“Extremely Hawkish”: Stocks, Bonds, Gold Puke After ‘Good’ Jobs Data; Rate-Hike Odds Soar
“Extremely hawkish,” says Dennis DeBusschere, founder of 22V Research.
‘Good’ news on the labor market (lowest unemployment rate since 1969… after 450bps of rate-hikes?!) is a disaster for the ‘soft landing’ narrative and sent rate-hike expectations soaring above pre-Powell levels…
Source: Bloomberg
Bloomberg Intelligence Chief US Interest Rate Strategist Ira Jersey says the much stronger-than-expected payrolls report may finally be the data point that convinces the market the Fed won’t be cutting this year.
“As such, we think the long-end range may once again be re-tested with the 10-year Treasury topping 3.75% again, but we think a more pronounced selloff unlikely. Meanwhile a re-test of 4.4% on the two-year note seems possible if 2023 rate cuts are priced out.”
This sent stocks tumbling…
And bond yields are soaring back to pre-Powell levels…
Gold tumbled back to $1900…
“Is Powell now wondering why he didn’t push back on the loosening in financial conditions?” asks Seema Shah, chief global strategist at Principal Asset Management.
“It’s difficult to see how wage pressures can possibly soften sufficiently when jobs growth is as strong as this and it’s even more difficult to see the Fed stop raising rates and entertain ideas of rate cuts when there is such explosive economic news coming in.”
The only thing flying high is the dollar…
Source: Bloomberg
Jeffrey Rosenberg, a senior portfolio manager at BlackRock Inc., says on Bloomberg TV: “This is a reminder of what Powell tried to say, but the market wasn’t listening.”
Following the passing of the Inflation Reduction Act in the U.S., pressure grew on the EU to introduce its own legislation to help fund the clean energy push on the continent.
Russia’s invasion of Ukraine and the resultant energy security issues in Europe have only added to the pressure on EU politicians to solve the bloc’s energy problems.
The EC’s new draft proposal is designed to encourage companies to remain in the EU rather than move operations to the U.S. to take advantage of IRA-related benefits.
When President Biden introduced his Inflation Reduction Act (IRA) last summer, he surprised the world with the extent of the climate commitments within it While supposedly aimed at inflation reduction, the legislation also provides extensive political support and funding for the green transition, providing tax cuts, subsidies, and other incentives for companies looking to use cleaner alternatives to fossil fuels. The EU has long been hailed as the leader in the switch to renewable energy, encouraging other countries worldwide to follow in its footsteps when it comes to climate pledges and policies. However, following the introduction of the IRA, pressure on the EU grew to introduce its own far-reaching, region-wide climate policy. After several months, it appears that the EU is ready to launch a transition policy that will provide the funding needed to keep up with the U.S. in the race to green. The EU has announced plans to reduce restrictions on tax credits for renewable energy projects in response to Biden’s IRA. Following mounting public pressure to expand its climate policy following the introduction of the new U.S. law, the European Commission (EC) has stated that it aims to loosen state aid rules to encourage greater investment in production facilities in the green energy industry. However, this kind of major policy shift requires broad support from its 27 member states, which often slows down the introduction of new laws.
Since the Russian invasion of Ukraine and subsequent sanctions on Russian energy, the EU and many other parts of the world have experienced severe energy shortages and rising consumer costs. This has led to greater pressure from the public and policymakers to accelerate the green transition, to ensure the future of the region’s energy security. The EC’s draft proposal reportedly proposes the redirection of some of the $869.8 billion in Covid-19 recovery funding to green tax credits. It states: “The provisions on tax benefits would enable member states to align their national fiscal incentives on a common scheme, and thereby offer greater transparency and predictability to businesses across the EU.”
The EC appears to be following in the footsteps of President Biden, having seen a flurry of activity in the green energy industry following the introduction of the IRA. The leader of the EC, Ursula von der Leyen, stated in January at the World Economic Forum that the EU is planning to mobilize state aid and a sovereign fund for renewable energy companies through the introduction of a new Net-Zero Industry Act or Green Deal Industrial Plan. The introduction of an expansive new climate policy is hoped to encourage companies to remain in the EU rather than moving operations to the U.S., where they may be eligible to receive tax credits and other incentives for using renewable energy in their operations.
This news will be encouraging for renewable energy firms that have been discouraged from expanding operations in recent months. Following the Russian invasion of Ukraine, the EU imposed revenue caps on wind and solar firms to protect consumers facing rising energy costs. In contrast, the IRA offers tax credits that boost U.S. wind and solar project profitability, making the U.S. a more attractive environment to develop new projects.
At present, EU state aid rules do not allow countries to provide direct support for national companies, a rule that the EC is open to temporarily adapting to accelerate the green transition and boost the EU’s energy security. Explaining the plan, von der Leyen stated: “To keep European industry attractive, there is a need to be competitive with the offers and incentives that are currently available outside the EU.” However, for it to become a reality, the Net-Zero Industry Act needs to achieve broad support from EU member states.
Pierre Tardieu, chief policy officer at lobby group WindEurope, believesthe EC’s plan demonstrates “a conscious decision to emulate…rather than challenge” the IRA.
He believes it to be an extension of the 2022 REPowerEU strategy, which aims to reduce Europe’s reliance on Russian energy and speed up the green transition. The new climate Act would improve permitting procedures for clean-tech product sites across the region and simplify state-aid rules to provide both grants and subsidies. It would also help Europe to solidify its position in the global green energy transition, not only ensuring that it meets its climate targets but that the U.S. does not become the leading green energy hub for energy and manufacturing firms. However, clear action on von der Leyen’s aim of making “Europe the home of clean tech and industrial innovation” has yet to be taken.
The introduction of a far-reaching climate policy by the EU would help position the region at the center of the global transition away from fossil fuels to renewable alternatives. Following the launch of President Biden’s IRA, the unveiling of a new policy from the EC would not be surprising, as it hopes to make the EU a favorable and competitive region for the development of green energy operations and technologies. Further announcements will likely be made to expand upon von der Leyen’s aims over the next few months, with a new EU climate policy on the horizon.
Half-Dozen Countries Temporarily Close Istanbul Consulates Over ‘Security Threats’
Large-scale protests in Turkey over the recent Quran-burnings by a far right activist in Sweden have resulted in multiple Western countries this week issuing travel alerts for their citizens in Turkey.
Additionally some half-dozen consulates in Istanbul have announced temporary closures due to security threats this week. German and Dutch consulates closed their doors Wednesday, and possibly further into the week, citing unspecified “security reasons”. The Dutch Consulate General in the Beyoğlu district announced extra precautions due to “potential protests” and “increasing threat against western targets.”
The Swiss consulate general in Istanbul on Thursday is the latest tosuspend operations – the sixth country to do so. So far Germany, France, the Netherlands, Sweden and the UK have temporarily shuttered their consulates.
Turkey is not happy, complaining that the unnecessary closures are severely damaging tourism, and that the dramatic step to close consulates has been done without evidence of said threats.
Turkish Interior Minister Suleyman Soylu charged Thursday that Western nations have launched “a psychological war” and that extra precautions amount to a propaganda stunt. Further, he was quoted as saying:
“On a day when we declared our aim of (attracting) 60 million tourists, at a time when 51.5 million tourists arrived and we obtained $46 billion in tourism revenue, they were on the verge of starting a new psychological warfare (against) Turkey,” said Soylu, who is known for his anti-Western rhetoric.
Turkey had earlier issued its own blanket warning to its nationals abroad, saying that growing ‘anti-Islamic’ protests in the West constitute a severe security threat, and that Turks should avoid crowds and public gathers where these occur.
Protests have continued across various Muslim nations following the late January Quran-burning in Stockholm, which took place in front of Turkey’s embassy. Turkish officials are outraged that Swedish authorities didn’t shut it down, but instead offered police protection against counter-demonstrators.
Protests continue to erupt across the Muslim world. Somalis are holding protests in Mogadishu to denounce the burning of a Quran by Rasmus Paludan on Saturday in front of the Turkish embassy in Stockholm. pic.twitter.com/UWfa5o9C7B
President Erdogan has since warned Sweden that it shouldn’t expect to enter NATO. But Sweden responded this week that its application process should have nothing to do with religion. As for the Quran-burning incident (which has now happened at least twice), Stockholm leaders said they find it morally reprehensible, but Sweden’s robust free speech laws protects such demonstrations.
Norwegian scientists have made a discovery of rare earth metals in the country’s northern region. The findings have the potential to transform the country’s economy and secure its place as a major player in the global market for high-tech and green technology. Furthermore, the findings could make Europe less dependent on China for the critical metals.
Karl Kristensen, a consultant for Bergfald Environmental Consultants, says that the green shift in economics will only multiply the world’s dependence on these materials. He warned that China has almost complete control of the market for rare earth metals in his lecture on the topic during the KÅKÅnomics economics festival in Stavanger, Norway, in October 2022.
The discovery in Norway was made during a routine survey of the region and was confirmed through extensive drilling and analysis.
The deposits are believed to be among the largest of their kind in the world, and the potential for further discoveries in the area is significant.
The Norwegian Petroleum Directorate (NPD) was responsible for conducting the research that led to the find. “The NPD has built up expertise over many years, in part through a number of expeditions. We’ve mapped relevant areas, collected data, and taken large volumes of mineral samples,” said Kjersti Dahle, director, technology, analysis and coexistence at the NPD.
NPD’s research shows that there is a large area of the Norwegian continental shelf with significant mineral resources, particularly in the deep sea, where several of these minerals are concentrated. The Norwegian government and NPD are now working together to create the necessary framework for a sustainable and responsible exploration and utilization of these minerals. The focus is on ensuring the protection of the marine environment, preserving the diversity of marine life, and mitigating the impact of the mineral exploration and extraction activities.
The discovery of these minerals on the Norwegian continental shelf is seen as a major step forward in the country’s efforts to reduce its dependency on mineral imports and to become a leading player in the production of sustainable technologies. The NPD’s report will now be used as a basis for further research and exploration activities in the coming years.
“Of the metals found on the seabed in the study area, magnesium, niobium, cobalt, and rare earth minerals are found on the European Commission’s list of critical minerals,” the NPD said in its statement on the research.
Rare Earth Metal Supply Chain in the West
The Norwegian find is a result of the West rebuilding its supply chain for rare earth minerals. It follows an announcement from LKAB, a Swedish mining company, earlier in January 2023. LKAB announced the discovery of Europe’s largest deposit of rare earth oxides in the country’s far north. The discovery was described as positive for not only the company, the region, and Sweden, but also for Europe and the climate.
To reduce dependence on China, Western countries are investing in exploration, mining, and processing of these minerals. The United States, for example, is funding projects to extract rare earths from coal and phosphates and is also working on recycling technology to reduce the need for new minerals. Europe is making efforts to secure its own supply of rare earths and is funding research into new technology to extract and process these minerals. The rebuilding of the rare earths supply chain is a step in reducing dependence on China and ensuring a sustainable future for technology and green energy solutions.
Sit back, relax and enjoy a race to the bottom of the Grand Canyon. The only question is who will get there first: the EU, NATO, or both…
One may be excused to imagine all sorts of amusement games unrolling at the HQ of the Russian General Staff as The Empire and NATO go literally bonkers. What crazy stunt will they come up with next – short of WWIII?
Here is a delightful put down of NATO’s dementia praecox. Everything so far has failed, from “crippling sanctions” to all sorts of wunderwaffen, while the whole Global South marvels at the exploits of Wagner PMC – now configured as the planet’s top urban fighting machine.
CIA mouthpiece Washington Post duly released how Washington, once again, had the Liver Sausage Chancellor Scholz for breakfast, lunch and dinner. The idea was floated by Secretary of State Tony Blinken: let’s announce we will deliver M1 Abrams to Ukraine in a hazy, unspecified future, thus providing cover for Scholz to release the Leopards now.
Don’t you just love German sovereignty in action?
Every military analyst with an IQ over room temperature knows all those Leopards will be duly incinerated – or better yet, captured, and dissected by Russian military specialists.
So what happens next is yet another vector of the – very successful so far – U.S.-unleashed German de-industrualization racket: the Americans will invade the German industrial military complex with their “much improved” Abrams – which may perhaps arrive in 2024, when only a rump Ukraine may still exist, or never arrive at all. So no need for the Abrams to prove themselves in actual combat – as in being captured and/or incinerated.
Rumors in Washington advance that the U.S. “strategy” in Ukraine – extensively detailed by endless think tank reports – had to be adapted. It’s not about “defeating Russia” anymore, but providing Kiev with the means to “scare” Russia. The Russian General Staff must be trembling in their boots.
Meanwhile, in real life, nearly every possible scenario gamed in Washington and Brussels finishes with NATO like a giant, armoured version of Wile E. Coyote plunging to the depths of the Grand Canyon. And that happens even if the much ballyhooded “Big Arrow” Russian offensive starts in a few days or weeks, or never starts at all.
Arguably the Russian General Staff has concluded a long time ago there’s no point in reducing Ukraine to rubble in a matter of hours – something they could easily accomplish. Thus the fabled mincing machine approach – offering no excuses for NATO to “escalate” (which they continue to do anyway, as Jens “War is Peace” Stoltenberg is so fond of parroting).
The trick is that NATO’s escalation overdrive, as it happens, is somewhat controlled by the Russian General Staff, which is always calculating which optimal maneuvers will consume NATO’s military hardware faster. Call it a Russian version of the popular axiom “frog in a boiling pot doesn’t realize it’s being cooked until it croaks.”
Attacking Russia-China-Iran
Absolute desperation is now graphically extrapolating into attacks on Iran. Both Russia and China have Iran as their key ally in West Asia for the whole, complex process of Eurasia integration; strategic partnerships interlink the trio.
So attacking the Ministry of Defense in Isfahan with drones – total fail – and bombing an IRGC convoy of humanitarian aid crossing from Iraq to Syria is a serious U.S.-Israel-coordinated provocation.
Essentially these are also attacks against Russia and China. Israel cannot lift its hand or foot without U.S. permission. Iranian intel may be able to establish how the Straussian neo-con and neoliberal-con cabal in charge of U.S. foreign policy authorized if not ordered these attacks, which of course are directly connected to NATO’s desperation in Ukraine.
When in doubt, just come back to Zbig “Grand Chessboard” Brzezinski: “Potentially, the most dangerous scenario would be a grand coalition of China, Russia and perhaps, Iran, an ‘anti-hegemonic’ coalition united not by ideology but by contemporary grievances. It would be reminiscent in scale and scope of the challenge once posed by the Sino-Soviet bloc.”
And mirroring Ukraine/Russia there’s of course Taiwan/China.
As Credit Suisse strategist Zoltan Pozsar has extensively explained, if Taiwan manufactures chips for U.S. missiles Washington then sends to Taiwan for its “self-defense”, but Taiwan needs to wait because the missiles are needed in Ukraine instead, or chips can’t be shipped to the U.S. owing to a possible sea and air blockade imposed by China, the Americans will be operationally ill-equipped to support their two-front war against peer competitors Russia and China.
Bye bye Pax Americana. It’s the fear, actually paranoia, of a destroyed Taiwan – and the destruction in every scenario would be provoked by the Americans themselves – that has led the Straussian neo-con and neoliberal-con cabal to demand their chips be Made in USA.
On the energy front, since U.S. energy costs are low, Washington gambled that much of the deindustrialization of Germany would revert to American benefit. Yet since Iranian, Russian and Venezuelan oil prices are lower than the U.S., not much production may be shifting to the Hegemon: it will go to China.
To the bottom of the Grand Canyon!
The January 10 joint declaration between EU-NATO graphically shows how the EU is no more than the P.R. arm of NATO.
This NATO-EU joint mission consists in using all economic, political and military means to make sure the “jungle” always behaves according to the “rules-based international order” and accepts to be plundered ad infinitum by the “blooming garden”.
So in the end what’s left of “Europe”, when it’s NATO – actually Washington – that really rules?
“Europe”, according to relentless propaganda, means defending “our values” – as in peace, democracy and prosperity. The trick is that unelected elites forced the implicit identification of this imagined, practically sacred “Europe” with the European Union. And that’s how the EU has acquired a mythical identity.
Of course, in real life the EU – as in the real, politically organized “Europe” – has performed as a toxic instrument of division among European peoples.
Instead of peace, it has invested in all-out rabid war against Russia. The EU is arguably the most democratically irresponsible institution on the planet: spend a day in Brussels and you understand everything. And instead of prosperity, the EU has institutionalized austerity.
So sit back, relax and enjoy a race to the bottom of the Grand Canyon. The only question is who will get there first: the EU, NATO, or both.
If You’re A Warehouse Worker. This Boston Dynamics Video Might Be An Ominous Sign
Warehouse automation continues to accelerate as millions of jobs are at risk of being displaced. The latest automation nightmare for warehouse laborers comes from a new video uploaded on YouTube by Boston Dynamics.
In a press release, the US robotics firm announced that Deutsche Post DHL Group has successfully deployed the Stretch robot for loading and unloading boxes from tractor trailers at warehouse docks.
“Unloading boxes is a strenuous, physically demanding work process which can impact an associate’s ability to work efficiently. By automating this process, DHL Supply Chain explained, the operation not only addresses safety concerns but also the ongoing labor supply challenge by redirecting skilled labor to focus on value-add, strategic tasks in other areas of the warehouse,” DHL wrote in a press release.
Translation: DHL is automating its supply chain and won’t need as many warehouse workers in the future.
“The custom-designed, lightweight arm of the robot has seven degrees-of-freedom, which gives it the length and flexibility to reach cases throughout the trailer or container,” DHL continued in the press release.
U.S. companies were involved in at least 37 percent of the total investment transactions in China’s artificial intelligence (AI) sector between 2015 and 2021, according to a new report.
The report (pdf), published by the Georgetown University Center for Security and Emerging Technology, found that $40.2 billion in investment transactions into Chinese AI companies had American backing, though it was unclear what percentage of that amount was made by U.S. investors or their overseas counterparts.
The money was given to 251 Chinese AI companies, primarily as venture capital angel, seed, and pre-seed stage investments.
There are risks with such investments, the report noted, as they are generally accompanied by other intangible benefits in which U.S. expertise is delivered to China-based companies.
“While Crunchbase data suggests that U.S. outbound investment into Chinese AI companies is limited, such financial activity, commercial linkages, and the tacit expertise that transfers from U.S.-based funders to target companies in China’s booming AI ecosystem carry implications that extend beyond the business sector,” the report said.
“Earlier stage VC investments in particular can provide intangible benefits beyond capital, including mentorship and coaching, name recognition, and networking opportunities. As such, U.S. outbound investment in Chinese technology, and particularly AI, merits additional attention and tracking.”
US Firms Funding Chinese AI Companies
American investments in China-based AI companies have come under fire in recent years due to the amount of control exercised over such companies by China’s communist regime.
The Chinese Communist Party (CCP), which rules China as a single-party state, has implemented several laws that require China-based companies to make all data in their possession available to the regime upon request.
This means that any data or technologies developed by China-based companies with U.S. backing could directly be used by the CCP to improve upon its military capabilities, in line with the regime’s “military-civil fusion” strategy.
Moreover, such investments directly fuel China’s efforts to overtake the United States as the lead technological power.
This is demonstrated by the value of the investments being made by U.S. sources into China’s AI companies. Whereas investment transactions involving U.S. funding sources only made up 17 percent of the total number of transactions made, the report said, those transactions accounted for 37 percent of the total funding value of all such transactions.
Notably, the U.S. investments also include major funding for Chinese companies whose research could tangibly benefit the Chinese military’s pursuit of AI and autonomous systems.
“Some of the largest investments include Goldman Sachs’ solo investment in 1KMXC, an AI-enabled robotics company, as well as an investment by three U.S.-based VC firms in Geek+, an autonomous mobile robot company,” the report said.
In the past three weeks, policymakers had their worlds rocked by generative artificial intelligence. The problem is that they don’t know it – yet.
First, a team of researchers demonstrated that Open AI’s Chat GPT3 can pass the stringent United States Medical Licensing Exam. Days later, Chat GPT 3 passed a bar exam. Finally, Chat GPT3 passed the prestigious Wharton Business School’s rigorous core examination.
The Wharton researcher writes, “OpenAI’s Chat GPT3 has shown a remarkable ability to automate some of the skills of highly compensated knowledge workers in general and specifically the knowledge workers in the jobs held by MBA graduates including analysts, managers, and consultants.”
Lawyers, doctors, administrators, managers, and consultants are some of the most highly compensated professionals in the United States. Generative artificial intelligence is banishing them to obsolescence.
With only 375 employees, the unprofitable Chat GPT3 was acquired by behemoth Microsoft at a valuation reportedly northward of $30 billion. For perspective, with over 42,000 highly educated healthcare employees, AmerisourceBergen is the largest company by revenue headquartered in Pennsylvania. Its valuation is $33.25 billion. So, with 99% fewer employees, the unprofitable Chat GPT3 is already worth nearly the same as the largest company in the Commonwealth.
Microsoft has already pledged $10 billion to optimize Chat GPT3 toward profitability. Tens of billions more dollars are coming.
The last time policymakers were presented with displacement on this scale was the globalization that decimated the American working class. The solution for Pennsylvania policymakers was to pivot the state’s economy to “Eds and Meds,” which now constitute 44% of total employment.
Those industries were chosen because spending is generated predominantly by the government, which is historically stable. To quote Ronald Reagan, “Government programs, once launched, never disappear.” Pennsylvania policymakers knew that they were making safe bets as those markets would almost always exist.
The pivot worked, with Pennsylvania stabilizing its population decline. Communities able to make the pivot, particularly in the suburbs, saw prosperity.
Once reliably Republican, the suburban voters employed by “Eds and Meds” now constitute the Democratic Party’s base. The rise of conservative populism, which pointed the finger at college-educated elites for the decline of the working class, accelerated the trend.
The reticence of suburban elites to choose Republican candidates is understandable, considering some in the GOP’s working-class base label them the enemy. For many in the working class, the contempt is personal, as they perceive the college-educated as having enriched themselves at their expense, via globalization.
But generative artificial intelligence is poised to inflict the same level of economic devastation on suburban elites as suffered by the working class through globalization. Some elites will undoubtedly find sure footing in the pending economy created by generative artificial intelligence. But many others will not.
The Rust Belt’s decline took decades to manifest. Its slow pace helped shield policymakers from criticism because gradual change enabled some Americans to find solutions on their own.
In contrast to globalization’s slow deindustrialization, however, technological adoption moves at lightning speed and is only getting faster. “Eds and Meds” suburbanites are unlikely to gain a reprieve through gradual transition. Profitable generative artificial intelligence business models may surface within a year. Suburban prosperity could be severely undermined before the next Winter Olympics. Policymakers need immediate solutions.
Political polarization rises during economic decline. A 20-point gap persists between the political affiliations of college-educated and non-college-educated Americans. It is one of the most pronounced cleavages in American politics.
The displacement potentially caused by generative artificial intelligence could put college-educated voters back into electoral play for Republicans, presuming the GOP can deliver something for them.
The path to help these Pennsylvanians, one that would be exclusive to Republicans, is rapid reindustrialization. The prerequisites for rapid reindustrialization are affordable, abundant energy and school choice. Both are fundamental tenets of the GOP platform.
Pennsylvania is blessed with abundant natural resources and is a net exporter of energy. It has educational entrepreneurs pleading for the opportunity to create the most industrially skilled workforce on the planet. Products made in Pennsylvania can reach most of the continental United States or international waters within 24 hours. Among the 50 states, this “iron triangle” of energy-workforce-logistics may be unique to Pennsylvania.
Rapid reindustrialization is the path that unites all educational backgrounds to produce real, sustainable wealth. Instead of pitting the educational classes against one another, it makes them partners in success.
Pennsylvania Republican policymakers have the opportunity before them to accomplish what Ron DeSantis has achieved in Florida: a generational political realignment of a state.
Meanwhile, Pennsylvania’s Republican Party leaders have proposed spending hundreds of thousands of dollars on a 2022 midterm post-mortem. That’s fine. But the lesson of the 2022 midterm is that voters do not reward looking backwards.
A crisis has begun. The GOP will respond either by providing tomorrow’s leaders or being condemned by history for failing to rise to the challenge.
That is what proponents of California’s high speed rail project say when asked about the whys and wherefores of the system. In other words, if it works somewhere else it will work here.
That argument, though, falls in the face of a rather basic fact: California and Japan are different.
It is true that Japan’s high speed rail system, first begun in 1964, actually makes money – a lot, in fact. The iconic first line, Shinkansen Tokaido, alone carries 90 million people a year and has an operating profit of about $4.4 billion dollars. That does not include capital costs, but teasing that number out after 60 years of operation and the privatization of the route in the late 1980s is extremely difficult – suffice to say the deal has “worked” for the owners.
There are multiple other Shinkansen lines in Japan, most of which also realize an operating profit (the latest expansion to Hokkaido – the very large island north of the Japanese mainland – has proven to be problematic, though.)
Focusing on the Tokaido line – the line typically referred to for comparison – shows a few similarities but many glaring differences. It’s distance is 320 miles, not terribly different from the 390 miles from Los Angeles to San Francisco. Also, it takes two and half hours – again not too dissimilar – and, in a downtown to downtown comparison, is faster and more convenient than flying (though not cheaper – it’s about $100 to fly and about $160 to take the Shinkansen) just like California’s project is supposed to be.
But that’s about it.
First, there is the issue of population. The Tokaido line (with its “Nozomi” train only stopping in the largest cities and hence the fastest) runs from Tokyo to Osaka, which alone have combined populations of 17 million, compared to 11 million for LA (including the county) and San Francisco.
In the cities along the Tokaido route there are 9 million more people; in the space between LA and SF, there are less than 3 million. For comparison, the smallest city on the Tokaido is Shinagawa at 400,000 people; the smallest city on the California system is Gilroy, at 58,000. All told, the average “stop population” between LA and SF is about 250,000 – on the Tokaido/Nozomi is 2,250,000.
It is these concentrations and the economies of scale they allow that drive the success of the Tokaido line – California’s system is simply not in the same league.
The Nozomi train operates 32 1,300-seat trains each way every day; pretty much on the half-hour with fewer overnight, while the two other slower (but still high speed) trains on the same system operate much more frequently and make many more stops.
Note on the following information– when dealing with California High Speed Rail (CHSR) Authority numbers – time or money – it is a good idea to remind oneself that they have never been right before, so really really big grain – meet salt.
The CHSR system will – in its “horizon year” of 2040, operate 105 southbound and 103 northbound trains per day over the system. Southbound, 64 trains will start in San Francisco, 20 in San Jose, and 21 in Merced. Northbound, 42 trains will start in Anaheim, 44 in Los Angeles, and 17 will start in Merced (note – that means 86 trains will pass through LA northbound every day.)
The system will operate 18 hours per day, with six hours designated “peak;” about half of the trains will operate during those six hours, the other half during the 12 “off peak” hours.
That means LA’s Union Station will – during the morning commute – see a train going north about every eight minutes, every day.
At 1,200 (could be a bit lower, could be a bit higher as the final design is not yet set) seats per train, about 10,000 people could leave LA between 7 and 8 a.m. For the system to hit its ridership (and therefore revenue) goals, about 5,000 have to.
Six trains will run non-stop from LA to SF and 10 will run with only stops at San Jose and Burbank – the non-stops are expected to meet the 2 hour and 40 minute time limit set by original bond; the other trains will not.
Like the Tokaido, California’s system will charge different fares for different distances traveled … sort of.
The 2020 ridership estimate report shows a ticket price (one way) of $100 from San Francisco to Bakersfield. The cost to travel to LA or even Anaheim? Also $100. It appears planners simply worked – in accordance with the original bond measure – backwards from a typical Southwest fare to set the cap.
For those traveling to/from smaller cities, the fares are obviously less. For example, San Francisco to San Jose is $26, SF to Merced is $66, Los Angeles to Anaheim is $34, etc..
While the high-speed rail has been touted as a way to make lower cost Central Valley housing more accessible, the fare rates could significantly impact that desire as it would cost about $30,000 a year to commute from Merced into the city (admittedly, it can most likely be assumed there will be some sort of farepass/frequent user program will cut that price.)
But at numbers in the thousands per month, the incentive to move out of more expensive cities becomes far less – why spend the money on train fare rather than on a more expensive, more central home if it’s going to be a wash, unless you were going to move anyway to raise a family and mow the lawn?
As to overall finances, the most the CHSR says the LA to SF system will cost is $113 billion and it will be done in 2033, four years after the Central Valley “starter kit” is done.
Exactly where the money will come from remains a bit of a puzzle, but the CHSR is hoping the Cap and Trade money it gets will be extended to 2050 (an extra $10-20 billion,) that they will find more federal funds including non-transportation grants for things such as renewable energy and “social equity.”
As to a private investor, the CHSR admits they are not quite ready for that but that once the system is running and turning an operational profit businesses will come knocking to invest.
Speaking of operational profit, the CHSR projects there is a “99.4%” likelihood it make an operational profit by 2040. It should be noted “operational profit” is just that – how much more money you bring in than you have to spend every day and is not related to the capital cost.
If – IF – the system makes $1.4 billion it expects to in 2040, that would give it a return on capital investment of 1.4% percent. That’s not terribly good and may make private companies think again and again and again about investing.
In other words, if (not accounting for inflation) the CHSR simply saved its money to build the rest of the system – the San Diego, Sacramento extensions – it would take about 40 years of “profit” to cover the cost
And those revenues figures are based on having about 1 million riders a week, about 140,000 a day, about 6,000 an hour, 100 a minute.
For proper context: Currently about 2.5 million people fly each year between LA and the Bay Area. And about 700,000 currently take Amtrak to/from Bakersfield to Oakland and/or Sacramento. That’s 3.2 million – total.
Note – assuming the new system attracts a few more riders in the Central Valley alone, that means the “south from Bakersfield” and the “Merced to San Francisco” and the “long haul” trips will have to attract about 50 million riders alone
Obviously, a whole bunch of other people drive to and from and in between, but I don’t think it is unreasonable to wonder if the 51 million annual riders the HSR estimates will use the system may be just a tad bit on the optimistic side
All this to be able to get from Fresno to Bakersfield for $63 six years from now.
Four of the highest ranking U.S. health officials—including Dr. Anthony Fauci—met in secret to discuss whether or not naturally immune people should be exempt from getting COVID-19 vaccines, The Epoch Times can reveal.
The officials brought in four outside experts to discuss whether the protection gained after recovering from COVID-19—known as natural immunity—should count as one or more vaccine doses.
“There was interest in several people in the administration in hearing basically the opinions of four immunologists in terms of what we thought about … natural infection as contributing to protection against moderate to severe disease, and to what extent that should influence dosing,” Dr. Paul Offit, one of the experts, told The Epoch Times.
Offit and another expert took the position that the naturally immune need fewer doses. The other two experts argued natural immunity shouldn’t count as anything.
The discussion did not lead to a change in U.S. vaccination policy, which has never acknowledged post-infection protection. Fauci and the other U.S. officials who heard from the experts have repeatedly downplayed that protection, claiming that it is inferior to vaccine-bestowed immunity. Most studies on the subject indicate the opposite.
The meeting, held in October 2021, was briefly discussed before on a podcast. The Epoch Times has independently confirmed the meeting took place, identified all of the participants, and uncovered other key details.
Dr. Jay Bhattacharya, a professor of medicine at Stanford University who did not participate in the meeting, criticized how such a consequential discussion took place behind closed doors with only a few people present.
“It was a really impactful decision that they made in private with a very small number of people involved. And they reached the wrong decision,” Bhattacharya told The Epoch Times.
Fauci, the head of the U.S. National Institute of Allergy and Infectious Diseases and the chief medical adviser to President Joe Biden until the end of 2022
Dr. Vivek Murthy, the U.S. surgeon general
Dr. Rochelle Walensky, the head of U.S. Centers for Disease Control and Prevention (CDC)
Dr. Francis Collins, head of the U.S. National Institutes of Health, which includes the National Institute of Allergy and Infectious Diseases, until December 2021
Dr. Bechara Choucair, the White House vaccine coordinator until November 2021
From outside the government:
Offit, director of the Vaccine Education Center at Children’s Hospital of Philadelphia and an adviser to the U.S. Food and Drug Administration on vaccines
Dr. Michael Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota and a former member of Biden’s COVID-19 advisory board
Akiko Iwasaki, professor of immunobiology and molecular, cellular, and developmental biology at Yale University
Dr. Peter Hotez, co-director of Texas Children’s Hospital Center for Vaccine Development and dean of the Baylor College of Medicine’s School of Tropical Medicine
Fauci and Murthy decided to hold the meeting, according to emails The Epoch Times obtained.
“Would you be available tonight from 9-9:30 for a call with a few other scientific colleagues on infection-induced immunity? Tony and I just discussed and were hoping to do this sooner rather than later if possible,” Murthy wrote in one missive to Fauci, Walensky, and Collins.
All three quickly said they could make it.
Walensky asked who would be there.
Murthy listed the participants. “I think you know all of them right?” he said.
Walensky said she knew all but one person. “Sounds like a good crew,” she added.
During the meeting, Offit put forth his position—that natural immunity should count as two doses.
At the time, the CDC recommended three shots—a two-dose primary series and a booster—for many Americans 18 and older, soon expanding that advice to all adults, even though trials of the boosters only analyzed immunogenicity and efficacy among those without evidence of prior infection.
Osterholm sided with Offit, but thought that having recovered from COVID-19 should only count as a single dose.
“I added my voice at the meeting to count an infection as equivalent to a dose of vaccine! I’ve always believed hybrid immunity likely provides the most protection,” Osterholm told The Epoch Times via email.
Hybrid immunity refers to getting a vaccine after recovering from COVID-19.
Some papers havefound vaccination after recovery boosts antibodies, which are believed to be a correlate of protection. Other research hasshown that the naturally immune have a higher risk of side effects than those who haven’t recovered from infection. Some experts believe the risk is worth the benefit but others do not.
Hotez and Iwasaki, meanwhile, made the case that natural immunity should not count as any dose—as has been the case in virtually the entire United States since the COVID-19 vaccines were first rolled out.
Iwasaki referred to a British preprint study, soon after published in Nature, that concluded, based on survey data, that the protection from the Pfizer and AstraZeneca vaccines was heightened among people with evidence of prior infection. She also noted a study she worked on that found the naturally immune had higher antibody titers than the vaccinated, but that the vaccinated “reached comparable levels of neutralization responses to the ancestral strain after the second vaccine dose.” The researchers also discovered T cells—thought to protect against severe illness—were boosted by vaccination.
There’s a “clear benefit” to boosting regardless of prior infection, Iwasaki, who has since received more than $2 million in grants from the National Institutes of Health (NIH), told participants after the meeting in an email obtained by The Epoch Times. Hotez received $789,000 in grants from the NIH in fiscal year 2020, and has received other grants totaling millions in previous years. Offit, who co-invented the rotavirus vaccine, received $3.5 million in NIH grants from 1985 through 2004.
Hotez declined interview requests through a spokesperson. Iwasaki did not respond to requests for comment.
No participants represented experts like Bhattacharya who say that the naturally immune generally don’t need any doses at all.
In public, Hotez repeatedly portrayed natural immunity as worse than vaccination, including citing the widely criticized CDC paper, which drew from just two months of testing in a single state.
In one post on Twitter on Oct. 29, 2021, he referred to another CDC study, which concluded that the naturally immune were five times as likely to test positive compared to vaccinated people with no prior infection, and stated: “Still more evidence, this time from @CDCMMWR showing that vaccine-induced immunity is way better than infection and recovery, what some call weirdly ‘natural immunity’. The antivaccine and far right groups go ballistic, but it’s the reality.”
That same day, the CDC issued a “science brief” that detailed the agency’s position on natural immunity versus the protection from vaccines. The brief, which has never been updated, says that available evidence shows both the vaccinated and naturally immune “have a low risk of subsequent infection for at least 6 months” but that “the body of evidence for infection-induced immunity is more limited than that for vaccine-induced immunity.”
Evidence shows that vaccination after infection, or hybrid immunity, “significantly enhances protection and further reduces risk of reinfection” and is the foundation of the CDC’s recommendations, the agency said.
Several months later, the CDC acknowledged that natural immunity was superior to vaccination against the Delta variant, which was displaced in late 2021 by Omicron. The CDC, which has made misleading representations before on the evidence supporting vaccination of the naturally immune, did not respond to a request for comment regarding whether the agency will ever update the brief.
Iwasaki had initially been open to curbing the number of doses for the naturally immune—”I think this supports the idea of just giving one dose to people who had covid19,” she said in response to one Twitter post in early 2021, which is restricted from view—but later came to argue that each person who is infected has a different immune response, and that the natural immunity, even if strong initially, wanes over time.
Osterholm has knocked people who claim natural immunity is weak or non-existent, but has also claimed that vaccine-bestowed immunity is better. Osterholm also changed the stance he took in the meeting just several months later, saying in February 2022 that “we’ve got to make three doses the actual standard” while also “trying to understand what kind of immunity we get from a previous infection.”
Offit has been the leading critic on the Vaccines and Related Biological Products Advisory Committee, which advises U.S. regulators on vaccines, over their authorizations of COVID-19 boosters. Offit has said boosters are unnecessary for the young and healthy because they don’t add much to the primary series. He also criticized regulators for authorizing updated shots without consulting the committee and absent clinical data. Two of the top U.S. Food and Drug Administration (FDA) officials resigned over the booster push. No FDA officials were listed on invitations to the secret meeting on natural immunity.
Fauci and Walensky Downplay Natural Immunity
Fauci and Walensky, two of the most visible U.S. health officials during the pandemic, have repeatedly downplayed natural immunity.
Fauci, who said in an email in March 2020 that he assumed there would be “substantial immunity post infection,” would say later that natural immunity was real but that the durability was uncertain. He noted the studies finding higher antibody levels from hybrid immunity.
In September 2021, months after claiming that vaccinated people “can feel safe that they are not going to get infected,” Fauci said that he did not have “a really firm answer” on whether the naturally immune should get vaccinated.
“It is conceivable that you got infected, you’re protected—but you may not be protected for an indefinite period of time,” Fauci said on CNN when pressed on the issue. “So I think that is something that we need to sit down and discuss seriously.”
After the meeting, Fauci would say that natural immunity and vaccine-bestowed immunity both wane, and that people should get vaccinated regardless of prior infection to boost their protection.
Walensky, before she became CDC director, signed a document called the John Snow Memorandum in response to the Great Barrington Declaration, which Bhattacharya coauthored. The declaration called for focused protection of the elderly and otherwise infirm, stating, “The most compassionate approach that balances the risks and benefits of reaching herd immunity, is to allow those who are at minimal risk of death to live their lives normally to build up immunity to the virus through natural infection, while better protecting those who are at highest risk.”
The memorandum, in contrast, said there was “no evidence for lasting protective immunity to SARS-CoV-2 following natural infection” and supported the harsh lockdown measures that had been imposed in the United States and elsewhere.
In March 2021, after becoming director, Walensky released recommendations that the naturally immune get vaccinated, noting that there was “substantial durability” of protection six months after infection but that “rare cases of reinfection” had been reported.
Walensky hyped the CDC study on natural immunity in August 2021, and the second study in October 2021. But when the third paper came out concluding natural immunity was superior, she did not issue a statement. Walensky later told a blog that the study found natural immunity provided strong protection, “perhaps even more so than those who had been vaccinated and not yet boosted.”
But, because it came before Omicron, she said, “it’s not entirely clear how that protection works in the context of Omicron and boosting.”
Walensky, Murthy, and Collins did not respond to requests for interviews. Fauci, who stepped down from his positions in late 2022, could not be reached.
Murthy and Collins also portrayed natural immunity as inferior. “From the studies about natural immunity, we are seeing more and more data that tells us that while you get some protection from natural infection, it’s not nearly as strong as what you get from the vaccine,” Murthy said on CNN about two months before the meeting. Collins, in a series of blog posts, highlighted the studies showing higher antibody levels after vaccination and urged people to get vaccinated. He also voiced support for vaccine mandates.
