Study: Four major climate tipping points close to triggering

By SETH BORENSTEIN

September 8, 2022


A boat navigates next to a large iceberg in eastern Greenland on Aug. 15, 2019. Even if the world somehow manages to limit future warming to the strictest international temperature goal, four Earth-changing climate “tipping points” are still likely to be triggered like the irreversible collapse of the Greenland ice sheets, with a lot more looming as the planet heats more after that, a new study said.

 (AP Photo/Felipe Dana, File)

Even if the world somehow manages to limit future warming to the strictest international temperature goal, four Earth-changing climate “tipping points” are still likely to be triggered with a lot more looming as the planet heats more after that, a new study said.

An international team of scientists looked at 16 climate tipping points — when a warming side effect is irreversible, self-perpetuating and major — and calculated rough temperature thresholds at which they are triggered. None of them are considered likely at current temperatures, though a few are possible. But with only a few more tenths of a degree of warming from now, at 1.5 degrees Celsius (2.7 degrees Fahrenheit) warming since pre-industrial times, four move into the likely range, according to a study in Thursday’s journal Science.

The study said slow but irreversible collapse of the Greenland and West Antarctic ice sheets, more immediate loss of tropical coral reefs around the globe and thawing of high northern permafrost that releases massive amounts of greenhouse gases trapped in now frozen land are four significant tipping points that could be triggered at 1.5 degrees Celsius of warming, which is three-tenths of a degree (half a degree Fahrenheit) warmer than now. Current policies and actions put Earth on a trajectory for about 2.7 degrees Celsius (4.9 degrees Fahrenheit) of warming since pre-industrial times, according to some projections.

“Let’s hope we’re not right,” said study co-author Tim Lenton, an Earth systems scientist at the University of Exeter in the United Kingdom. “There’s a distinct chance some of these tipping points are going to be unavoidable. And therefore it’s really important we do some more thinking about how we’re going to adapt to the consequences.”

Timing is a key issue for tipping points in two ways: when they become triggered and when they cause harm. And in many cases, such as ice sheet collapses, they could be triggered soon but their impacts even though inevitable take centuries to play out, scientists said. A few, such as the loss of coral reefs, cause more harm in only a decade or two.

“It’s a future generation issue,” said study lead author David Armstrong McKay, a University of Exeter Earth systems scientist. “That ice sheets collapsing is kind of that thousand-year timescale, but it’s still bequeathing an entirely different planet to our descendants.”

The concept of tipping points have been around for more than a decade but this study goes further looking at temperature thresholds for when they may be triggered and what impacts they would have on people and Earth and in the past 15 years or so “the risk levels just keep going up,” Lenton said.

Lenton likes to think of tipping points like someone leaning back on a folding chair.

“When you start tipping over backwards you have in that case a very simple kind of feedback on the forces of gravity operating on propelling you backwards until SPLAT,” Lenton said.

Study co-author Johan Rockstrom, director of the Potsdam Institute for Climate Impact Research in Germany, likened it to someone lighting a fuse on a bomb “and then the fuse will burn up until the big bang and the big bang may be further down the line.”

While the ice sheets with several meters or yards of potential sea rise can reshape coastline over centuries, Rockstrom said to him the loss of coral reefs is his biggest concern because of the “immediate impacts on human livelihoods.” Hundreds of millions of people, especially poorer tropical area residents, depend on fisheries linked to the coral reefs, McKay said.

With just a few more tenths of a degree new tipping points become more possible and even likely that includes a slow down of northern polar ocean circulation that can ripple into dramatic weather changes especially in Europe, loss of certain areas of Arctic sea ice, glaciers collapsing worldwide and utter failure of the Amazon rain forest.

Some of these tipping points, like the permafrost thaw, add to and accelerate existing warming, but don’t think “it’s game over” if temperatures hit 1.5 degrees of warming, which is quite likely, McKay said.

“Even if we do hit some of those tipping points, it will still lock in really substantial impacts we want to avoid, but it doesn’t trigger some sort of runaway climate change process,” McKay said. “That’s not the case at 1.5 degrees. And that means that how much further warming occurs beyond 1.5 is still mostly within our power to effect.”

That’s a crucial point that these are tipping points for individual regional disasters not the planet as a whole, so it’s bad, but not world ending, said climate scientist Zeke Hausfather of the tech company Stripe and Berkeley Earth, who wasn’t part of the study, but said it was important nuanced research that quantified tipping points better than before.

“Have we really contemplated what happens when you mess with our global and ecological systems to that degree?” said University of Miami climate risk scientist Katharine Mach, who wasn’t part of the study. She said it shows ripples and cascades that are troublesome. “This is a profound reason for concern in a changing climate.”
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Germany: Economists and activists call for climate fund

Economists, scientists and environmental campaigners have said that Berlin should take its inflation-driven tax revenues and invest it in the country's environmentally-friendly future.

Leading German economists and activists are urging more public financial 

expenditures to fight climate change

Economists, scientists and environmental campaigners came together in Berlin on Tuesday to demand Germany earmark €100 billion ($100 billion) for a climate change fund. 

Marcel Fratzscher, the president of the German Institute for Economic Research, said the money is needed partly because of Germany's failure to invest enough in solar and wind power. Adequate funding would have made the country less dependent on fossil fuel imports that are now contributing to energy poverty, Fratzscher said.

"These mistakes need to be corrected now,'' he told journalists. 

The Fridays for Future youth movement, which is helping to coordinate a global climate protest planned for next week, also supported the idea. Prominent member Luisa Neubauer said that Berlin could take a cue from Washington, where President Joe Biden recently signed a bill setting aside $375 billion in federal investments to fight climate change over the coming decade.

Inflation-boosted tax revenue could finance fund

Fratzscher suggested that additional tax revenue that the German government is receiving because of rampant inflation could go toward the fund, which would echo a similar financial vehicle the government recently created to boost the military. Treasury coffers already were up €29 billion in the first half of the year, he said.

Volker Quaschning, a prominent climate scientist at Berlin's University of Applied Sciences for Engineering and Economics, said the idea was a good start. However, he pointed out, €100 billion was only a fraction of the total sum required to transform Germany into a low-carbon economy and make the country resilient to the impacts of global warming.

Quaschning added that part of the money would have to go to developing countries, whose resources had been exploited by the West and now needed help in making their economies and infrastructures resistant to the problems climate change will bring. He pointed to the recent floods in Pakistan as an example.

es/wd (AP, AFP)

Health groups call for fossil fuel non-proliferation treaty

Around 200 health organisations and more than 1,400 health professionals on Wednesday called for governments to establish a binding international treaty on phasing out fossil fuels, which they said pose "a grave and escalating threat to human health".

The health community is calling for a binding international treaty to phase out fossil fuels

© ANGELOS TZORTZINIS

A letter proposing the "fossil fuel non-proliferation treaty" said it could work similarly to the World Health Organization's Framework Convention on Tobacco Control -- except this time the harmful controlled substances would be coal, oil and gas.

The WHO was among the health organisations from around the world who signed the letter.

"The modern addiction to fossil fuels is not just an act of environmental vandalism. From the health perspective, it is an act of self-sabotage," WHO chief Tedros Adhanom Ghebreyesus said in a statement.

The letter called on national governments to develop and implement a legally binding mechanism that would immediately stop all future fossil fuel expansion, as well as phasing out existing production.

It emphasised that the transition should be carried out in "a fair and equitable manner," and that high-income countries should support lower-income nations to ensure the change "reduces poverty rather than exacerbating it".

Air pollution, mostly from burning fossil fuels, has been linked to the deaths of seven million people a year.

Climate change has also spurred more frequent and severe extreme weather events, which can have a lasting impact on health even beyond those initially affected by the disasters, including smoke from wildfires and diseases spread after floods.

The letter also pointed to the heightened health risks faced by the workers who extract, refine, transport and distribute fossil fuels and related products.

Phasing out fossil fuels would prevent 3.6 million deaths a year from air pollution alone, the letter said, adding that "the same cannot be said for proposed false solutions, such as carbon capture and storage".

- Either fossil fuels or health -

Diarmid Campbell-Lendrum, the head of the WHO's climate change unit, said that "from a health point of view, you can't fix a disease without calling out what is causing it".

The call for a treaty was important because it did not "try to use false accounting or imaginary solutions to continue to prop up the burning of fossil fuels," he told AFP.

"We can either have fossil fuels or we can have health -- we can't have both."

Courtney Howard, an emergency physician in Canada's sub-Arctic region who signed the letter, said that the city of Yellowknife had some of the worst air quality in the world when it was ringed by wildfires in 2014.

"We had a doubling of emergency department visits for asthma, a 50 percent increase in pneumonia and one of our pharmacies ran out of one of the breathing medicines," Howard told AFP.

She said that phasing out fossils fuels is "something we need to do for everybody -- for everybody's kids."

Jeni Miller, the executive director of the Global Climate and Health Alliance which helped coordinate the letter, called for international dialogue and negotiation to make the treaty a reality.

"The costs of inaction are increasing," she said.

Fossil fuel ban treaty would save lives, say global health groups

Air pollution linked to carbon emissions causes millions of deaths every year. A coalition of health groups have called for a nonproliferation treaty to end fossil fuel use around the world.


Air pollution linked to fossil fuel use is responsible for more than 6.5 million deaths every year, according to the WHO

More than 1,000 health workers and 200 organizations have demanded that governments worldwide create and enact a legally binding nonproliferation treaty to end the global dependence on fossil fuels, which are known to be harmful to human health.

"The modern addiction to fossil fuels is not just an act of environmental vandalism. From the health perspective, it is an act of self-sabotage," said Tedros Adhanom Ghebreyesus, director-general of the World Health Organization, which backed the initiative along with the Global Climate and Health Alliance, Physicians for Social Responsibility, Health Care Without Harm and other groups.

In a public letter released Wednesday, they called for an immediate end to new fossil fuel exploration, production and infrastructure. Existing production should be phased out in a "fair and equitable manner" to meet the 1.5 degrees Celsius (2.7 Fahrenheit) climate goal set out in the 2015 Paris Agreement, with "financial, technological and other support" for low- and middle-income countries to ensure a"just transition"to a sustainable future.

"The proposal for a treaty aims to support what the international community has been pushing on for years but focusing on the supply side," Jeni Miller, executive director of the Global Climate and Health Alliance, told DW. "A treaty will allow the Paris Agreement to be stronger by creating a legally binding international mechanism that focuses on the heart of the problem: extracting fossil fuels. If we do not end extraction, it will be much more difficult to end use of these fuels."

"While everybody is aware that we need to end fossil fuel production and use in order to limit climate change, there is less awareness about the huge health bill that has come with decades of coal, oil and gas use," said Anne Stauffer, deputy director at the Brussels-based Health and Environment Alliance.

"With the pandemic, policy makers have placed health protection to the top of their agendas. Now, they need to bring their commitment to preventing ill-health to the area of fossil fuels."

Poor air quality causes millions of deaths each year

Air pollution linked to fossil fuel use causes more than 6.5 million deaths around the world each year, according to a May 2022 study in The Lancet Planetary Health journal. More than 90% of these deaths are happening in rapidly developing countries in Africa and Asia. Almost no one on Earth is spared. According to the latest WHO figures, 99% of the world's population lives in places where the air they breathe exceeds quality limits set by the global body.

The link between fossil fuel emissions and health was made clearer during the first wave of the COVID-19 pandemic, when cities across the world essentially shut down. With businesses closed, roads empty and many people staying home, carbon emissions decreased and air quality improved in many major centers, if only for a short time.

A recent study comparing 46 European cities during those months estimated that 800 deaths linked to air pollution in those cities may have been prevented in the first half of 2020. While just a snapshot of an unprecedented moment in time, the results do reflect how better air quality could improve the health of billions of people worldwide.

The results of the study are backed by moves to phase out coal in other parts of the world over the last 20 years. After the closure of coal-fired power plants in California and Ontario, Canada, for example, surrounding communities saw significant decreases in premature deaths, preterm births and hospital admissions.

Exiting fossil fuels to protect human and ecosystem health

The proposed treaty, to be negotiated by participating countries, would follow the example set by the WHO Framework Convention on Tobacco Control. The international accord, which entered into force in 2005, aims to raise awareness of the dangers of tobacco and limit its use.

A fossil fuel treaty would seek to do the same for the use of coal, oil and gas, which are known to be harmful to human and ecosystem health. The letter points out the numerous health effects of fossil fuel use that go beyond the direct impact of air pollution. A warming climate, for example, also increases the risk of heat-related illness and death and favors the spread of food and waterborne illnesses. At the same time, health care systems and medical supply chains are also coming under increasing strain.

The effects of air pollution in major cities like Dhaka, as seen here, are worse for children and the elderly

"Communities around the world have been paying the health price for our dependence on fossil fuels for far too long," said Miller. "Every stage of the fossil fuel cycle puts people's health at risk, from mining and fracking to transport through pipelines, to processing and finally to burning fossil fuels for transport, electricity, and industrial use," she said.

New treaty would be a 'tangible sign' that governments are serious

Stauffer of the Health and Environment Alliance told DW the call for a new treaty comes at a crucial time, pointing out that despite increased commitments in recent years from entities like the G20 and the European Union, progress on cutting back on fossil fuels has been too slow. The current geopolitical crisis in Europe isn't helping matters, with countries scrambling to find oil and gas from sources other than Russia rather than strengthening renewables.

"With the many short-term measures to deal with the implications from the war in Ukraine, we're risking a fossil fuel lock-in in Europe, despite all commitments to climate neutrality and energy transition," Stauffer said.

"A fossil fuel nonproliferation treaty would be a tangible sign and commitment by governments that they're serious about protecting our health and tackling a top cause of ill health," she added.

Miller said clean energy alternatives to fossil fuels are readily available, but remain out of reach for many. Developed countries, which have profited from decades of growth based on polluting power, now "have the resources and moral responsibility not only to make the clean energy transition, but to support developing countries to do the same," she said.

"For decades we've depended on the capacity of fossil fuels to provide energy, but we now have alternatives that are cleaner and more sustainable — and compatible with the healthier future we want," she added.

7 WAYS HELPING THE ENVIRONMENT WILL BENEFIT HUMAN HEALTH
Link between CO2 and less nutritious food
Cutting greenhouse gas emissions would not only slow global heating, it would also ensure our food remains nutritious. When plants absorb excess CO2, they produce less protein and fewer nutrients like zinc and iron. Deficiencies in those nutrients can result in many health problems, especially in children. If CO2 keeps rising, hundreds of millions more people will face chronic undernutrition.
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Edited by: Jennifer Collins

After 10 years of DACA, Dreamers still live in legal limbo

Mike Bebernes
·Senior Editor
Tue, September 13, 2022 
“The 360” shows you diverse perspectives on the day’s top stories and debates.

The Biden administration late last month issued a new rule designed to fortify DACA, the 10-year-old policy started under former President Barack Obama that has shielded from deportation hundreds of thousands of immigrants who were brought to the U.S. illegally as children.

Created in 2012, the Deferred Action for Childhood Arrivals policy granted some undocumented people who entered the U.S. as minors — often called Dreamers — the right to live and work in the country as long as they met certain criteria and weren’t convicted of serious crimes.

“These are young people who study in our schools, they play in our neighborhoods, they’re friends with our kids, they pledge allegiance to our flag,” Obama said when he established the program. “They are Americans in their heart, in their minds, in every single way but one: on paper.

In the decade since its inception, more than 800,000 Dreamers have taken advantage of the program, and many of them have since become adults who have started businesses, gotten married and had children of their own. Since the executive branch doesn’t have the authority to grant Dreamers permanent legal status or citizenship, DACA was intended to be a temporary stopgap until Congress passed a more comprehensive solution. Bills to do just that, most notably the DREAM Act, have been proposed repeatedly, but each time have failed to advance.

Lack of action from Congress has left the fate of Dreamers in the hands of the executive branch and the courts. Former President Donald Trump tried to repeal DACA early in his presidency, but was blocked by the Supreme Court. An ongoing legal challenge, however, could end the program for good. Last year, a federal judge in Texas ruled that DACA was unconstitutional. The Biden administration has appealed the decision, meaning current DACA recipients are unaffected as of now, but no new applications can be accepted. The case is currently being weighed by the Fifth Circuit Court of Appeals and, depending on the outcome, could ultimately make its way to the U.S. Supreme Court.
Why there’s debate

A strong majority of Americans, including most Republicans, support a permanent status for Dreamers. But the fate of the program is still very much up in the air and there’s significant debate over the best way to end the legal limbo that Dreamers have lived in for the past decade.

There’s some hope among some immigration rights advocates that the looming legal threat to DACA might provide motivation for Congress to finally pass something like the DREAM Act. Accomplishing that, some argue, might require some concessions from Democrats to secure enough Republican votes to overcome a likely filibuster. It may also mean proposing the DACA protections on their own, rather than as part of a larger package of immigration reforms that prompt more heated partisan opposition.

But skeptics say it’s still unlikely that anything substantive gets done. They argue that Republicans aren’t going to want to hand Democrats another legislative victory, especially with control of Congress up for grabs in the November midterm elections. Some advocates on the left say nothing will happen unless Democrats make a much more aggressive push to codify DACA into law during the shrinking window in which they control both the House and Senate.

Many of those same advocates have criticized Biden for not using his power as president to expand DACA so more immigrants are eligible. Some conservatives, though, argue that DACA has always been a severe violation of executive power and the courts would be correct to return full decision-making power over immigration policy back to Congress.
What’s next

The Fifth Circuit’s DACA ruling is expected to be released in the coming weeks. If that decision is appealed, it could be heard by the Supreme Court as early as this fall, with a potential final ruling sometime next year.
Perspectives

There’s at least some hope that Congress might pass a permanent solution

“If there’s any glimmer of hope for DREAMers, it might be in the Senate’s compromise on another highly divisive topic: gun control. … A series of major mass shootings finally galvanized enough bipartisan support to pass a gun safety package earlier this year that didn’t go as far as Democrats wanted, but still introduced tailored reforms. With the right motivation, immigration advocates hope a similar sort of negotiation might be possible on immigration, as well.” — Nicole Narea, Vox

DACA’s existence may actually be making true reform less possible

“The difference is night and day from being undocumented to then having protection from deportation, work authorization and essentially being able to start one's life. … But as an unintended consequence, DACA may have actually taken some of the steam out of a legislative fix that would have provided permanent legal status for undocumented young people.” — Tom Wong, immigration policy researcher, to NPR

The GOP should hold out on DACA until they have more leverage to enact their own immigration reforms

“Ultimately, this is a battle that must be fought in Congress and likely will not advance for Republicans until a president of their party is in the White House. After a year and a half of the Biden administration’s open borders … the American public is likely more receptive than ever to stricter immigration policies. If Republicans in Congress are paying any attention to where their voters are positioned on immigration, they should think twice before caving on amnesty for illegal aliens.” — Jack Wolfsohn, National Review

Republicans’ hard-line anti-immigrant views don’t allow room for nuance

“It’s all a matter of mindset, of course. Republicans could just as easily look at Dreamers as a ready workforce during a labor shortage that’s aggravating inflation, or perhaps even (God forbid!) as human beings. … They can’t seem to separate Dreamers, raised in the same country as them, from new border arrivals.” — Jean Guerrero, Los Angeles Times

An end to DACA would be an important step toward reining in presidential overreach

“Obama’s illegal DACA program caused an incalculable loss of faith in the rule of law. … Until presidents like Biden, Trump, and Obama are forced to drive within the lines, the presidency itself will continue to be the biggest threat to democracy in America.” — Editorial, Washington Examiner

Lawmakers on both sides must abandon political gamesmanship and pass a simple DACA solution

“The argument in Congress has long been about wider policy differences on immigration and border security. Hundreds of thousands of DACA recipients are human pawns on this political chess board. … Congress could pass a clean law to formally legalize the DACA program, and the president could sign it. Everything else is politics.” — Editorial, Orange County Register

Both political parties are too mired in dysfunction to solve the problem

“There’s a core of Republican voters that won’t support giving legal status to any undocumented immigrants, and members … of Congress either agree with them or are wary of crossing them. Meanwhile, Democrats still have trouble getting on the same page, even with control of the White House and slim majorities in both houses of Congress.” — Editorial, San Diego Union-Tribune

The moral argument for protecting Dreamers can only go so far

“A stunted ethical vision is a major issue at hand, but so is irrationality when one considers the financial contributions that DACA recipients make each year (for example, $9.4 billion in taxes alone) along with other markers showing the benefits that DACA has bestowed on recipients and on society at large — and the ultimate value of granting a pathway to citizenship.” — Andrew Moss, Daily Hampshire Gazette

Biden could do much more to protect Dreamers even without Congress

“Because the Biden administration chiefly focused on its battle with the courts, the new rule fails to adopt any substantive measures to expand or strengthen the DACA program. Most conspicuously, the government declined to extend the date that a young immigrant must have arrived in the United States to apply for DACA. … Effectively set an expiration date for DACA regardless of what the courts decide.” — Jacob Hamburger and Stephen Yale-Loehr, Slate

Even overwhelming public opinion won’t be enough to sway Congress

“The failure of Congress to pass federal legislation that would legalize the immigration status of hundreds of thousands of Dreamers is another reminder that polling data and statistics take a back seat when it comes to immigration policy. Politicians and elected officials would much rather pander to the most extreme and fringe elements of their political base.” — Marcela García, Boston Globe

Failure to protect Dreamers means comprehensive immigration reform is all but unimaginable

“The problem of migrants who lack long-term documentation is broader than dreamers. An estimated 6.7 million migrants have lived here for more than a decade; of that cohort, more than half have been here for 20 years or longer. Yet within that population, dreamers are unique. Having been brought to the country as babies, toddlers and teens, they were handed a raw deal. It’s a disgrace that we can’t resolve it.” — Editorial, Washington Post

Is there a topic you’d like to see covered in “The 360”? Send your suggestions to the360@yahoonews.com.

Photo illustration: Yahoo News; photos: Kent Nishimura/Los Angeles Times via Getty Images

ABANDONING LEGACY COSTS
IBM to Post $5.9 Billion Pension-Transfer Charge in Third Quarter

Brody Ford and Max Reyes
Tue, September 13, 2022


(Bloomberg) -- International Business Machines Corp. said it would report a $5.9 billion one-time pretax charge in the third quarter as a result of an agreement to offload pension obligations to two life insurers.

IBM and its pension plan administrator said the purchase of annuities from Prudential Financial Inc. and MetLife Inc. will transfer about $16 billion in pension obligations that cover about 100,000 participants and their beneficiaries. The annuities were funded directly by the assets of the pension plan and required no cash or asset contributions from IBM, the company said Tuesday in a regulatory filing.

The agreement is called a pension risk transfer. IBM, by buying annuities from the insurance companies, makes Prudential and MetLife responsible for paying the pension obligations. Insurers have been seeking out pension-transfer agreements in recent years as a way to accrue assets for investment. The popularity of the deals is also driven by employers that are looking to offload the long-term obligations.

IBM, in a blog post, said it has “taken actions over the last several years to reduce the risk profile of its worldwide retirement-related plans, while at the same time increasing the funded status of the plans.”

IBM said the charge will not affect its third-quarter or full-year operating profit or free cash flow.

Woodford Administrator Faces Possible £306 Million Hit, UK Says

Derek Decloet and Loukia Gyftopoulou
Tue, September 13, 2022 


(Bloomberg) -- The Financial Conduct Authority said the administrator of Neil Woodford’s failed fund could face a penalty of up to £306 million ($358 million) over its collapse, a first indication of the likely findings from the UK regulator’s longrunning probe.

The Financial Conduct Authority “is likely” to require Link Fund Solutions -- the entity that managed the Woodford fund -- to “pay a financial penalty and/or consumer redress,” the regulator said in a statement Monday, although it noted that the decision was not final and that LFS could challenge it.

The estimated redress payment reflects the regulator’s “current view” of Link’s failings in managing the liquidity of Woodford’s Equity Income Fund. The regulator opened an investigation into the circumstances relating to the suspension in June 2019.

Link Fund Solutions was the fund administrator on the LF Woodford Equity Income Fund, which started to be liquidated nearly three years ago. Woodford froze the vehicle in mid-2019 because he couldn’t meet clients’ withdrawal requests, trapping £3.7 billion of investor funds.

He was ousted as manager of the fund in October of that year, and announced he would shutter his investment firm, a stunning fall that counts as one of the most dramatic in London’s financial history. Subsequent asset sales have seen investors recoup some of their money but they are still about £1 billion out of pocket.

Link Administration Holdings said in a statement Tuesday that LFS “does not agree with the FCA’s view” and “will explore all options,” including challenging any decision. “Link Group considers that any liabilities relating to the Woodford Matters will be confined to” LFS.

Canadian Deal

The potential penalty could derail Toronto-based Dye & Durham Ltd. proposed acquisition of Australia’s Link Administration Holdings Ltd. The FCA said its approval of Dye & Durham’s acquisition of Link is “subject to a condition to commit to make funds available to meet any shortfall” within the fund administrator to cover potential payments.

Dye & Durham is assessing the impact of that demand made by the FCA, according to its separate statement Monday. If it can’t accept those terms, it said, then the companies might not be able to close the $1.7 billion deal, which had already been repriced lower after the sharp selloff in technology stocks.

The firm “must now decide whether to proceed with the transaction at a higher effective purchase price, renegotiate with Link and revise the terms of its offer to account for the incremental liability, or walk away from the deal,” BMO Capital Markets analyst Thanos Moschopoulos said in a note.

Shares in the Canadian company dropped 2% to C$14.43 in Toronto on Monday. Link shares fell by about a fifth on Tuesday in Sydney.

ECONOMIC DIKTATOR
Turkey’s Odd Bond Yields Show a Market Warped by Erdogan

Asli Kandemir and Ugur Yilmaz
Tue, September 13, 2022 


(Bloomberg) --

Turkish debt markets are becoming increasingly disconnected from economic reality as the government’s lira and dollar bonds trade at nearly the same yields.

It’s an oddity that doesn’t make sense when viewed through the lens of classic risk and reward. The lira is one of the world’s worst-performing currencies as Turkish inflation speeds past 80%, while the dollar enjoys the status of the ultimate safe haven.

But in Turkey, market movements are best understood by government policies. The central bank just delivered a shock rate cut demanded by President Recep Tayyip Erdogan while pushing lenders to buy more lira bonds, reducing borrowing costs.

As a result, the yield on lira-denominated notes due in November 2030 dropped as much as 13 basis points below the rate on the sovereign’s similar-maturity dollar bonds last week. In March, local yields were roughly 1,800 basis points higher.

“It’s an extremely rare situation for emerging markets in general, and the first time this has happened in Turkey,” said Emre Akcakmak, a senior consultant to East Capital, based in Dubai. “I wouldn’t expect this yield dynamic to be sustainable.”

The lira bond rally comes despite upward pressure on inflation and expectations the lira will weaken further. It also counters the trend with the junk-rated sovereign’s dollar debt, which has sold off this year -- along with bonds of many other developing markets -- amid risks to global and local economic growth prospects.

Compliance-Driven Rally

Foreign investors have largely exited from the country’s local bonds, meaning price movements there are driven by Turkish investors rushing to comply with new rules, regardless of economic fundamentals.

On Tuesday, the November 2030 lira bonds yielded about 29 basis points more than Turkey’s equivalent dollar notes. Other maturities have also seen an unprecedented conversion, with the extra yield on local bonds due in 2027 dropping to as little as 71 basis points above similar dollar notes last month, from 880 basis points in June.

The low-yield, high-inflation environment is the legacy of Erdogan’s unconventional economic beliefs. He says that low interest rates help curb consumer prices and has pressed policy makers into cutting official borrowing costs. However, the ultra-loose monetary policy has so far failed to halt inflation and contributed to the lira’s 27% weakening against the dollar this year.

Last month, the central bank released rules forcing banks to bring commercial loan rates closer to Turkey’s 13% benchmark policy rate, in an attempt to counter signs that the $830 billion economy might be slowing. Earlier, it forced lenders to buy lira bonds as requirements for collateral as well as bank reserves.

Such low rates on lira bonds may eventually lead to an outflow of foreign currency from Turkey as companies refinance hard-currency debt with local funding, according to Inanc Sozer, managing partner at Istanbul-based consultants Virtus Glocal.

Meanwhile, Turkish banks -- increasingly bloated by low-yielding lira-bond portfolios -- may be hit with “significant losses” when interest rates finally rise, he said.

Germany Sells Lufthansa Stake at $760 Million Profit


Eric Pfanner and Mariajose Vera
Wed, September 14, 2022 


(Bloomberg) -- Germany raised 760 million euros ($760 million) from the sale of a stake in Deutsche Lufthansa AG, unwinding all of the holding it took to keep the flagship carrier afloat during Covid-19 lockdowns.

The country’s Economic Stabilization Fund, or WSF, sold its remaining 9.92% stake in Europe’s largest airline via an accelerated bookbuilding to institutional investors, according to a statement late Tuesday.

“The total proceeds of 1.07 billion euros generated for the WSF from the sale of its stake significantly exceed the 306 million euros invested to acquire it by 760 million euros,” said Jutta Doenges, who is responsible for the WSF as managing director of the finance agency. With this outcome, “the participation of the WSF ends and the company is back in private hands,” she said.

The joint bookrunners of the block placement announced late Tuesday that the WSF had sold about 74.4 million Lufthansa shares representing about 6.2% of the share capital at 6.11 euros per share, a discount of 3.35% compared with the airline’s closing price.

Lufthansa in November repaid the last of its 9 billion-euro bailout ahead of schedule, enabling the government to pare its stake at a significant profit.

Germany’s richest man may have been one of the buyers, after saying he wants to acquire more shares in Europe’s biggest airline. Klaus-Michael Kuehne is looking to boost his 15.01% stake according to a filing last week, after investing a chunk of a fortune he made in logistics into the carrier.

The latest developments for the carrier come shortly after it said it reached agreement with pilots to increase pay and bar strikes for about a year. Europe’s largest airline has been wrestling with labor disputes that exacerbated an already chaotic summer travel season.

Crypto Lending Now Pays Less Than Safest US Government Debt

Eva Szalay
Tue, September 13, 2022 

(Bloomberg) -- Cryptocurrencies are facing a new threat: the lure of Treasuries offering a similar payout for a whole lot less risk.

In a rare reversal, crypto yields that institutions typically seek out have fallen below what the US government pays to borrow for three months, giving the hedge funds and family offices that have flocked to the digital space one less reason to keep investing.

The Federal Reserve’s hawkish stance is driving up interest rates almost everywhere -- except in the speculative world of crypto, where yields have collapsed alongside volumes, wiping out some of the main avenues for generating double-digit returns, while the implosion of the Terra stablecoin project and the failures of crypto lenders like Celsius Network shook confidence.

“Two years ago, interest rates in crypto were at least 10% and in the real world rates were either negative or near-zero,” said Jaime Baeza, chief executive officer of ANB Investments, a hedge fund focused on digital assets. “Now it’s almost the reverse, because yields in crypto have collapsed and central banks are raising rates.”

This year’s crypto winter has already challenged some of proponents’ key arguments, such as the asset class being a hedge against inflation and political turmoil. Instead, Bitcoin has traded pretty much in line with stock benchmarks like the S&P 500, except that it’s dropped at a much faster pace.

But not until recently have crypto yields been matched, or even surpassed, by those of government debt that’s essentially risk free.

Unlike in traditional markets, falling yields don’t signal lower risks for crypto. Yields are shaped by trading volumes rather than risk sentiment, and reflect the rate an investor can hope to earn lending out holdings on exchanges and decentralized-finance protocols, or depositing them with crypto lenders, often in the form of stablecoins.

Because they have no direct relation to central bank rates, crypto yields can slump even as borrowing costs spike across financial markets to reflect steep Fed hikes. That’s creating a mismatch that could lead to a secular stagnation in some of the world’s most speculative assets, some market observers say. Lower yields will make it less likely that investors buy tokens to lend them out, leading to lower demand and in turn, lower prices.

That dynamic is becoming even more pronounced after Fed Chair Jerome Powell’s recent higher-for-longer rates pledge to subdue stubborn inflation.

“Higher appetite for Treasuries has sucked out liquidity from crypto,” said Sidney Powell, the chief executive of crypto lending company Maple Finance.

DeFi Outflow

It’s not that investors who previously chased crypto yields are now buying Treasuries; rather, what’s happening is that across most of finance, higher rates are now available for a given amount of risk. For example, the yield investors can earn on global company debt has spiked to financial crisis-era highs of 4.4%, according to a Bloomberg index.

A key measure of investor interest in yield-generating crypto activities is the total value locked in marketplaces where much of the lending takes place — so-called DeFi platforms. This measure has declined to just $60 billion from its peak of $182 billion in December last year, according to data from DeFiLlama.

Meanwhile, Bitcoin is trading at $22,351, around 53% off its March peak this year after five consecutive weeks of outflows from Bitcoin and Ethereum ETFs totaling $99 million, according to CoinShares.

Kaspar Hense, a portfolio manager at BlueBay Asset Management, says that’s still too high, and suggests $10,000 would be closer to fair value. Double-digit yields were mainly thanks to distorted real rates when central banks kept borrowing costs anchored near zero, Hense argues.

Still, Inigo Fraser Jenkins, co-head of institutional solutions at AllianceBernstein, said that while the investment case for crypto is harder to make in a high-rate macro environment, institutional investors will still gravitate to it in order to gain experience trading an array of related assets.

“The real importance is seeing crypto as a stepping stone to a broader set of digital assets, in particular tokenized real assets,” Fraser Jenkins said.

Before the recent reversal, crypto had enjoyed exponential growth, even through rollercoaster ups and downs. The post-financial crisis era when central bankers sought to reflate economies via historically low interest rates sent money managers craving returns into ever riskier assets — a windfall for crypto.

“Now the environment is very different,” said Andrew Sheets, chief cross-asset strategist at Morgan Stanley. “A key cross-asset theme has been the shift from a near zero and negative rate environment to one where you can get over 3% on a triple A-rated T-bill that’s guaranteed by the US government. This will have an impact on the performance of assets with no yield such as gold, some tech stocks and crypto.”

Starbucks details its blockchain-based loyalty platform and NFT community, Starbucks Odyssey


Sarah Perez
Mon, September 12, 2022 at 6:00 AM·7 min read

Starbucks is today officially introducing Starbucks Odyssey, launching later this year -- the coffee chain's first foray into building with web3 technology. The new experience combines the company's successful Starbucks Rewards loyalty program with an NFT platform, allowing its customers to both earn and purchase digital assets that unlock exclusive experiences and rewards.

The company had earlier teased its web3 plans to investors, saying it believed this new experience would build on the current Starbucks Rewards model where customers today earn "stars" which can be exchanged for perks, like free drinks. It envisions Starbucks Odyssey as a way for its most loyal customers to earn a broader set of rewards while also building community.

To develop the project, Starbucks brought in Adam Brotman, the architect of its Mobile Order & Pay system and the Starbucks app, to help serve as a special advisor. Now the co-founder of Forum3, a web3 loyalty startup, Brotman's team worked on Starbucks Odyssey alongside the Seattle coffee chain's own marketing, loyalty and technology teams.

While Starbucks had been investigating blockchain technologies for a couple of years, it has only been involved in this particular project for around six months, Starbucks CMO Brady Brewer told TechCrunch. He says the company wanted to invest in this area, but not as a "stunt" side project, as many companies are doing. Rather, it wanted to find a way to use the technology to enhance its business and expand its existing loyalty program.

It opted to make NFTs the passes that allow access to this digital community, but it's intentionally obscuring the nature of the technology underpinning the experience in order to bring in more consumers -- including non-technical people -- to the web3 platform.

"It happens to be built on blockchain and web3 technologies, but the customer -- to be honest -- may very well not even know that what they're doing is interacting with blockchain technology. It's just the enabler," Brewer explains.

To engage with the Starbucks Odyssey experience, Starbucks Rewards members will log in to the web app using their existing loyalty program credentials.

Once there, they'll be able to engage with various activities, which Starbucks called "journeys" -- like playing interactive games or taking on challenges designed to deepen their knowledge of the Starbucks brand or coffee in general. As they complete these journeys, members can collect early digital collectibles in the form of NFTs (non-fungible tokens). Starbucks Odyssey, however, does away with the tech lingo and calls these NFT collectibles "journey stamps" instead.

Additionally, a set of limited-edition NFTs will be available to purchase in the Starbucks Odyessy web app, which also works on mobile devices. Though hosted on the Polygon blockchain, these NFTs will be bought using a credit or debit card -- a crypto wallet is not required. The company believes this will make it easier for consumers to engage with the web3 experience by lowering the barrier to entry. It also won't complicate consumers' transactions with things like "gas fees," preferring to offer a bundled price.

The company is not yet ready to share what its NFTs will cost or how many will be available at launch, saying these are decisions that are still being ironed out.

However, the various "stamps" (NFTs) will include a point value based on their rarity and can be bought or sold among Starbucks Odyessy members in the marketplace, with the ownership secured on the blockchain. The artwork on the NFTs is being co-created by Starbucks and outside artists, and a portion of the proceeds from the sale of the limited-edition collectibles will be donated to support causes chosen by Starbucks employees and customers.

By collecting the stamps, members will gain points that can unlock exclusive benefits.

These perks go beyond those you can earn with a traditional Starbucks Rewards account and its "stars." While today, members can earn things like free coffee, free food or select merchandise, the points earned in Starbucks Odyessy will translate into experiences and other benefits.

Starbucks Hacienda Alsacia. 

On the lower end, that could be a virtual espresso martini-making class or access to unique merchandise and artist collaborations. As you gain more points, you may earn invites to special events hosted at Starbucks Reserve Roasteries, or even earn a trip to the Starbucks Hacienda Alsacia coffee farm in Costa Rica. It's expected the very largest perks will be reserved for those who purchase NFTs, though lesser versions may be offered to those who earn their way up.

For instance, a paid NFT could offer the full travel package and farm tour, while an earned NFT could offer the tour alone with flights and hotels left up to the user. Starbucks hasn't made any formal decisions on this front, however.

But what the company can say is that it wants to deeply integrate the program with its existing loyalty rewards, beyond simply using the same user account credentials for both programs.

Brewer says Starbucks is already imagining how some of the activities that earn NFTs will be connected to real-world Starbucks purchases, for instance.

In Odyssey, users earn NFTs by doing challenges, which might also include a real-world activity like "try three things on the espresso menu." This would require the user to show their barcode at checkout -- as they would if earning stars -- to have their transaction counted toward the Starbuck Odyssey challenge. The company is still determining what mix of games, challenges and quests it will include at launch.

"But we'll have experiences that do link directly to customers' behavior in our stores," Brewer stresses. Most importantly, the company wants to make gaining NFTs something anyone can do -- not just those with money to blow on digital collectibles, as is often the case with current NFT communities, which price out the average user.

"There will be a lot of ways for people to earn [rewards] without having to spend a lot of money," says Brewer. "We want to make this super easy and accessible. There will be plenty of everyday experiences customers can earn like virtual classes or access to limited edition merchandise, for instance. "The range of experiences will be quite vast and very accessible," he adds.

Starbucks says it explored all the different blockchains for the project but landed on the "proof-of-stake" blockchain technology built by Polygon for this effort because it uses less energy than first-generation "proof-of-work" blockchains, which is more in line with its conversation goals.


The idea to enter into the world of web3 makes sense for a company known for taking advantage of emerging technologies and making them more approachable and easy for consumers to access. In years past, Starbucks introduced Wi-Fi in its stores to encourage customers to spend more time during visits. It also pushed the idea of mobile wallets long before Apple Pay became ubiquitous. And it made mobile ordering the norm well ahead of the COVID pandemic, when other restaurant chains picked it up.

But one criticism leveraged against many traditional businesses when they enter the web3 market is that they're approaching it as a marketing stunt, not a real endeavor. Starbucks, of course, argues that's not the case here -- but only time will tell how serious its interest may be.

"We're bullish on the future of these technologies enabling experiences that were not possible before," Brewer claims. The intention is to be flexible and move with the customers as the web3 market changes, he explains. "It's really important that we're looking at it for the long-term," he continues. "But, given that we're plugging it into our industry-leading, massive scale rewards program -- we're committed," he says.

The company says its web3 platform will open its waitlist (waitlist.starbucks.com) on September 12 and will launch later in the year. It will remove the waitlist and open the platform more broadly sometime next year.