From the dumpster fire

The finest handpicked things from the stinking and burning dumpster fire that is the interweb.

Violent kindness

I’ve been fascinated by behavioral economics for a long time. As presumptuous as it may sound, understanding how people behave adds an important dimension to the understanding of markets. It certainly has for me. In fact, the book I recommend the most when people ask me for finance book recommendations is The Behavioral Investor by Daniel Crosby.

When I first discovered behavioral economics, I was stunned at the pathetic creatures we humans are. I memorized a laundry list of biases and made arrogant proclamations that people are stupid, much like everyone else. But the more I read, the more apparent it became that this truism that people are biased and irrational is incomplete.

The development of behavioral economics was a paradigm shift in the history of modern finance, but then it kinda started losing its way. Many behavioral researchers became more preoccupied with discovering supposed biases, finding cute little effects, and party tricks. Over time, the sheen around behavioral economics started wearing off. First, the field has been facing a massive replication crisis [123] as study after study failed to replicate in different settings. As if that wasn’t bad enough, there have been massive scandals. A few months ago, two superstars of the field who studied dishonesty were accused of being, wait for it, dishonest!

Despite all this, I’m in the camp that behavioral economics can be useful. It’s a valuable tool in the toolkit of investors, regulators, policymakers, and governments. But coming back to the point, as I read more about behavioral economics, it started becoming obvious that there’s more to the notion that people are biased and irrational, but I didn’t know what it was. The aha moment for me was when I discovered this paper a few years ago.

In sum, the notion that human judgment is fundamentally flawed appears to have been flawed itself. When we observe humans in adaptively relevant environments, we can observe impressive design of human judgment that is free of irrational biases. Because of trade-offs in error costs, true biases might also prove to be more functional than one would think at first. Some genuine cognitive biases might be functional features designed by the wisdom of natural selection.

The premise of the paper was that the so-called biases are not flaws but rather evolutionary adaptations that helped humans survive for over 200,000–300,000 years. If we were so useless, how did we make it to the 21st century? Of course, this isn’t a novel argument, but I was too dumb and slow to discover it. Evolutionary theorists have been making these arguments since the 1950s and 1960s. Gerd Gigerenzer has been a vocal critic of mainstream behavioral economics and has been making the case that many of the so-called biases are not irrational but ecologically rational for decades. But I hadn’t explored the literature on evolutionary rationality in detail.

A week ago, I started writing an article, and I had to dive deeper into the evolution of human rationality. While I was exploring the evolutionary literature, I came across this talk by the erudite and famed neuroscientist Robert Sapolsky. I knew of him because I had bought his book Behave, which has been lying unread on my bookshelf for a while now. The talk was just wonderful. Listening to Robert Sapolsky was like listening to a scintillating poem about the biology of the human brain. I hadn’t heard anything that left such a deep imprint on me in a long time.

I want to highlight a few wonderful parts from the video:

The single strangest example of violence I’ve ever heard of—and this is one having to do with Indonesia in the 1960s—is when a coup overthrew the government and instituted a right-wing military dictatorship for the next thirty years. In the year afterward, approximately half a million Indonesians were killed by right-wing death squads. The writer V.S. Naipaul was traveling through Indonesia at the time and kept hearing this crazy story about how sometimes these death squads would show up at a village to kill everyone and bring along a traditional Indonesian gamelan orchestra. One day, he runs across one of these old, grizzled veterans of one of these death squads. He’s talking to the guy, who is proud to brag about all the villagers and civilians he killed, claiming he was saving the nation. Naipaul finally said, ‘You know this crazy thing about how sometimes you people would bring like gamelan orchestras to these massacres?’ The guy said, ‘Oh yes, yes, whenever we could, we would bring an orchestra along.’ Naipaul said, ‘Why would you do that?’ In one sentence, the guy looked puzzled and encapsulated everything that’s weird about our violence. He said, ‘To make it more beautiful, of course.’

The duality of human nature:

There is no other primate on Earth that could make sense of our violence when we’re bringing along orchestras to make it more beautiful. Now, the single most complicated thing about us as this miserably violent species is that, at the same time, we’re the most altruistic, most cooperative, and most empathetic species on Earth. And we’re getting better at it. Consider that every single thing up here was invented in the last century – all these ways in which we are extending a sort of umbrella of empathy and protection in all sorts of unlikely directions. How do we begin to possibly make sense of the biology of us at our best and worst?

This is my favorite part of the video on what it takes to understand human behavior:

Now, one of the things that is absolutely clear with that is that you’re going to get nowhere in understanding these features of our behavior if you decide that here is the part of the brain that explains everything that’s going on or here is the hormone, or the gene, or the childhood experience, or the anything, or the whatever that explains everything. Instead, if we’re going to make any sense of these complex, context-dependent behaviors of ours, we have to look at many layers. So, one of these behaviors happens – it’s wonderful, it’s appalling, it’s ambiguously somewhere in between. And we ask the biological question: why did that behavior just happen? And when we do that, we’re actually asking a whole array of questions: what went on one second before in that person’s nervous system that instructed those muscles to do that good, bad, or in-between behavior? But we’re also asking what was going on seconds to minutes before in the sensory world that triggered those neurons, and we’re also asking what was going on with hormone levels hours to two days before that made that organism more or less sensitive to certain sensory stimuli that caused that. And then back to adolescence and childhood, in fetal life, and back to when you were just a fertilized egg, and then back to what sort of culture your ancestors came up with, and what sort of ecosystems, and what evolutionary forces sculpted all of that. If you want to get a sense of it, you’re going to have to ask that question on all of these levels.

A few other interesting highlights, that blew my mind:

Dopamine is about reward, but even more so, it’s about the anticipation of reward. Remarkably, if you block the rise of dopamine, the organism doesn’t press the lever. It’s about the goal-directed behavior. It’s about the pursuit of reward rather than about reward itself.

Testosterone does not invent aggression; it exaggerates existing social patterns of aggression. It turns out that testosterone does something even more subtle than that. People are beginning to realize that what testosterone really does is make you do whatever you need to do to maintain your status when it is being challenged. For example, you can have an economic game where people get status by making generous offers and give people testosterone and they become more generous in the game. In other words, if you shot up a whole bunch of Buddhist monks with testosterone, they would run amok doing random acts of kindness all over the place.

Oxytocin doesn’t make us more pro-social and makes us more pro-social to people who feel like in us. If it’s a them, it makes us crappier and more xenophobic to them.

Your genes shape everything that happens in you, and the thing is your genes have no idea what they’re doing. Saying that a gene knows, for example, when it is going to regulate cell biology, saying that a gene knows what it’s doing is like saying that a cake recipe knows when you’re going to make the cake or decides when you were going to make the cake. Genes don’t regulate themselves; what regulates genes environment does.

The talk seems to based on this paper. Watch the video, you’ll love it.

Good reads

What If Money Expired?

What if the value of your money decayed over time, like potatoes? A fascinating history of a radical proposal for money that had an expiration date

Is his idea of an expiring currency any more absurd than the status quo we inherited? Perhaps his greatest contribution is to remind us that the rules of money can be reinvented, as indeed they always have. Money is a construct of our collective imagination, subject to our complacency, yes, but also to our inquiry, values and highest ambitions.

Nitrogen wars: the Dutch farmers’ revolt that turned a nation upside-down | Farming | The Guardian

The Dutch dairy industry is a significant contributor to nitrogen pollution, which is harming natural habitats. The government wants to combat nitrogen emissions by shutting down dairy farms and asking farmers to downsize their herds. To none’s’s shock, the farmers don’t like the idea of losing their livelihoods. The country has been rocked by massive protests by dairy farmers. The far-right politicians have co-opted the protests to peddle conspiracy theories and xenophobia. Climate change is a societal problem as much as it is an existential one.

There may be no proposal that will satisfy dairy farmers. Any solution for reducing emissions will require either fewer farms, or existing farms to function differently, or both. No solution can guarantee that incomes will be unaffected. As environmental protections become more urgent, it is likely that some people will simply have to change the way they work, just as others might be forced to change how they travel or cook.

The lie of “deinfluencing”

“The vast majority of content we consume when we’re on social media is by amateurs as opposed to professionals, and that’s a dramatic shift in terms of how we’ve gotten our media content over the years,” he says. “The notion of the amateur is that they’re doing it for love and not for money; they enjoy the creative expression, they have no ulterior motives. That has created the expectation in audiences that these folks are trustworthy, and that’s exactly what makes them valuable to then sell on behalf of marketers and corporations.”

The other China shock: How surging Chinese imports transformed global agriculture

To feed its manufacturing industry, and economic development more broadly, China became the world’s largest importer of fossil fuels and minerals. The black curves in Figure 1 clearly illustrates the relentless rise of Chinese manufacturing in terms of both exports of final goods and imports of inputs. Also visible in the figure is another, less publicised shock to the global economy: after joining the WTO in 2001, China quickly went from being a net exporter of agricultural products to being the world’s largest importer. China currently imports more than 10% of all internationally traded agricultural goods, and more than 5% of global agricultural production.

Is Netflix’s First-Mover Advantage at Risk?

Now look: none of this seems to have resulted in actual cancellations. Yet. Netflix hit 247 million subscribers worldwide at the end of the last quarter, at least in part thanks to a crackdown in password sharing prompting new signups. But first-mover advantage only really holds so long as people don’t start questioning the value of their subscription. And with more price hikes, a greater effort to shift customers to ad-supported tiers, a notable slowing in the creation of viral phenomena like Stranger Things and Tiger King, and the rise of cheaper services like Peacock and AppleTV+ alongside the so-called FAST (free ad-supported streamers) channels, Netflix is, for the first time in its history as the streaming leader, facing real questions of whether or not it is worth what it costs to subscribe.

How I Read. Non-secrets for voracious reading

I loved this piece on reading.

Reading requires a lot of effort and practice. Hearing language versus reading it engages different mental processes. Reading forces you to move more slowly. If an author explains an idea to you, the constraints of natural conversation mean that you can’t just pause for 10 minutes while you think deeply about what he or she just said and then subsequently resume the discussion. Books enable you to do that. Of course, you can pause on audiobook and think about what the author just said. Often, though, listening to audiobooks is accompanied by other tasks, making it harder to devote 100% of your attention to the ideas being discussed or the story being told.

What a joke!

This post is more a stream of consciousness than a thoughtful take. So don’t be a judgmental prick.

Laughter is a weird expression. We laugh when we’re happy, and we don’t want to be sad. We cry when something is funny beyond your expectations. We chuckle when we’re understood, and we laugh out loud when we’re misunderstood. We laugh to cope with the absurdity of life and the crushing weight of the unbearable. Laughter is a release valve for our deep-seated thoughts and an escape hatch from reality. You can inspire people, give them courage, and give them hope, all with a smile. Are there any other human expressions or emotions that can help us convey so many things?

We seem to have had the ability to laugh as far back as 14 million years. That means we learned to laugh before we could speak. Even human development follows the same pattern; babies first learn to laugh when they are about 3 months old, even if they are deaf and blind. There also seem to be brain structures and genetic components to laughter. In other words, laughter is the result of natural selection. Laughter is universal, and it has been observed across different cultures and even species.

When tickled, the higher primates (humans, chimpanzees, gorillas and orangutans) all display a laughter-like behaviour (Caron, 2002; Fry, 1994). Fry dates the “rudimentary elements of contemporary humor” to 6.5 million years ago — a figure representing the last common ancestor of Homo sapiens and chimpanzees. However, it appears that Fry inadvertently misses the last common ancestor of humans and orangutans, which is approximately 14 millions old (Dawkins, 2004). This means that the rudimentary origins of laughter could be at least 14 million years old. — The First Joke: Exploring the Evolutionary Origins of Humor

Humor is awesome, it’s like a social Swiss knife.

Humor provides a variety of physiological, psychological, social, and economic benefits. Experiencing humor boosts positive emotions while mitigating the perceived intensity of negative life events, helps people cope with stress and anxiety, makes utilitarian pursuits more enjoyable, improves creativity and aspects of mental health, and helps people manage relationships. Similarly, people who are good at making others laugh have an easier time attracting romantic partners, making favorable impressions on others, and navigating potentially contentious social interactions, such as negotiations and Thanksgiving dinners.

A bunch of academics actually looked for the world’s oldest jokes. Here are some that they found:

The world’s oldest joke is revealed to be an ancient Sumerian proverb dating back to 1900 BC – Something which has never occurred since time immemorial; a young woman did not fart in her husband’s lap. The Sumerian version of this joke occurs in tablets dating to the Old Babylonian period and possibly even dates back to 2,300 BC. The study notes that this joke is almost the ancient equivalent of a well known quip by the actor John Barrymore – “Love is the delightful interval between meeting a beautiful girl and discovering that she looks like a haddock.”

Other jokes that also make it onto the world’s oldest list include a more conventional gag from 1600 BC – how do you entertain a bored pharaoh? You sail a boatload of young women dressed only in fishing nets down the Nile and urge the pharaoh to go catch a fish. This is featured on the Westcar Papyrus and is said to be about King Snorfru.

This begs the question: Why do we laugh?

It turns out that the answer is complicated. Philosophers, psychologists, and biologists have been writing about laughter for thousands of years, but there’s no universal theory of laughter. The OG Greek philosopher and stud Plato hated laughter. He considered laughter evil, a vice, and said that important people should never laugh—I’m sure he was a riot at parties with his stone face and foaming mouth. Epicetus, another stoic Greek nerd, allegedly never laughed once in his life. But, others say, he’s misunderstood, and he periodically dropped some bangers such as this:

I have to die. If it is now, well then I die now; if later, then now I will take my lunch, since the hour for lunch has arrived – and dying I will tend to later. — Epicetus

Aristotle, one of the most popular philosophers with six-pack abs and a student of the hilarious Plato, had a more measured view of laughter. He considered wit an essential part of life but then argued that some forms of “jesting” should be outlawed—what a grump!

Aristotle was ripped—look at them abs. Maybe it was because he had to constantly hold his laughter, and his core got a brutal workout. Given that you have to clench your hind parts to stop laughing, I’m sure his butt was toned as well.


But not all philosophers were miserable pricks. With time, philosophers became less unfunny. Immanuel Kant was one of the first to explain why we laughed:

“In everything that is to excite a lively laugh there must be something absurd (in which the understanding, therefore, can find no satisfaction). Laughter is an affection arising from the sudden transformation of a strained expectation into nothing”

The French philosopher Henri Bergson said:

Laughter is a social sanction against inflexible behavior, which requires a momentary anaestheia of the heart.

Bertrand Russell would’ve sold out stadiums if he were alive today. The man dropped some real bangers:

“The fundamental cause of the trouble is that in the modern world the stupid are cocksure while the intelligent are full of doubt.”

“There are two motives for reading a book; one, that you enjoy it; the other, that you can boast about it.”

“I would never die for my beliefs because I might be wrong.”

“And if there were a God, I think it very unlikely that He would have such an uneasy vanity as to be offended by those who doubt His existence”

“Most people would sooner die than think; in fact, they do so.”

Fast forward to modern times, and we can laugh without risking the wrath of philosopher curmudgeons. So people have had the luxury of thinking more about why we laugh. There are many theories, but here are some popular ones:

1) humor reflects a set of incongruous conceptualizations, 2) humor involves repressed sexual or aggressive feelings, and 3) humor elevates social status by demonstrating superiority or saving face. These ideas reflect separate cognitive domains and therefore are not necessarily mutually exclusive.

1) We laugh when we think we are superior to others or at the misfortune of others.

2) Laughter is an outlet to release pent-up nervous energy. Sigmund Freud thought that humor allowed an outlet for suppressed or taboo views like sex and violence.

3) We find incongruent things funny. In other words, laughter is the result of a violation of our view of reality, and we laugh when this incongruity is resolved. This is how a joke works: there’s a setup and a punchline.

“The way a joke typically works is as a setup which leads your mind in one particular direction, and there’s a punch line which goes off in a totally different direction, and then there’s a resolution that happens in the brain, and this brings the two things which are incongruous together, and if the incongruity and the surprise is sufficient then that triggers laughter, a sense of amusement, or both.” — Jonathan Silvertown

I was watching an interview with George Carlin, and he shared a joke from his brother that perfectly illustrates the idea of incongruity resolution:

What we should do is take all the mentally defective people in this country, give them government jobs and just sit back and watch things improve.

This one is from Anthony Jeselnik:

Man, my parents were strict. Mom and dad were strict. My mom and dad once made me smoke an entire pack of cigarettes. An entire pack of cigarettes in one sitting. Just to teach me an important lesson about brand loyalty.

Another good one from Hannibal Buress:

I’m not an environmental person. Sometimes I let the water run for 45 minutes before I hop in the shower just to do it. It keeps running; it won’t stop running. It feels, you feel all… It makes me feel like the Poseidon of my apartment building—let the water flow. It just keeps running. So wasteful but it feels awesome. You never know, I might be saving somebody. Say some dude is drowning in a lake or the river or whatever; he’s drowning, but the water only comes up to right there because I decided to play a game of Madden before I hopped in the shower. I’m a hero; my methods are just different than yours.

As I finished writing the previous sentence, I discovered this interview where he talked specifically about the topic of incongruity in comedy:

You talked about how comedy’s all about incongruities, contrasts, exaggeration. Do you think about those techniques or those principles of humor consciously?

It happens automatically. Sometimes there’s a conscious heightening, you’ll recognize you’ve just chosen an image to make a point. Then your mind will just suddenly throw something at you that’s stronger—a heightening, to raise the stakes, a stronger word, a more visceral image, something that lights up the imagination, much better than the original thought. So you’re aware that you’re heightening and exaggerating further but you don’t use the word exaggeration or anything like that. All that stuff is just happening. And sometimes, afterward, I’ll look at something and say, “If I were giving a comedy lecture, that would be a good example.” I often think in those terms.

Don’t take the word of cranky philosophers and academics; listen to a comedian itself on why we laugh:

Paul Provenza: Jimmy has a book coming out. You have a theory about why we even have comedy.

Jimmy Carr: It’s a little bit pretentious. Are you sure you wanna hear it cuz it’s pretentious? Okay, so I was trying to think about why actually why do we laugh. Why is there an advantage in an evolutionary sense and a Darwinian sense to laughing? I think when you hear a joke, basically when you notice something that is out of place.

Tim Mimchin: Incongruent.

Jimmy Carr: Right, something is incongruent. I’m saying that the “haha moment” of a joke is very similar to the “aha moment” of ah I’ve had an idea, so you’re rewarding noticing difference and linguistic ability, and those are the two things that have led to our increased development over the last 4,000 years. Humanity, when we started, we were wandering around in the Savannah and you would look at a field and you would see a lion in it you’d notice that difference.

Chris Harddwick: Not bullshit! God put us here; he made us out of clay in a fucking garden and he ripped out one them goddamn ribs and made a pussy.

Jimmy Carr: He makes a very strong point. I would counter, but I just I think there is a I think there is an advantage. I think our culture has done very well out of laughter out of humor out of seeing something a little bit differently and I think you know the last couple hundred years.

Tim Michin: What do we still have to buy the book?

Jimmy Carr: We release endorphins when we laugh and then people come to comedy shows it is to it there’s a release of endorphins in your you’re happy.

Chris Hardwick: Endorphins is another word for brain cum basically.

Jimmy Carr: Brain cum, you release brain cum, that is what I meant to say.

Why write this post?

Last year, Brian Gallagher wrote a wonderful post in Nautilus magazine on why we laugh. I had read the piece but had forgotten about it. I rediscovered the piece again a few weeks ago, thanks to some algorithms—see, they aren’t all bad—and the timing couldn’t have been better.

In the last month or so, I’ve been bingeing on interviews with comedians. I don’t recall when I discovered stand-up comedy, but I’ve been a comedy nerd ever since. The only bright side of having to cross Silk Board every day is that you get a good chunk of time to do something useful in life as a Bengalurian. I loved listening to comedians so much that half the specials I’ve heard (not seen) were on my daily commutes, braving Bangalore traffic. I’ve gotten many perplexed stares at traffic signals as I laughed like an idiot.


To me, there are no better observers of the human condition than comedians. They are the sharpest observers of the absurdities of the world. You can learn more about the world and life from a brilliant comedian than from most news shows. The best comedians are good at shifting perspectives and framing things. They make you go, Hmm, I hadn’t thought of it that way. They push the envelope on the thorny issues of the day. The most subversive power that comedians wield is their ability to give people the luxury of talking about touchy topics because they push the limits of what is acceptable and what is not. Of course, not all comics are good at it, but the best ones are.

Roy Wood Jr: The best jokes land in one of two places. It’s either the audience absorbs it as “wow, I didn’t know that” or “I didn’t look at it like that,” or it’s “that’s what I’ve been trying to say.” — Ted

The best comedians not only make us laugh but also think, and we are better off as a species because of that. Jimmy Carr nailed it when he said this on the Modern Wisdom podcast:

Jimmy Carr: For me, comedy has a function in society that no one is calling, which is we’re pushing the Overton window. We we’re always at the edge of what is and what isn’t acceptable. Like, I’m not just talking about like I happen to tell edgy jokes, that’s not what this is. It’s I’m seeing things as they are but kind of with new eyes. That’s sort of what Comics do – even the most kind of mainstream observational comedy have done well. You’re sort of questioning the reality, you’re saying ‘well this is, this is uh this is not normal, this is not how things should be, this is weird am I the only one thinking this is it just me that’ kind of Trope of comedy and it pushes what we what we think about the world, it pushes what’s acceptable.”

Chris Williamson: You said that comedians are often ahead of the curve on social issues.

Jimmy Carr: I think they are. I think like comedians really do kind of it’s the canary in the mine. It’s the sort of test in the air of what you can say and you know politics lags behind.

Chris Williamson: So does culture, you know. If you want to know what are going to be the biggest talking points amongst normal people in about 18 months time, look at the jokes that comedians are making today.

Jimmy Carr: Well I think there’s a there’s a there’s a argument to be said that comedy lives in sort of a space between public and private discourse, and it strikes me that there’s never been a wider gap between public and private discourse – what people are saying in bars and homes and on social media to their friends and and what the party line, you know, you sort of the party line’s pretty strong at the moment on what you can and what you can’t say. You know if you want to see where power really lives, what can’t you say? It’s interesting right. What can’t you say in a society? What isn’t acceptable in the world? You get into very interesting topics.

I think the best comedians are modern-day philosophers. I’ve been telling my friends and colleagues that George Carlin is a modern-day Aristotle for years now. It’s not just me; here’s Morgan Housel speaking to Tim Ferriss:

Tim Ferriss: Could you just define that term so we understand what we’re talking about? The the term is “happiness”.

Morgan Housel: I would say happiness is you wake up grinning ear to ear. Happiness is you’re out at a bar with your friends. Happiness is you hear the funniest joke you’ve ever heard, and that’s what I think people strive for and they think that money’s going to give to them and it won’t. But I think contentment is you just wake up with a low or virtually no level of anxiety. You’re like, I’m good. I’m pretty happy — I’m pretty satisfied with my career. I’m satisfied with my relationships. I’m satisfied with the house that I live in. That’s not happiness though. I think money can reduce the number of sad days that you have, but it’s probably not going to increase the number of happy days that you have. Now, that’s awesome. If you can do that, that’s a huge life improvement, but it’s not happiness.

Tim Ferriss: Unless you have standup comedy budget and you go to more standup comedy shows.

Morgan Housel: See, that’s actually a great point.

Tim Ferriss: I’m not really kidding. That’s something that I do quite a lot of.

Morgan Housel: I’ve been on such a comedy binge lately, just Netflix specials. And I’ve said this many times, but I think comedians are the only good thought leaders because when you listen to good comedy — 

Tim Ferriss: They’re the only practical philosophers left.

Morgan Housel: Exactly. And not only do you laugh, but you get smarter. I think George Carlin was a bonafide genius. I think Bill Burr is a genius. Those guys understand human behavior better than any psychology PhD does.

This Will Durant quote on the link between comedy and philosophy is on the money:

“A sense of humor, being born of perspective, bears a near kinship to philosophy; each is the soul of the other.” ― Will Durant, The Story of Philosophy

Here’s Lawrence Yeo:

The comedian Tim Dillon was once asked about Jocko Willink’s book, Discipline Equals Freedom. The interviewer wanted to know if Tim thought that discipline was important to cultivate, and if it was a key ingredient to his success.

To that, Tim quipped, “Hey, how about freedom equals freedom? Has he ever thought of that?

Comedians are the great philosophers of our day, primarily because humor is all about framing wisdom in an absurd way. And Tim’s response is a great example of this dynamic in action.

Of course, it goes without saying that I am projecting my views on the comedians that they probably don’t agree with. This act of imposing your hopes and beliefs on people, especially comedians, reminds me of a few things. One is this post on Reddit from a guy who hates it when people call comedians philosophers.

Look, I love George Carlin, Bill Hicks, and Stewart Lee, but I’m really hesitant to call them philosophers. Carlin was the closest in that category, and he certainly had philosophical insights, but he was by no means a philosopher. Most comedians raise insights, but they don’t give any answers, which is half the job of a philosopher. That and most of them aren’t as inclined to inform, as they are to entertain.

This person has a point about entertainment vs. insight. This reminds me of an episode on The Green Room with Paul Provenza, a talk show with a panel of comedians involving Jimmy Carr:

Tim Minchin: I don’t do comedy about politics in the domestic politics sense. The reason I do comedy about logic, religion and belief systems is because I feel like I can go ‘well, that’s fucking wrong’ and ‘this is why that’s fucking wrong.’ And that’s why I avoid politics cuz I cannot ‘well but again, I get what’s right and wrong about it.'”

Jimmy Carr: It’s a different thing for me as a comedian. I’m purely an entertainer. I’ve got no message at all. All I’m doing is trying to make people laugh. I’ve got no… I don’t think anyone should be listening to me, particularly.

Here’s Bill Burr on why he became a comedian:

“I thought I became a comedian because I loved comedy and I liked making people laugh,” Burr says. “But I became a comedian because by the time I was 23, I was so walled-off and fucked-up that doing stand-up was the easiest way to go into a room full of strangers and make them like me so that no one would hurt me. I was onstage with the mindset of a 6-year-old from 23 to about 37.”

Here’s George Carlin:

John Stewart: When you were a kid growing up, yeah, you wanted to be Danny Kaye, he and Bob Hope. So, look, how do you think this thing is working out so far?

George Carlin: Well, I knew I wanted to stand up, and you know, I’d be silly and have people say, ‘ain’t he cute and clever,’ and that’s all it was, a reward, a psychic reward, you know? When you’re a kid, and you find out that you can get the attention of adults, approval, and a little bit of respect, and you just hunger for it, you keep going back for it.

And finally, the legendary and amazing Norm Macdonald:

When you’re a comedian, they expect you to know things nowadays. You know what I mean? It didn’t used to be like that. Like during the Vietnam War, they wouldn’t go, “I wonder what Red Skeleton thinks on this?” But nowadays, like I’ve heard they go, “A comedian is the modern-day philosopher, you know?” Which first of all, it always makes me feel sad for the actual modern-day philosophers who exist, you know?

Every comedian is different.

Legends like Lenny Bruce and George Carlin despised the limits on free speech and reveled in rebelling against the hypocrisy of society at great personal risk. Both were arrested numerous times for violating obscenity laws that were prevalent across America. They took aim at the notion that profane words would somehow corrupt society and destroy social values. They inspired a generation of comedians to express themselves freely.

“I want to help you if you have a dirty-word problem. There are none, and I’ll spell it out logically to you. Here is a toilet. Specifically-that’s all we’re concerned with, specifics-if I can tell you a dirty toilet joke, we must have a dirty toilet. That’s what we’re all talking about, a toilet. If we take this toilet and boil it and it’s clean, I can never tell you specifically a dirty toilet joke about this toilet. I can tell you a dirty toilet joke in the Milner Hotel, or something like that, but this toilet is a clean toilet now. Obscenity is a human manifestation. This toilet has no central nervous system, no level of consciousness. It is not aware; it is a dumb toilet; it cannot be obscene; it’s impossible. If it could be obscene, it could be cranky, it could be a Communist toilet, a traitorous toilet. It can do none of these things. This is a dirty toilet here. Nobody can offend you by telling a dirty toilet story. They can offend you because it’s trite; you’ve heard it many, many times.” ― Lenny Bruce, How to Talk Dirty and Influence People

Richard Pryor, one of the greatest comedians ever, was the son of a prostitute and a pimp and had a hellish childhood. He lived his nightmares and dealt with his demons on stage, and in doing so, he shone the light on what it meant to be a black man in America. Dave Chappelle, Eddie Murphy, Chris Rock, and others followed in his footsteps and became geniuses in their own right for their searing dissections of American social and cultural mores.

Jerry Seinfeld, as Ricky Gervais put it, is “the purest observational comic.” Don Rickles is one of the greatest insult comics ever, and he never wrote down anything. Everything was off-the-cuff.

Today’s comedians are different, and of course, comedy itself is never one thing. It mutates and changes like a virus as it interacts with society, lived experiences, culture, and money. Today’s comedy is arguably more political than ever. It’s funny when you consider the fact that more people watched Jon Stewart for their news than real news shows; he was the most popular fake newsman in America. John Oliver, who got his start under Jon Stewart, continued the tradition. You can see this need to be political among Indian comics as well. It’s a weird thing to see them talk about the absurdities of politics while they go to great lengths to tell us they are not experts.

Maybe people like me are living vicariously by projecting our ideals onto comedians. Maybe there are very few comedians who consider themselves social justice warriors or psychologists without credentials. Maybe by building them up into something they are not, we can express our deep-seated beliefs and frustrations. It’s just like imbuing useless objects with meaning through stories, religion, and just plain time—a musician’s underwear + 50 years = a collectible.

But hey, what do I know?

But whatever the case, comedians are incredibly insightful. Every time you listen to them, you can pick up a thing or two. For example, the last time I heard Bill Burr, I wrote a post on a few things about money I learned from him.

I’ve been listening to long-form interviews with comedians for the past month or so, and I can’t get enough. They’re wired differently, and their views on work, life, and love are fascinating. I loved this quote from Jimmy Carr that perfectly captures what makes comedians special:

As British comedian Jimmy Carr and writer Lucy Greeves put it in their book, Only Joking: What’s So Funny About Making People Laugh?, “Stand-up comedy is a peculiar performance art form. In a room filled with people, the comedian is the only one facing the wrong way. He’s also the only one who isn’t laughing. For normal people that’s a nightmare, not a career aspiration.”

Here’s what I’ve been watching and listening to:

Talking funny with Jerry Sienfeld, Chris Rock, and Ricky Gervais

Jimmy Carr – The Secret Hacks For Living A Fulfilled Life

I’m halfway through this one, and it’s just amazing. I highly recommend listening to it.

A beautiful interview with George Carlin, one of my idols

I had goosebumps right at the intro:

We are honoring this, this time around, an icon, a fellow who has really changed comedy as we know it. Literally, he’s celebrating 50 years of entertainment this year. He’s gone through more changes than most people do in a lifetime, and he’s invited us along on those changes. And sort of like the Beatles, we’ve gone through those changes with him. And he spent 50 years, think about that, 50 years making us laugh and, more importantly in some people’s opinion, he spent 50 years making us think. As you welcome, please, Mr. George Carlin.

Seth MacFarlane is a goddamn genius

I enjoyed this conversation of Anthony Jeselnik and Whitney Cummings

I just started watching these

Dave Chappelle with Naomi Campbell

The Power of Laughter with Nuar Alsadir

How Social Media Forced Political Comedy to Evolve | Offline with Jon Favreau

Things on the playlist:

The Evolution of Humor with Biologist Jonathan Silvertown

How Social Media Forced Political Comedy to Evolve | Offline with Jon Favreau

Breaking Bread with Wayne Federman

Jon Stewart interviews the legendary George Carlin

A few good reads

Why do we laugh? New study considers possible evolutionary reasons behind this very human behaviour

Why do we laugh when someone falls down? Here’s what science says

The evolutionary origins of laughter are rooted more in survival than enjoyment

What’s So Funny? The Science of Why We Laugh

Truth Is What a Comedian Makes of It

The Rise of “Clapter” Comedy

Was George Carlin really a prophet?

How Funny Does Comedy Need to Be?

Philosophy of Humor

I’ll leave you with a few things.

A brilliant quote:

A thing is funny when—in some way that is not actually offensive or frightening—it upsets the established order. Every joke is a tiny revolution. If you had to define humour in a single phrase, you might define it as dignity sitting on a tin-tack. Whatever destroys dignity, and brings down the mighty from their seats, preferably with a bump, is funny. And the bigger the fall, the bigger the joke. — George Orwell

A few of my favorite bits

Norm Macdonald on the Germans

George Carlin on Stuff

The yellow cake bit from Chappelle Show

One of my all-time favorite jokes from the amusing Norm McDonald

Ricky Gervais at the Golden Globes

Happy Diwali, folks, and go crack some inappropriate jokes about Diwali food-induced farts killing the cracker industry and leading to the unemployment of millions of minors.

Amusing ourselves to death

Ok, here’s what I found on the dumpster fire that is the interweb this week:

  1. Alain de Botton on a healthy mind.
  2. The end of open social media.
  3. Out the money reads: Did SEO ruin the internet, future of NGOs, climate change impact in poor countries, downside of EVs and more.
  4. Raghuram Rajan on the 2008 crisis, central banking, inequality, unconventional monetary policy, and more.
  5. Bond markets are going electronic in Europe.
  6. In the money reads: emerging markets resilience, performance chasing, college wage premium, personality traits, career success, and more.

A few good thoughts

I came across writer Alain de Botton’s beautiful post on the wondrous human mind, thanks to The Marginalian. Here are a few evocative excerpts:

So efficient and hushed are our brains in their day to day operations, we are apt to miss what an extraordinary and complicated achievement it is to feel mentally well. A mind in a healthy state is, in the background, continually performing a near-miraculous set of manoeuvres that underpin our moods of clear-sightedness and purpose.

A healthy mind knows how to hope; it identifies and then hangs on tenaciously to a few reasons to keep going. Grounds for despair, anger and sadness are, of course, all around. But the healthy mind knows how to bracket negativity in the name of endurance. It clings to evidence of what is still beautiful and kind. It remembers to appreciate; it can – despite everything – still look forward to a hot bath, some dried fruit or dark chocolate, a chat with a friend, or a satisfying day of work. It refuses to let itself be silenced by all the many sensible arguments in favour of rage and despondency.

A Therapeutic Journey: Lessons from the School of Life | Extract | Hat tip to Maria Popova

Another beautiful quote I found on the site:

“The mind is its own place, and in itself can make a heaven of hell, a hell of heaven..”

―John Milton

Rummaging through quotes on Goodreads has become a new pastime for me. I’ve heard a version of this quote from other accomplished and smart people that I look up to as well:

“For me, I am driven by two main philosophies: know more today about the world than I knew yesterday and lessen the suffering of others. You’d be surprised how far that gets you.”

― Neil deGrasse Tyson

“Sometimes, carrying on, just carrying on, is the superhuman achievement.”

―Albert Camus

Jim O’Shaughnessy shared this:

Anthony de Mello’s four truths:

1. Attachment or Happiness, you must pick one.

2. You didn’t pick your original attachments, you can rewrite them.

3. To be truly alive, you must have Perspective.

4. No thing or person outside you has the power to make you happy. Only you can.

Out of the money

The end of open social media

It’s hard not to look at statistics like this and be shocked, even though we know them at some level. It’s nuts.


The first popular social network in my circle was Orkut by Google. I don’t have a good recollection of what I used to do on the platform; it couldn’t have been anything useful. Soon, Orkut withered as Facebook became popular. I have fairly good memories of the dumb things I used to do on it. The earliest memory I have of Facebook is using the poke feature. Remember that? It’s something you did to annoy your friends.

Business Insider

These were good times. Social platforms were still called social networks, not social media. You checked in with distant friends, shared memories, rediscovered old acquaintances, found your soulmates, and sometimes even did accidentally useful things. Fun times. Hundreds of social media platforms came and went, but Facebook, Twitter, and Instagram remained popular. They became part of our daily lives. Without realizing it, we were getting hooked on the tiny dopamine hits of likes, pokes, shares, and retweets. But it was still okay; we were just having innocent fun.

Somewhere along the way, social networks became social media, and it all went to shit. The trouble started when social platforms started pushing news and branded content compared to updates from friends. Instead of poking each other, we started arguing about politics and other divisive topics. The platforms wanted engagement, and what better way than to enrage people? This strategy started to backfire starting around 2015.

Platforms had started to go to shit long before, but the 2016 US election, in which Donald Trump won, was the moment when the developed world went, “Oh shit, we have a problem.” Trump brought out the worst in people, and political polarization exploded. Social platforms became outlets for people to express their politically motivated hatred and animosity. The incentives of the platform to peddle extreme stuff further inflamed the situation. It wasn’t just the US; partisanship and polarization rose in several countries across the world, and platforms were at the heart of the issue. Social networks not only became places where you bickered and argued over pointless shit with people you otherwise liked but also with random people from Albania and Montenegro.

The platforms—Facebook in particular—did a sharp U-turn around 2017–18 as they deprioritized news content, but it was too late. There was a time when the narrative about social platforms was that they would connect people and even make the world a better place. Remember the Facebook and Twitter revolutions in Middle Eastern countries like Tunisia, Iran, and Egypt? Of course, the role of platforms in popular uprisings was vastly overstated. This period marked the end of the fun era of social networks. The shift from “social networks” to “social media” was complete.

It’s just stunning that the narrative about social networks went from them being saviors of democracy to destroyers of civilization. Today, social media platforms are charged with abetting genocide, dividing people, tearing apart the social fabric, and unleashing a global mental health crisis among young people.

After their divorce with news, the priorities of the platforms changed. They no longer cared about pointless shit like connecting people and making the world a better place. Platforms are businesses, and business interests dictate the direction they take—it’s shareholder capitalism, baby. The shareholders and venture capital investors were clear on what they wanted—they wanted moar growth, more clicks, moar engagement, and moar money. Moar more!

Unlike most other businesses on Earth that live and die by their customers’ demands, social media services are caught trying to satisfy both their users and the people actually paying for it all: investors and advertisers. 

The needs of these groups are dramatically different. Users want what the platform was originally for — be it ephemeral messaging, sharing photos, or otherwise. Surprising, energized spaces to connect with friends in a new way. But these use cases inevitably have a limit. You can only post so many photos. You only have so many friends to message. And for investors and advertisers, that’s a problem. So each social network has to find ways to make you send another photo, or it has to deploy a brand-new feature and encourage you to use that, too. More usage, more space for ads, more money for investors. — Ellis Hamburger

Platforms get all the blame, but it’s not like the users were innocent. It takes two to tango. The engagement-engagement loop disfigured the platforms. The platforms were influencing us, and our behavior was influencing them. I want to be clear that it’s easy to paint platforms as technological manifestations of Darth Vader. Are they responsible for all the ills that plague society? The research is unclear on that, but they had arole,e and that much is clear.

When I spoke with Nyhan, he told me much the same thing: “The most credible research is way out of line with the takes.” He noted, of extremist content and misinformation, that reliable research that “measures exposure to these things finds that the people consuming this content are small minorities who have extreme views already.” The problem with the bulk of the earlier research, Nyhan told me, is that it’s almost all correlational. “Many of these studies will find polarization on social media,” he said. “But that might just be the society we live in reflected on social media!” He hastened to add, “Not that this is untroubling, and none of this is to let these companies, which are exercising a lot of power with very little scrutiny, off the hook. But a lot of the criticisms of them are very poorly founded. . . . The expansion of Internet access coincides with fifteen other trends over time, and separating them is very difficult. The lack of good data is a huge problem insofar as it lets people project their own fears into this area.” He told me, “It’s hard to weigh in on the side of ‘We don’t know, the evidence is weak,’ because those points are always going to be drowned out in our discourse. But these arguments are systematically underprovided in the public domain.”

How the hell did we think that bringing the entire world online and letting everyone talk to each other would end well?

A global broadcast network where anyone can say anything to anyone else as often as possible, and where such people have come to think they deserve such a capacity, or even that withholding it amounts to censorship or suppression—that’s just a terrible idea from the outset. And it’s a terrible idea that is entirely and completely bound up with the concept of social media itself: systems erected and used exclusively to deliver an endless stream of content.

But now, perhaps, it can also end. The possible downfall of Facebook and Twitter (and others) is an opportunity—not to shift to some equivalent platform, but to embrace their ruination, something previously unthinkable. Ian Bogost, The Atlantic

Fast forward to 2023. Social media platforms feel like landfills. Gone are the days when embarrassing pictures of your friends and family used to fill our feeds. Now they are full of branded bullshit, exaggerated nonsense, engagement bait, hustle porn, and endless regurgitation of content that people steal from each other or, worse yet, copy from Wikipedia. Every day, tons and tons of fresh garbage are delivered to landfills. We don’t even care about the stench anymore because we’re used to it.

Then there are those short videos. People have become zombies as they watch one short video after another. Talking to another human being, staring at the birds in the distance, or, god forbid, stepping outside into the real world has become unimaginable. Swiping to find the next 60-second video is preferable compared to the agony of living. An entire generation of brain-dead people just hunched over and swiping up, desperate to escape life.

Add it all up, and the social web is changing in three crucial ways: It’s going from public to private; it’s shifting from growth and engagement, which broadly involves building good products that people like, to increasing revenue no matter the tradeoff; and it’s turning into an entertainment business. It turns out there’s no money in connecting people to each other, but there’s a fortune in putting ads between vertically scrolling videos that lots of people watch. So the “social media” era is giving way to the “media with a comments section” era, and everything is an entertainment platform now. Or, I guess, trying to do payments. Sometimes both. It gets weird. — David Pierce, editor-at-large of The Verge

In 2023, one thing that seems clear is that the era of open social media is over. Social networks just stopped being fun. We’re no longer social media “users”, we’re performers. Platforms have become performative hellscapes where people have to debase themselves to make a buck. People are twerking for Zuckbucks, Elonbucks, and YouTube bucks. In response to the fickle whims of the social algorithmic overlords, people, sorry “creators,” are having to demean themselves even more by escalating their ridiculousness.

Elon Musk woke up and asked him the question: What’s the best way to blow $44 billion? His answer was to buy an ossified social media platform and make it even worse than it was before. Zuck wanted to liberate humans from the tyranny of Silk Board and move us to the metaverse, but he’s taking a liking to the real world again. LinkedIn has become a parody of real life. A weird platform where even the most banal things are exaggerated. Things like “I farted in the elevator, and it changed my outlook about how to be professional, here are 5 things I learned.”


TikTok has become a cultural juggernaut in the US but faces an uncertain future after being banned in a large part of the world. For now, it’s the home of awkward and anxious teens craving the attention and validation of strangers in hopes that it will cure their acne outbreak. Instagram is no longer a cozy platform for amateur narcissists and terrible photographers. It’s filled with people peddling all sorts of nonsense, from magical jade stones that cure baldness if you put them in your butt to get-rich schemes. It’s a grifter’s paradise.

What comes next?

I’ve no idea, but here are some trends to watch out for.

  1. Twitter seems to be circling the drain as high-profile users leave the platform and other users reduce their activity. Elon’s new rightward turn and the boosting of right-wing nutcasesares turning the platform into a wasteland.
  2. Facebook is becoming less popular by the day.
  3. The future of social media may be a lot less social. There’s growing evidence to show that people are moving to private places like WhatsApp, Discord, Telegram, Instagram DMs, etc.
  4. Decentralized social networks like Mastadon and Bluesky are growing but are still light years away from the scale of centralized platforms.

I found this excerpt from Neil Postman’s Amusing Ourselves to Death interesting. I fear he may be right:

What Orwell feared were those who would ban books. What Huxley feared was that there would be no reason to ban a book, for there would be no one who wanted to read one. Orwell feared those who would deprive us of information. Huxley feared those who would give us so much that we would be reduced to passivity and egoism. Orwell feared that the truth would be concealed from us. Huxley feared the truth would be drowned in a sea of irrelevance. Orwell feared we would become a captive culture. Huxley feared we would become a trivial culture, preoccupied with some equivalent of the feelies, the orgy porgy, and the centrifugal bumblepuppy. As Huxley remarked in Brave New World Revisited, the civil libertarians and rationalists who are ever on the alert to oppose tyranny “failed to take into account man’s almost infinite appetite for distractions.” In 1984, Orwell added, people are controlled by inflicting pain. In Brave New World, they are controlled by inflicting pleasure. In short, Orwell feared that what we fear will ruin us. Huxley feared that what we desire will ruin us.

This book is about the possibility that Huxley, not Orwell, was right.”

“When a population becomes distracted by trivia, when cultural life is redefined as a perpetual round of entertainments, when serious public conversation becomes a form of baby-talk, when, in short, a people become an audience, and their public business a vaudeville act, then a nation finds itself at risk; culture-death is a clear possibility.”

― Neil Postman, Amusing Ourselves to Death: Public Discourse in the Age of Show Business

In my own experience, apart from the occasional shitposting, my social media posting activity had gone down. I doomscroll on Twitter because that’s where all the smart people are. It’s the only way I know of discovering the best articles, research, etc.

In the past couple of months, I’ve been increasingly using the Substack app. The explore feed is remarkably good, and the Substack algorithm is doing a good job of surfacing well-written perspectives. I haven’t found Substack Notes, a Twitter replacement, all that useful yet. The idea of this website was also, in a way, a reaction to the shittiness of social media platforms. I wanted to build a simple site where I could collect and organize some of the best things on the internet instead of dancing like a monkey to the whims of the platforms. Having said that, I may have to dance a little because I share the links to the posts on this website on the same platforms.

Dive deeper

Tiktok’s enshittification

The Internet Could Be So Good. Really

Social media is doomed to die

Why the Internet Isn’t Fun Anymore

We’re Nearing Opinion Overload

Fidelity has marked down the value of Twitter/X by 65%

It’s not just you. LinkedIn has gotten really weird.

I have more thoughts on the topic, but that’s for the coming weeks.

Good reads

The people who ruined the internet

“All the assholes that are out there paying shitty link-building companies to build shitty articles,” he said, “now they can go and use the free version of GPT.” Soon, he said, Google results would be even worse, dominated entirely by AI-generated crap designed to please the algorithms, produced and published at volumes far beyond anything humans could create, far beyond anything we’d ever seen before.

“They’re not gonna be able to stop the onslaught of it,” he said. Then he laughed and laughed, thinking about how puny and irrelevant Google seemed in comparison to the next generation of automated SEO. “You can’t stop it!” 

The end of the NGO?

The Oxfam scandal wasn’t the first of its kind. As far back as 2002, a report conducted by the UN Refugee Agency and Save the Children UK in west Africa found that agency workers from local and international NGOs, as well as UN agencies, were among the “prime sexual exploiters of refugee children”. Aid workers were accused of “using the very humanitarian assistance and services intended to benefit refugees as a tool of exploitation.”

The report, which included allegations against employees of some of the world’s biggest aid agencies, led only to patchy efforts to address the problem. 

Years into a climate disaster, these people are eating the unthinkable

A gut wrenching story of how climate change is devastating the poorest regions on the planet.

Her entire days are “devoted to the lilies,” she said, and collecting them has proved so punishing — two-hour walks, hours more in the water, lugging them back home — that she’s developed chronic coughs, regular fevers, and found herself many mornings asking if she could bear to return to the water. “As long as my children are alive,” she’s told herself, “I’ll keep going.”

Why Norway — the poster child for electric cars — is having second thoughts

Electric vehicles are not an unalloyed good. A cautionary tale of Norway, where over 80% of cars sold are electric.

So I flew across the Atlantic to see what the fuss was about. I discovered a Norwegian EV bonanza that has indeed reduced emissions — but at the expense of compromising vital societal goals. Eye-popping EV subsidies have flowed largely to the affluent, contributing to the gap between rich and poor in a country proud of its egalitarian social policies.

Worse, the EV boom has hobbled Norwegian cities’ efforts to untether themselves from the automobile and enable residents to instead travel by transit or bicycle, decisions that do more to reduce emissions, enhance road safety, and enliven urban life than swapping a gas-powered car for an electric one.

Pair this this article on the myths of electric vehicles

Your guide to the guides for fixing the internet

I loved the wonderful framing of how technologies evolve.

But I’m also personally a big believer in the idea that once you have a name for something happening online it’s already over. Whether it’s a meme or a trend or, in this case, a general vibe, the minute there’s a consensus as to what it is, it’s already its over to some degree. Which means I sort of think whatever that new status quo is, it’s already arrived and that the rut we feel like we’re in is possibly already over. Somewhere, at least. And while I share the affliction that all tech writers have, in that I crave applying some kind of order to the chaos of how technology evolves, the truth is that it just does a lot of the time. And there is some pocket of the web out there that has already defined our digital future. We just haven’t noticed it yet. (Though, it’s probably whatever furries are doing right now.)

Reading without purpose

I loved this post. Reading without purpose is a habit I’ve been deliberately trying to cultivate. This blog is based on the same premise—read without a purpose and share the good things.

At one point, Grant asked Nolan how he finds something that he’s passionate about. Nolan responded, in part:

“For me, it’s all about trying new things. If you’re going to write, you want to read a lot before you write, without any purpose. I love watching TV, love watching movies, preferably with no sense of purpose. Just being open to things that might inspire you—and staying open.”

Nolan reads “without any purpose.” I would argue, though, that there is a purpose in that: to find something that stimulates you but that you couldn’t have known to look for. I often wander bookstores, which I think of as places to find interests that I didn’t know I had.

In the money

Raghuram Rajan

Former RBI governor Raghuram Rajan is not a popular figure in certain Indian political circles. Whether you agree or disagree with him, he’s still one of the sharpest thinkers on issues of monetary policy and financial stability. He recently appeared on The Joe Walker Podcast, a favorite of mine, and I enjoyed listening to the conversation.

A few highlights from the conversation:

On his famous 2005 speech

In 2005, he gave a speech at the Jackson Hole symposium warning of hidden risks to the global financial system arising from distorted incentives. The event was supposed to be a celebration of the legacy of Alan Greenspan.

I remember leaving home and telling my wife, “This speech will either make or break me,” because I had an inkling that I was saying something important. 

But I also knew that I was going out on a limb because I would look really stupid if I’d said, “Look, there are these risks building” and nothing actually happened. And, interestingly, at the end of the speech I went up to say hello to Chairman Greenspan and he was obviously not pleased. What was interesting was there were two private-sector people also there who were telling him, “Look, you’ve got to stop us from taking these risks.” And what was interesting was, that was the missing piece that somehow we had all convinced ourselves that the smartest guys in the room would have figured out how to manage the risks. 

On his “let them eat credit” view

Well, there was a sense – which, again, like all ideas, there’s an element of good intent and truth to it – the sense that if we make credit easier, if we allow people to buy houses, for example, and they can ride the house appreciation, that’s good for their wealth, that’s good for their portfolios, but it also can take some of their worries away, including worries that they don’t have good jobs, they don’t have adequate human capital, et cetera.

Too much credit pushed too easily can actually do harm and even the people who get the credit can be harmed because they can get it at the wrong time. As prices are really going up they may not be able to afford the houses, they may not be able to afford the consumption that it made possible, they drew down on their home equity lines, and then found that house prices collapsed and there’s no equity anymore, in fact they were deeply in debt. 

On the perils of pushing easy access to credit as means to financial inclusion

And so, there is more of a sense now that public policy plus the private sector may make it too easy to access for the disadvantaged to access credit, and they themselves may not have the capacity to understand what is reasonable. In fact, they’ll take whatever comes because their discounting of the future is much higher – “Sick child today. Let me try and get the child to a hospital. What if I have to borrow.” But then the loan has to be paid tomorrow. That’s when the lenders start hounding this person. I myself, while I was in India, was much more focused on pushing payments and other services as the lead into inclusion, rather than pushing credit as the first thing. Because it struck me that the problem with pushing credit was that before people know how to manage their finances, if they get easy credit, there’s a likelihood they will overborrow and then face problems down the line.

On central bank independence

I do think that central banking is a very political job. It may seem technocratic and, yeah, you think about what R-star is and you set interest rates with that in mind. 

Where you think R-star is completely political. I shouldn’t say completely political; it cannot be devoid of politics. But your language, your persuasion, the extent of hostility that you face – all that is political

I don’t think they are. Technically, as a central bank chief, some countries will make it very hard to fire you. Does that mean that you can do what you want? No.

I don’t think it’s wise to completely put the central bank outside of any kind of control. I think unelected officials should have some oversight by the elected representatives of the people. I think there’s an optimal point where you respect them and you try not go too far away from what is politically acceptable. But there are times when there is something you need to do which will cause pain, which somebody who wanted to be elected in the next election would perhaps not espouse, but which you think is needed not just for the next election cycle, but for many election cycles down the line. 

That’s when, if you have enough independence as a central bank, you can make the tough choice. But to completely ignore the elected representatives of the people all the time? Well, sometimes they actually have sensible ideas which you should be paying more attention to. 

On incentives

The Goldman Sachses of the world – why would they go out on a limb? Why would they risk their firm’s capital? The missing piece, which to some extent I alluded to in the paper, was distorted incentives in the financial system – and that led to the tail risk-taking. The smartest guys were not immune to bad incentives. 

On why just lowering interest rates after the 2008 crisis didn’t work

In other words, you had to do structural reforms. And this sounds like the annoying sort of old geezer who says whenever things are slowing down, “All you young pups, you always want to stimulate. You actually need to fix the underlying problems. Structural reforms.” But I do think, as a number of people have suggested, one of the problems with the low demand in industrial countries stems from inequality that the lower end could consume more, would consume more, but doesn’t have the incomes. But how do you generate more incomes at the lower end? You have to make them more capable of getting good jobs, which means focus on capabilities, skill building et cetera. And for all the talk about the China effect on the US, I think the reality is the US has a lousy system of training people in response to trade shocks. The trade adjustment mechanisms simply don’t work. 

Tangential rabbit holes

Incentives and self-delusions

As I was writing this post, I came across psychologist Adam Mastroianni’s brilliant post on Goodharting ourselves, a reference to Goodhart’s law and how it applies to individuals as well.

“When a measure becomes a target, it ceases to be a good measure”

Dr. Rajan’s observation on incentives reminded me of this passage from Mastroianni’s post:

It’s not just me, of course. I’ve seen people melt down over lots of dumb games: Monopoly, Scrabble, Mario Kart, mini golf, charades, bowling, trivia, and croquet. Losing your cool after losing a game is mildly mortifying, but if 15 minutes of struggling for made-up points is enough to turn you into a howling, friendship-shredding monster, imagine how low you can sink when there’s actual money and prestige on the line. If you take a high-paying job to “provide for your family” and then you never see that family and they end up hating you, if you claw your way to the top only to find that you still feel as empty up there as you did at the bottom, if you get so obsessed with success that you lie and cheat to get it, then guess what: you got Goodharted.

Dive deeper into the history of the 2008 global financial crisis.

I’ve been fascinated by the 2008 financial crisis for a long time, and I had written about it a little in an old post as well. One of the definitive books on the crisis is Crashed by historian Adam Tooze. I highly recommend the book, but if you want a quick summary, you can watch this video as well. Adam Tooze is an information monster. He has the remarkable ability to consume a torrent of information and spit out accessible summaries and explanations of complex phenomena. I highly recommend reading anything he writes, including his Substack. He’s a regular on panels and podcasts, talking about a wide range of important economic developments. In the upcoming editions, I will try to summarize some of his talks.

He also hosts a weekly podcast that I recommend listening to.

European bond markets are going electronic

I have some experience trading bonds in India. It’s a market that’s stuck in time, where everything happens over calls and WhatsApp messages. Despite all the regulatory moves to increase liquidity in bonds on the exchanges, things haven’t changed much. All the bond trading has now been pushed to request for quote’ (RFQ) platforms on the exchanges, but the price negotiations still happen on calls. The trades are executed on RFQ instead of off-market transfers.

Bonds will never trade like equities in exchanges; it’s not the nature of the instrument, and it’s a global thing. Most retail investors are also better off not buying single-name papers and should stick to bond mutual funds. Which means on-market liquidity will always be limited.

But it looks like things are changing in Europe:

But while algorithms work well on the small trades that account for 60 per cent of European bond market activity, they’re not yet trusted with big and complicated stuff. Only liquid, recently issued bonds with a large outstanding basis and a high credit rating are considered sufficiently low-touch to be fed into the system. So while the median European trade is now electronic the category still only accounts for 30 per cent of total volume, Barclays finds.

Ken Rogoff on why emerging markets haven’t been resilient despite soaring US interest rates. He attributes this to central bank independence, but if you scroll up and read what Raghu Rajan says, he says the notion of central bank independence is a bit of a myth.

But the single biggest factor behind emerging markets’ resilience has been the increased focus on central-bank independence. Once an obscure academic notion, the concept has evolved into a global norm over the past two decades. This approach, which is often referred to as “inflation targeting,” has enabled emerging-market central banks to assert their autonomy, even though they frequently place greater weight on exchange rates than any inflation-targeting model would suggest.

Performance-chasing is an universal truth

The red line in the chart indicates that fund managers have about five years before their investors turn their backs on them. After five years of underperformance, there is no stopping disappointed investors from leaving the fund. My personal experience with investors is that five years is a long time. Most investors will get nervous after six to twelve months of underperformance and leave you after two to three years of underperformance.

Yet, this research points to a simple investment strategy for fund selectors. Look at funds that underperformed in years six to ten before today. These are the funds that tend to follow styles that are likely to come back into favour in the next five years. And that may have a better chance of outperforming going forward than the funds that did well in the last five years or so.

Fascinating discussion on the college wage premium in the United Kingdom and United States

What this chart is showing is that as each wave of graduates has entered the UK’s jobs market, on average they’re finding lower-grade jobs than the last, whereas in the US, each new wave of grads is met by a new wave of well-paid graduate jobs.

Other countries have the same rise in graduate numbers without the same decline in graduate earnings, because they’ve created good jobs. When people say Britain sends too many people to uni, they’re saying we’re not a country where skilled people can expect to find skilled jobs.

Short-changed graduates are just another symptom of the British economic disease. If you have low investment and low or zero productivity growth, then when your grads enter the job market, they’ll have fewer and weaker opportunities than grads in a country that had higher growth


On a related note, research on what personality traits predict good career outcomes

In this research, we examined whether personality changes from adolescence to young adulthood predicted five early career outcomes: degree attainment, income, occupational prestige, career satisfaction, and job satisfaction. The study used two representative samples of Icelandic youth (Sample 1: n = 485, Sample 2: n = 1,290) and measured personality traits over 12 years (ages ~17 to 29 years). Results revealed that certain patterns of personality growth predicted career outcomes over and above adolescent trait levels and crystallized ability. Across both samples, the strongest effects were found for growth in emotional stability (income and career satisfaction), conscientiousness (career satisfaction), and extraversion (career satisfaction and job satisfaction). Initial trait levels also predicted career success, highlighting the long-term predictive power of personality. Overall, our findings show that personality has important effects on early career outcomes—both through stable trait levels and how people change over time. We discuss implications for public policy, for theoretical principles of personality development, and for young people making career decisions.

Hat tip to Jay Van Bavel

That’s it for this week. Lift your head up from those screens, go smell the fresh polluted air of Bangalore, meditate about life at silk Board, and enjoy a long silent stroll on the main roads of Bangalore (becos we no footpath have).

There is no love of life without despair of life

The interweb is like a smelly public toilet with no doors near the Majestic Bus Stand. But the toilet becomes just a little bearable for you to finish unburdening yourself when a strong wind blows through the door, sweeping away the fresh and pungent Chanel N°5 odors of fellow travelers. In that split second, you can discover some wonderful things on the interweb. This blog is an ongoing journal of such things.

Here are some amazing things I discovered this week.

  1. Hope vs. despair
  2. Carbon credits a giant scam
  3. Myths about electric vehicles
  4. Summary of the IEA World Energy Outlook 2023
  5. The world’s largest carbon emitters in 2022
  6. In defense of rats
  7. Patrice O’Neal on people tricking God
  8. Victor Haghani reminisces about his days at Long Term Capital Management (LTCM).
  9. Survivorship bias
  10. Professor Aswath Damadoran’s interview
  11. Big market delusions
  12. Demographics are not destiny.

Out of the money

Age of discord

Conflicts are popping up all across the world. While a lot of people are shocked and lamenting that it’s the end of history or the end of end of history, I am not. This isn’t surprising at all to me because I am a technical analyst. Last year, I did technical analysis on the number of conflicts around the world, and there was a bullish moving average crossover. The fact that people are talking about World War III as if it’s the latest Call of Duty game release is not surprising to me. Technical analysis predicts everything.

Ok, that’s a terrible joke. The reason I made this joke is because there’s this pervasive belief that the long peace is over and we’re heading into an age of conflict. I’ve no idea what the future holds, and neither does anybody else. As I was reading about the bloodshed in the Middle East last week, I read a few wonderful articles on hope and despair in The Marginalian, and they stuck with me. The reason is because the topic of positivity vs. negativity is something I’ve long thought about, both personally and in the context of investing. Reading these perspectives was moving, and I couldn’t resist sharing them.


The poetic Rebecca Solnit on what hope is:

“Hope doesn’t mean denying these realities. It means facing them and addressing them by remembering what else the twenty-first century has brought, including the movements, heroes, and shifts in consciousness that address these things now.”

“It’s important to say what hope is not: it is not the belief that everything was, is, or will be fine. The evidence is all around of tremendous suffering and tremendous destruction. The hope I’m interested in is about broad perspectives with specific possibilities, ones that invite or demand that we act. It’s also not a sunny everything-is-getting-better narrative, though it may be a counter to the everything-is-getting-worse narrative. You could call it an account of complexities and uncertainties, with openings. “Critical thinking without hope is cynicism, but hope without critical thinking is naïveté,” the Bulgarian writer Maria Popova recently remarked. And Patrisse Cullors, one of the founders of Black Lives Matter, early on described the movement’s mission as to “Provide hope and inspiration for collective action to build collective power to achieve collective transformation, rooted in grief and rage but pointed towards vision and dreams.” It’s a statement that acknowledges that grief and hope can coexist.”

― Rebecca Solnit, Hope in the Dark

This passage by Zadie Smith landed like a punch to my brain:

Only the willfully blind can ignore that the history of human existence is simultaneously the history of pain: of brutality, murder, mass extinction, every form of venality and cyclical horror. No land is free of it; no people are without their bloodstain; no tribe entirely innocent. But there is still this redeeming matter of incremental progress. It might look small to those with apocalyptic perspectives, but to she who not so long ago could not vote, or drink from the same water fountain as her fellow citizens, or marry the person she chose, or live in a certain neighborhood, such incremental change feels enormous.

― Zadie Smith, Feel Free: Essays

Helen Keller became blind and deaf when she was just 19 months old. Yet she overcame that adversity to become one of the most inspiring figures we’ve ever known. This particular excerpt has been playing on rewind in my brain since I read it last week:

Once I knew only darkness and stillness. Now I know hope and joy. Once I fretted and beat myself against the wall that shut me in. Now I rejoice in the consciousness that I can think, act and attain heaven. … Can anyone who escaped such captivity, who has felt the thrill and glory of freedom, be a pessimist?

My early experience was thus a leap from bad to good. If I tried, I could not check the momentum of my first leap out of the dark; to move breast forward as a habit learned suddenly at that first moment of release and rush into the light. With the first word I used intelligently, I learned to live, to think, to hope.

Optimism that does not count the cost is like a house builded on sand. A man must understand evil and be acquainted with sorrow before he can write himself an optimist and expect others to believe that he has reason for the faith that is in him.

There is no love of life without despair of life.

Albert Camus

Climate as an asset class

The tragedy of our time is that we live under the tyranny of market logic, or price signals. An entire generation of economists and bureaucrats has grown up with the idea that markets solve everything. Whenever there’s a problem, the default impulse is to look toward the markets for solutions—what if we put a price on a problem? Over the past 50-60 years, this neoliberal belief system has been driving ideology across much of the world.

“The government is not the solution to our problem, government is the problem.” 

Ronald Reagan

The notion that governments suck and that markets are better at allocating resources has become gospel. There’s no place for nuance. This ideology didn’t just appear out of thin air; it was an explicit political project by a committed group of economists, businessmen, legal scholars, and politicians. It originated in Europe and the US but spread like a virus to the rest of the world.

“I react pragmatically. Where the market works, I’m for that. Where the government is necessary, I’m for that. I’m deeply suspicious of somebody who says, “I’m in favor of privatization,” or, “I’m deeply in favor of public ownership.” I’m in favor of whatever works in the particular case.”

—  John Kenneth Galbraith

While there’s a tremendous backlash against these ideas, they are deeply entrenched and still shape our world. Take the example of climate change. You would think that if humanity knew that it was going to slowly burn to death, it would act to save itself.


Humanity decided that they might as well get comfortable, switch on the AC, and enjoy the free tan. But politicians and policymakers couldn’t be seen as doing nothing. It was the end of the world, not a flat-earth protest. They had to show some minimum viable concern—a pretense that they were mildly worried that the world was ending. So they looked toward the markets for an easy solution.

In a surreal moment of brilliance, the people in power decided to put a price on climate change. If we’re going to choke and slow burn to death, we might as well make some money, went the logic. It’s personal finance 101! Lo and behold, the voluntary carbon markets were born. What if you put a price on carbon emissions? What if you paid people not to pollute? They could just buy and sell carbon credits and carbon offsets and continue polluting happily.

Did you know?

Sheryl Sturges is credited with inventing the carbon credit. In 1987, Sherly was working at the AES Corporation, which built coal-fired power plants. Global warming was becoming a part of the conversation, and Dennis Bakke, the CEO of AES, was worried and asked Sheryl to figure out ways to minimize the company's impact.

Sherly looked through a bunch of ideas and had a light bulb moment: what if you planted some fast-growing trees? She asked scientists to figure out if the idea was feasible, and soon she had a number—AES had to plant 52 million trees over 10 years, but there was no space around the plant. She then figured, What if you plant the trees elsewhere? They identified Guatemala as the spot and paid struggling farmers to plant trees, and the carbon credit was born.

Carbon credits are magical certificates that allow a company to continue polluting as long as it offsets it. Carbon credits and offsets are created from projects that reduce or remove carbon emissions, like reforestation projects, reducing deforestation, renewable energy projects, and now carbon capture. Each credit represents one ton of carbon dioxide (CO2) or equivalent gas. So polluters like fossil fuel companies, manufacturing companies, and even individuals can buy carbon credits to the extent of their pollution and sleep well knowing they are “carbon neutral.”

Brilliant idea. What could go wrong?

In short, even in countries better known as polluters than green leaders, things are shifting. By the beginning of 2023, 23% of global emissions were covered by a carbon price, up from just 5% in 2010. The spread will only accelerate over the coming years as more countries come round to the advantages of carbon pricing, and schemes expand their reach. According to the imf, 49 countries have carbon-pricing schemes, and another 23 are considering them

How carbon prices are taking over the world | The Economist

Heidi Blake published a damning expose of South Pole, a leading developer of carbon projects, in The New Yorker. In 2010–2011, South Pole entered into an agreement with Steve Wentzel, a Zimbabwean businessman who owned parcels of forestland near Lake Kariba in Zimbabwe. The deal would generate carbon credits by conserving the forestland and preventing deforestation. South Pole helped sell over 20 million credits to companies ranging from Volkswagen, Gucci, Nestlé and Porsche, allowing these companies to claim they were “carbon neutral.”

But in reality, South Pole overestimated the deforestation avoided and was generating more credits than the emissions that the project supposedly prevented. Not just that, despite knowing that their estimates were flawed, the company continued selling credits and making money. The company also seems to have made millions of dollars by speculating on the same credits.

Satellite data recently collected by South Pole shows that the company has severely overestimated the deforestation.This is good news for the climate but bad news for South Pole’s business: currently, the company is overestimating the deforestation it would have prevented by about a factor of 14.

The overestimation of carbon offsets is not the only bombshell under the Kariba project. South Pole publicly claims that it keeps 25 per cent of the project’s revenue as commission and that the remainder flows back to CGI, the project itself and the local people. But South Pole confirms to Follow the Money that it actually pocketed considerably more. Through a clever trick, it kept not a quarter but more than 40 per cent of the approximate 100 million revenue for itself.

Follow the money

To register the Kariba project with Verra, South Pole had to predict how much of the forest would be lost without any intervention, and thus determine how much carbon the scheme would conserve over a thirty-year life span. Credits would be issued every year against that total, and the prediction would be checked once a decade, by comparing Kariba with an unguarded reference area nearby. South Pole’s data analysts initially estimated that the program could save around fifty-two million tons of carbon. But Verra required them to rerun these calculations using one of its approved methodologies. The scientists used one named VM9, which generated a startlingly different projection: if the Kariba site was left undefended, deforestation would explode, resulting in the eventual loss of ninety-six per cent of the forest. On that basis, the project would be eligible for almost two hundred million credits—four times the initial estimate.

The Great Cash-for-Carbon Hustle | The New Yorker

This isn’t the first time people have exposed the uselessness of carbon credits. Earlier this year, an investigation by the Guardian, Die Zeit, and SourceMaterial found that over 90% of credits from projects certified by Verra were useless. Verra is a nonprofit that maintains several climate action standards and certifies over 70% of all voluntary carbon credits were useless: 

  1. Only a handful of Verra’s rainforest projects showed evidence of deforestation reductions, according to two studies, with further analysis indicating that 94% of the credits had no benefit to the climate.
  2. The threat to forests had been overstated by about 400% on average for Verra projects, according to analysis of a 2022 University of Cambridge study.
  3. Gucci, Salesforce, BHP, Shell, easyJet, Leon and the band Pearl Jam were among dozens of companies and organisations that have bought rainforest offsets approved by Verra for environmental claims.
The Guardian

Research by the University of California (UC) Berkeley Carbon Trading Project came to similar conclusions:

Ultimately, it is illusory to assume that forest conservation activities can be used to compensate for greenhouse gas emissions from the combustion of fossil fuels. They must not be lumped together into a single net value and accounting for their impacts must remain separate. This should not deter companies and governments from financing forest conservation, in particular for primary forests, but this should be done without using these investments to claim the offsetting of emissions.

Error Log: Exposing the methodological failures of REDD+ forestry projects

Also read:

‘Worthless’ forest carbon offsets risk exacerbating climate change

Carbon credits also face other challenges, one of the biggest being “leakage” or displacement of deforestation. Leakage may occur because the people who were cutting down the forest simply relocate to a different area. Alternatively, demand for food or timber that was fuelling deforestation in one place may be met by deforestation elsewhere – perhaps on the other side of the world. Another problem is ensuring that the forests are protected in perpetuity so that reduced deforestation represents permanent removal of carbon from the atmosphere.

Julia P G Jones, Professor of Conservation Science, Bangor University.
Neal Hockley, Senior Lecturer in Environmental Economics & Policy, Bangor University.

A tonne of fossil carbon isn’t the same as a tonne of new trees: why offsets can’t save us

It’s simply not possible to fully “offset” billions of tonnes of greenhouse gas emissions from burning of coal, oil and gas by regrowing forests, increasing the amount of carbon in soils or other measures. That’s because the carbon dioxide released by burning fossil fuels is fundamentally different to the way carbon is stored above ground in trees, wetlands and in the soil.

To compound the problem, much of the carbon stored in land-based offsets does not stay stored. Forests can easily be destroyed by fire, disease, floods and droughts, all of which are increasing with climate change.

Wesley Morgan, Research Fellow, Griffith Asia Institute, Griffith University.

There are more dimensions to the idea that we are turning climate and nature into asset classes, but more on that next week.

Climate stuff

I came across a bunch of interesting insights related to climate change and decarbonization. Simon Evans, the deputy editor of Carbon Brief, published two amazing pieces on myths about electric vehicles and an analysis of the World Energy Outlook 2023 by the International Energy Agency (IEA).

Factcheck: 21 misleading myths about electric vehicles

A few highlights:

  1. It takes less than two years for a typical EV to pay off the “carbon debt” from its battery. Over the full vehicle lifecycle, carbon dioxide (CO2) emissions from an EV are around three times lower than an average petrol car. In reality, therefore, an EV in Europe will pay off its carbon debt after around 11,000 miles (18,000km).
  2. The IEA added that, by the end of the decade, EV sales were on track to displace 5m barrels of oil demand per day – some 5% of the current total – and to cut annual global emissions by 700MtCO2, roughly the current yearly output of Germany or Saudi Arabia.
  3. In general, EVs cut carbon emissions significantly, even if they mainly run on coal- or gas-fired electricity, as the chart below shows. In coal-heavy Poland, an EV would cut lifecycle emissions by two-fifths, Carbon Brief analysis shows, rising to two-thirds in the UK and four-fifths in Norway.
  4. While it is true that the production of EVs creates more CO2 than petrol equivalents – the US Argonne National Laboratory puts manufacturing-phase emissions at some 30-100% higher, depending on battery size – this carbon debt is paid off quickly. (See: FALSE: ‘An EV has to travel 50,000+ miles to break even.’) As a result, EVs still cut carbon significantly overall.

Analysis: Global CO2 emissions could peak as soon as 2023, IEA data reveals


  1. Global fossil fuel use peaking in 2025, two years earlier than expected last year.
  2. For the first time, coal, oil and gas each peaking before 2030 under current policies.
  3. Fossil fuel peaks being driven by the “unstoppable” growth of low-carbon technologies.
  4. The IEA boosting its outlook for global solar capacity in 2050 by 69% since last year.
  5. The IEA expecting 20% more electric vehicles on the road in 2030 than it did last year.
  6. A key focus on slowing economic growth and faster low-carbon uptake in China, where fossil fuel demand is now expected to peak in 2024.

Pair this article with this Twitter thread (fuck X) by Peter Zeniewski, energy analyst for the IEA World Energy Outlook.


  1. If you want to dismiss the idea of a peak in fossil fuels, you’d point to the strong historical relationship between GDP and fossil fuels. But this relationship is already changing and, in all our scenarios, it is transformed by the emergence of a clean energy economy.
  2. But clean energy has to work hard just to bring about a peak in fossil fuel demand. Look at solar: 1 GW existed in 2000. Now? 1 000 GW. In 2012, there were around 30 thousand EVs on the road. Now there are 30 million.

And this thread by Fatih Birol, executive director of IEA.

Robbie Andrew, senior scientist at the Center for International Climate Research (CICERO), published a thread on the top ten carbon emitters. India has overtaken the European Union (EU) to become the third-largest CO2 emitter. It looks like the change in order is in part due to the reduction in emissions in the EU. 

Top ten emitters of fossil CO₂ per capita.

Rat-i-cal rethink

Rats are hideous and filthy vermin that spread pestilence and death, destroy our food, defile our homes, and steal our peace of mind. They are abhorrent, and they deserve to die in the most painful ways. Any creature that’s responsible for unleashing the plague that killed 30–50% of the total European population deserves to die a slow and gruesome death.

But are rats that bad?

The conventional wisdom is that rats are disgusting creatures that lay waste to everything in their paths. As it turns out, the conventional wisdom is wrong. J. B. MacKinnon published a whimsical and wonderful piece in Hakai Magazine on how rats are seriously misunderstood creatures. They didn’t cause the black plague, nor did they spread death and destruction wherever they went. If anything, rats are much like us. They are playful creatures that can learn, solve puzzles, and have distinctive personalities, and they love playing hide-and-seek. As for their filthiness, you can’t expect them to be clean when our cities are dirtier than ever with poor sanitation, a lack of waste management, and squalid living conditions.

Misconception is the order of the day with rats. Rats are aggressive, right? Bobby Corrigan, a legendary rodentologist and pest control expert in New York, has said that rats have never attacked him, “and I’ve put myself right in the thick of those animals, as thick as I can get.” But rats are filthy, right? In fact, they are such fastidious groomers, one scientist who researches laboratory animal welfare told me, that when she tried to use “permanent” ink to make identifying marks on rats’ tails, those marks were quickly cleaned away.

Even more surprising is how little we know about how often rats spread disease to humans. “We have no idea,” says Himsworth. She is, however, prepared to venture an educated guess. “Any rat you meet has the potential to have a disease,” she says. “But know that, in general, the risk—particularly for people in countries like Canada—is low.” Most people in wealthier nations live in sturdy, clean homes and have the resources to respond if faced with a serious rat infestation. On the other hand, a person who is living, say, in poor-quality housing, whose hygiene is affected by mental health struggles, and whose landlord refuses to act as rat problems worsen, is definitely at an increased risk.

In Defense of the Rat
Hat tip to Longreads for the rat-i-cal pun.

Laugh a little

Patrice O'NealI was watching this comedy special by the brilliant Patrice O’Neal, and I burst out laughing when I heard the bit about tricking God.

Patrice O’Neal: “Remember the good old days when you were a kid and you saw somebody with a funny-shaped head, and you pointed right at their head like it was nothing? You couldn’t stop yourself from pointing at that funny head that made you say, ‘Oh, Jesus, look at that funny-shaped head right there.’ It wasn’t that bullshit in you to stop. Now that we’re adults, we still want to point at a funny-shaped head, but we say to ourselves, ‘I can’t point at someone’s funny head.’ But your first feeling is your real feeling. That other shit is you trying to trick God into thinking you’re a wonderful person.”

A few wonderful thoughts

“I believe that reading and writing are the most nourishing forms of meditation anyone has so far found. By reading the writings of the most interesting minds in history, we meditate with our own minds and theirs as well. This to me is a miracle.”

Kurt Vonnegut
Hat tip to Matt Ruby

“See the collateral damage—the suffering—that results when you cling to your desires and opinions or take things personally. Over the long haul, most of what we argue about with others really doesn’t matter that much.”

Rick Hanson
Hat tip to Jim O’ Shaughnessy

Out of the money

In an interview with Abraham Okusanya and Robin Powell, Victor Haghani, founding partner at Long Term Capital Management (LTCM), said something interesting. It wasn’t the bit about index funds are great, but rather his comment about self-inspection. I work for a brokerage firm, and I see firsthand that most investors are oblivious to things like taxes, costs, and even basic performance measurement. The vast majority of retail money flows based on hope and ignorance and stays because of inertia. If most investors commit the damning sin of checking if what they are doing is working, markets will break.

Robin Powell: But the story doesn’t end there. The LTCM saga prompted Victor Haghani to look afresh at investing and, over the next few years, his investment philosophy changed completely. 

Victor Haghani: So I got to this point and I was like, wow! I really need to focus on investing the remaining capital and savings of my family post-LTCM, and I kind of realised that, “wow, I’ve never really thought about personal investing at all.” you know, here I was almost 40 years old and I had never really thought about it. I was working in at the forefront of finance, but I never really thought about personal investing. When I was at Solomon Brothers, I was young, I was getting paid. They were putting half of my compensation into Solomon stock, and the rest of it, I would pay tax on and sort of just keep mostly in cash and not do much investing. Then at LTCM, it just seemed like the only thing to do with your money was mostly put it into the LTCM fund. That seemed like the thing to do.

So I wasn’t really thinking about investing. Yet all of a sudden here I was. So the first thing that I did is I looked around at people that I respected, people that I liked, and I looked at what they were doing. All of them were actively trying to beat the market through different kinds of alternative and private investments, and angel investing, and doing trading in their own accounts – almost to a man, to a woman. And so I decided that’s what I should do too. You know, I knew all these hedge fund managers. It was my world. I thought I could assess managers. I thought I could find good investments, and that it would be fun. And so that’s what I started to do.

So I did that for four or five years. And then one day – maybe around 2005-06, I just started to really take stock of what I was doing and what my life was like. I was spending so much time on it. I was paying so much in fees. And also as a taxable investor, I saw that what I was doing was highly tax inefficient as well: a lot of short-term capital gains, a lot of ordinary income, a lot of non-deductible business expenses for the US listeners. And so I sort of decided I really wanted to go back to basics and to start to move away from all these active, concentrated forms of risk and get to what I was taught when I went to the London School of Economics: invest in the market portfolio, get full diversification, be a long-term investor. And that started my different journey after working in an investment bank, in a hedge fund. Started, I guess, the third chapter of my relationship with finance. 

This year marked the 25th anniversary of the collapse of LTCM. The collapse of LTCM is perhaps one of the most popular stories in finance—I’m surprised there isn’t a Netflix documentary on it. The interesting thing for me is that the episode has become a shorthand for smartness, not equating to results in investing. Here’s Warren Buffett himself:

If you take John Meriwether, Eric Rosenfeld, Larry Hilibrand, Gregory, Hawkins, Victory Haghani, the two Nobel Prize winners Myron Scholes and Robert C Merton, and the other twelve of them, they probably have as high an average IQ as any sixteen people working together in one business in the country, including at Microsoft or wherever you want to name. So, that incredible amount of intellect in that room.

Now, you combine that with the fact that those sixteen had had extensive experience in the field they were operating in. I mean, this is the one. It was not a bunch of guys who had made their money, you know, selling men’s clothing and then all of a sudden went into the securities business or anything. They had—they’d had in aggregate, the sixteen of them, probably 350 or 400 years of experience doing exactly what they were doing.

And then, you’re throwing in the third factor that most of them had virtually all of their very substantial networks in the business, so they had their own money up—hundreds and hundreds of millions of dollars of their own money up—super high intellect, working in a field they knew, and essentially, they went broke. And that, to me, is absolutely fascinating.

I mean, if I ever write a book, it’s going to be called “Why Smart People Do Dumb Things.” Yeah, my partner says it should be autobiographical, but I—I—but it: This might be an interesting illustration. And these are perfectly decent guys. I—you know—I respect them, and they helped me out when I was at problems with Solomon. And so, they’re—they’re not bad people at all. But to make the money they didn’t have and didn’t need, they risked what they did have and did need. And that’s foolish. That is just plain foolish.

I’d doesn’t matter what their IQ is if you—if you risk something that is important to you for something that is unimportant to you, it just does not make any sense. I don’t care whether the odds are a hundred to one that you succeed or a thousand to one that you succeed.

There are few other investing stories that have been co-opted by people to sell financial products as much as the LTCM story. It’s a story that launched a million investment product PPTs. This episode reminds me of another popular story involving survivor ship bias. No doubt you’ve seen this image floating around on Twitter threads. The story goes thus: during World War II, the Statistical Research Group (SRG) at Columbia University was trying to figure out better ways to protect bomber planes. So they looked at all the bullet holes in the planes that had returned, and they figured reinforcing the areas with holes would make them safer. However, Abraham Wald, a Hungarian statistician who was part of the group, noted that the group was looking only at the planes that had returned—the most damaged planes were the planes that had not returned. So he recommended adding armor to the least damaged parts of the planes. The inference was that if the planes had returned with bullet holes, that meant they could survive getting hit in those areas. 

It seems to me that the whole trope that genius doesn’t equal success in investing based on the failure of LTCM is a little overdone. What about the actual geniuses who are successful?

A couple of other good reads on survivorship bias:

Most of us are regularly fooled by the survivor bias. Consider the plethora of business books readily available in airport bookstalls that feature the most successful companies. Smith analyzes two of the best sellers in the genre. In his 2001 book Good to Great (more than three million copies sold), Jim Collins culled 11 companies out of 1,435 whose stock beat the market average over a 40-year time span and then searched for shared characteristics among them that he believed accounted for their success. Instead, Smith says, Collins should have started with a list of companies at the beginning of the test period and then used “plausible criteria to select eleven companies predicted to do better than the rest. These criteria must be applied in an objective way, without peeking at how the companies did over the next forty years. It is not fair or meaningful to predict which companies will do well after looking at which companies did well! Those are not predictions, just history.” In fact, Smith notes, from 2001 through 2012 the stock of six of Collins’s 11 “great” companies did worse than the overall stock market, meaning that this system of post hoc analysis is fundamentally flawed.

How the survivor bias distorts reality By Michael Shermer | Scientific American

“How do you respond to the argument that Steve Jobs, Bill Gates, Michael Dell, and Mark Zuckerberg—all billionaires—dropped out of college?” I asked.

“And what about ‘John Henry’ and the 420,000 other people who tried ventures and failed?” Smith responded. “It’s a classic case of survivor bias. We make judgments about what we should do based on the people who survived, totally ignoring all the guidance from the people who failed.

High-Tech Dropouts Misinterpret Steve Jobs’ Advice by Carmine Gallo | Forbes

Aswath Damodaran

I really admire Professor Damodaran because he’s one of the most intellectually honest and self-aware people in finance. In an industry that revolves around big egos and personality cults, that’s a rarity. I started listening to a conversation featuring Professor Damodaran, and the start of the conversation stood out to me because I had read a tweet related to the topic:

Professor Damodaran: Let me pause you right there. I am not objective, but I’m open about my bias. So anybody who ever claims to be objective is right off the top line. None of us as human beings is ever capable of being objective. All we can do is be open about our biases. I am open about my biases.

Larissa Fernand: Okay then, let’s start with your biases. Can you tell me a bias that you have successfully overcome and one that you are combating with right now?

Professor Damodaran: I don’t think you ever fully overcome a bias because it’s built into you. It’s in your DNA. All you can do is be aware of it. So I’ll give you an example. I love Apple as a company. I’ve loved it since 1981 when I bought my first Apple. And I struggle with that love of the company every time I evaluate the company. I can’t make it go away. It is there. But one of the things I can do is when I make a choice, I can always step back and say, “Did I make the choice because I like Apple as a company?” But I make a choice based on something that’s more soft, something based on the numbers. So I think it’s an ongoing process. You never get rid of it because it constantly recreates itself.

The tweet was from Steve Stewart-Williams about a new paper on bias blind spots. I couldn’t find an open version of the paper, but I found a different study on the same topic:

“When physicians receive gifts from pharmaceutical companies, they may claim that the gifts do not affect their decisions about what medicine to prescribe because they have no memory of the gifts biasing their prescriptions. However, if you ask them whether a gift might unconsciously bias the decisions of other physicians, most will agree that other physicians are unconsciously biased by the gifts, while continuing to believe that their own decisions are not. This disparity is the bias blind spot, and occurs for everyone, for many different types of judgments and decisions,” said Erin McCormick, an author and Ph.D. student in behavioral decision research in CMU’s Dietrich College of Humanities and Social Sciences.

We’re perfect; it’s the other people that suck!

The road to ruin is paved with good stories. This piece on market delusions was really good. Investors will be far more successful if they just diversify broadly with low-cost index funds and do something useful in their lives, like watching Fabulous Lives of Bollywood Wives on Netflix.

Avoid Getting Caught Up In Big Market Delusions: The Case Study Of Electric Vehicles by Larry Swedroe and Ben Henry-Moreland

The key point is that when an investor bets on a new technology or industry becoming huge based on the size of its potential market, even ‘diversifying’ by investing in multiple companies within that industry won’t necessarily protect them from losses, because when the entire industry becomes overvalued, the resulting correction is likely to affect everyone. The simple way to avoid getting caught up in big market delusions is by remaining broadly diversified across markets – and for advisors, the lessons learned from previous examples of big market delusions can help guide clients on avoiding the next one!

Aging Population Affects Economic Growth but Not Stock Returns by Larry Swedroe

While their findings document that a demographic drag could be the new normal in the upcoming decades for most OECD countries, economic growth depends not only on how cohorts change but also on how labor productivity changes with improvements in functional capacity as longevity rises. Improvements in functional capacity can cushion much of this slowdown. Thus, perhaps the consequences of population aging will be less severe than demographic predictions suggest, as immigration and technological progress can reduce the demographic drag by cushioning labor shortages, automating physically demanding tasks, and creating age-friendly jobs.

That’s it for this week. Go make someone laugh but try not to punch little kids.

History is just one fucking thing after another


“It is forbidden to kill; therefore all murderers are punished unless they kill in large numbers and to the sound of trumpets.” ― Voltaire

“What difference does it make to the dead, the orphans and the homeless, whether the mad destruction is wrought under the name of totalitarianism or in the holy name of liberty or democracy?” ― Mahatma Gandhi

“Everyone believes in the atrocities of the enemy and disbelieves in those of his own side, without ever bothering to examine the evidence.” ― George Orwell


History never ends.

“History is just one fucking thing after another.”― Alan Bennett

Branko Milanovic
Branko Milanovic

There’s senseless bloodshed again. In trying to make sense of things, I visited The Marginalian by Maria Popova. The site is a priceless repository of the collective wisdom of some of the brightest and most gifted thinkers to have walked the face of the earth. I was searching for this post about hope and despair by Rebecca Solnit that I had read a while ago. As I was searching for the post, I came across the Nobel acceptance speech of Elie Wiesel, an American writer, professor, political activist, Nobel laureate, and Holocaust survivor. The speech is from 1986, but it might as well be about today. Here’s a poignant excerpt:

I remember: it happened yesterday or eternities ago. A young Jewish boy discovered the kingdom of night. I remember his bewilderment, I remember his anguish. It all happened so fast. The ghetto. The deportation. The sealed cattle car. The fiery altar upon which the history of our people and the future of mankind were meant to be sacrificed.

I remember: he asked his father: “Can this be true?” This is the twentieth century, not the Middle Ages. Who would allow such crimes to be committed? How could the world remain silent?

And now the boy is turning to me: “Tell me,” he asks. “What have you done with my future? What have you done with your life?”

And I tell him that I have tried. That I have tried to keep memory alive, that I have tried to fight those who would forget. Because if we forget, we are guilty, we are accomplices. We could not prevent their deaths the first time, but if we forget them they will be killed a second time. And this time, it will be our responsibility.

And then I explained to him how naive we were, that the world did know and remain silent. And that is why I swore never to be silent whenever and wherever human beings endure suffering and humiliation. We must always take sides. Neutrality helps the oppressor, never the victim. Silence encourages the tormentor, never the tormented. Sometimes we must interfere. When human lives are endangered, when human dignity is in jeopardy, national borders and sensitivities become irrelevant.
Wherever men or women are persecuted because of their race, religion, or political views, that place must – at that moment – become the center of the universe.

Of course, since I am a Jew profoundly rooted in my peoples’ memory and tradition, my first response is to Jewish fears, Jewish needs, Jewish crises. For I belong to a traumatized generation, one that experienced the abandonment and solitude of our people. It would be unnatural for me not to make Jewish priorities my own: Israel, Soviet Jewry, Jews in Arab lands … But there are others as important to me. Apartheid is, in my view, as abhorrent as anti-Semitism. To me, Andrei Sakharov‘s isolation is as much of a disgrace as Josef Biegun’s imprisonment. As is the denial of Solidarity and its leader Lech Walesa‘s right to dissent. And Nelson Mandela‘s interminable imprisonment.

There is so much injustice and suffering crying out for our attention: victims of hunger, of racism, and political persecution, writers and poets, prisoners in so many lands governed by the Left and by the Right. Human rights are being violated on every continent. More people are oppressed than free. And then, too, there are the Palestinians to whose plight I am sensitive but whose methods I deplore. Violence and terrorism are not the answer. Something must be done about their suffering, and soon. I trust Israel, for I have faith in the Jewish people. Let Israel be given a chance, let hatred and danger be removed from her horizons, and there will be peace in and around the Holy Land.

I’ve been reading and listening to make sense of the Israel-Palestine conflict. Here are some things worth reading and listening to get a sense of this devastating moment.

A thoughtful, and nuanced take on the ethical and legal dimensions of the conflict by Benjamin Wittes

The prolonged economic degradation and devastation of the Gaza’s economy is mind-boggling. Brilliant piece by Adam Tooze

Historian Niall Ferguson warns of a Third World War

Will the War in Gaza Ignite the Middle East? Escalating Violence Could Set Israel and Iran on a Collision Course By Dalia Dassa Kaye

I was raised to curse Israel and pray for the destruction of Jews. That’s why I know all too well Hamas is another ISIS by Ayaan Hirsi Ali

Is Hamas winning the war? By Yuval Noah Harari

Vengeful Pathologies Adam Shatz on the war in Gaza

The Reckoning That Is Coming for Qatar

Why Washington Should Restrain Israeli Military Action in Gaza—and Preserve a Path to Peace By Richard Haass


This conversation between Derek Thompson and Dan Raviv, who’s written several books about Israel, was really good. It’s a good place to start if you want to get the historical context that led to the recent barbarity.

The historical roots of the conflict

Interregnum – The Israel-Hamas conflict

I haven’t yet heard this podcast from the LRB yet but LRB podcasts are awesome. One of the guests on this episode is Adan Shatz whose piece on the topic I’ve linked above.


Wow, I came across this video of Arnold Schwarzenegger thanks to Josh Wolfe. What a powerful and evocative message about not giving into hate.

Let me tell you something: when I walked through that camp in Auschwitz and I put myself in the shoes of those people herded into those gas chambers, it was horrifying, one of the darkest moments of my life. But in that darkness, a woman who survived the horrors of Auschwitz helped me find the light. I spent some time with her, had a wonderful conversation with her. She told me that the Nazis could conquer cities and countries, they could take her freedom, her friends, her family, even her life, but they could never conquer her mind. What strength that woman had! Wow! So, the bottom line is, I don’t care how many hateful things you may have written online. I don’t care how often you have marched carrying that hateful flag or what hateful things you may have said in anger. There’s still hope for you. There’s still time for you. Choose strength, choose life, conquer your mind. You can do it!

Pair these conversations with this timeline of the Israel-Palestine conflict.

Humor in dark times

I think the best comedians are philosophers. In my book, George Carlin is a modern-day Aristotle. Comedians are like a mirror; they show the contradictions, idiosyncrasies, and absurdities of life and the human condition like no other. Comedians are also humans, like all of us. They deal with the horrors of life on stage. In doing so, they help us deal with the terrible things in life and give us permission to laugh. Pete Davidson showed this last week as he delivered a moving monologue on SNL on the Israel tragedy:

I saw so many terrible pictures this week of children suffering – Israeli children and Palestinian children – and it took me back to a really horrible, horrible place. No one in this world deserves to suffer, especially not kids.

After my dad died, my mom tried pretty much everything she could do to cheer me up. I remember one day when I was eight, she got me what she thought was a Disney movie but it was actually the Eddie Murphy stand up special, “Delirious.” We played it in the car on the way home and when she heard the things that Eddie Murphy was saying, she tried to take it away. But then she noticed something, for the first time in a long time I was laughing again.

I don’t understand it. I really don’t. I never will. But sometimes comedy is really the only way forward from tragedy.

My heart is with everyone whose lives have been destroyed this week. But tonight I’m going to do what I’ve always done in the face of tragedy and that’s try to be funny. Remember, I said try

In the same vein, Ricky Gervais on the healing power of comedy:

Ricky Gervais: That’s what humor’s for, to get us over bad things. That’s exactly what evolutionarily speaking, humor is. it gets us over bad shit. If you can’t joke about bad shit, there’s no point joking about good shit. We don’t need it.Laughter is this drug that cures bad shit.

Here’s a a drug is a drug here it cures good shit. I don’t want that. I like good shit. I want something that cures bad shit. Well, laughter’s the best medicine, thank you very much.

In the money

The good side of low interest rates and bubbles

In the last couple of years, the phrase “it was a ZIRP (zero interest rate policy) thing” has become popular. It’s a catchall phrase to dunk on something as the result of low interest rates and not the result of sound fundamentals. The low interest rate phenomenon over the last decade has become a universal pejorative—it wasn’t brains, it was low interest rates. But are low interest rates all that bad?

Not really.

The reality is 38 shades of gray. Yueran Ma and Kaspar Zimmermann published a fascinating paper looking at the impact of rising interest rates on innovation. They found that interest rate hikes lead to less spending on R&D, a drop in tech patents, and a decline in venture capital investments.

We observe meaningful changes in innovation activities in the years following monetary policy shocks. First, investment in intellectual property products (IPP) in the national accounts (NIPA) declines by about 1 percent. The magnitude is comparable to the decline in traditional investment in physical assets. R&D spending in Compustat data for public firms declines by about 3 percent. Second, VC investment is more volatile, and declines by as much as 25 percent at a horizon of 1 to 3 years after the monetary policy shock. Third, patenting in important technologies measured by Bloom et al. (2023) declines by up to 9 percent 2 to 4 years after the shock. Interestingly, patenting in other technologies declines by less than patenting in important technologies.

Although the data suggest that monetary tightening reduces innovation activities, it is possible that downturns also have cleansing effects by eliminating weak companies (Schumpeter, 1942; Caballero 4 and Hammour, 1994; Foster, Grim, and Haltiwanger, 2016). To the extent that such companies are likely to be technologically underdeveloped and less innovative, the innovation measures above may not capture these potential cleansing effects. Gopinath et al. (2017) suggest that low interest rates worsened misallocation in Southern Europe as capital investment by large firms with high net worth increased by more, due to size-dependent borrowing constraints.

This reminds me of another brilliant post by the amazing Byrne Hobart on bubbles. The right kind of bubbles can lead to a lot of positive spillovers.

But even though the term “bubble” is usually pejorative, the right kind of bubble, at the right time, can exert a powerful positive effect on the world. A bubble is an objectively irrational shared belief in a better potential future … but that doesn’t just describe someone bidding up asset prices; it also describes anyone who chooses to build that kind of future. (And it’s not a coincidence that the other social sense of “bubble” is a filter bubble — a fact- and criticism-proof barrier that keeps a set of people convinced against all external evidence that they’re right.) 

Bubbles can be directly beneficial, or at least lead to positive spillover effects: The telecom bubble in the ’90s created cheap fiber, and when the world was ready for YouTube, that fiber made it more viable. Even the housing bubble had some upside: It created more housing inventory, and since the new houses were quite standardized, that made it great training data for “iBuying” algorithms — the rare case where the bubble is low-tech but the consequences are higher-tech. But, even so, there’s always the question of price: how can you tell when it’s worth the hype?

Takeaway: Most things in life are 87 shades of gray. While having absolute views and passing judgment is easy, reality is always nuanced.

The incredible shallowness of the Indian markets

Vashistha Iyer

India growth story

Robert Armstrong, Ethan Wu and Adam Tooze on the India growth story


Age of exchange traded funds (ETFs)

Exchange traded funds are nothing short of a revolution. They’ve changed the way not just retail investors invest but also institutions.


These numbers are all the more amazing considering the fact that much of the growth in ETF AUM has occurred post-2008.


ETFs have grown so large that there are active debates about their impact on market microstructure. A few papers and articles come to mind. In his brilliant paper liquidity cascades, Corey Hoffstein had a fascinating section on the destabilizing effects of basket trading:

Flow traded to track a basket is incentivized not to identify the right value for a given security, but to minimize the impact of that flow in the market and execute the trade as efficiently as possible.

This distinction is important because in the latter case, the authorized participant knows the price of everything but the value of nothing. And as a larger percentage of market flow is directed towards basket trades, it may create a destabilizing influence upon markets. For example, studies show that baskets can lead to “information linkages” between securities in the same basket. This can lead to persistent distortions from fundamental value for individual securities, as “market makers cannot perfectly distinguish between price changes caused by factors pertinent to their assets, and other factors irrelevant to them.”

Further, market makers may not be able to instantaneously synchronize their prices, which may lead to further price distortion. In fact, stocks with higher ETF ownership display significantly higher volatility, higher trading costs, higher “return synchronicity,” a decline in “future earnings response,” a decline in analyst coverage, and evidence even suggests that ETFs may even introduce a new source of noise to markets.

In a paper last year, Koont et al. argued that bond ETFs boost liquidity in normal times, but in turbulent market phases like the COVID crash, they reduce the liquidity of the underlying bonds.

ETFs’ efforts to improve the liquidity of their shares have consequences for the liquidity of the underlying securities. We find that a bond’s inclusion in an ETF basket has a significant state-dependent effect on the bond’s liquidity. This effect is positive in normal times but negative in periods of large imbalance between creations and redemptions. A salient example occurred in the spring of 2020. The COVID-19 crisis witnessed acute selling pressure in the bond market, which led to net redemptions from bond ETFs, which in turn strained the liquidity of the bonds concentrated in RD baskets. Given the growing role of ETFs in liquidity transformation, future episodes of ETF-induced liquidity strains seem likely

But not everyone agrees:

“The illiquidity is causing the issuer to put it in a more concentrated weight in the basket to try and either get us to take it from them or find a price,” said Izzo, who argued that the rise of ETFs had actually increased liquidity during periods of market stress.

An excerpt from a whitepaper about ETF performance during COVID by BlackRock:

Rather than exposing a flaw in the ETF structure, these discounts highlighted how fixed income ETF prices can provide a window into underlying market conditions, transmitting real-time information and providing price discovery for market participants. Bonds that trade infrequently may not have current market sentiment fully embedded in their prices, which means end-of-day NAVs may not represent up-to-date market levels. ETF market prices adjust quickly in rapidly changing markets, so the trading price of the ETF can be a source of price discovery of where investors are valuing the underlying portfolio of bonds.

The discontents of being rich

The inimitable Morgan Housel published a brilliant post on the downsides of being rich. I have chosen to worry about these after being rich.

Magic pills

Obesity is a real killer. It kills more people than car crashes and terrorism combined and the rates continue to climb around the world. The lack of physical activity isn’t the only cause.

Our World in Data

What if there was a miracle pill that could cure obesity?

We have one, and it’s called semaglutide. The injectable drug is sold under brand names like Ozempic and Wegovy. Semaglutide was developed to treat type 2 diabetes. The drug works by making you feel fuller for longer, so you end up eating less. Soon, people discovered that it only helped manage diabetes, but one of the side effects was drastic weight loss.

The drug exploded in popularity almost overnight, leading to massive shortages. The demand sparked a gold rush, leading to the development of an alternate marketplace where people sell off-brand formulations of the drug. Pharma companies have also jumped on the bandwagon, developing several alternate formulations that seem to deliver better results than Ozempic and Wegovy.

Novo Nordisk, the Danish pharma company that manufactures Ozempic and Wegovy, is raking it in.  

It seems like the drug’s miraculous effects aren’t limited to diabetes and weight loss. If you go by anecdotes, it seems to be helping with addiction and other compulsive behaviors.

As semaglutide has skyrocketed in popularity, patients have been sharing curious effects that go beyond just appetite suppression. They have reported losing interest in a whole range of addictive and compulsive behaviors: drinking, smoking, shopping, biting nails, picking at skin. Not everyone on the drug experiences these positive effects, to be clear, but enough that addiction researchers are paying attention. And the spate of anecdotes might really be onto something. For years now, scientists have been testing whether drugs similar to semaglutide can curb the use of alcohol, cocaine, nicotine, and opioids in lab animals—to promising results.

Corry Wang on Twitter posed an interesting question:

7/ How many American industries have been propped up for the last 50 years by the poor impulse control of a small cohort of people with eating problems, drinking problems, and gambling problems? Guess we’ll find out in a year

Can these drugs break the economy? What happens if people stop smoking, gambling, and eating? Josh Barro argues that such behavioral shifts will be good for the economy at large:

It is theoretically possible that a major positive social and public health change could lead to reduced economic output — American consumers could take all their savings from eating less and drinking less and making fewer impulsive shopping decisions, and put them toward a reduction in work hours and earlier retirement — but that is not usually how these things work.

Consider an area where we’ve had a lot of success fighting addiction over the last few decades: reduced smoking rates. You could tell a story where reduced spending on cigarettes depresses corporate profits and GDP — that ex-smokers spend less, and this allows them to work less and retire earlier. But that seems obviously wrong — ex-smokers work more than still-smokers because they are less burdened by disease and disability. What are those ex-smokers doing with the proceeds of their greater productivity?

Presumably, they’re taking their earnings and spending more than they otherwise would have on non-cigarette products and services. And even if their financial gains from not smoking are going into savings instead of consumption, that is still fueling economic activity — a positive shock to the savings rate pushes interest rates down and makes it easier for businesses to invest and individuals to consume, even if those individuals never smoked.

Here’s an interesting comment from the CEO of Walmart:

Last week, Walmart’s chief executive John Furner said that customer data, which compares people’s prescription history against their food shopping patterns, suggested those taking the obesity drugs were buying less food. “We definitely do see a slight change compared to the total population — we do see a slight pullback in the overall basket,” he said.

The sell side guys always come up with the best takes:

CITI’S TAKE It is possible that increased use of Ozempic, Wegovy and related weight loss/diabetes treatments could materially contribute to weight loss efforts of its users in the United States. However, digging through some of our recent work on A320 flight capabilities, the potential payload benefit from transporting lighter passengers is negligible, especially on shorter-distance flights. Use of these treatments would seem to have to be far more widespread to have any meaningful impact on A320 mission capabilities. Citi maintains Buy ratings on Delta, Copa, United, Air France/KLM, Volaris and Azul, among others.

I give it three weeks until Morgan Stanley counts the number of farts and shows how semaglutide can solve climate change by reducing farts.

While these drugs do help reduce weight, they have plenty of side effects. The amazing Izabell Kaminska, formerly of FT Alphaville, shares her experience with semaglutide:

About a year later, someone told me that the drug was now available in weekly form. Convinced I had messed things up because of erratic dosing, I decided to give it another go. This time the immediate effects were negligible. I didn’t get my ego-boosting first-week mega loss. And overall, if the drug did anything, it suspended my continuing and ongoing weight gain rather than helped me to lose more. Nor did the weekly injections prevent the nausea or brain fog.

The negatives weren’t quite as bad, but the upsides were far more limited. Utterly underwhelmed and disillusioned, especially since the price of the pens remained prohibitively expensive, I gave up again. And again, I ballooned after doing so.

Dive deeper

Ozempic: Metabolizing the market

Should Insurance Cover Wegovy, Ozempic and Other New Weight-Loss Drugs?

Will the Ozempic Era Change How We Think About Being Fat and Being Thin? 

Out of the money

Dirty clean energy

Meera Subramanian published a brilliant post about the Pavagada Ultra Mega Solar Park in Tumkur, Karnataka. The post chronicles the side effects of the push to decarbonize on local communities, marginalized groups, biodiversity, and rural economies.

“Solar people are building schools in all the villages, building roads,” Varshitha Gopala, an eighteen-year-old who lives in Vollur, told me. “For people, they haven’t done anything.” Gopala’s family lives in a Dalit-majority area, and her mother, Alvelamma, told me that Dalits were given farmland to work generations back. Before solar came, all women who could work did work, she said, whether on their own lands or as laborers for their landowning neighbors. But this arrangement had never come with a deed, which meant that Dalits were ineligible for a lease agreement and lost access to the land. Their landed neighbors now earn lease income, but the jobs are gone.

Clean-energy projects risk gaining a reputation for being extractive, in the same way that many fossil-fuel projects are. “Transformations are happening at this scale without any democratic process,” Saldanha said.

The Sound So Loud That It Circled the Earth Four Times

Why Do Superheroes Wear Spandex?

That’s it for this week. There were a few more interesting rabbit holes I went down, but in the interest of brevity, let me stop here. Now eat Lays chips, fart and make someone laugh.

A few interesting things on the interweb

I’m trying something new, something I always wanted to do—collect interesting things and share them with the world. I’ve always done that in one way or another, but I’m being deliberate this time. I’m lucky that I grew up with the internet. I’ve always consumed random things for as long as I can remember. Whenever I wanted to consume something, I had a list of people whom I could rely on to supply the most interesting things on the internet. These are curators (not a fan of the word) who have the amazing ability to find hidden gems in the raging dumpster fire that is the interweb.

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