Links to Consider, 5/26
Paul Kupiec on banks in trouble; Christopher Mims on human factors in tech; Alice Evans on Muslims and modernization; Gabe Fleisher on Gen Z;
Detailed analysis of December 2023 bank regulatory data suggests that, because of unrecognized interest rate losses in the banking system, banks’ true commercial real estate loan concentrations are much larger than traditional supervisory CRE loan concentration measures suggest. Taken together, the weak demand for several types of commercial properties, sustained unexpectedly high interest rates, and the concentration of CRE loans in many bank portfolios has created significant systemic risk in the banking system. …There is a high probability that the financial system and wider economy may be shocked by a wave of bank failures large enough to test the public’s confidence in the banking system and the resources of the federal deposit insurance safety net.
Have a nice day.
Why are three of the most valuable companies of 2014—Microsoft, Apple, and Google—bigger than ever? How is Meta doing so well even as people have for years been abandoning Facebook, its core product? Why is Twitter still chugging along, no matter what its new owner gets up to?
The short answer is that disruption is overrated.
For me, the short answer is cultural capital, or institutional knowledge. Legacy firms build up a store of knowledge about getting processes to work and avoiding fatal errors.1
On the other hand, legacy firms are subject to cultural decay. Their systems for promoting managers get gamed. You get Status-driven Syndrome.
Mims also writes,
what’s most often holding back mass adoption of a technology is our humanity. A new technology has to fit with the quirky, unpredictable, and far-from-rational set of predilections, needs and biases resident in all of us.
This makes it sound like it’s the humans’ fault that people aren’t making all-out use of virtual reality headsets, self-driving cars, or ChatGPT. But maybe the problem is that the current implementations of these innovations cause more pain than they relieve.
Islam is usually portrayed as traditionally conservative - either due to ‘hard-wiring’ or religious authoritarianism But view is marred by presentist and regional bias, narrowly equating Islam with the Middle East and North Africa. In truth, it only comprises 20% of the world’s Muslims. Until very recently, larger Islamic world was far more culturally diverse.
Economic growth is widely expected to encourage secularism and liberal tolerance, while stagnation is often blamed for backsliding. But this cannot provide a full explanation of growing conservatism in Malaysia and Kuwait.
Anyone who carefully studies the history of the Muslim world will surely agree that a culturally heterogeneous religion is now Arabising.
My guess is that she is going to argue that Islam itself is not incompatible with modernization. Instead, she will say that it is Arab culture that resists modernization. But we’ll have to stay tuned for future posts.
If Gen Z is not more or less politically engaged than other generations, and cares about similar issues as other generations, and is about as liberal as prior generations were at our age — what are the ways we are unique as a cohort? Here are a few:
Gen Z is deeply disillusioned and skeptical of institutions. For me, that is the biggest message that courses through all the data among young voters, which shows up whether you look at Gen Z disapproval towards Joe Biden (a creature of the political system), Gen Z support for RFK Jr. (the ultimate disrupter), and the large number of Gen Z voters who refuse to identify with any political party. Other generations are disillusioned right now too, but no one as much as Gen Z and no generation was this disillusioned this young.
Gen Z grew up immersed in smartphones and social media. … I suspect (and data suggests) it is heavily connected with the aforementioned pessimism …We are the Doomscrolling Generation…
if you’re reading a news article about Gen Z that only encompasses college student voices, you’re not hearing from about 40% of the generation — a 40% that thinks substantially differently from the rest of the cohort. Similarly, young men and women have historically shared similar political views; now, young women are much more likely than young men to be liberal. That means, any time you hear about Gen Z being progressive, you should remember that is largely true of Gen Z women; Gen Z men are trending increasingly conservative.
I first noticed this during the “browser wars” between Microsoft and Netscape. Netscape, the upstart, was much more creative. In 1994 and 1995 they came up with enduring innovations, like cookies and Javascript. But they could not execute. Typically, Netscape would introduce a new feature. They would get the feature blessed by the World Wide Web consortium (or whatever the equivalent standards body was back then), and then the standard would be correctly implemented by Microsoft’s browser but not Netscape’s! The upstart just did not have the processes in place to ensure that its software worked. This was most painfully true with Netscape’s server software, which should have been their prime revenue source and instead was too buggy for any web site to rely on.
I knew a family from Kosovo - there was a fellow in the area who had married a Kosovan woman and it seemed like largely through her - one woman's - efforts, this family among a larger group fleeing with what they could carry, the war in Yugoslavia, settled in our town. For some reason, perhaps because it required no English, and no certification like butchers - they quickly gained a place, then seemingly all the places, in our market in the produce "prep" (salads, cut-up fruit, etc.) section, and also I believe the prepared, cooked food department, though there they were not visible. Thus, for some years, in addition to the customary "employees must wash hands", "lava las manos" - the produce section had printed the same in a most unfamiliar tongue.
(Certainly they were not given hotel rooms in perpetuity, and credit cards. Assistance that was surely needed, was what could be raised privately. I believe they went to work immediately. The woman I became most acquainted with, who did speak English well or did by the time I knew her, took both a part-time produce job and one of those special ed positions in the school district, for which there was limitless "demand" due to lawyers. Not everyone was stuck in jobs unsuited to their presumed educations; the head of that family eventually got a good tech job on par (I guess) with what he had left. It goes to show that one determined person - that doctor's wife - is worth a hundred bureaucrats.)
This lady, a fellow mom, had an easygoing, languid European air, and was ready to socialize/chat in an unhurried manner that I found congenial, because it is no longer the American custom - over coffee and cigarettes. I did not pry, though I am a natural pry-er (which is usually successful because most people like to answer questions about their lives and histories). I did not pry because I had not paid attention to the Yugoslav war, had little grasp of the geography and demography of the area, nor what precisely "Kosovo" was, or whether they were simply Albanians; and so didn't feel on firm ground inquiring - but I made reference once to her religion: Muslim, I believe?
She laughed about that. She was decided: none, zero. We were all secular, she said. We were as secular as any Europeans.
It seemed strange to me, a Europe divorced from Christianity by a tenuous association with Islam, but ending in the same secular place.
I think of this, and a different-but-not-entirely-dissimilar experience I had with a Uyghur person - when the notion of the "diversity" of Islam is adduced. I now take with a grain of salt the idea that it "took" everywhere the same, no matter the distance from Mecca.
“My guess is that she is going to argue that Islam itself is not incompatible with modernization.” I Compare Pakistan and India, both parts of the British Raj, both large territories with large rural populations, ethnically the same, both got independence same day, both inherited the infrastructure built and left behind intact by the British.
Both had the same start point. One has just soft-landed a space vehicle on the Moon. The key difference is… ?