Friday, September 29, 2017


"It's silly to try to escape other people's faults. They are inescapable. Just try to escape your own." -Marcus Aurelius

How I Built This Podcast -- Starbucks: Howard Schultz (LINK)

When Warren Buffett Runs Your Pension Plan [H/T Linc] (LINK)

Amid big storm surge, insurers' exposure varies; 'disciplined' Berkshire won't take a big hit [H/T Linc] (LINK)
Related previous post (2014): Why Buffett is steering clear of catastrophe bonds - by Gillian Tett
Paul Sonkin and Paul Johnson discuss their book, Pitch the Perfect Investment, at Fordham (videos) (LINK)

Heard of Cobra Effect? Be careful what you ask for - by Sanjay Bakshi (LINK)

Would You Rather - by Eric Cinnamond (LINK)

Adventures in Finance Podcast: Observations and Interpretations: Jim Grant (LINK)

Macro Voices Podcast -- Mark Yusko: USD in secular bear market [Yusko section starts around the 14:05 mark] (LINK)

Freakonomics Radio (podcast): Why Larry Summers Is the Economist Everyone Hates to Love (LINK)

FT Alphachat Podcast: Dan Drezner on the economics of ideas (LINK)
Related book: The Ideas Industry: How Pessimists, Partisans, and Plutocrats are Transforming the Marketplace of Ideas
Erik Brynjolfsson and Andrew McAfee: "Machine, Platform, Crowd" | Talks at Google (LINK)

Exponent Podcast: Episode 126 — Getting to the Future Faster (LINK)

a16z Podcast: Why Crypto Tokens Matter (LINK)

Two Ways of Making Malaria-Proof Mosquitoes - by Ed Yong (LINK)

Japanese Animals Are Still Washing Up in America After The 2011 Tsunami - by Ed Yong (LINK)

The effects of a single terrorist nuclear bomb [H/T The Browser] (LINK)


Related to the third link above, I thought the exchange below from the 2016 Berkshire Hathaway Annual Meeting was also interesting (via a transcript, so the transcription may not be exactly accurate):

Jim Jones

My name is Jim Jones, I'm the Executive Director of the Katie School of Insurance at Illinois State University. I would like to express my concerns based on 3 hidden risks associated with the climate change. The first relates to stranded assets of insurers investing in fossil fuels. The second is a more insidious risk relating to climate change. This risk is associated with the long-term liabilities, associated with the property, life and health lines of business, and I realize that a number of intelligent people and experts don't see a long-term liability, but they're missing one important part is that primary insurers are not able to withdraw or reprice books -- entire books of business. Following Hurricanes Katrina, Rita and Wilma, new hurricane models were developed in Florida, and they attempted to get the recommended rate approvals for that. They were not allowed to. And so many insurers again to withdraw from that market. Ten years later, that about 40% of the underperforming business is still on the books of those insurers. And this could play out in several other states that are exposed to climate risk. For a reinsurer, the value of reinsurance with their customers is a long-term business. The reason why this is so important is because, according to my count, 156 of your reinsurance customers have filed climate change disclosures; and these customers are looking for long-term interest being protected by their reinsurer. And if not, there's a potential for a relationship default risk that could occur if they perceive your reinsurance as just being one-year contracts that can be repriced or withdrawn. And you enter into that world of the expanding market competition of alternative reinsurance, which just last year was $72 billion and earlier this quarter, we set a record of $2.2 billion in cat bonds.

Warren E. Buffett

The -- I would point out that we have not been asked ever, to my knowledge, to write long-term contracts. Our primary insurers know that we look at it one year at a time and we will not write business that we think has a major negative probability, and they don't expect us to. I -- it's way less a relational business than in the past. It's much more a transactional business. But we will not write -- if we lose a customer because they want us to do something stupid, we lose the customer. And it -- there's not a -- in our business, I'm not speaking for other reinsurers, but in our business, and I believe with most other reinsurers, they are not going to do something that they think is terribly disadvantageous to them just to maintain a relationship. That's not really a relationship, [it's a] subsidy. So I -- that does not strike me frankly, as a factor at all, of any negative consequence at Berkshire. We, in terms of what happened after Katrina, rates went up. And actually, the hurricane experience in Florida has been better than any periods since in -- before 1850, that we have any records on. That's been a surprise to us incidentally, but we've not written business, catastrophe business in Florida during that period because we don't think the rates were adequate. They were adequate, but we just were wrong about it. So the -- and incidentally that is not -- the fact that we walked away from CAT business in Florida, that we thought was mispriced, does not hurt us in the business. It's really a -- it's much more of a transactional business. There may have been a time when relationships were very big in reinsurance but with so many entrants in, it is very much a transactional business and no one expects you to do something that's very stupid. If they do that, it's the wrong kind of a relationship.