The Daily Parker

Josh Barro explains the FTX collapse in simple terms:

[T]his is not a technology story, because FTX was not a technology company. Sure, FTX’s business relied on technology, but so do most businesses. FTX has an app; so does Fidelity, and so does Chipotle, and that doesn’t make them tech companies. FTX was a brokerage, and there were two things that set them apart from a regular brokerage. One is that they dealt principally in nonsense financial products with no underlying economic value, and the other is that the owners either lost or stole the customers’ money and then lied about their resulting insolvency.

Because cryptocurrency assets have no fundamental economic value — unlike stocks and bonds, they do not reflect a claim on the cash flows of some business creating real value in the economy — there can be no such thing as fundamentals-based investing in them. When people invest in crypto, they out themselves as marks for scammers who might believe any nonsense about what something is worth. And therefore it’s the least surprising thing in the world that someone would open up a crypto exchange, offer implausible interest rate terms in order to hoover up billions in customer deposits from the gullible masses, and then misappropriate the proceeds.

He also provides some rules of thumb for dealing with cryptocurrencies, the first being, "any crypto-related business is a scam." Quite so.

I'm just finishing up a very large push to our dev/test environment, with 38 commits (including 2 commits fixing unrelated bugs) going back to last Tuesday. I do not like large pushes like this, because they tend to be exciting. So, to mitigate that, I'm running all 546 unit tests locally before the CI service does the same. This happens when you change the basic architecture of an entire feature set. (And I just marked 6 tests with "Ignore: broken by story X, to be rewritten in story Y." Not the best solution but story Y won't work if I don't push this code up.)

So while I'm waiting for all these unit tests to run, I've queued all this up:

• House Speaker Nancy Pelosi (D-CA) announced today that she will step down from her party leadership role when the 118th Congress meets on January 3rd.
• This came on the heels of a loser Florida retiree trying to get his old job back. Tina Nguyen looks at who might challenge the loser retiree for the same job. One thing I know: this won't end well for the Republican Party.
• Maybe that's why 12 Republicans in the US Senate crossed party lines to vote on moving the Same-Sex Marriage bill forward?
• Aaron Gordon investigates why American transit projects cost so much more than any other country's (hint: they have stronger anti-corruption laws).
• And yet, Washington got a Metro line to Dulles after waiting only 60 years, just slightly longer than we in Chicago's Ravenswood neighborhood have waited for the inbound Metra platform to open.
• Speaking of corruption, Kelsey Piper got a phone call from Sam Bankman-Fried, the guy who made a couple billion in crypto go *poof* last week, so he could clear the air. On the record. With pending litigation. (Seriously, who's his dealer?)
• For no reason anyone can determine, certainly not the recent dismissal of half its workforce including the only engineers who know where the bolts go, Twitter has experienced some intermittent problems with its multifactor authentication setup. Even better, "a researcher contacted Information Security Media Group on condition of anonymity to reveal that texting 'STOP' to the Twitter verification service results in the service turning off SMS two-factor authentication." Oh my!
• Speaking of that dying company, Elon Musk has done his utmost to hasten the exodus of engineering talent by giving everyone until (checks watch) two hours from now to choose a lifetime of misery or a three-month severance. Because we software engineers do our best work for narcissists with whips. (There simply isn't enough popcorn in San Francisco for this shit show.)
• Sadly, Republican speechwriter and Washington Post columnist Michael Gerson has died at 58. I didn't agree with him much, but he remained one of the sane ones till the end.

Finally, one of Chicago's last vinyl record stores, Dave's in Lincoln Park, will close at the end of this month. The building's owner wants to tear it down, no doubt to build more condos, so Dave has decided to "go out in a blaze of glory."

All right...all my tests passed locally. Here we go...

I mean, why? Just why?

• The XPOTUS, as predicted, announced his run for the 2024 election, despite looking like a total loser in the 2022 election. But narcissists gonna narcise.
• The Illinois Worker Rights Amendment passed, and will now become part of the state constitution. I think this will have a bunch of unintended consequences not beneficial to workers, so I voted against it. We're stuck with it now.
• Boomer Kathleen Parker spends her column today tut-tutting Boomers for not understanding Millennial jobs, picking "influencer" as just one example. I'm an X-er who completely understands "influencer" (i.e., children monetizing their own narcissism) and "change manager" (i.e., operations flunky) just fine, and suggests that the problem lies not with the Boomer parents but with the Boomer executives. (Longer post, maybe?)
• Pushwoosh, a Russian software company that writes spyware has pretended to be an American company, for reasons left as an exercise to the reader. About 8,000 apps use their stuff. As Bruce Schneier has said, supply-chain security is "an insurmountably hard problem."
• Bloomberg laments that "the wrong Americans are buying electric cars."
• Julia Ioffe cautions that Ukraine's re-taking of Kherson could lead to dangerous overreach as the war goes on—and a difficult diplomatic situation for the US.

Finally, the Missouri Department of Transportation proudly announced the 50th anniversary of their engineers killing downtown Kansas City, and the Internet let them have it.

The Federal Trade Commission, which has become the de-facto enforcer for Silicon Valley shenanigans, has decided the smell coming from Twitter HQ can no longer be ignored after their top privacy and security people have left:

It marked the second time in two days that a federal official has expressed concern about the chaotic developments at the company, coming less than 24 hours after President Biden said Musk’s relationships with other countries deserved scrutiny.

The agency said that it was “tracking the developments at Twitter with deep concern” and that it was prepared to take action to ensure the company was complying with a settlement known as a consent order, which requires Twitter to comply with certain privacy and security requirements because of allegations of past data misuse.

Twitter was first put under a consent order in 2011 and it agreed to a new order earlier this year. If the FTC finds Twitter is not complying with that order, it could fine the company hundreds of millions of dollars, potentially damaging the company’s already precarious financial state.

The FTC is the only government agency that could act through its consent decrees as a check on Musk, whose first two weeks at the helm of Twitter have been chaotic. The federal government has only limited oversight of social media companies, but the FTC has used its oversight of consumer protection and competition to establish itself as the country’s top data privacy regulator. The agency has used consent orders to hold some of the country’s largest tech companies, including Google, Facebook, and Snap, accountable for alleged privacy missteps. In 2019, the agency reached a $5 billion settlement with Facebook for its alleged violation of a prior order.

I wondered if there were a deadpool on Twitter...

I'm running all 538 unit tests in my real job's application right now after updating all the NuGet packages. This is why I like automated testing: if one of the updated packages broke anything, tests will fail, and I can fix the affected code. (So far they've all passed.)

This comes after a major demo this morning, and a new feature that will consume the rest of the sprint, which ends next Monday. Oh, and I have two opera rehearsals this week. Plus I have to vote tomorrow, which could take 15 minutes or two hours.

So it's not likely I'll have time to read all of these:

• Josh Marshall looks at the late polls for tomorrow's biggest races and decides...no one knows nothin'. (Not to mention, we won't have some results for up to two weeks, so...)
• Wait, Republican US Senate candidate Herschel Walker has dissociative identity disorder? Not that he's got severe brain damage from getting concussed in football games so many times? Shouldn't either condition be disqualifying for the Senate?
• Chicago gas bills could go up 60% this winter, to an average of $240-260 per month per household. Guess I'll keep the thermostats at 17°C...
• Free-speech crusader and irony-proof billionaire Elon Musk has banned everyone who changed their Twitter names to "Elon Musk" last week.
• Attorney Kellen Dwyer digs into the implications of Uber's former Chief Security Officer getting convicted of two Federal crimes on October 5th for covering up a security breach at the company.
• Strong Towns will launch a National Crash Analysis Studio in January to more accurately figure out why car accidents happen.
• With less than a day before they all go up for re-election, Chicago's city council passed Mayor Lightfoot's $16 billion budget for 2023. The mayoral election will take place February 28th. Goody.
• And the New York Times asked this morning, does the US have too many elections? (Yes. Yes we do.)

Regardless, I'm setting an alarm for just past 4am to see the total lunar eclipse tonight. NOAA predicts 17% sky cover, so I should get a good view of it. Unless I go back to sleep.

Elon Musk had a lot going for him when he started his first company: rich parents, being white in Apartheid South Africa, malignant narcissism, etc. Like other well-known billionaire charlatans, he has had his share of spectacular successes, and still decided to find his own little corner of the Peter Principle. So let it be with Twitter:

Some might say Elon Musk, who last week became Twitter’s official new owner, has buyer’s remorse. But that implies he had actually wanted the thing before he bought it. Back in April, the mercurial billionaire made an overpriced takeover bid, which he then tried to back out of.

Perhaps understandably: Twitter has been plagued by problems for years, of both the monetary and moral kinds. When Musk made his offer, tech stocks were already tanking, and it was clear he had neither a plan for fixing the company nor the inclination to fritter away a big chunk of his fortune figuring it out. After some legal back-and-forth, he reluctantly agreed to complete the $44 billion acquisition.

He has already begun pursuing a few controversial changes. They include charging users for their “blue check” verification badges, as well as developing a new paid-video feature, which will probably be used for “adult” material. But his most perplexing moves involve simultaneous plans to A) police content less, while B) increasing advertising revenue.

These objectives are somewhat at odds.

Mother Jones's Ali Breland wonders if Musk "made it his job to look dumb:"

[A]s has become increasingly obvious after Elon Musk’s acquisition of Twitter this week, getting rich does not make you deserving of praise. In fact, Elon Musk’s Twitter timeline is making one of the clearest cases that meritocracy is a myth. The reason Silicon Valley people, to their absolute chagrin, can’t be idolized like the maniacal bankers that came before them, is that they got rich by engineering the precise platforms that make them look awful.

The problem with the new tech sets’ desire to be heralded is that they got rich off tools for their own demise. There was a lengthy period in which Mark Zuckerberg was idolized. He achieved the national dream of going to Harvard, then eschewed it and conventional paths to wealth into a massively successful tech company and balked at a $1 billion offer to sell it years before it became profitable. The more Zuckerberg went out on his own platform though, posting videos of himself “smoking meats” and just generally being awkward and charisma-less, the harder it became to believe that his life is aspirational.

Marc Andreessen, who also invested in Twitter, albeit much earlier than Musk, could have ridden off into the metaphorical sunset looking like a genius for developing Mosaic and then Netscape, pioneering how we would all experience the internet. Instead, he showed us all of his mental shortcomings, by tweeting about the harms of anti-colonialism; liking tweets from people like date-rape apologist and conspiracy theorist Mike Cernovich; and being thin-skinned by blocking anyone who said anything slightly less than complimentary about him. Again: He did all of this on a platform he funded.

Elon Musk bought Twitter and Twitter makes people dislike Elon Musk. For once, the story of the stupidity of rich people—and how they got rich—is making sense to the masses. It just had to be written by the overlords themselves, in 280 characters or less.

Regardless of what happens with Twitter, I'm glad that the SNAFU of the US House of Representatives has at least forestalled an even bigger stupidity, year-round daylight saving time...

Thirty-five weeks into his 3-day war, Russian dictator Vladimir Putin woke up to a new IAEA report that his invasion of Ukraine may cause a permanent decline in Russian fortunes:

The energy crisis sparked by Russia’s invasion of Ukraine is likely to speed up rather than slow down the global transition away from fossil fuels and toward cleaner technologies like wind, solar and electric vehicles, the world’s leading energy agency said Thursday.

While some countries have been burning more fossil fuels such as coal this year in response to natural gas shortages caused by the war in Ukraine, that effect is expected to be short-lived, the International Energy Agency said in its annual World Energy Outlook, a 524-page report that forecasts global energy trends to 2050.

Instead, for the first time, the agency now predicts that worldwide demand for every type of fossil fuel will peak in the near future.

Russia, which had been the world’s leading exporter of fossil fuels, is expected to be hit especially hard by the energy disruptions it has largely created. As European nations race to reduce their reliance on Russian oil and gas, Russia is likely to face challenges in finding new markets in Asia, particularly for its natural gas, the report said. As a result, Russian fossil fuel exports are unlikely to return to their prewar levels.

Josh Marshall connects the dots:

What interested me most about the report however is the impact of the Ukraine War on Russia itself. Russia has spent decades building up both the economic engine of its fossil fuel industry as well as its geopolitical power. The report includes a range of scenarios for how the 2022 energy crisis impact plays out over the coming decades. But in each scenario Russia’s role as an energy producer goes into permanent decline. As the report’s executive summary puts it, “Russian fossil fuel exports never return – in any of our scenarios – to the levels seen in 2021, and its share of internationally traded oil and gas falls by half by 2030…”

That's the problem with malignant narcissism: if you think you're the smartest guy in the room, and you discount everyone else's opinion because of it, you won't know you're wrong until reality asserts itself.

UK Chancellor of the Exchequer Kwasi Kwarteng is out on his ass so that PM Liz Truss (who also holds the title First Lord of the Treasury) can put off going to the country for just a little longer:

Jeremy Hunt has been appointed as Liz Truss’s new chancellor, in a stunning reversal of political fortune and a sign that the beleaguered prime minister wants to reach out to other sections of the Conservative party.

Hunt, the former foreign secretary and health secretary, who has twice tried unsuccessfully to become Conservative leader, was named chancellor after Kwasi Kwarteng, in the job for just over five weeks, was sacked by Truss ahead of another U-turn over tax cuts.

Both Labour and the Liberal Democrats said Truss now needed to stand down. Rachel Reeves, the shadow chancellor, said: “We don’t just need a change in chancellor, we need a change in government.”

Kwarteng now holds the record for the shortest-serving Chancellor ever to survive the office:

Mr Kwarteng, formerly Ms Truss’s close political ally, is carrying the can for the financial and political turmoil unleashed by his mini-budget on September 23rd. His tenure of just 39 days in a job that dates back to the Middle Ages is not the shortest. But it’s not far off....

Mr Kwarteng’s chancellorship is the second shortest of modern times. Only Iain Macleod, who died on his 31st day in office, in 1970, spent less time in 11 Downing Street. Mr Kwarteng’s immediate predecessor, Nadim Zahawi, was chancellor for just 64 days. His tenure, it turns out, was not even the shortest of the year.

Mr Kwarteng’s successor, Jeremy Hunt, is the sixth chancellor in just over three years. Philip Hammond gave way to Sajid Javid when Boris Johnson replaced Theresa May as prime minister in July 2019. Mr Javid fell out with Mr Johnson after less than seven months. Rishi Sunak quit this year to force Mr Johnson from office. Mr Zahawi kept the seat warm while the Tories chose a new leader. And now Ms Truss’s catastrophic start has cost her ally his job. It may yet cost her hers.

The parliamentary system means that the government doesn't have to call an election if they don't want to, though an act passed earlier this year will force Parliament to dissolve five years after its opening. As that won't happen until January 2025, the Conservative Party could continue to drag the country through chaos until just after the end of President Biden's first term. Let's all hope they just get out of the way next spring.

Bloomberg reports that Kroger and Albertsons, two of the biggest grocery chains in the US, have started merger talks. This would create an enormous entity about the size of Wal-Mart. In Chicago, it would result in the merger of Jewel (Albertsons) and Mariano's (Kroger), just a few years after the dissolution of Dominick's, leaving us with just three major chains including Trader Joe's and Whole Foods Market.

Crain's elaborates:

An agreement could be reached as soon as this week, [unnamed sources] said, asking not to be identified discussing confidential information. No final decisions have been made and talks could still be delayed or falter, according to the people.

A potential tie-up would give the combined entity increased purchasing power, a sprawling shopper-loyalty program and greater heft in technology investments as online grocery sales increase. The resulting giant would be of comparable size in groceries to Walmart Inc., the US market leader.

But any deal would face tough scrutiny from US antitrust authorities, said Jennifer Bartashus, an analyst at Bloomberg Intelligence. The US Federal Trade Commission is already subjecting mergers to close examination, and a Kroger-Albertsons deal would join two large players that directly compete in much of the country.

“This is the type of transaction that really looks good on paper, but the actual practicality of achieving regulatory approval by the FTC could be difficult,” Bartashus said. “If you think about the store bases of the two respective entities, there is a lot of overlap in very competitive markets.”

I really hope the FTC shuts this thing down. While bigger and fewer grocery stores might make some business sense in less-dense areas, here in Chicago we like having more, smaller stores—and more choice.

After Chancellor Kwasi Kwarteng's shocking mini-budget announcement last week, worldwide markets (and the IMF) have clobbered Sterling and the Conservative government in general. Today the Bank of England intervened in bond markets to try undoing the worst damage:

The Bank will start buying government bonds at an "urgent pace" to help restore "orderly market conditions".

So called Liability Driven Investment funds - which support defined benefit pensions schemes - were facing a collapse in the value of the bonds they hold, which in turn could have forced them to rush to sell other assets, sparking yet more market panic.

The Bank has already said it will "not hesitate" to hike interest rates to try and protect the pound and try and stem surging prices. Some economists have predicted the Bank of England will raise the interest rate from the current 2.25% to 5.8% by next spring.

Despite the Bank's action, the pound continued to fall with some analysts warning it could even reach parity with the dollar.

"What today shows us, is that the market doesn't see this as a problem that just the Bank of England can clean up," said Jane Foley, a currency strategist at Rabobank. "This is just firefighting".

Economist Tony Yates, formerly of the Bank, believes the markets expect a reversal to the Tories' new policy, either as a volte-face soon or at the next election:

The combination of falling sterling and rising rates is particularly damning. Normally a country embarking on a monetary-policy contraction to combat an inflationary surge—imparted by a fiscal loosening—might be expected to see a rise in its exchange rate. But the government’s move has shaken markets’ faith in its fiscal competence and its grasp of macroeconomic realities. That loss of confidence produced the exchange-rate fall.

Mr Kwarteng’s delusions will come to an end. The worst return to reality would see Britain slide into a full-blown financial crisis. In this regard the fall in sterling is less important than the rise in the cost of government finances. That is partly because investors are demanding a premium: they expect to compensate themselves for the upheavals of recent days and the uncertainty they have introduced. (The economists Paul Krugman and Dario Perkins have called this a “moron risk premium”.) In a doomsday scenario this premium generates a self-fulfilling vicious cycle. It raises spending (on interest payments on existing government debt) and lowers revenues (a dearth of confidence will lead to less economic activity). This will raise the “moron premium” further, worsening the funding gap. And so on.

Ironically the fiscal plans of a prospective left-wing government are providing the confidence anchor for the right-wing government it is expected to defeat in the next election. And the more this is expected to happen, and the sterner and clearer Labour’s plans become, the less awful the crisis will be in the meantime. The stupidity of Mr Kwarteng’s policy and its unpopularity are helping to limit the damage done by it. Markets believe that things won’t carry on as they are indefinitely.

Of particular concern, most mortgages in the UK have floating rates, unlike here in the US where fixed rates are most common. So the rising interest rates and declining pound will start hitting mortgage borrowers hard, just when gas prices blow up later this autumn.

I only wish I had a few extra bucks right now for a trip to the Ancestral Homeland. Given the current Tory resistance to change in the face of direct evidence, though, I suspect the exchange rate will remain pretty favorable to Americans through the winter.