Good Nood

A Trump-backed budget bill failed in the House of Representatives, threatening a government shutdown. Internal conflicts within the Republican Party prevented an agreement. Democrats criticized the proposal as a cover for tax cuts for the rich. A solution before the deadline on Friday remains uncertain.

Ukraine uses millions of hours of drone footage to train AI models for the war effort. The OCHI system has been collecting and analyzing videos from over 15,000 drone teams since 2022 and has stored 2 million hours to date. This data helps AIs to recognize targets, learn tactics and evaluate weapon effectiveness. In addition to OCHI, Ukraine uses the Avengers system, which uses AI to identify 12,000 pieces of Russian equipment every week. Drones with AI technology fly attacks autonomously, and swarm drones are under development. Russia also uses AI, e.g. in Lancet drones for target recognition.

In Japan's small towns, such as Ino, labor shortages are threatening smaller companies despite automation and niche strategies. Paper recycler Wako Seishi only operates two out of three machines due to a lack of staff. Japan could face a shortage of 11 million workers by 2040, triggering an increase in bankruptcies and mergers. Local traditions such as “Tosa washi” are also under threat, while entrepreneurs such as Hiromasa Hamada are increasingly reliant on volunteers. The government is planning to raise wages and increase prices, but demographic change is making long-term solutions difficult.

A Swiss report criticizes the authorities' crisis management in the collapse of Credit Suisse, but lays the main blame on the bank's years of mismanagement. Although FINMA and the ministries were criticized for a lack of transparency and ad hoc decisions in the months leading up to the rescue by UBS, they are not accused of any causal misconduct. The 569-page commission of inquiry calls for a strengthening of financial supervision, higher capital requirements for large banks such as UBS and a reform of incentive systems. Between 2010 and 2022, the bonuses of Credit Suisse executives outweighed the bank's losses.

In a report, the Bank of Japan criticizes the radical measures taken by former governor Haruhiko Kuroda, which did not achieve the inflation target of 2% in the long term. Under Kuroda, the BOJ introduced massive bond purchases and negative interest rates. Governor Kazuo Ueda warns of long-term side effects and is initiating a gradual normalization of monetary policy. However, critics are calling for a deeper analysis of the failed strategy.

Luigi Mangione (26) is facing federal and state charges including murder and terrorism for the murder of UnitedHealth manager Brian Thompson. According to the indictment, he planned the crime out of hatred for the insurance industry. After his arrest in Pennsylvania, the police found a homemade gun and a silencer. He faces the death penalty. Mangione denies the allegations, his lawyer criticizes an overload of charges.

Benjamin Netanyahu is focusing on Iran following victories over Hamas, Hezbollah and the fall of Syrian President Assad. Breaking up Iranian alliances strengthens Israel's position in the region. Netanyahu plans to combat Iran's nuclear program and missile arsenal. At the same time, a possible ceasefire with Hamas is on the table, which would leave Gaza under Israeli military control. In the long term, Netanyahu is thus securing his strategy of preventing Palestinian statehood. In Syria, a fragile regime is forming under the former Islamist HTS group following the fall of Assad and is facing major challenges. The conflict over Palestine remains unresolved, while settler movements and the Trump administration could strengthen Netanyahu's position.

The Federal Council is deciding today on a higher care contribution to prevent financial problems for care insurance funds. Health Minister Lauterbach warns of impending insolvency. Without comprehensive reform, long-term care insurance will remain underfunded, costs will rise and those in need of long-term care will have to pay more. A merger of statutory and private long-term care insurance and more tax revenue are being discussed, but a consensus is not yet in sight.

At the last EU summit of the year, the focus was on support for Ukraine and the situation in Syria. German Chancellor Olaf Scholz emphasized that transatlantic cooperation must continue even under a new US President Trump, while Ukraine expects continued support. President Selenskyj rejected a frozen conflict and called for more arms aid. With regard to Syria, the EU is hoping for an orderly political process and is examining options for reconstruction. The next EU summit in March will focus more on economic issues such as competitiveness and prosperity.

On December 20, 2024, Russia attacked Kiev with missiles, killing at least one person and injuring several others. Further attacks targeted Kherson. Russia explained the attacks as retaliation for a Ukrainian missile attack. Kiev's mayor expected further casualties, as the heat supply was also disrupted. President Selensky called for more support, especially from the USA, as European security guarantees were not sufficient.

The US Department of Defense has revised the number of US soldiers in Syria to around 2,000, more than twice as many as previously announced. Previously, there had been talk of 900 soldiers, mainly deployed in the fight against IS. Pentagon spokesman Pat Ryder explained that the additional troops were stationed in Syria for temporary rotations and were already there before the fall of Assad. The discrepancy in the figures had only recently been noticed.

Two Volkswagen managers sue the company for 7.5 million euros in damages. They accuse VW of having discriminated against them after they reported abuses such as dangerous pollutants in vehicles. VW rejects the allegations and intends to defend itself. A trial could take place in June 2025.

At the EU summit, Hungary's Prime Minister Viktor Orbán blocks the extension of the Russia sanctions, which expire at the end of January. He does not want to make a decision until after the inauguration of US President Trump on January 20, as he is hoping for a possible end to the war and the associated lifting of sanctions. If Hungary does not agree, the sanctions will expire. Orbán criticizes the sanctions as harmful to the European economy. The extension requires a unanimous decision by the EU member states.

US vs EU: US government agencies warn EU against over-regulating AI Alejandro Mayorkas is the US Secretary of Homeland Security - and in an unusual move, he warns the EU against over-regulating AI. The fact that the USA and Europe are pursuing such different strategies in AI regulation is a threat to global cohesion.

Nvidia has had by far the most successful year in the company's history - and its business model falls right in the middle of the impending trade war between China and the USA. Nvidia made over $10 billion in sales outside the U.S. - and that could change under the new administration. (NYT)

• DAX: Closes below 20,000 points (TGS)
• Company bankruptcies: expected to reach ten-year high in Germany in 2024 (NTV)
• Heating law: Companies criticize CDU announcements (HB)
• Verdi: Strike against Amazon's Christmas business (NTV)
• Lufthansa: Premium seats will be significantly more expensive (only affects First and Business, so don't worry dear crunchers - 38E is not affected) (HB)
• Soho House: Gets $1.7 billion takeover offer (WSJ)
• Cryptocurrencies: Cost of hacking attacks to rise to ~$2.2bn in 2024 (RTS)
• PE firms: Expect takeover boom under Trump (FT)
• Unions: Strike Amazon in the US (AX)
• EY: Audits DAX company again for the first time since Wirecard with Qiagen (FT)