24 Sept
Living without working
This article runs through a number of explanations of how 30MM US American men can live without being in the formal workforce. There is nothing very extraordinary about the ways: basically, the black economy is probably bigger than you think, and quite a few people got rich enough to live off savings. Plus quite a few are in prison: this is the USA and those private prison company dividends aren’t going to pay themselves. It’d be ironic if some economically inactive men were living off dividend income generated from payment to CoreCivic ($CXW) by taxpayers who generally are working. But it’d also be impossible, because $CXW is levered to the gills and can’t afford to pay a dividend, but I guess it probably has issued some very high-yield debt so maybe …
$CXW was a Kuppy pick. The (cynical) thesis was that Biden would actually end up locking up a lot more men than Trump ever did. It hasn’t happened yet, but never say “never.”
Yellow submarines
The French are very, very sore about losing the submarine contract. Maybe it wasn’t a contract, or maybe it was a contract but it hadn’t yet been signed, maybe it had been signed, but by only one of the parties, maybe it was only an understanding. But overall, France is furious. This article goes into detail. It doesn’t even mention the UK, which barely has a walk-on role in this drama, whatever the UK govt. spin says. Like most countries, France views the US with extreme distrust, and resents its dominance spying. The US likes to think of itself as the leader of the free world. The free world, I think, sees the US as an abusive patriarch which is in decline but still has enough economic power to force it into cooperating, at least for the time being. For what it’s worth, I think China is a hundred times worse, but I’m not sure that there are many countries that still prefer the devil they know. The UK is one, for sure, because of the historical ties and “Anglo Saxon” shared heritage. For most of the world, this is not a factor.
Vanis Varoufakis argues that the submarine fiasco is entirely the result of an unwillingness of the European elites to give up their influence on national governments. I think he has a point.
Evergrande update
Evergrande seems to have dodged a bullet yesterday and made a coupon payment on a dollar bond. I think a lot of high-yield dollar ETFs have exposure to those bonds, so the argument that mostly this is an internal matter for China is not entirely persuasive. Anyway, Robert Armstrong as a good take on the matter. I’d love to short Evergrande & co, maybe even the banks with exposure to it, but the whole show is stage managed by the Chinese state, so any position would be really a bet on how one expects Xi Jin Ping to behave, which is well outside my expertise. Obviously, in the long run, it will all end in ruins, but we all know what happens in the long run.
Forex
Forex used to be the most volatile tradeable asset class of all. Now it’s flat and dull and untradeable, at least to me. I recently signed up to Brent Donnelly’s daily macro newsletter here. I don’t know much about him, but he seems to make sense. He is quite bearish on AUD and GBP (in spite of the BoE being about to raise rates). His newletter today (pdf, not linkable) points out how insanely unbalanced asset markets are in China, with housing as an asset being eight or so times the size of stocks or bonds. In the USA, stocks, bonds & housing are fairly balanced, with housing the smallest at 200 trillion yuan, stocks at 280. (Why yuan? That’s what the chart is in.)
Tullow Oil
Tullow Oil is leveraged to the hilt, has barely any operational assets, has a management that spends most of its time worrying about how to make the next coupon payment. It’s the sort of company that a serious investor would run a mile from. But sometimes shitcos are the ones that make investors rich. As any of the Apes who invest in AMC or Gamestop. Oil is on a tear (and Jesse Felder believes it’s going higher). Africa is the future.
I’m not an analyst, but I can at least tell that the company is not burning cash. I think it might be worth a second look. Obviously, take professional advice before investing.
I don’t like Facebook at all. To me, Zuck & Sheryl are evil incarnate. The news that corporate governance at the company is not what it should be was not, to me a great revelation. It’s hard to believe that it came as a great shock to Wall St. The share price, oddly, has been going down. It’s hard to believe that the present value of any future income stream from holding the stock can ever justify its valuation, but that has held more-or-less since the stock was listed, so it’s hard to think it’s a good basis for action. Having been burned far too many times, I want to keep well away. But if the downturn does not reverse, one wonders if stonks like $TSLA, which also have shockingly bad corp. governance, might also start to sag.
Climate change: the perfect cover for any political failure
The climate is changing. It has always changed. We (as a species) have probably made a difference to the rate. As the climate changes, we’ll have to adapt. We might be able to change our economies so that the part of the change that’s down to us is less. But its not that easy. And sometimes we don’t adapt quickly enough, through incompetence or malice, as in New York. I am not a ‘denier.’ But I’m not a fan of Greta either. We should take a scientific approach, not a religious one. Those who argue that ‘the science is settled’ are more like member of a cult than rationalists, to me, anyway.
I have no issue with writers like Noah Smith who take the view that action on climate change is urgent, but that it’s still possible to avert disaster.
The debt ceiling
This is pretty incomprehensible to us non-Americans. If parliament is sovereign, and has agreed on plans for taxing and spending, then why should an arbitrary limit on the aggregated debt level stop those plans being put into action. Does any other country have such a system?
Origins of Grand Theft Auto
How Dundee got the edge
Clive Sinclair was credited with revolutionising home computing in the UK and kick-starting the British video games industry with the ZX Spectrum in the 1980s. But his influence was especially pronounced in Dundee, where Sinclair sub-contracted the Spectrum’s manufacture to the city’s watchmaking factory, Timex.
At its peak, Timex was producing a new computer every four seconds – but not all of them made it to market. Some happened to find their way into the hands of light-fingered staff, who then moved them on cheap to their pals. This meant that, even with rampant unemployment elsewhere in the city, Dundee homes were still awash with Spectrums.
With nothing much else to do during the dole-dependent early 80s, coding games really caught on and the city consequently became a massive video game development hub. One that would later give the world a multi-billion dollar crime-flavoured franchise in the form of… Grand Theft Auto.
This is stolen from a well-known scandal sheet.
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