The Early Days
Friday, October 6, 2023
I’ve been getting a lot of odd economic information from various sources. It’s time to coalesce and condense that stuff, but first:
As I sat down to write I saw a headline “The Trump Show is Over.” It’s a quote from Letitia James responding to the antics of Donald.
I immediately thought of “The End” by The Doors. Jim Morrison’s long poem on side 2 of their second album “Strange Days.” No other song has ever captured The Id.
It’s haunting. It’s sexual. It’s – well – inappropriate.
Moving on. Crypto. I don’t understand it. I’ve read about it and it seems to make sense when I’m reading whatever about it. However, if I try to explain what I’ve read and how it works I realize I don’t know. I don’t understand. I have stayed away from crypto for these reasons.
Now Michael Lewis has a new book Going Infinite about FTX’s founder Sam Bankman-Fried. Most of the book tour interviews were terrible, very disappointing. The interviewers were more interested in telling you what they thought they knew about crypto or Sam, and little about the book. The only exception was 60 Minutes, where Lewis corrected the interviewer or maybe he clarified. He said crypto was not a Ponzi scheme. That it was a business model. Perhaps, not perfected at this time, but there was something there. Others disagree and say it is based on nothing. But then couldn’t one say that about Amazon or Google? Maybe not, maybe they provide a service or information. Maybe crypto does something like that too. I’m not sure. Hopefully, by the end of the book I’ll have a better understanding.
What has been fascinating is Lewis’ description of Bankman-Fried. (He gets his name from the last name of each of his parents, who never married only because they saw no point in it, but eventually had a civil ceremony. I know, what I’m writing doesn’t quite make sense.)
At eight years old Sam was questioning the existence of Santa Claus. A few years later he was surprised to discover that there were people who actually believed in God. He came to conclusions by reason and evidence.
He went to MIT. He showed up at a job fair, handed out his resume and got three interviews with high frequency trading companies. He liked games and puzzles, but only if they had undetermined rules and outcomes. He played Magic and Storyboard. Games where the flip of a card could change the rules. You had to adjust your strategy based on new information. Information that was incomplete.
One firm, Jane Street, had him in for an interview. They didn’t ask him a bunch of questions they gave him one hundred chips and had him play a poker game with two other interviewees and a Jane Street trader as dealer. The Jane Street trader kept introducing new side bet proposals and situations. Pretty soon Sam had a pile of chips. He never saw the other two folks again. Then there was the weighed coin game. Ten coins one weighted to come up 50/50 heads or tails. The others varied. You had to collect as many heads as you could in 100 flips. There were ten coins.
Most people tried to find the best coin. Sam found one that was “good enough.” He kept using it until it turned up tail then he moved to another one.
The point seemed to be – could you make good enough decisions with imperfect and changing information.
I’m trying to understand two things: what is crypto? and Did Sam commit a crime?
I’ll let you know.
Moving on.
I heard Robert Reich give a brief talk knocking down the typical arguments about raising the minimum wage. He pointed out that the arguments given don’t hold up under scrutiny. One that he didn’t explain and I’d like to better know the basis for was the idea that increasing the minimum wage does not add to inflation. My guess is that while prices go up, it’s not because of increases to the minimum wage, and furthermore increasing the. minimum wage only allows people to buy necessities and thus doesn’t push up prices, but I’m only guessing.
BTW he pointed out that minimum wage workers are for the most part breadwinners for their families and are between the ages of 25 and 64. Teenagers only make up 10% of minimum wage earners.
This got me to wondering – if the minimum wage is $7.50 an hour that’s $15 in two hours, 30 in 4 and $60 in 8 hours. Take that $60 time five days and you’re making $300. Three hundred for fifty weeks is $15,000.
Can anyone survive on $15K a year?
Okay double the minimum wage to $15/hr that’s $30K. Is that livable?
What about $30/hr and $60K? Yes, maybe. But it’s no great shakes.
Everything I’ve read about the minimum wage says something like – Back in the whatever decade, people made X and that was enough to afford a house, groceries and a two week vacation. To do the same now would mean … I think …. $21 an hour.
However, there is no cheap housing because during the housing crisis under W all the cheap housing was bought up by big money who have now turned around and will only rent to those who can show a year’s worth of paystubs that can meet the rent. I’ve looked at rents. $1600 to $2200 a month is pretty normal. Times twelve months that’s $19,200 to $26,400. Most financial people say you should spend no more that 25% of what you make on housing. That means to make the rents I’m talking about you’d need to make $76,800 to $105,600. Or to put it in hourly terms: $38.40/hr to $62.80/hr.
Houston, we have a problem.
It’s a huge problem here. Every square inch of properties are being built upon by out of state developers. Everything they build looks the same. Why, because if the get one design approved by the city they can continue to build the same ugly looking thing they got approved. All are square buildings with flat roofs. In a city known for its rain fall.Why? Because if they built anything with eaves it would take up property making it useless to them. All are 3 stories high and they now put 6 of these skinny houses on the same piece of property one house was one before. One floor is the kitchen, one floor is the living room and one floor is the bedroom. All the old houses are being destroyed. It is totally disgusting. Talk about ‘Ticky Tachy houses that all look the same!”