Author: A.T.

Whose Side Is Tucker Carlson On?

I read The Bridge At Andau not long after Russia crushed the Hungarian Revolution.

I was 11.

It made a big impression.

When the Wall fell in 1989, 33 years after those events at the Bridge, Hungary was finally free of Russian domination.

It’s not surprising Hungary takes Ukraine’s side against Russia today, as Russia seeks to subjugate Ukraine.

Yet Hungary’s leader, Victor Orbán — up for reelection April 3 — shares some of Putin’s own anti-democratic leanings.

Trump and Tucker Carlson endorse him.

Back in 1956, Russia’s communist tyranny was enforced by the KGB.

Today, its kleptocratic tyranny is still enforced by the KGB (renamed the FSB).

Carlson’s pro-Russia clips have been widely circulated.

He’s entirely on board with Orbán.

The KGB has changed its name but is still the KGB.

Molotov cocktails in the streets of Budapest have been replaced by Molotov cocktails in the streets of Kyiv but the brutality of Russia’s leadership has not changed.

And Trump sees Putin’s invasion as “genius.”

 

Trains, Planes, And Fewer Automobiles

Russia’s atrocities deserve almost all our attention.

But in the “On A Brighter Note” department . . .

I took the Brightline yesterday!

European-quality rail service from Miami to West Palm Beach.

For $42:

> A Brightline car picked me up at my door and drove me to the station;

> The airy, modern first-class* lounge was filled with snacks;

> The train arrived made it to West Palm in 67 minutes, 5 minutes early;

> A waiting car took me to my destination.

All that for $42.  (And $42 again back home.)

Later this year the line extends to Orlando.

I assume the Brightline is losing money, but am told the real play here, for the financiers, was buying up land around the proposed stations, knowing it would become more valuable.

Whatever — the Brightline is great and will take a lot of cars off the interstate.

Green, green, green.

As would be WheelTug.

This overview of airport design may be of interest.

“A number of things jumped out at me,” writes the CEO:

Laguardia’s “useless corners” (at 4:15 in the video) and the problems with jet blast are highly relevant to WheelTug. We make those corner spaces potentially useable! And by eliminating jet blast risk around the terminal, we obviate the assumptions used in this video for how aircraft need to be pushed back.

The bridges under which the aircraft taxi are to reduce the “chokepoint” problem that all the older airports have — that when a single airplane backs up, it blocks the ramp for all traffic in and out, and does so for 5-15 minutes. With WheelTug we can pirouette (Twirl) so close to the gate that the airplane is only in the taxiway when it is already moving forward toward the runway. This will make an enormous difference everywhere, even in the new LaGuardia, which, despite the redesign, is still constrained by gate and taxiway space, not by runway capacity.

Or to put this even more starkly: The LaGuardia renovation cost $8 billion or so. But as far as we can see, all of the airside changes would have been solved — and then some — with merely adding WheelTug. They redesigned an entire airport because they did not have WheelTug.

Which may help explain why WheelTug spends so much time talking to airports, which are always constrained by competing demands for space, throughput, customer happiness, reduced emissions, safety risks, etc.

Airports are not our customers. And we have no easy way to monetize the benefits we will deliver to them. Yet the goodness will flow down — airport wins will deliver airline competitive advantages which will at least partially flow into WheelTug revenue.

I don’t know whether this is fairly stated — or whether FAA certification and widespread adoption will come anytime soon, if ever.

But with grandparent Borealis trading at less than a $30 million market cap, I continue to like our odds.

*Hey: the ad revenue from this site has to go somewhere.

 

Democracy Reinvigorated

But first . . .

PRKR

Chris J.:  “How the heck does QCOM get to suppress evidence found in discovery? Very unfortunate ruling.”

→ And very wrong-headed, in the company’s view.  But a large bump in the road, for sure.

Bernie:  “How can you be so wrong on this one? Well, if you shorted the stock, good for you, my bad.”

→ Shorted the stock?  I own a zillion shares!  Hope you bought yours, as I bought mine, only with money you could truly afford to lose.

And it’s important to note: the game’s not over yet.

David O.: “How is it that PRKR dropped sharply yesterday (3/10/22) on news that only got released today (3/11/22)?”

→ I hope the SEC shares your curiosity.

Also . . .

The Stephen Kotkin / David Remnick conversation that everyone is forwarding.  These two guys know Russia so well.  Worth the 19 minutes.  (I particularly liked Professor Kotkin’s definition of “the West.”  It’s not geography.)

And now . . .

Stephen Pizzo:  “I watched this summit at Versailles on German news channel DW this morning . I wish all Americans had watched it too. I was deeply moved and greatly impressed. This is no longer your father’s EU…that group of quarrelsome, lazy-minded, self-interested nations. What I witnessed today was an EU of the kind that envisioned at its creation; a strong, unified, smart and resourceful entity ready, willing and able to step up to the dire threats facing Europe, and the world, today. Not since WWII has there been this degree of unity of purpose.  What I saw and heard this morning was on a Churchillian level of resolve and clarity.”

From Steve as well:  Russia’s disinformation machinery breaks down in wake of Ukraine invasion.

. . . the digital realm is where Russia found the most success in opening new fronts in its disinformation war. Social media, quasi-legitimate blogs, and bots reached ordinary people en masse all the time. With skill and care, Russian operatives tested and retested how best to polarize audiences. Using different platforms, content, and messaging, they built up a profile of users for their targeting purposes and then reflected back to them a picture of the world that would make them angry, frightened, and despairing—a picture that only exists online. For evidence of this, look no further than recent discourse in the West, where the Kremlin has been amplifying everything from climate denialism to the anti-vaxx movement to QAnon. All these things already existed but were the preserve of conspiracy theorists, quacks, and pranksters—now millions believe, in the face of reality, that climate change was made up by Green extremists, that “they” (whether it be Bill Gates, George Soros, or the World Economic Forum) are using vaccines to microchip people, that there’s a satanic cabal of baby-eaters in Washington, or all of the above.

. . . What the Kremlin failed to anticipate, however, is that the invasion of Ukraine would be the equivalent of Putin screaming at our face in the street—a brief but violent jolt in our collective online consciousness. It’s not just that what he claims about Ukraine is outlandish—after all, the Kremlin has been pushing many of these narratives for a long time, and many in the West believed them until now—but that the reality of Putin’s actions have broken through the unreality of online life.

Of course, this is not the first time Putin has invaded a neighboring country or territory and simultaneously launched an information war. But Ukraine has elicited an international response unlike anything we saw with Georgia in 2008 or Crimea in 2014. It may be because we have better Internet usage and available open source data compared to 2008 (for example, the Ukraine Witness map built by the Centre for Information Resilience, where I serve as director for special projects, Bellingcat and other partners provide easily verifiable data that refute Putin’s claims), and in 2014 no one was willing to kick up a significant fuss over Russia taking over a largely Russian-speaking area. But this spectacular collapse of the Kremlin’s machinery is also because Putin violated two key rules of disinformation this time around.

The first is that arrogance is the death of a disinformation campaign. In the past, the Kremlin has spent months or even years testing messaging to make sure it would land with its various audiences, whereas this time they seem to have assumed success based on previous claims about Ukraine; but those earlier campaigns were not launched during a full invasion of the country. Whatever dissenting voices exist in Moscow—and there must have been some that knew disinformation would have its limits in a time like this—were drowned out by the ever-expanding ego of an autocrat buoyed by no one reacting to his crimes for 20 years.

Putin also seems to have severely underestimated the extent to which the West had grown wiser to its manipulation in recent years and developed new capabilities to combat it. It similarly failed to anticipate the social media savvy of Ukrainian President Volodymyr Zelenskyy. While Zelenskyy engages on a human level through his accounts, Putin, Lavrov, and the other graying men sit at comically oversized tables in Moscow. Russia, as a leader in the field, should know that the very best manipulation is led by apparently humble—though morally bankrupt—and ideally anonymous groups of people who don’t take credit even when they are successful, don’t go for overkill even when they think it might work, and definitely don’t make themselves part of the story by looking as ridiculous as Putin has.

Russia has also broken another disinformation rule in Ukraine: lie to others, but not to yourselves. Stories from the frontlines say it all. Russian soldiers were told they were going into Ukraine on training exercises and did not expect actual resistance. Others were told that they were going to be saving Ukraine from Nazis and would be welcomed with open arms, not Molotov cocktails. Still others were told to be on the lookout for followers of Ukrainian nationalist Stepan Bandera, who died 63 years ago.

These missteps have taken the rest of Putin’s disinformation apparatus down with it: his usual apologists abroad have either fallen deathly silent or, even more damning, have openly recanted their former support. And the removal of RT and Sputnik from TV networks, social media, and search engines is, in no uncertain terms, devastating for Russia’s capacity to peddle influence. . . .

Already, the Kremlin’s slipping grip on the flows of information internationally has been devastating for Russia and its war machine. In Ukraine, Zelenskyy’s approval ratings are at 92 percent, and 86 percent of Ukrainians now want to join NATO—up more than 20 points from January. The West, in the form of NATO and the EU, has never been more unified, coming together over sanctions and actions that they would never have agreed to in the past. The war is even breaking down some of the divides that the Kremlin itself helped engineer: in the UK, Brexiters and Remainers are coming together over Ukraine, some talking to the other side without using expletives for the first time since 2016. In the US, Democratic Senator Ron Wyden and Republican Senator Mike Crapo couldn’t be further apart on issues ranging from abortion to gun control to Trump, but they recently led their parties’ joint efforts to ban Russian oil imports.

The golden era for Putin’s disinformation programs is over. . . .

Principles First, Says One Rare GOP Conference

In his letter to NBC Night News’ Lester Holt last week, Trump wrote:

“They RIGGED the Election. The proof is massive, conclusive, and indisputable.”

The proof, of course, in fact, is non-existent.

Not a single federal judge, including those appointed by Trump, found a shred.

Neither did Trump’s attorney general.

Nor his head of election security.

But so what!

Up is down!

The world is flat!

Russia isn’t bombing hospitals, Ukrainians are bombing their own hospitals!

Millions of Russians believe this . . .

. . . and that Ukraine’s Jewish president, descendant of Holocaust survivors, is a Nazi . . .

. . . just as millions of Americans believe the election was rigged.

Trump and Putin and Stalin and you-know-who — whose book of speeches Trump kept by his bedside — all use the same tactic.

The press is the enemy of the people.

It’s alternative facts you should believe.

The rest is fake news.

Meanwhile, three GOP summits were held recently.

One gives hope for the future.

. . . All three featured Republican officeholders. All three promised guests the unvarnished truth. Otherwise, there were vast differences, which boiled down to how much the American right should orient itself around the kind of cultural grievances harnessed by Trump. . . .

. . .A life-size cutout of the former president showed him wielding a machine gun. One man shaved the number 45, Trump’s place in the presidential lineup, on the back of his head. Leaflets left around the [CPAC] conference carried the heading: “Please Help Defend Jan. 6 Defendants: They are Defending Your Freedoms.” Below were directions for donating to a crowdfunding campaign. . . .

. . . Fuentes’s alternative, called the America First Political Action Conference, brought together right-wing media personalities and tech entrepreneurs. It also welcomed Rep. Marjorie Taylor Greene (R-Ga.), the far-right firebrand whose presence at both Orlando conferences signaled a measure of overlap between the two. . . .

. . . [P]art of what motivated a [competing] two-day “Principles First” conference [in D.C., at the National Press Club, an organization devoted to promoting and protecting the free press] was a perception among organizers that the two groups gathering in Orlando have too much in common.

“CPAC is an embodiment of the intellectual degradation of the party,” said Heath Mayo, a New York corporate attorney who organized the event. He said he identifies as a conservative but opposes Trump, having supported Sen. Marco Rubio (R-Fla.) in 2016. “The slow dissent away from ideas toward personalities — it doesn’t really matter what you’re saying — ‘Can you entertain me? Are we going to own the libs?’”

About 460 people registered for the event, Mayo said, from 41 states, and tickets cost $35. The “Principles First” event cost about $20,000 and does not make money, Mayo said. “We don’t have a Matt Schlapp that does this and charges from $300 to $5,000,” he said, referring to the CPAC organizer. “It’s all volunteers.” . . .

The main attractions on Saturday were Rep. Liz Cheney, the Wyoming Republican and fierce Trump critic recently removed from GOP House leadership, and Brad Raffensperger, the Republican secretary of state of Georgia who rebuffed Trump’s claims of widespread voter fraud. Both spoke via prerecorded videos. Other crowd favorites included Olivia Troye, a former national security aide to former vice president Mike Pence who now appears frequently on MSNBC as a fierce Trump critic, and Bill Kristol, the columnist, who socialized outside the ballroom and was slated to speak.

Denver Riggleman, a former Republican congressman from Virginia who is now working for the House committee investigating the Jan. 6 attack at the Capitol, drew guests to their feet by acknowledging Harry Dunn, a Capitol Police officer standing in the back of the room. Outside the room, Riggleman told attendees that he had just received promising new phone records of those involved in the pro-Trump riot but declined to say whose they were.

At CPAC, some of those under investigation by the committee were defiant, even wearing hats that said “SUBPOENAED,” while other speakers and guests railed against the committee.

“It is all about money,” Riggleman said of conspiracy theorists and those he is investigating. “I’m going to rip apart their ecosystem.” And he hinted at tantalizing findings, while offering few specifics. “I wish I could tell you about it,” he said of the data he was reviewing for the committee. “If I did, you’d be more shocked than you could imagine.”  . . .

Let’s hope they tell us soon.

BONUS

Obama on Putin (45 seconds, from 2014).

 

Of Pipelines and Madison Cawthorn

My esteemed pal David Durst:

Clarification needed on the right-wing media nonsense claiming that Biden’s having cancelled the Keystone XL pipeline is why gas prices are so high.

The pipeline would have brought in less than 0.5% of our oil consumption. Moreso, it was going to transport oil sands similar to the shale that we already have an excess of.

Two-thirds of the oil that would have come thru the pipeline would have been loaded onto super-tankers in the Gulf and shipped overseas to be refined and sold elsewhere because we don’t have the capacity to refine that low grade oil in large quantities and we already have an excess of that grade from fracking here at home.

It makes for a great Fox News sound bite but anyone who understands the complexities of the oil business knows it’s a nonsensical argument designed to influence folks who have limited knowledge about the oil markets.

My esteemed pal Trey Beck:

Here’s a novel path to keeping those involved with the January 6 attacks on the Capitol out of politics forever.

It’s a project that seeks to bar Rep. Madison Cawthorn (R-NC), potentially other U.S. House members, and ultimately Donald Trump from office under Section 3 of the Fourteenth Amendment, the “Insurrectionist Disqualification Clause.”

In discussing this with legal experts, including those closest to this action, I don’t think it’s an exaggeration to say this campaign might be the single most important lever that could be pulled to keep Trump from ever reentering the Oval Office. The main thing this effort needs is money and political will.

Some history:

The 14th Amendment was passed by Congress the year after Appomattox to do some heavy lifting. It grants “equal protection of the laws” to all citizens, including then former slaves. . . . And for our immediate purposes it prohibits any insurrectionist – whether by active participation or providing “aid or comfort” – who has previously pledged an oath to defend the U.S. Constitution from subsequently holding political, military, or civil government office, whether federal, state, or local. It was ratified by the states in 1868.

(If you’re wondering how Congress got former Confederate states to assent to the Fourteenth:  they had to, as a condition of regaining their Congressional delegations.)

Flash forward to 2022. Madison Cawthorn — the initial target of the 14point3 campaign given the obviousness of his Jan. 6 nexus and the ease with which a North Carolina voter can bring a qualification challenge — has won a surprising, but I am hopeful short lived, victory in federal court.

Cawthorn’s lawyers have taken the position that, independent of their other technical (and weak) challenges to North Carolina’s election laws, the Constitution’s Disqualification Clause itself is null and void because of the Amnesty Act of 1872, by which Congress provided a blanket amnesty to about 150,000 Confederates. This is a breathtaking position.

First, it seems nutty as both a legal and historical matter. The Fourteenth Amendment was duly ratified, and can only be repealed by the same onerous constitutional amendment process. Congress cannot unilaterally undo an amendment.

Moreover, the 1872 amnesty was passed per the procedure prescribed in the Fourteenth Amendment, where exceptions to the Disqualification Clause can be made, for individuals or groups, by vote of two-thirds of the House and Senate.

Lastly, the historical record makes clear the Amnesty Act very clearly applied retroactively, to Confederates, and, importantly, only to some of them, so not to, say, former officers of the Confederate States of America. So, for many years after 1872, previously barred persons remained barred.

Cawthorn’s argument ignores the overwhelming historical evidence that the Congress of 1866 that first passed what became the Fourteenth Amendment had a preoccupation with reducing the chance of another rebellion, hence the operation of the text with both retroactive and prospective effect:  “No person shall be [an officeholder] who, having previously taken an oath . . . to support the Constitution . . . shall have engaged in insurrection . . . .”

Second, there’s just the stench of the association here. Here we sit in 2022 with a sitting member of Congress trying to preserve his political career by invoking a 150-year-old clemency for Confederates that many historians argue was fatal to the Reconstruction, as thousands of unrepentant Old South revanchists reentered government and set to work disenfranchising and terrorizing Black people for the next, well, 150 years.

Despite the tendentious and illogical arguments Cawthorn has made, on Friday a federal judge, who happens to be a Trump appointee, agreed with Cawthorn’s 1872 position and granted Cawthorn a preliminary injunction forcing the NC State Board of Elections to pause its challenge process. This is a setback, but it is possibly addressable on appeal.

In the meantime, it’s important to understand this ruling has no binding precedent implications for other jurisdictions, such as Colorado or Arizona, where known Jan. 6 accomplices like Lauren Boebert or Paul Gosar could be pursued. I’d encourage those interested in maximizing our chances of success with insurrectionist House members and Trump himself to please consider giving to Free Speech for the People.

We Just Might Win The Mid-Terms

It’s true!

Fox News political analyst Juan Williams:

Biden may be Comeback Kid of midterms

. . . The more I watch Biden, the more I agree that Democrats have a chance in the midterms. It starts with party messaging that defines Biden as the right man to lead the nation at this moment: a can-do pragmatist successfully handling Russia, COVID-19, jobs, and inflation.

By November, President Biden may be the latest Comeback Kid.

Read the whole thing?

BONUS

The difference between Russian oligarchs and American oligarchs.

BONUS

The trucker convoy is frustrating satirists.

Granted, making fun of them will only make the truckers more angry and frustrated.

So: don’t forward this to truckers.

Yet somehow we have to get the folks who see their “freedom slipping away” to understand that most of us — maybe even most of them — are glad we have Medicare and Social Security, even though both were once decried as socialism.  Glad we have public schools and “freeways” — socialist, both — even though these are paid for with taxes.  Glad we have meat inspectors and (in most places) clean air and safe drinking water, even though these require regulation.  Glad their kids are safe from polio and small pox even though it took vaccine mandates to do it.  Glad people are free to marry the person they love, even if of a different race or the same sex.  Isn’t that more freedom?

Perhaps the most marked place freedom is threatened is where government proposes to force women to carry unwanted pregnancies to term, assuming control over their bodies.

Even in the case of rape or incest.

Albeit this freedom is denied only to those too poor to travel.

A New Stock Suggestion

But first . . .

How you can help the people of Ukraine.

And can we please allow Ukrainian families to enter the U.S. temporarily if they have people eager to put them up?  One of the happiest things I ever got to do was house a family in the wake of Hurricane Katrina.  A great many of us, I think, would like to do the same to help Ukrainians.

Yachts And War.  (“A fleet of the 20 largest Russian-owned luxury yachts is worth more than Ukraine’s defense budget.”  But Putin is in for a world of hurt.)

Aristides Capital’s Chris Brown has done wonders over the years managing an ever-larger chunk of my IRA.  From his latest letter:

The last time I bought a Russian stock was nearly a decade ago, when we bought a tiny position in a Russian energy company trading at something like 2 times earnings as its billionaire CEO (Mikhail Khodorkovsky) was in prison for political reasons, and rumors were swirling that he might be released. Putin eventually freed the oligarch, causing the stock to rally to 4 or 5 times earnings, at which point we dumped it immediately and celebrated our lucky win. I didn’t follow the story closely after that, but roughly what happened is the Russian state expropriated the company’s assets, the stock got delisted, and shareholders sued, winning a $50 billion judgment that they will almost certainly never collect.

I had the pleasure of visiting Russia in 1996—not quite five years after defenders of democracy in the country had thwarted a coup in 1991, followed by the Soviet Union wholly collapsing—when I went to Moscow as part of a US Agency for International Development sponsored project between four American universities and four Russian universities, helping the Russians to evaluate and deploy telemedicine. A surreal press conference offered a great early lesson in the vibe of the place: the Minister of Health for the Russian Federation spoke of a new website providing much-needed services for Russians. During the Q&A, one of the Russian doctors stood up and asked for the website address (URL). The Minister replied that it would be announced soon, and the doctor quipped “All of Russia is waiting for the URL.”

Russia was not a particularly high-trust sort of place even when Putin first became President in 2000. At the time, Russia’s Corruptions Perception Index ranking was 82nd in the world (a smaller number is better). In 1996, Boris Yeltsin had given oligarchs shares in lucrative companies in exchange for loans to the federal treasury. At first, Putin did not seem to be terrible for Russia; he established certain market reforms, and the Russian economy grew considerably during his first two terms. At the same time, Putin seized television networks in 2000 and 2001, and then, in 2003, arrested Russia’s wealthiest man (Khodorkovsky), a leading funder of opposition politicians. After a 4-year hiatus from the Presidency from 2008 to 2012 (before Putin had the Russian constitution amended, it limited Presidents to no more than two consecutive four-year terms), during which time Putin served as Prime Minister and his close ally Dmitri Medvedev served as President, Putin again became President in 2012, after campaigning on a message of conservative patriotism vs. “Western-funded traitors”. Putin then cracked down on the forces of open/civil society, passing legislation controlling Russians with dual citizenship, banning various NGOs, curtailing LGBTQ rights and symbols, and criminalizing peaceful assembly.2 Subsequently, Putin’s regime annexed Crimea in 2014, intervened in Syria on behalf of dictator Bashar al-Assad in 2015, poisoned leading opposition figure Alexei Navalny in 2020, and made nearly 10 million Russians ineligible for political office in 2021 (dropping Russia to 125th place in the Corruptions Perceptions Index rankings), before launching an all-out war against Europe’s 4th most-populous country, Ukraine, last month. In the run-up to war, which Putin branded “a peacekeeping special operation,” he made transparently ridiculous arguments to the Russian people, alleging that Ukraine was committing genocide against Russians in Eastern Ukraine, that the country was run by a cadre of “drug-addled Neo-Nazis” (despite President Zelensky being Jewish) . . .

From an investment perspective, the most shocking thing to me about Russian stocks is how expensive they were before this unjustified war. I looked last week at a Russian oil & gas stock, that, like all Russian stocks, had already fallen 80 or 90%-ish. I was stunned to see that even after crashing, it still yielded only about 17% free cash flow to enterprise value. Every Russian stock I browsed was the same story; they had all been priced, pre-crisis, at least double what people should have been willing to pay for them given the embedded risks. That is nuts. For many years after the 1998 crisis, Russian stocks traded at a massive discount to developed world markets. This made perfect sense to me, as when a nation has no rule of law, and investors’ attorneys can be jailed and murdered (e.g. Sergei Magnitsky, 2009), people are rightly a little spooked. Apparently, however, investors tend to have a short memory. This amnesia isn’t unique to Russia; it even has an official name, the “peso problem,” often attributed to Milton Friedman.

In the 1970s, the Mexican peso had been stably pegged to the dollar for more than two decades. For an observer with a knowledge of only this “short-term” history or “short-term” charts, it might seem anomalous that Mexican deposit interest rates were persistently higher than those available in the United States. The difference, of course, was due to the possibility of a large, sudden discontinuous move in prices, especially a sudden devaluation of the peso were the peg to break, which of course, it eventually did. As our firm’s favorite mathematician, Benoit Mandelbrot, pointed out rigorously: financial price series are not normally distributed, but rather have large tails (i.e. a higher-than-you’d-expect probability of huge moves), and for most financial price series, as you look at them over a longer and longer period, the standard deviation tends to expand. Many markets go to zero or near infinity (e.g. German equities in local currency during the Weimar hyperinflation), or both, when observed over a long enough time span.

The peso problem makes an appearance in Nassim Taleb’s Fooled by Randomness (2001): “Long periods of stability draw hordes of bank currency traders and hedge fund operators to the calm waters of the Mexican peso; they enjoy owning the currency because of the high interest rate it commands. Then they ‘unexpectedly’ blow up, lose money for investors, lose their jobs, and switch careers. Then a new period of stability sets in. New currency traders come in with no memory of the bad event. They are drawn to the Mexican peso, and the story repeats itself… In the spring of 1998, I spent two hours explaining to a then-important hedge fund operator the notion of the peso problem. I went to great lengths to explain to him that the concept was generalized to every form of investment that was based on a naïve interpretation of the volatility of past time series. The reply was: ‘You are perfectly right. We do not touch the Mexican peso. We only invest in the Russian ruble.’ He blew up a few months later. Until then, the Russian ruble carried attractive interest rates, which invited yield hogs of all types to get involved. He and other holders of investments denominated in rubles lost close to 97% of their investment during the summer of 1998.”

The 23 years of relative prosperity (sans the 2008-2009 global financial crisis) in Russian equity markets, followed by sudden collapse, shows that you can let the institutions of civil society gradually degrade in your country and, at least from a market valuation perspective, get away with it for a surprisingly long time. Eventually, however, core institutions and the rule of law matter. Ukrainians are dying, Russians are dying, millions of lives are being torn apart, and investors are losing a ton of money. The last phrase there is the least important in the grand scheme of things, but it is part of the reason why even hedge fund managers qua hedge fund managers should care about politics. I am long-term greedy. (Also, I have four kids.) In the long run, politics affect corporate profits, equity valuations, life, and death. I cannot “shut up and dribble.” The quality of our policy is the quality of our markets, especially for Americans, who tend to have massive home country bias in our investment allocations and whose currency is the reserve currency of the world.

So where does the United States fall in the Corruptions Perceptions Index? Are we first? Second? Fifth? In 2000, when Putin was elected President of Russia, we were 14th. In 2016, when Trump was elected to lead the United States, we were 18th . By the end of his term, we were 25th. As of 2021, we are now tied with Chile in 27th place. Putin’s ridiculous war speech reminded me immensely of 2003, when I was wearing an Air Force uniform and thinking “surely Americans will turn out to protest this, surely we won’t go to war on such an obvious, flimsy pretense” (i.e. non-existent “weapons of mass destruction” in Iraq). Of course, you know what happened next. More than 4,000 U.S. soldiers killed, approximately 600,000 excess deaths in Iraq (more than 100,000 of which have been attributed directly to coalition forces), and trillions of dollars spent. And for what? What did we get? Limbs blown off, PTSD, a weakened moral standing in the world, great cable news ratings, and happy defense contractors.

Meanwhile, [what do most popular cable TV news programs] serve up every day? A constant helping of the anecdotes meant to present one particular worldview, annotated with invective, and frequently liberated not only from context, but from veracity or reality itself. Literally nobody, except perhaps a researcher doing a PhD thesis on torture or propaganda, should watch these shows. Yet this is a steady diet for many Americans, telling us how much we are under threat, both from dark outside forces and from one another. The formula is so effective and popular that it can be found to some extent in every aspect of American media. Certainly social media is an ideal hotbed for marinating, and helping others to marinate, in the most extreme partisan stories. But even traditional local TV news, and local and national newspapers, have become much more conflict-oriented and sensationalistic in order to survive.

Consumers of this shock and fear diet predictably lose further faith in our country’s institutions and one another. This breeds a willingness to turn towards authoritarianism. Humans likely have a long evolutionary history of turning towards strongmen in times of resource scarcity, so our minds see authoritarianism as reasonable when we view other Americans as “the enemy,” and we see our own noble values and good intentions “under threat.” Putin has managed to manifest a personal/collective-Russian nightmare scenario into actual physical reality—Europe is more tightly allying with the United States, Germany is suddenly committed to expanding its military budget, neutral nations are now standing against Russia, and the Russian economy is falling apart. Similarly, Americans can manifest our nightmares into reality simply by seeing the worst in one another and destroying our nation together. The last two years have seen a rash of state legislation which would diminish rights to assembly, threaten basic rights of LGBTQ children & adults, reduce the teaching of history in public schools and even some universities, make it harder to vote, and more fully enshrine one party or another in permanent power through gerrymanders.  We are at each other’s throats, and authoritarianism and corruption are the beneficiaries.

The United States controls the world reserve currency and has the most expensive major equity market in the world, by far. We trade at a premium because we have the world’s best military, the world’s most trusted central bank, excellent rule of law, the world’s best university system, and the world’s best health care technology. In the Russian state media editorial that briefly leaked on February 26, prematurely praising Russia’s anticipated easy victory in Ukraine (“Vladimir Putin has assumed, without a drop of exaggeration, a historic responsibility by deciding not to leave the solution of the Ukrainian question to future generations…”), the authors made certain to highlight American internal political strife, a strife the Russians themselves have helped foment using social media trolls and disinformation: “Europe needs autonomy for another reason as well — in case the States go into self-isolation (as a result of growing internal conflicts and contradictions) or focus on the Pacific region, where the geopolitical center of gravity is moving.”

One good thing to emerge from the very dark war in Ukraine is that Europe and the United States have been reminded of the values we mutually profess to hold dear, and of the work required to uphold them. Peace and prosperity do not build themselves; they come from justice, strong education, industriousness, natural resources, defense, allies, supply chains, and most of all, from the hearts and the will of people. As the President said in his State of the Union Address this week, “Let’s stop seeing each other as enemies, and start seeing each other for who we really are: fellow Americans.” Sound advice if we want to survive as a peaceful, prosperous nation, especially one with a high price-to-earnings multiple.

And now . . .

KLTR went public at $10 this past July, touched $14 — and I got to buy a bunch last week around $2.  (Only, of course, with money I could truly afford to lose.)

 

Weep For Ukraine

From a 2017 speech by Timothy Snyder:

It was a question for Hitler who will the racial inferiors be, who will the slaves be in the German eastern empire? And the answer that he gave, both in “Mein Kampf” and in the second book* and in practice in the invasion of 1941, the answer was “the Ukrainians.”

Only five countries voted against condemning Russia’s atrocity:

Russia (His own national security advisor: “Trump is a Putin-loving moron who . . . complained about all the sanctions his administration put on Russia . . . and did nothing to deter Putin from invading Ukraine.”)

North Korea (He and Kim “literally fell in love” — and now Kim may be capable of vaporizing Mar-a-Lago.)

Belarus and Syria, which Russia basically controls, and Eritrea, future home to a Russian military base.

Anyone can see Putin is lying.  Ukraine is no more led by a Nazi than Hillary ran a child sex ring — but tens of millions of Russians fell under his spell.  He was making Russia great again.

Once spellbound, it becomes really hard to hear the truth.

What’s more, if a leader is scary and vengeful enough — a vicious counterpuncher unrestrained by common decency or the truth — even the rich and powerful who know he’s lying dare not risk his wrath, be they oligarchs or Republicans in Congress.

*This one?

 

The Whole World Is Watching — On Tik Tok

A Surge of Unifying Moral Outrage Over Russia’s War:  “Ukrainians take to social media, and taboos are tumbling as countries abandon neutrality and people abandon indifference to support their cause.”

There are certain clarifying moments.  Maybe truth IS a thing.  Maybe “alternative facts” are — quite simply — falsehoods.  Maybe lying and cheating and bullying and killing without provocation are simply wrong.

There are certain clarifying moments.  Maybe this is one of them.

In so much of life, it’s not clear where exactly truth or justice lie . . . what balance between alternatives is best . . . what compromises are most reasonable.  All that.  For sure.

But other times, there is clear good and evil.

This is one of them.

(As, 80 years ago, was this.)