Dana Blankenhorn

Word of the Year: Enshitification

Enshitification is what happens when principles go out the window.

Principles like service, like honor, like honesty, like “a little looking for the other fella,” as James Stewart said in Mr. Smith Goes to Washington, are what make civilization possible. When they disappear, as they have over the last several years, it doesn’t matter much what your system is or what your laws say. Those with power will take it, and only the strongest will survive.

This is mostly discussed today in the realm of politics. Words have lost their meaning and are often used to mean their opposite in the name of victory. Facts mean nothing and are simply denied in the name of power.

Lean Into $100 Oil

Markets are being spooked right now by Saudi Arabia’s decision to join Russia in cutting oil supplies. 

If oil prices stay high or go higher, analysts say, the economy may go into recession, and President Biden’s re-election will be threatened. 

I think there’s one weird trick that can prove a decisive point in world history.

Lean into it.

Accept higher oil prices. Note that American oil companies benefit. Explain that higher prices, and lower consumption, are essential in the fight against climate change. Highlight the growing cost disparity between fossil fuels and renewable energy, which continues to grow.

The Sauds and Russians think they have us over an oil barrel.

We should make this a decisive moment for putting them over one. 

There will be short-term pain because the analysts are right. Higher oil prices could tank the economy. They could cause a recession.

But, like the song says, your creature comforts aren’t the only things worth fighting for. The point of Biden’s economic policy has been to create American supply chains in energy, transportation, and manufacturing. The money to build these supply chains is being spent, supported by billions in private investment.

Health Care Mystery Solved

Around the time Barack Obama became President, I ran a health IT beat for ZDNet.

One point hammered home to me was that 75% of America’s health care bill relates to chronic conditions. These are things like heart disease, diabetes, and complications from smoking or drinking.

The way to cut the bill is through preventive care, I learned. Make sure people see a doctor regularly. Use those visits to monitor their condition, to hector people about their choices, and to get us to take our medicine. Keep us out of the hospital and everyone wins.

Obamacare covered that, for most people, especially those on Medicare. It also covered the cost of computerizing clinics and hospitals. While too many people are still forced to fill out too many forms, there are now electronic records on most of us. Hospitals can find out what patients are supposed to be doing and (through test results) whether we’re doing it.

VinFast: The Fix is In

America has the largest stock market in the world, by far.

It should be the most honest and most transparent.

It’s not.

The ease with which shysters manipulate our markets is appalling.

I saw it last year with AMTD Digital and Magic Empire. Both came public through a Hong Kong investment house. They had a limited float, but a ton of shares behind that float. Thus, when the share price here rose over scarcity, so did the market cap of the whole.

It was ridiculous, until the rug got pulled. MEGL traded for $97. HKD went for over $172. Now MEGL is under $2, and HKD is at $6. That’s still more than they’re worth.

Sell Nvidia, Buy Amazon

These are heady days for Nvidia, and profitable ones for my retirement account.

I bought 100 shares of Nvidia about 5 years ago, which soon turned into 300. I sold one-third of them to get my money out, but the remaining shares are worth nearly $500 each.

Nvidia is the chief arms merchant to the cloud. Its GPUs are essential to AI applications. More important, so is its software. It’s the Nvidia software stack that keeps chip rivals like AMD and Intel from gaining traction.

I also own stock in Amazon.Com If you’re into AI, Amazon.com is the better opportunity.

While Nvidia is at the front-end of AI, Amazon is at the back end of it. It’s Amazon that will reap AI’s rewards, in its supply chain, in its warehouse operations, and in its media business. Imagine if you could speak to Alexa casually and get real answers.

Amazon’s AWS cloud still has one-third of the market. Its approach in AI is to offer a wide range of tools, rather than insist companies buy any particular one. This makes sense to me.

What No One Wants to Hear

America is doing great. Anger burns itself out. We’re playing the 1983 Game. Ask your folks what happened in 1984.

No one wants to hear this, let alone admit it.

The Reich won’t hear it because it’s their job to be angry. The left won’t hear it because they think anger is necessary to beat the Reich.

The truth is different.

Productivity Explosion

Soon after being given a high tech beat at the Atlanta Business Chronicle, in 1982, I bought my first computer. (The picture was taken in 1981.)

I could suddenly write up an interview or press event in an hour. I would read it out loud and make corrections. Then my super-loud C. Itoh dot-matrix printer would buzz it up onto fanfold paper.

The fanfold would go to typesetters, who created long sheets they would paste onto boards, which became the paper. Plastic squares would be turned into pictures at the printer. The pictures would be clipped to each board and the whole collection driven 50 miles. Most papers were then mailed to subscribers, but some were bound for retail sale.

Back at the front end of this process I bragged I could do the work of three men. The noise, and my attitude, caused the paper to fire me the next year and hire the three men.

A few years later I visited my former boss in Houston and found everyone was working at terminals.

The Next Crash Will Be a Private Equity Crash

There is always a next crash.

The problem is we never know when it might happen, or what might trigger it.

I can’t answer the first question, but I can answer the second.

It will be private equity.

Private equity has been taking over the world for the last 40 years. It arbitrates against financial regulations by design. The idea is that people who invest in such a fund are guilty of wealth and, thus, can afford to take a loss.

But are they? Any loss, taken in any market, results in some panic selling. We see it in every crash.

The problem is that there’s now more private equity running around than public equity. The canary in that coal mine is the banking business.

Private lending has exploded in recent years. This is a $1.5 trillion business that’s crowding out banks. This was a $1 trillion business just two years ago. It’s growing that fast.

Meet the New Slum

Building a 21^st century city means ditching late 20^th century street plans in favor of the era before World War II.

That’s because 21^st century cities demand density, and mixed uses. The idea of fixed use zoning – offices, stores, homes separate – needs to go away. The most bike-able parts of Atlanta are on the east side, where Atlanta, Decatur, and Avondale Estates all had established street plans before Pearl Harbor. Outside that, roads are a half-mile apart, everyone is on a cul-de-sac, and you need a car to go anywhere.

Decatur can be a model, if area parking decks are organized so streets like Clairmont and Ponce de Leon can become car-free. What’s left are rows of four story blocks with homes or offices upstairs, restaurants and retail on the ground floor. This leaves room for small parks, which the nearby MARTA station delivers. It’s the best planned urban space in the Atlanta region.

DeKalb County had a chance to replicate this a few miles to the east, at the Kensington MARTA station. Instead, what’s going up are Stalinist rectangular blocks surrounded by street-level parking. It’s a 21^st century Pruitt-Igoe that will, by 2035, have the highest crime rate in the region.

The Coming Disney Breakup

Walt Disney Co. is in play. (I remember getting one of these sent to me after the Disney Channel's launch in 1980.)

CEO Bob Iger fired his replacement and can’t find another one. The company is killing its streaming service by reducing content and raising prices. Its deal with Penn Entertainment, directly running a sportsbook, means ESPN is now incompatible with the main company’s business model. The resorts business is tanking, thanks mainly to climate change.

My guess is that the entertainment company will be sold to Apple, probably within a year. ESPN, ABC, and the parks will be spun out as separately traded companies. It might happen all at once.

The only reason to keep the whole thing together was “synergy.” A bad year for one division might be offset by a good year in another. The combination would then be a better investment than the parts.

But that’s not working. The movie business is dying. Disney is doing all it can to hasten that by refusing to bargain with its unions. If management and labor aren’t partners, you can’t do business.

The TV business was dead years ago. This includes cable.

The resorts business is increasingly divorced from the rest of the company.

The Internet is doing to the streaming business what it did to print. Paywalls take away 90% of your audience. Advertising rates keep declining because there’s too much free content. Live sports are viable but the billionaires who control teams and leagues keep pricing fans out of the market. If it’s all just about money, the players will gravitate to whoever offers more of it.