Tuesday, June 22, 2021

U.S. Tornado Count Running Below Average

In the post immediately below I may have left the impression that the tone of reinsurer's communicationss is solely based on commercial greed, and that may not be the whole story.

It might be that the business attracts a pessimistic, borderline despondent slice of the business community, exemplified by Eeyore the Actuary:

"It's snowing still," said Eeyore gloomily.
"So it is."
"And freezing."
"Is it?"
"Yes," said Eeyore. "However," he said, brightening up a little, "we haven't had an earthquake lately."
-The House at Pooh Corner
So, in an attempt to bring a bit of joy to the industry, here's the current tornado count as compared with recent years:

U.S. Annual Tornado Trends

And that's the weather. Now back to Eeyore for some weekend fun:

"Good morning, Pooh Bear," said Eeyore gloomily. "If it is a good morning," he said. "Which I doubt," said he.
"Why, what's the matter?"
"Nothing, Pooh Bear, nothing. We can't all, and some of us don't. That's all there is to it."
"Can't all what?" said Pooh, rubbing his nose.
"Gaiety. Song-and-dance. Here we go round the mulberry bush."
-Winnie the Pooh

"Inflation to “sharply increase” hurricane claims costs, warns Swiss Re"

Over the years we've mentioned that these big companies have a predilection toward warning about this, that and the other thing:

From "No Surprise: Chile Leads to Reinsurance Rate Increase Debate" BRK-A; BRK-B

No kidding.
A brisk breeze gets the boys in Omaha, Zurich, Munich and London (Lloyds) talking about premium increases.
Not to mention the herverzekering crowd in Amsterdam, they're tough bastards....

And yet, they somehow survive.

From Artemis:

Swiss Re has warned that insurance and reinsurance firms will face increased indemnity costs after land-falling hurricanes in the United States this year, as inflationary factors are set to drive claims amounts higher.

In summarising what to expect from the 2021 Atlantic hurricane season, according to the forecasts, Swiss Re also touches on what is a key issue for the industry this year.

Inflation is driving prices higher and while the insurance and reinsurance industry may have been hoping that claims inflation from litigious claims could be close to reducing, thanks to legislative efforts in Florida, there are other inflationary factors that are a cause for concern.

Overall, economic conditions are increasingly tipping towards inflation, as a side-effect of the pandemic and related financing.

“Economic factors such as inflation also affect hurricane risk assessment for the insurance industry. US inflation is rising, fed by the economic recovery and consumer spending as well as fiscal stimulus from the crisis,” Swiss Re explained.

Chief among the inflationary factors being seen that will affect the hurricane season for the insurance and reinsurance industry are prices of materials and costs in thee construction industry.

Swiss Re said that, “Construction prices in particular are surging due to a booming housing market.”

We covered this exact topic in a recent Artemis Live video interview, where we discussed how inflation could be a driver of higher costs this hurricane season, as well as for other major catastrophe or property claims events.

Swiss Re believes that the industry faces the prospect of elevated industry losses from hurricanes this year, because of the inflationary factors impacting prices and in particular those related to repairs of properties....


So though the fact of higher prices for reconstruction is a reality, I think the reinsurers will somehow, God willing, make it through this challenge too.

Creighton's "Rural Mainstreet Index Remains in Solid Growth Territory: Only 30% of Bankers See Inflation Gain as Transitory"

From Creighton University's Heider College of Business:

  • Overall index remains at a high level indicating strong growth.
  • Despite recent solid job gains, U.S. Bureau of Labor Statistics data indicate that the Rural Mainstreet nonfarm employment remains 2%, below its pre-COVID-19 level.
  • In three states, Kansas, Missouri and Nebraska, current employment exceeds pre-pandemic levels.
  • For the first time since 2013, Creighton’s survey has recorded nine straight months of farmland prices above growth neutral.
  • Survey is tracking the best growth in agriculture equipment sales since 2012.
  • Only 30% of bankers expect the current increase in inflation to be transitory.
  • More than three-fourths of the bankers think the Federal Reserve should begin raising interest rates before the end of 2021.

OMAHA, Neb. (June 17, 2021) – For the seventh straight month, the Creighton University Rural Mainstreet Index (RMI) remained above growth neutral. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The overall index for June fell to still strong 70.0 from May’s record high of 78.8. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

Approximately, 46.7% of bank CEOs reported that their local economy expanded between May and June.

“Strong grain prices, the Federal Reserve’s record-low interest rates, and growing exports have underpinned the Rural Mainstreet Economy. Even so, current rural economic activity remains below pre-pandemic levels,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.

However, several bankers raised future concerns. Steve Simon CEO of South Story Bank and Trust in Huxley, Iowa, reported, “Continued dry conditions will start to have an effect on markets and crops soon”

Bankers were asked to name the greatest threat to 2021-22 bank operations. Approximately one-fourth identified a downturn in farm income, and an equal one-in-four named rising government regulation as the greatest threats.

Larry Winum, CEO of Glenwood State Bank in Glenwood, Iowa, named another concern stating that, “In my view, $29,000,000,000,000 in total debt with no real plan to reduce that debt, or balance the annual budget is the biggest threat to our economy's success.”

He argues that neither political party, nor the Federal Reserve, has engaged in a serious discussion to solve the problem.

Farming and ranching: For a ninth straight month, the farmland price index advanced significantly above growth neutral. The June reading slipped to a very strong 75.9 from May’s 78.1. This is first time since 2013 that Creighton’s survey has recorded nine straight months of farmland prices above growth neutral.

The June farm equipment-sales index rose to 71.6 from 67.9, its highest level since 2012, and up from May’s 67.9. After 86 straight months of readings below growth neutral, farm equipment sales bounced into growth territory for the last seven months. This is the best growth in this index since 2012.

Banking: The June loan volume index declined to 54.9 from May’s 59.0. The checking-deposit index fell to a very solid 70.0 from May’s 87.9, while the index for certificates of deposit, and other savings instruments, slumped to 35.0 from 43.9 in May.

More than half, or 53.3% of the bank CEOs judge the current uptick in the consumer price index (CPI) a. Only 30% expect the increase to be transitory.

More than three-fourths of the bankers think the Federal Reserve should begin raising interest rates before the end of 2021....


Monday, June 21, 2021

Swedish Fintech, Klarna, Now At $45 Billion Valuation On Latest Softbank Investment

 Just last September we were posting ""Klarna, Europe’s highest valued fintech startup, raises $650M funding round at $10.6 billion valuation"" and then I laid down to take a nap and, well, wow. 

That's quite a jump in valuation. For a private company. In nine months

From TechCrunch, June 10:

Fintech giant Klarna raises $639M at a $45.6B valuation amid 'massive momentum' in the US

Just over three months after its last funding round, European fintech giant Klarna is announcing today that it has raised another $639 million at a staggering post-money valuation of $45.6 billion.

Rumors swirled in recent weeks that Klarna had raised more money at a valuation north of $40 billion. But the Swedish buy now, pay later behemoth and upstart bank declined to comment until now.

SoftBank’s Vision Fund 2 led the latest round, which also included participation from existing investors Adit Ventures, Honeycomb Asset Management and WestCap Group. The new valuation represents a 47.3% increase over Klarna’s post-money valuation of $31 billion in early March, when it raised $1 billion, and a 330% increase over its $10.6 billion valuation at the time of its $650 million raise last September. Previous backers include Sequoia Capital, SilverLake, Dragoneer and Ant Group, among others.

The latest financing cements 16-year-old Klarna’s position as the highest-valued private fintech in Europe.

In an exclusive interview with TechCrunch, Klarna CEO and founder Sebastian Siemiatkowski said the company has seen explosive growth in the U.S. and plans to use its new capital in part to continue to grow there and globally.

In particular, over the past year, the fintech has seen “massive momentum” in the country, with more than 18 million American consumers now using Klarna, he said. That’s up from 10 million at the end of last year’s third quarter, and up 118% year over year. Klarna is now live with 24 of the top 100 U.S. retailers, which it says is “more than any of its competitors.”....


If interested see also April's "Startup Continent: The Most Well-Funded Tech Startups In Europe"

"Porsche to set up joint venture with German battery maker"

From Reuters, June 20:

Volkswagen's luxury sports car unit Porsche AG is setting up a joint venture with Customcells to produce high-performance batteries that will significantly reduce charging times, the company said on Sunday.

The partnership with Customcells, a company in southern Germany specialising in lithium-ion cells, will aim to produce car batteries with higher energy density than prototypes used in Porsche's current electric cars, the company said in a statement.

European carmakers are pushing to reduce their dependence on Asia for batteries as they roll out all-electric models to meet stricter emissions targets in the European Union.

In addition to cutting charging time, improving energy density will mean reducing the amount of raw material needed in batteries to achieve the same range. It will also cut battery production costs, making electric cars more affordable....


"China starts work on the world’s largest LNG storage unit"

I'm beginning to think that, what with the coal and the oil and the gas and all, that China doesn't plan on giving up the hydrocarbons any time soon.

And as U.S. climate envoy John Kerry said:

...“Not when almost 90 percent of all of the planet’s global emissions come from outside of US borders. We could go to zero tomorrow and the problem isn’t solved,”...

From RT who seem to be keeping an eye on Chinese natural gas news. Go figure. 

China’s National Offshore Oil Corporation (CNOOC) has expanded the construction of what will be the world's largest liquefied natural gas (LNG) storage tanks in Yancheng Binhai Port Industrial Park in Jiangsu province.

Overall, six tanks will be built at a cost of 6.1 billion yuan ($955 million), the company said. Upon completion at the end of 2023, the full project will have 10 tanks, including six new ultra-large tanks, which will have a total volume of 270,000 cubic meters.

According to the company, the Jiangsu LNG Binhai Receiving Station, which will house the six LNG storage tanks, will have an annual LNG processing capacity of 6 million metric tons and will become the largest LNG storage base in China.....


Platts' "Commodity Tracker: 4 charts to watch this week"

 From S&P Global Platts, June 21:

The potential imbalance between surging demand for oil as economies recover from the coronavirus pandemic and uncertain supplies from Iran and OPEC tops this week's pick of market trends. Plus, Asian refiners look for cheaper crude, US federal lease sales may resume and Pacific US markets rethink natural gas storage options.

  1. 1. Strong demand supports energy prices as Iran sanctions relief and OPEC uncertainty remains

S&P GSCI index energy vs non energy performance

What's happening? Energy prices continue to rise, particularly now against non-energy commodity indices. Oil has led the rise in the energy complex, but US natural gas has posted gains too. Tightening of oil balances had been expected in the middle of this year and this has now been increasingly reflected in the performance of the energy complex. Since early June, Dated Brent has pushed above $70/b and now extending to about $73/b.

What's next? Markets are focusing on the negotiation of a nuclear deal between world powers and Iran, which briefly resumed after the Iranian presidential election concluded and was then paused again, as well as the upcoming July 1 OPEC+ meeting in which supplies for August and potentially beyond will be set. Demand uplift over the summer months, along with delayed supplies of Iranian barrels, means oil market supply will continue to most likely lag demand, even if OPEC continues to cautiously increase output. This will support continuing stock draws. Against this backdrop has been a noted retrenchment in some non-energy commodities, particularly industrial metals. Until oil supplies catch up with demand normalization, perhaps in the shoulder months of autumn, energy commodity prices should remain supported....


Fun Fact: U.S. Junk Bonds Have A Negative Real Yield For The First Time

Now, if we can find a big enough assortment of junk strips (hate paying interest on shorts, hate it) we should be able to sit back and count the hypothetical profits. Unless the default rate somehow goes negative as well. In which case I'll be joining Musk for the one-way ride to Mars.

From Upfina, June 18: 

....Why Is Real Junk Negative?

As you can see from the chart below, real high yield debt is negative for the first time ever. Many new investors must be wondering what is going on. It’s not that exciting. In fact, it’s boring. There was a temporary spike in CPI due to base effects and the economic reopening. This situation was combined with near record low rates and very tight spreads. Rates are low because of low population growth. Spreads are tight because of the easy Fed policy and the lack of expected risks in the economy.

The Fed quickly limited the damage in March 2020 when spreads expanded due to the heightened risk environment. When the financial conditions index indicates stress, spreads widen because it’s tougher for highly indebted firms to raise capital. Now, corporations are in fine shape because they were allowed to raise a lot of debt and equity last year. In fact, many now have extra cash. This is leading to higher dividends, share buybacks, and capex. With rates so low and spreads so tight, high leverage is encouraged by investors. However, higher leverage means higher risk. You don’t want to ignore leverage risk because financial conditions can worsen before you realize you must sell.....

....MUCH MORE, on a variety of topics

Recently from Upfina, June 15:
Upfina: "This Is The Inflation Peak For Now"
It would be unfair to call Upfina "Inflationistas" but they are definitely inflation wary, so for them to use that headline might be important....

Agricultural Commodities: What Will Impact Prices In the Next Three Weeks

 Following up on "Agricultural Commodities: Whither the Weather", immediately below.

A very smart piece from AgWeb, June 18:

Jerry Gulke: What Are These Markets Trying to Tell Us?

....“Weather forecasters are saying sometimes in the next two weeks you could get 1” to 2” of rain over across the majority of the Midwest,” Gulke says. “We had rain come through last night in northern Illinois. We had three systems come through, and we got a total of a tenth of an inch. We had a 95% chance of rain. We did get rain — about 17 drops.”

Gulke says the markets are quickly shifting gears to focus on the June 30 Acreage report. Early estimates range from record planted acres to no changes from the March 31 Prospective Plantings report.

“We’re in the camp of about 3 million acres more of corn than what was estimated in March,” Gulke says. “If you multiple 3 million harvested acres by 180 bu. per acre you get 540 million bushels. If we get the acres and the yield doesn’t fall too far, we can offset a crop problem in the Western Corn Belt and northern Plains.” 

That level of acres and a lower yield, he says, does not justify $6 corn and certainty not $7 or $8 corn....

....MUCH MORE, including audio   

Combine [!] the June 30th report with the July WASDE and you have a recipe for action baby, action.

Cue Viva Las Vegas:

Agricultural Commodities: Whither the Weather

Attentive reader may have noticed we are not making as much noise about the ongoing drought in California as some folks are. As long as the government is sending water into the Pacific so the smelt can swim  it is hard to get worked up about cries of emergency. Lake Powell may drop far enough to cut into Cali's electricity supply but it wasn't me ignoring the lessons of history. Seven years ago we were posting: "California: The Last 200 Years Were The Happy Time For Weather, Get Ready For A Return to The West Without Water".

And every year we post the graph from "The Economics of the California Water Shortage"

Where this gets really interesting is when you throw a historical perspective on the current California drought:

—San Jose Mercury-News "California drought: Past dry periods have lasted more than 200 years, scientists say"

Regarding the drought in the desert southwest that is threatening Phoenix, Las Vegas and tangentially Los Angeles, ummm "Desert Southwest". 

Back in 2008 we posted these handy little maps
And noted:

...The relationship between drought in the continental US and the phases of the Pacific Decadal Oscillation (PDO) and the Atlantic Multidecadal Oscillation (AMO). The most severe droughts occur when the PDO is in a negative phase, and the AMO is in a positive phase....
The ocean SeaSurfaceTemperature anomalies are currently negative PDO and positive AMO i.e. the map at bottom right.

North American drought frequency

Here is the most recent Drought Monitor map:


Hey, looky there!!! Credit for the forecast maps must go to:

McCabe G J et al. PNAS 2004;101:4136-4141 
From McCabe (2004):
More than half (52%) of the space and time variance in multidecadal drought frequency over the conterminous United States is attributable to the Pacific Decadal Oscillation (PDO) and the Atlantic Multidecadal Oscillation (AMO). An additional 22% of the variance in drought frequency is related to a complex spatial pattern of positive and negative trends in drought occurrence possibly related to increasing Northern Hemisphere temperatures or some other unidirectional climate trend. Recent droughts with broad impacts over the conterminous U.S. (1996, 1999-2002) were associated with North Atlantic warming (positive AMO) and northeastern and tropical Pacific cooling (negative PDO). Much of the long-term predictability of drought frequency may reside in the multidecadal behavior of the North Atlantic Ocean. Should the current positive AMO (warm North Atlantic) conditions persist into the upcoming decade, we suggest two possible drought scenarios that resemble the continental-scale patterns of the 1930s (positive PDO) and 1950s (negative PDO) drought.

The most recent monthly readings for the AMO, January - May 202, are positive:

 2021    0.137    0.150    0.123    0.065    0.082

And the PDO (on blogroll at right) is negative:


So there's a drought where McCabe predicted there would be a drought.

This is getting to be a longer post than I had intended and we've yet to get to the real moneymaker over the next couple weeks: there's been rain over the central growing region of the U.S. and there is more forecast so enough with the scary map with all the red on it. (it is scary but as noted by McCabe on average 25% of the U.S. is in drought).

Coming up, some big reports.

Raghuram Rajan on The Boom and Bust in Farm Land Prices in the United States in the 1920s

From the former head of the Reserve Bank of India, now hanging his hat at the University of Chicago's Booth School of Business (comfy endowed chair):
The Anatomy of a Credit Crisis: The Boom and Bust in Farm Land Prices in the United States in the 1920s (with Rodney Ramcharan), American Economic Review , April 2015
How important is the role of credit availability in inflating asset prices? And does greater credit availability make the economy more sensitive to changes in sentiment or fundamentals?  In this paper we address these questions by examining the rise (and fall) of farm land prices in the United States in the early twentieth century, attempting to identify the separate effects of changes in fundamentals and changes in the availability of credit on land prices. We find that credit availability likely had a direct effect on inflating land prices. Credit availability may have also amplified the relationship between the perceived improvement in fundamentals and land prices. When fundamentals turned down, however, areas with higher ex ante credit availability suffered a greater fall in land prices, and experienced higher bank failure rates. We draw lessons for regulatory policy.
Does credit availability exacerbate asset price inflation? Are there long-run consequences? During the farm land price boom and bust before the Great Depression, we find that credit availability directly inflated land prices. Credit also amplified the relationship between positive fundamentals and land prices, leading to greater indebtedness. When fundamentals soured, areas with higher credit availability suffered a greater fall in land prices and had more bank failures. Land prices and credit availability also remained disproportionately low for decades in these areas, suggesting that leverage might render tem-porary credit-induced booms and busts persistent. We draw lessons for regulatory policy. (JEL E31, G21, G28, N22, N52, Q12, Q14 )
Asset price booms and busts often center around changes in credit availability (see, for example, the descriptions in Minsky 1986 and Kindleberger and Aliber 2005; theories such as Geanakoplos 2010; and the evidence in Borio and Lowe 2002, Mian and Sufi 2008, and Schularick and Taylor 2009). Some economists, however, claim that the availability of credit plays little role in asset price movements (e.g., see Glaeser, Gottlieb, and Gyourko 2010).

In this paper, we examine the boom (and bust) of farm land prices in the United States in the early twentieth century, using the variation in credit availability across counties in the United States to tease out the short- and long-run effects of the availability of credit on asset prices.The usual difficulty in drawing general lessons from episodes of booms and busts in different countries is that each crisis is sui generis, driven by differences in a broad range of hard-to-control-for factors.

The advantage of focusing on farm lending in the United States in the early twentieth century is that lending was local. So in effect, we have a large number of distinctive sub-economies, specifically, counties within each state, with some common (and thus constant) broad influences such as monetary policy and federal fiscal policy. Ceteris paribus, the more the banks in a county, the greater is the competition for depositor funds as well as the competition to offer credit, and closer is any bank to a potential customer, hence greater is the potential supply of intermediated funds. So our proxy for credit availability, through much of the paper, will be the log number of banks in a county. We rely on differences in bank regulations across states and Federal Reserve districts to allow us to isolate exogenous differences in credit availability.In addition, we have an exogenous boom and bust in agricultural commodity prices in the years 1917–1920, to which counties were differentially exposed.

The reasons for the commodity price rise are well documented. The emergence of the United States as an economic power helped foster a worldwide boom in commod-ities in the early twentieth century. The boom, especially in the prices of wheat and other grains, accelerated as World War I disrupted European agriculture, even while demand in the United States was strong. The Russian Revolution in 1917 fur-ther exacerbated the uncertainty about supply, and intensified the commodity price boom. However, European agricultural production resumed faster than expected after the war’s sudden end, and desperate for hard currency, the new Russian gov-ernment soon recommenced wheat and other commodity exports.
As a result, agricultural commodity prices plummeted starting in 1920 and declined through much of the 1920s (Yergin 1992; Blattman, Hwang, and Williamson 2007).1 Because different counties differed in the kind of crops they were most suited to produce, and each crop was affected to a different extent by the events in Europe, we have county by county variation in the perceived shock to fundamentals. Correcting for differences in the positive shock to fundamentals, we can tease out the effect of the availability of credit on land prices in 1920 (the peak of the boom).
We find that both fundamentals and credit availability mattered, but there was also a positive interaction effect; the shock generally boosted land prices even more in counties that had greater credit availability. We also explore the channels through which credit might have operated—whether it allowed marginal land to be brought into opera-tion, facilitated the more intensive use of existing land, allowed more investment in machinery, improved crop yields, or facilitated more leverage.
Credit availability seems to be primarily associated with higher leverage at the peak of the boom.The post-1920 collapse in commodity prices, induced by the resumption of European production, also allows us to examine the aftermath of the boom. Importantly, agricultural incomes fell, but only to levels before the acceleration in commodity price growth that started in 1917. This allows us to focus on the role of the financial leverage—both at the farm level and at the bank level—that built up in the boom years.
If the role of credit is relatively benign—borrowers simply sell the assets they had bought and repay credit—we should see relatively little independent effect of the prior availability of credit on asset prices, other than what rises the most falls the most. But if purchased assets are illiquid and hard to sell, and leverage cannot be brought down easily, we should see prices fall even more in areas that had easy access to credit. Also, distress, as evidenced in bank failures, should be more pronounced....
....MUCH MORE (39 page PDF)

Capital Markets: "Dollar Surge Stalls"

 From Marc to Market:

Overview: Pressure on equities seen last week carried over into Asia and Europe today. The MSCI Asia Pacific Index fell for the fourth consecutive session, led by more than a 3% decline in the Nikkei. Australia, Taiwan, and Hong Kong bourses fell by more than 1%. European equities opened lower, but have turned higher. The Dow Jones Stoxx 600 is up about a third of a percent in late morning turnover. US futures have found some bids and are up around 0.5%. The US 10-year yield is soft at 1.43%. The 30-year yield, which initially pushed below 2.0% for the first time in six months, is now holding above it. European rates are narrowly mixed. The dollar, which rallied strongly in response to the FOMC, is softer to start the new week. Led by the Antipodeans, sterling, and the euro, the majors are mostly up around 0.2%-0.4% against the greenback. The Japanese yen and Swiss franc are the laggards rising less than 0.10%. Asian emerging market currencies and the Russian ruble are lower, while European currencies, the Mexican peso, and South African rand are posting modest gains. The JP Morgan Emerging Market Currency Index is trying to snap a six-day slide. Gold, too, is posting its first gain in seven sessions near $1785. Oil is firm, with the July WTI, around $72. Copper remains heavy after losing almost 8.5% last week. Steel rebar and iron ore fell in Shanghai earlier today.

Asia Pacific
China kept its land prime rates steady at 3.85% and 4.65% for the 1-year and 5-year, respectively.
It was not surprising, but with rising price pressures, it suggests that Beijing is not too concerned yet. While the PBOC is not providing much extra liquidity beyond what is needed to roll over loans, it is not tightening policy further. Separately, Taiwan has recalled seven of its representatives to Hong Kong in protest of the city's officials pressing harder for all the representatives to take an oath recognizing one-China. This could spill over and impact trade relations.

South Korea continues to report strong trade figures, which are understood as further confirming regional and global recovery. Exports in the first 20 days of June rose 29.5% from a year ago, and when adjusted for the number of working days, it is closer to 34%. Exports to China, Seoul's largest trading partner, rose 7.9%, while shipments to the US rose by more than 41%. Exports to Europe jumped about 48% and 33% to Japan. Exports of semiconductors increased by 28%. Auto shipments surged by more than 62%. Wireless communication product exports rose by a little more than 15%....


Sunday, June 20, 2021

"Nvidia To Invest At Least $100 Million In UK Supercomputer"

Folks are doing some fancy stuff in Britain, what with this and Bezos wanting to build his fusion reactor down-river from Oxford.

NVIDIA would definitely make a good partner for anyone building a supercomputer, three of the top five and six of the top ten fastest 'puters in the world use NVDA's GPU's as accelerators, including NVIDIA's own supercomputer, Selene, which ranks as the fifth fastest.

So whether of not Mr. Huang is able to sway the British regulators on his proposed deal with ARM, this project will be world class.

We'll have more on NVIDIA and supercomputers later this week. For now, from Reuters, June 17:

Nvidia Corp's chief executive on Thursday said the company will spend at least $100 million on a supercomputer in the United Kingdom.

Speaking at The Six Five Summit, CEO Jensen Huang said Nvidia will spend "$100 million, just as a starting point" on the Cambridge-1 supercomputer.

Nvidia had said in October it planned to spend 40 million pounds, or about $55.6 million, on the project.

Nvidia is in the process of acquiring U.K.-based chip technology firm Arm Ltd for $40 billion from Japan's SoftBank Group Corp. The deal faces pushback from Nvidia's rivals and is under regulatory scrutiny in the United Kingdom, the United States and Europe.

To show its commitment to Arm's U.K. operations, Santa Clara, California-based Nvidia said in October it was building the U.K.'s most powerful supercomputer in Cambridge, where Arm is headquartered, to focus on solving healthcare and artificial intelligence problems....


Interestingly, the current world's fastest supercomputer, Japan's Supercomputer Fugaku, blew past the U.S.'s Summit and Sierra computers using ARM architecture. 

Michael Crichton On Speculation By (and in) the Media

 A very smart guy talking about stuff.

Mr. Crichton had an M.D. from Harvard but never practiced, preferring writing as his vocation.
Like Isaac Asimov he had a talent for science fiction and like Asimov he was pretty good at it.
Here is a speech Crichton gave in 2002, referenced in a column by In-Q-Tel's Chief Information Security Officer for the Advanced Computing Systems Association.

This version is the copy archived by the Wayback Machine from Mr. Crichton's website. The redesigned Crichton website seems not to have the speech.
It is also archived at DocDroid with an added quote from Mark Twain.

Given in La Jolla, California, at the International Leadership Forum on April 26, 2002

A talk by Michael Crichton
In recent years, media has increasingly turned away from reporting what has happened to focus on speculation about what may happen in the future. Paying attention to modern media is thus a waste of time.
My topic for today is the prevalence of speculation in media. What does it mean? Why has it become so ubiquitous? Should we do something about it? If so, what should we do? And why? Should we care at all? Isn't speculation valuable? Isn't it natural?

I will join this speculative bandwagon and speculate about why there is so much speculation. In keeping with the trend, I will try express my views without any factual support, simply providing you with a series of bald assertions.

This is not my natural style, and it's going to be a challenge for me, but I will do my best. I have written out my talk which is already a contradiction of principle. To keep within the spirit of our time, it should really be off the top of my head.

Before we begin, I'd like to clarify a definition. By media I mean movies television internet books newspapers and magazines. That's a broad definition but in keeping with the general trend of speculation, let's not make too many fine distinctions.

First we might begin by asking, to what degree has the media turned to pure speculation? Someone could do a study of this and present facts, but nobody has. I certainly won't. There's no reason to bother.

Today, everybody knows that "Hardball," "The O'Relly Factor," and similar shows are nothing but a steady stream of guesses about the future. The Sunday morning talk shows are pure speculation. They have to be. Everybody knows there's no news on Sunday.

But speculation is every bit as rampant in the so-called serious media, such as newspapers. For example, consider the New York Times for March 6, 2002, the day I was asked to give this talk. The column one story that day concerns George Bush's tariffs on imported steel. We read:

Mr. Bush's action "is likely to send the price of steel up sharply, perhaps as much as ten percent.." American consumers "will ultimately bear" higher prices. America's allies "would almost certainly challenge" the decision. Their legal case "could take years to litigate in Geneva, is likely to hinge" on thus and such.

In addition, there is a further vague and overarching speculation. The Allies' challenge would be "setting the stage for a major trade fight with many of the same countries Mr. Bush is trying to hold together in the fractious coalition against terrorism." In other words, the story speculates that tariffs may rebound against the fight against terrorism.

You may read this story and think, what's the big deal? Isn't it reasonable to talk about effects of current events in this way? I answer, absolutely not. Such speculation is a complete waste of time. It's useless. It's bullshit on the front page of the Times.

The reason why it is useless, of course, is that nobody knows what the future holds.

Do we all agree that nobody knows what the future holds? Or do I have to prove it to you? I ask this because there are some well-studied media effects which suggest that a simple appearance in media provides credibility. There was a well-known series of excellent studies by Stanford researchers that have shown, for example, that children take media literally. If you show them a bag of popcorn on a television set and ask them what will happen if you turn the TV upside down, the children say the popcorn will fall out of the bag. This effect would be amusing if it were confined to children. The studies show that no one is exempt. All human beings are subject to this media effect, including those of us who think we are self-aware and hip and knowledgeable.

Media carries with it a credibility that is totally undeserved. You have all experienced this, in what I call the Murray Gell-Mann Amnesia effect. (I call it by this name because I once discussed it with Murray Gell-Mann, and by dropping a famous name I imply greater importance to myself, and to the effect, than it would otherwise have.)

Briefly stated, the Gell-Mann Amnesia effect works as follows. You open the newspaper to an article on some subject you know well. In Murray's case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward-reversing cause and effect. I call these the "wet streets cause rain" stories. Paper's full of them.

In any case, you read with exasperation or amusement the multiple errors in a story-and then turn the page to national or international affairs, and read with renewed interest as if the rest of the newspaper was somehow more accurate about far-off Palestine than it was about the story you just read. You turn the page, and forget what you know.

That is the Gell-Mann Amnesia effect. I'd point out it does not operate in other arenas of life. In ordinary life, if somebody consistently exaggerates or lies to you, you soon discount everything they say. In court, there is the legal doctrine of falsus in uno, falsus in omnibus, which means untruthful in one part, untruthful in all.

But when it comes to the media, we believe against evidence that it is probably worth our time to read other parts of the paper. When, in fact, it almost certainly isn't. The only possible explanation for our behavior is amnesia.

So one problem with speculation is that it piggybacks on the Gell-Mann effect of unwarranted credibility, making speculation look more useful than it is.

Another issue springs from the sheer volume of speculation. Ubiquity may come to imply a value to the activity being so assiduously carried out. But in fact, no matter how many people are speculating, no matter how familiar their faces, how good their makeup and how well they are lit, no matter how many weeks they appear before us in person or in columns, it still remains true that none of them knows what the future holds.

Some people still believe that the future can be known. They imagine two groups of people that may know the future, and therefore should be listened to. The first is pundits. Since they expound on the future all the time, they must know what they are talking about. Do they? The now-defunct magazine Brill's Content used to track the pundit's guesses, and while one or another had the occasional winning streak, over the long haul they did no better than chance. This is what you would expect. Because nobody knows the future.

The second group that some people imagine may know the future are specialists of various kinds. They don't either. As a limiting case, I remind you there is a new kind of specialist occupation-I refuse to call it a discipline, or a field of study-called futurism. The notion here is that there is a way to study trends and know what the future holds. That would indeed be valuable, if it were possible. But it isn't possible. Futurists don't know any more about the future than you or I. Read their magazines from a couple of years ago and you'll see an endless parade of error.

Expertise is no shield against failure to see ahead. Paul Erlich, a brilliant academic who has devoted his entire life to ecological issues, has been wrong in nearly all his major predictions. He was wrong about diminishing resources, he was wrong about the population explosion, and he was wrong that we would lose 50% of all species by the year 2000. His lifelong study of these issues did not prevent him from being wrong.

All right, you may say, you'll accept that the future can't be known, in the way I are talking. But what about more immediate predictions, such as the effects of pending legislation? Surely it is important to talk about what will happen if certain legislation passes. Well, no, it isn't. Nobody knows what is going to happen when the legislation passes. I give you two examples from the left and right.

The first is the Clinton welfare reform, harshly criticized by his own left wing for caving in to the Republican agenda. The left's predictions were for vast human suffering, shivering cold, child abuse, terrible outcomes. What happened? None of these things. Child abuse declined. In fact, as government reforms go, it's been a success; Mother Jones predicts dire effects just ahead.

This failure to predict accurately was mirrored by the hysterical cries from the Republican right over raising the minimum wage. Chaos and dark days would surely follow as businesses closed their doors and the country was plunged into needless recession. What was the actual effect? Basically, nothing. Who discusses it now? Nobody. What will happen if there is an attempt to raise the minimum wage again? The same predictions all over again. Have we learned anything? No.

But my point is, for legislation as with everything else, nobody knows the future.

The same thing is true concerning the effect of elections and appointments. What will be the effect of electing a certain president, or a supreme court justice? Nobody knows. Some in this audience are old enough to remember Art Buchwald's famous column from the days of the Johnson Administration. Buchwald wrote a "Thank God we don't have Barry Goldwater" essay, recalling how everyone feared Goldwater would get us into a major war. So the country elected Johnson, who promptly committed 200,000 troops to Vietnam. That's what happens when you choose the dove-ish candidate. You get a war. Or you elect Richard Nixon because he can pull the plug on Vietnam, and he continues to fight for years. And then opens China.

Similarly, the history of the Supreme Court appointments is a litany of error in predicting how justices will vote on the court. They don't all surprise us, but a lot of them do.

So, in terms of imminent events, can we predict anything at all? No. You need only look at what was said days before the Berlin Wall came down, to understand that nobody can predict even a few hours ahead. People said all sorts of silly things about the Communist empire. I can't quote them, because that would mean I had looked them up and had facts at hand, and I have promised you not to do that. But take my word for it, you can find silly statements 24 hours in advance of the fall of the Russian empire.


Now, this is not new information. It was Mark Twain who said, 'I've seen a heap of trouble in my life, and most of it never came to pass."

If speculation is really worthless, why is there so much of it? Is it because people want it? I don't think so. I speculate that media has turned to speculation for media's own reasons. So now let's consider the advantages of speculation from a media standpoint.

1. It's incredibly cheap. Talk is cheap. And speculative talk shows are the cheapest thing you can put on television, They're almost as cheap as running a test pattern. Just get the talking host, book the talking heads-of which there is no shortage-and you're done! Instant show. No reporters in different cities around the world, no film crews on location. No research staff, no deadlines, no footage to edit, no editors...nothing! Just talk. Bullshit. Cheap.

2. You can't lose. Even though speculation is correct only by chance, which means it is wrong at least 50% of the time, nobody remembers and therefore nobody cares. People do not remember yesterday, let alone last week, or last month. Media exists in the eternal now, this minute, this crisis, this talking head, this column, this speculation.

One of the clearest proofs of this is the "Currents of Death" controversy. This fear of cancer from power lines originated with the New Yorker, which has been a gushing fountainhead of erroneous scientific speculation for fifty years. But the point is this: all the people who ten years ago were frantic to measure dangerous electromagnetic radiation in their houses now spend thousands of dollars buying magnets to attach to their wrists and ankles, because of the putative healthful effects of magnetic fields. They don't remember these are the same fields they formerly wanted to avoid. And since they don't remember, you can't lose with any future speculation.

Let me expand on this idea that you can't lose. It's not confined to the media. Most areas of intellectual life have discovered the virtues of speculation, and have embraced it wildly. In academia, speculation is usually dignified as theory. It's fascinating that even though the intellectual stance of the pomo deconstructionist era is against theory, particularly overarching theory, in reality what every academic wants to express is theory. This is in part aping science, but it's also an escape hatch. Your close textual reading of Jane Austen could well be wrong, and could be shown to be wrong by a more knowledgeable critic. But your theory of radical feminization and authoritarian revolt in the work of Jane Austen-with reference to your own childhood feelings-is untouchable. Similarly, your analysis of the origins of the First World War could be debated by other authorities. But your New Historicist essay, which includes your own fantasy about what it would be like if you were fighting in the first war...well, that's unarguable. And even better, how about a theory of the origin of warfare beginning with Paleolithic cave men? That's really unarguable.

A wonderful area for speculative academic work is the unknowable. Religious subjects are in disfavor these days, but there are still plenty of good topics. The nature of consciousness, the workings of the brain, the origin of aggression, the origin of language, the origin of life on earth, SETI and life on other worlds...this is all great stuff. You can argue it interminably. And it can't be contradicted, because nobody knows the answer to any of these topics-and probably, nobody ever will.

Then there is the speculative work of anthropologists like Helen Fisher, who claim to tell us about the origins of love or of infidelity or cooperation by reference to other societies, animal behavior, and the fossil record. How can she be wrong? These are untestable, unprovable, just so stories.

And lest anyone imagine things are different in the hard sciences, consider string theory, for nearly 20 years now the dominant physical theory. More than one generation of physicists has labored over string theory. But-if I understand it correctly, and I may not-string theory cannot be tested or proven or disproven. Although some physicists are distressed by the argument that an untestable theory is nevertheless scientific, who is going to object, really? Face it, a untestable theory is ideal! Your career is secure!

In short, there is now widespread understanding that so long as you speculate, you can't lose.

Now, nowhere is it written that the media need be accurate, or useful. They haven't been for most of recorded history. So now they're speculating....so what? What is wrong with it?


I can't imagine being a serious journalist and having to put up with this crap from colleagues, confr├Ęres and competitors. It has to drive them nuts to watch the never-ending speculations.

China's Broad Group Is Still Putting Up Buildings In Hours Rather Than Months

 It seems like forever ago we were posting "Not Only is China's Broad Group Planning to Assemble the World's Tallest Building in 90 Days, They Are Planning TO CAPTURE 30% OF THE WORLD's Construction Market (and cut energy costs by 50%)" and though they did not get the official okey dokey to build the world's tallest building and last I saw had not taken a 30% share of the world's construction market.

That July 2012 post was followed by:
Oct. 2012 
Schedule for "World's Tallest Building in 90 Days" is now at 210 Days.

Oct. 2013 
Update: World's Tallest/Fastest/Bestest Tower, Broad Sustainable's Sky City, is Grounded

But unlike many companies that get the kind of media attention that Broad received they did deliver to a certain extent: "China's Broad Sustainable Just Built A 57-Story Residential Tower in 19 Days".
And I'm sure that if any of the buildings have fallen down someone would have told me, so on to the latest.
From New Atlas, June 16:
Prefabricated buildings are designed to be put together very quickly – that's a big part of their appeal, after all. However, you'd be hard-pressed to find a building that goes up as quickly as this recently completed 10-story residential high-rise by China's Broad Group, which was assembled in just over a single day – or 28 hours and 45 minutes, to be exact.
The high-rise was constructed using Broad Group's Living Building prefabricated construction system. One of the most appealing things about this system is that each building module has the same dimensions as a shipping container when folded, making it very easy to transport it pretty much anywhere in the world using existing shipping methods.  
Each module is prefabricated in a factory and consists of a primarily stainless steel structure that includes wiring, insulation, glazing and ventilation systems (the Broad Group is also a ventilation specialist). So, to put it simply, the basic idea is that you'd take a group of these container-sized modules to a building site and stack them as required, bolting them into place. They're then connected to power and water, and ready to use....

"The Deep Sea Is Filled with Treasure, but It Comes at a Price"

 From The New Yorker, June 14

The International Seabed Authority is headquartered in Kingston, Jamaica, in a building that looks a bit like a prison and a bit like a Holiday Inn. The I.S.A., which has been described as “chronically overlooked” and is so obscure that even many Jamaicans don’t know it exists, has jurisdiction over roughly half the globe.

Under international law, countries control the waters within two hundred miles of their shores. Beyond that, the oceans and all they contain are considered “the common heritage of mankind.” This realm, which encompasses nearly a hundred million square miles of seafloor, is referred to in I.S.A.-speak simply as the Area.

Scattered across the Area are great riches. Mostly, these take the shape of lumps that resemble blackened potatoes. The lumps, known formally as polymetallic nodules, consist of layers of ore that have built up around bits of marine debris, such as ancient shark teeth. The process by which the metals accumulate is not entirely understood; however, it’s thought to be exceedingly slow. A single spud-size nugget might take some three million years to form. It has been estimated that, collectively, the nodules on the bottom of the ocean contain six times as much cobalt, three times as much nickel, and four times as much of the rare-earth metal yttrium as there is on land. They contain six thousand times as much tellurium, a metal that’s even rarer than the rare earths.

The first attempts to harvest this submerged wealth were undertaken nearly fifty years ago. In the summer of 1974, a drillship purportedly belonging to Howard Hughes—the Hughes Glomar Explorer—anchored north of Midway Atoll, ostensibly to bring up nodules from the depths. In fact, the ship was operated by the C.I.A., which was trying to raise a sunken Soviet submarine. But then, in a curious twist, a real company called Ocean Minerals leased the Glomar to collect nodules from the seabed west of Baja California. The president of the company likened the exercise to “standing on the top of the Empire State Building, trying to pick up small stones on the sidewalk using a long straw, at night.”

After the Glomar expeditions, interest in seabed mining waned. It’s now waxing again. As one recent report put it, “The Pacific Ocean is the scene of a new wild west.” Thirty companies have received permits from the I.S.A. to explore the Area. Most are looking to slurp up the nodules; others are hoping to excavate stretches of the ocean floor that are rich in cobalt and copper. Permits to begin commercial mining could be issued within a few years.

Proponents of deep-sea mining argue that the sooner it starts the better. Manufacturing wind turbines, electric vehicles, solar panels, and batteries for energy storage requires resources, often scarce ones. (Tellurium is a key component in thin-film solar panels.) “The reality is that the clean-energy transition is not possible without taking billions of tons of metal from the planet,” Gerard Barron, the chairman of the Metals Company, one of the businesses that holds permits from the I.S.A., observed a few months ago. Seafloor nodules, he said, “offer a way to dramatically reduce” the environmental impact of extracting these tons.

But seabed mining poses environmental hazards of its own. The more scientists learn about the depths, the more extraordinary the discoveries. The ocean floor is populated by creatures that thrive under conditions that seem impossibly extreme. There is, for example, a ghostly pale deep-sea octopus that lays its eggs only on the stalks of nodule-dwelling sponges. Remove the nodules in order to melt them down and it will, presumably, take millions of years for new ones to form.

Edith Widder is a marine biologist, a MacArthur Fellow, and the author of “Below the Edge of Darkness: A Memoir of Exploring Light and Life in the Deep Sea” (Random House). Widder is an expert on bioluminescence, a topic that she became interested in after nearly going blind. In 1970, when she was a freshman in college, she had to have surgery for a broken back. The surgery went fine, but afterward she started hemorrhaging. Her heart stopped beating, and she was resuscitated. This happened again, and then a third time. Blood leaked into both of her eyes, blocking her retinas. “My visual world was swirling darkness with occasional glimpses of meaningless light,” she recalls. Eventually, she regained her vision, but she no longer took sight for granted.

“We believe we see the world as it is,” she writes. “We don’t. We see the world as we need to see it to make our existence possible.”

The same goes for fish. Only the top layers of the oceans are illuminated. The “sunlight zone” extends down about seven hundred feet, the “twilight zone” down another twenty-six hundred feet. Below that—in the “midnight zone,” the “abyssal zone,” and the “hadal zone”—there’s only blackness, and the light created by life itself. In this vast darkness, so many species have mastered the art of bioluminescence that Widder estimates they constitute a “majority of the creatures on the planet.” The first time she descended into the deep in an armored diving suit called a Wasp, she was overwhelmed by the display. “This was a light extravaganza unlike anything I could have imagined,” she writes. “Afterwards, when asked to describe what I had seen, I blurted, ‘It’s like the Fourth of July down there!’ ”....


"Chinese drillers announce two MASSIVE oil & gas discoveries in Northwest China" (Uyghurland)

This is the follow-up to a December 2020 post, below.

From RT, June 20:

China has discovered a pair of new deposits containing roughly two billion tons of shale oil and gas, according to the state-controlled energy giant China National Petroleum Corporation (CNPC).

One of the wells was discovered in the Fuman oilfield – a major region for crude oil production in the Tarim Basin, in northwest China’s Xinjiang Uighur Autonomous Region. It reportedly contains a billion tons of super-deep oil and gas.

With a drilling depth of nearly 27,900 feet (8,500 meters) and a test oil column reaching 1,640 feet (550 meters), the reservoir set new records for the basin’s deepest oil production and highest oil column, and marks the largest discovery of oil in the area in a decade. It is expected to produce four million tons of oil and 49.4 billion cubic feet (1.4 billion cubic meters) of natural gas annually before 2025.

The oilfield is one of the world’s most difficult areas to drill, as most of the reserves are around 26,000 feet (8,000 meters) below the surface of the Earth. After it was discovered in 2015, annual output in the area grew from some 30,000 tons to 1.52 million tons in 2020, with an estimated production of about two million tons since the beginning of 2021.

Another deposit, in the Ordos Basin, also in the northwest, reportedly contains an estimated billion tons of shale oil, according to CNPC making it the biggest shale oil field in the country.....



PetroChina Makes Huge Gas Find In Uyghurland

Huh. Imagine that.
The Chinese would prefer it be called Xinjiang but let's go with Uyghurland.

From Reuters India, December 20:

PetroChina strikes big gas find in China Xinjiang's Junggar basin: state media

PetroChina,Asia’s largest producer of oil and gas, has struck a large natural gas discovery in northwest China’s Xinjiang region with an initial estimated reserve exceeding 100 billion cubic meters, China’s state news agency Xinhua reported over the weekend.

This marks another breakthrough in the state oil firm’s natural gas development in the region, following a similar-sized discovery at Tarim basin in September last year.

PetroChina tapped 610,000 cubic meters of daily gas flow and 106.3 cubic meters of crude oil at exploration well Hu-1, located in an exploration zone totalling 15,000 square kilometers at the southern rim of the Junggar basin, Xinhua said.

The oil and gas flows were struck at around 7,400 meters below the earth’s surface....


The Junggar was considered a lower probability prospect on this 2012 - 2013 map of China's shale deposits:



Saturday, June 19, 2021

"The Telegram Billionaire and His Dark Empire"

From Der Spiegel, June 11:

Telegram is one of the world's most popular chat apps – and possibly the most dangerous. There is little regulation of the platform, which is popular with criminals and terrorists. Who is the mastermind behind it? 

Little is known about the Russian billionaire, who is considered to be the richest person in his adopted home of Dubai. And what he does say in public often sounds puzzling. "The outside world is a reflection of the inside one,” he wrote as the caption under his Instagram photo. 

Durov was still the head of the social network VKontakte, the Russian-language Facebook clone, which had more than 100 million users at the time. The Russian government was unhappy with the fact that opposition groups had organized the protests using the social network. The Russian domestic intelligence agency FSB demanded that Durov shut down the groups, but instead of obeying the order, he published the letter from the intelligence service on Twitter along with a photo showing a dog in a hoodie sticking its tongue out. Three days later, armed officers with the special Russian police force OMON showed up at the door of his luxury apartment. "They seemed to want to break the door,” Durov later recalled in an interview with the New York Times. He peered at the officers through his intercom monitor but refused to open the door. They left after an hour....


"How the world’s richest defend their wealth, with help from a dedicated industry"

From the International Consortium of Investigative Journalists:

Author and scholar Chuck Collins offers an insider’s account of the ‘wealth defense industry’ and the inequality it perpetuates in his new book, “The Wealth Hoarders.”

When Chuck Collins was 26 years old, he gave away his entire inheritance to groups working for social justice.

Born into a wealthy family (his great-grandfather, Oscar Mayer, founded a prominent national lunch meat company in the United States), Collins says he was exposed early in life to the world of wealth managers and came to realize the inequalities they help perpetuate. Now an author and senior scholar at the Institute for Policy Studies in Washington, D.C., Collins draws on his personal experience, extensive research, interviews with industry professionals and ICIJ’s own investigations for his latest book, “The Wealth Hoarders.”

The book, subtitled “How billionaires pay millions to hide trillions,” offers insiders’ accounts of what’s described as the “wealth defense industry” — made up of a coalition of professionals from advisors to lawyers and accountants — and how it deploys anonymous shell companies, family offices, offshore accounts and trusts to help the world’s richest people shield their wealth from tax collectors.

We asked Collins about the wealth management industry and what’s changing in the world of wealth inequality, fair taxation, and more.

You begin your book with a fascinating anecdote from a conference for people with inherited wealth in the 1980s. You were considering giving your inheritance away, and someone asked you: What would you prove by committing class suicide? A recent headline also described you as an “upper-class traitor.” What does this mean, the idea of ‘class suicide’?

I think what happened to me in my mid-20s is I got an understanding of how the system worked, where the rules were tipped in my favor, where there was this group of trusted advisors who were there to help the very wealthy preserve their existing wealth and pass it on to the next generation. And I just was like, Oh, well, this is not good for me. And this isn’t good for society, you know, I don’t really want to benefit from the system of inherited wealth dynasties. So yeah, it was unusual to give away assets, and that’s where I kind of crossed the line. You can be kind of quirky, and you can do whatever you want with the income, but when you start to give away assets — and, as I did, give them to groups working for social change — then you’re betraying your class interests. That’s how people would look at it.

If you had to answer that question today, what were you trying to prove? And do you feel like you proved anything?

I didn’t really want to benefit from the system that allowed this kind of perpetuation of inherited wealth dynasties. So I don’t know if I was trying to prove anything other than, you know, I didn’t want to cooperate with it or benefit from it. I guess I was thinking, well, maybe I would try to make my own way. But now, honestly, in retrospect, I realize the money was just one of many, many advantages.

What were the other advantages?

Well, growing up white, male, affluent in the United States, having multi-generational security, access to health care, access to education, property, financial education. I didn’t quite understand where I fit in. But I now know, not everybody has that, those advantages. So yeah, they’re just things that were kind of hardwired into my life.

How do your kids feel about you giving away your money?

I should say they all are happy and support the decision I made — but they didn’t really have a say in any of this, they weren’t even born! Parents do things that just drive you crazy. What can you say?

But I think one of the things it’s done is, they were raised in a very different situation than I was. They are better prepared to live in a more equal society than I was. And, as a parent, I think they appreciate that.

In your book you write at length about the “wealth defense industry.” Can you talk about this concept?

The first thing I should say is that I didn’t create that phrase. Social scientists like Jeffrey Winters, who wrote a book called “Oligarchy”, have been using this concept for a long time. So just to clarify, his idea is that what distinguishes ordinary rich people from an oligarchy is that all oligarchs invest in wealth defense, they use their wealth to get more power and wealth and defend their wealth, and to lobby and rig the rules around them. And I would argue that about the $30 million and up level, people start to invest in wealth defense.

When you’re in a certain class of wealth, people are marketing their services to you. If you have money and it is in a bank or it is invested somewhere, there are investment advisors, and pretty soon they’re saying: have you done tax planning? How do we minimize your taxes? Have you used any partnerships or trusts? Are you preparing to avoid estate taxes? How can we set up trusts for your children and unborn grandchildren? So there’s a lot of money to be made working with these clients. There’s a whole culture and industry surrounding wealthy families. Some would sometimes inherit what are called the trusted advisors, right? You have a trust that was created before you were born by people who your family’s still connected to.

So it comes with the territory …

It’s totally in the territory. It’s just like having somebody who cleans your pool. They are the financial butlers, but they are a class. And I think that’s what I’m trying to point out, they are a  class in and of themselves. There are tens of thousands of them, who wake up in the morning, and are devoted to helping the richest people in the world get richer, and pass their wealth with as little taxes as possible. And they are not as wealthy as their clients. But they are quite well paid. They’re paid millions to hide trillions.

Who are some of the players who make up this industry?

They would be tax attorneys, people who specialize in tax and estate law. They are accountants. They are people who work in family offices, trust and estate practitioners, self-identified wealth managers. They’re white collar professionals. They might work at a major investment house or work in a family office setting....


Coincidentally I was looking at Mr. Collins' grandfather's house yesterday: "The Gilded Age Era: Oscar G. Mayer Mansion".

For some links on the family office biz see "Family Offices as the Apex Of the New Butler Class"

"Meet the future weapon of mass destruction, the drone swarm"

From The Bulletin of the Atomic Scientists, April 5:

In October 2016, the United States Strategic Capabilities Office launched 103 Perdix drones out of an F/A-18 Super Hornet. The drones communicated with one another using a distributed brain, assembling into a complex formation, traveling across a battlefield, and reforming into a new formation. The swarm over China Lake, California was the sort of “cutting-edge innovation” that would keep America ahead of its adversaries, a Defense Department press release quoted then Secretary of Defense Ash Carter as saying. But the Pentagon buried the lede: The Strategic Capabilities Office did not actually create the swarm; engineering students at the Massachusetts Institute of Technology (MIT) did, using an “all-commercial-components design.”

MIT engineering students are among the best engineering students in the world, and they have the exact skills for the task, but they are still students. If drone swarming technology is accessible enough that students can develop it, global proliferation is virtually inevitable. And, of course, world militaries are deploying new drone technology so quickly that even journalists and experts who follow the issue have trouble keeping up, even as much drone swarm-related research is surely taking place outside the public eye.  With many countries announcing what they call “swarms,” at some point—and arguably that point is now—this technology will pose a real risk: In theory, swarms could be scaled to tens of thousands of drones, creating a weapon akin to a low-scale nuclear device. Think “Nagasaki” to get a sense of the death toll a massive drone swarm could theoretically inflict. (In most cases, drone swarms are likely to be far below this level of harm, but such extremes are absolutely possible.)

Creating a drone swarm is fundamentally a programming problem. Drones can be easily purchased at electronics stores or just built with duct tape and plywood as the Islamic State of Iraq and Syria did. The drone swarm challenge is getting the individual units to work together. That means developing the communication protocols so they can share information, manage conflicts between the drones, and collectively decide which drones should accomplish which task. To do so, researchers must create task allocation algorithms. These algorithms allow the swarm to assign specific tasks to specific drones. Once the algorithms are created, they can be readily shared and just need to be coded into the drones.

Because battlefields are complex—with soldiers, citizens, and vehicles entering or leaving, and environmental hazards putting the drones at risk—a robust military capability still requires serious design, testing, and verification. And advanced swarm capabilities like heterogeneity (drones of different sizes or operating in different domains) and flexibility (the ability to easily add or subtract drones) are still quite novel. But getting the drones to collaborate and drop bombs is not.

Armed, fully-autonomous drone swarms are future weapons of mass destruction. While they are unlikely to achieve the scale of harm as the Tsar Bomba, the famous Soviet hydrogen bomb, or most other major nuclear weapons, swarms could cause the same level of destruction, death, and injury as the nuclear weapons used in Nagasaki and Hiroshima—that is tens-of-thousands of deaths. This is because drone swarms combine two properties unique to traditional weapons of mass destruction: mass harm and a lack of control to ensure the weapons do not harm civilians.

Countries are already putting together very large groupings of drones. In India’s recent Army Day Parade, the government demonstrated what it claimed is a true drone swarm of 75 drones and expressed the intent to scale the swarm to more than 1,000 units. The US Naval Postgraduate School is also exploring the potential for swarms of one million drones operating at sea, under sea, and in the air. To hit Nagasaki levels of potential harm, a drone swarm would only need 39,000 armed drones, and perhaps fewer if the drones had explosives capable of harming multiple people. That might seem like a lot, but China already holds a Guinness World Record for flying 3,051 pre-programmed drones at once....


If interested see also: 

"Autonomous 'Slaughterbot' Drones Reportedly Attack Libyans Using Facial Recognition Tech" 

"Omniviolence Is Coming and the World Isn’t Ready"

....“You can order them from a drone manufacturer in China. You can program the code to say: ‘Here are thousands of photographs of the kinds of things I want to target.’ A one-gram shaped charge can punch a hole in nine millimeters of steel, so presumably you can also punch a hole in someone’s head. You can fit about three million of those in a semi-tractor-trailer. You can drive up I-95 with three trucks and have 10 million weapons attacking New York City. They don’t have to be very effective, only 5 or 10% of them have to find the target.” Manufacturers will be producing millions of these drones, available for purchase just as with guns now, Russell points out, “except millions of guns don’t matter unless you have a million soldiers. You need only three guys to write the program and launch.” In this scenario, the K/K ratio could be perhaps 3/1,000,000, assuming a 10-percent accuracy and only a single one-gram shaped charge per drone....

Moscow Promoting Canal System Linking Turkey and Central Asia Via Russian Territory

Expanding on last week's Sultan Erdo─čan's Dream: "Construction of Kanal ─░stanbul to start on June 26, despite opposition".

From the Jamestown Foundation's Eurasia Daily Monitor, June 1:

In the 1930s, Soviet dictator Joseph Stalin considered building a canal between the Black and Caspian seas because the Volga­–Don Canal lacked the depth to handle large-capacity ships. But World War II forced him to suspend and then abandon that dream. Now, President Vladimir Putin is reviving it, drawing on a Dubai-based company to establish a water route between Turkey and Central Asia via Russian territory as well as considering developing a new canal system across the North Caucasus. The latter promises to not only reduce the importance of geopolitical changes in the South Caucasus caused by the latest round of Armenian-Azerbaijani fighting but also increase Russia’s role as a partner in China’s Belt and Road Initiative to link Asia and Europe. The Dubai company has already launched its waterway project—its ships are now moving through preexisting Russian internal rivers and canals. But the proposed new canal faces enormous obstacles—not just topographic but also political and ethnic—making it unlikely to be realized in the near future. Even so, these latest moves on the geopolitical chessboard of the Caucasus are already having an impact.

Last week (May 22), the Dubai-based P&O Logistics, which owns some 400 cargo ships, announced the opening of a new cargo container shipping route between Istanbul and Central Asia using the Black Sea and Russian internal waterways like the Volga–Don Canal and then via the Caspian to Kazakhstan and Turkmenistan. Russian and Turkish officials welcomed this development. However, others in the region affected by it, including Azerbaijan and Iran, have so far failed to react publicly, even though each could find its geopolitical role reduced. East-west trade that had once passed though Azerbaijani and Iranian territory may now be transferred to their north (Kaspiyskiy Vestnik, May 24; Vestnik Kavkaza, Haqqin.az, May 22.

The P&O Maritime Logistics announcement specifies that the company will use the Volga–Don Canal, but it does not indicate how that will affect the speed and thus the price of container traffic along the route. At present, ships using the canal cannot draw more than 3.5 meters, a restriction that would preclude the use of this waterway by larger vessels. Nonetheless, what is of great significance is that the route is now open and does not depend either on the reopening of railways in the South Caucasus or on the construction of new transport corridors. Moreover, it puts Moscow back into the critical game of container traffic. Up to now, Moscow had focused on bulk cargo, the importance of which is declining.

This new water route is expected to significantly increase container traffic between Turkey and Central Asia and, thus, (at least potentially) between China and Europe. At the same time, the P&O action importantly gives new impetus to Moscow’s plans to dredge the Volga–Don Canal so that it can handle larger ships. And it bolsters Kremlin discussions about the construction of a new canal between the Caspian and the Black Sea. Though the new route would bypass the existing waterway, it would help keep this international east-west trade route entirely on Russian territory rather than have it shift to intermodal traffic through Azerbaijan or Iran (see EDM, August 6, 2020)....