What to know about Evergande, the Chinese property developer dragging down global markets

What to know about Evergande, the Chinese property developer dragging down global markets
What to know about Evergande, the Chinese property developer dragging down global markets
CasPhotography/iStock

(NEW YORK) — Debt issues plaguing Evergrande, one of China’s largest real estate developers, have sent shock waves of anxiety throughout global financial markets.

The Dow Jones Industrial Average suffered its biggest single-day drop since July on Monday, and the index closed even lower Tuesday, with many analysts attributing the precipitous fall to the Evergrande saga emanating from the nation with the second-largest gross domestic product. Jitters related to Evergrande have also been linked to a slide in the cryptocurrency market, with Bitcoin trading 13% lower Tuesday evening compared to a week prior, as uncertainty drives investors away from riskier assets.

The Evergrande crisis has even been compared to the Lehman Brothers crash that is now synonymous with the onset of the Great Recession, though many economists have cautioned against panic and directly equating the two episodes. Still, there is a reason the embattled Chinese firm has become a household name on Main Street over the past few days, and Wall Street remains on high alert over what comes next as a repayment deadline looms on Thursday.

Here is what to know about the Evergrande debt crisis and its potential contagion to the global economy.

What is Evergrande?

Founded in 1996 in Guangzhou, Evergrande is one of the largest property development companies in China that specializes in building and selling residential apartments to the country’s rapidly growing middle and upper class, as well as building shopping malls and other commercial real estate projects.

The company has grown quickly and developed businesses in other sectors — including operating theme parks and manufacturing electric vehicles — but its primary source of revenue remains in property development, according to Shang-Jin Wei, a professor of Chinese business and economy at Columbia University’s Graduate School of Business.

The firm’s success has made its chairman, Hui Ka Yan, worth about $7.34 billion, according to Bloomberg’s real-time data. His net worth has fallen dramatically in recent months, however, as the company’s stock value plunged. In July 2020, Bloomberg estimated his net worth at nearly $40 billion.

Evergrande’s real estate arm owns more than 1,300 projects in more than 280 cities in China, according to its website. Evergrande Group says it employs 200,000 people total and its projects create more than 3.8 million jobs per year — leading some to suggest it has “too big to fail” status. The firm states it has some $350 billion in assets.

What is the issue and why is it impacting global stock markets?

Essentially, Evergrande’s rapid growth has been fueled in large part by borrowing. As demand in China’s once-exploding housing market wanes, fears that Evergrande could default on its estimated $300 billion in liabilities have come to a head.

“The problem in a nutshell is property development companies tend to use a lot of debt to finance their operations, and in response to rising housing prices, the Chinese government has said for quite a few years that they want to find ways to restrain the demand and restrain the housing price increases,” Wei, who formerly served as chief economist of the Asian Development Bank, told ABC News.

“Previous attempts by the government have not been very successful, and I guess Evergrande decided that the same will happen this time,” Wei added. “So the last few years, while some of the property development companies have scaled down their operations, Evergrande was still charging ahead. And recently, a change in government policies has reduced demand for residential apartments quite a bit, so the company is having trouble selling apartments fast enough to meet their debt obligations.”

Wei said that the commercial housing market in China largely did not exist before 1990, when most households lived in government-assigned apartments. China’s meteoric economic growth since the ’90s led to a boom in demand for housing, a wave Evergrande rode for years — in some cases selling properties and using the funds to pay for construction costs before they were even built — until recent policy changes by the Chinese Communist Party clamped down on such practices.

Evergrande borrowed from a combination of banks and non-bank financial institutions, and issued bonds to finance its recent endeavors, according to Wei.

“When the apartments are selling well that’s not a problem for them, but anytime that apartment sales slow down, the company could run into trouble to meet its debt obligation and that’s what we are seeing now,” Wei said.

It’s not immediately clear how much debt Evergrande has accrued because parts of the business are not publicly traded or required to disclose financial details, Wei said, but economists estimate its liabilities are around $300 billion. While it has assets such as land and under-construction apartment complexes, Wei said it’s unclear if selling these could even generate enough liquidity to pay its debts.

“One of the reasons that stock markets reacted so strongly to that one firm’s news is uncertainty, lack of clarity,” Wei said. “So even though the $300 billion is the best guess, people are not exactly sure whether they undisclosed or under-disclosed the debt obligation.”

Why now?

A deadline for Evergrande’s debt payments looms this week. In a report released earlier this week, S&P Global Ratings warned that Evergrande is “on the brink of defaulting.” The agency noted that the company is scheduled to make a number of interest payments on its public debt starting on Thursday, reiterating again that, “a default is likely.”

For those paying close attention, the issues have been brewing for months. Evergrande’s stock, listed on the Hong Kong exchange, has shed some 80% since the beginning of the year.

“Clearly people who invest in the company understand the company was undergoing financial difficulty and there’s a chance that they couldn’t meet their obligations,” Wei said. Recent policy changes in China to rein in the housing market — as well as corporate debt — have also led to Evergrande’s woes culminating in recent days.

While it is common for property developers to take on debt as part of their business model, S&P Global warned in its report that Evergrande’s contracted sales have fallen more rapidly than other players in the sector — in part because of its heavy use of of supplier commercial bills as a way to access capital. These commercial bills have a more rigid repayment date, according to S&P Global, and suppliers and contractors that have gone unpaid have filed suits against Evergrande that have ultimately resulted in halts in project construction.

“Financial institutions also appear to be quickly cutting Evergrande’s financing, likely as a reaction to the frequent negative news about the borrower,” the report states. “Without sufficient project financing, it makes even harder to sustain construction and salable resources. This is shutting down Evergrande’s most important source of cash flow: contracted sales of its property projects.”

Is this a ‘Lehman Brothers moment’?

The concern for many in China and beyond is whether Evergrande’s failure could have a spillover effect to other firms doing business with them as well as financial markets around the globe.

“China is the second-largest economy and second-largest importer of the world. If the Chinese economy is going south, it will reduce the demand of Chinese firms for other countries’ products,” Wei said. China’s economy is also intertwined with many others in the region, he added, meaning a financial or banking crisis could easily have negative impacts beyond its borders.

“These are the reason for why the U.S. and elsewhere we’ve see our stock market respond to news about a Chinese company,” he added. “Now is this response justified or is it an overreaction? That depends on two things — one is does Evergrande actually constitute a systematic risk for the Chinese economy? And two is, if it does, can the Chinese government manage to contain the risk?”

S&P Global stated in its report that it does not expect “government actions to help Evergrande unless systemic stability is at risk.”

“A government bailout would undermine the campaign to instill greater financial discipline in the property sector,” the researchers stated. “Government support to prevent a default is only likely if contagion risks cause other large developers to fail.”

The agency said it believes a hit to the financial system from Evergrande alone will be “manageable” and that Beijing’s focus would be to “ease Evergrande through an orderly debt restructuring or bankruptcy process that maximizes the value of its substantial assets.” Rather than a “bailout,” it foresees the government facilitating negotiations to ensure individual investors and homebuyers are protected.

Tommy Wu, an economist with Oxford Economics, similarly stated in a Tuesday report, “While we think the government doesn’t want to be seen as engineering a bail out, we expect it to step in to conduct a managed restructuring of the firm’s debt to prevent disorderly debt recovery efforts, reduce systemic risk, and contain economic disruption.”

If this restructuring plan works, Wu writes that they expect the implications for overall economic policy and outlook to “remain contained,” though the property sector will likely remain tense for some time and some spillover into the wider financial sector is likely.

Brad McMillan, the chief investment officer for Commonwealth Financial Network, said Americans should not panic about a so-called “Lehman Brothers moment” just yet in a memo shared with ABC News on Tuesday.

“Despite the worry, so far this looks like a corporate bankruptcy and not something worse,” McMillan said. “It’s a big one, to be sure, but one that can be handled within the system. Bondholders will lose money, other companies will be affected, and life will move on. So far, that situation is what we see and not something bigger.”

Even if it does evolve into something larger, McMillan noted that the Chinese government “has more money — and more legal powers — to contain the damage than the U.S. and western governments did back in 2008.” Moreover, McMillan argues the Chinese financial system and the rest of the world are less integrated than in 2008, meaning the “contagion possibilities are simply more limited.”

Ultimately, “the bus that you are watching is rarely the one that ends up hitting you,” McMillan adds.

“Both the U.S. government and regulators, and U.S. banks and financial institutions, are very aware of the situation in China, and they are at least thinking about how to minimize the risks,” he said. “That was not the case in 2008. Since this is not coming out of the blue, any damage will be contained — and likely much less than is now feared.”

Why is this impacting cryptocurrencies?

Cryptocurrencies have seen meteoric growth in recent years, and have emerged as especially popular among retail investors. Crypto markets have seen a dip in recent days amid the Evergrande headlines, but the digital currencies have also been notoriously volatile and prone to wide and seemingly sudden swings in prices.

“In opaque crises like the one now afflicting China’s Evergrande real estate conglomerate, it’s less ‘what you know’ than ‘what you know you don’t know’ that drives financial volatility,” Robert Hockett, a professor of law at Cornell University whose research focuses in part on financial and monetary law, told ABC News via email. “In these cases of opacity-fueled fear, assets described by the word ‘crypto’ can be expected to take the worst hits in the asset fire sales that accompany conflagration much as did those more euphemistically called ‘subprime’ 13 years ago.”

Bitcoin, Ethereum and others are “accordingly finding themselves hardest hit right now — even more than the more traditional speculative firms like Goldman,” he added.

“They are, in effect, the new canaries in the current financial coal mine,” Hockett said.

Copyright © 2021, ABC Audio. All rights reserved.

Elizabeth Holmes criminal trial dominated by allegations of deception and intimidation from those who worked for her

Elizabeth Holmes criminal trial dominated by allegations of deception and intimidation from those who worked for her
Elizabeth Holmes criminal trial dominated by allegations of deception and intimidation from those who worked for her
Chris Ryan/iStock

(NEW YORK) — Just three weeks into the criminal trial of Elizabeth Holmes, jurors have already heard allegations of lies, deception and alleged intimidation from those who worked directly under her — and the trial is expected to continue into December.

“I was scared that things would not go well,” one former Theranos scientist, Surekha Gangakhedkar, told prosecutors when asked why she made copies of internal communications and documents before resigning from the company. “I was also worried that I would be blamed.”

A full recap of last week’s proceedings is available on today’s episode of “The Dropout: Elizabeth Holmes on Trial” free on Apple Podcasts, Spotify, Amazon Music, or wherever you listen to podcasts.

Theranos was founded by Holmes in 2003. The company claimed to be developing blood testing technology that used only small droplets of blood.

Nearly two decades later, Holmes is defending herself against charges of wire fraud and conspiracy to commit wire fraud stemming from a “multi-million-dollar scheme to defraud investors, and a separate scheme to defraud doctors and patients,” according to prosecutors.

Gangakhedkar and Erika Cheung, two former Theranos scientists, testified under oath last week. They both conveyed the same information to the jury: Theranos’ Edison devices — their blood testing machines — rarely functioned properly.

Cheung told the court that Theranos would frequently cherry-pick data, deleting “any two data points that would not hit the metrics we needed.” She added that in March of 2014, about one in every four Theranos tests failed.

Cheung was one of the whistleblowers who first leaked information about Theranos to the Wall Street Journal in 2015. ABC News interviewed Cheung in the first season of “The Dropout.”

“Our quality controls were failing at one point … what seemed [like] almost every day,” Cheung told ABC News in 2019.

Gangakhedkar was the former manager of assay systems at Theranos and reported directly to Holmes. She told the jury that she didn’t think Theranos’ devices “were ready to be used for patient samples.”

Prosecutors presented several emails from 2013, in which Gangakhedkar reported the results of numerous failed tests on the Edison devices to Holmes directly. At the time, Theranos testing centers had already gone live in some Walgreens stores.

When prosecutors asked Gangakhedkar where this pressure to move forward before Theranos was ready came from, she swiftly responded “from Ms. Holmes.” Holmes’ defense has only just begun to question Gangakhedkar and will continue Tuesday.

The court granted Gangakhedkar full criminal immunity before she took the witness stand. She told the court she took documents with her upon her departure from the company, despite her non-disclosure agreement, “to protect myself and to have as a record in the event issues came up in the future.”

At the time Cheung was speaking with an investigative reporter in 2015, she believed she was being followed by people hired by Theranos. Soon after she started another job, she told jurors she was served a letter by an unknown individual at an address not many in her circle were aware of.

The jury was shown the letter, addressed from the firm Boies Schiller Flexner, and claimed she had disclosed Theranos’ “trade secrets and other confidential information without authorization.”

Recent Theranos financial documents made public via Holmes’ trial show the company paid $150,000 to private investigators for a project titled “E. Cheung & T. Schultz project.” Tyler Schultz was another Theranos whistleblower speaking with an investigative journalist at the time.

This week, Gangakhedkar will conclude her testimony.​​ Dan Edlin was once Theranos’ senior project manager and one of many friends recruited to the company by Holmes’ brother, Christian.

Holmes and her counsel did not respond to ABC News’ repeated requests for comment.

Copyright © 2021, ABC Audio. All rights reserved.

McDonald’s to make Happy Meal toys more sustainable by end of 2025

McDonald’s to make Happy Meal toys more sustainable by end of 2025
McDonald’s to make Happy Meal toys more sustainable by end of 2025
courtesy/iStock

(NEW YORK) — From Snoopy and Power Rangers to Hot Wheels and Pokemon, McDonald’s has long provided a jolt of joy with its kid-friendly toys inside the iconic Happy Meal. Now, the Golden Arches is making an earth-friendly move toward using sustainable materials in an effort to reduce plastic.

In the midst of Climate Week 2021, McDonald’s announced its goal that by the end of 2025, every toy in every Happy Meal sold around the world will be more sustainable and reduce conventional plastic by 90%, thus lowering demand on fossil fuel plastic production.

“Our next generation of customers care deeply about protecting the planet and what we can do to help make our business more sustainable,” Jenny McColloch, McDonald’s chief sustainability officer said in a statement. “With this transition for our toys, we’re working closely with suppliers, families and play experts and engineers to introduce more sustainable, innovative designs and help drive demand for recycled materials, to keep McDonald’s communities and beyond smiling for generations to come.”

McDonald’s said some of its toys such as “fan-favorite movie characters that used to be plastic figurines may reappear as 3D figures that can be built and decorated.” Other products such as mini board games with virgin fossil fuel-based plastic game pieces “may be swapped out in favor of accessories made from certified plant-derived or recycled materials.”

The transition to making toys with more renewable, recycled or certified materials will result in an approximately 90% reduction in virgin fossil fuel-based plastic use, which is nearly equal to the population of Washington, D.C., eliminating plastics from their lives for a year.

The fast food chain’s Happy Meal toy innovation efforts have been in motion since 2018 in other global markets including the U.K., Ireland and France, which McDonald’s said has reduced virgin fossil fuel-based plastic by 30%.

“Sustainable material sourcing is a necessary strategy for mitigating the impact of supply chains on our ecosystems and climate, including the plastic waste crisis,” said Sheila Bonini, the senior vice president of private sector engagement at World Wildlife Fund.

The lower demand for fossil fuel plastic will “instead create new markets for responsibly sourced renewable and recycled content,” Bonini said. “McDonald’s can engage its millions of daily customers around the world in the transition to a more sustainable, circular future.”

The company will continue to work with other industry partners to innovate renewable materials that meet both play and safety standards and can help remove the remaining conventional plastics within the toy portfolio.

McDonald’s was the first global restaurant company to set a science-based target to significantly reduce greenhouse gas emissions. Today, McDonald’s said it is on track to meet its 2030 targets, achieving an 8.5% reduction in the absolute emissions of restaurants and offices and a nearly 6% reduction in supply chain emissions intensity, compared to 2015.

The California-founded fast food restaurant also noted in Tuesday’s press release that “by the end of 2020, McDonald’s was approximately 80% of the way to its goal to source all guest packaging from renewable, recyclable or certified sources by 2025.”

McDonald’s credited the achievements this year to cross-industry collaboration from suppliers, producers and franchisees as well as investments in renewable energy and its 2020 Responsible Sourcing Goals across beef, soy, coffee, fish, palm oil, packaging fiber and forests.

Copyright © 2021, ABC Audio. All rights reserved.

Over 200 companies pledge net-zero emissions by 2040 as pressure on private sector mounts

PPAMPicture/iStock

(NEW YORK) — Nearly 90 new companies — including multinational corporate giant Procter & Gamble, tech behemoth HP and cloud-computing titan Salesforce — have signed onto the Climate Pledge, an Amazon-backed initiative that asks firms to commit to achieving net-zero carbon emissions by 2040.

Organizers of the Climate Pledge announced Monday a total of 86 new signatories, bringing the total number of companies involved to 201. The new commitments come as the United Nations General Assembly kicks off in New York City, with climate change talks expected to take center stage among the high-profile meeting of world leaders.

It also comes in the wake of a recent report from a U.N. panel — that U.N. Secretary-General António Guterres called a “code red for humanity” — warning of dire environmental consequences if immediate action is not taken to cut back greenhouse gas emissions.

ASOS, Nespresso and Selfridges are among some of the other household names who joined the pledge Monday. Altogether, pledge signatories employ more than 7 million employees across 26 industries in 21 countries.

“I believe that now, more than ever, companies like Amazon have an obligation to lead the fight for our planet,” Andy Jassy, Amazon’s CEO, said in a statement Monday.

“But, solving this challenge cannot be accomplished by one company; it requires all of us to act together, and it’s one of the reasons we’re so excited to announce that more than 200 businesses have joined us in signing The Climate Pledge — a commitment to reach the goals of the Paris Agreement 10 years early,” Jassy added.

David S. Taylor, Procter & Gamble’s CEO and president, echoed Jassy’s sentiments in a separate statement, saying that addressing climate change effectively, “requires collaboration across industries and credible science-based actions.”

“P&G has made significant progress over the past decade and we know we must do more,” Taylor added. “The task ahead is urgent, difficult, and much bigger than any single company can solve alone. P&G is proud to join The Climate Pledge as we work together to preserve our shared home for generations to come.”

If all of the firms followed through on their promise, they would collectively mitigate some 1.98 billion metric tons of carbon emissions by 2040, according to an estimate from initiative organizers, or 5.4% of the current global annual emissions.

The firms have committed to measuring and reporting their greenhouse gas emissions on a regular basis, implement decarbonization strategies in line with the Paris Agreement’s goalposts, and neutralize any remaining emissions with additional and quantifiable offsets.

A report issued last month by a U.N. panel that warned that the impacts of human-caused climate change are severe and widespread — and that while there is still a chance to limit that warming, some impacts will continue to be felt for centuries.

The report from the U.N.’s Intergovernmental Panel on Climate Change called for “immediate, rapid and large-scale reductions in greenhouse gas emissions” in order to limit future warming to 2 degrees Celsius over pre-industrial levels, as is the goal of the Paris Agreement by 2050. The report also warned that unless greenhouse gas emissions are drastically reduced, the world will exceed 1.5 degrees of warming in the next 20 years.

When calling the report a “code red,” U.N. Secretary-General António Guterres added that, “The alarm bells are deafening, and the evidence is irrefutable: greenhouse‑gas emissions from fossil-fuel burning and deforestation are choking our planet and putting billions of people at immediate risk.”

Jeff Bezos, Amazon’s then-CEO, announced the Climate Pledge and the company’s plan to commit to net-zero carbon emissions by 2040 — a decade ahead of the international Paris Agreement — in 2019. At the time, Bezos said that if Amazon “can meet the Paris Agreement 10 years early, then any company can.”

Christiana Figueres, the U.N.’s former climate chief and now founding partner of Global Optimism — the advocacy group spearheading the Climate Pledge with Amazon — said in a statement Monday that the IPCC report is the starkest warning yet that “the window of time to act decisively is narrowing.”

“This wake-up call from science must be faced with courage and conviction,” she added. “In this light, it’s encouraging that 86 more companies — some of the largest household names in the world — are now joining The Climate Pledge, committing to accelerate their actions to tackle climate change in a timely fashion, and playing their part in building a low-carbon economy.”

The private sector has faced immense pressure from consumers and even shareholders in recent years to address climate change. “Industry” accounted for a whopping 23% of greenhouse gas emissions in 2019, according to the U.S. Environmental Protection Agency, behind only transportation (29%) and electricity production (25%) — data some advocates say highlights the need for large-scale industry changes vs. putting the onus to tackle climate change solely on individuals.

Copyright © 2021, ABC Audio. All rights reserved.

Statue of Bitcoin founder honors mysterious ‘god’ of cryptocurrency

Vertigo3d/iStock

(BUDAPEST, Hungary) — Cryptocurrency enthusiasts unveiled what they say is the world’s first statue of mystery-shrouded Bitcoin creator Satoshi Nakamoto, at a park in Budapest, Hungary.

The expressionless, ultra-shiny bust is meant to represent “a general human figure, since we do not know the gender, race, age [or] height of the mysterious developer,” the creators of the project wrote on a website set up for the statue’s debut.

The creation of the monument to the digital currency legend was led by Andras Gyofi, the editor of a Hungarian cryptocurrency news site, as well as other key players in the Central European nation’s digital currency space.

The statue features a hoodie-clad figure constructed of bronze, but the face features a special bronze-aluminum composite so “every visitor can see their own face when looking at Satoshi,” the project organizers wrote. The art was the work of two Hungarian sculptors, Gergely Reka and Tamas Gilly, who decided to make the reflective face to represent a concept of “We are all Satoshi.”

A global debate has ensued for years as to who the actual person or persons behind the iconic pseudonym is. Despite many people claiming to be Satoshi Nakamoto — and a handful of others being called him by investigative reporters — the actual original author of the whitepaper that launched Bitcoin in 2008 has not been identified.

Given Bitcoin’s meteoric rise over the past decade or so — a single bitcoin worth about $600 five years ago now is worth more than $47,000 — Satoshi Nakamoto may have become a billionaire as cryptocurrency became more mainstream. Earlier this month, El Salvador became the first nation in the world to adopt Bitcoin as legal tender.

The mythic nature of the Bitcoin creator only seems to lend to his revered status among crypto evangelists.

A large crowd turned out to view the unveiling of the statue on Thursday in Graphisoft Park, a business park in Hungary’s capital city. The statue is available for public viewing, free of charge.

The sculpture’s creators look at Bitcoin as “much more” than just a cryptocurrency, and said they sought to honor the “very important legacy” of its creator.

“The underlying technology, blockchain that Satoshi Nakamoto introduced to the world, can truly make our life better,” they wrote on their website. “Transparency, fairness, several other values in numerous fields, this is what blockchain truly means.”

Copyright © 2021, ABC Audio. All rights reserved.

SpaceX successfully launches first all-civilian flight into Earth’s orbit

Eva Marie Uzcategui/Bloomberg via Getty Images

(MERRITT ISLAND, Fla.) — The first all-civilian flight to Earth’s orbit successfully launched Wednesday.

The Falcon 9 rocket took off as scheduled at the start of the five-hour window for launch at 8:02 p.m. ET. It reached orbit about 12 minutes later.

The crew said goodbye to their families, suited up and were driven in Teslas to Kennedy Space Center’s historic pad 39A Wednesday afternoon.

SpaceX’s Inspiration4 mission is the third recent billionaire-backed space launch, but it’s gone where neither Richard Branson nor Jeff Bezos could — into orbit.

SpaceX tweeted at just before 11 p.m. that the crew had reached an orbit of 535 km, or about 363 miles, the farthest any civilian has traveled from Earth.

That is even further than the International Space Station, which orbits at 240 miles.

Commanding the mission is 38-year-old billionaire Jared Isaacman, an experienced pilot. He founded a payment process company called Shift4 Payments and purchased all four seats on the flight for an estimated $220 million.

Isaacman wants this launch to benefit St. Jude Children’s Research Hospital. He has already donated $100 million to the cause.

One seat was reserved for 29-year-old St. Jude ambassador Hayley Arceneaux. Arceneaux is a bone cancer survivor and will be the youngest American to go to space as well as the first pediatric cancer survivor.

The third occupant will be Dr. Sian Proctor, 51, who said she has dreamed of going to space since she was a child. She burst into tears when she heard she was chosen as a member of the Inspiration4 mission.

She will become the fourth Black female American astronaut to travel into space.

The final crew member is Chris Sembroski, 41, an Iraq War veteran and engineer with Lockheed Martin, who won the final seat through a lottery that required a St. Jude donation to enter.

The four will orbit the Earth for three days with no set destination. They said they will conduct some science experiments while on board and auction off items in space for St. Jude.

There is always risk launching into space and coming home. While these passengers have been trained by SpaceX, they are not professional astronauts.

The SpaceX Crew Dragon will also be tested for the first time at this distance.

They cannot go much longer than three days without running low on fuel, food and water. And while past missions could make changes on the return because of bad weather on Earth due to astronauts on board, this ship won’t have quite as much flexibility.

After three days of orbiting Earth, they will prepare to splashdown in the Atlantic Ocean off the coast of Florida late Saturday or early Sunday.

Copyright © 2021, ABC Audio. All rights reserved.

SpaceX successfully launches 1st all-civilian flight into Earth’s orbit

Eva Marie Uzcategui/Bloomberg via Getty Images

(ORLANDO, Fla.) — The first all-civilian flight to Earth’s orbit successful launched Wednesday.

The Inspiration4 rocket took off successfully at the start of the five-hour window for launch at 8:02 p.m. ET. It reached orbit about 12 minutes later.

The crew said goodbye to their families, suited up and were driven in Teslas to Kennedy Space Center’s historic pad 39A Wednesday afternoon.

SpaceX’s Inspiration4 mission is the third recent billionaire-backed space launch, but it’s going where neither Richard Branson nor Jeff Bezos could — into orbit.

If successful, the crew on Inspiration4 will reach the farthest any civilian has traveled from Earth. They will orbit 360 miles above the Earth, even further than the International Space Station, which orbits at 240 miles.

Commanding the mission is 38-year-old billionaire Jared Isaacman, an experienced pilot. He founded a payment process company called Shift4 Payments and purchased all four seats on the flight for an estimated $220 million.

Isaacman wants this launch to benefit St. Jude Children’s Research Hospital. He has already donated $100 million to the cause.

One seat was reserved for 29-year-old St. Jude ambassador Hayley Arceneaux. Arceneaux is a bone cancer survivor and will be the youngest American to go to space as well as the first pediatric cancer survivor.

The third occupant will be Dr. Sian Proctor, 51, who said she has dreamed of going to space since she was a child. She burst into tears when she heard she was chosen as a member of the Inspiration4 mission.

She will become the fourth Black female American astronaut to travel into space.

The final crew member is Chris Sembroski, 41, an Iraq War veteran and engineer with Lockheed Martin, who won the final seat through a lottery that required a St. Jude donation to enter.

The four will orbit the Earth for three days with no set destination. They said they will conduct some science experiments while on board and auction off items in space for St. Jude.

There is always risk launching into space and coming home. While these passengers have been trained by SpaceX, they are not professional astronauts.

The SpaceX Crew Dragon will also be tested for the first time at this distance.

They cannot go much longer than three days without running low on fuel, food and water. And while past missions could make changes on the return because of bad weather on Earth due to astronauts on board, this ship won’t have quite as much flexibility.

After three days of orbiting Earth, they will prepare to splashdown in the Atlantic Ocean off the coast of Florida late Saturday or early Sunday.

Copyright © 2021, ABC Audio. All rights reserved.

SpaceX set to launch 1st all-civilian flight to Earth’s orbit

Eva Marie Uzcategui/Bloomberg via Getty Images

(ORLANDO, Fla.) — The first all-civilian flight to Earth’s orbit is set to launch Wednesday.

The Inspiration4 crew said goodbye to their families, suited up and were driven in Teslas to Kennedy Space Center’s historic pad 39A Wednesday afternoon, ahead of a five-hour window for launch beginning at 8:02 p.m. ET for SpaceX’s Falcon 9 rocket.

SpaceX’s Inspiration4 mission is the third recent billionaire-backed space launch, but it’s going where neither Richard Branson nor Jeff Bezos could — into orbit.

If successful, the crew on Inspiration4 will reach the farthest any civilian has traveled from Earth. They will orbit 360 miles above the Earth, even further than the International Space Station, which orbits at 240 miles.

Commanding the mission is 38-year-old billionaire Jared Isaacman, an experienced pilot. He founded a payment process company called Shift4 Payments and purchased all four seats on the flight for an estimated $220 million.

Isaacman wants this launch to benefit St. Jude Children’s Research Hospital. He has already donated $100 million to the cause.

One seat was reserved for 29-year-old St. Jude ambassador Hayley Arceneaux. Arceneaux is a bone cancer survivor and will be the youngest American to go to space as well as the first pediatric cancer survivor.

The third occupant will be Dr. Sian Proctor, 51, who said she has dreamed of going to space since she was a child. She burst into tears when she heard she was chosen as a member of the Inspiration4 mission.

She will become the fourth Black female American astronaut to travel into space.

The final crew member is Chris Sembroski, 41, an Iraq War veteran and engineer with Lockheed Martin, who won the final seat through a lottery that required a St. Jude donation to enter.

The four will orbit the Earth for three days with no set destination. They said they will conduct some science experiments while on board and auction off items in space for St. Jude.

There is always risk launching into space and coming home. While these passengers have been trained by SpaceX, they are not professional astronauts.

The SpaceX Crew Dragon will also be tested for the first time at this distance.

They cannot go much longer than three days without running low on fuel, food and water. And while past missions could make changes on the return because of bad weather on Earth due to astronauts on board, this ship won’t have quite as much flexibility.

After three days of orbiting Earth, they will prepare to splashdown in the Atlantic Ocean off the coast of Florida late Saturday or early Sunday.

Copyright © 2021, ABC Audio. All rights reserved.

Walmart partnering with Ford, Argo AI to test self-driving delivery vehicles

Ford Motor Company

(NEW YORK) — Walmart on Wednesday announced plans to launch a new delivery service using self-driving vehicles in three U.S. cities, with autonomous test vehicles expected to hit the streets later this year.

The world’s largest retailer is partnering with Ford and Argo AI, an autonomous vehicle tech firm headquartered in Pittsburgh, to launch the driverless delivery services in Miami, Washington, D.C., and Austin, Texas. The group said it expects to expand to other markets over time, and initial integration testing of the vehicles to begin within months.

The partnership comes as demand for delivery goods has been accelerated by the onset of the COVID-19 pandemic, and as Americans’ intrigue in self-driving technology continues to make headlines and propel forward the emerging technology.

“This collaboration will further our mission to get products to the homes of our customers with unparalleled speed and ease, and in turn, will continue to pave the way for autonomous delivery,” Tom Ward, senior vice president of last-mile delivery at Walmart U.S., said in a statement.

By working directly with Ford, Argo AI and Walmart will be able to implement the technology with vehicles at scale. As customer demand for next-day and same-day delivery in urban areas rises, both for groceries and other goods, the collaboration also will help the companies collect data on how customers respond to autonomous technology.

“Argo and Ford are aggressively preparing for large-scale autonomous vehicle operations across a broad footprint of U.S. cities,” Scott Griffith, CEO of Ford Autonomous Vehicles & Mobility Businesses, added in a statement. “Pairing Walmart’s retail and e-commerce leadership with Argo and Ford’s self-driving operations across these multiple cities marks a significant step toward scaling a commercial goods delivery service.”

As e-commerce booms in the U.S., many retailers are facing increased pressure to speed up delivery times in order to compete with behemoths like Amazon that offer same-day delivery in many urban areas. Meanwhile, firms like Tesla and its eccentric CEO Elon Musk have pushed self-driving technology mainstream in recent years, but controversies and investigations have delayed the large-scale adoption of autonomous vehicles despite Musk’s past timelines for it.

Earlier this year, pizza delivery giant Domino’s announced it was partnering with autonomous driving firm Nuro to launch driverless pizza delivery out of a store in Houston. Late last year, Alphabet Inc.’s Waymo launched self-driving ride-hailing services in parts of Phoenix to the public after some two years of testing.

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Citing human rights risks, UN calls for ban on certain AI tech until safeguards are set up

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(NEW YORK) — The United Nations Human Rights chief on Wednesday called for a moratorium on the sale of and use of artificial intelligence technology that poses human rights risks — including the state use of facial recognition software — until adequate safeguards are put in place.

The plea comes as artificial intelligence develops at a rapid clip, despite myriad concerns ranging from privacy to racial bias plaguing the emerging technology.

“Artificial intelligence can be a force for good, helping societies overcome some of the great challenges of our times. But AI technologies can have negative, even catastrophic, effects if they are used without sufficient regard to how they affect people’s human rights,” U.N. High Commissioner for Human Rights Michelle Bachelet said in a statement Wednesday.

Bachelet’s warnings accompany a report released by the U.N. Human Rights Office analyzing how artificial intelligence systems affect people’s right to privacy — as well as rights to health, education, freedom of movement and more.

“Artificial intelligence now reaches into almost every corner of our physical and mental lives and even emotional states,” Bachelet added. “AI systems are used to determine who gets public services, decide who has a chance to be recruited for a job, and of course they affect what information people see and can share online.”

The report warns of the dangers of implementing the technology without due diligence, citing cases of people being wrongly arrested because of flawed facial recognition tech or being denied social security benefits because of the mistakes made by these tools.

While the report did not cite specific software, it called for countries to ban any AI applications that “cannot be operated in compliance with international human rights law.” More specifically, the report called for a moratorium on the use of remote biometric recognition technologies in public spaces — at least until authorities can demonstrate compliance with privacy and data protection standards and the absence of discriminatory or accuracy issues.

The report also slammed the lack of transparency around the implementation of many AI systems, and how their reliance on large data sets can result in people’s data being collected and analyzed in opaque ways as well as result in faulty or discriminatory decisions. The long-term storage of data and how it could be used in the future is also unknown and a cause for concern, according to the report.

“Given the rapid and continuous growth of AI, filling the immense accountability gap in how data is collected, stored, shared and used is one of the most urgent human rights questions we face,” Bachelet said.

“We cannot afford to continue playing catch-up regarding AI — allowing its use with limited or no boundaries or oversight, and dealing with the almost inevitable human rights consequences after the fact,” Bachelet said, calling for immediate action to put “human rights guardrails on the use of AI.”

Digital rights advocacy groups welcomed the recommendations from the international body, especially as many nations lag in implementing federal laws surrounding artificial intelligence.

Evan Greer, the director of the nonprofit advocacy group Fight for the Future, told ABC News that the report further proves the “existential threat” posed by this emerging technology.

“This report echoes the growing consensus among technology and human rights experts around the world: artificial intelligence powered surveillance systems like facial recognition pose an existential threat to the future [of] human liberty,” Greer told ABC News. “Like nuclear or biological weapons, technology like this has such an enormous potential for harm that it cannot be effectively regulated, it must be banned.”

“Facial recognition and other discriminatory uses of artificial intelligence can do immense harm whether they’re deployed by governments or private entities like corporations,” Greer added. “We agree with the UN report’s conclusion: there should be an immediate, worldwide moratorium on the sale of facial recognition surveillance technology and other harmful AI systems.”

Multiple studies have indicated that facial recognition technologies powered by artificial intelligence have the potential of racial bias and false negatives. Just last summer, a Black man in Michigan was wrongfully arrested and detained after facial recognition technology incorrectly identified him as a shoplifting suspect.

A sweeping 2019 study from the U.S. Department of Commerce’s National Institute of Standards and Technology found a majority of facial recognition software on the market had higher rates of false positive matches for Asian and Black faces compared to white faces. A separate 2019 study from the U.K. found that 81% of suspects flagged by the facial recognition technology used by London’s Metropolitan Police force were innocent.

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