Links and Notes for February 12th, 2021
Published by marco on
Below are links to articles, highlighted passages, and occasional annotations for the week ending on the date in the title, enriching the raw data from Instapaper Likes and Twitter. They are intentionally succinct, else they’d be articles and probably end up in the gigantic backlog of unpublished drafts. YMMV.
“Here’s the other real and current problem. We don’t have enough vaccines in this country, and we don’t have enough for the world. We are racing against the more transmissible variants taking hold, and when they do eventually take hold, it will be even harder to contain them. Speeding up vaccination is even more urgent when one considers this.”
“Those who are wearing masks are doing so already—they need better, certified masks. And for most of the victims of this pandemic, “stay home” is a function of privilege. In most countries where we have research, we find that the younger victims are those we call “essential” frontline workers: the people who cannot work from home but who make our society run.”
“Since the beginning of the trials, all trials, there has not been a single death or hospitalization among people vaccinated. Not one. Zero. Not for Moderna, not for Pfizer/BioNTech, not for Oxford/AstraZeneca, not for Sputnik, not for J&J, not for Novavax.”
Anecdotally, no-one I know who’s had the vaccine who’s experienced bad symptoms has gone to the hospital or even seen a doctor. Some felt miserable, some for quite some time, but they were just feeling poorly—not enough to even see a doctor, to say nothing of going to a hospital or lying face-down on a bed for weeks with a tube down your throat. Most I know experienced no side effects. Side-effects are basically minimal.
“If anything, given the different trial periods, it’s quite plausible that there is no huge underlying difference in “efficacy” either. Maybe the variant increases the likelihood of someone having a fever rather than not even a fever, but it’s quite likely that that may apply to the earlier vaccines which were tested when these variants weren’t widespread.”
“I can, without a hesitation, say that of the ones I know are being considered in various places in the US, UK and Europe—Moderna, Pfizer/BioNTech, J&J, Oxford/AstraZeneca, Novavax—I would be happy with receiving *any* of them. I would easily recommend *any* of them to anyone I know, whatever they were offered.”
Dealing with a Pandemic as If Human Lives Mattered by Dean Baker (CEPR)
“The failure to go this route is hitting home now that much of the world, including the United States and Europe, are facing shortages of vaccines. In the wake of these shortages, we are hearing the response that there is limited manufacturing capacity. This is true, but that is precisely the problem. If Moderna or Pfizer can each build one or two factories to produce their vaccines, then it was possible to build ten or twenty. If there were inputs in short supply, we could have ramped up production of these inputs. This is why we have the Defense Production Act.”
“There is of course the risk that we would have produced 400 million doses of a vaccine that was not approved by the Food and Drug Administration, but so what? With the cost of production around $2 per shot, this would mean throwing $800 million in the garbage. In a context where the pandemic has cost us close to 500,000 lives, and trillions of dollars of lost output, the risk of wasting $800 million looks pretty trivial.”
“Two of China’s vaccines have been approved by other countries’ regulatory authorities. Russia’s vaccine has also been approved by regulatory authorities in a number of countries and a recently published article shows it to be highly effective. Russia is currently submitting for approval by the European Union’s regulatory agency. Germany has already expressed a willingness to use the Russian vaccine, if it is approved. Russia indicated it could provide 100 million doses to Europe in the spring.”
“It is also important to point out in this context that we have a very concrete reason for wanting a quick and successful worldwide vaccine program. We know that the more the virus spreads, the more it mutates. There is a great risk that if the pandemic is allowed to spread unchecked in large parts of the world, that there will be mutations for which the current vaccines are not effective.”
“We really really do not want to be in a situation where we have to go through this thing a second time. That means we should be very serious about getting the whole world inoculated as quickly as possible, even apart from the humanitarian interest that we should not want to see preventable illness and death anywhere.”
“On Thursday, White House Press Secretary Jen Psaki declared, “The president will not rest until all schools are open five days a week.” Last month, Biden’s top economic advisor Brian Deese bluntly stated, “We need to get the schools open so that parents, and particularly women … can get back to work.””
The Democrat-majority government won’t pass legislation for a single check, to say nothing of recurring support, as every other civilized nation is doing (e.g. at a minimum, Canada with $2000 per month or most of Europe and Japan, with 80%-100% of your salary paid), so they have to get people back to work for the ladies. Most of the teachers in America are ladies, and they’re sending them into ground zero of the next wave. Trumpism continues under Biden.
But, they get the vaccine right?
“In an effort to tamp down teachers’ expectations that they might get vaccinated before being sent back to unsafe schools, the guidelines explicitly state, “Access to vaccination should not be considered a condition for reopening schools for in-person instruction.” Alongside COVID-19 testing programs, this is simply an “additional layer” that districts should try to prioritize after meeting the above five “key mitigation strategies.””
One of these strategies is “ventilation”, which should work great for those schools opening in the large parts of the country seeing mornings at -20ºC in an enduring cold snap. Leave your windows open in winter—very conducive to both learning and survival and energy-efficiency. They’ve known for almost a year that schools have inadequate HVAC and have done nothing to upgrade them. Nothing. Now, they just send everyone back in, as if upgrading had never been an option, as if it wasn’t a condition for returning to a teaching landscape drastically deformed by not only COVID-19, but all of its inevitable successors.
Switzerland’s schools of higher learning have been in remote-only mode since October and will likely continue this way. Schools up to 16 years old never closed. It seems to be possible to run things in a way that transmission drops while schools stay open.
“The scientific journal The Lancet has confirmed that “Russia’s Sputnik V vaccine shows 91.6% efficacy in clinical trials.” Wow. What a relief. Since Pfizer/BioNTech and Moderna vaccines are in short supply, this should be a most welcome development.”
“Can we imagine Dr. Fauci being injected with Sputnik V? Or President Biden? Or President Putin being injected with Pfizer/BioNTech or Moderna? Why not? Wouldn’t that be a real sign of détente and resetting the relationship? A triumph of medical science over politics?
“If the pandemic is the major global issue today, why can’t we imagine global cooperation for vaccines? Granted that Sputnik V needs final approval by the World Health Organization, several non-Western countries are already using the Russian vaccine.”
Finance & Economy
“[…] silver has a 5,000-year history of being treated as valuable because people like shiny things,”
“Don’t you want to travel back in time and board an 18th-century Spanish treasure fleet, carrying silver from the New World to prop up Spain’s waning global hegemony, and tell them “you really cannot believe how much dumber everything is going to get”?”
“[…] you could have bought a put option: Pay a premium, and then if the stock plunges you can sell the stock at the put strike price. You could have bought a $10-strike April put for just 33 cents: If the stock fell below $10 by April, you’d get back the difference between the stock price and $10; if it went to zero by April, you’d get back $10 for your 33-cent investment. The day before the Reddit rally really took off, the $10 puts were a way to bet on GameStop’s stock collapsing quickly and totally.”
“If you bought those puts, you did great. Those $10 puts, which traded at $0.33 on Jan. 21, last traded at $1.55 this past Friday. You’re up 370%. The people who bought the stock did better—they’re up 655%—but of course they were right; the stock went up. You were wrong; the stock did not go to zero, but you’re still up 370%.”
“In general, as the price of a stock goes up, the value of a put goes down: A $325 stock is less likely to fall below $10 than a $43 stock. On the other hand, as the volatility of a stock goes up, the value of a put also goes up: A stock that swings wildly is more likely to fall below $10 than a boring one. In this case, mathematically, the change in volatility outweighs the change in spot price.”
“Many people emailed to say “well they had probably hedged their convertibles by selling stock short, and they used the stock they got on conversion to close out their shorts.” Which is totally a thing, as I know, because I used to design and build and market convertible bonds for a living. I just did not think of Silver Lake Management, the private-equity firm that owned the majority of the AMC convertible, as a hedged holder.”
So, kind of the reverse of what everyone else was doing: they had a long position in convertible stock, which they hedged at one point with shorts on the same stock (they bet for and against it and come up with a less risky position overall). When the shorts started to go south, they were forced to convert their stock and sell it, in order to get out of the shorts as well. They didn’t have to go to the market to buy stock from unwilling Redditors to unwind their increasingly unsavory short position but could just buy it from themselves—once they’d converted their stock. That’s a reasonable explanation, actually.
“It’s no coincidence that some of the most troubled borrowers are now the ones benefiting the most from the retail-driven rallies. Their huge debt loads, combined with the devastating impact that Covid-19 has had on their ability to generate revenue, were among the reasons their stocks were so heavily shorted in the first place.”
Reddit’s support of doomed companies is kind of like a kickstarter for foolish products.
“If you are going to announce an enormous controversial merger of two oil giants, you might as well do it this week? All the people who dislike concentration of economic power, and oil companies, are distracted right now. “Exxon and Chevron announced this week that they will combine in a historic $350 billion deal, more on that if we have time, but now back to the most important business story, a money-losing mall retailer of video games.””
“Probabilities derived from options do not reflect expectations about real-world probabilities; people sometimes call them “risk-neutral probabilities” and you can be led astray by taking them seriously as probabilities.”
“Like a lot of fast-growing consumer-facing tech-ish companies, Robinhood needs money to grow; if it had spent the next year or two steadily adding customers it would probably have raised more capital to pay for that growth; instead it packed a year’s growth into last week and so had to similarly accelerate the fundraising.”
“But I don’t know. It doesn’t exactly seem like Robinhood enjoyed going out to raise that money. It happened so fast that the VCs got a substantial desperation discount. (They bought convertible notes that “will convert into equity at a $30 billion valuation – or a 30% discount to an eventual valuation in a public listing, whichever is lower.”)”
“In general, in financial markets, when a broker has to shut down trading because its counterparties are demanding more collateral that it doesn’t have, that is not a great sign for the broker’s future.”
“This enrages customers who are long those stocks, encourages conspiracy theories about Robinhood helping out short sellers, and increases Robinhood’s market risk: If it had margin-loan exposure to those stocks, taking steps that will predictably drive down their prices was not a great idea.”
“The reason that Robinhood had to raise all this cash is that its clearinghouses demanded billions of dollars more collateral to keep clearing its trades. We talked about this last week; basically, as Robinhood trades more volume, and as the volatility of the names it trades increases, there is an increased risk that it will not have enough money to settle trades. The clearinghouses, which are responsible for keeping track of and settling the trades, do not like this risk; they require clearing members (like Robinhood) to post collateral to mitigate it, and as the risk goes up the collateral requirements do too.”
“The problem about clearing houses is that the ways in which they protect themselves against credit risk tend to have the effect of radiating liquidity problems out into the rest of the system.”
“a crucial parameter affecting the liquidity of the financial system — almost the antimatter equivalent of the central bank’s Lender of Last Resort function — has been handed over to a group of people who only have utterly counterproductive incentives to protect their own institution.”
“When volatility is up and markets are crazy, clearinghouses pick up the phone and call every bank and broker and trading firm and say “hey you need to give us a ton more money.” The banks and brokers with the most risk have to put up the most money. When volatility is up and markets are crazy, that is a tough time to ask banks and brokers for more money! They especially need all their money right then. If you ask them for more, you increase the risk that one of them will fail. The clearinghouse, meanwhile, has no real incentive to be conservative in its collateral demands—the more money it gets, the better for it. And the banks and brokers have no real way to say no, since being cut off from the clearinghouse is pretty much the worst possible thing that can happen to them.”
“Long-standing active regulars are, at this point, a small minority. Presumably the millions of new arrivals are not as well versed in the nuance and context and norms of the board, and will read pitches on their own (apparent) merits. Presumably some of them will say “ooh a short squeeze in silver, I’ve heard about short squeezes, better get in on that, that’s after all why I joined this subreddit yesterday.” And so an idea can both be “immediately and unequivocally rejected” by the community as a whole, and also get 11,000 upvotes.”
“(To be fair that’s how social media always works: A thing is good, which causes it to become big, which causes it to become bad. Circle of life. “No one goes there anymore, it’s too crowded.”)”
“I am happy to concede that it remains the favorite WallStreetBets trade, and part of me hopes that it can go on forever. Of course if it does then financial capitalism in its present form will end, as will my career analyzing it. Perhaps that will be an added incentive for WallStreetBets to keep it up.”
“There are two at issue here: The National Securities Clearing Corporation (a subsidiary of the Depository Trust & Clearing Corporation, and sort of interchangeably called “NSCC” or “DTCC”) clears U.S. stock trades; the Options Clearing Corporation (“OCC,” but not the bank one) clears options trades.”
“I should say, the collateral requirements were not increased *for Robinhood*; the increases were market-wide, and several other brokers limited trading in some meme stocks. Still Robinhood seems to have been disproportionately troubled by the whole thing.”
“If you’re a company that gets sued over this stuff and you defeat class certification, you more or less win; these cases are only fun for plaintiffs’ lawyers if they can sue on behalf of every shareholder who bought stock over some multi-year period. But if you lose that argument and the class is certified, the risk of the litigation gets bigger, and you more or less settle. So class certification is often the crucial decision of the case, the one that determines whether the company pays up or not.”
“Nobody writes an equity research note or a hedge-fund investment memo like “Goldman Sachs is undervalued because the market does not give them enough credit for integrity and honesty.””
“If it’s securities fraud to (1) have a code of ethics (or a policy on environmental, social and governance issues) and (2) also do something bad, then some companies will respond by not having codes of ethics. (Since that is easier and more reliable than not doing anything bad.) That is not an entirely good result! You want companies to promise to do good things! Ideally to do them too, but that is harder.”
“At yesterday’s close, GameStop was up about 378% year-to-date. What a great stock! From Bloomberg’s EEO function I see that $90 represents 67 times consensus 2023 earnings estimates (2021 and 2022 earnings estimates are negative), or roughly double Apple Inc.’s price/earnings ratio. The market must expect big things from this little company.”
“Yeah those investor meetings are probably pretty good. “We have a repeatable investing process based on fundamental value principles and committed thoughtful activism that adds real value to our targets, and we applied it here successfully, but then also Reddit manipulated the stock up for fun so that was a nice tailwind.””
“Why would you buy GameStop stock when you could get the diversification benefits and low expense ratio of a passive ETF made up of all the stocks that were briefly too dangerous to trade? Or of course you could short it, lol. How does this ETF not exist already; imagine having an investment thesis, in February 2021, that is not either “the meme stocks will go up” or “the meme stocks will go down.””
“AMC was different, for Mudrick, because it was a sort of capital-structure arbitrage: They thought the debt of AMC was undervalued, so they owned it, and they thought the stock was overvalued, so they sold call options on it. The basic theory of capital-structure arbitrage is that eventually the company’s different securitieshave to converge: If the company is good, the debt will rise in value; if the company is bad, the stock will fall in value. Here both legs worked out: The stock was at stupid levels and eventually fell, but while it was at stupid levels AMC used it to raise a bunch of money and shore up its credit.”
“Selling calls is both a bet that the stock price is too high (if the stock falls, you don’t have to pay out on your calls)”
“You pocket the price of the option. The buyer will not exercise the option because the difference in the strike price to the value on the strike date is too high. They’re Out the price of the option but can at least cut their losses by not exercising.”
“(If you delta-hedge the call options you sold by buying some stock, then that is *just* a bet on volatility and *not* a directional bet on the stock price;”
“You collect some cash now in exchange for making a (contingent) promise to deliver stock at some point in the future, hoping that the stock price will go down and the cash you get now will be worth more than your future obligation. Those are the same basic mechanics as short selling, but here it’s easy for everyone to understand why *you don’t need to have the shares now*, so nobody writes endless conspiracy theories about it. “Oh, right, you get paid now and promise to deliver shares later, I get it,” everyone shrugs.”
“That implies that they got out mostly on Jan. 27, when GameStop closed at its all-time high. They got into this stock based on fundamental research conducted over months; they called the top perfectly based on an Elon Musk tweet. Honestly I am tearing up a little? These guys get it. What a great investment process. I hope someone is working on a revised edition of Graham & Dodd that incorporates the Did Elon Musk Tweet Yet metric.”
“The basic dumb contours of the GameStop trade are becoming increasingly clear: People on Reddit who got into it early, like Gill, have made small or occasionally biggish fortunes. Hedge funds who were long early, like Senvest, and hedge funds who were short late, like Mudrick Capital Management, have made large fortunes. Hedge funds who were short early, like Melvin Capital, have lost large fortunes. Intermediaries—high-frequency traders, options market makers, brokerages—have been a bit cagey about how they’re doing, and have had a stressful couple of weeks, but there is a widespread sense that they mostly made a lot of money. The financial system will survive just fine thank you.
“People on Reddit who got into it late have lost—well, most of the money they put in, anyway. One hopes that was mostly fun gambling money, because by the time they got in this was incredibly transparently stupid and they had to know they’d lose everything, but of course one worries. There are already stories about people losing more money than they could afford to risk, and there will be more, and that will make people angry.”
“[…] the main one is that Reddit correctly noticed that if everyone buys a stock then it will go up, and then they all did that. I am not sure that there is a word, or a concept, for that. Ordinarily the way markets work is that some people want a stock and others don’t and they trade it around until it reflects a sort of distributed consensus of what everyone thinks about its value. Occasionally the way markets work is that one person with a ton of money really wants a stock, or really wants it to go up, so she pays a ton of money to buy a lot of it and push around the price.”
“If someone on Reddit was publishing dozens of posts lying about GameStop’s sales figures and game-company partnerships, sure, that’s a pump-and-dump. But in fact what seems to have happened is that hundreds of people on Reddit were publishing thousands of posts saying “HOLD!” What do you do with that?”
“[…] those are all words that people said about the GameStop trade, so it stands to reason that the legislative response should also use those words.”
“Or William Galvin is going to go after Roaring Kitty, and poor MassMutual, because they are readily available targets. This whole problem could have been averted if we had stricter rules about life insurance companies monitoring the outside online activities of their financial wellness education directors, why not.”
“It is a bit of empirical support for the “gamma squeeze” theory popular on WallStreetBets: If everyone goes out and buys a ton of call options, then options market makers will have to hedge those options (by buying stock), and they will have to adjust those hedges (by buying or selling stock) as the stock price moves. They have what is called “negative gamma”: They have to adjust their hedges by buying more stock as it goes up, or by selling some stock as it goes down. This increases intraday momentum: On days when dealers have a lot of negative gamma exposure, if markets go down in the morning they go down some more in the afternoon (as options dealers sell), and if they go up in the morning they go up more in the afternoon (as options dealers buy).”
“This is called “internalizing”: Your broker executes your order internally, against its other orders, rather than sending it out to the exchange. In practice a typical retail broker doesn’t have the ability to do this, so it sends its orders to what is usually, in the business, called a “wholesaler” (or sometimes “internalizer”), and usually, outside of the business, called a “high-frequency trader.” Popular wholesalers include Citadel Securities, G1X Execution Services LLC, Two Sigma Securities LLC, Virtu Financial Inc., Wolverine Securities, etc. The wholesaler does the thing I just said: It pays the sellers more for their shares than the exchange offers, charges the buyers less for shares than the exchange would, and keeps 5 cents for itself. Well, it keeps, say, 3 cents for itself, and sends 2 cents back to the retail broker who sent it the trade. The broker has subcontracted the internalizing job to the wholesaler, and they share the profits.”
“So the wholesaler executes the trades for its own account, out of inventory: If a retail sell order comes in, the wholesaler buys the shares and owns them for a little while; eventually a buy order comes in and takes the shares off the wholesaler’s hands. The wholesaler bridges the time gap between buyers and sellers. It uses its balance sheet to buy the stocks people want to sell and sell the stocks people want to buy, confident that over the course of the day those desires will mostly offset and it will make its spread.”
This is, of course, not without risk, but with volume and scale, it works out.
“The retail traders are trading randomly, which is what allows you to treat this problem as though you were matching them up with each other at a fixed price and collecting a spread. In reality you are matching them up with each other over time, not simultaneously, and the price moves while you are doing it, but the randomness of their trading means that this difference doesn’t matter too much.”
“This is why the spread on the public exchange—the difference between the $58 best bid to buy the stock and the $58.25 best offer to sell the stock—is so much wider than the 5 cents that the wholesaler charges. The wholesaler is just matching up small pleasant random orders and clipping a spread; the stock-exchange market maker is facing a real risk of being run over by an informed trader.”
Basically, wholesaling works because retail traders have historically been, and are assumed to continue to be, predictably non-impactful. When that changes in a hurry, a lot of entities that are expressly not in the risky-trade business get the hell out of the way and stop providing their service to an entity that can not be trusted to act predictably or in a low-risk manner. I don’t think these firms have any obligation to provide trades no matter what. They certainly don’t have to provide liquidity (as Robinhood apparently does, as it allows quite large trades without a margin account).
“But we can very roughly assume that, of the value that the wholesaler provides, about 80% is paid to customers in the form of price improvement and about 20% is paid to the broker in the form of payment for order flow.”
““Robinhood sells your order to Citadel so Citadel can front-run it.” No! First of all, it is illegal to front-run your order, and the Securities and Exchange Commission does, you know, keep an eye on this stuff. Second, the wholesaler is ordinarily filling your order at a price that is better than what’s available in the public market, so “front-running”—going out and buying on the stock exchange and then turning around and selling to you at a profit—doesn’t work. Third, because retail orders are generally uninformative, the wholesaler is not rubbing its hands together being like “bwahahaha now I know that Matt Levine is buying GameStop, it will definitely go up, I must buy a ton of it before he gets any!” The whole story is widely accepted but also completely transparent nonsense.”
I like Matt Levine and I understand that he writes for Bloomberg and has to keep his nose clean, but arguing that something is just not done on Wall Street because it’s illegal is specious. There are a great many patently illegal things done on Wall Street every day. This may happen to one of the ones that isn’t done. Or it may be that it is certainly not done by otherwise staid and venerable wholesalers. Having worked with a few companies, I can vouch that most of the work done in the plumbing would end up being illegal more from incompetence than from outright criminality. So, in this case, I accept the line of reasoning.
“The rough intuitive result [of eliminating PFOF] would be that big institutions would face lower trading costs, while retail investors would face higher costs: If you blend everyone together, the risk of adverse selection is somewhere between where it is on the exchange now (all institutions) and where it is for wholesalers now (all retail), so the spread will be somewhere in between too. Public spreads will go down, which is good for institutions, but retail investors won’t get price improvement, so they’ll pay more. This would be good for institutions, which means me, because despite some hypothetical examples above I don’t actually trade stocks; I own boring index funds.”
“The problem in GameStop was that way too many retail traders made way too many dumb trades, and if there was some friction maybe they would not have. Of course there is a trade-off here, and it is not at all obvious how much the government should do to prevent retail traders from making dumb trades.”
“The house usually wins, is an important lesson here.”
“The GameStop short squeeze was a high-stakes battle between Reddit traders who were long the stock and hedge funds who were short, an intense struggle to see who would give up first and lose everything. But also it was a way for banks and stock lenders to stand to one side and make so much money.”
It’s like a boxing match: the fighters themselves risk a lot and are going to take potentially career-ending damage. They have a decent shot at a payday they would otherwise not see. The promoters and arena owners and media channels, however, are are already far richer, will make far more money and take essentially no risk.
That’s what happened here: a scrappy band of fools banded together to lose most of their money fatally damaging one enemy and wounding a few others. Everyone else was selling merch and pay-per-view, etc. and couldn’t have cared less who won, as long as they kept fighting.
“[…] it’s not *Citadel*, the hedge fund, but *Citadel Securities*, the market maker, a different though affiliated company. The connection between the two led to a lot of conspiracy theorizing around GameStop, because Citadel Securities executes a lot of retail trades (including for Robinhood), while Citadel the hedge fund invested in Melvin Capital, the hedge fund that got hit hard by shorting GameStop.”
“The stock market tells us about the expected value of future after-tax corporate profits. At least, that is when it tells us anything at all. That is not radical lefty ranting, that is from the Econ textbook.”
“People will not pay more money for shares of Microsoft, GE, or any other stock because they expect the economy to boom. They will pay more money for shares of the stock in these companies if they expect their after-tax profits to be higher. And if Biden’s tax increase on profits is going to more than offset any plausible increase in profits due to higher sales, then share prices will fall.”
The Gamestop Affair Is Just the Latest Incarnation of the “People’s Capitalism” Delusion by Edward Ongweso Jr. (Jacobin)
“And I think it’s also really important to note that these supposed democratic trading companies were not transparent about the fact that they’re just normal trading platforms. The real reason why Robinhood halted those trades is because they were so volatile that clearinghouses were going to need more collateral to back up the trades than they actually had, so rather than telling anyone this, it said, “Oh shit, we just have to stop it.””
“But BlackRock is also in a position to do something called securities lending where, if you’re a short seller, you can come to me and, if I’m BlackRock, I can lend shares to you, and you just have to give me collateral. And the collateral is a steal in and of itself because GameStop stock is worth nowhere near $400. It’s not worth $4, but it’s also not $400. So you’re handing over collateral equivalent to a massively inflated price, just so you can get out of a ridiculous short that you’re trapped in. So these companies — BlackRock, Vanguard, Fidelity Investments — have securities lending programs and have massive stakes in companies like GameStop, AMC, BlackBerry, and so on. And they’ve been able to make hundreds of millions of dollars over the course of this entire spectacle by either lending out the securities or maybe liquidating some of their assets.”
“My own stock in Blackberry, yet another target of r/wallstreetbets, lost 42% of its value on January 28, after the Robinhood platform froze buying on this company’s shares along with those of GameStop and AMC movie theaters, thus blatantly manipulating the market and making the invisible hand that supposedly runs it radiantly visible in a flash.”
I was not expecting a deep reading on this particular topic from Smith—indeed, I was not expecting him to address it at all—but I would have expected him to be more careful about going out on a limb with such certitude, when he should have almost certainly realized that he was out of his depth and that parroting the superficial mainstream interpretation would add nothing to the discussion. I suppose even the most erudite can cave to popular pressure.
“There is no question, either, that the swarm did more than standing in a park and holding a sign or shouting some cringey “Hey hey ho ho” chant ever could: it got inside the system, and started messing with the money.”
Occupy made it salonfâhig to talk about inequality and stamped 99% into the vernacular, seemingly permanently. It is gone but not forgotten. Gamestop killed one of thousands of hedge funds. It, like Occupy, does not appear to be repeatable, despite fevered imaginings to the contrary.
“[…] the poet turns to government ministers, whom we might “update” in our imaginations to include both establishment politicians and those close enough to them to, say, call for a trading freeze on a company’s stock in order to reverse the losses of a multibillion-dollar hedge fund:”
It’s of note that those who most eagerly agree that the markets are a casino complain just as loudly when there seem to be brakes on lunatic volatility that would break it entirely. It’s almost as if they’re angry to find the market to be defending itself against those who were deliberately thwarting price discovery. (This is the task for which the rules are designed. That there is a ton of gambling anyway doesn’t affect that.) A casino is a place where the poor lose all their money and the house always wins. Why the surprise? It would have stopped trading for any stock with too much volatility. Trading stopped entirely 19 times in just one 6.5- hour trading day. The DTCC refused to clear trades for any entity that can’t meet reserve requirements (as Robinhood temporarily couldn’t).
“[…] the continued salience of the basic analysis of society’s greatest asymmetry: that the “Ministers” are up to exactly the same louche and self-serving machinations as the gamers are, but only the ministers, in their tight orbit around the law, are able consistently to get away with it.”
“Unlike nearly everyone I know in academia, who continue shamelessly to deny that there even is such a thing as cancel culture, I see the regular Yezhov-ing of honest and decent people, some of whom are my friends, to be among the most troubling social phenomena I have ever witnessed.”
“Unlike 75 million or so of my fellow Americans (if not my fellow American academics), I am also horrified by the demonstration in 2016 of the internet’s power to meme a joke-president into existence. It only makes sense, in this light, that I should also be horrified by the new phenomenon of “meme stocks”.”
“The difference now is that the bubbles are occurring not due to error, but, at least in part, due to the power of lulz, and the metastasis of gaming to include virtually the entirety of our social life.”
“I absolutely do not think Robinhood should have been legally able to block trading once “the wrong kind of people” began manipulating the market, unlike its regular manipulators who are never blocked.”
I wholeheartedly agree, but that’s almost certainly not what happened. That is a nice story about David vs. Goliath, but the volatility brake and reserve requirements apply to all players. It’s just that the swarm—and their entrance to the market, Robinhood—was well-equipped enough to cause trouble and win a few skirmishes, but they weren’t going to take down a system with players 1000 times bigger.
“Of all these three groups of swarmers, in fact —the GameStop squeezers, the Pepe memers, and the cancel mobs—, I have by far the most sympathy with the squeezers. But I remain uneasy about the technological conditions that have paved the way for them.”
“Wikipedia had already fully displaced Encyclopaedia Brittanica and other comparable resources as the world’s preeminent reference work. A decentralized, open-source, collaborative encyclopedia thus anticipated by some years the comparable innovation in finance, and as with Robinhood’s lag behind Twitter, we may assume that this is because there are more barriers of entry to finance than to news, politics, and culture.”
“I am a greater fan of building than of swarming. If old institutions are going to be destroyed, I want them to be replaced with something both solid and elegant.”
“Social media are like smoke driving us out of the hive, out of our honest work, into a swarm in search of something, anything, to attack.”
That is not what smoke makes bees do at all. They respond to what they think is a forest fire by returning to the hive to rescue what they can.
“When the queen can no longer reproduce, she is replaced in a process known as “supersedure”, which begins when the workers surround her and put her to death by “balling”, driving up her body temperature until she dies of heat-stroke. Is this a “revolt”? Do the workers experience a shift in allegiance? Did they ever feel allegiance to her in the first place? Is this all, as Quinby suspected, just so much projection? Probably. But we’re human beings, and have nowhere else to look to make sense of ourselves but to nature.”
Public Policy & Politics
“Or perhaps how Wonder Woman’s new outfit firmly locates the underwear on the inside rather than the outside and this means women around the world are winning the fight for equality? That type of story could probably score me some of the coveted #WokeHive clicks. (I just made up the #WokeHive but now that I did, I have a bad feeling it might really exist. That makes me sad.) And by writing about the underwear revolution, I could grab readership, operate within the bounds of allowable corporate thought, and tell myself that I’m creating change (while actually achieving nothing). The American Dream.”
“Despite millions of years of finding ways to survive and continue on, these newly extinct species failed to outlast the most destructive force this planet has ever seen — humans wielding unfettered capitalism like a battle axe.”
“As the last Tapanuli orangutans faced the long goodnight, we bought three extra spatulas at Ikea because they were three for a dollar and we talked about what a great price that was for the next two weeks. (We have yet to use three spatulas simultaneously, but we did once use two at the same time to kill a tenacious millipede.)”
“Does the human race have the will and desire to break our capitalist social engineering that has screamed at us every day of our lives — “Buying more is the answer. Eating more is the answer. Collecting more things is the answer. Don’t worry about the cost. Don’t worry about the waste. Don’t worry about the result, the ramifications, the externalities. Live for this moment and to hell with the rest! Anything inhibiting your rapacious consumptive binge is anti-freedom, anti-choice, and anti-you.””
“While the very fact of Navalny’s poisoning with Novichok has not been proven to this day, last week, CNN, the German magazine Der Spiegel, working in collaboration with Bellingcat, an obscure publication with ties to NATO think tanks, as well as the Russian pro-opposition outlet The Insider, published features alleging that they had personally identified the members of an “elite unit” of the Russian secret service FSB that had supposedly poisoned Navalny with Novichok.”
“Why would Kudriatsev, member of an “FSB elite unit,” chat over a regular phone to an unknown man for over 45 minutes, describing in detail a supposedly massive operative failure of the FSB that had taken place almost four months ago and has since become the subject of enormous political tensions between Moscow, and the leading imperialist powers, including Germany, the US and France? And how could a man, who has supposedly followed Navalny and his blog for years, not recognize the latter’s voice over the phone?”
“The Navalny story becomes even more farcical if one reads it alongside others of the anti-Russia campaign. While one attempt on Navalny’s life by the Russian state after another has failed miserably despite an enormous expense of resources, and while FSB officers seem not to mind chatting with strangers about operative secrets over the phone, the American and European public has been told, time and time again, over the past years, that the same Russian state is responsible for monumental hacks that have undermined the “integrity” of the US 2016 election, and almost brought down its cyber security system.”
“French President Emmanuel Macron, whose government has brutally suppressed social protests in recent years, declared the verdict “unacceptable” because “political disagreement is never a crime.” German Defense Minister Annegret Kramp-Karrenbauer and US Secretary of State Antony Blinken both called for the immediate release of Navalny. British foreign minister Dominic Raab denounced his sentencing as “perverse.””
That’s Dominic Raab from the same country that is killing Julian Assange in its inhumane prison system, keeping him there for as long as its best buddy America wants to continue appealing the case.
“This follows years of economic slump, triggered by the conflict over Ukraine and sanctions imposed by the US and EU. The Russian oligarchy has shifted the full burden of this conflict onto the working class. Real wages had been in steady decline for six years even before the pandemic hit. Incomes fell again by 3.5 percent last year, while inflation stands at 4.9 percent.”
“In 2017, the top 10 percent owned 89 percent of [Russia’s] wealth. The vast majority of workers have to survive on a few hundred dollars a month, while the ten richest Russian oligarchs own a combined wealth of $151.6 billion.”
“Terrified of mounting class anger in Russia, Navalny and his backers are seeking to channel such sentiments behind a reactionary agenda. Navalny, who maintains well-documented ties to the far-right, speaks for a layer of the oligarchy that is oriented toward more direct cooperation with the US.”
“Universities and scientific associations assume the task of filtering out falsity. In contrast to the market analogy, they operate as a centrally planned league organizing the hierarchical peer review process with a view to falsifying propositions dispassionately.”
“The weather will do what it will, regardless of a meteorologist’s predictions, so when the meteorologist’s predictions are wrong, her model must be wrong.”
“This is why neither empirical success nor failure causes an economic theory ever to be dismissed. Like conspiracy theorists and theologians, economists of different schools – Keynesians, monetarists, and Marxists, for example – can explain every possible observation within the confines of their particular paradigm. And, like religions, the prevailing creed results from power struggles between groups hiding their interests behind different dogmas.”
“The new administration brims with the same experts who promoted the false prophecies that reinforced the unequal, exploitative, irrational social and economic order that begat Trumpism.”
“The Georgia-Russia war of 2008 and the Russian annexation of Crimea in 2014 were part of a Russian strategy to secure what it called its “Near Abroad.” Fearful of continued NATO expansion, and remembering the NATO 2008 Bucharest Summit Declaration that “NATO welcomes Ukraine’s and Georgia’s Euro-Atlantic aspirations for membership in NATO. We agreed today that these countries will become members of NATO.” For the Russian Federation, the potential of NATO troops directly on its borders is as anathema to its security as Soviet troops in Cuba were to the United States in the 1960s. And the Soviet troops and missiles were not on the U.S. border; they were some 90 miles away.”
“All of these measures are window dressing, masking the root cause of the demise of America — unchecked oligarchic power and greed. The longer wealth is funneled upwards into the hands of a tiny, oligarchic cabal, who put Biden into office and whose interests he assiduously serves, we are doomed.”
“Once an oligarchy seizes power, deforming governing institutions to exclusively serve their narrow interests and turning the citizenry into serfs, there are only two options, as Aristotle pointed out — tyranny or revolution. The staggering concentration of wealth and obscene avarice of the very rich now dwarfs the hedonism and excesses of the world’s most heinous despots and wealthiest capitalists of the past.”
“Either a leftwing populism that smashes oligarchic power takes control or its counterfeit, a rightwing populism, built on the poisoned solidarity of hate, racism, vengeance and violence — and bankrolled by the hated oligarchs that use it as a front to solidify tyranny. We are barreling towards the latter.”
“An additional eight million Americans were recently classified as “newly poor” as the poverty rate increased 2.4 percentage points from June to December 2020. It is now at 11.8 percent, although many economists argue that the official poverty rate of $26,500 for a family of four masks the fact that perhaps half the country lives in real poverty. The official poverty rate for Blacks has climbed 5.4 percent to 23.6 percent just between June and December, but again is probably at least twice that number.”
“In Maryland, for example, Black people make up 30 percent of the population and 40 percent of the health care industry yet account for just 16 percent of those who have been vaccinated.”
“Global capitalism relentlessly searches the globe to exploit cheap, unorganized labor and plunder natural resources. This is its nature, as Karl Marx understood. It buys off or overthrows local elites. It blocks the ability of the developing world to become self-sufficient. At the same time, it strips workers in the industrialized world of good paying jobs, benefits, and legal protections, pushing them into crippling debt peonage, which further swells the bank accounts of these global speculators. Its two unrelenting goals are the maximization of profit and the reduction of the cost of production, which demands that workers be disempowered and treated like prisoners.”
“Biden, a tool of global oligarchy, who naively intends to resurrect the ancien régime, is paving the way for a frightening despotism, one where voices of dissent, from the left and the right, are censored and all who refuse to accept the new global order are labeled as domestic terrorists and pounded into submission.”
An Interesting Impeachment Argument from Michael McConnell by Michael Ramsey (The Originalism Blog)
“Article I, Section 3, Clause 6, states: “The Senate shall have the sole Power to try all Impeachments.” The key word is “all.” This clause contains no reservation or limitation. It does not say “the Senate has power to try impeachments against sitting officers.” Given that the impeachment of Mr. Trump was legitimate, the text makes clear that the Senate has power to try that impeachment.”
“[A]s argued by Andrew Hyman on this blog, and by Noah Feldman at Bloomberg (and elaborated by Keith Whittington at Volokh Conspiracy), historical understanding and practice strongly indicate that a President is not impeached (under the Constitution’s original meaning) until the Articles of Impeachment are delivered to the Senate. Impeachment, in this view, is not the act of voting on the articles, but rather the act of making an accusation to the entity having trial authority (in this case, the Senate).”
“Professor Whittington goes on to note that the terminology changed in the 20th century, so that people began to speak of impeachment occurring upon the House’s vote. But the original meaning seems clearly to the contrary. Thus in an originalist analysis, even if Professor McConnell is right about the Senate’s trial power, that does not affect the outcome in the particular case, because President Trump was impeached, for constitutional purposes, after he left office.”
“There is no authority granted to Congress to impeach and convict persons who are not “civil officers of the United States.””
“The interpretation that persons are subject to impeachment and conviction even if they are not civil officers would greatly expand the Senate’s ability to prevent future office-holding.”
“Professor McConnell is among the very best originalist scholars in the nation and I hesitate to disagree with him on anything, but ultimately I am not persuaded on this point. I think either the impeachment/conviction power is defined by Article II, Section 4, or it is essentially unlimited (except as to the nature of the punishment).”
Why the Senate Shouldn’t Hold a Late Impeachment Trial by Philip Bobbitt (Lawfare)
“[…] the Senate is making a mistake in holding a trial of the article of impeachment, which is scheduled to begin the week of Feb. 8, after the president leaves office. Doing so subverts the law in an effort to punish someone who subverted the law.”
“There is no authority granted to Congress to impeach and convict persons who are not “civil officers of the United States.” It’s as simple as that. But simplicity doesn’t mean unimportance. Limiting Congress to its specified powers is a crucial element in the central idea of the U.S. Constitution: putting the state under law.”
“Their reasoning runs this way: If the convicted person cannot be removed from office because he no longer holds an office, he can still be disqualified from future service. Disqualification, it is said, is an alternative punishment to removal, not a supplement—although by this logic a president could be disqualified from holding office without being removed, an obvious absurdity.”
“In an effort to salvage the penalty of disqualification where an official has been impeached while in office but has resigned, advocates for this view would have the Senate convict a person no longer in office, inventing a new basis for conviction beyond that provided in Article II.”
“Now let’s turn to ethos. Apart from these considerations, pruning the disqualification penalty away from its basis in removal creates a bill of attainder, a punishment levied by a legislative body without a criminal trial. An impeachable offense, it is well established, does not have to be a statutory crime.”
“I would make this one observation to those who are anxious to bar Trump from seeking further office. Donald Trump lost the Republican majority in the House in 2018; he lost the Republican majority in the Senate in 2020; and he lost the presidency decisively. Isn’t the better part of wisdom to trust the American public to deliver the verdict on Trump’s future electoral service? It would be the ultimate achievement of Trump’s contempt for law if he were able to provoke Americans into running roughshod over the Constitution in order to rebuke him.”
“I think it is appropriate to recall the famous passage in “A Man for All Seasons” in which Sir Thomas More confronts his future son-in-law about the pitfalls in cutting legal corners to pursue wickedness:
“William Roper: So, now you give the Devil the benefit of law!
Sir Thomas More: Yes! What would you do? Cut a great road through the law to get after the Devil?
William Roper: Yes, I’d cut down every law in England to do that!
Sir Thomas More: Oh? And when the last law was down, and the Devil turned ’round on you, where would you hide, Roper, the laws all being flat? This country is planted thick with laws, from coast to coast, Man’s laws, not God’s! And if you cut them down, and you’re just the man to do it, do you really think you could stand upright in the winds that would blow then? Yes, I’d give the Devil benefit of law, for my own safety’s sake!”
“These sections do not say that “a” president or “a former president” or “anyone who has served in that office” may be impeached. It says “the” president. There is a difference between “the” president and “a” president, and there can be no dispute that “the” president is not Donald Trump but Joe Biden. The former remained in office, and on that basis, was subject to impeachment until noon on Jan. 20, 2021. The latter was not subject to impeachment until that very same moment but now is.”
“I read this clause — in particular, the use of the conjunctive “and” rather than the disjunctive “or” — to establish removal as a condition precedent to the remedy of disqualification. If a public official is subject to removal through the impeachment process, then he or she is subject to disqualification. If not, then the opposite is true.”
The Constitutional Case Against Retroactive Impeachment by Eugene Kontorovich (Newsweek)
“The arguments in favor of impeaching former officials are weak—and those to the contrary is at least compelling enough to not deprive a private citizen of his right to a jury trial.”
“Indeed, since government officials spend more time out of office than in it, if subsequent impeachment were constitutional, one would expect to see it more often than impeachment of sitting officials.”
“It would be like prosecuting dead people for crimes, and punishing their estates with fines, because otherwise people could “escape accountability” by committing suicide.”
“Even if concern about strategic resignation were valid, it would not mean that the Senate should be able to try people who did not resign to avoid responsibility. Trump left office not through any gamesmanship, but at the natural end of his term. It was the Senate, not Trump, that strategically choose to delay the start of the process until he left office.”
“Supporters of trying Trump ignore the far greater scope of possible abuses and absurdities that their position would lead to. In their view, the impeachment power it is actually unlimited in time; the Constitution contains no statute of limitations. Congress could impeach someone who held office 50 years ago, for acts long forgotten. New congressional majorities could terrorize former office holders long after their time in public life. Or Congress could undermine checks and balances by waiting for officials to leave office—when they may be less able to defend themselves—to commence the process. Surely this is not what the Framers intended.”
“[…] a Senate trial is, as the Constitution emphasizes, an exceptional procedure: it is the only situation in which someone can be tried for a crime without the benefit of a jury. The Sixth Amendment’s requirement of a jury trial is broad and clear. The basic rules of criminal law require construing legal uncertainties in favor of a defendant. Donald Trump is hated by many for undermining constitutional norms. But the desire to remove his influence from politics should not be turned into an occasion for doing the same.”
How a Russian Nationalist Named Alexei Navalny Became a Liberal Hero by Alexey Sakhnin (Jacobin)
“He became the country’s main fighter against corruption. He would buy small amounts of shares in large state-owned companies and thus get access to their documents. On this basis, he conducted and published high-profile investigations. Many of them were brilliant journalistic work — though some critics suspected that Navalny was simply involved in the “media wars” among rival financial-industrial groups, receiving “orders” from them and information that compromised their competitors.”
“[…] across Russia, popular opinion has shifted noticeably to the left. In line with this, Navalny has changed the language he uses to describe corruption. Now he is discussing not so much the inefficiency of the state as social inequality. He compares the luxury of Russian oligarchs and officials to the poverty of ordinary people.”
“Interoperability is the default state of the world. Anyone’s charcoal will burn in your barbecue, just as anyone’s gas will make your car go. Any manufacturer can make a lightbulb that fits in your light-socket and any shoes can be worn with any socks.”
“Interoperability is the default state of the world. Anyone’s charcoal will burn in your barbecue, just as anyone’s gas will make your car go. Any manufacturer can make a lightbulb that fits in your light-socket and any shoes can be worn with any socks. Some of this is down to standardization: manufacturers, academics, regulators, and interested parties gather in “standards development organizations” to make this process simpler, describing the canonical direction and spacing of a lightbulb-thread, or the syntax of an HTTP request, or the fittings on the underside of your toilet.”
“Companies like high switching costs. For a would-be monopolist, the best product is one that’s seductively easy to start using and incredibly hard to get rid of.”
“Leaving Facebook in the 21st century is like my grandmother leaving the USSR in the 40s: you can go, but your friends and loved ones are all held hostage behind Zuckerberg’s Iron Curtain, so leaving Facebook means leaving your communities, your relationships.”
“Google wants to ensure that you won’t leave the company or its products and services. It could improve its retention by making you so delighted with its offerings that you never consider leaving – but a surer, cheaper way is to interweave its products and services with your life: making sure that your kid can’t go to a public school without creating a Google account; embedding Google search in your mobile OS; releasing web- and app-development frameworks for third parties that quietly harvest the data of their users and send them to Google.”
“Without interoperability, your choice is “take it or leave it”: if the app store blocks an app you want, the price of getting that app is throwing away your phone, all its apps, and some or all of the data you’ve painstakingly input into your phone. That unauthorized app needs to be pretty darned good before anyone would pay such a high price for it.”
“Bunching together copyrights and trademarks and patents and other rules wasn’t particularly useful, since these are all very different legal regimes. On those rare instances in which all of these laws were grouped together, the usual term for them was “creator’s monopolies” or “author’s monopolies.””
“It’s not about giving Coca-Cola the exclusive right to use the work “Coke” – it’s about deputizing Coca-Cola to punish crooks who trick Coke drinkers into buying knockoffs. Coke’s trademark rights don’t cover non-deceptive, non-confusing uses of its marks, even if these users harm Coca-Cola, because these do not harm Coke drinkers.”
“When you look at how “IP” is used by firms, a very precise – albeit colloquial – meaning emerges: “IP is any law that I can invoke that allows me to control the conduct of my competitors, critics, and customers.” That is, in a world of uncertainty, where other people’s unpredictability can erode your profits, mire you in scandal, or even tank your business, “IP” is a means of forcing other people to arrange their affairs to suit your needs, even if that undermines their own needs.”
“Through the past four decades of massive consolidation in every industry, a consensus has emerged among the shareholder and managerial classes that these escape valves are defects in otherwise excellent laws, and they have set to work creating legal precedents, new laws, and new legal tactics to jam these valves shut.”
“If you think you don’t have enough copyright, it’s hard to go to Congress or Parliament and demand an expansion of your regulatory monopoly – far more pleasant is demanding help in defending your “property.””
“However, there are actual, market-power monopolies in the entertainment industry: the single movie-theater chain that controls the vast majority of cinema screens (AMC, which may be bankrupt or a part of Amazon by the time you read this); the three record labels, four movie studios, and five publishers (maybe four by the time you read this); the single national brick-and-mortar bookstore chain and the single global online bookseller (which also effectively owns the audiobook market).”
“[…] any author who wants to access those readers will have to do so on Amazon’s terms, turning over the power of their “author’s monopoly” to be used in Amazon’s “market power monopoly” arsenal. Give authors more copyright – a stronger monopoly – and Amazon will seize that too, as a condition of reaching the audience Amazon has imprisoned in its walled garden.”
“The unblinking eye of the software enforcement system is always watching, ready to discipline you for your lack of consideration for its shareholders’ bottom line.”
“From this, they concluded that the mountaineers survived the initial crush of snow, cutting their way out of the tent, although some of them were seriously injured. But if they’d escaped a relatively small avalanche, why would they flee over half a mile away, instead of sticking around to dig out their supplies, especially their boots? Investigators found the group had actually stashed another set of supplies in the forest, so perhaps they’d set out for them in a panic. “You start to cut the tent from the inside to get out,” says Gaume. “You see there was an avalanche, and then you might be afraid of a second avalanche. And so they may have decided that the best option would probably be to go to the forest, make a fire, and try to find the supply.”
“But, clad in little clothing, they didn’t survive more than a few hours in the biting cold. They had no way of knowing the intricate dynamics of a slab avalanche, and that, shocked as they were, it may have been safe to dig out their supplies and move along.”
“While this new slab avalanche theory actually has scientific rigor to it, it remains exactly that: a theory. After all, no eyewitnesses survived. “I want to be clear that we do not claim that we solve the mystery,” says Gaume. “I mean, no one wants this mystery to be solved in Russia. This is part of the Russian lore.””
“The central insight of fusionism is that the common good is best achieved when the state stays focused on protecting rights and liberties, leaving individuals and voluntary associations to do the rest. To be clear, there is nothing easy about that answer.
“The post-liberal temptation is to believe that government power can be a substitute for the hard labor of institution building and cultural change. It isn’t. The solution must begin at home—on the front porch, around the kitchen table, and in the mirror. The law is not a magic wand. There are no magic wands, and there is no shortcut to the good society.”
In a society that’s failed to have any moral character for so long, there’s honestly nothing else for it but to enforce morality with laws until we learn better. Just letting the vultures rip apart the corpse until we can teach it the error of its ways is not working. We need a crutch to help us along—or a weapon.
Other societies—e.g. Switzerland—don’t have a payday-loan industry because we take care of our people. First of all, no-one even thinks of the idea and, second of all, there are fewer people to take advantage of.
“To call on reporters to stop using the SPLC as a credible source for hate groups based upon its express decision to forfeit credibility for the cause is too much to expect. Reporters don’t know any better, don’t have the time or will to find out and, frankly, are likely to share the SPLC’s ideological bias. And, of course, the public only knows what it’s told. While the SPLC should never have been accepted as the indisputable arbiter of good and evil groups, as its determinations never reflected more than its own views, it at least demonstrated some degree of ideological humility in the past. That legacy is now dead, yet the SPLC will continue to feed off it and use its reputation to further its cause rather than be an honest broker.”
“Joe Biden talks with Samantha Power during the 69th session of the United Nations General Assembly at UN headquarters on September 26, 2014 in New York City. (Andrew Gombert-Pool / Getty Images)”
This picture is from six years ago. It’s an accidental renaissance picture for sure. I’m not sure what Joe’s chuckling at but Power’s definitely having an orgasm. They probably just ordered the UN to approve some bombing campaign or other.
“Recent events have magnified some of the cost we’re paying. In January, Facebook and Twitter suspended the then-president of the United States from the platforms. I’ve little sympathy for Donald Trump, who strikes me as an uncouth narcissist, but since I’m a Danish citizen living in Denmark, I don’t think that I ought to have much of an opinion about American politics.
“I do think, on the other hand, that the suspension sets an uncomfortable precedent.
“Should we let a handful of tech billionaires control essential infrastructure? This time, the victim was someone half the world was glad to see go, but who’s next? Might these companies suspend the accounts of politicians who work against them?
“Never in the history of the world has decision power over so many people been so concentrated. I’ll remind my readers that Facebook, Twitter, Google, etcetera are in worldwide use. The decisions of a handful of majority shareholders can now affect billions of people.
“If you’re suspended from one of these platforms, you may lose your ability to participate in school activities, or from finding your way through a foreign city, or from taking part of the democratic discussion.”
Either that or we, once again, forbid the use of these free-as-in-beer-but-not-as-in-speech platforms by entities charged with our lives. Stop using WhatsApp to coordinate public schools. Stop using Facebook for same.
Or regulate it and maybe nationalize it.
“When a utility becomes important to the functioning of society, a sensible government steps in to regulate it to ensure the further smooth functioning of society.
“I think that the services offered by Google, Facebook, and Twitter are fast approaching a level of significance that ought to trigger government regulation.
“I don’t say that lightly. I’m actually quite libertarian in my views, but
I’m no anarcho-libertarian. I do acknowledge that a state offers essential services such as protection of property rights, a judicial system, and so on.”
“Programmers, employees of those companies, wrote the algorithms. They experimented and tweaked those algorithms to maximise ‘engagement’. Humans are continually involved in this process. Editing takes place.
“I think it’s time to stop treating social media networks as platforms, and start treating them as publishers.”
Science & Nature
New study: A zero-emissions US is now pretty cheap by John Timmer (Ars Technica)
“By building a model of the energy market for the entire US, the researchers explored what it will take to get the country to the point where its energy use had no net emissions in 2050—and they even looked at a scenario where emissions are negative. They found that, as you’d expect, the costs drop dramatically—to less than 1 percent of the GDP, even before counting the costs avoided by preventing the worst impacts of climate change. And, as an added bonus, we would pay less for our power.”
“[…] it’s clear that we’ll need quite a bit beyond that, since the research team estimates that per-capita energy use has to decline by about 40 percent in the next 30 years to reach carbon neutrality.”
“The typical scenario would involve about 3.2 terawatts of new capacity, almost all of it in the form of wind and solar power. The good news is that doing this is relatively cheap. The researchers estimate that the net cost of the transformation will be a total of $145 billion by 2050, which works out to be less than a half-percent of the GDP that year.”
“Part of the reason it is so cheap is because reaching the goal doesn’t require replacing viable hardware. Everything that needs to be taken out of service, from coal-fired generators to gas hot-water heaters, have finite lifetimes. The researchers calculate that simply replacing everything with renewables or high-efficiency electric versions will manage the transition in sufficient time.”
“Similar things are true with batteries; the periods when demand outstrips capacity are expected to be so rare that it doesn’t make economic sense to build that many batteries to cover them.”
“Instead, gas plants will simply dump their carbon emissions into the sky. This ends up being carbon neutral because we’ll still need some liquid fuels for things like air travel, and we’ll make these with carbon pulled back out of the atmosphere, combined with hydrogen produced from water during periods of excess renewable supply. The researchers estimate that we’d require 3,500 terawatts just to make enough hydrogen—roughly the same amount of electricity we make currently.”
“The only scenario in which nuclear power makes economic sense is the one in which land use is limited. This also drives more wind offshore and relies on fossil fuel plants with carbon capture.”
“Going entirely renewable actually forces much higher levels of carbon capture to ensure that fuel needs could be met without any fossil fuels. And going net negative involves a variety of carbon capture and biofuels, with substantial land use as a result of the latter.”
““The net cost of deep decarbonization, even to meet a 1°C/350 ppm trajectory,” they write, “is substantially lower than estimates for less ambitious 80 percent by 2050 scenarios a few years ago.””
“Now, even if we go for deep decarbonization, we’ll be investing in the future. It will cost money to get there, but we’ll have lower future energy costs if we pay the price upfront—as well as improved health and a more stable climate.”
“WebMD solves this by never giving the tiniest shred of useful information to anybody.”
“This is actually a widespread problem in medicine. The worst offender is the FDA, which tends to list every problem anyone had while on a drug as a potential drug side effect, even if it obviously isn’t. This got some press lately when Moderna had to disclose to the FDA that one of the coronavirus vaccine patients got struck by lightning; after a review, this was declared probably unrelated.”
“The essence of Moloch is that if you want to win intense competitions, you have to optimize for winning intense competitions − not for some unrelated thing like giving good medical advice. Google apparently has hard-coded into their search algorithm that WebMD should be on the front page for any medical-related search; I would say they have handily won the intense competition that they’re in. They must have placated a wide variety of stakeholders and fought off a wide variety of attackers; each of those victories took a minor change to their medical information or their procedures for producing medical information. Repeat a thousand times, and they’re on top of the world, and also every diagnosis is “cancer” and every drug’s side effects are “everything”.”
“Everyone has to make their own compromise between morally-pure-but-useless and tainted-but-useful, and I think Fauci comes out better than many.”
“When Zvi asserts an opinion, he has only one thing he’s optimizing for − being right − and he does it well. When the Director of the CDC asserts an opinion, she has to optimize for two things − being right, and keeping power. If she doesn’t optimize for the second, she gets replaced as CDC Director by someone who does.”
“I realize it doesn’t sound like it, but I’m trying to excuse the CDC here. I’m not just saying they’re corrupt. I’m saying they have to deal with the inevitable amount of corruption which it takes to be part of a democratic government, and they’re handling it as well as they can under the circumstances.”
“know a lot of people who have turned into the mask they put on to succeed, just because it’s easier that way.”
“I think Weyl thinks of the world like this. Some experts make a plan. But experts are often biased or corrupt. So if we expose the plan to lots of democratic feedback, then the people (who aren’t biased or corrupt), will drag it in the direction of being better. Sometimes this is true. But other times I use a different model. Some experts make a plan. Experts are sometimes unbiased and not-corrupt, at least insofar as it’s possible for anyone to be unbiased and non-corrupt in this world. If you expose the plan to politics, the politics will drag it in the direction of being worse. Every feedback channel you open up is a way for somebody to attack you.”
“If you’re planning the coronavirus response, maybe the best thing you can do is lock Zvi in a cave completely incommunicado and make him write one for you. The moment there’s a gap in the cave, thousands of lobbyists and activists and politicians will rush in, trying to sue him or bribe him or threaten him or guilt him into changing it to favor their constituency. If he has the slightest shred of self-preservation, the end result will be some balance between the good plan he would have written earlier, and the stuff he needs to include to avoid getting sued or fired or cancelled or universally-loathed or mobbed.”
“What’s the best form of government? Benevolent dictatorship, obviously, just get the best person in the country and let her fix everything. But everyone realizes this is easier said than done; the procedure to pick the best person is corruptible. At one point we tried a very simple best-person-picking procedure that really should have worked and ended up choosing Donald Trump as the best person. I’m still not really sure what went wrong there, but apparently this is really hard.”
“What I sometimes call Marx’s Fallacy is that if we burnt down the current system, some group of people who optimized for things other than power would naturally rise to the top. Wrong. People who most brutally and nakedly optimized for power would gain power; that’s what “optimize” means.”
“I think our system for producing legibly-mediocre people is a good start. It doesn’t always pick the most trustworthy people. But it almost always gets someone in the top 50%, sometimes the top 25%. There are few biologists who deny evolution, few epidemiologists who think vaccines don’t work, and few economists who are outright communists.”
“Anthony Fauci is neither Attila the Hun nor Trofim Lysenko. He’s a kind of bumbling careerist with a decent understanding of epidemiology and a heart that’s more or less in the right place. The whole scientific-technocratic complex is a machine which takes Moloch as input and manages − after spending billions of dollars and the careers of thousands of hard-working public servants − to produce Anthony Fauci as output. This should be astonishing, and we are insufficiently grateful.”
“You may have also noticed the nsfs filesystem at /run/snapd/ns/audacity.mnt. This is a byproduct of the fact that snaps aren’t just containerized in the sense of their individual squashfs filesystems—their code is also executed inside Linux containers, which minimizes their ability to interact (potentially harmfully) with other running processes they have no business touching.”
“So the actual snap we downloaded is audacity_748.snap. It’s mounted at /snap/audacity/748, and the contents of that mountpoint essentially look like a nearly entire miniature Linux filesystem.”
“This approach brings some significant advantages—since everything’s a snap, everything runs in a container, and (at least theoretically) maximally isolated from everything it has no business touching. Since the default is full containerization, devs have to go out of their way to breach the containers when they need to—in sharp contrast to the traditional Linux way, in which everything gets to touch everything else unless you add SELinux or AppArmor protection layers.”
“A fleet of identical hardware can be expected to respond to fleetwide software upgrades very predictably—especially so, when there isn’t a traditional “upgrade” process that strews files all over a read/write filesystem and can be interrupted in the middle of its process (such as by power outage) with unpredictable results.”
“There can also be some performance hassles, typically revolving around application startup times—we’ve seen the snap version of a complex package such as the Gimp photo editor take four to five times as long as the deb version to launch.”
“If you’ll recall, I left a lot unsaid when I discussed writing posts. In particular, how do I publish them to interested parties. This is where we start to apply policies. Part of the process of adding a post is to figure out what timelines it should go to.”
“In particular, how do I publish them to interested parties. This is where we start to apply policies. Part of the process of adding a post is to figure out what timelines it should go to. By moving most of the cost to the write side, we drastically reduce the overall complexity. Furthermore, it also make a lot more sense, given that most posts aren’t going to have a wide blast radius.”
“The key here is the whole manner in which this works is done via selecting what we’ll publish to. Further more, you can see that a user have multiple timelines, and in the case of a mention, we can apply additional policies to see how the post gets routed. This is complex and often changing, but it also happens a lot less often than reads. So it is a net benefit to move all the costs to the write side.”
“Another thing to notice in this case is how we handle a reply. A reply it just appended to the timeline of the post. In other words, it is timelines all the way down. We want to have a single simple abstraction to handle as much of the system as we want.”
“The purpose of the Public Timeline, for example, is to show you the front page of the site, how much data back do we need to keep? Is there a reason to keep your timeline from three years ago? The answer is probably no. We can keep the public timeline at a certain size and likely benefit from a lot of space savings. On the other hand, the replies for a post can be quite interesting, and while they can grow very big, it probably make sense to never trim them.”
“We can handle that easily enough using two stage approach. First, all the new post ids appended to a timeline are written in a “loose” form. Each one with each own entry. Once we hit a certain limit (128, for example), we know that this is likely to grow bigger. We can grab the loose post ids in the timeline and gather them into a section. A section is an independently addressed part of the timeline. The idea is that we gather all of the post ids currently loose in the timeline, write them into a single object and compress that. Then we use the hash of the resulting object to as the key to an object store.”
“It is possible that a compressed section will have an id that also appears in the loose portion of the timeline. The responsibility to handle such a scenario is on the client code, which is able to do so far more easily than the server side portion.”
“And because I’m driving this from the client, it is very easy for me to scale. Throwing the data into object store like S3 means that I can get both CDN support easily and my scaling issue is now: “serve a lot of small files”, which is a very well understood problem.”
“[…] programming properly should be regarded as an activity by which the programmers form or achieve a certain kind of insight, a theory, of the matters at hand. This suggestion is in contrast to what appears to be a more common notion, that programming should be regarded as a production of a program and certain other texts.”
“During the design phase group B made suggestions for the manner in which the extensions should be accommodated and submitted them to group A for review. In several major cases it turned out that the solutions suggested by group B were found by group A to make no use of the facilities that were not only inherent in the structure of the existing compiler but were discussed at length in its documentation, and to be based instead on additions to that structure in the form of patches that effectively destroyed its power and simplicity. The members of group A were able to spot these cases instantly and could propose simple and effective solutions, framed entirely within the existing structure. This is an example of how the full program text and additional documentation is insufficient in conveying to even the highly motivated group B the deeper insight into the design, that theory which is immediately present to the members of group A.”
“The conclusion seems inescapable that at least with certain kinds of large programs, the continued adaption, modification, and correction of errors in them, is essentially dependent on a certain kind of knowledge possessed by a group of programmers who are closely and continuously connected with them.”
“What characterizes intellectual activity, over and beyond activity that is merely intelligent, is the person’s building and having a theory, where theory is understood as the knowledge a person must have in order not only to do certain things intelligently but also to explain them, to answer queries about them, to argue about them, and so forth.”
“The notion of theory in the sense used here applies not only to the elaborate constructions of specialized fields of enquiry, but equally to activities that any person who has received education will participate in on certain occasions. Even quite unambitious activities of everyday life may give rise to people’s theorizing, for example in planning how to place furniture or how to get to some place by means of certain means of transportation.”
“The dependence of a theory on a grasp of certain kinds of similarity between situations and events of the real world gives the reason why the knowledge held by someone who has the theory could not, in principle, be expressed in terms of rules.”
“On the Theory Building View of programming the theory built by the programmers has primacy over such other products as program texts, user documentation, and additional documentation such as specifications.”
This has been my experience. Even were it possible to document sufficiently, a novice will not be able to find answers. They will bolt something on that the do understand. In the end, you have a truck pulled by a team of horses because no-one knows what gasoline is.
This happened in one product I’ve returned to after 15 years. The interim developers didn’t understand the metadata programming approach (not really) and ended up just redefining everything in a second and third model, resulting in bizarreness like having three full modules that all describe addresses, people, and so on. In another project that’s also almost 13 years old, that isn’t happening because I’m still involved—I possess the “Theory” of how the program was built and can make quick and simple extensions.
“Thus the programmer must be able to explain, for each part of the program text and for each of its overall structural characteristics, what aspect or activity of the world is matched by it. Conversely, for any aspect or activity of the world the programmer is able to state its manner of mapping into the program text.”
I would argue that some of this can be captured in documentation, but it must be well-written, engaging, … and is unlikely to be read by any but the most desperate and unlikely to be comprehended by any but the most talented.
“The programmer having the theory of the program is able to respond constructively to any demand for a modification of the program so as to support the affairs of the world in a new manner.”
This is crucial. The programmer knows the limitations and possibilities.
“Designing how a modification is best incorporated into an established program depends on the perception of the similarity of the new demand with the operational facilities already built into the program.”
“One thing seems to be agreed by everyone, that software will be modified. It is invariably the case that a program, once in operation, will be felt to be only part of the answer to the problems at hand. Also the very use of the program itself will inspire ideas for further useful services that the program ought to provide. Hence the need for ways to handle modifications.”
Modifications are the large part of a program’s lifecycle, especially with MVPs and POCs (Minimum Viable Products and Proof-Of-Concepts), which are extremely iterative in nature. In many products I’ve worked on, the whole idea was to hand off the product to another team—who had to be trained as “experts” in the “theory” of the software before they could the project could reasonably be considered as “handed off”.
“it should be noted that such an expectation cannot be supported by analogy with modifications of other complicated man–made constructions. Where modifications are occasionally put into action, for example in the case of buildings, they are well known to be expensive and in fact complete demolition of the existing building followed by new construction is often found to be preferable economically.”
“[…] the expectation of the possibility of low cost program modifications conceivably finds support in the fact that a program is a text held in a medium allowing for easy editing. For this support to be valid it must clearly be assumed that the dominating cost is one of text manipulation. This would agree with a notion of programming as text production. On the Theory Building View this whole argument is false. This view gives no support to an expectation that program modifications at low cost are generally possible.”
“A further closely related issue is that of program flexibility. In including flexibility in a program we build into the program certain operational facilities that are not immediately demanded, but which are likely to turn out to be useful. Thus a flexible program is able to handle certain classes of changes of external circumstances without being modified.”
“[…] flexibility can in general only be achieved at a substantial cost. Each item of it has to be designed, including what circumstances it has to cover and by what kind of parameters it should be controlled. Then it has to be implemented, tested, and described. This cost is incurred in achieving a program feature whose usefulness depends entirely on future events. It must be obvious that built–in program flexibility is no answer to the general demand for adapting programs to the changing circumstances of the world.”
“This observation leads to the important conclusion that the problems of program modification arise from acting on the assumption that programming consists of program text production, instead of recognizing programming as an activity of theory building.”
“On the basis of the Theory Building View the decay of a program text as a result of modifications made by programmers without a proper grasp of the underlying theory becomes understandable.”
“This difference of character of various changes is one that can only make sense to the programmer who possesses the theory of the program. At the same time the character of changes made in a program text is vital to the longer term viability of the program. For a program to retain its quality it is mandatory that each modification is firmly grounded in the theory of it.”
“This problem of education of new programmers in an existing theory of a program is quite similar to that of the educational problem of other activities where the knowledge of how to do certain things dominates over the knowledge that certain things are the case, such as writing and playing a music instrument. The most important educational activity is the student’s doing the relevant things under suitable supervision and guidance.”
“In building the theory there can be no particular sequence of actions, for the reason that a theory held by a person has no inherent division into parts and no inherent ordering. Rather, the person possessing a theory will be able to produce presentations of various sorts on the basis of it, in response to questions or demands.”
“On the Theory Building View the primary result of the programming activity is the theory held by the programmers. Since this theory by its very nature is part of the mental possession of each programmer, it follows that the notion of the programmer as an easily replaceable component in the program production activity has to be abandoned.”
“What should you put into the documentation? That which helps the next programmer build an adequate theory of the program. This is enormously important. The purpose of the documentation is to jog memories in the reader, set up relevant pathways of thought about experiences and metaphors. This sort of documentation is more stable over the life of the program than just naming the pieces of the system currently in place.”
“When people talk about “clean code,” a large part of what they are referring to is how easily the reader can build a coherent theory of the system. Documentation cannot—and so need not—say everything. Its purpose is to help the next programmer build an accurate theory about the system.”
“Another advantage that we can use is the fact that when we get to high numbers, we can reduce the update rate. Consider: We now need to update the post only once every 100,000 likes or shares or once for 10,000 replies. Depending on the rate of change, we can skip that if this happened recently enough. That is the kind of thing that can reduce the load curve significantly.”
“The reason you want to add this complexity is that there is a big difference between all the posts in a social media and the active working set. That tends to be far smaller value and can dramatically reduce the amount of data we need to keep and manage. Assuming that the working set is at 25 millions posts or so across the network seems reasonable, and that amount of data can be easily handle by any server instance you care to use.”
“How are these UIs built for movies? They’re all built with tools like After Effects, Illustrator, Maya/Cinema4D/Houdini. The UIs aren’t responsive, they aren’t accessible, they aren’t populated with real data, and they don’t have the real-time resource constraints that real UIs have. They’re all rendered out into video files that can take minutes to render a single frame.”
“With these two new APIs [Houdini’s Paint and Animation Worklets] you can parallelize more JS work than previously possible, but we’re still ultimately bound by the underlying rendering mechanisms of the browser. There’s only one way to get around that, which is working with the GPU itself via WebGL. This is also a requirement for rendering 3D objects and special effects with shaders.”