Monday, December 18, 2017

"Debunking the Theory of the Firm"

From Elaine's Idle Mind:
Until recently, US tech companies were pretty good about taking care of employees from new hire to retirement. Many Fortune 500 companies had explicit no-layoff policies: Hewlett Packard, Motorola, General Motors, McDonnell Douglas, Lincoln Electric, American Airlines, Delta. IBM never laid off a single worker until 1993.
This tie clip is a tiny slide rule that IBM gave to retiring employees. Do they still give these out? Do employees even make it to retirement age anymore?
At some point, the employer-employee relationship fell off a cliff. Corporations used to value the loyalty they gained by promising lifelong job security. Now they don’t even want real employees: Nearly all of the 10 million jobs created since 2005 are temp positions.

Does this disprove the Theory of the Firm? According to Ronald Coase, organizations form long-term relationships with employees to eliminate the transaction costs of constant market exchange. Sourcing candidates, negotiation, hiring with incomplete information, making sure contractors don’t run off with a USB stick full of trade secrets – that’s all really expensive!

The Sovereign Individual predicted that technology would eventually automate the firm away. Information systems and AI could seamlessly coordinate a two-sided marketplace. Offices equipped with surveillance devices would measure workers’ output, obviating the need for employee trust. Isn’t that basically Uber? With the help of services like LinkedIn and Gigster and Foundry and Fiverr, we can already reduce transaction and coordination costs to the point where full-time employment makes no sense at all.

Why stop at ruining jobs?...

Today in Crypto: "Man Arrested After Making Over $1 Million Selling Chuck E. Cheese Tokens As 'Bitcoins'"

From Huzlers:
NEW YORK CITY – A New York man has been arrested after he reportedly made over a million dollars selling Chuck E. Cheese tokens as Bitcoins on the streets.

Marlon Jensen, 36, was arrested a Sunday morning when NYPD stormed his home. NYPD received calls from the fraud victims that someone had sold them “Bitcoins”, only to find out there actually was no tangible bitcoin currency available. NYPD found $1.1 Million of cash inside Marlons home. According to police, Marlon had scratched off most of the Chuck E. Cheese engravements on the coins, and would write “B” on each coin with permanent marker.

As many should know already, Bitcoin is a crypto currency and payment system that has recently received unprecedented popularity and value, with each bitcoin currently worth $18,950 USD. Although Bitcoin isn’t actually a tangible form of currency, that hasn’t stopped some people from successfully selling “bitcoins” to people using irrelevant gold coins, in this case Chuck E. Cheese Tokens.

“People are retarded haha”, said NYPD Officer Michael West, “My 8 year old son would know those weren’t bitcoins and lord knows he’s not the brightest”.

Marlon is currently being charged with fraud and can face up to 5 years in federal prison.....
So the cop not only slams the slow-of-wit community but throws his own kid under da bus?
For folks unfamiliar with Chuck E. Cheese here's a handy graphic via imgur:

Previously on the C.E. Cheese beat:

Deloitte Canada Turning Into Chuck E. Cheese
A more accurate, but still wildly figurative headline would be "Chuck E. Cheese passes the token torch to Deloitte."
Or something. You decide.
From Going Concern, your source for the accounting news you won't find elsewhere:...

Now It Can Be Told: Mohammed bin Salman Was the Mystery Buyer of the $300 Million French Château

It's good to be King Crown Prince—although at the time of purchase he was just another Saudi prince, second in line to the throne.
From the New York Times:

World’s Most Expensive Home? Another Bauble for a Saudi Prince
LOUVECIENNES, France — When the Chateau Louis XIV sold for over $300 million two years ago, Fortune magazine called it “the world’s most expensive home,” and Town & Country swooned over its gold-leafed fountain, marble statues and hedged labyrinth set in a 57-acre landscaped park. But for all the lavish details, one fact was missing: the identity of the buyer.

Now, it turns out that the paper trail leads to Crown Prince Mohammed bin Salman, heir to the Saudi throne and the driving force behind a series of bold policies transforming Saudi Arabia and shaking up the Middle East.

The 2015 purchase appears to be one of several extravagant acquisitions — including a $500 million yacht and a $450 million Leonardo da Vinci painting — by a prince who is leading a sweeping crackdown on corruption and self-enrichment by the Saudi elite and preaching fiscal austerity at home.

“He has tried to build an image of himself, with a fair amount of success, that he is different, that he’s a reformer, at least a social reformer, and that he’s not corrupt,” said Bruce O. Riedel, a former C.I.A. analyst and author. “And this is a severe blow to that image.”

The story of Chateau Louis XIV, as pieced together through interviews and documents by The New York Times, unfolds like a financial whodunit, featuring a lawyer in the Grand Duchy of Luxembourg and a fixer for the very rich from the Mediterranean nation of Malta. Even Kim Kardashian made a cameo at the chateau, reportedly considering it for her wedding to Kanye West.

The ownership of the chateau, in Louveciennes, France, near Versailles, is carefully shrouded by shell companies in France and Luxembourg. Those companies are owned by Eight Investment Company, a Saudi firm managed by the head of Crown Prince Mohammed’s personal foundation. Advisers to members of the royal family say the chateau ultimately belongs to the crown prince.
Eight Investment was the same company that backed Prince Mohammed’s impulse buy of the 440-foot yacht from a Russian vodka tycoon in 2015. The company also recently bought an 620-acre estate in Condé-sur-Vesgre, known as Le Rouvray, an hour’s drive from Paris. The chateau’s architect is refurbishing the manor house there and building structures for an apparent hunting compound, according to permit records at the local town hall.

Versailles Style, Modern Amenities
The chateau’s developer, Emad Khashoggi, nephew of the late billionaire arms dealer Adnan Khashoggi, bulldozed a 19th-century castle in Louveciennes to make way for the new chateau in 2009. To the naked eye it appears to have been built in the time of Versailles, the royal palace that set a world standard for gaudy luxury. But the 17th-century design camouflages 21st-century technology. The fountains, sound system, lights and whisper-silent air conditioning can all be controlled remotely by iPhone....MUCH MORE, including slide show
Messy Nessy (linked by us in "Huh, Apparently The Barbie Doll Began Life As a High-end German Call Girl Named Lilli"  and many others) had some of the best interior shots of the house:
...What feels like an online sales brochure, except it’s not, is accompanied by dozens of overly-photoshopped images of the vast property, including a few cheesy stock photos of a woman dressed in Cinderella-style evening wear, climbing the stairs– before it strikes midnight and she realises Prince Charming never moved in, and her fairytale castle is a big empty replica show home.
The five meter high ceilings with copycat trompe l’oeil frescoes as seen at Château Vaux-le-Viconte, hide perfectly silent air conditioning vents. Hidden under the palace’s very own moat is a “meditation room” inside a giant glass bubble for admiring the marine life within the giant aquarium.
Also built in the moat is an underwater 50 square meter safe, enclosed by two heavy armoured doors with a real vault and a garage that can hold eight vehicles. An entire floor is dedicated to leisure, with an indoor and outdoor heated pool, which you can dive into from the terrace above, a squash court, gym, a movie theatre and even a disco with its own bar....

The Bank Of England's Christmas Special: Financial Crises in the 19th Century

Yes, it's time once again for the traditional reading of the crises.
From the BoE's Bank Underground blog:
Dec. 19, 2016
Today we begin a 3-part series of posts telling the story of a period of financial boom and bust in British economic history, when crises hit with almost clockwork regularity:  1847, 1857 and 1866.  We delved deep into the Bank’s archives to reveal letters exchanged between Governors and Chancellors of the Exchequer temporarily suspending the law, read the diary entries of the people at the heart of the turmoil, and perused the Bank’s ledgers of the time to bring the crises to life.

Together these three episodes were crucial in shaping the evolution of the Bank’s role into what we now think of as a central bank; the lessons learned during this time resulted in half a century of financial stability and are as relevant now as they were then.

Back then, the Bank was private bank with its own shareholders but it had to operate under the 1844 Bank Charter Act and the Gold Standard.  A practical consequence of this arrangement was that any new currency issued by the Bank had to be backed by gold.

In each crisis, the Bank’s cash reserves dipped so low that there was a risk it could not honour its liabilities to the rest of the financial system. Each time the government was asked to grant an indemnity to the Bank to allow the issue of unbacked currency, in order to allow the Bank to expand its balance sheet, provide liquidity and stabilise the financial system....

HT for the above and for the heads up on the series: FT Alphaville's Further Reading post, Dec. 20, 2016.

The series:
Dec. 19
The ghost of crises past, present and future: The Bank Charter Act goes on trial in 1847
Dec. 20
The Nightmare before Christmas: Financial crises go global in 1857
Dec. 21
Unto us a lender of last resort is born: Overend Gurney goes bust in 1866
Dec. 21
The Bank Underground Christmas Quiz

That failure of Overend Gurney was rather a big deal, it was in all the papers.
From our August 2016 post "Overend, Gurney & Co.: An Inspiration to Karl Marx and Bear Stearns":
One of the most dramatic events in the financial history of Victorian England was the collapse of Overend, Gurney and Co. Its failure had a more severe impact on the London financial market than the collapse of Bear Stearns had on U.S. markets over 140 years later. During the financial crisis of 1866, over 200 firms went bankrupt, including a number of banks. The failure of Overend, Gurney and Co. also led to one of the first trials for financial fraud in history when all six directors were brought before the courts of London to answer for their alleged crimes....

Shipping: Freight Forwarder Flexport: "...Digitizing The Entire International Shipping Process"

From CB Insights:

This Startup Is Digitizing The Entire International Shipping Process
Freight forwarding startup Flexport has raised more than $200M to take on the entire global shipping industry, while fending off other new entrants such as Amazon.
Logistics giants like DHL and Kuehne + Nagel have been entrenched industry leaders for decades, but their size may be an obstacle as new technologies emerge that can significantly streamline the shipping industry. San Francisco-based freight forwarding startup Flexport is attempting to upend these massive players, using its software-based infrastructure as a competitive advantage.

Recent headlines have highlighted the necessity for tech adoption in the logistics space. Shipping carrier Hanjin’s 2016 collapse, for example, stranded 400,000 containers aboard its ships and left 8,300 cargo owners with no visibility over their freight.

Flexport uses software and data to provide greater control and visibility to clients though freight forwarding service, which facilitates the international shipment of freight through coordination with manufacturers, warehouses, shipping carriers, and other global trade players.

Competing as a new freight forwarder is no easy task due to high regulatory hurdles, complex logistical operations, and competition from both startups and incumbents.

However, Flexport’s digital-first model — with real-time visibility and analytics tools — differentiates it from traditional larger players. At the same time, Flexport is one of the only digitally-driven logistics startups with significant funding to tackle the entire freight forwarding process.

Moreover, recent moves into capital-intensive offline services such as warehousing and trade financing may help further shield Flexport from emerging startup competition, where we’re seeing a more crowded market, while also helping it move up the value chain to more directly compete against incumbent corporations.

We analyzed Flexport’s financing history, investors, product offerings, business initiatives, and its biggest threats and opportunities to understand the company’s position against major rivals....MORE

"Germans fear huge loss of jobs from US tax reform"

From Handelsblatt:

German investment in the US is expected to rise by €39 billion because of lower US corporate taxes. 
While Americans are anxiously awaiting full details of the tax bill now being finalized in Congress, German economists are warning that the changes sought by President Donald Trump mean that significant amounts of new investment and jobs will shift from Europe to the United States.

“The tax competition will have a new dimension,” said Christoph Spengel, chairman of the corporate tax department at the University of Mannheim. Mr. Spengel, who is also a research associate at the Center for European Economic Research, and a group of tax experts at the university have done a detailed comparison of the two countries’ tax systems and published a report under the heading, “Germany loses out in US tax reform.”

Clemens Fuest, who heads the Ifo economic think tank, also said he believed German business would suffer. “Investments and jobs will migrate to the US,” he said....MORE

Sunday, December 17, 2017

iPod and Nest Creator Tony Fadell Talks About Apple and Google (AAPL; GOOG)

From Wired, October 19, 2017:

Tony Fadell’s Next Act? Taking on Silicon Valley—From Paris
Tony Fadell is at the Grove, a spectacularly beautiful country estate outside of London. The event is Founders Forum: the ultra ­exclusive invite-only tech conference. Prince William is in the house. The guest list is lousy with knights and lesser officers of the Most Excellent Order of the British Empire. Marissa Mayer, the now ex-CEO of Yahoo, and Biz Stone, recently returned to Twitter, are mingling with the other hundred or so invitees. But this is really Fadell’s moment.

It’s almost exactly 10 years since the iPhone was released, and the media buzz is inescapable. The press is having trouble coming up with superlatives to describe the impact of a device that has sold more than a billion units. A new book, The One Device, is lighting up the intertubes with fresh gossip about “the secret history of the iPhone.” And Fadell—both the source and the subject of that gossip—is getting his due as one of the guys most responsible for turning Steve Jobs’ one-device-to-rule-them-all vision into reality.

The title of the afternoon session is “What to Build Next?” and Fadell is onstage with two other bona fide tech zillionaires—Niklas Zennström, the Skype guy; and Kevin Ryan, one of New York City’s most successful internet entrepreneurs—as well as a couple of other founder-­investor types. Of the five people onstage, Fadell is the only one who helped build an object that every person in the audience has most likely used at one time or another. First Fadell helped build the iPod for Apple, then the iPhone, and then he ventured out on his own to build the Nest thermostat.

Fadell is the star of the show, and he knows it. His self-confidence is well earned but can come across as overweening—especially to those who suddenly find themselves in his shadow. “Any VC who tells you that you have to move to Silicon Valley,” Fadell says at one point, gesticulating wildly, “is being very lazy.” Two of the other people onstage are, in fact, from Silicon Valley venture capital firms, and their collars seem to squeeze a bit tighter. Fadell, in comparison, is supremely comfortable: relaxed and expansive in a pair of bright red sneakers—no socks—and a polo shirt. The moderator, wrapping things up, calls for a lightning round: a rapid-fire series of questions—with only one-word answers allowed.

What’s the biggest problem facing the world right now?
“Climate,” Fadell says. Then he adds, “We’regoingtohavetogonuclear …” before being hushed by the moderator for busting the one-word rule.

What’s the next big thing in tech?
“Computational synthetic biology,” Fadell says, bending the rules a second time.

What is the one word that people who know you would use to describe you?

With that, the panel is over, and Fadell is mobbed as he tries to leave the Grove’s 18th-century manor. People want autographs, selfies, a word or two—but the most persistent want money and advice. Like many of his contemporaries, Fadell makes personal investments as an angel, through a firm called Future Shape, with one important difference: He says he has a venture-size pool of money—a portfolio of Future Shape investments worth more than half a billion dollars. Looking to make his escape, Fadell slips into the men’s room. One persistent supplicant follows and, while Fadell is standing at the urinal, penis in hand, proceeds to make his pitch. It’s a startup with a new design for a robotic arm. Fadell listens for less than a minute and, shaking off, says: “A new robot arm? China is going to copy that in a second! What then? What’s your value proposition?”
Faster, better, cheaper … blah blah blah.

“Not good enough!” Fadell thinks, before offering some bland words of encouragement and dashing off to slip into the back seat of a black Mercedes-Benz S-class emblazoned with the AMG performance badge. As we start to speed toward central London to catch the afternoon Eurostar to Paris, he entertains the chauffeur (and me) with the penis-pitch story. “I did like his persistence, though,” Fadell says, “I respect that.”

Turning philosophical, Fadell puts on his shades against the bright sun streaming through the backseat sunroof. “It’s kind of like being a film producer,” he says, reflecting on his new role, post-Nest, as an investor. People pitch him, and if he likes their idea, it’s go time.

As if on cue, Fadell is forced to cut his reverie short to take a call from a young journalist doing a story on “the new culture of celebrity in tech.”
Did you ever think that tech would make you into a celebrity?

“Absolutely not!” Fadell says. “The tech business in the ’80s was Revenge of the Nerds. It was geeks. We were looked down upon, trodden upon …” Fadell is working himself into his trademark lather. “ ‘Who are these crazy guys with pocket protectors and broken glasses?’ ” he asks rhetorically. “So you never thought that you were going to become a rock star,” Fadell says, winding down, before quickly amending the thought. “Not that I am,” he says, “but that’s what some people think.”

I don’t think Fadell is a rock star, but I’m quickly realizing that he is not your run-of-the-mill Silicon Valley billionaire making an early retirement out of an investing hobby either. For starters, he doesn’t even live in the Valley anymore. He has moved to Paris. Permanently. And the more I learn about him, the more I begin to suspect that Silicon Valley’s favorite son secretly hates the Valley. To hear Fadell tell it, he certainly has reason to.
Rewind to the early ’90s....MUCH MORE

"The 6 Most Statistically Full of Shit Professions"

A repost from January 2013:

From Cracked:
People get paid a lot of money to be experts on things, so one would assume they're much more knowledgeable than the average Joe or, at the very least, a blindfolded monkey throwing darts.
Sadly, in many cases this just isn't true, and the so called "expertise" in question amounts to little more than a shot in the goddamn dark. Here are a few cases of experts that probably shouldn't inspire as much confidence as they do.
#6. Stock Market Experts
Many of us find the stock market too intimidating to put money into, or at least we would if we had the money to invest in the first place. How do you decide what stocks to pick? We can't even pick where to go for lunch half the time and we understand lunch.

...don't we?
That's when you call in a professional, or if you're not rich, you buy a pre-set package of stocks and bonds that a professional has pre-picked for you, and then sit back and, uh...
Watch your stocks grow more slowly than if you picked them at random.  
Yes, as it turns out, the majority of professionally managed funds picked by stock market experts (70 to 85 percent) actually underperform the Dow or S&P indexes, which are technically supposed to represent the average performance of the market to begin with. 

Results not typical. 
If you do have to peddle your nest egg off to someone else, try to hand it to Warren Buffet, whose Berkshire Hathaway stocks have outperformed the index by 11.14 percent on average for over 30 years. So it's not like financial advisors can't know what to pick. They usually just don't.
But hey, there is some good news: When going up against a bunch of dudes throwing darts at a chart to randomly pick their stocks, the stock professionals performed better.
 #5 Wine Tasters
One thing we all can be sure about is that people that make their living writing about wine must be able to sniff out differences between wines much better than us plain ordinary folk.
Sure, Joe Consumer actually likes cheaper wines better, but that's because Joe Consumer is a stupid Philistine. The experts can tell the difference between a 2006 and 2007 Stag's Leap Cabernet Sauvignon in their sleep because everyone knows 2006 was a pedestrian year for Napa Valley reds.
Hell, they are so good they can tell the difference between two bottles of the same wine. In one experiment, wine experts were given two bottles of the same wine, only one was labeled a "vin de table" (France's version of "Night Train") and one was labeled a "grand cru" (top-rated vineyard since 1855). Want to guess what happened?
According to the article: "Whereas the tasters found the wine from the first bottle 'simple,' 'unbalanced,' and 'weak,' they found the wine from the second 'complex,' 'balanced,' and 'full.'" Not only were their tasting skills put to shame, it didn't even occur to them that nobody buys a $40-plus bottle of wine for a university experiment.

"...this tastes like vodka and grape soda." 
Not only can professional wine tasters be convinced that the same bottle of wine was both award-winning and hobo juice, but they could even be convinced that the same bottle was both red and white with the cunning use of food coloring.
That's not to say the whole idea of wine tasting is a crock- it just seems like a field where judging with one's eyes is a temptation too easy to fall into. For example, in the 1976 Judgment of Paris, French experts picked American wines as superior to their own, recoiling in horror when they found out.
#4. Art Critic
Despite being the battle cry of the bad artist, it's really true that art is subjective. So we don't expect art critics to be able to tell us which art is the "best." We do expect them to at least be able to tell the difference between a Van Gogh and a Picasso, or a Vermeer and a Gary Larson.
The good news is that one of those expectations is correct....MORE
Hmmm....a disturbing trend appears to be emerging.

The first episode of the Simpsons — Season 1, Episode 1 — Debuted on December 17, 1989

Twenty-eight years ago this evening.

From NowIKnow:

The Forgotten History of Jingle Bells
The first episode of the Simpsons — Season 1, Episode 1 — debuted on December 17, 1989. Homer and Marge (with Maggie in tow) make their way to Springfield Elementary School for Lisa and Bart’s Christmas concert. Bart’s grade is singing a Christmas melody featuring the iconic song “Jingle Bells.” But Bart, as seen in this clip goes with some alternative lyrics — “Jingle Bells, Batman smells, Robin laid an egg; the Batmobile broke its wheel; the Joker got awa–,” resulting in him being pulled off-stage.
Jingle Bells, the lesson we should learn, is a wholesome Christmas song, not one to be manipulated by a rascally fourth grader. But that lesson is wrong. Jingle Bells is neither a wholesome song nor about Christmas.

The song we sing today was originally written by a guy named James Lord Pierpont. Pierpoint most likely wrote the lyrics in Medford, Massachusetts in 1850 although there is some debate around both the when and the where. (He first published the song in Savannah, Georgia, seven years later, and Savannah also lays claim to the song.) Those lyrics, to modern ears, sound very Christmasy — “dashing through the snow in a one-horse open sleigh” — but perhaps only glancingly so; there’s no mention of Christmas itself and the “sleigh” isn’t Santa’s. (Santa’s sleigh, recall, is an eight-reindeer one, with apologies to Rudolph.) Most likely, Pierpoint’s lyrics were inspired by Medford’s sleigh races — and, most likely (per Snopes), those lyrics were written for Thanksgiving, not Christmas — and for a Sunday school class at that.

But there’s a problem with that theory: the rest of the lyrics don’t really scream “Sunday school.” The song doesn’t end after the verse you learn as a young child. The subsequent verses have references to a sleigh crash, a drag race-style rivalry with another sleigh driver, and — most un-Sunday school-ish — a note about galavanting with various women:
Now the ground is white
Go it while you’re young
Take the girls tonight
and sing this sleighing song
As the Atlantic points out, “it’s difficult to imagine fresh-faced children singing this for a Unitarian Thanksgiving service in the 1850s.” Another theory may be more likely: that Jingle Bells was a drinking song....
....MORE, including a Special Bonus Fact!

And then there was this making the rounds last week:

Speaking of Canaletto, Here's Something You Don't See Every Day

Following up on the Canaletto collection score in the post immediately below, Elizabeth II Regina—274, Me—0, here's a repost from 2014:

"...How London Looks on Google vs. Paintings From the 1700s"
Too Cool.
From Wired:

Redditor Shystone took Google Street View photos and made composite images using classic paintings of London. Here is the River Thames in present day with Canaletto's painting of the same view in 1746.
Google’s Street View images bear some similarities to 18th-century landscape paintings. The content is different, of course. What Google’s army of photo collectors captured at Westminster Abbey on any given day in the 21st century will look different than what Italian painter Canaletto saw back in the 1700s. But they’re both a representation of an exact moment in time, which makes them a handy way to compare now and then if you can isolate the right locations.

Redditor Shystone has laid old paintings over Google Street View photographs to create a series of perspective-bending composite images of old and new London. Modern sculptures dominate a plaza that was once wide open; neon signs reside on the same block as gas-lit streetlights; and a bridge covers over a river that was once filled with sailboats....MORE
Canaletto’s painting of Westminster Abbey from 1749 is overlaid on an image from Google Street View. Image: Shystone

Readers who have been with us for a while have probably noted a fascination with Canaletto:

Will a Titian painting from the 1560s beat Salvator Mundi’s $450m hype?


And I'm not sure why the article is illustrated with what I think are a Bellotto and a Canaletto but they're pretty pictures too.
From Quartz's Quartzy:
The art world has been abuzz for weeks over the sale of Leonard da Vinci’s “Salvator Mundi” for $450.3 million. The painting—which is the most expensive piece of art ever sold at auction—will hang in the new branch of the Louvre, in Abu Dhabi.

Interestingly, “The last da Vinci,” as the painting has been called, has something in common with another piece of Old Masters art set to be sold at Sotheby’s early next year. “Saint Margaret,” painted by Titian and his workshop, and Salvator Mundi were both once owned by King Charles I, who Christie’s calls “the greatest picture collector of his age.”

This is significant because it means that there are apparent records of what both paintings were worth when the King met his untimely end (by decapitation) in 1649. The Financial Times reported that, in an inventory taken after the monarch’s death, Leonardo da Vinci’s work was valued at a mere £30, while the Titian work was approximately three times that, at £100.

This begs the question: Is there any kind of methodology or predictability to the way art appreciates in value? As the FT wryly estimated: “if the same valuation ratio has applied to both paintings through the past four centuries or so, [the Titian] could be worth $1.5bn.” But insiders are estimating that the Titian painting will sell for a paltry $2-3 million—not exactly a stunning price tag for high net worth individuals. So, what gives?

First, says Andrew Goldstein, editor in chief of, there is the obvious fact that Salvator Mundi is a da Vinci and that the art market is anything but stable....MORE
Here's the Titian:
If I'm reading this right it's the Prado's painting which raises the question: Why is the museum selling?
As for Canaletto, England's Royal Collection has one of the largest assemblages of Canaletto's including a whole bunch (technical term) of the Venice scenes.
This puts the score at:
Queen of England-274---Me-0.

Facebook's Statement on Social Media and Mental Health (FB)


Hard Questions: Is Spending Time on Social Media Bad for Us? 

By David Ginsberg, Director of Research, and Moira Burke, Research Scientist at Facebook
December 15, 2017
With people spending more time on social media, many rightly wonder whether that time is good for us. Do people connect in meaningful ways online? Or are they simply consuming trivial updates and polarizing memes at the expense of time with loved ones?

These are critical questions for Silicon Valley — and for both of us. Moira is a social psychologist who has studied the impact of the internet on people’s lives for more than a decade, and I lead the research team for the Facebook app. As parents, each of us worries about our kids’ screen time and what “connection” will mean in 15 years. We also worry about spending too much time on our phones when we should be paying attention to our families. One of the ways we combat our inner struggles is with research — reviewing what others have found, conducting our own, and asking questions when we need to learn more.

A lot of smart people are looking at different aspects of this important issue. Psychologist Sherry Turkle asserts that mobile phones redefine modern relationships, making us “alone together.” In her generational analyses of teens, psychologist Jean Twenge notes an increase in teen depression corresponding with technology use. Both offer compelling research.

But it’s not the whole story. Sociologist Claude Fischer argues that claims that technology drives us apart are largely supported by anecdotes and ignore the benefits. Sociologist Keith Hampton’s study of public spaces suggests that people spend more time in public now — and that cell phones in public are more often used by people passing time on their own, rather than ignoring friends in person.
We want Facebook to be a place for meaningful interactions with your friends and family — enhancing your relationships offline, not detracting from them. After all, that’s what Facebook has always been about. This is important as we know that a person’s health and happiness relies heavily on the strength of their relationships.

In this post, we want to give you some insights into how the research team at Facebook works with our product teams to incorporate well-being principles, and review some of the top scientific research on well-being and social media that informs our work. Of course, this isn’t just a Facebook issue — it’s an internet issue — so we collaborate with leading experts and publish in the top peer-reviewed journals. We work with scientists like Robert Kraut at Carnegie Mellon; Sonja Lyubomirsky at UC Riverside; Dacher Keltner, Emiliana Simon-Thomas, and Matt Killingsworth from the Greater Good Science Center at UC Berkeley, and have partnered closely with mental health clinicians and organizations like and the National Suicide Prevention Lifeline.

What Do Academics Say? Is Social Media Good or Bad for Well-Being?
According to the research, it really comes down to how you use the technology. For example, on social media, you can passively scroll through posts, much like watching TV, or actively interact with friends — messaging and commenting on each other’s posts. Just like in person, interacting with people you care about can be beneficial, while simply watching others from the sidelines may make you feel worse.

The bad: In general, when people spend a lot of time passively consuming information — reading but not interacting with people — they report feeling worse afterward. In one experiment, University of Michigan students randomly assigned to read Facebook for 10 minutes were in a worse mood at the end of the day than students assigned to post or talk to friends on Facebook. A study from UC San Diego and Yale found that people who clicked on about four times as many links as the average person, or who liked twice as many posts, reported worse mental health than average in a survey. Though the causes aren’t clear, researchers hypothesize that reading about others online might lead to negative social comparison — and perhaps even more so than offline, since people’s posts are often more curated and flattering. Another theory is that the internet takes people away from social engagement in person.

The good: On the other hand, actively interacting with people — especially sharing messages, posts and comments with close friends and reminiscing about past interactions — is linked to improvements in well-being. This ability to connect with relatives, classmates, and colleagues is what drew many of us to Facebook in the first place, and it’s no surprise that staying in touch with these friends and loved ones brings us joy and strengthens our sense of community.

A study we conducted with Robert Kraut at Carnegie Mellon University found that people who sent or received more messages, comments and Timeline posts reported improvements in social support, depression and loneliness. The positive effects were even stronger when people talked with their close friends online. Simply broadcasting status updates wasn’t enough; people had to interact one-on-one with others in their network. Other peer-reviewed longitudinal research and experiments have found similar positive benefits between well-being and active engagement on Facebook.
In an experiment at Cornell, stressed college students randomly assigned to scroll through their own Facebook profiles for five minutes experienced boosts in self-affirmation compared to students who looked at a stranger’s Facebook profile. The researchers believe self-affirmation comes from reminiscing on past meaningful interactions — seeing photos they had been tagged in and comments their friends had left — as well as reflecting on one’s own past posts, where a person chooses how to present themselves to the world.

In a follow-up study, the Cornell researchers put other students under stress by giving them negative feedback on a test and then gave them a choice of websites to visit afterward, including Facebook, YouTube, online music and online video games. They found that stressed students were twice as likely to choose Facebook to make themselves feel better as compared with students who hadn’t been put under stress....

The Perpetuities of Venice: Favored Investment of the Fourteenth Century 1%

A repost from March 2014.
From Global Financial Data:


When most people think of Venice, they think of the visuals of Venice: the canals, the gondoliers, the paintings by famous artists such as Canaletto or Titian, the Bienniale, or St Mark’s Square (named after the saint whose relics the Venetians stole from Alexandria in 828 by hiding them beneath pork to get them past the Muslim inspectors) and its pestering pigeons.

When I think of Venice, I think about three things. I think about the first time I went to Europe with my dad. For an entire week before we got to Venice, all I heard about was his insistence on going on a gondola, and passing through the canals while the gondolier sang his Venetian songs.  By the time we got to Venice, I was so sick of this that the first thing I did was take him to the place where you hired gondoliers so I would never have to hear about the canal ride again. My dad asked our potential gondolier how much the ride was, and when he found out it was the equivalent of $50 (this was a long time ago), he swore at the gondolier and said he wasn’t wasting $50 on a stupid boat ride. I was ready to kill my dad, but I didn’t cherish the idea of spending the rest of my life in a Venetian prison and having to pass over the Bridge of Sighs.

Since I am an economist, the other two things I think about deal with finance.  First, Venice was one of the three city-states in Italy (Florence in 1252, Genoa in 1253, and Venice in 1280) that reintroduced gold into the Italian peninsula eight centuries after the fall of Rome.  The other important financial contribution that I associate with Venice are the prestiti: the government bonds Venice began issuing in the 1100s to fund its wars.  The prestiti were the first Eurobonds and if Moody’s and S&P had been around in the 1300s, they would have been the first AAA-rated government bonds, though they eventually would have been downgraded.

Venice was the first country to issue government bonds to its citizens in the same way governments currently issue government bonds.  Before the Venetian prestiti, and even after, kings, queens, emperors and others borrowed money to fight wars or feed their royal megalomania.  When the rulers were unable to pay back the loans, they simply defaulted, often bankrupting their creditors.

Venice was different. Venice was the medieval equivalent of Athens, a democracy for the elites.  In 726, the Venetians rebelled against their Roman/Byzantine rulers over the Iconoclast controversy and elected the first of 117 doges before Napoleon conquered the city in 1797.  Venice became a city-state, expanding its commercial reach, and became an imperial power, eventually capturing and sacking Constantinople in 1204 during the Fourth Crusade. By the late thirteenth century, Venice was the most prosperous city in all of Europe. At the peak of its power and wealth, it had 36,000 sailors operating 3,300 ships, dominating Mediterranean commerce. Defending their empire meant wars with other Italian city-states, such as Florence and Genoa, and wars meant borrowing money.

Venice introduced the prestiti in the twelfth century.  Subscriptions were obligatory on wealthy citizens in proportion to their wealth, and the elites of Venice found forced loans preferable to outright taxation.  In 1262, Venice lost control over Constantinople, and the outstanding loans, which had been considered temporary, were consolidated into one permanent fund called the monte vecchio. This move institutionalized the prestiti as long-term loans rather than short-term borrowings. The prestiti paid a nominal interest rate of 5% on the outstanding capital, two installments of 2.5% paid per annum. After 1377, interest rates were variable, and rates were reduced to 4% in the 1400s. In 1482 a new series of prestiti, the monte nuovo, was issued based upon a new kind of tax and the interest rate was restored to 5%. Another new series, the monte novissimo, was issued in 1509 during the war with the League of Cabrai, and finally the monte sussidio was introduced in 1526....MORE

What Is Going On With Russian Banks? 3rd Major Bank Topples in 4 Months

Oh yeah, it's Russia.
"We meant to do better, but it came out as always"
—Former Gazprom head, Viktor Chernomyrdin
From Wolf Street: 

“It turned into a lender which financed its owners”: Central Bank.
It’s Friday, and another Russian bank gets taken over and most of its creditors get bailed out by the Central Bank, this time the 10th largest bank in Russia, Promsvyazbank – with the top six being state-owned banks; with number seven, Bank Otkritie, having toppled in August; with number 12, B&N Bank, having toppled in September; and with Jugra Bank having gotten its banking licence revoked in July for having falsified its accounts.

The bailout of Promsvyazbank (PSB) will require between 100 billion rubles and 200 billion rubles (between $1.7 billion and $3.4 billion), based on a preliminary estimate, said Central Bank deputy governor Vasily Pozdyshev on Friday, according to Reuters.

“Preliminary estimates” of bank-bailout costs have a way of morphing into bigger ones. The Central Bank, which is also the banking regulator, has already increased its estimate for the combined cost of the bailouts of Otkritie and B&N Bank to 820 billion rubles ($14 billion), but it now deems both too financially weak to continue.

The combined assets of PSB, Otkritie, and B&N would amount to 4 trillion rubles, equivalent to Russia’s fourth biggest bank, according to Reuters calculations. By comparison, Russia’s largest bank, state-controlled Sberbank, accounts for one-third of the Russian banking system, as it says, and has 22 trillion rubles ($374 billion) in assets.

PSB’s subordinated debt will likely be written off, Pozdyshev said. Shareholders will also take a big hit or be wiped out. They include as of the end of November: The European Bank for Reconstruction and Development, Russian financial group Budushchee, the Credit Bank of Moscow, and non-state pension fund Safmar....MUCH MORE

And Now, Time For the Traditional "Princess Rap Battle: Mrs.Claus vs. Mary Poppins"

Via Tastefully Offensive:
Actress and comedian Whitney Avalon is back with another "Princess Rap Battle" and this time around it's holiday-themed with Mrs. Claus (Alyssa Preston) squaring off against Mary Poppins (Whitney Avalon). Both women break out the claws and show no mercy, and they even brought along their jolly men, Santa (Parks and Rec's Jim O’Heir) and Bert (Kevin Allen), to back them up....MORE

There is also a "making of..." video.

The Most Valuable Magazine In The World

Since 2007 we've been marking the anniversary of the publication of  Beeton's Christmas Annual-1887.

There's one little problem, I don't know the date the darn thing rolled off the presses. It wouldn't really matter much except for the fact that the Annual contained the first appearance Sherlock Holmes.
It seems that the Annual was printed in November but we don't have the date and we've run the 'anniversary' as late as December 15 today.

Here's that 2007 post with a couple additions:

Another Anniversary Already? And How Much is it Going to Cost?

It was 120 126 127 128 129 130 years ago that Sherlock Holmes came to the world's attention in Beetons Christmas Annual of 1887.

Here's the most expensive magazine in the world:
Sotheby's held the sale in New York City on 21 June 2007.
"The owner, a lady, put up two Sherlockian lots for sale."
Lot 105, Beeton's Christmas Annual for 1887, set a new auction record for that magazine and sold for $156,000. The hammer price was $130,000 and the 20% buyer's premium brought the total to $156,000. That beat the previous record of $153,600 set in an auction at Sotheby's in December 2004. The 2004 record was said to make Beeton's the most expensive magazine in the world, and this new sale reinforces that position.
In 2008 Randall Stock who keeps a census of the extant copies emailed and pointed to this page.
I can't imagine there is any one site in the world with more information on "The World's Most Expensive Magazine".
Beeton's Christmas Annual 1887: A Census and Annotated Checklist

In 2011 he reported on a previously unknown copy that was offered at auction in Australia but failed to reach the reserve.
Maybe in the next equity bull market.

And from Forbes a picture of the madness that can overtake persons of any station:

A Former Apple Executive's Obsessive Search For Sherlock Holmes
“I like artifacts,” says Glen Miranker. “I get an emotional and visceral and intellectual connection with a subject I’m interested in through them.” For the 60-year-old former chief technology officer for Apple that abiding subject is Sherlock Holmes, the legendary detective created by Sir Arthur Conan Doyle in 1887. The evidence? An extraordinary collection of books, manuscripts, illustrations and ephemera (known as “Sherlockiana”) that he began building in the 1970s, which now includes approximately 4,500 items and fills three rooms in his San Francisco home.

Miranker’s interest in Holmes began when he first read Conan Doyle’s mystery stories as a child. Later, as an undergraduate at Yale, he rediscovered Holmes when a roommate dropped a copy of the complete stories into his lap to cheer him up during a night of melancholy–”Maybe I was turned down for a date or thought I blew a test,” says Miranker.

The collecting started a bit later, in 1976 or ’77–he can’t quite recall–when he was in graduate school for computer science at MIT. His wife, Cathy, went out on a walk, ducked into a little book fair at Harvard’s Gutman Library and, for $15, picked up a copy of the first American edition of The Case-Book of Sherlock Holmes. Miranker says the choice of that volume was driven primarily by a simple motive: “To be brutally honest, of the books that might have been of interest to me, this one was the most affordable.” But something clicked when she handed it to him. “I remember thinking, ‘You mean you don’t have to be J.P. Morgan to collect books?’” Today, that book–the seed of his collection–rests in a special box made by Cathy, on which she playfully embossed: “World’s Costliest Book.”

Miranker started collecting slowly, picking up rare and fragile editions of Conan Doyle’s books as he worked his way through the tech industry (with stops at Ardent Computer and NeXT Computer) and adjunct professorships at Columbia University and UC Berkeley. Ten years after getting that first Holmes book, Miranker’s grouping hit a critical mass, turning into a full-blown collection. The tipping point came around 1985, when he acquired the book collection of Marvin Epstein, a mathematician at Bell Labs in New Jersey and a prominent figure in the Sherlockian community.

“Marv had a secret weapon,” says Miranker. “From the ’60s through the early ’80s, he had a WATS line, which he burned up hunting down Sherlockian books.” Miranker counts Epstein, who was “unbelievably generous with his time and knowledge,” as one of his three gurus in Sherlockiana. The other two are Dan Posnansky, “a remarkably talented collector” who lives in Kennebunkport, Maine, and Peter Stern, an antiquarian book dealer in Boston and the world’s foremost dealer in Holmes material (among other specialties), who has supplied Miranker with a sizable portion of his collection.

Miranker’s passion for Holmes continued when he joined Apple in 1996 to help launch the iMac, eventually becoming the chief technology officer until he retired in 2004. Today, he sits on the boards of various organizations, including the Toronto Reference Library and the National Cryptologic Museum. (Cryptology is another passion of Miranker’s, which extends into collecting–he owns two Enigma machines, devices used by the Germans in World War II to encode messages.)

Aside from rare first editions with mint dust jackets, Miranker has collected autographed copies with special association value, original manuscripts and so-called pirated editions–books published in violation of copyright, without paying the author, which often happened to Conan Doyle due to the popularity of his books and the lax enforcement of the day. Miranker points out that some of this material first appeared in book form in these editions (most of the stories originally ran in the London-based Strand Magazine), such as the first American printing of The Sign of Four, published by Collier in 1891, which can be worth more than $10,000. He particularly treasures another pirated edition of this book, issued by the United States Book Company and signed by Conan Doyle himself–despite the theft of his intellectual property–to a Chicago department store magnate, Harlow N. Higinbotham (estimated worth: $50,000-$75,000). While Miranker generally stays away from translations, he is quite pleased with his Yiddish edition of The Sign of Four, published in Brooklyn in 1930....MORE

Saturday, December 16, 2017

If You Can't Trust Your Internet Anonymizer or Encrypted Chat App Purveyor, Who Can You Trust?

From The Baffler:

The Crypto- Keepers
It’s 7:30 p.m. on a Monday in June at an undisclosed location somewhere in northern Europe. I’m sitting in a private dining room in an upscale hotel, talking to Pavel Durov—the “Mark Zuckerberg of Russia,” a young internet mogul who had built the country’s most popular social network and lost it to the Kremlin all before he turned thirty. Not long after the famed American whistleblower Edward Snowden had fled to Russia to avoid federal prosecution, Durov had offered Snowden a job—but then himself had to flee Russia because of a widening conflict with the Russian government. Initially hailed as a cyber-dissident because of his spat with the Kremlin, Durov has since drawn the repeated, aggressive interest of American intelligence officials, as well.

A group of wealthy tourists milled around in the lobby, excitedly chattering about their day of sightseeing and museum tours. Our conversation was of a darker nature. Durov and I were talking about the murky, hyper-paranoid world of the crypto-obsessed privacy movement—a place where spies ruled, nothing was what it seemed, and no one could be trusted.

For me, the paranoia made sense. For the last three years I had been investigating the grassroots crypto tech accessories at the heart of today’s powerful privacy movement: internet anonymizers, encrypted chat apps, untraceable drop boxes for whistleblowers, and super-secure operating systems that even the NSA supposedly couldn’t crack. These tools were promoted by Pulitzer Prize-winning journalists, hackers, whistleblowers, and the biggest and most credible names in the privacy trade—from Edward Snowden to the Electronic Frontier Foundation and the American Civil Liberties Union. Apps like Tor and Signal promised to protect users from America’s all-seeing surveillance apparatus. And the cryptographers and programmers who built these people’s crypto weapons? Well, many of them claimed to live on the edge: subversive crypto-anarchists fighting The Man, pursued and assailed by shadowy U.S. government forces. Citing harassment, some of them had fled the United States altogether, forced to live in self-imposed exile in Berlin.

At least that’s how they saw themselves. My reporting revealed a different reality. As I found out by digging through financial records and FOIA requests, many of these self-styled online radicals were actually military contractors, drawing salaries with benefits from the very same U.S. national security state they claimed to be fighting. Their spunky crypto-tech also turned out, on closer inspection, to be a jury-rigged and porous Potemkin Village version of secure digital communications. What’s more, the relevant software here was itself financed by the U.S. government: millions of dollars a year flowing to crypto radicals from the Pentagon, the State Department, and organizations spun off from the CIA....MUCH MORE
HT: naked capitalism, Dec. 1

Things You Don't See Every Day: "Video of an Extinction-Level Asteroid Impact Set to 'Chestnuts Roasting On An Open Fire'"

From Sweet Meteor of Death:
If Twitter hasn't yet figured-out how to do video, here's an embed:

More S.M.O.D:

The Volokh Conspiracy Has Moved

From the legal eagles of The Volokh Conspiracy:
As you can see, we've moved from the Washington Post, where we've blogged since early 2014, to Reason. Good to see you here, and we hope you'll keep visiting us here often! We wanted to say a few things about our move, to satisfy those curious about it and to avoid the need for people to speculate about our reasons.

First, we wanted to thank our Post hosts very much for nearly four years -- mostly very happy years -- blogging at their site.

We benefited greatly from the Post's deservedly excellent reputation, and drew many new readers. We also benefited greatly from the technical support provided by Ben Sumner, and the work of all the editors at their copyediting desk. We much appreciate all that the Post and its people have done for us and for the blog.

Why, then, the move? 
The chief reason was that we wanted to be freely available to the broadest range of readers....

Financial independence is helpful in many ways, just ask Jeff Bezos.

Meanwhile In Cryptocurrencies: Cigar Company Ditches Cigars Entirely, Pivots to Bitcoin

Not everyone is convinced that bitcoin isn’t a giant bubble ready to burst. Its surging value has created a sort of mania in the market, according to North American Securities Administrators Association president Joseph Borg, who recently told reporters he’s seen people taking out mortgages in order to invest in the cryptocurrency.

Reports Friday (Dec. 15) suggested some business owners are also taking drastic measures to get in on the bitcoin action.

According to Mashable, Florida-based Rich Cigars, a high-end cigar company, is ditching cigars entirely and pivoting its business model toward “aggressive cryptocurrency mining” and patents.
It could prove a lucrative move, at least in the short term. A single bitcoin was valued at more than $17,500 at the time the Mashable article was released and, according to research from the Cambridge Centre for Alternative Finance published earlier this year, bitcoin miners have so far earned more than $2 billion in revenue — most of which was earned in the last few years alone....MORE
And from the pubs and bars trade publication The Morning Advertiser:

Should your pub install a Bitcoin ATM?
By Stuart Stone
The Morning Advertiser spoke to digital entrepreneur Thomas Plummer of Crypto de Change to see how pubs can cash in on cryptocurrency.....

We may have to start a "Questions Cambridge Wants Answering" series.

"Fascinating new clues emerge on lost tsarist gold and diamonds worth an untold fortune"

The amazing thing is: this stuff turns up from time to time. In 2014 we posted "Find of the century? U.S. scrap dealer finds $20 million Faberge egg" and it turned out there was a buyer who desired the newfound treasure so much and didn't want to risk it going to auction that he offered $33 million for a private sale.

From The Siberian Times, Nov. 20:

Secret KGB documents and a book by ex-FSB colonel kickstart 100 year old search for missing Romanov treasures and valuables.

The troves include the personal jewellery and valuables of the tsar, his empress Alexandra, their four princess daughters, and son and heir Alexei, all of whom were shot to death in Yekaterinburg in July 1918. Picture: Hermitage Museum
A wide array of treasures including the personal riches of the tragic Russian royal family went missing in Siberia in the aftermath of the Bolshevik revolution exactly a century ago.
The lost riches in the ensuing chaos includes vast bullion reserves worth tens of billions of dollars, along with precious gold and silver awards dating to the brief period of Siberian 'independence' after Lenin's seizure of power - all of which had been in the hands of White forces seeking to roll back the Red advances after the defeat of Russia's post-tsarist provisional government.

The troves include the personal jewellery and valuables of the tsar, his empress Alexandra, their four princess daughters, and son and heir Alexei, all of whom were shot to death in Yekaterinburg in July 1918.

It is probable Nicholas intended some of these personal riches as dowries for his unmarried daughters, aged between 17 and 22 at the time they were slain.

Remarkable new evidence points to at least newly-disclosed FIVE locations for the lost treasures which includes diamond encrusted sabres and dirks,  belonging to the ex-tsar and, Alexei, Russia's last crown prince, who was 13 when he was brutally executed.

The Soviet authorities repeatedly hunted for the treasures, and while they discovered some of them, large quantities have remained missing.

A bizarre but abortive Nazi-backed attempt was also made to find some of the valuables in the middle of the Second World War, we can reveal.

The Siberian Times has unearthed a document held in KGB - Soviet state security - files indicating that 26 boxes of tsarist-era gold were stashed at a depth of 2 to 2.5 metres deep in ground around five kilometres from Taiga (Tayga) railway station on the Trans-Siberian railway route in modern-day Kemerovo region in late October 1919.

Despite a major KGB operation in the early 1940s, this gold was never found - more details about it are below....MUCH MORE
Egg Decorating: There's Top 1% Rich and then There's Autocrat of All the Russias Rich*

"In Search Of Russia's Lost Gold"

*The number of titles is borderline ridiculous:
"By the Grace of God, We, NN, Emperor and Autocrat of All the Russias, Moscow, Kiev, Vladimir, Novgorod; Tsar of Kazan, Tsar of Astrakhan, Tsar of Poland, Tsar of Siberia, Tsar of Chersonese Taurian, Tsar of Georgia; Lord of Pskov and Grand Prince of Smolensk, Lithuania, Volhynia, Podolia, Finland; Prince of Estland,....."
It goes on and on listing the territories and actually ends with:
"...hereditary Sovereign and ruler of the Circassian and Mountainous Princes and of others; Lord of Turkestan; Heir of Norway; Duke of Schleswig-Holstein, Stormarn, Dithmarschen, and Oldenburg, and others, and others, and others."

Monopoly profits aren’t necessary for anti-competitive behaviour

Speaking of FT Alphaville (HT immediately below) here is a piece by Alexandra Scaggs that I've been ruminating over:
Daenerys Targaryen: Lannister, Targaryen, Baratheon, Stark, Tyrell — they’re all just spokes on a wheel. This one’s on top, then that one’s on top, and on and on it spins, crushing those on the ground.

Tyrion Lannister: It’s a beautiful dream, stopping the wheel. You’re not the first person who’s ever dreamt it.

Daenerys Targaryen: I’m not going to stop the wheel, I’m going to break the wheel.
– Game of Thrones
I’ll concede this: AT&T’s DirecTV business is probably not a “golden goose”, as the Justice Department claims.

Is it trying to buy earnings growth? Probably. Is it trying to steamroll its nascent online-streaming competition? Maybe! It could be hoping for both, for all we know.
But the question of pay-TV’s profitability isn’t central to the issue at hand. AT&T doesn’t need high pay-TV margins to undermine its competition. In fact, the assumption that anti-trust enforcement requires rich monopoly profits and high consumer prices has been challenged in recent years.
The DOJ argues that if AT&T owns a prominent industry supplier, it could simply starve DirecTV’s competitors of content, and lure away their customers by promising a cheaper, faster Game of Thrones fix. (It doesn’t seem terribly easy to compete with HBO.)

It can do so because AT&T is more than a pay-TV distributor or phone company*. It’s a digital platform — an especially capital-intensive one, to be sure, but one that has managed bounced back after an encounter with the business end of an anti-trust enforcement hammer decades ago. These days, its wireless business has 138.8m subscribers, more than a third of the US population.

The company could use its reach to expand Time Warner’s already-nice margins. And if net neutrality is rolled back as expected, it would be permitted to cleanly stream HBO and throttle/charge fees to, say, Netflix. And Time Warner could help its parent company’s platform gain market share, even without cutting off other distributors’ access to its content.

AT&T could just charge above-market prices for content and make DirecTV cheaper in comparison. The DOJ describes this risk in its complaint, along with the possibility of undermining online-streaming competitors, which Matt addressed yesterday. From the complaint:
The merger would […] substantially lessen competition by giving the merged company the additional leverage to charge its rival video distributors higher prices for its networks than Time Warner’s current market power would otherwise allow, making those distributors less able to compete effectively with the merged company. The view that vertical mergers help market efficiency and keep prices low is a legacy of Robert Bork, the rejected Reagan Supreme Court nominee and author of The Antitrust Paradox. Bork wrote that “the only legitimate goal of antitrust is the maximization of consumer welfare,” and that “productive efficiency” is “the single most important factor contributing to that welfare.”
Yet Lina Khan — of the recently (and dramatically) formed Open Markets Initiative — makes a compelling argument that modern platform monopolies and oligopolists have exploited Bork’s market-focused framework to dodge regulation....MORE

Interesting stuff.
The post raises some of the questions/issues surrounding the use of existing anti-trust structure to address the evolving thinking on anti-competitive behavior currently in play, a train of thought being pushed to the forefront by Ms Scaggs interviewee, Yale Law's Lina Khan and by the Stigler Center at the University of Chicago.
Here's the 'About' page of  the Stigler Center's ProMarket blog:
There is an issue that– while extremely important today–receives too little attention not only in the traditional media but also in the blogosphere, and academia: the subversion of competition by special interests. Following Adam Smith, the vast majority of economists believe that competition is the essential ingredient that makes a market economy work. Yet, what ensures that markets are indeed competitive? While a competitive market system ends up benefitting everyone, nobody benefits enough to spend resources to lobby for it. Business has very powerful lobbies; competitive markets do not. The diffuse constituency which is in favor of competitive markets has few incentives to mobilize in its defense....MORE

And here is a representative piece by the blog's editor, Chicago Booth's Luigi Zingales who sits in a comfy endowed chair as Professor of Entrepreneurship and Finance:

Our most recent prior link to ProMarket was on the competition between a couple of the Hansa cities: 

Jeremy Grantham—GMO Quarterly Letter: Career Risk and Stalin’s Pension Fund

From Grantham Mayo Van Otterloo, Q3:

Career Risk and Stalin’s Pension Fund: Investing in a World of Overpriced Assets (With a Single Reasonably-Priced Asset)
■ Inside GMO there are three different views on whether and how rapidly the market will revert to its pre-1998 normal: James Montier feels it will be business as usual and revert within 7 years. Ben Inker also holds out for a 7 year period, but includes a 33% chance it will revert to a higher average valuation (the “Hell” scenario). I believe that the reversion on valuations will take 20 years, and that profit margins will probably only revert two-thirds of the way back to the old normal.
■ All three outcomes are quite possible. This creates a difficult investment challenge.
■ My proposition, though, is that there is an optimal investment for all three outcomes: a heavy emphasis on Emerging Market (EM) equities, especially relative to the US.
■ The next difficulty lies in deciding how much to emphasize this investment, which is perceived as riskier than most, and can of course fail.
■ I firmly believe that asset allocation advice should not be offered unless you are willing, on rare occasions, to make major bets and accept a big dose of career and business risk. Otherwise asset allocation should be indexed.
■ In contrast, a traditional, diversified 65% stock/35% fixed income portfolio today, designed to control typical 2-year career risk, I believe is likely to produce a return over 10 years in the 1% to 3% real range – a near disaster for pension funds.
■ To concentrate the mind, I fantasize about managing Stalin’s pension fund where the penalty for failing to deliver 4.5% real per year over 10 years is death. I believe only a very large investment in EM equities will give an excellent chance of survival.
■ Since February 2016, EM equities have already moved 11% relative to the US. But their three earlier moves since 1968 were at least 3.6x the developed world markets! 1 Absolutely , at around 16x Shiller P/E, EM equities can keep you alive.
1 According to Minack Advisors, the three times were from 1968 (5x), from 1987 (6x), and from 1999 (3.7x).

■ Even a quite successful attempt to leap out of the market and back in, although likely to beat the conventional approach, is unlikely to beat a very heavy EM equities portfolio. 
■ Conclusion . Be brave. It is only at extreme times like this that asset allocation can earn its keep with non-traditional behavior. I believe a conventional diversified approach is nearly certain to fail.
A Rapid Market Fall Back to the Old Trend or a 20-Year Slow Retreat?
At GMO these days we argue over three very different pathways to a similar dismal 20-year outlook for pension fund returns. James Montier thinks it is likely that we will have a very sharp market break in the near future, back to the old pre-1998 levels of value and that we will stay there, with the last 20-year block becoming an interesting historical oddity. Ben Inker – the boss – also believes things will revert over 7 years, but considers it plausible that the valuation level the market will revert to has changed, leaving near-term returns better than James’ view, but the 20-year return largely the same. I represent a third view, that the trend line will regress back toward the old normal but at a substantially slower rate than normal because some of the reasons for major differences in the last 20 years are structural and will be slow to change. Factors such as an increase in political influence and monopoly power of corporations; the style of central bank management, which pushes down on interest rates; the aging of the population; greater income inequality; slower innovation and lower productivity and GDP growth would be possible or even probable examples. Therefore, I argue that even in 20 years these factors will only be two-thirds of the way back to the old normal of pre-1998. This still leaves returns over the 20-year period significantly sub-par. Another sharp drop in prices, the third in this new 20-year era, will not change this outcome in my opinion, as prices will bounce back a third time.

These differences of assumptions produce very different outcomes in the near and intermediate term. Near-term major declines suggest a much-increased value of cash reserves and a greater haven benefit from high-rated bonds.

My assumption of slow regression produces an expectation of a dismal 2.5% real for the S&P and 3.5% to 5% for other global equities over 20 years, but also a best guess of approximately the same over 7 years. This upgrades the significance of the positive gap between stocks and cash and downgrades the virtues of cash optionality and long bond havens. This much is clear. What is not so intuitively obvious is how similar all three estimates are for 20 years. All three are within the range of 2.5% to 3% real return for the US – a dismal outlook for pension funds and others – and within nickels and dimes for other assets.

A problem for investors following GMO’s writing is which of these three alternatives to choose. It is pretty clear to me that all three are possible. Ben Inker, our head of Asset Allocation, has tried hard to make our clients’ portfolios relatively robust to either a very bad medium-term outcome (the James scenario) or a relatively benign outcome (my scenario). I am going to attempt something much simpler here – some might say oversimplified, but I hope not – of asking which investments are appealing in all three outcomes, but particularly the 7-year and 20-year versions. My conclusion is straightforward: heavily overweight EM equities, own some EAFE, and avoid US equities. The next question is how brave to be in this type of situation, where there is only one asset that is reasonably priced in a generally very high-priced world. This is the topic I want to emphasize this quarter....MUCH MORE, including Ben Inker on inflation. (22 page PDF)
HT: Paul Murphy at FT Alphaville's Further Reading Post.