TheChek News Flow

Arson that left parts of German capital without electricity for days highlights poor energy infrastructure

An arson attack that left parts of Berlin without power for days in freezing temperatures has shaken residents and sparked a debate about the resilience of Germany’s energy infrastructure.

Last Saturday, 45,000 households and 2,200 businesses in affluent south-western districts of the German capital — as well as several hospitals and nursing homes — woke up without electricity, heating or mobile phone service.

Investigators are still working to establish who was responsible for the deliberate fire, which damaged several high-voltage cables running over a canal near a power plant.

Activists purporting to be from a leftwing anti capitalist organisation called Volcano group initially claimed responsibility. But subsequently others who said they were the authentic Volcano group denied involvement.

Germans have grown accustomed to increased sabotage in recent years — which Chancellor Friedrich Merz has mostly attributed to Russian hybrid warfare — but Saturday’s incident caused unprecedented disruption.

As night fell, plunging homes and snow-blanketed streets into darkness, authorities said it would take six days to fully restore power, confronting Germany with its longest outage since the second world war — and a sudden sense of fragility.

By Wednesday, power was finally restored. The country’s ageing energy infrastructure is set to be upgraded after two decades of under-investment, but the blackout has exposed the country’s lack of readiness for such an attack.

“If a group of German anarchists can be that disruptive, imagine what foreign secret services can do,” said Alexandra Prokopenko, a Berlin-based research fellow at US think-tank Carnegie Endowment for International Peace, who was among those affected.

It has also highlighted a degree of bureaucratic inertia and unpreparedness. Berlin’s Christian Democrat Union mayor Kai Wegner, who leads a coalition with the Social Democrats, only visited the affected areas 24 hours after the attack. Wegner, who hails from Merz’s party, later admitted he played tennis on the first day of the outage.

The city waited until Sunday to declare a state of emergency, while some residents in unaffected areas received an “extreme danger” alert on their phone on Wednesday.

The electricity network operator said on Saturday that it was searching for specialist staff to carry out “a complex operation”.

Manuel Atug, an expert in cyber security and critical infrastructure, said the handling of the crisis was “catastrophic”, adding that politicians were seeking to divert attention by focusing on the perpetrators.

“Obviously not all German municipalities take emergency management, crisis management and civil protection seriously and don’t learn from previous incidents,” he added.

Berlin’s grid lacks backup lines to reroute power, a well-known weakness that authorities failed to address, he said. Some cables laid out three or four decades ago need modernising and spare parts for them are no longer available, he added.

Berlin’s interior minister, Iris Spranger, defended the city’s management, saying that it acted quickly and that it had addressed some of the network’s shortcomings.

The Volcano group has allegedly targeted Germany’s grid, radio masts and railway lines since 2011. In 2024, the group was linked to an arson on a pylon near Tesla’s plant outside Berlin, forcing the US carmaker to suspend production for several days.

Anonymous people claiming to be the authentic Volcano group on Wednesday denied involvement in the latest arson attack, saying the organisation had halted such actions after Russia’s 2014 annexation of Crimea.

German intelligence services are still investigating whether the group was behind the arson and have not ruled out a foreign power’s involvement, according to a government insider.

Merz’s interior minister Alexander Dobrindt was quick to declare that “leftwing terrorism is back in Germany with increasing intensity”.

Peter Neumann, a security professor at King's College London, said that the ideology of groups like Volcano is rooted in “various crisis narratives — climate crisis, capitalism critique, technology scepticism and rejection of the state”.

This means they see sabotage ‘‘as a politically legitimate means to accelerate the supposed decline of the existing system”, he added.

In affected areas, the outage exposed social divides as the better off living in villas near some of the prettiest lakes surrounding the capital decamped to hotels and temporary apartments.

Well-known figures in Berlin society were hit, including former ambassador to the US Wolfgang Ischinger. Now chair of the Munich Security Conference, Ischinger complained on X that “instead of planting trees”, the city and federal government should use state infrastructure funds to prevent “one sabotage team” from “shutting down the entire capital’’.

A senior executive at a US company told the Financial Times he dusted off an old radio to keep up with the news. He admitted he was glad he still owned a diesel car: his electric vehicle was trapped in the garage behind an electrically operated door. On Wednesday, he was relieved to see his heat pump restarted without issue.

Others struggled more. Prokopenko found friends willing to host her, and on Tuesday took her cats with her as temperatures descended below 11 degrees in her flat. Contacted by phone, she laughed about the alerts she received on her phone the first day, which included links to websites that were impossible to access without the internet. “But nothing on my mailbox,” she noted.

At Zehlendorf town hall, which was turned into an emergency shelter with makeshift beds, hot meals and charging points for phones, residents of the borough with nowhere else to go were in disbelief.

Joachim Schönleiter, a 98-year-old pensioner who lives alone, recalled being captured by Soviet troops during the second world war. “There are extremists everywhere,” he said on Monday.

Sabine, a 65-year-old office worker on sick leave and walking on crutches, said she suspected Russia might be responsible. “I was afraid even to drink tap water,” she said. “I am not the only one thinking this.”

Natalia Stepanenko, a 55-year old Ukrainian accountant working from home with her son, said the outage brought back memories of her war-stricken hometown of Dnipro.

Meanwhile Emilia von Fumetti, 23, and Trille Schünke, 37 — both volunteers and members of the leftwing Die Linke party — said the attackers gave their ideology a bad name.

This type of attack “affects vulnerable groups the most”, von Fumetti said. “The wealthy this is supposed to target are well provided for. They have cars, they can stay in hotels, they can buy supplies. It’s hitting the wrong people — full stop.”

Stablecoins could shake up global payments — but not with technology

Fintechs have touted stablecoins as a way to revolutionise international transfers

Stablecoins, like the broader cryptocurrency industry, have often been dismissed as a solution in search of a problem. That’s a bit unfair, though. When it comes to high-cost cross-border payments, crypto fans have actually identified a problem where stablecoins could be helpful — just not for the reasons some cheerleaders think.

Stablecoins are a type of digital currency that runs on a blockchain, as bitcoin does, but whose value is pegged against a regular currency. Fintechs and mainstream banks have touted them as a way to revolutionise international transfers, particularly in the US. Stripe and PayPal are enthusiasts; so are Bank of America and JPMorgan, participants in the Zelle bank-to-bank payments network.

Globally, the average price of sending a $200 remittance is more than 6 per cent of the transaction value, according to the World Bank. Businesses too get saddled with high fees. Stablecoin evangelists reckon they can slash those rates by using better technology and cutting out intermediaries.

The market is so huge that even taking a small fee for facilitating transfers quickly adds up. Estimates of the annual value of cross-border payments range from the extremely large — about $200tn, according to FXC Intelligence — to the mind-boggling — one quadrillion dollars, according to a recent IMF paper. That’s 15 zeros, for anyone unfamiliar.

Yet several fintechs have already proven it is possible to slash payment costs without inventing a whole new — energy-intensive — technology. London-listed Wise, for example, moved £85bn across borders in the six months to September, charging an average rate of just over 0.5 per cent.

Wise says it’s agnostic about the type of technology it uses, and would happily use stablecoins if they made transfers cheaper. So far, it remains unconvinced. Its costs are driven as much by keeping up with anti-money laundering rules and other regulations as they are by challenges relating to software and systems.

This is probably the biggest challenge for stablecoins. By rights, they should face at least some of the regulatory costs currently borne by the companies and platforms they are trying to usurp, which would limit their ability to beat their predecessors when it comes to conversion spreads and other fees.

Users of Coinbase’s “advanced” service, for example, could buy and transfer Circle’s USDC coin very cheaply, at least in developed-market currencies. But a newly signed-up user of its default service would pay a 0.5 per cent foreign exchange spread, plus a transfer fee to send the money to another account. The recipient may pay again to convert it back into fiat currency.

That’s not to say stablecoins don’t have a role in upgrading the financial system. One reason international payments have historically been so expensive is that customers are confronted with an oligopoly. While choice was limited to a few large banks and specialists like Western Union, providers could get away with charging high opaque fees.

Entrants like Wise and Revolut in the UK have already forced mainstream banks to respond by lowering their own charges. A flood of new players in the US and elsewhere could do the same. The technology underpinning stablecoins is clever, for sure, but the real game-changer could simply be good old-fashioned competition.

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Obesity drug users will regain weight two years after ending medication, review finds

Experts say health authorities need plans to deal with people coming off medicines such as Ozempic and Wegovy

People who stop taking anti-obesity drugs will within two years return to their original weight and forfeit benefits to the heart, cholesterol levels and blood pressure, according to projections based on a wide-ranging research review.

The findings add to evidence of difficulties in sustaining the significant weight loss and associated health advantages many people achieve while they use drugs such as Ozempic, Wegovy and Mounjaro.

Experts warn that health authorities need plans to deal with millions of users who will come off the popular medicines during the coming years.

“What we’ve shown in this particular piece of analysis is that weight regain after medication is common and is rapid,” said Susan Jebb, a co-author of the research and a public health nutrition scientist at Oxford university.

“Obesity is a chronic relapsing condition and it’s very clear that . . . some sort of intervention needs to continue if we’re going to sustain the benefits of these treatments.”

Researchers behind the paper published in the BMJ late on Wednesday analysed data from more than 9,000 people from 37 studies that examined the effects of ceasing the drugs. On average, the participants took the medicines for 39 weeks and provided follow-up data for 32. The scientists extrapolated from the studies to forecast what would have happened after a further lapse of time.

They found that on average people lost 8.3kg during treatment but were on course to return to their original weight fewer than 21 months after stopping.

Beneficial effects on the heart, cholesterol levels and blood pressure for participants who took the medicines were projected to disappear within 18 months.

The rates of both weight loss and regain were much faster than for people who took courses focused on changing behaviour.

The scientists acknowledged limitations in their work including that almost a third of the trials they surveyed had a high risk of bias. The populations in the drug and behavioural treatment programmes might have differed in potentially important ways, such as the degree of obesity and incidence of comorbidities, they added.

Experts not involved in the work said it was consistent with emerging thinking about the medicines’ strengths and limitations.

The research highlighted the challenge of maintaining weight loss for the “massive wave of people who will likely be coming off these drugs in the coming months and years”, said Adam Collins, associate professor of nutrition at the University of Surrey.

Naveed Sattar, a professor of cardiometabolic medicine at the University of Glasgow, stressed weight loss medicines were “essential” for many people who had very high body mass indices.

“This paper cannot yet tell us whether short-term use offers lasting benefits for organs, but it’s plausible that being lighter for even two or three years due to short-term use of the medicines could help slow damage to joints or hearts and kidneys,” Sattar said. 

Weight-loss drug users may be vulnerable to nutritional deficiencies and muscle loss because they do not receive sufficient guidance on diet, according to a separate paper published in Obesity Reviews on Thursday.

Evidence suggests as much as 40 per cent of weight lost using the medicines can be lean body mass, including muscle, said the researchers from the UK’s UCL and the University of Cambridge.

The UK National Health Service’s obesity drug treatments include programmes to ensure a balanced diet and increased physical activity. But the vast majority of users buy the medicines privately and often do not receive such support. 

“If nutritional care is not integrated alongside treatment, there’s a risk of replacing one set of health problems with another, through preventable nutritional deficiencies and largely avoidable loss of muscle mass,” said Marie Spreckley, a Cambridge university scientist who led the research.

The Oracle of London?

With Warren Buffett “going quiet” after six decades at the helm of Berkshire Hathaway, he’s left a void for a steady leader to guide investors through the frenetic world of crypto, meme stocks and financial short-termism.

The UK’s Chris Hohn has entered the frame.

“They say there’s no free lunch in finance, but actually, I do think long-termism in a great company is a free lunch”, Hohn said last year.

His hedge fund TCI’s returns are backing him up.

TCI surged 27 per cent last year after it profited from big bets on the aerospace sector, cementing Hohn’s place as one of the world’s best-performing hedge fund managers.

Hohn is known for his fearsome activist campaigns against companies including Airbus, Alphabet and the London Stock Exchange Group, but also for buying and holding companies that he sees as having powerful competitive advantages against rivals.

TCI managed just under $80bn at the start of this year. Some of its holdings massively outperformed in 2025: GE Aerospace stock surged 90 per cent, Safran increased 45 per cent and Airbus gained more than 30 per cent.

The S&P 500 climbed 16 per cent last year while the Stoxx Europe 600, the region’s benchmark index, gained almost 17 per cent.

Of course, Buffett wasn’t just the world’s most famous investor. His annual letters also offered life and business advice.

While Hohn may not have built Buffett’s loyal following yet, he’s sought to leave his mark.

Hohn’s been a longtime advocate for climate action and donated to green protest groups such as Extinction Rebellion.

And TCI’s accounts show the group made a $797mn charitable donation last year, confirming Hohn as one of the UK’s biggest donors.

Data group forecasts deficit of 10mn tonnes by 2040, equivalent to nearly one-third of current global demand

The world is on track for a copper shortage that would pose a “systemic risk” to global economic growth, driven by the energy transition and the booming artificial intelligence sector’s demand for the red metal, according to S&P Global.

The looming deficit is forecast to reach 10mn tonnes — equivalent to almost one-third of current global demand — by 2040, in the absence of a “meaningful expansion of supply”, said the data group in a report on Thursday. 

This constitutes a “systemic risk for global industries, technological advancement and economic growth”, it warned.

Copper, which has hit a series of record highs since October amid a broad surge in metals prices, is increasingly in demand, including for the construction of AI data centres and to build the grid infrastructure to power these facilities and the green transition. A meaningful shortage of the metal is seen by analysts as likely to threaten the growth of both sectors.

“Copper is the great enabler of electrification, but the accelerating pace of electrification is an increasing challenge for copper,” said Daniel Yergin, vice-chair of S&P Global, who co-chaired the study.

“At stake is whether copper remains an enabler of progress or becomes a bottleneck to growth and innovation,” he added.

The price of copper has surged from just over $8,000 per tonne in April to more than $13,000, driven by concerns over disruptions at major mines and tariffs. Among other metals, gold and silver have hit record highs in recent weeks, while nickel is up by more than one-quarter since mid-December and this month reached its highest level since mid 2024.

On current trends, global copper production will peak in 2030 before falling again even as demand continues to rise, said S&P. Many copper mines are ageing and becoming less productive, and it can take years and huge investment to find and open new facilities. 

S&P expects a “transformative” increase in global copper demand, which it forecasts will rise from 28mn tonnes last year to 42mn in 2040. Asia is expected to account for 60 per cent of demand growth over that period, driven by factors such as the swift adoption in the region of electric vehicles and upgrading the power grid to increase capacity and tap renewables.

Meanwhile, demand for copper for data centres — including for AI and robotics — could rise from around 1.1mn tonnes in 2025 to 2.5mn tonnes by 2040, said S&P. “Access to copper is critical for the AI boom to take off and for the data centre build-out to occur,” it added.

As the development of AI becomes a “national security issue” for the US and China, “it’s going to be an absolute requirement that they can make the investments in electrification, and with that the copper that’s necessary to be able to sustain that supply”, said Carlos Pascual, senior vice-president of geopolitics and international affairs at S&P Global Energy.

“The challenges are going to be who can actually gain that access to electricity, at what cost,” he added.

Prolonged shortages of commodities are rare, as they typically push up prices, which can weigh on demand, push buyers to look for substitutes or incentivise new production.

The looming shortfall takes into account growth in copper scrap recycling, which could see global production of 10mn tonnes by 2040, said the report. As such, closing the gap will require a “concerted effort” to increase mined supply from 23mn tonnes in 2025 to at least 32mn by 2040, it said.

Bank mergers again

A few days ago, I wrote about how consolidation would be good for the US banking industry. In a business where economies of scale are important, fixed costs are high and where competition from non-banks is increasing, “join or die” is only a slightly exaggerated motto for regional banks. And US bank regulators appointed by Trump have signalled their willingness to wave acquisitions through quickly. Properly executed, consolidation might help end years of unhappiness for regional bank investors:

“Properly executed” is the critical phrase there. As we noted, the last regional bank megadeal, which fused BB&T and SunTrust into Truist, has not worked at all well. The stock is flat since the merger was announced in early 2019: 

So the question is, what is the right way to consolidate? In the earlier piece, I noted how one problem was some regional bank bosses’ unwillingness to sell and give up their cushy perch. But, having spoken to several industry insiders, it seems that is only half the problem. Many bank CEOs and boards are too keen to do acquisitions and end up either paying too much, or buying the wrong things. It is easy to see how the two problems would feed off each other: unwillingness to sell reduces the number of sensible targets, which drives hungry acquirers into worse deals. 

Leaders of acquiring banks are tempted to do bad deals because running a big bank pays better than running a small bank. Here is a chart from Barclays showing the correlation between bank assets and CEO pay:

So there is an incentive to accumulate assets, and acquisitions are a fast way to do that. But acquisitions have to be paid for, and the standard acquisition currency is newly issued shares of the acquirer. If the value paid for the target bank, in terms of the net asset or “book” value of each acquirer share, is higher than the value of the acquiring bank, the result is a bigger bank, each share of which is worth less (in the jargon, this is “tangible book value dilution”). The CEO wins; investors lose.

Buyers promise that taking out redundant costs will increase earnings, so their per-share value will recover in a few years. Sometimes this happens; more often it does not. HoldCo Asset Management, an activist investment house specialising in banks, has come to prominence lately for urging Comerica to sell itself to Fifth Third. But more often, rather than pushing banks to sell, HoldCo pushes banks to stop buying. Last year, for example, it urged the leadership of Columbia Banking System to “swear[] off any and all future acquisitions” and “publicly express [the] intention to use all excess capital . . . above its target capital ratios to buy back shares”.

It is not just tangible book dilution that makes good deals scarce. Another problem pointed out by HoldCo in its activist campaign slide decks is the cost of deposits. Too often, buyers pay up to buy another bank and its deposits, when the cost of the acquired deposits is higher than the buyer’s own. This increases assets but compresses profitability.

Once these and other financial hazards are overcome there is the hard work of integrating two banks’ cultures and technology systems, and the pain of firing a lot of people. Truist employed 38,000 people as of a year ago; that is 20,000 fewer than BB&T and SunTrust combined employed at the end of 2018. And integration, rather than financial mechanics, is where the Truist deal appears to have come to grief. Ebrahim Poonawala, bank analyst at Bank of America, told me that “in hindsight, the two banks had very different cultures”. In the hurly-burly of integration, lots of good bankers left and Truist lost market share in both loans and deposits to competitors. It is hard to see how much corporate cultures matter until you try to mix two of them. 

The more I think about bank mergers, in short, the harder they look. But the industrial logic remains, the regulatory window will be open for at least a few more years and the economic backdrop is solid. As this chart from Bank of America shows, bank M&A picked up in 2025, and Poonawalla expects it to do so again in 2026:

More bank consolidation is needed, and more bank mergers seem likely. It is less clear whether the deals will make shareholders, and not just bankers, any richer.