The SEC has taken the first step toward undermining 401(k) plan fiduciaries

Alicia H. Munnell - Yesterday

© Getty ImagesThe SEC has taken the first step toward undermining 401(k) plan fiduciaries
The Securities and Exchange Commission has decided to allow Amazon.com Inc.’s shareholders to vote on a proposal requiring the company to prepare a report assessing the extent to which the company’s current retirement plan investment options align with its corporate climate action goals. This proposal is being pushed by a nonprofit shareholder advocacy group As You Sow. The group wants to replace low-fee index funds with ESG funds, which tend to be actively managed and involve significantly higher fees. The SEC decision is wrongheaded and could hurt retirement saving.

The SEC used to allow companies to exclude this type of proposal from proxy statements, because they relate to the company’s ordinary business operations – the wages and benefits provided to employees. The agency simply viewed it as impractical to resolve operational problems at an annual meeting. In this new era, however, the SEC has adopted a new stance – it does not support the exclusion of any proposal pertaining to “significant social issues.”

The significant social issue in this case is climate change, and As You Sow is going after broad market index funds, which by their very nature include fossil fuel companies in the asset mix. The organization’s website focuses particularly on low-cost target-date funds that serve as the default investment in most 401(k) plans. Vanguard funds, which are used by 14 of the 16 companies identified as bad actors, receive special attention. Although other target-date funds, such as those from BlackRock, Fidelity, American Funds, T. Rowe Price TIAA-CREF, J.P. Morgan and State Street also received failing grades.

As You Sow is not advocating for simply adding an ESG option to the company’s 401(k) plan investment roster, but rather to replace low-cost index funds with high-cost ESG funds as the plan default. They contend that dropping fossil fuel companies would allow investors to reduce risk and earn higher returns, while supporting socially beneficial practices and outcomes.

Such a shift, however, would be a terrible idea for many reasons, including:
It isn’t clear that this form of social investing is effective. The SEC itself has started to crack down on “greenwashing”— the claim that investments will save the world with little evidence to support it.

Moreover, ESG funds are expensive (on average 80 basis points more than index funds). Essentially, they are a marketing ploy by financial-services firms to repackage costly, actively managed investments—which were becoming increasingly less appealing—in a trendy wrapper.

Even more pernicious, social investing allows people to think that they’re really solving an important world problem when, in fact, they are doing nothing. It’s delusional to think that 401(k) participants can lead the way on fighting climate change by not investing in fossil fuel stocks. Other investors will step in and pick up the stock in undervalued fossil fuel companies.

So, what happens now? The best outcome would be that shareholders vote down the proposals, and no one has to write a report. The alternative is that the proposal is approved and the report tries to reconcile the company’s and its retirement plan’s objectives. This would be an impossible task. Fiduciaries under ERISA are supposed to invest in the best interest of plan participants, not get involved with ineffective divestures that involve lower returns and higher fees.

If As You Sow creates pressure for a climate-pure default in 401(k) plans, fiduciaries will face either the wrath of disappointed socially active participants or future lawsuits by participants angry over low returns and high fees. The ultimate bad outcome is that companies throw up their hands and stop offering 401(k) plans.

All this could have been avoided if the SEC just stuck to its knitting

FICTIOUS CAPITAL

Billionaire founder of crypto exchange Binance says he's 'poor again' after its luna holdings — once worth $1.6 billion — crashed and are now worth just $2,200

Weilun Soon
Wed, May 18, 2022

Changpeng Zhao, founder of Binance, joked he was "poor again" after the crypto luna took a dive.REUTERS/Darrin Zammit Lupi

Crypto exchange Binance's founder Changpeng Zhao tweeted "poor again" after crypto-token luna crashed.

Binance's holdings of the coin were once worth $1.6 billion but are now worth about $2,200.

According to Bloomberg estimates, Zhao is still a billionaire and Binance is the world's largest crypto exchange.

Chanpeng Zhao, the wealthy founder of crypto exchange Binance, joked on Tuesday that he was "poor again" after the exchange's investments in the luna cryptocurrency crashed from $1.6 billion just a month ago to about $2,200 this week.

In a tweet on Monday, Zhao said that Binance, the world's largest crypto exchange, held 15 million luna tokens. Binance received these tokens in exchange for its $3 million investment in 2018 into the Terra network that luna is based on. Its luna tokens were "never moved or sold" as of Monday, according to Zhao.

Insider has reached out to Zhao for comment.

Binance's luna holdings were worth $1.6 billion in early April when the token hit its peak price. But its recent crash saw that value shrink to about $2,200 this week. The coin is trading at about $0.0001468 as of Thursday.

Luna's value has rapidly plunged in the past two weeks.

Its implosion started when its sister token, TerraUSD, lost its peg to the US dollar two weeks ago. The two tokens' valuations are tied to each other. When TerraUSD's price fell, investors rushed to dump their holdings of that token in a scenario similar to a bank run. TerraUSD's plunge, in turn, dragged down luna's price.

The two tokens' free fall was estimated to have wiped out more than $50 billion in paper value, Insider reported on Sunday.

Zhao on Monday urged the Terra team to reimburse its retail investors first. "To lead by example on PROTECTING USERS, Binance will let this go and ask the Terra project team to compensate the retail users first, Binance last, if ever," he tweeted.

Despite his comments, Zhao, 45, definitely isn't broke. He has a net worth of about $14.8 billion as of Thursday, based on Bloomberg's estimates. The majority of his wealth likely comes from his estimated 70% stake in Binance, according to Forbes.

Binance's market value is estimated to be six times that of its nearest competitor, Coinbase, Forbes reported in March. Binance took in about $14.6 billion in trading fees last year, according to MarketWatch, which quoted a report published by financial-services consultancy Opimas.

Bitcoin is just the latest in the American tradition of buying snake oil


Tim Rowland

The Herald-Mail
Thu, May 19, 2022

The world’s also-ran nations are always looking for an angle, be it as a tax haven, an opaque repository of foreign assets or as home to some oddball tourist attraction, like swallows or sea turtles.

El Salvador, trying to get the jump on other nations, decided it could make a splash on the world scene by being the Bubba of Bitcoin. Whoops. It made a splash all right, the same sort of splash a dead sailor makes when they throw him overboard.

The financially beleaguered nation went all-in on cryptocurrency in September by making Bitcoin its national currency and floating a $1 billion crypto bond.

In other words, El Salvador took its entire economy to Las Vegas and put it on red. And we all know what happened.

Actually, El Salvador is lucky. Bitcoin is only down 50%. Some went entirely down the flume. If you had $1 million in Luna yesterday, today you don’t even have enough to buy a ham sandwich.

Fortune favors the — RUN FOR YOUR LIVES!

What? You mean a financial investment hyped by Mike Tyson and Kim Kardashian turned out to be a sham? No.

Employing someone, who has famously blown through multiple fortunes, as a pitchman for financial planning is, even by American standards, nutty beyond belief.

Normal Ohioans meanwhile have to be breathing a sigh of relief that Republican voters rejected the senatorial candidate who wanted to make the state “pro-God, pro-family, pro-Bitcoin.”

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Because nothing says “family” like rooting around in a dumpster together searching for fish bones. And how you equate God with Bitcoin, I can’t even begin to say. It wasn’t like Jesus cast the money changers out of the temple so he could put his cash into Ethereum.

None of this is unique to the American condition, obviously. In the 19th century, a horse-drawn wagon would roll into dusty backroad communities and talk its citizens into spending their last three cents on Dr. Caldwell’s Syrup Pepsin instead of groceries.

Last century it was penny stocks. You could buy 50,000 shares of Cressen Consolidated Mining and Milling Co., and maybe a year later you would get notice as an official registered shareholder that aforementioned entity was now officially insolvent and had liquidated off its last remaining assets, which at that point amounted to six folding metal chairs and half a jar of Sanka.

Very, very infrequently, one of these companies would turn into Microsoft, at which point the lucky investor would — being all too aware of the odds — stop investing and start selling a correspondence course advertised in the back of Popular Mechanics magazine with a guy in a plaid suit saying, “I made a zillion dollars in penny stocks and you can too!”

Can, but won’t.

And sure enough, there is no shortage of true believers today. You can’t swing a cat without hitting a cryptocurrency, none of which you’ve ever heard of, with names like Tron, ZCash, Tezos, Neo, Dash, Ox and literally thousands of others.

Hey, if it’s your thing, knock yourself out. But most people are going to be reluctant to put their life savings into a global currency cooked up by a kid in his parents’ garage wearing a T-shirt with Taco Bell stains.

I acknowledge these might be brilliant people. But the American monetary system is the one thing the government does really, really well. It dominates the globe. If the goal is to launder drug money or scam senior citizens, it might not be perfect, but if I put a dollar in the bank tonight I know it’s going to be there tomorrow, which is a lot more than you can say for these geniuses who think they can do better.

So if they want to start a revolution, maybe they should focus their talents on something that actually needs fixing, like the health insurance industry or the Department of Motor Vehicles.

BitLicense. That’s something I’d buy into.

Tim Rowland is a Herald-Mail columist.
This article originally appeared on The Herald-Mail: Cryptocurrencies seem to be modern version of penny stocks

Analysis-Crypto crash leaves El Salvador with no easy exit from worsening crisis

FILE PHOTO - El Salvador uses Bitcoin as legal tender

Wed, May 18, 2022, 
By Nelson Renteria, Sarah Kinosian and Rodrigo Campos

SAN SALVADOR/NEW YORK (Reuters) - El Salvador's big bet on bitcoin, which the Central American nation has been buying since September, has soured in recent weeks as a cryptocurrency rout shaved over a third of the value of the government's holdings, Reuters calculations show.

Under populist President Nayib Bukele, a vocal cheerleader for the currency, El Salvador went all-in on bitcoin, not just becoming the world's first country to adopt it as a legal tender but also sketching out plans for a volcano-powered crypto mining hub and plans to issue the first sovereign bond linked to the coin.

With global borrowing costs on the rise and a big debt repayment on the horizon, El Salvador has other fiscal headaches than the impact of the currency's swoon. But the crypto slump has also closed some potential off-ramps from the crisis, including the now-postponed bitcoin bond.

"The government's financial problems are not because of bitcoin, but they have gotten worse because of bitcoin," said Ricardo Castaneda, senior economist and country coordinator for El Salvador and Honduras at think tank Central American Institute for Fiscal Studies (ICEFI). For the government, he said, "bitcoin ceased to be a solution and has become part of the problem."

Bitcoin has fallen 45% since El Salvador officially adopted it in early September, and 26% from its May high as crypto assets have been swept up in a risk-off investing environment.

The combined market value of all cryptocurrencies recently fell to $1.2 trillion, less than half of where it was last November, based on data from CoinMarketCap.

El Salvador's debt stood at $24.4 billion as of December, from $19.8 billion at end-2019, after the Bukele administration allocated millions of dollars to deal with the COVID-19 pandemic and its economic effects over the past couple of years.

The International Monetary Fund estimates that the current account deficit for its remittance and external financing-reliant economy will hover near $2 billion through 2025.

But adopting bitcoin set the country at loggerheads with multilateral lenders like the IMF, from which Finance Minister Alejandro Zelaya said https://www.reuters.com/article/us-el-salvador-economy-exclusive/exclusive-el-salvador-seeks-imf-funding-sees-golden-opportunity-for-economy-says-finance-minister-idUSKBN2AW1GV last year the government was seeking $1.3 billion.

The fund has recommended that El Salvador ditch bitcoin altogether. Any deal for a credit line would have to address risks including "those related to the adoption of bitcoin as legal tender as well as risks related to economic governance," an IMF official said on Wednesday.

Ratings agencies have warned bitcoin adoption could facilitate money laundering, and importantly, the bitcoin risk has given bond investors another reason to demand higher returns

As of Wednesday, they were seeking a record-high premium of 2,445 basis points over U.S. Treasuries.

Bukele's moves to centralize power, from removing all the top judges on the country's supreme court to muscling through authorization to seek immediate re-election despite constitutional term limits, have helped drive the risk premium higher.

"If there isn't potential for bitcoin-growth dividends or innovative bitcoin-financing, then the Bukele administration will have to prioritize spending priorities and identify financing options," according to Siobhan Morden, head of Latin America Fixed Income Strategy at Amherst Pierpont.

Reuters calculations of a $36 million paper loss in bitcoin, enough to make at least some of those coupon payments, is based on Bukele's tweets and an estimate of prices on the purchase dates. The government has spent some $104.2 million on 2,301 coins now worth just $67.9 million using Wednesday's volume weighted average price.

The country has to service $329 million in interest due on its international bonds this year as well as $800 million in a bond set to mature in January.

ICEFI's Castaneda listed financing options including the Central American and Latin American development banks - CABEI and CAF, respectively - as possible patches for financing the $800 million payment due in January. Another option, he said, is to nationalize the country's pension fund to cover the fiscal deficit - which could be done by transferring the public's savings to a government account.

A debt restructuring for El Salvador is "inevitable" if the country continues with the "current policy mix," said Polina Kurdyavko, head of emerging markets at BlueBay Asset Management. "Debt in El Salvador could be sustainable with the right (IMF) program. But they have to act now."

The country's finance minister, Zelaya, declined to comment for this story.

Salvadoran bonds trade between 43.5 cents and 34 cents on the dollar except for the January maturity at 75 cents, reflecting cautious optimism that the country could make that payment.

The cost to insure investors against a Salvadoran sovereign default over the next five years on Wednesday hit its highest level since 2020, according to S&P Global data.

(Reporting by Nelson Renteria in San Salvador, Sarah Kinosian in Mexico City and Rodrigo Campos in New York; Additional reporting by Jorgelina do Rosario in London; Editing by Christian Plumb and Matthew Lewis)

Grim 2022 drought outlook for Western US offers warnings for the future as climate change brings a hotter, thirstier atmosphere

Imtiaz Rangwala, Research Scientist in Climate, 

Cooperative Institute for Research in Environmental Sciences, 

University of Colorado Boulder

The Conversation
Thu, May 19, 2022

Farmers in some regions are being encouraged to preserve and establish grasslands that can survive drought and protect the soil. AP Photo/Mark Rogers

Much of the western U.S. has been in the grip of an unrelenting drought since early 2020. The dryness has coincided with record-breaking wildfires, intense and long-lasting heat waves, low stream flows and dwindling water supplies in reservoirs that millions of people across the region rely on.

Heading into summer, the outlook is pretty grim. The National Weather Service’s latest seasonal outlook, issued May 19, 2022, described drought persisting across most of the West and parts of the Great Plains.

One driver of the Western drought has been persistent La Niña conditions in the tropical Pacific since the summer of 2020. During La Niña, cooler tropical Pacific waters help nudge the jet stream northward. That tends to bring fewer storms to the southern tier of the U.S. and produce pronounced drought impacts in the Southwest.

The other and perhaps more important part of the story is the hotter and thirstier atmosphere, caused by a rapidly warming climate.

As a climate scientist, I’ve watched how climate change is making drought conditions increasingly worse – particularly in the western and central U.S. The last two years have been more than 2 degrees Fahrenheit (1.1 Celsius) warmer than normal in these regions. Large swaths of the Southwest have been even hotter, with temperatures more than 3 F (1.7 C) higher. Studies suggest the Southwest’s ongoing 20-year drought is the most severe in at least 1,200 years, based on how dry the soils are.

A hotter atmosphere sucks more moisture from the soil

A thristier atmosphere tends to extract more water out of the land. It exacerbates evaporative stress on the land, particularly when a region is experiencing below-normal precipitation. High evaporative stress can rapidly deplete soil moisture and lead to hotter temperatures, as the evaporative cooling effect is diminished. All this creates hydroclimatic stress for plants, causing restricted growth, drying and even death.

As a consequence of a warming climate, the U.S. Southwest has seen an 8% increase in this evaporative demand since the 1980s. This trend is generally happening across other parts of the country.

The thistier atmosphere is turning what would otherwise be near-normal or moderately dry conditions into droughts that are more severe or extreme. As the climate heats up further, the increasing atmospheric thirst will continue to intensify drought stress, with consequences for water availability, long-lasting and intense heat stress, and large-scale ecosystem transformation.

Climate models project ominous prospects of a more arid climate and more severe droughts in the Southwest and southern Great Plains in the coming decades.

In addition to direct impacts of increasing temperatures on future droughts, these regions are also expected to see fewer storms and more days without precipitation. Climate models consistently project a poleward shift in the midlatitude storm tracks during this century as the planet heats up, which is expected to result in fewer storms in the southern tier of the country.

Expect flash droughts even in wetter areas

The changing nature of droughts is a concern even in parts of the U.S. that are expected to have a net increase in annual precipitation during the 21st century. In a hotter future, because of the high evaporative demand on the land, prolonged periods with weeks to months of below normal precipitation in these areas can lead to significant drought, even if the overall trend is for more precipitation.

Large parts of the northern Plains, for example, have seen precipitation increase by 10% or more in the last three decades. However, the region is not immune to severe drought conditions in a hotter climate.

At the tail end of what was the wettest decade on record in the region, the northern Plains experienced an intense flash drought in the summer of 2017 that resulted in agricultural losses in excess of .6 billion and wildfires across millions of acres. Record evaporative demand contributed to the severity of the flash drought, in addition to a severe short-term precipitation deficit. A flash drought is a drought that intensifies rapidly over a period of a few weeks and often catches forecasters by surprise. The likelihood of flash droughts that can cause severe impacts to agriculture and ecosystems and promote large wildfires is expected to increase with a warmer and thirstier atmosphere.

During the 2017 flash drought, a North Dakota farmer stands in a wheat field that should have been twice as high at that point. 

AP Photo/Blake Nicholson

Flash droughts are also emerging as a growing concern in the Northeast. In 2020, much of New England experienced an extreme hydrologic drought, with low stream flows and groundwater levels and widespread crop losses between May and September. Aided by very warm and dry atmospheric conditions, the drought developed very rapidly over that period from what had been above-normal wet conditions.

As humanity enters a hotter future, prolonged periods of weeks to months of below-normal precipitation are going to be of a greater concern almost everywhere.
Heading into unfamiliar territory

Other forms of droughts are also emerging.

Atmospheric heating is causing snow droughts as more precipitation falls as rain rather than snow and snow melts earlier. Shorter snow seasons and longer growing seasons because of warmer temperatures are changing the timing of ecological responses.

The ‘bathtub ring’ on Lake Powell, one of the nation’s largest reservoirs, attests to its falling water level over two decades of drought in Arizona. The Colorado River reservoir is crucial for water supplies and hydropower. 

Justin Sullivan/Getty Images

Land is greening up earlier and causing an earlier loss of water from the land surface through evapotranspiration – the loss of water from plants and soil. This could result in drier soils in the latter half of the growing season. As a result, parts of the central and western U.S. could see both increased greening and drying in the future that are seasonally separated across the growing season.

With a rapidly changing climate, we are entering unfamiliar territory. The world will need new ways to better anticipate future droughts that could transform natural and human systems.

Read more: Hydropower's future is clouded by droughts, floods and climate change – it's also essential to the US electric grid

This article is republished from The Conversation, a nonprofit news site dedicated to sharing ideas from academic experts. It was written by: Imtiaz Rangwala, University of Colorado Boulder.

Read more:

Hydropower’s future is clouded by droughts, floods and climate change – it’s also essential to the US electric grid


As Colorado River Basin states confront water shortages, it’s time to focus on reducing demand


Trees are dying of thirst in the Western drought – here’s what’s going on inside their veins

Imtiaz Rangwala receives funding from USGS, USDA, NOAA, US Forest Service. He is affiliated with the University of Colorado Boulder, North Central Climate Adaptation Science Center and Western Water Assessment.

Cold War Relic Threatens Europe's Plans to Ditch Russian Oil



Stefan Nicola and Rachel Graham
Wed, May 18, 2022

(Bloomberg) -- Berlin risks running out of fuel unless German officials can find a way to keep a Cold War relic from falling victim to geopolitics.

A refinery on the Polish border, which supplies the bulk of the jet fuel for the German capital’s airport and gasoline for the region’s vehicles, is caught up in the European Union’s standoff with Moscow over the war in Ukraine. A plan to ban Russian oil imports by the end of the year threatens to choke off supplies to the facility in the small town of Schwedt, which would cripple Berlin and much of eastern Germany in the process.

The PCK refinery is directly connected to a pipeline pumping Russian crude from the other side of the Ural mountains. Because the facility is far from a major port, there’s no easy alternative, and the fact that it’s controlled by the Kremlin’s oil champion Rosneft PJSC multiplies the complexity.

From Berlin to Germany’s Baltic coast and parts of western Poland, “virtually every plane, police car, fire truck and ambulance is powered by fuel from Schwedt,” said Annekathrin Hoppe, mayor of the town of 34,000 on the Oder river. Closing the refinery “would be a disaster.”

The facility, which covers an area more than twice the size of New York’s Central Park, was built in the 1960s to cement former communist East Germany’s reliance on the Soviet Union. The struggle to find a solution shows that those links are still strong more than three decades after the fall of the Berlin Wall.

To comply with the EU’s planned oil embargo, Chancellor Olaf Scholz’s government is weighing some heavy-handed solutions, including taking control of the refinery as it did with Gazprom PJSC’s German unit. But a change of ownership wouldn’t resolve the main issue: replacing the 12 millions tons of crude pumped to the refinery every year through the Druzhba pipeline, named after the Russian word for “friendship.”

“The refinery is not configured for anything else” but Russia’s high-sulfur crude oil, said Ben Van Beurden, chief executive officer of Shell Plc, which owns a stake in PCK that it had been trying to sell. The refinery declined to comment for this story.

German Economy Minister Robert Habeck traveled to Schwedt last week to address concerns over the refinery’s future. With hundreds of workers straining to hear, he climbed on a table to better deliver his message on how the government is working to ensure that operations can continue if Russian oil is banned.

“We need your production, your work to safeguard Germany’s supply,” Habeck told PCK’s staff, adding that there will likely be disruptions. “I don’t want to take you for a fool or paint a picture that’s too rosy.”

German authorities are scrambling for options and have determined that an old pipeline linking Schwedt to the Baltic port of Rostock could be used for crude delivered via tanker. But its relatively small size means it could only cover some 60% of normal volumes. To boost supplies, plans to increase the pump pressure and modernize the infrastructure are under discussion, according to officials familiar with the matter.

Another option would be to have tankers dock in Gdansk in Poland and send crude through a pipeline that connects to the Druzhba. That would require the help of Warsaw, which has its own supply issues to deal with as it phases out Russian energy.

Polish Climate Minister Anna Moskwa said the government, which is already helping to supply another German refinery in Leuna, wants Rosneft out of PCK’s ownership. She indicated the country might seek even more in return.

“We are working with the German side on a new joint model of managing the refineries so that it’s optimal both for Polish and German societies,” she said. “I can assure you that it’s a business model. It’s not charity.”

Michael Kellner, a deputy German economy minister, said Wednesday on NDR television that he’s optimistic that a solution can be found with the Polish government. If needed, Germany could tap oil reserves to supply Schwedt, he said, adding that the country is prepared for every eventuality given the refinery’s “massive importance” for the region.

Locals in Schwedt, which boasts a church dating back to the 13th century, are skeptical that decades-old infrastructure connections can be re-routed successfully in little more than six months.

“There have been several crises with Russia since the plant was founded, but those never affected the supply relationship,” said Gundolf Schuelke, head of the regional chamber of industry and commerce. “This conflict — with its massive scope and sanctions as well as counter-sanctions — is unprecedented.”

Berlin already had a taste of what could happen if Russian crude dries up. In 2019, supplies through the Druzhba were found to be contaminated. Within just a few weeks, Berlin was running short and needed to secure emergency deliveries of heating oil, diesel and gasoline from Hamburg.

In that case, the issue was short-lived. Now, a more structural shift is under way, and PCK has done little to prepare for a time without access to cheap Russian crude — or the end of the fossil-fuel era.

Over the longer term, city officials are pushing to transform not just the refinery but also the local economy by creating an “innovation campus” to attract startups and sustainable industrial firms.

Hamburg-based Bio-Lutions International AG is setting up a plant that will turn straw and tomato stalks into an alternative for plastic packaging. Leipzig-based Verbio Vereinigte BioEnergie AG is already producing biodiesel, bioethanol and biomethane at the PCK site and shares its vast pipeline, rail and processing infrastructure.

But those efforts aren’t an immediate replacement for the refinery, which employs around 1,200 people and sustains at least as many more jobs at local partners. Also, heat generated by the plant keeps 80% of Schwedt’s homes warm during the winter.

“If PCK will stop production, there is no fuel in East Germany and no fuel in Berlin anymore,” Claus Sauter, Verbio’s chief executive officer, said on a conference call last week. “A whole region will die.”

How inflation could help us save money — and the planet

‘It is the times of shock that force us out of our comfort zone,’ says Tanja Hester

May 19, 2022 

By Alessandra Malito

Inflation might push Americans to make different spending decisions, 

for the better of their wallets and the planet. 

GETTY IMAGES/ISTOCKPHOTO

Inflation has many Americans worrying — a jump in prices of groceries and gas means paying more for fewer items, and possibly constraining any savings for the future. But it could also be a chance to rethink everyday spending, and possibly even help the environment.

There’s a link between consumer spending and climate change. Much of what Americans purchase must be manufactured, placing more emphasis on resources, energy and fuel. This record inflation, currently standing at more than 8%, could be a time to revisit everyday spending and change behaviors, for the benefit of consumers’ budgets and the world, said Tanja Hester, author of “Wallet Activism: How to Use Every Dollar You Spend, Earn and Save as a Force for Change.”


In her book, Hester, who is also a MarketWatch contributor, shows the link between spending and big-picture global issues, including climate change, inequality and capitalism. Hester is also an early retiree, leaving the workforce at age 38 after switching from a lifestyle of splurging to saving. Her first book, “Work Optional: Retire Early the Non-Penny-Pinching Way,” explores financial independence and early retirement.

“For the people who are under 60 currently and hopefully have a lot of years left on the planet, we have to think of the world we want to be retired in,” Hester said.

Hester spoke with MarketWatch about the relationship between consumerism and inflation and how people could change their behaviors to save their money and help the planet at the same time. This interview was edited for clarity and length.

See: Gas is going up but this is how inflation really hurts older Americans

MarketWatch: Americans are worried about inflation and what it may mean for their everyday expenses. What is causing this problem, and what are a few ways you see it impacting their cash flow?

Tanja Hester: People are thinking of the supply side shortages and how that’s affecting prices or availability of things. We saw early on in the pandemic people hoarding toilet paper or other people trying to buy them and found the shelves were empty, so you would call that supply side shocks and that has driven a small part of this. But the vast majority of inflation is driven by two factors — one, just to put it bluntly, corporate greed. We see corporations raising prices solely because they can, not because their prices have gone up. We know agribusiness giants that control the meat supply by and large are jacking up prices even though they’re not paying suppliers more or workers more. Only 8% of hikes in prices are reflective of workers getting paid more. So there’s the corporate profit side, and the other side is overconsumption by consumers. Unlike other times when we had hardships, most people still have enough money to spend right now. Up until a few weeks ago we had a strong stock market so those profits funded people’s ability to spend, and workers got raises or switched jobs and got more pay. That ended this year, but until this year, government programs were putting more money in people’s pockets to help them spend. So people were able to spend and that means they can drive higher and higher demand for goods, then prices go up. It’s a vicious cycle at this point.

In terms of what people can do — if they haven’t, look at what they can trim back and where they can do some rearranging in household spending. From an inflation and climate change perspective, it is expensive to eat a lot of meat. It is also really carbon intensive to produce and comes with a big emission toll that affects the climate. So if you want to shift more meals to meatless — I’m not saying going vegetarian or vegan — you can reduce consumption of animal products, reduce household spending and do something positive for the climate. It can also be trying to delay other purchases. It is a terrible time to buy electronics, and a terrible time to buy a car. They are just wildly expensive. So if you can put off a purchase like that, it’s good for your budget, the planet and the exploited labor that goes into that thing. We know after the pandemic people feel very stuck, they want to travel, but airfare is expensive. If you can do something closer to home, that can reduce the climate toll of your actions and reduce how much you’re spending on travel.

MW: In your book, you talk about a connection between consumer spending and climate change — can you elaborate on that a bit for us?

Offshore wind faces shake-up as tenders abandon price-only criteria - report


General view of the Walney Extension offshore wind farm operated by Orsted off the coast of Blackpool

Wed, May 18, 2022

OSLO (Reuters) - A new set of factors beyond bidding price is gaining traction in global tenders to award licences for offshore wind farms and will determine the winners and losers in a highly competitive industry, a new report by energy research firm Wood Mackenzie shows.

"The focus is now shifting to multiple criteria to determine tender and lease auction outcomes, and the criteria in individual markets will differ," Chris Seiple, vice chairman for Energy Transition at Wood Mackenzie said in a statement on Wednesday.

Cost competitiveness will always remain a central element of winning in offshore wind, but this has reached its limits as project returns are dropping amid the entry of new market players, rising lease payments and lower subsidy payments.

Instead, competitors will also have to consider local content, or the value a project can bring to a local, regional or national economy, as well as systems integration, ecological mitigation and sustainability in future bids, necessitating a strategic shift and greater cooperation, according to Wood Mackenzie's head of offshore wind research Soren Lassen.

"I think that it's the companies that are able to set up the right partnerships when bidding that will benefit the most, but I don't think it's one company that is going to be better than everyone else across all tenders and lease auctions," Lassen told Reuters.

There should be plenty of opportunities, with offshore wind poised to become one of the key technologies powering the decarbonisation of the global economy, Wood Mackenzie said.

By 2030, 24 countries will have large-scale offshore wind farms, up from nine at present, total installed capacity will rise to 330 gigawatt (GW) compared with 34 GW in 2020, and cumulative global capex spend in the offshore wind sector will hit $1 trillion by 2031, Wood Mackenzie forecast.

(Reporting by Nora Buli; Editing by Aurora Ellis)

Armenian protesters paralyse metro in growing unrest


FILE PHOTO: Activists hold an anti-government protest in Yerevan

Wed, May 18, 2022

(Reuters) - Protesters briefly shut down the metro network in Armenia's capital on Wednesday, the metro operator said, part of growing anti-government unrest in recent weeks against possible concessions over territory disputed with neighbour Azerbaijan.

Footage from social media showed protesters standing in the doors of metro carriages, blocking trains from moving. The activists were demanding the resignation of Prime Minister Nikol Pashinyan and chanting anti-government slogans, TASS news agency reported.

"Citizens carried out protest action in Yeritasardakan metro station, disrupting metro traffic", the metro in capital Yerevan said, adding that the doors to all subway stations had been closed in response.

In a statement published about an hour later, the metro said that traffic had been restored.

Over 350 people were detained across the city on Wednesday, RIA news agency reported, citing the police. A police spokesperson did not immediately respond to a request for comment on how many people had been arrested and why.

Protests have simmered for weeks since Pashinyan said the international community wanted Armenia to "lower the bar" on its claims to the disputed Nagorno-Karabakh region.

The Nagorno-Karabakh enclave is internationally recognised as part of Azerbaijan but was populated and fully controlled by ethnic Armenians until they lost to Azerbaijan in a six-week war in 2020. A Russia-brokered peace deal that ended the war led to a significant loss of territory for Armenia.

Armenia is currently a close ally of Russia, which has a military base in the northwest of the country and sent peacekeepers to Nagorno-Karabakh under the accord that ended the fighting in 2020.

(Reporting by Caleb Davis in Gdansk; Editing by Frank Jack Daniel)

Ukraine war puts Indian diamond polishers out of work

Indian workers examine diamonds at a cutting and polishing workshop in Ahmedabad

 (AFP/SAM PANTHAKY)

Nivrita GANGULY
Thu, May 19, 2022,

India's huge diamond-polishing industry has furloughed around 250,000 of its roughly two million workers because of sanctions on Russia hitting supplies, a trade union said Thursday.

The South Asian nation cuts and polishes 90 percent of the world's diamonds, with Russian diamond miners such as Alrosa traditionally accounting for 30-40 percent of India's imported rough gems.

"This problem has started ever since the Russia-Ukraine war began," Ramesh Zilariya, president of the Diamond Workers' Union Gujarat, told AFP.

"Western countries like the United States and Europe have stopped accepting Russian diamonds that have been polished in India," he said.

Workers were furloughed this month in the western state of Gujarat, the main hub of the industry, Zilariya added, as companies struggle with cash flow and supply disruptions.

Traders say Russian supply has fallen short since Western sanctions forced Moscow out of the SWIFT cross-border payments system, plunging the supply chain into uncertainty.

"Supply is still disrupted and payments are mostly on hold," Sripal Dholakia, director at the All India Gem and Jewellery Domestic Council, told AFP.

Dholakia said imports from Russia are "not adequate" at present, and Indian traders are facing higher bank charges while making direct payments in rupees or rubles.

An industry pitch to the Indian government to make future payments via India's Unified Payments Interface system has gone unanswered.

India exported cut and polished diamonds worth $24 billion in the year ended March 31, data from the Gems and Jewellery Export Promotion Council showed.

Top export destinations included the United States, Hong Kong and the United Arab Emirates.

Many Western buyers are now refusing to accept diamonds sourced in Russia for fear of violating sanctions.

"They have started asking for a bill which specifies that the goods we are supplying are not Russian," a Mumbai-based jeweller told AFP on condition of anonymity.

Prices too have turned volatile.

"Fifteen to 20 percent instability is a big thing for us because we work on a margin of two to five percent... It becomes difficult," the jeweller said.

The Gujarat diamond union has asked the state government to provide financial aid and re-skilling training to out-of-work polishers to help tide over the crisis.

"(We) asked the government to support workers in the diamond industry because this issue is not going to be resolved in one month," Zilariya said.

"This issue will go on for at least five, six or seven months."

India has called for a cessation of violence but has stopped short of condemning Russia's invasion of Ukraine.

The two countries have historically had close ties, with Moscow supplying most of New Delhi's arms.

ng/stu/axn

WORKERS REVOLT
Apple Delays Plan to Have Staff in Office Three Days a Week



Mark Gurman
Tue, May 17, 2022

(Bloomberg) -- Apple Inc. delayed a plan to require workers to come back to the office three days a week, citing a resurgence in Covid-19 cases, marking the latest setback in its efforts to return to normal.

The company informed employees Tuesday that it’s delaying the requirement, which had been slated to go into effect on May 23, according to a memo seen by Bloomberg. However, the company is still expecting workers to come to the office two days per week. The company said the requirement is being delayed for “the time being” and didn’t provide a new date.

Apple was set to require employees to work from the office on Mondays, Tuesdays and Thursdays beginning next week -- a policy that had been controversial among some staff. Already, employees have been coming in two days a week as part of a ramp-up effort that began in April. For now, that mandate isn’t changing.

The company also told staff that they must again wear masks in common areas -- at least in Silicon Valley offices. Separately, retail employees were informed Tuesday that about 100 US stores will again require mask wearing by staff members as well. Apple had dropped that requirement in March when cases eased.

A spokesman for the Cupertino, California-based tech giant declined to comment.

While the delay is related to Covid-19’s recent rebound, some Apple employees have complained about the return-to-work plan, saying that it limits productivity. They’ve said that commute time takes away hours that could be put toward their work. Employees have also complained that the office return ignored the lack of a vaccine for young children.

Apple Executive Who Left Over Return-to-Office Policy Joins Google AI Unit


Apple Executive Who Left Over Return-to-Office Policy Joins Google AI Unit

Mark Gurman
Tue, May 17, 2022, 

(Bloomberg) -- An Apple Inc. executive who left over the company’s stringent return-to-office policy is joining Alphabet Inc.’s DeepMind unit, according to people with knowledge of the matter.

Ian Goodfellow, who oversaw machine learning and artificial intelligence at Apple, left the iPhone maker in recent weeks, citing the lack of flexibility in its work policies. The company had been planning to require corporate employees to work from the office on Mondays, Tuesdays and Thursdays, starting this month. That deadline was put on hold Tuesday, though.

Goodfellow’s jump to Google is a coup for the DeepMind division, which is bringing him on as an individual contributor, said the people, who asked not to be identified because the hiring isn’t yet public. Goodfellow is known as one of the foremost machine learning researchers, and the move is a reunion of sorts. He worked as a senior researcher at Google until 2019.

DeepMind declined to comment on the hire. Alphabet’s return-to-office policy is generally looser than Apple’s. Though the search-engine giant is also asking employees to come back to the office, it’s approving exemptions for most employees seeking to work from home. Goodfellow hasn’t yet started the new job.

Goodfellow was a director of machine learning within Apple’s Special Projects Group and supervised engineers working on autonomous technology. The director level is one of the most senior at Apple. The company has about 1,000 directors of a total of 170,000 employees -- a figure that includes retail workers.

Goodfellow is the most senior employee known to leave over the company’s return-to-office policy, but more departures are expected as the rules go into effect. For now, though, Apple’s desire to have its employees in offices three days a week is up in the air. The rule, adopted in April, had been slated to go into effect May 23. On Tuesday, Apple told employees that the deadline was delayed for “the time being,” but workers are still expected in the office two days per week.

For months, some Apple employees have complained about the return-to-office drumbeat, saying they’re more productive at home and that remote work saves time and energy that would be spent commuting. Apple was primarily a remote-work company since the beginning of the pandemic in 2020.

“Everything happened with us working from home all day, and now we have to go back to the office, sit in traffic for two hours and hire people to take care of kids at home,” a different former Apple employee told Bloomberg last month. That worker also left, in part, because of the stringent return-to-the-office push.

When Goodfellow departed Apple, he cited the policy in an internal note to staff. The executive is credited with creating GANs, or generative adversarial networks. The networks allow computers to create images or data sets with remarkable accuracy, making research much more effective. They’ve been used in fields as far-flung as video games and astronomy, but most people may be familiar with their use in “deepfake” photos or videos.

DeepMind, widely considered a leading AI research hub, is famous for its software that conquered the game Go. The lab’s research has been used to improve some Google services, like YouTube bandwidth, and has recently moved more into health-care and biology applications, spinning out a new company working on drug discovery.P.