Tech and crypto firms experienced massive layoffs in May. Here’s how bad it really is

Andrew Marquardt

Sat, June 4, 2022,

Kena Betancur—VIEW press/Getty Images

Last month, Fortune reported that the tech industry’s 2021 hiring boom seemed to be slowing down. One month later, it’s clear that the boom is over.

Amid rising inflation rates and slowing demand, tech and crypto companies cut more jobs in the month of May than in the previous four months combined, according to outplacement firm Challenger, Gray & Christmas, as first reported by MarketWatch.

There were 4,044 job cuts in the tech industry in May, compared to around 500 through the first four months of the year and the most in one month since December 2020, according to the Challenger, Gray & Christmas figures. Crypto and other companies in the fintech industry cut 1,619 jobs in May, compared to 440 in January through April.

"Many technology startups that saw tremendous growth in 2020—particularly in the real estate, financial, and delivery sectors—are beginning to see a slowdown in users, and coupled with inflation and interest rate concerns, are restructuring their workforces to cut costs," Andrew Challenger, senior vice president of Challenger, Gray & Christmas, told Reuters.

Many of the world’s top tech and crypto companies announced plans to slow down hiring last month amid what Uber CEO Dara Khosrowshahi described as a reaction to a “seismic shift” in the markets.

Khosrowshahi told employees last month the company will begin to “treat hiring as a privilege” as a means for cutting costs. Facebook parent company Meta announced in early May it was slowing or pausing hiring mid- to senior-level positions for the same reason. A week later, Salesforce made a similar announcement.

Last week, Microsoft announced it was slowing hiring in its Windows, Office, and Teams chat and conferencing software groups, citing a need to realign staffing priorities. Shares of Snap Inc. dropped as much as 30% last week after CEO Evan Spiegel announced the company was slowing down hiring for the rest of the year and expected to miss its quarterly revenue and earnings targets.

On Friday, crypto exchange Coinbase announced it was pausing hiring “for the foreseeable future” as a result of market conditions, and even went as far as rescinding job offers to people who had recently accepted jobs there but had not yet started to work.

Other companies have taken it a step further and have started to lay off employees.

Tesla CEO Elon Musk announced on Friday that the company plans to cut 10% of jobs for salaried workers, according to Electrek. Musk said in an internal email that Tesla has “become overstaffed in many areas,” prompting the upcoming layoffs.

Insurtech platform Policytech laid off 25% of its staff in recent weeks, less than three months after it raised more than $125 million in investments, according to reporting from TechCrunch.

In April, digital brokerage app Robinhood said it would be cutting 9% of its workforce, after the company’s headcount grew from around 700 employees in 2019 to 3,800 at the end of 2021. Also in April, streaming giant Netflix laid off dozens of employees from its Tudum editorial companion site after losing 200,000 subscribers in the previous quarter.

Despite the recent slew of layoffs and hiring slow-downs among tech and crypto firms, the latest U.S. jobs report showed 390,000 job gains in May, outpacing expectations.

Job growth in May was led by steady hiring in leisure and hospitality, business services, and education and health care, Bloomberg reported.

Crypto: Coinbase and the Winklevoss Twins Confirm Tough Times Are Ahead

The cryptocurrency market has been struggling since the beginning of the year.

LUC OLINGA
15 HOURS AGO

The tough time that the crypto sphere is going through is not about to go away.

Judging by the recent decisions announced by the big names in the sector, it is even logical to say that what industry sources call "crypto winter" will continue for several more weeks, at least, even if volatility is the key word in the space.

The last episode of "crypto winter" lasted from 2018 to fall 2020 before prices rebounded and soared to record highs in 2021.

Coinbase (COIN) , the most popular of American digital currency trading platforms, has just announced new cost-saving measures. These include an indefinite suspension of hiring. Worse, the firm will rescind certain job offers made to candidates.

"In response to the current market conditions and ongoing business prioritization efforts, we will extend our hiring pause for both new and backfill roles for the foreseeable future and rescind a number of accepted offers," L.J Brock, chief people officer, said in a blog post on June 2.

"It’s become evident that we need to take more stringent measures to slow our headcount growth," Brock added. "Adapting quickly and acting now will help us to successfully navigate this macro environment and emerge even stronger, enabling further healthy growth and innovation."

The extended hiring pause does not include roles that are related to security and compliance, the company said.

As for the cancellation of accepted job offers, Coinbase said this will apply to "people who have not started yet."

'Coinbase Will Cone Out Stronger'

"We always knew crypto would be volatile, but that volatility alongside larger economic factors may test the company, and us personally, in new ways. If we’re flexible and resilient, and remain focused on the long term, Coinbase will come out stronger on the other side," Brock concluded.

The challenges of which the executive speaks are linked to fears of a recession in the economy. These fears have prompted many investors to liquidate risky assets, such as cryptocurrencies.

Recent scandals, such as the collapse of the UST and Luna coins, have also reminded investors that the industry is still young and therefore subject to many ups and downs.

The crypto market has lost over $1.7 trillion in value since November.

The price of Bitcoin is down 57% from its all-time high of $69,044.77 reached on Nov. 10. The king of cryptocurrencies is now trading around $29,846.33 at last check, according to data firm CoinGecko.

Ether, the second crypto in terms of market value, is worth 64% less than when it broke its record high of $4,878.26 on Nov. 10. It's currently trading around $1,780.06.

As for Coinbase, its market capitalization has shrunk by more than $48 billion since January, while the stock has lost about 74% of its value to $66.69 as of June 3.

'We Are Not Alone'

Gemini, another platform for buying and selling cryptocurrencies, is also reducing costs. And that means job cuts. The firm was founded in 2014 by twin brothers Cameron and Tyler Winklevoss, who came to prominence after they and a classmate claimed that Mark Zuckerberg stole their idea for Facebook.

"We have asked team leaders to ensure that they are focused only on products that are critical to our mission and assess whether their teams are right-sized for the current, turbulent market conditions that are likely to persist for some time," Cameron and Tyler wrote in a blog post. "After much thought and consideration, we have made the difficult but necessary decision to part ways with approximately 10% of our workforce."

The crypto revolution is well underway and its impact will continue to be profound. But its trajectory has been anything but gradual or predictable. Its path can best be described as punctuated equilibrium — periods of equilibrium or stasis that are punctuated by dramatic moments of hypergrowth, followed by sharp contractions that settle down to a new equilibrium that is higher than the one before."

"This is where we are now, in the contraction phase that is settling into a period of stasis — what our industry refers to as “crypto winter.” This has all been further compounded by the current macroeconomic and geopolitical turmoil. We are not alone."

This is the first time Gemini has cut jobs. The firm employs 1,033 people, according to PitchBook, and was valued at $7.1 billion in its last funding round. A 10% reduction would therefore amount to laying off a little more than 100 people.

Global energy upheaval offers Argentina’s ‘Dead Cow’ a new lease of life

Madeleine Bruder1 day ago

 

Can the EU’s ban this week on most Russian oil imports breathe new life into a dead cow in Patagonia?

Argentina’s president Alberto Fernández thinks so. He is talking up the potential of the world’s second-largest shale gas deposit and its fourth-largest shale oil reserve to fill the gap left by the growing western embargo on Russian energy. Argentina, he told his German hosts while visiting Berlin last month, is “a reservoir of what the world needs right now: food and energy”.

Chevron, Petronas and Shell will be among the international companies to benefit if Argentina’s Vaca Muerta (Dead Cow) petroleum development finally takes off. Gas production “could surge . . . to make Argentina a rival to Australia and Qatar in the LNG market at a time when demand is growing”, according to a recent S&P report.

Miguel Galuccio, chief executive of Vista, the second-biggest oil producer in Vaca Muerta, says the deposit has already turned Argentina into an oil exporter (albeit on a very small scale) and stresses its future potential, thanks to relatively low production costs and low-carbon production.

But there’s a snag above ground in the form of past Argentine government decisions. Years of hype about Vaca Muerta and its appealing geology have not been matched by official policies attractive enough — either under the previous government of Mauricio Macri or until now the current Peronist one — to lure the tens of billions of dollars of investment needed.

Vaca Muerta has been under development for a decade and despite production costs having fallen to levels close to those of US shale, less than 10 per cent of the acreage is being exploited. Yet the government says that if 50 per cent of Vaca Muerta’s resources were brought to market, Argentina would generate more than $30bn a year of additional export earnings.

Why has it not happened? A big culprit is Argentina’s rigid exchange control regime, which prevents profits from being repatriated. After years of lobbying, the government has just agreed to let oil and gas companies convert revenues from part of their additional production into dollars, but this falls well short of the freedom enjoyed almost everywhere else.

Under the new rules, energy groups must apply for permission to change a limited amount of their rapidly devaluing pesos into US currency at an official rate barely half that of the black market.

Another drawback is Argentina’s longstanding fixation with fuel subsidies. Oil sells in the domestic market at a controlled price only about half that of the world level.

Finally, the South American country needs more energy infrastructure. Gas production in Vaca Muerta is capped by the capacity of existing pipelines. A contract to build a new $3.4bn pipeline connecting Vaca Muerta with Buenos Aires has yet to be awarded and the head of the project resigned on May 30 (the government says a tender will be awarded soon).

National oil company YPF is scouting coastal locations to build a plant to liquefy natural gas for export but today, for all Vaca Muerta’s potential, Argentina remains a net importer of gas. “We need to continue investing in pipelines and export facilities and we should have more competitive . . . domestic market pricing,” said Galuccio.

Not everyone is waiting patiently. China’s Sinopec sold out of Argentina last year and ConocoPhillips also exited.

As the stampede away from Russia leads to a redrawing of the global energy map, Argentina’s government needs to move faster and more boldly if the companies that stuck with Vaca Muerta are to be rewarded with a bucking bronco, rather than a lethargic cow.

michael.stott

80 Years On, It's Unclear the U.S. Would Win a New Battle of Midway


Brendan Simms

TIME
Fri, June 3, 2022

A Japanese Mogani class cruiser burns after being bombed in the Battle of Midway in June 1942.

A Japanese Mogani class cruiser burns after being bombed in the Battle of Midway in June 1942. Credit - Corbis—Getty Images

On June 4, 1942, the first day of the battle of Midway, the U.S. Navy sank four Japanese aircraft carriers for the loss of one of its own. This tore the heart out of Kido Butai, the enemy striking force, and changed the whole dynamic of the War in the Pacific where the Americans had been on the retreat since the surprise attack on Pearl Harbor six months earlier. It would take another three hard years to defeat Japan, which was still on the advance in the Solomons further south, but it was clear that the tide had turned. This epic victory came down to many things, including excellent U.S. intelligence and the strategic genius of Admiral Chester Nimitz, the Commander of the Pacific Fleet, but above all it was the achievement of a small number of highly-skilled dive-bomber pilots and their plane, the Douglas Dauntless. It was they who set the four Japanese carriers ablaze.

Today, the order that these men helped to create is once again under threat, and it is not clear that the U.S. would win a second battle of Midway. For the first time since World War II, the West faces a serious naval challenge in the Pacific. The People’s Republic of China—a communist dictatorship—poses both an ideological threat and a strategic one. It has built a large oceangoing navy with a growing carrier capability; the first domestically built aircraft carrier is expected to enter service in 2023. In fact, according to a U.S. Department of Defense report in 2020, the PRC now boasts “the largest navy in the world with an overall battle force of approximately 350 ships.” It menaces Taiwan directly and has established a massive military presence in the contested South China Sea. Beyond this, Beijing’s “Belt and Road Initiative,” which seeks to transform the whole of Eurasia, and the maritime “String of Pearls” concept, which attempts something similar in the Indo-Pacific, shows the PRC’s vaulting ambition.

Over the past few years, the United States and the rest of the Western world generally have slowly been waking up to this reality. In February 2016, Admiral Harry Harris, chief of US Pacific Command, warned Congress that he believed that “China seeks hegemony in East Asia.” In April last year, the Australian secretary for home affairs, Michael Pezzullo, announced that the “drums of war” were beating in the Pacific and that the nation needed to prepare accordingly. As for the PRC, leader Xi Jinping has warned advisers to “prepare for war” in the South China Sea.

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In fact, the People’s Republic of China poses some of the same problems for the United States as Imperial Japan did in World War II, but on a much larger scale. Like Imperial Japan, the PRC’s leaders believe that the current order in the region is illegitimate and stacked against their interests. Whatever one thinks of these claims and demands, they are not simply to be mocked or disregarded. If we don’t deal with them, or prepare to counter them, then we may suffer another Pearl Harbor—but there is no guarantee that we have done the necessary preparation to earn another Midway.

There are two principal reasons to be concerned. First, the U.S. Navy is, as former Navy Secretary John Lehman has written, “stretched too thin and woefully underfunded.” Its ship and dockyards are in crisis. The fighting navy, as Seth Cropsey, the director of the Center for American Seapower, lamented, is now only 297 ships strong, fewer than half the number during the Reagan administration, and is tasked with deterring not only the PRC but also Russia, Iran, and North Korea. Second, the PRC is unlikely to oblige the United States by walking into a trap in the middle of the Pacific Ocean, as the Japanese did at Midway. It is more likely to inflict a surprise defeat in the narrow waters of the South China Sea.

In these circumstances, as Elbridge Colby, former deputy assistant secretary for defense and the lead author of the 2018 National Defense Strategy, has argued, Washington must prepare to win a war with China—one which it cannot afford to lose—precisely in order to prevent that war from happening. In the Pacific, as David Zikusoka of the Center for a New American Security wrote, the United States’ best hope may be to draw the PRC into a complex struggle on many fronts far from home. America, he argued, has learned “how to fight away games,” whereas the PRC has not, or at least not yet. Ultimately, this is about deterrence. “The defense establishment,” Zikusoka said, “needs to start thinking about how it would fight a Second battle of Midway to ensure it never has to fight at all.”

When a military confrontation arises between the West and the People’s Republic of China, it will consist in large part of a contest for the sea. In some respects, this will take the form of a battle for the control of islands, many of them obscure outposts such as Midway, that govern access to the continents of Asia and North America. But in other respects this will be a battle between naval resources, between carriers that attack one another from beyond the horizon with aircraft or missiles. It is understandable, then, that the battle of Midway, which bears strategic and tactical similarities to a likely future scenario, has been the focus of renewed attention. The battle also offers important lessons about the value of fundamentals, such as intelligence and reconnaissance, or the principles of surprise and simplicity, as well as outright aggression. There is also the obvious lesson of the Douglas Dauntless Dive-Bomber, a sturdy and powerful weapon, built in adequate numbers in advance of the war.

U.S. Douglas SBD-3 Dauntless dive bombers prepare to attack burning Japanese cruiser Mikuma on June 6, 1942.Images Group—Getty Images

Unsurprisingly, the PRC has taken a keen interest in the Battle of Midway and its lessons. China, as Lyle Goldstein wrote in the National Interest in 2017, “hopes to get right what Imperial Japan got wrong.” Tactically, they have criticized the submarine and carrier deployment and the immense risk of exposing the Kido Butai so far from home. Strategically, they have noted the failure to prepare the economy for a long war, so that battlefield losses could be replaced. A more cautious approach, they have concluded, might well have “caused the Americans to bleed heavily” and seek a negotiated solution.

Our own lessons from Midway are somewhat different. First of all, the battle shows that procurement wins wars. “You have two kinds of equipment,” said the only survivor of a Torpedo Squadron destroyed at the battle of Midway, George Gay at the end of his book Sole Survivor. “Experimental and obsolete.” His point was that the military was in continual need of improving its equipment. The Dauntless was designed, and the three American carriers built before the war; the critical dive-bomber pilots got their wings before Pearl Harbor.

Second, the Battle of Midway teaches us that war takes place not in some other world but in our own world. The danger of interpreting World War II as a reaction to the attack on Pearl Harbor is that it causes one to believe that the problems of war are solved during wartime. The time to prepare for the next Midway is now.

Read More: The Real World War II History Behind the Movie Midway

It has now been 80 years since the Battle of Midway. It would appear that much has changed. Modern weapons systems have a lethality and complexity unimaginable at the time of Midway time. The strategic situation is also different: the United States and Japan, for example, are now allies. One thing, though, remains the same. East Asia is still the site of a furious contestation, at the heart of which lies the Indo-Pacific. The job that the dive-bomber pilots did may, unfortunately, have to be done all over again.

But America is now less prepared than it was when it was surprised at Pearl Harbor. Despite the loss of the battle fleet, and even before the great engine of American industry began its relentless production, the U.S. carrier force of December 1941 was strong enough to stem and then turn the tide. Today, the U.S. Navy is a formidable force, but it possesses only a proportion of its former dominance. Its real quality will be demonstrated only when it is put to the test—that is when we will know which of its systems are the Devastators and which are the Dauntlesses of our time.

As conflict between the United States and the People’s Republic of China looms in the Pacific, there is still a critical lesson in Midway for our time. We have seen that the devastatingly effective attack of the dive bombers was not a fluke, as is sometimes suggested. They did exactly what they had been trained to do. Equally important was the fact that their equipment, and especially the Douglas Dauntless bomber itself, did exactly what it had been designed to do. The peacetime American taxpayers got excellent value for their money. Even if the United States had not built a single new ship after Pearl Harbor or trained a single new pilot, it would still have won the Battle at Midway. This means that the United States today should not trust luck or amateur genius, but military preparedness in times of relative peace. The question Midway poses is not whether we were lucky then but whether we want to trust luck today.

Adapted from The Silver Waterfall: How America Won the War in the Pacific at Midway by Brendan Simms and Steven McGregor, available now from PublicAffairs. Copyright © 2022 by Brendan Simms and Steven McGregor.

The Russian navy's surprising losses against Ukraine are reminders of another humiliating defeat 117 years ago

Benjamin Brimelow
Thu, June 2, 2022

Russian cruiser Moskva in the Mediterranean Sea near Syria, December 17, 2015.Russian Defense Ministry Press Service via AP

Russia's navy has taken high-profile losses against an outnumbered and outgunned Ukrainian enemy.

The losses themselves are not catastrophic for Russia's navy but they are blows to Russian prestige.

These defeats come a century after another Russian naval debacle on the other side of the world.

Since Russia launched its attack on Ukraine in late February, a heavily outnumbered and outgunned adversary has handed the Russian navy several high-profile losses.

The Russians have lost at least five Raptor-class patrol boats, one Tapir-class landing ship, one Serna-class landing craft, and most notably the Moskva, a Slava-class guided-missile cruiser that was also the flagship of the Black Sea Fleet.

The losses themselves are not catastrophic for the Russian navy and are unlikely to alter the course of the war or the balance of power in the Black Sea, but they are blows to Russian prestige and come a little over a century after another historic debacle for Russia: the Battle of Tsushima, the last time a Russian navy flagship was sunk in combat.

The Japanese and Russian empires fought in the waters between Korea and southern Japan on May 27 and 28 in 1905. The battle cemented Japan's rise as an equal to Western powers and had a lasting impact on both empires.

Competing empires

A print of Japanese warships steaming to bombard Port Arthur during the 1904-1905 Russo-Japanese War.Ann Ronan Pictures/Print Collector/Getty Images

Japan's overwhelming victory in the Sino-Japenese War in 1895 had stoked tensions between the Japanese and Russian empires.

Japan, equipped with an organized, modern army, pursued ambitions in Korea and China that brought it dangerously close to Russian interests, especially in Manchuria and Korea.

Of particular importance to Russia was Port Arthur — now Dalian, China — which it leased and was the Russian Empire's only warm-water Pacific port. Port Arthur became the headquarters of Russia's Pacific Fleet and the government had plans to connect it to Russia via the Trans-Siberian Railway.

Negotiations between Japan and Russia over the future of the region went nowhere, and on February 8, 1904, the Imperial Japanese Navy attacked the main part of the Russian Pacific Fleet at Port Arthur, formally declaring war hours later.

Men on shore in front of the Russian ships Pallada, left, and Pobida, after Japanese forces sunk the boats at Port Arthur in 1904.Hulton Archive/Getty Images

Japan gained a naval advantage relatively quickly. It fought off an attempt by the main part of the Russian Pacific Fleet to break the blockade of Port Arthur and largely defeated Russia's Vladivostok-based squadrons at Chemulpo Bay and Ulsan — victories that allowed Japan to effectively dominate the Pacific.

Unwilling to concede defeat, and with Japanese ground forces beginning a siege of Port Arthur itself, Russia's Tsar Nicholas II ordered the creation of the 2nd Pacific Squadron, which would be made up of ships from the Baltic Fleet.

Commanded by Vice Adm. Zinovy Rozhestvensky, some 40 ships — including 11 pre-dreadnought battleships, nine cruisers, and nine destroyers — composed the 2nd Pacific Squadron.

Sailing from the Baltic in October 1904, they were supposed to relieve the Pacific Fleet at Port Arthur, destroy any Japanese ships they encountered, and cut the supply lines between Japan and mainland Asia.

Russia's doomed fleet

Imperial Russian battleship Knyaz Suvorov, the Russian flagship at the Battle of Tsushima, in Kronshtadt near St. Petersburg in August 1904.Official photograph

Russia's navy had been modernized in during the latter half of the 1800s, but while the 2nd Pacific Squadron appeared strong on paper, it was not a first-rate naval force. Some of the warships were new and untested, but many were old and bordered on obsolete. Others were little more than auxiliary ships with guns mounted on them.

Russian Navy leadership was also of low quality. Many of its officers came from wealthy and connected families who simply bought their commissions. The rank-and-file sailors were not much more professional, as many of them were inexperienced conscripts.

These issues were on full display during the seven-month, 18,000-mile journey to the Pacific.

While in the North Sea near England, the fleet opened fire on British fishing trawlers, somehow thinking they were Japanese torpedo boats. The mistake killed two fishermen, injured one, and sunk one trawler while damaging four others. In the chaos, some of the Russian ships even fired on each other, causing casualties and damage.

Imperial Russian battleship Borodino at Kronshtadt near St. Petersburg in August 1904.Official photograph

Diplomatic maneuvering managed to prevent the British from joining the war on the side of Japan, but the Russian fleet's troubles were only beginning.

Most of the fleet sailed around Africa rather than through the Suez Canal. The longer journey took a toll on the crews, who had never experienced such a different climate or such a long time at sea. The ships themselves were also under considerable strain. During gunnery practice with a mock target towed by a cruiser, the only thing the fleet hit was the cruiser.

With no allies, the Russians couldn't dock in friendly ports, and so they had to take on more coal while at sea. Conditions on the ships deteriorated, and disease and respiratory issues killed a number of sailors.

By the time the fleet was in Madagascar in January, Port Arthur had fallen. Their mission was then changed: They were to meet the remnants of Russia's Pacific Fleet in Vladivostok before engaging the Japanese in a decisive battle.

Slaughter at Tsushima

The Japanese fleet sailing to meet the Russians at Tsushima early on May 27, 1905, as seen from the battleship Asahi. Shigetada Seki via Wikimedia Commons

When the Russian ships finally reached the Tsushima Strait on the night of May 26, 1905, Rozhestvensky attempted to slip through unnoticed. Unfortunately for him, a patrolling Japanese vessel had spotted one of his ships.

Even more unfortunately, the Russian ship mistakenly believed the Japanese vessel was a lost Russian ship and signaled that more Russian ships were nearby.

With the location of his enemy confirmed, Japanese Adm. Tōgō Heihachirō's Combined Fleet — which included four modern battleships, over 20 cruisers, 21 destroyers, and 43 torpedo boats — set out to meet them.

On the morning of May 27, the fleets made contact. Before the firing began, Tōgō hoisted a signal flag that conveyed a predetermined message to his fleet: "The Empire's fate depends on the result of this battle, let every man do his utmost duty."  

Russian protected cruiser Oleg, showing damage from the Battle of Tsushima, in Manila Bay on June 27, 1905.Collection of P.H. Proctor via Wikimedia Commons

The ensuing battle was a slaughter. In addition to better training, discipline, and experience, the Japanese were equipped with modern armor-piercing rounds that tore the Russian ships apart.

By the end of the day, the Japanese had sunk four Russian battleships. Imperator Aleksandr III sank with its entire crew of over 700 sailors, while Borodino sank with all but one of its more than 800 crew members.

The flagship, Knyaz Suvorov, sank with all but 20 officers, while about half of Oslyabya's crew went down with the ship. The Japanese sunk a number of cruisers and destroyers as well.

As night fell, the survivors attempted to make it to Vladivostok under cover of darkness. Tōgō's destroyers hunted them down, picking off two more battleships and several other warships. By the following afternoon, most of the survivors surrendered.

Lost prestige

Japanese citizens welcome Adm. Heihashima Togo upon return to Tokyo on October 22, 1905.ullstein bild/ullstein bild via Getty Images

Russian losses were immense: 21 ships sunk or scuttled, and seven captured. Only three ships reached Vladivostok, though six others made it to neutral ports in China, the Philippines, and Madagascar.

The Japanese killed over 4,000 Russian sailors were killed and captured almost 6,000. The Japanese lost only three torpedo boats with just 117 killed and about 500 wounded — including a young Isoroku Yamamoto, mastermind of the attack on Pearl Harbor, who lost two fingers in the battle.

The Russian navy's prestige never recovered after Tsushima. It saw little major action in World War I, being unable to rebuild to the same grand scale. The Soviet Navy also only saw limited action in World War II and never truly proved itself during the Cold War, though Soviet submarines were a constant concern for NATO navies.

Today, the Russian navy boasts a smaller, more modern fleet that focuses on green-water operations rather than high-seas campaigns, but its surprising losses against Ukraine show it has yet to regain the dominance it lost a century ago.

RESULTING IN  REVOLUTION

Leon Trotsky

1905

Part of the First St. Petersburg Soviet of Workers Deputies in 1905 Trotsky is in the middle row, fourth from the left. https://www.marxists.org/archive/trotsky/1907/1905/

Exiled Russian economist says Putin will 'laugh' at losses from the EU embargo on Russian oil and won't change course in Ukraine

John Haltiwanger

Fri, June 3, 2022, 

Russian President Vladimir Putin visits Kaliningrad Stadium in Kaliningrad, Russia July 20, 2018.Alexei Nikolsky/Reuters

• The EU announced a partial embargo on Russian oil earlier this week as the war in Ukraine rages on.

• The bloc framed it as a major step to cut off funds to Putin's war machine.

• An exiled Russian economist told The Washington Post that Putin will "laugh" at the costs of the embargo.

The EU agreed on Monday to institute an embargo on most Russian oil imports by the end of 2022 in what the bloc has framed as one of its most significant reactions to Russia's unprovoked war in Ukraine to date.

But Russian economist Sergei Aleksashenko, a former deputy chairman of the Russian central bank who now lives in exile in the US, told The Washington Post that the embargo will mean little to Russian President Vladimir Putin and won't alter his plans in Ukraine.

Putin's economic advisors will "tell him what the estimated loss is from the embargo, and he will laugh quietly," Aleksashenko said, adding, "He is not changing his course."

Europe relies on Russia for 40% of its natural gas and 27% of its oil, and it has faced criticism over continued energy purchases as the war in Ukraine rages on.

Kyiv has accused the EU of funding Putin's war machine by continuing to import Russian energy. The EU has spent approximately $58 billion on Russian energy since Putin announced the onset of Russia's so-called "special military operation" in Ukraine in late February, according to the Center for Research on Energy and Clean Air.

The EU's embargo on Russian oil imports was an effort to address this, but, due to opposition from Hungarian Prime Minister Viktor Orbán, a friend of Putin's, the embargo exempts pipeline imports and only affects sea shipments, which Aleksashenko suggested Russia could try to reroute to India or China to decrease the impact of the partial embargo. The EU has still portrayed the move as a major blow to Russia.

The EU's foreign policy chief, Josep Borrell, said in a tweet on Monday that the embargo was a "landmark decision to cripple Putin's war machine."

"This will effectively cut around 90% of oil imports from Russia to the EU by the end of the year," European Commission President Ursula von der Leyen said via Twitter on Monday.

Russia has brushed off the significance of the oil embargo, saying it will find other importers.

The U.S. Desperately Needs To Revamp Its Energy Policies

Editor OilPrice.com

Sat, June 4, 2022

About a decade ago, a friend asked how high I thought gasoline prices might rise. I said “One day you will pay $10 a gallon for gasoline.” He replied that he would refuse to pay that much, and I asked what he would do if the price rose to $10 a gallon tomorrow. He finally conceded that he would, in fact, pay $10 a gallon for gasoline.

Then oil prices plummeted in 2014, and again in 2020. I am sure my prediction looked pretty stupid to him when gasoline fell under $2.00 a gallon.

Why did I make such a prediction? Because I had already seen gasoline prices approach that level when I was living in the Netherlands in 2008, and the roads were still packed with cars. Energy demand just isn’t that elastic in the short term, so people pay what they have to pay to get to work.

Here is how I saw things playing out. I imagined that energy demand would continue to grow, but supply would have a hard time keeping up. At times, there would be supply/demand imbalances that would spike prices higher and higher.

However, over the past decade supply has managed to keep pace most of the time. At times, the market was oversupplied and prices crashed. There have also been periods of spiking prices, but then demand growth would slow down and supplies would catch up.

At the same time, alternatives like electric vehicles, and to some extent biofuels have helped mitigate oil demand growth. But it wasn’t enough. Oil demand kept growing (until the Covid-19 pandemic hit), albeit a bit slower than if there had been no alternatives.

Related: Oil Prices Rise As EU Leaders Agree On Partial Russian Crude Ban

The risk I always saw was that if policymakers believed alternatives would scale fast enough to replace oil demand growth — and they passed policies unfriendly to our domestic oil companies — they could be setting up a very nasty price shock in the future.

This is why I was so adamant that canceling the Keystone XL Pipeline was the wrong decision. It’s not because I love fossil fuels, it’s because I recognize the risk of needing supplies and not having them. We have seen that it doesn’t take much of a shortfall in oil supply to have a disproportionate impact on the price.

Hence, what we are seeing right now is one of the possible consequences of the energy transition. When alternatives don’t scale up fast enough to fill the gap between oil supply and demand, oil prices skyrocket.

I know that many people who have opposed any additional fossil fuel development saw a different scenario unfolding. They believed that alternatives would scale up fast enough, and that we wouldn’t need the oil.

Here’s the thing, though. If we invest in fossil fuel development — and we don’t need the oil and gas because alternatives do scale up rapidly — that’s a loss the fossil fuel companies would take. That is the risk they are taking, for the potential reward that demand will be there in the future.

What’s the downside of continuing to support our domestic oil industry? That it will simply continue our addiction to fossil fuels?

That’s where we have to also make sure we are doing as much as possible to encourage alternatives. Today’s fossil fuel investments would be ready to supply the market if needed, but alternatives will be trying hard to make sure they aren’t needed.

That’s the win-win energy policy we need.

By Robert Rapier

Biden Administration Considers A Windfall Tax On Oil And Gas Profits

Sat, June 4, 2022

The Biden administration is considering a proposal to tax oil and gas windfall profits to provide a gas subsidy for American consumers struggling with high energy prices, said Bharat Ramamurti, deputy director of the National Economic Council at a panel sponsored by the Roosevelt Institute think tank on June 2.

The news follows a similar move in the U.K. by Chancellor Rishi Sunak on May 26, to impose a 25 percent windfall tax on North Sea energy producers to provide a 15 billion pound ($18.9 billion) energy fund subsidy for Britons paying for soaring fuel costs.

The White House has been examining proposals from Congress that would hike taxes on energy producers in order to provide a subsidy or tax rebate to households.

“We are very much open to any proposal that would provide relief to consumers at the pump,” said Ramamurti.

“There are a variety of interesting proposals and design choices on a windfall profits tax. We’ve looked carefully at each of them and are engaging in conversations with Congress about design.”

The proposal, backed by 15 Democrats in the Senate and the House, would impose a new quarterly tax on American oil companies for crude produced domestically or imported from abroad.

The revenue would be siphoned off to consumers below a certain income in the form of a tax rebate that would amount to a few hundred dollars per year, but the bill does not appear so far to have support in Congress.

The bill is being sponsored by Sen. Elizabeth Warren (D-Mass.), who announced on MSNBC in March, “I’m co-sponsoring … a bill on windfall profits tax. We get it, supply and demand, prices go up, but profit margins should not go up, that’s just oil companies gouging.”

“Big oil companies are making higher profits off Putin’s war,” tweeted Warren.

The “windfall tax on oil would guarantee $200 oil,” responded Dan Rosenblum, a financial analyst at Sharkbiotech.com, in a tweet, explaining that a tax on gas producer profits would cause U.S. fuel prices to skyrocket.

Ramamurti admitted that there would be a potential impact on supply if a windfall tax on producers was imposed, but he said he did not see this as an “insurmountable hurdle.”

“One thing you want to be aware of when you are looking at those types of proposals is how is it going to affect supply as well,” said Ramamurti.

“I don’t think that’s an insurmountable hurdle, but it is an important question at a time when there’s clearly a supply issue.”

His comments came just a day after he told reporters that the administration’s plan to combat inflation included shrinking the Federal budget deficit, by raising taxes on high-income individuals and major corporations.

“What the president has done and made clear is that we are dedicated to doing everything we can to stop and push back on that Russian aggression, but it’s going to cause pain for American consumers in the short term, and gas prices are one unfortunate example,” Ramamurti told local media.

High energy prices due to the war in Ukraine, declining U.S. energy supplies, and supply chain logjams have pushed oil producer revenue to record highs this year.

Exxon Mobil, the largest U.S. oil producer, earned $5.48 billion in the first quarter and said that it would triple its expected stock buybacks through 2023 to $30 billion.

The Biden administration has blamed energy producers for not investing in further output and for not passing on more of their earnings to consumers, despite White House policies that have discouraged investment in energy production and supply.

President Joe Biden is under intense pressure from his party to ease gas prices before the midterm elections in November, as the approval ratings for the Democrat-controlled Congress continue to sink in the polls.

Related: Could Iraq Dethrone Saudi Arabia As Largest Oil Producer?

U.S. President Joe Biden at the Eisenhower Executive Office Building in Washington on June 1, 2022. (Kevin Dietsch/Getty Images)

U.S. consumer price growth slowed down in April after gas prices dipped below the March record high, while consumer prices were up 8.3 percent in April from the year prior, according to the Labor Department.

As a cyclical industry, taxing windfall energy profits during a good cycle is likely to discourage investment in energy production.

The U.S. energy sector has been the worst-performing part of the market over the past decade, despite major increases in total output.

An energy producer tax could be a two-way street for energy market investors, especially if producers reduced through-the-cycle investment in the United States, which may lead to sustained higher global oil and natural gas prices.

There was similar criticism of the proposed U.K. tax on energy producers, “We understand the worry for millions of people about how high energy costs are challenging their household budgets—and the need for support to help make ends meet,” said a Shell spokesperson, “but at the same time, we must sustain investment in securing supplies of oil and gas the U.K. needs today, while allocating future spend for the low-carbon energies we want to build for the future.”

The national average for a gallon of gasoline in the United States hit $4.715 on June 2 up from $4.671 the day before, according to AAA.

Brent Crude was at nearly $118 and West Texas Intermediate crude stood at $117 at the end of trading on June 2.

By Zerohedge.com

Dehcho First Nations seek repudiation of Doctrine of Discovery

Ahead of an anticipated papal visit in late July, the Dehcho First Nations called on the Vatican and Canada to reject the international law widely considered a legal justification for colonialism.

The law, which first appears in a papal bull issued by the Catholic Church in the 15th century, defines land unoccupied by Christians as "vacant" and seizure of those lands to be "discovery."

It has been used by Canadian courts as recently as 2011 and by then-Supreme Court Justice Ruth Bader Ginsberg in the United States in 2005, and forms the legal basis for what is considered to be Crown land.

"The Dehcho First Nations, representing eight Dene First Nation communities and two Métis communities in the N.W.T., now call on the Vatican, the Government of Canada and the Crown to clearly and unequivocally reject and repudiate the Doctrine of Discovery and acknowledge what we all know to be true: that the land now known as Canada was not vacant or ungoverned when Europeans arrived and that it was actually governed by sovereign nations with our own institutions and laws," a Dehcho First Nations news release stated on Friday.

In 2012, the United Nations called the doctrine "shameful." It has been repudiated by the Presbyterian, Episcopal and Evangelical Lutheran churches.

Following the Pope's historic apology for the actions of some Catholics in April, delegation leader Gerald Antoine spoke of the importance of the issue.

"One thing that is quite clear: when you look at residential schools, if you trace the seed back to where it started from, you will find the Doctrine of Discovery," he told Cabin Radio at the time.

"The apology is not good unless the seed is destroyed. So the real need is to have the Doctrine of Discovery revoked completely. That is one specific part of the equation that needs to be done away with."

The Pope is expected in Canada from July 24 to 29.

Caitrin Pilkington, Local Journalism Initiative Reporter, Cabin Radio

California drought is pushing Latino farmers and workers to make difficult decisions

Nicole Chavez - Yesterday


Joe Del Bosque roamed the 2,000 acres of his California farm knowing he couldn’t touch nearly half of the land he’s owned for decades.

“I got the land, I got the people. I have everything but no water. I can’t do it,” said Del Bosque, a 73-year-old farmer in Firebaugh, California.

Del Bosque is one of the many Latino farmers and workers whose lives revolve around California’s agriculture industry and who have been forced to make difficult decisions due to the ongoing water crisis.

Years of low rainfall and snowpack in the state have now led to rapidly draining reservoirs. Last month, the state’s two largest reservoirs reached “critically low levels” just as extreme drought conditions expanded from covering 40% to 60% of the state, according to the US Drought Monitor.

Federal officials dealt a large blow to farmers in the state’s Central Valley when earlier this year, they significantly reduced allocations for irrigation. Many of these farmers rely on underground reservoirs for their operations and officials said only a limited number of agriculture customers would receive water deliveries. They are serviced by the Central Valley Project, a complex water system made of 19 dams and reservoirs as well as more than 500 miles of canals across the state.

While farmers have previously made numerous changes in response to the drought, this year’s water limits have pushed them to leave more portions of their land idle and reduce the number of workers they hire. Del Bosque says he stopped growing asparagus and sweet corn, solely focusing on melons and almonds, which most of the world’s crops are produced in California.

Without those crops, Del Bosque was not able to hire about 100 people to work on his farmland.

“These are people who had worked for us for many years, and they’re highly skilled people,” Del Bosque said.


California drought is pushing Latino farmers and workers to make difficult decisions

Joe Del Bosque is the owner of Del Bosque Farms. - Terry Chea/AP

Researchers at the University of California, Merced estimate the drought had a $1.1 billion impact in the state’s agriculture industry last year.


Their report, released in February, says roughly 385,000 acres were drought idled in the Central Valley. They also linked the loss of nearly 8,750 full- and part-time jobs across the state to the drought.

Hernan Hernandez, executive director of the California Farmworker Foundation, said many farmworkers are now struggling to find jobs that will keep them working all year long.

Because there is less farmland being harvested or grown, some farmers are opting to hire larger crews than usual. While they are doing it to keep more people employed, Hernandez says, the work is getting done faster and farmworkers end up hunting for their next job sooner than anticipated.

“Many people come to the Central Valley because they feel like this is an area where they can have steady work throughout the year. Whether they were documented or undocumented. Now, the drought continues to plague this area and work is more scarce, it’s more limited,” Hernandez said, referring to workers who come from Mexico and other parts of California.

Worried about being able to afford rent, childcare and higher gas prices, farmworkers are starting to look outside agriculture to supplement their income.

“In the daytime, some will be at a farming operation and in the nighttime, they’ll be at packing houses. Some are now entering restaurant and retail businesses. We’ve heard of some being Uber drivers after work. There’s less work and they got to find a way to make ends meet. They’re now doing various things just to pretty much continue to live in the state,” Hernandez said.

Del Bosque, whose parents and himself were farmworkers, says he worries about the future of his farm and the potential of a massive exodus of workers.

There are more than 112,000 producers in the United States who identify as Hispanic and 60% of them live in Texas, California and New Mexico, according to the USDA’s 2017 Census of Agriculture.

California employs the most agricultural workers in the US, the Bureau of Labor Statistics says. An estimated 77% of all farmworkers are Hispanic, according to the latest National Agricultural Worker Survey.

“They can’t sit here and wait ‘till next year. They have to do something to support their family and because the whole valley is dry there’s probably other farmers in the area like me that don’t have the jobs. Some of them (farmworkers) may have to move to another state,” Del Bosque said.

Lawmakers in California are considering new legislation aimed at supporting farmworkers who lose work due to drought conditions.

Senate Bill 1066, proposed by State Sen. Melissa Hurtado, a Democrat, aims to create a state-funded project that would provide a monthly $1,000 cash payment for three years to households with at least one farmworker.

“SB 1066 will provide much needed help, and assistance to those struggling to feed their families, in an environment of increasingly rising food costs and uncertainty. Supporting our farmworkers is just the tip of the iceberg; we need to provide additional drought relief and ensure water is available for homes, and for health, and that it is truly available to all,” Hurtado previously said about the bill.