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Hedge Fund Managers: “Back to the Land!”

Hedge Fund Man­agers Enjoy­ing Their Invest­ments

COMMENT:   No, hedge fund man­agers haven’t “gone hip­pie” with a cry of return­ing to till­ing the earth, in order to “get back to basics.” Rather, they fore­see an apoc­a­lyp­tic eco­nom­ic col­lapse, char­ac­ter­ized by resource wars and a bru­tal strug­gle for food.

Many are invest­ing in farm­land, in order to prof­it from this dev­as­tat­ing reality–an even­tu­al­i­ty that their spec­u­la­tion and edi­to­r­i­al com­men­tary may well help to bring to fruition.

The ongo­ing con­cen­tra­tion of eco­nom­ic pow­er and resources embod­ied in the hedge funds them­selves may also con­tribute to this becom­ing a self-ful­fill­ing prophe­cy.

“Hedge Farm! The Dooms­day Food Price Sce­nario Turn­ing Hed­gies  into Sur­vival­ists” by Fos­ter Kramer; New York Observ­er; 5/17/2011.

EXCERPT: On the rare occa­sion that New York­ers talk about farm­ing, it’s usu­al­ly some­thing along the lines of what sort of organ­ic kale to plant in the van­i­ty gar­den at the sec­ond house in the Adiron­dacks. But on a recent after­noon, The Observ­er had a con­ver­sa­tion of a dif­fer­ent sort about agri­cul­tur­al pur­suits with a hedge fund man­ag­er he’d met at one of the many dark-pan­eled pri­vate clubs in mid­town a few weeks pri­or. “A friend of mine is actu­al­ly the largest own­er of agri­cul­tur­al land in Uruguay,” said the hedge fund man­ag­er. “He’s a year old­er than I am. We’re some­where [around] the 15th-largest farm­ers in Amer­i­ca right now.”

“We,” as in, his hedge fund.

It may seem a lit­tle odd that in 2011 any­one’s think­ing of putting mon­ey into assets that would have seemed attrac­tive in 1911, but there’s some­thing in the air-name­ly, fear. The hedge fund man­ag­er and oth­ers like him envi­sion a dooms­day sce­nario cat­alyzed by a weak dol­lar, high­er-than-you-think infla­tion and an uncer­tain polit­i­cal cli­mate here and abroad.

The pat­tern began to emerge some­time in 2008. “The Hedge Fund Man­ag­er Who Bought a Farm,” read the head­line on one Feb­ru­ary 2008 Times of Lon­don  piece detail­ing a British hedge fund man­ager’s attempt to play off the ris­ing prices of grains in order to usurp local farm­land. A Finan­cial Times  piece two months lat­er began: “Hedge funds and invest­ment banks are swap­ping their Guc­ci for gum­boots.” It detailed Black­Rock­’s then-rel­a­tive­ly new $420 mil­lion Agri­cul­ture Fund, which had already swept up 2,800 acres of land.

Even Michael Bur­ry, the now-defunct Scion Cap­i­tal founder and star pro­tag­o­nist of Michael Lewis’ The Big Short-who bet against the hous­ing bub­ble in 2008 with cred­it default swaps to enor­mous prof­it-gave a rare inter­view on Bloomberg TV last year, explain­ing that he’s thrown his hat into “pro­duc­tive agri­cul­ture land with water on site” as it’s going to be “very valu­able in the future.” (Like most of those asked to com­ment for this sto­ry to The Observ­er, Bur­ry declined to dis­cuss his invest­ments in farm­land.)

Three years lat­er, the pur­chase of farm­land both in Amer­i­ca and abroad by out­side investors has increased-so much so that in Feb­ru­ary, Thomas Hoenig, the pres­i­dent of the Fed­er­al Reserve Bank of Kansas City, warned against the vio­lent pos­si­bil­i­ties of a farm­land bub­ble, telling the Sen­ate Agri­cul­ture Com­mit­tee that “dis­tor­tions in finan­cial mar­kets” will catch the U.S. by sur­prise again. He would know, because he’s see­ing it in his back­yard: Kansas and Nebras­ka report­ed farm­land prices 20 per­cent above the pre­vi­ous year’s lev­els and are on pace to dou­ble val­ues in four years. A study com­mis­sioned by the Orga­ni­za­tion for Eco­nom­ic Coop­er­a­tion and Devel­op­ment and released in Jan­u­ary esti­mat­ed the amount of pri­vate cap­i­tal cur­rent­ly com­mit­ted to farm­land and agri­cul­tur­al infra­struc­ture at $14 bil­lion. It also esti­mat­ed that future invest­ments will “dwarf” what’s cur­rent­ly being thrown into land, by two to three times. Fur­ther down, the study makes a con­ser­v­a­tive pro­jec­tion that the amount of cap­i­tal poten­tial­ly enter­ing the sec­tor over the next decade will fly past $150 bil­lion. . . .

Discussion

21 comments for “Hedge Fund Managers: “Back to the Land!””

  1. This is just absolute­ly fuck­ing sick­en­ing, Dave.

    To think that these peo­ple have the GALL and the NERVE to usurp all this farm­land at a time like this? That’s just bull­shit. We need to stop this, NOW.

    Posted by Steven | May 25, 2011, 4:17 pm
  2. It fol­lows great­ly on the “Eco­nom­ics of 9/11” show that you repost­ed last weeks.In effect, it is only too log­i­cal. Because crude and gazo­line prices will go up on a hyper-infla­tion spree, a lot of peo­ple won’t be able to eat, due to prices increas­es in the food sec­tor. So, know­ing in advance that it will hap­pen, the finan­cial sec­tor buys huge amount of shares in food cor­po­ra­tions. It is not exag­ger­at­ed to think that cor­po­ra­tions aligned with the Bor­mann Cap­i­tal Net­work might prof­it from a dou­ble dip­ping: huge prof­its from the increas­es in the price of oil...and huge prof­its in the increas­es in the prices of food.

    Of course, and that’s the pin­point of it, it allows for the cen­tu­ry-long dream of fas­cists to mass-exter­mi­nate a large share of the world’s pop­u­la­tion to come into fruition, with­out for them hav­ing to assume it frankly. In the con­spir­a­cy the­o­rists milieu, many sce­nar­ios have been pre­sent­ed as for the means that would be employed for such a mas­sacre: mass dead­ly vac­ci­na­tions, poi­so­nous chem­trails, atom­ic bombs, envi­ron­men­tal dis­as­ters, WWIII, round-ups, etc. But then you real­ize that they can actu­al­ly reach that goal by a very sim­ple and easy method...depriving the peo­ple of food.It is not spec­tac­u­lar but it works, and they don’t have to live with the stain, guilt and bad pub­lic­i­ty linked with some­thing like, say, gas cham­bers. Those things are nev­er good for PR... And you don’t want to make the parade at Nurem­burg.

    I don’t know what to say to you, Steven, to cheer up your moral. But any­way, if we can save our­selves, using our brains to sur­vive the years to come, it will be already some­thing. The way things are going, the igno­rant and unaware will per­ish, one way or the oth­er.

    Posted by Claude | May 26, 2011, 10:38 pm
  3. I’m sure that the recent inten­tion­al flood­ing of farm­land and farm­towns along the mis­sis­sip­pi will con­ve­nient­ly put much of that same land on the mar­ket
    where it will be bought by the afore­men­tioned hedge fund man­agers.

    I’m not sug­gest­ing that they were involved in the deci­sion mak­ing process or had input into the Army’s corps of engi­neers deci­sion to flood cer­tain towns.

    Flood­ing that farm­land was a spur of the moment emer­gency deci­sion. No one could forsee it.
    And once the riv­er start­ed threat­en­ing to breech the lev­ees,
    doing noth­ing was not an option.

    Too much was at stake.

    So the deci­sion was made, to “sac­ri­fice” a few towns up riv­er in order to “save” more impor­tant cities down.

    Where, just by coin­ci­dence, more than one HFM lives.

    Posted by Devil James | May 28, 2011, 9:08 am
  4. And Mark Rich’s old firm Glen­core con­tin­ues to solid­i­fy its sta­tus as a glob­al min­ing and agri­cul­tur­al giant:

    March 20, 2012 1:45 pm
    Glen­core agrees C$6.1bn Viter­ra deal

    By Jack Farchy

    Glen­core has agreed to buy Cana­di­an grain trad­er Viter­ra for C$6.1bn (US$6.1bn) in a deal that will kick start the Switzer­land-based trad­ing house’s expan­sion in agri­cul­tur­al com­modi­ties, the com­pa­nies announced on Tues­day.

    Viter­ra, based in Regi­na in the rur­al province of Saskatchewan, has been the focus of a takeover bat­tle since announc­ing it had received expres­sions of inter­est from third par­ties. Archer Daniels Mid­land and Bunge, the New York-list­ed agri­cul­tur­al com­mod­i­ty traders, were also inter­est­ed in buy­ing it, indus­try exec­u­tives said.

    ...

    The move on Viter­ra comes as Glen­core is also try­ing to merge with Xstra­ta, the Lon­don-list­ed min­er, to cre­ate a $90bn nat­ur­al resources pow­er­house. That deal is not yet assured, how­ev­er, as sev­er­al of Xstrata’s lead­ing share­hold­ers have voiced their oppo­si­tion to the pro­posed terms.

    Ivan Glasen­berg, Glen­core chief exec­u­tive, has made no secret of his desire to expand the company’s agri­cul­tur­al trad­ing divi­sion, despite a loss of more than $330m last year trad­ing cot­ton.

    Viter­ra han­dles up to 45 per cent of the Cana­di­an grain and oilseed mar­ket, accord­ing to ana­lysts at Mac­quar­ie. It also owns almost all of the grain stor­age capac­i­ty in South Aus­tralia, through the acqui­si­tion of ABB in 2009.

    Its net­work of fer­tilis­er retail out­lets accounts for 34 per cent of the Cana­di­an mar­ket, while its pro­cess­ing divi­sion is one of the world’s largest oat millers and the third-largest pas­ta­mak­er in North Amer­i­ca.

    “The acqui­si­tion of Viter­ra reflects our strong belief in the impor­tance and future poten­tial of the Cana­di­an and Aus­tralian grain mar­kets,” said Chris Mahoney, head of Glencore’s agri­cul­tur­al divi­sion.

    The acqui­si­tion will put Glen­core in pole posi­tion to cap­i­talise on the dereg­u­la­tion of the Cana­di­an wheat mar­ket, one of the most impor­tant export mar­kets for the grain, which is a sta­ple for many of the world’s poor.

    ...

    Posted by Pterrafractyl | March 20, 2012, 11:49 am
  5. Cli­mate change is going to be real­ly good to Glen­core:

    Glen­core food chief says US drought is ‘good for busi­ness’

    Chris Mahoney, Glen­core direc­tor of agri­cul­tur­al prod­ucts said US drought gave the firm a chance to prof­it from soar­ing prices

    Rupert Neate
    guardian.co.uk, Tues­day 21 August 2012 15.46 EDT

    The head of Glen­core’s food trad­ing busi­ness has said the worst drought to hit the US since the 1930s will be “good for Glen­core” because it will lead to oppor­tu­ni­ties to exploit soar­ing prices.

    Chris Mahoney, the trader’s direc­tor of agri­cul­tur­al prod­ucts, who owns about £500m of Glen­core shares, said the dev­as­tat­ing US drought had cre­at­ed an oppor­tu­ni­ty for the com­pa­ny to make much more mon­ey.

    “In terms of the out­look for the bal­ance of the year, the envi­ron­ment is a good one. High prices, lots of volatil­i­ty, a lot of dis­lo­ca­tion, tight­ness, a lot of arbi­trage oppor­tu­ni­ties [the pur­chase and sale of an asset in order to prof­it from price dif­fer­ences in dif­fer­ent mar­kets],” he said on a con­fer­ence call .

    Mahoney said Glen­core, which report­ed pre-tax prof­its of $2.2bn (£1.4bn), would be able to exploit the drought to its advan­tage, espe­cial­ly after its takeover of Cana­di­an grain trad­er Viter­ra. “I think we will both be able to pro­vide the world with solu­tions, get­ting stuff to where it’s need­ed quick­ly and time­ly, and that should be good for Glen­core.”

    The blis­ter­ing heat in the US has destroyed 45% of the corn and 35% of the soya bean crop, push­ing the price of the com­modi­ties to record highs. Over­all glob­al food prices rose by 6% in July, accord­ing to the UN.

    The drought is so severe that G20 nations are con­sid­er­ing hold­ing a cri­sis sum­mit. The last severe food cri­sis, in 2008, sparked riots in cities from the Caribbean to the far east. The Unit­ed Nations food agency warned this month that “there is poten­tial for a sit­u­a­tion to devel­op like we had back in 2007-08.” Abdol­reza Abbass­ian, senior econ­o­mist and grain ana­lyst at the UN’s Food and Agri­cul­ture Organ­i­sa­tion, told Reuters: “There is an expec­ta­tion that this time around we will not pur­sue bad poli­cies and inter­vene in the mar­ket by restric­tions, and if that does­n’t hap­pen we will not see such a seri­ous sit­u­a­tion as 2007-08. But if those poli­cies get repeat­ed, any­thing is pos­si­ble.”

    Raj Patel, an expert in the glob­al food trade and for­mer UN employ­ee, said Glen­core and oth­er multi­na­tion­al food traders were in a “fine posi­tion to make mon­ey from a cri­sis because they’ve pushed for an inter­na­tion­al eco­nom­ic sys­tem that relies on them”.

    “They [Glen­core] are mil­lion­aires mak­ing mon­ey from oth­er peo­ple’s mis­ery caused by the drought,” he said. “It’s the sad fact of how the inter­na­tion­al food sys­tem – that they pushed for and our gov­ern­ments gave to them – works.

    “It’s unsur­pris­ing that a cri­sis is a rev­enue gen­er­a­tor.”

    ...

    Droughts = rev­enue, eh? I think I smell prof­its (it turns out that prof­its smell like methane)!

    Posted by Pterrafractyl | September 10, 2012, 10:46 am
  6. @Pterrafractyl–

    Con­sid­er the impli­ca­tions of Project HAARP–online for well over a decade and an instru­men­tal­i­ty whose stat­ed
    patent appli­ca­tions involve manipulating/controlling the weath­er.

    Who actu­al­ly con­trols it?

    If one could pre­cip­i­tate weath­er changes that would affect crop har­vests, think of the mon­ey to be made on the com­modi­ties mar­kets!

    E‑systems, which had the patents at one point, was sell­ing high­ly clas­si­fied tech­nol­o­gy to the Saud­is.

    Orig­i­nal­ly, they belonged to ARCO.

    The oil com­pa­nies and the Saud­is are both in bed with the Under­ground Reich.

    Keep up the great work!

    Dave Emory

    Posted by Dave Emory | September 10, 2012, 3:42 pm
  7. @Dave: Accord­ing to this arti­cle, spec­u­la­tive hedge fund bets on high­er crop prices are 10-times high­er this year com­pared year. It’s a reminder of the incred­i­ble prof­it poten­tial weath­er con­trol tech would have for all sort of play­ers that nor­mal­ly have noth­ing to do with agri­cul­ture, but pri­mar­i­ly if it was secret­ly employed. So some­thing to watch going for­ward regard­ing the pos­si­ble secret imple­men­ta­tion of weath­er con­trol tech­nol­o­gy will be the the spec­u­la­tive behav­ior of the big hedge funds. If we ever do start see­ing weath­er con­trol tech­nol­o­gy put into play for pur­pose of manip­u­lat­ing crop yields you just know that the insid­ers won’t be able to help them­selves if they know about that in advance. And with cli­mate change increas­ing and weird weath­er increas­ing­ly the norm, we’re in sit­u­a­tion that’s almost ide­al for secret weath­er con­trol tech­nol­o­gy because weird weath­er isn’t going to seem to weird in com­ing years. It seems like just a mat­ter of time before we have some real­ly weird weath­er cou­pled with some real­ly big and real­ly prof­itable bets by hedge funds bet­ting on exact­ly that type of real­ly weird weath­er.

    Posted by Pterrafractyl | September 12, 2012, 2:19 pm
  8. Haarp tech­no-destruc­tion aside, there is prob­a­bly already enough built in insta­bil­i­ty of cli­mate and unpre­dictabil­i­ty of yields for the com­mod­i­ty mar­kets to cre­ate region­al famines wher­ev­er they wish.

    This will play out in con­di­tions where actu­al glob­al food pro­duc­tion, despite the bad weath­er of the past decade, has topped glob­al sub­sis­tence needs by 5 to 10 per­cent annu­al­ly. The result­ing social chaos is expect­ed to push gov­ern­ments to the right and towards racial and reli­gious fun­da­men­tal­ism.
    What may shock the inter­na­tion­al fas­cist con­spir­a­cy is a grow­ing sol­i­dar­i­ty among the new non-aligned nations move­ment as they respond to these arti­fi­cial dis­as­ters.

    Posted by Dwight | September 13, 2012, 11:50 pm
  9. Add one more item to the list of rea­sons why human­i­ty’s addic­tion war­fare is a death sen­tence for human­i­ty: Both mod­ern agri­cul­ture and mod­ern war­fare are heav­i­ly depen­dent on phos­pho­rous. Phos­pho­rous is also an ele­ment with a finite sup­ply. So if “peak phos­pho­rous” real­ly is in our future, our wars might lit­er­al­ly be blow­ing through the future’s fer­til­iz­er:

    Moth­er Jones
    Are We Head­ing Toward Peak Fer­til­iz­er?

    —By Tom Philpott
    | Wed Nov. 28, 2012 3:03 AM PST

    You’ve heard of peak oil—the idea that the globe’s easy-to-get-to petro­le­um reserves are large­ly cashed, and most of what’s left is the hard stuff, buried in deep-sea deposits or tar sands. But what about peak phos­pho­rus and potas­si­um? These ele­ments form two-thirds of the holy agri­cul­tur­al tri­umvi­rate of nitro­gen, phos­pho­rus, and potas­si­um (also known as NPK, from their respec­tive mark­ers in the peri­od­ic table). These nutri­ents, which are essen­tial for plants to grow, are extract­ed from soil every time we har­vest crops, and have to be replaced if farm­land is to remain pro­duc­tive.

    ...

    Of the two key fer­til­iz­ers Grantham warns about, phos­pho­rous is the more urgent. As Grantham notes, our friend­ly neigh­bor Cana­da sits on a vast potash stash. But phos­phate rock is large­ly con­cen­trat­ed in Morocco—and not just any­where in Moroc­co. It’s in the coun­try’s West­ern Sahara region, on high­ly dis­put­ed land. In a superb 2011 piece in Yale Envi­ron­ment 360, the envi­ron­men­tal writer Fred Pearce explained:

    The West­ern Sahara is an occu­pied ter­ri­to­ry. In 1976, when Span­ish colo­nial­ists left, its neigh­bor Moroc­co invad­ed, and has held it ever since. Most observers believe the vast phos­phate deposits were the major rea­son that Moroc­co took an inter­est. What­ev­er the truth, the Polis­ario Front, a rebel move­ment the UN rec­og­nizes as the right­ful rep­re­sen­ta­tives of the ter­ri­to­ry, would like it back.

    Giv­en that a savvy investor like Grantham calls Moroc­co’s phos­phate hold­ings “the most impor­tant qua­si-monop­oly in eco­nom­ic his­to­ry,” you can bet that the Polis­ario Front isn’t going to let the Moroc­can gov­ern­ment con­trol it with­out a fight. In oth­er words, a scarce min­er­al key to the future of indus­tri­al agri­cul­ture is con­cen­trat­ed on geopo­lit­i­cal fraught ter­ri­to­ry. As Pearce puts it, “If the peo­ple of West­ern Sahara ever resume their war to get their coun­try back—or if the Arab Spring spreads and Moroc­co goes the way of Libya—then we may be adding phos­phate fer­til­iz­er to the list of finite resources, such as water and land, that are con­strain­ing world food sup­plies soon­er than we think.”

    ...

    Posted by Pterrafractyl | November 28, 2012, 3:01 pm
  10. **Pun Alert**

    Ah, love­ly, anoth­er state decides to have a fiat freak­out and go down the gold-hole. Here we gold again:

    Sen­ate OKs mak­ing gold, sil­ver legal ten­der in AZ

    2/28/2013 • Howard Fis­ch­er
    Capi­tol Media Ser­vices

    PHOENIX — State sen­a­tors vot­ed Wednes­day to make gold and sil­ver legal ten­der in Ari­zona.

    The pro­pos­al, SB 1439, stems from con­cerns of some that the paper mon­ey print­ed by the Fed­er­al Reserve Bank is los­ing val­ue.

    They per­suad­ed Sen. Chester Cran­dell, a Heber Repub­li­can, to give pri­vate­ly mint­ed gold and sil­ver coins the same legal sta­tus to pay bills, at least in Ari­zona.

    A dis­dain­ful Sen. Steve Far­ley, a Tuc­son Demo­c­rat, sug­gest­ed if Ari­zona is going to have mer­chants weigh­ing and assay­ing gold and sil­ver to deter­mine its val­ue, per­haps the state should not stop there.

    So Far­ley pro­posed an “Ari­zona-cen­tric” list of addi­tions from the “Five Cs” for which the state is known — cop­per, cat­tle, cot­ton, cit­rus and cli­mate.

    He said, for exam­ple, there is lit­tle dif­fer­ence between trad­ing beef or oranges as com­modi­ties ver­sus gold and sil­ver.

    “And what has more val­ue than sun­beams?” he added, though he did­n’t describe how they could be count­ed.

    Far­ley’s light­heart­ed effort to amend the bill met with frowns from its sup­port­ers.

    Sen­ate Pres­i­dent Andy Big­gs, R‑Gilbert, called it an “unfor­tu­nate attempt” at humor. And Cran­dell bris­tled at hav­ing fun poked at his mea­sure.

    ...

    Part of what’s fun­ny about the “And what has more val­ue than sun­beams?” quip by the bil­l’s oppo­nent is that, if you think about, the pri­ma­ry fount of true “val­ue” on our plan­et is, in fact, sun­beams rain­ing down on the plan­et every sin­gle day. With­out that con­stant infu­sion of ener­gy life on this plan­et just could­n’t exist. And the econ­o­my of the future is pret­ty much guar­an­teed to be solar pow­ered because only a civ­i­liza­tion com­plete­ly in the thrall of an ener­gy car­tel would avoid switch­ing to solar once the tech­nol­o­gy is avail­able (so ok, it’s not actu­al­ly guar­an­teed that the future is solar pow­ered). So, what has more val­ue than sun­beams? Cer­tain­ly not gold. Graphene solar pan­els? Or maybe water would make a bet­ter store of wealth for Ari­zon­a’s infla­tion-con­cerned cit­i­zens con­sid­er­ing that Ari­zona is run­ning out of it. As they say, you can’t eat gold. You can’t water your crops with it either.

    **the pun alert has been can­celled**

    Posted by Pterrafractyl | February 28, 2013, 4:01 pm
  11. This is just a reminder that one of the rea­sons future gen­er­a­tions are going to loath us is because we allowed folks like Mr “my phi­los­o­phy is to make mon­eyto define the future by destroy­ing the present:

    A ser­mon for the ages

    by David Atkins

    Many of you may already have seen Bill McK­ibben’s extra­or­di­nary ser­mon “God’s Taunt” at the River­side Church in New York. If not, def­i­nite­ly take the twen­ty min­utes to watch and lis­ten:
    [Video]

    For those who can­not watch the video, here are some excerpts com­piled by Diane Sweet at Crook­san­dLiars. He begins by speak­ing of Job answer­ing to God that he can­not con­trol the weath­er, not­ing that in fact that is no longer true:

    ...Rather, Job has to answer as all mor­tals did up until our time, because all of a sud­den we’ve got­ten rather large. Our first sense of that sud­den change in stature came with the det­o­na­tion of the first atom bomb at Ala­m­agor­do in the New Mex­i­co desert. J. Robert Oppen­heimer, watch­ing the mush­room­ing cloud, quot­ed from the [Bhag­vad Gita], from the Hin­du scrip­ture — “We are become as gods, destroy­ers of worlds.”

    But the images of those blasts at Hiroshi­ma and Nagasa­ki were enough to per­suade us, so far at least, to go no fur­ther down that path, thank god. We could imag­ine the hor­ror of those titan­ic explo­sions. We, so far, have NOT been able to ade­quate­ly imag­ine the effect of the explo­sion of bil­lions of pis­tons in bil­lions of cylin­ders every minute of every hour of every day, but those explo­sions are wreck­ing the earth just as sure­ly and almost as fast as nuclear war.

    Con­sid­er that, so far, human beings have burned enough coal and gas and oil to raise the tem­per­a­ture of the plan­et 1 degree Celsius...the ener­getic equiv­a­lent of explod­ing 400,000 Hiroshi­ma-sized bombs every day...enough ener­gy so far to melt the Arctic...We’ve tak­en one of the largest phys­i­cal fea­tures on earth and we’ve bro­ken it, and with the oth­ers not far behind. The oceans are now 30% more acidic...The atmos­phere itself, because warm air holds more water vapor than cold, is now 5% wet­ter than it was 40 years ago, which loads the dice for drought and for flood...

    ...This is the largest social jus­tice issue that we have ever faced...When I start­ed this work, one of the things I’d always heard was that envi­ron­men­tal­ism was some­thing for rich white peo­ple who had tak­en care of their oth­er prob­lems, and if you wor­ried where your next meal was com­ing from you would­n’t be an envi­ron­men­tal­ist.

    What we found as we worked around the world is exact­ly the oppo­site. Rich peo­ple tend to feel them­selves immune from these changes. Most of the peo­ple that we work with around the world are poor and black and brown and Asian and young because that is what most of the world con­sists of. And what do you know, those peo­ple care as much about the future as any­body else, maybe more, so because if you are poor in this world right now, the future bears down hard­er on you than it does on any­body else...

    ...As I’ve said, so far we’ve raised the tem­per­a­ture one degree but the same sci­en­tists who told us that would hap­pen have shown quite clear­ly that that one degree would be 4 or 5 by cen­tu­ry’s end unless we act very swift­ly to get off coal and gas and oil.

    And the larg­er ques­tion is why aren’t we doing that? Why aren’t we try­ing to make our­selves some­what small­er? Why aren’t we fol­low­ing, say, the lead of Ger­many, the only major coun­try that’s real­ly pur­sued renew­able pow­er at an appro­pri­ate pace? There are now more solar pan­els in Bavaria than there are in the Unit­ed States. There were days last sum­mer when Ger­many gen­er­at­ed more than half the pow­er it used from solar pan­els with­in its bor­ders and this is Ger­many. Munich is north of Mon­tre­al. Think what a coun­try could do if it had, oh, I don’t know, Flori­da or Neva­da, Texas or Cal­i­for­nia or Ari­zona to work with!

    ...

    ...The man who runs...[Exxon] final­ly admit­ted for the first time last sum­mer that glob­al warm­ing was real and caused by car­bon emis­sions. But, he said, it was an engi­neer­ing prob­lem with engi­neer­ing solu­tions. Asked what he meant, he explained, “If we need to move our crop pro­duc­tion areas, we will”...Crop pro­duc­tion areas are what most of us call farms, and we already have them...The Exxon CEO made plain the rea­son for his unwill­ing­ness to change in a sec­ond inter­view a few weeks ago with Char­lie Rose who asked him his phi­los­o­phy...He just looked at the cam­era and said, “My phi­los­o­phy is to make mon­ey.”

    ...

    ...

    Posted by Pterrafractyl | May 13, 2013, 12:12 pm
  12. Now we can have our cake and bomb it too. Woohoo!

    Bloomberg
    Ural­ka­li Breaks Potash Car­tel to Grab Mar­ket Share
    By Yuliya Fedori­no­va — Jul 30, 2013 9:12 AM CT

    OAO Ural­ka­li, the world’s largest potash pro­duc­er, upend­ed the $20 bil­lion-a-year indus­try by end­ing lim­its on pro­duc­tion that under­pinned prices and halt­ing coop­er­a­tion with Belarus that con­trolled sup­plies from the for­mer Sovi­et Union.

    The deci­sion sent shares of potash pro­duc­ers plung­ing as much as 27 per­cent from Israel to Ger­many to Cana­da and the U.S. as investors spec­u­lat­ed a flood of sup­plies will lead to low­er prices for potash, a soil nutri­ent that strength­ens plant roots. Ural­ka­li, part-owned by bil­lion­aire Suleiman Ker­i­mov, said it exit­ed the ven­ture after Belarus under­mined the sales agree­ments.

    “Uralkali’s announce­ment com­plete­ly turns the glob­al potash mar­ket upside down,” Ele­na Sakhno­va, a VTB Cap­i­tal ana­lyst in Moscow, said by phone. “If pre­vi­ous­ly glob­al potash pro­duc­ers were act­ing like an oli­gop­oly, work­ing with the rule that ben­e­fit­ed high­er potash prices over shipped vol­umes, now the mar­ket will be ful­ly com­pet­i­tive.”

    Uralkali’s ven­ture and a group com­pris­ing Potash Corp. (POT) of Saskatchewan, Mosa­ic Co. and Agri­um Inc. (AGU) played off each oth­er, mod­er­at­ing out­put and exports along with demand to pre­vent price swings.

    ...

    Posted by Pterrafractyl | July 30, 2013, 7:29 am
  13. Your oli­garch over­lords are now your new land­lords. Con­grats Amer­i­ca. A shiny new rental-hous­ing car­tel could be just around the cor­ner:

    The Wall Street Jour­nal
    July 30, 2013, 3:41 p.m. ET

    Black­stone, Deutsche Bank in Talks to Sell Bond Backed by Home Rentals
    By JEANNETTE NEUMANN

    Two major Wall Street firms are in detailed dis­cus­sions to cre­ate and sell the world’s first bond backed by home-rental pay­ments, peo­ple famil­iar with the mat­ter say.

    Black­stone Group LP is in nego­ti­a­tions to bun­dle month­ly rental pay­ments on around 1,500 to 1,700 of its homes. The pri­vate-equi­ty giant is among the firms that have spent bil­lions buy­ing homes out of fore­clo­sure, an invest­ment strat­e­gy that has helped to bol­ster demand and strength­en the U.S. hous­ing mar­ket.

    The bond com­prised of the Black­stone homes would be struc­tured and mar­ket­ed to investors by Deutsche Bank AG, the peo­ple say.

    The cre­ation of a new type of secu­ri­ty shows that Wall Street’s finan­cial engi­neer­ing, blamed for deep­en­ing the finan­cial cri­sis, is revving back up.

    Some investors and ana­lysts have said they are wary of a bond backed by rental pay­ments, cit­ing the dearth of long-term data on how often ten­ants liv­ing in pre­vi­ous­ly fore­closed homes pay their rent on time.

    Also, some investors and ana­lysts have raised con­cerns about how quick­ly firms have pur­chased thou­sands of homes, and whether they have the man­age­ment track record and exper­tise to over­see the main­te­nance of prop­er­ties scat­tered across the coun­try.

    But investors are still hun­gry for the high returns that are like­ly to accom­pa­ny a first-of-its-kind deal, which will be viewed as more risky than well-known secu­ri­ties.

    The size of the Black­stone-Deutsche Bank deal is expect­ed to be around $240 mil­lion to $275 mil­lion, the peo­ple famil­iar with the bond say. The top-rat­ed slice could receive a rat­ing as high as single‑A or triple‑B from some of the cred­it-rat­ing firms, some of the peo­ple famil­iar with the deal add. The deal is expect­ed to be backed by equi­ty and prop­er­ties that are worth between $300 mil­lion to $350 mil­lion, the peo­ple famil­iar with the mat­ter said.

    The deal could be avail­able to investors as soon as August or Sep­tem­ber. But the met­rics could change as the details aren’t com­plet­ed, cau­tioned some of those peo­ple.

    And Black­stone could still walk away from a secu­ri­ti­za­tion or chose to sell the deal with­out let­ter-grade rat­ings from the cred­it-rat­ing firms, say peo­ple famil­iar with the deal.

    Spokes­women for Deutsche Bank and Black­stone declined to com­ment.

    Black­stone has emerged as the biggest investor in sin­gle-fam­i­ly rental homes, spend­ing more than $5.5 bil­lion since the begin­ning of last year to acquire about 32,000 homes in around a dozen major U.S. mar­kets.

    Oth­er com­pa­nies, such as Amer­i­can Homes 4 Rent, Colony Cap­i­tal LLC and Way­point Real Estate Group LLC also have been snap­ping up thou­sands of fore­closed homes, revamp­ing them and rent­ing them out. Amer­i­can Homes 4 Rent, with 19,000 homes owned or con­trolled, is expect­ed to price shares of its stock Wednes­day in a bid to raise $750 mil­lion in an ini­tial offer­ing on the New York Stock Exchange.

    The com­pa­nies have trans­formed what has tra­di­tion­al­ly been a space for “mom and pop” investors to earn cash into an insti­tu­tion­al invest­ment strat­e­gy that has helped to boost home prices in cities across the U.S. The invest­ment strat­e­gy is often known as buy-to-rent.

    The struc­ture of the deal would be sim­i­lar to bet­ter-known secu­ri­ties, such as those backed by home or com­mer­cial mort­gages.

    Secu­ri­ti­za­tion is the process of pool­ing togeth­er assets—whether that is rental or mort­gage payments—to back a deal. That deal is then “sliced” into dif­fer­ent lay­ers, or bonds, accord­ing to the risk of the under­ly­ing assets and the order in which bond­hold­ers will be paid as the pay­ments from the under­ly­ing assets roll in.

    Each lay­er is sold as a “class” of bonds to investors. The top lay­er is paid first, then the sec­ond and so on. The riski­est slices offer the high­est poten­tial returns.

    While secu­ri­ti­za­tion got a bad rap because of the loss­es investors suf­fered after pur­chas­ing such deals before the finan­cial cri­sis, pro­po­nents say it can be an effec­tive process to tap the cap­i­tal mar­kets for financ­ing by turn­ing thou­sands of sep­a­rate cash-gen­er­at­ing assets into bonds.

    Ana­lysts have said in recent months that Black­stone and Deutsche Bank were a like­ly pair­ing on an ini­tial rental secu­ri­ti­za­tion. Black­stone’s real-estate prowess could quell some investors’ fears about man­age­ment of the prop­er­ties, while Deutsche Bank has led the charge among Wall Street banks offer­ing loans to real-estate firms buy­ing fore­closed homes.

    Deutsche Bank has led the issuance of around $3.6 bil­lion of loans to Black­stone in recent months, coor­di­nat­ing with oth­er major Wall Street banks. Debt financ­ing allows bor­row­ers such as Black­stone to buy more prop­er­ties at low­er costs. The sale of a Black­stone-backed secu­ri­ti­za­tion would bring still more mon­ey to the com­pa­ny.

    An invest­ment-grade rat­ing from cred­it-rat­ing firms would allow more investors to pur­chase slices of the Black­stone-Deutsche Bank deal than if it were rat­ed low­er.

    ...

    Posted by Pterrafractyl | July 30, 2013, 2:06 pm
  14. Here’s one of those sto­ries that’s a reminder that eco­log­i­cal col­lapse is going a great way for com­mod­i­ty barons to make a killing:

    The New York Times
    Pan­el Warns of Risks to Food Sup­ply From Cli­mate Change

    By JUSTIN GILLIS
    Pub­lished: Novem­ber 1, 2013

    An inter­na­tion­al sci­en­tif­ic pan­el has found that cli­mate change will pose sharp risks to the world’s food sup­ply in com­ing decades, poten­tial­ly reduc­ing out­put and send­ing prices high­er in a peri­od when glob­al food demand is expect­ed to soar.

    That find­ing is by far the stark­est warn­ing that the Unit­ed Nations-appoint­ed group, the Inter­gov­ern­men­tal Pan­el on Cli­mate Change, has ever issued regard­ing the food sup­ply. Its last report, in 2007, was more san­guine, essen­tial­ly find­ing that cli­mat­ic warm­ing and the ris­ing lev­el of car­bon diox­ide in the air would boost agri­cul­tur­al pro­duc­tion across large areas, though that report did cite some risks.

    The warn­ing is con­tained in a draft report that leaked on Fri­day. The doc­u­ment is not final and not sched­uled for release until after an edit­ing ses­sion in Yoko­hama, Japan in March.

    The draft report warns that sweep­ing impacts from cli­mate change are already being seen across the plan­et, and that these are like­ly to inten­si­fy as human emis­sions of green­house gas­es con­tin­ue to rise.

    Echo­ing past find­ings, the draft report points out that land ice is melt­ing world­wide, lead­ing to a rise of the sea that is putting coastal com­mu­ni­ties at increased risk of flood­ing. It describes a nat­ur­al world in tur­moil as plants and ani­mals attempt to migrate to escape ris­ing tem­per­a­tures, and warns that many could go extinct. Sav­ing a sig­nif­i­cant frac­tion of the world’s bio­log­i­cal diver­si­ty may require far more aggres­sive human man­age­ment of nat­ur­al sys­tems, the report declares.

    Efforts to adapt to cli­mate change have already begun in many coun­tries, the report found; Pres­i­dent Oba­ma on Fri­day signed an exec­u­tive order to step up such efforts in the Unit­ed States. But these efforts remain inad­e­quate com­pared with the risks, the report says, and far more inten­sive — and expen­sive — adap­ta­tion plans are like­ly to be required in the future.

    The report found that it is not too late for cuts in emis­sions to have a strong impact on the future risks of cli­mate change, though the costs would be incurred in the next few decades and the main ben­e­fits would like­ly be seen in the late 21st cen­tu­ry and beyond.

    The Inter­gov­ern­men­tal Pan­el on Cli­mate Change is the prin­ci­pal sci­en­tif­ic body charged with review­ing and assess­ing cli­mate sci­ence, then issu­ing reports about the risks to the world’s gov­ern­ments. Its main reports come out every five to six years. The group won the Nobel Peace Prize, along with Al Gore, in 2007 for its efforts to alert the world to the risks.

    Hun­dreds of bil­lions of dol­lars are being spent every year to reduce emis­sions, in direct response to past find­ings from the group, though many ana­lysts have said these efforts are so far inad­e­quate to head off dras­tic cli­mat­ic changes lat­er in the cen­tu­ry.

    On the food sup­ply, the new report finds that ben­e­fits from glob­al warm­ing may be seen in some areas, such as north­ern lands that are now mar­gin­al for food pro­duc­tion. But it added that over all, cli­mate change could reduce agri­cul­tur­al out­put by as much as 2 per­cent per decade for the rest of this cen­tu­ry, com­pared with what out­put would be with­out cli­mate change.

    Dur­ing that peri­od, demand is expect­ed to rise as much as 14 per­cent each decade, the report found, as bil­lions of peo­ple in devel­op­ing coun­tries acquire the mon­ey to eat rich­er diets. Ris­ing food prices would like­ly hit the world’s poor hard­est, as has already occurred from sharp price increas­es of recent years — spikes caused to a large extent by cer­tain types of weath­er extremes, like severe heat waves, that have been linked to cli­mate change.

    The agri­cul­tur­al risks “are great­est for trop­i­cal coun­tries, giv­en pro­ject­ed impacts that exceed adap­tive capac­i­ty and high­er pover­ty rates com­pared with tem­per­ate regions,” the draft report finds.

    If the report proves to be cor­rect, glob­al food demand might have to be met – if it can be met – by putting new land into pro­duc­tion. That could entail chop­ping down large areas of for­est, an action that would only accel­er­ate cli­mate change by send­ing sub­stan­tial amounts of car­bon diox­ide into the air from the destruc­tion of trees.

    The leak of the new draft occurred on a blog hos­tile to the sci­en­tif­ic pan­el.

    “It’s a work in progress,” said Jonathan Lynn, a spokesman for the inter­gov­ern­men­tal pan­el. “We don’t have any­thing to say about the con­tents. It’s like­ly to change.”

    ...

    When you look at the world we’re cre­at­ing in com­ing decades, with bil­lions more peo­ple con­sum­ing more and more of a declin­ing resource-base, it’s not how to imag­ine that con­tem­po­rary com­mod­i­ty barons might be lick­ing their chops at the prospect of glob­al cli­mate change and all of the prof­it-cre­at­ing destruc­tion and tur­moil that comes with it. At least in the medi­um-term. In the long-run, though, it’s very unclear how destroy­ing the ecosys­tem and leav­ing the plan­et with sub­stan­tial­ly reduced bio­log­i­cal resources is going to work out well for the bil­lion­aires, espe­cial­ly this cur­rent crop of “I wan­na live for­ev­er!” bil­lion­aires. You can’t eat mon­ey. But even if mon­ey was edi­ble, it’s not like the rab­ble isn’t going to be scape­goat­ing the bil­lion­aires of the future dur­ing human­i­ty’s Great Col­lapse. Will gobs of mon­ey, even edi­ble mon­ey, real­ly be worth it when the com­mod­i­ty barons are con­sid­ered the ene­mies of life on Earth? Just what kind of mes­si­ah com­plex are our dear lead­ers strug­gling with?

    Posted by Pterrafractyl | November 1, 2013, 3:02 pm
  15. Oh wow, what a sur­prise: Humans aren’t the only species ill-equipped to deal with the stress­es of rapid cli­mate change:

    Hul­la­baloo
    Our crops and oth­er plants may not be able to adapt to cli­mate change

    by David Atkins
    12/28/2013 07:30:00 AM

    More bad news on the cli­mate front:

    A new study sug­gests that mod­ern flow­er­ing plants, trees and agri­cul­tur­al crops may not have the char­ac­ter­is­tics, or the time, to respond to rapid human-induced cli­mate change.

    The report in Nature looks at how plants evolved to cope with cold in the past, but finds these same mech­a­nisms may not pro­vide the same defense against human-induced cli­mate change...

    They iden­ti­fied three traits that help them do that: drop­ping their leaves before the win­ter chill, nar­row­ing the cells that trans­port water from the roots to the leaves, and dying back to the ground and re-sprout­ing from their roots or seeds in the spring.

    “The next bit was, we want­ed to not just look at where species are today and whether they are see­ing freez­ing or not, but to try to under­stand the evo­lu­tion of these char­ac­ter­is­tics and the order of the evo­lu­tion of those char­ac­ter­is­tics or those traits,” Zanne said.

    To do that, the researchers con­struct­ed the largest-ever time-scaled evo­lu­tion­ary tree of 32,000 plant species. They then com­pared the emer­gence of those adap­tive traits with big changes in the Earth­’s cli­mate to recon­struct how plants evolved with the cold as they spread across the globe.

    What hap­pened, unsur­pris­ing­ly, is that the plants evolved traits to deal with chang­ing tem­per­a­tures over grad­ual timescales. If the changes had been more sud­den, they would not have been able to adapt.

    Cli­mate change, need­less to say, is a sud­den event. Crops and oth­er plants will have a dif­fi­cult time adapt­ing.

    It’s not going to be pos­si­ble to sim­ply “adapt” to cli­mate change. Mit­i­ga­tion will be essen­tial. And, unfor­tu­nate­ly, for right-wing eco­nom­ic ide­ol­o­gy, mit­i­ga­tion is going to require large-scale inter­na­tion­al gov­ern­men­tal reg­u­la­tion. There’s no oth­er way.

    It’s often point­ed out by folks that take the “What, me wor­ry?atti­tude to cli­mate change that the cli­mate has been chang­ing all through­out his­to­ry and there­fore we have noth­ing to wor­ry about because this is all part of nature. This argu­ment is true in the sense that the earth has expe­ri­enced many peri­ods of cli­mate change in the past. But it’s worth keep­ing in mind that the cli­mate was­n’t the only thing that was chang­ing dur­ing those peri­ods.

    Oh well, at least if noth­ing changes, in terms of pub­lic pol­i­cy and our attempts to deal with this civ­i­liza­tion­al threat, there will be at least one grow­ing food source.

    Posted by Pterrafractyl | December 28, 2013, 7:53 pm
  16. All good things come to an end. Moral­ly dubi­ous things also come to an end. Ends hap­pen:

    Bloomberg
    Farm Prof­its Seen Falling as Five-Year Crop Boom Ends
    By Alan Bjer­ga Feb 11, 2014 10:57 AM CT

    A wan­ing boom in U.S. crop prices will cut annu­al farm prof­its 27 per­cent this year from a record, poten­tial­ly dent­ing demand for Deere & Co. trac­tors and Mon­san­to Co. chem­i­cals, the gov­ern­ment said.

    Agri­cul­tur­al net income will be $95.8 bil­lion, down from a revised $130.5 bil­lion last year, the U.S. Depart­ment of Agri­cul­ture said today in its first 2014 fore­cast. Income for major crops includ­ing corn, soy­beans and wheat will be $189.4 bil­lion, down 12 per­cent, while all expens­es for feed, chem­i­cals and oth­er items will be $348.2 bil­lion, down 11 per­cent.

    Flat demand for corn to make ethanol and few­er exports to Chi­na may halt gains in farm­land val­ues after a 37 per­cent jump since 2009, leav­ing farm­ers with less to invest. The farm law Pres­i­dent Barack Oba­ma signed last week also will cut gov­ern­ment spend­ing on agri­cul­ture, fur­ther erod­ing prof­it.

    “We’re look­ing at an era of about three, four, five, years of reduced prof­itabil­i­ty in agri­cul­ture,” Matthew Roberts, an econ­o­mist at Ohio State Uni­ver­si­ty in Colum­bus, said before the report was released. With­out sig­nif­i­cant dis­rup­tions to crop pro­duc­tion, “by 2015, 2016, farms that expand­ed very rapid­ly over the last few years could be vul­ner­a­ble, and we would see the first sig­nif­i­cant farm fail­ures.”

    The slump in the val­ue of U.S. crops will erode pros­per­i­ty in Corn Belt states, harm­ing rur­al busi­ness and, if sus­tained, may lead to a wave of farm fail­ures for the first time in a gen­er­a­tion, Roberts said.

    Live­stock Rev­enue

    In Novem­ber, the depart­ment had esti­mat­ed 2013 prof­it at a record $131 bil­lion, and the most since 1973 when adjust­ed for infla­tion. About 2.6 mil­lion peo­ple worked on farms in 2012, accord­ing to the USDA, with anoth­er 13.9 mil­lion in food-relat­ed indus­tries. The com­bined total equals 9.2 per­cent of the total U.S. work­force.

    For 2014, live­stock pro­duc­ers’ rev­enue will be $183.4 bil­lion, up 0.7 per­cent from last year. Among farm expens­es, ani­mal feed, the biggest sin­gle cost, will be $52.1 bil­lion, down 1 per­cent from 2013 because of the low­er cost of corn. Seeds will cost $21.6 bil­lion, up 1.5 per­cent.

    Futures for corn, the most valu­able U.S. crop, sold on the Chica­go Board of Trade slumped 40 per­cent in 2013, the most since at least 1960, accord­ing to data com­piled by Bloomberg. Soy­beans, the No. 2 crop, fell 8.3 per­cent and wheat plunged 22 per­cent.

    ...

    Tight­en­ing Belts

    “Every­one is tight­en­ing their belts,” said Kestel, who sells DuPont Co. seeds while rais­ing 1,200 acres of corn and soy­beans about 60 miles south­west of Chica­go. “We’ve had a wind­fall the past few years. Mov­ing for­ward, it’s scary.”

    Farm­ers pro­duced a record 13.925 bil­lion bushels of corn last year, the USDA said yes­ter­day. Corn used for ethanol was 5 mil­lion bushels for the cur­rent year, lit­tle changed from three years ago. Farm goods sold to Chi­na may drop to $21.5 bil­lion this year from $23.5 bil­lion in 2013, the USDA said in Decem­ber.

    Gov­ern­ment sub­si­dies to agri­cul­ture will be $6.1 bil­lion, down 45 per­cent from last year. The farm bill signed by Oba­ma last week, hailed by farmer groups as a way to bet­ter tar­get aid toward pro­duc­ers dur­ing times when they need it, prob­a­bly won’t add much to prof­it this year, said­Patrick West­hoff, an agri­cul­tur­al econ­o­mist at the Uni­ver­si­ty of Mis­souri in Colum­bia.

    The law ends a $5 bil­lion annu­al crop sub­sidy and relies on sub­si­dized fed­er­al crop insur­ance to guard against floods, drought, pests and oth­er risks.

    So it sounds like there are a num­ber of fac­tors lead­ing to this sharp drop from record prof­its last year for US farmer, like reduced sub­si­dies and few­er exports. Could there have been some oth­er rea­sons that should be added to the list of reduced prof­its? Things like Drought-Freezes?

    Bloomberg
    Wheat Crops See Worst Dam­age in 5 Years on Drought-Freeze
    By Jeff Wil­son Apr 4, 2014 2:07 AM CT

    It’s been a dou­ble-wham­my win­ter for wheat farm­ers in the U.S., the world’s largest exporter.

    With drought already sap­ping soil mois­ture across the Great Plains, the biggest grow­ing region, a polar vor­tex in ear­ly 2014 draped fields in a deep freeze, killing more plants than nor­mal. Since crops began going dor­mant in Novem­ber, con­di­tions dete­ri­o­rat­ed by the most in five years, accord­ing to grain bro­kers Jef­feries Bache LLC and CHS Hedg­ing Inc.

    “My main con­cern is the lack of sub­soil mois­ture,” said Ron Sup­pes, 62, who farms about 10,000 acres near Dighton, Kansas. “We have received less than a third of the nor­mal rain since we plant­ed. With­out more than a half inch of rain in the next two weeks, the crop will decline very quick­ly.”

    The prospect of crop dam­age is esca­lat­ing sup­ply con­cerns that sent Chica­go wheat futures to their biggest ral­ly to start a year in three decades. Prices jumped to a 10-month high March 20 after Russia’s annex­a­tion of the Crimea region in Ukraine boost­ed the risk of dis­rup­tions to grain ship­ments from the Black Sea. U.S. exports for deliv­ery before the har­vest in June are up 19 per­cent from last year, and domes­tic inven­to­ries on March 1 were down 15 per­cent from a year ear­li­er.

    Extreme weath­er is rais­ing costs for con­sumers, send­ing world food prices to a 10-month high in March as crop dam­age from dry con­di­tions across the globe lift­ed every­thing from meat to dairy to grain, Unit­ed Nations data show. The U.S. retail price for all-pur­pose white flour reached a record 55.5 cents a pound in Feb­ru­ary, up 5.9 per­cent from a year ear­li­er, data from the Bureau of Labor Sta­tis­tics show.

    Ris­ing Prices

    Wheat futures on the Chica­go Board of Trade jumped 16 per­cent in March, the biggest month­ly gain since July 2012, and are up 11 per­cent since Dec. 31 at $6.74 a bushel. Prices touched a 42-month low of $5.50 a bushel on Jan. 29. The Stan­dard & Poor’s GSCI Spot Index of 24 com­modi­ties ral­lied 1.9 per­cent in 2014, led by gains in cof­fee, hogs, corn and nick­el. The MSCI All-Coun­try World Index of equi­ties advanced 1.3 per­cent, while the Bloomberg Trea­sury Bond Index gained 1.4 per­cent.

    Dri­er-than-nor­mal sub­soils more than dou­bled in March to 76 per­cent in an area from Texas to North Dako­ta, where farm­ers grow hard, red win­ter wheat, T‑Storm Weath­er LLC in Chica­go said in a note April 2. Yields may drop to 45.7 bushels an acre this year, com­pared with 47.4 a year ear­li­er, Berwyn, Penn­syl­va­nia-based Plan­a­lyt­ics Inc. said March 28. The firm based its esti­mate on weath­er and satel­lite images.

    ‘Ane­mic Crop’

    The U.S. Depart­ment of Agri­cul­ture will issue its first esti­mate of this year’s U.S. crop con­di­tions on April 7. The report may show 42 per­cent in good or excel­lent con­di­tion, com­pared with 62 per­cent in Novem­ber, Jef­feries Bache and CHS said. A 20 per­cent­age-point drop would the biggest dur­ing win­ter dor­man­cy since 2009, data show.

    “The first crop rat­ings of the year will show sig­nif­i­cant declines since Novem­ber,” said Shawn McCam­bridge, the senior grain ana­lyst for Jef­feries Bach in Chica­go. “It’s an ane­mic crop because of the mois­ture deficits.”

    In Kansas, the biggest grow­er of win­ter wheat, Sup­pes said his fields, about 214 miles (344 kilo­me­ters) north­west of Wichi­ta, have endured drought-like con­di­tions of vary­ing degrees for 11 straight years. On the fields his fam­i­ly has farmed for more than 90 years, plants that nor­mal­ly get about 17 inch­es (43 cen­time­ters) of rain got less than 6 inch­es, and crops on high ground that lacked pro­tec­tive snow cov­er were dam­aged or destroyed by arc­tic cold.

    “The wheat looks green from the road, but if you were to walk out into the field and start dig­ging down into soil, you won’t be impressed with the crop poten­tial,” Sup­pes said.

    Drought Con­di­tions

    As of April 1, the U.S. Drought Mon­i­tor rat­ed 65 per­cent of Kansas with severe-to-extreme drought, up from 34 per­cent at the end of 2013. Tem­per­a­tures fell to the low­est since 1982 in Feb­ru­ary, dam­ag­ing plants that did not have snow cov­er, accord­ing to Tim Emslie, the research man­ag­er for CHS Hedg­ing.

    As of March 30, state agri­cul­ture depart­ments report­ed crops rat­ed in good or excel­lent con­di­tion fell to 32 per­cent in Kansas from 63 per­cent in Novem­ber, while Texas saw a decline to 11 per­cent from 32 per­cent and Okla­homa dropped to 17 per­cent from 77 per­cent, USDA data show.

    The sub-zero win­ter tem­per­a­tures across the Plains killed some plants, which means farm­ers may aban­don as much as 10 per­cent of fields, up from an aver­age of 3 per­cent, said Jeff Bechard, the pres­i­dent of AgMark LLC, the Beloit, Kansas-based coop­er­a­tive that han­dles more than 50 mil­lion bushels of grain annu­al­ly.

    “Wheat is sur­viv­ing off the top-soil mois­ture, because there is very lit­tle sub­soil mois­ture,” Bechard said. “There’s no pan­ic yet, but we need half an inch of rain every week for plants to recov­er.”

    Rain Helps

    Rain and the return of more sea­son­ably warm weath­er could revive the U.S. crop. Wheat is a hearty grass that can with­stand peri­ods of extreme weath­er, and most fields had a pro­tec­tive lay­er of snow when tem­per­a­tures were at their low­est. Prices tum­bled 22 per­cent last year, the biggest drop since 2008, on signs that record glob­al out­put would boost reserves. Futures are down 6.6 per­cent from last month’s peak.

    Sup­plies are increas­ing from Cana­da, the sec­ond-largest exporter, after rail bot­tle­necks delayed ship­ment of a record crop from 2013.

    Rail oper­a­tors are ramp­ing up the num­ber of cars to move Cana­di­an grain stuck in stor­age, Trans­port Min­is­ter Lisa Raitt said March 26 in Win­nipeg. The gov­ern­ment ordered Cana­di­an Nation­al Rail­way Co. (CNR) and Cana­di­an Pacif­ic Rail­way Ltd. last month to increase the num­ber of grain cars each sends to prairie ele­va­tors to move 500,000 met­ric tons a week.

    ...

    Yep, the polar vortex/drought expe­ri­ence is a reminder that ris­ing food prices only helps those with food to sell. That’s one of those fun-facts that could have quite an impact on how food sup­pli­ers struc­ture their busi­ness­es in the future. Espe­cial­ly the spec­u­la­tive food sup­pli­ers. Hope­ful­ly we’ll see some changes from food deman­ders too.

    Posted by Pterrafractyl | April 4, 2014, 1:46 pm
  17. Here’s a sto­ry that high­lights the unfor­tu­nate real­i­ty that human­i­ty’s loom­ing “peak soil” expe­ri­ence may not sim­ply involve deplet­ed soil that lacks nutri­tion­al val­ue. That deplet­ed soil might also be infused with dif­fer­ent sur­prise ingre­di­ent: Pol­lu­tion:

    The New York Times
    One-Fifth of China’s Farm­land Is Pol­lut­ed, State Study Finds
    By EDWARD WONGAPRIL 17, 2014

    BEIJING — The Chi­nese gov­ern­ment released a report on Thurs­day that said near­ly one-fifth of its arable land was pol­lut­ed, a find­ing cer­tain to raise ques­tions about the tox­ic results of China’s rapid indus­tri­al­iza­tion, its lack of reg­u­la­tions over com­mer­cial inter­ests and the con­se­quences for the nation­al food chain.

    The report, issued by the Min­istry of Envi­ron­men­tal Pro­tec­tion and the Min­istry of Land Resources, said 16.1 per­cent of the country’s soil was pol­lut­ed, includ­ing 19.4 per­cent of farm­land. The report was based on a study done from April 2005 to last Decem­ber on more than 2.4 mil­lion square miles of land across main­land Chi­na, accord­ing to Xin­hua, the state news agency.

    The report said that “the main pol­lu­tion source is human indus­tri­al and agri­cul­tur­al activ­i­ties,” accord­ing to Xin­hua. More specif­i­cal­ly, fac­to­ry waste prod­ucts, irri­ga­tion of land by pol­lut­ed water, the improp­er use of fer­til­iz­ers and pes­ti­cides, and live­stock breed­ing have all result­ed in taint­ed farm­land, the report said.

    The study found that 82.8 per­cent of the pol­lut­ed land was con­t­a­m­i­nat­ed by inor­gan­ic mate­r­i­al. The most com­mon pol­lu­tants were cad­mi­um, nick­el and arsenic, and the lev­els of these mate­ri­als in the soil had risen sharply since land stud­ies in 1986 and 1990. The lev­el of cad­mi­um had risen by 50 per­cent in the south­west and in coastal areas and by 10 per­cent to 40 per­cent in oth­er regions, Xin­hua report­ed. The soil in south­ern Chi­na is more pol­lut­ed than in the north.

    The report con­firms spread­ing fears among many offi­cials and ordi­nary Chi­nese that the country’s soil has been in severe decline. Its num­bers also indi­cate a more seri­ous prob­lem than sta­tis­tics did in a book pub­lished in ear­ly 2013 by the Min­istry of Envi­ron­men­tal Pro­tec­tion, “Soil Pol­lu­tion and Phys­i­cal Health,” which said one-sixth of China’s arable land, or near­ly 50 mil­lion acres, was pol­lut­ed.

    Offi­cials have become increas­ing­ly vocal about the prob­lem in the past year. In Decem­ber, a vice min­is­ter of land and resources, Wang Shiyuan, said at a news con­fer­ence that eight mil­lion acres of land across Chi­na, equal to the size of Mary­land, were so pol­lut­ed that farm­ing should not be allowed on it.

    Hunan Province, in cen­tral Chi­na, has some of the worst soil pol­lu­tion because it is one of China’s top pro­duc­ers of non­fer­rous met­als. But it is also a large rice-grow­ing area, pro­duc­ing 16 per­cent of the country’s rice in 2012, accord­ing to one mar­ket research com­pa­ny. Offi­cials in Guang­dong Province last year found that some rice had exces­sive lev­els of cad­mi­um. Most of that rice was from Hunan.

    ...

    Well, human­i­ty’s agri­cul­tur­al prac­tices might still be large­ly unsus­tain­able, but the cycle of mind­less­ly pol­lut­ing the next gen­er­a­tion seems to be going strong.

    Posted by Pterrafractyl | April 21, 2014, 10:20 am
  18. Here’s some good news: food spec­u­la­tors that were bet­ting on a big El Nino-trig­gered food bust in Asia may not be doing so well now that it’s look­ing like El Nino might decide to skip this year:

    The Wall Street Jour­nal
    Food Bets Dwin­dle as El Niño Dis­ap­pears
    12:58 am ET
    Aug 1, 2014

    By Huileng Tan and Isabel­la Ste­ger

    Fears of a return of the weath­er phe­nom­e­non El Niño have cooled, spurring investors to with­draw bull­ish bets on food and oth­er sta­ples.

    Palm oil prices have dropped 22% since hit­ting an 18-month high in March as a dry spell in South­east Asia, togeth­er with El Niño fears, raised hopes that demand would out­strip sup­ply. But El Nino, which had been slat­ed by weath­er experts for a June return, is look­ing increas­ing­ly to be a weak event or even non-event, dis­ap­point­ing some palm oil investors.

    El Niño is an abnor­mal warm­ing of the Pacif­ic Ocean that caus­es drought in some areas and flood­ing in oth­ers. It is usu­al­ly asso­ci­at­ed with dri­er weath­er in Asia, which would hit har­vests of palm fruits.

    Australia’s Bureau of Mete­o­rol­o­gy is now pre­dict­ing a 50% chance of El Niño occur­ring this year, down from an ear­li­er esti­mate of 70%. This week it said that the chances of an El Niño this year have “clear­ly eased”, although it said some cli­mate mod­els still pre­dict El Niño may still return in the south­ern hemi­sphere spring because “warmer-than-aver­age waters per­sist in parts of the trop­i­cal Pacif­ic.” If one occurs it is “increas­ing­ly unlike­ly to be a strong event,” added the bureau.

    “Prices were bull­ish due to El Niño but at the same time, peo­ple were under-esti­mat­ing the soy­bean crop, which would be fur­ther improved due to El Nino. This year, El Niño will be an anti­cli­max for pro­duc­tion,” said Chan­dran Sin­nasamy, head of trad­ing at LT Inter­na­tion­al Futures Sdn. in Kuala Lumpur. Soy­bean oil is a key com­peti­tor to palm oil. El Niño brings heavy rains to soy­bean grow­ing regions, improv­ing yields.

    ...

    In relat­ed news, since the El Nino-trig­gered rain that Cal­i­for­nia has been thirst­ing for may not be hap­pen­ing, spec­u­la­tors that bet on an ongo­ing drought dis­as­ter for Cal­i­for­nia are prob­a­bly feel­ing pret­ty good...assum­ing they don’t live in Cal­i­for­nia and are fac­ing the threat of forced migra­tion:

    Cal­i­for­nia drought: ‘May have to migrate peo­ple’
    Mark Koba | CNBC
    Thurs­day, 31 Jul 2014 | 2:53 PM ET

    It’s going from worse to worst each week in Cal­i­for­nia.

    Suf­fer­ing in its third year of drought, more than 58 per­cent of the state is cur­rent­ly in “excep­tion­al drought” stage, accord­ing to the lat­est U.S. Drought Mon­i­tor map. That marks a huge jump from just sev­en days ago, when about 36 per­cent of the state was cat­e­go­rized that way.

    Excep­tion­al drought, the most extreme cat­e­go­ry, indi­cates wide­spread crop and pas­ture loss­es and short­ages of water in reser­voirs, streams and wells.

    If the state con­tin­ues on this path, there may have to be thoughts about mov­ing peo­ple out, said Lynn Wil­son, aca­d­e­m­ic chair at Kaplan Uni­ver­si­ty and who serves on the cli­mate change del­e­ga­tion in the Unit­ed Nations.

    “Civ­i­liza­tions in the past have had to migrate out of areas of drought,” Wil­son said. “We may have to migrate peo­ple out of Cal­i­for­nia.”

    Wil­son added that before that would hap­pen, every option such as import­ing water to the state would like­ly occur— but “migra­tion can’t be tak­en off the table.”

    The drought has near­ly deplet­ed the state’s sur­face water—which is seen being reduced by about one-third this year. Farm­ers in Cal­i­for­nia have turned to ground­wa­ter to keep crops irri­gat­ed.

    That has led to fears of deplet­ed ground­wa­ter in the years ahead if that con­tin­ues, accord­ing to a report released ear­li­er this month..

    “So far, ground­wa­ter has helped get crops to mar­ket and keep food prices in line,” said Jay Lund, direc­tor of the Cen­ter for Water­shed Sci­ences at the Uni­ver­si­ty of Cal­i­for­nia, Davis, which released the report.

    But the study said the drought in Cal­i­for­nia will cost the state $2.2 bil­lion and put some 17,000 agri­cul­tur­al work­ers out of a job this year.

    ...

    Waster­shed’s Lund said that agri­cul­ture is by far the state’s great­est water user, account­ing for 75 per­cent of consumption—while cities and sub­urbs use about 20 per­cent of the state’s water.

    He added that Cal­i­for­nia is always des­per­ate for water and “hard to drought-proof.”

    But the sit­u­a­tion could get worse before it gets bet­ter. Pre­dic­tions for the drought have it last­ing through 2015.

    Yes, life goes on in the New Nor­mal cli­mate, El Nino or not. Although the over­all vol­ume of life in a giv­en region might need some even­tu­al forced down­siz­ing. Invest wise­ly.

    Posted by Pterrafractyl | August 4, 2014, 9:13 am
  19. Life in the big city isn’t always easy. Espe­cial­ly if its a real­ly big, grow­ing city expe­ri­enc­ing the worst drought in its his­to­ry and is now run­ning out of water:

    Brazil’s biggest city may cut water ser­vice to 2 days a week
    Jan 28, 2:51 PM EST

    SAO PAULO (AP) — The worst drought to hit Brazil’s biggest city in decades may leave res­i­dents with water ser­vice only two days a week.

    Sao Paulo water util­i­ty com­pa­ny Sabe­sp says a five days-off, two days-on sys­tem would be a last-ditch effort to pre­vent the col­lapse of the Cantareira water sys­tem.

    The reser­voir is the largest of six that pro­vide water to some 6 mil­lion of the 20 mil­lion peo­ple liv­ing in the met­ro­pol­i­tan area of Sao Paulo. The util­i­ty says Cantareira is now down to 5.1 per­cent of its capac­i­ty of 264 bil­lion gal­lons (1 tril­lion liters).

    Sabe­sp offi­cial Paulo Mas­sato Yoshi­mo­to said Wednes­day that “rationing could hap­pen if rain­fall does not increase in the reser­voir area soon.”

    Also note that, with 70% of Brazil’s elec­tric­i­ty com­ing from hydo­elec­tric pow­er, an his­toric Brazil­ian drought dou­bles as an elec­tric­i­ty short­age:

    Hydro World
    Brazil’s drought brings water sup­ply to near zero capac­i­ty at hydro­elec­tric facil­i­ties
    BRASILIA, Brazil
    01/28/2015
    By Gre­go­ry B. Poindex­ter

    Brazil is expe­ri­enc­ing a debil­i­tat­ing drought as the nation endures the dri­est peri­od since South America’s most pop­u­lous coun­try began keep­ing records in the 1930s. As a result of the arid con­di­tions, reser­voir lev­els and lake water flow to hydro­elec­tric facil­i­ties that sup­ply pow­er to Brazil’s most dense­ly pop­u­lat­ed city of Sao Paulo are near­ing zero capac­i­ty.

    Accord­ing to the fed­er­al gov­ern­ment, hydro­elec­tric pow­er facil­i­ties in the country’s south­east­ern region that sup­ply pow­er to close to 20 mil­lion peo­ple in the met­ro­pol­i­tan region of Sao Paulo (MRSP) are being deac­ti­vat­ed. A list of the deac­ti­vat­ed facil­i­ties is not imme­di­ate­ly avail­able, but Brazil nor­mal­ly receives about 70% of its elec­tric­i­ty from hydro­elec­tric plants, accord­ing to ener­gy offi­cials.

    The Billings Reser­voir, in MRSP, sup­plies the 889-MW Hen­ry Bor­den hydro­elec­tric facil­i­ty as part of the Cantareira water sys­tem. Local media out­lets report Billings Reser­voir is near­ly dry.

    Greater Sao Paulo, accord­ing to the World Bank, is the most impor­tant indus­tri­al pro­duc­er of the coun­try. Sao Paulo City, the world’s ninth-largest city accord­ing to avail­able 2012 cen­sus data, is locat­ed on the south­east­ern end of the Alto-Tiete Riv­er Basin. The city relies heav­i­ly on the Cantareia water sys­tem for hydro­elec­tric ener­gy to pow­er indus­try, san­i­ta­tion and drink­ing water.

    ...

    Because of the extreme water short­age brought on by the drought, SABESP has been forced to pump dead water — water from reserves below the intake pipes of sev­er­al reser­voirs — to use as drink­ing water.

    For the Alto-Tiete sys­tem, water lev­el stands at 10.5% against the 46.9% observed a year ago. Water reserves have plunged dra­mat­i­cal­ly in the past 12 months, caus­ing capac­i­ty in sev­er­al reser­voirs to reach all-time lows: Guara­pi­ran­ga, from 77.3% to 46.9%; Alto Cotia saw the great­est decline, going from 86.3% to 32.8%; Rio Grande went from 93.7% to 74.3%; and Rio Claro dimin­ished from 90.8% to 54.3%, accord­ing to the lat­est SABESP esti­mates.

    On Jan. 19, Brazil’s nation­al grid oper­a­tor, Oper­ador Nacional do Sis­tema Elet­ri­co (ONS), cut pow­er to sev­er­al major Brazil­ian cities, includ­ing Sao Paulo and Rio de Janeiro.

    The drought is also hav­ing an impact on ener­gy sup­plies. Offi­cials said with reduced gen­er­a­tion from hydro­elec­tric dams, demand for elec­tric­i­ty gen­er­at­ed from fos­sil fuel-fired plants will con­tin­ue to peak as peo­ple turn up the air con­di­tion­ing through the hot sum­mer.

    So fos­sil-fuel ener­gy sup­plies might need to get fired up due to the drought shut­ting down the hydro­elec­tric plans. Well, that’s pret­ty much a night­mare sce­nario. But keep in mind could be worse. A lot worse.

    And if you’re think­ing that life out­side the big city will help you avoid a loom­ing human­i­tar­i­an cat­a­stro­phe, keep in mind that it can be worse there too. A lot worse.

    Posted by Pterrafractyl | January 28, 2015, 7:50 pm
  20. One of the nice things about Lib­er­tar­i­an­ism is that the ‘Lib­er­tar­i­an phase’ in most peo­ple’s lives often does­n’t last too long. So with Brazil going through some sort of Lib­er­tar­i­an phase of its own, here’s a reminder that when a gov­ern­ment goes through a Libertarian/“let’s let the mar­ket run every­thing!” phase, that phase prob­a­bly isn’t going to last too longer either, although that would have less to do with a youth­ful lack of expe­ri­ence and more to do with all the dis­as­ters that would be unleashed:

    The Guardian
    Why Brazil’s megadrought is a Wall Street fail­ure
    Amy Larkin

    Brazil’s recent drought shows that Wall Street is still baf­fled by the eco­nom­ic cost of envi­ron­men­tal – and exis­ten­tial – risk
    Fri­day 10 April 2015 12.41 EDT

    It’s hard to over­es­ti­mate the appalling envi­ron­men­tal and eco­nom­ic cri­sis that’s brew­ing in Brazil right now. The coun­try is in the grip of a crip­pling megadrought – the result of pol­lu­tion, defor­esta­tion and cli­mate change – that deeply threat­ens its econ­o­my, soci­ety and envi­ron­ment. And the dam­age may be per­ma­nent: São Paulo, Brazil’s largest city and indus­tri­al cen­ter, has begun rationing water and is dis­cussing whether or not it will need to depop­u­late in the near future.

    But if Brazil’s drought is shock­ing, Wall Street’s short­sight­ed approach to the coun­try is appalling. Insti­tu­tion­al investors’ reports on the coun­try – the sev­enth largest econ­o­my in the world – cite wor­ries about infla­tion, gov­ern­ment cut­backs and low con­sumer con­fi­dence. But I could not find a sin­gle analy­sis that men­tioned the exis­ten­tial threat fac­ing the coun­try: the megadrought that is expect­ed to last decades and could destroy the Brazil­ian econ­o­my. Not a sin­gle analy­sis cit­ed the bru­tal glob­al impact that this will cause..

    In oth­er words, a host of insti­tu­tion­al investors have found wor­ri­some things to say about Brazil, but none seem to be aware of – or, at least, will­ing to face – the country’s great­est threat.

    Attempt­ing to sep­a­rate economies from envi­ron­ment – as many of these ana­lysts seem to do – is like try­ing to sep­a­rate mind and body. It sim­ply doesn’t work.

    We will nev­er repair our busi­ness mod­els and gov­ern­ment poli­cies to con­form to the real envi­ron­men­tal con­straints of the 21st cen­tu­ry until we repair this fun­da­men­tal flaw in our eco­nom­ic sys­tem. Investors and ana­lysts reg­u­lar­ly review a host of fac­tors – includ­ing nation­al debt, infla­tion, cur­ren­cy deval­u­a­tion and oth­er finan­cial con­sid­er­a­tions – when they for­mu­late their eco­nom­ic pre­dic­tions. Their deci­sion to omit the envi­ron­ment as a fun­da­men­tal eco­nom­ic con­sid­er­a­tion is will­ful­ly igno­rant and neg­li­gent.

    Gconomies are cycli­cal, with peri­ods of boom and bust. But a lack of water can cause per­ma­nent dam­age. São Pao­lo, which is one of the rich­est cities in the world, serves as the finan­cial cen­ter for most of South Amer­i­ca. The con­se­quences of this drought are hard to cal­cu­late, but one can get an idea by imag­in­ing how water rationing in New York City – and the atten­dant pop­u­la­tion drop, pub­lic out­cry and social insta­bil­i­ty – would affect the world’s econ­o­my.

    This lack of fore­sight on the part of finan­cial ana­lysts is noth­ing new. They are over­look­ing this high risk sit­u­a­tion, just as they did with the dot­com boom and bust, the sub­prime glob­al melt­down, and a host of oth­er finan­cial crises. This will­ful delu­sion is also cycli­cal, and also a sig­nif­i­cant threat to the world’s econ­o­my.

    I have worked with dozens of multi­na­tion­al cor­po­ra­tions on trans­for­ma­tive projects and ini­tia­tives that cut or elim­i­nate waste, water usage, emis­sions and ener­gy con­sump­tion. Every sin­gle com­pa­ny has had the same com­plaint: they do some­thing spec­tac­u­lar­ly dif­fi­cult and smart that enhances their company’s long-term finan­cial secu­ri­ty. But, when it comes time for the quar­ter­ly earn­ings calls with Wall Street, no one ever asks about it.

    Exec­u­tives are respon­si­ble for main­tain­ing a sta­ble sup­ply chain, a pre­dictable P&L, a respectable brand image, and a keen aware­ness of com­pe­ti­tion and reg­u­la­tions. Sus­tain­able busi­ness inno­va­tion con­nects with all of these, and is one of the pil­lars need­ed to keep a mod­ern finan­cial house in order. Unfor­tu­nate­ly, Wall Street doesn’t seem to notice.

    ...

    So that was dis­ap­point­ing. And as the arti­cle point­ed out, it was also dis­ap­point­ing­ly typ­i­cal:

    ...
    This lack of fore­sight on the part of finan­cial ana­lysts is noth­ing new. They are over­look­ing this high risk sit­u­a­tion, just as they did with the dot­com boom and bust, the sub­prime glob­al melt­down, and a host of oth­er finan­cial crises. This will­ful delu­sion is also cycli­cal, and also a sig­nif­i­cant threat to the world’s econ­o­my.
    ...

    Yep. “The mar­ket” might be good for some things, but main­tain­ing a healthy econ­o­my and ecosys­tem prob­a­bly isn’t one of them. Have fun with that Lib­er­tar­i­an ‘Rev­o­lu­tion’ Brazil!

    And every­one else.

    Posted by Pterrafractyl | April 17, 2015, 8:19 pm
  21. Now that Don­ald Trump and the GOP have cap­tured the reigns of fed­er­al pow­er in a com­plete pow­er grab for the oli­garchy, here’s an inter­est­ing and grow­ing trend to keep an eye on: Dooms­day prep­per oli­garchs:

    The New York­er

    Dooms­day Prep for the Super-Rich
    Some of the wealth­i­est peo­ple in America—in Sil­i­con Val­ley, New York, and beyond—are get­ting ready for the crack­up of civ­i­liza­tion.

    By Evan Osnos
    Jan­u­ary 30, 2017 Issue

    Steve Huff­man, the thir­ty-three-year-old co-founder and C.E.O. of Red­dit, which is val­ued at six hun­dred mil­lion dol­lars, was near­sight­ed until Novem­ber, 2015, when he arranged to have laser eye surgery. He under­went the pro­ce­dure not for the sake of con­ve­nience or appear­ance but, rather, for a rea­son he doesn’t usu­al­ly talk much about: he hopes that it will improve his odds of sur­viv­ing a dis­as­ter, whether nat­ur­al or man-made. “If the world ends—and not even if the world ends, but if we have trouble—getting con­tacts or glass­es is going to be a huge pain in the ass,” he told me recent­ly. “With­out them, I’m fu cked.”

    Huff­man, who lives in San Fran­cis­co, has large blue eyes, thick, sandy hair, and an air of rest­less curios­i­ty; at the Uni­ver­si­ty of Vir­ginia, he was a com­pet­i­tive ball­room dancer, who hacked his roommate’s Web site as a prank. He is less focussed on a spe­cif­ic threat—a quake on the San Andreas, a pan­dem­ic, a dirty bomb—than he is on the after­math, “the tem­po­rary col­lapse of our gov­ern­ment and struc­tures,” as he puts it. “I own a cou­ple of motor­cy­cles. I have a bunch of guns and ammo. Food. I fig­ure that, with that, I can hole up in my house for some amount of time.”

    Sur­vival­ism, the prac­tice of prepar­ing for a crack­up of civ­i­liza­tion, tends to evoke a cer­tain pic­ture: the woods­man in the tin­foil hat, the hys­teric with the hoard of beans, the reli­gious doom­say­er. But in recent years sur­vival­ism has expand­ed to more afflu­ent quar­ters, tak­ing root in Sil­i­con Val­ley and New York City, among tech­nol­o­gy exec­u­tives, hedge-fund man­agers, and oth­ers in their eco­nom­ic cohort.

    Last spring, as the Pres­i­den­tial cam­paign exposed increas­ing­ly tox­ic divi­sions in Amer­i­ca, Anto­nio Gar­cía Martínez, a forty-year-old for­mer Face­book prod­uct man­ag­er liv­ing in San Fran­cis­co, bought five wood­ed acres on an island in the Pacif­ic North­west and brought in gen­er­a­tors, solar pan­els, and thou­sands of rounds of ammu­ni­tion. “When soci­ety los­es a healthy found­ing myth, it descends into chaos,” he told me. The author of “Chaos Mon­keys,” an acer­bic Sil­i­con Val­ley mem­oir, Gar­cía Martínez want­ed a refuge that would be far from cities but not entire­ly iso­lat­ed. “All these dudes think that one guy alone could some­how with­stand the rov­ing mob,” he said. “No, you’re going to need to form a local mili­tia. You just need so many things to actu­al­ly ride out the apoc­a­lypse.” Once he start­ed telling peers in the Bay Area about his “lit­tle island project,” they came “out of the wood­work” to describe their own prepa­ra­tions, he said. “I think peo­ple who are par­tic­u­lar­ly attuned to the levers by which soci­ety actu­al­ly works under­stand that we are skat­ing on real­ly thin cul­tur­al ice right now.”

    In pri­vate Face­book groups, wealthy sur­vival­ists swap tips on gas masks, bunkers, and loca­tions safe from the effects of cli­mate change. One mem­ber, the head of an invest­ment firm, told me, “I keep a heli­copter gassed up all the time, and I have an under­ground bunker with an air-fil­tra­tion sys­tem.” He said that his prepa­ra­tions prob­a­bly put him at the “extreme” end among his peers. But he added, “A lot of my friends do the guns and the motor­cy­cles and the gold coins. That’s not too rare any­more.”

    Tim Chang, a forty-four-year-old man­ag­ing direc­tor at May­field Fund, a ven­ture-cap­i­tal firm, told me, “There’s a bunch of us in the Val­ley. We meet up and have these finan­cial-hack­ing din­ners and talk about back­up plans peo­ple are doing. It runs the gamut from a lot of peo­ple stock­ing up on Bit­coin and cryp­tocur­ren­cy, to fig­ur­ing out how to get sec­ond pass­ports if they need it, to hav­ing vaca­tion homes in oth­er coun­tries that could be escape havens.” He said, “I’ll be can­did: I’m stock­pil­ing now on real estate to gen­er­ate pas­sive income but also to have havens to go to.” He and his wife, who is in tech­nol­o­gy, keep a set of bags packed for them­selves and their four-year-old daugh­ter. He told me, “I kind of have this ter­ror sce­nario: ‘Oh, my God, if there is a civ­il war or a giant earth­quake that cleaves off part of Cal­i­for­nia, we want to be ready.’ ”

    When Mar­vin Liao, a for­mer Yahoo exec­u­tive who is now a part­ner at 500 Star­tups, a ven­ture-cap­i­tal firm, con­sid­ered his prepa­ra­tions, he decid­ed that his caches of water and food were not enough. “What if some­one comes and takes this?” he asked me. To pro­tect his wife and daugh­ter, he said, “I don’t have guns, but I have a lot of oth­er weapon­ry. I took class­es in archery.”

    For some, it’s just “bro­gram­mer” enter­tain­ment, a kind of real-world sci-fi, with gear; for oth­ers, like Huff­man, it’s been a con­cern for years. “Ever since I saw the movie ‘Deep Impact,’ ” he said. The film, released in 1998, depicts a comet strik­ing the Atlantic, and a race to escape the tsuna­mi. “Everybody’s try­ing to get out, and they’re stuck in traf­fic. That scene hap­pened to be filmed near my high school. Every time I drove through that stretch of road, I would think, I need to own a motor­cy­cle because every­body else is screwed.”

    Huff­man has been a fre­quent attendee at Burn­ing Man, the annu­al, cloth­ing-option­al fes­ti­val in the Neva­da desert, where artists min­gle with moguls. He fell in love with one of its core prin­ci­ples, “rad­i­cal self-reliance,” which he takes to mean “hap­py to help oth­ers, but not want­i­ng to require oth­ers.” (Among sur­vival­ists, or “prep­pers,” as some call them­selves, FEMA, the Fed­er­al Emer­gency Man­age­ment Agency, stands for “Fool­ish­ly Expect­ing Mean­ing­ful Aid.”) Huff­man has cal­cu­lat­ed that, in the event of a dis­as­ter, he would seek out some form of com­mu­ni­ty: “Being around oth­er peo­ple is a good thing. I also have this some­what ego­tis­ti­cal view that I’m a pret­ty good leader. I will prob­a­bly be in charge, or at least not a slave, when push comes to shove.”

    Over the years, Huff­man has become increas­ing­ly con­cerned about basic Amer­i­can polit­i­cal sta­bil­i­ty and the risk of large-scale unrest. He said, “Some sort of insti­tu­tion­al col­lapse, then you just lose shipping—that sort of stuff.” (Prep­per blogs call such a sce­nario W.R.O.L., “with­out rule of law.”) Huff­man has come to believe that con­tem­po­rary life rests on a frag­ile con­sen­sus. “I think, to some degree, we all col­lec­tive­ly take it on faith that our coun­try works, that our cur­ren­cy is valu­able, the peace­ful trans­fer of power—that all of these things that we hold dear work because we believe they work. While I do believe they’re quite resilient, and we’ve been through a lot, cer­tain­ly we’re going to go through a lot more.”

    In build­ing Red­dit, a com­mu­ni­ty of thou­sands of dis­cus­sion threads, into one of the most fre­quent­ly vis­it­ed sites in the world, Huff­man has grown aware of the way that tech­nol­o­gy alters our rela­tions with one anoth­er, for bet­ter and for worse. He has wit­nessed how social media can mag­ni­fy pub­lic fear. “It’s eas­i­er for peo­ple to pan­ic when they’re togeth­er,” he said, point­ing out that “the Inter­net has made it eas­i­er for peo­ple to be togeth­er,” yet it also alerts peo­ple to emerg­ing risks. Long before the finan­cial cri­sis became front-page news, ear­ly signs appeared in user com­ments on Red­dit. “Peo­ple were start­ing to whis­per about mort­gages. They were wor­ried about stu­dent debt. They were wor­ried about debt in gen­er­al. There was a lot of, ‘This is too good to be true. This doesn’t smell right.’ ” He added, “There’s prob­a­bly some false pos­i­tives in there as well, but, in gen­er­al, I think we’re a pret­ty good gauge of pub­lic sen­ti­ment. When we’re talk­ing about a faith-based col­lapse, you’re going to start to see the chips in the foun­da­tion on social media first.”

    How did a pre­oc­cu­pa­tion with the apoc­a­lypse come to flour­ish in Sil­i­con Val­ley, a place known, to the point of cliché, for unstint­ing con­fi­dence in its abil­i­ty to change the world for the bet­ter?

    Those impuls­es are not as con­tra­dic­to­ry as they seem. Tech­nol­o­gy rewards the abil­i­ty to imag­ine wild­ly dif­fer­ent futures, Roy Bahat, the head of Bloomberg Beta, a San Fran­cis­co-based ven­ture-cap­i­tal firm, told me. “When you do that, it’s pret­ty com­mon that you take things ad infini­tum, and that leads you to utopias and dystopias,” he said. It can inspire rad­i­cal optimism—such as the cry­on­ics move­ment, which calls for freez­ing bod­ies at death in the hope that sci­ence will one day revive them—or bleak sce­nar­ios. Tim Chang, the ven­ture cap­i­tal­ist who keeps his bags packed, told me, “My cur­rent state of mind is oscil­lat­ing between opti­mism and sheer ter­ror.”

    In recent years, sur­vival­ism has been edg­ing deep­er into main­stream cul­ture. In 2012, Nation­al Geo­graph­ic Chan­nel launched “Dooms­day Prep­pers,” a real­i­ty show fea­tur­ing a series of Amer­i­cans brac­ing for what they called S.H.T.F. (when the “shit hits the fan”). The pre­mière drew more than four mil­lion view­ers, and, by the end of the first sea­son, it was the most pop­u­lar show in the channel’s his­to­ry. A sur­vey com­mis­sioned by Nation­al Geo­graph­ic found that forty per cent of Amer­i­cans believed that stock­ing up on sup­plies or build­ing a bomb shel­ter was a wis­er invest­ment than a 401(k). Online, the prep­per dis­cus­sions run from folksy (“A Mom’s Guide to Prepar­ing for Civ­il Unrest”) to grim (“How to Eat a Pine Tree to Sur­vive”).

    The reëlec­tion of Barack Oba­ma was a boon for the prep­ping indus­try. Con­ser­v­a­tive devo­tees, who accused Oba­ma of stok­ing racial ten­sions, restrict­ing gun rights, and expand­ing the nation­al debt, loaded up on the types of freeze-dried cot­tage cheese and beef stroganoff pro­mot­ed by com­men­ta­tors like Glenn Beck and Sean Han­ni­ty. A net­work of “readi­ness” trade shows attract­ed con­ven­tion­eers with class­es on sutur­ing (prac­ticed on a pig trot­ter) and pho­to oppor­tu­ni­ties with sur­vival­ist stars from the TV show “Naked and Afraid.”

    The fears were dif­fer­ent in Sil­i­con Val­ley. Around the same time that Huff­man, on Red­dit, was watch­ing the advance of the finan­cial cri­sis, Justin Kan heard the first inklings of sur­vival­ism among his peers. Kan co-found­ed Twitch, a gam­ing net­work that was lat­er sold to Ama­zon for near­ly a bil­lion dol­lars. “Some of my friends were, like, ‘The break­down of soci­ety is immi­nent. We should stock­pile food,’ ” he said. “I tried to. But then we got a cou­ple of bags of rice and five cans of toma­toes. We would have been dead if there was actu­al­ly a real prob­lem.” I asked Kan what his prep­ping friends had in com­mon. “Lots of mon­ey and resources,” he said. “What are the oth­er things I can wor­ry about and pre­pare for? It’s like insur­ance.”

    Yis­han Wong, an ear­ly Face­book employ­ee, was the C.E.O. of Red­dit from 2012 to 2014. He, too, had eye surgery for sur­vival pur­pos­es, elim­i­nat­ing his depen­dence, as he put it, “on a non­sus­tain­able exter­nal aid for per­fect vision.” In an e‑mail, Wong told me, “Most peo­ple just assume improb­a­ble events don’t hap­pen, but tech­ni­cal peo­ple tend to view risk very math­e­mat­i­cal­ly.” He con­tin­ued, “The tech prep­pers do not nec­es­sar­i­ly think a col­lapse is like­ly. They con­sid­er it a remote event, but one with a very severe down­side, so, giv­en how much mon­ey they have, spend­ing a frac­tion of their net worth to hedge against this . . . is a log­i­cal thing to do.”

    How many wealthy Amer­i­cans are real­ly mak­ing prepa­ra­tions for a cat­a­stro­phe? It’s hard to know exact­ly; a lot of peo­ple don’t like to talk about it. (“Anonymi­ty is price­less,” one hedge-fund man­ag­er told me, declin­ing an inter­view.) Some­times the top­ic emerges in unex­pect­ed ways. Reid Hoff­man, the co-founder of LinkedIn and a promi­nent investor, recalls telling a friend that he was think­ing of vis­it­ing New Zealand. “Oh, are you going to get apoc­a­lypse insur­ance?” the friend asked. “I’m, like, Huh?” Hoff­man told me. New Zealand, he dis­cov­ered, is a favored refuge in the event of a cat­a­clysm. Hoff­man said, “Say­ing you’re ‘buy­ing a house in New Zealand’ is kind of a wink, wink, say no more. Once you’ve done the Mason­ic hand­shake, they’ll be, like, ‘Oh, you know, I have a bro­ker who sells old ICBM silos, and they’re nuclear-hard­ened, and they kind of look like they would be inter­est­ing to live in.’ ”

    I asked Hoff­man to esti­mate what share of fel­low Sil­i­con Val­ley bil­lion­aires have acquired some lev­el of “apoc­a­lypse insur­ance,” in the form of a hide­away in the U.S. or abroad. “I would guess fifty-plus per cent,” he said, “but that’s par­al­lel with the deci­sion to buy a vaca­tion home. Human moti­va­tion is com­plex, and I think peo­ple can say, ‘I now have a safe­ty blan­ket for this thing that scares me.’ ” The fears vary, but many wor­ry that, as arti­fi­cial intel­li­gence takes away a grow­ing share of jobs, there will be a back­lash against Sil­i­con Val­ley, America’s sec­ond-high­est con­cen­tra­tion of wealth. (South­west­ern Con­necti­cut is first.) “I’ve heard this theme from a bunch of peo­ple,” Hoff­man said. “Is the coun­try going to turn against the wealthy? Is it going to turn against tech­no­log­i­cal inno­va­tion? Is it going to turn into civ­il dis­or­der?”

    The C.E.O. of anoth­er large tech com­pa­ny told me, “It’s still not at the point where indus­try insid­ers would turn to each oth­er with a straight face and ask what their plans are for some apoc­a­lyp­tic event.” He went on, “But, hav­ing said that, I actu­al­ly think it’s log­i­cal­ly ratio­nal and appro­pri­ate­ly con­ser­v­a­tive.” He not­ed the vul­ner­a­bil­i­ties exposed by the Russ­ian cyber­at­tack on the Demo­c­ra­t­ic Nation­al Com­mit­tee, and also by a large-scale hack on Octo­ber 21st, which dis­rupt­ed the Inter­net in North Amer­i­ca and West­ern Europe. “Our food sup­ply is depen­dent on G.P.S., logis­tics, and weath­er fore­cast­ing,” he said, “and those sys­tems are gen­er­al­ly depen­dent on the Inter­net, and the Inter­net is depen­dent on D.N.S.”—the sys­tem that man­ages domain names. “Go risk fac­tor by risk fac­tor by risk fac­tor, acknowl­edg­ing that there are many you don’t even know about, and you ask, ‘What’s the chance of this break­ing in the next decade?’ Or invert it: ‘What’s the chance that noth­ing breaks in fifty years?’ ”

    One mea­sure of survivalism’s spread is that some peo­ple are start­ing to speak out against it. Max Levchin, a founder of Pay­Pal and of Affirm, a lend­ing start­up, told me, “It’s one of the few things about Sil­i­con Val­ley that I active­ly dislike—the sense that we are supe­ri­or giants who move the nee­dle and, even if it’s our own fail­ure, must be spared.”

    To Levchin, prep­ping for sur­vival is a moral mis­cal­cu­la­tion; he prefers to “shut down par­ty con­ver­sa­tions” on the top­ic. “I typ­i­cal­ly ask peo­ple, ‘So you’re wor­ried about the pitch­forks. How much mon­ey have you donat­ed to your local home­less shel­ter?’ This con­nects the most, in my mind, to the real­i­ties of the income gap. All the oth­er forms of fear that peo­ple bring up are arti­fi­cial.” In his view, this is the time to invest in solu­tions, not escape. “At the moment, we’re actu­al­ly at a rel­a­tive­ly benign point of the econ­o­my. When the econ­o­my heads south, you will have a bunch of peo­ple that are in real­ly bad shape. What do we expect then?”

    On the oppo­site side of the coun­try, sim­i­lar awk­ward con­ver­sa­tions have been unfold­ing in some finan­cial cir­cles. Robert H. Dug­ger worked as a lob­by­ist for the finan­cial indus­try before he became a part­ner at the glob­al hedge fund Tudor Invest­ment Cor­po­ra­tion, in 1993. After sev­en­teen years, he retired to focus on phil­an­thropy and his invest­ments. “Any­one who’s in this com­mu­ni­ty knows peo­ple who are wor­ried that Amer­i­ca is head­ing toward some­thing like the Russ­ian Rev­o­lu­tion,” he told me recent­ly.

    To man­age that fear, Dug­ger said, he has seen two very dif­fer­ent respons­es. “Peo­ple know the only real answer is, Fix the prob­lem,” he said. “It’s a rea­son most of them give a lot of mon­ey to good caus­es.” At the same time, though, they invest in the mechan­ics of escape. He recalled a din­ner in New York City after 9/11 and the burst­ing of the dot-com bub­ble: “A group of cen­ti-mil­lion­aires and a cou­ple of bil­lion­aires were work­ing through end-of-Amer­i­ca sce­nar­ios and talk­ing about what they’d do. Most said they’ll fire up their planes and take their fam­i­lies to West­ern ranch­es or homes in oth­er coun­tries.” One of the guests was skep­ti­cal, Dug­ger said. “He leaned for­ward and asked, ‘Are you tak­ing your pilot’s fam­i­ly, too? And what about the main­te­nance guys? If rev­o­lu­tion­ar­ies are kick­ing in doors, how many of the peo­ple in your life will you have to take with you?’ The ques­tion­ing con­tin­ued. In the end, most agreed they couldn’t run.”

    Élite anx­i­ety cuts across polit­i­cal lines. Even financiers who sup­port­ed Trump for Pres­i­dent, hop­ing that he would cut tax­es and reg­u­la­tions, have been unnerved at the ways his insur­gent cam­paign seems to have has­tened a col­lapse of respect for estab­lished insti­tu­tions. Dug­ger said, “The media is under attack now. They won­der, Is the court sys­tem next? Do we go from ‘fake news’ to ‘fake evi­dence’? For peo­ple whose exis­tence depends on enforce­able con­tracts, this is life or death.”

    Robert A. John­son sees his peers’ talk of flee­ing as the symp­tom of a deep­er cri­sis. At fifty-nine, John­son has tou­sled sil­ver hair and a soft-spo­ken, avun­cu­lar com­po­sure. He earned degrees in elec­tri­cal engi­neer­ing and eco­nom­ics at M.I.T., got a Ph.D. in eco­nom­ics at Prince­ton, and worked on Capi­tol Hill, before enter­ing finance. He became a man­ag­ing direc­tor at the hedge fund Soros Fund Man­age­ment. In 2009, after the onset of the finan­cial cri­sis, he was named head of a think tank, the Insti­tute for New Eco­nom­ic Think­ing.

    When I vis­it­ed John­son, not long ago, at his office on Park Avenue South, he described him­self as an acci­den­tal stu­dent of civic anx­i­ety. He grew up out­side Detroit, in Grosse Pointe Park, the son of a doc­tor, and he watched his father’s gen­er­a­tion expe­ri­ence the frac­tur­ing of Detroit. “What I’m see­ing now in New York City is sort of like old music com­ing back,” he said. “These are friends of mine. I used to live in Belle Haven, in Green­wich, Con­necti­cut. Louis Bacon, Paul Tudor Jones, and Ray Dalio”—hedge-fund managers—“were all with­in fifty yards of me. From my own career, I would just talk to peo­ple. More and more were say­ing, ‘You’ve got to have a pri­vate plane. You have to assure that the pilot’s fam­i­ly will be tak­en care of, too. They have to be on the plane.’ ”

    By Jan­u­ary, 2015, John­son was sound­ing the alarm: the ten­sions pro­duced by acute income inequal­i­ty were becom­ing so pro­nounced that some of the world’s wealth­i­est peo­ple were tak­ing steps to pro­tect them­selves. At the World Eco­nom­ic Forum in Davos, Switzer­land, John­son told the audi­ence, “I know hedge-fund man­agers all over the world who are buy­ing airstrips and farms in places like New Zealand because they think they need a get­away.”

    John­son wish­es that the wealthy would adopt a greater “spir­it of stew­ard­ship,” an open­ness to pol­i­cy change that could include, for instance, a more aggres­sive tax on inher­i­tance. “Twen­ty-five hedge-fund man­agers make more mon­ey than all of the kinder­garten teach­ers in Amer­i­ca com­bined,” he said. “Being one of those twen­ty-five doesn’t feel good. I think they’ve devel­oped a height­ened sen­si­tiv­i­ty.” The gap is widen­ing fur­ther. In Decem­ber, the Nation­al Bureau of Eco­nom­ic Research pub­lished a new analy­sis, by the econ­o­mists Thomas Piket­ty, Emmanuel Saez, and Gabriel Zuc­man, which found that half of Amer­i­can adults have been “com­plete­ly shut off from eco­nom­ic growth since the 1970s.” Approx­i­mate­ly a hun­dred and sev­en­teen mil­lion peo­ple earn, on aver­age, the same income that they did in 1980, while the typ­i­cal income for the top one per cent has near­ly tripled. That gap is com­pa­ra­ble to the gap between aver­age incomes in the U.S. and the Demo­c­ra­t­ic Repub­lic of Con­go, the authors wrote.

    John­son said, “If we had a more equal dis­tri­b­u­tion of income, and much more mon­ey and ener­gy going into pub­lic school sys­tems, parks and recre­ation, the arts, and health care, it could take an awful lot of sting out of soci­ety. We’ve large­ly dis­man­tled those things.”

    As pub­lic insti­tu­tions dete­ri­o­rate, élite anx­i­ety has emerged as a gauge of our nation­al predica­ment. “Why do peo­ple who are envied for being so pow­er­ful appear to be so afraid?” John­son asked. “What does that real­ly tell us about our sys­tem?” He added, “It’s a very odd thing. You’re basi­cal­ly see­ing that the peo­ple who’ve been the best at read­ing the tea leaves—the ones with the most resources, because that’s how they made their money—are now the ones most prepar­ing to pull the rip cord and jump out of the plane.”

    On a cool evening in ear­ly Novem­ber, I rent­ed a car in Wichi­ta, Kansas, and drove north from the city through slant­i­ng sun­light, across the sub­urbs and out beyond the last shop­ping cen­ter, where the hori­zon set­tles into farm­land. After a cou­ple of hours, just before the town of Con­cor­dia, I head­ed west, down a dirt track flanked by corn and soy­bean fields, wind­ing through dark­ness until my lights set­tled on a large steel gate. A guard, dressed in cam­ou­flage, held a semi­au­to­mat­ic rifle.

    He ush­ered me through, and, in the dark­ness, I could see the out­line of a vast con­crete dome, with a met­al blast door part­ly ajar. I was greet­ed by Lar­ry Hall, the C.E.O. of the Sur­vival Con­do Project, a fif­teen-sto­ry lux­u­ry apart­ment com­plex built in an under­ground Atlas mis­sile silo. The facil­i­ty housed a nuclear war­head from 1961 to 1965, when it was decom­mis­sioned. At a site con­ceived for the Sovi­et nuclear threat, Hall has erect­ed a defense against the fears of a new era. “It’s true relax­ation for the ultra-wealthy,” he said. “They can come out here, they know there are armed guards out­side. The kids can run around.”

    Hall got the idea for the project about a decade ago, when he read that the fed­er­al gov­ern­ment was rein­vest­ing in cat­a­stro­phe plan­ning, which had lan­guished after the Cold War. Dur­ing the Sep­tem­ber 11th attacks, the Bush Admin­is­tra­tion acti­vat­ed a “con­ti­nu­ity of gov­ern­ment” plan, trans­port­ing select­ed fed­er­al work­ers by heli­copter and bus to for­ti­fied loca­tions, but, after years of dis­use, com­put­ers and oth­er equip­ment in the bunkers were out of date. Bush ordered a renewed focus on con­ti­nu­ity plans, and FEMA launched annu­al gov­ern­ment-wide exer­cis­es. (The most recent, Eagle Hori­zon, in 2015, sim­u­lat­ed hur­ri­canes, impro­vised nuclear devices, earth­quakes, and cyber­at­tacks.)

    “I start­ed say­ing, ‘Well, wait a minute, what does the gov­ern­ment know that we don’t know?’ ” Hall said. In 2008, he paid three hun­dred thou­sand dol­lars for the silo and fin­ished con­struc­tion in Decem­ber, 2012, at a cost of near­ly twen­ty mil­lion dol­lars. He cre­at­ed twelve pri­vate apart­ments: full-floor units were adver­tised at three mil­lion dol­lars; a half-floor was half the price. He has sold every unit, except one for him­self, he said.

    ...

    Some sur­vival­ists dis­par­age Hall for cre­at­ing an exclu­sive refuge for the wealthy and have threat­ened to seize his bunker in a cri­sis. Hall waved away this pos­si­bil­i­ty when I raised it with him over din­ner. “You can send all the bul­lets you want into this place.” If nec­es­sary, his guards would return fire, he said. “We’ve got a sniper post.”

    ...

    If a silo in Kansas is not remote or pri­vate enough, there is anoth­er option. In the first sev­en days after Don­ald Trump’s elec­tion, 13,401 Amer­i­cans reg­is­tered with New Zealand’s immi­gra­tion author­i­ties, the first offi­cial step toward seek­ing residency—more than sev­en­teen times the usu­al rate. The New Zealand Her­ald report­ed the surge beneath the head­line “Trump Apoc­a­lypse.”

    In fact, the influx had begun well before Trump’s vic­to­ry. In the first ten months of 2016, for­eign­ers bought near­ly four­teen hun­dred square miles of land in New Zealand, more than quadru­ple what they bought in the same peri­od the pre­vi­ous year, accord­ing to the gov­ern­ment. Amer­i­can buy­ers were sec­ond only to Aus­tralians. The U.S. gov­ern­ment does not keep a tal­ly of Amer­i­cans who own sec­ond or third homes over­seas. Much as Switzer­land once drew Amer­i­cans with the promise of secre­cy, and Uruguay tempt­ed them with pri­vate banks, New Zealand offers secu­ri­ty and dis­tance. In the past six years, near­ly a thou­sand for­eign­ers have acquired res­i­den­cy there under pro­grams that man­date cer­tain types of invest­ment of at least a mil­lion dol­lars.

    ...

    An Amer­i­can hedge-fund man­ag­er in his forties—tall, tanned, athletic—recently bought two hous­es in New Zealand and acquired local res­i­den­cy. He agreed to tell me about his think­ing, if I would not pub­lish his name. Brought up on the East Coast, he said, over cof­fee, that he expects Amer­i­ca to face at least a decade of polit­i­cal tur­moil, includ­ing racial ten­sion, polar­iza­tion, and a rapid­ly aging pop­u­la­tion. “The coun­try has turned into the New York area, the Cal­i­for­nia area, and then every­one else is wild­ly dif­fer­ent in the mid­dle,” he said. He wor­ries that the econ­o­my will suf­fer if Wash­ing­ton scram­bles to fund Social Secu­ri­ty and Medicare for peo­ple who need it. “Do you default on that oblig­a­tion? Or do you print more mon­ey to give to them? What does that do to the val­ue of the dol­lar? It’s not a next-year prob­lem, but it’s not fifty years away, either.”

    New Zealand’s rep­u­ta­tion for attract­ing doom­say­ers is so well known in the hedge-fund manager’s cir­cle that he prefers to dif­fer­en­ti­ate him­self from ear­li­er arrivals. He said, “This is no longer about a hand­ful of freaks wor­ried about the world end­ing.” He laughed, and added, “Unless I’m one of those freaks.”

    Every year since 1947, the Bul­letin of the Atom­ic Sci­en­tists, a mag­a­zine found­ed by mem­bers of the Man­hat­tan Project, has gath­ered a group of Nobel lau­re­ates and oth­er lumi­nar­ies to update the Dooms­day Clock, a sym­bol­ic gauge of our risk of wreck­ing civ­i­liza­tion. In 1991, as the Cold War was end­ing, the sci­en­tists set the clock to its safest point ever—seventeen min­utes to “mid­night.”

    Since then, the direc­tion has been inaus­pi­cious. In Jan­u­ary, 2016, after increas­ing mil­i­tary ten­sions between Rus­sia and NATO, and the Earth’s warmest year on record, the Bul­letin set the clock at three min­utes to mid­night, the same lev­el it held at the height of the Cold War. In Novem­ber, after Trump’s elec­tion, the pan­el con­vened once more to con­duct its annu­al con­fi­den­tial dis­cus­sion. If it choos­es to move the clock for­ward by one minute, that will sig­nal a lev­el of alarm not wit­nessed since 1953, after America’s first test of the hydro­gen bomb. (The result will be released Jan­u­ary 26th.)

    Fear of dis­as­ter is healthy if it spurs action to pre­vent it. But élite sur­vival­ism is not a step toward pre­ven­tion; it is an act of with­draw­al. Phil­an­thropy in Amer­i­ca is still three times as large, as a share of G.D.P., as phil­an­thropy in the next clos­est coun­try, the Unit­ed King­dom. But it is now accom­pa­nied by a ges­ture of sur­ren­der, a qui­et dis­in­vest­ment by some of America’s most suc­cess­ful and pow­er­ful peo­ple. Faced with evi­dence of frailty in the Amer­i­can project, in the insti­tu­tions and norms from which they have ben­e­fit­ted, some are per­mit­ting them­selves to imag­ine fail­ure. It is a gild­ed despair.
    ...

    “I asked Hoff­man to esti­mate what share of fel­low Sil­i­con Val­ley bil­lion­aires have acquired some lev­el of “apoc­a­lypse insur­ance,” in the form of a hide­away in the U.S. or abroad. “I would guess fifty-plus per cent,” he said, “but that’s par­al­lel with the deci­sion to buy a vaca­tion home. Human moti­va­tion is com­plex, and I think peo­ple can say, ‘I now have a safe­ty blan­ket for this thing that scares me.’ ” The fears vary, but many wor­ry that, as arti­fi­cial intel­li­gence takes away a grow­ing share of jobs, there will be a back­lash against Sil­i­con Val­ley, America’s sec­ond-high­est con­cen­tra­tion of wealth. (South­west­ern Con­necti­cut is first.) “I’ve heard this theme from a bunch of peo­ple,” Hoff­man said. “Is the coun­try going to turn against the wealthy? Is it going to turn against tech­no­log­i­cal inno­va­tion? Is it going to turn into civ­il dis­or­der?””

    So accord­ing to Reid Hoff­man’s esti­mate, over half the bil­lion­aires of Sil­i­con Val­ley have some sort of “apoc­a­lypse insur­ance”. And one of the main fears dri­ving this trend in the fear that arti­fi­cial intel­li­gence is going to put so many peo­ple out of work that there’s a mass back­lash against Sil­i­con Val­ley. It’s prob­a­bly worth keep­ing mind the next time you hear a Sil­i­con Val­ley bil­lion­aire dis­miss the idea that arti­fi­cial intel­li­gence and robot­ics could seri­ous­ly dis­rupt the labor mar­ket and, in turn, seri­ous­ly dis­rupt the under­ly­ing social con­tract that holds soci­ety togeth­er. On the plus side, at least it sounds like the Sil­i­con Val­ley bil­lion­aires are pret­ty opti­mistic about the pace of arti­fi­cial intel­li­gence advances. They just aren’t opti­mistic about the con­se­quences:

    ...

    As pub­lic insti­tu­tions dete­ri­o­rate, élite anx­i­ety has emerged as a gauge of our nation­al predica­ment. “Why do peo­ple who are envied for being so pow­er­ful appear to be so afraid?” John­son asked. “What does that real­ly tell us about our sys­tem?” He added, “It’s a very odd thing. You’re basi­cal­ly see­ing that the peo­ple who’ve been the best at read­ing the tea leaves—the ones with the most resources, because that’s how they made their money—are now the ones most prepar­ing to pull the rip cord and jump out of the plane.”

    ...

    And then there’s the prep­per bankers, wor­ry­ing that their wild suc­cess in mak­ing more mon­ey than every­one else is going to lead to an Amer­i­can “Russ­ian Rev­o­lu­tion”:

    ...

    On the oppo­site side of the coun­try, sim­i­lar awk­ward con­ver­sa­tions have been unfold­ing in some finan­cial cir­cles. Robert H. Dug­ger worked as a lob­by­ist for the finan­cial indus­try before he became a part­ner at the glob­al hedge fund Tudor Invest­ment Cor­po­ra­tion, in 1993. After sev­en­teen years, he retired to focus on phil­an­thropy and his invest­ments. “Any­one who’s in this com­mu­ni­ty knows peo­ple who are wor­ried that Amer­i­ca is head­ing toward some­thing like the Russ­ian Rev­o­lu­tion,” he told me recent­ly.

    To man­age that fear, Dug­ger said, he has seen two very dif­fer­ent respons­es. “Peo­ple know the only real answer is, Fix the prob­lem,” he said. “It’s a rea­son most of them give a lot of mon­ey to good caus­es.” At the same time, though, they invest in the mechan­ics of escape. He recalled a din­ner in New York City after 9/11 and the burst­ing of the dot-com bub­ble: “A group of cen­ti-mil­lion­aires and a cou­ple of bil­lion­aires were work­ing through end-of-Amer­i­ca sce­nar­ios and talk­ing about what they’d do. Most said they’ll fire up their planes and take their fam­i­lies to West­ern ranch­es or homes in oth­er coun­tries.” One of the guests was skep­ti­cal, Dug­ger said. “He leaned for­ward and asked, ‘Are you tak­ing your pilot’s fam­i­ly, too? And what about the main­te­nance guys? If rev­o­lu­tion­ar­ies are kick­ing in doors, how many of the peo­ple in your life will you have to take with you?’ The ques­tion­ing con­tin­ued. In the end, most agreed they couldn’t run.”

    Élite anx­i­ety cuts across polit­i­cal lines. Even financiers who sup­port­ed Trump for Pres­i­dent, hop­ing that he would cut tax­es and reg­u­la­tions, have been unnerved at the ways his insur­gent cam­paign seems to have has­tened a col­lapse of respect for estab­lished insti­tu­tions. Dug­ger said, “The media is under attack now. They won­der, Is the court sys­tem next? Do we go from ‘fake news’ to ‘fake evi­dence’? For peo­ple whose exis­tence depends on enforce­able con­tracts, this is life or death.”

    ...

    When I vis­it­ed John­son, not long ago, at his office on Park Avenue South, he described him­self as an acci­den­tal stu­dent of civic anx­i­ety. He grew up out­side Detroit, in Grosse Pointe Park, the son of a doc­tor, and he watched his father’s gen­er­a­tion expe­ri­ence the frac­tur­ing of Detroit. “What I’m see­ing now in New York City is sort of like old music com­ing back,” he said. “These are friends of mine. I used to live in Belle Haven, in Green­wich, Con­necti­cut. Louis Bacon, Paul Tudor Jones, and Ray Dalio”—hedge-fund managers—“were all with­in fifty yards of me. From my own career, I would just talk to peo­ple. More and more were say­ing, ‘You’ve got to have a pri­vate plane. You have to assure that the pilot’s fam­i­ly will be tak­en care of, too. They have to be on the plane.’ ”
    ...

    “From my own career, I would just talk to peo­ple. More and more were say­ing, ‘You’ve got to have a pri­vate plane. You have to assure that the pilot’s fam­i­ly will be tak­en care of, too. They have to be on the plane.’ ””

    This is appar­ent­ly some­thing Amer­i­ca’s finan­cial and tech­no­log­i­cal elites are think­ing about these days: Now that me and my fel­low oli­garchs have made so much mon­ey that soci­ety is break­ing and the seams and we haven’t even ful­ly unleashed the AI-pow­ered labor-bots yet, will the pilot for my per­son­al plane be avail­able to fly me to my dooms­day bunker when the time is required? Do I need to bring the pilot’s fam­i­ly too? And what about all the oth­er help staff I’ll require? These are the ques­tions fac­ing mod­ern cap­i­tal­ists.

    It’s also worth not­ing that there’s an obvi­ous answer to at least some of these ques­tions about prep­per pre­pared­ness and whether or not you’ll have a pilot ready to fly you to your Dooms­day bunker: replace your pilot with an AI and your bunker labor with more AI-pow­ered robots. Don’t for­get the armed robot guards. Per­haps even a robot doc­tor. And hope­ful­ly more robots designed to repair the rest of your robots. In oth­er words, make you’re entire Dooms­day sur­vival plan auto­mat­ed. And sure, while auto-pilot­ed planes should be pos­si­ble today, the tech­nol­o­gy to field your own per­son­al army of robot labor­ers might not be there quite yet today, it will be someday...right before the super-AI robots col­lapse economies and it’s time to head for the hill. So tim­ing is prob­a­bly going to be pret­ty impor­tant if you’re plan­ning on going with the robot-army Dooms­day lux­u­ry bunker plan.

    Posted by Pterrafractyl | January 23, 2017, 3:43 pm

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