Rain ruins one of Norway’s richest men

Einar Aas bet that the spread between energy prices on the Nordic and German electricity markets would narrow, but heavy rains proceeded to fill the reservoirs of hydroelectric dams across northern Europe. Above, rainfall in the Telemark region of Norway. (Wikimedia Commons)
Updated 14 September 2018
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Rain ruins one of Norway’s richest men

  • Taking aggressive positions, Aas bet that the spread between energy prices on the Nordic and German electricity markets would narrow
  • However, the spread between the two markets grew bigger than ever — up to 17 times the normal position

OSLO: He built his fortune on dizzying forecasts but rain washed it all away: Einar Aas, one of Norway’s richest men, is now teetering on the verge of bankruptcy after betting the wrong way on the energy market.
A media-shy private trader, Aas made headlines on Friday in Norway and beyond, his misfortunes uncannily coinciding with the 10th anniversary of the collapse of US investment bank Lehman Brothers.
The 47-year-old power trader said in a statement late Thursday he was now risking “personal bankruptcy.”
Taking aggressive positions, Aas bet that the spread between energy prices on the Nordic and German electricity markets would narrow.
But, after an unusually dry summer, heavy rains earlier this week filled the reservoirs of hydroelectric dams that provide much of northern Europe’s electricity, sending prices tumbling.
At the same time, a rise in carbon prices pushed up the German cost of electricity, which is largely fossil fuel-based.
As a result, the spread between the two markets grew bigger than ever — up to 17 times the normal spread, according to the Financial Times.
Aas used his last remaining liquidity — 350 million kroner (36 million euros, $42.5 million) — to cover his positions, but still found himself in default of payment.
“I had positions that were too high compared to the liquidity on the market,” he said on Thursday.
It was a brutal fall from grace for the man born on a farm in the southern town of Grimstad and who has several times topped the list of Norway’s highest earners.
The former Agder Energi trader, who left the company to go private in 2005, made a mind-boggling 833 million kroner in taxable income in 2016, according to tax figures, which are public in the Scandinavian country.
This amounted to an hourly income of 95,000 kroner, taking his personal fortune to an estimated 2.17 billion kroner.
Described in the Norwegian media as a brilliant student who developed a passion for poker and race horse betting at secondary school, he now risks having to sell his luxury real estate digs, including a spectacular 350-square-meter (3,750-square-foot) rooftop apartment in central Oslo.
The exact scope of the damage remains to be determined, but the Norwegian media are already calling it “the biggest loss” ever recorded by a private person in Norway.
The Nasdaq stock exchange is also licking its wounds.
The market operator, which closed and liquidated Aas’ portfolio on Wednesday, said it had “fully contained” the risks.
But Nasdaq was nonetheless left 114 million euros in the hole.
Of that, 107 million came from the mutual default fund clearing house members must contribute to — reportedly two-thirds of the entire fund — and seven million from Nasdaq’s own default fund.
“For an experienced trader, who knows the market like the back of his own hand, to accumulate such an enormous position that he is unable to pull out unscathed is shocking,” Norwegian business daily Dagens Naeringsliv wrote in a comment.
“It is also shocking that Nasdaq allows a single actor to take on a risk that de facto wipes out the default fund as well as its own market capital,” it added.


Will flying cars take off? Japan’s government hopes so

Updated 18 September 2018
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Will flying cars take off? Japan’s government hopes so

  • This vision of the future is driving the Japanese government’s “flying car” project

TOKYO: Electric drones booked through smartphones pick people up from office rooftops, shortening travel time by hours, reducing the need for parking and clearing smog from the air.
This vision of the future is driving the Japanese government’s “flying car” project. Major carrier All Nippon Airways, electronics company NEC Corp. and more than a dozen other companies and academic experts hope to have a road map ready by the year’s end.
“This is such a totally new sector Japan has a good chance for not falling behind,” said Fumiaki Ebihara, the government official in charge of the project.
Nobody believes people are going to be zipping around in flying cars any time soon. Many hurdles remain, such as battery life, the need for regulations and, of course, safety concerns. But dozens of similar projects are popping up around the world. The prototypes so far are less like traditional cars and more like drones big enough to hold people.
A flying car is defined as an aircraft that’s electric, or hybrid electric, with driverless capabilities, that can land and takeoff vertically.
They are often called EVtol, which stands for “electric vertical takeoff and landing” aircraft.
The flying car concepts promise to be better than helicopters, which are expensive to maintain, noisy to fly and require trained pilots, Ebihara and other proponents say.
“You may think of ‘Back to the Future,’ ‘Gundam,’ or ‘Doraemon,’” Ebihara said, referring to vehicles of flight in a Hollywood film and in Japanese cartoons featuring robots. “Up to now, it was just a dream, but with innovations in motors and batteries, it’s time for it to become real.”
Google, drone company Ehang and car manufacturer Geely in China, and Volkswagen AG of Germany have invested in flying car technology.
Nissan Motor Co. and Honda Motor Co. said they had nothing to say about flying cars, but Toyota Motor Corp. recently invested $500 million in working with Uber on self-driving technology for the ride-hailing service. Toyota group companies have also invested 42.5 million yen ($375,000) in a Japanese startup, Cartivator, that is working on a flying car.
The hope is to fly up and light the torch at the 2020 Tokyo Olympics, but it’s unclear it will meet that goal: At a demonstration last year, the device crashed after it rose to slightly higher than eye level. A video of a more recent demonstration suggests it’s now flying more stably, though it’s being tested indoors, unmanned and chained so it won’t fly away.
There are plenty of skeptics.
Elon Musk, chief executive of electric car maker Tesla Inc., says even toy drones are noisy and blow a lot of air, which means anything that would be “1,000 times heavier” isn’t practical.
“If you want a flying car, just put wheels on a helicopter,” he said in a recent interview with podcast host and comedian Joe Rogan on YouTube. “Your neighbors are not going to be happy if you land a flying car in your backyard or on your rooftop.”
Though the Japanese government has resisted Uber’s efforts to offer ride-hailing services in Japan, limiting it to partnerships with taxi companies, it has eagerly embraced the US company’s work on EVtol machines.
Uber says it is considering Tokyo as its first launch city for affordable flights via its UberAir service. It says Los Angeles and Dallas, Texas, and locations in Australia, Brazil, France and India are other possible locations.
Unlike regular airplanes, with their aerodynamic design and two wings, Uber’s “Elevate” structures look like small jets with several propellers on top. The company says it plans flight demonstrations as soon as 2020 and a commercial service by 2023.
Uber’s vision calls for using heliports on rooftops, but new multi-floored construction similar to parking lots for cars will likely be needed to accommodate EVtol aircraft if the service takes off.
Unmanned drones are legal in Japan, the US and other countries, but there are restrictions on where they can be flown and requirements for getting approval in advance. In Japan, drone flyers can be licensed if they take classes. There is no requirement like drivers licenses for cars.
Flying passengers over populated areas would take a quantum leap in technology, overhauling aviation regulations and air traffic safety controls, along with major efforts both to ensure safety and convince people it’s safe.
Uber said at a recent presentation in Tokyo that it envisions a route between the city’s two international airports, among others.
“This is not a rich person’s toy. This is a mass market solution,” said Adam Warmoth, product manager at Uber Elevate.
Concepts for flying cars vary greatly. Some resemble vehicles with several propellers on top while others look more like a boat with a seat over the propellers.
Ebihara, the flying-car chief at the Ministry of Economy, Trade and Industry, says Japan is on board for “Blade Runner” style travel — despite its plentiful, efficient and well developed public transportation.
Japan’s auto and electronics industries have the technology and ability to produce super-light materials that could give the nation an edge in the flying car business, he said.
Just as the automobile vanquished horse-drawn carriages, moving short-distance transport into the air could in theory bring a sea change in how people live, Ebihara said, pointing to the sky outside the ministry building to stress how empty it was compared to the streets below.
Flying also has the allure of a bird’s eye view, the stuff of drone videos increasingly used in filmmaking, tourism promotion and journalism.
Atsushi Taguchi, a “drone grapher,” as specialists in drone video are called, expects test flights can be carried out even if flying cars won’t become a reality for years since the basic technology for stable flying already exists with recent advances in sensors, robotics and digital cameras.
A growing labor shortage in deliveries in Japan is adding to the pressures to realize such technology, though there are risks, said Taguchi, who teaches at the Tokyo film school Digital Hollywood.
The propellers on commercially sold drones today are dangerous, and some of his students have lost fingers with improper flying. The bigger propellers needed for vertical flight would increase the hazards and might need to be covered.
The devices might need parachutes to soften crash landings, or might have to explode into small bits to ensure pieces hitting the ground would be smaller.
“I think one of the biggest hurdles is safety,” said Taguchi. “And anything that flies will by definition crash.”
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