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Business Times
18-07-2025
- Business
- Business Times
The public stock market isn't enough anymore
THE sharp division between public and private securities was a major bulwark of financial regulation from the New Deal in the 1930s to the end of the 20th century. Securities that could be sold to anyone had extensive disclosure and investor-protection rules, while private securities that were available only to sophisticated institutions and wealthy individuals had limited regulatory oversight. For a quarter of a century, cracks have been appearing in the dam separating public from private. Now, we appear to be poised on the brink of a complete dam break. Deloitte estimates that within five years, US and European retail investors will hold US$5.4 trillion of investment in private companies, up from under US$1 trillion today, if recent trends hold. This will constitute a significant fraction of all retail investment. Under current US rules, little of this will be direct. Instead, retail investors will have a menu of indirect offerings to choose from: exchange-traded funds (ETFs) from asset managers such as Invesco and ProShares, special-purpose acquisition companies, derivatives, mutual funds, interval funds, blocker corporation shares, and other products. The race to tokenise exposure to companies such as SpaceX and OpenAI for retail investors made headlines recently. In addition, investors will get more indirect exposure through investments by their pension funds and other retirement instruments. This raises two questions. Is the traditional distinction between public and private investments worth defending? And should regulators encourage an officially approved mechanism for investment or let the market experiment, relying on the survival of the fittest to produce the best result? BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Breaking point One issue is that the old regulatory structure was designed under the assumption that the pressure for private investment came from businesses wanting inexpensive retail capital without the trouble and expense of meeting public investment rules. The situation today is the reverse – the pressure is coming from retail investors, who want exposure to the hottest sectors, pushing money onto private companies that don't want it. An equally important pressure is coming from intermediaries, anxious to earn fees with creative ways to force retail money on hot private enterprises. The dam can survive only as long as the hottest private businesses do not want retail capital. Two-sided pressure – private companies that want capital and retail investors who want to supply it – cannot be resisted, especially with the funds management industry keen to accommodate both sides. Sooner or later, when private capital dries up or new private businesses form to accept retail capital, it will be impossible to stop. So, my answer to the first question is 'no', there is no hope of preserving the traditional distinction. For the second question, the easy path is to let different methods of getting retail capital into private entities duke it out in the marketplace until one or more become standardised and the rest disappear. The trouble is that this forfeits any chance to build into the distribution mechanism some of the investor protections lost when retail investors get exposure to companies without rigorous disclosure and governance rules. If the intermediaries are public securities, such as mutual funds or ETFs, then regulators have a lever for rules. But if the mechanisms are cryptocurrency tokens or private contracts, the retail investor capital flowing to private entities is invisible to regulators. A negative approach – outlawing retail investment in private companies that doesn't flow through official channels – will fail. Prohibition won't have much effect in a world where it's easy to gain exposure to private companies with private contracts and exchange that for retail capital via crypto tokens. The only path likely to succeed is a positive approach that offers retail investors officially approved channels that are inexpensive, convenient and carry strong investor protections. Value washed away Any workable official channel will require the active participation of the private company. They must provide exposure directly. Retail investors must have direct recourse to the business holding their contributed capital, not to some intermediate derivative or special-purpose vehicle that's created without the permission of the private company. We must retain the idea that the company using the capital is an issuer, with responsibilities to the capital provider. Since private companies are unwilling to provide the public disclosure and follow the governance rules required for public companies, the intermediary dealing with the retail investor must substitute some kind of oversight. For example, if someone creates an ETF to hold shares in a private company, the ETF issuer must be charged with due diligence responsibilities – and the private company must agree to give the ETF issuer access to the required information. No doubt, there are many other ways to design conduits for retail capital in private companies, but the good ones will have to follow these general principles. Trillions of dollars are going to move from retail investor wallets to private companies over the next few years, and we need a plan. The dam separating public from private capital will break. If we have no plan, a lot of value could get washed away in the flood. BLOOMBERG
Washington Post
18-07-2025
- Business
- Washington Post
How Trump dominates and corrupts the private sector
After six months, with seven times that much time remaining, Trump 2.0 seems as transformative as the New Deal was, but different. Franklin D. Roosevelt's legacy was the institutional architecture of the welfare and regulatory state. Donald Trump's legacy will be a demonstration: How a purely transactional politician, untethered from any political philosophy and uninterested in norms of self-restraint (e.g., unforced respect for the separation of powers) can exploit this architecture for unconstrained executive power.
Atlantic
16-07-2025
- Politics
- Atlantic
Trump's Ultimatum for America's Largest Public-Energy Provider
For weeks now, the country-music star John Rich has waged a very public battle against a proposed gas-fired power plant near his home in Nashville. The Tennessee Valley Authority, the largest public energy provider in the United States, says the new plant will keep blackouts at bay and prices low; Rich, along with environmental groups who have vocally opposed the project, is worried about 'water contamination, destroyed farms, noise and air pollution.' Recently, the singer's crusade caught President Donald Trump's attention: On Saturday, in a post on X, Rich said that the commander in chief had called him with what he described as 'a MASSIVE announcement coming soon concerning this Anti-American, debacle of a project.' And today, the TVA shared the news: It was backing away from the proposed site. But before that, on Monday morning, the White House delivered an ultimatum on a call with the TVA's board of directors, two sources with direct knowledge of the situation told me. The command was stark: Fire the utility's CEO, Don Moul, or prepare to be fired. The board balked. Instead of following the order, which has not been reported on, the board argued in a letter to the White House on Monday that it had no cause to fire Moul: His 97-day tenure had followed 'President Trump's vision of unleashing American energy and achieving American energy dominance.' In fact, the board had selected Moul—a veteran executive who has led nuclear-energy programs at many of the nation's biggest utility companies—'to ensure that TVA embarks on an aggressive policy of energy dominance that involves all fuel types,' according to a copy of the letter I obtained. (When I reached out for comment, the TVA directed me to the White House. The White House did not respond to questions.) The order to fire Moul was not explicitly linked to the proposed plant near Nashville. But the board believes that the project prompted this latest upheaval, the two sources said. The letter to the White House hammers home the point that building new power plants is what Trump has said he wants. At the same time, the two sources told me, they suspect that the Nashville music star's protest is an excuse for the president to pursue another goal: setting the stage for selling off the nation's largest government-owned utility by installing a handpicked CEO more closely allied to him. Trump hasn't spoken recently about privatizing the TVA. But in his first term, he proposed selling off the TVA's power lines to a private buyer in 2018 and again in 2020. Now, he is positioned to stack the TVA's board with new members. That, combined with his administration's relentless push to shrink the federal government, has revived speculation about privatization—which many in Trump's MAGA orbit have long argued should be the utility's fate. Established under Franklin D. Roosevelt's New Deal to bring electricity to parts of the South too poor to attract investor-owned utilities, the TVA has for decades been one of the largest corporations whose shares are all owned by the federal government; it serves 10 million Americans. Its board is appointed by the White House, but the TVA otherwise functions like a normal monopoly power company. Ratepayers fund its operations; it hasn't relied on direct federal appropriations for its power-generation system since 1959. Periodically, presidents from both parties have proposed privatizing its operations. Barack Obama floated the idea in 2013. Selling off the clunky old TVA for parts might have sounded good in theory. But when experts have done the math, breaking up a behemoth that produces power, maintains transmission lines, supplies electricity to rural cooperatives, and manages a complex system of rivers and dams would result in worse outcomes. In 2021, the investment bank Lazard released a study of the TVA finances on behalf of the federal government and found that the utility had 'met or outperformed' its key financial and operating goals since 2014. Joel Yudken, an economist at the consultancy High Road Strategies, told me that the conclusion of his own analysis was, essentially, 'If it ain't broke, don't fix it.' Since taking office again this January, Trump has been setting up the pieces to control the TVA's future. The White House needs the board to appoint a new CEO, but Trump can appoint—and remove—its members. The current board of directors has just three members—short of the five-person quorum it needs to make major decisions, and well short of its full nine-member panel. At the beginning of Trump's new term, the board had three vacancies; the Senate had failed to confirm new appointees before President Joe Biden's term ended. Then, starting in March, Trump fired three of Biden's other appointees. That left six open seats. Last month, Trump sent four of his nominees to the Senate for approval, including a controversial former car-dealership magnate from Nashville who appears to have no experience in utilities but who in 2020 called Trump the real winner of the presidential election. The Senate has yet to vote on the picks. If Trump uses Congress's August recess to make emergency appointments to the committee, the White House could legally bypass the Senate confirmation process for nearly two years. Even if he retains the three sitting board members, he could unilaterally seat a majority of the TVA's board without Senate approval. If he fires the existing members, the board could consist of only his handpicked members, giving him that much more leverage to select a CEO. One top candidate, the sources suggested, would be Trump's former energy secretary, Dan Brouillette, who until last fall headed a trade association for investor-owned utilities. Brouillette did not immediately respond to an emailed request for comment. Privatization would still be a political battle. A U.S. president, board, and CEO all in favor of privatization would still likely need Congress's cooperation to sell off the TVA, and neither of Tenneessee's senators, Republicans Marsha Blackburn and Bill Hagerty, have publicly endorsed privatizing the TVA. Instead, in an op-ed published in late March, the pair urged Trump to 'rescue TVA from itself' and cement his legacy as 'America's Nuclear President' by embarking on a major reactor build-out. (Spokespeople for both senators did not reply to questions about whether they would support privatization or Brouillette's candidacy.) But the utility's top management could press Congress to support privatization legislation, and it could silo parts of the business to set the stage for a sale. The two sources close to the TVA fear that the latest disruption is not about going after a single plant but going after the TVA itself, in part because the proposed gas plant otherwise fits neatly into Trump's vision for energy expansion. (The TVA has been criticized by environmental groups for its build out of gas-fired plants.) In the past six months, his administration has pushed to build new gas pipelines, relaxed enforcement of safety regulations, and directed more funding toward expanding fossil-fuel production. Trump has also pushed for new nuclear reactors—which Moul has pursued at the TVA—and in the past fought against NIMBY opponents of fossil-fuel infrastructure. The TVA has been expanding its generation capacity, in part with an eye to increased electricity demands; Elon Musk's xAI has data centers in Tennessee, for instance. The TVA's monopoly has long guaranteed that locals and their businesses pay some of the lowest electricity rates in the nation—one reason the utility has been the region's pride for almost a century now. In other parts of the U.S., electricity prices have been on the rise; privatizing the utility would almost certainly mean the Tennessee Valley would pay more for electricity, too. Privatization would also risk the very legacy that some Republicans envision for Trump. Given the high cost of building new nuclear reactors, state-owned utilities are—all over the world—the primary vehicles for working out the kinks in novel models. That's how China, Russia, France, and the United Arab Emirates all managed to construct atomic superstations. This strategy is catching on again in the United States too: New York just tapped its New York Power Authority, the largest state utility after the TVA, to build its first nuclear-power plant since the 1980s. In Canada, the government-owned Ontario Power Generation is moving forward with what could be the first commercial small modular reactors in North America. The TVA is currently on track to follow up on the Ontario utility's work by building its own small reactor. With Wall Street investors constantly demanding short-term quarterly returns, few other utilities can take on that kind of megaproject. But if the TVA goes private, the U.S. will have even fewer other power options. Only a government can really pursue a project the scale of the TVA; if the utility is sold off, the scale of its potential will shrink too.
Irish Independent
14-07-2025
- Entertainment
- Irish Independent
Larry Tye: MAGA backlash against ‘woke' Superman is nothing new
Every superhero character has had to adapt to the time they exist in, serving as a beacon of hope against the threat of the day ©Washington Post In the new Superman movie, our extraterrestrial hero confronts perhaps the most formidable foe of his lifetime: US president Donald Trump. One of the colossus of Krypton's greatest superpowers has always been the ability to adapt to the enemy du jour, and this film is no exception. In Superman, the Man of Steel flies back to his New Deal progressive roots and strikes out at the commander-in-chief's mean-spirited policies even as he never mentions the president by name.
Bangkok Post
13-07-2025
- General
- Bangkok Post
Faced with US heat waves, the Navajo push for power -- and A/C
TONALEA (UNITED STATES) - Workmen plant electricity poles in the rust-orange earth of the Navajo Nation and run cables to Christine Shorty's house -- finally giving her power against the searing Arizona desert heat. It will be a luxury in the vast Native American reservation, the largest in the United States, where more than 10,000 families are still without electricity and therefore air conditioning. "It's climate change. It's getting hotter," Shorty tells AFP. "This would be easier for us with the fan and maybe air conditioning. And we look forward to that." In her 70 years, Shorty has seen her isolated, tiny hamlet of Tonalea, a dot in the enormous area of the reservation, change dramatically. Summer monsoon rains are rarer, and temperatures can touch 104 degrees Fahrenheit (40 degrees Celsius) in July and August -- previously unthinkable in the hamlet, located on a plateau at an altitude of 5,700 feet (1,730 metres). The area's seasonal lakes are drying up, and in some years the livestock are dying of thirst. Like many others, Shorty has a generator and small solar panels that allow her to power a gas fridge, cook and watch television. But their power is limited, and she often has to choose which appliance to plug in. Being hooked up to the electrical grid is "a big change. It's going to make my life a lot easier," she tells AFP. - 'Survival mode' - Most of the United States was electrified in the 1930s under president Franklin Roosevelt's New Deal initiatives. But in the Navajo Nation, which stretches across Arizona, New Mexico and Utah, the first efforts only began in the 1960s, and there are still not enough power lines. "This area was looked over," says Deenise Becenti of the Navajo Tribal Utility Authority (NTUA), the agency that manages the reservation's infrastructure. "That surprises many people. They're saying, you know, why are there third world conditions that exist here in the United States, the greatest country in the world?" To catch up, the semi-autonomous government of the reservation launched the "Light Up Navajo" project in 2019. The humanitarian initiative sees electricity companies from all over the country send their employees to work in the reservation for around a dozen weeks a year. Since 2019, electricity has been supplied to 5,000 families in the reservation, including 1,000 thanks to "Light Up Navajo," Becenti said. But as climate change drives temperatures higher, families still without power in the reservation -- where many live below the poverty rate and unemployment is high -- are in "survival mode," she said. - 'Angry' - Elbert Yazzie's mobile home turns into a furnace in the summer, and he has already lost one member of his extended family to heat stroke. "I used to like the heat," the 54-year-old, who lives in nearby Tuba City, tells AFP. "But when you get older I guess your body can't take it no more." His home was finally connected to electricity just weeks ago. Since then, he has rigged up an evaporative air cooler, also known as a "swamp cooler", by salvaging three broken appliances from a garbage dump. "Now we can turn on the A/C anytime we want, so we don't have to worry about the heat, and the generator and the gas, and all that stuff," he says. "Now we don't have to go to (other) people's houses to cool down, we can just stay home, relax, watch TV, things like that." He and Shorty are the fortunate ones. Without more funding, connecting the remaining 10,000 Navajo families without electricity could take another two decades, Becenti says. That is far too long for Gilberta Cortes, who no longer dares let her children play outside in the summer, for fear of getting heat-exacerbated nosebleeds. An electricity pole has just been erected in front of the 42-year-old's house and a line is due to be extended to her in a few months' time. But she has endured too much false hope to be serene. "My mom and dad were in their 20s, they were promised power," but it never materialised, she says.
