1—How zoning broke cities
"Like most states, California went all in on zoning in the 20th century, prohibiting the construction of apartments—including ADUs [granny flats]—in most residential neighbourhoods. Indeed, the first single-family zoning district in the United States was adopted in Berkeley in 1916, specifically and explicitly to segregate the suburb. Following the Supreme Court's seal of approval in Euclid v. Ambler in 1926—a decision that infamously derided apartments as 'mere parasites'—single-family zoning districts spread nationwide, producing the homogeneous and segregated suburban landscape we have today."
That's from M. Nolan Gray, who recently wrote a book called Arbitrary Lines: How Zoning Broke the American City and How to Fix It. According to Gray:
"Such prohibitions play no small role in the California housing crisis. By one estimate, the state faces a shortfall of nearly 1 million units. Until recently, apartments were technically illegal to build in 75 to 94 percent of residential areas in cities such as Los Angeles and San Jose. Worse yet, in numerous California suburbs and smaller towns—including many in the heart of Silicon Valley—apartments were completely prohibited. That is, until the state legalised ADUs."
The good news is that, at least in California, "the pro-housing forces are winning" – granny flats, now that they're legal, are "making neighbourhoods across California ever-so-slightly more affordable and integrated".
You can read Gray's summary of his book in the Atlantic here (~6 minute read), which concludes that more zoning reforms are needed to end the "century of cities stagnating under myopic local control".
2—A feature, not a bug
How is the present monetary tightening cycle going to end? According to the WSJ's Greg Ip, a look back at history doesn't fill one with optimism:
"A stretch of easy money brings a host of risky practices, like borrowing short term to lend long, 'reach for yield,' and leveraged arbitrage: buying one thing while selling short something similar. When rates go up, short-term loans get harder to refinance, risky asset prices decline and leveraged investors are forced to sell to meet margin calls. This dynamic plays out in derivatives, equities, corporate debt, emerging-market debt and mortgages in past crises: Mexico’s default in 1982, the stock market crash in 1987, the bankruptcy of Orange County in 1994, and the global financial crisis of 2007-09. I'd be surprised if this tightening cycle, the fastest since the 1980s, didn't trigger something similar. I just don't know how serious it will be."
The period of easy money has already happened and mistakes were inevitably made (it's unlikely that British pension funds were the only financiers taking undue risks). Tighter monetary policy is what exposes them:
"Financial accidents are a feature of Fed tightening, not a bug. That's because higher interest rates dampen growth and inflation by tightening financial conditions, which include lower stock prices, higher private borrowing costs, and a stronger dollar but also things that come with financial accidents such as illiquidity, volatility, lenders pulling back and general risk aversion. Only if a financial accident tightens financial conditions enough to affect inflation or growth would the Fed stop or cut rates, as it did in 2008. The bar today is higher because inflation was under control then, but isn't now."
You can read Ip's full newsletter here (~4 minute read), in which he says he believes the Fed will continue tightening until "the financial system is crying out for liquidity".
3—Not a great look
4—Who uses the metaverse
Or rather, who uses Meta's metaverse, Horizon Worlds? Apparently not even those developing it want to dive into the $10 billion/year experiment:
"'Since launching late last year, we have seen that the core thesis of Horizon Worlds — a synchronous social network where creators can build engaging worlds — is strong,' Shah wrote in a memo last month. 'But currently feedback from our creators, users, playtesters, and many of us on the team is that the aggregate weight of papercuts, stability issues, and bugs is making it too hard for our community to experience the magic of Horizon. Simply put, for an experience to become delightful and retentive, it must first be usable and well crafted.
A key issue with Horizon's development to date, according to Shah's internal memos, is that the people building it inside Meta appear to not be using it that much. 'For many of us, we don't spend that much time in Horizon and our dogfooding dashboards show this pretty clearly,' he wrote to employees on September 15th. 'Why is that? Why don't we love the product we've built so much that we use it all the time? The simple truth is, if we don't love it, how can we expect our users to love it?"
Mark Zuckerberg is supposed to share "major updates to Horizon and avatar graphics" at Meta's annual conference this Tuesday (US time). We can't wait.
You can read the Verge's full scoop here (~3 minute read).
👨💻 Binance, the world's largest cryptocurrency exchange, lost an estimated $US566 million of its own BNB tokens after an "attacker found a way to forge a proof so that they could make two fraudulent withdrawals".
💰 "The ABC understands it is unlikely there will be any change to the stage 3 income tax cuts in the [Australian] October 25 budget, which were legislated under the former Coalition government and are due to come in to effect in 2024."
👷♀️ "Adjusting for demographic shifts (mostly the aging population), Americans are working at a rate well above the pre-Great Recession level, though below pre-pandemic peak."
🚆 "SNCF, the French national railroad, was among bullet train operators from Europe and Japan that came to California in the early 2000s with hopes of getting a contract to help develop the system... The company pulled out in 2011. 'There were so many things that went wrong,' Mr. McNamara said. 'SNCF was very angry. They told the state they were leaving for North Africa, which was less politically dysfunctional.'"