're up to. 

Amazon's Stock Is Down 23% This Month (AMZN)

And possibly more; in early pre-market trade AMZN is off another $19.20 (-1.25%) at $1,519.68.

From CNBC Oct. 29:
Amazon shares are cratering — down 6% today, down 23% in the past month

• Amazon dropped 14 percent in two days, marking its worst two-day tumble since February 2014.
• The company reported disappointing financial results on Thursday.
• Tech stocks fell broadly on Monday, with the Nasdaq closing down 1.6 percent.

Amazon shares closed down 6.3 percent on Monday suffered their steepest two-day tumble in more than four years, as investors continued to flee the stock following Thursday's disappointing earnings report.

The stock dropped $103.93 to $1,538.88 at the close, after losing $139.36, or 7.8 percent, on Friday, and is trading at its lowest price since April, down 23 percent over the past month. The 13.7-percent drop over two days is the biggest decline since February 2014, when the shares plummeted 14.1 percent.

Amazon reported third-quarter revenue last week that trailed analysts' estimates and also provided a fourth-quarter outlook that was below expectations. The stock dragged down the Nasdaq, which closed down 1.6 percent on Monday. Netflix, which like Amazon has been a favored stock for tech investors in recent years, is in the midst of a hefty two-day drop, down 9 percent....MORE

That's the trouble with earnings. Once you show 'E', the analyst bastards start putting a P to E ratio on you and from there you're just another company, no longer the inscrutable black box that can use infinity as the multiplier.
Better to have a little mystery in your life.

Walmart is Testing a Cashierless Sam's Club (WMT)

From SlashGear, Oct. 29:

Walmart’s Amazon Go rival is a cashierless Sam’s Club store

The Walmart and Amazon rivalry continues, this time involving plans to launch another type of futuristic store. Walmart is transforming one of its Sam’s Club locations in Dallas, Texas, into a tech-filled warehouse store where customers have a “mobile-first experience.” How does that work? It’ll involve a new type of storage associate that Sam’s Club calls “the concierge of the club,” as well as a mobile app.

The new type of store is called Sam’s Club Now and the first of its kind will be opening in Dallas. Customers will need a smartphone and the Sam’s Club Now app, the combination of which will provide direct access to things like smart shopping lists, navigation within the store, augmented reality, and the ability to order items for one-hour pickup.

The company details Sam’s Club Now in a way that makes it sound like a work-in-progress. This effort will include testing electronic shelf labels that present instant price and product changes. In the future, Sam’s Club Now stores will also feature more than 700 cameras for inventory management and layout optimization....MORE

Capital Markets: "Another Attempt to Put a Bottom in Stocks"

From Marc to Market, Oct. 30:

Overview: 
First, reports suggested that if China refused to make any trade concessions, the Trump-Xi meeting on the sidelines of the G20 meeting next month would not take the issue up. Fair enough. Then, new reports indicated that the White was prepared to take additional trade measures if there was no agreement between Trump and Xi. The news hit a weak market. The NASDAQ was also in negative territory, and the S&P 500 had seen its early gains pared, but the escalation of US trade pressure sent shares reeling. The 103 point range for the S&P 500 was the largest since February. Asia followed suit initially but reversed higher and the MSCI Asia Pacific Index snapped a five-day slide. Most markets in the region but Hong Kong, India and Singapore participated in the advance. Still, judging from Korea, where foreign investors were net sellers of shares today for the 16th consecutive session, show sentiment remains fragile. Some linked the recovery, especially in China to Trump's claim that "I think we will make a great deal with China, and it has to be great because they've drained our country." European bourses enjoying modest gains in the morning session ahead of the US open. It is the second consecutive advancing session for the Dow Jones Stoxx 600, something it could not do last week. The more stable equity tone is sapping the bid from bond and yields are higher across the board, with Italy being the notable exception. It sold 5.5 bln euros of bonds today to complete a little more than 90% of this year's funding interest. Often lost on observers, Italy's experience makes it a good manager of debt with the depth in secondary markets. There are 10 bln euro of maturing Italian bonds this week and 5 bln euros in coupon payments and the premium over German Bunds is back below 3%. In the foreign exchange market, the dollar-bloc currencies are edging higher, while the funding currencies (aka safe havens) like the Swiss franc and Japanese yen on softer. Among emerging market currencies, the Turkish lira and South African rand are firmer, while most are little changed.

Asia-Pacific:
The US has imposed tariffs on $250 of Chinese goods. Of that, the 10% tariff on $200 bln of goods will be hiked to 25% on January 1. Yesterday, Trump renewed this threat to put a tariff on the remaining roughly $255 bln of goods the US imports from China. Given the process, these could be implemented as early as February. Economists and investors need to give more thought to the possibility that the US puts a 25% tariff on nearly all Chinese goods. Without a policy response, economists project that is could slow the world's second-largest economy by 1%-2% next year. Of course, China would have a policy response. Over the past few days, Chinese officials have brandished another domestic policy card to play. Tax cuts. Not only will the government cut income taxes, but it may also cut the sales tax on autos to help spur demand. China is already securing new markets and supply sources to replace America, though of course, this takes time, which means some disruption is likely. The prospect of protracted Sino-American trade confrontation will create new opportunities and may impact investment decisions, encouraged too by rising costs in China. The yuan slipped to its lowest level in a decade before recovering somewhat. The CNY7.0 level has taken on special significance, but we suspect it is not inviolable. The yuan has weakened about 6.5% against the dollar since the start of the year. Because of the import intensity of China's exports, with yuan incurred production costs relatively modest, the depreciation of the yuan, therefore, barely blunts the impact of the rising tariffs.

Japan's labor market tightened. The unemployment rate unexpectedly slipped to 2.3% in September from 2.4%. The jobs to applicant ratio ticked up to 1.64. The natural disasters in the month may have skewed the data, but as the Bank of Japan meets, the takeaway message is the labor market remains strong even if wage growth, especially among full-time workers remain modest. The natural disasters may also have weighed on September industrial production figures, which will be released tomorrow before the conclusion of the BOJ meeting. The Nikkei posted an upside reversal today and a gap from last week extends to 21911 may attract prices. We had been concerned that the dollar was going to hold below the JPY112.50 area but it has pushed through there to test last week's highs just shy of JPY112.90. A move above there would target the JPY113.40 area.

EMU
There were two data streams from the EMU today. Growth and prices. The Bundesbank warned last week that the German economy may have stagnated in Q3. France didn't. It may be of little help to President Macron who has slumped in the opinion polls, but the economy grew 0.4% in Q3, twice the pace in Q2. Still, the year-over-year pace slowed to 1.5% from 1.7%. Italy disappointed as well. The economy did not grow in Q3 after expanding 0.2% in Q2. The year-over-year pace eased to 0.8% from 1.2%. We suspect the Italian government's fiscal proposals would go over much easier if investors and others could be confident that the efforts would boost growth on a sustained (structural) basis. But, alas, judging by the government's even optimistic forecasts, they don't believe it either. The initial estimate for Q3 GDP for the euro area as a whole was 0.%, down from 0.4% in Q1 and Q2 and 0.7% every quarter last year....

...MUCH MORE

Millions of Euros Disappear From Gaddafi Account in Belgium - Reports

The Swiss!*
From Sputnik:

Libya has been in turmoil since the ouster of its long-time leader Muammar Gaddafi in 2011. Its eastern part is ruled by the country's parliament, supported by the Libyan National Army, while the UN-backed Government of National Accord headed by Prime Minister Fayez Sarraj operates in the country's west.

The UN is investigating the alleged embezzlement of up to five billion euros (5.6 billion dollars) that disappeared from accounts owned by former Libyan leader Muammar Gaddafi, according to Belgian MP Georges Gilkinet.

"UN documents confirm that Belgium failed to comply with a UN resolution on freezing Libyan assets," he told the Belgian news network RTBF.

He said that thus far, he had only received fragmentary information from Belgian authorities and that it is necessary "to clarify the situation, which may lead to a big scandal, because hundreds of millions of euros were sent to unknown individuals in Libya who were not known."

RTBF also cited a source as saying on condition of anonymity that over the past seven years, this hefty sum has allegedly been used to "finance a civil war which led to a major migration crisis."

A special UN report, in turn, suggested that the money was received by the Libyan investment authorities, whose complex structure makes it almost impossible to find out what these funds were allocated for....MORE

This could end up being a lot of money.
At one time Gaddafi was reputed to have a $200 billion net worth. So even just the interest and dividends would add up.

*The reference to the Swiss! was because:

a) They're Swiss, and transnational money seems to still be flowing there, and
b)  That time it looked like Gaddafi was going to invade, up the Rhône and on to Geneva

September 2009 
Qaddafi proposes abolishing Switzerland
February 2010 
"Qaddafi declares jihad against Switzerland"
May 2010 
"Qaddafi accuses Switzerland of mass murder"

March 2011 
Switzerland Seizes Opportunity, Declares War on Libya
March 2011 
"New Qaddafi media strategy: Blame Denmark"
January 2012 
"Switzerland's long Libyan nightmare is finally over"

The bellicosity was the result of violent actions on the part of Gaddafi's son,
Hannibal.

Using's Sartre's Critique of Dialectical Reason for Managerial Decision-Making

Thinking of Sartre, not sure why.
First seen in 2015's "Existential Questions I Hadn't Considered: 'Is There a Gnawing Ennui Within the Financial Industry?'"

Via SpringerLink:

Abstract

This article will offer an alternative understanding of managerial decision-making drawing from Sartre’s Critique of Dialectical Reason rather than simply Being and Nothingness. I will begin with a brief explanation of Sartre’s account of freedom in Being and Nothingness. I will then show in the second section how Andrew West uses Sartre’s conception of radical freedom from Being and Nothingness for a managerial decision-making model. In the third section, I will explore a more robust account of freedom from Sartre’s Critique of Dialectical Reason. I will attempt to show that freedom is not simply a matter of choosing (or not choosing) to perform an action, but entails external constraints—including other people. Finally, I will provide the implications of this account of freedom for managerial decision-making. I will show that it’s unreasonable to place full responsibility and/or blame on managers given their constraints. This does not absolve them from responsibility, but better accounts for the way in which we ought to hold them responsible.

I like that "including other people" which is of course an homage to 'ol J.P.'s line “L’enfer, c’est les autres” which we last visited in 2017's "David Byrne Has a Theory of An Overarching Agenda In Technology (and Sartre does a driveby)".

All of which is just an excuse to reward any reader who has stuck with me this far and revisit a bit of genius:

Le Blog de Jean-Paul Sartre

From the New Yorker:

Saturday, 11 July, 1959: 2:07 A.M.
I am awake and alone at 2 A.M.
There must be a God. There cannot be a God.
I will start a blog.

Sunday, 12 July, 1959: 9:55 A.M.
An angry crow mocked me this morning. I couldn’t finish my croissant, and fled the café in despair.
The crow descended on the croissant, squawking fiercely. Perhaps this was its plan.
Perhaps there is no plan.


Thursday, 16 July, 1959: 7:45 P.M.
When S. returned this afternoon I asked her where she had been, and she said she had been in the street.
“Perhaps,” I said, “that explains why you look ‘rue’-ful.”
Her blank stare only reinforced for me the futility of existence.

Friday, 17 July, 1959: 12:20 P.M.
When S. came through my study just now I asked her to wait a moment.
“Rueful,” I told her. “Because ‘rue’ is the French word for street.”
“What?” she said.
“From yesterday,” I said.
“Oh,” she said. “Yeah. Right.”
“And you said you had been in the street.”
“I got it,” she said.
“It was a pun,” I said.
“Got it,” she said. “Puns aren’t your thing, are they?”...

...MORE

HT: Marginal Revolution

IBD: "Stock Market Correction Hits New Low Point As Nasdaq Decline Is Worst Of The Year" (BA; IBM)

From Investor's Business Daily, 4:17 PM ET:

Stocks wiped away morning gains and closed sharply lower Monday, marking new lows for the stock market correction.

Selling picked up in the final two hours of trading, save for a bounce in buying in the last 15 minutes. Volumes were lower from Friday's totals on the NYSE and Nasdaq, according to early data.
The Nasdaq composite squandered a 1.8% increase to close 1.6% lower. The composite's correction has reached 13%, worse than the correction of January and February.

The S&P 500 slid 0.7% after it, too, made a bearish reversal. The S&P 500 and Dow have already wiped out all gains for the year, and the Nasdaq has only a 2% gain left.

Small caps fared relatively better, with the Russell 2000 down 0.5%. Small caps have tended to do better when trade tariff issues flare, and that was the case Monday. New threats of tariffs on Chinese imports seemed to unsettle the stock market.

Boeing Hurts The Dow
Boeing's (BA) sell-off sent the Dow Jones industrial average down 1%. Boeing descended 6.6%, falling below the 200-day moving average. Besides tariff woes, Boeing faced a new problem after one of the company's new 737-Max airliners operated by Lion Air mysteriously crashed in Indonesian waters....MORE

Hedge Fund CIO: "Today, The Chinese Are Trapped... And The Box Keeps Shrinking"

Can't say I agree with all of this piece but one bit stands out:

“Today, the Chinese are trapped. They need to keep policy easy to prevent implosion of their crazy-levered economy, but easing pressures their currency, which induces capital flight. So far, they’ve sidestepped this dilemma through capital controls and portfolio inflows (the latter a result of co-opting global asset managers and bureaucrats by getting included into global benchmarks and the SDR basket). But these are just delaying tactics.” As the box keeps shrinking.

Via ZeroHedge:

“America built the global trading system, but we don’t really need it,” said the strategist. “We defend it, but we don’t require it.” For all the free-trade talk, the US is the most closed of all major economies. “When you include Canada and Mexico – basically vassal states – you could cut off trade with every other country and America would run just fine.” Plus we haven’t even started fracking south of the border. “We built the trading system to support our allies during the Cold War. We subsidized them for so long we forgot why we were doing it. But the war is over.”

“The US pays for the security that underpins world trade,” continued the strategist. “And we provide the excess demand that allows the world’s mercantilists to function.” No large nation/block is willing to run a current account deficit like we do. “The Bushes and Clintons kept it going. Obama too. They kept the Cold War alive. And it was great for Wall Street, multi-nationals, their executives.” But it wasn’t great for most workers. “The rearrangement we see today was inevitable. It just needed a leader strong-willed enough to defy the establishment.”

“Neither Democrats nor Republican leaders wanted this change,” explained the strategist. “But almost overnight, voters have woken to the notion that China is not our friend. It’s a strategic rival.” This genie will not return to the bottle. “Neoliberalists assured us that welcoming China in the WTO would yield a win-win.” It certainly helped them get rich. “A strong China is not really a win for the US. It’s not a win for Vietnam either.” Or anyone within 1,000 miles of Beijing. “This change is generational. And the impact on China will be terminal.”...

...MORE 

Update—The Fly Lives to Fight another Day

After getting to down 566 the DJIA reversed to close at 24,442.92 down 245.39.

With his customary reserve and modesty Le Fly (as he sometimes styles himself) reports:

4:01pm EST
If You Didn’t Buy Today — Fuck Yourself

Full disclosure: I’m salty AF for missing the crash. I knew it was coming and got HOOKED into the sentiment this morning, forced to average down later on during the day — now bewildered and dizzy from the panorama of fuckery.

I just stepped in and bought TQQQ — just because.

I was a fucking winner, up until today, 80% cash, swag like a motherfucker — long a sundry of inverse ETFs. Instead of continuing along that path, I dove in at the wrong time and belly flopped like a god damned fool.

The plans for the balance of my days is to brood, and then lament, brood some more, and then mope around the house. I probably won’t shave, instead opting for remaining in a morose state of regret.

I had some fucking YANG, SOXS, FAZ, and DRIP, but instead now own a series of unfortunate SAAS stocks and TQQQ. How did my life come to this?

Look at AMZN and BA....

...MORE

Brood and lament.
As a doctor I know has said "Go into the pain, embrace the pain, the pain tells us we're alive."

effin' quack.