best book

*False Alarm*, the new book by Bjorn Lomborg

The subtitle is How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet.

I agree with the author’s claim that climate change is not an existential risk for humanity.  Still, both the title and subtitle bother me.  The alarm does not seem to be a false one, even if many of the worriers make grossly overstated claims about the end of the earth.  And right now “climate change panic” is not costing us “trillions,” rather virtually all countries are failing to reduce their carbon emissions and most are not even trying very hard.

There should be more of a focus on the insurance value of avoiding the worst plausible scenarios, which are still quite bad.  There is no argument in this book which overturns the Weitzman-like calculations that preventive measures are desirable.

I can report that the author endorses a carbon tax, more investment in innovation, and greater adaptation, with geoengineering as a back-up plan, more or less the correct stance in my view.

There is much in this book of value, and the criticisms of the exaggerated worriers are mostly correct.  Still, the oppositional framing of the material doesn’t seem appropriate these days, and Lomborg will have to choose whether he wishes to be “leader of the opposition,” or “provider of the best possible message.”  Or has he already chosen?

Zachary Booker on bridge loans and bankruptcy

This is an email, all from him, I won’t add in any other formatting:

“Like you, I have an extraordinarily deep concern about the capacity for businesses – not only SMBs, but also larger, capital-intensive firms – to weather this path of suppression. I was quite surprised to hear Russ take a lighter note.

…I am deeply sceptical of the efficacy of bridge loans that you spoke about early this morning. While Brunnermeier, Landau, Pagano, and Reis have laid out the best transmission mechanism, I can not possibly envision it will move the needle enough for the majority of those businesses while also not leaving a wake of loss provisions for future generations. I suppose you could say I am partial to point two in your piece.

I also simply can’t understand the legal logistics of bridge loans in this scenario. Most companies will have a capital structure of some kind (perhaps without the most sophisticated lenders). How are you cramming down those who you are priming in the capital structure? You need consent. Who will be managing this incredibly laborious process of gaining consent and creating the terms? Cash grants are one thing, but bridge loans that aren’t unsecured at the bottom of the capital structure are an entirely different matter.”

“While the benefit of hindsight can be a hindrance to pontificating on novel circumstances, it strikes me as unequivocally true that the GFC had a much simpler – intellectually, if not politically – solution. Namely a solution that at its core involved taking known, marketable securities out of the system at haircuts or depressed valuations to abate panic, settle markets, and of course eventually sell at a profit.

In short, I’m partial to the view that mark-to-market accounting was both a central impetus for why the crisis was so severe and why action could be taken so decisively without burdening tax payers for generations to come (see Ball’s very good book here and Fragile by Design, both of which you’re likely familiar with). This crisis provides no such “simple” solutions that can be concentrated against a singular sector of the economy by taking decisive action.

I, of course, have no grand unified theory to share with you. However, I did want to pass along some thoughts I had upon reading your bridge loan piece that came to mind.

Like you, I am also worried about how broad the demand shock is currently and will be moving forward. Affecting not only every industry severely, but also every locality in the economy (e.g. leaving no state or municipality without deep, painful bruises). This raises the question of how the economy – when this is all said and done – reconstitutes itself in an orderly, efficient fashion.

While I’m partial…I believe one of the incredible strengths of the United States is its bankruptcy code. In particular, the out-of-court and Chapter 11 processes.

I would perhaps mull over how the United States can leverage the bankruptcy code to provide support, both out-of-court (e.g. before filing) and to expedite the process while in-court (e.g. by utilizing pre-packs, which are very popular, very quick, and incredibly effective at providing sustainable balance sheets).

The United States could explore offering – or backstopping – DIP Financing for firms that file Chapter 11 (see explainer on DIP financing from Davis Polk here). DIP Financing has been around for many decades, is incredibly safe, and deeply effective.

  1. The US could offer DIP Financing at favourable terms directly and automatically under preset conditions (e.g. a firm that was FCF positive in 2018 with EBITDA +$[10]mln, but needing to file Chapter 11 in 2020, would immediately get a facility at L+[100]). This would also give the US the highest seniority in the cap stack with very favourable terms upon a potential future Chapter 11 (Chapter 22) or a future Chapter 7 (liquidation). For firms that have not been in distress prior to the crisis, this would have the US assuming very little real credit risk. 
  2. The US could backstop private DIP providers – to get credit rolling again – by guaranteeing [95] cents on the dollar for any facility extended within the next [X] months. Historically, DIPs have returned much more than this so this is reasonably safe from a credit perspective. Note: this could also be done for TL1s or revolvers out-of-court. Same principle applies regarding seniority, lessened credit risk, etc. although you’d need consent down the capital structure.
    1. The United States could explore offering participation in pre-packs whereby:
      1. The US would inject $[X]mln in senior secured notes if;
      2. Existing Senior Secured take a [5]% haircut
      3. Unsecured take a [15]% haircut
      4. Equity take a [50]% haircut
      5. Again, the idea would be for pre-packs to be, well, pre-done. The idea would be that if your business is hurling towards bankruptcy, it may be best to bite the bullet and recapitalize (via the US notes) while re-working your balance sheet right now. If your firm meets the FCF, EBITDA, or whatever criteria is determined then the US would offer this package automatically. Contingent only on those within the capital structure consenting to taking at least [X]% haircuts (as consent is required by law). Note: you may want to say that any financing put in – or backstopped by – the US will not be additive to the covenant ratios underpinning the rest of the capital structure (or these covenants can just be amended, if necessary, to allow for this new capital injection as is commonplace anyway).

One would hope that if The United States does something like this it could serve three useful functions:

  1. Providing confidence to market participants that there will be a financing backstop – for otherwise healthy firms blindsided by COVID-19 – by the United States, which will likely have the paradoxical affect of freeing up credit from private participants and stopping the explosion in credit spreads and the halting of credit extension we’re currently seeing.
  2. Allowing firms, without much relative credit risk to the United States, to obtain a runway through the fresh injection of capital along with a modest restructuring that will help them weather the storm if it is to be prolonged.
  3. Providing an automatic, guaranteed solution that is widely accessible to firms as all qualifications and terms would be preset and thus remove any uncertainty as to what firms would be able to qualify for or ultimately obtain.

Using the bankruptcy code in this way would allow the United States to help firms (albeit, likely slightly larger ones than mom-and-pops) in a predictable, known, guaranteed way while also protecting tax payers from taking significant downside risk positions in an ad-hoc and convoluted matter via bridge loans (if they are feasible at all, which I doubt). In short, the United States would leverage the incredibly strong institutional and intellectual framework of its existing bankruptcy code.

I believe – as I believe you do as well – that we are in for a much lengthier protraction than many anticipate…I do not believe Goldman’s forecast…that we’ll see 13% GDP growth in Q3. I do not believe demand will return so quickly or in such force, because I do not believe we will return to normalcy as quickly as we have just departed it.

As I said previously, I have no grand unified theory to get American business through this crisis. However, we both agree in the general goodness of Big Business as a driver of America. What I’ve just laid out is perhaps the most politically palpable solution (because it involves bankruptcy, even if only in name only) that can give a strong life line to those currently in need while not exposing taxpayers to absurd (albeit still large) credit risk. This solution also can be worked to protect pension liabilities and other essential worker benefits.

I think it’s inevitable that we have mass insolvencies, dislocations, and mismatches moving forward. For small businesses, there are solutions around the edges, but I simply cannot comprehend how the United States would be able to figure out and then extend the appropriate levels of credit via bridge loans en masse to these folks. It is surreal to imagine it possibly working and I worry deeply about what such a program – if tried, almost certainly with less dollars than would be required – would do to the social fabric and psyche of the American people when firms inevitably still buckle and break.

I haven’t given much thought to how to leverage the institutional framework of America to best ameliorate this crisis, but I’ve seen no one speak much about how out-of-court or in-court restructuring could be a partial solution. So I figured I’d pass this along as something to keep in the back of your mind and mull over.”

Zachary tells me you can reach him at [email protected].

How can you best volunteer?

David Brooks writes:

If you know someone who lives alone ask them to join NextDoor, which is Facebook for neighborhoods. It helps them stay in touch with those right around them. Vital in a crisis.

I am not familiar with that project, but I would trust David’s judgment in such matters.  How else can people volunteer usefully, especially if they do not wish to leave their homes?  Keep in mind that useful volunteering is also a good way to keep people occupied and at home!

Please do leave your suggestions in the comments.  if nothing else, even “placebo volunteering” could be highly worthwhile.  I will put up some of the best ideas in a later post.

In praise of art books

Running out of things to read?  Do you ever have the sneaky feeling that books might be overrated?  Well, for some variation at the margin try reading art books.  That’s right, books about art.  Not “how to draw,” but books about the content and history of art.  Some of them you might call art history, but that term makes me a little nervous.  Just go into a good art museum, and look at what they are stocking in their bookstore.  Many of them will be picture books, rather than art history in the narrower, more scholarly sense of that word.

Art books offer the following advantages:

1. They are among the best ways to learn history, politics, and yes science too (advances in art often followed advances in science and technology).  Even economic history.  Since the main focus is the art, they will give you “straight talk” about the historical period in question, rather than trying to organize the narrative around some vague novelty that only the peer reviewers care about.

2. They are often very pretty to look at.  You also feel you can read them in small bites, or you can read only a single chapter or section.  The compulsion to finish is relatively weak, a good thing.  You can feel you have consumed them without reading them at all, a true liberation, which in turns means you will read them as you wish to.

3. They have passed through different filters than most other books, precisely because they are often “sold into the market” on the basis of their visuals, or copyright permissions, or connection with a museum exhibit, or whatever.  Thus they introduce variation into your reading life, compared to say traditional academic tomes or “trade books,” which increasingly are about gender, race, and DT in an ever-more homogenized fashion.

4. They are among the best ways of learning about the sociology of creativity and also “the small group theory” of history.

5. These books tend not to be politically contentious, or if they are it is in a superficial way that is easily brushed off.  (Note there is a whole subgenre of art books, from theory-laden, left-wing presses, with weird covers, displayed in small, funky Manhattan or Brooklyn bookstores where you can’t believe they can make the rent, where politics is all they are about.  Avoid those.)

6. A bookstore of art books is almost always excellent, no matter how small.  It’s not about comprehensiveness, rather you can always find numerous books there of interest.

7. Major reviewing outlets either do not cover too many art books, or they review them poorly and inaccurately.  That suggests your “marginal best book” in the art books category is really quite good, because you didn’t have an easy means to discover it.

8. You might even wish to learn about art.

9. This whole genre is not about assembling a reading list of “the best art books.”  Go to a good public library, or museum bookstore, and start grabbing titles.  The best museum bookstore I know of is at the Metropolitan Museum of Art in New York.

10. It is also a very good introduction to the histories and cultures of locations such as China and India, where “straight up” political histories numb you with a succession of names, periods, and dynasties, only barely embedded in contexts that make any sense to you.

*Serious Noticing*, the new James Wood book

The subtitle is Selected Essays 1997-2019, here is one excerpt:

A genre is hardening.  It is becoming possible to describe the contemporary ‘big, ambitious novel’.  Familial resemblances are asserting themselves, and a parent can be named: Dickens.  Such recent novels as Rushdie’s The Ground Beneath Her Feet, Pynchon’s Mason & Dixon, DeLillo’s Underworld, David Foster Wallace’s Infinite Jest, and Zadie Smith’s White Teeth overlap rather as the pages of an atlas expire into each other at their edges.

The big contemporary novel is a perpetual motion machine that appears to have been embarrassed into velocity.  It seems to want to abolish stillness, as if ashamed of silence.  Stories and sub-stories sprout on every page, and these novels continually flourish their glamorous congestion.  Inseparable from this culture of permanent storytelling is the pursuit of vitality at all costs.  Indeed, vitality is storytelling, as far as these books are concerned.

I do not love the big, ambitious novel, as portrayed here.  As for Wood, the best parts of this book are excellent, and none of the lesser parts would seem to lower the sustainable growth rate of gdp.

Best movies 2019

I am happy to recommend these selections, the links going to my earlier remarks about them:

Spider-man: Into the Spider-Verse (animated)

Campernaum (Ethiopian refugee in Beirut)

Transit

Us

Ash is Purest White (Chinese, obscure)

High Life (best science fiction movie of the year?)

Long Day’s Journey into Night (big screen only, Chinese obscure)

Woman at War (Icelandic, wacky)

Godzilla: King of the Monsters (duh)

Booksmart (full of energy on the screen)

Echo in the Canyon (L.A. music scene in the 1960s and beyond)

The Farewell (American-Chinese, about a dying relative)

Honeyland (Macedonian, about bee keepers)

Inside Bill’s Brain (Bill Gates, short documentary)

Joker

Parasite (Korean, the Straussian reading is anti-egalitarian)

JoJo Rabbit (modern-day anti-Nazi comedy, mostly they pull it off)

Marriage Story

Atlantics

The Rise of Skywalker

A Hidden Life

From those my top picks would be Marriage Story — the American redo of Scenes from a Marriage, and then Honeyland.  Overall it was a much better year for movies than last year.

As for marginal choices, Ad Astra and Knives Out were two movies I liked, and came close to making this list, but didn’t.

As for historic cinema, I am very glad I purchased the complete Blu-Ray set of Ingmar Bergman movies, spectacular transfers and the American viewer can watch the true, complete version of Persona for the first time.

As for the rest of the year, I have high hopes for The Souvenir, Little Women and also the new Adam Sandler movie, but I have not yet seen them.  The documentary For Sama has potential too.

What am I forgetting?

Facebook and privacy

Oops, this blog post isn’t about Facebook at all!  Here goes:

Records and interviews show that colleges are building vast repositories of data on prospective students — scanning test scores, Zip codes, high school transcripts, academic interests, Web browsing histories, ethnic backgrounds and household incomes for clues about which students would make the best candidates for admission. At many schools, this data is used to give students a score from 1 to 100, which determines how much attention colleges pay them in the recruiting process.

Admissions consulting companies charge schools tens of thousands of dollars a year to collect and analyze the data of millions of students. In emails reviewed by The Post, employees of Louisville-based Capture Higher Ed urged school administrators to hand over all data they felt comfortable sharing.

“We love data, so the more the merrier,” one of Capture’s consultants wrote in a 2017 email to the admissions director at UW-Stout.

The more the merrier!  And did you know that The New York Times will sell subscriber data about you?

Here is the full article, via the excellent Samir Varma.

*Talking to Strangers*, the new Malcolm Gladwell book

Definitely recommended, talking to strangers is one of the most important things you do and it can even save your life.  This book is the very best entry point for thinking about this topic.  Here is a summary excerpt:

We have strategies for dealing with strangers that are deeply flawed, but they are also socially necessary.  We need the criminal justice system and the hiring process and the selection of babysitters to be human.  But the requirement of humanity means that we have to tolerate an enormous amount of error.  That is the paradox of talking to strangers.  We need to talk to them.  But we’re terrible at it — and, as we’ll see in the next two chapters, we’re not always honest with each other about just how terrible at it we are.

One recurring theme is just how bad we are at spotting liars.  On another note, I found this interesting:

…the heavy drinkers of today drink far more than the heavy drinkers of 50 years ago.  “When you talk to students [today] about four drinks or five drinks, they just sort of go, “Pft, that’s just getting started,'” the alcohol researcher Kim Fromme says.  She says that the heavy binge drinking category now routinely includes people who have had twenty drinks in a sitting.  Blackouts, once rare, have become common.  Aaron White recently surveyed more than 700 students at Duke University.  Of the drinkers in the group, over half had suffered a blackout at some point in their lives, 40 percent had had a blackout in the previous year, and almost one in ten had had a blackout in the previous two weeks.

And:

Poets die young.  That is not just a cliche.  The life expectancy of poets, as a group, trails playwrights, novelists, and non-fiction writers by a considerable margin.  They have higher rates of “emotional disorders” than actors, musicians, composers, and novelists.  And of every occupational category, they have far and away the highest suicide rates — as much as five times higher than the general population.

It also turns out that the immediate availability of particular methods of suicide significantly raises the suicide rate; it is not the case that an individual is committed to suicide regardless of the means available at hand.

Returning to the theme of talking with strangers, one approach I recommend is to apply a much higher degree of arbitrary specificity, when relating facts and details, than you would with someone you know.

In any case, self-recommending, this book shows that Malcolm Gladwell remains on an upward trajectory.  You can pre-order it here.

The new Ben Horowitz management book

What You Do Is Who You Are: How to Create Your Own Business Culture.  It is the best book on business culture in recent memory, here is one bit:

When Tom Coughlin coached the New York Giants, from 2004 to 2015, the media went crazy over a shocking rule he set: “If you are on time, you are late.”  He started every meeting five minutes early and fined players one thousand dollars if they were late.  I mean on time…”Players ought to be there on time, period,” he said.  “If they’re on time, they’re on time.  Meetings start five minutes early.”

And:

Two lessons for leaders jump out from Senghor’s experience:

  1. Your own perspective on the culture is not that relevant.  Your view or your executive team’s view of your culture is rarely what your employees experience.

You can pre-order the book here, due out in October.

Which are the best autobiographies by women?

That question has been floating around Twitter, here are my picks:

Sylvia Plath, The Bell Jar.

Janet Frame, Autobiography.

Claire Tomalin, A Life of My Own.

Marjane Satrapi, The Complete Persepolis.

Golda Meir, My Life.

Joan Didion, The Year of Magical Thinking.

Zora Neale Hurston, Dust Tracks on a Dirt Road.

Temple Grandin, Thinking in Pictures.

Am I allowed to say Virginia Woolf, corpus?

Nadezhda Mandelstam, Hope Against Hope: A Memoir.

Helen Keller, The Story of My Life.

Anne Frank of course.

What else?  Maybe Carrie Fisher?  Maya Angelou?  Erica Jong?  St. Therese of Liseaux?  (I Am Rigoberto Menchu turned out to be a fraud.)  There are a variety of important feminist books that read like quasi-autobiographies, but maybe they don’t quite fit the category.  What is a memoir and what is an autobiography in this context?  Do leave your suggestions in the comments.

It is also worth thinking about how these differ from well-known male autobiographies…

Gustave Flaubert on travel books

Only, travel writing as a genre is per se almost impossible.  To eliminate all repetitions you would have had to refrain from telling what you saw.  This is not the case in books devoted to descriptions of discoveries, where the author’s personality is the focus of interest.  But in the present instance the attentive reader may well find that there are too many ideas and insufficient facts, or too many facts and not enough ideas.

That is from his November 1866 letter to Hippolyte Taine, reproduced in the Francis Steegmuller collection.  Here is my recent post on why most travel books are not good enough.  Here is a 2006 MR post on which are the best travel books.

Mostly returned books

I have thought about this question for at least twenty years, Elisa Gabbert spells it out (NYT):

My favorite spot in my local library — the central branch in Denver — is not the nook for new releases; not the holds room, where one or two titles are usually waiting for me; not the little used-book shop, full of cheap classics for sale; and not the fiction stacks on the second floor, though I visit all those areas frequently. It’s a shelf near the Borrower Services desk bearing a laminated sign that reads RECENTLY RETURNED.

This shelf houses a smallish selection of maybe 40 to 60 books — about the number you might see on a table in the front of a bookstore, where the titles have earned a position of prominence by way of being new or important or best sellers or staff favorites. The books on the recently returned shelf, though, haven’t been recommended by anyone at all. They simply limit my choices by presenting a near-random cross section of all circulating parts of the library: art books and manga and knitting manuals next to self-help and philosophy and thrillers, the very popular mixed up with the very obscure. Looking at them is the readerly equivalent of gazing into the fridge, hungry but not sure what you’re hungry for.

Is it better to spend time, at the margin, pawing through the “recently returned” cart, or the “New Arrivals” section or for that matter just the regular shelves?  How about the books simply left on tables and abandoned?

The big advantage of the books on the carts is that they usually are not bestsellers.  For bestsellers there is a waiting list, and they are held for another patron, never making their way to the cart.  I say go for the carts.

Best fiction of 2018

This year produced a strong set of top entries, though with little depth past these favorites.  Note that sometimes my review lies behind the link:

Varlam Shalamov, Kolyma Stories.

Gaël Faye, Small Country.  Think Burundi, spillover from genocide, descent into madness, and “the eyes of a child caught in the maelstrom of history.”

Madeline Miller, Circe.

Karl Ove Knausgaard, volume six, My Struggle.  Or should it be listed in the non-fiction section?

Can Xue, Love in the New Millennium.

Anna Burns, Milkman, Booker Prize winner, Northern Ireland, troubles, here is a good and accurate review.

Homer’s Odyssey, translated by Emily Wilson.

Uwe Johnson, From a Year in the Life of Gessine Cresspahl.  I haven’t read this one yet, I did some browse, and I am fairly confident it belongs on this list.  1760 pp.

Which are your picks?

Amazon search is getting worse, especially for classic books

Just type in “Gulliver’s Travels,” and the first page will not show any editions you actually ought to buy.  And there are so many sponsored ads for mediocre, copyright-less editions.  If you type in “Gulliver’s Travels Penguin” you eventually will get to this, a plausible buy for the casual educated reader.  And wouldn’t it be nice if someone told you the $156.31 Cambridge University Press edition is by far the best choice? — full of marginal annotations!