Howdy All, a few Interesting Items for your information. Enjoy –
In this issue –
1. Gasline
2. Kelly
3. Cali
4. Datacenters
1. Gasline. As the democrat- RINO majorities in the Alaska legislature careen into their last week in session, the fate of the proposed Alaska LNG pipeline becomes a game of Let’s Make a Deal. To review the current bidding, the enabling legislation has been tied up in Senate Resources for over a month of endless, pointless hearings, and procedural obstruction by the Chair, Republican Cathy Giessel from Anchorage. The Let’s Make a Deal trade is a demand for Governor Dunleavy not to veto legislation creating a defined benefit pension plan for state troopers in return for passage of enabling legislation. On the face of it, it is a remarkably disastrous trade, proving its backers have little interest in basic economics. As with all stupidities, there may be a silver lining. OTOH, as a pessimist, that light at the end of the tunnel may very well be an oncoming train.
- The democrats in charge of the legislative majorities do not support resource development in any form, especially anything involving mining, oil and natural gas. It is part of their party platform. They are proud of it. They run on it. As part of their delay game of enabling legislation, they have inserted an endless stream of poison pill tax increase provisions into the bill during hearings. As of today, the legislation only enables the death of the project under the weight of at least four new taxes on all oil and natural gas production in Alaska.
- The Governor is scheduled to speak on the impasse this morning. Most expect him to announce some sort of agreement. As of this writing, either his speech was incomprehensible, so far outside the realm of whatever was expected, or simply late that there is no reporting at this writing. I will believe a positive outcome when I see it.
- But the question remains: what does it take to force a full half of the Alaska legislature to offer up legislation to do something they absolutely refuse to do, something they hate at the cellular level (oil and natural gas development)?
- On the state employee pension side of the festivities, currently, the PERS / TERS public employee system total obligation is underfunded by about $7 billion. Defined Benefit pensions started being phased out in 1990, morphing into a defined contribution system over three more changes 1990 – 2006. The current system matches a fixed contribution from the State with employee contributions. Retirees hired before 2006 get a combination of whatever the State pays with whatever their 401K pays. Those hired after 2006 are completely dependent on the 401K plus a health care piece.
- Note that the reason the legislature started moving away from defined benefit was the unsustainable outyear obligation, today at the previously mentioned $7b. That math hasn’t changed over the years. But the union leadership, being economically stuck in an economic model half a century old, loves themselves some defined benefit pensions, so union-friendly politicians fall all over themselves getting this thing passed. This year they passed it out of the legislature, though have not yet sent it to the governor for his action. Thus, the Let’s Make a Deal gambit we are seeing today.
- Here’s the fun part. We may have come to a time in history when defined benefit pensions are no longer popular with employees. Today, the younger you are, the more portability you demand, especially with your retirement savings and health care. Defined benefit is a lot like military retirement. If you don’t work for ‘X’ years, you don’t get your full retirement. Worse, if you move from job to job to job, the clock to vest starts over. If the legislation allows employees to opt in or opt out, or worse, if it allows some sort of choice, there will be very few new people signing up for it. Some unknown number of old guys will. How many of them are willing to put on golden handcuffs is anybody’s guess.
- The play here for the Good Guys is to ensure there is a provision in the enabling and all future enabling legislation that will include an opt-out, something that will not tie state employees into the defined benefit model as opposed to the 401k model. Sell it via a choice / freedom argument, which will ultimately carry the day. Over time, the left will figure out their strategic mistake. If we do our job correctly, that mistake will kill them, as liberty, choice, always wins.
- Outside Juneau, the state population has strong support of the gasline, if for no other reason that it is privately financed. Public support is in the 70 – 80% range, not unlike support for the SAVE America Act in congress. The Trump administration is also in full support of the gasline, as is the Alaska congressional delegation. Yes, even Lisa. Historically, political refutation of things the public strongly supports ends up poorly for the political class. Don’t know how long this one or the SAVE opposition will take, but the outcome is pretty clear. How will this end up? Anybody’s guess, though the process is going to be fairly ugly. The only thing I am sure of is that the legislative majorities will gag the process and do their level best to produce a nearly unsingable piece of legislation intended to kill the project regardless of what happens with the defined benefit legislation (yes, I and shocked (/sarc) that the political left won’t keep their word to the public). I feel that I am a bit like a spectator at an airshow or race hoping an accident takes place.
2. Kelly. One of the Sedition Seven, democrats who did the TikTok video urging active-duty military to question and ignore whatever they believe are unlawful orders took another bite at the sedition apple last week. This time around, he opined about shortages in weapons stockpiles following the end of kinetic action in Iran. This would normally be a no-brainer, as you can always use up weapons quicker than you can manufacture them when the balloon goes up. Problem is that Kelly got his information from a classified Pentagon briefing and took that information public. SECWAR Hegseth accused Kelly of releasing classified. Kelly responded that Hegseth gave that response during public testimony, essentially declassifying it. It is one thing to worry about replacing complex, expensive weapons used during actual combat. It is quite another thing to actually name the stockpiles of concern, which is what Kelly did. This kind of makes you scratch your head about a man who spent 54 days in space on four shuttle missions over a decade. He was smart enough to survive the missions and come back alive. But he is not smart enough to protect classified information in his zeal to score some smarmy little political points over his hated president.
3. Cali. In addition to the ongoing Medicare / Medicaid fraud investigations, Cali has a pair of increasingly interesting major races on their Jun 2 primary ballot.
- The first of these is in LA, with incumbent Karen Bass, City Council member Nithya Raman and former reality star Spencer Pratt running for Mayor. Bass and Raman are both avowed socialists, promising to steer the Good Ship LA faster and harder into the fiscal iceberg they are in the process of crashing into. Pratt is running from a trailer parked on the lot of his burned home in the Palisades, asking Angelinos if they have had enough yet? His media has been spectacular, entertaining, persuasive and highly embarrassing to both women. He did well enough in his first mayoral debate that Bass and Raman canceled all future debates. He did well enough that the democrat machine turned TMZ loose on him with the “discovery” that his wife and kids weren’t living in the trailer at all. I am shocked, simply shocked (/sarc). Instead, the family is currently living in a local hotel. Queue the shocked face. TMZ kept the attack going with claims Pratt is going to leave LA if he doesn’t win the election for Mayor. Note that TMZ didn’t remind the viewers that there was no power or water on the lot after the fire to keep the trailer habitable. Should be a most interesting race.
- Second of these comes with the race to replace Governor Hairgel, Gavin Newsom. Current polling has Steve Hilton at 20%, Xavier Becerra at 18%, Tom Steyer at 16% and Chad Blanco at 13%. Hilton and Blanco are Republicans. The Cali jungle primary passes the top two candidates on to the general election. For a time, Hilton and Blanco were leading. That changed following the democrats’ public execution of Swalwell. In last week’s debate, all Becerra could do was “not Trump / Orange Man Bad,” something that may or may not work this year. Should be an interesting race.
- Final race of interest is the primary to replace long-time House incumbent Darrell Issa in San Diego. Issa was redistricted out of office by Newsom’s redistricting gambit last year. The democrat party hack tabbed to replace him is an O’Bamaoid named Ammar Campa – Najjar. San Diego County Supervisor Jim Desmond is the Republican. He is a former mayor of San Marcos and is well known in the district. He is doing very well, better than the democrats who were supposed to walk into the newly blue district. This one should be fun to watch.
4. Datacenters. Any time I see a drumbeat of scaremongering, especially when all the Usual Suspects are in lockstep, I start wondering what is behind it and move rapidly to who is paying for the opposition persuasion play. Today’s topic is datacenters, huge, massive, energy hungry, water hungry datacenters for AI. the issue is being framed as datacenters = bad, no datacenters = good.
- On the one hand, we have Jay Valentine, formerly of Fractal Computing (more about them later), who loudly claims that the large, industrial datacenters, including Elon’s million satellite solution, are old tech, rendered obsolete by his distributed approach.
- On the other, we have any number of innovators arguing for better solutions. One example came from Andy Masley, in an Oct 2025 Substack piece claiming that the loudly proclaimed AI Water Issue is Fake. It is a very long piece concluding that datacenters use only 0.2% of US fresh water in 2023. In perspective, all AI in all US datacenters use as much water as 8 towns of 16,000 people, which is a very small impact. Datacenters today have minimal impact on water access at their current locations. Note that the largest impact on local water is during construction, which is a common impact with all construction, something else nobody on the anti side every bothers to put into context.
- It appears that the solution to the requirement for massive amounts of new energy for the new datacenters is being solved by requirements for new datacenters to bring their own generation with them rather than competing with existing users. There have been some suggestions that new AI datacenters may be located on existing military installations as they are essentially national security assets. The Trump administration may be planning for this already with their effort to place GenIV Small Modular Reactors (SMRs) on military bases. The SMRs have the longest lead time of all energy assets and they going to start appearing on bases in a year or two.
- As to Valentine, it appears that his company (Fractal Computing was not named, but you can’t find it any more online) was destroyed by the venture capitalists who funded its rise. He was replaced as a CEO by one of the VC favorites. It took the new CEO 90 days to fire a bunch of developers, forgetting to tell them to back up the corporate source code. The company lost the corporate source code, $100 million in valuation, and quickly filed for bankruptcy. Valentine currently writes in The Black Swan Files Substack and is busily rebuilding the company. If he is right, the distributed approach is alive and well.
More later –
- AG