Newsletter 8/26: Distressed debt, stressed grad student

I discovered late last week that there is a version of my Derivatives textbook for the upcoming semester that is made specifically for English-speaking students in India. Unfortunately, I discovered this after having already done several hours of working ahead to prepare for the upcoming semester and spending $30 on the wrong book.

Oh well. Maybe the knowledge of the history of financial derivatives in Southeast Asian markets and familiarity with foreign exchange problems involving Rupees will come in handy one day. For now, it just means that my motivation to get ahead was all for not.

One story this week did serve to re-energize me, though. This Wall Street Journal Toys-R-Us story by Gretchen Morgenson and Lillian Rizzo is a great example of why learning more about how companies are financially structured is important.

A quick overview for those who don’t want to read the whole thing: the story basically pinpoints a group of creditors who bought the failing company’s debt at a discount and then were able to block Toys-R-Us from leaving bankruptcy, resulting in workers losing jobs and suppliers losing a lot of money on outstanding bills.

The thing that killed off Toys-R-Us, then, was not Amazon or changing consumer tastes, but some firms that held less than 20 percent of Toys-R-Us’s debt – a position those companies took knowing that bankruptcy was a looming possibility.

Links

• I read a lot about Elizabeth Warren’s proposals to reform corporate board structures and make companies responsible to all stakeholders instead of just stockholders. Two opposing pieces here are from Matt Yglesias at Vox and Matthew Klein at Barron’s.
• Nicole Auerbach from The Athletic on Urban Meyer and Ohio State.
• Melanie Evans from the Wall Street Journal had a fascinating piece on how hospitals don’t even know how much medical procedures cost.
• I saw “Three Identical Strangers” this weekend, and I think it is my favorite movie of the year. As someone with two brothers fairly close in age, it probably hit closer to home for me than others, but it was a documentary that left me feeling unsatisfied in a way that was infuriating and powerful. Sean Fennessey wrote about our mini-boom in documentaries at The Ringer.

Gus update

It is national dog day, according to the internet, and my genius dog somehow locked himself in the bathroom while I am writing this post. I’ve had him for a month now, and he has made a lot of progress in getting trained (and doubled in size!) but oh man do I still have a long way to go.

I leave you with a photo of him harassing me as I try to make breakfast.

Newsletter 8/19: The Liberty Bell

I realized as I was standing in line to see the Liberty Bell on Saturday that I had no idea why the Liberty Bell is actually important. Was it cracked in a battle? Was it made for a specific purpose?

It turns out that it was always purely symbolic: it was a bell that hung in the Pennsylvania State House and cracked years later due to a defect in how it was made. There is a legend that it rang on July 4, 1776, to mark the signing of the Declaration of Independence, but there really is no proof of that.

Far more interesting to me, however, is how the symbol of the Liberty Bell has been co-opted in other social movements through the country’s history.

The Liberty Bell Center is a small but really well done museum. As you wait in line to go inside, you pass exhibits about American slavery, including a really powerful wall that lists out countries that the slaves were taken from.

Once you go inside, you pass through exhibits that show how the Liberty Bell has been a symbol in other social movements – early American abolitionists, women’s suffrage pioneers and LGBTQ+ rights activists all had the Bell feature in their movements. The Bell is the final thing you see, and to see it feels unifying without the constant “yeah, but” in the back of your head that you can sometimes get when you read about American history.

Granted, just because it worked on me doesn’t mean it feels as powerful to members of marginalized communities within the country, but it certainly feels like a good faith effort.

Random media musing

I’ve seen a lot of journalists I follow on Twitter – from various types of media outlets – got pretty worked up about Alexandria Ocasio-Cortez’s banning of the media from a public campaign event.

I’m not going to call out individual people for their opinions on this, and I think a reflexive defensiveness about the media getting shut out of a political event is a healthy thing. But as someone who just spent four years reporting on a college campus, Ocasio-Cortez’s decision to hold a public-but-no-media event didn’t seem out of the ordinary at all.

I don’t think there is, or should be, a hard and fast rule on what events like this should be open to the press as some sort of First Amendment right. For one thing, media is a broad term – the New York Times certainly falls under the umbrella, but so does The Daily Wire, home of Ben Shapiro and his grandstanding, bad-faith challenge to Ocasio-Cortez to debate him. A simple ban on all media may actually be a better outcome than encouraging campaigns to get really strict on issuing credentials.

Second, there is a reason for people in the communities Ocasio-Cortez says these events are designed for to fear the press. There are some obvious repercussions about speaking publicly about your immigration status or domestic violence and having it broadcast to a wide audience. There are ways for the press to cover these issues well, but to expect the people to inherently trust that the media at large will cover them well seems foolish.

I don’t actually know how I feel about the press being banned from these events. It could be a dangerous precedent or just a blip on an otherwise press-friendly career from the soon-to-be Congresswoman. (A lot of politicians have private events for donors that are off-limits to the press, which feels more concerning than this). But part of the media industry becoming more diverse and inclusive means that some old rules and customs will need to be re-examined and changed. It is possible that demanding access to public campaign events will not be one of the things that needs to change, but it is worth considering.

Links

• There was so much amazing writing about Aretha Franklin this week. This from Wesley Morris was my favorite.
• I’m trying to read more about VR in general, mainly to assuage my fears that it will make the world even more dystopian, and this on Magic Leap from WIRED writer Jessi Hempel is a fascinating look at the business side of the transition from theoretical technology to actual consumer product.
• This long read from David Ramsey on a corrupt lobbyist in Arkansas is incredible.

Gus update

I’ve spent most of this week slowly realizing that the “let your puppy chew on your hand until it hurts, then yelp so he knows he is biting too hard” method of puppy training is not going to work with Gus.

He now weighs more than 10 pounds and is outgrowing his collar. He also learned to destroy my Sunday copy of the Philadelphia Inquirer and to make a judgmental face.

Newsletter 8/12: One semester down…

I’m a little late this week on the newsletter, but I guess the presentation, project and final test I had this week is a good excuse. I’m now finished with the summer semester at Villanova. Two more to go, but at least I won’t be sitting in three hour lectures anymore.

The class I just finished was Valuation. Basically, we spent a month trying to find a fair stock price for a company in the student managed investment fund that we actually take the reins of here in a couple of weeks. It was an interesting exercise, and it was a nice way to see how a bunch of concepts worked together, but it was too slow and simplified to really see it as getting an accurate idea of what financial analysts do.

I’ll be exploring Philadelphia more in the next couple weeks, so the next few posts will probably read like a travel blog. In the meantime, here are some things I read this week.

Links

• From fellow OU alum Hannah Allam, a fascinating look at the descendants of slaves trying to preserve their unique culture on a coastal island in Georgia.
• This story from Josh Fechter at the Express-News traces the ownership of the facilities in Texas where immigrant children are being held. Having reporters who understand a business’ structure and what questions to ask is why business reporters are valuable at the local level.
• The WSJ story on Hungary being pulled toward Moscow and the Atlantic article on Bashar al-Assad’s survival in Syria paint a strong picture of Russia’s overall foreign policy in a way that doesn’t get caught in the absurdity of current U.S. politics.
• The ESPN story on the football culture at Maryland should be required reading for all football fans. Also, please point to this story (and others like it) when people say student athletes get enough to eat because the linemen are so big. Eating is a job (or punishment) – and a really difficult one – for some of these players, not a benefit.

Gus Update

This puppy is getting way too big way too quickly. Pretty soon I’m going to put a GoFundMe link in here so I can buy all the food he eats. In the meantime, here he is confused to learn that just because he is standing by the fridge doesn’t mean he is hidden.

Newsletter 8/2 – Blockchain and Cigarettes

I’ve spent way too much brainpower over the last 9 months trying to understand the blockchain, cryptocurrencies and all of the mania that surrounds Bitcoin and its brethren. I go into each new round of research hoping for an epiphany, a strong conviction that this is the future or all a scam, or at least a way to explain it to someone else in under two minutes. Instead, every new attempt half answers one or two questions I have while creating three or four more.

(This NYT Magazine piece on Blockchain is probably the most enlightening thing I’ve read, while this Wired piece is one of the more bizarre.)

The latest such attempt was a visit to r3, a fin-tech startup in New York City that is building a blockchain network for financial institutions. The visit was part of a bus trip the Villanova MSF cohort took earlier this week. I’d be lying if I said I understood completely what was going on during the visit, but it does make more sense to me that blockchain transactions make more sense at a large scale than a small one. It takes time and money to certify blockchain transactions, making it unwieldy to use at McDonald’s or something similar. That’s a big reason why the number of transactions using Bitcoin is plummeting.

But many financial transactions already take time, money and computing power. And they are often many magnitudes larger than a Quarter Pounder meal, making the transaction fees more palatable. The interesting thing about r3 is that it is partnered with many mainstream financial institutions. In essence, one of the most promising uses for blockchain technology – which was supposed to decentralize the flow of money – is being developed by and for the very financial institutions that some crypto people wanted to cut out completely.

As for the new questions this visit raises, any new wrinkle in the financial world creates opportunities for massive wealth and massive fraud. (For what it’s worth, r3 is also partnering with regulators). I’m still not sure I understand the technology well enough to know exactly what questions to ask, but I hope someone does and is.

There may be some journalistic uses of Blockchain – such as Civil – but I have no idea how or why those are supposed to work. This podcast with Peter Kafka and Manoush Zomorodi made me even more skeptical of that particular project, but I hope it succeeds. As long as people are trying new things in digital media, something useful will shake out.

What I’m reading

I finally finished Barbarians at the Gate: The Fall of RJR Nabisco by Bryan Burrough and John Helyar. The book follows the transformation and eventual buyout of RJR Nabisco, with CEO Ross Johnson angering all of the old tobacco leaders in Winston-Salem, North Carolina, before being outbid for his own company by KKR. It is an absolutely brilliant book. There were so many hours of interviews put into it, and the authors (both Wall Street Journal reporters at the time) managed to create a compelling story that both explained leverage buyouts in great detail and gave an overall portrayal of Wall Street in the 1980s. It is one of those books that we should probably make all journalism students read, just to show that you can always interview more.

Picks of the week

• Really good job by Brett McMurphy in his continuing coverage of the former Ohio State assistant coach with a history of domestic violence allegations and what Urban Meyer may have known about it. Even more credit should go to Courtney Smith, the ex-wife of the coach in question, who has bravely come forward with her story.
• I can confirm the accuracy of the WSJ story on the fleece vest as the new corporate uniform. I saw it a lot on Wall Street this week, and it was honestly pretty funny.
• Nicole Auerbach’s story on Ricky Town’s journey from top QB recruit to prospective backup at Pitt is one of those stories that makes The Athletic worth the money.
• Kara Swisher’s column on Mark Zuckerberg and Silicon Valley at large is worth a read. It increasingly feels like we are all at the mercy of the maturation process of certain tech titans.
• The new Amanda Shires album is incredible. Stream it. Buy it. See her in concert.

Dog update

The puppy’s name is officially Gus, and he passed his first vet check up with flying colors. He also likes to curl up inside the book case next to my Charles Portis books, so he is very much an on-brand dog for me.

Until next week!