"The OFR Financial Stress Index (OFR FSI) is a daily market-based snapshot of stress in global financial markets. It is constructed from 33 financial market variables, such as yield spreads, valuation measures, and interest rates. The OFR FSI is positive when stress levels are above average, and negative when stress levels are below average. The OFR FSI incorporates five categories of indicators: credit, equity valuation, funding, safe assets and volatility. The FSI shows stress contributions by three regions: United States, other advanced economies, and emerging markets."
Investors Fueled The Bubble, But The Fed Will Burst It"
by Epic Economist
"There's no doubt we're in a massive stock market bubble. The only question is, what will be the trigger event that will finally burst it? Several factors are at play and one wrong turn can lead to a crash. However, according to experts, there are two main determinants that are already setting up the stage for a major collapse. That's what we're going to expose in this video.
Financial strategist and market expert, Lance Roberts has recently shared an analysis on the website Real Investment Advice, in which he outlined that the common belief that as long as the Federal Reserve is active there would be nothing investors should worry about may actually not be backed by tangible prospects anymore. In fact, the central bank might soon find itself trapped by its own policies, and ended up providing the two pins that will pop the stock market bubble.
All market crashes, which resulted from the preliminary bubble, have actually occurred as a consequence of other factors unrelated to valuation levels. The primary catalysts have varied from liquidity troubles to political actions, reckless monetary policies, economic recessions, or inflationary spikes. Those determinants were the catalyst, or trigger, that led to the investors' “reversion in sentiment”, and therefore, the crash. Right now, amongst many other possible drives, there are two key factors that very likely to make markets implode.
The first one is inflation. The Federal Reserve has persistently maintained that its monetary policy is a function of two essential components: full employment and price stability. So, on one hand, the Fed has signaled it is willing to let “inflation” run hot, but on the other hand, the central bank's biggest fear is to repeat the runaway inflation of the 70s. By contrast, the foundation of the entire current bull market is low rates. If historical patterns can still be used to reflect modern-day trends, it appears that very soon the Federal Reserve will start talking about tapering monetary policy, and hiking interest rates.
Consequently, the second key factor would be higher interest rates. As Roberts highlights, the problem with inflation is that if economists do get their wish for higher prices, such also corresponds historically with higher interest rates. However, every time interest rates have moved up correspondingly with inflation, that never remained the case for long. Although much of the media constantly suggests that interest rates are may surge higher due to economic growth and inflationary pressure, the expert disagrees with that notion. Instead, he sustains that economic growth is “governed” by the level of debt and deficits. And at this point, it isn’t just the heavily leveraged government - it is every single facet of the economy. Debt has exploded in pretty much every sector of the economy throughout the past few years.
"So, how did the Federal Reserve fall into this trap?" one may ask. As people often say, “a crisis happens slowly, then all at once.” Considering interest rates affect “payments,” rising rates are likely to have a negative impact on consumption, housing, and investment, which ultimately halts economic growth. That's why Roberts argues that "with expectations currently off the charts, literally, it will ultimately be the level of interest rates that triggers some “credit event” that starts the great unwinding. It has happened every time in history."
So now, the biggest concern for the market going forward is that the current prices are backed by the ambitious idea that the economy will experience a speedy recovery back to pre-recession norms, the health crisis will be swiftly controlled and the widespread distribution of a vaccine would put that chapter behind us. However, considering our real economic prospects, and the emergence of two new virus variants, and the slow speed of vaccination, it's very unlikely that things will go smoothly, so the Federal Reserve is going to have a huge problem.
Every time excessive bullish optimism takes over the stock market it is eventually met with disappointment. In short, the monumental amounts of liquidity, the strong appetite for speculative risk, and a fear of missing out have all merged to fuel asset bubbles especially in the tech sector, cryptocurrencies, and many other speculative startups in favored market segments. Investors may have created and fuelled the bubble, but policymakers are the ones that will make it all explode. As margin debt keeps spiking and continues to contribute to the speculative frenzy, stock prices will remain trading at record-highs even though our bleak economic outlook won't sustain all of that optimism. All signs point to a coming market crash and the bursting of the tech bubble. At this stage, there's no more escape."
“Separated by about 14 degrees (28 Full Moons) in planet Earth's sky, spiral galaxies M31 at left, and M33 are both large members of the Local Group, along with our own Milky Way galaxy. This narrow- and wide-angle, multi-camera composite finds details of spiral structure in both, while the massive neighboring galaxies seem to be balanced in starry fields either side of bright Mirach, beta star in the constellation Andromeda. Mirach is just 200 light-years from the Sun. But M31, the Andromeda Galaxy, is really 2.5 million light-years distant and M33, the Triangulum Galaxy, is also about 3 million light years away.
Although they look far apart, M31 and M33 are engaged in a gravitational struggle. In fact, radio astronomers have found indications of a bridge of neutral hydrogen gas that could connect the two, evidence of a closer encounter in the past. Based on measurements, gravitational simulations currently predict that the Milky Way, M31, and M33 will all undergo mutual close encounters and potentially mergers, billions of years in the future.”
"Everything passes away- suffering, pain, blood, hunger, pestilence. The sword will pass away too, but the stars will still remain when the shadows of our presence and our deeds have vanished from the earth. There is no man who does not know that. Why, then, will we not turn our eyes towards the stars? Why?"
"There is a power in nature, restless and terrible- storm, wildfire, earthquake, tidal wave. There is a delicacy too, to which we attend with a more perceptive eye and ear- the woolly bear caterpillar in the grass, the red-tailed hawk circling high and silent above the meadow, the six-dotted shadow of the water strider on the bottom of the pond. I think of lines from a poem of Grace Schulman, a poem called “In Place of Belief”:
“...I would eavesdrop, spy,
and keep watch on the chance, however slight,
that the unseen might dazzle into sight.”
Listening. Watching. Waiting admidst the clamor of strident certainity for the still small voice. Waiting for the unseen to dazzle into sight. Karl Popper, the eminent philosopher of science, once wrote, "It is imperative that we give up the idea of ultimate sources of knowledge, and admit that all knowledge is human; that it is mixed with our errors, our prejudices, our dreams, and our hopes; that all we can do is to grope for truth even though it is beyond our reach." Reaching. Groping. Evavesdroping. Four centuries after Galileo, the world is still beset by those who claim access to ultimate sources of knowledge- divine revelation through tradition, holy books, or prophets. If there is a fundamental way to divide people in the world today it is into those who know and those who grope.
In the southern hemisphere summer of 1848, at age twenty-three, Thomas Huxley was sailing Australian waters as Assistant Surgeon on HMS Rattlesnake. He was head-over-heels in love with a remarkable young women he had met Down Under, and drifting into the skepticism about matters of religion he would later dub "agnosticism." Other than young Henrietta "Nettie" Heathorn, the main thing on his mind was jellyfish, of which he had netted hundreds. As the ship sailed up the Australian coast he worked at sorting out the relationships between his many specimens, and between the jellyfish and other marine organisms. Huxley's biographer Adrian Desmond writes: "Nettie, a sensible girl who liked Schiller and penned love poems, must have asked 'Why jellyfish?' And he must have led her self-importantly from these pulsing 'nastinesses' to the great problem of existence, contrasting the tiny truths of creation with the great sandcastle sophistries for which men were willing to die. The tiny truths were real bricks which would build a palatial foundation to Truth. They were stanzas of Nature's great poem; and only by reciting the ultimate sonnet could we gain a rational set of mores and a real meaning to life."
The tiny truths of creation! Huxley was convinced that we have something to learn about the creation and ourselves by studying the lowliest blobs of protoplasm afloat in the sea. The great truths, if they are to be found, will be discovered in the Book of Nature, as a patient accumulation of individually minute observations. For Huxley, the only knowledge worth having was secular, not theological, and "was not to be delegated by episcopal patrons, but seized by plebeian hands." His jellyfish represented common knowledge- groping, partial, tentative- the still small voice, by and for the common man.”
“To me, there are three things we all should do every day. We should do this every day of our lives. Number one is laugh. You should laugh every day. Number two is think. You should spend some time in thought. And number three is, you should have your emotions moved to tears, could be happiness or joy. But think about it. If you laugh, you think, and you cry, that’s a full day. That’s a heck of a day. You do that seven days a week, you’re going to have something special. I just got one last thing... I urge all of you, all of you, to enjoy your life, the precious moments you have.”
"You've seed how things goes in the world o' men. You've knowed men to be low-down and mean. You've seed ol' Death at his tricks... Ever' man wants life to be a fine thing, and a easy. 'Tis fine, boy, powerful fine, but 'tain't easy. Life knocks a man down and he gits up and it knocks him down agin. I've been uneasy all my life... I've wanted life to be easy for you. Easier'n 'twas for me. A man's heart aches, seein' his young uns face the world. Knowin' they got to get their guts tore out, the way his was tore. I wanted to spare you, long as I could. I wanted you to frolic with your yearlin'. I knowed the lonesomeness he eased for you. But ever' man's lonesome. What's he to do then? What's he to do when he gits knocked down? Why, take it for his share and go on."
"The COVID Tracking Project" Every day, our volunteers compile the latest numbers on tests, cases, hospitalizations, and patient outcomes from every US state and territory. - https://covidtracking.com/ ○
2/20/2021: "Cases are very high but have decreased over the past two weeks. The numbers of hospitalized Covid patients and deaths in the Pinal County area have also fallen. The test positivity rate in Pinal County is very high, suggesting that cases are being significantly undercounted. We’ve recommended additional precautions below."
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My luck ran out Thursday, after dodging this monster for a year. No idea
how this plays out, will do my best to maintain the blog. Please folks, stay safe!
“The Tarantula Nebula is more than a thousand light-years in diameter, a giant star forming region within nearby satellite galaxy the Large Magellanic Cloud, about 180 thousand light-years away. The largest, most violent star forming region known in the whole Local Group of galaxies, the cosmic arachnid sprawls across this spectacular composite view constructed with space- and ground-based image data.
Within the Tarantula (NGC 2070), intense radiation, stellar winds and supernova shocks from the central young cluster of massive stars, cataloged as R136, energize the nebular glow and shape the spidery filaments. Around the Tarantula are other star forming regions with young star clusters, filaments, and blown-out bubble-shaped clouds In fact, the frame includes the site of the closest supernova in modern times, SN 1987A, at the lower right. The rich field of view spans about 1 degree or 2 full moons, in the southern constellation Dorado. But were the Tarantula Nebula closer, say 1,500 light-years distant like the local star forming Orion Nebula, it would take up half the sky."
“There is a concept in physics called angle of repose. Set an object, a book say, on a plank. Now slowly tip up one end of the plank until the moment when the book just starts to slide. The angle between the plank and the horizontal is the angle of repose, where the component of the gravitational force down the plank becomes greater than the maximum friction force holding the book at rest. Or, in more evocative terms - as I write I am lying on the couch with the laptop in my lap, in perfect repose. If you started tipping up the couch, at some point I'd go sliding into a heap at the bottom. That's the angle of repose, or perhaps it would be more accurate to call it the angle of the end of repose.
This comes to mind because I just spent fifteen minutes on my knees in the yard watching ants excavate a nest in the ground. One by one they scurry out of the hole carrying a tiny grain of sand, which they dump in a ring around the hole. A circular pile. Now if the ants just dumped their burdens at the mouth of the hole, pretty soon the pile would get so steep that the sand grains would slide back into the hole. Instead, the circular ring gets higher and wider, with a slope that never exceeds the angle at which the grains will slip - the angle of repose. Now here's the thing: the ants almost invariably carry their grain to just beyond the top of the pile. If the grain slips, it will slide away from the hole. These tiny ants, hardly bigger than sand grains themselves, understand a little physics in their mysterious instinctive way.
Wallace Stegner has a novel titled "Angle of Repose." It is indeed an evocative phrase. In a job, in a relationship, in life itself, many of us instinctively seek that maximum degree of individual gratification that will satisfy emotional needs without doing violence to our essential repose, and that of those around us - the art of walking close to the edge, the thrill without the spill. Every day in the news we hear of folks - politicians or celebrities - who tipped the plank too far, whose lives went sliding into self-destruction, who failed to grasp, metaphorically speaking, something that a tiny ant instinctively understands.”
“The sands of time blew into a storm of images... images in sequence to tell the truth! Glorious legends of revolutionaries, bound only by a desire to be true to themselves, and to hope! Parables of colliding worlds, of forbidden love, of enemies healing the wounds of circumstance! Projected myth of persecution through greed and selfishness... and the will to survive! The Will to survive! And to survive in the face of those who claim credit for your very existence! We survive not as pawns, but as agents of hope. Sometimes misunderstood, but always true to our story. The story of Man."
- Scott Morse
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“Do you believe," said Candide, "that men have always massacred each other as they do to-day, that they have always been liars, cheats, traitors, ingrates, brigands, idiots, thieves, scoundrels, gluttons, drunkards, misers, envious, ambitious, bloody-minded, calumniators, debauchees, fanatics, hypocrites, and fools?" "Do you believe," said Martin, "that hawks have always eaten pigeons when they have found them?" "Yes, without doubt," said Candide. "Well, then," said Martin, "if hawks have always had the same character why should you imagine that men may have changed theirs?”
“What a chimaera then is man, what a novelty, what a monster, what chaos, what a subject of contradiction, what a prodigy! Judge of all things, yet an imbecile earthworm; depository of truth, yet a sewer of uncertainty and error; pride and refuse of the universe. Who shall resolve this tangle?”
- Blaise Pascal
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And so it is...
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Vangelis, "Alpha"
This song always suggested the March of Mankind through the ages...
"These are crazy times. A pandemic led to national quarantine; to self-induced recession; to riot, arson, and looting; to a contested election; and to a riot at the U.S. Capitol. In response, are we focusing solely on upping the daily vaccination rate? Getting the country back to work? Opening the schools as the virus attenuates? Ensuring safety in the streets? Or are we descending into a sort of madness?
It might have been understandable that trillions of dollars had to be borrowed to keep a suffocating economy breathing. But it makes little sense to keep borrowing $2 trillion a year to prime an economy now set to roar back with herd-like immunity on the horizon. Trillions of dollars in stimulus are already priming the economy. Cabin-feverish Americans are poised to get out of their homes to travel, eat out and socialize as never before.
Meanwhile, the United States will have to start paying down nearly $30 trillion in debt. But we seem more fixated on raising rather than reducing that astronomical obligation. We are told man-made, worldwide climate change - as in the now-discarded term “global warming” - can best be addressed by massive dislocations in the U.S. economy.
The Biden administration plans to shut down coal plants. It will halt even nearly completed new gas and oil pipelines. It will cut back on fracking to embrace the multitrillion-dollar “Green New Deal.”
Americans should pause and examine the utter disaster that unfolded recently in Texas and its environs. Parts of the American Southwest were covered in ice and snow for days. Nighttime temperatures crashed to near zero in some places. The state, under pressure, had been transitioning from its near-limitless and cheap reservoirs of natural gas and other fossil fuels to generating power through wind and solar. But what happens to millions of Texans when wind turbines freeze up while storm clouds extinguish solar power? We are witnessing the answer in oil- and gas-rich but energy-poor Texas that is all but shut down.
Millions are shivering without electricity and affordable heating. Some may die or become ill by this self-induced disaster - one fueled by man-made ideological rigidity. Texas’ use of natural gas in power generation has helped the United States curb carbon emissions. Ignoring it for unreliable wind and solar alternatives was bound to have catastrophic consequences whenever a politically incorrect nature did not follow the global warming script.
In 2019, a special counsel wrapped up a 22-month, $35 million investigation into then-President Donald Trump’s alleged “collusion” with Russia in the 2016 election. Robert Mueller and his team searched long and hard for a crime and came up empty. Then, Trump was impeached in December 2019 and acquitted in the Senate in early 2020. His purported crime was warning the Ukrainians about the Biden family’s quid pro quo racketeering.
After the revelations concerning Hunter Biden’s shenanigans not only in Ukraine but also in Kazakhstan and China, Trump’s admonitions now seem prescient rather than impeachable. Trump had been threatened with removal from office under the 25th Amendment. He was accused of violating the Logan Act and the Constitution’s emoluments clause. His executive orders were often declared unconstitutional if not seditious. All these oppositional measures predictably failed to receive either public or congressional support.
Finally, an exasperated left decided to flog the presidential corpse of now private citizen Trump. It did so without a Supreme Court chief justice to oversee an impeachment trial in the Senate. The targeted president was no longer president. There was no special prosecutor, little debate and even less cross-examination. In the end, the second impeachment was sillier than the first. But, like the first, the show trial wasted precious time and resources in the midst of a pandemic.
But the height of our collective madness is the current cancel culture. Its subtexts are “unearned white privilege” and “white supremacy.” In the name of those abominations, mobs tear down statues, destroy careers, censor speech, require veritable oaths and conduct reeducation training. Stranger still, those alleging “white privilege” are usually themselves quite wealthy, liberal - and white. These elites count on their incestuous networking, silver-spoon upbringings and tony degrees to leverage status, influence and money in a way undreamed of by the white working class.
Affluent and privileged minorities likewise join the chorus to call for everything from reparations to “reprogramming” Trump voters. The most elite in America are the most likely to damn the privilege of those who lack it. Perhaps this illogic squares the psychological circle of feeling guilty about things they never have any intention of giving up.
If blaming those without advantages does not satisfy the unhappy liberal elite, then there is always warring against the mute dead: changing their eponymous names, destroying their statues, slandering their memories and denying their achievements. The common denominator with all these absurdities? An ungracious and neurotic elite whose judgment is bankrupt and whose privilege is paid for by those who don’t have it."
A few days after the Covid pandemic was officially announced last year on 1/23/20, I prepared a chart projecting the course of the pandemic. In my view it still stands, with two updates: "vaccines months away" has been updated to "mass vaccinations months away" and "Wave 2" has been updated to "Wave 4." (see chart below)
The end-point--global depression - is up next. Very few are prepared for this eventuality because they put their faith in 1) central banks pursuing an insane folly and 2) a fragile, brittle global economy that was already teetering on the edge of destabilization before the pandemic.
Here's the central banks' insane folly in a nutshell: to create new enterprises and jobs, we'll blow the world's greatest speculative bubble into an even greater speculative bubble. So in other words, we'll further enrich the top layer of the Financial Aristocracy who own the vast majority of the assets we're pushing to the moon, and by some inexplicable magic, adding trillions of dollars, yuan, yen and euros to the wealth of this elite will somehow launch a thousand new thriving enterprises which will magically hire 500,000 new workers every month.
Can we be honest for a split second and admit that the Tooth Fairy and Santa Claus look plausible compared to this insane proposition? Since there's a tiny window of honesty open, let's also admit that adding a booster rocket to the wealth-income inequality that is undermining democracy, society and the economy is exactly what we'd choose to do if our goal was destroying America. Yet this is precisely what the entire Federal Reserve policy sets out to do: boost wealth-income inequality to new extremes. "What Poisoned America?" (2/18/21)
Meanwhile, global supply chains that were optimized for Globalization Heaven are incredibly brittle and fragile as a result of the optimization. Optimizing for maximizing profit means getting rid of redundancies, buffers, quality control and ramping dependence on offshore suppliers to 100%.
If you set out to design a global supply system that would fail catastrophically, creating self-reinforcing shortages of essentials and key components, you'd choose the system now teetering on the edge of implosion. Optimization is wonderful for boosting profits when everything is priced to perfection and functioning to perfection, but when reality intrudes, you find you've stripped out all those costly, unnecessary bits that enabled the supply chain to deal with a spot of bother.
Unfortunately for the central bankers, their policy of giving trillions in free money for financiers and speculators is suffering from diminishing returns: where $100 billion once had a significant effect on financial markets, now $1 trillion no longer has any effect at all, and so the only dose that causes the patient's eyelids to flicker briefly is $3 trillion--no wait a minute, make that $5 trillion, nope, not enough, make it $10 trillion, yikes, still not enough, pump in $20 trillion!
I prepared a chart (below) which depicts how diminishing returns on inflating speculative asset bubbles leads the global financial system to a cliff from which there is no return.
Though few seem to be aware of it, we're tottering on that cliff edge. The final manifestation of central bankers' insane folly is the promise that endless wealth can be yours if only you join the speculative extremes racing over the cliff. Maybe the immense herd of speculators will all magically grow wings once they're in free-fall; that's no more insane than counting on speculative asset bubbles to magically create real enterprises and jobs.
This madness is now global, so next up: global depression. The story of the past year hasn't changed: blowing an even bigger speculative asset bubble is the sure cure; the latest "fix" to the pandemic will make it go away forever and ever, and everything that was broken before the pandemic will magically be restored by the magic of ever larger and more precarious speculative asset bubbles."
"The power collapse happening in Texas right now is merely a short preview of the total collapse of the United States. America's infrastructure is getting obsolete and starting to crumble. Our power grid wasn't designed to support so many people, our water systems are a complete failure, and this event has made it clear that we would be entirely lost if a major long-term national emergency ever occurred. Texas is one of the richest states of the nation, and it also has vast energy resources, but its inefficiency and lack of preparation to handle this crisis outlined how vulnerable the energy system in the state really is. And if it can’t even handle a few days of cold weather, what's going to happen to this country when things actually start to get turbulent in the months ahead? That's what we are going to discuss in this video.
The chaos brought on by freezing temperatures has underlined how the power grid in Texas is much more fragile than anyone ever imagined. When the chillwave hit the state, demand for energy soared to unprecedented levels. But, on the other hand, nearly half of the wind turbines that the state relies upon completely froze, and the rest of the system simply wasn't able to meet the enormous increase in demand. Approximately 15 million Texan homes were affected and hundreds of thousands of them remain without power right now. However, the situation could've been much worse if grid operators haven't cut the power immediately after they realized something was going terribly wrong with the system.
Grid operators noticed the system was overwhelmed and could collapse at any moment, so they had to act quickly to cut the amount of power distributed. If operators had not promptly acted, Texas could have suffered blackouts that could have occurred for months, and left the state in an indeterminately long crisis. America is literally falling apart all around us, and as our population has grown and our infrastructure has aged, our performance has been decaying with each passing year. Just as problematic as the energy system, our water systems are also very fragile.
In Texas, the cold weather caused thousands of pipes to burst, and at least 13.5 million people are facing water disruptions, as 797 water systems throughout the state reported issues such as frozen or broken pipes. To make matters even worse, access to fresh drinking water is also becoming increasingly scarce in Texas, with roughly 725 systems under a boil water advisory, Baker revealed during a press conference Thursday. So people are having to make the desperate choice between going thirsty or facing possible illness.
Shortages of food and other essential supplies are also being reported in Texas, and the cold weather could potentially cause huge damages to the state’s agricultural sector. For that reason, officials warned that the storm could hamper food access for weeks to come. At the moment, extremely long lines have been forming at local supermarkets all over the state. Meanwhile, several county officials across Texas revealed to be coming up with strategies to feed and bring water to those devastated by the storm. The Harris county executive, Lina Hidalgo, said she's tremendously worried about the lack of drinkable water in her community. “It’s not just a weather emergency,” Hidalgo said. “This is a multifaceted disaster.”
In short, the power shortage has broadened to the point it triggered food, water and health crises. When we take into account the amount of damage registered in just a few days, and the lack of preparation of our authorities to promptly mitigate the crisis, we wonder what would happen to us if a steep long-term national emergency disrupted food, water, and power systems for months. This time, all it took to spark so much turmoil and result in a domino effect of outages and shortages was a cold wave. Needless to say, eventually, much worse troubles will unfold in our nation, but it has become clear that we are not ready to handle our issues. So you should get prepared while you still can, because time is running out."
"The COVID Tracking Project" Every day, our volunteers compile the latest numbers on tests, cases, hospitalizations, and patient outcomes from every US state and territory. - https://covidtracking.com/ ○
2/18/2021: "Cases are very high but have decreased over the past two weeks. The numbers of hospitalized Covid patients and deaths in the Pinal County area have also fallen. The test positivity rate in Pinal County is very high, suggesting that cases are being significantly undercounted. We’ve recommended additional precautions below."
“This colorful skyscape features the dusty, reddish glow of Sharpless catalog emission region Sh2-155, the Cave Nebula. About 2,400 light-years away, the scene lies along the plane of our Milky Way Galaxy toward the royal northern constellation of Cepheus.
Astronomical explorations of the region reveal that it has formed at the boundary of the massive Cepheus B molecular cloud and the hot, young, blue stars of the Cepheus OB 3 association. The bright rim of ionized hydrogen gas is energized by the radiation from the hot stars, dominated by the bright blue O-type star above picture center. Radiation driven ionization fronts are likely triggering collapsing cores and new star formation within. Appropriately sized for a stellar nursery, the cosmic cave is over 10 light-years across.”
