in Economy
Excess savings are back, maybe
Receive free Global Economy updatesWe’ll send you a myFT Daily Digest email rounding up the latest More
Aurelia Butler
More stories
- in Economy
IMF calls on governments to impose carbon taxes or face ‘unsustainable’ fiscal hit
Receive free International Monetary Fund updatesWe’ll send you a myFT Daily Digest email rounding up the latest More
Bitcoin and Associated Stocks Rise as Smiledirectclub Files for Bankruptcy
Stocks linked to cryptocurrencies have also benefited from this wave of optimism. Bitcoin miners Marathon Digital and Riot are projected to open 6.6% and 7.1% higher respectively. These two entities typically demonstrate parallel movement in their stock prices.Electric vehicle manufacturer Rivian (NASDAQ:RIVN) also saw its stock price set to continue its upward trajectory on Monday, following a 17.9% increase over the past week. The stock was trading 3.8% higher in the premarket on Monday. This rise is attributed to an upgrade from analysts at Baird, who backed Rivian after the company reported production of 14,000 vehicles last quarter, a significant jump from 4,400 the previous year and zero vehicles in 2021. Despite this production increase, Rivian recorded an operating loss of $2.7bn.In contrast to these rising stocks, SmileDirectClub (NASDAQ:SDC) is set to open nearly 60% lower when the US markets begin trading later on Monday due to news that emerged over the weekend of the company filing for Chapter 11 bankruptcy. This type of bankruptcy allows a company to continue operations while devising a repayment plan for its creditors.The company’s founders plan to reinvest $20m into the business in an attempt to revive it after years of struggling to generate profit and being embroiled in a patent dispute. The company, which produces plastic mouth guards that straighten teeth, listed $499m in assets and over $1bn in liabilities in its bankruptcy petition. Its 2019 IPO had valued the company at $8.9bn.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More
Sam Bankman-Fried’s fraud trial: How will he defend himself?
NEW YORK (Reuters) – Sam Bankman-Fried will likely defend himself at his fraud trial, due to begin on Tuesday, by arguing he did not think the use by his FTX cryptocurrency exchange of customer funds was improper and by challenging the credibility of those who say otherwise.The arguments, which defense lawyers have hinted at in court filings, could help the 31-year-old former billionaire try to defeat charges he stole a fortune from FTX customers by arguing he lacked criminal intent despite making mistakes that led to the now-bankrupt exchange’s November 2022 collapse.But any testimony from others suggesting Bankman-Fried knew his hedge fund, Alameda Research, improperly borrowed FTX customers’ money to pay its debts, make investments, and lend billions to Bankman-Fried and other executives could undermine the argument that he acted in good faith, experts said.A spokesperson for Bankman-Fried declined to comment. He is currently jailed in Brooklyn.Bankman-Fried has pleaded not guilty to seven counts of fraud and conspiracy. He has long acknowledged failing to manage risk at FTX, but denied prosecutors’ claims he stole billions of dollars in FTX customer deposits to plug Alameda’s losses.”We got overconfident and careless,” Bankman-Fried wrote on X, formerly known as Twitter, on Nov. 16, five days after FTX filed for bankruptcy. “And problems were brewing. Larger than I realized.”In an interview with the New York Times two weeks later, he acknowledged Alameda had borrowed money from FTX, but said he was not aware of how large those debts had grown.In September court papers, Bankman-Fried’s lawyers said he had a “good faith belief” that the manner in which FTX and Alameda handled customer funds was permissible. They said FTX’s terms of service did not restrain its use of customer deposits, as long as it honored withdrawal requests.FTX ultimately halted withdrawals in November as customers raced to pull out their money due to concerns over commingling of funds between the exchange and hedge fund. But Bankman-Fried is likely to argue that was due to his failures running the business, not any theft of funds, said Jordan Estes, a former federal prosecutor.”You have to set the stage that this was ultimately a run on the bank that was completely unexpected,” said Estes, now a partner at law firm Kramer Levin.Prosecutors with the U.S. Attorney’s Office in Manhattan have pointed to a section of the FTX terms of service stating users retain the title to their digital assets at all times, and argued Bankman-Fried falsely said in public statements – including FTX commercials – that the exchange properly maintained customer assets.U.S. District Judge Lewis Kaplan barred Bankman-Fried from calling an expert witness to share his interpretation of the terms of service, but did not rule out letting the defendant cross-examine witnesses about the terms.’AN INSIDER’S PERSPECTIVE’Testimony from former colleagues who were close to Bankman-Fried could challenge his claim of good faith. Three former members of his inner circle – former Alameda Chief Executive Caroline Ellison and former FTX executives Gary Wang and Nishad Singh – have pleaded guilty and are set to testify against him at trial.”Cooperating witnesses like Caroline Ellison and Gary Wang … are able to provide an insider’s perspective on what was happening behind closed doors, which can be very powerful to show intent,” said Tim Howard, a former federal prosecutor in Manhattan and now a partner at law firm Freshfields.Prosecutors are seeking to play jurors a recording of an Alameda meeting in which Ellison told colleagues that Bankman-Fried approved the use of customer funds. Prosecutors say Bankman-Fried told Wang to alter FTX’s code to let Alameda accrue a negative balance on the exchange, which other users could not do.Bankman-Fried is likely to argue that his former colleagues are motivated to falsely implicate him in the hope of winning a more lenient sentence, a common tactic in criminal cases involving cooperating witnesses, experts said.His lawyers have also argued in court papers that others in the cryptocurrency sector used customer assets in a similar way, contributing to his good faith belief that FTX’s treatment of customers’ deposits was appropriate.Kaplan on Sept. 26 declined to rule on a request by prosecutors to bar Bankman-Fried from introducing evidence of how other cryptocurrency companies used customer funds.In a Sept. 28 court hearing, he said that even though the case involves some “arcane” subjects such as cryptocurrency, “the issues in this case are pretty straightforward.””Was there fraud,” Kaplan said, “or wasn’t there?” More
- in Economy
How a £25 payment is turning Scotland into a European pioneer in reducing child deprivation
For Bonnie Quinn, a cash payment of £25 a week has proved to be a lifeline during the UK’s cost of living crisis.A single mother from Polbeth, south west of Edinburgh, the Scottish child payment has enabled her to afford packed lunches for her son, who rejects school meals because of his autism, and travel to her job as a catering assistant.“[It] has really helped just for me to be able to get to work and make sure that my little boy had everything when I was at work,” Quinn said of the government assistance she has received since 2021. “It has definitely been a lifesaver.”Supporters of the programme say the money is reducing deprivation among Scottish children to levels below the rest of the UK. They also say the initiative could act as a model for cash disbursements in combating poverty globally.But few people outside of Scotland are aware of the “bold policy intervention”, said Liz Ditchburn, an honorary professor at the Adam Smith Business School at Glasgow university and a former civil servant who held senior positions with the Scottish and UK governments.“I’ve lost track of the number of times I’ve mentioned the Scottish child payment to colleagues and friends based elsewhere in the UK . . . and been told they’ve never heard of it,” she wrote in a blog posted by the David Hume Institute, a think-tank.Quinn’s six-year-old son is one of 316,000 children who have benefited from the payment, which Edinburgh said has helped to lift about 90,000 youngsters out of poverty this year. Paid in addition to other welfare benefits received by families with children under 16 years, the payment means a four-child family is entitled to £5,200 a year that is not available to peers in England. Each child aged under 16 in Scotland is entitled to £25 a week on top of a “qualifying” welfare benefit, such as universal credit or income support. The child payment was introduced in 2021 at £10 a week per child, and is one of seven welfare benefits specific to Scotland. It was raised to £20 in April 2022 and to £25 in November. Supporters of Scottish independence believe its success is an example of how the country could do things differently if it broke with the UK.Evidence that the payment, which will cost the government £405mn in 2023-24, according to official estimates, is cutting poverty could boost the chances of the crisis-hit Scottish National party at the by-election this week in Rutherglen and Hamilton West. Morag Treanor: ‘This is a game-changer for Scotland’ More
- in Economy
US has the trade tools needed for China’s EVs — but it must use them
Receive free Electric vehicles updatesWe’ll send you a myFT Daily Digest email rounding up the latest More
- in Economy
Donald Trump to appear in New York court for civil fraud trial
“I’m going to Court tomorrow morning to fight for my name and reputation,” Trump said on his Truth Social account on Sunday.Trump lashed out in his post at New York state Attorney General Letitia James and the judge in the case, who Trump called “unfair, unhinged, and vicious in his pursuit of me”.In a decision last week, New York state Judge Arthur Engoron found that Trump and his family business fraudulently inflated the value of his properties and other assets to suit their business needs.Trump and the other defendants have argued that they never committed fraud.”He values Mar-a-Lago, in Palm Beach, Florida, at 18 Million Dollars, when it is worth 50 to 100 times that amount. His valuations are FRAUDULENT in pursuit of Election Interference, and worse. THIS WHOLE CASE IS SHAM!!! See you in Court – Monday morning,” Trump said in his post, referring to the judge and the case.Trump had been sued in September 2022 by state attorney James, who accused him, his adult sons, the Trump Organization and others of “staggering fraud” in how they valued properties.James is seeking at least $250 million in penalties, a ban on Trump and his sons, Donald Jr and Eric, from running businesses in New York, and a five-year commercial real estate ban against Trump and the Trump Organization.The case is unrelated to the four criminal indictments that Trump faces, including for trying to overturn the 2020 presidential election. More
- in Economy
Top central banks’ rate hike push fizzles out in September, EM parts ways
LONDON (Reuters) – Central banks across major developed economies delivered what looked like a last gasp set of rate hikes in September, while economies in both Latin America and emerging Europe were on track for continued easing.September saw nine of the central banks overseeing the 10 most heavily traded currencies hold rate setting meetings, though just three – Sweden, Norway and the European Central Bank – hiked rates, by a cumulative 75 basis points. The U.S. Federal Reserve, the Bank of England as well as Australia, Canada and Japan all opted for no change, Reuters data showed. New Zealand’s central bank did not meet. September’s moves compare to two hikes across four meetings in August – traditionally a more quiet month for monetary policy decisions – and take the 2023 year-to-date tally for G10 central banks to a total of 1,150 bps across 36 hikes.”We have reached cruising altitude for the central banks – at 4% for the ECB and 5.25%-5.50% at the Fed, I do not see any more hikes in the near future,” said Bjoern Jesch, global chief investment officer at DWS Group.”Policy is restrictive right now – it will bring down growth, but not in a massive way.”Markets have seen some seismic shifts in recent weeks after being forced to adjust to the ‘higher for longer’ mantra propagated by major central banks. Diverging rate trajectories were on full display in emerging economies where 16 out of the 18 central banks in the Reuters sample held meetings in September. Latin America and central and eastern Europe are at the forefront of the easing cycle, with Brazil, Chile and Poland lowering benchmarks, taking the cumulative amount of rate cuts to 200 bps for September, and the annual total of cuts to 420 bps across eight moves lower. Hungary also reduced one of its rates – the one-day deposit rate by 100 basis points to 13% last week – aligning it with the main base rate which it left unchanged.However, the recent jump in oil prices has added to uncertainty over how fast the easing cycle could progress. “Most policy makers are quite cautious,” said Kaan Nazli, a portfolio manager at asset manager Neuberger Berman. “I don’t think we’re back to the point where these central banks will start tightening again..but if you are a central banker, especially of an oil importing country, you do become more cautious.” On the other hand, a select number of central banks in emerging markets were still in hiking mode. Turkey, which is struggling with inflation pressures and a currency that is sliding from one record low to the next, delivered another bumper 500 bps rate hike. Russia raised its benchmark by 100 bps while Thailand also hiked rates in surprise decision, taking the monthly tightening tally across developing economies to 625 bps in September and the total in the year-to-date to +3,475 bps through 30 hikes. More
