Earth Shattering
Fracking
We talked recently about groundwater, and how parts of the US are rapidly depleting underground aquifers, some of which may never recover. Americans are rapidly sucking our water reserves dry to grow alfalfa and maintain our golf courses. But, did you know there’s another extractive industry using millions of gallons of water to destroy the planet in new and exciting ways?
That’s right, we’re talking fracking:
Together, oil and gas operators reported using about 1.5 trillion gallons of water since 2011, much of it from aquifers, the Times found. Fracking a single oil or gas well can now use as much as 40 million gallons of water or more.
Hell yeah. Not only are hydraulic frackers damaging the planet by injecting toxic chemicals and shattering the earth’s crust to unknown effect, they’re using a rapidly dwindling resource to do so! Texas, as you’d imagine, is especially bad:
In the western portion of the Eagle Ford, one of the state’s major oil-producing regions, aquifer levels have fallen by up to 58 feet a year, a 2020 study by researchers at the University of Texas at Austin found, and fracking’s water demands could result in further regional declines of up to 26 feet.
Since 2011, BP has dug at least 137 groundwater wells in Texas for its oil and gas operations and reported using 9.1 billion gallons of water nationally during the past decade. EOG, one of the country’s largest frackers, consumed more than 73 billion gallons of water for fracking at the same time.
While residents of Texas cities are being asked to conserve, oil and gas companies can drill hundreds of feet into the ground and suck as much water out as they want. Fracking wastewater contains such a complex mix of chemicals that scientists don’t know everything that’s in it, so it can’t be cleaned or recycled for human use, despite industry claims.
Nor is the industry blind to the side effects - half a decade ago the companies were aware they were taking water from stressed areas:
A 2016 Ceres report found that nearly 60 percent of the 110,000 wells fracked between 2011 and 2016 were in regions with high or extremely high water stress, including basins in Texas, Colorado, Oklahoma, and California.
And as easier fracks become more scarce, companies must drill deeper which requires - you guessed it - more water. It’s become so bad that in some areas fracking uses more water than every other human activity:
But researchers at Colorado State University who compared water used for fracking in oil- and gas-producing states between 2011 and 2020 found that, under arid conditions, frackers could use more water than irrigation. In La Salle for instance, under arid conditions, fracking used more water than irrigation and local homes and businesses combined.
The US push to become less reliant on foreign oil and gas imports encouraged fracking to proliferate like wildfire over the last decades, despite little understanding of what it would do to the land above and below extraction points. Now, it turns out fracking is not only causing earthquakes and releasing toxic chemicals into the environment, it’s also siphoning an inordinate amount of groundwater to line the pockets of the same tiny group of people becoming impossibly wealthy selling the fruits of their theft back to us so we can burn it to finish the job.
SBF
With the trial of Sam Bankman Fried starting, much is still being made of his life, his motives, and his potential defenses in court. Michael Lewis has become an ongoing side plot in the trial, because he’s releasing a new book about SBF, and keeps doing interviews insisting the crypto fraudster did not actually steal the money it’s pretty clear he stole.
Much of the bloom has come off Lewis’s rose as an impassive chronicler of amazing stories that seem to fall into his lap, but for the sake of argument, let’s discuss what it would have looked like if SBF were truly a hapless business novice, fumbling his way through running a multibillion-dollar crypto empire.
When you start a business, there are a lot of things people don’t tell you. You can use a third-party service (i.e. Legal Zoom) to file your corporate paperwork, and find yourself a registered agent in Delaware to take advantage of its laws and tax rates, but after that you have to do a lot of stuff to keep your operations compliant.
There’s accounting - do you know how to do accounting? Do you understand how ‘accrual’ works? Have you ever used QuickBooks? Have you filed the proper tax forms for your employees and contractors? Are you collecting sales tax and paying it to the city and/or state each week, month, or quarter? As a small business owner you have to know how to do all that, or you can run afoul of the tax authorities. The laws are, of course, different depending on where you live. Fun!
If you’ve got people on payroll (and yourself - do you know if you can pay yourself salary?) do you have your deductions set up properly? Whatever company you’re paying (i.e. ADP) requires you to set much of this up yourself, which means you may not get your contributions right. And if they make a mistake, it’s still your problem!
Have you taken a loan, or any other sort of debt to start your company? Are you paying that back? Did you book it as income by accident and now you’re paying taxes on it? Can your accountant sort that out for you? Do you have an accountant?
I have started and run multiple businesses over the course of my life and I generally tell people: if you’re thinking about starting a business, think real hard. There is a reason most businesses fail, and the people who start them end up in financial trouble - it’s really complicated! Armies of consultants and accountants and other services professionals exist to make it easier to run a small company with a few employees successfully, which is a still an extremely uphill battle.
What often happens, when someone is lucky enough to have a business that is making money, is the person starts to use that money for things it’s not supposed to be used for. Paying personal bills, taking or giving loans to yourself and friends, or floating existing expenses with future payables. There is a reason practically every ‘entrepreneur’ you’ve read about has a history of unpaid taxes - I did!
I know what it’s like to look at bank accounts with a bunch of money in them and think hey, I can use some of this to pay this thing I owe now, without taking into account what I will owe in a month, or six months. Or whether I’ve set aside enough money to pay taxes in April. So you pay one bill, then another, then you use a little to buy dinner for someone, or pay your car payment, and come April the money isn’t there so you just don’t file taxes, or you fudge them and risk getting caught.
This is the unfortunate reality for scores of small businesspeople around the country - whether they run a software startup like I did, a corner store, or a car wash. There are very few experts who can tell you what to do, how to do it, and you usually can’t afford those people anyhow. Corner stores don’t have CFOs - they’re lucky if they have dedicated bookkeepers. And, even if an expert tells you what you should do, it doesn’t change the reality of what you must do. Because the bills need to be paid. Somehow.
I’ve written all these words to provide a little context for what it is like when you are a plucky entrepreneur who gets out over her skis and make some bad financial decisions that come back to bite you. Often, you lose the money you and maybe your family and friends invested in your business, and you are left licking your wounds with a friendly IRS collections agent trying to reach you via phone and mail.
However! SBF was not a well-intentioned startup founder who blew some of his investors’ cash on some bad bets. He was in charge of a multibillion-dollar crypto empire, and he had a team of executives (though no CFO), and other teams accountants and lawyers who helped him create his labyrinthine web of offshore companies around the world. There were lots of people who could have taken a look at the books and said ‘hey, wait, is this really just a fucking Excel sheet tracking all your assets?’ He actively prevented them from doing so, which is not the sign of someone making a good faith effort to run a business.
Also, he was funneling millions to his parents, and he and his co-founders were siphoning many more millions for real estate, entertainment, and political donations to keep the charade afloat.
What I am saying is there is a plausible incompetence defense if you start a dry cleaners and run it into the ground because you’ve never taken an accounting class and didn’t hire a lawyer. There is probably not a similarly plausible defense when you hire teams of attorneys and accountants to set up twenty seven offshore shell companies to run your crypto exchange(s). Then, when your web of global entities is bringing in billions, you extend a secret, unlimited credit line to your own hedge fund which loses money like it was its sole reason for existing. And, you donate millions to political causes and industry groups and go in front of Congress to argue for more regulation in crypto, because you have spent years convincing everyone you are the smartest mind in crypto. A judge or jury might look at all that and say ‘eh, it doesn’t seem likely this person was also just very unlucky and bad at business and that’s why he couldn’t account for a few billion dollars’ worth of customer deposits.
Running a business is hard, it’s even harder to get right, and it’s rarely lucrative for its owners. SBF may have few avenues of defense, but his lawyers and Michael Lewis for some fucking reason trying to portray him as a victim with bad luck and good intentions does a disservice to the people who actually make a good faith attempt at entrepreneurship.
Agri Stats
We have talked around here about meat producers. American meat prices have remained high after the shock of the pandemic, and meatpackers continue to reap conspicuously large profits.
Remember last year when Biden (and others) accused meatpackers of greedflation? We were told by the industry that there were supply chain shocks, or livestock pandemics, or labor had become more expensive.
In the midst of the last few weeks’ flurry of antitrust cases against tech giants like Amazon, the DoJ filed a case against a company called Agri Stats. Who is this unknown firm and what were they up to?
The company essentially recruits the leading meat processors, all of which compete with one another, into its information-exchange service.
[…]
Agri Stats offers a “give-to-get” policy: If processors give up complete information for all their facilities, they will get complete information for everyone else’s. It sets up what is described as an automated “direct download” of key information from the various processors; none of it is survey data. It’s just precise, weekly information about births of livestock, raising and slaughter of animals, packaging and cutting of meats, and delivery to grocery stores, complete with production costs (including labor wages and benefits) and prices charged to customers.
Oh, sure! You see, if the companies all called each other up on the phone and said ‘hey [meatpacking executive] how’s the weather? kids? also what was your per-unit production cost for broilers this week and what did you sell them for?’ that would be price fixing and they could get in trouble. So instead, they just use a ‘research firm’ that gives them all that data in exchange for their data, which is shared with their competitors.
This is pretty much the definition of industry collusion and the company has been doing this shit for forty years. There have been private lawsuits against Agri Stats, and the company shut down its turkey and pork feeds four years ago. But they’re still at it in other categories, even offering highly detailed sales reports to customers:
In addition to sales, production, processing, and operating profit books, the “bottomline” book ranks every processor’s profit margins, on a per-animal and per-pound basis. Processors can ask for specific sales reports for cuts of meat or other categories. None of this data is made available to non-processors, like farmers, workers, or retailers.
Yeah, that last bit is important too - no one outside the meat production ecosystem has access to this data, or likely even knows that nearly every major meatpacker in the nation is using extremely detailed reports to price fix.
The government has mountains of evidence - examples of processors changing prices in response to reports, or planning to restrict supply to keep prices high. For years, it’s worked like a charm:
Costs decreased in the turkey market between 2013 and 2016, according to the data from the complaint, yet prices went up, and profit margins soared 300 percent.
Right, yes. Meat industry flacks can insist that their costs have gone up, blaming Biden or whatever, but they haven’t! The data is right there! In the same detailed feeds they’re using to collude with their competitors to keep prices high! Gah!
The DoJ is seeking to shut down Agri Stats, which would make it more difficult for companies to price gouge, but given the current judicial climate in this country it wouldn’t surprise me to see a new service pop up in its place, betting that it could take years or even decades for anyone to notice and do anything about it.
ShotSpotter
ShotSpotter is a company that claims its technology can detect where gunshots are coming from and direct police to the source. Gunshot detection technology is, to put it mildly, controversial at best.
A report from Chicago found that in nearly ninety percent of cases where the technology was used by police, there was no evidence of a gun crime. Then came the revelations that humans at ShotSpotter are given broad discretion to rule whether something is a gunshot or not, begging the question whether the ‘tech’ it touts is actually any better than a person listening to sounds on headphones.
THEN came the details of police telling ShotSpotter to fudge their data to find phantom gunshots to help them build cases. Clearly, the secretive nature of the company’s ‘algorithms’ and their susceptibility to human intervention and misuse by police should be, at the very least, major red flags that the service is ripe for abuse.
Undeterred, ShotSpotter is expanding into other areas of crime detection, hoping to round out its suite of services to its law enforcement and governmental clients. What company did they just acquire?
PredPol! You may remember them from the Markup’s reporting into how their software was, basically, worthless, and led to over-policing of minority neighborhoods and needless arrests. ShotSpotter owned one bunk predictive policing company, so when PredPol’s parent decided to sell itself off for parts, of course ShotSpotter stepped in to acquire a product so bad United States police departments couldn’t justify spending their ridiculously bloated budgets on it.
Seriously, when the cops who solve less than twenty percent of nonviolent crimes decide your app is actually making them worse at their jobs, you should go into a different line of work immediately. Unless, I guess, you were venture funded, in which case you wait a couple years until some equally hapless company with more money comes along and buys you out.
Short Cons
The Verge - “I am lingering here because it highlights a major problem with Isaacson’s biography. We are dealing with not one but two unreliable narrators: Musk and Isaacson himself.”
American Prospect - “On top of all these egregious violations of elementary judicial ethics, our research revealed another ethics controversy surrounding Thomas and CFPB v. CFSA that has thus far escaped close scrutiny. It concerns Thomas’s central role in the Horatio Alger Association, an exclusive circle of wealthy business elites that gave Thomas lavish undisclosed gifts.”
Hamilton Nolan - “If you were to make one single rule to follow when it comes to hiring journalists at a news organization it would be “Try to avoid hiring the direct family members of prominent politicians, for your political news outlet.” And yet.”
Axios - “Regulatory pressure and free speech concerns have pushed tech giants to abandon efforts to elevate quality information, leaving the public more susceptible to misinformation ahead of the 2024 election.”
Bloomberg - ““Harvey had access to a lot of so much more attractive girls, I have to tell you,” [Crispin] Odey joked during the 17-minute phone call. “If you lose an arm, you only get ten grand — you know, if someone touches you on the bottom you might be able to get a hundred grand,” he said elsewhere in the call.”
CNBC - “Authorities have arrested crypto fugitive Su Zhu, co-founder of bankrupt digital asset hedge fund Three Arrows Capital, who was apparently attempting to flee Singapore.”
WaPo - “The full scope of 777’s revenue streams remains unknown, but the company has financed several businesses that have been accused of profiting from what critics deem predatory financial practices that target economically vulnerable people, according to interviews and court records reviewed by The Washington Post.”
WSJ - “U.S. merchants paid an estimated $93 billion in Visa and Mastercard credit-card fees last year, according to the Nilson Report, an industry publication. That was up from about $33 billion in 2012.”
WIRED - (TW: animal abuse) “Missing from the veterinary records released by the university are hundreds of photographs taken by the primate center’s staff between 2018 and 2020 of Neuralink’s test subjects.”
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