The good news is I can run it again since nothing has changed. The bad news is I can run it again since nothing has changed -- Mega-fire repost 3

 TUESDAY, SEPTEMBER 22, 2020

West Coast wildfires -- Marketplace gets it right

At first glance, this shouldn't be that difficult. You just have to hit the following points clearly and emphatically.

1. While climate change contributes to the wildfire crisis, the much larger and more immediate cause is the result of decades of excessive Western fire suppression.

2. We desperately need to address this crisis as soon as possible, primarily through controlled and managed burns.

3. The scientists studying forests are in absolute agreement on both these points and have been warning us about this crisis for years.

4. However, a combination of governmental inaction, perverse incentives and the short-sighted self-interest of various parties has kept us from avoiding catastrophe.

Not one in ten articles on the subject meets these standards, but perhaps we shouldn't be that surprised. Telling a story that grows out of the facts, fighting the urge to bend it to fit popular narratives, keeping the focus on the genuinely important. These are things that require journalists to have both skill and courage.

Which is part of the reason why Marketplace is the best daily news show on public radio.

The good news is I can run it again since nothing has changed. The bad news is I can run it again since nothing has changed -- Mega-fire repost 2

 

TUESDAY, SEPTEMBER 8, 2020

"California would need to burn 20 million acres — an area about the size of Maine — to restabilize in terms of fire"

The sky here in LA has taken on that distinct orange tint. Just as the heat has started to let off, the air is turning bad. Another large fire has broken out in the Angeles Forest. [Emphasis added]

The rugged terrain, access and triple-digit temperatures created difficult and dangerous conditions for firefighters. During a Monday afternoon press conference, officials expressed concern that winds in the coming days would change the direction of the flames, pushing them down the mountains toward foothill communities in the San Gabriel Valley.

If that happens, authorities said the communities that would impacted first would be Monrovia and Duarte. Residents in those areas are being urged to be prepared to evacuate. Bradbury, Azusa, Arcadia and Sierra Madre could also potentially see either evacuation warnings or orders.

"Directly coming into Monrovia or Duarte, no, that area has not burned in 50 to 100 years in some places, so the fuel-loading is high and there is not a natural break from the fuels from previous fires," said incident commander Steve Goldman.

As Elizabeth Weil explains in her Pulitzer-worthy Propublica piece (which we discussed earlier here), this is not just a dangerous but an unnatural situation. [again, emphasis added]

Yes, there’s been talk across the U.S. Forest Service and California state agencies about doing more prescribed burns and managed burns. The point of that “good fire” would be to create a black-and-green checkerboard across the state. The black burned parcels would then provide a series of dampers and dead ends to keep the fire intensity lower when flames spark in hot, dry conditions, as they did this past week. But we’ve had far too little “good fire,” as the Cassandras call it. Too little purposeful, healthy fire. Too few acres intentionally burned or corralled by certified “burn bosses” (yes, that’s the official term in the California Resources Code) to keep communities safe in weeks like this.

Academics believe that between 4.4 million and 11.8 million acres burned each year in prehistoric California. Between 1982 and 1998, California’s agency land managers burned, on average, about 30,000 acres a year. Between 1999 and 2017, that number dropped to an annual 13,000 acres. The state passed a few new laws in 2018 designed to facilitate more intentional burning. But few are optimistic this, alone, will lead to significant change. We live with a deathly backlog. In February 2020, Nature Sustainability published this terrifying conclusion: California would need to burn 20 million acres — an area about the size of Maine — to restabilize in terms of fire.

...

[Deputy fire chief of Yosemite National Park Mike] Beasley earned what he called his “red card,” or wildland firefighter qualification, in 1984. To him, California, today, resembles a rookie pyro Armageddon, its scorched battlefields studded with soldiers wielding fancy tools, executing foolhardy strategy. “Put the wet stuff on the red stuff,” Beasley summed up his assessment of the plan of attack by Cal Fire, the state’s behemoth “emergency response and resource protection” agency. Instead, Beasley believes, fire professionals should be considering ecology and picking their fights: letting fires that pose little risk burn through the stockpiles of fuels. Yet that’s not the mission. “They put fires out, full stop, end of story,” Beasley said of Cal Fire. “They like to keep it clean that way.”

The good news is I can run it again since nothing has changed. The bad news is I can run it again since nothing has changed -- Mega-fire repost 1

THURSDAY, SEPTEMBER 3, 2020

The truth about Western megafires is the narrative no one wants to hear.

Every few years, some journalist will do a solid, deeply reported story on Western megafires. (This Propublica piece by Elizabeth Weil is excellent. I also recall a good series from NPR a while back.) These articles always say basically the same thing about the scientific consensus, the severity of the problem and the steps we need to take. They are always persuasive, always told with a great sense of urgency, and always ignored. This is what happens, at least these days, when a crisis and its solutions break with conventional narratives and  require great political will to address.

The doomed California genre plays both to very real environmental concerns and to a longstanding Eastern schadenfreude, the epicenter of which is located in the editorial offices of the New York Times. The Golden State is supposedly burning for its environmental sins but in reality this is not primarily a climate change story. While increased heat and more severe droughts exacerbate the situation, we would still be having megafires without them.

A seventy-word primer: We dug ourselves into a deep, dangerous fuel imbalance due to one simple fact. We live in a Mediterranean climate that’s designed to burn, and we’ve prevented it from burning anywhere close to enough for well over a hundred years. Now climate change has made it hotter and drier than ever before, and the fire we’ve been forestalling is going to happen, fast, whether we plan for it or not.

Megafires, like the ones that have ripped this week through 1 million acres (so far), will continue to erupt until we’ve flared off our stockpiled fuels. No way around that.

Fires are an essential part of the life cycle of these forests. Controlled burns return the forests to a more normal equilibrium. If we listened to the scientific consensus, they would be the main weapon in our arsenal. Unfortunately science is not the main consideration here.

By comparison, planning a prescribed burn is cumbersome. A wildfire is categorized as an emergency, meaning firefighters pull down hazard pay and can drive a bulldozer into a protected wilderness area where regulations typically prohibit mountain bikes. Planned burns are human-made events and as such need to follow all environmental compliance rules. That includes the Clean Air Act, which limits the emission of PM 2.5, or fine particulate matter, from human-caused events. In California, those rules are enforced by CARB, the state’s mighty air resources board, and its local affiliates. “I’ve talked to many prescribed fire managers, particularly in the Sierra Nevada over the years, who’ve told me, ‘Yeah, we’ve spent thousands and thousands of dollars to get all geared up to do a prescribed burn,’ and then they get shut down.” Maybe there’s too much smog that day from agricultural emissions in the Central Valley, or even too many locals complain that they don’t like smoke. Reforms after the epic 2017 and 2018 fire seasons led to some loosening of the CARB/prescribed fire rules, but we still have a long way to go.

“One thing to keep in mind is that air-quality impacts from prescribed burning are minuscule compared to what you’re experiencing right now,” said Matthew Hurteau, associate professor of biology at University of New Mexico and director of the Earth Systems Ecology Lab, which looks at how climate change will impact forest systems. With prescribed burns, people can plan ahead: get out of town, install a HEPA filter in their house, make a rational plan to live with smoke. Historical accounts of California summers describe months of smoky skies, but as a feature of the landscape, not a bug. Beasley and others argue we need to rethink our ideas of what a healthy California looks like. “We’re used to seeing a thick wall of even-aged trees,” he told me, “and those forests are just as much a relic of fire exclusion as our clear skies.”

 

In the Southeast which burns more than twice as many acres as California each year — fire is defined as a public good. Burn bosses in California can more easily be held liable than their peers in some other states if the wind comes up and their burn goes awry. At the same time, California burn bosses typically suffer no consequences for deciding not to light. No promotion will be missed, no red flags rise. “There’s always extra political risk to a fire going bad,” Beasley said. “So whenever anything comes up, people say, OK, that’s it. We’re gonna put all the fires out.” For over a month this spring, the U.S. Forest Service canceled all prescribed burns in California, and training for burn bosses, because of COVID-19.

In my more pessimistic moments, I think we are in a post-solution America, a country that talks a better and better game but has lost its taste for actually solving problems. Lately, those pessimistic moments have become more frequent.

Andy and the anti-vaxxer

It's useful to step back from time to time and remind ourselves just how far beyond precedent the Republican party has drifted. The following clip aired in March of 1962. It came from one of the most popular shows of the decade, especially in rural America. 

There was nothing controversial about assuming that vaccination was a public good or about depicting the vaccine-hesitant as backwards and uneducated. Audiences would have found it strange to think otherwise. As with many other issues, the Right's "reactionary" positions are not actually a move back to popular attitudes from the past. They are instead new and radical and would have been seen as crazy sixty years ago.

The Greatest Post-Script in TED Talk History

I wish I'd known about this video before I wrote the post.



Scam artists locking in on citizen science was another one we should have seen coming.

THURSDAY, APRIL 1, 2021

The almost perfect 2021 business story: funded by the likes of Andreessen Horowitz, feted by goop, it was a massive fraud built around a literal shit company

If only they could have gotten Musk and Thiel involved.

 

SF poop-testing startup, once compared to Theranos, charged in $60M fraud scheme

Zachary Schulz Apte and Jessica Sunshine Richman, co-founders of defunct microbiome testing company uBiome, are accused of bilking their investors and health insurance providers, federal prosecutors said. They were indicted Thursday on multiple federal charges, including conspiracy to commit securities fraud, conspiracy to commit health care fraud and money laundering.

...

Apte, 36, and Richman, 46, founded uBiome in 2012 as a direct-to-consumer service called “Gut Explorer.” Customers would submit a fecal sample that the company analyzed in a laboratory, comparing the consumer's microbiome to others' microbiomes, prosecutors said. The service cost less than $100 initially.

The company grew to include “clinical” tests of gut and vaginal microbiomes, which were aimed to be used by medical providers so uBiome could seek up to $3,000 in reimbursements from health insurance companies. The federal indictment states that uBiome sought upwards of $300 million in reimbursement claims from private and public health insurers between 2015 and 2019. The company was ultimately paid more than $35 million for tests that “were not validated and not medically necessary."

Apte and Richman met in San Francisco in 2012 through the California Institute for Quantitative Biosciences Garage, an incubator used by UCSF. Together, they founded uBiome and received funding from Silicon Valley investors like 8VC in San Francisco and  Andreessen Horowitz in Menlo Park, which hold 22% and 10% stakes in uBiome, respectively, according to court documents.

For a time, they were the latest up-and-coming business determined to disrupt the medical testing industry. In 2018, Richman was even named an "innovator" winner in Goop's "The Greater goop Awards" and at its peak, uBiome was valued at $600 million.

Counterfactuals and age

This is Joseph.

I was reading Andrew Gelman's post on potential outcomes and it reminded me of the classic problem with this parameter in epidemiology, namely chronological age. I like potential outcomes for a lot of questions -- what happens if we change an exposure and create a counterfactual outcome is a very logical way to think about things like prescription drugs, milk in the diet, and water purity. There is a reasonable causal contrast between exposed and unexposed that could be estimated (e.g., it is true in expectation in a randomized controlled trial).

It gets trickier with other variables. Sex (as opposed to gender) is difficult to imagine being anything but a theoretical contrast (gender, on the other hand, is a lot more complicated). Similarly, disentangling the effects of race as a genetic piece (usually very small) versus racism is a very challenging causal inference problem. You can imagine changing the racist nature of society but not really genotypes. Smart people work on this problem, but I think of it as quite hard (and thus I am glad for the smart people).

But the biggest challenge is age. Age is a very important etiological factor in driving key diseases like cardiovascular disease and cancer. You probably won't understand risks for these diseases very well should you not control for age. But what is the counterfactual for age? If I say taking drug X doubles your risk of a stroke, that is easy -- the contrast is taking/not taking the drug. But if I say aging 15 years doubles your risk for a stroke what is the potential outcome, as age is not in any sense a fully controlled variable. 

Now, some people say age is a correlated for a whole mess of biological processes and if we measured them all then we could create this contrast, piece by piece. But that simply sidesteps the blunt fact that age is a super powerful predictor and we don't have a great sense of all of the pieces of aging. 

It seems easy because the first thing that we consider when studying (for example) mortality, is age. But what is the counterfactual -- a person being 15 years older or younger with the same life-course exposures. It is an area where the (extremely useful) tool works . . . awkwardly. And that is a good lesson -- models (even conceptual models) are useful tools but need to be carefully thought about in the context of the specific question under study. 

Feral Disinformation and Sane Vampires

Quick recap: For the story behind referring to dishonest people who pretend to believe crazy ideas, see here and here. The other term was introduced in this post and was defined as follows:

Disinformation has gone feral when:

1. It is no longer in the control of the group that created it.

2. It has continued to grow in popularity and influence.

3. It has started to evolve in such a way that the nuisance/threat it presents is as as great to the people who created it as it does to the original targets. 

We previously said that at least in the US, covid-focused anti-vaxx hysteria is currently the prime example of previously domesticated disinformation gone wild. 

The Conservative Movement spent decades depicting the scientific establishment as alarmist and corrupt because undermining it served a clear political purpose at the time. Recently this narrative took on an added usefulness as the Republicans tried to contain the fallout from the pandemic. It was an unspeakably evil position to take, greatly adding to a horrific death toll, but it had a certain ends-justify-the-means logic, "had" being the operative word.

In 2021, being the anti-vaxx party is not in the Republicans' best interest. It devastates  areas that voted for Trump and it makes the most comically crazy people imaginable the face of the GOP. On top of that, it's bad for business. 

The best messaging for the Republicans at this point would be to start referring to the "Trump vaccines" and to work the phrase "Operation Warp Speed" into every statement and interview response, regardless of topic, then take credit for the end of the pandemic. That is, however, not an option. Control of the narrative has been lost, Things have gone feral.

This has put the sane vampires of the GOP in quite the spot. Not be crazy, they know that in the medium and long term, you seldom want to be associated with the con side of a vaccination debate, but in the short term, introducing truth from the right is... challenging. 

Some have risen to that challenge.

Alabama Gov. Kay Ivey held a press conference sounding the alarm bell about the rapid spread of COVID in the state and put a significant amount of the blame on people who haven’t gotten vaccinated. “Let’s be crystal clear about this issue. And media, I want you to start reporting the facts. The new cases of COVID are because of unvaccinated folks. Almost 100% of the new hospitalizations are with unvaccinated folks. And the deaths are certainly occurring with the unvaccinated folks. These folks are choosing a horrible lifestyle of self-inflicted pain,” she said at the event yesterday in Birmingham.

Some started out boldly enough then lost their nerve.

Tonight, Sean Hannity went on a long rant on his radio show, assuring his audience that he’s “not urging people to get the COVID-19 vaccine”https://t.co/TY0Yxqn8gN pic.twitter.com/N80YIYNYGV

— Media Matters (@mmfa) July 23, 2021

And some have tried to lie their way out of it. (I'm from the Bible Belt, and some of my best friends, etc. etc., but take it from an old Arkansas boy, the Huckabees are soulless.)

Sanders writes: "Harris said in debate she wouldn't take any vaccine the Trump administration had a hand in creating"

that's false

Harris said she wouldn't take it on Trump's word

but also: "if Dr. Fauci, the doctors, tell us we should take it, I'll take it"

they did

she did

— John Harwood (@JohnJHarwood) July 25, 2021

Regardless, the sane see what's coming.




Final thought: "Does the name Custer mean anything to you?" -- Robin Williams

I think Brian really gets it here. Most of the adult population is vaccinated. Those people are starting to see that we're now going backwards because a big minority is refusing. People are getting pissed. That's what's driving the GOP switcheroo. https://t.co/j8pwJcM0eY

— Josh Marshall (@joshtpm) July 25, 2021

Feral Disinformation

Another one for the lexicon.

Disinformation has gone feral when:

1. It is no longer in the control of the group that created it.

2. It has continued to grow in popularity and influence.

3. It has started to evolve in such a way that the nuisance/threat it presents is as as great to the people who created it as it does to the original targets. 

The most prominent example of the moment is the right wing movement opposing covid vaccines and increasingly vaccination in general. 

The Conservative Movement spent decades depicting the scientific establishment as alarmist and corrupt because undermining it served a clear political purpose at the time. Recently this narrative took on an added usefulness as the Republicans tried to contain the fallout from the pandemic. It was an unspeakably evil position to take, greatly adding to a horrific death toll, but it had a certain ends-justify-the-means logic, "had" being the operative word.

In 2021, being the anti-vaxx party is not in the Republicans' best interest. It devastates  areas that voted for Trump and it makes the most comically crazy people imaginable the face of the GOP. On top of that, it's bad for business. 

The best messaging for the Republicans at this point would be to start referring to the "Trump vaccines" and to work the phrase "Operation Warp Speed" into every statement and interview response, regardless of topic, then take credit for the end of the pandemic. That is, however, not an option. Control of the narrative has been lost, Things have gone feral.

Over the past the past week, the GOP establishment made a coordinated effort to move away from this disastrous message. 

"Why aren’t conservatives pounding away that it was their guy who started the development of the vaccine under his overstated moniker Operation Warp Speed?" https://t.co/v9zOPzShFy

There are answers to this, but it's a good question. By @Sulliview

— Jay Rosen (@jayrosen_nyu) July 21, 2021

It's amazing how much everyone gets in line once the bat signal goes out. https://t.co/e4MAiCL5Wz

— Josh Marshall (@joshtpm) July 20, 2021

sounds like there’s a fight inside fox management over whether to kill off their audience, or not…

Steve Doocy Implores Fox & Friends Viewers to Get Vaccinated https://t.co/vjmxvFiD3X

— Rick Wilson (@TheRickWilson) July 19, 2021

SEAN HANNITY: "Please take Covid seriously. I can't say it enough. Enough people have died. We don't need any more death. Research like crazy. Talk to your doctor... I believe in science. I believe in the science of vaccination." pic.twitter.com/tOi5ebpqSf

— Sahil Kapur (@sahilkapur) July 20, 2021

The pivot is not going well.

imagine the choices you have to make In life to find yourself pleading, begging a national television audience at the end of a pandemic to not believe reports that you recommended the life-saving vaccine that you definitely took. pathetic. pic.twitter.com/YvbPWfGf1I

— John Whitehouse+ (@existentialfish) July 23, 2021

For those of you who joined us recently (after 2013), I thought I'd rerun this favorite passage from Pauline Kael

  In 1971, people took film so seriously that they actually starting taking film criticism seriously. Critics were major celebrities. They appeared on talk shows receiving equal billing with the stars they wrote about. Their serious debates (and often childish feuds) were covered extensively. Your position on auteurist theory might not be as divisive as your stand on Vietnam but among the intelligentsia, it could be competitive. 

Kael was the most influential and controversial critic at the time. Today she is the best remembered (and most misremembered). One of these days, when my schedule clears and I regain the ability to focus, I need to revisit her work (long form only. Short form is best avoided by any but the completist).

 Still relevant and still badly needed.

SATURDAY, NOVEMBER 2, 2013

Weekend blogging -- Kael and the importance of context

Pauline Kael had a rare knack for pointing out things that you never realized had always bothered you, like the way so many analysts of pop culture get things so badly wrong because the lack adequate context and detachment and because they're completely oblivious of these limitations.

I was working on a post on the dangers of writing a serious socio/political essay from a fanboy perspective and I was reminded of the next to last paragraph of the following excerpt from Raising Kane. After I went back and reread it, I decided I needed (had an excuse) to print the whole passage:

In later years, Welles, a brilliant talker, was to give many interviews, and as his power in the studios diminished, his role in past movies grew larger. Sometimes it seems that his only power is over the interviewers who believe him. He is a masterful subject. The new generation of film historians have their own version of “Look, no hands”: they tape-record interviews. Young interviewers, particularly, don’t bother to check the statements of their subjects—they seem to regard that as outside their province—and thus leave the impression that the self-aggrandizing stories they record are history. And so, as the years go on, if one trusts what appears in print, Welles wrote not only Kane but just about everything halfway good in any picture he ever acted in, and in interviews he’s beginning to have directed anything good in them, too. Directors are now the most interviewed group of people since the stars in the forties, and they have told the same stories so many times that not only they believe them, whether they’re true or false, but everybody is beginning to.

        This worship of the director is cyclical—Welles or Fellini is probably adored no more than von Stroheim or von Sternberg or De Mille was in his heyday—but such worship generally doesn’t help in sorting out what went into the making of good pictures and bad pictures. The directors try to please the interviewers by telling them the anecdotes that have got a good response before. The anecdotes are sometimes charming and superficial, like the famous one—now taken for motion-picture history—about how Howard Hawks supposedly discovered that The Front Page would be better if a girl played the reporter Hildy, and thus transformed the play into His Girl Friday in 1940. (“I was going to prove to somebody that The Front Page had the finest modern dialogue that had been written, and I asked a girl to read Hildy’s part and I read the editor, and I stopped and I said, ‘Hell, it’s better between a girl and a man than between two men.’”) Now, a charming story is not nothing. Still, this is nothing but a charming and superficial story. His Girl Friday turned out joyously, but if such an accident did cause Hawks to see how easy it was to alter the play, he still must have done it rather cynically, in order to make it conform to the box-office patterns then current. By the mid-thirties—after the surprise success of It Happened One Night—the new independent, wisecracking girl was very popular, especially in a whole cycle of newspaper pictures with rival girl and boy reporters. Newspaper pictures were now “romantic comedies,” and, just as the movies about lady fliers were almost all based on Amelia Earhart, the criminal-mouthpiece movies on William Fallon, and the gossip-column movies on Walter Winchell, the movies about girl reporters were almost all based on the most highly publicized girl reporter—Hearst’s Adela Rogers St. Johns. Everybody had already been stealing from and unofficially adapting The Front Page in the “wacky” romantic newspaper comedies, and one of these rewrites, Wedding Present, in 1936 (by Adela Rogers St. Johns’s then son-in-law Paul Gallico), had tough editor (Cary Grant) and smart girl reporter (Joan Bennet) with square fiancé (Conrad Nagel). This was the mold that The Front Page was then squeezed into to become His Girl Friday, with Cary Grant, Rosalind Russell, and Ralph Bellamy (already a favorite square from The Awful Truth) in the same roles, and Rosalind Russell was so obviously playing Adela Rogers St. Johns that she was dressed in an imitation of the St. Johns girl-reporter striped suit.

        Some things that students now, seeing films out of the context of the cycles they were part of, may take to be brilliant inventions were fairly standard; in fact, the public at the time was so familiar with the conventions of the popular comedies that the clichés were frequently spoofed within the pictures. But today, because of the problems peculiar to writing the history of modern mass-art forms, and because of the jumbled circumstances in which movies survive, with knowledge of them acquired in haphazard fashion from television, and from screenings here and there, film enthusiasts find it simpler to explain movies in terms of the genius-artist-director, the schoolbook hero—the man who did it all. Those who admire Citizen Kane, which is constructed to present different perspectives on a man’s life, seem naïvely willing to accept Welles’s view of its making; namely, that it was his sole creation.

        Howard Hawks must wonder what the admiration of the young is worth when he learns from them that he invented overlapping dialogue in His Girl Friday, since it means that they have never bothered to look at the text of the original Hecht and MacArthur play. Welles, too, has been said to have invented overlapping dialogue, and just about everything else in Kane. But unearned praise is insulting, and a burden; Welles sometimes says, “I drag my myth around with me.” His true achievements are heavy enough to weigh him down. Welles is a great figure in motion-picture history: he directed what is almost universally acclaimed as the greatest American film of the sound era; he might have become the greatest all-around American director of that era; and in his inability to realize all his artistic potentialities he is the greatest symbolic figure in American film history since Griffith.

Sidenote: this was also something of a swipe at the writing of  Peter Bogdanovich. Perhaps not coincidentally,  Bogdanovich has since engaged in a decades-long effort to discredit Kael and this essay. See here and here for examples.

Tony Soprano was a piker

 

“Once you know how it all ends, the only use of time is…how do I buy more bitcoin? But take all your money and buy bitcoin. Then take all your time, figure out how to borrow more money to buy more bitcoin. Then take all your time and figure out what you can sell to buy bitcoin. And if you absolutely love the thing, that you don’t want to sell it, go mortgage your house and buy bitcoin with it. And if you’ve got a business that you love because your family works for the business and it’s in your family for 37 years, and you can’t bear to sell it, mortgage it, finance it, and convert the proceeds into the hardest money on earth, which is bitcoin.” – Michael Saylor

As a companion piece to yesterday's post,  Doomberg peaks into the window of the asylum. 

Fast forward about 20 years to mid-2020. MicroStrategy is a no-growth (but free cash flow positive) software provider sitting on about $500 million in cash. Saylor, who owns 25% of MicroStrategy’s stock, makes a fateful decision. With a market cap of $1.2 billion, his ownership of MicroStrategy is worth approximately $300 million. As we’ll see, Saylor isn’t the settle-for-being-a-centi-millionaire type, so he decides to do something totally unique. He goes all in on bitcoin.

On August 11, 2020, Saylor and MicroStrategy shocked the investing world by revealing they had spent $250 million of shareholder money to purchase 21,454 bitcoins at an average price of $11,652 each. Recognizing the significant risk of a negative market reaction, Saylor hedged his bluff. MicroStrategy’s stock had closed at $123.62 the day prior. Concurrent with the bitcoin announcement, the company also revealed it was willing to repurchase up to $250 million of the company’s stock at up to $140 a share, a 13% premium to the prior close. Here’s the text from the 8K filed with the SEC:

“On August 11, 2020, the Company also issued a press release announcing that the Company has commenced a “modified Dutch Auction” tender offer to purchase up to $250.0 million in value of shares of its issued and outstanding class A common stock, or such lesser number of shares as are properly tendered and not properly withdrawn, at a price not greater than $140.00 nor less than $122.00 per share. A copy of this press release is attached as Exhibit 99.2 to this Current Report on Form 8-K.”

The bluff worked, and so did Saylor’s bet on bitcoin. MicroStrategy’s stock quickly rose to above the repurchase offer. Ultimately, the company only ended up spending $60.5 million on the modified Dutch auction and used the remaining money to, wait for it, buy more bitcoin!

...

Saylor also continued to put his shareholder’s money where his mouth was, regularly using the rest of the company’s cash (and any new cash flow generated by the underlying software business) to buy more bitcoin. When those funds ran dry, Saylor officially crossed the Rubicon. On December 7, 2020, with the stock trading at $330 a share and bitcoin trading at $19,000, MicroStrategy announced its intent to issue debt in the form of unsecured convertible bonds to buy more bitcoin. Naturally, the deal was oversubscribed and upsized to $650 million. Stonks and whatnot.

On February 9, 2021, with bitcoin over $47,000, MicroStrategy stock reached an intraday all-time high of $1,315 a share, a ten-fold increase since Saylor embarked on his bitcoin adventure. His stake in MicroStrategy soared to above $3 billion, on paper at least.

What is a responsible steward of shareholder value, err, degenerate gambler to do? This might come as a surprise to you, but Saylor isn’t the settle-for-being-a-low-single-digit-billionaire type either. A week after MicroStrategy’s stock topped, he went back to the debt market, this time raising $1.05 billion in a new unsecured convertible debt offering to buy yet more bitcoin. This time, however, he seems to have nearly top-ticked the bitcoin price. After reaching $57,000 in the aftermath of Saylor’s latest gambit, bitcoin treaded water for the next three months, before collapsing by ~50% in mid-May to the mid-$30,000s.

Just when I thought Saylor was out of Rubicons to cross, he found another. Having tapped out the unsecured debt market, Saylor literally mortgaged MicroStrategy’s software business to raise yet another $500 million of debt, but this time it was of the secured variety. That’s right, by issuing a straight bond with a 6.125% coupon, secured by the assets and future cash flows of the software business, Saylor simultaneously screwed over the previous buyers of the unsecured convertible debt (by cramming them down the cap table behind the new bondholders) and tripled down on his bitcoin parlay.

The latest development is MicroStrategy selling up to one billion new shares of equity, undoubtedly to buy more bitcoin. The closest analogy I can think of for all this is a mafia bust out but with the CEO doing it to his own company. 

But no one seems to care. Not the regulators, of course, because this is the 21st century. Not the stockholders who have given this bitcoin holding company a market cap of more than one and a half times the bitcoin it holds. More than twice if you figure in the massive debt the company has taken on. 

Here's the kicker. Even though the company is obviously obscenely overvalued, Doomberg DOES NOT recommend betting against it. "In today’s market, the more outrageous a CEO behaves, the higher their stock can go." It may have always been true that "the market can stay irrational longer than you can stay liquid," but it's never been this true.

Hiltzik on Robinhood

One of the fundamental lies of early 21st century investing is that making it easier and cheaper to play the markets with tools including a full range of derivatives will democratize the system and finally let the little guy compete on an equal footing.

This isn't just wrong; it's dangerously wrong, but far too many journalists have been too timid to call this out. Fortunately, here is LA we have Michael Hiltzik. 

The cost of the settlement is $70 million, including $12.6 million in restitution to customers. The Financial Industry Regulatory Authority, or Finra, which imposed the settlement, calls the fine the largest in its history.

Robinhood settled the Finra case without admitting or denying the allegations, but “consented to the entry of FINRA’s findings,” the regulator said. Stripped of its jargon, that statement implies that you can interpret Finra’s allegations as true.

That’s not a good look for a company about to issue stock to the public for the first time, especially since Finra’s case is so comprehensive. Nor is it particularly consistent with Robinhood’s corporate boast that its mission is “democratizing finance for all.”

The company founders say in a letter to shareholders and customers attached to its SEC stock registration filing that “we believe that it’s important ... to be able to own stocks directly in the companies you love, without any middlemen.” (Of course, Robinhood itself is a middleman, but leave that aside.)

Indeed, Robinhood’s performance thus far raises the question of whether Wall Street will look askance at any alleged wrongdoing as long as there’s money to be made. The date for Robinhood’s public offering on Nasdaq hasn’t been set, but the whisper number on the street is that the firm could be worth $30 billion.

That’s possible because the details of Finra’s findings haven’t been as widely reported as the size of the settlement, which is broadly seen as Robinhood putting its problems behind it.

We’ll take a closer look. Finra accused Robinhood of plying millions of customers with “false or misleading information” about their account balances, of leaving millions of customers unable to trade because its IT systems broke down at crucial moments, and of approving thousands of customers for options trading even though it should have known they were unqualified to play the options market.

...

Its app was crafted to resemble a video game, with features that appear designed to get customers’ blood flowing, including a digital confetti shower to mark customers’ first trades and other milestones.

“Our app is simple, easy-to-use, bright — maybe even delightful,” its website says. But it scrapped the confetti thing after Massachusetts regulators filed a complaint that it was luring inexperienced customers into treating investing as a game.

...

The mystery of why Robinhood would be so cavalier about exposing its customers to options trading risk may have been solved by its stock registration filing. That document reveals that the firm made handsome revenues from options trading, through a process known as “payment for order flow.”

This is a controversial practice through which retail brokers such as Robinhood steer customer orders to big trading firms, which appreciate the volume, for a fee. (Robinhood’s alleged failure to fully disclose this practice to customers and how it might affect the prices at which they bought and sold securities is what brought the SEC down on its head in December.)

According to the filing, Robinhood collected about 0.2% of the value of its customers’ holdings of stocks as payment for order flow as of the end of the first quarter of this year — $133.3 million in “transaction-based revenues” on holdings of $65.1 billion. But it received 9.7% of its customers’ option holdings as payment — $198 million on holdings of only $2 billion. Obviously, the options market was a cash cow for Robinhood, compared with the stock market.

That brings us to one more aspect of Robinhood’s business that became known through its stock registration filing: It has become a big player in the cryptocurrency market, especially in Dogecoin.

Dogecoin, as it happens, is a cryptocurrency that was originally launched as a parody of Bitcoin. But since nothing in the crypto market makes any sense in terms of financial fundamentals, it has gained a foothold as a tradable instrument.

Among the “risk factors” Robinhood listed for would-be investors in its SEC filing is its immoderate dependence on revenues from Dogecoin trading. In the quarter that ended March 31, they amounted to about 6% of total revenue of $420.4 million, or about $25 million.

Monday Tweets

🤬فقط في مصر 🤬 pic.twitter.com/omo4Im5hwU

— Error 404 (@Error4019082820) July 11, 2021

One of the lessons of the education reform movement was that defunding an institution is generally the worst way to reform it. Politically speaking, the only thing worse would be to associate your party with defunding while the other party was actually doing it on the sly.

Worth reminding that in each of the four previous years, the GOP White House proposed large cuts in police spending. https://t.co/q34gT0AwI1

— Matthew Yglesias (@mattyglesias) July 11, 2021

Back to the strap-on wings configuration

At 104 years and running, the "Here comes the flying car" story is one of journalism's most durable genres. https://t.co/YSZzClLthn

— Mark Palko (@MarkPalko1) July 12, 2021

[The 1917 Curtiss Autoplane]

It is difficult to overstate Andrew Sullivan's impact on American jornalism, and I do not mean that in a good way.

This is the lead "story" in this morning's Mike Allen Axios newsletter. It's an entire post about all the "elites" now being in the Democratic party and based entirely on a post by Andrew Sullivan. (washington remains wired for the gop ...) pic.twitter.com/wG5T5DA16Z

— Josh Marshall (@joshtpm) July 17, 2021

Covid notes.

Last week I spoke to over 5000 people in rural Georgia. Most were not vaccinated because they still had questions. EVERY question they asked was legitimate and important.

Stop telling people to “just get vaccinated” if you aren’t willing to put in the work to help them do it.

— Rhea Boyd MD, MPH (@RheaBoydMD) July 17, 2021

COVID vaccine refusal was not some unprompted, spontaneous reaction among pro-Trump Americans. It was manufactured: first as part of a larger program of denial to cover for Trump's pandemic failures; then after Trump lost, in order to stoke feelings of victimhood and persecution. https://t.co/F3EGOqsuOV

— David Frum (@davidfrum) July 17, 2021

Utah Republican Governor Spencer Cox: “We have these talking heads who have gotten the vaccine and are telling other people not to get it. That kind of stuff is dangerous, it’s damaging, and it’s killing people.” https://t.co/bbmVFJS2pI

— Bill Kristol (@BillKristol) July 16, 2021

Where we’re at …. pic.twitter.com/6zvON7ZERB

— Josh Marshall (@joshtpm) July 16, 2021

I am old enough to remember when childhood diseases - now controlled by vaccines - terrorized families, wreaking pain and heartbreak. This is lunacy. https://t.co/t84c8DKIUG

— Dan Rather (@DanRather) July 13, 2021

Gallup:

Republicans' confidence in science is nearly 30 points lower than in 1975.

1975: 72% of Republicans had confidence in science
2021: 45% of Republicans have confidence in science

— Kyle Griffin (@kylegriffin1) July 17, 2021

I am begging you to make me show my vaccination card

— Starlee Kine (@StarleeKine) July 16, 2021

One for both the education and Tucker-Carlson-is-a-horrible-person threads.

Backing up a bit... IMHO, many of the misconceptions about how schools actually work are colored by folks misremembering gow their own school operated decades ago. Too many refuse to even consider that their memories may be a bit clouded https://t.co/6r1aJqQrit

— Jersey Jazzman (@jerseyjazzman) July 14, 2021

The economic niche for dancing robots is smaller than you might think.

It seems prudent that I should surface this comment yet again: https://t.co/6dqNqikT70

— Adam J. Cook (@AdamJosephCook) July 17, 2021

A good point about the hiacking metaphor.

To my former colleague Adam Kinzinger I say, respectfully, bullshit. Our party hasn’t been “hijacked.” THIS IS WHO OUR PARTY IS. This is what our party has been for a long time, and the leaders of our party ignored it. And now our party is fully radicalized. That’s no hijacking. https://t.co/eKAV3iz6H4

— Joe Walsh (@WalshFreedom) July 11, 2021

The conclusion might be getting just a bit ahead of its skis, but still interesting

The Jan. 6 riot at the Capitol hurt the Republican Party, new research finds https://t.co/JnhbrQcQLk

— Monkey Cage (@monkeycageblog) July 16, 2021

Best thing you’ll see today… https://t.co/NyO3UVatOf

— Rex Chapman🏇🏼 (@RexChapman) July 16, 2021

Marshall (almost) goes there

Let's just get this out of the way at the top. 

There is no way to have a blanket objection to the filibuster in principle and not object to the actions of Democratic state legislators in Texas. If you use the framing of anti-majoritarian = bad then there is simply no way to support (or even defend) this tactic. Under these assumptions, placing constraints on the will of the majority is simply wrong. They also make the Bill of Rights more than a bit problematic (it's basically just a list of things even a democratically elected government isn't allowed to do), but that's a topic for another day.

Josh Marshall is a more nuanced thinker. 

We’re witnessing another of these state legislators abscond across state lines dramas in Texas. As I mentioned a few weeks ago, it hearkens back to a similar drama in 2003 which presaged much of our current politics. But I’d like to take this in a different direction. What we’re seeing right now with these efforts to short-circuit the legislative process is what the legislative filibuster in the Senate should be like.

Now, I’m not suggesting that we move to a system where Senators run off to Canada or I guess in some cases Russia. It gets a bit more complicated in jurisdictional terms. But Texas Democrats clearly believe these laws are of an extraordinary character. Texas legislative Democrats get outvoted all the time. But they view this law as different from other laws they oppose. And most critically their actions are public and self-limiting.

It’s very publicly clear what’s happening here. Democrats are making a huge spectacle. No one’s going to miss that. They also have to be very clear why they’re doing it. It’s because of an assault on voting rights in the state. They have to own that. And they’re taking this step because they’re clearly quite willing to own that.

Just as clear, this can only go on for so long. How do I know? Basically logic really but also history. We’ve seen this in Texas, Oregon, Wisconsin and various other places. Legislators are only willing to stay on the lam for so long. Over time there are various tools legislative majorities can use to get their way. (That’s not a bad thing. Majority rule is our fundamental system.) You also need a really good reason for doing it. Otherwise public opinion will rapidly turn against you.

The whole effort is best seen as an effort to stall, buy some time and they hope either slow the process down or shift public opinion in their favor. It’s not pretty but there’s some value in having that kind of escape valve in the legislative process. It’s public. It’s self-limiting. You have to own it and be politically accountable for your actions.

Reading between the lines a bit (because the post, while well reasoned, does not follow through with what seem like fairly obvious conclusions), Marshall apparently sees the filibuster as bad because it can be used by a minority without restraint, transparency or cost. Since the Texas action looks like a good filibuster, this implies good filibuster is possible.

It's also worth noting that, as far as I can tell, everything Marshall says about what a filibuster should be applies to the talking filibuster. He stops short of an endorsement but it's pretty much the inescapable next step.

I believe the underlying logic here (which I happen to agree with) is that while the support of 50.01% of the population should not give you unconstrained power and there are rare cases where a minority should be able to at least delay the majority's will, there must be constraints on those constraints. The process has got to be transparent, costly and difficult to sustain and it must come with real accountability. A talking filibuster meets these conditions; supermajority rules do not.

I realize abolishing any form of the filibuster has become a point of principle for many. I'm just not sure if those principles are well thought out, let alone a hill worth dying on.

One Twitter thread and one tweet. Presented without comment.

And un grand nudge à la française already at work this evening. Macron announces tight upcoming restrictions for the unvaxxed (no restaurants, bars, flights etc) and French anti-vax sentiment crumbles in real time: 20,000 vax appointments being made each minute since he spoke https://t.co/8Ey2kKhVcD

— Sophie Pedder (@PedderSophie) July 12, 2021

And now it's our worldwide daily chart.
Bonne #fetenationale 🇫🇷 Happy Bastille Day ! https://t.co/8iQPR8bPdF @TheEconomist

— Sophie Pedder (@PedderSophie) July 14, 2021

With Tennessee's hard turn against all vaccines, this state directive stands out: “no outreach whatsoever regarding the HPV vaccine." https://t.co/vYSEf591ln via @TPM

— Josh Marshall (@joshtpm) July 14, 2021

"Musk is not in it for the money."

[For the source of the quote...]

From a product standpoint, SolarCity isn't a very interesting company. Tesla has made some impressive cars and the engineers at SpaceX have made real progress building on TRW's foundation. SC's best known product is, by comparison, roof tiles that didn't actually exist when Musk demonstrated (and still don't match the specs he claimed.

However, for those trying to make sense of Musk the businessman, keeping up with the SolarCity story. We've already recommended this excellent long-form expose by Bethany McLean (best known for her reporting on Enron, which should give you some idea where things are going). For a more up-to-date account, check out this from Dana Hull. 

Remider: Musk used his other entities to raise capital for SolarCity, including @SpaceX. SpaceX had $255 million of SolarCity bonds and Musk bought $65 million worth of SCTY bonds himself. For a deep dive, read this: https://t.co/TfA32F0oUw

— Dana "Vaxxed & Masking Indoors” Hull 👩🏻‍💻 (@danahull) July 13, 2021

[Emphasis added]

Tesla’s board initially balked at the proposal. So did Evercore Inc., one of the banks it brought in to evaluate the deal. (Not that they felt their guidance would be heeded: “It’s Elon’s world. We just live in it,” an Evercore banker joked in an email.) Even Tesla’s then-Chief Financial Officer Jason Wheeler raised concerns. “We have Model 3 happening. We have a lot of things going on. We ourselves have a large debt load,” Wheeler said in his June 2019 deposition. “Why do we need to do this now, Elon?” 

Then there were the jarring conflicts of interest. Besides his cousins Lyndon and Peter Rive running SolarCity, its board and Tesla’s had complicated overlaps. Six of Tesla’s seven directors were Musk associates (including his brother, Kimbal) with SolarCity ties. Antonio Gracias was on the board of both companies. What’s more, Musk had used his other entities to raise capital for SolarCity: SpaceX, for example, had purchased $255 million of SolarCity bonds. Musk bought $65 million worth. Tesla’s directors had to grapple with this apparent self-dealing as Musk pushed them to reconsider the acquisition in May 2016. Musk said he recused himself from these deliberations, but court filings indicate he remained actively involved, even advocating for the move directly with bankers and investors. 

To win over shareholders, Musk came up with the concept of a “Solar Roof” that resembled a traditional rooftop shingle but could capture power from the sun. At a joint Tesla-SolarCity event in Los Angeles in October 2016, Musk showed off the product to an impressed audience. The demos he unveiled weren’t functional, but the acquisition received approval a few weeks later.

Musk may still dodge this bullet but if he does, it probably says more about the legal system than it does about his case.

Musk's argument that Tesla needed SolarCity deal to aid its Powerwall battery business is, uh, a stretch. Every solar installer in the U.S. touts Powerwall batteries to would-be customers. They aren't exclusive to people who order Tesla solar systems 🤔 https://t.co/QKXzVc0NFD

— Alan Ohnsman 🚶🏼‍♂️🚲🚌🚄 (@alanohnsman) July 13, 2021

Perhaps the most telling testimony came from Kimbal Musk in an earlier hearing. The whole thread is highly recommended.

6/ On October 20th, 2015, SolarCity stock is starting to fall, and Kimbal is facing a potential margin call. He is asking Elon for a loan or considering selling SpaceX stock. He knows he is going to sell some $TSLA stock in November via his predetermined 10b5-1 plan. $TSLAQ pic.twitter.com/nmJt2I0bpp

— TC (@TESLAcharts) October 29, 2019