Month: December 2022

If you read the news last night, it looked pretty ordinary. An election in Georgia. War in Ukraine. College football playoffs producing joy and tears.

But if you were on Twitter you would hardly know any of that stuff was happening. Instead, the conversation was overwhelmingly about the actions of Twitter itself during a 24-hour period at the tail end of the 2020 presidential campaign. We'll get to that in a moment, but first, here's my best crack at a super-short bit of background.

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Hunter Biden, Joe's son, has led a precarious life. He did lots of drugs. He traded on his name. He got himself involved in lots of dubious enterprises with lots of dubious partners. At one point he held a sketchy but well-paid board position with Burisma, a Ukrainian energy company.

But this was not the wartime Ukraine of today, led by the valiant Volodymyr Zelensky and supported by all right-thinking foes of Vladimir Putin. It was the shockingly corrupt Ukraine that existed in the wake of, first, the Orange Revolution, and then the Maidan Uprising. It is the Ukraine that formed the background of Donald Trump's first impeachment.

At the time our story starts properly (2015-16) the official position of the Obama administration was to pressure Ukraine to rein in its endemic corruption, and in particular to fire chief prosecutor Viktor Shokin. Obama made Joe Biden, then vice president, the point man for this, a job that Biden took on with his usual gusto. Eventually Shokin was fired and the US agreed to release aid funding.

Republicans then invented a story about this: namely that the real reason Joe Biden wanted Shokin fired was because Shokin was investigating Burisma and was likely to find some dirt on Hunter. The reality, unsurprisingly, was just the opposite: Shokin wasn't investigating Burisma at the time and posed no danger to Hunter. However, the new prosecutor did investigate Burisma, although he says he never found anything about Hunter. This all happened during the Trump administration, when Joe Biden was entirely out of power.

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Are you with me so far? Now let's fast forward to October 2020, just before the presidential election. At the time, Trump allies had been working for months trying to sell a story to the nation's press. Unfortunately, nobody would take it. Finally, feeling panicked that the story might never appear—and having run out of alternatives—Rudy Giuliani offered it to the New York Post and they agreed to publish it.

The story turned out to be bizarre in several ways. First, the lead reporter who worked on it refused to allow his byline to be used. He just didn't feel the story was credible. Second, the story was all about Hunter Biden and was based on a mysterious hard drive that was allegedly full of his emails.

But where did the hard drive come from? The Post explained that an unknown customer had dropped off a broken laptop for repair at a shop in Delaware. It was never picked up and apparently the customer never even left his name so the shop owner could contact him. Very peculiar. Eventually, for reasons that are unclear, the shop owner gave the laptop to the FBI, but first he made a copy of the hard drive, which—again, for unclear reasons—he turned over to Giuliani's lawyer.

This is . . . a very sketchy story at best. But that's the story they had, so that's the story the Post published. The rest of the media remained reluctant to publish anything because they couldn't verify the whole story no matter how hard they tried. The problem was that Giuliani resolutely refused to turn over a copy of the hard drive, which made it impossible to forensically analyze it, and without that there was nothing to go on. Maybe it was a fake. Maybe it was a Russian plant. In any case, why on earth would the guy who wants the story publicized refuse to make the hard drive available to reporters?

While the rest of the media pondered this and tried to follow up the laptop story, executives at Twitter made an even more momentous decision. They went beyond merely declining to follow up the Post story. They decided to ban anyone on Twitter from even linking to the Post story.

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Finally! We're now up to the present day and the eye of Sauron turns away from Hunter Biden and squarely onto Twitter, which was recently acquired by tycoon/showman Elon Musk. And Musk's supporters wanted answers. Why did Twitter ban links to the Post story? Were they in the tank for Hunter Biden? Currying favor with the Joe Biden campaign? Trying to do anything they could to hurt Donald Trump?

So Musk announced that, by God, he was going to get to the bottom of the whole sordid affair. He hired Matt Taibbi, a muckraking but hard-to-describe journalist, to investigate and gave him access to all of Twitter's internal emails and chat logs from around the time the decision was made. Taibbi dived in, and on Friday published his findings in the form of a long tweet thread.

So what bombshells did Taibbi expose during his tweet-by-tweet unveiling on Friday afternoon? Would you believe me if I said none?

Probably not, so let's go through what Taibbi found:

• People sometimes ask Twitter to remove tweets.
• In particular, presidential campaigns do this.
• In particular particular, Joe Biden's campaign periodically asked Twitter to remove some tweets. Taibbi has a screen shot of one of the emails they sent.
• In that case, the tweets turned out to be nude pictures of Hunter Biden. Twitter agreed to remove them because they were basically revenge porn, which Twitter doesn't allow.
• When the Post story came out, Twitter execs engaged in a fairly normal, low-key conversation about what they should do. For various and obvious reasons, they thought the whole thing looked like a ratfuck and was quite possibly based on hacked material, which violated their rules.
• So they banned links to the Post story. Then they spent the next day tying themselves in knots over whether they had done the right thing. Within 24 hours they changed their mind and rescinded the ban.
• Neither the FBI nor the Biden campaign was involved in any of this.

Long story short, it turned out the material wasn't hacked and didn't violate Twitter's policies. The Twitter execs never displayed any kind of partisan bias here, but they did show some poor judgment. And even that's pretty understandable given the plain and obviously fishy nature of the Post story.

On a partisan note, I'll add that this whole thing was obviously an attempt to recreate the Great Comey Letter scandal of 2016, when a last minute bombshell about Hillary Clinton's emails sank her chances to beat Donald Trump. The Trumpies desperately wanted to replicate that stunning, last-minute victory, something that Rudy Giuliani all but admitted on national TV. The national press was keenly aware of all this, which makes it hardly surprising that they were reluctant to give the story much oxygen.

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And where are we with the Hunter laptop story today? Same as always, I'd say. Most of the juicy details—drug use, dick pics, money problems, 10% for the "big guy," etc.—have been public for a long time. Hunter has been under investigation for tax problems for a few years, and charges might drop soon. But even if they do, there's simply never been anything implicating Joe Biden in any of it.

There still isn't, but Republicans have announced that they plan to hold Benghazi-style hearings about the Hunter Biden laptop as soon as they take over the House in January. Once again, they're trying to relive past triumphs because they have nothing else on tap. Good luck to them.

According to the 2022 Sight & Sound poll, here are the two best films of each decade from the past century:

• 1920s: Man With a Movie Camera (#9), Sunrise: A Song of Two Humans (#11)
• 1930s: The Rules of the Game (#13), L'Atalante (#34)
• 1940s: Citizen Kane (#3), Meshes of the Afternoon (#16)
• 1950s: Vertigo (#2), Tokyo Story (#4)
• 1960s: 2001: A Space Odyssey (#6), Cléo from 5 to 7 (#14)
• 1970s: Jeanne Dielman (#1), The Godfather (#12)
• 1980s: Close-up (#17), Do the Right Thing (#24)
• 1990s: Beau travail (#7), The Piano (#50)
• 2000s: In the Mood for Love (#5), Mulholland Drive (#8)
• 2010s: Portrait of a Lady on Fire (#30), Moonlight (#60)

The 1950s appear to be the best film decade of all time—so good that even the #10 film of all time can't break into its top two. The 1930s, by contrast, were surprisingly unloved.

I was muddling around in Sight & Sound's latest edition of their 100 Best Films of All Time poll, and I got curious about which director seems to be the critics' favorite. It turns out there are five with more than two movies on the list:

1. Alfred Hitchcock
   Vertigo, Psycho, Rear Window, North by Northwest
2. Jean Luc Godard
   Breathless, Contempt, Pierrot le fou, Histoire(s) du cinéma
   .
3. Andrei Tarkovsky
   Mirror, Stalker, Andrei Rublev
4. Billy Wilder
   Sunset Boulevard, Some Like it Hot, The Apartment
5. Stanley Kubrick
   2001: A Space Odyssey, Barry Lyndon, The Shining

All four of Hitchcock's winners were made within a period of six years. Kubrick would be one of the select group of directors with four films on the list if Dr. Strangelove had made it. It's odd that it didn't, especially since it made the Directors' List at #46. However, Kubrick is the only director whose winners span three decades, and 2001: A Space Odyssey is #1 on the Directors' List.

I want to emphasize something that I mentioned in passing yesterday. Here is employment measured two different ways:

The orange line is the usual payroll employment number that we see every month. It tells us that we've created 2.5 million new jobs since March.

The blue line is the employment level. It's a broader measure, and on a month-to-month basis it's less accurate. Over eight months, however, it's plenty accurate and it shows literally zero job growth since March.

Maybe this is just some kind of weird fluke and it doesn't mean anything. But every month since March it's continued to show no employment growth. And the JOLTS hiring data turned downward at the same time:

So: have we really created 2.5 million new jobs since March? I'm not sure I believe that.

I guess. I'm not feeling very sportsmanlike right now. I mean, why did Lincoln Riley keep Caleb Williams in the game til the very end? He shouldn't have taken a snap after about five minutes into the third quarter. And did someone put petroleum jelly on our defense's gloves? Alex Grinch has some questions to answer.

Better luck next year, guys. In the meantime, here is Charlie watching the game with us during happier times. Then Charlie left and Utah outscored us 44-7 during the rest of the game. Obviously he knew what was coming.

Here is Hilbert walking purposefully toward the camera. The little curl at the top of his tail means he's feeling especially sociable, and indeed he was. When he reached us he immediately started circling around and then flopped onto the ground to get a tummy rub, purring and drooling the whole time.

He only drools when he's really, really happy. So he must have been pretty happy.

Is remote work at high levels here to stay? My guess has been that it isn't, though obviously it was a previously growing trend that was bound to get a tailwind from the pandemic.

It's still too early to draw any firm conclusions, but I figured it was time to mark my views to market and take a look at where we are now—or try to, anyway, since this is no easy task. First up, here's my best estimate of the percentage of workers who primarily work remotely:

This is very rough since no one was much interested in this question before the pandemic and data has been spotty during and after the pandemic. Question wording is also critical. Most of this data is from the Census Bureau's American Community Survey (here and here), where it's extrapolated from commuting rates. But there was no ACS in 2020, so I interpolated a Gallup poll which suggested twice as many people worked from home in 2020 compared to 2021. Finally, for 2022, I used the latest Pulse Household Survey from the Census Bureau, which asks directly about working from home.

This is obviously complicated and possibly wrong since these numbers aren't entirely comparable, but I think they're about as close to accurate as we can get at the moment.

As the chart shows, working remotely has come down a lot since its pandemic peak, mostly for obvious reasons. But there's also this from LinkedIn:

This chart suggests that aside from the slowdown in COVID, the decline in remote work is largely due to employers getting tired of it. If you invert the chart data you get the number of applications per open job, which until mid-2021 was about the same for remote and non-remote jobs. Since then things have diverged dramatically: employers get a lot more applications for remote work (two for every job) than for each non-remote job (half an application per job). This tells us that workers remain eager for remote jobs, but it turns out that employers have decreased the number of remote jobs they offer anyway (from 17% of all job openings at the start of the year to 14% today). Employers want their workers in the office.

Next up is another marker of working in an office rather than from home. It's the vacancy rate of office space:

This might surprise you, but vacancy rates change slowly thanks to long-term lease agreements. Still, vacancy rates have recently come back down to nearly their rate before the pandemic. This wouldn't happen unless corporations have been actively re-signing leases in anticipation of getting their workforce back to the office fairly soon.

But this is just official vacancy rates. How much of this office space is actually being used? Here's an estimate from Moody's:

According to Moody's, the actual number of people using their offices plummeted from 95% pre-pandemic to around 15% after the pandemic hit. It has since risen to about 40%. This is progress, obviously, but still nowhere near 95%.

Finally, here are two charts with some interesting tidbits. First up is this survey from a recent Microsoft report on hybrid work:

It's not surprising that people are more likely to come into the office if they think their friends will be there. But what is (a little) surprising is that this motivation for office work is by far the strongest among young workers. Contrary to popular myth, young people are generally hard workers but they're also, by far, the ones who say they want to work remotely. Perhaps, though, this is really only true if they dislike their office and don't have many friends there?

Finally, here's an excerpt from a chart in a recent McKinsey report:

This is interesting because every single issue McKinsey polled produced more negative problems for remote work than in-person work. Some of these are odd: for example, why would physical health issues be worse for those working from home? Ditto for a hostile work environment, unless you're stuck in a really bad marriage.

Regardless, what this shows is that, on average, a lot of workers understand already that there's a price to remote work. It's possible that this understanding will spread as remote work wears on. It's not the panacea that many people think it is.

As I said at the top, it's still too early to draw any firm conclusions from any of this. I continue to think that once things have shaken out, remote work will be more widespread than it was before the pandemic, but still has a ways to fall from today's numbers. I'd put my guess at 8-10% of the workforce.

In case you're interested in such things, Very Peri has only a few weeks left as Pantone's color of the year. It is being replaced in 2023 by Viva Magenta:

This is no ordinary red, either!

This year’s Color of The Year is powerful and empowering. It is a new animated red that revels in pure joy, encouraging experimentation and self-expression without restraint, an electrifying, and a boundaryless shade that is manifesting as a stand-out statement. PANTONE 18-1750 Viva Magenta welcomes anyone and everyone with the same verve for life and rebellious spirit. It is a color that is audacious, full of wit and inclusive of all.

Inclusive of all! Here's part of the official statement from Leatrice Eiseman, executive director of the Pantone Color Institute:

In this age of technology, we look to draw inspiration from nature and what is real. PANTONE 18-1750 Viva Magenta descends from the red family, and is inspired by the red of cochineal, one of the most precious dyes belonging to the natural dye family as well as one of the strongest and brightest the world has known.

Rooted in the primordial, PANTONE 18-1750 Viva Magenta reconnects us to original matter. Invoking the forces of nature, PANTONE 18-1750 Viva Magenta galvanizes our spirit, helping us to build our inner strength.

Whew. That's a lot to ask of one color, and I hope Viva Magenta is up to it.

The American economy gained 263,000 jobs last month. We need 90,000 new jobs just to keep up with population growth, which means that net job growth clocked in at 173,000 jobs. The headline unemployment rate remained at 3.7%.

As usual these days, the biggest gains were in leisure and hospitality. The biggest losses were in retail (remember that this data is seasonally adjusted, so holiday season hiring is already accounted for). Transportation and trucking were down yet again, a worrisome trend.

Overall this is a respectable report, but the bad news is that although unemployment went down a little, so did employment. That's better than last month, when employment went down a lot and unemployment went up, but in both cases it's mostly arithmetic keeping the headline unemployment number down, not a robust economy. Here's the employment level:

This measures something a little different than the jobs report, but they're still comparable when you look at month-to-month changes. As you can see, the employment level has been dead flat since March and was down 138,000 compared to last month.

In earnings news, blue-collar wages were up 4.3% on an annualized basis. Adjusted for inflation this comes out to -1.1%.

A few days ago I was thinking about writing a super-short explainer about the whole FTX affair, but then I got sick and never got around to it. But I'm better now! Plus Atrios linked today to an article that added, in the author's words, a "smoking bazooka" to the whole affair. So let's do it.

1. In 2017 Sam Bankman-Fried (universally referred to as SBF) started up Alameda Research, a hedge fund with a focus on crypto. Alameda does what every hedge fund does: takes money from clients and then buys and sells stuff in order to make big profits for itself and its clients.
2. In 2019 SBF founded FTX, a cyptocurrency derivatives exchange. Like all exchanges, it was basically a broker for investors who wanted to buy crypto products. One investor, for example, was Alameda Research. Unlike hedge funds, however, exchanges don't gamble with customer funds; they generally make money by charging set fees for every transaction they enable.
3. In 2021 SBF moved both Alameda and FTX to the Bahamas and a few months later stepped down as CEO of Alameda, leaving it in the hands of Sam Trabucco and Caroline Ellison. However, executives from both companies shared a $30 million penthouse suite in Nassau, and SBF was apparently romantically involved with Ellison.
4. Sometime around 2021—the date is vague—Alameda began borrowing huge amounts of money from FTX. This was client money that was held by FTX and was not supposed to be used for trading. Alameda's collateral for the loans was a crypto token invented by FTX but not really traded anywhere. It was notionally worth $10 billion but in reality was worth roughly nothing.
5. At about the same time, Alameda loaned $4.1 billion to several FTX executives, including about $3 billion to SBF alone. This is the smoking bazooka.
6. In addition, Alameda enjoyed special exemptions from FTX's usual trading rules. This allowed it to lose billions of dollars before fessing up to FTX—though it's likely everyone at FTX knew about this anyway but kept quiet because they didn't want to jeopardize the loans they were getting from Alameda.
7. In November 2022 Alameda's eventual $10 billion in losses (loans to FTX executives + losses from bad trades) came to light. Since these were essentially losses of FTX client money, FTX clients naturally got worried about whether their money still existed. So they all started asking for withdrawals which FTX was unable to honor.
8. On November 11 FTX and Alameda filed for bankruptcy.

There's plenty more background stuff, the juiciest of which involves SBF's involvement in "effective altruism" and his huge donations to Democratic politicians¹ and various worthy causes. There's also a vast amount of chaff and irrelevant detail that's being flung around—both deliberately and otherwise—to disguise what really happened. It was just mismanagement! SBF was in over his head! Look at his work combating parasitic worms in Niger!

But it ain't so. SBF's motives are a little opaque, but it was all just a fraud for at least the past couple of years. Why else do you think everyone from both FTX and Alameda continues to hide out in the Bahamas instead of coming home to answer the FBI's questions straightforwardly?

¹Although SBF says that actually he donated equally to both Democratic and Republican pols, but kept the Republican donations dark in order not to anger liberals.