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Burman Family-Religare Fiasco: Another Corporate Battle In The Making
The Burmans have alleged violation of insider trading rules by Religare’s Executive Chairperson Rashmi Saluja.
Religare Enterprises Ltd. is once again tangled with controversies, just a few years after it came out of one.
This time, it’s a corporate battle between the company and the owners of Dabur India Ltd.—the Burman family.
The Burmans have alleged violations of insider trading rules by Religare’s Executive Chairperson, Rashmi Saluja.
According to a letter dated Nov. 7 that was submitted to the Securities and Exchange Board of India, the Burmans said that Saluja sold shares of the company worth Rs 34.71 crore, following communication of the Burman family’s intention to make an open offer to Religare’s shareholders.
The information was communicated to Saluja on Sept. 20, on a confidential basis, in her “professional capacity as executive chairperson of the company”.
The shares were sold on Sept. 21 and Sept. 22, after a meeting was held between Saluja and the Burman family’s representative, Arjun Lamba.
The process for the sale of Saluja’s ESOPs was “undertaken before the said meeting on Sept. 20, 2023,” according to Religare’s spokesperson.
The Burman family, through its associate entities—M.B. Finmart Pvt., Puran Associates Pvt., VIC Enterprises Pvt., and Milky Investment and Trading Co.—announced an open offer to buy a stake representing 26% of the expanded voting share capital.
The four companies acquired 5.27% of the issued and outstanding equity share capital and 5% of the expanded voting share, triggering the open offer. That took the Burman family's holding in the financial services firm above 25% of the expanded voting share threshold.
Prior to the transaction, the four companies held 21.25% of the equity capital and 20.15% of the expanded voting share.
The letter to the market regulator highlighted that the board of Religare didn’t respond after the issue was flagged to them in a letter dated Oct. 6.
“We have not received any response from the company. Neither have we been informed of any specific action the company intends to take. Given the serious nature of the issues, we request you to examine the trades in detail and take necessary action," the letter said.
The saga doesn’t end here.
On Nov. 9, the Burmans flagged the “high compensation” of Saluja, which is in excess of Rs 150 crore. The amount is “not in line with compensation norms by any reasonable parameters”, according to a Burman family spokesperson.
However, Religare rejected the issue, stating that it is “completely false and erroneous”. The compensation was decided by the remuneration committee and duly approved by the board, according to the Religare spokesperson. The compensation was also approved by a special resolution passed by the shareholders.
“As per the annual report for FY23 of REL, the remuneration for the Executive Chairperson was Rs 8.12 crore. Even after including the perquisite value of the ESOPs, it reached a figure of Rs 42.06 crore.”
The independent directors of Religare Enterprises have also written to regulators, including SEBI, RBI and IRDAI, alleging fraud and other breaches against the Burmans, according to an Economic Times report.
“We are surprised and disappointed at these allegations. These allegations are false, frivolous and defamatory,” according to a Burman family spokesperson. This is an attempt by the company to deflect the “attention of regulatory authorities/Board/public shareholders", it said.
All this comes only years after Religare's founders, Malvinder Singh and Shivinder Singh, served jail time for allegedly syphoning funds from their companies.
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Stocks Trading & Speculation
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The interest the government pays on national debt has reached a 20-year high as the rate on 30-year bonds reaches 5.05%.
A rise in the cost of borrowing comes at a difficult time for the chancellor, Jeremy Hunt, as he prepares for the autumn statement on 22 November.
Mr Hunt has already made clear that tax cuts will not be announced in November.
The higher cost of servicing the country's debt pile could influence the decisions he makes on spending.
The total amount the UK government owes is called the national debt and it is currently about £2.59 trillion.
The government borrows money by selling financial products called bonds. A bond is a promise to pay money in the future. Most require the borrower to make regular interest payments over the bond's lifetime.
UK government bonds - known as "gilts" - are normally considered very safe, with little risk the money will not be repaid.
Gilts are mainly bought by financial institutions in the UK and abroad, such as pension funds, investment funds, banks and insurance companies.
The Bank of England has also bought hundreds of billions of pounds' worth of government bonds in the past to support the economy, through a process called "quantitative easing"
A higher rate of interest on government debt will mean the chancellor will have to set aside more cash, to the tune of £23 billion to meet interest payments to the owners of bonds.
This means the government may choose to spend less money on public services like healthcare and schools at a time when workers in key industries are demanding pay rises to match the cost of living.
The current level of debt is more than double what was seen from the 1980s through to the financial crisis of 2008.
The combination of the financial crash in 2007/8 and the Covid pandemic pushed the UK's debt up from those historic lows to where it stands now.
But in relation to the size of the economy, today's debt is still low compared with much of the last century,
The US, German and Italian borrowing costs also hit their highest levels for more than a decade as markets adjusted to the prospect of a long period of high interest rates and the need for governments around the world to borrow.
It follows an indication from global central banks, including the US's Federal Reserve and the Bank of England, that interest rates will stay "higher for longer" to continue their jobs of bringing down inflation.
During the last financial year, the government spent £111bn on debt interest - more than it spent on education.
Some economists fear the government is borrowing too much, at too great a cost.
Others argue extra borrowing helps the economy grow faster - generating more tax revenue in the long run.
The government's official economic forecaster, the Office for Budget Responsibility (OBR), has warned that public debt could soar as the population ages and tax income falls.
In an ageing population, the proportion of people of working age drops, meaning the government takes less in tax while paying out more in pensions.
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United Kingdom Business & Economics
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Donald Trump and his former “fixer” Michael Cohen have not been in a room together in five years. But next week, they’re expected to meet up for a reunion of sorts, when Cohen testifies against his ex-boss in a civil trial that could result in Trump being barred from running a business in the state of New York, losing Trump Tower, and being forced to pay a $250 million fine. So, y’know, not exactly a “Buddy, it’s been too long, how’s the fam”–type situation.
The Messenger reports that Trump will resume his appearance in the courtroom next Tuesday, Wednesday, and Thursday, after a 2024 rally in Iowa earlier in the week. “He wants to be there. This is his personal business, his family business. So it cuts a little closer,” a source familiar with the matter told the outlet. “He wants to be there to take a stand and show people he’s not backing down.” Cohen is expected to testify on Tuesday. “It’s been five years since we have seen one another. Assuming I am even on to testify next week, I look forward to the reunion. I hope Donald does, as well,” Cohen told NBC News, adding that he believes Trump is “scared” and “petrified.”
While it’s not clear exactly what Cohen will have to say next week if he testifies, previous testimony by the former Trump attorney offers some big hints. In 2019, while testifying before Congress, Cohen told lawmakers: “It was my experience that Mr. Trump inflated his total assets when it served his purposes” and “deflated his assets to reduce his real estate taxes.” Asked by Representative Alexandria Ocasio-Cortez, “Did the [then] president ever provide inflated assets to an insurance company?” Cohen responded “Yes.”
The New York attorney general is attempting to prove just that—and has accused Trump of overvaluing his assets by, in some cases, billions of dollars a year in order to obtain more favorable loan terms. The AG’s office specifically claims that Trump overvalued Mar-a-Lago by hundreds of millions of dollars in statements to banks and insurers. At other times, Trump claimed his Manhattan triplex was three times the size of the actual space. (Court documents revealed last week indicate that he knew his Trump Tower property was not 30,000 square feet but roughly 10,000.)
The civil trial in New York is, of course, far from the only legal issue facing Trump. He’s also scheduled to go to trial versus the Manhattan district attorney over hush money deals paid before the 2016 election; the Fulton County district attorney over his attempt to overturn the 2020 election in Georgia; the federal government over his handling of classified documents; and the federal government again over his attempts to stay in power after losing to Joe Biden. (Trump has pleaded not guilty to all criminal counts against him.)
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Real Estate & Housing
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Shree Cement Q2 Results Review - Muted Performance; Rich Valuation; Maintain 'Sell': Dolat Capital
Capacity expansion to support volume growth
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Dolat Capital Report
Shree Cement Ltd. reported beat on results except volume in line.
Shree Cement posted +21.3% YoY (-8.3% QoQ) growth in revenue to Rs 45.8 billion led by +10% YoY (-8% QoQ) in volume to 8.2 million tonne coupled with +10.3% YoY (-0.3% QoQ) in blended realisation/tonne to Rs 5,591.
Shree Cement's Ebitda/adjusted profit after tax +67%/ +159.1% YoY to Rs 8.7 billion/ Rs 4.9 billion in Q2 FY24.
We expect 12.4%/ 22.3%/ 29.9% revenue/ Ebitda/adjusted profit after tax compound annual growth rate over FY23- 26E led by 12%/ 11%/ 15.6% volume growth and 3.4%/ -3%/ -1.4% blended realisation growth in FY24E/ FY25E/ FY26E.
We maintain our Ebitda estimates for FY24E/ FY25E and introduce FY26E. Considering rich valuation (19.6 times/ 16.6 times enterprise value/Ebitda FY25E/ FY26E), we maintain 'Sell'.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
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India Business & Economics
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Shortages of some fresh fruit and vegetables such as tomatoes and cucumbers could be the “tip of the iceberg”, the National Farmers’ Union (NFU) has said.
Certain products are hard to come by in UK supermarkets due to poor weather reducing the harvest in Europe and north Africa, Brexit rules and lower supplies from UK and Dutch producers hit by the jump in energy bills to heat glasshouses.
The NFU’s deputy president, Tom Bradshaw, said a reliance on imports had left the UK particularly exposed to “shock weather events”.
He said the UK has now “hit a tipping point” and needs to “take command of the food we produce” amid “volatility around the world” caused by the war in Europe and the climate crisis.
“We’ve been warning about this moment for the past year,” Bradshaw told Times Radio on Saturday. “The tragic events in Ukraine have driven inflation, particularly energy inflation, to levels that we haven’t seen before.
“There’s a lack of confidence from the growers that they’re going to get the returns that justify planting their glasshouses, and at the moment we’ve got a lot of glasshouses that would be growing the tomatoes, peppers, cucumbers, aubergine that are sitting there empty because they simply couldn’t take the risk to plant them with the crops, not thinking they’d get the returns from the marketplace.
“And with them being completely reliant on imports – we’d always have some imports – but we’ve been completely reliant on imports [now]. And when there’s been some shock weather events in Morocco and Spain, it’s meant that we’ve had these shortages.”
Bradshaw also acknowledged that the current shortage was an indirect result of the UK’s decision to leave the EU.
He added: “It’s really interesting that before Brexit we didn’t used to source anything, or very little, from Morocco but we’ve been forced to go further afield and now these climatic shocks becoming more prevalent have had a real impact on the food available on our shelves today.”
On Wednesday, Tesco followed Aldi, Asda and Morrisons in introducing customer limits on certain fresh produce as shortages left supermarket shelves bare.
Tesco and Aldi are limiting customers to three units of tomatoes, peppers and cucumbers as a precautionary measure, while Asda is also limiting customers on lettuce, salad bags, broccoli, cauliflower and raspberries.
Meanwhile, Morrisons has set a limit of two items per customer across tomatoes, cucumbers, lettuce and peppers.
It comes as the shortage of tomatoes in UK supermarkets has widened to other fruit and vegetables due to the combination of bad weather and transport issues.
The environment secretary, Thérèse Coffey, caused a furore after she suggested people should “cherish” seasonal foods such as turnips as bad weather cleared supermarket shelves of tomatoes and other fresh produce.
She told MPs: “A lot of people would be eating turnips right now rather than thinking necessarily about aspects of lettuce, and tomatoes and similar.
“But I’m conscious that consumers want a year-round choice and that is what our supermarkets, food producers and growers around the world try to satisfy.”
However, there have been reports of a shortage in turnips since the environment secretary’s comments.
While Waitrose has reportedly discontinued selling the root vegetable, shoppers at Sainsbury’s complained of a lack of turnips in their stores.
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United Kingdom Business & Economics
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In the wake of this year's banking crisis, the Federal Deposit Insurance Corporation (FDIC) is pressing banks to fix the way they report uninsured deposits, or those that exceed the agency's $250,000 insurance limit.
Key Takeaways
- The FDIC has called out banks for not properly reporting their uninsured deposits by excluding those backed by collateral.
- Uninsured deposits are those that exceed the FDIC's $250,000 insurance limit.
- Uninsured deposits played a leading role in this year's banking crisis, as the banks that went under—Silicon Valley (SVB), Signature, and First Republic banks—were those with some of the highest ratios of uninsured deposits to total deposits.
- Federal lawmakers have stepped up calls for more stringent regulation of the banking industry, and discussed setting higher provisions for uninsured deposits.
In a statement, the FDIC said that certain banks "are not reporting uninsured deposits in accordance with the Instructions to the Consolidated Reports of Condition and Income." In particular, the agency singled out the practice of banks excluding uninsured deposits backed by collateral, leading banks to understate the total amount of uninsured deposits. The agency did not single out any bank in particular.
Under the FDIC's instructions, banks must report all uninsured deposits, including those backed by collateral. The FDIC instructs banks to "make a reasonable estimate of the portion of these [uninsured] deposits using available data."
Uninsured deposits are those that exceed the FDIC's $250,000 insurable limit, a limit that was established in 2010 with the Dodd-Frank Act. It's been raised periodically since the FDIC was created in 1933 as a means of protecting depositors in the wake of bank failures during the Great Depression.
How Uninsured Deposits Fueled This Year's Banking Crisis
Uninsured deposits played a leading role in this year's banking crisis, as the banks that went under—Silicon Valley Bank (SVB), Signature Bank, and First Republic Bank—were those with the highest share of uninsured deposits relative to total deposits.
Leading up to their collapse, more than 90% of all deposits at Silicon Valley and Signature banks—and 68% of those at First Republic—were uninsured, a reflection of the banks' wealthy client base that parked large sums of money with the lenders. When rising interest rates and declining mortgage portfolios led to financial losses, panic quickly ensued, leading to massive outflows as depositors quickly withdrew their money in a run on the banks.
Deposits at First Republic Bank plunged by more than 50% in the first quarter, not including a $30 billion liquidity injection by 11 of the nation's biggest banks in late March, weeks before First Republic was eventually taken over by the FDIC and sold to JPMorgan Chase on May 1.
Legislators Call for Higher Provisions
While deposits exceeding $250,000 are not insured by the FDIC under normal circumstances, federal regulators made multiple exceptions during the banking crisis, with the biggest account holders in the three failed banks also getting their money back.
Federal lawmakers have stepped up calls for more stringent regulation of the banking industry, and discussed setting higher provisions for uninsured deposits. Shortly after the first wave of bank failures in March, Treasury Secretary Janet Yellen floated the idea of covering uninsured deposits at other banks, and said that the decision to insure all depositors at SVB and Signature banks "reduced the risk of further bank failures that would have imposed losses on the [FDIC's] Deposit Insurance Fund, which is paid for through fees on insured banks."
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Banking & Finance
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From the headlines, you would think that the end of the crypto industry is here. It isn’t.
While it’s true that the last year in crypto has seen fraud, meltdowns, and layoffs that triggered sequential failures of crypto companies, that’s largely of those failed companies’ own making.
The biggest players in the industry promised self-regulation, but the actions of numerous bad actors of the past year — the ones who failed — extinguished any chance of that happening.
However, the crypto survivors — those with legitimate businesses — are still looked at like zombies, able to move forward but with little hope of life. But the phenomenon of narrative gravity, when the media, public, and influencers agree that a narrative is correct without question or examination, is happening throughout the digital asset sector.
As it stands, the Securities and Exchange Commission (SEC), influenced by narrative gravity instead of the 30,000-foot view of the promise of blockchain technology, is regulating crypto aggressively through overreach and enforcement actions rather than contributing to thoughtful policymaking. This is the wrong approach, full stop.
The stakes are too high, as crypto has become woven into too many parts of the global financial system.
The stakes are too high, as crypto has become woven into too many parts of the global financial system. Blockchains have created a new internet and crypto is a foundational layer to the future of global commerce and banking, communication, and individual ownership.
Hundreds of millions of people worldwide use crypto for various purposes and believe in its potential. The SEC’s inability to both use the past as a prologue and see how crypto is inevitably part of our future means that the U.S. is lagging behind the rest of the world when it comes to this frontier technology.
The EU, U.K., Japan, Singapore, UAE, and even China have introduced or are introducing permanent regulatory frameworks for crypto. Notably absent from this list is the U.S., which is arguably the world economic power that is farthest from a cogent regulatory framework — at least at the federal level.
The outcome? The industry is moving offshore, rapidly. According to a recent Electric Capital report, the United States was home to 42% of the world’s open source blockchain developers in 2018. By 2022, that dropped to 29%.
As the engine of the global economy, it is unlikely the U.S. will go against the global trend of crypto regulation. It would be unprecedented for the EU and U.K. to have a fully regulated financial market that is relatively illegal in the U.S.
It’s not how the global economy functions. Plus, the risk of losing crypto to other world powers is too dire. What if Google or Twitter had been founded in China? What would the internet look like today?
Simply put, the lack of a fully regulated financial market in the U.S. contradicts the global economic interdependence seen in other major economies.
The U.S. has historically met the moment when it comes to thoughtful regulation of frontier technologies. That’s why it’ll happen again now. Most states in the U.S. have created permanent regulatory frameworks for digital assets, and it is completely within their mandate to do so. California and New York even issue BitLicenses, which further codifies web3 activity in the two largest state economies in the United States.
The U.S. federal government might be moving slower than ever, but we’re starting to see signs that a clear regulatory framework is coming. A recent draft bill offers a pathway for digital assets that begin as securities to eventually be regulated as commodities.
Tokens offered as part of an investment contract would remain in the SEC’s remit, while those that qualify as commodities would be overseen by the Commodity Futures Trading Commission (CFTC). And there are important conversations happening about whether an asset is considered a commodity if a blockchain network is decentralized.
Knowing that there will eventually be a path forward at the federal level, let’s talk about what that looks like.
- The U.S. government should be at the forefront of investing in blockchain R&D. There are countless examples of the U.S. incubating world-changing technology. Why stop now?
- Policymakers should be using the technology. How can anyone regulate what they fundamentally don’t understand? Other governments around the world, including the European Commission, are doing this.
- The U.S. government should run a sandbox and come up with compliant — even mutually beneficial — ways to engage with the private sector and the technology itself.
Predicting the death of crypto is a convenient but inaccurate narrative. The U.S. will get there. It always does. The industry will get stronger as meaningful regulations — not strong-arm enforcements — are put into place.
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Crypto Trading & Speculation
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COLUMBUS, Ohio (AP) — Ohio’s former top utility regulator surrendered Monday in connection with a $60 million bribery scheme related to a legislative bailout for two Ohio nuclear power plants that has already resulted in a 20-year prison sentence for a former state House speaker.
Sam Randazzo, former chair of the Public Utilities Commission of Ohio, self-surrendered at U.S. District Court in Cincinnati after being charged in an 11-count indictment that was returned on Nov. 29, U.S. Attorney Kenneth L. Parker’s office announced. Randazzo was scheduled for an initial court appearance later in the day.
READ MORE: 4 indicted in $60 million Ohio bribery probe plead not guilty
“Today’s indictment outlines an alleged scheme in which a public regulatory official ignored the Ohio consumers he was responsible for protecting, instead taking a bribe from an energy company seeking favors,” FBI Cincinnati Special Agent in Charge J. William Rivers said in a statement.
Randazzo, 74, resigned in November 2020 after FBI agents searched his Columbus townhome and FirstEnergy revealed in security filings what it said were bribery payments of $4.3 million for his future help at the commission a month before Republican Gov. Mike DeWine nominated him as Ohio’s top utility regulator.
He faces one count of conspiring to commit travel act bribery and honest services wire fraud, two counts of travel act bribery, two counts of honest services wire fraud, one count of wire fraud and five counts of making illegal monetary transactions.
A message seeking comment was left for his lawyer. If convicted as charged, the defendant could face up to 20 years in prison.
Ohio Consumers’ Counsel Maureen Willis, who represents the state’s utility ratepayers, said the indictment was “an important first step to bring justice to Ohio utility consumers” — but that more is needed.
“It underscores the need for near-term reform of the PUCO selection process that led to his appointment as Chair of the PUCO,” Willis said in a statement. “OCC’s calls for reform so far have gone unanswered. Ohioans deserve better from the public officials in this state.”
The long-awaited indictment marks the latest development in what has been labeled the largest corruption case in Ohio history.
Former Ohio House Speaker Larry Householder was sentenced in June to 20 years in prison for his role in orchestrating the scheme, and lobbyist Matt Borges, a former chair of the Ohio Republican Party, was sentenced to five years.
The U.S. attorney’s office in Cincinnati indicted three others on racketeering charges in July 2020. Lobbyist Juan Cespedes and Jeffrey Longstreth, a top Householder political strategist, pleaded guilty in October 2020. The third person arrested, statehouse lobbyist Neil Clark, pleaded not guilty before dying by suicide in March 2021. The dark money group used to funnel FirstEnergy money, Generation Now, also pleaded guilty to a racketeering charge in February 2021.
All were accused of using the $60 million in secretly funded FirstEnergy cash to get Householder’s chosen Republican candidates elected to the House in 2018 and then to help him get elected speaker in January 2019. The money was then used to win passage of the tainted energy bill, House Bill 6, and to conduct what authorities have said was a $38 million dirty-tricks campaign to prevent a repeal referendum from reaching the ballot.
For Randazzo’s part, prosecutors allege that in November 2019, he included language in a PUCO opinion and order to address a concerning issue FirstEnergy had coming up in 2024.
“Stock is gonna get hit with Ohio 2024. Need Sam to get rid of the ’Ohio 2024 hole,’” an energy executive text message read. Another messaged that they had spoken to Sam and he “(t)old me 2024 issue will be handled next Thursday.”
The next Thursday, the PUCO decision included language alleviating the 2024 issue.
An 81-page FBI criminal complaint from July 2020 detailed how executives of Akron-based FirstEnergy interacted with Householder and others indicted in the scheme, including 84 phone contacts between Jones and the former speaker and 14 phone contacts between Dowling and Householder.
FirstEnergy admitted to its role in the bribery scheme as part of a July 2021 deferred prosecution agreement with the U.S. Department of Justice. The company agreed to pay $230 million in penalties and to accomplish a long list of reforms within three years in order to avoid being criminally prosecuted on a federal conspiracy charge.
A statement of facts signed by current FirstEnergy CEO and President Steven Strah lays out in detail the involvement of Jones, Dowling, Randazzo and others in the bribery scheme. Randazzo’s attorneys have called claims contained in the document mere “hearsay” designed to keep the energy giant out of legal hot water.
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Energy & Natural Resources
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At the Labour Party Conference, Shadow Defence Secretary John Healey shed light on the party’s approach to defence.
Drawing directly from his speech, here is a detailed recount of the commitments he set forth.
Healey underscored the unwavering support the party has shown towards the Ukraine conflict, stating, “Labour has stood with Kyiv since day one.”
Highlighting the profound implications of the conflict for Britain, he affirmed, “That’s why the defence of the UK starts in Ukraine.”
Direct Criticism of Current Spending Delays
Pointing out the perceived inefficiencies of the current government, Healey remarked, “But just when Britain should accelerate our support and rebuild our stockpiles, the government is on a go-slow.”
He further detailed some of these delays, noting, “It took 287 days after Putin invaded for Ministers to sign a new contract for vital anti-tank weapons. 503 days to agree a contract for more ammunition.”
Labour’s Proposed Actions
In a pivotal procurement-related section of his speech, Healey announced, “I can announce today, Labour in Government will accelerate this £2 billion spend to rearm Britain, resupply Ukraine and boost British industry.”
Historical Defence Records
Healey also drew parallels with past figures when Labour was at the helm, mentioning, “When we last left government … Britain was spending 2.5% of GDP on defence. The British Army had 100,000 full-time troops. Satisfaction with service life was at 60%.”
Critique of Conservative Policies
He continued to highlight perceived shortcomings of the Conservative government, stating, “In 13 years, they’ve … Cut the Army to its smallest since Napoleon. Scrapped 1 in 5 Royal Navy ships. Taken 200 aircraft out of RAF service.”
Healey’s words at the conference offer a lucid outline of the Labour Party’s stance on defence; you can read them in full below.
“Conference, it’s an honour – as always – to address you. And it’s a pleasure to follow David. We work a great deal together, including this month’s visit to the US – our most essential UK ally. As we said in Washington, with threats increasing and war in Europe, security is now at the heart of every nation’s interests.
These words have special, shocking significance for Israel today … we utterly condemn the attacks and support Israel’s right to defend itself. We pray all hostages will return safely. Conference, a year has passed since we last met here, in Liverpool. Back then, we all hoped by now the Ukraine conflict would be over. But war still rages. Cities still bombed. Civilians still raped and killed.
When President Zelensky addressed Parliament earlier this year, he said: “London has stood with Kyiv since day one”. Mr President, I’m proud to say: ‘Labour has stood with Kyiv since day one’. Now on day 592, we will we continue to stand with Ukraine for as long as it takes to win. Ukrainians are fighting a tyrant ready to redraw borders by force. Who murders his own people, targets our democracy, disregards UN law. Ukrainians are fighting for the values we share – freedom, democracy, human rights and the rule of international law. That’s why the defence of the UK starts in Ukraine.
So from this Conference, let Putin be in no doubt: There may be a change to Labour next year but there will be no change to Britain’s resolve to stand with Ukraine, confront Russian aggression and pursue Putin for his war crimes.
I am proud of the UK’s leadership on Ukraine. I want to be proud still in six months’ time. But just when Britain should accelerate our support and rebuild our stockpiles, the government is on a go-slow. It took 287 days after Putin invaded for Ministers to sign a new contract for vital anti-tank weapons. 503 days to agree a contract for more ammunition. And still – seven months after announcing £2 billion pounds for new stockpiles – Ministers have not spent a penny of this money or signed a single contract.
I can announce today, Labour in Government will accelerate this £2 billion spend to rearm Britain, resupply Ukraine and boost British industry. Conference, from the troops deployed as part of NATO to submariners at sea with our vital UK deterrent, Labour is proud of our Armed Forces and our veterans. This is now a different era, demanding different decisions but Labour will always do what’s required to defend this country.
When we last left government … Britain was spending 2.5% of GDP on defence. The British Army had 100,000 full-time troops. Satisfaction with service life was at 60% … Labour levels that have never been matched in any Tory year since.
Britain is weaker in the world after 13 years of Conservative government. Ben Wallace said himself, our Armed Forces have been “hollowed out and underfunded” by the Tories. In 13 years, they’ve … Cut the Army to its smallest since Napolean. Scrapped 1 in 5 Royal Navy ships. Taken 200 aircraft out of RAF service.
In 13 years, they’ve … Left forces families living in damp housing and let service morale sink to record lows.
In 13 years, they’ve… Failed to fix the ‘broken’ defence procurement system – wasting billions and too often creating jobs abroad, not building in Britain. The greatest risk to UK defence is another five years of the Conservatives.
My pledge to the British people – and to the men and women who serve – is that Britain will be better defended with Labour. First, we will reinforce protections for our UK homeland. Second, we will ensure our NATO obligations are fulfilled in full. Third, we will make allies our strategic strength by developing deeper Indo-Pacific partnerships and striking new defence pacts with Germany, France and the European Union. Fourth, we will renew the nation’s moral contract with those who serve and create a strong independent champion for our forces and their families. Fifth, we will drive deep reform of defence procurement to direct British defence investment first to British jobs and British business. This is how Labour will make our country secure at home, and strong abroad.
Conference, Tony Blair once said: “The difference between Opposition and Government is this: in Opposition you wake up every morning and think ‘what can I say today?’ In Government, you ask yourself ‘what can I do today?’
Conference, we have this one single purpose: to win a Labour Government. Together – we can win. Together – we will give Britain its future back.”
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United Kingdom Business & Economics
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Parents of a six-year-old with food allergies have said they faced an "uphill battle" to get a good selection of school meals for him.
Quinten from Powys has a severe allergy to dairy, egg, soya and nuts.
His dad Kam said he "always feels like the odd one out" with his friends as he and wife Ceri try to make progress with Powys council to avoid him having bland or repetitive meals.
The council said its menus were healthy and balanced.
Quinten is in Year 1 and is entitled to free school meals but his parents said they still faced a challenge to make sure he was happy at lunchtime.
Kam said: "I find it really perplexing because Welsh government have announced that this was a priority... yet they seem to be totally unprepared for this, which I don't quite understand.
"From the very beginning when we knew he was entitled to a meal, it started off at a very basic level in terms of what they came back with.
"Lots of roast dinners, jacket potatoes without butter or cheese or anything, bland type options and we've had to spend a lot of time working with them to say 'well no, that's not right'."
One lunchtime, Quinten had "a slice of turkey in some gravy" when his friends had curry.
Quinten's mother Ceri said she and Kam had been told that a "single supplier policy" meant the council could not find similar alternatives which would be safe.
"Their policy is the bit that discriminates against him... I know a lot of people think that he should be grateful to have something, but actually, most people want to be the same as everybody else."
Aisling Pigott of the British Dietetic Association said she recognised that catering for allergies took "a lot of planning" but said a nutritious meal should be available to all children.
"I think it's all about equity and just because you've got a medical condition or an allergy it's important that you're not excluded from receiving healthy, nutritious food," she added.
Jake Berriman of Powys council said: "When we are informed that a child has a special dietary need, our school catering service will liaise with the family directly to provide a menu that will meet their need.
"These menus, which follow Welsh government guidance, are checked by dieticians to ensure that they are healthy and nutritionally balanced."
The Welsh government said it wanted its free school meals to be "as inclusive as possible" and schools were "expected to make reasonable adjustments to meet any medically prescribed dietary needs".
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Consumer & Retail
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Trump Son Signed Off But Didn’t Verify Key Documents In NY Fraud Case
Donald Trump’s eldest son, who helped run the former president’s real estate business, told a judge that he certified but never verified the accuracy of financial statements at the heart of a civil fraud case brought by New York state.
(Bloomberg) -- Donald Trump’s eldest son, who helped run the former president’s real estate business, told a judge that he certified but never verified the accuracy of financial statements at the heart of a civil fraud case brought by New York state.
“I would be comfortable trusting my team” of accountants and lawyers, who advised him to sign off on the documents, Donald Trump Jr. said on the witness stand Thursday at the trial of the suit accusing him, his father and brother Eric Trump of inflating asset values.
The state court judge in the case has already ruled the statements of financial condition were fraudulent before the start of the trial a month ago. The trial is now focused on who was involved in creating the statements, which were used in financial transactions worth hundreds of millions of dollars over more than a decade.
Donald Trump Jr., who took on greater responsibility running the Trump Organization after his father was elected president, testified he has no recollection of how the asset valuations used in the financial statements were prepared by the company’s accountants at Mazars USA LLP.
In earlier testimony, Mazars accountant Donald Bender said he relied on the Trump Organization to provide accurate valuation data and that he wouldn’t have signed off on the financial statements if he had known they were inflated. Bender said under the terms of the contract with Trump, Mazars wasn’t required to verify the appraisals.
The New York attorney general alleges the former president and his sons inflated the value of Trump’s assets by billions of dollars to get better terms from banks and insurers. It’s one of six trials Trump is facing as he seeks to return to the White House in 2024. Trump denies wrongdoing in all the cases.
Read More: Trump Directed Bogus Asset Inflation, Ex-Fixer Cohen Says
“I relied upon Mazars and our accounting team to tell me” about the preparation of a 2017 Trump financial statement, Donald Trump Jr. told the judge, who is hearing the case without a jury. “That’s why we have accountants.”
“I don’t recall ever being involved in that,” Trump said. “But yes, I would have also relied on their working intimately with Mazars,” he said. “Mazars was involved in every transaction, every LLC, they would have been a key part in compiling the accounting and they would have been well aware of that.”
Donald Trump Jr. also testified that he had no recollection of how he responded when he was made aware in 2017 that one of his father’s biggest assets — his Trump Tower penthouse apartment — was being wildly overvalued.
A lawyer for the state showed him an email exchange from March 2017 in which Forbes magazine explained that the apartment his father claimed was 30,000 square feet was about one third that size.
“Insane amount of stuff here,” Donald Trump Jr. wrote in an internal Trump Organization response to the Forbes email.
The state alleges that Donald Trump Jr. ignored the error days later when he verified to Mazars that his father’s 2016 statement of financial condition, which falsely valued the penthouse at over $300 million, was accurate. He also sent the statement to one of the family’s biggest lenders, Deutsche Bank AG.
©2023 Bloomberg L.P.
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Real Estate & Housing
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Simon Carter, the chief executive of listed property giant British Land, writes exclusively for City A.M. on the desperate need for an overhaul of the planning regime
The Prime Minister has a vision for the United Kingdom to be a `global sciences and technology superpower’ by 2030. In the Autumn Statement later this week, we expect the Chancellor to re-commit to that ambitious goal, but without the right life sciences space we risk falling further behind our global competitors.
The UK has all the ingredients to achieve superpower status: world-leading academic institutions, a skilled workforce, cutting-edge clusters, R&D spend and the unique centralised resources of the NHS.
There should be no limit to our ambitions for the UK life sciences sector, but it needs more room to innovate and grow, to ensure we attract and retain the world-leading companies that can deliver the Government’s ambition and respond to evolving needs driven by innovation in AI and data-led research.
Demand for UK laboratories is growing fast: laboratory vacancy rates are just 1% in Cambridge and London, and 7% in Oxford; yet across these areas 11.6 million square feet of laboratory space is waiting for a planning decision or in the pipeline.
Despite this, the UK is still a long way behind the more mature US markets. Boston, San Francisco, San Diego and New York are home to 113 million square feet of laboratory space, over 20 times the equivalent space in the UK’s Golden Triangle of London, Oxford and Cambridge.
The UK must overcome barriers to expansion by attracting more funding, equity finance and Initial
Public Offerings (IPOs), ensuring that it creates the right conditions for investment, with less stringent NHS price caps and an internationally competitive tax environment. The UK’s over-burdened planning regime adds complexity and delays much needed development.
Today British Land and Savills have published `Accelerating Innovation: a five-point plan to boost life sciences real estate’, which shows that if life sciences real estate markets in the Golden Triangle were to match the growth of their counterpart markets in the US, by 2035 they would generate 66,700 more jobs, £4 billion per year in additional GVA and an extra £1.1 billion per year in tax revenue.
And this opportunity is not just limited to the South East of the UK. Accelerating the growth of research and development facilities outside the Golden Triangle to match its growth rate would result in 14,500 more people in well paid jobs across the country by 2035.
Together, British Land and Savills have set out a five-point plan to ensure that the UK life sciences sector has room to innovate and grow:
- First, we recommend that the Government sets clear targets to grow the life sciences sector, in Gross Value Added terms, by at least 25% and double the value of inward Foreign Direct Investment by 2035.
- We are calling on the Chancellor to fully commit to building the new East-West Rail line linking Oxford and Cambridge, as efficient transport links are particularly vital to growth.
- To accelerate planning and delivery, Development Corporations should be designated to support innovation-led regeneration in economic growth corridors.
- We believe the Government should expand R&D tax credits to include relief for capital expenditure on laboratory space, drawing on international examples to boost the sector in the UK.
- Adult education and skills budgets should be devolved to create local, sector-specific training and employment programmes and ensure that high-skill, high-wage job opportunities can be accessed locally.
British Land is delivering significant life sciences projects across the UK, including lab enabled space at our Regent’s Place and Canada Water campuses in London, and an office and lab building at Peterhouse Technology Park in Cambridge to address the acute lack of supply of life sciences and innovation space in the city. In total, across our real estate portfolio, we have a pipeline of over 2 million square feet of life sciences and innovation space.
As a developer of essential life sciences space, we believe that the plan we are outlining today can help realise the sector’s full potential and deliver long-term sustainable economic growth. The opportunity to become a science superpower is there for the taking – but we need the right real estate in the right places to match our ambition to take on the world.
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United Kingdom Business & Economics
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Second-hand clothing has come a long way from a rummage-fest in the musty charity shop of old.
Buying and selling "pre-loved" clobber is now a huge industry, in part due to online companies - or marketplaces - such as Depop, Vinted and eBay where people can trade clothes.
But there is evidence that some fashionistas are choosing to buy second-hand clothing only, not just for value and environmental reasons, but because they want individual style.
Isabella Vrana, 26, has made a business out of it.
From a hobby that she started on Depop as a student eight years ago, she has generated sales of £800,000 and the business is still growing.
It all started because of a "shopping problem".
"I was buying too much for myself basically," she says. "But I was getting it all at really good prices because everything was second hand, so I just decided to start selling those pieces for money and realised that I was making profit off each piece."
While her fellow university students were working in pubs or restaurants at the weekend, Ms Vrana - sometimes with the help of her mum - was packaging up vintage clothes for customers and dashing to the post office between lectures.
After failing to get a job as a professional fashion buyer because of a lack of industry experience, Ms Vrana decided to take the plunge and move into selling second-hand clothing full-time.
It was scary, she admits. "At the time I was thinking, 'I just want a boss and a pay cheque and holiday and sick pay.'"
But she says: "Actually I'm really glad I just sort of went for it because I love being self-employed."
Ms Vrana now employs three people and has a shipping container/warehouse as well as two studios where clothes are shipped, sorted, photographed and sent out to customers who access her business through Depop.
She also recently set up a wholesale business to sell vintage clothes to other online firms as well as hosting pop-up shops in New York, Dublin and Copenhagen. And she sells her own Isabella Vrana label.
Over her eight years in the business, Ms Vrana says she has seen huge changes in demand for second-hand clothes.
"It wasn't such a normal thing when I started so I've definitely seen an increase in people buying second hand to try and be more sustainable," she says.
Plus there's the quality of well-made vintage clothes. "These items are lasting decades and they're being worn as well. Take a vintage pair of jeans - I've got jeans with dry cleaning labels from the 1990s and they're still going so strong," she says.
"I think people are realising that you might be investing a bit more of an upfront cost, but then it is really paying off long-term."
Adam Jay, marketplace chief executive at the clothing resell app Vinted, says the growth in demand for second-hand clothing as been "phenomenal".
Vinted now has over eight million registered members in the UK, up from 1.2 million in 2021.
There are the obvious reasons why people are attracted to second-hand clothing.
Buying new clothes and footwear can be expensive at a time when many people are struggling with the cost of living.
The rate at which prices are rising for clothing and shoes hit 6.5% in the year to April, according to the Office for National Statistics.
Meanwhile, the fashion industry is responsible for generating between 8-10% of global emissions, according to the United Nations, from growing cotton to using oil to create synthetic materials such as polyester.
But for fashion and sustainability vlogger Rosie Okotcha "thrifted fashion is very cool now because its my personal style, no-one else can get it".
She credits TikTok and Instagram with driving the trend for second-hand clothing, in particular with "Gen Z" shoppers - that's people who were born in between the mid-1990s and mid-2000s.
That is reflected in the sort of styles people are buying.
According to Depop, "Y2K" is a popular trend on its app including oversized denim, colourful crochet and vintage t-shirts. There's also demand for one-of-a-kind and customised items, as well as clothing that is handmade or reworked from existing pieces.
But while the internet might be fuelling the trend, there is vintage fashion to be found in the High Street charity shop.
Ms Okotcha says that part of her mission is to try to "break down the stigma that there is something wrong with shopping second hand because it is actually really fantastic fun and great for the planet".
While it might seem inevitable that the popularity of apps might have ended up re-routing clothing donations away from the High Street, the Charity Retail Association (CRA) says that's not the case.
Charity shop sales rose by 15.1% between January and March compared with the same three months last year.
"There is plenty of second-hand clothing to go around, so we see the growth of online selling platforms as complementary to the work of charity shops," says the CRA.
Ms Vrana agrees that there is plenty of room for competition, and she plans to continue.
"There's definitely money to be made," she says.
"You can definitely support yourself through doing this full-time, which I'm really grateful for because sometimes it doesn't even feel like a job because I enjoy it so much."
Tips for selling online
- Use social media: Sharing pictures of what you want to sell on apps such as Instagram means extra views and hopefully buyers. Include details of where people can find you on marketplace apps in your bio.
- Compare:If you can't decide how much to sell a piece of clothing for, check out what other people are charging for similar items.
- Good lighting: Make sure you show the clothing you want to sell in clear lighting. Don't be afraid to point out flaws in the garment - people want to know what they're buying.
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Consumer & Retail
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(NEXSTAR) – 2022 was a rough year for many Americans, newly released U.S. Census Bureau data indicates.
While the median household income climbed in five states, far more saw that metric drop last year. Connecticut, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, Ohio, Oregon, Pennsylvania, Vermont, Virginia, and Wisconsin all saw household income take a dip in 2022.
Nationwide, the median household income was $74,755 in 2022 – nearly 1% lower than the year before when you account for inflation. Income inequality also increased.
Alabama, Alaska, Delaware, Florida, and Utah were the lucky five states where the median family saw income grow.
The other 28 states, plus Puerto Rico and D.C., didn’t see a statistically significant change, according to the Census Bureau.
The nation’s capital got the honor of having the highest median household in the country: $101,027. Mississippi, where the median household took home $52,719 last year, had the lowest of any state. Puerto Rico, a U.S. territory, had a median household income of $24,112.
While the overall poverty rate didn’t increase in any single U.S. state, the poverty rate for children and for those 65 and older did go up in many places as coronavirus pandemic-era government benefits expired and inflation kept rising.
In response to the COVID-19 pandemic, which started in 2020, the federal government expanded the child tax credit and sent payments to people who had suffered from the pandemic, lowering poverty measures in 2021. The expansion of the child tax credit expired at the end of 2021, and other pandemic-related benefits have expired within the past year.
As a result, the supplemental poverty measure rate for children jumped 7.2 percentage points to 12.4% in 2022, according to the Census Bureau.
The Associated Press contributed to this report.
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Inflation
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Fahrenheit to take over Celsius
0°C×9/5+32 = how much money to thaw frozen crypto accounts?
New Jersey-based cryptocurrency lender Celsius Network has announced it will be bought by a consortium called Fahrenheit.
A late January court-appointed investigation concluded that the business model Celsius promoted was not the one it operated. Celsius also concealed from investors that the initial coin offering (ICO) of its CEL tokens failed to meet its $50 million earnings target. Furthermore, former CEO Alex Mashinsky promised to buy the unsold tokens from the ICO, but never followed through. The company then propped up its token by purchasing it itself, unbeknownst to customers.
The auction to find a buyer for the frozen crypto lending and mining business began April 22.
Fahrenheit will provide the capital, management team, and technology to establish a new company – NewCo – announced Celsius on Thursday.
The purchase is contingent on a $10 million deposit and regulatory approval. Members of the acquisition consortium include Arrington Capital, US Bitcoin Corp., Proof Group, Steven Kokinos and Ravi Kaza.
- Bankruptcy probe: Celsius cheated investors 'from the start'
- EU passes world's first regulatory framework for cryptocurrency
- Ads for lucrative jobs in Asia fail to mention chance of slavery as crypto-scammer
- Inside FTX: Jokes about misplaced funds, diabolical IT, poor oversight, and worse
NewCo will receive cryptocurrency estimated between $450 million and $500 million and must "meaningfully distribute" the alterna-cash to Celsius account holders.
Celsius said account holders will own 100 percent of the equity in NewCo. NewCo's management team, however, will receive $35 million per year in management fees.
"The winning bid also provides attractive offers for Celsius to immediately energize its mining rigs that are currently inactive and for NewCo to build its mining business over time," said Celsius.
Blockchain Recovery Investment Consortium (BRIC) was chosen as a "backup bid," should it be required for "any reason." BRIC is a holding company backed by the Winklevoss twins' Gemini Trust, Van Eck Absolute Return Advisers Corporation, and Global X Digital. ®
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Crypto Trading & Speculation
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- The Mega Millions jackpot jumped to an estimated $940 million Friday.
- The winner can expect a sizable tax bill before seeing a dollar of the proceeds.
- The next Mega Millions drawing is at 11:00 p.m. ET on Friday.
If you pick the magic six numbers, there are two payout options: a lump sum of $472.5 million or 30 years of annuitized payments worth $940 million. Both choices are pretax estimates.
However, both windfalls shrink considerably after the IRS takes its cut — and the lucky winner could also trigger a state tax bill.
However, the lump sum may be better because you can maximize the prize by investing the proceeds sooner, according to certified financial planner and enrolled agent John Loyd, owner at The Wealth Planner in Fort Worth, Texas.
Either way, you'll need to "have a plan and realize you can run out of money," he said. Working with a team of experts, including a financial advisor, lawyer and accountant, may eliminate some of the pressure when it comes to decisions about future gifts or donations.
The chance of hitting the Mega Millions jackpot is roughly 1 in 302 million.
Before collecting a dollar of the Mega Millions jackpot, there's a 24% federal withholding. Winnings above $5,000 require a 24% mandatory upfront federal withholding that goes straight to the IRS.
If you opt for the $472.5 million cash option, the 24% withholding automatically reduces your prize about $113.4 million.
However, the 24% withholding won't cover the entire tax bill because the prize pushes the winner into the 37% tax bracket, Loyd said.
The multimillion-dollar Mega Millions jackpot bumps the winner into the top federal income tax bracket, which is currently 37%. However, that doesn't mean they'll pay 37% on the entire windfall.
For 2023, the 37% rate applies to taxable income of $578,126 or more for single filers and $693,751 or higher for couples filing together. You calculate taxable income by subtracting the greater of the standard or itemized deductions from your adjusted gross income.
Single lottery winners will pay $174,238.25, plus 37% of the amount over $578,125. But for couples filing jointly, the total owed is $186,601.50, plus 37% of the amount above $693,750.
The 24% federal withholding will cover a sizable chunk of taxes owed, but the final bill could represent millions more, depending on the winner's tax mitigation strategies and other factors.
You may also be on the hook for state taxes, depending on where you live and where you bought the ticket. Some states don't tax lottery winnings or don't have income taxes, but others may levy above 10% in the top bracket.
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Personal Finance & Financial Education
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Two of the biggest names in the NFT space are clashing over the future of how the tokens’ creators get paid. Yuga Labs, the company behind Bored Ape Yacht Club and CryptoPunks, said today that it would block the ability to trade its newer NFTs on OpenSea by February 2024. The move is meant to protest OpenSea’s decision to stop collecting royalties on behalf of NFT creators — a huge blow to Yuga’s business.
One of the big promises of NFTs was that their original creator would get a cut every time they were resold. For companies like Yuga, which saw explosive prices on its Bored Ape collection for a time, those royalty fees added up to tens of millions of dollars (a blog post suggests the number was $35 million for Bored Apes alone just via OpenSea trades as of November 2022).
But despite the many promises of Web3, it was ultimately up to NFT marketplaces to enforce and distribute those fees for artists. And as the NFT market has deflated, more marketplaces have been happy to cut artists out of the picture as a way to lower fees and attract sellers. The leading marketplace, Blur, only enforces a 0.5 percent fee in most cases, far lower than the 5 to 10 percent fee that artists typically set.
The ban only applies to newer NFTs
Not all of Yuga’s NFTs will be blocked from OpenSea because of technology constraints. The company said it would drop OpenSea support on “all upgradable contracts and any new collections,” which means that older collections — including its most famous, Bored Ape Yacht Club and CryptoPunks — will likely continue to be traded there, dulling the impact of this protest.
“We’ll be working toward disallowing OpenSea’s marketplace to trade our collections as they phase out royalties,” Emily Kitts, a Yuga Labs spokesperson, told The Verge. She declined to offer details on which collections would be affected.
OpenSea tried for a time to find ways to enforce creator fees, but on Thursday the company threw in the towel. It announced that as of March 2024, all royalty fees for artists would be optional — tips, essentially, that the seller could choose to distribute or not. Fees will be optional for all new collections starting August 31st.
Many NFT businesses rely on those fees. They’ll create a limited number of NFTs, sell them for a low-ish price, and then focus on growing the value of the tokens so they can pocket the resale fees later. (Bored Apes were sold for around $220 at launch, which is a lot less than the $216,000 Jimmy Fallon is believed to have paid for one less than a year later.)
Resale fees aren’t the only way that NFT businesses can make money — CrytoPunks don’t have a fee, for instance — but it’s certainly among the primary ways. The Bored Ape collection has a 2.5 percent fee, and after acquiring the Meebits NFT collection, Yuga added a 5 percent fee.
“Yuga believes in protecting creator royalties so creators are properly compensated for their work,” Yuga CEO Daniel Alegre said in a statement this afternoon. Yuga Labs has previously blocked certain transactions from happening on Blur and other marketplaces that don’t enforce royalty fees.
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Crypto Trading & Speculation
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Like most first-time dads, this father wants to do the best for his baby son, even if that means stealing baby formula to keep him fed.
"It's the hungry scream, I know it now," he said, looking out to sea from the clifftop.
Most days, this man and his partner take him for walks along the beach in his buggy. The sea air is fresh. It sounds idyllic, but the truth is they can barely afford to feed him.
Both parents asked that their names not be published.
"I was trying to make the milk last, so I wasn't putting as much powder in as it said to," the man said. The responsibility of feeding a baby weighs heavily.
"In my head, I was thinking 'F*** that - I am just going to go and steal him some'."
The latest on the cost of living crisis
Over the next few weeks, he worked out how to avoid the security measures in their local shops to minimise the chance of being caught - but the adrenaline is always there when he goes in to steal.
His favoured technique is the top-up: buying £20 worth of groceries and stealing a few things that he simply doesn't put through the till.
Sometimes it works, but not always. He was once challenged by two store employees who had spotted him stealing. They asked: "What's in the bag?"
His response was simple and to the point: "Just some stuff I have stolen, if I had the money I'd pay for it."
Only once have the police been called and he was taken off to the police station for questioning before being released.
But he keeps doing it to feed his son.
The most expensive - and essential - item on the list
"It's just when we're really desperate, we manage our money normally," says the boy's mum who is in her early 30s.
She's embarrassed by what they've been doing - it leaves her stressed and tired.
She is on statutory maternity leave from her job as a retail assistant, but inflation means they run out of money almost every month. She said she hasn't been able to access Health Start vouchers from the government that are supposed to provide some help.
Baby formula is one of the most expensive, and essential, items on their shopping list.
She tried hard to breastfeed, but her son wouldn't latch on, so formula milk is their only way of feeding him.
"I just tell my partner what I need, when we need it and he'll go and do it. There's always a risk of him being arrested and not coming back," she said, struggling to finish the sentence.
"And then... we're stuck."
Her partner is unapologetic. He'll do what it takes to feed his son: "The price of the milk is criminal. Where's the line? If you're talking about getting food for your baby, surely that's not on the wrong side of the line?"
They are just one of countless families across the country who are suffering due to above-inflation rises in the cost of baby formula milk. New data from First Steps Nutrition shows that the cost of the cheapest brand of formula milk has risen by 45% in the past two years.
Other brands have risen between 17% and 31% in that time period.
Read more:
Soaring cost of baby formula is leading to unsafe feeding practices
How one group of US mums is mobilising
Health professionals consistently point out that all first formula milks must meet the same industry standards, so the cheapest and the most expensive brands all provide a baby with the nutrition they need.
Sky News has also spoken to other desperate parents risking their babies' health by feeding them formula that is either watered down or mixed with cow's milk or sugar-laden condensed milk.
"People shouldn't be facing these choices when they are simply trying to feed their baby safely ... This shouldn't be happening in 21st-century Britain," says Clare Murphy, the chief executive of the British Pregnancy Advice Service.
She added: "It is appalling that we're having this conversation that you are going out and finding these kind of stories.
"All these things that are happening are putting us on the brink of a public health crisis."
Inside Hartlepool's Baby Bank, they feel that crisis biting every day. It is another frantic day of parents coming in looking for essentials for their babies, and their team of volunteers buzz about fetching items. A sparrow has just flown in from outside and there's a commotion while they try to guide it out. It's a rare moment of distraction.
The number of families coming in keeps rising - so too does the variety of nationalities amongst them. They have one volunteer from El Salvador who helps translate for Spanish speakers. The next mum through the door only speaks Arabic. Her 10-year-old son is helping convey what his mother needs to the volunteers.
The baby bank founder Emilie De Bruijn has just two final tins of first formula available to give out. They are like "gold dust" she said, sounding drained. "This is the busiest week we've ever had."
Her team of volunteers now support around 170 families a week, with baby formula their second most-requested item behind nappies.
Charities across the UK have told Sky News they are dealing with a similar surge in demand - from Aberdeen to Cornwall.
The Splice Baby Bank in Bridgend told Sky News that they often have families needing two tubs of formula a week and regularly make deliveries to families. At the Tippytoes Baby Bank in Leyland, Lancashire, they are exasperated because it all feels so precarious - they are in no doubt that the health and development of babies are being put at risk.
Back in Hartlepool, Emilie explained that when they can't provide the formula a family needs, parents often become frustrated and resort to desperate measures to feed their little ones.
"People are doing unsafe things," Emilie says. "They are swapping to [different types] of formula and that's not good for digestion. They have said: 'I'd rather baby had a rash than be starving'. It's that stigma, that shame. Will you be trolled? Will people try and take your child away?"
The problem with having an in-demand, unaffordable product is that people will look for alternative ways of finding it. A black market in baby formula has sprung up.
The father who was stealing milk also admits to buying discount tubs via a contact, he called a "fence" - a woman selling stolen baby formula for knockdown prices.
"She sells it for a third of the price ... She'll be on the bus with the bags and I'll meet her later," he explains. "It's branded stuff. I won't go to a back alley and buy baby formula from someone who has made it themselves."
Over the past few months, Sky News has seen multiple messages posted online from parents desperately seeking baby formula.
One mum told Sky News she was even considering selling sexual images of herself to meet the cost of it.
Others look for cheap or free formula milk which is regularly advertised online by people selling or giving it away. Health professionals call it "formula foraging". Often it's just parents with good intentions who don't want to throw unopened containers that are still within their use-by date in the bin.
It is the tubs that are already open and being traded online that really concern Emilie.
"It could be out of date, it could be laden with bacteria.
"This could be a baby ends up in A&E, on a drip, because they could get such a bad stomach bug. They could get so dehydrated. It's horrendous.
"Families shouldn't be having to put themselves into dangerous situations like buying a half tub. How do you know that hasn't been laced with something?"
She would like to see a clampdown: "It's dangerous, but people are desperate. That child could be eating something that's riddled with bacteria. I don't want to see babies ended up in hospital with stomach bugs, but it seems inevitable."
Infant feeding specialist Dr Vicky Thomas told Sky News that anecdotal evidence suggests there are more infants being brought for treatment at A&E but that the reasons are often complex, and families are unlikely to say that they are struggling to feed their children.
"In the worst-case scenarios, families sometimes worry that something like that will result in their children being removed from them which is absolutely not what we would expect to happen.
"I think we are going to see babies who are being underfed or possibly overfed because they are having milk crammed into them when they are not actually wanting or needing it just because of the expense of making a bottle."
She pointed out just how crucial the first year is for a baby's development. "They will double their birth weight by the time they are six months, they treble it by the time they are about a year old... you double the size of your brain," she explained.
"So it's not just about building a healthy body, it's about building a healthy brain."
Dr Thomas agrees that what's happening does amount to a public health crisis. "I think that is completely accurate," she said.
"The nutrition that babies are receiving right now determines their health going forward for the next 80 years."
The need for better solutions for families is clear. Clare Murphy from BPAS explained that there are short-term measures that could help, but also wants a proper government-led review to establish what is going on.
"This is an issue in need of national attention," she said.
"It really needs an urgent review to see how we can absolutely secure access to affordable infant formula for every family that needs it.
"We need to look at why we are facing such high prices and really investigate how we ensure access to an affordable, safe product that families across the UK can use."
The formula milk manufacturers told Sky News that they realise how difficult times are for families but that they are facing a significant rise in production costs.
A spokesperson for Danone, which makes Cow & Gate and Aptamil, told Sky News: "We've tried to make savings and absorb costs wherever we can so we can continue to offer the best value to parents right across the UK.
"We are working with key retailers to offer more bigger format value packs, which we have also committed to keep at the same price to retailers throughout 2023.
"Ultimately, individual retailers set the selling price in their stores for all products."
A spokesperson for Nestle, which makes SMA formula milk, told Sky News they are working to increase prices in a responsible way, adding: "Our goal is to keep products affordable and accessible for consumers while still paying fair prices to our suppliers, including farmers."
A UK government spokesperson said: "We recognise the impact rising prices are having on families which is why we are providing significant support worth on average £3,300 per household, including holding down energy bills, uplifting benefits and delivering direct cash payments.
"In April 2021, the value of Healthy Start rose from £3.10 to £4.25 per week, providing additional support to eligible pregnant women and families with children aged under four and over one to make healthy food choices.
"Those eligible families with children aged under one can receive £8.50 in total, a rise from £6.20 a week."
There is no plan to increase the value of the Healthy Start vouchers.
None of that helps the hungry boy whose parents are stealing to keep him fed. It's a daily battle that they are in - it's a survival thing for them. Their options are limited.
His mum said we were the first people she has told about stealing the milk. She hates herself for doing it but won't wait for that hungry scream again.
"He's precious. I'd do anything for him. Even though it's breaking the law."
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United Kingdom Business & Economics
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Scotland's largest city has warned it faces an "unprecedented" rise in homelessness applications as the Home Office tries to clear a backlog of asylum claims.
Glasgow City Council says it could result in 1,400 successful applicants who need help with housing this year.
Modelling suggests the council would need to find another 1,100 properties and face an extra £27m in costs.
The UK government has not pledged additional funding for councils.
The Home Office said action on backlogs was necessary to relieve pressure on the asylum system and that "ample support" was offered to those who made successful applications.
Last December, Prime Minister Rishi Sunak set a target of clearing the so-called legacy backlog in unprocessed asylum claims by the end of this year.
As part of that drive, the Home Office announced a "streamlined" process to help clear a record backlog of people awaiting an initial decision.
Applicants from Afghanistan, Eritrea, Libya, Syria and Yemen who applied before July last year will be considered for refugee status without a face-to-face interview.
Glasgow City Council now expects about 2,500 asylum claims to be processed in Glasgow before the end of the year - with about 1,800 likely to be successful.
Officials believe that a majority of these - about 1,400 individuals - will need help with housing.
'Unplanned and ill-conceived'
Susanne Millar, of Glasgow's Health and Social Care Partnership, said this could put "significant pressure" on the housing system, where there is already a 1,600 shortfall in available properties.
She told an emergency meeting: "When we tried to model what we would need in relation to permanent accommodation for that population, it resulted in an additional 1,100 lets from our [registered social landlord] partners."
She also warned of a risk of rising destitution and rough sleeping in the city, as well as increased use of emergency bed-and-breakfast accommodation.
Overall, the additional housing required is predicted to cost an extra £27m by December, rising to more than £53m by the end of the financial year.
During the meeting on Thursday, councillors claimed Glasgow had been "abandoned" and that the housing shortfall was leading to a "humanitarian crisis".
It comes four months after authorities announced spending reductions in homelessness services. because of budget pressures.
Ms Millar said there were similar pressures in other cities and regions across the UK as a result of a lack of additional funding from government.
Susan Aitken, leader of Glasgow City Council, said the move would be "devastating for refugees and cities across the UK".
"For Glasgow, a sudden cost of around £50m is simply unmanageable and the suffering caused to thousands of people who will suddenly be pushed into destitution is simply unimaginable," she said.
"I want to see people humanely treated by the asylum system. Refugees and immigrants have enriched Glasgow's culture for centuries and I am so proud that people want to make their home here.
"But this unstructured, unplanned and ill-conceived action will cause massive harm to people and to institutions across the country."
Ms Aitken called on additional financial resources to manage the increase.
The Home Office said it needed to speed up processing times in order to relieve pressure on the asylum system and cuts costs for taxpayers.
'Ample support'
A spokesperson said: "To minimise the risk of homelessness, we encourage individuals to make their onward plans as soon as possible after receiving their decision, whether that is leaving the UK following a refusal, or taking steps to integrate in the UK following a grant.
"We offer ample support once claims have been granted through Migrant Help, access to the labour market and advice on applying for Universal Credit."
If a person is granted leave to remain in the UK, they are given 28 days to leave accommodation provided by Mears, a contractor which provides asylum seekers support services to the Home Office.
They can then apply to the local authority for housing under homelessness legislation.
Glasgow is the second Scottish council this week to express concerns about the impact clearing the asylum backlog is having on social housing.
On Monday, Dumfries and Galloway Council leader Gail Macgregor agreed to write to UK Home Secretary Suella Braverman about the local authority's lack of resources to deal with supporting hundreds of asylum seekers looking for housing.
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United Kingdom Business & Economics
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- The Federal Reserve is still expected to hike rates by one-quarter of a percentage point at this week's policy meeting.
- Borrowing rates are already at fresh highs.
- Here’s a breakdown of how the Fed is impacting your monthly expenses and savings.
Another a 0.25 percentage point, or 25 basis point, hike will mark the 10th time the Fed has raised its benchmark interest rate over the past year or so, the fastest pace of tightening since the early 1980s.
Consumers are now paying more to borrow while still grappling with a high cost of living — causing them to feel increasingly worse off financially.
Even though the Fed's rate-hiking cycle has already started to cool inflation, higher prices are causing real wages to decline.
Real average hourly earnings are down 0.7% from a year earlier, according to the latest reading from the U.S. Bureau of Labor Statistics.
Because incomes have not kept pace with inflation, household budgets are squeezed, causing more people to lean on credit just when interest rates have been rising at the fastest pace in decades.
"People are racking up debt and that's troublesome," said Tomas Philipson, University of Chicago economist and the former chair of the White House Council of Economic Advisers.
Here's a breakdown of how increases in the benchmark rate have impacted the rates consumers pay on the most common types of debt:
Most credit cards come with a variable rate, which has a direct connection to the Fed's benchmark rate.
After a prolonged period of rate hikes, the average credit card rate is now more than 20%, on average — an all-time high, while balances are higher and nearly half of credit cardholders carry credit card debt from month to month, according to a Bankrate report.
"Yet another rate hike from the Fed means today's sky-high credit card interest rates will rise even further in the very near future," said Matt Schulz, chief credit analyst at LendingTree. Cardholders should expect their current cards' interest rates to rise in the next billing cycle or two, he said.
Although 15-year and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed's policy moves.
The average rate for a 30-year, fixed-rate mortgage currently sits at 6.48%, according to Bankrate, down slightly from November's high but still much higher than they were a year ago.
"While borrowers can save money relative to what they would have paid for a mortgage a few months ago, they're still going to be shelling out much more than they would have had they bought a home at the start of last year," said Jacob Channel, senior economic analyst at LendingTree.
"All in all, there's no getting around just how tough today's housing market is for many people to break into and navigate."
Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate. As the federal funds rate rises, the prime rate does, as well, and these rates follow suit. Most ARMs adjust once a year, but a HELOC adjusts right away. Already, the average rate for a HELOC is up to 7.99%, according to Bankrate.
Even though auto loans are fixed, payments are getting bigger because the price for all cars is rising along with the interest rates on new loans.
The average interest rate on a five-year new car loan is now 6.58%, according to Bankrate.
Keeping up with the higher cost has become a challenge, research shows, with more borrowers falling behind on their monthly loan payments.
Federal student loan rates are also fixed, so most borrowers aren't immediately affected by rate hikes. The interest rate on federal student loans taken out for the 2022-23 academic year already rose to 4.99%, and any loans disbursed after July 1 will likely be even higher. Interest rates for the upcoming school year will be based on an auction of 10-Year Treasury notes later this month.
For now, anyone with existing federal education debt will benefit from rates at 0% until the payment pause ends, which the U.S. Department of Education expects to happen sometime this year.
Private student loans tend to have a variable rate tied to the Libor, prime or Treasury bill rates — and that means that, as the Fed raises rates, those borrowers will also pay more in interest. How much more, however, will vary with the benchmark.
While the Fed has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock-bottom during most of the Covid pandemic, are currently up to 0.39%, on average.
Thanks, in part, to lower overhead expenses, top-yielding online savings account rates are as high as 4.5%, according to Bankrate.
However, if this is the Fed's last increase for a while, then deposit rate hikes are likely to slow, according to Ken Tumin, founder of DepositAccounts.com.
But "it's not too late," said Greg McBride, chief financial analyst at Bankrate.com. "We may not see much more in the way of improvement but there's still a substantial advantage," he said of switching to a high-yield savings account.
"There's no advantage to staying where you are if you haven't benefited from rising rates."
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Interest Rates
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RBI Resisted Government Push For Rs 3 Lakh Crore Transfer In 2018 Ahead Of Elections: Viral Acharya
Acharya in a fresh prelude to his book 'Quest for Restoring Financial Stability in India', called the exercise a "backdoor monetisation of the fiscal deficit by the central bank".
The Reserve Bank of India resisted a 'raid' planned by some in the government to extract Rs 2-3 lakh crore from its balance sheet in 2018 to meet populist spending in run-up to general elections, Viral Acharya, who was deputy governor at RBI at that time, has written.
This apparently had led to differences between RBI and the government, which even contemplated invoking never-used Section 7 of the Reserve Bank of India Act to issue directions to the central bank.
Acharya who had first flagged the issue while delivering AD Shroff Memorial Lecture on Oct. 26, 2018, in a fresh prelude to his book 'Quest for Restoring Financial Stability in India', called the exercise a "backdoor monetisation of the fiscal deficit by the central bank".
"Creative minds in the bureaucracy and the government' devised a plan to transfer substantial sums accumulated by RBI during the tenure of previous governments to the current government's account," he said in the prelude in the updated edition of his book first published in 2020.
RBI every year sets aside a part of its profit instead of giving it all to the government. In three years leading up to the 2016 demonetisation, the central bank made record profit transfers to the government, Acharya said.
During the demonetisation year, the expense for currency printing reduced the transfers made to the Centre, resulting in 'intensifying' the government's demand ahead of the 2019 elections, he said.
Extracting more dividends from the RBI was in a way 'back-door monetisation' of fiscal deficit -- the difference between the revenue government generates and its expenditure. The deficit widened after disinvestment missed targets.
"Why cut populist expenditures in an election year... when the central bank balance sheet can be raided and surging fiscal deficits essentially monetised?" he wrote.
Acharya quit in June 2019, six months before his three-year term as the deputy governor in-charge of the monetary policy, financial markets, financial stability and research.
Prior to that, Urjit Patel had resigned as the governor of the central bank in December 2018. Though he cited 'personal reasons', the resignation came amid reports of the rift between the RBI and the government. His was a rare case of a serving governor leaving his job midway through his three-year term.
Delivering the AD Shroff Memorial Lecture, Acharya had in October that year stated that: "Governments that do not respect central bank independence will sooner or later incur the wrath of the financial markets, ignite economic fire, and come to rue the day they undermined an important regulatory institution."
Acharya, who was deputy governor of RBI from Jan. 23, 2017 to July 23, 2019, in the prelude wrote that the conditions in 2018 were "undoubtedly challenging" but not extreme, like the global financial crisis of 2008-09 or the U.S.'s 'taper tantrum' of May-September 2013.
The real catch was that a national election was due from April to May 2019, he wrote, adding, "some creative minds in the bureaucracy and the government conjured up an idea for generating Rs 2-3 lakh crore, or equivalently $30-40 billion at the then exchange rate, for populist spending".
Demonetisation of November 2016 was of course another such idea, the former deputy governor wrote.
In this case, however, the magic wand would be waived on the RBI balance sheet rather than on currency notes, he said.
Explaining the events that led to the standoff where the never-used Section 7 of the RBI Act to issue directions to the central bank was discussed, Acharya said, "No democratic emerging market government with reasonable institutions is likely to get its way without meeting formidable resistance when it repeatedly proposes plans to raid its central bank's balance sheet for short-term populist expenditures."
His going public about the tensions, led to some sort of wise counsel prevailing and a committee under former governor Bimal Jalan was set up to draw a reasonable framework for future transfers from RBI balance sheets to the government.
"To its credit, the government sidelines most of the original architects of the 'idea' [to raid RBI balance sheet]," he wrote. "And indeed, a rather large transfer, which unlike in 2018 could be well justified during the pandemic in 2020, was delivered by the then Reserve Bank Board."
The RBI, he pointed out, generates revenues primarily via seigniorage.
Each year, the central bank's board sets aside some provisions out of the profits so generated rather than distributing them all to the central government.
In short, the Reserve Bank saves from its profits, maintains provisions and holds safe assets for financial stability purposes, he said and added the 'idea' conjured up was to transfer a significant portion of these provisions from the central bank balance sheet to the account of the present-day government - provisions accumulated over several terms of prior governments and needed to smoothen financial fragility during several terms of future governments.
"As is now publicly known, the Reserve Bank did not play along with the idea," Acharya wrote.
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India Business & Economics
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Millions of households across the UK will receive £300 from the government between 31 October and 19 November.
It is the second of three cost of living payments - totalling £900 - being sent directly from the Department for Work and Pensions (DWP).
Eligible pensioner households will also receive a further £300 payment later this year as an addition to the Winter Fuel Payment.
The money is being sent out automatically and directly, meaning those who are eligible do not need to apply, contact the government, or take any action to receive it.
Potential recipients should be wary of any email scams or text messages purporting to be from the DWP and asking for personal details.
The payment reference for bank accounts will be the recipient's National Insurance Number followed by DWP COL or HMRC COLS.
It is part of a package of support with the average household being paid £3,300 in the past year, Chancellor of the Exchequer Jeremy Hunt says.
Read more from Sky News:
Supermarkets accused of 'potentially dodgy tactics'
Amazon announces October sales - cost of living latest
UK set for highest inflation in the G7
What benefits qualify for the payment?
To receive the payment, you must have received one of the following between 18 August and 17 September.
Work and pensions minister Mel Stride said: "The best way we can boost bank balances is by bearing down on inflation, but as we get there, we are ensuring the most vulnerable households are cushioned from high prices with a further Cost of Living payment.
"Alongside this, thousands of Work Coaches across the country are helping find work, increase their hours and boost their skills.
"I encourage anyone who wants to progress their career and strengthen their finances to visit their local Jobcentre to find out what help is available."
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United Kingdom Business & Economics
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- Retailers and brands are trying to cash in on the Barbie buzz, as higher grocery prices and a shift toward services hurts sales of discretionary merchandise.
- Macy's-owned Bloomingdale's, Gap, Aldo and Crocs are some of the companies with deals with Mattel to create and sell Barbie-themed clothing, shoes and more.
- Companies are also thinking beyond Barbie by chasing new and different merchandise that gets shoppers to spend.
NEW YORK CITY — In the middle of Manhattan, shoppers can step inside of a life-sized Barbie box, strike a pose by a hot pink slide and browse earrings, dresses and candles inspired by the iconic plastic doll.
The pop-up shop inside Bloomingdale's flagship store is just one example of how retailers are trying to cash in on the buzz ahead of the Friday release of "Barbie" from Warner Bros.
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More than 100 brands, including Bloomingdale's, Kohl's, Crocs and Gap, have licensing agreements or other deals with toy maker Mattel to sell Barbie-themed fashion, beauty, accessories and more. Many of those items cater to adults who want to channel childhood memories by donning bright pink heels or lounging on a pool floatie that looks it came out of a Barbie dreamhouse.
Bloomingdale's has an exclusive collection of Barbie-inspired women's clothing and accessories for its private label, Aqua. It also hopes to draw shoppers with Barbie-themed window displays on Lexington Ave., special events and complimentary hair styling.
With a splash of hot pink, retailers hope to chase away the summer doldrums and inflation blues. The Barbie merchandise, while hatched months ago in the lead up to the movie, speaks to how retailers have had to work harder and get creative to catch shoppers' attention and convince them to pay full price. Companies including Bloomingdale's parent Macy's, big-box retailer Target and Coach parent Tapestry have warned of weaker sales of discretionary merchandise and big-ticket items in the U.S., as consumers pay more for groceries and spend on services like dining out and traveling.
Plus, millions of Americans have another expense returning this fall: Student loan payments are resuming after a more than three year pandemic-related pause.
Aldo Chief Brand and Product Officer Daianara Grullon Amalfitano said some sparkle and hot pink could help snap shoppers out of a practical, budget-focused mindset.
"This Barbie Aldo collaboration is one of those where maybe that rational thinking just goes out the window and you're just like, 'Ah, this makes me feel so happy. So good. I have to have it,'" she said.
About half of Aldo's Barbie collection sold out in the first week. The company said it's working on replenishing inventory for the limited-edition collection, which includes 19 items from crossbody bags to pumps.
About half of Aldo's 317 North American stores carry the line, along with its website. The Aldo products are also available at select Macy's stores and on Macy's website.
Macy's higher-end department store, Bloomingdale's, carries the Barbie the Movie x Aqua line in nine stores and online, and mixed in merchandise from other brands. So far, the Barbie merchandise is "selling incredibly well" and appealing to customers across generations, said Frank Berman, the department store's chief marketing officer.
Berman said the retailer intentionally included items across price points in the Barbie-inspired collection, from a $24 pink candle to rose gold heart stud earrings for $8,350.
"We have a few things that are a little over the top, but it's curated so that everybody can can have a piece of it," he said.
Many items in Gap's Barbie collection have sold out. They include rectangular hot pink adult sunglasses and a T-shirt with Ken in big capital pink letters, both $39.95.
Barbie may not just jolt a sluggish 2023 box office. The buzz could also lift spending on nonessential items that has dropped after a Covid spending spree.
Retailers will likely have to keep offering unique and trendy merchandise to get shoppers to shell out on wants rather than needs as they gear up for the all-important holiday season.
Discretionary general merchandise sales fell by 4% in dollars in June compared with the year-ago period, according to market researcher Circana, the merged company formerly known as The NPD Group and IRI. Unit sales in the category fell by 9% during that timeframe.
Last week, Amazon, Walmart, Target and others drove sales by offering deeper discounts with Amazon Prime Day and other competing promotions. Consumers spent $12.7 billion during the two-day sales event online in the U.S., representing 6.1% growth year-over-year and marking a new record, according to Adobe Analytics.
Barbie cut through as a popular search item last week. It jumped from 85th to 49th on the list of top brands this Prime Day versus last year, according to early data from Numerator. The top Barbie item sold during the sales event was lead actress Margot Robbie's "Barbie" collectible doll.
As Americans look for deals, Barbie is just one of the ways that retailers are persuading them to look beyond the essentials.
Oliver Chen, a retail analyst for Cowen, said brands have capitalized on trends like the shift toward looser-fitting denim, the return to dressier and more tailored outfits for occasions and the heightened interest in innovative makeup and skincare products.
"Every brand loves newness because newness creates desire," said Chen.
Barbie is "another floating life jacket" that retailers can grab onto, said Susan Fournier, a professor of marketing and dean of Boston University's business school. The brand has built-in recognition, nostalgia that resonates across generations and baked-in free marketing because of the movie.
Unlike other movie-themed merchandise, Barbie isn't just a logo that can get plastered on T-shirts and backpacks, but an aesthetic that cuts across home goods, makeup and clothing and channels an optimism that many shoppers may crave, she said.
"We're in a pretty messy world," she said. "We're in the post-Covid world, which has a ton of baggage. There's a ton of anxiety. And then you get Barbie and it's all pink. And I think there's something super deep about a hunger for that."
She said some of the brand's power comes from its complicated legacy. Barbie is closely linked with perfection, with her tiny waist, beautiful home and handsome boyfriend. Yet Barbie was also unmarried and became an astronaut before the first moon landing.
"There is something culturally powerful about living in that contradictory space," Fournier said.
Other retailers have run a similar playbook with branding inspired by pop culture.
Tapestry-owned Coach has collaborated with beloved brands and celebrities, including Disney and comic strip Peanuts. It had a collection of clothing and accessories inspired by Jean-Michel Basquiat, the late New York artist who became famous in the 1980s for his edgy and graffiti-inspired designs. It recently launched a new collection with actress Kirsten Dunst.
Coach CEO Todd Kahn said the company carefully chooses which partnerships make sense. He said he has enjoyed seeing other brands' Barbie collaborations, but Coach decided against a partnership.
"So often people use collaborations for a quick spike," he said. "We're interested in long-term sustainability. That's why with our collaborations we've become very selective on them. We use them to help bring a new audience to the table. And then we measure how sticky they are afterwards, which is super important."
For example, he said, Coach's Basquiat items attracted new and more engaged customers, brought in about 10% more Gen Z and millennial customers than its mainline collections and enticed them to pay some of Coach's highest price points.
Some brands appear to be getting a Barbie bump — but it remains to be seen whether those customers will stick around.
Berman, Bloomingdale's longtime chief marketing officer, said the chain sees an increase in store and website traffic when it has collaborations. That's why the company's flagship has "The Carousel," a dedicated pop-up space, which can also be shopped online.
The retailer has blended fashion, a well-recognized brand and a memorable experience many times before. It had a pop-up inspired by Netflix's hit series, "Bridgerton." Many years ago, it had a "Moulin Rouge"-themed pop-up, complete with can-can dancers and an appearance by the movie's star, Nicole Kidman.
Aldo's Amalfitano declined to share recent sales numbers or its forecast for the year. Yet like other retailers, the footwear and accessories brand has felt the pullback in discretionary spending, she said.
She hopes elevated sales and shopper engagement will continue, even when the Barbie merchandise is gone.
"That's a burning question," she said.
— CNBC's Caitlin Freda and Courtney Reagan contributed to this report.
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Consumer & Retail
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The ‘subscription economy’ is huge, predicted to grow to $1.5 trillion worldwide, according to UBS - and most of us have a few online subscriptions we no longer need, but still pay for.
Figures from C+R Research found that 42 percent of us have stopped using a subscription service but forgotten that they are still paying for it.
DailyMail.com spoke to financial wellness expert Clare Seal, founder of the My Frugal Year Instagram community, who said that you should be careful when signing up to subscription services - and use clever tech hacks to cancel ones you don’t need.
Seal said: ‘When you sign up to any free trial, check that you can cancel online and just as easily as you signed up.
'If there’s a long process or you have to call or email someone, you might forget or be too busy and end up paying for a subscription you don’t use.
‘Also, as soon as you sign up for a free trial, put in a calendar reminder the day before renewal to cancel or renegotiate.’
Seal recommends ‘soft quitting’ as a way to save money on your subscriptions.
She said: ‘ If you still want to use a service, but don’t want to pay full price, try ‘soft quitting’.
'This is where you go through all of the motions of canceling but accept an offer to stay. This works well with some streaming subscriptions, especially now.’
Seal says that there are also some steps to take to track down rogue subscriptions you might have forgotten about.
Seal says, ‘Your phone's operating system also lets you keep track of subscriptions you might have made in apps.’
On Apple devices, you can automatically hunt down and cancel subscriptions you might've signed up to through iOS apps - you can even get refunds for recently billed ones.
Simply go to the App Store app, then tap your profile image, then in your Account page, you’ll see a list of your current subscriptions plus their billing dates (or expiry dates).
You can cancel simply by tapping on any of the subscriptions, and selecting Cancel.
On Android, open Google Play Store, tap your profile picture in the top right, then select, ‘Payments and Subscriptions’, then ‘Subscriptions’.
You can see all of your current subscriptions here, including their next billing date.
You can cancel directly from the Play Store app, without having to visit the app in question.
Use your banking app - or a specialist one
Setting a time each month to think about subscriptions can help, says Seal - as can using apps to track down rogue subscriptions.
She says, ‘Set a monthly time to review all your subscriptions by looking at your bank statement or an app that monitors your spending.
Many modern banking apps offer automatic ways to track recurring expenses - for instance, Bank of America’s virtual assistant Erica can find recurring payments (and warn you when these go up).
She says, ‘Using bank apps or subscription apps, you can work out the total of what you’re spending on subscriptions each month/year, which can be a wake-up call. Once you review, think about what you get value from and what you don’t, and cancel or pause the latter.’
Apps such as Mint and AskTrim offer automatic ways to find subscriptions, logging in to your online bank account with your details and spotting recurring payments (apart from energy bills and rent).
Services such as TrackMySubs take a more manual approach, where you have to add subscriptions yourself, but offer a useful reminder when payments go out.
If you signed up using your email as a username, chances are you’ll be sent regular emails notifying you that you’ve been billed.
Even if you have a lot of email subscriptions , it’s fairly easy to hunt down the paid ones - just search ‘subscription billed’, or ‘subscription receipt’ within your email app.
Within some services there will be an option to unsubscribe directly from the email - if not, go to the provider’s website or app and unsubscribe manually.
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Personal Finance & Financial Education
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A former Deutsche Bank executive testified Wednesday that the bank viewed Donald Trump as a "whale" of a client, and sought to do additional business with him, while praising the Trump Organization for taking its properties from a "shell" into "fully operational" spaces.
Rosemary Vrablic, a former Deutsche Bank managing director, took the stand in the civil trial stemming from New York Attorney General Letitia James’ lawsuit against former President Trump, his family, and his businesses. James accused Trump of inflating his financial statements and deceiving banks.
Former President Trump and his family have denied any wrongdoing. The former president has repeatedly said his assets were actually undervalued. Trump has repeatedly said his financial statements had disclaimers, requesting that the numbers be evaluated by the banks.
Trump's defense team has sought to show that the bank actually sought additional business from Trump — which Vrablic testified to Wednesday.
The bank’s revenue from its business with Trump increased from approximately $13,000 in 2011 to a projected $6 million in 2013, according to a briefing document the bank prepared for then-co-chairman, Anshu Jain, before a lunch with Trump in early 2013.
The document revealed "key asks" for Jain to make during that lunch with Trump, including to "obtain more deposits and investment management assets" from Trump, as well as to "strategically discuss leveraging Mr. Trump’s personal and professional network within the real estate industry" in New York for the benefit of Deutsche Bank.
"It was a very, very nice, productive lunch," Vrablic recalled on the stand.
The next year, her direct boss went to lunch with Trump to thank him and "ask whether we can work on other opportunities with them," according to a document for that meeting.
Vrablic also testified about Trump’s acquisition of the Old Post Office in Washington, D.C.
"It was an empty shell," she said of the space before the Trump Organization came in. "[The Trumps] took it from a shell to a fully operational hotel and event space."
Vrablic was also asked if Deutsche Bank ever turned Trump down for a loan.
Vrablic said they did — a loan for the Scotland golf course, Trump International Golf Links Aberdeen, but only because Trump was about to become president and the bank did not want to increase exposure, amid concerns that increased exposure could bring additional scrutiny and carry more risk for the bank.
During cross-examination, Vrablic said she never saw Trump’s statement of financial condition. She also testified that she expected her clients to present their financial information accurately.
James, a Democrat, sued Trump, his children, and the Trump Organization last year, alleging that he and his company misled banks and others about the value of his assets. James said the former president’s children — Donald Jr., Ivanka and Eric — and his associates and businesses committed "numerous acts of fraud and misrepresentation" on their financial statements.
James filed the lawsuit against Trump "under a consumer protection statute that denies the right to a jury," a Trump spokesperson told Fox News Digital.
"There was never an option to choose a jury trial," the spokesperson said. "It is unfortunate that a jury won’t be able to hear how absurd the merits of this case are and conclude no wrongdoing ever happened."
Judge Arthur Engoron, who is presiding over the trial, in September ruled that Trump and the Trump Organization committed fraud while building his real estate empire by deceiving banks, insurers and others by overvaluing his assets and exaggerating his net worth on paperwork used in making deals and securing financing.
Trump defense attorneys say they will likely move for a mistrial.
The Associated Press contributed to this report.
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Banking & Finance
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The cost of a first class stamp will rise to £1.10 early next month, Royal Mail has announced, breaking the £1 barrier for the first time.
The company said it would increase the price of a first class stamp by 15p from 3 April, a year after it went up by 10p to 95p. The price of a second class stamp is also going up, by 7p to 75p.
The charity Citizens Advice condemned the increase, which it said could not come at a worse time for consumers hit by the soaring food and energy bills owing to the cost of living crisis.
Royal Mail said the increases were needed to ensure the universal service, which means letter delivery costs the same irrespective of distance, “remains sustainable”. Its decision follows a 25% decline in letters since the pandemic.
The 507-year-old business, which was privatised in 2013, has been hit by repeated strikes in a long-running dispute with the Communication Workers Union over pay and changes to working conditions, and was also the victim of a cyber-attack earlier this year that halted international parcel and letter deliveries.
It expects to make an operating loss of up to £450m this year.
Royal Mail said it remained committed to the universal service but that costs were increasing as “customer behaviours change”. It has asked the government to reduce its obligation to deliver letters six days a week, to five days.
Nick Landon, chief commercial officer at Royal Mail, said: “We appreciate that many businesses and households are facing a challenging economic environment and we are committed to keeping our prices affordable. We have to carefully balance our pricing against a continued decline in letter volumes and the increasing costs of delivering letters six days a week to an ever-growing number of addresses across the country.”
Matthew Upton, director of policy at Citizens Advice, said the higher cost of stamps came as many consumers endured postal delays. “These record-breaking prices couldn’t be coming at a worse time for consumers, who’ll now be paying 64% more for a first class stamp than five years ago. Almost one in five people are already struggling with current prices for second class stamps.
“Royal Mail is choosing to hike prices at a time when millions are missing important letters, thanks to post delays. Nobody should be paying more for this kind of sub-par service.”
He said Ofcom should be holding Royal Mail to account over two years of missed delivery targets. “Enough is enough, it’s time for the regulator to act.”
Research by Citizens Advice found that 60% of UK adults have experienced letter delays, with 6.2 million people missing important mail last Christmas, such as health appointment letters. Royal Mail’s most recent quality of service report showed it delivered only 54% of first-class post on time in the third quarter, against a target of 93%.
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United Kingdom Business & Economics
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Americans owe $1 trillion in credit card debt
America’s credit card balance has passed $1 trillion, or it’s about to, depending on whom you ask.
The average interest rate on a new card is 24 percent, the highest figure since the Reaganomics era.
A typical American household now carries $10,000 in credit card debt, by one estimate, another record.
If that doesn’t sound like a lot of debt, try paying it off. At $250 per month, with 24 percent interest, you’ll be making payments until 2030, and you’ll spend a total of $20,318, twice what you owed. And that assumes you never use the card again.
“It’s hard to build wealth when you’re paying 20 percent interest every month,” said Ted Rossman, a senior industry analyst at Bankrate.com.
The nation’s credit card debt stands at $986 billion, according to the Federal Reserve. The figure has climbed by $250 billion in two years.
Some other estimates range higher. A WalletHub report put total card debt at $1.2 trillion at the end of 2022.
Just two years ago, the national credit card narrative seemed headed in the opposite direction. Card balances declined from about $850 billion at the start of 2020 to less than $750 billion in the spring of 2021, a time of pandemic penny-pinching and federal stimulus-payment largesse.
“In 2021, we saw people paying off a record amount of debt,” said Jill Gonzalez, a senior analyst at WalletHub. “People had been saving through 2020, without much to do.”
And then, everything changed. Spending picked up. Saving slowed down. The Federal Reserve commenced an unprecedented campaign of interest rate hikes.
Credit card debt rose by $86 billion in the fourth quarter of 2022, the largest increase on record.
“The spending is really nonstop now,” Gonzalez said. “We once thought of putting things on our credit card as frivolous spending, or a big purchase, a TV. Now, because of inflation, people are putting actual necessities, food, housing, on their credit card.”
The average credit card interest rate stands at 20.92 percent. Just last spring, the average card rate was 16.65 percent.
“We’ve been tracking credit card rates since 1985, and these rates are the highest we’ve ever seen,” Rossman said. “The minimum-payment math is pretty staggering.”
Credit card customers fall in two distinct camps: those who pay off their balance every month, and those who do not. For consumers who never carry a balance, the interest rate doesn’t really matter, because they aren’t paying it.
But that group is shrinking. Forty-six percent of cardholders carry debt from month to month, up from 39 percent a year ago, Bankrate reports.
Credit card balances typically recede in the first months of the year, as consumers leverage holiday guilt, year-end bonus funds and early tax refunds to pay down their cards.
This year, that didn’t happen: The national credit card debt remained essentially flat.
And analysts expect it to rise in the months to come.
“We have summer travel coming up,” Gonzalez said. “And then we have quarter four upon us, the biggest spending time of the year.”
Credit card debt is afflicting different generations in myriad ways.
Older Americans tend to owe more card debt. A New York Life survey found that the average Generation X consumer with a balance owes just over $7,000, compared to an overall average debt of $6,321 per cardholder.
Millennials and Generation Z have less card debt, but they may struggle more to pay it down. One recent survey found that credit cards rank among the top three monthly expenses for both groups.
Credit card debt isn’t like a student loan or home equity line. It can sneak up on you. And it carries a stigma of fiscal irresponsibility. A recent NerdWallet survey found that one-third of married Americans with card debt haven’t told their spouses how much they owe.
“For some people, there is shame attached to debt,” said Melissa Lambarena, credit card expert at the personal finance site.
Federal regulators worry about Americans taking on too much card debt, especially younger consumers and lower-income households.
The Credit Card Accountability Responsibility and Disclosure Act of 2009 restricted lenders from charging excessive fees to customers who pay late or charge past their credit limit. The legislation barred card issuers from abruptly changing the interest rate or requiring payment on an unreasonably short deadline. The legislation offered further protections for young cardholders.
This year, the Biden administration is moving to further reduce punitive fees.
“Currently, you can be charged $30 for the first late payment, and $41 for a subsequent late payment within six billing cycles,” said Wei Zhang, a deputy assistant director in the Consumer Financial Protection Bureau.
Proposed reforms would cap fees at $8, reducing the annual tab for late fees from $14 billion to $5 billion, Zhang said.
If you feel buried in credit card debt, here are some tips for paying it down.
A zero-interest credit card
The zero-APR credit card may be the single best way to drive down card debt, in terms of pure savings. The typical card allows the customer to transfer thousands of dollars of debt from other accounts for a one-time fee. After that, in most cases, your entire monthly payment goes toward reducing your debt, rather than paying interest to the bank.
The downside: Once the promotion expires, the interest kicks in.
Pay off the smallest balance first
One easy strategy for trimming debts is to pay them off one by one, starting with the smallest. Financial planners call this technique the snowball: List all of your debts, and pay off the smallest one as quickly as possible.
Fairly quickly, a list of seven or eight debts can shrink to five or six, which means fewer monthly payments.
Pay off the debt with the highest interest
One alternative to the snowball is the avalanche: Arrange your debts from the highest interest rate to the lowest, and make your biggest payment on the debt with the highest rate, typically a credit card.
This technique makes good money sense, because you’re targeting the loan that costs the most. On the downside, paying off a large balance with a high rate can take years.
Call a credit counselor
Overwhelmed borrowers might consider contacting the nonprofit National Foundation for Credit Counseling.
A credit counselor can rescue borrowers from past-due notices and debt collectors. They work with lenders to halt or waive fees and cut interest rates. The client makes a single monthly payment to the counselor, who parcels out the money to creditors.
Call the bank
A consumer facing high interest rates and crippling late fees should consider contacting the bank that issued the card. Dial the 800 number and open a polite negotiation. The higher your credit score, the stronger your leverage. The card issuer may lower your interest rate. The company may waive late fees or offer a temporary reprieve from monthly payments.
Try any of those techniques to reduce your card debt, credit experts say, but do something.
“The longer it takes for you to come up with a plan to pay it off,” Lambarena said, “the more expensive it’s going to be.”
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Banking & Finance
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As we saw with the collapse of FTX, the Web3 space leaves a lot to be desired in terms of transparent information about companies, fundings, management and a slew of other data that really is commonplace and ‘de rigueur’ in the ‘normal’ tech industry. And there are far too many so-called ‘Web3 analyst’ houses that are borderline conflicted.
But, let’s face, it the ‘Web2’ space doesn’t have all the answers either. Subscribing to platforms like Pitchbook and Crunchbase can be an expensive business, expecially for the for the everyday individual builder who doesn’t have access to a corporate expense account, making it difficult to access reliable, trustworthy, web3 data for the average person.
After a while in Beta, a new startup, now formally coming out of the gate, hopes to change this.
EdgeIn is a new database platform which it says is aiming to “level the playing field for builders in Web3” to “erode Big Venture/Hedge’s advantage/stranglehold” over the market, it says.
Put simply, the platform is pulling in lots of different data sets in a familiar database format and making it either (mostly) freely available or charging a low subscription.
The Web3 dataset on companies, projects and investments will cost $14.99/month, and offer real-time updates on companies, people, deals and events. Unusually, it will also offer emails of users on the platform (I’m not sure how that will play with Europe’s GDPR however).
Cofounder and CEO Redg Snodgrass told me the idea for the platform came from ‘scratching his own itch’ in terms of a desire to get reliable data for discovery, due diligence and competitive analysis: “We spoke with 100s of investment analysts and associates (the workhorses) and heard the same pain points over and over. Crunchbase is stale and unreliable. Pitchbook is too expensive and out of reach especially for web3-specific data. Other incumbents in the space move too slow. Everyone wanted a better, more collaborative experience.”
There are currently two user journeys on the site: company and investor. The platform pulls in lots of data sets from partners such as Harmonic.ai or Amberdata, and indexes companies itself. A companies page offers ‘Recently Discovered’ Web3 projects. This is a short view of a company, plus users can tag-up companies, add a reaction or add it to a personal list.
It also displays a company index which can be filtered on funding, geography, trending, recently acquired or shut down.
An activity timeline shows events related to a company listing, such as fundraising, acquisitions, hiring events, plus the company’s team, as well as investment data. On the Investors page you can see they invest in certain tags, but a user can also contrast with their actual deals.
Finally, if users see missing data, they can make suggestions on the platform which – EdgeIn claims – can be acted upon in around an hour.
EdgeIn claims to have indexed over 90% of the Web3 market to date, and listed 50,000 Web3 companies and projects, with 4,000 active investor profiles and over 20,000 builders. The company eventually plans to target Generative AI, AR/VR and a few other alpha markets.
Community members have free access to around 25,000 published companies, and since anyone can provide data, EdgeIn wants to create incentivize structures for that, such as with tokens. In addition, EdgeIn will be releasing an API.
Founded by Snodgrass, Ashley Brown and Raymond Lopez, the company is currently bootstrapping and has raised $400,000 from a handful of angel investors including Mike Dinsdale (Akkadian Ventures, DocuSign, DoorDash, Gusto), Mike Borozdin (DocuSign, Google), Jeremy Clover (Circle), Pedram Amini, Bayo Okusanya and Ulises Merino Núñez. The company is now in the process of raising a $1.5M pre-seed round at an $8 million cap.
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Crypto Trading & Speculation
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PROGRAMMING NOTE: We’ll be off for Thanksgiving this Thursday and Friday but back to our normal schedule on Monday, Nov. 27.
The crypto industry took a bit of a black eye yesterday as Changpeng Zhao, the founder of the largest crypto exchange in the world, Binance, pleaded guilty to a slew of money laundering charges and the company agreed to pay the federal government $4.4 billion in penalties.
The deal forces crypto to reckon with its biggest questions: How “law-abiding” can an industry really be when it’s inherently designed to evade surveillance and reporting? What should the industry’s relationship with the government be, and who should be responsible for supervising it? Are crypto markets really something new at all, or just speculative finance by another name?
Binance’s downfall did not come as a surprise to most crypto-watchers. Federal agencies have been monitoring the company’s activities for years, as it was widely known for keeping to the crypto world’s original Wild West ethos in an effort to drive growth.
“It’s not like everybody thought everything was all good at Binance,” Steven Lubka, a managing director at the Bitcoin firm Swan, told me. “It’s been an open secret that things are not okay.”
Binance reached its agreement with the Department of Justice, Treasury, and the Commodity Futures Trading Commission over a heap of financial crimes including allegations that the company continually processed transactions for individuals and nations sanctioned by the U.S. government, including Hamas and ISIS. Zhao, the company’s founder and arguably the most influential person in crypto, stepped down as CEO and agreed to pay a $50 million fine and another $150 million penalty to the CFTC. He faces up to 18 months in prison, and the company will continue to operate under a Treasury-approved monitor.
The structural decapitation and continual federal surveillance of the biggest crypto company in the world is not, obviously, immediately a good thing for the industry. But some think that it could clarify the differences between the field’s fraudsters and good-faith actors, clearing the lane for lucrative and lawful crypto businesses.
“Some people thought the U.S. government was just going to completely ban and annihilate all of this… I think it’s ridiculous to assume that’s the outcome,” Lubka said. “Who has really done the most damage — the industry or the regulators?”
Lubka was citing the high-profile collapses of FTX, Three Arrows Capital, and Celsius, all of which spectacularly flamed out amid their own financial mismanagement or outright fraud. The sense that the “adults” are missing when big decisions are made has been a major focus in the crypto industry recently: POLITICO’s Morning Money reported today on the herd of credibility-boosting law enforcement and security officials who have joined crypto’s ranks in recent months, from former defense secretary Mark Esper joining Coinbase’s “global advisory council” to a letter to Congress signed by 40 defense officials on behalf of the Blockchain Association trade group.
“The signatories state clearly that no amount of money, whether it be gold, dollars, or digital assets should be used to fund illicit activity, but we must also be able have a reasonable conversation about the latter when it comes to proposed solutions to the problem,” Blockchain Association CEO Kristin Smith said in a statement.
Crypto has also been trying to dispel its outlaw image through the use of super PACs, as POLITICO’s Jasper Goodman reported this week. A group called Fairshake, partially backed by Coinbase CEO Brian Armstrong, is supporting crypto-friendly members of Congress as a bipartisan bill seen as a victory by industry makes its way toward the House floor. Coinbase spokesperson Julia Krieger framed crypto regulation in a statement to POLITICO as drawing a line between the “sides candidates are on — for change or for the status quo.”
In that light, some within the crypto community see the Binance deal not as a scarlet letter for the industry, but an overdue comeuppance for an acknowledged bad actor that clears the way for necessary change.
“This has moved us from position one, which is that we have this large, potentially nefarious actor doing God knows what, to that this actor has now been reined in, which is actually an improvement,” Lubka said. “Binance no longer being the primary exchange where prices are being settled actually removes a number of objections that have hung over this whole dialogue.”
With crypto foes in Washington like Sen. Elizabeth Warren (D-Mass.) proclaiming the bust “part of a larger trend of criminal activity in the crypto industry and sadly predictable,” Lubka’s optimism might still face an uphill battle among lawmakers. But with the titanic Binance brought to heel, the industry has more room to cultivate a reputation removed from the terrorist-aiding anarchists and scammers that crypto skeptics fear.
Just in case you missed it… Sam Altman is back at OpenAI.
After the Twitter-borne tumult of the several days following his Friday ouster, the charismatic CEO is back leading the company he co-founded, a resolution supported by Microsoft that also revamps the board to include early Facebook executive Bret Taylor and former Secretary of the Treasury Lawrence Summers.
POLITICO’s Brendan Bordelon reported on the fallout this morning in Washington, where the upheaval is already raising concerns about personal influence and instability at the companies building powerful AI systems.
“I think there’s going to be more scrutiny on [effective altruist] stuff in general, probably from both sides of the aisle,” Zach Graves, executive director at the Foundation for American Innovation, told Brendan, referring to the philosophical debates about AI development that reportedly led to Altman’s initial ouster. “They broke through into the mainstream discourse.”
Spare a thought for “Galactica,” Meta’s “research demo” large language model that crashed and burned last year but left a few useful lessons for developers.
Speaking with VentureBeat recently, Joelle Pineau, VP of AI research at Meta, said there were “a lot of good lessons” from the bot’s dramatic release and failure — which also, unpropitiously, happened to take place just two weeks before the debut of ChatGPT. Pineau described how users were shocked and appalled by bugs that would come to be expected from more finely tuned models like OpenAI’s, such as their tendency to “hallucinate.”
“It was absolutely a research project… We released with the intent, we did a low-key release, put it on GitHub, the researcher tweeted about it,” she told them. “Suddenly people had a product expectation, like you would use it to actually write your papers — no, that’s not the intent.”
The fiasco of the Galactica release led Meta to be much more careful around that of its Llama LLM in February, with Meta chief scientist Yann LeCun saying a form was required to access it, “because last time we made an LLM available to everyone (Galactica, designed to help scientists write scientific papers), people threw vitriol at our face and told us this was going to destroy the fabric of society.”
- Nvidia hasn’t yet met its investors’ expectations for the AI boom.
- An AI startup is using the technology to supercharge materials science research.
- Meet the lawyer leading a slew of copyright lawsuits against AI companies.
- OpenAI snuck a reference to its corporate drama into a new ChatGPT feature.
- “Oppenheimer” director Christopher Nolan discusses how destructive tech can be.
Stay in touch with the whole team: Ben Schreckinger ([email protected]); Derek Robertson ([email protected]); Mohar Chatterjee ([email protected]); Steve Heuser ([email protected]); Nate Robson ([email protected]) and Daniella Cheslow ([email protected]).
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Crypto Trading & Speculation
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As the deck keeps stacking up against Donald Trump at his New York bank fraud trial, the former president has found a notable outside ally who can circumvent the increasingly stringent court rules and be his attack dog: Congresswoman Elise Stefanik (R-NY).
In her latest move, Stefanik did what Trump has been explicitly told not to do: directly attack a key witness in the case.
On Tuesday, the congresswoman officially called on Attorney General Merrick Garland to pursue criminal perjury charges against one-time Trump lawyer Michael Cohen—drawing from his recent testimony in court, where he revealed new instances of lying under oath.
Last month, Trump’s defense lawyers railroaded New York state investigators who tried to use Cohen as a witness against his former boss. Instead of bolstering the financial fraud case, Trump’s attorneys managed to extract what appeared to be damning confessions from the ex-felon that could be used against him.
With the former president angrily looking on from the defense table, attorney Alina Habba pounded Cohen with questions—and managed to get him to admit that he lied to the Senate Intelligence Committee in 2019. Although Cohen explained on the witness stand the various ways the real estate tycoon would pressure top Trump Organization executives like Allen Weisselberg to inflate his stated wealth on paper, Habba pointed to previous testimony that said the opposite.
During that 2019 interview, Cohen was asked, “Did Mr. Trump direct you or Mr. Weisselberg to inflate the numbers for his personal statement?” According to the transcript shown in court, Cohen responded, “I'm sorry. Did he ask me to inflate the numbers? Not that I recall.”
“Were you telling the truth then?” Habba asked.
Cohen shook his head and appeared visibly flustered, stammering, “I was in the camp of Donald Trump–”
“Mr. Cohen, were you being honest before the Permanent Select Committee on Intelligence?” Habba asked.
“No,” Cohen replied.
“So you lied, under oath, in February 2019? Is that your testimony?” Habba asked.
“Yes,” Cohen said.
Stefanik, who sits on the House Intelligence Committee, is now citing that interaction in a letter to the Department of Justice. In a letter co-signed by Committee Chairman Michael Turner (R-OH), they ask federal prosecutors to consider hitting Cohen with a new round of criminal charges.
“Mr. Cohen’s testimony at the New York trial is inconsistent with his testimony before the Committee. That Mr. Cohen was willing to openly and brazenly state at trial that he lied to Congress on this specific issue is startling. His willingness to make such a statement alone should necessitate an investigation,” they wrote.
“Mr. Cohen’s prior conviction for lying to Congress merits a heightened suspicion that he has yet again testified falsely before Congress. We therefore request that the Department investigate whether any of Mr. Cohen’s testimony warrants another charge for the violation of 18 U.S.C. §§ 1001 or 1621,” they added.
This is the second time Trump’s legal team appears to be weaponizing the MAGA-loyal congresswoman. Last week, she asked New York’s judicial ethics commission to investigate the trial judge’s law clerk—a direct attack on court staff.
Justice Arthur F. Engoron has repeatedly ordered Trump and his lawyers to cease their slash-and-burn approach to the civil case, resorting to gag orders that prevent Trump from trying to intimidate court staff and witnesses. Engoron slapped Trump with a $15,000 fine and threatened him with a short stint in jail.
But Trump has managed to get around that by relying on Stefanik’s outside meddling. The congresswoman, who is not a party in the case, is not bound by the court’s orders. And she’s wielding that power and independence on Trump’s behalf.
On Tuesday, Cohen texted a statement to The Daily Beast.
“Republican Congress members Stefanik and Turner continue to do Donald’s bidding in witness tampering and obstructing justice. The two members fail to understand the distinction between explicit and implied; which is how the question was asked and accurately responded to. The topic was further clarified several questions thereafter; which is conveniently and intentionally being ignored. I am not concerned at all with their baseless request,” he wrote.
The move also marks an escalation in Stefanik’s role as one of Trump’s most trusted attack dogs on Capitol Hill, a role she has eagerly accepted even before her staunch defense of the former president during his first impeachment over Ukraine military aid in 2019.
The Upstate New York congresswoman has steadily risen in Trumpworld since then. She’s long been on Trump’s shortlist for a VP pick in 2024, as The Daily Beast first reported in January.
In a potential preview of an attack dog role for Trump in the later stages of the campaign—as his running mate or elsewhere—Stefanik has once again gone to bat for the former president. But crucially, this time she’s doing something for him that he legally cannot do for himself.
Stefanik’s letter might be addressed by the judge in court, but it’s unclear what he could do other than ask Trump’s defense lawyers directly whether they have been coordinating with the congresswoman in a blatant attempt to circumvent his orders.
Trump’s bank fraud trial is now six weeks in and halfway over. New York Attorney General Letitia James sued Trump last year in civil court and scored a major victory on the eve of trial, when the judge concluded that the billionaire did indeed vastly inflate his finances to trick banks into giving him better loans over a decade. The trial is set to continue until the end of the year, when Engoron will decide how to dissolve the storied real estate company and whether to punish the family with more than $250 million in fines.
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Banking & Finance
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The BBC has been accused of anti-Conservative bias after Rishi Sunak was branded a “mendacious narcissistic sociopath” on the broadcaster’s flagship Sunday politics show.
Comedian Ben Elton said the Prime Minister was “dripping with vanity” when he urged cash-strapped Britons to hold their nerve over interest rate hikes and stressed there was “no alternative” but to stamp out inflation in an interview, with host Laura Kuenssberg.
A Tory source claimed producers had deliberately invited “anti-Conservative people from the arts world” to make “personal insults” about party members, which were then packaged up and “pushed out on social media”.
Tory MP Paul Bristow also criticised the comedian, claiming he was part of a “North London ‘champagne socialist’ clique”.
Elton criticised Mr Sunak for delivering what he called an “extraordinary Orwellian, meaningless, evasive word salad”.
“I sort of believed maybe he’s kind of a bit more decent, and it turns out, he’s as much of a mendacious, narcissistic sociopath as his previous boss,” he said.
“This man literally, he seemed to be making a principle of the fact that he resigned from a government that he’d served loyally and tried to keep propped up for numerous years.
“He’s trying to boast about having worried about inflation while he was chancellor of the exchequer under Johnson. “He seems to act as if being born into Downing Street six months ago was a miracle birth.
“No – he was a part of a 13-year cycle which has got us to this point.”
He added: “He’s the Prime Minister. He owes us honesty but we got nothing but mendacity, evasion and vanity, just dripping with vanity.”
In his interview with Kuenssberg, broadcast during Sunday’s show, Mr Sunak said that “inflation is the enemy” and defended the Bank of England’s decision to raise interest rates to a 15-year high last week, piling pressure on mortgage-holders.
‘Conscious decision’
The Tory source said: “It’s a conscious decision by BBC producers to invite anti-Conservative people from the arts world to make personal insults about Tories. It’s all packaged up afterwards and then pushed out on social media.
“Licence fee payers want to see guests who can provide actual analysis on important issues, not just throw around petty personal jibes. It’s not surprising that viewers are switching off.”
Mr Bristow told The Telegraph: “Quite why the BBC thinks it relevant to broadcast to the nation what Ben Elton thinks is beyond me.
“He is part of the same North London ‘champagne socialist’ clique that appear periodically to espouse their Left-wing and anti-Brexit credentials to a bored country. They have about as much in common with working people as a £12.50 avocado on toast breakfast.”
A BBC spokesman said: “We feature a wide range of guests and opinions across the series and ensure we meet our due impartiality commitments.”
The remarks were part of a discussion with former Conservative special adviser Luke Tryl, now UK director of More in Common, and activist Marina Litvinenko.
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Inflation
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WASHINGTON, June 22 (Reuters) - U.S. banks are pushing to soften a major regulatory proposal to hike bank capital requirements, worried it could prove too onerous, especially for lenders still reeling from the March banking crisis, according to six people briefed on the matter.
Bank regulators led by the U.S. Federal Reserve are finalizing the proposal which would implement international capital standards agreed by the Basel Committee on Banking Supervision in the aftermath of the 2007-2009 financial crisis.
Bankers are particularly concerned by an aspect of the draft proposal that would apply higher capital charges on non-interest revenue, such as the fees lenders charge on credit cards or investment banking services.
That capital charge is part of the package agreed by the Basel Committee in 2017, but the industry says it overstates the risk for banks that have a high proportion of non-interest income and had hoped U.S. regulators would mitigate its impact, the people said.
Bank groups are pushing for regulators to cap the proportion of assets on which such charges would apply, said three people, but it was unclear if the agencies would take that approach.
Non-interest services income has been a key focus of many lenders' growth strategies in recent years, one industry official noted.
American Express (AXP.N), Morgan Stanley (MS.N) and the U.S. units of UBS, Deutsche Bank and Barclays are among banks with a high proportion of non-interest income, according to a 2022 blog by Washington group the Bank Policy Institute.
Barclays, Deutsche Bank, and Morgan Stanley declined to comment. UBS and American Express did not immediately provide comment.
On Wednesday, Fed Chair Jerome Powell told Congress it was critical banks have strong capital, but regulators must be mindful of the tradeoffs.
WALL STREET CRACKDOWN
While the Basel rules were agreed years ago, the U.S. regulations to comply with them are being drafted in the wake of this year's banking crisis in which deposit runs caused Silicon Valley Bank and two other lenders to fail. The proposal is the first major rule led by Fed Vice Chair for Supervision Michael Barr, who has launched a sweeping review of capital rules and is expected to be tough on Wall Street.
"The baseline has shifted to an assumption that the scale and scope of the proposal is going to be far more punitive than anyone expected at the end of last year," said Isaac Boltansky, director of policy research for brokerage BTIG.
Industry executives argue the bank failures were caused by mismanagement and liquidity issues, and that system-wide capital is already ample.
The proposal is also expected to apply stiffer capital rules to smaller lenders with over $100 billion in assets, which would include some that experienced liquidity problems this year, three sources said.
Given investor jitters over the health of the industry and the broader economy, bankers say, hiking capital now could backfire, putting pressure on banks and hurting lending.
Republican officials at the agencies have flagged similar concerns, two people said, while Republican lawmakers on Wednesday also raised worries over capital rules with Powell.
“It’s extremely important for the agencies to be mindful of the economic costs at a time of great uncertainty," said Kevin Fromer, CEO of the Financial Services Forum whose members, the country's largest eight banks, have roughly $900 billion in common equity capital.
"It's not in the interest of the U.S. economy to raise capital requirements on institutions that are already well-capitalized."
The Fed is drafting the Basel rules with the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corp. (FDIC). Regulators had hoped to unveil the proposal this month but staff are still working on the draft and the timeline has slipped to later in July, five people said.
The FDIC and OCC declined to comment.
Speaking to reporters last week, acting Comptroller Michael Hsu said banks had "not been shy about sharing their concerns" which regulators were taking into account.
Our Standards: The Thomson Reuters Trust Principles.
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Banking & Finance
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Lekita Smith used to tell herself she would smoke dope until the day she died.
Key points:
- Hobart City Mission warns the rental crisis is increasing the number of families at risk of having their children removed
- Lekita and Justin were warned their baby son would be taken into care without suitable housing
- They say their past struggles have worked against them in the private rental market
The 26-year-old experienced trauma as a child, was in an emotionally abusive relationship as a teenager, and had her older children taken off her when she became homeless.
Ms Smith used to smoke cannabis as a coping mechanism, but that all changed several years ago when she met her partner Justin Williams and became pregnant with her now-seven-month-old son George.
"[George] has changed us completely ... we are 100 per cent better people because of him," she said.
Mr Williams has not had an easy life either.
He was first introduced to drugs by a family member when he was 15, and the now-38-year-old admits he has done things he is not proud of.
"I ended up running away from home, committing crimes and using drugs," he said.
But the pair say they are determined not to let their past dictate their future and have worked incredibly hard to give up drugs and stay clean by seeking help from Hobart City Mission, mental health professionals, and drug and alcohol support services.
The couple managed to find stable accommodation through Centacare Evolve Housing at New Norfolk in southern Tasmania when Ms Smith was pregnant.
She said it made her feel whole for the first time.
But after a break-in at their home, the couple was told it was not safe and left the property before they could organise another home to live in.
For more than a year, they have struggled to find secure and stable housing, which they understand is a requirement if they want to keep their son.
"We were told if we can't find housing, George would have to be put into care until we find somewhere," Ms Smith said.
"We don't want to spend a minute without him; he's too important to us," Mr Williams said.
Past struggles hurt chances
Mr Williams and Ms Smith have been fortunate enough to live with family and in temporary accommodation while they look for suitable housing, but it is not a long-term solution.
The couple would ideally like a three-bedroom home in a safe suburb so their older children can stay with them.
They also need a house that is close to public transport, as neither of them drives.
They found their perfect home on the private rental market but were unable to complete the application because they did not have the necessary rental references.
"There was a good home in our price range of around $350 per week, and we started to apply for it, but we didn't end up going through with it because we couldn't fill out the rest of the forms," Mr Williams said.
"Obviously, we've had past struggles, and that's not what private landlords want," Ms Smith said.
"Landlords don't see how much you've changed, they don't look past it ... they just think, 'Well what's going to happen to my property?'"
After being on the public housing waiting list for months, the family was recently given a choice of two homes in the greater Hobart area.
While they are grateful they have an option of accommodation when so many Tasmanians are still waiting, they say both homes are unsuitable because they are not close to public transport, are in areas they worry will increase their risk of relapse, and are away from their support network.
"We are taking something that we don't think is suitable for us, but we are taking it because it's all about George," Mr Williams said.
"I can't get a job without relying on transport."
Children at risk of homelessness
Figures recently published by the Australian Bureau of Statistics revealed there is a growing number of people experiencing homelessness across Tasmania.
On census night in 2021, 2,350 people in Tasmania said they were experiencing homelessness, compared with 1,622 in 2016.
Tenants' Union of Tasmania principal solicitor Ben Bartl said there simply was not enough accommodation for those who needed it.
"We are getting calls every week from parents who are worried what will happen to them and their families; they're worried that they're not all going to be able to fit into a car or a caravan," he said.
"They're worried they are being excluded from rental properties because they have children."
In a statement, Commissioner for Children and Young People Leanne McLean said: "The link between access to stable housing, family breakdown and statutory child removal is well known internationally."
She said ensuring children were safe and supported through the first 1,000 days of their lives made the greatest difference to their future development.
"Every Tasmanian child deserves to have a safe place to live. It's also their right," Ms McLean said.
A spokesperson for the Department for Education, Children and Young People said: "For families experiencing difficulties impacting on the safety and wellbeing of their children, housing instability is often one of the contributing factors.
"However, housing instability or homelessness on their own do not result in children entering statutory care."
What's the solution?
Not-for-profit organisation Hobart City Mission has seen an increase in demand for their support services in the past 12 months, which includes emergency assistance, family and housing support and options for single fathers who are homeless or at risk of homelessness.
Chief executive Harvey Lennon said without these programs, there was a high risk some young children would be taken into care because their parents could not put a roof over their heads.
"It's certainly a risk and is a growing risk in the environment we live in at the moment."
Mr Lennon said the Tasmanian government not only needed to provide a range of housing options, but it also needed to better support organisations that help people cope with looking after a rental property or staying in long-term employment.
The Tenants' Union of Tasmania wants the Tasmanian government to review the current Residential Tenancy Act 1997 and introduce a standard application form for all prospective tenants in the private rental market.
"It would remove discrimination and ensure everyone is on an equal footing," Mr Bartl said.
A Tasmanian government spokesperson said the government "recognises the barriers and challenges families can face in securing safe accommodation, which is why more than $36 million is invested each year in specialist homelessness services".
What does the future look like?
While their housing situation is not ideal, Mr Williams and Ms Smith remain committed to giving George the best upbringing he can have, regardless of their circumstances.
George has been enrolled in weekly swimming lessons and is learning new things every day, while Mr Williams is actively looking for work.
"Think about what you have today and not what you don't have," Ms Smith said.
"It might feel like it's never going to work out, but it does in the end; it will happen if you keep working for it."
Anyone who is homeless or at risk of homelessness can call Housing Connect 24 hours a day, seven days a week on 1800 800 588.
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Real Estate & Housing
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TENNESSEE COLONY, Texas, Aug 10 (Reuters) - The brown and black cattle of Texas, beloved symbols of the Lone Star state, walk through desiccated grass and stand in shrunken watering holes while their ranchers struggle to get them enough food.
For the second summer in a row, drought and extreme heat are stressing the health of cattle in Texas - the top beef-producing state in the U.S. by far - leading some ranchers to think about thinning their herds to save money on animal feed and hay.
"The grass is just not growing and primarily because it's thirsty," said rancher David Henderson. "Now we hit August and this is normally our hottest, driest time of the year ... and the only thing I can think of, sometimes it calls for selling cows." Henderson, 62, manages a herd of about 150 cows in Tennessee Colony in East Texas, and said he sold roughly 30 cows in 2022 due to the drought.
Dry conditions last year drove ranchers in East Texas to sell more than 2.66 million cattle from January 2022 through August 2022 — an increase of more than 480,000 cattle compared to that time period the previous year, according to the Texas Farm Bureau.
Texas State Climatologist John Nielsen-Gammon predicts extreme heat spurred by global warming will become the norm.
"Well, certainly for the next few decades, the trends are going to continue," Nielsen-Gammon said. "This sort of heat will become normal in the summertime for Texas. And that, in addition, means that the heat extremes will be that much hotter and that much more severe."
The drought, triple-digit heat and lack of food impacts just about every facet of the cattle industry - how much milk the calves get, how the cows fatten up, how much they reproduce, and how much that coveted steak will cost.
Jimmy Reed owns the Cattle Ranch Supply store in Tennessee Colony and, with pastures diminished, has been sending out feed deliveries to ranchers in early August instead of the normal time in mid-November.
"With everybody wanting to eat that rib eye and that T-Bone or those ribs, there's going to be less supply. So the price of beef will once again take a rise," Reed said.
Rancher Corey Davis, 39, said after plentiful spring rains he had been optimistic.
"This year, I thought being a young farmer, I said, 'Well, we're going to make a bunch of hay,'" Davis said.
"I was excited and you know, four or five months later, no rain for a month. So, we're back in a drought again."
Our Standards: The Thomson Reuters Trust Principles.
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Agriculture
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Credit Suisse Collapsed, And Switzerland Went Back To Making Money
It is almost as if most Swiss heaved a collective shrug and the country went back to making money.
(Bloomberg) -- In 2022 it was “Schwinger,” or traditional Swiss wrestlers, that were the star attraction. This year it was youth groups. Every Aug. 1 since 1891, patriotic Swiss have gathered on an Alpine meadow overlooking Lake Lucerne to commemorate a rebellion in 1291 that was the foundation of “modern” Switzerland. This is a country that likes tradition.
It was a very different kind of youth who in March swarmed the headquarters of Credit Suisse on Zurich’s Paradeplatz, in an extraordinary display of anger at the normally staid epicenter of Swiss banking. Young protesters wrote messages like “Cretin Suisse” in chalk outside the bank’s headquarters as demonstrators bellowed their discontent through megaphones. Newspaper editorials were filled with columns about a national humiliation and regulators stressed the need for major change. Some questioned whether Switzerland had a future as a predominant banking center.
Credit Suisse was, after all, an icon of the Swiss economy that financed the country’s railroads. So its government-brokered rescue by UBS Group AG, to prevent it collapsing and wreaking havoc across the global banking sector, was one of the biggest blows to the national psyche since the 2002 demise of national icon Swissair, and was seen by many as something that could, or should, trigger a profound change to the way the country works.
Yet four months on, there are few signs that anyone is readying for major change in Switzerland. It is almost as if most Swiss heaved a collective shrug and the country went back to making money. Unemployment has barely budged and is not expected to move much even after bank layoffs, the country’s annual inflation rate of 1.6% remains the envy of the industrialized world and the almighty Swiss franc has even gained in value since March when the deal was brokered.
The apparent lack of change since March stems from what makes Switzerland what it is — a 13th-century nation which takes pride in its reputation as a bastion of stability on a continent repeatedly torn apart by war. A country that first gave women the right to vote only in 1971, decades after the rest of the western world. It’s a nation where, if change occurs, it happens very, very slowly.
“There is a big risk that nothing happens,” says Michael Hermann, director of Swiss political research institute Sotomo in Zurich, “because you get used to the new situation with a huge bank and if it works, why would you change anything?”
But is Switzerland missing an opportunity to repair and improve its reputation for competence and prudence, so tarnished in the eyes of international investors in the wake of the takeover by UBS? The run-up to federal elections set for Oct. 22 will offer a stage for national debate on that, but some believe it’s already too late.
There are politicians who want to make the Credit Suisse debacle a catalyst for reform and an election issue, but feel that it has already been swept under the rug, says Jared Bibler, a former regulator at the Swiss Stock Exchange. “We are all surprised by how quickly the issue seems to have dissipated,” he says.
Bibler, who wrote a book about Iceland's banking crisis, says there are similarities with the Nordic nation in 2006 when it failed to properly address the need for banking reform. “In Switzerland, you have a real culture of circling the wagons among the elites.”
The first step to solving a problem is often acknowledging that you have one. But if you speak to those elites — ranging from the central bank to government and parliament — such forthright admissions are rare. Instead many will say Credit Suisse’s rescue is a testament to the country’s strengths.
“The way Credit Suisse was saved speaks in favor of the stability of our country,” says Thierry Burkart, MP and president of the center-right Free Democratic Party. “We prevented massive damage to the financial system of Switzerland and possibly even to Europe and the whole western world.”
‘Attacked’ From All Sides
What’s indisputable is that Switzerland is not the country it was a decade ago. First it was Swiss banking secrecy that came under attack from a US Department of Justice bent on making Swiss lenders pay for helping American taxpayers hide their money. Then Russia’s invasion of Ukraine last year prompted Switzerland to abandon its strict neutrality — allowing it to fully embrace EU sanctions against Moscow — amid pressure from Brussels to not ignore a war just one day’s drive away.
Read More: Forget Londongrad. Switzerland in Focus as Sanctions Target Rich
In June, Swiss voters backed raising corporate taxes for multinationals to the OECD-wide agreed minimum level of 15% from an average of 11% in a national referendum after the government persuaded once-skeptical voters that it was better to keep tax revenue inside the country given it wasn’t able to stop the international accord.
For Burkart, there are malign forces at work. “We are attacked from abroad. And also from within,” he says in a reference to the DoJ, European Union and those inside the country calling for more banking regulation. “Political forces from the left to the center are working to destroy the advantages of Switzerland as a location for business.”
Despite the proposed tax hike the country remains an attractive hub for multinationals, but its long-held primacy in wealth management is slipping. It’s likely to drop to second in the rankings of those who manage the assets of the rich, behind Hong Kong, by 2025, according to the Boston Consulting Group. Singapore, emboldened by outflows of money from China during the pandemic, and Dubai, which has seen billions roll in from wealthy Russians since the invasion of Ukraine, have made inroads too.
The stakes for Switzerland’s position as a financial center are high. Finma, the country’s banking regulator, and the Swiss National Bank, have called for reform to the way things work, including more powers to punish those who break the rules, in the aftermath of the Credit Suisse crisis. The question is whether it can overcome a Swiss tendency toward inertia to identify what went wrong. And then, do anything to repair the reputational damage.
“The regulatory culture in Switzerland is weak and not based on a meaningful set of rules,” says Kern Alexander, chair of the law and finance program at the University of Zurich, “but instead on a light touch principles regime that leaves the regulator too much discretion not to take action and to allow problems to fester until they reach a breaking point.”
Both Finma and the SNB were intimately involved in the Credit Suisse-UBS takeover. And both have faced heavy scrutiny.
Finma came in for severe criticism during the crisis, a result partly of its controversial writedown of $17 billion worth of AT1 bonds. The writedown, made possible by a clause in the fine print of the high-risk bonds, has spawned a wave of lawsuits that face an uphill battle in the Swiss courts.
The light-touch regulation of Credit Suisse in the years leading up to the bank’s collapse has also been the focus of criticism. Urban Angehrn, head of Finma, acknowledged as much in a recent editorial in the Neue Zurcher Zeitung newspaper.
Switzerland has historically avoided Anglo-Saxon style financial policing, but Angehrn called for Finma to be given similar powers to those of the US Securities and Exchange Commission to fine errant banks or their staff. “This is tried and tested practice in other financial centers and strengthens the precautionary effect of supervision,” wrote Angehrn.
His earnest appeal was made just as the Swiss parliament headed off on its lengthy summer recess, and has been met with silence from lawmakers. A further indication, say critics, of the lack of urgency around the banking collapse. Crisis averted. Normal service resumed.
What to Do About the Banks
The glacial, consensus-building pace at which Swiss politics moves should give pause to anyone expecting urgent reforms to restore trust in the banking system or reconcile Switzerland with the fact that the enlarged UBS is now twice the size of the domestic economy.
Thomas Jordan, the central bank president, said in June that lessons need to be drawn and that in future, “banks should be required to prepare a minimum amount of assets that can be pledged at central banks.” That suggestion might feed into a broader global discussion about whether the liquidity rules pledged after the 2008 financial crisis are still fit for purpose, but any concrete change will likely need to be squared with international peers and take years to materialize.
Following the 2008 financial crisis, politicians from the right-wing Swiss People’s Party and the left pushed a legislative proposal to split big lenders into their constituent parts, to minimize the risk that a loss-making investment bank could jeopardize the entire institution — a scenario that roughly describes what happened with Credit Suisse. But when that bill finally made it to a vote before parliament in 2014, it failed with 64% opposing the measures.
Now, 15 years later, academics and politicians are again chewing over the problem of what to do about the banks. A report produced in May by the University of St. Gallen has created a framework for a finance ministry study on reform that’s due later this month. The report argues that in order to avoid the problem of “too-big-to-fail,” stricter liquidity rules and higher capital requirements as well as a robust framework for nationalization are needed. It dismissed the prospect of splitting up the banks as unworkable.
The report barely addressed the problem that sank Credit Suisse in the first place, namely that bad risk management was embedded in the culture of the bank over many years.
Read More: The Triumph of UBS Is Also the Humbling of Swiss Banking
“Culture is a very important thing,” says Andrea Schenker-Wicki, a professor of management and president of the University of Basel. “If we don’t change the culture, we’ll have the same problems again.”
Colm Kelleher, the UBS chairman, has stressed that anyone who joins his bank from Credit Suisse will have to make it through a culture filter to avoid contaminating “our ecosystem.” His message? UBS doesn’t have a culture problem.
The FDP’s Burkart goes further and says Credit Suisse lost its way because it lost its Swiss-ness.
“Going by its management culture, Credit Suisse wasn’t a Swiss bank anymore, but a global one,” says Burkart. “When corporations abandon classic Swiss values like diligence, precision, modesty and humility, things like this happen.”
It is this kind of Swiss groupthink that ails the country, says Arturo Bris, the director of the Institute for Management Development’s World Competitiveness Center in Lausanne. To illustrate his point, he invokes the photograph of the Swiss finance minister, the heads of the SNB and Finma, and the chairmen of Credit Suisse and UBS all sitting together on March 19 to announce the hastily-agreed takeover.
“That to me has been the most damaging picture that Switzerland has had in decades,” says Bris, “when everybody gets together like in crony capitalism.” A nationalization of Credit Suisse wasn’t seriously considered seriously enough because selling it to UBS was deemed feasible, he argues.
Hand-Wringing in a Powerless Parliament
In the days after the collapse, senior regulators and government ministers gave repeated interviews in which they stressed the same message: that the snap rescue by UBS was the best option given the circumstances. They ruled out the temporary nationalization of Credit Suisse or an orderly wind-down of the bank even though the latter scenario was something expressly planned for, by the government and regulators, in the wake of the 2008 financial crisis.
Elsewhere, there are signs the Swiss establishment wants to move on. Geneva’s top financial crimes prosecutor signaled in May that he plans to drop a multi-year investigation into Credit Suisse’s mishandling of rogue banker Patrice Lescaudron, one of several damaging scandals, many of which are still being fought over in the courts, that undermined investor confidence in the bank.
Just a year ago, the prosecutor, Yves Bertossa, said there were clear grounds to indict Credit Suisse because it had let eight suspect transactions slide. Now he has done an about face. He concluded that because Lescaudron had been convicted of fraud and forgery but not money-laundering, the bank couldn’t be indicted on those charges either.
Back in April, well aware of the upcoming elections and the risk that inaction could lead MPs to be punished at the polls, Switzerland’s parliament denied the takeover its blessing in a vote. In a fiery special session of parliament that stretched over two days, the same left-and right-wing parties who a decade earlier had unsuccessfully pushed for a separation of investment and corporate banks voted down the state guarantees for Credit Suisse.
But the vote was purely symbolic. A designated group of senior lawmakers had already signed off on the deal. A parliamentary Inquiry Commission was formed in May to look at the role played by the government, Finma and the SNB ahead of the takeover by UBS. But its findings are not due for at least a year and it has said that the files used by the committee will not be made public for 50 years — signaling that lawmakers apparently see no need for greater transparency to inform the debate.
Schenker-Wicki of the University of Basel says she is eager to see what conclusions the commission reaches but remains wary about whether much will change. “Does it make sense for such a small country to have such a big bank?” she asks. “Is that a risk a country like Switzerland can take?”
--With assistance from Myriam Balezou.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
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Banking & Finance
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3 Things Home Insurance Doesn't Cover That Could Come as a Surprise
KEY POINTS
- Floods are not covered by a standard homeowners insurance policy.
- Earthquakes are also typically excluded.
- Without add-on coverage, sinkholes won't be covered either.
When buying homeowners insurance, most people expect that they will be protected against losses that they face with their property. After all, the point of buying insurance is so a disaster does not empty a property owner's bank account and destroy their financial security.
Unfortunately, while home insurance policies cover lots of possible sources of loss -- including things like fires and theft -- there are some hazards that are not typically covered by a standard policy. And many of these exclusions could come as a big surprise.
In particular, homeowners may be shocked to discover their insurance will not protect them from the following disasters.
1. Floods
Water can do a tremendous amount of damage to a home in a short period of time. And, some water damage is covered. If a fridge or tub leaks, for example, your homeowners insurance will likely pay for the resulting consequences.
Unfortunately, insurance won't cover the water issue most likely to cause you problems. That's because rain and storm flood damage are typically excluded from a standard homeowners insurance policy. This means if a hurricane brings torrential rains or a major rainstorm causes a creek beyond a home to flood, insurance won't be there to help you.
Homeowners who are located in a designated flood zone will typically be required by their mortgage lenders to purchase add-on flood coverage (which is available through FEMA's National Flood Insurance Program). Even those not in a designated flood zone may wish to look into a policy, though, if they have water near their home and they are concerned about a bad rainstorm leading to uncovered losses.
2. Earthquakes
Most natural disasters are not covered by a standard homeowners insurance policy either. This includes earthquakes.
There are standalone earthquake policies that can be purchased, though. This includes traditional earthquake insurance that would provide reimbursement for the value of lost items if a covered event happens, as well as parametric insurance that covers only specific events such as when an earthquake meets a certain intensity level.
3. Sinkholes
Sinkholes can be a frightening experience, sometimes opening up to swallow whole buildings. Unfortunately, homeowners insurance is not going to provide coverage for them if homeowners have only a standard policy.
Sinkholes are more common in certain states than others, with an elevated risk existing in Alabama, Florida, Kentucky, Missouri, Pennsylvania, Texas, and Tennessee. Those who face a risk of losses caused by a sinkhole may be able to get add-on coverage for their existing insurance policy. Many insurers offer sinkhole riders that will pay for both repair or replacement of the building as well as repair or replacement of any property damaged by a sinkhole.
It is important to understand the different options that exist to provide coverage for hazards excluded from a standard insurance policy. But, it's only possible to find and buy the right protection if homeowners know whatisn't covered.
Homeowners can't afford to wait until a disaster happens to understand the limitations of a standard homeowners insurance policy. Anyone who owns a property should review their insurance contract carefully, and consider talking with their home insurer if they aren't sure if something is covered. It's better to find out before the flood, earthquake, or sinkhole that the disaster won't be covered than to learn this after the fact and be left with devastating financial loss.
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There are many homeowners insurance companies to choose from. We’ve researched dozens of options and short-listed our favorites here. Looking for a green build discount or easy bundle policies? Want an easy-to-use interface? Read our free expert review and get a quote today.
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Real Estate & Housing
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FMCG Industry Grows At Fastest Pace In 18 Months On Higher Demand: NielsenIQ
The increase was fueled by higher consumption growth of 7.5%, the highest in two years, and aided by price cuts.
India's consumer goods industry expanded at its fastest pace in 18 months during the April–June quarter. The expansion was driven by softening inflation and an upswing in rural consumption, according to market research firm NielsenIQ.
The value growth of consumer goods stood at 12.2% during the three months until June. This marks an improvement from the 10.2% growth in the previous quarter and the 10.9% growth witnessed during the corresponding period last year, as its FMCG Q2 snapshot showed.
This increase was fueled by higher consumption growth of 7.5%—the highest in two years—and aided by price cuts, the report said.
"The softening of the inflationary rate and decline in food inflation are good news for the industry," said Satish Pillai, managing director, NIQ India. This has led to confidence in spending, and that's reflected in retail channels across the country, he said.
The drop in prices driven by the food categories has also had a positive impact on consumers. "And it is anticipated to be mirrored in the buildup to the festive season," Pillai said.
Demand for soap-to-staples has been under pressure in recent quarters, particularly in rural areas. Higher prices have forced people to curtail expenditure on essential daily items as well as discretionary products. However, as inflation eased in April and May, companies passed on the benefits to consumers to bolster volume. In the June quarter, rural markets posted staggered growth, with volume climbing 4%, according to NielsenIQ.
This was an improvement from the 0.3% rise in the previous quarter. Rural market volume had experienced a decline over the preceding four quarters, primarily driven by the non-food category. Rural consumption for non-food, however, clocked a growth of 1.4% in the June quarter as compared with a 3.9% decline in Q1. However, certain segments, such as home care and personal care, continue to decline.
Overall, the food category continues to drive consumption growth at a rate of 8.5%, up from 4.3% in the March quarter. Non-food volume rose to 5.4% in the June quarter from 0.2% in the preceding quarter, according to Nielsen.
The urban markets continued to see momentum in consumption growth and have doubled to 10.2% in the April-June period as compared with growth for the previous quarter.
"Q2 thus far is the best quarter in a year and a half," said Roosevelt D’Souza, lead, customer success, NIQ India, adding that rural recovery combined with 21% growth in modern trade augurs well for the festive season.
Inflation also led to a marked shift towards low-priced purchases, favouring local brands. Companies including Hindustan Unilever Ltd., Britannia Ltd., and Nestle India Ltd. have called out the resurgence of local brands in their quarterly earnings calls. They expect competition to intensify as these brands begin to eat into their market share with low prices and localised marketing strategies.
Smaller packs continue to drive demand as well. "Although there is an upward trend seen for average pack sizes, it continues to remain negative across markets, except urban markets," D’Souza said.
"At this stage, it is important to focus on the right assortment and pack sizes of products. The reduction in input costs, if continued to be passed on to consumers, will only increase consumption, benefiting manufacturers, retailers, and consumers," according to him.
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India Business & Economics
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Starbucks plans to open 100 new stores across the UK this year, while investing millions of pounds in upgrading existing cafes.
It comes as the world's largest coffee chain reported a big jump in sales in the UK for 2022, continuing its recovery from the pandemic.
Last year the firm was reportedly looking to sell its British operations.
Starbucks, which launched in the UK in 1998, has over 1,000 outlets in the country.
Its UK expansion comes despite inflation - the rate at which prices rise - being near a 40-year-high, pushing up the cost of ingredients for the firm and eating into its profits.
The firm also plans to open 300 new stores in the rest of Europe, the Middle East and Africa (EMEA).
However, Duncan Moir, who lead's firm's EMEA business, said he remained "cautious" about economic outlook.
"Like many other businesses", he said Starbucks had faced challenges including shortages of HGV drivers, rising supplier costs and shipping delays.
It is also struggling with higher energy bills and demands for higher wages from staff.
Hospitality companies across the UK have been putting up pay as they face a shortage of workers and the cost of living rises. Pret A Manger recently announced it will be giving its staff their third pay rise in 12 months.
Starbucks said that since the pandemic, its customers' habits had changed and as a result, the firm would seek to increase its number of drive-through branches, and invest in digital capabilities in its stores.
It added that as many people continued to work from home, footfall at cafes in city centres and train stations had been slower to recover, with London being the exception.
Starbucks last year was reportedly considering selling its UK business as it faced rising competition from other chains.
The firm, which denied it had ever begun a formal sales process, had also been hit hard by pandemic restrictions around the world.
About 70% of its UK shops are run as franchises, with the remainder owned by the company, and Starbucks said the new stores would be a mixture of both.
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United Kingdom Business & Economics
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- Ripple said that it plans to fight the ongoing lawsuit with the U.S. Securities and Exchange Commission "all the way through," its president Monica Long told CNBC.
- Ripple is among crypto companies such as Binance and Coinbase which are being sued by the SEC for violating laws.
- Crypto leaders have slammed the U.S. and its approach to regulation, particularly for a lack of clarity.
U.S.-based cryptocurrency company Ripple says it's planning to fight the ongoing lawsuit with the U.S. Securities and Exchange Commission "all the way through."
"We are planning to continue to fight the case all the way through," Monica Long, Ripple's president, told CNBC on Monday.
The lawsuit between Ripple and the SEC has stretched for nearly three years.
In 2020, the SEC accused Ripple and its co-founders of breaching securities laws by selling $1.3 billion of its native cryptocurrency XRP without first registering it as a security.
Ripple disputed the claims, insisting XRP cannot be considered a security and is more akin to a commodity. In July, a landmark ruling by U.S. District Judge Analisa Torres determined the token was not necessarily a security.
"We also got clarity in that lawsuit. And the judge's order in that case said very clearly XRP in and of itself is not a security, which kind of opens the doors to us to really expand our business — not just in the U.S. but even more globally," said Long.
Crypto leaders have slammed the U.S. government and its approach to regulation, particularly for the lack of clarity.
Coinbase and Ripple, as well as other crypto firms, have threatened to leave the U.S. in response to the SEC's crackdown.
The SEC requested to file a motion for appeal to challenge the landmark ruling by Judge Torres, saying "'programmatic' offers and sales of XRP over crypto asset trading platforms could not lead investors to reasonably expect profits from the efforts of others."
Ripple's legal team said in a filing the SEC's request for an appeal largely stemmed from "dissatisfaction" with the judge's ruling that the XRP token did not qualify as a security for sales to retail investors.
Ripple's president told CNBC the company is seeking to "operate above board" and comply with regulators. In June, Ripple received in-principle approval to offer regulated crypto services from the Monetary Authority of Singapore.
"We've always been very engaged with regulators, policymakers, and it's just a part of our DNA. When we build [a] product, compliance is in the room. They have a seat at the table," said Long.
On Friday, Ripple said it will acquire crypto infrastructure startup Fortress Trust for an undisclosed sum. This follows its acquisition of Swiss crypto custody services firm Metaco in May.
"So the point on trust, we totally appreciate that to be a player in finance, and we're now a regulated financial services provider with these licenses," said Long. "You got to always operate above board."
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Crypto Trading & Speculation
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Families have been tightening their budgets amid a cost of living squeeze. But there’s one thing many aren’t ready to give up just yet: their summer holiday.
Airlines including easyJet and British Airways are either back in profit or enjoying higher earnings amid the travel boom. This has driven up travel costs, forcing holidaymakers to pony up, even as the overall rate of inflation has eased to 6.8pc in the year to July.
Airfares rose by almost 30pc in July compared with a year ago, according to the Office for National Statistics (ONS), while ferry tickets are up 14.4pc.
Restaurant and hotel costs also saw near double-digit increases, pushing up the overall rate of services inflation to 7.4pc in the year to July 2023, up from 7.2pc in June.
These figures are a headache for the Bank of England, which already warned this month that services inflation was likely to remain “elevated” for the rest of this year.
Bank policymakers were expecting the rate to rise to 7.3pc, and average 7pc “through the second half of 2023”.
Meanwhile, private rents are rising at their highest pace since comparable records began amid strong demand from tenants, while insurance costs have also soared. Average car insurance premiums are up 50pc compared with a year ago. Claims usually require courtesy cars, which have become more expensive to hire, while the cost of repair materials such as paint and other tools has also shot up.
This is important because the Monetary Policy Committee (MPC) that sets interest rates has identified services inflation as one of the main indicators of persistent inflationary pressures. This is combined with tightness in the labour market and rampant wage growth.
These three factors will help to determine whether a fifteenth straight rate rise is warranted in September, with rates currently at 5.25pc. So far, all the signs are pointing to another rise.
Matthew Swannell, an economist at BNP Paribas, said services prices are likely to remain “sticky” in the coming months.
“Services are not only running hot on an annual basis, but momentum is still running at a rate which is above a target-consistent pace,” he said. “This will only normalise as pay growth moves back towards rates consistent with inflation at target. This will probably be a relatively gradual process as the labour market loosens.”
Food prices are now the most powerful day to day symbol of inflation for most households. Energy bills have dropped back from their peaks, but food prices continue to rise.
Overall food prices in July were up 14.9pc on the year. This is down from a peak rate of more than 19pc in March, but remains painfully high.
The Resolution Foundation calculates the average family’s annual grocery bill has risen by £960 since 2019-20, which is more than the typical £910 rise in energy prices.
Some individual foods are spiralling at remarkable rates. Sugar costs almost 55pc more than it did a year ago. Olive oil, propelled in part by drought in Spain, is up more than 40pc. Eggs cost a quarter more now than they did a year ago.
But price rises are slowing for most items and a few even got cheaper between June and July.
Milk and butter cost less in July than the previous month as pressures in dairy markets ease. Potatoes also got cheaper on the month, as did cereals.
But hazards remain, warns Helen Dickinson, chief executive of the British Retail Consortium.
“Russia’s withdrawal from the Black Sea Grain Initiative and subsequent targeting of Ukrainian grain facilities, as well as rice export restrictions could put pressure on some global commodity prices, slowing the fall in food prices,” she says.
Looking at the bigger picture, while July’s drop in the headline inflation rate is welcome, it is unlikely to be repeated. Last month saw a big fall in the energy price cap to £2,074, from £2,500 over the winter.
Consultancy Cornwall Insight expects the price cap for a typical dual fuel, direct debit consumer to fall to £1,860 in October before rising to £1,958.81 next January. In other words, big drops in energy bills are behind us.
Rishi Sunak remains hopeful that he will meet his goal of halving inflation, insisting on Wednesday that “if we stick to the plan I’ve set out, we’ll get it done”.
However, the Institute for Fiscal Studies (IFS) think tank warned that the Prime Minister’s pledge could still be in “jeopardy” because of stubbornly high services prices as well as high so-called “core” inflation that strips out volatile price movements in food and energy.
“With only four months to go, it no longer seems at all clear that inflation at the end of the year will have fallen by enough to achieve it.”
But to use Sunak’s own words, there is also “light at the end of the tunnel”, with glimmers of hope coming from Britain’s manufacturers.
Factories’ costs spiked last year, surging at levels not seen since the ONS’s records began in the 1980s. The expense was rapidly passed on to customers – factory gate prices increased at their fastest since 1977.
But with the decline of energy bills and the end of many pandemic-era supply chain squeezes, costs are now falling.
The costs manufacturers face to produce goods fell 3.3pc in the year to July, led by falls in the cost of oil and petroleum products. Output prices, charged to customers, dropped 0.8pc.
Falls of this scale have not been seen since 2020.
Manufacturers’ customers are often other companies, whether that is factories where their products are further processed, or retailers.
It means there should be falling prices in the pipeline, which the ONS expects will reach the shop shelves around the end of the year.
There is also hope on the international front. Britain’s inflation has proven painfully persistent compared with other rich economies.
Prices are still rising faster in the UK than anywhere else in the G7. Germany’s inflation stands at 6.5pc, according to Eurostat, while Italy’s price rises are only a touch slower at 6.4pc and the US is seeing annual price rises of 3.2pc.
While there is not a direct relationship, the ONS notes that in terms of the peak in inflation and subsequent fall, the UK appears to be tracking around four months behind the US.
Although the situation is not identical – the US avoided Britain and Europe’s energy price surge – the UK’s tight jobs market has some similarities with that in the US, raising hopes that price pressures will indeed fade over time.
While prices at the factory gate may now be falling, the Bank of England’s inflation headache has far from gone away.
Sanjay Raja, chief UK economist at Deutsche Bank, says the current dilemma facing policymakers is not if they will raise interest rates, but by how much.
There will be one more set of inflation and wage figures released before the MPC has to make its decision. Raja, like the Bank, believes inflation will inch back above 7pc in August “for two reasons”. He explains: “One, alcohol duties will see a hefty increase. And two, pump prices are likely to register a big gain after eight months of declines.”
Raja says if pay growth continues to climb at close to 8pc and services inflation remains above 7pc “the odds could tilt firmly to a half a point hike in September”.
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United Kingdom Business & Economics
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Tory MPs in marginal seats are already sounding the alarm over an “interest rate catastrophe”, amid claims that the party has not understood the impact of spiralling mortgages.
With the Bank of England likely to increase interest rates again this week and major mortgage lenders raising their own rates in the last few days, there is a growing nervousness among Tories about the impact this will have later in the year as the main parties begin to shape their campaigns for the next election.
In the most direct intervention to date, Lucy Allan, the Tory MP in the traditionally marginal constituency of Telford, questioned her party’s attitude to the issue. “I don’t think we have quite understood the interest rate catastrophe,” she said shortly after announcing she would not run again at the next election. “People [are] telling me their monthly mortgage payment is exceeding their salary. That is unsustainable.
“Constituents do ask about ‘support for unaffordable mortgages’. I say ‘talk to your lender,’ but the reality is they need to sell sooner rather than later and that’s a hard message to hear.” Other Tories said they had not had many cases so far, but were on alert for the issue to become more serious later in the year.
While ministers are acutely aware of the problem, Rishi Sunak and chancellor Jeremy Hunt primarily want to tackle inflation – making any package designed to help those struggling with their mortgage difficult. Another Tory in a marginal seat said: “It is very hard because there aren’t many levers we can pull.”
Allies of Boris Johnson are already seeing the coming mortgage crisis as the issue that will sink Sunak’s attempts to recover in the polls before the next election. “When you look at what is happening to mortgages, it’s really killing our own people,” said one Tory. “It feels like this is the end of a cycle – 13 years coming to an end.”
An alarming report from the Resolution Foundation thinktank found that UK households coming to the end of fixed-rate mortgage deals next year will face an average £2,900 increase in their annual payments. It estimated the average two-year fixed mortgage rate will be 6.25% this year. A slew of new data backing up the concerns is expected this week.
How best to respond to rising mortgage costs is also a challenge for Labour, which has opted to prioritise fiscal discipline over all other demands. It recently scaled down a pledge to spend £28bn a year on green investment, opting to instead build up to that figure over time. So far, only the Liberal Democrats have backed a special package aimed at mortgage distress in the form of a £3bn “mortgage protection fund” for people facing repossession.
In response to the Resolution Foundation report, the Treasury said: “We know this is a concerning time for mortgage holders, which is why the FCA [Financial Conduct Authority] requires lenders to offer tailored support to borrowers struggling to make their payments, and we continue to support mortgage holders through the Support for Mortgage Interest scheme.
“Behind this, though, is global inflation, continuing to eat away at incomes around the world, which is why the single biggest thing we can do to help families is to halve the rate this year.”
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United Kingdom Business & Economics
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© John Lawrence Lee Anderson - John Lawrence Lee Anderson was holed up in his favourite Nottinghamshire pub late on Friday, boasting on Twitter how he had been able to buy a round of drinks and a packet of pork scratchings for £6.90. “Only in Ashfield,” he told his 48,000 followers.Anderson is not your usual Conservative MP. A former miner and Labour councillor, he only jumped ship to the Tories a year before winning his Ashfield seat at the 2019 general election. The pub – the New Cross – like Ashfield itself has only recently come around to welcoming Tories. “It is one of those pubs where they used to sweep the teeth up on a Sunday afternoon. It has still got the same clientele coming in,” he says. “I walked in the other week and they all stood up and clapped me. I would have got chased out of this pub 10 years ago if I had dared walk in as a Tory.” Anderson needed the drink at the end of a week when he was criticised for using the salary details of a staff member to try to demonstrate how it is possible to survive on a low income as the debate about food banks raged. He now appears to regret his post on Twitter as he refuses to discuss it because of the online abuse that has been directed his aide’s way, and asks The Sunday Telegraph not to name her. Anderson was trying to make the point that often people who are driven to use food banks need help with budgeting their finances, drawing on his experience working at his local Citizens Advice Bureau before he became a MP. “We would sit down with a service user and decide why they have the use of a food bank. In a lot of cases, it was people who had relationship breakdowns, or a sudden illness or disability or whatever, a sudden change in circumstances. There is nothing wrong with that.” But when he filled out an income and expense sheet for others, he often found people were spending money on luxuries they simply did not need. “In a lot of cases these people were just wasting money on fags and booze and non essentials, non priority debts, Sky TV or Virgin Media. “There was a lot of money they could save. There were takeaways, holidays. In this world, you don’t have the automatic right to have all the nice things in life. You have to work for them and you have to pay for them.” Anderson blames what he describes as an “industry” behind food banks, which leaves people relying on them and unable to navigate their own way out of poverty. “Yes, there is a need for food banks for some people who fall on hard times all of a sudden. But there’s a whole industry now. In my opinion this is a scandal,” he says. “We should be teaching a man to fish. If we get back to the basics, get people to help themselves, give them a hand up rather than a hand out, this country would be even better.” Trying to make these points in the nuance-free zone of Twitter often lands Anderson in hot water. He is nicknamed “30p Lee” after a local chef showed him how to produce 172 meals – costing about 30p each – to feed a family of five from an outlay of just £50 a week at a local Aldi. Anderson blames a dependency culture which he can trace back to the tax credits system pioneered by former Labour prime minister Tony Blair and his chancellor Gordon Brown – and continued with some enthusiasm by their Conservative successors – for leaving people trapped on low incomes. “Overnight, they made it more attractive for people not to go to work full time. You could earn the same money for 16 hours a week,” he says. “Three generations later, the unintended consequence of that is people are stuck in entry level jobs and the employers have not been able to upskill their own staff because they are refusing to work longer hours. “We’ve got to break that cycle. We’ve got to tell people that the way to get that new car or have that holiday abroad is not by having your income topped up on Universal Credit, it’s by promotion.” Anderson, 56, has lived and worked his entire life in and around Ashfield, Nottinghamshire. With his two sisters, Lisa and Paula, he grew up in Huthwaite, a mining village. His mother Jennifer was a factory worker and his father Paul was a miner. “We had vegetables in the garden. At the bottom of the garden we had chickens and rabbits and ducks. “When it was dinner time we had one of them,” he says. “I’ll take no lectures from anybody about being hard up ... That was our food bank, our back garden.” He says that “we didn’t have a pot to p--- in when we were kids. We really didn’t. We were brought up with plenty of love in the house. But we had absolutely nothing.” He left Ashfield School with several O-levels taking local jobs – including a year as a labourer in a concrete factory – until he finally got a job as a miner, working alongside his father, in the mid-1980s. Over 10 years Anderson worked at four collieries in the area – Sutton, Welbeck, Creswell, where he had coalface training, Manton, before returning to Welbeck. He says: “I had it really tough in the early 90s. I was working seven days a week down a coal mine, working 12 hours and 14 hours on a night shift, seven nights on the trot and hardly any money at the end of the week. And that’s what I did. “When my first missus got pregnant with our second child, I had to go to my boss at the pit and say, ‘I’m working six days, I need a Sunday shift’. “There was no social media for them to complain to. I didn’t blame the government. I thought, ‘I’d got her pregnant, it was my job to feed my kid’.” Anderson and his partner separated, and he went on to raise his two sons Charlie and Harry, now 31 and 29, on his own. At one point he sold his car to make ends meet. “I walked everywhere. I was not one of those people who were whinging and moaning, I thought, ‘That’s an expense. I could walk and catch the bus. I can walk kids to school’.”Anderson says his work ethic was instilled by his father. “My dad always told me that if I wanted nice things, I had to go to work and if I wanted even nicer things, I had to do more work,” he says. Anderson left the pits in 1997 to devote his time to his sons, before volunteering for and then eventually starting work at the Citizens’ Advice Bureau. He also started to dip his toe in Labour politics, eventually being elected as a local councillor for the party in 2015. However, his political conversion to the Tories happened in February 2018 when he was suspended by his local Labour Party for receiving a community protection warning from Ashfield District Council “after placing boulders to deter travellers from setting up camp at a site in the area”, according to the Mansfield Chad newspaper.He quit Labour to join the Tories the following month, telling the BBC at the time “the Labour Party has been taken over by the hard-left and Momentum in particular and I will play no part in that. It’s been a very difficult decision to come to”. Anderson won Ashfield for the Conservatives at the December 2019 general election, with a majority of 5,733 over an independent candidate who pushed Labour into third place, turning the seat blue for the first time in 22 years. Since entering Parliament, Anderson has formed close bonds with millionaire Tory MPs like Richard Drax and Jacob Rees-Mogg. “I can honestly say that some of the people who made me feel the most welcome, being a working-class bloke, are people like Richard Drax and Jacob Rees-Mogg,” he says. Perhaps unsurprisingly, he has signed up to the Common Sense Group of around 40 Tory MPs which campaigns against woke issues. © Provided by The Telegraph Jacob Rees-Mogg - Isabel Infantes/Anadolu Agency Anderson notes how the childhood friends he grew up with in “one of the roughest parts of Ashfield” have done well. “They’ve seen where they’ve come from and thought ‘F--- that, I want a decent life’. They’ve got strong Conservative values – aspiration. And they want their children to do a little bit better than what they’ve done.” Rishi Sunak, the millionaire Prime Minister, and other privileged Conservatives, can “sympathise” but not “empathise” with the poor. “It’s not their fault how they were brought up,” he says. The Tory grassroots seem to have taken Anderson to their hearts. He is often booked to speak at southern Tory associations, desperate to hear from their new cousins in the party’s Red Wall. In the weeks leading up to Christmas he was asked to address local Conservatives in Chipping Barnet, Ipswich and leafy Kensington, among others, to hear him deliver “straight talking with a healthy slice of common sense”, according to one association. Anderson is convinced he can hold his seat at the next general election and even – despite the polls – is cautiously optimistic about the Tories’ chances to hold on to power – as long as Sunak adopts what he describes as “Conservative policies”. A lot of my voters – especially the first time Tory voters – voted for a Conservative government: can we please have some Conservative policies? “I know that we’ve been interrupted by Covid, the war in Ukraine and now the strikes, but Rishi has got nearly two years to turn it around. Hopefully in the run-up to the next general election, people in this country can start to see what a Conservative government is all about. And that means cutting taxes, cutting business rates, making sure that work pays, securing our borders, that there’s more police on the street, and sorting these strikes out.” One of his ideas is for the Government to do more to stop people “abusing the system”. He takes aim at “those people that quite frankly don’t want to go to work. People who are feigning illness. I used to see them on a daily basis in my time at Citizens Advice Bureau. “I’d see people coming in on two sticks, or could hardly walk, and then Friday I’d see them downtown on the dance floor at the disco. We know that happens. “It’s not fair on the decent hard-working taxpayer in this country who puts a shift in, works seven days a week, and never sees the kids because they are working all the hours God sends.” He adds: “We as a government, as a Conservative Party, need to come down heavily on the side of the hard-working British taxpayers, showing that we really care about them.” He wants to see more government ministers promoting “personal responsibility” among the population and stopping a tendency among people to look for help from the state. Anderson describes this “can do” spirit as “the mentality of the Red Wall”. He says: “The Government has got to start promoting personal responsibility as well as aspiration. “It is your family, you provide for them. Make sure that you live in a safe, decent country with good education, a good health-care system and a good police force.” Anderson worries that the voice of an older generation who had to make do with what they had got when funds ran low is being replaced by one which expects the state to step in. “It’s not the state or the Government’s job to pay people more money. It’s your own job to support your family,” he says. “The generation of people that support me on this sadly are getting older and dying. And the new generation has probably not got those sorts of ideas and I think that’s a dangerous thing.” Although he uses his Twitter feed to take his message of self-reliance to voters, he blames social media for leaving younger generations feeling entitled. Asked why he is urging people to live within their means, he says: “There is a big sense of entitlement in this country.“People automatically think they should have things. You see five-year-old kids with tablets and iPhones. “Back in the day if I got a hole in my socks, my mum sewed them up for me. Nowadays, you just chuck them in the bin and you get three new pairs for two quid from Asda.” Anderson is bemused that people cannot find work: “In this country now, we’ve got over a vast number of vacancies. So there is no excuse at all for people being out of work.”For his fans, Anderson is a rare blast of common sense in Westminster, which can often get overwhelmed by issues which mean little outside SW1. Take this week’s row over the Government’s plans to ban trans conversion therapy. “There is a tiny amount of the population who are genuinely affected by it. And we must respect that and we must support and help,” he says. “But the campaign side of it are normally middle-class white blokes, in skinny jeans with silly beards and who’ve probably got hemp slippers on. “These are ones that are campaigning and have been a right nuisance about it. These sorts of people look for a minority group and then keep telling them that they’re victims. They keep telling them the world’s against them and the world’s not against them.” He adds: “Over the years, I’ve knocked on thousands of doors, spoken to literally tens of thousands of people, and nobody’s ever brought this nonsense up.” As a miner, Anderson went on strike a couple of times when John Major’s Tory government was closing mines in the early 1990s but now considers it “a pointless gesture”. His advice for today’s public sector workers who are striking over pay is to “put the family first, not the union”. He says: “You can carry that through your life sometimes being bitter and having that ‘poor me syndrome’ and blaming everybody else. “Other people are getting on with their life, working, grafting, getting another qualification, doing overtime and providing for their families.” As his followers will know, Anderson appears to enjoy winding up his critics on social media. His regular altercations with Steve Bray, an anti-Brexit campaigner who spends his time heckling Tories in Westminster through an outsized megaphone, often spread virally. On Friday, Anderson took it to the next level by challenging Bray to a boxing match to settle their differences. He told me on Chopper’s Politics podcast: “He is a nuisance. And I’ve got a challenge for him: meet me in the boxing ring. Let’s do three rounds. And if I win, he never protests out there again. And if he wins, I’ll go and protest with him.” © Provided by The Telegraph Anti-Brexit protester Steve Bray - PA Anderson, who is married to his second wife Sinead, 45, a Conservative councillor on Mansfield District Council, who suffers from cystic fibrosis and had a double lung transplant in 2020, wants to raise money from any boxing match for a male suicide charity after the 30-year-old son of his friend Graham Lynk took his own life a month ago. Graham’s son Sean “was a big handsome man,” he says. “He had a smile that would light any room up, nobody saw it coming, he said goodbye to his Dad one night. He said ‘I will see you at work’ and then he went home and took his own life.” Ahead of any bout, Anderson has just started a diet to cut his weight from 17st 2lb to 15st 8lb. A weekly weigh-in recorded on Twitter is promised. And he is getting inspiration from his Twitter feed. “This week I’ve been called a lard a--- potbelly MP. I’ve been called a fat b------ all over Twitter. Most of them are hidden profiles, keyboard cowards,” he says. “I used to watch Popeye as a kid. Every time he had his tin of spinach, he got stronger and that’s what it is like for me every time I got one of these horrible comments. My haters are my motivators.”Listen to Christopher Hope’s interview with Lee Anderson on Chopper’s Politics Podcast at playpodca.st/Chopper or wherever you listen to your podcasts Sign up to the Front Page newsletter for free: Your essential guide to the day's agenda from The Telegraph - direct to your inbox seven days a week.
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HONG KONG, Aug 17 (Reuters) - The debt crisis at Country Garden (2007.HK), China's largest property developer before this year and once considered a financially sound company, has triggered fresh contagion fears just two years after China Evergrande Group (3333.HK) defaulted.
WHAT COULD HAPPEN NEXT?
Since the sector's debt crisis unfolded in mid-2021, companies accounting for 40% of Chinese home sales have defaulted, most of them private property developers.
It has led to many unfinished homes, unpaid suppliers and creditors who are not only financial institutions but also ordinary folks who bought wealth management products linked to trust financing.
Many offshore bonds now trade at low double- or even single-digit cents on the dollar, and their share values have shrunk 90%. There is very little liquidity left in both the equity and debt markets as investors and creditors avoid the sector.
With home sales already very weak, the debt crisis could delay the prospect of a recovery of both the property market and the broader Chinese economy, in which real estate is a core pillar.
S&P Global Rating said on Wednesday it could adjust its forecast for property sales to a "descending staircase" figure from an "L" shaped recovery, if Country Garden officially defaulted.
Home-buyers could become even more wary of private developer brands, and home prices in many areas could come under greater pressure if Country Garden resorted to fire sales to raise cash.
Local government could tighten more the escrow accounts where presale funds are kept in order to ensure homes can be completed and delivered - a top priority set by Beijing.
These would in turn squeeze the sector more and lead to additional defaults even among state-backed developers.
HOW IS THIS TIME DIFFERENT?
Country Garden's quick slip into financial trouble did not shock the market as much as Evergrande's because most private developers had already defaulted. However, it emerged when the property market and the economy are in much worse shape.
While Country Garden's total liabilities of 1.4 trillion yuan ($191.7 billion) are only 59% as big as those at Evergrande, the world's most indebted developer, it has 3,121 projects across all China's provinces, compared to around 800 for Evergrande.
Evergrande was already insolvent at the time of default, but Country Garden currently still has more assets than liabilities. Analysts warn that Country Garden could become insolvent if it had to write off large inventories, and run into negative equity if its asset values dropped over time.
IS THERE SYSTEMIC RISK?
This week, news of missed payments on investment products by leading trust firm Zhongrong International Trust Co highlighted the outsized exposure of China's $3 trillion shadow banking sector to the property sector.
Increasing defaults by developers had already raised Chinese banks' non-performing loan ratios to 4.4% at the end of last year from 1.9% in 2020, Moody's said.
But market experts generally do not think China is on the brink of a "Lehman moment" with one company's failure cascading into a broader financial collapse, as financial institutions' exposure to the real estate sector has dropped in the past few years.
China's property sector accounts for more than half of global new home sales and home building, and it is the largest asset class in the world, with an estimated market value of around $62 trillion.
The next thing to watch is how regional governments, many of which rely on real estate revenue, manage their debt. Local-government financing vehicles (LGFVs) are estimated to hold 66 trillion yuan in total debt by the International Monetary Fund.
WILL CENTRAL GOVERNMENT INTERVENE?
China's Politburo, a top decision-making body of the ruling Communist Party, fuelled speculation more stimulus is on the way when it omitted the often-repeated phrase that "houses are for living in, not for speculation" from a statement in late July in which it pledged to adjust property policies in a timely manner.
But so far no bold stimulus measures have been announced, and views are split among industry experts whether they will eventuate.
Many analysts are hopeful that Beijing, which has so far refrained from state-funded bailouts, will roll out drastic measures in the coming weeks to stem the downward spiral.
Some analysts, however, question the tools that Beijing can use while maintaining a balancing act between providing support to the housing market and keeping debt in check.
($1 = 7.3040 Chinese yuan renminbi)
Reporting by Clare Jim; Editing by Sumeet Chatterjee and Stephen Coates
Our Standards: The Thomson Reuters Trust Principles.
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Asia Business & Economics
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Ed Jones/AFP via Getty Images
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Sam Bankman-Fried leaves a Manhattan federal court in New York City on Jan. 3, 2023.
Ed Jones/AFP via Getty Images
Sam Bankman-Fried leaves a Manhattan federal court in New York City on Jan. 3, 2023.
Ed Jones/AFP via Getty Images
Sam Bankman-Fried, the former head of cryptocurrency exchange FTX, was found guilty of each of the seven criminal charges he was facing, marking a spectacular fall from grace for a "math nerd" who was once a shining star in finance.
Bankman-Fried now faces the prospect of spending decades in prison after being convicted on charges including securities fraud, wire fraud and money laundering. The jury deliberated just for several hours before reaching its verdict.
Bankman-Fried is likely to appeal the decision.
"We respect the jury's decision. But we are very disappointed with the result. Mr. Bankman Fried maintains his innocence and will continue to vigorously fight the charges against him," Mark Cohen, Bankman-Fried's lawyer, said in a statement.
During a trial that lasted more than four weeks, prosecutors sought to prove that Bankman-Fried had been a criminal mastermind who orchestrated one of the largest financial frauds in history.
In a courtroom that was frequently packed, prosecutors detailed how Bankman-Fried and some of his top lieutenants secretly funneled billions of dollars in customer assets from FTX to Alameda Research, a private trading firm he also controlled.
The U.S. government said the former billionaire treated Alameda like a personal piggybank, using FTX customer money to buy luxury real estate for friends and family, and to make political donations and risky investments.
"This was a pyramid of deceit built by the defendant on a foundation of lies and false promises, all to get money," Assistant U.S. Attorney Nicholas Roos told the court in his closing argument. "And eventually it collapsed, leaving countless victims in its wake."
From a penthouse in The Bahamas to prison
The conviction marks a sharp reversal of fortune for a now 31-year old M.I.T. graduate who just last year was living large in a $35 million penthouse with some of his co-workers, as he ran a crypto empire that was estimated to be worth tens of billions of dollars during its heyday.
As FTX grew, Bankman-Fried became a celebrity in his own right at a time when the popularity of cryptocurrencies surged. There was a wave of investments from amateur traders and established Wall Street firms alike, and Bankman-Fried capitalized on the craze.
Instantly recognizable by his disheveled hair and his typical attire of a T-shirt and shorts, he was feted at conventions, and hung out with celebrities like former quarterback Tom Brady.
But his businesses started to crumble after an article raised concerns about the financial health of Alameda. That prompted spooked customers at FTX to withdraw their funds, in what was effectively a crypto run on the bank.
On Nov. 11, FTX and Alameda Research filed for bankruptcy. One month later, Bankman-Fried was arrested in The Bahamas.
Michael M. Santiago/Getty Images
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Bankman-Fried arrives at a Manhattan federal court in New York City on March 30, 2023. The former head of FTX was accused of perpetrating one of the biggest financial frauds in history.
Michael M. Santiago/Getty Images
Bankman-Fried arrives at a Manhattan federal court in New York City on March 30, 2023. The former head of FTX was accused of perpetrating one of the biggest financial frauds in history.
Michael M. Santiago/Getty Images
Bankman-Fried's friends turned against him
Then, one by one, Bankman-Fried's former executives started to turn against him, including Caroline Ellison, who headed Alameda at one point, and was also his on-again, off-again girlfriend.
She and other colleagues, including Gary Wang – who co-founded Alameda Research and FTX with Bankman-Fried — pleaded guilty to separate charges, and agreed to cooperate with federal prosecutors.
Their testimony proved damning during the trial.
They told the court Bankman-Fried directed them to commit crimes, and their comments were especially compelling because the cooperating witnesses weren't just Bankman-Fried's colleagues, they were also some of his closest friends.
Wang, for example, was Bankman-Fried's friend at math camp and his roommate at M.I.T.
Bankman-Fried's Hail Mary
Perhaps the most dramatic moment in the trial came when Bankman-Fried testified in his own defense — something most white-collar criminal defendants don't do.
The trial had gone so badly for him that he decided to throw a Hail Mary, hoping it would keep him out of prison.
It was a high-stakes gamble for someone who has a reputation for embracing risk. But it didn't work.
Bankman-Fried wilted under withering cross-examination from Danielle Sassoon, a formidable prosecutor who clerked for the late Supreme Court Justice Antonin Scalia.
She used Bankman-Fried's own words against him to great effect, and she had plenty to choose from.
For years, Bankman-Fried was the public face of FTX, eagerly courting reporters, posting Tweets and speaking at conferences.
And he continued to seek the limelight even after he was indicted and placed under house arrest at his parents' home in Northern California.
Bankman-Fried continued to talk to, and share sensitive information about the case with, journalists, leaving Judge Lewis Kaplan so fed up that he revoked Bankman-Fried's bail and sent him to jail.
Bankman-Fried's defense crumbles
Sassoon used Bankman-Fried's comments to show that there was a stark difference between what Bankman-Fried said in public, and how he acted behind the scenes.
For example, when FTX was teetering on the brink, Bankman-Fried told his hundreds of thousands of followers on X, formerly known as Twitter, it was in sound shape, even as prosecutors claimed he knew that couldn't have been farther from the truth.
"FTX is fine," he tweeted on Nov. 7, just days before the company imploded. "Assets are fine."
Michael M. Santiago/Getty Images
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Caroline Ellison, the former head of Alameda Research, leaves a Manhattan federal court in New York City after testifying during the trial of Bankman-Fried on Oct. 10, 2023. Ellison accused Bankman-Fried of directing her to commit crimes.
Michael M. Santiago/Getty Images
Caroline Ellison, the former head of Alameda Research, leaves a Manhattan federal court in New York City after testifying during the trial of Bankman-Fried on Oct. 10, 2023. Ellison accused Bankman-Fried of directing her to commit crimes.
Michael M. Santiago/Getty Images
The picture painted by the prosecution was at odds with Bankman-Fried's defense, that he was not a "movie villain," but a "math nerd" who got in over his head.
The defense also tried to argue Bankman-Fried was an inexperienced executive who was unable to keep tabs on what was happening at two multibillion dollar companies or to properly supervise executives at FTX and Alameda Research.
In his closing argument, Bankman-Fried's lawyer, Mark Cohen said Bankman-Fried made mistakes, but argued he always acted in good faith and never intended to commit any crimes.
"In the real world, people misjudge things," Cohen said. "They hesitate. They don't plan for the unexpected. They make good and bad business decisions, and they make mistakes that later on they wish they could have fixed."
After several hours of deliberation, the jury sided with the prosecution.
That means that for now, Bankman-Fried remains incarcerated in a federal jail in Brooklyn, facing the prospect of spending the rest of his life in prison.
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Crypto Trading & Speculation
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A landmark court ruling drove XRP prices to nearly double in the past 24 hours before receding during the early Asian trading hours on Friday, with XRP shorts losing the most money so far this year.
Data from Coinglass shows XRP-tracked futures traders racked up a total of $58 million in losses as a U.S. judge ruled the sale of XRP tokens on exchanges did not constitute investment contracts.
Of that, shorts, or bets against price rises, lost $33 million while longs constituted the remaining. Traders at crypto exchange Bybit saw the most liquidations at $21 million, followed by OKX at $14 million and Binance at $14 million.
Liquidation refers to when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. This happens when a trader is unable to meet the margin requirements for a leveraged position or fails to have sufficient funds to keep the trade open.
Large liquidations can signal the local top or bottom of a price move, which may allow traders to position themselves accordingly.
Such price action came immediately after the District Court for the Southern District of New York said the “offer and sale of XRP on digital asset exchanges did not amount to offers and sales of investment contracts,” as “the record cannot establish the third Howey prong to these transactions.”
Elsewhere, the ruling caused Solana (SOL), Cardano (ADA) and other altcoins to jump as traders likely considered XRP’s partial victory as a favorable outcome for the crypto market – one that has been targeted by the U.S. Securities and Exchange Commission in recent months for allegations of several issuers offering their tokens as securities to U.S. investors.
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Crypto Trading & Speculation
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Jeremy Hunt has told ministers there will be no extra money to give millions of public sector workers an average 6% pay rise, potentially leaving departments facing a difficult choice between raising salaries or cutting frontline services.
The Guardian understands the chancellor has ruled out providing a further cash injection beyond what is already budgeted if Rishi Sunak decides to implement the recommendations of independent pay review bodies, which are expected as soon as Thursday.
Government sources said the decision over whether to back the proposal would only be made once the prime minister was back from the Nato summit in Vilnius on Wednesday night and had gone over the figures. “There’s definitely still contention in this,” one said.
Cabinet ministers have been urging Sunak to agree to adopt the recommendations against a backdrop of the rising cost of living and amid concerns that public sector strikes could continue in the run-up to the next general election.
Senior Conservatives are concerned they will have to cut frontline services across education, health and policing if they are expected to fund the estimated £5bn difference between budgeted increases of 3.5% and the pay review body recommendations.
However, Treasury insiders said the salary proposals for 2023-24, which sources said ranged from 5% to 6.5%, could fuel further inflation and even set off a wage-price spiral, where increasing disposable income raises demand for goods.
In his Mansion House speech on Monday night, Hunt said any pay rises must not be funded from additional borrowing or tax rises. Treasury sources suggested his words were aimed as much at his fellow Conservative ministers as the wider public.
“Delivering sound money is our number one focus. That means taking responsible decisions on public finances, including public sector pay, because more borrowing is itself inflationary,” Hunt said.
“It means recognising that bringing down inflation puts more money into people’s pockets than any tax cut. And it means recognising that there can be no sustainable growth without eliminating the inflation that deters investment and erodes consumer confidence.”
Sunak also said on Saturday that giving unaffordable pay rises would be “shortsighted” and that any increases would have to abide by his principles of “fairness, affordability and responsibility”.
The warnings from Sunak and Hunt may be met with some concern from the unions that their expectations are being managed, in the hope that they will agree to the pay recommendations if the government does, in the end, decide to adopt them.
The proposals from the independent bodies, which the Treasury and other spending departments have already received, suggest that armed forces personnel should get between 5% and 6% next year, that police officers, junior doctors and prison officers should get at least 6% and that teachers should receive a 6.5% rise.
Gillian Keegan, the education secretary, Steve Barclay, the health secretary, Ben Wallace, the defence secretary, Alex Chalk, the justice secretary, and Suella Braverman, the home secretary, are all said to be pushing Sunak to back the review bodies.
Sunak and his ministers spent much of last year arguing they had to abide by the independent bodies’ below-inflation pay proposals during strikes when unions were demanding more. Ministers have ignored the advice just four times in the last 10 years.
The Bank of England governor, Andrew Bailey, joined the chancellor’s calls for wage restraint at the Mansion House on Monday, telling a City of London audience that high pay settlements were hitting the fight against inflation, which currently stands at 8.7%.
However, annual private sector wage growth increased to 7.6% in the three months to April, according to the latest official data. Downing Street said that Sunak did not believe that those working in the public sector deserved less than those in the private sector.
His official spokesperson said: “No. I think that obviously it’s for private companies to set their pay as they see fit … We want to agree fair and reasonable pay offers [with public sector workers].”
The work and pensions secretary, Mel Stride, told LBC radio the government had to make sure that wage pressures were “moderated” as they contributed to the “stickiness” of inflation.
He added: “That’s why it’s so important that the government takes a relatively firm and robust approach to public pay settlements and there’s no way, unfortunately, that we can duck that because if those settlements are too high that will feed into those problems.”
Pressed on whether the government would accept the recommendations of the pay review bodies, he said the government would be “absolutely unwavering” in its mission to reduce inflation.
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United Kingdom Business & Economics
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Lupin Q2 Results Review - Strong Execution On New Launches In The U.S.: Systematix
Lupin has guided around a portfolio of launches in Ophthalmic, injectable and a few first-to-file launches.
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Systematix Research Report
Lupin Ltd. Q2 FY24 earnings performance exceeded expectations led by a strong performance in rest of world markets and Europe, the Middle East and Africa. U.S. revenues were also slightly above expectations as the quarter witnessed channel filling for gSpiriva which was recently launched. Spiriva launch has been extraordinary, and company has guided that they have capacities to garner a significant share of not just the U.S. market but have enough capacities for other markets like Canada and Australia, where they are expecting a launch.
Lupin has also guided around a portfolio of launches in Ophthalmic, injectable and a few first-to-file launches. The larger ones include Mirabegron (in FY25), Tolvaptan (FY26) and gRevlimid (FY26).
We revise our FY25E numbers and incorporate higher sales for gSpiriva and incrementally factor in some of the guided launches on a risk adjusted basis. Based on our revised estimates we retain our hold rating with a revised target price of Rs 1,032 based on 22 times FY25E earnings per share.
The key upside risks to our estimates being delayed entry of competition in the some of the limited competition product (gSuprep) and the key downside risks being delayed approval of new complex generics and faster than expected erosion in existing limited competition portfolio.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
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India Business & Economics
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Sensex, Nifty Off Day's High To Trade Little Change: Midday Market Update
As of 12:40 p.m., the Sensex rose 16.30 points, or 0.03%, to 66,039.55, while the Nifty 50 fell 5.9 points, or 0.03% to 19,805.95.
India's benchmark stock indices were off intraday high to trade little changed by midday on Thursday, dragged by losses in Cipla Ltd. and Larsen and Toubro Ltd.
As of 12:40 p.m., the S&P BSE Sensex rose 16.30 points, or 0.03%, to 66,039.55, while the NSE Nifty 50 fell 5.9 points, or 0.03% to 19,805.95.
"Despite a relatively narrow range of movement, the market exhibited resilience," said Shrey Jain, founder and chief executive officer of SAS Online. "Today, it is expected that the Nifty may trade in the 19,800-19,900 range."
In contrast to the Nifty, the Bank Nifty showed underperformance for the second consecutive day, Jain said. "It is anticipated that the Bank Nifty will consolidate around the current levels, considering the substantial open interest in both the 43,500 call and put options for the day," he said.
Bajaj Auto Ltd., HDFC Bank Ltd., Hero MotoCorp Ltd., IndusInd Bank Ltd. and Reliance Industries Ltd. were positively contributing to the Nifty.
Whereas, Cipla Ltd., ICICI Bank Ltd., Larsen & Toubro Ltd., Tata Consultancy Services Ltd. and UltraTech Cement Ltd. were weighing on the index.
Among sectoral indices, Nifty Pharma and Nifty Healthcare declined the most by over 1%, while Nifty Realty and Nifty Media advanced.
The broader markets outperformed their larger peers, with the BSE MidCap rising 0.20% and the BSE SmallCap gaining 0.61% through midday trade on Thursday.
Fifteen of the 20 sectors compiled by BSE Ltd. advanced. BSE Healthcare fell the most.
The market breadth was skewed in favour of buyers. About 2,058 stocks rose, 1,443 declined, and 179 remained unchanged on the BSE.
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India Business & Economics
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Venmo is rolling out a new feature that will make dividing the bill even easier.
Announced Tuesday, Venmo Groups will help users track, split, and manage ongoing expenses between people for things like dinners, holidays, and household costs, all through the app.
The feature will automatically calculate individual amounts based on the number of people in the group. Venmo Groups are ongoing, which means expenses can be continuously added within groups. Users can create groups under the "Me" tab on the app.
It comes as surprising that Venmo has just now integrated the feature, considering it sits at the ethos of the PayPal-owned app. Friends and family have used it to make payments since its inception, with a social-media slant to it all. The app operates almost like a social network, with public posts, emojis, and interactions incorporated into the payment system.
Erika Sanchez, vice president and GM at Venmo, said in a statement that this was amongst the "most requested features" by users. Sanchez called the feature a "seamless solution for users to better track and settle shared expenses in group settings."
Venmo says that Groups will reduce the need for spreadsheets, mental math, or multiple apps — the latter acknowledging that the feature has the potential to put apps like Splitwise, SettleUp, and Splid on the defensive.
The feature is now available to select users, but will roll out to everyone in the coming weeks.
Topics Apps & Software
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Banking & Finance
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US Crypto Crackdown Reaches Fever Pitch As SEC Sues Coinbase
The SEC’s civil lawsuit on Tuesday stands out because of Coinbase’s high profile in the US, and its status as a publicly traded company.
(Bloomberg) -- The Securities and Exchange Commission widened its sweeping crackdown on crypto by accusing Coinbase Global Inc. of running an illegal exchange, a move that could make it harder for the industry to operate and for US citizens to trade.
In a 101-page lawsuit filed Tuesday in federal court in New York, the SEC alleged that Coinbase for years evaded its rules by letting users trade numerous crypto tokens that were actually unregistered securities. Just a day earlier, the regulator sued rival Binance Holdings Ltd. alleging a slew of violations.
The SEC moved against Coinbase, the biggest US crypto exchange, after Chair Gary Gensler repeatedly argued for years that most tokens are subject to his agency’s oversight and that swaths of the industry have been breaking the law. At the same time, US regulators have been warning banks to steer clear of crypto because of potential risks to the financial system, making it harder for US citizens to invest.
The SEC’s civil lawsuit on Tuesday stands out because of Coinbase’s high profile in the US, and its status as a publicly traded company.
Coinbase shares tumbled as much as 20% in New York trading.
The case against Coinbase, coupled with Monday’s case against Binance, forms a one-two punch against the industry. The SEC alleged Binance, the world’s largest crypto platform, and its chief executive, Changpeng Zhao, mishandled customer funds, misled investors and regulators, and broke securities rules.
The SEC didn’t accuse Coinbase Chief Executive Officer Brian Armstrong of wrongdoing in its complaint. The firm was founded in 2012.
“The SEC under Gensler is dead set on enforcing rules that, if followed, would kill off almost all of crypto,” Omid Malekan, adjunct professor at Columbia Business School who has consulted on crypto.
Gensler Crackdown
Gensler said in an interview on Bloomberg Television that the SEC worked with 10 states to bring its complaint against Coinbase. He cast the agency’s efforts to clamp down on crypto as one of both investor protection and US market integrity.
“Why should the New York Stock Exchange or broker dealers we all know and respect be undermined by this other corner of the capital markets, which is sort of saying, thumbing their nose and saying ‘Catch us if you can’?,” he told Bloomberg’s David Westin.
‘Enforcement-Only Approach’
Although Binance is bigger globally, Coinbase is the largest US crypto exchange, with more than 150 different tokens that trade. Paul Grewal, the company’s top lawyer, has previously said that those tokens aren’t securities.
“The SEC’s reliance on an enforcement-only approach in the absence of clear rules for the digital asset industry is hurting America’s economic competitiveness and companies like Coinbase that have a demonstrated commitment to compliance,” he said in a statement on Tuesday.
Wall Street’s main regulator is seeking an order that would require Coinbase to comply with securities laws, and give up what the agency says were ill-gotten gains.
The regulator also alleged that Coinbase acted as an exchange, broker-dealer, and clearinghouse all without registering with the SEC for any of those roles.
“This back-to-back, double whammy of actions by the SEC against Binance and Coinbase confirm that US regulators believe strongly that these entities have for years ignored the securities laws,” Ashok Ayyar, counsel at Ashbury Legal, said.
Coins Covered
A virtual currency may fall under the SEC’s remit if investors buy it to fund a company or project with the intention of profiting from those efforts. That determination is based on a 1946 US Supreme Court decision defining investment contracts.
In its complaint, the SEC said that numerous tokens offered on Coinbase were securities, including SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO.
The question of whether certain tokens are securities has hung over the crypto industry for years. In 2020, the SEC sued Ripple Labs Inc., contending that its XRP token is a security and subject to SEC regulation. A ruling in the case is expected this year.
Staking
The SEC also accused Coinbase of breaking the agency’s rules with its “staking” service. That product offers customers a return in exchange for providing their tokens to be used to facilitate transactions on a blockchain.
The case is U.S. Securities & Exchange Commission v. Coinbase Inc. et al, 1:23-cv-04738, U.S. District Court for the Southern District of New York (Manhattan).
--With assistance from Allyson Versprille, David Westin, David Pan, Vildana Hajric and Emily Nicolle.
(Updates with new details throughout. An earlier version misspelled Coinbase’s name in a deck headline.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
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Crypto Trading & Speculation
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Maine Gov. Janet Mills (D) signed a new paid family and medical leave law this week. Maine is the 13th state overall to guarantee paid family and medical leave—along with the District of Columbia—and the second state to enact paid leave in 2023 following Minnesota’s law, signed earlier this year.
Here are the key facts about the legislation.
When does the program start?
Workers will be able to begin taking leave and receiving benefits on May 1, 2026 (subject to a potential short delay based on an actuarial study). Workers and employers will begin contributing to the program a year earlier, on January 1, 2025.
What will the law do?
Maine’s law will guarantee workers in the state the right to paid family and medical leave when they cannot work due to serious health or caregiving needs.
Who does the law cover?
The law will cover nearly all employees in Maine, including both private and public sector workers. State and local government employees subject to a collective bargaining agreement will be covered when their current agreement expires. It will cover employees regardless of employer size and include full-time, part-time, temporary, and seasonal workers. Self-employed people will be able to voluntarily opt in to coverage, as will Tribal governments.
What kinds of leave does the law provide?
Maine’s law will provide:
- Medical leave to address workers’ own serious health conditions, including pregnancy
- Caregiving leave to allow workers to care for a loved one with a serious health condition
- Parental leave to provide workers the time to bond with a new child
- Safe leave for certain needs when workers or their loved ones experience sexual or domestic violence
- Deployment-related leave to deal with the impact of a loved one’s military deployment
Who will be eligible for benefits?
To be eligible, workers will need to have earned at least six times the state average weekly wage in total over the base period—a designated year-long period prior to the start of leave. Based on the current state average weekly wage, workers would need to have earned about $6,622 in the base period to qualify.
Benefits are portable, meaning that income earned across all covered Maine employers in the base period counts toward the total. This means that someone who recently changed jobs could count income from their past job as well as their current job, while someone with two jobs could count income from both. In other words, workers keep their eligibility for the monetary benefits, even as they change employers, and could be eligible for monetary benefits as soon as they start with an employer if they were previously eligible.
How much time can workers take?
Workers can receive up to 12 weeks of leave per benefit year.
What family members can workers use leave to care for?
For the purposes of Maine’s law, a family member will include a worker’s spouse or domestic partner, child, parent, parent-in-law, sibling, grandchild, or grandparent. The definition of family will also include a person designated by the worker “with whom the covered individual has a significant personal bond that is or is like a family relationship, regardless of biological or legal relationship.” This additional coverage ensures that workers can care for a chosen family member.
Will workers’ jobs be protected while they take leave?
As long as they have been employed by their employer for at least 120 days prior to their leave, employees will have the right to get their job, or an equivalent job, back following covered leave, regardless of the size of their employer or how many hours they work per week. Employees who receive health insurance through their employer will be entitled to keep their coverage while on leave. Employers are prohibited from interfering with employees’ rights or retaliating against employees for using those rights.
How much money will workers receive when they take leave?
Wage replacement rates—the percentage of their own income that workers receive while on leave—will be progressive. This means lower-income workers receive a higher percentage of their own income, with a sliding scale of lower percentages as workers earn more. Progressive wage replacement balances the need for lower-income workers to receive as high as possible a percentage of their own income while on leave with the need to keep program costs, which are ultimately borne at least in part by workers, affordable.
Workers will receive:
- 90 percent of the portion of their weekly wages that is less than or equal to 50 percent of the state average weekly wage, plus:
- 66 percent of the portion of their weekly wages that is more than 50 percent of the state average weekly wage.
Benefits will be capped at 100 percent of the state average weekly wage. For 2023, 50 percent of the state average weekly wage would equal $551.86 per week, and 100 percent would be $1,103.71 per week.
How will the state pay for the program?
The program will be funded with payroll contributions split evenly between employers and employees. While the initial contribution rate has not yet been set, it will be capped at a maximum of 1 percent of wages in total, meaning that employers and employees will each pay no more than 0.5 percent of wages. Contributions will be assessed on income up to the maximum income subject to contributions for Social Security. Employers with fewer than 15 employees will not pay the employer share of the contribution, which the fund will absorb; employees at small employers will pay the same amount as those at larger employers.
How will workers access benefits?
Like other state paid leave programs, Maine’s new law will create an insurance system. This means that, typically, when workers need benefits, they will apply to the state, which will process their claim and pay benefits out of the state insurance fund. Employers will not need to pay employees while they are on leave.
Employers can request special permission to provide benefits through a private plan. With an approved private plan, workers would be entitled to benefits like those under the state plan but would apply for and receive benefits from the private plan, such as a commercial insurance policy, rather than through the state. Private plans will be subject to strict rules and oversight.
Conclusion
Maine’s new paid leave law will offer critically needed protections to workers across the state, including nearly all of the state’s half a million private sector employees. This victory belongs to the Maine Paid Leave Coalition and its members who lead the fight; the current and former elected officials who championed this cause over the years; and to the Mainers and their families, who will benefit for years to come.
The positions of American Progress, and our policy experts, are independent, and the findings and conclusions presented are those of American Progress alone. A full list of supporters is available here. American Progress would like to acknowledge the many generous supporters who make our work possible.
Author
Senior Fellow
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Workforce / Labor
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Staff at the bank which refused to give the Chancellor an account described the Conservatives as “evil” and celebrated Tory election losses, The Telegraph can reveal.
Employees at Monzo, the challenger bank with more than seven million customers, also said Sir Jacob Rees Mogg, the Tory grandee, “could do the human race a favour” by leaving politics and called Harry Potter author JK Rowling “vile”.
Amid a backlash over the “debanking scandal”, Jeremy Hunt revealed last month he had his application for an account with the lender rejected before he was appointed Chancellor.
Monzo was also criticised last week after it emerged that it had told Gina Miller, the anti-Brexit campaigner, that it would close her political party’s account.
Scrutiny of the wider banking sector comes after Dame Alison Rose was forced to resign as chief executive of Natwest last week after admitting she leaked information about Nigel Farage’s Coutts bank account.
The Brexiteer has revealed that his account was closed in part because his views “do not align with our values” and dozens of other prominent figures have since claimed their accounts were closed over political views.
The debanking scandal has spread to other banks and a whistleblower has now revealed how staff at Monzo openly mocked those with views they disagreed with on workplace forums.
In a message on a Slack forum in October last year, one staff member wrote: “Maybe JRM could do the human race a favour and stay out of politics forever. Doubt you could replace him with anyone who is more of an archetypal Tory”.
The following day the same member described the Conservatives as “evil” and “ugly”.
A dossier also reveals that staff celebrated the Conservative local election losses in May with one responding to a meme by saying “What’s great about this gif is that the Tories have lost Maidenhead” and another writing: “Tory losses in the local elections – we love to see ittttt”.
A third staff member, a financial crime investigator, added: “I’m just gutted that my own local council didn’t have an election”
In March, an engineer wrote that the Spring budget had distracted the public from “the general state of the country”, while in January another said: “I hope I’m wrong though and we manage to topple the Tories for good. I’m not sure anyone can survive under the Tories for much longer”.
In April 2022, a senior manager also said that “the Tories are evidently swaying towards arguments put forward by Terfs”.
“Terf” stands for trans-exclusionary radical feminist and is regarded as a slur by many gender-critical people who defend the reality of biological sex.
The same employee claimed that the registered gay rights charity LGB Alliance was promoting “hate speech”.
In another example of apparent intolerance towards those with gender-critical views, one member of senior management in Human Resources told staff to “anticipate responses from Terfs”.
‘Left-wing agenda’
In August last year, another staff member wrote that “JK Rowling is a terf so grim” while in October 2021 another employee described her as “vile”.
The Telegraph revealed earlier this year that the digital bank was reprimanded by the data watchdog after staff called a gender-critical man a “horrible Terf”.
Employees had mocked and condemned the man’s opinions on an internal company forum after he publicly criticised their transgender policy.
The Information Commissioner’s Office issued a rebuke, confirming it has written to the bank to “ask them to review and strengthen their own internal procedures and staff training in relation to this matter”.
MPs said that the internal discussions at Monzo raised fresh questions about the culture within banks.
“Banks should not behave like political activists,” Gareth Johnson, the Conservative MP for Dartford, said. “It is time the Treasury took action against those banks who increasingly seem to have a Left-wing agenda. Is it too much to ask banks to just get on with banking and to stop their political activism?”
‘Cherry-picked comments’
Mr Farage said it was not surprising bank staff were criticising the Tories and it was part of the wider culture within the sector.
“I think the general public would be astonished but I’m afraid I’m not in the least bit surprised,” he said. “Corporate Britain has suffered a complete takeover.
“It’s all one way, this is a culture, to reverse this it’s going to be a big battle”.
Sir Jacob said he respected bank staff’s right to free speech and it would only be a problem if these views influenced account closures.
A spokeswoman for Monzo said: “Our ambition is to make money work for everyone, which means that we’re politically neutral and personal views play no part in our policies or decision making, including eligibility for a Monzo account. Any suggestion otherwise is categorically untrue.
“These cherry-picked comments are personal views of a handful of employees in informal conversations and it is wrong to portray them as the views of Monzo or our thousands of other employees.”
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Banking & Finance
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While Social Security was never meant to fund the entire lifestyle of retirees, many American seniors unfortunately find themselves in that very position. According to a recent study from Nationwide, 21% of Americans now rely on Social Security as their sole source of retirement income, up from 13% in 2014.
Social Security Cuts: States That Would Be Impacted the Least
Learn: The Simple, Effective Way To Fortify Your Retirement Mix
Technically, the average Social Security check is enough to keep Americans above the federal poverty level, but there are two problems with this type of analysis. First, in spite of the technical definition, the federal poverty line is far below the standard of living most Americans would want. Second, seniors who are living in poverty are likely earning far below the average Social Security check.
In other words, it’s extremely difficult to live a comfortable retirement for seniors in poverty who are living off just their Social Security checks. To see how tough it is, here’s a quick look at the relationship between federal poverty levels, seniors living in poverty and the size of their Social Security checks.
Federal Poverty Levels for 2023
Federal poverty levels are used to calculate eligibility for a wide range of government programs, from Medicaid and the Children’s Health Insurance Program to Affordable Care Act subsidies and more. As such, they are administrative levels more than actual estimates of what it means to be living in poverty.
For example, the federal minimum wage remains at just $7.25 per hour, which is technically enough to keep you above the poverty line. But there aren’t many Americans who would agree that earning $15,000 per year amounts to anything but living in poverty.
Nevertheless, the poverty levels are what they are — $14,580 for individuals and $19,720 for two-person households. From there, the poverty line increases by just $5,140 for each additional person in a household, meaning a family of six, for example, would have a poverty line of $40,280.
Florida’s Retirees Are Fleeing: Here’s Where They’re Going Instead
Average Social Security Checks as of Sept. 2023
According to IRS data, the average Social Security payout for retirees as of Sept. 2023 was $1,841.27. Spouses of retired workers drew an average check of $888.03.
This means that the average retiree household in which a spouse was also drawing benefits received a total of $2,279.30 per month, or $32,751.60 per year. That amounts to $13,031.60 above the poverty line for a two-person household.
Average Social Security Checks of Retirees Living in Poverty
The SSA doesn’t break down Social Security payouts by income level. However, an estimate can be made by comparing average U.S. incomes with the average Social Security benefit for retirees.
According to U.S. Census data, Americans in a nonfamily household (meaning they lived alone or with unrelated others) has a median income of $45,440 in 2022. Meanwhile, the average Social Security benefit for an individual retiree as of Dec. 2022 was $1,775.81, or $21,309.72 per year. Lastly, in 2022, the federal poverty level for individuals was $13,590 in income per year.
If you put this all together, an individual living in poverty earned about 30% or less in income than the median nonfamily household. Applying that ratio to the average Social Security payment results in an estimated monthly check of $532.74, or just $6,392.88 per year.
This is by no means a scientific analysis, but it’s a fair estimate of what a poverty-level earner could expect in terms of a Social Security retirement benefit. Bear in mind that there are plenty of ways for lower-earning retirees to get additional support, including the Supplemental Security Income (SSI) program and numerous health and food security assistance programs.
Ways To Boost Your Social Security Check
There are only two ways to boost the amount you receive in your Social Security check. The first is to increase your earnings. The SSA uses your 35 highest-earning years to compute the amount of your check, so maximizing your earnings for at least 35 years is the best way to raise your payout.
The second way is to delay when you file. Although you can legally claim Social Security as early as age 62, by waiting until age 70, you can increase your benefit significantly. If you’re due a $1,000 monthly benefit at your full retirement age of 62, for example, that would be reduced to $700 if you claim at age 62. However, if you wait until age 70, that benefit would jump to $1,240, 77% higher than if you filed at 62.
If you’re struggling to get by, it might be hard to wait until age 70. However, if it’s at all possible, you’d enjoy much higher Social Security checks for the rest of your life.
Supplemental Sources of Retirement Income
It’s clear that Social Security alone isn’t usually enough to cut it for most retirees. With this in mind, it’s important to start saving and investing as early as possible to supplement your Social Security income in retirement.
Even a modest $100 investment per month that earns 10% per year would be worth a whopping $632,405 after 40 years, thanks to the power of compound returns. If you could earn even 5% interest on that money in retirement, that would provide you with an additional $31,620.25 per year in income. Coupled with the average annual Social Security benefit of $22,095.24, you’d be pulling in $53,715.49 per year in income without having to lift a finger — and that doesn’t even include any potential spousal benefits or other income.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: How Big Is the Average Social Security Check of a Retiree Living in Poverty?
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Personal Finance & Financial Education
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The Daily Telegraph says Prime Minister Rishi Sunak is now considering demands from within cabinet to crack down on visas for foreign NHS and care workers, after Tory MPs called for "immediate and massive" action to meet the party's manifesto pledge to reduce migration numbers.
The paper says a five-point plan being pushed by Immigration Minister Robert Jenrick has the support of the New Conservative group of around 20 MPs. In an article for the paper, its chairman, Miriam Cates, says failing to deliver on migration is more serious than failing to cut taxes. She argues that mass migration is changing the nature of Britain forever.
The Times reports that Mr Jenrick's plan includes stopping students staying in the UK after their courses finish, and limiting the number of family members migrants can bring. According to the paper, Mr Sunak could even announce measures along these lines next month. They had previously been resisted by some departments because of nervousness about their impact on the economy - but now the Treasury is so alarmed by the new figures it's prepared to look at "serious" proposals to curb numbers, the paper says.
As far as the Daily Mail is concerned, the former Home Secretary Suella Braverman is leading a "Tory revolt" after the release of the migration data, which it calls a "bombshell". It highlights her social media statement on Thursday in which she said "enough is enough" and urged Mr Sunak to "act now". Mrs Braverman said the pressure the numbers put on housing, the NHS and "community cohesion" was unsustainable.
The Daily Express says there are fears that immigration is "passing the point of no return", and is now out of control. And the Daily Mirror says the Tories are "breaking Britain", listing migration alongside the economy, household bills and how the Covid pandemic was handled as areas where the government is failing.
The Financial Times reports that the entrepreneur Lawrence Jones - once considered one of the most influential tech magnates in the UK - has been found guilty of raping two women and sexually assaulting a third. The rapes occurred in the 1990s, while the assault took place when the victim worked at Jones's webhosting company, UKFast.
The Guardian's main story is that because of a system dating back to feudal times, King Charles III is able to profit from the assets of some people who die without a will or a known next of kin. Ownerless property in some parts of northern England reverts to the Duchy of Lancaster, the King's property and land estate. Funds are, claims the paper, being used to finance the renovation of property owned by the King. The Duchy says that anything left from the ownerless properties after deducting costs is given to charity.
The Daily Telegraph says that senior Treasury figures have discussed holding an early Budget, fuelling speculation of a snap general election in the spring. Bringing the budget forward would allow more time for tax cuts to improve voters' finances before they go to the polls. But a Treasury source tells the paper the department is still planning for a March budget as usual.
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United Kingdom Business & Economics
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Prosecutors have accused former crypto boss Sam Bankman-Fried of deceit as his US fraud trial draws to a close, claiming he repeatedly lied to customers, the public and the jury.
Mr Bankman-Fried is facing charges of fraud and money laundering.
Prosecutors say he precipitated the collapse of his cryptocurrency exchange, FTX, by stealing billions of dollars from customers.
He denies the charges and has claimed he was acting in "good faith".
Mr Bankman-Fried's defence lawyer said that prosecutors had failed to prove beyond reasonable doubt that the entrepreneur had acted with criminal intent.
But prosecutor Nick Roos said that arguments that Mr Bankman-Fried was not aware of what was going on at his company were not "remotely credible".
"This was a pyramid of deceit built by the defendant on a foundation of lies and false promises," he told the jury that will decide his fate.
"He took the money, he knew it was wrong and he did it anyway because he thought he was smarter and better⦠He thought he could talk his way out of it," he added. "That ends with you."
Prosecutors for the US government have argued that Mr Bankman-Fried directed special systems to be set up, such as a massive line of credit, that allowed his crypto hedge fund Alameda Research to take billions in FTX customer deposits.
They say he then spent the money to repay Alameda lenders, buy property, make investments and political donations.
When FTX collapsed last year, $8bn (£6.6bn) in customer funds was missing, owed by Alameda.
"There is just one person who had the motive" for such activity, Mr Roos said.
"This is not about complicated issues of crypto urgency, it's not about hedging, it's not about technical jargon," Mr Roos said. "It's about deception, it's about stealing, it's about greed."
He challenged Mr Bankman-Fried's testimony, saying he had become a "different person" depending on whether he faced friendly questions from his own lawyers or cross-examination by the government.
Lawyers for the two sides summed up their cases for the jury on Wednesday, staying late to finish. Deliberations are expected to begin on Thursday.
The entrepreneur denies the charges and has claimed he was acting in "good faith".
He spent much of his lawyer's closing argument facing the jury, his hands resting below the desk, unlike the morning, when he could be seen passing notes to his team and typing on the internet-disabled laptop he received a special exception to have in the courtroom.
'Bad business judgements not a crime'
His lawyer, Mark Cohen, said the special features of Alameda's account that prosecutors focused on had been set up for "valid business reasons, not to carry out some grand fraudulent scheme".
"In the real world, things get messy," he said. "Bad business judgments are not a crime."
He also said that prosecutors had sought to portray Mr Bankman-Fried as a "villain" and "monster".
The 31-year-old is a former billionaire and was arrested last year after the collapse of his firm, FTX.
The downfall left many customers unable to recover their funds.
Before the collapse of his companies, Mr Bankman-Fried was known for socialising with celebrities and appearing frequently in Washington DC and in the media with a head of wild curls to discuss the sector.
Mr Cohen said the government had introduced elements like Mr Bankman-Fried's messy hair and cargo shorts that were irrelevant to criminality.
He added: "Every movie needs a villain... And let's face it, an awkward high school math nerd doesn't look particularly villainous.
"So what did they do? They wrote him into the movie as a villain."
Mr Bankman-Fried faces decades in prison if convicted.
The rapid growth of his firm and his deal-making last year, when a market downturn hit other firms, earned him the moniker the "Crypto King".
During the trial that began early in October, the entrepreneur admitted he had made "mistakes" in managing his business empire, but said that he never committed fraud.
He depicted himself as overwhelmed by work and claimed he only became aware of the issues facing Alameda when it was too late.
He said the problems at the company arose because his instructions were ignored by employees, including his former girlfriend.
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Crypto Trading & Speculation
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RISHI SUNAK’S government has put councils on red alert for an election - amid growing rumours he could call a snap vote next May.
Local authority chiefs are ramping up their planning after being told to “be election ready” by next spring, insiders said.
With the campaign expected to be the most brutal in years, Tory HQ has been splurging big money drawing up local ‘mini election’ strategies for different areas.
They are carrying out secret, in depth constituency by constituency polling across the 100 most marginal seats.
MPs will be told which policy areas poll well and should be blitzed locally.
Red Wallers expected to go heavy on tough immigration lines and rural seats expected to pivot to softer issues like transport links.
The plan has been devised by Tory polling supremo Isaac Levido.
But it is shrouded in secrecy with MPs told to keep quiet about details.
One Tory source said: “The idea is to replicate the success of Uxbridge - to go all guns blazing on issues that matter locally.”
A Westminster source said: “My money is on a May election.
Most read in Politics
“Council CEOs have been told to be ready by then, and Tory HQ is cranking up. It sounds like game on to me.”
Rishi effectively fired the starting gun on an election campaign earlier this week by junking unpopular Net Zero policies.
Promising to make more “tough” calls, he is expected to scrap the Birmingham to Manchester leg of the wildly over-budget HS2 rail link to save many billions.
No10 plans to use a lot of the cash saved to bankroll other local train projects - like Northern Powerhouse Rail, The Sun on Sunday understands.
One government insider said: “It is a huge amount of money saved. You would be able to afford more than one project.”
The decision has sparked a huge dust-up in the Tory Party, with Boris Johnson and David Cameron both said to be fuming at the decision to junk the project.
Bojo branded it “Treasury driven nonsense”.
But many Tory MPs hailed the move - and even Red Wallers said they will back if their areas are guaranteed cash for other train routes.
One said: “In my area, no one cares about HS2. It’s local rail projects that will win votes.”
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United Kingdom Business & Economics
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New York Attorney General Letitia James is suing the Winklevoss twin-led exchange Gemini along with the crypto lending firm Genesis and its parent company, Digital Currency Group. The complaint, filed Thursday, alleges that the crypto firms defrauded more than 230,000 investors, including at least 29,000 New Yorkers, of more than $1 billion.
Gemini and Genesis have been locked in a cycle of lawsuits over an investment product called Gemini Earn, with litigation also levied by the Securities and Exchange Commission. The accusations from New York’s attorney general are just the latest in a series of legal woes for the crypto empires belonging to the Winklevoss twins and DCG head Barry Silbert.
“These cryptocurrency companies lied to investors and tried to hide more than a billion dollars in losses, and it was middle-class investors who suffered as a result,” James said in a statement shared with Fortune. “This fraud is yet another example of bad actors causing harm throughout the under-regulated cryptocurrency industry.”
Gemini Earn
During crypto’s bull run, investment vehicles popped up and began offering enticing interest rates unmatched by traditional financial firms. Genesis, a subsidiary of the Digital Currency Group, which also includes the crypto publication CoinDesk and asset management company Grayscale, offered users interest payments to deposit crypto that was then loaned out to companies such as hedge funds.
In February 2021, Genesis partnered with Gemini, the crypto platform founded by Tyler and Cameron Winklevoss that includes exchange and investing services, to offer a product called Gemini Earn. With the service, Gemini users could loan cash and crypto at interest rates as high as 8% to Genesis, which in turn would lend out the assets, ostensibly generating returns.
According to the lawsuit, Gemini told investors that it vetted Genesis through a risk management framework, although its own internal risk analyses showed that loans to Genesis were risky. Genesis, of course, was lending out its assets to companies that would later collapse, including Three Arrows Capital and Alameda Research.
As the lawsuit details, Sam Bankman-Fried’s Alameda was at one time the borrower of nearly 60% of all outstanding loans from Genesis to outside parties. Bankman-Fried is currently in the middle of a criminal trial at a federal court in New York related to the collapse of FTX and Alameda.
While Gemini revised its estimate of Genesis’s credit rating from investment grade to junk in February 2022, it did not publicly reveal the update to investors, the lawsuit alleges. In July 2022, Gemini’s board of managers discussed ending Gemini Earn because of risks associated with Genesis, with some of Gemini’s risk personnel allegedly withdrawing their own investments from the program.
Customer losses
As crypto prices soared in 2021 and early 2022, Gemini Earn drew over 230,000 investors, with enough hailing from New York to catch the attorney general's attention. The lawsuit details one victim, a retired 73-year-old grandmother who invested her life savings of $199,000 in Gemini Earn, allegedly spurred by its “marketing statements.”
Letitia James's office has proven one of the most aggressive U.S. regulators toward crypto, including actions against the stablecoin issuer Tether and its associated company Bitfinex, as well as former Celsius CEO Alex Machinsky. In May, James also proposed enacting sweeping crypto legislation, although it put her office at odds with the state’s other powerful crypto regulator, the Department of Financial Services.
Gemini Earn has been a lightning road for lawsuits. After FTX collapsed in November, Genesis froze withdrawals, trapping users’ funds, including for Gemini Earn. Genesis filed for bankruptcy in January.
A week before Genesis filed for bankruptcy, the SEC sued both Genesis and Gemini, alleging that Gemini Earn constituted the unregistered offer and sale of securities. Then in July, after a months-long public dispute played out largely on Twitter, Gemini sued Genesis parent company DCG and CEO Barry Silbert, alleging “fraud and deception.”
With Gemini and Genesis continuing to hash out details over unfreezing the trapped funds from Gemini Earn, the lawsuit from James adds a new wrinkle to the operations of the two crypto heavyweights.
The complaint also charges Silbert and former Genesis CEO Soichiro Moro with trying to conceal more than $1.1 billion in losses from investors—Gemini as well as the public. According to the lawsuit, Genesis lied to Gemini about conducting regular reviews of its borrowers’ financial statements, alleging that Genesis still hadn't received audited financial statements from Three Arrows Capital more than two years after asking for them. Genesis, the suit continues, also made misleading statements and concealed key information to hide its own financial condition.
In addition to restitution for investors and disgorgement penalties, the lawsuit is seeking to stop Gemini, Genesis, and DCG from engaging in business related to securities and commodities in New York.
In a tweet posted after this story was published, Gemini wrote that the lawsuit confirms that Gemini, Earn users, and other creditors were "the victims of a massive fraud," but that the company disagrees with the decision to sue Gemini as well.
Fortune reached out to Genesis, and DCG at the time of publication but didn't immediately receive responses.
This story was originally featured on Fortune.com
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Crypto Trading & Speculation
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- Closing arguments kicked off on Wednesday in Sam Bankman-Fried's criminal fraud trial.
- Assistant U.S. Attorney Nicolas Roos told the jury that Bankman-Fried "schemed and lied to get money, which he spent."
- Bankman-Fried, who pleaded not guilty to all charges, faces a potential life sentence if convicted.
Prosecutors in Sam Bankman-Fried's criminal fraud trial kicked off their closing argument on Wednesday, reminding the 12 jurors why they've spent the past four weeks sitting in a lower Manhattan courtroom.
"Almost a year ago, thousands of people from all over the world who deposited money with FTX started withdrawing funds," Assistant U.S. Attorney Nicolas Roos told the court.
Roos said there's "no serious dispute" that $10 billion in customer money that was sitting in FTX's crypto exchange went missing, with some of it going to to pay for real estate, investments, loan repayments and political donations.
The main thing the jury has to decide, Roos said, is whether Bankman-Fried knew that taking the money was wrong.
"The defendant schemed and lied to get money, which he spent," Roos said.
Bankman-Fried, the 31-year old son of two Stanford legal scholars and graduate of Massachusetts Institute of Technology, faces a potential life sentence if convicted on charges, which include wire fraud, securities fraud and money laundering, all tied to the collapse late last year of FTX and sister hedge fund Alameda Research. He pleaded not guilty.
The trial, which began in early October and is set to wrap up in the coming days, has largely pitted the testimony of Bankman-Fried's former close friends and top lieutenants against the sworn statements of their former boss and, for many of them, former roommate.
The government's key witnesses included Caroline Ellison, Bankman-Fried's ex-girlfriend and the former head of Alameda, and FTX co-founder Gary Wang, who was Bankman-Fried's childhood friend from math camp. Both pleaded guilty in December to multiple charges and cooperated as witnesses for the prosecution.
When it was time for Bankman-Fried's team to mount a defense, lead counsel Mark Cohen left the bulk of the case to his client, who spent three days on the stand telling the jury that he didn't defraud anyone, didn't take customer money and tried to work with his deputies to keep FTX from failing.
Roos spent Wednesday morning asking the jury to look at the evidence. At one point, he asked, "Who is responsible? He then stepped out from behind the podium and towards the defense table, pointed at the defendant and said, "This man, Samuel-Bankman-Fried."
"A pyramid of deceit was built by the defendant," Roos said. "That ultimately collapsed."
The facts, as listed by Roos, were that customers believed their deposits were their own and not to be used by anyone else; that FTX ads continually said the exchange was the safest and easiest way to buy cryptocurrency; and that $10 billion was missing.
Roos told the jury that Bankman-Fried lied to them, reminding them how smooth the defendant was in answering questions from his own attorney but how "he was a different person" when it was the prosecutors' turn. He had a perfect memory on Friday, Roos said, telling the jury that Bankman-Fried knew the details about the layout of his Airbnb office in California, the reason he went to Hong Kong and why he picked the Miami Heat arena as the one for FTX to sponsor.
That all changed when the government was asking the questions.
"It was uncomfortable to hear," Roos said, adding that Bankman-Fried said "I can't recall" over 140 times during questioning by the government.
"To believe his story, you'd have to ignore the evidence," Roos said. "You'd have to believe the defendant, who graduated from MIT and built two multibillion-dollar companies, was actually clueless."
Critical to the failure of FTX was the use of customer funds to cover losses in Alameda's books following the plunge in crypto prices last year. Roos said Bankman-Fried is the one who gave special privileges to Alameda, which he started before founding FTX, allowing it to siphon customer money. He knew it was wrong, Roos said, which is why he kept it secretive.
Roos said Bankman-Fried had been lying to the public about Alameda's "secret advantages," and was being untruthful when he told the public and the media that Alameda was just like everyone else.
"Those were lies," Roos said. Had they known the truth, "investors would have run for the exits," he said.
Bankman-Fried blamed "messy accounting," Roos said, adding "give me a break." He said those comments contradicted what he told Congress, that he'd reconciled the books.
Judge Lewis Kaplan, who presided over the trial, started court almost a half hour late on Wednesday because a juror was stuck in traffic. Then there were technical issues, as the second row of monitors in the jury box stopped working. That led to a 1- minute break.
Later in Roos's closing, he brought up the infamous spreadsheet of the seven alternate versions of Alameda's finances that Ellison had put together when third-party lenders were asking for an update. Bankman-Fried testified that he'd seen a spreadsheet but didn't remember the details and didn't ask Ellison questions about it. Roos called the explanation "implausible."
Roos referred to metadata showing that Bankman-Fried was part of a meeting for about 30 minutes where the hole in FTX's balance sheet and repaying lenders were discussed. Metadata shows he was studying the Google Doc of the company's finances, with numbers indicating the billions in borrowing from FTX.
Roos brought up testimony from three firsthand witnesses who said that they'd spoken with Bankman-Fried about the giant hole in the balance sheet. Ellison said there was no way to repay it, and Singh testified that Bankman-Fried admitted to him that "we are a little short on deliverables."
Bankman-Fried "had the arrogance to think he could get away with it," Roos said.
Another point speaking to the defendant's intent, Roos said, was his tweeting.
Bankman-Fried's plan last November, when he knew there was only enough money to process one-third of client assets, was to send a confident tweet thread. Singh testified that he wasn't comfortable with the plan, yet Bankman-Fried went on to tweet that "assets are fine" as the bank run was underway, Roos said.
Bankman-Fried knew Alameda had a negative net asset value of $2.7 billion, Roos said, but wanted to make another $3 billion in venture investments. The only way to do that was with FTX customer funds, he said.
Additionally, Roos told the jury, client money went to $100 million in real estate expenses, including a $30 million penthouse in the Bahamas and $16 million for his parents' home.
In referencing the Super Bowl picture with Katy Perry and others, Roos called Bankman-Fried a "celebrity chaser."
Roos walked the jury through a timeline of key moments, as follows:
- On Sept. 1, Bankman-Fried saw that FTX had a $13.7 billion hole.
- On Sept. 7, Bankman-Fried wrote a long memo proposing the shutdown of Alameda. Still, he spent $45 million for a stake in Skybridge Capital.
- Then, on Sept. 22, he paid $4 million to himself.
- Four days later, he sent $250 million to Modulo Capital, a hedge fund in the Bahamas.
- And on Oct. 3, he funneled $6 million for political donations.
"That's all you need to know to find him guilty," Roos said.
— CNBC's Dawn Giel contributed to this report.
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Crypto Trading & Speculation
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Caroline Ellison testified on Tuesday in Sam Bankman-Fried's criminal trial.
Ellison, the former CEO of his cryptocurrency hedge fund, said SBF believed money could win him political power.
He thought "you could get very high returns for relatively small amounts of money," Ellison testified.
Prosecutors allege Bankman-Fried defrauded customers and investors of FTX, his now-defunct cryptocurrency exchange, by siphoning their funds to Alameda Research, his cryptocurrency hedge fund, without their knowledge or permission.
As part of her testimony Tuesday in a downtown Manhattan federal courtroom, Ellison, the former CEO of Alameda Research, said Bankman-Fried donated $10 million to Biden in 2020.
Federal Election Commission records show that Bankman-Fried personally donated $52,800 directly to Biden's Victory Fund and Biden for President in 2020 — though he's also accused of donating to politicians under other peoples' names.
Campaign finance data show Bankman-Fried also donated millions to states' democratic committees and other progressive groups in 2020.
Ellison said that the money donated to Biden was a small amount of money for Bankman-Fried. He believed that even this got him important recognition later on.
"He thought it was very effective, that you could get very high returns for relatively small amounts of money," she said.
Later, Ellison testified that Bankman-Fried also believed there was a chance he could be elected US President one day.
While putting together a balance sheet for Alameda in 2022, Ellison says she saw a $35 million loan to former FTX executive Ryan Salame. Ellison understood it was for donations to Republican political candidates, per her testimony.
Salame, who was one of Bankman-Fried's political fixers, said in September 2022 that he donated $13.4 million to that year's Republican primary races. Last month, Salame pleaded guilty to defrauding the Federal Elections Commission and to illegally making a campaign contribution on behalf of a company.
"He said he really valued Ryan for his loyalty," Ellison told the jury.
In the 2022 campaign cycle alone, Bankman-Fried contributed over $40 million in political donations, and those primarily went to progressive funds, the FEC data shows.
The Protect Our Future PAC, which helped support the campaigns of dozens of Democrats running for Congress, received $27 million from Bankman-Fried, per FEC records.
Ellison pleaded guilty to four criminal counts herself and is testifying as part of a cooperation agreement.
Besides serving as the CEO of Alameda Research, Ellison had an on-and-off relationship with Bankman-Fried from 2019 to 2022. Ellison said in her testimony on Tuesday that they made their relationship official in 2020.
"The whole time we were dating, he was also my boss, so that created some awkward situations," Ellison said on Tuesday.
Representatives for Bankman-Fried did not immediately respond to a request for comment from Insider sent outside regular business hours.
Read the original article on Business Insider
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Crypto Trading & Speculation
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The UK's economy has grown faster since the start of the Covid pandemic than initially thought, new figures show.
Revised data indicates that the UK has seen faster growth than France or Germany since the end of 2019.
The growth figures had been expected to be upgraded, after the Office for National Statistics (ONS) published new estimates earlier this month of how the economy had performed since Covid.
However, analysts said the UK was still suffering from lacklustre growth.
The latest figures from the ONS indicated that the UK's economy has grown by 1.8% since the pandemic started, whereas the previous estimate was a 0.2% contraction.
They also showed that the economy grew by 0.3% in the first three months of this year, up from the 0.1% previously estimated.
The estimate for the April-to-June quarter was unchanged at 0.2%.
Following the latest set of revisions, ONS chief economist Grant Fitzner said the UK's growth rate was "almost unrevised over the last 18 months".
The size of an economy is measured by Gross Domestic Product, or GDP, which tries to cover all the activity of companies, governments and individuals in a country.
The ONS revises GDP figures over time as it receives more information about how the economy performed.
Earlier this month, the ONS had said that "richer data" from its annual survey meant that it now estimated the UK economy was larger than previously estimated in the final three months of 2021 compared to pre-pandemic levels.
The latest set of figures, means the UK's growth since the pandemic exceeds that of 1.7% in France and 0.2% in Germany.
Responding to the new data, Chancellor Jeremy Hunt said: "We know that the British economy recovered faster from the pandemic than anyone previously thought and data out today once again proves the doubters wrong.
"We were among the fastest countries in the G7 to recover from the pandemic and since 2020 we have grown faster than France and Germany."
However, Ruth Gregory, deputy chief UK economist at Capital Economics, said the latest ONS release "changes very little".
"The data leaves the economy still only 0.6% above its level a year ago," she said.
"It does not change the big picture that the economy has lagged behind all other G7 countries aside from Germany and France since the pandemic. And that's before the full drag from higher interest rates has been felt."
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, noted that when it came to international comparisons, "a stable picture might take some time to emerge, given that statistical authorities in other countries are revising their data too".
The most recent GDP figures showed that the economy shrank by 0.5% in July, due to a combination of strike action and the impact of wet weather, and there have been concerns over the economy's weak performance in recent months.
However, Mr Tombs said he thought that the UK would avoid a recession in the second half of this year, helped by the recent slowdown in the rate of consumer price rises.
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United Kingdom Business & Economics
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Jeremy Hunt’s plan to encourage pensions to invest more in Britain will leave savers worse off, the Government’s own modelling suggests.
The Chancellor unveiled a raft of pension reforms on Monday night in a speech to the City bosses, including a voluntary “compact” among the biggest pension funds to invest 5pc of their assets in start-ups and private equity.
The Treasury has claimed the reforms could boost pension incomes by more than £1,000 extra per year.
But internal modelling has shown the very high fees charged by private equity firms could erase returns for pension savers.
Government analysis estimates that in the average scenario, before fees, a worker earning £30,000 and saving into a pension for 30 years would have a pot worth £283,800 if 5pc of the money were invested in private equity.
If it were only invested in stocks and bonds, it would be worth £273,300, Department for Work and Pensions analysis showed.
However, after fees are taken into account, a saver who did not invest in private equity would be £1,300 better off, it found.
This is because private equity firms charge much higher fees in exchange for their investment expertise. Fund managers investing in stocks normally charge an annual fee of between 0.5 to 1pc.
Private equity funds, which back companies that are not listed on the stock market, often charge a fee of 2pc, as well as a performance fee. This can be as high as 20pc if the fund delivers a return above 8pc.
Pension fees are currently capped at 0.75pc, but this does not include performance fees.
The Government has suggested the pensions industry may be able to negotiate with private equity firms to charge just 1pc for annual management costs and 10pc for performance fees.
Laura Trott, the minister for pensions, said returns could vary and that the Government had taken reasonable assumptions in the report. She added that if 5pc private equity allocation replaced bonds instead of stocks, returns could be greater.
However, Rebecca O’Connor, of the provider Pensionbee, said she could not imagine pension funds being able to negotiate the numbers down so low.
She said: “It will be very difficult as there is a reason private equity firms charge such high rates – early stage growth businesses require a lot of research and you will not be able to reduce fees because the work involved will be the same.
“This is why these kinds of investments are not typically open to regular savers.”
She added: “We have to ask who these reforms are really for, when the models suggest the pay-off for savers could actually be quite low.”
It came as Jeremy Hunt appeared to overrule the City watchdog by proposing a relaxation of short-selling rules.
On Tuesday, The Treasury proposed to water down reporting requirements and public disclosure rules for short-sellers following a consultation.
Last month, The Telegraph revealed that the Financial Conduct Authority (FCA) was opposed to any material relaxation of the EU-era regulations, with officials saying they wanted to retain key parts of the current rulebook in meetings with industry stakeholders.
Short selling is when traders borrow shares they believe will fall in price, selling them, and then waiting for the price to drop before buying it back. The trader then pockets the difference. It is a strategy commonly deployed by hedge funds.
The Treasury said it will increase the threshold above which traders are forced to report short positions to the FCA from 0.1pc to 0.2pc of total issued share capital.
It was understood that the FCA wanted to maintain the threshold at 0.1pc, arguing that it allowed it to obtain a fuller picture of what happens in financial markets and helped it to become more “data driven”.
The Treasury said the change “strikes a better balance between providing the FCA with sufficient data to carry out its functions, and appropriate burdens on reporting firms”.
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United Kingdom Business & Economics
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HIDDEN in this week’s record-high immigration numbers was a shocking fact: Work visas issued to foreign nationals have doubled since 2019.
Because of the Government’s failure to train hundreds of thousands of our young people or get people back to work, the economy is dependent on low pay and cheap labour.
After 13 years, the Tories’ empty promises have come home to roost. It’s time to get real about this.
Of course, we should be proud of how we welcome people here. It has always been part of our national story.
But if we don’t get serious about providing better training, skills and opportunities for British workers, our economy will continue to splutter along in second gear.
We won’t be able to compete in the race for the jobs and industries of the future.
We won’t deliver on the huge potential we have.
Pulling the lever of immigration is no substitute for a proper plan.
We want immigration to come down. Brits want immigration to come down.
If we want to build a better Britain, apprenticeships is the place to start.
Most read in The Sun
Businesses are pulling their hair out about skills shortages.
Yet huge amounts of money for training is going unspent and the numbers of people starting apprenticeships is plummeting.
This is a travesty. Apprenticeships are a ticket to a better future.
They are the best tool we have for ending the cultural snobbery towards vocational learning. We must urgently expand them.
Working with businesses and employees, we will ensure people can get the skills they need to get on.
We’ll sort out the Government’s failing Apprenticeship Levy so British workers have the training and qualifications they need to seize the opportunities of the future.
Young people are desperate for opportunities but do not get the direction they need.
That guidance should be available to everyone, through proper, skilled careers advisers.
And we should bring back two-week work experience placements.
But we also need to end the culture that encourages businesses to hire from abroad rather than train people here.
Vital mission
In sectors with shortages, foreign workers can be paid 20 per cent less than the going rate.
This is bad for those who come here to work, bad for British workers and bad for business.
Labour would scrap this and ensure businesses that need to hire from abroad pay the going rate and set out proper plans to invest in training at home.
These are common sense, practical solutions.
I come from a working-class family. My dad was a toolmaker, my mum was a nurse.
Throughout the cost-of-living crisis, I’ve carried with me the memory of having our phone cut off because we couldn’t afford the bills.
I know how it feels to struggle to make ends meet.
But I also remember that no matter how tough things got, we always had optimism.
“Work hard and you’ll get on in life” is something every parent tells their kids.
For too many people, this is no longer true. People are working harder, paying more, getting less.
If we are to prove the naysayers wrong and fulfil Britain’s potential, it is essential we make this a country where hard work pays and people can make the most of their talents.
In the coming weeks I’ll be setting out Labour’s vital mission: To provide opportunity for all. It won’t be simple or easy. It will mean taking on those who reject change.
But I have never ducked those fights before.
I’m not going to start now, when the prize for Britain is so great.
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United Kingdom Business & Economics
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The UK’s welfare budget could be cut to pave the way for Tory tax cuts, the chancellor has said before the party’s annual conference in Manchester.
Though Jeremy Hunt said the government was “not in a position” to contemplate a decrease in tax immediately, he said the welfare budget could be hit further down the line to foot the bill.
He told the Times that 100,000 people a year were “moving off work into benefits without any obligation to look for work” – a sign he said showed the system was not working.
The welfare system had to be a “mix of carrot and stick”, with more assistance required to help people find work, given there was “no shortage of jobs”, he added.
The UK government is expected to spend about £230bn on welfare in 2022-23, down from £234bn the previous year.
His comments came ahead of the Conservative party conference, starting on Sunday, and after it was revealed that the UK economy grew faster than had first been thought between January and March this year.
There is no shortage of senior Tory figures urging the chancellor to announce tax cuts, including the former prime minister Liz Truss, one of several expected to speak out against current taxation levels during the conference.
“We should always seek to reduce the tax burden, especially when there’s so much pressure on family budgets,” she tweeted on Friday, adding that she viewed high taxes as the cause of the UK’s “stagnating” economy.
Truss’s mini-budget 12 months ago, delivered by her then chancellor, Kwasi Kwarteng, sent the value of the pound tumbling and mortgage rates soaring because of the market’s adverse reaction to its £45bn of unfunded tax cuts.
The Tories will have presided over, during the time between the 2019 election and the next general election, the biggest set of tax rises since at least the second world war.
Analysis by the Institute for Fiscal Studies thinktank said taxes will have risen to about 37% of national income, equivalent to about £3,500 more per household.
Hunt has previously said he will not make any tax cuts at the autumn statement in November but Truss and 32 other Tory MPs, including the former party chair Jake Berry, have signed a public pledge not to vote for the autumn statement if it contains tax rises.
The former home secretary Priti Patel also called on the prime minister, Rishi Sunak, and his chancellor to cut taxes, telling the BBC: “State spending is now nearly £1.2tn, with over £1tn being raised in taxes. This level of spending, borrowing and taxation is unsustainable.
“The British people need a tax break – we need to trust people and businesses to keep more of what they earn and spend their money to support themselves and economic growth.”
With a general election expected in 2024, the chancellor could use his spring budget to unveil tax cuts before the next Tory manifesto is published.
Hunt said: “We’re not in a position to talk about tax cuts at all. The question we have to answer for the British people is: what are you doing to get yourself in a position where you can credibly lower taxes?”
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United Kingdom Business & Economics
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Bud Light is no longer among the nation’s 10 most popular beer brands following its ill-fated tie-up with transgender influencer Dylan Mulvaney, according to a survey.
Bud Light, which was tied for ninth-most popular last year, is currently tied for 14th-most popular, according to the YouGov survey, which was first cited by Newsweek.
The poll taken in the second quarter of 2022 found that 42% of Americans “liked” Bud Light, putting the brand on par with the likes of Corona Extra, Dos Equis and Coors Light, according to Newsweek.
In the second quarter of this year, the percentage of those who “liked” Bud Light stayed the same, but other brands such as Pabst Blue Ribbon, Miller Genuine Draft and Miller Lite vaulted ahead.
Guinness, Heineken, Corona, Samuel Adams and Blue Moon were the top five most-liked beers in the US, according to the survey.
The surging popularity of Bud Light rivals is consistent with sales figures showing a decline in consumption of the Anheuser-Busch brand.
Sales of Bud Light fell 27.9% in the week that ended on June 24 — a slight improvement from the 28.5% drop the previous week, according to data from NielsenIQ and Bump Williams Consulting.
The staggering drop in sales since the April 1 tie-up with the trans influencer led the company to try to lure back customers ahead of the holiday weekend with a tweet showing an image of ice-cold Bud Lights captioned: “It’s 4th of July weekend, enjoy some beer.”
Then Tuesday, its official Twitter account followed that up with an image of a Bud Light drinker having a frosty one on a steamy day sitting next to a fan.
“Never underestimate the power of a makeshift mister. Happy 4th everyone,” the tweet read.
Both tweets were met with negative responses on social media.
Meanwhile, social media users posted videos of unsold cases of Bud Light over the Fourth of July weekend as beer drinkers continue to shun the brand.
TikTok user Phillip Hawkins wandered into a local retailer and recorded a video showing 12-packs and 24-packs of Bud Light languishing on shelves and in the aisles despite the parent company offering significant rebates.
“Bud Light is not selling. This is garbage beer,” he said. “Check it out: even with the coupon, nobody wants this.”
Anheuser-Busch offered holiday-rate rebates totaling $15 for its products — making them free in some parts of the country.
The smaller cases of Bud Light were being offered for as little as $2.99 while the larger ones were going for $4.99.
On Twitter, a video recorded by a user purportedly from Salem, Ore., showed a Walmart store refrigerator fully stocked with Bud Light.
The neighboring shelves appear empty while Anheuser-Busch brands Bud Light, Budweiser and Michelob Ultra remain unsold.
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Consumer & Retail
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If sales generally feel hard to resist, the sale in front of Aarron Schurevich was the ultimate test: a new Kia Soul just like the one he'd had and loved, at a dealership he trusted, at a moment when he really needed a car. And it was priced $4,000 off, more than a 20% discount.
"I figured that I would be an idiot not to to take advantage of that," says Schurevich, a teacher from Omaha, Neb. "I'd better snatch this opportunity before it evaporates."
After he sped through paperwork and drove the car off the lot, the deal turned sour. Bills arrived with hidden charges. The brand-new car quickly needed repairs. Schurevich now jokes that he paid a tax for being a fool.
"You know it's that kind of voice in the back of my head that's like, 'Are you being a sucker?'" Schurevich says. "And unfortunately, that day, that voice was a little bit quieter than it oughta have been."
Why is it so hard for the human brain to resist a discount? What's the deal with deals? This big-ticket example illustrates all the dynamics that play out when any of us fall for a sale.
How a sale works its way through your brain
When you shop, there's usually a standoff in your brain between what can be described as its emotional and rational parts.
"The human brain has essentially evolved to feel first and think next," says Carolyn Yoon, who studies consumer neuroscience at the University of Michigan.
Spotting something you'd like to to buy activates your brain's reward circuitry. Dopamine-fueled impulses pump you up. Anticipation might have you imagining how great life would be with this new thing if you had it. All this gets especially heightened if it's something you're predisposed to like — say, the same Kia Soul you've enjoyed for years.
Victoria Freeman
toggle caption
Aarron Schurevich from Omaha, Neb., poses with his son in front of the Kia that he bought after a dealership advertised a discount that seemed impossible to pass up.
Victoria Freeman
Aarron Schurevich from Omaha, Neb., poses with his son in front of the Kia that he bought after a dealership advertised a discount that seemed impossible to pass up.
Victoria Freeman
The counterbalance is your cognitive mechanism. It might pipe up like a prudent accountant: Do I need this? Is this worth it? How does it fit in my budget?
A sale lands like the thumb that tips your mental scale toward buying.
In fact, the discount itself often registers as a win, delivering its own bolt of joy, says Jorge Barraza, a consumer psychologist at the University of Southern California.
"Not only are we getting the product," he says, "but we're also getting that reward that we discovered something, we've earned this extra thing."
How stores prime and prod us
Stores, of course, know all this and try to push our buttons.
Experts say we often subconsciously believe popular things to be more valuable or more rewarding. Plus, there's our urge to avoid losses — call it loss aversion or simply FOMO, the fear of missing out.
Paul Ellis/AFP via Getty Images
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Black Friday sales are advertised in a window display in Liverpool in England on Nov. 22.
Paul Ellis/AFP via Getty Images
Black Friday sales are advertised in a window display in Liverpool in England on Nov. 22.
Paul Ellis/AFP via Getty Images
So stores appeal to our crowd mentality: It's Black Friday, and everyone's shopping, buying that thing you'd like. They create urgency: Your favorite car is on sale today only! And they create scarcity: Shop now while supplies last!
"Limited-quantity, limited-time, scarcity-marketing promotions — they get people's blood pumping," says Kelly Goldsmith, who studies this as a marketing professor at Vanderbilt University. "You attribute it to the product: it must be good."
Retailers also try various pricing tricks. For example, picture a store shelf where a medium bag of candy sits next to a larger bag of the same candy.
"How do we make more customers go to the more expensive option? We add a decoy," says Savannah Wei Shi, who researches pricing and decision-making at Santa Clara University.
The decoy is a medium-sized bag. It's much smaller than the other bag, but only slightly cheaper. It makes the big bag look like the best deal, so shoppers buy that one — the most expensive option on the shelf.
Another classic is the suggested price — an amount always higher than the discounted offer, still listed on the tag for comparison. Barraza says people not only perceive expensive things as higher-quality, they actually experience them as higher-quality.
"So the suggested retail price can really pack a wallop," he says. "We can communicate quality to a consumer. But then we can discount it and have consumers think, 'Not only am I getting a quality product, but I'm getting that for a much cheaper price.'"
How to shop smarter
It's really hard to always approach sales rationally — even experts struggle. Barraza says during the last holiday season, he almost bought a video-game system simply because it was on sale.
Jessica McGowan/Getty Images
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Shoppers walk past sale signs on Black Friday 2022 in Alpharetta, Ga.
Jessica McGowan/Getty Images
Shoppers walk past sale signs on Black Friday 2022 in Alpharetta, Ga.
Jessica McGowan/Getty Images
Deals and sales certainly can be good and useful. And Barraza underscores that prices are subjective, so a discount may be unattractive to one person but appealing to another.
One buying strategy experts recommend is to make a shopping list in advance and then, stick to it. Another is to research items — beforehand or on the spot, checking online — to weigh whether the sale really is a good deal.
The main thing is give yourself time to cool off from your instant reaction.
"The ability to think can override the emotional state," says Yoon. "The more you spend time thinking and bring your cognitive processes to bear ... you have a shot at basically saying, 'No, I think I'm going to pass,' even though that wasn't your first inclination."
In fact, this is what stopped Barraza from buying that gaming system: Standing behind about 20 people in line to check out, he had time to ponder whether he actually wanted the thing or was simply swept up in the excitement of a sale.
"I was saved by that line," he says. "A little bit of time can go a long way."
Remember: we feel first and think later. Your internal accountant just needs a moment.
NPR's Joe Hernandez contributed to this report.
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Consumer & Retail
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Today The Athletic publishes its second tranche of government emails concerning the takeover of Newcastle United in October 2021 by Saudi Arabia’s Public Investment Fund (PIF).
The first set of emails, published in April of this year, concerned communications between May 1 and July 30 in 2020. They revealed the scale of the British government’s interest in the deal and that it considered the possible failure of the Saudi takeover of Newcastle United to be an “immediate risk” to the United Kingdom’s relationship with the Gulf nation.
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For this report, we requested communications between August 1 and October 31 in 2021, which represents the months leading up to and shortly after the announcement of the takeover on October 7.
The 27 pages of newly obtained emails, released by the UK Foreign Office following a freedom of information request by The Athletic, shed fresh light on discussions between government departments and the Premier League
According to the latest emails disclosed to The Athletic, The Premier League “agreed to settle their differences” with PIF so that the takeover of Newcastle United could “go ahead” in a conversation with a senior official from the United Kingdom’s Foreign Office.
A UK government spokesperson previously told The Athletic that it “has not had a role at any point in the takeover of Newcastle United.” Premier League chief executive Richard Masters has previously said there was “no pressure applied” by the UK government during the process that ended with the Saudi PIF acquiring 80 per cent of Newcastle United in October 2021.
You can read the full investigation, and see images of a selection of the emails, by clicking this link. But for those of you short on time, among the key disclosures are:
- Nine days before the takeover, Neil Crompton, UK ambassador to Saudi Arabia, described being told by Chad Woodward, then the director of trade and investment for the UK government in Saudi Arabia, the Premier League had, in a conversation with another foreign office official, “agreed to settle differences with the PIF so that their investment in Newcastle can go ahead”
- Two meetings were held by foreign office officials with the Premier League over Microsoft Teams in the fortnight before the takeover was announced
- On October 6, the day before the takeover’s announcement, an email to Woodward states that a Premier League official sent a message on WhatsApp to a foreign office employee, which is repeated verbatim in the email but almost entirely redacted
- The day before the takeover, the Foreign Office distributed its prepared “top lines”, presumably for expected media scrutiny on the matter. Stock answers included: “How has the Government allowed a country responsible for the murder of Jamal Khashoggi to take control of one of the North East’s most important cultural assets?”
- A foreign office note also said that while some critics of the takeover might discuss “sportswashing”, the takeover in fact represented a chance to show off Saudi’s progress in promoting female participation in sport.
- The emails suggest that the Premier League’s insistence on separation of control led to Yasir Al-Rumayyan, the governor of PIF and whose own lawyers described him as a “sitting minister” of the Saudi government, becoming a non-executive chairman and they’d appoint “someone” (presumed to be Staveley) to run the club
The Premier League declined to formally comment for this story but senior sources, who were not authorised to speak publicly on the matter, maintained to The Athletic on Monday evening that the decision to allow the takeover to proceed in October 2021 was made by the Premier League Board based on the legally binding assurances received by the Premier League and not as a result of any external influence.
They also said that their interactions with the UK state apparatus showed the government “being predisposed” to being helpful but insisted it did not sway the decision, while adding they had no recollection of discussing a PR offer.
The UK foreign office was approached for comment but did not respond at the point of publication.
- You can read today’s full article here: Newcastle’s Saudi takeover: Government emails about PIF, Premier League, Staveley and owners
- The first investigation here: Newcastle’s Saudi takeover: The UK government’s emails revealed
- And a special report on investment in the city here: Saudi influence in Newcastle: A story of property, prosperity and power
(Top photo: Getty Images; design: Eamonn Dalton)
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United Kingdom Business & Economics
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Top City firms have fired a warning shot at Rishi Sunak over a lack of “long term clarity” on net-zero today after ministers have wavered on a number of climate commitments in recent weeks.
In a letter to the prime minister, investors and banks worth more than £1.5trillion in assets said the prime minister’s rhetoric towards the climate and a lack of action on net-zero are muddying long term policy and potentially scuppering “transformative investments”.
“We are writing to express concern at government’s recent public statements and policy signals, which risk undermining the UK’s leadership in the clarity, certainty, and confidence of policymaking toward meeting the UK’s commitment to net zero,” wrote the group convened by the UK Sustainable Investment and Finance Association, which includes Jupiter Asset Management, Scottish Widows, Aegon, and Royal London.
“This shift blurs regulatory visibility for investors and risks the ability of the finance sector to make the large-scale, transformative investments required to accelerate net-zero delivery and unlock growth in the UK.”
Despite a 2019 commitment for net-zero by 2050, the government has wavered on a number of climate commitments in recent weeks, including leaning into a pro-car agenda just as London’s Labour Mayor Sadiq Khan presses ahead with a controversial expansion of the Ultra Low Emission Zone in the capital.
Banning new petrol and diesel car as well as gas boilers had previously been a cornerstone of the government’s net zero plans. However writing to Sunak, the firms they felt the plans had been thrown into doubt.
“Recent public debates have cast doubt on the UK’s 2030 phase-out of new petrol and diesel cars and 2035 phase-out of gas boilers, while the reforms to the UK’s carbon markets, energy efficiency standards for the private rented sector, and plans to issue new oil and gas licences in the North Sea all cast uncertainty on government’s commitment to the UK’s near and longer-term climate targets,” they wrote in the letter.
The comments point to a recent doubling down from Ministers on oil extraction in the North Sea, with energy and Net Zero secretary Grant Shapps saying the government would now look to “max out” the UK’s oil reserves.
The group writing today have now urged the government to “provide long-term policy certainty” to ensure investment and the UK’s net-zero targets are now scuppered.
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United Kingdom Business & Economics
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Keir Starmer appears to have enjoyed a “glitter-bomb bounce” from the Labour conference, a new Observer poll suggests, amid Tory concerns that only an economic upturn can reverse their party’s fortunes.
The Labour leader was covered in glitter by a protester at the start of his Labour conference speech in Liverpool last week. He responded by taking off his jacket, rolling up his sleeves and telling delegates he favoured “power, not protest”.
The incident has coincided with an increase both in Labour’s lead and Starmer’s personal popularity ratings, according to the latest poll by Opinium. At the end of what is likely to be the last conference season before the election, Labour’s lead increased to 16 points – up 2 points on last week. The party now has 44% of the vote, with the Tories on 28%.
Meanwhile, Starmer’s net approval rating – the difference between the share of voters who approve and disapprove of the job he is doing – has leapt by 9 points. The share of voters who approve is now 35%, compared with the 34% who disapprove. The proportion who see Starmer as a “prime minister in waiting” has risen from 30% last week to 38% now.
It comes at the end of a conference season that many Tories regard as a missed opportunity to begin closing Labour’s poll lead, which has remained in double digits since Rishi Sunak took over from Liz Truss a year ago.
While some senior MPs were pleased to hear Sunak make big decisions such as scrapping HS2 north of Birmingham and scaling down the government’s net zero policies, the chaotic scenes at the party’s conference have led most to believe that any Tory comeback is reliant on a significant economic upturn in 2024.
A former cabinet minister said: “I always think conferences are overrated as gamechangers, and it’s particularly true this year, given Israel. As ever, it’s the economy, stupid.”
A former minister said: “For Conservatives, it shows the scale of the problem, and for many it underlines the concern that whatever is said or done, the public have made up their minds.”
Some MPs are angry with Sunak and his performance. One even advocated removing him before the election, saying: “He is clearly not up to it.”
A veteran MP added: “There was a massive popular surge of support for Labour in 1997, and that’s not the same now – but there is limited time. Polls are more likely to be influenced by people suddenly finding they’re getting a bit better off and interest rates have come down – just seeing light at the end of the tunnel. So I still don’t think it’s over, but it’s not a very cheering scenario.”
Chancellor Jeremy Hunt has ruled out making tax cuts in the forthcoming autumn statement, and senior figures in Starmer’s team feel increasingly confident they could oppose any promise the Tories make to cut taxes in the next parliament. “We could be pretty sceptical about that,” said one shadow cabinet figure. “Given the way [the Tories}have behaved, I’m not sure the public are going to believe they would go through with tax cuts if they win the election.”
Starmer’s decision to put housebuilding and home ownership at the heart of his conference speech appears to have had an effect. The proportion of voters aligning this initiative with Labour has jumped to 58% from 44% since last week.
James Crouch, head of policy and public affairs at Opinium, said: “Conference season has ended with a return to solid double-digit leads for Labour. But it has been an especially good week for the Labour leader himself.
“It appears the glitter-based protest during Starmer’s speech, and his reaction to it, has helped to boost his ratings, leading to a glitter-bomb bounce in his scores for approval and leadership attributes. The handling of this event enabled his speech to cut through when the news shifted to the Middle East.”
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United Kingdom Business & Economics
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When you think of a “banana republic,” you think of corrupt dictators someplace distant, where the people in power control the economy and jail their political opponents. Places like this still exist in the world — and believe it or not, right here in the good ’ol US of A.
Don’t believe me? Consider the absurd campaign-finance fraud case that partisan Democrat Manhattan DA Alvin Bragg brought against Donald Trump. Bragg twisted logic and law to indict the former president because he was a Republican, even if the stated premise was that Trump paid hush money to an alleged paramour.
That Trump, as he campaigns for the White House, could go to jail because of a $130,000 payment to Stormy Daniels, is real banana republic stuff. Even more banana republic is Bragg’s broader policy to indict political opponents while he lets violent criminals roam free as one of the most “progressive” prosecutors in the country.
Securities and Exchange Commission Chairman Gary Gensler deserves a place in our country’s Banana Republic Hall of Fame as well. Gensler has, of course, been flirting with banana republic status for some time. He is regulating crypto through enforcement. He also is looking to change decades of securities laws by forcing major companies to expand their disclosures beyond financial information to include how they’re addressing climate change and other progressive policy goals.
The SEC chief is supposed to be Wall Street’s top cop but, like Bragg, Gensler has chosen to ignore real malfeasance such as the obvious pumping and dumping we’ve seen in some “meme stocks,” costing generational wealth for small investors who believed the pumpers.
Yet what puts Gensler firmly in the banana republic camp is his latest prosecution of something that’s pretty prosaic: The functional equivalent of a books and records violation committed by a trading firm named Virtu, according to securities lawyers I spoke to. Last week, Gensler’s SEC tried to make Virtu’s faux pas into the crime of the century.
Why? Well, maybe it begins with the fact that Virtu is run by a guy named Doug Cifu, who has been critical of Gensler’s bizarre reign as SEC chief.
Yes, real banana republic stuff in this one.
Cifu is a rare CEO in that he runs a profitable business and he speaks his mind. Virtu is a market maker — a trading firm that matches buyers and sellers of stock. It also employs people to trade stocks using the company’s capital. It is one of the top firms involved in computerized high-speed trading, which is controversial to some but not to people who know how markets work.
Most small investors don’t know Virtu is the reason you can trade on your Robinhood app for free, and at low cost via brokerages like Charles Schwab, E*TRADE, etc. It utilizes computer programming to make markets more efficient for small investors and still makes a ton of money.
Cifu, a lawyer by training, understands the markets and their structure better than almost anyone I know on Wall Street — and he’s not bashful about telling you as much. Again, that puts him at odds with some folks even if it’s so refreshing since most Wall Street C-suite types are fearful of offending anyone, especially their regulators at the SEC. That’s why they often sound like simpletons, automatons, or both.
Not Cifu. One of the people Cifu has spoken out against, forcefully and at times eloquently, is Gensler, his primary regulator, no less. Gensler has grand plans to remake the stock market to score brownie points with lefties like the powerful Wall Street-hating senator from Massachusetts, Elizabeth Warren.
Investor roadkill
But Cifu says Gensler is looking to fix something that isn’t broken since stock trading runs pretty seamlessly, and is inexpensive. When Gensler gets through with “fixing” the markets, investors might end up as roadkill. And from what I understand, Cifu has said that to Gensler’s face.
Ouch.
That’s one reason why the Gensler-SEC enforcement action against Virtu last week appears so banana republic-like. Another is that the charges are incredibly weak. The SEC is taking issue with Virtu’s activities during a 15-month period in 2018 and 2019 when it was digesting an acquisition and there was a flaw in its control system. The SEC said Virtu’s traders could spy on what the company was doing on the market-making side and profitably trade off that information, and then essentially lied about it to customers. Those are serious violations of securities laws, the agency says.
OK, insider trading is a crime. But it’s nowhere to be found in the complaint. That’s because, Virtu says, it didn’t happen. Even the SEC concedes that by failing to show a single instance of traders spying on what was happening in market-making. Virtu tells me the SEC is also ignoring that there were other controls in place to prevent it. The glitch, the company said, was caught by Virtu and self-reported to the SEC. Its misstatements — failure to disclose the alleged glitch — weren’t lies but the company’s contention that customer data were secured.
Most cases like this get settled; Virtu probably would have, were it not for Gensler’s desire to have the company agree to serious charges for a victimless crime.
So now the case will likely go to court, where a judge will decide whether to allow markets to morph into banana republic status.
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Stocks Trading & Speculation
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U.S. Rep. George Santos on Wednesday missed another deadline to submit a key financial disclosure report, a months-long delay that the embattled New York Republican blamed on his federal taxes and the desire to avoid a "rushed job."
The disclosures, which are filed with the House Committee on Ethics, provide a public snapshot of a representative's personal finances. They are meant to serve as a bulwark against potential conflicts of interest.
In an emailed statement to The Associated Press, Santos acknowledged being tardy, but said he would "rather be late, accurate, and pay the fine than be on time, inaccurate, and suffer the consequences of a rushed job."
Santos, who gained infamy for fabricating big parts of his life story while running for office, is facing a 13-count federal indictment centered on charges of money laundering and lying to Congress in an earlier financial disclosure.
It still isn't completely clear how he made his living prior to being elected. He described himself as a Wall Street dealmaker who also made money in real estate, but he didn't work for the companies he claimed had employed him and he had been evicted from some apartments for not paying rent. More recently, he said he made money helping wealthy people buy luxury items, like yachts, but he hasn't provided details.
He received a 90-day extension for the House financial disclosure in May, then missed the due date in August. At the time, he said he planned to file the disclosure within a 30-day grace period permitted by the federal government.
That period elapsed Wednesday, with Santos saying he had no plans to file until submitting his federal tax returns from last year.
"Despite my legal team’s and my best efforts to meet the deadlines, additional auditing and tax filing for 2022 remained," he said. "I still have until November 2023 to submit my 2022 taxes with the IRS in order to avoid legal troubles."
"Because House filing deadlines conflict with IRS regulations, this misalignment exists," he added.
Stephen Spaulding, the vice president of policy at Common Cause, a watchdog group, described Santos’ reasoning as "nonsensical," noting there was no reason that his federal tax obligations should prevent him from filing the necessary disclosure.
"He is thumbing his nose at transparency requirements, his constituents and the public," Spaulding said. "All the more reason to strengthen these penalties."
Under federal law, members of Congress are punished with only a $200 late fee for missing the filing deadline. Those who don’t file at all, or knowingly falsify their statements, may face a civil penalty up to $71,316.
While it is not uncommon for representatives to file their disclosures late, few of them blow past the extended deadlines, according to Spaulding.
"Everyone else seems to know how to comply with this," he said. "It’s not onerous."
Santos is due back in court in his criminal case in October.
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Personal Finance & Financial Education
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(Bloomberg) -- FTX co-founder Gary Wang said he and Sam Bankman-Fried committed a multibillion-dollar fraud with customer funds that led to the cryptocurrency exchange’s collapse, shortly after taking the stand against his onetime math camp buddy and MIT roommate.
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Dressed in a gray suit and red tie, Wang didn’t make eye contact with Bankman-Fried as he entered the Manhattan courtroom Thursday afternoon to testify as a government witness. At one point, Assistant US Attorney Nicolas Roos asked Wang, 30, to identify his former colleague. Wang craned his neck, looking around the courtroom before pointing towards Bankman-Fried, who was seated between his lawyers.
Prosecutors claim Bankman-Fried orchestrated a scheme in which billions of dollars in FTX customer funds were secretly transferred to affiliated hedge fund Alameda Research.
The testimony by Wang, who pleaded guilty to fraud and agreed to cooperate against his onetime friend in December, promises to be among the most powerful the government puts on against Bankman-Fried. Wang, also FTX’s chief technology officer, said Bankman-Fried directed him to alter the cryptocurrency exchange’s code so that Alameda was able to draw a $65 billion line of credit.
“It withdrew so much that FTX was not able to pay customers who tried to withdraw,” Wang said.
Wang initially appeared nervous and spoke quickly on the stand, though he seemed to become more at ease as questioning continued. His testimony on Thursday was relatively brief, but he’s expected to return to the stand on Friday.
‘We Are Not Equal’
As an FTX co-founder, Wang was once a billionaire, though he said his wealth never matched that of Bankman-Fried, who was estimated to be worth $26 billion before the exchange’s collapse. The unequal relationship extended to Alameda, Wang said, where he owned 10% of the firm and Bankman-Fried had 90%. And Bankman-Fried had the final say on most business decisions.
“We are not equal,” Wang testified. He said Bankman-Fried carefully oversaw the process by which FTX’s top brass were able to borrow hundreds of millions of dollars from Alameda. “He told us what things to be implemented,” such as how much collateral was needed for certain positions and limits on how much people can deposit or withdraw, Wang testified.
Wang’s testimony potentially undercuts Bankman-Fried’s contention that he was not closely involved with the running of Alameda and relied instead on its chief executive officer, Caroline Ellison, who is also his ex-girlfriend. Bankman-Fried’s lawyers are arguing that he made mistakes but had no ill intent.
Ellison has also pleaded guilty to fraud and her testimony was touted by prosecutors in opening statements on Wednesday.
Read More: The Crypto Fraud Case Against Bankman-Fried and FTX: QuickTake
Earlier on Thursday, Adam Yedidia, another Massachusetts Institute of Technology classmate who went to work at FTX, testified that Bankman-Fried was aware and concerned about a potential $8 billion shortfall at FTX from loans to Alameda five months before both companies collapsed. Yedidia told jurors he was testifying under a grant of immunity from prosecution.
Yedidia said he discovered Alameda’s massive liability to FTX in June 2022 while working on an internal accounting program and decided to discuss the matter with Bankman-Fried.
“It concerned me,” Yedidia testified. “It seemed like a lot of money for Alameda to be owing FTX. And I wanted to be certain that Alameda could repay that debt.” Pressed by Assistant US Attorney Danielle Sassoon on why he was concerned, Yedidia said, “It was possible that FTX customers might need that $8 billion.”
Yedidia said he raised the issue with Bankman-Fried in a conversation outside the $35 million luxury Bahamas penthouse that they shared with eight other people. “Are things okay?” he said he asked.
Not ‘Bulletproof’
“In response, Sam said said something like, ‘We were bullet proof last year. We’re not bullet proof this year,’” Yedidia testified, adding that Bankman-Fried appeared nervous and worried. Yedidia said that was atypical of the friend he’d known for many years.
Yedidia testified that he received a $6 million cash bonus at the end of 2021, which he immediately invested in FTX stock. Though his base salary was between $175,000 and $200,000, Yedidia said he received several million dollars in cash bonuses and stock options.
In its cross-examination of Yedidia, the defense tried to downplay Bankman-Fried’s own wealth, once estimated at $26 billion, comparing the Bahamas penthouse to a dorm and asking Yedidia if he ever witnessed his friend buying watches, sports cars, yachts or fancy clothes. Yedidia said he did not.
“I didn’t see him wearing any fancy clothes,” he testified.
Read More: FTX Founders Traced an Arc of Brotherhood and Betrayal
Prosecutors sought to highlight the close friendship between Yedidia and Bankman-Fried, asking the former about a conversation in which the FTX co-founder sought advice on his relationship with Ellison.
Yedidia testified that sometime in 2019 Bankman-Fried told him he and Ellison, who was not yet Alameda CEO, had had sex and asked whether it would be a good idea for them to date.
“I said no,” Yedidia said, without elaborating.
Later, as customers were rapidly pulling out of FTX in November 2022, Yedidia and Bankman-Fried were texting each other.
“I said ‘I love you, Sam, I am not going anywhere, don’t worry,’” Yedidia said on the stand.
But he said he wound up resigning shortly afterward, when he learned that Alameda Research had been using FTX customer funds to repay its creditors.
Yedidia said he hasn’t spoken to Bankman-Fried since resigning. Unlike with Wang, the two of them made eye contact when Yedidia entered the courtroom, and they nodded at each other in acknowledgment.
Listen and subscribe to Spellcaster: The Fall of Sam Bankman-Fried on Amazon Music, Apple, Spotify and on the Bloomberg Terminal.
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(Updates with more detail from Wang’s testimony.)
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Crypto Trading & Speculation
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Sahara Matter Will Continue Even After Subrata Roy's Death, Says SEBI Chief
Buch said for SEBI, the Sahara matter was about an entity's conduct and added that it will continue.
SEBI chairperson Madhabi Puri Buch on Thursday said the Sahara matter will continue for the capital markets regulator even after the death of the group's founder Subrata Roy.
Roy died in Mumbai on Tuesday after a prolonged illness at the age of 75.
Speaking to reporters on the sidelines of a Ficci event, Buch said for SEBI , the Sahara matter was about an entity's conduct and added that it will continue regardless of whether an individual is there or not.
When asked why the refunds have been too less, Buch said the monies were returned through a Supreme Court-appointed committee basis the evidence of the claims made by investors.
It has been reported that refunds of only Rs 138 crore have been made to investors even though Sahara group was asked to deposit over Rs 24,000 crore with Sebi for further refund to investors.
Sahara group has faced many allegations, including that of running a Ponzi scheme. Troubles for Roy started in November 2010 with Sebi asking two entities of Sahara group not to mobilise funds from equity markets or from issuance of any security to the public while restraining Roy from approaching the public for raising money.
Roy was arrested in 2014 on the orders of the Supreme Court after he failed to appear before it in a contempt case arising out of non-refund of more than Rs 20,000 crore to investors by the two companies.
He was later granted bail but troubles continued for his various businesses.
The two Sahara group companies — Sahara India Real Estate Corporation and Sahara Housing Investment Corporation — raised funds in 2007-08 through a debenture instrument, OFCD.
In June 2011, the capital markets regulator asked the two entities to refund money collected from investors through Optionally Fully Convertible Debentures along with the return.
After a long process of appeals and cross-appeals, the Supreme Court, in 2012 ordered refund of deposits of its investors along with 15 per cent interest.
Sahara was eventually asked to deposit an estimated Rs 24,000 crore with Sebi for further refund to investors, though the group always maintained it amounted to 'double payment' as it had already refunded more than 95% of investors directly.
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India Business & Economics
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JSW Infrastructure To Buy Over 50% Stake In PNP Maritime Services For Rs 270 Crore
This acquisition will help JSW Infrastructure expand its footprint, it said in an exchange filing.
JSW Infrastructure's wholly owned subsidiary, JSW Dharmatar Port Pvt., has entered into a share purchase agreement to acquire over 50% of PNP Maritime Services Pvt. for Rs 270 crore.
PNP Port is well-connected with road and railway facilities and this acquisition will help JSW Infrastructure expand its footprint, it said in an exchange filing on Monday.
The company acquired 10,00,001 shares from SP Port Maintenance Pvt. in order to expand its cargo handling capacity and cargo volume. The transaction is subject to the completion of conditions as defined in the share purchase agreement, it said.
JSW Dharmatar has set a time period of 15 days for the completion of the acquisition.
Shares of JSW Infrastructure closed 2.25% lower at Rs 219.85 apiece as compared with a 2.07% advance in the NSE Nifty 50.
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India Business & Economics
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Tata Consumer Eyes Direct Supply In 20 Lakh Outlets, Strengthens Rural Game
The expansion in distribution comes at a time when smaller rivals are eating into its market share.
Tata Consumer Products Ltd. is expanding its distribution network in a bid to regain market share as competition from smaller rivals intensifies.
The fast-moving consumer goods division of the Tata Group aims to grow its direct reach to 1.7 million outlets by the end of this fiscal and further grow this number to reach more than two million next year. In terms of its overall reach, the company is looking at four million outlets in fiscal 2024.
"Post the formation of Tata Consumer nearly four years ago, what we found (is) that our distribution is concentrated in the key metro cities while in the lower urban centers, which is essentially the tier-II and tier-III cities, we had a very sketchy footprint," according to Navaneel Kar, president and head (India sales) at Tata Consumer Products.
"So, we had a big task cut out for ourselves in what we call the rest of urban. Fast forward to 2023, our direct distribution footprint has gone up by almost three times."
Currently, it has a direct reach of 1.5 million outlets and total reach of 3.8 million outlets. While Tata Consumer has largely covered the rest of urban markets, the next stage of growth is going to be rural, Kar told BQ Prime.
"We are not implementing a spray-and-pray approach in the rural markets. Instead, we have identified states where consumption for categories that we operate in are very high and started building distribution in these markets," said Kar. "We're very careful of selecting these markets as the cost of building rural infrastructure is relatively costlier than urban."
The Tata Group firm is working with external consultants to identify priority markets. "We are also ensuring our entire assortment is made available to the distributors to be able to sell and not just Tata Salt," said Kar.
Fight For Market Share
Tata's distribution strategy, especially in rural areas, highlights the fight for market share as local players make a comeback and flood the market with low-priced products as inflation cools. These brands, with localised marketing strategies, have gained market share in their areas of operation.
Tata Consumer said its market share of the salt and tea markets suffered a knock in June amid inflationary woes. While its share in the tea business fell 50 basis points volumewise and 110 basis points in terms of value over the previous year, there was a market share loss of 30 basis points in salt mainly led by the low-priced brands, according to Nielsen data.
"Clearly, there is a disruption which has been created in a lot of categories with local brands coming in," Kar said.
As and when prices fluctuate, the local brands generally tend to gain. Now, they are also getting better in terms of how they design their packaging, and communications, he said. But, he expects this trend to be short-lived.
"There is also a steady state demand for national brands when there is a consistency in availability. That is where I feel that our distribution is a key strength because the consumer is then not second guessing," he said.
In terms of rural sales, there hasn't been any major uplift. "The way rural markets have continued for the last few quarters, it's continuing that way," said Kar. Yet, for Tata Consumer, the rural growth story is "more or less similar" to urban because it comes on a low base as the company deepens rural coverage.
About 70-75% of general trade business still comes from the urban markets, Kar said.
"With all the infrastructure coming in, we would like rural to grow at a percentage or two higher than urban in the near future," he said.
In a post-earnings call, the management of Tata Consumer said that it intends to split routes in all one million-plus towns. It aims to appoint direct distributors in all 50,000-plus population towns.
Sharing brand-specific details, the management said that the distribution and execution of Himalayan brand are off to a good start. "We closed last year at Rs 600 crore; the target for this year is to hit a four-digit number."
There's also a long way to go in terms of building NourishCo's footprint.
"Last year, we started moving to the north and this year now, we are slowly coming to the west and the rest of the south," according to the tea-to-salt maker. "We are still yet to build up NourishCo's distribution completely in Bombay (Mumbai), in Bangalore (Bengaluru) or Delhi."
The brand is widely present in Andhra Pradesh, Telangana, Odisha and some parts of Tamil Nadu.
"We are yet to completely reach where we want to be in our distribution journey, but we are making good strides essentially with these two pillars: direct distribution and digitised network," said Kar.
Uttar Pradesh, Maharashtra, Bihar, Jharkhand, and Tamil Nadu are some of the markets where the company will be focusing on.
E-Commerce Play
Tata Consumer is also stepping up its e-commerce business. But, the approach of dealing with online is very different from that of general trade, said Kar.
"Unlike traditional channels where you make a one-year plan and you review it maybe once in a quarter or six months, e-commerce tends to be much more agile," he said.
"There's a lot of change happening, so possibly we have a quarterly plan, but we are also very flexible that things may change within a month and we should be able to have the ability to make those changes in our strategy."
From about 3-4% pre-pandemic, the contribution of e-commerce to sales has grown to 10%, said Kar. As consumers look for convenience, they will depend on online purchases, and he expects the e-commerce share to grow further.
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India Business & Economics
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The government is considering extending its mortgage guarantee scheme as part of measures to help first-time buyers in the upcoming Autumn Statement.
It is understood the Treasury is looking at making the scheme, which helps people take out a mortgage with a 5% deposit, available for another year.
Chancellor Jeremy Hunt will announce the Autumn Statement on 22 November, weeks after the Tories lost two by-elections to Labour.
The Treasury declined to comment.
The scheme, first introduced in March 2021 by the then Chancellor Rishi Sunak, was designed to encourage lenders to give mortgages to borrowers with a smaller deposit.
Since December that year, the interest rate has risen from a historic low to the current 5.25% as the Bank of England has sought to curb high inflation.
It has meant that mortgages have become more expensive for borrowers while many grapple with the higher cost of living.
Recent figures from financial information service Moneyfacts show that the typical rate for a five-year fixed mortgage have dipped to 5.99%. But a two-year fixed mortgage has a rate of 6.5%.
The mortgage guarantee scheme was extended for 12 months last year and is due to end in December.
However, it is understood the Treasury is considering keeping it in place for another year.
It is one of a package of measures, first reported by the Sunday Times, that the Treasury is examining ahead of the Autumn Statement to help people get on the property ladder.
The department is also reportedly considering a new Individual Savings Accounts, or ISA, to encourage potential buyers to save for their first home.
Other ISAs, such has Help to Buy, which rolled-out in 2015 under former chancellor George Osborne and ended on 31 March, were criticised as house prices rose higher than the scheme's limit.
Under its rules, buyers were awarded a 25% bonus from the government on homes worth up to £250,000 in England and £450,000 in London.
Mr Hunt is also considering increasing the £450,00 upper limit on house purchases funded by a Lifetime ISA, where government adds 25% to savings aimed at building a deposit.
The latest data from Halifax showed that the average UK property price in September was £278,601 and, for London, was £525,678.
The BBC understands that no decisions have been taken, and depend on official forecasts of the health of the public finances.
Last week, the government lost two safe seats, in Mid Bedfordshire and Tamworth, to Labour. There have been calls from some Tories to cut taxes to boost support for the government.
Immigration Minister Robert Jenrick told BBC One's Sunday with Laura Kuenssberg programme that the government would consider cutting taxes if it meets its target of halving inflation by the end of year.
He said that he understood Conservatives and the public "all want to cut taxes".
"But the first task has got to be bearing down on inflation," he said.
Last week, new figures revealed that inflation - which measure the rate at which prices are rising - remained at 6.7% in September which was the same as August.
However, Andrew Bailey, the governor of the Bank of England, has said he expects a "noticeable drop" in inflation for October when figures are published next month.
Meanwhile, the Bank of England is set to announce its latest interest rate decision on 2 November after it voted to keep rates at 5.25%.
Mr Jenrick said that if inflation is brought under control then "of course we will consider what more we should do" on taxes.
Labour has been contacted for comment.
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Real Estate & Housing
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RBI Governor Says 87% Of Rs 2,000 Notes Came As Bank Deposits
Reserve Bank of India Governor Shaktikanta Das on Friday said 87% of the Rs 2,000 denomination notes being withdrawn have returned as deposits into banks while the rest has been exchanged across counters.
Reserve Bank of India Governor Shaktikanta Das on Friday said 87% of the Rs 2,000 denomination notes being withdrawn have returned as deposits into banks while the rest has been exchanged across counters.
Addressing a press conference after the announcement of the bi-monthly monetary policy review, Das said Rs 12,000 crore of the Rs 3.56 lakh crore worth of Rs 2,000 notes in circulation as on May 19, 2023 are yet to come back.
Last on Saturday, the RBI had said that Rs 3.42 lakh crore of notes had been received back as of Sept. 29, and Rs 14,000 crore was yet to come back. The central bank had also extended the deadline for return of the notes by a week.
Das said the RBI wants to 'emphatically' focus on the 4% headline inflation target, and till the price rise number does not get down, the monetary policy will be 'actively disinflationary'.
As the banker to the government, the RBI does not have any worry on the central government finances, Das said.
The 'outlier' loan growth of 33% as against the overall credit growth of 13-14% made the RBI flag the issue of personal loans and prompt banks to take steps to avoid any risk build-up, Deputy Governor J Swaminathan said.
Das asked the financiers to "smell where the crisis is likely to come up" and take appropriate steps.
The governor also said that the gross non-performing assets have improved in the June quarter, if one were to go by the unaudited results.
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India Business & Economics
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WASHINGTON (AP) — The Federal Trade Commission on Wednesday proposed a rule to ban any hidden and bogus junk fees, which can mask the total cost of concert tickets, hotel rooms and utility bills.
The president is expected to speak at 11:45 a.m. EDT. Watch live in the player above.
President Joe Biden has made the removal of these fees a priority of his administration. The Democrat’s effort has led to a legislative push and a spate of initiatives aimed at helping consumers. Administration officials have said these additional costs can inflate prices and waste people’s time.
READ MORE: In ‘junk fee’ fight, U.S. releases data that shows which airlines won’t charge extra for family seating
“The proposed rule would prohibit corporations from running up the bills with hidden and bogus fees, requiring honest pricing and spurring firms to compete on honesty rather than deception,” FTC Chair Lina Kahn said on a call with reporters. “Violators will be subject to civil penalties and be required to pay back Americans that they tricked.”
The FTC proposal is being coupled with the Consumer Financial Protection Bureau announcing that it will block large banks from charging junk fees to provide basic customer services.
Biden plans to speak about both plans on Wednesday in the White House Rose Garden.
Lael Brainard, director of the White House National Economic Council, said research indicates that hidden fees can cause consumers to pay as much as 20 percent more than had they known the total cost upfront and comparison shopped.
READ MORE: Biden’s student loan cancellation plan advances with debate over details
The FTC estimates that consumers waste 50 million hours each year searching for the total price for tickets and lodging. The time saved in those two categories because of the rule would be equivalent to about $1 billion annually.
But some business groups are skeptical that people will realize savings. After Biden discussed junk fees at a February meeting with aides, the U.S. Chamber of Commerce issued a statement that the “Washington-knows-best approach” would lead to fewer choices for consumers and make the economy less competitive.
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Consumer & Retail
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Charities have criticised the "nonsensical" closure of migrant hotels after the BBC found many residents were being moved from one hotel to another.
The government has promised to shut 50 asylum hotels by January.
BBC South East followed the closure of one of the first, in Folkestone, Kent, and found asylum seekers were bussed to other hotels in London and Bournemouth.
The Home Office said it was working with contractors and councils to limit the impacts of the closures.
It declined to answer questions about specific sites, but said it aimed to end the use of hotels, which cost UK taxpayers £8.2m a day.
The BBC has been told that asylum seekers at a recently closed hotel in Worcestershire and another in Suffolk have also been moved to other hotels.
'I am not happy here'
Ahmadi, who fled Afghanistan after the Taliban takeover, moved into a seafront hotel in Folkestone after a traumatic Channel crossing.
His boat fell apart and he plunged into the water on 14 December 2022.
"I was in the water for 25 minutes," he said. "It was very cold. We [were] shouting help, help, help."
Four people have been confirmed dead, four are missing and 39 were rescued.
He was pulled from the water by a passing fishing boat, while others were rescued by the RNLI.
Many of the survivors moved to the same hotel, where, Ahmadi said, they formed a strong bond. But on 7 November, the majority of the 60 men at the hotel were sent by coach to a 400-room hotel in central London.
Ahmadi and five others were sent to a hotel in Bournemouth.
"I am not happy here," he said from his new room, which he shares with a stranger.
He said he used to go to school in Folkestone, but since being moved he spends all day in the hotel.
"I don't do anything."
The use of hotels has faced criticism from refugee charities, who say it is unsuitable accommodation, as well as protests from far-right groups.
It has become more widespread due to a backlog of undecided asylum claims.
Migrants are legally entitled to housing while waiting for a decision on asylum applications, as they are unable to work or claim benefits.
Kent Refugee Action Network, a charity that has been supporting asylum seekers at the Folkestone hotel, said many had "started to rebuild their lives" since arriving last year.
Chief executive Razia Shariff said: "Moving them from one hotel to another - especially if it is out of the area - does not deliver on the government's target of reducing the costs, nor does it help the young men in their transition and integration to life in the UK."
Alex Kempton, of The Refugee Buddy Project, said it was "ridiculous and nonsensical to really disrupt and turn upside down these people's lives just to move them to another hotel".
Asylum seekers in other parts of the country have faced a similar experience.
In Bromsgrove, Worcestershire, a local community group that supports asylum seekers said a hotel housing about 80 men closed in early November.
Bromsgrove & District Asylum Seeker Support said the majority had been moved to other hotels in the West Midlands, while "a few men" had gone to shared houses.
In Ipswich, a hotel that was home to 200 asylum seekers closed on 24 November, with some "moved to another hotel in a much more remote location", Suffolk Refugee Support said.
Conservative MP Tim Loughton, who sits on the Home Affairs Committee, said the government was reducing the asylum backlog and cutting the use of hotels.
Asked about the fact that some migrants were being moved from one hotel to another, he said there were towns with "far too great a concentration of asylum seekers and a lot of hotels being used, so it's right to take the pressure off some of those towns".
However, he added: "The direction of travel is to reduce the number of hotels that are being used, and to find other suitable accommodation."
He said the government was "solving the problem by reducing the number of people in hotels and improving the [asylum] processing times - not good enough yet, but it's going in the right direction."
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Nonprofit, Charities, & Fundraising
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(Bloomberg) -- It took three years, multiple digital-asset market dislocations and hundreds of millions of dollars, but the eyeball-scanning crypto project known as Worldcoin has officially launched.
Most Read from Bloomberg
“Worldcoin is an attempt at global scale alignment,” the digital identity and crypto payments project co-founded by OpenAI Chief Executive Officer Sam Altman said in a statement Monday. “The journey will be challenging and the outcome is uncertain.”
Both the digital asset market and the broader tech industry have undergone sharp changes in the years following the project’s founding. Since June 2021, when Bloomberg first reported on Altman’s new startup, the price of Bitcoin has taken a rollercoaster ride from about $32,000 to a high of more than $67,000 and back to less than $30,000.
Some of the startup’s original backers have been swept up in crypto market gyrations, including collapsed hedge fund Three Arrows Capital and Sam Bankman-Fried, the disgraced former CEO of bankrupt exchange FTX. And artificial intelligence has usurped crypto as the latest tech trend— with Altman himself emerging as one of AI’s most influential figures.
Worldcoin, like Altman, straddles the worlds of AI and crypto. The project uses a small device called an “orb” to scan people’s eyeballs in order to generate a a unique digital identity. That identity, or World ID, grants its holder “proof of personhood” in the Worldcoin parlance. Altman and his co-founders say the new approach to digital verification is essential in a time when AI is making it harder than ever to determine what’s created by humans and what isn’t.
In addition to launching a blockchain called OP Mainnet, the project also announced initial distribution of the Worldcoin crypto token to those who have already obtained a World ID and plans to broaden eyeball-scanning signups to more countries.
The process has not always been smooth. As it signed people up, the project was criticized for relying on allegedly deceptive and exploitative practices in countries like Indonesia, Ghana and Chile. And despite the buzz around AI, many in the industry wonder whether the sector has been swept up in a hype cycle — for example, an academic paper recently noted degraded performance in ChatGPT over time.
Altman said in an interview with Bloomberg News that the AI fervor has helped generate more enthusiasm around Worldcoin. “There’s much more interest and understanding and excitement, particularly as AI has become more of a factor in the world than when we started the project,” he said.
The current global regulatory environment for crypto, marked by crackdowns and lawsuits, poses a conundrum for the project. Worldcoin’s token is currently not available in the US, where tensions around crypto regulation have intensified in recent months. Altman and his co-founder Alex Blania published a letter Monday stating that rules were less clear in the US.
“There’s clearly a great lack of certainty, to say it as mildly as possible,” Altman told Bloomberg. “I think it’s a shame.”
Altman said he hopes that the US will be able to get to “a rational place” in terms of crypto regulation. He previously testified before the Senate in May, urging Congress to regulate AI.
Blania, who is also the CEO of Tools for Humanity, the startup developing Worldcoin applications, said he’s excited to expand use of Worldcoin in Asia, particularly in Japan and South Korea. Worldcoin has had more than 2 million signups, according to its website. Blania also noted that the project has upgraded its security following two recent issues: the theft of login credentials for some Worldcoin operators who were in charge of signing up new users, and black-market sales of World IDs.
Blania said the impact of these incidents was minimal, and in addition to implementing two-factor identity authentication, there’s also now a security feature that can detect when a login is geographically very far from where the user signed up for an account. “Of course there will be fraud,” Blania said. “It will not be a perfect system, especially early on.”
Blania suggested Worldcoin would move beyond being seen as a crypto project — a move reminiscent of the rebranding strategy recently undertaken by several other operators in the digital asset space.
“Crypto is hopefully a label that will get dropped over the coming years anyways, and it’s just essentially the technology that you use to build certain products,” Blania said.
Both Blania and Altman emphasized that decentralization, a key tenet of crypto, is an important part of their mission. Altman said he isn’t concerned about giving the impression that he has too much control in the market for digital tokens.
“In the world of crypto, I’m either unknown or close to it, and if so, not very well-liked,” Altman said. He added: “If I started a new AI thing, people might say something about undue influence.”
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Crypto Trading & Speculation
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People are planning to cut the cost of their holidays this year, while others might do without trips altogether, a survey has found.Just over a third of holidaymakers had planned to take steps to make their breaks less expensive (34%), while a further 16% will go without taking holidays altogether, according to insurer Aviva.
Among those who plan to save money on their travels, 28% have chosen to take UK-based breaks rather than going abroad and around 26% want to travel out of peak season to save more.A quarter have said they will shorten the duration of their holidays, while 13% eat away from tourist attractions and find a lesser-known destination.In order to save money, 20% said they would book well in advance to get a good deal, while the same amount said they would wait for last-minute deals.
Meanwhile, one in five people said they are looking to cut holiday plans to set a spending limit for their getaway.'It's concerning to see... people would think about not taking out travel cover'Hoping to reduce costs further, one in 14 holidaymakers plan to cut costs by not taking out travel insurance.Kelly Whittington, speciality claims director at Aviva UK, said: "Holidaymakers have some really good ideas on how to save, from setting themselves a spending limit to looking for last-minute deals. "However, it's concerning to see that a small number of people would think about not taking out travel cover as unfortunately the unexpected can and does happen."This can mean anything from requiring medical treatment overseas, to lost luggage, to a stolen passport while abroad."As a result of this, Whittington said holidaymakers could face "unforeseen costs of hundreds, thousands of pounds - even five or six-figure sums in some instances - particularly where medical bills are concerned."Read more on Sky News: Sir Rod Stewart calls in to Sky News to donate for medical scansShopping habits could help spot signs of ovarian cancerHunt confirms HS2 will reach central London after reports it might stop in suburbsWhittington added: "We'd also urge people to take out travel insurance as soon as they book their break in case an unforeseen incident means they need to cancel."More than 4,000 people were surveyed across the UK by Censuswide in January 2023, for Aviva.
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United Kingdom Business & Economics
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Joe Raedle/Getty Images
toggle caption
A customer waits to order food at a Miami McDonald's on July 26, 2022. The CEO of McDonald's expects the U.S. to experience a mild recession and says customers have grown more reluctant to splurge on or supersize their orders.
Joe Raedle/Getty Images
A customer waits to order food at a Miami McDonald's on July 26, 2022. The CEO of McDonald's expects the U.S. to experience a mild recession and says customers have grown more reluctant to splurge on or supersize their orders.
Joe Raedle/Getty Images
From banks to burger joints, the U.S. economy is showing signs of stress as nervous shoppers dial back their spending and anxious lenders keep a tight grip on credit.
A report from the Commerce Department to be released on Thursday is expected to show slower economic growth during the first three months of the year than in the previous quarter.
And the economy is projected to lose more steam in the months to come, as rising prices and higher interest rates take a toll on families and businesses.
"Our base expectation is for a mild recession in the U.S.," McDonald's CEO Chris Kempczinski said this week.
Although the fast-food chain reported strong sales so far in 2023, customers are less likely to splurge after two years of rising food costs, he said in an earnings call with investors.
"Things like — did someone add fries to their order?" Kempczinski said. "We're seeing that go down in most of our markets around the world — slightly — but it's still going down."
Virginia resident Desiree Prince says she's more budget conscious now than she used to be, and making decisions about what she spends with an eye on the price tag.
"Once upon a time, I might have said, 'I'd like to have steak and potatoes for dinner,'" Prince said. "Now it's like, 'Let's see what's in the refrigerator and cobble together a meal from things that I already have."
Prince, who lives in Alexandria, is planning a vacation this summer with her mom and sister, but with airfares up nearly 18% this year, they're limiting themselves to places they can go by car.
"We did have to be a bit selective about what we'll be doing on vacation," Prince said. "Do we want to pet the dolphins? That's a bit pricey. Maybe we'll just do the free national park. So we've been frugal with our travels."
Consumers are spending enough to keep the economy going
Spending by consumers like Prince is the biggest driver of the U.S. economy. It has slowed in recent months, though it hasn't stalled out completely.
"The American consumer is the firewall between a recession and an economy that moves forward. And right now the firewall is holding firm," said Mark Zandi, chief economist at Moody's Analytics.
People may not be spending aggressively, "but they are spending enough to keep the economy moving forward," he said.
Zandi believes the U.S. can avoid an outright recession this year, but he argues it won't be easy, especially after the collapse of Silicon Valley Bank and Signature Bank and the resulting drop in lending by other banks.
"The Federal Reserve is still raising interest rates," Zandi said. "You throw into the mix the ill effects of the banking crisis and it does suggest that growth through the remainder of this year and into next is going to be very much on the soft side."
Mike Kaeding, who builds and leases apartments in Minnesota, has noticed the sharp drop in loans.
"Some of the regional banks here in the Twin Cities that do a lot of construction [loans], they're not lending at all right now," Kaeding said. "I think there's going to be a negative impact on the construction industry, where we'll actually see for the first time in a while where jobs start to dry up."
Construction companies cut 9,000 jobs last month.
Many other businesses are still hiring, but job growth in March was the slowest in more than two years. Even profitable companies like McDonalds and General Motors have been cutting white-collar jobs.
That rattles Prince, even though her own job as a nuclear engineer seems secure.
"You start seeing banks start to fail, companies like Microsoft and Facebook laying people off," she said. "I'm not an economist so I don't know what to think, but it doesn't feel great."
The debt limit fight could create the economy's next hurdle
Politics could also pose a risk, as members of Congress squabble over the federal government's debt limit.
House Republicans want big spending cuts and other concessions in exchange for letting the government borrow more money. The White House insists it won't negotiate and argues the full faith and credit of the government must be protected.
If no agreement is reached by summer, the government could default on its debts, resulting in falling stock prices, rising borrowing costs and a great deal of uncertainty.
"All the things you don't want at any time but particularly when the economy is struggling to keep its head above water and out of recession," Zandi said.
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Inflation
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A pair of crypto firms including a struggling exchange owned by the Winklevoss twins allegedly bilked investors out of $1.1 billion as the digital currency market tanked last year, according to a bombshell lawsuit filed Thursday by New York’s attorney general.
The twins’ New York-based crypto exchange Gemini, along with billionaire Barry Silbert’s firm Digital Currency Group and its subsidiary, the now-bankrupt crypto bank Genesis Capital, stand accused of defrauding more than 230,000 customers, including at least 29,000 New Yorkers.
The complaint was unveiled weeks after The Post reported Cameron and Tyler Winklevoss secretly pulled $282 million in cryptocurrency from Genesis on Aug. 9, 2022. A few months later on Nov. 16, Genesis had frozen withdrawals on some $900 million in customer assets after the bank was caught up in the meltdown of Sam Bankman-Fried’s FTX empire.
“This fraud is yet another example of bad actors causing harm throughout the under-regulated cryptocurrency industry,” New York AG Letitia James said in a statement. “My office will continue our efforts to stop deceptive cryptocurrency companies and push for stronger regulations to protect all investors.”
The firms face scrutiny over the now-defunct Gemini Earn program, an interest-bearing account product that teased customers with up to 8% interest on their crypto deposits. Genesis served as the sole banking partner of Gemini Earn.
Gemini never responded to The Post’s request for comment on the withdrawal, but later acknowledged it had occurred. The company claimed it withdrew “Earn users’ money” to create a “liquidity reserve” for them under the program’s terms of service as part of a “wise and prudent” risk management strategy.
The explanation infuriated some Earn customers and claimant attorneys who spoke to The Post and questioned why Gemini never halted the program or informed clients that anything was amiss despite its apparent misgivings.
The withdrawal also raised questions about what the twins knew about Genesis’ financial stability and when in the months before its collapse – a central theme in the New York attorney general’s lawsuit, which alleged that Gemini repeatedly assured investors the Earn program was a safe investment even though its own internal analyses of Genesis showed it was a high-risk lender.
Victims of the Gemini Earn meltdown included a 73-year-old grandmother in New York who “invested her and her husband’s lifesavings of over $199,000 in Gemini Earn because they believed Gemini’s marketing statements that it was a safe and secure choice,” according to the state’s lawsuit. The money was intended to pay for her grandchild’s education.
“Are you going to be able to give us our money any time soon? I am crying all day. I am 73 years old and without that money I am doomed,” the unnamed grandmother said in a Nov. 29 message to Gemini, according to the complaint.
The lawsuit also claims that Gemini risk management personnel pulled their personal investments out of the Earn program before its collapse. Gemini’s chief operating officer, who is not named in the suit, allegedly withdrew his entire investment of more than $100,000 from Earn on June 16 and 17 of last year. The company’s COO at the time, Noah Perlman, departed from the role in January.
In a statement, Gemini tried to spin the latest lawsuit in its favor – claiming it “confirms what we’ve been saying all along — that Gemini, Earn users, and other creditors were the victims of a massive fraud and systematically ‘lied to’ by these parties about ‘Genesis’s financial condition.’”
“With that said, we wholly disagree with the NY AG’s decision to also sue Gemini,” the company said. “Blaming a victim for being defrauded and lied to makes no sense and we look forward to defending ourselves against this inconsistent position.”
Gemini’s statement drew a harsh response from some X users.
“You are acting like CHILDREN,” one X account called “Crypto Watchdog” wrote. “Newsflash: this is YOUR FAULT, TOO!”
Gemini failed to disclose its concerns to the public – including that nearly 60% of Genesis’s loans were at one point tied to Alameda Research, the freewheeling crypto hedge fund whose risky bets led to FTX’s meltdown, the complaint alleges.
Gemini allegedly downgraded its own estimate of Genesis credit rating to a junk grade in February 2022, but continued marketing the program as a low-risk investment up until its collapse that November.
In July 2022, a Gemini board member allegedly compared the state of Genesis Capital to that of infamous investing banking firm Lehman Brothers before its collapse during the Great Recession, the suit said.
Separately, Genesis and DCG are accused of attempting to conceal $1.1 billion in losses from customers in the months before the Earn program failed. Silbert, DCG and Genesis are also alleged to have misled both Gemini and the public about Genesis’ financial health.
James is seeking restitution payments for investors and disgorgement of any ill-gotten gains. Additionally, Gemini, Genesis and DCG face a ban from participating in the financial investment industry in New York.
Silbert said in a statement that he was “shocked by the baseless allegations in the Attorney General’s complaint and intend to fight these claims in court.”
DCG said it “fully intend(s) to fight the claims and look forward to being vindicated in this case.”
“DCG has always conducted its business lawfully and with integrity,” a DCG spokesperson said. “We have actively cooperated for months with the Attorney General’s investigation in an open and transparent manner. We were blindsided by the filing of the complaint, and there is no evidence of any wrongdoing by DCG, Barry Silbert, or its employees.”
The lawsuit is only the latest legal headache facing the Winklevoss twins. In January, the SEC sued Gemini and Genesis for allegedly offering “unregistered securities to the public, bypassing disclosure requirements designed to protect investors.”
The Winklevoss twins and Silbert are also locked in a nasty public legal battle with each other.
The brothers — who became crypto kingpins after gaining notoriety for their legal war over Facebook with former Harvard classmate Mark Zuckerberg — sued Silbert and DCG in July, alleging that they were given a “false, misleading, and incomplete representation” of Genesis’s financial health. DCG later filed a motion to dismiss the suit, which is still pending.
The New York AG’s lawsuit was announced even as Bankman-Fried faces trial on federal charges for allegedly misappropriating billions of dollars in FTX customers funds to cover risky bets at Alameda.
Bankman-Fried’s ex-girlfriend Caroline Ellison, the former CEO of Alameda, was a star witness for the prosecution. Bankman-Fried has pleaded not guilty.
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Crypto Trading & Speculation
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India’s Booming Payments Industry Lures Ebanx With IPO On The Cards
Brazilian payments company Ebanx Ltda, which operates in 16 countries in Latin America and Africa, will begin doing business in India by the end of the year as part of its global expansion to developing countries.
(Bloomberg) -- Brazilian payments company Ebanx Ltda, which operates in 16 countries in Latin America and Africa, will begin doing business in India by the end of the year as part of its global expansion to developing countries.
Ebanx, which counts Advent International LP and FTV Capital among backers, will soon begin allowing global merchants to process payments through its platform including India’s booming Unified Payments Interface in one of its biggest bets yet on large emerging markets.
“It’s in the center of our vision to expand into emerging markets — we call them rising markets — and connect them to global commerce,” Chief Executive Officer and co-founder Joao Del Valle said in an interview. “Our merchants in the US, Europe and China have demand for India, they have businesses there and they need support.”
Since its founding in 2012, Curitiba-based Ebanx has focused on cross-border transactions for clients like Spotify Technology SA, Airbnb Inc. and Alibaba Group Holding Ltd. It has grown into a leading player in Brazil’s own central bank-controlled instant payments platform known as PIX, which is used more than credit cards now in Latin America’s largest economy.
Expanding to India gives the company a presence in a country where 22% of the population of nearly 1.4 billion people currently uses the UPI platform, according to Ebanx. UPI will process about 1 billion transaction a day by the end of the year.
Ebanx aims to give merchants the flexibility to process payments in whatever methods their consumers prefer via a single platform, said Paula Bellizia, global head of payments.
“When we talk about rising markets, we talk about all kinds of payment methods that are preferred by the consumers,” she said.
The executives declined to comment on which multinational merchants will sign on initially as well as on who will run the India operation and the size of the team that will be based in Mumbai.
Founded by a trio of Brazilians from legal, finance and technology backgrounds, Ebanx focuses on payments in areas like e-commerce, gaming, streaming, digital ads and online travel booking for companies including Sony Group Corp., Uber Technologies Inc., SheIn Group Ltd. and Shopee Co Ltd.
It doesn’t disclose the amount of annual payments processed. In 2022 the figure increased by 44% from a year earlier, the company said. Back in 2020, it had a payment volume of $3.5 billion across 150 million transactions.
In 2021, Advent invested $430 million in the startup for a minority stake, including funds to assist with an initial public offering in the US. A confidential IPO filing later that year was set to value the company at about $10 billion, according to people familiar with the matter. Ebanx postponed the listing last year.
IPO Plans
Reviving that plan is not a focus for now, said Del Valle, “but it’s definitely a very well considered milestone” in a range of one to three years.
As headwinds struck the tech industry in the past 18 months, Ebanx did some “belt tightening,” scrapped some projects and cut headcount to 800 from 1,300, Del Valle said. Investments come from its normal working capital and they haven’t tapped new investors or taken on debt, he said.
Co-founders Alphonse Voigt and Wagner Ruiz have left executive roles and are now chairman and a member of the board, respectively.
Last year, the payments firm made its foray out of Latin America by expanding into South Africa, Kenya and Nigeria while hiring Wiza Jalakasi as its head for Africa. The firm is expanding into eight additional countries there.
“Credit cards are not super relevant there, penetration is very low except for one or two countries so alternative payment methods, especially mobile, is a must,” Del Valle said. “As European or American merchants are used to credit cards, when they go to these countries, they need a partner to enable like 90% of the population to pay.”
Executive Hires
In the home market of Latin America, Brazil continues to be the gateway for global merchants, including Chinese retailers, to enter the region and Mexico continues to grow well, including through a partnership with Femsa at their Oxxo stores. Argentina has been “unstable” given the economy, Del Valle said.
The firm has also invested in C-level talent to fill out executive positions. Bellizia was hired last year as the global payments head from a marketing role at Google. The firm recently hired Valerio Zarro as VP of governance, risk and compliance from iFood, Fabio Scopeta from Microsoft as chief technology officer and Melissa Cherrey Johnson from PayPal as VP of merchant success for the Americas and Europe.
“To say that Ebanx is becoming global, I think it’s shy to our footprint today,” Bellizia said. “We’ve been global and we are reinforcing our global position.”
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
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India Business & Economics
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It’s only August yet at top Wall Street firms recruitment for summer 2024 internships is already in full swing – but the salaries being offered are roughly the same as this year.
The compensation for internships at prized firms like JPMorgan, Goldman Sachs, Citibank, Barclays and Morgan Stanley is hovering between $100,000 and $110,000 – right around the average of $52-$54 per hour most interns are making this year, according to data from levels.fyi.
“The tables have turned – a few years ago everyone was seeing these tech startups with crazy valuations and people getting equity grants where they would see their options quadruple,” the anonymous founder of financial account Litquidity told On The Money.
“Now we are in a bear market for venture capital…I’d want to stay in finance in a time like this.”
Pay had spiked dramatically from 2022 to 2023: At top firms, salaries jumped almost 20% year over year, and at major hedge funds pay soared almost 30% year over year, according to data from levels.fyi.
The huge sums attracted tens of thousands of applicants.
Citadel, which pays interns $5,000 a week, had more than 69,000 applications.
This week, applications for JPMorgan’s 2024 Corporate and Investment Bank Markets Summer Analyst Program went live on LinkedIn. Applications for summer 2024 internships are already live at Goldman Sachs, Citibank, Barclays, and Morgan Stanley.
All those banks slashed staff this year as Wall Street suffered from a dearth of deal-making.
“All things considered, people should be thankful they’re getting paid when there are so many layoffs,” Liquidity said.
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Banking & Finance
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A health minister has refused to commit to accepting the recommendations of public sector pay review bodies (PRBs) for next year, saying the government has to "look overall at what is affordable".
Speaking to Sky News, Helen Whately said she would not "pre-empt" the next steps in the process, as the prime minister "needs to be responsible with the public finances" and "look at things in the round".
Politics live: Chancellor to insist watchdogs use powers to cut prices
The PRBs take evidence from across sectors like the NHS and education each year, as well as submissions from government, before saying what wage rises should be introduced for the following 12 months.
Amid anger from unions about the figures failing to match inflation last year, Health Secretary Steve Barclay insisted it was right for ministers to "continue to defer to that process to ensure decisions balance the needs of staff and the wider economy".
The recommended figure is expected to be published next month, alongside formal pay offers, with reports claiming the number could be around 6% for the health service and 6.5% for teachers.
But reports over the weekend suggested Rishi Sunak could block the rise over concerns it could increase already record high inflation.
Asked by Kay Burley if the government would accept the PRBs' recommendations, social care minister Ms Whately said: "I'm not going to pre-empt the next stage in the process.
"Obviously government has to look overall at what is affordable. And the prime minister has been very clear... about the need to be responsible with the public finances as the number one priority, of course, must be bring down inflation.
"So government has to look at things in the round."
She added: "We take the advice of recommendations from the pay bodies. But you've got to understand that government has to be responsible for the public finances.
"That's why I can't say here and now what the outcome of of the whole process is going to be. We know we have a number one priority of bringing down inflation.
"And actually the job in government and job of prime minister is to make tough decisions."
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Inflation
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Business NewsFTX Sent Email to Sculptor, Customers Promising Money Was Safe
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FTX Sent Email to Sculptor, Customers Promising Money Was Safe
In an email a few months before FTX collapsed, the company falsely promised institutional customers, including hedge fund Sculptor Capital Management, that their assets would be safe in the event of an insolvency, according to a former FTX lawyer who testified at the trial of Sam Bankman-Fried.
(Bloomberg) -- In an email a few months before FTX collapsed, the company falsely promised institutional customers, including hedge fund Sculptor Capital Management, that their assets would be safe in the event of an insolvency, according to a former FTX lawyer who testified at the trial of Sam Bankman-Fried.
(Bloomberg) -- In an email a few months before FTX collapsed, the company falsely promised institutional customers, including hedge fund Sculptor Capital Management, that their assets would be safe in the event of an insolvency, according to a former FTX lawyer who testified at the trial of Sam Bankman-Fried.
Can Sun, who joined FTX as a general counsel in August 2021, said in a federal court Thursday that FTX Digital Markets told customers that in the unlikely event it went bankrupt, their funds would be ringfenced.
The government showed an email exchange between FTX and Sculptor as one such example.
He said while he helped structure financial transactions, he had no idea customer funds would be used inappropriately. Sun said he believed that customer funds would be fully protected, segregated and returned to them.
“I didn’t do anything wrong,” he said on the stand. Sun disclosed that he has a non-prosecution agreement with the government.
Bankman-Fried faces decades in prison over charges that he funneled FTX customer funds into an affiliated hedge fund, Alameda Research, for risky trades, political contributions and property.
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Crypto Trading & Speculation
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Biocon Unit To Sell Two Non-Core Branded Businesses To Eris Lifesciences For Rs 366 Crore
The agreement is expected to be closed by the end of November this year.
Biotechnology major Biocon Ltd.’s unit, Biocon Biologics Ltd., will sell two of its non-core branded businesses to Eris Lifesciences Ltd. for Rs 366 crore.
The company entered into a definitive agreement with Eris Lifesciences for the divesture of its dermatology and nephrology branded formulations business units in India, that mostly comprise its legacy small molecules brand, it said in its exchange filing.
The announced transaction is a ‘Slump Sale’ that will enable a seamless transfer of the product brands and employees associated with these businesses, Biocon said.
The divestment is inclusive of working capital conveyed as part of the deal, and represents an accretive multiple of four times on revenue and 22 times on Ebitda.
The agreement is expected to be closed by the end of November, and after closure, over 120 employees of the two business units are expected to transition to Eris.
“This divesture of non-core assets allows Biocon Biologics to unlock value within our branded formulations portfolio in India and sharpen focus on our core therapy areas like diabetes, oncology and immunology,” said Shreehas Tambe, chief executive officer and managing director of Biocon Biologics.
The company reaffirmed its commitment to strengthen the core, accelerate growth, and invest in the future.
Biocon Biologics is a global biosimilar company and had previously acquired the global biosimilar business of its long-standing partner Viatris.
The company has commercialised eight biosimilars in key emerging markets and advanced markets like the U.S., Europe, Australia, Canada, and Japan.
Shares of Biocon closed 0.58% higher at Rs 226.65 apiece, as compared with a 0.19% advance in the benchmark Nifty 50 on Wednesday.
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India Business & Economics
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In order to aid Puerto Rico’s recovery, the Biden-Harris Administration has committed to the territory’s revival, unlocking billions of dollars in funding for disaster aid and promoting healthcare and economic assistance programs for residents. Since 2021, the Biden-Harris Administration has assisted in creating a solid foundation for the islands by implementing multiple pieces of legislation, such as the American Rescue Plan (ARP) and the Inflation Reduction Act (IRA). The American Rescue Plan will include funds for repairing damaged buildings after earthquakes, better water infrastructure, and providing high-speed internet at affordable prices as of May 13, 2023. The Inflation Reduction Act will be committed to lowering the cost of living for households and businesses, which will help provide an affordable future for residents in Puerto Rico. The Biden-Harris administration has also introduced the Bipartisan Infrastructure Law to help provide infrastructure projects across the islands, which can not only provide jobs but also construct roads, public transit, bridges, and airports, being funded over $596.1 million.
To help further the renewal and rebuild the islands, in April 2022, President Biden appointed Deputy Secretary of Commerce Don Graves to serve as the administration’s Puerto Rico Economic Growth Coordinator, assigned to focus on specific projects over the course of 2023, such as development in the workforce, providing energy, rebuilding the economy, and improving the government overall. Along with Graves, White House advisors Susan Rice and Julie Graves hosted Puerto Rico Governor Pedro Pierluisi (NPP, D), along with the members of his cabinet, at the White House in December 2022 to plan the actions of the federal and territorial governments in 2023.
In order to move forward with the new developments and gain a better understanding of the islands’ situation, Deputy Secretary Graves traveled to Puerto Rico in February 2023. During this visit, he announced with Rescue Plan Coordinator Gene Sperling and officials in the Department of the Treasury the approval for a budget of $109 million in funds allowing the Economic Development Bank of Puerto Rico to make loans and provide collateral for businesses. This also included unprecedented relief and lasting investments for residents of the territory, municipalities, and businesses. The islands’ municipal governments will receive $4 billion in the American Rescue Plan and the Local Fiscal Recovery Funds to help respond to the economic and health impact of the COVID-19 Pandemic. With these investments, local governments can maintain necessary services and keep local law enforcement on the job. Another act for the gradual improvement of small businesses, the American Rescue Plan, expands a new version of the Earned Income Tax Credit to adjust for Puerto Rico, which can contribute more benefits for workers by investing in job training. The Biden-Harris administration has committed more than $30 million in funds to protect pension benefits and provide more protection for retirees.
Protection for families in Puerto Rico is a top priority for the Biden-Harris administration, with the American Rescue Plan expanding tax benefits through the Child Tax Credit, ensuring that all families, including those with one child, can benefit. As a result, over 250,000 families can now receive credits, cutting child poverty and improving the lives of many. Along with child benefits, the ARP also provides $250 million in rent assistance with the help of the Emergency Rental Assistance Program, assisting many Puerto Rican households that face the threat of eviction. These funds are also being distributed to childcare programs so they can continue to stay open. Lastly, along with the Biden-Harris Administration, to more swiftly and more diligently recover from natural disasters, the Federal Emergency Management Agency has assigned over $891 million in emergency funds for Puerto Rico, including grants to support families and households. FEMA also contributed to improving and expanding Disaster Recovery Centers in more affected areas by expanding access to shelters. Since Hurricane Fiona, the US Department of Housing and Urban Development has worked towards repairing the fragile power grid by partnering with departments of energy such as EPA. The Biden-Harris administration is committed to countering the threat storms pose to Puerto Rico’s power system by planning for a more renewable, solar-powered energy source. President Biden is committed to assassinating the island with the same diligence and focus as he does with the States. With the new recovery funds and government assistance, Puerto Rico and its residents can have a better chance at survival and a chance to rebuild after hardship.
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Latin America Economy
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Food prices are still rising faster than wages, new data has shown.
The British Retail Consortium (BRC) reported overall food inflation rose 11.6% in August, down from 14.3% in July.
But annual growth in average total pay only grew by 8.2% from April to June, according to the latest data available from the Office for National Statistics (ONS).
Fresh food inflation fell to 11.6% in August, down from 14.3% in July.
Inflation for ambient foods - items stored at room temperature - fell from 12.3% in July to 11.3% in August.
Meanwhile the BRC said price rises in shops have slowed to their lowest rates in October last year but keep going up significantly.
Prices rose 6.9% in the year to August, down from 8.4% in July.
While retail inflation has dropped it does not mean items are getting cheaper, just that prices increased more slowly between September 2022 and August 2023 than they did between August 2022 and July 2023.
The BRC showed the main reason retail inflation dropped was because fresh food prices rose less rapidly.
Inflation for non-food items was unchanged at 4.7%, the BRC said.
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Energy price cap falls
Millions risk getting ill because they are 'too scared to put heating on' when it's cold
Tory 'chaos and incompetence' have left families worse off, says Labour
"Better news for consumers as shop price inflation in August eased to its lowest level since October 2022," the consortium's chief executive Helen Dickinson said.
"This was driven by falling food inflation, particularly for products such as meat, potatoes and some cooking oils.
"These figures would have been lower still had the government not increased alcohol duties earlier this month."
She said key components of toiletries and cosmetics had become cheaper which helped ease price rises in these categories.
But inflation for clothing and footwear increased as the summer sales came to a close.
"While inflation is on course to continue to fall thanks to retailers' efforts, there are supply chain risks for retailers to navigate," Ms Dickinson added.
"Russia's withdrawal from the Black Sea Grain Initiative and its targeting of Ukrainian grain facilities, as well as poor harvests across Europe and beyond, could serve as potential roadblocks to lower inflation.
"A potential £400m hike to business rates bills from next April would certainly jeopardise efforts to tackle inflation unless the chancellor intervenes."
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United Kingdom Business & Economics
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A star witness has given evidence at the trial of fallen crypto entrepreneur Sam Bankman-Fried - telling the court he directed her to commit fraud.
Caroline Ellison was the CEO of Alameda Research - a hedge fund linked to the doomed FTX exchange - and used to be the one-time billionaire's girlfriend.
She told the court that Alameda used $10bn (£8.14bn) of funds belonging to FTX customers to repay debts and make investments without their knowledge.
Read more: How FTX founder went from star-studded £21bn empire
Ms Ellison, who has already entered a plea deal with prosecutors in the hope of a lesser sentence, described Bankman-Fried as a "very ambitious" young man who wanted to use his vast fortune to wield influence.
She went on to reveal that he thought he had a 5% chance of being US president one day.
During her appearance at the New York trial, Ms Ellison claimed Bankman-Fried had set up the systems that allowed customer funds to be misused.
She also alleged the 31-year-old had shared misleading information about the health of his business with lenders.
Prosecutors have accused Bankman-Fried of spending countless millions on luxury real estate and political donations, with Ms Ellison telling the court that he donated $10m (£8.14bn) to Joe Biden's presidential campaign in 2020.
FTX used to be the world's second-largest exchange, and before it suddenly collapsed last November, Bankman-Fried was worth $32bn (£26bn) on paper - rubbing shoulders with A-list celebrities and advising US politicians on how the industry should be regulated.
When the crisis hit, his net worth plunged by 94% in a single day - the biggest wealth collapse a billionaire has ever suffered in such a short space of time.
Bankman-Fried's lawyers have sought to argue that Ms Ellison bears some responsibility for FTX's demise - depicting him as a CEO who was spread too thin, and someone who needed to rely on senior executives to put safeguards in place.
But she poured cold water on this narrative - telling the court she always consulted him on big decisions, and always deferred to him.
"He was the person I officially reported to, he owns the company, and he was the one who set my compensation and had the ability to fire me if he wanted," she said.
Ellison went on to reveal that she was paid a salary of $200,000 (£162,792) as Alameda's CEO, and received a £20m (£16.2m) bonus in 2021.
Bankman-Fried has pleaded not guilty to two counts of fraud and five counts of conspiracy - arguing that he never intended to steal customer funds. If convicted, he could face over 100 years behind bars.
Three members of his inner circle have pleaded guilty to fraud charges, and Ms Ellison is the second to give evidence.
'If the jury can stay awake to hear it'
Blockworks opinion editor Molly Jane Zuckerman, who was in court, told Sky News three members of the jury fell asleep during the hearing - a sign that the complicated nature of the case may be difficult to follow.
She added: "Sam Bankman-Fried's defence has a tough task ahead, if the jury can stay awake to hear it.
"The prosecution has a heavy line-up of former FTX senior executives with cooperation deals, all fully ready to admit their guilt and take Sam along with them."
Read more:
Inside the wild world of crypto casinos
Who is Sam Bankman-Fried?
How FTX collapsed in just three days
Before the trial began, Bankman-Fried shared Ms Ellison's private diary entries with The New York Times, in which the 28-year-old described being overwhelmed with work and upset about their break-up.
That led the judge to revoke his $250m (£203m) bail, and he was sent to jail for probable witness tampering.
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Crypto Trading & Speculation
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Tata Technologies IPO To Open On Nov. 22
The Tata Technologies IPO will consist of an offer for sale of 6.08 crore shares.
The initial public offering of Tata Technologies Ltd. will open on Nov. 22 and close on Nov. 24.
The IPO will consist of an offer for sale of 6.08 crore shares, according to an exchange filing by Tata Motors Ltd.
Tata Motors will sell 4.62 crore shares, Alpha TC Holdings will sell 9.71 crore shares, and Tata Capital Growth Fund will offload 48 lakh shares, the filing said.
The company earlier announced that it will reserve a portion of its initial public offering shares for its employees as well as shareholders of its parent Tata Motors.
Tata Motors, at present, owns 74.69% of the company, while Alpha TC Holdings and Tata Capital Growth Fund I have 7.26% and 3.63% stakes, respectively.
JM Financial Ltd., Citigroup Global Markets India Pvt. and BofA Securities India will be the book-running lead managers for the issue.
Tata Technologies, a wholly owned subsidiary of Tata Motors, is a global ER&D services firm that offers product development and digital solutions to original equipment manufacturers, not limited to the automotive sector. It counts Jaguar Land Rover Plc and Airbus SE among its clientele. JLR recently expanded its partnership with Tata Technologies for its digital transformation.
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India Business & Economics
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Introduction
One of the most transformational and revolutionary inventions of the twenty-first century is blockchain technology. Its potential to disrupt various industries, from finance and healthcare to supply chain and government services, has not gone unnoticed in Saudi Arabia. The Kingdom has been quick to recognize the significance of blockchain technology and has actively pursued its development. In this blog, we will explore how blockchain is reshaping Saudi Arabia, a revolution with innovation and how they are contributing to the nation’s technological advancement.
The Saudi Vision 2030 and Blockchain Technology
The driving force behind Saudi Arabia’s push towards blockchain technology can be attributed to the ambitious Saudi Vision 2030. This comprehensive plan aims to diversify the Saudi economy, reduce its dependency on oil, and transform the Kingdom into a global technological and economic powerhouse. Blockchain technology is seen as a key enabler to achieve these goals.
1. Saudi Arabian Monetary Authority (SAMA):
The Saudi Arabian Monetary Authority, or SAMA, has been actively exploring the potential of blockchain technology in the financial sector. SAMA initiated Project “Aber” in collaboration with the United Arab Emirates Central Bank to develop a blockchain-based cryptocurrency for cross-border transactions between the two countries. This project showcases Saudi Arabia’s commitment to staying at the forefront of financial technology.
2. Saudi Aramco and Blockchain:
Saudi Aramco, the world’s largest oil and gas company, has also shown interest in blockchain technology. While primarily an energy company, Aramco has been exploring blockchain for its supply chain management. Implementing blockchain in the oil and gas industry can enhance transparency, traceability, and efficiency in the supply chain, which is crucial for a company of this magnitude.
3. Blockchain in Healthcare:
Saudi Arabia has recognized the potential of blockchain in healthcare. The Ministry of Health has been working on a blockchain-based platform to securely and efficiently manage patients’ health records. Such a system can improve patient care and data security while reducing administrative burdens.
4. Public Sector Initiatives:
Various government entities have also embraced blockchain technology. For instance, the Saudi Customs Authority is working on a blockchain-based system to streamline and secure customs operations, thus reducing trade friction and encouraging international business.
5. Private Sector Ventures:
Beyond government initiatives, numerous startups and private companies are actively developing blockchain solutions in Saudi Arabia. These include ventures focusing on supply chain management, real estate, and financial services. The Saudi Arabian startup ecosystem has seen significant growth in recent years, driven in part by blockchain innovation.
Challenges and Opportunities
While Saudi Arabia’s efforts in blockchain development are commendable, there are still challenges to overcome. These include regulatory frameworks, talent acquisition, and public awareness. The regulatory landscape needs to adapt to accommodate blockchain technology while ensuring security and compliance. At the same time, educating and upskilling the local workforce in blockchain-related fields is crucial for long-term success.
However, there are immense opportunities on the horizon. Blockchain has the potential to reduce fraud, increase transparency, and enhance the overall efficiency of various industries. In doing so, it can attract more foreign investment and stimulate economic growth, aligning perfectly with the goals of Saudi Vision 2030.
Conclusion
Saudi Arabia’s commitment to blockchain development is a testament to its dedication to technological advancement and economic diversification. The Kingdom is taking significant strides to harness the potential of this transformative technology across various sectors, from finance to healthcare and beyond. As blockchain continues to evolve and mature, Saudi Arabia is well-positioned to be at the forefront of its global adoption, further cementing its role as a technological powerhouse in the Middle East. With the right support, partnerships, and a continued focus on innovation, Seracle delivers the best blockchain development service in Saudi Arabia.
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Middle East Business & Economics
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Schools affected by collapse-risk concrete will not have to pay for repairs out of their budgets, the education secretary has insisted.
Gillian Keegan told Sky News there will be no new money to fix the problem, but the costs will be covered by the Department for Education (DfE)..
There has been a growing row over who will pay to pick up the bill for repairs to reinforced autoclaved aerated concrete (RAAC) after the government announced last week that more than 100 schools would have to close or partially close because of the risks associated with it.
Ms Keegan said the government had already procured stock of portable cabins for schools that need temporary accommodation - and the DfE was paying for this "directly".
She said: "We have eight structural surveying firms who go in and do the surveys.
"We have three portacabin providers, so we've laid up a stock of portacabins so that people can be prepared quickly to be able to do that if they need temporary accommodation. And we've also looked at a propping company that's nationwide.
"The Department for Education will pay for all of that."
Asked if schools that are already strapped for cash will have to find more money, Ms Keegan insisted: "No, we will pay for that."
Asked if the money will come out of school budgets, Ms Keegan said: "No. It's coming out of the Department for Education."
However, Ms Keegan could not say how much funding would be ringfenced towards the issue.
She said the government didn't have the costs for this yet - but admitted it was likely to cost "many, many millions of pounds".
On Sunday Chancellor Jeremy Hunt said he would "spend what it takes" to address the problem, but Treasury sources later said money for repairs would come from the Department for Education's (DfE) existing capital budget.
Unions have been angered by uncertainty about which costs will be covered by government, calling for transparency on whether headteachers will be reimbursed for mitigation expenditure
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United Kingdom Business & Economics
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AUSTIN, Texas — For decentralized platforms to stay autonomous, such as cryptocurrencies, creators and proponents must overcome a range of specific challenges, according to new research from The University of Texas at Austin.
Communities looking for freedom from regulation are rallying around alternatives to established banking systems, social media platforms and search companies such as Facebook and Google — but many struggle. Understanding the common pitfalls of decentralization may make these platforms more resilient.
“They’re supposed to be more egalitarian and democratic, but you often end up with power in the hands of a few individuals or institutions,” said Michael Sockin, an assistant professor of finance in the McCombs School of Business who led the study. “We’re raising some issues that we think creators and the community haven’t fully thought about.”
The research is published in The Journal of Finance.
With Wei Xiong of Princeton University, Sockin modeled one kind of platform, known as a decentralized autonomous organization (DAO). It works like this:
- Instead of raising money from investors, it sells tokens to its users.
- Tokens entitle them to services from the DAO and to a vote on its policies.
- To be transparent, every transaction gets recorded on a blockchain.
On one successful DAO, Filecoin, the service is data storage. Users exchange tokens to rent storage space from other users, as alternatives to cloud companies such as Amazon.
The researchers modeled how DAOs evolve over time, comparing them with centralized platforms with investors. They found several lessons for what works and what does not.
They first found that small is beautiful. Selling tokens works best for small groups that are passionate about a specific purpose. Such DAOs have formed for targeted goals like buying digital art or raising aid money for Ukraine. But recruiting more users risks pulling in people who are less committed and less likely to contribute services.
“It’s like a neighborhood association,” Sockin said. “If not enough people are willing to help to fix the fences, the community doesn’t do well.”
The study also found that decentralization is economically fragile. Centralized platforms are more likely to survive an economic downturn, because big investors can put in more money.
And finally, tokens draw speculators. A problem arises when a DAO allows users to buy and sell tokens. That activity can attract speculators who care more about profit than the community’s purpose.
The researchers point to cryptocurrencies, which were meant to be used for buying things. Instead, they get held as investments. Over time, Sockin’s models predict, a few entities tend to accumulate both tokens and control.
“The ability to get high returns has hurt cryptocurrencies as mediums for payment, because people don’t want to spend it,” he said. “They can easily take us back to being like Amazons and Apples, which is the whole issue we were trying to move away from.”
Read the McCombs Big Ideas story.
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Crypto Trading & Speculation
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Inflation is a tax. Rishi Sunak was right to contradict Laura Kuenssberg on this point earlier this month, and BBC Verify is wrong to assert that it is not a tax, simply because it is not announced as a formal charge or levy in the Budget.
Economists such as Tony Yates, the former head of monetary policy strategy at the Bank of England, routinely describe inflation as a tax, because it is the result of the government (via the central bank, which it owns) adding money to the economy. Everyone who uses the economy (so, everyone) effectively transfers money to the government through inflation because the more prices rise, the more revenue goes back to the Exchequer. “If you come across a textbook that mentions monetary policy, I guarantee that it will use the term ‘inflation tax’,” Yates says. “It’s a debate people had probably 60 or 70 years ago and concluded, let’s call inflation a tax and move on.”
In these terms you could also argue that smoking – another thing that Sunak rightly wants to reduce, and eventually eliminate – is a tax. The cost of smoking is for most smokers not optional, because nicotine (combined with other substances and flavourings) is one of the most addictive substances known to science; it typically takes more than 30 attempts to quit. It’s debatable how much of a choice people have in becoming addicted to smoking, given that most smokers (an estimated 80 per cent) become addicted as children, and the conditions for becoming addicted are clearly imposed by a person’s surroundings (people living in the most deprived areas of England are four times as likely to smoke as those in the least deprived areas).
Smoking is a tax because almost all of the money from smoking goes to the government – which receives, for example, £11.04 if you buy a pack of 20 cigs for £14.10 (£8.22 Tobacco Duty plus £2.82 VAT). Tobacco duty alone nets the government more than £10bn a year, while the VAT on tobacco products (of which the UK bought £21.3bn last year) would add up to another £4.3bn.
It might look as if, given the lack of fiscal headroom for tax cuts, this is a useful £14bn to have; the energy profits levy was introduced in May last year was expected to raise that much over five years. It isn’t, though, and the reason for this is that the smoking tax is highly regressive: the fifth of the population with the lowest incomes do almost a third of the smoking, paying almost £5,000 a year for a 20-a-day habit.
That’s a problem for the economy, because the spending of people on low incomes is the best kind of spending for growth. An extra pound that goes to a person on low income is almost guaranteed to go straight back into the real economy (they’ll spend it on goods and services), whereas an extra pound to the wealthy is much more likely to go into the housing market, a savings account or a financial market. If you want growth, start by increasing the disposable incomes of those most disposed to spend.
Previous academic studies have suggested the huge benefit to the economy of this extra spending: in 1995 researchers at Manchester University predicted a severe reduction in smoking (from 1990 levels, which were high) could create 150,000 new jobs (this is known as “induced employment”). In the US, smoking bans have been shown to dramatically increase revenues at bars and restaurants. The tobacco industry, meanwhile, employs just 5,000 people in the UK.
There are, of course, other reasons to ban smoking (heart disease, chronic respiratory disease, lung cancer, dementia), all of which have their own impacts on the economy and an overstretched health system. Smoking costs the NHS £2.6bn a year.
The problem with the current debate around smoking (and vaping) bans is that people defend it as a liberty. It isn’t: the whole point of selling a highly addictive drug (backed up by vast sums in marketing and lobbying, not to mention all the free samples given to children) is to deprive the consumer of choice.
It is more realistic (and perhaps more politically excusable) to call smoking what it is – a £14bn-a-year tax, paid largely by the people who can least afford it.
[See also: Vapes aren’t enough to stop people smoking]
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Inflation
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In this report, we look at the racial wealth divide at the median over the next four and eight years, as well as to 2043, when the country’s population is predicted to become majority non-white. We also look to wealth rather than income to reconsider what it means to be middle class. In finding an ever-accelerating gap, we consider what it means for the American middle class and we explore what policy interventions could reverse the trends we see today. We find that without a serious change in course, the country is heading towards a racial and economic apartheid state.
Key Findings:
- While households of color are projected to reach majority status by 2043, if the racial wealth divide is left unaddressed, median Black household wealth is on a path to hit zero by 2053 and median Latino household wealth is projected to hit zero twenty years later. In sharp contrast, median White household wealth would climb to $137,000 by 2053.
- If current trends continue, by 2020 median Black and Latino households stand to lose nearly 18% and 12% of the wealth they held in 2013, respectively, while median White household wealth increases 3%. At that point–just three years from now–White households are projected to own 86 times more wealth than Black households and 68 times more wealth than Latino households.
- The declining wealth of households of color is already taking a significant toll on the broader economy. The nation’s overall median wealth decreased nearly 20% from 1983 to 2013 ($78,000 to $64,000—a period when Black and Latino median wealth went down and White wealth slowly went up.
- Even earning a middle-class income does not guarantee a family middle-class economic security, according to the report. White households in the middle income quintile—those earning $37,201-61,328 annually—own nearly eight times as much wealth ($86,100) as Black middle-income earners ($11,000) and ten times that of their Latino counterparts ($8,600).
- This disconnect in income and wealth is visible across every socioeconomic level. The report found that on average, only Black and Latino households with an advanced degree have middle-class wealth or higher, while White households, on average, need only a high school diploma to attain that same level of wealth.
The report calls on the Trump administration and Congress to consider a range of policy options to help close the racial wealth divide. They include:
- Changing our tax code to stop subsidizing those who are already wealthy and start investing in opportunities for low-wealth families to build wealth. Specifically, the report recommends reforming the mortgage interest deduction and other tax expenditures, bolstering and expanding the federal estate tax, and creating a net-worth tax on multi-million-dollar fortunes.
- Protecting low-wealth families from wealth-stripping practices by strengthening the Consumer Financial Protection Bureau and closing the offshore tax shelters currently enabling the ultra-wealthy to hide their assets.
- Investing in bold new programs like Children’s Savings Accounts, automatic-enrollment retirement accounts, federal jobs guarantees, and a racial wealth divide audit of government policies.
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Inflation
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Social Security benefits can provide you with a stream of retirement income that is reliable. Deciding when to take benefits is an important question, especially if you’re married and hope to qualify for spousal benefits. If you’re already taking Social Security, you might be wondering if it’s possible to switch to a spousal benefit later. The answer depends on whether your spouse is receiving Social Security benefits yet.
A financial advisor can help you figure out what you qualify for and when the best time is for you to start taking benefits as part of your full retirement plan.
How Do Social Security Spousal Benefits Work?
Calculating Social Security benefits as a married couple is a bit different than doing it as a single person. When someone files for Social Security benefits, their spouse may be able to claim a spousal benefit. The benefit is based on their spouse’s contributions to Social Security and is capped at 50% of their benefit amount at full retirement age. For example, if they were to receive $2,200 per month at full retirement age, their spousal benefit would max out at $1,100 per month.
In order to receive spousal Social Security benefits, you must:
Be at least 62, the earliest age at which you can receive Social Security benefits OR
Be a caretaker for a child under age 16 or a child who’s receiving Social Security disability benefits
Be married for at least one year to someone who has filed for their retirement benefits
When you apply for spousal benefits, the Social Security Administration calculates your benefits based on your own work and earnings record as well. If you’re eligible to receive your retirement benefit as well as spousal benefits, then you’d get the higher of the two.
If your spouse hasn’t filed for retirement yet, then you can’t get spousal benefits. You can, however, file for your own retirement benefits if you’re at least 62 years old.
Taking Social Security at age 62 will reduce your benefit amount, below the amount you’d be entitled to if you had waited until you reached full retirement age. Delaying benefits until age 70, on the other hand, increases your benefit amount.
If you’re claiming spousal benefits and filing before your full retirement age, then your benefit amount would be roughly 30% instead of 50%. The only exception is if you’re claiming spousal benefits and you’re a caretaker for a child under 16 or a child with disabilities.
Can I Switch My Social Security Benefit to a Spousal Benefit?
Switching from your regular retirement benefit to a spousal benefit is something you might be interested in if you’re hoping to maximize Social Security benefits. Whether you can make this switch is determined by whether your spouse is already receiving benefits.
If your spouse is not receiving any retirement benefits yet, then you could technically take your regular Social Security benefit as early as age 62. When your spouse files for their benefit later you could switch to spousal benefits. That could potentially increase the total amount of benefits you receive as a couple if they’re waiting until age 70 to start taking benefits.
What if your spouse is already receiving their Social Security benefits? In that situation, the deemed filing rule applies. That rule dictates that when someone applies for their regular retirement benefit, they’re also approved for spousal benefits if they’re entitled to receive them. So again, you’d get the higher amount of the two.
If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.
Deemed Filing and Spousal Benefits
The Social Security Administration implemented the deemed filing rule to prevent double-dipping. Prior to the rule, if spousal benefits were higher than an individual benefit, the person could receive a combination of benefits equal to the higher benefit. Deemed filing keeps spouses from receiving one type of retirement benefit while also benefiting from delaying another type of benefit.
There are some exceptions to this rule, which would still allow you to apply for spousal benefits independent of your own retirement benefit. You might be eligible for an exception if you:
Were born before January 2, 1954
Are caring for a child under 16 or a child with disabilities
Are eligible for Social Security disability benefits
If you’ve already taken your retirement benefits and your spouse is receiving a spousal benefit, they can opt to switch over to their retirement benefit instead if they were born before January 2, 1954. In that situation, you could then apply for an additional spousal benefit on top of your regular benefit once their benefits kick in.
When Should You Claim Spousal Benefits?
Timing matters when deciding when to claim spousal benefits. Again, taking benefits before full retirement age can reduce the number of benefits that you’re eligible to receive. However, delaying spousal benefits beyond full retirement age won’t increase the benefit amount, the way that it would regular retirement benefits.
When deciding how to time spousal benefits or retirement benefits, it helps to look at the bigger picture and consider:
Life expectancies and how long you and your spouse anticipate relying on Social Security benefits
Health and the possibility of one or both of you needing long-term care at some point
Retirement budget and estimated expenses
Living longer, for example, might make delaying Social Security benefits more attractive. On the other hand, if you don’t have sufficient savings and investments then you might need the additional income that Social Security can provide sooner rather than later.
If you’re confused about when to take spousal benefits or whether you can switch your retirement benefit to spousal benefits, talking to a financial advisor can help. An advisor who’s well-versed in Social Security planning can help you to decide on the right time to claim those benefits.
The Bottom Line
It’s possible to switch your Social Security retirement benefit to spousal benefits if your spouse hasn’t filed yet. Whether it makes sense to do so can depend on your current ages and the ages at which each of you filed for benefits.
As a general rule of thumb, the longer you can delay filing for Social Security the better, as it can result in a larger benefit amount.
Retirement Planning Tips
Consider talking to your financial advisor about switching from your retirement benefit to spousal benefits if your spouse has plans to claim their own benefits. If you don’t have a financial advisor yet, finding one doesn’t have to be difficult. With SmartAsset’s free tool, matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Talking to your advisor can also help you to come up with a strategy for coordinating Social Security alongside other sources of income, such as a pension plan, annuity, 401(k) or government retirement benefits. Deciding when to tap into each income stream can affect your tax situation so it’s important to understand the best order for drawing down assets. An advisor can also offer advice on how to claim Social Security benefits as an ex-spouse if you’re now divorced.
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Personal Finance & Financial Education
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Sanghi Industries Shares Hit Upper Circuit After Ambuja Buys Additional Stake
Ambuja Cements Ltd. acquired an additional of 2.23% stake in Sanghi Industries on Dec. 5.
Shares of Sanghi Industries Ltd. soared to all-time high and were locked in upper circuit of 4.99% on Wednesday, as investors cheered Ambuja Cement Ltd.'s acquisition of additional stake in the company.
Ambuja Cements Ltd. acquired an additional of 2.23% stake in Sanghi Industries on Dec. 5. It previously held 54.51% stake in Sanghi Industries. Post the additional stake acquisition, Ambuja holds 56.74% of the voting share capital in Sanghi Industries.
Sanghi Industries and Incor Realty have agreed to revise the sale consideration of Rs 125 crore for non-core surplus land, on account of certain improvements in the land condition and certain other factors, according to an exchange filing.
Shares of Sanghi Industries were locked in upper circuit of 4.99% at Rs 135.70 apiece, as of 10:49 a.m. This compares to a 0.33% advance in the NSE Nifty 50.
The stock has risen 93.58% on a year-to-date basis. Total traded volume so far in the day stood at 0.6 times its 30-day average. The relative strength index was at 74.47, indicating that the stock may be overbought.
The two analysts tracking the company maintain a 'buy' rating. The average 12-month consensus price target implies an upside of 40%.
Disclaimer: AMG Media Networks Ltd. (AMNL) currently owns 49% stake in Quintillion Business Media Ltd. (QBML), the owner of BQ Prime Brand. AMNL has entered into an MOU to acquire the balance 51% stake in QBML. Post acquisition, QBML will become a wholly owned subsidiary of AMNL.
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Stocks Trading & Speculation
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PTC India To Be Debt Free Post PTC Energy Sale To ONGC, Says CMD
The divestment of PTC Energy is part of the strategy to exit the non-core business, said PTC India CMD Rajib K Mishra.
Power trading solution provider PTC India would soon achieve a debt-free status following the divestment of its arm, PTC Energy, to ONGC for an enterprise value of Rs 2,021 crore, according to a top official.
PTC India in October announced that the upstream firm ONGC had emerged as the successful bidder for acquiring its 100% stake in PTC Energy for an enterprise value of Rs 2,021 crore.
In an interview with PTI, PTC India Chairman and Managing Director Rajib K Mishra said, "With the transfer of PTC Energy's assets, the company would become virtually debt-free."
Mishra said the enterprise value of PTC Energy includes Rs 925 crore bid of the ONGC as well as over Rs 1,100 crore debt component which will be transferred to the oil company after the transaction is complete.
PTC India's outstandings have reduced drastically due to the Late Payment Surcharge scheme and it is now emerging as a company that does not take loans to meet its working capital needs, he pointed out.
He further said that PTC India is also coming out of non-core business and is focussing on becoming an asset-light firm.
The divestment of PTC Energy is part of the strategy to exit the non-core business, he said, adding that the company is more focussed on improving core margin per unit rather than on increasing trade volumes.
The data shows that per unit margin (including surcharge & rebate income) has increased from 6.07 paise per unit in the first half of the previous fiscal year to 7.38 paise per unit in the same period this year, reflecting an increase of 22%.
Similarly, the per unit margin has increased from 3.39 paise per unit in the first half of the last fiscal to Rs 3.54 paise per unit in the same period this year.
The standalone core operating margin of the company has increased by 8% in the first half of this fiscal to Rs 285 crore from Rs 234.85 crore in the same period a year ago.
PTC India Ltd, a government of India initiative, is the pioneer in starting a power market in India. The company has maintained its leadership position in power trading since its inception.
The trading activities involve long-term trading of power generated from large power projects including renewables as well as short-term trading arising as a result of supply and demand mismatches.
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India Business & Economics
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More Americans say they can never retire
A growing share of working Americans don’t think they will ever retire, recent surveys suggest.
Retirement is a time-honored life stage and a near-universal expectation in working America. Yet, a comfortable retirement requires savings, and many workers fear they don’t have enough.
In a July poll conducted jointly by Axios and Ipsos, 29 percent of workers under 55 answered a retirement query with, “I don’t think I will ever retire.”
Asked why not, three-quarters of the never-retire group said they could not afford to stop working. A smaller share said they didn’t want to.
“How to make the dollars and cents of retirement work is a constant balancing act for those who are retired and Americans hoping to reach that milestone one day,” said Clifford Young, president of Ipsos Public Affairs.
Another survey, from the Employee Benefit Research Institute (EBRI), found that one-third of workers now expect to retire at 70 or later, or never.
A third report, from the Transamerica Center for Retirement Studies, found that 40 percent of Generation X workers, and nearly half of boomers, expect to retire after 70, or not at all.
Retirement fears seem to be rising. In the EBRI survey, the share of workers planning to delay retirement rose to 33 percent in 2023 from 29 percent in 2022 and 26 percent in 2021.
The summer of 2023 might seem an odd moment for Americans to feel short of retirement funds. Nearly three-quarters of all 401(k) money sits in stocks, and the stock market is booming, although this week has been rocky.
But the full story of American retirement planning is more complicated.
One big reason workers are worrying about retirement is inflation, which surged in 2021 and 2022 after many years of relatively flat prices.
Another factor is diminished retirement savings. The average 401(k) lost about 20 percent of its value in 2022, according to investment-house data.
Both stocks and bonds plunged in 2022. That’s not supposed to happen: When stocks fall, bonds usually rise, and vice-versa. Last year was a bizarre outlier, triggered by the inflation crisis and the corrective campaign of federal interest-rate hikes.
The nation’s retirement accounts are recovering, but they are not fully healed. The average IRA held $109,000 in the first quarter of this year, down from $127,000 at the same time last year, according to Fidelity Investments.
More than two-fifths of baby boomers in the 55-64 age group have no retirement savings, Census data show. Many work for small companies that don’t offer retirement savings, or work for themselves, or lack the income to put money away.
The median retirement savings account in that age range has a balance of $71,168, according to a NerdWallet analysis.
Common wisdom suggests that’s not nearly enough. Workers believe they will need about $1.8 million for a comfortable retirement, according to a new Charles Schwab survey.
Not surprisingly, many Americans don’t think they will have sufficient money to live comfortably in retirement. In the 2023 EBRI survey, 36 percent of respondents said they have little or no confidence in financial security after retirement.
That data point, too, is creeping up. A year ago, 27 percent of workers lacked retirement confidence.
Transamerica research found that only 17 percent of Generation X workers are “very confident” of a comfortable retirement. The oldest people in that cohort are nearing age 60.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Personal Finance & Financial Education
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Subsets and Splits
List Unique Topics
Simple retrieval of unique topics from the dataset, useful for basic exploration but lacks deeper insights.