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Investment, fairness, prosperity

20 january 2022

Trump assets
Did Donald Trump lie to banks and tax officials about his finances? That has been the premise of years of prosecutorial scrutiny and New York State’s attorney general is more convinced than ever the answer is yes. On Tuesday she released a 115-page court filing on “material misstatements and omissions” in the Trump Organization’s financial statements. Letitia James’ findings add to growing evidence the company inflated the value of its assets and used those bloated numbers to secure bank loans, insurance policies and tax breaks. She says Trump claimed his Manhattan triplex was three times its actual size (and therefore three times as valuable) and swelled the value of his land holdings and golf courses based on the addition of villas and mansions that were never built. Jeffrey McConney, the Trump Organization’s controller, has been cooperating with James but his boss, Allen Weisselberg, has not been playing ball. James subpoenaed Weisselberg last year; under questioning he invoked his Fifth Amendment rights more than 500 times. Next on her list: Ivanka, Donald Jr. and Trump himself.

19 january 2022

UK inflation
If British politics had not been hijacked by the history of lockdown, they would be dominated by inflation. Prices rose more than expected between November and December, by 5.4 per cent, which means in the month before Christmas inflation was higher than at any time in 30 years. An FT analysis shows spiking transport costs drove much of the increase, with housing and energy prices the second-most important factor. The Bank of England is supposed to target an inflation rate of 2 per cent and so will feel pressure to raise interest rates. It’s also supposed to be independent, but will nonetheless feel a countervailing pressure from government not to raise rates too far for fear of slowing an already sluggish post-Covid recovery. At least the chancellor has something other than his next job to think about.

18 january 2022

BBC fee
Nadine Dorries, the UK’s culture secretary, told parliament the BBC licence fee will be frozen at £159 for two years, after which it will continue rising with inflation – currently running at 5.1 per cent. The freeze is the equivalent of a £2 billion funding cut for the world’s biggest, best-known public service broadcaster, over the duration of its next settlement period. Dorries framed the decision as the government not being able to “justify extra pressure on the wallets of hardworking households”. In reality the timing of her statement was pure politics; red meat for MPs who may be wavering in their support for Johnson but share her view that the BBC is institutionally biased against her party and world view. She has previously questioned whether it will still exist in a decade – and there’s certainly no alternative funding mechanism that has wide support.

17 january 2022

Macron’s boom
Macron is running a pocketbook reelection campaign. Stick with me, he’s telling France, and I will be a conduit for investment and jobs. He visits Alsace today to trumpet a €300 million investment by BASF, the German chemicals giant, which will be presented as part of a slate of investments worth €4 billion and 10,000 jobs. An aide tells Reuters this pre-election period would ordinarily be considered dicey by investors but “instead we see very strong confidence in the president’s economic policy”. The strategy is to take voters’ minds off immigration and the cultural battlegrounds where Macron’s right-wind challengers want to fight him. It could work. French GDP grew by 6.7 per cent last year, compared with 6.4 per cent for the UK (estimated in October, before Omicron hit) and 2.9 per cent for Germany.

14 january 2021

Kazakh crypto
Russian troops are leaving Kazakhstan after a fortnight of unrest, but aftershocks linger in the bitcoin business. When China banned crypto-mining overnight last June, Kazakhstan’s low temperatures, cheap electricity and empty warehouses seemed a perfect alternative. It quickly became the second-largest hub globally for Bitcoin mining. Then the protests led to an internet shutdown, halting all mining. The global hashrate – the rate per second Bitcoin calculations are made – dropped 12 per cent and it’s estimated the outage cost Kazakh miners around $20 million, or $4.8 million for every 24 hours with no internet. The miners had already been struggling with government-mandated power rationing and are probably stuck for now as other hubs in the US and Russia have little capacity for new business. That said, the squeeze had little impact on Bitcoin as a whole. The system is designed to handle dropouts, but Kazakhstan is unlikely to keep it’s crypto-crown.