Former FTX CEO Sam Bankman-Fried arrested in the Bahamas
NEW YORK (AP) — The former CEO of failed cryptocurrency firm FTX, Sam Bankman-Fried, has been arrested in the Bahamas at the request of the U.S. government, U.S. and Bahamian authorities said Monday.
The arrest was made Monday after the U.S. filed criminal charges that are expected to be unsealed Tuesday, according to U.S. Attorney Damian Williams. Bankman-Fried had been under criminal investigation by U.S. and Bahamian authorities following the collapse last month of FTX. The firm filed for bankruptcy on Nov. 11, when it ran out of money after the cryptocurrency equivalent of a bank run.
“We expect to move to unseal the indictment in the morning and will have more to say at that time,” Williams said.
Bahamian Attorney General Ryan Pinder said the Bahamas would “promptly” extradite Bankman-Fried to the U.S. once the indictment is unsealed and U.S. authorities make a formal request. FTX is headquartered in the Bahamas and Bankman-Fried has largely remained in his Bahamian luxury compound in Nassau since the company’s failure.
A spokesman for Bankman-Fried had no comment Monday evening. Bankman-Fried has a right to contest his extradition, which could delay but not likely stop his transfer to the U.S.
Bankman-Fried’s arrest comes just a day before he was due to testify in front of the House Financial Services Committee. Rep. Maxine Waters, D-Calif., chairwoman of the committee, said she was “disappointed” that the American public, and FTX’s customers, would not get to see Bankman-Fried testify under oath.
Bankman-Fried was one of the world’s wealthiest people on paper, with an estimated net worth of $32 billion. He was a prominent personality in Washington, donating millions of dollars toward mostly left-leaning political causes and Democratic political campaigns. FTX grew to become the second-largest cryptocurrency exchange in the world.
That all unraveled quickly last month, when reports called into question the strength of FTX’s balance sheet. Customers moved to withdraw billions of dollars, but FTX could not meet all the requests because it apparently used its customers deposits to cover bad bets at Bankman-Fried’s investment arm, Alameda Research.
Bankman-Fried said recently that he did not “knowingly” misuse customers’ funds, and said he believes his millions of angry customers will eventually be made whole.
The House Financial Services Committee is still expected to hear testimony Tuesday from current CEO John Ray III. Ray, who took over FTX on Nov. 11 and is a long-time restructuring specialist, has said in court filings that the financial conditions at FTX were worse than at Enron.
Bahamian authorities plan to continue their own investigation into Bankman-Fried.
“The Bahamas and the United States have a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law,” said Bahamian Prime Minister Philip Davis, in a statement.
The U.S. Securities and Exchange Commission said it had authorized separate charges related to alleged violations of securities laws and would file them publicly Tuesday.
Musk’s Twitter disbands its Trust and Safety advisory group
Elon Musk’s Twitter has dissolved its Trust and Safety Council, the advisory group of around 100 independent civil, human rights and other organizations that the company formed in 2016 to address hate speech, child exploitation, suicide, self-harm and other problems on the platform.
The council had been scheduled to meet with Twitter representatives Monday night. But Twitter informed the group via email that it was disbanding it shortly before the meeting was to take place, according to multiple members.
The council members, who provided images of the email from Twitter to The Associated Press, spoke on the condition of anonymity due to fears of retaliation. The email said Twitter was “reevaluating how best to bring external insights” and the council is “not the best structure to do this.”
“Our work to make Twitter a safe, informative place will be moving faster and more aggressively than ever before and we will continue to welcome your ideas going forward about how to achieve this goal,” said the email, which was signed “Twitter.”
The volunteer group provided expertise and guidance on how Twitter could better combat hate, harassment and other harms but didn’t have any decision-making authority and didn’t review specific content disputes. Shortly after buying Twitter for $44 billion in late October, Musk said he would form a new “content moderation council” to help make major decisions but later changed his mind.
“Twitter’s Trust and Safety Council was a group of volunteers who over many years gave up their time when consulted by Twitter staff to offer advice on a wide range of online harms and safety issues,” tweeted council member Alex Holmes. “At no point was it a governing body or decision making.”
Twitter, which is based in San Francisco, had confirmed the meeting with the council Thursday in an email in which it promised an “open conversation and Q&A” with Twitter staff, including the new head of trust and safety, Ella Irwin.
That came on the same day that three council members announced they were resigning in a public statement posted on Twitter that said that “contrary to claims by Elon Musk, the safety and wellbeing of Twitter’s users are on the decline.”
Those former council members soon became the target of online attacks after Musk amplified criticism of them and Twitter’s past leadership for allegedly not doing enough to stop child sexual exploitation on the platform.
“It is a crime that they refused to take action on child exploitation for years!” Musk tweeted.
A growing number of attacks on the council led to concerns from some remaining members who sent an email to Twitter earlier on Monday demanding the company stop misrepresenting the council’s role.
Those false accusations by Twitter leaders were “endangering current and former Council members,” the email said.
The Trust and Safety Council, in fact, had as one of its advisory groups one that focused on child exploitation. This included the National Center for Missing & Exploited Children, the Rati Foundation and YAKIN, or Youth Adult Survivors & Kin in Need.
Former Twitter employee Patricia Cartes, whose job it was to form the council in 2016, said Monday its dissolution “means there’s no more checks and balances.” Cartes said the company sought to bring a global outlook to the council, with experts from around the world who could relay concerns about how new Twitter policies or products might affect their communities.
She contrasted that with Musk’s current practice of surveying his Twitter followers before making a policy change affecting how content gets moderated.
“He doesn’t really care as much about what experts think,” she said.
Asian shares mostly higher ahead of Fed rate hike decision
BANGKOK (AP) — Asian shares were mostly higher on Tuesday as the Federal Reserve and other central banks prepared for the year’s final barrage of interest rate hikes.
Tokyo’s Nikkei 225 rose 0.3% to 27,925.38 while the Hang Seng in Hong Kong gained 0.6% to 19,572.66. Australia’s S&P/ASX 200 edged 0.2% higher to 7,195.00.
In Seoul, the Kospi edged 0.1% lower to 2,370.55. The Shanghai Composite index lost 0.2% to 3,172.36. Shares fell in India and Taiwan but rose in Singapore and Bangkok.
Markets have struggled this year thanks to high inflation and the interest rate hikes engineered to combat it. Higher rates slow business activity by design but also risk causing a recession if they go too high, all while dragging down prices of investments.
On Wall Street on Monday, the S&P 500 rallied 1.4% to 3,990.56. The Dow Jones Industrial Average added 1.6% to 34,005.04. The Nasdaq climbed 1.3% to 11,143.74. The Russell 2000 gained 1.2% to 1,818.61.
The indexes were coming off their first weekly loss in three weeks.
Technology stocks accounted for a big share of the market’s gains. Microsoft rose 2.9% and was the biggest single force lifting the S&P 500. The London Stock Exchange Group agreed to a 10-year deal where it will move data to Microsoft’s cloud and spend at least $2.8 billion. Microsoft is also taking a 4% ownership stake in the company.
Horizon Therapeutics jumped 15.5% after Amgen announced it would acquire the biopharmaceutical company for about $26.4 billion.
The rally came ahead of a key inflation report on Tuesday and a meeting of policymakers at the Federal Reserve, after which investors expect the Fed to announce Wednesday its last rate hike of the year following a blitzkrieg that began in March.
The Fed has hinted it will dial down the size of its rate hikes, leading to expectations for a more modest increase of 0.50 percentage points Wednesday.
That would follow four straight mega-hikes of 0.75 percentage points. Each was triple the Fed’s usual move, and they lifted the central bank’s key overnight rate to a range of 3.75% to 4% after starting the year at virtually zero.
Other central banks around the world are also likely to raise their own rates by half a percentage point this week, including the European Central Bank.
Economists at Goldman Sachs expect Fed policy makers on Wednesday to signal their median expectation is for rates eventually to hit a range of 5% to 5.25%.
Even if inflation is waning, the global economy still faces threats from the rate increases already pushed through. The housing industry and other businesses that rely on low interest rates have shown particular weakness, and worries are rising about the strength of corporate profits broadly.
The next big milestone for markets comes later Tuesday with the release of the latest update on inflation at the consumer level. Economists have forecast that inflation slowed to 7.3% last month from 7.7% in October.
Besides raising short-term rates, the Fed is also making other moves with its vast trove of bond investments that should effectively allow longer-term yields to rise.
The yield on the 10-year Treasury, which helps set rates for mortgages and other loans, rose to 3.61% from 3.59% late Friday. The two-year yield, which tends to more closely track expectations for the Fed, rose to 4.39% from 4.34%.
Energy producers rose Monday after the price of U.S. oil settled 3% higher. Exxon Mobil rose 2.5%.
U.S. benchmark crude added 73 cents to $73.90 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the basis for pricing for international trading, picked up 93 cents to $78.92 per barrel.
Last week, crude prices scraped their lowest levels of the year on worries about a weakening global economy, which would mean less demand for energy.
AP Business Writers Stan Choe and Alex Veiga contributed.
Shoppers, workers clash over post-pandemic expectations
NEW YORK (AP) — Before the pandemic, Cheryl Woodard used to take her daughter and her friends to eat at a local IHOP in Laurel, Maryland after their dance practice. But now they hardly go there anymore because it closes too early.
“It is a little frustrating because it’s not as convenient as it used to be,” said Woodard, 54, who also does most of her shopping online these days instead of in person because of stores limiting their hours.
Before the pandemic, consumers had gotten accustomed to instant gratification: packages and groceries delivered to their doorstep in less than an hour, stores that stayed open around the clock to serve their every need.
But more than two and a half years later in a world yearning for normalcy, many workers are fed up and don’t want to go back to the way things were. They are demanding better schedules, and sometimes even quitting their jobs altogether.
As a consequence, many businesses still haven’t been able to resume the same hours of operations or services as they continue to grapple with labor shortages. Others have made changes in the name of efficiency. For instance, Walmart, the nation’s largest retailer and private employer, announced this past summer it doesn’t have any plans for its supercenters to return to its pre-pandemic 24-hour daily operations.
IHOP says a vast majority of its locations have returned to their pre-pandemic hours and some have even expanded them. But others, like the Laurel location that Woodward used to frequent, have indeed cut back.
The changes are creating a disconnect between customers who want to shop and dine like they used to during pre-pandemic times and exhausted employees who no longer want to work those long hours — a push-pull that is only being heightened during the busy holiday shopping season.
“Nobody is winning,” said Sadie Cherney, a franchise owner with three resale Clothes Mentor boutiques in South Carolina. “It is so demoralizing to see that you are falling short on both ends.”
Across all industries, the average number of hours worked per week per worker totaled 34.4 hours in November, unchanged from February 2020, according to the Bureau of Labor Statistics. But for the retail industry, it slipped 1.6% to 30.2 hours per week during the same period. Hours worked at restaurants were down by similar amount in October, according to the most recent data.
Meanwhile, the National Restaurant Association’s most recent monthly survey of 4,200 restaurant operators conducted in early August found that 60% of restaurants reduced hours of operation on the days they were open, while 38% closed on the days they would normally be open compared to right before the pandemic. And a report published by food and beverage research firm Dataessential showed the average U.S. restaurant as of October was open around six fewer hours per week than in 2019 — a 7.5% decline.
Cherney noted her stores returned to pre-pandemic hours last year but with the worsening labor shortages and higher labor costs, she has struggled to keep those same hours this year.
Her store in Columbia is open one hour later, but she had to offer wage increases to her workers. For her two other locations in Greenville and Spartanburg, hours have been reduced for personal shopping appointments throughout the week, and no longer accept second-hand clothing from shoppers on Sundays.
Cherney noted customers often complain about long waits to process their second-hand offerings, while her staff is overextended because they’re working 20% more than what they would like. The end result: Cash flow and profitability have both taken a hit.
Mani Bhushan, owner of Taco Ocho, a taco restaurant with four locations in the Dallas area, still struggles to hire cooks at his McKinney location, which opened in July 2021. He said many workers can’t afford to live in this upscale suburb and have to travel from elsewhere. Several times a week he’s had to close the location early — something he has never had to do in the 40 years he has worked in the business.
Even when Bhushan is able to keep his normal hours of operation, he still has to cut off online orders earlier in the day and the service is not up to par with his other locations.
“I am a perfectionist,” he said. ”I am not happy. But I can’t fix it right now.”
The worker shortages should remain acute into next year even as several big tech companies have reduced staff or have frozen corporate hiring. The economy added 263,000 jobs while the unemployment rate remained at 3.7% in November, still near a 53-year low, according to the Labor Department. And while U.S. job openings dropped in October from September, the number ticked up 3% in retail.
For mall operator Taubman Centers, which manages or leases 24 premier centers in the U.S. and Asia, many stores are opening later than its centers to save on employee costs, according to Bill Taubman, president and chief operating officer. However, he said that causes frustration among customers who go to the mall thinking the store where they want to shop will be open.
Vicky Thai, a 27-year-old studying to be a physician’s assistant in West Hartford, Connecticut, said she’s often frustrated over the waits to get served at restaurants and stores. She recalled a recent restaurant experience where it took a long time just to get some water; at a local clothing store, she spent 30 minutes in line to buy an item because of staffing shortages.
But for every frustrated customer, there is a frustrated worker. Artavia Milliam, 39, of Brooklyn, New York, is a visual merchandiser at H&M in Times Square. She said she spends more of her time helping out on the sales floor than updating the mannequins because of the shortage of staff.
“It can get overwhelming,” she said. “Everyday, I encounter someone who is rude.”
Associated Press Business Writer Haleluya Hadero in New York contributed to this report.
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Lawmakers to hold FTX hearing despite former CEO arrest
NEW YORK (AP) — The House Financial Services Committee plans to hold a hearing into the collapse of crypto exchange FTX on Tuesday, but its star witness will be missing.
Sam Bankman-Fried was scheduled to testify in front of the House Financial Services Committee, along with the company’s current CEO, John Ray III. However Bankman-Fried was arrested in the Bahamas late Monday, and U.S. authorities said they plan to unseal charges against him on Tuesday.
FTX filed for bankruptcy on Nov. 11, when the firm ran out of money after the cryptocurrency equivalent of a bank run. The collapse of crypto’s second-largest exchange has garnered worldwide attention, and Bankman-Fried is now facing charges by U.S. authorities and likely Bahamian authorities as well.
Rep. Maxine Waters, D-Calif. and chairwoman of the financial services committee, said while she understands that Bankman-Fried must be held accountable, she is “disappointed” that the arrest happened before he got to testify.
“Although Mr. Bankman-Fried must be held accountable, the American public deserves to hear directly from Mr. Bankman-Fried about the actions that’ve harmed over one million people, and wiped out the hard-earned life savings of so many,” Waters said in a statement Monday evening.
Bankman-Fried became prominent in Washington and donated millions of dollars toward mostly left-leaning political causes and Democrat political campaigns, and was hailed as the new face of the crypto industry. He previously testified in favor of certain bills that would regulate the crypto industry in ways that favored FTX.
A handful of members of the Financial Services Committee have previously taken political donations from FTX or Bankman-Fried, including Rep. Josh Gottheimer, D-N.J. and Rep. Ritchie Torres, D-N.Y.
Bankman-Fried has, more or less, remained in his Bahamian luxury compound in Nassau.
This will be the first public appearance by Ray since FTX’s collapse. Before FTX, the restructuring expert was best known for having to clean up the mess at Enron roughly 20 years ago. Ray has said in court filings that the financial conditions at FTX were worse than at Enron, and that he has no confidence in FTX’s bookkeeping before he took over the firm.
“FTX Group’s collapse appears to stem from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems or controls that are necessary for a company that is entrusted with other people’s money or assets,” Ray said in his prepared remarks for Tuesday’s hearing.
Amgen to buy Horizon Therapeutics in $26.4B deal
Amgen is spending more than $26 billion to dive deeper into rare disease treatments with a deal for drugmaker Horizon Therapeutics.
The biotech drug developer said Monday that it will pay $116.50 in cash for each share of Horizon, which makes a thyroid eye disease treatment that generated more than $1 billion in its first full year on the market.
The deal offers Amgen another chance to build its portfolio of rare-disease treatments after it closed in October a roughly $3.7 billion acquisition of ChemoCentryx, which focuses on autoimmune disease drugs.
Horizon Therapeutics PLC, based in Dublin, Ireland, develops potential treatments for rare, autoimmune and severe inflammatory diseases. Its best-seller, Tepezza, is only approved in the United States and treats eye bulging and double vision from thyroid eye disease.
U.S. regulators approved Tepezza in early 2020 as the first treatment for thyroid eye disease. The drug’s sales more than doubled last year to $1.67 billion. That’s about half of the company’s total sales of $3.23 billion.
Amgen leaders told analysts on a Monday morning conference call that they intend to expand the drug’s use globally. Scientists also are working to develop and easier-to-use injectable version of the drug, which is given by IV.
Amgen Chairman and CEO Robert Bradway said the deal gives his company a “strong platform” to expand into rare disease treatments, with many Horizon drugs still early in their life cycle.
Horizon also makes Krystexxa for uncontrolled gout. Sales of that treatment grew 39% last year to $565.5 million. Amgen officials said they expect their company’s long-standing history of working with rheumatologists will help that treatment’s sales grow.
Horizon also has a pipeline of additional potential treatments in mid-stage clinical testing and a possible therapy for the autoimmune disease myasthenia gravis in late-stage testing.
Amgen is facing competition for some of its key products like its autoimmune disease treatment Enbrel, so a Horizon takeover makes strategic sense, Mizuho Securities USA analyst Salim Syed said in a research note. He also said Horizon’s presence in Ireland, which has lower corporate tax rates than the United States, could help Amgen cut its tax bill.
Horizon said late last month that it had started “highly preliminary discussions” about an acquisition with three potential suitors: Amgen, the French drugmaker Sanofi, and Johnson & Johnson’s Janssen division.
Amgen had confirmed discussions were taking place and said that any offer it made for Horizon likely would be in cash.
The deal laid out Monday represents a premium of 48% to Horizon’s closing price of $78.76 before it made that late-November announcement.
Amgen said it expects the deal, which has an enterprise value of about $28.3 billion, to close in the first half of next year.
Horizon’s stock price jumped more than 14% after markets opened Monday. They had already soared about 30% since the late November announcement.
Shares of Amgen Inc., based northwest of Los Angeles in Thousand Oaks, California, fell about 1%, while broader indexes climbed slightly.
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EPA: US fuel economy flat in 2021, emissions down slightly
DETROIT (AP) — Fuel economy for 2021 model year vehicles in the U.S. stayed flat with 2020 as people continued to buy less-efficient trucks and SUVs, according to an annual government report published Monday.
The fleet of new vehicles got 25.4 miles per gallon (10.8 kilometers per liter) for the model year, while greenhouse gas emissions dropped by 2 grams per mile to a record low of 347, the Environmental Protection Agency said in its annual Automotive Trends Report. The 2021 fuel economy figure ties a record set in model year 2020.
The performance came under fuel economy and emissions standards that were relaxed when Donald Trump was president. Requirements will start to increase at a higher rate in 2026 under standards adopted by the Biden administration.
The EPA said in a statement that all vehicle types are at record low carbon dioxide emissions, but “the market shift away from cars and toward sport utility vehicles and pickups has offset some of the fleetwide benefits.”
In the 2021 model year, cars and station wagons, the most efficient vehicles, fell to 26% of U.S. new vehicle production, well below the 50% market share as recently as 2013, the EPA said. SUVs were a record 45% of new vehicle sales for the 2021 model year, while pickup trucks hit 16%.
Stellantis, the former Fiat Chrysler, had the lowest fuel economy and the highest emissions of all manufacturers at 21.3 mpg (9.1 kilometers per liter) and 417 grams per mile of carbon dioxide. Tesla, which makes only electric vehicles, had the highest mileage equivalent at 121.5 mpg (51.7 kilometers per liter), and zero carbon dioxide emissions.
Nine manufacturers were above their EPA carbon dioxide emissions standard: BMW, Volkswagen, Kia, Nissan, Hyundai, General Motors, Mazda, Stellantis and Mercedes. Five were below their standards, meaning they emitted less than allowed: Tesla, Subaru, Ford, Honda and Toyota. Automakers can meet the standards with credits they accrued or bought from other manufacturers.
Stellantis said its showing doesn’t reflect its current or future products, saying it has since introduced a new Jeep that’s the best selling plug-in hybrid in the U.S. The company says it plans to bring 25 battery-electric models to the U.S. by 2030.
The EPA said that since the 2004 model year, average fuel economy in the U.S. is up 6.1 miles per gallon (2.6 kilometers per liter), or 32%.
It said that gas-electric hybrid production reached a new high of 9% of all vehicles in the 2021 model year. while electric, plug-in hybrid and fuel cell vehicles were 4% of nationwide production.
“Today’s report demonstrates the significant progress we’ve made to ensure clean air for all as automakers continue to innovate and utilize more advanced technologies to cut pollution,” EPA Administrator Michael Regan said in a statement.
But Dan Becker, director of the Center for Biological Diversity’s Safe Climate Campaign, said automakers deserve an “F” grade for the small drop in emissions and for selling so few electric vehicles.
“Automakers won’t slash pollution and improve gas mileage unless strong standards make them do so,” he said in a statement.
Preliminary data for the 2022 model year show mileage rising to 26.4 mpg (11.2 kilometers per liter) and carbon dioxide emissions falling to 331 grams per mile.
EXPLAINER: Why fusion could be a clean-energy breakthrough
The major advance in fusion research announced in Washington on Tuesday was decades in coming, with scientists for the first time able to engineer a reaction that produced more power than was used to ignite it.
Using powerful lasers to focus enormous energy on a miniature capsule half the size of a BB, scientists at the Lawrence Livermore National Laboratory in California started a reaction that produced about 1.5 times more energy than was contained in the light used to produce it.
There are decades more to wait before fusion could one day — maybe — be used to produce electricity in the real world. But the promise of fusion is enticing. If harnessed, it could produce nearly limitless, carbon-free energy to supply humanity’s electricity needs without raising global temperatures and worsening climate change.
At the press conference in Washington, the scientists celebrated.
“So, this is pretty cool,” said Marvin “Marv” Adams, the National Nuclear Security Administration deputy administrator for defense programs.
“Fusion fuel in the capsule got squeezed, fusion reactions started. This had all happened before – 100 times before – but last week for the first time they designed this experiment so that the fusion fuel stayed hot enough, dense enough and round enough for long enough that it ignited,” said Adams. “And it produced more energy than the lasers had deposited.”
Here’s a look at exactly what nuclear fusion is, and some of the difficulties in turning it into the cheap and carbon-free energy source that scientists hope it can be.
WHAT IS NUCLEAR FUSION?
Look up, and it’s happening right above you — nuclear fusion reactions power the sun and other stars.
The reaction happens when two light nuclei merge to form a single heavier nucleus. Because the total mass of that single nucleus is less than the mass of the two original nuclei, the leftover mass is energy that is released in the process, according to the Department of Energy.
In the case of the sun, its intense heat — millions of degrees Celsius — and the pressure exerted by its gravity allow atoms that would otherwise repel each other to fuse.
Scientists have long understood how nuclear fusion has worked and have been trying to duplicate the process on Earth as far back as the 1930s. Current efforts focus on fusing a pair of hydrogen isotopes — deuterium and tritium — according to the Department of Energy, which says that particular combination releases “much more energy than most fusion reactions” and requires less heat to do so.
HOW VALUABLE COULD THIS BE?
Daniel Kammen, a professor of energy and society at the University of California at Berkeley, said nuclear fusion offers the possibility of “basically unlimited” fuel if the technology can be made commercially viable. The elements needed are available in seawater.
It’s also a process that doesn’t produce the radioactive waste of nuclear fission, Kammen said.
Crossing the line of net energy gain marks a major achievement, said Carolyn Kuranz, a University of Michigan professor and experimental plasma physicist.
“Of course, now people are thinking, well, how do we go to 10 times more or 100 times more? There’s always some next step,” Kuranz said. “But I think that’s a clear line of, yes, we have achieved ignition in the laboratory.”
HOW ARE SCIENTISTS TRYING TO DO THIS?
One way scientists have tried to recreate nuclear fusion involves what’s called a tokamak — a doughnut-shaped vacuum chamber that uses powerful magnets to turn fuel into a superheated plasma (between 150 million and 300 million degrees Celsius) where fusion may occur.
The Livermore lab uses a different technique, with researchers firing a 192-beam laser at a small capsule filled with deuterium-tritium fuel. The lab reported that an August 2021 test produced 1.35 megajoules of fusion energy — about 70% of the energy fired at the target. The lab said several subsequent experiments showed declining results, but researchers believed they had identified ways to improve the quality of the fuel capsule and the lasers’ symmetry.
WHY IS FUSION SO HARD?
It takes more than extreme heat and pressure. It also takes precision. The energy from the lasers must be applied precisely to counteract the outward force of the fusion fuel, according to Stephanie Diem, an engineering physics professor at the University of Wisconsin–Madison.
And that’s just to prove net energy gain is possible. It’s even harder to produce electricity in a power plant.
For example, the lab’s lasers can only fire a few times a day. To viably produce energy, they would need to fire rapidly and capsules would need to be inserted multiple times a minute, or even faster, Kuranz said.
Another challenge is to increase efficiency, said Jeremy Chittenden, a professor at Imperial College in London specializing in plasma physics. The lasers used at Livermore require a lot of electrical energy, and researchers need to figure out a way to reproduce their results in a much more cost-effective way, he said.
Associated Press reporter Maddie Burakoff contributed to this report.
Associated Press climate and environmental coverage receives support from several private foundations. See more about AP’s climate initiative here. The AP is solely responsible for all content.
Twitter relaunching subscriber service after debacle
NEW YORK (AP) — Twitter is once again attempting to launch its premium service, a month after a previous attempt failed.
The social media platform said it would let users buy subscriptions to Twitter Blue to get a blue check mark and access special features starting Monday.
The company owned by billionaire Elon Musk has also started granting a new gold-colored check mark to businesses on the platform. The gold label began appearing Monday on the account profiles for Coca-Cola, Nike, Google and dozens of other big corporations.
“The gold checkmark indicates that the account is an official business account through Twitter Blue for Business,” the company says on a support web page.
Twitter’s blue check mark was originally given to companies, celebrities, government entities and journalists verified by the platform. After Musk bought Twitter for $44 billion in October, he launched a service granting blue checks to anyone willing to pay $8 a month. But it was inundated by imposter accounts, including those impersonating Nintendo, pharmaceutical company Eli Lilly and Musk’s businesses Tesla and SpaceX, so Twitter suspended the service days after its launch.
The relaunched service will cost $8 a month for web users and $11 a month for iPhone and iPad users. San Francisco-based Twitter says subscribers will see fewer ads, be able to post longer videos and have their tweets featured more prominently. Twitter’s website doesn’t say if business accounts must pay extra for the gold label or if it is granted automatically.
A slowdown in US inflation eases some pressure on households
WASHINGTON (AP) — Inflation in the United States slowed again last month in the latest sign that price increases are cooling despite the pressures they continue to inflict on American households.
Consumer prices rose 7.1% in November from a year ago, the government said Tuesday. That was down sharply from 7.7% in October and a recent peak of 9.1% in June. It was the fifth straight decline.
Measured from month to month, which gives a more up-to-date snapshot, the consumer price index inched up just 0.1%. And so-called core inflation, which excludes volatile food and energy costs and which the Federal Reserve tracks closely, slowed to 6% compared with a year earlier. From October to November, core prices rose 0.2% — the mildest increase since August 2021.
All told, the latest figures provided the strongest evidence to date that inflation in the United States is steadily slowing from the price acceleration that first struck about 18 months ago and reached a four-decade high earlier this year.
Gas prices have tumbled from their summer peak. The costs of used cars, health care, airline fares and hotel rooms also dropped in November. So did furniture and electricity prices. Housing costs jumped, though much of that data doesn’t yet reflect real-time measures that show declines in home prices and apartment rents.
Grocery prices remain a trouble spot. They surged 0.5% from October to November and are up 12% compared with a year ago.
Those price spikes have left many Americans struggling to afford food. In Phoenix, there are long lines at St. Mary’s Food Bank, which provided Thanksgiving meals to a record 19,000 families across Arizona last month.
“They’re eating snacks and granola all day long,” Rosa Davila, an unemployed single mother, said of her three teenagers while waiting in line for a package Tuesday. “The food bank really resolves things for us.”
Alma Quintera, also waiting in her car, said that even with her husband working full time as a house painter, they have to visit the food bank two or three times a month to adequately feed their three school-age children.
“The high prices have really affected us — the rent, the bills and especially the food,” she said.
Jerry Brown, a spokesman for St. Mary’s, said the food bank’s main Phoenix location last week distributed packages to 4,717 families, up 63% from the same week a year ago.
Economists say the latest inflation figures, though, suggest the likelihood of some relief in the coming months.
“Inflation was terrible in 2022, but the outlook for 2023 is much better,” said Bill Adams, chief economist for Comerica Bank. “Supply chains are working better, business inventories are higher, ending most of the shortages that fueled inflation in 2020.”
President Joe Biden called the inflation report “welcome news for families across the country” and noted that lower auto and toy prices should benefit holiday shoppers. Still, Biden acknowledged that inflation might not return to “normal levels” until the end of next year.
One sign of progress in November’s figures was that prices for new cars didn’t budge from October. On average, new cars are still 7.2% costlier than they were a year ago. But that’s down from a 13.2% year-over-year jump in April, which was the highest on records dating to 1953.
The decline in new-car prices helps illustrate how supply chain snarls, which have unwound for most goods, are also easing for semiconductors and other key automotive parts. Economists say this should enable automakers to boost production and give buyers an expanded supply of vehicles.
It also suggests that the Fed’s aggressive interest rate hikes, which have made it more expensive to borrow for homes, cars and on credit cards, have begun to slow demand and limit the ability of auto dealers to charge more.
Wall Street welcomed the better-than-expected inflation data as providing further support for the Fed to slow and potentially pause its rate hikes by early next year.
On Wednesday, the Fed is widely expected to raise its benchmark rate by a half-point, its seventh hike this year. The move would follow four three-quarter-point hikes in a row. A half-point increase would put the Fed’s key short-term rate in a range of 4.25% to 4.5%, the highest in 15 years.
The increase will further raise loan rates for consumers and businesses. Economists have warned that in continuing to tighten credit to fight inflation, the Fed is likely to cause a recession next year.
“There’s growing evidence that the worst of the inflation scare may be in the rearview mirror,” said Jim Baird, an economist at Plante Moran Financial Advisers. “On the horizon is the potential for a recession — the next hazard in the road that policymakers will need to navigate the economy around or potentially through.”
Fed Chair Jerome Powell has said he is tracking price trends in three separate categories to best understand the likely path of inflation: Goods, excluding volatile food and energy costs; housing, which includes rents and the cost of homeownership; and services excluding housing, such as auto insurance, pet services and education.
In a speech two weeks ago in Washington, Powell noted that there had been some progress in easing inflation in goods and housing but not so in most services. Some of those trends extended into last month’s data, with goods prices, excluding food and energy, falling 0.5% from October to November, the second straight monthly drop.
Housing costs, which make up nearly a third of the consumer price index, are still rising. But real-time measures of apartment rents and home prices are starting to drop after having posted sizzling price acceleration at the height of the pandemic. Powell said those declines will likely emerge in government data next year and should help reduce overall inflation.
As a result, Powell’s biggest focus has been on services, which he said are likely to stay persistently high. In part, that’s because sharp increases in wages are becoming a key contributor to inflation. Services companies, like hotels and restaurants, are particularly labor-intensive. And with average wages growing at a brisk 5%-6% a year, price pressures keep building in that sector of the economy.
Services businesses tend to pass on some of their higher labor costs to their customers by charging more, thereby perpetuating inflation. Higher pay also fuels more consumer spending, which allows companies to raise prices.
Prices for many services kept rising in November. Dental care jumped 1.1% just from October and is 6.4% costlier than it was a year ago. Restaurant prices rose 0.5%. They’re 8.5% higher than a year earlier.
Auto insurance prices jumped 0.9% in November and are 13.4% more expensive than a year earlier. The average cost of an auto repair rose 1.3% last month and 11.7% over the past year.
Yet even in services, excluding housing, there were some signs of cooling prices. The cost of car rentals, airline fares and hotel prices, for example, all dropped in November.
Overall, a measure that approximates services excluding rent was unchanged in November, after having dipped 0.1% in October. That measure had soared 1.1% in both April and June this year.
AP Writers Josh Boak in Washington and Anita Snow in Phoenix contributed to this report.
FTX founder charged in scheme to defraud crypto investors
NEW YORK (AP) — The U.S. government charged Samuel Bankman-Fried, the founder and former CEO of cryptocurrency exchange FTX, with a host of financial crimes on Tuesday, alleging he intentionally deceived customers and investors to enrich himself and others, while playing a central role in the company’s multibillion-dollar collapse.
Federal prosecutors said Bankman-Fried devised “a scheme and artifice to defraud” FTX’s customers and investors beginning in 2019, the year it was founded. He illegally diverted their money to cover expenses, debts and risky trades at the crypto hedge fund he started in 2017, Alameda Research, and to make lavish real estate purchases and large political donations, prosecutors said in a 13-page indictment.
Bankman-Fried, 30, was arrested Monday in the Bahamas at the request of the U.S. government, and remains in custody after being denied bail.
He has been charged with eight criminal violations, ranging from wire fraud to money laundering to conspiracy to commit fraud. If convicted of all the charges, Bankman-Fried — referred to by crypto enthusiasts as “SBF” — could face decades in jail.
At a news conference on Tuesday, U.S. Attorney Damian Williams in New York called it “one of the biggest frauds in American history,” and said the investigation is ongoing and fast-moving.
Bankman-Fried has fallen hard and fast from the top of the cryptocurrency industry he helped to evangelize. FTX filed for bankruptcy on Nov. 11, when it ran out of money after the cryptocurrency equivalent of a bank run.
Before the bankruptcy, he was considered by many in Washington and on Wall Street as a wunderkind of digital currencies, someone who could help take them mainstream, in part by working with policymakers to bring more oversight and trust to the industry.
Bankman-Fried had been worth tens of billions of dollars — at least on paper — and was able to attract celebrities like Tom Brady or former politicians like Tony Blair and Bill Clinton to his conferences at luxury resorts in the Bahamas. One prominent Silicon Valley firm, Sequoia Capital, invested hundreds of millions of dollars in FTX.
Sporting shorts and t-shirts to contrast himself with the buttoned-down world of Wall Street, he was the subject of fawning media profiles, a vocal advocate for a type of charitable giving known as “effective altruism,” and garnered millions of Twitter followers.
But since FTX’s implosion, Bankman-Fried and his company have been likened to other disgraced financiers and companies, such as Bernie Madoff and Enron.
The criminal indictment against Bankman-Fried and “others” at FTX is on top of civil charges announced Tuesday by the Securities and Exchange Commission and the Commodity Futures Trading Commission. The SEC alleges Bankman-Fried defrauded FTX customers by making loans to himself and other FTX executives, and illegally using investors’ money to buy real estate for himself and his family.
No other FTX executives were named in the indictment, nor was the CEO of Alameda Research, Caroline Ellison. Also not named in the indictment: Bankman-Fried’s father, Joseph Bankman, a Stanford University law professor who was considered an adviser to his son.
U.S. authorities said they will try to claw back any of Bankman-Fried’s financial gains from the alleged scheme.
A lawyer for Bankman-Fried, Mark S. Cohen, said Tuesday he is “reviewing the charges with his legal team and considering all of his legal options.”
At a congressional hearing Tuesday that was scheduled before Bankman-Fried’s arrest, the new CEO brought in to steer FTX through its bankruptcy proceedings leveled harsh criticism. He said there was scant oversight of customers’ money and “very few rules” about how their funds could be used.
John Ray III told members of the House Financial Services Committee that the collapse of FTX, resulting in the loss of more than $7 billion, was the culmination of months, or even years, of bad decisions and poor financial controls.
“This is not something that happened overnight or in a context of a week,” he said.
He added: “This is just plain, old-fashioned embezzlement, taking money from others and using it for your own purposes.”
Before his arrest, Bankman-Fried had been holed up in his luxury compound in the Bahamas. U.S. authorities are expected to request his extradition to the U.S.
Bankman-Fried was denied bail at a court hearing in the Bahamas on Tuesday after prosecutors argued he was a flight risk, according to Our News, a broadcast news company based there. He will remain in custody at the Bahamas department of corrections until Feb. 8, Our News reported.
Bankman-Fried’s was previously one of the world’s wealthiest people on paper; at one point his net worth reached $26.5 billion, according to Forbes. He was a prominent personality in Washington, donating millions of dollars to Democrats and Republicans. U.S. Attorney Williams said Tuesday that Bankman-Fried made “tens of millions of dollars” in illegal campaign donations.
His wealth unraveled quickly last month, when reports called into question the strength of FTX’s balance sheet. As customers sought to withdraw billions of dollars, FTX could not satisfy the requests: their money was gone.
“We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto,” said SEC Chair Gary Gensler.
The SEC complaint alleges that Bankman-Fried had raised more than $1.8 billion from investors since May 2019 by promoting FTX as a safe, responsible platform for trading crypto assets.
Instead, the complaint says, Bankman-Fried diverted customers’ funds to Alameda Research without telling them.
“He then used Alameda as his personal piggy bank to buy luxury condominiums, support political campaigns, and make private investments, among other uses,” the complaint reads.
In the weeks after FTX’s collapse, but before his arrest, Bankman-Fried gave interviews to several news organizations in which he grasped for ways to explain what happened.
For example, Bankman-Fried said he did not “knowingly” misuse customers’ funds, and that he believes angry customers will eventually get their money back.
At Tuesday’s congressional hearing, the new FTX CEO bluntly disputed those assertions: “We will never get all these assets back,” Ray said.
Jack Sharman, an attorney at Lightfoot, Franklin & White, said Bankman-Fried’s recent comments to the media could be damaging, admissible evidence in court. “Those statements in that speaking tour were in no way helpful to his cause,” Sharman said.
In its complaint, the SEC challenged Bankman-Fried’s recent statements that FTX and its customers were victims of a sudden market collapse that overwhelmed safeguards that had been in place.
“FTX operated behind a veneer of legitimacy,” said Gurbir Grewal, director of the SEC’s enforcement division. “That veneer wasn’t just thin, it was fraudulent.”
The collapse of FTX — which followed other cryptocurrency debacles earlier this year — is adding urgency to efforts to regulate the industry.
Yesha Yadav, a law professor at Vanderbilt University who specializes in financial and securities regulation, said U.S. lawmakers and regulators have been too slow to act, but that is likely to change.
“Lawmakers are clearly under pressure to do something, given that so many people have lost their money,” she said.
Hussein contributed to this report from Washington.
New FTX CEO says lax oversight, bad decisions caused failure
WASHINGTON (AP) — Sam Bankman-Fried, founder and former CEO of the failed cryptocurrency exchange FTX, helped 1,500 Bahamian investors remove $100 million from their accounts while other customers around the world were locked out of the exchange, according to the company’s new CEO, who testified before a House committee Tuesday
FTX CEO John Ray III, who has guided dozens of companies, including Enron, through bankruptcy restructuring, called FTX’s collapse one of the worst business failures he has seen — a “paperless bankruptcy,” fueled by an “unprecedented lack of documentation.”
For nearly four hours, without a break, Ray told lawmakers about the lack of oversight and financial controls that he discovered since taking over FTX a month ago. He found a loan where Bankman-Fried was both the issuer and the recipient. There were expenses approved by emoji. FTX didn’t have accountants. For record-keeping, employees used QuickBooks, pre-packaged software typically used by small and medium-sized businesses, to manage FTX’s finances.
“Nothing against QuickBooks,” Ray said. “It’s a very nice tool, just not for a multibillion-dollar company.”
At its peak, FTX’s market value topped $30 billion.
Notably absent from the hearing before the House Financial Services Committee was Bankman-Fried, who was arrested in the Bahamas just hours before he was scheduled to testify. The arrest was made at the request of the U.S. government, which on Tuesday announced criminal charges against Bankman-Fried including wire fraud and money laundering.
The timing of Bankman-Fried’s arrest frustrated many committee members. Republican Rep. William Timmons, of South Carolina, called the timing “bizarre” and added that, as a former prosecutor, he couldn’t imagine why any prosecutor wouldn’t want “hours of congressional grilling for the target of an investigation” to help make a case.
FTX filed for bankruptcy protection on Nov. 11, when the firm ran out of money after the cryptocurrency equivalent of a bank run. The collapse of crypto’s second-largest exchange has garnered worldwide attention, and prompted worries in the crypto industry that the pain could become widespread. Ray estimated that about $8 billion of customer funds are missing.
Some customers in the Bahamas, where FTX was based, were able to recover some money, Ray said. That’s because the Bahamian government and Bankman-Fried agreed to let them get their money out of FTX while customers in other countries were blocked from doing so, Ray said.
Ray, who took over FTX on Nov. 11, told the committee that the problems at FTX were a cumulation of months or even years of bad decisions and poor financial controls.
“This is not something that happened overnight or in a context of a week,” he said.
However, Ray didn’t answer numerous questions about what regulations could have stopped the collapse of FTX. Instead, he focused on how unusual FTX was — having no board of directors, having no real structure that prohibited money invested by consumers in FTX to be shifted to Bankman-Fried’s hedge fund Alameda Research for other investments or lavish purchases, without the original investors’ knowledge.
In his prepared remarks, Ray painted a picture of a company acting with little to no oversight.
“FTX Group’s collapse appears to stem from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems or controls that are necessary for a company that is entrusted with other people’s money or assets,” Ray said.
In interviews since FTX filed for bankruptcy protection, Bankman-Fried acknowledged that the company lacked proper financial controls and corporate governance, but denied any fraud had been committed.
U.S. prosecutors and financial regulators disagreed with that assessment. An indictment unsealed Tuesday charged Bankman-Fried with a host of financial crimes and campaign finance violations, alleging he played a central role in the rapid collapse of FTX and hid its problems from the public and investors. The Securities and Exchange Commission said Bankman-Fried illegally used investors’ money to buy real estate on behalf of himself and family.
Ray’s comments supported those allegations.
“This is just old fashion embezzlement, taking money from others and using it for your own purposes,” he said. “This is not sophisticated at all.”
A lawyer for Bankman-Fried, Mark S. Cohen, said Tuesday he is “reviewing the charges with his legal team and considering all of his legal options.”
Reporter Ken Sweet contributed.
Lawmakers announce ‘framework’ on bill to keep gov’t open
WASHINGTON (AP) — Lawmakers leading the negotiations on a bill to fund the federal government for the current fiscal year announced late Tuesday they’ve reached agreement on a “framework” that should allow them to complete work on the bill over the next week and avoid a government shutdown.
Congress faces a midnight Friday deadline to pass a spending bill to prevent a partial government shutdown. The two chambers are expected to pass another short-term measure before then to keep the government running through Dec. 23, which will allow negotiators time to complete work on the full-year bill.
“Now, the House and Senate Appropriations Committees will work around the clock to negotiate the details of final 2023 spending bills that can be supported by the House and Senate and receive President Biden’s signature,” said Rep. Rosa DeLauro of Connecticut, the Democratic chair of the House Appropriations Committee.
Earlier in the day, Senate leaders said lawmakers from the two parties were nearing an agreement, but Republicans warned Democrats that lawmakers would need to complete their work by Dec. 22 or they would only support a short-term extension into early next year. That would give House Republicans more leverage over what’s in the legislation, since they will be in the majority then.
“We intend to be on the road going home on the 23rd. We intend not to be back here between Christmas and New Year’s, and if we can’t meet that deadline, we would be happy to pass a short-term (resolution) into early next year,” said Sen. Mitch McConnell of Kentucky, the Republican leader in the Senate.
McConnell voiced confidence Republicans would be able to meet their priorities of increasing spending on defense without “having to pay a bonus above what President Biden asked for” on non-defense priorities. He said Democrats were willing to accept that because they had previously passed two bills on a party-line basis that allow for more government spending on various domestic priorities.
Sen. Richard Shelby, R-Ala., said last week that the two parties were about $25 billion apart in what is expected to be about a $1.65 trillion package, not including mandatory spending on programs such as Social Security and Medicare. However, Democrats in their statements did not indicate what topline spending number had been reached in the framework announced Tuesday.
Asian shares track Wall St gains on cooler inflation data
BANGKOK (AP) — Stocks rose Wednesday in Asia after a rally on Wall Street spurred by news that inflation in the U.S. cooled more than expected last month.
The 7.1% consumer price index reading for November raised hopes Tuesday for easing pressure on the economy ahead of an interest rate policy update from the U.S. Federal Reserve.
The Fed is widely expected to raise its benchmark rate a half-point Wednesday, smaller than the past four hikes of three-quarters of a point.
Also Wednesday, the Bank of Japan’s quarterly “tankan” survey showed a deterioration in business conditions for major Japanese manufacturers, reflecting higher costs for industrial inputs and energy and weaker demand as the Fed and other central banks raise interest rates to tame inflation.
The headline index for large manufacturers was 7, down from 8 in the previous quarter and the fourth straight quarter of declines. The tankan measures corporate sentiment by subtracting the number of companies saying business conditions are negative from those responding they are positive.
Conditions for nonmanufacturers, such as service industries, rose to 19 from 14, as Japan lifted pandemic precautions and reopened to foreign tourists.
“Today’s Tankan survey suggests that while the services sector is going from strength to strength, the outlook for the manufacturing sector continues to worsen,” Darren Tay of Capital Economics said in a commentary. He noted that capital spending projections also weakened slightly.
Tokyo’s Nikkei 225 advanced 0.8% to 28,178.55 and the Hang Seng in Hong Kong added 0.7% to 19,730.48. South Korea’s Kospi was up 0.8% to 2,392.11.
The Shanghai Composite index edged 0.1% higher to 3,180.59.
In Australia, the S&P/ASX 200 gained 0.6% to 7,243.40.
On Tuesday, the S&P 500 rose 0.7% to 4,019.65 and the Nasdaq composite gained 1% to 11,256.81. The Dow Jones Industrial Average picked up 0.3% to 34,108.64.
Small company stocks also gained ground. The Russell 2000 index rose 0.8% to 1,832.36.
Stocks pared back gains as analysts cautioned investors not to get carried away by hopes for an easier Fed, as they have in the past.
The detail of the inflation data “under the hood being less encouraging than it is on the surface,” Mizuho Bank economists said in a report. They noted that core services prices were up 0.4% from a month earlier, distorting inflation risks.
“To be precise , the headline understates underlying inflation risks that concern the Fed,” the report said.
Tuesday’s report offered hope that the worst of inflation really did pass during the summer, though inflation remains painfully high and shoppers are paying prices well above levels from a year earlier.
A Fed rate hike of 0.50 percentage points would usually be a big deal because it’s double the typical move. But with inflation coming off its worst level in generations, it would be a step down from the four hikes of 0.75 percentage points the Fed has approved since the summer.
Some of Wall Street’s wildest action Tuesday was in the bond market, where yields fell sharply immediately after the inflation report’s release.
The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, fell to 3.50% from 3.62% late Monday. The two-year yield, which more closely tracks expectations for the Fed, dropped to 4.22% from 4.39%.
Other central banks around the world, including the European Central Bank, are also likely to raise their own rates by half a percentage point this week.
Even if inflation is finally abating, the global economy still is threatened by rate increases already pushed through. The housing industry and other businesses that rely on low interest rates have shown particular weakness, and worries are rising about the strength of corporate profits broadly.
In other trading, U.S. benchmark crude lost 19 cents to $75.20 per barrel in electronic trading on the New York Mercantile Exchange. It jumped $2.22 on Tuesday to $75.39 per barrel.
Brent crude, the pricing basis for international trading, shed 23 cents to $80.45 per barrel.
The dollar slipped to 135.52 Japanese yen from 135.59 yen. The euro fell to $1.0624 from $1.0633.
AP Business Writers Damian J. Troise, Alex Veiga and Stan Choe contributed.
US study: Over half of car crash victims had drugs in system
DETROIT (AP) — A large study by U.S. highway safety regulators found that more than half the people injured or killed in traffic crashes had one or more drugs, or alcohol, in their bloodstreams.
Also, just over 54% of injured drivers had drugs or alcohol in their systems, with tetrahydrocannabinol (THC), an active ingredient in marijuana, the most prevalent, followed by alcohol, the study published Tuesday by the National Highway Traffic Safety Administration found.
Although the study authors say the results can’t be used to gauge drug use on the roads nationwide, they say the high number of drivers, passengers and other road users with drugs in their systems is concerning.
Acting NHTSA Administrator Ann Carlson said the study found that nearly 20% of the drivers tested had blood-alcohol levels of 0.08% or higher, exceeding the legal limit in every state.
“We also are concerned that nearly 20% of road users tested positive for two or more drugs, including alcohol,” she said. “The use of multiple substances at once can magnify the impairing effects of each drug.”
The study of blood tests taken at seven level-one trauma centers and four medical examiners’ offices across the country comes at a critical time on U.S. roadways. Traffic deaths have risen dramatically since the start of the pandemic to what officials describe as crisis levels. And more states are legalizing recreational use of marijuana with research just starting about the impact on traffic safety.
“It’s scary to all of us in a way,” said Michael Brooks, executive director of the nonprofit Center for Auto Safety, a watchdog group. “But frankly, I don’t think I’m that surprised.”
Brooks, who is based in Washington, D.C., said he often sees people drive after drinking or smoking cannabis.
“There’s not a commute that goes by that I don’t smell marijuana on the road, from someone actively smoking in a car in front of me,” he said.
The study took place between September of 2019 and July of 2021 at trauma centers in Miami and Jacksonville, Florida; Charlotte, North Carolina; Baltimore; Worcester, Massachusetts; Iowa City, Iowa; and Sacramento, California. Medical examiners at four of the sites also took part.
The study, which took blood-test data from 7,279 road users, also found that more than half of injured pedestrians and just over 43% of injured bicyclists had a drug in their bloodstreams.
Of the total number of patients, 25.1% tested positive for THC, 23.1% for alcohol, 10.8% for stimulants and 9.3% for opioids, according to the study.
The study was set up to measure prevalence of drug and alcohol use, but the numbers can’t be used to show drug use on the roads nationwide because the hospitals were not picked to represent the entire country, said Amy Berning, a NHTSA research psychologist and one of the study authors.
The study also can’t be used to show a correlation between increasing numbers of highway deaths and drug use, although she said detecting such a high percentage of use with a large sample size is “a concern for NHTSA.”
Researchers counted any level of drugs in blood samples and did not measure whether people were impaired, Berning said. It likely will use the data as a baseline for further study of the issue, she said. NHTSA is planning a national roadside survey to measure alcohol and drug use on the roads. It last did such a survey in 2013 and 2014.
The presence of THC in so many patients could be because it can stay in a bloodstream longer than alcohol or other drugs, Berning noted.
The study was released as NHTSA began its annual holiday season campaign against impaired driving.
“Making a plan for a safe, sober ride home is critical to saving lives this holiday season,” Carlson said.
Company starting to recover oil from Kansas pipeline spill
TOPEKA, Kan. (AP) — The company operating a pipeline that spilled about 14,000 bathtubs’ worth of oil into a Kansas creek during a test for potential problems is recovering at least a small portion of the crude.
The U.S. Environmental Protection Agency said Tuesday that Canada-based TC Energy has recovered 2,598 barrels of oil mixed with water from the 14,000-barrel spill on a creek running through rural pastureland in Washington County, Kansas, about 150 miles (240 kilometers) northwest of Kansas City. Each barrel is enough to fill a household bathtub.
Last week’s rupture in Kansas forced the company to shut down the Keystone system, and it hasn’t said when it will come back online. The company said it is working around-the-clock to suck up spilled oil using trucks equipped with what essentially are large wet vacuums.
No one was evacuated, and officials said no drinking water was affected. The company has promised to fully comply with demands from regulators and to work until it has “fully remediated the site.”
Concerns that spills could pollute waterways spurred opposition to plans by TC Energy to build another crude oil pipeline in the same system, the 1,200-mile (1,900-kilometer) Keystone XL, across Montana, South Dakota and Nebraska. President Joe Biden’s cancelation of a permit for the project led the company to pull the plug last year.
Last week’s spill was the largest on the Keystone system since it began operating in 2010 and the largest onshore spill since a Tesoro Corp. pipeline rupture in North Dakota leaked 20,600 barrels in September 2013, according to U.S. Department of Transportation data. The agency’s pipeline safety arm last week ordered TC Energy to take corrective action.
The order said TC Energy was running an in-line inspection using a device inside the pipeline that was some 80 miles (129 kilometers) past where the pipeline ruptured. Such devices are designed to fit tightly inside and are known as “pigs” because early wooden ones squeaked as they went through.
Three university petroleum engineering instructors who reviewed the regulators’ order ahead of Associated Press interviews pointed out the testing, which federal guidelines call for doing at least once every five years.
“That timing is definitely suspicious,” said Jennifer Miskimins, head of the Colorado School of Mines’ petroleum energy department. “It is like blowing a pea through a pod.”
She along with instructors from the University of Tulsa and Pennsylvania State University said moving a pig through the pipe would have required additional pressure. But Bill Caram, executive director of the advocacy Pipeline Safety Trust, saw the timing of the two events as “a weird coincidence.”
Local farmer Bill Pannbacker said the rupture occurred on his land at a point after the pipe goes under a creek and starts to ascend an 80-foot (24-meter) hill. Mike Stafford, the University of Tulsa instructor, said such a location is typical of where pipes tend to fail. That’s because oil contains a little water that tends to separate, and when oil is carried up hills that water flows back down, causing corrosion.
While Sanjay Srinivasan, the Penn State professor, was skeptical that corrosion was to blame because it is a slow process, he took note of the failure occurring in a section with a lot of bends.
“It’s not unusual for those kinds of locations to go through some severe stress that can cause these things,” he said. ”If there is any weak spot, that’s when it’ll show up.”
TC Energy used booms, or barriers, to contain the oil in the creek and built two earthen dams to prevent it from moving into larger waterways.
The regulators’ order said TC Energy cannot restart operations for the 96-mile (155-kilometer) Keystone segment from Steele City, Nebraska, south to Hope, Kansas, without their permission. It also said the company must reduce the operating pressure by 20% inside that segment of the pipeline.
The company also must identify the cause of the spill and submit a plan for finding similar problems elsewhere and conducting additional tests by early March.
“They need to excavate the pipe in such a way that it’s preserved just for the investigation, for that root-cause analysis, and that takes probably the most time,” Caram said. “But the actual repair can be pretty quick.”
Hollingsworth reported from Kansas City, Mo.
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Fed raises key rate by half-point and signals more to come
WASHINGTON (AP) — The Federal Reserve reinforced its inflation fight Wednesday by raising its key interest rate for the seventh time this year and signaling more hikes to come. But it announced a smaller hike than it had in its past four meetings at a time when inflation is showing signs of easing.
The Fed made clear, in a statement and a news conference by Chair Jerome Powell, that it thinks sharply higher rates are still needed to fully tame the worst inflation bout to strike the economy in four decades.
The central bank boosted its benchmark rate a half-point to a range of 4.25% to 4.5%, its highest level in 15 years. Though lower than its previous three-quarter-point hikes, the latest move will further increase the costs of many consumer and business loans and the risk of a recession.
More surprisingly, the policymakers forecast that their key short-term rate will reach a range of 5% to 5.25% by the end of 2023. That suggests that the Fed is poised to raise its rate by an additional three-quarters of a point and leave it there through next year. Some economists had expected that the Fed would project only an additional half-point increase.
The latest rate hike was announced one day after an encouraging report showed that inflation in the United States slowed in November for a fifth straight month. The year-over-year increase of 7.1%, though still high, was sharply below a recent peak of 9.1% in June.
“The inflation data in October and November show a welcome reduction,” Powell said at his news conference. “But it will take substantially more evidence to give confidence that inflation is on a sustained downward path.”
In its updated forecasts, the Fed’s policymakers predicted slower growth and higher unemployment for next year and 2024. The unemployment rate is envisioned to jump to 4.6% by the end of 2023, from 3.7% today. That would mark a significant increase in joblessness that typically would reflect a recession.
Consistent with a sharp slowdown, the officials also projected that the economy will barely grow next year, expanding just 0.5%, less than half the forecast it had made in September.
“The Fed is not done — it sees a prolonged slowdown and a rise in unemployment as the only way to fully derail inflation,” Diane Swonk, chief economist at KPMG, said in a research note.
Though Powell said he thought the economy could still avoid a recession, the Fed’s economic forecasts show the policymakers expect job losses to result from its higher rates.
“They really need the unemployment rate to go higher and wages to start coming down,” said Subadra Rajappa, an investment strategist at Societe Generale. Powell has said that slower wage growth would reduce inflation pressures.
Powell said Wednesday, “I just don’t think anyone knows whether we’re going to have a recession or not. … I wish there were a completely painless way to restore price stability. There isn’t.”
In recent weeks, Fed officials have indicated that they see some evidence of progress in their drive to bring inflation back down to their 2% annual target. The national average for a gallon of regular gas, for example, has tumbled from $5 in June to $3.21.
Many supply chains are no longer clogged, thereby helping reduce goods prices. The better-than-expected November inflation data showed that the prices of used cars, furniture and toys all declined last month.
So did the costs of services from hotels to airfares to car rentals. Rental and home prices are falling, too, though those declines have yet to feed into the government’s data.
And one measure the Fed tracks closely — “core” prices, which exclude volatile food and energy costs for a clearer snapshot of underlying inflation — rose only slightly for a second straight month.
Inflation has also eased slightly in Europe and the United Kingdom, leading analysts to expect the European Central Bank and the Bank of England to slow their pace of rate hikes at their meetings Thursday. Both are expected to raise rates by half a point to target still painfully high prices spikes after big three-quarter-point increases.
Inflation in the 19 countries using the euro currency fell to 10% from 10.6% in October, the first decline since June 2021. The rate is so far above the bank’s 2% goal that rate hikes are expected to continue into next year. Britain’s inflation also eased from a 41-year record of 11.1% in October to a still-high 10.7% in November.
Many economists think the Fed will further downshift to a quarter-point rate hike when it next meets early next year. Asked about that Wednesday, Powell said he has yet to decide how large he thinks the next hike should be. But having raised rates so fast, he said, “we think the appropriate thing to do now is to move at a slower pace. That will allow us to feel our way.”
Powell downplayed any notion that the Fed might decide to reverse course next year and start cutting rates to support growth, as Wall Street investors are expecting.
“I wouldn’t see the committee cutting rates until we’re confident that inflation is moving down in a sustained way,” he said.
Cumulatively, the Fed’s hikes have led to much costlier borrowing rates for consumers as well as companies, ranging from mortgages to auto and business loans. They have sent home sales plummeting and are starting to weigh down rents on new apartments, a leading source of high inflation.
Fed officials have said they want rates to reach “restrictive” levels that slow growth and hiring and bring inflation down to their target range. Worries have grown that the Fed is raising rates so much in its drive to curb inflation that it will trigger a recession next year.
Powell’s biggest focus has been on services prices, which he has said are likely to stay persistently high. In part, that’s because sharp increases in wages are becoming a key contributor to inflation. Services companies, like hotels and restaurants, are particularly labor-intensive. And with average wages growing at a brisk 5%-6% a year, price pressures keep building in that sector of the economy.
With many service-sector employers still desperate for workers, Powell said pay growth may remain above what’s consistent with the Fed’s 2% inflation target.
“We have a long way to go,” the Fed chair said, “to get to price stability.”
AP Business Writer David McHugh contributed to this report from Frankfurt, Germany.
Company holiday parties are back — but with some restraint
NEW YORK (AP) — Say goodbye to virtual wine tastings, and bust out the karaoke. Love them or hate them, company holiday parties are back — in a toned-down kind of way.
After more than two years of working in pajama bottoms and clinking glasses over Zoom, many office workers seem to be yearning for a bit of glamour. The same is true for some front-line workers who saw festivities canceled even as they showed up to work every day during the depths of the COVID-19 pandemic.
“It just always makes me feel special,” said Shobha Surya, who missed treating herself to a new dress every year for the dinner and karaoke party thrown by Ajinomoto Health and Nutrition North America, a Japanese-owned company based in the Chicago area. She was so excited the party was back for the first time in two years that she picked out her black-and-white cocktail dress two months in advance.
“Everybody let loose,” she said, smiling the Monday after the party, where she accepted a recognition award for 15 years at the company. “It gets you into the holiday season.”
More than 57% of companies are planning in-person holiday celebrations this year, according to a survey of 252 U.S.-based companies conducted by Challenger, Gray & Christmas, a hiring firm. While that’s still notably fewer than the 75% that threw parties in 2019, it’s a big leap from 26% in 2021 and 5% in 2020.
Still, not everyone is ready to party like it’s 2019.
Many parties will be more intimate, as companies try to accommodate workers who are increasingly remote and far-flung. Some businesses are opting for spas, juggling shows and even private movie theater showings to lure out employees who have relished working from home. And a few are sticking to the bonuses or extra time off that they offered instead of parties during the pandemic.
Cari Snavely’s team of 20 opted for an afternoon of pickleball when her Boston-based software company gave them a budget to decide on their own how to celebrate.
It’s a far cry from the giant bashes she remembers from her days just a few years ago working at Coca-Cola Co. in Atlanta, but Snavely said it’s a better way to break the ice for people who haven’t worked together in person much. Besides, she said, many of her teammates wanted the chance to leave work and get home early.
“We really wanted to make sure that as many people as possible could go,” said Snavely, who works in finance. “People have home commitments, kids.”
Quickbase has 700 employees but many of them are remote — and as far away as Bulgaria — so it didn’t make sense to have a big party at headquarters, said Chief People Officer Sherri Kottmann. Instead, the company left it to individual teams to organize their own fun. Even in Boston, she said only 30% to 40% of employees come to the office in the middle of the week, when it’s busiest.
But one thing seems sure: People are fed up with getting on screens for cocktail mixing or secret Santa exchanges. Fewer than 2% of companies are hosting virtual celebrations this year, compared to 7% last year and 17% in 2020, Challenger’s survey found.
Jeff Consoletti, founder of Los Angeles event production company JJLA, said he has received zero requests this year for the gift boxes and cheese-and-wine pairing kits that helped keep his business afloat for the past two years. Instead, he has seen a 100% increase in bookings for in-person events, though they are much smaller than the 5,000-person revelries he often staged before the pandemic.
Ksenia Kulynych, director of operations at Monarch Rooftop & Indoor Lounge in New York, said she’s seen a more than 30% increase in small group reservations this year — and often, a drastic undercount or overcount of guests as planners struggle to gauge how deep the enthusiasm for parties goes. Lunches are surprisingly popular, and Fridays are out.
“We will pitch away on Fridays and the response is always, ‘no one’s in the office. It’s too hard to get anyone to come into the office. No one’s going to come into the city on a Friday,’” Kulynych said.
Even before the remote work revolution, some people were pushing back at the idea of “forced fun” at work, particularly in corporate cultures where heavy drinking is intertwined with networking.
Shwetha Pai, who works from home in Cincinnati for a small workplace analytics firm, said big holiday parties stir up memories of her early career days in investment banking, when her guard was always up at male-dominated nights out, and she often used her commute home as an excuse to leave early.
“People make bad decisions in those situations. They just do,” said Pai, 41, head of operations and marketing at Worklytics. “There is definitely this expectation that you take part in all of it because that’s part of ‘team bonding.’ But in fact, for women, it’s really fraught with a lot of challenges and risk.”
Bill MacQueen, 46, is far removed from big city nightlife as assistant director of commercialization at Ajinomoto’s manufacturing plant in Eddyville, Iowa. And he doesn’t drink.
But count him in for bingo.
MacQueen said his heart gave a “leap for joy that we were back to pre-COVID” when he got his bingo card at the entrance of Ajinomoto’s dinner party for its plant workers, an event he has cherished since he started working there 28 years ago, two days after graduating high school.
“It was just so nice to hear everyone in that hall talking and laughing, and people teasing each other,” MacQueen said. “And sounding cheesy, it was just kind of like a family reunion.”
Senate crypto hearing yields big claims, possible regulation
Whether increased regulation would have prevented the spectacular collapse of cryptocurrency exchange FTX was fiercely debated at a hearing of the Senate’s banking committee Wednesday. However, new legislation is potentially on the way.
Sen. Elizabeth Warren announced at the hearing bipartisan legislation aimed at cracking down on cryptocurrencies being used in money laundering. The legislation, co-sponsored by Republican Sen. Roger Marshall of Kansas, would require cryptocurrency exchanges to verify customer identities like banks and other financial institutions do.
“Crypto has become the preferred tool for terrorists, for ransomware gangs, for drug dealers and for rogue states that want to launder money,” said Warren, the Massachusetts Democrat, adding that “crypto doesn’t get a pass to help the world’s worst criminals – no matter how many television ads they run or how many political contributions they make.”
Republican Sen. Cynthia Lummis, of Wyoming, said she and Democratic Sen. Kirsten Gillibrand, of New York, would reintroduce their bipartisan legislation, the Responsible Financial Innovation Act, next year. That act would require disclosures and consumer protection obligations from cryptocurrency issuers.
Lummis, like several other Republicans on the banking committee, said the alleged financial crimes of former FTX CEO Sam Bankman-Fried should not be used to target cryptocurrency more generally.
“Let’s separate digital assets from corrupt organizations,” she said. “FTX is good old-fashioned fraud.”
However, Democratic Sen. Sherrod Brown, chairman of the Senate Committee on Banking, Housing and Urban Affairs, asked the hearing’s four witnesses – two crypto proponents and two critics – whether fraud was systemic at other firms in the industry. They all indicated that it was – one of the few points of agreement in the entire hearing.
Hilary J. Allen, professor of law at the American University Washington College of Law, testified that the current environment cryptocurrency operates in is highly conducive to fraud.
“Sam Bankman-Fried may have engaged in good old-fashioned embezzlement,” she said, “but the embezzlement was able to reach such a scale and go undetected for so long because it was crypto – shrouded in opacity, complexity, and mystique.”
Entrepreneur Kevin O’Leary, best known as Mr. Wonderful on the TV show “Shark Tank,” disagreed with the characterization, even though the $15 million he earned as a paid spokesman for FTX is now essentially worthless.
“I am of the opinion that crypto, blockchain technology and digital payment systems will be the 12th sector of the S&P within a decade,” he said, referring to the S&P 500, a well-known benchmark for stocks.
O’Leary also testified that Bankman-Fried told him that the collapse of FTX was due to its battle with crypto competitor Binance, which also held a stake in FTX.
“These two behemoths that owned the unregulated market together… were at war with each other,” O’Leary said. “And one put the other out of business.”
Federal prosecutors say Bankman-Fried defrauded FTX customers and investors starting in 2019 and illegally diverted their money to cover expenses, debts and risky trades at the crypto hedge fund he started in 2017, Alameda Research. Bankman-Fried, 30, was arrested Monday in the Bahamas at the request of the U.S. government, and remains in custody after being denied bail.
Pennsylvania Republican Sen. Pat Toomey, the ranking member of the banking committee, said FTX’s actions do not reflect the business of cryptocurrency as a whole.
“There’s nothing intrinsically good or evil about software – it’s about what people do with it,” he said. “Code committed no crime.”
However, actor and author Ben McKenzie Schenkkan, best known for his role as Jim Gordon on “Gotham,” said his research shows cryptocurrency is built on “misinformation, hype and fraud” and that the estimated 40 million Americans who have invested in it were lied to.
“In my opinion, the cryptocurrency industry represents the largest Ponzi scheme in history,” he said. “The fact that it has roped in tens of millions of Americans from all walks of life, as well as hundreds of millions of people worldwide, should be of concern to us all.”
Twitter changes rules over account tracking Elon Musk’s jet
Twitter on Wednesday suspended an account that used publicly available flight data to track Elon Musk’s private jet, despite a pledge by the social media platform’s new owner to keep it up because of his free speech principles.
Then, hours later, Musk brought back the jet-tracking account after imposing new conditions on all of Twitter’s users — no more sharing of anyone’s current location.
But shortly afterward, the account was suspended again. That came after Musk tweeted that a “crazy stalker” attacked a car in Los Angeles carrying his young son.
He also threatened legal action against Jack Sweeney, the 20-year-old college sophomore and programmer who started the @elonjet flight-tracking account, and “organizations who supported harm to my family.” It’s not clear what legal action Musk could take against Sweeney for an account that automatically posted public flight information.
Before Wednesday, the account had more than 526,000 followers.
“He said this is free speech and he’s doing the opposite,” Sweeney said in an interview with The Associated Press.
Sweeney said he woke up Wednesday to a flood of messages from people who saw that @elonjet was suspended and all its tweets had disappeared. Started in 2020 when Sweeney was a teenager, the account automatically posted the Gulfstream jet’s flights with a map and an estimate of the amount of jet fuel and carbon emissions it expended.
He logged into Twitter and saw a notice that the account was permanently suspended for breaking Twitter’s rules. But the note didn’t explain how it broke the rules.
Sweeney said he immediately filed an online form to appeal the suspension. Later, his personal account was also suspended, with a message saying it violated Twitter’s rules “against platform manipulation and spam.”
And then hours later, the flight-tracking account was back again, before it was shut down anew. Musk and Twitter’s policy team had sought to publicly explain Wednesday that Twitter now has new rules.
“Any account doxxing real-time location info of anyone will be suspended, as it is a physical safety violation,” Musk tweeted. “This includes posting links to sites with real-time location info. Posting locations someone traveled to on a slightly delayed basis isn’t a safety problem, so is ok.”
“Doxxing” refers to disclosing online someone’s identity, address, or other personal details.
For Sweeney, it was the latest in a longtime tangle with the billionaire. The University of Central Florida student said Musk last year sent him a private message offering $5,000 to take the jet-tracking account down, citing security concerns. Musk later stopped communicating to Sweeney, who never deleted the account. Their exchange was first reported by tech news outlet Protocol earlier this year.
But after buying Twitter for $44 billion in late October, Musk said he would let it stay.
“My commitment to free speech extends even to not banning the account following my plane, even though that is a direct personal safety risk,” Musk tweeted on Nov. 6.
Sweeney ran similar “bot” accounts tracking other celebrities’ airplanes. For hours after the suspension of the @elonjet account, other Sweeney-run accounts tracking private jets used by Bill Gates, Jeff Bezos, Mark Zuckerberg and various Russian oligarchs were still live on Twitter.
But by later Wednesday, Twitter suspended all of them, including Sweeney’s personal account. He also operates accounts tracking Musk’s jet on rival social platforms such as Facebook and Instagram.
Twitter didn’t respond to a request for comment. Musk has promised to eradicate automatically generated spam from the platform, but Twitter allows automated accounts that are labeled as such — as Sweeney’s were.
Its note to Sweeney about the suspension, which he shared with the AP, said “You may not use Twitter’s services in a manner intended to artificially amplify or suppress information or engage in behavior that manipulates or disrupts people’s experience on Twitter.” But that rationale was different from what Musk explained later Wednesday.
Sweeney had days earlier accused Musk’s Twitter of using a filtering technique to hide his tweets, and revealed what he said were leaked internal communications showing a Twitter content-moderation executive in charge of the Trust and Safety division ordering her team to suppress the account’s reach. The AP has not been able to independently verify those documents.
Sweeney said that he suspects the short-lived ban stemmed from anger over those leaks.
Musk has previously criticized that filtering technique — nicknamed “shadowbanning” — and alleged that it was unfairly used by Twitter’s past leadership to suppress right-wing accounts. He has said the new Twitter will still downgrade the reach of negative or hateful messages but will be more transparent about it.
In his push to loosen Twitter’s content restrictions, he’s reinstated other high-profile accounts that were permanently banned for breaking Twitter’s rules against hateful conduct, harmful misinformation or incitements of violence.
Sweeney said he originally started the Musk jet tracker because “I was interested in him as a fan of Tesla and SpaceX.”
In the weeks since the Tesla CEO took over Twitter, the @elonjet account has chronicled Musk’s many cross-country journeys from his home base near Tesla’s headquarters in Austin, Texas, to various California airports for his work at Twitter’s San Francisco headquarters and his rocket company SpaceX.
It showed Musk flying to East Coast cities ahead of major events, and to New Orleans shortly before a Dec. 3 meeting there with French President Emmanuel Macron.
In a January post pinned to the top of the jet-tracking account’s feed before it was suspended, Sweeney wrote that it “has every right to post jet whereabouts” because the data is public and “every aircraft in the world is required to have a transponder,” including Air Force One that transports the U.S. president.
Elon Musk sells $3.58B worth of Tesla stock, purpose unknown
DETROIT (AP) — Elon Musk sold another $3.58 billion worth of Tesla stock this week, but it wasn’t clear where the proceeds were being spent.
The Tesla CEO, and new owner of Twitter, sold the shares from Monday through Wednesday, according to a filing posted Wednesday night by the U.S. Securities and Exchange Commission.
Musk has sold nearly $23 billion worth of Tesla stock since April, with much of the money likely going to help fund his $44 billion acquisition of Twitter.
The sale comes as shares of the electric vehicle and solar panel maker have collapsed, losing over half their value since Musk first disclosed in April that he was buying up Twitter stock.
The falling shares have bumped Musk from his status as the world’s wealthiest person, with his net worth falling to $174 billion, according to Forbes. He was passed last week by French fashion and cosmetics magnate Bernard Arnault.
The takeover of Twitter has not been smooth, and some big companies have halted advertising on the social media platform. Musk has said that Twitter had “a massive drop in revenue” due to the advertiser losses.
Investors have been punishing Tesla stock of late as Musk has spent much of his time running Twitter, raising fears that he’s distracted from the car company.
Wedbush analyst Dan Ives said Musk is now a villain in the eyes of Tesla investors. He said Tesla’s fundamentals remain healthy but his behavior with Twitter is hurting the company’s brand. “The Twitter overhang is a nightmare that is growing with no one but Musk to blame,” Ives wrote in an email.
A message was left with Tesla Wednesday night seeking comment on the stock sale.
Rail workers air their frustrations with rallies, vote
OMAHA, Neb. (AP) — Railroad workers who are fed up with demanding work schedules and disappointed in the contract they received aired their frustrations this week at rallies across the country and in a leadership vote at one of their biggest unions.
Workers gathered in Washington D.C. and nearly a dozen other locations across the country Tuesday to emphasize their quality of life concerns and fight for paid sick leave after Congress intervened in the stalled contract talks earlier this month and imposed a deal on four unions that had rejected it. And thousands of engineers voted to oust their long-time union president although that result won’t be final until next week.
The five-year contract that roughly 115,000 workers in 12 unions received includes 24% raises, $5,000 in bonuses and one additional paid leave day, but the unions say it didn’t do enough to address workers’ quality-of-life concerns. President Joe Biden urged Congress to get involved because the potential economic damage that would come with a railroad strike was too great to bear, but their action left many workers disappointed because lawmakers opted not to require the railroads to add sick time.
“The American people should know that while this round of collective bargaining is over, the underlying issues facing the workforce and rail customers remain,” said the Transportation Trades Department coalition of the AFL-CIO that includes all the rail unions. “Over the last seven years, the freight railroad industry has moved to a business model that has cut their workforces to the bone, devastated worker morale by creating unsustainable working conditions across the industry, and put the safety of their workers and the American public at risk.”
The unions have said that the roughly 45,000 job cuts across the industry as railroads overhauled their operations over the past several years have increased the workload for everyone who remains and prompted the railroads to adopt strict attendance policies that make it hard for workers to take a day off. Railroads say they don’t need as many workers as they used to because they have cut down on the number of trains and locomotives they are using by relying on longer trains with a mix of freight that run on a tighter schedule.
The railroads did agree as part of the contract to try to improve the way regular days off are scheduled through ongoing additional negotiations at each railroad. But it’s not yet clear how much of a difference those changes will make to engineers and conductors who say they are now essentially on call 24-7.
One of the other concessions railroads made was to offer engineers and conductors three unpaid days off a year to tend to medical events as long as they schedule their appointments at least 30 days ahead of time.
The engineers union narrowly approved the deal while the union that represents conductors rejected it. But more than half of the Brotherhood of Locomotive Engineers and Trainmen union members who voted this week backed challenger Eddie Hall over Dennis Pierce, who had led the union since 2010.
BLET officials say those results won’t be certified until Monday after any challenges to the vote are resolved. Pierce, who was one of the leaders of the large bargaining coalition that represented the unions in the contract talks with all the major freight railroads over the past three years, declined to comment on the election results.
Hall said he thinks the vote clearly shows that engineers just aren’t “satisfied with our leadership,” The win is remarkable given that Hall was little known among the union nationally before he was nominated by workers in his division in Arizona.
“This is like a club fighter knocking out Muhammad Ali,” Hall said. “I’m a vice local chairman out of Division 28 in Tucson. This is unprecedented. It’s never happened before and it’ll probably never happen again.”
Hall said there is definitely still a lot of work to do to help improve workers’ quality of life, but he doesn’t have a long plan of what he will do if he does take office. He said the first thing on his agenda will be getting out and meeting with engineers all across the country to listen to their concerns.
Regardless of who leads the BLET for the next four years, all the unions have pledged to continue pressing the railroads to add sick time and ease some of their restrictive rules.
Hacker claims breach of FBI’s critical-infrastructure portal
BOSTON (AP) — A hacker who reportedly posed as the CEO of a financial institution claims to have obtained access to the more than 80,000-member database of InfraGard, an FBI-run outreach program that shares sensitive information on national security and cybersecurity threats with public officials and private sector actors who run U.S. critical infrastructure.
The hacker posted samples they said were from the database to an online forum popular with cybercriminals last weekend and said they were asking $50,000 for the entire database.
The hacker obtained access to InfraGard’s online portal by posing as the CEO of a financial institution, they told independent cybersecurity journalist Brian Krebs, who broke the story. They called the vetting process surprisingly lax.
The FBI declined to comment. Krebs reported that the agency told him it was aware of a potential false account and was looking into the matter.
InfraGard’s memberhip is a veritable critical infrastructure Who’s Who. It includes business leaders, IT professionals, military, state and local law enforcement and government officials involved in overseeing the safety of everything from the electrical grid and transportation, to health care, pipelines, nuclear reactors, the defense industry, dams and water plants and financial services. Founded in 1996, it is the FBI’s largest public-private partnership, with local alliances affiliated with all its field offices. It regularly shares threat advisories from the FBI and the Department of Homeland Security and serves as a behind-closed-doors social media site for select insiders.
The database has the names, affiliations and contact information for tens of thousands of InfraGard users. Krebs first reported its theft on Tuesday.
The hacker, going by the username USDoD on the BreachForums site, said on the site that records of only 47,000 of the forum’s members’ — slightly more than half — include unique emails. The hacker also posted that the data contained neither Social Security numbers nor dates of birth. Although fields existed in the database for that information, InfraGard’s security-conscious users had left them blank.
However, the hacker told Krebs that they had been messaging InfraGard members, posing as the financial institution’s CEO, to try to obtain more personal data that could be criminally weaponized.
The AP reached the hacker on the BreachForums site via private message. They would not say whether they had found a buyer for the stolen records or answer other questions. But they did say that Krebs’ article “was 100% accurate.”
The FBI did not offer an explanation for how the hacker was able to trick it into approving the InfraGard membership. Krebs reported that the hacker had included a contact email address that they controlled — as well as the CEO’s real mobile phone number — when applying for InfraGard membership in November.
Krebs quoted the hacker as saying InfraGard approved the application in early December and that they were able to use the email to receive a one-time authentication code.
Once inside, the hacker said, the database information was easy to obtain with a simple software script.
AIG unit that had big role in 2008 crisis nears official end
NEW YORK (AP) — A unit of American International Group that played an outsized role in the 2008 global financial crises is nearing its official end.
AIG said Wednesday in a filing with the U.S. Securities and Exchange Commission that its Financial Products unit has filed for Chapter 11 bankruptcy protection.
Bad bets on mortgages by the Financial Products unit knocked parent company AIG off its feet, leading to a cascading series of bank failures that nearly caused a global economic collapse.
AIG was saved by a U.S. funded bailout package that eventually exceeded $182 billion, but the economic damage to the global economy was catastrophic. It was the beginning of the greatest economic catastrophe to hit the U.S. since the Great Depression.
The filing for AIG Financial Products Corp. was made Wednesday in U.S. Bankruptcy Court for the District of Delaware.
New York-based AIG is the largest creditor to its Financial Products subsidiary because it loaned the unit tens of billions of dollars during the economic crisis, a portion of the loans it received from the U.S. Federal Reserve.
But those loans were already recognized as losses in financial filings from 2008. The bankruptcy will have no material effect on AIG, according to a filing with the SEC Wednesday.
The unit had already ceased to function and has no employees, and largely existed due to ongoing legal issues.
In its heyday, the AIG unit was a major player in securities used by banks that were backed by subprime mortgages. The packaging of subprime mortgages was widespread by 2007 with numerous Wall Street players taking part in trading them at home and abroad.
Those subprime mortgages were bundled within higher quality tranches of mortgages and received higher-than-warranted ratings from major credit ratings agencies.
When those subprime mortgages began to fail, the stability of what was once thought to be safe investments for pension funds, schools systems and banks evaporated.
AIG paid back all of its government loan s by 2013.
Lawmakers quick to unload FTX founder’s contributions
WASHINGTON (AP) — A writer’s workshop in Alaska. Food banks in California. A charity that fights diabetes.
Lawmakers who accepted piles of cash from onetime wunderkind Samuel Bankman-Fried now can’t move fast enough to offload their contributions from the disgraced crypto mogul to anywhere else but their own campaign coffers.
Before his arrest in the Bahamas this week, Bankman-Fried, the former CEO of cryptocurrency exchange FTX, was a prolific political donor to individual candidates — from local campaigns all the way up to President Joe Biden — as well as super PACs that can wield outsized influence in campaigns. But in a matter of days, Bankman-Fried — a proponent of “effective altruism” — became a pariah facing allegations of massive financial fraud and potentially decades in prison.
The Associated Press contacted more than four dozen current and incoming lawmakers who received campaign contributions from Bankman-Fried this election cycle — a group that included members of both political parties and chambers of Congress, but predominantly House Democrats. Many of the recipients of Bankman-Fried’s cash were quick to respond, stressing that they had already donated or plan to send the money to charity. Several also stressed that the lawmakers did not solicit the contributions from Bankman-Fried.
Recipients of Bankman-Fried’s campaign largesse included lawmakers at the most senior levels of House and Senate Democratic leadership. Rep. Hakeem Jeffries, D-N.Y., the incoming leader of House Democrats, donated the contribution to the American Diabetes Association. Rep. Pete Aguilar, D-Calif., who will be the third-ranking House Democrat next year, donated his contributions from Bankman-Fried to local charities last month.
In the Senate, Majority Whip Dick Durbin of Illinois, the No. 2 Democrat in the chamber, will donate his contribution to an “appropriate charity,” a spokeswoman said. Sen. Patty Murray, D-Wash., who will be third in line to the presidency next year, will donate her cash to a local Washington state charity.
Sen. Tina Smith, D-Minn., donated Bankman-Fried’s contributions to Planned Parenthood North Central States. Sen. Alex Padilla, D-Calif., sent his cash to food banks across California. Sen. Lisa Murkowski, R-Alaska, donated her contribution to Storyknife Writers Retreat in Homer, Alaska.
Democratic Rep. Ruben Gallego of Arizona, who is strongly hinting he’ll challenge Democrat-turned-independent Kyrsten Sinema for the Senate, gave the $5,800 he received from Bankman-Fried to incoming Democratic Rep. Andrea Salinas of Oregon. In her Democratic primary, Salinas defeated a rival backed by millions of spending from Bankman-Fried.
“Congress must take immediate action to regulate the crypto industry, implement strict oversight standards and shield consumers from schemes like this in the future,” said Rep. Angie Craig, D-Minn., who added she will donate her Bankman-Fried contribution to a bankruptcy fund to compensate FTX customers.
Sens. Cory Booker, D-N.J., John Boozman, R-Ark., Bill Cassidy, R-La., Susan Collins, R-Maine, John Hoeven, R-N.D., Joe Manchin, D-W.Va., Debbie Stabenow, D-Mich., Sen.-elect Peter Welch, D-Vt., and Reps. Josh Gottheimer, D-N.J., Salud Carbajal, D-Calif., Joe Neguse, D-Colo., Josh Harder, D-Calif., Kim Schrier, D-Wash., Ritchie Torres, D-N.Y., all donated their Bankman-Fried donations to various charities or plan to, according to their aides.
The main campaign committees dedicated to electing congressional Democrats also received tens of thousands from Bankman-Fried, while House Majority PAC, a deep-pocketed outside group backing House Democrats, got a $6 million contribution, according to FEC records. The Democratic Congressional Campaign Committee and the Democratic Senatorial Campaign Committee did not return requests for comment on what the groups planned to do with Bankman-Fried’s contributions. The House Majority PAC declined to comment.
The White House has also been mum on the multimillion-dollar boost his presidential bid received. Press secretary Karine Jean-Pierre referred inquiries to the Democratic National Committee, which declined to comment.
Then there were the millions given to more obscure political action committees: The Protect Our Future PAC, financed by Bankman-Fried, spent up to $2 million in ads in support of Lucy McBath, who ran a successful campaign in Georgia’s 7th Congressional District against incumbent Rep. Carolyn Bordeaux. Bankman-Fried wired at least $27 million to the PAC in 2022, according to the FEC website.
In an interview with the Associated Press, Bordeaux said the dilemma surrounding Bankman-Fried’s campaign spending isn’t as simple as returning individual donations. In some cases, the money already has been used to affect elections.
“The larger issue at play is the super PACs,” Bordeaux said. “That’s not something they can refund. Here is an example of a billionaire using money he stole and diverted into political contributions — it’s an egregious example of the corruption in our political system.”
“This is a good opportunity to reopen the conversation about campaign finance reform,” she said.
Brett Kappel, a longtime campaign finance attorney who has worked for both Republicans and Democrats, said it would be “prudent” for members of Congress who received donations from Bankman Fried or other FTX officials to set the money aside “given the high likelihood the bankruptcy receiver will be seeking their return.”
That’s because, in bankruptcy cases, courts have often sided with those looking to recoup money that they unfairly lost. Lawmakers who gave donations from company officials to charity could still find themselves on the hook to return the money they received — or face the perilous optics of stiffing constituents who lost investments when the company melted down.
Still, the lawmakers face no liability themselves “unless they knew the contributions were illegal at the time they received them,” Kappel said.
The U.S. government charged 30-year-old Bankman-Fried with a host of financial crimes this week, alleging he intentionally deceived customers and investors to enrich himself and others, while playing a central role in the company’s multibillion-dollar collapse.
Among the counts listed in his indictment is conspiracy to defraud the United States and violating campaign finance laws enforced by the Federal Election Commission. At a press conference on Tuesday, U.S. Attorney Damian Williams said Bankman-Fried made “tens of millions of dollars” in illegal campaign donations.
The Securities and Exchange Commission complaint alleges that Bankman-Fried raised more than $1.8 billion from investors since May 2019 by promoting FTX as a safe, responsible platform for trading crypto assets but instead diverted customers’ funds to a privately held crypto hedge fund called Alameda Research LLC without telling them.
The SEC says Bankman-Fried then used those customer funds to make undisclosed venture investments, lavish real estate purchases and large political donations. He contributed funds to both political parties, Bankman-Fried said in an interview last month, adding that “all my Republican donations were dark,” meaning undisclosed.
On the Republican side, Ryan Salame, the co-CEO of FTX Digital Markets, one of FTX’s affiliates, contributed millions to Republicans on behalf of Bankman-Fried, including to Rep. Steve Scalise in Louisiana, Rep. Greg Pence in Indiana and others.
Bankman-Fried also sent campaign cash to a slew of incoming House Democrats, including Reps.-elect Becca Balint, D-Vt., Nikki Budzinski, D-Ill., Robert Garcia, D-Calif., Sydney Kamlager, D-Calif., Morgan McGarvey, D-Ky., and Brittany Pettersen, D-Colo., who all donated their contributions to local charities. Tweeting that he rejects not just corporate PAC cash but also “stolen money,” Rep.-elect Maxwell Frost, D-Fla., said he donated his contribution to the Zebra Coalition, a group that aids LGBT youth.
“The situation with FTX is both distressing and unsettling,” said Rep.-elect Valerie Foushee, D-N.C. She said she donated her contribution to a non-profit in Chapel Hill.
Associated Press reporters Brian Slodysko, Zeke Miller, Aamer Madhani in Washington, Jonathan J. Cooper in Phoenix and Sara Burnett in Chicago contributed to this report.
Musk’s Twitter tweaks foreshadow EU showdown over new rules
LONDON (AP) — Self-proclaimed free speech warrior Elon Musk’s more unfettered version of Twitter could collide with new rules in Europe, where officials warn that the social media company will have to comply with some of the world’s toughest laws targeting toxic content.
While the new digital rulebook means the European Union is likely to be a global leader in cracking down on Musk’s reimagined platform, the 27-nation bloc will face its own challenges forcing Twitter and other online companies to comply. The law doesn’t fully take effect until 2024, and EU officials are scrambling to recruit enough workers to hold Big Tech to account.
Known as the Digital Services Act, the EU’s sweeping set of rules aims to make platforms and search engines more accountable for illegal and harmful content including hate speech, scams and disinformation. They’ll kick in next summer for the biggest digital companies like Google, Facebook and TikTok and then expand to all online services the following year.
Those standards are poised to run up against Musk’s whipsawing policies at Twitter: He abruptly axed a group of advisers this week who address problems like hate speech, child exploitation and self-harm, halved Twitter’s workforce and issued conflicting decisions about content moderation.
“A lot can change in six months, but it sure seems like Twitter is lining up to be Europe’s first major test case when it comes to enforcing the DSA,” said John Albert of Berlin-based AlgorithmWatch, a nonprofit research and advocacy group.
Musk has called for “freedom of speech, not freedom of reach,” saying he wants to downgrade negative and hateful posts. The billionaire Tesla CEO considers the bloc’s rules “a sensible approach to implement on a worldwide basis,” EU digital policy chief Thierry Breton recounted after a video call with Musk this month.
Other jurisdictions are far behind Europe. In the U.S., Silicon Valley lobbyists have largely succeeded in keeping federal lawmakers at bay, and Congress has been politically divided on efforts to address competition, online privacy, disinformation and more. Britain is working on its own Online Safety Bill, but it was recently watered down and not clear when it will be approved.
Musk’s style of making ad hoc changes won’t fly under the new European rulebook, experts said.
Twitter’s disastrous rollout of paid “verified” blue checks likely would have triggered an EU investigation and possibly big fines because such major design changes wouldn’t be allowed without a risk assessment, Albert said.
The abrupt disbanding of Twitter’s Trust and Safety Council also would “raise some eyebrows in Brussels,” Albert said. Expert advisers aren’t required under the EU rules, but “good-faith voluntary efforts” show “European regulators that you care about transparency and are invested in trust and safety,” he said.
Musk’s tinkering — including dropping enforcement of COVID-19 misinformation rules and granting amnesty to suspended accounts — has already alarmed European officials.
Musk’s approach is “a big issue” that calls for “more regulation,” French President Emmanuel Macron told “Good Morning America.”
In Europe, “you can demonstrate you can have free speech, you can write what you want. But there is responsibilities and limits,” he said. Macron, who met with Musk in the U.S. this month, tweeted that “efforts have to be made by Twitter to comply with European regulations.”
The bloc will require online companies to follow clear rules on dealing with illegal content and explain to users why the material was taken down or given a warning label. They will have to be transparent about the workings of their content moderation systems and recommendation algorithms, which suggest the next song, news story or product to users. They must let EU regulators review their efforts.
Breton, the EU’s digital policy chief, said he reminded Musk about the penalties for violations, including fines worth 6% of global annual revenue that could reach billions. Repeat violations could result in an EU-wide ban. Musk and Twitter didn’t respond to messages seeking comment.
Musk is already “backtracking on the absolutism” of free speech by suspending the rapper formerly known as Kanye West for a swastika post, said Marietje Schaake, a former European Parliament lawmaker who’s now international cyber policy director at Stanford University.
“The problem is that there is a lot of hateful content below this threshold, which will make Twitter under Musk less safe and pleasant for women, minorities and people whose opinions are met with aggression,” Schaake said.
To tackle such “lawful but awful” content that frequently bedevils content moderators, the EU will require extra scrutiny for the biggest online platforms — those with 45 million monthly users.
There’s speculation Twitter might not qualify. It reported 238 million users before it was bought by Musk, who complained that the number of fake accounts was vastly understated. Companies have to report their user numbers to the EU by mid-February.
Big platforms will have to assess how they’re dealing with “systemic risks,” such as harassment, election-related disinformation, hoaxes and manipulation during pandemics.
By the summer, the first changes stemming from the rules should start appearing via digital “buttons” on websites and apps so users can easily flag illegal content.
The wide-ranging rulebook also poses a challenge for regulators who need to hire enough enforcers. EU officials have estimated they will add more than 100 full-time staff by 2024 to enforce the DSA and other new rules on digital competition.
Each of the 27 EU countries also will have to hire more people to police smaller platforms and coordinate with Brussels. On top of that, tech companies need to recruit more compliance staff.
All three groups will be hiring for very specific and similar skill sets: experts who know how platforms and their algorithms work, have insight into sites’ content moderation practices and have experience enforcing regulations.
The problem is they “might end up competing for the same talents,” said Rita Jonusaite, advocacy coordinator at EU DisinfoLab, a nonprofit group that researches disinformation.
There are concerns some European countries won’t have the means and expertise to enforce the rules, especially if they’re building skills in areas like disinformation from scratch.
“Regulators need to train themselves and acquire capacity very quickly,” Jonusaite said.
The EU’s executive Commission has launched a recruitment spree for dozens of expert jobs, including legal officers, data scientists, technology specialists, and digital policy officers to help supervise the systems that online platforms use to combat illegal content such as terrorist or child sexual abuse material and to fight harmful posts like disinformation.
“As Musk is scrambling to both save money, comply with the law, and keep advertisers on board, the main question is whether he will dedicate the needed resources to monitor content at all,” said Schaake of Stanford.
“It is one thing to make a conscious decision to leave racist content up, it is another to have it be up unnoticed” because teams monitoring content “are simply not there,” she said.
California approves roadmap for carbon neutrality by 2045
SACRAMENTO, Calif. (AP) — California air regulators voted unanimously Thursday to approve an ambitious plan to drastically cut reliance on fossil fuels by changing practices in the energy, transportation and agriculture sectors, but critics say it doesn’t go far enough to combat climate change.
The plan sets out to achieve so-called carbon neutrality by 2045, meaning the state will remove as many carbon emissions from the atmosphere as it emits. It aims to do so in part by reducing fossil fuel demand by 86% within that time frame.
California had previously set this carbon neutrality target, but Gov. Gavin Newsom signed legislation making it a mandate earlier this year. The Democrat has said drastic changes are needed to position California as a global climate leader.
“We are making history here in California,” Newsom said in a statement Thursday.
But the plan’s road to approval by the California Air Resources Board was not without criticism. Capturing large amounts of carbon and storing it underground is one of the most controversial elements of the proposal. Critics say it gives the state’s biggest emitters reason to not do enough on their part to mitigate climate change.
In a meeting that lasted several hours, activists, residents and experts used their last chance to weigh in on the plan ahead of the board’s vote. Many said the latest version, while not perfect, was an improvement from earlier drafts, committing the state to do more to curb planet-warming emissions.
Davina Hurt, a board member, said she was proud California is moving closer to its carbon neutrality goal.
“I’m glad that this plan is bold and aggressive,” Hurt said.
The plan does not commit the state to taking any particular actions but sets out a broad roadmap for how California can achieve its goals. Here are the highlights:
The implementation of the plan hinges on the state’s ability to transition away from fossil fuels and rely more on renewable resources for energy. It calls for the state to cut liquid petroleum fuel demand by 94% by 2045, and quadruple solar and wind capacity along that same timeframe.
Another goal would mean new residential and commercial buildings will be powered by electric appliances before the next decade.
The calls for dramatically lowering reliance on oil and gas come as public officials continue to grapple with how to avoid blackouts when record-breaking heat waves push Californians to crank up their air conditioning.
And the Western States Petroleum Association took issue with the plan’s timeline.
“CARB’s latest draft of the Scoping Plan has acknowledged what dozens of studies have confirmed — that a complete phase-out of oil and gas is unrealistic,” said Catherine Reheis-Boyd, the group’s president, in a statement. “A plan that isn’t realistic isn’t really a plan at all.”
At the beginning of Thursday’s meeting, California Air Resources Board Chair Liane Randolph touted the latest version of the plan as the most ambitious to date. It underwent changes after public comments earlier this year.
“Ultimately, achieving carbon neutrality requires deploying all tools available to us to reduce emissions and store carbon,” Randolph said.
Officials hope a move away from gas-powered cars and trucks reduces greenhouse gas emissions while limiting the public health impact of chemicals these vehicles release.
In a July letter to the air board, Newsom requested that the agency approve aggressive cuts to emissions from planes. This would accompany other reductions in the transportation sector as the state transitions to all zero-emission vehicle sales by 2035.
The plan’s targets include having 20% of aviation fuel demand come from electric or hydrogen sources by 2045 and ensuring all medium-duty vehicles sold are zero-emission by 2040. The board has already passed a policy to ban the sale of new cars powered solely by gasoline in the state starting in 2035.
The plan refers to carbon capture as a “necessary tool” to implement in the state alongside other strategies to mitigate climate change. It calls for the state to capture 100 million metric tons of carbon dioxide equivalent and store it underground by 2045.
Connie Cho, an attorney for environmental justice group Communities for a Better Environment, called the plan’s goal of phasing down oil refining “a huge step forward” to mitigate climate change and protect public health.
“Our communities have been suffering from chronic disease and dying at disproportionate rates for far too long because of the legacy of environmental racism in this country,” Cho said.
But Cho criticized its carbon capture targets, arguing they give a pathway for refineries to continue polluting as the state cuts emissions in other areas.
One of the goals is to achieve a 66% reduction in methane emissions from the agriculture sector by 2045. Cattle are a significant source for releasing methane — a potent, planet-warming gas.
The plan’s implementation would also mean less reliance by the agriculture sector on fossil fuels as an energy source.
This story has been updated to make clear that Connie Cho, an attorney for environmental justice group Communities for a Better Environment, was referring specifically to the plan’s goal of phasing down oil refining when she called it “a huge step forward” to mitigate climate change and protect public health.
This story has been updated to correct the plan’s target for aviation fuel demand from electric or hydrogen sources. It is 20%, not 10%.
Sophie Austin is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues. Follow Austin on Twitter: @sophieadanna
How the Fed’s rate hikes could affect your finances
NEW YORK (AP) — The Federal Reserve’s move Wednesday to raise its key rate by a half-point brought it to a range of 4.25% to 4.5%, the highest level in 14 years.
The Fed’s latest increase — its seventh rate hike this year — will make it even costlier for consumers and businesses to borrow for homes, autos and other purchases. If, on the other hand, you have money to save, you’ll earn a bit more interest on it.
Wednesday’s rate hike, part of the Fed’s drive to curb high inflation, was smaller than its previous four straight three-quarter-point increases. The downshift reflects, in part, the easing of inflation and the cooling of the economy.
Here’s what to know:
WHAT’S PROMPTING THE RATE INCREASES?
The short answer: Inflation. Over the past year, consumer inflation in the United States has clocked in at 7.1% — the fifth straight monthly drop but still a painfully high level.
The Fed’s goal is to slow consumer spending, thereby reducing demand for homes, cars and other goods and services, eventually cooling the economy and lowering prices.
Fed Chair Jerome Powell has acknowledged that aggressively raising interest rates would bring “some pain” for households but that doing so is necessary to crush high inflation.
WHICH CONSUMERS ARE MOST AFFECTED?
Anyone borrowing money to make a large purchase, such as a home, car or large appliance, will take a hit, according to Scott Hoyt, an analyst with Moody’s Analytics.
“The new rate pretty dramatically increases your monthly payments and your cost,” he said. “It also affects consumers who have a lot of credit card debt — that will hit right away.”
That said, Hoyt noted that household debt payments, as a proportion of income, remain relatively low, though they have risen lately. So even as borrowing rates steadily rise, many households might not feel a much heavier debt burden immediately.
“I’m not sure interest rates are top of mind for most consumers right now,” Hoyt said. “They seem more worried about groceries and what’s going on at the gas pump. Rates can be something tricky for consumers to wrap their minds around.”
HOW WILL THIS AFFECT CREDIT CARD RATES?
Even before the Fed’s latest move, credit card borrowing rates had reached their highest level since 1996, according to Bankrate.com, and these will likely continue to rise.
And with prices still surging, there are signs that Americans are increasingly relying on credit cards to help maintain their spending. Total credit card balances have topped $900 billion, according to the Fed, a record high, though that amount isn’t adjusted for inflation.
John Leer, chief economist at Morning Consult, a survey research firm, said its polling suggests that more Americans are spending down the savings they accumulated during the pandemic and are using credit instead. Eventually, rising rates could make it harder for those households to pay off their debts.
Those who don’t qualify for low-rate credit cards because of weak credit scores are already paying significantly higher interest on their balances, and they’ll continue to.
As rates have risen, zero percent loans marketed as “Buy Now, Pay Later” have also become popular with consumers. But longer-term loans of more than four payments that these companies offer are subject to the same increased borrowing rates as credit cards.
For people who have home equity lines of credit or other variable-interest debt, rates will increase by roughly the same amount as the Fed hike, usually within one or two billing cycles. That’s because those rates are based in part on banks’ prime rate, which follows the Fed’s.
HOW ARE SAVERS AFFECTED?
The rising returns on high-yield savings accounts and certificates of deposit (CDs) have put them at levels not seen since 2009, which means that households may want to boost savings if possible. You can also now earn more on bonds and other fixed-income investments.
Though savings, CDs, and money market accounts don’t typically track the Fed’s changes, online banks and others that offer high-yield savings accounts can be exceptions. These institutions typically compete aggressively for depositors. (The catch: They sometimes require significantly high deposits.)
In general, banks tend to capitalize on a higher-rate environment to boost their profits by imposing higher rates on borrowers, without necessarily offering juicer rates to savers.
WILL THIS AFFECT HOME OWNERSHIP?
Last week, mortgage buyer Freddie Mac reported that the average rate on the benchmark 30-year mortgage dipped to 6.33%. That means the rate on a typical home loan is still about twice as expensive as it was a year ago.
Mortgage rates don’t always move in tandem with the Fed’s benchmark rate. They instead tend to track the yield on the 10-year Treasury note.
Sales of existing homes have declined for nine straight months as borrowing costs have become too high a hurdle for many Americans who are already paying much more for food, gas and other necessities.
WILL IT BE EASIER TO FIND A HOUSE IF I’M STILL LOOKING TO BUY?
If you’re financially able to proceed with a home purchase, you’re likely to have more options than at any time in the past year.
WHAT IF I WANT TO BUY A CAR?
Since the Fed began increasing rates in March, the average new vehicle loan has jumped more than 2 percentage points, from 4.5% to 6.6% in November, according to the Edmunds.com auto site. Used vehicle loans are up 2.1 percentage points to 10.2%. Loan durations for new vehicles average just under 70 months, and they’ve passed 70 months for used vehicles.
Most important, though, is the monthly payment, on which most people base their auto purchases. Edmunds says that since March, it’s up by an average of $61 to $718 for new vehicles. The average payment for used vehicles is up $22 per month to $565.
Ivan Drury, Edmunds’ director of insights, says financing the average new vehicle with a price of $47,000 now costs $8,436 in interest. That’s enough to chase many out of the auto market.
“I think we’re actually starting to see that these interest rates, they’re doing what the Fed wants,” Drury said. “They’re taking away the buying power so that you can’t buy a vehicle anymore. There’s going to be fewer people that can afford it.”
Any rate increase by the Fed will likely be passed through to auto borrowers, though it will be slightly offset by subsidized rates from manufacturers. Drury predicts that new-vehicle prices will start to ease next year as demand wanes a little.
HOW HAVE THE RATE HIKES INFLUENCED CRYPTO?
Cryptocurrencies like bitcoin have dropped in value since the Fed began raising rates. So have many previously high-valued technology stocks.
Higher rates mean that safe assets like Treasuries have become more attractive to investors because their yields have increased. That makes risky assets like technology stocks and cryptocurrencies less attractive.
Still, bitcoin continues to suffer from problems separate from economic policy. Three major crypto firms have failed, most recently the high-profile FTX exchange, shaking the confidence of crypto investors.
WHAT ABOUT MY JOB?
Some economists argue that layoffs could be necessary to slow rising prices. One argument is that a tight labor market fuels wage growth and higher inflation. But the nation’s employers kept hiring briskly in November.
“Job openings continue to exceed job hires, indicating employers are still struggling to fill vacancies,” said Odeta Kushi, an economist with First American.
WILL THIS AFFECT STUDENT LOANS?
Borrowers who take out new private student loans should prepare to pay more as as rates increase. The current range for federal loans is between about 5% and 7.5%.
That said, payments on federal student loans are suspended with zero interest until summer 2023 as part of an emergency measure put in place early in the pandemic. President Joe Biden has also announced some loan forgiveness, of up to $10,000 for most borrowers, and up to $20,000 for Pell Grant recipients — a policy that’s now being challenged in the courts.
IS THERE A CHANCE THE RATE HIKES WILL BE REVERSED?
It looks increasingly unlikely that rates will come down anytime soon. On Wednesday, the Fed signaled that it will raise its rate as high as roughly 5.1% early next year — and keep it there for the rest of 2023.
AP Business Writers Christopher Rugaber in Washington, Tom Krisher in Detroit and Damian Troise and Ken Sweet in New York contributed to this report.
The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
CES 2023: Tech world to gather and show off gadgets
NEW YORK (AP) — CES, the annual tech industry event formerly known as the Consumer Electronics Show, is returning to Las Vegas this January with the hope that it looks more like it did before the coronavirus pandemic.
The show changed its name to CES to better reflect the changing industry and the event, which had expanded beyond audio and video to include automotive, digital health, smart phones, wearables and other technologies.
Companies and startups will showcase innovations in virtual reality, robotics and consumer tech items to the media and others in the tech industry during next month’s gadget show and organizers say their goal is to draw 100,000 attendees.
That would be a marked contrast with the look and feel of the past two shows — the last of which saw a 70% drop in in-person attendance amid the spread of the Omicron variant. The one before that was held virtually, replacing in-person displays and meet and greets with video streams and chats.
Even if organizers reach their goal for next month’s event, which runs from Jan. 5-8, it would still represent a 41% dip in attendance compared to the in-person show held in early 2020, before the pandemic consumed much of everyday life.
Kinsey Fabrizio, senior vice president at the trade group Consumer Technology Association, said more than 2,800 companies have signed up to attend CES 2023.
Exhibitors include many startups and routine visitors like Amazon and Facebook parent Meta, both of which have recently cut jobs and implemented hiring freezes after beefing up their staff during the pandemic. Other tech companies have also been tightening their belts and laying off workers amid concerns about the economic environment.
The Associated Press spoke with Fabrizio about CES and what consumers should expect at the show. The conversation has been edited for clarity and length.
Q: The tech industry has been going through a rough time in the past few months. How do you expect that to impact the show?
A: Yeah, for the last two years, the tech industry was booming. We’re seeing a recalibration now and as part of the recalibration, there are layoffs. But in terms of CES, the companies are coming big. And they’re going to be showcasing some of these solutions that were critical during the pandemic, and a lot of the solutions that have continued to change the way consumers live and behave. The momentum and excitement we’re seeing for the show hasn’t been impacted.
Q: Are most of the exhibitors startups?
A: We have a lot of startups and new companies. Over 1,000 new exhibitors for CES this year, which is on par with prior years. There will be some repeat customers in Eureka Park, where our startups are primarily stationed. They can be there for up to two years. But we will also have a lot of companies who’ve been at CES for a while.
Q: The theme for the show is human security. How did you land on that?
A: We were approached by The World Academy of Art and Science, which has been working with the United Nations for a long time on human security. You can think of it as basic human rights — access to food, health care, etc. And they wanted CES to really use this theme because our exhibitors are showcasing how they’re solving some of these big global challenges with technology.
Q: Historically, CES has been more focused on convenience and personal tech. So this is going to be a shift.
A: This is the shift. We’ve talked about how tech solves challenges in the world. But we’ve never had a theme at CES before. It’s always been about innovation and great products for the consumer. But for this show, you will be able to see the theme on the show floor and other places. For example, John Deere is showcasing some of their agricultural technology that really contributes to sustainability and access to food. Another company created a secure voting technology on the blockchain, which aligns with the U.N. theme of political security.
Q: The metaverse is going to be another big topic. A lot of companies are investing in it. What can visitors expect to see at the show?
A: The metaverse is a key theme. We’ll have a dedicated part of the show floor for Web3 technology. There’s also going to be shared and immersive virtual experiences. Automaker Stellantis and Microsoft have a partnership to create a showroom in the metaverse. There’s a company called OVR that has created a solution where you can smell in the metaverse. People are talking about unique ways to reach their customers, and different experiences people can have there. So that will be a big theme among both big and small exhibitors.
Retail sales drop at start of key holiday shopping season
WASHINGTON (AP) — Americans cut back sharply on retail spending last month as the holiday shopping season began with high prices and rising interest rates forcing families, particularly lower income households, to make harder decisions about what they buy.
Retail sales fell 0.6% from October to November after a sharp 1.3% rise the previous month, the government said Thursday. Sales fell at furniture, electronics, and home and garden stores.
Americans’ spending has been resilient ever since inflation first spiked almost 18 months ago, but the capacity of Americans to continue spending in a period of high inflation may be beginning to ebb. Inflation has retreated from the four-decade high it reached this summer but remains elevated, enough to erode the spending power of Americans. Prices rose 7.1% in November from a year ago.
“The weakness in sales … suggests that higher borrowing costs, slower employment growth and an unusually low saving rate are now catching up with consumers,” said Andrew Hunter, senior U.S. economist at Capital Economics.
Consumer spending is still likely to grow at a solid pace in the final three months of the year, Hunter said, but he expects a sharp drop early next year.
Monthly sales data can be volatile and one negative report is often followed by a rebound, other economists said.
Sales plunged 2.3% at auto dealers, and slipped 0.6% at sporting goods stores and 0.1% at general merchandise stores, a category that includes large chains such as Walmart and Target. Sales at online and catalog stores fell 0.9%.
The steep 2.5% decline in sales at home and garden stores likely reflects the sharp decline in home sales due rapid interest rate hikes in the U.S., which have put homes increasingly out of reach for more Americans.
Solid hiring, rising pay, and enhanced savings from government financial support during the pandemic have enabled most Americans to keep up with rising prices. Yet many are now digging into their savings to maintain the same level of spending. The saving rate declined to its second-lowest level on record in October.
Americans are also putting more purchases on their credit cards. Total credit card debt jumped 15% in the July-September quarter, according to the Federal Reserve Bank of New York, the biggest jump in 20 years.
Shopping at a Walmart in New Jersey, Eric Cruz, said he planned to cut his holiday shopping budget by roughly 20% this year, to about $800. The 33-year-old Jersey City entrepreneur said rising costs for utilities and rent now take a bigger chunk of his income. He is trying to offset rising costs by seeking out credit cards with greater rewards, like 5% back on spending.
“I am looking for extra incentives and credit cards allow me to do that,” he said.
Symptoms of economic stress are beginning to appear, retailers have noted.
Craft supplies chain Jo-Ann Stores this week announced a pause in quarterly dividends for investors after comparable store sales fell 8% during its most recent quarter, which ended in October.
“Budget-conscious consumers have been under a prolonged period of stress for many months now, and they are getting more selective,” said CEO Wade Miquelon.
Miquelon said, however, that inflation is subsiding even as the U.S. potentially heads into “something more typical of a recessionary environment in the short term.”
Overstock, the online retailer that sells a lot of furniture, began promoting holiday items as early as October this year to pull in cautious shoppers, said CEO Jonathan Johnson.
“Everyone is competing for wallet share by offering the best deals they can offer,” Johnson said. “Customers continue to look to stretch their dollars as far as possible.”
Black Friday weekend, which kicks off the holiday shopping season, was strong this year, said Sonia Lapinsky, managing director in the retail practice at consultancy AlixPartners.
Yet, Lapinsky noted, people are buying less overall with almost everything more expensive than it was last year.
“Inflation is going to continue to put pressure on the wallet,” Lapinsky said. “I think consumers are going to hunker down.”
D’Innocenzio reported from New York.
Tesla closes up despite Musk selling $3.58B of its shares
AUSTIN, Texas (AP) — Shares of Tesla rose slightly Thursday despite news that CEO Elon Musk sold another $3.58 billion worth of the electric vehicle maker’s stock this week.
The stock closed at $157.67, up less than 1% but still close to its two-year lows. Tesla did fare better than the broader U.S. stock market, where concerns about rising interest rates led to a 2.5% drop in the S&P 500 index.
Musk, the new owner of Twitter, sold the Tesla shares from Monday through Wednesday, according to a filing posted Wednesday night with the U.S. Securities and Exchange Commission. It wasn’t clear where the proceeds of the sales were being spent.
Musk has sold nearly $23 billion worth of Tesla stock since April, with much of the money likely going to help fund his $44 billion acquisition of Twitter. Early last month, he sold nearly $4 billion worth of Tesla shares, according to regulatory filings.
The sale comes as shares of the electric vehicle and solar panel maker have collapsed, losing over half their value since Musk first disclosed in April that he was buying up Twitter stock.
Wedbush analyst Dan Ives said in a client note that Musk seems to be changing the Tesla narrative from the fundamental electric vehicle transformation story to becoming a source of funds to finance his Twitter acquisition.
“The Twitter nightmare continues as Musk uses Tesla as his own ATM machine to keep funding the red ink at Twitter which gets worse by the day as more advertisers flee the platform with controversy increasingly driven by Musk,” Ives wrote.
The falling shares of Tesla have bumped Musk from his status as the world’s wealthiest person, with his net worth falling to $174 billion, according to Forbes. He was passed last week by French fashion and cosmetics magnate Bernard Arnault. Most of Musk’s wealth is tied up in shares of Tesla Inc., which is based in Austin, Texas.
The takeover of San Francisco-based Twitter has not been smooth, and some big companies have halted advertising on the social media platform. Musk has said that Twitter had “a massive drop in revenue” due to the advertiser losses.
Investors have been punishing Tesla stock of late while Musk has spent much of his time running Twitter, raising concerns that he’s distracted from the car company.
Just this week Twitter dissolved its Trust and Safety Council, the advisory group of around 100 independent civil, human rights and other organizations that the company formed in 2016 to address hate speech, child exploitation, suicide, self-harm and other problems on the platform.
A message was left with Tesla seeking comment on the stock sale.
Elon Musk claims he was doxxed. But what exactly is that?
NEW YORK (AP) — When Twitter abruptly suspended the accounts of several journalists with no explanation, the platform’s owner Elon Musk hinted at the possible reason: They allegedly doxxed him.
“You dox, you get suspended. End of story. That’s it,” he said on a Twitter Space audio discussion late Thursday, referring to the act of disclosing someone personal details online.
Musk targeted journalists from The New York Times, CNN, Washington Post and other outlets after suspending a Twitter account that tracked his private jet using publicly available data — an account Musk had previously said he would leave alone as a demonstration of his commitment to free speech.
Twitter updated its policy this week, saying it would remove any tweets or accounts that share someone’s live location if it’s not done to help in humanitarian efforts or during public events.
Several of the journalists whose accounts were suspended had written about the plane tracking Twitter account as well as Musk’s reasoning for the new policy, which followed Musk’s claims that a family member in Los Angeles had been stalked earlier in the week.
SO WHAT IS DOXXING?
Doxxing, sometimes written as doxing, is a shortened version of “dropping dox” or documents.
It’s typically a malicious practice that involves gathering private or identifying information and releasing it online without the person’s permission, usually in an attempt to harass, threaten, shame or exact revenge.
Jeff Kosseff, a cybersecurity law professor at the U.S. Naval Academy who wrote a book tied to the topic, said doxxing is not a legally defined term and it can mean different things to different people. Some people think only applies to the sharing of private information. The Department of Homeland Security says doxxers may use publicly available information, such as property records.
“If you were to take DHS’ definition, the fact that plain data is already open source and publicly available doesn’t necessarily mean that it’s not doxxing,” Kosseff said. “But DHS does have what I think most people include, which is malicious purposes. And it’s really hard to make that judgment about why someone is posting this information.”
Doxxing sprang from 1990s online hacker culture, which prized anonymity. It was a way for hackers to unmask rivals they were feuding with, according to cybersecurity firm Kaspersky. But that aspect became less relevant as doxxing’s definition expanded and many more people moved online using their real names on their social media accounts, the firm says.
Celebrities, politicians, journalists have all been victims of doxing. So have people with lower profiles.
In early example, anti-abortion hackers in the 1990s infamously exposed abortion providers’ home addresses, photos and other information on a now-defunct website called the “Nuremberg Files.”
Another prominent victim was Brianna Wu, a software engineer who was critical of the “Gamergate” movement, a 2014 harassment campaign against female game developers. She told The Associated Press in 2016, “I got death threats, so I had to go to the police, I got ‘doxed’ so my personal information (was) out there.”
Even authorities aren’t immune. High-ranking police officials in a number of U.S. cities, including Washington, Atlanta, Boston and New York, had their home addresses, emails and phone numbers shared on social media amid tensions over the police custody death of George Floyd.
IS DOXXING ILLEGAL?
Releasing publicly available information is more of an ethical issue rather than a legal one, said Kosseff, the cybersecurity expert.
It would be difficult to show liability for a crime, for example, if an account is simply republishing public flight data, he said. Any criminal charges that could be filed against anyone involved in sharing personal information would more likely be related to something like harassment, not doxxing.
“To the extent that it’s based on publicly available data, I think there would be pretty strong First Amendment protections,” Kosseff said. Still, he said that could change depending on the jurisdiction of a potential case and any specific harms that occur.
WAS ELON MUSK DOXXED BY THE SUSPENDED JOURNALISTS?
It depends on how you define doxxing.
The suspended journalists deny they were directly sharing information about Musk’s location. Musk’s definition of doxxing seems to be much more expansive than its original meaning, to include anyone even linking to personal information posted by someone else.
When some of the journalists, including the Washington Post’s Drew Harwell, held a Twitter Spaces audio discussion to talk about the suspensions Thursday night, Musk made a surprise appearance.
“You’re suggesting that we’re sharing your address, which is not true,” Harwell said. “I never posted your address.”
“You posted the link to the address,” Musk replied.
Harwell argued that the journalists posted links to the @elonjet account that tracked his private jet as a normal course of reporting.
WHAT ABOUT MUSK’S OWN RECORD?
While it’s not clear whether Musk himself has doxxed anyone — as one of the suspended journalists has alleged — he does have a history of calling people out and making them the target of harassment by his army of fans.
Business Insider columnist Linette Lopez, who spent years covering Musk, alleged in a Tweet before her suspension Friday that Musk participated in the doxxing of “Montana Skeptic,” a prominent Tesla critic who contributed to the website Seeking Alpha. His real identity was posted on Twitter several years ago.
The writer, whose real name is Lawrence Fossi, told Mediate earlier this year that Musk also called into his workplace one day and threatened to sue over the writings.
Among other examples, Musk also faced a defamation lawsuit in 2019 after he called a British cave explorer “pedo guy” in an angry tweet. The man, Vernon Unsworth, had participated in the rescue of 12 boys and their soccer coach after they were trapped in a cave in Thailand in 2018. Musk defeated the suit.
Chan reported from London.
Twitter chaos too much? There are plenty of other options
Twitter has been engulfed in chaos since billionaire Tesla CEO Elon Musk took the helm, cutting the company’s workforce in half, upending the platform’s verification system, reinstating previously banned accounts — including those of white nationalists — and suspending journalists who’ve been covering him.
While it’s not clear if the drama is causing many users to leave — in fact, having a front-row seat to the chaos may prove entertaining to some — lesser-known sites Mastodon and even Tumblr are emerging as new (or renewed) alternatives. Here’s a look at some of them.
(Oh, and if you are leaving Twitter and want to preserve your tweet history, you can download it by going to your profile settings and clicking on “your account” then “download an archive of your data.”)
Sharing a name with an extinct mammal resembling an elephant, Mastodon has emerged as a front-runner among those curious about life beyond the blue bird. It shares some similarities with Twitter, but there are some big differences — and not just that its version of tweets are officially called “toots.”
Mastodon is a decentralized social network. That means it’s not owned by a single company or billionaire. Rather, it’s made up of a network of servers, each run independently but able to connect so people on different servers can communicate. There are no ads as Mastodon is funded by donations, grants and other means.
Mastodon’s feed is chronological, unlike Facebook, Instagram, TikTok or Twitter, which all use algorithms to get people to spend as much time on a site as possible.
It can be a tad daunting to try to sign up to Mastodon. Because each server is run separately, you will need to first pick one you want to join, then go through the steps to create an account and agree with the server’s rules. There are general and interest- and location-based ones, but in the end it won’t really matter. Once you’re in, the feed is reminiscent of Twitter. You can write (up to 500 characters), post photos or videos, and follow accounts as well as see a general public feed.
“We present a vision of social media that cannot be bought and owned by any billionaire, and strive to create a more resilient global platform without profit incentives,” Mastodon’s website says.
Currently, the site has more than 2 million users, nearly a quarter of whom signed up after Musk took over Twitter on Oct. 27, according to founder Eugen Rochko.
Another option that’s getting a lot of chatter, especially among journalists, is Post News. Post, writes founder Noam Bardin “will be a civil place to debate ideas; learn from experts, journalists, individual creators, and each other; converse freely; and have some fun.”
But, for now, there’s a long waitlist to join.
Remember Clubhouse, back when we were all under lockdown and couldn’t talk in person? It’s the buzzy audio-only app that got somewhat overshadowed by copycat Twitter Spaces, which also lets people talk to each other (think conference call, podcast or “audio chat”) about topics of interest.
Once you join, Clubhouse lets you start or listen into conversations on a host of topics, from tech to pro sports, parenting, Black literature and so on. There are no posts, photos or videos — only people’s profile pictures and their voices. Conversations can be intimate, like a phone call, or might include thousands of people listening to a talk by boldface names, like a conference or stage interview.
SUBSTACK and MEDIUM
For longer reads, newsletters, and general information absorption, these sites are perhaps closest to the blog era of the early 2000s. You can read both without signing up or paying, but some writers, creators and podcasters create premium content for paying subscribers.
Tumblr, which was all but left for dead, appears to be enjoying somewhat of a resurgence. The words/photos/art/video site is known for its devoted fan base and has been home to angry posts from celebrities like Taylor Swift. It angered many users in 2018 when it banned porn and “adult content,” which made up a big part of its highly visual and meme-friendly online presence and led to a large drop in its user base.
Onboarding is simple, and for those who miss the early years of social media, there’s a decidedly retro, comforting feel to the site.
T2 or TBD?
Gabor Cselle, a veteran of Google who worked at Twitter from 2014 to 2016, is determined to create a better Twitter. For now, he’s calling it T2 and says the Web domain name he purchased for it — t2.social — cost $7.16. T2, which may or may not be its final name, is currently accepting signups for its waitlist, but the site is clearly not yet functioning.
“I think Twitter always had a problem in figuring out what to do and how to decide on what to do. And that was always kind of in the back of my mind,” Cselle told The Associated Press. “I decided to just go for it. I didn’t see anyone else really doing it.”
Twitter-style text and TikTok-style videos are one idea. Cselle says for this to work, the text really has to be “amped up” so it’s not drowned out by the videos.
“My bet is that it’s going to be easier and more efficient to build a better Twitter or public square now than fix the legacy problems at Twitter,” Cselle added.
Cselle, of course, is not the only one jumping to the opportunity. Project Mushroom, for instance, plans a “safe place on the internet — a community-led open-source home for creators seeking justice on an overheating planet” and says it has received 25,000 early signups to its yet-to-launch platform.
“My sense is that things are going to further fragment into more ideological platforms and some will die and then we’ll see some new consolidation emerge over the next couple of years,” said Jennifer Stromer-Galley, a professor at Syracuse University who studies social media.
One of Twitter’s most valuable features has been the way it allows people to find information within seconds. Was that just an earthquake? Twitter will tell you. Or at least it did.
While there is no perfect replacement for Twitter, staying up to date with local, national and international news is easier than ever. Apple and Google both offer news services that aggregate articles from a broad range of publication (Apple offers a premium subscription service that gets you access to more articles, while Google shows free stories first.) There’s also Flipboard, which works kind of like a personal magazine curated to your interests.
Of course, subscribing to individual publications (or downloading a free news app such as the AP’s AP News) is also an option.
Yes, you might have to pay for some of them and no, you won’t get a blue check mark with your subscription.
US recession a growing fear as Fed plans to keep rates high
WASHINGTON (AP) — After scaling 40-year highs, inflation in the United States has been slowly easing since summer. Yet the Federal Reserve seems decidedly unimpressed — and unconvinced that its fight against accelerating prices is anywhere near over.
On Thursday, stock markets buckled on the growing realization that the Fed may be willing to let the economy slide into recession if it decides that’s what’s needed to drive inflation back down to its 2% annual target.
The S&P 500 stock index lost roughly 100 points — 2.5% — in its worst day since early November. The losses came a day after the Fed raised its benchmark interest rate for the seventh time this year. The half-point hike the Fed announced — to a range of 4.25% to 4.5% — had been widely expected.
What spooked investors was Wall Street’s growing understanding of how much further the Fed seems willing to go to defeat high inflation. In updated projections they issued Wednesday, the Fed’s policymakers forecast that they will ratchet up their key rate by an additional three-quarters of a point — to a hefty 5% to 5.25% — and keep it there through 2023. Some Fed watchers had expected only an additional half-point in rate hikes.
Those higher rates will mean costlier borrowing costs for consumers and companies, ranging from mortgages to auto and business loans.
The policymakers also downgraded their outlook for economic growth in 2023 from the 1.2% they had forecast in September to a puny 0.5% — as near to a recession forecast as they were likely to make. What’s more, they raised their expectation for the unemployment rate next year to 4.6% from 3.7% now.
All of which suggested that the officials expect — or at least would accept — an economic downturn as the price of taming inflation.
The message the Fed was sending, said Ryan Sweet, chief U.S. economist at Oxford Economics, was blunt: “We’re going to break something. We’re going to break inflation or we’re going to break the economy.’’
Many investors had convinced themselves that with inflation pressures gradually easing, the Fed might soon declare some progress in their fight and perhaps even reverse course and cut rates sometime in 2023.
There was seemingly reason for optimism: Consumer prices rose 7.1% last month from a year earlier, down from 9.1% in June and the fifth straight drop. Even more encouragingly, on a month to month basis, prices inched up just 0.1%. And core inflation, which excludes volatile food and energy costs and which the Fed tracks closely, rose just 0.2% from October to November, the mildest rise since August 2021.
A slowing economy has eased pressure on supply chains, which had previously been overwhelmed with customer orders, causing shortages, delays and higher prices. Oil prices, too, have plunged, easing prices at the pump. A gallon of unleaded gasoline cost an average $3.19 on Thursday, down from $5.02 in mid-June, according to AAA.
Yet Fed Chair Jerome Powell, who had been slow to recognize the inflation threat when it emerged in the spring of 2021, was in no mood to celebrate. Powell essentially shrugged off the signs of incremental progress.
“Two good monthly reports are very welcome,’’ he told reporters Wednesday. “But we need to be honest with ourselves… 12-month core inflation is 6%’’ — three times the Fed’s target. “It’s good to see progress but let’s just understand we have a long ways to go to get back to price stability.’’
Powell seemed to bat down hopes that the Fed might end up cutting rates by late next year — a move that typically acts like steroids for markets and the economy — unless inflation had dropped significantly by then, which he does not appear to expect.
The policymakers increased their inflation forecast for next year above what they were expecting back in September. It suggested that they feel their anti-inflation fight isn’t having as much impact as they had hoped.
Many economists were caught off-guard by that change. For next year, the Fed is projecting more rate hikes, a slower economy and higher unemployment than it did three months ago.
All those things typically help tame inflation. Yet the Fed’s officials predict that their preferred inflation gauge will be 3.1% at the end of 2023, up from their 2.8% forecast in September. That’s above their 2% target and likely too high for them to feel they can cut rates.
The Fed wasn’t the only source of rising recession fears Thursday. The European Central Bank, which is waging its own aggressive war against inflation, signaled that it, too, might send rates higher than markets expected, thereby raising the likelihood of a downturn in Europe.
On Thursday, the U.S. government reported that Americans slashed their spending at retailers in November. That was disconcerting news in the midst of the holiday shopping season. And the Federal Reserve Banks of New York and Philadelphia issued downbeat reports on manufacturing in their regions. Yields on long-term Treasurys fell, a sign that bond investors are growing more concerned about a possible recession.
Even the goods news out Thursday — a drop in the number of Americans seeking unemployment benefits — had a downside: It reinforced the Fed’s concern that a strong and resilient job market is putting upward pressure on wages and overall inflation.
The Fed is especially worried that a worker shortage in the labor-intensive services sector — everything from restaurants and hotels to airlines and entertainment venues — could keep pay growth high and make inflation more intractable.
Sweet of Oxford Economics said he suspects that “the Fed is overstating how strong inflation might be.’’
But he said he sympathized with its predicament: Powell and the other policymakers fear that a failure to curb high inflation — even if it means a recession next year — would lead to a central bank’s nightmare scenario: “stagflation.” That’s a worst-of-all-worlds combination of weak growth, high unemployment and persistent inflation.
It’s a problem with no clear solution.
“Faced with that choice,” Sweet said, “they’ll do everything they can to prevent it.”
Choe reported from New York. AP Economics Writer Christopher Rugaber contributed to this report.
US puts 3 dozen more Chinese companies on trade blacklist
BANGKOK (AP) — The U.S. Department of Commerce is adding 36 Chinese high-tech companies, including makers of aviation equipment, chemicals and computer chips, to an export controls blacklist, citing concerns over national security, U.S. interests and human rights.
The inclusion of the companies in the trade “Entity List” means that export licenses will likely be denied for any U.S. company trying to do business with them. In some cases, companies based in other countries are also required to comply with the requirements to prevent technologies from being diverted to uses banned under the export controls.
The move signals a hardening of U.S. efforts to prevent China, especially its military, from acquiring advanced technologies such as leading edge computer chips and hypersonic weapons. It’s the latest in a years-long escalation of U.S. restrictions of Chinese technology that began with President Donald Trump and has continued under President Joe Biden’s administration.
At the same time, the Biden administration has been moving to beef up American manufacturing capabilities for semiconductors and other advanced technologies.
The changes to the Commerce Department’s entity list were entered in the Federal Register, scheduled for publication Friday.
Yangtze Memory Technology Co., a computer chip maker based in the central city of Wuhan, and its Japan unit were included in the list for “posing a significant risk of becoming involved in activities contrary to the national security or foreign policy interests of the United States,” according to the document.
It said Yangtze Memory Technologies and Hefei Core Storage Electronic Ltd. were included because they allegedly might act as suppliers to Huawei Technologies, the world’s biggest maker of network equipment, and to Hangzhou Hikvision Digital Technology, another company subject to U.S. sanctions.
Late last month, the U.S. banned the sale of communications equipment made by Chinese companies Huawei and ZTE and restricting the use of some China-made video surveillance systems, including Hangzhou Hikvision, citing an “unacceptable risk” to national security.
Companies in the Anhui Cambricon Information Technology group, some affiliated with the Chinese Academy of Sciences and the Chinese Electronics Technology group, were said to be or have “close ties” to government institutions supporting the Chinese military and defense industry, it said.
Some of the companies were included in the list for being at “risk of diversion” to other companies on the entity list or are accused of illegally exporting U.S. electronics subject to export controls to Iran for military use.
Some major aviation suppliers were included to prevent them acquiring know-how and products that would aid China’s development of hypersonic weapons and other military capabilities.
Tianjin Tiandi Weiye Technologies Co. was listed, the document said, because it was implicated in high-technology surveillance, detentions and other human rights violations of Muslim ethnic minorities in China’s northwestern Xinjiang region.
There was no immediate comment from the Chinese government Friday. However, when asked Wednesday about reports that Washington was planning to change the trade blacklist to include more than 30 companies including Yangtze Memory Technologies, Foreign Ministry spokesperson Wang Wenbin said the U.S. was “stretching the concept of national security, abusing export control measures, engaging in discriminatory and unfair treatment against enterprises of other countries, and politicizing and weaponizing economic and sci-tech issues.”
“This is blatant economic coercion and bullying in the field of technology,” Wang said, adding that it also undermined regular business activities. “It is not in the interests of China, the U.S. or the whole world.”
Earlier this week, China filed a lawsuit with the WTO against the United States over its export control measures for computer chips.
The Chinese Ministry of Commerce said Beijing did so to protect its “legitimate interests.”
A statement from the ministry, reported by the official Xinhua news agency, said such controls were protectionist and threatened the “stability of the global industrial and supply chains.”
Democrats set aside donations from ex-FTX CEO Bankman-Fried
WASHINGTON (AP) — The three primary committees charged with electing Democrats said Friday that they would set aside more than $1 million in donations this election cycle from disgraced crypto mogul Samuel Bankman-Fried, who is accused of making tens of millions of dollars in illegal campaign donations.
Bankman-Fried, the former CEO of cryptocurrency exchange FTX, was a prolific political donor to individual lawmakers, official campaign committees and super PACs. Among the recipients of his cash were the Democratic National Committee, the Democratic Senatorial Campaign Committee and the Democratic Congressional Campaign Committee.
In a statement Friday, DNC spokesman Daniel Wessel said that the group will set aside the $815,000 in contributions it has received from Bankman-Fried since 2020. That total includes donations Bankman-Fried made directly to the DNC as well as the Democratic Grassroots Victory Fund and the Biden Victory Fund, which was a joint fundraising committee approved by Joe Biden’s presidential campaign, the DNC and state Democratic parties.
“We will return as soon as we receive proper direction in the legal proceedings,” Wessel said.
Officials at the DSCC and DCCC — the official campaign arms of Senate and House Democrats, respectively — released similar statements.
The DSCC group received $103,000 in donations associated with Bankman-Fried, and like the DNC, is preparing to return it once it gets the proper guidance, according to spokesman David Bergstein. The DCCC is setting aside its $250,000 it got from Bankman-Fried and said it is “waiting for further guidance from the government on what to do with the money based on their legal proceedings.”
“House Democrats are committed to preserving the integrity of our democracy and fairness in our campaign finance system,” said the spokesman, Chris Taylor.
There’s growing scrutiny on campaign donations that Bankman-Fried showered on individual lawmakers, campaign committees and super PACs since FTX collapsed last month and potentially erased the holdings of hundreds of thousands of customers.
Many lawmakers said in response to queries from the Associated Press that they will donate Bankman-Fried’s contributions to charity. Some lawmakers, similar to the campaign committees, are setting aside the money until further legal guidance.
Some campaign finance experts recommend setting his campaign cash aside, considering that those defrauded by him could seek to recoup the funds.
“During my most recent campaign I received unsolicited contributions from the company’s principal Samuel Bankman-Fried,” Rep. Jim Costa, D-Calif., said in an e-mailed statement Friday. “It is my intention to return or donate all the funds received. I will hold the funds in a separate account while we await guidance from legal counsel before proceeding.”
Youngkin executive order bans TikTok from state computers
RICHMOND, Va. (AP) — Virginia Gov. Glenn Youngkin banned the use of several Chinese-owned apps, including TikTok and WeChat, on state government devices and wireless networks on Friday, calling them a threat to national security.
Youngkin’s executive order covers apps developed by ByteDance and Tencent. Businesses who contract with Virginia must also prohibit their use on state-owned devices or IT infrastructure.
“TikTok and WeChat data are a channel to the Chinese Communist Party, and their continued presence represents a threat to national security, the intelligence community, and the personal privacy of every single American,” Youngkin, a Republican, said in a statement. “We are taking this step today to secure state government devices and wireless networks from the threat of infiltration and ensure that we safeguard the data and cybersecurity of state government.”
Youngkin joins at least 14 others governors who have taken such an action, amid calls for Congress to also ban the use of the programs on federal government devices.
The executive order drew praise from one of Virginia’s Democratic U.S. senators, Mark Warner, who chairs the Senate Select Committee on Intelligence.
“TikTok has the stamp of approval of the Chinese Communist Party and it poses a serious national security threat due to its data collection practices and its ability to reach and manipulate Americans. I hope to see more states take action to keep our government technology out of the CCP’s reach,” Warner, a former governor, said in a statement.
TikTok spokesperson Jamal Brown said in an emailed statement that it was “disappointing that states and some federal officials are promoting falsehoods to ban the platform instead of advancing sound policies to promote U.S. national security interests.”
“Millions of Americans rely on TikTok to grow their small businesses, reach new audiences, and make their livelihoods,” Brown said.
Wall Street loses ground, marking 2nd straight weekly loss
Wall Street racked up more losses Friday, as worries mounted that the Federal Reserve and other central banks are willing to bring on a recession if that’s what it takes to crush inflation.
The S&P 500 fell 1.1%, its third straight drop. The Dow Jones Industrial Average dropped 0.8% and the Nasdaq composite lost 1%. The major indexes marked their second straight weekly loss.
The pullback was broad. More than 80% of stocks in the benchmark S&P 500 fell. Technology and health care stocks were among the biggest weights on the market. Microsoft fell 1.7% and Pfizer slid 4.1%.
The Fed this week raised its forecast for how high it will ultimately take interest rates and tried to dash some investors’ hopes that rate cuts may happen next year. In Europe, the central bank came off as even more aggressive in many investors’ eyes.
“Inflation continues to be the monster in the room,” said Liz Young, head of investment strategy at SoFi.
Inflation has been easing from its hottest levels in decades, but remains painfully high. That has prompted the Fed to maintain its aggressive attack on prices by raising interest rates to slow economic growth. The strategy increasingly risks slamming on the brakes too hard and sending an already slowing economy into a recession.
“Whether it’s a mild, medium, or deep recession is still unknown,” Young said.
A mixed report from S&P Global on Friday highlighted the recession risk. It showed that business activity slowed more than expected this month as inflation squeezes companies. It also noted that it was the sharpest drop since May of 2020, but that inflation pressures have also been easing.
“In short, the survey data suggest that Fed rate hikes are having the desired effect on inflation, but that the economic cost is building and recession risks are consequently mounting,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said.
The S&P 500 fell 43.39 points to 3,852.36. It’s now down about 19% this year. The Dow dropped 281.76 points to finish at 32,920.46. The Nasdaq slid 105.11 points to 10,705.41.
Small company stocks had more moderate losses than the broader market. The Russell 2000 fell 11.19 points, or 0.6%, to 1,763.42.
Bond yields were mixed. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.49% from 3.45% late Thursday. The yield on the two-year Treasury, which closely tracks expectations for Fed moves, fell to 4.21% from 4.24% late Thursday.
The Fed on Wednesday ended its final meeting of the year by raising its short-term interest rate by half a percentage point, its seventh straight increase this year. Wall Street had been hoping that the central bank would signal an easing of rate increases heading into 2023, but the Fed instead signaled the opposite.
The federal funds rate stands at a range of 4.25% to 4.5%, the highest level in 15 years. Fed policymakers forecast that the central bank’s rate will reach a range of 5% to 5.25% by the end of 2023. Their forecast doesn’t call for a rate cut before 2024.
Several companies bucked the broader losses on Friday after reporting strong financial results and forecasts. Software maker Adobe rose 3% after topping Wall Street’s fiscal fourth-quarter earnings forecasts. United States Steel gained 5.8% after giving investors a strong earnings forecast.
Elaine Kurtenbach and Matt Ott contribute to this report.
Drivers are stuck in limbo as world’s oil supply reshuffles
NEW YORK (AP) — At a gas station outside New York City, retired probation officer Karen Stowe was faced with a pump price she didn’t want to pay. She bought groceries from the convenience store instead, planning to buy cheaper gas elsewhere.
“The price is so high, people have to think very hard about where they’re driving to,” said Stowe, who had just been volunteering at a food pantry. “People are in trouble, and that’s the truth.”
Though drivers in the U.S., Europe and elsewhere are getting a break from the sky-high gasoline prices they endured over the summer, the cost is still difficult for many who have been struggling with relentless inflation. The U.S. average was $3.19 per gallon, down from a record $5 in June, while European Union pump prices have dropped the equivalent of 55 cents, to $6.41 per gallon, since October.
Drivers now hope the situation doesn’t get worse after a series of cutbacks tied to Russia’s war in Ukraine, accidents and the slowing global economy have strained the world’s oil supply. While oil and gasoline prices have dropped despite a recent supply crunch, those threats could end up pushing costs higher this winter.
What’s the world facing?
— An EU ban on imports of most Russian oil took effect last week.
— At the same time, the Group of Seven leading democracies and 27-nation EU capped the price of Russian crude for other countries at $60 per barrel.
— There was a major leak along the Keystone pipeline in the U.S., which halted oil shipments along a major corridor.
— Dozens of oil tankers were stuck in Turkey for days.
— The OPEC+ coalition of oil producers has cut back production.
“The global system can withstand probably a few more days of these outages, but if they persist, they’re going to play a major role in price hikes,” said Claudio Galimberti, senior vice president of analysis at Rystad Energy.
A key reason restrictions on oil supply have not sent prices higher: Traders think there will be less demand for oil in the future, due to fears that the global economy is headed into recession, which would mean less driving and manufacturing. And some investors worry China’s looser COVID-19 restrictions could backfire for the nation’s economy.
“It can quickly turn into a major COVID wave which engulfs the hospitals and then is going to have a worse effect on demand than COVID policy,” Galimberti said.
The restrictions on Russian exports are likely to have a bigger impact on oil prices next month. Although Western nations have banned Russian oil, customers in India and China are buying it, so there’s enough oil on the market for those who need it. More than 97% of Russia’s seaborne crude exports went to China and India last month, according to Refinitiv, a financial market data provider.
“We do not ask our companies to buy Russian oil. We ask them to buy oil,” Indian External Affairs Minister Subrahmanyam Jaishankar said in Parliament last week. “But it is a sensible policy to go where we get the best deal in the interest of Indian people, and that’s exactly what we are trying to do.”
In February, global oil supply could get more limited, because European nations won’t be able to buy Russian refined products such as gasoline and diesel, so Russia could cut back on producing oil.
“So far, there hasn’t been a major decline in Russian production. But once Russia cannot export products to Europe, they will need to decrease production, and that will result in a supply shortage, which will be reflected in the prices most likely,” Galimberti said.
Russia also could decide not to produce oil due to the G-7 price cap. Its oil is selling for less than that now. But if the price goes up and approaches the cap, Russia could decide to take oil off the market, analysts said.
“There’s another shoe to drop on that front,” said Kevin Book, managing director at Clearview Energy Partners.
The price cap will lock in a discount on Russian oil, especially in light of the $100 per barrel Russia earned just a few months ago, White House press secretary Karine Jean-Pierre said.
“We are focused on limiting Putin’s ability to profit from rising prices to fund his illegal war, while promoting stable global energy markets,” Jean-Pierre said. “This is not about Russian oil off the market. This is about the cap — the cap at this level maintains clear incentives for Russia to continue exporting, and we believe that it should.”
International standard Brent crude oil was selling for about $80 a barrel Friday. That’s likely to grow to $92 per barrel on average next year, according to projections by the U.S. Energy Information Administration. That is still below $125 seen this summer.
When it comes to prices at the pump, they’re lower than they were last year, but Americans have paid $2 to $3 per gallon for most of the last decade, according to AAA data.
In the EU, where taxes account for a larger share of the cost of gasoline, prices fell to 1.65 euros per liter ($6.41 per gallon) as of Dec. 12 from 1.80 euros per liter ($6.96 per gallon) at the end of October, according to figures from the bloc’s executive Commission.
The recent price drop coupled with freezing weather has kept Aria Razdar, 28, behind the wheel of his BMW hatchback in Frankfurt, Germany. During the summer price spike, he would ride a Vespa scooter to work and school, but gasoline prices fell and so did the temperature.
“Right now, prices are a little more reasonable — actually they’re still high, but in comparison,” Razdar, a child care worker studying to be a teacher, said as he finished pumping fuel in an icy wind.
He spent a bit under 30 euros ($32) to fill up for the week, a cost he said he could manage for the convenience of driving 12 minutes to work instead of spending 45 minutes on public transit.
Others also wished prices were lower.
Gary Schwuchow, a retired maintenance supervisor, said he’s taking fewer road trips and saving money because he lives off his pension and Social Security payments.
“I used to be able to fill the tank up for $40 or $42, and now it’s almost $60,” he lamented as he gassed up his Nissan Sentra at a station in Yonkers, New York, where a gallon of regular gas was selling for $3.79. “I don’t fill it anymore. I put in $25 at a time.”
McHugh reported from Frankfurt, Germany. Associated Press writers Fatima Hussein in Washington and Ashok Sharma in Delhi contributed.
US buying 3M barrels of oil to start replenishing reserves
WASHINGTON (AP) — The Biden administration said Friday it is buying 3 million barrels of oil to begin to replenish U.S. strategic reserves that officials drained earlier this year in a bid to stop gasoline prices from rising amid production cuts by OPEC and a ban on Russian oil imports.
President Joe Biden withdrew 180 million barrels from the Strategic Petroleum Reserve starting in March, bringing the stockpile to its lowest level since the 1980s. The purchase, to begin in January, will start to replenish the reserve and is likely to be followed by additional purchases, officials said.
The Energy Department called the purchase “a good deal for American taxpayers” since the price will be lower than the $96 per barrel average the U.S. oil was sold for. The replenishment also will strengthen U.S. energy security, the department said in a statement.
The purchase price was not announced, but benchmark West Texas Intermediate crude oil was selling at $74.50 per barrel late Friday.
Gasoline prices, meanwhile, averaged about $3.18 per gallon on Friday, down from $3.74 a month ago and just over $5 per gallon at their peak in June, according to the AAA auto club.
Tapping the reserve is among the few things a president can do by himself to try to control the inflation that makes Americans poorer and often creates a political liability for the party in control of the White House.
Global oil prices were rising even before Russia invaded Ukraine last February. When Biden announced a ban on Russian oil imports in early March, he acknowledged it would come at a cost to American consumers.
The administration completed the release of 180 million barrels in October. The reserve now contains roughly 400 million barrels of oil, down from more than 600 million in late 2021, according to the Energy Department.
The reserve was created after the 1970s Arab oil embargo to give the United States a supply that could be used in an emergency.
Contracts for the purchase will be awarded by Jan. 13, with deliveries to an SPR site in Texas expected in February.