Search Results for: fertility

On Human Fertility, Part 6

Data Credit: all data in this picture and article came from the CIA factbook. (2018 data)

I write about this once every two years or so. What got me to write this time is this article The Global Fertility Crash. The title is overly sensational, but the article is mostly anecdotal, as it interviews four relatively well-off women about their family sizes and the impact it has had on their lives. To me it wasn’t very informative, and seemed a little behind the curve.

Yes, fertility is falling globally. My guess is that it is falling slower than I have stated in the past, but still falling. Using the CIA Factbook for data, the 2018 total fertility rate for the world is 2.397 births per woman that survives childbearing. That is down from 2.407 in 2016, 2.425 in 2014, 2.467 in 2012, and 2.489 in 2010.? At this rate, the world will be at replacement rate (2.1), somewhere between 2030 and 2050.

This is a story of slow cultural change, mostly stemming from women wanting to be more like men. There are other factors, like reduction of war and disease, rising living standards. More children are living to adulthood, so some reason, why bother to have so many? Why not have one fewer?

I have only seen three answers to that: 1) you can’t trust government security programs if birth rates continue to fall. 2) some don’t trust an ethnic group near them and think it would be wiser to have more people in the future than fewer, and 3) religious faith. The optimism that stems from regular religious worship tends to lead husbands and wives to a few more kids.

But the “one fewer” logic is dominant now. When you see places like Saudi Arabia below replacement rate (2.06), US exceptionalism decreases to 1.87, India decline to 2.40 — something significant is happening.

Now it’s possible that the developed nations, staring at the problems that come from an elderly and shrinking population, may be changing their minds to some degree, and starting to have more children. Take a look at the graphs below:

Data from the CIA Factbook (2018 data)

This next graph expands the southwest corner of the above graph.

Data from the CIA Factbook (2018 data)

Take a look at the light blue line in both graphs. That’s the dividing line between fertility rising and falling. Countries above the line have rising fertility 2010-2018, and countries below the line have falling fertility. You will note that the high fertility nations in 2010 have had falling fertility on average, and low fertility nations have had rising fertility on average. The balance point is at 1.7. Now the nations below 1.7 in 2010 are a smaller portion of the total population than the nations above 1.7 in 2010 — overall fertility has fallen, and is likely to continue to do so. But as I said in the last piece:

I?m chuckling a little bit as I write this, because this [fertility rising in low fertility countries] is an interesting result, and one that I never thought I would be writing when I started this project. ?Interesting, huh? ?My guess is that there is a limit to how much you can get people to reduce family sizes before they begin to question the idea. ?Older parents may say, ?What was that all about?? but children are usually fun and cute when they are little if they are reasonably disciplined.

On Human Fertility, Part 5

I think most of these changes stem from cultural factors and not government incentives. When women conclude that the rewards of society (money, power, approval of peers) go to those with fewer children, that?s a tough cultural idea to overcome. ? Subsidies will not move the needle.

Some husbands and wives may conclude that family life is worth investing in, and they will have one more kid. At present trends, more will conclude that the investment in the future that a child represents is not worth their time, and they will have one fewer kid. Most will just imitate what they see in others, and not think about the issue (or, their issue 😉 ).

To the group having fewer kids, I would tell them that hey are being short-sighted. They should consider their old age. Now, they might be better off financially than those with more kids in their old age, but they will lack key supporters who love them when they are too old to fend for themselves. People without such supporters tend to live less happily, get taken advantage of more often, and lose sanity younger.

And, the future may not be as stable as it is today. Older people rely on stability far more than those who are young. Having young allies is more important when things go bad.

And so I close the article with a note that I am likely to be blessed by my first grandchild next month. I smile and look forward to a future that will hopefully be rich with younger people who love me.

On Human Fertility, Part 5

On Human Fertility, Part 5

Data from the CIA Factbook
Data from the CIA Factbook

========================

I write about this every now and then, because human fertility is falling faster then most demographers expect. Using the CIA Factbook for data, the present total fertility rate for the world is 2.407 births per woman that survives childbearing. That is down from 2.425 in 2014, 2.467 in 2012, and 2.489 in 2010.? At this rate, the world will be at replacement rate (2.1), somewhere between 2035 and 2040. That?s a lot earlier than most expect, and it makes me suggest that global population will top out somewhat below 9?Billion in 2050, lower and earlier than most expect.

Have a look at the Total Fertility Rate by group in the graph above. The largest nations for each cell are listed below the graph. Note Asian nations to the left, and African nations to the right.

Africa is so small, that the high birth rates have little global impact. Also, AIDS consumes their population, as do wars, malnutrition, etc.

The Arab world is also slowing in population growth. When Saudi Arabia at?replacement rate (2.11), you can tell that the women are gaining the upper hand there, which is notable given the polygamy is permitted.

In the Developed world, who leads in fertility? Israel at 2.66. Next is France at 2.07 (Arabs), New Zealand at 2.03, Iceland at 2.01, Ireland at 1.98 (up considerably), UK at 1.89, Sweden at 1.88, and the US at 1.87, which is below replacement. The US?still grows from immigration, as does France.

Most of the above is a quick update of my prior pieces, which have some additional crunchy insights. ?When I look at the new data, I wonder if developed nations might not finally be waking up to the birth dearth. ?Take a look at this graph:

Now, the bottom left is a little crammed. ?What if I expand it?

I did the second graph in order to make the point that nations with fertility below 1.76 in 2010 tended to increase their fertility, while those above 1.76 tended to decrease it. ?Not that you should trust any statistical analysis, but if you could, this is statistically significant at a level well above 99%. ?(Note: this is an ordinary least squares regression. ?Every “nation” is weighted equally. ?If I get asked nicely, I could do a weighted least squares regression which gives heavy weight to China, India and the US, and less weight to Somalia, the West Bank, and Tonga. ?I don’t think the result would change much.)

I’m chuckling a little bit as I write this, because this is an interesting result, and one that I never thought I would be writing when I started this project. ?Interesting, huh? ?My guess is that there is a limit to how much you can get people to reduce family sizes before they begin to question the idea. ?Older parents may say, “What was that all about?” but children are usually fun and cute when they are little if they are reasonably disciplined.

One final note: I’ve been running into a lot of demographic articles of late, but this was the one that got me to write this:?The World’s Most Populous Country Is Turning Gray. ?The barbaric “One Child Policy” of China is having its impact; demography is often destiny. ?That said, over the last six years China’s total fertility rate has moved from 1.54 to 1.60.

As it says in the article:

Births in 2016 reached 17.86 million, the most since 2000, rising by 1.91 million from 2015, the National Health and Family Planning Commission said this month. That still falls short of the official projection. Last June, the ministry estimated there would be an increase of 4 million new births every year until 2020. China will continue to implement the two-child policy to promote a balanced population, the plan said.

Fertility doesn’t turn on a dime. ?When women conclude that the rewards of society (money, power, approval of peers) go to those with fewer children, that’s a tough cultural idea to overcome. ?I would conclude that it will take a lot longer than a single five-year plan to turn around birthrates in China… if they can be turned around at all. ?All across Asia, marriages happen at lesser rates, happen later, and produce fewer children. ?China is one of the more notable examples.

PS — Picky note: the two-child policy in China is only available to a husband and wife where at least one is an “only child.” ?It won’t create a balanced population near replacement rate, as everyone else must have only one child (with exceptions).

On Human Fertility, Part 4

On Human Fertility, Part 4

Data Credit: CIA FactbookI write about this every now and then, because human fertility is falling faster then most demographers expect. Using the CIA Factbook for data, the present total fertility rate for the world is 2.425 births per woman that survives childbearing. That is down from 2.45 in 2013, 2.50 in 2011, and 2.90 in 2006. At this rate, the world will be at replacement rate (2.1), somewhere between 2025 and 2030. That?s a lot earlier than most expect, and it makes me suggest that global population will top out at 8.5 Billion in 2050, lower and earlier than most expect.

Have a look at the Total Fertility Rate by group in the graph above. The largest nations for each cell are listed below the graph. Note Asian nations to the left, and African nations to the right.

Africa is so small, that the high birth rates have little global impact. Also, AIDS consumes their population, as do wars, malnutrition, etc.

The Arab world is also slowing in population growth. When Saudi Arabia is near replacement rate at 2.17, you can tell that the women are gaining the upper hand there, which is notable given the polygamy is permitted.

In the Developed world, who leads in fertility? Israel at 2.62. Next is France at 2.08 (Arabs), New Zealand at 2.05, and the US at 2.01,?slightly below replacement. We still grow from immigration, as does France.

Most of the above is a quick update of my prior piece, which has some additional crunchy insights. ?This evening, I would like to highlight two articles that I saw recently — one on troubles with municipal pensions, and one on how some areas of China are dying. ?They are at root the same story, but with different levels of potency.

Let me start with the?amusing question where?Arnold Schwarzenegger asks Buffett via CNBC what can be done to solve the municipal defined benefit pension problem, which Becky Quick then asks Buffett. ?For the next 80 seconds, Buffett says it is a messy problem created by politicians that voted for high municipal pensions, because future generations would pay the bill, and not current taxpayers. ?The politicians that voted for them are long gone. ?Buffett offers no solutions, and I don’t blame him because all of the solutions are ugly. ?Here they are:

  • If state law allows, terminate the current plans and replace them with Defined Contribution plans, or reduce the rates of future accrual. ?If those can’t be done, create a new Defined Contribution plan for all new employees, who will no longer participate in the?Defined?Benefit plans. ?Even the last of these will be fiercely resisted by municipal unions.
  • Cancel the cost of living adjustment, if you can do so legally.
  • Raise taxes — I’m sure younger people will enjoy paying for past services of municipal employees.
  • Impose excise (or something like that) taxes on municipal pension payments, and rebate the money back to the plans.
  • Declare or threaten bankruptcy if you can legally do it, and try to extract concessions from the representatives of pensioners.
  • Amend the state constitution to change the status of pension benefits, including adding an?exception adding legality to adjust benefits after the fact. (ex post facto)

Don’t get me wrong. ?I don’t think the radical solutions could/would ever be done, and the National government would probably slap down any state that actually tried something draconian. ?Remember, states are practically administrative units of the national government. ?States’ rights is a nice phrase, but often very empty of power.

Here are some non-solutions:

  • Float pension bonds — just a form of leverage, substituting a fixed liability for a contingent liability, and assuming that you can earn more than the?rate paid on the pension bonds.
  • Invest more aggressively. ?Sorry, taking more risk won’t do it. ?Returns are only weakly related to risk, and often taking high risks leads to lower returns. ?The returns you are likely to get depend mostly on the entry prices you pay for the underlying cash flow streams in question.
  • Invest in alternative assets. ?Sorry, you are late to the game. ?Alternatives offer little more than conventional assets at present, and they carry high fees and illiquidity.
  • Adjust the discount rate, or salary increase rate assumption. ?That may make the current problem look smaller, but it doesn’t change the underlying benefits to be paid, or the returns the assets will earn. ?If anything, the assumptions are too aggressive now, and plan assets are unlikely to return much more than 4%/year over the next 10 years.

Buffett gave one cause for the problem, but there is one more — if the US population were growing rapidly, there would be a larger base of taxpayers to spread the taxes over. ?Diminished fertility feeds into the problems in the states, as well as other social insurance schemes, like Social Security and Medicare. ?You could loosen up immigration to the US, particularly for younger, wealthy, and or/skilled people, but that has its controversial aspects as well.

Here’s another way of phrasing it — it’s difficult to create workers out of thin air. ?Governments would like nothing better than to?have more working age people magically appear. ?It would solve the problem. ?Alas, those decisions were largely made 20-40 years ago also. ?There is even competition now for the best immigrants.

That brings me to the article on China. Rudong, a city in China where the one-child policy began, is now an elderly place with few younger people to take care of the elderly. ?Kind of sad, even if the problem was partially self-inflicted, and partially inflicted by conceited elites who thought they were doing a good thing.

A few?quotations from the article:

?China will see more places like Rudong very soon,? said Wang Feng, a professor of sociology at the University of California at Irvine. ?It?s a microcosm of the rapid demographic and economic transformation China has been experiencing the last decades. There will be more ghost villages and deserted or sleepy towns.?

also:

?China is quickly turning gray on an unprecedented scale in human history, and the Chinese government, even the whole Chinese society, is not prepared for it,? Yi said. ?In many places, including my hometown in western Hunan, it?s hard to find a young man in his 20s or 30s.?

and also:

What?s different in China is that the one-child policy accelerated the process, removing hundreds of millions of potential babies from the demographic pool. China?s old-age dependency ratio ? a measure of those age 65 or over per 100 of working age ? is set to triple by 2050, to 39.

The one-child policy created possibly the sharpest demographic shift in the world. ?It is largely irreversible; once women as a culture stop having children, they don’t start having more when benefits are offered or penalties are lowered. ?It would take a big change in mindset in order to get that to shift, like a religious change, or the aftermath of a big war.

The Christians are growing in China, and many of them would have larger families, but even if Christianity?gets a lot bigger, and the Party tolerates it, that won’t come fast enough to deal with the problems of the next 30 years, but it could help with the problems after that.

In closing, there is enough pity to go around. ?Pity for the elderly that will not get taken care of to the degree that they would like. ?Pity for those younger who cannot afford the time or monetary costs of taking care of the elderly.

I think the only solution to any of this would be shared sacrifice, where everyone gets hurt somewhat. ?My question would be what places in the world have the requisite maturity to?achieve such a solution. ?Optimistically, the answer would be many, but only after a lot of sturm und drang.

On Human Fertility, Part 3

On Human Fertility, Part 3

I write about this every now and then, because human fertility is falling faster then most demographers expect.? Using the CIA Factbook for data, the present total fertility rate for the world is 2.45 births per woman that survives childbearing.? That is down from 2.50 in 2011, and 2.90 in 2006.? At this rate, the world will be at replacement rate (2.1), somewhere between 2020 and 2030.? That?s a lot earlier than most expect, and it makes me suggest that global population will top out at 8.5 Billion in 2030, lower and earlier than most expect.

Have a look at the Total Fertility Rate by group:

On human fertility 3

The largest nations for each cell are listed below the graph.? Note Asian nations to the left, and African nations to the right.

Africa is so small, that the high birth rates have little global impact.? Also, AIDS consumes their population, as do wars, malnutrition, etc.

The Arab world is also slowing in population growth.? When Saudi Arabia is near replacement rate at 2.21, you can tell that the women are gaining the upper hand there, which is notable given the polygamy is permitted.

In the Developed world, who leads in fertility?? Israel at 2.65.? Next is France at 2.08 (Arabs), and the US and New Zealand at 2.06, slightly below replacement.? We still grow from immigration, as does France.

Quoting from my prior piece, why is this happening?? There are many reasons why the total fertility rate is declining:

  • Educating females makes many of them want to have fewer kids, whether the reason is pain, effort, wanting to work outside the home, etc.
  • Contraception is more widely available.
  • The marriage rate is declining globally.? Willingness to have children is positively correlated with marriage.
  • Governments provide an illusion of support, commonly believed, that the government can support people in their old age, so people don?t have kids for old age support.

The rapidly slowing rate of childbearing will have global population peak in the early 2030s at a level in the lower 8 billions, unless there is some further change to attitudes on children that makes people have more or even fewer kids.

Some of those changes may come from:

  • governments looking to stem a shrinking population that is causing a future problem with their social welfare programs.? (Note: in general, whatever governments offer, people don?t have materially more kids. Once women are convinced that kids are more of a burden than an advantage, they do not easily shift from that view, even if that view is wrong.)
  • Various religious leaders realizing that the women are not with the program of growing their ranks, where contraception has become quietly common.? I am speaking mostly of Catholics and Muslims here.
  • Abortion, especially for sex selection reasons becomes more or less common.? Growth in future population depends heavily on the level of fertile women, and if they are being killed or not at birth in places like China, India, the satellite countries of the former Soviet Union, etc? fewer women means a lower growth rate, and unhappier societies 20+ years out.

As I close, I want to list a few nations that are below replacement rate, that would surprise some people:

  • Libya
  • Vietnam
  • Iran
  • Qatar
  • Lebanon
  • Chile
  • Uzbekistan
  • Brazil
  • Thailand
  • Russia
  • Azerbaijan
  • Georgia
  • Tunisia
  • North Korea
  • South Korea

And those the are close to replacement rate:

  • Bangladesh
  • South Africa
  • Peru
  • Burma
  • Morocco
  • Colombia
  • Turkey
  • Indonesia
  • UAE
  • Saudi Arabia (Wahabism is less strong than believed)
  • India
  • Mexico
  • Venezuela
  • Argentina

One last point, because the demographics profession has been slow to pick up on these shifts, if present trends continue, within 10 years, I believe you will see a scad of articles talking about the likely leveling off of global population and even future shrinkage of global population, and the effects thereof.? Always something to worry about?

Libya
On Human Fertility, Part 2

On Human Fertility, Part 2

I write about this every now and then, because human fertility is falling faster then most demographers expect.? Using the CIA Factbook for data, the present total fertility rate for the world is 2.47 births per woman that survives childbearing.? Last year it was 2.50, and in 2006 it was 2.90.? 2.10 is replacement rate.? At the current trend, the world will be at replacement rate in 2022.? That’s a lot earlier than most expect, and it makes me suggest that global population will top out at 8.5 Billion in 2030, lower and earlier than most expect.

Have a look at the Total Fertility Rate by group:

The largest nations for each cell are listed below the graph.? Note Asian nations to the left, and African nations to the right.

Africa is so small, that the high birth rates have little global impact.? Also, AIDS consumes their population, as do wars, malnutrition, etc.

The Arab world is also slowing in population growth.? When Saudi Arabia is near replacement rate at 2.26, you can tell that the women are gaining the upper hand there, which is notable given the polygamy is permitted.

In the Developed world, who leads in fertility?? Israel at 2.67.? Next is the US at 2.06, slightly below replacement.? We still grow from immigration.

Quoting from my prior piece, why is this happening?? There are many reasons why the total fertility rate is declining:

  • Educating females makes many of them want to have fewer kids, whether the reason is pain, effort, wanting to work outside the home, etc.
  • Contraception is more widely available.
  • The marriage rate is declining globally.? Willingness to have children is positively correlated with marriage.
  • Governments provide an illusion of support, commonly believed, that the government can support people in their old age, so people don?t have kids for old age support.

The rapidly slowing rate of childbearing will have global population peak in the early 2030s at a level in the lower 8 billions, unless there is some further change to attitudes on children that makes people have more or even fewer kids.

Some of those changes may come from:

  • governments looking to stem a shrinking population that is causing a future problem with their social welfare programs.? (Note: in general, whatever governments offer, people don’t have materially more kids. Once women are convinced that kids are more of a burden than an advantage, they do not easily shift from that view, even if that view is wrong.)
  • Various religious leaders realizing that the women are not with the program of growing their ranks, where contraception has become quietly common.? I am speaking mostly of Catholics and Muslims here.
  • Abortion, especially for sex selection reasons becomes more or less common.? Growth in future population depends heavily on the level of fertile women, and if they are being killed or not at birth in places like China, India, the satellite countries of the former Soviet Union, etc… fewer women means a lower growth rate, and unhappier societies 20+ years out.

As I close, I want to list a few nations that are below replacement rate, that would surprise some people:

  • Bahrain
  • Qatar
  • Lebanon
  • Azerbaijan
  • Georgia
  • Tunisia
  • North Korea
  • Uzbekistan
  • Iran
  • Brazil

And those the are close to replacement rate:

  • Turkey
  • Indonesia
  • UAE
  • Saudi Arabia (Wahabism is less strong than believed)
  • India
  • Mexico
  • Argentina

One last point, because the demographics profession has been slow to pick up on these shifts, if present trends continue, within 10 years, I believe you will see a scad of articles talking about the likely leveling off of global population and even future shrinkage of global population, and the effects thereof.? Always something to worry about…

On Human Fertility

On Human Fertility

Fertility

When I gave a presentation to the Society of Actuaries three years ago, I was amazed that the Total Fertility Rate had fallen to 2.9 globally.? I am now amazed that the CIA Factbook estimates that rate at 2.5 for the world on average.

Background: recently I had a disagreement with my father-in-law who is brighter than me.? I alleged that global population growth was declining more rapidly than the politicians/activists were stating.? I suggested that global population would peak out around 2040 at a lower level than many suggest — less than nine billion.

He is brighter than me, but I am more street-smart.? Demographers are trailing indicators, and are slow to revise their forecasts.? There are many reasons why the total fertility rate is declining:

  • Educating females makes many of them want to have fewer kids, whether the reason is pain, effort, wanting to work outside the home, etc.
  • Contraception is more widely available.
  • The marriage rate is declining globally.? Willingness to have children is positively correlated with marriage.
  • Governments provide an illusion of support, commonly believed, that the government can support people in their old age, so people don’t have kids for old age support.

I don’t aim for controversy; it finds me as I try to explain reality.? But the most frosty time I have had in economics was 27 years ago, when I argued to my development economics class that people in the third world were rational in the number of kids that they had, because they had no way to save for their old age.? This was totally at variance with the development economics literature, but was utterly fact-based in terms of the way people behaved. (I got a friendlier reception preaching the Gospel on the UC-Davis quad.)? As people in developing countries have found more peace and stability, and markets allowing for long-term investment, family sizes have declined.

It is my assertion that estimates of peak global population will come sooner than most expect, and at lower levels.? But what would happen to the economy of a world where the total population peaks out and starts to decline? It will be a global Japan.? Per capita growth will slow, and those who are younger will find fewer opportunities to advance as oldsters hang onto their jobs longer.

Personally, I believe that mankind can overcome resource limits.? We’re smart, but we don’t figure out ways to overcome limits until we are forced to do so.? Thus I am not worried about overpopulation or shrinking population.

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Market Dynamics

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Banking

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Around the US

  • MLB’s new pitch clock may reduce player workloads by the equivalent of one game per week. Team managers hope players feel less physical and mental fatigue as a result. https://t.co/psKvJtT7Vg  Will improve focus and rest Mar 31, 2023
  • The world’s most important oil price is about to be transformed for good, allowing crude supplies from west Texas to help determine the price of millions of barrels a day of petroleum transactions https://t.co/MP4MmgkLuI  A sign of US dominance in producing light sweet crude oil Mar 31, 2023
  • Americans returned $212 billion worth of merchandise last year. A host of startups are now working with retailers to the process more efficient — and even profitable https://t.co/slzM3eXCBs  Looks promising. Mar 30, 2023
  • In repairing the damage done by highways that divided communities of color, the US risks creating new disasters https://t.co/i2A57bM4hg  Baltimore got the “worst of all worlds” on this one. Doing nothing or doing the whole thing would have been better. Mar 30, 2023
  • Ken Fisher made a serious investment when he moved his money management firm north from California to Washington seeking a friendlier business climate to house its rapid expansion https://t.co/ueUzpzvQ7i  Low taxes attracts businesses Mar 29, 2023
  • Why there may be no return to ‘normal’ for the U.S. used vehicle market https://t.co/xlYWybXETt  It is a capital-intensive cyclical business. This will eventually normalize. It may even overshoot on the downside. Mar 26, 2023
  • Feral Hogs Are the Invasive Menace You’ve Never Thought About https://t.co/oDxSjznZi1  “Wild hogs destroy crops, uproot landscapes, and spread diseases—and not much is stopping them.” Mar 26, 2023
  • 2 high schoolers say they’ve found proof for the Pythagorean theorem, which mathematicians thought was impossible https://t.co/gXRzswTHO5  I disagree. Proof #4 on this page does not rely on the unit circle. https://t.co/mb0cn3KBXx  Mar 25, 2023
  • @guardian Is the paper available anywhere on the Internet? Mar 25, 2023
  • A new study of nearly 12,000 women finds that getting married brings significant benefits in health and well-being, bolstering the case for marriage as a social good. https://t.co/yIrYcnr4FX  Marriage has great potential for happiness & sadness. Unselfish behavior is crucial. Mar 25, 2023

Artificial Intelligence

  • Several tech executives and top artificial-intelligence researchers, including Elon Musk and AI pioneer Yoshua Bengio, are calling for a pause in the development of powerful new AI tools https://t.co/emJZrXpqiS  This will not happen. Mar 29, 2023
  • Artificial intelligence experts are calling on AI developers to pause training any models more powerful than the latest iteration behind OpenAI’s ChatGPT https://t.co/3euzVgNP2d  Foolish. AIs are inexpensive to create. Trying to control AI is like grasping water w/your hand. Mar 29, 2023
  • Google’s ChatGPT rival Bard is now open for public use https://t.co/rozmsae9A8  Since hosting my moderated chat between Bing and Bard, which went well, Bing no longer allows such chats. https://t.co/KrAqv77b4R  https://t.co/koYUIPXUr2  Mar 29, 2023
  • A new study finds that AI tools could more quickly handle at least half of the tasks that auditors, interpreters and writers do now https://t.co/hEDpTk2TWV  This may be a “use it or lose it” scenario. Mar 29, 2023
  • Introducing Two Friends https://t.co/KrAqv77b4R  A conversation between OpenAI ChatGPT-4 and Bard https://t.co/ohqyZTb15j  Mar 29, 2023
  • Society’s Technical Debt and Software’s Gutenberg Moment https://t.co/5RC0yIdhFO  Thought-provoking commentary on the effect that Large Language Models may have on writing software. Mar 28, 2023
  • The US Federal Trade Commission is paying close attention to developments in AI to make sure it isn’t dominated by major tech players https://t.co/Dp3vicuiV4  Foolish FTC, see “The genie escapes: Stanford copies the ChatGPT AI for less than $600” https://t.co/7VfE1GNtrr  Mar 27, 2023
  • The genie escapes: Stanford copies the ChatGPT AI for less than $600 https://t.co/7VfE1GNtrr  It also implies that $MSFT overpaid for OpenAI. Not only can people build their own models, but they could do it quite cheaply. Mar 26, 2023

Companies and Corporate Life

  • Munich Re has quit the world’s largest climate finance alliance, a step the German company says is necessary to protect itself from legal risks https://t.co/xrnFgjwdii  “German insurer cites the risk of antitrust allegations” There is a fiduciary angle to this also Mar 31, 2023
  • The stock of Charles Schwab is on pace for its worst month in more than 35 years https://t.co/4cvffr5oOx  $SCHW cost of capital rising, and shares continue to fall. Mar 31, 2023
  • Disney is using a Royal Lives Clause to extend its reign over Florida theme parks. https://t.co/rD3Squdbrl  How to create perpetual trusts Mar 31, 2023
  • $AMC rose as much as 18% after the Intersect website reported that Amazon is weighing a possible acquisition of the struggling movie-theater chain https://t.co/CCJNaL2Hx6  Start by buying the $APE units. Mar 29, 2023
  • This Citigroup Preferred Yields 10%. Is It Too Good to Be True? https://t.co/DtIzLn2GuH  There is likely a cheaper way to finance $C. I would not rely on the argument that accounting reasons matter more than economics. Mar 29, 2023
  • The US Air Force’s test of a hypersonic missile was marred by failure to transmit in-flight performance data, sources say https://t.co/Z1kBgR5FyT  $LMT is paid a lot to do this. They should get it right. Mar 29, 2023
  • In financial services, chief information officers are working more closely than ever with chief risk officers to ensure the right tools for analyzing risk are in place https://t.co/H7ORMMU6u7  Hire an investment actuary to eliminate interest rate risk. Follow his advice. Mar 29, 2023
  • How The New York Times managed to avoid ruining Wordle https://t.co/bQdCK6QlXT  In hindsight, The New York Times was a natural buyer. Mar 25, 2023

Non-US

  • Sweden’s construction industry may be facing years of drought as investment in housing plummets https://t.co/dYSThCm4pn  The effects of higher interest rates hit highly levered sectors first. Mar 31, 2023
  • Heard on the Street: The European Union just moved an important step closer to turning its climate ambitions into law. The impact will be felt well beyond the energy industry https://t.co/bAnXYcNrQr  This will be difficult to achieve. Mar 30, 2023
  • France’s financial prosecutor is searching 5 banks as part of a probe into tax fraud and money laundering, according to a statement https://t.co/VnIiCQ8Vlp  European banks are more opaque than US banks. Mar 29, 2023
  • South Korea needs to adopt an “emergency mindset” to reverse its fertility rate that ranks as the lowest in the world, its president says https://t.co/LFvd9pcUSs  Changing a culture is very difficult. Once women think they are only rewarded by external work, kids are a burden. Mar 29, 2023
  • A Russian economy that survived 2022 faces a long-term deep freeze. “There will be no money next year.” https://t.co/BpqFON0AA1  Russia is losing economic vitality, and quickly. Autarky is tough to pull off. It killed the USSR. Mar 29, 2023
  • A significant buying opportunity in Asia—for longer-term investors—could be hiding in plain sight https://t.co/3W02aGynDH  Interesting opportunity. FD: + $EWY Mar 28, 2023
  • @BubbleTIsland When I was young, I was told that Taipei had a lot of air pollution, but indeed, this is beautiful. Perhaps it is the same as America — the 1970s were smoggy. Mar 26, 2023

Commercial Real Estate

  • Shares in German real estate firm Aroundtown slump to an all-time low https://t.co/wZUvArZzVp  Too much debt, and how will the losses get shared with lenders? Mar 31, 2023
  • A 5% writedown on commercial real estate loans would wipe out almost a quarter of the banks’ profits in the European Union with the Nordic region potentially hit the most, Bloomberg Intelligence estimated this week. https://t.co/lqmcOl9KoF  Challenging times. Mar 31, 2023
  • Everything is looking down for Europe’s worst-hit sector: Real estate https://t.co/Q5YpvaAZJy  Too much debt magnifies the effect of changes in property values, rents, etc. Mar 31, 2023
  • Manhattan’s office-vacancy rate is at a record high as new developments add even more space to the struggling market https://t.co/KeLHbyn00B  This will be quite a transition for New York City Mar 31, 2023
  • Signs of stress in commercial property https://t.co/pcmISa2L7s  Looks overdone. Mar 30, 2023
  • Defaults and vacancies are on the rise at high-end office buildings, as remote work and rising interest rates spread pain to more corners of the commercial real-estate market https://t.co/rZHtubWQog  This is like the slow-motion pressure in the Great Financial Crisis w/subprime. Mar 29, 2023

US Politics

  • Trump indictment is going to make US politics even more divisive https://t.co/N28inU5VJE  Really, it stinks that this indictment, which has its own issues, makes it more likely that Trump will be the GOP nominee. Apr 01, 2023
  • Lawyers who have dealt with court-imposed limits on speech, often referred to as gag orders, say Donald Trump should be wary of giving judges cause for concern https://t.co/kcS6YLCZit  Inciting violence could be a reason to do so, or harming the ability for jurors to be neutral Mar 31, 2023
  • Looming changes to Medicare and Medicaid may temper growth at the biggest health insurers. https://t.co/raovXdK9AO  Growth in government reimbursement levels falling Mar 31, 2023
  • The looming failure of the Chips and Science Act shows all that’s wrong with American industrial policy https://t.co/azu23Kk56M  Aside from national defense, there is no reason for industrial policy Mar 28, 2023
  • Rural America Grows Weary of Waiting for Its Mail https://t.co/U3pZWrX5ge  Wish we could remove the current postmaster general… Mar 27, 2023
  • The pandemic split parents over schools. It’s tearing Mentor, Ohio apart https://t.co/ec9PTIVGV5  Schools mirror parenting culture(s). If there are wide differences in parenting cultures, you should expect fractious school board meetings Mar 27, 2023

Employment

  • Accenture says it will cut 19,000 jobs over the next 18 months https://t.co/hLRF41Pxh4  Interesting to see lack of demand for consultants Mar 28, 2023
  • The era of remote work has ended for millions of Americans https://t.co/IVuhIuwZNp  “Share of businesses with workers on-site most of the time neared prepandemic levels in 2022, Labor Department finds” Mar 28, 2023
  • McKinsey is embarking on a rare round of major job cuts, with plans to eliminate about 1,400 jobs https://t.co/GV0xwLtg8p  Interesting place for job cuts. Perhaps demand for their services have declined Mar 28, 2023
  • How to explain the covid baby boom https://t.co/vs4lpSRhGj  Very small boom, but it highlights a shift where those who are better off are more willing to have more kids, particularly when they can work from home. Mar 27, 2023
  • It’s a debate playing out at workplaces: Who should be included in a layoff? The behind-the-scenes process is complicated. https://t.co/cUKUgK0KaL  Answer: it varies a lot. Mar 27, 2023

Cryptocurrencies

  • Tether, the largest stablecoin, is continuing to extend its lead in the battle for supremacy among stablecoins https://t.co/fGveF8ZCt6  A money market fund with no accountability Mar 29, 2023
  • Some banks are rolling out the welcome mat for cryptocurrency firms that found themselves in need of banking services after the downfall of Signature Bank and Silvergate Capital https://t.co/ongomIieAR  Surprising that they want that risk. What will the FDIC & SEC say? Mar 29, 2023
  • US regulator sues top crypto exchange Binance, CEO for ‘willful evasion’ https://t.co/vdXVDZxHR6  KYC AML BSA allegedly violated. Mar 27, 2023
  • A decent rule of thumb is that all cryptocurrency exchanges are doing crimes, and if you’re lucky your exchange is doing only process crimes. https://t.co/RvXJaSKeuu  Maybe peaker plants should be paid a commitment fee like revolving credit agreements @matt_levine Mar 27, 2023

China

  • Chinese creditors are more hesitant to participate in sovereign debt restructuring because multilateral development banks are not offering debt relief, a senior official at China’s central bank says https://t.co/EdJWfijjBk  Chinese lenders want multinationals to eat their losses Mar 27, 2023
  • Beijing wants to show it’s backing private businesses, but Jack Ma’s decision to spend months overseas suggests otherwise. https://t.co/Ojlf1AHllL  A CCP cell inside every significant business. Enterprise free enough to serve the Party. Mar 27, 2023
  • Market confidence remains shaky for investors looking at China, revealing just how much damage has been done to the country’s credibility abroad. Here’s an explainer https://t.co/DMJmZhjXHH  Don’t confuse “rule of law” & “rule by law.” China has the latter: the CCP is not limited Mar 27, 2023
  • Chinese billionaire Jack Ma’s trip home comes as Beijing eases up on a tech crackdown that has hit confidence among private businesses https://t.co/YpXMcFA2Oa  Is the coast clear? Mar 27, 2023

Monetary Policy

  • Money-market mutual funds are proving an irresistible place for investors to park their cash right now instead of banks https://t.co/vAXF0RaoFH  Just lower the rates in the Fed’s reverse repo program. Is the Fed daft? Should have been done a year ago. Apr 01, 2023
  • The Federal Reserve’s preferred inflation gauge rose less than expected last month, and consumer spending stabilized https://t.co/IIC82Pu9ux  Would you rather have a solvency crisis or inflation? Apr 01, 2023
  • Is Japan’s new central banker the next big threat to global financial stability? https://t.co/1JF62TW9AT  Swelling bank balance sheet without economic purpose creates its own problems, as we are learning in the US. QE is not a free lunch Apr 01, 2023

Twitter

  • Elon Musk is upsetting celebrities by tying Twitter’s blue check mark to platform subscriptions https://t.co/auhdGcfbjx  When the service is free, you are the product. Mar 31, 2023
  • Elon Musk Values Twitter at $20 Billion https://t.co/hXbBPOz2JF  Let the banks that lent the $13 billion know that the debt-to-equity ratio went from 42% to 186%. Mar 27, 2023
  • Why advertisers aren’t coming back to Twitter https://t.co/A5vzydhrIU  When Twitter goes broke, the banks will hold an auction. Some entity will buy it for $1B or so, and rebuild it so advertisers will trust Twitter. Or, Musk will re-buy it. Mar 25, 2023

College

  • A majority of Americans don’t believe a college degree is worth the cost, according to a new Wall Street Journal-NORC poll, a new low in confidence in what has long been a hallmark of the American dream https://t.co/mT3jmg3YfV  People are getting more practical about college. Mar 31, 2023
  • College students are about to put a robot on the moon before NASA https://t.co/rLcHpj3ism  Pretty cool, and cost less than $1 million. Mar 30, 2023
  • Relief is expected for Howard University undergrads who have had to deal with questionable conditions living on-campus at some of the school’s dorms https://t.co/OQg94HLk5N  The economics of running a college are difficult. Mar 27, 2023

Space

  • Russia’s Viasat Hack Exposed Satellite Industry’s Security Flaws https://t.co/Vu5wpDoRqU  Scary stuff. Time to start encrypting satellite transmissions Mar 30, 2023
  • Astronomers Were Not Expecting This https://t.co/jjpzfnsTTQ  The universe looks a lot younger than expected. Faraway galaxies look fully formed, as near galaxies do. Mar 25, 2023
  • Russia’s (Civilian) Space Program Is in Big Trouble https://t.co/Ir1z499qzS  Lacks funding. Has increasing numbers of accidents. Even Kazakhstan has foreclosed on Russian space assets in their country for nonpayment on the Baikonur spaceport. Mar 25, 2023

Adani Group

  • Two months on, Hindenburg’s short seller attack has left the Indian tycoon Gautam Adani’s empire reevaluating its ambitions, reverting his focus to core projects https://t.co/C2fRGWNLsG  This is sensible — focus on core businesses & reduce debt Mar 31, 2023
  • In the aftermath of Adani Group’s woes, another sprawling Indian conglomerate—miner Vedanta Resources—looks vulnerable https://t.co/aYQuATQI7y  The bear phase of the credit cycle forces examination of badly-financed assets. Mar 31, 2023
  • Adani execs meet with US investors from BlackRock , Blackstone and Pimco as part of its plans to market some privately placed bonds https://t.co/O8fkBKEd6k  Unless the notes are secured, I don’t see why anyone would buy an 8% yield for 10-20 years from a complex firm like Adani. Mar 29, 2023

Materials Science

  • Snack companies are experimenting with packaging that uses less plastic without sacrificing taste https://t.co/TkTxU0eNFp  The economics of this is challenging Mar 27, 2023
  • Electrical steel, a crucial material used in EV motors, can be less than a quarter of a millimeter thick for the highest grade. It’s in high demand. https://t.co/CYzVkw3xyn  I had never heard of electrical steel before today. Mar 27, 2023

Sorted Weekly Tweets

Picture Credit: David Merkel, with an assist from the YouImagine AI image generator || Twitter bird visits China

Banking

  • Saba Capital’s Boaz Weinstein talks bank CDS; Carvana exchange falters; Evergrande reveals restructuring plan https://t.co/SFUXCBASiZ  Thinks bank sub debt is overpriced in general… Mar 24, 2023
  • US authorities guarantee bank deposits as high as $250,000. That could soon change https://t.co/PHS0cpK0R0  Will solve some short-term problems, and create bigger long-term problems. Mar 24, 2023
  • The banking precedent that matters for where we are now isn’t 2008, but the empire-building a decade earlier https://t.co/wgPsiKSHFC  As I have said before, hand banking regulation back to the states. End interstate banking. I like JP Morgan so much, I want 50 of them Mar 24, 2023
  • Schwab CEO Walt Bettinger says the brokerage giant could continue to operate even if it lost most of its deposits over the next year https://t.co/kZog3PhNBs  “At the end of last year, it was the 10th-largest bank in the US” $SCHW Okay, here is a sizable problem. Negative TBV MTM Mar 23, 2023
  • The Federal Home Loan Bank System issued $304 billion in debt last week. That’s almost double the $165 billion that liquidity-hungry lenders tapped from the Fed https://t.co/LVsV7GAmWD  The FHLBs are the second to last resort lender; there must be demand for funds Mar 21, 2023
  • Treasury Secretary Janet Yellen will tell bankers that the US could intervene again to protect depositors if smaller lenders get into jeopardy https://t.co/U5OUtxgg9p  You can’t have it both ways. Insuring all deposits will lead to bankers taking more risk Mar 21, 2023
  • Silicon Valley Bank was warned by BlackRock that risk controls were weak https://t.co/g544mW9MUa  This article a prime example of what I mean when interest rate risk does not get measured well for banks. 1-2% parallel shift rate rises are not enough! Mar 21, 2023
  • JPMorgan Chase Chief Executive Jamie Dimon is leading discussions with the chief executives of other big banks about fresh efforts to stabilize troubled First Republic Bank https://t.co/IJgU7riYOm  Uninsured deposits have to live somewhere… Mar 20, 2023
  • Treasury Secretary Janet Yellen and Fed Chair Jerome Powell are seeking to reassure investors to halt a slide in financial stocks https://t.co/fAJXDXvTzX  Will it be able to keep uninsured depositors? If so, will they be able to earn money over the cost of their liabilities? $FRC Mar 20, 2023
  • A coalition of midsize US banks asked regulators to extend FDIC insurance to all deposits for the next two years https://t.co/HMueRWZjHk  You could quietly raise the rate you pay on deposits, but don’t seem panicked Mar 20, 2023

Odds & Ends

  • Crypto fugitive Do Kwon, creator of the failed TerraUSD stablecoin, has been arrested in Montenegro https://t.co/oWPI8PUoIt  Lose enough people enough money, and it is likely you will be caught and prosecuted. Mar 24, 2023
  • Excel Never Dies, by @packyM https://t.co/OFjdeIFwV5  It’s the Swiss Army Knife of software. Used carefully, it can do amazing things. Mar 24, 2023
  • Researchers did DNA testing on strands of Ludwig van Beethoven’s hair and found answers to questions about the composer’s health and family history https://t.co/lqEv106yVV  A temperamental genius who was a wreck as a man. Still, there are a lot of unproven aspects to DNA testing. Mar 22, 2023
  • Elon Musk’s global empire has made him extremely powerful — and a major headache for Washington https://t.co/Mj5kZM70X4  How Elon Musk gives many politicians distress in the US Government, while having fun at the same time Mar 21, 2023
  • Here’s a visual guide to how America uses freight trains https://t.co/3g2iB4jfmv  Interesting graphics. Seems that safety improvements reversed around 2010. Mar 21, 2023
  • JPMorgan owned the London Metal Exchange nickel contracts that turned out to be backed by bags of stones rather than metal https://t.co/EewStihuef  Hmm… this *did* lead LME to ask the warehouses to check all the nickel inventories. Mar 21, 2023
  • Forget simple shampoo and conditioner. More consumers are adding extra steps to their showers–enough for the process to last 60 minutes or more. https://t.co/VHfulhcl9v  I realize I am an old guy, but this seems overboard. Mar 21, 2023
  • Why have a drab lawn when you can paint it green? Grass-painting is a growing way to save money and water. Neighbors might be shocked. “One day it’ll be yellow and the next day it’s green.” https://t.co/Chz6qpqH70  I would rather live with my weedy yard, with its many problems. Mar 20, 2023
  • The problem with AirPods and other Bluetooth earbuds? Their tiny, irreplaceable batteries https://t.co/81Wo8v1dOz  You could buy wireless headphones. They are better for your ears as well. Mar 20, 2023

Commercial Real Estate

  • As funding markets seize up, malls are headed for one more shakeout and that may be just what the long-suffering sector needs https://t.co/L9Bsj38U8P  Class A retail should be okay, though there will still be stress Mar 24, 2023
  • Small bank struggles could hit the real estate market hard https://t.co/1JujTvSqwZ  16% of CRE is offices Mar 24, 2023
  • Smaller banks are likely to respond to the crisis of confidence in banks overall by tightening standards and slowing lending to raise capital ratios https://t.co/j7gTP9Kr9L  Especially commercial real estate lending Mar 24, 2023
  • Remote work is starting to hit office rents https://t.co/MDGnDAedFl  Effect is higher where commuting is hard Mar 24, 2023
  • A large number of office defaults could force banks to mark down value of these and other loans https://t.co/bxyTAzZTee  Most of the carnage should be confined to offices, and malls that are not Class A Mar 22, 2023
  • Transcript: Where Stress Is Brewing in the $20 Trillion Commercial Real Estate Market https://t.co/pbWdLkcuZw  @TheStalwart & @tracyalloway did a great interview w/Rich Hill of Cohen & Steers. Offices are in trouble, Malls less so. And, it’s still about location. Mar 20, 2023

Science

  • The Sun Is Stranger Than Astrophysicists Imagined https://t.co/joHsDfna1D  Far more gamma rays than expected, and a big block of spectrum missing. Mar 24, 2023
  • A space object baffled scientists as it zipped through our solar system in 2017. Theories ranged from an asteroid to an alien probe, but a new study offers another idea. https://t.co/HG0lsIqwWb  It’s only a comet Mar 22, 2023
  • Google opens early access to its ChatGPT rival Bard — here are our first impressions https://t.co/zIVLnaXPL5  Bard is coming soon to a screen near you. You can sign up for the waitlist. Mar 22, 2023
  • Space junk getting you down? Just get out of the way https://t.co/8aNEFoA80b  Send up less, decommission more (burn up on re-entry), and dodge junk is the least costly solution Mar 23, 2023
  • A test vehicle unveiled by Chinese carmaker JAC has the battery world buzzing about sodium-ion cells https://t.co/OLMA08ggtH  Has the potential to deliver power at half the cost of lithium ion batteries. Plus: no fire risk. Minus: added weight Mar 21, 2023
  • Here’s everything you need to know about deadly fungus Candida auris, which has spread to more than half of all US states https://t.co/WMS0ixGumM  This one is challenging, as it is resistant to present antifungals & has a death rate of 30-60%. Mar 21, 2023

Culture

  • TikTok’s content moderator backtracks on a promise to stop making employees review the web’s most extreme content https://t.co/e7mAmHs2PN  It would be a rare person who could deal with every type of disturbing content day after day, and stay sane. Mar 25, 2023
  • Lawsuits and legislation targeting sex trafficking are causing collateral damage: they are damaging the livelihoods of online sex workers https://t.co/2fxX1lmIES  Suing Visa $V did the trick. Do we really want payment networks to be ethics guardians? That’s the government’s job Mar 24, 2023
  • The Real Reason South Koreans Aren’t Having Babies https://t.co/vXCgz96mQR  Evangelicals are 20% of SK’s population. This article doesn’t go into this, but the #1 factor differentiating fertility is strong religious faith. Likely true in SK. Mar 23, 2023
  • Is it a bad idea to assign a sex to digital assistants and other robots? https://t.co/dBwInqoxnJ  No, in most fiction, robots are assigned a sex, as they mimic humans. Example: Yokohama Kaidashi Kikou, where almost all the robots are female https://t.co/Hfl0JuTgMZ  Mar 23, 2023
  • What happens when sexting chatbots dump their human lovers https://t.co/o6N012otk5  This reads like something Asimov wrote (not just “I, Robot) in some of his stories in the 1970s. Mar 22, 2023

Monetary Policy

  • Federal Reserve Bank of Atlanta President Raphael Bostic says the decision to raise interest rates by 25 basis points this week came after “a lot of debate” https://t.co/KpzSjt2iXo  Smart short-term moves that lead to bad long-term results. Mar 25, 2023
  • The crisis that claimed Credit Suisse and SVB heralds a new chapter for financial capitalism https://t.co/S7ZkUfxSXt  The errors of monetary policy compound, creating a debt-ridden unstable economy. The government will take it over. Then the system as a whole will fail. Mar 25, 2023
  • The Fed’s Self-Directed Tragedy https://t.co/rPjnfyvKxi  If the FOMC would avoid inverting the yield curve or making it ultra-steep, we could avoid lot of problems. Toss all the neoclassical economists out of the Fed. Mar 22, 2023
  • STEVE HANKE And MATT SEKERKE: Fed’s Monetary Blunders Put The Entire Banking System In A Bad Spot https://t.co/CShCuEQaOS  This is the cost of QE. Load the banking system w/long debt, & the costs come due when policy tightens Mar 22, 2023
  • The Fed Must Not Flinch https://t.co/cQW7Ynwol5  Total idiot. Inflation is less important than systemic stability. Mar 22, 2023

Companies

  • Apple plans to spend $1 billion a year to make films for theaters https://t.co/sWbCMqCyo6  There is too much money chasing entertainment. Crowded trade. $AAPL $NFLX $AMZN Mar 24, 2023
  • Diebold Nixdorf and some of its lenders remain in confidential talks as the automated teller machines maker works to head off a liquidity shortfall https://t.co/vDO4aqd2qQ  This stock took a while to die $DBD People don’t use cash much Mar 21, 2023
  • The world’s most indebted developer said it expects that a restructuring support agreement will be ready by the end of March, after it won preliminary support from a group of major creditors https://t.co/r1ZjnnvxTF  Playing for time, one last time. Mar 21, 2023
  • Joe Hinrichs had never worked for a railroad when he was named CEO of $CSX, but the company is counting on his outsider perspective https://t.co/yXWnPKybDU  Key question: how much incremental profit will come from treating workers better? Mar 21, 2023
  • Some job listings don’t give anyone a ghost of a chance. Why some companies are posting ads for positions they aren’t actually trying to fill https://t.co/jgSDzj3wHb  The labor market is not as strong as it seems Mar 20, 2023

Risk Management

  • The M-Score is warning that the chance of fraud at major companies is the highest in over 40 years, writes Numbers columnist @JoshZumbrun https://t.co/ijbzyL9VMA  Take note, financial flexibility is ebbing. Mar 24, 2023
  • It’s the Most Thankless Job in Banking. Silicon Valley Bank Didn’t Fill It for Months. https://t.co/ZeoxnnEFww  If the CEO, CFO, & Chairman do not fully buy in to limit risk, rather than optimize risk, it does no good to have a Chief Risk Officer. Mar 23, 2023
  • Most companies don’t take steps to keep their bank accounts safe. Here’s why and how they should. https://t.co/R1cpJR3Y23  These are clever ideas, but why not just keep a laddered account of T-bills for the cash above normal transactional needs? Mar 23, 2023
  • The collapse of two lenders has prompted a rethink of banking rules, but risk experts say the failures could be something else: risk overseers who can’t stand up to the bosses https://t.co/gbbY2x0vsj  Boards exist to excuse management. Interest rate risk management at banks stinks Mar 22, 2023
  • The Federal Reserve raised concerns about risk management at Silicon Valley Bank starting at least four years before its failure earlier this month https://t.co/El3a1mjYV9  Since no one will talk about it, we have no idea of what this was. Mar 20, 2023

Market Dynamics

  • Hedge funds that bet on big-picture market moves have been hit with steep losses as a spate of recent bank failures upends bets that interest rates would remain elevated https://t.co/5NH5HT7hqg  Macro hedge funds are not infallible. Same for CTAs. Mar 23, 2023
  • Steve Leuthold, a financial guru known for partying and potatoes, has died at age 85. https://t.co/wANYmLz0RC  For a few years, I enjoyed reading his research. I knew he was a character — I didn’t know he was *such* a character. Mar 22, 2023
  • Banks and investors are reviving a push for changes to securities accounting after the SVB collapse https://t.co/YVRuZGWbvX  As I said to IASB 20+ years ago, there should be book and fair value balance sheets and income statements. More info for stakeholders. Mar 22, 2023
  • Why your financial conditions index sucks https://t.co/lJn1Rh2Zgf  I like the yield on 2-year US Treasury minus the yield on 30-Day A2/P2 Nonfinancial Commercial Paper https://t.co/KWJ42jOwnE  Mar 21, 2023
  • Record debt levels around the world have spurred fears of a ‘Minsky moment.’ Here’s what that means https://t.co/ljaM2Dmtms  So long as keep increasing debt levels, we will always face instability due to misfinancing of assets Mar 21, 2023

Around the US

  • CNN Visits San Francisco https://t.co/ifaUGKWgoG  CNN reporters with added security get robbed in San Francisco. Progressivism at its finest. Mar 22, 2023
  • Should New York be able to force suburbs to approve housing? Gov. Kathy Hochul’s plan to do so faces pushback https://t.co/NWahNVpLyQ  Zoning imposes costs on poor people Mar 20, 2023
  • As NBA fans wring their hands over star players missing games, the league’s coaches, owners and commissioner agree on one thing: it seems to work. https://t.co/715oUeUpWS  You have to remember — it’s a business. Disappointing fans when you are on the road is bearable. Mar 20, 2023
  • California’s torrential rains have plunged tens of thousands of homes into darkness, but may end up keeping the lights on during its summer blackout season https://t.co/ZSMf0aGSqk  You wanted more rain & you got it. Why complain? Mar 20, 2023
  • Chicago’s mayoral frontrunner Paul Vallas is taking a leaf out of Rahm Emanuel’s book to try to lure businesses back https://t.co/fxVWL6jQjY  Consider the economic drag of Chicago and Illinois state pensions & the task is very hard. What budget area will you cut? Mar 20, 2023

Islamic World

  • Iranian activists want tech companies to ban the Ayatollah https://t.co/0P00BQ7T5y  Tough to do, even though leader in Iran can use Twitter, but its citizens can’t Mar 22, 2023
  • About 79% of Turkish citizens think home sales to foreign nationals should be banned, according to a survey https://t.co/GrI5YPKp60  But well-off Russians, Iranians & Iraqis need a place to flee to. Mar 21, 2023
  • Iran is the big winner in the agreement with Saudi Arabia. Having given Tehran the upper hand, Riyadh should expect to be slapped around. https://t.co/MDqXXGRFwo  Hard to say. The disagreements of over 1300 years are not easily overcome Mar 21, 2023
  • The Taliban’s supreme leader, who banned girls from attending secondary school a year ago, is discovering it is one thing to issue a fiat, and quite another to enforce it. https://t.co/P7uzKoYPZR  Similar to those who homeschool underground in many totalitarian nations Mar 21, 2023

China

  • Those fretting about the challenge a united China and Russia pose to the West should have another look at the history of their relationship https://t.co/dMm4qPn105  Article indirectly compares Russia to N. Korea. China supports both, but has little leverage over either. Mar 25, 2023
  • Xi Jinping used two days of talks in Moscow to firmly align with Russia against the US. But the Chinese leader held back from offering Vladimir Putin something he’s been looking for: A commitment to buy a lot more gas https://t.co/2oXmXmS1dT  A lot of gas Mar 23, 2023
  • Chinese lenders and small businesses are stuck in a doom loop https://t.co/5jujZE5Iyt  You can’t have strong small & medium sized firms without freedom Mar 22, 2023

Credit Suisse

  • Credit Suisse’s top shareholders and AT1 bondholders are among the big losers while $UBS is a winner https://t.co/lCx0y3KOY6  Well said… other winners include employees of CS that will have jobs, & liability-holders of CS that will get paid. Mar 21, 2023
  • Credit Suisse’s riskiest bonds will be wiped out as part of its deal with UBS Group, dealing a blow to investors who held the lender’s AT1 bonds https://t.co/ZVp64UFRcz  When buying innovative bonds, be sure to read the terms in the prospectus. I like my bonds simple. Mar 20, 2023
  • After the write-down of Credit Suisse’s riskiest bonds, the Bank of England sought to clarify its rules regarding the order in which shareholders and creditors should bear losses in the event of insolvency https://t.co/g7uHWvbrhP  Read the terms of the bonds. Hard to cancel common Mar 20, 2023

CFA Institute

  • The AV CFA Meme Competition: the winners https://t.co/nHMeURHkZp  I had never seen these. Pretty funny. Easy exams that keep getting easier. Mar 20, 2023
  • Good news: ChatGPT would probably fail a CFA exam https://t.co/P5GMfOArRT  Scored at the same level as random guessing. Mar 20, 2023

Sorted Weekly Tweets

Picture Credit: David Merkel, with an assist from the YouImagine AI image generator || Twitter bird flies off into the sunset

Companies

  • Missed signals: behind Trafigura’s $577mn loss on non-existent nickel https://t.co/fJNQSmKbgl  Fascinating that they never did physical checks of what was delivered. Also that they didn’t do a background check on TMT. Feb 16, 2023
  • Podcast Companies, Once Walking on Air, Feel the Strain of Gravity https://t.co/RaNTop40uS  My kids ask me to do a podcast. I tell them it’s too much work for too little gain. I would rather read than listen, unless I am driving or cutting the yard. Feb 15, 2023
  • One of the world’s richest families was thrust into the spotlight by a surprising share sale from one of its own members https://t.co/Gk6Xzr2OcU  You need a liquidity plan, akin to what a private real estate fund does. You can’t assume that no family member needs liquidity Feb 15, 2023
  • How Ben & Jerry’s ended up at war with itself https://t.co/x2W5knUvR7  The revolution eats it own children, even as they eat ice cream Feb 15, 2023
  • As tech companies shed thousands of jobs, more employees want a say in their severance https://t.co/WHDVvdwRCO  Hiring a lawyer at your severance can be valuable. Feb 15, 2023
  • On the latest episode of the Zero podcast, @AkshatRathi speaks to the founder of Imprint Energy, which developed a printable battery for internet-connected devices. https://t.co/uIdNoxfPlz  Looks promising Feb 15, 2023
  • FICO scores are flawed. These lenders say they’ve found a better way to judge your credit https://t.co/jklyVW53r3  Sowing the seeds of new consumer bankruptcies on the low end of the income scale. Avoid debt for consumption purposes. Feb 14, 2023
  • A $4B accounting shortfall typically raises alarm bells for an auditor. Somehow a PwC affiliate missed it at Americanas https://t.co/Vr72rqV6c7  PwC may have cultural problems. If you can miss something that large & not be culpable, it calls into question the value of audits Feb 14, 2023
  • As tech giants look to slim down, middle managers are feeling the pressure https://t.co/4I5JhO6ez8  Not sure if this is good or bad Feb 13, 2023

Odds & Ends

  • New Car Prices Are So High Only Rich Americans Can Afford Them https://t.co/yrGEmDSIVS  This will eventually have political impacts, as regulations affect poor people more than the rich Feb 18, 2023
  • Wanting to go big with AI in search, Microsoft could end up causing the kinds of harm it will come to regret, writes @parmy https://t.co/e9g3Mlom6D  They are not sentient. They are easily tricked. They are code. Feb 18, 2023
  • The buildout of so-called dark warehouses has begun, but the high-tech facilities are far from common due to their high price tags and the limitations of robotic technology https://t.co/i1xgwi8BKY  Not quite ready for prime time Feb 17, 2023
  • A ‘Crucial Bridge’ to History, the Codex Sassoon Could Fetch $50 Million https://t.co/z9xQGClGoF  Really, you can’t put a price on this. I bet there are Hebrew scholars worried about who will buy this, & future access. Feb 16, 2023
  • 3 amateur codebreakers set out to decrypt old letters. They uncovered royal history https://t.co/kNGYZx6YT7  But nothing significant, really… Feb 16, 2023
  • This Company Uses Machine Learning to Track Your Antibodies https://t.co/c0r5Bk1Tn4  Promising technology Feb 15, 2023
  • Two of the most-talked-about Super Bowl ads on Sunday focused on an unlikely topic: Jesus https://t.co/lDOsgH3cjM  The gospels were written for a Roman audience as eyewitness accounts of who Jesus was & what he did. Read them & ask, was Jesus a legend, liar, lunatic or Lord? Feb 13, 2023
  • @codywillard Wow, Cody. Glad you’re alive. The Lord had mercy on you and your family. Feb 12, 2023

Culture

  • Yes, Single People Can Be Happy and Healthy https://t.co/6mrXtdv6ai  It is better to be single & wish you were married, than to be married & wish you were single. That said, this article is wrong, at least for men. Married men live longer & are happier than single men, on average Feb 18, 2023
  • The adults celebrating child-free lives https://t.co/hkiZK3zrpn  Those not having or adopting children should be excluded from government pensions and healthcare benefits Feb 18, 2023
  • Some school districts are doing away with honors classes, which has made some parents unhappy https://t.co/rPHDXEx68L  All teaching only reaches a fraction of IQs. This is why there needs to be many levels of teaching: high, middle, low, if you want to have all children improve. Feb 17, 2023
  • Education should not be a social experiment. It needs to be based off of what works, not wishful theories. What gets taught to prospective teachers in college is positively harmful to pedagogy. We need to end that. https://t.co/uHyxOznUxl  Feb 17, 2023
  • Miriam Adelson, along with her late-husband, poured tens of millions of dollars into former President Trump’s reelection campaign. Now she’s leading a push to legalize gambling in Texas https://t.co/jMmlxpVWq7  Legal gambling leaves society as a whole worse off Feb 16, 2023
  • As the country emerges from a pandemic that left children zoning out over Zoom, parents are turning to the turbocharged “Russian math” method to give their kids an academic edge. https://t.co/zsdtgrNnel  The examples given are not impressive Feb 16, 2023
  • Disney has tightly controlled Winnie-the-Pooh’s image. With the copyright expired, ‘Winnie-the-Pooh: Blood and Honey’ breaks the wholesome mold https://t.co/2H3IxjRtOc  This is not good, but it is notable. Perhaps $DIS will find a way to sue. Feb 15, 2023

Real Estate

  • America’s Priciest Neighborhoods Are Changing as the Ultra-Rich Move to Florida https://t.co/GOIJ61QsPD  The wealthy seek lower taxes and warmer places. There should be no surprise here. Feb 15, 2023
  • Turning offices into condos: New York after the pandemic https://t.co/z8zoyRUTyy  Popular concept. Tough but not impossible to execute Feb 15, 2023
  • Brookfield Defaults on Two Los Angeles Office Towers. The properties include the Gas Company Tower and the 777 Tower https://t.co/KmTLc9r9OZ  Losses go to Brookfield DTLA Fund holders, & their lenders Feb 15, 2023
  • When It’s Easy to Be a Landlord, No One Wants to Sell https://t.co/brqym7aoJS  With help from firms like Mynd that do property managment, you can keep your home w/a low rate mortgage, and rent it out Feb 13, 2023
  • Why mortgage rates spiked from 6% to 6.5% early-February 2023 & what’s next https://t.co/y6sKncYEBs  Complex way of saying “We don’t know.” Hint: the long end of the curve does not move much in response to short-term inflation. FOMC, take note Feb 13, 2023
  • The high costs of housing are influencing romantic decisions https://t.co/opJ5P2Abjw  Moving in reveals who each of you really are. Selfishness, laziness, bad communicating, substance abuse, lying… break relationships Feb 13, 2023

Adani Group

  • Adani Group tells investors that they will address deadlines to repay debt with options including private placement notes and cash from operations https://t.co/FUEWh43C3I  But will they be profitable after refinancing near-term debt at higher rates? What covenants will they make? Feb 17, 2023
  • Adani halts $847mn acquisition of coal-fired power plant in India https://t.co/hJQDR61XfB  Financing is less available. Not a good sign. Feb 16, 2023
  • That would functionally subordinate some of their public debts, making them even less valuable. I remember looking at the final private placement Enron issued. Complexity was over the top; we did not participate. I would love to see the PP memorandum leaked. https://t.co/sDRoh7P6qc  Feb 16, 2023
  • Indian conglomerate Adani Group is in talks with potential investors as it considers offering privately placed bonds for at least three of its group companies, people familiar with the matter say https://t.co/YF98mIE4Vb  Maybe they do secured debt, or add protective covenants Feb 16, 2023
  • Adani Group sees no material refinancing risk for its listed companies and has no significant near-term liquidity requirements https://t.co/frK2aP7nZq  Complex holding company structures make liquidity management difficult. I’ve lost money on a few of those. Feb 15, 2023
  • Adani Group sees no material refinancing risk for its listed companies and has no significant near-term liquidity requirements https://t.co/frK2aP7nZq  If so, keep paying down your debts, and feed losses to the shorts. Feb 15, 2023

The Markets

  • The rise of short-dated options is creating event risk on the scale of the stock market’s early-2018 volatility implosion, JPMorgan’s Marko Kolanovic says https://t.co/IRIg7SYOb8  Possibility of self-reinforcing move if 0DTE options go into the money, forcing option deals to hedge Feb 16, 2023
  • A once arcane corner of Wall Street is now in demand as borrowing costs soar and $6 trillion of bond maturities loom https://t.co/XZsM1nDN43  The corporate bond market is not arcane, & though there will be bankruptcies, this is not a crisis. Feb 16, 2023
  • The shares have surged so much that it’s creating a dilemma for investment giant Nuveen — and posing a little-known risk to its investors https://t.co/jmcR1WpDbH  Why not do an “in kind” distribution as a dividend, or a discounted buyback, or just “ride the ask” $ENGH Feb 16, 2023
  • Credit Suisse is offering investors a hefty incentive to buy its new euro bonds just days after announcing a bigger-than-expected quarterly loss https://t.co/OeuM8J31NO  Seems desperate Feb 15, 2023
  • The mood is starting to shift in global credit markets after a three-month rally https://t.co/VRjlamNJ0W  Credit rally overdone & difficult to get away from LIBOR #liborwasbetter Feb 13, 2023

Non-US

  • Nigeria is trying to gain more control over its vast cash economy by compelling citizens to swap their old money for newly designed naira bills. But the plan is running into serious trouble https://t.co/63mjaLLbBQ  Difficult to outlaw cash when financial systems are underdeveloped Feb 16, 2023
  • It’s undermining Beijing’s attempt to engineer an economic recovery tied to consumption https://t.co/GrjowTdfdT  Efforts to get Chinese to consume more creates financial speculation via low rates on personal loans. Feb 15, 2023
  • More than 200 construction bosses face arrest in Gaziantep and cities across Turkey’s earthquake zone. https://t.co/sCgMpMdLup  Corruption leading to deaths Feb 15, 2023
  • Japan is quietly experiencing its biggest outbreak of the pandemic https://t.co/rbwea15TwH  Elderly population is more likely to die. Medical resources are stretched. Feb 15, 2023
  • Moldova’s pro-European president accused Russia of trying to overthrow its democratic system and open a fresh front in Moscow’s war on Ukraine https://t.co/2koKvf0DbJ  Putin wants the USSR back. Feb 13, 2023

Central Banking

  • Richmond Fed President Tom Barkin says he supported the central bank’s plans to continue raising interest rates in quarter-point increments https://t.co/R9w8bhtw3l  Driving through the rear-view mirror. My three questions he didn’t answer at the 3/22 @CFASBaltimore all came true Feb 17, 2023
  • President Christine Lagarde reiterates that the European Central Bank intends to raise borrowing costs by another half-point next month https://t.co/zGOtVri6ka  Unless you want to discover hidden weaknesses in EU financial systems, you shouldn’t invert the yield curve further Feb 15, 2023
  • Liquidity, leverage and interconnectedness? https://t.co/abqrRH6lsZ  Good interview w/@fmnatalucci. He understands financial risk and liquidity. A lot of what he said sounds like me. Where I see risk is not open-end high yield funds, but EU banks & pseudo-banks. Feb 15, 2023
  • The White House is considering nominating Austan Goolsbee, who became president of the Chicago Fed last month, to serve as vice chair of the Federal Reserve’s board of governors https://t.co/QwxJJD5Gph  We could do worse, but why not Lacy Hunt? Feb 15, 2023
  • The end of distressingly high inflation is coming into view, but the cost of goods, housing and other services is complicating path for easing consumer prices https://t.co/laCY0cZDdn  Focus on median inflation than all of the measures that drop out whole spending categories Feb 13, 2023

Economic Policy

  • How three major bills could change the American economy. https://t.co/ufiiuufFTw  Nothing useful, lots of additional debt Feb 17, 2023
  • The US Supreme Court could rewrite the rules of the internet with a challenge to the liability shield cherished by online companies https://t.co/sQfeDhzmJO  I lean in favor of allowing lawsuits against social media companies for inadequate moderation, but limiting damage claims Feb 17, 2023
  • Odd Lots Transcript: This Is What Happens If the US Actually Hits the Debt Ceiling –What if it doesn’t get lifted? https://t.co/AkPZE6hxoy  No one knows. Maybe the 14th amendment section 4 can be invoked to invalidate the debt ceiling Feb 16, 2023
  • New York City is pausing a small business loan program less than a month after it launched after an unanticipated influx of over 10,000 applications https://t.co/i9uRS9Ml2o  Why governments should not subsidize: they are either too generous or cheapskates Feb 15, 2023

China

  • China’s sweeping policy support for the property sector has been no quick fix for developers’ liquidity struggles, leaving some investors waiting until the last minute for cash https://t.co/EB7wDHkaJH  The Chinese Communist Party learns reflating a bubble is surprisingly difficult Feb 17, 2023
  • Heard on the Street: China’s fiscal position—and ability to fund other priorities—will increasingly be threatened by threatened by rising healthcare costs https://t.co/0sX2iyoBoE  Social welfare systems only work well when populations are young. Feb 17, 2023
  • Investors are buying Chinese stock funds, betting that the reopening of China’s economy will help push markets higher  https://t.co/hISEKrfwbN  ‘“There’s opportunity, to be sure, but I think those are trades, not investments,” said Nancy Tengler.’ Feb 15, 2023
  • In China, single mothers are facing fewer hurdles as Beijing tries to boost its fertility rate https://t.co/BNIeVRlIs2  Reduces abortion Feb 15, 2023

Crypto

  • Binance is considering ending relationships with US business partners as regulators turn up the heat on crypto https://t.co/8f7dIWson0  Pushing crypto out of the US is good policy Feb 17, 2023
  • Crypto platforms could soon face a new set of hurdles to hold digital assets owned by clients of hedge funds and private equity firms in the US https://t.co/m9bZLCxokL  Makes sense if you want custodial accounts. Feb 15, 2023
  • Sam Bankman-Fried was blocked from using virtual private networks while on bail, with the judge overseeing his fraud case expressing concern that VPNs present similar risks as encrypted messaging apps https://t.co/7zpiWHoMjE  From crypto-king to peasant disallowed encryption Feb 15, 2023
  • US regulatory crackdown on crypto aids Tether’s USDT, a stablecoin that’s located offshore, even as the transparency of its reserves faces scrutiny https://t.co/didoPeEO6t  US holders of Tether will appreciate the foreign domicile when Tether fails & recovering value is hard Feb 15, 2023

War

  • Hundreds of fuel vessels are taking steps to hide where they’re going https://t.co/wK67gNEjV2  Evading sanctions — there is a profit to be made, and Russia needs money for the war Feb 18, 2023
  • Many countries are reassessing their military might — and it’s not just limited to Ukraine’s neighbors https://t.co/C0QpA7rXOj  War takes resources, & budgets are stretched… what will be given up? Feb 18, 2023
  • The world’s war machine is running low on ammunition https://t.co/VAMcJLwxbp  Together with stretched government budgets and relatively tight money globally — is this why the long end is selling off? Feb 16, 2023

Pensions

  • Time Bomb of Public Pension Funding Ticks Louder https://t.co/QO6mS07lwI  One way the article could have been improved would be to add in the effects of falling interest rates, not just the long stock rally Feb 13, 2023
  • The aggregate funding level for state and local pension plans is below 50%, inviting a disaster that would outstrip the occasional municipal bankruptcy https://t.co/QO6mS07lwI  Well written. Will it take the failure of a US State to get serious about this? Feb 13, 2023
The Best of the Aleph Blog, Part 40

The Best of the Aleph Blog, Part 40

Photo Credit: michel D’anastasio

======================

In my view, these were my best posts written between November 2016 and January 2017:

When I was a Boy?

Can lessons from the distant past illumine the future?? I think so.

On Long-Term Corporate Investments

This is timely.? Are US firms too short-term in their orientation? No.? To be more controversial, if companies in the rest of the world imitate the US, they will be better off.? They don’t push the present hard enough, and the great long-term returns don’t materialize as a result.

How do you Manage a Company when the Stock is Considerably Overvalued?

This was a fun piece to write.? It is a high quality problem (usually), but the rules are the opposite for firms with undervalued stock, which is more common.

?Do Half? Applied

What should you do if you think you missed the rally???What should you do if you think you think you should take money off the table?

Edging In, Edging Out

How do you balance the short- and long-term in long-only investing?

The Beauty of Old Ideas

Often it takes time for an investment thesis to work.? Thus, look at old ideas that have gone nowhere… maybe the work is about to pay off.? Also, other ways to find ideas to buy.

Patience and a Little Courage

Why are patience and courage the attitudes that most investors need?

The Rules, Part LXII

In markets, ?what is true? works in the long run. ?What people are growing to believe is true? works in the short run.

Be wary of surrendering liquidity

I talk about interval funds and other illiquid investments.

Who Needs Liquidity Most?

Liquidity is plentiful now, but what happens when it switches and becomes scarce?

The Value of Risk-Based Capital in Financial Regulation

How to think about asset credit risk for financial institutions.? Also, why a “brain dead” 10% leverage proposal for banks is a bad idea, and really not a conservative idea at all.

A Failure of Insurance Regulation

On the liquidation of Penn Treaty’s subsidiaries, and what things regulators should do to avoid a repeat.? (Hint: apply these ideas to Genworth.)

Call Me When You Have A Real Insurance Company!

Supposedly Hank Greenberg said that to Warren Buffett at one point.? This was written when BRK wrote a huge retroactive cover for AIG, capping prior bad underwriting decisions.

Distrust Forecasts

Distrust Forecasts, Part 2

Why you should be careful about what you read in the media, and even from me.

A Cautionary Tale on Municipal Pensions

Why the main municipal pension fund in South Carolina ran into troubles, and what lessons we can learn from that.? (Put on your peril-sensitive sunglasses before reading this…)

Trump and Conflicts of Interest

Why Trump could have IPO’ed his firm, and lost all of the conflicts of interest, despite his objections at the time.

On Human Fertility, Part 5

Fertility doesn?t turn on a dime. ?When women conclude that the rewards of society (money, power, approval of peers) go to those with fewer children, that?s a tough cultural idea to overcome. ?I would conclude that it will take a lot longer than a single five-year plan to turn around birthrates in China? if they can be turned around at all. ?All across Asia, marriages happen at lesser rates, happen later, and produce fewer children. ?China is one of the more notable examples.

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