Sun Block: Red State advantage eroding? Why does Israel protect the Druze and Sanssouci in Beijing.
Great links, images, and reading from Chartbook Newsletter by Adam Tooze
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Kate Diehn-Bitt (German, 1900-1978). Source: Rostock Art Gallery
What if America’s red states are about to lose their cheap-housing advantage?
A study by Edward Glaeser of Harvard University and Joseph Gyourko of the University of Pennsylvania published in May found that new homebuilding in big sunbelt metro areas such as Atlanta, Dallas, Miami and Phoenix has dramatically slowed, leading to higher prices. And on June 30th Mr Newsom signed a reform to make it harder for nimbys to block new housing in California, which could eventually make living there more affordable.
Between 2000 and 2024 home prices in Miami rose faster than in any other of the 20 big metropolitan areas that make up the s&p CoreLogic Case-Shiller 20 City Composite Home Price … Developers in the sunbelt used to respond quickly to rising demand, thereby keeping a lid on prices, but “that has become much less true,” observe Mr Glaeser and Mr Gyourko. One possible explanation is that some sunbelt cities are reaching the limits of sprawl. They started growing rapidly after the widespread adoption of air-conditioning made Dixie summers more bearable. For decades builders could add new suburban homes by paving over farmland. But at some point the supply of land within a reasonable commute of the city centre (typically by car) becomes exhausted. … The obvious solution is to build upwards. However, it turns out that red states have more red tape than they realised. … Jay Knight, a developer in Atlanta, says it used to take 90 days to zone a parcel of land and another 90 to get a permit to build on it; now he budgets at least a year for each. Robert Dietz, the chief economist at the National Association of Home Builders, estimates that 15 years ago 30% of workers in the construction industry were office staff dealing with red tape; today it is 40%. Mr Glaeser and Mr Gyourko speculate that the educated folks who moved to the sunbelt for cheaper housing may then have turned nimby to preserve their new neighbourhoods. The realtor-in-chief is adding headaches, too. Tariffs could raise the cost of building materials: 25% of the lumber used in American construction is imported from Canada. Tougher immigration enforcement could make it harder to find bricklayers and plasterers. Lawrence Yun of the National Association of Realtors says that one-third of workers in the construction industry are in America illegally. “The industry is bracing for big raids,” says a construction boss in Texas. “If they start rounding more workers up it would bring many projects to a halt: I’m talking highways, hospitals, data centres, schools. I’m talking about building America.” Meanwhile, in California, Democrats are finally removing obstacles to building.
In 2020 ceqa lawsuits sought to block the equivalent of nearly half the year’s housing production .. Weakening it “represents the single best chance in decades” to restore growth, says Judge Glock of the Manhattan Institute, a think-tank. If the red-state house-price advantage were to shrink a lot, the consequences would be widely felt. … The conventional wisdom is that blue states will keep shrinking as a share of America’s population, and so will lose members of Congress and electoral-college votes. (California is projected to lose four or five of its 54 seats after the 2030 census.) But if the exodus dwindles, that might not happen. .. Some red-state politicians are waking up to the threat. Texas recently passed several yimby reforms….
Source: The Economist
JP Morgan has problems that others would envy it for!
Valued at north of $800 billion, JPMorgan is now worth more than three of its largest competitors — Bank of America, Citigroup and Wells Fargo — combined.
Paul J. Davies says the bank’s dominance creates a number of headaches for Wall Street wunderkind Jamie Dimon. “To find growth that doesn’t make the bank more of a risk to itself and the economy it inhabits, it has to be very well run. But its immediate problem is an extremely high stock valuation and billions of dollars of excess capital – both of which threaten its returns if mishandled,” he says. Dimon, it seems, has been too pragmatic, too adaptive and too patient for his own good. Paul explains: “JPMorgan has roughly $60 billion of equity capital more than it needs to meet regulatory requirements. It is expected to spend about one-quarter of that on share buybacks over the rest of this year … Sounds great, but there’s a problem: Its shares are so highly valued that this is a bad trade for the bank. The current price is 2.4 times the book value per share that JPMorgan reported for the second quarter – buying those shares for investors means paying them more than double the current net asset value of the company they own.”
Source: Bloomberg
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The electricity price shock comes for America’s AI data centers. But did auction prices really surge by 800 percent?
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800%!!!!! The numbers in this story were so shocking that I did some DeepSeek Fact-Checking. It provided some helpful context.
1. PJM's 2023/2024 Capacity Auction Price
True. PJM’s 2023/2024 Base Residual Auction (BRA) for the RTO (Regional Transmission Organization) zone cleared at $269.92/MW-day, a record high.
Previous auction (2022/2023) cleared at $34.13/MW-day, meaning the 2023/2024 price was indeed a ~690% increase (not quite 800%, but still an extreme jump).
Reason for spike: Supply shortages due to generator retirements (coal, older gas) and stricter emissions rules, alongside increased demand forecasts.
2. Steps Taken to Lower Power Prices
True. After the high auction prices, PJM proposed reforms to its capacity market (e.g., changing the Minimum Offer Price Rule (MOPR) to better accommodate state-subsidized renewables).
State actions: Some states (like Illinois, New Jersey) pushed for changes, and Maryland even explored exiting PJM’s capacity market temporarily to lower costs.
FERC (Federal Energy Regulatory Commission) also intervened, requiring PJM to adjust its market rules to prevent extreme price spikes.
Conclusion:
Mostly accurate, but the 800% increase is slightly overstated (actual increase was ~690%).
PJM and states did take action to mitigate future price surges, including market reforms and regulatory pressure.
Sources: PJM 2023/2024 Auction Results, Reuters - PJM capacity prices surge, and Utility Dive - States react to high PJM prices
In fact the 2023 auction price which generated the gigantic surge in 2024 was exceptionally low, as DeepSeek explains:
Why Was the 2023 Price So Low?
Oversupply of Capacity
PJM had a large surplus of generation capacity (around 20%+ reserve margin), keeping prices depressed.
Many older coal and gas plants had not yet retired, and new renewables were coming online.
Low Natural Gas Prices (2020-2022)
Cheap gas reduced the cost of electricity generation, lowering capacity market pressures.
COVID-19 Demand Reduction
Lower electricity demand forecasts during the pandemic contributed to weaker price signals in prior auctions.
Regulatory & Market Factors
PJM’s Minimum Offer Price Rule (MOPR) at the time suppressed prices by limiting how low subsidized resources (like renewables) could bid.
Historical Context
Pre-2023 prices were often $100-$200/MW-day in constrained zones (e.g., $140 in 2018, $165 in 2019).
2023’s $34.13 was an outlier, partly due to temporary market conditions.
The 2024 spike ($269.92) reflected a sudden tightening as older plants retired and demand rebounded.
Conclusion
Yes, the 2023 price was unusually low, making the 2024 surge seem even larger in percentage terms. The 800% increase comparison is somewhat misleading because it compares an exceptionally low year to an exceptionally high one. A better benchmark would be pre-2023 averages.
Sydney house price inflation is extreme.
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Kate Diehn-Bitt (German, 1900-1978), “Normaluhr nachts” (1931). Source: MutualArt
Why Does Israel Protect the Druze? A really useful explainer.
Menzel in Beijing
Coming across this life-sized reproduction of Menzel’s Sanssouci tableau in a fashionable art center in the Houhai Hutong of Beijing was one of the weirder moments of the summer!
Apart from Frederick the Great at center stage, the assembly is made up of some of the leading names of the day, namely:
Johann Joachim Quantz, the king's flute teacher (standing far right)
Franz Benda, Bohemian violinist and composer (on his right with a violin and a dark skirt)
Carl Philipp Emanuel Bach, German musician and composer (harpsichord player)
Gustav Adolf von Gotter, diplomat (foreground at left)
Jakob Friedrich von Bielfeld, German writer and statesman (behind him)
Pierre Louis Maupertuis, French mathematician and philosopher (behind him, looking up)
Wilhelmine von Bayreuth, Frederick's sister (sitting on the pink couch)
Amalie von Preussen, composer and also Frederick's sister (on her right, with a court lady)
Carl Heinrich Graun, German composer and the court conductor (behind them)
Countess Camas (elderly lady behind the music stand)
Egmont von Chasot, friend of Frederick (behind her)
According to his own words, Menzel was not so much interested in depicting the people in his painting, but rather in showing the lighting situation with the many candles. He is said to have confessed to a visitor that he had "actually only painted the picture because of the chandelier". And this is what the store owner told us. She had no idea what the image was of, but it was gifted to her by her sister, who was a musician, who found the intimacy and lighting of the scene comforting and inspiring.
Source: Wikipedia
Here is the great Emmanuel Pahud performing one of the King’s own compositions.
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Kate Diehn-Bitt (German, 1900-1978), “Jürnjakob mit Kalla” (1934). Source: Rostock Art Gallery
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