Starbucks is bringing back the Sharpie, Spraying Diamonds in the Sky, Google gets a fine larger than the global asset base, Lazy version of kiting cheques, America buys too much for other countries to move away from the USD.

Greetings folks, and a warm welcome to the 16th edition of Friday Finance Weekly. I am sure the world will be a changed place in a week from now as we wait for the US Presidential Elections. I haven’t been this excited since the Canucks were in Game 7 of the Stanley Cup Finals. Let’s get to it, as I was late writing this and it will be shorter than normal (which might be a good thing).

New Starbucks CEO Brian Niccol announced Wednesday that Starbucks would be bringing handwritten names on cups, reintroducing self-serve stations for cream and sugar, and eliminating the non-dairy surcharge on oat/soy milk and other alternatives. Company officials estimate that approximately 200,000 Sharpies will be needed to support the endeavor.

These branding efforts are part of a wider strategy to recreate a coffeehouse vibe and the company’s most recent attempt at stimulating same-store sales growth. Starbucks on Wednesday reported a third straight quarter of slumping sales and declining customer foot traffic. Global sales at stores open at least a year dropped 7% last quarter, and the number of customer transactions fell by 8%. (Source: CNN, Quora)

Geoengineering is the controversial process of altering the environment to induce anthropogenic climate change. One of the best examples of geoengineering was when China fired rockets filled with silver iodine into the atmosphere to negate sandstorms, reduce hailstorms, and relieve drought ahead of the 2022 Winter Olympics.

As the threat of global warming continues to grow, climate scientists have begun exploring potential ways to reverse global warming through abstract techniques like dumping iron into the ocean and launching mirrors into space. The latest proposal involves shooting 5 million tons of diamond dust into the stratosphere each year to achieve an estimated 1.6°C of global cooling. At roughly $500,000 per ton, the total projected cost of deploying diamond dust into the atmosphere between 2035 and 2100 is estimated to be $175 trillion.

Given the enormous cost associated with this scheme, scientists tend to favor the more traditional proposal of using sulfur particles in a process that essentially imitates the natural process of volcanism. We have seen real-world evidence supporting the effectiveness of this; for example, in 1991, the eruption of Mount Pinatubo caused global cooling of as much as 0.5°C for several years.

Unfortunately, sulfur injections also pose climate risks, including tiny sulfuric acid drops – one of the primary components of acid rain – and depletion of the ozone layer. While diamond dust doesn’t pose the same risk given its chemically inert properties, the 2,400x cost premium presents a different kind of challenge. Let’s not change how we treat the planet; let’s just spray diamonds in the air. I found this intriguing, but I can’t figure out who would possibly fund this research, maybe DeBeers.

(Source: Science.org, The Washington Post)

₽36,000,000,000,000,000,000,000,000,000,000,000,000.00 – is the amount of compensation that Google has been ordered to pay a group of Russian media outlets for blocking access to their content, according to a Russian court. The court had previously ruled that Google would be charged a penalty of 100,000 rubles (US$1,000) for every day that access to the TV channels remained blocked, with the amount doubling each week.

The plaintiffs, a consortium of Russian media outlets, include prominent state interests like Zvezda – run by the country’s Defense Ministry, Channel One – a state-owned propaganda mouthpiece, and NTV – a pro-Kremlin channel owned by Gazprom. As it currently stands, the fine amount already far exceeds the total value of all assets on earth and will continue to grow at an exponential rate. The quantum of the amount is enough to be a joke. (Source: Novaya Gazeta Europe)

JP Morgan Chase has commenced legal action against two individuals and two businesses for partaking in the “infinite money glitch” phenomenon popularized by TikTok earlier this year. The harebrained scheme involved bank customers writing large cheques to themselves, depositing them, and then withdrawing the funds in cash before the cheque bounced. The loophole was closed a few days after the videos went viral on social media, but not before an untold number of customers were able to exploit the “glitch.”

In one case, a masked man in Houston deposited a cheque for $335,000 to the defendant’s Chase account, who then stole $290,000. The other cases involved sums ranging from $80K to $141K. The parties are being asked to return the money with interest, pay related overdraft fees, and cover legal expenses and other costs suffered by JP Morgan Chase (good luck). While there are only four defendants for now, the bank is said to be investigating thousands of additional incidents involving possible cheque fraud. Infinite money glitch is a fancy word as in banking it’s a lazier version of kiting. (Source: BBC)

Last week at the BRICS Summit in Russia, Vladimir Putin conceded that the bloc’s members “have not built and are not” building a payment system to challenge the US dollar-based global banking system. Neither China’s Xi Jinping nor India’s Narendra Modi mentioned alternative payment arrangements in their closing remarks.

The technical requirements for alternative payment systems aren’t the issue; the challenge boils down to the Global South’s outsized reliance on US imports as a means of fueling economic growth. China’s exports to the US amount to just 2.3% of its GDP; however, roughly half of its surge in exports to the Global South since 2020 depends on re-exports to the United States. While China’s exports to the Global South have now reached roughly $140 billion a month, US imports from the region have totaled approximately $100 billion a month over the past four years.

The Global South simply doesn’t have the capital markets or currency stability to convince a surplus trading country to hold assets in exchange for goods. Comparatively, selling assets to foreigners in return for their goods is something that the US does particularly well. Its $18 trillion negative net foreign asset position corresponds to the last 30 years’ cumulative current account deficits.

With few exceptions, BRICS central banks don’t hold each other’s currencies as reserve assets. For example, just 2.3% of central bank reserves are held in Chinese RMB – down from a peak of 2.8% in 2022. Progress in the area’s transparency and risk management of capital markets, a stronger middle class, infrastructure, and education will all be required for the Global South to make their currencies an attractive reserve instrument. While these changes are already happening in many developing countries, progress has been gradual and uneven. For now, the Global South is still a long way away from declaring independence from the dollar system. Essentially, America buys too much from the world and therefore controls the currency markets. This, in turn, allows the US to keep running deficits. So the USD is the real ‘infinite money glitch’. (Source: Asia Times)

Thanks again, and have a fantastic weekend. Please don’t hesitate to forward this to friends and family.

Many thanks,

Sam