Wednesday Briefs – 12 May 2021

THIS WEEK: Big City Mayors; Virgin Galactic; Copper/Gold; Cyberattacks.

Big City Mayors

A little known fact outside of England is that the City of London did not have a mayor before 2000. For some people, that was just fine; they do not see even today a need for a mayor. The city was administered by the Greater London Council until 1986 and by joint boards in the various boroughs from 1986 to 2000. By contrast, New York City has had mayors for over three centuries, starting with Thomas Willett in 1665, a British sea-captain and Plymouth colony trader.

If a metropolis like London could do without for so long, and in view of the tussle between Mayor Di Blasio and Governor Cuomo, the role of big city mayor needs better definition. In the present case, the Governor wants to call the shots on the most important questions concerning the City, while the Mayor is determined not to cede ground easily. It seems then that we have two leaders claiming executive privilege over the same set of decisions. A wry Londoner may sum it in one word: redundancy.

While we still have a mayor however, let us look at the most prominent candidates for the impending election. On the Democrat side, which in New York usually means the winning side, there are former presidential contender Andrew Yang and seven other candidates that all have some credentials in business, in non-profits, within the City’s administration or in government more broadly. Mr. Yang has a comfortable lead in all the polls. This is not surprising since he enjoys name recognition and had previously promised free money in the form of a universal basic income.

On the Republican side, there are two candidates: Curtis Sliwa founder of the Guardian Angels and Fernando Mateo, founder of the New York State Federation of Taxi Drivers. Mr. Mateo has unbounded optimism on his side as he is trying 1) to beat a household name in the primary (Mr. Sliwa), 2) to overcome the Democrats’ huge advantage in the main election, and 3) ostensibly to reverse Uber’s tidal disruption of the taxi business.

The New York Post has endorsed Brooklyn Borough President Eric Adams who is running not far behind Andrew Yang in the polls. The New York Times has endorsed Kathryn Garcia who has occupied for a decade senior positions in the City’s administration. Judging from their endorsements (an imperfect approach), Mr. Adams is an established local politician and Ms. Garcia seems an effective decision-maker. Unless Ms. Garcia can catch up quickly, Mr. Yang or Adams will be the next mayor.

Virgin Galactic

Founded in 2004 by Richard Branson, Virgin Galactic went public on 28 October 2019 when it merged with a SPAC (special purpose acquisition vehicle) managed by investor Chamath Palihapitiya. The stock closed at $11.79 on that day. Five months later in March 2020, it made a high of $42.49 right before the pandemic crash brought it back to $9.06. Then came three spikes (see log-scale chart), in July 2020 to $27.55, in December to $35.82 and ultimately in February of this year to $62.80. Two of these three spikes were followed by retracements of 50% and 35%. The latest is more serious with the stock now at $17.88, or down 72% from peak. That is a lot of launches and crashes in a seventeen months period.

Log Scale.

Space exploration is a long duration investment that will not show real tangible results for years or even decades to come. But the market value of assets moves faster and compels investors to adjust their holdings. Mr. Palihapitiya offloaded all of his personal holdings last March, or 6.2 million shares at an average price of about $34 for total proceeds of $213 million. He still owns 15.8 million shares (worth $276 million today) through another SPAC. And Mr. Branson sold 5.6 million shares last month at prices between $26 and $29, a small part of his stake. He retains 24% of the company through his company Virgin Group. Both billionaires remain committed to Virgin Galactic, though they are less invested than two months ago.

Virgin Galactic had revenues of $238,000 in 2020 and has now a market cap of $4 billion down from a peak of $14.7 billion. But the SPAC way of going public has already begun to deliver for its main shareholders.


The ratio of copper to gold prices has tended to move in sync with the 10-year treasury yield. In recent months, the two have diverged with copper/gold rising (copper has boomed while gold has weakened) and the 10-year marking time.

As these things go, there will be a reversion which can take one of three forms: a weaker copper price signaling a softening economy, a stronger gold price reflecting investor concern, or a higher yield representing either a strengthening economy or higher expectations of inflation.


In a plot that only existed in James Bond movies until a few years ago, a group named DarkSide has crippled the Colonial Pipeline that carries gasoline from Texas to the eastern seaboard. Cyber warfare is the new form of terrorism, destroying or attempting to destroy economic or infrastructure assets for monetary or political gain. Until the proper safeguards are put in place, we will likely face more and larger attacks in the months ahead. In the worst case, just as smaller terrorist attacks foretold 9/11 and just as contained virus outbreaks preceded Covid-19, we are seeing manageable attacks that could be followed by a larger cyber attack. With the experience of those precedents, we will be better prepared.

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Update: Working Age Population Around the World 1960-2050

This is an update of a similar post from 2015. The UN projections have changed but only by small numbers. The main observations are the same as six years ago (click table to enlarge in a new tab).

The working age population (WAP, those aged 15 to 64) of sub-Saharan Africa continues to grow rapidly. It has more than doubled since 1990 from 252 million to 609 million, and is expected to more than double again by 2050 to 1.3 billion. If the reality turns out to be anywhere near these projections, it will be a significant challenge for African economies to absorb and to employ productively this enormous amount of new human energy.

India faces a similar challenge with its WAP growing from 928 million now to 1.1 billion in 2050. Though daunting, this represents a slowdown in the rate of growth from the previous thirty-year span 1990-2020.

The WAP of Europe, China and Japan have already peaked and will be declining for the rest of the century, per UN projections. Europe’s decline from near 500 million in 2005 to a projected 407 million by 2050 is mainly due to eastern and southern Europe. The WAP of France and the United Kingdom will flatline to 2050 while those of Germany and Russia decline.

In the United States, the steady growth in the WAP between 1960 and 2005 combined with a falling dependency ratio to fuel strong economic conditions. Growth in the WAP is expected to be more muted in the decades ahead.

Compared to the late 20th century and the first decades of this century, the future growth in the WAP will taper off or even turn negative in several regions and countries. Sub-Saharan Africa stands out as the exception that will maintain strong WAP momentum through at least 2050.

The Boom in Certainty

Sinclair Lewis called it “the sedate pomposity of the commercialist”. Now it has spread to many parts of society, not always in its sedate form.

Back in our final days as architecture students in Austin, our class had a farewell gathering with a professor who had been a valued mentor to several of us. As was habitual on such occasions, the professor was discussing with us the work of various architects when the subject of a newly-constructed building came up.

“I hate that building”, one classmate said flatly.

After an awkward silence, the professor mocked: “you mean, strongly dislike?” Off guard, the offending party protested that his use of the word was innocuous then and there. The professor conceded as much but explained that it was a visceral word, the kind of word that forestalls further discussion and that hardens the speaker’s and listener’s opinions. It is difficult to walk back or to change your mind from “hate”, and easier to do so from “dislike” or even from “strongly dislike”, he argued. His advice was to leave in one’s words an open path for retreat, in essence to never burn one’s rhetorical bridges.

This led to another discussion about certainty and about people who speak with certainty. The professor said that he had a reflexive dislike for certainty and that he felt a profound distrust towards people who speak with certainty. There is very little that is certain in life, he said, even among things of which we are convinced at a given point in time. Opinions change, science changes, research advances. New discoveries change our beliefs. Knowledge doesn’t just flow or evolve gradually like a river; it shifts laterally and sometimes suddenly like an earthquake.

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Camus Against the Virus

Decency is of little value without a foundation of honesty.

Albert Camus’ masterful novel La Peste (The Plague) is enjoying a resurgence in the current pandemic. Published in 1947 in the immediate aftermath of WW2, it was not, or not only, about a biological plague but also about the plague of Nazism or other ideological cancers and their equally devastating effect on humanity.

Albert Camus

Among the many different citations recently lifted from the book, this particular one has appeared in several articles and countless social media posts:

“It may seem a ridiculous idea, but the only way to fight the plague is with decency.”

Coming from Camus, this sentence looked unusual because there is no direct literal word in French for decency as we mean it in English. The closest are décence and pudeur but these words convey different meanings.

In the original French text, Camus had written: Read more

You Are What You Risk, With Michele Wucker, 19 April 2021

“For some people, risk is scary and dangerous, and means peril and loss. For others, it means risk assets and they have to pile on because they just see the upside. But risk is actually value-neutral. It is important to be aware of the bias that you bring to things. Do you see both sides and do you weigh them? Or are you likely to overweigh the downside or overweigh the upside?” ________ Michele Wucker

We all have an ambivalent attitude towards risk. In 1850, a young Emily Dickinson wrote to her friend Abiah Root “the shore is safer, Abiah, but I love to buffet the sea. I can count the bitter wrecks here in these pleasant waters, and hear the murmuring winds, but oh, I love the danger!”

In her new book You Are What You Risk, author and strategist Michele Wucker codifies this ambivalence to risk. In this podcast with Sami, Michele explains the concepts of “risk fingerprint” and “personal risk portfolio”, among others.

Topics include:

  • 0:00 Introduction of Michele Wucker
  • 2:13 Thesis of ‘You Are What You Risk’
  • 5:20 Attitude towards risk: innate vs. acquired through experience
  • 10:40 Taking a risk vs. following a path; Risk and entrepreneurship
  • 14:10 About each person’s risk fingerprint
  • 19:45 Taking risk as the only woman in the room
  • 24:40 “Risk is value-neutral”
  • 33:00 Matching risk fingerprints in interactions; Measuring risk
  • 38:20 The personal risk portfolio
  • 42:25 Remembering the onset of the pandemic as a gray rhino


(photo of Michele Wucker by Hal Shipman)

Wednesday Briefs – 21 April 2021

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THIS WEEK: The Billionaires’ Skyline; Troop Movements in Ukraine and Afghanistan; Immunity and Secrecy.

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Wednesday Briefs – 14 April 2021

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THIS WEEK: Most People are Very Smart; Back to the Border; Podcast: Lebanon in Crisis.

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Lebanon in Crisis, with Joe Issa El Khoury

“Historically, Lebanon prospered as a result of inflows of people and funds – people who came to take refuge in Lebanon and also funds. If we look at the post World War 2 period when modern Lebanon became independent and also at previous periods that Lebanon went through – and I mean over the past 100 or 200 years – one thing that was common to all these eras is its liberal economic system that was adopted by all who lived on this land. The constant was the liberal economic system.”____ Joe Issa El Khoury

Sami J. Karam speaks with Joe Issa El Khoury, a Beirut-based financier, about the tragic events that have unfolded in Lebanon since 2019. A sharp fall in the currency, a banking freeze, a political crisis, hyperinflation, and widespread street protests made 2019 a difficult year. But these events were then compounded by the Covid-19 pandemic and the explosion in the port of Beirut in 2020.

Issa El Khoury explains the sequence of events that led to the present, and offers a possible way forward.

Topics include:

  • 0:00 Introduction of Joe Issa El Khoury
  • 2:25 What is it like right now on the ground in Beirut?
  • 8:33 Why did Lebanon have a golden period in 1945-75; why was it later so prone to crisis?
  • 17:40 The Rafik Hariri era and the return of growth 1990-2005
  • 20:00 What explains the weakness of the Lebanese state: geography and demographics
  • 26:30 Lebanon’s diversity as a source of wealth; Example of Lebanese cuisine
  • 30:40 Crossing the line from a laissez-faire economy to a crony economy
  • 35:05 The real estate boom of 2007-11
  • 36:55 The impact of the Syrian civil war
  • 39:10 Crowding out the private sector
  • 44:10 The proximate factors that led to the meltdown
  • 46:15 The current condition of the banking sector; Role of the Central Bank
  • 51:00 Will depositors suffer a haircut? The Lazard and other plans
  • 54:45 Talk of privatization of state assets
  • 59:45 Political patronage in the public sector
  • 1:01:50 “All roads lead to Washington DC and the acronym IMF”
  • 1:05:20 Political reform and the role of the diaspora


Wednesday Briefs – 31 March 2021

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THIS WEEK: Suez – Container Shipping; VolTswagen; New York Coronavirus; Triumphing on the Venom of a Snake.

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