This week's interesting finds

Akhil, partner since 2021 (Toronto, ON)   

This week in charts 

Market risks 

Canadian mortgages   

Japan

Americans Are Losing Faith in College Education, WSJ-NORC Poll Finds

“These findings are indeed sobering for all of us in higher education, and in some ways, a wake-up call,” said Ted Mitchell, the president of the American Council on Education, which counts more than 1,700 institutions of higher education as members. “We need to do a better job at storytelling, but we need to improve our practice, that seems to me to be the only recipe I know of regaining public confidence.” 

Dr. Mitchell cited student debt, which has reached $1.7 trillion, and the 60% graduation rate at four-year colleges as two of the biggest problems undermining confidence in the sector. 

Public skepticism toward higher education began to rise after the 2008 recession and compounded during the pandemic. Enrollment in U.S. colleges declined by about 15% over the last decade while the growth in alternative credentials, including apprenticeships, increased sharply. 

Women and older Americans are driving the decline in confidence. People over the age of 65 with faith in college declined to 44% from 56% in 2017. Confidence among women fell to 44% from 54%, according to the poll.   

Retailers Reaping Big Savings on Ocean Transport Costs

The average price for Asia-to-U.S. container trade has “fallen as dramatically as we’ve ever seen it fall,” said Jon Cargill, senior vice president and chief financial officer of Hobby Lobby Stores Inc. 

Importers and container lines typically conclude agreements for the fall shipping season, when retailers stock up on consumer goods, by mid-April for contracts that take effect May 1. Companies say they are negotiating in a far different environment from last year, when retailers looking to replenish depleted inventories rushed to sign deals and paid record amounts to secure scarce space on container ships.

Ocean carriers are struggling to fill space on ships after a steep drop-off in cargo that began in the fall and that has continued into 2023. Retailers ended up overstocked in the second half of last year as consumer spending shifted, and many are still coping with excess inventories. 

Spot market rates have crashed more than 90% from pandemic-era highs as shipping demand has declined. The average spot rate to ship a container from Asia to the U.S. West Coast as of Thursday was $1,289, according to Norway-based transportation data specialist Xeneta, about $668 lower than the contract price.   

Netflix Restructures Film Group as It Scales Back Movie Output 

Film chief Scott Stuber is attempting to scale back the company’s output so that he can ensure more of the titles are of high quality. The streaming service has released more original movies than any other company in Hollywood recently, producing upwards of 50 projects a year. 

A handful of those earn Oscars, like All Quiet on the Western Front, which won best international film this year, or are viewed by tens of millions of people, like Glass Onion: A Knives Out Mystery. But many of them come and go with little fanfare. 

Netflix increased its output in part because it knew other studios would stop licensing it as many titles as they focused on their own streaming services. The company added staff to boost production, creating multiple divisions responsible for movies at different price points. The independent film group makes movies with a smaller budget (typically $30 million or less), while another group makes ones in the mid-budget range (between around $30 million to $80 million). Yet another unit makes bigger-budget films. 

The job cuts are much smaller in scale than the ones Netflix instituted a year ago. The company, which closed 2022 with about 12,800 employees, eliminated hundreds of positions last year in an effort to reduce costs after its subscriber growth slowed.   

This week’s fun finds 

The power of Excel

MIT Researchers Twisted Apart Hundreds of Oreos to Find the Perfect Method 

In 2022, researchers at the Massachusetts Institute of Technology (MIT) unveiled their cookie-centric findings in a study titled, "On Oreology, the fracture and flow of 'milk's favorite cookie.'" The research, which has recently resurfaced on social media, focused on if and how people could evenly split the crème inside an Oreo when twisting it open. 

To find out if, and how, the crème could be evenly split, the team created the "Oreometer," a 3D-printed apparatus, which employs both rubber bands and weighted coins to represent the force of twisting apart the cookies. The team even open-sourced the design, so anyone with a 3D printer can make their own at home. 

Of course, this entire study is much deeper than just finding the perfect cookie twist. It's also a look at rheology, which Nature describes as "the science of measurement of deformation. Virtually all materials deform in response to an imposed stress ('everything breaks if you hit it hard enough') and the materials present in the eye range from liquid-like to soft-solid behavior." 

So, what did the team conclude? That despite their best efforts and original hypothesis, it's actually almost impossible to have evenly distributed crème on both sides of an Oreo after twisting. 

You Don't Need to Do a Cleanse Diet 

Otherwise known as detoxification diets, the extremely restrictive temporary regimens, often hawked by nutrition influencers, claim to carry meaningful health benefits: weight loss, clearer skin, mental acuity. A sense of pureness. 

These diets come in many different forms. Drinking only liquid or specialty mixed smoothies is probably what comes to mind when someone hears the word “cleanse,” but eating certain foods, taking certain herbs, and popping certain supplements all fall under the detoxification rubric. 

The fact is that our bodies do the heavy lifting for us. And if that’s the case, why the emphasis on detox diets? “It kind of implies a shorter-term solution, and quick results,” said Brigitte Zeitlin, a registered dietitian. 

There is a good reason why detox diets help people lose weight, for example, in the short-term. Consider the fact that on a detox diet you’re eating less sugar, fewer processed foods, and more whole foods (if you’re eating at all). You’re eating fewer calories overall, which is exactly what the limited number of papers on detox diets spells out. For some people, that can be great for a short-term boost; for others, it saps them of energy. In either case, you might be missing out on key nutrients you get from foods on the plate.

This week's interesting finds

 

Nataliya, partner since 2008 (Toronto, ON)   

This week in charts 

Canadian population   

Energy consumption   

Opinion: LNG is a hat trick for Canada 

Natural gas is the most energy dense by mass of the entire fossil fuel group and generates the lowest emissions when ignited, it’s at the top of the fossil fuel evolutionary ladder if you like. For the record, a molecule of methane has three times the embedded energy as a molecule of hydrogen. In general, from an energy sourcing prospective, we should be migrating towards denser, lower cost, lower emission energy sources. Natural gas most certainly releases carbon when burned, it’s not perfect, but that’s actually the case with all the current components of the world’s energy stack. Whether it’s renewables, nuclear or fossil fuels, each energy source has both positive and negative attributes, be it carbon emissions, cost challenges per unit of energy, or ultimate waste disposal. 

The foundation of our modern civilization has been built upon abundant and inexpensive energy. The world’s energy stack continues to ‘transform’ between sources in an effort to systematically improve efficiency, economics, and emission profile to provide energy for our planet’s growing population. Part of that transformation is a rapidly growing ‘transition’ to natural gas envisaged for the next several decades. No matter which forecast or outlook you use, natural gas consumption is growing materially, to as much as 35 to 40 per cent of the entire energy stack within 10 years. So the world is most certainly not transitioning off natural gas, it’s just the opposite. 

Canada is currently the fourth-largest producer of natural gas in the world, and we are blessed with amongst the largest gas reserves on the planet. We have a well-established gas industry with an extensive natural gas processing and country-wide transportation infrastructure already built and in place. Another advantage is that we have relatively low-cost reserves to develop, the main gas resource plays aren’t particularly deep, and they tend to drill and complete quickly and easily. Although the Western Canadian Sedimentary Basin has been producing for almost 100 years, our prime natural gas resource plays, the Alberta Deep Basin and the BC/AB Montney, are actually very early in producing life, and much earlier than their US counterparts to the south. The Montney, for example, has only produced 22 TCF of an estimated 645 TCF of ultimate recoverable gas reserve (current production from the Montney is approximately 5.7 TCF per year). We’re in the top of the first inning and pitching to the first batter, to use a baseball analogy to depict the remaining Montney reserve life. A 4 bcf/day LNG project, the potential size of LNG Canada, is estimated to create up to 20,000 jobs and $9-12 billion in annual export income to the Canadian economy. 

And this is a true net reduction for the world. The atmosphere has no borders so replacing coal with gas in China or India is a true 60 MT/year reduction for the world. The second key consideration is that our Canadian gas industry produces on average the world’s lowest-emission natural gas, and our leading clean-tech industry is allowing us to get cleaner, faster than anyone else. The gas is going to be supplied to the countries that demand it; China, India and now Europe, whether Canadian methane molecules show up or not. The global atmosphere is a net loser in that case as the gas will be sourced from producing jurisdictions with a higher emission profile. 

The final goal in our hat trick is scored by the opportunity to improve First Nation prosperity. The majority of First Nations in Western Canada are very supportive of oil and gas development as it’s seen as an opportunity for long-term, high-quality employment and a sustained higher standard of living. Be it Indigenous-owned service companies, a growing reclamation business sector, direct employment with producers, or equity investment in pipeline projects; the First Nations’ economic opportunities are myriad if we become a major global LNG player. We need to ensure this opportunity is not lost. 

Top Biden Adviser Says US Won’t Rush to Fill Petroleum Reserve

“We’ve seen a decline in oil prices, we’re seeing some crunch there,” [Special Presidential Coordinator for Global Infrastructure and Energy Security Amos] Hochstein said. “We should take a deep breath and wait and see how this crisis right now impacts the oil and gas industry, production and what the profile is. So far prices have come down. We’re watching it very closely, we’ll continue to watch it over the next several days.” 

The SPR, which was designed to shield the country from supply disruptions, is currently at 371.6 million barrels, the lowest since the 1980s, after the historic release of 180 million barrels last year to tame gasoline prices in the wake of the war in Ukraine. 

The administration previously laid out a plan to refill the reserve at prices close to $70 a barrel. WTI futures tumbled to almost $66 in New York on Wednesday. 

Russia’s Oil Trade Is Starting to Show Signs of Clogging Up

Even after the world’s main oil forecasting agency said output could fall by 30%, exports from the OPEC+ producer have so far been resilient as the sanctions, along with price caps on Russian oil, were intended to keep the flow going. However, cargoes are now starting take longer in finding homes. 

As well as having implications for Moscow — proceeds from taxes on oil industry accounted for over two thirds of energy tax revenue in February — the development may alarm US officials, who’ve long argued that the Russian oil needs to flow freely to avoid a surge in fuel prices. 

Ships filled with refined fuels are floating off the coasts of Europe, Africa and Latin America, potentially ratcheting up waiting fees. Some vessels hauling the OPEC+ producer’s crude oil are bouncing between ports without discharging, while others are unloading and being stashed at unusual locations. 

It all points to a network of logistics that is struggling to keep pace with servicing a country that exports over 7 million barrels a day of crude oil and products. A vast swath of that trade has shifted from Europe to new and less-familiar customers, often thousands of miles further away. 

“Although crude oil cargoes are finding new homes in China and India, products are facing increasing difficulties to be placed,” said Tamas Varga, an analyst at brokerage PVM. 

Crypto Is Mostly Over. Its Carbon Emissions Are Not.

Mining bitcoin does not involve actually digging anything out of the ground—unless you count the fossil fuel that often powers it. The process involves using heavy-duty computers to grind through trillions of calculations, solving equations to create virtual coins. The method is known as “proof of work.” Once upon a time, bitcoin mining was something that people did if they had a couple of spare computers they wanted to put to work. Over time, it’s taken more and more computing power to unlock a single coin; now most mining is done in large-scale operations using purpose-built mining rigs. 

And it is America’s problem now. After China clamped down on crypto mining in 2021, such computing work increased in the United States. Miners set up shop in communities with low energy prices. And owners of unprofitable power-generation infrastructure, such as waste-coal-burning power plants, opened up crypto-mining operations to create another revenue stream. These companies have put a lot of money into their hardware and their physical space, and they will continue mining until they are actively losing money. “There are miners that have been quoted saying, ‘As long as the price is over $10,000 per coin, it still can generate money,’” Elizabeth Moran, a policy advocate at the green law firm Earthjustice, told me. And that is a big reason crypto keeps spewing out so many emissions even during the “crypto winter”: Bitcoin prices in particular have held up, in fact they just passed $28,000 a coin. That’s still far below their peak of almost $68,000 in late 2021, but represents a bit of a comeback from the sub-$16,000 prices of last fall. 

So it is still very possible to make money at this game. Some companies bypass the energy grid entirely; depending on the price of gas and the price of bitcoin, turning natural gas into crypto might be twice as profitable as selling it to the wholesale gas market. Gas companies bring in a trailer or three jam-packed with generators, plugging one end into the well and the other into “shipping containers full of bitcoin miners,” says Rob Altenburg, the senior director for energy and climate at PennFuture, an environmental nonprofit. “We’ve heard of three different companies doing it. But we’ve got thousands of fracked gas wells across the state and just simply have no way of knowing where this is happening.” Gas drilling is heavily regulated, but crypto mining itself is not. 

A recent federal investigation in Colorado found crypto mining powered by gas wells on public-lease lands, creaming energy off before it hit the grid and converting it to crypto without paying any royalties. The report noted that because the generators and rigs are usually on trailers, the entire operation can be moved quickly, so miners can stay ahead of government oil and gas inspectors. Other “behind-the-meter” operations are physically located at power plants. The natural-gas-fired Greenidge Generation Station, on the shores of Seneca Lake in upstate New York, opened a massive bitcoin-mining operation plugged right into the plant, which in 2021 consumed the bulk of the electricity it produced. Tapping into energy before it hits the grid is just one way bitcoin miners keep costs down; they’ll seek out and exploit any cheap source of energy. 

Lots of other digital activities do consume power and cause greenhouse-gas emissions—questing with pals, hoarding years of work emails on the cloud, making friends with a hallucinating AI. One analysis in 2019 suggested that our online lives were responsible for 3.7 percent of planet-wide emissions; the number may have gone up since. Schneps likened bitcoin’s global electricity consumption to “roughly the same as video games.” But even if that’s true, while two-thirds of Americans play video games, just 21 percent of Americans own crypto, and even less bitcoin in particular. The massive environmental impact of bitcoin is harder to swallow because it is part of an industry that is, in essence, “smoke and mirrors,” as the crypto blogger James Block put it in an interview with Charlie Warzel. “There’s nothing produced by these companies.”  

This week’s fun finds 

St. Patrick’s Day moai 

Although we couldn’t find an Irish place that would cater, Luke ordered some deli sandwiches and the obligatory Guinness for the big day. Lucky us!   

Data Never Sleeps 10

Why Are All Action Heroes Named Jack, James, or John? 

The first step was to define my data set. Since there exists no one official pantheon of action heroes, I started by turning to the first port of call for many researchers: Wikipedia. According to its list of action movies, 2,206 modern movies had been released in the genre, beginning in 1962 with Dr. No, the first movie to star James Bond. From these movies, I narrowed down the list to include only Hollywood productions and movies centered on a male everyman–type hero. The trope is well known: A lone man facing seemingly unbeatable odds conquers any foe put in his way—be it his government, a terrorist cell, or a natural disaster. Gone from the list were movies that featured ensemble casts or were about buddy cops or female heroes. (This last category didn’t take long to remove.) If it was not immediately clear whether the movie was built around a single man of action, I dug deeper, consulting trailers, plot summaries, and other marketing materials to make an informed decision. (This also led me to watch some great action movies I’d never heard of, like 2002’s Extreme Ops.) After going through all 2,206 action movies, I was left with 790 movies featuring an everyman-type lead. 

Out of those 790 movies, 542 featured single male antagonists. I added up all the names together, expecting to see a few popular villainous names emerge, but this was not what the data showed. The most frequent fiendish name in the data was Victor, seen in only 10 movies. Villains had names beginning with J only 7 percent of the time. 

Jennifer Moss, from BabyNames.com, told me over email, “When I sit down to watch a new show and hear that the protagonist is named Jack, I think ‘Isn’t that over, yet?’ ” Going back to the data, I wanted to see how the trend has changed over time and whether we are seeing an end to it. From the data dating back to 1962, J-named action stars overtake all other names a few times, in the early 1970s, for a moment in 1984, and last in 2002. It’s already been more than two decades since the J’s reigned supreme.

This week's interesting finds

 

Ruairi, partner since 2019 (Dublin, Ireland)  

This week in charts 

Canadian housing 

Lost decades 

Trans Mountain crosses $30-billion threshold

"Buying and building this pipeline will go down in the history books as one of, if not the, worst infrastructure decision a Canadian government has ever made,” said Greenpeace Canada senior energy strategist Keith Stewart. “It was always a disaster from a climate change perspective, but this is now an economic crime that has stolen $30 billion of public funds from real climate solutions." 

On Friday afternoon, the Crown corporation disclosed that TMX’s estimated total cost is 44 per cent higher than the previous estimate of $21.4 billion from February 2022. It chalked the skyrocketing costs up to global inflation, flooding in British Columbia, archeological discoveries and a handful of other factors, like “challenging terrain between Merritt and Hope,” B.C., and “earthquake standards in the Burnaby Mountain tunnel.”In a statement, Finance Minister Chrystia Freeland did not directly acknowledge the Crown corporation’s ballooning cost increase. Rather, she said Trans Mountain released an updated cost estimate and confirmed the project would be complete by the end of this year and operational by 2024. 

“The federal government acquired (Trans Mountain Corporation) and the Trans Mountain expansion project in 2018 because we knew it was a serious and necessary investment — one that is in the national interest and will make Canada and the Canadian economy more sovereign and more resilient,” Freeland said. 

The statement did not address where the additional $9.5 billion of financing would come from. Last year — after Freeland promised no more public funds would be committed to the project — the federal government greenlit a $10-billion loan guarantee to cover TMX’s cost increases. 

Regardless of cost, Canadians already own TMX, and experts say the public will also end up on the hook for the $10-billion loan provided by Canada’s six biggest banks last year. Guaranteed returns on a loan that size are a great deal for the banks because even if Trans Mountain fails to pay back the entire amount, the federal government’s promise means there is no risk the banks will lose money. Loan guarantees like this are also fossil fuel subsidies, according to the World Trade Organization’s widely accepted definition.   

This week’s fun finds 

EdgePoint’s hot sauce review crew vs. Sprig’s Bhut Jolokia sauce 

Made from the ghost pepper, allegedly the “world’s hottest”. 

About 10 of us tried it out, but the warning on the back (“Not for people with heart conditions”) was scarier than the spiciness. 

Group rating: 

• Spice: 7/10 (“The spice lingers, but not bad.”) 

• Flavour: 4/10 (“Not too much flavour…but it’s smoky, so it would be nice mixed with something.”) 

Thanks for bringing it in, Akhil! 

The Daring Ruse That Exposed China’s Campaign to Steal American Secrets

Then the security officers told [GE engineer] Hua that the F.B.I. wanted to talk to him. Two F.B.I. agents, who were already in the building, entered the room. One of them was Bradley Hull, a bright-eyed man with a shaved head and a goatee. He started with the same questions that G.E. security had asked about Hua’s China trip. 

Hua was shaking with nervousness, one of the agents told me in an interview. He repeated the answers he had given to his employer’s security officers. Hull proceeded to ask more questions about the trip, giving Hua several chances to amend his story and signaling that he didn’t think Hua was being truthful. Finally, he confronted Hua with evidence showing that Hua had met with people other than just friends and family. He had also paid a visit to the Nanjing University of Aeronautics and Astronautics. 

Hua finally disclosed that he had given a presentation at N.U.A.A. about designing airplane parts out of composite materials. He said he had been careful to not divulge any information that was proprietary to G.E., even though he had downloaded certain files that belonged to his employer to help prepare his slides. As Hua provided more detail about his visit, Hull became convinced that he had been hosted at Nanjing by Chinese intelligence officials looking to cultivate the engineer as an asset, someone who could steal trade secrets for them. 

Hua was put on leave without pay by G.E. Aviation right after the F.B.I. interviewed him in November 2017. As he struggled to find paid work in the weeks that followed, his efforts on behalf of the F.B.I. kept him engaged. Under the agency’s direction, he kept up his exchanges with [Chinese Ministry of State Security agent] Xu over WeChat and email, expressing eagerness to share information from G.E. “Just recently I’ve heard the speculation about laying off in my department. I, of course, don’t want to be affected, but the possibility is there,” he wrote in a message on Jan. 23. “That’s why I’m trying my best to collect as much information as possible.” Xu asked if Hua could send material relating to the specifications and design process for building an encasement for fan blades. Hua obliged with a document titled “G.E.9X Fan Containment Case Design Consensus Review.” It had the appearance of being useful but didn’t contain anything of real value — G.E. Aviation, which was cooperating with the F.B.I., had altered the document. This bait worked: Xu, emboldened, sent a list of “domestic requirements” that he wanted Hua to collect information for, such as the type of software used in designing composite structures. 

The battle to boost our deep sleep – and help stop dementia

Doctors have long recognised the restorative properties of sleep, but it wasn’t until 2012 that Prof Maiken Nedergaard at the University of Rochester Medical Centre, in the US, and her colleagues identified a previously unknown plumbing system in the brain that springs to life during sleep, and enables the organ to clean itself. 

They found a series of tiny channels surrounding the brain’s blood vessels that allow CSF to filter in, and get pushed through the brain tissue by the pulse of blood alongside – and dubbed it “the glymphatic system”, because it is similar to the body’s lymphatic network except managed by the brain’s glial (support) cells. Having such a system is important because your neurons are extremely active during the day, and produce waste that needs to go somewhere. 

[Assistant professor of biomedical engineering Laura] Lewis has expanded on Nedergaard’s studies by persuading human volunteers to have their brains imaged while they sleep. “We saw these large waves of fluid flow that started to wash over the brain about every 20 seconds or so, and could travel quite long distances inside the brain,” she says. “As soon as people woke up, this flow pattern would disappear.” 

This system seems to be most active during slow-wave sleep – the deepest phase of non-rapid eye movement sleep, predominating during the early hours of the morning. 

For reasons that aren’t yet fully understood, people experience less of this kind of sleep as they get older. The glymphatic system also shows a dramatic decrease in efficacy as we enter our later years. “Your dishwasher only works at 20% capacity,” Nedergaard says. 

The key thing to focus on is sleep quality, which means avoiding coffee, alcohol, exercise and electronic devices in the run-up to bed, and maintaining a dark bedroom overnight. “If light is coming in through the window, or from pilot lights on electronic devices, even if it doesn’t wake you up, it may kick you into a lighter sleep stage and you won’t feel as well rested,” say Prof Lewis.

This week's interesting finds

Honglei, partner since 2020 (Toronto, ON)   

EdgePoint investments alongside its investment partners

As at December 31, 2022, our internal partners hold some $363 million in company-related products (for many of us, the lion's share of our investable assets) and are collectively one of our largest investors.

This week in charts 

Technology companies 

Europe   

U.S. Federal reserve 

Natural gas 

Battery production

   

This week’s fun finds 

The return of the spicy challenge 

Thanks to Norm for bring in some spicy jellybeans for us to try. 

Five brave internal partners went from mildest (sriracha) to spiciest (Carolina reaper). Opinions were “unpleasant”, “didn’t taste good” and “why did I do that?” 

Hot sauce reviews will be starting up again soon. 

Can AI perfect the IPA? 

In 2021, Deep Liquid, an Adelaide-based company that partners with the Australian Institute for Machine Learning, helped nearby Barossa Valley Brewing create AI2PA: The Rodney, an AI-generated IPA. On each can of AI2PA, a QR code allows drinkers to submit their thoughts on the beer’s flavor, aroma, and mouthfeel. That real-time feedback goes straight into a data set that is then plugged into an algorithm that can adjust the recipe accordingly. 

“Since the biggest companies collect the most data, they’re the ones who’ve been able to harness AI,” says Deep Liquid co-founder Denham D’Silva. “We’ve flipped this and put the technology in the hands of the consumer, giving them direct contact that enables smaller brewers to leverage AI.” 

[History professor Malcolm] Purinton says making machine learning more accessible to smaller brewers will help them refine recipes, maintain quality control, and know exactly how much of each ingredient to use, limiting waste and saving money. 

Innovation is coming to beer’s ingredients, too. While water, barley, yeast, and hops have been on virtually every beer mash bill since the 8th century, the way brewers acquire and use these ingredients has shifted drastically in recent years. And that’s due largely to climate change. 

Brewers are teaming with bioengineers to explore the role of genetically modified yeast strains that can unlock more intense flavoring agents within hops during fermentation. This means that more of the tropical and fruity essences can be extracted from each flower, achieving the same big hop flavor with a much smaller load of hops. 

Eventually, the technology could save money, energy, and resources. But most brewers, adventuresome chemists and cooks at heart, are more excited about what flavors these genetically modified yeasts might one day unleash. 

Inside Canada’s Polar Bear Jail 

Immobilizing a 500-pound animal that can run on uneven terrains or hide among rocks takes a joint land and air effort. Hanging out off the side of the helicopter with a dart gun, Maclean’s work partner Ian van Nest, gave the ivory fugitive a shot of telazol, a quick-acting anesthetic. The on-the-ground team was ready with trucks and ATVs, but the bear got out of reach. “It took two-ish minutes for this bear to feel the effects of that drug,” says Maclean, but she managed to get onto the other side of a big berm where no vehicles could reach her. The team had to retrieve the problem girl on foot using a “polar bear stretcher,” essentially a massive board. “Seven of us carried this 500-pound bear over the berm and put it into the back of our truck,” says Maclean. “And then we drove it to the polar bear holding facility.” 

Years ago, a bear smacking at the window or breaking a door would likely be shot to avoid potential human fatalities. But over the years, that mentality has changed, influenced by tourists’ interest in the majestic creatures and by the fact that there aren’t many left. Only about 20,000 to 26,000 polar bears remain in the wild, says Geoff York, senior director of conservation at Polar Bear International, a nonprofit organization that works to preserve the animals. According to a recent Canadian government report, the polar bear population has dropped 27 percent over the past five years. With less and less sea ice forming every year, the bears have less time to hunt seals and build up necessary fat stores, leaving many bears to face starvation. Today, Churchill’s Polar Bear Alert program keeps a close tab on the hungry prowlers, putting them behind bars and out of harm’s way only when absolutely necessary. 

Colloquially known as the polar bear jail, the holding facility is a massive hangar of 28 cells built from cinder blocks with steel bar ceilings and doors. A second set of solid metal doors prevents bears from reaching out between bars. Most cells fit only one bear (otherwise they’d fight) but two larger cells are reserved for moms with cubs. Five of the cells are air-conditioned to make them more comfortable during warmer weather. Some bears are tranquilized when they’re brought in. Others arrive awake in huge culverts, traps baited with a chunk of seal meat that snap shut once bears pull on the food. 

The jail environment teaches the animals that approaching humans results in a boring and annoying experience, not worth repeating. That’s why bears don’t get to do much in their cells. They can perambulate back and forth among the cinderblocks or lounge on straw bedding or wood shavings. They can bang on the walls, which is usually a good sign, says Maclean. “If we don’t hear from a bear, we may occasionally peek in on it,” she says. “But a bear that’s banging is usually a good, healthy bear.” 

While “imprisoned,” bears get water or snow through a trough that runs across their cells, but no snacks—to avoid associating humans with food. “At that point, they’re already fasting,” explains Maclean, plus they’re not spending as much energy as they would be out in the tundra. “They’re losing almost the exact same weight that they would be if they were out on the land,” York says. “So they’re having a very similar experience in terms of fasting that they would if they were not in a facility.” 

Most bears stay in the lockup for 30 days or until the bay freezes. As soon as the ice forms, they are free to go—an annual spectacle many of the town’s residents come to see. Loaded into the culverts, the bears are brought over to the ice and the trap doors are lifted, setting them free one by one. The team drives a truck towards each bear, nudging it to head towards the ice. In 2022, there were only five inmates released when the bay froze. All the freed bears happily wandered off onto the ice, hungry for their long-awaited dinner.

This week's interesting finds

Malcolm, partner since 2008 (Elora, ON)   

This week in charts 

Correlation
 

Canadian GDP
   

Global equity comparisons
    

Leveraged buyout transactions
 

Returns by generation

   

Nothing Beats Having a Great Partner (from the 2022 Berkshire Hathaway shareholder letter)

Charlie and I think pretty much alike. But what it takes me a page to explain, he sums up in a sentence. His version, moreover, is always more clearly reasoned and also more artfully – some might add bluntly – stated. 

Here are a few of his thoughts, many lifted from a very recent podcast: 

• The world is full of foolish gamblers, and they will not do as well as the patient investor. 
• If you don’t see the world the way it is, it’s like judging something through a distorted lens. 
• All I want to know is where I’m going to die, so I’ll never go there. And a related thought: Early on, write your desired obituary – and then behave accordingly. 
• If you don’t care whether you are rational or not, you won’t work on it. Then you will stay irrational and get lousy results. 
• Patience can be learned. Having a long attention span and the ability to concentrate on one thing for a long time is a huge advantage. 
• You can learn a lot from dead people. Read of the deceased you admire and detest. 
• Don’t bail away in a sinking boat if you can swim to one that is seaworthy. 
• A great company keeps working after you are not; a mediocre company won’t do that. 
• Warren and I don’t focus on the froth of the market. We seek out good long-term investments and stubbornly hold them for a long time. 
• Ben Graham said, “Day to day, the stock market is a voting machine; in the long term it’s a weighing machine.” If you keep making something more valuable, then some wise person is going to notice it and start buying. 
• There is no such thing as a 100% sure thing when investing. Thus, the use of leverage is dangerous. A string of wonderful numbers times zero will always equal zero. Don’t count on getting rich twice. 
• You don’t, however, need to own a lot of things in order to get rich. 
• You have to keep learning if you want to become a great investor. When the world changes, you must change. 
• Warren and I hated railroad stocks for decades, but the world changed and finally the country had four huge railroads of vital importance to the American economy. We were slow to recognize the change, but better late than never. 
• Finally, I will add two short sentences by Charlie that have been his decision-clinchers for decades: “Warren, think more about it. You’re smart and I’m right.” 

And so it goes. I never have a phone call with Charlie without learning something. And, while he makes me think, he also makes me laugh. 

************ 

I will add to Charlie’s list a rule of my own: Find a very smart high-grade partner – preferably slightly older than you – and then listen very carefully to what he says.  

The Myth of the Inevitable Rise of a Petroyuan

The inevitability of a petroyuan has become a popular take in the financial blogosphere: China flexing its muscles as an emerging power, elbowing one of the most visible and enduring signs of the 75-year US hegemony in the Middle East. 

If you believe in conspiracy theories, the introduction of a petroyuan, and the ensuing collapse of the petrodollar, would be a first domino, potentially weakening the whole US financial system. Very serious stuff. A redrawing of the global economic map. The backdrop to crisis and wars. 

Ask quietly in government circles in Riyadh, Abu Dhabi, Kuwait City or Doha about the petroyuan, and the response — even in the weeks following Xi’s visit to Riyadh — is unanimous: the petrodollar is here to stay. On a recent trip to the region, I didn’t hear a single official talking seriously about making preparations to introduce a new currency to the mix. The answers sound a lot like this: What’s in it for us? The greenback is freely convertible, the yuan isn’t; the dollar is liquid, the yuan isn’t. That’s the polite version; the more candid answers sounded even more emphatic about the absurdity of turning to a managed currency produced by an opaque and unpredictable financial machine. 

As in every conspiracy, there’s a grain of truth in the petroyuan tale, however. Xi did encourage the region to embrace the yuan for oil trade. But rather than pricing oil in yuan, as many had expected, Xi simply asked Middle East producers to accept payments in yuan. 

Ironically, the only new petrocurrency to emerge of late has been the dirham of the United Arab Emirates. India is using it to settle some oil transactions with Russia, bypassing US sanctions. But for the past 25 years, the dirham has been pegged to the US dollar — another indication that the petrodollar remains the only petrocurrency that really matters. 

This “Climate-Friendly” Fuel Comes With an Astronomical Cancer Risk

The Environmental Protection Agency recently gave a Chevron refinery the green light to create fuel from discarded plastics as part of a “climate-friendly” initiative to boost alternatives to petroleum. But, according to agency records obtained by ProPublica and The Guardian, the production of one of the fuels could emit air pollution that is so toxic, 1 out of 4 people exposed to it over a lifetime could get cancer. 

That risk is 250,000 times greater than the level usually considered acceptable by the EPA division that approves new chemicals. Chevron hasn’t started making this jet fuel yet, the EPA said. When the company does, the cancer burden will disproportionately fall on people who have low incomes and are Black because of the population that lives within 3 miles of the refinery in Pascagoula, Mississippi. 

Aside from the chemical that carries a 25% lifetime risk of cancer from smokestack emissions, another of the Chevron fuels ushered in through the program is expected to cause 1.2 cancers in 10,000 people — also far higher than the agency allows for the general population. The EPA division that screens new chemicals typically limits cancer risk from a single air pollutant to 1 case of cancer in a million people. The agency also calculated that air pollution from one of the fuels is expected to cause 7.1 cancers in every 1,000 workers — more than 70 times the level EPA’s new chemicals division usually considers acceptable for workers. 

In addition to the chemicals released through the creation of fuels from plastics, the people living near the Chevron refinery are exposed to an array of other cancer-causing pollutants, as ProPublica reported in 2021. In that series, which mapped excess cancer risk from lifetime exposure to air pollution across the U.S., the highest chance was 1 cancer in 53 people, in Port Arthur, Texas. 

The 1-in-4 lifetime cancer risk from breathing the emissions from the Chevron jet fuel is higher even than the lifetime risk of lung cancer for current smokers. 

Asked why it didn’t require tests to clarify the risks, a spokesperson wrote that the “EPA does not believe these additional test results would change the risks identified nor the unreasonable risks finding.” 

Whatever you call it, the creation of fuel from plastic is in some ways worse for the climate than simply making it directly from fossil fuels. Over 99% of all plastic is derived from fossil fuels, including coal, oil and gas. To produce fuel from plastics, additional fossil fuels are used to generate the heat that converts them into petrochemicals that can be used as fuel. 

Major mortgage lenders let borrowers shift unpaid interest onto principal to cope with rising costs

At least two of Canada’s largest mortgage lenders allow borrowers to shift a portion of their interest costs onto the principal owed on their mortgages, helping them cope with the impact of soaring interest rates. 

Both TD and CIBC have variable-rate mortgages that are similar to those of most of the other major lenders: The loans have constant monthly payments and the interest rate on the mortgage is connected to the Bank of Canada’s overnight lending rate. 

With every interest-rate hike, the cost of borrowing increases and more of the borrower’s monthly mortgage payment is used to cover the interest expenses. 

But with TD and CIBC variable-rate mortgages, borrowers may be allowed to go past the trigger rate and stick with payments that don’t even cover the full amount of the interest owed, up to a certain threshold. The unpaid portion of the interest is deferred and added to the mortgage principal and the borrower’s loan balance grows, or negatively amortizes. 

Under federal banking rules, a portion of a borrower’s loan must always be amortizing. But Canada’s bank regulator, the Office of the Superintendent of Financial Institutions (OSFI), has also said that it “expects lenders’ risk management to be responsive to changing conditions, and practices to be adjusted accordingly.” 

The federal mortgage insurer, Canada Mortgage and Housing Corp., allows the mortgage to grow up to 105 per cent of the variable-rate borrower’s original loan amount. 

The fact that CMHC rules allow for balances on insured mortgages to grow past the original amount raises questions, said Ben Rabidoux, founder of market-research firm North Cove Advisors. 

Mr. Rabidoux also sees another issue with policies that allow mortgage balances to grow: a likely outsized financial shock for homeowners when their mortgages come up for renewal. 

At renewal, lenders must bring the mortgage back in line with the original amortization schedule. For example, consider a borrower who bought a home with a five-year mortgage amortized over 25 years. After five years, their lender will recalculate payments so that the remaining mortgage balance will be paid off in the remaining 20 years. 

This week’s fun finds 

The Puzzling Gap Between How Old You Are and How Old You Think You Are 

But “How old do you feel?” is an altogether different question from “How old are you in your head?” The most inspired paper I read about subjective age, from 2006, asked this of its 1,470 participants—in a Danish population (Denmark being the kind of place where studies like these would happen)—and what the two authors discovered is that adults over 40 perceive themselves to be, on average, about 20 percent younger than their actual age. “We ran this thing, and the data were gorgeous,” says David C. Rubin (75 in real life, 60 in his head), one of the paper’s authors and a psychology and neuroscience professor at Duke University. “It was just all these beautiful, smooth curves.” 

Why we’re possessed of this urge to subtract is another matter. Rubin and his co-author, Dorthe Berntsen, didn’t make it the focus of this particular paper, and the researchers who do often propose a crude, predictable answer—namely, that lots of people consider aging a catastrophe, which, while true, seems to tell only a fraction of the story. You could just as well make a different case: that viewing yourself as younger is a form of optimism, rather than denialism. It says that you envision many generative years ahead of you, that you will not be written off, that your future is not one long, dreary corridor of locked doors. 

Rubin and Berntsen made a second intriguing discovery in their work on subjective age: People younger than 25 mainly said they felt older than they are, not younger—which, again, makes sense if you’ve had even a passing acquaintance with a 10-year-old, a teenager, a 21-year-old. They’re eager for more independence and to be taken more seriously; in their head, they’re ready for both, though their prefrontal cortex is basically a bunch of unripe bananas. 

Fat, Sugar, Salt … You’ve Been Thinking About Food All Wrong

[Nutritionist Carlos] Monteiro created a new food classification system—called NOVA—that breaks things down into four categories. Least worrisome are minimally processed foods, such as fruits, vegetables, and unprocessed meats. Then come processed culinary ingredients (oils, butter, and sugar), and after that processed foods (tinned vegetables, smoked meats, freshly baked bread, and simple cheeses)—substances to be used carefully as part of a healthy diet. And then there are ultra-processed foods. 

There are a bunch of reasons why a product might fall into the ultra-processed category. It might be made using “industrial processes” like extrusion, interesterification, carbonation, hydrogenation, molding, or prefrying. It could contain additives designed to make it hyper-palatable, or preservatives that help it stay stable at room temperature. Or it might contain high levels of fat, sugar, and salt in combinations that aren’t usually found in whole foods. What all the foods share, Monteiro says, is that they are designed to displace freshly prepared dishes and keep you coming back for more, and more, and more. “Every day from breakfast to dinner you are consuming something that was engineered to be overconsumed,” says Monteiro. 

On the ultra-processed diet, people ate around 500 extra calories per day and put on about two pounds. When people were on the whole-food diet, they ate fewer calories and lost weight—this is despite the fact that the meals on offer had roughly the same nutrient compositions. To [researcher Kevin] Hall, this implied that there was something other than salt, sugar, and fat content that was causing people to eat excess calories and gain weight. “It suggested that there was something different about this NOVA categorization system,” he says. Maybe there is more to food than its constituent parts.

A big factor might be the effect that ultra-processed foods have on our brain. Alexandra DiFeliceantonio is an assistant professor at the Fralin Biomedical Research Institute at Virginia Tech Carilion who studies how junk food interacts with the brain’s reward systems. “We know a lot more about fat, sugars, and carbohydrates, and how those are signaled in the gut and to the brain. We know a lot less about the role of ultra-processing in altering any of those signals,” says DiFeliceantonio. 

Her hypothesis is that since ultra-processed foods are rich in easily available calories, they induce a potent reward response in our brains that keeps us coming back for more.