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    German government reaches deal to reduce deficit target after 2025 budget debacle

    BERLIN (Reuters) -Germany’s coalition government reached a deal on Friday to narrow its 2025 budget deficit target from 17 billion euros ($19 billion) down to 12 billion euros, in a compromise aimed at salvaging the spending plan after the original proposals fell apart.The cabinet approved its 2025 budget in July after months of wrangling but left open how to reduce the gap between projected spending and revenue. Finance Minister Christian Lindner said then that the government’s intention was to reduce the shortfall to 9 billion euros.”It would be better if it was in single-digit figures,” Lindner said on Friday about the newly agreed target of 12 billion euros. “This is somewhat higher than I would wish for as finance minister.”The government agreement paves the way for a draft budget plan to be submitted to parliament on Friday, keeping the legislation on track for approval by the end of the year.Under the deal, the infrastructure division of Deutsche Bahn will be given 4.5 billion euros in equity, which will replace subsidies that were included in the previous version of the draft budget.In addition, Deutsche Bahn will receive a loan of 3 billion euros from the government, which can be used to redeem infrastructure bonds previously issued on the market. “Compared to the July decision, we have decided to invest in transport infrastructure with additional capital and loans for Deutsche Bahn and have made further general savings,” German Chancellor Olaf Scholz said on Friday about the agreement. The draft budget for 2025 includes a total of 15.1 billion euros in investments for rail infrastructure. The equity injection and the loan do not count towards the debt brake, which limits public borrowing to 0.35% of gross domestic product. “The debt brake is therefore respected and all the measures that we have now introduced, for example giving loans and equity to the railway, are designed in such a way that they are absolutely in line with the constitution,” Lindner said.The constitutionality of the different options to narrow the gap was carefully studied, as the government was trying to avoid the chaos of November 2023, when a court ruling blew a 60 billion-euro hole in the public finances and threw the government’s financing framework into turmoil.Options under scrutiny in July had included converting the grants of national rail operator Deutsche Bahn and the highway company into loans, as well as using extra funds from state bank KfW. The advisory board to the Finance Ministry had said those options were problematic and new options had to be found. The government will also get 300 million euros extra from energy utility Uniper, as the company will pay 2.9 billion euros instead of 2.6 billion as it has set aside more funds for the payment obligation to the federal government for aid received in 2022.Other measures include a 200-million-euro reduction in the provision for the loss of tax revenue from the European Union energy crisis fund. “The budget legislators can now begin their deliberations on next year’s budget right on time after the parliamentary summer break,” Scholz said. The Bundestag will begin debating the budget plan in the second week of September. The Budget Committee then carries out a final review on Nov. 14, and the budget should pass both houses of parliament before the end of the year.Lindner said on Friday that he expected the projected budget gap could be further reduced by November.($1 = 0.9080 euros) More

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    Bitcoin, cryptocurrencies are ‘losing their luster’: Wolfe Research

    The report highlights a clear divide between cryptocurrencies and equities, with equities outpacing cryptos since March. Wolfe points out that while Bitcoin has held steady in absolute terms, it’s stuck in a downward trend, with the easiest path likely being further decline. “There are a number of factors at play, and at the moment all seem to be working against Crypto. This is a much different backdrop than years past when excess liquidity and sky-high enthusiasm sent Crypto prices soaring to new highs,” the report added.While Wolfe Research remains neutral on Bitcoin until a decisive move occurs, it expects range-bound trading to continue until there’s a decisive breakout in either direction. After reaching a record high of $73,798 in March, Bitcoin has pulled back, with repeated attempts to rally back to that peak falling short. Events that once sparked enthusiasm, like inflows into US Bitcoin ETFs or hopes for future Federal Reserve interest-rate cuts, now seem to have less impact.“Price has chopped around and worked incrementally lower since peaking in March. Strong conviction lacks in either direction, but as trend followers, it is becoming clear to us that the path of least resistance is to the downside,” Wolfe Research analysts explain.The analysis also highlights the struggles of Ethereum, which saw a breakdown last week, suggesting further downside is likely. Moreover, Wolfe Research’s outlook suggests that the crypto market may face more challenges ahead, with key assets showing signs of weakening momentum.“Much like the Ai trade, which we also think has seen its best days for now, Crypto looks to have run out of steam. We only anticipate this trend continuing as Alt coins across the board break down to fresh lows,” the report reads. More

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    Teething troubles in the green transition

    $75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

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    Polkadot to attend Web3 Summit after five-year break

    Web3 Summit makes its return after a five-year break. Hosted by the Web3 Foundation, the event will take place at the historic Funkhaus Berlin, attracting over 60 speakers and more than 40 talks.Per its official agenda, the Web3 Summit will center around key developments in blockchain, decentralized technologies, and Web3 innovation. Notable speakers include Gavin Wood, Ethereum co-founder, and Juan Benet, the creator of IPFS and Filecoin, who will offer their perspectives on the future of the decentralized web.Participants can look forward to an array of activities, including workshops, presentations, and a 72-hour hackathon, the Blockspace Symmetry Hackathon. This hackathon offers developers the chance to compete for top grants via a two-milestone prize structure.In addition to the main events, the Web3 Summit will host community-driven activities such as an opening party on August 19 and a happy hour on August 20. Attendees can also claim their Proof of Attendance Protocol (POAP) badges, which are powered by dynamic NFT technology on Polkadot.According to its recent treasury report, Polkadot allocated $87 million worth of DOT to various initiatives in the first six months of 2024. Marketing and outreach activities took the largest share of spending, with over $36 million allocated to advertisements, events, meetups, conference hosting, and other initiatives. Doubling the pace of the previous six months, these expenses were justified to attract new users, developers, and businesses to the Polkadot ecosystem.After wrapping up Polkadot 1.0 in July 2023, the blockchain community is now preparing for Polkadot 2.0, which is supported by advanced technologies like Async Backing, Elastic (NYSE:ESTC) Scaling, and Agile Coretime. These upgrades allow Polkadot to function similarly to cloud services like AWS or Azure. High-demand projects will benefit from increased transaction throughput, while early-stage projects can control costs by only paying for the coretime they actually need. More

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    California pot farmers feel the heat from low pricing, wildfires

    (Reuters) – Small-scale cannabis farmers in California are calling it quits, crushed by crop damage from devastating wildfires and sliding prices, and industry experts expect the exodus to continue near-term in the largest pot market in the United States.Unlike for traditional crops, pot cultivators cannot claim government monetary support for damage from extreme weather because cannabis remains on the federal list of controlled substances.”These operators don’t have the ability to go to FEMA (Federal Emergency Management Agency) to get reimbursement for losses in a federal disaster zone because of the federal classification,” said Anthony Coniglio of NewLake Capital Partners.California has also seen prices plummeting since 2021 due to oversupply.The Golden State has witnessed an influx of new producers as demand peaked during the pandemic, when wholesale flower prices went above $2,000 per pound, but the buzz has waned and prices are currently around $1,200 per pound.”The lower price point of wholesale doesn’t create enough margin for people to take on risk of wildfires. As we continue to see elevated risk of wildfires, fewer people will invest in outdoor grows,” Coniglio said.Climate change is also raising insurance costs for cannabis farmers, who are already restricted to a limited pool of insurers.”We’ve seen increased costs, such as electricity, water, and labor, which has not pushed through to crop pricing… pressuring margins and causing more farmers to exit,” said Morgan Paxhia, co-founder and managing partner, Poseidon Investment Management.Many have surrendered cultivation permits and left Lake County in northern California, a once popular growing region, several farmers told Reuters.In Q1 2024, active business licenses declined over 20% year-over-year, according to cannabis data firm CRB Monitor.California sold $5.3 billion worth of cannabis products in 2023, according to the state’s tax department, versus nearly $6 billion recorded in 2021, losing the top spot to Colorado in the first quarter this year.”Industry dynamics continue to pose significant challenges for legal cannabis operators in California. As a result, other state markets are seen as more attractive,” said Verano founder and CEO George Archos. More

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    UK rental affordability at worst level in more than 7 years

    $75 per monthComplete digital access to quality FT journalism with expert analysis from industry leaders. Pay a year upfront and save 20%.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print edition More

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    Bangladesh student protesters plan new party to cement their revolution

    DHAKA (Reuters) -Student demonstrators who ousted Prime Minister Sheikh Hasina have rejected calls from Bangladesh’s two main political parties for quick elections and are considering creating their own party to cement in place reforms, according to interviews with four protest leaders.Their hope: to avoid a repeat of the last 15 years, in which Hasina ruled the country of some 170 million with an iron fist. That was until June, when a handful of students – most in their early-to-mid 20s – began organising demonstrations against a law reserving coveted government jobs for certain segments of the population.Within weeks, Hasina’s government was swept away by an upswell of popular anger at the brutality of its crackdown on anti-quota protesters. At least 300 people were killed in the single largest bout of violence since Bangladesh’s war of independence from Pakistan in 1971.The movement was hailed as a Gen Z revolution, spurred by young Bangladeshis’ anger at years of jobless growth, allegations of kleptocracy, and shrinking civil liberties.An interim government headed by Nobel Peace laureate Muhammad Yunus – which includes two student leaders in senior positions – now runs the country. For most of the past three decades, Bangladesh has been governed either by Hasina’s Awami League or the Bangladesh Nationalist Party of her rival Khaleda Zia, both of whom are in their 70s.Student leaders are discussing forming a political party to end the duopoly, said Mahfuj Alam, who chairs a committee tasked with liaising between the government and social groups such as teachers and activists.A decision would be made in about a month, the 26-year-old law student told Reuters, adding that protest leaders wanted to consult widely with citizens before deciding on a platform.Details of the students’ plans for their movement’s political future have not previously been reported. “People are really tired of the two political parties. They have trust in us,” he said, at the gates of Dhaka University’s Arts Faculty.Tahmid Chowdhury, another student coordinator who helped bring down Hasina, said there was a “high chance” they would form a political party. They were still working out their program, though he said it would be rooted in secularism and free speech. “We don’t have any other plan that could break the binary without forming a party,” said the 24-year-old graduate student in world religion.The student leaders in interim government have not specified what policies they intend to pursue, beyond sweeping institutional changes – such as reforming the electoral commission handpicked by Hasina – to avoid another spell of authoritarian rule.”The spirit of the movement was to create a new Bangladesh, one where no fascist or autocrat can return,” said Nahid Islam, 26, a key protest organiser who sits in Yunus’ cabinet. “To ensure that, we need structural reforms, which will definitely take some time.”The government is not considering calls from the Awami League and BNP to hold fresh polls as early as fall, said Islam, who holds the telecommunications portfolio.The regime change has forced out the chief justice, the central bank governor and the police chief who oversaw the crackdown on the students, among other officials. A spokesperson for Yunus, who has said he is not keen on holding elected office, did not return a request for comment. Touhid Hossain, a career diplomat serving as Yunus’ de facto foreign minister, told Reuters the students had not discussed their political plans with the technocrats. But he added: “the political scenario is going to change because we have basically excluded the young generation from politics.”   Yunus, an 84-year-old economist whose microcredit programs helped lift millions globally out of poverty, wields moral authority but there are doubts over what his administration can achieve.”We are totally in uncharted waters, both legally and politically,” said Shahdeen Malik, a constitutional expert. “The powers of this interim government are not defined because there is no constitutional provision.” Reuters interviewed more than 30 people, including key student leaders, Hasina’s son and adviser Sajeeb Wazed, opposition politicians and army officers to assess the divisions left in the wake of the protests and the prospects for the new government.Hasina, whose son said she hopes to return to Bangladesh, couldn’t be reached for comment. “The political parties are not going anywhere. You cannot wipe us out,” Wazed told Reuters from the United States, where he lives. “Sooner or later, either the Awami League or the BNP will be back in power. Without our help, without our supporters, you are not going to be able to bring stability to Bangladesh.”COLLABORATORSOn July 19, as Hasina’s supporters and police battled student demonstrators, authorities detained three of the movement’s most important leaders: Islam, Asif Mahmud and Abu Baker Mojumder. Mojumder told Reuters that he was sedated and beaten by law enforcement. The treatment, he said, solidified his view that Hasina had to go.The new police chief Mainul Islam did not respond to Reuters’ questions for this story.Previous protests had fizzled when leaders were detained but this time demonstrations raged on. Expecting to be arrested, the core of about two dozen coordinators had formed a structure in which they were supported by layers of other student-activists, said Islam, a veteran of previous protests.Missteps by Hasina, meanwhile, fuelled public anger against her. While the students had protested for more than a month, they were largely limited to public university campuses. Then, on July 14, Hasina held a news conference.Half an hour in, she half-smilingly referred to the demonstrators as “razakars”. The pejorative describes people who collaborated with Pakistan during the 1971 war, which she contrasted with descendants of freedom fighters for whom many government jobs would be reserved.The comment ignited furious mass protests.At Dhaka University, male demonstrators were joined by female students who broke out of their five halls of residences, whose gates are locked in the evenings, said Umama Fatema, 25, a female student coordinator.The next day, the Awami League’s student wing moved to suppress demonstrations and clashes erupted, with sticks, iron rods and stones for weapons. ‘STOP THE VIOLENCE’The escalation in violence that week expanded the demonstrations from public campuses to private institutions, said Nayeem Abedin, a 22-year-old coordinator at the private East-West University. “We had a responsibility to come out to the street for our brothers,” he said.Students at such institutions typically come from Bangladesh’s middle class that expanded rapidly during the robust economic growth that Hasina oversaw over much of her term. “It felt like a turning point,” said Islam. “Private university students joined in, and unexpectedly, so did many parents.”At least 114 people were killed by the end of that week, with hundreds more hurt. The scale of the crackdown shocked even some in the Awami League elite.”I also told my mother: ‘no, we need to immediately tell Chhatra League not to attack, stop the violence,'” said Wazed, without providing further details. “We suspended the police officers that shot at students.”At least two officers were suspended in early August after a video depicting the killing of a student went viral online. The student leaders plan to prosecute police and paramilitary accused of abuse.On July 21, Bangladesh’s Supreme Court, whose judges were effectively appointed by Hasina, ruled that 93% of state jobs should be open to competition, meeting a key demand of the students. The demonstrations continued to grow.Hasina declared an indefinite curfew on Aug. 4, a day after at least 91 people were killed. The army told the prime minister that evening it would not enforce the lockdown.”The army chief didn’t want more bloodshed,” said one serving officer, who spoke on condition of anonymity because he wasn’t authorised to talk to media. “People from all walks of life were joining.”The next day, as crowds marched to her official residence, Hasina fled to India.  More

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    US single-family housing starts tumble in July

    Single-family housing starts, which account for the bulk of homebuilding, tumbled 14.1% to a seasonally adjusted annual rate of 851,000 units last month, the Commerce Department’s Census Bureau said on Thursday. Homebuilding has now declined for five straight months.Single-family housing starts dropped 14.8% on a year-on-year basis in July. The housing market has stepped down following a spring resurgence in mortgage rates. Residential investment, which includes home building, contracted in the second quarter after rising for three consecutive quarters. Though mortgage rates have since retreated amid optimism that the Federal Reserve will cut interest rates next month, a jump in new housing inventory to levels last seen in early 2008 could limit any rebound in housing starts. New construction had been buoyed by a dearth of previously owned homes for sale. But the stock of existing homes has also risen from historic lows. The average rate on the 30-year fixed-rate mortgage has declined to 6.45% from a peak of 7.22% in May.A National Association of Home Builders survey on Thursday showed homebuilder sentiment fell to an eight-month low in August. Builders blamed “challenging housing affordability conditions” for the fourth straight monthly drop in confidence.Permits for future construction of single-family homes slipped 0.1% to a rate of 938,000 units in July. More