Linked List: March 11, 2023

Saturday, 11 March 2023

The Talk Show: ‘Fine Hypertext Products’ ★

Jason Kottke returns to the show to celebrate the 25th anniversary of Kottke.org.

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Not From The Onion, I Swear: the WWE Is Trying to Legalize Betting on Pro Wrestling ★

Alex Sherman, reporting for CNBC:

WWE is in talks with state gambling regulators to legalize betting on high-profile matches, according to people familiar with the matter.

WWE is working with the accounting firm EY to secure scripted match results in hopes it will convince regulators there’s no chance of results leaking to the public, said the people, who asked not to be named because the discussions are private. Accounting firms PwC and EY, also known as Ernst & Young, have historically worked with award shows, including the Academy Awards and the Emmys, to keep results a secret.

Betting on the Academy Awards is already legal and available through some sports betting applications, including market leaders FanDuel and DraftKings, although most states don’t allow it. WWE executives have cited Oscars betting as a template to convince regulators gambling on scripted matches is safe, the people said.

The idea that any state might legalize betting on pro wrestling reminds me of this great bit from Vegas Vacation. Clark Griswold, down on his luck and down to his last few dollars, starts playing sketchy games in a sketchy casino — “Coin Toss”, “Rock Paper Scissors”, etc. He loses the last of his money at “Pick a Number” — you guess a number between 1 and 10, then the “dealer” tells you whether it’s the same number they were thinking of. I don’t see how betting on pro wrestling would be any different.

(Via Matt Levine, who quipped, “Oh man, I am so excited to write about this insider trading case in like a year.”)

Marc Rubinstein: ‘The Demise of Silicon Valley Bank’ ★

The best explanation of what happened to Silicon Valley Bank is this piece by Marc Rubinstein at Net Interest:

“When you’re not working, what do you do to de-stress?”

That was the last question Greg Becker, CEO of Silicon Valley Bank, fielded at an investor conference on Tuesday this week.

“Cycling is my advice,” he replied. “Living in Northern California and being on the peninsula. That’s just — I think it’s the best bike-riding cycling in the world, period.”

Three days later, Becker’s bank is in receivership.

Now that’s a lede.

Rubinstein links to this piece at another Substack site, Nongaap Investing, which points to a boy-that-sure-looks-bad-in-hindsight oddity in SVB’s corporate governance: the bank did not have a Chief Risk Officer for most of 2022:

In particular, the most interesting disclosure is the company didn’t have a Chief Risk Officer for much of 2022, and (from what I can gather) doesn’t explicitly communicate this to shareholders until the 2023 Preliminary Proxy is filed on March 8, 2023.

This non-disclosure immediately makes me wonder what caused former Chief Risk Officer Laura Izurieta to leave the role and create such a glaring hole in risk oversight during such a critical time. [...]

Given that Ms. Izurieta sold $4 million worth of shares in December 2021 just before the company would approach her to begin discussions regarding her transition out of the Chief Risk Officer role, I can’t help but wonder if she realized the bank’s balance sheet was a ticking time bomb when she sold the stock.

The optics look pretty bad.

Pretty bad indeed.

Matt Levine on SVB: ‘Startup Bank Had a Startup Bank Run’ ★

Matt Levine, unsurprisingly, wrote a great column on Silicon Valley Bank’s collapse. He predicts the FDIC will succeed in finding a bigger buyer to buy SVB and make all depositors whole — both because SVB should still be worth enough to buy at such a price, and because otherwise, the results could be catastrophic industry-wide:

I would also guess — not investing or banking advice! — that the answer will also turn out to be higher than $188 billion, which is the total amount of deposits plus FHLB advances. I say this not because I have done a detailed analysis of SVB’s assets but because it seems bad for the FDIC to wind up a big high-profile bank in a way that causes significant losses for depositors, including uninsured depositors. There was a run on SVB in part because there hasn’t been a big bank run in a while, and people — venture capitalists, startups — were naturally worried that they might lose their deposits if their bank failed. Then the bank failed.

If it turns out to be true that they lose their deposits, there could be more bank runs: Lots of businesses keep uninsured deposits at lots of banks, and if the moral of SVB is “your uninsured transaction-banking deposits can vanish overnight” then those businesses will do a lot more credit analysis, move their money out of weaker banks, and put it at, like, JPMorgan. This could be self-fulfillingly bad for a lot of weaker banks. My assumption is that the FDIC, the Federal Reserve, and the banks who are looking at buying SVB all really don’t want that. If you are a bank looking at buying SVB, and you do a detailed analysis of its assets and conclude that they are worth $180 billion, and you come to the FDIC and say “I will take over this bank and pay the uninsured depositors 95 cents on the dollar,” the FDIC is going to look at you and say “don’t you mean 100 cents on the dollar,” and you are going to say “oh right yes of course, silly me, 100 cents on the dollar.”

Maybe I’m wrong about that, but if I am it’ll be bad!

The Financial Times, Two Weeks Ago: ‘Silicon Valley Bank Profit Squeeze in Tech Downturn Attracts Short Sellers’ ★

The Financial Times had Silicon Valley Bank’s problem nailed, two weeks ago (non-paywalled mirror of the story at Financial Post):

Silicon Valley Bank, the Californian institution central to financing U.S. startups, is facing scrutiny over an investment decision made at the peak of the tech boom that is squeezing its profitability just as the industry faces its worst downturn in decades. [...]

But some analysts, shareholders and short sellers point to another problem of its making: a move to put US$91 billion of its assets into a poorly performing bond portfolio that has since amassed an unrealized US$15 billion loss. [...]

While interest rates were low, several big banks parked more deposits into government debt accepting the lower rate of return during a time of economic uncertainty However, SVB’s relative exposure far exceeds its peers. It had US$120 billion of investment securities — which include its US$91 billion mortgage-backed securities portfolio — at the end of 2022, far exceeding its US$74 billion total loans.

By comparison, Bank of America had US$863 billion of debt securities, including US$633 billion of held-to-maturity assets, less than its approximate US$1 trillion of loans and leases. San Francisco-based First Republic, SVB’s closest rival in Silicon Valley, had US$55 billion in investment securities including US$28 billion of held-to-maturity debt securities, compared to US$167 billion in total loans.

Remarkably prescient reporting.

Reddit Post Seemingly Proves That Samsung’s Galaxy S-Series ‘Moon Photos’ Are Fake, and They’ve Been Blatantly Lying About Them ★

“ibreakphotos”, on Reddit:

Many of us have witnessed the breathtaking moon photos taken with the latest zoom lenses, starting with the S20 Ultra. Nevertheless, I’ve always had doubts about their authenticity, as they appear almost too perfect. While these images are not necessarily outright fabrications, neither are they entirely genuine. Let me explain.

There have been many threads on this, and many people believe that the moon photos are real (Input) — even MKBHD has claimed in this popular YouTube short that the moon is not an overlay, like Huawei has been accused of in the past. But he’s not correct. So, while many have tried to prove that Samsung fakes the moon shots, I think nobody succeeded — until now.

Here’s how he proved Samsung’s moon photos are a scam: he started with a high-res photo of the moon, downsized it to just 170⁠ ⁠×⁠ ⁠170 pixels, and applied a gaussian blur. He then displayed that image, upscaled, on his computer monitor and used a Galaxy S-series phone (he doesn’t say which model) to take a picture of that blurry circle on his display. The phone turned that image into this.

Have to say I’m surprised both Raymond Wong and Marques Brownlee were taken in by this. These “amazing” moon photos seem impossible optically, and, more tellingly, no one is able to get these Samsung phones to capture similarly “amazing” 100× zoom images of random objects that aren’t the moon.

Anything Samsung ever claims that seems too good to be true should be assumed to be a blatant lie. They’re a corrupt company with a corrupt culture.