Month: October 2022

COVID-19 has entered a new stage of super aggressive evolution:

The pace of evolution is so fast that many scientists depend on Twitter to keep up. A month ago, scientists were worried about BA.2.75, a variant that took off in South Asia and spawned a cloud of other concerning sublineages. In the United States, BA.4.6 and BF.7 have been slowly picking up steam. A few weeks ago, BQ.1.1 started to steal the spotlight — and still looks like a contender to take over this fall in Europe and North America. A lineage called XBB looms on the sidelines, and threatens to scramble the forecast.

....XBB appears to be the best at evading immunity. Researchers in China have found that XBB can elude the protective antibodies generated by a breakthrough BA.5 infection, raising concern that fall boosters engineered to target the BA.4 and BA.5 versions of omicron may be quickly outpaced. Still, those booster shots remain the best tool on the shelf.

All of these are variations of Omicron. Hopefully this means that although they evade immune defenses effectively, they aren't especially deadly. Hopefully.

Today is the 8th anniversary of my cancer diagnosis. And I'm still alive! Hooray for modern medicine!

Seriously. My doctors have all been fine and I appreciate everything they do. But I'm alive because medical research has produced a sea change in treatments for multiple myeloma over the past decade, and if I'm lucky I'll soon undergo a treatment that might even put this once incurable disease into remission.

So thanks, researchers! Come on by if you're ever in town and I'll buy you a donut.

When I was at the French Open I spent some time snapping pictures on the practice courts. The upside of this is that you can get really close to the players down at eye level. The downside is that you don't necessarily know who the players are.

Like this one. Is she someone famous? Or just a hitting partner? Sadly, I don't follow the game closely enough to know anymore. Does anyone out there recognize her?

UPDATE: According to iokevins in comments, this is Elena-Gabriela Ruse of Romania, probably preparing for her doubles match later in the afternoon.

Did the Biden stimulus package produce our current inflation? Over at Vox, Madeleine Ngo says the evidence is against it:

Some economists say that recent research and new data have reaffirmed their belief that the stimulus package did not significantly fuel inflation.

....Dean Baker, a senior economist and co-founder of the liberal-leaning Center for Economic and Policy Research, argued that new research on housing inflation helped support the idea that price gains were mostly driven by a mass shift to remote work and not the stimulus package.

....As more people started working remotely, they sought out additional space at home....Researchers estimated that remote work resulted in house prices rising by about 15 percent from November 2019 to November 2021, which accounts for more than 60 percent of the overall increase in house prices.

Hmmm. I've looked at the idea that housing and rent increases have significantly affected inflation, and it sure doesn't seem like they did. At the same time, the three stimulus packages of 2020-2021 do seem to have produced inflation—though with a caveat:

Two things are obvious here. First, when you exclude shelter from core inflation, almost nothing happens. It simply doesn't have much effect. Second, the three rounds of stimulus were followed like clockwork by bouts of inflation.

Wait—make that three things: all three bouts of inflation seem to have lasted about three or four months. So the Biden stimulus in early 2021 might explain inflation through the end of last year, but something happened around January 2022 that reignited it.

In other words, if we're speaking about now, inflation remains mysterious. The impulse from the stimulus packages obviously dissipated long ago, and housing has done nothing to push core inflation higher. What's more, housing inflation has abated and certainly isn't producing an inflationary impulse now regardless of whether it did last year.

And as Paul Krugman points out:

A quick note: Anyone who is both predicting a nasty recession *and* calling for big rate hikes isn't making sense. We don't need a major recession to end a wage-price spiral, because we don't have one 1/ pic.twitter.com/ms1KVXW2Il

— Paul Krugman (@paulkrugman) October 17, 2022

So inflation now isn't about shelter. It's not about wages. It's no longer about stimulus. It's not about expenditures or savings. And supply chains seem to be in tolerably good shape these days. The answer lies somewhere else. But where? To anyone who predicted high inflation throughout 2022, I'll give you credit for being right—but only if you can explain why inflation has remained so high. Let's hear it.

Things must be going downhill in China:

China, the world’s second-largest economy, announced without explanation on Monday that it was delaying indefinitely the release of economic data that had been scheduled for Tuesday morning, including closely watched numbers for economic growth from July through September, which had been expected to show continued lackluster performance.

....In addition to deferring the release of gross domestic product data for the third quarter, the government agency also postponed the release of September data for retail sales, industrial production, fixed asset investment and other categories.

This week marks Xi Jinping's triumphant appearance at China's 20th Party Congress and his humble willingness to accept an unprecedented third term as leader of the Communist Party—and we can't have this ruined by a bunch of foreigners and malcontents nitpicking over growth rates and industrial production. Xi is a goddam hero of the Chinese people, OK?

Next Monday should be quite soon enough to release the latest economic figures. Maybe even the week after. Or maybe the fourth of infinity. What matters is that Xi is a great man. Let's not allow anything to overshadow that this week.

Larry Summers thinks the world is headed toward economic crisis and he's unhappy about the lack of action so far:

“The fire department is still in the station. Somebody should be proposing something somewhere,” Summers said. “I’m very disappointed in the response.”

"Somebody" should be doing "something somewhere"? That strikes me as a little vague for a brilliant economist to be suggesting in public.

Unlike many progressives, I'm not a Summers hater. He really is a brilliant liberal economist with a lifetime of policy experience, and it would be stupid to disregard him over a few minor disagreements of priority and emphasis. Still, if he doesn't have any good ideas to present, who does?

But there's nothing in the rest of his remarks aside from providing a few billion dollars to the World Bank.¹ That's fine, but obviously not the stuff of crisis response. So should we stop the Fed's austerity policy—which was Summers' idea in the first place? Focus on a weaker dollar? Increase tariffs on China? Reduce tariffs on China? What?

¹In fairness, see here for more, although it's basically just a few routine reform proposals.

A piping new Harvard/Harris poll is out, and it has lots of fascinating stuff on a whole bunch of different levels. Let's dig in.

For starters, it turns out that of all the institutions they surveyed, Americans trust Amazon more than almost anything:

Hell, I don't even blame people for this. Amazon's service isn't as good as it used to be, but it's still pretty damn good. Also worth noting: the CDC remains pretty popular despite everything.

Next up, take a look at the wording of these two headlines:

In the past four months, GOP approval has risen four points. During the same time, Democratic approval has risen six points. So why the pretzel-bending effort to pretend that Republicans are making more progress with voters?

The next one is dedicated to Dave Roberts:

Among those surveyed, 42% think climate change is an immediate threat, but only 20% think it should be prioritized over higher gasoline prices. Sigh.

And speaking of oil, only 12% of Americans view Saudi Arabia as an ally while a full third view it as a straight-up enemy:

And yet, nearly half of all people still don't want to harm this "key relationship." Sigh again.

Check this out: 58% of Americans support President Biden's student loan cancellation, but only 46% think it was right for him to do it:

Apparently there are about 12% of Americans who favor this and don't give a damn if it was legally right or wrong. I'm surprised the number is this low—and I'll bet in real life it's actually much higher. I suspect most people never admit things like this even to themselves and accidentally told the truth this time only because they were taken by surprise.

Finally, here is public opinion on crime and wokeness:

I've gotten weary of progressives who insist there's no "proof" that slogans like Defund the Police have done the liberal cause any harm. This just defies common sense.

Now, I admit this poll result is not cast-iron proof, but I'd say it's pretty suggestive. And it doesn't make any difference if crime is truly up. Or if woke politicians really are at fault. Or that this result is probably driven by Fox News and Republican advertising. All of those things are part of the real world, and all of them have to be dealt with. Like it or not, this is how things are playing out, and it's done liberals no good.

From the Washington Post's print edition today:

After some reader complaints, the Post agreed to make their headline a wee bit more accurate:It was too late to make this change in the print edition, but I suppose online is better than nothing. A more prominent placement would also have been nice, but again, I suppose a dense, art-free block of text on A4 is better than nothing. A little bit, anyway.

The New York Times says that a rent revolution is coming, and not just to expensive coastal cities:

Kansas City, Mo., is a leading example. With a population of 500,000, where the avenues are lined with brick buildings and side streets have modest homes with raised porches, the city offers little to suggest a renters’ revolution. Zillow’s home value index puts the typical Kansas City home at $230,000, or more than $100,000 below the national level.

But with a steadily expanding economy driven by the logistics and medical industries, Kansas City has seen its rents increase 8.5 percent from a year ago....The strain from rising rents, which landlords say they need to cover their costs, is creeping from people working in low-income service professions to middle-income teachers and city workers, part of a festering affordable housing crunch that spreads more widely across the nation each month.

Because I'm a dork, the first thing I wondered was just how much rents really have gone up in Kansas City. The usual way to measure this is as a percentage of income, since incomes go up over time too. Here's the rent/income ratio for Kansas City:

The solid green line shows median rent in Kansas City—measured by the Zillow ZORI index—as a percentage of the median household income in Kansas City reported by the Census Bureau. The dashed line is an extrapolation based on the growth of national household income.

So the answer is that rent has indeed gone up quite a bit recently in Kansas City. On a percentage basis, it's increased from 24% of income to 26% of income. On a dollar basis, it means that even after you account for rising wages, you'll pay about $100 more for an apartment today than you would a year ago.

But what caused this? Rent activists like to suggest it's because of building regulations or greedy landlords, but those aren't problems that have suddenly cropped up in the past year. All the way through 2021, rents were perfectly stable.

So what happened at the start of 2021? This is not really a hard question:

After adjusting for inflation, annual income has dropped more than $2,500 since the start of 2021. If income had instead stayed steady, it would cut the increase in the rent/income ratio in half (i.e., it would have gone up only to 25% instead of 26%). If wages had grown at a normal rate (dashed trendline), the rent/income ratio would still be virtually flat.

I'm puzzled that so many people on the left refuse to really, completely internalize this. Oh, we have activists fighting for a $15 minimum wage and other similar things, but we don't have very much outrage over the simple fact that working and middle-class earnings just aren't increasing enough. Whether the problem du jour is the cost of food or rent or gasoline or anything else, the real underlying answer usually doesn't involve food or rent or gasoline. It's simpler: The rent is not too damn high. Incomes are too damn low.

Taking your private company public in the normal way is a pain in the ass. There are lots of fiddly little transparency rules that the SEC insists you follow. You have to publicly reveal how much money you make, what your assets are worth, what your debt structure looks like—and you have to do it truthfully! Can you imagine?

Luckily, along came the SPAC, where your company just quietly merges with a pile of money that happens to have a stock market symbol. Except for the owners of the SPAC, no one need know all the details of your financial performance.

Sounds great, doesn't it? And it is. But not for everybody:

Stock-market investors in SPACs that merged with private companies since 2015 lost an average 37% of their investment a year after the merger through the end of September, according to the authors of a forthcoming paper on SPACs in the Review of Financial Studies, an academic journal.

At the same time, SPAC managers, known as sponsors, turned an average investment of about $8 million into about $54 million, giving them average annualized returns of 110% on their initial investment in the SPACs, the authors found.

This is pretty much what the normal, SEC-regulated version of becoming a public company is supposed to stop. And it does, though hardly perfectly. But even that's too much honesty and transparency for a lot of modern CEOs and their Wall Street managers, so they invented the SPAC and it worked pretty well for a while.

For them, anyway. Not so much for everyone else.

MORE FROM THE STORY:

SPACs are essentially publicly listed pools of cash in search of private companies to merge with—providing an alternative to an IPO. The sponsors who form the SPAC—private-equity managers, hedge funds and the occasional celebrity—commit an average of 5% of this initial funding and then raise the rest from stock investors, according to the researchers.

When the SPAC sponsor completes a merger, the sponsor gets a bonus typically equivalent to 20% of the value of the SPAC.

Many investors and academics have criticized this bonus—known as a promote—as overly generous given that it can lead sponsors to profit even if the SPAC’s investors are down over 90% in many cases. Regulators from the U.S. Securities and Exchange Commission have called SPAC sponsor compensation costly and drafted rules to make it more transparent to investors.