Bernie Sanders to join striking workers in Battle Creek as political pressure on Kellogg increases

Norah Mulinda, Bloomberg
and Josh Funk, Associated Press

Rey Del Rio/Getty Images via Bloomberg
Kellogg's cereal plant workers demonstrate in front of the cereal plant in Battle Creek in October.

Sen. Bernie Sanders plans to rally with striking Kellogg Co. workers in Battle Creek on Friday, highlighting an issue that also has drawn the attention of President Joe Biden.

Kellogg is facing increasing political pressure to resume contract talks with its 1,400 cereal plant workers who walked out Oct. 5.

Bernie Sanders

Sanders, a former Democratic presidential candidate, heads to Michigan after Kellogg said last month it was planning to hire replacement workers "where appropriate."

"Kellogg's workers made the company billions during a pandemic by working 12-hour shifts, some for more than 100 days in a row," Sanders said in a tweet Tuesday. The company is "now choosing corporate greed over the workers they once called 'heroes'."

Last week, Biden said he was "troubled" by Kellogg's plan to replace the striking workers and urged the two sides to reach an agreement.

Meanwhile, Nebraska Gov. Pete Ricketts sent a letter to the company's CEO this week urging the company to return to the bargaining table with workers at its four plants nationwide, including one in his state.

Ricketts said in his letter that the Battle Creek-based company should recognize the contributions its workers have made during the pandemic by continuing to produce its well-known brands of cereal and try to retain them during this period when many companies are struggling to hire enough workers.

"Despite the challenges of the global pandemic, they showed up day after day to do their jobs so that across the country there was food on the shelves," said Ricketts, a Republican. "These workers helped Kellogg's increase sales and revenue (and grow net income by over 30 percent) from 2019 to 2020 — a time when many businesses endured losses due to the financial headwinds of the pandemic."

Michigan Gov. Gretchen Whitmer, a Democrat, has not publicly weighed in on the work stoppage.

Members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union overwhelmingly rejected a contract offer from the company last week that would have delivered 3 percent raises and preserved their current health benefits.

Union members have said they remain concerned about the company's two-tiered system of wages that has been a sticking point during contract talks. The company said its offer would have allowed all workers with at least four years of experience move up to the higher legacy pay level, but union officials said the plan wouldn't let other workers move up quickly enough. And the company proposed eliminating the current 30 percent cap on the number of workers at each plant who receive those lower wages.

Biden said in a statement Friday he believes Kellogg was undermining the collective bargaining process with its plan to hire permanent replacements for the striking workers.

"I am deeply troubled by reports of Kellogg's plans to permanently replace striking workers from the Bakery, Confectionery, Tobacco Workers and Grain Millers International during their ongoing collective bargaining negotiations," said Biden, the Democrat who has long been a strong supporter of unions. "Permanently replacing striking workers is an existential attack on the union and its members' jobs and livelihoods."

Throughout the strike, Kellogg has been trying to keep its plants operating with salaried employees and outside workers, but it said after the contract vote that it would move forward with plans to hire permanent replacements.

Kellogg spokeswoman Kris Bahner said the company believes its contract offers have been fair and it remains willing to negotiate with the union although no additional talks are scheduled at the moment. She said last week's offer would have improved workers' wages and benefits.

"We are very disappointed that it was ultimately rejected. We have an obligation to our customers and consumers to continue to provide the cereals that they know and love — as well as to the thousands of people we employ," Bahner said.

The strike includes four plants in Battle Creek; Omaha, Neb.; Lancaster, Pa.; and Memphis, Tenn., that make all of Kellogg's brands of cereal, including Rice Krispies and Apple Jacks.

The Kellogg’s strike is testing the union’s theory of a labor shortage

Michelle Cheng
Wed, December 15, 2021

Striking Kellogg workers picket outside a plant in Michigan

In a tight US labor market, unionized workers have been demanding more. But labor is perhaps starting to lose the upper hand.

Following the failure to reach a contract with its union, Kellogg’s said it is permanently replacing striking workers. Some 1,400 hourly employees, who are part of the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union, walked off the job across four cereal plants in Michigan, Nebraska, Pennsylvania, and Tennessee starting Oct. 5.

The rejected contract offer would have included a 3% wage hike for legacy employees and increases for newer hires. The company proposed eliminating the cap on the share of lower-tier workers, but some union employees were worried that would put downward pressure on veteran workers’ wages if lower-tier workers became a majority.

The food manufacturer has been on a hiring spree to replace the striking workers. The hourly rates for replacement workers posted on the Kellogg’s job board are $21.72 an hour for “general labor” and $34 to $37 for “skilled labor”, depending on the role. That’s comparable to the pay for the unionized legacy employees, who make on average $35.26 an hour, according to Kris Bahner, a company spokesperson.

The fact that the replacement wages are more or less the same as the previous pay suggests the labor market may not be as tight as union activists believe.

The unemployment rate in Battle Creek, Michigan is worse than the US average

In Battle Creek, Michigan, where Kellogg’s is headquartered, the labor situation has been challenging.

The unemployment rate in the city was 6% in October, which is higher than the national average of 4.6%, according to data from the US Bureau of Labor Statistics. The job opening rate, or the share of available jobs of all filled and unfilled positions, in the nondurable good industry—which includes Kellogg’s, one of the largest employers in the city—was 8%, higher than the national average of 6.9%. Meanwhile, the hourly earnings of all private-sector workers in Battle Creek was $26.22 in October, suggesting that Kellogg’s workers are highly compensated compared to the relative jobs in the area. That may boost the company’s confidence it will find workers to replace the ones striking, and undermine the union’s bargaining power.

“There’s a lot of potential labor supply for these jobs,” says Donald Grimes, a regional economic specialist at University of Michigan. “The idea that people are not going to take these replacement jobs is a bit inaccurate.”

Still, while the pay is high, it’s possible Kellogg’s is bluffing, Ruth Milkman, a professor at the City University of New York’s School of Labor and Urban Studies, wrote in an email. She said that while permanently replacing striking workers is both standard operating procedure and legal, recent strikes have not seen this outcome because it’s hard to find workers.

Labor resurgence?

From Nabisco to Amazon, the heightened labor activity in part stems from the pandemic, which has forced workers into more unsafe working conditions or less favorable schedules. Meanwhile, lower-wage workers, like those in the restaurant or retail industry, have been quitting at record rates, signaling that they feel confident they can find better jobs elsewhere—and can do so without a union.

But there are reasons to think that Kellogg’s union should have perhaps taken the deal.

The union may have had confidence its workers would not want to cross the picket line, but it’s not clear if that will be the case since the region’s unemployment rate is high and wages for Kellogg’s workers are better than the average job in the area. “I would just be a little bit careful if I was on the high end of the payscale if I was a union member,” says Grimes. “You could go overboard.”

And, despite most Americans supporting unions, union enrollment has been on a decline for decades. Just 10.8% of US employees are part of unions, according to the latest BLS data. Part of the reason for that is just how organizations have become more fragmented, according to Grimes. He adds, an increasingly larger share of jobs are in industries that have smaller firms, and it’s just harder to unionize smaller shops.

The bakery union still represents tens of thousands of workers at other companies, but the risk for striking workers is not just other workers filling their spots but also more investment in robots and automation to replace those workers, says Grimes. It’s possible that even if Kellogg’s union workers win this battle, they could still lose the war.

Ken Klippenstein discusses demands of striking Kellogg workers

12/15/2021

Investigative reporter Ken Klippenstein on Monday delved into the demands of striking Kellogg workers, as well as the company's reaction to their efforts.

In an interview on Hill TV's "Rising," Klippenstein, who has been covering the strike, said he is hearing frustration from workers that "management was getting its side of the story across" more successfully. He noted that the company is "calling in over 1,000" replacement workers and "looking to hire them permanently."

Last week, Kellogg North America President Chris Hood said the company would need to move forward its regular operations after having 19 negotiation sessions with striking workers.

About two months ago, roughly 1,440 Kellogg employees began striking when the company and their union, the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, had a contract dispute.

After the employees rejected a proposed five-year contract, Hood said that Kellogg had "no choice but to continue executing the next phase of our contingency plan including hiring replacement employees in positions vacated by striking workers."

During his interview, Klippenstein said such a decision is "something that's illegal in a lot of countries."

He said the employees "voted against a proposal from the company which would set up a two track pay system wherein new hires, new employees would not enjoy the same benefits which not only senior employees had enjoyed but junior ones in the past historically had been given."

"This strike really is an act of sympathy from the older workers who want there to be one pay system partly out of solidarity with the younger workers but also because they recognize that setting up a two track pay system has a sort of downward and depressing effect on their wages at the top too," he said.

VIDEO  Ken Klippenstein discusses demands of striking Kellogg workers | TheHill

Striking Kellogg’s Workers Vow to Hold Out for Better Contract, Urge Boycott of Company Products

Democracy Now!

Kellogg’s announced it would begin permanently replacing the 1,400 workers who have been on strike for over two months to demand fair wages and better working conditions. The move comes after an overwhelming majority of Kellogg’s workers rejected a new five-year agreement they say falls short of their demands and sparked widespread public backlash, including from President Biden. “We are fighting for equal pay and equal benefits regardless of what the company is putting out there, and trying to replace us is something that they’re using as a scare tactic,” says Kevin Bradshaw, a striking Kellogg’s worker and president of Local 252G in Memphis, Tennessee. #DemocracyNow Democracy Now! is an independent global news hour that airs on nearly 1,400 TV and radio stations Monday through Friday. Watch our livestream 8-9AM ET: https://democracynow.org

 

What workers are striking against: A global profile of the Kellogg Company

Tom Hall
WSWS.ORG

“The pandemic presented us with a sampling event like none other and we saw increases in household penetration that outpaced most of our categories...” This is how Kellogg’s CEO Steve Cahillane summed up the company’s performance during 2020, when widespread lockdowns drove demand for packaged foods as millions sheltered in their own homes. Net income for the breakfast cereal giant increased 30 percent to $1.25 billion, and revenue jumped slightly to $13.77 billion.

This rosy description of the coronavirus pandemic, which has killed 800,000 in the US alone, is an example of the cold logic driving forward the company’s attempts to smash the two-month strike by 1,400 cereal workers in the United States. It responded to their overwhelming rejection of a concessions contract brokered by the Bakery, Confectionery, Tobacco Workers and Grain Millers’ International Union (BCTGM)—that would have eliminated restrictions on the hiring of lower-paid, second tier workers—by declaring it would accelerate plans to fire and replace the strikers en masse. This autocratic move sparked outrage among workers around the country and the world.

Kellogg World Headquarters, Battle Creek, Michigan, USA (source: Wikpedia)

But this ruthless campaign is not the product of a company struggling for survival. Indeed, Kellogg’s remains as highly profitable as it has been in its more than 110-year history, and it has expanded its operations significantly in recent years, driven by ruthless cost-cutting. Indeed, breakfast cereal is among the most profitable segments in the food processing industry, which Yahoo! in turn recently rated the 14th most profitable industry in the world.

In 1995, when the International Committee initiated a campaign against Kellogg’s global job-cutting campaign at the time, we noted that Kellogg’s had already vastly increased its international scope. Of its global workforce of 15,000 at the time, 7,000 lived outside of the United States, and the company was expanding aggressively into emerging markets such as southeast Asia and the former Soviet Union. The company had made $705 million in net profits the year before, on worldwide sales of $6.6 billion.

At the same time, the company controlled 42 percent of the global cereal market and was locked in a bitter struggle over market share with rival General Mills.

Since then, both the company’s revenue and profits have roughly doubled. Kellogg’s earnings before interest and taxes (EBIT) were $1.6 billion, with an 11.6 percent profit margin. By comparison, Ford Motor Company reported of $1.63 billion on $115.8 billion in revenue, making the world’s fourth-largest auto manufacturer slightly more than one-tenth as profitable as Kellogg’s.

Dividends, meanwhile, have increased for decades, and now stand at $2.31 cents a share. At a share value of $63.37, this means Kellogg’s dividend yield is 3.5 percent, more than twice the average of the S&P 500. Even though many other large companies suspended dividend payments last year to conserve cash during the pandemic, Kellogg’s continued to dole out tens of millions of dollars to its shareholders.
A globalized food company

In spite of this, Kellogg’s market share in breakfast cereals has continuously eroded since the 1990s. Its US market share declined from 36 percent in 1995 to 30 percent in 2017. This is one factor in the company’s growing diversification into different segments of the prepared foods market. It has done this through a series of high-profile mergers and acquisitions that will continue to play a critical role in the company’s current “Deploy for Growth” strategy, which targets accelerated growth rates of between 1 and 3 percent.

Map of Kellogg's international factories (source: Kellogg's)

These mergers have expanded Kellogg’s from a cereal maker primarily centered around on the US market to a multinational producing a wide variety of packaged foods for different markets across the world. The most high profile of these acquisitions was arguably its $2.7 billion purchase of potato chip brand Pringles in 2012 from Proctor & Gamble. Most of its recent acquisitions, however, have focused on international brands and joint ventures.

These include:
A joint venture announced in 2012 with Singapore-based Wilmar International focused on the growing Chinese snack market;
Another joint ventured in 2015 with Tolaram Africa focused on West Africa. Kellogg’s later invested another $420 million into the venture;
The purchase of majority stakes in Egyptian food companies Bisco Misr and Mass Food Group, also in 2015;
A 2016 acquisition of a controlling stake in Brazilian food company Parati for $429 million

As a result of these moves, breakfast cereals occupy a substantially smaller portion of the company’s sales than it did less than 20 years ago. According to a 2018 slide show for investors, the proportion of cereal as a total of net sales declined from roughly two-thirds in 2005 to less than half in 2017, while snacks, a category that includes products such as Cheezits, Pringles, Town House crackers and Nutri-grain bars, doubled to 52 percent. The volume of products sold in the United States as a share of worldwide also declined in this period.

The company’s workforce has also doubled since 1995 to approximately 30,000 today. Currently, it operates 52 plants worldwide, half of which are located outside of North America. These include three plants in Russia, three in South America, three in Africa and two in India. Slightly less than half, or 25 of these plants, actually produce cereal, with others producing frozen foods and pre-packaged snacks. Only five of the company’s 26 factories in the US and Canada, four of which are involved in the current strike, produce cereal (the fifth, a new plant located in Belleville, Canada, is not a party to the same labor contract as the US plants).

The 1,400 workers on strike in the four US cereal plants comprise less than five percent of Kellogg’s the global workforce. This is, in part, the product of relentless job-cutting campaigns, such as the one in 1995 that eliminated 1,075 jobs worldwide. The cuts have reduced the workforce of these plants to a fraction of what they were a generation ago. The company’s flagship plant in Battle Creek, Michigan currently employs only 410 workers, less than a quarter of the 1,700 people who worked there in 1995.

Kellogg's plant in Querétaro, Mexico (source: Kellogg's)

Kellogg’s global workforce has been subjected to repeated job cuts. The most recent of these, “Project K” which was completed just before the pandemic in 2019, eliminated 7 percent of the global workforce, resulting in an estimated cost savings of $700 million per year, according to the company.

At the same time, Kellogg’s has demanded repeated concessions from workers’ wages and benefits, supposedly in the name of “saving” jobs. Before and during the 2015 contract talks, it locked out workers at the Memphis plant and threatened to close an unnamed US plant if workers did not accept the establishment of a new second tier of lower-paid “transitional” workers. The BCTGM obliged, pushing the contract through, but its repeated acceptance of concessions has not saved a single job.

In part to deflect attention from this record, the BCTGM is promoting a ferocious anti-Mexican campaign, calling on Kellogg’s and other companies to cease production in Mexico and blaming foreign workers for the loss of jobs and wages in the United States. This racist agitation has been taken up by the far-right news outlet Breitbart, which is a key media promoter of Trump’s ongoing attempts to build a fascist, extra-constitutional movement. In fact, Trump’s nationalist “America First” tirades, directed against Mexico in particular, had been the stock in trade of the American unions for decades before Trump emerged as a major political figure in the Republican Party.

In reality, Kellogg’s presence in Mexico goes back decades, and it was the first non-English speaking market that the company expanded into. The Kellogg’s plant in Queretaro, Mexico was built in 1951, making it decades older than the US plant in Lancaster, Pennsylvania.

While the company has, almost from the start, conducted business on a multinational scale, the international expansion of Kellogg’s and the global integration of capitalist production over the past four decades has rendered the national-based strategy of the BCTGM, and indeed the trade unions as a whole, hopelessly obsolete. It serves only to isolate the striking workers in the United States from their most powerful allies in Kellogg’s global workforce and the international working class as a whole, all of whom would be outraged to learn of the company’s strikebreaking efforts. Indeed, Kellogg’s is attempting to weather the strike by utilizing its international supply chains to compensate for lost production in the United States.

Kellogg's facility in Lagos, Nigeria (source: user on Nairaland messageboard)

But the international dimensions of Kellogg’s operations are a source of strength for workers, not weakness. Kellogg’s, like any other major international company, is extremely vulnerable to disruptions in its global supply chains and a global campaign among Kellogg’s workers to unite with workers in the US would have a powerful impact.

Workers in Mexico have repeatedly demonstrated their determination to oppose their exploitation. In January 2019, auto parts and electronics workers in Matamoros, just across the border from Brownsville, Texas revolted against the poverty wages and sweatshop conditions at the US and other foreign-owned maquiladoras. They staged a series of wildcat strikes in defiance of the company-controlled unions and marched to the border where they appealed to their class brothers and sisters in the US to join them.

In the summer and fall of 2019, workers at the General Motors factory in Silao, Mexico refused to work overtime during the strike by 45,000 GM workers in the US. For their courageous act of class solidarity, GM fired and blacklisted the leaders of the struggle. In response, rank-and-file workers in the US called for their reinstatement and donated money to support the victimized Mexican workers.

The American media, the BCTGM, the United Auto Workers and other US unions blacked out any information about these struggles in order to keep perpetuating the poisonous lie that Mexican and American workers are enemies.

Among striking Kellogg’s workers in the US there is enormous sympathy for their coworkers in Mexico and the developing world, whom they regard as a super-exploited “third tier” of workers.

Kellogg’s has an international strategy to pit workers against each other in a race to the bottom. To defeat this, workers need their own international strategy. That means rejecting the divide-and-conquer nationalism promoted by the BCTGM and reaching out to their class brothers and sisters around the world to defend the jobs, living standards and working conditions of all workers.

This requires taking the conduct of the strike out of the hands of the pro-company union by establishing a rank-and-file strike committee, independent of the BCTGM, to establish lines of communication and joint action by workers across Kellogg’s global empire.

CAPITALI$T CRI$I$; OVERPRODUCTION

About half of U.S. oil pipeline space is empty after boom time building spree


By Stephanie Kelly

© Reuters/Nick Oxford FILE PHOTO: Pipelines run to Enbridge Inc.'s crude oil storage tanks at their tank farm in Cushing

NEW YORK (Reuters) - About half of U.S. oil pipeline space is sitting unused, heating up competition for barrels in higher-output areas like the Permian Basin in Texas.

Overall U.S. pipeline capacity utilization is at around 50%, compared with a range of 60% to 70% headed into early 2020 before the coronavirus pandemic hit, according to consultancy Wood Mackenzie.

Pipelines overall are now half-full, as production, which surged to 13 million barrels per day in early 2020 to make the United States the top oil producer, has averaged just 11 million bpd in 2021.

Oil and gas shippers often find themselves building pipelines amid a production boom only to find there is too much capacity when downturns occur. Numerous pipelines were built in the Permian in Texas and New Mexico - the largest U.S. oilfield - to export locales while production surged between 2017 and 2020.

© Reuters/Nick Oxford FILE PHOTO: A sign built out of a pipeline that reads "pipeline crossroads of the world" welcomes visitors to town in Cushing   IT IS CROSSROADS OF NORTH AMERICAN OIL PRODUCTION

Some pipeline operators in areas like the Permian Basin have responded by cutting pre-pandemic shipping rates, as the U.S. oil industry has been slow to recover from the coronavirus outbreak.

Generally, basins that are overbuilt, like the Permian, have lower uncommitted shipping rates than before the pandemic, but basins with less pipeline capacity have managed to raise rates, because there are fewer shipping options, said Ryan Saxton, head of oil data at Wood Mackenzie.

During the pandemic, companies began offering discounted rates to committed shippers as an incentive, said Jesse Mercer, senior director of oil markets at Enverus. As production continues to return, companies are likely to wind down those offers, he said.

The best-performing pipeline in the Permian right now at around 94% utilization, is Phillips 66's Gray Oak Pipeline, Saxton said.

The uncommitted tariff rate to ship on Gray Oak is about $2.97 per barrel, he said, compared with the more than $4.00-per-barrel on the BridgeTex, another Permian pipeline.

In its third quarter earnings, Phillips 66 noted its midstream transportation pre-tax income rose $30 million from the second quarter, in part due to Gray Oak, one of the largest pipelines in the basin with a capacity of 900,000 bpd.

BridgeTex, a joint venture from Magellan Midstream Partners LP, is at around 70% utilization, Saxton said. The 440,000-bpd line delivers crude to Magellan's terminal in East Houston.

BridgeTex volumes in the third quarter 2021 fell to just over 315,000 bpd, about 5% below volumes in 2020 due to a decrease in uncommitted shipments in the quarter and unfavorable pricing differentials, Magellan said in its most recent earnings call. The company's crude transportation and terminals revenue decreased $38 million in the third quarter.

"The utilization of a pipeline directly impacts the performance of those midstream operators," Saxton said.

However, earnings are starting to recover from lower utilization, said Colton Bean, director of infrastructure research at Tudor, Pickering, Holt & Co.

North Dakota's Bakken production is lagging pre-pandemic levels, and Energy Transfer LP's Dakota Access Pipeline, which can carry about 570,000 bpd out of the region, is at about 77% of utilization, compared with nearly full utilization before the pandemic, Saxton said.

However, Dakota Access' uncommitted tariff rate is $6.64 per barrel, above the around $6.28 per barrel before the pandemic, Saxton said. There are fewer pipes out of the Bakken than in the Permian. Energy Transfer declined to comment for this article.

(Reporting by Stephanie Kelly; Editing by Marguerita Choy)

USELESS CONTRARIAN PARTY

Alberta's relaxed gathering restrictions will escalate Omicron risk, doctors warn

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Indoor gatherings now permitted to include

unvaccinated adults

KENNEY SAYS LET ZOMBIES COME OVER FOR XMAS

Wallis Snowdon · CBC News · Posted: Dec 15, 2021

Alberta is making changes to testing, booster shots and gathering restrictions as it braces for an increase in cases of the more transmissible Omicron variant of COVID-19. (Paul Chiasson/The Canadian Press)

Alberta's decision to permit unvaccinated adults to attend holiday gatherings will allow the Omicron variant to spread rapidly, say doctors on the front lines of the COVID-19 crisis.

"It's a big risk, and I think that it's potentially setting us up for a rapid rise in cases over the holidays like we saw about a year ago," Edmonton emergency physician Dr. Shazma Mithani said Wednesday.

"To me, there is no logical explanation as to why the province would start to allow people who are unvaccinated to gather indoors."

Earlier Wednesday, the province announced changes to gathering restrictions. Unvaccinated adults are now permitted to attend private indoor gatherings of up to 10 adults. 

• Unvaccinated adults can attend indoor holiday gatherings, Kenney says

Under the previous rule, people who were unvaccinated could not attend any private indoor gatherings. The new rules lift a restriction that limited indoor gatherings to people from two households.

The province also announced it will expand rapid testing while increasing the availability of vaccine booster shots.

WATCH | Alberta's chief medical officer of health discusses new rules:

"I cannot overstate the importance of having learned from that experience and the need to be extremely cautious as we learn more about the Omicron variant," says Dr. Deena Hinshaw, Alberta's chief medical officer of health, says the province. 2:49

Premier Jason Kenney defended the relaxed restrictions as a "reasonable, very modest change." 

He said the increased availability of rapid testing kits will allow more families to safely gather over the holidays, and that Alberta's vaccination rate means it is well-positioned to handle the variant.

As of Wednesday, 85 per cent of Albertans aged 12 and older have received at least two doses of vaccine. That equates to 72.3 per cent of the overall population.

Changes send wrong message, experts say

The province's approach demonstrates a failure of leadership in responding to the health crisis, said Dr. James Talbot, Alberta's former chief medical officer of health.

The changes send the wrong message about the dangers of COVID-19, especially with Omicron's ability to evade vaccines and spread rapidly, Talbot said.

It's not really the time to be making tweaks that suggest that this is over.- Dr. James Talbot

"You really want people to stay the course and protect themselves over the holidays. It's not really the time to be making tweaks that suggest that this is over." 

The province has not learned from its past mistakes, Talbot said.

"In July, they basically declared it the 'best summer ever' and now there are now 960 Albertans for which it was the last summer ever.

"We now have another variant out there and instead of holding the line or increasing the amount of protection we have, the message they are giving is that it's OK to let your guard down." 

• 20 more omicron cases reported as Alberta records 250 new COVID-19 cases, 8 new deaths

• THE LATEST
  Everything you need to know about COVID-19 in Alberta on Wednesday, Dec. 15

Dr. Joe Vipond, an emergency physician in Calgary, said the regulatory changes set the stage for a powerful fifth wave.

WATCH | Provinces sound the alarm over holiday plans as Omicron cases rise:

With cases of the Omicron variant confirmed in all 10 provinces, officials are rolling out restrictions, rapid tests and booster shots to try to curb its spread. But Alberta Premier Jason Kenney is loosening restrictions, saying residents may not follow new measures. 3:41

While increased rapid testing and vaccine boosters will be powerful tools in curbing the spread, cutting back on public health restrictions was ill-timed, Vipond said.

"At a time when we should be tightening restrictions, we're loosening them," he said.

We have not yet learned from our mistakes in this province.-Dr. Joe Vipond

The province should be considering proactive measures to clamp down against Omicron, he said.

"The way to deal with exponential growth is to act early and act hard, and that way you avoid having to put in those stringent restrictions later for longer," he said.

"We have not yet learned from our mistakes in this province." 

Dr. Lynora Saxinger, an infectious diseases specialist and associate professor at the University of Alberta, questioned whether rapid testing will be enough to protect Albertans who choose to gather.

• 'Now is not the time': Federal government warns against travel abroad as Omicron spreads

• Be 'ready to pivot' domestic holiday travel plans amid rapidly spreading Omicron variant, medical experts say

The tests are less reliable on people who are not showing symptoms, Saxinger said.

"I wouldn't bet the bank on just doing rapid tests and thinking that's enough to prevent transmission," she said. "I would always see the test as an added layer of protection, not replacing anything." 

'Make the selfless decision'

The number of Omicron cases in the province spiked Tuesday, with 60 cases now detected. 

Mithani expects that number to rise over the coming weeks. 

Rapid tests come with the risk of false negatives, she said, and variants pose an increased risk of breakthrough infections.

She said the unvaccinated should get immunized or accept the consequences of their choices.

"I would encourage them to, you know, make the selfless decision not to engage with other individuals throughout the holiday season, even though the rules allow them to." 

CRIMINAL CAPITALI$M

Column: Trump's latest deal could set a high water mark for investment scams


Michael Hiltzik
Tue, December 14, 2021

Donald Trump in 2019. (Associated Press)

For a while there, it seemed that the SPAC boom had run out its string. Then came Donald Trump.

Already confused?

Let's start with first principles. SPACs, or special purpose acquisition companies, are shell companies that collect funds from investors on the expectation that they'll find a private company to merge into within a given period of time, usually 24 months.

It is never a good idea to invest in a SPAC just because someone famous sponsors or invests in it or says it is a good investment.

Securities and Exchange Commission

The wrinkle is that the SPAC doesn't have a target in mind at the outset, so these are the blindest of blind pools.

The SPAC boom built through 2020 and through the first quarter of this year, peaking at some 300 deals in that quarter alone.

Many were associated with big names in sports and entertainment such as Shaquille O'Neal and Jay-Z, or political and business luminaries such as Paul Ryan and Sam Zell, the onetime owner of The Times.

By mid-year, the thrill appeared to be over. Since the end of the first quarter, only about 300 more SPACs have come to market, according to SPAC Research.

More saliently, investors have been pulling their money out of SPACs at an increasingly high rate. In the SPAC model, investors can bail, or "redeem" their investments, once a target has been identified. The average redemption rate in the latest quarter exceeded 50%, up from 10% at the start of the year. That's a sign that investors are growing more skeptical of their returns from SPAC mergers.

Enter Trump. On Oct. 20, a SPAC named Digital World Acquisition Corp. announced that it had found a merger target in Trump Media & Technology Group. Trump Media claims to be a business that aims to challenge what it calls the "tech monopoly" in media, which it asserts aims to silence conservative voices, like Trump's.

Despite Trump Media not having issued a discernible financial plan or explained how it intends to go about this task, interest in Digital World went stratospheric, with its shares soaring from about $10 (the standard IPO price for pre-merger SPACs), to $175 in the two days after the announcement.

Since then, Trump Media has missed a self-imposed deadline of November to launch a beta version of Truth Social, a social media platform that would supposedly be an alternative to Twitter (which has banned Trump). The world is still waiting. The problem may have been that a very early iteration of the site was compromised into oblivion by a tidal wave of trolls expressing anything but admiration for Trump.

On Dec. 6, Trump's company did disclose that it has hired a chief executive: Rep. Devin Nunes (R-Tulare), who will quit Congress to take the job, never mind that he has never run a media company before, but he has shown a sedulous devotion over the years to Trump.

Nunes hasn't explained his decision to leave Congress, though it's reasonable to assume that it has something to do with the prospect that his district will become more Democratic in the pending redistricting.

The Trump SPAC deal has attracted the attention of Sen. Elizabeth Warren (D-Mass.), who has devoted her career to outing financial phonies. In a Nov. 17 letter to Securities and Exchange Commission Chair Gary Gensler, Warren used the deal to underscore that SPACs are inadequately regulated.

The deal, Warren said, appears to be "a textbook example of a SPAC misleading shareholders and the public about materially important information."

She was referring to alleged undisclosed contacts between DWAC and Trump associates, which contradicted DWAC's consistent claims that it had not "initiated substantive discussions, directly or indirectly, with any business combination target." Under federal law, Warren observed, those discussions were required to be publicly disclosed.

Warren also expressed concern that "DWAC’s acquisition of Trump Media and Technology may reignite the market" for SPACs. That's troubling, she indicated, given signs that SPACs have a tendency to disadvantage small investors compared to promoters.

As it happens, the SPAC market has shown modest signs of life lately, starting around the time of the DWAC announcement about Trump.

Many investors who may have been enticed into Digital World by the magic of Trump's name, such as it is, may have already had their heads handed to them, as the shares have fallen from their peak of $175 to $50.49 at Monday's close.

That has reinforced the impression that SPACs are made to fatten the wallets of promoters and their insider friends at the expense of credulous small investors, especially when they have little going for them other than a celebrity name.

"These newer SPACs increasingly feel like an inside joke for the super-rich and a way for celebrities to monetize their reputations,” Jim Cramer, the stock trading guru at CNBC, told listeners in March. “Believe me, you don’t want to invest in someone else’s inside joke."

Cramer was seconding the SEC, which issued an investor alert around the same time, warning, "It is never a good idea to invest in a SPAC just because someone famous sponsors or invests in it or says it is a good investment."

As I reported in March during the frenzy, the SPAC system hid numerous pitfalls for unwary small investors, who may have been lured by the notion that SPACs enabled hidden gems among private companies to go public more cheaply than through an initial public offering.

“Costs built into the SPAC structure are subtle, opaque, and far higher than has been previously recognized,” law professors Michael Klausner of Stanford and Michael Ohlrogge of New York University reported in a paper in November 2020. (Their paper was titled “A Sober Look at SPACs.”)

In other words, for investors and startups alike, SPACs present nothing new under the sun. They just look new.

So what about this Trump deal? It didn't last for more than a few days before raising eyebrows among financial regulators. As Digital World disclosed on Dec. 6, in late October it received an inquiry from the Financial Industry Regulatory Authority, or FINRA, a Wall Street self-regulatory body, about suspicious trading in its shares ahead of the announcement.

The disclosure states that in early November, the SEC asked for information about "certain ... communications between DWAC and TMTG," among many other things. Neither FIRA nor the SEC has said that any wrongdoing has been established thus far.

As for Trump Media & Technology Group, it's not what you would call a solidly established business enterprise. The investor presentation Digital World filed with the SEC on Dec. 6 is devoid of business information. It's heavily devoted to Trumpian grousing about "Tech Monopoly Censorship" and to airy claims about the enterprise's "market opportunity."

The latter is pegged at 457 million potential users generating $35 billion in annual revenue. Trump conjured up those figures by adding together the market reach and revenues of Netflix, Twitter and the radio and podcast firm iHeartMedia.

A couple of other aspects of the presentation are bound to raise smiles. It calculates Trump's "historic social media following" at 146 million, although the figure is the sum of his followers on Instagram, Facebook and Twitter, which may have overlapped, and although his current following on Twitter is zero because he's been banned from the platform.

The slide deck lists 30 executives and other members of Trump Media's "technology team," presumably to bolster the notion that it's a serious tech company.

But the team members are identified only by their first names and initials of their last names — i.e., "Josh A." and "Tom M.," like peripheral characters in a 19th century Russian novel. The deck notes, "personnel subject to change," so if you were basing your investment on, say, "Steve E." serving as VP, engineering, you may be disappointed.

The entire deck is attributed to the firm of E.F. Hutton. This isn't your father's or grandfather's E.F. Hutton, the brokerage renowned for its "When E.F. Hutton talks, people listen" ad campaign of the 1960s. That E.F. Hutton got absorbed by Shearson Lehman Bros. (remember them?) in 1988 after an enormous fraud scandal and was owned by American Express and Citigroup in the course of a series of mergers.

The brand name was evidently controlled by one Stanley Hutton Rumbough, grandson of the original Edward Francis Hutton, who ceded it to Kingswood Capital Markets, an investment bank, which rebranded itself to evoke the "rich history, successful legacy and long-recognized value" of the old name, never mind the fraud scandal. Anyway, Kingswood seems to be the investment bank associated with Trump Media.

There isn't much more to say about this SPAC deal, at least until Trump and his new CEO actually do something media-like. The deal has followed the SPAC model to the point of arranging a $1-billion cash infusion from outside investors known as a PIPE, for "private investment in public equity."

The PIPE investors appear to be getting a good deal in that they are assured of buying shares in the merged company at a steep discount to the shares' public price. That assures them almost certainly of being able to flip their shares at a profit the moment the merged company goes public. In the estimate of Bloomberg financial columnist Matt Levine, the goal is indistinguishable from encouraging them to find "some retail rubes" to foist the shares on.

That's particularly true in light of the fact that Trump Media has yet to demonstrate that it is a genuine company. What it has is a business pitch derived from Trump's epic resentments, a CEO with no apparent experience, and a management team that can't be identified.

It also has Trump's name, which has been known in the past to attract investors and lenders to a purported university, a failing casino, and other businesses hawking vodka and steaks. To anyone who wants to play in this sandbox, we can only say: "Good luck, suckers."

This story originally appeared in Los Angeles Times.

'This is weird and murky.' Trump SPAC deal values firm at more than $10 billion despite red flags

By Matt Egan, CNN Business
Tue December 14, 2021


New York (CNN Business)Former President Donald Trump's new media venture has no known revenue or product.

Trump Media & Technology Group (TMTG) posted an investor presentation last week that appears to contain errors and seems to have been partially copied and pasted from the internet. Bizarrely, one slide defines a user as a "sales representative who travels to visit customers," a definition that makes little sense given that this is a media company, not a sales platform.

TMTG's incoming CEO, Republican Congressman Devin Nunes, has no business experience in technology or social media. And federal regulators are investigating the deal to bring the media venture public.

Despite these red flags, TMTG is creating enormous buzz among at least some investors and has achieved an implied valuation above $10 billion, according to Renaissance Capital.



Federal regulators are investigating the Trump SPAC deal

"This is weird and murky," Matthew Tuttle, CEO of Tuttle Capital Management LLC, told CNN. "I've never seen anything like this before. And I probably never will again."

TMTG, chaired by the former president, simultaneously revealed a deal to go public through a merger with Digital World Acquisition Corp., which is a type of a shell company known as a SPAC, or a Special Purpose Acquisition Company. SPACs raise money that must be used to acquire and bring public private firms. Essentially they are blank-check firms that exist solely to find suitable merger partners.

SPACs have become very popular on Wall Street, in part because they can save time and money compared with traditional initial public offerings. Celebrities including Alex Rodriguez, Larry Kudlow and Shaquille O'Neal have gotten involved in SPACs, prompting regulators to warn investors not to invest in a SPAC just because a celebrity is involved.

Implied valuation above $11 billion

The Trump SPAC instantly set off a frenzy on Wall Street -- even though little was known about the new entity. Shares of Digital World skyrocketed as much as 1,657% in the days after the deal was announced before eventually retreating.

"This is now the meme stock of all meme stocks," said Tuttle, whose firm issues ETFs, including several that focus on the SPAC market. "Take all of the buzz going around about AMC and GameStop in January and February and multiple it by a million and that's what this is."

Based on Digital World's Monday closing price of $50.49, the SPAC deal implies a valuation on TMTG at about $10.5 billion, according to Renaissance Capital, which provides IPO-focused ETFs and pre-IPO research. That implied valuation includes warrants, private placements and a deal to raise $1 billion upon the completion of the SPAC merger.

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Tuttle, who said his firm briefly owned shares in Digital World before they skyrocketed, called the valuation "somewhat frightening" and "ridiculous."
"Treat this like a gamble, because it definitely is," said Matthew Kennedy, senior IPO market strategist at Renaissance Capital. "It seems like a lot of the valuation is based on hype and the personal popularity of Donald Trump. That's not a sound investment rationale."

'It didn't really make sense'

One of the many unusual aspects of the Trump SPAC is that the parties initially released very little concrete information about the fundamentals of the business.

New documents were released last week, but they raise more questions than answers.
A 38-slide presentation filed by TMTG includes a page titled "Infrastructure" that defines a user as a "person, or organization, or system that has one or more roles that initiates or interacts with activities." It goes on to say that includes a "sales representative who travels to visit customers."

That definition is hard to reconcile with the fact that TMTG is supposed to be a conservative media company, not a platform that caters to traveling salespeople.
"It didn't really make sense," Kennedy said. "A better example of a user would be 'US residents with internet access' or 'one of the 89 million followers of Trump's former Twitter account.'"

Judd Legum, who writes the political newsletter Popular Information, flagged the definition of a "user" in a Twitter thread over the weekend. Legum pointed out that the language on the infrastructure slide is just "cut-and-pasted from other sites."

Indeed, the slide's description of database servers matches what is written on a page last updated in 2016 on Techopedia, a website that includes a tech jargon dictionary. The definition of load balancer matches what is listed on a page on the website of Citrix.
Likewise, the definition of a client matches what is found on the website of Cloudflare.
"In other words, not only does this company not have any technical infrastructure," Legum wrote, "it could not be bothered to even write its own slide of what the infrastructure will be."

TMTG did not respond to requests for comment.

'Serious errors'

But these are not the only oddities in the investor presentation.
Kennedy, the Renaissance Capital strategist, notes that slide 5 shows the PIPE (private investment in public equity) potentially converting into 13.7 million shares, even though other filings indicate the minimum is actually 29.8 million. Another line in the same slide appears to have another error about the number of shares to be held by TMTG stockholders, Kennedy said.

Another unusual element of the presentation is that slide 21 in the deck lists first names and last initials only of the members of TMTG's technology team.
"I believe they're moving very quickly to capitalize on the current share price, so that could explain some of the errors, inconsistencies and other abnormalities," Kennedy said.

TMTG is not the only company in a SPAC deal to have typos and errors in filings. Kennedy said in the last year, he's noticed more of these issues creeping into investor presentations.

"This is a bit more. It's an error regarding the valuation and very fundamental components of the deal. These are more serious errors than we normally see," he said.

Projecting just $1 million in revenue next year

The slide deck lists an array of financial projections, including that Truth Social could reach 81 million users by 2026 and generate $13.50 in average revenue per user. The presentation states that TMTG+, the planned streaming app, is projected to reach 40 million total subscribers by 2025 and generate $9 in average monthly fees per user.

"TMTG aspires to create a media powerhouse to rival the liberal media consortium and fight back against the 'Big Tech' companies of Silicon Valley, who have used their unilateral power to silence opposing voices in America," TMTG says in the presentation.
The company said TMTG+ could deliver a price point close to that of Netflix "given President Trump's highly enthused base."

Yet the presentation also concedes that the business doesn't amount to much at the moment.

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One slide indicates management projects to generate just $1 million in revenue next year, based solely on Truth Social.

"This is extremely high risk. It is really buying a pig in a poke," said Jonathan Macey, a professor at Yale Law School. "But apparently a lot of people seem to believe that something can be made of this because the valuation really is soaring."

TMTG recently announced a deal to raise $1 billion upon the completion of its SPAC agreement.

However, the company did not disclose who the investors committing $1 billion are, other than to say they are a "diverse group" of institutional investors.

Renaissance's Kennedy said the terms of the $1 billion investment are "unusually favorable" to the investors, granting them preferred shares that convert to common shares at a steep discount.

SEC and FINRA are investigating

The Trump SPAC is also the subject of regulatory scrutiny.

Last week, Digital World said in a filing it received a document and information request from the Securities and Exchange Commission in early November. Among other items, Digital World said the SEC request sought documents and communications between Digital World and Trump Media and Technology Group.

Digital World also said Wall Street's self-regulator, the Financial Industry Regulatory Authority, or FINRA, is looking into trading prior to the deal's announcement.

In late October, the New York Times reported that Trump began discussing a merger with Digital World long before the blank-check company went public and before such talks were disclosed to investors.

That prompted Senator Elizabeth Warren to call for the SEC to investigate whether any laws were broken by Digital World because the company repeatedly told shareholders that it had not held substantive talks with a target company.

Devin Nunes is the new CEO

Trump's own role in the SPAC deal is unclear. The filings do not clearly indicate the former president's role, beyond describing him as the chairman of TMTG. Trump did not respond to requests for comment.

TMTG reached a deal to go public in October despite not having a CEO. That vacancy has since been filled by Nunes, the California Republican who recently announced he will leave the House to join the Trump social media firm.

Yet Nunes, a former cattle and dairy farmer, does not appear to have any business experience in social media or technology. His Congressional website says he has a bachelor's degree in agricultural business and a master's in agriculture. Nunes did not respond to requests for comment.

The fact that TMTG won't be run by an executive with a proven track record in technology or social media adds to the risky nature of the venture. Countless startups with far more experienced executives have tried and failed to crack this market.
"It's difficult to build a social media company. Even after Twitter generated hundreds of millions of users, there were doubts about the company," Kennedy said. "You can throw money at these projects, but it's hard to build a sticky platform."

Physicists create new state of matter from quantum soup of magnetically weird particles

Scientists have spotted a long hypothesized, never-seen-before state of matter in the laboratory for the first time.

© Provided by Live Science The new material works by forming triangles out of an atom's spin states.

Ben Turner

By firing lasers at an ultracold lattice of rubidium atoms, scientists have prodded the atoms into a messy soup of quantum uncertainty known as a quantum spin liquid.

The atoms in this quantum magnetic soup quickly became connected, linking up their states across the entire material in a process called quantum entanglement. This means that any change to one atom causes immediate changes in all of the others in the material; this breakthrough could pave the way for the development of even better quantum computers, the researchers said in a paper describing their findings Dec. 3 in the journal Science.

"It is a very special moment in the field," senior author Mikhail Lukin, a professor of physics at Harvard University and the co-director of the Harvard Quantum Initiative, said in a statement. "You can really touch, poke, and prod at this exotic state and manipulate it to understand its properties. It's a new state of matter that people have never been able to observe."

First theorized in 1973 by the physicist Philip Anderson, quantum spin liquids emerge when materials are cajoled into disobeying the usual rules that govern their magnetic behaviour.

Electrons have a property called spin, a type of quantum angular momentum, that can point either up or down. In normal magnets (like the ones people put on the fridge), the spins of neighboring electrons orient themselves until they all point in the same direction, generating a magnetic field. In non-magnetic materials, the spins of two neighboring electrons can flip to oppose each other. But in either case, the tiny magnetic poles form a regular pattern.

In quantum spin liquids, however, the electrons refuse to choose. Instead of sitting next to each other, the electrons are arranged into a triangular lattice, so that any given electron has two immediate neighbors. Two electrons can align their spins, but a third will always be the odd one out, destroying the delicate balance and creating a constantly switching jumble of agitated electrons.

This jumbled state is what the researchers call a "frustrated" magnet. As the spin states no longer know which way to point, the electrons and their atoms are instead thrown into a weird combination of quantum states called a quantum superposition. The ever-fluctuating spins now exist simultaneously as both spin up and spin down, and the constant switching causes atoms all the way across the material to entangle with each other in a complex quantum state.

The researchers couldn't directly study the ideal quantum spin liquid, so they created a near perfect facsimile in another experimental system. They chilled an array of 219 trapped rubidium atoms — which can be used to minutely design and simulate various quantum processes — to temperatures of roughly 10 microkelvins (close to absolute zero or minus – 273.15 degrees Celsius° Celsius).

Occasionally one of the electrons in an atom is in a much higher energy level than the others, putting the atom in what is known as a Rydberg state. Much like with spin states, the spooky rules of quantum mechanics ensure that an atom does not want to be in a Rydberg state if its neighbor is. By firing lasers at certain atoms within the array, the researchers mimicked the three-way tug-of-war seen in a traditional quantum spin liquid.

Following the creation of their quantum Rydberg soup, the researchers conducted tests on the array and confirmed that its atoms had become entangled across the entire material. They had created a quantum spin liquid.

The scientists then turned their attention to a proof of concept test for its potential application: designing the qubits, or quantum bits, of a quantum computer. While ordinary computers use bits, or 0s and 1s to form the basis of all calculations, quantum computers use qubits, which can exist in more than one state at once. Qubits, however, are incredibly fragile; any interaction with the outside world can easily destroy the information they carry.

But the special nature of the quantum spin liquid's material-wide entanglement, however, could allow for far more robust information storage. That's because instead of encoding quantum information into just one qubit, it could allow for information to be contained in the shape — or the topology — that the entangled spin states make throughout the material itself; creating a "topological qubit." By encoding information in the shape formed by multiple parts rather than one part alone, the topological qubit is much less likely to lose all of its information.

The researchers' proof of concept created only a tiny topological qubit, just a few tens of atoms long, but in the future, they hope to create much larger, more practical ones.

"Learning how to create and use such topological qubits would represent a major step toward the realization of reliable quantum computers," co-author Giulia Semeghini, a quantum physicist at Harvard University, said in the statement. "We show the very first steps on how to create this topological qubit, but we still need to demonstrate how you can actually encode it and manipulate it. There's now a lot more to explore."

Originally published on Live Science.