Monday, October 31, 2022

‘Dr. Doom’ predicts NYC destroyed by nukes, storms in next 20 years

And don't forget the convexity vortex wreaking devastation back and forth on Wall Street.

Continuing our survey of reviews of Professor Roubini's latest book, this time at the New York Post, October 22:

Nouriel Roubini is seriously reconsidering whether he wants to continue living in New York. Mostly because, well, he wants to survive.

“There’s a scenario in which, in the next twelve months, Russia uses tactical nuclear weapons against Ukraine and then they attack NATO and we start a conventional war with Russia. The first nuclear weapon is gonna go to New York,” said the 64-year-old NYU economics professor and CEO of Roubini Macro Associates. “Being in New York City is not safe.”

Even if Manhattan manages to avoid nuclear annihilation, there’s still the possibility of a natural disaster, like Hurricane Sandy that flooded New York in 2012, but “much, much worse,” Roubini told The Post. ”In the next 20 years, most of downtown New York is gonna be underwater.”....


Also at the Post: "I’m told my work clothes are ‘inappropriate’ because I wear bras with no shirt" Probably not about Professor Roubini

Recently (October 30): "A Look At Nouriel Roubini's New Book: "MegaThreats: Ten Dangerous Trends That Imperil Our Future, And How to Survive Them""

"Join the euro or your EU dream dies, Sturgeon told"

Ooohh, that's a tough one.

From The Times, Scotland edition, October 27:

Brussels sources tell The Times currency pledge is essential before membership considered

Nicola Sturgeon’s plans for an independent Scotland to join the EU have been dealt a blow after senior figures in Brussels insisted the SNP must commit to joining the euro before membership can be considered.
Four separate EU sources have told The Times that any Scottish application for membership would be given short shrift without a pledge to sign up to the single currency.

The intervention damages Sturgeon’s currency plans to use sterling in the years after independence before switching to a separate Scottish pound.

Eyebrows were raised in Brussels after the first minister launched her economic paper last Monday in which she committed to rejoining the EU without binding to the euro insisting it was not “the right option for Scotland”.
The first minister offered no timetable for re-entry but her deputy John Swinney later said he believed Scotland would become an EU country using its own currency within a decade.

The EU’s membership terms are very clear: “All EU member states, except Denmark, are required to adopt the euro and join the euro area.” Speaking to The Times, a senior source was equally unambiguous: “No euro, no membership.”
EU member states are understood to have become more ardently opposed to new applicants who reject the single currency since the 2016 Brexit vote. Seven of the 13 countries that have joined the EU since 2004 have switched to the euro, most recently Lithuania on January 1, 2015. Croatia will join it next year.

Rejoining the EU is not universally popular within the SNP with some activists concerned that Scotland gains fiscal levers from London only to hand over control to Brussels. A paper on EU membership will be published as part of the Scottish government’s series of policy documents on independence....


Now the Important Stuff: How to Name Your Hedge Fund

It is hard to go wrong if your name contains umlauts, diaeresis, or other diacritics.

With the widespread adoption of Artificial Intelligence for just about every purpose—"Mäÿönnäisë, now with AI", etc. (note liberal use of diacritics, don't they just 'pop' on the page?)— it is time to update 2014's "The Hedge Fund Name Generator", which used a simple algo:

You've done your homework:
"How to Start a Hedge Fund" and "Budding Gordon Gekkos Get Tips on Ponzi Scams in 'History of Greed'"

You've decided on the type of investing you will pursue:

"Asset International's Periodic Table of Hedge Fund Strategy Returns"
 You have set your personal goals:
"The Top 25 Highest Earning Hedge Fund Managers"
You have searched your soul:
"More on The Top Earning Hedge Fund Managers and The Metaphysics of Moolah"
You have begun to spread the word that you are serious:
"Dogbert on Hedge Fund Marketing, Structured Products and Virtual Currency"
There's one last thing to do which may be critical to your success:
Pick a name!
Stumped for ideas? There's always the Hedge Fund Name Generator
Don't use one of these:
Most disliked names
Top 10 Hedge Fund names, the Hedge Fund Name Generator users seem to be trashing. If you like them ... well you might be the only one :) 
Hedge Fund nameAverage Rating
YellowMount Partners1.00
SummerTree Brothers1.00
OakBay 1.00
BrownField Holdings1.00
StateView Sons & Co1.00
YellowView Funds1.00
SpringRoad Sons & Co1.00
BrownStream Markets1.00
YellowCrescent Sons & Co1.00
StateVille Advantage1.00

Rather, keep spinning until you see something like this:

Most liked names
Top 10 Hedge Fund names favoured by the Hedge Fund Name Generator users. If you like them too, you'd better hurry up as some other traders might already be running with the name. 
Hedge Fund nameAverage Rating
OakStone Holdings5.00
RedHill Sons & Co5.00
OakHill Advisors5.00
SolidMount Advantage5.00
BrownTree Trust5.00
SilverRock Advisors5.00
StateStreet Funds5.00
FallStream Funds5.00
WinterStream Partners5.00
BlackCity Partners5.00
Fame and fortune await.

Originally posted March 2018, they were simpler times.

"Breaking China’s grip on rare earths markets a ‘pipe dream,’ Australia says"

Better to stick with the battery metals right now, though nickel is going into surplus this quarter or next, copper is as sensitive to the slowdown in Chinese housing construction as it is to upside in the green revolution, cobalt is on the way out of battery chemistry if Mr. Musk has his way and lithium has gotten so expensive it is now a bottleneck on the final-price of electric vehicles.

Of the four we are betting copper trades down to last summer's low of $3.13, and maybe below $3.00 before turning into a shiny red rocketship.

On the headline stuff, somewhere between 2010 and today the U.S. and the West lost their way on the rare earths and we've only posted sporadically since the  Happy Time with MolyCorp and all the little scams, all the while reflecting back on what's probably the best book on investing that's been written since de la Vega's Confusion de Confusiones (Amsterdam, 1688):

...Words like "uranium", "rare earths", etc. seem to be magic to
 those unsuspecting who are often fleeced...
Gerald M. Loeb
The Battle for Investment Survival
Simon & Schuster, 1935

Our last post on rare earths was in June "Huge rare earth reserve discovered in Turkey, but experts caution that ‘grade is king’"

Not just grade. The composition of a deposit, the amounts of the 17 rare earth elements is critical. As one example, the Mountain Pass mine in the U.S. despite its relatively high grade (8% REEs) is actually not as valuable as some lower grade mines with a more profitable mix.

Additionally, exploitation of a REE resource is highly dependent on processing and supply chain factors that can not quickly be brought into being, it's one thing to have the deposit, quite another to have, for example, the end product, a neodymium magnet.

We have some experience with this stuff, if interested see after the jump....

(we've been tracking the doings of the big dog since 2009's "With a Name Like Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co., it has to be good (600111:Shanghai)"

If you are interested, I believe MolyCorp's Mountain View mine ended up in Chinese hands leaving Australia's Lynas Corp ( as probably the best in the West. (mentioned in the story below)

And from Bloomberg via, the headline story and then another we've been following for a dozen years or so:

Australia’s resources minister said it was a “pipe dream” that Western countries could soon end their reliance on China for rare earths and critical minerals — vital for the defense, aerospace and automotive industries — due to the Asian powerhouse’s existing grip on global markets.

“That’s a country that has seen this need coming and made the most of it,” Resources Minister Madeleine King told Bloomberg News in an interview.

That won’t stop Australia and the US from working together to boost investment in these critical minerals in an attempt to break China’s monopoly on international supply chains, King said. It was Canberra’s aim to “make the most of the natural endowment we have of these resources, so that we can provide an alternative source of them from China,” she added.

Lithium and other critical minerals including cobalt, platinum and rare earths are used in the manufacturing of a wide range of products which are crucial for national security and the fight against climate change, including jet engines, solar panels and electric vehicles. Australia has some of the world’s largest reserves of these resources and is among the biggest producers of critical minerals globally.

Much of the country’s production capacity for lithium and rare earths is in Western Australia. Siriana Nair, the US Consul General in the state capital Perth, said Australia and the US shared a “strong strategic interest” in securing critical mineral supply chains.

While Nair wouldn’t specify China as the target of growing cooperation between the US and Australia, the US diplomat said having a single source of any critical resource was a “big drawback and a huge flaw.”

“I don’t think anybody in any country wants to have global supply chains dependent on kind of a single point of failure,” she said in a separate interview. “It’s just smart policy.”

Capacity growing
Australia’s King said some exploration was still underway for additional deposits and the peak could still be five or 10 years away. “This is going to be an ongoing demand for a long time. So we need to get there and keep pumping it out,” she said.....


Also at October 31:

And some long ago posts:
October 2010:
"Japan Scrambles for Rare Earth" (AVL.TO; LYC.AX; MCP) 600111: Shanghai
Oct. 2010
"Japan's rare earth minerals may run out by March" and Japan to Mine Sewage Sludge, E-Waste for Precious and REE Metals
July 2011
Rare Earths: Japan Finds Huge Undersea Deposits; German Industry Dubious; Stocks Droop (AVL; MCP; REE)
June 2012
Japan Makes Huge Rare Earth Find

And finally:

If interested, the extracts of Confusion de Confusiones at the Hathi Trust is probably the most accessible version online. If your Spanish is up to it the the version at the Digital Library for Dutch Literature is the most complete. (508 page PDF)
And again, the analysis in The Confusion of Confusions :  Between Speculation and Eschatology is a good introduction.

Big Money Carbon Capture: Blue Diamonds Coming To Auction At Sotheby's, Geneva

From United Press International, (also on blogroll at right), October 13:

Sotheby's to auction off blue diamonds valued at $70 million

Sotheby's will be auctioning off a set of eight rare blue diamonds valued at over $70 million at their Magnificent Jewels Auction in New York, Hong Kong and Geneva in 2022 and 2023. The diamond collection from De Beers is among the most valuable ever to be offered up for auction.

The diamonds were purchased in 2020 by De Beers and Diacore from the Cullinan mine in South Africa, the same mine that was the source of a 15.10-karat Fancy Vivid Blue diamond that sold for $57.5 million in April....


We've fancied the fancies for a while. One of the more interesting stories: 

You Thought the Rio Tinto Red Diamonds Were Baubles, You Dismissed the 118 Carat 'Perfect' Being Auctioned Tomorrow as Crass, Perhaps Monsieur et Madame Would be Interested In...

...The Pink Star!/format/webp/quality/90/?

It sold at auction in Geneva for $83 million in 2013 but, from Art Market Monitor, March 2017:

Sotheby’s Brings ‘Pink Star’ Diamond to Hong Kong

Sotheby’s announced today that it is bringing back the Pink Star diamond to the marketplace. The nearly 60ct Flawless Fancy Vivid Pink diamond was originally sold in Geneva three and a half years ago for a record price of $83m. Then the buyer reneged on his bid and Sotheby’s—which had guaranteed the stone for a reported $60m—took the diamond into inventory....MORE

Don't cry for Sotheby's on the busted trade, on the second go-round it fetched $71 million.

Here are the Rio Tinto reds mentioned in the headline above the pinkun:
May 2013
Rio Tinto's Extremely Rare Red Diamonds (RIO) 
And here's an interesting stone from a 2016 post:
There are many more if interested, use the 'search blog' box upper left

Y Combinator's Online Stanford Class: "How to Start a Start-up"

I've never much cared for the formal teaching of "Entrepreneurship". Most of the entrepreneurs I know just do it. They may be a double Doctor, M.D. Phd/PhD, PhD/J.D., M.D. showing they have some academic ability or they may not have any academic credentials at all, but most haven't taken one "How to be an entrepreneur" class.


In 2014 Stanford and YCombinator got together and did something that might be worth your time. Video lectures and transcripts:

Sam Altman. former President of YCombinator and current CEO of OpenAI (GPT-3; DALL-E) has the lectures we didn't post.

Chips and the CHIPS Act: "Where the Chips Fell"

From American Affairs Journal:

Before student loan forgiveness, the raid on Mar-a-Lago, and the Inflation Reduction Act, something called the CHIPS Act was a major news story for a few days in late July. CHIPS was essentially a bill to support semiconductor manufacturing in the United States, and the final version that passed into law, which added basic research funding and related programs, was christened the CHIPS and Science Act.

By some accounts, CHIPS is a critical tool in the intensifying economic and technological competition against China, a solution to address America’s eroding technological leadership and the decline of a key manufacturing sector. Others still argue that it represents America’s abandonment of free market capitalism. In reality, however, it is neither. More semiconductor fabs will be built in the United States as a result of CHIPS (some commitments have already been announced), but its legislative trajectory also reveals the shortcomings of the current U.S. approach to industrial policy and the lack of any serious resolve when it comes to competing against China.

By way of background, although the United States still leads in key elements of semiconductor design, its share of global manufacturing has fallen from nearly 40 percent in the 1990s to around 10 percent today. Moreover, the chips that are produced in the United States are not at the technological frontier. Taiwan, Korea, and China are the top global producers, with Taiwan’s TSMC the technological leader. China has invested heavily in building its own semiconductor industry since the early 2000s, when it essentially started from zero. While it remains far from technological leadership, it has established a strong presence at the lower end of the value chain. Moving up the technological ladder remains a major priority for the Chinese government; Beijing’s spending on the sector dwarfs that of the United States, even after CHIPS.

The path of CHIPS itself was a long and winding one. It began as two bills in 2020, both led by Republicans with bipartisan support, that were folded into one: the CHIPS for America Act. CHIPS for America was passed into law via the National Defense Authorization Act in December 2020, but Congress still needed to appropriate funding before it could be implemented. Hence CHIPS funding became a key component of two larger bills, the United States Innovation and Competition Act, or usica (in the Senate), and the America competes Act (in the House). These bills combined CHIPS funding with various research spending and industrial policy programs (mostly drawn from yet another proposal, the Endless Frontiers Act). As with any major piece of legislation nowadays, both also contained their share of pork and extraneous provisions; usica—perhaps ironically for a bill touted as essential to competing with China—additionally included significant tariff relief on Chinese imports. Both bills passed their respective chambers and headed to conference committee, where they languished for months, with no compromise bill that could pass both houses emerging. This is where the story becomes interesting.

There are basically two industry lobbies in the United States interested in CHIPS, in particular, and industrial policy more generally: the Semiconductor Industry Association (SIA), naturally, and a gaggle of groups that lobby on behalf of American universities to promote research funding. Other industries that might presumably have an interest in industrial strategy—such as aerospace, defense, and pharma—are entrenched within their own silos and, if anything, tend to oppose any “innovation” policy that might disrupt the status quo in their verticals. CHIPS was the pet project, and in many ways the brainchild, of SIA from the beginning.

SIA’s attitude toward the broader industrial policy proposals of the larger usica and competes bills was always somewhere between indifference and hostility—which is understandable in the near term but, as we shall see, may prove unfortunate in the longer term. Thus, as the usica–competes conference negotiations dragged on, SIA lobbied aggressively to remove these additional proposals—some dubious, and some, like “Manufacturing Investment Companies,” much more interesting—and pass a “skinny bill” focused on semiconductor funding alone.

After CHIPS had been isolated from the rest of usica–competes, and essentially reduced to subsidies for incumbent firms, SIA then launched a scorched-earth campaign aimed at removing any restrictions on these subsidies. First, progressives like Bernie Sanders sought to limit firms receiving subsidies from engaging in share buybacks and cash distributions to shareholders. This effort never stood much of a chance in today’s America and was defeated easily. A somewhat more serious challenge came from senators, primarily Republicans, seeking to restrict beneficiary firms’ ability to continue investing in China.

A late addition to the bill allowed the secretary of commerce to grant exemptions from the law’s prohibitions on recipient firms investing in manufacturing facilities in China. This may seem like a minor technical detail to those unfamiliar with multinational firms’ strategies to circumvent trade laws, but allowing the Department of Commerce to grant exemptions has become a common industry tactic to vitiate statutory restrictions. Indeed, the Wall Street Journal recently reported that a “Commerce Department–led process that reviews U.S. tech exports to China approves almost all requests and has overseen an increase in sales of some particularly important technologies.” Of course, selling the chips themselves to China is defensible insofar as it keeps Chinese industry dependent on U.S. exports. But investing in production facilities in China is another matter entirely, and this “loophole” arguably undermines a major premise of the whole bill. Several Republican sponsors of the original CHIPS legislation in 2020, including Senators Cotton, Rubio, and Hawley, ended up voting against the 2022 bill as a result.

But by this point, it didn’t matter. The industry’s brazen and in many ways dishonest lobbying tactics foreclosed any opportunity to correct this loophole. The usual chorus of “national security experts” was trotted out to insist that the bill was essential to compete against China—though on the question of beneficiary firms continuing to invest in China, these experts apparently had nothing to say. Intel threatened to cancel a previously announced investment in an Ohio fab, and the SIA threatened that investment would flow elsewhere if the bill suffered even the slightest delay. In reality, these blackmail attempts were risible—firms would still accept subsidies to invest in the United States even with tighter restrictions on Chinese facilities, and they will continue to invest elsewhere if the subsidies in those countries are sufficient, especially since the bill’s restrictions are so weak—but most congressional offices showed little willingness or capacity to seriously investigate these issues.

The bill’s provisions for research funding went through a similar process....


PayPal Correction/Amplification/Mea Culpa/My Bad (PYPL)

Regarding October 26's "Following PR Crisis, PayPal Again Updates TOS Hoping You Won’t Notice".

From Decrypt, October 27:

No, PayPal Did Not Resurrect Its ‘Misinformation’ Penalty

Long-standing rules reveal the payment giant will still police “false, inaccurate or misleading information.”

Financial Twitter is again abuzz over rumors that PayPal, the world’s third-largest payments platform, has reinstated a controversial policy to fine its users for “misinformation.”

The uproar, however—which has drawn in many popular crypto influencers—appears to be over old news....


Regret the error.


The truth is not just out there but as one of my mentors used to say: "The truth is in the price."



$82.8455 last, down $3.4045 (-3.95%)

Oil CEO's Attempt To Forge A Truce Between Saudi Arabia And The Biden Administration

 Gasparino at the New York Post, October 29:

Some of Wall Street’s top CEOs spent the last week on a diplomatic mission to ­Saudi Arabia. It wasn’t touted as diplomacy, of course. The financiers who attended the Future Investment Initiative in ­Saudi Arabia, known as “Davos in the Desert,” are a well-scripted bunch who prefer to keep their dealings private whenever possible.

Tough luck. Word leaked to me that what went down was vastly more important than seminars on climate change or whatever else the globalist crowd likes to virtue-signal about.

Rather, I am told by people with knowledge of the matter that the real reason so many top CEOs attended the conference was to forge a truce between the Saudis and the Biden administration. The ongoing and very public bellicosity between the two longtime allies is bad for business, both the CEOs’ and that of the US.

True, Saudi Arabia is a big Wall Street client looking to further modernize its economy through investment-banking deals, while it turns to our financial sector to manage its riches. But the growing consensus among the people who run the US financial system is that having the Saudis as an enemy is among the biggest geo­political and economic mistakes of the mistake-prone Biden administration.

It will embolden the aims of our common enemy, the terrorist regime in Iran, and drive the Kingdom further into the hands of our rivals, Russia and especially China. (Reps from China flooded the conference this year, I am told, and not because they like the desert heat). Plus the bickering will do nothing to satisfy our ­energy needs and save Sleepy Joe Biden’s presidency.

For the unacquainted, what goes down in Riyadh every year for ­almost a decade is very similar to the more established World Economic Forum confab in Davos, Switzerland. Running the show in Riyadh is a more controversial host than milquetoast globalist WEF chief Klaus Schwab.

It’s the crown prince, Mohammed bin Salman — known by haters and admirers alike as MBS. When MBS (now just 37) became the Kingdom’s de facto ruler a few years ago, he was in charge of a country with enormous oil wealth and vast economic potential....

....MUCH MORE, he goes deep.

The OPEC production cuts are due to start tomorrow and relations between the Saudis and the U.S. are as bad as they've been in a very long time.

As noted a few weeks ago:

The O'biden administration has never much cared for the Saudis, much preferring the Iranians.
(the O'Biden moniker comes from the time in March 2020 the then-candidate said "I’m An ‘OBiden-Bama’ Democrat")

Fortunately the relationship between the Sunnis and Shia are not quite as fraught as they were in 2016: 

Pakistan Threatens To Wipe Iran Off the Face of The Earth If Saudi Arabia Threatened

Major Supplier, Mansfield Energy, On The Current State Of The Diesel Market On The U.S. East Coast

They are indeed a major supplier.

From Mansfield, October 25:

Supply Alert – October 25, 2022

East Coast fuel markets are facing diesel supply constraints due to market economics and tight inventories.

Poor pipeline shipping economics and historically low diesel inventories are combining to cause shortages in various markets throughout the Southeast. These have been occurring sporadically, with areas like Tennessee seeing particularly acute challenges.

Back in May 2022, diesel prices rose by $1/gal and supply dried up throughout the Southeast. Over the past few weeks, market volatility has begun to echo the challenges seen in April 2022, as we covered in FUELSNews on Oct 11 and Oct 14. Like before, markets are now seeing extremely high prices in the Northeast along with supply outages along the Southeast.

In many areas, actual fuel prices are currently 30-80 cents higher than the posted market average, because supply is tight. Usually the “low rack” posters can sell many loads of fuel before running out of supply; now, they only have one or two loads. That means fuel suppliers have to pull from higher cost options, at a time when low-high spreads are much wider than normal. At times, carriers are having to visit multiple terminals to find supply, which delays deliveries and strains local trucking capacity....


And October 27:

Diesel Crisis Continues – What 25 Days of Supply Means for Fleets

If you follow oil markets even tangentially, you’ve likely heard that diesel inventories in the US are now at the lowest level since 2008, with just 25 diesel days of supply left. That’s significant because diesel is the fuel that drives the global economy – powering trucks, construction equipment, generators, heaters, and more. A sudden supply outage or a big surge in demand – such as panic buying, cold weather, holiday sales, or industry-specific factors – can cause a supply/demand imbalance, leading the market to pull more product out of inventory to make up the difference. But what if that product isn’t there?

Diesel markets operate on a “just-in-time” basis – pipeline shipments arrive every few days, bringing enough supply to meet local demand in local markets such as Birmingham or Richmond. But a disruption forces markets to turn to inventory. US diesel markets tend to be comfortable and liquid when inventories are around 35-40 days; 30 days of supply begins to get tight. At 25 days of supply, there’s critically low fuel available when a crisis hits.  Keep in mind, those inventories include products held at refineries and en route on the pipeline – so a large chunk of that supply is days or weeks away from the market where it will be consumed.

The East Coast is receiving especially high focus because it relies on just two pipelines and is supplied by an area (Gulf Coast refiners) that can easily re-route supplies to other countries at the right price...


Although Mansfield has every reason to talk their book, these communications are going to their customers, some of very long standing. I can't see them blowing smoke at someone who has been with them for 30 or more years. 

Sunday, October 30, 2022

"European Union sets goal to block sales of gas-powered cars by 2035"

Question: What will power their replacements? Have the plans for a couple hundred nuclear power plants been drawn up? Is the funding for the build-out in place? This timeline is only thirteen years long, better get cracking.

And a comment: the sub-head for this article is a bit deceptive if you are doing lifecycle analysis of the CO2 produced along the entire value chain. Unless we go with the ancient/modern fusion story line: Intractable problem - hand waving - Deus ex machina - 100% reduction - happily ever after.

From Popular Science, October 28:

The major step will cut new vehicle emissions by 100 percent by that time. 

It’s not just New York and California passing major measures to stifle and eventually stop new gas-powered car sales recently—just today the European Union announced their own version on Thursday. This step is just the first part of the bloc’s current climate legislation dubbed the  “Fit for 55” package, which is meant to cut greenhouse gas emissions by 55 percent over the next decade. 

The first step in the new deal is to reduce emissions of new cars by 55 percent of 2021 levels by 2030, with vans requiring a 50 percent cut in that time. This is higher than the existing target set by the EU in 2018 of 37.5 percent reductions by 2030.

The EU additionally aims to require car companies to cut emissions from their cars by 100 percent by 2035, effectively banning gas and diesel engines. This would make it impossible to sell new fossil fuel powered cars across all 27 EU countries. 

The proposal faced resistance when it was first presented back in July 2021. Reuters reported at the time that the European car industry association ACEA argued that banning one type of technology was “not a rational way forward.”....


Speaking of ancient Greek story lines there's Aristophanes' The Birds with its Cloud Cuckoo Land.

It's a comedy.

Evgeny Morozov On Chips

 From Le Monde diplomatique, 24 October 2022 a new introduction to a 2021 article:

There has been an escalation in the struggle over semiconductors, which was revealed by the pandemic. As the 20th Congress of the Chinese Communist Party opened, Washington published a 135-page document banning US companies from selling advanced computer chips to Chinese companies. Those Chinese companies operating on US soil, and researchers working with Chinese firms, will come under increased scrutiny.

At the heart of this confrontation is Taiwan, where the vast majority of the most sophisticated chips are manufactured. At the CCP Congress, Xi Jinping declared that he was determined to defend China’s sovereignty across the Taiwan Strait, as well as his country’s technological security — so how will he respond to these retaliatory measures?


August 3, 2021
The technological arms race that will shape our future

Chips with everything

Our lives run on semiconductors, the dizzyingly powerful and sophisticated chips found in every device we use. This century, dominating chip design, manufacture and supply will be at least as significant geopolitically as oil was in the 20th.

by Evgeny Morozov

Our lives run on semiconductors, the dizzyingly powerful and sophisticated chips found in every device we use. This century, dominating chip design, manufacture and supply will be at least as significant geopolitically as oil was in the 20th.

As crises go, this year’s chip famine — the global shortage of semiconductors that run electronic devices, from PCs, cars and washing machines to toasters and gaming consoles — has been a weird event, not least geopolitically. In May, US companies wrote to South Korean president Moon Jae-in, urging him to pardon the disgraced Samsung chair Lee Jae-yong, currently serving an 18-month prison sentence for bribery (1). Given American chip dependence, it was imperative Samsung should proceed with its planned multi-billion dollar investment in chip manufacturing facilities in the US. With the US’s ‘semiconductor sovereignty’ at stake, there was no mention of the rule of law.

The dialectic of the chip crisis would have delighted scholars of the Frankfurt School, if only for exposing the inner dumbness of today’s smart society. The scarcity of chips has forced us to wait for the latest consumer electronics: without semiconductors (some at only $1 a piece), they cannot function. All those electric cars, smartphones, smart fridges and toothbrushes have suddenly disappeared into the black hole of global capitalism, as if an invisible spoilsport had cancelled the Consumer Electronics Show in Vegas.

Today's crisis has come amidst wider anxieties over globalisation, declining western industrial activity and politicisation of technologies such as AI, a strategic domain in US/China relations

Today’s crisis isn’t exceptional. This time, however, it has come amidst wider anxiety about globalisation, the decline of western industrial activity, and politicisation of advanced technology such as AI, now a strategic domain in the US/China standoff. This explains how a boring technical issue, which ten years ago would have had little impact outside the directly affected industries, has become a massive headache for governments.

This had something to do with the pandemic. Global lockdown was made bearable by an unprecedented increase in consumption of digital services, all requiring chip-dependent devices, routers and servers. It also pushed bored consumers to upgrade to slicker household appliances, boosting demand for blenders, rice cookers etc.....


And more chips tomorrow.

A Look At Nouriel Roubini's New Book: "MegaThreats: Ten Dangerous Trends That Imperil Our Future, And How to Survive Them"

He's been making the book-hawking rounds but Spiegel in particular likes Professor Roubini, he made a couple good calls from their platform and the interviewers are comfortable speaking with him, as you'll see below.

From Der Spiegel, October 28:

"World War III Has Already Effectively Begun"
Global warming, war and inflation: The world seems to be in a perpetual state of crisis at the moment. In an interview, crash prophet Nouriel Roubini identifies 10 "megathreats" we are facing and how he is dealing with them.

DER SPIEGEL: Professor Roubini, you don't like your nickname "Dr. Doom." Instead you would like to be called "Dr. Realist." But in your new book, you describe "ten megathreats" that endanger our future. It doesn’t get much gloomier than that.

Roubini: The threats I write about are real – no one would deny that. I grew up in Italy in the 1960s and 1970s. Back then, I never worried about a war between great powers or a nuclear winter, as we had détente between the Soviet Union and the West. I never heard the words climate change or global pandemic. And no one worried about robots taking over most jobs. We had freer trade and globalization, we lived in stable democracies, even if they were not perfect. Debt was very low, the population wasn’t over-aged, there were no unfunded liabilities from the pension and health care systems. That's the world I grew up in. And now I have to worry about all these things – and so does everyone else.

DER SPIEGEL: But do they? Or do you feel like a voice crying in the wilderness?

Roubini: I was in Washington at the IMF meeting. The economic historian Niall Ferguson said in a speech there that we would be lucky if we got an economic crisis like in the 1970s – and not a war like in the 1940s. National security advisers were worried about NATO getting involved in the war between Russia and Ukraine and Iran and Israel being on a collision course. And just this morning, I read that the Biden administration expects China to attack Taiwan sooner rather than later. Honestly, World War III has already effectively begun, certainly in Ukraine and cyberspace.

DER SPIEGEL: Politicians seem overwhelmed by the simultaneity of many major crises. What priorities should they set?

Roubini: Of course, they must take care of Russia and Ukraine before they take care of Iran and Israel or China. But policymakers should also think about inflation and recessions, i.e. stagflation. The eurozone is already in a recession, and I think it will be long and ugly. The United Kingdom is even worse. The pandemic seems contained, but new COVID variants could emerge soon. And climate change is a slow-motion disaster that is accelerating. For each of the 10 threats I describe in my book, I can give you 10 examples that are happening as we speak today, not in the distant future. Do you want one on climate change?

DER SPIEGEL: If you must.....


This one is from February 27, 2020 i.e. before the WHO even got around to declaring the coronavirus an emergency and thus before the lockdowns began in the U.S. And before the Dow Joneses continued their collapse by falling an additional 2,997.10 points during the White House press conference on March 16.
From Der Spiegel: 
"This Crisis Will Spill Over and Result in a Disaster"
Economist Nouriel Roubini correctly predicted the 2008 financial crisis. Now, he believes that stock markets will plunge by 30 to 40 percent because of the coronavirus. And that Trump will lose his re-election bid....
Tim Bartz was the solo interviewer on this one, he had a helper on the first interview above.
The S&P 500; MSCI and FTSE all fell 33 to 35% before the big reversal in the third week of March. Pretty good call.
What Dr. Roubini was not aware of, was that at the same time his interview was published the Fed was beginning to crank the valve on the fire hose of liquidity to wide open ($700 bil. QE on March 16) in addition to the half-point Fed Funds rate cut on March 3 and the full point rate cut on March 16.

Things That Make You Say Hmmmm....

A short story (three tweets):

Bank of Canada: "Archetypes for a retail CBDC"

Think of the fun Trudeau et Freeland could have had with the truckers had this been in place.

And from Canada's central Bank, October 2022:

Staff Analytical Note 2022-14 (English

Key messages
  • A wide variety of technology designs have been, and continue to be, proposed to underpin retail central bank digital currency (CBDC) systems. Central banks need a common framework to analyze and compare the different possible designs, independent of vendor, platform and technology.
  • We consider the fundamental perspective of how information, or state, related to a retail CBDC instrument is organized among participating entities. From this perspective, we develop five archetypes—common patterns that recur in system designs—and discuss their trade-offs from the perspective of privacy, compliance, visibility, scalability, resilience, extensibility, online and offline payments.
  • These archetypes can be combined and are general enough to collectively cover a wide range of possible CBDC designs. We anticipate that some CBDC system designs will closely align with one archetype, some will be variations of an archetype, and others will combine aspects of multiple archetypes.
  • Although our fundamental perspective is how information is organized, we note that the space of possible designs could be analyzed differently. A closely related perspective is the representation of money (i.e., what the structure of information is).
  • Our analysis suggests that no archetype scores highly across all criteria, so a design based on a single archetype is not likely to satisfy all policy goals. Instead, guided by the policy goals of their jurisdiction, policy-makers should consider a design that combines aspects of multiple archetypes.


I saw this heading and thought they were trying to figure out how to put a picture of King Charles and/or a loon on the CBDC:
Representations of money and state

The Intersection Of The Financial and Physical Universes and Why the Former Won't Fix the Latter

Although some oil & gas exploration might help, who in their right mind would finance such a thing when the powers-that-be, from the international to the small-town mayor tired of talking potholes, say the goal is to eliminate the industry?

This piece by Gail Tverberg runs a bit contra to the Russell Napier interview that was making the rounds a couple weeks ago with his capex boom optimism but Gail is an actuary, she has to deal with the cold, hard reality of numbers and she's been applying that gimlet eye to the nexus of energy and finance for a long time.

From her Our Finite World blog, October 18:

Time and time again, financial approaches have worked to fix economic problems. Raising interest rates has acted to slow the economy and lowering them has acted to speed up the economy. Governments overspending their incomes also acts to push the economy ahead; doing the reverse seems to slow economies down.

What could possibly go wrong? The issue is a physics problem. The economy doesn’t run simply on money and debt. It operates on resources of many kinds, including energy-related resources. As the population grows, the need for energy-related resources grows. The bottleneck that occurs is something that is hard to see in advance; it is an affordability bottleneck.

For a very long time, financial manipulations have been able to adjust affordability in a way that is optimal for most players. At some point, resources, especially energy resources, get stretched too thin, relative to the rising population and all the commitments that have been made, such as pension commitments. As a result, there is no way for the quantity of goods and services produced to grow sufficiently to match the promises that the financial system has made. This is the real bottleneck that the world economy reaches.

I believe that we are closely approaching this bottleneck today. I recently gave a talk to a group of European officials at the 2nd Luxembourg Strategy Conference, discussing the issue from the European point of view. Europeans seem to be especially vulnerable because Europe, with its early entry into the Industrial Revolution, substantially depleted its fossil fuel resources many years ago. The topic I was asked to discuss was, “Energy: The interconnection of energy limits and the economy and what this means for the future.”

In this post, I write about this presentation.

Slide 3

The major issue is that money, by itself, cannot operate the economy, because we cannot eat money. Any model of the economy must include energy and other resources. In a finite world, these resources tend to deplete. Also, human population tends to grow. At some point, not enough goods and services are produced for the growing population.

I believe that the major reason we have not been told about how the economy really works is because it would simply be too disturbing to understand the real situation. If today’s economy is dependent on finite fossil fuel supplies, it becomes clear that, at some point, these will run short. Then the world economy is likely to face a very difficult time.

A secondary reason for the confusion about how the economy operates is too much specialization by researchers studying the issue. Physicists (who are concerned about energy) don’t study economics; politicians and economists don’t study physics. As a result, neither group has a very broad understanding of the situation.

I am an actuary. I come from a different perspective: Will physical resources be adequate to meet financial promises being made? I have had the privilege of learning a little from both economic and physics sides of the discussion. I have also learned about the issue from a historical perspective.

Slide 4

 Slide 5

World energy consumption has been growing very rapidly at the same time that the world economy has been growing. This makes it hard to tell whether the growing energy supply enabled the economic growth, or whether the higher demand created by the growing economy encouraged the world economy to use more resources, including energy resources.

Physics says that it is energy resources that enable economic growth....


Recently from Ms Tverberg: 

Math: "Ramping Up Renewables Can’t Provide Enough Heat Energy in Winter"

Reserve Bank of India: "Concept Note on Central Bank Digital Currency"

A clear, concise look at the considerations the central bank of the world's largest democracy is juggling and balancing. Combined with the country's digital identity system, Aadhaar, which the IMF seems to like despite its flaws and vulnerabilities and you can glimpse the future, now.

From the RBI, FinTech Department, October 2022 the bit that grabs everyone's attention:


5.7 Programmability One interesting application of CBDC is the technical possibility of programmability. CBDCs have the possibility of programming the money by tying the end use. For example, agriculture credit by banks can be programmed to ensure that is used only at input store outlets. Similarly, for MSMEs etc., that may take care of the issue of diversion of funds and further financial inclusion. This may help in ensuring the end-use which banks have to continuously grapple with across the globe. However, the programmability feature of CBDC needs to be carefully examined in order to retain the essential features of a currency. It can also have other implications for monetary policy transmission as tokens may have an expiry date, by which they would need to be spent, thus ensuring consumption. The programmability of tokens can be achieved using the following....

....MUCH MORE (51 page PDF)

Add Izabella Kaminska's primer on CBDC's and you'll be able to face the future, loins girded.

Although we don't plan a  Dress & Grooming column, this may come in handy should the markets descend into madness.

From The Art of Manliness:

If you’ve read the Bible, then you’ve probably come across the phrase “gird up your loins.” I’ve always thought it was a funny turn of phrase. Loins….heh.

Back in the days of the ancient Near East, both men and women wore flowing tunics. Around the tunic, they’d wear a belt or girdle. While tunics were comfortable and breezy, the hem of the tunic would often get in the way when a man was fighting or performing hard labor. So when ancient Hebrew men had to battle the Philistines, the men would lift the hem of their tunic up and tuck it into their girdle or tie it in a knot to keep it off the ground. The effect basically created a pair of shorts that provided more freedom of movement....MORE
Gird Up Your Loins 2

Also at the Art of Manliness:
How to Recover From a Bad First Impression

Saturday, October 29, 2022

Well, Jeff Bezos Said One Day Amazon Would Fail, And Izabella Kaminska Has Some Ideas How That Might Come About (AMZN)

 Here's CNBC in November 2018:

Jeff Bezos to employees: ‘One day, Amazon will fail’ but our job is to delay it as long as possible

Just days before Amazon announced the big winners of its HQ2 sweepstakes, CEO Jeff Bezos had to address a separate but related concern among employees: Where is all this headed?

At an all-hands meeting last Thursday in Seattle, an employee asked Bezos about Amazon’s future. Specifically, the questioner wanted to know what lessons Bezos has learned from the recent bankruptcies of Sears and other big retailers.

“Amazon is not too big to fail,” Bezos said, in a recording of the meeting that CNBC has heard. “In fact, I predict one day Amazon will fail. Amazon will go bankrupt. If you look at large companies, their lifespans tend to be 30-plus years, not a hundred-plus years.”...


And Here is Ms Kaminska at The Blind Spot, October 29, 2022: 

In the Blind Spot (Robotaxis, Amazon, BoE)

"Documents Reveal 'Complex and Grave Situation' Inside a Wuhan Lab"

Something about "The bats are loose, the bats are loose."
But in Mandarin.
(the bit about the bats is fāke. It now appears the bats and the pangolins and the wet market and the whole myth the Chinese and The Lancet and Dr. Fauci and his merry band were spinning, was all a coverup of a monstrous debacle/crime)

From Vanity Fair, October 28:

COVID-19 Origins: Investigating a “Complex and Grave Situation” Inside a Wuhan Lab
The Wuhan Institute of Virology, the cutting-edge biotech facility at the center of swirling suspicions about the pandemic’s onset, was far more troubled than previously known, explosive documents unearthed by a Senate research team reveal. Following the trail of evidence, Vanity Fair and ProPublica provide the clearest picture yet of a laboratory institute in crisis. 

“A Secret Language of Chinese Officialdom”
Toy Reid has always had a gift for languages—one that would carry him far from what he calls his “very blue-collar” roots in Greenville, South Carolina. In high school, Spanish came easily. At nearby Furman University, where he became the first person in his family to attend college, he studied Japanese. Then, “clueless but curious,” as he puts it, he channeled his fascination with the Dalai Lama into a master’s degree in East Asian philosophy and religion at Harvard. Along the way, he picked up Khmer, the national language of Cambodia, and achieved fluency in Chinese.

This story was produced in partnership with ProPublica.

But it was his career as a China specialist for the Rand Corporation and as a political officer in East Asia for the US State Department that taught him how to interpret a notoriously opaque language: the “party speak” practiced by Chinese Communist officials.

Party speak is “its own lexicon,” explains Reid, now 44 years old. Even a native Mandarin speaker “can’t really follow it,” he says. “It’s not meant to be easily understood. It’s almost like a secret language of Chinese officialdom. When they’re talking about anything potentially embarrassing, they speak of it in innuendo and hushed tones, and there’s a certain acceptable way to allude to something.”

For 15 months, Reid loaned this unusual skill to a nine-person team dedicated to investigating the mystery of COVID-19’s origins. Commissioned by Senator Richard Burr (R-N.C.), the team examined voluminous evidence, most of it open source but some classified, and weighed the major credible theories for how the novel coronavirus first made the leap to humans. An interim report, released on Thursday by the minority oversight staff of the US Senate Committee on Health, Education, Labor & Pensions (HELP), concludes that the COVID-19 pandemic was “more likely than not, the result of a research-related incident.”

As part of his investigation, Reid took an approach that was artful in its simplicity. Working out of the Hart Senate Office Building in Washington, DC, and a family home in Florida, he used a virtual private network, or VPN, to access dispatches archived on the website of the Wuhan Institute of Virology (WIV). These dispatches remain on the internet, but their meaning can’t be unlocked by just anyone. Using his hard-earned expertise, Reid believes he unearthed secrets that were hiding in plain sight.

Ever since the Chinese city of Wuhan was identified as ground zero for the COVID-19 pandemic, a contingent of scientists have suspected that the virus could have leaked from one of the WIV’s complex of laboratories. The WIV is, after all, the venue for some of China’s riskiest coronavirus research. Scientists there have mixed components of different coronaviruses and created new strains, in an effort to predict the risks of human infection and to develop vaccines and treatments. Critics argue that creating viruses that don’t exist in nature runs the risk of unleashing them.

The WIV has two campuses and performed coronavirus research on both. Its older Xiaohongshan campus is just eight miles from the crowded seafood market where COVID-19 first burst into public view. Its newer Zhengdian campus, about 18 miles to the south, is home to the institute’s most prestigious laboratory, a biosafety level 4 (BSL-4) facility, designed to enable safe research on the world’s most lethal pathogens. The WIV triumphantly announced its completion in February 2015, and it was cleared to begin full research by early 2018.

Like many scientific institutes in China, the WIV is state-run and funded. The research carried out there must advance the goals of the Chinese Communist Party (CCP). As one way to ensure compliance, the CCP operates 16 party branches inside of the WIV, where members including scientists meet regularly and demonstrate their loyalty.

Week after week, scientists from those branches chronicled their party-building exploits in reports uploaded to the WIV’s website. These dispatches, intended for watchful higher-ups, generally consist of upbeat recitations of recruitment efforts and meeting summaries that emphasize the fulfillment of Beijing’s political goals. “The headlines and initial paragraphs seem completely innocuous,” Reid says. “If you didn’t take a close look, you’d probably think there’s nothing in here.”

But much like imperfect propaganda, the dispatches hold glimmers of real life: tension among colleagues, abuse from bosses, reprimands from party superiors. The grievances are often couched in a narrative of heroism—a focus on problems overcome and challenges met, against daunting odds....


Meanwhile in Düsseldorf: "Painting by Piet Mondrian hanging upside down for 77 years"

From India's WION News, October 30:

According to a curator at the German museum, an abstract painting by Dutch artist Piet Mondrian has been hanging upside down for 77 years. 

At the Kunstsammlung museum in Düsseldorf, a sizable retrospective of the avant-garde artist's work debuted on Saturday. Among the works on display is "New York City 1," a 1941 painting. ...


Not the first time.

New York's Museum of Modern Art had Matisse' Le Bateau upside down for a few weeks as noted in this 2016 post: 

Museum Goers Mistake Pair of Glasses for Art

We haven't had one of these in a while.
The most famous bit of Art/Not Art was when Matisse's sailboat (Le Bateau) was hung upside down at New York's Museum of Modern Art for 47 days in 1961. The error was first reported by a stockbroker, proving there is a use for retail. (I kid)
There's actually quite a history of this stuff happening, usually not deliberately.
(although sometimes I wonder)

From the Independent:

A pair of glasses were left on the floor at a museum and everyone mistook it for art
Several visitors to the San Francisco Museum of Modern Art this week were fooled into thinking a pair of glasses set on the floor by a 17-year-old prankster was a postmodern masterpiece.

“Upon first arrival we were quite impressed with the artwork and paintings presented in the huge facility,” TJ Khayatan told BuzzFeed. “However, some of the ‘art’ wasn’t very surprising to some of us.”

“We stumbled upon a stuffed animal on a gray blanket and questioned if this was really impressive to some of the nearby people.”

To test out the theory that people will stare at, and try and artistically interpret, anything if it’s in a gallery setting, Khayatan set a pair of glasses down and walked away.
Soon, people began to surround them, maintaining a safe distance from the ‘artwork’ and several of them taking pictures.
I like to think they imagined the floored glasses to represent the dumbing down of culture, or perhaps the viewing of life through a lens, possibly with a nice, lower-case title like 'myopia' or 'real eyes (real lies)'....MORE

If interested here are quite a few more instances recorded by the The Gallery of
Art Hung Upside-Down

Ins and Outs Of Credit Ratings In Early America (plus the time PIMCO's Bill Gross turned Warren Buffet down for a loan)

From Lapham's Quarterly, September 21:

Rate the Room
The early history of rating credit in America.

One new and uniquely American source of information appeared in the wake of the financial crisis of 1837: credit reporting. Instead of continuing to rely on their own informal sources of information about the creditworthiness of others, merchants could now turn to a third party, a “mercantile agency,” whose business it was to provide independent and encompassing assessments of the creditworthiness of other firms.

The Mercantile Agency (later known as R.G. Dun) was founded in 1841 by Lewis Tappan, a prominent textile merchant and ardent abolitionist who had failed in the panic of 1837. According to historian Rowena Olegario, the idea of a credit agency was already “in the air,” but it was Tappan who brought this idea firmly into reality. Organizationally, Tappan established a central office (in New York City, close to his clients) and attached to this a network of independent confidential correspondents, distributed across the country, who provided information about the firms in their local vicinity. Scholar William Armstrong gave a thumbnail summary: “Lewis Tappan…applied himself to the establishment of a commercial agency, the object of which is to ascertain, by means of agents throughout the country, the character and standing of the merchants in the different towns, so that when the New York dealers receive applications for goods from traders at a distance, they have only to refer to Mr. Tappan to ascertain their degree of trustworthiness.” Using the well-functioning national postal system, correspondents mailed information about firms to the head office. This information was transcribed and edited, and then turned into credit reports that could be sold to anyone with an interest in a particular firm. As of August 1841 Tappan had acquired 133 subscribers to his new service, mostly in the dry-goods business.

Although many organizations could be interested in someone’s ability to pay their debts (e.g., banks, insurance companies, employers, etc.), rating agencies served the mercantile community first and concentrated on trade credit. In an early advertisement, Tappan attracted customers by giving them the chance to assess for free the information his firm would provide: “Any merchant who wishes to test the value of the information can do so gratuitously. No better way has been thought of than for such to bring a list of the bad debts they have made since the establishment of the agency in 1841, and ascertain how the debtors stood on the books of the agency when the goods were sold to them.”....


HT: An FT Alphaville Further Reading post but I've forgotten which one. So here's the lot of them.

Although the "Five C's of creditworthiness" are 'character, capacity, capital, collateral, and conditions' J.P. Morgan famously said in his 1912 testimony before the Pujo Commission:

 Q: Is not commercial credit based primarily upon money or property?

JPM: No, sir. The first thing is character.

Q: Before money or property?

JPM: Before money, or anything else. Money cannot buy it.

—U.S. Library of Congress, Testimony of J.P. Morgan before the Bank and Currency Committee of the House of Representatives, at Washington, D. C., appointed for the purpose of investigating an alleged money trust in "Wall street."" (60 page PDF)
Finally, an October 2010 post: 

Bill Gross on Turning Down Loan Requests from Warren Buffett and Sam Walton (BRK.B; WMT)

Mr. Gross and PIMCO manage a bit over $1 Trillion dollars.
From CNBC:

Bill Gross' Lesson Learned: Character Trumps Flash
Choosing flash over substance led Bill Gross, founder and co-CIO of bond company PIMCO, to say “pass” to two of the best investments in US history and give a thumb's-up to a major flop.

Now, to avoid a repeat of either situation, he keeps a picture of the legendary banker J.P. Morgan on his wall. Morgan had told Congress once, that "Lending is not based on money or property," said Gross.
The first decision of learned lessons was when he turned down Warren Buffett and Charlie Munger for a $10 million loan for their company Berkshire Hathaway in 1975.

“It seemed like a funny company,” said Gross. He made his decision based on the exteriors of their assets—a dilapidated industrial complex in the Northeast, a See's candy store, Blue Chip Stamps, but not much else.”

Although PIMCO didn’t make the loan to those unassuming Midwesterners who eventually became among the world’s wealthiest men, Pacific Mutual, which owned PIMCO, did.

About a week later, Gross met Sam Walton, who was looking to expand his young general store operation to Ohio and Iowa.

“The two sons and Sam would drive me around town and show me the Wal-Mart , all the while with their dog named Dan.
They'd yell, ‘Git ‘em, Dan, git ‘em, Dan,’ when a dog or cat would cross the street.”
Gross turned the Waltons down, too, based on appearances, he said.
Shortly thereafter, Gross agreed to loan money to a new company called Itel, not Intel, a San Francisco rail car leaser, which had a plush office 30 floors up with a view of the Golden Gate Bridge.
“I said, ‘Now this is a company. Carpets, secretaries, rail cars that you can touch and feel, and the steel,” Gross explained. “So the loan was made, $5 million to Itel, and six months later the company was bankrupt.”
So whenever Gross is considering a decision, he looks at that picture of Morgan.

Family nets $6 million by staging car-crashes

From New York Magazine's Intelligencer, October 3:

Collision Course
The car wrecks were staged. The injuries were real. Led by a charismatic rogue, one family bloodied itself to pocket $6 million.

Mize hurt you one at a time, pulling tools from a briefcase, cold and businesslike. He’d gash your brow with a razor or box cutter. Scuff up the wound with sandpaper, gripe if you didn’t bleed enough. For concussions or a busted knee, he’d smack you with a liquor bottle, a brick, a frying pan. You’d chug a Red Bull to spike your blood pressure. Pop aspirin so your blood would stream faster. Spill a bottle of your urine on your pants like you’d blacked out.

Inside the “victim” car, women could clamp on a neck brace, a helmet. Men typically wouldn’t get any protection: too wimpy, in Mize’s view. He’d get into the “at fault” car, headlights glaring through the darkness down the road. Your dread would be coursing now — fear about what’s to come, whether you’d pull this off.

All clear. 

Mize would hit the accelerator, speeding toward you at 40, even 50 mph — you packed in with the others, your girlfriend or cousin or best man, like bowling pins. Your wounds already throbbed, and you feared that the crash would go off-script to do further damage: steel warping unexpectedly, glass slicing something vital, a seatbelt rupturing a spleen.

After the impact, after the cars had spun and screeched to a stop, after you realized you were rattled but alive, Mize or another person would rush to the window to collect helmets and braces and pee bottles and burner phones. Mize would hop in a third car with a getaway driver and vanish. The at-fault actor would climb into the driver’s seat of the car Mize had left crumpled behind, ready to take the blame.

Then you’d sit in the eerie silence, listening to the drip of oil. You’d ask quietly if everyone was okay, tap your scrapes to conjure fresh blood as sirens started their tiny, far-off scream.

The first responders would see a totaled car of crash victims bruised, bloodied, whimpering, seemingly in shock or barely conscious. You’d feel like such scum as you were strapped to the stretcher, the responders comforting you as you wasted their time. Cops — sometimes at the scene, sometimes at the hospital — would pull out their collision reports.


Mize had made you rehearse your lines. You were driving a Sebring convertible down an industrial stretch in Las Vegas when you dropped a CD on the floorboard and, reaching down, sideswiped a Mercedes. You dropped your water bottle. Your vape. Your Pepsi. You were lighting a cigarette. Reaching for a phone. You swerved to miss an animal. You were swigging from a glass bottle that chipped your tooth. You slammed your head. You blacked out. Could you blame the responders for believing?....


Previously on Masters-level scams: 

I know I'm violating BuzzFeed's first rule of listicle headlines*, use odd numbers in the header, but I had to add one as an introductory story.
I suppose I could have gone with 1+(5x3) or something but that seems a bit obsessive.

First up, from Timeline:

Jumping in front of cars for insurance money helped some 1920s immigrants achieve the American Dream
Flopping was, and is, a lucrative business*s74g3dgajjBoQy0ANojbNQ.jpeg
A bus swerved to avoid a boy who had been ‘knocked down’ in the road in 1912. (Getty Images
America is the land of the free — and the home of people suing each other over frivolous lawsuits. This is the country where a woman once planted a severed human finger in a bowl of Wendy’s chili — and then tried to sue the fast food chain. The woman was later arrested — but initially thought she could get away with her ‘chili-finger’ scam, because suing people is such a way of American life. That’s why the culture of ‘floppers’ is a clever criminal enterprise.

As they’re known in the trade, floppers, flim-flam-floppers, or flop artists have been a thorn in the side of insurance companies since the 19th century. As mentioned in the book Accidentally, on Purpose, one of the first documented slip-and-fall artists was a woman known as Banana Anna, who would plant banana peels on steam trains, “slip” on them, and fake injuries to rake in insurance money.

The 1950 report Exposing the Fake Claim Racket described a flopper as someone who’d “scout certain parts of a city for openings or defects best suited for causing an ‘accident,’ such as an open cellar door, a broken step, a defective sidewalk coal chute cover, or a broken vault light. Locating such a spot, the flopper will purposely get his foot wedged in a jagged crevice and pretend to fall.”
Jim Quiggle, director of communications for the Coalition Against Insurance Fraud says, “Flops are so easy to create. It requires so little expertise. How much skill does it take to sit on the floor and cry bloody murder at the top of your lungs?”

In the early 20th century, when New York was the promised land for those who newly arrived via Ellis Island, the story of floppers reads like an immigrant American dream.

In fact, the 1920’s were the Golden Age of flopping. And one of the masters of the form was a man named Daniel Laulicht, who along with his brother Benjamin ran the biggest flopper ring in New York City. Laulicht grew up a poor immigrant in the Lower East Side. According to city records, Laulicht was first arrested for flopping back in 1918, but that was just the beginning. Laulicht eventually became a flopping tycoon....