Rory Sutherland Special : EI Weekend 2979
May God preserve me from linear thinking! …
A sure cure when stuck with the box dwellers is: Rory Sutherland, enjoy this special edition!
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Exchange Invest was founded by former exchange CEO and author of the first bestselling book of fintech (“Capital Market Revolution!” FT 1999) Patrick Young. Monday through Friday our daily paid subscriber email discusses the business of bourses of all kinds across the world.
On this day in 2009, General Motors declared bankruptcy and was bailed out by the U.S. Government.
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MACRO THOUGHTS
“it’s much more easy to start silly and rein it back
than it is to start boring and rein it forward.”
- Rory Sutherland
Here’s a classic of Sutherland perspective from the Spectator a few weeks back. I mean, yes the duds you wear would be dull as dishwater to Le Roi Soleil but here’s one to offer to the next person whining about how they are an impoverished TikToker with a Habitat furnished Brookyn ‘ghetto’ penthouse bemoaning a lack of government health coverage for gerbils or whatever: Louis XIV Would Envy Your Life (The Spectator).
IN BIGWORLD
From Exchange Invest 2976: Wednesday, May 29th:
There was a fascinating swing state opinion poll recently commissioned by Digital Currency Group, executed by Harris Group of 1201 voters in those 6 vital ‘swing states’ where the next US Presidential election will be won by one gerontocrat or another in November.
Over 90% of those polled plan ned to vote while 70% believed the current financial system is outdated and 74% would like to see this status quo overhauled.
So far and so exciting for the crypto kiddies until the reaction to BTC et al turned out pretty lukewarm… Only 41% of swing voters reckoned crypto represents a new way toward financial security and prosperity, while only slightly more than a third — 35% — believe crypto is the future of transacting.
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Guest: Steve Zwick
June 4th, 2024
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A former futures broker / trader, Steve Zwick writes about the economics of sustainable development and the interplay between land-use / climate change — subjects he developed a fascination for in a 30-year career that brought him from Chicago’s trading pits and led to subsistence farms in rural parts of Kenya, Vietnam, and Brazil.
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BITCARNAGE
Realty Meets Reality
We told Bitcarnage / EI subscribers this last year. Anyway, realty and reality just collided as expected:
Sam Bankman-Fried And His Crew Overpaid For Real Estate, Bahamas Listings Show Reports Yahoo Finance / Fortune…
Way back as the US celebrated Thanksgiving in 2022, EI 2515, November 24th 2022, we noted “Bahamas real estate turnover broadly doubled in Q1 2021 to $400 million. That’s the entire country, not just Nassau/New Providence. It was a record year but even so without the largesse passed through from the investors to SBF et al… Bahamian GDP shows total real estate activity including rents in New Providence to have been $1.3 billion in 2021, $1.8 billion for the entire country of which FTX/SBF et al amounted to $300 million.”
Therefore it wasn’t the case that SBF/FTX moved the market, they WERE the market in Bahamas property for one relatively brief spell within a year. Thus as I noted in EI 2928 some weeks back, we had realtors salivating at the inventory but now comes the reality. The Bahamas market is a bit more subdued post-COVID bounce AND dumping what amounts to a quarter’s worth of inventory onto the market in one dollop (and everybody knows it’s there to be sold…), an illiquid market like real estate will also have issues. Total stamp duty is not huge in the Bahamas at 2.5% but with legal fees etc the frictional cost is about 5% give or take which amounts to $15 million in its own right. Essentially, SBF/FTX seem to have been in a hurry to buy and that helped firm up market prices as they essentially removed a vast swathe of inventory from the market.
I believe turnover is below 2021 levels currently — some other Caribbean markets are hotter but equally this is now hurricane season which marks the slowest point in the cycle (peak transactions are often Q1 and Q4. We know the SBF penthouse from whence he was arrested was briefly offered at $40 million but failed to sell and was offered for $30 million. It’s a fabulous piece of real estate but the stress in the market is that the liquidators are paying the service fees and hence a value oriented bid will probably scoop the property.
It remains unclear if the SBF parents are still hanging on to “their” disputed $16.4 million villa incidentally. Given the need to sell fairly urgently, only a mega buoyant property market could save this sell-off methinks while it appears everything SBF/FTX bought was in a form of managed building / gated community and the bean counters liquidating FTX will be eager to stop their fee liability.
Therefore, it looks as if the FTX property portfolio may represent an interesting opportunity for some (highly relative) bargain buys in the Nassau / New Providence property market. At least it looks as if creditors are already going to be made somewhat “whole.”
If you enjoyed this excerpt you may be interested to know that you can read Bitcarnage every day in Exchange Invest.
Alternatively, if you want to follow Bitcarnage — the daily update on happenings in the world of crypto and digital assets, then you can find Bitcarnage as a standalone on Substack.
OF INTEREST
As always, a review of interesting reading to provoke thoughts and consideration… Not sure we agree with much of it….but it’s thought-provoking!
PLY: So Rory Sutherland creates solutions — on occasion to problems nobody has noticed with the laser eyed focus of a lifetime adman. Lose your mind’s eye study of the rather classic movie, “How to get ahead in Advertising” as Sutherland is nothing like Richard E. Grant…and all the better for it.
A lateral thinking engine of wonder, Sutherland entertains and intrigues weekly with the Wikiman column in The Spectator and he gives fabulous “Google” for anybody who seeks to search his videos.
He remains hugely quotable e.g. “Where economists make the fundamental mistake is they think money is money,” with remarks that lead to a surfeit of food for thought… In other words, this is an adman who can explain why we prefer stripy toothpaste but does so with macro lessons for life, liberty and the pursuit of happiness both as an individual and a business. He also appears in a gazillion clip videos on Instagram and is an excellent pithy anecdote to the content objectifying physical beauty of people, places and things.
Let’s start at TEDx Athens way back when Greece was in the throes of economic crisis. This gem from Rory including a paeon to Ludwig Von Mises:
Rory Sutherland: Perspective Is Everything
TED Youtube
“Reality isn’t a particularly good guide to human happiness” is one of the many pith perfect remarks in this excellent presentation.
Leaping closer to the present, here’s the case made well for EVs and the potential customers’ biggest concern:
The Case For Driverless Cars
How To Solve ‘Range Anxiety
The Spectator
Let’s divert to the concept of technology development using classic fabric. As Sutherland notes, “I have a theory that if Harris Tweed had been invented by scientists in California last year we would hail it as a miracle fabric. Breathable, largely waterproof and warm, you can throw dirt at it and pack it in a suitcase for six months, and with a brush and a shake it’s ready to wear. Some things are unimprovable:” (Harris Tweed, The Miracle Fabric — The Spectator).
Let’s delve into a final spot of complexity which may appeal to all those folks in derivatives who have had to wrestle with multilateral counterparties, novation or not:
There Are Three Sides To Every Story
The Spectator
I know, after all that multi-lateral complexity, it’s time for a drink and to conclude this weekend’s special edition devoted to Rory Sutherland’s excellent thinking and pithy communication skills:
Context: Why We’re Willing To Pay More For A Beer At A Hotel Than A Beach Shack
Yahoo
IPO-VID NOW ONLINE
Guest: Rainer Zitelmann
May 28th, 2024
1700 UK, 1800 CET, 1200 EST
German historian, sociologist and bestselling author, Rainer Zitelmann has authored 28 books which have been translated into 30 languages.
Previously on IPO-VID, Rainer discussed:
IPO-VID #104: In Defence of Capitalism
IPO-VID #116: Rainer Zitelmann — The Wealth Elite
IPO-VID #135: Unbreakable Spirit — with Rainer Zitelmann
In this week’s IPO-VID, Rainer discusses his latest book, addressing the fascinating topic “How Nations Escape Poverty.”
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Books worth reading:
FINANCE BOOK OF THE WEEK
“Alchemy: The Surprising Power of Ideas That Don’t Make Sense” by Rory Sutherland reveals why abandoning logic and casting aside rationality is the best way to solve any problem. Rory Sutherland shows how economists, businesses and governments have got it all wrong: we are not rational creatures who make logical decisions based on evidence. Instead, the big problems we face every day, whether as an individual or in society, could very well be solved by thinking less logically.
Get the book here.
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VICTORY OR DEATH
Victory Or Death” is a must-read book for anyone interested in the intersection of Blockchain, Cryptocurrency and FinTech giving a holistic view of the future of markets.
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LAST WORD
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