Sunday, May 16, 2021

"Are Debt And Climate Transforming Central Banks?"

The writer is, how do you say, wired in to the transnational finance system at a very high level.

From Finews, May 14:

Central banks are increasingly weighing in on challenges facing our society, dramatically broadening their perspective beyond financial markets and banking, Fabrizio Pagani writes in his article for finews.first.

This article is published on finews.first, a forum for authors specialized in economic and financial topics.

Central banking is facing three pressing challenges: debt, digital and climate. We believe the response to these challenges by the major central banks will change the nature of monetary policy and the role of central banking in the economy and society at large.

Since the 2007/2008 Great Financial Crisis (GFC), central banks have enriched the toolkit of monetary policy by introducing new non-standard instruments and enhancing existing ones. Among these unconventional policies, quantitative easing stands out. Major central banks have engaged in quantitative easing (QE) in the years following the GFC and have made further, massive, recourse to this instrument in response to the COVID–19 pandemic.

«Existential questions loom over this debt»

So also the Federal Reserve (Fed), European Central Bank (ECB), Bank of England and Bank of Japan did. In the last decade, central bank balance sheets have grown dramatically. For example, the number of bonds bought by the Euro-system through its different programs (APP and PEPP) stood at around 4,000 billion euros in mid-April 2021.

More than 75 percent of the securities owned by the ECB are government bonds, the purchase of which will continue at a substantive pace until at least the end of March 2022, further swelling its balance sheet. Equally in April 2021 Fed-owned assets amounted to more than $7700 billion, with a striking ninefold increase since early 2008. The ECB and Fed will end up owning between 25 percent and 30 percent of their government's debt, and the Bank of Japan over 40 percent.

Existential questions loom over this debt, well beyond contingent issues about the length of the extension to the current purchase programs. Will central banks embark on its indefinite rollover, possibly extending the maturity? Will this debt eventually be made perpetual or even canceled as has been proposed? In the case of the European Union, will the ECB progressively replace national debt with a supranational one issued by the Commission under programs such as the Next Generation EU?

«A technological revolution is taking place: money could not remain unaffected»

Each central bank has its own mandate, culture and practices and these questions can, possibly, find narrow, technical answers according to each jurisdiction. However, there is a general interrogative on the long-term role that central banks will play vis-à-vis the increasing levels of government indebtedness and the rising amount of national debt which they own. Perhaps we have not yet reached a time to fully answer these questions.

In recent years, we have seen an acceleration in the pace of digitalization in all aspects of the economy and within society more broadly. A technological revolution is taking place: money could not remain unaffected. Indeed, it is not the first time money has undergone a radical technological transformation and each transformation, such as from gold coins to banknotes, has had its own challenges.

There is much confusion around the exact definition of the digitalization of money. It is a notion that includes different phenomena such as electronic payment systems, the most successful being the digital wallets of China’s WeChat and Alipay; the emerging array of fiat cryptocurrencies, such as the popular bitcoin and stable coins on the blockchain; and the possibility of central banks issuing digital currencies.

Central banks and governments globally are considering introducing central bank digital currencies (CBDCs). For some time, the Bank of International Settlement (BIS) has been trying to find clarity and provide some early taxonomy. Central bankers are eager to stress the difference between CBDCs and cryptocurrencies that they prefer to call crypto-assets....


"That Time Hitler’s Girlfriend Visited Iceland and the British Invaded"

From Hakai magazine, May 11:

The location of this small island nation, along with its people and economy, played an unexpected and crucial role in the outcome of the Second World War.

Egill Bjarnason has been Hakai Magazine’s go-to writer on all things Iceland since 2017. Bjarnason, an Icelander, has introduced readers to the small island nation’s fixation on swimming lessons for all, its connection to the first moon landing, and its role in seasickness research. The following excerpt, “That Time Hitler’s Girlfriend Visited Iceland and the British Invaded,” is from Bjarnason’s first book, How Iceland Changed the World. Iceland, it turns out has shown up unexpectedly—and has had an outsized role—in many world-changing events.

I always said it. Hitler should not be trusted. Had people just taken my advice, this mess would never have happened.
—A sheep farmer in northern Iceland lecturing his workers during a coffee break, according to Nú er hlátur nývakinn, a collection of anecdotes from the region

Some of the oldest color film footage ever taken of Iceland was shot aboard a cruise ship sailing around the Westmann Islands. The archipelago of 15 dome-shaped islands sits on a volcanic hotspot just 16 kilometers off the southern coast. The largest island, Heimaey, is inhabited by a community referred to as the Eyjamenn—the island people—by “continental” Icelanders. The journey as the ship enters Heimaey’s harbor is stunning. The ship sails through a narrow inlet, passing sheer black-green cliffs that plunge into the sea, crossed by the flight of fulmars and skuas. The old film footage is silent. All it reveals, so far, is a voyage in an astounding landscape. End of shot.

Next cut: the camera is on solid ground, pointed at some of the quaint houses that once dotted Heimaey (in 1973, the town would have to be rebuilt after a volcanic eruption). The sequence moves quickly, reflecting the price of color film, but the cameraperson lingers for a few seconds on the sight of clean laundry luffing on a clothesline in the ocean breeze. Green gardens suggest the peak of summer. The idyllic motifs continue as the filmmaker’s eye is drawn to children. One girl stands with her fist gripping the neck of a dead puffin, a local delicacy. She poses with two friends. The camera then cuts to a blond boy, probably around eight years old, and stays on him long enough to capture a shy smile toward the camera. The clip suggests an eye drawn toward the innocent, the gentle and pure. In context, it’s bone-chilling.

Holding the camera was Eva Braun. Eva Braun, Adolf Hilter’s girlfriend and partner in suicide; a woman who stayed with him for a decade, through the entire Holocaust; the only woman who could call der Führer by his first name: Adolf, dear.

Braun was in Iceland in the summer of 1939, the year the Second World War began, traveling on board the Milwaukee, a cruise liner from the Nazi state-operated leisure organization Kraft durch Freude. The ship’s manifest lists her real name, next to her mother’s and her older sister’s, Gretl. Only they know about the life she leads back home; the relationship with Hitler was a secret for 14 years, based on Hitler’s idea that a bachelor status would lure female followers.

After the Westmann Islands, the ship docked in Reykjavík and rented out the entire local taxi fleet in order to view the hot springs in nearby Hveragerði. From there the ship’s course was set for the northwest and northeast, docking at the regional capitals of Ísafjörður and Akureyri. According to a pamphlet about the voyage, the Milwaukee returned to Travemünde, Germany, on August 3, less than a month before Germany kicked off the most devastating war in history by invading Poland.

Months before Eva Braun’s visit, Germany had bought a prominent villa in downtown Reykjavík, one designed by the legendary Guðjón Samúelsson, the creator of the National Theater and the Hallgrímskirkja Church. The three-floor Túngata 18 was set to host an incoming consultant and Nazi Party favorite: the retired physician Werner Gerlach. For debt-burdened Germany, he had a startlingly large budget to spend on a tiny island nation still under the rule of the Danish king....


How Iceland changed the world? How about the time it set the stage for the French Revolution?  

Laki: How A Volcano Swallowed Europe 

"Change of Climate and the French Revolution 1789"

"Go East: Singapore’s family office boom"

From Spear's magazine, May14:

Family offices are flocking to Singapore thanks to a concerted effort by government to court global wealth and capitalise on growing UHNW interest towards Asian markets

Family offices are fast becoming the favoured method of administering and managing UHNW wealth. There are now an estimated 3,700 single family offices (SFOs) worldwide – a 38 per cent rise since 2017, according to research by Campden Wealth.

That’s higher than the number of billionaires worldwide (2,043). As this number continues to rise – and there is no reason to think it will stop – countries are seizing on their economic potential. Singapore might have latched onto the trend with more determination than anywhere else. According to the Monetary Authority of Singapore, assets managed by SFOs in the city-state have risen an estimated five-fold from 2017 to 2019.

Last October, the country’s senior minister Tharman Shanmugaratnam said that there were around 200 SFOs in Singapore managing assets ‘in excess’ of $100 million. At the beginning of 2021, website Family Capital found that 229 family offices had registered in the jurisdiction since 2020.

Not bad for a city-state with a population smaller than London’s. Singapore has become something of a hotspot for Western wealth, too. Google co-founder Sergey Brin – the ninth richest person in the world – became the latest high-profile figure to announce he was setting up an SFO in the Lion City, joining recent additions such as Ray Dalio and Sir James Dyson.

This agglomeration is no accident, but rather a result of a concerted effort by government to court global wealth and capitalise on growing UHNW interest towards Asian markets.....


I believe Dyson has re-domiciled back to the UK where he was on a bit of a land-buying binge.

More Carbon Credit Shenanigans: The Massachusetts Audubon Society

Following on the sordid tale of the Nature Conservancy's racket.

From ProPublica and MIT Technology Review, May 10:

A Nonprofit Promised to Preserve Wildlife. Then It Made Millions Claiming It Could Cut Down Trees.
The Massachusetts Audubon Society has managed its land as wildlife habitat for years. Here’s how the carbon credits it sold may have fueled climate change. 

This story was co-published with MIT Technology Review.

The Massachusetts Audubon Society has long managed its land in western Massachusetts as crucial wildlife habitat. Nature lovers flock to these forests to enjoy bird-watching and quiet hikes, with the occasional bobcat or moose sighting.

But in 2015, the conservation nonprofit presented California’s top climate regulator with a startling scenario: It could heavily log 9,700 acres of its preserved forests over the next few years.

The group raised the possibility of chopping down hundreds of thousands of trees as part of its application to take part in California’s forest offset program.

The state’s Air Resources Board established the system to harness the ability of trees to absorb and store carbon to help the state meet its greenhouse gas reduction goals.

The program allows forest owners like Mass Audubon to earn so-called carbon credits for preserving trees. Each credit represents a ton of CO2. California polluters, such as oil companies, buy these credits so that they can emit more CO2 than they’d otherwise be allowed to under state law. Theoretically, the exchange should balance out emissions to prevent an overall increase in CO2 in the atmosphere.

The Air Resources Board accepted Mass Audubon’s project into its program, requiring the nonprofit to preserve its forests over the next century instead of heavily logging them. The nonprofit received more than 600,000 credits in exchange for its promise. The vast majority were sold through intermediaries to oil and gas companies, records show. The group earned about $6 million from the sales, Mass Audubon regional scientist Tom Lautzenheiser said.

On paper, the deal was a success. The fossil fuel companies were able to emit more CO2 while abiding by California’s climate laws. Mass Audubon earned enough money to acquire additional land for preservation, and to hire new staff working on climate change.

But it didn’t work out as well for the climate, unless Mass Audubon actually intended to start acting more like a timber company. The project wouldn’t achieve anywhere near the claimed levels of reduced carbon emissions if the nonprofit was getting credits for forests that were never in danger of aggressive logging. And every time a polluter uses a credit that didn’t actually save a ton of carbon, net emissions go up, undermining the point of the program.

In order for California’s system to work, carbon market experts say, the program must cause carbon savings that wouldn’t have happened in the absence of the program. If Mass Audubon had already planned to preserve the forest, then the carbon credits program is paying to save trees that were never at risk.

The concept in question is known as “additionality.” And how regulators create rules to ensure it happens is at the heart of the debate about whether California’s carbon offset program is actually benefiting the environment.

To the Air Resources Board, the landowner’s intent is not important. So long as the land could have been logged in a way that is legal, doesn’t lose money, and doesn’t exceed typical logging practices in that region, the agency’s rules treat the savings to the atmosphere as real.

Some offset researchers argue that the state’s approach allows landowners to claim credits for trees that were never in danger.

New research by the San Francisco nonprofit CarbonPlan provides evidence that this is occurring: It shows that landowners in the program routinely maximize the number of trees they assert they could chop down if they weren’t given carbon credits, even if they have little history of logging or have mission statements in sharp opposition to such practices.

The research suggests the program could be significantly exaggerating the amount of carbon savings achieved.

“The nearly universal pattern we see in the data,” said Danny Cullenward, policy director at CarbonPlan and a coauthor of the study, corroborates concerns that “those projects are not delivering real climate benefits.”

That finding was one piece of a larger study that concluded the program issued tens of millions of carbon credits that don’t achieve real climate benefits. As ProPublica and MIT Technology Review reported recently, those ghost credits were the result of oversimplified calculations of average carbon levels in forests.....


As the prostitute said: "I got it, I sell it, I still got it."
Or something.

The folks who, fifteen years ago, were likening carbon credits to the old skool Catholic church selling indulgences to absolve rich parishioners of their sins were not that far off. The credits basically allow you to continue doing what you were doing or, as US climate czar John Kerry said when jetting off to Iceland in his private plane to receive a climate change leadership award:

“If you offset your carbon, it’s the only choice for somebody like me
who is traveling the world to win this battle”

Roger that, only choice, over. 

And from the Oakland Institute, a group that, like Farmlandgrab keeps tabs on the land, the headline story:....

"Inside the Secretive Swiss Bank for the World’s Richest People"

We used to think of Sarasin as being of the same quality, though 35 years younger and earlier to ESG, but since Safra took control they seem to be just another Swiss Bank.

From Bloomberg via Yahoo Finance:

In the mythology of private banking, Banque Pictet & Cie SA stands apart. Over the course of more than two centuries, the Swiss institution has discreetly tended to the assets of the very rich, led by a small crop of partners who form the most exclusive men-only club anywhere outside the Vatican.

In its entire history, only 43 individuals — all men, all white — have risen to the rank of Pictet managing partner, creating a bond more enduring than your typical marriage. From their Geneva perch, they oversee more than 600 billion francs ($662 billion) in assets under management and a level of profitability far beyond larger, publicly-listed peers, often rewarding each of them with more than 20 million francs a year.

But in recent years, an unsettling new trend crept into Pictet, cracking the façade of corporate cohesion: key employees began leaving. Over the course of 2019, a dozen long-tenured relationship managers at the wealth unit departed. Within days in September of that year, four leading bankers from the team looking after Russian clients handed in their resignations. Bankers for Scandinavia and Israel followed, putting billions in assets under management at stake.

At the heart of the exodus lies a culture clash. Longtime employees were bristling at the brash style of the flood of recent hires brought on to manage the money of the ultra rich, particularly the explosive growth of new wealth in Asia that has set off an aggressive race for assets and talent with bigger rivals like UBS Group AG and HSBC Holdings Plc.

Yet for others, change wasn’t happening fast enough; some newcomers who had signed up to the promise of the rejuvenated Pictet were departing again in frustration.

Interviews with a dozen people familiar with Pictet’s private-wealth arm reveal a business at a crossroads, confronted with the reality that, in order to stay ahead, Switzerland’s preeminent private bank must adapt. That means embracing more risk and changing the client relationship — away from the concierge-like approach that endured for generations toward a more transactional model.

That can be tough for employees accustomed to the principle of caution and secrecy that guided Pictet through the centuries. But change has also brought opportunity to rethink old habits and expand the bank on the global stage.

The people asked not to be identified discussing the bank’s inner workings. Pictet declined to comment for this story.

While overall attrition at Pictet Wealth Management stands at an all-time low of 2.8%, the evacuation of longtime talent has reverberated through the corridors of the five-story modernist headquarters. The departures startled the partners, who viewed the outflow as an assault on an institution priding itself in flat fluctuation. So late in 2019, they gathered in a spartan conference room for what the partners call their salon meeting to learn more about what was behind the defections.

Sitting in tiered formation at the large conference table, much in the same way they congregate several times a week to discuss the order of business, the men heard of tensions, a dispute over restraint and renewal rippling through the bank’s private wealth subsidiary.

“Pictet is in between two worlds,” says Pedro Araujo, a senior researcher at the University of Fribourg, who has studied Switzerland’s elite families. “They are in the old world of Geneva private bankers, and the new world of globalized finance, where they want to be present internationally, they want to grow, they want to present themselves as modern, but not too much. Two worlds that are on a collision course.”

For all its tradition, Pictet has become more attuned to change in recent years. The company transformed its legal status after the end of banking secrecy in 2014, disclosing more performance metrics as a result. One of its partners, Rémy Best, had already made his mark revamping the asset-management unit. Next, he turned his attention to the wealth division, long the beating heart of Pictet.

It turned out that the operation required fresh blood. And the bank found it in Boris Collardi, who performed one of the most audacious maneuvers in Swiss banking in 2018 when he abruptly left as CEO of Zurich private-banking nemesis Julius Baer and decamped to the shores of Lake Geneva to join Pictet.

On the face of it, Collardi is everything that the typical Pictet stakeholder is not. More bonvivant than ascetic financier, Collardi, 46, stands apart as the first outside partner in decades. He also brought serious star power and a dose of bonhomie to the Pictet franchise that values uniformity over individualism, down to the subdued color palette of the partners’ perfectly tailored suits.

Collardi, by contrast, is known to greet close colleagues with a hug or a peck on the cheek; in meetings, he is the first to take off his suit jacket and jokingly complains about having to wear a tie. His ascent to the Pictet partnership not only made him one of the youngest people in recent history to hold that title, it also tipped the scale for the first time to a majority of members in the group who aren’t descendants of the founding families.

In Collardi, the partners identified a peer who could pick up from Best, a longtime acquaintance who had introduced the new hire to the other partners. And Collardi was already well versed in Asia, where Pictet was keen to tap into an affluent class of newly minted billionaires preparing to pass on their wealth to the next generation.

But Collardi also had to adjust to the new reality of no longer being the undisputed leader. Instead, he is now one voice among seven, where every decision is made in unison. The weekly meetings are presided over by senior partner Renaud de Planta, who declined to comment for this story.

Given that the average tenure of an active partner is 20 years, collegial harmony is the glue that holds together the senior team. That hasn’t stopped Collardi from moving swiftly in his new role. Within a year, more than 100 of his loyalists had followed him to Pictet, including close to the complete teams for the Middle East and Latin America.

Collardi also accelerated an overhaul of the investment and trading platforms, replacing some of the longest-serving portfolio managers with investment advisers half their age.

By the end of 2020, Pictet's wealth bankers had swelled to 1,098 from 740 just five years earlier, an expansion not dissimilar to absorbing a full-blown acquisition.

The changes echo the overhaul that Collardi enacted at Julius Baer. Over the course of a decade, he turbo-charged the storied private bank, sending it on a breakneck expansion from Sao Paulo to Singapore, doubling assets under management as a result. But despite his meteoric rise, Collardi remained, by his own account at the time of the move, “only an employee.” Pictet, by contrast, offered a once-in-a-lifetime opportunity to become an entrepreneur with extra financial legroom but without the daily grind of running a publicly-listed company.

Making Pictet partner brings a stake in a steady business whose owners share in more than 500 million francs in annual profit. Up until a few years ago, the firm was so old-fashioned that managing partners were expected to be addressed as Notre Sieur, a formal French title for sire.

The challenge facing the partners is that in order to grow, they need to aggressively target Asia, the epicenter of wealth creation. But that requires the embrace of new — and potentially riskier — investment assets, chief among them structured products, which use derivatives to track the performance of an underlying asset....


How We Choose What We Do

 From Inference Review, Vol. 6, Issue 1:

The reviewer's mini-bio at Inference:

Jean-Paul Fitoussi is Professor Emeritus of Economics at the Institut d’études politiques de Paris and Professor at Luiss Guido Carli University. He is also a member of the Center for Capitalism and Society at Columbia University. In January 2021, Fitoussi was elected Vice President of the Fondation nationale des sciences politiques. His last books are Measuring What Counts: The Global Movement for Well-Being, with Joseph Stiglitz and Martine Durand, and Comme on nous parle: L’emprise de la novlangue sur nos sociétés


Willful: How We Choose What We Do
by Richard Robb
Yale University Press, 256 pp., $18.00.

How do we choose? None of us knows. What is known precisely is not complete, and what is known completely is not precise. Richard Robb’s research lies on the boundary between economics and philosophy; it is a ragged boundary and so a tough discipline. In thinking about choice, Robb commits to a thesis that is both economic and philosophical: people choose by calculating what is optimal or by acts that escape calculation. In looking to optimization, Robb is in good company. Kenneth Arrow, Gérard Debreu, Paul Samuelson, Amartya Sen, and Herbert Simon have all employed and criticized the canonical answer: consumers maximize their utility under budgetary constraints; entrepreneurs, their profits under technological constraints.

Arrow argued that making a rational choice through calculation is more than complex—it is often impossible. When trying to determine the outcome of an action, the real challenge is not so much factoring in one’s own rationality, but that of others. No computer can solve an optimization problem on these terms. If we do not have any idea about the consequences, how then do we make choices?1

George Akerlof proposed adding an objective to the optimization problem: people do not simply want to economize or maximize their profits, they “want to be ‘rich and famous’—the and-famous part of the expression not being redundant.”2 The desire to be famous sometimes leads people to make irrational choices. Clearly, another approach is needed.3

Simon, in turn, proposed that humans exhibit bounded rationality: an agent looks merely for a satisfactory solution because he does not have the cognitive means to achieve optimization. This form of rationality allows greater freedom to act since the agent does not have to seek an unattainable optimum. In this sense, bounded rationality is an accommodation between the theory of rational choice and that of free action.

Robb wishes to maintain some distance from the theory of rational choice. As both a scientist and an engineer, he is, by nature, a pragmatist. This leaves him no room for dogmatism. Why, he asks, throw out an instrument such as rational choice theory when it could still be utilized, and when there is no comparable replacement available? And this all the more so when its shortcomings are known: rational choice theory presents a mechanical vision of the world, reducing every life to a mere choice.

Robb acknowledges a larger class of actions within economics that seem stubbornly retrograde to rational decision theory. “Early on in graduate school,” he writes,

my classmates and I stumbled on behavioral economics, which was then emerging as an alternative to rational choice orthodoxy. Cognitive biases were documented in all sorts of lab experiments. In one famous experiment, subjects were indifferent between receiving $10 immediately and receiving $21 in one year. They were also indifferent between paying $10 immediately and paying $15 in one year. Since a rational person ought to be willing to trade small amounts of cash now for cash in one year at a single discount rate, whether paying or receiving, this discrepancy was interpreted as evidence of “gain-loss asymmetry”—meaning that people need more compensation to delay gains than they are willing to pay to delay losses.4

However curious or compelling the examples of behavioral economics, in the end, Robb is persuaded, they can be mostly folded within the ambit of optimization:

Behavioral economics assumes that people understand their preferences, but that defects in their mental apparatus impair decision-making. At least one hundred and fifty behavioral biases have been identified, mostly through laboratory experiments, from the “ambiguity effect” (ruling out options when we can’t assign probabilities to possible outcomes) to the “zero-risk bias” (spending unwarranted amounts to reduce small risks to zero while ignoring bigger ones). Presumably, once people are made aware of their biases, they will try to correct them, choose more wisely, and become better off. Until then, the field seeks to build more accurate models of behavior.5

In this respect, irrational behavior is no more a violation of decision theoretic principles than a perturbed planetary orbit is a violation of Newtonian mechanics.

There yet remain actions that are well defined but neither rational nor frankly irrational. Some actions, Robb argues, are undertaken for their own sake “without regard to whether [they are] better than some alternative.”6 No calculations are involved. Actions of this kind “cannot be ranked against, or traded for, other actions.”7 They are neither rational nor irrational. An act of this sort, Robb writes, is undertaken for-itself. These actions make sense, Robb argues, “only if we accept that an activity can matter beyond its ostensible purpose.”8


Saturday, May 15, 2021

Electric Vehicle Startups Lose Over $40 Billion After Taking SPAC Route Public

From Bloomberg via Yahoo Finance, May 14:

At their highs, five electric-vehicle startups that went public through mergers with special purpose acquisition companies were worth $60 billion. The corrections that followed have been brutal.

Three of the companies plumbed new lows this week as short-seller attacks, management turmoil and execution issues lead investors to reconsider their prospects. They’ve lost more than $40 billion of market capitalization combined from their respective peaks.

The sliding valuations of Nikola Corp., Fisker Inc., Lordstown Motors Corp., Canoo Inc. and Arrival Ltd. underscore the risks surrounding the blank-check boom. Unlike in a traditional initial public offering, going public via SPAC allows companies to make forward projections to investors during their listings. This was key to ginning up interest in EV companies -- all five are still working on delivering their first vehicles to customers.

Here’s a breakdown of what’s happened at each company:

Founder Trevor Milton burst onto the scene last year boasting that he could “out-Elon” Tesla Inc.’s Elon Musk. Days after his battery-electric and hydrogen-powered truck maker debuted on the Nasdaq in June, it was worth almost $29 billion, rivaling Ford Motor Co. at the time.

When Bloomberg News reported that Milton had exaggerated the capability of his first truck years before the company went public, it got the attention of Hindenburg Research. The small short-selling firm produced a lengthy report accusing the company of deceiving investors. The U.S. Securities and Exchange Commission opened an investigation, and Milton resigned soon after.

Early this year, the company cut its projection for semi-truck production this year to 100 units, one-sixth of its earlier plan. The shares have recovered somewhat since dipping below $10 in April.

The second EV venture founded by longtime auto designer Henrik Fisker announced its reverse merger a month after Nikola’s listing. While the company was more than two years from starting production, its plan to market an under-$40,000 sport utility vehicle and outsource the manufacturing work to others turned heads. Its market value peaked at almost $8 billion in February.

The catalysts for Fisker’s decline to below $3 billion this week have been less clear than some of its peers. The company appeared to lose out as investors grew more bullish about incumbent automakers’ EV prospects. Its shares are surging in early trading after an announcement late Thursday of plans to develop an EV with Foxconn Technology Group and build it in the U.S.

Lordstown Motors
Then-Vice President Mike Pence attended Lordstown’s unveiling of its Endurance work truck in June at the factory the company took over from General Motors Co. While it was a risky move championing a company with just 70 full-time employees, the Trump administration was eager to embrace a startup trying to revive an Ohio plant that once employed 10,000 people....


"George Blake and the Prison Escape Story Hitchcock Spent The Last Decade of His Life Trying to Make"

From CrimeReads:

The spy who escaped prison and captured popular imagination.

In 1950, George Blake, a British MI6 agent, was taken prisoner by the North Korean army. By the time he was returned to Britain, three years later, he had been converted to the Soviet cause and was acting as a KGB double agent. He was caught in 1961 and sentenced to forty two years in prison. He was serving his time in Wormwood Scrubs prison, in London, in 1966, when he decided to escape.

All this time Blake had been waiting anxiously inside the prison wall for Bourke to throw him the ladder. As time passed he began to give up hope. He claims to have waited ‘a whole hour, which turned into an eternity’. He later recalled thinking: ‘Now he’s gone away. I couldn’t go back, but I also couldn’t go over the wall.’ At this point, it seemed probable that he would be caught and spend the rest of his life in prison. Then, suddenly, he heard Bourke’s voice coming through again. But by this time people were parking in the street for visiting hour at the hospital, and Bourke had to resume his wait. Time was ticking away. Blake knew that, when the prisoners were returned to their cells at 7 p.m., the wardens would discover that he was gone. It was about 6.55 p.m. when Bourke finally threw the ladder over the wall. Blake climbed up it. When he reached the top, he realised that Bourke had forgotten to affix a metal hook to the ladder so that it could be attached to the wall. Blake jumped 20 feet, broke his wrist and cut his forehead, but Bourke picked him up and bundled him into the car. In Simon Gray’s play “Cell Mates,” when a minor character is told about the escape, he responds: ‘But that’s – that’s – (Laughing.) It’s like something out of a – a comic book!’ Within twenty minutes Blake and Bourke were safe inside the bedsit that the Irishman had rented just a few hundred yards from the prison, at Highlever Road. Soon afterwards, a prison officer found the rope-ladder and Bourke’s chrysanthemums, still wrapped in florist’s paper. Only about forty-five minutes after the breakout did the prison authorities alert the police.

News of the escape delighted the prisoners. The Observer quoted one prisoner as saying the atmosphere in the Scrubs was ‘like Christmas Day after Father Christmas has been’. In Zeno’s telling, even the prison wardens seemed happy that Blake was free. Meanwhile, at Highlever Road, Blake and Bourke watched TV news report the escape, and raised a glass.

Some people on the outside were pleased too. ‘Flags went up on my house,’ Jeremy Hutchinson said half a century later. The prime minister, Harold Wilson, reportedly remarked in private: ‘That will do our Home Secretary [Roy Jenkins] a great deal of good. He was getting too complacent and he needs taking down a peg.’ Jenkins hadn’t even known that Blake was in Wormwood Scrubs.

The British prison system was starting to look as error-prone as the British intelligence services. A couple of dozen prisoners had escaped in the previous two years, including the Great Train Robbers Charlie Wilson and Ronnie Biggs, and six men from Blake’s own wing of Wormwood Scrubs on 5 June 1966.

Ten more prisoners would get out in December 1966, including the ‘Mad Axeman’ Frank Mitchell, who once at liberty began writing letters to the newspapers. ‘Over Christmas,’ wrote the New Yorker magazine in early 1967, ‘the breaks were such almost daily occurrences that some of the more sporting-minded newspapers took to facetiously reporting the figures in handy tables, like football-league results or horse-race prices.’....

"Alcoholic killer monkey leaves one man dead and 250 injured...."

Lest we forget.
A repost from the heart of the bad time, June 20, 2020:

I'm telling you, they seem more human every day.
From the Daily Mail, June 18

Alcoholic killer monkey leaves one man dead and 250 injured after going on rampage when his booze supply dried up

An alcoholic killer monkey has left one man dead and 250 injured after going on the rampage when his booze supply dried up in India.

The inebriated imp, known as Kalua, was formerly the pet of an occultist who fed him hard liquor at his home in Mirzapur, Uttar Pradesh.
But after his owner died, the bereft animal stopped getting his supply of spirits and began prowling the streets in a furious rage.

The simian targeted women and girls in particular, with dozens of children left needing plastic surgery after he ripped open their faces with his fangs.
The animal has since been caught and will now be kept in captivity for the rest of its life....MORE
I'm not sure why the writer used the word "imp."
And from last December's "Fairness, Capuchin Monkeys and Wall Street":
This is a few years old but contains some good lessons so is probably worth reposting

The speaker, Frans de Waal, is one of the heavyweights of the primate world. Actually, we all are among the heavyweights of the primate world but he's up there with Jane Goodall in the study of primates....


"How scientists taught monkeys the concept of money. Not long after, the first prostitute monkey appeared"
Commodity traders superior to chimpanzees, research shows

I made a serious career track mistake.
Years ago a counselor pointed out that I seemed to have an affinity for animals (It's true. Kids and dogs like me. So do drunks and folks suffering from various psychopathologies).
Had I followed up on her thinking I would now be tenured, trading outside my species and living the grant-proposal dream....
 ...chimpanzees in nature do not store property and thus would have little opportunity to trade commodities...
2020: "Motorcycle-Riding Monkey Tries Kidnapping Small Child ... In Indonesian Alley "—UPDATED
Monkeys Are Transcribing The New York Times, Typing Hamlet at 12 Words Per Minute
"Vineyard-Raiding Baboons Favor Pinot Noir"
What a bunch of wine snob poseurs.
Merlot is just fine, especially if it's dolled up as Chateau Petrus.
Berry Bros. & Rudd is running a special case price, "Buy 6 and save £2667.37".
A Romanée Conti (pinot noir) will cost you double or triple. BB&R is price on request.
Either way, possibly more than the average baboon has in petty cash.....

Information Infrastructure: The Filing Cabinet

I admit it. I get a bit obsessive with information storage and retrieval. As noted in an April 2020 post:

This is a couple months old but if I don't post it now it may not re-emerge from the link-vault in my lifetime.
(filing systems: very important you remember how things were indexed and cross-indexed)

*You may think of your filing system as a thing of beauty:
 Strahov Library, Prague via Wikimedia

When it has actually morphed, without your noticing, into something like this:

Central Social Institution, also Prague, via

And today's story from Places Journal, May 2021:

The filing cabinet was critical to the information infrastructure of the 20th-century. Like most infrastructure, it was usually overlooked.

The subject of this essay emerged by chance. I was researching the history of the U.S. passport, and had spent weeks at the National Archives, struggling through thousands of reels of unindexed microfilm records of 19th-century diplomatic correspondence; then I arrived at the records for 1906. That year, the State Department adopted a numerical filing system. Suddenly, every American diplomatic office began using the same number for passport correspondence, with decimal numbers subdividing issues and cases. Rather than scrolling through microfilm images of bound pages organized chronologically, I could go straight to passport-relevant information that had been gathered in one place.

The filing cabinet is a milestone in the history of storage.

I soon discovered that I had Elihu Root to thank for making my research easier. A lawyer whose clients included Andrew Carnegie, Root became secretary of state in 1905. But not long after he arrived, the prominent corporate lawyer described himself as “a man trying to conduct the business of a large metropolitan law-firm in the office of a village squire.” 1 The department’s record-keeping practices contributed to his frustration. As was then common in American offices, clerks used press books or copybooks to store incoming and outgoing correspondence in chronologically ordered bound volumes with limited indexing. For Root, the breaking point came when a request for a handful of letters resulted in several bulky volumes appearing on his desk. His response was swift: he demanded that a vertical filing system be adopted; soon the department was using a numerical subject-based filing system housed in filing cabinets. 2

The shift from bound volumes to filing systems is a milestone in the history of classification; the contemporaneous shift to vertical filing cabinets is a milestone in the history of storage.

It is easy to dismiss the object: a rectilinear stack of four drawers, usually made of metal. With suitable understatement, one design historian has noted that “manufacturers did not address the subject of style with regard to filing units.” 3 The lack of style figures into the filing cabinet’s seeming banality. It is not considered inventive or original; it is simply there, especially in 20th-century office spaces; and this ubiquity, along with the absence of style, perhaps paradoxically contributes to the easy acceptance of its presence, which rarely causes comment. In countless movies and television shows, one or more filing cabinets line the walls of newsrooms and advertising agencies or the offices of doctors, attorneys, private eyes, police inspectors. Their appearance defines a space as an office but rarely draws attention to the work it does in that office. Occasionally, the neatness or disorder of a filing cabinet gives us an insight into the mental state and work habits of the office’s occupant. Sometimes, the filing cabinet plays a small but vital role in dystopian critiques of bureaucracy.

The filing cabinet does not just store paper; it stores information

But if it appears to be banal and pervasive, it cannot be so easily ignored. The filing cabinet does not just store paper; it stores information; and because the modern world depends upon and is indeed defined by information, the filing cabinet must be recognized as critical to the expansion of modernity. In recent years scholars and critics have paid increasing attention to the filing systems used to store and retrieve information critical to government and capitalism, particularly information about people — case dossiers, identification photographs, credit reports, et al. 4 But the focus on filing systems ignores the places where files are stored. 5 Could capitalism, surveillance, and governance have developed in the 20th century without filing cabinets? Of course, but only if there had been another way to store and circulate paper efficiently. The filing cabinet was critical to the infrastructure of 20th-century nation states and financial systems; and, like most infrastructure, it is often overlooked or forgotten, and the labor associated with it minimized or ignored. 6


"CDC guidance now authorizes fully vaccinated people to resume giving each other mouth to mouth shotgun bong hits"

Many people have been waitiing for and working toward this day.

From Sweet Meteor Of Death:

"A new ‘director’s cut’ of Prince playing While My Guitar Gently Weeps has been released" (at George Harrison's Rock and Roll Hall of Fame induction)

The mention of "obscure bluegrass-electro-punk band" in the post immediately below reminded me: "Wait, we've got something REALLY good" in the queue.
Although the focus is on Prince (he enters about half-way in) I had forgotten just how pure the vocals by Tom Petty and the fellow from ELO (Jeff Lynne) were that night.
The rest of the band included Steve Winwood (organ); Billy Preston (piano); Jim Capaldi (percussion)....MORE (Quora)

George's son, Dhani Harrison seems pretty happy with his dad's induction.


The performance took place in 2004 at The Rock And Roll Hall Of Fame.

A newly edited version of Prince’s performance of While My Guitar Gently Weeps has been released, offering more details and close-ups than the previous version that had been circulated online. The performance took place at the 2004 Rock And Roll Hall Of Fame induction ceremony, and also featured Tom Petty, Jeff Lynne, Steve Winwood and Dhani Harrison, George Harrison’s son.

The edit arrives thanks to Joel Gallen, the director and producer of the original broadcast from the 2004 Rock And Roll Hall Of Fame ceremony. Writing underneath the video, Gallen explained: “17 years after this stunning performance by Prince, I finally had the chance to go in and re-edit it slightly – since there were several shots that were bothering me. I got rid of all the dissolves and made them all cuts, and added lots more close-ups of Prince during his solo. I think it’s better now. Let me know what you think. Joel.”...MORE

 From Mr. Gallen's YouTube channel:


Climate Envoy John Kerry On Chinese Solar Panels: "...are being in some cases produced in forced labor by Uyghurs"

I know some people have said "Twitter dēlenda est," in my own case phrased as "Shut 'em all down", but without the tweet machine I probably would not have been aware that FT's Alphaville's editor had been thinking about Chinese solar:


And I would not have experienced the Baader-Meinhof phenomenon* when I saw this at the New York Post, May 13:

John Kerry says Xinjiang solar panel production presents ‘problem’ for US climate strategy

US Special Envoy on Climate John Kerry acknowledged on Wednesday that obtaining solar panels from Xinjiang, China is a problem given the forced labor reported in the area and China’s strength in the market. 

During a House Foreign Affairs Committee hearing, Rep. Michael McCaul, R-Texas, asked Kerry about ensuring that the US’ climate strategy wouldn’t involve solar panels produced from forced labor.

“When you look at the supply chain, when you look at China, they dominate the critical mineral supply and solar supply chains all coming out of Xinjiang Province,” McCaul said.

Kerry told McCaul he was “absolutely correct” in his concerns. “It is a problem,” he added.

“Xinjiang Province not only produces some of the solar panels that we believe are being in some cases produced in forced labor by Uighur[s], but also there are significant amounts of a certain rare earth mineral that’s used in the solar panels themselves.”

Although Kerry didn’t commit to precluding those panels, he indicated that the Biden administration was moving toward doing so with sanctions....MORE

Envoy Kerry's testimony via C-SPAN.

Partial transcript:

Representative Michael McCaul:

“How can you ensure that….slave labor coming out of China–where genocide is taking place as we speak–[is] never part of the climate solution in the United States?”

Climate Envoy Kerry:

“You’re absolutely correct. Ranking Member McCaul you’re — it is a problem. Xinjiang province not only produces some of the solar panels that we believe are being in some cases produced in forced labor by Uyghurs but also there are significant amount of rare mineral that’s used in the solar panels themselves. It is my understanding that the Biden Administration is right now in the process of assessing whether or not that will be the target of sanctions.”

*And Bader-Meinhof? Via Pacific Standard:

There's a Name for That: The Baader-Meinhof Phenomenon
When a thing you just found out about suddenly seems to crop up everywhere.

Your friend told you about that obscure bluegrass-electro-punk band yesterday morning. That afternoon, you ran across one of their albums at a garage sale. Wait a minute—that’s them in that Doritos commercial, too! Coincidence ... or conspiracy? More likely, you’re experiencing “frequency illusion,” somewhat better known as the Baader-Meinhof phenomenon....

It doesn't even have to be something you just found out. Simply having a prior point of recognition can clear the way for repetitions to enter the consciousness.  

Over the years we've had a few mentions of the B-M phenomena. One that made it to the headline: 

Tying Today's Posts Together: Synchronicity, Serendipity and the Baader-Meinhof Phenomena

Friday, May 14, 2021

"China's 1st Mars rover 'Zhurong' lands on the Red Planet"


China just successfully landed its first rover on Mars, becoming only the second nation to do so. 

The Tianwen-1 mission, China's first interplanetary endeavor, reached the surface of the Red Planet Friday (May 14) at approximately 7:11 p.m. EDT (2311 GMT), though Chinese space officials have not yet confirmed the exact time and location of touchdown. Tianwen-1 (which translates to "Heavenly Questions") arrived in Mars' orbit in February after launching to the Red Planet on a Long March 5 rocket in July 2020. 

After circling the Red Planet for more than three months, the Tianwen-1 lander, with the rover attached, separated from the orbiter to begin its plunge toward the planet's surface. Once the lander and rover entered Mars' atmosphere, the spacecraft endured a similar procedure to the "seven minutes of terror" that NASA's Mars rovers have experienced when attempting soft landings on Mars....


It appears to be drawing a nine-dash-line in ever-widening circles around the landing area. 

Sorry, that's a lie. I was thinking about China's rather ridiculous South China Sea claim and wires got crossed:

At least The Philippines, Indonesia, Brunei, Malaysia and Vietnam think it's ridiculous. 
China is dead serious.

"Revisionist Glaciology: Better Iceberg Illustrations Show Undersea Surprises"

 Ah hell. I saw "Revisionist Glaciology..." and thought I was in for another romp akin to 2016's:

Glaciers, gender, and science
A feminist glaciology framework for global environmental change research


Glaciers are key icons of climate change and global environmental change. However, the relationships among gender, science, and glaciers – particularly related to epistemological questions about the production of glaciological knowledge – remain understudied. This paper thus proposes a feminist glaciology framework with four key components: 1) knowledge producers; (2) gendered science and knowledge; (3) systems of scientific domination; and (4) alternative representations of glaciers. Merging feminist postcolonial science studies and feminist political ecology, the feminist glaciology framework generates robust analysis of gender, power, and epistemologies in dynamic social-ecological systems, thereby leading to more just and equitable science and human-ice interactions.....

But no.

From 99% Invisible:

Everyone has seen renderings of icebergs with small hills on top and vast spikes protruding into the depths, appearing to embody common knowledge that 90% of an iceberg sits underwater. But as interested scientists are quick to point out: these iconic configurations don’t reflect the way huge chunks of ice actually float in the world’s oceans.

Typical but misleading illustration of an iceberg above and below the surface

When glaciologist and PhD student Megan Thompson-Munson posted a more realistic watercolor illustration of an iceberg, it stirred up a lot of attention, but that was just the tip of the proverbial…well, you know.....

....MUCH MORE, including catberg

While I am thinking of things intersectional here is a photo of one of the icebergs claimed to be the one whose path intersected that of the Titanic, taken by a 17 year old passenger on the rescue ship Carpathia:


First authentic photograph taken by Miss Bernice Palmer, who was on board the “Carpathia”, showing iceberg and icefield run into by the Titanic, which caused the greatest marine disaster.
First images of the icebergs and ice field on the morning of April 15th, 1912. Bernice saw debris and deck chairs floating in the ice field. She then realized the magnitude of the tragedy. (Bernice Palmer | Smithsonian)

On the back of this photograph, Bernice wrote:
“[The] Titanic struck a North Atlantic iceberg at 11:40 PM in the evening of 14 April 1912 at a speed of 20.5 knots (23.6 MPH). The berg scraped along the starboard or right side of the hull below the waterline, slicing op the hull between five of the adjacent watertight compartments. If only one or two of the compartments had been opened, Titanic might have stayed afloat, but when so many wer sliced open, the water-tight integrity of the entire forward section of the hull was fatally breached. Titanic slipped below the waves at 2:20 AM on 15 April. The Cunard Liner RMS Carpathia arrived at the scene around two hours after Titanic sank, finding only a few lifeboats and no survivors in the 28F degree water. Bernice Palmer took this picture of the iceberg identified as the one which sank Titanic, almost certainly identified by the survivors who climbed aboard Titanic. The large iceberg is surrounded by smaller ice floes, indicated how far north in the Atlantic Ocean the tragedy struck.”

There are a few other candidates that were photographed before and after the disaster.

"Expert: Italian Mafia has Mastered Complex Economic Schemes"

Credit default swaps? Maturity transformations? Let's see what these fellows are up to.

From the Organized Crime and Corruption Reporting Project:

The Italian mafia is no longer just a violent gang running local rackets and smuggling drugs, but has mastered complex financial operations that can impact the country’s economy, experts said following a massive bust of money laundering operations run by several Italian mafia groups. 

In a massive sweep up earlier this month, authorities arrested more than 70 members of Italy’s ‘Ndrangheta and Camorra mafia groups, the Guardia Di Finanza announced in a statement.

The operation intended to uncover Italian organized crime’s infiltration into the mineral and gas sector, particularly the country’s so called ‘white pumps’ - unbranded stations that are common around the country.

“We saw how competent they really are, and the power they have to move the whole economy,” Sergio Nazzaro, an Italian writer and expert on the mafia told the OCCRP on Monday. “It’s not the usual few guys trying to scam some money, it’s something far more deep.”

The days when the mafia was more involved in street crimes and operating on local levels is long gone, Nazzaro said. “We know that when they need violence they will use it, but now they just need to control the economy.”

Almost every significant Italian mafia group was involved in some scheme involving the sector, together laundering more than US$200 million, according to the Guardia Di Finanza. 

One group the Italian authorities focused on was the Camorra’s Moccia clan, which operates in and around Naples and Rome.

The clan “is one of the most powerful and dangerous Camorra organizations on the national scene,” the Guardia Di Finanza said. The group is well known for its ability to infiltrate the legal economy, they said, and has embedded itself in the oil sector.

The group would largely use the oil business as a way to launder their funds gained from other illicit enterprises.

“For the collection of large cash sums deriving from fraud, the Moccia clan made use of a real parallel organization, autonomous, structured, and suitable for the recycling of their financial resources,” Guardia di Finanza said.

As for ‘Ndrangheta, Italy’s most powerful mafia group from the country’s Calabria region, authorities focused on the Mancuso clan which is at the center of the so-called maxi-trial currently underway in Italy. 

With more than 400 defendants, the trial is the largest since the historic maxi-trials of the 1980s and 90s which targeted the Sicilian Cosa Nostra.

Authorities uncovered two major fraud schemes run by the ‘Ndrangheta.

“Two fraud systems have been ascertained, concerning the oil & gas trade, which involved 12 companies, five fuel depots and 37 road distributors,” the statement said. “The fraud system consisted in the import, mostly from Eastern Europe, of artificial petroleum products (mixtures) and lubricating oils, subsequently marketed as diesel for transport, resulting in substantial gains due to the different level of taxation.”

In another scheme, the mafiosi mislabeled fuel for transport as agricultural fuel which has a subsidised tax rate....


So no SPACs or PIPES yet. 

Their American brethren were doing blind pools and death-spiral convertibles back in the '90's while the Russian mafiya was all over the gasoline tax racket in the '80's, to the tune of billions, cash.

"The Technology Used To Protect Nord Stream 2 From Sabotage"

Be wary about this information. 

1) The source, as can be seen by recent posts, is very pro-Russian.

2) Some of the details of the pipeline's defenses are very difficult to verify.

On the other hand some of the things they highlight are in fairly widespread use though not spoken of all that much.

From StalkerZone, February 13, 2021:

Advanced monitoring systems, minesweepers, and unmanned mini-submarines

The hysteria surrounding the Nord Stream 2 gas pipeline does not subside. While the Danish authorities name the final terms of construction, the US continues to put pressure on Europe, threatening heavy sanctions. Kiev adds fuel to the fire, which puts the frighteners on by citing the terrible economic consequences of stopping gas transit through Ukraine. Berlin has its own arguments. While the standoff is going on in the political plane, and no one can rule out a military option – for example, sabotage, we found out how Nord Stream 2 is protected.

“I believe that, in fact, there is little that can threaten Nord Stream 2,” says military expert Aleksey Leonkov. “Firstly, it is technically extremely difficult to commit sabotage, and even at the bottom of the sea. There is a need for special deep-sea underwater vehicles. And not all states have them.”

Therefore, even if a section of Nord Stream 2 is blown up, it will be clear that the sabotage is the work of state intelligence agencies. This can no longer be attributed to extremist terrorists. In addition, the statistics speak for themselves: So far, there has not been a single terrorist attack or deliberate bombing on underwater oil pipelines, gas pipelines or on the same communication cables in the Atlantic. The condition of such objects is constantly carefully monitored with the help of various technical means. As for the gas pipeline, this is a constant check of the pressure and the amount of gas flow in the pipe, at the exit from Russia and at the entrance to Europe.

“So no one will walk along the Nord Stream 2 pipe with automatic weapons and it is also not necessary to entangle it with a ‘thorn’,” the expert believes.

He was skeptical about the idea of using the situation around Nord Stream 2 as a pretext for increasing the military presence in the Baltic.

“What for? We have enough strength there. More potential of the Baltic Fleet will increase, if necessary, without any flows,” says Leonkov. “These are things in different planes, and they do not affect each other in any way.”

Nevertheless, the expert is convinced that the monitoring system should be fine-tuned to the smallest detail.

“Russia is responsible as a supplier. The contract clearly states how much we pump and with what pressure. If something happens, the gas line is instantly blocked, a repair team is formed, the accident site is determined, and with the help of, for example, special underwater welding or robotic manipulators, the malfunction is eliminated.”

At the same time, it is known that Russia also has special unmanned underwater vehicles that can be used as a monitoring tool. One of them is the “Galtel” robotic complex. A few years ago, this deep reconnaissance sapper had already been tested off the coast of Syria. It was busy searching for unexploded ordnance and guarding the waters off the port of Tartus. In parallel with this, “Galtel” helped to create the most detailed map of the depths.

“Galtel” navigates under water using special sonar navigation systems. The fact is that neither the Russian GLONASS nor the overseas GPS reaches the depths, so reference beacons are used, which set the coordinates of the movement of the underwater vehicle. But the sight of Galtel is much more important – it can make out even small camouflaged objects on the seabed – from a saboteur swimmer to a matchbox stuck in the silt....



Farmland: "Bullish Land Price Outlook"

As goes the farmgate commodity basis, so goes the entire rural economy edifice, banking and finance, retail provisioners, land prices, the whole thing built upon the price of wheat. And corn. And soybeans. and cotton. And marijuana.

From DTN Progressive Farmer:

Ag Land Prices Remain Strong on High Demand, Rising Farm Income

There are many good reasons Chad Ratermann says he'll buy farmland, but the one that's always in the back of his mind has nothing to do with soil quality or field location. He's thinking about how to best give the family's next generation a leg up.

"I started thinking about that before I even had kids," says the dad of two. "I always wanted to make sure they had an opportunity to farm if they wanted it. Every morning I wake up planning on passing it down."

Ratermann, in his mid-40s, has a son and a daughter. His dad died when he was just 24, leaving him and his brothers, Darin and Craig, to grow up fast, taking what their dad left them as a start. From there, the brothers put a lot of hard work and determination into building Ratermann Brothers' Grain and Livestock, based at Bartelso, Illinois.

The diversified operation includes corn, soybean and wheat production, as well as hog finishing and cattle feeding businesses.

The three brothers are always looking for a chance to add good acreage to the mix, and in March 2021, they bought two tracts, totaling about 156 acres. The parcels were offered as part of a near-900-acre auction of farmland across Montgomery and St. Clair counties, through Indiana-based Schrader Real Estate and Auction Company. The average price for those tracts was $8,256 per acre, reflective of current prices in the area.

Ratermann liked the tracts because of their location and that they included good road frontage on two sides. The area is about an hour's drive from the base operation, but Ratermann says they are willing to look outside their immediate area when adding ground because heavy livestock use at their home base of operation drives land prices to the higher side.

"Overall, I'm looking for the right location, good soil types and I'm considering the way the land lays. Every area is different in terms of productivity, and I base price off of that," he says. Ratermann notes he looks for cropland that will give him corn yields of 185 to 200 bushels per acre (bpa), soybean yields of 60 to 75 bpa and wheat yields of 75 to 90 bpa.

Does Ratermann think land prices are too high? He says it's hard to put a number on where the land market should be or what makes sense. Even with higher commodity prices today, he doesn't believe most cropland actually cash-flows. But Ratermann says this isn't the only consideration when it comes to owning land.

"It's true that when we started buying land for the operation it was considerably cheaper, but so were commodity prices and yields," he points out. "I believe land is always a good investment, even with the ups and downs, especially if you're looking to hold it long term. That's the kind of buyer I am, long term. I'm looking not just to my future, but the future of the family for generations to come."


Ratermann's story is not a new one to R.D. Schrader, head of Schrader Real Estate and Auction. He says even as land prices went north of the $10,000-per-acre mark, a majority of the buyers he saw, and continues to see, planned to farm the land and pass it on to future generations. Farmland is not as much of an investment sometimes as a means of building on a chosen way of life.....


Also at DTN Progressive Farmer:


And more next week. In the meantime remember our oft-stated premise:

Farmland is worth it's discounted cashflow. Period.
It may sell for more but at some point it returns to trend. It can correct either in price or in time.

Trouble In Repo Land—The QE Endgame: A Big Problem Is Emerging For The Fed

There is barely enough collateral in the repo market right now to cover all of the cash being invested. 

From ZeroHedge:

For the second time in three weeks, the US Treasury sold $40BN in 4-week bills at a price of 100.000% representing a rate of 0.00%.

To be sure, Bills had printed at 0.000% at auction previously, but that was largely during the reserve glut days of 2015.

So why now? The same reason usage of the Fed's Reverse Repo facility has soared in recent weeks from zero to over $100 billion at the end of April, hitting a whopping $235 billion today... investors choose to directly transact with the Fed - where only positive rates are allowed - rather than the open market where collateral rates have frequently been negative in recent weeks as Curvature's Scott Skyrm explained in this note from April 26:

Overnight rates are low. Too low by all normal standards. The fed funds rate is well below the mid-point of the fed funds target range and the Repo GC rate is at zero; often trading negative. Zero percent interest rates are forcing billions of dollars of cash into the Fed's RRP facility.

While this This is a delightful case of deja vu irony - the Fed is taking Treasurys out of the market through QE purchases and putting them right back in via the RRP - it is also distorting the Repo market, and although the Fed can fix this aberration by hiking the IOER or RRP rates, it has so far refused to do so. 

But the ongoing surge in reverse repo usage masks a far bigger problem in store for the Fed, and it's why Curvature's Skyrm writes that "now is a pretty good time to start talking about the size of the SOMA portfolio, even if some people don’t want to talk about it."

Why is the surge in reverse repo linked to tapering? Skyrm explains, by posting a rhetorical question:

"What are the next steps for tapering purchases and what will the SOMA portfolio look like when we're done? What will the market look like?"

The repo strategist then reminds us that even when the Fed starts tapering, the Fed balance sheet will continue to grow indefinitely, if at a slower pace, flooding the system with the same reserves that are now desperate to buy Bills at 0.000% or be parked at the Fed (for 0.000%).

Talk of tapering feels like when you're getting ready for a dinner out. You're ready and it's time to go. You check on your spouse and they haven't even started getting ready yet! As of last week, the SOMA portfolio stood at $7.185 trillion and the Fed continues purchases at $120 billion a month. If and when tapering starts, the purchases won't go from $120 billion to zero in one announcement. The purchases will gradually slow - going from $120 billion, to maybe $100 billion, to maybe $80 billion, to $50 billion, to $20 billion....


"Mind the (rate expectation) gap"

Unless the Fed engages in some form of financial repression long rates will continue to rise, followed by short rates as the Fed sloooowly steps on the brakes.

From Blackrock, May 10:

A disconnect
Markets are still grappling with the Federal Reserve’s new framework, leading to a disconnect between market pricing and the Fed’s projections for rates.
Forward looking estimates may not come to pass. Sources: BlackRock Investment Institute, Federal Reserve and Federal Reserve Bank of New York, with data from Refinitiv Datastream, May 2021. Notes: The chart shows expectations for the federal funds rate, the Fed’s policy target. Market pricing is based on futures on the U.S. dollar Secured Overnight Financing Rate. We use the median forecast in the March 2021 Survey of Market Participants by the New York Fed. The BII assumption is part of our economic projections in our capital market assumptions. The Fed median dot plot comes from the January 2021 Summary of Economic Projections.
Markets are pricing in a liftoff from near-zero policy rates as early as next year, even though the Fed through its new framework has committed to stay behind the curve on inflation. We caution against extrapolating too much from strong near-term activity data amid a powerful restart. We see a high bar for the Fed to change its policy stance and believe this may be underappreciated by markets.

The Fed has reiterated its intention to stay behind the curve on inflation under its new framework that implies inflation overshoots to make up for past misses. Yet this has been met with some skepticism in markets, against the backdrop of a powerful economic restart. Current market pricing and consensus expectations suggest the federal funds rate, the Fed’s policy rate, would start rising much sooner than Fed officials’ own projections would indicate. See the chart above. We see two reasons for this disconnect. First, investors may be over-extrapolating from near-term growth data amid the powerful economic restart. We view the Covid shock as more akin to a natural disaster followed by a rapid “restart” – instead of a traditional business cycle recession followed by a “recovery.” That implies the huge near-term growth spurt will be transitory. And second, we believe many are still wedded to the central bank’s old policy framework, and may underestimate the central bank’s commitment to push inflation above target.

Market chatter about a potential tapering of the Fed’s asset purchases has gotten louder, yet we don’t see the Fed discussing this imminently. Tapering is the first step towards normalization of Fed policy, but even a discussion later this year does not mean the liftoff is close. There is a risk the discussion could trigger market volatility or be miscommunicated by the Fed. We believe investors should look through any such bouts of volatility, as our new nominal theme implies that the Fed will likely be much slower than in the past to raise rates in the face of rising inflation.

Inflation – not the near-term growth outlook – is key to the Fed’s rate outlook under the new framework, in our view. We believe two important developments would need to take place before the Fed considers a liftoff. First, the realized core personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, should stay at or around the Fed’s 2% target for a sustained period of time. The current inflation overshoot doesn’t meet the bar as the Fed views it as driven by transient factors. We also see uncertainties around the near-term persistence of the overshoot as the restart has led to unusual supply and demand dynamics. This is why we have recently closed our overweight in inflation-linked bonds over the tactical horizon. Second, the Fed’s inflation forecast would need to rise from current levels and point to a prolonged period of moderately above-target inflation. What could potentially pull forward the Fed’s timetable for a liftoff? An upward spiral in prices and wages set in motion by behavior of individuals and firms could be one driver, in our view....