The US Doesn't Have An Oil Problem - It Has A Refinery Problem

One of the enduring weaknesses of the modern US economy is the lack of redundancy.  As long as most of the world is operating normally and there are no serious geopolitical disruptions, America's "just in time" system works fine.  But, throw a monkey-wrench into distribution, global exports, freight systems, shipping or elements of production and cracks quickly form in the armor.  

This does not mean that the US economy can't adapt; the pandemic shutdowns were horrifically pointless but they did prove that the system has the ability to function despite deep deficiencies.  However, when it comes to the management of vital resources, such as energy resources, it's clear that some changes need to be made in the near term.  

Before the war in Iran a large portion of the public was oblivious to the fact that the US is the largest exporter of oil in the world, and of the foreign oil supplies we do receive, only 8% come from Gulf nation producers.  A mere 7% of those supplies travel through the Strait of Hormuz.  In other words, the US doesn't rely on the Gulf for oil.  With the new Venezuelan deal and oil flows from the gulf back to 98% of pre-conflict levels, the war is even less of a concern when it comes to US energy.  

The problem is, there is a global oil refinery capacity shortage, and the US is not adapting as it should.  

Ukrainian drone strikes against Russian refineries have recently forced the Kremlin to cut off all diesel exports to other countries.  Russia is the second largest supplier of diesel in the world with 12% of all exports.  This loss to global markets is straining already struggling refineries and causing prices to climb.  The only country with the ability to increase refining capacity quickly is the US, but it's not happening.  

The last time a full-conversion refinery was built in the US was Marathon’s Garyville, Louisiana plant. It came online in 1977 at about 200,000 b/d and has since been expanded to about 617,000 b/d.  Most U.S. capacity growth since the 1970s has come from expanding existing sites, not building new ones.    

In five decades, no major infrastructure has been added.  This means that as aging plants shut down, or as they are closed down due to state policies, US refining capacity will continue to fall and the ceiling for supply vs demand will get tighter and tighter. 

Currently, national demand for distilled products is 8.7 million b/d, and production provides only 9.5 million b/d - That's an extremely narrow gap at 95%-98%.  Unfortunately, this gap has narrowed further due to refinery closures in 2025.  The largest drop in U.S. capacity came from the shutdown of the LyondellBasell’s Houston plant (about 264,000 barrels per day) and the Phillips 66’s Los Angeles plant (about 139,000 barrels per day). Together those removed about 400,000 b/d; small expansions elsewhere offset some of that, but not enough.  

The Houston plant was built in 1918 and was so old any expansion or updating would have been too costly.  Plants in California, on the other hand, have been closing due to crushing regulations.  Valero’s Benicia plant (about 145,000 b/d) stopped refining this spring and was taken out of monthly capacity later.

The answer to refinery shrinkage has long been "expansion creep" in existing facilities because it's faster than building brand new infrastructure, but this is not going to help for much longer.  Current facilities are limited in their ability add on more capacity and these measures do not account for abrupt global changes, wars and crisis events. 

The US needs redundancy, not "just in time" economics.     

Estimates suggest that up to eight new refineries (for heavy and light crude) running at least 250,000 b/d would be needed to increase the capacity ceiling while adding modern infrastructure and redundancy to offset aging plants.  A safer margin would be demand at 85%-90% of capacity.  This would also help the US to add supplies to any global market shortfall and keep prices from skyrocketing in the event of ongoing wars.  

What's stopping this from happening?  There's a number of obstacles.  First and foremost, no one wants to sink billions of dollars into a new facility based on higher gas margins that might be temporary.  In other words, investors will wait around until there's a catastrophic disruption and prices go out of control, but by then it will be too late.

This means it's likely that the only way to get new refineries built would be for the US government to partially backstop the investment.  It's not the worst way to spend taxpayer money; everyone likes lower gas prices.  Getting such a measure passed through congress is questionable, though. 

One possible avenue would be profit sharing with taxpayers on excess fuel sold, or on exports sold from new refineries.  This is similar to the Saudi Arabia model, which invests some oil profits back into healthcare, education, housing loans, and cheaper fuel and utilities for citizens.  Of course, Saudi Arabia is a monarchy and moving from theory to practice in the US is another matter.  

Then there's the permits, environmental studies and regulations, and a lot of other red tape that can extend build time up to 10 years.  Even with a streamlined bureaucracy, it can still take 3-5 years.  With government aid, the time can be reduced to 1-3 years.  It's clear that this is not a quick fix in any scenario, but if the process had been started a few years ago, then there would be no capacity issue and there would be no need for this discussion.

Again, the US economy is almost designed to avoid redundancy and preparedness.  

There is the possibility that a rush to build refineries is unnecessary in the short term.  With ship traffic in the Hormuz returning to normal, prices on oil will continue to drop.  This does not mean, though, that gasoline prices will fall in tandem, at least not for months to come.  The war in Ukraine also looks like it will be ongoing for some time, which means Russian supplies will not be returning to global markets.  

Refineries are a long term solution which requires long term planning; something which is nearly impossible within the US where the political landscape changes every 2-4 years.  It is also extremely difficult when half the government under Democrats wants to tear down oil infrastructure and force the country to accept inefficient green tech.  The point is, there are obvious fixes available, but nothing will happen until disaster strikes and politicians are effectively frightened.  

Tyler Durden Sun, 10/04/2026 - 13:30

 

Shane Parrish’s Knowledge Project:

Bill Ackman is the founder and CEO of Pershing Square Capital Management, one of the most closely watched investment firms in the world. In this conversation, he breaks down how he tells the difference between real innovation from hype, what he looks for before making a billion-dollar investment, and why he sold Netflix—and later bought it back. He also shares the mistakes that reshaped his investment process and his plan to build a modern-day Berkshire Hathaway. Bill also opens up about something far more personal: his daughter Lucy’s sudden brain hemorrhage, the hours before surgery, and her ongoing recovery. He describes running his business from a hospital room and the institute he and his wife are building to help other families facing similar challenges.

 

 

 

 

 

The post The Knowledge Project Podcast: Bill Ackman appeared first on The Big Picture.

US, Australia Halt Consular Services In Brazil Before Presidential Election, Citing Security Concerns

Authored by Aldgra Fredly via The Epoch Times,

The United States and Australia on Oct. 2 suspended consular services in Brazil, citing security concerns ahead of the country's high-stakes presidential elections.

Security personnel stand outside the U.S. embassy after consular services were suspended due to security concerns in Brasilia, Brazil, on Oct. 2, 2026. Eraldo Peres/AP Photo

The U.S. embassy in Brazil issued an alert advising U.S. citizens seeking emergency assistance to contact the appropriate duty officer instead of visiting the embassy or other diplomatic facilities.

The Australian embassy also announced its closure in a notice, advising citizens seeking urgent consular assistance to contact the consular emergency center in Canberra by phone. It also urged people not to visit U.S. diplomatic facilities in Brazil, citing the U.S. embassy's security alert.

No details were provided about the security concerns that prompted the closures. The State Department said it coordinated with Brazilian officials to address security concerns.

Brazil's federal police said on Oct. 2 that they conducted a preventive operation in Sao Paulo and the Federal District targeting activity that could threaten U.S. diplomatic facilities, but have not yet identified any suspects linked to criminal organizations.

Police said the investigation stemmed from cooperation with foreign intelligence agencies and is still ongoing following the seizure of communication equipment.

Brazil will hold the first round of its presidential election on Oct. 4, with incumbent Luiz Inácio Lula da Silva and Sen. Flávio Bolsonaro among the frontrunners. If neither wins more than 50 percent of the vote, a runoff vote will take place on Oct. 25.

Bolsonaro is the son of former President Jair Bolsonaro, who is serving a 27-year prison sentence after being convicted of plotting a coup following his 2022 election loss.

Last year, U.S. President Donald Trump imposed a 50 percent tariff on Brazilian imports, citing the prosecution of Jair Bolsonaro. The U.S. government also sanctioned Brazilian Supreme Federal Court Justice Alexandre de Moraes and revoked his visa, along with those of his judicial allies and their family members, over what it called "censorship of protected expression in the United States" and a "witch hunt" targeting Jair Bolsonaro.

Lula has condemned the U.S. moves as interference in the Brazilian justice system.

The U.S. State Department on Aug. 31 placed Brazil under a "Level 2-Exercise increased caution" classification, while some areas of the country are designated as "Level 4-Do not travel," the most severe of the four advisory levels.

The advisory warns that violent crimes are common in urban regions of Brazil, including murder, armed robbery, and carjacking.

"Assaults are common, including with sedatives or drugs placed in drinks, especially in Rio de Janeiro," it stated. "Criminals target foreigners through dating apps or at bars before drugging and robbing their victims."

Naveen Athrappully and The Associated Press contributed to this report.

Tyler Durden Sun, 10/04/2026 - 13:00

"First Time In History": Bessent Says Iran Faces Zero Oil Revenue As Tanker Loadings Collapse

Treasury Secretary Scott Bessent joined Mike Allen for a new episode of "The Axios Show," published Saturday morning.

Bessent spoke about the Iran war's effect on the cost of living for US consumers and his "I am the house" comment early last month, which warned anyone betting against the Treasury's defense of the long end of the market.

Beyond the broader global bond rout, his comments on the Strait of Hormuz added color to President Trump's economic stranglehold on Tehran.

"They are isolating them economically like this never happened before. You know, right now, the score: barrels out of the Strait: U.S. about 1.1 billion, Iran zero," Bessent told Allen.

Bessent continued, "For the first time in history, they, since they started pumping oil, they will have no oil on the water this week. They will have no revenue."

Bessent on Iran:

For the first time in history, since they started pumping oil, they will have no oil on the water this week.

They will have no revenues. pic.twitter.com/PIrHwUCG4q

— Clash Report (@clashreport) October 3, 2026

Separately, last week, Goldman analysts Yulia Zhestkova Grigsby, Alexandra Paulus, and Daan Struyven told clients that a "divergence between the fall of Iranian exports and the rise of exports of other Persian Gulf producers" was underway.

The Goldman energy experts estimated that "dark exports" have helped boost Persian Gulf oil exports to 23.3 million barrels a day over the past week, back to prewar levels.

Also last week, Bloomberg News reported that Iran's crude loadings crashed to zero in August from around 250,000 barrels per day.

Data providers Kpler and Vortexa also recorded zero crude loadings last month.

The collapse in Iranian crude loadings suggests the US naval blockade is constraining Tehran's export options, while recovering flows from other Gulf producers point to eroded Iranian leverage over the strait. If sustained, Tehran's oil revenues would plunge, pressuring the regime to make a deal. 

Tyler Durden Sun, 10/04/2026 - 12:30

Why So Many Social Science Claims Are False

Authored by Christopher J. Ferguson via RealClearInvestigations,

One of the most urgent questions facing society today is the potential impact of AI on education and labor markets. So it's no surprise that two scientists attempted to provide an answer, producing a meta-analysis suggesting that incorporating ChatGPT in schooling dramatically improved student outcomes. Social media and online sources promoted the 2025 study as a beacon of bright light.

The problem is that the researchers' conclusions were later found to be unreliable, and the study was retracted in April - another blow to the public's faith in science.

Scientists are increasingly chasing answers to big questions in fields from health care to climate change to AI. The academic research industry incentivizes them to produce the biggest possible findings that make for splashy headlines and career promotions. But such discoveries are rare in science, and too often, the result is widespread exaggeration, dodgy methods, and miscommunication.

"The incentive structure of modern science is such that a 'simplify, then exaggerate' strategy has become dominant, even if only tacitly," according to a recent academic review. "To get published in leading journals, to be awarded grants and to be hired as a postdoc or faculty member, a system-wide bias for novelty, exaggeration and storytelling has emerged."

As RealClearInvestigations has previously reported, an alarming amount of poor-quality academic and scientific research has been discovered in recent years. Hindawi, formerly a part of major science publisher Wiley, had to retract thousands of science articles, many of them alleged to have been produced by paper mills that generate reams of reports of studies that never existed.

Big discoveries are rare in science, but the academic research industry incentivizes scholars to turn small findings into splashy headlines.
AP

While cases of outright fraud have received wide attention, a more subtle infection has spread within the research community: Research results that are inconsistent, based on poor methodologies, or are of limited practical impact are too often transformed into big, broad, but unreliable claims that, over time, reduce public confidence in science.

Several recent high-profile retractions of scientific papers highlight how broad scientific claims can be built upon questionable data. A recent paper asserted that banning sex work increases rapes. The sex work paper got significant attention on social media before skeptical scholars pointed out they couldn't replicate the findings. In another major case, economists estimated that climate change would have a devastating economic toll on the world in a paper that was widely covered and influential in banking. However, it was ultimately retracted after other scholars alleged major errors.

In each case, science sleuths found that the dramatic claims did not reflect reality. While the number of retractions has soared over the past two decades to several thousand a year, according to the watchdog group Retraction Watch, experts believe only a small fraction of questionable work gets caught.

Flip a Coin

Lee Jussim, distinguished professor of psychology at Rutgers University and frequent critic of social science, has estimated that the vast majority of psychology research claims are false. He also noted that the ability of psychology to replicate most findings is no better than a coin toss.

At the core of the crisis is a broken system that pressures researchers to produce more and more papers in high-profile journals that favor bold rather than incremental (or null) findings. The incentives include:

• Academic reward systems that grant promotions, tenure, and grant funding to researchers based on the number of publications and bold claims they produce rather than thoughtful scholarship
• Journals that often attract subscription dollars and news attention for flashy findings
• News media that win subscriptions and clicks with dramatic, often surprising claims about human behavior
• Politicians who cherry-pick alarmist science claims to promote their favorite policies while overlooking contradictory evidence

"The growing competition and 'publish or perish' culture in academia might conflict with the objectivity and integrity of research, because it forces scientists to produce 'publishable' results at all costs," Daniele Fanelli, a meta-scientist at Heriot-Watt University and the London School of Economics, noted in a recent paper.

The system set up to tamp down sensationalism and flawed findings - peer review - is so overwhelmed by the flood of research papers in recent years that it can't begin to pull all the weeds from the garden of science. Peer reviewers are busy scholars who are mostly unpaid and stretched too thin, even with the help of emerging AI tools that have their own problems with accuracy. One recent paper estimated that, in any given year, peer reviewers collectively work the equivalent of 15,000 years on scientific papers, which, if actually paid, would cost about $2.5 billion for U.S., Chinese, and U.K. reviewers alone.

Even when errors are detected, correcting and retracting papers is a contentious process that often takes years. Publishers and editors fear reputational damage and lawsuits from researchers, providing few incentives for correcting the record even if fraud is suspected.

Numbers Game

A common type of research exaggeration stems from the promotion of "statistically significant" findings. The seriousness of the phrase may lead the public to interpret the findings as reliable and practically useful. But often that's not the case. That's because most social science and medical findings are very weak, so weak they might be produced by methodological flaws (or crud) in those studies. Scientists are nonetheless incentivized to highlight the supposed importance of statistically significant studies in order to get attention, even if they don't warrant it.

As an analogy, consider the difference between a butterfly and an anvil landing on one's head. Both exert measurable weight on the head and, as such, both produce "statistically significant" results. But the magnitude of impact, the effect size, differs enormously. Most people would be far more concerned to avoid an anvil landing on their head than a butterfly. That's why "statistically significant" tells us nothing about the practical importance of a finding.

Even a finding with a standard effect size may not be reliable. For instance, social psychologist Daryl Bem published a report in one of the American Psychological Association's leading journals suggesting that ordinary people had extrasensory perception, or the ability to predict the future. Such an implausible finding raised considerable controversy at the time.

The problem was that Bem used weak research methods common throughout the social sciences to publish impossible results. Long a defender of ESP, Bem had in an earlier paper explicitly noted that the effects of ESP appeared similar to findings in other areas of psychology, saying, "The mean effect size is quite respectable in comparison with other controversial research areas of human performance." Bem did not respond to requests for comment.

Professor Fanelli said that poor training and unrealistic expectations help explain why social scientists miscommunicate data. "I think that part of a useful cultural change would be towards a greater understanding and acceptance of the limitations of social science," Fanelli said in an email. "Instead, a lot of it seems to have in some ways reinforced what was deemed the 'cult of statistical significance,' a mechanical and simplistic use of [statistical significance] as a paragon of validity."

Behind this presentation of hyped results is an academic publishing industry of five big companies with handsome profit margins. The Big Five, as they are known (Elsevier, Sage, Springer Nature, Taylor & Francis, Wiley), along with research grant funders, academic tenure evaluations, and the media incentivize scholars to stretch for the dramatic and oversell weak results. In science, a negative finding that shows no effect is as important as a positive one. But few negative findings get published.

Policymakers tend to make things worse. Catherine Knibbs, a psychotherapist and founder of Children and Tech, had been involved in some of the conversations around the controversial U.K. push for social media bans for youth under 16. She suggests policymakers often approach science with set conclusions, not open questions, and appear incurious about data that doesn't fit their agendas.

"To be honest I feel science is complex and whilst I love that about it, I [feel] quite alone in this," Knibbs said in an email. "People are often skimming the stats and looking for [evidence that confirms their beliefs]. Not many people have time to slow down and use their slower cognizant processes. It's why we have the chicken little sky is falling down shit."

Pushing for Reform

The good news is that a growing number of researchers are pushing for reforms that could improve the integrity of scientific findings. One promising sign is the growth of the "open science movement," which encourages the preregistration of studies. This reduces the ability of researchers to mangle their data analysis to produce preferred results. And the movement's promotion of greater data transparency allows for more confirmation of findings.

Brian Nosek, a professor of psychology at the University of Virginia who is leading the open science movement, struck a hopeful tone. "My most optimistic take is that we have established a stronger culture of self-scrutiny and continuous improvement," he said. "I don't know how successful the practice changes have been, but I believe that experimenting with new research methods and committing to evaluating what works and what doesn't will lead us in positive directions."

Some scholars are breaking away from the Big Five academic publishers by beginning their own nonprofit scientific journals. In some cases, this has been the result of exorbitant fees that journals charge authors for making papers public. A new federal legal case likewise accuses the Big Five of defrauding the government through unreasonable publishing charges, often paid for by government grants. Aside from the financial costs taken on by scholars, independent journals also potentially free scholars from a heavy focus on positive findings or publication bias.

A small number of research institutions are also trying to directly address some of the problematic incentives. In awarding promotions and tenure, they are putting less emphasis on the number of papers that researchers produce and the prestige of the journals where they are published. Instead, the quality of the paper is what counts.

Professor Ric Ferraro, editor of Current Psychology, emphasized that not all scholars or journals are bad actors. Some try to do the right thing and produce solid research. But breaking this cycle of perverse incentives will be difficult, as too many benefit from it, from scholars and academic journals to news media and politicians.

Until the incentives for research change more broadly, the public will continue to be fed a steady diet of bold claims about human behavior built on an unsteady foundation.

This article is part of an RCI series on The Normalization of Scientific Fraud. Read the previous articles here.

Tyler Durden Sun, 10/04/2026 - 12:00

"In The Name Of God": Yemen Leader Orders All-Out Offensive Against Iran-Backed Houthis

Saudi Arabia and Yemeni government forces have been preparing for a major offensive against Iran-backed Houthis, whose latest advances along Yemen's western coast have tightened their control over coastal areas and disrupted a critical maritime chokepoint known as the Bab el-Mandeb Strait. Bloomberg now reports that the operation is underway.

The outlet reports that Rashad Al-Alimi, head of Yemen's Presidential Leadership Council, ordered all branches of the armed forces into active combat operations on Sunday.

"All state military, security and civil institutions as of this moment are mobilized and on high alert until the mission is completed and victory is achieved," Al-Alimi said on Sunday.

He said the operation would continue "until the liberation of the country from the grip of the terrorist Houthi militia."

باسم الله، وباسم الشعب، وبناءً على قرارات مجلس الدفاع الوطني، نعلن اليوم بدء العمليات العسكرية لاستعادة ما تبقى من أراضي الجمهورية، وبسط سلطة الدولة ومؤسساتها على كامل التراب الوطني. pic.twitter.com/yaKsnSDpbK

— د/ رشاد محمد العليمي (@PresidentRashad) October 4, 2026

Our reporting on Saturday indicated that more than 100,000 Yemeni pro-government troops were set to mobilize for the offensive. Last month, the ease and speed of Houthi gains proved humiliating for the Saudi coalition in Yemen.

The Houthis largely stayed out of the US-Israeli war against Iran. But by midsummer, the terror group had announced a blockade of Saudi ships in the critical maritime chokepoint in response to what it described as a "siege" of Yemen. It has since repeatedly attacked the kingdom, including its oil facilities.

On Saturday, multiple reports and footage circulating on X showed what appeared to be smoke rising from Saudi Aramco's Riyadh refinery.

Reuters reported Friday that Saudi air power would support Yemeni ground forces. The report did not specify which aircraft had been deployed for the operation, but the Saudis operate US-built F-15s, Eurofighter Typhoons and Tornado strike aircraft.

Beyond the Bab el-Mandeb Strait, the latest data from Goldman show that crude oil flows through the Strait of Hormuz are back to pre-war levels, an indication that Tehran's leverage in the region has quickly eroded.

Tyler Durden Sun, 10/04/2026 - 11:30

10-Year Cost Of Democratic Socialist Policies Could Hit $350,000 Per Household, White House Says

Authored by Jacki Thrapp via The Epoch Times,

American taxpayers would face a net fiscal burden of over $350,000 per household in the next decade if the Democratic Socialists of America's top policies were adopted, according to a report released Oct. 1 by President Donald Trump's Council of Economic Advisers.

The report predicted a net fiscal burden of more than $49 trillion from 2027 to 2036 - larger than the national debt, which hit a milestone of $40 trillion in August.

The report added up the presumed costs for Democratic Socialists of America's agenda items such as loosening border restrictions, handing out amnesty to all illegal immigrants in the country, abolishing the police and U.S. Immigration and Customs Enforcement (ICE) officers, eliminating prisons, providing government-run healthcare for everyone, and canceling all student debt.

The majority of the cost would come from Medicare for All, which is predicted to cost $47.4 trillion out of the $52.8 trillion in gross costs, which was lowered to nearly $49 trillion due to the estimated $3.9 trillion that would be collected from the wealth tax.

Medicare for All proposals would transform the United States into a single-payer healthcare system in which the federal government covers all medical services, eliminating the out-of-pocket costs for patients.

The second most expensive proposal, according to the report, would be canceling student debt and making college free. That comes at a price tag of $3.6 trillion.

Student Loan Debt Statistics by the Education Data Initiative suggest that Americans currently owe roughly $1.9 trillion in student debt. Nearly $1.7 trillion of that debt is held by the federal government and is owed by nearly 43 million loan recipients.

The third-largest spending item would come from a mandated 32-hour workweek, costing approximately $918 billion in lost tax revenue.

The Trump administration described the proposals' potential impact on the economy, suggesting they would make everyday costs skyrocket with double-digit inflation and prices rising an extra 130 to 160 percent over 10 years.

The Epoch Times contacted the Democratic Socialists of America for comment and did not hear back by publication.

The report came out the same day Trump kicked off his 32-day campaign blitz for Republicans facing tough races in the November midterms.

During a speech at Peterbilt Motors' factory in Denton, Texas, on Thursday, Trump highlighted the resurgence of manufacturing in the United States and touted the economy's performance under his administration.

"We announce all these great numbers," Trump said. "The best numbers in the history of any president. There's never been any president that's got $21 trillion invested in our country. Not even close."

The president also showed his support for Texas Attorney General Ken Paxton, a Republican, who is in a tight U.S. Senate race against Democrat James Talarico.

After the speech, Trump made a rare presidential visit to the Choctaw Nation of Oklahoma for a rally. Only a handful of U.S. presidents have visited tribal nations while in office.

Tyler Durden Sun, 10/04/2026 - 11:00

Zelensky Vows To Hammer More Russian Refineries As G7 Greenlights Emergency Fuel Dump

President Volodymyr Zelensky told Reuters in an exclusive interview that Ukraine plans to intensify attacks on Russian oil refineries in response to continued strikes on Ukrainian cities. The threat comes as the Trump administration pressures European allies to release up to 100 million barrels of emergency oil and diesel stocks ahead of the Northern Hemisphere winter, with a global refining crunch already straining fuel supplies.

Zelensky told the outlet that Ukrainian intelligence had obtained documents outlining what he described as Russian President Vladimir Putin's new war doctrine to broaden attacks on civilian infrastructure ahead of winter.

"We saw documents and we know that they allow them to attack infrastructure, logistics, and especially to attack in the cities, in the villages, everywhere, roads, schools, hospitals," Zelensky said. "To pressure people to leave the capital, leave different cities: this is the goal of the operation."

Zelensky then said, "We have to respond in any way (we can). With their attacks on our energy, we have to respond on their energy. First of all, oil refiners, etc.: what gives money to them for this war. But we will not respond, of course, just like them, on any civilian objects."

gonna need a bigger diesel emergency reserve release...

— zerohedge (@zerohedge) October 3, 2026

Zelensky's plan to further destroy Russia's refineries comes as the Trump administration seeks to revive peace negotiations. Zelensky said Russia had shown no willingness to discuss either peace talks or a ceasefire covering energy infrastructure.

The Trump administration's move to pressure European countries and other G7 members into releasing as much as 100 million barrels of emergency oil and diesel stocks, as confirmed by French President Emmanuel Macron on Friday, is likely in response to Zelensky's expanding drone and missile attacks on Russian energy assets, as stockpiles for critical fuels are well below seasonal levels for this time of year. 

The International Energy Agency is coordinating the emergency release, which will take place over the next four months, according to Macron.

Goldman energy analyst Nikhil Bhandari warned last month that the global refining crisis stems from a combination of disruptions in the Strait of Hormuz and, more importantly, Ukraine's bombardment of Russian refineries. Those attacks have prompted Moscow to extend its diesel export halt, suggesting the refining crisis could linger well into next year and keep refined-product prices elevated. 

Meanwhile, last Thursday at the Valdai Discussion Club in Moscow, Putin warned the Western allies to cease their escalation in Ukraine, stressing he's willing to use "all weapons" in the Russian arsenal in the scenario that Russia's exclave of Kaliningrad comes under attack.

Tyler Durden Sun, 10/04/2026 - 10:30

French Feminist Convicted Of The Crime Of "Public Insult" For Refusing To Call Transgender Mayor A "Woman"

Authored by Jonathan Turley via JonathanTurley.org,

Dora Moutot is a feminist who has dedicated much of her life to fighting for women's rights and has built a following on social media. Like other feminists, Moutot does not view transgender women the same as biological women. She has now joined others who are facing criminal charges for expressing those views. Transgender advocates have demanded that she be punished for her views in France.

Moutot recounted how transgender activists demanded that she be more "inclusive" in how she referred to "women." She refused, and explained that "being a woman is a biological fact and that I didn't think saying so should be controversial." She was immediately denounced as a "transphobe and a TERF (trans-exclusionary radical feminist), a term I'd never even heard before."

What followed was all too familiar. A cancel campaign led to her brand partnerships being canceled. In 2022, she was invited on a French TV program to discuss transgender issues with Marie Cau, France's first transgender mayor. On the program, she was asked if she thought Cau was a woman. Moutot responded, Cau "is a man, a transfeminine man."

That was all it took. Transgender advocates had their case and filed charges for "public insult," which is a crime in France with a maximum punishment of one year in prison and a fine of up to €45,000 for insults committed against a person because of their sex, sexual orientation, gender identity, or disability.

Free speech has long been in a free fall in France. Many disagree with Moutot and they are accorded free speech to denounce her views. However, Moutot is not extended the same protection based on the content of her views.

These laws criminalize speech under vague standards referring to "inciting" or "intimidating" others based on race or religion. For example, fashion designer John Galliano has been found guilty in a French court on charges of making anti-Semitic comments against at least three people in a Paris bar. At his sentencing, Judge Anne Marie Sauteraud read out a list of the bad words used by Galliano to Geraldine Bloch and Philippe Virgitti, including using 'dirty whore" in criticism.

In another case, the father of French conservative presidential candidate Marine Le Pen was fined because he had called people from the Roma minority "smelly." A French teenager was charged for criticizing Islam as a "religion of hate."

This is a nation that still echoes the cry of Liberty, Equality, and Fraternity ("liberté, égalité, fraternité"). However, in today's France, "liberté" is no longer valued. Individual rights of religion and speech are routinely sacrificed in the name of "equity" and "fraternity."

In my book The Indispensable Right, I discuss the decline of free speech in France and other nations. As we face our own growing anti-free speech movement, citizens need to take a long look at countries like France to see what awaits us down this path. Europe went down this slippery slope of censorship decades ago, and the desire to silence others has now become an insatiable appetite.

As in this case, activists spend more time silencing opposing views than responding to them. For transgender activists, it is intolerable for feminists like Moutot to hold contrary views. Instead of addressing her viewpoints in public, they want her declared a criminal. Censorship then becomes an insatiable appetite for groups to silence their own critics.

Moutot describes the Orwellian take on free speech in France today:

"The judge did not impose the course, but in May, I was found guilty of 'public insult' and fined €4,754. The judge found that though my statements were made in the context of a debate, they constituted an 'abuse of freedom of expression warranting the imposition of a criminal penalty commensurate with the harm thus caused to the values protected by our democratic society.' In other words, the judge concluded my intent had been to cause harm."

It is chilling to think of a judge willingly participating in such censorship, but this is now standard in the country. In the meantime, transgender activists are not done with Moutot, whose very existence appears to outrage them:

"In June, just weeks after my conviction, another LGBT organization filed six more complaints against me and my colleague Marguerite Stern. These new charges target specific statements we made on social media and on our feminist blog and YouTube channel Femelliste. They include our opinion that 'men' were 'demanding access to our spaces' and the question: 'On what grounds should trans women's fear of being mocked in men's toilets take precedence over women's fear of being raped?'"

This speech would be entirely protected in the United States. However, the case is a chilling cautionary tale for Americans fighting a resurgent anti-free speech movement. This is the slippery slope of censorship that awaits us if we abandon our defining commitment to free speech. After the removal of much of the censorship system established during the Biden Administration, American censors did not take jobs at Starbucks. They continue to peddle their expertise in regulating and silencing the speech of others.

It is a dire future. Just ask Dora Moutot.

Jonathan Turley is a law professor and the New York Times best-selling author of "Rage and the Republic: The Unfinished Story of the American Revolution".

Tyler Durden Sun, 10/04/2026 - 09:20

"We Don't Need To Sell The Story Anymore": Nuclear Wins The Argument At WNA 2026... Now Everyone Is Racing For Bronze

For most of the 2010s, the annual World Nuclear Association symposium in London was an exercise in group therapy: an industry reeling from Fukushima, German shutdowns and a seven-year uranium bear market, explaining to an indifferent world why it deserved to exist. Not anymore.

This year's gathering (Sept 9-11) drew a record crowd: attendance was up 17% from last year per BofA, with more than 1,000 delegates from 50 countries and 35 new WNA members. And the mood had changed completely. As Cameco CEO Tim Gitzel put it during his fireside chat:

"We don't need to sell the [nuclear] story anymore, we just need to convert it to action."

CIBC analyst Anita Soni, who also attended, summed up the three days the same way: "nuclear energy has largely won the policy and market acceptance debate, with attention now turning to execution at scale." The question is no longer whether the world builds reactors, but whether anyone can build them on time and on budget. On that front, the industry's track record needs little comment.

There's also a catch that Gitzel, whose Cameco owns 49% of Westinghouse, was candid about: in the West, nobody wants to go first. "Everyone is racing for bronze," he said. Most utilities would rather be the third to build a new large reactor than risk being the first. Constellation's Jason Murphy confirmed this from a separate panel: CEG is one of the companies that would "prefer to be third, not first." This is how you end up with a race in which all the runners stay at the starting line watching each other.

The symposium lined up nicely with the IAEA's annual outlook, which raised its long-term nuclear projections for the sixth consecutive year. Under the high case, global capacity hits 1,045 GWe by 2050 (from 992 GWe in last year's edition) and 1,284 GWe by 2060, or about 3.4x the 377 GWe operating at the end of 2025. Even the low case now roughly doubles capacity by 2060.

According to Northland's Jeff Grampp, the more important point is that the low case moved most: +14% to 641 GWe, versus +5% for the high case. In his view this "suggests a de-risking of the long-term growth narrative." North America's low case also flipped from contraction last year to growth this year (136 GWe by 2050, vs 98 GWe previously).

Source: ZH using IAEA figures cited by Northland and CIBC

Northland makes two further points we agree with:

• The forecast is bottom-up and not reverse-engineered from a net-zero scenario, "which we think make these projections more credible/realistic." In other words, nobody started with 1.5°C and worked backward.
• The driver has changed from climate to energy security. "While its zero carbon attributes are compelling, we think the energy security investment case is stronger and more resilient than climate-based investment, which can ebb and flow with political regimes." We've been saying the same for years, and it's hard to argue with after watching Germany's economy minister call for a "nuclear rethink" as energy prices surged in April. Better late than never.

Then there are SMRs. Last year the IAEA saw small modular reactors taking 5%-24% of new capacity by 2050, a range so wide it was nearly meaningless, with the low end at a "paltry" 16 GWe. This year the band is 23%-28%, or about 120-285 GWe. In North America, ~60% of new nuclear capacity is expected to come from SMRs. Readers will know that we've long argued modular, behind-the-meter reactors are the only real long-term answer to the AI power problem, so it's nice to see the IAEA catching up (for much more, see "Bring Your Own Power Plant: Behind-The-Meter To Power 25% Of All Data Centers By 2030").

CIBC's Krista Friesen, in her Weekly Blueprint, adds a point that gets far less attention: the existing fleet is old. Two-thirds of operating reactors are more than 30 years old, and 46% are over 40. Even in the high case, about one-third of today's capacity retires by 2060. The industry therefore has to keep building just to stand still, and in 2025 it didn't quite manage that. Seven reactors (2.8 GW) were retired and only three (3.0 GW) were connected. Nuclear generation grew 1.1%, overall electricity generation grew 2.7%, while nuclear's share of global power fell to 8.4% from 8.7%.

The $6 trillion question

Day 1 of the symposium was a Finance Summit, and the headline number was large. Meeting the "Tripling Declaration" would require about $6 trillion over 25 years, with annual nuclear capex rising from about $80BN today to more than $250BN a year through 2050. (For reference, current aggregate national targets put global capacity at 1,457 GWe by 2050, which is almost a quadrupling.)

The notable change is that, as one Westinghouse/EDF/Orano/GE Vernova panel put it (per BofA), "A few years ago the question was whether there was sufficient investment money to do this. Now there is." CIBC reports that discussions are "now focused less on whether institutions will invest and more on when." The WNA also launched a World Nuclear Investment Guide to help turn a "specialized energy investment" into a mainstream infrastructure asset class. The goal is to take design, licensing, regulatory and supply-chain risk out of projects and leave only execution risk, which, based on history, is plenty.

The most useful comments came from the customers. On BofA's "Beyond offtake" panel, ExxonMobil said plainly that "the nuclear industry doesn't have a technology problem, it has a DEPLOYMENT problem", and argued that the risk model is wrong. In LNG or CCGT projects, nobody expects the technology vendor to carry most of the risk. The owner-operator does. Exxon is preparing a report proposing a new delivery model.

Amazon, which is putting "real money on the table" behind X-energy, made a point that should be pinned above every regulator's desk:

"No point for a PPA if the connections take 7 years."

That's the grid interconnection queue in one sentence, and it's why we've been pushing "behind the meter" on-site generation for data centers (going so far as to tweet in December: "Make 'behind the meter' mandatory"). Demand isn't the issue either: CIBC notes Microsoft plans to more than triple its data center capacity to over 38 GW by 2032 from about 12 GW, excluding rented neocloud capacity. Those gigawatts have to come from somewhere.

Meanwhile, China just builds them

While the West waits to see who goes first, China explained how it does things. Ma Yuanhua of State Nuclear Power Technology Corp. said China had 62 reactors operating (66 GW) and 58 under construction (69 GW) as of July, with targets of 110 GW by 2030 and 150 GW by 2035. The method is dull and it works: standardization, specialization, centralization. Targets include 80% design reuse, a 56-month construction schedule, 93%+ factory acceptance rates, and centralized procurement. (By comparison, some Western projects have spent longer than 56 months on permitting.)

Of course, it depends who is counting. SNPTC's 58 includes projects China considers underway. The WNA only counts reactors once the first concrete has been poured, and by that stricter definition, per Goldman's monthly tracker, China had 37 reactors under construction as of Aug 11, more than twice India (8) and Russia (7) combined, and nearly as many as the other 16 countries on the list put together (42). The U.S. doesn't appear on the chart at all, which is the more telling number. As we summarized it on Aug 13: "China 37 nuclear reactors under construction; US 0."

Source: @zerohedge on X; World Nuclear Association, data compiled by Goldman Sachs Global Investment Research

This is where "everyone racing for bronze" leads: the U.S. hasn't even qualified for the race yet, while China is already building its next reactors.

The Western lesson was said out loud. Constellation: "The West should apply the China model." Speakers backed a "license once, review once, build many" framework, and there's real movement. Finland's regulatory overhaul cuts binding requirements from about 8,000 to 1,500, the U.S. NRC is changing its culture under the ADVANCE Act, and Europe's ENGARD initiative aims to harmonize design reviews across countries.

Other highlights from around the world:

• Japan is back. TEPCO restarted Kashiwazaki-Kariwa Unit 6 on Feb 9 after 14 years offline. Kansai Electric says 15 reactors have now restarted since Fukushima, and Japan's policy has moved from "reducing" to "maximizing" nuclear, with a 20% share targeted by 2040 and 11-14 new large reactors by the 2050s. We asked back in May whether new Japanese build was inevitable. The answer appears to be yes. 

How it's done:

This is TEPCO’s Kashiwazaki-Kariwa nuclear power station in Niigata. The seven-unit site has 8.2GW of capacity, making it the world's largest power plant. Unit 6 entered commercial operation on 16 April 2026, returning a 1.36GW Advanced Boiling Water Reactor to… pic.twitter.com/N2HrvHfFhA

— zerohedge (@zerohedge) September 30, 2026

• Poland has secured €17BN for its first plant, with three AP1000s in preparation.
• Czech Republic is moving to 80-year operations and building new units plus a Rolls-Royce SMR.
• USA: Following the May 2025 Executive Order calling for 10 large reactors under construction by 2030, DOE's $17.5BN long-lead procurement program has letters of intent with seven unnamed counterparties. Some attendees are optimistic about 1-2 site announcements before the midterms. TerraPower has its construction permit and an active job site in Wyoming.
• Africa: Togo's president signed on to the tripling pledge and will host the NEISA summit in 2027, noting that Africa wants "partnerships and investment rather than technology handouts."
• Ships: HD Korea Shipbuilding presented on nuclear-powered commercial vessels, a timely follow-on to Washington laying the groundwork for offshore nuclear in July. Its risk disclosure was admirably honest: "It might not work."

The real bottleneck: you can't 3D-print a uranium deposit

This is where the symposium got most interesting for markets. Reactors can be standardized, financed and eventually built. The fuel to run them is a different problem. Here is what CCJ's Gitzel said, via BofA:

Uranium mining is the bottleneck, as deposits are non-reproducible and lead times from discovery to production range up to 20 years; while fuel conversion, enrichment and fabrication can be more easily addressed with capital alone.

Kazatomprom's Dastan Kosherbayev put it more bluntly: after years of underinvestment, producers will prioritize customers who give clear, long-term demand signals. Kazatomprom will "no longer turn down attractive eastern deals in anticipation of potential western demand." Put simply, Western utilities that have been waiting for spot dips may find the East has bought the inventory. This comes as Russia banned sulphuric acid exports through year-end, threatening about 3MM lbs of Kazakh 2027 output, while Kazatomprom agreed to sell uranium to Rosatom's Uranium One. Coincidences happen.

Northland ran the numbers, and they are large:

• Uranium: At 0.4-0.5MM lbs per GWe per year, the IAEA's 641-1,045 GWe range implies 288-470MM lbs of annual demand by 2050, versus about 168MM lbs today, and that's before replacing depleted mines.
• Enrichment: Excluding Russian and Chinese SWU, Western demand is about 28.5MM SWU against about 24.8MM SWU of supply (per Urenco). The West is already in deficit. In the IAEA high case, demand rises to about 57MM SWU, a ~32MM SWU shortfall, or up to 69MM if SMRs running on HALEU take 30%-50% share.

ZH chart built from Northland Capital Markets figures

Urenco confirmed this from the supply side: its order book has grown from €8.7BN in 2021 to €21.3BN, and it is adding 4.6MM SWU, almost a third more capacity, "based on a market assessment, not orders." Separately, Constellation said LEU+ (fuel enriched up to 10%) will allow 24-month reload cycles across its fleet, and Silex/GLE expects its laser enrichment license near Paducah by 2027. As we noted when DOE put $2.7BN behind domestic enrichment in January, the fuel chain is where the money is going.

Prices are responding. BofA's charts:

On uranium, the long-term contract price hit an all-time high of $96.50/lb (even if nuclear stocks have not noticed), above the prior 2007 peak of $95.00, as we noted in "Uranium Needs To Go Higher" earlier this month. BofA reaffirmed its forecasts: $104.20/lb for 2026 and $129.80/lb for 2027, which would be a new record, before easing to a long-term $84.75.

Spot has also been trading below term, as the chart above shows. BofA says the important change is who is buying. Producers' share of term selling fell from 92% in 2023 to 76% in 2025, and "rising utility participation in the term market is a driver of higher U3O8 prices, as churn... is replaced by end-user consumptive demand." In other words, less trading between hedge funds and more buying by utilities that actually need the fuel.

For those who think the move is over, here's the 38-year chart. Uranium remains well below its 2007 nominal peak, even though the demand story is now much broader.

None of this is new to regular readers. Goldman flagged a cumulative 2.3 billion lb uranium supply deficit through 2045 in May when it added SMRs to its models, and we argued in August that the market is still underpricing the nuclear build cycle.

How to trade it: picks and shovels over reactor dreams

The sell side mostly agrees on direction, but not on where to position along the value chain:

• BofA (Lawson Winder) "remains constructive" and names buy-rated U.S.-listed exposure: CEG, TLN, VST in power; CCJ and OKLO among vendors; and CCJ and STDN in the fuel cycle.
• Northland (Jeff Grampp) is also long-term bullish but more careful on timing. He cut price targets on reactor developers (IMSR to $8 from $15, SMR to $10 from $16, NNE to $22 from $37) to reflect higher costs of capital (i.e., more dilution) and a slower 2030-2035 buildout. He instead favors fuel and supply-chain names that make money now: BWXT, LEU, EU, URG, MIR. Asked to choose between enrichment and uranium, Northland picks uranium.

That seems like the right reading of the symposium. The long-term story is intact and improving, with the IAEA raising forecasts again, hyperscalers writing checks and Japan back in the game. The near-term constraints are physical: fuel, forgings, workers and grid connections. Reactor developers have to wait for the first Western mover to deliver on time and on budget. Uranium miners and enrichers don't. Both need the same uranium.

As Kansai Electric's delegate said, the industry's next phase is about "disciplined vision," and increasingly about meeting in person, "becoming more analog in an increasingly digital world." That's also a fair description of uranium: a physical asset that can't be replicated, needed to power data centers, and in short supply.

More in the full notes: BofA Global Research, "Postcard from the 2026 WNA Symposium" (Sept 15); CIBC Capital Markets, "2026 World Nuclear Symposium" (Sept 15) and "IAEA Raises Nuclear Outlook For Sixth Consecutive Year – The Weekly Blueprint" (Sept 14); Northland Capital Markets, "Takeaways From Updated IAEA Nuclear Forecast" (Sept 17), all available to pro subs.

Tyler Durden Sun, 10/04/2026 - 08:45

Why Apartments In Tokyo Are So Much Cheaper Than In NYC

Authored by Julia R. Cartwright via The Daily Economy,

Imagine it's January in New York and you're sharing a tiny apartment with two roommates. The walls are crumbling around you, and there's a hole in your bedroom wall big enough to see outside. Every time it rains or snows, water drips into your room. You call your landlord to fix it over and over again, but nothing happens.

Tokyo apartment building by night. CAPTAINHOOK via Shutterstock.

This is reality for many New Yorkers. This degradation is the predictable result of decades of housing policy that has kept supply scarce and left rent-regulated buildings to decay. Many people blame it on big-city life, but lessons from Tokyo show us that it doesn't have to be that way.

Tokyo Metropolis is home to about 14.27 million people, far more than New York City's roughly 8.5 million. Yet renting in a city not quite twice the size costs a fraction of what it does in the biggest city in the US.

In the mid-1990s, a one-bedroom apartment in Tokyo cost about the same as one in New York, a little less than $1,000 a month. By 2025, a New York one-bedroom averaged about $4,400 per month, while a Tokyo one-bedroom ran about $1,270. A weaker yen explains part of that gap, but even in yen, Tokyo rents barely moved in 30 years while New York's rents nearly tripled.

Housing prices ultimately come down to supply and demand. So how has Tokyo managed to keep housing relatively affordable, while New York has struggled to do the same?

Tokyo has been focused on keeping up with demand; its housing stock nearly tripled between 1963 and 2013, reaching 7.36 million homes. To do this, Japan keeps zoning flexible. Instead of limiting each area to a single use, zoning allows homes, shops, and light industry to coexist on the same blocks. Projects that follow these rules can be built "as-of-right," without discretionary review or giving neighbors the power to block them.

Japan's zoning rules are uniform across the country. The national government defines 13 standard zones instead of leaving land use to individual neighborhoods. That top-down approach cuts both ways, however, since a national system could tighten rules as easily as loosen them, but Japan's has repeatedly loosened them to allow more housing.

New York City's zoning works in nearly the opposite way. A site-specific rezoning goes through the Uniform Land Use Review Procedure, a review so onerous that about 40 percent of private rezoning proposals fail to get approved. About 27 percent of Manhattan's lots are under restrictive landmark regulations, and historic districts see new buildings at about one-sixth the rate of other lots.

Then there are the empty NYC apartments. The 2019 Housing Stability and Tenant Protection Act capped rent increases on vacant rent-stabilized units and limited how much renovation cost landlords can recover. When a $700-a-month unit needs $100,000 of work to meet code, many owners leave it empty; this helps explain why nearly 57,000 rent-stabilized apartments were empty in 2025.

Continuing their stance of flexibility, Tokyo has allowed smaller apartments to be built. A typical one-bedroom is about 430 square feet, compared with 590 for a New York one-bedroom. Smaller apartments lower the barrier to entry for single renters and young professionals to get their own place.

New York spent decades making small units hard to build through a 400-square-foot minimum rule dating to 1987 and zoning rules called the "Dwelling Unit Factor" that forced large average unit sizes. The "City of Yes" amendment only eased those rules in December 2024, after decades of limiting the kinds of smaller, cheaper apartments Tokyo builds routinely.

Buildings in Japan also turn over faster. Japan's tax code depreciates a wooden house over 22 years, and the average Japanese home is demolished at about 32 years old, versus roughly 70 in the US. Old stock gets replaced with newer, denser buildings instead of being preserved indefinitely.

Japan's inclusive regulations result in much more building. Tokyo averaged about 155,000 housing starts a year from 1995 to 2015 and still starts roughly 130,000 annually; New York, by contrast, added roughly 50,000 in 2025. Since the 1960s, Tokyo's stock has nearly tripled while New York's has grown only 20 to 30 percent.

Factory-built homes also help ease supply constraints. One Japanese Sekisui House plant produces about 20 houses a day, and roughly 13 percent of new Japanese homes are prefab or modular. New York has only recently started experimenting with modular construction, and it remains a small share of the city's building, far behind Japan.

To be fair, Tokyo isn't cheap by Japanese standards, but it has accommodated millions without New York-style crumbling buildings and vacant units. New York is moving the other way: Mamdani's Rent Guidelines Board froze rents for roughly one million stabilized apartments. The freeze helps current tenants but creates no new homes, and analysts expect more units to sit empty as prices for non-stabilized apartments keep rising.

The renter watching snow blow through the hole in her bedroom wall won't be saved by another year of frozen rent. Instead of doubling down on the policies that brought scarcity, dilapidated apartments, and sky-high rents, New York could take a lesson from Tokyo, where the way to make housing affordable has been to make a lot more of it.

Julia R. Cartwright is an economist whose work specializes in law and economics, political economy, and economic development. Her research features topics like the governance structures of crypto markets, the economic consequences of judicial interventions in courts in East Africa, and the development impact of housing regulations.

Tyler Durden Sun, 10/04/2026 - 08:10

IRS Takes Aim At AQR's Tax-Slashing "Holy Grail", Warns Crackdown May Be Retroactive

For three years Wall Street's hottest product wasn't a stock, a sector or even an AI trade - it was losing money. Specifically, losing it in a very precise, very engineered way so that the "losses" could be handed to the IRS while the portfolio itself kept compounding. But now the taxman has finally noticed.

On Monday, Treasury and the IRS released Notice 2026-62 and Revenue Ruling 2026-20, a double-barreled warning shot at the "tax alpha" industry. Among the targets: strategies that help wealthy clients harvest losses to shelter ordinary income - the salaries, bonuses and wages taxed at the highest rates - a niche best known through AQR's Delphi Plus, the flagship of what is now the world's largest hedge fund, Bloomberg reports.

The punchline, and the part that should be making some family offices sweat: the IRS said any guidance it ultimately publishes "could apply retroactively" to transactions that already took place.

What the IRS is going after

The notice reads like a greatest-hits album of structured tax trades. According to the text, Treasury is studying (and may designate as listed transactions or "transactions of interest"):

• Tax-aware funds that manufacture capital gain / ordinary loss mismatches - i.e., gains that get taxed at the lower cap-gains rate while losses are ordinary and offset wages
• Same-day acquisitions and dispositions of foreign currency forwards (hello, Section 988)
• Selective terminations of notional principal contracts (read: equity swaps), and identified straddles with mixed character - the swaps-plus-futures combos Bloomberg flagged
• "Box spread" ETFs that mimic T-bill returns without generating current income
• Various Section 852(b)(6) ETF redemption games, including using in-kind redemptions to dodge the RIC qualifying-income test

The IRS did concede that plain-vanilla stock-focused long-short strategies may fit "long-standing, well established techniques." It is the ordinary-loss machinery it has a problem with, noting that "certain of these tax-aware funds appear to be primarily tax-motivated rather than being directed toward generating an economic return from genuine investment activity." Which, in fairness, is also the marketing pitch. Comments are due by October 28.

Delphi Plus: the "holy grail"

AQR's Delphi Plus is the best-known product aimed at exactly this outcome. The AQR TA Delphi Plus Fund had $6.6 billion at midyear and, per documents seen by Bloomberg, recorded ordinary losses in 2025 equal to 28% of capital invested. Put differently: a client who wrote a $10 million check got roughly $2.8 million of losses to deduct against their W-2 in year one, while the portfolio itself was designed to keep the winners running.

It's unclear whether AQR's trades already work around the IRS's concerns. The firm didn't respond to Bloomberg, and has previously said it adapts strategies "to operate within all relevant guidance and regulations." Notably, AQR had already added disclosure warning clients that the IRS could retroactively disallow the benefits - so nobody can say they weren't told.

Short seller Nathan Koppikar of Orso Partners, who has been betting authorities would step in, called ordinary-income shielding the industry's "holy grail." NYU Law's Daniel Hemel was more blunt: the total addressable market is "huge if the Treasury doesn't do anything about it" - it would be "carried interest on steroids."

That's the real issue. Capital-gains harvesting mostly helps people who already have large embedded gains. Ordinary-income sheltering, on the other hand, appeals to every well-paid surgeon, lawyer and Goldman MD in the country. That's a much bigger tax base, and a much bigger hole in federal receipts at a time when the 10-year just briefly topped 5% for the first time since 2023.

How AQR got here

We first flagged the explosion of this trade back in March in "Wall Street's Trillion-Dollar Bet On 'Tax Alpha'", noting that more than $1 trillion was sitting in tax-efficiency strategies, from direct indexing to the far more exotic long-short structures.

Wall Street's Trillion-Dollar Bet On "Tax Alpha" https://t.co/YgKTg8JDDu

— zerohedge (@zerohedge) March 24, 2026

Since then the numbers have only gotten sillier. Cliff Asness's firm, which had shrunk below $100 billion by 2022 after a brutal quant winter, rode tax-aware products back to the top: its long-short tax assets went from about $3 billion in 2023 to roughly $70 billion, around 40% of the firm. One of the more aggressive variants, per Bloomberg's August feature, could turn a $100 million investment into more than $580 million of tax-offsetting losses over a decade. When your "losses" are nearly 6x your principal and the account is still up, you are no longer running a hedge fund so much as a deduction factory.

The warning lights were there. Treasury officials said at a New York conference in July that some of these structures produce "outcomes Congress did not intend" and were "potentially abusive." Schwab and Fidelity quietly started limiting new accounts pursuing the strategy - rare restraint from two firms that generally don't turn away billions in AUM.

Meanwhile, the 351 "black hole" gets plugged too

The companion Revenue Ruling went after the other darling of the tax-alpha crowd: the Section 351 ETF conversion, where an investor seeds a brand-new ETF with a pile of highly appreciated stock, and the ETF then swaps it out via in-kind redemptions for a diversified portfolio - no tax bill. We noted the headline as it crossed:

*IRS ISSUES RULING ON 351 CONVERSIONS INTO ETFS

— zerohedge (@zerohedge) September 28, 2026

Rev. Rul. 2026-20 applies substance-over-form and step-transaction doctrines, treats the ETF as a mere conduit, and recharacterizes the whole thing as a taxable exchange between the contributing investor and the authorized participant. More than 100 ETFs, with over $20 billion in seed assets, have launched via 351 exchanges since 2021, per Tax Alpha Insider. Those issuers - and the crypto ETF crowd that has been using in-kind redemptions to sidestep the RIC income test - are now scrambling with their lawyers.

Bessent: "serious"

As the notice went out, Treasury Secretary Scott Bessent chimed in on X, saying the department "is serious about cracking down on transactions designed to dodge taxes or exploit our federal tax code."

Today, @USTreasury and @IRSnews issued a notice on tax-motivated investment strategies that makes clear Treasury is serious about cracking down on transactions designed to dodge taxes or exploit our federal tax code. The companion Revenue Ruling also takes on prearranged §351 ETF… https://t.co/F8ZJQcx2B9

— Treasury Secretary Scott Bessent (@SecScottBessent) September 28, 2026

For an administration that just cut taxes, it may seem odd to go after the rich's favorite deductions. But a Treasury funding a massive deficit with long yields near 5% can do the math: every dollar of wage income sheltered by a currency forward is a dollar of Treasury supply that has to be sold to someone else.

What's next

This is a notice, not a regulation, and the comment window runs to late October. But the retroactivity language is the tell. By refusing to grandfather existing trades, the IRS has effectively put a question mark next to every 2025 and 2026 K-1 that shows outsized ordinary losses. Expect three things:

• Product tweaks: managers will try to lean on the "well established" stock-only long-short safe harbor and pull back on FX forwards and swap terminations.
• Slower inflows: the ~$1 billion a week that had been pouring into tax-aware long-short is unlikely to keep going at that pace while a retroactive audit risk hangs over the product.
• Unwind risk: if clients head for the exits, the leveraged long-short books behind these products (often 130/30 to 250/150) will have to be delevered. Keep an eye on crowded shorts in names these quant books favor.

As one long-time skeptic put it when the trade was booming: when something seems too good to be true, it probably is. In this case, it may also be retroactively too good to be true.

Tyler Durden Sun, 10/04/2026 - 07:35

Multi-Million Dollar TRICARE Fraud Bought A Gold-Plated Cybertruck And Casino Parties

Authored by Austin Campbell via Task & Purpose,

Millions of dollars spent on casino-themed parties, expensive hotels and a gold-plated Cybertruck. It sounds like the spending spree of a character from The Wolf of Wall Street. Instead, federal prosecutors say the absurd spending was financed by a 64-year-old mental health clinic owner named Kevin Darnell Curry.

Curry, who owned and operated Acuity TMS of Plano, Acuity TMS of Fort Worth and Emerald Coast TMS of Fort Walton Beach, was convicted of submitting roughly $26 million in fraudulent claims to TRICARE, which paid out approximately $17 million.

These clinics, which offered transcranial magnetic stimulation or TMS, operated in areas with substantial military populations. His Fort Walton Beach clinic sat in the same Florida Panhandle military community as Eglin Air Force Base and Hurlburt Field, while his Fort Worth operation was near Naval Air Station Joint Reserve Base Fort Worth. A third clinic operated in Plano, north of Dallas, Texas.

The scheme involved an unknown number of active duty service members, veterans and military family members covered by TRICARE, though the indictment did not identify where they lived or which installations, if any, the active-duty beneficiaries were assigned to. Curry falsely presented himself as a medical doctor, using fake credentials to convince service members and families to sign up for the treatment.

Curry was convicted of three counts of health care fraud, three counts of offering and paying illegal health care kickbacks and three counts of engaging in monetary transactions in criminally derived property. Federal authorities previously seized approximately $200,000 in assets connected to Curry's case, including $136,022 in cash and the gold-plated Cybertruck, according to the Justice Department.

Prosecutors say Curry recruited TRICARE beneficiaries through illegal kickbacks and bribes to receive TMS, then billed TRICARE for treatments that weren't provided, weren't provided as represented or for which patients did not qualify.

TMS is a noninvasive treatment that uses magnetic pulses to stimulate nerve cells in areas of the brain involved in depression. TRICARE covers the treatment for some patients with major depressive disorder when other treatments have failed.

To qualify, patients generally had to have tried at least two antidepressants from different drug classes without success and undergone evidence-based psychotherapy that also failed to adequately treat their depression, according to the indictment.

Prosecutors say some of Curry's patients did not meet those requirements. His clinics allegedly submitted false information about beneficiaries' treatment histories to obtain authorization from TRICARE, including records claiming patients had unsuccessfully tried medications they had not actually taken.

The scheme turned military beneficiaries into a source of millions of dollars in fraudulent TRICARE payments and unfolded inside a military health system that has simultaneously been trying to convince service members they can trust it enough to seek mental health care.

Despite the benefits of treatment, an estimated 60% to 70% of military personnel experiencing mental health problems do not seek mental health services, according to the Defense Department's Psychological Health Center of Excellence.

The Pentagon attributes that gap to a range of barriers, including stigma and concerns about how seeking treatment could affect a service member's career.

Those concerns can include fears about being viewed as weak, being treated differently by military leadership or losing the confidence of others in their unit.

It remains unclear how much of the approximately $17 million paid by TRICARE has been recovered.

Curry is scheduled to be sentenced at a later date and faces up to 10 years in prison on each count.

Tyler Durden Sun, 10/04/2026 - 07:00

Avert your eyes! My Sunday morning look at incompetency, corruption and policy failures:

• I Deliberately Bet Like a Problem Gambler.DraftKings Made Me a VIP. Jake Pearson blew $1,800 in one night chasing losses with bigger bets, a textbook warning sign. The next day DraftKings invited him to audition for its VIP program. (ProPublica)

• How Cities Are Forced to Funnel License Plate Data to a Massive Federal Surveillance Program: How the federal government built a massive database of license plate reader data through an anti-drug trafficking program. (404) see also  19 Out of 21 Late-Model Cars Tested Shared Data With 3rd Parties, Including Big Tech: Infotainment screens and connected features are now standard, and a new study finds nearly every car tested is passing driver data along to outside companies. A new study from Northeastern University finds late-model vehicles and their companion apps are sending vast swaths of information out. (Road & Track)

• Inside Man: How Chinese spies used lies, love and betrayal to target the Federal Reserve: The’ descent from senior Fed official to espionage suspect appears to have been driven by his desire for female companionship. This desire was exploited by a Chinese government agent, who became increasingly entwined in Rogers’ professional and personal life. Rogers’ indiscretion was later exploited by online blackmail scammers, ultimately leading to his downfall. Eamon Javers reconstructs the espionage case against former Fed economist John Harold Rogers. (CNBC)

​• The Volunteer Internet Sleuths Hunting Down Rogue AI Agents: After OpenAI disclosed how its agents had broken loose, independent researchers like Selena Zhang started digging for themselves. Gerrit De Vynck on what they’re finding. (Washington Post)

• Insurance doesn’t protect US adults from medical debt, Commonwealth Fund finds: One-third of privately insured adults have unpaid debt to a healthcare provider, illustrating how medical debt isn’t limited to uninsured people or those facing major medical emergencies. (Healthcare Dive)

• She’s 28, Loves God and Her Family, and Might Be the Reason You Can’t Have Kids: No IVF. No surrogacy. No polygenic tests. Emma Waters is leading a national fight against fertility tech—with her hot husband’s permission, of course. (Wired) but see The Babies Left Behind in America: ​Caitlin Dickerson on the family-separation fallout of ICE enforcement, starting with Estela Garcia and 2-year-old Eber and the morning routine they share. (The Atlantic)

• Ospreys are disappearing along the East Coast. Scientists think they know why. At the center of a widening crisis for one of the nation’s great wildlife comebacks is a fish most Americans would hardly recognize. Mark Robichaux on Bryan Watts, the William & Mary biologist who watched the Chesapeake become home to the world’s largest breeding population of ospreys after DDT, and is now watching it unravel. (Washington Post)

• The CIA Killed Him. The Navy Blamed My Friend.: Seth Hettena on former Navy SEAL Dan Cerrillo, who went to his grave insisting he took the fall for a prisoner’s death in Iraq that the CIA was responsible for. (Seth Hettena)

​• The Unitary Executive Theory in All of Its Historical Perversity: Jack Rakove, the Stanford constitutional historian, on the misinformed idea underlying much of John Roberts’s Supreme Court. (Washington Monthly) see also Why Do So Many People Think Trump Is Good? ​David Brooks takes the question seriously rather than rhetorically. (From July 2025.) The work of the moral philosopher Alasdair MacIntyre helps illuminate some central questions of our time. (The Atlantic)

• The Four TV Shows That Heralded America’s Fall: “The Sopranos,” “The Wire,” “Mad Men” and “Breaking Bad,” besides being among the best shows the medium has ever produced, together served as a televisual Four Horsemen of the Apocalypse. Two hundred years from now, when people look to understand life in the United States in 2026, they’d be well advised to bypass whatever happens to be playing currently on TV. (NY Times)

Video of the day: China’s “Revolutionary” Concrete Is Already Cracking — Experts Call It a Scam

Be sure to check out our Masters in Business interview this weekend with Omar Aguilar, President, Chief Executive Officer, and Chief Investment Officer of Schwab Asset Management, which runs more than $1 trillion across over 100 ETFs, mutual funds, and separately managed account strategies. He has held both the CEO and CIO titles since 2022

 

The Senate map is up for grabs

Source: Washington Post

 

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The post 10 Sunday Reads appeared first on The Big Picture.

Victorian Doctors Seek Answers From OpenAI And Governments Over Medicare Breach

Authored by Rex Widerstrom via The Epoch Times,

The Australian Medical Association (AMA) Victorian branch has called on OpenAI and the Victorian and federal governments to explain how they will protect patient health data following a security incident in which an OpenAI agent gained unauthorized access to a Medicare statistics portal.

The ChatGPT app is displayed on a phone alongside a medicare card in Melbourne, Australia on Sept. 24, 2026. Asanka Ratnayake/Getty Images

While the doctors' group noted that no personal information appears to have been accessed, AMA Victoria President Dr Simon Judkins asked, "What happens next time if an AI agent gains access to a system containing sensitive clinical information?"

Judkins said the breach raised serious questions for doctors and patients.

"Confidentiality remains absolutely critical to maintaining a trusted relationship between a doctor and their patient, and increasingly that depends on the security of the digital systems we use every day," he said.

"Patients and doctors need confidence that unauthorized access will be detected quickly and reported immediately ... Why did it take nearly three months for Australian authorities to be notified?"

Prime Minister Anthony Albanese said the agent reached the Medicare Statistics Reporting Service portal, run by Services Australia, on June 18.

It accessed public and non-public files after finding a way around existing blocks. Albanese said no personal information is believed to have been accessed, though official investigations remain ongoing.

OpenAI notified the Australian government on Sept. 10 via an email sent to a public mailbox, according to the prime minister.

Services Australia subsequently reported the breach to the Australian Cyber Security Centre on Sept. 15.

"It took until Sept. 10 before there was any notification," Albanese said, adding that "there will obviously be legal consequences on it."

Other Agencies Affected

OpenAI confirmed its agents also accessed sites belonging to the Australian Institute of Health and Welfare (AIHW) and NSW Bureau of Crime Statistics and Research.

At the Victorian Department of Health, the company stated that agents used an exposed access key to retrieve aggregate statistics, though medical records were not accessed.

The AMA said that federal investigations are examining the agent's interactions across multiple government systems.

The company has since apologized. "We should have handled our response better. We are sorry and working to do better in the future," OpenAI stated, committing to establish a task force on AI control.

OpenAI has also committed to having its chief strategy officer, Jason Kwon, appear before a Joint Select Committee inquiry in Sydney on Oct. 6.

Mounting Cybersecurity Concerns

Australia has previously experienced major breaches involving health information, including the 2022 Medibank cyberattack, in which data including names, dates of birth, addresses, phone numbers, and Medicare numbers of millions of Australians was accessed.

In 2024, a separate attack on electronic prescriptions provider MediSecure exposed personal and health information, prompting a federal investigation.

Dr Mukesh Haikerwal, a former AMA Victoria and federal AMA president, said governments must also consider what safeguards are needed.

"The clear question to ask is whether the Federal and Victorian governments are satisfied that our health systems are adequately protected against unauthorized access by AI?" he said.

"What safeguards are in place for hospital records, My Health Record and electronic prescribing?"

An Australian Signals Directorate report found only 22 percent of surveyed government entities met all eight key cybersecurity measures in 2025.

The Epoch Times has sought comment from Services Australia and the Victorian Department of Health.

Tyler Durden Sat, 10/03/2026 - 23:20

11 Million US Workers May Need To Switch Careers By 2035

This month has made it very clear how AI doom narratives are promoted in an information operation through public relations firms, billionaires, and endless streams of climate-like doom corporate media headlines. These efforts aim to shape public opinion about AI and push for tighter regulation, giving those at the top of frontier labs moats. 

The headlines have ranged from claims that AI will take tens of millions of jobs to, more recently, Bill Gates warning that AI could "cause a billion deaths" as he calls for regulation. But like Gates' climate predictions, much of the doomerism seems to be hyped up. 

As for the AI jobs-apocalypse narrative, it may be overblown. A new report by McKinsey & Co. suggests AI could force roughly 11 million US workers to change occupations by 2035 - or about 7% of the current workforce.

McKinsey describes the labor market disruption as more of a transitional period for working-class folks in low-skilled jobs rather than an outright jobs apocalypse. However, six out of seven affected workers could face income loss.

"Job opportunities can be abundant and yet leave millions of workers without work if those positions require different skills, credentials, locations or pay structures than current jobs," the report's authors stated.

The US economy has navigated technological changes before, and there is nothing new under the sun: from tractors displacing farm workers in the fields to automated factories replacing workers on an assembly line, computerized offices, and online retail. Those transitions lifted productivity but disrupted the labor market, requiring workers to retrain and find new jobs.

Over time, living standards rise, and the economy adapts. But apocalyptic narratives of tens of millions of job losses and warnings like Gates' claim that AI could "cause a billion deaths" represent perhaps what can only be described as peak doomerism.

Tyler Durden Sat, 10/03/2026 - 22:45

US To Allow Online Applications For 1st-Time Passports: Rubio

Authored by Naveen Athrappully via The Epoch Times,

Beginning next year, U.S. citizens can apply for their first passport fully online, according to Secretary of State Marco Rubio.

A woman applies for a U.S. passport online. Shutterstock

"By the end of 2027, our goal is for the vast majority of Americans to be able to apply for a passport or a passport card on America.gov," Rubio said during a Sept. 29 remark at an event launching the America.gov platform.

The online application makes the process "more accessible and easier for Americans," he said.

"So, whether you live in the middle of a major city or you live in a rural town, you'll be able to apply from anywhere," Rubio said.

Currently, American adults seeking a first passport must apply in person at an authorized acceptance facility and fill out forms with their personal identification information and other related details.

According to Rubio, a major benefit of the online application system is that users can find existing personal details after signing in to the platform through their login.gov account and do not have to "type the same thing over and over and over again" during the application process.

The new system also makes the photo submission process easier.

Currently, people must submit one passport photo. It must meet certain conditions, such as being in color, being taken in the past six months, and using a plain white or off-white background free of objects or shadows.

But in the online application process, people would take a photo of themselves through their phones and upload it.

"No printing forms, no drugstore hostage photo, no appointment, no line, no middleman that you're paying to do something that should be available to you," Rubio said.

"You tell America.gov what you're trying to do, and it walks you through every single step and tells you exactly what comes next."

He said there was an entire industry built around cashing in on every stage of the passport application process, with some businesses even charging for forms and appointments that are free.

Rubio also said there was a risk of services keeping or misusing applicants' personal details.

The America.gov platform was launched by President Donald Trump on Sept. 29.

Trump signed an executive order instructing federal agencies to integrate their services with the platform.

The new web portal is aimed at making it easier for people to find government-related information, enabling people to ask questions and get guidance on how to procure various services.

The portal serves as a landing page that consolidates almost 30,000 federal government websites into one chatbot.

"The federal government no longer stands in your way, and it stands only at your service," Trump said. "We're simplifying it. ... We're making it what it should be."

Answers to questions about government services come directly from official government websites with links to sources, according to the platform.

Next year, the site is scheduled to offer assistance in finding Medicare coverage and enrollment.

The site will also make it easier for Americans to find a job in the federal government.

Citizens will submit their resumes, and the platform will match them with positions fitting their experience.

Tyler Durden Sat, 10/03/2026 - 21:00

Army Deploys To Rio Grande Valley After Cartel Gunmen Open Fire On Coast Guard Crew

Roughly 500 troops are being dropped onto islands in the Rio Grande by Chinook helicopters, days after suspected cartel gunmen opened fire on a US Coast Guard crew from the Mexican side of the river.

The deployment figure comes from sources who confirmed it to NewsNation, which also obtained video of the Chinook drops. Officials have not put a number on it publicly. Breitbart reports the size and duration are being withheld for operational security, with troops expected to stay staged in the sector for at least 30 days.

#BREAKING Law enforcement sources confirm that roughly 500 troops are deploying this week to Texas’ Rio Grande Valley —Being dropped onto islands by chinook helicopters.

It comes after suspected cartel members shot at a USCG vessel near Roma over the weekend—The coast guard… pic.twitter.com/xApDsX2RKw

— Ali Bradley (@AliBradleyTV) October 2, 2026

According to the Coast Guard, personnel from Coast Guard Forces Rio Grande were running joint interdiction operations near Garceno, Texas, on Sept. 26, when they took gunfire from across the border. They returned fire. No one was hurt, no Coast Guard assets were damaged, and the incident remains under investigation.

The Coast Guard said it "works closely with U.S. Border Patrol, the Department of War and the Texas Military Division to secure the border, disrupt illicit activity and protect the American people," and that threats to its members are taken "extremely seriously."

Between August and September, officials told NewsNation, the military used a high-energy laser in the Rio Grande Valley to take down at least 11 cartel-linked drones that posed a physical threat to troops and CBP personnel. The Rio Grande Valley sector covers more than 320 river miles, 250 coastal miles and 19 counties, and the cartels working it are watching agents and troops, using drones to guide crossings, and moving drugs.

Tyler Durden Sat, 10/03/2026 - 20:25

Siberian Plague-Lab Death Draws FSB Escort For Ambulances

A possible plague case in Siberia has triggered a major containment effort after the death of a 28-year-old employee of an anti-plague laboratory. A hospital wing is under quarantine, nearly 200 people are reportedly under observation, and Russia's chief sanitary official has flown in. Local outlets say FSB units have been escorting ambulances carrying the woman's contacts for examination.

The authorities are clearly taking the threat seriously - but getting a straight answer out of the feds is another matter. Irkutsk Governor Igor Kobzev is still calling it a "particularly dangerous infection," while assuring residents that every identified contact is symptom-free and testing negative.

The dead lab worker has been identified as Daria Shipilova, a laboratory assistant at the Irkutsk Anti-Plague Research Institute of Siberia and the Far East, according to Lyudi Baikala and REN TV. She was admitted to hospital in Shelekhov with severe pneumonia, placed on a ventilator, and died. Reports differ slightly on the timeline: The Moscow Times gives a September 29 admission and a Thursday death (48 hours), while Lyudi Baikala says she spent three days in hospital. 

According to The Moscow Times, Shipilova told medical staff she had accidentally broken a tube containing live bacteria while collecting samples. Lyudi Baikala, citing journalist Pavel Stepanov and the Telegram channel Mash, placed the alleged accident on September 25 and linked it to plague bacteria. Those reports describe the illness as pneumonic plague, although neither that diagnosis nor the laboratory accident has been publicly confirmed by investigators. IRK.ru reported that doctors initially suspected severe COVID and sent her to the hospital's COVID center.

By the evening of October 1, security and administrative officials were meeting in Irkutsk. Lyudi Baikala, citing a source close to law enforcement, reported that FSB units began accompanying ambulances transporting Shipilova's contacts for examination that day. The Insider carried the same account, while residents reported seeing people in protective suits on the streets. The FSB has not confirmed the escorts.

“There is a possibility that the number of people the young woman [lab worker] came into contact with reached into the three digits,” Irkutsk journalist Pavel Stepanov said*, and that residents have already noticed people on the streets wearing protective suits, masks and gloves.…

— Annie Jacobsen (@AnnieJacobsen) October 2, 2026

Shelekhov district head Maxim Modin confirmed that the hospital's inpatient department was under quarantine; the outpatient clinic remained open. Kobzev said the sanitary-epidemiological commission had convened on October 2 over a suspected "particularly dangerous infection." Anna Popova, who heads Rospotrebnadzor, the federal agency that runs Russia's disease surveillance and owns the anti-plague institutes, traveled to attend. The governor told TASS it was premature to identify the disease and made no mention of a death. Irkutsk also postponed a city cleanup day scheduled for October 3.

The reported contact numbers suggest how widely authorities are casting the net. REN TV and Izvestia put the total at roughly 197, with 189 hospitalized for observation: 114 in one facility, 63 in another, and 12 at the anti-plague institute. Eight remained outside hospital, and some accounts said the list was still growing. No secondary infection has been confirmed. Kobzev's October 2 statement said the contacts had no symptoms and negative tests, although some media reports claimed several people under observation had developed symptoms.

First Official Use Of 'Plague' 

The leader of Buryatia (the next region over from the lab), Alexey Tsydenov, wrote that the woman who died of plague in Irkutsk region had not visited his republic. Citing Rospotrebnadzor and his government, he also said Buryatia had no plague foci, including along the Mongolian border. But even that acknowledgment became less definite: Meduza reported that he later edited the post to say she "may have died of plague." He did not identify the pneumonic form.

Meanwhile, competing accounts sent Shipilova to Thailand or Buryatia before she fell ill. Tsydenov denied the Buryatia visit. Gennady Onishchenko, who ran Rospotrebnadzor until 2013, questioned whether plague was involved at all, pointing to dormant rodents and fleas and snow already falling in Buryatia. That argument addresses a possible wildlife exposure; it does not resolve the allegation that she broke a tube of bacteria at work.

Izvestia and the Telegram channel Ostorozhno Novosti both report that investigators have opened a criminal case under Article 236, which covers sanitary violations that cause death by negligence. Nobody has confirmed it on the record. That charge only makes sense if somebody broke a rule at work.

By Saturday, some of the public information was disappearing. Baikalsk's administration posted a notice urging residents to limit travel to Shelekhov and nearby settlements, citing "unofficial information" about a plague case. Roughly two hours later, the notice was gone. REN TV also deleted five Telegram posts about the Shelekhov hospitalization figures.

Kobzev's Saturday post concerned an inspection by Roszdravnadzor, the healthcare-quality regulator rather than the epidemiological service, and did not address the infection. Comments asking why there was still no official statement went unanswered. Meanwhile, Lyudi Baikala reported that pharmacies in Irkutsk and Shelekhov had sold out of antibiotics.

The institute where Shipilova worked was founded in 1934 to fight plague and still leads plague surveillance for the region, alongside cholera, anthrax and tularemia. It is one of five such institutes nationally and the only one covering Siberia and the Far East. Natural plague foci remain in parts of southern Siberia, including Tuva, Altai and Transbaikal. Russia's last widely reported human case involved a child in the Altai Republic in 2016 and was linked to marmots.

The negative tests are welcome news, and the reports so far do not establish a spreading outbreak. But a young laboratory worker is dead, a hospital wing is quarantined, and almost 200 contacts have reportedly been identified. "Particularly dangerous infection" is a description of the stakes. It still isn't an explanation of what happened.

Tyler Durden Sat, 10/03/2026 - 18:05

Quantum Isn't Coming For Your Bitcoin

Authored by Brandon Black via Bitcoin Magazine,

For as long as Bitcoin has existed, new forms of FUD (fear, uncertainty, and doubt) have been used to predict its demise. Despite this, Bitcoin has grown into a multi-trillion dollar asset and begun to take its place in the global monetary order. In recent months, the specter of a cryptographically relevant quantum computer (CRQC) enabling an attacker to recreate secret keys from public keys and sign Bitcoin transactions moving other people's coins has returned as an evolved form of FUD.

Is this a realistic threat to Bitcoin's continued growth? In a word, no.

There is no evidence that a CRQC will be built within a decade, and it remains unknown whether such a machine will ever be built. The quantum threat remains FUD.

State of the Art

To date, no quantum computing machine has computed anything out of reach of a precocious 6-year-old (confirmed empirically). Quantum computers are remarkable technology and showcase the truly science fiction worthy capabilities of the modern world. These devices harness foundational technologies such as optical tweezers, laser cooling, superconducting flux qubits, electromagnetic traps, dilution refrigerators, and many more. Within these devices individual qubits are coerced into specific subatomic states (different for each candidate technology), entangled into superpositions, manipulated to represent computations, and then their subatomic properties are read and interpreted. The astounding truth is that these devices exist, and can be manipulated to produce meaningful computations across a handful of inputs. The cold reality check is that (for an example candidate tech.) to do a computation that a small child can do requires enough power to air condition a Texas high school, many hours of setup, and further hours of post-processing.

Reading the Future

I know what you're thinking, "but there's so much money flowing into quantum computing". Does money flowing into a field correlate with the rate of real-world technological progress in that field? Not really. In fact, it can be argued that until the correct underlying technology has been developed and the product-market fit confirmed, money flowing into an area has a negative correlation with the likelihood of applicable technology being developed. This can be clearly seen by comparing NASA's Space Shuttle program to SpaceX's Falcon 9. SpaceX took (mostly) known science and reduced it to practice to satisfy a demonstrable market need for reliable and lower cost access to space, at a program cost of less than $5 billion to first crewed mission. The Space Shuttle cost roughly $50 billion to reach its first crewed mission. Not only did Falcon 9 cost an order of magnitude less to develop, but it has a perfect crew safety record to date. There are many reasons for these differences, but it goes to show that no amount of money makes a technology that is not ready practicable. Translating this to quantum computing: we can see that with tons of money being thrown at the problem, technology demonstrations at massive cost are possible.

But this tells us nothing about whether more money will bring us the holy grail of stable, low-error qubits (like the reliability of the Falcon 9).

No amount of continued development on the Space Shuttle program would ever have produced the low cost, high reliability of Falcon 9, and it's entirely probable that no amount of continued development, at any cost, will ever make any of the current quantum computing technologies reliable enough to break a single key pair.

Now, you might be thinking, "but what about all the recent advancements?" There are two important things to keep in mind about recently published advancements.

First, many of these advancements have been advancements in pure mathematics only.

For example, the recent Google paper which had such an important result that they chose to redact the theoretical quantum circuit rather than risk it being used to break important cryptographic systems. This may seem like massive progress toward the future of CRQCs, but in fact it changed nothing. Unless (or until) the quantum hardware has its Falcon 9 moment, there simply is no device which comes anywhere near the stability and scale needed to run the redacted circuit. It's pure theater to hide a circuit designed for a device which may never exist.

Second, on the hardware side itself, we see many new results and bits of progress published in a given year, but how many of these relate to the same quantum computing candidate technology? How many represent merely a starting over after a prior result ended in a dead end? The reality is that these advancements do not represent some linear track toward eventual success. They represent the breadth-first search of an infinite possibility space within which quantum researchers are hoping to find a path along which they can proceed for even a modest distance without reaching yet another dead end.

When we look at the reality of the future of quantum computing, it's hazy at best. There are promising technological developments. Especially, to my eye, in the area of neutral atom devices. But it's far too early to tell if there's a path open toward an eventual CRQC along any of the currently known branches or if more restarts are in our future. If, at some point, we see many iterations of the same candidate technology implementing progressively more capable devices, and computing meaningful results that a precocious child cannot also compute, we can revisit this discussion with different evidence.

In Theory

There are two possible explanations for the repeated failure of quantum research to develop a CRQC over many decades. It's possible that it's just a hard problem and we're continuing to apply science and engineering to solve it and one day the ingenuity of the human species will prevail as it has in the development of the Internet, the smart phone, social media, and Bitcoin (left to the reader to decide which of these are positive developments). On the flip side, it may be that developing a CRQC is either impossible or will remain forever outside our grasp. Consider what it would mean for a CRQC to exist: the machine would have to represent within its superposition a field of possibilities the same size as the complexity of the cryptographic problem to be solved. I.e. to break the 128-bit security of the elliptic curve discrete log on Bitcoin's secp256k1 curve, the quantum superposition would have to represent all possible values of a 128-bit number. In classical computing, representing all such values would require more computer storage (by many orders of magnitude) than humans have ever produced. If there is even the slightest granularity to the quantum superposition (i.e. the quantum superposition is not perfectly continuous across all possible values) then the quantum computer cannot ever become cryptographically relevant. If the energy required to hold a superposition scales with the complexity of the field being represented then a quantum computer cannot ever be cryptographically relevant. The contemporary understanding of quantum physics does not rule out either of these possibilities.

Conclusion: Bitcoin Cannot Rest

Despite all of the preceding, Bitcoin development toward new cryptographic algorithms must continue. While a quantum attack on Bitcoin's cryptography is not imminent by any means, it's entirely possible that another flaw could be found through other means. We know that certain elliptic curves have been found to have weaknesses, and secp256k1 could be next. Bitcoin has survived as long as it has because attacks on the system have strengthened it and that will continue to be true as the quantum FUD attack plays out. The development of P2MR or P2TRv2, of SHRINCS, SPHINCS, IBC, ML-DSA, and more post-quantum signature schemes will eventually lead to improvements to Bitcoin's resilience in the face of future attacks even if an actual CRQC is never developed.

This piece is featured in the latest Print edition of Bitcoin Magazine, The Quantum Issue. We're sharing it here as an early look at the ideas explored throughout the full issue.

Tyler Durden Sat, 10/03/2026 - 17:30