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Morning news brief

ROB SCHMITZ, HOST:

The Securities and Exchange Commission has charged the former CEO of the cryptocurrency exchange FTX with violating securities laws. Prosecutors say Sam Bankman-Fried orchestrated a massive yearslong fraud. NPR's David Gura joins us now. David, hello.

DAVID GURA, BYLINE: Hey, Rob.

SCHMITZ: Walk us through this indictment, David. What does the SEC allege?

GURA: Well, prosecutors say that Sam Bankman-Fried, who founded FTX in 2019, was defrauding investors in his company and customers who used the site to buy and sell cryptocurrencies. For years, they allege he was, quote, "diverting billions of dollars of the trading platform's customer funds for his own personal benefit and to help grow his crypto empire." The SEC says Bankman-Fried took customer money and he used it to make investments. He also bought millions of dollars of real estate with it in the Bahamas, where he was based. And he used it to make substantial political donations. You know, at the center of this, Rob, is an extremely cozy relationship between FTX and a trading firm called Alameda Research, which was essentially Bankman-Fried's personal crypto hedge fund. The SEC says he was co-mingling customer funds, using customer money for investments. And when the crypto market soured a few months ago, he used it to plug holes that just kept getting bigger and bigger.

SCHMITZ: This does not sound good. How does this comport with the image that Sam Bankman-Fried projected?

GURA: You know, this is really central to this indictment. SEC Chair Gary Gensler says in a statement, Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto. The SEC alleges Bankman-Fried misled investors about what he was doing, what he wasn't doing and the risk protocols FTX had in place. Prosecutors say Bankman-Fried, quote, "held himself out as a visionary leader in the crypto industry and touted his efforts to create a regulated and thriving crypto asset market." They go on to note he conducted an intensive public relations campaign to brand himself and his companies as honest stewards of crypto, Rob. But the SEC says the reality was very different.

SCHMITZ: And, David, remind us, how did this all come about?

GURA: Well, extremely quickly. Remember, FTX imploded and filed for bankruptcy just one month ago. We learned Bankman-Fried was arrested in the Bahamas at the request of the U.S. government on Monday night. Bahamian police say he was taken into custody without incident at his apartment, and he's scheduled to appear before a judge there today. This is going to be a busy day with the U.S. attorney for the Southern District announcing criminal charges of its own, another indictment from the Commodity Futures Trading Commission. We've known pretty much since FTX imploded that regulators and law enforcement in the U.S. but also in a handful of other countries have been investigating what happened. And FTX's new CEO, who's shepherding it through bankruptcy proceedings, said in a court filing, FDX has been fielding lots of information requests. FTX has more than a million creditors, Rob, and hundreds of millions of dollars have just gone missing.

SCHMITZ: Gosh. What are the implications for the other investigations into FTX?

GURA: Well, the attorney general in the Bahamas is doing his own investigation. FTC's is doing a postmortem. There's been a request in U.S. bankruptcy court for an independent examiner. And then there's Congress. Lawmakers in both the House and the Senate in both parties are digging into this. Bankman-Fried was supposed to appear virtually before the House Financial Services Committee today. Of course, that's now not in the cards. But the chairwoman of that committee said in a statement the hearing is going to go forward as scheduled. The other witness, John Ray, who is FTX's new CEO, is going to testify as planned. And in his testimony, he says basically what we see laid out in this indictment, that FTX was a total mess with no corporate governance. And what he's trying to do with a new executive team and a new independent board is to track down those hundreds of millions I mentioned just a moment ago that have disappeared.

SCHMITZ: NPR's David Gura, thanks.

GURA: Thank you.

(SOUNDBITE OF MUSIC)

SCHMITZ: This morning, U.S. scientists are announcing a big advance in nuclear fusion.

A MARTÍNEZ, HOST:

Now, that's the process that powers our sun. And if it could be brought to Earth, it would mean nearly limitless clean energy.

SCHMITZ: Joining us now is NPR science correspondent Geoff Brumfiel. Good morning, Geoff.

GEOFF BRUMFIEL, BYLINE: Good morning, Rob.

SCHMITZ: So, Geoff, break down this breakthrough for us.

BRUMFIEL: Right. So last week at the Lawrence Livermore National Laboratory in California, scientists did something they've never done in a laboratory setting before. They got more energy out of a nuclear fusion reaction than they put into it.

SCHMITZ: Wow.

BRUMFIEL: And there are some caveats. We'll get to those caveats a minute. But this is a big deal because nuclear fusion is very hard to make happen on Earth. Basically, fusion is the process of sticking lightweight atoms together. When they fuse, when they glom together, they release a ton of energy. But getting them to stick is really tough.

SCHMITZ: This is very exciting. How did they do this?

BRUMFIEL: With lasers. It's like the...

SCHMITZ: Lasers.

BRUMFIEL: ...Classic science pew-pew-pew laser science. They have this multibillion-dollar dollar facility called the National Ignition Facility. It's pretty much the most powerful laser on Earth. And basically, all these laser beams are pointed at one teeny, tiny target made of gold and depleted uranium. Inside that target is an even tinier sphere of diamond, about the size of a peppercorn. And inside that are different isotopes of hydrogen. So basically, 192 laser beams go in. The energy squeezes all that hydrogen together until it ignites and burns kind of like the head of a match. But this is a real brute-force approach to making nuclear fusion happen.

SCHMITZ: This is fascinating. How much power did that produce?

BRUMFIEL: Well, here's the sort of caveat part. It wasn't all that much.

SCHMITZ: OK.

BRUMFIEL: So the experiment did generate more power out than the lasers put in. But the lasers themselves require a ton of electricity to operate. So actually, they still ended up using a lot more power than they got out the other end. And this is just sort of the start of the problem with this whole laser approach.

SCHMITZ: OK.

BRUMFIEL: I spoke to Ryan McBride, a nuclear engineer at the University of Michigan. And he said if you wanted to make electricity, you'd need to zap several of these diamond targets every second.

RYAN MCBRIDE: So it's (vocalizing). You know, that's a lot of pulsing. There's a debris field left as these things are blasted. And you'd have to, like, clear that debris, inject another one, have all the lasers hit it.

BRUMFIEL: And you have to do that over and over for days and months and years. And at the moment, they can only zap a target once a week.

SCHMITZ: OK.

BRUMFIEL: So power is a long way off.

SCHMITZ: Does this have any other uses?

BRUMFIEL: Yeah, it turns out the exploding target is actually like a thermonuclear weapon. And in fact, the main job at the National Ignition Facility, or NIF, as it's known, is to make sure our aging nuclear weapons still work.

MCBRIDE: We no longer test nuclear weapons. And so they've built machines like NIF as surrogates to doing actual tests since we haven't tested since 1992.

BRUMFIEL: And so this is a big deal for that side of things, as well, because it means that weapons physicists can make sure their calculations are correct.

SCHMITZ: So bottom line, Geoff, this sounds huge, like Thomas Edison light bulb huge, but maybe it's not going to change the world just yet.

BRUMFIEL: Yeah, it's a big step forward. But the scientists I spoke to said fusion energy remains decades away. And to put things in perspective, the U.S. is trying to cut its carbon emissions in half by 2030, which is only a few years away. So I don't think this is going to solve the climate crisis. But on the bright side, it does show that humans are good at solving tough problems. So maybe don't count us out just yet.

SCHMITZ: NPR's Geoff Brumfiel. Thanks, Geoff.

BRUMFIEL: Thank you, Rob.

(SOUNDBITE OF MUSIC)

SCHMITZ: We'll get an update on inflation this morning from the government's official price checkers.

MARTÍNEZ: Yeah, November's consumer price index figures come out just as the Federal Reserve is preparing for another boost in interest rates. Inflation was likely a little bit tamer than the month before, but overall prices are still climbing at a rapid rate.

SCHMITZ: NPR's Scott Horsley joins us this morning to talk about what we're going to see. Good morning, Scott.

SCOTT HORSLEY, BYLINE: Good morning, Rob.

SCHMITZ: Scott, we've all seen the drop in gasoline prices in recent weeks. Is that going to keep inflation in check?

HORSLEY: It certainly helps. Unfortunately, some of the savings that people are enjoying at the gas station are being gobbled up at the grocery store, especially in the produce department. The wholesale price of vegetables jumped by a whopping 38% last month. That's largely due to an insect-borne virus in California that put a big dent in the lettuce crop. A produce distributor, Brian Guarino, says a wholesale box of lettuce that typically sells for about 25 or $30 on the East Coast is now selling for as much as $100.

BRIAN GUARINO: I've never seen it like this. I've seen to go 80, $85. I've never seen triple digits, though. Just crazy. I mean, you can't put lettuce on a hoagie and expect not to put an upcharge on it when you're paying $100 for 24 heads of lettuce.

HORSLEY: Some restaurants are substituting less expensive kale for pricey lettuce, although Guarino told me, who wants to eat kale...

SCHMITZ: (Laughter).

HORSLEY: ...Compared to romaine? Lettuce prices should start to come down as more of Arizona's crop comes on the market. But in the meantime, you're going to have to shell out some extra green for the greens.

SCHMITZ: Is anything coming down in price besides gasoline?

HORSLEY: Yes. We continue to see falling prices for things like used cars, which were a big driver of inflation last year. In fact, goods prices overall are not climbing nearly as fast as they were earlier this year. There's also some relief on the horizon when it comes to housing. This is going to take some time to show up in the official inflation numbers. But when you look at actual rental prices in the market, they're not climbing as fast as they were in the spring. Selma Hepp, who's with the housing data firm CoreLogic, says that's partly because rents are already so high, some people have just been priced out of finding their own place.

SELMA HEPP: People are now, as a result of high rents, doubling up again. So we're seeing an increase in number of people who are moving in with roommates.

HORSLEY: Hepp says the slowdown's particularly noticeable in places where rents have been climbing the fastest, like Miami and Phoenix.

SCHMITZ: Scott, will the November numbers have any effect on the Federal Reserve as it tries to get these prices under control?

HORSLEY: You know, the Fed still has a ways to go. Even though goods prices are starting to level off and even though there are encouraging signs about housing prices, Fed Chairman Jerome Powell is worried that the price of services is still going up. And we spend a lot of money on services, everything from health care to haircuts. So Powell is concerned those price hikes are keeping overall inflation much too high.

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JEROME POWELL: My colleagues and I are acutely aware that high inflation is imposing significant hardship, straining budgets and shrinking what paychecks will buy. This is especially painful for those least able to meet the higher costs of essentials like food, housing and transportation.

HORSLEY: So tomorrow, the Fed is expected to raise interest rates again. It's the seventh rate hike in nine months. Fed officials have been very clear borrowing costs will likely go up and stay up longer if that's what it takes to tamp down demand and bring prices back under control. It's sort of the central bank's version of kale - maybe a little tough, but ultimately, it's supposed to be good for you.

SCHMITZ: It is. NPR's Scott Horsley, thank you.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.