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Launch partner Discover more at Bloomberg.com May 23, 2022 (cid:3) Jackie Dolby, who handles Lehman’s taxes, will be one of the last people out the door 1 K E E W S S E N SI U B G R E B M O O BL FEATURES Lehman’s Long Goodbye R 32 O F NA Meet the caretakers ushering the bank through its final legal proceedings A D R A C A The Teen Who Defied DeFi TT 38 O L R A How a young math whiz nabbed $16 million by exploiting decentralized finance C Y B H P A Build Backs Better GR 46 O T HO Braces for scoliosis are improving, though slower than you might expect P (cid:4) CONTENTS Bloomberg Businessweek May 23, 2022 (cid:2) IN BRIEF 4 Biden in Buffalo ○ Brexit redux ○ Renault leaves Russia (cid:2) COVER TRAIL (cid:2) OPINION 5 Why that baby formula is so hard to find How the cover (cid:4) AGENDA 5 Davos 2022 ○ Alibaba ○ Champions League Final gets made ① “This week’s story is (cid:4) REMARKS 6 Humanity’s history with microbes bodes ill for the future about Lehman Brothers.” “What??” BUSINESS 10 US dollars back English football, and fans get nervous 1 “Yep, Lehman. The 12 Carvana has a pandemic hangover Lehman.” “Did I somehow fall into TECHNOLOGY 14 (cid:6) It’s a sad time to be a unicorn 2 a hot tub whose console was altered to change the course of history?” “I’m confused. I mean, you’re pretty dry …” “Have you never seen the classic film Hot Tub Time Machine? Basically the best buddy comedy of the past 12 years. That is, assuming we’re still in 2022?” “Ah, yep. Still are.” “OK, and we’re doing a Lehman cover?” “Yeah! So, as I was saying, it turns out that the company is still quite valuable.” “I thought they literally 2 triggered the Great Recession.” “Please don’t use 16 Is debt financing causing Musk’s Twitter jitters? ‘literally’ that way. Actually, people have been selling off their FINANCE 18 Luna and Terra: An object lesson in how crypto can tank assets since then and 3 making a lot of money.” 21 The SEC gets curious about bankers’ phones “So … less time travel, more zombie?” ECONOMICS 23 The UK is better at cost-cutting than long-term planning 4 “Try extended afterlife.” 24 Nigeria was modernizing. Then Chinese capital dried up 26 Proof that a CPI is a many-splendored thing “Ah! I’ve heard great things about purgatory. Speaking of which, STRATEGIES 28 How remote workers and a tight labor market affect pay have you seen + Groundhog Day?” 29 Women in astronomy have faced plenty of harassment 31 Want to boost job performance? Walk or bike to work K E (cid:4) PURSUITS 53 Travel treats for the senses: Touch whales in Mexico … E W S S 56 … turn off the GPS and read the stars above Maui … E N SI 58 … find birds in Africa by using your ears … BU G R 60 … learn to trust your nose when in a new place … BE M O 63 … and let eating out help you find your way home O L B R O F R A (cid:4) LAST THING 64 Restaurants are on a staffing diet. They’ll cope B RI L E NI A D Y B H P How to Contact Bloomberg Businessweek RA G EDITORIAL 212 617-8120 ○ AD SALES 212 617-2900, 731 Lexington Ave. New York, NY 10022 ○ EMAIL [email protected] O T O ○ FAX 212 617-9065 ○ SUBSCRIPTION CUSTOMER SERVICE URL businessweekmag.com/service ○ REPRINTS/PERMISSIONS Cover: H P 800 290-5460 x100 or email [email protected] ○ Letters to the Editor can be sent by email, fax, or regular mail. Photo illustration by Y: G O They should include the sender’s address, phone number(s), and email address if available. Connections with the subject of the letter 731; photos: Alamy L O should be disclosed. We reserve the right to edit for sense, style, and space ○ Follow us on social media (cid:10) FACEBOOK facebook.com/ (2); Getty Images (1); HN C bloombergbusinessweek/ (cid:10)TWITTER @BW (cid:10) INSTAGRAM @businessweek Shutterstock (1) E T (cid:2) IN BRIEF Bloomberg Businessweek By Benedikt Kammel ○ Globally, more than ○ “White 526 million people have been infected by the supremacy is coronavirus, and about 6.3m a poison. And it’s been people have died. North allowed to Korea has disclosed about 1.5 million suspected fester and grow Covid-19 infections, which it calls “fever cases.” The right in front of reclusive country, where much of the population is our eyes.” malnourished and all are unvaccinated, faces an ○ President Joe Biden called on Americans to reject the extremist racist ideology that inspired a shooter to murder 10 people unprecedented health crisis. on May 14 in a predominantly Black neighborhood in Buffalo. He and Jill Biden visited the scene of the rampage on May 17. ○ The Russian ○ Walmart and Target ○ Boris Johnson ○ Online mental- cut their profit outlooks invasion of wants to redo a part health startup on May 18, sending their Ukraine is entering of Brexit. Cerebral replaced shares tumbling the most its fourth month. in 35 years. Surging costs its CEO. for merchandise, storage, and labor are squeezing (cid:10) Russia is getting closer to occupying Mariupol after a protracted seige of US retailers, while inflation 4 the Azovstal steel plant. Hundreds of and higher fuel prices are Ukrainian fighters surrendered and were taken to Russia, their fate unclear. sapping consumer appetite. Still, April retail data show (cid:10) Meanwhile, Sweden and Finland’s attempt to join NATO hangs in the that Americans are still balance after alliance member Turkey The company’s board voted on May 18 said it opposed the move, accusing the spending, likely propped up to oust Kyle Robertson, who vowed ES G countries of fostering terrorism. by credit-card borrowing. London said on May 17 it would like to to fight the dismissal. The showdown MA override trading arrangements that comes after Cerebral, the subject of a TY I (cid:10) The Biden administration will fully have created a disruptive customs federal investigation into its prescribing GET block Russian bond payments to US border between Northern Ireland and practices, announced it would stop O: G investors after a deadline expires on the rest of the UK. Reneging on the dispensing almost all controlled MIN May 25, whch could force Moscow into pact, signed two years ago, is certain to substances. The company has said it LA F its first foreign default in a century. escalate tensions with the EU. intends to cooperate with the probe. ES. G A M Y I T ○ Élisabeth Borne was ○ Goldman ○ Renault sold its majority ○ Biniam Girmay ET G named prime minister of stake in Avtovaz to a state- NN/ Sachs is giving won the 10th MA France. Previously run Russian automobile RT A H labor minister employees research institute for the stage of the Giro R E H P under President symbolic price of 1 ruble, or O unlimited annual d’Italia on May 17. T S 2¢ RI Emmanuel Macron, she H vacation. E: C succeeds Jean Castex. RN O Borne will be only the S. B GE A second woman, after Edith on May 16. Renault had M Y I T Cresson in the 1990s, to valued the maker of the ET G K: hold the post. bestselling Lada brand at U But there’s a catch: ES. The offer only applies to €2.2 billion ($2.3 billion) at MAGGES pdrhocwaoaffiaornrmre rakdtckntpsl ty eh alon artolrolias.nsu t kJ,aero iutsnndrwn,idg oawio oumab irslsnol a eb y ufnnoa ttai nriogmg krrie eunr egsl i,n wgh o’d the end of last year. Thsrhataihsacdetneo td2.r oB y2o pu anyutse tlh laht iohsre-ue ojpot fil odyord fswE ittura hBmitserl a escacahotk notn h rAtctee-fy srlcpiivtclr eiaeasdftnst :tm e tGigora ii arodm uesa y NICHOLAS KAMM/GETTY ILUCA BETTINI/GETTY IMA be given at least two extra prosecco cork struck him in the eye ENS: MAY: days each year. during the podium ceremony. BIDGIR (cid:2) BLOOMBERG OPINION May 23, 2022 Short of Baby Formula? increases that would normally encourage production when shortages arise. Such a system seems almost ready-made to Blame Red Tape exacerbate a supply crisis. So what now? Abbott and the FDA have entered an agree- And Protectionism ment to restart production in Michigan, but that will take time. The FDA is working to increase formula imports, the USDA is trying to relax WIC rules to boost supply of eligible products, and companies across the industry are cranking To soaring prices, plummeting stocks, and disrupted supply up production. None of those steps will alleviate shortages chains, add another worry for US consumers: an alarming overnight, but they’re all on the right path. shortage of baby formula. Beyond the panic for parents, the Over the long term, one hopes this crisis will help policy- crisis is an object lesson in how decades of protectionism can makers accept that protectionism doesn’t make the economy culminate in disaster. stronger or more resilient. Quite the opposite: It diminishes Reports of empty shelves, rationed supplies, and online competition, limits choice and capacity, raises prices, and scams have proliferated in recent weeks. An analysis by leads to brittle and vulnerable supply chains. Which, as parents Datasembly Inc. found that the out-of-stock rate for infant are finding out, can buckle just when they’re needed most. (cid:3) formula surged to 43% nationwide in May, up from 11% in For more commentary, go to bloomberg.com/opinion November. In some cities the rate exceeds 50%. Experts warn it could be months before supplies are back to normal. (cid:2) AGENDA Two basic problems underlie the shortage, one new and one years in the making. The first was a contamination scare. In February, Abbott Laboratories—maker of Similac formula— shut a plant in Michigan when federal regulators warned con- sumers that four infants had been hospitalized after exposure to its products, and two had died. (None of the illnesses has been conclusively linked to the formula.) Abbott issued a vol- 5 untary recall. Because the Michigan plant made more than half of the company’s US formula—and Abbott produces some 40% of total domestic supply—the shutdown rippled across the market and worsened existing production challenges, such as labor shortages and supply chain disruptions. Policymakers could hardly be expected to predict such a series of events. But it’s fair to question the Food and Drug Administration’s response. Its inspectors first detected poten- tial contamination at the plant in September. A whistleblower warned of additional safety lapses in October. Yet the agency (cid:10) A Warmer Davos in Colder Times waited months to act. A second, more intractable problem is that decades of bad The World Economic Forum returns to Switzerland from policy have led to an unduly concentrated market. Excessive its Covid hiatus, on May 22-26. There are plenty of issues tariffs and other trade barriers have all but shut out imported facing the political and financial elite, including the war in formula. Even if consumers were willing to pay higher prices, Ukraine, rising inflation, and the path to a greener future. the red tape the government imposes on foreign products can be prohibitive. Such measures have effectively blacklisted (cid:10) London’s Elizabeth (cid:10) In a sign of defiance (cid:10) Alibaba reports its Line opens on May 24 against Moscow’s fiscal fourth-quarter imports from the European Union. for public rail traffic after aggressive rhetoric, earnings on May 26. A program overseen by the US Department of Agriculture 15 years of construction. NATO will conduct its Beijing’s sweeping One of the UK’s most Parliamentary Assembly crackdown on the tech worsens this dynamic. The Special Supplemental Nutrition ambitious projects, it will Spring Session on sector has forced the Program for Women, Infants, and Children, known as WIC, serve about 200 million May 27 in Lithuania, on country’s internet giants people annually. the border with Russia. to freeze growth plans. provides vouchers to low-income families to help pay for food. By some estimates, it accounts for half of all US for- mula sales. Over the years, formula producers have offered (cid:10) The Senate Banking (cid:10) Twitter holds its (cid:10) Liverpool and Real N DU increasingly steep discounts to win WIC contracts, knowing Committee holds its annual general meeting Madrid face off in the A annual hearing with the on May 25, an event prestigious Champions G ME that this will make retailers more likely to stock their brands heads of the largest US that promises to be League final on May 28 BY banks on May 25. Topics tumultuous with Elon in Paris. Madrid has N and thus boost their market share. O include market turmoil Musk’s takeover won the trophy 13 times, TI RA This arrangement discourages competitors from entering and returning to work. pending. (cid:12) 16 more than any other T LUS the market, inhibits investment, and suppresses the price soccer team. L I (cid:4) REMARKS May 23, 2022 ○ Small things considered: Humanity’s these microscopic creatures behave and the dangers they pose. Most microbes are harmless or even symbiotically future may turn on Earth’s unseen beneficial. Then again, a transmissible, cross-species avian majority of mutating life forms virus could hypothetically kill hundreds of millions of people. When a new pathogen rifles through urban centers, the win- dow to respond is often a matter of weeks. Wait too long and ○ By Brian Bremner leaders face a Hobbesian choice: You can save lives or your economy. China’s Covid lockdowns have sent shock waves through its economy and global supply chains. When a respiratory virus sweeps away almost 15 million lives in Rich-world governments certainly think a lot about pan- two years, as Covid-19 has, according to a May 5 World Health demic risk. Yet scientific funding skews way more to known Organization estimate that includes indirect deaths, it’s a diseases and microbes than to future, probabilistic risks. “We savage hit to humanity. are still stuck in a 20th century mode of finding a pathogen, A single microbe has destabilized health-care systems, developing a vaccine, and waiting for the next pathogen,” unbalanced economies, and confounded government lead- says Dennis Carroll, former director of the US Agency for ers worldwide. It’s a humbling moment for Homo sapiens, International Development’s (USAID) Pandemic Influenza and accustomed as we are to doling out crushing blows to other Other Emerging Threats Unit. life forms rather than having them rock our own. Discerning how microbes swap genes and collaborate in Why have we stumbled so spectacularly? The short answer swarming, cross-species networks called microbiomes is is that we’ve rarely been adept at dealing with contagions on where things stand to get especially interesting in the decades a massive scale. If you look at the history of infectious disease ahead. These infinitesimal biological entities have thrived outbreaks, across millenniums and technological eras, soci- for almost four billion years and survive in extreme envi- eties have reacted in similarly self-defeating ways. ronments, from scalding hydrothermal vents in deep ocean We’re cognitively wired to react to risks we can see and trenches to the International Space Station. The potential feel in the here and now—less so with invisible, shape-s hifting payoffs from unraveling the genetic secrets of microbes tran- biological events that happen infrequently. The disease scend pandemic prevention. Microbial science is central to 7 avoidance strategies we’ve adapted that make sense at an all the big, civilizational challenges ahead: food security, bio- individual level can set off widening gyres of social disorder weapons, ocean health, and climate change, to name a few. for a community at large. In our oceans, the Arctic, and the Amazon region, Pandemics divide us. We’re more likely to look for ways microbiomes recycle greenhouse gases such as carbon diox- to scapegoat outsiders, and more susceptible to entertain ide, nitrous oxide, and methane. Yet a warming planet may baseless conspiracies to justify our actions or downplay risks. be changing their metabolism and possibly undermining that Game theory research shows that the longer a health crisis role. Studies show evidence of increased methane emissions lasts, the less likely individuals are to make the shared sacri- from naturally occurring carbon storage systems called “sinks” fices needed to ensure public health. in thawing permafrost and dwindling rainforest regions. The Plague of Athens in the fifth century B.C., which is Until this century, biologists and geneticists had few inves- believed to have wiped out 25% of the city-state’s population, tigative tools to explore this strange micro world, so much so “marked the beginning of a decline to greater lawlessness,” that some scientists dubbed microbes and their constituent the ancient military historian Thucydides wrote in History of DNA “dark matter.” What’s changed is the rapid-fire digitiza- the Peloponnesian War. tion of biology. Advanced sequencing techniques, combined Almost 2,500 years later, a viral adversary unmoored the US, with high-powered computation, artificial intelligence, and where homicides and hate crimes have soared since. Pandemic big-data analytics, have opened the way to analyze the key and vaccine skepticism posed challenges to public-health offi- information-carrying molecules in a teeming and diverse pop- cials, even in the face of more than 1 million dead Americans. ulation of microbes. At the same time, the pinpoint accuracy “We’re going through a truly historic pandemic that people feel of Crispr gene-editing technology, modeled on what we have 3) S ( is not real,” Anthony Fauci, America’s top infectious diseases learned about how bacteria copy and cut the DNA of preda- E G MA authority and director of the National Institute of Allergy and tory viruses, has given us the potential to repair genetic disor- Y I TT Infectious Diseases (NIAID), said at the end of 2020. ders, extend lifespans, and boost agricultural output. E G S: If we’re going to successfully handle future viral and bac- This century has seen a giant leap in our ability to read, O T O H terial outbreaks, we’ll need to head off pathogens quietly edit, and redesign the genetic source code of cells and bio- P 31; Y 7 circulating in nature or within wildlife and livestock animal logical systems. Run a random teaspoon of dirt or seawater B N O carriers well before they escape into human populations. That through a sequencer, and you’ll find gigabytes of genetic TI A TR requires sustained, long-term investment in a biosurveillance information, some of which could spawn new food tech appli- S U L O IL system that tracks microbial risks at something approaching cations and biomaterials. Modern humans evolved in a micro- T HO the molecular level. We need far better understanding of how P Bloomberg Businessweek (or 10 followed by 30 zeros) individual viruses, well more Bioengineering is also disrupting animal d isease vectors. than all the stars in the observable universe. There are an Last year a British biotech firm spun out from the University estimated 5 million, trillion, trillion bacteria. of Oxford called Oxitec released genetically modified mosqui- Christopher Mason, a geneticist and professor of physiol- toes into the air over the Florida Keys. Oxitec has developed a ogy and biophysics at Weill Cornell Medicine in New York, says way to suppress the population of an invasive species of mos- that when you sequence part of the human genome, you often quito called Aedes aegypti, which transmits Zika and dengue find genetic fragments derived from ancient microbial DNA. fever and is rapidly spreading worldwide as the c limate warms. The ubiquity of microbes inspired Mason to develop molecu- It does so by genetically altering male Aedes, so that when lar maps of them in the world’s biggest transportation hubs. they mate with females their offspring inherit a gene that Mason’s team spent three years collecting, sequencing, and overproduces a protein. It’s lethal to females, the biters in analyzing microbial swab samples from more than 60 global search of blood for their eggs. Male descendants are unaf- transit systems, where billions of commuters collide with tril- fected but pass on the life-shortening gene. Population col- lions of microbes. In 2021 his consortium, the Metagenomics lapses of 90% have ensued in Oxitec trials. and Metadesign of the Subways and Urban Biomes (MetaSUB), Better intelligence on microbes is also key for vaccine reported the discovery of 10,000 previously unidentified bac- development. The one-year turnaround of Covid messen- teria and viruses. “People thought it would be too labori- ger RNA (mRNA) and viral vector vaccines by companies ous, or too expensive, to go pathogen hunting,” says Mason. such as Pfizer, BioNTech, Moderna, and AstraZeneca was a “People pay taxes for a military that defends our nation secu- stunning achievement. rity. Pathogens are in a sense our enemy.” We also caught a break, because we knew a fair bit about Jonna Mazet, a professor of epidemiology and disease ecol- coronaviruses from earlier epidemics of severe acute respira- ogy at the University of California at Davis School of Veterinary tory syndrome (SARS) and Middle East respiratory syndrome Medicine, led a group that designed a disease surveillance pro- (MERS). Serious blind spots remain. Research by pandemic gram called Predict whose diagnostic systems identify new expert Carroll estimates that there are 631,000 to 827,000 viruses believed to be high-risk for infectious disease flare- viruses across 25 viral families in mammal and bird hosts that ups. In 2018, Predict researchers discovered and geneti- may have the potential to jump species. Carroll chairs the cally sequenced entirely new species of the Ebola viral Global Virome Project, an ambitious effort to identify and 8 family called Bombali ebolavirus and found the s uperlethal sequence the planet’s major viral threats. Marburg virus in bats in Sierra Leone in West Africa. Building an “always-on” early warning system to detect emerging threats and related investments in health-care AI is proving to be a transformative technology in our and drug development could cost as much as $430 billion evolutionary race with the bugs. In early 2020, a team led by over a decade, McKinsey & Co. forecasts. Steep, yes—until synthetic biologist James Collins at the Massachusetts Institute you consider the International Monetary Fund forecast of Technology used AI modeled on the neural networks in that the Covid pandemic will cost the global economy at our brains to discover a structurally unique antibiotic effective least $12.5 trillion in lost growth through 2024. against dangerous strains of the bacterium Escherichia coli and drug-r esistant tuberculosis. They called it halicin, an homage Whatever choices we make, the microbial world will c ontinue to HAL 9000, the starship computer in 2001: A Space Odyssey. to send us biosignals. SARS, MERS, the run of avian and swine “They took 100 million chemical compounds, embedded it into flu, the resurgence of Ebola, Zika, and malaria—they all reflect an AI system, and it figured out how the proteins and molec- enhanced disease spillover risks as the expanding food indus- ular chemistry would work without them telling it,” says Eric try and megacities encroach upon natural habitats. Schmidt, a synthetic biology investor and former chief exec- A decades-long barrage of antibiotics, antivirals, utive officer of Google. “The program literally discovered it.” antifungals, and antiparasitics into the biosphere has triggered In another breakthrough, DeepMind Technologies, the biochemical adaptations that make infections harder to treat. London-based AI subsidiary of Google parent Alphabet Inc., Some “superbug” strains of tuberculosis are now multidrug- deciphered one of biology’s most vexing challenges: pre- resistant. “The cadence of these types of emergencies, not dicting a protein’s 3D shape from its amino acid sequence. necessarily on the Covid scale, is on the order of every few Co-founded by child chess prodigy and neuroscientist years,” says Kamran Khan, a physician and Demis Hassabis, DeepMind developed a deep learning founder of BlueDot, a Toronto-based data program that accurately models the geometry of proteins, research and digital health firm. the building blocks of life. Understand a protein’s shape, So it might be wise to listen to what and you’ll understand a great deal about its function. In the microbes are telling us. Our fates are mid-2021, DeepMind and the European Molecular Biology intertwined, and they’re in it for the long Laboratory open-sourced a database of the predicted haul—even if we’re not. (cid:3) Adapted from structures of the 20,000 or so proteins expressed in Man Versus Microbe, published by World the human genome and those of 20 model microbes. Scientific Publishing Co. on May 20.