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    How Inflation Affects Turkey's Struggling Economy

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    Even before the pandemic, Turkey was trying to ward off financial meltdown. The crisis has accelerated as President Recep Tayyip Erdogan has doubled down on his unorthodox policies.The signs of Turkey’s disastrous economy are all around. Long lines snake outside discounted bread kiosks. The price of medicine, milk and toilet paper are soaring. Some gas stations have closed after exhausting their stock. Angry outbursts have erupted on the streets.“Unemployment, high living costs, price increases, and bills are breaking our backs,” the Confederation of Progressive Trade Unions said last month.Even before the coronavirus pandemic and supply chain bottlenecks began walloping the world’s economies nearly two years ago, Turkey was trying to ward off a recession as it struggled with mountainous debt, steep losses in the value of the Turkish lira, and rising inflation. But in recent weeks that slow-moving train wreck has sped up with a ferocious intensity. And the foot that’s pushing hardest on the accelerator belongs to the country’s authoritarian president, Recep Tayyip Erdogan.Why is this happening now?Turkey’s economic problems have deep roots but the most recent crisis was caused by Mr. Erdogan’s insistence on lowering interest rates in the face of galloping inflation — precisely the opposite tactic of what economists almost universally prescribe.Mr. Erdogan, who has ruled Turkey for 18 years, has long resisted that particularly painful prescription, but his determination to keep cutting interest rates even as the country’s inflation rate tops a staggering 21 percent appears to be pushing Turkey past a tipping point.Normally, investors and others look to a nation’s central bank to keep inflation in check and set interest rates. But Mr. Erdogan has repeatedly shown that if Turkey’s central bankers and finance ministers won’t do what he wants, he will get rid of them, having already fired three in two years.The value of the lira has nose-dived in recent weeks, and on Monday hit a record low — reaching 14.3 to a dollar, from about 7 to the dollar earlier this year — pushing some businesses and households that have borrowed money from abroad into bankruptcy. The currency’s steep decline means prices for imported goods keep rising. Shortages are common and people are struggling to afford food and fuel. The youth unemployment rate is 25 percent. The president’s popularity is sinking and his opponents have become emboldened.With an election coming up in 18 months, Mr. Erdogan seems convinced that his strategy will enable the Turkish economy to grow out of its problems. Most economists, however, say a crash is more likely.When did Turkey’s economic problems begin?“Interest rates make the rich richer, the poor poorer,” the Turkish President Recep Tayyip Erdogan said in a recent interview.Antonio Masiello/Getty ImagesMr. Erdogan’s aggressive pro-growth strategies have worked for him before. Since he began governing Turkey in 2003, he has undertaken expensive infrastructure projects, courted foreign investors and encouraged businesses and consumers to load up on debt. Growth took off.“Turkey was considered to be an economic miracle” during the first decade of Mr. Erdogan’s rule, said Kadri Tastan, a senior fellow at the German Marshall Fund based in Brussels. Poverty was sliced in half, millions of people swelled the ranks of the middle class, and foreign investors were eager to lend.But Mr. Erdogan’s relentless push to expand became unsustainable. Rather than pull back, however, the giddy borrowing continued.The increasingly unstable economy was caught in a bind. High interest rates attracted foreign investors to accept the risk and keep lending, but they would stunt growth. Mr. Erdogan was unwilling to accept that trade-off, and continued to support cheap borrowing as inflation took off and the currency’s value declined.And he insists that high interest rates cause inflation — even though it is low interest rates that put more money into circulation, encourage people to borrow and spend more, and tend to drive up the prices.“Erdogan has his own economic philosophy,” said Henri Barkey, a fellow at the Council on Foreign Relations.The economy seesawed between these conflicting goals until 2018 when growing political tensions between Turkey and the United States caused the value of the lira to topple.The political standoff eased, but the underlying economic problems remained. Mr. Erdogan kept pushing state banks to offer cheap loans to households and businesses and the borrowing frenzy continued. “Things never really normalized,” said Selva Demiralp, an economist at Koc University in Istanbul.When the chief of the central bank resisted pressure from the president to lower the 24 percent interest rate in 2019, Mr. Erdogan fired him, the beginning of a pattern.To prop up the lira, Turkish banks began selling off their reserves of dollars. Those stocks of dollars are now running low.The global economic slowdown caused by the coronavirus pandemic has added to the strains by limiting the sales of Turkish goods around the world. Tourism, which was one of Turkey’s most dynamic sectors, has also been badly hit.What is President Erdogan’s approach to interest rates and what do economists say?A protest against the economic policies of the government in Istanbul on Sunday.Murad Sezer/ReutersBy keeping interest rates low, Mr. Erdogan argues that consumers will be more eager to keep shopping and businesses will be more inclined to borrow, invest money in the economy and hire workers.And if the lira loses value against the dollar, he says, Turkey’s exports will simply become cheaper and foreign consumers will want to buy even more.That is true to some degree — but it comes at a heavy price. Turkey is quite dependent on imports like automobile parts and medicine, as well as fuel and fertilizer and other raw materials. When the lira depreciates, those products cost more to buy.At the same time, Mr. Erdogan’s disdain for conventional economic theory has scared off some foreign investors, who had been eager to loan Turkish businesses hundreds of millions of dollars but now are losing faith in the currency.And the lower rates go, the faster inflation rises. Over the past year, the lira has lost more than 45 percent of its value, and the official inflation rate has surged past 20 percent, although many analysts believe the rate on the streets is much higher.By comparison, an inflation rate of 6.8 percent so far this year in the United States (the highest in nearly four decades) and a 4.9 percent rate in the eurozone are enough to set off alarms.In Turkey, skyrocketing prices are causing misery among the poor and impoverishing the middle class.“We can’t make a living,” said Mihriban Aslan, as she waited on a long line to buy bread in Istanbul’s Sultangazi district. “My husband is 60 years old, he can’t work much now.” He has a small pension of 1,800 lira — which at the moment is worth about $125. “I sometimes do needle work at home to bring in extra money,” she said.Businesses would rather hoard goods than sell them because they don’t think they will be able to afford to replace them.Ismail Arslanturk, a 22-year-old cashier at a neighborhood grocery shop, complained that the price of green lentils has nearly doubled. “I don’t believe the economy will be fixed after this point,” said Mr. Arslanturk, who added he was forced to leave high school to help support his family. “I am hopeless.’’A currency exchange office in Turkey. Over the past year, the lira has lost more than 45 percent of its value.Emrah Gurel/Associated PressWhat has Erdogan’s response been to the intensifying crisis?The president has doubled down on his approach, asserting he will “never compromise” on his opposition to higher interest rates. “Interest rates make the rich richer, the poor poorer,” he said in an interview on national television last month. “We have prevented our country from being crushed in such a way.”The president has invoked Islamic precepts against usury and referred to interest charges on loans as the “mother and father of all evil,” and blamed foreign interference for rising prices. Analysts like Mr. Barkey of the Council on Foreign Relations said that such comments are primarily aimed at appealing to more conservative religious segments of the country that represent the core of Mr. Erdogan’s support.Turkey’s fundamental problem, Mr. Barkey maintains, is that it has an overly confident ruler who has been in power for a long time. “He believes in his omnipotence and he’s making mistakes,” Mr. Barkey said, “but he’s so surrounded by yes men that nobody can challenge him.” More

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    ‘Our Money Has No Value’: Frustration Rises in Turkey at Lira Crisis

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    President Recep Tayyip Erdogan’s insistence on directing monetary policy and sticking with low interest rates is draining confidence, economists say.ISTANBUL — Lines outside bread stores and gas stations; farmers defaulting on loans; impromptu street demonstrations. The signs of economic distress in Turkey are all too clear as the lira continues a dizzying slide.Sporadic protests have broken out around Turkey and the opposition parties have called for a series of rallies to demand a change of government after the lira crashed sharply last week. The latest week of turmoil follows months of worsening economic conditions for Turkish citizens. The currency has lost more than 45 percent of its value this year, and nearly 20 percent in the last week, continuing its downward trend on Tuesday. Economists have tied the currency crisis to President Recep Tayyip Erdogan’s direct interference in monetary policy and his determination to lower interest rates.The latest crash in the currency came after Mr. Erdogan gave a speech last week outlining his determination to keep rates low as a way of promoting economic growth. He reaffirmed his opposition to raising rates again in comments to reporters aboard his plane as he returned from a visit to Turkmenistan on Monday.President Tayyip Erdogan of Turkey addressing members of his party last week. He has said he will “never compromise” on interest rates.Murat Cetinmuhurdar/Ppo/Via Reuters“I have never defended raising interest rates, I don’t now and will not defend it,” he told the reporters. “I will never compromise on this issue.”There are rumblings of public dissent, unusual for a country where only officially sanctioned demonstrations are permitted and the main television channels and newspapers follow the government line.Scores of people have been detained for joining street protests. The police detained 70 people in several districts of Istanbul last Wednesday who were protesting the government’s management of the economy, after a record drop in the lira the day before.The Confederation of Progressive Trade Unions issued a blunt statement on Wednesday. “That’s enough. We want to make ends meet,” it read. “Unemployment, high living costs, price increases, and bills are breaking our backs.”An Istanbul shopping district last week. Some traders in the city said business was sharply down.Ozan Kose/Agence France-Presse — Getty ImagesNecla Sazak, an 80-year-old retired bank employee heading home with a bag of groceries, said she was surviving on credit cards.“Our purchasing power dropped — our money has no value anymore,” she said.Business has stalled around the country as inflation scares away domestic shoppers and causes producers to hoard goods.“I didn’t sell anything since the morning,” Asuman Akkus, the 29-year-old owner of a clothing store in Istanbul, said one recent afternoon. “It is deserted here this week and it is 100 percent because of the dollar.”Opposition parties have renewed their call for the government to resign and for Mr. Erdogan or Parliament to call early elections. Yet they are in a bind, without the seats in Parliament to force a vote for early elections and wary of triggering unrest that could prompt Mr. Erdogan to impose a state of emergency, which would suspend normal democratic procedures.Police officers detaining a protester during a demonstration in Istanbul last week.Bulent Kilic/Agence France-Presse — Getty ImagesMr. Erdogan, who is sliding in the polls, will not call elections before they are scheduled in June 2023, a political ally, Devlet Bahceli, leader of the Nationalist Movement Party, said last week. In the meantime, Mr. Erdogan ratcheted up the pressure on his opponents by detaining Metin Gurcan, a military and political analyst and a leading member of an emerging opposition party, DEVA, on charges of espionage.Mr. Erdogan has promised that low interest rates will help kick start the economy within three to six months, but economists said they detected little confidence in his policies at this stage.“I don’t think he has the confidence of the nation anymore,” said Atilla Yesilada, an investment analyst with Global Source Partners. “There’s an urgent problem of deepening poverty and the wheels of the economy are coming to a standstill,” he said.Some loyal supporters of Mr. Erdogan, when asked, insist that everything is fine, but even the pro-government columnist Abdulkadir Selvi, of the Turkish daily Hurriyet, said he disagreed with Mr. Erdogan’s economic policy. He recalled an episode during an earlier economic crisis in 2001 when a shopkeeper threw his cash register at the prime minister, sparking a countrywide revolt.Outside a currency exchange office in Istanbul last week. The Turkish lira has lost more than 45 percent of its value this year.Sedat Suna/EPA, via Shutterstock“We can’t ignore what is happening today,” Mr. Selvi warned. He added: “We should stay strong but we shouldn’t miss the fact that broad economic turmoil has broad political consequences.”Shortages are emerging, including in imported medicines and medical equipment, and even at bakeries, Mr. Yesilada, the analyst, said. A loaf of bread still sells at 2.5 liras, or about 20 cents, but bakeries are complaining that their costs are closer to 4 liras a loaf, he said. “Soon they are going to shut down bakeries and then we are going to have bread riots,” he said.The Turkish public talks of little but the economy.“We used to be able to go and have tea with our friends in a cafe somewhere, but now a glass of tea costs 7 liras and so we don’t go,” said Cansu Aydin, a high-school graduate. “Our social lives have come to a stop, and now it’s as if we are living just to survive.”Some Turks have expressed concerns over their ability to afford basic goods. Erdem Sahin/EPA, via ShutterstockOguzhan Yelda, 21, a student in Istanbul, said he worried especially about “utility bills and basic goods like oil, sugar, flour.” Many young people were leaving the country to take menial jobs as cleaners and waiters abroad, he said. “When I graduate, a bleak future awaits me.”Dogan Gul, 60, was sitting outside a bank in Istanbul on Monday, waiting for it to open so he could make a payment on a loan. “We cannot get by,” he said. “The rent has gone up from 1,500 liras to almost 2,500 liras since last year. I don’t know where this is all going.”He said he could not afford the cost of transportation to visit relatives.“For the future of my children, what can I say?” he lamented. “They are each trying to make sure they have a meal once a day. They can’t even think about the next day. They can’t plan their futures. This is not just the case for me but for all of Turkey.”For Yaman Ayhan, who sells clothing online, the answer is plain. “The leaders have to change,” he said. “Just a decision for snap elections would make the lira gain some value.” More

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    Why the Taliban Desperately Need Cash to Run Afghanistan

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    The group has long tapped underground banks and opium to fund Afghanistan’s insurgency. Fixing the nation’s problems will require a lot more than that.As Afghans pay surging prices for eggs and flour and stand in long lines at the bank, money changers like Enayatullah and his underground financial lifeline have found themselves in desperate demand.Enayatullah — his family name withheld — holds down a tiny point in a sprawling global network of informal lenders and back-room bankers called hawala. The Taliban used hawala to help fund their ultimately successful insurgency. Many households use it to get help from relatives in Istanbul, London and Doha. Without cash from hawala, economic life in whole swaths of Afghanistan would come to a crashing halt.That is now a very real possibility. Foreign aid has dried up. Prices are surging. The value of the afghani currency is tumbling. The country’s $9.4 billion in reserves have been frozen.And hawala won’t be enough, said Enayatullah, who says people’s need for money has become so desperate in the last week he raised his commission to 4 percent per transaction, about eight times his usual rate. The system is now struggling with a lack of money, leading the Taliban and dealers themselves to rein in activity to preserve cash.“The demand,” Enayatullah said, “is too much.”The Taliban won the war in Afghanistan, and an economic crisis may be their prize. They have been cut off from the international banking system and from the country’s previous funding sources, like the International Monetary Fund, the World Bank and the United States government. Foreign aid makes up nearly half of economic output.Without other sources of money, millions of Afghan people could lose the gains they made, in fits and starts, over the past two decades. Already, drought conditions have created a real risk of hunger.“We have conflict. We have war. This is another misery,” said Shah Mehrabi, a board member of Afghanistan’s central bank. “You will have a financial crisis and it will push families further into poverty.”Food prices soared last week after the Taliban took over, at a market in Kabul, Afghanistan.Jim Huylebroek for The New York TimesLong before Afghanistan had formal institutions like banks, it had the hawala system. Millions of Afghans, shut out from formal banking, used it to send and receive remittances, as have migrant workers and others around the world.The system functions on the premise that people want to send equivalent amounts of money between two locations. Loans and transfers are recorded on ledgers, but money doesn’t have to change hands. Those features make it useful for evading taxes, paying bribes and laundering ill-gotten gains.Hawala was a necessity under the Taliban-led Afghanistan of two decades ago, before the American invasion in 2001, when money from illicit sources greased the country’s financial wheels. In addition to hawala, opium from the country’s vast poppy fields and smuggling brought the country money from the rest of the world, offsetting weak trade. As insurgents, the Taliban funded themselves by taxing smuggled goods like televisions and fuel, in transactions often financed through hawala, and through the drug trade.But the Afghanistan of 2021 is a country transformed. The economy, though its growth has been unsteady over the past decade, is five times the size it was in the early 2000s. Once scarce in most places, electricity is now widely available. Smartphones and internet access are common.Foreign money helped. Over the two decades, the United States spent more than $145 billion on reconstruction activities in Afghanistan, according to the U.S. government. Much of it was used to build the Afghan security forces, but funds also went toward large-scale infrastructure projects and an economic support fund. More than three quarters of the Afghan government’s $11 billion annual public expenditures was paid for by donor funding.The Taliban will be hard-pressed to make up that shortfall.Since taking over Afghanistan, the Taliban have said they will stop production of opium. But for the hawala system to work, Afghanistan must ultimately find sources of hard currency to lubricate the lines of credit that would snake back into the country. With exports in 2019 of about $870 million — mostly carpets, plus figs, licorice and other agricultural products — Afghanistan has little to offer on a large scale that is as lucrative as opium.The Taliban could see support from governments like Pakistan, Iran and China that might have their own reasons for keeping relations with Afghanistan warm. Trade has already started up again with Iran, said David Mansfield, an independent consultant and an expert on rural Afghanistan, citing satellite imagery of fuel tankers and transit trucks moving across the border. He has estimated that during its insurgency, the Taliban was able to raise more than $100 million a year from informally taxing goods from Iran and southern Afghanistan.Even if the Taliban raised several multiples more than that, it would mean a return to the minimalist state like the 1990s.“Economic crisis, humanitarian disaster, more refugees,” Mr. Mansfield said. “The other side of this is we have an Afghan population in the past 20 years who have seen some degree of transformation. Their livelihoods have improved.”People stood in line outside Azizi bank in Kabul on Sunday, the first day banks reopened in Afghanistan’s capital.Jim Huylebroek for The New York TimesThe hawala system, though central to life in Afghanistan, won’t be enough on its own. While many hawala transactions exist only on ledgers, they are ultimately backed by cold, hard cash often held by hawala dealers called hawaladars. In Afghanistan, say experts, hawaladars regularly use the local currency, the afghani, to buy American dollars from Afghanistan’s central bank, a transaction that can help stabilize the afghani’s value.Understand the Taliban Takeover in AfghanistanCard 1 of 6Who are the Taliban? More

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    My Strange Journey in the Crypto World Creating a Hype Coin

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    I created a hype coin to show how risky an investment can be. The coin had other plans.Times Insider explains who we are and what we do, and delivers behind-the-scenes insights into how our journalism comes together.When I conducted a little experiment recently for an article to highlight a corner of the cryptocurrency world, I knew I was creating something that would live on after the piece was published. But what happened still took me by surprise.As a business reporter based in London, I have been riveted in recent months by the booming popularity of so-called hype coins. These are the down-market, volatile cousins of Bitcoin, the graybeard of the cryptocurrency world. There are more than 70,000 of these coins — with names like Klaytn, Chiliz, Helium and others you’ve never heard of — and a few dozen new ones are created each day.On its face, the hype coin phenomenon is one of the most baffling financial crazes in history. At least if you went bust during the tulip mania in the 17th century, you could end up with some tulips. Hype coins have no intrinsic value. But investors and venture capitalists have swooned for them. More than 80 have a market value in excess of $1 billion.To enlighten readers, and myself, I made my own hype coin. I spent about $1,000 of The New York Times’s money — yes, I first cleared this outlay with editors, and we discussed the legal issues of this project with Times lawyers — to create and promote it.I christened it Idiot Coin. The name was just one part of an effort to dissuade anyone from hoping it would “moon,” or soar in value. I wanted this thing to flop, and for very solid legal reasons. Two lawyers who specialize in cryptocurrency law explained to me that hype coins are securities and that anyone who markets one with the intent to get rich could earn some unwanted attention from the Securities and Exchange Commission.I made 21 million Idiot Coins and put seven million up for sale. Here’s where I really tried to sabotage this enterprise. Developers of new crypto will kick-start trading by putting money into a “liquidity pool.” The details here get complicated, but suffice it to say, most coin makers pour about $10,000 into their pools. I put up $30.I had essentially created a car that had two sips of gas, max. The point was to demonstrate how easy it is to make and promote an utterly useless commodity. Then, I would watch that commodity wobble into oblivion. That’s not what happened.After the article was published online, a few dozen people showed up in the Idiot Coin account on Telegram, an encrypted messaging platform. A handful started making very amusing memes. Someone named DragonX posted an image of a wide-eyed toddler, tonguing a window, under the words “Wen [sic] I’m not licking windows I’m buying Idiot Coin!”Others were eager for the coin to earn a fortune. “Let’s get on that idiot moon!” IceMaster0x wrote. It will never moon, I kept replying to would-be boosters. That didn’t stop a few dozen people from snapping up coins, often by the hundreds of thousands.On the morning of Aug. 10, the total market value of the coin stood at about $6,000. By that evening, it had gone up 10 fold. The next afternoon, nearly all of the coins were sold and the market value had reached $108,000. It went down, then to a new high. On Monday afternoon, it stood at $68,000.Selling the coins would probably crater the price. This modest pot could vanish in a few frenzied minutes. But if the increase persists, the money will go to charity.For now, a curious kind of camaraderie has taken shape in the Telegram account for Idiot Coin, with voices and opinions from all around the world. (Shout out to Rusty from Kazakhstan.) “Only buy if you are an Idiot,” reads a meme that keeps getting posted. Some urge stratagems that might cause the coin to appreciate. Others argue that such a notion is way off brand for a currency named Idiot Coin.As I type this, I have no idea what will happen next. What’s certain is that some people will invest in just about any venture, even one designed for failure. More

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    Cryptocurrency Seeks the Spotlight, With Spike Lee’s Help

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    The filmmaker’s commercial for a crypto company is one of many recent marketing efforts to make digital cash palatable for newbies.Before Spike Lee accepted cryptocurrency, he turned down Crocs.Years ago, the filmmaker rejected an offer to buy into the Colorado company that makes perforated foam clogs, a decision that caused him to miss out when its stock soared on the strength of the footwear fad.“I wish I would’ve given some money back then,” Mr. Lee said in a recent interview. “Anytime something is new, you’re going to have people who are going to be skeptical. With some of the best ideas, people thought the inventors were crazy.”Now he has taken a leap into another cultural craze, having agreed to direct and star in a television commercial for Coin Cloud, a company that makes kiosks for buying and selling Bitcoin and other virtual currencies. Although cryptocurrency is not widely used for transactions, an increasing number of merchants now accept it as payment.The commercial, which he shot last month, is one of several recent marketing efforts meant to broaden the audience for a form of currency that can intimidate people accustomed to cash and credit cards.Mr. Lee, outfitted nattily in a straw hat and gold-tipped cane while filming part of the commercial on Wall Street, led a diverse cast that included his daughter Satchel, the “Pose” actress Mj Rodriguez and the drag queen Shangela. Other shoot locations included Fort Greene Park and the Chillin’ Bar and Grill in Washington Heights, where breakfast patrons craned to catch a glimpse of the director as he filmed a Coin Cloud machine on the sidewalk.“Old money is not going to pick us up; it pushes us down,” Mr. Lee says in the commercial, which portrays the cryptocurrency system as a more accessible and equitable alternative to traditional, discriminatory financial institutions.“The digital rebellion is here,” he says.Cryptocurrency has also been known to intimidate investors, with its extreme volatility and the overwhelming number of virtual alternatives, known as coins. The marketing of this relatively new money has so far been limited mostly to ads on trade websites and targeted pushes on social media, where aficionados swap meme-fueled in-jokes about coin values rocketing to the moon.The industry is increasingly betting that celebrities can help demystify cryptocurrency for the uninitiated.The actor Alec Baldwin offered crisp definitions of cryptocurrency in a series of online ads for the crypto trading platform eToro, and the National Football League star Tom Brady signed on as a brand ambassador for FTX, a crypto exchange that also has a deal to sponsor Major League Baseball.Alec Baldwin is advertising for the cryptocurrency trading platform eToro.eToroThe actor Neil Patrick Harris recently appeared in a TV commercial for the digital currency kiosk operator CoinFlip. “Now anyone, anywhere, can turn cash into crypto!” he declares.EToro and Coinbase, another exchange, collectively spent $22.8 million on advertising last year, nearly double the $12.4 million they shelled out in 2019, according to the research firm Kantar. In recent months, Coinbase hired the Martin Agency, the advertising company behind GEICO and DoorDash.As Madison Avenue fields more inquiries from cryptocurrency clients, agency executives are feeling pressure to better communicate the investment risks, rather than romanticize the industry.“I get very nervous because I start looking at the way that some of the platforms are specifically targeting younger investors,” said Alex Hesz, the chief strategy officer of the advertising giant DDB Worldwide. In the face of frenzied cryptocurrency trading, ad agencies should push for moderation and diversification, he said. “Maximizing is what’s being encouraged here — the idea that this is an amazing asset, and as much as you want to put in, come on and jump on in, the Bitcoin’s lovely,” Mr. Hesz said. “We would never feel comfortable for an alcohol client, or a high-salt or high-sugar or high-fat client, to encourage that level of unequivocal behavior.”Some celebrity endorsements of cryptocurrencies have run into trouble. In 2017, the Securities and Exchange Commission cautioned that some famous people were hyping the virtual currency sales known as initial coin offerings without disclosing that they had been paid to promote them. The commission has since settled charges against the boxer Floyd Mayweather Jr., the music producer DJ Khaled and the actor Steven Seagal.Social media influencers and e-sports stars have also been linked to shady cryptocurrency schemes, accused of pumping up coins just before their value crashes.Coin Cloud’s chief marketing officer, Amondo Redmond, said he hoped Mr. Lee’s stature would help elevate the industry by delivering something “more than just cool creative, but that is really at the forefront of digital currency becoming mainstream.”“It’s more than just adding a celebrity face,” he said.Mr. Lee, who won an Oscar in 2019 in the best adapted screenplay category for “BlacKkKlansman,” has worked on ads for Capital One, Uber and, most famously, Nike. In the 1980s and 1990s, he directed and starred in commercials for Air Jordans, playing his cinematic alter ego Mars Blackmon opposite Michael Jordan.“That was lightning in a bottle,” Mr. Lee said from a flight bound for the Cannes Film Festival, where he is the first Black person to lead the festival jury.He declined to say how much he had been paid for the Coin Cloud commercial, but noted that “if anyone’s known my body of work over the last four decades, you kind of know about the way I see the world, and when they approached me, it fit in line.”As the coronavirus pandemic continues to highlight financial disadvantages for people of color, Mr. Lee hopes to promote cryptocurrency as neutral to race, gender, age and other identifying characteristics.But he was no expert before filming began, and had to take “a crash course” on crypto. He insisted that the commercial include a line urging viewers to do their own research on virtual money.Mr. Lee said he now planned to invest in virtual coins. He said he would not, however, go anywhere near the digital ownership certificates known as nonfungible tokens.“NFTs, I don’t understand that,” he said, laughing. “I’m old school, so sometimes my children have to turn on the TV — all those remotes and stuff.” More

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    Lebanon’s Financial Collapse Hits Where It Hurts: The Grocery Store

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    The country’s currency has sunk to a new low against the dollar, sending prices for once affordable foods soaring out of reach.BEIRUT, Lebanon — In normal times, Ziad Hassan, a grocery store manager in Beirut, would get a daily email from his chain’s management telling him which prices needed to be adjusted and by how much.But as Lebanon’s currency has collapsed, sending the economy into a tailspin, the emails have come as often as three times a day, ordering price increases across the store.“We have to change everything,” an exasperated Mr. Hassan said, adding that his employees often weren’t even able to finish marking one price increase before the next one arrived. “It’s crazy.”The country’s economic distress grew more acute last week as the Lebanese pound sank to 15,000 to the dollar on the black market — its lowest level ever — sucking value from people’s salaries as prices for once affordable goods soared out of reach. It has since rebounded to about 12,000.Lebanon has been grappling with a web of economic and political crises since late 2019 that have led to rampant unemployment, skyrocketing prices, road closures by angry protesters and a government with no clear plan to slow the descent. A catastrophic explosion in Beirut’s port in August, which killed 190 people and left a large swath of the capital in ruins, only deepened the misery.In a country where most products are imported, the currency collapse has left no sector unaffected.The catastrophic explosion at Beirut’s port in August last year has deepened the misery in Lebanon.Diego Ibarra Sanchez for The New York TimesFood prices had risen 400 percent as of December compared with a year earlier, according to government statistics, while prices for clothing and shoes had gone up 560 percent and hotels and restaurants more than 600 percent.Scores of pharmacies across the country went on strike last Friday to protest conditions that have left them without some medicines and cut into their profits. Professionals including lawyers, teachers, doctors and university professors have watched the value of their salaries shrink. Many others have been pushed into poverty.In August, the United Nations said that more than 55 percent of Lebanon’s population had become poor, nearly double the number from the year before. Extreme poverty had increased threefold to 23 percent. And the situation has worsened since.The crisis springs from the collapse of a policy by Lebanon’s central bank to keep the Lebanese pound, or lira, pegged to the dollar at a rate of about 1,500 to 1 since 1997. That allowed people to use the two currencies interchangeably and made it easy for merchants selling products in pounds to convert their profits into dollars to pay for imports.But the state’s ability to maintain the peg faltered in late 2019, when mass protests erupted over decades of political corruption and poor governance. Since then, two governments have resigned and the gap between the pound and the dollar has widened. Western and United Nations officials’ calls for reforms, which could unlock foreign aid and a potential bailout from the International Monetary Fund, have gone unheeded.For many Lebanese, the most personal element of the crisis is the grocery store, where products once considered staples have vanished and other essentials have tripled or quadrupled in price. There has been a run on staples like oil, flour, sugar and rice.“Everything is soaring,” said Suheir al-Jizini, 60, after realizing that the price of the jug of cooking oil she had bought last week was now two-thirds higher. “I’m really shocked.”Riot police standing guard in front of Lebanon’s Central Bank in Beirut last week during a demonstration over the rising cost of living and low purchasing power of the Lebanese pound.Wael Hamzeh/EPA, via ShutterstockShe had come to the store planning to also buy laundry detergent and pasta, but realized she didn’t have enough cash. She said her husband brought in 750,000 pounds per month as a driver. That used to be worth $500 but was now less than $60.The World Food Program said in November that food prices in Lebanon had increased 423 percent since October 2019, the largest jump since monitoring began in 2007. Prices have continued to rise since, putting acute pressure on the poor.Faten Haidar, 29, said she was struggling to pull together meals for her three children as food prices shot up and her husband’s earnings from his coffee stand declined. Speaking by telephone from the northern city of Tripoli, she said that she had only labneh — a strained yogurt — in the fridge and that she was already in debt to her local shop.“I don’t know how to pay them,” she said.Other essentials also depleted her funds, she said, like sanitary pads, whose price had quadrupled. That burden will increase when her 12-year-old daughter reaches puberty.“I can’t afford mine,” she said. “How can I afford hers?”The value of soldiers’ and police officers’ salaries has also fallen, heightening concerns that social unrest and crime will increase. This month, Mohammed Fahmy, the interior minister, who oversees the security forces, said those salaries had “reached rock bottom.”Stocking up at a gas station in Beirut. The price of fuel has also increased.Wael Hamzeh/EPA, via Shutterstock“Three months ago, I would have said the security situation is starting to break down,” Mr. Fahmy told a local news network. “Now, I am saying it has broken down.”Addressing military leaders, the head of the Lebanese Army, Gen. Joseph Aoun, earlier this month issued a rare public criticism of the leaders in Lebanon’s sect-based political system, warning them that his soldiers were also “suffering and going hungry.”Addressing the leaders, he asked: “Where are we going? What do you intend to do?”Parliament recently authorized a $246 million loan from the World Bank to provide cash assistance to poor families, but no significant efforts have been made to stop the wider collapse.The cabinet of the departing prime minister, Hassan Diab, resigned after the disastrous explosion in the Beirut port on Aug. 4 and has yet to be replaced. That has left the government operating in a reduced, caretaker capacity for longer than it was in power.A former prime minister, Saad Hariri, was designated in October to form a new government. But he has made little progress, despite 17 meetings to discuss political horse trading with President Michel Aoun. Last Thursday, they agreed to meet again on Monday.Jihad Sabat, 48, has watched the decline from the window of the Beirut butcher shop he has run since 1997. Over the last year, he said, the price of meat has kept rising while the number of customers has dwindled.A Beirut supermarket.Mohamed Azakir/ReutersA pound of beef now costs more than three times what it would have before the crisis, he said — more than three times what it cost before the crisis. He has also seen a rise in people wanting to buy on credit and interested in taking bones to boil for soup.“Meat has become a luxury,” he said.He accused the country’s politicians of stealing the state’s money through corrupt schemes and criticized them for failing to stabilize the economy.A friend hanging out in the shop interjected, “The problem is the people.” Mr. Sabat nodded.“That’s an essential point,” he said. “If there were elections tomorrow, the same people would be back.”In the grocery store, Mr. Hassan, the manager, said his branch sold less meat every month and more lentils, even though they, too, are imported and cost five times more than before the crisis.Fights have broken out in the aisles over staples like rice, sugar and cooking oil subsidized by the government, he said. And it is common for customers to get sticker shock in the checkout lane when they realize they can afford only a few essentials.“I don’t know how people keep going,” he said. “But it will eventually cause an explosion.” More