Saturday, December 31, 2022

Covid-19 Timeline: December 31, 2019

From J. Michael Waller's "China’s propaganda pandemic in an expanding timeline, November 2019-April 2020" hosted at The Center For Security Policy:

...December 31

Chinese authorities notify WHO. Chinese government officials inform the World Health Organization (WHO) of the coronavirus, and say that the disease is associated with the Wuhan Hunan Wholesale Seafood Market. The warning discounts human-to-human transmission. [Note: This December 31 warning will become the basis for China’s subsequent insistence that it was “transparent” from the beginning.]

WHO sends Beijing questions & offers assistance. Security services repress information. “WHO officials sent Beijing a list of questions about the outbreak and offered assistance,” the Washington Post reports in a reconstruction. “While scientists and public health experts scrambled to collect more information, China’s security services tried to smother it.”

Taiwan warns Beijing and WHO about human-to-human transmission. The government of Taiwan notifies Chinese health officials and WHO about its detection of a SARS-like virus outbreak in Wuhan, and warns of human-to-human transmission. WHO does not inform member nations about the report on its internal website.

Taiwan starts screening visitors from Wuhan. Taiwanese authorities begin screening visitors arriving from Wuhan....


... December 30

Dr Li warns other physicians. Dr. Li Wenliang, a 34 year-old ophthalmologist at Wuhan Central Hospital, warns other physicians about the virus on WeChat, and advises them to wear protective gear. (Dr. Li will be forced to sign a “confession” renouncing his statement, and will then die. A colleague, Dr Ai Fen, director of emergency at Wuhan Central Hospital, will later denounce authorities publicly on March 10 and disappear by March 16.)

Shi Zhangli, a top Wuhan Institute of Virology scientist, suspects lab leak. The director of the Wuhan Institute of Virology, China’s only P4 lab certified to handle coronaviruses, summons one of his top scientists with the report of the spread of SARS-like new coronavirus in the city. The scientist, Shi Zhangli, is known is “Bat Woman” for her research on coronaviruses carried by bats and transmitted to humans. Highlights from a late February interview in Scientific American:

  • Shi summoned after first hospital reports. “The mysterious patient samples arrived at the Wuhan Institute of Virology at 7 P.M. on December 30, 2019. Moments later Shi Zhengli’s cell phone rang. It was her boss, the institute’s director. The Wuhan Center for Disease Control and Prevention had detected a novel coronavirus in two hospital patients with atypical pneumonia, and it wanted Shi’s renowned laboratory to investigate.”
  • New deadly pathogen feared. “If the finding was confirmed, the new pathogen could pose a serious public health threat—because it belonged to the same family of viruses as the one that caused severe acute respiratory syndrome (SARS), a disease that plagued 8,100 people and killed nearly 800 of them between 2002 and 2003.”
  • Director: Come back from Shanghai and handle the crisis. “‘Drop whatever you are doing and deal with it now,’ she recalls the director saying.”
  • Shi never thought such a virus could spread in Wuhan, central China. “Shi, a virologist who is often called China’s ‘bat woman’ by her colleagues because of her virus-hunting expeditions in bat caves over the past 16 years, walked out of the conference she was attending in Shanghai and hopped on the next train back to Wuhan. ‘I wondered if [the municipal health authority] got it wrong,’ she says. ‘I had never expected this kind of thing to happen in Wuhan, in central China.'”
  • Shi wonders if the virus escaped from her lab. “Her studies had shown that the southern, subtropical provinces of Guangdong, Guangxi and Yunnan have the greatest risk of coronaviruses jumping to humans from animals—particularly bats, a known reservoir. If coronaviruses were the culprit, she remembers thinking, ‘Could they have come from our lab?'”

First official reports emerge of outbreak. Wuhan authorities confirm 27 cases of a mysterious viral pneumonia.....

"Share Buybacks and the Contradictions of 'Shareholder Capitalism'” (it's a racket)

I've mentioned SEC Rule 10b-18 a few times, some links after the jump. A lifetime of looking at this stuff has led me to the conclusion that in the U.S. stock buybacks are nothing more than a tax-avoidance scam with the added benefit of rewarding managers for things they didn't do by, well, managing the company rather than the stock price....
(there's an icebreaker for tonight's festivities: "Say, what's your take on SEC Rule 10b-18?") 

A repost from October 2019:

In the U.S. stock buybacks are just a straight-up tax dodge with the added attraction of boosting shares-based management compensation. If interested see "The Real Reason Stock Buybacks Are a Problem"

The smart kids, members of Phi Scamma Jamma, are still pitching a differential between tax on earned income and tax on capital gains even though the efficacy of capital gains tax breaks in performing their original purposes, investment and job creation, has been declining since the 1970's and is now just an excuse for a loophole. See "TAXES, CAPITAL AND JOBS" for an exceptionally lucid discussion, again, if interested.

And today's headliner, from American Affairs Journal:

In the jargon of finance, America is suffering from a capital allocation problem. The country seems incapable of making the necessary investments to fuel future productivity and growth, or to ensure widespread prosperity. At the government level, public spending on basic research and development as well as infrastructure investment has declined significantly over the past several decades. This trend, of course, should not be surprising, as reducing government spending has been a conscious policy objective for many years, especially (though not exclusively) for conservatives.

Over the same period, however, business investment has also declined. As a percentage of GDP, corporate investment has been in a long-term downward trend since 1980. And this trend is much more pronounced when viewed as a percentage of corporate profits or market capitalization.
This latter fact is particularly problematic for advocates of “free market” policies: if “getting government out of the way” does not lead to more entrepreneurial investment in the private sector, then what’s the point? Indeed, the entire neoliberal/libertarian economic policy toolkit has essentially been discredited by its failure to generate increased business investment in recent decades.
To take the most recent examples, the 2017 corporate tax cut was sold in large part with claims that it would increase private-sector investment, thus driving growth. Yet although there was some uptick in investment in early 2018, capital spending has stalled out in recent months, and growth estimates have been revised downward. In fact, in the second and third quarters of this year, S&P 500 companies spent more money buying back their own shares than on capital investment. For the foreseeable future, the prospects for any major boom in investment—certainly one matching the magnitude of the tax cut—are dim. Apparently the Trump administration’s vaunted deregulatory agenda has not worked either.

Looking back further, the Fed’s uniquely accommodative monetary policy in the aftermath of the financial crisis did lead to extraordinary asset-price inflation, but it did not produce anything approaching extraordinary investment growth. Meanwhile, the much-lauded “gains from trade”—really increases in corporate profits from tax and labor arbitrage—were never reinvested in the domestic economy. Nor were increased monopoly rents resulting from relaxed anti-trust, nor the labor cost savings resulting from de-unionization.

In short, neoliberal policies—from tax cuts, to deregulation, to trade liberalization, and so on—have produced massive increases in corporate profits, but these profits have not been reinvested in productive, entrepreneurial activity as promised (nor, of course, have they gone to labor). Instead, they have simply flowed into financial markets and remained there. But without sufficient investment into productivity-enhancing technologies, facilities, equipment, and the like, productivity has inevitably stagnated, and the economic prospects for future generations have deteriorated. In addition, given the highly unequal distribution of stock ownership (50 percent of Americans own no stocks; the top 10 percent own over 80 percent of equities, and the top 1 percent owns almost 40 percent), more capital flowing into financial markets has led to and will only continue to exacerbate gaping inequality, apparently with no compensating benefit that was supposed to come from increased investment.

The net result, as William Lazonick has argued, has been the construction of a “value extraction” economy rather than a system that rewards “value creation.” In other words, the financial markets are rewarding corporate behavior that extracts value from capital assets in order to convert it into liquid financial assets, rather than incentivizing the investment of financial assets into the real economy.

Many serious voices on the left have been calling attention to these problems for some time, unfortunately to little apparent effect even within the Democratic Party. But the situation has gotten so bad that critiques of the current system and new policy proposals to address its problems are starting to come from some unexpected quarters. Larry Fink, the CEO of BlackRock, recently called on companies to focus more on long-term capital investment rather than the short-term boosts of financial engineering (though there is no indication that BlackRock has used its considerable power as a massive institutional investor to force changes in corporate behavior). Moreover, today, Senator Marco Rubio proposed amending the tax code such that corporate share buybacks would be deemed dividends and taxed accordingly. This would remove the tax advantage/deferral that buybacks currently enjoy versus other forms of capital return, and aims to reduce the warped incentives that reward financial engineering at the expense of productive investment as well as labor compensation.
Needless to say, this tax change, even if implemented, would not itself solve all the problems related to counterproductive corporate behavior and financialized “shareholder capitalism.” Yet it is certainly the first serious attempt to address these issues—and one that goes beyond the conventional policy toolkit—to emerge from a Republican.

If discouraging financial engineering is now a bipartisan cause, it seems likely that a new and perhaps more concrete public debate around these issues will have to occur. And while the basic positions on these matters are fairly well defined, many delusions persist, so it is worth investigating in particular the issues around share buybacks.

At this point, the only remaining intellectual defenders of share buybacks or financial engineering more broadly fall into two groups. First, there are the salaried salesmen of “free market” think tanks, who typically have no practical knowledge of financial markets or the business world (indeed it is shocking—though probably not accidental—how few libertarian think tank commentators have any real-world business or Wall Street experience). On the other hand, the second group is mostly comprised of a few mediocre stock-pickers with academic pretensions like Cliff Asness who are basically talking their own book. Their main argument is that returning capital to shareholders does not reduce investment but simply allows for the reallocation of cash from one company to another which could deploy that cash more efficiently.

As an aside, some still argue that buybacks serve a bona fide business purpose, like “restructuring,” but anyone with any experience in institutional investing recognizes these arguments as utterly frivolous. In almost all cases, companies do buybacks in order to return capital to shareholders and boost their stock price by reducing the number of shares outstanding and thus improving earnings-per-share (EPS) metrics. Buybacks have also come to be preferred over dividends because they enjoy a tax advantage: shareholders who do not sell immediately receive a tax deferral on the price appreciation resulting from the stock’s increased EPS, whereas dividends are subject to tax immediately upon payment.

Returning to the main question, however, defenders of buybacks argue that returning capital to shareholders does not come at the expense of productive investment but rather represents the best use of capital available and allows shareholders to allocate capital to other companies more in need of it. Like most neoliberal economic arguments, this claim benefits from a certain logical simplicity, but it totally breaks down when applied to the real world.

First, the statistics simply do not support this argument. According to data from the Peterson Institute for International Economics and Bloomberg, in 1980 total capital return (buybacks plus dividends) represented about 2 percent of U.S. GDP, while investment was close to 15 percent of GDP. In 2016, investment represented around 12 percent of GDP while capital return was about 6 percent of GDP. To be sure, there is some variation in these numbers year over year, but the long-term trends are obvious....


There is an interesting little wrinkle in that last paragraph's 1980 start date for the comparison but I'll have to leave that for another post. 

If interested see also:
"The Real Reason Stock Buybacks Are a Problem"
This argument is a corollary of the fact that the preferential taxation of capital does not seem to deliver on the policy goals with which it is rationalized.
More on that after the jump.
(I'm going to get kicked out of the club aren't I?)

Related, the post where I first used the 10b-18 intro: Taibbi: "The S.E.C. Rule That Destroyed The Universe"

And just to refresh memories:

...II. Overview of Current Rule 10b-18
A. Rule 10b-18 as a "Safe Harbor"
In 1982, the Commission adopted Rule 10b-18,4 which provides that an issuer will not be deemed to have violated Sections 9(a)(2) and 10(b) of the Exchange Act, and Rule 10b-5 under the Exchange Act, solely by reason of the manner, timing, price, or volume of its repurchases, if the issuer repurchases its common stock in the market in accordance with the safe harbor conditions.5 Rule 10b-18's safe harbor conditions are designed to minimize the market impact of the issuer's repurchases, thereby allowing the market to establish a security's price based on independent market forces without undue influence by the issuer....

For many, many years corporations have been the marginal buyer, meaning their actions are what sets stock prices, which is directly at odds with the original intent of the rule change.

There Have Been Other December 31's That Were Much More Momentous

This piece by Mark Steyn (not to be confused with Lady Justice Steyn) was originally published in the Telegraph on December 31, 1999.

With Santana's "Smooth" on constant replay providing the background music, the most talked about topics, in some circles anyway, were the Y2K bug and whether this was really the turn of the Millennium or if it was next year. The dotcom bubble was in full stride and the zeitgeist was a bit frivolous.

This Date in History

December 31st, 999
A reluctant King Ethelred the Unready has been pressured by the Thane of Blair into attending tonight's opening of the Millennium Dome in London. Initially, His Majesty had argued that the new millennium did not start until January 1st, 1001. "Sire," the Thane pointed out, "the clock of your consultations and executions is forever set some hours late. Your people are ready for this new millennium, yet Your Majesty persists in his unreadiness."

"Give us a break," replied the King. "This Millennium Dome of yours is just an overgrown tent. It's not even a permanent structure."
"But in this kingdom what is?" riposted the Thane. "We put up a fabulous abbey at Tavistock, but the Danes burnt it down. They sack London, they rape Kent. The beauty of this Dome, Sire, is that, with any luck, it will have collapsed before Svein Forkbeard's hordes have a chance to torch it. Oh, by the way, a belated Merry Christmas from all us barons." He handed the King a copy of the current best-selling self-help manual Men Are from Norseland, Women Are from Kent.

Two thousand years ago
December 31st, 1 BC

In Rome today, officials insisted that fears of a so-called "Y1" bug were groundless, and that the rush to the forum to stock up on food before midnight was simply causing unnecessary panic. Despite these statements, soothsayers around town have been urging citizens to beware: "They laughed at me about the Ides of March," says one. "But I'm ready to go double or quits." He predicts widespread chaos on January 1st, affecting everything from utilities to transportation: "Chariots will be dropping off the aqueducts," he warns.

Others note that, whereas in previous years 4 BC changed smoothly to 3 BC and 3 BC to 2 BC, at midnight tonight there will be no new year for the calendar to flip to - a design fault that experts claim was all too predictable when the system was installed. "They've known this was coming since at least, er, 4000 BC, and maybe earlier," says Computa Geekus, editor of BC PC. "They've had plenty of time to think up some numbers lower than one - and what have they come up with? Nothing. Nada. Zip. Zero. Well, come to think of it, if they'd come up with 'zero,' we wouldn't be in this mess. But zero as a numerical concept is unknown to the Roman world. Hence, this crisis. Happy No Year."
However, Bill Portas, the richest man in the world, says there should be no problems, as long as everyone upgrades to Windows AD.

In other news, Chronos, the popular Greek magazine, has announced its "Top Ten People Of The Millennium": 1) Alexander the Great; 2) Plato; 3) Socrates; 4) Pericles; 5) Aristotle; 6) Protagoras; 7) Aristophanes; 8) Mimnermos; 9) Hippias of Elis; 10) Cleopatra.
Meanwhile, Campus, the popular gay magazine, has announced its "Top Ten Gays Of The Millennium": 1) Alexander the Great; 2) Plato; 3) Socrates; 4) Pericles; 5) Aristotle; 6) Protagoras; 7) Aristophanes; 8) Mimnermos; 9) Hippias of Elis; 10) Sappho.

Three thousand years ago
December 31st, 1001 BC

In the abandoned city of Hattusas, Dick Clark announced the results of his poll for the Millennium's All-Time Greatest Hittite. The winner is King Suppiluliuma I (circa 1380-1345 BC).

Four thousand years ago
December 31st, 2001 BC

In Sumer today, officials were divided as to whether tomorrow is really the first day of the new millennium. "What can I tell you? It's circa this, circa that, so let's just call it CY2K," said the King's press agent, In-Nummeru. "I've been in this business circa 40 years and, lemme tellya, there's no need to reinvent the wheel here. We did that in the last millennium."
But critics contend that, actually, we do need to reinvent the wheel, since Babylon is developing something called a "chariot" - a two-wheeled high-speed vehicle that could revolutionize warfare in the next millennium. "You're either on the Conflagration Super Highway or you're left behind in the dust," says one defence expert.

Sumerian complacency has also been attacked by leading property developer and potential candidate for King, Donald the Trump. "They call me a clown, but I'm not joining the circa's," he said, in a sustained attack on how inefficient Sumerian statism had left its economy way behind the more entrepreneurial Babylonians. "You wanna put up a building here, the planning board says, sure, as long as it's a ziggurat," he complained. "Listen, I got Trump Ur Ziggurat, Trump Nippur Casino and Ziggurat, Trump Mari Palace Ziggurat. You know how sick people are of ziggurats? The whole town looks like a discount staircase warehouse. You've got 200,000 square feet on the ground floor and by the time you get to the penthouse you're lucky if you can get a broom closet up there. I'm the biggest developer in the hottest city in the world, and I say: Let's build buildings that go straight up. You'll have your regular temple on the ground floor - strictly the best, high class all the way - but on top of that we'll have room for a parking garage that blocks out all sunlight from here to the Euphrates."

However, commentators thought The Trump's proposals had come too late to save the atrophied Sumerian civilization from total collapse. "Sumer is riven by inter-city rivalry. Ur has been sacked by the Elamites, Isin is struggling to hold Nippur," reported a correspondent for the Sumer edition of Time magazine, Sumer Time. "As for this circa business, as the old saying goes: Spring into Sumer, Fall back to Winter."

Five thousand years ago
December 31st, 3001 BC

The Nasdaq index bounced to a record high today of three following the latest stock offering by a hieroglyph start-up company. "This is revolutionizing communication," said hieroglyph entrepreneur Ptolyouso, founder of e-Gypt and the mail-order bookstore "Before, if you wanted to tell a joke to your cousin in Thebes, you had to get into a boat and paddle up river. Now, you simply use p-mail: Relate your joke to a scribe and he'll deliver it within weeks in convenient papyrus form."....


I thought I had a PDF of the original as published but it seems to have disappeared somewhere in the link-vault so the above was copypasta'd from Mr. Steyn's website. 

For some reason I do not comprehend, when I did a quick search of the link-vault, the first hit was "On this day in 1004":

Events in History in 1004      
May 15 Henry II the Saint crowned King of Italy
Nov 13 Abbo van Fleury [Floriacensis], French abbott and saint, dies

Not as funny as Steyn but amusing in a trivial sort of way.

On This Date in 1935 the Game "Monopoly" Was Patented (economist Henry George does a cameo)

The fellow who patented the game, Charles Darrow, did not invent it, did not improve it and pretty much did nothing but file for the patent, which the USPTO granted;  Patent Number 2,026,082 on December 31, 1935.

"I think it's wrong that only one company makes the game Monopoly"
-comedian  Steven Wright

We've looked at Henry George a few times, links after the jump.
First up, from

December 31, 1935: Charles Darrow patents the board game Monopoly 
A salesman granted himself a licence to print money when he patented the World's most popular board game on this day in 1935. 
The most successful board game of all time, Monopoly - which would go on to be printed in more than 40 languages and licensed in well over 100 countries – was patented on this day in 1935 by a salesman from Philadelphia named Charles B. Darrow.

After convincing the Parker Brothers company to publish the game, its ongoing success would make Darrow the first ever millionaire game designer. It would later be established, however, that Monopoly was simply a development of other, previously existing board games which dated back to the turn of the century.
Charles B. Darrow with his money-spinning invention.
In 1903, an anti-monopolist named Elizabeth ‘Lizzie’ Magie had created what she called The Landlord’s Game, intended to show the negative aspects of allowing too much land to be held by private monopolies. She took out her own patent a year later....MORE
BT knows a thing or two about monopolies, past and present.

And From Henry

How Henry George's Principles Were Corrupted Into the Game Called Monopoly
History is filled with surprising stories of how people and ideas are connected. One such story is that of the origins of the most popular board game in modern history. It's an American classic: each new generation of Monopoly players learns to love (harmlessly) indulging its cutthroat, ruthless, greedy impulses. Players begin the game as equals. Luck — and a bit of strategy — eventually enables one player to dominate all others. That player ends up amassing a huge fortune in cash and real estate. Most Monopoly players don't know (or care) that this game was originally the product of a passion for social and economic justice. In the late 1800s, a young woman named Elizabeth Magie was introduced to the writings of Henry George by her father. She eventually became one of many people who took on the task of trying to teach others what she had learned from studying Progress and Poverty and George's other works.
Collaborating with friends in her Brentwood, Maryland community, Elizabeth Magie created The Landlord's Game. She applied for a patent, which was granted on January 5th, 1904 (No. 748,626). She explained that the game was to be a "practical demonstration of the present system of land-grabbing with all its usual outcomes and consequences."

While still a young, single woman, Elizabeth -- or "Lizzie" as she came to be called -- became a regular visitor to the Single Tax enclave of Arden, Delaware. This was around 1903. Whether on her own or in conjunction with other Single Taxers in Arden, Lizzie continued to work on the design of The Landlord's Game as a way to explain how Henry George's system of political economy would work in real life.

Arden landmarks: Stephen's Theater and the Craft Shop.
For a close-up look at the game board used in Arden, Click here.

The First Commercial Versions of The Landlord's Game

In 1906, Elizabeth moved to Chicago, Illinois, where she met, and in 1910 married, Albert Phillips. I have not been able to find any reference to Albert as a follower of Henry George, but evidently he was sympathetic to his wife's efforts. At some point in 1906 Elizabeth and a number of other followers of Henry George established the Economic Game Company of New York, which published The Landlord's Game.
Sometime soon thereafter Elizabeth and Albert moved to Clarendon, Virginia, in the Washington D.C area and eventually patented a new edition of The Landlord's Game in 1924 (No. 1,509,312) under her married name of Elizabeth Magie Phillips. This new edition, published by the Washington, D.C. firm, Adgame Company, appeared in 1932 and included named streets and other changes in the appearance of the board. More importantly, the new edition included a second, alternative, set of rules and a second name for the game, Prosperity.

Connections with Academe

Around 1900, Scott Nearing was introduced to The Landlord's Game by either Lizzie Magie or other residents of Arden. He was at the time a full-time resident of Arden. Nearing went on to become a member of the economics department at the University of Pennsylvania in 1906, where he used The Landlord's Game in his teaching. His support of Henry George's proposals to raise pubic revenue exclusively from those who owned land, and his opposition to child labor, caused him to be dismissed from the university in 1915.
Burton H. Wolfe, in "The Monopolization of Monopoly" (San Francisco Bay Guardian, 1976), says that "Nearing played The Landlord's Game with his brother, Guy Nearing, who lived in the Henry George single tax community of Arden, Delaware." Then:
As the students and single taxers played the game, they began a process ... of altering the rules. The main change was that instead of merely paying rent when landing on a property block, the players could hold an auction to buy it.       They also made their own game boards so that they could replace the properties designated by Lizzie Maggie with properties in their own cities and states; this made playing more realistic. As they drew or painted their own boards, usually on linen or oil cloth, they change the title "Landlord's Game" to "Auction Monopoly" and then just "Monopoly".
Burton Wolfe also tells us that a young Rexford E. Tugwell was one of the players. One of Tugwell's own students, Priscilla Robertson -- long-time editor of The Humanist -- provided the following details on the early history of the game: "In those days those who wanted copies of the board for Monopoly took a piece of linen cloth and copied it in crayon. It was considered a point of honor not to sell it to a commercial manufacturer, since it had been worked out by a group of single taxers who were anxious to defeat the capitalist system." (I am obliged to note here the considerable misrepresentation of the objectives pursued by Single Taxers who shared Henry George's principles. Defeating monopoly in all its forms (but, particularly, monopoly of nature), not capitalism, was - and is - the cause embraced then and today.)

Other writers note the game was played by students at Princeton University and Haverford College. Changes were made to the board design, gathering the properties into groups, allowing buildings to be added to the locations and increasing the amount of rent charged based on the number of like properties owned.

By the late 1920s, the version of the game being played by college students and others had evolved quite a bit from Elizabeth's design. The game was now generally referred to as "Monopoly." A young student at Williams College (Reading, Pennsylvania) produced a commercial version under the name Finance, but the game was essentially Monopoly. Then, a woman named Ruth Hoskins who learned the game in Indianapolis moved to Atlantic City, New Jersey and supposedly created the version that included the Atlantic City street names.

Then the plot thickens. The game was introduced by Eugene (Colonel) and Ruth Raiford, friends of Ruth Hoskins, to Charles Todd, who lived in Germantown, Pennsylvania; and, Charles Todd then introduced the game to Charles and Esther Darrow. Eugene Raiford, Charles Todd and Esther Jones Darrow all attended the Quaker Westtown School from 1911 to 1914 or 1915. The subsequent connection with Atlantic City occurred because of the close association of the Westtown School with the Atlantic City Friends' School. As Todd later recalled: "The first people we taught it to after learning it ... was Darrow and his wife Esther. ...It was entirely new to them.... Darrow asked me if I would write up the rules and regulations and I wrote them up ... and gave them to Darrow."...

And Henry George?
...In a January 1936 interview in The Washington Star, Elizabeth was asked "how she felt about getting only $500 for her patent and no royalties ever. She replied that it was all right with her "if she never made a dime so long as the Henry George single tax idea was spread to the people of the country."...
If interested see also: 

"How the brain calculates a quick escape" (plus the fuzzy logic of fleeing for your life)

From Knowable Magazine, December 21:

Whether fly or human, fleeing from danger is key to staying alive. Scientists are beginning to unravel the complex circuitry behind the split-second decision to beat a hasty retreat. 

Survival of the fittest often means survival of the fastest. But fastest doesn’t necessarily mean the fastest moving. It might mean the fastest thinking. When faced with the approach of a powerful predator, for instance, a quick brain can be just as important as quick feet.

After all, it is the brain that tells the feet what to do — when to move, in what direction, how fast and for how long. And various additional mental acrobatics are needed to evade an attacker and avoid being eaten. A would-be meal’s brain must decide whether to run or freeze, outrun or outwit, whether to keep going or find a place to hide. It also helps if the brain remembers where the best hiding spots are and recalls past encounters with similar predators.

All in all, a complex network of brain circuitry must be engaged, and neural commands executed efficiently, to avert a predatory threat. And scientists have spent a lot of mental effort themselves trying to figure out how the brains of prey enact their successful escape strategies. Studies in animals as diverse as mice and crabs, fruit flies and cockroaches are discovering the complex neural activity — in both the primitive parts of the brain and in more cognitively advanced regions — that underlies the physical behavior guiding escape from danger and the search for safety. Lessons learned from such studies might not only illuminate the neurobiology of escape, but also provide insights into how evolution has shaped other brain-controlled behaviors.

This research “highlights an aspect of neuroscience that is really gaining traction these days,” says Gina G. Turrigiano of Brandeis University, past president of the Society for Neuroscience. “And that is the idea of using ethological behaviors — behaviors that really matter for the biology of the animal that’s being studied — to unravel brain function.”

Think fast
Escape behavior offers useful insight into the brain’s inner workings because it engages nervous system networks that originated in the early days of evolution. “From the moment there was life, there were species predating on each other and therefore strong evolutionary pressure for evolving behaviors to avoid predators,” says neuroscientist Tiago Branco of University College London.

Not all such behaviors involve running away, Branco notes. Rather than running you might jump or swim. Or you might freeze or play dead. “Because of the great diversity of species and their habitats and their predators, there are many different ways of escaping them,” Branco said in November in San Diego at the 2022 meeting of the Society for Neuroscience.

Of course, sometimes an animal might choose fight over flight. But unless you’re the king of the jungle (or perhaps a roadrunner much smarter than any wily predatory coyote), fighting might be foolish. When an animal is the prey, escape is typically its best choice. And it needs to choose fast.

“If it decides to escape it should make this escape as quickly and accurately as possible,” Branco points out. “And then it should also terminate it as soon as possible because escape is a very costly affair. It costs energy and it also costs missed opportunities.”....


An earlier look at some of the research came from the brainiacs at IEEE Spectrum: "The Fuzzy Logic of Fleeing for Your Life", to which I added one of the most amazing escape stories I've ever come across, the crash of Air France Flight 358 in Toronto. Attempting to land in really lousy weather the plane went too far down the runway and into a ravine. There were 309 people on board.

...Runway Overrun and Fire:

...1.15  Survival Aspects

1.15.1  General
The passenger load comprised 297 passengers: 168 adult males; 118 adult females; 8 children; and 3 infants. Adult passengers included: three wheelchair passengers and one blind passenger....


The fires started before the plane hit the ravine.

When Flight 358 came to a stop, 4 of the 8 exits were unusable, due either to the fires or the damage caused by impact.

The flight attendants got everybody, all 309, off the plane in 125 seconds.

Think about that the next time you board and look around at your fellow passengers.
Could they do it?

The picture above is a screengrab of a video taken two minutes later. 

Friday, December 30, 2022

"'Greenflationary' expectations"

From the prolific (not kidding, I don't think he ever stops thinking about this stuff) Peter Sainsbury's Substack, Carbon Risk, May 10:

The lumpy, unpredictable nature of climate change and the transition towards zero carbon is likely to mean that inflation will be higher, and more volatile in the future.

Much of this inflationary pressure relates to the impact that climate shocks have on the supply of essential commodities, especially agricultural and energy. However, the transition to a zero carbon economy (and the costs that implies) is likely to become an increasingly important contributor to high and volatile inflation.

Up until relatively recently, carbon prices were low and the impact on carbon abatement behaviour was limited. Over the longer term though, higher carbon prices provide the incentive to decarbonise power generation and industrial assets. However, these assets take time to come to fruition, which means that in the short-term capital is diverted away from high carbon sectors such as fossil fuels.

Higher carbon prices also represent a cost that business must either pass onto their consumers, or alternatively absorb it and see their margins cut. Uncertainty over short and long term carbon prices will become more and more important in determining inflationary expectations.

Volatile inflation is particularly pernicious due to the significant cost it imposes on economic activity resulting from the the uncertainty it introduces into decision making (see 'Greenflation' fears are a twin threat to the EUs monetary and climate credibility.

Central bankers should play a pivotal role in communicating the economic trade-offs involved in decarbonisation. They have the power to provide a stable foundation for the investment and behaviour change required. Without that foundation then carbon prices are likely to be higher, and for much longer.

‘Greenflationary’ expectations

The degree to which inflation will result from carbon pricing ultimately depends on where we are today.

Compliance carbon markets covered ~17% of global emissions in 2021 and posted a carbon market-weighted average price of ~$28 per tonne (~€26.50). The low average price reflects the large share of emissions covered by China’s nascent carbon market and it’s relatively low carbon price; launched in July 2021 the scheme closed the year below $10 per tonne. Taking account of other countries where carbon taxes exist and carbon pricing of some sort (either taxes or carbon markets) covers around 22% of global emissions. The other 78% are starting from zero.

On a global basis this means the price of carbon is low, really low.

~$2.50 per tonne.

We are so very early. Global carbon prices need to be well north of $75 per tonne if the world is to decarbonise in the timescales its leaders have committed to. The inflationary implications of higher carbon prices has barely begun.

Impact of higher cost of carbon on energy prices

Credit Suisse estimates that every $10 per tonne increase in the carbon price (equivalent to €9.50), will add ~$4 per barrel (bbl) to the oil price. At an oil price of $100 per bbl, this would imply a 21% and 42% increase in prices if carbon rose to $50 per tonne and $100 per tonne respectively.

When it comes to natural gas the bank estimates that every $10 per tonne increase in the carbon price would add ~$0.5 per MMBtu. At $8 per MMBtu, a $50 per tonne carbon price would raise natural gas prices by 34%, and 68% at a carbon price of $100 per tonne.

Crucially, the estimates here only account for Scope 3 emissions, i.e. those involved with the combustion of the fossil fuels. If Scope 1 and Scope 2 emissions are included then the impact on energy prices for every $10 increase in the carbon price could be some 25% higher.1

Remember that higher carbon prices could be introduced through the compliance markets (e.g. via steeper floor price or expanding the coverage, etc.), or through direct carbon taxes, or some combination of the two (e.g. several countries in Europe have a separate carbon tax and are also part of the EU ETS).

Impact on inflation across economies....


Pelé and the Dassler Shoe Factory

From Joe Pompliano, December 29:

....MUCH MORE (thread)

"The rise and the rainfall of the Roman empire"

 From The Economist, August 1, 2018:

DURING the past two months, the world has been stifled by exceptional temperatures. Deadly wildfires have ripped through parts of the United States and Greece; Japan has declared its heatwave a natural disaster; drought in Britain has led to hosepipe bans and caused farmers to slaughter their cattle for lack of feedstock. As the planet warms, global heatwaves and associated droughts will become increasingly common. History offers numerous cautionary tales about the effects that these weather-related shocks can have on society and politics.

One such lesson is how drought affected the stability of the Roman empire 1,500 years ago. In a new paper published in Economics Letters, Cornelius Christian of Brock University and Liam Elbourne of St Francis Xavier University identify a strong association between rainfall patterns and the duration in power of Roman emperors. The academics hypothesise that lower precipitation reduced crop yields, leading to food shortages and eventually starvation for soldiers stationed at the empire’s frontiers. As a result, troops were more likely to stage mutinies and assassinate their emperor.

The academics combine data on assassinations—some 25 emperors were assassinated, roughly one-fifth of the total—with precipitation data collected from rainfall-sensitive oak-tree rings across the Roman frontier in France and eastern Germany. They find that a one-standard-deviation decline in annual rainfall (a 20% reduction from the average) was associated with an increase of 0.11 standard deviations in the probability that an emperor would be assassinated the following year. The Gordian dynasty from 235 AD to 285 AD was particularly tumultuous: 14 of the 26 emperors who ruled were assassinated during this period. Of course hungry troops were not the only cause of the demise of emperors. This period was also marked by plague, invasions and economic depression....


Plague, invasions and economic depression, eh?

If this pattern holds true, and the current drought in the Western United States comes to resemble anything near the droughts of the past, the next Governor-or-ten of California may want to double up on their Praetorian Guard. 

—San Jose Mercury-News "California drought: Past dry periods have lasted more than 200 years, scientists say"

"Ukraine to battle Russia for Miss Universe title"

This is such a bizarre war.

From the New York Post:

The next battlefield will be at a beauty pageant.

Miss Ukraine Viktoria Apanasenko, who will be representing the war-torn country at the Miss Universe pageant in New Orleans on Jan. 14, unveiled her look for the contest’s National Costume competition: a stunning multilayered motif with ornate, oversize blue and yellow wings.

The Warrior of Light costume “symbolizes our nation’s fight against darkness,” read Apanasenko’s caption on Instagram.

“Like Archangel Michael, who defends Ukraine with a sword, it protects us.”

The outfit — complete with weapon and body armor — sends the message that Apanasenko “carries light through the darkness that came to our peaceful lands with the aggressor.”

Competing alongside her will be Miss Russia Anna Linnikova, who unveiled her The Crown of the Russian Empire costume on Wednesday. The opulent red velvet gown is dripping with pearls and gems....


Also at the Post:

I ditched my ‘Karen cut’ and got 11 tattoos and 7 piercings...

That reminds me, the Tōhoku earthquake (Fukushima) shifted the earth on its axis.

Meanwhile, in Canada...

This is just brutal on so many levels, from individual to societal and everything in-between.

Upper right, under "National Bank of Canada".

What is human capital?

From Aeon magazine:

Human capital theory was invented as an ideological weapon in the Cold War. Now it is helping to Uberise the world of work
Chicago, 1960. The United States is bogged down in a long, expensive and dangerous Cold War with the Soviet Union. Inside the Economics Building at the University of Chicago, two academics are engaged in a private, intense conversation. Theodore ‘Teddy’ Schultz is tall and lanky. Raised on a South Dakota farm and pulled out of school by his father, he’d still managed to scale the heady heights of academia, first as chairman of the Economics Department in 1944 and then as president of the American Economic Association in 1960. Schultz has strong connections with the Ford Foundation, an important front for CIA programmes during the Cold War.

His younger sparring partner is Milton Friedman who in 1946 joined what became known as the ‘Chicago school’. Although Friedman was of diminutive stature, measuring only 1.52 metres tall, he already enjoyed a fierce reputation as a verbal opponent. Friedman will flirt with the CIA in due course too, training Chilean economists in the art of neoliberal ‘shock therapy’. His know-how came in handy after the US-sponsored overthrow/death of Chile’s Marxist president Salvador Allende in 1973. Richard Nixon said he wanted to hear the Chilean economy scream.

As the two men faced each other in that dark, oak-panelled office, they had a big problem on their hands. University economists were being recast in a new light by US state authorities; no longer bumbling professors (sporting a pipe and tweed jacket) but the creators of ideational weapons, just as important as the intercontinental ballistic missiles being readied at Vandenberg airbase in California. Members of the Chicago school were confident they could make a significant contribution in the struggle.

But how exactly?

Schultz shifts nervously in his leather-bound chair. Economic growth has to be the answer, he avers. Friedman nods in agreement, but quietly frowns as Schultz makes his case. In Moscow, Nikita Khrushchev has just announced that ‘growth of industrial and agricultural production is the battering ram with which we shall smash the capitalist system’. This brazen provocation caused a stir when it was read to the US Joint Economic Committee of Congress in 1959.

Friedman is stony silent – a rarity that Schultz seizes upon to extend his point. There’s a very pragmatic aspect to his plan, too. Not only is growth a ‘hot topic’ following the Khrushchev speech, but a number of powerful technocrats in the US government are increasingly sympathetic to Schultz’s views, especially the Council of Economic Advisers. They’ve been instructed by the Oval Office to devise a growth strategy that will eclipse the USSR and leave it for dead.

Although Schultz holds staunch neoclassical assumptions about growth and development, he learnt from his earlier studies of agricultural productivity that increased public spending on education was absolutely vital to the nation’s growth agenda. It will not only give the US a scientific edge in the space race but also enrich the country’s wider skill reserves, making it more productive and thus beating the Soviets at their own ‘growth game’.

Friedman abruptly interjects. Yes, he intones, the question of economic growth is vital. But public spending is not the way forward. It’s easy to picture Friedman browbeating his weary chairman once again about the evils of ‘big government’ and central planning. The Soviet enemy instead needs to be confronted on strictly US terms, where individual freedom and capitalist enterprise come to the fore. Government is the problem, not the solution. Friedman’s ideal hero is the self-made entrepreneur. He often cited a joke from the vaudeville humourist Will Rogers to cut down his government-friendly critics: just be thankful you don’t get the government you actually pay for!

Here, Friedman is echoing the views of the Austrian free-market zealot F A Hayek, who had joined the University of Chicago in 1950. While exiled in London back in the 1940s, Hayek had written the rabid anti-communist tract, The Road to Serfdom. A condensed version was published by Reader’s Digest and made its author famous. Hayek’s near-fanatical belief in capitalist individualism and all things anti-USSR undoubtedly swayed the terms of the debate that Schultz and Friedman were presently having.

The two academics pause to gather their thoughts. Then the concept of human capital is broached. Possibly by Schultz since it might help to find some common ground with his tiny counterpart. Unfortunately, it proved to be the older academic’s undoing in the debate.

In essence, the idea of human capital wasn’t new. Adam Smith had pointed out long before how the skills and abilities acquired by workers (eg, training, education, etc) can add economic value to an enterprise. But Schultz had only recently become intrigued by the idea. He actively encouraged new faculty and PhD students to build a more robust and formalistic theory of human capital. Legend has it that Schultz suddenly grasped its importance after visiting an impoverished farm. He asked the threadbare owners why they were so content. Because they’d managed to send their children to school, they replied. It would guarantee a secure income for the family long into the future.

Friedman too was fascinated by the notion of human capital, but from a different angle. Some junior colleagues – including Gary Becker, Friedman’s doctoral student who would make his name in this branch of economics – had made some major breakthroughs. One in particular caught Friedman’s eye. Unlike money or equipment, this type of capital cannot conceptually be separated from the individual who owns it. It’s intrinsically part of him. And by extension, someone’s human capital cannot be owned by anyone else since that would be slavery. Therefore, who exactly ought to have the responsibility of investing in it or the enjoyment of its benefits? We gain an inkling of where Friedman stood on the issue from an early paper of Becker’s, in which he showed why it’s irrational for a firm to fund employee training schemes since that same investment might one day literally walk out the door and join a rival....


"Should We Legalize Market Manipulation for Crypto?"

The ghost of Joe Kennedy smiles.*

From Mark Helfman at Data Driven Investor

A proving ground for financial experiments

"Revealed: Blair wanted to regulate papers for ‘accuracy’ of reporting, former top aide says"

From CityAM:

A key official in the team of former prime minister Tony Blair wanted to regulate newspapers for the “accuracy” of their reporting, according to newly-released official papers.

Files released by the National Archives show Mr Blair’s principal private secretary Jeremy Heywood (a future cabinet secretary) became exasperated by what he regarded as the inaccurate reporting of the government’s activities.

However his appeal for a system of “accuracy regulation” was swiftly shot down by Mr Blair’s advisers, who said it would be “suicidal” to try.

Writing in August 2001, Mr Heywood said: “I assume it is unthinkable to impose accuracy regulation on newspapers?

“No other industry would get away with the practice of making up stories that even our most serious newspapers indulge in.

“Is there no country in the world that has a successful model of newspaper regulation?”....


Thursday, December 29, 2022

More On BlackRock's Plans For Ukraine

Following on the earlier "Zelensky Says Rebuilding Ukraine Will Cost More Than $1 trillion; Talks To BlackRock About The Opportunity (BLK)".

From Yahoo Finance' "BlackRock to advise Zelensky on investments aimed to rebuild Ukraine", this line in particular stands out:

“Volodymyr Zelensky and Larry Fink agreed to focus in the near term on coordinating the efforts of all potential investors and participants in the reconstruction of our country, channeling investment into the most relevant and impactful sectors of the Ukrainian economy,”

That sounds pretty darned comprhensive.
And which elicited from Common Dreams, December 29: 
BlackRock Accused of 'Trying to Cash In On the Disaster' With Ukraine Reconstruction Deal  
"This is going to make the neoliberalism and privatization the U.S. inflicted on post-Soviet Russia look like child's play," one critic predicted. 

Investment behemoth BlackRock was accused Thursday of what author Naomi Klein termed "disaster capitalism" after war-ravaged Ukraine's president announced he would work with the firm to coordinate foreign investment in the country's reconstruction.

"The BlackRock team has been working for several months on a project to advise the Ukrainian government on how to structure the country's reconstruction funds," Ukrainian President Volodymyr Zelenskyy's office said Wednesday following the president's video conference with BlackRock CEO Larry Fink.

Zelenskyy's office said that the two men "agreed to focus in the near term on coordinating the efforts of all potential investors and participants in the reconstruction of our country, channeling investment into the most relevant and impactful sectors of the Ukrainian economy."

In language evocative of Klein'sThe Shock Doctrine: The Rise of Disaster Capitalism, Medea Benjamin, co-founder of the peace group CodePink, tweeted that BlackRock is "already trying to cash in on the disaster in Ukraine."

Investigative journalist and Status Coup CEO Jordan Chariton predicted that "this is going to make the neoliberalism and privatization the U.S. inflicted on post-Soviet Russia look like child's play."....


Let us hope this turns out to not be the case.
Shock Therapy is what led to the rise of Putin.

If interested see also:
"Shock therapy on the world economy"
I've been wondering if Germany was going to experience something similar to what was done to Russia...but in this essay one of our favorite Marxist Economists implies it could happen on a much wider scale....

There are a lot of secrets that have yet to be exposed and the amount of money taken out of Russia and Ukraine, not just by the oligarchs but also by the hordes of American and European kleptos is almost beyound belief.
Let's say, oh, an eighth-of-a-trillion dollars. 
Back when a trillion was real money.....

Barron's UPDATE: Elon Musk DID NOT Have A Margin Call (TSLA)

I'm pretty sure the commenters are confusing a margin call with Tesla's internal limits on how much stock can be pledged and confusing both with initial reports on the Twitter buy-out funding. I have a call in to the lady attorneys but they're on a boat somwhere and seemingly can't be bothered.

I'd say I'm getting too old for this sh** but if the reason the lady attorneys can't be bothered is a 25-year old named Paolo I would just be confirming their priors.

From Barron's via MarketWatch:

Last Updated: Dec. 29, 2022 at 6:07 p.m. ET  

How Elon Musk Dodged a Potential Margin Call Bullet by Following His Own Advice

Tesla CEO Elon Musk might regret his purchase of Twitter—but at least he doesn’t have to regret the way he was going to finance it.

If Musk executed the initial agreement he had signed with bankers to help fund his Twitter purchase, he would have experienced his first margin call, an obligation to cough up cash or provide more collateral. As It turned out, he followed his own advice.

It was a close call. Musk’s decision to buy Twitter has gone sideways, but it could have been even worse if he had gone ahead with an original agreement that would have used a nearly $12.5 billion margin lending facility in the purchase of Twitter.

Borrowing against stock isn’t unusual or even prohibited. Tesla executives are allowed to borrow up to 25% of the value of their Tesla stock, using their shares as collateral for the loan. In the original loan agreement from April, the initial loan-to-value ratio for the $12.5 billion facility that was part of Musk’s Twitter financing, however, had an initial loan-to-value ratio of 20%. That means the $12.5 billion in loans needed to be backed by $62.5 billion of stock collateral.

The initial margin call in that agreement would have happened when the loan-to-value ratio fell below 35%. Assuming the facility was fully drawn when the Twitter acquisition closed, Tesla stock would have had to drop about 43% for the loan-to-value ratio to hit 35%. Tesla stock was off 44% from the time of the Twitter purchase when it closed at $125.35 on Dec. 22, Musk would have faced his first call this past week.

Hitting the call level requires Musk to reset the loan-to-value ratio to 25%.

There are three options for someone facing a margin call: pay back some of the loan, offer more collateral, or a combination of both. For the original loan, that would have meant paying back about $3.7 billion of the margin facility, put up another $15 billion of Tesla stock to back the loan, or some of both.

Thankfully, for Musk, he doesn’t have to make that choice. Musk cut the margin portion of the financing in May and then abandoned the margin loan altogether, agreeing to kick in more cash to fund the purchase, likely to satisfy Twitter and Tesla investors worried about the impact of margin debt....


This was fake news: "Update On Musk And Margin: Barron's Says He Got A Call (TSLA)" with my personal heartfelt outro:

Now I'm familiar, actually way too familiar, with margin clerks but the numbers presented by Barron's are confusing me. 

Additionally this does not sound like a margin call as defined under the Federal Reserve Board's Regulation T. (12 CFR §220).

I shall make inquiries directly 

And earlier this morning our introduction to: 

UPDATED—"The Great Tesla Stock Repricing: It’s healthy for the car maker, but can Elon Musk’s finances handle it?" (TSLA)

Does Mr. Musk have a lot of stock on margin? I thought he had cleaned up many of the loans he had taken out to pay for fuel for his airplane (I kid, he borrowed to maintain his entire lifestyle, not just the plane) and he didn't do much beyond giving himself a bridge loan for the Twitter acquisition, that's been paid off for a couple months, which is why the lenders on the Twitter deal feel they can ask for either more collateral (TSLA shares) or a buy-down by Musk of some of the bank debt. 

Musk was well aware that getting a margin call was one of the ways those folks who really dislike what he is doing could actually do him some harm, in addition to calling him a poopyhead. The other way is to have the Obiden-Harris administration come after Tesla or Spacc-X; The Boring Co. and Neuralink not offering much leverage in the "Musk must be destroyed" festivities. 

The third angle of attack on Musk is what I think of as the "Smear, slander, calumny and character assassination" approach. I can't really get into that very much beyond noting that there appears to be a coordinated echo chamber of the old journolist crowd and their mockingbird hangers-on and wannabes....

I am vindicated in my recollection and interpretation. And alone. 'effin Paolo.

Say, have I ever told you about the time a buddy of mine got a margin call?

In "Ace Greenberg: 'never make fun of a millionaire, never hit a cripple, and never have sex with an idiot.'" I retold the story of a friend who cleared through Bear Stearns and who was just tickled pink when, in the middle of one of our Friday-after-the-close schmoozefests, who should call but Alan Greenberg.

My friend was so happy that I was there to hear him chat with "Ace" that he put the call on speakerphone.
Whereupon Mr. G. cuts directly to the chase and shouts, "Where's my fucking $10 million dollars?"
My friend took the call off speaker and asked if I would excuse myself for a few minutes....

—the introduction to "Bear Stearns CEO Ace Greenberg Has Died"

Update II On Musk And Margin: Barron's Says He Got A Call (TSLA)

Original post:

Following up on ""The Great Tesla Stock Repricing: It’s healthy for the car maker, but can Elon Musk’s finances handle it?" (TSLA)". 

From Baron's, Updated Dec. 29, 2022 1:46 pm ET / Original Dec. 29, 2022 10:43 am ET

Tesla CEO Elon Musk Could Have Had His First Margin Call for Twitter Loan

Tesla CEO Elon Musk might regret his purchase of Twitter—or at least the way he financed it. Based on the agreement Musk signed with bankers to help fund his Twitter purchase, he would have experienced his first margin call, an obligation to cough up cash or provide more collateral. Musk, on Wednesday, apparently sent an email to Tesla (ticker: TSLA) employees, admonishing them to ignore gyrations in the company’s stock and focus on shipping as many cars as possible as the end of the quarter, and year, approaches.

Tesla didn’t immediately respond to a request for comment about the email.

It may be sound advice to employees given the shares’ recent performance. Coming into Thursday trading, Tesla stock is down about 68% year to date and off about 58% over the past three months.

The email isn’t the first piece of investing advice Musk has offered this month. On Dec. 8, Musk suggested investors avoid margin loans when the economic outlook is uncertain.

Musk has learned lessons about volatility and margin, having almost used a $12.5 billion margin lending facility to purchase Twitter. Tesla didn’t immediately respond to a request for comment about Musk’s borrowings and collateral pledges.

Tesla executives are allowed to borrow up to 25% of the value of their Tesla stock, using their shares as collateral for the loan. In the original loan agreement, the initial loan-to-value ratio for the $12.5 billion facility that was part of Musk’s Twitter financing, however, had an initial loan-to-value ratio of 20%.

That means the $12.5 billion in loans needed to be backed by $62.5 billion of stock collateral. The initial margin call in that agreement happens when the loan-to-value ratio falls below 35%. Assuming the facility was fully drawn when the Twitter acquisition closed, Musk faced his first call this past week....


Now I'm familiar, actually way too familiar, with margin clerks but the numbers presented by Barron's are confusing me. 

Additionally this does not sound like a margin call as defined under the Federal Reserve Board's Regulation T. (12 CFR §220).

I shall make inquiries directly

UPDATED—"The Great Tesla Stock Repricing: It’s healthy for the car maker, but can Elon Musk’s finances handle it?" (TSLA)

Original post:

Does Mr. Musk have a lot of stock on margin? I thought he had cleaned up many of the loans he had taken out to pay for fuel for his airplane (I kid, he borrowed to maintain his entire lifestyle, not just the plane) and he didn't do much beyond giving himself a bridge loan for the Twitter acquisition, that's been paid off for a couple months, which is why the lenders on the Twitter deal feel they can ask for either more collateral (TSLA shares) or a buy-down by Musk of some of the bank debt. 

He was well aware that getting a margin call was one of the ways those folks who really dislike what he is doing could actually do him some harm, in addition to calling him a poopyhead. The other way is to have the Obiden-Harris administration come after Tesla or Spacc-X; The Boring Co. and Neuralink not offering much leverage in the "Musk must be destroyed" festivities. 

The third angle of attack on Musk is what I think of as the "Smear, slander, calumny and character assassination" approach. I can't really get into that very much beyond noting that there appears to be a coordinated echo chamber of the old journolist crowd and their mockingbird hangers-on and wannabes.

Anyhoo, from The Wall Street Journal, December 27:

How much money Elon Musk has in the bank suddenly has become a general societal concern. Fans, investors and employees of his non-Tesla businesses, including Twitter, realize that it’s Mr. Musk’s Tesla wealth that helps keep them afloat.

Tesla shareholders realize how much they have been supporting his other endeavors, which compete for his attention. In the latest news about one of the strangest corporate acquisitions ever, Twitter’s bankers are reportedly trying to reduce calls on Twitter’s faltering cash flow. How? By having Mr. Musk personally take over some of the company’s corporate debt, using yet more of his Tesla shares as collateral.

This would be a brave stand if it were really needed to preserve Twitter from bankruptcy. But things get complicated for two reasons: his board’s requirement that he put up $100 of Tesla stock for every $25 of borrowing, and Tesla’s epoch-making plunge, down another $14 on Tuesday. Mr. Musk gets blame from his most loyal investors for triggering the selloff because of his Twitter engagement, his Tesla stock sales, the potential for margin calls, and his off-color tweeting.

But an occasion for re-rating Tesla was coming anyway. The company has shed a monumental $900 billion in market cap and is still richly priced for a car maker with its growth prospects.

For years analysts justified its share price by saying Tesla wasn’t a car company, it was another Apple. Meaning what? Apple isn’t some free-spirited, uninhibited innovator spinning off new industries in all directions. It’s basically one thing, an iPhone company. Tesla is one thing, a car company. For a lot of reasons, profit margins on cars will never be as attractive as profit margins on iPhones. And just as no reason exists to believe Apple could dream up another money-spinner equivalent to the iPhone, no reason exists to believe Tesla will invent a product or service to transcend the competitive predicament of a car company.

I made myself unpopular years ago by pointing out that the established, union-employing companies dearest to politicians’ hearts would also be lured into making electric vehicles by the same subsidies that lured Tesla. These companies operate under an additional political dispensation, thanks to our fuel-economy regime, which lets them lose money on EVs to preserve the inflated pickup-truck profits they earn behind a 25% pickup import tax in place since LBJ.

Political favoritism has shifted against Tesla. Small example: The subsidized charging network the Biden administration is building devalues the competitive advantage Tesla created for itself by building its own charging network....

Related, December 27: 
If interested in more on calumnies see Machiavelli, Niccolò: Chapter VIII of Book I, Discourses on the First Ten Books of Titus Livius.

Flashback: “To Halt Climate Change, We Need an Ecological Leninism”

This guy is straight up dangerous. I'm not sure if his role is to expand the Overton Window of climate discussions or if he actually believes what he says but either way he's going to get someone killed.

From Jacobin Magazine, June 15, 2020:

Andreas Malm

Despite the obvious parallels with coronavirus shutdowns, states still show little determination to put in place the measures we’ll need to deal with the climate emergency. For Andreas Malm, we need to stop seeing climate change as a problem for the future — and use state power now to impose a drastic reordering of our economies.

On the final day of 2019 — a year marked by record high temperatures, wildfires, and tropical storms — China reported to the World Health Organization that a new virus had broken out in the city of Wuhan. Initially dismissed by many Western observers as an unfortunate event in a far-off land, COVID-19 quickly grew into a full-blown pandemic, causing the deaths of hundreds of thousands of people, rapidly intensifying class and racial inequalities, and ushering in the greatest worldwide recession since the Great Depression.

In the space of a few short weeks, received economic wisdom on the bounds of state intervention was turned upside down, as were the day-to-day lives of billions of workers worldwide. Factories and schools have been shuttered, borders closed, and whole populations confined to their homes under threat of hefty fines and imprisonment. Otherwise mundane technocratic leaders have recast themselves as wartime commanders doing battle with an invisible invader.

The dominant media discourse concerning the pandemic has been to cast it as an exogenous shock to business as usual, the origins of which lie either in natural processes divorced from human influence or in the failings of a specific state or culture — generally meaning China’s. Calls have arisen to punish a still-unknown perpetrator, conspiracy theories have abounded, and the international radical left — almost everywhere bereft of actual power — has been reduced to cheering on the draconian lockdowns and dreaming ineffectually of a better world to come.

At the same time, the ongoing climate crisis has been largely erased from the mainstream narrative. Social media has been flooded with images of blue skies over normally smog-eclipsed cities, dolphins skipping through waterways, and wild animals foraging for food in deserted cities. Many environmentally minded observers have expressed hope for a green recovery from the crisis — but also remained largely silent regarding the structural constraints that bar its way.

In an attempt to make sense of the pandemic, its origins, and its consequences for the climate justice movement, Jacobin’s Dominic Mealy sat down with Andreas Malm, a world-leading scholar on human ecology. Author of half a dozen books and innumerable essays on the political economy of climate change, anti-fascism, and struggles in the Middle East, Malm’s works include The Progress of This Storm and the Deutscher Prize–winning Fossil Capital. He is also the author of an upcoming book on COVID-19 entitled Corona, Climate, Chronic Emergency: War Communism in the Twenty-First Century, to be published by Verso Books.

Dominic Mealy

Can you begin by explaining the relationship between the current COVID-19 pandemic and global climate change?

Andreas Malm

From quite early on in the course of the pandemic, commentators began to draw comparisons between the COVID-19 crisis and the climate crisis. However, I argue that such direct comparisons are flawed in the sense that the current pandemic constitutes a specific event, whereas global warming is a secular trend. Nevertheless, we miss the essence of the COVID-19 outbreak if we fail to recognize it for what it is, namely one extreme — but long expected — manifestation of another secular trend: the rise in the rate of infectious diseases jumping from wild animals to human populations. This is a trend that has increased over past decades and is projected to accelerate in the future.

The most important driving force behind the production of pandemics is clear in the scientific literature and it is deforestation — which is also the second biggest contributor to global climate change. The place in which you find the greatest biodiversity on Earth is in tropical forests, and this biodiversity includes pathogens. These pathogens, which circulate among nonhuman animals in wild habitats, do not generally pose a problem to humanity as long as humans stay away from them. However, the problem arises as the human economy makes deeper and deeper incursions into these habitats. The clearance of forests for logging, agriculture, mining, and the construction of roads creates new interfaces where humans come into contact with wildlife. Through these interfaces, animal pathogens are able to mutate and leap into human populations through a process called zoonotic spillover....

Malm is also the author of How to Blow Up a Pipeline. If interested see yesterday's ""Should the Climate Movement Embrace Property Destruction?"". 

Related, December 19: 
Also related yesterday, and related to much of the information coming out of Twitter on censorship:  
....To repeat:

    "―Eliminationism claims a moral purpose, holding that political opponents are ―a cancer on the body politic that must be excised—either by separation from the public at large, through censorship, or by outright extermination—in order to protect the purity of the nation."

The phrase is used in Holocaust and other genocide studies, as here re: the study of the Einsatzgruppen, the Ordnungspolizei "German Order Police" and their henchmen, the Ukrainian Auxiliary Police and the Trawniki Men in the Generalgouvernement in occupied Poland; and in the Ukrainian Soviet Socialist Republic and the Byelorussian SSR.....