A little preparation and common sense go a long way in the great outdoors

If you’re heading for the great outdoors, be sure to bring along some common sense. That’s the best way to reduce the chances that a bite, sting, cut, scrape, burn, blister, rash, sprain, strain, more serious injury or other mishap will spoil your outdoor adventure. “Knowing your limits, not trying to do too much, knowing where you’re going and what you might encounter there and being aware of the environment you’re in are the best ways to avoid problems outdoors,” said Dr. Henderson….....»»

Category: topSource: bizjournalsMay 14th, 2022

The 12 best new books coming out in May, according to Amazon"s editors — from Selma"s Blair"s memoir to a "We Were Liars" prequel

From Selma Blair's memoir to a highly anticipated prequel, these are the best new books coming out in May 2022, according to Amazon's editors. Prices are accurate at the time of publication.From Selma Blair's memoir to a highly anticipated prequel, these are the best new books coming out in May 2022, according to Amazon's editors.Amazon; Rachel Mendelson/InsiderWhen you buy through our links, Insider may earn an affiliate commission. Learn more. Amazon's book editors rounded up the best new books being released this month. May's books include high-profile memoirs and can't-put-down fiction. For other book recommendations, check out some of the most anticipated book releases of 2022 here. There are long, sunny days in our not-so-distant future, and we recommend a new books haul in preparation for peak lounging.Just like every month, Amazon's book editors have curated the best new titles coming out in May. The top releases range in genre and tone, from evocative memoirs by Selma Blair and Paul Holes (the detective who found the Golden State Killer) to fast-paced fiction perfect for future beach trips.You'll find the full list of great May reads, plus why they're worth the read, according to Amazon's book editors, below. The 12 best books of May 2022, according to Amazon editors:*Captions are provided by Amazon's Book Editors and lightly edited for length and clarity. "This Time Tomorrow" by Emma StraubPenguin Random House"This Time Tomorrow," available at Amazon, $21.99If you could go back in time and make different decisions, would you? That question is at the center of Emma Straub's big-hearted new novel, "This Time Tomorrow." The protagonist, Alice, drunkenly falls asleep on her 40th birthday and wakes up in her childhood bedroom on her 16th birthday. She's wistful about carefree days with her best friend and the teen boy who got away, but blown away by her youthful, healthy father, and an opportunity to change his life nearly 25 years later. This novel is a sweet take on the passing of time, the power of relationships, the misguided rush to adulthood, and the pressure to achieve arbitrary milestones in life. The time travel never feels gimmicky, and '80s kids will appreciate the references to "Back to the Future." It's breezy, yet smart — check it out for your next book club pick! — Lindsay Powers, Amazon Editor"Mean Baby: A Memoir of Growing Up" by Selma BlairAmazon"Mean Baby," available at Amazon, $22.99Selma Blair's memoir is more than a gushy celebrity story of bright lights and glitzy parties. It's a story about complicated mother-daughter relationships, how childhood interpretations of experiences can shape you, how the need for attention can drive you, how Hollywood kismet happens, and how the public platform it provides can be a force for good. "Mean Baby" will make you laugh out loud at moments that are at once deeply funny and deeply disquieting. Blair's life is not all roses — booze entered her life at the age of seven and eating disorders and the darkness of depression is a constant — but she recounts the bittersweet events and details of her life with such specific clarity, honesty, and humor that it's impossible to not fall under her spell in this page-turning memoir. — Al Woodworth, Amazon Editor"River of the Gods: Genius, Courage, and Betrayal in the Search for the Source of the Nile" by Candice MillardAmazon"River of the Gods," available at Amazon, $26.99River of the Gods is thrilling narrative nonfiction full of adventure, ambushes, false starts, and the pursuit of conquest. Richard Burton was a consummate explorer, with a penchant for languages (he spoke more than 25), sex, and glory (one of his greatest expeditions was a trip to discover the head-waters of the Nile in 1857). Candice Millard, the best-selling author of "The River of Doubt" and "Destiny of the Republic," recounts Burton's life and epic journey that not only involved harrowing physical feats but stiff competition and epic clashes with his fellow explorer John Hanning Speke, and also with the man who has been left out of the history books, African guide Sidi Mubarak Bombay. Using diary entries and letters, Millard's story drops you in the middle of the jungle and exposes a world of conquering and colonial exploits. A fascinating portrait of the characters and the era in which they roamed that is an adventure to read. — Al Woodworth, Amazon Editor"Remarkably Bright Creatures" by Shelby Van PeltAmazon"Remarkably Bright Creatures," available at Amazon, $19.59What does a misanthropic octopus have in common with Tova, a widowed aquarium employee? Not much, until a friendship develops following a daring tank rescue, and Marcellus McSquiddles happily uses all eight of his tentacles, his three hearts, plus his sharp brain, to solve the soul-scarring mystery of Tova's son Erik's disappearance thirty years ago. Utterly original, funny, wise, and heartwarming (be warned: there'll be tears as well as giggles), "Remarkably Bright Creatures" will have readers falling hard for an acerbic invertebrate whose intervention in his new friend's life sets her up for healing lessons in love, loss, and family. —Vannessa Cronin, Amazon Editor"Sleepwalk" by Dan ChaonAmazon"Sleepwalk," available at Amazon, $27.99It might take you a few chapters to figure out who Chaon's protagonist Will Bear is and what makes him tick, but the chapters are short and soon you'll have your bearings. Sleepwalk takes place in a near-future dystopia where most of the big problems we have in the world have continued to worsen. Will Bear lives in that worsening world, and he has an unsavory job that keeps him driving around and off the grid, and that sometimes requires him to shoot people — but his humanity and warmth in the face of all that, along with his sense of humor, will win you over. Sleepwalk is a road novel that will make you think and make you laugh. It's fast-paced, literary, and entertaining. There's a lot going for it, but in my view, the book's greatest asset is Will Bear himself. I almost wished I could ride shotgun with him. — Chris Schluep, Amazon Editor"Unmasked: My Life Solving America's Cold Cases" by Paul HolesAmazon"Unmasked," available at Amazon, $19.02True crime fans take note: here is a first-person account of a life spent solving cold cases, told by the detective who found the Golden State Killer. But "Unmasked" is much more than that. First, the Golden State Killer is only one of the high-profile cases Paul Holes tackled. And second, this is a book about more than solving high-profile cold cases. Unmasked describes what it's like to be a forensic detective, to dedicate oneself to uncovering the secrets behind some of life's most brutal acts, day in and day out, and the toll that it takes on the rest of one's life. There is obsession here, but there is also confession. As we read about Hole's life solving cold cases — some famous, some only remembered by a handful of people — an imperfect man with a laser focus and a deep well of compassion comes to life amid all that brutality. This is a special book. — Chris Schluep, Amazon Editor"The Other Mother" by Rachel M. HarperAmazon"The Other Mother," available at Amazon, $28"The Other Mother" is a complex story set over 30 years, weaving two families together — whether they like it or not. It opens on Jenry's first day at college, which happens to be the alma mater of his mother, who raised him alone, and his famous ballet dancer father, whom Jenry never knew. The narrative is told via rotating character perspectives, alternating two timelines: present day, and the early years of his parents' lives and relationship. I love the way the author starts with a narrow viewpoint and then widens the lens, immersing you deeper into the story — uncovering facts and questions through each twist and turn. I had big feelings about this book, physically hugging it while feeling all the emotions tingling throughout my body after reading the last words. The journey through the ups and downs of life; love, secrets, growth, and forgiveness, captured me and will leave me thinking about this one for quite a while. — Kami Tei, Amazon Editorial Contributor"Hidden Pictures" by Jason RekulakAmazon"Hidden Pictures," available at Amazon, $25.19Rekulak runs his fingers down your spine with a pulse-pounding thriller, steeped in the supernatural and fueled by alarming twists. In "Hidden Pictures," Mallory Quinn is an ex-drug addict with a chance at redemption working as a nanny for the Maxwell's, a seemingly perfect family living in an idyllic neighborhood. But when her sweet five-year-old charge begins drawing dark, disturbing pictures well beyond his age, Mallory starts looking for answers in a decades-old story of a local artist's murder. Is Mallory's past coming back to haunt her or is there something malignant at play? This horror-tinged tale of suspense will keep you up at night racing to the final shocking outcome. — Seira Wilson, Amazon Editor"Such Big Dreams" by Reema PatelAmazon"Such Big Dreams," available on Amazon, $27With a whip-smart, funny, and strong-willed woman at its core, "Such Big Dreams" is an absolute pleasure to read. Growing up homeless on the streets of Mumbai, 23-year-old Rakhia is hardwired with a certain grit and skepticism about the world — especially because her best friend on the streets disappeared ten years ago. Now an adult, she's landed on her feet, working as a personal assistant at a nonprofit human rights law organization, and with the encouragement of her boss and a white intern, she begins to dream of a life beyond the slum where she lives and the menial tasks she performs. But dreams are never that easy. There's a lot that Patel tackles in this book — the disparity of wealth in India and abroad, the education gap; the nonprofit world commandeered by celebrity; loss and love — and yet, it's done with such a deft hand that it's impossible to put this book down. Rakhia is a narrator you will root for and want as your best friend — she's got guts, gusto, and dares to dream, and there's nothing better than that. — Al Woodworth, Amazon Editor"Family of Liars: The Prequel to We Were Liars" by E. LockhartAmazon"Family of Liars," available on Amazon, $13.38If you loved "We Were Liars" then the backstory of the Sinclair family's deeply-rooted rifts and allegiances is the book you've been waiting for. "Family of Liars" returns to idyllic Beechwood Island, circa 1987, a magical epoch of lemon hunts and privilege, of first love, and of shocking events that upend the teenage Sinclair sisters' lives. Lockhart pulled me into the story so thoroughly that I could smell the ocean, hear the clink of ice in a glass, and feel the raw emotions of our (admittedly) unreliable narrator. Old family secrets come to light, and new ones are buried in this spell-binding novel of family and tragedy, love and betrayal, that will sweep you off your feet. — Seira Wilson, Amazon Editor"Siren Queen" by Nghi VoAmazon"Siren Queen," available at Amazon, $24.29The glitz of the golden age of Hollywood was never bright enough to hide the darkness behind the scenes, but here Nghi Vo creates a world where the once metaphorical monsters of the studio system drop their disguises. They rip and rend with teeth and claws just as easily as they do with words. Lured in as a child by dreams of stardom, Luli Wei must find what she truly believes in before she's devoured like so many hopeful young actresses before her. Haunting, thrilling, and beautifully told, "Siren Queen" captures a portrait of magic, fear, and love as vivid as any I've seen on the silver screen. — Marcus Mann, Amazon Editor"The Change" by Kirsten MillerAmazon"The Change," available at Amazon, $19.59For every woman who's ever been ignored, underestimated, or talked over, you need to read "The Change." Described as "'Big Little Lies' meets 'The Witches of Eastwick,'" with, we think, a tiny pinch of "The First Wives Club" thrown in for good measure, this epic, boo-yah revenge fantasy centers on three woman "of a certain age" who find that while their estrogen may be declining, the other "gifts" that arrived with menopause are surging, giving them the kind of superpowers that can take on whoever is killing young women in their affluent neighborhood. Have your highlighter finger ready, because Miller has packed this novel with the kind of pithy, quotable, laugh-out-loud zingers that belong on fridge magnets everywhere. To misquote Dylan, "'The Change' is gonna come, and evil better be ready." — Vannessa Cronin, Amazon EditorRead the original article on Business Insider.....»»

Category: topSource: businessinsiderMay 5th, 2022

The Perisher: Inside the grueling test the Royal Navy uses to pick its submarine commanders

"You see people laid bare psychologically," a British submarine officer who passed the Perisher told Insider. HMS Astute returns to Her Majesty's Naval Base Clyde in Scotland, March 1, 2012. Royal Navy/LA(Phot) Paul Halliwell British Royal Navy officers face rigorous test before they are given command of a submarine. During the "Perisher," candidates have to show they can lead a team and remain calm under pressure. "You see people laid bare psychologically," an officer who passed the course told Insider. British Royal Navy submarine officers typically have one major ambition: to have their commanding officer shake their hand and say, "Congratulations, captain."The person hearing those words has spent more than a decade of their life on a submarine and has passed a notorious, months-long command course known as Perisher.The name is a nod to the course's history, not its difficulty, according Capt. Iain Breckenridge, captain of submarine training at Her Majesty's Naval Base Clyde in Scotland.When the submarine command course was launched at the end of World War I, it was known as the "Periscope School," because much of the training revolved around that key instrument.Over time, the name was shortened to "Perisher," Breckenridge told Insider.About 1,200 people have passed the course since then - Breckenridge, who joined the navy in 1984 and became a submariner in 1987, was the 1,088th when he completed Perisher in 1996."The driver from Day One when you join the submarine service [as a warfare officer] is, 'I want to get Perisher,'" he said.The Perisher Ambush, the second of the Royal Navy's Astute-class attack subs, at HMNB Clyde, September 9, 2021. Royal Navy/LA(Phot) Stu Hill The four-month test is offered about three times every two years, and evaluates a submariner's potential to command their own boat. Four to six officers typically participate in each cohort.Much of it takes place in simulators at Naval Base Clyde, so that the teacher leading the course can put candidates through complicated scenarios with multiple ships and more easily raise the operational tempo, Breckenridge said.Four weeks of the course are spent at sea aboard a nuclear-powered attack submarine in coordination with the UK's biannual Joint Warrior exercise, held east of Scotland."There's just enough units out there that we can use as adversaries that we can keep it busy for the students and give them a really good test," he said.At sea, the teacher will gradually ramp up the pressure and step back bit by bit to allow the candidates to deal with the increased stress on their own.What it takes Trafalgar-class submarine HMS Trenchant during an exercise with the US Navy, August 5, 2017. US Navy/MCS Seaman Zachary Wickline A successful candidate must be more than capable of operating a submarine and have a deep knowledge of submarine systems and warfare tactics, Breckenridge said. They have to show they can lead a team and remain calm and clear under pressure.Successful candidates must have "the ability to take the initiative, to proactively plan, [and] understand your own limits and those of your team," Breckenridge said. "A tired captain is not only a danger to himself - he's a danger to his shipmates."Other attributes include the awareness to exploit an opportunity when it arises and the ability to remain comfortable in a situation where you don't have "the 100% solution."The course was much more compressed during World War II, and the advent of new capabilities and weaponry, like the Tomahawk cruise missile, have led the British navy to develop more complex mission sets for candidates, but the qualities those candidates need to demonstrate during Perisher haven't changed much over the past century."Everything I said about pressure, command, leadership [is] fundamentally the same," Breckenridge said. First Sea Lord and Chief of the Naval staff Adm. Sir Mark Stanhope, left, and US Chief of Naval Operations Adm. Jonathan Greenert, center, in HMS Astute's command center, January 26, 2012. US Navy/MCS1 Peter D. Lawlor Perisher candidates tend to be senior lieutenants or junior lieutenant commanders, depending on when they joined the Navy. They range in age from 29 or 30 years old to late 30s.Once an officer becomes a principal warfare officer for submarines - normally their third sea job - their commanding officer will write both an annual appraisal and a specific report on their suitability to take the Perisher course. A selection board reviews all candidates' performance appraisals and compiles a list of officers eligible for the next cohort.Lt. Cmdr. Paul Hayes joined the navy in 2007 as a warfare officer and became an executive branch officer for submarines in 2010. He had about six months to prepare for the grueling course and passed the test in spring 2021."I kept doing the job I was doing. That's preparation in itself," he told Insider. He also took advantage of a list of recommended reading and course material.Hayes felt confident going into Perisher, but his self-doubt grew as the test wore on. He recalled a moment when he made a "tactically unsound decision" after sleeping poorly for several nights."I took the submarine in the wrong direction for a really lengthy period of time, despite some fairly good feedback from the people I was leading," he said. "I managed to turn it around in time and realize I was being a buffoon … [but] that sat with me for quite a while."'Congratulations, captain' Royal Navy sailors aboard a Trafalgar-class submarine. Royal Navy At the end of the course, successful candidates are brought to the submarine's wardroom, where their teacher - and VIPs including Breckenridge, the boat's commanding officer, and the commodore of the submarine flotilla - have champagne ready to mark the big moment."Then the teacher holds out his hand and says, 'Congratulations, captain. Welcome to the club,'" Breckenridge said.The phrase itself is a piece of Royal Navy history. Candidates who passed the course used to go on to command diesel-powered submarines. Now those who pass the course spend two to three years first as an executive officer - a boat's second-in-command - and then several more years in a shore job before being eligible for promotion and ready for command.It's important to retain that expression to recognize the officer and their completion of a "viscerally demanding course," Breckenridge added. The majority of commanding officers are commanders, but the officer in charge of any Royal Navy ship or submarine is referred to as "captain" by their team, irrespective of their actual rank. British sailors on a Trafalgar-class submarine. Royal Navy Hayes recalled feeling ecstatic to receive the final handshake and as well as "an overwhelming sense of relief" that the course was over.There's little time to recover afterward. Successful candidates receive their next submarine assignment along with the news that they passed the course."You're processing your next job while processing that you've still got one," Hayes said. His new job as an executive officer started the day after he completed the course.The submariner community is notably tight-knit, but colleagues who pass the Perisher course in the same cohort develop a particularly strong sense of camaraderie, Hayes noted."You see people laid bare psychologically. Regardless of how you get on with that [person], that stays forever and provides a deeper sense of understanding," he said.Real-world training An Astute-class submarine on the surface with HMS Queen Elizabeth in the background, June 13, 2021. Royal Navy/POPhot Jay Allen NATO allies, including Norway, France, and the Netherlands, have participated in Perisher courses in the past. French submariners have also completed the UK command course."Being part of the NATO club allows us to operate using common procedures," Breckenridge said.In 2005, he completed the US Navy submarine command course - becoming one of only a handful of submariners who are dual-qualified in both courses.While the subs and the equipment aboard were different from what is used in the Royal Navy, the skill sets being evaluated were the same. The US course "was as hard a test as the UK submarine test," Breckenridge said.The spring 2021 Perisher course had a major addition: the Royal Navy's newest aircraft carrier, HMS Queen Elizabeth.The service's fleet flagship was participating in a pre-deployment exercise with its support task group, made up of destroyers, frigates, and a blended air wing of UK and US F-35B Joint Strike Fighters. HMS Trenchant sailing into Devonport for the last time on March 25, 2021, before its decommissioning later in the year. Royal Navy/LPhot Phil Bloor Working with the carrier provided "a great training ground" for the Perisher group, Breckenridge said.The task was clear: "Can we get in, can we get close, can we get a picture, and can we creep away without being seen?" Breckenridge said. "The answer to that was - unsurprisingly, as far as I'm concerned - yes."Historically, about two-thirds of Perisher candidates pass. That was the case for spring 2021, when three out of five candidates were selected for command.There have been years where the pass rate was below 50%, which could lead to a dearth of available, command-ready officers several years down the line. On those occasions, former commanding officers have been brought back for a second tour.Right now, the service has "just enough people through" to fill the required executive-officer slots, Breckenridge said.Despite that balancing act, the course has to maintain its standards, Breckenridge said. "If you lower the standards, you're going to get a lesser standard at sea."Vivienne Machi is an award-winning reporter based in Stuttgart, Germany. Her writing has appeared in outlets including Foreign Policy, Defense News, the Counter, and Via Satellite. Twitter: @VivienneMachiRead the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 1st, 2021

"Dangerous Nonsense" Or "Win-Win" - What To Expect From The COP26 Gabfest

"Dangerous Nonsense" Or "Win-Win" - What To Expect From The COP26 Gabfest Authored by Bill Blain via, “Clean energy isn’t just good for the planet, but will make us all richer!” It’s easy to be cynical about next week’s COP26 Gabfest, but we could all be winners if global leaders successfully optimise for a cleaner decarbonised environment and a global growth economy based on new clean technologies, but we need time for the transition from fossil fuels. If we fail to do so, the alternatives are bleak. From Sunday the Good, the Bad, the Ugly and Politicians meet in Glasgow for the 26th United Nations “Conference of Parties” on Climate Change. It might just be the most important gab-fest of global leaders in the whole of human history – so I am told. So far, the biggest winners are Scottish Railway workers. They were threatening strike action through the conference, and they’ve just accepted a 2.5% bribe pay-rise to return to work. Ultimately.. we might all be winners… I should stop being cynical about the COP26 conference. I guess I just have a problem with virtue-signalling politicians and unelected commentors telling us how to live our lives and telling me I can’t eat steak. These same folk will be furiously negotiating compromises on how much longer they can keep building coal-fired power stations. I don’t mind that – as long as the coal is part of a short-term transition strategy. As a trader and investor, I’ve weighed up the evidence and concluded the climate science predicting global warming is more likely than not to be correct. I’d much rather the scientists are wrong, but common sense and the risk profile dictates we should go with a hedging strategy; a “perfect preparation prevents piss-poor performance” approach to mitigating climate change. (I take the same approach to my passion for offshore sailing – prepare for every eventuality, no matter how remote. Assume stuff is going to break. (Generally, a good rule of life is buying an expensive piece of kit to fix a specific breakage means that breakage will never occur. If you don’t buy it – the thing will break.)) I accept climate change is among the most important issues facing humanity today. Unless we are prepared for it, then increasing concentrations of greenhouse gases in the atmosphere caused by industrial processes will trigger higher temperatures, catastrophic weather events (such as we’ve seen this summer), sea levels to rise with unquantifiable economic damage. These are just the Micro-issues. Climate change could tip an increasingly unstable global society into Macro-chaos. Very small weather changes can trigger drought. The wars of the future are far more likely to be about water security than the passions of kings. Water security could trigger mass migration – and all the consequences that could follow in terms of nationalism, protectionism, global conflict and even genocide. In short, even small rises in global temperatures could be… nasty in the extreme. Avoiding chronic instability as the result of climate change is what the COP26 meeting is about. All of us win if we avoid the events described above. Global leaders will update us on how they’ve cut Co2 emissions since COP20 5-years ago in Paris, and “commit” to “binding” net-zero targets for the future. Like all gabfests it will be about compromise. At the end some grand statement (agreed months ago by conference Sherpas), will emerge. The Climate protestors will keep protesting saying the conference failed to do enough. The reality is everything is a compromise. We need to find a way to deal with the climate threat without cratering global society. What we need to solve for is an optimisation: How to reverse rising emissions while maintaining global growth, raising billions of people out of poverty and providing them with higher living standards, and doing so in a better, cleaner more stable environment. That spells massive market opportunity! Perfect preparation for climate change should spur massive innovation! Its already happening. It should mean multiple new energy technologies – each potentially with the revolutionary potential of the internal combustion engine. It should mean whole new industries to capture, sequester and store carbon and improve the environment. It should mean finding new ways to prepare for a carbon neutral future, and spur whole new industries, even things like manufacturing and mining in space. The possibilities are endless – but they can’t be done overnight. Economic transformation will not be easy. The basics of climate change mitigation are about energy transition – how to switch from fossil fuels to other energy sources. 77% of emissions causing global warming come from transport and power derived from fossil fuels. If we can cut the economy’s reliance on coal, oil and gas by transiting to renewable power sources, then we might get the 80% reduction in CO2 emissions required by 2030 to reach global net zero by 2050, thus limiting global temperature rises to a “manageable” 1.5 degrees. The only way we could achieve these targets overnight would mean the total collapse of the global economy and that we all starve or freeze. That would not be a good compromise. The International Energy Authority says renewables now account for 28% of global energy production, up 2% in a single year! We’ve embraced them because the costs of wind and solar power, and battery storage, have dramatically fallen. Wind costs are down 50% in a decade! Solar power in 2030 is expected to be 1/20th of the price 10-years ago. Renewables work but have issues; weather means wind and solar are intermittent, the carbon costs of construction are huge, it takes years to achieve carbon neutrality (solar panels take 4 years, and 3 years for an electric vehicle’s battery), there are questions about maintenance and replacement, and supply chain and recycling chokepoints are appearing in commodities like lithium. Any renewable energy future is going to require a massive increase in minerals, rare-earths and metals mining – raising new social and environmental costs. The market has embraced the simple renewables. Under the banner of ESG (Environment, Social and Governance), most investment managers now claim to be green and won’t fund anything fossil fuel related. They foresee greatly improved returns from renewables – creating a virtuous circle where renewable stocks go higher as fossil fuels tank. The result is companies with a high ESG rating trade at up to a 25% premium to the poorer ones, and can raise finance some 10% cheaper. But… what we’ve seen so far has been the easy yards of the long-term decarbonisation shift. EVs are not rocket science. Windmills are millennia old-tech. Solar panels are great when it’s not raining. They were all established technologies – and relatively simple to upscale and innovate for the modern age. We embraced Wind, Solar and Lithium batteries because they were proven, cheap and promised swift payback – and there is nothing the market likes as much as short-term returns. The fashion for ESG assumes renewables are a complete solution – that wind and solar can be ramped up from 28% to 100% – which is dangerous nonsense. Over the past decade it’s become increasingly difficult to finance fossil fuel exploration or production. The result is a new energy crisis – the UK and Europe ignored the reality we will need Gas for decades to provide power during the transition to clean energy, but having neglected how to source or store it. The result is the deepening crisis for European Energy Security and an increasingly dangerous dependency on Russia for supplies. The next and very necessary stage of de-carbonisation is likely to prove more difficult and more expensive. Wind and Solar were easy but unreliable. Tidal energy is an example of short-termism failure. Tides are ultra-reliable, but extracting energy comes at a higher cost because the sea is an unfriendly environment for any piece of high-tech kit dunked in it. Tidal power remains in the slow lane, even though industry experts have shown costs would quickly tumble on widespread adoption to make them cheaper and more reliable than wind. It takes years and billions to build a nuclear power station, or to develop smaller and more nimble nuclear alternatives. There are battery solutions which will be less dependent on dirty, socially questionable elements like lithium, but they are still a few years from commercial roll out. They require long-term investment – which is difficult due to the market’s short-termism. A second issue is the reality of changing the global economy from high growth to carbon neutral growth, something no politician will talk about it if it looks like a poorer future. Which developing nations are willing to tell their populations future growth is limited while the developed west looks relatively richer? The problem of free riding will not go away – at the individual or national level – which is why the no-show of China’s President Xi at the conference is generating distrust. Politics is a game with a short frame focused on the next election – however much they say about future generations. Short-term solutions are favoured to garner immediate results. Sound bites allowing politicians to bask in glory on their well intentioned but short-term plans will flavour the conference. The hard work is making it happen over the long-term. Tyler Durden Fri, 10/29/2021 - 05:00.....»»

Category: blogSource: zerohedgeOct 29th, 2021

The 9 best yoga mats of 2021, according to yoga teachers

I'm a Hatha yoga teacher and have tested dozens of mats. Here are the 9 best that have proven their worth, including JadeYoga and Manduka yoga mats. Table of Contents: Masthead Sticky Practicing yoga on the same mat creates a familiar, relaxing space anywhere we set it down. As a yoga teacher, I find the best yoga mats offer stability, non-slip grip, and joint cushioning. Our top pick, the Rumi Earth Sun, is eco-friendly, well-cushioned, durable, and absorbs sweat. Your yoga mat does more than just keep you from slipping and absorb your sweat during a vigorous flow. Unrolling and stepping onto it becomes a signal to our brain and body that it's time to slow down, Vinita Laroia, a 300 RYT-certified yoga and meditation teacher with over 20 years of experience, told Insider. Considering you touch your yoga mat every time you practice, choose wisely. Materials, durability, thickness, non-slip grip, and other subtle design differences between mats play into comfort and balance.Related Article Module: The 7 best yoga accessories to elevate your home practice in 2021, according to yoga instructorsAs a 200RYT Hatha yoga teacher with over 10-years-worth of practice, I have a ton of first-hand experience testing out dozens of mats over the years (in addition to those I tested specifically for this guide), as well as an endless list of input from fellow yogis about which mats they love (or regret purchasing). At the end of this guide, I've detailed how exactly we rigorously tested these yoga mats and included what is most important when you're shopping for a yoga mat.Here are our top picks for the best yoga mats:Best yoga mat overall: Rumi Earth Sun Yoga MatBest budget yoga mat: Hugger Mugger Gallery Collection Yoga MatBest eco-friendly yoga mat: Hugger Mugger Para Rubber Yoga MatBest socially-responsible yoga mat: Kosha Yoga Co. Sanctuary PUre Couture Yoga MatBest thick yoga mat: Manduka PRO™ Yoga Mat 6mmBest travel yoga mat: Manduka Eko Superlight Travel Yoga MatBest yoga mat for sweaty yogis: JadeYoga Harmony MatBest washable yoga mat: Yogi Bare Teddy Yoga MatBest yoga mat for alignment work: Liforme Yoga Mat The best yoga mat overall Rumi Earth's Sun mat is the best yoga mat as it's eco-friendly, well-cushioned, durable, and absorbs sweat. Rumi Earth Rumi Earth's Sun Yoga Mat is made from sustainable materials from a minority-owned small business that provides adequate support for your joints — a great choice for newbies and seasoned pros alike.Pros: Plenty of padding, biodegradable, non-toxic materials, durable, multiple lengths, great for yogis of all levels, minority-owned small businessCons: NoneA minority-owned yoga and athleisure brand, Rumi Earth focuses on sustainability and conscious sourcing of non-toxic materials for its products. The Sun yoga mat is available in multiple lengths, widths, and color options. Every Rumi Earth mat is also entirely biodegradable.Made from cotton fibers and natural rubber, this mat is eco-friendly with excellent grip and durability. With its open-cell design, I had no problems with traction, even while dripping sweat all over during my cardio pilates sessions.What's more, this mat is subtly more padded than most at 4.3mm instead of the standard 3mm. Kasia Gondek, PT, DPT, CSCS, physical therapist at Fusion Wellness and Physical Therapy in California, told Insider that thicker yoga mats can also help in cushioning common pressure points for anyone, like the sacrum, heels, and greater trochanters in your hips.As someone with chondromalacia patellae in both knees, I need a thicker yoga mat for less pressure on my joints. I found Rumi Earth's Sun Yoga mat's 4.3mm to hit the sweet spot of being enough padding for me, but not so excessive that it'll bother those without any joint pain (you probably won't even notice it's thicker than standard).  The best budget yoga mat Hugger Mugger's Gallery Collection Yoga Mats are lightweight, easy to clean, and cheap. Hugger Mugger Hugger Mugger's Gallery Collection Yoga Mats are dual-sided, lightweight, and highly affordable for yogis on a budget.Pros: Lightweight, latex-free, colorful designsCons: Not as durable, can shift around during practice, slipperyA dependable, comfortable yoga mat is important to help you "create the sanctuary you need," according to Laroia, even for beginners. And that doesn't have to come with a high price tag.Hugger Mugger's Gallery Collection Yoga Mat is made from PER material, weighs just 2.2lbs, and comes in colorful choices — all for under $35. These thoughtfully-designed mats are also ideal for yogis on the go as they are incredibly lightweight and easy to roll up.Featuring a closed-cell design, the mats are non-porous to moisture and dirt; however, that of course means they become slippery the more you sweat (which was definitely my experience). This mat is best suited for less intensive flows like yin or hatha yoga, or will need a full-length yoga mat towel with non-slip grip for added absorbency over top.I also don't recommend it for fast-paced flows — especially if you practice on tile like me — as the mat tends to shift around when moving quickly from one asana to the next.This mat offers the standard 3mm of padding. If you're a yogi like me that needs more cushioning under the joints when you practice, opt for the Gallery Collection Ultra Yoga Mats. At 6mm thick, these well-cushioned mats offer double the padding and comfort as you flow through your practice. The best eco-friendly yoga mat Hugger Mugger's Para Rubber yoga mat is non-toxic and completely biodegradable. Hugger Mugger Made from 100% sustainably sourced non-Amazon rubber, Hugger Mugger's Para Rubber yoga mats are non-toxic, durable and when it's time to retire, completely biodegradable as well.Pros: Environmentally-friendly, well-cushioned, natural rubber, sturdyCons: Heavy, latex can aggravate allergies for some, expensiveMade from 100% non-Amazon sustainably sourced rubber, this eco-friendly mat is dual-sided — if you sweat a lot, pick the woven-like side, which offers excellent grip during hot yoga sessions, while the smooth side, which is still grippy, can be used for more relaxed classes.The Para Rubber mat is 24 by 70 inches but also comes in an XL version (24 by 78in) for taller yogis. At 6.4mm thick, I find the mat to be very comfortable on the knees and wrists, especially when practicing quicker-paced, Vinyasa and Ashtanga yoga flows. Thicker, denser mats, Laroia explained, are best for ensuring better stability during your practice.At $95, this yoga mat is undoubtedly an investment, but its sustainable manufacturing process, thick cushioning, and reversible nature justify the price. Not to mention its non-slip grip means sweaty yogis don't have to buy an additional yoga towel.The only downsides are that you have to clean it frequently thanks to its open-cell design structure (which equals more porous), and some yogis may find the initial natural rubber smell to be overpowering. However, in my experience, the smell went away after regularly wiping down and airing out my mat in the first few weeks. The best socially-responsible yoga mat PUre Couture Yoga Mats are sustainably made, well-cushioned, and purchases give back to the local community. Kosha Yoga Co. Sustainably made in India, Kosha Yoga Co.'s range of PUre Couture Yoga Mats benefit the local communities they are produced in — a percentage of each sale goes to two local non-profits, Maee Home for the Blind and the Kalote Animal Trust.Pros: Sustainable, PVC-free materials, socially-conscious, colorful floral patterns, sturdy designCons: Expensive, initial rubber smellFocused on sustainability and giving back to the community, Kosha Yoga Co.'s PUre Couture Yoga Mats are entirely biodegradable thanks to the mat's recycled-PU top layer and dense, natural rubber base.At 27 by 73 inches, the PUre Couture mat is broader and longer than a standard yoga mat, making it a great pick for taller yogis. I love that it also comes with a carrying strap, which, in a pinch, can also double as a yoga strap.With 4.5mm of cushioning, there's enough padding between your joints and the floor. And, thanks to its sturdy rubber base, the mat stays firmly in place during power yoga flows; its non-slip top layer makes this a good choice for sweaty yogis.Apart from the use of eco-friendly materials, this sustainable Mumbai-based athleisure brand gives a percentage of each sale back to the local community. In addition, Kosha Yoga Co. provides career opportunities to women in Dharavi, Asia's largest slum — its line of yoga mat bags and meditation cushions are entirely handmade there. The best thick yoga mat This Manduka yoga mat is thicker and longer than your average mat, so it's ideal for those who need a well-padded yoga mat. Manduka The Manduka PRO is thicker and longer than your average mat, making it a great choice for taller yogis and those who need extra padding.Pros: Extra dense and padded, available in two sizes (85-inch variety is ideal for taller yogis), lifetime guaranteeCons: Heavy, expensive, may need a towel for hot yoga or if you sweat a lotThe Manduka yoga mats are leaders in the yoga community and highly recommended by teachers. We love the Manduka PRO in particular because, as Laroia puts it, "This mat does everything."However, the Manduka PRO's price tag is steep at $130 ($155 for the extra long, 71x85-inch version), which means it's not a good pick for everyone. But if you need a longer mat or more padding, this Manduka yoga mat is worth the money.At 6mm thick, it has the right amount of cushioning without being soft and provides ideal support for your knees and joints, allowing practitioners such as myself extra comfort when practicing. As Gondek's preferred mat of choice for five years, she finds the PRO yoga mat "very comfortable on the knees and sacrum during quadruped and supine positions."The PVC-mat is made using an emissions-free process and has a closed-cell design, creating a non-porous surface that lengthens its life span. This prevents moisture and bacteria from being absorbed into the mat; however, closed-cell mats can get slippery and are not great on their own for hot yoga or if you sweat a lot (though this is easily solved by throwing a yoga towel on top).Perhaps best of all, Manduka's lifetime guarantee for its PRO series makes the mat a worthwhile long-term investment. If you do experience flaking or peeling of your yoga mat, which happened to my first Manduka mat, they'll send you a replacement at no cost.Best budget alternative: For a more affordable mat, I recommend the Hugger Mugger Earth Elements 5mm Yoga Mat. At 2.4 lbs, this mat is lightweight and extremely easy to carry from home to yoga studio without sacrificing on thickness. Made from non-toxic TPE, it features a closed-cell design, and is also a great latex-free pick. The best travel yoga mat Manduka's Eko SuperLite Travel Yoga Mat is lightweight with good grip, making it ideal for a travel yoga mat. Manduka Manduka's Eko SuperLite Travel Yoga Mat is slim and lightweight enough to bring with you no matter how far you roam without compromising grippiness.Pros: Lightweight, easy to maintain, thin enough to fold, signature grip, durable materialCons: ThinLightweight travel mats let you keep up with your practice on the road without borrowing a questionable yoga mat from your hotel (or worse — down-dogging directly on the carpet). The Manduka Eko SuperLite Travel Mat is the lighter, thinner version of Manduka's top-ranked Eko option.It's made of a woven scrim material that won't tear or stretch either with use or in your suitcase. "I've used this mat for over two years, and just like any other Manduka, the mat has held up very well during travel," Gondek said. "Even on camping trips with plenty of dirt and grime."It's thin enough to be foldable so that you can tuck the mat away into your backpack or your carry-on without added weight or bulk. Thanks to Manduka's signature sweat-resistant closed-cell design, this mat stays drier and cleaner for longer. But, if you end up signing up for a hot yoga class during your travels, Gondek recommends bringing a non-slip grip yoga mat towel along. — Rachael Schultz and Christabel Lobo The best yoga mat for sweaty yogis JadeYoga Harmony Mat provides great traction and minima slipping, even during sweaty yoga classes. Jade Yoga Whether you're a yogi who sweats a lot during workouts, or you enjoy the sweat-inducing practice of hot yoga, the JadeYoga Harmony Mat is what you need to avoid slipping and sliding.Pros: Non-slip surface, plenty of cushioning, multiple length options, multiple color optionsCons: Some may find the cushioning too much for their preference, expensiveIf your yoga practice works up enough of a sweat that most mats become dangerously slippery, JadeYoga's Harmony Mat will keep you safe. Made from natural rubber with tiny dots instead of a smooth, sleek surface, the Harmony Mat's design provides great traction and minimizes slipping. The texture is small enough it goes unnoticed by your hands and knees, even after a 60-minute session.The mat is incredibly comfortable, too. Featuring thick enough cushioning to protect your knees and back from getting dinged while practicing, it's not too thick to hinder movement.JadeYoga offers the Harmony Mat in two different sizes, as well as a dozen different colors and prints. It is on the spendy side at $85 for the longest option, but for sweaty yogis, that's often cheaper (and way more convenient) than purchasing a mat plus absorbent towel. — Kaitlin GatesRead our review of the JadeYoga Harmony Mat. The best washable yoga mat The Yogi Bare Teddy is machine washable, but still very durable and with great traction. Yogi Bare The Yogi Bare Teddy is machine washable without sacrificing quality or durability over time and use.Pros: Machine-washable, grippy microfiber top, natural rubber bottom stays in place, comes in a variety of fun patternsCons: Requires a washing machine, not very paddedThough most mats are easily cleaned with a simple spray and wipe down, if you use it outside or tend to heavily sweat while you practice, it's convenient to have a mat that can be thrown in the washing machine. The Teddy from Yogi Bare is actually machine washable. I was surprised to find during testing that the washer didn't compromise its integrity; its natural rubber base and microfiber top stayed as intact as when I first bought it, even after multiple washes.Even if the Teddy wasn't machine-washable, it'd still be a great yoga mat. Its microfiber surface is grippy, especially after I'd been sweating a bit on it, and it's just padded enough that it provides a soft landing whenever my feet (or wayward knees and elbows) hit the ground. It comes in fun patterns and colorways.It's cheaper than many other mats on this list. However, it's also only 2mm thick, so it's not a great choice if you have any sort of joint pain. — Rick Stella The best yoga mat for alignment work The Liforme Mat uses a printed alignment system to help you with form and alignment. Liforme The cult-favorite Liforme Mat has a signature printed alignment system on the surface, which promises symmetry, balance, and proper footing during your practice.Pros: Eco-friendly, extremely sticky, doesn't wear over time, signature alignment systemCons: One-size-fits-all alignment doesn't fit all bodies, very expensiveThe Liforme mat has discreet lines, shapes, and markers etched into its surface to help you place your limbs accurately as you move from one asana to the next. Laroia explained that these help you with hand and feet placement and improve your alignment, a key feature for beginner yogis.The mat is 27 by 73 inches, so longer and wider than most mats. This is great for taller yogis, but if you're shorter than 5'4", you may have trouble hitting the recommended alignments.That being said, I used the Liforme mat for a few weeks and definitely saw the appeal of the lines. Laroia adds, "The mats are good in quality, rivaling my trusty Manduka." Thanks to its proprietary blend of natural rubber and sustainably sourced felt to cushion your knees, hips, and hands, the Liforme mat is exceptionally grippy, preventing you from sliding around during vigorous yoga sessions. It's also PVC-free, and each layer is heat-bonded to avoid toxic glues and adhesives, making it an eco-friendly choice.  How we tested these yoga mats As a decades-long yoga practitioner and 200 RYT Hatha yoga teacher since 2017, most of the yoga mats included have been a regular part of my practice for several years. Others, such as Kosha Yoga Co.'s PUre Couture Mat, were tested daily from February to June 2021.I spent hours testing the yoga mats out in a variety of yoga disciplines, including yin yoga, invigorating vinyasa flows, and gentle, hour-long Hatha classes, in addition to sweat-inducing cardio and mat pilates-focused workouts to evaluate their grippiness and traction when wet. I practiced on several different surfaces, including tile, carpet, and concrete. I even took the mats outdoors to see how they'd fare in different climates and evaluate their portability and durability. Each yoga mat featured in this guide went through a series of on-the-mat tests to see how well they stacked up across these five categories: Performance: The key aspects include how grippy the mat is for helping you hold poses or reliably move a hand or foot (especially once you start sweating), and how comfortable or padded the mat is. Durability: Durability of a mat is what justifies their higher price tags and truly speaks to its sustainability. Be it puddles of sweat or the constant barrage of knees, elbows, heels, and shoulders, a yoga mat is under constant pressure. Yoga mats should be able to take a beating, especially if you use it often. Material: PVC or TPE, all-natural rubber or synthetic, latex — the materials used to make your yoga mat affect all the other categories listed here. PVC mats tend to be the best value; however, they aren't very eco-friendly or durable. So, while a lower price tag may seem attractive now, in the long run you may end up spending more just replacing your cheaper mats. We consider sustainability a major factor in choosing a mat, so your best bet is to seek out options made from cork, natural, non-Amazon harvested rubber, or recycled materials; some brands, such as Manduka, have its own eco-friendly lines or are OEKO-TEX certified — an European-based textile certification agency focused on sustainable manufacturing processes. Smell is another thing to consider; some new mats have a distinct rubber smell that dissipates after time but can hinder your practice initially.Support: If you don't have joint pain, the standard 3mm-thick mat should be fine for you. But extra cushioning helps take the pressure off your joints, so it's a smart consideration for anyone with knee issues, joint pain, or autoimmune diseases like rheumatoid arthritis. Look for a thick, dense mat, over a soft one, which can destabilize some practitioners in balancing postures, side planks and asymmetrical holds, Laroia said. Ease of cleaning: It's recommended that you clean your yoga mat after every use (especially for anyone who sweats heavily), so a mat that's easy to clean is a necessity. Closed-cell designs are easier to clean, while open-cell designs requires more meticulous disinfection to remove dirt and sweat buildup.Value: Value is the combination of every category we judged the yoga mats on, plus its actual price point. We like to think that it's better to invest more in a quality mat that lasts than to spend the money on several cheap mats in the same amount of time. So when choosing our budget pick, we also wanted to make sure it wasn't some shoddy mat but something that delivers premium quality at a more wallet-friendly price. What to look for when buying yoga mats As a decades-long yoga practitioner and 200 RYT Hatha yoga teacher since 2017, I have personally tested, researched dozens of mats and brands, and spoken to trusted experts to find the best yoga mats for a variety of practices and lifestyles.Quality, of course, comes with a higher price tag, Laroia explained. "But the quality of the mat is the foundation of your whole yoga experience."The most important factors to consider when shopping for a yoga mat are:Size and portability: You'll often tote your mat along to the studio or need to stash it somewhere in a small apartment. Plus, some mats are longer than others, which is important if you're tall.Stickiness: While certain people like sticky mats that keep their feet from sliding around, others find them annoying, providing too much hold when they want the freedom of movement.  This is a personal consideration.Thickness: Most yoga mats are 3mm thick, which will suffice for less-injured yogi. But considering every person has different abilities and a lot of people turn to yogi to mend an ailing body, mats with a thickness at 4mm and above will relish the extra protection and cushion for their joints.Firmness: Gondek explains that for beginner yogis, mats serve as important tools to help "improve your balance and joint position sense by gently challenging the vestibular system." The right yoga mat can also teach you how to focus your attention through mindful connection between body and mind. "Practicing on a firm surface allows us to connect directly with our base of support, which is beneficial for people with poor balance, and allows us to maintain presence and focus during our practice, " she says.Durability: You want a mat that's going to last, so durability and longeviety also play into price.Materials: Most of the time, either your skin is touching the mat or your face is close to it, so you want one that isn't made with harsh or harmful chemicals. It's also important to opt for materials that are easy to wipe clean after a sweaty session of hot yoga. On top of all that, if you're a conscious consumer, you want a mat made from more sustainable, recycled, or recyclable materials, rather than PVC or plastics. What else we considered What else we recommendYoGo Travel Yoga Mat ($68): This mat is lightweight, rolls up really small, and comes with durable buckles and handles. However, we prefer the Manduka Eko SuperLite as a travel mat, as it's the same thickness and made from sustainable rubber, but $20 cheaper.Liforme Travel Mat ($115): Liforme's travel mats come with a canvas carrying bag and offer the brand's signature printed alignment guide, plus an incredibly grippy surface. But the Manduka Eko SuperLite is a more universal fit for traveling yogis and significantly cheaper.PrAna E.C.O. Yoga Mat ($55): Made from 100% thermoplastic elastomer, PrAna's E.C.O. yoga mat is non-toxic, completely recyclable, and super sticky so your hands and feet won't slide. The TPE material isn't super cushy on your knees or back, but if you're on a budget, this is an excellent option as it's $39 cheaper than the Hugger Mugger Para Rubber Yoga Mat.Jade Level 1 Yoga Mat ($50): Touted as "beginner-friendly", this mat has grippy bottom so your mat will stay put and an all-natural rubber construction. Its 4mm thickness and under $50 price tag have made this my go-to mat for cross-country road trips and short-haul travels.What we don't recommendGaiam Print Premium Yoga Mat ($30): From a trusted yoga brand, this Gaiam mat is highly affordable, comes in many colorways, and has a decent non-slip grip. However,  it's not as durable as other options, so you may end up spending more money down the line replacing it.Manduka ProLite Yoga Mat ($92): Its no-slip grip surface and lighter weight make this Manduka mat an appealing choice for yogis of all levels. However, Rumi Earth's Sun Yoga Mat beat it for the Best Overall Yoga Mat since the Manduka mat is made from PVC and its closed-cell design means it's more slippery when you're sweating.What we're looking forward to tryingGurus Roots Cork Yoga Mat ($99): With an antimicrobial top — thanks to cork's natural therapeutic properties — and all-natural rubber bottom (harvested from the owner's family rubber trees in southern India), Gurus's cork yoga mats are as sustainable as they come. Cork's naturally non-slip surface means no yoga towels during your next hot yoga session. Suga Yoga Mat ($79): This innovative Southern California-based brand collects your old neoprene wetsuits and converts them into yoga mats. Suga's (rhymes with beluga) 5mm-thick recycled mats come in two sizes, regular and extra large. It also have a 3mm travel mat for yogis on the go. FAQs Manduka Why does a good yoga mat matter?The right yoga mat can actually help prevent injury by cushioning pressure points like the knees, lower back, and hip bones, Kasia Gondek, PT, DPT, CSCS, physical therapist at Fusion Wellness and Physical Therapy in California told Insider. "Less joint pain can improve your activity tolerance during your yoga practice, allowing you to spend more time improving your mobility, flexibility, and strength in the areas you need it most," she said.Even the most able-bodies person will feel a different level of comfort between an uber-minimal or cheap mat, and a quality one at standard thickness. If you have any sort of joint pain, upgrading to a thicker mat (4mm+) will give you a world of relief.Additionally, if you like heart-pumping Ashtanga or Vinyasa flows or who sweat easily during hot yoga, you'll enjoy your practice a lot more if your mat has special sweat-absorbing properties. Meanwhile, those who travel often will benefit from foldable and lightweight mat for maintaining a daily practice on the road.What is the best thickness for a yoga mat?Standard yoga mats are 3mm thick, which keeps them lightweight, foldable, but cushioned enough to support your bones and joints from hard floors. However, if you have aches and pains in general or during certain poses, like chakravakasana (cat-cow pose) or anjaneyasana (low lunge pose), a thicker mat can help cushion pressure points, says Kasia Gondek, PT, DPT, CSCS, physical therapist at Fusion Wellness and Physical Therapy in California. This can be a slightly-thicker mat, like the Rumi Earth's Sun Yoga Mat at 4.3mm thick, or significantly thicker, like the Manduka PRO at 6mm thick.What is the difference between yoga mat and exercise mat?Exercise mats are designed to provide max cushioning between your hands, knees, or spine and the floor so you can be comfortable while doing floor exercises. But too much cushioning can throw off your balance and stability.Yoga mats are typically thinner than exercise mats so that your points of stability (e.g., hands, feet) can make better contact with the floor, providing better balance. But they are still thick enough to help cushion your joints from the hard surface.A yoga mat can be used as an exercise mat, but an exercise mat doesn't work so well for yoga.How much should I spend on a yoga mat?You should spend around $50-75 to score a quality yoga mat that will keep your hands and feet from slipping and last more than a year or two. The best cheap yoga mat we've found is from Hugger Mugger and runs about $45, while nicer mats made from sustainable materials and with more cushion can cost upwards of $120.That being said, you can grab a basic yoga mat at a store like Target or Walmart for under $30. And if you're just buying one to start stretching more, that's fine. But cheaper mats will fall apart quicker and aren't designed with features like grippiness, sweat-absorption, or cushioning to make yoga a comfortable experience. Expert sources As a decades-long yoga practitioner and 200 RYT Hatha yoga teacher since 2017, I have personally tested, researched dozens of mats and brands and spoken to others in the community about their experiences. For this article, I not only leaned on that expertise, but I also spoke with trusted experts to find the best yoga mats for a variety of practices and lifestyles, including:Dr. Kasia Gondek, DPT, CSCS, a licensed pelvic floor and orthopedic physical therapist at Fusion Wellness and Physical Therapy in Southern California and instructor of a biweekly "Yoga for Pelvic Pain" donation-based Zoom class that teaches those with pelvic, low back, and hip pain to be present in the moment and find pain-free movement based in Hatha and yin yoga styles.Vinita Laroia, a first-generation Indian-American 300 RYT yoga and meditation teacher based in California's Sonoma County. Other yoga coverage from Insider Reviews PeopleImages/Getty Images The best yoga accessories to elevate your home practice in 2021, according to yoga instructorsThe best yoga blocksThe best yoga socksThe best workout clothes for women Read the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 25th, 2021

The 5 best electric scooters of 2021

Electric scooters provide a reliable form of transportation no matter if you're commuting to work or running errands. Here are the best we've tested. Table of Contents: Masthead Sticky Electric scooters are a convenient and fun way to commute to work or run errands around town. The best electric scooters should have a reliably long battery range and travel at speeds of up to 20-plus mph. Our top pick, the Ninebot KickScooter by Segway ES4, has a dual-battery design that gets up to 28 miles of range. Electric scooters have gone from curious novelties to a bonafide form of transportation thanks to advancements in tech and the rise of e-scooter rental services like Lime and Bird.And I can't overlook the fact they're just plain fun to ride.But more people have also discovered that owning their own is incredibly convenient - I know I have. Whether it's a quick jaunt to the store, a ride to a friend's house, or just commuting from a distant parking lot to the office, there are numerous times when having an e-scooter has proved incredibly handy for me. If you've been considering buying an electric scooter of your own, I highly recommend it. But the most important question to ask yourself before buying is what you plan to use it for - after that, there are plenty of models that stand out from the crowd. To help, I've compiled the following guide of the best electric scooters I've tested, perfect for a variety of people and use cases.I've also included some insight into how to shop for an electric scooter, as well as how I tested each of the scooters featured in this guide. Here are the best electric scooters of 2021:Best overall: Ninebot KickScooter by Segway ES4Best on a budget: Gotrax XR UltraBest for commuters: Xiamoi Mi M365 Best for performance: Outstorm Maxx Ultra High-SpeedBest for kids: Razor E100 How I test electric scooters Each of the electric scooters in this guide went through a series of tests to determine how well they compared against these four categories: Range, portability, versatility, and value. Here's how I specifically considered each category while testing:Range: Most electric scooters are defined by the range they're capable of delivering, and this is the top factor to consider. To test this, we compared the on-paper range to how it fared in real-world tests. Where range begins to take a hit on almost every model is when you start riding uphill or traveling at its top speed for extended periods of time (and we've noted in the review of each model where this was the most significant).Portability: Being able to easily transport a scooter is a vital consideration for anyone living in an apartment building or someone who plans on commuting part of the way on a scooter. Portability means not just how much it weighs but whether it folds up and is easy to carry. Versatility: Versatility also means that a scooter can handle a wide range of uses, from fun rides to commuting to running errands. Judging a scooter's versatility meant seeing if it was capable of operating outside of its typical use case (within a set of safe parameters, of course).Value: Value is a combination of the three categories above and how it relates to what it actually costs. This can often mean that it's better to spend a little more on a quality scooter designed to last and function properly, as opposed to spending less on something you'll need to replace more often.  The best electric scooter overall Segway For excellent all-around performance, including good range and speed, the Ninebot KickScooter by Segway ES4 is a great option for riders looking for a versatile, easy-to-use model.Pros: Up to 28 miles of range on a single charge, features a dual-battery design, large wheels allow for very minimal offroad travel, speeds up to 18 mphCons: Long battery recharge timeThe Ninebot KickScooter by Segway ES4 has been on the market for several years and yet, it remains one of the top all-around models. Not only does it offer a solid and accurate range of 28 miles on a single charge, it can also hit top speeds in excess of 18 mph.That level of performance is due in part to its dual-battery design. Equipped with both a built-in and removable power cell, the ES4 provides good versatility when it comes to staying charged, too. The ES4's solid 8-inch wheels allow it to roll over large obstacles and provide a smooth ride on a variety of surfaces. Front and rear shock absorbers increase the level of comfort and help smooth out your commute. That's especially important when zipping along at top speed, which tends to amplify every bump in the road. Fortunately, the ES4 offers a relaxing and fun ride across a variety of terrain.Other nice features include a front-facing LED light, as well as user-customizable lights on the side and undercarriage to aid in visibility in lowlight conditions. A small, but easy to read, LCD screen displays current speeds and the battery's charge level, while electric and mechanical braking systems allow for a good sense of control. This model even folds down nicely for easy transport and comes with IPX54 water resistance for use in poor weather conditions. Because the ES4 uses two batteries to keep it running at such a high level, it takes a little longer than some other models in this guide to recharge. It can take more than six hours to power this scooter up to its full capacity, which can require a bit of planning depending on your needs. The ES4 can function as a traditional kick scooter in a pinch, though. Although there are other options that cost less, few of them offer the same level of performance and convenience in such a well-designed package as the ES4. The best budget electric scooter Amazon The budget-friendly Gotrax XR Ultra electric scooter provides good speed and range, along with more than few unexpected features, without putting a major dent in your wallet. Pros: Inexpensive, weighs 27 pounds, sturdy tires, has both disc and electric brakesCons: Limited featuresWhile the top end of the electric scooter market continues to push the envelope in terms of speed, range, and portability, many of those models remain too expensive for the general consumer. As with most products, however, the technology eventually trickles down to price points that are more palatable to the general public, delivering a lot of bang for the buck in the process. Such is the case with the Gotrax XR, a budget e-scooter that offers a level of performance that will meet most people's needs, without making them feel buyer's remorse afterward. The XR Ultra's top speed of 15.5 mph and a max range of 17 miles seems unimpressive when compared to other–more expensive—competitors. But its sub-$400 price tag makes this model a much more approachable option for those looking to dip their toe in the e-scooter waters. Put in other terms, this is the Toyota Camry of electric scooters. It is affordable, reliable, and offers good performance–just don't compare it to a Mercedes S Class. One of the best elements of the XR Ultra is its very smooth and comfortable ride. This scooter glides along at a steady pace, its 8.5-inch inflatable tires rolling over most obstacles with ease. The XR's folding frame and 27-pound weight should make it a favorite amongst budget-conscious commuters as well. In an effort to keep costs down, Gotrax didn't including any kind of suspension, however, which means this model performs best on smooth, paved surfaces. That isn't to say that the XR Ultra doesn't have a good feature set. The scooter comes with both a disc and electric braking systems with regenerative properties. It also includes a bright LED headlight and an LCD screen that displays speed, distance, battery life, and a number of other items. An integrated kickstand is a nice touch, as is the IP54 water resistance rating too. While I think the Gotrax XR Ultra is the best budget e-scooter on the market, it should be noted that there are plenty of other models that are available at a lower price. With those other options, you'll more than likely find yourself having to make compromises in terms of speed, range, and weight in order to save a little cash. The XR Ultra doesn't have any of those glaring compromises, bridging the gap between a truly budget scooter and the more expensive higher-end quite nicely. The best electric scooter for commuters Amazon Lightweight and capable of folding down to a surprisingly small size, the Xiaomi Mi M365 is an electric scooter built specifically with commuters in mind. Pros: Folds down for easy portability, weighs 27 pounds, comes standard with front and rear taillightsCons: Only rated to carry riders up to 220 poundsWhen selecting an e-scooter for use as a daily commuter, I want something that's lightweight and easy to carry around, without compromising on performance. That's exactly what I found in the Xiaomi Mi M365, which manages to provide 18.6 miles of range and a top speed of 15.5 mph while tipping the scales at a shade over 27 pounds. Add in a small battery charger and the ability to fold down to a smaller size and the M365 is easy to recommend to anyone who places an emphasis on portability. And don't let that lightweight fool you, it still has plenty of features packed into its design. For instance, it comes with front and rear lights, wide shock-absorbing tires, and an LED indicator for battery life. It also has a regenerative braking system that feeds power back into the battery, as well as a companion app for customizing settings and tracking distance, speed, and other metrics.This scooter even has a power-saving mode that helps extend the range by limiting the rate of acceleration and its top speed. Turning that mode on also makes the M365 more accommodating to beginners. It's clear Xiaomi put a lot of thought into making the M365 easy to use. This is especially evident in its folding mechanism, which allows it to shrink down to a more compact size in under three seconds. I appreciate that simplicity when entering and exiting trains, climbing stairs, riding elevators, or even taking the M365 in and out of a car trunk. While folding e-scooters are hardly a rarity, the speed and fluidity at which this one operates is a great feature.In order to achieve the M365's relatively low weight, Xiaomi used a minimalist design and a lightweight aluminum frame. Because of this, the scooter is only rated to carry riders weighing up to 220 pounds. The frame itself is plenty durable and can certainly support someone who exceeds that weight limit, but a heavier passenger cuts into performance, reducing both its range and speed.Weight limit aside, the Xiaomi Mi M365 is in a class by itself when used as a daily commuter. Lightweight and easy to carry, it offers a good blend of range and speed and delivers a smooth ride. The best electric scooter for performance Amazon If you're in the market for a fast scooter with long-range, the Outstorm Maxx Ultra-High-Speed is exactly what you're looking for. Pros: Up to 52 miles of range and speeds to 56 mph, maximum weight capacity of 485 pounds, can ride on gravel, dirt trails, and in sandCons: Extremely heavy at 100 poundsWhen moving up to the performance level of the e-scooter market, prices can increase substantially. While the models found at the top end of the scale are indeed fast and powerful, they can also cost several thousands of dollars. The Outstorm Maxx Ultra-High-Speed flirts with a $2000 price tag but ultimately delivers a lot of bang for the buck, striking an intriguing middle ground when it comes to performance and cost. So, what exactly does a performance scooter at this price point have to offer? In the case of the Maxx, it provides a top speed of 56 mph and a range of up to 52 miles. This is achieved thanks to its dual motors, which can produce as much as 3200 watts of power at their highest level of output. It also allows the scooter to carry a maximum weight of 485 pounds and ride not only on paved surfaces but also on dirt trails, gravel, and sand. The Maxx does well on hills too, powering up steep inclines without missing a beat. This scooter features three different speed modes and two power modes, which made it easy to find a good balance between speed and range. A digital readout prominently displays how fast the scooter is currently moving and shows battery life and distance traveled. A regenerative braking system helps feed energy back into the battery throughout the ride, while a bright LED headlight makes riding at night much safer as well. The Maxx also features a hydraulic shock system, 11-inch tires, durable running boards, and electronic cruise control. Of course, all the high-performance components used in the Maxx's construction come at the expense of weight. This model weighs in at a whopping 100 pounds, which means it isn't an especially good choice for commuting. Yes, it can fold down to a smaller size for ease of storage, but that doesn't make it any easier to lift or move around when the battery is dead. Thankfully, with its large 60V power cells, it doesn't run out of juice all that often. In terms of performance scooters, the Outstorm Maxx Ultra High Speed is a relative bargain, offering plenty of speed and range in an attractive package. But it also provides a smooth, comfortable ride as well, both on and off-road. Because it falls into the pricier end of the market, it definitely isn't a model for most people. Riders who are willing to pay the extra money will find that it more than delivers on its promise of exhilarating two-wheeled thrills. The best electric scooter for kids Amazon Built with kids in mind, the Razor E100 is stable, comfortable to ride, and easy to control, while managing to remain nimble and fun. Pros: Offers a stable ride perfect for kids to learn on, easy to maneuver, favors safety over performanceCons: Limited long-term durability, 26-pound weight could be a lot for kids to carry, not many featuresRazor has been designing scooters—both electric and kick models—for a variety of age groups for years. Over that time, the company has learned that the features that you look for in an adult model are quite different than those for kids. While speed and range are of the utmost importance to the former, safety and stability are the chief concerns for the latter. That design philosophy is evident with the E100, an e-scooter that is sure to delight younger riders. The E100 provides a top speed of 10 mph and offers a ride time of about 40 minutes between charges. Yes, the range of this model is measured in minutes rather than miles, which is another departure from the adult scooter market. Forty minutes of continous use is a fairly long time by kid standards, however, providing a reasonable amount of range before the battery runs dry. With its 8-inch pneumatic front tire, the E100 provides a nice, smooth ride. Coupled with the scooter's rear-wheel-drive system, this shifts much of the weight to the back, enhancing stability and balance as a result. Hand brakes and a thumb throttle make learning to ride quick and easy too, making this a scooter even younger kids will feel comfortable on quite quickly. As with any product designed for kids, long-term durability is always in question. To alleviate those concerns, Razor used a steel frame in the construction of the E100, giving it a very solid feel overall. Those materials do end up adding some weight to the scooter, which tips the scales at 26 pounds. By adult e-scooter standards, that is quite svelte but younger kids may find the E100 unwieldy to lug around.  Compared to most electric scooters designed for adults, the Razor E100 doesn't have a lot of features and amenities. Still, thanks to its ease of use and uncomplicated design, kids will find this model a lot of fun to ride around. After all, their goal isn't to commute to and from the office but to ride with friends and enjoy some time outdoors. For that, this is a wonderful choice. How to shop for an electric scooter As the electric scooter market has grown and diversified, there are now a number of categories that help to define it. The most obvious of those categories is whether or not a specific model is designed with kids or adults in mind.Those made for the younger crowd tend to be smaller, less expensive, and slower. They often have less battery life as well, which translates to a shorter range. Conversely, adult scooters are built for, well, adults, and as such, they are larger, faster, and heavier. They also tend to be more expensive. Unsurprisingly, when it comes to choosing an electric scooter, price is one of the major defining factors. At the lower end, you'll find budget models that come with less expensive components, smaller batteries, and slower top speeds. Mid-tier e-scooters typically fall into the commuter segment and offer a nice blend of range and speed, with prices reflecting those upgrades.At the high-end of the market, you'll find performance models that can potentially cost more than $1,000 but are also quicker, more nimble, and have a longer range than their competitors. RangeWhen shopping for an e-scooter of your own, there are some important specifications that you'll want to keep in mind. Probably the most important of those specs is the range a scooter offers. Each scooter manufacturer offers an estimated range for a given model, which is defined as the distance it travels on a single charge. That distance is directly impacted by the size of the battery, the weight of the rider, and the surface type of surface that it is ridden on.The outside temperature can also have an impact on the range, with colder temps drastically reducing the life of the battery. In real-world conditions, you can expect to ride anywhere from 10-40 miles before having to recharge.SpeedAnother defining characteristic of an e-scooter is its top speed. Its actual number varies greatly depending on the model and manufacturers will often boast of speeds in excess of 25 or even 30 mph, although in practice those numbers aren't always accurate.The size of the motor and battery, along with the weight of the rider, each have an impact on the level of performance. This results in many scooters cruising along in the 5-10 mph range, particularly when not riding on a flat, even surface. Still, shoppers are encouraged to consider the top speed of a model very carefully. A faster model may seem more fun, but it can be much more challenging to control. Quicker acceleration and more power can come in handy, particularly for commuters, but safety should be a primary concern as well.Inexperienced riders are encouraged to choose slower, more stable options while still learning to ride. Additionally, faster scooters also tend to burn through their battery life more quickly, reducing range as result. Portability and weightIf you're the kind of owner who plans to just keep your scooter in the garage and only ride it around the neighborhood, then portability probably isn't something you're all that concerned with.Those who plan to use a scooter for commuting should pay close attention to its weight. Lugging it on and off the subway, or up and down several flights of stairs, can be quite a challenge, especially if your particular model wasn't built with that in mind.As with buying a bicycle, the components used in manufacturing an e-scooter have a direct impact on how much it weighs. Budget models tend to have smaller batteries and motors, which of course weigh less than their larger, more powerful counterparts. However, the other components found on these types of scooters often weigh quite a bit more, which keeps the price down but pushes the weight up.More expensive models tend to have a more powerful drivetrain but are made from high-quality, lighter components. The result tends to be a scooter that costs more, performs better, and is easier to carry around. Some electric scooters that have been specifically designed with commuters in mind may even offer the option to collapse down to a smaller size for ease of transport. Scooters that fold up and can be stored in a carrying case or bag have become so common that they now fall into a category entirely of their own.Usually, these types of scooters sacrifice some performance for improved portability, making them very compelling options for those placing a high value on convenience rather than speed or range. 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Category: smallbizSource: nytOct 7th, 2021

12 hotels we love in Palm Springs, from midcentury gems to relaxing spas

These are the best hotels in Palm Springs, from Ace's cool pool parties to boutique luxury at the Avalon or Parker, and pet-friendly picks downtown. When you buy through our links, Insider may earn an affiliate commission. Learn more. Tripadvisor Palm Springs is a desert oasis that was once a glam retreat for Hollywood stars. Now, it's known for midcentury design, rejuvenating spas, pool parties, and music festivals. Palm Springs hotels have all of the above from boutique spots to sprawling resorts and retro motels. Table of Contents: Masthead StickyWith swaying palms and near-perfect year-round weather, Palm Springs is a desert oasis.It teems with retro, vintage vibes like a time capsule paying homage to a heydey when the city was a glam retreat for Hollywood's elite. Given so much nostalgia, the city should probably feel a lot kitschier than it is. But it works. There's an authenticity that makes a weekend getaway just as exciting as it was for Frank Sinatra and Liz Taylor way back when.As such, Palm Springs has seen an influx of hotels including design-forward boutique hideaways, contemporary big brand chains, sprawling villa-style resorts, and hip hangs for pool-party revelry.I've been visiting Palm Springs for years and the following represents the best places to stay whether you're a Coachella-goer, an art lover, nature seeker, design purist, or family looking to savor what makes Palm Springs so special.Browse all of the best Palm Springs hotels below, or jump to a specific area:The best Palm Springs hotelsFAQ: Best hotels in Palm SpringsHow we selected the best hotels in Palm SpringsMore of the best hotels in the SouthwestThese are the best Palm Springs hotels, sorted by price from low to high. Sonder | V Palm Springs Rooms overlooking the pool offer a fun perch. Book Sonder | V Palm SpringsCategory: BudgetTypical starting/peak prices: $74/$346Best for: Couples, friends, solo travelersOn-site amenities: Restaurant, lounge and workspacesPros: This hotel has highly designed rooms, a fun pool scene, and cheap prices even in high season.Cons: The DJ spins tunes at the pool on weekends which can be noisy if your room faces it, and the vibe can get boozy, which might not be best if you're coming with children.Apart-hotel Sonder's acquisition of local favorite V Palm Springs offers a cheap base to stay with the comforts of a long-stay hotel.The property offers exceptional value year-round, and even during popular periods, for a design-forward, comfortable place to stay. Travelers range from those simply in search of a good deal, to discriminating Instagram influencer types willing to sacrifice neither cachet nor style.Plus, whereas Margaritaville or Ace can be rowdy in high-occupancy seasons, we've never had a problem at the V, with stays that are consistently positive. Somehow, it seems the masses haven't caught on yet.COVID-19 procedures are available here.Read our full hotel review of V Palm Springs Margaritaville Palm Springs The pool at Margaritaville has a stunning backdrop of palm trees and mountains. Margaritaville Palm Springs Book Margaritaville Palm SpringsCategory: BudgetTypical starting/peak prices: $103/$399Best for: Families, couples, travelers on a budget, ParrotheadsOn-site amenities: 2 restaurants, 2 bars, coffee shop, store, spa, salon, fitness center, meeting space, bike rentalsPros: Margaritaville is a renovated hotel with refreshed rooms, a great pool, a large spa, and a fun spirit that was not previously found in Palm Springs. It's a great pick for families and those who want neither a vintage boutique inn nor fancy luxury.Cons: The laid-back party approach means the clientele can get rowdy and though the resort was renovated, some room features were not fully updated. The resort fee is expensive.Margaritaville Palm Springs is one of the newest additions to the local hotel scene and has made a splashy entrance, taking over a former iconic midcentury hotel with full-out signature Jimmy Buffet flair.Beachy wicker mixes with tropical colors throughout common spaces and rooms, though, none cement those vacation vibes more strongly than a floor-to-ceiling flip flop sculpture that presides over the lobby, right next to a chandelier fashioned from margarita glasses.Guest rooms are bright and airy, with washed wood furnishings, pops of turquoise, and crisp white bedspreads with subtle parrots sewn in. Spacious balconies overlook the pool area or manicured grounds, and many have mountain views.As should be expected, Jimmy Buffet features prominently, from videos playing on lobby screens to wall plates with lyrics adorning hallways, and the aptly-named 5 O'Clock Somewhere Pool Bar churning out various takes of that frozen concoction that helps you hang on.There's also a large spa and salon, two pools, open-air restaurants, and a fun, laid-back vibe you won't find at Palm Springs' more sophisticated hotels. While it's not quintessential Palm Springs in terms of style, it is one of the best options in town for families or those who want to hang by the pool with a, what else, margarita.COVID-19 procedures are available here.Read our full hotel review of Margaritaville Palm Springs Hotel California This California Spanish Mission-style hotel has just 14 rooms nestled around a lush courtyard with a pool. Trip Advisor Book Hotel CaliforniaCategory: BoutiqueTypical starting/peak prices: $152/$246Best for: Couples, familiesOn-site amenities: Communal kitchen, pool, grills, hot tub, DVD library, gamesPros: Enjoy a quiet, peaceful stay that offers large, well-appointed rooms and helpful amenities like a communal kitchen. Cons: There is no restaurant or spa on-site and the hotel's address is on a busy street that's a bit too far from the main area of town to be walkable. Rooms are comfortable, but no frills. Don't expect a look as contemporary as other options in town.Hotel California feels like a local secret, except it's widely regarded as a top hotel in Palm Springs. The hotel has more of an inn or B&B feel, but with all the privacy and amenities you'd want in a resort. It's small, with rooms nestled around an interior courtyard and pool area filled with leafy plants, misters to keep you cool, and a fountain.Rooms are traditional but updated; there's no flashy decor, but it's comfortable with plenty of space. Most come with a private patio and upgraded rooms have kitchenettes.I loved my stay here and recall it as especially peaceful. Many hotels on the main street can be loud with traffic. I didn't hear any noise and highly recommend upstairs rooms for this reason. The pool is quiet, and there's a communal kitchen for guests to make their own meals. For COVID-19 procedures, call the hotel at 760-322-8855 or Triada Palm Springs, Autograph Collection The Mediterranean-inspired Triada is a tranquil place to stay that's close to downtown Palm Springs. Emily Hochberg/Business Insider Book Triada Palm SpringsCategory: BoutiqueTypical starting/peak prices: $175/$489Best for: Couples, families, Marriott loyalistsOn-site amenities: Restaurant, 2 pools, fitness centerPros: Rooms are tasteful with comfortable beds and Mediterranean style, plus well-appointed suites offer good value. The location is excellent, within walking distance to downtown.Cons: Entry-level rooms can be small with some complaints of noise. The scene might be too quiet for some people, and facilities like the pools and gym are small.Triada Palm Springs is a favorite among Marriott Bonvoy loyalists looking to earn nights towards status, without sacrificing signature Palm Springs style. I love the tranquil scene here with Mediterranean-style buildings overlooking tiled-mosaic courtyards with fountains and spilling Bougainvillea flowers.Entry-level rooms are on the smaller side, about 250 square feet, but I recommend an upgrade to a King Casita. With a kitchen, living area, and private back patio, it feels like the plush Palm Springs bungalow you'll wish was your second (or first) home. It's also typically cheaper than other comparable villas.The vibe is much calmer and quieter than other hotels in the area. Many days, I was often the only person at the pool. Don't come to people-watch, but rather, to relax in a more grownup setting than some of the other options on this list.COVID-19 procedures are available here. Holiday House Bold, design-forward rooms lead the way at this whimsical boutique resort for adults. Trip Advisor Book Holiday HouseCategory: BoutiqueTypical starting/peak prices: $164/$644Best for: Couples, groups of friendsOn-site amenities: Bar, pool, breakfastPros: Savor design-forward, stunning interiors with an adults-only vibe that's not raucous either.Cons: Holiday House endorses a communal environment which means no TVs, kids, or anyone under 21, which won't be a fit for everyone.With just 28 rooms, Holiday House is a true boutique hotel with whimsical and bright blue-and-white patterned decor. The design-forward approach features art from the likes of David Hockney, Roy Liechtenstein, Herb Ritts, and a garden sculpture by Donald Sultan.Rooms are called "Good," "Better," and "Best," and feature Nespresso machines, plush linens and robes, wet bars, outdoor showers, and balconies with prime mountain views. As the names imply, the more upgraded rooms include added indoor and outdoor space.The Pantry is a poolside bar serving cocktails and bites to eat, while an impressive breakfast buffet spread is also offered each morning to all guests, included in room rates.COVID-19 procedures are available here. ARRIVE Palm Springs ARRIVE blends midcentury style with a modern, industrial look. Trip Advisor Book ARRIVE Palm SpringsCategory: BoutiqueTypical starting/peak prices: $175/$695Best for: Couples, groups of friendsOn-site amenities: Pool restaurant and bar, ice cream bar, coffee shop, poolPros: ARRIVE has a clean, modern aesthetic that looks and feels brand new with comfortable rooms, great on-site amenities, and an ideal uptown location.Cons: The younger crowd might be a negative for some, as it leads to a rowdier, party-like scene, especially on weekends.ARRIVE is just a few years old and is already making a splash beyond its pool party scene, though, there's certainly that, too.The hotel blends midcentury style with a modern, almost industrial look and draws a younger crowd for its dynamic programming and excellent on-site food and drink, which includes a great coffee bar and ice cream treats.Past guests rave about the well-designed rooms and cool vibe that's a fresher alternative to the similarly hip Ace Hotel. Expect Egyptian cotton bedding, plush robes, marble-accented bathrooms with rain showers, Apple TV, Malin & Goetz bath products, and loads of natural light.COVID-19 procedures are available here. Sparrows Lodge With no kids allowed and farm-to-table shared meals, Sparrows feels like summer camp for grownups. Tripadvisor Book Sparrows LodgeCategory: BoutiqueTypical starting/peak prices: $197/$1,876Best for: Couples, groupsOn-site amenities: Pool, massages, restaurant, communal spots, bike rentalsPros: The fresh approach to hospitality feels unique from other Palm Springs offerings with farm-to-table fare and shared meals for a luxe summer camp for grownups vibe.Cons: The community atmosphere might not be a match for everyone, including those who like to watch TV, or have kids in tow.Enjoy chilled-out Palm Springs vibes at this former home of a Hollywood star that was reimagined as an intimate adults-only hotel with just 20 rooms. The hotel was originally built as Castle's Red Barn in 1952 by MGM actor Don Castle and his wife Zetta, and there's a rumor that Bewitched actress Elizabeth Montgomery had her first marriage at the Red Barn. Rooms are found within industrial-meets-rustic cabins that have exposed wooden beams, stone accent walls, and barn-like furniture. In fact, the poolside room with a tub has a bathroom outfitted with a horse-trough-like steel tub for bathing. With no phones or TVs in guest rooms, and no children permitted, this adults-only retreat is a place to unplug.Common spaces invite guests to linger with a vegetable garden and family-style meals served at the Barn Kitchen. Dip into the pool or book a massage in the open-air spa tent set to the sounds of birds chirping, fountains trickling, and the smell of burning sage.The location is within walking distance of downtown Palm Springs and bikes are provided for getting around.For current COVID-19 policies, please email the hotel at Kimpton Rowan Palm Springs This is the only rooftop pool in downtown Palm Springs. Trip Advisor Book Kimpton Rowan Palm SpringsCategory: BoutiqueTypical starting/peak prices: $200/$676Best for: Families, couples, travelers with petsOn-site amenities: 2 restaurants, bar, rooftop pool, fitness center, meeting spacePros: The prime downtown location places all of Palm Springs directly outside your door. Plus, it has the only rooftop pool in town.Cons: There's a $40 daily resort fee, which can add up, but it does offer helpful services such as airport shuttles, car service around town, golf bag storage, coffee and tea, bike rentals, Wi-Fi, and pet-friendly amenities.Kimpton Rowan commands a super central location in downtown Palm Springs, right off the main strip of stores and restaurants, placing you within walking distance of the city's best spots. Still, it manages to feel hidden from crowds with a location tucked back a block from the action.Rooms are clean, modern, and more spacious than other boutique hotels for the same price. In addition to the stellar location, the true highlight of staying here is the rooftop pool surrounded by incredible mountain views; it's the only one in town.Staying here also comes with many signature Kimpton perks like happy hour, bike rentals, and pet-friendly policies.COVID-19 procedures are available here. Ace Hotel & Swim Club A lively pool scene is the focal point of this hip hotel. Trip Advisor Book Ace Hotel & Swim ClubCategory: BoutiqueTypical starting/peak prices: $179/$559Best for: Couples, groups of friendsOn-site amenities: Restaurant, bar, pool, spaPros: Minimal rooms with patios and fire pits are dripping in cool factor, and staying here comes with prime access to some of the hottest spots in town.Cons: There's a real party vibe on weekends. Visit midweek if you prefer something quieter, and know that rates surge in high season with an expensive daily resort fee on top of it.There's no denying the hipster association with Ace Hotel & Swim Club, but it's a badge the hotel wears proudly. The property took over a run-down motel and Denny's and reinvented both of them as the cool kids' hangout in town.Rooms boast the minimal-urban-rock aesthetic that Ace hotels have perfected with pared down rooms that feature platform beds, midcentury furniture, and in some cases, come with guitars to strum, hammocks to sway in, and fireplaces to gather 'round.King's Highway restaurant and the Amigo Bar are worthy attractions in their own right and many young guests flock here for the lively pool scene, which becomes a DJ-fueled party most weekends. COVID-19 procedures are available here. Avalon Hotel and Bungalows Palm Springs Avalon's historic studios, suites, and bungalows are surrounded by fragrant citrus, lush gardens, and secluded pools. Trip Advisor Book Avalon Hotel and Bungalows Palm SpringsCategory: LuxuryTypical starting/peak prices: $263/$799Best for: Couples, families, groups of friendsOn-site amenities: 3 pools, spa, restaurant, meeting spacePros: The enviable downtown location still manages to feel tucked away from the noise and bustle, and the refined sense of style and luxury are sometimes available at an attainable price point.Cons: Entry-level rooms are very small, hovering under 250 square feet, which can feel cramped with suitcases. Some prior guests complain about noise from other rooms and on-site events such as weddings.The Avalon is a long-time Palm Springs staple, beloved for its central downtown location, resort-style amenities, and Spanish-inspired villas and bungalows surrounded by greenery. The well-designed property is ideal for a relaxing vacation that's still close to the action. Plus, three pools, a spa, and well-reviewed dining are enough to keep you on-site. Standard rooms are tight on space but are still mod with a monochrome black and white palette and a location steps from the pool, while upgraded rooms feature fireplaces, extra seating areas, and glam design accents. Bungalows are the way to go in terms of space, style, and comfort behind an iconic persimmon-colored door with midcentury furnishings and a private patio. COVID-19 procedures are available here.Read our full hotel review of Avalon Hotel & Bungalows Palm Springs The Colony Palms Hotel and Bungalows Retro vibes shine at this pool shaded by mountain views. The Colony Palms Hotel Book The Colony Palms Hotel and BungalowsCategory: BoutiqueTypical starting/peak prices: $275/$600Best for: Couples, groups of friendsOn-site amenities: Restaurant, pool, spaPros: This is a sleek boutique hotel with a luxury lean and well-designed rooms within walking distance to all the best spots in town.Cons: The hotel is small, which some may find too quiet. Those looking for a livelier pool scene might want to consider a bigger resort. It is also adults-only, so it's not a good pick for families with kids under 18.The boutique Colony Palms is named for Palm Springs' Movie Colony neighborhood, where many Hollywood stars lived when they visited Palm Springs in its heyday.The hotel dates back to 1937, but that's not to say it's dated or out of touch. The 57 rooms, designed in Spanish colonial style are a nod to years past but have been lovingly restored with all the modern touches and amenities of a luxury hotel.There are 57 fully renovated guest rooms spread over three verdant acres, each featuring bold, geometric prints and statement wallpaper, as well as custom beds and mattresses, Frette linens, and Le Labo toiletries. Some have clawfoot tubs, patio, or fireplaces.Colony Palms also boasts a great location within walking distance of both uptown and downtown Palm Springs, which are filled with buzzy restaurants, bars, and shops.For COVID-19 procedures, call the hotel at (760) 969-1800.  Parker Palm Springs Style enthusiasts will recognize designer Jonathan Adler's touch; he designed the zingy feel of this luxury hotel. Trip Advisor Book Parker Palm SpringsCategory: LuxuryTypical starting/peak prices: $299/$599Best for: Couples, design enthusiastsOn-site amenities: Multiple posh restaurants and bars, salon, spa, 2 pools, fitness centerPros: No detail was overlooked at this hotel with gorgeous design and beautifully manicured grounds that feel like a desert oasis.Cons: The hotel tends to be expensive, and not just room rates. On-site dining venues are costly. Expect to pay $30 for a salad. It's also not within walking distance to town.This midcentury posh icon opened in 1959 as California's first Holiday Inn and a decade ago was transformed into a sleek, contemporary hideaway under the direction of design guru Jonathan Adler. The Parker is now one of Palm Spring's luxe-est offerings on a sprawling 14-acre property where 131 guest rooms and villas are nestled amid lushly-lined pathways. It's a great pick for couples looking for a romantic escape, or families wanting something a bit more grownup.Interiors pop with bright colors and zingy patterns, and Adler's trademark whimsy is everywhere, from the custom-made pillows to animal-shaped poofs. Rooms vary in size and layout but entry-level Estate rooms are plenty playful and measure around 320 square feet, while Deluxe rooms offer more space and are closest to the pool. For private outdoor space, upgrade to a Hammock room and enjoy an enclosed patio. Outdoor amenities include areas for croquet, tennis, and there are two saltwater pools. There's also a spa, salon, and fashionable dining to be found on the terrace of Norma's restaurant or inside the glamorous lobby-adjacent Mr. Parker's, tucked behind turquoise velvet doors. COVID-19 procedures are available here.  FAQ: Best hotels in Palm Springs Where is Palm Springs?Palm Springs is located in the Coachella Valley, about a 2.5-hour drive from Los Angeles. It's about the same time driving from San Diego, as well.When is the best time to visit Palm Springs?For the best weather, visit between October and April when the weather is warm and sunny during the day and cooler in the mornings and at night. During this time you can lay out at the pool, go shopping, and enjoy seasonal farmer's markets and art fairs.Summer is hot, hot hot. Highs can reach 120 degrees Fahrenheit and your time outdoors will be limited. However, the crowds will be far fewer and prices will be significantly cheaper for hotel stays.How much are hotels in Palm Springs?Hotel prices in Palm Springs depend on when you plan to visit. Visit on a weekend in high season, the winter, and expect to pay at least $200 per night, or more depending on the level of the hotel. Visit in the summer and you'll regularly see fares under $100 if you visit midweek.Which hotel has the best pool in Palm Springs?In a desert city like Palm Springs, the hotel pool is essential. It's a place to relax for some, and party for others. Depending on what you seek, there's a pool for you.For a relaxed, serene pool setting, plan to go to the Avalon or the Parker. If you've come to party, you'll love the pool scene at the Ace, ARRIVE, or V. Families will enjoy the relaxed, laidback pools like those at Margaritaville. And the Kimpton has the only rooftop pool in town.What hotels in Palm Springs allow pets?Many hotels in Palm Springs allow pets, often for an added fee, but the Kimpton Rowan has perhaps the best pet-friendly perks included in your rate. How we selected the best hotels in Palm Springs I've been to Palm Springs many times and have stayed at, visited, or extensively researched every hotel on this list.All hotels are highly reviewed on trusted traveler sites such as Trip Advisor and of the best Palm Springs hotels have a starting price point under $300 per night in low season.Design is integral to Palm Springs' spirit and every hotel has thoughtful decor, midcentury touches, and spacious layouts.All hotels have the amenities you'd want in a desert getaway, including great pools, relaxing spas, and buzzy cocktail bars or restaurants.Every hotel is close to downtown so going out to eat, shop, or drink, is never a hassle.Every hotel is adhering to COVID-19 safety protocols, which we've noted where available online. More of the best hotels in the Southwest Sweeping Red Rock views abound from Hilton Sedona Resort. The best hotels in Las VegasThe best hotels in Los AngelesThe best hotels in San DiegoThe best hotels in ArizonaThe best hotels in Sedona Read the original article on Business Insider.....»»

Category: topSource: businessinsiderSep 28th, 2021

Central Bankers" Narratives Are Falling Apart

Central Bankers' Narratives Are Falling Apart Authored by Alasdair Macleod via, Central bankers’ narratives are falling apart. And faced with unpopularity over rising prices, politicians are beginning to question central bank independence. Driven by the groupthink coordinated in the regular meetings at the Bank for International Settlements, they became collectively blind to the policy errors of their own making. On several occasions I have written about the fallacies behind interest rate policies. I have written about the lost link between the quantity of currency and credit in circulation and the general level of prices. I have written about the effect of changing preferences between money and goods and the effect on prices. This article gets to the heart of why central banks’ monetary policy was originally flawed. The fundamental error is to regard economic cycles as originating in the private sector when they are the consequence of fluctuations in credit, to which we can add the supposed benefits of continual price inflation. Introduction Many investors swear by cycles. Unfortunately, there is little to link these supposed cycles to economic theory, other than the link between the business cycle and the cycle of bank credit. The American economist Irving Fisher got close to it with his debt-deflation theory by attributing the collapse of bank credit to the 1930s’ depression. Fisher’s was a well-argued case by the father of modern monetarism. But any further research by mainstream economists was brushed aside by the Keynesian revolution which simply argued that recessions, depressions, or slumps were evidence of the failings of free markets requiring state intervention. Neither Fisher nor Keynes appeared to be aware of the work being done by economists of the Austrian school, principally that of von Mises and Hayek. Fisher was on the American scene probably too early to have benefited from their findings, and Keynes was, well, Keynes the statist who in common with other statists in general placed little premium on the importance of time and its effects on human behaviour. It makes sense, therefore, to build on the Austrian case, and to make the following points at the outset: It is incorrectly assumed that business cycles arise out of free markets. Instead, they are the consequence of the expansion and contraction of unsound money and credit created by the banks and the banking system. The inflation of bank credit transfers wealth from savers and those on fixed incomes to the banking sector’s favoured customers. It has become a major cause of increasing disparities between the wealthy and the poor. The credit cycle is a repetitive boom-and-bust phenomenon, which historically has been roughly ten years in duration. The bust phase is the market’s way of eliminating unsustainable debt, created through credit expansion. If the bust is not allowed to proceed, trouble accumulates for the next credit cycle. Today, economic distortions from previous credit cycles have accumulated to the point where only a small rise in interest rates will be enough to trigger the next crisis. Consequently, central banks have very little room for manoeuvre in dealing with current and future price inflation. International coordination of monetary policies has increased the potential scale of the next credit crisis, and not contained it as the central banks mistakenly believe. The unwinding of the massive credit expansion in the Eurozone following the creation of the euro is an additional risk to the global economy. Comparable excesses in the Japanese monetary system pose a similar threat. Central banks will always fail in using monetary policy as a management tool for the economy. They act for the state, and not for the productive, non-financial private sector. Modern monetary assumptions The original Keynesian policy behind monetary and fiscal stimulation was to help an economy recover from a recession by encouraging extra consumption through bank credit expansion and government deficits funded by inflationary means. Originally, Keynes did not recommend a policy of continual monetary expansion, because he presumed that a recession was the result of a temporary failure of markets which could be remedied by the application of deficit spending by the state. The error was to fail to understand that the cycle is of credit itself, the consequence being the imposition of boom and bust on what would otherwise be a non-cyclical economy, where the random action by businesses in a sound money environment allowed for an evolutionary process delivering economic progress. It was this environment which Schumpeter described as creative destruction. In a sound money regime, businesses deploy the various forms of capital at their disposal in the most productive, profitable way in a competitive environment. Competition and failure of malinvestment provide the best returns for consumers, delivering on their desires and demands. Any business not understanding that the customer is king deserves to fail. The belief in monetary and fiscal stimulation wrongly assumes, among other things, that there are no intertemporal effects. As long ago as 1730, Richard Cantillon described how the introduction of new money into an economy affected prices. He noted that when new money entered circulation, it raised the prices of the goods first purchased. Subsequent acquirers of the new money raised the prices of the goods they demanded, and so on. In this manner, the new money is gradually distributed, raising prices as it is spent, until it is fully absorbed in the economy. Consequently, maximum benefit of the purchasing power of the new money accrues to the first receivers of it, in his time being the gold and silver imported by Spain from the Americas. But today it is principally the banks that create unbacked credit out of thin air, and their preferred customers who benefit most from the expansion of bank credit. The losers are those last to receive it, typically the low-paid, the retired, the unbanked and the poor, who find that their earnings and savings buy less in consequence. There is, in effect, a wealth transfer from the poorest in society to the banks and their favoured customers. Modern central banks seem totally oblivious of this effect, and the Bank of England has even gone to some trouble to dissuade us of it, by quoting marginal changes in the Gini coefficient, which as an average tells us nothing about how individuals, or groups of individuals are affected by monetary debasement. At the very least, we should question central banking’s monetary policies on grounds of both efficacy and the morality, which by debauching the currency, transfers wealth from savers to profligate borrowers —including the government. By pursuing the same monetary policies, all the major central banks are tarred with this bush of ignorance, and they are all trapped in the firm clutch of groupthink gobbledegook. The workings of a credit cycle To understand the relationship between the cycle of credit and the consequences for economic activity, A description of a typical credit cycle is necessary, though it should be noted that individual cycles can vary significantly in the detail. We shall take the credit crisis as our starting point in this repeating cycle. Typically, a credit crisis occurs after the central bank has raised interest rates and tightened lending conditions to curb price inflation, always the predictable result of earlier monetary expansion. This is graphically illustrated in Figure 1. The severity of the crisis is set by the amount of excessive private sector debt financed by bank credit relative to the overall economy. Furthermore, the severity is increasingly exacerbated by the international integration of monetary policies. While the 2007-2008 crises in the UK, the Eurozone and Japan were to varying degrees home-grown, the excessive speculation in the American residential property market, facilitated additionally by off-balance sheet securitisation invested in by the global banking network led to the crisis in each of the other major jurisdictions being more severe than it might otherwise have been. By acting as lender of last resort to the commercial banks, the central bank tries post-crisis to stabilise the economy. By encouraging a revival in bank lending, it seeks to stimulate the economy into recovery by reducing interest rates. However, it inevitably takes some time before businesses, mindful of the crisis just past, have the confidence to invest in production. They will only respond to signals from consumers when they in turn become less cautious in their spending. Banks, who at this stage will be equally cautious over their lending, will prefer to invest in short-maturity government bonds to minimise balance sheet risk. A period then follows during which interest rates remain suppressed by the central bank below their natural rate. During this period, the central bank will monitor unemployment, surveys of business confidence, and measures of price inflation for signs of economic recovery. In the absence of bank credit expansion, the central bank is trying to stimulate the economy, principally by suppressing interest rates and more recently by quantitative easing. Eventually, suppressed interest rates begin to stimulate corporate activity, as entrepreneurs utilise a low cost of capital to acquire weaker rivals, and redeploy underutilised assets in target companies. They improve their earnings by buying in their own shares, often funded by cheapened bank credit, as well as by undertaking other financial engineering actions. Larger businesses, in which the banks have confidence, are favoured in these activities compared with SMEs, who find it generally difficult to obtain finance in the early stages of the recovery phase. To that extent, the manipulation of money and credit by central banks ends up discriminating against entrepreneurial smaller companies, delaying the recovery in employment. Consumption eventually picks up, fuelled by credit from banks and other lending institutions, which will be gradually regaining their appetite for risk. The interest cost on consumer loans for big-ticket items, such as cars and household goods, is often lowered under competitive pressures, stimulating credit-fuelled consumer demand. The first to benefit from this credit expansion tend to be the better-off creditworthy consumers, and large corporations, which are the early receivers of expanding bank credit. The central bank could be expected to raise interest rates to slow credit growth if it was effectively managing credit. However, the fall in unemployment always lags in the cycle and is likely to be above the desired target level. And price inflation will almost certainly be below target, encouraging the central bank to continue suppressing interest rates. Bear in mind the Cantillon effect: it takes time for expanding bank credit to raise prices throughout the country, time which contributes to the cyclical effect. Even if the central bank has raised interest rates by this stage, it is inevitably by too little. By now, commercial banks will begin competing for loan business from large credit-worthy corporations, cutting their margins to gain market share. So, even if the central bank has increased interest rates modestly, at first the higher cost of borrowing fails to be passed on by commercial banks. With non-financial business confidence spreading outwards from financial centres, bank lending increases further, and more and more businesses start to expand their production, based upon their return-on-equity calculations prevailing at artificially low interest rates and input prices, which are yet to reflect the increase in credit. There’s a gathering momentum to benefit from the new mood. But future price inflation for business inputs is usually underestimated. Business plans based on false information begin to be implemented, growing financial speculation is supported by freely available credit, and the conditions are in place for another crisis to develop. Since tax revenues lag in any economic recovery, government finances have yet to benefit suvstantially from an increase in tax revenues. Budget deficits not wholly financed by bond issues subscribed to by the domestic public and by non-bank corporations represents an additional monetary stimulus, fuelling the credit cycle even more at a time when credit expansion should be at least moderated. For the planners at the central banks, the economy has now stabilised, and closely followed statistics begin to show signs of recovery. At this stage of the credit cycle, the effects of earlier monetary inflation start to be reflected more widely in rising prices. This delay between credit expansion and the effect on prices is due to the Cantillon effect, and only now it is beginning to be reflected in the calculation of the broad-based consumer price indices. Therefore, prices begin to rise persistently at a higher rate than that targeted by monetary policy, and the central bank has no option but to raise interest rates and restrain demand for credit. But with prices still rising from credit expansion still in the pipeline, moderate interest rate increases have little or no effect. Consequently, they continue to be raised to the point where earlier borrowing, encouraged by cheap and easy money, begins to become uneconomic. A rise in unemployment, and potentially falling prices then becomes a growing threat. As financial intermediaries in a developing debt crisis, the banks are suddenly exposed to extensive losses of their own capital. Bankers’ greed turns to a fear of being over-leveraged for the developing business conditions. They are quick to reduce their risk-exposure by liquidating loans where they can, irrespective of their soundness, putting increasing quantities of loan collateral up for sale. Asset inflation quickly reverses, with all marketable securities falling sharply in value. The onset of the financial crisis is always swift and catches the central bank unawares. When the crisis occurs, banks with too little capital for the size of their balance sheets risk collapsing. Businesses with unproductive debt and reliant on further credit go to the wall. The crisis is cathartic and a necessary cleaning of the excesses entirely due to the human desire of bankers and their shareholders to maximise profits through balance sheet leverage. At least, that’s what should happen. Instead, a modern central bank moves to contain the crisis by committing to underwrite the banking system to stem a potential downward spiral of collateral sales, and to ensure an increase in unemployment is contained. Consequently, many earlier malinvestments will survive. Over several cycles, the debt associated with past uncleared malinvestments accumulates, making each successive crisis greater in magnitude. 2007-2008 was worse than the fall-out from the dot-com bubble in 2000, which in turn was worse than previous crises. And for this reason, the current credit crisis promises to be even greater than the last. Credit cycles are increasingly a global affair. Unfortunately, all central banks share the same misconception, that they are managing a business cycle that emanates from private sector business errors and not from their licenced banks and own policy failures. Central banks through the forum of the Bank for International Settlements or G7, G10, and G20 meetings are fully committed to coordinating monetary policies on a global basis. The consequence is credit crises are potentially greater as a result. Remember that G20 was set up after the Lehman crisis to reinforce coordination of monetary and financial policies, promoting destructive groupthink even more. Not only does the onset of a credit crisis in any one country become potentially exogenous to it, but the failure of any one of the major central banks to contain its crisis is certain to undermine everyone else. Systemic risk, the risk that banking systems will fail, is now truly global and has worsened. The introduction of the new euro distorted credit cycles for Eurozone members, and today has become a significant additional financial and systemic threat to the global banking system. After the euro was introduced, the cost of borrowing dropped substantially for many high-risk member states. Unsurprisingly, governments in these states seized the opportunity to increase their debt-financed spending. The most extreme examples were Greece, followed by Italy, Spain, and Portugal —collectively the PIGS. Consequently, the political pressures to suppress euro interest rates are overwhelming, lest these state actors’ finances collapse. Eurozone commercial banks became exceptionally highly geared with asset to equity leverage more than twenty times on average for the global systemically important banks. Credit cycles for these countries have been made considerably more dangerous by bank leverage, non-performing debt, and the TARGET2 settlement system which has become dangerously unbalanced. The task facing the ECB today to stop the banking system from descending into a credit contraction crisis is almost impossible as a result. The unwinding of malinvestments and associated debt has been successfully deferred so far, but the Eurozone remains a major and increasing source of systemic risk and a credible trigger for the next global crisis. The seeds were sown for the next credit crisis in the last When new money is fully absorbed in an economy, prices can be said to have adjusted to accommodate it. The apparent stimulation from the extra money will have reversed itself, wealth having been transferred from the late receivers to the initial beneficiaries, leaving a higher stock of currency and credit and increased prices. This always assumes there has been no change in the public’s general level of preference for holding money relative to holding goods. Changes in this preference level can have a profound effect on prices. At one extreme, a general dislike of holding any money at all will render it valueless, while a strong preference for it will drive down prices of goods and services in what economists lazily call deflation. This is what happened in 1980-81, when Paul Volcker at the Federal Reserve Board raised the Fed’s fund rate to over 19% to put an end to a developing hyperinflation of prices. It is what happened more recently in 2007/08 when the great financial crisis broke, forcing the Fed to flood financial markets with unlimited credit to stop prices falling, and to rescue the financial system from collapse. The state-induced interest rate cycle, which lags the credit cycle for the reasons described above, always results in interest rates being raised high enough to undermine economic activity. The two examples quoted in the previous paragraph were extremes, but every credit cycle ends with rates being raised by the central bank by enough to trigger a crisis. The chart above of America’s Fed funds rate is repeated from earlier in this article for ease of reference. The interest rate peaks joined by the dotted line marked the turns of the US credit cycle in January 1989, mid-2000, early 2007, and mid-2019 respectively. These points also marked the beginning of the recession in the early nineties, the post-dotcom bubble collapse, the US housing market crisis, and the repo crisis in September 2019. The average period between these peaks was exactly ten years, echoing a similar periodicity observed in Britain’s nineteenth century. The threat to the US economy and its banking system has grown with every crisis. Successive interest peaks marked an increase in severity for succeeding credit crises, and it is notable that the level of interest rates required to trigger a crisis has continually declined. Extending this trend suggests that a Fed Funds Rate of no more than 2% today will be the trigger for a new momentum in the current financial crisis. The reason this must be so is the continuing accumulation of dollar-denominated private-sector debt. And this time, prices are fuelled by record increases in the quantity of outstanding currency and credit. Conclusions The driver behind the boom-and-bust cycle of business activity is credit itself. It therefore stands to reason that the greater the level of monetary intervention, the more uncontrollable the outcome becomes. This is confirmed by both reasoned theory and empirical evidence. It is equally clear that by seeking to manage the credit cycle, central banks themselves have become the primary cause of economic instability. They exhibit institutional groupthink in the implementation of their credit policies. Therefore, the underlying attempt to boost consumption by encouraging continual price inflation to alter the allocation of resources from deferred consumption to current consumption, is overly simplistic, and ignores the negative consequences. Any economist who argues in favour of an inflation target, such as that commonly set by central banks at 2%, fails to appreciate that monetary inflation transfers wealth from most people, who are truly the engine of production and spending. By impoverishing society inflationary policies are counterproductive. Neo-Keynesian economists also fail to understand that prices of goods and services in the main do not act like those of speculative investments. People will buy an asset if the price is rising because they see a bandwagon effect. They do not normally buy goods and services because they see a trend of rising prices. Instead, they seek out value, as any observer of the falling prices of electrical and electronic products can testify. We have seen that for policymakers the room for manoeuvre on interest rates has become increasingly limited over successive credit cycles. Furthermore, the continuing accumulation of private sector debt has reduced the height of interest rates that would trigger a financial and systemic crisis. In any event, a renewed global crisis could be triggered by the Fed if it raises the funds rate to as little as 2%. This can be expected with a high degree of confidence; unless, that is, a systemic crisis originates from elsewhere —the euro system and Japan are already seeing the euro and yen respectively in the early stages of a currency collapse. It is bound to lead to increased interest rates in the euro and yen, destabilising their respective banking systems. The likelihood of their failure appears to be increasing by the day, a situation that becomes obvious when one accepts that the problem is wholly financial, the result of irresponsible credit and currency expansion in the past. An economy that works best is one where sound money permits an increase in purchasing power of that money over time, reflecting the full benefits to consumers of improvements in production and technology. In such an economy, Schumpeter’s process of “creative destruction” takes place on a random basis. Instead, consumers and businesses are corralled into acing herd-like, financed by the cyclical ebb and flow of bank credit. The creation of the credit cycle forces us all into a form of destructive behaviour that otherwise would not occur. Tyler Durden Sun, 05/22/2022 - 08:10.....»»

Category: blogSource: zerohedgeMay 22nd, 2022

I visited a newly licensed marijuana farm in New York, and was shocked by how far there is to go before legal sales begin

An idyllic upstate New York farm owned by a Rockefeller is one of the first few dozen to be granted a recreational-marijuana cultivation permit. The front of the main office building at Hudson Hemp, one of the first farms in New York State to receive a license to grow high-THC cannabis for recreational sales beginning in late 2022.Ben Gilbert/Insider Legal sales of recreational marijuana are set to begin in New York City in late 2022. The first legal growers were granted licenses in April so that they could have harvests ready for sale. I visited one of the first licensed farms in upstate New York and saw how far there still is to go. Sometime later this year — no one seems to know exactly when — New York City will legally allow recreational marijuana to be sold, opening what's expected to be one of the most lucrative legal cannabis markets in the world. And right now, in preparation for the feeding frenzy, dozens of farmers are growing the marijuana that will become New York's first legal crop. Last Friday, I visited one such farm two hours north of New York City in rural, idyllic Hudson, New York — and saw just how far there is to go before sales open.Hudson Hemp, in Hudson, New York, is among the first few dozen farms to receive a license from New York to legally cultivate marijuana.The view of the farm from the office, which is set inside a gorgeous old farmhouse.Ben Gilbert/InsiderTwo hours north of New York City, on a 2,700 acre farm property owned by John D. Rockefeller's granddaughter, Hudson Hemp is producing one of New York state's first-ever legal marijuana crops.Don't let the name fool you: Hudson Hemp is officially, as of this season, a full-time marijuana farm.The difference between hemp and marijuana is simple: They're both cannabis plants, but hemp has less than 0.3% THC — the psychoactive constituent that is most directly responsible for feeling high.Beyond being used for textiles and manufacturing, hemp can be used to extract CBD oil. For the last several years, Hudson Hemp has been doing just that.But no longer.The farm's first crops will be grown outdoors, both in open air and in a greenhouse.Chief Cultivation Officer Brandon Curtin and Cultivation Manager Adam Smith surveying the farmland that will house Hudson Hemp's first legal marijuana crop.Ben Gilbert/InsiderHudson Hemp is one of the first 88 farms that was granted a license to produce marijuana by the newly-created New York State Office of Cannabis Management. That number has since swelled to 146 in total.By approving farms like Hudson Hemp first — thus giving farmers time to grow, dry, cure, and process marijuana for sale — the state is hoping to adequately prepare for when legal sales begin at an unspecified date later this year. But even for the first licensed farms, the process is just barely getting started.The greenhouse will enable the farm to more carefully control the environment of its first legal marijuana crop.The new greenhouse was just being finalized when I visited in mid-May. Hudson Hemp had started construction a few weeks before, despite not knowing if the state was going to grant its application to grow — one of many unknowns that businesses entering the cannabis market face.Ben Gilbert/Insider"This is where we're gonna be prepping our beds in the next 48 hours and planting ASAP," Hudson Hemp CEO Melany Dobson told me, referring to the newly constructed greenhouse.Before getting marijuana plants in the ground directly, Hudson Hemp is starting in the greenhouse with raised beds. "We're gonna build raised beds in here," Chief Cultivation Officer Brandon Curtin explained. "There's gonna be five of them, on a span of a hundred feet."Those raised beds, full of soil from the farm, will grow four or five different strains of high-THC cannabis intended for the first legal sales later this year. With just seven months of 2022 left to go, Hudson Hemp — like the rest of the legal cannabis industry in New York state — is starting from zero.Ben Gilbert/InsiderAs of mid-May 2022, the legal marijuana growers of New York state are still months away from harvest. It takes anywhere from three to eight months to grow a cannabis plant to maturity, depending on a wide number of variables, and another several weeks to cure the product after that. Yet, when legal marijuana sales open later this year, the only product that will be legally allowed for sale is product grown and processed in New York state. Moreover, there are limitations on how much can be grown by one cultivation licenseholder: 43,560 square feet of "flowering canopy" is allowed, Dobson said."That restriction creates a lot of variables in how much someone could potentially produce this year," she added. That's because you could technically have a subsequent crop growing and, as long as it isn't in the flowering stage, it doesn't count against your total canopy allotment."Had we had our greenhouse already up," she said, "we could have run two cycles." There are still major unknowns going into the opening of legal sales later this year. Hudson Hemp doesn't even know how its marijuana will be sold.Ben Gilbert/InsiderHow does a business produce goods for a market that doesn't exist yet?That question quietly hovers over every step of the operation at Hudson Hemp. Do consumers want pre-rolled joints, or whole packaged flower? What stores will even be able to sell marijuana when legal sales open up later this year?"At this moment in time, I do not know where we will transact our first sales," Dobson told me. "Right now that is one of the largest uncertainties," she said. "We're putting a ton of money into our cultivation, our harvesting, our curing, our trimming — the whole packaging line."New York's Office of Cannabis Management has yet to open the application process for retail licenses, and it's unclear when the process will begin, though educational workshops for applicants have begun. Nationwide, delays between between legalization and recreational sales have become extremely common. Dobson suspects that the first licensed retailers will be existing medical dispensaries, which are all owned by so-called "multi-state operators" — national or international cannabis companies like Curaleaf that are backed by private equity and venture capital — despite New York's marijuana legislation explicitly including social equity mandates.In the meantime, marijuana producers like Hudson Hemp are attempting to maximize their first harvests while dealing with a vegetative product that doesn't have an infinite shelf life.Like the garlic and banana peels in Hudson Hemp's compost pile, cannabis is an organic product that breaks down over time.Ben Gilbert/InsiderWhen you get home from the dispensary later this year and open up an eighth of New York City Diesel, it will already be degrading. Like produce and cut flowers, marijuana is organic material that breaks down over time. So when Hudson Hemp harvests its first crop later this year, the clock begins ticking on the quality of that product.There are industrial processes that slow down the process, of course — if packaged in an oxygen-free container and kept in a cool, dry, dark place, marijuana can last "for like a year," Dobson said, "but that's very expensive packaging." Hudson Hemp plans to get around this issue by only offering pre-rolled joints in its first year of sales, "so that it smokes beautifully and consistently," Dobson said, "and also resealable so that you can maintain the freshness of the pre-rolls for longer."Got a tip? Contact Insider senior correspondent Ben Gilbert via email (, or Twitter DM (@realbengilbert). Use a non-work device to reach out. PR pitches by email only, please.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderMay 21st, 2022

Russia badly botched its capture of Mariupol, which should have been over much quicker, analyst says

Though Ukraine ultimately lost control of Mariupol and its steel plant, the cost to Russia was out of all proportion, a Chatham House expert said. Pro-Russian forces seen outside the Azovstal steel mill in Mariupol, Ukraine, on May 16, 2022.REUTERS/Alexander Ermochenko Ukraine said Monday it was evacuating all troops from its last holdout in the city of Mariupol. Thought Ukraine effectively gave up the territory, it extracted a huge price from Russia for it. Thousands of well-armed Russian troops took much longer than expected to prevail, one analyst said. Russia's capture of the Azovstal steel plant in Mariupol, following weeks of strident Ukrainian resistance, came at too great a cost, according to Ukrainian officials and experts.As Russian troops began to take over the city last month, a group of Ukrainian fighters, namely the Azov Battalion, retreated to fight from basement tunnels below the steel works.At one point, Russian troops were preparing to storm the steel plant, but President Vladimir Putin called off the raid on April 21, calling instead for a blockade "so not even a fly can get through."Ultimately, it worked. After weeks weathering attacks from Russian troops, Ukraine's military announced Monday it was evacuating the troops, whom it had "performed their combat task."Although the Ukrainian military did not use the word, the move effectively surrendered the plant to Russia and handed them total control of Mariupol.One analyst told Insider that the Ukrainians vastly outperformed expectations, "holding out for many weeks longer than was considered feasible."  Though a blow for Ukraine in principle, analysts said that Ukraine forced Russia to pay a disproportionately high price for the city, mostly reduced to rubble in the attacks.In its statement, Ukraine's military said Russia had to commit 20,000 troops to the steel works, who were then unable to attack other targets in Ukraine.Smoke rises above Azovstal Iron and Steel Works during Ukraine-Russia conflict in the southern port city of Mariupol, Ukraine April 21, 2022.Alexander Ermochenko/Reuters"Forging the enemy's core forces around Mariupol has given us the opportunity to prepare and create the defensive frontiers on which our troops are still present today and give a decent counterpoint to the aggressor," it said."We got the critically needed time to build reserves, regroup forces, and get help from partners."Keir Giles, a senior consulting fellow on the Russia and Eurasia program at Chatham House, agreed."It was plainly important to Russia to continue hammering the defenders in the Azovstal complex long after they were surrounded and cut off from any possible relief, as opposed to waiting and starving them out," he told Insider."This is one of the many spectacular achievements of the defenders, not only holding out for many weeks longer than was considered feasible, but also in the process tying down numbers of Russian troops that were out of all proportion to the complex's value as a military objective, and therefore making the task of Ukrainian defenders across the rest of the country easier.""The length of the siege and resource that Russia has committed to it just underline the extent to which the political drivers for the Russian offensive run counter to military common sense," he added.UK intelligence suggested on April 18 that Russian commanders would be furious at the slow progress their forces were making in Mariupol. It ultimately took a month more to take the city.Mykhailo Podolyak, an adviser to President Volodymyr Zelenskyy, tweeted Tuesday: "83 days of Mariupol defense will go down in history as the Thermopylae of the XXI century," a reference to the legendary battle where 300 Spartans held back a vast Persian army before being killed.Podolyak continued: "'Azovstal' defenders ruined [Russia's] plan to capture the east of [Ukraine], took a hit on themselves and proved the real 'combat capability' of [Russia] … This completely changed the course of the war."Ukraine's defense ministry said 53 of the troops evacuated from Monday were "seriously wounded" and that another 200 had been evacuated to the Russia-controlled town of Olenivka. Russia's defense ministry said Monday that it had agreed to the rescue mission.Ukraine's Deputy Prime Minister Iryna Vereshchuk said Tuesday that Ukraine wants to swap Russian prisoners with those troops rescued from Azovstal. In a message posted to Telegram Tuesday, Zelenskyy said: "We hope that we will be able to save the lives of our guys. Among them are the seriously wounded, they are being provided with medical aid. I want to emphasize: Ukraine needs Ukrainian heroes alive."Mariupol became a critical target for Russia following Putin's decision to refocus Russian attacks away from Kyiv and onto the pro-Kremlin Donbas region.Control of it enables them unbroken access by land between mainland Russia and the peninsula of Crimea, which it annexed in 2014.However, Russia has struggled to achieve its aims in the Donbas, and is still facing stiff resistance from Ukrainian forces. One critical target which Ukraine managed to secure in recent days is the city of Kharkiv, Ukraine's second largest city located in the north of the country.Ukraine's defense ministry said Saturday that Russian troops were now withdrawing from the city a major concession from Moscow.Speaking to Insider, Giles, the analysts, said: "The manpower crisis that Russia is experiencing, and its difficulty in making progress on the front line, owes an intangible amount to their failure to seize Mariupol weeks before they did. "Read the original article on Business Insider.....»»

Category: topSource: businessinsiderMay 17th, 2022

25 Ways To Help Your Young Children Save Their Money

Did you know that kids aged 4 to 14 receive an average weekly allowance of about $9.35? That comes out to roughly $486 per year. Which, really isn’t all that bad for daily chores like tidying their bedroom or helping with laundry. Even better? It’s also been found that almost half of the average kid’s […] Did you know that kids aged 4 to 14 receive an average weekly allowance of about $9.35? That comes out to roughly $486 per year. Which, really isn’t all that bad for daily chores like tidying their bedroom or helping with laundry. Even better? It’s also been found that almost half of the average kid’s weekly allowance is saved. While kids may not have the same financial obligations as their parents, this is certainly encouraging. Saving money ensures financial independence and security during an emergency. More specifically, this habit encourages discipline and goal-planning. And, it can prevent a potential financial crisis. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Warren Buffett Series in PDF Get the entire 10-part series on Warren Buffett in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more With that being said, if you’re a parent, you can help your young children step up their saving game using the following 25 strategies. Start with the basics sooner than later. In 2001, Sam X Renick created Sammy Rabbit, a character and financial literacy initiative for children. He has been teaching kids about money through his Sammy Rabbit stories since then. It has been his experience that the earlier you start teaching your children about finances, the better. Money habits and attitudes are formed by age seven, he says, so lessons need to begin before then. Your children should be introduced to coins and cash when they are old enough to know they shouldn’t eat pennies. Describe how money works and why it is important to save money. Rather than telling them how money works, you should show them. You can do this by showing them how you use cash. You should always tell your children that you’re using money to make purchases, regardless of whether you use a debit or credit card. Chase Peckham, director of the San Diego Financial Literacy Center, taught his daughter and son this when they were young. On every shopping trip they took together, Peckham showed his children the receipts with the amount he had paid. “By doing it over and over again, it became habit to them,” he says. “As they got older, they started to understand. That’s how we introduced money.” The receipt strategy allowed Peckham’s son to understand how money works by the age of 4. However, getting his daughter to understand was more difficult. Consistency, however, guaranteed that “the light bulb would turn on” — which it did. Talk about money. According to a 2021 survey by T. Rowe Price, 41% of parents are reluctant to talk to their children about money. Moreover, many express embarrassment when discussing money. In order to teach kids how to save, you must sustain an ongoing dialogue. The key is to keep the conversation going, whether you schedule a weekly check-in to talk about money or make it part of your daily routine. Be a financially responsible role model. Educate children by example by saving money yourself. This is the most effective way to teach them to save money. Put funds into your own jar of money frequently, for example. As you’re out shopping, teach your kids how to discern different prices and why some items are more beneficial than others. Also, emphasize that you save a portion of every paycheck as a way to secure your financial future. Use a piggy bank. By providing your kids with a piggy bank, you can teach them the importance of saving and make it easy for them to do so. To fill up the piggy bank until there is no room, tell your children to put in as many dollars and coins as they can. Most importantly, demonstrate that the piggy bank is for saving money for the future. And, this will result in wealth accumulation. As an example, Kevin O’Leary from “Shark Tank” explained compound interest to his own children by using a piggy bank in this video. Develop their budgeting skills. As you know, a budget helps create financial stability by tracking expenses and following a plan. And teaching your kids how to budget is a crucial life skill they need to develop sooner than later. Use jars to teach your children basic budgeting concepts by spending, saving, giving, and sharing. You can show younger children how Elmo from “Sesame Street” saves in those three jars. As your child’s chores or allowance are complete, discuss with them the importance of; Saving money now so it will grow for later use Making a plan for how to spend the money that they have now How caring means sharing their funds with people and organizations that your family values Physically show them that things cost money. It’s one thing to tell your son or daughter that that Paw Patrol vehicle they’ve been eying up is $10. It’s another thing to have them take a few dollars from their piggy bank and hand it to the cashier at the store. Sure, this is a simple act. But, it will have a greater impact than having a conversation. Write down savings goals. According to psychology professor Gail Matthews, writing your goals down on a regular basis makes them 42% more likely to be achieved. And, yes, this can be applicable to children as well. When they write down a clear savings goal, they’ll be motivated to follow through. Additionally, you can help them break this goal into achievable. Let’s say they want a $60 Lego set. Help them determine how long it will take for them to reach that goal if they receive $10 a week for doing chores. Also, help your child understand that there are two types of savings. One type of savings is saving for the Lego set, a game card, or a special pair of Allstar shoes. However, the other savings is the savings we never touch — it is for emergencies and to build enough funds for investment. Use stories to inspire. “Beyond writing down goals and providing interest payments, I’ve also discovered that stories can be educational and inspire kids to keep saving,” writes Kerry Flatley, owner, and author of Self-Sufficient Kids. “I’ve shared a few stories with my girls of times when I had to save – for my first car, for example – to provide insight into how saving works in the adult world, where purchases are larger and more critical.” Additionally, Flatley and her children have read a few books together on how people stick to their savings goals — or don’t. She recommends the following three books; “Rock, Brock, and the Savings Shock” “Alexander, Who Used to Be Rich Last Sunday” “Bunny Money” Give them fake money. This might seem a bit out there. However, the positive aspect of fake money is that it teaches kids about how money works without involving any real money. Essentially, it’s a set of training wheels for future consumers, with you acting both as merchant and bank. To make this stick, assign reasonable values to various chores, such as making their bed or cleaning up after a meal. You can also apply this to privileges, such as movie night and their wants, like popcorn for said movie night. Create a timeline. Kids often have difficulty understanding the concept of time and money. In fact, it’s been found that one-hour financial lessons lose their impact after five months. As such, a timely and ongoing approach to money education is needed for the message to stick. If, for example, your child receives $5 a week in allowance and they want to save $50. Their goal would be reached in roughly three months if they saved 100 percent of their allowance. To really bring this home, use visualization. You’ll need a long piece of paper and a marker to begin. On one side of the paper write 0 and on the other side write 50. Make checks for 25%, 50%, and 75% of the goal on the paper. If an amount is saved, draw a line showing the amount that they saved. Also, explain that at each checkpoint, kids will be given small rewards. Rewarding kids in this way can encourage them to stay the course. Also, visual representations assist them in illustrating how their money is growing and how their savings goals are progressing. Consider making earning money a competition. You could make money-making a contest if you have more than one child. “That always brings out the competitive nature of the kids. Whichever child saves the most gets the biggest special treat or bonus,” Lamar Brabham, CEO of Noel Taylor Agency, told U.S. News. In order to make sure that your kids are good sports if they lose, you could always set up a series of contests to increase the chances that both will win. It will help, however, if you make teaching your kids about finance an enjoyable experience, Brabham says, noting that many adults have a difficult time dealing with the world of finance. “Words like boring, confusing, complicated, and scary are common when hearing someone describe money matters. You can imagine what children think of it,” he says. Play games. Do you and your family play games together? Board games in particular can be fun while also teaching priceless life lessons as well. Ideally, you want to pick games that teach financial basics, like the Game of Life, Pay Day, or Monopoly. Additionally, there are some games that specifically teach money management techniques, such as Cash Flow 101. Make sure kids get paid fairly for age-appropriate chores When you give young children an allowance without requiring them to work, make sure it’s fairly distributed and based on their age. If you prefer, you can give them quarterly or annual raises. Most importantly, assign equal work assignments, as well as similar pay rates if you pay for chores. Unfortunately, the gender wage gap has reached children as well. According to BusyKid, an app that tracks personal finances for kids, girls receive less than half the weekly allowance given to boys. Believe it or not, that gap is far more severe than the one that exists for adults. Offer savings incentives. Matching contributions from employers are perhaps the main reason people make contributions to their company’s retirement plan. Everyone loves free money, right? Well, using that same principle will help you motivate your kids to start saving. You can match your child’s savings by 25 or 50 cents on the dollar, for example. Not only does this help them increase their savings, but it also introduces the idea of company matching in 401(k) plans. Discourage impulse purchases. As a parent, I’m sure that you’ve been in this situation before. You go to Target and your child pleads for you to buy them Chase’s transforming police car from PAW Patrol. As opposed to caving in, remind them that they can use their savings. But, also suggest that they wait a day or two. Maybe after sleeping on it, they really don’t want this new toy. But, just reassure them that Chase and his police car will still be there if they decide that they really want to buy it. Also, depending on their age, this could be a great time to talk about opportunity costs. By fifth grade, children should understand this concept. Help them prioritize their needs and wants. Impulse buying happens to the best of us from time to time. But, help them to learn to recognize it and how to limit it. As little as possible, give kids money. Yeah. This might seem harsh. But, here’s the jest. When kids are given as much money as possible less frequently, they will learn to budget. As an example, instead of giving your 10-year-old lunch money every single day, give them $80 for the entire month. Remind them that if they spend all of this money too soon, they’ll have to eat PB&J every day. In this way, your children will understand the real meaning of money and the need for budgeting and deferral of expenses. Make use of age-appropriate spending cards and parental control apps. Today, you use apps for just about everything. So, why not use an app to improve your child’s financial education? With Greenlight, you can reload a prepaid debit card for your kids. Through an app, you can supervise and control the card. The card is designed to load instantly, leave notifications every time your child uses it, and turn on and off instantly. Another feature worth mentioning is that it also lets them save their change. Stress the importance of giving. I remember during a family vacation to D.C. my little brother struck up a conversation with a homeless vet. Without hesitation, he gave the man $5 from his allowance. With that in mind, when your little one has some money saved, teach them the power of giving. “I think helping our kids experience the happiness that comes from giving to others is probably one of the most valuable ways we can nurture generosity in them,” says Lara Aknin, an assistant professor of psychology at Simon Fraser University in Canada (and the one who led the study suggesting that giving makes toddlers happier than getting). “It sets off this positive cycle: Giving makes people happy and happiness promotes giving.” At the same time, don’t force them to do this. Researchers have found that when people are forced to do something kind for others, or subtly coerced to do so, they will feel less altruistic and less motivated to help others. Include them in the financial process. Encourage your children to help you save money while shopping. Ask them to find the right items and compare prices with coupons from the grocery store, for instance. You can also challenge your child to find the clothes they need within a limited budget when back-to-school shopping. The older your children get, show them what your mortgage or utility payments look like. Or, you show them what your 401(k) statement looks like. Sounds simple. But, having them be a part of your financial processes is good preparation for when they have their own financial documents. Kid blew all their money and needs more? Seize this teachable moment. Parents familiar with this scenario might be able to relate: your kid has money but spends it all on toys. Imagine you are at the toy store again, where they want something but can’t afford it. How do you deal with that? Don’t give in. Instead, use this as a “teachable moment,” suggests says Rachel Cruze, personal finance expert and the co-author of “Smart Money Smart Kids: Raising the Next Generation to Win with Money “Teach them that when money runs out, it runs out,” Cruze says. “It will be tough in the moment, but in the long run you are teaching them to live below their means — and that’s the only way to win with money.” Visit the bank together. You and your child can open a no-fee savings account together. The concept of delayed gratification can be difficult for them to grasp. However, children may see the benefits of accumulating compound interest as free money if they equate it with short-term sacrifices. Charge a “parent” tax. I don’t think that many of us are fond of taxes. But, that’s life. So, this could be an easy way to break the news to your children. To help them prepare them for the real world withhold some of their earnings. Be sure not to spend the money though. Instead, invest it or save it for them until they’re 18. By letting them know that they won’t keep every penny of their paycheck, they’ll be better prepared financially. Also, let them know that if they have $5,000 saved by 16, they can invest this money and become rich. As a teenager. Let them make mistakes. You may think “that’s easier said than done.” But let me explain. Almost everyone has regrettably purchased something, whether it was a Peloton we thought we’d use more frequently or an investment that was too good to be true. Since the stakes are low, now would be an ideal time for your child to make mistakes. Give your child the option of spending their money on a short-lived gimmicky toy. Upon realizing a mistake, ask them what they’ve learned and how they can avoid making it again. Do they need to do more research next time? What can they do to remind themselves of what their goals are? How can they spend their money in a way they enjoy? Perhaps, in the future, they’ll spend their savings a bit more wisely. And, since we’re talking about kids here, don’t be too harsh. In fact, you can share with them your past financial mistakes and the lesson you learned. Don’t give your kids an open line of credit. Make sure your kids do not have open credit lines. Spending money should be limited, even if occasional spoiling is possible. After all, on other matters, you’ve been telling your kids no for a while. The same holds true when it comes to denying requests for cash or parent-aided purchases such as video games and candy bars. The importance of imparting this type of financial education to young children cannot be overstated. When you delay, old habits will become more difficult for them to break. Now, how exactly you approach this is totally up to you. Maybe there’s a family jar of money for expenses like snacks or activities like mini-golf. If they know the balance, your kids will be able to budget their spending accordingly and won’t be surprised when you say no. And, with time, they’ll realize that if they want a large purchase, they’ll need to save. that they need to save. Open a 529 plan. Share the fact that you are saving for your children’s future higher education with them. Even better, ask them if they want to contribute to the plan as well. Although you don’t need to share the dollar amount saved in your 529 plan with them, make it clear that you expect them to continue their education after high school. According to a study by Institute for Higher Education Policy, children who know that money will be saved for college are much more likely to enroll in college. What’s more, kids with college savings of $1-$499 are three times more likely than children with no savings to attend college. If you’re unaware, plan 529s are for any school your child wishes to attend after high school. As a result, these funds can be used tax-free for eligible higher education expenses including; Four-year schools Two-year colleges Trade institutions Apprenticeship programs Certificate programs In short, this means that your children are free to attend schools based on their interests, talents, and skills. And, this can set them up for financial success later in life since they won’t have a lot student loan debt. Frequently Asked Questions When should kids learn about saving money? According to research, many of our money habits as adults are formed around age 7. So it’s wise to teach your children about money at a very early age. Children as young as 3 can start with basic concepts. As they grow, they can move on to more advanced ones. How do I talk to my kids about saving money? Curiosity is a natural, and often relentless, characteristic of kids. Teach young children that in order to make money, you have to earn it. Explain that money is a type of energy exchange. After all, money just doesn’t appear out of thin air. Take going to the grocery store with them. Show them the budget for groceries and why it’s important. Tell them if they want a toy that it’s not in the budget. But, tell them to put the money in their piggy bank so that they can buy it later. You can also involve your children in making money-making decisions that affect the whole family, such as booking a summer vacation, as they grow up. Consider sharing your experience with them when you’re negotiating a job offer or choosing a robo advisor. How can I encourage my kids to save money? Providing a place for kids to save their money is an effective way to get them to set aside some of their money. Kids younger than 12 can get a piggy bank; older kids can get a debit card or bank account. Incentives such as interest can also be provided to encourage them to save money. What are some of the best ways for kids to earn money? Children can earn money in a variety of ways. You might find them setting up a lemonade stand or having a yard sale depending on their age. They can also babysit, care for pets, collect recyclable materials, wash cars, and work in the yard. If you have your own business, you could also “hire” them for age-appropriate tasks like filing paperwork or being a part of your social media marketing. Make sure to follow child labor laws. How can you teach kids to distinguish between needs and wants? Children can be quizzed about household items such as kitchen utensils, clothing, and toys. Ask them if it’s something your family really needs or if it’s just something they fancy. Kids learn that some purchases should have a greater priority than others as a result of that distinction. Article by John Rampton, Due About the Author John Rampton is an entrepreneur and connector. When he was 23 years old while attending the University of Utah he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months he had several surgeries, stem cell injections and learned how to walk again. During this time he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine, Finance Expert by Time and Annuity Expert by Nasdaq. He is the Founder and CEO of Due. Updated on May 16, 2022, 3:22 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkMay 17th, 2022

Saga Partners 1Q22 Commentary: Carvana And Redfin

Saga Partners commentary for the first quarter ended March 31, 2022. During the first quarter of 2022, the Saga Portfolio (“the Portfolio”) declined 42.4% net of fees. This compares to the overall decrease for the S&P 500 Index, including dividends, of 4.6%. The cumulative return since inception on January 1, 2017, for the Saga Portfolio […] Saga Partners commentary for the first quarter ended March 31, 2022. During the first quarter of 2022, the Saga Portfolio (“the Portfolio”) declined 42.4% net of fees. This compares to the overall decrease for the S&P 500 Index, including dividends, of 4.6%. The cumulative return since inception on January 1, 2017, for the Saga Portfolio is 112.0% net of fees compared to the S&P 500 Index of 122.7%. The annualized return since inception for the Saga Portfolio is 15.4% net of fees compared to the S&P 500’s 16.5%. Please check your individual statement as specific account returns may vary depending on timing of any contributions throughout the period. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Interpretation of Results I was not originally planning to write a quarterly update since switching to semi-annual updates a few years ago but given the current drawdown in the Saga Portfolio I thought our investors would appreciate an update on my thoughts surrounding the Portfolio and the current market environment in general. The Portfolio’s drawdown over the last several months has been hard not to notice even for those who follow best practices of only infrequently checking their account balance. Outperformance vs. the S&P 500 since inception has flipped to underperformance on a mark-to-market basis and the stock prices of our companies have continued to decline into the second quarter. In past letters I have spent a lot of time discussing the Saga Portfolio’s psychological approach to investing to help prepare for the inevitable chaos that will occur while investing in the public markets from time-to-time. It’s impossible to know why the market does what it does at any point in time. I would argue that the last two years could be considered pretty chaotic, both on the upside speculation and now what appears to be on the downside fear and panic. I will attempt to give my perspective on how events played out within the Saga Portfolio with an analogy. Let’s say that in 2019 we owned a fantastic home that was valued at $500,000. We loved it. It was in a great neighborhood with good schools for our kids. We liked and trusted our neighbors; in fact, we gave them a spare key in case of emergencies. It was the perfect home for us to live in for many years to come. Based on the neighborhood becoming increasingly attractive over time, it was likely that our home may be valued around $2 million in ~10 years from now. This is strong appreciation (15% IRR) compared to the average home, but this specific home and neighborhood had particularly strong long-term fundamental tailwinds that made this a reasonable expectation. Then in 2020 a global pandemic hit causing a huge disorientation in the housing market. For whatever reasons, the appraised value of our home almost immediately doubled to $1 million. Nothing materially changed about what we thought our home would be worth in 10 years, but now from the higher market value, the home would only appreciate at a lower 7% IRR assuming it would still be worth $2 million in 10 years. What were our options under these new circumstances? We could move and try to buy a new home that provided a higher expected return. However, the homes in the other neighborhoods that we really knew and liked also doubled in price, so they did not really provide any greater value. Also, the risk and hassle of moving for what may potentially only be modestly better home appreciation did not make sense. We could buy a home in a less desirable neighborhood where prices looked relatively cheaper, but we would not want to live long-term. Even if we decided to live there for many years, the long-term fundamental dynamics of the crummy neighborhood were weak to declining and it was uncertain if the property would appreciate at all despite its lower valuation. We could sell our home for $1 million and rent a place to live for the interim period while holding cash and waiting for the market to potentially correct. However, we did not know if, when, or to what extent the market would correct and the thought of renting a place temporarily for our family was unappealing. For the Saga family, we decided to stay invested in the home that we knew, loved, and still believed had similar, if not stronger prospects following the COVID-induced surge in demand in our neighborhood. Now, for whatever reason, the market views our neighborhood very poorly and the appraised value of our home declined to $250,000, below any previous appraisals. It seems odd because it is the exact same home and the fundamentals of the neighborhood are much stronger than several years ago, suggesting that the expected $2 million value in the future is even more probable than before. It is a very peculiar situation, but the market can do anything at any moment. Fortunately, the lower appraisal value does not impact how much we still love our home, neighborhood, schools, or what the expected future value will be. In fact, we prefer a lower value because our property taxes will be lower! One thing is for certain, we would never sell our home for $250,000 simply because the appraised value has declined from prior appraisals. We would also never dream of selling in fear that the downward price momentum continues and then hopefully attempt to buy it back one day for $200,000. We can simply sit tight for as long as we want while the neighborhood around us continues to improve fundamentally over time, fully expecting the value of our home to eventually go up with it. It just so happens humans are highly complex beings and do not always react in what an economist may consider a rational way. Our emotions are highly contagious. When someone smiles at you, the natural reaction is to smile back. When someone else is sad, you feel empathy. These are generally great innate characteristics for helping to build the strong relationships with friends and family that are so important throughout life. But it also means that when other people are scared, it also makes you feel scared. And when more and more people get scared, that fear can cascade exponentially and turn into panic, which can cause people to do some crazy things, especially when it comes to making long-term decisions. As fear spreads, all attention shifts from thinking about what can happen over the next 5-10+ years to the immediate future of what will happen over the next day or even hour. Of course, during times of panic, “this time is always different.” It may very well be the case, but the world can only end once. Historically speaking, things have tended to work out pretty well over time on average. I am by no means immune to these contagious feelings. My way of coping with how I am innately wired is by accepting this fact and then trying to know what I can and cannot control. A core part of my investing philosophy is that I do not know what the market will do next, and I never will. Inevitably the market or a specific stock will crash, as it does from time-to-time. This “not timing the market” philosophy or treating our public investments from the perspective of a private owner may feel like a liability during a drawdown, but it is this same philosophy of staying invested in companies we believe to have very promising futures which positions us perfectly for the inevitable recovery. Eventually, emotions and the business environment will normalize, and the storm will pass. It could be next quarter, year, or even in several years, but we will be perfectly positioned for the recovery, at which point the stock price lows will likely be long gone. The whole investing process improves if one can really take the long-term view. However, it is not natural for people to think long-term particularly when it comes to owning pieces of publicly traded companies. It is far more natural to want to act by jumping in and out of stocks in an attempt to outsmart others who are trying to outsmart you. When the market price of your ownership in a business is available and fluctuating wildly every single day, it is hard to ignore and not be influenced by it. While one can get lucky through speculation, the big money is made by investing, by owning great businesses and letting them compound owner’s capital over many years. As the market has evolved over the last few decades, there appears to be an ever-increasing percent of “investors” who are effectively short-term renters, turning over the companies in their portfolios so quickly that they never really know the business that lies below the surface of the stock. While more of Wall Street is increasingly focused on the next quarter, a potentially looming recession, the Fed’s next interest rate move, or trying to time the market’s rotation from one industry into another, we are trying to think about what our companies’ results will be in the year 2027, or better yet 2032 and beyond. The most significant advantage of investing in the public market is the ability to take advantage of it when an opportunity presents itself or to ignore the market when there is nothing to do. The key to success is never giving up this advantage. You must be able to play out your hand and not be forced to sell your assets at fire sale prices. Significant portfolio declines are a good reminder of the importance of only investing money that you will not need for many years. This prevents one from being in a position where it is necessary to liquidate when adverse psychology has created unusually low valuations. However, we do not want to simply turn a blind eye to stock price declines of 50% or more and dig our heals into the ground believing the market is just being irrational. When the world is screaming at you that it believes your part ownership in these companies is worth significantly less than the market believed not too long ago, we attempt to understand if we are missing something by continually evaluating the long-term outlooks of our companies using all the relevant information that we have today from a first principles basis. Portfolio Update Instead of frequently checking a stock’s price to determine whether the company is making progress, I prefer looking to the longer-term trends of the business results. There will be stronger and weaker quarters and years since business success rarely moves up and to the right in a perfectly straight line. As a company faces headwinds or tailwinds from time-to-time, the stock price may fluctuate wildly in any given year, however the underlying competitive dynamics and business models that drive value will typically change little. Regarding our companies as a whole, first quarter results reflected a general softness in certain end markets, including the used car, real estate, and advertising markets. However, the Saga Portfolio’s companies, on average, provide a superior customer value proposition difficult for competitors to match. Most of them have a cost advantage compared to competitors; therefore, the worse it gets for the economy, the better it gets for our companies’ respective competitive positions over the long-term. For example, first quarter industry-wide used car volumes declined 15% year-over-year while Carvana’s retail units increased 14%. Existing home sales decreased 5% during the quarter while Redfin’s real estate transactions increased 1%. Digital advertising is expected to grow 8-14% in 2022 while the Trade Desk grew Q1’22 revenues 43% and is expected to grow them more than 30% for the full year 2022. While industry-wide TV volumes remain below 2019 pre-COVID levels, Roku gained smart TV market share sequentially during the quarter, continuing to be the number one TV operating system in the U.S. and number one TV platform by hours streamed in North America. Weaker industry conditions will inevitably impact our companies’ results; however, our companies should continue to take market share and come out on the other side of any potential economic downturn stronger than when they went in. For the portfolio update, I wanted to provide a more in-depth update on Carvana and Redfin which have both experienced particularly large share price declines and have recent developments that are worth reviewing. Carvana I first wrote about Carvana Co (NYSE:CVNA) in this 2019 write-up. I initially explained Carvana’s business, superior value proposition compared to the traditional dealership model, attractive unit economics, and how they were uniquely positioned to win the large market opportunity. Since then, Carvana has by far exceeded even my most optimistic initial expectations. While the company did benefit following COVID in the sense that customers’ willingness to buy and sell cars through an online car dealer accelerated, the operating environment over the last two years has been very challenging. Carvana executed exceedingly well considering the shifting customer demand in what is a logistically intensive operation and what has been a tight inventory environment due to supply chain issues restricting new vehicle production. Sales, gross profits, and retail units sold have grown at a remarkable 104%, 151%, and 87% CAGR over the last five years, respectively. Source: Company filings Shares have come under pressure following their first quarter results, which reflected larger than expected losses. The quarter was negatively impacted by a combination of COVID-related logistical issues in their network that started towards the end of the fourth quarter as Omicron cases spread. Employee call off rates related to Omicron reached an unprecedented 30% that led to higher costs and supply chain bottlenecks. As less inventory was available due to these problems, it led to less selection and longer delivery times, lowering customer conversion rates. Additionally, interest rates increased at a historically fast rate during the first quarter which negatively impacted financing gross profits. Carvana originates loans for customers and then sells them to investors at a later date. If interest rates move materially between loan origination and ultimately selling those loans, it can impact the margin Carvana earns on underwriting those loans. Industry-wide used car volumes were also down 15% year-over-year during the first quarter. While Carvana continues to grow and take market share, its retail unit volume growth was slower than initially anticipated, up only 14% year-over-year. Carvana has been in hyper growth mode since inception and based on the operational and logistical requirements of the business, typically plans, builds, and hires for expected capacity 6-12 months into the future. This has historically served Carvana well given its exceptionally strong growth, but when the company plans and hires for higher capacity than what occurs, it can lead to lower retail gross profits and operating costs per unit sold. When combined with lower financing gross profits in the quarter from rising interest rates, losses were greater than expected. In February, Carvana announced a $2.2 billion acquisition of ADESA (including an additional $1 billion plan to build out the reconditioning sites) which had been in the works for some time. ADESA is a strategic acquisition to help accelerate Carvana’s footprint expansion across the country, growing its capacity from 1.0 million units at the end of Q1’22 to 3.2 million units once complete over the next several years. It is unfortunate the acquisition timing followed a difficult quarter that had greater than expected losses, combined with a generally tighter capital market environment. Carvana ended up raising $3.25 billion in debt ($2.2 billion for the acquisition and $1 billion for the buildout) at a higher than initially expected 10.25% interest rate. Given these higher financing costs and first quarter losses, they issued an additional $1.25 billion in new equity at $80 per share, increasing diluted shares outstanding by ~9%. Despite the short-term speedbumps surrounding logistical issues, softer industry-wide demand, and a higher cost of capital to acquire ADESA, Carvana’s long-term outlook not only remains intact but looks even more promising than before. To better understand why this is the case and where Carvana is in its lifecycle, it helps to provide a little background on the history of retail. While e-commerce is a more recent phenomena that developed from the rise of the internet in the 1990s, the retail industry has undergone several transformations throughout history. In retailing, profitability is determined by two factors: the margins earned on inventory and the frequency with which they can turn inventory. Each successive retail transformation had a similar economic pattern. The newer model had greater operating leverage (higher fixed costs, lower variable costs). This resulted in greater economies of scale (lower cost per unit) and therefore greater efficiency (higher asset turnover) with size that enabled them to charge lower prices (lower gross margins) than the preceding model and still provide an attractive return on capital. The average successful department store earned gross margins of ~40% and turned inventory about 3x per year, providing ~120% annual return on the capital invested in inventory. The average successful big box retailer earned ~20% gross margins and turned its inventory 5x per year. Amazon retail earns ~10% gross margins (including fulfillment costs in COGS) and turns inventory at a present rate of 12x times annually. The debate that surrounds any subscale retailer, particularly in e-commerce, is whether they have enough capital/runway to build out the required infrastructure and then scale business volume to spread fixed costs over enough units. Before reaching scale, analysts may point to an online business’ lower price points (“how can they charge such low prices?!”), higher operating costs per unit (“they lose so much money per item!”), and ongoing losses and capital investments (“they spend billions of dollars and still have not made any money!”) as evidence that the model does not make economic sense. Who can blame them since the history books are filled with companies that never reached scale? However, if the retailer does build the infrastructure and there is sufficient demand to spread fixed costs over enough volume, the significant capital investment and high operating leverage creates high barriers to entry. If we look to Amazon as the dominant e-commerce company today, once the infrastructure is built and reaches scale, there is little marginal cost to serve any prospective customer with an internet connection located within its delivery footprint. For this reason, I have always been hesitant to invest in any e-commerce company that Amazon may be able to compete with directly, which is any mid-sized product that fits in an easily shippable box. As it relates to used car retailing, the infrastructure required to ship and recondition cars is unique, and once built, the economies of scale make it nearly impossible for potential competitors to replicate. Carvana is in the very early stages of building out its infrastructure. There is clearly demand for its attractive customer value proposition. It has demonstrated an ability to scale fixed costs in earlier cohorts as utilization of capacity increases, providing attractive unit economics at scale. Newer market cohorts are tracking at a similar, if not faster market penetration rate as earlier cohorts. Carvana is still investing heavily in building out a nationwide hub-and-spoke transportation network and reconditioning facilities. In 2021 alone, Carvana grew its balance sheet by $4 billion as it invested in its infrastructure while also reaching EBITDA breakeven for the first time. The Amazon story is a prime example (pun intended) of a new and better business model (more attractive unit economics) that delivered a superior value proposition and propelled the company ahead of its competition, similar to the underlying dynamics occurring in the used car industry today. Amazon invested heavily in both tangible and intangible growth assets that depressed earnings and cash flow in its earlier years (and still today) while growing its earning power and the long-term value of the business. The question is, does Carvana have enough capital/liquidity to build out its infrastructure and scale business volume to then generate attractive profits and cash flow? Following Carvana’s track record of scaling operating costs and reaching EBITDA breakeven in 2021, the market was no longer concerned about its liquidity position or the sustainability of its business model. However, the recent quarterly loss combined with taking on $3 billion in debt to buildout the 56 ADESA locations across the country raises the question of whether Carvana has enough liquidity to reach scale. Carvana’s current stock price clearly reflects the market discounting the probability that Carvana will face liquidity issues and therefore have to raise further capital at unfavorable terms. However, I think if you look a little deeper, Carvana has clearly demonstrated highly attractive unit economics. It has several levers to pull to protect it from any liquidity concerns if needed. The $2.6 billion in cash (as well as $2 billion in additional available liquidity in unpledged real estate and other assets) it has following the ADESA acquisition, is more than enough to sustain a potentially prolonged decline in used car demand. The most probable scenario over the next several quarters is that Carvana will address its supply chain and logistical issues that were largely due to Omicron. As the logistical network normalizes, more of Carvana’s inventory will be available to purchase on their website with shorter delivery times, which will increase customer conversion rates. This will lead to selling more retail units, providing higher inventory turnover and lower shipping costs, and therefore gross profit per unit will recover from the first quarter lows. Other gross profit per unit (which primarily includes financing) will also normalize in a less volatile interest rate environment. Combined total gross profit per unit should then approach normalized levels by the end of the year/beginning of 2023 (~$4,000+ per unit). Like all forms of leverage, operating leverage works both ways. For companies with higher operating leverage, when sales increase, profits will increase at a faster rate. However, if sales decrease, profits will decrease at a faster rate. While Carvana has high operating leverage in the short-term, they do have the ability adjust costs in the intermediate term to better match demand. When demand suddenly shifts from plan, it will have a substantial impact on current profits. First quarter losses were abnormally high because demand was lower than expected. Although, one should not extrapolate those losses far into the future because Carvana has the ability to better adjust and match its costs structure to a lower demand environment if needed. As management better matches costs with expected demand, operating costs as a whole will remain relatively flat if not decline throughout the year as management has already taken steps to lower expenses. As volumes continue to grow at the more moderate pace reflected in the first quarter and SG&A remains flat to slightly declining, costs per unit will decline with Carvana reaching positive EBITDA per unit by the second half of 2023 in this scenario. Source: Company filing, Saga Partners Source: Company filing, Saga Partners With the additional $3.2 billion in debt, Carvana will have a total interest expense of ~$600 million per year, assuming no paydown of existing revolving facilities or net interest income on cash balances. Management plans on spending $1 billion in capex to build out the ADESA locations. They are budgeting for ~$40 million in priority and elective capex per quarter going forward suggesting the build out will take ~6 years. Total capex including maintenance is expected to be $50 million a quarter. Carvana would reach positive free cash flow (measured as EBITDA less interest expense less total Capex) by 2025. Note this assumes the used car market remains depressed throughout 2022 and then Carvana’s retail unit growth increases to 25% a year for the remainder of the forecast and no benefit in lower SG&A or increased gross profit per unit from the additional ADESA locations was assumed. Stock based compensation was included in the SG&A below so actual free cash flow would be higher than the chart indicates. Source: Company filings, Saga Partners Note: Free cash flow is calculated as EBITDA less interest expense less capex After the close of the ADESA acquisition, Carvana has $2.6 billion in cash (plus $2 billion in additional liquidity from unpledged assets if needed). Assuming the above scenario, Carvana has plenty of cash to endure EBITDA losses over the next year and a half, interest payments, and capex needs. Source: Company filings, Saga Partners The above scenario does not consider the increasing capacity that Carvana will have as it continues to build out the ADESA locations. After building out all the locations, Carvana will be within one hundred miles of 80% of the U.S. population. This unlocks same-day and next-day delivery to more customers, leading to higher customer conversion rates, higher inventory turn, lower risk of delivery delays, and lower shipping costs, which all contribute to stronger unit economics. Customer proximity is key. Due to lower transport costs, faster turnaround times on acquired vehicles, and higher conversion from faster delivery speeds, a car picked up or delivered within two hundred miles of a recondition center generates $750 more profit than an average sale. It is possible that industry-wide used car demand remains depressed or even worsens for an extended period. If this were the case, management has the ability to further optimize for efficiency by lowering operating costs to better match demand. This is what management did following the COVID demand shock in March 2020. The company effectively halted corporate hiring and tied operational employee hours to current demand as opposed to future demand. During the months of May and June 2020, SG&A (ex. advertising expense and D&A) per unit was $2,600, far lower than the $3,440 reported in 2020 or $3,654 in 2021. Carvana has also historically operated between 50-60% capacity utilization, indicating further room to scale volumes across its existing infrastructure without the need for materially greater SG&A expenses. Advertising expense in older cohorts reached ~$500 per unit, compared to the $1,126 reported for all of 2021, while older cohorts still grew at 30%+ rates. If needed, Carvana could improve upon the $2,600 SG&A plus $500 advertising expense ($3,100 in total) per unit at its current scale and be far below gross profit per unit even if used car demand remains depressed for an extended period of time. When management optimizes for efficiency as opposed to growth, it has the ability to significantly lower costs per unit. Carvana has highly attractive unit economics and I fully expect management will take the needed measures to right size operating costs with demand. They recently made the difficult decision to layoff ~2,500 employees, primarily in operations, to better balance capacity with the demand environment. If we assume it takes six years to fully build out the additional ADESA reconditioning locations, Carvana will have a total capacity of 3.2 million units in 2028. If Carvana is running at 90% utilization it could sell 2.9 million retail units (or ~7% of the total used car market). If average used car prices decline from current levels and then follow its more normal longer-term price appreciation trends, the average 2028 Carvana used car price would be ~$23,000 and would have a contribution profit of ~$2,000 per unit at scale. This would provide nearly $5.6 billion in EBITDA. After considering expected interest expense, maintenance capex, and taxes, it would provide over $4 billion in net income. If Carvana realizes this outcome in six years, the company looks highly attractive (perhaps unreasonably attractive) compared to its current $7 billion market cap or $10 billion enterprise value (excluding asset-based debt). Redfin I recently wrote about Redfin Corp (NASDAQ:RDFN) in this December 2021 write-up. I explained how Redfin has increased the productivity of real estate agents by integrating its website with its full-time salaried agents and then funneling the demand aggregated on its website to agents. Redfin agents do not have to spend time prospecting for business but can rather spend all their time servicing clients throughout the process of buying and selling a home. Since Redfin agents are three times more productive than a traditional agent, Redfin is a low-cost provider, i.e., it costs Redfin less to close a transaction than a traditional brokerage at scale. It is a similar concept as the higher operating leverage of e-commerce relative to brick & mortar retailers. Redfin has higher operating leverage compared to the traditional real estate brokerage. Real estate agents are typically contractors for a brokerage. They are largely left alone to run their own business. Agents have to prospect for clients, market/advertise listings, do showings, and service clients throughout each step of the real estate transaction. Everything an agent does is largely a variable cost because few of their tasks are automated. Redfin, on the other hand, turned prospecting for demand, marketing/advertising listings, and investments in technology to help agents and customers throughout the transaction into more of a fixed cost. These costs are scalable and become a smaller cost per transaction as total transaction volumes grow across the company. Because Redfin is a low-cost provider, it has a relative advantage over traditional brokerages. No other real estate brokerage has lowered or attempted to lower the costs of transacting real estate in a similar way. This cost advantage provides Redfin with options about how to share these savings on each transaction. Redfin has primarily shared the cost savings with customers by charging lower commission rates than traditional brokerages. By offering a similar, if not superior, service to customers compared to other brokerages yet charging lower fees, it naturally attracts further demand which then provides Redfin with the ability to scale fixed costs per transaction even more, further widening their cost advantage to other brokerages. So far, the majority of those cost savings are shared with home sellers as opposed to homebuyers. Sellers are more price sensitive than homebuyers because the buyer’s commission is already baked into the seller’s contract and therefore buyers have not directly paid commissions to agents historically. Also, growing share of home listings is an important component of controlling the real estate transaction. The seller’s listing agent is the one who controls the property, decides who sees the house, and manages the offers and negotiations. Therefore, managing more listings enables Redfin to have more control over the transaction and further streamline/reduce inefficiencies for the benefit of both potential buyers and sellers. Redfin also spends some of their cost savings by reinvesting them back into the company by hiring software engineers to build better technology to continue to lower the cost of the transaction. This may include building tools for agents to service clients better, improving the web portal and user interfaces, on-demand tours for buyers to see homes first, automation to give homeowners an immediate RedfinNow offer, etc. Redfin also invests in building other business segments like mortgage, title forward, and iBuying which provide a more comprehensive real estate offering for customers which attracts further demand. So far, the lower costs per transaction have not been shared with shareholders in the form of dividends or share repurchases, and for good reason. In theory, Redfin could charge industry standard prices and increase revenue immediately by 30-40% which would drop straight to the bottom-line assuming demand would remain stable. However, giving customers most of the savings through lower commissions has obviously been one of the drivers for attracting demand and growing transaction volume, particularly for home sellers. The greater the number of transactions, the lower the fixed costs per transaction, which further increases Redfin’s cost advantage compared to traditional brokerages, which provides Redfin with even more money per transaction to share with either customers, employees, and eventually shareholders. With just over 1% market share, Redfin should be reinvesting in growing share which will increase the value of the business and inevitably benefit long-term owners of the company. Redfin’s stock price has experienced an especially large decline this year. I typically prefer to not attempt to place an explanation or narrative on short-term stock price movements, but I will do it anyways given the substantial drop. There are primarily two factors contributing to the market’s negative view of the company: first, the market currently dislikes anything connected to the real estate industry and second, the market currently has little patience for any company that reports net losses regardless of the underlying economics of the business. Real estate is currently a hated part of the market, and potentially for good reason. It is a cyclical industry, and the economy is potentially either entering or already in a recession. Interest rates are expected to continue to rise, negatively impacting home affordability, while an imbalance in the housing supply persists with historically low inventory available helping fuel an unsustainable rise in housing prices. From a macro industry-wide perspective, the real estate market will ebb and flow with the economy over time, but demand to buy, sell, and finance homes will always exist. I do not have the ability to determine how aggregate demand for buying or selling a home will change from year-to-year, but I do know that people have to live somewhere and if Redfin is able to help them find, buy or rent, and finance where they live better than alternative service providers, then the company will gain share and grow in value overtime. Redfin has also reported abnormally high losses of $91 million in the first quarter for which the current market has little appetite. It feeds the argument that Redfin does not have a sustainable business model. While losses can be a sign of unsustainable economics, that is not the case for Redfin. There are several factors that are all negatively hitting the income statement at the same time, and all should improve materially over the next year or two. Higher first quarter losses largely reflect: Agent Productivity: First quarter brokerage sales increased 7% year-over-year, but lead agent count increased 20%, which meant agents were less productive, leading to real estate gross profits declining $17 million from the prior year. Lower productivity was a result of a steeper ramp in agent hiring towards the end of the year against lower seasonal transaction volumes. It typically takes about six months for new agents to get trained and start closing transactions and then contributing to gross profits. Any accelerated hiring, particularly during a softer macro environment, will be a headwind while Redfin is paying upfront costs before any revenue is being generated. Further, closing transactions has been difficult particularly for buyers, which is where most new agents start. The housing market has been unbalanced where there is not enough inventory. A home for sale will typically receive many competing offers which makes it difficult for a buyer to win the deal. Since Redfin agents are mostly paid on commission (~20% salary plus the remainder being commission), it has been more difficult for new agents to earn a sufficient income in the current real estate environment. In response, Redfin started paying $1,500 retention bonuses for new agents who could guide customers to the point of bidding on a home, regardless of whether those bids win. While the bonus may impact gross profits in the near-term before a customer closes a transaction, it will not impact gross margins in the long-term when a transaction eventually takes place. Going forward, agent hiring will return to more normal rates and the larger number of new hires from recent quarters will ramp up which will improve productivity and gross profits. RentPath: Redfin bought RentPath out of bankruptcy for $608 million in April 2021, primarily to incorporate its rentals on its website which helps show up higher on Internet real estate searches. Prior to the acquisition, RentPath had no leadership direction for several years and declining sales and operating losses. RentPath had new management start in August 2021 and was integrated into in March. It finally started to see operational improvement with sales increasing in February and March year-over-year for the first time since 2019 despite a significant decrease in marketing expenses. While RentPath had $17 million in losses during the first quarter and is expected to have $22 million in losses in the second quarter, operations will improve going forward. Management made it clear that RentPath will be a contributor to net profits in its own right and not just a driver of site traffic and demand to Redfin’s brokerage business. Mortgage: A recent major development was the acquisition of Bay Equity for $135 million in April. Redfin was historically building out its mortgage business from scratch but after struggling to scale the operation decided to buy Bay Equity. Redfin was spending $13 million per a year on investing in its legacy mortgage business but going forward, mortgage will now be a net contributor to profits with Bay expected to provide $4 million in profit in the second quarter. The greater implication of having a scaled mortgage underwriter that is integrated with the real estate broker is that they can work together to streamline and expedite the transaction closing which has become an increasingly important value proposition for customers. Looking just a little further into the future, having a scaled and integrated mortgage underwriter can provide Redfin with the capability of providing buyers with the equivalent of an all-cash offer to sellers. Prospective homebuyers who offer all-cash offers to sellers are four times as likely to win the bid and sellers will often accept a lower price from an all-cash buyer vs. one requiring a mortgage. A common problem that many homeowners face is that when they are looking to move, it is difficult to get approved for a second mortgage while holding the current one. Much of their equity is locked in their current home. Frequently, a homebuyer wins an offer on a new home and then is in mad dash to sell their existing home in order to get the financing to work. It is not ideal to attempt to sell your home as fast as possible because it decreases the chance of getting the best price possible. A solution that Redfin could offer as a customer’s agent and underwriter is provide bridge financing between when a customer buys their new home and is then trying to sell their existing home and is therefore paying on two mortgages. Redfin would be able to make a reasonable appraisal for what a customer’s existing home will sell for (essentially what Redfin already does with iBuying) and underwriting the incremental credit exposure they are willing to provide the buyer. The buyer would then have “Redfin Cash” which would work like a cash offer. If this service helps buyers win a bid four times more often, it would even further differentiate Redfin’s value proposition and attract further demand. At least in the near-term, the mortgage segment will go from being a loss center to a contributor to net profits as well as further improving Redfin’s customer value proposition. Restructuring and transaction costs: Redfin had $6 million in restructuring expenses related to severance with RentPath and the mortgage business as well as closing the Bay Equity acquisition. $4 million in restructuring expenses are expected in the second quarter but these expenses will go away in future quarters. The combination of the above factors provided the headline $91 million net loss for the first quarter. Larger than normal losses between $60-$72 million are still expected in the second quarter. However, going forward losses are expected to continue to improve materially. While Redfin is not done investing in improving its service offerings, it should benefit from the significant investments it has already made over the last 16 years. Redfin has been building and supporting a nationwide business that only operated in parts of the country and had to incur large upfront costs. Going forward, it will benefit from the operating leverage baked into its cost structure with gross profits expected to grow twice as fast as overhead operating expenses. Redfin is expected to be cash flow breakeven in 2022 and provide net profits starting in 2024. Redfin has built a great direct to consumer acquisition tool that is unmatched by any real estate broker. It has spent the costs to acquire the customer and has now built out the different services to provide customers any of the real estate services that they may need, whether that is one or a combination of brokerage services, mortgage underwriting, title forward, iBuying, or rental search. Being able to monetize each customer that it has already acquired by offering them any of these services provides Redfin with a better return on customer acquisition costs that no other competitor is able to do to the same extent. Additionally, these real estate services work better when they are integrated under the same company. One does not have to dig very deep to see how attractive Redfin’s shares are currently priced. Shares are now selling around all-time historic lows since its IPO in August 2017. The prior all-time lows were reached during the COVID crash which was a time the world was facing an unknown pandemic that would shut down the economy and potentially put us through a great depression. At its current $1.2 billion market cap, Redfin is selling for 3x expected 2022 real estate gross profits, or 4x its current $1.7 billion enterprise value (excluding asset-based debt). Both are far below the historic average of 15x (which excludes peak multiples reached towards the end of 2020 and early 2021), or the previous all-time low of 6x reached in the depths of March 2020. If we assume Redfin can raise brokerage commissions by 30%, in line with traditional brokerage commission rates, and it does not lose business, Redfin would be able to provide ~20% operating margins. If we take a more conservative view and say Redfin can earn 10% net margins on its 2022 expected real estate revenues of $990 million, it would provide $99 million in net profits, providing a current 12x price-to-earnings ratio. This is for a company that has a long track record of being able to grow 20%+ a year on average, consistently gains market share each quarter, and has barely monetized its significant upfront investments and fixed costs with a long runway to continue to scale. This also does not place any value on its mortgage or iBuying segments which are now contributors to gross profits. There may be macro risks as well as other concerns today, however Redfin’s business and relative competitive advantage have never been stronger. The net losses reported are not representative of Redfin’s true underlying earning power. Redfin has untapped pricing power, an increasingly attractive customer value proposition, and a growing competitive advantage compared to alternative brokerages, which will help Redfin to continue to grow and take market share in what is a very large market. Conclusion Of course, the future can look scary, as it often does when headlines jump from one risk to the other. Despite what may be happening in the macro environment, our companies on average are stronger than they have ever been and are now selling for what we believe are the most attractive prices we have seen relative to their intrinsic value. I have no idea what shares will do in the near-term and I never will. Stock prices can swing wildly for many reasons, and sometimes seemingly for no reason at all. They can diverge, sometimes significantly from their true underlying value. I have no idea when sentiment will shift from optimism to pessimism and then back to optimism. This is what keeps us invested in both good times and in bad. The current selloff can continue further, but assuming our companies continue to execute over the coming years by winning market share and earning attractive returns on their investment spending, the market’s sentiment surrounding our portfolio companies will eventually reflect their underlying fundamentals. I will continue to look towards the longer-term operating results of our companies and not to the movements in their stock price as feedback to whether our initial investment thesis is playing out as expected. While the market can ignore or misjudge business success for a certain period, it eventually has to realize it. During times of greater volatility and periods of large drawdowns, I am reminded of how truly important the quality of our investor base is. It is completely natural to react in certain ways to rising or declining stock prices. It takes a very special investor base to look past near-term volatility and to trust us to make very important decision on their behalf as we continually try to increase the value of the Saga Portfolio over the long-term. As always, I am available to catch up or discuss any questions you may have. Sincerely, Joe Frankenfield Saga Partners Updated on May 16, 2022, 4:44 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkMay 17th, 2022

How To Identify The Consensus In Any Market

How To Identify The Consensus In Any Market By Alex of MacroOps Here’s John Percival, writing in his book The Way of the Dollar, describing how to identify the Consensus and act as a Contrarian.  “Remember the last time you sold a currency at what proved to be the bottom, or bought at the exact top? That wasn’t just bad luck — nor even just foolishness. You and the crowd caused the bottom, or the top.  The Consensus.  I know of one top equity fund manager who has no other rule for handling the currency markets than to go against the consensus. It’s common sense. We must be ‘contrarians’, if we are to survive in financial markets in general and the currency markets in particular. During the great bull market in the dollar in 1981-5, it was the one single rule that assured survival. If you have any problem with that, I suspect there is no solution but to observe markets till it’s no longer a problem; for the shifts from pessimism to optimism and back are what bull and bear markets are about.  The difficulty is to define “the consensus”. The crowd isn’t always wrong. When a price movement gets going, the crowd as often as not will line up in the direction of the movement. But standing against the crowd, at times can be as desirable as standing in the way of an express train. This is the drawback of such objective measures of opinions as Market Vane — a well known American service which measures bullish opinion among traders. If you poll traders, most of them will point in the direction of the trend. Bullish opinion as measured by Market Vane tells us the direction of prices over the past week, but not necessarily a lot more.  Perhaps Bruce Kovner, of Caxton, nailed the problem when he said that what he was looking for was the consensus that is not confirmed by price action. That covered the entire 1981-5 bull market in the dollar when the consensus was constantly bearish. It also covers the price extremes, when the consensus is wrong by definition.  Whether we are looking at the underlying multi-month/ multi-year trend or the intermediate multi-week moves, there are usually two phases when the consensus is not confirmed by price — early in the move and at the end of the move. Soon after a price reversal, majority opinion is usually aligned with the previous trend, i.e. the consensus lags. Similarly, majority opinion strengthens along with the on-going trend, trending to reach peak consensus at the price extreme. So the ideal position is to be contrarian at the beginning and end of a move, and pro-consensus in the middle. Nice work if you can get it so right.  Never forget that the consensus  usually includes you. The consensus gauge is a subjective gauge. We read the papers and specialist commentators and we talk to people, and we conclude that most punters are facing one way. If we are facing the same way, we have to reconsider the situation in the light of our other sentiment gauges and cut back if they are flashing yellow. In the heat of a powerful favourable price move, we are often lulled into complacency: at that point, consulting the consensus is an essential discipline — it often comes as a shock to discover that we are in with the herd, and it can be very costly if we fail to make this discovery. When we diagnose a situation where the consensus is not confirmed by price, we should not just cutback but try facing the other way, to see whether anything clicks. If the market action feels right; if the open interest is extended; and if we can find a fitting rationale, we can reverse our position…  Helpful Images There is another description of the consensus-that’s-not-confirmed-by-price. It consists of two images that have become part of the ancient lore of Wall Street, the Wall of Worry and the River of Hope. A bull market we recall, “climbs a wall of worry” ; and “a bear market flows down a river of hope”. In point of fact, the description normally only applies to the early and middle stages in bull and bear markets. So we can be very comfortable when we diagnose a wall or a river — assuming we’re climbing and flowing respectively.  In the later stages of the trend, things change. The worriers capitulate to the up-trend; and the hopers throw in the towel and give up the fight against the bear. At this stage, in a bull market, we find die-hard bears saying that, well, we are heading for a collapse, but prices are going to go up further before they head down. And in a bear market die-hard bulls assert that prices are far too low — but they can go lower still. The conversion process is nearing its end. Now we have to get a little wary, for obviously we are in the region of consensus. And this is a very dangerous region because nobody on earth can tell how far things can go. Currencies, stocks, commodities — it makes no difference. In this respect they’re all the same.  It is said of Joseph Kennedy, father of President John Kennedy, that when he was having his shoes shined one day in autumn 1929, he was astonished to hear the shoe shine boy tip him a hot stock that was sure to go from 160 to 2000 or whatever. That was all Joe K needed. If shoe shine boys (or elevator attendants, or hairdressers, the cover of Newsweek or whatever) were tipping stocks, it was time to get out. So Joe K started selling short and thus laid the foundation of the family fortune — so the story goes. But if it’s true that Joe K went short at that moment then he was lucky. The sucker buys at the top of the market; geniuses and liars sell at the top of the market; but the super-sucker sells short at what he thinks is the top of the market.  In 1979, the then financial editor of Britain’s Daily Mail newspaper, Patrick Sargent (later to be a founder of Euromoney), called the top of the gold market at around $450. It was a perfectly sound call, in the light of the speculative heat in gold at the time especially from one who had been bullish of gold for a good time. Yet gold was to climb a further $400 by early 1980, when speculation turned from red-hot to white-hot. Imagine being short at $450! As I say, no-one on earth knows where a speculative trend will end — except with hindsight…  This brings us to the question how you can distinguish a minor multi-week extreme from a major multi-month or multi-year extreme. The late stages in that great dollar bull market of 1980-5 provide a clue: you watch the way the conversion process trickles down through the different categories of currency observers. In mid-1984, the world was still full of die-hard dollar bears who had considered the currency overvalued ever since 1981. Who were they? It wasn’t the dealers, who are not and do not need to be overly concerned with underlying value; nor was it the trend-followers. It was the value-oriented analysts — researchers and economists by profession — with a long-term orientation. What happened was that some time during the autumn of 1984, the bearish consensus among this category turned round; and it happened relatively suddenly. You will see it quite clearly if you go back over the research material turned out by major banks at the time. “The dollar is grossly overvalued at DM 3.00, but we think it will head further up before it collapses”, that kind of thing.  In other words, it’s just as you would expect. When the long-termers who were formerly skeptical at last capitulate to the trend, then you have a total consensus and the end is nigh for the major multi-month / multi-year move. Nigh, but not necessarily over. At this point one of our sentiment gauges comes into its own. We have to watch market action: the way the markets react in relation to the background and to news events.” Michael Lewis wrote in his book Liar’s Poker that:  Everyone wants to be, but no one is, for the sad reason that most investors are scared of looking foolish. Investors do not fear losing money as much as they fear solitude, by which I mean taking risks that others avoid. When they are caught losing money alone, they have no excuse for their mistake, and most investors, like most people, need excuses. They are, strangely enough, happy to stand on the edge of a precipice as long as they are joined by a few thousand others… It’s incredibly difficult to identify the consensus and act as a contrarian in markets. A good first step is to acknowledge that you suffer from the same base cognitive impulses that drive the rest of the herd — we’re ALL part of the Dumb Money crowd.  As soon as you accept this, you can then go about learning some tools to help you step back from the crowd and better understand the popular narratives and emotions that are driving prices. Doing so is more art than science and it takes a lot of work. But it’s better than standing on the edge of a precipice…  Tyler Durden Sun, 05/15/2022 - 13:25.....»»

Category: smallbizSource: nytMay 15th, 2022

Alphabet CEO: The U.S. Should Work To Maximize An Open, Interconnected Internet

Following is the unofficial transcript of a CNBC exclusive interview with Alphabet Inc (NASDAQ:GOOGL) CEO Sundar Pichai on CNBC’s “TechCheck” (M-F, 11AM-12PM ET) today, Thursday, May 12th. Following is a link to video on The U.S. Should Work To Maximize An Open, Interconnected Internet, Says Alphabet CEO Part I DEIRDRE BOSA: Now as we […] Following is the unofficial transcript of a CNBC exclusive interview with Alphabet Inc (NASDAQ:GOOGL) CEO Sundar Pichai on CNBC’s “TechCheck” (M-F, 11AM-12PM ET) today, Thursday, May 12th. Following is a link to video on The U.S. Should Work To Maximize An Open, Interconnected Internet, Says Alphabet CEO Part I DEIRDRE BOSA: Now as we discussed some big some big tech does continue to be under pressure today despite the rebound in the broader sector over the last few months, it had held up better than some of those more speculative areas. This week we continue to see names like Apple and Microsoft underperform. Against that backdrop, Alphabet held its first in person I/O Developers Conference in three years in Mountain View yesterday, we were there. The audience got hardware teases like a Pixel Watch and plans for Google Glass successor. Pichai also announced some developments in artificial intelligence and breakthroughs in language processing. Now that return to normalcy and the energy in the amphitheater though it was in contrast with what was going on in the markets and economy as I sat down with him, the Nasdaq closed lower by another 3%. So that is where I started.  I asked Pichai how vulnerable Alphabet is to a recession? .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more SUNDAR PICHAI: Well, we definitely see uncertainty ahead, like everyone else and the, the good thing is we've been around as a company for a while. Have worked through past moments like this, be it 2008 or the early days of the pandemic and we take a long-term view. Obviously, when you're, you know, serving across the economy, you know, and a lot of the macroeconomic factors like GDP growth end up affecting advertisers' spend as well. But a lot of, like, what you saw today at Google I/O too is when we are investing in AI, one of the largest investors of R&D in the world, and we take a long-term view and we work hard to make our products better. And so, you know, so I think, I think for me, the work we are doing today will pay dividends two to three years out. So that's how I approach it. BOSA: When you say that you're seeing uncertainty, where is that showing up right now? For example, this morning we got inflation numbers, some saying that maybe it suggests a peak. Are you seeing the same thing in the data that Google has in terms of the travel data, the purchasing, the ad spend? PICHAI: Yeah. We definitely see travel recovering. You know, there are signs that people are clearly moving post the pandemic, and so there is some return to normalcy. But there are what make, what gives uncertainty is there are so many different factors, be it supply chain issues or be it rising energy prices. And, and so trying to add all of that up together is that uncertainty— BOSA: What about inflation specifically? Does the data that you see suggest that maybe we're at a peak? Are you optimistic? PICHAI: I think it's gonna take time to work through. A lot depends on, I do think people are seeing relief in certain sectors. But then you have other new areas which are showing problems maybe due to supply chain constraints. But I think it's gonna take us some time to work through this. BOSA: Like, where, new areas? PICHAI: You know, just, you know, energy has been an issue, as an example. In some cases, rentals have gone up. And, you know, so, you know, food prices. So it's, it's a complex factor, particularly globally. BOSA: Right. Now at I/O you guys had a number of announcements. You're gonna be spending more and I wonder you're still a $1.5 trillion, I almost said billion, trillion-dollar company. Your workforce is now more than 150 people strong, or Google are strong. How nimble are you as a company if we continue to see this economic slowdown? When would you start to consider scaling back plans? Would you be able to quickly? PICHAI: Well, I've always, you know, prided on our ability to be nimble when needed. And, and, you know, as a company, we wanna be resilient in moments like this. We are, we are very excited about the opportunities ahead. And so we are investing. We are continuing to hire, bringing in great talent. There are areas where we are in where we are seeing a secular transformation, like Cloud and the transformation to digital. So we, we are continuing to invest. But, you know, we'll obviously given the uncertainty, you know, pay, pay close attention to it. And to the extent, you know, as a company we need to do something differently, like we have always done, you know, we, we do this responsibly. BOSA: What do you think it's been what do you think what makes your strategy different, let me ask it this way, than some of your peers, that you're able to hire 12,000 people this year? You're able to spend almost $10 billion on infrastructure? Why do you think you're in this position versus some of the other companies now that are coming out and saying that they're gonna have to freeze hiring plans, or even do layoffs? PICHAI: Well, I mean, as, as you said at the start, you know, all of us are impacted in varying degrees. I think we are, you know, we, we invest in foundational technologies and we are in many areas so in some ways, we are diversified. Obviously, we have important products like Search and YouTube. We have computing products involving Android Play and our hardware devices and and Cloud is a big area of opportunity for us as well. So I think we are exposed to many, many sectors and we do this globally as a company. And I think that allows us to take a long-term view and think through these phases. BOSA: Yeah. You guys spend a lot on research and development, as evidenced here. I wanna talk about some of the diversification because Alphabet is a company of many different businesses. You also touch on many different societal issues. So, I want to talk about some of them, how they fit in today, how they fit into Alphabet's future. Developers first, since we are here at I/O. How do you manage it shifting App Store dynamics? Does Google deserve to continue to take a fee for providing a platform for developers and companies, or is something changing here? Is that era over as Match and some other companies have argued that it should be? PICHAI: Yeah, look, it's an important area and we've been listening and we wanna make sure we get it right. I think it's important to remember we invest in Android. We provide the operating system for free both to OEMs and to carriers and, you know, and, and try and make phones affordable. And we invest a lot in keeping the platform secular and we give the distribution with built-in payments to reach. And, you know, and for the vast majority of developers, you know, pay reasonable fees and, you know, around 15% or so. And but I think it's important for that for us to continue investing in the platform too. So, I think we have struck the right balance. We are constantly looking how we can add value to developers, and there are so many developers who are who have embraced the model, who are investing on the platform. But, you know, these are important conversations and so, we'll continue to listen to them. BOSA: You say that you provide Android for free. Do you mean to the consumer? PICHAI: To the consumer, to OEMs and, you know, we, we invest thousands of engineers and under open-source license provide the operating system for free. BOSA: But it's what the developers pay in terms of those fees and commissions that allow you to provide that for free, right? So— PICHAI: That is part of our business model. Yeah. BOSA: Exactly. So, what happens if those fees go away? Is that why you don't think they ever will go away because they're important to keep the ecosystem going? PICHAI: We provide an economic value there and, and I think it's rooted in foundational economics in terms of the value we provide. But we have made many changes to our developer program. So, we've made a lot of changes and I think, you know, we brought many developers onboard. And so I think we'll be able to navigate the transition well. BOSA: Let's talk social media next. We certainly watched YouTube's growth and how quickly it has been growing, although we saw that decelerate a little bit the past quarter. What does free speech on the internet mean to you? PICHAI: I think, you know, free speech I've always viewed it as, you know, foundational. I grew up in a large democracy and, you know, the importance of free speech and giving people a voice I think is really foundational. As Google, you know, Search is one of the products. Free Search represents what's on the web today. We, you know, we only take down stuff that is against the law. And so the, the core principles of free speech are deeply built into the platform. BOSA: Sounds very similar to how Elon Musk describes free speech, in that they will only comply with the law. Would you say that your approach is the same as him? Or help us understand how your strategy may be different. PICHAI: I can talk about our approach. I mean it's on a strong principle of free speech. We comply with laws and regulations. We also have in, in a product like YouTube, where we recommend and where we can amplify content, you know, we do have community guidelines. So we have clearly stated policies. And, and we, you know, take action. And that's what actually allows us to maximize free speech help keep the platform safe for everyone involved and, and I think there is a balance to be struck there. But I do think underlying all that is a strong commitment to free speech and, you know, and that's how we approach it. BOSA: How closely have you been following or not been following what Elon Musk has been saying about how he might run Twitter? How might that change the landscape for you? How much are you thinking about this? PICHAI: You know, I'm, I'm a avid user of Twitter. I think it's an extraordinarily important product for the world. I've gotten a lot out of it and I think there is value in investing in it for the long term. And, you know, and I, I think that is important because it plays an important role in, in democratic society. So I share that view. And, you know, I'm, you know, I would like to see the product continue to get better and so, you know, that's what I think about. BOSA: If he reverses the ban on former President Donald Trump, how does that change or not change the calculus for YouTube? PICHAI: I mean, well, these are different products. And, you know, we, we, we have, we've always had policies and we apply them consistently, regardless of who it is. And, and we have deep experts who like at it and, you know, and, and we'll continue making our decisions. BOSA: And how does AI shape, I know you spoke a lot about that on stage today and this whole idea of maybe open sourcing a social network like Twitter or YouTube. Do you think that would help counter some of the free speech issues in our society today? Or would it amplify them? PICHAI: Well, I think, you know, I think, I think it's important to give people a sense of transparency. And, you know, and there are many ways to accomplish that. And, for example, we publish our community guidelines or, or in the case of Search, how our raters evaluate for search quality, we publish that publicly. And so I think there are different ways to approach this and I think it's important to do it in a way in which spammers and others who are trying to work around your products are not able to do as well so but I'm glad there are different approaches being discussed. BOSA: Right. Now, privacy is another area being reshaped, being debated in public. On “TechCheck,” we half-jokingly say that the regulators in chief are the EU and Tim Cook. What do you think about one company, Apple, sort of unilaterally changing the privacy landscape as we've seen it done over the last year or so? PICHAI: You know, I think well, there are many, many factors which are driving privacy. For me, I would argue that it is users' evolving expectations that are moving the privacy needle more than anything else. And, you know, users increasingly in a digital world, I think, I think they are asking for privacy. And I think all of us need to respond to it. There's been extraordinarily important legislation like GDPR. And all of us have, have had to work to comply with that. And you saw, as Google, you know, we are helping organize information, make it better for you. And as part of that, there are products where we do that, be it Gmail Photos. We never use that for advertising. The products we monetize with that pricing, we give users clear choice and controls, including more controls we announced today. So I think the way I think about it is people care deeply about privacy. It is going to constantly evolve and we need to stay a step ahead of that evolving user expectation. BOSA: So people care deeply. You're seeing that people want more control, especially over things like tracking and targeting. I wonder why then has Google not moved as quickly as Apple in terms of third party cookies when clearly consumers are opting out of that kind of tracking on their Apple devices. PICHAI: I mean, we, there are, we try to consumers many choices. We have clearly announced plans to, you know, phase out third-party cookies. But there is a large ecosystem and people use many services, including news publishers and content and which are monetized by advertising. And so we, we are working with advertising, you know, with publishers, with regulators to help drive this massive change across the ecosystem. I think, I think we are, feel responsible to get it right. BOSA: Was Apple hasty or irresponsible in moving so quickly without getting the proper feedback? PICHAI: I the they are coming at it with a different, different viewpoint. And, you know, they don't operate, you know, products for publishers the way we do. And so I think they are looking at it different. So I don't wanna comment on that. You know, I think about what we should do as a company. BOSA: Now, in terms of your relationship with American lawmakers, last year you spent nearly $10 million on lobbying. That is actually less than half of what you spent back in 2018. What does that tell you? Is scrutiny easing? Is the relationship getting better? Or has crypto replaced big tech as sort of the punching bag? PICHAI: Oh, there's definitely, you know, I think internet and tech are playing an important role. And so there is definite scrutiny. I think it's important Congress passes legislation. I think the US is behind on privacy legislation. We have long called for strong federal privacy legislation. I think there's important legislation to be done around children's safety online. I think, I think, I think scrutiny is important. I think we plan to engage constructively. And but there are important issues where we engage on when we say, for example, making sure there is rural broadband, or making sure people have access to digital skills, are all topics we lobby on as well. And, and including the importance of free speech. And so I think, I think these are complex topics. And I think the next decades will have new rules written for the internet. And, you know, we wanna make sure we add perspective there too. BOSA: I mean, you talk about things like rural access to the internet some of the things in language processing that you talked about on stage today have really shown themselves to be so valuable during the pandemic. Would you say that the relationship has improved, become more constructive with lawmakers then in America? PICHAI: I mean, I think they, they always I, I think they respond to areas where we see doing good work, be be it COVID around pandemic to help we did to make sure we got message on vaccines out, or the work we are doing to contribute to small and medium businesses, particularly training them on digital transformation. So there are many areas we see common ground. We're also innovating as a company. You started early asking about inflation. There are many areas as a company we lower prices. You know, tech is, you know, people take it for granted. But year after year, we provide the services we do and, you know, we, we in our own ways contribute to making sure it's affordable for users. So I think there's a lot of areas of common ground as well. Part II BOSA: We want to bring you some more from my exclusive interview with Alphabet CEO Sundar Pichai. We also spoke about YouTube which accounted for over 11% of the company's total revenue last year. This past quarter, the company did miss the street's estimates as TikTok continues to dominate the short-form video space. So I asked Pichai how big of a threat TikTok is? PICHAI: To me, you know, YouTube, people forget that YouTube was short-form video, right? I think, I think users constantly evolve to newer places. I think there is real excitement around what, what is today called short-form video. And, and, you know, it's to me what's exciting is it's, it's a big area in which you're seeing the shift in the platform. Creators are responding, and users are adopting it. And so we definitely see strong growth. YouTube through the pandemic has turned out to be a more important platform than we ever imagined. And, you know, we see healthy indicators on the platform. So, again, you know, we have to respond to what users are asking for. And, you know, we are trying to give them the best experience. And, and so we feel challenged to do better. That's how I would think about it. BOSA: Is, is TikTok a threat then? Do you think of it in those terms? PICHAI: I think there's always going to be, you know, now having been in, on the internet for over two decades, you're constantly going to have new services come, and people will use that. You know, things like Snapchat, Pint, all of these didn't exist a few years ago, right? And, and it shows the power of mobile as a platform, how, how much opportunity there is for innovation and creating new things which shows how competitive and vibrant the underlying sector is. And so for me these this is all more evidence of that. And, you know, as companies, we always have to be nimble and we have to adapt. And that's how it feels every Monday when I come into work. BOSA: The TikTok piece of it is different in that it's owned by a Chinese company. I lived in China for a number of years. I couldn't access Google. I'd have to log on to my VPN even to get my Gmail. Is there a double standard though? TikTok has grown completely unfettered here in the United States. It is so popular now. Do lawmakers here have your back, have American companies' backs in letting Chinese companies grow so large here while our companies are banned over there? PICHAI: Look, I, I mean, I would go back to my earlier point. I think part of the reason I think it's really important Congress, you know, tackles on, on all the, the industry has to play a role and and be constructive and supportive, too, on privacy and children's safety. I think the more we have, you know, clear rules and frameworks which applies to everyone I think that's how we can, we can make progress on topics like this. BOSA: Do you think though lawmakers should be harder on China just given that clear sort of distinction, that bifurcation that we see between the two countries, the standards that our companies are held to versus theirs? PICHAI: The way, the way I think about is, look we, we have a open internet and, you know, as a company we have strongly believed in a open internet. And I think that foundation is important. So, I think, you know, the U.S. should work to maximize a open, interconnected internet. And, and as part of that and making sure people as use, as users are protected. And, and, and I think those are the two main responsibilities in terms of at least how I would think about approaching it. Updated on May 12, 2022, 1:39 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkMay 12th, 2022

As Markets Correct, Remember The Wit & Wisdom Of Ace Greenberg

As Markets Correct, Remember The Wit & Wisdom Of Ace Greenberg Authored by Bill Blain via, “Tricks make headlines, but winners execute the basics..” Markets remain in a major correction – but fear not. When the hurly burly is done, what goes down and survives will (eventually) come back up! As the pain bites, I recommend the wit and wisdom of Ace Greenberg, the best banking CEO ever, a man who understood the primacy of common sense. Peloton’s numbers said it all. Great concept. Terrible Business. The most difficult thing in business is convincing someone who thinks they have a brilliant concept that it’s not. From meme stocks, to SPACs, to profitless growth-fixated firms to disruptive tech… it’s the realisation great marketing and gab doesn’t always translate into brilliant businesses that’s hurting whole slices of the market. Such is life. Three times I’ve invested in airships. They will never replace planes, but I shall probably fall for it again because next time is always different. No. It usually is not. Good firms – the legion of companies with solid fundamentals, the ones that don’t make the front pages of the FT and WSJ on a regular basis, the well managed ones, aware of their position on the earth and part of it, making perfect widgets and selling great products, looking after their staff and achieving positive social good – (the ones that do ESG without having to have it explained to them) – are also suffering for all the usual reasons: an inflated bubbelicious market bursting, and a declining economic outlook in the face of inflation, recession, difficult supply chains and rising global tensions. If you are holding good and great companies you really have little to worry about. Sure, the stock price may decline as the economic picture develops, the great correction of 2022 will continue as a falling tide lowering all boats, but ultimately good companies will bounce back, they will pay dividends and they will resume on trend mean-reverted growth. These firms are the long-term holds. My portfolio is down, but it will be back up again. I am not panicking. As I’ve pointed out many times, the trick is understanding which firms will evolve into or maintain profitable niches, and which are ultimately evolutionary dead ends… As for Coinbase last night.. I had to stifle giggles as I scanned their statements. Sadly, it won’t be a final hurrah for Crypto. Around the world there is a huge number of desperate crypto-losers hoping and clinging to the belief the few pennies they have left in this Crypto Winter are still going to germinate into fantabulous wealth. They sincerely believe the gibberish that passes as crypto-proof. They don’t understand Greater Fool theory. They believed the invisible clothes of crypto could only be seen by really clever people, and didn’t want to look foolish. Yet, today I was surprised to discover my crypto wallet is still worth 70% of my investment – I will be smugly satisfied when its zero! But, all the above is just noise.. What does it all really mean.. So a bit of a departure on the Morning Porridge this morning. Today, I am going to listen to someone else’s advice… Yesterday, I was chatting with an old work chum and he showed me a photo of his dog-eared Crash of 29 by Galbraith. I went looking for mine – and its vanished. I reckon either the ex-Bank of England economist up the road or one of our local hedgies snaffled it at the Halloween, Christmas or my Birthday party.. hey-ho! But I did find my last remaining copy of the Greatest Book on business ever written. Ace Greenberg’s Memos from the Chairman. Ace was CEO and chairman of Bear Stearns, the greatest Little Investment Bank to ever grace the Street. I have enjoyed every moment of my not very grand career in finance, but the 10 years I spent at Bear were probably the best. (Shard, of course, comes a very close second…) The book is a collection of genuine memos Ace sent round Bear Stearns – they are full of wisdom, humour and are highly instructive. Even though they are now 30 years old, they remain highly pertinent to what’s happening in market’s today. Perhaps the things Ace valued most was common sense and pragmatism. Ace was a real character – and a genuine good man. Many years ago I dragged him to the IMF annual shindig in Washington. Between meetings with clients, while I was flaffing around arranging taxis, materials and schedules, he stopped me, made me sit down and decompress, and insisted on sharing his lunch with me. He gave me great advice on the clients we met. He told me not to engage with one Irish bank we met – they didn’t pass his sniff test. He was spot on right. The Irish Bank went spectacularly bust a few years later. Ace had a gift for remembering everyone and a genuine interest and concern for his colleagues. He understood the business backwards, and was tough. He would not hesitate to pull the trigger when required, but he was absolutely fair. When he stepped back… under his utterly different successor it was only a matter of time.. which was a great shame. Bear Stearns – happy days and a great crowd of people. I raise a toast! I reread Memos from the Chairman again last night. It’s utterly brilliant. Let me share some gems: On being successful in markets: Watch expenses Work for our clients Keep our feet on the ground and our heads on straight.” “Make decisions based on common sense and avoid herd mentality.” “Control expenses with unrelenting vigil.” “Help all departments grow, this year’s starlet can be next year’s dog.” “All this time I thought Merchant Banking was some esoteric, complicated British secret.”   “The bear markets will end, and it can end quickly.” “This market will not get me down. It is just a minor challenge.” “People who talk too much seem to have bad luck.” On Investment Banking: “You cannot fly with the eagles and poop like a canary.” “It is up to all of us to fight our unrelenting enemies – complacency, over-confidence and conceit.” “Thou will do well in commerce as long as thou does not believe thine own odour is perfume.” “Every industry in this country is having financial problems. We paid our dues by surviving and even prospering during some tough years for Wall Street, but do not confuse luck for brains.” “I find it amazing we never hear of a conference devoted to applying common sense to the securities industry” On People and Markets: “The market in stocks has taken a precipitous drip, but I am far from depressed. Why? Because we will see great opportunities in all areas, particularly personnel.” “If somebody with an MBA applies for a job, we will not hold against them, but we are really looking for people with PSD degrees. (Poor, smart and a deep desire to get rich.)” “Bear Stearns is not having a hiring freeze. Our experience has been the best time to hire productive people is when conditions are difficult.” “The only thing that can stop us getting richer is stupidity.” “Forget the chain of command. That is not the way Bear Stearns was built. If you think someone is doing something off the wall or his/her decision making stinks, go around this person, and that includes me.” On CVs “Remember one thing; today’s applicant could be next year’s client.” On Work  (he recognised answering phones promptly and is critical to success) “I conducted a study of 200 firms that disappeared from Wall Street and discovered 62.349% went bust because important people did not leave word on where they went when they left their desks…” “A firm that has enthusiastic telephone operators starts off with a tremendous advantage over the dummies of the world.” On trading “If you have a problem position, discuss it with the head of desk. Absolution can be granted for losing money, but never for lying about it.” On strategic planning: “It is reported some prominent M&A bankers just left a firm because of a difference of opinion over strategic planning. That will never happen at Bear Stearns because we have no Strategic Planning.” “The amount of dissension rises geometrically with the more issues you have to philosophize over.” On Expenses  it wasn’t just spending on paperclips… “Federal Express is not a wholly owned subsidiary of Bear Stearns… we are spending $50,000 a month with them.” “It hurts to report I saw someone throw away a used internal envelope before it made 22 trips round the office. I can’t stand to see people burn money.” “Electricity is not free! This will come as a surprise to 98% of the people who work at Bear Stearns. I found enough lights and machines left on to fund Bangladesh’s light bill for a year.” “We are flexible. We should have anticipated the culture shock when a person joins us from a firm that has been losing billions. From this date forward… the personnel department will give new folks a paper bag with a box of paper clips and twenty rubber bands.” “When the toner is low, take out the cartridge, shake it and give it another try. If we get 5% more use out our toner cartridges, it would save the company $15,000 a year.” Bear Stearns has just bought its 10,000th Fax Machine. The Fax salesperson has just retired. He is burnt out – he is 33 years old. He has purchased Donald Trump’s yacht, and the overworked soul wants to take it easy…. There is a moral hidden somewhere… It’s a brilliant read.. and I’m still smiling… Tyler Durden Thu, 05/12/2022 - 06:30.....»»

Category: blogSource: zerohedgeMay 12th, 2022

Transcript: Alex Guervich

     The transcript from this week’s, MiB: Alex Guervich, Hon Te Advisors, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in… Read More The post Transcript: Alex Guervich appeared first on The Big Picture.      The transcript from this week’s, MiB: Alex Guervich, Hon Te Advisors, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. BARRY RITHOLTZ, BLOOMBERG RADIO HOST: This week on the podcast, I have a fascinating guest. His name is Alex Gurevich. He is a hedge fund manager and trader who has been involved in macro trading for decades, since the late ‘90s. And he’s one of these folks that basically has managed to put together a fascinating trading history and a great track record. In 2020, he was positioned in a very contrarian setup. At the end of 2019 and into 2020, he was anticipating a substantial decrease in interest rates when most of the rest of the world was positioned in the opposite way. And when the pandemic hit and emergency Fed cuts came in, his fund did spectacularly well. It was ranked second best performance of all hedge funds in 2020. When you read his books, and his most recent one is “The Trades of March 2020: A Shield Against Uncertainty.” You can see there is a tremendous amount of complexity and deep thought in how his portfolio was positioned. They primarily trade derivatives, interest rates, swaps, currencies. It’s not your standard stock and bond trading. It’s a little more complex and sophisticated. And this is one of the only books I’ve ever read, where the Slack channel, that is his trading desk where all the trades are — are given, confirmed, executed is — is pretty much reprinted as it was. I would say about a third of the book is Slack. And following this is really an education on how a real-world hedge fund trading desk operates. They’re located on the West Coast. So they’re both behind the East Coast by three hours, but they’re anticipating what takes place in Asia, and Japan, and China. And what’s really fascinating about this is when the pandemic began, they were pretty much trading around the clock. It’s not a giant firm. It’s, you know, him and a number of his employees where, you know, for days at a time, trading continuously. And you could see it by the timestamps in the Slack channel, 1a.m., 3 a.m., 5 a.m., 7 a.m., 10 p.m., 8 p.m., and that’s West Coast time. Really fascinating conversation. He is a super interesting, not just a trader, but his worldview and how he looks at what drives asset prices is really fascinating. So if you are all interested in the world of macro trading, strap yourself in for an education because this conversation is fascinating. With no further ado, my interview with Alex Gurevich of HonTe Advisors. ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. RITHOLTZ: I’m Barry Ritholtz. You’re listening to Masters in Business on Bloomberg Radio. My special guest this week, Alex Gurevich, founder and CIO of HonTe Advisors. Previously, he was the head of JPMorgan’s macro book. In 2020, HonTe was ranked second in net return by Barclays, and Gurevich was one of the Top 10 emerging managers as tracked by Eurekahedge. He is the author of two books on trading the first, “The Next Perfect Trade: A Magic Sword of Necessity.” His most recent book just came out this year, “The Trades of March 2020: A Shield Against Uncertainty.” Alex Gurevich, welcome to Bloomberg. GUREVICH: Thank you very much for having me. I’m excited about this conversation. RITHOLTZ: As am I. Let’s start talking a little bit about your background. You earned a PhD in Mathematics from the University of Chicago. Tell us a little bit about that experience and how you get to apply math as a fund manager and a trader. GUREVICH: Well, first of all, I will confess, the experience of being in graduate school at University of Chicago was so amazing, that for many years, almost decades afterwards, I suffered from nostalgia. Even when I was a successful Wall Street trader, I was often suffering from nostalgia from my graduate school days. So that’s a quick summary. I think it’s pretty amazing for me, at least, to be in a very small circle of like-minded people who had — even though I grew up in a different country, and backgrounds are different, but interestingly, mathematicians all around the world do the same math. And they play the same math games, solve the same puzzles. So there was so much in common and so much fun to have in that environment. And — RITHOLTZ: Were you — were you ever — were you ever planning on pursuing a career in pure mathematics, or was the thinking I’ll take this skill in education I — I earned at Chicago and apply to Wall Street? Tell us what your thinking was when you were in school? GUREVICH: You know, honestly, since I was a teenager, there was kind of a double thinking in my mind. It’s almost like two superimposed ideas that I wasn’t really clear. My natural path was always to do theoretical math. I wanted to be a mathematician since — since I was four years old. But my fascination with finance industry with strategy was already there. I remember seeing the movie “Wall Street” in back in Russia and I was totally fascinated by it. And just the whole idea of like financial strategy was so exciting to me. I think somewhere in the back of my mind, I always thought that at some point, I would end up on Wall Street. But at the same time, I was making all the motions to pursue the career in theoretical math. So I think I was a little conflicted about this until certain points. RITHOLTZ: So you mentioned you saw the film “Wall Street” growing up in Russia, you grew up in St. Petersburg. GUREVICH: Correct. RITHOLTZ: Did you know you always wanted to come to the West? It’s hard to imagine seeing such a — just like, I guess, capitalist film like “Wall Street,” even with good guys, bad guys, and corruption in the film, even still seeing it in Russia had to be a little — you know, a little cognitive dissonance built into that? GUREVICH: Well, I think it was very exciting and refreshing. They did show a bit of foreign movies in Russia, it was not that closed. I saw “Star Wars” in Russia, too. So we had — there was a little bit of cultural flow. RITHOLTZ: Right. GUREVICH: So I did always want to go to America. There was no question in my mind, since I was six years old, I consider myself American. Like it was deep in my heart that I belong only in one country, in the United States. That was not a negative statement on Russia at all. It was not even about politics fully. Like, I mean, I — and also like I always loved Russian poetry and literature and architecture and many aspects of the culture. But I always felt that I belonged in the United States. There was never a doubt in my mind. I don’t know how I knew it, but I knew it since I was a little kid. RITHOLTZ: So — so when did you move to the U.S.? GUREVICH: I moved in the U.S. in the middle of college. It was ‘89. I was almost 20 years old. RITHOLTZ: And you’ve been here — GUREVICH: I did two years of college there, and I’ve had two years of college in America then I went to graduate school. RITHOLTZ: And — and so first job out of school was where? GUREVICH: Well, I went straight to graduate school and my first job out of graduate school, that’s when after I got my PhD. I went to Bankers Trust in ‘97. And that was a critical point of my decision when I decided, OK, I’ve already accomplished what I needed to accomplish. In math, I proved my mettle. And now, I really want to have a good opportunity. I’ve had a good offer. I’m going to try Wall Street. RITHOLTZ: And how did you go — how did you end up at JPMorgan? GUREVICH: Well, I was with Bankers Trust and I started trading fixed income derivatives. That’s very important to understand that I — most of my mathematician friends went to do some kind of quantitative work on Wall Street. I never did. I went straight into trading. That was my interest. I always said if I want to do associate, I would stay in the math department. Even if it pays less money, but the lifestyle will be worth it. I wanted to trade. I went to Bankers Trust, which became the trades on a swap desk. And then it bought — they’re bought by Deutsche Bank. And at Deutsche Bank, because they’re still three organizing, I was pretty junior at that time, they offered me a different kind of job, which was very good in terms of the trade options. It was not particularly interesting for me, but it was very educational. But I started to look for a new job soon and I got a — in 2000, I got a job at Chase, basically doing basis swaps, which I did originally Bankers Trust as a junior trader, but I got a senior job at Chase. And then Chase merged JPMorgan, I ended up at JPMorgan Chase, running basis swap franchise, and then I launched the agency asset swap franchise also in the year 2001, I think. RITHOLTZ: And then — GUREVICH: And then — RITHOLTZ: By — by 2003, you’re mentioned in The Wall Street Journal as the star trader of JPMorgan. Tell us about that. How did that feel being recognized for your trading skills? GUREVICH: You know, honestly, it is interesting. At that time, I did not really appreciate so much the value of publicity. And I did almost no networking and almost no publicity. So I moved to proprietary desk in 2002 from — because after I did really well with my market-making businesses in 2001 and built them up really well, they’re forming global currencies and commodities group in the merged JPMorgan Chase Bank. By the way, this group ended up to be extremely successful going forward, and they offered me to shift and move to macro portfolio because my — even with my client portfolios, I was more and more focusing on macro factors. And then that was like — then I had a very successful year in 2002, and started very successfully 2003 and that’s when they wrote an article. The article was really based on a leak. I think somebody just told them what positions we had and what money we’re making in 2003. And then there was this article. And it was, on one time, exciting and like — I know like my parents were excited about showing this article. But on the other hand, I was like a little disturbed that there is a leak and somebody knows something about my positions that they should not. RITHOLTZ: Interesting. GUREVICH: And I was not really seeking publicity and I was a little shy of publicity, honestly, after that. I don’t think it was like a bad leak. It was a very positive article. There was nothing — I mean, no negative in it and there was nothing wrong about it. But I was just a little nervous about publicity after that, because nobody — I think they reached for comment, but I don’t think there was — this was like an article that JPMorgan was specifically pushing, right? RITHOLTZ: Yeah. GUREVICH: So — but what I realized afterwards, like in a year’s later, when I started to raise money around my own hedge funds, I realized, well, actually, any publicity is kind of good and it’s good to know people. RITHOLTZ: So — so let’s — let’s look at that timeline. So this was back in 2003. How much longer did you stay at JPMorgan for? And when did you launch your — your fund? GUREVICH: Well, I stayed at JPMorgan till early 2007. And then — so it’s been quite a while, it’s now 15 years that I’ve been doing various things on my own. But I not always run businesses. I had one fund which actually did not work out. And I talked about this a lot in my first book, “The Next Perfect Trade,” about my first fund and kind of mistakes that were made there and things like that. It was called Cloudy Capital. And then I, for a few years, basically was running my own money, and then HonTe was created around 2015 and started to take outside money around 2016, relatively recent, but also relatively established. RITHOLTZ: Since you mentioned HonTe, let’s talk a little bit about that fund. Tell us about the genesis of the name HonTe, which you described in the book, “The Trades of March.” GUREVICH: So HonTe is a Japanese strategic term. It originates from the game of Go. And Hon means to and Te means move, so it’s to move. But the context in which it’s used, sometimes in a game, you make a move which is not the most flashy or aggressive, but what they call an honest move, like what you really have to do even maybe not the most impressive thing to do, but that’s what gives you the best results in the long run. RITHOLTZ: Really interesting. GUREVICH: And that’s what I wanted to make this strategic concept a symbol for how you run the fund. RITHOLTZ: I like it a lot. (COMMERCIAL BREAK) RITHOLTZ: Let’s talk a little bit about what you do at HonTe. You went from being a trader to the head of JPMorgan’s macro book, to launching this — this hedge funds. Tell us a little bit about those transitions. What — how were you able to build on your prior experience with each new position? GUREVICH: Yes. I think it was very important step stone in my career that I started as a market-maker. Some people who move directly into hedge fund by side business, I think missed out a little bit. Seeing what’s actually happening in the trenches, what’s happening on a trading floor of the bank, how the client flows work, what’s doable and not doable, I think it was very important for my formation as a trader. I remember the crisis of ’98 and when there was a first freeze of the market that I observed, I was very junior, but as it turned out, I had to make some decisions because my boss was on vacation and I had to take over some aspects of the book that I was focusing on, and deal with big hedge funds. I was like super junior trader and all these big hedge funds coming to me, begging me for unwinds because they were blowing up. And people would ask me questions like market salespeople would come and ask me questions, “Where is such and such trading?” And I was like, “What are you talking about? It’s not trading, the market is frozen.” There is maybe one beat, and if I show any offer, my boss will fire me. That’s my market. RITHOLTZ: That’s really interesting because there’s a line in the book, “The Trades of March 2020,” that really jumped out at me. Tell me about this quote “Every crisis starts with fear and ends with necessity,” explain that. GUREVICH: You see a crisis – first of all, crisis always has to be something unexpected. Crisis never happens on schedule. We know that, right? Like, when people try to schedule a crisis like Y2K, you get no crisis. RITHOLTZ: Right. GUREVICH: So it always comes from unexpected direction, by definition. And then usually when there is a crisis which spills into financial markets, people lose liquidity. And then the panic starts, we need to liquidate positions, how bad things can go. And things get to the point when people are like really thinking that the world is ending, as we know it. And one day, it might end, as we know it. By in global financial crisis, people thought, “OK, the whole financial system will collapse. In COVID, I don’t know what people were thinking. We’re all going to die or whatever. Everything is going to be shut down. I don’t know what people were thinking. But clearly, people were quite panicked about what things can happen. And now, of course, we’ll have other existential threats with the current war situation, as we’re recording this. So first, it starts with fear. But then what happens is that because – and some people add some fear, but then people have — eventually, people have to act not because of their fear, and not only because of their choices, but because of the decisions are forced. What happens is if you are a founder and you’re losing money, and your AUM decreases, you need to reduce your position. This is not about fear; this is about necessity. So you have to liquidate. So various people need to liquidate certain positions, do certain transactions, because exchanges are forcing them, the margins are forcing them, the bosses are forcing them. And then the policymakers step in and they buy assets or provide liquidity, and this is all – this liquidity comes in not because somebody chooses it, but because these are various unstoppable flows that’s happening in the markets. And this is a necessity. In the end, there is no choice for things, but to go certain ways. Does it make sense? RITHOLTZ: Yeah. No, it makes perfect sense. We’ll talk about the book later. But there are some really interesting excerpts where you are showing your — your trading in real time and the conversation you’re having with your colleagues in your desk. When — when you say it begins with fear and ends with necessity, can you feel that as a trader when you’re plugged into the market? Are you seeing that in flows, in prices and in opportunities? GUREVICH: Yes, and I even feel it in my own emotion. RITHOLTZ: Explain that. GUREVICH: And one of the things I tried to concentrate on the book is like show the psychology of trading. There were moments and I point them out on the book when I felt like deep existential threat, like, what’s going to happen? I feel like that those moments were like, “Yeah, the Fed just cut 100 basis points, but I’m not sure that they’ll do it, right? And you’re feeling like, “Will everybody cut my funding tomorrow, right?” Will – will there be no balance sheet? What’s going to happen? That is — when you think in those terms, you realize that the market is still ruled by fear. When you start thinking, “OK, I’ve reduced my positions. Now, the Fed is buying those assets that I’m holding, and they’re rallying,” you start feeling the sense of necessity. RITHOLTZ: Very interesting. So — so let’s talk a little bit about the trading in 2020 during the start of the COVID-19 pandemic. In that year, your fund ranked second in net returns. You’re one of the Top 10 emerging managers. Tell us what your thought process was in 2020, what led to so much conviction that you had positioned right. And I believe if I’m reading the book correctly, you were fairly well positioned for a series of rate cuts in 2019, when much of the market was still expecting rate hikes, did — did I get that right? GUREVICH: Yes. Yes, and that definitely contributed to success in 2020. Generally, one has to realize if you’re on a macro portfolio and there is some kind of exogenous event, you’re not always fully positioned right for it. RITHOLTZ: Right. GUREVICH: Maybe like if you always own just optionality, there are pure option funds. But even that like event could do some very different things. Like, events don’t go just one direction. For example, U.S. election in 2016 sent markets in certain way that people did not expect at that moment, right? But then there was September 11, the global financial crisis. There was European debt crisis. There was — of course, going back, there was like 1987 crash. With all of those events, you can look at which happened suddenly. They’ll have different flavor, and you will not always be positioned right for it. So there is a little bit of an element of luck in terms of being positioned right. But there’s also a little bit of an element of work. If you’re always a little positive towards crisis premium, like if you tend to be — have assets that have some balance in your portfolio, that there are some assets that make positions, that make money if things go sideways. In that particular case, I was — in the job cut protection, I had a very strong view in 2018, that rates are heading an exorbitant zero. I think this view was ex ante undisputable. I think people who thought otherwise were just plain wrong. Because everything — same way as 2014, I was convinced that rates were going lower. And I delineated my logic in 2014 in my first book, “The Next Perfect Trade,” even back then. And then over the next few years, between 2014 and 2020, up to COVID, we’ll have the situations when everything that could go wrong for bonds went wrong. Like, we had very robust growth, strong employment. We had U.S. politics, fiscal, both fiscal — fiscal politics and growth. Everything was actually negative for bonds, if you looked at it, if you looked at those numbers, right? And those fiscal expansions and the elections and everything, you will — you would think everything would be negative for you as bonds. And yet they performed tremendously well, which — and I had that logic in place, why there was no choice for them not to perform as well. That’s why I called my first book “The Magic” — “A Magic Sword of Necessity.” RITHOLTZ: So — so — GUREVICH: I like to say sometimes the magic sword of necessity is on shift. RITHOLTZ: So — so how do you conceptualize all of these macro currents and cross-currents and events? Do you create a model, or is it really you’re just putting together a lot of different ideas and trying to game out how they’re going to manifest themselves in prices of interest rates and inflation, and other factors that — that drive markets? GUREVICH: I think what I — it’s a kind of a hybrid. I follow — I follow the market just kind of continuously. It’s hard to say because if you’re in the financial markets for 25 years, without ever really taking a true break, there is certain cont.....»»

Category: blogSource: TheBigPictureMay 9th, 2022

Financial War Takes A Nasty Turn

Financial War Takes A Nasty Turn Authored by Alasdair Macleod via, The chasm between Eurasia and the Western defence groupings (NATO, Five-eyes, AUKUS etc.) is widening rapidly. While media commentary focuses on the visible side of the conflict in Ukraine, the economic and financial aspects are what really matter. There is an increasing inevitability about it all. China has been riding the inflationist Western tiger for the last forty years and now that it sees the dollar’s debasement accelerating wonders how to get off. Russia perhaps is more advanced in its plans to do without dollars and other Western currencies, hastened by sanctions. Meanwhile, the West is increasingly vulnerable with no apparent alternative to the dollar’s hegemony. By imposing sanctions on Russia, the West has effectively lined up its geopolitical opponents into a common cause against an American dollar-dominated faction. Russia happens to be the world’s largest exporters of energy, commodities, and raw materials. And China is the supplier of semi-manufactured and consumer goods to the world. The consequences of the West’s sanctions ignore this vital point. In this article, we look at the current state of the world’s financial system and assess where it is headed. It summarises the condition of each of the major actors: the West, China, and Russia, and the increasing urgency for the latter two powers to distance themselves from the West’s impending currency, banking, and financial asset crisis. We can begin to see how the financial war will play out. The West and its dollar-based pump-and-dump system The Chinese have viewed the US’s tactics under which she has ensured her hegemony prevails. It has led to a deep-seated distrust in her relationship with America. And this is how she sees US foreign policy in action. Since the end of Bretton Woods in August 1971, for strategic reasons as much as anything else America has successfully continued to dominate the free world. A combination of visible military capability and less visible dollar hegemony defeated the communism of the Soviets and Mao Zedong. Aid to buy off communism in Africa and Latin America was readily available by printing dollars for export, and in the case of Latin America by deploying the US banking system to recycle petrodollars into syndicated loans. In the late seventies, banks in London would receive from Citibank yards-long telexes inviting participation in syndicated loans, typically for $100 million, the purpose of which according to the telex was invariably “to further the purposes of the state.” Latin American borrowing from US commercial banks and other creditors increased dramatically during the 1970s. At the commencement of the decade, total Latin American debt from all sources was $29 billion, but by the end of 1978, that number had skyrocketed to $159 billion. And in early-1982, the debt level reached $327 billion.[i] We all knew that some of it was disappearing into the Swiss bank accounts of military generals and politicians of countries like Argentina. Their loyalty to the capitalist world was being bought and it ended predictably with the Latin American debt crisis. With consumer price inflation raging, the Fed and other major central banks had to increase interest rates in the late seventies, and the bank credit cycle turned against the Latins. Banks sought to curtail their lending commitments and often (such as with floating-rate notes) they were paying higher coupon rates. In August 1982, Mexico was the first to inform the Fed, the US Treasury, and the IMF that it could no longer service its debt. In all, sixteen Latin American countries rescheduled their debts subsequently as well as eleven LDCs in other parts of the world. America assumed the lead in dealing with the problems, acting as “lender of last resort” working with central banks and the IMF. The rump of the problem was covered with Brady Bonds issued between 1990—1991. And as the provider of the currency, it was natural that the Americans gave a pass to their own corporations as part of the recovery process, reorganising investment in production and economic output. So, a Latin American nation would have found that America provided the dollars required to cover the 1970s oil shocks, then withdrew the finance, and ended up controlling swathes of national production. That was the pump and dump cycle which informed Chinese military strategists analysing US foreign policy some twenty years later. In 2014, the Chinese leadership was certain the riots in Hong Kong reflected the work of American intelligence agencies. The following is an extract translated from a speech by Major-General Qiao Liang, a leading strategist for the Peoples’ Liberation Army, addressing the Chinese Communist Party’s Central Committee in 2015: “Since the Diaoyu Islands conflict and the Huangyan Island conflict, incidents have kept popping up around China, including the confrontation over China’s 981 oil rigs with Vietnam and Hong Kong’s “Occupy Central” event. Can they still be viewed as simply accidental? I accompanied General Liu Yazhou, the Political Commissar of the National Defence University, to visit Hong Kong in May 2014. At that time, we heard that the “Occupy Central” movement was being planned and could take place by end of the month. However, it didn’t happen in May, June, July, or August. What happened? What were they waiting for? Let’s look at another timetable: the U.S. Federal Reserve’s exit from the Quantitative Easing (QE) policy. The U.S. said it would stop QE at the beginning of 2014. But it stayed with the QE policy in April, May, June, July, and August. As long as it was in QE, it kept overprinting dollars and the dollar’s price couldn’t go up. Thus, Hong Kong’s “Occupy Central” should not happen either. At the end of September, the Federal Reserve announced the U.S. would exit from QE. The dollar started going up. Then Hong Kong’s “Occupy Central” broke out in early October. Actually, the Diaoyu Islands, Huangyan Island, the 981 rigs, and Hong Kong’s “Occupy Central” movement were all bombs. The successful explosion of any one of them would lead to a regional crisis or a worsened investment environment around China. That would force the withdrawal of a large amount of investment from this region, which would then return to the U.S." For the Chinese, there was and still is no doubt that America was out to destroy China and stood ready to pick up the pieces, just as it had done to Latin America, and South-East Asia in the Asian crisis in 1997. Events since “Occupy Central” will have only confirmed that view and explains why the Chinese dealt with the Hong Kong problem the way they did, when President Trump mounted a second attempt to derail Hong Kong, with the apparent objective to prevent global capital flows entering China through Shanghai Connect. For the Americans the world is slipping out of control. They have had expensive wars in the Middle East, with nothing to show for it other than waves of displaced refugees. For them, Syria was a defeat, even though that was just a proxy war. And finally, they had to give up on Afghanistan. For her opponents, America has lost hegemonic control in Eurasia and if given sufficient push can be removed from the European mainland entirely. Undoubtedly, that is now Russia’s objective. But there are signs that it is now China’s as well, in which case they will have jointly obtained control of the Eurasian land mass. Financial crisis facing the dollar The geopolitics between America and the two great Asian states have been clear for all of us to see. Less obvious has been the crisis facing Western nations. Exacerbated by American-led sanctions against Russia, producer prices and consumer prices are not only rising, but are likely to continue to do so. In particular, the currency and credit inflation of not only the dollar, but also the yen, euro, pound, and other motley fiat currencies have provided the liquidity to drive prices of commodities, producer prices and consumer prices even higher. In the US, reverse repos which absorb excess liquidity currently total nearly $2 trillion. And the higher interest rates go, other things being equal the higher this balance of excess currency no one wants will rise. And rise they will. The strains are most obvious in the yen and the euro, two currencies whose central banks have their interest rates stuck below the zero bound. They refuse to raise them, and their currencies are collapsing instead. But when you see the ECB’s deposit rate at minus 0.5%, producer prices for Germany rising at an annualised rate of over 30%, and consumer prices already rising at 7.5% and sure to go higher, you know they will all go much, much higher. Like the Bank of Japan, the ECB and its national central banks through quantitative easing have assembled substantial portfolios of bonds, which with rising interest rates will generate losses which will drive them rapidly into insolvency. Furthermore, the two most highly leveraged commercial banking systems are the Eurozone’s and Japan’s with assets to equity ratios for the G-SIBs of over twenty times. What this means is that less than a 5% fall in the value of its assets will bankrupt the average G-SIB bank. It is no wonder that foreign depositors in these banking systems are taking fright. Not only are they being robbed through inflation, but they can see the day when the bank which has their deposits might be bailed in. And worse still, any investment in financial assets during a sharply rising interest environment will rapidly lose value. For now, the dollar is seen as a haven from currencies on negative yields. And in the Western world, the dollar as the reserve currency is seen as offering safety. But this safety is an accounting fallacy which supposes that all currency volatility is in the other fiat currencies, and not the dollar. Not only do foreigners already own dollar-denominated financial assets and bank deposits totalling over $33 trillion, but rising bond yields will prick the dollar’s financial asset bubble wiping out much of it. In other words, there are currently winners and losers in currency markets, but everyone will lose in bond and equity markets. Add into the mix counterparty and systemic risks from the Eurozone and Japan, and we can say with increasing certainty that the era of financialisation, which commenced in the 1980s, is ending. This is a very serious situation. Bank credit has become increasingly secured on non-productive assets, whose value is wholly dependent on low and falling interest rates. In turn, through the financial engineering of shadow banks, securities are secured on yet more securities. The $610 trillion of OTC derivatives will only provide protection against risk if the counterparties providing it do not fail. The extent to which real assets are secured on bank credit (i.e., mortgages) will also undermine their values. Clearly, central banks in conjunction with their governments will have no option but to rescue their entire financial systems, which involves yet more central bank credit being provided on even greater scales than seen over covid, supply chain chaos, and the provision of credit to pay for higher food and energy prices. It must be unlimited. We should be in no doubt that this accelerating danger is at the top of the agenda for anyone who understands what is happening — which particularly refers to Russia and China. Russia’s aggressive stance There can be little doubt that Putin’s aggression in Ukraine was triggered by Ukraine’s expressed desire to join NATO and America’s seeming acquiescence. A similar situation had arisen over Georgia, which in 2008 triggered a rapid response from Putin. His objective now is to get America out of Europe’s defence system, which would be the end of NATO. Consider the following: America’s military campaigns on the Eurasian continent have all failed, and Biden’s withdrawal from Afghanistan was the final defeat. The EU is planning its own army. Being an army run by committee it will lack focus and be less of a threat than NATO. This evolution into a NATO replacement should be encouraged. As the largest supplier of energy to the EU, Russia can apply maximum pressure to speed up the political process. The most important commodity for the EU is energy. And through EU policies, which have been to stop producing carbon-based energy and to import it instead, the EU has become dependent on Russian oil, natural gas, and coal. And by emasculating Ukraine’s production, Putin is putting further pressure on the EU with respect to food and fertiliser, which will become increasingly apparent over the course of the summer. For now, the EU is toeing the American line, with Brussels instructing member states to stop importing Russian oil from the end of this year. But already, it is reported that Hungary and Slovakia are prepared to buy Russian oil and pay in roubles. And it is likely that while other EU governments will avoid direct contractual relationships with Russia, ways round the problem indirectly are being pursued. A sticking point for EU governments is having to pay in roubles. Otherwise, the solution is simple: non-Russian, non-EU banks can create a Eurorouble market overnight, creating rouble bank credit as needed. All that such a bank requires is access to rouble liquidity to manage a balance sheet denominated in roubles. The obvious providers of rouble credit are China’s state-controlled megabanks. And we can be reasonably sure that at his meeting with President Xi on 4 February, not only would the intention to invade Ukraine have been discusseded, but the role of China’s banks in providing roubles for the “unfriendlies” (NATO and its supporters) in the event of Western sanctions against Russia will have been as well. The point is that Russia and China have mutual geopolitical objectives, and what might have come as a surprise to the West was most likely agreed between them in advance. The recovery in the rouble from the initial hit to an intraday low of 150 to the dollar has taken it to 64 at the time of writing. There are two factors behind this recovery. The most important is Putin’s announcement that the unfriendlies will have to pay for energy in roubles. But there was a subsidiary announcement that the Russian central bank would be buying gold. Notionally, this was to ensure that Russian banks providing finance to gold mines could gold and other related assets as collateral. But the central bank had stopped buying gold and accumulated the unfriendlies currencies in its reserves instead. This was taken by senior figures in Putin’s administration as evidence that the highly regarded Governor, Elvira Nabiullina, had been captured by the West’s BIS-led banking system. Russia has now realised that foreign exchange reserves which can be blocked by the issuers are valueless as reserves in a crisis, and that there is no point in having them. Only gold, which has no counterparty risk can discharge this role. And it is a lesson not lost on other central banks either, both in Asia and elsewhere. But this sets the rouble onto a different course from the unbacked fiat currencies in the West. This is deliberate, because while rising interest rates will lead to a combined currency, banking, and financial asset crisis in the West, it is a priority of the greatest importance for Russia to protect herself from these developments. A new backing for the rouble Russia is determined to protect herself from a dollar currency collapse. So far as Russia is concerned, this collapse will be reflected in rising dollar prices for her exports. And only last week, one of Putin’s senior advisors, Nikolai Patrushev, confirmed in an interview with Rossiyskaya Gazeta that plans to link the rouble to commodities are now being considered. If this plan goes ahead, the intention must be for the rouble to be considered a commodity substitute on the foreign exchanges, and its protection against a falling dollar will be secured. We are already seeing the rouble trending higher, with it at 64 to the dollar yesterday. Figure 1 below shows its progress, in the dollar-value of a rouble. Keynesians in the West have misread this situation. They think that the Russian economy is weak and will be destabilised by sanctions. That is not true. Furthermore, they would argue that a currency strengthened by insisting that oil and natural gas are paid for in roubles will push the Russian economy into a depression. But that is only a statistical effect and does not capture true economic progress or the lack of it, which cannot be measured. The fact is that the shops in Russia are well stocked, and fuel is freely available, which is not necessarily the case in the West. The advantages for Russia are that as the West’s currencies sink into crisis, the rouble will be protected. Russia will not suffer from the West’s currency crisis, she will still get inflation compensation in commodity prices, and her interest rates will decline while those in the West are soaring. Her balance of trade surplus is already hitting new records. There was a report, attributed to Dmitri Peskov, that the Kremlin is considering linking the rouble to gold and the idea is being discussed with Putin. But that’s probably a rehash of the interview that Nickolai Patrushev recorded with Rossiyskaya Gazeta referred to above, whereby Russia is considering fixing the rouble against a wider range of commodities. At this stage, a pure gold standard for the rouble of some sort would have to take the following into account: History has shown that the Americans and the West’s central banks manipulate gold prices through the paper markets. To fix the rouble against a gold standard would hold it a hostage to fortune in this sense. It would be virtually impossible for the West to manipulate the rouble by intervening in this way across a range of commodities. Over long periods of time the prices of commodities in gold grams are stable. For example, the price of oil since 1950 has fallen by about 30%. The volatility and price rises have been entirely in fiat currencies. The same is true for commodity prices generally, telling us that not only are commodities priced in gold grams generally stable, but a basket of commodities can be regarded as tracking the gold price over time and therefore could be a reasonable substitute for it. If Russia has significant gold bullion quantities in addition to declared reserves, these will have to be declared in conjunction with a gold standard. Imagine a situation where Russia declares and can prove that it has more gold that the US Treasury’s 8,133 tonnes. Those who appear to be in a position to do so assess the true Russian gold position is over 10,000 tonnes. Combined with China’s undeclared gold reserves, such an announcement would be a financial nuclear bomb, destabilising the West. For this reason, Russia’s partner, China, for which exporting semi-manufactured and consumer goods to the West is central to her economy activities, would prefer an approach that does not add to the dollar’s woes directly. The Americans are doing enough to undermine the dollar without a push from Asia’s hegemons. Furthermore, a mechanism for linking the rouble to commodity prices has yet to be devised. The advantage of a gold standard is it is a simple matter for the issuer of a currency to accept notes from the public and to pay out gold coin. And arbitrage between gold and roubles would ensure the link works on the foreign exchanges. This cannot be done with a range of commodities. It will not be enough to simply declare the market value of a commodity basket daily. Almost certainly forex traders will ignore the official value because they have no means of arbitrage. It is likely, therefore, that Russia will take a two-step approach. For now, by insisting on payments in roubles by the unfriendlies domestic Russian prices for commodities, raw materials and foods will be stabilised as the unfriendlies’ currencies fall relative to the rouble. Russia will find that attempts to tie the currency to a basket of currencies is impractical. After the West’s currency, banking, and financial asset crisis has passed then there will be the opportunity to establish a gold standard for the rouble. The Eurasian Economic Union While it is impossible to formally tie a currency which trades on the foreign exchanges to a basket of commodities, the establishment of a virtual currency specifically for trade settlement between jurisdictions is possible. This is the basis of a project being supervised by Sergei Glazyev, whereby such a currency is planned to be used by the member states of the Eurasian Economic Union (EAEU). Glazyev is Russia’s Minister in charge of integration and macroeconomics of the EAEU. While planning to do away with dollars for trade settlements has been in the works for some time, sanctions by the unfriendlies against Russia has brought about a new urgency. We know no detail, other than what was revealed in an interview Glazyev gave recently to a media outlet, The Cradle [ii]. But the desire to do away with dollars for the countries involved has been on the agenda for at least a decade. In October 2020, the original motivation was explained by Victor Dostov, president of the Russian Electronic Money Association: “If I want to transfer money from Russia to Kazakhstan, the payment is made using the dollar. First, the bank or payment system transfers my roubles to dollars, and then transfers them from dollars to tenge. There is a double conversion, with a high percentage taken as commission by American banks.” The new trade currency will be synthetic, presumably price-fixed daily, giving conversion rates into local currencies. Operating rather like the SDR, state banks can create the new currency to provide the liquidity balances for conversion. It is a practical concept, which being relatively advanced in the planning, is probably the reason the Kremlin is considering it as an option for a future rouble. That idea of a commodity basket for the rouble itself is bound to be abandoned, while a successful EAEU trade settlement currency can be extended to both the wider Shanghai Cooperation Organisation and the BRICS members not in the SCO. China’s position We can now say with confidence that at their meeting on 4 February Putin and Xi agreed to the Ukraine invasion. Chinese interests in Ukraine are affected, and the consequences would have had to be discussed. The fact that Russia went ahead with its war on Ukraine makes China complicit, and we must therefore analyse the position from China’s point of view. For some time, America has attacked China’s economy, trying to undermine it. I have already detailed the position over Hong Kong, to which can be added other irritations, such as the arrest of Huawei’s chief financial officer in Canada on American instructions, trade tariffs, and the sheer unpredictability of trade policy during the Trump administration. President Biden and his administration have now been assessed by both Putin and Xi. By 4 February their economic and banking advisors will have made their recommendations. Outsiders can only come to one conclusion, and that is Russia and China decided at that meeting to escalate the financial war on the West. Their position is immensely strong. While Russia is the largest exporter of energy and commodities in the world, China is the largest provider of intermediate and consumer goods. Other than the unfriendlies, nearly all other nations are neutral and will understand that it is not in their interests to side with NATO, the EU, Japan and South Korea. The only missing piece of the jigsaw is China’s commoditisation of the renminbi. Following the Fed’s reduction of its funds rate to the zero bound and its monthly QE increase to $120bn per month, China began to aggressively stockpile commodities and grains. In effect, it was a one-nation crack-up boom, whereby China took the decision to dump dollars. The renminbi rose against the dollar, but by considerably less than the dollar’s loss of purchasing power. This managed exchange rate for the renminbi appears to have been suppressed to relieve China’s exporters from currency pressures, at a time when the Chinese economy was adversely affected first by credit contraction, then by covid and finally by supply chain disruptions. With respect to supply chains, current lockdowns in Shanghai and the logjam of container vessels in the Roads look set to emasculate Western economies with supply chain issues for the rest of the year. All we know is that the authorities are making things worse, but we don’t know whether it is deliberate. It is increasingly difficult to believe that the financial and currency war is not being purposely escalated by the Chinese-Russian partnership. Having attacked Ukraine, the West’s response is undermining their own currencies, and the urgency for China and Russia to protect their currencies and financial systems from the consequences of a fiat currency crisis has become acute. It is the financial war which is going “nuclear”. Talk in the West of the military war escalating towards a physical nuclear war misses this point. China and Russia now realise they must protect themselves from the West’s looming currency and economic crisis as a matter of urgency. To fail to do so would simply ensure the crisis overwhelms them as well. Tyler Durden Fri, 05/06/2022 - 21:00.....»»

Category: dealsSource: nytMay 6th, 2022

The Tucker Carlson origin story

Tucker Carlson's journey from prep school provocateur to Fox News flamethrower, according to his friends and former classmates. Tucker Carlson during a CNN National Town Meeting on coverage of the White House sex scandal, on January 28, 1998.Richard Ellis/Getty Images Tucker Carlson is remembered as a provocateur and gleeful contrarian by those who knew him in his early days. His bohemian artist mother abandoned her young family and cut Tucker and his brother out of her will. At a Rhode Island prep school and at Trinity College, classmates remember him as a skilled debater who could both amuse and infuriate his audiences. On Oct. 29, 1984, New York police killed an elderly Black woman named Eleanor Bumpurs in her own home. Bumpers, who lived in a public housing complex in the Bronx, had fallen four months behind on her rent. When officials from the city housing authority tried to evict her, she refused, and they called the police. Five officers responded by storming into her apartment. Bumpurs, who had a history of mental illness, grabbed a butcher knife as two officers pushed her against a wall with their plastic shields and a metal pole. A third officer fired two shots from his 12-gauge shotgun, striking Bumpurs in her hand and chest.Eleanor Bumpurs' death dominated the city's news for two months and led the NYPD to revise its guidelines for responding to emotionally disturbed individuals.At St. George's prep school, some 175 miles away in Rhode Island, the incident deeply haunted Richard Wayner. He was one of the school's few Black students and had grown up in a residential tower not far from where Bumpurs had lived. He earned straight As and was so admired that in 1984 his peers elected him senior prefect, the prep equivalent of student body president, making him the first Black class leader in the school's 125-year history. Harvard soon beckoned.Wayner was frustrated with how the St. George's community seemed to ignore the conversations about racial justice that were happening outside the cloistered confines of Aquidneck Island. It bothered Wayne that almost no one at St. George's seemed to know anything about Bumpurs' killing. "You had your crew, you put your head down, and you tried to get through three or four years of prep school with your psyche intact," Wayner said of those days.As senior prefect, one of the duties was to deliver an address each week at the mandatory Sunday chapel service. One Sunday, perched from the chapel podium, Wayner described the shooting as a sea of white faces stared back at him. He concluded with the words: "Does anyone think that woman deserved to die?"Near the front of the chapel, a single hand went up for a few brief seconds. It was Tucker Carlson.Eleanor Bumpurs was shot and killed by the New York Police Department on October 29, 1984APThen a sophomore, Tucker had a reputation as a gleeful contrarian – an indefatigable debater and verbal jouster who, according to some, could also be a bit of a jerk. "Tucker was just sort of fearless," said Ian Toll, a St. George's alumnus who would go on to be a military historian. "Whether it was a legitimate shooting may have been a point of debate but the fact was that Tucker was an underclassmen and the culture was to defer to the seniors." Wayner himself never saw Tucker's hand go up, and the two kept in touch over the years. (Note on style: Tucker Carlson and the members of his family are referred to here by their first names to avoid confusion.)  Four decades later, glimmers of that prep school provocateur appear on Tucker's Prime Time show on Fox, which garners an average of between 3 to 4 million viewers a night. His furrowed visage and spoiling-for-a-fight demeanor are all too familiar to those who have known him for decades. In the words of Roger Stone, a Republican political operative, frequent guest, and longtime friend of Tucker's: "Tucker Carlson is the single most influential conservative journalist in America… It is his courage and his willingness to talk about issues that no one else is willing to cover that has led to this development."Tucker's name has even been floated as a possible Republican presidential candidate in 2024. "I mean, I guess if, like, I was the last person on earth, I could do it. But, I mean, it seems pretty unlikely that I would be that guy." he said on the "Ruthless" podcast in June, dismissing this possibility.Tucker's four decades in Washington, and his transition from conservative magazine writer to right-wing television pundit, have been well documented. But less well known are his early years and how they shaped him: his bohemian artist mother, who abandoned her young family and cut Tucker and his brother out of her will; the Rhode Island prep school where he met his future spouse; and his formation into a contrarian debater who could both amuse and infuriate his audience with his attention-getting tactics.Tucker declined to participate in an interview with Insider, saying in a statement. "Your level of interest in the boring details of my life is creepy as hell, and also pathetic," he wrote. "You owe it to yourself and the country to do something useful with your talents. Please reassess."California roots Tucker Carlson's West Coast roots burrow as deep as a giant redwood. He was born in San Francisco in May 1969 as the excesses of the Sixties peaked and the conservative backlash to the counterculture and the Civil Rights movement started to take shape. Tucker's mother, Lisa McNear Lombardi, born in San Francisco in 1945, came from one of the state's storied frontier families. Lisa's mother, Mary Nickel James, was a cattle baron heiress. Her great-great-grandfather had owned 3 million acres of ranchland, making him among the largest landowners west of the Mississippi. Her father Oliver Lombardi was an insurance broker and descendant of Italian-speaking Swiss immigrants. Lisa enrolled at UC Berkeley, where she majored in architecture. She met Richard Carlson, a San Francisco TV journalist from a considerably less prosperous background, while still in college. Lisa and Richard eloped in Reno, Nevada in 1967. The couple didn't notify Lisa's mother, who was traveling in Europe with her new husband at the time. "Family members have been unable to locate them to reveal the nuptials," a gossip item published in the San Francisco Examiner dished.Tucker arrived two years later. A second son, Buckley, was born two years after that. As Richard's career began to flourish, the family moved first to Los Angeles and then, in 1975, to La Jolla, a moneyed, beach-front enclave about 12 miles north of San Diego. When Lisa and Richard divorced a year later, in 1976, Richard got full custody of their sons, then 6 and 4. According to three of Tucker's childhood classmates, Lisa disappeared from her sons' lives. They don't recall Tucker talking about her, or seeing her at school events. Marc Sterne, Tucker's boarding school roommate who went on to be executive producer of the Tony Kornheiser Show, says the two didn't talk much about Tucker's relationship with his mother and he got the impression that Tucker and Richard were exceptionally close. When Sterne's own parents split up that year, he said Tucker was supportive and understanding. Lisa spent the next two decades as an artist – moving first to Los Angeles, where she befriended the painter David Hockney, and later split her time between France and South Carolina with her husband, British painter Michael Vaughan. In 1979, Richard Carlson married Patricia Swanson, heiress to the Swanson frozen foods empire that perfected the frozen Salisbury steak for hassle-free dinners. She soon legally adopted Tucker and Buckley.  When Lisa died in 2011, her estate was initially divided equally between Tucker, his brother Buckley, and Vaughan. But in 2013, Vaughan's daughter from another marriage found a one-page handwritten document in Lisa's art studio in France that left her assets to her surviving husband with an addendum that stated, "I leave my sons Tucker Swanson McNear Carlson and Buckley Swanson Peck Carlson one dollar each." A protracted battle over Lombardi's estate involving Vaughan and the Carlson brothers wound up in probate court. The Carlsons asserted the will was forged but a forensic witness determined that Lisa had written the note. The case eventually went to the California Appellate Court, which allowed the Carlson brothers to keep their shares in 2019."Lisa was basically sort of a hippie and a free spirit," said one attorney who  represented the Vaughan family and recalled having conversations about the case. "She was very liberal and she did not agree with Tucker's politics. But she stuck the will in the book, everyone forgot about it, and then she passed away."In a 2017 interview with The New Yorker, Tucker described the dissolution of his family as a "totally bizarre situation — which I never talk about, because it was actually not really part of my life at all." Several pieces of art produced by Tucker's mother, Lisa Lombardi, and her then-partner Mo Mcdermott in the home of a California collector.Ted Soqui for InsiderLisa When Lisa left her husband and two young sons, she was escaping suburban family life in favor of the more bohemian existence as an artist. One of Tucker and Buckley's former teachers said their mother's absence "left some sour grapes." "I felt they sided with the father," Rusty Rushton, a former St. George's English teacher said. After the divorce, Lisa returned to Los Angeles and tried to break into the city's thriving contemporary art scene. She befriended Mo McDermott, an LA-based British sculptor, model, and longtime assistant to David Hockney, one of the most influential artists of the 20th century. A few years before he met Lisa, the scene was captured in Jack Hazan's 1974 groundbreaking documentary "A Bigger Splash," which followed Hockney and his coterie of gay male friends idly lounging around the pool in his Hollywood Hills home."When love goes wrong, there's more than two people who suffer," said McDermott, playing a slightly exaggerated version of himself, in a voiceover in the documentary.Lisa and McDermott became a couple and Lisa won admission into Hockney's entourage. Hockney lived a far more reclusive lifestyle than his pop art compatriot Andy Warhol but some four dozen or so artists, photographers, and writers regularly passed through his properties."She was more like a hippie, arty kind of person. I couldn't ever imagine her being a mother," said Joan Quinn, the then-West Coast editor of Andy Warhol's Interview Magazine, who knew Lisa during those years and still owns several of her works. "She was very nervous all the time… She was ill-content."The pair were often seen at Hockney's Hollywood Hills home and at Friday night gallery openings on La Cienega Boulevard. They collaborated on playful, large-scale wood sculptures of animals, vegetables, and trees. A handful of their pieces could be seen around Hockney's hillside ranch."Hockney had me over to meet them. He wanted a gallery to handle their work," said Molly Barnes, who owns a gallery in West Hollywood and gave the pair shows in 1983 and 1984. "They were brilliant and David loved Mo. He thought they were the best artists around.""She was quiet and intellectual and somewhat withdrawn," Barnes said. "She had come from a lot of money and that reflected on her personality. She wasn't a snob in any way but she had the manners of a private school girl and someone who was fighting the establishment."A sculpture by Tucker's mother, Lisa Lombardi, and her then-partner Mo Mcdermott in the home of a California collector.Ted Soqui for InsiderNone of them recall Lisa discussing her two sons. McDermott died in 1988. After his death, Hockney discovered that McDermott had been stealing drawings from him and selling them. Hockney said the betrayal helped bring on a heart attack. "I believe I had a broken heart," Hockney told The Guardian in 1995. (Hockney did not answer multiple inquiries about Lisa or McDermott.)In 1987, Lisa met Vaughan, one of Hockney's peers in the British art scene known as the "Bradford Mafia." They married in February 1989 and for years afterward they lived in homes in the Pyrenees of southwest France and South Carolina's Sea Islands.Lisa continued to make art, primarily oversized, wooden sculptures of everyday household items like peeled lemons and dice, but she exhibited her work infrequently. She died of cancer in 2011, at which point Carlson was a decade into his media career and a regular contributor on Fox News. Richard In contrast to Lisa's privileged upbringing, Richard's childhood was full of loss. Richard's mother was a 15-year-old high school girl who had starved herself during her pregnancy, and he was born with a condition called rickets. Six weeks later, his mother left him at an orphanage in Boston called The Home for Little Wanderers. Richard's father, who was 18, tried to convince her to kidnap the infant and marry him, but she refused. He shot and killed himself two blocks from her home.A Massachusetts couple fostered Richard for two years until he was adopted by a wool broker and his wife, which he described in a 2009 reflection for the Washington Post. His adoptive parents died when he was still a teenager and Richard was sent to the Naval Academy Preparatory School. He later enlisted in the Marines and enrolled in an ROTC program at the University of Mississippi to pay for college.In 1962, Richard developed an itch for journalism while working as a cop in Ocean City, Maryland at the age of 21, and the future NBC political correspondent Catherine Mackin, helped him get a copy boy job at the Los Angeles Times. Richard moved to San Francisco three years later and his career blossomed. He started producing television news features with his friend, Lance Brisson, the son of actress Rosalind Russell. They filmed migrant farm workers in the Imperial Valley living in cardboard abodes in 110 degree weather, traipsed the Sierra Nevada mountains to visit a hermit, and covered the Zodiac Killer and Bay Area riots (during one demonstration in 1966, they sent television feeds from their car where they trapped for four hours  and a crowd roughed up Brisson, which required four stitches under his left eye). Another time, they rented a helicopter in search of a Soviet trawler but they had to jump into the Pacific Ocean when the chopper ran low on fuel near the shore and crashed.In 1969, Richard and Brisson co-wrote an article for Look Magazine that claimed San Francisco Mayor Joseph Alioto had mafia ties. Alioto sued the magazine's owner for libel and won a $350,000 judgment when a judge determined the article's allegations were made with "actual malice" and "reckless disregard for whether they were true or not." (Richard was not a defendant in the case and has stood by his story. Brisson declined an interview.)Richard moved back to Los Angeles to join KABC's investigative team two years later. One series of stories that delved into a three-wheeled sports car called the Dale and the fraudulent marketing practices of its founder, Geraldine Elizabeth Carmichael, won a Peabody award in 1975. The series also outed Carmichael as a transgender woman. (Richard's role in Carmichael's downfall was explored in the HBO documentary "The Lady and the Dale.") Soon after arriving as an anchor for KFMB-TV, San Diego's CBS affiliate, Richard ran a story revealing that tennis pro Renee Richards, who had just won a tournament at the La Jolla Tennis Club, was a transgender woman."I said, 'You can't do this. I am a private person,'" Richards, who years later would advise Caitlyn Jenner about her transition, urged the television journalist to drop his story, according to a 2015 interview. "His reply? 'Dr. Richards, you were a private person until you won that tournament yesterday.'" By the time he left the anchor chair in 1977 to take a public relations job with San Diego Savings and Loan, Richard had soured on journalism. "I have seen a lot of arrogance and hypocrisy in the press and I don't like it," he told San Diego Magazine in 1977. "Television news is insipid, sophomoric, and superficial… There are so many things I think are important and interesting but the media can be counted on to do handstands on that kind of scandal and sexual sensation."Years later, Richard said that he never tried to encourage his eldest son in politics or journalism, but that Tucker had a clear interest in both from an early age. "I never thought he was going to be a reporter or a writer. I never encouraged him to do that," Richard told CSPAN of his eldest son in 2006. "I actually attempted not to encourage him politically, either. I decided those are the things that should be left up to them."A LaJolla, California post card.Found Image Holdings/Corbis via Getty ImagesA La Jolla childhoodAfter the divorce, Richard and his boys stayed in La Jolla in a house overlooking the La Jolla Beach and Tennis Club. Friends of Tucker's would later say that the trauma of their mother's absence brought the three of them closer together.  "They both really admired their dad. He was a great source of wisdom. He's one of the great raconteurs you'll ever meet. They loved that glow that came from him," said Sterne, Tucker's boarding school roommate. "They both looked up to him, it was clear from my eyes."In an essay included in his book "The Long Slide: Thirty Years in American Journalism," Tucker described Richard as a kind parent who imbued family outings with a deeper message.One of Tucker's earliest memories, he writes, was from just after the divorce, when Tucker was seven and Buckley was five: the brothers gripping the edge of a luggage rack on the roof of his family's 1976 Ford Country Squire station wagon, while their father gunned the engine down a dirt road."I've sometimes wondered what car surfing was meant to teach us," Tucker wrote. "Was he trying to instill in us a proper sense of fatalism, the acknowledgement that there is only so much in life you can control? Or was it a lesson about the importance of risk?... Unless you're willing to ride the roof of a speeding station wagon, in other words, you're probably not going to leave your mark on the world."More often, the boys were left unsupervised and found their own trouble. Tucker once took a supermarket shopping cart and raced it down a hill in front of their house with Buckley in its basket. The cart tipped over, leaving Buckley with a bloody nose. He also recalled building makeshift hand grenades with hydrochloric acid and aluminum foil – using a recipe from their father's copy of "The Anarchist Cookbook"  and tossing them onto a nearby golf course."No one I know had a father like mine," Tucker wrote. "My father was funnier and more outrageous, more creative  and less willing to conform, than anyone I knew or have known since. My brother and I had the best time growing up."Richard sent Tucker to La Jolla Country Day, an upscale, largely white private school with a reputation as one of the best in Southern California, for elementary and middle school. In his book, "Ship of Fools: How a Selfish Ruling Class Is Bringing America to the Brink of Revolution," Tucker described his first grade teacher Marianna Raymond as "a living parody of earth-mother liberalism" who "wore long Indian-print skirts," and sobbed at her desk over the world's unfairness. "As a conservative, I had contempt for the whiny mawkishness of liberals. Stop blubbering and teach us to read. That was my position," he wrote. "Mrs. Raymond never did teach us; my father had to hire a tutor to get me through phonics.""I beg to differ," Raymond countered in an interview, saying that she was also Tucker's tutor during the summer after first grade and was even hired again. "I'm a great teacher. I'm sure he liked me." For her part, she remembered Tucker as a fair-haired tot who was "very sweet" and "very polite." (When The Washington Post reached out her her, she said Carlson's characterization had been "shocking.")  Friends from La Jolla remember that Tucker loved swimming the mile-and-a-half distance between La Jolla Shores Park and La Jolla Cove, jumping off cliffs that jut out into the Pacific Ocean, riffing on the drums, and playing Atari and BB gun games at the mall with his friends. "He was a happy kid. We were young, so we used to go to the beach. We did normal kid stuff," said Richard Borkum, a friend who is now a San Diego-based attorney. When they weren't at the beach or the mall, Borkum and another friend, Javier Susteata, would hang out at the Carlson home listening to The Who, AC/DC, and other classic rock bands. Borkum said the adults at the Carlson household largely left them alone. "I'm Jewish and Javier was Mexican and I'm not sure they were too happy we were going to their house," Borkum said.Another friend, Warren Barrett, remembers jamming with Tucker and going snow camping at Big Bear and snorkeling off Catalina Island with him in middle school."Tucker and I literally ate lunch together every day for two years," Barrett said. "He was completely the opposite of now. He was a cool southern California surfer kid. He was the nicest guy, played drums, and had a bunch of friends. And then something must have happened in his life that turned him into this evil diabolical shithead he is today."LaJolla is a upscale beach community outside of San Diego. Carlson and his family moved their in 1975.Slim Aarons/Hulton Archive/Getty ImagesSan Diego's next mayorRichard, meanwhile, was exploring a second career in public service. By 1980, he had risen to vice president of a bank headed by Gordon Luce, a California Republican power broker and former Reagan cabinet official. The following year, Richard's public profile got a boost when he tangled with another veteran television journalist, CBS's Mike Wallace. The 60 Minutes star had interviewed Richard for a story about low-income Californians who faced foreclosures from the bank after borrowing money to buy air conditioners without realizing they put their homes up for collateral. Richard had his own film crew tape the interview, and caught Wallace saying that people who had been defrauded were "probably too busy eating their watermelon and tacos." The remark made national headlines and Wallace was forced to apologize.Pete Wilson, the U.S. Senator and former San Diego mayor, encouraged Richard to run for office. In 1984, Richard entered the race to challenge San Diego Mayor Roger Hedgecock's re-election. "He was a very well-regarded guy," Hedgecock told Insider. "He had an almost Walter Cronkite-like appearance, but because he was in local news he was all about not offending anybody. He didn't have particularly strong views. He was nice looking, articulate, and made good appearances, but what he had to say was not particularly memorable other than he wanted me out of office."Sometimes Tucker tagged along for campaign events. "He would always show up in a sport coat, slacks and a bowtie and I thought that's really nice clothing for someone who is a kid," Hedgecock remembers. He was a very polite young man who didn't say much."Five days before voters went to the polls, Hedgecock went on trial for 15 counts of conspiracy and perjury, an issue that Richard highlighted in his television campaign ads. Richard still lost to Hedgecock 58 to 42 percent despite pouring nearly $800,000 into the race and outspending Hedgecock two to one. (Hedgecock was found guilty of violating campaign finance laws and resigned from office in 1985 but his convictions were overturned on appeal five years later.)People are seen near a beach in La Jolla, California, on April 15, 2020.Gregory Bull/AP PhotoPrep school In the fall of 1983, a teenaged Tucker traded one idyllic beachfront community for another.At 14, Tucker moved across the country to Middletown, Rhode Island, to attend St. George's School. (Buckley would follow him two years later.) The 125-year-old boarding school sits atop a hill overlooking the majestic Atlantic Ocean, and is on the other side of Aquidneck Island where Richard Carlson went to naval school. The private school was known as a repository for children of wealthy East Coast families who were not as academically inclined as those who attended Exeter or Andover. Its campus had dorms named after titans of industry, verdant athletic fields, and a white-sand beach.Senators Claiborne Pell and Prescott Bush graduated, as did Vermont Gov. Howard Dean, and poet Ogden Nash. Tucker's class included "Modern Family" actor Julie Bowen; Dede Gardner, the two-time Oscar-winning producer of "12 Years a Slave" and "Moonlight"; and former DC Entertainment president Diane Nelson. Billy Bush – "Extra" host, and cousin to George W. Bush – was three years behind him.Tuition at St. George's cost $13,000 per year in the 1980s (it's now up to $67,000 for boarding school students) and student schedules were tightly regimented with breakfast, classes, athletics, dinner, and study hall encompassing each day. Students were required to take religion classes, and attend chapel twice a week. Faculty and staff would canvass the dorms on Thursdays and Sundays to ensure no one skipped the Episcopal service. Tucker impressed his new chums as an hyper-articulate merrymaker who frequently challenged upperclassmen who enforced dorm rules and the school's liberal faculty members."He was kind of a California surfer kid. He was funny, very intelligent, and genuinely well-liked," said Bryce Traister, who was one year ahead of Tucker and is now a professor at the University of British Columbia. "There were people who didn't like Tucker because they thought he was a bullshitter but he was very charming. He was a rascal and a fast-talker, as full of shit as he is today."Back then Tucker was an iconoclast more in the mold of Ferris Bueller than preppy neocon Alex P. Keaton, even if his wardrobe resembled the "Family Ties" star. Students were required to wear jackets, ties, and khakis, although most came to class disheveled. Tucker wore well-tailored coats and chinos, pairing his outfit with a ribbon-banded watch and colorful bowtie which would later become his signature. "He was always a very sharp dresser. He had a great rack of ties. He always knew how to tie a bowtie but he didn't exclusively wear a bowtie," said Sterne, Tucker's freshman year roommate. "He always had great clothes. It was a lot of Brooks Brothers." Their crew crew held court in each others' dorm rooms at Auchincloss, the freshman hall, kicking around a Hacky Sack and playing soccer, talking about Adolph Huxley, George Orwell, and Hemingway, and dancing to Tom Petty, the Grateful Dead, and U2 on the campus lawn. Televisions weren't allowed so students listened to their Sony Walkman swapping cassette recordings of live concerts. Tucker introduced several bands to his friends."He loved classic rock and he was and still is a big fan of Jerry Garcia and the Grateful Dead," said Sterne, who saw a Dead show with Tucker at RFK Stadium in 1986.Sometimes the clique got slices at Aquidneck Pizza and played arcade games in town, hung out in history instructor William Schenck's office, and smoked pot and Marlborough Red cigarettes on a porch in the main building's common room that faced the ocean, according to multiple sources. When the school administrators banned smoking indoors the following year so they congregated behind the dumpster behind the dining hall. Vodka (often the brand Popov) mixed with Kool-Aid was the drink of choice and students stockpiled bottles under their beds.Tucker was an enthusiastic drinker, half a dozen classmates recall. In his book, "The Long Slide," Tucker credits Hunter S. Thompson's "Fear and Loathing in Las Vegas" for enticing him to try drugs in 10th grade, The experience gave him "double vision and a headache." By the time he got to college, Tucker writes, "I switched to beer."By the late 1990s Tucker stopped smoking. He eventually cut alcohol too in 2002 after drinking so much while covering George W. Bush in New Hampshire during the 2000 primary that he accidentally got on the wrong plane, according to a friend.Most of Tucker's fellow students remember him best as a skilled speaker."He was always eager to take the less palatable side of the argument and argue that side," said Mahlon Stewart, who attended prep school and college with Tucker and is now a geriatric specialist at Columbia University. "Back then it was comedic. I thought it was an act.""His confidence was just amazing. He could just put out some positions and be willing to argue anything no matter how outlandish," Keller Kimbrough, a former classmate who's now a professor at the University of Colorado. "We were talking about politics and religion one time Tucker pulled this card out of his wallet and said, 'Well actually I'm an ordained minister, I'm an authority on the subject.' This was a stunt. He could literally play the religion card." "When he got the job at Fox I just thought 'Wow that's perfect for him, that's exactly what he can do.'"Their dorm room discourses were never serious. Tucker would pick a side in a debate between whether the color red or blue were better, and the crowd would erupt whenever he made a good point, friends said.  "Even at age 15 he was verbally dexterous and a great debater," Ian Toll said. "His conservative politics was fully formed even back then. He believed in strong defense and minimal government."His teachers saw a pupil who was primed for law school."Language and speaking came naturally to him. He took pleasure in it," said Rusty Rushton, Tucker's former English teacher. Tucker's politics, though, "seemed fluid to me," Rushton said. "I don't think of him as a deeply ensconced ideologue."He ditched soccer after sophomore year to act in a school theater production of Ayn Rand's courtroom thriller "Night of January 16th" (Julie Bowen starred as the prosecuting attorney. Tucker played a juror). But Tucker found his voice in competitive debate when he eventually joined the school's debate club. The team traveled to other private school campuses to compete against schools like Andover, Exeter, and Roxbury Latin in tournaments."He won some debate and basically did a victory lap afterward and got in the face of all the faculty there," one alum from a rival school who debated against Tucker said. "After defeating the student team, he started challenging the faculty, and said, 'Do any of you want to take me on? Are any of you capable of debating me?'"SusieIn the fall of Tucker's sophomore year, a new headmaster arrived at St. George's, Rev. George Andrews II. Andrews' daughter, Susie – who Tucker would eventually marry – was in Tucker's class. According to school tradition, a rotating group of underclassmen was charged with serving their classmates dinner and, one night in late September, Tucker and Susie had the shift at the same time. "They were sitting at a table at the far end of Queen Hall just leaning in, talking to each other," Sterne recalled. "You could see the sparks flying, which was cool."Susie floated between the school's friend groups easily. When she was seen mingling with Tucker, some questioned what she saw in him."People were saying, 'Come on Susie, why are you dating Tucker?' He's such a loser slacker and she was so sweet," Traister said. The pair started dating at the age of 15 and quickly became inseparable. Tucker gained notoriety on campus for repeatedly sneaking into Susie's room on the second floor of Memorial Schoolhouse, the school's stately administrative office that housed the headmaster's quarters. He had less time for his dumpster buddies now that the couple hung out on the campus lawn, attended chapel and an interdenominational campus ministry organization called FOCUS. His senior yearbook included a photo of Tucker squinting in concern to a classmate, with the caption "What do you mean you told Susie?While Susie was universally liked within the St. George's community, her father was polarizing.Andrews led the school during a turbulent period – it was later revealed – when its choirmaster Franklin Coleman was accused of abusing or having inappropriate conduct with at least 10 male students, according to an independent investigation by the law firm Foley Hoag in 2016. (Two attorneys representing several victims said 40 alumni contacted them with credible accounts of molestation and rape accusations at the hands of St. George's employees between 1974 and 2004 after a 2015 school-issued report detailed 26 accounts of abuse in the 1970s and 1980s. (Coleman was never criminally charged and he has not responded to Insider's attempts to reach him.) Over his eight-year tenure as school music director, from 1980 to 1988, Coleman invited groups of boys to his apartment for private parties. Sometimes he shared alcohol and pot with some of them, gave them back and neck rubs, showed pornographic videos, traveled with them on choral trips and stayed in their hotel rooms, and appeared nude around some of them, the report found. Several of Tucker's classmates and former faculty said they had no reason to believe he would have been aware of the accusations. "There were rumors circulating wildly that Coleman was bad news. The idea was he would cultivate relationships with young men," Ian Toll, a St. George's alum, said. "Anyone who was there at that time would have likely been aware of those rumors."Andrews told Foley Hoag investigators he was not aware of any complaints about Coleman until May 1988 (by then, Tucker had finished his freshman year in college) when school psychiatrist Peter Kosseff wrote a report detailing a firsthand account of misconduct. But Andrews acknowledged to investigators the school could have been aware of "prior questionable conduct" before then, the report said. Andrews fired Coleman in May 1988 after the school confronted Coleman with allegations of misconduct and he did not deny them. According to the investigation, Andrews told students Coleman resigned due to "emotional stress" and that he had the "highest regard and respect for him." On the advice of a school attorney, Andrews did not report the music teacher to child protective services. He also knew that his faculty dean wrote Coleman a letter of recommendation for a job at another school, according to investigators. Andrews left the school a few weeks after Coleman departed. By September 1989, he was named headmaster at St. Andrew's School in Boca Raton, Florida which he led for 18 years. (Andrews declined to speak about Tucker or his tenure at either school.) St. George's, meanwhile, reached an undisclosed settlement with up to 30 abuse survivors in 2016. Coleman found work as a choir director at Tampa Preparatory School in Tampa Bay, Florida before he retired in 2008. Tucker Carlson attended St. George’s School, a boarding school starting at age 14.Dina Rudick/The Boston Globe via Getty ImagesTrinity In the fall of 1987, Tucker enrolled at Trinity College in Hartford, CT, where Rev. Andrews had also attended.Nearly two-thirds of Trinity's student body back then originated from private schools and many came from wealthy backgrounds. Tuition in 1987 cost $11,700 plus an additional $3,720 for room and board—around $27,839 in today's dollars."When the Gulf War broke out" in 1990, one Trinity alum who knew Tucker recalled, "there was a big plywood sign in front of the student center that read, 'Blood for Oil,' and someone else threw a bucket of paint on it."The posh campus was situated in the middle of Hartford, Connecticut, the state's capital and one of its poorest cities. Discussions about race and inequality were sometimes at the forefront of campus politics, but many students avoided engaging in them entirely."There were issues about whether black students should only date other black students, that kind of thing," said Kathleen Werthman, a classmate of Tucker's who now works at a Florida nonprofit for people with disabilities. "My sophomore year, for new students, they had a speaker talking about racism, and one of the students said, 'I never met a black student, how are you supposed to talk to them?' And the idea that only white people can be racist was challenged too."Susie was at Vanderbilt in Nashville, Tennessee. His brother remained in Rhode Island and other prep school friends had fanned out across the East Coast. Tucker moved into a four-bedroom dormitory overlooking the main quad. One suitemate, Neil Patel, was an economics major from Massachusetts who played intramural softball. (They would co-found the Daily Caller together two decades years later.) Other roommates played on the varsity soccer team and they formed a tight-knit group."I remember being struck by him. He was the same way he is now," said Rev. Billy Cerveny, a college friend of Tucker's who's now a pastor at Redbird Nashville. "He was a force of nature. He had a sense of presence and gravitas. You might get into an argument with him, but you end up loving the guy."Tucker often went out of his way to amuse his friends. Once during the spring semester, several activists set up a podium and microphone beneath his dorm window to protest the CIA's on-campus recruitment visits. The demonstration was open-mic so Tucker went up to the stage and told the crowd of about 15 people, "I think you're all a bunch of greasy chicken fuckers.""I think people laughed. He did," Cerveny said. "There was always a small collection of people any time there was an issue who tried to stir the pot in that way. Some people were dismissive and other people loved it, thinking 'Oh we're getting a fight here.'"As a sophomore, Tucker and his friends moved into a dingy three-story house on Crescent Street on the edge of the campus. He ditched his tailored jackets, khakis, and bowties for oversized Levi jeans, t-shirts, and untucked oxford shirts. Tucker commandeered a low-ceilinged room above the front porch with so many windows he had to hang up tapestries to keep out the sun. The tiny alcove had barely enough space for an eight-foot futon and several bookshelves Tucker built himself stacked with books he collected. Friends remember Tucker receiving an 8-by-10 manilla envelope that his father sent through the mail once or twice a month containing dozens of articles from newspapers and magazines.One of Tucker's friends, Cerveny, remembered stopping by Richard's home in Washington, D.C. and finding evidence of his hobbies, including the world's second largest collection of walking sticks."His house was filled with rare canes he collected from all over the world," Cerveny said. "The hallways had really amazing rows of canes hung on hooks that were specially made to mount these things on the house. One used to be a functional shotgun, another one was made out of a giraffe. His dad would pull out newspaper clippings of WWII Navy aircraft carriers. It changed the way I thought about a lot of things. I had never seen anything like that. Who collects canes?"During sophomore year, Tucker's friends decided to rush Delta Phi, a well-to-do fraternity also known as St. Elmo's. The Greek scene had a large presence on campus — about 20 percent of men joined them even though Trinity was a liberal arts school — and St. Elmo's had a reputation as freewheeling scamps. Once a year, a St. Elmo's brother would ride his motorcycle naked through the campus cafeteria. (Faculty voted in 1992 to abolish Greek life saying they were sexist and racist, and school administrators instead forced fraternities to become co-ed.)But Tucker refused to come aboard. Some classmates thought it was because he didn't want to be hazed."Tucker was not a joiner like that," Mahlon Stewart said. "He wouldn't have set himself up for whatever humiliation would have been involved. He would not have put up with that." But Cerveny, who pledged the fraternity, said it was a matter of faith."I remember explicitly him saying 'Look, I want to focus on what my faith is about and I thought this would be a big distraction,'" Cerveny said. "But he was very much in the mix with us. When we moved to a fraternity house [on Broad Street], we asked him to live with us."Tucker occasionally dropped in on his friends' fraternity events and occasionally brought Susie when she visited or Buckley when he drifted into town. Other times they hung out at Baker's Cafe on New Britain Avenue. Mostly Tucker stayed in his room."He was basically a hermit. It wasn't like he was going to a ton of parties" one Trinity St. Elmo's brother said. "He was not a part of the organizational effort of throwing big parties, or encouraging me to join the fraternity." Susie, who didn't drink or smoke, was a moderating influence. "Tucker and Susie had their moral compass pointing north even back then," Sterne said. "Tucker's faith was not something he was focused on in his early years but when he met Susie and he became close to her family, that started to blossom and grow in him. Now it's a huge part of his life."By the time his crew moved to another house on Broad Street, they each acquired vintage motorcycles and tinkered with them in their garage. Tucker owned a 1968 flathead Harley Davidson that barely ran and relied on a red Jeep 4X4 to transport friends around town (the Volkswagen van he had freshman year blew up). He smoked Camel unfiltered cigarettes, sipped bourbon, and occasionally brewed beer in the basement, including a batch he named "Coal Porter," according to GQ.When he wasn't reading outside of his courses or tinkering with his carburetor, Tucker took classes in the humanities and ultimately majored in history. Tucker dabbled in other fields including Russian history, Jewish history, Women's Studies, and Religious Studies, sitting in the back of lecture halls with his friends. Ron Kiener, who taught an introductory level course in Judaism, recalled Tucker performing "poorly" but earning a credit. "He did not get a stellar grade from me," Kiener said. "Based on what he says now he surely didn't get very much out of my courses."But Leslie Desmangles, who led courses in Hinduism, Buddhism, and Myth, Rite, and Sacrament, said Tucker was engaged and likely did just enough to pass his courses even if he wasn't very studious or vocal in class discussions."He was interested in understanding the nature of religious belief and studying different cultures and religions but I'm not sure if he had an interest in diversity," Desmangles said. "He was genuinely interested in ritual since a lot of the Episcopal church is highly ritualistic."Tucker's fascination with religion extended to his extracurricular activities too. He and several friends joined Christian Fellowship, a Bible study group that met weekly and helped the school chaplain lead Sunday services. Some members even volunteered with ConnPIRG, a student advocacy group on hunger and environmental issues, and traveled to Washington D.C. to protest the Gulf War. But Tucker steered clear of campus activism. He spent his free time reading and seeing Blues Traveler, Widespread Panic, and Sting perform when they came through Connecticut. Sometimes he skipped school to follow his favorite band, the Grateful Dead, on tour.He took an interest in Central American politics too. At the end of freshman year, Tucker and Patel traveled to Nicaragua. "We did not have a place to stay or any set plans," Tucker told the Trinity Tripod, his college paper, in March 1990. "It was very spontaneous. We are both extremely political and we felt that getting to know the country and some of its citizens would give us a better perspective on the situation." In February 1990, Tucker returned with three friends to Managua for 10 days to observe Nicaragua's elections. The National Opposition Union's Violetta Chamoro, which was backed by the U.S. government, defeated the leftist Sandinista National Liberation Front Daniel Ortega who had been in power since 1979. A month later Tucker and his classmate Jennifer Barr, who was separately in Nicaragua to observe elections and distribute medical supplies to the Sandinistas, shared their perspectives about their visits to a small crowd at the Faculty Club for the school's Latin America Week. Tucker thought press coverage of the election was too left-leaning and criticized the media for skewing a conservative victory, according to Barr."I don't think it was necessarily true," Barr said. "He was dismissive [about my views]. I did get a sense that he believed in what he was saying, and it was very different from my experience and my understanding of the race."Tucker's stance on U.S. politics at the time was less didactic. As the 1992 presidential election loomed his senior year, Tucker touted the independent candidacy of Ross Perot, a Texas business magnate, to his friends although it did not appear that Tucker was an ardent supporter."Tucker would go on and on about how Ross Perot was the answer to this or that, as a joke, and every one would participate" one St. Elmo's brother said. "He liked the way Ross Perot was basically throwing a wrench into the system. He wasn't a serious Ross Perot proponent. He was cheering on somebody who was screwing up the system."In Tucker's college yearbook, below his tousle-haired, bowtie wearing thumbnail photo, was a list of his extra-curricular activities: "History; Christian Fellowship 1 2 3 4, Jesse Helms Foundation, Dan White Society." Neither of the latter two – named, respectively, after the ultra-conservative North Carolina Senator, and a San Francisco supervisor who assassinated Harvey Milk in 1978 – ever existed. Tucker admired Helms for being a "bull in the china shop" of Congress, one classmate said. Some friends believed Tucker slipped in the off-color references as a lark."It's like a joke you and a friend would put in a series of anagrams that only you and two friends would remember and no one else would," the St. Elmo's friend said. "It's so niche that only someone like Tucker is thinking things like that or would even know the name of the person who killed Harvey Milk. He paid attention to things like that."Others claimed Tucker was the victim of a prank."It would not at all surprise me if one of the other guys in the [fraternity] house filled it in for him, and not just an inside joke, but pegging him with something that he got grief for," another close friend said. Protesters rally against Fox News outside the Fox News headquarters at the News Corporation building, March 13, 2019 in New York City.Drew Angerer/Getty ImagesAn outsider among insidersBy the spring of 1991, Tucker's academic performance had caught up with him. He had accumulated a 1.9 grade point average and may have finished with a 2.1 GPA, according to one faculty member who viewed a copy of his transcript. Tucker would eventually graduate from Trinity a year late. Falling behind was not uncommon. About 80 percent of Trinity students completed their degrees in four years, according to Trinity College records. (A Trinity spokeswoman would not comment on Tucker's transcript due to FERPA laws, which protect student privacy.Tucker's post-collegiate plans fell through too. Tucker applied to the CIA that spring. The spy agency passed."He mentioned that he had applied and they rejected him because of his drug use," another college friend said, while declining to be named. "He was too honest on his application. I also probably should say I don't know whether he was telling the truth or not." Once the school year was over, Tucker and Neil Patel hit the road on a cross-country motorcycle ride. After that: Washington DC.  Tucker's family left Southern California for Georgetown after President Reagan named his father head of Voice of America. In June 1991, President George H.W. Bush appointed Richard ambassador to the Seychelles and the Carlson family upgraded to a nicer house in Georgetown with a pool in the basement. That summer, with Tucker's father and stepmother often out of town, the Carlson household was the center of Tucker's social lives, the place they retired to after a night drinking at Georgetown college dive bars like Charing Cross and Third Edition, and pubs like Martin's Tavern and The Tombs, immortalized in St. Elmo's Fire. In August, Tucker and Susie got married in St. George's chapel and held a reception at the Clambake Club of Newport, overlooking the Narragansett Bay. Back in Washington, Tucker's prep school, college, and his father's Washington-based networks began to mesh. Tucker took a $14,000-a-year job as an assistant editor and fact checker of Policy Review, a quarterly journal published at the time by the Heritage Foundation, the nation's leading conservative think tank. For the next three decades, Tucker thrived in the Beltway: He joined The Weekly Standard and wrote for several magazines before appearing on cable news networks as a right-of-center analyst and host at CNN, PBS, and MSNBC. His father embarked on a third career as a television executive where he ran the Corporation for Public Broadcasting and his brother became a political operative and a pollster. By the time Tucker reached the core of the conservative media sphere, a slot on Fox News's primetime opinion lineup, he shed friends from his youth who couldn't grapple with the hard-right turn he veered once he became the face of the network.One friend was not surprised with Tucker's act. In the spring of 2016, during the heat of Donald Trump's presidential campaign against Hilary Clinton and a few months before "Tucker Carlson Tonight" premiered on Fox, Tucker had lunch with his old prep school classmate Richard Wayner who made the speech about Eleanor Bumpurs all those years ago. Wayner believed Tucker's gesture from his pew was never serious. "As a 9th or 10th grader in a chapel full of people in a conversation, he was trying to get attention," Wayner said.The two stayed in touch over the years and Tucker at one point suggested he write a handful of pieces for the Daily Caller, the conservative news and opinion site that Tucker co-founded and ran in the 2010s. As they settled into their table at a Midtown Manhattan steakhouse, the two chatted about Wayner's experience on the board of St. George's (which Susie was about to join) and their respective careers. Tucker was floating around at Fox, and Wayner, now an investor and former Goldman Sachs investment banker, said the conversation drifted toward salaries."He was asking, 'How much do you make on Wall Street' and was like, 'Wow, Wall Street guys make a lot.'" Wayner said. When they left the restaurant and headed back toward the Fox News headquarters, several people recognized Tucker on the street even though he had jettisoned his trademark bowtie years ago. Wayner saw Tucker making the pragmatic decision to follow a business model that has made his conservative media counterparts a lot of money."I don't think he has a mission. I don't think he has a plan," Wayner said. "Where he is right now is about as great as whatever he thought he could be.""Tucker knows better. He does. He can get some attention, money, or both." he added. "To me, that's a shame. Because he knows better." Read the original article on Business Insider.....»»

Category: topSource: businessinsiderMay 5th, 2022

Douglas Dynamics Reports First Quarter 2022 Results

Highlights: Delivered Net Sales of $102.6 Million Recorded Net Loss of $3.9 million, or $(0.18) of Diluted EPS Adjusted EBITDA was $4.6 million, compared to $10.7 million in 1Q21 Reiterated 2022 guidance Paid $0.29 per share cash dividend on March 31, 2022 MILWAUKEE, May 02, 2022 (GLOBE NEWSWIRE) -- Douglas Dynamics, Inc. (NYSE:PLOW), North America's premier manufacturer and upfitter of work truck attachments and equipment, today announced financial results for the first quarter ended March 31, 2022. "While we faced a difficult comparison this quarter, we delivered results that were in line with our expectations, and see positive demand trends continuing this year," noted Bob McCormick, President & CEO. "Like many companies operating in the work truck sector, we continue to be impacted by supply chain constraints that are restricting the flow of chassis and components. Our teams are working tirelessly to alleviate the issues wherever possible, and continue to expect the situation to slowly start to improve in the second half of the year. Therefore, we are reiterating our annual guidance as demand remains strong across both segments, with the preseason sales period off to a great start for Attachments and backlog continuing to grow at Solutions." Consolidated First Quarter 2022 Results $ in millions(except Margins & EPS) Q1 2022 Q1 2021 Net Sales $102.6 $103.3 Gross Profit Margin 20.5% 25.4%       Income (Loss) from Operations $(2.9) $3.6 Net Income (Loss) $(3.9) $0.7 Diluted EPS $(0.18) $0.03       Adjusted EBITDA $4.6 $10.7 Adjusted EBITDA Margin 4.5% 10.3% Adjusted Net Income (Loss) $(2.3) $1.2 Adjusted Diluted EPS $(0.11) $0.04 Consolidated Net Sales were essentially flat compared to the record results for the same period last year on lower volumes. Higher pricing at both segments offset lower volumes in the Attachments segment due to the difficult comparison to the robust snowfall in February 2021 and lower production volumes in the Solutions segment stemming from chassis and component shortages. Operating results were lower compared to the first quarter of 2021, as a result of lower production volumes and unfavorable product mix comparisons within Attachments. Selling, general, and administrative costs increased slightly compared to the first quarter of 2021, largely due to higher labor costs, as well as a return to more normalized marketing spending. Interest expense decreased $0.9 million due primarily to lower interest paid on the term loan following the June 9, 2021 refinancing. Work Truck Attachments Segment First Quarter 2022 Results $ in millions (except Adjusted EBITDA Margin) Q1 2022 Q1 2021 Net Sales $45.8 $42.0 Adjusted EBITDA $3.0 $8.2 Adjusted EBITDA Margin 6.6% 19.6% Work Truck Attachment Net Sales increased 9% over the prior year due to higher pricing on higher input costs, which offset lower volumes in comparison to the robust snowfall experienced in 1Q21. Adjusted EBITDA and Adjusted EBITDA margin decreased compared to the record results in first quarter of 2021, driven by lower volumes and product mix impacting profitability, as well as outsourcing costs, marketing spending related to the NTEA Work Truck Show, and the timing of other spending. McCormick noted, "It is important to remember that our first quarter is often unprofitable given it usually accounts for approximately ten percent of sales for our Attachments segment, but our costs are set fairly equally across the four quarters. First quarter 2021 produced record profitability for our Attachments segment as robust snowfall in February 2021 created massive demand for parts and accessories, making for a tough comparison this year.   First quarter 2022 volumes met our expectations despite the below average snowfall. I am pleased to report that the 2022 preseason is off to a strong start following the NTEA Work Truck Show in March, and we are seeing significant interest in our non-truck products." Work Truck Solutions Segment First Quarter 2022 Results $ in millions (except Adjusted EBITDA Margin) Q1 2022 Q1 2021 Net Sales $56.8 $61.4 Adjusted EBITDA $1.6 $2.4 Adjusted EBITDA Margin 2.8% 3.9% Work Truck Solutions Net Sales decreased approximately 7% compared to the corresponding period of last year due to chassis and component shortages hindering production, somewhat offset by pricing adjustments. Adjusted EBITDA and Adjusted EBITDA margin decreased as a result of the lower volumes and inefficiencies stemming from chassis and component shortages hindering production, plus inflationary pressures. McCormick added, "The trends we have seen recently continued this quarter. Demand remains strong, and backlog continues to grow throughout our Solutions segment. When supply chain disruption starts to subside, we're well positioned to meet customer expectations, drive revenue and grow earnings." Dividend & Liquidity A quarterly cash dividend of $0.29 per share of the Company's common stock was paid on March 31, 2022, to stockholders of record on March 18, 2022. Net cash used in operating activities of $(26.0) million increased by $50.1 million from the first quarter 2021 to the first quarter 2022. The increase was due to less favorable operating results, as well as an increase in inventory in anticipation of inflationary price increases and supply chain disruptions, plus the timing of supplier payments. Free cash flow for first quarter 2022 was $(28.2) million compared to $22.0 million in first quarter 2021, a decrease of $50.2 million. The decrease is primarily a result of higher cash used in operating activities as noted above. The effective tax benefit was 20.6% and 11.6% for the first quarters of 2022 and 2021, respectively. The rate was higher in 1Q22 due to discrete tax expense, versus a discrete tax benefit in the same period last year related to excess tax from stock compensation. During the quarter, approximately 82,000 shares were repurchased at a cost of approximately $3.0 million. Outlook McCormick explained, "We are reiterating our guidance given first quarter results met our expectations and the preseason is off to a strong start in Attachments. Demand remains strong in Solutions and, as we noted last quarter, 2022 is expected to mirror 2021, with supply chain difficulties being prevalent in the first half of this year, and then starting to gradually improve in the second half of the year. Work Truck industry data indicates 2023 should produce similar conditions to 2019, which was a record year for our company. Therefore, we remain confident in both our 2022 annual guidance and long-term targets. Demand signals remain strong across the board, and we continue to invest in our operations to ensure that, a) we are ready to deliver when supply chains improve, and b) we are well positioned to drive long-term growth." The 2022 financial outlook remains unchanged: Net Sales are expected to be between $570 million and $630 million. Adjusted EBITDA is predicted to range from $70 million to $100 million. Adjusted Earnings Per Share are expected to be in the range of $1.25 per share to $2.15 per share. The effective tax rate is expected to be approximately 25% to 26%. The outlook assumes relatively stable to improving economic conditions and the Company's core markets will experience average snowfall levels. Earnings Conference Call Information The Company will host a conference call on Tuesday, May 3, 2022 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). To join the conference call, please dial (877) 369-6591 domestically, or (253) 237-1176 internationally. The call will also be available via the Investor Relations section of the Company's website at For those who cannot listen to the live broadcast, replays will be available for one week following the call. About Douglas Dynamics Home to the most trusted brands in the industry, Douglas Dynamics is North America's premier manufacturer and up-fitter of commercial work truck attachments and equipment. For more than 75 years, the Company has been innovating products that not only enable people to perform their jobs more efficiently and effectively, but also enable businesses to increase profitability. Through its proprietary Douglas Dynamics Management System (DDMS), the Company is committed to continuous improvement aimed at consistently producing the highest quality products, at industry-leading levels of service and delivery that ultimately drive shareholder value. The Douglas Dynamics portfolio of products and services is separated into two segments: First, the Work Truck Attachments segment, which includes commercial snow and ice control equipment sold under the FISHER®, SNOWEX® and WESTERN® brands. Second, the Work Truck Solutions segment, which includes the up-fit of market leading attachments and storage solutions under the HENDERSON® brand, and the DEJANA® brand and its related sub-brands. Use of Non-GAAP Financial Measures This press release contains financial information calculated other than in accordance with U.S. Generally Accepted Accounting Principles ("GAAP").  The non-GAAP measures used in this press release are Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings Per Share, and Free Cash Flow.  The Company believes that these non-GAAP measures are useful to investors and other external users of its consolidated financial statements in evaluating the Company's operating performance as compared to that of other companies.  Reconciliations of these non-GAAP measures to the nearest comparable GAAP measures can be found immediately following the Consolidated Statements of Cash Flows included in this press release. Adjusted EBITDA represents net income (loss) before interest, taxes, depreciation, and amortization, as further adjusted for certain charges consisting of unrelated legal and consulting fees, severance, restructuring costs, stock-based compensation, certain purchase accounting expenses, and incremental costs incurred related to the COVID-19 pandemic. Such COVID-19 related costs include increased expenses directly related to the pandemic, and do not include either production related overhead inefficiencies or lost or deferred sales. We believe these costs are out of the ordinary, unrelated to our business and not representative of our results. The Company uses Adjusted EBITDA in evaluating the Company's operating performance because it provides the Company and its investors with additional tools to compare its operating performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect the Company's core operations. The Company's management also uses Adjusted EBITDA for planning purposes, including the preparation of its annual operating budget and financial projections, and to evaluate the Company's ability to make certain payments, including dividends, in compliance with its senior credit facilities, which is determined based on a calculation of "Consolidated Adjusted EBITDA" that is substantially similar to Adjusted EBITDA. Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per Share (calculated on a diluted basis) represents net income (loss) and earnings (loss) per share (as defined by GAAP), excluding the impact of stock-based compensation, severance, restructuring charges, non-cash purchase accounting adjustments, certain charges related to unrelated legal fees and consulting fees, incremental costs incurred related to the COVID-19 pandemic, and adjustments on derivatives not classified as hedges, net of their income tax impact. Such COVID-19 related costs include increased expenses directly related to the pandemic, and do not include either production related overhead inefficiencies or lost or deferred sales. We believe these costs are out of the ordinary, unrelated to our business and not representative of our results. Adjustments on derivatives not classified as hedges are non-cash and are related to overall financial market conditions; therefore, management believes such costs are unrelated to our business and are not representative of our results.  Management believes that Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per Share are useful in assessing the Company's financial performance by eliminating expenses and income that are not reflective of the underlying business performance. Free Cash Flow is a non-GAAP financial measure that we define as net cash provided by (used in) operating activities less capital expenditures.  Free Cash Flow should be evaluated in addition to, and not considered a substitute for, other financial measures such as Net Income (Loss) and Net Cash Provided by (Used in) Operating Activities.  We believe that free cash flow represents our ability to generate additional cash flow from our business operations. Forward Looking Statements This press release contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These statements include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation, product demand, the payment of dividends, and availability of financial resources. These statements are often identified by use of words such as "anticipate," "believe," "intend," "estimate," "expect," "continue," "should," "could," "may," "plan," "project," "predict," "will" and similar expressions and include references to assumptions and relate to our future prospects, developments, and business strategies. Such statements involve known and unknown risks, uncertainties and other factors that could cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, weather conditions, particularly lack of or reduced levels of snowfall and the timing of such snowfall, including as a result of global climate change, our ability to manage general economic, business and geopolitical conditions, including the impacts of natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as the COVID-19 pandemic, our inability to maintain good relationships with our distributors, our inability to maintain good relationships with the original equipment manufacturers with whom we currently do significant business, lack of available or favorable financing options for our end-users, distributors or customers, increases in the price of steel or other materials, including as a result of tariffs, necessary for the production of our products that cannot be passed on to our distributors, increases in the price of fuel or freight, a significant decline in economic conditions, the inability of our suppliers and original equipment manufacturer partners to meet our volume or quality requirements, inaccuracies in our estimates of future demand for our products, our inability to protect or continue to build our intellectual property portfolio, the effects of laws and regulations and their interpretations on our business and financial condition, our inability to develop new products or improve upon existing products in response to end-user needs, losses due to lawsuits arising out of personal injuries associated with our products, factors that could impact the future declaration and payment of dividends or our ability to execute repurchases under our stock repurchase program, our inability to compete effectively against competition, our inability to achieve the projected financial performance with the business of Henderson Enterprises Group, Inc. ("Henderson"), which we acquired in 2014, or with the assets of Dejana Truck & Utility Equipment Company, Inc., which we acquired in 2016, and unexpected costs or liabilities related to such acquisitions or any future acquisitions, as well as those discussed in the section entitled "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2021 and any subsequent Form 10-Q filings. You should not place undue reliance on these forward-looking statements. In addition, the forward-looking statements in this release speak only as of the date hereof and we undertake no obligation, except as required by law, to update or release any revisions to any forward-looking statement, even if new information becomes available in the future. For further information contact:Douglas Dynamics, Inc.Nathan Financial Statements     Douglas Dynamics, Inc.   Consolidated Balance Sheets   (In thousands)                     March 31, December 31,     2022 2021   (unaudited) (unaudited)           Assets       Current assets:       Cash and cash equivalents $ 8,212     $ 36,964   Accounts receivable, net   43,058       71,035   Inventories   143,839       104,019   Inventories - truck chassis floor plan   1,469       2,655   Refundable income taxes paid   1,473       1,222   Prepaid and other current assets   4,830       4,536   Total current assets   202,881       220,431           Property, plant, and equipment, net   65,635       66,787   Goodwill   113,134       113,134   Other intangible assets, net   139,479       142,109   Operating lease - right of use asset   17,264       18,462   Non-qualified benefit plan assets   10,140       10,347   Other long-term assets   1,927       1,206   Total assets $ 550,460     $ 572,476           Liabilities and stockholders' equity      .....»»

Category: earningsSource: benzingaMay 2nd, 2022

Gordon Chang: What To Do About China

Gordon Chang: What To Do About China Authored by Gordon Chang via The Gatestone Institute, Since about 2018, Chinese officials have been talking about the moon and Mars as sovereign Chinese territory, part of the People's Republic of China. This means that China considers those heavenly bodies to be like the South China Sea. This also means that China will exclude other nations from going to the moon and Mars if they have the capability to do so. We do not have to speculate about that: Chinese officials say this is what they are going to do. [W]hen Biden says, "Oh, the Chinese just want to compete with us," he is wrong. They do not want to "compete" within the international system. They do not even want to change that system... They want to overthrow it altogether, period. Is Xi Jinping really that bold... to start another war? ... First, China considers the United States to be its enemy. Second the United States is no longer deterring China. China feels it has a big green light to do whatever it wants. We Americans don't pay attention to propaganda... After all, these are just words. At this particular time, these words... [suggest] to me that China is laying the justification for a strike on the United States. We keep ignoring what Beijing is saying. We kept ignoring what Osama bin Laden was saying. We have to remember that the Chinese regime, unlike the Japanese, always warn its adversaries about what it is going to do The second reason war is coming is that America's deterrence of China is breaking down. Di's message was that with cash, China can do anything it wants, and that all Americans would take cash. He mentioned two words in this regard: Hunter Biden. In February, [Biden] had a two‑hour phone call with Xi Jinping. By Biden's own admission, he didn't raise the issue of the origins of COVID‑19 even once. If you are Xi Jinping, after you put down the receiver, your first thought is, "I just got away with killing hundreds of thousands of Americans." We have news that China is building something like 345 missile silos in three locations: in Gansu, Xinjiang, and in Inner Mongolia. These silos are clearly built to accommodate the DF‑41. The DF‑41 has a range of about 9,300 miles, which means that it can reach any part of the United States. The DF‑41 carries 10 warheads. This means that China could, in about two years..., have a bigger arsenal than ours. ...we have to assume the worst because Chinese leaders and Chinese generals, on occasion, unprovoked, have made threats to nuke American cities. In July, 2021 China tested a hypersonic glide warhead, which circled the world. This signals China intends to violate the Outer Space Treaty, to which China is a party. As of today, more than eight million people have died outside China. What happened? No one imposed costs on China. For at least a half‑decade, maybe a little bit longer, Chinese military researchers have been openly writing about a new type of biological warfare....They talk about a new type of biological warfare of "specific ethnic genetic attacks." In other words, pathogens that will leave the Chinese immune but sicken and kill everybody else, which means that the next disease from China can be a civilization killer. A lot of military analysts talk about how the first seconds of a war with China are going to be fought in outer space. They are going to blind our satellites, take them down, do all sorts of stuff. Those statements are wrong. The first day of war against the United States occurs about six months earlier, when they release pathogens in the United States. Then we are going to have that day in space. The war starts here, with a pathogen ‑‑ a virus, a microbe, a bug of some kind. That is where it begins. The One‑China policy is something many people misunderstand. Probably because Beijing uses propaganda to try to fuzzy up the issue.... China has a One‑China principle: that Taiwan is part of the People's Republic of China, full stop. We have a One‑China policy..., that the status of Taiwan is unresolved.... that the resolution of the status of Taiwan must be with the consent of people on both sides of the Strait. We need a policy of "strategic clarity," where we tell China that we will defend Taiwan. We also say we will extend a mutual defense treaty to Taiwan if it wants it, and we will put American troops on the island as a tripwire. We are Americans. We naturally assume that there are solutions, and good solutions, to every problem. After three decades of truly misguided China policy, there are no ... solutions that are "undangerous." ...The current trend of policy is unsustainable. There will be no American republic if we continue to do what we are currently doing and if we continue to allow China to do what it does. I do not think that enforcing a trade deal will start World War III. China has not met its obligations. As of a few months ago, China had met about 62% of its commitments..... We should be increasing the tariffs that President Trump imposed under Section 301 of the Trade Act of 1974. Remember, those tariffs are meant to be a remedy for the theft of US intellectual property. China has continued to steal US IP. As matter of fact, it has gotten worse... I do not think that we should be trying to foster integration of Wall Street into China's markets.... Do not take it from me, just look at their failure to comply with very simple, easy‑to‑comply-with requirements. It was a mistake. The best response would be if we hit them with everything at once because China right now is weak. If we were going to pick the number one thing to do, I would think trade. China now has a debt crisis, so they are not going to invest their way out of this crisis, which means the only way they can save their economy is net exports. We should stop buying their stuff. China has bought the political establishment in the Solomon Islands, except for one brave man named David Suidani. Recently, somebody got the bright idea of publishing all of the specific payments that Beijing has made to Solomon Islands politicians.... We should be doing this with payments to American politicians, we should be doing this across the board. What bothers me is that, although their assumptions about China have demonstrably been proven wrong, American policymakers still continue with the same policies. There is, in some people's mind, an unbreakable view that we have to cooperate with China.... This is what people learn in international relations school when they go to Georgetown, and they become totally stupid. Clearly, Nike and Apple and other companies are now, at this very moment, trying to prevent Congress from enacting toughened rules on the importation of forced‑labor products into our country. Moreover, the Chinese regime is even more casualty‑averse than we are. Even if Beijing thinks it can take Taiwan by force, it is probably not going to invade because it knows an invasion would be unpopular with most people in China. It is not going to risk hundreds of thousands of casualties that would result from an invasion. Unfortunately..., we taught the Chinese that they can without cost engage in these dangerous maneuvers of intercepting our planes and our ships. That is the problem: because as we have taught the Chinese to be more aggressive, they have been. [W]e should have made it clear to the Chinese leadership that they cannot kill Americans without cost. Hundreds of thousands Americans have been killed by a disease that China deliberately spread. From October 2020 to October 2021, more than 105,000 Americans died from fentanyl -- which China has purposefully, as a matter of state and Communist Party policy -- sold to Americans... we have to change course. I would close China's four remaining consulates. I would also strip the Chinese embassy down to the ambassador and his personal staff. The thousands who are in Washington, DC, they would be out. I would also raise tariffs to 3,600%, or whatever. This is a good time to do it. We have supply chain disruptions. We are not getting products from China anyway. We can actually start to do this sort of stuff. I would... just hammer those guys all the time verbally. People may think, "Those are just words." For communists, words are really important, because they are an insecure regime where propaganda is absolutely critical. I would be going after the Communists on human rights, I would be going after them on occupying the South China Sea, on Taiwan, unrelentingly -- because I would want to show the world that the United States is no longer afraid of China.... State Department people, they are frightened. We need to say to the Chinese regime, like Dulles, "I'm not afraid of you. I'm going after you, and I'm going to win." Is Xi Jinping really that bold... to start another war?... First, China considers the United States to be its enemy. Second the United States is no longer deterring China. China feels it has a big green light to do whatever it wants. All the conditions for history's next great war are in place. Jim Holmes, the Wiley Professor at the Naval War College, actually talks about this period as being 1937. 1937 was the year in which if you were in Europe or America, you could sense the trouble. If you were in Asia in 1937, you would be even more worried, because that year saw Japan's second invasion of China that decade. No matter where you lived, however, you could not be sure that the worst would happen, that great armies and navies around the world would clash. There was still hope that the situation could be managed. As we now know, the worst did happen. In fact, what happened was worse than what anyone thought at the time. We are now, thanks to China, back to 1937. We will begin our discussion in Afghanistan. Beijing has had long‑standing relations with the Afghan Taliban, going back before 9/11, and continuing through that event. After the US drove the Taliban from power and while it was conducting an insurgency, China was selling the group arms, including anti‑aircraft missiles, that were used to kill American and NATO forces. China's support for killing Americans has continued to today. In December 2020, Indian Intelligence was instrumental, in Afghanistan, in breaking up a ring of Chinese spies and members of the Haqqani Network. The Trump administration believed that the Chinese portion of that ring was actually paying cash for killing Americans. What can happen next? We should not be surprised if China gives the Taliban an atomic weapon to be used against an American city. Would they be that vicious? We have to remember that China purposefully, over the course of decades, proliferated its nuclear weapons technology to Pakistan and then helped Pakistan sell that Chinese technology around the world to regimes such as Iran's and North Korea's. Today, China supports the Taliban. We know this because China has kept open its embassy in Kabul. China is also running interference for the Taliban in the United Nations Security Council. It is urging countries to support that insurgent group with aid. It looks as if the Taliban's main financial backers these days are the Chinese. Beijing is hoping to cash in on its relationship in Central Asia. Unfortunately, there is a man named Biden, who is helping them. In early August, Biden issued an executive order setting a goal that by 2030, half of all American vehicles should be electric‑powered. To be electric‑powered, we need rare earth minerals, we need lithium. As many people have said, Afghanistan is the Saudi Arabia of rare earths and lithium. If Beijing can mine this, it makes the United States even more dependent on China. It certainly helps the Taliban immeasurably. Unfortunately, Beijing has more than just Afghanistan in mind. The Chinese want to take away our sovereignty, and that of other nations, and rule the world. They actually even want to rule the near parts of the solar system. Yes, that does sound far‑fetched, but, no, I'm not exaggerating. Chinese President Xi Jinping would like to end the current international system. On July 1, in a landmark speech, in connection with the centennial of China's ruling organization, he said this: "The Communist Party of China and the Chinese people, with their bravery and tenacity, solemnly proclaim to the world that the Chinese people are not only good at taking down the old world, but also good in building a new one." By that, China's leader means ending the international system, the Westphalian international system. It means he wants to impose China's imperial‑era notions of governance, where Chinese emperors believed they not only had the Mandate of Heaven over tianxia, or all under Heaven, but that Heaven actually compelled the Chinese to rule the entire world. Xi Jinping has been using tianxia themes for decades, and so have his subordinates, including Foreign Minister Wang Yi, who in September 2017 wrote an article in Study Times, the Central Party School's influential newspaper. In that article, Wang Yi wrote that Xi Jinping's thought on diplomacy ‑‑ a "thought" in Communist Party lingo is an important body of ideological work ‑‑ Wang Yi wrote that Xi Jinping's thought on diplomacy made innovations on and transcended the traditional theories of Western international relations of the past 300 years. Take 2017, subtract 300 years, and you almost get to 1648, which means that Wang Yi, with his time reference, was pointing to the Treaty of Westphalia of 1648, which established the current system of sovereign states. When Wang Yi writes that Xi Jinping wants to transcend that system, he is really telling us that China's leader does not want sovereign states, or at least no more of them than China. This means that when Biden says, "Oh, the Chinese just want to compete with us," he is wrong. They do not want to "compete" within the international system. They do not even want to change that system so it is more to their liking. They want to overthrow it altogether, period. China is also revolutionary with regard to the solar system. Since about 2018, Chinese officials have been talking about the moon and Mars as sovereign Chinese territory. In other words, as part of the People's Republic of China. This means that China considers those heavenly bodies to be like the South China Sea: theirs and theirs alone. This also means that China will exclude other nations from going to the moon and Mars if they have the capability to do so. We do not have to speculate about that: Chinese officials say this is what they are going to do. Let us return to April 2021. Beijing announced the name of its Mars rover. "We are naming the Mars rover Zhurong," the Chinese said, "because Zhurong was the god of fire in Chinese mythology, " How nice. Yes, Zhurong is the god of fire. What Beijing did not tell us is that Zhurong is also the god of war—and the god of the South China Sea. Is Xi Jinping really that bold or that desperate to start another war? Two points. First, China considers the United States to be its enemy. The second point is that the United States is no longer deterring China. China feels it has a big green light to do whatever it wants. On the first point, about our enemy status, we have to go back to May 2019. People's Daily, the most authoritative publication in China, actually carried a piece that declared a "people's war" on the US. This was not just some isolated thought. On August 29th 2021, People's Daily came out with a landmark piece that accused the United States of committing "barbaric" acts against China. Again, this was during a month of hostile propaganda blasts from China. On the August 29th, Global Times, which is controlled by People's Daily, came right out and also said that the United States was an enemy or like an enemy. We Americans don't pay attention to propaganda. The question is, should we be concerned about what China is saying? After all, these are just words. At this particular time, these words are significant. The strident anti‑Americanism suggests to me that China is laying the justification for a strike on the United States. We keep ignoring what Beijing is saying. We kept ignoring what Osama bin Laden was saying. We have to remember that the Chinese regime, unlike the Japanese, always warn its adversaries about what it is going to do. Jim Lilley, our great ambassador to Beijing during the Tiananmen Massacre, actually said that China always telegraphs its punches. At this moment, China is telegraphing a punch. That hostility, unfortunately, is not something we can do very much about. The Chinese Communist regime inherently idealizes struggle, and it demands that others show subservience to it. The second reason war is coming is that America's deterrence of China is breaking down. That is evident from what the Chinese are saying. In March of 2021, China sent its top two diplomats, Yang Jiechi and Wang Yi, to Anchorage to meet our top officials, Secretary of State Antony Blinken and National Security Advisor Jake Sullivan. Yang, in chilling words, said the US could no longer talk to China "from a position of strength." We saw the same theme during the fall of Kabul. China then was saying, "Look, those Americans, they can't deal with the insurgent Taliban. How can they hope to counter us magnificent Chinese?" Global Times actually came out with a piece referring to Americans: "They can't win wars anymore." We also saw propaganda at that same time directed at Taiwan. Global Times was saying, again, in an editorial, an important signal of official Chinese thinking, "When we decide to invade, Taiwan will fall within hours and the US will not come to help." It is probably no coincidence that this propaganda came at the time of incursions into Taiwan's air-defense identification zone. We need to be concerned with more than just the intensity and with the frequency of these flights, however. We have to be concerned that China was sending H‑6K bombers; they are nuclear‑capable. Something is wrong. Global Times recently came out with an editorial with the title, "Time to warn Taiwan secessionists and their fomenters: war is real." Beijing is at this moment saying things heard before history's great conflicts. The Chinese regime right now seems to be feeling incredibly arrogant. We heard this on November 28th in 2020, when Di Dongsheng, an academic in Beijing, gave a lecture live-streamed to China. Di showed the arrogance of the Chinese elite. More importantly, he was showing that the Chinese elite no longer wanted to hide how they felt. Di, for instance, openly stated that China could determine outcomes at the highest levels of the American political system. Di's message was that with cash, China can do anything it wants, and that all Americans would take cash. He mentioned two words in this regard: Hunter Biden. Unfortunately, President Joe Biden is reinforcing this notion. China, for instance, has so far killed nearly one million Americans with a disease that it deliberately spread beyond its borders. Yet, what happened? Nothing. We know that China was able to spread this disease with its close relationship with the World Health Organization. President Trump, in July of 2020, took us out of the WHO. What did Biden do? In his first hours in office, on January 20th, 2021, he put us back into the WHO. In February, he had a two‑hour phone call with Xi Jinping. By Biden's own admission, he didn't raise the issue of the origins of COVID‑19 even once. If you are Xi Jinping, after you put down the receiver, your first thought is, "I just got away with killing hundreds of thousands of Americans." Then there's somebody named John Kerry. Our republic is not safe when John Kerry carries a diplomatic passport, as he now does. He is willing to make almost any deal to get China to sign an enhanced climate arrangement. Kerry gave a revealing interview to David Westin of Bloomberg on September 22, 2021. Westin asked him, "What is the process by which one trades off climate against human rights?" Climate against human rights? Kerry came back and said, "Well, life is always full of tough choices in the relationship between nations." Tough choices? We Americans need to ask, "What is Kerry willing to give up to get his climate deal?" Democracies tend to deal with each other in the way that Kerry says. If we are nice to a democracy, that will lead to warm relations; warm relations will lead to deals, long‑standing ties. Kerry thinks that the Chinese communists think that way. Unfortunately, they do not. We know this because Kerry's successor as Secretary of State, Hillary Clinton, in February 2009, said in public, "I'm not going to press the Chinese on human rights because I've got bigger fish to fry." She then went to Beijing a day after saying that and got no cooperation from the Chinese. Even worse, just weeks after that, China felt so bold that it attacked an unarmed US Navy reconnaissance vessel in the South China Sea. The attack was so serious that it constituted an act of war. The Chinese simply do not think the way that Kerry believes they do. All of this, when you put it together, means that the risk of war is much higher than we tend to think. Conflict with today's aggressor is going to be more destructive than it was in the 1930s. We have news that China is building something like 345 missile silos in three locations: in Gansu, Xinjiang, and in Inner Mongolia. These silos are clearly built to accommodate the DF‑41. The DF‑41 has a range of about 9,300 miles, which means that it can reach any part of the United States. The DF‑41 carries 10 warheads. This means that China could, in about two years, as some experts think, have a bigger arsenal than ours. China has built decoy silos before. We are not sure they are going to put all 345 missiles into these facilities, but we have to assume the worst because Chinese leaders and Chinese generals, on occasion, unprovoked, have made threats to nuke American cities. This, of course, calls into question their official no‑first‑use policy, and also a lot of other things. China will not talk to us about arms control. We have to be concerned that China and Russia, which already are coordinating their military activities, would gang up against us with their arsenals. In July, 2021 China tested a hypersonic glide warhead, which circled the world. This signals China intends to violate the Outer Space Treaty, to which China is a party. It also shows that in hypersonic technology, which was developed by Americans, China is now at least a decade ahead of us in fielding a weapon. Why is China doing all this now? The country is coming apart at the seams. There is, for instance, a debt crisis. Evergrande and other property developers have started to default. It is more than just a crisis of companies. China is basically now having its 2008. Even more important than that, they have an economy that is stumbling and a food crisis that is worsening year to year. They know their environment is exhausted. Of course, they also are suffering from a continuing COVID‑19 epidemic. To make matters worse, all of this is occurring while China is on the edge of the steepest demographic decline in history in the absence of war or disease. Two Chinese demographers recently stated that China's population will probably halve in 45 years. If you run out those projections, it means that by the end of the century, China will be about a third of its current size, basically about the same number of people as the United States. These developments are roiling the political system. Xi Jinping is being blamed for these debacles. We know he has a low threshold of risk. Xi now has all the incentive in the world to deflect popular and regime discontent by lashing out. In 1966, Mao Zedong, the founder of the People's Republic, was sidelined in Beijing. What did he do? He started the Cultural Revolution. He tried to use the Chinese people against his political enemies. That created a decade of chaos. Xi Jinping is trying to do the same thing with his "common prosperity" program. The difference is that Mao did not have the means to plunge the world into war. Xi, with his shiny new military, clearly does have that ability. So here is a 1930s scenario to consider. The next time China starts a conflict, whether accidentally or on purpose, we could see that China's friends -- Russia, North Korea, Iran, Pakistan -- either in coordination with China or just taking advantage of the situation, move against their enemies. That would be Ukraine in the case of Russia, South Korea in the case of North Korea, Israel in the case of Iran, India in the case of Pakistan, and Morocco in the case of Algeria. We could see crises at both ends of the European landmass and in Africa at the same time. This is how world wars start. *  *  * Question: Why do you believe China attacked the world with coronavirus? Chang: I believe that SARS‑CoV‑2, the pathogen that causes COVID‑19, is not natural. There are, for example, unnatural arrangements of amino acids, like the double‑CGG sequence, that do not occur in nature. We do not have a hundred percent assurance on where this pathogen came from. We do, however, have a hundred percent assurance on something else: that for about five weeks, maybe even five months, Chinese leaders knew that this disease was highly transmissible, from one human to the next, but they told the world that it was not. At the same time as they were locking down their own country ‑‑ Xi Jinping by locking down was indicating that he thought this was an effective way of stopping the disease -- he was pressuring other countries not to impose travel restrictions and quarantines on arrivals from China. It was those arrivals from China that turned what should have been an epidemic confined to the central part of China, into a global pandemic. As of today, more than eight million people have died outside China. What happened? No one imposed costs on China. For at least a half‑decade, maybe a little bit longer, Chinese military researchers have been openly writing about a new type of biological warfare. This was, for instance, in the 2017 edition of "The Science of Military Strategy," the authoritative publication of China's National Defense University. They talk about a new type of biological warfare of "specific ethnic genetic attacks." In other words, pathogens that will leave the Chinese immune but sicken and kill everybody else, which means that the next disease from China can be a civilization killer. Remember, Xi Jinping must be thinking, "I just got away with killing eight million people. Why wouldn't I unleash a biological attack on the United States? Look what the virus has done not only to kill Americans but also to divide American society." A lot of military analysts talk about how the first seconds of a war with China are going to be fought in outer space. They are going to blind our satellites, take them down, do all sorts of stuff. Those statements are wrong. The first day of war against the United States occurs about six months earlier, when they release pathogens in the United States. Then we are going to have that day in space. The war starts here, with a pathogen ‑‑ a virus, a microbe, a bug of some kind. That is where it begins. Question: You mentioned 1939. Taiwan is the Poland of today. We get mixed signals: Biden invites the Taiwanese foreign minister to his inauguration, but then we hear Ned Price, his State Department spokesman, say that America will always respect the One‑China policy. Meaning, we're sidelining defending Taiwan? Chang: The One‑China policy is something many people misunderstand. Probably because Beijing uses propaganda to try to fuzzy up the issue. China has a One‑China principle: that Taiwan is part of the People's Republic of China, full stop. We have a One‑China policy, which is different. We recognize Beijing as the legitimate government of China. We also say that the status of Taiwan is unresolved. Then, the third part of our One‑China policy is that the resolution of the status of Taiwan must be with the consent of people on both sides of the Strait. In other words, that is code for peace, a peaceful resolution. Our policies are defined by the One‑China policy, the Three Communiques, Reagan's Six Assurances, and the Taiwan Relations Act. Our policy is difficult for someone named Joe Biden to articulate, because he came back from a campaign trip to Michigan, and he was asked by a reporter about Taiwan, and Biden said, "Don't worry about this. We got it covered. I had a phone call with Xi Jinping and he agreed to abide by the Taiwan agreement." In official US discourse, there is no such thing as a "Taiwan agreement." Some reporter then asked Ned Price what did Biden mean by the Taiwan agreement. Ned Price said, "The Taiwan agreement means the Three Communiques the Six Assurances, the Taiwan Relations Act, and the One‑China policy." Ned Price could not have been telling the truth because Xi Jinping did not agree to America's position on Taiwan. That is clear. There is complete fuzziness or outright lying in the Biden administration about this. Biden's policies on Taiwan are not horrible, but they are also not appropriate for this time. decades, we have had this policy of "strategic ambiguity," where we do not tell either side what we would do in the face of imminent conflict. That worked in a benign period. We are no longer in a benign period. We are in one of the most dangerous periods in history. We need a policy of "strategic clarity," where we tell China that we will defend Taiwan. We also say we will extend a mutual defense treaty to Taiwan if it wants it, and we will put American troops on the island as a tripwire. Question: You think he is not saying that because he has no intention of actually doing it, so in a way, he is telling the truth? Chang: The mind of Biden is difficult to understand. We do not know what the administration would do. We have never known, after Allen Dulles, what any administration would do, with regard to Taiwan. We knew what Dulles would have done. We have got to be really concerned because there are voices in the administration that would give Taiwan, and give other parts of the world, to China. It would probably start with John Kerry; that is only a guess. Question: You mentioned earlier the growing Chinese economic problems. Would you use taking action on the enormous trade deficits we run with China to contribute to that problem? Chang: Yes, we should absolutely do that. Go back to a day which, in my mind, lives in infamy, which is January 15th, 2020, when President Trump signed the Phase One trade deal, which I think was a mistake. In that Phase One trade deal, it was very easy for China to comply, because there were specific targets that China had to meet in buying US goods and services. This was "managed trade." China has not met its obligations. As of a few months ago, China had met about 62% of its commitments. That means, they have dishonored this deal in a material and significant way. If nothing else, China has failed to meet its Phase One trade deal commitments. We should be increasing the tariffs that President Trump imposed under Section 301 of the Trade Act of 1974. Remember, those tariffs are meant to be a remedy for the theft of US intellectual property. China has continued to steal US IP. As matter of fact, it has gotten worse: for instance, these Chinese anti‑lawsuit injunctions, which they have started to institute. We need to do something: China steals somewhere between $300 to $600 billion worth of US intellectual property each year. That is a grievous wound on the US economy, it is a grievous wound on our society in general. We need to do something about it. Question: As a follow‑up on that, Japan commenced World War II because of the tariffs Roosevelt was strapping on oil imports into Japan, do you think that might well have the same effect on China, where we do begin to impose stiffer tariffs on American imports? Chang: That is a really important question, to which nobody has an answer. I do not think that China would start a war over tariffs. Let me answer this question in a different way. We are Americans. We naturally assume that there are solutions, and good solutions, to every problem. After three decades of truly misguided China policy, there are no good solutions. There are no solutions that are "undangerous." Every solution, going forward, carries great risk. The current trend of policy is unsustainable. There will be no American republic if we continue to do what we are currently doing and if we continue to allow China to do what it does. I do not think that enforcing a trade deal will start World War III. The point is, we have no choice right now. First, I don't think the Chinese were ever going to honor the Phase One agreement . This was not a deal where there were some fuzzy requirements. This deal was very clear: China buys these amounts of agricultural products by such and such date, China buys so many manufactured products by such and such date. This was not rocket science. China purposefully decided not to honor it. There are also other issues regarding the trade deal do not think that we should be trying to foster integration of Wall Street into China's markets, which is what the Phase One deal also contemplated. Goldman Sachs ran away like a bandit on that. There are lot of objections to it. I do not think we should be trading with China, for a lot of reasons. The Phase One trade deal, in my mind, was a great mistake. Do not take it from me, just look at their failure to comply with very simple, easy‑to‑comply-with requirements. It was a mistake. Question: Concerning cybersecurity, as we saw in the recent departure of a Pentagon official, ringing the alarm on how we are completely vulnerable to China's cyberattacks. From your perspective, what would an attack look like on China that would hurt them? What particular institutions would be the most vulnerable? Is it exposing their secrets? Is it something on their financial system? Is it something on their medical system or critical infrastructure? What does the best way look like to damage them? Also, regarding what you mentioned about Afghanistan, we know that China has been making inroads into Pakistan as a check on American hegemony in relationships with India and Afghanistan. Now that the Afghanistan domino is down, what do you see in the future for Pakistan's nuclear capability, in conjunction with Chinese backing, to move ever further westward towards Afghanistan, and endangering Middle East security? Chang: Right now, India has been disheartened by what happened, because India was one of the main backers of the Afghan government. What we did in New Delhi was delegitimize our friends, so that now the pro‑Russian, the pro‑Chinese elements in the Indian national security establishment are basically setting the tone. This is terrible. What has happened, though, in Pakistan itself, is not an unmitigated disaster for us, because China has suffered blowback there. There is an Afghan Taliban, and there is a Pakistani Taliban. They have diametrically‑opposed policies on China. The Afghan Taliban is an ally of China; the Pakistani Taliban kill Chinese. They do that because they want to destabilize Pakistan's capital, Islamabad. Beijing supports Islamabad. The calculation on part of the Pakistani Taliban is, "We kill Chinese, we destabilize Islamabad, we then get to set up the caliphate in Pakistan." What has happened is, with this incredible success of the Afghan Taliban, that the Pakistani Taliban has been re‑energized -- not good news for China. China has something called the China‑Pakistan Economic Corridor, part of their Belt and Road Initiative. Ultimately that is going to be something like $62 billion of investment into Pakistani roads, airports, electric power plants, utilities, all the rest of it. I am very happy that China is in Pakistan, because they are now dealing with a situation that they have no solutions to. It's like Winston Churchill on Italy, "It's now your turn." We should never have had good relations with Pakistan. That was always a short‑term compromise that, even in the short term, undermined American interests. The point is that China is now having troubles in Pakistan because of their success in Afghanistan. Pakistan is important to China for a number of reasons. One of them is, they want it as an outlet to the Indian Ocean that bypasses the Malacca Strait -- a choke point that the US Navy ‑‑ in their view ‑‑ could easily close off, which is correct. They want to bypass that, but their port in Gwadar is a failure in many respects. Gwadar is in Pakistan's Baluchistan. The Baluchs are one of the most oppressed minorities on earth. They have now taken to violence against the Chinese, and they have been effective. Pakistan is a failure for China. The best response would be if we hit them with everything at once because China right now is weak. If we were going to pick the number one thing to do, I would think trade. Trade is really what they need right now. Their economy is stalling. There are three parts to the Chinese economy, as there are to all economies: consumption, investment, and net exports. Their consumption right now is extremely weak from indicators that we have. The question is can they invest? China now has a debt crisis, so they are not going to invest their way out of this crisis, which means the only way they can save their economy is net exports. We should stop buying their stuff. We have extraordinary supply chain disruptions right now. It should be pretty easy for us to make the case that we must become self‑sufficient on a number of items. Hit them on trade. Hit them on investment, publicize the bank account details of Chinese leaders. All these things that we do, we do it all at the same time. We can maybe get rid of these guys. Question: In the Solomon Islands, they published China's under-the-table payments to political figures. Should we do the same thing with China's leaders? Chang: Yes. There is now a contest for the Solomon Islands, which includes Guadalcanal. China has bought the political establishment in the Solomon Islands, except for one brave man named David Suidani. Recently, somebody got the bright idea of publishing all of the specific payments that Beijing has made to Solomon Islands politicians. This was really good news. We should be doing this with payments to American politicians, we should be doing this across the board. Why don't we publish their payments to politicians around the world? Let's expose these guys, let's go after them. Let's root out Chinese influence, because they are subverting our political system. Similarly, we should also be publishing the bank account details of all these Chinese leaders, because they are corrupt as hell. Question: Could you comment, please, on what you think is the nature of the personal relationships between Hunter Biden, his father, and Chinese financial institutions. How has it, if at all, affected American foreign policy towards China, and how will it affect that policy? Chang: There are two things here. There are the financial ties. Hunter Biden has connections with Chinese institutions, which you cannot explain in the absence of corruption. For instance, he has a relationship with Bohai Harvest Partners, BHR. China puts a lot of money into the care of foreign investment managers. The two billion, or whatever the number is, is not that large, but they only put money with people who have a track record in managing investments. Hunter Biden only has a track record of being the son of Joe Biden. There are three investigations of Hunter Biden right now. There is the Wilmington US Attorney's Office, the FBI -- I don't place very much hope in either of these – but the third one might actually bear some fruit: the IRS investigation of Hunter Biden. Let us say, for the moment, that Biden is able to corrupt all three of these investigations. Yet money always leaves a trail. We are going to find out one way or another. Peter Schweizer, for instance, is working on a book on the Biden cash. Eventually, we are going to know about that. What worries me is not so much the money trail -- and of course, there's the art sales, a subject in itself, because we will find out. What worries me is that Hunter Biden, by his own admission, is a troubled individual. He has been to China a number of times. He has probably committed some embarrassing act there, which means that the Ministry of State Security has audio and video recordings of this. Those are the things that can be used for blackmail. We Americans would never know about it, because blackmail does not necessarily leave a trail. This is what we should be most concerned about. Biden has now had two long phone calls with Xi Jinping. The February call, plus also one a few months ago. We do not know what was said. I would be very worried that when Xi Jinping wants to say something, there will be a phone call to Biden, and it would be Xi doing the talking without note takers. Question: Please tell us about the China desk over the 30 years, the influence of the bureaucracy on politics; what can they affect? Chang: I do not agree with our China policy establishment in Washington, in general, and specifically the State Department and NSC. This a complicated issue. First, there is this notion after the end of the Cold War, that the nature of governments did not matter. You could trade with them, you could strengthen them, and it would not have national security implications. That was wrong for a number of reasons, as we are now seeing. What bothers me is that, although their assumptions about China have demonstrably been proven wrong, American policymakers still continue with the same policies. There is, in some people's mind, an unbreakable view that we have to cooperate with China. You hear this from Blinken all the time: "We've got to cooperate where we can." It is this formulation which is tired, and which has not produced the types of policies that are necessary to defend our republic. That is the unfortunate thing. This is what people learn in international relations school when they go to Georgetown, and they become totally stupid. We Americans should be upset because we have a political class that is not defending us. They are not defending us because they have these notions of China. George Kennan understood the nature of the Soviet Union. I do not understand why we cannot understand the true nature of the Chinese regime. Part of it is because we have Wall Street, we have Walmart, and they carry China's water. There are more of us than there are of them in this country. We have to exercise our vote to make sure that we implement China policies that actually protect us. Policies that protect us are going to be drastic and they will be extreme, but absolutely, we have now dug ourselves into such a hole after three decades of truly misguided views on China, that I don't know what else to say. This is not some partisan complaint. Liberals and conservatives, Republicans and Democrats, all have truly misguided China policies. I do not know what it takes to break this view, except maybe for the deaths of American servicemen and women. Question: Is the big obstacle American businesses which, in donations to Biden, are the ones stopping decoupling of commerce, and saying, "Do not have war; we would rather earn money"? Chang: It is. You have, for instance, Nike. There are a number of different companies, but Nike comes to mind right now, because they love to lecture us about racism. For years they were operating a factory in Qingdao, in the northeastern part of China, that resembled a concentration camp. The laborers were Uighur and Kazakh women, brought there on cattle cars and forced to work. This factory, technically, was operated by a South Korean sub‑contractor, but that contractor had a three‑decade relationship with Nike. Nike had to know what was going on. This was forced labor, perhaps even slave labor. Clearly, Nike and Apple and other companies are now, at this very moment, trying to prevent Congress from enacting toughened rules on the importation of forced‑labor products into our country. One of the good things Trump did was, towards the end of his four years, he started to vigorously enforce the statutes that are already on the books, about products that are made with forced and slave labor. Biden, to his credit, has continued tougher enforcement. Right now, the big struggle is not the enforcement, but enhancing those rules. Apple and all of these companies are now very much trying to prevent amendment of those laws. It's business, but it's also immoral. Question: It is not just big Wall Street firms. There are companies that print the Bible. Most Bibles are now printed in China. When President Trump imposed the tariffs, a lot of the Bible printers who depended on China actually went to Trump and said, "You cannot put those tariffs in because then the cost of Bibles will go up." Chang: Most everyone lobbies for China. We have to take away their incentive to do so. Question: What are the chances that China's going to invade Taiwan? Chang: There is no clear answer. There are a number of factors that promote stability. One of them is that, for China to invade Taiwan, Xi Jinping has to give some general or admiral basically total control over the Chinese military. That makes this flag officer the most powerful person in China. Xi is not about to do that. Moreover, the Chinese regime is even more casualty‑adverse than we are. Even if Beijing thinks it can take Taiwan by force, it is probably not going to invade because it knows an invasion would be unpopular with most people in China. It is not going to risk hundreds of thousands of casualties that would result from an invasion. The reason we have to be concerned is because it is not just a question of Xi Jinping waking up one morning and saying, "I want to invade Taiwan." The danger is the risk of accidental contact, in the skies or on the seas, around Taiwan. We know that China has been engaging in hostile conduct, and this is not just the incursions into Taiwan's air-defense identification zone. There are also dangerous intercepts of the US Navy and the US Air Force in the global commons. One of those accidents could spiral out of control. We saw this on April 1st, 2001, with the EP‑3, where a Chinese jet clipped the wing of that slow‑moving propeller plane of the US Navy. The only reason we got through it was that George W. Bush, to his eternal shame, paid China a sum that was essentially a ransom. He allowed our crew to be held for 11 days. He allowed the Chinese to strip that plane. This was wrong. This was the worst incident in US diplomatic history, but Bush's craven response did get us through it. Unfortunately, by getting through it we taught the Chinese that they can without cost engage in these dangerous maneuvers of intercepting our planes and our ships. That is the problem: because as we have taught the Chinese to be more aggressive, they have been. One of these incidents will go wrong. The law of averages says that. Then we have to really worry. Question: You don't think Xi thinks, "Oh well, we can sacrifice a few million Chinese"? Chang: On the night of June 15th, 2020, there was a clash between Chinese and Indian soldiers in Ladakh, in the Galwan Valley. That was a Chinese sneak attack on Indian-controlled territory. That night, 20 Indian soldiers were killed. China did not admit to any casualties. The Indians were saying that they killed about 45 Chinese soldiers that night. Remember, this was June 15th of 2020. It took until February of 2021 for China to admit that four Chinese soldiers died. TASS, the Russian news agency, recently issued a story reporting that 45 Chinese soldiers actually died that night. This incident shows you how risk‑averse and casualty‑averse the Chinese Communist Party is. They are willing to intimidate, they are willing to do all sorts of things. They are, however, loath to fight sustained engagements. Remember, that the number one goal of Chinese foreign policy is not to take over Taiwan. The number one goal of Chinese foreign policy is to preserve Communist Party rule. If the Communist Party feels that the Chinese people are not on board with an invasion of Taiwan, they will not do it even if they think they will be successful. Right now, the Chinese people are not in any mood for a full‑scale invasion of Taiwan. On the other hand, Xi Jinping has a very low threshold of risk. He took a consensual political system where no Chinese leader got too much blame or too much credit, because everybody shared in decisions, and Xi took power from everybody, which means, he ended up with full accountability, which means -- he is now fully responsible. In 2017, when everything was going China's way, this was great for Xi Jinping because he got all the credit. Now in 2021, where things are not going China's way, he is getting all the blame. The other thing, is that Xi has raised the cost of losing a political struggle in China. In the Deng Xiaoping era, Deng reduced the cost of losing a struggle. In the Maoist era, if you lost a struggle, you potentially lost your life. In Deng's era, if you lost a struggle, you got a nice house, a comfortable life. Xi Jinping has reversed that. Now the cost of losing a political struggle in China is very high. So there is now a combination of these two developments. Xi has full accountability. He knows that if he is thrown out of power, he loses not just power. He loses his freedom, his assets, potentially his life. If he has nothing to lose, however, it means that he can start a war, either "accidentally" or on purpose. He could be thinking, "I'm dying anyway, so why don't I just roll the dice and see if I can get out of this?" That is the reason why this moment is so exceedingly risky. When you look at the internal dynamics inside China right now, we are dealing with a system in crisis. Question: China has a conference coming up in a year or so. What does Chairman Xi want to do to make sure he gets through that conference with triumph? Chang: The Communist Party has recently been holding its National Congresses once every five years. If the pattern follows -- and that is an if -- the 20th National Congress of the Communist Party will be held either October or November of next year. This is an important Congress, more so than most of them because Xi Jinping is looking for an unprecedented third term as general secretary of the Communist Party. If you go back six months ago, maybe a year, everyone was saying, "Oh, Xi Jinping. No problem. He's president for life. He's going to get his third term. He will get his fourth term. He will get his fifth term, as long as he lives. This guy is there forever." Right now, that assumption is no longer valid. We do not know what's going to happen because he is being blamed for everything. Remember, as we get close to the 20th National Congress, Xi Jinping knows he has to show "success." Showing "success" could very well mean killing some more Indians or killing Americans or killing Japanese or something. We just don't know what is going to happen. Prior to the National Congress, there is the sixth plenum of the 19th Congress. Who knows what is going to happen there. The Communist Party calendar, as you point out, does dictate the way Xi Jinping interacts with the world. Question: Going back to the wing-clip incident, what should Bush have done? Chang: What Bush should have done is immediately demand the return of that plane. What he should have done was to impose trade sanctions, investment sanctions, whatever, to get our plane back. We were fortunate, in the sense that our aviators were returned, but they were returned in a way that has made relations with China worse, because we taught the Chinese regime to be more aggressive and more belligerent. We created the problems of today and of tomorrow. I would have imposed sanction after sanction after sanction, and just demand that they return the plane and the pilots. Remember, that at some point, it was in China's interests to return our aviators. The costs would have been too high for the Chinese to keep them. We did not use that leverage on them. While we are on this topic, we should have made it clear to the Chinese leadership that they cannot kill Americans without cost. Hundreds of thousands Americans have been killed by a disease that China deliberately spread. In one year, from 2020 to 2021, nearly 80,000 Americans died from fentanyl, which China has purposefully, as a matter of state and Communist Party policy -- sold to Americans. China is killing us. We have to do something different. I'm not saying that we have good solutions; we don't. But we have to change course. Question: Biden is continuing this hostage thing with Huawei, returning the CFO of Huawei in exchange for two Canadians. Have we taught the Chinese that they can grab more hostages? Chang: President Trump was right to seek the extradition of Meng Wanzhou, the chief financial officer of Huawei Technologies. Biden, in a deal, released her. She did not even have to plead guilty to any Federal crime. She signed a statement, which I hope we'll be able to use against Huawei. As soon as Meng was released, China released the "two Michaels," the two Canadians who were grabbed within days of our seeking extradition of Meng Wanzhou. In other words, the two Michaels were hostages. We have taught China that any time that we try to enforce our own laws, they can just grab Americans. They have grabbed Americans as hostages before, but this case is high profile. They grabbed Americans, and then they grabbed Canadians, and they got away with it. They are going to do it again. We are creating the incentives for Beijing to act even more dangerously and lawlessly and criminally in the future. This has to stop. Question: On the off-chance that the current leader does not maintain his position, what are your thoughts on the leaders that we should keep an eye on? Chang: There is no one who stands out among the members of the Politburo Standing Committee. That is purposeful. Xi Jinping has made sure that there is nobody who can be considered a successor; that is the last thing he wants. If there is a change in leadership, the new leader probably will come from Jiang Zemin's Shanghai Gang faction. Jiang was China's leader before Hu Jintao, and Hu came before Xi Jinping. There is now a lot of factional infighting. Most of the reporting shows that Jiang has been trying to unseat Xi Jinping because Xi has been putting Jiang's allies in jail. Remember, the Communist Party is not a monolith. It has a lot of factions. Jiang's faction is not the only one. There is something called the Communist Youth League of Hu Jintao. It could, therefore, be anybody. Question: Double question: You did not talk about Hong Kong. Is Hong Kong lost forever to the Chinese Communist Party? Second question, if you could, what are the three policies that you would change right away? Chang: Hong Kong is not lost forever. In Hong Kong, there is an insurgency. We know from the history of insurgencies that they die away -- and they come back. We have seen this in Hong Kong. The big protests in Hong Kong, remember, 2003, 2014, 2019. In those interim periods, everyone said, "Oh, the protest movement is gone." It wasn't. China has been very effective with its national security law, but there is still resistance in Hong Kong. There is still a lot of fight there. It may not manifest itself for quite some time, but this struggle is not over, especially if the United States stands behind the people there. Biden, although he campaigned on helping Hong Kong, has done nothing. On the second question, I would close China's four remaining consulates. I would also strip the Chinese embassy down to the ambassador and his personal staff. The thousands who are in Washington, DC, they would be out. I would also raise tariffs to 3,600%, or whatever. This is a good time to do it. We have supply chain disruptions. We are not getting products from China anyway. We can actually start to do this sort of stuff. The third thing, I would do what Pompeo did, just hammer those guys all the time verbally. People may think, "Those are just words." For communists, words are really important, because they are an insecure regime where propaganda is absolutely critical. I would be going after the Communists on human rights, I would be going after them on occupying the South China Sea, on Taiwan, unrelentingly -- because I would want to show the world that the United States is no longer afraid of China. We have taught the world that we are afraid of dealing with the Chinese. State Department people, they are frightened. We need to say to the Chinese regime, like Dulles, "I'm not afraid of you. I'm going after you, and I'm going to win." Tyler Durden Sun, 05/01/2022 - 23:20.....»»

Category: blogSource: zerohedgeMay 2nd, 2022

Diesel For Dinner

Diesel For Dinner Via Doomberg Substack, “Governing a great nation is like cooking a small fish - too much handling will spoil it.” – Lao Tzu The words edible and eatable are often used interchangeably but embedded within their respective definitions is a distinction that makes an important difference. Edible means “safe to eat,” whereas eatable means “pleasant to eat.” A variant of the word eatable is delicious, commonly defined as “highly pleasant to eat.” Delicious certainly sounds more enticing than highly eatable, a phrase nobody would use to compliment an exquisite meal crafted by a professional chef. We find such linguistic nuances pleasing. Whether the balance of calories a person consumes is edible, eatable, or delicious depends on where they sit on Maslow’s hierarchy of needs, a concept we covered at length in a piece we wrote last July called Why Are Cows Sacred?  For those at the base of the pyramid, the struggle to consume enough edible food just to see another sunrise defines much of their existence. At the top of the pyramid sit those fortunate souls who can afford to cook delicious meals with fresh ingredients, eat at fine restaurants, or even hire a personal chef to tend to their every dietary indulgence. At the molecular level, the distinction between edible and inedible can be subtle. The rearrangement of a few atoms within an otherwise similar chemical structure can make the difference between satiation and a trip to the emergency room.  Prior to the advent of the modern chemical and energy industries, humanity leveraged animal and plant byproducts to create many of the functional materials used in daily life, making the tradeoff between food and other needs a more visceral one than it is today. The edible parts were eaten, and the inedible stuff – presumably identified through an unfortunate series of trial and error experiments – was converted into other useful things or burned to create energy. Armed with humanity’s mastery of chemistry, we can now rearrange atoms with astonishing specificity at an unimaginable scale, pushing billions of people further up Maslow’s hierarchy than they would otherwise be. In addition to using fossil fuels to create most of the materials that surround us, we leverage them to produce fertilizers, herbicides, fungicides, and other inputs into the farming process, boosting crop yields to levels once thought impossible. We also synthesize mountains of edible ingredients directly from oil and gas. Touring a modern food processing factory would seem almost indistinguishable from a specialty chemical plant, mostly because they aren’t all that different. While it makes perfect sense to leverage our bounty of fossil fuels and ability to manipulate them at the molecular level to increase global food abundance, going through the effort to grow food only to turn around and burn it for energy seems less than ideal. In a controversial piece we wrote in January titled “In Praise of Corn Ethanol,” we put forth a theory that the adoption of corn ethanol as a mandated additive to gasoline was a scheme to coverup one of the greatest environmental scandals of the past century: the use of tetraethyl lead as an anti-knock agent. While some readers interpreted our piece as supporting this policy – undoubtedly because of the title – our primary purpose was to highlight the ugly history that got us to the current situation, and how it was predominantly a dirty political compromise. In hindsight, “Why Corn Ethanol is a Thing” might have been a better title. No such compromise underpins the decision to use foodstuffs as replacements for diesel, a policy that will make the unfolding global food crisis substantially worse if it is not soon overturned. When a barrel of oil is refined, it is separated into various products using the different boiling points of its components. Gasoline boils at a lower temperature than diesel and represents about 43% of each barrel of oil. Diesel makes up approximately 27%, with the other 30% destined to become heating oil, jet fuel, asphalt, and other important materials. Because of its higher energy density per gallon and the efficiency of engines designed to use it, diesel is a desirable fuel, especially for long-haul trucking. Trucks at the pump | Getty Images Unfortunately for those near the bottom of Maslow’s pyramid, many cooking oils – liquid fat isolated from various crops used extensively in frying, baking, and other types of food preparation all over the world – have a molecular structure quite similar to that of diesel. It does not take much chemical magic to transform previously edible cooking oils into workable substitutes for the valuable fuel. Now that the environmental lobby has convinced government officials worldwide that “renewable carbon content” is prima facia a desirable thing – a fallacy that deserves its own Doomberg piece – various mandates exist to literally take food out of the mouths of the hungry and pump it into our trucks for burning. For the planet, and whatnot. The first commercially relevant incarnation of a diesel substitute derived from crops is a product known as biodiesel. Oils derived from palm, sunflower, soybean, rapeseed, and castor are used as inputs, to name a few, and they are reacted with methanol (derived from fossil fuels) in a chemical process known as transesterification. Transesterification generates a product with higher oxygen content than standard diesel. This presents some challenges, including poor low-temperature performance, increased microbial growth, corrosion of engine parts, and higher shipping costs (biodiesel cannot leverage existing pipelines that are used to transport regular diesel). Much like corn ethanol, biodiesel is blended with regular diesel at concentrations between 2-20% before being marketed. Despite these limitations, government mandates have motivated farmers the world over to redirect a sizable chunk of their crops from the grocery store to the gas station. Nearly all of the challenges with biodiesel have been overcome with the recent development of renewable diesel, a material synthesized by hydrotreating cooking oils. Here’s how the US Energy Information Agency (EIA) describes the differences (emphasis added throughout): “Renewable diesel is a biomass-based diesel fuel similar to biodiesel, but with important differences. Unlike biodiesel, renewable diesel is a hydrocarbon that is chemically equivalent to petroleum diesel and can be used as a drop-in biofuel that does not require blending with petroleum diesel for use… Because renewable diesel is a drop-in fuel, it meets ASTM D975 specification for petroleum diesel and can be seamlessly blended, transported, and even co-processed with petroleum diesel.” Image credit: iStockPhoto / Lori Hays To the truckers forced to meet renewable carbon content mandates, renewable diesel is a godsend. It requires no change on their part, is indistinguishable from regular diesel, and allows them to proudly proclaim their green bonafides. To the companies who produce it, renewable diesel is a government-mandated financial pot of gold. The US Environmental Protection Agency (EPA) issues valuable renewable identification numbers (RINs) to track compliance with various mandates and to stoke production. There’s also a national $1-per-gallon tax credit to further incentivize producers. While support at the federal level has been important, the real driver for renewable diesel adoption has been the State of California. Through its low-carbon fuel standards (LCFS) program, credits currently trading for $115 per carbon ton are being issued, and renewable diesel is now the largest source of incremental credits. This is before the real capacity to produce renewable diesel comes online. Where will all this renewable diesel come from? In the US, soybean oils are the main input, and it should come as no surprise that planting strategies are being quickly modified to produce more of it. This quote from an industry consultant frames the magnitude of the upcoming disruption well: “The dramatic development of the U.S. renewable diesel industry is similar to how ethanol changed the U.S. corn industry from 2007 to 2010, says Dan Basse, president of AgResource Company. But he believes renewable diesel could be more disruptive. ‘We are calling for 90.5 million soybean acres in 2022 versus this year’s 87 million, and that just gets us started in meeting renewable diesel demand,” he says. “Then we’d need to increase soybean acres by 5 million to 7 million each year. We have to top 120 million acres of soybeans to meet the growing demand for renewable diesel.’” With the force of the government’s thumb on the scale of demand compounding pre-existing inflationary pressures hitting farmers, the price of soybeans has soared to fresh all-time highs. At the time of this writing, soybeans trade for $17 per bushel, more than double the price seen just two years ago. Unless these policies are unwound, it is difficult to imagine a scenario where positive price momentum abates. In a piece we wrote last October called Starvation Diet, we warned that the unfolding energy crisis would trigger a global famine, a process that would be exacerbated by protectionism. Here’s a key passage: “We’ve written extensively about how the market for energy in Europe broke and how the ripple effects will snap through our delicate supply chains like a whip. When the supply of critical goods goes short, countries implement protectionist policies in a futile attempt to minimize the impact at home. A cascading series of retaliatory moves usually follows, leading to economic vapor lock. We are seeing that pattern play out now in agriculture.” Although we take no joy in being proven right in this regard, more evidence of our prescience emerged last week when Indonesia shocked the world by banning all exports of palm oil. Cooking oils can be substituted for each other and price pressures on one oil inevitably puts a bid under the others. Here’s how The Guardian describes the situation: “The price of edible oils such as soyoil, sunflower oil and rapeseed oil is expected to rise after Indonesia announced a surprise export palm oil ban, experts have warned. Major edible oils are already in short supply due to adverse weather and Russia’s invasion of Ukraine. The move by Indonesia to pause exports will place extra strain on cost-sensitive consumers in Asia and Africa hit by higher fuel and food prices.” The magnitude of this ban cannot be overstated. According to data from Statista, palm oil accounted for 35% of all cooking oil produced last year. Indonesia is responsible for a staggering 60% of global palm oil production. The blast waves emanating from this explosive move will be felt the world over, most acutely by those already on the brink that can least afford to react. Bluntly, people are going to starve. In the face of a global energy crisis, the war in Ukraine, food shortages, and rampant inflation, does it make sense to be redirecting so many acres of valuable cropland to make renewable diesel, a fuel we can easily and directly drill for domestically? Do our policymakers understand the interconnected nature of these markets, and how forcing a strong link between diesel and soybeans creates a tunnel through which the contagion of crisis in one market bleeds directly into the other? Imagine how grotesque this spectacle must seem to the most vulnerable among us. While they scramble to secure enough edible food to survive, our elite know-it-alls gorge themselves on the most delicious hors d'oeuvres the cocktail party circuit can provide. Through either shocking ignorance or callous indifference, they convince themselves they are saving the planet. Saving the planet for who, exactly? The poorest citizens on Earth? Nah. Let them eat diesel. *  *  * If you have enjoyed this or any of the 105 articles we’ve published in the last year, please hit the “Like” button and consider upgrading your subscription. New articles will be limited to paid subscribers after April 30th. Claim your spot in the Chicken Coop today! Tyler Durden Sun, 05/01/2022 - 14:00.....»»

Category: blogSource: zerohedgeMay 1st, 2022