Finance, economics, markets etc…
- The illustrated Zoltan Pozsar.
This week’s Blind Spot spotlight is on what I have termed “the end of dollar neutrality” and why this is an important historical marker for finance. It riffs on Zoltan but takes things in its own direction. After I wrote it, however, Zoltan popped up with a follow-up note featuring some good visualisations to support his thesis. Here are a couple of the best ones:
- Russia’s Gazprom says it continues gas exports to Europe via Ukraine.
- The BIS team sees CBDCs as a new tool in the financial inclusion toolkit.
From the cryptoverse:
- Metaverse company to offer immortality through ‘Live Forever’ mode. All it requires is massive amounts of personal data.
Also sort of the plot of Brainstorm with Christopher Walken.
From the fake news zone:
- More escalations in online censorship.
- Controversial “truth” speaker Dr Robert Malone said the following on Telegram the other day:
If you read my “Me and Bobby Malone” post (now available for free), you will see that the former FT journalist he mentions is probably me. What I didn’t mention in that post, however, is that we bumped into eachother in one of the ground floor chambers of the palace of Versailles under an imposing portrait of Marie Antoinette.
The coincidence of the meeting blew my mind. It was totally accidental. I was there as a mere tourist. This is why I decided to write about the encounter.
But I too have to fact check the good doctor on a couple of points in his missive. As is explained in my original post, Dr Malone and I originally spoke in December, by which time I had already resigned from the FT and was serving my relatively longish notice period. My leaving the FT had nothing to do with Dr Malone. There were much broader factors in play. I wrote about them here and here. And while I remain super cynical about the state of the media, I’m not quite as cynical as Dr Malone.
I don’t see the risk averse and one-sided mentality gripping media institutions as the result of any conscious policy. I continue to think that the vast majority of people who work in the mainstream media are incredibly smart, honorable and honest people, who believe they are being fair and balanced. I see them more as unwitting cogs in a much wider and organic groupthink phenomenon in which the group understanding of what constitutes fair and balanced journalism has changed due to the polarisation and radicalisation of society more broadly.
I do however agree with Malone on many of his points about advocacy journalism. And he is right that one of my final columns for the FT about shareholder power (which referenced his comments about Blackrock on the Joe Rogan show) was spiked at the last minute. I later got it published here.
I should stress I don’t blame Dr Malone at all for getting those small points wrong in his message. Our meeting was very fleeting, in weird circumstances and it is entirely possible I may have failed to communicate the situation properly. So I’m just setting the record straight.
Given Dr Malone’s recent foray into WEF and Davos criticism, however, I am also somewhat tickled by the fact that that our paths crossed in Versailles of all places. I’ve always considered Versailles a worthy historical comparative for the spectacle that is the annual meeting in Davos.
“The people’s oligarch”
- Former Reddit CEO Yishan Wong has some thoughts about Elon Musk and Twitter.
The general gist of Yishan’s thread is that there is no mega conspiracy to silence anyone on social media. Both left and right are equally affected. The censorship, he says, comes about as a function of trying to maintain order in a chaotic realm, but also as a function of social media users generally behaving badly. Yishan implies if we all just behaved nicely, nobody’s speech would have to be silenced.
With respect to the censorship of taboo topics, such as the lab leak theory, he suggests this comes about because of fears about how people might react to contentious information. He predicts Elon will have a rude awakening if or when he takes Twitter over, because he will learn that platforms have evolved in a censorious way not because of a top-down conspiracy to silence people, but because of organic forces that want to maintain order and which are somewhat unstoppable.
I have some sympathy for Yishan’s view. In some respects it echoes my own theory about how the demise of media segmentation has impacted the ability for certain contentious truths to be communicated by the media at all. The theory posits that if all media has to cater to the widest possible common denominator — just in case something goes viral on Twitter — it can never be up front about more sensitive matters that might otherwise be misinterpreted by a broad population that doesn’t have the necessary grounding in or understanding of a given subject.
This, I recognise, is definitely an elitist perspective. And I should stress I don’t necessarily endorse segmentation as a mechanism to keep free speech in play in journalism. I suspect segmentation is a naturally occurring phenomenon which manifests because the system is most stable when knowledge is compartmentalised.
At its heart, however, segmentation is an argument in favour of cult-style initiation since it implies that before one is ready to behold certain truths one has to come to terms with lower levels of learning. If not, one’s mind may not accept what it is being told. It may take things too emotionally and lash out, demanding reparations or knee-jerk justice, which in turn provoke chaotic consequences for all of society.
A stoic, dispassionate and practical-minded attitude is therefore preferred.
But it is also the case that this sort of attitude, while it can make you handle the truth, numbs one’s mind to the horrors, hypocrisies and potential cruelty of the information being handled.
When segmentation breaks down it often ignites outrage about practices long considered acceptable within the compartmentalised information zones, moving the Overton window and influencing common law. This has happened with everything from Libor fixing to non-dom status. In some cases this is good. In other cases, new rules beget new problems.
Since it is Easter, I thought I would draw on the be-sandled one to make a further analogy.
Any Christian will tell you that traditions like the stations of the cross, the golden legend or biblical parables are understood to be mechanisms for didactic learning. Jesus used simple stories in his sermons to communicate complex ideas, but also to cultivate popular support for protocols that demanded self-sacrifice from his followers for the sake of social harmony. These stories worked on many levels. They could be taken literally, but they could also be taken figuratively to reveal truths about economics, politics or power structures. In all cases, however, the outcome would be the same: people were encouraged to self-sacrifice voluntarily for the sake of the collective.
The problem with the current social media paradigm is that while it also encourages self-sacrifice for the collective, it achieves the sacrifice not through an appeal to logic but through outright censorship or begrudging self-censorship. This is why it feels repressive and coercive. This is why I suspect Twitter can only be fixed if behavioural norms that elevate kindness, forgiveness and mediation are established from the bottom up. I agree with Yishan that that’s not going to be easy.
However, I would also add Elon/Twitter free speech battle can also be seen through the framing of Anacyclosis.
That is to say: all multi-prong social systems are vulnerable to the forces of corruption and the risk of becoming central points of failure. This occurs no matter how well intentioned the founders of these systems are when they set them up. The forces are stronger than any single individual or executive.
This perspective has informed my views on fintech, banking, business and Elon himself for many years. There’s no better example of it in play than the solutionist Silicon Valley mindset that tries to disrupt a standing industry because it is inefficient, expensive or complex, only to discover there’s a reason why things are done a certain way and over time recreates all the processes it was originally trying to disrupt.
I used to have a defeatest attitude about this. Why bother? In recent years, however, I’ve acquired a more Schumpeterian attitude to the whole thing. I’ve concluded the continous shakeout is a necessary protocol in its own right equivalent to pruning a tree or weeding a garden.
The path of the righteous man may just be the one of maximum resistance.
- Here are Elon’s thoughts on the matter.
- And here is the FT’s Lex on Elon:
“Musk is a remarkable entrepreneur. But his hostility to vigorous moderation could result in even greater use of the site by fringe groups. This could be bad for civilised debate — and Twitter’s shaky business model.”
- Really enjoyed this analysis of the Western infowars by podcaster Nick Margerrison:
One of the characteristics of pre-casting is using intelligence (often provided to journalists by anonymous officials) in such a way that whether it is proved right or wrong, it still works in one’s favour. So, if what the intelligence is predicting doesn’t happen, it’s explained that the act of warning everyone about the thing that was going to happen stopped it happening. And if it does happen, the prediction is seen as being correct and therefore that the intelligence was good. What it really amounts to, however, is a strategy of lying for the purposes of achieving policy. This is a risky path to tread, says Nick, because it risks undermining trust in all intelligence in the long run.
The historical comparison that comes to my mind is that of the oracles of ancient Greece. From today’s vantage point, it’s easy to dismiss the cryptic utterances and predictions of the Pythia priestesses at Delphi as nothing more than common fortune teller tactics. These were meaningful predictions set in ambiguous terms to ensure whatever happened, the prediction couldn’t fail.
A good example is what happened when Croesus, the King of ancient Lydia, asked the Delphic oracle whether he should go to war against the Persian Empire. The answer he received was: “If Croesus goes to war he will destroy a great empire.” Croesus naturally assumed that it would be his enemy that would be defeated. It wasn’t. It was his own empire. But the Delphic oracle — despite starting a war for no good reason — got away with its reputation intact.
The moral of the lesson is that the ancient oracles accumulated power and wealth not because of the quality of their intelligence, but because of how they played all sides against eachother. It’s surprising really that they had a business model at all.