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Omnivore Digest 5/26/2024

·4728 words·23 mins
Table of Contents
  1. Angela Duckworth (247 words)
  2. The art of self-renewal, Darwin on wonder and the spirituality of nature, Hemingway on loss and the meaning of life (260 words)
  3. Inside the Rockefeller Clan’s Intensifying Feud With Exxon - WSJ (223 words)
  4. Alabama Sues to Stop California’s Climate-Change Power Grab - WSJ (210 words)
  5. Open Borders Produced the Biden Economic Boom - WSJ (219 words)
  6. Why Liberals Struggle to Defend Liberalism | The New Yorker (237 words)
  7. I Was Laid Off and Can’t Find a Job; Retirement Worry (168 words)
  8. 5 Easy Ways To Make Money Online In 2024 (186 words)
  9. Nova Scotia’s Billion-Dollar Lobster Wars | The New Yorker (237 words)
  10. The Massive Immigration Wave Hitting America’s Classrooms - WSJ (243 words)
  11. At All Costs, Keep This (235 words)
  12. The Student Who Was Suspended for a Prizewinning AI Tool Fights Back - WSJ (226 words)
  13. How Saddam Diverts Millions Meant For Food Aid to Reap Illegal Oil Profit - WSJ (213 words)
  14. The Psychology of Money in 20 minutes (287 words)
  15. The Massive Immigration Wave Hitting America’s Classrooms - WSJ (283 words)
  16. Can You Read a Book in a Quarter of an Hour? | The New Yorker (221 words)
  17. A Coder Considers the Waning Days of the Craft | The New Yorker (217 words)
  18. 🧺 Axios AM: Biden dirty laundry (248 words)
  19. Your Saturday Stoic Review — Week of May 20 - 26 (195 words)
  20. DealBook: Be our commencement speaker? No thanks (225 words)
  21. Axios Pro Rata: PE pressure point (252 words)
  22. Higher for even longer (167 words)

Angela Duckworth (247 words) #

In the article “Angela Duckworth: FAQ,” Angela Duckworth elucidates key concepts and addresses common queries surrounding her research on grit. Duckworth defines grit as “passion and perseverance for long-term goals,” distinguishing it from talent, luck, and short-term enthusiasm (Duckworth). Duckworth emphasizes the importance of the Grit Scale not just for research but also for self-reflection, while acknowledging its limitations, such as the potential for “reference bias” (Duckworth).

Duckworth refutes the notion that being gritty in one area guarantees grit in all areas due to the constraints of time and energy. She asserts that grit is most significant in achieving challenging, meaningful goals (e.g., education and personal commitments) rather than tasks demanding immediate self-control (Duckworth). Duckworth clarifies that while grit correlates with self-control and conscientiousness, it independently predicts achievement in rigorous contexts, such as West Point training (Duckworth).

Addressing criticisms, Duckworth argues that promoting grit does not downplay the significance of poverty and social inequality; rather, both are crucial and intertwined. Additionally, while grit is partially influenced by genetics, experiences are equally vital for its development (Duckworth). Lastly, she underscores that while grit is important, it is not more critical than foundational values like honesty and kindness (Duckworth).

The art of self-renewal, Darwin on wonder and the spirituality of nature, Hemingway on loss and the meaning of life (260 words) #

Summary of “The Art of Self-Renewal, Darwin on Wonder and the Spirituality of Nature, Hemingway on Loss and the Meaning of Life” by Maria Popova

Maria Popova explores profound themes of self-renewal, the complexities of nature, and the spirituality interwoven with our understanding of life and loss. She begins with John Gardner, who in his posthumous work “Living, Leading, and the American Dream,” contemplates self-renewal and the transience of life, asserting that meaning in life is constructed through a dynamic interplay of experiences. Gardner emphasizes the importance of constantly evolving and facing new challenges to prevent stagnation, a sentiment supported by introspective reflections on personal and societal influences.

Popova further delves into nature’s intricacies through Zoë Schlanger’s “The Light Eaters,” exploring plant intelligence and challenging human-centric perceptions of consciousness. Schlanger’s research reveals plants’ complex behaviors and communication systems, advocating a paradigm shift in understanding intelligence and consciousness.

The discussion culminates with Ernest Hemingway’s heartfelt letter addressing the death of Gerald and Sara Murphy’s son, illustrating profound insights on grief and the continuity of love beyond death. Hemingway contends that genuine aliveness transcends physical existence, echoing broader existential truths about connection and resilience.

Popova’s narrative is enriched with diverse perspectives and supported by compelling examples, urging readers to continually grow and find meaning in life’s ongoing dialogue.

Inside the Rockefeller Clan’s Intensifying Feud With Exxon - WSJ (223 words) #

Christopher M. Matthews chronicles the Rockefeller family’s escalating feud with Exxon, primarily driven by Miranda Kaiser, who took over her late brother David’s campaign against ExxonMobil’s stance on climate change. According to Matthews, David Kaiser started this effort, accusing the oil industry of deception about its environmental impact.

Miranda, despite personal challenges, has intensified the campaign, with the Rockefeller Family Fund supporting over 30 lawsuits against the fossil fuel industry. Matthews reports that Exxon views these lawsuits as meritless and politically motivated, fearing large penalties from juries in progressive states.

David sought his sister’s involvement during his terminal illness, and Miranda felt morally compelled to honor his wish. She frames the campaign as a familial obligation given their wealth’s origin from fossil fuels. Matthews highlights how Miranda’s actions have drawn mixed reactions within the Rockefeller family and significant pushback from Exxon, which accuses the Rockefellers of orchestrating a smear campaign.

Miranda believes Exxon could redeem itself by adopting green energy initiatives, a marked detour from historical Rockefeller philanthropy. Despite setbacks like Exxon’s victories in court, Miranda remains committed to holding the industry accountable for its environmental impact.

Alabama Sues to Stop California’s Climate-Change Power Grab - WSJ (210 words) #

Steve Marshall argues that California and other blue states are overstepping their bounds by attempting to regulate out-of-state carbon emissions through state tort and consumer-protection lawsuits. He asserts that these actions defy the principles of federalism, as states do not have the authority to impose regulations on other states or create de facto national policies, a prerogative reserved for Congress.

Marshall cites the historical precedent set by Justice Louis Brandeis, highlighting the concept of states as laboratories of democracy, which should not interfere with each other’s policies. He emphasizes that national energy policies and interstate emissions are inherently federal issues that must be resolved through federal law, noting previous unsuccessful legislative attempts by progressive climate activists to ban fossil fuels.

According to Marshall, the lawsuits, backed by activist-funded influence operations, threaten to create a two-tier system of “climate justice,” disadvantaging American companies while giving foreign state-owned energy producers a free pass. The potential outcomes, he warns, could undermine U.S. energy independence and geopolitical power. Marshall calls on the Supreme Court to end these extraterritorial climate regulations, thereby preserving the union’s foundational principles.

Open Borders Produced the Biden Economic Boom - WSJ (219 words) #

Donald L. Luskin argues that President Biden’s economic success is largely attributable to the influx of immigrants over the southern border, despite the political unpopularity and perceived lawlessness of such policies. He credits this influx with creating a robust labor market and spurring economic growth. According to Luskin, data from the Bureau of Labor Statistics shows a 3.2 million increase in the foreign-born adult population since July 2022, with 1.8 million gaining employment, implying that immigrants are actively participating in the workforce.

Luskin uses these figures to challenge the stereotype that immigrants do not work, showing that without them, job growth would be significantly lower. He notes that, while new immigrants might initially dilute productivity due to skill and language deficits, they eventually enhance productivity through skill acquisition on the job. Furthermore, he points out that the employment-to-population ratio for the foreign-born is higher than for the native-born.

Despite these economic advantages, Luskin highlights the political backlash, noting that a majority of Americans view the border situation as a crisis. He concludes that while the current immigration surge has economic benefits, the lack of stable border policies undercuts long-term growth prospects and requires careful future management.

Why Liberals Struggle to Defend Liberalism | The New Yorker (237 words) #

Adam Gopnik argues that defending liberalism is growing increasingly difficult due to its complex and diverse nature. According to Gopnik, liberalism is a “practice” rather than a strict ideology, which contrasts sharply with more defined belief systems like Marxism or Catholicism. This inherent ambiguity makes it challenging for liberals to present a unified defense.

Gopnik uses the work of Robert Kagan to illustrate the historical persistence of anti-liberal sentiments in the United States, noting that Kagan’s book, “Rebellion: How Antiliberalism Is Tearing America Apart—Again,” connects contemporary political crises to long-standing currents of anti-liberalism in America.

In discussing solutions, Gopnik highlights two new books: Daniel Chandler’s “Free and Equal: A Manifesto for a Just Society” and Alexandre Lefebvre’s “Liberalism as a Way of Life.” Chandler proposes a conventional reform-oriented vision, whereas Lefebvre focuses on cultural aspects, comparing liberalism to the backdrop of everyday life.

Gopnik notes that both authors draw heavily from John Rawls’ theories on justice, emphasizing equality. However, he argues that their contemplative and abstract approaches might be inadequate for addressing the urgent crises facing liberal democracies today. Gopnik concludes by stressing the fragility and importance of liberal institutions, cautioning against dismissing them despite their imperfections.

I Was Laid Off and Can’t Find a Job; Retirement Worry (168 words) #

In her article, Ella Hopkins shares Donna Kopman’s struggle to find employment after being laid off at the age of 57. According to Kopman, despite her efforts, which include applying to around 400 jobs and securing only two interviews, ageism plays a significant role in her job search difficulties. She believes that employers often assume older candidates demand higher salaries or lack adaptability, leading to automatic rejections potentially facilitated by AI screening processes.

Kopman argues that employers overlook the willingness of older applicants to accept lower pay to stay employed and their ability to learn new technologies. She also discusses the financial strain unemployment places on her, as she draws from savings and unemployment benefits to meet expenses, and the broader issue of delayed retirement plans. Kopman’s situation highlights the need for more inclusive hiring practices and retaining older workers in the workforce to ensure financial stability and a diverse work culture.

5 Easy Ways To Make Money Online In 2024 (186 words) #

According to Rachel Wells, the current instability in the job market, exemplified by Tesla’s ongoing layoffs, is prompting a shift among workers towards more autonomous and flexible employment options. Wells suggests five accessible ways to earn money online in 2024.

First, she advocates participating in online focus groups through platforms like User Testing, where compensation ranges from $50 to $300. Second, she recommends hosting virtual workshops to leverage existing expertise acquired from previous jobs, potentially utilizing AI instructional tools. Third, selling old items on eBay is presented as a practical way to declutter and make money. Fourth, Wells endorses affiliate marketing, explaining that promoting products through blogs or social media can generate commissions. Lastly, she highlights remote customer service jobs available via company career pages or freelance platforms like Upwork.

Wells supports her claims by highlighting the minimal resources and quick setup time required for these ventures, emphasizing the potential for individuals to gain financial stability and independence from the comfort of their homes.

Nova Scotia’s Billion-Dollar Lobster Wars | The New Yorker (237 words) #

According to Abe Streep, Nova Scotia’s waters have become the world’s most productive lobster breeding grounds, due largely to global warming which has pushed lobster populations northwards. As a result, Canadian fishermen have seen their harvest double since the mid-nineties, creating a booming industry now worth 1.5 billion dollars. Many of these fishermen are independent, primarily operating in inshore waters where large corporations, such as Clearwater, are banned.

Streep explains that recent tensions have arisen from the Mi’kmaq people asserting their historic fishing rights, upheld by a 1999 Supreme Court ruling allowing them to fish for “a moderate livelihood.” Chief Michael Sack of the Sipekne’katik First Nation initiated an unsanctioned treaty fishery, leading to confrontations with non-Indigenous fishermen who saw this as a threat to their livelihoods and lobster populations. These tensions escalated into acts of intimidation and violence.

Streep highlights how the Mi’kmaq’s multi-million dollar acquisition of Clearwater in partnership with Premium Brands bolstered their economic power, though it sparked concerns about the implications for both Indigenous sovereignty and corporate control in the industry. Streep uses detailed accounts, interviews, and historical context to support his claims, illustrating the complexity and sensitivity surrounding the lobster fisheries and Indigenous rights in Nova Scotia.

The Massive Immigration Wave Hitting America’s Classrooms - WSJ (243 words) #

In “The Massive Immigration Wave Hitting America’s Classrooms,” Jon Kamp and Alicia A. Caldwell illustrate the profound impact of a recent surge in young migrants on U.S. public schools. Kamp and Caldwell highlight students like Sandla Desir, an eighth-grader from Haiti, whose rapid progress in learning English exemplifies both the triumphs and challenges faced by schools nationwide. They note that millions of migrants, including as many as one million children, have recently arrived in the U.S., significantly straining educational resources.

According to the authors, districts such as Stoughton, Massachusetts, have experienced a sharp increase in the number of English learners, from 250 to over 500 in three years. Denver’s schools faced a $17.5 million budget shortfall due to the influx. The financial burden includes hiring additional staff and covering transportation costs, which in Stoughton’s case amounted to at least $500,000.

Kamp and Caldwell emphasize that these students often bring complex trauma and academic gaps, complicating their adaptation. The authors use specific examples, such as the experiences of Haitian students in Massachusetts, to showcase the broader systemic and operational challenges that schools are confronting. They indicate that while federal and state reimbursements help, the lag in funding exacerbates planning difficulties for districts.

At All Costs, Keep This (235 words) #

According to the Daily Stoic, the story of the Roman general Marcus Atilius Regulus exemplifies extreme integrity. Regulus, having been captured by the Carthaginians, was sent to Rome to negotiate a peace treaty and prisoner swap, promising to return if the deal was rejected. Despite personal interests, Regulus advised the Roman Senate against accepting the offer, believing Carthage’s weakness was an opportunity for Rome to win the war. True to his word, Regulus returned to captivity when the Senate refused the terms, honoring his oath despite the severe personal cost.

Jane Doe underscores that while most people won’t face such extreme tests, everyday commitments—like deadlines, promises, and plans—similarly test our integrity. Regulus’s return, despite the circumstances, demonstrated that trust in one’s word is foundational to character. Seneca saw Regulus’s story as a model of justice and individual heroism. Doe argues that maintaining integrity in small things builds a habit that defines one’s character over time, aligning with Stoic beliefs that character ultimately determines fate. This narrative ties into the broader themes of Ryan Holiday’s forthcoming book, “Right Thing, Right Now,” which offers guidance on developing and maintaining good character.

The Student Who Was Suspended for a Prizewinning AI Tool Fights Back - WSJ (226 words) #

Joseph Pisani reports on the case of Benjamin Craver, a college student suspended by Emory University for developing an AI study tool, Eightball, which had previously won a $10,000 prize at a university startup competition. Craver expresses his surprise over the suspension, emphasizing the severe and lasting impact of an academic dishonesty record. Eightball aids students by generating study materials from class notes, unlike ChatGPT, which sources from the internet. According to Pisani, Emory’s honor council flagged potential misuse for cheating and unauthorized distribution of class material, despite the initial award.

Pisani notes that Craver, supported by his parents, has filed a lawsuit seeking to overturn the suspension. While an Emory spokeswoman refrained from commenting on ongoing litigation, court documents reveal the university’s stance against connecting Eightball to its learning software and highlight the broader educational challenge of integrating AI without facilitating academic dishonesty.

Craver’s suspension prohibits him from continuing his studies and participating in career opportunities. He aims to return to Emory and expand Eightball’s reach. Pisani includes statements from alumni, like Vanessa Youshaei, who back Craver’s innovation, underscoring the divided opinions on AI’s role in education.

How Saddam Diverts Millions Meant For Food Aid to Reap Illegal Oil Profit - WSJ (213 words) #

Alix M. Freedman and Steve Stecklow assert that Iraq, under Saddam Hussein, has diverted millions intended for humanitarian aid through the U.N. oil-for-food program into illegal profits. Freedman and Stecklow reveal evidence of Iraq imposing secret surcharges on oil sales, funneling the extra revenue into accounts controlled by Hussein’s regime. The authors highlight that the UN’s divided Security Council contributed to this issue by granting Iraq considerable control over its oil sales and failing to adequately police the program.

Freedman and Stecklow note U.S. oil companies like ChevronTexaco, Exxon Mobil, and Valero Energy have heavily relied on Iraqi oil, indirectly supporting the illegal surcharges, while claiming ignorance of these unethical practices. The authors use financial estimates from the U.N. and statements from U.S. and U.N. officials to quantify the illicit revenue, indicating Iraq siphoned up to $300 million from the program and smuggled about $1 billion worth of oil annually. Efforts to curtail these practices, such as retroactive pricing, have partially succeeded but also inadvertently reduced funding for humanitarian efforts by decreasing Iraqi oil exports.

The Psychology of Money in 20 minutes (287 words) #

According to B.C. Marx in “The Psychology of Money in 20 minutes,” financial decisions are deeply influenced by human behavior and personal experiences, rather than just mathematical precision. Marx uses examples like differences in generational experiences with the stock market and inflation to illustrate how formative years shape financial perspectives. For instance, those born in the 1970s had positive views of the stock market due to its significant growth during their youth, shaping their inclination to invest.

Marx highlights Warren Buffett’s success, attributing it to his early and consistent investing, underscoring the power of compounding. This is contrasted with Jim Simons, who achieved higher annual returns but started serious investing later, resulting in a significantly smaller net worth compared to Buffett.

Pessimism, Marx argues, is prevalent in financial matters due to the human tendency to focus on negative news and quick losses, despite the steady, often unnoticed, long-term gains. Drawing from Morgan Housel’s book, he discusses how luck and risk are pivotal in success, exemplified by Bill Gates’ access to a rare computer in high school, which played a crucial role in founding Microsoft.

Marx posits that true wealth is about having control over one’s time, not just accumulating material possessions. He uses the concept of “tail events,” where few exceptional outcomes drive the majority of success, and argues that knowing when “enough” is enough is essential to avoid the endless pursuit of more, which can be unfulfilling and even destructive.

The Massive Immigration Wave Hitting America’s Classrooms - WSJ (283 words) #

Jon Kamp and Alicia A. Caldwell, in their article “The Massive Immigration Wave Hitting America’s Classrooms,” illustrate the significant challenges and triumphs accompanying a recent influx of young migrants in U.S. schools. Reflecting on cases like Sandla Desir, an eighth-grader from Haiti who initially struggled but made remarkable progress in English, the authors highlight the broader educational impacts of this migrant wave. According to Kamp and Caldwell, millions of asylum-seeking migrants, including up to one million children, have crossed the U.S. border since 2021, straining public school resources.

The authors point to data from Stoughton, Massachusetts, where the number of English learners has doubled in three years, adding financial burdens like the $500,000 cost for additional staff and transportation, which was largely reimbursed by the state. Denver schools have faced a $17.5 million budget shortfall due to new migrant students. Kamp and Caldwell emphasize the trauma many migrant students have endured, citing a Stoughton teacher’s account of a student whose pet was killed by gangs in Haiti, which complicates the educational process even further.

The authors also note logistical challenges, such as shelter consolidations that relocate migrant students, disrupting their adjustment. Superintendents like Joseph Baeta and Josh Vadala strive to balance the needs of newcomer and existing students to prevent community tensions. Ultimately, Kamp and Caldwell argue that while schools work to support these children, the complexities of trauma, language barriers, and funding uncertainties present ongoing hurdles.

Can You Read a Book in a Quarter of an Hour? | The New Yorker (221 words) #

Anthony Lane argues that reading books has become increasingly challenging due to distractions and time constraints, particularly citing the allure of smartphones (which he likens to meth in their addictive quality). According to Lane, Blinkist, an app that summarizes books into concise “Blinks” of around two thousand words, offers a solution for those who struggle to find time to read. Lane highlights how Blinkist provides a basic grasp of complex works, albeit at the cost of losing nuanced arguments and detailed evidence, such as Steven Pinker’s extensive graphs in “Enlightenment Now.”

Lane observes that while Blinkist can make literature more accessible, it also risks oversimplifying and decontextualizing content. He points out that the app is particularly popular among young professionals and self-help enthusiasts, emphasizing its success in catering to these demographics by selecting content that aligns with their interests and goals. Lane concludes with a humorous reflection on how summarizations can strip down intricate literary works to their most basic elements, sometimes with comical results, such as the case of reducing “Crime and Punishment” to its brutal plot points or turning Milton’s “Paradise Lost” into a strategic business meeting among demons.

A Coder Considers the Waning Days of the Craft | The New Yorker (217 words) #

In “A Coder Considers the Waning Days of the Craft,” James Somers reflects on the evolving landscape of programming, driven by advancements in artificial intelligence like GPT-4. Somers shares his initial confidence in instilling coding as a fundamental skill for his future child, only to question its longevity as a valuable skill due to AI’s rapid progression.

Somers recounts his personal experiences, noting how his friend Ben, with the aid of GPT-4, could rapidly produce code and applications, a task which would have traditionally demanded thorough expertise. This anecdote underscores AI’s potential to replace much of the intricate, skill-intensive work typical of professional programmers.

Somers draws parallels to chess and Go, suggesting that tools like GPT-4 might relegate conventional programming skills to obsolescence but could make learning programming more accessible and dynamic, akin to chess being revitalized by AI. He concludes with a forward-looking perspective, proposing that future generations might shift from traditional coding to interacting with AI systems, emphasizing a hacker’s spirit over specific skills. Somers uses these observations and examples to illustrate how career-defining knowledge and skills might soon become obsolete, reshaping the profession fundamentally.

🧺 Axios AM: Biden dirty laundry (248 words) #

Mike Allen’s article “Axios AM: Biden dirty laundry,” highlights the legal strategies unfolding around Hunter Biden’s criminal trials. Allen, referencing colleague Alex Thompson, asserts that the Justice Department is increasingly unloading personal Biden family details into legal filings, covering text messages, clothing receipts, divorce papers, and incriminating photos of Hunter. Legal experts mentioned believe these revelations seem aimed more at embarrassment than necessity. Mike Allen backs up these claims with trial specifics, including Hunter’s impending trials for lying about drug use to purchase a gun and tax charges, supported by a range of evidentiary documents, from family texts to videos.

Allen shifts focus to the nonpartisan perception of American companies, utilizing data from the latest Axios/Harris Poll 100 survey showing that 40% of businesses, like Procter & Gamble, manage to remain politically neutral despite a polarized environment. The report elaborates that energy companies and fast-food chains especially retain bipartisan goodwill.

Finally, Allen addresses the shifting military paradigms due to the rise of cheap drones, heavily impacting U.S. military planning and operations. Using examples from Ukraine, Iran, and North Korea, he underlines how accessible unmanned systems are continuously reshaping conflict tactics and defense strategies. Allen concludes by mentioning an upcoming Axios newsletter dedicated to these defense trends.

Your Saturday Stoic Review — Week of May 20 - 26 (195 words) #

According to the Daily Stoic’s latest newsletter, Marcus Aurelius valued collecting stories of people’s goodness, using them as models for his own life, inspired by Seneca’s advice. Ryan Holiday, whose upcoming book “Right Thing, Right Now” emphasizes justice as the cornerstone of all virtues, echoes this sentiment by encouraging others to be good and work for common good.

In a YouTube video, Holiday relays Stoic truths shared by podcast guests like Matthew McConaughey and Tim Ferriss, promoting engagement in life and relationships. Holiday’s conversation with Admiral Bill McRaven on the Daily Stoic Podcast highlights Stoic leadership, stressing the importance of convincingly justifying decisions to others.

Ryan Holiday utilizes this data to illustrate the practical application of Stoic principles, supporting the central thesis of his book series and underscoring the importance of modeling one’s life on virtuous examples as a path to personal and communal well-being. The promotion of Holiday’s new book includes pre-order perks like signed first editions, enhancing engagement with his Stoic teachings.

DealBook: Be our commencement speaker? No thanks (225 words) #

Andrew Ross Sorkin explores the decline in the appeal of delivering commencement speeches in his article “DealBook: Be our commencement speaker? No thanks.” Sorkin reports that only three Fortune 50 CEOs are speaking at commencements this year, attributing the reluctance to recent campus protests and controversies around hot-button issues like the war in Gaza. According to David Murray of the Professional Speechwriters Association, executives are increasingly cautious, preferring “less is more” approaches in ‘24 due to the polarized environment. Sorkin notes Tim Cook, Taylor Swift, and other high-profile figures have been past speakers, but the current climate has many shying away from potentially fraught engagements.

Murray points out that even generic messages are now seen as overly political, impacting executives’ willingness to speak. Some, like Microsoft’s Satya Nadella, choose informal chats over traditional speeches to avoid controversy. Sarah Kessler emphasizes that over-sanitizing speeches to avoid controversy risks them becoming meaningless.

To back his claims, Sorkin highlights instances like Columbia University’s cancellation of its main ceremony amid protests, illustrating the fraught environment on campuses today. The data he presents underscores a broader trend of public figures retreating from the spotlight amid growing societal divisions.

Axios Pro Rata: PE pressure point (252 words) #

In “Axios Pro Rata: PE pressure point,” Kia Kokalitcheva argues that the private equity industry is currently facing significant challenges due to its inability to exit investments at a pace that meets limited partner (LP) demands. According to Kokalitcheva, private equity firms are holding onto $3.2 trillion in unsold assets and sitting on $4 trillion of dry powder. She cites Bain & Co. to underscore the gravity of the situation.

Kokalitcheva highlights the reluctance of general partners (GPs) to sell high-performing assets, a sentiment echoed by Hamilton Lane co-CEO Erik Hirsch, who notes that GPs are hesitant to divest from businesses with double-digit growth. This reluctance is creating friction with LPs, who question their commitment to GPs that have not been distributing returns efficiently.

Rob Pulford from Goldman Sachs suggests that a recovering IPO market might alleviate this backlog, but he also notes that the present situation has led to a new focus on Distributed to Paid-In Capital (DPI) rather than Internal Rate of Return (IRR). Pulford’s data reveal the global DPI average for recent funds is significantly low, emphasizing the urgency for exits to satisfy investors.

In summary, Kokalitcheva uses data from various sources to illustrate a challenging environment for private equity, driven by a mismatch between GPs’ asset holding strategies and LPs’ expectations for returns.

Higher for even longer (167 words) #

According to Bloomberg, the US, following the inflation shock of the coronavirus pandemic, is outperforming Europe in terms of growth and employment due to massive rescue packages. US Treasury Secretary Janet Yellen, among other G-7 finance ministers, highlighted America’s continued strong performance despite lingering inflation. Although Europe is expected to implement interest-rate cuts soon, the Federal Reserve’s “higher-for-longer” interest rate strategy has bolstered the dollar.

Bloomberg also notes that Argentina, under President Javier Milei, faces severe inflation and slow growth. While Milei’s austerity measures and spending cuts have increased bond prices and strengthened the peso, it significantly impacts the populace, halting over 2,000 public works projects.

The article uses various data points to support its claims, including economic forecasts and policy decisions, thereby illustrating the differing economic strategies and outcomes across the US, Europe, and Argentina.