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Putin Warns Macron "Large-Scale Catastrophe" Looms At Ukraine Nuclear Plant

Putin Warns Macron "Large-Scale Catastrophe" Looms At Ukraine Nuclear Plant French President Emmanuel Macron and his Russian counterpart Vladimir Putin held a phone call Friday where the focus was ensuring the avoidance of disaster at the Zaporizhzhia nuclear plant in southern Ukraine. For weeks the site has emerged as the single most concerning hotspot in the conflict, given the possibility of nuclear accident. Over the past week tit-for-tat accusations between Russian and Ukrainian forces have intensified amid warnings of "another Chernobyl" if the standoff doesn't deescalate. Russia, which has about 500 of its troops occupying the nuclear power plant, the largest in Europe, has blamed Ukrainian forces for repeat shelling of the sensitive facility. Putin in Friday's call warned Macron about the potential for "large-scale catastrophe" at the plant, blaming Kiev for the continued shelling and the deterioration of safe operations.  The two leaders have talked dozens of times since the war began. AFP via Getty Images According to the call readout from the Kremlin side via Reuters: Putin said shelling of the Russian-controlled Zaporizhzhia nuclear plant in southern Ukraine, which he blamed on Kyiv, created the risk of "large-scale catastrophe". Both presidents agree on the need to send a team from the International Atomic Energy Agency to the plant. According to the Kremlin, Putin told Macron about continuing obstacles to supplying Russian food and fertilizer products to world markets. The day prior, IAEA chief Rafael Grossi said he's ready to lead an inspection team there, after an urgent call the inspect the complex was issued by Thursday's trilateral meeting of President Zelensky, Turkey's Recep Tayyip Erdogan, and Secretary-General António Guterres in Lviv, Ukraine.  Ukraine for its part has charged Russian forces with using the plant which supplies broad swathes of Europe with power as "nuclear blackmail". But following the Macron call, Putin confirmed readiness to facilitate an urgent IAEA mission. Zelensky has stated outright that anything that happens there will automatically be viewed as Moscow's fault. He also in Saturday statements indicated his forces won't stop attempting to liberate it from Russian troops: "Every Russian soldier who either shoots at the plant, or shoots using the plant as cover, must understand that he becomes a special target for our intelligence agents, for our special services, for our army," Zelenskiy said in a video address on Saturday night. It's clear that the plant has already been hit and partially damaged by shelling this month. Concern for potential contamination has raised such that international monitors have begun modeling various disaster scenarios: In case a nuclear disaster at Zaporizhzhia nuclear power plant occurred on Aug 15-18, this is how the released airborne radioactive contaminants would probably get dispersed - Ukrainian hydrometeorological institute pic.twitter.com/1dQLcCtt1u — Myroslava Petsa (@myroslavapetsa) August 18, 2022 Bloomberg has given the latest damage update Friday as follows: "Already only two of six reactors at the Zaporizhzhia Nuclear Power Plant are operating, potentially leaving Ukraine’s electricity grid facing collapse this winter, with the crisis spilling into neighboring European Union energy markets." "Europe’s biggest atomic-energy station, Zaporizhzhia has in recent weeks been hit by shelling, with Ukraine and Russia blaming each other," the report continues. "Explosions wrecked infrastructure and cables critical for cooling atomic reactions and transmitting power." The Kremlin has meanwhile alleged that Ukraine is planning a "false flag provocation" at Zaporizhzhia, even specifying something is being planned for Friday. There are unconfirmed reports being circulated that the Russian military even told local plant workers who are keeping it running to stay home Friday. Tyler Durden Fri, 08/19/2022 - 11:50.....»»

Category: dealsSource: nytAug 19th, 2022

As US Announces New $800M Ukraine Arms Package, Here"s The Total List Since War"s Start

As US Announces New $800M Ukraine Arms Package, Here's The Total List Since War's Start In a Thursday CNN interview Ukrainian Defense Minister Andriy Zagorodnyuk described a stalemated battlefield situation with Russia, while also urging more Western arms to be urgently sent. "The war is in a situation where the Russians cannot move anywhere further because of the weapons the West provided us. We managed now to make them stop," Zagorodnyuk said. "But unfortunately at the same time we don’t have enough weapons for a proper, serious, fully-fledged counter-offensive," he added. Yet a battlefield stalemate is where things can get dangerous fast, as is the case with the ongoing standoff at the Zaporizhzhia nuclear power plant. As we detailed earlier President Putin has warned his French counterpart Emmanuel Macron in a Friday phone call that Ukraine forces' "systematic shelling" risks a "large-scale catastrophe" at the Zaporizhzhia plant, based on his words in the Kremlin call readout.  But the West still appears to be holding out hope that ramped up arms shipments, including increasingly heavier and longer-range weapons, can tip the scales against the superior and larger Russian forces. This is at least the logic in Washington, despite little evidence the unprecedented defense aid packages have significantly halted or dented the Russian offensive.  Politico reports Friday: "The U.S. will announce a new military aid package for Ukraine on Friday, two people familiar with the announcement told Politico, with another $800 million in weapons and ammunition." This means the total so far in pledged defense packages (excluding other types of US aid) has just sailed north of $9 billion, according to the below figures. AFP/Getty Images "A third person said the next package will include Excalibur precision-guided munitions, which would further help Ukraine hit far-away Russian targets during the war’s artillery-heavy phase," the report continues. The package is to include additional HIMARS, or the High Mobility Artillery Rocket System, as well as Howitzers.  Russia is already warning that the possibility of a direct clash with NATO or the US is now higher than ever, also as on Thursday the defense ministry sent hypersonic missiles to be stationed in Kaliningrad, to be on 'ready' by three MiG fighter jets. Tensions with Ukraine's Western backers are also boiling because of recent explosions at Russian bases deep inside Crimea, leading to speculation of long-range attack capability by Ukraine. Politico speaks to the potential symbolism and timing of the new impending aid: "The tranche comes just days before Ukraine’s independence day on Aug. 24, which one DoD official suggested could also bring a fresh American show of support," it notes. Source: Ukraine Support Tracker via the Kiel Institute for the World Economy * * * Below is a timeline of all publicly disclosed major weapons shipments or funding packages going back to February 24, compiled by the thinktank, Quincy Institute for Responsible Statecraft: August 8 The Pentagon announced that it will send $1 billion worth of security assistance to Ukraine via presidential drawdown, including: HIMARS ammunition (This is an acronym for High Mobility Artillery Rocket System. These mobile missile launchers can fire a wide range of munitions, including rocket artillery and short-range ballistic missiles.) Artillery ammunition Javelin missiles and other anti-armor weapons August 1 The Pentagon announced an additional $550 million of security aid via presidential drawdown, including: HIMARS ammunition Artillery ammunition July 22 The Pentagon announced that it will send $270 million of military aid to Ukraine, with $175 million authorized via presidential drawdown and the other $95 million coming via USAI funds. This included: Four additional HIMARS  HIMARS ammunition Four Command Post vehicles (These can be used as a tactical operations center or an armored ambulance, among other things.) Tank gun ammunition Phoenix Ghost drones (These are a type of “loitering munition,” or a weapon that can wait in the air for extended periods of time before attacking a target. This was created by the United States for use in Ukraine.) July 8 The Pentagon announced an additional $400 million of military assistance via presidential drawdown, including: Four additional HIMARS HIMARS ammunition Artillery ammunition July 1 The Pentagon announced that it will send $820 million of security aid, with $50 million authorized via presidential drawdown and the remaining $770 million coming via USAI funds. This included: HIMARS ammunition Two National Advanced Surface-to-Air Missile Systems (NASAMS) (This system launches missiles to defend against various types of aircraft, including drones.) Artillery ammunition June 23 The Pentagon announced an additional $450 million in military assistance via presidential drawdown, including: Four HIMARS Artillery ammunition Grenade launchers Patrol boats June 15 The Pentagon announced an additional $1 billion in lethal aid, with $350 million authorized via presidential drawdown and $650 million coming from USAI funds. This included: Howitzers (This is a popular long-range artillery weapon.) Artillery ammunition  HIMARS ammunition Two Harpoon coastal defense systems (These launch missiles that fly just above the surface of the water to attack planes and ships.) June 1 The Pentagon announced an additional $700 million in military assistance via presidential drawdown, including: HIMARS ammunition Javelin missiles and other anti-armor weapons Artillery ammunition Four Mi-17 helicopters (These can be used for transport or combat.) May 19 The Pentagon announced $100 million in lethal aid via presidential drawdown, including: Howitzers On the same day, Congress passed a $40 billion aid package for Ukraine, roughly half of which was earmarked for military assistance. May 6 The Pentagon announced $150 million in military aid via presidential drawdown, including: Artillery ammunition April 21 DoD announced $800 million in further aid via presidential drawdown, including: Howitzers Artillery ammunition Phoenix Ghost drones April 13 The Pentagon announced that it will send an additional $800 million in military assistance via presidential drawdown, including: Howitzers Artillery ammunition Switchblade drones (This is another form of loitering munition.) Javelin missiles and other anti-armor weapons Armored personnel carriers 11 Mi-17 helicopters Various types of explosives April 6 The Pentagon announced an addition $100 million in aid via presidential drawdown, including: Javelin anti-armor systems April 1 DoD announced that it will send $300 million in lethal aid using USAI funds, including: Laser-guided rocket systems Switchblade drones Puma surveillance drones Anti-drone systems  Armored vehicles March 16 The Pentagon announced that it will send $800 million worth of military aid via presidential drawdown. The exact contents of this package are unclear, but it likely included Mi-17 helicopters, Javelin missiles, and Stinger anti-aircraft missiles. March 12 The White House announced that it will send $200 million in lethal aid via presidential drawdown, including: Javelin missiles  Stinger missiles March 10 Congress approved $13.6 billion in aid to Ukraine, roughly half of which was earmarked for military assistance. February 25 The White House announced that it will send $350 million in military aid via presidential drawdown, including: Anti-armor weapons Small arms Tyler Durden Fri, 08/19/2022 - 14:04.....»»

Category: smallbizSource: nytAug 19th, 2022

Putin Warns Macron "Large-Scale Catastrophe" Looms At Ukraine Nuclear Plant

Putin Warns Macron "Large-Scale Catastrophe" Looms At Ukraine Nuclear Plant French President Emmanuel Macron and his Russian counterpart Vladimir Putin held a phone call Friday where the focus was ensuring the avoidance of disaster at the Zaporizhzhia nuclear plant in southern Ukraine. For weeks the site has emerged as the single most concerning hotspot in the conflict, given the possibility of nuclear accident. Over the past week tit-for-tat accusations between Russian and Ukrainian forces have intensified amid warnings of "another Chernobyl" if the standoff doesn't deescalate. Russia, which has about 500 of its troops occupying the nuclear power plant, the largest in Europe, has blamed Ukrainian forces for repeat shelling of the sensitive facility. Putin in Friday's call warned Macron about the potential for "large-scale catastrophe" at the plant, blaming Kiev for the continued shelling and the deterioration of safe operations.  The two leaders have talked dozens of times since the war began. AFP via Getty Images According to the call readout from the Kremlin side via Reuters: Putin said shelling of the Russian-controlled Zaporizhzhia nuclear plant in southern Ukraine, which he blamed on Kyiv, created the risk of "large-scale catastrophe". Both presidents agree on the need to send a team from the International Atomic Energy Agency to the plant. According to the Kremlin, Putin told Macron about continuing obstacles to supplying Russian food and fertilizer products to world markets. The day prior, IAEA chief Rafael Grossi said he's ready to lead an inspection team there, after an urgent call the inspect the complex was issued by Thursday's trilateral meeting of President Zelensky, Turkey's Recep Tayyip Erdogan, and Secretary-General António Guterres in Lviv, Ukraine.  Ukraine for its part has charged Russian forces with using the plant which supplies broad swathes of Europe with power as "nuclear blackmail". But following the Macron call, Putin confirmed readiness to facilitate an urgent IAEA mission. Zelensky has stated outright that anything that happens there will automatically be viewed as Moscow's fault. He also in Saturday statements indicated his forces won't stop attempting to liberate it from Russian troops: "Every Russian soldier who either shoots at the plant, or shoots using the plant as cover, must understand that he becomes a special target for our intelligence agents, for our special services, for our army," Zelenskiy said in a video address on Saturday night. It's clear that the plant has already been hit and partially damaged by shelling this month. Concern for potential contamination has raised such that international monitors have begun modeling various disaster scenarios: In case a nuclear disaster at Zaporizhzhia nuclear power plant occurred on Aug 15-18, this is how the released airborne radioactive contaminants would probably get dispersed - Ukrainian hydrometeorological institute pic.twitter.com/1dQLcCtt1u — Myroslava Petsa (@myroslavapetsa) August 18, 2022 Bloomberg has given the latest damage update Friday as follows: "Already only two of six reactors at the Zaporizhzhia Nuclear Power Plant are operating, potentially leaving Ukraine’s electricity grid facing collapse this winter, with the crisis spilling into neighboring European Union energy markets." "Europe’s biggest atomic-energy station, Zaporizhzhia has in recent weeks been hit by shelling, with Ukraine and Russia blaming each other," the report continues. "Explosions wrecked infrastructure and cables critical for cooling atomic reactions and transmitting power." The Kremlin has meanwhile alleged that Ukraine is planning a "false flag provocation" at Zaporizhzhia, even specifying something is being planned for Friday. There are unconfirmed reports being circulated that the Russian military even told local plant workers who are keeping it running to stay home Friday. Tyler Durden Fri, 08/19/2022 - 11:50.....»»

Category: dealsSource: nytAug 19th, 2022

Chris Hedges: War With Iran?

Chris Hedges: War With Iran? Authored by Chris Hedges via ConsortiumNews.com, The United States, Saudi Arabia and Israel, responsible for military fiascos, hundreds of thousands of deaths and innumerable war crimes in the Middle East, are now plotting to attack Iran. Illustration by Mr. Fish — “Biden at Bat” The United States, Israel and Saudi Arabia are plotting a war with Iran. The 2015 Iranian nuclear arms accord, or Joint Comprehensive Plan of Action (JCPOA), which Donald Trump sabotaged, does not look like it will be revived.  U.S. Central Command (CENTCOM) is reviewing options to attack if Teheran looks poised to obtain a nuclear weapon and Israel, which opposes U.S.-Iran nuclear negotiations, carries out military strikes. During his visit to Israel, Biden assured Prime Minister Yair Lapid that the U.S. is “prepared to use all elements of its national power,” including military force, to stop Iran from building a nuclear weapon.  Saudi Arabia, Israel and the U.S. function as a troika in the Middle East. The Israeli government has built a close alliance with Saudi Arabia, which produced 15 of the 19 hijackers in the Sept. 11 attacks and has been a prolific sponsor of international terrorism, supporting Salafi jihadism, the basis of al-Qaeda, and such groups as the Afghanistan Taliban, Lashkar-e-Taiba (LeT) and the Al-Nusra Front.   The three countries worked in tandem to back the 2013 military coup in Egypt, led by General Abdel Fattah al-Sisi, who overthrew its first democratically elected government. He has imprisoned tens of thousands of government critics, including journalists and human rights defenders, on politically motivated charges. The Sisi regime collaborates with Israel by keeping its common border with Gaza closed to Palestinians, trapping them in the Gaza strip, one of the most densely populated and impoverished places on earth.  Israel, the only nuclear power in the Middle East, has conducted an ongoing campaign of covert attacks on Iranian nuclear sites and nuclear scientists. Four Iranian nuclear scientists were assassinated, presumably by Israel, between 2010 and 2012. In July 2020, a fire, attributed to an Israeli bomb, damaged Iran’s Natanz nuclear site. In November 2020, Israel used remote control machine guns to assassinate Iran’s top nuclear scientist.  In January 2020, the United States assassinated Gen. Qassem Soleimani, the head of Iran’s elite Quds Force, along with nine other people including a key figure in the anti-ISIS coalition, Abu Mahdi al-Muhandis. It used an MQ-9 Reaper drone to fire missiles into his convoy, near Baghdad’s airport.  Iranian Restraint If similar attacks had been carried out by Iranian operatives inside Israel, it would have triggered a war. Only Iran’s decision not to retaliate, beyond lobbing about a dozen ballistic missiles at two military bases in Iraq, prevented a conflagration.  On July 7, Iran informed The International Atomic Energy Agency (IAEA) that  it is using IR-6 centrifuges with “modified subheaders.” The declared purpose of the enrichment process at its underground facility at Fordow is to create uranium isotope enriched up to 20 percent — far below the 90 percent enrichment levels necessary to create weapons-grade uranium. Under the JCPOA agreement, enrichment levels were capped at 3.67 percent. Israel has allocated $1.5 billion for a potential strike against Iran and, during the first week of June, held large-scale military exercises, including one over the Mediterranean and in the Red Sea, in preparation to attack Iranian nuclear sites using dozens of fighter aircraft, including Lockheed Martin F-35 fighter jets.   The 2016 Memorandum of Understanding signed by President Barack Obama provides a 10-year, $38 billion military package for Israel.  Israel and its lobby in the U.S. are working to scuttle  negotiations with Iran to monitor its nuclear program. The preparation for war mirrors the Israeli pressure on the U.S. to invade Iraq, one of the worst strategic decisions in U.S. history.  Former British Prime Minister Tony Blair, in testimony before the British Iraq war commission, offered this account of his discussions with George W. Bush in Crawford, Texas in April 2002: “As I recall that discussion, it was less to do with specifics about what we were going to do on Iraq or, indeed, the Middle East, because the Israel issue was a big, big issue at the time. I think, in fact, I remember, actually, there may have been conversations that we had even with Israelis, the two of us, whilst we were there. So that was a major part of all this.”    Saudi Arabia, which seeks to dominate the Arab world, severed ties with Iran in 2016 after its embassy in Tehran was stormed by protesters following Riyadh’s execution of Shia cleric Sheikh Nimr al-Nimr. Saudi Arabia, with Chinese help, has built a plant to process uranium ore and acquired ballistic missiles. Saudi Arabia signed a series of letters in 2017 with the U.S. to purchase weapons totaling $110 billion immediately, and $350 billion over the next decade. Awar with Iran would be a catastrophe of unimaginable proportions.  It would spread swiftly throughout the region. The Shiites across the Middle East would see an attack on Iran as a religious war against Shiism. The two million Shiites in Saudi Arabia, concentrated in the oil-rich Eastern province; the Shiite majority in Iraq; and the Shiite communities in Bahrain, Pakistan and Turkey would join the fight against the U.S. and Israel.  Iran would use its Chinese-supplied anti-ship missiles, rocket and bomb-equipped speedboats and submarines, mines, drones and coastal artillery to shut down the Strait of Hormuz, the corridor for 20 percent of the world’s oil and liquified gas supply. Oil production facilities in the Persian Gulf would be sabotaged. Iranian oil, which makes up 13 percent of the world’s energy supply, would be taken off the market. Oil would jump to over $500 a barrel and perhaps, as the conflict drags on, to over $750 a barrel. Our petroleum-based economy, already reeling under rising prices because of the sanctions on Russia, would grind to a halt. Israel would be hit by Iranian Shahab-3 ballistic missiles. Hezbollah’s store of Iranian-supplied rockets that allegedly can reach any part of Israel, including Israel’s nuclear plant at Dimona, would also be deployed. Strikes by Iran and its allies on Israel, as well as on American military installations in the region, would leave hundreds, maybe thousands, dead. In 2002, the U.S. military conducted its “most elaborate war game” ever, costing over $250 million. Known as the Millennium Challenge, the exercise was between a Blue Force (the U.S.) and the Red Force (widely considered as a stand-in for Iran). It was meant to validate America’s “modern, joint-service war-fighting concepts.” It did the opposite. The Red Force, led by retired Marine lieutenant general Paul Van Riper, conducted a swarm of kamikaze suicide boat attacks and destroyed 16 U.S. warships in under 20 minutes. When the war game was reset, it was rigged in favor of the Blue Force. The Blue Force was given access to experimental technology – including that which doesn’t exist such as airborne laser weapons. Meanwhile, the Red Force was told they weren’t allowed to shoot down the Blue Team’s aircraft, had to keep their offensive weapons in the open and could not use chemical weapons. Even then, the Blue Force could not achieve all of its objectives as Riper unleashed a guerrilla insurgency on the occupying forces. The US-Saudi Tandem President Joe Biden and Saudi Crown Prince Mohammed bin Salman bin Abdulaziz greeting at Al-Salam Palace in Jeddah, on Friday. (Saudi Press Agency/Wikipedia) Why shouldn’t Joe Biden be feted by the murderous regime of Saudi Arabia and the apartheid state of Israel? He and the U.S. have as much blood on their hands as they do. Yes, in 2018 the de facto ruler of Saudi Arabia, Mohammed bin Salman, ordered the assassination and dismemberment of my friend and colleague Jamal Khashoggi. Yes, Israel assassinated Palestinian journalist Shireen Abu Akleh. But Washington has more than matched the crimes carried out by Israel and the Saudis, including against journalists.  The imprisonment of Julian Assange – who released the collateral murder video showing U.S. helicopter pilots laughing as they shot to death two Reuters journalists and a group of civilians in Iraq in 2007 – is designed to destroy Assange psychologically and physically. The corpses of civilians, including children, piled up by Israel and Saudi Arabia, who do much of their killing in Gaza and Yemen with U.S. weapons, don’t come close to the hundreds of thousands of dead the U.S. has left behind in the two decades of warfare it has perpetrated in the Middle East.  In 1991, a U.S.-led coalition destroyed much of Iraq’s civilian infrastructure, including water treatment facilities resulting in sewage contaminating the country’s drinking water. Then followed years of U.S., U.K. and French airstrikes enforcing a “No Fly Zone” along with crushing sanctions they imposed via the U.N. From 1991 to 1998, these sanctions alone were estimated to have killed 100,000 to 227,000 Iraqi children under the age of five, although the exact figures have been the subject of much dispute. The U.S. “Shock and Awe” bombing campaign of Iraqi urban centers during its subsequent invasion of Iraq in 2003 dropped 3,000 bombs on civilian areas, killing over 7,000 noncombatants in the first two months of the war.  By one estimate, the U.S. has been responsible for directly or indirectly killing nearly 20 million people since the end of the Second World War.  Israel and Saudi Arabia are gangster states. But so is the United States. “There are few of them,” Biden, reacting to Democratic lawmakers who have criticized Israel’s treatment of the Palestinians, told Israel’s Channel 12 news. “I think they’re wrong. I think they’re making a mistake. Israel is a democracy. Israel is our ally. Israel is a friend and I make no apologies.” The angst about Biden’s not holding the Saudis and the Israelis to account on this visit is risible, as if we have any credibility left that allows us to arbitrate between right and wrong. The idea that Biden and the U.S. are brokers for peace was eviscerated long ago. The U.S. offers shameless support for Israel’s right-wing government, including vetoing U.N. resolutions that censor Israel. It refuses to condition aid on a respect for human rights even as Israel launches repeated murderous assaults against the civilian population in Gaza, labels Palestinian NGOs as terror groups, expands illegal Jewish-only settlements, carries out aggressive housing evictions of Palestinian families and mistreats Palestinian and Arab-American citizens at points of entry and within the Occupied Palestinian Territories. The idea that the U.S. represents and promotes virtue illustrates the self-delusion that accompanies America’s moral and physical degeneration. The rest of the world, which recoils in repugnance at what the U.S. has become, does not take it seriously. They fear U.S. bombs. But fear is not respect. They no longer envy America’s hedonistic mass culture, tarnished by mass shootings, social inequality, the decay of infrastructure, dysfunction and a Grand Guignol-style of politics that has turned civil and political discourse into a tawdry burlesque. America is a grim joke, one about to be made worse when the Christian fascists, bigots and conspiracy theorists take control of Congress in the fall, and I expect, the presidency two years later. The U.S., along with Israel, makes war on Muslims who, with an estimated 1.9 billion adherents, comprise nearly 25 percent of the world population. The U.S. has turned many in the Muslim world into its enemies. The Muslim world does not hate the U.S. for its values. It hates its hypocrisy. It hates its racism, its refusal to honor their political aspirations, its lethal attacks and military occupations and its crippling sanctions. Muslims express the rage felt by Guatemalans, Cubans, Congolese, Brazilians, Argentines, Indonesians, Panamanians, Vietnamese, Cambodians, Filipinos, North and South Koreans, Chileans, Nicaraguans and Salvadorans – those Frantz Fanon called “the wretched of the earth.” They too were slaughtered by the U.S. high-tech military machine and subjugated, humiliated, forced to accept U.S. hegemony and killed in American clandestine torture centers or by C.I.A.-backed assassins. No one is held accountable. The C.I.A. blocked all investigations into its torture program, including destroying videotape evidence of interrogations involving torture and classifying nearly all of the 6,900-page report by the Senate Select Committee on Intelligence that examined the C.I.A.’s post-9/11 program of detention, torture and other abuse of detainees.  Biden goes to Saudi Arabia and Israel as a supplicant. As a presidential candidate, he called Saudi Arabia a “pariah” and vowed to make it “pay the price” for Khashoggi’s murder. But with the rising price of oil, Biden is whitewashing the murder, along with the humanitarian disaster the Saudis have caused in Yemen, imploring the Saudis to increase output, a plea Prince Salman has rejected. Similarly, Biden is weak in Israel, powerless against the expansion of Jewish settlements and assaults on Palestinians, and unwilling to move the U.S. Embassy back to Tel Aviv from Jerusalem, a move by the Trump administration that violates international law. Biden’s staff was reduced to pleading with the Israelis not to embarrass him as they did during his 2010 visit as vice president. During his 2010 visit, Israel announced it was building 1,600 new Jewish-only houses in illegal settlements in occupied East Jerusalem. The Obama White House angrily condemned “the substance and timing of the announcement.” How can the U.S. bar Cuba, Nicaragua and Venezuela from a summit of the Americas in Los Angeles and embrace the Saudi regime and the Israeli aparatheid state? How can it decry the war crimes of Russia and unleash industrial violence on the Mulism world? How can it plead for the 12 million Uyghurs, mostly Muslim, living in Xinjiang, and ignore the Palestinians? How can it justify another “preemptive war,” this time against Iran? The duplicity is not lost on most of the world. They know who the U.S. is. They know that in American eyes they are unworthy. The inevitable demise of the U.S. on the world stage is cheered by the majority of the planet. The tragedy is that, as it goes down, it is determined to take so many others down with it. *  *  * AUTHOR’S NOTE TO READERS: There is now no way left for me to continue to write a weekly column for ScheerPost and produce my weekly television show without your help. The walls are closing in, with startling rapidity, on independent journalism, with the elites, including the Democratic Party elites, clamoring for more and more censorship. Bob Scheer, who runs ScheerPost on a shoestring budget, and I will not waver in our commitment to independent and honest journalism, and we will never put ScheerPost behind a paywall, charge a subscription for it, sell your data or accept advertising. Please, if you can, sign up at chrishedges.substack.com so I can continue to post my now weekly Monday column on ScheerPost and produce my weekly television show, The Chris Hedges Report. This column is from Scheerpost, for which Chris Hedges writes a regular column. Click here to sign up for email alerts. Tyler Durden Tue, 07/19/2022 - 23:25.....»»

Category: blogSource: zerohedgeJul 20th, 2022

Why Nuclear Energy Is More Relevant Than Ever

Why Nuclear Energy Is More Relevant Than Ever By Josh Owens of Oilprice.com The global energy market is in turmoil, with electricity bills around the world soaring and scant options when it comes to securing new supply. A combination of Russia’s invasion of Ukraine, years of underinvestment in new projects, and the rapid return of demand after covid have overwhelmed the energy market. The price of everything from coal to natural gas, oil, and even lithium is soaring. And while it may be impossible to conjure up new supply in the short term, now is certainly a good time to reconsider how best to invest in our energy infrastructure going forward so as to fortify it against future crises. In particular, it is time to revisit the debate over nuclear power, consider why it fell out of favor, and if it is time to bring it back. The state of nuclear power today Following the Fukushima disaster in 2011, nuclear power fell out of favor around the world. Most notably, Japan and Germany moved to phase out nuclear power altogether. Then, following the shale boom in the U.S. and the remarkable cost reduction of solar and wind energy, the economics of nuclear power grew increasingly unattractive. More recently, however, interest in nuclear energy is bouncing back. China has committed to building 150 new reactors in the next 15 years, the Biden administration is investing $6 billion in saving financially distressed nuclear reactors, and the European Commission declared that some nuclear energy investments would be labeled as ‘green’. This sudden rush to support nuclear is perhaps unsurprising if you consider that the IEA’s road map to achieve net-zero emissions by 2050 had nuclear power generation nearly doubling. Despite that roadmap, nuclear has been struggling to gain support. Globally, nuclear energy made up 10% of global electricity generation in 2021, down from 17% in 2000. It did, however, see a 4% increase from the year before, adding 100Twh to reach a total of 2,736 TWh. It seems nuclear power could be on the brink of a renaissance, and Russia’s invasion of Ukraine could well speed that up, but there are still plenty of reasons to be wary of the energy source. The argument against nuclear power Ultimately, the argument against nuclear power comes down to three key factors - safety, cost, and time. The most visible problem with nuclear power is the danger of a nuclear meltdown. The fact that by simply naming two cities, Fukushima and Chornobyl, one can evoke images of a nuclear catastrophe is evidence enough of the fear that is associated with nuclear energy. A nuclear meltdown and the resultant radiation can poison the surrounding environment, force citizens to permanently flee their homes, and cost lives. Beyond that more direct threat, there is also the safety aspect of disposing of nuclear waste. Roughly 3% of nuclear waste is so radioactive that it has to be securely stored for 50 years. While there isn’t a huge volume of waste to deal with at the moment, an expansion of nuclear energy will only add to this risk. From the risk of an explosion or nuclear meltdown to the very real and unsolved problem of dealing with nuclear waste, nuclear energy undeniably poses a degree of risk. The second, and arguably more important, weakness of nuclear power is the large up-front cost associated with completing a project. Nuclear energy advocates have long been claiming that costs will fall, but project after project has overrun its budget. The latest example of this is the Vogtle 3 and 4 nuclear-generating stations in Georgia, which are now due to come in 250% over budget. In 2017, two unfinished nuclear reactors in South Carolina were abandoned due to cost overruns, wasting roughly $9 billion. Those nuclear projects that have succeeded in the U.S. have been supported by government research, development, and insurance. Realistically, financing a nuclear project is way beyond the balance sheet capacity of most utilities in the U.S. While proponents may promise that prices will fall, the track record of nuclear power projects running over budget is hard to argue with. Finally, opponents of nuclear power will frequently point to the time it takes to bring nuclear power projects online. Yes, we need energy now, yes we want low-carbon energy, and yes we need it to be reliable, but if we sign off on building a nuclear power plant today, it will take 10 years or more to produce its first drop of energy. The nuclear power plants in Georgia that are 250% over budget are also six years behind schedule. It’s fine to sell the dream of nuclear energy, but why waste money on an energy project that, if it avoids being abandoned, will be providing energy for a market that will look very different from today’s?  For the past decade, this argument has been difficult to counter, but as the geopolitical, environmental, and technological context has shifted, it has become necessary to revisit the debate. Why it’s time for a nuclear renaissance The main strengths of nuclear power are that it is clean, reliable, and space-efficient. It is these characteristics that have made it the dominant source of clean electricity in the United States. Ultimately, the reason it has not been expanding over the last decade is that the cost and risks associated with nuclear energy have been deemed to outweigh the benefit of this clean and reliable energy. Today, with energy prices soaring, global emissions rising, and nuclear costs potentially falling, that calculation has changed. Firstly, if governments around the world are serious about their commitment to cut emissions, nuclear energy will have to be a central part of their energy mix. Secondly, the geopolitical instability and supply chain problems the world is currently experiencing have thrown the importance of energy security into sharp relief. Finally, new technologies and approaches for nuclear energy production could counter some of the cost and time concerns of critics. While nuclear energy is far from a silver bullet, it would undoubtedly make the global energy mix both cleaner and more resilient. If governments and international organizations are serious about the aggressive emissions reduction targets they have set, then then they will need a clean and consistent energy supply. That means an energy system that uses renewables combined with battery storage, fossil fuels combined with carbon capture, geothermal energy, or nuclear energy. Of those options, nuclear energy is the only one that can provide energy at scale currently. This fact means that every gigawatt of nuclear energy that we lose is a gigawatt of clean energy that is likely to be replaced by coal or natural gas. This is a phenomenon that was seen in New York when it closed the Indian Point plant. The argument for nuclear energy is even more compelling when you add the need to decarbonize transportation and industry, a task that will require huge amounts of new energy supply to create hydrogen and ammonia. Finally, there is the physical footprint of nuclear energy, a footprint that is set to shrink with the advent of small modular reactors. While renewable megaprojects face resistance due to the threat they pose to ecosystems, modern nuclear reactors pose relatively little threat to the immediate environment. From an environmental perspective, the world is undeniably better off with nuclear energy than it would be without it.  There are few events in modern history that have highlighted the importance of energy security more than Russia’s invasion of Ukraine. The fact that Russia is both at war with Ukraine and paying Kyiv for natural gas flows is difficult to get your head around. Ultimately, access to energy is existential. Europe cannot afford to stop importing natural gas and Russia cannot afford to stop selling it. When considering nuclear power in this context, it represents a more diversified and therefore more resilient energy mix. Russia is a major exporter of uranium, so any expansion of nuclear energy would have to include a diverse and secure supply chain. But if Europe and the U.S. had backed nuclear energy a decade ago, there is no doubt energy markets would be in a very different place today. Another geopolitical issue of importance is the influence that a large nuclear energy actor can have over nuclear proliferation. According to the IEA’s pathway to net-zero emissions by 2050, two-thirds of new nuclear reactors will be built in emerging markets and developing economies. Meanwhile, of the 72 nuclear reactors being built outside Russia, less than 3% are being built by U.S. companies. China and Russia are building 20% and 50% of those reactors respectively. In short, that means both Russia and China are in an incredibly strong position to influence the international nuclear industry. Between the energy security concerns highlighted by Russia’s invasion of Ukraine and the national security concerns associated with influence over the global nuclear regime, the geopolitical role of nuclear energy is increasingly important. The final reason to reconsider the role of nuclear power in the modern era is the technological advancements the industry has undergone in the past decade. Nuclear energy is becoming smaller, safer, and faster. While it is necessary to take the promises of new nuclear technologies with a grain of salt, projects like the Rolls Royce SMR are expected to significantly reduce the price of nuclear energy. Bill Gates, predictably, is also getting in on the action with an SMR that is expected to reduce the cost of nuclear by 50%. Other approaches include new technologies to reduce the amount of waste created, new safety features that eliminate the need for offsite electricity, and new coolants such as helium or molten salt. While it could be argued that promises of new nuclear technology are just as valid as promises of miracle batteries and nuclear fusion, the development of SMRs is considerably further along than either of those energy innovations. It is important when considering the future of nuclear energy to recognize that the industry itself is developing and costs and timelines could well fall.  Ultimately, while the promise of new nuclear technology may not convince critics, the need to reduce emissions and increase energy and national security is going to become increasingly hard to ignore. The Best Way To Embrace Nuclear Energy If we are to embrace nuclear energy, the most difficult problem to overcome will be the cost. In order to deal with this problem, one must reimagine the role of nuclear power in our society. It will be necessary, as argued in a previous article on Oilprice.com, to treat our nuclear power in the same way we treat military jets. These are necessary, regardless of the cost. A private-sector contractor will submit a bid, have it approved, and then build the system. The first project may run over budget, but it will be completed and the following projects will likely be progressively cheaper - bringing the average cost down. This is a matter of energy security, environmental protection, and geopolitical influence. It does not have to be, and quite possibly never will be, a commercially viable power source. As energy prices, geopolitical tensions, and global carbon emissions soar, the call for nuclear energy will only grow louder. In the words of Voltaire, the best is the enemy of the good, and nuclear energy is looking like an increasingly good solution.  Tyler Durden Tue, 06/07/2022 - 03:30.....»»

Category: blogSource: zerohedgeJun 7th, 2022

Biden"s Big Lie: "Green" Energy Doesn"t Save Money, It"s 4-6 Times More-Expensive

Biden's Big Lie: 'Green' Energy Doesn't Save Money, It's 4-6 Times More-Expensive Op-Ed authored by Stephen Moore via The Epoch Times, President Joe Biden keeps claiming that wind and solar energy are going to save money for consumers. But more government subsidies to “renewable energy” is a key feature of the White House anti-inflation strategy recently announced by Biden. U.S. Representative Alexandria Ocasio-Cortez (D-N.Y.) and U.S. Senator Ed Markey (D-Mass.) (R) speak during a press conference to announce Green New Deal legislation to promote clean energy programs outside the U.S. Capitol in Washington, D.C., on Feb. 7, 2019. (Saul Loeb/AFP via Getty Images) He probably got that idea from John Kerry, the administration’s climate czar, who recently claimed that “solar and wind are less expensive than coal or oil or gas.” Pete Buttigieg, the Biden Transportation secretary, makes the same claims about the thousands of dollars that motorists can save if they buy electric cars. This couldn’t be more wrong. Proponents of “green” energy boondoggles are often masters at playing with the numbers, because that is the only way that wind and solar electricity generation make any sense. Advocates such as Kerry love to focus on the low operating costs of solar and wind since they don’t require constant purchases of fuel. Ignoring the relatively short lifespan of solar and wind components, as well as the high initial investment, can make it appear as though solar and wind operate at lower costs than fossil fuels or nuclear power. Let’s get the facts straight. The cost isn’t just what you pay at the retail level for gas or power. It also includes the taxes you pay to subsidize the power. A 2017 study by the Department of Energy found that for every dollar of government subsidy per BTU unit of energy produced from fossil fuels, wind and solar get at least $10. That’s anything but a money saver. The reason the subsidies are so high is that solar and wind have additional costs compared to their more reliable competition. “Green” energy sources are non-dispatchable, meaning their output can’t be changed to match demand. The wind doesn’t blow harder, and the sun doesn’t shine brighter, just because electricity use is peaking. Conversely, fossil fuel entities—such as a coal plant—can ramp up generation when we need it most and ramp down when demand falls. Widespread adoption of solar and wind generation would necessitate expensive batteries on a large scale to ensure that people still have power when the wind stops blowing or when the sun stops shining—like it does every single night. So, unlike reliable and flexible natural gas, solar and wind require large-scale storage solutions: massive banks of batteries that are hardly environmentally friendly but are also extremely expensive. And since batteries don’t last forever, they add to both the initial expense and maintenance costs during the life of a solar or wind energy generating station. The same problem exists with electric cars. The sticker price on EVs is considerably higher than for conventional gas-operated cars, and the so-called savings over time assume that the electric power for recharging is free. But it isn’t and power costs are rising almost as fast as gas prices. Factors such as these are consistently ignored by Kerry and other “green” energy activists. To genuinely evaluate dissimilar energy sources and provide an apples-to-apples comparison, the U.S. Energy Information Administration uses the Levelized Cost of Energy (LCOE) and the Levelized Cost of Storage (LCOS). These measures consider the initial costs, the lifespan of generation and storage systems, maintenance and fuel costs, decommissioning expenses, subsidies, etc., and compare that to how much electricity is produced over a power plant’s lifetime. The numbers don’t lie: “green” energy is a complete waste of resources. The LCOE and LCOS for solar and on-shore wind farms are four times as expensive as natural gas. But offshore wind takes the cake—it’s six times as expensive as natural gas. Imagine paying four to six times as much every month for the same electricity! That’s the green paradise world that the Biden administration wants for America. Yet, it’s even worse than that because electric power costs greatly affect the cost of producing nearly everything else. In the case of producing aluminum, for example, a third of the total production cost is electricity alone. Imagine what quadrupling electricity prices would do to the prices of all the goods and services that people buy. If you think inflation is bad now, just wait until the nation is dependent on wind and solar—then you’ll see REAL price increases. And despite official government data contradicting their own claims, the Biden administration—including Kerry—continues spouting simple untruths on wind and solar. They hope that no one will check their fantastic facts. To the left, wanting it to be true, makes it true. All the while, the middle class is being crushed by $4-a-gallon gasoline and businesses everywhere are buckling under $5-per-gallon diesel. The Wall Street Journal warns that electric power blackouts could be coming because of overreliance on wind and solar power. At some point, if this push for green energy continues, the whole nation will start to look like California, where gas is $6 a gallon, the lights go out, and electric cars are stranded because of rolling blackouts.  If that’s our “green” future, then Americans should want nothing to do with it. Stephen Moore is a distinguished fellow in economics at the Heritage Foundation, and E.J. Antoni is a research fellow in Heritage’s Center for Data Analysis. Moore is a co-founder of the Committee to Unleash Prosperity, where Antoni is a senior fellow. Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times or Zero Hedge. Tyler Durden Thu, 05/19/2022 - 20:40.....»»

Category: dealsSource: nytMay 19th, 2022

As Putin Threatens Nuclear Disaster, Europe Learns to Embrace Nuclear Energy Again

In early March, the world looked on in horror as a fire broke out at Europe’s largest nuclear power plant in southeast Ukraine. The blaze at the Zaporizhzhia facility following shelling by invading Russian forces was eventually brought under control, and no leaked radiation was reported, though the potential for catastrophe prompted Ukraine President Volodymyr… In early March, the world looked on in horror as a fire broke out at Europe’s largest nuclear power plant in southeast Ukraine. The blaze at the Zaporizhzhia facility following shelling by invading Russian forces was eventually brought under control, and no leaked radiation was reported, though the potential for catastrophe prompted Ukraine President Volodymyr Zelenskyy to accuse his Russian counterpart Vladimir Putin of “nuclear terrorism.” “There are six nuclear reactors there,” Zelensky said of Zaporizhzhia. “In Chernobyl, it was one reactor that exploded, only one.” By referencing Chernobyl—the nuclear power plant in northern Ukraine that became the site of the world’s worst nuclear disaster in 1986—Zelensky was making the stakes very plain. But strange as it may sound, those scenes at Zaporizhzhia may inadvertently contribute to a new dawn for nuclear power. [time-brightcove not-tgx=”true”] The instability resulting from the Russian invasion—as well as mounting evidence of war crimes—has made finding alternatives to Russian oil and liquid natural gas (LNG) a policy priority for European nations who want to stop funding Putin’s war machine. With few options that offer true energy sovereignty, there is now renewed enthusiasm for nuclear energy among politicians in Europe. On April 8, British Prime Minister Boris Johnson announced the U.K. would build up to eight new nuclear plants by 2030 to ensure “we are never again subject to the vagaries of global oil and gas prices” and “can’t be blackmailed by people like Vladimir Putin.” Across Europe, there has been a growing acceptance that nuclear energy is a vital plinth of efforts to fight climate change, and Russia’s invasion of Ukraine has catalyzed that trend by injecting a national security argument. And as a leader in revolutionary new nuclear technology, the U.S. stands to be the chief geostrategic beneficiary of any revival. The question is whether engrained, ideological aversion to nuclear power in key stakeholder states, particularly Germany, will quell that momentum. Why Nuclear Power is Back on the Discussion Table Collectively, the E.U. imported more than 60% of its energy in 2019. Of that, 47% of the bloc’s imported coal came from Russia, along with 41% of its imported LNG, and 27% of its imported crude oil. The ideal solution is to replace coal and oil with renewables like wind, solar and tidal power. However, despite some great advances in battery technology amid heaps of investment, there is still not a viable storage solution to provide power when the sun isn’t shining, or wind stops blowing. This means each nation’s energy portfolio requires a “firm” element. The cheapest option is simply to swap out dirty coal for comparatively clean LNG, but Putin’s aggression has underscored the hidden costs of that approach. Not only is nuclear energy immune to the vicissitudes of oil and gas prices, it’s also a zero-carbon technology. Beyond the practically uncountable damage greenhouse gas emissions inflict on the lives and livelihoods of people globally, the air pollution that results from burning fossil fuels directly led to 8.7 million deaths in 2018 alone, according to research published last year. Meanwhile, despite the raft of high-profile disasters, historic fatalities from the civil nuclear industry are measured in the low thousands. In February, the E.U. classified nuclear energy as “green,” drawing a backlash from environmentalists who point to risks associated with accidents and nuclear waste. But many energy experts counter that it’s a necessary element of a viable net-zero economy. “Nuclear power is an important source of low-carbon electricity and heat that can contribute to attaining carbon neutrality and hence help to mitigate climate change,” wrote Olga Algayerova, Executive Secretary of the United Nations Economic Commission for Europe, in a report published in the lead up to November’s COP26 climate talks. And boosting the capacity of Europe’s existing nuclear reactors—which don’t normally run at full tilt, due to the growing inclusion of renewables—was one of the solutions the International Energy Agency (IEA) recently proposed to reduce European reliance on Russian LNG. “The majority of countries in Europe will be even more pro-nuclear now,” says Kai Vetter, a professor of nuclear engineering at the University of California, Berkeley. Even before the war in Ukraine, the IEA was saying that the nuclear industry must nearly double in size over the next two decades to meet global net-zero emissions targets. In 2018, the Intergovernmental Panel on Climate Change (IPCC) published a 400-page special report, “Global Warming of 1.5°C,” which offered four pathways to mitigate global temperature rises. All four pathways increased the use of nuclear power in relation to 2010, by an amount ranging from 59% to 106% by 2030, and from 98% to 501% by 2050. Since the invasion of Ukraine, E.U., policymakers grappling with how to wean their nations off Russian energy are seeing nuclear as an increasingly viable alternative. Why Some E.U. Countries Remain Skeptical of Nuclear On the other hand, nuclear power remains deeply political in Europe, not least after the 2011 Fukushima meltdown in Japan reenergized anti-nuclear advocates in the region. Perhaps the most important country opposing nuclear is Germany—which also happens to be the E.U.’s largest user of Russian energy. Germany’s ruling coalition partner Green Party has its roots as an advocacy group specifically in opposition to nuclear energy, and the country was about to take its nuclear power offline when the war began. As Russian tanks rolled into Ukraine in February, Robert Habeck, German Vice-Chancellor and a Green Party leader, said he wouldn’t rule out extending the life of Germany’s three remaining nuclear plants on “ideological” grounds. But he soon backtracked and insisted decommissioning would take place as planned. Instead, Germany has gone cap in hand to Qatar and the UAE to seek alternative sources of liquid natural gas despite climate and human-rights concerns. “It’s so incomprehensible,” says Vetter. “There’s amazing naiveté in Germany in my opinion.” Nuclear power is an issue that splits Europe. Although most E.U. nations are pro-nuclear, at COP26 a group of five—Austria, Denmark, Germany, Luxembourg and Portugal—banded together to urge the European Commission to keep nuclear out of the E.U.’s green finance taxonomy. “We have plenty of evidence of how dangerous nuclear power can be,” Austrian Energy Minister Leonore Gewessler told a COP26 side-event on Nov. 11. The reasons for each member’s opposition are varied and complex. In Germany and Austria, a sense of powerlessness amid fallout from the Chernobyl disaster melded anti-Soviet sentiment with anti-nuclear. In Portugal, opposition is rooted in historic tensions with neighboring Spain, which has four of its ten nuclear plants using the Tagus River for cooling, which runs into Portugal. Still, other Western European nations such as Finland, Sweden, France, Spain and Belgium have all historically supported the technology, even while adding renewables like wind and solar. In Eastern Europe, Romania, Czech Republic, Slovakia and Hungary are all beginning or expanding their nuclear capabilities. Indeed, appreciation of the myriad benefits is swelling alongside the price of oil and gas. “The question of how nuclear power may come back onto the scene was already being discussed because of climate goals,” says a senior Western diplomat in Central Europe, asking to remain anonymous due to official protocol. “Now we have the whole Russian gas question. And again, it’s an answer.” Jean-Marie Hosatte—Gamma-Rapho/Getty ImagesThe Cruas Nuclear Power Plant, in southern France, on Feb. 13, 2022. France is the E.U. country currently most reliant on nuclear energy. What Comes Next Many obstacles remain, of course: Aside from political hesitancy, nuclear plants are expensive, with steep regulatory hurdles. And there is no quick fix: traditional large-scale plants take 10 years to bring online; even the most cutting-edge, next-generation reactors require at least four. Nevertheless, those next-gen reactors, called Small Modular Reactors (SMRs), can make a difference, say industry watchers. They’re groundbreaking because, as they are modular, with different numbers of “off the shelf” reactors, they can be combined to tailor for specific needs. Rather than being built bespoke to fit on a specific site, SMR modules get shipped to the location by truck, rail, or barge. This makes them more affordable when economies of scale kick in. They are also theoretically much safer, requiring neither manpower nor electricity to go offline in case of a crisis, while also producing less hazardous waste since they are able to “burn” up more fuel. While traditional reactors are ideal for splitting uranium-235 atoms, the neutrons of “fast” SMRs can also split uranium-238, which makes up over 99% of the enriched uranium that’s fed to reactors. This means less frequent refuelings and less waste. “SMRs could potentially change the game and bring nuclear back,” says the Western diplomat. “There’s a lot of countries looking at this type of technology with different designs for small reactors.” Oregon-based NuScale is a leader in the SMR field, and co-founder and Chief Technological Officer Jose Reyes has seen an uptick in inquiries since the war in Ukraine, as nations grapple with an increasingly thorny energy conundrum. “We’ve gotten a lot of interest globally,” he tells TIME. On the sidelines of COP26 last fall, U.S. and Romanian officials inked an agreement for NuScale to build Europe’s first SMR in partnership with local nuclear firm Nuclearelectrica. The collaboration “will contribute to Romania’s energy independence in line with the European vision of protecting the environment and reducing carbon dioxide emissions,” Romanian Prime Minister Nicolae Ciucă told TIME in an interview in March. Indeed, if the E.U. wants a nuclear energy ascendency, the U.S. is a likely partner. In the U.S., nuclear power is largely uncontroversial—even Democrats and Republicans are united on the benefits—and America’s 93 operating nuclear reactors supply 20% of U.S. power, or about half of its carbon-free electricity. The U.S. has also been pushing the power source as a solution for developing countries, unveiling in November $25 million of funding to help build reactors in Brazil, Kenya, and Indonesia. In the E.U., the invasion of Ukraine has galvanized an appreciation of nuclear energy. The new mood has been helped by the fact that France—Europe’s most pro-nuclear country, generating over 70% of its electricity via the technology—is the current rotating president of the E.U. Council and controversially added promotion of nuclear power to its presidential program in what one German Green Party member described to TIME as a “f–k you into the face of Germans.” Many other European nations are making a similar calculation. Of the 10 foreign nations that have signed memoranda of understanding (MoUs)—which establishes the groundwork for exploring building an SMR—with NuScale, half are European. In addition, in December NuScale signed an agreement with Ukraine to offer analysis of necessary licensing revisions for SMR deployment funded by a U.S. Trade and Development Agency grant. Courtesy of NuScale Power, LLCNuScale co-founder and chief technology officer José Reyes on a platform at the firm’s Integral System Test facility at Oregon State University in Corvallis, Oregon Oregon. NuScale may be the first SMR firm to gain U.S. Nuclear Regulatory Commission design approval but it won’t have the field to itself for long. “There are four or five other [SMR] companies in the United States which I really believe will be on the grid within the next 10 years or so,” says Vetter. “And they will be strongly supported by the U.S. government.” The potential strategic benefits for the U.S. pushing this technology overseas are clear. Building a nuclear plant is not like coal or gas—the client is locked into dependency for training, fueling, and maintenance. Russia currently leads the world in exporting civilian nuclear technology, but Putin’s invasion of Ukraine has underscored it as an unreliable partner, and the E.U. is currently mulling whether to ban all collaboration with Russian nuclear providers, especially Rosatom and its subsidiaries. If so, Washington stands to boost its geostrategic clout at the expense of the Kremlin. China could be another potential partner for the E.U. Building more new nuclear reactors than any other country—it plans for as many as 150 by 2030, costing in the region of $500 billion—China will soon overtake the U.S. as the operator of the world’s largest nuclear-energy system. It is also experimenting with SMRs, and given its existing engineering prowess and record of slashing costs, is already offering cost-effective alternatives. But question marks hang over China’s strategic ambitions amid accusations of coercive practices and debt-trap diplomacy. In November 2015, Romania’s Nuclearelectrica signed a MoU with China General Nuclear Power Corporation (CGN) for the redevelopment of its sole existing nuclear power facility, Cernavoda. However, in August 2019, the U.S. blacklisted CGN over the alleged theft of U.S. nuclear technology for military purposes, and Romania canceled the deal less than a year later. Instead, it has agreed to a deal thought to be worth $8 billion to have the U.S. refurbish and expand Cernavoda. It helps that the U.S. is a trusted ally. “Our plants are designed for a 60 year life,” says Reyes. “So that’s a long-term relationship that involves supply chain and operations and training. So it’s a natural bond that’s created between nations when you do that.” German opposition remains the most problematic for the pro-nuclear lobby given the nation’s leadership role within the E.U. One leading Green Party figure, who asked to remain anonymous since energy policy was not his specific brief, tells TIME that any internal dissent regarding doubling down on LNG instead of reevaluating nuclear remains very much a fringe viewpoint. “There are political identity, cultural, and political risk components [to our continued opposition to nuclear],” he says. “And in a situation of crisis like now there are just so many compromises you can sell.” Certainly, the longer the Ukraine war goes on, extricating nations from Russian oil and gas will stay firmly at the top of Western policy agendas. And the nuclear-over-oil drum is one that Washington, Paris, and others, will keep on banging......»»

Category: topSource: timeApr 21st, 2022

Transcript: John Doerr

   The transcript from this week’s, MiB: John Doerr, Kleiner Perkins, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This… Read More The post Transcript: John Doerr appeared first on The Big Picture.    The transcript from this week’s, MiB: John Doerr, Kleiner Perkins, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, I have, yes, an extra special guest, John Doerr of the famed venture capital firm Kleiner Perkins is here to discuss all things venture capital and climate related. He has a new book out that’s really quite interesting. We talk about everything from crypto to Tesla to beyond me, to all of the opportunities that exist in order to help moderate and reduce carbon in the atmosphere and the potential climate crisis that awaits us if we don’t change our ways. So, Doerr is a venture capitalist. He invests money in order to generate a return. These aren’t just finger-wagging-be-green-for-green sake. He describes their venture fund which they put nearly a billion dollars into it 10 years ago and now, it’s worth over three billion. That’s how successful the returns have been. He describes the climate crisis as a multitrillion dollar opportunity. Yes, we need to do something in order to make sure we leave our children and grandchildren a habitable Earth. At the same time, there is a massive opportunity in everything from food to electrical grid, to transportation, on and on and on. It really is quite fascinating somebody like him sees the world from both perspectives, from the, hey, we want to make sure we have a habitable place to live but he can’t take off his VC hat and he sees just massive opportunities to do well by doing good. Really, a fascinating conversation. With no further ado, my interview with Kleiner Perkins’ John Doerr. ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. RITHOLTZ: My extra special guest this week is John Doerr. He is the famed venture capitalists known for his work at Kleiner Perkins Caufield & Byers. The venture capital firm operates 32 funds. They’ve made more than 675 investments, including such early-stage funding for companies like Google, Twitter, Amazon and too many others to list. Doerr still holds a substantial stake in his initial investment in Google. His most recent book is “Speed & Scale: An Action Plan for Solving our Climate Crisis Now.” John Doerr, welcome to Bloomberg. JOHN DOERR, CHAIRMAN, KLEINER PERKINS: It’s thrilled to be here with you, Barry. Thank you. RITHOLTZ: And I’m thrilled to talk to you. Let’s go back to the early parts of your career before we start to get current. You originally joined Intel because you couldn’t land a gig as a venture capitalist. Tell us a little bit about that. DOERR: I came to Silicon Valley with no job, no place to live and incidentally, no girlfriend. The lady I’ve been dating decided I was too persistent and dumped me. So, I — my real goal was to win my way back into her heart and to join with some friends to start a company. I wanted to start a company and I heard that venture capital had something to do with that. So, I cold called all the venture capitalists and some of them returned my call in the mid-70s and they looked at my experience and uniformly included that I should go get a real job. That was their advice. I remember Dick Gramley (ph) said, we just backed a small new chip company called Intel, why don’t you interview for a job there, and I did. And lo and behold, unbeknownst to me, my former girlfriend, Ann Howland, now Ann Howland Doerr, has gotten a job at Intel. I got a job there and when I arrived that first summer day, I was surprised to see her there and she was not happy to see me. So, it took the rest of the summer to put our relationship back together again. But I love Intel, it was a dynamic place. They just invented the microprocessor and I’ve seriously considered abandoning my graduate education in business as it turns out to just stay at Intel. But I returned there after graduating and worked for, I guess, four or five years helping democratize computing as to get microprocessors used in everything from traffic lights to defibrillators, to nuclear resonance magnetic imaging systems, and it was all because I wanted to be part of new rapidly growing companies. RITHOLTZ: How did you work your way from Intel to venture investing? How did you find your way to Kleiner Perkins? DOERR: I got a phone call one day from a friend who said, hey, John, I just finished interviewing for job at a venture capital firm, Kleiner Perkins Caufield & Byers. It sounded to me like a law firm. I really didn’t know them. But he said, you should go interview there because what they want to add to their team is someone younger professional with a strong technical background, a good network in Silicon Valley, and a passion for startups. I think you and they would make a great fit. So, I didn’t — they ran an ad actually in the “Wall Street Journal” for this position which I didn’t see. But I called up, I interviewed and got a job there as an entry level professional, a gofer, I did everything. I carried people’s bags. I read business plans. But there was one important condition that I had and that is I made them promise that they would back me with my friends in starting a company. I went to work there because, honestly, I wasn’t interested in venture capital. I wanted to be an early ’80s entrepreneur. And they had — they agreed to that and pointed out that they had backed other young partners at Kleiner in writing business plans. Bob Swanson had written a business plan for Genentech that led to the whole biotech industry and Jimmy Treybig had done the same thing with Tandem Computers. My current partner, Brook Byers as the young partner at Kleiner wrote the business plan for hybrid tech. So, Eugene Kleiner and Tom Perkins were unusual and I’d even say mythic or epic figures in that they had technical backgrounds. They started their own companies and they felt that was part of what their venture capital firm ought to do. RITHOLTZ: So, here’s the key question, how come you never left Kleiner Perkins? Why didn’t you launch your own startup? DOERR: Well, I did. They backed me in doing it. The first was one called Silicon Compilers. I became the full-time CEO and founder of that with a Cal Tech professor, Carver Mead. RITHOLTZ: Sure. DOERR: Then as I worked with companies like Compaq, Sun Microsystems, they were growing really rapidly, I realized I was not at all qualified to advise these entrepreneurs. So, I took another 18-month leave of absence from Kleiner to run the desktop division of Sun and almost left Kleiner permanently to do that. But Ann and I wanted to start a family and she said, you know, you’re doing this Sun thing and keeping involved in Kleiner, it’s just not going to work, we have to make some choices here. And so, I left my operating role at Sun. But never gave up an interest in starting new companies and did that again at a later time with a company called @Home. You may remember that they … RITHOLTZ: Sure. DOERR: … standardized and commercialized the cable modem to access the Internet. Before the @Home venture, access to the Internet was really very slow and cable modem swept the United States and our company was key in making that happen. RITHOLTZ: So, I like this quote from you, “If you can’t invent the future, the next best thing is to fund it.” And so, I guess that helps to explain your move from Sun over back to Kleiner Perkins. DOERR: Exactly. It was Alan Kay, the Chief Scientist at Apple, who said the best way to predict the future is to invent it and while I’ve made some inventions, they’re modest, my better fortune has been to find amazing entrepreneurs, identify them and then help fund and accelerate their success. RITHOLTZ: Quite interesting. Amazon, Netscape, Applied Materials, Citrix, Intuit, Genentech, EA Sports, Compaq, Slack, Uber, Square, Spotify, Robinhood, that is just an amazing, amazing list of startups that you guys were fairly early investors in. Any of them stand out as uniquely memorable to you? DOERR: Well, two of the standouts got to be Amazon and Google, now, Alphabet, because, what are they, they’re two of the four or five most valuable companies in the world and I think both of them have profoundly changed the way that we live, communicate, educate, inform, conduct commerce, see the world. They both — what they both have in common is exceptional founders and really strong management teams who have a sense of urgency and a focus on either large new markets or large existing markets that deserved and have benefited from disruption. So, I remember when I was first offered a position at Kleiner Perkins, I told them that I thought it was kind of unfair that they would pay me to do the job. I would pay them for the privilege of working with these amazing entrepreneurs and founders. RITHOLTZ: So, when you’re thinking about putting money into the Amazon in the mid ’90s or Google in the late ’90s, at any point in that process, are you thinking, sure, these can become $2 trillion companies soon? DOERR: Well, I had no really good idea how big they could be. So, I put the question to Jeff Bezos and his response was, well, John, I don’t know but we’re going to get big fast. At that time, I kicked up something of a firestorm by proclaiming that the Internet had been under hyped and it might be the largest legal creation of wealth in our lifetimes. But I was more clear and explicit with Larry Page when I met with him and Sergey and I asked Larry, how big Google would get. I’ll never forget this, Barry. He responded to me without missing a beat, 10 billion, and I said, just to test myself, I said, surely, you mean market capitalization, don’t you, and he said, no, John, I mean revenues. We’re just beginning in the field of search and you cannot imagine how much better it’s going to get over time. And sure enough, he was, he was more than right. RITHOLTZ: To say the very least. So, let’s talk a bit about Google. You are known for introducing to both Larry and Sergey your concept of, OKRs, objectives and key results. What was the impact of that on Google? How did they respond to your suggestion on come up with objectives and come up with ways to measure your progress? DOERR: So, for everyone in your audience, objectives and key results or OKRs is a goalsetting system that Andy Grove invented at Intel and that’s because in the semiconductor industry, I’m a refugee from the semiconductor industry, you got to get tens of thousands of people to get lines that are a millionth of a meter, one micron wide, exactly right or nothing works, the chips fail. So, you need exceptional discipline, attention to detail, focus and execution. And so, Andy came up with the system. I was so enamored of it. When I left Intel, I took it everywhere I went from nonprofits to startups to large companies. The Gates Foundation in the nearly days, for example, how — they were — I mean, they were a very large nonprofit startup and an important one for the planet. So, I took Andy Grove’s system to Larry and Sergey, the founders of Google, in the very early days and I went through it with them and at the end of it asked them, so, guys, what you think, would you use this in growing Google, and Larry was — had no comment whatsoever. But Sergey, he was more like brilliant. I’d like to tell you, Barry, that he said, we love this, we’re going to adopt it wholeheartedly. Well, the truth of the matter is what he said was, we don’t have any better way to manage this Google company. So, we’ll give it a try, which I took as a ringing endorsement because what’s happened since then to this day, every Googler, every quarter, writes down her objectives and key results and publishes them for the entire company to see and interestingly, they never leaked. So, there’s 140,000 Googlers who are doing this four times a year. They’re graded. But at the end of each quarter, they’re swept aside because they’re not used for bonuses or promotions. They serve a higher purpose and that’s a collective social contract to get everybody focused and aligned and committed in tracking their progress to stretch for almost impossible to achieve goals. And I’m telling you this story because the same system that Andy Grove invented has now spread pretty broadly through the technology and other sectors of the economy and it’s at the heart of this plan that we have called speed and scale to deal with climate crisis. RITHOLTZ: Quite interesting. I want to stick with some of the early investments that you made and ask a really broad general question, how likely is it that a company you made in early stage investment in ends up looking like the company you thought you were investing in, meaning, how often do companies iterate or pivot into something totally different from what you thought you were getting involved with? DOERR: Well, I was going to say not often if it’s totally different. But if it’s meaningfully different, that happens all the time. And that’s why in the venture capital work that we do, it’s so important to back — to find fund and build a relationship with the right people because the people and the quality of the team is going to affect how they pivot, how they adapt their business plan to changing markets, changing technologies, changing opportunities. RITHOLTZ: Very interesting. So, you mentioned Amazon and Google as just uniquely memorable startups. What about some memorable ones that you thought would work out that didn’t or I know VCs love to talk about look how silly we are, we had an opportunity to invest in X and we passed and now X is fabulously successful, what stands out in that space? DOERR: Well, the standout in that space is the bad decision we made to invest in Fisker instead of in Tesla and at that time, they had similar strategies, which was to enter the electric vehicle market with high-end luxury, pretty expensive car and then to drive the cost of that vehicle down over time. Both companies were struggling to raise money. One of them had experienced executive from the automobile industry, fundamentally a designer by the name of Henrik Fisker as its founder and CEO. The other had Elon Musk who had no automobile industry experience but was determined to reinvent every part of the automotive car doing it more as a machine to run software than a collection of subsystems procured from the automobile industry. We made the wrong call and the rest is history. RITHOLTZ: That Fisker, that first Fisker car was just a gorgeous design and at that time, Tesla was taking old Lotus convertibles and filling them with laptop batteries. Between the two, it’s pretty easy to see how the Fisker opportunity really looked more intriguing than Tesla did way back when. How typical is that for the world of venture? DOERR: It happens all the time. RITHOLTZ: All the time. DOERR: That’s what makes the job of finding funding and accelerating the success of entrepreneurs hard. RITHOLTZ: To say the very least. So, there was just a new report that came out. It said, renewable energy in the U.S. has quadrupled over the past decade. So, we’re all good, right? There’s nothing else to worry about with the climate? DOERR: I wish that was true. I came to this project, this passion back in 2006 when Al Gore’s movie, you remember “An Inconvenient Truth” appeared. RITHOLTZ: Sure. DOERR: And I took my family and friends to see it and we came back for a dinner conversation and went around the table to see what people thought. When it came turn for my 16-year-old daughter Mary Doerr, she said, I’m scared and I’m angry. She said, dad, your generation created this problem, you better fix it. And, Barry, I was speechless, I had no idea what to say. So, I set out with partners at Kleiner Perkins to understand the extent of the climate crisis, even hired Al Gore as a partner and over time, over three funds, invested a third up to a half of the funds, total about $1 billion in some 70 climate ventures, most of which failed and, in fact, it’s hard, it’s very hard to grow a climate tech or green tech venture. It’s pretty lonely in the early days of doing that. And we almost lost all of our investments but we stood by these entrepreneurs and they produced companies like Beyond Meat or Enphase or the NEST smart thermostats and today are worth some $3 billion. But that was then, this is now. I think what’s important about now is we need way greater ambition and speed to avert catastrophic, irreversible climate crisis. I mean, the evidence is all around us. We’ve got devastating hurricanes and floods and wildfires and 10 million climate refugees. The IPCC says that if we don’t reduce our carbon emissions by 2030 by 55 percent, we will see global warming overshoot by more than 2°C, nearly 4°F. And the Paris accords, which were agreed to in 2015, if we were achieving them, it would still cause us to land at around 2°C. The bad news is we’re not close to achieving any of those goals. So, the latest report from the UN said this is a code red problem and I also see all problems as opportunities. Barry, I think this is going to be the greatest opportunity, human opportunity, social opportunity, economic opportunity for the 21st century. RITHOLTZ: So, let’s talk a little bit about that opportunity. You talked in the book about cutting emissions in half by 2030 and net zero by 2050 and you referenced six main areas of attack, transportation, the electrical grid, food, protecting nature, cleaning up industry, and then removing carbon from the atmosphere. Let’s talk a little bit about each of those because they’re all quite fascinating. We were talking about Tesla, how quickly do we think that we’re going to be past internal combustion engines with a fully electrified transportation network? DOERR: Well, that’s a great question and we can — I want to put this in context. Every year, we dump 59 gigatons of carbon, greenhouse gas emissions in the atmosphere as if it’s some kind of free and open sewer. And so, the book and the research behind it has built a plan in electrifying transportation and the other five for which each of the objectives has three to five key results. These are Andy Grove Intel style, very measurable specific steps in transportation. It says that electric vehicles will achieve parity, price performance parity with combustion engines in the U.S. by 2024. It says one of two new personal vehicles purchased worldwide are electric vehicles by 2030. So, what I’m trying to say is this is a global plan. RITHOLTZ: Right. DOERR: We’ve seen some nations of the world, some states like California say they’re going to ban the sale of internal combustion vehicles. And there’s also key results for buses, for trucks, for miles driven, for airplanes and maritime and this whole plan is available for free. You can download it at the website speedandscale.com. So, it’s pragmatic, it’s ambitious, it’s almost unachievable. It’s a total of 55 key results for the world, numeric time bound, and we’ve got to get after them all at once. We can’t take turns. We’re not going to achieve all of these, Barry. It’s — but if we fall short on one, we can make ground faster in others. Now, I don’t want to intimidate people by how big — how tall an order this is. The book also includes 35 stories from entrepreneurs and policymakers and leaders and innovators, leaders of indigenous tribes that describe in their own words their struggle, their successes, their journey to change the world. One of my favorites is of a cross-country team who got together to petition their school district to go to cleaner busses. They were sick and tired of running behind diesel buses with polluted air and it shows that something that I deeply believe and that is we’re fast running out of time. And so, yes, we need individuals to take individual action to eat less meat, use photovoltaic solar and buy an electric vehicle if you can afford it. But I’ve really written this book for the leader inside of everyone, their inner leader, and that’s their ability to influence others to act as a group like this cross-country team of runners in Maryland who got their school district to adopt electric buses. What the book shows is that we can get this job done but, as I said, we’re fast running out of time. RITHOLTZ: So, let’s talk a little bit about — by the way, the bus discussions in the book are quite fascinating not just because China leapt out to a big lead and have been very aggressively replacing diesel buses with electric buses but you helped fund an entrepreneur in the U.S. that’s gone around and has done a great job getting cities to purchase electric buses. The transportation grid is clearly an issue but as you point out, that’s only six gigatons. A bigger issue is the grid, the electric grid, which produces 21 gigatons of emissions. Tell us about what we need to do to decarbonize the electrical grid. DOERR: 100%, you’re right. If we move to electric vehicles but we still use coal to generate electricity, we won’t have reduced emissions. And the biggest opportunity is to decarbonize the grid and that’s to take today’s 24 gigatons of emissions mostly from goal, also natural gas to generate electricity. Take that 24 down to three gigatons. So, the first key result, the biggest of them, is to get 50 percent of our electricity from zero emission sources globally by 2025 and get it down to 38 percent — get a 90 percent by 2035. That would save us 16.5 gigatons. Simply put, we need to move to renewable sources like wind and solar and invest in longer-term durable storage so that we have reliable energy when the wind isn’t blowing and the sun isn’t shining. RITHOLTZ: So, let’s talk about that battery technology a little bit. We’ve seen a series of incremental improvements over time but nothing has been like an order of magnitude improvement. Will we be able to get there soon enough? Do we need a Manhattan project for batteries or are all those incremental improvements compounding and we’ll get there eventually? DOERR: Much of the improvement that is needed in all of these technologies is lowering their costs. And so, batteries today are still too expensive for electric vehicles in India and in China. They’re barely affordable in the U.S. marketplace. RITHOLTZ: Right. DOERR: And so, the book tells the story of QuantumScape, I’ll disclose, a public company that I’ve invested in and served on the board of, an entrepreneur by the name of Jagdeep Singh and he is going for a quantum improvement in batteries to more than double their energy density. The energy density of a battery is how much energy you’ll get out of it for a pound of weight of a battery and it’s especially important in electric vehicles because the most expensive part of the vehicle is the battery and it’s the heaviest part and you got use energy to move the weight around. So, if you double the energy density of a battery, you can get a three or four times systems improvement in the vehicle itself. I’m not expecting, I don’t think anyone is forecasting an order of magnitude improvement. We’ve seen considerable lowering costs of batteries over time. But the QuantumScape innovation, which is an all solid-state battery, would be a genuine breakthrough. RITHOLTZ: Let’s talk a little bit about food, another key source of emissions. How can we become more efficient in growing the food affecting the menu of what we eat and reducing enough food waste to make a difference? DOERR: There’s three big things t to do about food. The first is to reduce the meat and dairies in our diet and I’m not saying cut them out entirely but to replace some of that with delicious, healthy plant-based proteins. And the book tells a story of Beyond Meat and the crusade of its founder. He struggled and mortgaged his house to lead the revolution in plant-based protein. It turns out that there’s a billion cows on the planet. The book tells you their story as well. If they were a nation, it would be the third largest country in terms of the emissions. The second big thing to do about food is to reduce food waste. Globally, 30 percent of the food that we produce is wasted and taking some straightforward measures we think that can be reduced. Our goal is to reduce it to 10 percent of the food that we produce, particularly when you consider the population will grow to 10 billion by the end of the century. Finally, we got to get more efficient with how we grow food and we can, for example, apply fertilizer much more precisely with new technologies. All in all, the food sector is a way for us to reduce nine gigatons of emissions to two gigatons by 2050 or a net gain of seven out of the 59 gigatons that we got to drive to zero. RITHOLTZ: So, we’ve spent a lot of time talking about beef and agriculture generally. But let’s talk about commercial fishing, what’s the impact of our fishing practices on the health of the oceans and its ability to absorb carbon and reflect heat? DOERR: Well, over fishing together with over drilling and over development have released huge amounts of carbon from the ocean floor and life and if we prevented the destruction of mangroves and other ocean life, we could prevent a gigaton of emissions from entering the atmosphere every year. Our plan calls to eliminate deep sea bottom trawling, which is an especially destructive practice. Bottom trawling releases one and a half gigatons of CO2 equivalent emissions. It also calls for increasing the protection of oceans to 30 percent by 2030 and 50 percent by 2050. I want to call out, this is an area of climate ambition that Walmart is staking out an important and powerful leadership position. Not only that they said they’re going to have their supply chain be carbon neutral by 2040 but they are going to preserve, protect millions of acres of land and ocean water in the effort to become the first scale regenerative company. RITHOLTZ: Really, really interesting. So, very often, the average person listening to a conversation like this thinks, well, what can I do, I’m just one person. What’s the balance of responsibility between individuals on one side and government and institutions on the other? DOERR: We need all the forces in our economy, in our society to come together and work on this. We need innovators. We need entrepreneurs. We need policymakers. We need investors. We need to hear more from impassioned youth. In 2018, Greta Thunberg was a single high school student skipping school on Fridays. A year later, in 2019, in December, she organized a million-person march in a hundred cities around the world and specifically, she made the climate crisis atop two voting issue in the nations in Europe. Barry, it is not a top voting issue in the U.S. It is not a top issue in China or even in India. So, we have work to do and that’s one of our accelerants, the ways we get all this done faster and that’s to turn movements into specific actions. We really need individuals to lead others in powerful ways. That’s, for example, employees, pushing your employers to make net-zero commitment or shareholders and investors demanding changes in the board rooms. It turns out that changing the lightbulbs and eating less meat is important but we’ve got to go further. We’ve got to change our laws or even our lawmakers in order to avert this climate crisis. RITHOLTZ: Quite fascinating. I want to talk about some of the things you’ve said in the book that apply everywhere but are especially applicable to the climate crisis. Let’s start with, quote, “It seems every dozen years we witness magical ever-exponentially larger waves of innovation.” So, let’s start first with climate, how and where are those waves of innovation coming that’ll help ameliorate the climate crisis? DOERR: Well, the innovations are happening on many fronts, the material sciences, electrochemistry, biology. The opportunity that the climate transition to a clean energy the economy represents is the largest of our lifetime. It’s a bigger mobilization than even the effort of the allies to defeat the Nazi Axis in World War II. You’ll remember then, we shut down for four years all manufacturing of automobiles and appliances and instead, created 268,000 fighter aircrafts, 20,000 battleships. It was a monumental effort dealing with an existential threat. And that same level of innovation and ambition is required to win in this climate campaign. Other areas of breakthroughs or innovations, I’m even becoming a believer that we’ll see nuclear fusion. That’s the kind of clean energy that comes from the sun, practical within a decade. Concrete and steel that’s carbon free, long duration storage, the opportunities to reimagine and reinvent how we create, share, transmit and use energy in every facet of our lives is as big an opportunity as we’ll see in our lifetime. RITHOLTZ: So, let’s stay focused on that opportunity for a minute. This isn’t a charity or a foundation that’s doing this for free. When we look around, there are actual venture investments that you’ve been making successfully. So, you past on Tesla but somebody put money into Tesla. Wind turbines, solar, Beyond Meat is now public company. You are an early investor into that. You’re looking at this as more than just, hey, we have to do this in order to make sure that we don’t have a runaway greenhouse effect and Earth turns into Venus and becomes uninhabitable. But there are also very legitimate economic opportunities here also. Expound on those a little bit. DOERR: Well, there’s no better example than Tesla which had gone from a struggling company reliant on loans, thank you, United States taxpayers, to the sought most valuable company in the world. And by some measures, Elon Musk is the most — is the richest individual in the world. He took on huge risks and he delivered for his customers and shareholders, his country and his planet. And the best of the work that Elon has done is inspire, perhaps, through fear but certainly by example the rest of the automobile industry to accelerate their shift to clean and electric vehicles. So, this is, how I like to say, the mother of all markets. It’s a monster market. Batteries alone, the batteries to move from internal combustion vehicles to electric vehicles, are estimated to be $400 billion per year, Barry, for 20 years. We are going to — we must recreate all the infrastructure that we use to power out planet. RITHOLTZ: Let’s talk about something we haven’t gotten to when we were talking about those larger waves of innovation. Lots of folks are excited about blockchain and crypto and Web 3.0. But when we look at things like Bitcoin, it’s a big energy hog, how do we reconcile all the wealth that’s being created there with its massive electricity consumption? DOERR: Its electricity consumption is sustainable and so, we’re going to have to move to clean Bitcoin, green Bitcoin and we’ll get there by regulation, if not, by other market forces I would predict. Today, I believe that Bitcoin uses as much energy as the entire nation of Sweden. So, Bitcoin, I believe, is here to stay but it — we can’t fuel it through dirty electricity. RITHOLTZ: You mentioned concrete earlier and I also read in the book that you want to end single-use plastics. What does the world of material science promised us for replacing things in those spaces? How do you replace concrete? How do you replace single-use plastic? DOERR: Concrete is probably the hardest problem of all because in the production of the concrete, you almost must create carbon emissions. We can reduce the energy use to make concrete. There are some concrete innovations that absorb the CO2 into the material. But that’s an area where we need more innovation. What was your second area? RITHOLTZ: Single-use plastics. DOERR: Single-use plastics. The plan calls for the banning and really the replacement of single-use plastics. The banning of single-use plastics and in general to replace plastics with compostable materials that can be recycled and I am confident that with investment and entrepreneurial work, we can get that done. RITHOLTZ: So, we haven’t really talked about pulling carbon out of the atmosphere. I get the sense from some people that they’re expecting some technological magic bullet that’s going to solve climate change. Tell us about how we can remove carbon from the atmosphere and is there a magic bullet coming. DOERR: The speed and scale plan calls for us to remove 10 gigatons of carbon dioxide per year. I emphasize remove. This will be gigatons of CO2 emissions that we were not able to eliminate, we were not able to cut, we were not able to slash. They’ll be some uses of aviation fuel as an example or other stubborn carbon. Two approaches to this, one of which is to innovate around nature-based ways of removing CO2. For example, growing greater kelp forest in the oceans. But the other that has captured a lot of attention is called direct air capture or that’s engineered removal of carbon. Think of them as kind of mechanical trees and this technology works today but only at small scale. It sucks the CO2 out of the air. It requires a lot of electricity in order to do that. And so, it’s very expensive today, some $600 per ton. If we’ve got to remove five gigatons per year at $600 per ton, that’s $3 trillion a year and it’s hard to see how that’s affordable. So, entrepreneurs are hard at work to lower those costs and I hope they do. RITHOLTZ: So, there’s a quote I like from another venture capitalist who said venture capital properly deployed can solve the biggest problems, filling the void left by shrinking scientific ambitions of governments, foundations and international organizations. What are your thoughts on that approach? How crucial is venture capital to our future and can it replace these other entities? DOERR: Venture capital is crucial and it’s stepping up to the challenge. There will be an estimated $30 billion invested venture capital in climate technologies this year. Our plan calls for 50 billion this year. But venture capital is not going to get this job done on its own. We need government-funded research and development to grow in the U.S. alone to 40 billion a year. Other countries have got to triple their funding. We need project financing. We need philanthropic investing. Jeff Bezos’ commitment of $10 billion to the Bezos Earth Fund is the largest philanthropic commitment to climate crisis that we’ve ever witnessed or enjoyed. There’s really four accelerators that will get this job done. One of them is investing. Another is innovation, the work of entrepreneurs. But I think the hardest are going to be to turn our movements into actions so we get the politics and the policy correct because it’s going to take a massive, collective, coordinated effort to achieve our ultimate OKR and that’s to take 59 gigatons of emissions to net zero by 2050. RITHOLTZ: That’s an ambitious target and if we miss that target, what are the ramifications? DOERR: We’ll leave our kids and our grandkids an uninhabitable planet. We’ll see the Arctic sea ice surely melts away. We’ll have — estimates are up to a billion climate refugees. There’s 10 million of them already. Hundreds of millions of people will starve. It’s unthinkable. And so, we must get this done. RITHOLTZ: So, let me turn this back to what’s going on in the world of venture now. When the early decades of you work at Kleiner Perkins was into a very friendly IPO market, how much does timing matter broadly, meaning, hey, if there’s an exit available, if there’s a big IPO market that makes it more likely people are going to invest in these companies and have a successful exit. Tell us a little bit about timing. DOERR: Well, investors, myself included, will stop at nothing to copy success. So, the timing of today’s markets for climate technologies whether it’s Tesla or Rivian or better batteries or Beyond Meat, it’s good and I would say in the long run, it’s going to continue to be good because the size of the markets and the need, the economic need, the opportunity, and the planetary pressures. RITHOLTZ: So, if a younger venture capitalist or a newfound venture fund came to you and ask for advice, what would you tell them about this opportunity? DOERR: There’s so many different venture firms and strategies. I would say to them that this is the greatest opportunity with 21st century that they should be strategic about their contribution. Is it to work with early-stage entrepreneurs and removing technical risks or at the other extreme, is it to be smart and sharp about project financing? But the overall costs of the transition from a dirty fossil economy to a clean new energy economy is $4 trillion per year, per year. That sounds like a big number until you compare it with the cost of dirty energy, the social cost, the disruption, the premature deaths. One in five deaths are premature due to carbon pollution. Those come in at about $10 billion per year. So, it’s literally cheaper to save the Earth than it is to ruin it. RITHOLTZ: And there’s just seems to be endless amounts of cash pouring into the venture capital sector. Arguably, it’s never been higher. What are your thoughts on this? Does it worry you? What’s the driver of all this money sloshing around? DOERR: Some people say that we’re experiencing a bubble, a bubble in fintech or Bitcoin or climate technologies. I see it very differently. I think it’s a boom and historically, whether it was the advent of transcontinental railroads or the automobiles, we saw booms which led to full employment, overinvestment, rapid innovation. And, no, not all those car companies survive. But I think the same will be true of the other fields of innovation. I think one of the things that gives me great hope is the power of human ingenuity. We got ourselves into these specs and, Barry, I’m betting, we’re going to figure our way out. RITHOLTZ: So, what do you say to people who sort of posture Silicon Valley’s best days are behind it? Do you have a response to any of those folks? DOERR: I think they’re wrong. I think provided we deal with this existential threat, the climate crisis, and that is not guaranteed, but provided we do that and we get a 50% reduction in the next decade, I think we’re on track for a wonderful, prosperous, healthy planet. RITHOLTZ: Can I tell you and I should have mentioned this earlier but I read a ton of books for the show and I found the book really quite fascinating and it’s pretty obvious to me that an engineer was behind this. There’s just a lot of great slides and charts and graphs and it’s not just all texts. Parts of it are narrative and parts of it are historical and it reminds me of a well-made slide deck. So, nice job on the book. DOERR: Well, thanks for sharing that. I want to send you a bound version of the book if you’ll email me your physical mailing address. There’s one other thing — other story I might tell you about the book. RITHOLTZ: Sure. DOERR: I was talking the other day with a reader, a mom who told me that every night, she takes two or three pages of the book and she reads them together with her daughter and then they talk about together what that means for the world her daughter is going to inherit, and I thought, wow, that’s the use of the book I never imagined and one that I’m honestly proud of. RITHOLTZ: How — it looks like this was the work of a lot of different people. How did you end up researching and writing this? DOERR: We talked to hundred different leaders in the field, policymakers, researchers, modelers, activists and from those, selected some 35 stories. We ended up with a thousand different data points that we needed to verify and collected those into 500 end notes, which are in the book. And I did it with an amazing small team of three or four on research and writing stuf. I’m an engineer as you know and so I’m not so good with words and I had the benefit of a writing team that helped make this much more readable. RITHOLTZ: Well, it shows, you can see the book is a fast read. I sat down with a bunch of stickies and highlighter and found myself just plowing through chapter after chapter. It was a relatively quick read and very easy to put down and then pick back up again. Each chapter is very distinct and you’ve really laid out a plan to prevent climate catastrophe from taking place. So, thank you for that. DOERR: One thing I want to make sure your audience know is this, they can get a free infographic, it’s a single poster-sized piece of paper that has on both sides of it all the objectives, all the key results, all the measures. And it’s reassuring for people who are fearful that there is a plan and that if we do these things, we can find a way to a habitable planet. That’s what we’ve got to do. RITHOLTZ: So, I know I only have you for a limited amount of time. Let me jump to my favorite questions that I ask all of my guests starting with tell us what you’ve been streaming these days, give us your favorite Netflix or Amazon Prime or whatever podcast you’re listening to. DOERR: So, I haven’t had time for streaming on Netflix. I’ve been doing research, reading books and papers on the climate crisis itself. But getting this word out, I’ve listened to a — I’ve started listening to a couple of new podcast, John Heilemann’s Hell & High Water … RITHOLTZ: Sure. DOERR: … and Tim Ferriss Show, both of which, I think, have a distinctive imprint from their hosts (ph). RITHOLTZ: Tell us about your mentors who helped to shape your career. DOERR: So, the biggest influence on my life was my dad Lou Doerr, an engineer, entrepreneur and hero and I’ve been blessed by a number of mentors, perhaps most notable of them, Andy Grove, and what I learned from him at Intel prompted me to write a first book called “Measure What Matters” and that tells stories of a dozen different organizations using OKRs, which is what then I applied to the climate crisis. I would tell you Al Gore is a hero of mine. He’s wonderfully resolute man who’s impassioned, effective and funny. He and I talked regularly about the climate crisis. RITHOLTZ: Tell us about some of your favorite books, what are your all-time favorites and what are you reading right now. DOERR: So, my current reading, no surprise, is largely around the climate crisis. I love Elizabeth Colbert’s “Under a White Sky” which described climate futures. And two other books are “How to Avoid a Climate Disaster” by Bill Gates, very accessible book, and a profile — a new profile of Winston Churchill called “The splendid and the Vile.” RITHOLTZ: Two good recommendations. What sort of advice would you give to a recent college grad who wanted to pursue a career in venture investing? DOERR: I would say to her gain experience as an entrepreneur. I’d repeat the advice that I was given early in my career which was go get a real job in a real growing tech company and sharpen your skills in the real hard world of business economics and then take that experience to help other entrepreneurs succeed. RITHOLTZ: And our final question, what do you know about the world of venture investing today that you wish you knew 40 years ago? DOERR: I wish I knew 40 years ago how important the team is, the leadership of the team, the recruiting of the team, the growing of the team because in the end, it’s more than large market, it’s more than compelling technologies. It’s teams who know how to execute well. RITHOLTZ: Really, really fascinating stuff. Thanks, John, for being so generous with your time. We have been speaking with John Doerr. He is a partner at famed venture firm Kleiner Perkins and the author of the new book, “Speed and Scale: An Action Plan for Solving our Climate Crisis Now.” If you enjoy this conversation, be sure and check out all of our previous discussions. You can find those wherever you find your favorite podcast, iTunes, Spotify, Acast, wherever. We love your comments, feedback and suggestions. Write to us at mibpodcast@bloomberg.net. Sign up for my daily reads @ritholtz.com. Follow me on Twitter, @Ritholtz. I would be remiss if I do not thank our crack staff that helps with these conversations together each week, Michael Batnick is my head of research, Atika Valbrun is our project manager, Paris Wald is our producer, I’m Barry Ritholtz, you’ve been listening to Masters in Business on Bloomberg Radio.   ~~~   The post Transcript: John Doerr appeared first on The Big Picture......»»

Category: blogSource: TheBigPictureDec 6th, 2021

Transcript: Albert Wenger

     The transcript from this week’s, MiB: Albert Wenger, Union Square Ventures, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in… Read More The post Transcript: Albert Wenger appeared first on The Big Picture.      The transcript from this week’s, MiB: Albert Wenger, Union Square Ventures, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, what can I say, I have yet another extra special guest, Albert Wenger, managing partner at Union Square Ventures. He has a fascinating background in technology and software, and is interested in all sorts of interesting things, ranging from climate change to humanism, to the huge transitions that humans have gone through as a species and what it means to society, investing, scarcity and just the quality of life that we will enjoy as a species. I found this conversation to be really intriguing. If you’re interested in venture capital, in technology, in how to think about early stage investing, well, strap yourself in, this is a great one. With no further ado, my conversation with Union Square Ventures’ Albert Wenger. You have quite a fascinating history. Let’s delve into that, starting with your background. You won a national German competition in computer science in high school. Tell us about that and where that led you. ALBERT WENGER, MANAGING DIRECTOR, UNION SQUARE VENTURES: Well, I fell in love with computers very early on when I was a young teenager. And my parents were super indulgent of this at a time when that was very unusual, and they bought me an early Apple II computer, one of the earliest Apple IIs to be sold in Europe, actually. And I’ve stuck with that, my entire life. I’ve studied computer science as an undergrad and as a graduate student. And I’ve been investing in a lot of computer companies over the years. So it’s been a central to what I do and who I am. RITHOLTZ: So let’s talk about the timing of school. You graduate Harvard in 1990, with an Economics and Computer Science degree, perfect for the explosion of the Internet; a PhD from MIT and Information Technology in ‘96. So when you were leaving school, were you interested in the Internet, or was it more hardware and software? WENGER: No. The web was really exploding while I was at MIT. And I actually finished my PhD in ’99, but I started a company in late ‘96, early ‘97. And I was kind of doing the company and the thesis at the same time, which wasn’t great for either, and also wasn’t great for our marriage. We kind of managed to get through that. But I was really fascinated with the web from when I first discovered it, which was in a computer lab at MIT where I’m trying to do my stats homework. So — RITHOLTZ: So let’s talk a little bit about some of the other companies you either founded or run, the most famous is probably del.icio.us, which ended up getting picked up by Yahoo. Tell us a little bit about — WENGER: It was an early Web 2.0 darling, Joshua Schachter had started. He was working at Morgan Stanley actually full time. He had started this as a side project. And it was kind of this idea that you would share your bookmarks with others, because bookmarks were kind of an indication of something that was actually interesting on the Internet. And Joshua added tags to that, and so you could browse things by tags. And at that time, Union Square Ventures’ Fred and Brad had started the firm, they had just raised the first fund. I had just finished another project I was been working on. And they were like, “Hey, we’re talking to this guy, Joshua, what do you think?” So I met up with Joshua, and they wound up investing, and I wound up to become the president. RITHOLTZ: So you’re president of del.icio.us, you see it through in order to be acquired by Yahoo in the early 2000s. Tell us a little bit about that experience. WENGER: The del.icio.us team was tiny. It was sub 10 people, basically. RITHOLTZ: Wow. WENGER: And it was a very rapidly growing service. I made myself sufficiently unpopular during the acquisition because I insisted on certain things, I’m like, “We’re not doing this. We’re not doing this. We’re not doing this.” At they at the end, they were like, “We want all of you except for this Wenger guy. We don’t want him,” which was perfect for me, mind you, because I didn’t want to relocate out to the West Coast. So I got to just take my marbles and start making angel investments. RITHOLTZ: So is that what led you to Etsy and Tumblr was the del.icio.us acquisition? WENGER: Yeah, exactly. I had a little bit of money and I met Rob Kalin, the founder of Etsy. He had just come back from the West Coast. He had tried to raise money on the West Coast, was unsuccessful with that. And so I wrote an angel check here, and then I brought Union Square Ventures in as the first Series A investor. RITHOLTZ: Is that what led to your transition from entrepreneur to venture capital? WENGER: Well, I was basically hanging out at the USV offices after the sale of del.icio.us and — RITHOLTZ: Just because you had no place else to go. WENGER: Because I knew both Brad and Fred really well, and so it was kind of a natural thing to do. I did these angel investments. I led the Union Square Ventures investment in Etsy, I became a venture partner for that, and then became a GP in the 2008 fund. RITHOLTZ: So Etsy, also Tumblr was another one. And if memory serves, were they acquired by Yahoo? WENGER: They were also acquired by Yahoo. Yes. RITHOLTZ: Okay. So you’re working at a contact list. What was that experience like now not as a president, but as an outside investor? WENGER: It was a very, very lucky landing for Tumblr, because Yahoo really was the only bidder and they were bidding against themselves, but they didn’t really know that. RITHOLTZ: So what eventually led you to say, “You know, I think I could do this venture stuff full time. Let me hang my hat at Union Square Ventures and focus solely on something else.” WENGER: Yeah, that had really been my goal since my own first startup in ’96, ‘97, which was a company called W3Health that ultimately failed. From that experience, I realized that I really loved startups, but then I was never going to be good operator, but I thought I could maybe be a decent investor. RITHOLTZ: Let me make a digression here, and since you’re in front of me, I have to ask this question. So I deal with traders, investors, fund managers, economists down the list, there is no group of people that seem to be prouder of their failures than venture capitalists. Why is that? WENGER: Because it’s an integral part of the business. And if you can’t deal with failure, you can’t be a VOICE, because many of the startups you invest in fail. RITHOLTZ: Statistically, that’s your expectation? WENGER: Yes, absolutely. RITHOLTZ: So it just seems like the healthiest way to think about what is unavoidable, yet so many people within the world of finance, kind of dance around it, try not to deal with it. There’s a little bit of denial. It’s almost like an object of pride, “Look, here are all the companies we invested in that didn’t make it. Look, here are all the great companies we passed on.” It’s almost like a point of pride, this sort of self-awareness. WENGER: Well, it’s also important too, how the venture capital model works overall, right? So the most you can ever lose in venture capital is the amount of equity you’ve put in. RITHOLTZ: Right. WENGER: But the upside is nearly limitless. I mean, it’s what Nassim Taleb calls convex tinkering, right? It’s the perfect example of that. You take many small, relatively small positions, and any one of them can become very, very large. But you also learn a lot from the things that don’t work. You know, sometimes you learn a lot more from that than you learn from the ones that do succeed. RITHOLTZ: Sure. You tend to learn more from losers than winners usually. And then I have to ask the same question, so Union Square Ventures, by definition Union Square is here in New York City. What’s it like being a venture investor on this side of the country, as opposed to what seems to be, you know, the gravitational black hole of venture out in Silicon Valley in California? WENGER: Well, first of all, it’s no longer that. So you know, Sequoia just opened a New York City office. Andreessen Horowitz has people on the ground here. So New York City is now, today, one of the epicenters. When we started, that wasn’t the case. When we started, people were like, “Oh, there’s been no tech company in New York City. There’s been no IPO.” Of course, you know, we were involved with two of the major IPOs. We led the Series A in Etsy. I also led the Series A — we — Union Square Ventures led the Series A in MongoDB, the big New York City-based success story. So it was incredibly healthy, though, because we were never caught up in the “Oh my God FOMO” of we have to have one of these and one of those, and everybody else is investing in the sector. It was always a “Let’s form our own thesis. Let’s figure out what we believe, and then let’s find companies that fit with that.” And we’ve always been extremely competitive in winning deals in the West Coast. In Twilio, I led the Series A, for Union Square Ventures, and there was a, you know, San Francisco-based company. So — RITHOLTZ: Last question on this topic, how different is venture in New York versus California, or is there really no big difference? WENGER: There used to be a noticeable difference between East Coast and West Coast. Today, I think that’s completely erased. RITHOLTZ: Quite interesting. So let’s talk about the thesis-driven venture capital firm, which is how USV describes itself. Tell us what these theses are and how do they drive your investment? WENGER: Yeah. So there’s been an evolution over time. I would say, you know, what we call Thesis 1.0 was that we invest in large networks of engaged users, differentiated by user experience, and those were investments like Twitter and Tumblr. And then we started to focus on companies that had less obvious network effects, so more data behind the scenes, companies like Sift, for example. And then we added to our thesis sort of infrastructure, and infrastructure investments included Twilio and MongoDB, Cloudflare. Stripe. There’s a whole bunch of infrastructure investments, infrastructures for building digital businesses. Our current iteration, what we call Thesis 3.0 is about broadening access to knowledge, capital and well-being by leveraging existing networks and protocols, and building trusted brands. And each part of that thesis actually means something very concrete. So let me just pick one of them, building trusted brands. For us, a lot today is about is your business model fundamentally aligned with your customer or not? The advertising model, as we have learned is not aligned with customers’ interests, right? If you’re YouTube, you want to serve the most engaging video so that you can show more ads. You don’t want to serve the most appropriate video, right? But if you have a subscription model, let’s say like Netflix, you want to show something that somebody actually really truly deeply is going to relate to, so that they stay as subscriber long term. So each part of this thesis means something and we use the sort of high level thesis to then look for very concrete things. So for example, I said broadening access to capital, so we’ve done a lot in lending, like, how can we do better underwriting, better, cheaper, faster loans, for instance, to small businesses, investment, like a company like Funding Circle, or to individuals, like a company like Upgrade, in a way that actually helps people, so where you’re not dragging them into like a debt hole, but you’re actually helping them build up their credit score while you’re giving them — extending their credit. RITHOLTZ: So 3.0 sounds a lot like World After Capital, I’m hearing some very similar themes. WENGER: Absolutely. There’s a strong relationship between some of the ideas in the book and some of the ideas that inform our investing. RITHOLTZ: We’ll circle back to the book in a little bit. Let’s talk about a couple of companies you invested in because I’m picking up a theme there, Meatable, Terra, Living Carbon, Marvel Fusion, Legendary Food, climate sustainability impact investing. WENGER: Yeah. So those are all personal investments, not Union Square Ventures investments. But I made those investments in the run up to us forming a climate thesis, and now a Climate Fund. So those are all investments that go back a few years, when I sort of became really interested in what kind of opportunities come out of the climate crisis. The climate crisis, if we don’t get on top of it, none of the other stuff will matter. None of the money we’ve made will matter. It’s so big. It’s so much bigger than COVID, for example, in ways that I think people still don’t appreciate. And so I made some personal investments first, and then we started talking to our LPs about it. And then during COVID, we raised the first Climate Fund, $160 million Climate Fund. We’re almost done investing that. And so the climate thesis is very simple. We want to invest in companies that either reduce emissions, draw down existing emissions, or help with adaptation. So I’ll give an example of an adaptation investment. We invested in a company out of Australia called FloodMapp. And what they do is they predict where things are going to flood. They also measure the actual flooding. Floods are one of the biggest problems coming out of the climate crisis, and they’re here today. This is not some future problem. And mega floods in Pakistan, a third of Pakistan is underwater as we speak. I don’t think people understand how horrific the devastation there is. RITHOLTZ: It’s the other side of the droughts that are everywhere. It’s what’s dry gets drier, what’s wet gets wetter. WENGER: Absolutely. Talking about emissions reductions, we’ve made investments, for example, in our first ever investment in Africa, in a company called Shift EV. What Shift EV does is it takes existing delivery vans and retrofits them in a space of a couple of hours, from internal combustion engine to electric. RITHOLTZ: A couple of hours? WENGER: A couple of hours. Yes. RITHOLTZ: Because if you want to take an old 911 and convert it to EV, it will take you about a year, assuming if you can get on the list. It’s that backed up for that shift itself. WENGER: So they have completely industrialized this process. RITHOLTZ: That’s amazing. WENGER: You drive a minivan in and a couple of hours later, drives out as an EV. RITHOLTZ: Wow. What do they do with the internal combustion engine and — WENGER: That’s a great question. I need to ask Ellie what they do with that. I don’t know. RITHOLTZ: I mean, it seems like that’s a lot of hardware to just throw away. WENGER: I don’t know. Great question. RITHOLTZ: Really interesting. WENGER: And then I’ll talk about one of the drawdown investments. We’ve invested in a company called Brilliant Planet out of the U.K. What they do is they build ponds in the desert and they pump seawater in, and then they grow algae very, very rapidly, continues algae bloom, and it takes a huge amount of carbon out of the atmosphere. RITHOLTZ: Algae in ponds — WENGER: In the desert. RITHOLTZ: — can move the needle? WENGER: Yes. Absolutely. RITHOLTZ: That’s quite fascinating. Two questions come out of this, one is structural and one is fund based. Let’s do the fund one first. So John Doerr had a climate fund started about 10 years ago at Kleiner Perkins. Some people have said it kind of lagged other similar era venture funds. Was he just early? How do you look at this in terms of not just having a positive impact on the planet but generating a return on investment? WENGER: Yeah. The early green tech funds, they were too early in one sense. But in another sense, they were actually crucial to our having a shot at overcoming the climate crisis. Because if it hadn’t been for the investments, we wouldn’t have gotten on the cost curve, for instance, for solar PV, right? So the reason we have really cheap PV today, the reason we have really relatively cheap batteries today is because of some of the investments that were made back there. And there’s this pattern in the world where every big technological shift starts with a bubble, right? RITHOLTZ: Right. WENGER: So when we had ships, we had the South Sea bubble, right? And when we had railroads, we had the railroad bubble. There was an automotive bubble. There was dot-com bubble, multiple bubbles in crypto. There was a green tech bubble. But, now, it’s a decade-plus later and all the things that they were rightly concerned about are all coming true. And we are now reaping some of the benefit, but we’re also now building on — we’re sort of standing on the shoulders of giants, as it were. RITHOLTZ: And to clarify, I believe that fund doubled over 7 or 10 years, not like it was a sinkhole, but compared to what it could have done, had that money been invested elsewhere, it might have seen better returns. But it wasn’t — I don’t want to make it sound like it was total loss. So the second question is, you’re making seed investments, how does that work if you want to bring one of those seeds to your firm, to Union Square Ventures? And from a public market, that sounds like it’s a compliance and conflict nightmare. You guys approach it differently. WENGER: In our LPA, we can write checks up to $100,000. So we can’t make massive investments in startups. So all of the companies you mentioned have a sub $100,000 investment. And then the only one where I’ve invested more is Marvel Fusion. We can invest more once the fund has passed on something. So if the fund says we’re not doing this, then we can invest. RITHOLTZ: Got it. Interesting. So along those lines, there are some venture firms that don’t really seem to care a lot about valuations and others seem to focus on a little bit. How do you fall in that spectrum? Is valuation significant, or is it, hey, we’re going to make 100 investments and if two or three workout, the valuations are irrelevant? WENGER: No, we’ve definitely always been disciplined on valuation, and we’ve let a number of things go. Sometimes we let them go and they do great, like, “Well, we could have made money if we had invested.” And sometimes you’re very happy at that. Our approach is we’ve always kept our fund sizes small, so we don’t need to be in everything that’s out there. Our latest funds are — our core fund is $250 million. So these aren’t big funds in the scheme of things when you have other firms that raised $3 billion. $8 billion, $15 billion per fund. And as a result, if we think the price is too high, we can just find something else. RITHOLTZ: So let’s talk a little bit about some of those bigger funds, and I guess we’ll hold Softbank off to the side because that was really aberrational. But do you end up when you have lots of $10 billion and $20 billion venture funds, with too much capital chasing to a few good deals? How does this impact the whole ecosystem that’s out there? WENGER: Largely, it’s great for us because we’re early stage investors. So it means there’s lots of money to come in and fund later rounds of the companies we’ve invested in. So we haven’t really spent much of our time worrying about it. And then every once in a while, these firms go. We’re going to go really early and some of them do spread money early. But we find, because we’re thesis-driven and because we are opinionated, on deals that we’re really interested in, we can win those deals. Sometimes they’ll take a small check from somebody else along for the ride, but they know that we work with early stage companies that we roll our sleeves up, that we’re involved, and that we have a thesis. And you know, we take the approach we’d rather disagree with the founder and then not invest than sort of like — be like, “Oh, well, whatever it is you want to do.” Like, we have a thesis as to why we think this is interesting. Let’s talk about this. If it’s aligned, great. And obviously things may change after we’ve invested. We’re not like stubborn, you know. But let’s talk about why we are excited. And if that aligns with you, that’s great. If it doesn’t, let’s go separate ways, right? So we take a kind of — I call it a high alpha approach investing. We’d rather have really upfront conversations about what we like and don’t like than sort of get married as it were. And actually, it’s harder to get rid of VC than it is to get a divorce. So like we think it’s good to have these conversations up front, right? RITHOLTZ: What about follow-up rounds, or some firms that will do a seed round, and then participate in an A or B round? Is that something that Union Square does? WENGER: Well, we reserve a lot of funds for follow-on, and we have a very sort of, I think, sophisticated reserves methodology that we’ve honed over many funds cycles now, where we actually built kind of a Monte Carlo analysis of the portfolio to see how much money we think we need to keep in reserve. But eventually, when the valuations get too high, the rounds get too large, we don’t follow on. We have a separate vehicle called the Opportunity Fund, where we sometimes write bigger checks into late-stage rounds in some of our portfolio companies, but not always. RITHOLTZ: So let’s talk a little bit about this book, “The World After Capital,” starting with what is technological nonlinearity? I liked that phrase. WENGER: The basic idea is that every once in a while in humanity’s history, we invent things that radically change what we, as society, have as a binding constraint on us. So let me make that very concrete. For hundreds of thousands of years, our ancestors were foragers. They were hunter-gatherers. They would go out and find things, and eat berries and kill little squirrels. And then roughly 10,000 years ago, we had a bunch of inventions. We figured out that you could plant seeds, that you could irrigate them, that you could domesticate animals, that you could use the dung from the animals too as a fertilizer. We figured all those things out and we got agriculture. And the constraint shifted from how much food can you find to how much land — arable land do you have. And when that constraint shifted, we changed just about everything, about how humanity lives. Like, we went from being migratory to being sedentary. We went from very flat tribal societies to very hierarchical agrarian societies. We went from being, clearly, like polygamous, polyamorous, whatever you want to call it, to being monogamous-ish. We went from having religions where, you know, everything was a spirit, a tree, a rock, everything had a spirit, and then we went from that to theistic religions where there was some different number of gods. Then fast forward to a couple 100 years ago, we had sort of the enlightenment. With the enlightenment, we had sort of big scientific breakthroughs and we figured out how to dig up stuff out of the ground and burn it and create energy, and make heat and electricity and all those things. And the constraint of it again shifted from, you know, how much land do you have to how much physical capital can you create? How many machines can you build? How many buildings, roads, railroads, et cetera? RITHOLTZ: That’s really interesting. WENGER: And we changed everything yet again. And so now the point of the book is, guess what? We have to change everything yet again, because capitalism, this is why the book is called “The World After Capital,” capital is no longer the binding constraint. Instead, it’s human attention. RITHOLTZ: Human attention, so that’s the third great shift is. So we went from agricultural scarcity to having enough food. WENGER: We went from forager to agrarian, so from food scarcity to land scarcity, then we went from land scarcity to capital scarcity. And now, we’re going from capital scarcity to attentional scarcity. RITHOLTZ: Capital is no longer scarce. So now attention is the new scarcity, which there’s a line in the book that really caught my eye, attention is time plus intentionality. Explain that. WENGER: Yeah. So speed just tells you how fast you’re going. Velocity tells you how fast you’re going towards something, towards some destination. RITHOLTZ: Speed plus direction. WENGER: Speed plus direction is velocity. And the same is true for attention. Time just tells you how much time has elapsed, you know, two hours. Attention is what was your mind and your body doing during those two hours. Were you, you know, just scrolling Twitter, or were you like working on a solution to the climate crisis? RITHOLTZ: So you say something about these transitions that really jarred me. Previous transitions like agriculture emerged over thousands of years and was incredibly violent. Industrial Age lasted over hundreds of years, and also involved lots of violence and bloody revolutions, and two World Wars, which raises the obvious question, what sort of violence is the next transition based on attention scarcity potentially going to involve? WENGER: Well, at the moment, the leading candidate is the climate crisis. We have known about it for literally hundreds of years, actually, and we have refused to do enough about it. And so now, we have entered the state where we’re getting extreme heat events. We’re getting extreme drought events. The food supply is definitely in question. Something that we have taken for granted for many years now. We’ve taken for granted that you can go to the store and buy food. Unless we really course correct very hard, very dramatically, and by dramatically, I mean, the level of government activation that we had in World War II. In World War II, we spend roughly 50% of GDP on the war effort. We need to spend roughly 50% of GDP on the climate crisis for several years sustained in order to actually avert it. RITHOLTZ: So that suggests that you don’t think there’s going to be some technological magic bullet going to appear out of nowhere? WENGER: Well, if you look at World War II, the government went to Ford and said, “We need you to build airplanes, not cars.” And actually, there’s a chart in my book that shows that output of cars dropped. We need to get to a similar point where we’ll say there’s certain things we’re just not going to do for a while because we need to do these other things. There are great technologies. We don’t need to invent some magic bullet that doesn’t exist. We just need to build a lot of what we already know how to build. Like, we need to build a lot of nuclear power plants. We need to build a lot of these ponds in the desert that can draw down carbon. There’s 1001 different things that we need to build. We just need to take our physical capital and point it at that. And when you do that at that scale, incredible things become possible. So, during World War II, Ford Motor Company built a plant, it was called the Willow Run facility. And in Willow Run, they built the B-17 Liberator bomber. Now, that’s a four-engine bomber, with lots of gun turrets to defend against fires. At peak production, they finished — they finished one of these every hour. RITHOLTZ: Amazing. WENGER: They finished a complete airplane every hour. And my point is once we decide to take our attention, and allocate our attention to what the real problem is, we can redirect our physical capital. We have plenty of physical capital. People say, “Oh, you can’t build nuclear power plants fast enough.” That’s if you built them in peacetime mode. If you built them in wartime mode, you could build them very rapidly. RITHOLTZ: So when you say this requires a substantial commitment of capital, let’s put a dollar amount on that. Are you talking — WENGER: Half of GDP. I’m saying half of GDP. RITHOLTZ: So you’re saying $10 trillion? WENGER: Yeah. RITHOLTZ: Just in the U.S. alone? WENGER: Yeah. RITHOLTZ: Now, we just passed a climate bill, arguably, that was a couple of billion dollars, $100 billion maybe over 10 years. And it was like pulling teeth, it was a miracle it just managed to skate through. And that’s a fraction of a trillion dollars. How you’re going to get 10x or 100x? Do things have to get much worse before they get much better? WENGER: Yeah. I mean, there’s a book about the climate crisis called “Ministry for the Future,” by Kim Stanley Robinson. And the book starts with a devastating heat event in India, where tens of millions of people die. I don’t know what it takes. But I can tell you, it’s only going to get worse, it’s going to get a lot worse. And at some point, hopefully, people — enough people will wake up and say, “No, no, we really actually have to get into a wartime footing. RITHOLTZ: So up till now, a huge swath of the population has been asked my grandkids problems, what wakes them up? Is that sort of events? I mean, you see what’s happening in California. You see what’s going on in lots of the United States with droughts. It seems like people are starting to pay attention. WENGER: Oh, absolutely. Yale does an incredible survey of climate attitudes. And it is very clear that even in the U.S., which has been lagging on this, a significant majority of people believe that the climate crisis is real, that is caused by humans, and the government should do something about it. So I actually believe this is going from a kind of a losing proposition for politicians to a winning proposition. And I think politicians need to be much more into it. Most of them still aren’t willing to acknowledge the full extent of this crisis. And the physics of this crisis are extraordinary. So because of all the CO2 we’ve put in the atmosphere, the amount of heat that we’re now trapping that used to radiate out into space, do you know how much heat it is? It is four Hiroshima-sized nuclear bombs every second. RITHOLTZ: It’s insane. I read that in your book and I was like, no, no, he must mean every week. Every second? WENGER: Every second. Now, imagine for a moment you had alien spaceships above Earth, throwing four Hiroshima-sized nuclear bombs into our atmosphere every second. RITHOLTZ: That would put us on a wartime footing? WENGER: And what will we do? Yeah. We would drop everything, right? We would be like, “They’re trying to kill us. We have to get rid of them.” I mean, we made a movie about it called Independence Day. RITHOLTZ: Four nuclear bombs every second? WENGER: Yeah. RITHOLTZ: And it’s just — WENGER: Of every minute of every hour of every day, it’s a mind-boggling amount of heat. RITHOLTZ: So there’s a couple of other things in the book I wanted to touch on. You mentioned alien visitors. We’ll hold off on the Fermi paradox discussion because nobody wants to hear me babble about that. But one of the things I thought was kind of interesting is the transition of the nature of scarcity. You’re right, it changes the way we measure human effort. It makes it more difficult, and we need increasingly more sophisticated ways of providing incentives to sustain unnecessary level of effort. Flash that out a little more. WENGER: So if you think of hunter-gatherers, right, I mean, you can see the results of effort immediately. RITHOLTZ: Right. WENGER: Like, you go to the forest, you either come back with something or not. RITHOLTZ: Right. WENGER: So it’s very easy to create incentives. Like, if you don’t find something, go back hunting and come back with something. RITHOLTZ: Or you’ll go hungry. Right. WENGER: When you go to agriculture, you have these, you need to see, you need to take care of it, and you don’t know how big a harvest you’re going to get. So you need a little more sophisticated incentive, and a lot of those incentives were often provided by a religion. Religion is sort of saying you have to apply yourself to this backbreaking work. This is the work of the Lord, et cetera. And then when we went over to capital, now it gets even more complicated because you might not see results of some effort for many, many years. I actually think when I say more sophisticated incentives, in the book, I talked a lot about just freeing up humans to pursue their interests, to make it so that you can freely allocate attention. And I’m always very inspired by mathematics. Like, you can’t get rich as a working mathematician, basically. I mean, yes, if you wind up going to Wall Street, you can. But if you actually keep working as a mathematician, that’s not a — you know, there’s also no patents. And you know, the only thing math works on recognition by peers, and there’s some prizes. There’s like the famous Fields Medal, and there’s some other prizes. And yet, the amount of math that’s been produced over the last, you know, few decades is just mind-blowing extraordinary. And I believe we need to bring that type of model to many, many more parts of the economy and parts of activity. So in a way, what all of “The World After Capital” is about is how can we shrink all the explicitly incentivized economic activity, where there’s an explicit, okay, you go to work and you get paid a wage kind of thing. And here’s a market transaction, how can we shrink that and make room for things that are super, super important, but cannot have prices, cannot be economically incentivized? Let me give concrete examples of that. Obviously, we’ve talked about the climate crisis. But let’s talk about death from above. Like, every million years or so, the earth gets hit by something very large out of space. That’s very, very bad when it happens. But there’s no market for allocating resources to that. There’s no supply and demand for it. So we, as humanity, need to decide that this is a real problem and we ought to be working on it. RITHOLTZ: Now, aren’t we tracking various large observed asteroids and doing some stuff? WENGER: We are, but the amount of effort we’re putting into this relative to the size of the problem is minuscule. The number of people who sort of truly globally work full time on this is a tiny fraction of the people we actually should have. And we’re also not working sufficiently on like what will we do if we detected one that’s clearly headed for us, right? RITHOLTZ: Well, you send Bruce Willis up and — WENGER: Exactly. Yes. RITHOLTZ: — he takes it, right? WENGER: Yeah, he does. RITHOLTZ: I mean, it’s not unknown. We know the regular major extinction events. There’s a real interesting theory that as the sun goes around the galaxy and passes over and above the galactic plane, that affects the asteroid belt and — WENGER: The famous Oort cloud is where a lot of these objects — yeah. RITHOLTZ: Right, which is full 360 around the — WENGER: Yes. So we know all of this. And here’s the interesting thing. When we went from the agrarian age to the industrial age, we didn’t get rid of agriculture. This agriculture today, right, we all eat food that’s grown in agriculture. But what we did is we shrunk how much human attention is required to do agriculture, and we took it from being like 80% of human attention to like sub 10%. RITHOLTZ: It’s less than 2% in United States. It’s tiny. WENGER: So what I want to do is, let’s do the same with the rest of the economic sphere. I’m not an anti-capitalist. I’m not a degrowth. Person. I’m not suggesting we should get rid of markets. I’m just saying we should compress market-based activity from absorbing much of human attention to absorbing maybe 30% of human attention, and we should free the rest up to work on these incredibly important thing. Some of them are threats, and some of them are opportunities, right, opportunity to cure cancer, opportunity to create incredible wildlife habitats, restore those wildlife habitats, opportunity to travel to space. I mean, all these opportunities that we’re not paying attention to because they’re not — again, they’re not really market price based and can’t be market price based. There’s just no prices for them. RITHOLTZ: So the conclusion of the book had a list of action goals, which was not what I was expecting in a book on venture capital and “The World After Capital;” mindfulness, climate crisis, democracy, decentralization, improving learning, and humanism. Address whichever those you feel like. WENGER: Well, these are all core components of how to have a — hopefully, a transition that’s not a violent transition, right? These are all about how could we get out of the industrial age into the knowledge age without some cataclysmic event, without a world war, without killing billions of people through the climate crisis, right? They’re also all components of what a knowledge age society might look like. Right? So let’s talk about mindfulness for a second. We’re constantly assaulted with new information now. You know, our brains evolved in an environment where when you saw a cat, there was an actual cat. Now, there’s an infinity of cat pictures. So if you don’t work on how you — how much you are in control of your mind, external sources will control your mind. So mindfulness, which is a much abused word, but it has become much more important in a world where we’re constantly assaulted by information flows, right? Let’s talk about humanism for a moment. Humanism is about recognizing that humans are the prime movers on this planet. We are the ones who have brought about the climate crisis. We are the ones who put a theory to solve it, or wind up getting wiped out by it. And it’s about this idea that, you know, with great power comes great responsibility. And so, we are responsible for the whales, not the whales for us. There is — at the moment, because we’re in this transition period already, and because things are going so poorly for so many people in this transition, there’s no a flight back to religion, there’s a flight to populism. And a big part of the book is about, no, there is a secular alternative way of thinking about society that embraces science, that embraces progress, that embraces humans and all types of humans, and that recognizes that we are first and foremost human, and only secondarily are we American, or Russian, or male or female or something else. You know, these are all secondarily. But primarily, we’re humans, and humans are fundamentally different from all the other species on the planet. RITHOLTZ: Quite fascinating. So let’s talk about the current state of the world for venture capitalists. We’ve seen valuations come way down for public companies. They’re pretty reasonably priced these days, about 16 times for the S&P 500. That’s historically, more or less, average. Where do you see the state of the world in early stage valuations? How are they holding up? A year ago, late stage valuations had gone just bonkers. Tell us a little bit about what’s going on today. WENGER: The correction always, basically, is a trickle-down type of correction. It happens very rapidly in the public markets. Then you still get some high-priced private rounds that either were in the works, or they have a lot of structure. In the later stage markets, you know, there’s a headline number. But then nobody talks about all the war in coverage that’s behind the scenes. And then the early stage valuations tend to sort of lag behind all of that. But we’re seeing early stage valuations come down. And as a firm, we’ve always been disciplined on valuations. So we just let a lot of things go where we just thought it was — RITHOLTZ: Are they down off the peak, or are they cheap and attractive? WENGER: The down of the peak, whether they’re cheap or attractive, I think, you know, time will tell. But we are back in a situation where, you know, there are seed deals getting done that’s below $10 million, certainly below $20 million, and you know, seed rounds that have a reasonable size. So you know, for a while we were seeing these $10 million, $20 million, $30 million seed rounds. RITHOLTZ: It sounds pricey. WENGER: Yeah. And that’s not happening anymore. But at Union Square Ventures, we’ve also always tried to basically be at the next era, at the next thesis and evolve our thesis before everybody else gets there. And once everybody else gets there, try and evolve our thesis. And so, for example, in the Climate Fund, we’ve made any number of reasonably priced investments, very reasonably priced. RITHOLTZ: So I always assumed it was tied to the public markets. But sometimes you just don’t realize, when you have a good couple of years in a row in the public markets, like we saw in the 2010, pretty much straight up through 2021, you see that impact and what people are looking for, what sort of deals get done, and valuations generally. WENGER: I always find it relatively surprising how much private early stage valuations are tied to public markets because our holding — RITHOLTZ: That’s the exit, right? WENGER: But our holding periods are 5, 8, 10 years. And so, like, what’s the current public — RITHOLTZ: Right. WENGER: And so there’s a couple of different explanations. One, obviously, is just investor sentiment, right? RITHOLTZ: Right. WENGER: You know, when investors are like bearish because of what they’re seeing in the public markets, they take a bearish attitude towards their own investing. We try — at Union Square Ventures, we try to have a pretty steady pace as one way of contracting our own sort of — you know, whatever our own emotions may be about the public markets. There is, however, another effect that sometimes is underestimated, which is that the people who give money into venture funds, so these are pension funds and endowments, and so forth, they have a certain whip from the public markets, because when they’re feeling flashed on the public markets then their private allocation, you know, as a percentage of their overall portfolio, they have a certain target in mind. Then when the public markets come down a lot, all of a sudden, they’re overallocated, so they want to pull back. So there is a mechanism by which the current public markets transmit into the private markets. There’s a real financial mechanism. There’s a psychological mechanism and a real financial mechanism by which some transmission, some contagion basically happens from the public market into private market. But it doesn’t make very much sense. Like, if people were sort of more cognizant of both that emotional reaction and this mechanism, they’d be like, “Well, yeah, but innovation is happening at some pace. In some area, there’s some innovation and we should be funding that innovation.” RITHOLTZ: So I’m just making notes, investors are irrational. WENGER: Deep and profound insight right here. RITHOLTZ: Right. There you go. WENGER: You’ve never heard this one before. RITHOLTZ: So to put that into a little context, 2020, 2021, very founder-friendly deals. Now, it seems like a little more investor-friendly, a fair assessment or not quite there yet? WENGER: Well, when it comes to founder-friendly versus investor-friendly, there’s a lot more to deal than valuation. There’s all the other terms. And while I believe we will see a correction on valuation that’s pretty significant, I don’t think we’re going to go back to where venture capital was 20 or 30 years ago, that had all these super draconian terms. Certainly, even at the early stage, even at the early stage, there were all these like — there were redemption provisions in the early stage deals. I don’t think that’s going to come back. We are not fans of structure in latest stage deals. Like, just to give a good example, when I was still on the board of Twilio, Twilio had the option of doing a totally clean, no structure round and call it $1,000,000,001. In a highly structured round with like — you know, we’re going to have a full ratchet into an IPO at a $1,000,000,005. And I was — you know, some of the other investors at the table really wanted the $1,000,000,005 number because it’s a big headline number. And I talked to Jeff and I said, “It doesn’t make any sense.” RITHOLTZ: Right. WENGER: You don’t actually know what your deal is until many years. Like, just take the deal where you know what the deal is today and you know what the deal is a year from now, and two years from now, because it’s not going to change based on circumstances. RITHOLTZ: Right. WENGER: And so Jeff took the clean deal, and that enabled Twilio to go public when the IPO window reopened. Whereas at the $1,000,000,005 deal, they wouldn’t have been able to go public. And that worked incredibly well for Twilio to become a public company. RITHOLTZ: Really interesting. So since we’re comparing early stage investments to the public world, lately, everybody has been looking at different sectors the past year. Energy has done well, technology not so much. Within venture, do you see that same sort of segmentation, different sectors have different — WENGER: Well, we were basically the first sort of venture firm to have a dedicated climate fund. And now, many of the venture firms are following suit, either adding a climate pocket to their existing funds, or a climate thesis or, you know, some people call it sustainability fund. Ours is very focused on climate. So for instance, we don’t deal with water waste. It’s strictly about atmospheric carbon. So there’s a lot money rotating into that sector. There’s still healthy sort of activity around Web3. So you know, Web3, there’s still — RITHOLTZ: Crypto, blockchain, all that? WENGER: Yeah. There’s still healthy sort of activity. I do think that certain kind of software companies that had found it very easy to raise money, I think they’re finding it a lot harder, just because people have looked at it and said, “Wow, I think we’ve reached some stage of normalization in this market.” You know, like, not everything in this market is going to be a $50 billion outcome. There’s going to be many, much smaller outcomes, and so we need to adjust accordingly. And also, many of these markets had just too many companies raised venture capital doing basically more or less the same thing. RITHOLTZ: So it was easy to raise money for a fund today, a little more challenging, even if you’re a pretty decent sized VC with a 10, 20-year history. Are they having difficulty going back to their clients saying, “Hey, we’re doing another billion dollars?” WENGER: You know, I think that we will only see a year from now, or two years from now. There were a lot of funds that have put out a lot of money very, very rapidly, and we’ll see just how big the hangover is. But we won’t know that for some time. RITHOLTZ: So some of the folks who give advice to founders like Chamath and Jason, and the crew with the All-In Podcast, they’ve been talking about — preaching really about cutting costs and reducing your burn rate, and get ready for a tough year or two. How do you see this environment? Is that good advice, or do you really have to, you know, go all out and get more funding as opposed to trying to make a more modest burn rate last longer? WENGER: There’s very little one size fits all advice that makes sense. RITHOLTZ: Fair. WENGER: Nonetheless, we held a call early this year for all of our portfolio companies. And we said this really is a big adjustment and it’s not a one or two months’ blip. This is a long-term adjustment. And it was great because we had some CEOs in our portfolio who had managed through the implosion of dot-com bubble, and they spoke about just how difficult the funding environment can get. So generally speaking, we did a lot in ’21 because we saw this coming. To me, the biggest sign of the bubble really was — that we really were reaching the tail end, was all these incubation efforts that were being raised. And I knew this because I had raised money into an incubator in ‘99, towards the end of the dot-com bubble. And I think when investors think, “Oh, I don’t even need the entrepreneur, I can just start the company myself,” that’s kind of when you know that it’s gotten too easy, right? And that’s not going to lie. So in ‘21, we took a lot of liquidity. We sold a lot of things that we were able to sell. And we told all of our portfolio companies to raise money. And so — RITHOLTZ: Last year, this is — WENGER: ‘21. Yeah. Well, it’s best to do things before. RITHOLTZ: Sure. Sure. WENGER: Right? So as a result, we have very few companies in our portfolio that need to raise. We have some, but we have very few. And then, you know, at the beginning of this year, we told everybody who had raised successfully, “You got to make this money lasts much longer than you thought when you raised it.” And so, yes, absolutely. You know, companies were operating with very inefficient growth. Because it was easy to fund inefficient growth, you could be burning $1 million, $2 million, $3 million, $4 million a month. And you know, if you were growing 405%, 50%, 60%, that was good enough. That’s not going to be the case. So you’re either growing very fast, or you have something very compelling, in which case you can raise money, or you are growing, you know, 20%, 30%, but you are growing very, very efficiently, right? So being in the sort of 50% growth, but you’re super inefficient, that’s going to be a really tough place to be. RITHOLTZ: All right, so before I get to my favorite questions, I have two questions I’ve been sitting on sort of from the book and some from your blog continuations that I want to hear where you go with this. And the first one is a quote from the book, “Malthus could not foresee the scientific breakthrough that enabled the Industrial Revolution.” I think you let him off the hook a little too easy. It’s just an abject failure of imagination. And you are in the imagination business. The Malthusians, weren’t these folks just unable to imagine any sort of progress or technological development? WENGER: Well, we have had more progress and more technological development than people were able to imagine. I think, conversely, we’re now in the opposite trap. We can’t imagine that things could get really, really bad. We can’t imagine that the climate crisis could disrupt our food supply to the point where billion people starved. We simply can’t wrap our head around this idea. So I think we’re in the opposite trap at the moment. We’ve been so used to the success of progress, and we’ve so neglected the engines that produce progress, that I think we’re in the opposite trap at the moment. RITHOLTZ: What are the other engines? Is it early stage investing from governments when the project has a 10 and 20-year ROI that the private sector won’t do it? WENGER: It’s foundational research. We’ve not had a true breakthrough in science since quantum mechanics. It’s a hundred years ago. So general relativity and quantum mechanics are hundred years ago. Now, we’ve made some progress in biology. Biology, we’ve had some really good progress. But you know — RITHOLTZ: You’re talking fundamental science not technology. WENGER: Fundamental science. RITHOLTZ: Like, I immediately think of semiconductors was a giant — WENGER: Oh, no, incredible progress. But fundamental science, we’ve not had a true big unlock in a hundred years. Now, I think when we talk about engine of progress, this is also how hard is it to start a business? How many regulations do you have to comply with? How expensive is it to comply with those regulations? We’re also talking about — we’re still subsidizing oil and gas globally, to the tune of trillions of dollars. RITHOLTZ: Yes. Yes. WENGER: Subsidizing oil and gas, it’s crazy. RITHOLTZ: Which by the way, helps to explain why so many people have an incentive to either question the impact, the source or the reality of climate change. WENGER: Yes. RITHOLTZ: There’s forces that work there. WENGER: And so, I believe we’re in this sort of opposite trap today. And you know, people like to make fun of Greta Thunberg. But young kids, young activists understand the severity of the climate crisis in a way — RITHOLTZ: Right. WENGER: — in a way that most adults don’t seem to be willing to accept. RITHOLTZ: Right. I don’t think climate change is going to impact my life. You know, I’m 60. I’m going to run out the clock. WENGER: You’re not. RITHOLTZ: Someone your age — WENGER: The reality is you’re not. You’re not going to escape. You and I are not going to escape this. It’s here, it’s now and it’s only going to get worse. RITHOLTZ: I don’t doubt that for a second, but — WENGER: And here’s the thing, I think — RITHOLTZ: I challenge — WENGER: We could live in this amazing, incredible future. Like, wouldn’t you rather live in a city that has mostly electric or all electric cars in it? Like, the air would be so much better. Wouldn’t you rather live in a world that has huge — like, think of all the Midwest, instead of growing corn to feed cows — RITHOLTZ: Right. WENGER: — super inefficient. If we can grow the meat of the cows in the vast instead, we could have like incredible forests. We could have incredible wildlife areas. Like, we could have this amazing, incredible future. We could have energy reserve. If we build more nuclear power, electricity could basically be almost free. So we have this amazing thing we can go. Instead, we’re headed for this complete disaster and we’re mostly like, “eh.” RITHOLTZ: I think that’s a fair assessment. I think you definitely have that. And I certainly see people my generation, absolutely think it’s not going to impact them or minimum impact, it’s really the grandkids’ problem. WENGER: Yeah. And it’s just — that’s totally, utterly wrong. RITHOLTZ: All right, one other curveball I have to ask you about, which involves Yuval Noah Harari, who says in Sapiens, “All value systems are based on equally valid, subjective narratives, and humans have no privileged position as a species.” You say he’s wrong. Explain. WENGER: Not just wrong, it’s completely dangerous because it opens the door to absolute moral relativism. It’s sort of like, well, if you believe that, then, you know, the ISIS narrative is just as valid, you know, and I just think that’s wrong. And I do think there’s an objective thing, which is humans have knowledge. And by knowledge, I mean, I can read a book today that somebody else wrote in some other part of the world a thousand years ago, right? No other species on the planet has this. I mean, other species have amazing things about them, but none of them has knowledge. And that puts us in a privileged position. By the way, privilege comes with obligation. That’s usually what it used to mean. Today, we think of privilege just it lets you do whatever you want. But it used to mean that you had real obligations, right? And I believe because we have the power of knowledge, we have real obligations to other species. Other species don’t have much of an obligation to us, but we have an obligation to them. RITHOLTZ: And the interesting thing about what you said is not only does no other species have the ability to access anything, anybody has written, anytime in history, pretty much this is the first generation that had access in that way, across — pretty much across the whole board. WENGER: Well, this is the amazing thing about digital technology, right? We could use it to make all the world’s knowledge accessible to everybody in the world. And great things could come from that, right? So there’s some people like Elon Musk and others who are like, “Oh, my God, the population is going to, you know, decrease a lot and that will be bad.” I’m like, no, we have 8 billion people at the moment, peak population. The present trajectory might be 11 billion, although if we don’t get on top of the climate crisis, it will decrease actually rapidly. But we’re making such poor use of it. Why? Because so many people don’t have access to knowledge, don’t have a shot. I always love the story of Ramanujan, the famous mathematician, who used to send a letter to Hardy. And Hardy was like, “We should bring this guy over to England and he would have been a very productive mathematician.” There are Einsteins, and Ramanujans, and Elinor Ostrom, and Marie Curies all around the world today, and we’re not giving them — so we’re vastly undertapping human potential. And we can use digital technology to change that and to give everybody access. And that’s one of the things, one of the great opportunities that we have in this transition to the knowledge age. RITHOLTZ: Quite, quite fascinating. So let me jump to my favorite questions that I ask all of my guests, starting with, tell us what kept you entertained over the past couple of years. What have you been watching or listening to? WENGER: I really don’t watch much. At the moment, the only thing I watch with any kind of regularity Sabine Hossenfelder’s YouTube series called Science Without the Gobbledygook. RITHOLTZ: I’ll take a look at that. I’m a giant fan of YouTube Premium, and I’m always astonished that people I know who are YouTube junkies won’t spring for the 8 bucks a month to pull out commercials and distractions. But YouTube is just an endless rabbit hole. WENGER: Well, YouTube is an example of the best and the worst of the Internet all in one place, right? There’s so much amazing knowledge like Sabine’s videos, Veritasium. I mean, you could learn almost anything from how to fix your dishwasher to how — you know, the theory of general relativity works. At the same time, YouTube is also this place where tons of people, you know, become radicalized or redpilled, or whatever it is, because the algorithm — the algorithm has the wrong objective function, right? Its objective function is engagement. It’s not lifting people up. RITHOLTZ: Tell us about some of your mentors who helped shape your career. WENGER: I was super, super fortunate when I was an early teenager. We talked about this, when I first fell in love with computers. I lived in a relatively small village in Germany. And there was one computer science student there who was maybe 10 years older than I was. And he just spent time with me, and he gave me his books, and he gave me his floppy disks with software, and he helped me sort of understand all this. And I’m forever grateful to (Anstur Guenther), wherever you are in the world. RITHOLTZ: That’s really interesting. Have you spoken to him anytime recently? WENGER: No, because I haven’t been able to find him. Basically, he seems to have disappeared. RITHOLTZ: Well, if you’re listening, reach out to Albert. Tell us — we mentioned a number of books. Tell us about some of your favorite and what you’re reading right now. WENGER: Favorites, I would say David Deutsch, “The Beginning of Infinity” is definitely one of my favorites. RITHOLTZ: I just ordered that because of you. WENGER: I’m reading at the moment, a book by Ada Palmer called “Perhaps the Stars.” It’s the fourth book in a series called the Terra Ignota Series. She’s a professor at the University of Chicago. RITHOLTZ: What sort of advice would you give to a recent college grad who is interested in a career in either entrepreneurship or venture capital? WENGER: Develop a mindfulness practice, you know, whatever works for you, whether that’s yoga, running, for me, it’s conscious breathing. I just think it’s such a superpower not to get hijacked by your emotions. It’s a true superpower. And the more humans can cultivate it, the more we can achieve. RITHOLTZ: That’s really, really intriguing. And our final question, what do you know about the world of venture today that you wish you knew 30 or so years ago when you were first getting started? WENGER: There will always be another bubble. RITHOLTZ: There will always be another bubble. That’s amazing. Just human nature can’t be avoided. WENGER: It can’t be avoided. RITHOLTZ: And what should we do in anticipation of during and after bubbles? WENGER: We should acknowledge that they will come, that they’re part of how we operate, that you can make money before, during and after. RITHOLTZ: There you go. Really, really fascinating stuff. We have been speaking with Albert Wenger. He is managing partner at Union Square Ventures. If you enjoy this conversation, well, be sure to check out any of our previous 400 or so discussions we’ve had over the past eight years. You can find those at iTunes, Spotify, or wherever you get your favorite podcasts from. We love your comments, feedback and suggestions. Write to us at mibpodcast@bloomberg.net. Sign up for my daily reading list at ritholtz.com. Follow me on Twitter @ritholtz. I would be remiss if I did not thank the crack staff that helps put these conversations together each week. Sarah Livesey is my audio engineer. Sean Russo is my head of Research. Paris Wald is my producer. Atika Valbrun is our project manager. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio. END   ~~~   The post Transcript: Albert Wenger appeared first on The Big Picture......»»

Category: blogSource: TheBigPictureSep 20th, 2022

Europe"s "State Of The Union": A War Economy, Without The Guns To Support It

Europe's "State Of The Union": A War Economy, Without The Guns To Support It By Michael Every of Rabobank Ursula von der Leyen gave a muscular State of the Union address yesterday. There was no shirking from the outset: “Never before has this Parliament debated the State of our Union with war raging on European soil….From that very moment, Europeans neither hid nor hesitated. They found the courage to do the right thing.” Some of the right things, as critics even within the EU might point out, and much slower and on a much smaller scale than the US, for example. There was a clear warning: “The months ahead of us will not be easy. Be it for families who are struggling to make ends meet, or businesses, who are facing tough choices about their future.” Europe was about to be tested, she said, and much was at stake, for it and the world at large. But that was about all she said about the tough choices or struggling from then on. VDL opted for geopolitics over economics: “This is not only a war unleashed by Russia against Ukraine. This is a war on our energy, a war on our economy, a war on our values and a war on our future. This is about autocracy against democracy.” That sounds very much like the economic war and systemic metacrisis warned of here all year, and which touches just about everything. She stressed that Russia's financial sector is on life-support and “Nearly one thousand international companies have left the country. The production of cars fell by three-quarters compared to last year. Aeroflot is grounding planes because there are no more spare parts. The Russian military is taking chips from dishwashers and refrigerators to fix their military hardware, because they ran out of semiconductors. Russia's industry is in tatters.” It isn’t the only one facing that fate, sadly: regardless, “I want to make it very clear, the sanctions are here to stay.” EUR100m was offered to Ukrainian schools: a down-payment on the estimated EUR300-400bn it might take to rebuild the country. Then VDL pointed out the EU has connected Ukraine to its electricity grid: “And today, Ukraine is exporting electricity to us. I want to significantly expand this mutually beneficial trade.” I am sure Europe would love more electricity from Ukraine, though it is odd that a shattered country should have to do that kind of lifting. She stayed geopolitical, via energy: “We should have listened to the voices inside our Union – in Poland, in the Baltics, and all across Central and Eastern Europe,” and spoke of new investments in renewable energy, LNG terminals, and interconnectors, noting “This costs a lot. But dependency on Russian fossil fuels comes at a much higher price.” “Gas prices have risen by more than 10 times compared to before the pandemic. Making ends meet is becoming a source of anxiety for millions of businesses and households.” Yet that pain has only just started to be felt. It remains to be seen if her assertion that “Europeans are also coping courageously with this” will remain true, as she offered Stakhanovite stories of ceramics factories in central Italy that have moved their shifts to early morning, to benefit from lower energy prices. Such sacrifice! But any others are just going to close completely. Indeed, although VDL proclaimed that “We were in the deepest recession since World War 2. We achieved the fastest recovery since the post-war boom,” some now fear the deepest recession since World War 2 all over again, especially as US shale warns Europe that it won’t be able to step up to fill demand gaps this winter. Indeed, as France capped energy price hikes at 15%, VDL proposed electricity rationing, without details of how; she merely added that defraying the higher bills that are looming with windfall taxes and revenue caps: so where does the capital come from to invest in all this new energy supply? No answers. The TTF gas market will also be shaken up to establish a more representative benchmark – based on what? The EU will also now take into account the specific nature of its relationship with energy suppliers, labelling them in a ‘traffic lights’ system from unreliable to reliable: and what if many are red or amber, given Europe has not yet gone green? VDL acknowledged the EU is short of the metals it needs for that transition, and that “almost 90% of rare earths and 60% of lithium are processed in China.” In response, she announced a European Critical Raw Materials Act, which will identify strategic projects all along the supply chain, from extraction to refining, from processing to recycling, and build up strategic reserves where supply is at risk. Many of us can point to where all this green stuff is on a map; and who owns the mines; and which direction the commodities flow; and how rough this Great Game is on the ground. It’s doing something about it that is hard and expensive. Apparently all is well though, as VDL noted: “Five years ago, Europe launched the Battery Alliance. And soon, two third of the batteries we need will be produced in Europe.” How soon? And what energy source will be powering all this cars switching from oil? She also boasted: “Last year I announced the European Chips Act. And the first chips gigafactory will break ground in the coming months.” So, years from completion. And what energy will be powering it, as at least one EU national leader worries about “de-industrialisation”? Then it was back to values: “This watershed moment in global politics calls for a rethink of our foreign policy agenda. This is the time to invest in the power of democracies. This work begins with the core group of our like-minded partners: our friends in every single democratic nation on this globe. We see the world with the same eyes. And we should mobilize our collective power to shape global goods. We should strive to expand this core of democracies.“ VDL will find most of the countries selling most of the green goods the EU needs most are not democracies. And note her pledge that: “I want the people of the Western Balkans, of Ukraine, Moldova and Georgia to know: You are part of our family, your future is in our Union, and our Union is not complete without you!” Russia will love that. So will China. VDL also spoke of the Global Gateway investment plan announced in last year’s SoTU. Apparently this has already built two factories in Africa to manufacture mRNA vaccines: two. Not quite the Marshal Plan. Indeed, the scheme “requires investment on a global scale, so we will team up with our friends in the US and with other G7 partners to make this happen.” Then there was another geopolitical message: “We should not lose sight of the way foreign autocrats are targeting our own countries. Foreign entities are funding institutes that undermine our values. Their disinformation is spreading from the internet to the halls of our universities… These lies are toxic for our democracies. Think about this: We introduced legislation to screen foreign direct investment in our companies for security concerns. If we do that for our economy, shouldn't we do the same for our values? We need to better shield ourselves from malign interference. This is why we will present a Defence of Democracy package. It will bring covert foreign influence and shady funding to light. We will not allow any autocracy's Trojan horses to attack our democracies from within.” In short, the SoTU sounded like a Cold War-era US equivalent – without the guns behind it. What the EU is promising is not just a semi war/planned-economy from energy and green supplies up, but muscular liberal-democratic mercantilism from the top down. Such a policy shift was 100% predictable years ago (in this Daily!) without the help of dialectical materialism; all one needed was realpolitik, materialism, and the empiricism of why we had empires and “-isms” The problem is the EU doesn’t have the muscles to match yet. Indeed, VDL failed to address the full scale of the multidimensional challenges, and sacrifices, the EU will face if it is to thrive in a realpolitik world. The energy crisis will rage for years, with untold pain and at unknown cost: and Europe will simultaneously have to rearm, even as its industrial production will slow. Indeed, as she was speaking, Armenia and Azerbaijan slipped closer to war, the former calling on Russia for help, the latter likely on NATO member Turkey. Shortly after she spoke, Ukraine proposed the EU and US should offer it defence guarantees without NATO membership – and Russia responded that implied a nuclear holocaust. It may have been expected, and necessary, for VDL to have been ‘laying down the law’ in the way she did: but if you want to be sheriff then you have to accept that there are real bad guys out there, and High Noons. “Long live Europe”, as she concluded – but not by denying that fact. VDL wasn’t alone in that deliberate oversight though. Markets slept through the whole SoTU as if none of this matters, is already priced in, or won’t happen. The main action was instead the BOJ threatening to intervene to prop up JPY at the same time as the government announced a new fiscal stimulus program – policies that lean in entirely different directions. Japan (and Australia and New Zealand) echo Europe’s experience of waking up to a cold, harsh, more lawless geopolitical world, and thrashing around for a policy framework that matches. Tyler Durden Thu, 09/15/2022 - 09:51.....»»

Category: worldSource: nytSep 15th, 2022

Luongo: There Is "More Than A Whiff Of Desperation & Fear" Emanating Across Europe

Luongo: There Is 'More Than A Whiff Of Desperation & Fear" Emanating Across Europe Authored by Tom Luongo via Gold, Goats, 'n Guns blog, All I hear is that lonesome sound The Hounds of Winter They harry me down - Sting By a narrow margin Boris Johnson’s clownish Defense Minister Liz Truss will become the next Prime Minister of the United Kingdom. She doesn’t have a lot of time to put together a government lest the U.K. have to suffer through yet another general election. Truss, by virtue of her full-throated support for Ukraine against Russia, was the choice of those Tories committed to maintaining the UK’s relationship with the US, leaving it nominally more independent from the European Union. Davos man-child Rishi Sunak, the darling of the Remainers of City of London the true hounds of winter here, failed to overtake Truss in the end. What started as a Davos-style decapitation of Johnson, who rightfully deserves to be jailed for his undermining Russian/Ukrainian peace talks in April, ended with the female version of him in office. While I’d like to say I’m happy to see Davos lose another major conflict in Europe, empowering the US neoconservatives is not a win here. In the end, the deep ties between the US and UK intelligence and military services won out in the Tory leadership battle. Again, there are no winners from our perspective, here. Truss comes in vowing to fix everything, from lowering taxes (good) to dealing with an energy crisis she helped create by leading the charge to sanction Russian energy to hell and back. She’ll deficit spend like she’s supposed to because making peace with Putin or breaking with Davos over developing Scotland’s energy reserves is verboten. She wants to be thought of as the new Thatcher, but she has neither the support Maggie had nor one-third her talent or smarts. And she doesn’t have the trust of the London banks, who themselves are now rightfully staring at a black hole thanks to her manifest stupidity and belligerence. Truss is a typical midwit just smart enough to know who’s giving the orders and how to make them manifest but not smart enough to rise above that. I remind everyone that this is a woman so unqualified for the job she had that she doesn’t know where the borders of Russia and Ukraine are but believes in the ‘territorial integrity of Ukraine.’ Like all good servants of the elites she represents, she was rewarded for her incompetence. The choice between Truss and Sunak was another classic Hobson’s Choice — continued war with Russia across every vector (Truss) or the surrender of the UK to the EU and the reversing of Brexit (Sunak). Either way there is not much hope this morning if you are a Brit. At best she will be an even weaker leader than Johnson was, since she has no issue to rally the country around, like Brexit, which she won’t even discuss in public. This was reflected in the final party leadership vote where 20% of Tories stayed home. So, even if Truss is able to cobble together a government and presents it to the Queen to rubber stamp, she will do so with the Tories having been thoroughly discredited as a party. Not that Labour is any useful opposition here. While the old guard of British politics may have won this fight, it is a Pyrrhic victory for them. It’s still a country with no friends as long as Biden is in power. British politics have been frozen for months because of this ridiculous affair. All it did was extend everyone’s misery as the UK warmongers cling to the vestiges of their former power. What’s truly sad is that Johnson backed a Hail Mary in Ukraine surrounding the Zaporizhia Nuclear Power Plant (ZNPP) that may now have to be considered the British version of the Bay of Pigs, but with far vaster implications. The massacre that occurred last week was a plan so retarded it reveals the mendacity and desperation of both British Intelligence and former Prime Minister Boris Johnson to escalate the conflict, remain in power and advance their ultimate agenda of weakening global support for Russia at the UN. The Ukrainian Armed Forces, with significant help from British ‘advisors,’ staged a multi-pronged commando amphibious landing north of the ZNPP.  The goal was to attack it and take it over while the Russian garrison had been mostly removed while awaiting the IAEA inspectors. The idea being to shame the Russians out of the ZNPP to show that it wasn’t being used as a military staging area and attack it while it was lightly defended. Then… and this is the insane part… take the entire IAEA delegation hostage but doing so POSING AS RUSSIAN TROOPS. Here’s the link to the plan from Intel Slava Z’s Telegram Channel, of course salt to taste. The Kremlin was aware of the plans of the Main Intelligence Directorate of the Armed Forces of Ukraine to take advantage of the arrival of the IAEA mission and carry out an amphibious landing in order to try to seize the Zaporizhzhya Nuclear Power Plant and make statements for days that it was Russian special forces.  Under ideal conditions for the work of the DRG, they calculated the task of taking the mission itself hostage and keeping the nuclear power plant under mines, making demands for the complete withdrawal of Russian troops to the territory of Crimea. Boris Johnson brought the plan of operation and some of the instructors with him as a demobilization chord of his premiership, but if the GUR was successful, he would have refused to transfer power, referring to an international emergency threatening a catastrophe on a planetary scale.  At the moment, 47 DRG fighters have been destroyed, three have been taken prisoner (!), Two are in serious condition between life and death.  A group of 12 people is blocked on three sides and cut off from the water and boats, by 15:00 CTO will be over.  Zelensky’s statement on this situation is expected in the late afternoon, the head of the IAEA Mission has already been notified of the situation, as well as UN Secretary General Guterres.  The operation was coordinated by MI6 officers from their headquarters in the suburbs of Kyiv. All 64 DRGs have recently completed training in the UK and traveled from Warsaw to Odessa on 29 August. Now, clearly this is a Russian version of events. But it is backed up by the statements coming from the UN in the aftermath, praising the Russian military for securing the safety of the IAEA inspectors, something they would never have done. Even if the whole ‘impersonating Russians holding IAEA inspectors hostage’ plan failed, the story is still deeply disturbing, because this type of multi-pronged (5 different invasion points of the area) operation had to have been planned well in advance. The Russian Ministry of Defense’s version of the story is similar if cleaner, for diplomatic reasons if nothing else. They leave out the ‘impersonating Russians’ part but leave in all of Ukraine’s attempts to insert friendly Western media into the delegation who would then give us the ‘official story’ of what happened. Moscow has suggested that Kiev’s plan was to capture the nuclear plant and then use the staff of the UN nuclear watchdog as “human shields” to maintain control over it. What this means is that the Johnson and the US Dept. of Defense/National Security Council (all staffed by the move virulent Neocons) have been planning something like this for months which is why they refuse to allow the Ukrainians to surrender.   It’s also why the EU/Davos (who clearly want out of this insanity) are throwing Johnson under the bus for blowing up April’s peace talks. Russian President Vladimir Putin keeps tightening the screws on the energy-starved Europeans causing all kinds of havoc there politically. The timing of his announcement Gazprom was shutting down Nordstream 1 indefinitely while the IAEA inspectors were at the ZNPP is yet another clue to what the real story was. Moreover, note that since this inspection went off without a hitch there was little to no breathless reporting on it. It vanished from the media as quickly as the prospects for the UK’s economic recovery with the announcement of Truss’ big win. The Brits under Johnson and Truss have been trying to create a false flag incident to justify official NATO involvement in the Ukraine conflict since the beginning of the war. The excuse of a multi-country nuclear meltdown incident would more than provide that justification. This was their big operation to finally turn the entire world against the Russians by saying that in order to suppress the real story at the ZNPP Russia kidnapped peaceful IAEA inspectors and used them as political hostages.   Because even if Ukrainian forces stormed the plant, do you think the lying British media would tell you a story even remotely pro-Russian? No. These are the same people who have been trying to convince you that Russia was shelling its own troops there for weeks now. This may have allowed Neocon-backed Johnson to stay in power through emergency powers and set the precedent for Biden to do the same thing before the mid-terms. Truss’ election as the head of the Tories in the UK ensure this type of insanity will continue uninterrupted because she’s too stupid to see the obvious ploy to discredit both the UK and the US while Europe plays the victim. Playing through their strategy, any kind of ‘accident’ at ZNPP can be coordinated with a collapse of capital markets as NATO officially gets involved in Ukraine and vast nationalization of whole swaths of the West’s industrial base then ensues. Thankfully the Russians escorting the IAEA inspectors into the ZNPP and the amphibious assaults vaporized (which they have), this entire disgusting affair ends.   I bring this up not because I believe the entire story. I don’t. But it is emblematic of the mindset of the people in charge. There is more than a whiff of desperation and fear emanating from all across Europe, but especially from the UK as they have been brought to the edge of extinction by inept leadership refusing to accede to the reality that not only has the sun finally set on the British Empire, but it’s not likely to rise again anytime soon. The only hope the UK had was in the US supporting its bid for independence from the EU via Brexit. Once Biden was selected that hope died, minus an Oliver Cromwell moment. What they got was Liz Truss. The reason I’m so set on my thesis about the Fed being against Davos is the actions of the UK in this conflict. It was clearly an operation that both the US/UK neocons and the Davos globalists saw common ground in using Ukraine to attack Russia. Their interests aligned all during the eight year lead up to Russia’s invasion. They really did believe their own clownish stories about the fragility of Putin’s government, Russia’s economy and the depth of the West’s financial and legal power to extract pain from those that defied them. Once it became obvious that the economic ‘shock and awe’ campaign to isolate Russia had failed and Putin’s Energy Counter-Offensive began, the cracks in the relationship opened and the power of ‘Outside Money’ — gold, commodities — exposed the weakness of ‘Inside Money.’ The failure of the Biden junta to secure the Fed means that not only did the Davos/Neocon alliance crack but US sovereigntist forces saw the opportunity to take out City of London and Amsterdam in the chaos. Now both the UK and the EU are caught between the Fed draining them dry in the capital markets and the Russians refusing them much needed energy. When I look at a long-term chart of the British Pound all I see is oblivion. It’s on pace for the lowest close in history this year. And thanks to Gordon Brown there are no gold reserves left to back the currency nor any new energy sources to stabilize it. It, along with the Canadian dollar are the ultimate form of ‘Inside Money.’ And Inside Money is falling fast, first to the US dollar (USDX knocking on 110 and rising) and then to the broad commodity sector and eventually gold itself. The Euro chart is worse. Russia and Putin understand this and all they have to do is continue doing nothing, or more explicitly pumping nothing, and the collapse will finally be complete. All the Fed has to do is stay its course. So, while City of London thought they were circling the Brexiteers and Russia going for the kill, they were themselves encircled by the real dogs of war. Maybe Davos wants this collapse. Sure, they talk a good game about Building Back Better and the Great Reset, but they didn’t imagine it would be on someone else’s terms, namely both the Americans’ and the Russians’. Yes, they are selling the carbon-free future to their people but at what price and with what capital? Yes, they believe they can consolidate their financial problems in the ECB, a European-style Resolution Trust bad bank, then default through George Soros’ idea of Perpetual Bonds and emerge with a clean balance sheet. But who is going to invest in them ever again after the pain they put everyone through? Not Russia. Not China. Maybe a weakened US. Europe will be a smoking ruin for decades if this happens. Putin is not only interested in finally besting Russia’s centuries-old enemy, Britain. He’s also no longer smitten with the ideas of old Europe. If there is to be détente between Europe and Russia it will be on Russia’s terms, not Europe’s. So far the EU is doubling down on its stupidity because it fits their plan, as stupid as it is, much as I expect Truss to double down on Johnson’s because of legendary British arrogance and stubbornness. Just don’t expect Putin or Powell at the Fed to come to their rescue anytime soon. Liz Truss is a woman more bloodthirsty than Hillary Clinton with one-tenth of her gravitas. The British people certainly deserve better because no one should be treated to such depravity. She is a band-aid on an open wound festering as the hounds of winter circle in for the kill. *  *  * Join my Patreon if you understand why Winter is Coming Tyler Durden Tue, 09/06/2022 - 11:25.....»»

Category: blogSource: zerohedgeSep 6th, 2022

China"s Water Crisis Could Trigger Global Catastrophe

China's Water Crisis Could Trigger Global Catastrophe China's water crisis is nothing new, but it's gotten worse - and is now on the 'brink of catastrophe' and could trigger a global catastrophe, according to Foreign Affairs. Dried-up riverbed of Jialing river, a Yangtze tributary, China, August 2022 Thomas Peter / Reuters Given the country’s overriding importance to the global economy, potential water-driven disruptions beginning in China would rapidly reverberate through food, energy, and materials markets around the world and create economic and political turbulence for years to come. -Foreign Affairs For starters, there's no substitute for water - which is essential for food production, electricity generation and sustaining all life on earth. In China, which consumes ten billion barrels of water per day (approximately 700x its daily oil consumption), decades of economic and population growth have pushed northern China's water system to unsustainable levels. According to the report, the per-capita water supply around the North China Plain at the end of 2020 was nearly 50% below the UN's definition of acute water scarcity at 253 cubic meters. Other major cities, including Beijing, Shanghai, Tianjin, are at similar (or lower) levels.  For comparison, Egypt had per-capita freshwater resources of 570 cubic meters, and has nowhere near as large of a manufacturing base as China. Not fit for human consumption Also worrisome, is that 19% of China's surface water is not fit for human consumption according to China’s Ministry of Ecology and Environment. Roughly 7% was deemed unfit for any use at all. Groundwater was worse - with around 30% considered unfit for consumption, and 16% unfit for any use. In order to utilize this water, Beijing will need to make major investments in treatment infrastructure, which will require a significant increase in electricity usage in order to power the equipment. Working against progress is China's farming and industrial industries, which dump contaminants into the country's groundwater - potentially setting the stage for decades of additional impairments. Data from the UN Food and Agriculture Organization indicate that China uses nearly two and a half times as much fertilizer and four times as much pesticide as the United States does despite having 25 percent less arable land. For decades, Beijing has generally chosen to conceal the full extent of China’s environmental problems to limit potential public backlash and to avoid questions about the competence and capacity of the Chinese Communist Party (CCP). This lack of transparency suggests that an escalation to acute water distress could be far closer than most outside observers realize—increasing the chances that the world will be ill prepared for such a calamity. -Foreign Affairs The core problem is the overpumping of aquifers under the Northern China Plain - which according to NASA GRACE satellites, are more overdrawn than those of the Ogallala Aquifer under the Great Plains in the US - which is one of the world's most imperiled sources of agricultural water. In some instances, groundwater levels have gotten so low that underground aquifers have collapsed - triggering a phenomenon called Land Subsidence, which can cause the ground to cave in over large areas, which in some case renders the aquifer unusable in the future. In 2003, Beijing launched a $60 billion "South-to-North Water Transfer Project" to use waters from the Yangtze River to replenish the north. Meanwhile, China has deployed cloud seeding technologies to lace the clouds with silver iodide or liquid nitrogen in order to stimulate rainfall. It's also relocated heavy industries away from dry regions. In April 2022, Vice Minister of Water Resources Wei Shanzhong estimated that China could end up spending $100 billion annually on water-related projects. It might not be enough, however. Despite highly innovative programs to improve water availability, some scholars estimate that water supply could fall short of demand by 25 percent by 2030—a situation that would by definition force major adjustments in society. Experiences to date on the North China Plain enhance concern and illustrate the scale of additional needed hydraulic intervention. Despite nearly a decade of importing Yangtze valley water supplies to high-stress areas such as Beijing, large-scale depletion of stored groundwater continues in other nearby areas, such as Hebei and Tianjin. -Foreign Affairs The result of a worsening drought will, of course, mean less food. 60% of China's wheat, 45% of its corn, 35% of its cotton and 64% of its peanuts come from the at-risk North China Plain - where, in the example of wheat, their annual production of more than 80 million tons is on par with Russia's annual output, while their 125 million tons of corn is nearly 3x Ukraine's prewar production. In order to sustain these harvests, water is being pumped to farms faster than nature can replenish it. According to satellite data, between 2003 and 2010, Northern China lost as much groundwater as Beijing consumes annually - leaving farmers struggling to find new sources. If the North China Plain suffers a 33% crop loss due to water insufficiency, China would need to import roughly 20% of the world's internationally traded corn and 13% of the world's wheat. Although China has stockpiled the world’s largest grain reserves, the country is not immune to a multiyear yield shortfall. This would likely force China’s food traders, including large state-owned enterprises such as COFCO and Sinograin, into global markets on an emergency basis to secure additional supplies. This in turn could trigger food price spikes in high-income countries, while rendering key food items economically inaccessible to hundreds of millions of people in poorer countries. The impacts of this water-driven food shortage could be far worse than the food-related unrest that swept across lower- and middle-income countries in 2007 and 2008 and would drive migration and exacerbate political polarization already present in Europe and the United States. -Foreign Affairs A shocking problem China's water woes go beyond agriculture - with around 90% of the country's electrical grid reliant on extensive water resources - "particularly hydro, coal, and even nuclear generation, which needs large and steady water supplies for steam condensers and to cool reactor cores and used fuel rods" according to the report. If China lost 15% of its hydropower production in any given year due to low water levels, it would have to increase electricity output via other means by an amount equal to what Egypt consumes in a year - something that only coal would be able to accomplish. Except - the process of mining and preparing coal is also highly water intensive. And while seawater can be used to cool the limited coastal coal sources, much of the sooty resource is located inland and rely on groundwater, rivers and lakes. Read the rest here... Tyler Durden Thu, 08/25/2022 - 23:20.....»»

Category: blogSource: zerohedgeAug 26th, 2022

We Are Not The First Civilization To Collapse, But We Will Probably Be The Last

We Are Not The First Civilization To Collapse, But We Will Probably Be The Last Authored by Chris Hedges via The Chris Hedges Report, I am standing atop a 100-foot-high temple mound, the largest known earthwork in the Americas built by prehistoric peoples. The temperatures, in the high 80s, along with the oppressive humidity, have emptied the park of all but a handful of visitors. My shirt is matted with sweat. I look out from the structure—-known as Monks Mound — at the flatlands below, with smaller mounds dotting the distance. These earthen mounds, built at a confluence of the Illinois, Mississippi and Missouri rivers, are all that remain of one of the largest pre-Columbian settlements north of Mexico, occupied from around 800 to 1,400 AD by perhaps as many as 20,000 people. This great city, perhaps the greatest in North America, rose, flourished, fell into decline and was ultimately abandoned. Civilizations die in familiar patterns. They exhaust natural resources. They spawn parasitic elites who plunder and loot the institutions and systems that make a complex society possible. They engage in futile and self-defeating wars. And then the rot sets in. The great urban centers die first, falling into irreversible decay. Central authority unravels. Artistic expression and intellectual inquiry are replaced by a new dark age, the triumph of tawdry spectacle and the celebration of crowd-pleasing imbecility. “Collapse occurs, and can only occur, in a power vacuum,” anthropologist Joseph Tainter writes in The Collapse of Complex Societies. “Collapse is possible only where there is no competitor strong enough to fill the political vacuum of disintegration.” Doomsday Selfie - by Mr. Fish Several centuries ago, the rulers of this vast city complex, which covered some 4,000 acres, including a 40-acre central plaza, stood where I stood. They no doubt saw below in the teeming settlements an unassailable power, with at least 120 temple mounds used as residences, sacred ceremonial sites, tombs, meeting centers and ball courts. Cahokia warriors dominated a vast territory from which they exacted tribute to enrich the ruling class of this highly stratified society. Reading the heavens, these mound builders constructed several circular astronomical observatories — wooden versions of Stonehenge.  The city’s hereditary rulers were venerated in life and death. A half mile from Monks Mound is the seven-foot-high Mound 72, in which archeologists found the remains of a man on a platform covered with 20,000 conch-shell disc beads from the Gulf of Mexico. The beads were arranged in the shape of a falcon, with the  falcon’s head beneath and beside the man's head. Its wings and tail were placed  underneath the man’s arms and legs. Below this layer of shells was the body of another man, buried face downward. Around these two men were six more human remains, possibly retainers, who may have been put to death to accompany the entombed man in the afterlife. Nearby were buried the remains of 53 girls and women ranging in age from 15 to 30, laid out in rows in two layers separated by matting. They appeared to have been strangled to death. The poet Paul Valéry noted, “a civilization has the same fragility as a life.” Across the Mississippi River from Monks Mound, the city skyline of St. Louis is visible. It is hard not to see our own collapse in that of Cahokia. In 1950, St. Louis was the eighth-largest city in the United States, with a population of 856,796. Today, that number has fallen to below 300,000, a drop of some 65 percent. Major employers — Anheuser-Busch, McDonnell-Douglas, TWA, Southwestern Bell and Ralston Purina —have dramatically reduced their presence or left altogether. St. Louis is consistently ranked one of the most dangerous cities in the country. One in five people live in poverty. The St. Louis Metropolitan Police Department has the highest rate of police killings per capita, of the 100 largest police departments in the nation, according to a 2021 report. Prisoners in the city’s squalid jails, where  47 people died in custody between 2009 and 2019, complain of water being shut off from their cells for hours and guards routinely pepper spraying inmates, including those on suicide watch. The city’s crumbling infrastructure, hundreds of gutted and abandoned buildings, empty factories, vacant warehouses and impoverished neighborhoods replicate the ruins of other post-industrial American cities, the classic signposts of a civilization in terminal decline. “Just as in the past, countries that are environmentally stressed, overpopulated, or both, become at risk of getting politically stressed, and of their governments collapsing,” Jared Diamond argues in Collapse: How Societies Choose to Fail or Succeed. “When people are desperate, undernourished and without hope, they blame their governments, which they see as responsible for or unable to solve their problems. They try to emigrate at any cost. They fight each other over land. They kill each other. They start civil wars. They figure that they have nothing to lose, so they become terrorists, or they support or tolerate terrorism.” Pre-industrial civilizations were dependent on the limits of solar energy and constrained by roads and waterways, impediments that were obliterated when fossil fuel became an energy source. As industrial empires became global, their increase in size meant an increase in complexity. Ironically, this complexity makes us more vulnerable to catastrophic collapse, not less. Soaring temperatures (Iraq is enduring 120 degree heat that has fried the country’s electrical grid), the depletion of natural resources, flooding, droughts, (the worst drought in 500 years is devastating Western, Central and Southern Europe and is expected to see a decline in crop yields of 8 or 9 percent), power outages, wars, pandemics, a rise in zoonotic diseases and breakdowns in supply chains combine to shake the foundations of industrial society. The Arctic has been heating up four times faster than the global average, resulting in an accelerated melting of the Greenland ice sheet and freakish weather patterns. The Barents Sea north of Norway and Russia are warming up to seven times faster. Climate scientists did not expect this extreme weather until 2050.  “Each time history repeats itself, the price goes up,” the anthropologist Ronald Wright warns, calling industrial society “a suicide machine.” In A Short History of Progress, he writes:  Civilization is an experiment, a very recent way of life in the human career, and it has a habit of walking into what I am calling progress traps. A small village on good land beside a river is a good idea; but when the village grows into a city and paves over the good land, it becomes a bad idea. While prevention might have been easy, a cure may be impossible: a city isn't easily moved. This human inability to foresee — or to watch out for — long-range consequences may be inherent to our kind, shaped by the millions of years when we lived from hand to mouth by hunting and gathering. It may also be little more than a mix of inertia, greed, and foolishness encouraged by the shape of the social pyramid. The concentration of power at the top of large-scale societies gives the elite a vested interest in the status quo; they continue to prosper in darkening times long after the environment and general populace begin to suffer. Wright also reflects upon what will be left behind: The archaeologists who dig us up will need to wear hazmat suits. Humankind will leave a telltale layer in the fossil record composed of everything we produce, from mounds of chicken bones, wet-wipes, tires, mattresses and other household waste to metals, concrete, plastics, industrial chemicals, and the nuclear residue of power plants and weaponry. We are cheating our children, handing them tawdry luxuries and addictive gadgets while we take away what’s left of the wealth, wonder and possibility of the pristine Earth. Calculations of humanity’s footprint suggest we have been in ‘ecological deficit,’ taking more than Earth’s biological systems can withstand, for at least 30 years. Topsoil is being lost far faster than nature can replenish it; 30 percent of arable land has been exhausted since the mid-20th century. We have financed this monstrous debt by colonizing both past and future, drawing energy, chemical fertilizer and pesticides from the planet’s fossil carbon, and throwing the consequences onto coming generations of our species and all others. Some of those species have already been bankrupted: they are extinct. Others will follow. As Cahokia declined, violence dramatically increased. Surrounding towns were burned to the ground. Groups, numbering in the hundreds, were slaughtered and buried in mass graves. At the end, “the enemy killed all people indiscriminately. The intent was not merely prestige, but an early form of ethnic cleansing” writes anthropologist Timothy R. Pauketat, in Ancient Cahokia and the Mississippians. He notes that, in one fifteenth-century cemetery in central Illinois, one-third of all adults had been killed by blows to the head, arrow wounds or scalping. Many showed evidence of fractures on their arms from vain attempts to fight off their attackers.  Such descent into internecine violence is compounded by a weakened and discredited central authority. In the later stages of Cahokia, the ruling class surrounded themselves with fortified wooden stockades, including a two-mile long wall that enclosed Monks Mound. Similar fortifications dotted the vast territory the Cahokia controlled, segregating gated communities where the wealthy and powerful, protected by armed guards, sought safety from the increasing lawlessness and hoarded dwindling food supplies and resources. Overcrowding inside these stockades saw the spread of tuberculosis and blastomycosis, caused by a soil-borne fungus, along with iron deficiency anemia. Infant mortality rates rose, and life spans declined, a result of social disintegration, poor diet and disease. By the 1400s Cahokia had been abandoned. In 1541, when Hernando de Soto’s invading army descended on what is today Missouri,  looking for gold, nothing but the great mounds remained, relics of a forgotten past. This time the collapse will be global. It will not be possible, as in ancient societies, to migrate to new ecosystems rich in natural resources. The steady rise in heat will devastate crop yields and make much of the planet uninhabitable. Climate scientists warn that once temperatures rise by 4℃, the earth, at best, will be able to sustain a billion people. The more insurmountable the crisis becomes, the more we, like our prehistoric ancestors, will retreat into self-defeating responses, violence, magical thinking and denial.  The historian Arnold Toynbee, who singled out unchecked militarism as the fatal blow to past empires, argued that civilizations are not murdered, but commit suicide. They fail to adapt to a crisis, ensuring their own obliteration. Our civilization’s collapse will be unique in size, magnified by the destructive force of our fossil fuel-driven industrial society. But it will replicate the familiar patterns of collapse that toppled civilizations of the past. The difference will be in scale, and this time there will be no exit. Tyler Durden Tue, 08/16/2022 - 16:25.....»»

Category: smallbizSource: nytAug 16th, 2022

No Hope In Sight For The EV Industry

In his podcast addressing the markets today, Louis Navellier offered the following commentary.  EU’s Energy Problems I am on the Forbes cruise this week in the Baltic Sea and have learned some interesting things.  First, the war in Ukraine cannot be ignored in Europe due to the fact that it is too close and refugees are being […] In his podcast addressing the markets today, Louis Navellier offered the following commentary.  EU’s Energy Problems I am on the Forbes cruise this week in the Baltic Sea and have learned some interesting things.  First, the war in Ukraine cannot be ignored in Europe due to the fact that it is too close and refugees are being held in many Baltic Sea countries.  The guard posts on the Russian border for Estonia and other neighboring countries are largely abandoned since Russia needed soldiers to fight in Ukraine. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   Estonia is proud that it is building a large LNG terminal to help Finland and other European countries diversify away from Russian natural gas.  Spain has also proposed a new natural gas pipeline to France that would help deliver natural gas within a year.  Unfortunately, winter is coming and Germany’s head of BNA, Klaus Muller, which is the agency in charge of rationing natural gas supplies, said “If we fail to reach our target (20% cut in natural gas usage) then there is a serious risk that we will not have enough gas.”  However, the looming problem is that since natural gas prices are expected to remain abnormally high, Germany is expected to lose its competitiveness and may be forced to move some operations to lower-cost countries. Germany is now running a trade deficit for the first time in over 30 years and the low water levels on the Rhine river are becoming bottlenecks for the transportation of coal and other commodities.  BASF, which has factories on the Rhine river is now relying on more rail transportation.  Essentially, due to low water levels on the Rhine river, the tonnage on barges has to be reduced.  I should also add that France energy supplier EDP has reduced its electricity output at nuclear power stations along the Rhone and Garonne rivers to the lowest in over 30 years due to low water levels.  France has traditionally been an electricity exporter but is now relying on electricity imports from neighboring countries.  Due to the high cost of electricity as well as the supply shortages, thermostats have been raised across Europe and some countries, like Spain, ordered air conditioning to be limited to 27 degrees Celsius or 80.6 degrees Fahrenheit.  My youngest daughter was staying in Madrid at the time with her friend from college and she confirmed that it was pretty uncomfortable. I should add that I have been chatting with one of the approximately 180,000 British Conservative Party members that will be voting for the new Prime Minister, which will be announced on September 5th.  Liz Truss is the leading candidate so far and has middle-class roots that many British citizens like, especially because many citizens are struggling with sky-high electricity bills.  Under outgoing Prime Minister Boris Johnson, British taxes rose to a record level and many British citizens are struggling with sky-high inflation, so the most emphatic candidate that can connect to the people is expected to become the next Prime Minister on September 5th. So as far as Europe is concerned, the fall and rain cannot come soon enough.  With the help of natural gas rationing, hopefully Europe will have enough natural gas until alternative LNG supplies and natural gas pipelines can be added, so they finally break away from Russian natural gas.  Interestingly, some central European countries that are reluctant to stop using Russian natural gas, like Hungary, are landing new business.  For example, the biggest battery supplier in the world, CATL, just announced a massive $7.5 billion, 100 Gwh EV battery plant in Debrecen, Hungary that will be producing battery cells and modules for European automakers, like BMW, Mercedes, Stellantis and VW Group. Dog Days of Summer Here in the U.S., we are also in the “dog days of summer” and the stock market is expected to meander listlessly on light trading volume for the remainder of August.  Since CNBC was touting “meme” stocks last week and there was a lot of short covering in low quality companies, I am expecting that the stock market will begin to consolidate after an incredible run since June 16th.  The big news this week is expected to be the Federal Open Market Committee (FOMC) minutes that will be carefully scrutinized for hints that the Fed is nearing the end of its interest rate tightening cycle.  The famous words from Fed Chairman Jerome Powell after the last FOMC meeting was that the Fed would remain “data dependent” moving forward.  Although the big green energy bill that Congress approved is expected to put some upward pressure on interest rates and fossil fuels (due to higher energy taxes).  By and large, this government spending is expected to evolve slowly, since it is rewarding domestic green energy, like battery production, that is not fully up to scale, so the federal spending is expected to be constrained somewhat. No Hope For EV Speaking of constrained, there is really no hope in sight for the EV industry due to the high prices of lithium, nickel and cobalt for lithium-ion batteries that continue to rise in price to raw material costs.  At the Forbes conference on the cruise ship, we have all been discussing how challenging the supply bottlenecks are for raw battery materials and how the EV industry has stalled due to a shortage of lithium-ion batteries.  This is a good time to remind investors that the only reason that Tesla Inc (NASDAQ:TSLA) can make more EVs is that its Shanghai plant is making EVs with CATL’s iron phosphate batteries, which are less efficient, heavier, but also safter, since iron phosphate batteries do not catch on fire.  The faster companies follow Tesla to CATL’s iron phosphate batteries, like Ford, Rivian and VW Group, the faster the EV revolution can proceed.  Currently, I am worried about General Motors Company (NYSE:GM)’s EV strategy, since GM is stuck with LG Chem’s more expensive lithium-ion batteries and do not yet have an iron phosphate battery solution.  So right now, my winners in the EV race are Panasonic and Toyota (solid state batteries in hybrids in 2025), plus CATL, Ford and VW Group (for utilizing both iron phosphate and lithium-ion batteries). Coffee Beans Between April and July, 170 startups and tech-oriented companies incorporated in the United States laid off employees compared to just 20 in the first quarter. Netflix let go 450 or around four percent of its employees during the second quarter of 2022, while PayPal terminated contracts for 83 of its workers. Source: Statista. See the full story here. Updated on Aug 15, 2022, 2:02 pm.....»»

Category: blogSource: valuewalkAug 16th, 2022

Africa Needs Conventional Fuels, Not Windmills And Solar Panels

Africa Needs Conventional Fuels, Not Windmills And Solar Panels Authored by Manuel Tacanho via The Mises Institute, The energy and climate goals that Western governments, the United Nations, and other organizations are pushing on Africa constitute a crippling blow to its economies. As the least developed region, Africa should unequivocally prioritize economic development. One would think that amid energy poverty in Africa, Western governments and “development” institutions would prioritize energy security for African countries over energy transition. African countries must have reliable, abundant, and cheap energy (e.g., fossil fuels) to accelerate economic development. Fossil fuels power economies and people’s lives. To deny these countries the possibility of developing with fossil fuels by imposing climate goals that the Western world itself fails to achieve is hypocritical. And malicious. Climate Alarmism and Energy Hypocrisy Many environmental and energy experts acknowledge the imperative to address climate change but reiterate that there is no need for apocalyptic alarmism. Bjørn Lomborg is one such expert. In his book False Alarm, he makes the case that climate panic costs trillions of dollars and hurts people in undeveloped countries disproportionately. He warns: With 194 signatories, the 2015 Paris Agreement on climate change, the most expensive pact in human history, is likely to incur costs of some $1–$2 trillion per year by 2030. With ever more nations making promises to go carbon neutral over the next decades, these costs could escalate to tens of trillions of dollars annually in the coming years. Any response to climate change will cost money (if addressing the problem made money, doing so wouldn’t be contentious and we’d already be doing it). If a relatively low-cost policy could fix most of the problem, that could be money well spent. However, it turns out that the Paris Agreement in its best-case scenario will achieve just one percent of what the politicians have promised (keeping temperature rises to 1.5°C (2.7°F)), and at huge cost. It is simply a bad deal for the world. Worse still, like most governments, African governments are technically insolvent and thus dependent on systemic aid (i.e., loans and grants) to stay afloat. Africa’s tax burdens are rather heavy already. More debt, deficit spending, and heavier taxes further damage Africa’s economies. Fiat money printing cannot help either. In short, African governments cannot afford Western/UN-imposed climate and energy transition goals. Another such voice is Michael Shellenberger, a veteran environmentalist and author of Apocalypse Never: Why Environmental Alarmism Hurts Us All. Shellenberger has penned a letter in which, on behalf of all environmentalists, he apologizes for the false climate scare. A part of the letter reads: On behalf of environmentalists everywhere, I would like to formally apologize for the climate scare we created over the last 30 years. Climate change is happening. It’s just not the end of the world. It’s not even our most serious environmental problem. I may seem like a strange person to be saying all of this. I have been a climate activist for 20 years and an environmentalist for 30. But as an energy expert asked by Congress to provide objective expert testimony and invited by the Intergovernmental Panel on Climate Change (IPCC) to serve as Expert Reviewer of its next Assessment Report, I feel an obligation to apologize for how badly we environmentalists have misled the public. Climate alarmism, indeed. In his article “The Reason Renewables Can’t Power Modern Civilization Is Because They Were Never Meant To,” Shellenberger also notes that: Between 2000 and 2019, Germany grew renewables from 7 percent to 35 percent of its electricity. And as much of Germany’s renewable electricity comes from biomass, which scientists view as polluting and environmentally degrading, as from solar. Of the 7,700 new kilometers of transmission lines needed, only 8 percent have been built, while large-scale electricity storage remains inefficient and expensive. “A large part of the energy used is lost,” the reporters note of a much-hyped hydrogen gas project, “and the efficiency is below 40% … No viable business model can be developed from this.” Meanwhile, the 20-year subsidies granted to wind, solar, and biogas since 2000 will start coming to an end next year. “The wind power boom is over,” Der Spiegel concludes. All of which raises a question: if renewables can’t cheaply power Germany, one of the richest and most technologically advanced countries in the world, how could a developing nation like Kenya ever expect them to allow it to “leapfrog” fossil fuels? Though Germany may be one of the most severely affected countries in the developed world, the energy crisis is undoubtedly global. As such, Germany, the US, China, and other countries are looking to increase coal-fired power generation to mitigate the crisis. In the US, the Biden administration chokes off domestic fossil fuel production but asks Saudi Arabia to increase its own output. Likewise, Europe is looking to African and other countries to secure access to natural gas as the continent moves away from Russian energy. So, the developed West is looking to fossil fuels to solve its energy problems, but undeveloped Africa should transition to solar and wind? This brings us to the hypocrisy part. Lomborg wrote: The developed world’s response to the global energy crisis has put its hypocritical attitude toward fossil fuels on display. Wealthy countries admonish developing ones to use renewable energy. Last month the Group of Seven went so far as to announce they would no longer fund fossil-fuel development abroad. Meanwhile, Europe and the U.S. are begging Arab nations to expand oil production. Germany is reopening coal power plants, and Spain and Italy are spending big on African gas production. So many European countries have asked Botswana to mine more coal that the nation will more than double its exports. Meanwhile, South Africa is getting money from Western countries to phase out coal while the same Western countries look to increase coal-fired electricity generation. The display of hypocrisy is blatant and will severely undermine Africa’s economic development. But though Western meddling has been harmful, if today African economies are still undeveloped and in a precarious state—over fifty years since “independence,” Africans should look at the leadership, or the lack thereof, as the ultimate culprit. Energy Transition? Not Exactly In theory, there is an energy translation happening. In reality, no such thing is taking place. Today’s global energy crisis conclusively demonstrates that the world desperately needs more, not less, fossil fuels. Consider the case of biomass, the first energy source used by humans. Despite tremendous advancements in technology and the existence of coal, oil, and natural gas, biomass is still part of today’s energy mix. This being the case, it does not make sense even to talk about phasing out fossil fuels, which meet almost 80 percent of the world’s energy needs. To think otherwise is absurd. There is no such thing as an energy transition happening. What we do have is energy source accumulation. Humanity started with biomass and over time added coal, hydro, oil, natural gas, nuclear, wind, and solar. Today we can use these energy sources combined. Not exactly a transition.   Source: Visual Capitalist   A transition from fossil energy to wind and solar is unattainable for material, technological, and environmental reasons, among others. All existing wind and solar farms’ combined energy output does not even supply 5 percent of the world’s energy needs, yet their environmental harm is already noticeable. For example, West-funded wind farms in Kenya threaten birdlife, including endangered species. Same in the US, where wind turbines have been killing eagles and other rare birds. Only one energy source can enable humanity to phase out coal, oil, and natural gas. And that is nuclear. Nuclear power can provide clean, reliable, abundant, and cheap energy for everyone and for the foreseeable future. So, if we are serious about net-zero emissions and environmental protection, we must embrace nuclear power. Yes, it is safe, and can be made even safer. Africa’s Way Out of Energy Poverty Before I was born, Angola already was mired in severe and chronic energy problems. I am gravitating toward forty years of age, and Angola is still mired in these problems. The government controls the production and distribution of energy products and services through companies that it wholly or partially owns. Undeniably, the government has failed to provide Angolans with reliable, abundant, and cheap energy goods and services. Angola’s government is not the only African government that failed to deliver energy prosperity to its people. Energy woes are entrenched across the continent. Even in South Africa, Africa’s most developed energy state, the energy situation is going from bad to worse. African governments should finally step aside, which is the least they could do after decades of accumulated policy failures, and let free enterprise and free trade reign in energy production and distribution. Anyone able and willing to produce, distribute, and sell energy goods and services should be free to do so. The onerous mountains of regulations and bureaucratic measures must be removed. Politicians failed to deliver energy prosperity. Now politicians should have humility and let markets perform their economic miracle. The free market is the fastest and most effective approach to making African societies sustainably energy rich. Conclusion Climate change is real. And so are climate alarmism, ecocolonialism, and Western energy hypocrisy. Environmental and energy policies based on pseudoscience and exaggerated reports are pushing even advanced economies such as Germany and California toward energy precarity and potential blackouts. But that pales in comparison to the harm ecocolonialism can do, and in fact does, to African economies and lives. Still, however hypocritical and malicious Western regimes may be, the responsibility for energy abundance and economic development lies entirely with Africa’s decision-makers. Tyler Durden Sat, 08/13/2022 - 09:20.....»»

Category: blogSource: zerohedgeAug 13th, 2022

There Is A Giant Illusion For The Majority Of Market Commentators Choosing Not To See It

There Is A Giant Illusion For The Majority Of Market Commentators Choosing Not To See It By Michael Every of Rabobank Holy Illusions Hands up how many of you had 528K down as your US payrolls guess? Nobody, because the Bloomberg survey low was 50K and the high 325K. While there are question marks over these data given Covid --nearly 3m people weren’t/couldn’t work due to it-- and the “birth/death” model, the household survey saw jobs +179K; backwards payroll revisions were +28K; total employment was back to pre-pandemic levels, albeit with reallocation away from sectors such as leisure and hospitality (-1,214K) towards others, such as transport (+745K); the participation rate edged down to 62.1%, so the jobless rate fell to 3.5%, but even using pre-Covid participation rates unemployment would have been 5.4%, down from 5.5%; and average hourly earnings rose much faster than expected at 0.5% m-o-m, 5.2% y-o-y (and 6.0% annualized). If it’s an illusion, and look at full-time vs. part-time and multiple jobs as a clue... ... it still convinced Larry Summers to warn that if US CPI falls back this week, the Fed must not pivot, and Krugman to add it’d be “no justification for a pivot toward easier money.” Indeed, it now seems the Fed may go another 75bps in September, and Bowman implies afterwards as well perhaps, and the Wall Street Journal underlines, “Witness the small army of Fed officials who have fanned out to warn markets that the Chairman didn’t mean what he supposedly wasn’t saying last week.” In short, the illusion of a Fed dovish pivot is dispelled, with 2-year Treasury yields up 16bp to 3.23% Friday, and 10s up 14bp to 2.83%. More to come: or record yield curve inversion. Add a Fed pivot to “transitory” inflation on the list of illusions fading for the same underlying reason: the global system is crumbling. They join EU energy, economic, and foreign policy, as the German regulator calls for 20% cuts in household gas usage, and the West’s ‘Great Illusion’ that war just can’t happen (to it) in the modern world. On which, Ukraine just got another $1bn in US arms as a new phase of the war looms around Kherson: a counter-attack appears imminent. However, don’t be under the illusion that the US can keep up that pace of arms supply - and its stocks can’t be replaced quickly once depleted. The same is true for Russia, and in terms of men, but their media says North Korea might strike a deal to send 100,000 soldiers to fight in Ukraine in exchange for food and energy(!) If so, the war escalates further, and the EU energy outlook darkens further. NATO member Turkey on Friday also struck a deal with Russia to deepen economic ties: that is a terribly muddied picture for the EU and US as they try to isolate Moscow. However, illusions abound on all sides: Russia just released a video aimed at attracting people to move there due to its ‘hospitality, vodka, and an economy that can withstand thousands of sanctions’. Elsewhere, Reuters warns Chinese military exercises around Taiwan could disrupt key shipping lanes, and Taipei states they “simulate an attack” on its main island, drawing condemnation from the G7, but Russian support. China has now halted: communication with US military theatre leaders; defence meetings; maritime security dialogue; and co-operation over illegal migration, criminal justice, transnational crime, narcotics, and the climate - the US says this “punishes the world." The White House is now leaning on Congress to delay the bipartisan Taiwan Policy Act of 2022, which designates it a major non-NATO ally, provides $4.5bn in military aid, upgrades its international status, and allows the imposition of sanctions, including SWIFT bans, on major Chinese financial institutions. As the Carnegie Endowment think-tank notes, “The US and China are seriously talking past each other…That disconnect will lead to a very unstable new baseline.” Linking back to today’s title, Friday saw the release of ‘Holy Illusions’, a report from a key think-tank backing UK PM candidate Truss. It argues, “Just as in the 1970s, the country faces many interconnected, serious but superficially very different problems.” True. Controversially, it diagnoses that “The most significant underlying economic problem… is the malign consequences of low to negative interest rates over a prolonged period.”  Artificially low rates, it says, have “gradually prevented the normal mechanisms of a market economy from working properly… there has been a greater and greater search for yield on riskier and riskier assets, with everything that follows upon that, notably, market instability, huge asset price inflation, and inequality. The lack of rewards to enterprise and the ease with which fundamentally unproductive “zombie” companies can be maintained have made it difficult to generate those normal improvement mechanisms of a market economy which drive productivity and growth.” It’s hard to disagree with that Austrian and Marxist assessment. The report then says other UK problems are manifold: “Implausible energy policies”; over-regulation, antipathy to risk; “Unsustainable” welfare; a shrinking labour force; a declining birth-rate (an issue in all major economies, except one); “Education systems that don’t educate”; and, it claims, high immigration. It warns that if current UK growth rates continue --and this was presumably before the BOE’s latest awful assessment-- then by 2035 the likes of Poland will “overtake” the UK: will they then import British plumbers? It unsurprisingly argues Brexit is not an issue, even if it means short-term costs (and clearly more immigration is not on the cards). It says the UK isn’t willing or able to do anything with the “full democracy” Brexit grants it, as “Our governing class seems to have forgotten how to govern, how to guide a state, and how to set a goal and direction of travel.” Then --perhaps contradicting itself for some readers-- it argues, “Given this set of daunting problems… there really ought to be strong political movements… to analyse and begin to deal with them. That is not the case. Instead we see the reverse - a refusal to get to grips with the problems or even to acknowledge them. It is easier to ignore the most pressing economic and societal issues of the day, pretend they don’t exist, or claim they will be solved automatically as normal conditions return. We are, it seems, studiously pretending to be asleep.” Again, no arguments here. To show it is not like the others, it dares to ask, “What is to be done?” - and it tells us government must: “Convince the public that change is needed. The public must come to feel that we have taken a wrong path and to react against it.” They are already there! Just as we have mortgage strikes in China, we may see energy strikes in the UK; and some warn of a looming ‘winter of discontent. (And don’t think Putin doesn’t see this too, and won’t act accordingly.) “Show the electorate an alternative,” which is “to increase the productive capacity of our economy (because without that other problems simply cannot be solved)”. They are with you! But here comes the rub. What does that mean on energy? Silence. Moreover, the government must “persuade the public… that collectivist, socialist solutions are incapable of achieving that.” But how do you get the private sector to invest productively when other governments will? See ‘how the US gave away a breakthrough battery technology to China’, because the inventor “talked to almost all major investment banks; none of them [wanted to] invest in batteries," as they “wanted a return on their investments faster than the batteries would turn a profit.” Will higher rates, lower taxes, and deregulation force banks to make loans to productive rather than “fictitious capital”? Austrians say yes: Marxists say not, and with the better track record; and they add that even productive loans will just be made abroad, where it is cheaper to invest. That gaping theoretical/policy hole is more evident when we are then told the government must “persuade the public that this alternative route is actually possible; that [it] has a plan to get the country onto it; that continuing on the current path will simply make the inevitable correction measures more painful; and that failure to take such measures will mean a materially worse outcome. [It must] make this alternative politically feasible and hence potentially attractive.” --But what alternative?!-- Its conclusion avoids the answer in saying that: “A successful nation state needs market economics to create prosperity, and requires solidarity and a clear sense of identity to sustain itself. A reform programme must be similarly broad-based. It should reject the artificial polarity between the “market”  --“right wing” economics and economic globalisation-- and “society” --“left wing” statism and solidarity-- but recognise instead that running a successful country involves elements of both.” It just doesn’t say how beyond rates, taxes, and fostering ‘national unity’: yet the latter alone was *wrongly* presumed by Smith and Ricardo to stop capitalists investing abroad at all, which we just edit out of our textbooks! If only we could edit it out of our financial flows so easily. Ironically, the report also says, ”the political difficulty is that governments and politicians have not for many years set out the reality of how economies work and how prosperity is created. Levels of understanding are low.” Yes, they are: if it was as simple as ‘getting the state out of the way’, China would not be an economic superpower and Afghanistan might be. Yet the underlying message that we been ‘getting GDP wrong’, and we can’t get it right by only focusing on GDP is arguably very valid, as is the criticism of relying on low rates policy. We *do* need a higher common purpose, and higher rates, and others are saying similar things: here is an example arguing, “Without that, any aspiring state is just a gated community for the working wealthy, much like the ones for old retirees in South Florida.” It’s just that we need *more* than that structurally to boot, and ‘Holy Illusions’ still seems to cling to its own in avoiding that conclusion. It *could* be seen as backing a neo-Hamiltonian free market behind high tariff barriers, with industrial policy, which was how the US (and China) developed. Yet that mercantilist model is also an illusion for the UK and others not large enough for economies of scale and a modern army, especially as large rivals *are* state-backed and have one; and as high debt levels logically require MMT and higher interest rates, if just to pay for that military. The flurry of legislation coming out of the US is not a million miles away from some of those ideas and developments. But if we need ‘Hamilton’ in blocs, the UK still just rejected being a member of one. Does that mean it will end up in a new Holy Anglosphere? Some say that’s no illusion, other that it is. Regardless, the above still implies global national-security/commodity/supply-chain/tech/values fragmentation ahead; and higher interest rates; and lower asset prices; and more productive, higher-wage investment - as we had already projected as a 2030 scenario. Unless that’s just my own holy illusion. What isn’t is that if you don’t keep track of these seemingly-esoteric developments, you won’t be in a position to call where rates are going - which is why nobody in markets called three (or four?) back-to-back 75bps Fed hikes this year. That was “not how the political economy works”. But the political economy had changed. To paraphrase Keynes, “When the facts change, I change my forecast. What do you do?” That is what you should be focused on: not the illusion of the relevance/positivity of Chinese July trade data released Sunday, which showed exports up 18% y-o-y and imports only 2.3%, for a staggering trade surplus of $101.3bn. Does anyone think this $1.2 trillion annualised figure is good news for anyone: not China (where it means no demand); not globally (where it means no local supply). There is a giant illusion for the majority of market commentators choosing not to see it. Tyler Durden Mon, 08/08/2022 - 09:04.....»»

Category: blogSource: zerohedgeAug 8th, 2022

"It Only Hurts When I Laugh"

"It Only Hurts When I Laugh" By Michael Every of Rabobank It only hurts when I laugh Minister: Good morning. I'm sorry to have kept you waiting, but I'm afraid my walk has become rather sillier recently, and so it takes me rather longer to get to work. Now then, what was it again? Mr. Pudey: Well sir, I have a silly walk and I'd like to obtain a government grant to help me develop it. Minister: I see. May I see your silly walk? Mr. Pudey: Yes, certainly, yes. (He gets up and does a few steps, lifting the bottom part of his left leg sharply at every alternate pace. He stops.) Minister: That's it, is it? Mr. Pudey: Yes, that's it, yes. Minister: It's not particularly silly, is it? I mean, the right leg isn't silly at all, and the left leg merely does a forward aerial half turn every alternate step. Mr. Pudey: Yes, but I think that with government backing I could make it very silly. ----------------- It’s another payrolls Friday. This time, can a weak print provide more ‘pivot-fuel’ for a market already so drunk on it that it won’t heed the Fed saying “WRONG!” over and over – as they just did yet again yesterday? Conversely, will a strong payrolls number sober the market up? We have to wait for the usual silly game of guessing a silly number and the sillier market reaction. Meanwhile, government ministries are busily pushing out silly policies. Picking an example would be like shooting fish in a barrel, but closing down nuclear power plants in an energy crisis is very high on the list. Central banks are pursuing silly monetary policy in the eyes of markets, where yield curves continue to invert and bond yields fall (even at the short end!) even as official interest rates rise. For example, as the Bank of England hiked rates 50bps to 1.75%, the most in 27 years, 2-year gilt yields fells from 1.91% to 1.84%, with future hikes being priced out and cuts being priced in, while the 10-year yield slipped 3bps to 1.88%. GBP fell against its peers. The silliness also extends right across the commercial world. Warner Brothers just made a $70m ‘Batgirl’ film so bad they are opting to can it rather than put it up in any format on any streaming platform – which really says something given the pile of drivel on most of them. They also say they are going to drop the ‘spend, spend, spend’ streaming model though, which is actually very sensible. Why is this silliness happening? Not from any love of comedy. In a recent interview, ex-Python John Cleese --still no dead parrot at 82-- underlined the specific truism that, “In Hollywood, nobody knows anything… but they all laugh as if they do.” Relatedly, he recalls that back in the 60’s, almost all of the top BBC executives tried to cancel his legendary comedy show after just a few episodes because they didn’t get it. More broadly, he stressed such managers (rather than those with experience of doing or creating) are now in charge all over the place. Indeed, in his experience, 90% of people in most professions don’t know what they are doing. Worse, 90% of those who don’t know what they are doing don’t know that they don’t know what they are doing, “which makes them the most dangerous and destructive”. And inadvertently funny – because if you don’t laugh then you cry. One would like to think there are exceptions for surgeons, pilots, etc., but Cleese suggests this is not the case. He said that in a lifetime of deliberately asking people of different backgrounds to honestly tell him how many of their industry participants actually know what they are doing, the highest share he has ever been given was 15%(!) He didn’t say which industry that was for. Are politicians, economists, or central bankers exceptions? Don’t make me laugh! Next British PM Liz Truss wants to put the BOE under review (like the RBA already is), perhaps threatening their independence, on allusions to Japan’s ultra-low rates policy - as if somehow that is applicable to a UK with traditional current-account deficits, rather than surpluses. Presumably slashing taxes and red tape needs to be matched by slashing rates, and growth will magically take care of itself. Let’s see how GBP magically takes care of itself if that comes to pass. Of course, the BOE have made themselves few friends with their honesty about the staggering scale of the economic downturn and inflation upturn ahead - which they utterly failed to see coming. As Stefan Koopman notes in his review of the ‘Nightmare on Threadneedle Street’, the Bank just warned of the longest recession since the GFC, with a five-quarter downturn and cumulative GDP growth of -1.7% in the next three years. It also forecasts UK inflation to hit the highest in 42 years ahead at over 13%, and to still be around 10% a year from now. Worse, there will be a leap in unemployment from 3.7% to 6.3%, and the largest decline in real household income growth on record. Underlying this grim set of forecasts is a dark view on the UK’s structural rate of growth; a consequence of subpar investment and weak productivity growth, which makes the economy highly sensitive to shocks. By contrast, the Fed says there is no US recession ahead, even as the US yield curve screams there will be one --what a good one-liner that is-- and the White House and Paul Krugman dispute what recession actually means, taking us into more surreal comedy. The ECB says the same about recession, even as EU wholesale electricity prices rise to industry-crushing levels, and Russia makes clear “sanctions and non-compliance with current contractual obligations on the part of Siemens make it impossible” to restart normal NordStream 1 gas flows again: resulting runs on diesel and heating oil are already being reported in Germany. Pure black comedy. The RBA argues that while there is only a “narrow path” to avoid recession, GDP growth will remain strong, the labour market is red hot, inflation will peak soon and come down by itself, unemployment will hardly rise at all, and the wobbling housing market won’t be hit by higher rates because some households have large buffers. Yes, they are called households without mortgages. How one can argue that stops people with large mortgages from being pressured requires very silly random econometric walks. Presumably today’s Statement on Monetary Policy will have more such gems. The PBOC aren’t saying anything much, as 1,666 Chinese property developers had missed commercial paper payments at least three times in the last six months as of June, up from 135 in January, and talk is still of when the mega-bailout happens, the cost of which will end up on its balance sheet. Recall when everyone solemnly said this was all about Evergrande, and was “contained”, and/or that the US had debt and asset-bubble problems, but China didn’t? It was ironic, and you didn’t get it at the time. There are now lots of sensible financial media pointing to a deep ‘lack of Truss’ in central banks. Rightly so. However, they still aren’t getting the punchline about where this all goes next – it surely isn’t back to ‘2%-CPI targeting independence’. As such, many people with silly skill sets will need to learn to walk new walks. And don’t delude yourself that current markets are any kind of exception from Cleese’s 10% ratio. After all: Financial conditions continue to ease even as base rates rise, and the more they ease, the more rates will have to rise. US mortgage rates are now back to around 5% when they were recently at 6%, putting more juice back into the system. Is that another 100bps the Fed has to go? Despite Saudi Arabia raising oil prices for Asia steeply, US WTI prices just tested below $90. Is it US demand destruction, or claims that its gasoline usage is now lower than in 2020 under lockdown that is most questionable? A wider basket of commodities are also far off their recent highs even as there has been only marginal improvement in most fundamental supply-demand, and none in related geopolitics. That would make sense if the Fed’s aggressive rate actions were pushing commodity-backed ‘new world orders’ off the stage, as I have argued they will have to try to do – but financial conditions are easing, not tightening. Then again, ‘Copper Worth Nearly Half a Billion Dollars Goes Missing in Qinhuangdao, China’ says Bloomberg, pointing to why the idea of holding raw commodities over the greenback as a ‘safe haven/reserve’ leaves others laughing longest. Yet stocks are trying to snigger at central-bank actions and/or looming recessions, “because markets”. And, as a colleague related to me this week, perhaps because so many funds are so far in the red that they have nothing to lose in going all in on leveraged longs, hoping hopium acts like helium. Actually, all it will do is make their voices sound high, squeaky, and silly. Even the US market mega straight man is getting into crypto just as everyone else sees what a silly joke it was all along and new regulation looms. Cleese also stressed something else important: the 10% rule does not apply to comedy, because you cannot fake being funny. You either are or you aren’t. Neither can you repress a laugh when something is funny, even when it ‘shouldn’t’ be. That’s why the role of the fool as truth-teller in medieval courts was so important, and why authoritarians are renowned for their lack of a sense of humor – the levelling nature of comedy is always deeply iconoclastic and revealing.   Markets used to have that function. However, now *they* are the dangerously destructive bad comedy. On that note, I will leave you to wait for US payrolls and all its related silliness – Happy Friday! Tyler Durden Fri, 08/05/2022 - 08:21.....»»

Category: worldSource: nytAug 5th, 2022

Futures Flat As Crushing 37bps Curve Inversion Screams Recession

Futures Flat As Crushing 37bps Curve Inversion Screams Recession US futures are mixed on Thursday, first trading in the red, then turning green before moving unchanged, as investors shrugged off growth warnings from the bond market while Taiwan war fears faded further despite drills launched by China overnight. Oil bounced back from the lowest level in almost six months. Contracts on the S&P 500 were flat while Nasdaq futures were modestly green, suggesting the tech-heavy Nasdaq will extend an advance of 19% from its June 16 low on the back of a massive CTA, buyback and retail-driven buying frenzy. In premarket trading, Alibaba gained 3.4% after reporting revenue for the first quarter that beat the average analyst estimate. Adjusted earnings per American depositary receipt also topped expectations. Altice USA shares jumped 5% after the cable television provider reported second-quarter results and announced it received inquiries for its Suddenlink assets. US-listed Chinese tech stocks including JD.com, Pinduoduo and Baidu rise in premarket trading Thursday as Alibaba shares jump 3.9% after reporting better-than-expected revenue in the first quarter. Here are some other notable premarket movers: AMTD Idea (AMTD) shares slump 11.5% putting the Hong-Kong based financial services firm on track to slump for a second straight day after a wild 237% jump earlier this week. Eli Lilly (LLY) falls 2% after the company cut its adjusted earnings per share forecast for the full year. Equinox Gold Corp. (EQX) slides 2.5% after reporting second quarter results that missed consensus analyst estimates for revenue and posted a loss per share, and announced a CEO change. Fastly Inc. (FSLY) shares are down 7% after the infrastructure software company reported second quarter revenue that beat expectations. Gannett Co. Inc. (GCI) shares plunge 5% after the company lowered its full-year revenue and Ebitda outlook, citing “current economic conditions.”. Kohl’s Corp. (KSS) was downgraded to market perform from outperform at Cowen, with analyst Oliver Chen saying a “weakening and inflationary consumer backdrop” could drive EPS downside. Shares decline 3%. Pacific Biosciences (PACB) 2Q results look broadly in line but guidance has been cut significantly, albeit this is not a major surprise, analysts say. Shares down 4% in US premarket trading. Revolve Group Inc. (RVLV) shares are down 13% after the e-commerce fashion company reported quarterly net sales and earnings per share that fell short of analysts’ expectations. Skillz (SKLZ) shares tumble 11.6% after the mobile games platform operator cut its full-year guidance for revenue, with Citi noting that revenue and user metrics disappointed. Under Armour (UAA) is downgraded to neutral from outperform at Baird, which says its view of the athletic-wear retailer’s near-term prospects has “deteriorated materially” over the past two quarters, and faces further pressure from an uncertain macroeconomic environment. The stock declines 0.5% in premarkettrading. Yellow Corp. (YELL) shares jump 37% after the logistics company reported earnings per share for the second quarter that beat the average analyst estimate. So far US stocks have proven resilient to heightened bond market anxiety and an inverted Treasury yield curve flashing warnings on economic risks, as the S&P 500 climbs back toward the highest level in two months ignoring the screaming recession warning from the 2s10s curve which is now 37bps inverted. But a global wave of monetary tightening risks upending those gains. The Bank of England unleashed its first half-point hike since 1995 in an effort to control inflation, joining some 70 other institutions around the world moving rates up in outsized steps. “There’s an intense tug-of-war happening in the economy and markets,” said Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors. “On one side, you have a narrative that reasonable growth is going to support continued inflation pressure and keep the Fed hiking. The other narrative is that slowing growth is going to ease inflation and allow the Fed to stop hiking.” Meanwhile, US-China tension remains among the uncertainties clouding the outlook. Taiwan braced for the Chinese military to start firing in exercises being held around the island in response to US House Speaker Nancy Pelosi’s visit. Here are the latest headlines surrounding Taiwan/Pelosi: China's Taiwan Affairs Office said the Taiwan issue is not a regional issue but is a China internal affairs issue, while it added that punishment of pro-Taiwan independence diehards and external forces is reasonable and lawful. Taiwan's Defence Ministry said unidentified aircraft which were likely drones, flew above Kinmen Islands on Wednesday night, while the military fired flares to drive away the aircraft, according to Reuters. Taiwan's Defence Ministry said troops will continue to reinforce alertness level and are carrying out daily training as usual, while the military will react appropriately to an enemy situation and safeguard national security and sovereignty, according to Reuters. ASEAN Foreign Ministers are concerned about international and regional volatility and are concerned volatility could lead to a miscalculation, serious confrontation, open conflicts, and unpredictable consequences among major powers, according to Reuters. US House Speaker Pelosi plans to visit an inter-Korean border area jointly controlled by the American-led UN Command and North Korea, according to a South Korean official cited by Reuters. China's PLA has added an additional zone for its military exercise encircling Taiwan starting Thursday, exercises have been extended until Monday at 10:00, via dwnews' Yang citing Taiwan's port authority. Now seven zones around Taiwan. Gains in the Stoxx Europe 600 Index were led by retailers, leisure and technology firms, alongside an advance in shares of Chinese tech companies.  Among individual stock moves, Glencore Plc shares fell as much as 2% as its capital return plans overshadowed solid first-half results. Ubisoft shares surged as much as 21% after Tencent reached out to Ubisoft’s founding Guillemot family and expressed interest in increasing its stake, according to Reuters. Here are the most notable European movers: Rolls-Royce drops as much as 12% in London. Jefferies highlights that 1H adjusted Ebit came in 24% below consensus, is disappointed Civil margin “once stripped of a number of one-offs, remains well below breakeven.” SES shares drop as much as 10%, the most intraday since April 2020, as some analysts raised doubts about a potential combination with Intelsat after the FT reported deal talks between the two companies. Ambu falls as much as 16%, the most intraday since May 6, after the company slashed its organic revenue forecast for the full year and said it will cut about 200 jobs from its global workforce. Lufthansa gains as much as 7.4% after the airline forecast a “significant increase” in earnings in the third quarter compared to the second and provided a clearer outlook for full-year profit, predicting adjusted Ebit of more than EU500m. Next shares climb as much as 3.2% after the UK apparel retailer reported better-than-expected 2Q sales and raised its profit outlook for the year. Adidas shares gain as much as 4.4% after the German sportswear company reported 2Q results that were largely in line with expectations, following last week’s profit warning. Merck KGaA shares rise as much as 1.7% after the German pharmaceutical group’s 2Q report showed stable growth for its Life Science division despite abating Covid-19 tailwinds, with Jefferies saying it sends a “positive message” for the rest of 2022. Earlier in the session, Asian stocks rebounded as easing tensions over Taiwan and overnight gains on the Nasdaq fueled a rally in Chinese tech shares ahead of key earnings reports. The MSCI Asia Pacific Index climbed 0.5%, set for its first gain in three sessions. Alibaba, which is scheduled to release earnings later Thursday, and e-commerce peers Meituan and JD.com helped boost the Hang Seng Tech Index as much as 3.4%, most in more than a month. Other benchmarks in Hong Kong and South Korea’s tech-heavy Kosdaq were among the region’s outperformers.  “Hong Kong stock markets are getting re-rated after seeing the risk-off mood due to Taiwan tensions, as there were no military conflicts,” said Xuehua Cui, a China equity analyst at Meritz Securities in Seoul.  US House Speaker Nancy Pelosi left Taiwan after reaffirming US support for the democratically elected government in Taipei. China responded with trade curbs and military drills.  Elsewhere in Asia, the main Philippine index reached its highest since June 10 on foreign inflows. Asia’s key stock benchmark has rebounded from its July low, but its recent recovery has been lagging behind US peers amid a property crisis in China and heightened geopolitical risks. Japanese equities erased earlier gains and slipped as Toyota announced first-quarter earnings that missed estimates and as investors continue to evaluate corporate earnings both domestically and abroad.  The Topix Index was virtually unchanged at 1,930.73 with Toyota Motor leading declines as of market close Tokyo time, while the Nikkei advanced 0.7% to 27,932.20. Toyota Motor shares dropped during market hours as the automaker reported disappointing first quarter earnings and kept its conservative outlook for the current year. Out of 2,170 shares in the index, 1,198 rose and 849 fell, while 123 were unchanged. “Toyota Motor’s financial results confirmed that the impact of high raw material and fuel prices was strong enough to offset the effects of the weak yen,” said Shuji Hosoi, an analyst at Daiwa Securities. “The fact that the company didn’t change its full-year operating income forecast negatively impacted the markets, which had been expecting an upward revision.” India’s Sensex index snapped a six-session rally, dragged by Reliance Industries and leading lenders, on risk-aversion ahead of a monetary-policy announcement on Friday.  The S&P BSE Sensex fell 0.1% to 58,298.80, in Mumbai, after paring decline of as much as 1.3% in the session. The NSE Nifty 50 Index was flat. Both gauges posted early gains and appeared headed for their longest winning streaks since October 2021, but reversed course.  “The sudden drop in indexes is most likely led by ‘basket selling’ from foreign portfolio investors ahead of the central bank’s rate decision on Friday,” said Abhay Agarwal, a fund manager at Piper Serica Advisors. “Stocks have gained for six straight sessions and investors may want to reap gains ahead of a major policy event.” Reliance Industries fell 1.3%, while State Bank of India and Axis Bank led declines among lenders.  Economists expect the Reserve Bank of India to raise rates for a third consecutive time on Friday but remain divided on the level of the hike aimed at fighting inflation and supporting a weakening currency.  Of 30 shares in the Sensex index, 17 rose and 13 fell. Both of India’s equity benchmarks had gained least 5.5% in previous six sessions driven by $1.7 billion of net purchases by foreigners since the end of June amid signs that inflationary pressures are cooling.  Eight of the 19 sector sub-indexes compiled by BSE Ltd. declined on Thursday. A measure of telecom stocks was the worst performer among the sectoral measures. In FX,  the dollar consolidated as traders awaited US payrolls data due later in the day for clues on the pace of future Federal Reserve rate hikes. Sterling tumbled after the BOE delivered its biggest rate hike in 27 years, pushing rates up by 50bps, however it also warned of a devastating stagflation, hiking its inflation forecast to 13.3% in October even as it predicted a harrowing 5-quarter long recession. In rates, Treasuries were moderately cheaper across the curve - which continues to invert deeply with the 2s10s now -37bps, the biggest yield curve inversion since 2000 as traders increased wagers on Federal Reserve rate hikes ahead of Friday’s US jobs data - as US stock futures added to Wednesday’s gains.  The US 10-year yield dropping to 2.70% as Federal Reserve officials indicated they were resolute on aggressive hikes to cool inflation, dashing market hopes they were ready to embark on a shallower rate path. Treasuries offered little initial reaction to Bank of England decision to hike rates 50bp in an 8-1 vote while warning of a 5 quarter-long recession. Front-end yields cheaper by ~2bp on the day, flattening 2s10s and 5s30s spreads by ~1.5bp and ~0.5bp; 10-year yields around 2.71% trade cheaper by 5bp vs bunds.  European long-end bonds nudged higher. In the UK, focus is on the Bank of England’s rate decision, with a majority of economists anticipating a 50-basis-point hike. In commodities, oil drifted 0.2% lower to trade at the $90 level as investors weighed weaker US gasoline demand and rising inventories against a token supply increase from OPEC+. Spot gold rises roughly $20 to trade near $1,787/oz. Base metals are mixed; LME lead falls 1.1% while LME zinc gains 1.2%. Bitcoin slips back below the USD 23k mark but remains in relative proximity to the level in a tight range. Looking to the day ahead now and we have US June trade balance and Initial Jobless Claims, Germany June factory orders, July construction PMI, UK July new car registrations, construction PMI, Canada June building permits and international merchandise trade. Earnings will include Alibaba, Eli Lilly, Toyota, ICE, ConocoPhillips, Bayer, Glencore, Cigna, Rolls-Royce, adidas, Cheniere, DBS, Apollo, Lyft, Expedia, Deutsche Lufthansa, Warner Bros Discovery, Vertex Pharmaceuticals, DoorDash, Atlassian, Amgen, Block, EOG, Kellogg and AMC. Market Snapshot S&P 500 futures little changed at 4,153.75 STOXX Europe 600 up 0.2% to 439.32 MXAP up 0.4% to 159.68 MXAPJ up 0.6% to 521.36 Nikkei up 0.7% to 27,932.20 Topix little changed at 1,930.73 Hang Seng Index up 2.1% to 20,174.04 Shanghai Composite up 0.8% to 3,189.04 Sensex down 0.6% to 57,993.23 Australia S&P/ASX 200 little changed at 6,974.93 Kospi up 0.5% to 2,473.11 German 10Y yield little changed at 0.89% Euro up 0.1% to $1.0178 Brent Futures little changed at $96.78/bbl Brent Futures little changed at $96.75/bbl Gold spot up 0.4% to $1,773.19 U.S. Dollar Index down 0.13% to 106.37 Top Overnight News from Bloomberg China’s military fired missiles into the sea on Thursday in live-fire military exercises around the island in response to US House Speaker Nancy Pelosi’s visit, even as Taipei played down the impact on flights and shipping. The Bank of England on Thursday is expected to push through the biggest interest-rate increase in 27 years despite growing risks of a recession. European stocks edged higher on Thursday as investors continued to weigh the path of corporate earnings, while attention turned to the Bank of England’s policy decision later in the day. The dollar is close to a 20-year high, despite talk of its inevitable demise. While reluctant to add another article that ends up in traders’ trash cans, current pricing is extreme. Asia’s emerging economies are drawing on large foreign exchange reserves to help prop up their currencies rather than going all-out with interest-rate hikes. A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were firmer as the positive momentum rolled over from global peers. ASX 200 was kept afloat by tech after similar outperformance of the sector stateside. Nikkei 225 briefly reclaimed the 28k level amid recent JPY weakness and as the earnings deluge continued. Hang Seng and Shanghai Comp conformed to the heightened risk appetite with firm gains in tech including Alibaba ahead of its earnings and with Hong Kong set to provide HKD 2k in consumption vouchers from Sunday. Top Asian News   China’s Yiwu city will conduct mass testing and China's Sanya city is on lockdown amid a COVID flare-up, according to state media. China Cancels Japan Meeting Over G-7 Criticism of Taiwan Drills SoftBank Raises $22 Billion Through Alibaba Derivatives: FT China State-Backed Builder’s Dollar Bonds Slump as Worries Mount Tiger Global Fund Halves Stake in India Food Platform Zomato Additional Share Sales Break Asia’s Usual Summer Lull: ECM Watch Li Ka-shing’s CK to Sell AMTD Stake After Unit Soars 14,000% European bourses are firmer across the board, Euro Stoxx 50 +0.9%, with the general tone constructive though the FTSE 100 lags pre-BoE amid GBP strength. Stateside, US futures have lifted from initial rangebound action, ES +0.3%, with specific newsflow limited pre-data/Fed speak Top European News Next Raises Profit Outlook as Hot Spell Spurs Fashion Buying French Tech Startup Back Market Said to Start Early IPO Prep Goldman, Bernstein Strategists Say Stocks Rally Can Fizzle Out European Retailers Outperform, Fueled by Zalando Relief Rally Czech Finance Minister Attending Central Bank’s Rate Meeting Credit Agricole’s Investment Bank Drives Earnings Beat FX DXY remains subdued in early European trade following a relatively contained APAC session; fresh session lows are seen heading into the US entrance. GBP/USD and EUR/USD are currently buoyed, but seemingly more as a function of the Dollar with the former gearing up for the BoE. A mixed session thus far for the non-US Dollars, with the Antipodeans leading the charge whilst the Loonie remained suppressed by crude prices. JPY resides as the current G10 laggard with recent Fed rhetoric fuelling a retracement of last week’s USD/JPY downside. Fixed Income Core consolidation after recent rampant upward move, knife-edge BoE looms; Bund Sep'22 towards mid-point of a +100 tick range. USTs are following suit with the yield curve flattening modestly but generally quite contained ahead of Mester (2022 voter, Hawk) who has provided commentary recently. Pre-BoE Gilts are supported, but in narrower parameters than EGB peers, as participants look for clarity on the 25/50bp debate as pricing implies a 90% chance of 50bp and circa. 150bp total by end-2022. Commodities Crude consolidates and moves with broader sentiment post-OPEC & pre-JCPOA. Currently, benchmarks are firmer by circa. USD 1.00bbl and towards the top-end of relatively/comparably narrow ranges. Saudi Arabia OSPs (Sep) vs Oman/Dubai average: Arab Light to Asia at USD +9.80/bbl (exp. 9.80-11.10/bbl), according to Reuters sources. Spot gold is bid and benefitting from a USD pullback that has sent the yellow-metal above the 50-DMA at best; base metals somewhat mixed. US Event Calendar 07:30: July Challenger Job Cuts YoY, prior 58.8% 08:30: June Trade Balance, est. -$80b, prior -$85.5b 08:30: July Initial Jobless Claims, est. 260,000, prior 256,000; Continuing Claims, est. 1.38m, prior 1.36m DB's Jim Reid concludes the overnight wrap One thing we can say for sure is that August hasn’t been dull so far and we’ve only had three days. This is all before the biggest BoE hike for 27 years (50bps) likely today, and then US payrolls tomorrow. Indeed, there have been some remarkable ranges in treasuries so far in the three days of August. In just over 24 hours from mid-afternoon London time on Tuesday, 2yr US yields moved from 2.83% to 3.18%, 5yrs from 2.58% to 2.96% and 10yrs from 2.52% to 2.83%. These all marked the high points as the three closed at 3.07% (+1.4bps on the day), 2.83% (-2.4bps) and 2.71% (-4.5bps) respectively, 11bps to 13bps off their intra-day highs immediately after a strong US services ISM yesterday. This led to a big curve flattening as 2s10s closed c.6bps lower at -36bps. This morning in Asia, treasury yields are pretty much unchanged. If that wasn’t enough, the Nasdaq 100 (+2.73%) surged to finish the day at a level last seen on May 4th leaving a strong S&P 500 (+1.59%) slightly behind. The narratives at the moment are struggling to be consistent though as equities have recently rallied on weaker growth that has been seen as helping to limit how far the Fed can hike. However yesterday equities rallied on stronger economic data regardless of the potential Fed impact. Discretionary (+2.52%), IT (+2.69%) and communications stocks (+2.48%) were the major drivers of the S&P. The broad rally lifted 79% of benchmark’s members with energy (-2.97%) being the only sector to close in the red as oil plummeted. Speaking of which, although the OPEC+ agreed to increase its September output by 100k bpd, way below the July and August increases north of 600k, crude’s short-lived almost +3% gain unwound fairly quickly, with both WTI (-3.87%) and Brent (-3.60%) weaker on lower US gasoline demand as consumers seem to be driving less. Oil is very slightly higher in Asia. In terms of earnings, Moderna (+16%), PayPal (+9.25%) and CVS (+6.3%) were among top performers in the S&P 500 after a combination of upbeat results and perhaps more importantly buy back announcements. Another interesting snippet from this earnings season came when Bloomberg reported that Meta is looking for a potential debut in bond markets. News of debt sales by Apple and Intel already came through earlier this week as well, supporting narratives of resilience in corporate debt markets. Dissecting the data, just before the ISM services was released, we got a slight upward revision for the US services PMI (47.3 vs 47.0) but the real surprise was the ISM services index itself. The print showed an unexpected expansion from 55.3 in June to 56.7 last month, the highest since April, while the median Bloomberg estimate stood at 53.5. The employment index also improved to 49.1 from 47.4 and business activity and new orders indicators were the highest since January, while prices paid plunged from 80.1 to 72.3. Another strong reading came from June factory orders that increased +2.0% (vs +1.2% expected), up from May’s revised reading of +1.8% (from +1.6% previously). This data dovetailed with comments from a list of Fed speakers over the last 24 hours, including Bullard, Daly, Barkin and Kashkari, all saying that the central bank is not close to finishing its work and markets shouldn’t expect a quick reversal to cuts. This all supports our view that the US isn’t in recession yet. As we’ve said many times before we think it’s almost inevitable it does go into one within say 12 months but that we still might need the lagged impact of an aggressive (but necessary) series of rate hikes first to get us there. The risks to this view in terms of an earlier recession would probably be due to a sudden self fulfilling loss of confidence as everyone talks about imminent recession risk, or if financial conditions dramatically collapse. To be fair the latter was very worrying by mid-June but we’ve seen a tremendous loosening since. Over to Asia and the strong gains in US equities are echoing in Asia with all the key markets trading higher. As I type, the Hang Seng (+1.78%) is leading the way across the region helped by gains in Chinese technology companies with shares of Alibaba climbing around +5.0% ahead of its earnings results later today. Elsewhere, the Nikkei (+0.54%), and the Kospi (+0.36%) are trading higher in early trade. Over in Mainland China, the Shanghai Composite (+0.15%) and the CSI (+0.40%) are both trading in the green. Outside of Asia, stock futures in the US are pausing for breath with contracts on the S&P 500 (-0.10%) and NASDAQ 100 (-0.20%) moving slightly lower. Early morning data showed that Australia’s trade balance swelled to a record high of A$17.67bn in June (v/s A$14.0bn expected) from A$15.97bn in May driven by strong prices of key exports from grains to metals and gold. Elsewhere, although Pelosi left Taiwan yesterday without incident, remember that China will start 4 days of military drills today around the island. So be prepared for headlines to come through. Back to yesterday and European shares rallied but missed the main part of the US climb with the STOXX 600 closing with a +0.51% advance for the day after a steady march higher throughout the session. It was an across-the-board rally led by IT (+2.78%), financials (+1.60%) and discretionary (+1.52%) stocks. The few sectors in the red - utilities (-0.94%), healthcare (-0.92%) and communications (-0.35%) - were left behind by a risk-on mood. Speaking of European utilities, it is a sector that has faced challenges not only amid the Russian gas story but also the extreme heat in Europe. Our European economists cover implications of the drought-driven low water levels for the German economy here. As a reminder, it was an important topic back in 2018 but today’s situation with gas supplies reinforces its effect given coal plants’ reliance on waterways for supplies. Linked in, yesterday’s announcement by Uniper about potentially limiting output at a coal plant in Germany sent gas futures in New York up by almost +10%, with contracts holding on to a +7.71% gain by the close of US markets. Other companies depend on water traffic too and water-intensive industries are likely to get affected as well. Earlier this week EDF has warned about potential further nuclear power cuts as river water, used for plant cooling, becomes too warm. Expect this to be an increasingly pertinent and market-moving issue across industries. Diving back into market movements, the bullish sentiment in European stocks was strong enough to overpower surging yields. In Germany the belly of the curve surged, with 5y yields (+7.6bps) racing ahead of both the front end (+6.9bps) and the 10y (+5.6bps) that was mainly upheld by higher breakevens (+6.1bps). While a similar story was seen in France (OATs +3.4bps), Italy stood out with an across the curve decline in yields. 2s10s still flattened as the 2y yield (-1.5ps) fell by less than the 10y (-4.1bps). We should note that US yields rallied 7-8bps after Europe closed. Central banks and yields will be in focus today as well since today’s BoE’s meeting will likely be top of the list in terms of events for European markets and our UK economists expect the Bank to hike by +50bps (taking the Bank Rate to 1.75%). Their full preview is here. This hike would imply the largest single Bank Rate increase since 1995 and come amid the 9.4% CPI print for June, a 40-year high. They also updated their growth outlook for the country yesterday (link here) and now expect the economy to contract in Q4-22 and Q1-23 in a short and mild technical recession. Gilts behaved similar to other European bond markets yesterday, with the 2y yield (+7.1bps) rising by more than the 10y (+4.4bps) but both lagging the 5y (+9.0bps). Staying with Europe and briefly returning to yesterday’s other data releases, Germany’s exports accelerated to +4.5% in June, way ahead of the +1.0% median estimate on Bloomberg’s and May’s revised +1.3% (from -0.5% previously). Imports came in softer than expected, however, slowing to just +0.2% (+1.3% expected). Elsewhere, Eurozone’s retail sales contracted -3.7% yoy in June, missing estimates of -1.7%. The PPI accelerated to a monthly gain of +1.1% in June relative to the prior +0.5% (revised from +0.7%). To the day ahead now and we have US June trade balance, Germany June factory orders, July construction PMI, UK July new car registrations, construction PMI, Canada June building permits and international merchandise trade. Earnings will include Alibaba, Eli Lilly, Toyota, ICE, ConocoPhillips, Bayer, Glencore, Cigna, Rolls-Royce, adidas, Cheniere, DBS, Apollo, Lyft, Expedia, Deutsche Lufthansa, Warner Bros Discovery, Vertex Pharmaceuticals, DoorDash, Atlassian, Amgen, Block, EOG, Kellogg and AMC. Tyler Durden Thu, 08/04/2022 - 08:25.....»»

Category: smallbizSource: nytAug 4th, 2022

UN chief warns the world is just "one misunderstanding" away from "nuclear annihilation" as tensions rise across the globe

"The clouds that parted following the end of the Cold War are gathering once more," the UN chief warned. A Russian long-range missile rolls along Red Square during the military parade marking the 75th anniversary of Nazi defeat, on June 24, 2020 in Moscow, Russia.Mikhail Svetlov/Getty Images Antonio Guterres on Monday warned that the world is "one misunderstanding" away from "nuclear annihilation." The UN chief was calling on countries to work toward a world without nuclear weapons. His comments came as Putin warned that "there can be no winners in a nuclear war." UN Secretary-General Antonio Guterres on Monday urged countries to reduce their nuclear stockpiles, warning that "humanity is just one misunderstanding, one miscalculation away from nuclear annihilation.""Almost 13,000 nuclear weapons are now being held in arsenals around the world. All this at a time when the risks of proliferation are growing and guardrails to prevent escalation are weakening," Guterres said at a conference in New York of countries that are party to the Treaty on the Non-Proliferation of Nuclear Weapons (NPT). "The clouds that parted following the end of the Cold War are gathering once more," the UN chief said, pointing to "festering" crises occurring around the world — including the "invasion of Ukraine by Russia."Guterres said "eliminating nuclear weapons is the only guarantee they will never be used," calling on countries to work "relentlessly towards this goal."The UN chief's comments came amid concerns over rising tensions, with issues like the war in Ukraine, China and Taiwan, and Iran's nuclear program causing friction. Throughout Russia's large-scale invasion of Ukraine, some Western officials have expressed concerns that Russian President Vladimir Putin could get desperate enough to use nuclear weapons to achieve his goals in the war. As Russia launched its attack on Ukraine in February, Putin said that any countries attempting to intervene would face "consequences you have never seen." Putin also put Russia's nuclear deterrent forces on highly alert shortly after he ordered the start of the so-called "special operation" in Ukraine. In a letter to the NPT conference on Monday, the Russian leader warned that there could be no winners in a nuclear war. "We proceed from the fact that there can be no winners in a nuclear war and it should never be unleashed, and we stand for equal and indivisible security for all members of the world community," Putin said, according to Reuters.US Secretary of State Antony Blinken on Monday ripped into Putin for his past "nuclear saber rattling.""It's engaging in reckless, dangerous nuclear saber rattling, with its president warning that those supporting Ukraine self-defense 'risk consequences such as you have never seen in your entire history,'" Blinken said of Russia during remarks to the NPT conference.The US and Russia collectively possess roughly 90% of the world's nuclear warheads. The top US diplomat during his remarks also excoriated North Korea for expanding "its unlawful nuclear program" and continuing "its ongoing provocations against the region." He mentioned in his remarks that North Korea appears to be preparing for a seventh nuclear test. And as the Biden administration vies to revive the 2015 nuclear deal with Iran, Blinken also accused Tehran of remaining on a "path of nuclear escalation."Talks aimed at restoring the Iran nuclear deal — formally known as the Joint Comprehensive Plan of Action (JCPOA) — are stalled. Blinken on Monday urged Iran to come back into compliance with the deal, which President Donald Trump withdrew the US from in May 2018. "Although it publicly claims to favor return to mutual compliance with the JCPOA, the Joint Comprehensive Plan of Action, since March, Iran has been either unwilling or unable to accept a deal to achieve precisely that goal," Blinken said. "Getting back to the JCPOA remains the best outcome – for the United States, for Iran, for the world."Meanwhile, Iran's atomic energy chief said on Monday, per BBC News, that the country has the technical capacity to build a nuclear bomb but no plans to do so.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderAug 1st, 2022

Climate change is disrupting our food system, which makes it vulnerable to new crises

Weather, the atmosphere, the oceans, and the climate are all changing. That has devastating effects on crops, livestock, and fisheries. Valerio Rojas picking up an old fishing net in Lake Poopó, Bolivia's second-largest lake, which has dried up because of water diversion for irrigation and a warmer, drier climate, on July 24, 2021.Claudia Morales/Reuters The climate crisis is making our food systems vulnerable, and scientists expect it to get worse. Extreme weather and long-term environmental changes harm crops, livestock, and fisheries. Researchers and scientific reports answer key questions about food and the climate crisis. In Kansas, more than 2,000 cattle died in a record heat wave. In Tunisia, fires razed fields of grain to the ground. In southern China, historic flooding damaged almost 100,000 hectares of crops. In northern Italy, a farm lobby warned that drought could claim half the region's agricultural output.That was just June.The global food supply is taking a hit from pandemic-driven labor shortages, supply-chain disruptions, and the war in Ukraine. Underlying it all is the climate crisis."Without a doubt, it's always there. And it's now always going to be there," said Ed Carr, the director of the International Development, Community, and Environment Department at Clark University.Federica Vidali, a 29-year-old agricultural entrepreneur, checking her damaged soy plant, which was affected by seawater flowing into the drought-hit Po river in Porto Tolle, Italy, on June 23.Guglielmo Mangiapane/ReutersRising temperatures have been changing weather conditions and ecosystems across the planet for decades, before the pandemic or the war began. That's chipping away at the security of our food system and priming it for new crises.It's not all bad news, but the future of food hangs in the balance. Here's what experts, scientific studies, and international climate reports tell us.Remind me: What is climate change? What's the big deal?When humans burn coal and oil for fuel, that releases carbon dioxide. The gas's concentration in the atmosphere has increased 50% since 1850, and the rate of increase has tripled since the 1960s. All that carbon dioxide (plus other emissions, such as methane, from our agriculture, garbage dumps, and land destruction) is trapping more and more of the sun's heat, raising global temperatures. Since 1850, humans' fossil-fuel dependence has caused global average temperatures to rise about 1.1 degrees Celsius, and scientists warn that we may face a catastrophic 1.5 degrees of warming in 20 years. That may not sound like much, but it's altering the planet's weather and ecosystems, to the detriment of global food supplies.So how exactly are climate change and the food crisis connected?A farmer standing in a wheat field burned by fire in Jendouba, Tunisia, on June 2.Jihed Abidellaoui/ReutersClimate change is making droughts, floods, wildfires, and heat waves more severe and more frequent, according to the sixth assessment of the United Nations' Intergovernmental Panel on Climate Change, published in installments over the past year.Scientists can't link every individual event to climate change, but research shows that rising temperatures affect the overall occurrence of extreme weather. Such events can devastate crops and kill livestock, as they did in Kansas, Tunisia, China, and Italy in June.A woman drying flood-damaged corn on a road near a damaged paddy field in a village in Assam state, India, on June 28.Anupam Nath/AP PhotoClimate change also does long-term, chronic damage to our food systems.As baseline temperatures steadily rise, scientists fear some regions of the world will become inhospitable to the foods economies rely on. Several studies have shown that rising temperatures can cut yields for the staple crops that account for two-thirds of all the calories humans eat: wheat, rice, maize, and soybean. Last year, a NASA study projected that the climate crisis would drive a 24% decline in yields of maize — a crop that factors into countless food products and feeds livestock across the globe.Withered corn, affected by a long drought, at a farm in 25 de Mayo, on the outskirts of Buenos Aires, Argentina, on January 24.Agustin Marcarian/Reuters"Most of the large grain-producing regions in the world are seeing some kind of climate signal, some kind of climate stress," said Carr, who is also a coauthor on the IPCC report.In 2021, Cornell University researchers calculated that global farming productivity was already 21% lower than it would be without climate change. Other research suggested that rising carbon-dioxide levels deplete nutrients in some crops."We see slightly less protein, less iron, less zinc in the grains at higher CO2 levels," said Toshihiro Hasegawa, who studies rice and co-led the IPCC report's chapter on food. "That's really concerning, alarming for people who depend mostly on the diet of the main staple foods."Farmers planting rice on a paddy field at night to avoid heat that's gotten worse over the years, in Hanoi, Vietnam, on June 25, 2020.Nguyen Huy Kham/ReutersThe oceans, too, are heating up. That's forcing the migration of fish populations — a critical source of protein for billions of people. Iceland, for example, is losing key fish, such as capelin and cod, as they swim north for cooler waters. Rivers are warming as well, driving a decline in salmon populations in the northwest US.The oceans have also become 30% more acidic as they absorb some of the carbon dioxide that human activities have added to the atmosphere. Shellfish, such as oysters, clams, and mussels, can't escape warming and acidifying waters, so they're more prone to die-offs.The IPCC report said the effects of climate change on particular fish populations were understudied, but it concluded that ocean warming and acidification were depleting fish stocks.Overall, the IPCC has already documented declines in food quality or yield on every continent because of climate change, as shown in the map below.That sounds bad. Is that the worst of it?No. If we don't reel in emissions, up to 10% of the planet's current crop and livestock areas could become unsuitable for agriculture by 2050, the IPCC projected.Especially in Africa, Australia, and the Mediterranean, scientists expect that heat and water scarcity will strain agriculture. If global temperatures rise 2 degrees Celsius above the preindustrial standard — which is well within our current trajectory — the IPCC expects increased malnutrition, mostly in sub-Saharan Africa, South Asia, Central and South America, and on small islands. Many of these places already struggle with hunger, and it could get much worse.Women who fled drought queuing to receive food distributed by local volunteers at a camp for displaced persons in the Daynile neighborhood of Mogadishu, Somalia, on May 18, 2019.Farah Abdi Warsameh/AP Photo"Unless we, as a global community, make very significant cuts to our greenhouse-gas emissions, we can anticipate having many more crises and incidents of acute food insecurity, as well as impacts in terms of food prices," said Rachel Bezner Kerr, the other coleader of the IPCC report's chapter on food.Climate change also means increasing risks to food safety. This year in the US, an avian flu outbreak drove an almost 300% increase in the price of eggs. The IPCC warns that there will likely be more infectious-disease outbreaks as rising temperatures allow new pests and pathogens to overlap with livestock and crops.Will my favorite foods get more expensive or hard to find?Grocery shopping in Rosemead, California, on April 21.Frederic J. Brown/AFP/Getty ImagesIt's unclear. Many factors influence food prices, including labor supply, international relations, efficiency of food production, and consumer demand for particular foods.For now, major foods aren't in imminent danger of disappearing, but a few consumer favorites, such as coffee, chocolate, and wine, are especially vulnerable to climate change."It really will come down to: How much are you willing to pay? Or I guess, maybe given inequality within our country: How much are you able to pay for your favorite food?" Carr said.Elena Biondetti, a confectioner apprentice, stirring liquid chocolate in a bowl during the production of Easter bunnies at Confiserie Baumann in Zurich on March 11, 2021.Arnd Wiegmann/ReutersCoffee-growing areas in Central and South America, Vietnam, and Indonesia are likely to see average temperature increases that make the crop harder to grow. A January study in the journal PLOS One projected a "drastic," about 50%, decrease in areas suitable for coffee cultivation by 2050. Already, between 2020 and 2021, extreme weather in Brazil drove the cost of coffee up 70%, The New York Times reported, citing data from the International Monetary Fund.A fully formed coffeeberry, left, is pictured next to a coffeeberry damaged by drought, in a coffee farm in Santo Antônio do Jardim, Brazil, on February 6, 2014.Paulo Whitaker/ReutersCoffee may become "more of a specialty drink, or a treat that you have occasionally," Bezner Kerr said.Chocolate could undergo a similar decline. Most of the world's cocoa — 70% of it — grows in Ivory Coast and Ghana, the World Economic Forum said, where drier conditions might make cocoa farms unsuitable for the plants.Climate disruptions are leading to shortages worldwide. Wildfires and droughts are besieging wine-grape vineyards in California and the Mediterranean. Severe drought in Mexico is cutting chili-pepper yields and driving a Sriracha shortage. Apples suffered from last year's extreme heat and late-spring frosts in the US. In France and Canada, mustard-seed growers reported a changing climate had cut production in half in 2021.The climate crisis isn't new. How did things get so bad this year?A Ukrainian service member standing on a burning wheat field near the front line, on a border between the Zaporizhzhia and Donetsk regions, during Russia's attack on Ukraine on July 17.Dmytro Smolienko/ReutersDamages from climate change and disruptive events, such as the war in Ukraine and the coronavirus pandemic, compound one another. The war, for example, is exacerbating a preexisting fertilizer shortage and cutting off a crucial global supply of wheat.Even places that don't rely on Ukraine's wheat or fertilizer suffered from the rise in global food prices. For instance, in Malawi farmers were already reeling from a late start to the rainy season, which brought extreme flooding. The country turned to imports to replace its lost crops, but now global price hikes could make imported food too expensive for many Malawians, leading to food shortages.Children showing off their catch, near a wreck washed away during Tropical Storm Ana on the flooded Shire river in Chikwawa district, southern Malawi, on January 26.Eldson Chagara/Reuters"Climate by itself, right now, generally doesn't lead to terrible" food-access outcomes, Carr said, adding, "But it's intersecting with a lot of other stressors that are out there." The coronavirus pandemic dealt a major blow to supply chains and is still driving labor shortages. That weakened the food-supply chain from farm to plate and drove costs higher."You get these worsening impacts from the interaction between a non-climatic factor, such as a conflict, and a climatic factor, such as drought, in a particular region, leading to really severe food crises," Bezner Kerr said.Can we fix this?"Letzte Generation" (Last Generation) activists blocking a highway to protest against food waste and for reducing agricultural greenhouse-gas emissions, in Berlin, on February 4.Christian Mang/ReutersWe can't stop the globe from warming in the years ahead since the greenhouse gases we've already added to the atmosphere will continue to trap heat. But we can reduce the greenhouse gases we're emitting and adapt our food systems to the changes that are already happening.Those adaptations look different depending on the region and the climate problems it faces. Some farms have already seen success with new water-management tactics, the diversification of crops, and the integration of crops with livestock and forests to improve soil quality. Research institutions are also developing more drought-resistant varieties of staple crops, such as corn.A Karbi tribal woman, whose agricultural land had been transferred to build a solar-power plant, grazing her cow near the plant in northeastern Assam state, India, on February 18.Anupam Nath/AP PhotoResearchers need to study those solutions more to know if they'll work at scale.To stop the crisis from accelerating even more, we must stop adding carbon to the atmosphere and transition away from fossil fuels to more renewable energy sources, such as solar and wind power.We need to make those changes now, or "the future looks grim," Bezner Kerr said. "I think it's an opportunity, a hopeful opportunity, and it's a closing window."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderAug 1st, 2022

Inside a nuclear tomb: The underground store that"s humanity"s first attempt to dispose of nuclear waste for 100,000 years

The world's first large-scale underground nuclear waste disposal site has just finished construction. Tons of waste will be buried over 100 years. I visited Onkalo, the world's first commercial underground nuclear waste depository, which has just finished its construction in Finland.Marianne Guenot/Insider Radioactive waste from nuclear plants is stored in temporary facilities around the world. Finland has a different idea: burying the waste forever, 1,400 ft underground encased in metal. Insider visited the site near the Baltic Sea, which is opening soon. Here's what we saw. The world has a nuclear waste problem — hundreds of thousands of tonnes have been produced with no good place to put it.It typically goes in temporary facilities. Experts agree that a safe, permanent solution is needed.Finland is on the cusp of turning that into reality, beating countries like China, the US, and the UK to produce the world's first forever home for radioactive waste.Insider visited the site, called Onkalo, to see what it was like. Insider covered the costs of the trip, in line with our reporting policies.It took me further underground than I've ever been, into a facility that will soon be brimming with nuclear waste.Onkalo is a sprawling site, with 31 miles of tunnels that reach 1,300 feet under the ground.This is what Onkalo will look like when it is full.Posiva OyThe concept is simple: put the waste someplace far from people, where it can decay undisturbed.But this can take 100,000 years — and humans have never before had to plan for something to last remotely that long.The result is the Onkalo plant, the product of almost 20 years of work that will be in operation for another 100 years and will cost an estimated 3.5 billion euros ($3.7 billion) once it is full.   An annotated aerial view of the site.TVO/Insider.Here is what's at the site: A preparation plant, where the nuclear waste is encased in canisters made of iron and copper to protect it.3 miles of human access tunnels that spiral down to about 1,300 ft.An elevator shaft running straight down about 1,500 ft.A hive of sub-tunnels, where the waste will be sealed away forever.The facility aims to hold about 3,250 of these massive canisters, which are about 10 ft long or longer. In the end, it will store about 6,500 tonnes of the spent nuclear fuel in total.Posiva, the company that operates Onkalo, estimates that the tunnels will be full in about 100 to 120 years. Here is the way in to the access tunnels, seen from above.This slopped entrance leads to the entrance of the service tunnels.Tapani Karjanlahti/TVO/InsiderWe drove down in a van, deeper and deeper.This is what the entrance of the tunnel looks like.Marianne Guenot/InsiderThe trip took around 20 minutes.The tunnel was just wide enough for one vehicle. I was aware I'd never been this deep underground before.The tunnel seen from inside the van as we go down into Onkalo.Marianne Guenot/InsiderSigns at regular intervals reminded us how far we'd come — this green one marks 3.1 km, or 1.9 miles, to the surface.Here we're about 3 km (about 1.8 miles) down the tunnels, as shown by the green sign.Marianne Guenot/Insider.We got a bunch of gear to keep us safe underground.The tunnels are an active construction site, so safety gear is paramount.Marianne Guenot/InsiderI was given personal protective equipment like heavy protective boots and a flashlight that I had to wear at all times. My helmet was equipped with a tracking device that allowed security officers to know how many people are in the tunnels.   This is the bottom. These heavy metal doors mark the beginning of the area where the nuclear waste will be held.Through these doors is the beginning of the zone that will be sealed off for contamination.Marianne Guenot/InsiderAfter the century-long storage operations are over, these tunnels will be sealed and the site closed forever. Around me were thousands and thousands of feet of rock like this — migmatite with veins of granite.The wall of the storage tunnel in Onkalo is made of migmatite, a hard rock with granite veinsMarianne Guenot/InsiderA big reason the site is here is because of the rock."You essentially want an area of rock that isn't gonna change for millions of years," said Lewis Blackburn, a materials scientist from the University of Sheffield in the UK. Blackburn researches ways to make nuclear waste safer. He wasn't involved in the making of Onkalo. Geologists need to be sure that the storage facility is not going to crack, erode, or be split apart by an earthquake.For that, you need rock that is either very soft or, like in Onkalo, very hard.The rocky chamber will be the final home for nuclear fuel roads like these — metal poles embedded with chunks of refined uranium.A replica fuel assembly, made of multiple rods. A real fuel rod would contain refined uranium.Marianne Guenot/InsiderSome 250 to 500 half-inch-long pellets of uranium, refined and treated with a process that turns the fuel into a type of ceramic, go into a single rod. Dozens of these rods are brought together to make a single fuel assembly. Each assembly contains between 370 and 1200 lb of uranium, depending on which reactor they are going to.   The rods spent their working life stacked by the thousand in a reactor core, making heat that will be turned into electricity. This is me in a (replica!) reactor, with a wall of rods behind.This is what it would look like if you could step inside a nuclear reactor. The silver rods are fuel rods.Marianne Guenot/InsiderThe fuel is only mildly radioactive before it is put in the reactor. After it is taken out of the reactor, it is at its most radioactive.If a human were directly exposed to the raw fuel at that point, it could be lethal. But the fuel is carefully packaged and handled to prevent any exposure. The rods come out spent, hot, and highly radioactive. Their first stop is 40 years in nearby cooling ponds.Olkiluoto nuclear power plant stores all of its spent nuclear fuel on site in the cooling ponds.Marianne Guenot/InsiderThe pools have two purposes: the water cools down the fuel and acts as a barrier against the radiation.At the Onkalo site, the pools are right next to the reactor. All the waste the plant has produced is still here. Other facilities take the nuclear waste out into huge concrete vats above ground. Both techniques are safe but require constant maintenance.    Posiva has a plan after the pool phase. The spent rods — which haven't been in a reactor for 40 years — will go in huge metal tubes like this.The waste is first encased in a cast-iron tube, which is then sealed into a copper tube.Marianne GuenotBy this point, the fuel has lost 99.9% of its radioactivity at the point of unloading from the reactor, but still needs to be kept away from people. The inner gray tube is thick cast iron and the outer layer is copper.The iron is to protect the rods from pressure or other unexpected forces, while the copper is resistant to corrosion.Water is the main enemy of long-term storage and with enough time will seep into anything, so it must be kept away from the spent fuel for as long as possible. It would take a very long time for the water to eat through the canisters and the ceramic uranium pellets. To avoid water getting to the canisters, the next defense is a special type of clay called bentonite.Bentonite is a friable clay.Marianne Guenot/InsiderEvery canister gets wrapped in bentonite.Antii Mustonen, a geologist and research manager who has been working at Onkalo for 16 years said the material swells up on contact with water, creating a tight seal around the canister. "It's like self-healing," he said. After being fully sealed, the waste canister will enter an elevator here to be taken down to permanent storage.The opening to the elevator shaft is shown in this pictureMarianne Guenot/Insider.This is the other end of the elevator shaft.The waste arrives here, 1300ft underground.Marianne Guenot/InsiderAfter the canister arrives, it can be buried for good in the hive of side tunnels, a process that is almost entirely automated.This video explains how it works: An automated digging machine goes along each tunnel to make a shaft for each canister, like in this animation.A remote-controlled machine digs a canister-sized hole in a disposal tunnel.Posiva Oy/YoutubeThis is a prototype of a real-life hole-drilling machine.This is what the tunnel drilling machine looks like (prototype).PosivaAnother machine lines the hole with bentonite to protect the canister from water.The machine is also remote-controlled.Posiva Oy/YoutubeThis is one of the deposition tunnels in real life. The canisters will be buried into the floor.The tunnel felt like it was going on for miles.Marianne Guenot/InsiderFive of these tunnels have been built to date, waiting for the signoff from the Finnish government for the first waste to be buried. A third machine — also automated — picks up a canister from a short-term storage room like this.This machine is also remote controlled.Posiva Oy/The machine carried each canister in a temporary extra radiation shield during transport, in case a human operator needs to get close.And takes it to the prepared hole, lined with bentonite, where it deposits it.This machine is about to deposit the canister in the hole.Posiva Oy/YoutubeHere is a real-life prototype of the canister-moving machine.This is a prototype of the remote-controlled machinery that will bury the spent nuclear fuel.Tapani Karjanlahti/TVOThe shaft is then sealed.This is how big the holes will be where the fuel will be depositedMarianne Guenot/InsiderThe finished shafts will look a bit different from this, the holes will be backfilled with a bentonite layer to complete the seal.As each hole is filled, another machine comes and fills the entire thing with more bentonite.This machine is also remote-controlled.Posive Oy/YoutubeEach finished tunnel will be sealed further with a massive concrete plug, like this.This is what a sealed tunnel will look like.Marianne Guenot/InsiderThe photo shows the end of a tunnel that was used with dummy canisters to test the process.Humans will still need to work on the site until it is closed, sometime around 2120.Workers, here carrying out tests on a tunnel, will keep working on the site for up to a century.PosivaPosiva is contracted to run this site until it is filled with the refuse from Finland's two current active nuclear plants. Waste will be buried in batches and each batch will be quickly sealed away. But people will still need to access the tunnel complex to oversee the process and to blast out new tunnels.The cave complex comes with bathrooms, showers, and a cafeteria where workers can take a break.This is the worker's cafeteria, which is 1300 ft underground.Marianne Guenot/InsiderThe workers spend between 8 and 12 hours underground in one go. Asked whether this was difficult, Mustonen said it wasn't"I don't think any special character is needed here because it's like a normal parking hall in the city," he said. It is more annoying to go down in the tunnels on a warm summer's day like the one when I was visiting, but less so when it is cold and dreary outside during the short winter days, he said. There is a fully-stocked cafeteria for the workers. Pea soup, a traditional Finnish dish, is on the menu every Thursday.The workers don't have parties down there... yet!I asked Mustonen if there had been any parties in the tunnels."No. Not yet!" he replied jokingly.  He said, however, that there have been events. Every time a tunnel is finished, he said, the miner's tradition dictates you lather the end of the tunnel with tar and have a little ceremony. Posiva also organized a concert at the bottom of the elevator shaft in honor of a music festival. Operatic bass singer Mika Kares took advantage of the amazing acoustics of the room on the occasion, as can be seen here.  Engineers are confident they've thought about every feasible possibility.Mustonen, the Onkalo geologist, says people probably don't realize how much work has gone into future-planning the site against every eventuality. "Maybe they ask: have they thought of this?" he saidThe answer, he said confidently, is: "Yes, we have." Asked if he was concerned that a volcano or earthquake could bring the waste back to the surface, Mustonen simply said: "We have seen that happening in movies." But he says "something like that just doesn't happen," he said. In terms of geological events, Mustonen says the next big predicted event is an ice age — about 50,000 years from now. This could put pressure on the system by flooding the ground with more water and causing earthquakes. But even then, the geologists' work suggests that the site will not be substantially affected. And even in the unlikely event the particles are released into the environment, Posiva's calculations suggest that by then, the risk to humans and the environment will remain very small. How is Onkalo future-proofing against accidental human exposure? Not with radioactive cats or nuclear warding religious cults, Posiva says.The idea of how to future-proof nuclear waste storage has been on scientists' minds for a while. From the 1970s scientists proposed a range of wacky ideas, from genetically engineered cats that changed colors when exposed to radiation to elaborate nuclear-based sects, to building Stonehenge-like religious monuments to scare pious future humans away, as can be seen in the video below.But Janne Mokka, CEO of Posiva, dismissed these plans as excessive. Ultimately, he said, Posiva is only responsible for the site until it is closed, that is for the next 100 years.But "of course, we have thought about this," he said.For Mokka, it is hard to conceive that humans would lose every record of the repository and accidentally stumble upon the buried waste.Even then, by the time this would happen, the radioactivity would already have substantially diminished, he said."We are saying that this concept is safe, it doesn't need any continuous guarding or measuring," he said. The world will be looking at Onkalo for inspiration.The US investigated a plan to buried the spent nuclear fuel under the Yucca mountains in Nevada. Here, a research tunnel is pictured in 2014. The project has since been scrapped.Courtesy of the Department of Energy.Onkalo could be a model for nuclear waste deposition for the rest of history. "Regardless of what people think about nuclear power, the waste is there, and there's a lot of it," Blackburn said. "It's an expensive problem. And it's a problem that should have probably been thought out a lot more in the early days of nuclear power," he said.Many other countries have been trying to build their own site. China recently started testing whether they could build a geological disposal facility in the Gobi desert by 2050.Blackburn said that the US and the UK are about 20 to 30 years behind Finland because they haven't even selected a site yet. Read the original article on Business Insider.....»»

Category: worldSource: nytJun 27th, 2022