Category: Government

Did Feds Bail Out Silicon Valley Bank (SVB) Because It Was “a Climate Bank”?

After the article quoted below appeared, the Feds decided to bailout the Silicon Valley Bank. They claimed that this was a selective action–not one they would equally apply to all failed banks.

(p. B1) “Silicon Valley Bank was in many ways a climate bank,” said Kiran Bhatraju, chief executive of Arcadia, the largest community solar manager in the country. “When you have the majority of the market banking through one institution, there’s going to be a lot of collateral damage.”

Community solar projects appear to be especially hard hit. Silicon Valley Bank said that it led or participated in 62 percent of financing deals for community solar projects, which are smaller-scale solar projects that often serve lower-income residential areas.

. . .

The collapse of Silicon Valley Bank threatens to derail what was a fast and growing part of the venture capital sector. More than $28 billion was invested in climate technology start-ups last year, up sharply from the year before, according to HolonIQ, a data provider.

For the full story, see:

David Gelles. “Bank’s Collapse Leaves Climate Start-Ups at Risk.” The New York Times (Monday, March 13, 2023): B1 & B4.

(Note: ellipsis added.)

(Note: the online version of the story has the date March 12, and has the title “Silicon Valley Bank Collapse Threatens Climate Start-Ups.”)

“They Just Invest in How to Navigate This Bureaucracy”

(p. A1) Capella Space, a San Francisco-based start-up, is building a fleet of small, inexpensive satellites that can track enemy troops as they move at night, or under cloud cover that traditional optical satellites cannot see through.

Fortem Technologies, a small aerospace company in Utah, wants to supply the Pentagon with a new type of unmanned aircraft that can disable enemy drones.

HawkEye 360, a Virginia-based firm, has used private equity funds to launch its own satellites that use radio waves emitted by communications equipment and other electronic devices to detect the presence of enemy troop concentrations.

Each of these systems is getting real-world testing in the war in Ukraine, earning praise from top government officials there and validating investors who have been pouring money into the field.

But they are facing a stiff challenge on another field of battle: the Pentagon’s slow-moving, risk-averse military procurement bureaucracy.

When it comes to drones, satellites, artificial intelligence and other fields, start-up companies frequently offer the Pentagon cheaper, faster and more flexible options than the weapons systems produced by the handful of giant contractors the Pentagon normally relies on.

But while the military has provided small grants and short-term contracts to many start-ups, those agreements often expire too quickly and are not large enough for young companies to meet their payrolls — or grow as rapidly as their venture capital investors expect. Several have been forced to lay people off, delaying progress on new technologies and war-fighting tools.

. . .

(p. A8) From the early months of the war, SpaceX’s Starlink, the Elon Musk-founded satellite internet service, had played a critical role for frontline Ukrainian troops. But small drones and a denser collection of satellites are also helping to provide the capacity for pervasive surveillance, allowing Ukraine to identify and track threats and targets constantly.

A new generation of cheaper and more precise attack drones carrying bombs can loiter in the air autonomously until they find their targets. Artificial intelligence-backed computer systems can fuse this collected data and other feeds to make targeting decisions, faster than any human.

The Ukrainians have also innovated a great deal themselves, impressing Pentagon officials as they have converted commercial drones, for example, into mini bombers.

Taken together, said Thomas X. Hammes, who studies war-fighting history at the Pentagon-backed National Defense University, the developments represent a “genuine military revolution,” and one that is happening much more quickly than the shift from infantry that traveled by foot in World War I to the motorized and mechanized armies of World War II.

. . .

(p. A9) Perhaps the most revolutionary use of American technology in Ukraine has been the application of software that uses artificial intelligence, made by Palantir, to help with targeting efforts. The company’s chief executive, Alex Karp, traveled to Ukraine last year to meet with President Volodymyr Zelensky.

“If you go into battle with old school technology,” Mr. Karp said this year at an event to discuss artificial intelligence tools in warfare, “and you have an adversary that knows how to install and implement digitalized targeting in A.I., you obviously are at a massive disadvantage.”

Some experts say that artificial intelligence, which has been used in Ukraine to help sift through the massive loads of data being accumulated from surveillance, will ultimately prove as disruptive to the nature of war-fighting as nuclear weapons.

. . .

For Primer, the small artificial-intelligence firm based in downtown San Francisco, it was a breakthrough moment.

Not long after the war in Ukraine started, its engineers, working with Western allies, tapped into a tidal wave of intercepted Russian radio communications. It used advanced software to clean up the crackly sound, automatically translated the conversations, and most importantly, isolated moments when Russian soldiers in Ukraine were discussing weapons systems, locations and other tactically important information.

This same work would have taken hundreds of intelligence analysts to identify the few relevant clues in the mass of radio traffic. Now it was happening in a matter of minutes.

The findings were quickly matched up with other so-called open source intelligence streams, like geolocation data pulled from social media accounts, giving updates on the location of troops or equipment, that could be matched with surveillance video from drones or images from satellites.

“It’s getting situational awareness,” said Sean Gourley, the founder of Primer.

Yet at the same time, the Pentagon was still deciding when to move ahead with major purchases of its technology. The company was burning through its cash reserves too quickly, so Mr. Gourley laid off engineers and other staff members.

“These engineers are great at creating solutions to solve these problems, which is what matters,” Mr. Gourley said. “But there is the uncertainty: When is this contract going to close? It’s very, very hard to justify that spend.”

Mr. Gourley said he decided instead to invest more money in a government relations push, hiring a former top aide to the Senate Armed Services Committee to help the company promote its business in Washington.

“The big defense companies, they don’t really kind of invest in the tech,” he said. “They just invest in how to navigate this bureaucracy. That kind of sucks, but that’s how you’ve got to play this game.”

In interviews, nearly a dozen top executives of technology-oriented companies shared stories of stalled efforts or frustration.

For the full story, see:

Eric Lipton. “Pentagon Is Slow At Signing Deals With Innovators.” The New York Times (Monday, May 22, 2023): A1 & A8-A9.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the story has the date May 21, 2023, and has the title “Start-Ups Bring Silicon Valley Ethos to a Lumbering Military-Industrial Complex.”)

Milton Friedman Was a “Formative Intellectual Influence” to George Shultz

(p. A13) [George] Shultz, an unflamboyant personality once described by a college classmate as a “steady, plodding intellect,” reached the commanding heights of American government, holding four cabinet posts over his career from secretary of the Treasury to state. Shultz died in 2021 at the age of 100.

. . .

For a time Shultz was on track for a career in academia, working in the economics department at MIT and later the University of Chicago. “Chicago is what started me,” Shultz said. Milton Friedman, a formative intellectual influence and enduring friend, methodically deepened Shultz’s faith in free markets and his skepticism of government intervention in the economy. “Milton didn’t hit the tennis ball hard but it always came back,” Shultz once remarked, “which was reflective of the way he argued, too.”

. . .

. . . Shultz was hardly immune from being wrong. For example: Along with the rest of the State Department, he tried to talk Reagan out of using the line “Mr. Gorbachev, tear down this wall.” Shultz worried it was too provocative.

The cautionary tale is that many know Shultz from perhaps the biggest error in judgment he ever made, some 90 years into his life. That’s his association with Elizabeth Holmes, the Silicon Valley founder convicted of fraud in federal court. Shultz was one of Ms. Holmes’s first marks, and he helped her assemble a board for her blood-testing company from his Rolodex. Among the wreckage was Shultz’s relationship with his own grandson, Tyler, who early on discovered the company’s misrepresentations.

For the full review, see:

Kate Bachelder Odell. “BOOKSHELF; Subsume the Ego And Stay Loyal.” The Wall Street Journal (Tuesday, March 7, 2023): A13.

(Note: ellipses, and bracketed name, added.)

(Note: the online version of the review has the date March 6, 2023, and has the title “BOOKSHELF; ‘In the Nation’s Service’ Review: George Shultz’s Quiet Strength.”)

The book under review is:

Taubman, Philip. In the Nation’s Service: The Life and Times of George P. Shultz. Stanford, Cal.: Stanford University Press, 2023.

In 2021 Summers and Blanchard Worried That Biden’s Covid Stimulus Would Fuel Inflation

(p. A2) When Congress passed President Biden’s $1.9 trillion American Rescue Plan in early 2021, which included checks to households, enhanced jobless benefits and aid to state and local governments, inflation was around 2% and unemployment, though coming down, still above 6%.

At the time many forecasters thought the stimulus could push demand above the economy’s potential to supply goods and services and unemployment below its long-run natural rate of around 4%. Yet few thought this would meaningfully raise inflation. In previous decades unemployment had remained similarly low without raising price pressures.

A few disagreed, notably former Treasury Secretary Lawrence Summers and Blanchard. Both warned the stimulus was so large it would push the economy dangerously into overheating territory.

For the full commentary, see:

Greg Ip. “CAPITAL ACCOUNT; Why Did Inflation Take Off? Two Top Economists Answer.” The Wall Street Journal (Wednesday, May 24, 2023): A2.

(Note: the online version of the commentary has the date May 23, 2023, and has the title “CAPITAL ACCOUNT; Why Inflation Erupted: Two Top Economists Have the Answer.”)

A 2021 article that documented Summers’s and Blanchard’s worry that Biden’s huge stimulus might fuel inflation is:

Ip, Greg. “Inflation Risk: Little Now, but Some See Danger Ahead.” The Wall Street Journal (Tues., March 2, 2021).

Russians Are Reading Book on How to Remove Dictators

(p. A24) . . . the book, “The End of the Regime: How Three European Dictatorships Ended,” is not about Russia or Vladimir Putin. It’s about three dictatorships — those of Francisco Franco in Spain, Antonio Salazar in Portugal and the colonels in Greece — and how those countries became democracies, returning to the global fold. A large number of Russians haven’t suddenly taken an interest in the history of 20th-century Southern Europe. Rather, discussions of the book have common themes: How do prolonged right-wing dictatorships end? And can Russia become a democracy?

As one might expect, the book is being widely discussed by opposition groups and those calling for an end to the war. More surprisingly, it is also being read by the Russian nomenklatura — those at the apex of the Russian state. It seems that the book has become a pretext for discussion of taboo topics, such as political transition, the health and death of the leader, defeat in a colonial war, the end of isolation and, indeed, the end of the regime.

. . .

Russian readers have found much that is resonant in the book. How the Greek dictatorship, for example, collapsed after an attempt to annex Cyprus, which it regarded as a historical part of the country. Or how the Portuguese regime caved in as a result of a colonial, imperialist war that dragged on for years. Or how Salazar, plagued by health problems, was removed from power but continued to think that he was ruling the country. (To maintain the illusion, a special newspaper was published just for him.) And then there is the story of how in Spain, the idea of a transition to democracy slowly took hold and was brought about by the ruling elite itself.

For the full essay, see:

Alexander Baunov. “Russians Are Still Asking Questions About What’s Next.” The New York Times (Thursday, April 27, 2023): A24.

(Note: ellipses added.)

(Note: the online version of the essay has the date April 26, 2023, and has the title “Russians Seem Very Interested in My Book About How Dictatorships End.”)

Baunov’s essay discusses his Russian-language book:

Baunov, Alexander. The End of the Regime: How Three European Dictatorships Ended.

Fast Transition Away from Fossil Fuels Requires Fast and Huge Increase in Mining of Lithium, Cobalt, and Copper

(p. A17) The drive toward energy transition will increase demand for lithium, cobalt and other minerals many times over. An offshore wind project uses nine times the minerals of a natural-gas-fired power plant of the same generating capacity.

As countries roll out targets for “net zero” carbon emissions by 2050, it’s becoming clear how difficult it will be to source this huge increase in minerals. The U.S. and Japanese governments, the European Union and a host of multilateral organizations have issued alarming reports about the magnitude of the challenge. The International Monetary Fund warns that striving to achieve net zero by 2050 will “spur unprecedented demand for some of the most crucial metals,” leading to price spikes that “could derail or delay the energy transition itself.”

Consider a recent S&P Global study on copper. Much of the energy transition is predicated on electrifying as much as possible, as fast as possible. That will require a huge amount of copper, as it is the “metal of electrification.” The report concludes that translating the 2050 net zero goals into the equipment and technologies that will be needed—electric-vehicle batteries and charging stations, offshore wind, onshore wind, solar panels, battery storage, etc.—adds up to a doubling of the need for copper by the mid-2030s.

. . .

Two countries mine about 40% of world’s copper supplies—Peru, where the government is in disarray after the president was impeached and arrested, and Chile, whose government is struggling between its populist agenda and the need for economic growth.

. . .

The quest for net zero emissions will face similar challenges with other commodities, where the growth in demand will be much greater. Seventy percent of cobalt, critical for electric-vehicle batteries, comes from the Democratic Republic of the Congo, where large mining operations coexist with small, hand-dug mines in which both adults and children work.

There’s a further complication—about 60% of the world’s lithium is processed in China, and 47% of copper is smelted there. By comparison, the U.S. processes 4% of world copper. Once the U.S. had more than a dozen copper smelters; now it has two.

For the full commentary, see:

Daniel Yergin. “‘Net Zero’ Will Mean a Mining Boom.” The Wall Street Journal (Thursday, April 13, 2023): A17.

(Note: ellipses added.)

(Note: the online version of the commentary has the date April 12, 2023, and has the same title as the print version.)

The S&P Global study mentioned above is:

Yergin, Daniel (Project Chairman). “The Future of Copper: Will the Looming Supply Gap Short-Circuit the Energy Transition?” S&P Global, July 2022.

Occidental Building Costly Plant to Bury Carbon Dioxide, Hoping to Be the Last Firm Still Allowed to Produce Oil

The “oracle of Omaha,” Warren Buffett, has been investing in Occidental.

(p. A1) About fifty miles southwest of Midland, Texas, deep in the oil-saturated Permian Basin, more than 100 workers are busy laying out roads and water lines, preparing to build an elaborate complex of fans, each as large as a tennis court.

When they start running in 2024, the fans will suck massive amounts of carbon dioxide out of the air. The carbon will be funneled thousands of feet down deep wells into geological formations, where it should remain for centuries.

The company behind this environmental moonshot is Occidental Petroleum Corp., one of the country’s most successful oil-and-gas producers. It hopes the enterprise will give it license to keep operating as a driller decades into the future.

It is spending more than $1 billion to build the first in a planned fleet of plants using direct-air capture to pull the CO2 out of the air, a budding technology with fuzzy economics. Bolstering the move are generous tax incentives included in the climate package President Biden signed into law last year that cover up to 45% of Occidental’s expected initial costs per metric ton.

. . .

(p. 8) To be successful, Occidental will need to bring the cost of capture and containment down by hundreds of dollars per metric ton of CO2, according to energy executives and analysts.

Occidental estimated its initial cost to remove a metric ton of CO2 would be between $400 and $500. It said that as it manufactures more plants and efficiencies kick in, it will be able to roughly halve that to between $200 and $250 a ton by the end of the decade, according to the company. None of the figures include federal tax credits.

The Inflation Reduction Act, signed into law by President Biden last year, rewards companies that capture and store atmospheric CO2 with a $180 tax credit per metric ton contained permanently, up from $50. Credits for capturing atmospheric CO2 and using it in enhanced oil recovery rose to $130 a metric ton, up from $35. The bill also offers incentives to companies that capture CO2 at industrial plants and sequester it, which Occidental also plans to do.

. . .

Howard Herzog, a leading researcher on carbon capture at the Massachusetts Institute of Technology, said he didn’t think bringing the cost of direct-air capture down to around $100 a metric ton was a realistic goal. Occidental is “probably more bullish on direct-air capture than I would be,” he said. But he added that how much buyers of carbon credits are willing to pay will also determine how profitable direct-air capture turns out to be.

Ms. Hollub told The Wall Street Journal in August that Occidental’s efforts on carbon capture and on becoming a net-zero emitter would allow it to keep up its investments in oil and gas. She warned that underinvestment in fossil fuels, which she says will be needed for years even amid the broader transition to clean energy, will lead to a scarcity of supplies. In contrast, she said, other oil majors such as BP PLC and Shell PLC have shrunk their oil segment and invested in renewables.

Oil companies will have to find ways to remove as much carbon dioxide as they emit “if they want to be the last producer standing in the world,” Ms. Hollub said.

For the full story, see:

Benoît Morenne. “Occidental’s Green Bet To Keep Pumping Oil.” The Wall Street Journal (Tuesday, April 11, 2023): A1 & A8.

(Note: ellipses added.)

(Note: the online version of the story has the date April 10, 2023, and has the title “Occidental Makes a Billion-Dollar Climate Moonshot—So It Can Keep Pumping Oil.”)

Political Challenges Were Greater Than Technology Challenges in Creating Geostationary Satellites

(p. A13) After the Soviet Union launched Sputnik 1, the world’s first satellite, in 1957, a 31-year-old Rosen was inspired to build “a lightweight satellite that, when launched into a high orbit above the equator, would mimic the Earth’s rotation and retain its relative position, like a spoke on a wheel.” Mr. Amelinckx goes on: “This geostationary satellite would provide twenty-four-hour global communications, something never before attempted. Rosen was excited.”

Indeed he was. Rosen was a brilliant electrical engineer who worked at Hughes Aircraft in California. His tenacity enabled him to surmount, over the following years, the seemingly endless number of infuriating obstacles that stood between him and his goal. There was the multitude of technical problems to be solved—from the satellite’s weight to its spin, antenna, solar panels and more. There were the questions from NASA, Congress, the Pentagon and aerospace companies about whether the U.S. should prefer low-orbit satellites or geostationary ones. (The latter would possess greater transmitting and receiving versatility, but many scientists were convinced that geostationary satellites, which orbit at much higher altitudes, were impractical and would “take years to develop.”)

Mr. Amelinckx notes that solving the political challenges proved more difficult than creating the necessary technologies. Fortunately for Rosen, President Kennedy was keen on communications satellites. And so in 1961, NASA began funding Hughes to create Rosen’s vision.

For the full review, see:

Howard Schneider. “BOOKSHELF; How ‘Early Bird’ Got the Worm.” The Wall Street Journal (Friday, April 14, 2023): A13.

(Note: the online version of the review has the date April 13, 2023, and has the title “BOOKSHELF; ‘Satellite Boy’ Review: How ‘Early Bird’ Got the Worm.”)

The book under review is:

Amelinckx, Andrew. Satellite Boy: The International Manhunt for a Master Thief That Launched the Modern Communication Age. Berkeley: Counterpoint, 2023.

Musk on San Francisco: “Even if Attackers Are Caught, They Are Often Released Immediately”

(p. A3) A suspect was arrested in connection with the fatal stabbing in San Francisco of Cash App founder Bob Lee, police said, more than a week after the tech executive’s death shocked Silicon Valley.

Nima Momeni, 38, was arrested by San Francisco police Thursday morning and booked on a murder charge, said Bill Scott, the San Francisco police chief.

Mr. Lee, 43, was fatally stabbed in the early morning hours of April 4 [2023]. The suspect and the victim knew each other, said Chief Scott. He declined to elaborate on the motive for the killing.

. . .

Some tech-industry executives slammed San Francisco over crime after Mr. Lee’s murder. Last week, Elon Musk tweeted, “Violent crime in SF is horrific and even if attackers are caught, they are often released immediately.”

For the full story, see:

Alyssa Lukpat and Zusha Elinson. “Man Arrested in Killing of Cash App Founder.” The Wall Street Journal (Friday, April 14, 2023): A3.

[Note: ellipsis and bracketed year added.]

(Note: the online version of the story was updated April 13, 2023, and has the title “Suspect Arrested in Fatal Stabbing of Cash App Founder Bob Lee.”)

The “Huge Opportunity Cost” of Congress Keeping Obsolete Warthog Planes Flying

(p. A1) The Air Force has said for years that the A-10 jets, nicknamed Warthogs for their bulky silhouette and toughness in a fight, have passed their prime and will be vulnerable in the wars of the future. The production line where they were made fell silent in the mid-1980s, and the average A-10 here is four decades old. Its job can be done by newer, more advanced planes, the Air Force says.

“The A-10, while it has served us well, is simply not a part of the battlefield of the future,” said Lt. Gen. Richard Moore, the Air Force’s deputy chief of staff for plans and programs.

Congress has other ideas. Bowing to members whose constituencies are dependent on the jet for jobs and the flow of federal tax dollars, it has instead insisted nearly all the planes keep flying at a cost of more than $4 billion over the past 10 years.

This kind of intervention is common—and is (p. A9) impairing the U.S.’s ability to respond to rapidly modernizing Chinese forces in a new era of great-power competition, say current and former senior defense officials and military analysts.

Efforts by lawmakers to bring military jobs and funding to their districts and keep them there are as old as Congress itself. But they come at a huge opportunity cost at a time when the U.S. is facing its most formidable adversary since the end of the Cold War. Congress is in effect forcing the Pentagon to spend billions on programs for which it sees no role in future wars.

For the full story, see:

Daniel Nasaw. “Why Is America Still Flying the A-10 Warthog, a Cold War Relic?” The Wall Street Journal (Friday, April 14, 2023): A1 & A9.

(Note: the online version of the story has the date April 13, 2023, and has the same title as the print version.)

Biden EV Goals Depend on “Troubled” Business Model for Fast Charging

(p. A13) President Biden’s EV ambitions will hinge in large part on the availability of public places to plug in and repower cars reliably, a network that largely doesn’t exist. Building it won’t be easy.

While the government is (p. A2) pouring billions of dollars into developing a national highway charging network, many companies aren’t sure how they will make money off the nascent business. Fast charging requires expensive utility infrastructure and projects often encounter supply chain hang ups and long wait times to connect to the grid.

. . .

The business model for fast charging has been troubled because there aren’t enough EVs in most places yet for charging to turn a profit. Yet EV advocates say many drivers will only be comfortable purchasing vehicles if rapid charging is widely available.

Utility companies and gas stations have been arguing across several states about who will own and operate EV chargers. The expensive utility bills that can result from delivering quick jolts of power have been a particular point of contention. Meanwhile, the young companies that provide charging gear and services have struggled with equipment on the fritz, vandalism and driver payment systems, a frequent source of failure.

For the full story, see:

Jennifer Hiller. “Fast Electric-Vehicle Chargers Get Boost, But Hurdles Lurk.” The Wall Street Journal (Friday, April 14, 2023): A1-A2.

(Note: ellipsis added.)

(Note: the online version of the story was updated April 13, 2023, and has the title “Fast EV Chargers to Nearly Double on U.S. Highways Under Expansion Plan.” In the first paragraph quoted above, the online version has “Mr. Biden’s” instead of “President Biden’s.”)