Hello, and welcome to another episode of the Odd Lots podcast.
I'm Jill Wisenthal and I'm Tracy Alloway.
Tracy, obviously, one of the best things of doing odd loss is just all the random fun things that we learned. I mean that you know, that we learn over the course of the year, or that we learn in any given episode.
Yeah.
I don't know of many other jobs where you can just kind of look into anything that you think might be interesting, but this is one of them. And on all thloughts, I suppose we do have a reputation nowadays for covering a wide variety of topics, so things that are going on right now, things that may have happened in the past, And it means that we learn a lot about a wide variety of.
Subjects, and some of them, of course are you know, we learn about them, and the you know, what we learned is interesting but also sort of straightforward. So for example, you know, I'm not surprised that an increase in steel costs, although that's interesting, makes it harder to build offshore wind but I was surprised to learn, for example, that the Jones Act, perpetual oddlote topic was also an impediment also interesting, also very surprising in a way I was definitely not anticipating.
Yes, it all comes back to the Jones Act. This is sort of a classic all thoughts thing where we discover one aspect of the world or the economy, and then we keep discovering it in other conversations. It keeps coming up. But it is the end of the year and we are both in a reflective mood, and so we've gone over all the conversations that we had in twenty twenty three and we've picked out our top ten most interesting and most surprising things that we have learned this year.
Yep.
So let's kick it straight off with an episode with a Josh Younger on the origin of euro dollars.
So the first the definition of the euro dollar being deployed off sure is fairly specific, and the question is when did that start, and we don't really know. We know roughly in the late forties to declassified CIA documents. After the war ended, the Russians were moving money around because they were worried about a subsequent land war in Europe and they didn't want their funds to be frozen. Never mind the weirdness of like a Soviet invasion where
they need dollars. I'm not sure why that would be necessary, but they were uncomfortable leaving money in New York and so there were a handful.
Title of this episode should be the Communist origins of euro dollars area.
Yeah, and so there were a sanctions which which connects somewhat to today, and they moved their money from New York banks to a handful of banks to specifically in France, London, and Belgium, because the local regulations allowed those banks to issue non local currency deposits. Your local regular has to allow this in the first instance. And in Paris in particular, there was a bank called basically the Commercial Bank of Northern Europe. I'm not going to try to pronounce it
in French, but it was called Bison. Bison was run by a notorious Communist sympathizer who had relationships in Moscow, and so they were comfortable with that particular bank, and they grew its assets from seven million dollars to two hundred million dollars over a few years. The first recorded use of those euro dollars was possibly, although it's hard to say, replacing the salaries of striking French coal miners
forty eight. So there's some evidence of that, But that's not really a euro dollar in the definition that I just described, because it doesn't really have a use because I didn't say anything about the asset side of the equation.
So where did the asset side come from? This is just going to be one of those episodes where we ask you, like, how did this happen?
So it was tied basically to trade because trade was denominated in dollars, but when it's all Communist dollars, it has to be east west trades. So trade crossing the Iron Curtain, which was small because both the Russians and the Americans were not terribly comfortable with a large volume of trade, and the Russians in particular had a policy of self reliance, so they said, we don't want to need imports from the West to run our economy or
a society. We don't know how big that was. It was actually, as of nineteen forty seven, illegal to talk about economic data in the Soviet Union. It was a lot passed. It said, this is like punishable by some extreme measure. Oh wow, So we don't actually know the volume of this trade, but there's some evidence that it was there, that it was funded in part by like trade finance was facilitated by BSEN to some extent. It's unclear when it started, but it's a very small market.
The surprising communist origins of euro dollars, that's sort of not only a classic Old Blots topic, but a sort of classic line from one of our favorite guests, Josh Younger.
Not that I'm thinking about it, were other Remember we learned that there was euro dollars gum?
Oh yeah, yeah, I went looking for a foot well. I went on eBay to see if anyone was selling gum from the nineteen seventies with this packaging. I could not find it.
But that was a great episode for many new and surprising things.
Yes, now, speaking of new and surprising things, another thing we learned had to do with the sort of hidden connection within economies and how economies evolve. And we spoke to Ricardo Housman of the Center for International Developments Growth Lab at Harvard University, and we talked to him about how economies actually develop their complexity. He gave us a really unexpected example of how that works. Take a listen.
A lot of increase in complexity in Japan and Korea did not happen because new companies were created to do more things, but because established companies, these chiballs in Korea, these k etsuos in Japan, divers fight internally into more things. So a company like Samson started in sugar trading, and you know now they are the largest producer of semiconductors and sgrams and TV screens and smartphones. That process of transformation happened inside the company, and it happened by adding
capabilities to their capability. So for example, you'd say Finland is a country that had a lot of trees, and traditional development economists would have said, cut those trees and sell wood. And then they would say, no, don't sell wood. Make furniture with that wood, or make paper with that wood. Add value to your raw materials. But that's not where the story really went. It's sort of like Finland had a lot of trees, so they have to cut the trees.
But to cut the trees, you need tools to cut trees. You need machines to cut trees. So they became good at tools and machines that cut wood, and from there they moved to tools and machines that cut because not everything is made out of wood. And from there they made they went to automated machines that cut, because cutting everything by hand can be either boring or imprecise. And then they said, you know, from automated machines that cut, they want to just automated machines. Why do we need
to cut? There's more to life than just cutting, right, And then from automated machines they ended up in Nokia. So the process is a process of adding capabilities to their capabilities, because once you know how to do something, there is something in that cognitive vicinity that you could do.
There's more to life than just cutting. It's got to be like a great it's true, right, I never thought about it, but it's definitely true. There's more to life than just cutting.
Also, Ricardo's analogy of monkeys swinging from trees as an economic metaphor that lives, that imagery lives free in my head for all time.
But yeah, that was a great conversation, and thinking about how economies actually develop in terms as opposed to how you might expect them to develop on paper was really great. All right, speaking of the sort of you know, I guess we're going to speak on the complexity theme for the moment. So with Ricardo, we talked about complexity in terms of it's good that countries get more complex with their economic development, but complexity it can also be bad
in some respects. And one area is that sort of famously complex is any time we're dealing with government soft and so. On this episode we spoke with Jennifer Palka and Dave Guarino, who at longtime veterans working on government software. I think anyone who knows about government software government websites probably no feels intuitively that they're more frustrating than to say, you know, the website that you might use for a bank or buying an airline ticket or something like that.
So we're going to hear the story of a software system that was so bad even the designer didn't believe or couldn't believe it wasn't working.
When we were at California, State of California working on unemployment insurance, they were actually about to put out a Business System Modernization RFP. Actually I think about it to award it to a vendor, and I think it had seven six seven hundred requirements. We can check that, but it's in that's really a normal number of requirements, and so they do all these things that where you can check a box, but what they don't do is actually check that it works. So I mean, maybe I'll just
tell a quick story from the book. And you know, there was famously this application for veterans' healthcare benefits at the VA that didn't work outside the building and they couldn't see it. So basically, somewhere in the specs it had that this form needed to work on a very specific and outdated combination of Internet Explorer and Adobe Reader. And the reason no one knew that it didn't work inside the building is that's how all the computers in
there were set up. But if you were outside the building and had any other possible combination of those two
pieces of software, it literally wouldn't load. And so they had very very few people applying for these benefits online, and you know, veterans were really, really, really frustrated, and it took a team going out there recording a veteran who had tried to do this dozens and dozens of times, bringing that video back and showing it to the Deputy secretary for them to be able to say, oh, okay, actually there is something to be fixed here. Okay, you know,
you can go ahead and make a new form. But up to them, they said, sorry, it's fine, we're looking at the requirements. The requirements have been met. There's technically nothing wrong.
That's amazing. It's also kind of crazy to think that people would have been looking at that and just been like, oh, well, I guess demand for veterans benefits is lower than we thought it would be. But actually it was a tech issue.
I think what they said was demand for them doing it online is low. These veterans must not have access, which is absolutely not true, or they can't figure out the computer when in factive. Yeah, I mean the other telling them didn't figure out the software. They would tell them, And they told this guy Dominic, the veteran that they interviewed, they kept telling him it's user error. There's something wrong with you.
That is still such a funny story. There are so many layers to it, so including the idea of people having to go out and shoot a video of a veteran trying to access this form and then bringing it back to someone who would watch it and be like, oh, okay,
I see there is in fact a problem. But also that anecdote at the beginning about designing one piece of software for unemployment insurance with six thousand, seven hundred requirements, Like, how long does it take you to physically tick six thousand, seven hundred boxes? Is there an actual form where you have to go and like click every one of them?
And how do you prove? Yeah, how do you prove that you did every single one? To the to the lawmakers that made that rule.
Yeah, it sounds like, to your point, a very complex process. Say, this might be a little bit more simple, but I think it's generally accepted that in the world of commodities there is a fraud problem, and I think having lots of physical things that you're moving around poses an opportunity
for criminals to take advantage of that process. We like to talk about financial fraud and crime on this podcast, and we saw a lot of instances recently of frauds happening in the commodity space, and specifically with one commodity in particular, and that is Nickel. So we wanted to know what is it about Nickel that makes it prone
to fraud? And we brought on Anton Posner and Margo Brock, the CEO and president respectively of Mercury Group, and they came on and explained why there is so much financial crime tied to Nickel.
It just to be clear on Nickel, and I think this is something Terry Duffy when we talk to him, he's like, there's something about nickel. It's that it's in bags, right, Like some metal is like stacked, you see it, and so everything What would be an ideal form of auditing. I can imagine like you open every bag, but like what is okay?
Yeah, again, it becomes that randomized audit, that randomized sampling, and you do have to you have to look and you have to go in and say, let's you know, it's all stacked in the warehouse, let's break some down, let's pull it out, and let's just at a minimum open the top of the bags and look in.
Also is going to say two Nichol is a much more higher value metal versus aluminum or zinc. So it's like counterfeiting. If you're going to counterfeit bills, you can probably counterfeit if taking the time to do it, you're going to be doing one hundred dollars bills, right, Rather than focusing on counterfeiting dollar bills, right, Nickel.
So in bags high value, and there's really been two different types of fraud on it, and one is the Indian one that traffic Wor is involved in is during shipment, so by the time it lands where it's headed, the last containers are already afloat and everything, all the documents are presented and everyone's been paid, so they haven't had the opportunity to open doors on that very first container that's shipped to even look and find their fraud.
So that fraud you have to.
Really concentrate on combating at load. And then there's the fraud of the rocks that were in the nickel bags, and that was in warehouse for years and years, but again nobody, nobody opened up the bags there. So there's you know, like Anton said, it's a system as old as time, and there's so many points within that system where fraud can happen and theft happens, and the opportunities present themselves.
To your point, Tracy introducing that, you know, I think one thing with commodities too, and something we talked about with Javier Blass, like it really does feel like the Last Wild West part. Yes, fine, it I mean I guess crypto kind of too. Also also a place where there's been some fraud I've heard, but any you know, it feels like, you know, a rock is a rock in a way that in a way that a digital claim to a company's cash flow is just much more easier to track.
There's something almost pleasingly old fashioned about someone like taking a bag of rocks and painting them and then putting them back in the bag and tricking auditors that way. It's kind of it's satisfying in its simplicity, and.
It still works in twenty twenty three because people still need bags of nickel and they can't check every bag. All right, let's pivot a little bit. So obviously, you know, we talk about finance of all different swords. We talk about real estate a lot on the show. One area that we haven't we've started talking about it more, but we want to do more on is insurance and just the explosion that a lot of real estate developers have
seen in their insurance costs over the last year. Often a lot of it related to climate, but other factors also the law. Take a listen to David O'Reilly. He's the CEO of Howard Hughes, major real estate developer, with some shocking statistics about the price of insurance.
Rates have taken off over the past year at ways that we've never experienced, and I've never seen in twenty years, and I'm told there's a lot of reasons for that. Yeah, the reinsurance market is drying up. People are reluctant to take risk, have been more and more natural disasters, making it harder and harder to price insurance appropriately, and there's just fewer and fewer risk takers on the other side of the table to meet the demand of folks that need insurance on this side of the table.
When you say rates are taking off like the way you've never seen, can you like put some numbers behind it in terms of just like how different, how crazy is the market or the movement the rate of change in the market in twenty twenty three versus a period that it might be.
Most risk managers would define insurance markets as either hardening or softening okay, worse or getting better.
Okay.
Every year they always tell me it's hardening, okay, and I say, one of these days it's going to soften, and sometimes it'll soften, but they always manage my expectations by saying it's hardening. Okay, So this year they said it's hardening, and I kind of rolled my eyes and shrugged and said, okay, here we go again, and we'll suck. You know, we'll take it. We'll take a three to five percent increase.
Yeah, it'll be all right.
And we came back with twenty five percent. Oh wait, maybe it's forty percent. And then some of our peers and some of those that I've talked to in the industry have seen a fifty percent And it's just there's not as much availability as there used to be, and then therefore certain pieces of the insurance stack gets more expensive for a company like Howard to use. With six
billion of total insurable value. We do what's called the shared and layer program like most people do, which is think of a CMBs loan or an ABS loan, where you take the whole loan and you slice it by risk, and then you have this tetris like grid and you
fill it up with insurers. Those that want to take the most risk at the top get the highest rate, and then all of a sudden, at the end of the year, when you go to get your policy there's a big gap in the middle, or you can't fill a couple of layers, and then the cost of filling those incremental layers are so pricey that it impacts the pricing of every layer around it. And it's just that there's not enough supply to meet the demand.
So the insurance conversation is interesting on so many levels. So not only are rates increasing, so the costs are being passed on, making real estate more expensive for normal people, but there's also the pricing of financial risk and event risk, So how do you actually put a number on something like a flood or a hurricane. That is always fascinating. There's the distribution of risk, which David was talking about, the idea that okay, you can sell some tranches of risk.
There's certain demand for like the lowest level of risk or the highest level of risk, but sometimes the in between spaces are becoming more difficult. And then there's also this big question which I think Joe, you and I have spoken about this before, but in a world where one off events are happening more often, where stuff in general is just perceived to be riskier than it was previously, the insurance companies kind of become the arbiters of accepted
behavior and normality. They're the ones kind of putting standards in place by deciding whether or not they're going to ensure those particular practices. And I just that completely fascinating, totally.
You know.
The other thing that's interesting is we always talk about financial conditions and financial conditions tightening, loosening and higher rates and higher spreads, et cetera. But you never really hear insurance rates folded into the financial conditions convo. But you just have to assume that when insurance prices for certain projects jump thirty forty fifty percent in a year, they're just going to be many things that don't pencil out.
So it feels to me like that's probably a massive tightening at least in twenty twenty three, or parts of twenty twenty three and twenty twenty two, tightening of financial conditions that perhaps wasn't captured in a lot of the metrics.
Yeah, that's a good point, and Bloomberg does have a financial conditions index, so maybe we should suggest that they incorporate it somehow. Anyway, Speaking of costs going up in real estate, another surprising thing that happened this year at least to many people who perhaps didn't listen to all blots in twenty twenty two is that the housing market was pretty resilient. There are lots of people out there who thought that mortgage rates going up spectacularly meant that
housing prices would inevitably have to go down. But as our guest Jim Egan, a strategist at Morgan Stanley, has pointed out repeatedly, that is not necessarily the case. Instead, we've seen, you know, basically a freeze in the market. Jim in general is full of interesting facts and figures and stats about US real estate, and whenever he comes on the show, he sort of throws out all these
really interesting numbers. One of the most interesting numbers he told us this year has to do with the number of houses currently owned by baby boomers.
I think the reason that we haven't been as focused on older age cohorts as an industry is because historically they just haven't been that large. The boomer generation moving into this age cohort is really driving kind of differentiated housing dynamics. If we look at the percentage of homes that are owned by people over sixty five from nineteen eighty to twenty twelve, it is a very consistent twenty
five percent. The oscillations are really small. As I mentioned a little bit earlier, it's gone up to thirty three percent from twenty twelve to today. Given some of the demographic forecasts from our economics team, it's only going to move higher right now. And that trend has been aging in place. While older homeowners do move from time to time, when they do move, they tend to move to very similar places Florida, Arizona, South Carolina. For the most part,
they do stay where they are. They age in place. They are the least mobile age cohort in our population. I talked about listings being at the lowest levels we've seen in forty years. The truth is in twenty eighteen twenty nineteen they were close to forty year lows. And one of the reasons behind that, we think, is this aging boomer population. What share of housing they're taking up Now from twenty twenty to now, it has dramatically fallen
in and very much you set those lows. But this was a conversation when we're having pre.
COVID, So Tracy, you know, one thing that just sort of strikes me in general, there is that a there's no imminent relief coming from the housing market for demographic reasons. And also like it just feels like many things are becoming kind of less cyclical about the economy, whether it's real estate because a bunch of people are just in their homes, not exposed to raids, government spending on a
domestic investment, et cetera. Like a big story feels to me there are just many slow moving trains that are not going to be affected by the short term ups and downs.
Yeah, that's a really good way of putting it. There's also the inequality to this point, the inequality issue, right, any baby boomer who owns a house at this point is probably mortgage free, and they've seen the value of their houses go up. Maybe they're even using some of those profits to like buy additional houses, vacation homes, rental homes, whatever. It's a very two track housing at the moment where the people who don't have houses yet, obviously, the affordability
statistics just keep getting worse and worse. And meanwhile, anyone who's lucky enough to have bought a home before interest rates went up spectacularly is probably doing reasonably well.
All right.
So one way in theory to satisfy more demand for housing. It was a big topic and the media and the industry is office to residential conversions, which sound very nice because we know there's a lot of empty office space, there's demand for housing, so why can't you just turn the offices into apartments? And so there has been some
of that, but it's very challenging. And our guests here, Joey Khalily, managing director at the Van Barton Group, described to us why sometimes to do it, you just have to cut a big hole down the middle of a building.
So I think one of your famous conversions is downtown one eighty Water Street, and you solve that depth problem by basically creating a sort of like inner atrium courtyard.
Is that right?
Yeah, we ended up cutting a thirty foot forty foot hole in the center of the building. Wow, twenty something stories went all the way and that created a courtyard essentially for light and air to come down on the inside. And then there were studios and two or three bedrooms that had their bedrooms up against that.
What was it that made that plausible?
So?
Okay, so you see it's called the floor plate. Is the term and this is like sort of yeah, okay, so.
You if we're on the sixth floor or second floor of a building, Yeah, that's the floor plate.
The horizontal slice of the building. So this what it was One eighty Water Street. Okay, so one eighty Water Street in its previous version did not have like a suitable floor plate, but you understood the that there was an opportunity to cut a hole in.
It, correct it it had a suitable floor plate at one point in time for office use, right right, For residential it did not, And evaluating that, yeah, came up with the plan of cutting that hole in the center.
Can you just talk a little bit more about that hole cutting, Like how did you sort of righte recognize that, Yes, it's only it's currently only capable for offices, but actually we can make the math work if we cut a giant hole down the center of a building. Talk a little bit about that evaluation.
So with with a lot of things, just about everything is possible, but it would cost a lot of money. Yeah, so you have to valuate the structural modifications that it would take to create that and ultimately what you're going to do with that building at the end of the day. Yeah, create the residence is how much money you're going to get on the rent and then eventually sell that building
one day. And so when you evaluate that, especially in that courtyard area, what's the spacing of the column days from column to column and does it allow for enough space to be able to cut that in without really cutting out any other structural steel columns or our supports, which when we cut that out, we still had to reinforce the rest of the structure and and do quite.
A bit of that, you know, joe I think about a month after we released that episode, New York did unveil a new plan to make office to residential conversions a little bit easier, and I think a major part of that was maybe simplifying some zoning processes. But to Joey's point, it's not just the zoning, it's not just the regulation. There are these physical impediments to converting these giant office buildings into apartments that people are going to see as desirable and livable.
We got to take up Joey. He made an offer us to do like a field trip to the latest building they're working on. So for twenty twenty four, let's remember to take them up.
On it.
Yeah, let's do that. I look good in a hard hat. We must do that, all right? Coming up next this This is one of my favorite episodes of the year, mostly because I think it was maybe a cathartic experience for both of us, seeing as we were both blocked
on social media by this particular guest. I am, of course talking about Nassim Nicholas Taleb, the author of many books including Black Swan, a prolific online presence, and someone who is known for blocking other people online, and in this episode we finally got a chance to ask him how he decides who to block, and his answer was very surprising.
Why did you.
Block me and Joe and why have we been unblocked?
Uh?
I think a largely a lot of my blocking is not done by me the boss. You had to understand that I got besieged by finance people, and you know that time don't get along general finance ground and by the crypto people, particularly after the positions that are not very favorable to the crypto people. So you do block and clean up my feet, just block things. And I had someone who happened to be in Ukraine at the
time helping me. You know, do automatic blocking. I believe, believe it or not, the best thing to do with your Twitter feed is block groups because then then things become cleaned.
Oh I believe it for sure.
So so unfortunately that you guys. But then I up block people when I realized went too far.
Thank you.
So the first reaction is what I called the gativa. It's like you close the door and then you let in those who think that were excluded or will not degrade the feed.
That's a great answer.
Does have anything to do with with disagreements. It has to do with the styles, right then. But I think the people that that annoy the most other liticks because of divers conversation and lip pickers are I mean trolls. You can see in the trolls littickers, people don't notice the liitpickers.
Joe knows that one of the things I hate online is people who sort of pick out like the tiniest, tiniest thing in a tweet, like why didn't you label your ex access properly? And things like that. It drives me crazy. So Teleb and I share that opinion about nitpickers, and I'm glad to say Joe that at the end of twenty twenty three. We remain both of us, I think, unblocked by TELEB.
But it is funny to me, Tracy that you implicitly by having been blocked at one point, did get lumped in with crypto trolls and nitpickers in the eyes of Teleb or whoever he does, is blocking for him.
It's true.
Moving on, obviously, major topic and are sort of major source of interest is what is going on with the Chinese economy. How do we understand the Chinese policy making
choices better. There's so much more to do on it, but we did do a few episodes, including this episode with a songwind Zoelou from the Council on Foreign Relations, where she talked a little bit about the story, and Tracy loves the story of the Idiot sunflower seed seller and what it says about sort of early early market reforms under former Chinese premieer doing showpeg.
This rich person apparently he was one of the if not the earliest. He was one of the earliest Chinese entrepreneur to make one hundred million UM. He was the founder of this sunflower seed company called Shads Goads or Idiot sunflower Seed. When Idiot sunflower seeds, yes or fo sunflower seeds, shats gods and name. So at that time, out of jealousy or some or other reasons, there were some voices among China the people or policy makers to say, this guy becomes so rich, we need to take him down.
And in his speech don't some things that I'm aware of, these kind of recommendations, but we cannot do that. He stracked it down. And the reason he also explained why he the party cannot do that. He said, if we punished him, that would send a terrible signal. It would make people think that we changed our policy of reform and open up. And there are so many instances that we can do things and make people think we changed
our policies, and we cannot do that. So from his perspective, you know, the part, the big risk, as he charakrized, it is to make mistakes to make people think that we changed our policy.
Joe's right. I love that story, idiot. Sunflower Seeds is my new favorite company, not just for the name, but also because it ends up really contrasting differences in policy between Dung Chao Ping and maybe she Shinping nowadays, where he's you know, instituted a whole bunch of crackdowns on private industry, and he has kicked off this conversation in
China about well, is it worth even trying anymore? If you know you could become a billionaire and like the next day you're in trouble with the government and it all comes crashing down. It's still a very relevant anecdote, even though it comes to us from the past. I really want to do an episode just on this company.
I've you know, I've seen some translations, so obviously she said, it's also been it's called fool sunflower seeds. I've seen translations that called it simpletons sunflower seeds. I really but idiot's sunflower seeds. I hope that's the best one.
Yeah, I mean, I suspect it. It can be all of those things at once. But if you're wondering why it was called that, my understanding is it was kind of like a little bit like crazy Eddie in that the idea is, like, our prices for sunflower seeds are so stupidly or idiotically low. What are we thinking by our sunflower seeds? That was kind of the origins of it. I love it so if you've stayed with us for this long, then you've already gotten a preview of our
tenth and final surprising thing we learned this year. It is, of course, the Jones Act and its impact on the offshore wind industry. We spoke with one of our colleagues here at Bloomberg benef analyst Chelsea Jean Michelle, and even though we weren't necessarily expecting to encounter this one hundred year old law, yet again, we just can't get away from it. The Jones Act is with us everywhere, so here it is.
Yeah, so the US has essentially this law called the Jones Act. I'm not sure you guys familiar.
Yes, we love it.
It always comes back.
It always comes back to the Jones Act.
No, we've done.
I've done a couple episodes.
Had no idea this is going to turn into a Jones Act episode. I'm really excited.
So I have my own personal feelings about it. But that aside, I've noticed.
By the way, like on social media, that's one of the most hot button topics that you can talk about. So you never never say anything about the Jones Act online whatever. People have a really strong opinion. Okay, sorry, worries.
I mean, it's a hot button topic. So essentially, basically, if you are traveling between two points in the US, then that ship has to be US built, US crewed, US flagged, And what that means for offshore wind is that that offshore wind farm counts as a point. And so the US has you know, I mentioned seven turbines
currently installed, two projects currently under construction. But what happens is, because of the Jones Act, you either have to have a Jones Act compliant vessel that can do that transportation. That doesn't exist in the US right now. Currently, there's only one wind turbine installation vessel that Dominion is building right now.
I'm getting dredging.
Yeah, oh my god, this is so amazing. It all comes full circle.
So, yeah, there's only one vessel currently under construction right now, and that's not going to be ready until a few years from now, and Dominion's planning on using that on their two point six giga Coastal Virginia offshore wind projects, sets set to be the largest in the US when it commissions, one of the largest in the world, which is great for them, but for other projects.
Orstead was actually.
Hoping to use this for their Sunrise Wind and Revolution Wind projects. But now that the vessel has been delayed, they are no longer able to use that Jones Act compliant winterbine installation vessel. So another thing that you can consider doing is using a European wind turbine installation vessel and then using a kind of like feeder barge method. And so this is what a lot of US offsho
wind projects are hoping to do. Essentially, the feeder barges are Jones Act compliant and you feed in the components to the European vessel that stays at the offshore wind site. So the Jones Act has essentially created a situation where so many vessels involved in the offshore wind installation process need to be built here and right now there's only one. So that's a huge constraint.
Joe, I dare you to tweet that the Jones Act causes pollution and adds to the US's carbon load by denying when energy.
I'll tweet it from my outlocked alta account that nobody knows about. It's true. On my secret all Twitter account, I tweet all the time about dredging and the Jones EG. But I would never express my views publicly on the main because it's just too too hot button of a topic.
Wait, I'm going to have to go look for your all account now. I bet I can find it.
I briefly mentioned what it's called. Oh really, and then I deleted the tweet that. So if you're looking at that one moment, Oh okay.
Well, listeners, here's something I want to learn for twenty twenty four. What Joe's alt account is on Twitter slash x Well. I have to say that was a really fun list to put together. It kind of gave us an opportunity to go over a lot of our episodes for the year, revisit what we've learned, what's surprising. I still cannot get over some of the nuggets in those stories. Six seven hundred requirements for a piece of government software, idiot sunflower seeds, the Jones Act and wind, the communist
origins of euro dollars. There's so much in.
There, and I'm looking forward to all the fascinating things we learned in twenty twenty four.
Yes, absolutely, shall we leave it there.
Let's leave it there.
This has been another episode of the Authoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway and.
I'm Joe Wisenthal. You can follow me at the Stalwart. Follow our producers Carmen Rodriguez at Carmen Arman, dash O Bennett at Dashbot and Kelbrooks at Kelbrooks. Thank you to our producer Moses onm. For more Oddlots content, go to Bloomberg dot com slash odd Lots, where we have a blog, transcripts and a newsletter and you can chat about all these ten topics and more with fellow listeners in the discord twenty four to seven discord dot ggen slash.
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