- Fun's over: The Ever Given was refloated and the Suez cleared
- UK institution cleared itself of institutional racism
- France entered a four-week lockdown
- A corporate spying case against IKEA shocked Europe
- Dozens were killed when a high-speed train derailed in Taiwan
- One step forward, two backward in India-Pakistan trade talks
- Violence spread in West Bengal ahead of a crucial state election
- US court heard damning evidence against Derek Chauvin
- Florida GOP Congressman Matt Gaetz accused of sex trafficking
- World's old-growth tropical forests collapsed by 12% last year
US President Joe Biden has pulled out the chequebook. A $2tn infrastructure plan might not get his nation back to the halcyon days of the 'American century', but it has traced a path for a newer, cleaner future.
A New, New Deal
There are three clear aims of the President Joe Biden's infrastructure plan: repair America's disintegrating infrastructure, combat climate change, and belt China over the head where possible. A massive job-creation scheme and public investment schedule will retool America for a clean future. And apparently leapfrog China to boot. If that sounds ambitious, draw your attention to the $2tn that Biden wants to allocate to the job. Coming weeks after his $1.9tn Covid relief plan announced last month, it's clear that the freshman president is laser focused on "transformational progress" and achieving it posthaste.
So where do you spend $2tn? To start with, creating tens of thousands of well-paid jobs in the renewable-energy and clean-technology sectors. A critical component of the plan is a $174b program to accelerate the adoption of electric vehicles . The comical attachment to gas-guzzling cars has left EVs eating the dust (and soot) of SUVs and pick-up trucks. Do an image search for the Ford F-650 if you are in need of a laugh. 500,000 new charging stations across the country will (hopefully) alleviate range anxiety; tax credits and other sweeteners should help dealers clear the showroom floor.
At a step above the charging port, $100b is being poured into decarbonising the energy generation sector in just over a decade. The fine print the bill leaves space for a "Clean Energy and Sustainability Accelerator": a green bank to spur private investment. Which is not to say that there isn't cash for last century's infrastructure projects : hundreds of billions have been set aside for bridges, roads, and rail. Airports? Not so much. How do you get one over China in the meantime? By gaining ascendency in the critical industries of the moment: semiconductors and electric vehicles . There is one small issue here: Beijing seized on depressed commodity prices last year and purchased just about all the rare-earth minerals it could get a hold of. Technological ascendency won't come cheap.
The GOP has signalled its opposition to the bill . It may as well be commentary from the cheap seats given that most components of the bill will be able to pass both houses without a single Republican vote. They should be content enough that their threat of a scorched earth campaign has deterred Biden's team from even sniffing at a carbon tax.
Bidenomics in the 21st century
If you are worried that they'll have to buy a bigger billboard for the national deficit clock, rest assured that $2tn will be raised through taxes. First up on the chopping block (or adding block) are Trump's 2017 tax cuts. While most fiscal conservatives tend to shroud benefits for the wealthy in vaguely-serious sounding terms like "flattening the tax curve", the 2017 cuts were so nakedly inequitable even some Republicans reddened. Great news for any Americans who would like their government to be able to afford to meet their fundamental human needs.
Biden is lifting the official corporate tax rate from 21%, where it fell under Trump, up to 28%. This is a marked improvement for the Treasury Department, but it's still the second-lowest point since the Second World War. Once factoring in the Internal Revenue Service's "two scoops for you, no scoops for me" rebates and deductions, one quickly arrives at an number that doesn't look much like 21% or 28%. Prior to Trump the average actual tax rate for American corporations was 16%; under Trump it was 8%. The real test for this administration will be knotting those foreign profits loopholes into nooses. In his announcement speech in the old industrial powerhouse of Pittsburgh, Biden took aim, "the biggest companies in the world, including Amazon... pay not a single, solitary penny of federal income tax. That is just wrong."
On one hand: well, duh! On the other: it is refreshing to hear it coming from someone who can do something about it. Biden's predecessor took time out from his busy schedule of gatecrashing weddings at Mar-a-Lago to pronounce it "among the largest self-inflicted economic wounds in history". We've decided to include Donald Trump's view in part for balance, but mostly because we know you miss his antics just a little.
While some policies have changed, there are similarities between the 45th and 46th. One is an unconscionable immigration policy (but we'll save that for next week). Another area of common ground is shaky ground. Trump's well-documented trouble with slight inclines and ramps has been replaced by commander-in-chief who was outfoxed by Air Force One's carpeted staircase. Indeed, Biden has barely put a foot right in the category of general uprightness: his nothing-to-see-here hairline foot fracture in December was a red flag for all who've witnessed elderly loved ones take a fall.
But then again, the president who implemented the original New Deal saw stairs as a challenge too – and look how he's remembered.
Swedes cotton on to Xinjiang ethics
This week a World Health Organisation (WHO) report pinned the entire coronavirus pandemic on one bat and one mystery animal but couldn't say for sure if they emerged in Wuhan. Chinese researchers were quick to add that the bat and the intermediary beast may have gotten in their fateful tangle somewhere in Southeast Asia . Phew. The report was roundly criticised by Washington and Brussels – though, it must be said, firmly defended by its international authors. A balm to Beijing's blushes, nonetheless. In another boon, the World Trade Organisation (WTO) forecast an 8% surge in Asian exports this year – the lion's share to be filled by China . In its sunnier-than-expected outlook the WTO credited China's "effective management of the pandemic" as the basis for the rebound. So in post-pandemic China there's money to be made – fistfuls of it – but not for H&M.
The Swedish fast-fashion giant was just one of several Western manufacturers and retailers which pledged not to use cotton spun in the interment mills of Xinjiang province. Resentment was bubbling away in the more fanatic corners of China's social media platforms until the Communist Youth League took up the fight online. Overnight H&M found itself firma non grata in the People's Republic: dozens of stores were shut down by obliging landlords and censors excised digital traces from the internet. Cowed, the retailer has committed to "regaining the trust and confidence of our customers" (read: Beijing) and is zipping up about the concentration camps. It was the talk of the town at China Fashion Week. Designer Zhou Li had this to say, "I think Xinjiang cotton is my sweetheart, my love, which is to say I'm very grateful it has brought me me such happiness". Which, even the flintiest apparatchiks must admit, is laying it on thick.
The lesson for companies is a simple: leave your criticism at the door if you want to enter the world's second-largest market. The head of the European Union Chamber of Commerce in China, Joerg Wuttke said, "It's a complicated picture. On the one hand, China saved the skin of many companies last year. At the same time, you have of course this kind of political pressure that is on you, and again a topic like Xinjiang is a no-win situation." If it's no-win for the harried upper management of Western firms, what is it for the million or so interned Uighurs?
A model conflict in Mozambique
The extraction of Africa's human, material, and mineral wealth is one of the oldest and widely-practised enterprises there is. If you'd stood long enough on the northern Mozambican coast, looking across to the Quirimas Islands, you would've witnessed a broad swathe of human history. Merchants speaking the simplified Greek of Alexander the Great, arriving in the first century of what we call the Common Era. Intrepid Gujarati sailors coming ashore and leaving with slave girls. From the 700s, Muslim Arab slavers loaded estimated 1,000 slaves aboard each year for 1,000 years . Indeed, the inhabitants of that coastline are the descendants of the Bantu who were marched, manacled, out of the interior. The Portuguese and British came and went. Now, it's the multinationals.
Today, the extraction continues apace in that exact spot: Cabo Delgado province. In 2019 the French oil and gas giant Total SE snapped up a huge tract of land on the Afungi peninsula for €3.3b. A fraction of the €20b they stand to make from offshore natural gas deposits. Further south the London-listed and Dublin-based Kenmare Resources operates a sprawling titanium ore mine at Moma (the company produces 7% of the global supply of titanium feedstocks).
These are fully-certified going concerns to their shareholders and directors, and a lightning rod for the local branch of Islamic State. Since 2017 the group known as al-Shabab (no relation to the Somali organisation) has channelled religious fervour and political disaffection into a growing insurgency. Its targets? The Mozambican government and the foreign corporates it is aligned with. To date fighting has left 700,000 displaced and at least 2,600 dead.
The port of Palma, adjacent to Total's enormous plant, has long been a ripe target. Last week the IS offshoot launched a coordinated assault and seized much of the town. 60 have died as the rebels clashed with the less-than-exemplary Mozambican army and a South African mercenary outfit armed with gunships. Thousands of residents have escaped by boat south , but one convoy of 17 vehicles was ambushed on its way out of Palma. Where are the Total staff? Hunkered down safe in a fortified compound. It is perhaps a microcosm of extractive conflict: insurgents attack foreign interests, foreigners escape with the help of their mercenaries, locals are beheaded in the streets of their ravaged town.
The best of times
For years we've struggled to figure out exactly how supermassive black holes become so... supermassive. This week scientists found what’s known as an ‘intermediate’ black hole — placed between a supermassive and stellar black hole. Other intermediate black holes have been found before, however, none have been right in the middle of the size range. As a result, astronomers can study this specific void to fill their gaps in knowledge about supermassive black hole formation and growth. Plus, we’ve also gotten a glimpse of what the universe looked like three billion years ago .
100 gecs? What about four?
Discoveries don’t have to be 55,000 times the mass of the sun to be significant. They can also come in the form of a palm-sized gecko. The cupola gecko has not been since 2007, and before that in 1968. Because of this, officials had no idea how many of them existed — or if they did at all. Luckily, four of them were found under a rock in New Zealand after a years-long search by expert Ben Barr. The result? Reassurance, and a whole lot of euphoria.
The worst of times
Cries fall on deaf ears
The number of Syrians in need of aid is increasing sharply and yet the international community is failing to help. More specifically, only $6.4b of a $10b target has been raised to help the 13m Syrians in dire need of support. Since last year, that number has jumped by 20% as conflict continues to wreak havoc in the east. Last year the 50 donor nations — including the US and UK — managed just $8b. Donor fatigue is deadly.
Mounting death toll in Myanmar
Violence in Myanmar escalated as the military cracked down on any and all forms of dissent. On Saturday more than 100 protesters were killed in a show of the Tatmadaw’s force. It was so far the deadliest day the country has seen since the coup on February 1. Following that, those who attended a funeral to mourn the losses faced open fire once again.The western world has condemned the force — though as noted before, any more significant foreign interference is highly unlikely.
“I have looked inside the machine and I can tell you business does not have this. Not because these are bad people but because they run for-profit machines that will operate exactly as you would expect them to do.”
– Tariq Fancy , a former head of sustainable investing at BlackRock (roughly $7t in assets managed) gives a brutal assessment of the 'environmentally-friendly investing'. So if that doesn't realign global capital with humanity's future, what will?
“If you put a tax on carbon, every single portfolio manager would adjust their portfolio.”
- A number of top tier brokers were left on the hook for ten big ones after Bill Hwang's stealthy $10b bet on ViacomCBS Inc was sprung in spectacular fashion. The oversight of high-net-worth family offices has been revealed to be as rigorous as you'd imagine it would be. Surprisingly, the fallout from the Archegos Capital Management hoo-ha hasn't crept back into the broader markets.
- The number of Yemenis experiencing emergency food shortages and chronic hunger. At highest risk are the 400,000 children among them . At least 16,500 suffer from catastrophic food shortages, which is to say that there is little hope in sustaining life. This is not a natural disaster – it is a weapon of war wielded by well-fed princelings in Riyadh and Abu Dhabi.
" Nike sues over Lil Nas X 'Satan shoes' containing drop of human blood " – The Evening Standard . Death, taxes, weepy moral panics...
The special mention
This week we give a heavily-qualified farewell to G. Gordon Liddy – simply one of the meanest and strangest men to have walked the face of the planet. He was first amongst Nixon's running dogs and strained at his leash mightily: Liddy 'masterminded' the bungled Watergate burglary and 'Operate Gemstone' (a series of highly illegal covert actions against the Democratic party). After doing his time, Liddy did as all wounded patriots do: become a radio talk-show host. Other pursuits included commissioning a calendar in which scantily-clad and heavily-armed swimsuit models posed with him, growing and maintaining a fine moustache, and cursing "the notorious rat John Dean" until the day he died.
A few choice long-reads
- "For the best part of a week, the Suez canal was blocked by a 200,000-tonne metaphor". With that kind of sizzle from The Economist, there is no way you are not clicking the link.
- Are your errors simply hidden intentions? Brian Eno seems to think so. Bloomberg Businessweek dives into the creative process of, let's face it, just about the best musician of the 20th century.
- Who rules the world? Tricky question. Richard Haass answers it in this 5600-word monster for Foreign Affairs. Some light Saturday morning reading for you!
Tom Wharton @trwinwriting