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Trump's controversial Space Force readies for blast off

A closer look at the day's most notable stories with The National's Jonathon Gatehouse.

Newsletter: A closer look at the day's most notable stories

Vice President Mike Pence gestures during an event on the creation of a U.S. Space Force at the Pentagon on Aug. 9, 2018. (The Associated Press/Evan Vucci)

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TODAY:

  • The countdown begins for U.S. President Donald Trump's controversial Space Force.
  • Elon Musk faces mounting pressure for tweeting about taking Tesla private, but funding isn't the only challenge that could stand in his way. 
  • The ongoing Australian drought is causing dire conditions for the country's farmers and things could get worse before they get better.
  • Missed The National last night? Watch it here

To infinity and beyond

Donald Trump is boldly going where no American president could be bothered to go before — militarizing space. 

At the Pentagon Thursday morning, Mike Pence unveiled his boss's plan to create the U.S. Space Force – a sixth "separate from but equal to" branch of America's military.

"The time has come to write the next great chapter in the history of our armed forces," the vice president told an audience of military brass and invited guests. "To prepare for the next battlefield, where America's best and bravest will be called to deter a new generation of threats to our people, our nation."

"America will always seek peace, in space as on the Earth," he added. "But history proves that peace only comes through strength. And in the realm of outer space, the United States Space Force will be that strength."

Breaking with the post-Cold War idea of space as a frontier of cooperation, Pence outlined the Trump administration's vision of a "crowded and adversarial" universe, saying that its "growing security threats" had been neglected for too long. Space, he said is a "war-fighting domain" just like Earth's land, sea and air. 

Thursday's event was the first formal step towards establishing the new military body that Trump unveiled in June.

President Donald Trump points to the sun as he arrives to view the solar eclipse at the White House in Washington on Monday, Aug. 21, 2017. (Andrew Harnik/Associated Press)

The U.S. Department of Defense will now focus on bringing its various space programs under one roof, appointing a four-star general to lead the corps and figuring out how to integrate the new body into its combat commands. Such a project will require both time and new money from Congress, however, and Space Force won't be up and running until 2020.

The plan will also face opposition from within the Pentagon (Defense Secretary Jim Mattis fears the plan will bring added costs and bureaucracy) and from Congress.

But there's at least one big believer.   


Elon Musk listens as Chicago Mayor Rahm Emanuel talks about constructing a high speed transit tunnel at Block 37 during a news conference on June 14, 2018 in Chicago, Illinois. (Joshua Lott/Getty Images)

Elon Musk's big gamble 

Elon Musk is going to have to put his money where his mouth is. 

The Tesla founder has made no secret about his belief that his electric car company is being treated unfairly by big players in the market, calling its shares the "most shorted stock in the history of the stock market" in a letter to employees this week.

But his musings about taking the publicly-traded company private have put him in a real bind.

Musk tweeted on Tuesday afternoon that he was "considering" such a solution and included a price of $420 per share with the words "funding secured."

And whatever wiggle room he might have had disappeared. 

It emerged Wednesday that the U.S. Securities and Exchange Commission is already asking some pointed questions about whether Musk's post violated the law. They want an assurance that the tech entrepreneur's statement was "factual" and are wondering why he chose to make the announcement on social media rather than filing the required formal disclosure. 

Musk's casual approach to such a major financial transaction certainly breaks with tradition – companies usually have such things all tied up in a bow and halt trading prior to making the news public. 

The Tesla CEO maintains that he really does have the funding lined up pending a shareholder vote and the Tesla board has confirmed it was part of the discussions

But a number of questions remain, most notably the one about how he intends to pull it off.

There are about 170 million shares of the car company outstanding. An offer of $420 per share, which is about $60 more than where the stock is trading today, puts the value of the buyback at $71 billion US. Or something closer to $57 billion if you assume that Musk will keep his 20 per cent piece of the company.

Tesla has already taken on a lot of debt and hasn't posted a profit since it went public in 2010. Last year it lost close to $2 billion and burned through another $1.8 billion in cash through the first two quarters of this fiscal year. Therefore it seems unlikely that someone will lend Musk the money, and if such a financing plan is in place, none of the usual players will admit to being involved or knowing anything about it. 

If another company is going to be involved, the list of suspects is pretty short. As this article points out, there are only 11 global firms that have at least $50 billion on hand for such an investment. The richest is Apple — and such a partnership has been rumoured before — but it has been reported that they're not interested this time. Still, Microsoft, Alphabet, Goldman Sachs and a few others have the means to make it happen.

A 2018 Tesla Model 3 electric vehicle is shown in Cardiff, Calif. on June 1, 2018. (Mike Blake/Reuters)

Others are pointing to sovereign wealth funds as the likeliest investor. The Saudis recently took a $2 billion stake in Tesla and have a lot more cash on hand. But Norway's $1.1 trillion US state fund might be a better fit, especially since it is divesting itself of oil and gas stocks and using its muscle to force other partners to go green. Yet the idea of a foreign country buying up such a big chunk of a U.S. tech leader is likely to be controversial and might attract Congressional scrutiny.

The scenario that Musk seems to be hinting at is one where he can keep his biggest investors on board and not have to raise quite so much cash. The top five shareholders and the CEO own 49.9 per cent of the company, which would reduce the amount needed for a buyout to $35 billion.

Musk has also tweeted that he wants to offer his small investors (individual investors hold around 12 per cent of Tesla's stock) the opportunity to stay involved. Although that may also cause trouble with regulators as the SEC mandates that companies with more than 2,000 investors follow public disclosure rules, which would sort of defeat the advantages of going private.

Musk's Tuesday tweet did help his own bottom line, however. When Tesla shares spiked to almost $380 on Wednesday, his net worth increased by $1.4 billion to $25.8 billion.

According to Bloomberg's Billionaire Index, the 47-year-old is the 31st richest person on the planet.


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Farmer May McKeown feeds the remaining cattle on her drought-effected property located on the outskirts of the north-western New South Wales town of Walgett in Australia on July 20, 2018. (Reuters/David Gray)

The land of droughts

Australia's heartland, New South Wales, has been declared 100 per cent drought-stricken as farmers struggle to find ways to feed and water their livestock.

The second-driest fall on record has been followed by a winter with scant rainfall. Sydney's Olympic Park for example, recorded just 3.6 millimetres of precipitation in July instead of the usual 63.5 millimetres. While the National Botanical Gardens in the capital of Canberra had 5.6 millimetres of rain, well below the average of 50.8 millimetres. And the "serious to severe rainfall deficiency" in the state now stretches back 16 months

Until yesterday, some areas along the coast were considered to be in "recovery" but now all 800,000-square-kilometres of New South Wales and 60 per cent of neighbouring Queensland are officially short of water.

On Sunday, Prime Minister Malcolm Turnbull acknowledged the country's "volatile and often capricious climate" as he announced an additional $135 million Cdn in emergency aid for farmers, bringing the total being spent by all levels of government to almost $1.5 billion. 

"We are the land of droughts and flooding rains, we recognize that," he said. "Australian farmers are resilient, they plan for drought, they are good managers but it can become really overwhelming."

But that same day Turnbull found himself doling out hugs to a crying charity worker who broke down while describing the hardship farm families are facing. "It's worse than anything you are seeing in the media, it's far worse," Edwina Robertson told the prime minister. "It's dire."

Frank McRae, the head of the Australian Fodder Industry Association, warned Wednesday that New South Wales had practically run out of animal feed even as prices rose to almost $10,000 a truckload for hay. "There's pretty much virtually nothing in NSW and supplies are rapidly drying up in southern Victoria," McRae told the Australian Broadcasting Company. "You have to go back to 1981-1982 to see a drought this widespread and so severe."

New South Wales, the country's most populous state, also produces about a quarter of Australia's agricultural output. 

As part of drought-relief efforts, farmers are being given special permission to shoot kangaroos that might compete with their livestock for water. "We have kangaroos in plague proportions across NSW now," Niall Blair, the state's primary industries minister said yesterday. Farmers will now be able to get hunting permits online or over the phone instead of in-person and will be exempt from the usual tagging and disposal procedures. 

A truck stirs up dust on a road behind a dam on farmer May McKeown's drought-affected property located on the outskirts of the northwestern New South Wales town of Walgett in Australia, July 19, 2018. (Reuters/David Gray)

The dry and cool conditions have also driven the kangaroos into cities in greater numbers as well. 

Last month, the Canberra Times reported that there had already been 2,300 vehicle collisions involving kangaroos in 2018, not far off the 2,600 in all of 2017. 

Australia's worst modern dry spell remains the "millennium drought," an extended period of below-average rainfall that began in 1997 and finally came to an end in 2005 that devastated 50 per cent of the country's farms and ranches. The culprit then was considered to be two strong El Nino years that warmed the surface of the Pacific Ocean and brought much drier conditions. 

In late June, Australia's Bureau of Meteorology declared an El Nino "watch" for the coming spring, saying that there is a 50 per cent chance of the powerful phenomenon developing this September. 


A few words on …

The death of an unlikely soldier. 


Quote of the moment

"The theatre of the absurd continues. No proofs, no clues, no logic, no presumption of innocence, just highly-likelies. Only one rule: blame everything on Russia, no matter how absurd and fake it is."

-Dmitry Polyanskiy, a Russian representative to the U.N., reacts to news that the United States will impose new sanctions on the Kremlin over the March nerve agent poisoning of former double-agent Sergei Skripal and his daughter.


What The National is reading​

  • Buildings collapse as strong new quake rocks Indonesia, death toll tops 300 (CBC)
  • Saudi-led airstrike in Yemen kills 43, most of them children (BBC)
  • Botched extradition request leaves American sex offender in Canada (CBC)
  • Puerto Rican government admits that 1,427 died from Hurricane Maria (NY Times)
  • Looted Iraqi antiquities return home after UK experts crack cold case (Guardian)
  • Julian Assange considers offer to appear before US Congress (Reuters)
  • Argentina's Senate rejects bill to legalize abortion (CBC)
  • Man quits job to write 'Stop Brexit' across Europe with van and GPS (Irish Times)

Today in history

Aug. 9, 1982: Eaton's axes Santa Claus parade

If you are planning to kill a Christmas tradition, you might as well do it in the dead of summer. Fredrik Eaton blamed the early 1980s recession for his decision to abandon his family department store's downtown Toronto Yule parade after 77 years. But the prospect of disappointing millions of children spurred civic leaders to take over the event. The 114th edition is scheduled for this Nov. 18.

Eaton's axes its 77 year old Santa Claus parade 2:12


That's all for today.

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