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Your guide to a disrupted world
Marc Filippino, Sujeet Indap, Taylor Nicole Rogers and Heba Saleh
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This is an audio transcript of the FT News Briefing podcast episode: Crypto collapse hits black Americans hard
Marc Filippino
Good morning from the Financial Times. Today is Monday, July 11th, and this is your FT News Briefing.
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Elon Musk doesn’t want Twitter anymore. Twitter says, sorry, suck it up. And cryptocurrency investing became really popular among black Americans.
Taylor Nicole Rogers
Black investors typically have less money and are more likely to put that money into cryptocurrency.
Marc Filippino
Now the crypto crash is hitting them especially hard. Plus, a eulogy of sorts for the famed houseboats of Cairo. I’m Marc Filippino and here’s the news you need to start your day.
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Elon Musk wants to back out of his $44bn deal to buy Twitter. But the social media company is not going to give up without a fight. Sources tell the FT Twitter hired a law firm that plans to file a lawsuit this week. They’re trying to force Musk to stick to the plan and buy the company. I’m joined by the FT’s Sujeet Indap to help unpack yet another chapter in this ongoing saga. Hey, Sujeet.
Sujeet Indap
Hi, Marc. Good to talk to you.
Marc Filippino
So Sujeet, Musk is accusing Twitter of having false and misleading information about the number of fake and spam accounts on the site. Does Musk have a case here, or enough of a case, to blow up the deal?
Sujeet Indap
So Elon’s case seems pretty flimsy. Most deals, the contracts for deals are written in a way that the risk is on the buyer. Once they sign up to close the deal, it’s very hard to escape. Many have tried over the years. Usually it’s a negotiating tactic. So at least from, on the legal side, it feels like Elon’s case is pretty thin. The question is, he is the richest man in the world and not afraid to litigate, and so from Twitter’s perspective, the question is just how much hardball do they want to play in court?
Marc Filippino
Yeah. And on that note, what’s Twitter’s approach to all this?
Sujeet Indap
They will seek to enforce the merger agreement. The question is, in the background, will there be some kind of negotiations around the settlement? And that could be many things. That could be Elon paying a termination fee or damages of some sort for potentially billions of dollars, but less than the $44bn deal value. So expect there to be parallel paths here, inside and outside of court.
Marc Filippino
Yeah. So that termination fee you mentioned, that would be a billion dollars Musk would have to pay. Can you explain a little bit more about that?
Sujeet Indap
Yeah. So there is this reverse termination fee of $1bn. Just how and what circumstances that would be payable and if that was just the way for Elon to get out and he could just pay a billion and go away, that’s a more complicated question. There is this technical clause called specific performance, which Twitter has negotiated, which forces Elon to close the deal if every other closing condition is met, including the financing being available. And that I think in a sense is the most likely scenario. Everything else seems to be in accordance. So it really is up to Elon to show up at closing with the money and Twitter has the right to force him to do that. The question is again, how much does Twitter wanna, to fight him, if Elon truly doesn’t want to pay $44bn. It doesn’t make sense for all sides to cut a deal in advance in that moment.
Marc Filippino
Sujeet Indap is the FT’s US Lex editor. Thanks, Sujeet.
Sujeet Indap
Thanks, Marc. Good to talk to you.
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Marc Filippino
Cryptocurrency values have gone off a cliff this year. Bitcoin, for example, is now trading at around $20,000. That’s about half of what its value was at the start of the year. Now, a lot of people have lost money from these investments going sour. But there’s one group that’s been hit especially hard — black Americans. The FT’s Taylor Nicole Rogers joins me now to talk more about this. Hey, Taylor.
Taylor Nicole Rogers
Hey, good to be back.
Marc Filippino
Yeah, good to have you. So why does this flight from the crypto market hurt black Americans more than, say, other demographic groups?
Taylor Nicole Rogers
Well, the simple answer is black investors typically have less money and are more likely to put that money into cryptocurrency. When I was reporting out this story, I heard a lot of people talking about how they felt that, like, their families had historically been left out of the financial markets and the housing market, and they wanted to get in early and invest big in crypto to make sure that didn’t happen again. Which obviously means that when crypto tanks all of a sudden they’re losing more money.
Marc Filippino
Taylor, why were so many black Americans in crypto to begin with? I mean, you cite a survey in the story you wrote that says a quarter of black American investors owned crypto at the beginning of the year. I mean, that’s a real chunky number.
Taylor Nicole Rogers
It is. And it’s really interesting considering that black investors historically tend to be the most conservative investors in the country. But when I was talking to people, the things that I heard over and over again is that the communities around cryptocurrency did a really good job of selling this story, that this was an investment that could create financial freedom and independence from big banks that don’t come across as particularly trustworthy.
Marc Filippino
OK, but crypto has just been one of many markets that have tanked this year. I mean, we talk about equities and bond markets tanking constantly on this show. Why aren’t they impacting black Americans as much as crypto, or are they?
Taylor Nicole Rogers
They’re certainly impacting black investors and we saw this in the Great Recession, too. Black investors lost a lot of money when the housing market crashed and of course, when the stock market crashes as well. But I think what makes this particularly concerning to people who follow cryptocurrency is that there’s no guarantee that this market will come back. If you look at, you know, the arc of history, everyone is pretty confident the stock market will eventually come back. But there are still a lot of people that worry that all of these investments, these first-time investors that have put their life savings, their retirement savings, their kid’s college savings into cryptocurrency. The question is, are those investments really secure?
Marc Filippino
So what does this mean for the future of crypto investing for black Americans?
Taylor Nicole Rogers
Well, a lot of people are still really gung-ho about it.
Marc Filippino
Really?
Taylor Nicole Rogers
Yeah, absolutely. Which I found really surprising.
Marc Filippino
Yeah.
Taylor Nicole Rogers
People are really, really desperate for a way to build wealth. I mean, the wealth gap in this country between black and white Americans is absolutely out of control and getting wider every single day. And cryptocurrency has been presented as a way to close that. And in the absence of any other solutions, I think people are really gonna hold on to this idea, and I hope they’re right.
Marc Filippino
Taylor Nicole Rogers is the FT’s US labour and equality correspondent. Thanks, Taylor.
Taylor Nicole Rogers
Thanks, Marc.
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Marc Filippino
In Egypt’s capital, a beloved feature of the city’s landscape is nearly gone. The government is removing Cairo’s iconic houseboats to make way for urban redevelopment. But the FT’s Heba Saleh says that in the process, the city is losing an important piece of its character.
Heba Saleh
Architectural historians say there were hundreds of houseboats. And then in 1966, the remaining houseboats were asked to moor in that particular stretch, which is a few hundred metres, it’s not huge. They are built on floating platforms, barrels in general, and moored to the land, of course, and the little bridge. And then there are, the rooms are surrounded by terraces. Most of them are two stories and they have an internal staircase. I mean, inside it looks very much like a home.
Marc Filippino
Heba says it’s still not entirely clear why these houseboats are being removed.
Heba Saleh
What we know is that the banks of the river in Cairo are being turned into, it’s called the promenade. And so it’s a concrete walkway on various banks of the river and cafés and shops are springing on the walkway. It’s a project spearheaded by the military. There are really no details as to what’s going to happen there. But what we were told or what we’ve heard, this senior official from the Ministry of Irrigation say is that this place is going to be redeveloped.
Marc Filippino
Now, infrastructure and redevelopment can be a good thing for cities. But it always comes at a cost, like here with the houseboats.
Heba Saleh
I think the city has lost part of its memory, really. There is a wealth of history and of culture behind these houseboats. They also feature in culture, in novels, in the cinema. And they are the last remaining houseboats in Cairo.
Marc Filippino
Heba Saleh is the FT’s Cairo correspondent.
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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.
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This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.
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