- Jeffrey Sonnenfeld et al have a nice, detailed paper looking at how Russia's economy is really handling sanctions, given the limited data Russia has released since the invasion. The answer is: not well, with inflation rising, especially for imported goods, and with oil selling at a steep discount. There are some quibbles to be had, of course: Russia is selling its crude at a $35/barrel discount to Brent, but Brent is up $25 this year, and the war has had a big impact on that. More importantly, one of the paper's persistent themes is that in Russia's trade relationships, Russia is usually more dependent than its counterparties in terms of trade share. For example, China is Russia's #1 source of imports, but only China's 11th-largest destination for exports. And as of June, US LNG has higher market share than Russian oil in the EU. This is true, but the real question about dependency is which side can take a bigger hit; natural gas futures in Europe are up about 700% year-over-year, so that substitution comes at a cost. And this sets up interesting second-order effects: when China buys Russian gas, it's effectively subsidizing the conflict, and imposing a high cost on Europe. That may not be in China's interest, but it's now an option.
This piece is worth reading for another reason: it's a good way to think about Modern Monetary Theory as a framework for understanding the economics of de-globalization. In a world with free trade and free flow of capital, you can look at countries' economies using aggregate measures. But when specific goods are unavailable in specific places, it pays to look more narrowly. Russian military equipment apparently uses chips scavenged from refrigerators and washing machines (to be fair, if you buy a new car it might contain chips from appliances, too). And Russian airlines have had to curtail service so they'll have spare parts to cannibalize (this, too, happens in other parts of the aviation industry, to a lesser degree ($)). Russia has a lot of control over the value of the ruble, which has given them the ability to produce favorable economic headlines at will. But converting those rubles into the goods that Russians want is another matter.
- Michael Fritzell of Asian century Stocks on the forgotten 1980s Taiwan Bubble. Taiwanese stocks rose 12x in a three-year period before collapsing in the early 90s. This had many similarities with other emerging-market bubbles, where the original thesis was that export growth and political stability would lead to long-term growth, and eventually finance crowded out more productive sectors of the economy. It's also useful context for understanding which companies survived, and how they approach things today—TSMC was, coincidentally, founded close to the start of the bubble, and survived the subsequent collapse. The experience may have given the company a better sense of just how excessive things can get, and of when to pull back.
- Florida Power and Light, subject of this recent Diff writeup, secretly subsidized a local news blog in exchange for favorable coverage. It's always hard to tell how much of this is happening. Certainly, it feels like some news outlets are so biased that someone must be pulling the strings—on the other hand, perfectly normal people have all kinds of odd opinions. Can one site really shift the conversation much? And how do they think about the tradeoff between a) saying things favorable to their clients, and b) saying the kinds of things that will get them enough attention for those favorable comments to matter? And what's the risk-reward? SimilarWeb says this outlet had only 54k monthly visits, and the Miami Herald gets 5.7 million, so it's possible that more people will read the negative story about the blog than read the blog in the first place.
- Politico has a tale of either nerdiness or well-calibrated ambition, profiling the 29-year-old president and CEO of the Richard Nixon Foundation. There are, roughly speaking, two ways for unusually young people to get jobs with significant responsibility: enter a growing and chaotic field where the career path hasn't been defined yet, or find a niche that other people are fleeing. Sometimes those niches can work out well; Nixon has a sort of oddball cachet, both because of legitimately forward-looking policies like the Clean Air Act and dealing with China, and because many of the people who grew up hating him have aged into voting for his party.
- In Fortune, how McDonald's left Russia. McDonald's was in an awkward position, where its presence in Russia was originally symbolic of the country's reopening, but evolved into a meaningful part of the company's business. Part of what this piece emphasizes is that public pressure coexists with backchannel discussions; one reason companies pulled out from Russia in bursts was that their CEOs were talking to each other about whether to leave and when.
- Gabriele D'Annunzio: Poet, Seducer, and Preacher of War: One of those historical figures too weird for fiction, Gabriele D'Annunzio was a popular poet, novelist, and playwright who joined the Italian military in the First World War and then seized control of the city of Fiume after the war. The author is torn between disliking her subject and seeming impressed with how energetically he pursued his literary, political, and romantic goals. Characters like this seem to show up in transitional periods; when many fields are emerging and changing at once, it's possible to be, as D'Annunzio was, a contributor to poetry, stage drama, and the early use of aircraft in war.
- Drop in any links or comments of interest to Diff readers.
- "High-agency," "main-character energy," and "live player" all seem to describe the same kind of person. What traits set such people apart?
Monday's post asked why everything is getting old, and included the example of movies and music. Reader Jonathan Shafter suggests a framing I hadn't thought of:
Mass scale stars are hard to manufacture anymore because the media landscape for new stars is so fragmented. Music is no longer a handful of radio stations but the infinity of the internet. TV is no longer 3 networks but a billion streaming distributors. Movies outside of big tentpole franchises like Marvel barely exist anymore as a relevant cultural force. The old stars created at the end of the prior era persist and have additional scarcity value because they just ain't making them anymore.
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