A Few Things: Europe's Energy Problem, Cyber War, Elon Musk TED Talk, Why The Past 10 Years Have Been Stupid, How To Be Early In Crypto, Anatomy of a Scandal....
April 23, 2022
I am sharing this weekly email with you because I count you in the group of people I learn from and enjoy being around.
“Our goal should be to live life in radical amazement… get up in the morning and look at the world in a way that takes nothing for granted. Everything is phenomenal; everything is incredible; never treat life casually. To be spiritual is to be amazed.”
- Rabbi Heschel
“Measure wealth not by the things you have, but by the things you have for which you would not take money.”
- Dave Ramsey
“Worry does not empty tomorrow of its sorrow, it empties today of its joy.”
- Anonymous
A. A Few Things Worth Checking Out:
1. Despite all the sanctions on Russia, Europe is still buying billions worth of Russian Natural Gas. There has been a lot written about Europe giving up on Russian gas in 2022. Is this viable?
Quoting a great Doomberg article:
How much gas does Europe buy from Russia? Most estimates peg the annual amount to about 155 billion cubic meters. There are 35.3 cubic feet in a cubic meter, and there are 365 days in a year, thus Europe has a 15 bcf/d gap to fill by turning off the Russian spigot [(155 x 35.3)/365 = 15 bcf/d].
Thanks to the shale revolution, the US now produces approximately 96 bcf/d of natural gas. Of that amount, nearly 12 bcf/d is exported via newly constructed LNG terminals. Said another way, Europe’s Russian natural gas imports represent the equivalent of 125% of the entire current US LNG export capacity. This is a significant number.
While the US is a major global producer of LNG, it is hardly the lone player of size. Qatar and Australia produce similar quantities, and together the “big three” have more than half the global market share. Naturally, the soaring price of LNG is triggering a substantial global supply response. In addition to US growth plans, Qatar is making bold bets with plans to increase its LNG export capacity from approximately 11 bcf/d to 17 bcf/d in the coming years.
According to data from S&P Global, total LNG exports amounted to approximately 377 million metric tonnes in 2021. To convert this into our bcf/d framework, there are 48.7 billion cubic feet in a million metric tonnes and still 365 days in a year, making the global LNG export market approximately 50 bcf/d across all sources [(377 x 48.7)/365 = 50 bcf/d].
At a rate of 15 bcf/d, Europe relies on Russia for the equivalent of 30% of the entire global LNG export market. Given the price elasticity of demand for natural gas, and the fact that countries like Japan, South Korea, China, and India depend heavily on LNG imports to meet their energy needs, the nature of the challenge facing Europe becomes clearer.
Step 1 to me feels like Germany should at least stop de-commissioning their Nuclear Reactors and Step 2 might be to bring some of the reactors back online.
Doomberg was on the Hidden Forces podcast discussing what’s happening in energy and commodity markets. The also discussed the renewed lockdowns in Shanghai, how they compound existing global food and supply chain issues, and how those issues are part of a larger set of challenges that will lead to food shortages particularly in the developing world. This has implications for everyone on the planet, but especially the Europeans who will experience even more migratory pressure from Africa and the Middle East.
I listened to it twice.
2. This surprised me:
3. Acclaimed author of “This Is How They Tell Me the World Ends” (which we discussed here) and former New York Times reporter Nicole Perlroth spoke with NightVision (a cyber security VC firm) about the evolving threat landscape, the current crisis in Ukraine and the broader geopolitical cybersecurity landscape.
4. This was an amazing set of pictures:
5. Kyla Scanlon had a thoughtful piece with the f*ck around and find out quadrant which is seemed like a smart way to think about decisions.
F*ck around and Find Out: In my opinion, this implies big change. People are making big decisions, and they are making those decisions with goals in mind.
F*ck around and Don’t Find Out: This has an element of being resistant to change - because you never find out. You’re just goofing off or trying to prevent something from happening
Don’t F*ck around and Find Out: This is “reasonable” change in my opinion (whatever reasonable even means) because you’re still finding stuff out, but in a more orderly format
Don’t F*ck around and Don’t Find Out: Stuff stays the same basically here
I’m all for the top right quadrant.
6. The Dollar-Yen exchange has moved rapidly, but that rate is really a harbinger for CNYJPY and CNYUSD.
Given the slowdown in China, and the lockdown in Shanghai, could we see a further CNY devaluations leading to a round of global devaluations, which could further exacerbate inflationary pressures?
7. You can say a lot Elon Musk and his shenanigans, but he has still created multiple world changing companies: Tesla, SpaceX, OpenAI and Neuralink and on paper is worth over $250bn.
He spoke with Chris Anderson about a future worth getting excited about.
Thank you Yaser for flagging.
B. Why The Past 10 Years Have Been Uniquely Stupid
I really worry about our democracies and civil society. There has been a real breakdown in trust across society and things don’t seem to be getting any better.
Professor Jonathan Haidt and author of three great books: The Happiness Hypothesis, The Righteous Mind and The Coddling of the American Mind had a great piece in the Atlantic on “Why the Past 10 Years of American Life Have Been Uniquely Stupid”.
It’s a must read and it discusses why and how US civil society broke down in the last ten years and what we can do about it. I think the analysis applies to other countries almost as well.
I have paraphrased the key parts below.
The story of Babel is the best metaphor I have found for what happened to America in the 2010s, and for the fractured country we now inhabit. Something went terribly wrong, very suddenly. We are disoriented, unable to speak the same language or recognize the same truth. We are cut off from one another and from the past.
Things Fall Apart:
Historically, civilizations have relied on shared blood, gods, and enemies to counteract the tendency to split apart as they grow. But what is it that holds together large and diverse secular democracies such as the United States and India, or, for that matter, modern Britain and France?
Social scientists have identified at least three major forces that collectively bind together successful democracies: social capital (extensive social networks with high levels of trust), strong institutions, and shared stories. Social media has weakened all three. To see how, we must understand how social media changed over time—and especially in the several years following 2009.
Politics After Babel:
Social media has given voice to some people who had little previously, and it has made it easier to hold powerful people accountable for their misdeeds, not just in politics but in business, the arts, academia, and elsewhere. Sexual harassers could have been called out in anonymous blog posts before Twitter, but it’s hard to imagine that the #MeToo movement would have been nearly so successful without the viral enhancement that the major platforms offered. However, the warped “accountability” of social media has also brought injustice—and political dysfunction—in three ways.
First, the dart guns of social media give more power to trolls and provocateurs while silencing good citizens. Research by the political scientists Alexander Bor and Michael Bang Petersen found that a small subset of people on social-media platforms are highly concerned with gaining status and are willing to use aggression to do so.
Second, the dart guns of social media give more power and voice to the political extremes while reducing the power and voice of the moderate majority.
Finally, by giving everyone a dart gun, social media deputizes everyone to administer justice with no due process. Platforms like Twitter devolve into the Wild West, with no accountability for vigilantes.
Structural Stupidity:
The most pervasive obstacle to good thinking is confirmation bias, which refers to the human tendency to search only for evidence that confirms our preferred beliefs. Even before the advent of social media, search engines were supercharging confirmation bias, making it far easier for people to find evidence for absurd beliefs and conspiracy theories, such as that the Earth is flat and that the U.S. government staged the 9/11 attacks. But social media made things much worse. The most reliable cure for confirmation bias is interaction with people who don’t share your beliefs. They confront you with counterevidence and counterargument.
Part of America’s greatness in the 20th century came from having developed the most capable, vibrant, and productive network of knowledge-producing institutions in all of human history, linking together the world’s best universities, private companies that turned scientific advances into life-changing consumer products, and government agencies that supported scientific research and led the collaboration that put people on the moon.
This, I believe, is what happened to many of America’s key institutions in the mid-to-late 2010s. They got stupider en masse because social media instilled in their members a chronic fear of getting darted. The shift was most pronounced in universities, scholarly associations, creative industries, and political organizations at every level (national, state, and local), and it was so pervasive that it established new behavioral norms backed by new policies seemingly overnight. The new omnipresence of enhanced-virality social media meant that a single word uttered by a professor, leader, or journalist, even if spoken with positive intent, could lead to a social-media firestorm, triggering an immediate dismissal or a drawn-out investigation by the institution. Participants in our key institutions began self-censoring to an unhealthy degree, holding back critiques of policies and ideas—even those presented in class by their students—that they believed to be ill-supported or wrong.
Democracy After Babel:
We can never return to the way things were in the pre-digital age. The norms, institutions, and forms of political participation that developed during the long era of mass communication are not going to work well now that technology has made everything so much faster and more multidirectional, and when bypassing professional gatekeepers is so easy. And yet American democracy is now operating outside the bounds of sustainability. If we do not make major changes soon, then our institutions, our political system, and our society may collapse during the next major war, pandemic, financial meltdown, or constitutional crisis.
What changes are needed? Redesigning democracy for the digital age is far beyond my abilities, but I can suggest three categories of reforms––three goals that must be achieved if democracy is to remain viable in the post-Babel era. We must harden democratic institutions so that they can withstand chronic anger and mistrust, reform social media so that it becomes less socially corrosive, and better prepare the next generation for democratic citizenship in this new age.
He was also on the Bari Weiss podcast having a deep discussion on what broke our society and democracy. It’s an important listen.
C. The Tech and Crypto Section:
1. @punk6529 had a great thread on the EU giving up on Tech and AI innovation. As bullish as I am on European Venture, I do think the EU has dropped the ball.
2. There are lots of companies pursuing AI & Machine Learning at the software level, but there is only one company driving it at the hardware level - Nvidia. Which is why it’s one of those rare $500 bn market cap companies that most people don’t know much about. The Acquired podcast discussed the company from 2006 to today, and where it’s headed.
3. Olaf Carlson-Wee is the Founder and CEO of Polychain Capital, a crypto investment firm that he founded in 2016, and before that he was one of the first employees at Coinbase. He was on the Bankless podcast discussing how he became a contrarian thinker, which blockchain he believes has the potential highest likelihood to accrue the most value, the future of work and decentralized governance.
Last week’s guilty pleasure:
The 6-part Netflix special tells the story of Parliamentary minister James Whitehouse, a happily married man with everything a man would want, including Sienna Miller as a wife and a loving family home. However, a scandalous set of secrets is about to come to light which will bring down both his home and a substantial portion of the British establishment. It’s created & produced by David E Kelley who wrote Big Little Lies.
Have a great weekend.
I think you would enjoy this one
https://www.realvision.com/shows/raoul-pal-adventures-in-crypto/videos/the-world-according-to-punk-6529-mXg5