Biden administration tells US Supreme Court to review social media laws

Andrew Chung
Mon, August 14, 2023 


(Reuters) - President Joe Biden's administration urged the U.S. Supreme Court to take up a dispute over Republican-backed laws in Texas and Florida that would undercut efforts by social media companies to curb content deemed objectionable on their platforms.

The states call the actions impermissible censorship.

The justices are considering taking up two cases involving challenges to the state laws brought by technology industry groups including NetChoice, whose members include Meta Platforms Inc Alphabet Inc, and X, formerly known as Twitter.

Supporters of the laws, passed in 2021, have argued that social media platforms have silenced conservative voices, while advocates of content moderation have argued for the need to stop misinformation and advocacy for extremist causes.

Florida is seeking to revive its law after a lower court ruled largely against it, while the industry groups are appealing a separate lower court decision upholding the Texas law, which the Supreme Court blocked at an earlier stage of the case.

Invited to weigh in on the dispute, the Justice Department on Monday said the cases merit review because the laws burden the platforms' rights under the U.S. Constitution's First Amendment, which protects freedom of speech.

"When a social-media platform selects, edits, and arranges third-party speech for presentation to the public, it engages in activity protected by the First Amendment," the Justice Department said in a written brief.

The cases would test the argument made by the industry groups that the First Amendment protects platforms' editorial discretion and prohibits governments from forcing them to publish content against their will.

The companies have said that without editorial discretion their websites would be overrun with spam, bullying, extremism and hate speech.

Florida's law requires large platforms to "host some speech that they might otherwise prefer not to host" by disclosing censorship rules and prohibiting the banning of any political candidates. Texas' law forbids censoring users based on "viewpoint."

(Reporting by Andrew Chung in New York; Editing by Sonali Paul)

MONOPOLY CAPITALI$M M&A
Esmark Offers to Buy US Steel for Cash, Trumping Cliffs

Joe Deaux
Mon, August 14, 2023 




(Bloomberg) -- Esmark Inc. offered to buy United States Steel Corp. for $7.8 billion in cash, trumping an earlier bid from Cleveland-Cliffs Inc. and raising the stakes in a battle for the future of the US industrial icon.

The announcement by privately held Esmark has surprised many market watchers — the industrial company’s steel business is focused on processing and distributing rather than the raw metal that US Steel produces, making it an unlikely buyer. Esmark chief executive officer and owner James Bouchard, a one-time US Steel executive, said in a phone interview that the company has available cash on hand to fund the offer.

US Steel shares spiked further on the new bid to close 37% higher, its biggest one-day increase on record. Still, the closing price of $31.08 a share remains below the $35 a share being offered by Esmark.

The Esmark announcement is the latest twist in a rapidly evolving saga that has the potential to reshape the domestic steel landscape. US Steel, which traces its roots back more than a century and was America’s first $1 billion company, announced Sunday it had started a strategic review of alternatives after rejecting the $7.25 billion offer from rival Cliffs. The company said it had received multiple approaches for part or all of its business and appointed advisers for the review.

The news sent US Steel shares soaring on Monday morning, as Cliffs CEO Lourenco Goncalves insisted in television interviews he was confident his bid would succeed, citing the backing of the influential United Steelworkers union.

However the bigger bombshell was still to come. In a statement thin on details, Esmark announced a “voluntary public cash and exchange offer” for US Steel, which it said would run until Nov. 30 and could be extended.

“The Esmark bid is a shocker. I would expect that we would see some other steelmakers come into play before what is a traditional service center,” said Josh Spoores, the principal steel analyst at industry consultant CRU. “I don’t know what to make of it. It’s a head scratcher.”

Commenting on the announcement, a US Steel spokesperson said it was the first that the company had heard from Esmark. “We welcome them to join the multiple parties already in our previously announced strategic alternatives process.”

Bouchard said that his offer was motivated by a desire to ensure US Steel remained American owned after the weekend’s announcements.

“They’ve made huge strides, but we have a lot of work to do and we can make US Steel US Steel again,” he said. “This needs to stay an American institution.”

Esmark made headlines over a decade ago when it sold its steel assets to Russia’s OAO Severstal in 2008, before repurchasing three processing plants that were part of the earlier deal in 2010. However, those deals were dramatically smaller than the bid it has announced for US Steel.

The company said on Monday it is a leading processor and distributor of value-added flat-rolled steel in the US and the third-largest domestic producer of tin plate steel.

US Steel is one of the icons of US industry, tracing its roots back to 1901 when J. Pierpont Morgan merged a collection of assets with Andrew Carnegie’s Carnegie Steel Co.

Under CEO David B. Burritt, who took the helm of the then struggling metal producer in 2017, the company has shifted its investment focus to furnaces that remelt scrap into steel, rather than creating metal from iron ore as it has for more than a century.

(Updates with comment from Esmark CEO, US Steel spokesperson.)

Most Read from Bloomberg Businessweek

Ceramic pipes kept this town from flooding during monsoons 4,000 years ago

Laura Baisas
Mon, August 14, 2023

Closeup photo of water pipe segments fitted together in situ at Pingliangtai.

China’s Longshan period which lasted from about 2600 to 2000 BCE is best known for its sophisticated pottery shapes, but their sophisticated plumbing is getting some well-deserved attention. A team of archaeologists found the oldest known ceramic water pipes in China, demonstrating that locals were capable of major feats of engineering without a centralized state government. The findings are described in a study published August 14 in the journal Nature Water.

[Related from PopSci+: Inside the project to bring ‘self-healing’ Roman concrete to American shorelines.]

The newly unearthed network of ceramic water pipes and drainage ditches were found at the ancient walled city of Pingliangtai, located in what is now the Huaiyang District of Zhoukou City in central China. The town was home to roughly 500 people during neolithic times and had protective walls and a surrounding moat. It sits on the Upper Huai River Plain on the vast Huanghuaihai Plain, and the climate 4,000 years ago saw large seasonal climate shifts. Summer monsoons could dump a foot and a half of rain on the region every month.

With all this rain, it was critical for the region to manage floodwaters. The people of Pingliangtai appear to have built and operated a two-tier drainage system to help mitigate the rainy season’s excessive rainfall. Simple but coordinated lines of drainage ditches ran parallel to the rows of houses to divert water from the residential area to a series of ceramic water pipes that carried the water into the surrounding moat, and away from the village.

The team says that this network of pipes shows that the community cooperated with one another to build and maintain this drainage system.

“The discovery of this ceramic water pipe network is remarkable because the people of Pingliangtai were able to build and maintain this advanced water management system with stone age tools and without the organization of a central power structure,” study co-author and University College London archaeologist Yijie Zhuang said in a statement. “This system would have required a significant level of community-wide planning and coordination, and it was all done communally.”

The network is made of interconnecting individual segments which run along roads and walls that divert rainwater. According to the team, it shows an advanced level of central planning and is the oldest complete system discovered in China to date.

The team was also surprised by this find because the Pingliangtai settlement shows little evidence of a social hierarchy. The homes within it were uniformly small and there aren’t any signs of social stratification or significant inequality amongst the population. Digs at the town’s cemetery also didn’t reveal any evidence of a social hierarchy in burials the way excavations at other nearby towns have.

[Related: Mysterious skull points to a possible new branch on human family tree.]

The level of complexity that these pipes demonstrate also undermines some earlier understanding of archaeological finds that believe only a centralized state power could organize and provide the resources for such a complex water management system. Other ancient societies that used advanced water systems tended to have a stronger, more centralized government, but Pingliangtai shows that that centralized power was possibly not always needed.

“Pingliangtai is an extraordinary site. The network of water pipes shows an advanced understanding of engineering and hydrology that was previously only thought possible in more hierarchical societies,” study co-author and Peking University archaeologist Hai Zhang said in a statement.

Photo of in situ water pipes leading to a drainage ditch near Pingliangtai's southern gate. CREDIT: Yanpeng Cao

The ceramic water pipes also show an advanced level of technology for this period in time. Like with Longshan pottery, there was some variety of decoration and styles, but each pipe segment was about 7.8 and 11.8 inches in diameter and about 11.8 to 15.7 inches long. Multiple segments were slotted into one another to transport the water over long distances.

According to the study, the team can’t say specifically how the labor to build this infrastructure was organized and divided. A similar level of communal coordination would also have been necessary to build the earthen walls and moat that surround Pingliangtai.

Joseph Needham's contribution to the history of science ...

United Nations University

https://archive.unu.edu › unupress › unupbooks

For more than 30 years, Joseph Needham's work on the history of Chinese science and technology has been carried out as a contribution toward the detailed ...

Nikola Plunges After EV Battery Fires Spur Recall, Sales Halt


Craig Trudell
Mon, August 14, 2023 

(Bloomberg) -- Nikola Corp. shares plummeted after the manufacturer announced it will recall trucks and temporarily stop sales after several battery fires.

The company will call back roughly 209 of its Tre trucks after a third-party investigator found a coolant leak was likely behind a blaze at the company’s Phoenix headquarters in June. While Nikola said its vehicles can remain in operation, it advised customers and dealers to park outside until a fix is ready in the coming weeks.

Nikola’s stock plunged as much as 20% shortly after the start of regular trading Monday. The shares have fallen 98% from their peak reached in June 2020, the month Nikola went public by merging with a special purpose acquisition company.

Internal investigations by Nikola’s safety and engineering teams indicate a single supplier component within its battery packs are the likely source of coolant leaks that a third party found to be the probable cause of the June truck fire.

The company said this was corroborated by another “minor thermal incident” last week involving one of its engineering-validation trucks in Arizona. No one was injured in either case.

Nikola said only two of its batteries have experienced a thermal event out of more than 3,100 packs on trucks produced to date.

CRIMINAL CAPITALI$M
Lebanon's interim central bank governor freezes assets of former chief and close associates

Associated Press
Mon, August 14, 2023 

 Lebanese Central Bank Governor Riad Salameh attends a news conference in Beirut, on Nov. 11, 2019. The United States, United Kingdom, and Canada Thursday slapped sanctions on Lebanon's embattled ex-central bank governor and four family members and close associates for corruption, the U.S. Treasury Department said. Salameh, 73, ended on July 31, 2023 his 30-year tenure under a cloud of investigation and blame for his country's historic economic crisis.

 (AP Photo/Hussein Malla, File)

BEIRUT (AP) — Lebanon’s interim central bank governor Monday froze the accounts of the bank's embattled former chief and close relatives and associates days after the United States, United Kingdom and Canada slapped sanctions on them.

Wassim Mansouri’s decision was made public following a meeting of the central bank’s Special Investigation Commission. The commission is in charge of fighting money laundering and terrorism financing. It named former Gov. Riad Salameh, his son Nady, brother Raja, close associate Marianne Hoayek and former partner Anna Kosakova.

Mansouri ordered all accounts in Lebanese banks and financial institutions of the five individuals be frozen. It also lifts bank secrecy requirements of the individuals at the request of judicial authorities.

Riad Salameh's mobile phone was off when contacted for comment by The Associated Press.

Salameh, 73, ended his 30-year tenure on July 31 under a cloud of investigation and blame for his country’s historic economic crisis.

France, Germany, and Luxembourg are investigating Salameh and close associates over alleged financial crimes, including illicit enrichment and the laundering of $330 million. Paris and Berlin issued Interpol notices on Salameh in May, though Lebanon does not hand over its citizens to foreign countries.

The U.S. Treasury Department said last week that the U.S. coordinated the sanctions with the U.K. and Canada and that assets connected to Salameh would be frozen.

Salameh has repeatedly denied allegations of corruption, embezzlement and illicit enrichment. He insists that his wealth comes from inherited properties, investments and his previous job as an investment banker at Merrill Lynch.

Salameh is also being investigated in Lebanon. The Lebanese judiciary took his passports and imposed a travel ban soon after receiving the Interpol notices.

Salameh has criticized the European probe and said it was part of a media and political campaign to scapegoat him.

Once hailed as Lebanon’s guardian of financial stability, Salameh has been among the officials most blamed for policies that led to the country’s economic crisis, which has decimated the value of the Lebanese pound by around 90% against the U.S. dollar and sparked triple-digit inflation.

A forensic audit into Lebanon’s central bank by a New York-based company last week revealed yearslong misconduct by Salameh and $111 million in “illegitimate commissions.”

A copy of the 331-page document by Alvarez & Marsal, was seen by The Associated Press on Friday. The audit was among key demands by the international community and the International Monetary Fund, which over the years has increasingly lost confidence in crisis-hit Lebanon.

Environmentalists sue Puerto Rican government over location of renewable energy projects

DÁNICA COTO
Mon, August 14, 2023

SAN JUAN, Puerto Rico (AP) — Activists and environmental groups including the Sierra Club sued Puerto Rico’s government Monday over the planned location of dozens of renewable energy projects meant to ease the U.S. territory’s power woes.

The lawsuit claims the projects would be built on lands that are ecologically sensitive and of high agricultural value, a violation of local laws.

The groups requested that a judge prohibit various local government agencies from approving projects on such lands, noting that they should instead be built on roofs, parking lots, landfills in disuse and previously contaminated grounds.

“The loss of prime agricultural land to install solar projects of an industrial magnitude is a serious attack on the food security of Puerto Rico, which is already in precarious condition,” said David Sotomayor, a soils professor at the University of Puerto Rico.

Puerto Rico’s Energy Bureau has so far approved 18 projects on more than 2,000 hectares that the lawsuit states are classified as special agricultural reserve and specially protected rustic land.

A spokeswoman for the Energy Bureau did not return a message for comment.

Meanwhile, a spokeswoman for Puerto Rico’s Justice Department, which also was named in the lawsuit, said she had to check whether the agency received the lawsuit and reviewed it before issuing comment.

The groups suing also accused the Energy Bureau of withholding the names of the projects and other details because of alleged confidentiality, noting they had to go to court to obtain what is supposed to be public information.

The lawsuit comes as the government of Puerto Rico prepares to consider dozens of additional renewable energy projects in a push to lessen its dependence on oil. Petroleum accounts for nearly 60% of the island’s energy use, followed by natural gas at 28%, coal around 12% and renewables only 2%, according to the U.S. Energy Information Administration.

As a result, power bills in Puerto Rico are one of the highest of any U.S. jurisdiction.

Recent policies dictate that Puerto Rico must obtain 40% of its power supply from renewables by 2025 and 60% by 2040. The renewable energy projects are part of a push to rebuild the island's power grid after Hurricane Maria razed it in September 2017, with ongoing power outages still plaguing the U.S. territory.

In the lawsuit, the groups asked a judge to order the Puerto Rico Energy Bureau to identify suitable places for industrial energy projects to be built, among other things.

“We favor renewable energy, but not to the detriment of land of high ecological value and agricultural reserves in the largest productive places,” said Marissa Reyes, from the Boricuá Organization for Eco-Organic Agriculture Inc.

Will China-Philippines tensions make other South China Sea claimants more likely to speak up?

South China Morning Post
Sun, August 13, 2023 


A clash between China and the Philippines in the South China Sea last weekend will make Southeast Asian nations a little anxious but it may make some governments more likely to speak up against Beijing's actions if tensions escalate, observers said.

Chinese coastguard ships intercepted and fired water cannons on August 5 to warn off a Philippine vessel that was carrying supplies for Filipino troops stationed at the Second Thomas Shoal in the contested Spratly Islands.

Manila summoned the Chinese envoy to the Philippines over the incident and called China's actions "illegal" and "dangerous", while its long-time ally the United States said the actions directly threatened regional peace and stability.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

China said it had implemented "necessary controls" to stop the Philippine ships, and that Beijing had "indisputable" sovereignty over the Spratly Islands.

It also claimed that the Philippine ships had "disregarded China's repeated dissuasion and warnings and attempted to transfer construction materials used for maintaining and repairing the ship, which has been grounded on the shoal illegally".

The Second Thomas Shoal is controlled by Manila but also claimed by Hanoi, Taipei and Beijing, which also claims the resource-rich South China Sea waterway almost in its entirety.

A Chinese Coast Guard ship launches what it says is a warning water cannon spray in the direction of a Philippine vessel as seen in a screen grab from a video released on August 8. Photo: China Coast Guard alt=A Chinese Coast Guard ship launches what it says is a warning water cannon spray in the direction of a Philippine vessel as seen in a screen grab from a video released on August 8. Photo: China Coast Guard>

Collin Koh, a senior fellow at the S Rajaratnam School of International Studies (RSIS) in Singapore, said the Philippines' neighbours were likely to have watched the incident unfold with some unease against a backdrop of repeated stand-offs between Beijing and Manila.

"[Southeast Asian countries] will certainly view that as something quite worrisome and see it as an uptick in tensions that seem to have built up," said Koh, who specialises in naval affairs in the Indo-Pacific. "They view that as potentially impinging upon regional peace and stability."

In February, Chinese coastguard ships directed lasers at a Philippine vessel and disrupted a supply mission. More recently, vessels from the two countries nearly collided.

Last weekend's incident was the first time since 2021 that China's coastguard had used a water cannon against a Philippine resupply mission to the Second Thomas Shoal.

Greg Poling, director of the Southeast Asia programme at the Centre for Strategic and International Studies, said the incident and the overall "rise in Chinese coercion ... makes everyone in the region nervous".

But the anxiety, he suggested, would be much more immediate for other South China Sea claimants in the region, from Malaysia to Indonesia and Vietnam.

These countries have in recent months appeared to be more cautious about China's actions in the disputed seas.

Manila now had plans to sign a maritime cooperation pact with Hanoi, and Indonesia had undergone a major shift within its security services after the Chinese coastguard "dangerously harassed" Indonesian oil and gas operations some two years ago, according to Poling.

"If China continues to ratchet up pressure, and especially if it causes a threat to the lives of Filipino mariners, I expect some Southeast Asian parties - Singapore, Vietnam, Indonesia, potentially a future Thai government - could feel compelled to speak up more forcefully," he said.

Thomas Daniel, a senior fellow at the Institute of Strategic and International Studies Malaysia, said claimant states "ought to be worried", noting that Malaysian and Vietnamese stations - like the Philippines - also relied on resupply runs.

The response of Southeast Asian countries would largely rely on their interests in the South China Sea and their relationship with China, he added.

Koh from RSIS said most, if not all, Southeast Asian countries were likely to remain silent on the incident or stick to the refrain that they were monitoring the situation, for fear of appearing to take sides and being "embroiled in what seemed to be a very unnecessary problem".

There was also a fear of repercussions from China, which remains a key trading partner for many of the region's economies.

Any continued silence from Southeast Asian countries, and especially claimant states that had experienced some form of aggression from China, would be "both telling and damning", Daniel said.

"Perhaps this is a reflection of a real fear of escalation dominance by Beijing, which no claimant state can ever hope to counter," he said.

"Worse still, perhaps Hanoi and Putrajaya [Malaysia] have been slowly, reluctantly, but successfully conditioned by Beijing to keep their heads down, in the ultimately doomed hope of biding one's time."

Beyond that, the recent stand-off could also prompt countries in the Association of Southeast Asian Nations to question whether they should still trust China in negotiating a code of conduct for the South China Sea, said Aristyo Rizka Darmawan, an international law expert at the University of Indonesia.

China and Asean last month completed the second reading of a much-delayed code of conduct, which would be a legally binding document to regulate behaviour in the disputed waterway.

Darmawan, whose research focuses on maritime security in Southeast Asia, said it was important for claimant states to stand behind the Philippines and put pressure on China to not escalate tensions if Beijing was committed in the negotiations.

"Otherwise, this shows that China is not trustworthy on any mechanism and therefore there is no point in the negotiation of code of conduct if China does not commit to keeping peace in the area," he said.

While most countries in Southeast Asia would have viewed last week's incident with some anxieties, Koh said some might see it as a "welcome development".

"Not to say that they welcome tensions but I think what they saw ... was a somewhat interesting phenomenon where there are more countries in Southeast Asia who are more willing to speak up against China and, in a way, hoping that at least it might have some positive impact of moderating Chinese behaviour from now on," he said.

Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.

5-year-old buried in Rio after being killed during protest against police violence

DIARLEI RODRIGUES
Mon, August 14, 2023



Gilgres Santos, the father of five-year-old Eloah Passos, carries his daughter's remains for a burial at Cacuia Cemetery two days after she was killed by a stray bullet in Rio de Janeiro, Brazil, Monday, Aug. 14, 2023. Passos died on Saturday, Aug. 12, while at home in the Dende favela. 

(AP Photo/Bruna Prado)

RIO DE JANEIRO (AP) — A 5-year-old girl was buried in Rio de Janeiro on Monday, two days after she was fatally shot as shantytown residents protested against alleged police violence.

Eloáh Passos died when she was hit by a gunshot at her home in the Morro do Dende, one of Rio's most violent areas. Passos’ neighbors allege the shot that killed her came from one of the policemen who tried to block a local protest against the death of a 17-year-old boy earlier in the day.

Rio police said in a statement they would investigate the girl's death.

The child's father, Gilgrês dos Santos da Silva, 31, carried her small casket to her grave in a northern Rio cemetery as local residents applauded, cried for justice and released fireworks in respect to the girl's death.

“I don't know who did it. I just know that my daughter's life was taken,” da Silva told journalists after the burial.

Wendell Eduardo de Almeida, 17, was killed Saturday after he allegedly refused to stop his motorbike at a police checkpoint in the same shantytown. Rio police said he was taken down during an exchange of gunfire. The teenager was buried Sunday.

Antônio Carlos Costa, a founder of the Rio de Paz human rights non-profit organization, attended the burial showing a Brazilian flag with holes as if it had been showered with gunshots. He said 14 children were killed by stray bullets in Rio state between January of last year and August of this year.

“Most of them had their lives ended as police and criminals exchanged gunfire,” Costa said. He added that he wants to meet with Rio Gov. Claudio Castro to discuss the state's policing strategies.

BlackRock expects economy to flatline for a year before inflation returns in 2024. Get ready for a generational shift to ‘full-employment stagnation’

Will Daniel
Mon, August 14, 2023

In December, BlackRock’s top minds told their clients that a U.S. recession was “foretold.” The Federal Reserve’s aggressive interest rate hikes, although meant to merely tame inflation, would ultimately lead to a wave of job losses and falling GDP, they warned. But now with inflation fading, GDP growth continuing, and the labor market remaining resilient, experts at the world’s largest asset manager have become a bit more optimistic about the future—at least in the near term.

“Our base case is that the economy broadly flatlines for another year as the full impact of high interest rates comes through and consumers exhaust their pandemic savings,” Jean Boivin, head of the BlackRock Investment Institute, and his deputy head, Alex Brazier, wrote in an Aug. 14 blog post.

A stagnant economy is slightly better than a shrinking one, but Boivin and Brazier noted that if their prediction is correct, the economy will have essentially “flatlined” for two and a half straight years. “That would be the weakest such period in the postwar era outside the Global Financial Crisis,” they explained, referring to the financial meltdown caused by the subprime mortgage crisis in 2008.

Boivin and Brazier also argue that a “big structural shift” is underway that could cause problems for the U.S. in the long term. Changing demographics and a rise in early retirements are increasing the share of retirees in the U.S. population. That could lead to labor force shortages, which would slow the economy and have the potential to reignite inflation.

“Our assessment is that we are set for ‘full-employment stagnation,’” the pair wrote Monday, arguing that as labor shortages start to “bind” in 2024, inflation will go on a “roller-coaster ride” and reemerge.

Out of the fire and into the frying pan

Over the past few years, changing consumer spending patterns and pandemic and war-related supply-chain issues helped to create a “mismatch” in the economy that sparked the rise of inflation, according to BlackRock.

Essentially, the economy wasn’t set up to produce what people actually wanted to buy, and this supply-demand imbalance caused prices to surge. But now, although that imbalance is “resolving,” enabling inflation to fade, the labor shortage is threatening to bring consumer price increases back with a vengeance.

Boivin and Brazier found that the U.S. workforce is 4 million workers short of where it would have been if it kept growing at its pre-COVID pace. And due to demographics, the pair believe it will now grow by only 0.5% on average each year, compared to 1.5% before the pandemic.

That could cause “full-employment stagnation,” or a period of weak growth with rising inflation caused by labor shortages. “And that should lead to a shift in how all the income generated in the economy is being distributed: A greater share is ending up in employees’ pockets and a smaller share for companies and their shareholders,” Boivin and Brazier explained.

Rising wages are great for workers, but with increased pay comes less profit and increased costs for business, and that “could hold back business investment” and stoke inflation, according to BlackRock. And on top of that: “A smaller workforce means the rate of growth the economy will be able to sustain without resurgent inflation will be lower: more like 1% than the 2% we were used to,” Boivin and Brazier warned.

Of course, some economists—and even billionaire CEOs—believe that rising wages are not necessarily an issue for the economy. Barry Sternlicht, the founder and CEO of Starwood Capital, told Fortune last September that even if rising wages push inflation higher, that might not be the worst tradeoff.

“I think the whole dialogue is wrong. I don’t think we need 2% inflation,” he said. “I mean, inflation that is driven by wage growth is fabulous. We should want wages to go up—that will help social issues in the United States. It’s the trickle-down that we’ve all been waiting for with low unemployment.”

A word of warning for the Fed

For the Federal Reserve, full-employment stagnation is a serious concern. Keeping inflation sustainably at bay amid labor shortages that cause steadily rising wages, while also ensuring that the economy continues to grow, will be a real challenge.

On top of that, the tactics used to spark economic growth in the past, including cutting interest rates or buying government bonds and mortgage backed securities, may prove to be far more inflationary amid future labor force shortages as lower rates and increased liquidity could lead to unsustainable wage gains.

With that in mind, Boivin and Brazier had a message for central bank officials:

“This is not a business cycle. We are in the midst of a structural shift. Monetary policy cannot rescue the economy from weakness. The Fed will need to make sure the U.S. economy is not growing more quickly than what it can now maintain without inflation surging.”

This story was originally featured on Fortune.com

State Farm is closing its doors to millions of new customers exposed to ‘rapidly growing’ catastrophes — here’s who’s affected

Laurelle Stelle
Mon, August 14, 2023 

The EPA reports that wildfires are getting worse as the planet gets warmer. In response to this and other factors, major insurer State Farm has announced that it will no longer offer homeowner’s insurance to new applicants in fire-prone California.

What’s happening?

According to the EPA, the area burned by wildfires each year has been increasing since the 1980s. The 10 most destructive years on record have happened in the past 20 years, causing more damage thanks to the plentiful dry plants left behind by drought.

While the effects are felt across the U.S., California is famous for its yearly wildfires and the resulting smoke. This year has been particularly hard for the state due to a devastating combination of storms, floods, drought, and fire.

As Axios reports, this became too much risk for State Farm. The company cited “historic increases in construction costs outpacing inflation” and “rapidly growing catastrophe exposure” in its decision to close applications across California in May.

Why does it matter?

For homeowners in California, it will now be harder to find affordable coverage for their property. Without it, residents run the risk of losing everything in a fire. Owners that already have coverage are still protected, but State Farm won’t accept any new applications in California, it says.

But the problem extends beyond California. Disasters of all kinds have become more common and more destructive as rising temperatures across the world have caused the weather to become less stable.

If insurers find it too risky to cover areas affected by these disasters, then more and more regions could find themselves without coverage. Louisiana and Florida are already losing coverage thanks to predictions of an active hurricane season, Axios reports. Ironically, State Farm has announced its intent to remain in Florida despite large competitors like Farmers and AAA pulling out.

What’s being done?

Michael Soller, the California deputy insurance commissioner, told Axios in an email that the California Department of Insurance is dedicated to protecting consumers in the long run.

“We have been here before after major wildfires,” he said. “What’s different is the actions that we are taking with the first-ever insurance discount program for wildfire safety and unprecedented wildfire mitigation investments from the Legislature and Governor.”

In other words, the CDI is working with the state government to lower insurance costs and reduce the risk of wildfires so that insurers can be secure operating in the area once again.