She's a good looking cow.
Guy wants to buy a cow. So he goes to a rancher, says I’d like to buy one of your cows. Ok, says the rancher, let’s go out there to the herd and pick one out and we’ll talk about her. They go out to the herd and the guy picks out a cow he likes. Says I like the look of that one, what’ll you take for her? That one? says the rancher, good looking cow. I know it, says the guy, what’ll you take for her? I’ll take a hundred dollars for her, says the rancher. Ok, says the guy. I don’t have a hundred dollars on me but you hang on to that cow and I’ll go get the hundred dollars. All right, says the rancher. The guy takes a picture of the cow. She’s a good looking cow, says the rancher again. I know it, says the guy.
So the guy goes to his banker. Says, I’m looking to buy a cow. Rancher wants a hundred dollars for her, so I’d like to borrow a hundred dollars. Banker says you got a picture of the cow? The guy shows him. Good looking cow, says the banker. I know it, says the guy, will you lend me a hundred dollars for her? What do you have for collateral? asks the banker. Guy says I have a hundred and fifty dollars worth of stock in an electric tractor company. Banker says the rules say we can only lend up to half the value of stock. So I’ll lend you seventy five dollars against your electric tractor company stock, and then you come up with twenty five more and you’re good to go. Well, says the guy, I’m not as liquid as I’d like to be just at the present. Ain’t that always the way, laughs the banker. So I’ll tell you what we could do, says the guy. You lend me seventy five dollars against my electric tractor company stock, and we’ll sign a deal right now that if you give me the other twenty five dollars, I’ll go buy the cow and first thing I’ll do is come back here and give you the cow’s heart. That’s worth twenty five dollars easy, on the market. Banker looks it up on the Mooberg Terminal, sees that fresh beef hearts are running eight dollars a pound, does a little math and nods. Ok, he says, sounds like a fair deal. They shake on it, and the guy goes off with his hundred dollars.
A little while later the guy comes back to the banker’s office with a big paper bundle tied up with twine. He drops it on the banker’s desk and pulls a knot loose in the twine, and out flops five pounds of fresh beef heart, steaming warm and spilling a pool of coppersmelling blood like thick cognac across the banker’s polished mahogany desk. Here you are, as promised, says the guy. That’s a good looking piece of muscle, says the banker. I know it, says the guy. So we’re square for that twenty five? We’re square, says the banker. But just out of professional curiosity, asks the banker, how much you think you’ll get for the rest of the meat? Meat? says the guy. Oh no, this here’s a milk cow. I’m starting my dairy with her. In fact I better get milking so I can pay you back the rest of that loan. And he walks out whistling.
Banker looks at the blood starting to coagulate on his desk and dripping softly down onto his fancy Italian loafers and considers getting into another line of work. Thinks to himself: maybe I should start a newsletter.
—Tex Levine, Money Roundup.
Last year, Twitter’s interest expense was about $50 million. With the new debt taken on in the deal, that will now balloon to about $1 billion a year. Yet the company’s operations last year generated about $630 million in cash flow to meet its financial obligations.
That means that Twitter is generating less money per year than what it owes its lenders.
—“Can Elon Musk Make the Math Work on Owning Twitter? It’s Dicey.” Lauren Hirsch, New York Times.
The problem for the banks is that the Fed will likely only allow them to keep the Twitter debt on their balance sheets, marked at par, or 100 cents on the dollar for so long. My bet is that the Fed will get impatient with banks that try to do that much beyond the first quarter of 2023. If the financial markets are still dysfunctional three months from now, the Fed will likely insist that the banks take their hit on Twitter.
And then they'll have the worst of both worlds—a significant markdown on the Twitter debt, requiring more capital to be reserved against it and a writedown, plus less capacity available for new financings. At that point, the banks are better off selling the debt, even at a significant discount, and taking their painful medicine. And that is when the real fun and games will begin financially for Elon, assuming he is not the buyer of the Twitter debt, himself. Once the Twitter debt gets sold off for a discount to distressed debt investors—they are generally not the warm and cuddly type of investors—then any payment or other technical default on that debt will likely result in a new serious headache for Elon: the risk of Twitter being forced into an involuntary bankruptcy by its irate creditors.
—“Elon’s Clues and an M&A Hail Mary,” William D. Cohan, Puck.
Not to beat a dead cow but: Fifty Tesla employees are poring over the Twitter code, trying to figure out how quickly they can make it kill a pedestrian. Tex Levine admits to being a (Bloomberg) terminal sicko for finance writing, tells Liz Lopatto “They can bury me at Sesame Place with my boots on and my laptop open.” Twitter Head of Safety & Integrity Yoel Roth posts graph of the sharp spike in slurs, post-Musk, but doesn’t have anything to say to Davey Alba about election misinformation. Alba reported, along with Kurt Wagner, Edward Ludlow, and Jackie Davalos, that “most people who work in Twitter’s Trust and Safety organization are currently unable to alter or penalize accounts that break rules around misleading information, offensive posts and hate speech…” Advertisers flee. Board axed. Kate Conger, Tiffany Hsu and Ryan Mac: “Exodus! Movement of Jah advertisers and executives.”
Any good news? According to Edward Ongweso Jr, “Facebook’s Monopoly Is Imploding Before Our Eyes.” And they’re back at it again at Vine.
Via Brad Johnson of the excellent Hill Heat newsletter, which is like Tabs for climate policy news, here’s a really hopeful story by Canary Media’s Jeff St. John on Montgomery County, MD’s self-sustaining solar microgrid electric bus transit system.
Blab Leak: News organizations who ought to know better continue to beclown themselves with the Covid lab-leak theory, more than a year after Nicholson Baker’s fatally flawed New York Magazine cover story. This time it’s ProPublica and Vanity Fair, who made the mistake of trusting a Senate Republican report that appears to have mistranslated its key evidence, as Max Tani Semainforms us.
Formerly critical, now “high” priority OpenSSL 3.0 bug patched, not as disastrous as expected. But Adriana Chechik, the Twitch streamer who broke her back in the Spinal Foam Pit at TwitchCon, apparently required multiple surgeries to fuse vertebrae and repair nerve damage, and in the process lost a pregnancy she had been unaware of. Yikes. Take Wu-Tang’s advice and protect ya neck my friends.
There’s a new Katherine “Geek Love” Dunn book out today, somehow? Reviews/essays on it by Terry Nguyen in LARB and Adrienne Raphel in NYT.
Guy says, that’s a good looking newsletter. I know it, says the rancher. What’ll you give me for it?
Ben Mathis-Lilley: “What Is J.D. Vance Doing?” This is some real good campaign writing.
Vance’s fundraising was poor, and he was making relatively few campaign appearances—except, in one eyebrow-raising July move, at a conference in Israel. “Tim Ryan is talking about kitchen-table issues, and J.D. Vance is out there going to fucking CPAC in Israel,” a strategist told the Daily Beast. Another added, “Republicans are like, ‘Are you out of your fucking mind?’ This isn’t some fucking book tour, dude.”
Vance’s pace of campaigning is now appropriately frantic, and it’s possible to justify or at least explain his low-key summer. Tim Ryan didn’t have a competitive primary, and came out of it with a lot of intraparty goodwill and money to spend on television ads; Vance didn’t have much cash left and was dealing with a divided GOP base. But the poll numbers were what they were.
It was the worst of all worlds: Vance had sold out, but no one was buying.
Today’s Song: Kenny Rogers, “The Gambler”
~ and somewhere in the discourse, the gambler he broke even, but in his final tabs I found an ace that I could keep ~
If you have a friend working at Twitter, can I suggest a gift?