March Flooding (of the Switchboard)

From the Foster City Police Dept. Facebook page on March 29th:

The FCPD is aware of the large male turkey that has been wandering around Foster City. The turkey is a wild animal. We are asking the community to please refrain from calling the FCPD regarding the turkey.

We appreciate the diligence of our residents.

Thank you, the FCPD

My guess is that "please refrain from calling the FCPD" was the original last sentence, until the PR spokesperson added "We appreciate the diligence of our residents" to mellow the harsh.

There are still Bay Area communities that don't have floods, wildfires, homelessness and rampant crime, and I'm lucky to be living in one that inundates the police switchboard with reports about a loose turkey.

Wallet Impact Fee

The Hawaiian legislature is working on yet another ploy to soak tourists:

A “visitor impact fee” bill that would require any nonresident aged 15 or older to pay for an annual license to visit a state park, beach, forest, hiking trail or other natural area is still alive.

Most tourists will likely pay the $50 for the "annual license," and the overwhelming majority will not use it much since few can afford to visit the Islands more than once a year.

Every attraction which can be easily fenced off, for example Hanauma Bay and Waimea Falls, already charges a steep admissions fee to non-residents, and a general "visitor impact fee" is obviously just a pretext. Existing fees aren't even spent consistently on site maintenance:

Hapuna Beach State Recreation Area has collected more than $1.5 million in fees from visitors, but the fees have not been reinvested into the park.

It's a race between my old home State of Hawaii and my new home State of California to see which can dream up new ways to tax visitors. And they wonder why the convention business is down.

Note: after the break is the full article.

It Started with Racism, but Ending it Would be Racism

Cardi B (CBC photo)

The bottom story of last year: the decade-long cultural obsession with big butts was ending.

Since admiration of large backsides had racist origins, ending this trend should have been a good thing, but alas, dear reader, you are wrong:

After almost a decade of our cultural obsession with twerking, peach emojis and Brazilian butt lifts, 2022 apparently marked the end of the era of the big booty.

On TikTok, users speculated that Kim Kardashian had her butt implants removed (a procedure she never confirmed having in the first place). Cardi B recently shared that she had her own implants removed and cautioned others against getting butt injections. And the New York Post ran a headline that said "Bye-bye booty" and declared that heroin chic was back.

Some critics swiftly shot back, saying that women's bodies should not be reduced to trends. They also pointed out the inherent racism in declaring that a particular physical attribute that many women of colour have naturally is no longer desirable.

If men say that they like a certain physical attribute of women, they're being sexist or racist or both. If they say they don't like it, they're still being sexist and racist.

Guys, keep your traps shut. This advice is no guarantee you'll stay out of trouble, but it will help.

Cold Logic

(Martha Stewart photo)

Your humble blogger always hand-washes dishes with hot water. There's no question that hot, soapy water cuts oils much better than cold. Also, more bacteria are killed, and running the hot water while rinsing reduces grease build-up in the drain.

But heated water is not better than cold when it comes to washing clothes, according to Tide experts:

P&G has sold a line of Tide designed for washing in cold water for almost two decades and still sells that product, called Tide Plus Coldwater Clean. The latest campaign pitches the overall brand as being effective in cold water. The company says it has reformulated Tide over the years to be more effective...

P&G says that cleaning clothes in cold water could save $150 a year on a household’s energy bill, or somewhat less with the high-efficiency washing machines used in about 70% of U.S. households.

A Clorox scientist says warm is more effective than cold:

[Mary Gagliardi] says warmer water is generally the best way to ensure clean clothes, especially in colder climates. Ms. Gagliardi says manufacturers are able to test garment-washing in water as warm as 85 degrees Fahrenheit and define it as a cold-water wash according to levels set by standards organization ASTM International. A warm cycle is around 100 degrees, while hot is 122 degrees, she says.

“If you are in Minnesota right now and your cold-water temperature is 45 degrees, some people are washing in temperatures barely above freezing,” she says. “You are not going to get any cleaning done in 49 degrees.”

I'll stick with what I learned at the kitchen sink when it comes to washing clothes.

Call me clothes-minded, but warm is better.

Fast Track to the Poorhouse

Southbound 101 has a toll lane 5 miles from our house..

FasTrak toll lanes have appeared on the Bay Area's busiest freeways, but the technology isn't up to speed. Penalties and interest pile up on drivers' unpaid balances, and thousands of cars have been put on "registration hold": [bold added]

Unpaid toll debts are surging since the Bay Area has eliminated cash payments on bridges and unfurled a vast web of express lanes.

Last June, the Bay Area Toll Authority, which oversees the seven state-owned bridges, said it would place over 550,000 drivers’ annual vehicle registration on hold over unsettled debts – with the bulk of registration holds starting this July. The decision ended a pandemic era of lax enforcement and started a renewed crackdown as the toll authority uses DMV holds to recoup tens of millions of dollars in tolls and even more in fines and fees.

One lady, Brenda Angulo, who is not blameless to be sure, ran up late payment penalties more than fourteen times the original charges:

The total Angulo owed to multiple express lane and bridge toll agencies was far worse, climbing to $43,590 made up mostly of late payment fees and other fines, tacked on to her original charges of about $3,000.

...Angulo’s debt underscores a complicated payment system for the growing network of Bay Area express lanes, which charge variable fees depending on the time of day and the length of a driver’s commute. Those lanes can easily whisk cars past traffic jams at a reasonable cost. But they can also lead to financial devastation for those who ignore — or don’t appreciate — how overdue toll debts can explode with late fees.

If a private bill collector behaved as the government does--assess penalties of $40,000 on an original bill of $3,000 and hold hostage a person's method of getting to her job--that collector would be figuratively tarred and feathered on social media as well as in newspapers and TV.

We voted for this draconian system that created a welter of toll roads on top of having the second-highest gas taxes in the nation. If we want someone to blame, we just have to look in the mirror.

Signs of Life

The bulb is on a window sill

The flowers opened on the amaryllis bulb shortly after Christmas. When the petals faded, we pinched off the flowers before they began to seed.

To our surprise (it was our first amaryllis, a gift), the bulb grew another stalk and bloomed again, two weeks in advance of Easter.

Green is everywhere after the heavy rains.

Most people have doffed their masks.

Signs of new life are everywhere.

Buckling Road

We're used to seeing roads rendered impassable by mudslides or sinkholes, but this is the first time your humble blogger has seen mudslides buckle the road like an earthquake:

A mudslide triggered by storms that rocked the Bay Area this week caused some extreme warping and buckling to a road in Novato, officials said.

The slip caused "significant erosion" on the hillside and uncovered a PG&E gas line and possibly created pressure on the North Marin Water District aqueduct that runs from Sonoma County to Marin, the county said in a statement Thursday.

Over the past decade we've learned that we are far from safe from Mother Nature, which is full of dangerous surprises.

Gordon Moore

Leaders of Intel in 1978:  Andy Grove,
Robert Noyce, and Gordon Moore (Chron)

He was the last of the founding fathers of Silicon Valley. Gordon Moore died at the age of 94. He achieved renown for starting Intel, but in the popular consciousness he became famous as the author of Moore's Law: [bold added]

A native San Franciscan, Moore wrote an article for the April 19, 1965, edition of Electronics magazine describing how the number of transistors that could be placed on an integrated circuit had been doubling every two years. His observation that the trend would continue became known as “Moore’s Law.”

Forecasters are lauded if their predictions pan out in the near-term; Moore's Law, to even Gordon Moore's astonishment, has held for over 50 years.

Consumers counted on its continued applicability; if they could live with their computers, television, telephone, etc. for the time being, they knew that a better and cheaper model was coming out next year.

Gordon Moore was a key member of the first generation of tech leaders who brought incalculable riches to the world. R.I.P.

It Won't Make Your Heart Beat Faster

I use the Keurig most days. Time permitting, I
steep the grounds in the "French press" mug.

Coffee is a miracle substance. Its taste is pleasurable, it has documented health benefits, and its stimulative effects are well known (they were the original reason your humble blogger began drinking coffee in the first place.) However, the caffeine in coffee is also a concern for people who are worried about heart problems.

A recent study may reduce that worry.

Coffee consumption doesn’t increase abnormal heartbeats associated with an increased risk of the most common heart rhythm disturbance [atrial fibrillation], according to a new study published Wednesday in the New England Journal of Medicine. Researchers monitored the hearts, activity and sleep of 100 people without underlying heart conditions over two weeks. They found that the key cardiac risk marker remained about the same for coffee drinkers as it did for non-coffee drinkers.

The coffee drinkers in the study did sleep an average of 35 minutes per night less than non-coffee drinkers, a finding consistent with my own experience. After twelve noon I drink decaf.

Dr. Larry Chinitz, director of the Heart Rhythm Center and co-lead of NYU Langone Heart, said if people are looking to improve their heart health, drinking coffee or staying away from it isn’t likely to be the most critical factor.

He said the kind of lifestyle choices that most people need to make to prevent and control cardiac conditions are much harder than picking up or avoiding that daily cup of coffee.

“People ignore exercise, diet and sleep patterns, and those may be the greatest contributors to cardiovascular disease,” he said.

The Taxman Cometh for Them, Too

American influencers should be grateful they only have
the IRS to deal with. Influencer Viya was ordered to pay
1.34 billion yuan ($210 million) in back taxes, late fees
and fines to Chinese authorities. (Time - 12/21/21)

I sympathize with people's tax problems (unless they are committing fraud) but I have a hard time getting worked up over this one:

If an influencer receives a free, unsolicited product from a company, and there’s no agreement to promote it, do they still have to pay income tax?

It all boils down to intent. Accountants will want to know more about the influencer’s relationship to the brand, or how many free items they get, or how they use them.

“The way I see it, it’s all income,” said Lynne Fuentes, managing partner at Fuentes & Angel CPAs and president of the New York State Society of CPAs. “And influencers should be keeping track of it.”

Accountants said the more transparent influencers are with their tax preparers, the easier it is to figure out what’s taxable and what’s not.

"Social influencers" seek fame in order to attract money and merchandise from businesses, who hope that the influencers' use of their wares will induce their followers to buy them.

Successful influencers will get unsolicited free merch, maybe a lot of it. Setting up a system to administer the stuff was a foreseeable consequence of success, and influencers should just deal with it.

Note: Actors, musicians, athletes, etc., for whom becoming an influencer was a secondary consequence of what made them famous have had to struggle with this gift-merch issue long before the internet was invented. For them I do have sympathy.

There's Still Plenty of Dough in Silicon Valley

One-hundred-twenty-five dollars and 90 cents?
If it was $125 per pound I might have bought some.

After last year's opening crowds had checked out its price-to-value proposition, I wasn't optimistic about Eataly's long-term chances.

That is why I didn't go into marketing: nine months later it was still going strong.

On Sunday afternoon we ordered sandwiches, pizza slices, and desserts from the first-floor vendors and shopped for imported foodstuffs on the third floor.

All told, we got out of there having spent less than $200, and no, we didn't buy any Wagyu beef.

[Update - 10PM: Valley Fair in San Jose adds merchants, hits record sales and visits]

Westfield Valley Fair in San Jose has begun to attract visitors and retail activity at levels that top the big shopping mall’s activity even prior to the outbreak of the coronavirus.

After the opening of the popular Eataly Italian food hall, the retail complex is preparing for the opening of other high-profile merchants.

Decarbonising the Gut

(Image from katygastro.com)

"Good" gut bacteria can multiply faster by starving them of carbon.

The Yale team...found that the beneficial gut bacterium Bacteroides thetaiotaomicron responded to starvation for carbon — a main building block for all cells — by sequestering a portion of the molecules for an essential transcription factor within a membrane-less compartment...

An awareness of these membrane-less compartments actually goes back a hundred years, [Yale geneticist Eduardo] Groisman said. [Postdoctoral fellow Aimilia] Krypotou’s key insight, he said, was to deduce novel properties for the bacterial transcription factor — termed Rho — based on the extra region. Sequestration of the transcription factor takes place by a process known as liquid-liquid phase separation, a ubiquitous phenomenon present in a wide variety of cells including those of humans.

My college roommates who were going to medical school said that molecular biology was their toughest course, and the preceding paragraph is an example of the concepts they had to deal with. Far be it from this non-STEM major to understand bacterial transcription and membrane-less compartments, but I am able to figure out from the article that if one is starving in general, then one is starving for carbon.

The bottom line is that this research provides yet another reason--gut health--to go on a fasting diet.

The Father Brother Encourages

Under an exchange program with the Church of Our Savior in Mill Valley, its rector, the Reverend Brother Richard Edward Elmer, was our priest today.

Father Elmer, or as he jokingly referred to himself "Father Brother," is a member of the Brotherhood of Saint Gregory (BSG), a community of friars in the Episcopal Church. The BSG calls its members to service and prayer, and because it is the season of Lent, Father Elmer focused on the "Daily Office", that is, the services of Morning, Noonday, Evening, and Compline prayer, all of which may be found in the 1979 Book of Common Prayer.

Pre-1979, Episcopal services alternated between Holy Communion and Morning Prayer. Beginning in 1979 Holy Communion has been the norm nearly every Sunday. The morning prayer service, in fact the BCP itself, is used infrequently in the modern Episcopal Church.

Father Elmer encouraged us to engage with as many parts of the Daily Office that we can. If we don't have a prayer book at home, the Daily Office may conveniently be found online.

His words struck a chord. The time may be right to give it a try.

Catalyzing the Decision

Our Asian-American nephew is departing for Yokohama after living his entire life in the U.S. His wife, a Japanese national, and their two children have already moved. He is prepping their San Jose house for sale and wrapping up projects for work.

For his birthday dinner we took him to Gyu-Kaku, a Japanese barbecue restaurant in San Mateo. It was a bittersweet celebration, and there was laughter and a few tears while the beer flowed and a variety of meats were grilled.

The night ended happily with promises to stay in touch and even make a serious attempt to visit each other.

The next day he reported a real downer: the catalytic converter was stolen from his Prius after he returned home. The wait for a replacement is at least three months and the cost is at least $2,000, and the schedule for his remaining months in the Bay Area has been severely disrupted.

The silver lining is that the theft of his converter reinforces the rightness of his move. Japan is a better place to raise his kids (who are fluent in both Japanese and English) and safer for the whole family.

Alison Gerken and Amanda
Arguile (Chron photo)

In general the majority of people who do leave the Bay Area are happy they did so. A minority have second thoughts, and a few regret the decision so much that they move back. One couple returned to San Francisco, the experience was the opposite of their rose-colored memories, and they're leaving again. [bold added]

Alison Gerken and her wife, Amanda Arguile, who rejoiced when they got jobs in the veterinary field, bringing them back to San Francisco from Florida and its miserable anti-LGBTQ politics last fall after a three-year break. They missed the freedom, the weather, the beauty, the quirky small businesses and the easy road trips to the redwoods, Napa, Tahoe and Yosemite. They missed their home.

Then reality struck in the form of a swiped catalytic converter, a theft that ended up revealing a surprising amount about their new, old city. The saga that followed the crime reminded them of what’s not working in San Francisco — and convinced them to leave for good...

She was reluctant to drive the car on the neighborhood’s steep hills and ran inside to call the police non-emergency number to report the theft and file a police report online. By the time she got back to her car, it had a street sweeping ticket — one she felt sure would be dismissed if she explained what happened. It wasn’t.

Gerken had the right to further contest the parking ticket at a hearing, but figured the outcome wouldn’t change and her time was more valuable than the $87 fine. So she paid it.

Meanwhile, she learned from the local Toyota dealership that, because so many Prius owners were seeking catalytic converter replacements, the waiting list was months long. [The Chronicle reporter] called San Francisco Toyota on Tuesday morning to ask how long it would take to get a catalytic converter for a 2013 Prius, and the parts department worker who answered the phone let out a long whistle. “Five or six months,” he said...

Finally, she gave up. A few weeks ago, she had Cash for Cars haul it away in exchange for $2,400, far less than its value before the theft...Gerken received six parking tickets and has paid four of them so far.

This is the reality of living in San Francisco:

“We couldn’t wait to leave Florida,” Gerken said. “But coming back, it was this abrupt holy s—. This is bad. We kind of forgot what it was like.”

San Francisco is just as expensive as ever, they said, but the streets are far less lively. Some of their favorite small businesses have closed and are boarded up with plywood. More of their middle-income friends have been priced out, and they have co-workers commuting from as far as Santa Rosa and Oakley.

The streets seem dirtier, they said, and open-air drug dealing seems more prevalent with cops just passing by. They see bodies sprawled on the street and wonder if they should stop to make sure the person is OK. Usually, Gerken said, she keeps walking, but feels awful about it.

Catalytic-converter theft is rampant, there's next to nothing done to stem the tide, and victims like Alison Gerken pile up fines until there's no alternative but to scrap their cars.

Every individual has his breaking point, and life in the Bay Area produces more than its share.

Pig Butchering on LinkedIn

My nine most recent invitations from LinkedIn

Lately I've been receiving regular invitations to connect on LinkedIn. None of these individuals are known to me, nor do we have any shared organizations (schools, businesses) in our histories.

They do have attributes in common with each other: young, female, attractive, and Asian, mostly Chinese and Chinese-American. Yes, these are honey traps. [bold added]

The profile of “Mai Linzheng” is actually one of the millions of fraudulent pages set up on LinkedIn to lure users into scams, often involving cryptocurrency investments and targeting people of Chinese descent all over the world. Scammers like Mai claim affiliation with prestigious schools and companies to boost their credibility before connecting with other users, building a relationship, and laying a financial trap...

This wasn’t the first time [Financial Times columnist Jeff] Li had noticed what he thought were fake LinkedIn accounts. Starting in late 2021, he says, he started seeing profiles with less than a few dozen connections—rare for real LinkedIn users—and with profile photos that were always good-looking men and women, likely stolen from other websites. Most appeared to be of Chinese ethnicity and to live in the United States or Canada.

Scammers involved in this practice, which started as early as 2017 in China, create fake profiles on social media sites or dating sites, connect with victims, build virtual and often romantic relationships, and eventually persuade the victims to transfer over their assets. The scammers themselves came up with the name “pig butchering,” comparing the intensive and long-term process of gaining victims’ trust to raising a pig for slaughter.

Guys, know yourself: if a pretty girl strikes up a conversation with you, it's not because she's interested in a romantic relationship. The saying on Wall Street applies to social media: "Bulls make money, bears make money, pigs get slaughtered."

Absolute Power Corrupts Absolutely

2020: in front of four EV's Gavin Newsom bans the sale of gas-powered cars by 2035.

Gavin Newsom's war against fossil fuels has been waged across several fronts, including

Banning the sale of new gasoline-powered vehicles starting in 2035;

Imposing "price gouging" penalties on the oil and gas industry;

Prohibiting improvements to and retrofitting of pre-existing wells around which communities have sprung.

Yesterday the Governor withdrew the price-gouging legislation in favor of setting up an Executive Branch "watchdog": [bold added]

On Wednesday, the governor’s office said it is proposing legislation to create a watchdog body, backed by subpoena powers, within the California Energy Commission to investigate the state’s oil refinery market and gas prices. Based on findings from the watchdog entity, the commission could issue penalties at its discretion on the state’s oil refiners, according to advisers in the governor’s office.

IMHO, the new proposal is worse than the one it replaced. "Penalties at its discretion" is an invitation to corruption, i.e., payments to the right people will get fines waived since there don't seem to be objective criteria about where the penalty lines are.

It's also clear that a persistent price premium must have an explanation other than capitalist greed, which, if that were the case, would exist peculiarly only in California. My hypothesis: gasoline producers have only 12 years to recover their investment in California plant and equipment, after which the market for gasoline will dry up. In the rest of the country refiners can count on a useful life of 20 years or longer, thereby lowering the prices they require to turn a profit.

Come summer hellfires or winter high waters, the Progressives in charge of the one-party State are marching California to their utopian destination, while making sure that they're getting their cut along the way.

That's Amore

It's easy as π (3.14159265...) to calculate
the square inches of the 16" wheel

In honor of Pi day (3.14.23) we ordered pizza last night. Our favorite joint was closed on Tuesdays, so we ordered take-out from Velo City Pizza. (The name isn't as clever as the owner thinks.)

The #2 special--sausage, pepperoni, mushrooms, bell peppers, black olives--was delish. The crust was thin and crisp, the cheese and tomatoes didn't overwhelm, and the spicing was delicately complex.

The verdict was unanimous: we have a new favorite pizza place.

When you take the night off, that gives customers a chance to sample the competition.

English Breakfast: Good, But Once Was Plenty

On my first business trip to London in the 1990's the stereotype about English food ("bland, soggy, overcooked, and visually unappealing") I found generally true. But I was pleasantly surprised by the English breakfast.

The full English breakfast has been a staple of the nation’s diet for hundreds of years, but no one can quite agree on what should be included—or left out...

Almost everyone agrees sausages and bacon belong on the plate, but after that things get more complicated. What about mushrooms, fried bread or grilled tomatoes? Should eggs be fried, scrambled or poached? Hasn’t anyone heard of vegetables?

The breakfast that was served to me had fried tomatoes and beans but no blood sausage. In a bow to American sensibilities the restaurant offered, and I gratefully accepted, coffee. (I'd rather have eaten the blood sausage than drunk the abominable tea-with-milk-and-sugar.)

The English breakfast was expensive--£12, when the exchange rate was about $1.60 / £1 and it was 30 years ago--and the travel policy covered it. Given the quantity of food, I refrained from having another "full English" and contented myself with a croissant for breakfast the rest of the trip. It was good, but once was plenty.

The Forever Bond

The business news through the weekend has been all about bank failures and their effect on interest rates and the economy. At the heart of the problem is the inability of banks to pay off deposits when customers show up during a bank run.

Bank deposits are "hot money" because they are liabilities that can be redeemed at any time. Silicon Valley Bank and Signature Bank failed because they didn't have enough cash on hand (or could get cash quickly enough from asset sales or borrowings from other institutions).

"When this bond was written on vellum in 1648,...
its wide margins were empty. Over many years,
the margins were covered with the records of the
interest returned to its owner."

At one end of the duration spectrum are bank deposits. At the other is a 375-year-old “perpetual” Dutch bond.

One of Yale’s most intriguing investments is a 375-year-old “perpetual” Dutch bond that still pays interest. It was issued by the Hoogheemraadschap Lekdijk Bovendams, a semi-public organization charged with maintaining the dike along the Lek river in the Netherlands.

The water authority was founded in 1323; its successor still operates today, in the province of Utrecht, as the Stichtse Rijnlanden.

The bond is a "bearer bond," which is a key plot point of many a murder-mystery novel:

The text makes clear that the bond was transferable, and payment was to be made to the bearer of the security, not to someone listed in a registry.

However, what may dissuade someone from acquiring the instrument via foul means is that the bearer must show up in person to receive the interest. Also, the amount at stake is not enough to quit one's day job:

Beinecke curator Timothy Young presented the allonge in 2015 at the Stichtse Rijnlanden offices to collect the subsequent twelve years of payments. The latter amounted to the equivalent of $153.

The water company paid its obligation, even when the Netherlands were annexed by France in 1810. When the debt was issued in 1648, the payment of same was viewed as a moral imperative. It's nice to know that some people and cultures still subscribe to that principle.

Believe the Science

According to the Babylon Bee, the science is settled: go to church!

Presiding Bishop Michael Curry looks like
he's having fun (Florida Times-Union)

WORLD - According to a breaking news report, you should go to church, you insolent heathen. The report, released this morning, which is Sunday, the day people go to church, indicated that you are still at home playing on your smartphone instead of getting your family ready to go mingle with a bunch of weirdos, eat some stale donuts, and enter the presence of the Almighty God to worship Him and learn from His Word. "The data is clear, and the science has spoken," said one expert who helped run the study underlying the report. "You are not at church, and it is the Lord's Day, and you should be at church. Therefore, if you want to follow the data, you need to get your butt out of bed right now and get your family ready to worship Jesus." Well, folks, looks like the science is settled: go to church!

The above is probably fake news, the giveaway being that the Bee is a satyrical rag. The Bee's stories have been fact-checked and found to be untrue more frequently than stories in the mainstream media.

But I'll still go to church this Sunday.

Inevitable Deflation

There was a party at the house at the end, one of the few that has little kids.

The air pump was working from dawn to dusk. It had rained all week but today we only had a few drops. Were our neighbors lucky or smart?

After the fun came the inevitable deflation.

A truck came to haul the carcass away.

Everyone should sleep well tonight, though they have one hour less to do it.

Silicon Valley Bank Lent Long and Borrowed Short

Police at SVB HQ in Santa Clara (Mercury News)

The failure of Silicon Valley Bank today appears ("appears" because it's still early days) to be contained to the bank itself and does not foretell other failures in the banking sector.

However, the latter possibility affected the stock market, whose major indices were down between 1 and 2%. [bold added]

SVB Financial bought tens of billions of dollars of seemingly safe assets, primarily longer-term U.S. Treasurys and government-backed mortgage securities...These securities are at virtually no risk of defaulting. But they pay fixed interest rates for many years. That isn’t necessarily a problem, unless the bank suddenly needs to sell the securities. Because market interest rates have moved so much higher, those securities are suddenly worth less on the open market than they are valued at on the bank’s books. As a result, they could only be sold at a loss.

SVB’s unrealized losses on its securities portfolio at the end of 2022—or the gap between the cost of the investments and their fair value—jumped to more than $17 billion.

At the same time, SVB’s deposit inflows turned to outflows as its clients burned cash and stopped getting new funds from public offerings or fundraisings. Attracting new deposits also became far more expensive, with the rates demanded by savers increasing along with the Fed’s hikes. Deposits fell from nearly $200 billion at the end of March 2022 to $173 billion at year-end 2022.

The failure of SVB is symbolically meaningful because it puts an exclamation mark on the decline of the tech industry in California. SVB's customers are concentrated in tech, and the steep rise in interest rates over the past year has made risky investments in those customers much less attractive.

In California financial stress has been exacerbated by high taxes and regulations, which have caused high-profile companies like HP, Oracle, and Tesla to move out of State. It is easy to imagine that the run on California's premier tech bank is related to the exodus of businesses out of the State.

A negative number indicates the 1-year Treasury rate
is greater than the 10-year. (SF Federal Reserve)

The weekend hiatus provides time for cooler heads to prevail. According to the Journal article, SVB's problems seem to stem from lending long and borrowing short. That strategy produces regular profits, except for the infrequent occasions when the short rate exceeds the long. Duke University finance professor Campbell Harvey:

"If you lock your money up for a longer period of time, you almost always get a higher interest rate..."However, today, things are backwards - 10-year interest rates are far below short-term rates. This is known as an 'inverted yield curve.' In the past 50 years, we have seen seven inverted interest rate curves. Each one was followed by a recession."

Silicon Valley Bank bet that normal would continue. That bet proved disastrous when it kept having to refinance deposits and other short-term borrowings as rates climbed rapidly higher. Major banks are required to "stress test" for just such an eventuality; let's hope they didn't cut corners.

It Won't be a Chinese Century

1975: "Practicing family planning is conducive
to protecting the health of mothers and children"

China's one-child policy may have provided economic benefits over three decades, but it has turned out to be a long-term disaster: [bold added]

The Chinese family is about to undergo a radical and historically unprecedented transition. Extended kinship networks will atrophy nationwide, and the widespread experience of close blood relatives will disappear altogether for many. This is a delayed but inescapable consequence of China’s birth trends from the era of the notorious one-child policy (1980-2015). The withering of the Chinese family will make for new and unfamiliar problems, both for China’s people and its state. Policy makers in China and abroad have scarcely begun to think about the ramifications...

A “kin famine” will thus unfold unforgivingly over the next 30 years—starting now. As it intensifies, the Chinese family—the most important institution protecting Chinese people against adversity in bad times and helping them seize opportunity in good times—will increasingly falter in both these crucial functions.

By a grim twist of fate, China’s withering of the family is set to collide with a tsunami of new social need from the country’s huge elderly population, whose ranks will more than double between 2020 and 2050.... By 2050 living parents and in-laws will outnumber children for middle-aged Chinese men and women. Thus exigency may overturn basic familial arrangements that have long been taken for granted. The focus of the family in China will necessarily turn from the rearing of the young to the care of the old...

Owing to the surfeit of baby boys under the one-child policy and declining cohort sizes, growing numbers of men in decades ahead will enter old age without spouses or children—the traditional sources of support for the elderly. By our projections, by 2050, 18% of China’s men in their 60s will have no living descendants, twice the fraction today.

The thinning of family trees has significant societal implications:

China’s coming family revolution could easily conduce to a rise in personal risk aversion. Risk aversion may in turn dampen mobility, including migration. Migration is a risky act that requires knowledge of opportunities and trusted people who can help obtain them. Without the ability to stay on a cousin’s couch, so to speak, migration will become riskier, harder, and, almost certainly, rarer. Less migration means less urbanization, which means less growth—and possibly still more pessimism and risk aversion.

The change in Chinese family structure also promises political reverberations. If the waning of the family requires China to build a huge social welfare state over the coming generation, as we surmise it will, Beijing would have that much less wherewithal for influencing events abroad through economic diplomacy and defense policy.

Further, our simulations suggest that by 2050 at least half of China’s overall pool of male military-age manpower will be made up of only children. Any encounter by China’s security forces involving significant loss of life will presage lineage extinction for many Chinese families.

If China's hegemonic ambitions can be contained over the next decade, then the inexorable reality of its demographics will cause expansionist looking outward to become contractionist turning inward.

China is and will continue to be a great power, but it won't be a Chinese century.

Café noir

My first cup of coffee was loaded with cream and sugar to make it palatable, but I quickly went minimalist. Coffee, black, got me through dozens of all-nighters in college.

The 2+cup habit persisted throughout my working life, and the only reason I'm not 20 pounds more overweight is because I'm part of a dwindling minority who drink it black.

Starbucks history: no sugar, no milk

In a nation awash in Pistachio Cream Cold Brew and Iced Chocolate Almondmilk Shaken Espresso with Chestnut Praline Syrup, black-coffee drinkers like [Alex] Wicker are becoming a rare breed.

What lovers of straight black consider simple, easy-to-pour orders can wind up stuck behind a jam of customized, multipump concoctions, they said. Sometimes their pristine black joe is lightened with sugar or cream anyway. Some baristas seem bewildered by the concept of coffee taken plain.

Mr. Wicker said his purist take on coffee makes him feel like an outcast. “I don’t know a single person within my age range that enjoys drinking black coffee,” he said.

Coffee is loaded with antioxidants. Having a daily cuppa joe is a healthy habit, as long as the drinker foregoes dairy and sweeteners.

And coffee sans accoutrements is a lot cheaper, too.

Black is better.

There Goes the Neighborhood

The intersection by our house has been torn up since the beginning of the year. It's inconvenienced over a thousand residents who use the street as their main exit from Foster City.

The project didn't seem to be abnormally difficult. Ours is one of four intersections where traffic lights have been scheduled to be installed since 2018. I spoke to one of the workers before work started. He said the delay was caused by a shortage of electricians.

Even when the lights start operation (at the red arrow in the diagram), traffic will be slow. The green-arrowed intersection already has lights; located at the latter's four corners are an elementary school, an apartment building, a shopping center, and a pre-school. Two lights one block apart are a most unusual configuration for a sleepy suburb.

Some drivers will choose to cut through the shopping center, where they can avoid both lights on certain commonly traveled routes. Then the shopping center will put up "patrons only" signs at the entrance points. There goes the neighborhood.

Carpe Diem is Over-rated

The wind, rain, and sun are intense...at the same time.

With only ¼ mile remaining on the walk home, a flurry of rain hit the Kalakaua Bridge for 30 seconds. Soaking wet without an umbrella or jacket, I decided to forego stopping at the Honolulu Coffee Company.

There was plenty to do on my last day In Hawaii--put the finishing touches on Mom's tax returns, have her sign them, pack for the return trip, tidy up the family home, and refill the tank on the car. I really shouldn't spend an hour in a coffee bar, no matter how pleasant the surroundings.

There will be ample time for relaxation in July, when we will return for family celebrations.

Marvel at the Longevity

God and the Tree of Knowledge
Nasher Museum, Duke Univ.

European cathedrals are distinguished for their craftsmanship and longevity; the component that is most remarkable, at least to your humble blogger, is the stained glass. Some pieces, like God and the Tree of Knowledge, date back nearly 800 years.

The resources needed to produce Medieval artwork were immense:

Stained glass was in great demand in the Middle Ages, and manufacturing it required large quantities of sand, wood ash and powdered metals melted at extremely high temperatures. According to one estimate, the European glass industry burned through roughly 13 million tons of firewood between 1250 and 1500...

From lumbering and harvesting to mining and quarrying, producing materials for medieval art demanded enormous amounts of manual labor, said [Pulitzer Foundation curator Heather Alexis] Smith. In the mid-1300s, the pandemic known as the Black Death killed an estimated 30-60% of the population of Western Europe, setting off decades of labor shortages...

Religious orders were perhaps the biggest drivers of environmental change in the medieval era. In sustaining their communities, monasteries often cleared forests and wetlands for farming, at times initiating large-scale building projects that required tons of quarried stone.

The greatest amount of medieval resources was used for religious purposes, and those monuments have lasted for hundreds of years.

Will our own expressions have such durability? It's doubtful, since utility is less powerful a motivator than the perceived demands of deities, and environmental constraints sap the life from invention.

Meanwhile, marvel at the stained glass.

Design Flaw

In Hawaii, like coastal California, the birds have lost their fear of people.

The Costco architects perhaps forgot to account for them when designing the two outdoor snack bars on Oahu.

As soon as the bothersome humans leave with their hot dogs, the birds swoop down to the condiment bar to scarf up the spillage.

I decided not to put anything on my hot dog that afternoon.

Family Dinner

You know you're getting old when you want to sit at the kids' table.

Being in their 20's and 30's, my nephews and nieces aren't "kids" any more, but I often think of the no-longer-little darlings that way. Their table certainly had more energy than ours.

On our table the brothers and their wives discussed retirement, medical issues, investments, taxes, and, of course, Mom.

We packed up a plate of leftovers to bring to her. Earlier in the day Mom had requested steak for tomorrow. I'll grill a small piece for her and throw it in with the chicken, noodles and duck. I'd be surprised if she eats half of what I'll bring her, but since, without her, none of us would be here, no request is too small.

Cocks of the Lots

On the same block as million-dollar houses and condos roam wild chickens. (We've noted them before.)

This empty lot in Waikiki is ripe for building, or perhaps it's owned by a developer who is biding his time, hoping to buy adjacent properties to build something tall.

Construction projects that had been active when I was here in November are being completed; those loans don't extend indefinitely.

Friends and relatives on the Mainland have been shocked at the price of Hawaiian rentals. Tourism is almost back to pre-pandemic levels.

Given construction lead times, owners of empty lots such as this one should be laying the groundwork(!) for a speculative build, but it's not my money and advice is cheap.

Then the chickens will have to find another place to strut.

Mark Twain on the Annexation of Hawaii 25 Years Before It Happened

At Kuhio Avenue and Kanekapolei Street in Waikiki:
statue of Princess Kaiulani (1875-1899)

We have posted before about the annexation of Hawaii by the United States in 1898 (here, here, and here)

Here's Mark Twain's 1873 opinion against annexation. (It's really a polemic against American politics and culture.)

We must annex those people. We can afflict them with our wise and beneficent government.

We can introduce the novelty of thieves, all the way up from street-car pickpockets to municipal robbers and Government defaulters, and show them how amusing it is to arrest them and try them and then turn them loose -- some for cash and some for "political influence." We can make them ashamed of their simple and primitive justice. We can do away with their occasional hangings for murder, and let them have Judge Pratt to teach them how to save imperiled Avery-assassins to society. We can give them some Barnards to keep their money corporations out of difficulties. We can give them juries composed entirely of the most simple and charming leatherheads. We can give them railway corporations who will buy their Legislatures like old clothes, and run over their best citizens and complain of the corpses for smearing their unpleasant juices on the track. In place of harmless and vaporing Harris, we can give them Tweed. We can let them have Connolly; we can loan them Sweeny; we can furnish them some Jay Goulds who will do away with their old-time notion that stealing is not respectable. We can confer Woodbull and Claflin on them. And George Francis Train. We can give them lecturers! I will go myself.

Mark Twain rails against individuals, institutions, and behaviors who have 21st-century counterparts.