Cryptocurrency is hitting black Americans hard

This is an audio printout of FT News Briefing podcast episode: Cryptocurrency is hitting 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 no longer wants Twitter. Twitter says, sorry, suck it up. And investing in cryptocurrencies became really popular among black Americans.

Taylor Nicole Rogers
Black investors usually have less money and are more likely to put the money into cryptocurrency.

Marc Filippino
Now, cryptocurrency is hitting them especially hard. Plus a kind of eulogy for the famous houseboats in Cairo. My name is Marc Filippino, and here’s the news you need to start the day.

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Elon Musk wants to withdraw from his $ 44 billion deal to buy Twitter. But the social media company will not give up without a fight. Sources say that 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 am joined by FT’s Sujeet Indap to help unpack another chapter in this ongoing saga. Hey, Sujeet.

Subject Indap
Hey, Marc. Good to talk to you.

Marc Filippino
So Sujeet, Musk accuses Twitter of having false and misleading information about the number of fake accounts and spam accounts on the site. Does Musk have a case here, or enough case, to blow up the deal?

Subject Indap
So Elon’s case seems pretty flimsy. Most agreements, contracts for agreements are written in such a way that the risk lies with the buyer. Once they have registered to terminate the agreement, it is very difficult to escape. Many have tried over the years. Usually it is a negotiation tactic. So at least from 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 sue, and so from Twitter’s perspective, the question is just how much hardball they want to play in court?

Marc Filippino
Yes. And on that note, what’s Twitter’s approach to all this?

Subject Indap
They will seek to enforce the merger agreement. The question is, in the background, will there be any kind of negotiations around the settlement? And there can be many things. It could be Elon paying a termination fee or some sort of compensation for potentially billions of dollars, but less than the contract value of $ 44 billion. So expect there to be parallel paths here, inside and outside the course.

Marc Filippino
Yes. So the termination fee you mentioned, that would be a billion dollars Musk would have to pay. Can you explain a little more about that?

Subject Indap
Yes. So it’s this $ 1 billion reverse termination fee. Exactly how and what circumstances were to be paid, and if that was just the way for Elon to get out and he could just pay a billion and walk away, that’s a more complicated question. It is this technical clause called specific performance, which Twitter has negotiated, that forces Elon to terminate the agreement if all other terminating conditions are met, including the financing available. And I think that is in a way the most likely scenario. Everything else seems to be in line. So it’s really up to Elon to show up at the end with the money, and Twitter has the right to force him to do so. The question is again, how much Twitter wants to fight him, if Elon really does not want to pay 44 billion dollars. It does not make sense for all parties to make an agreement in advance at that moment.

Marc Filippino
Sujeet Indap is FT’s American Lex editor. Thank you, Sujeet.

Subject Indap
Thanks, Marc. Good to talk to you.

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Marc Filippino
Cryptocurrency values ​​have gone downhill this year. Bitcoin, for example, is now traded for around $ 20,000. That is about half the value at the beginning of the year. Many people have now lost money because these investments have stalled. But there is one group that has been particularly hard hit – black Americans. FT’s Taylor Nicole Rogers joins me now to talk more about this. Hey, Taylor.

Taylor Nicole Rogers
Hi, good to be back.

Marc Filippino
Yes, good to have you. So why does this escape from the crypto market hurt black Americans more than, for example, other demographic groups?

Taylor Nicole Rogers
Well, the simple answer is that black investors usually have less money and are more likely to put the money into cryptocurrency. When I reported this story, I heard many people talk about how they felt that their families had historically been left out of the financial and housing markets, and they wanted to get in early and invest heavily in crypto to make sure it doesn’t happen again. Which obviously means that when crypto tanks suddenly lose more money.

Marc Filippino
Taylor, why were so many black Americans in crypto to begin with? I mean, you cite a survey in the history you wrote that says that a quarter of black American investors owned crypto at the beginning of the year. I mean, it’s a really thick number.

Taylor Nicole Rogers
It is. And it’s very interesting considering that black investors have historically tended to be the most conservative investors in the country. But when I talked to people, what I heard over and over again was that the communities around cryptocurrency did a very good job of selling this story, that this was an investment that could create financial freedom and independence from large banks that did not appear as especially reliable.

Marc Filippino
OK, but crypto has just been one of many markets that have broken down this year. I mean, we’re talking about stock and bond markets that are constantly breaking down on this show. Why do they not influence black Americans as much as crypto, or do they?

Taylor Nicole Rogers
They certainly affect black investors, and we saw this in the Great Recession as well. Black investors lost a lot of money when the housing market crashed and of course also when the stock market crashed. But I think what makes this particularly worrying for people who follow cryptocurrency is that there is no guarantee that this market will return. If you look at the arc of history, everyone is pretty sure that the stock market will eventually return. But there are still many people who worry that all these investments, these first-time investors who have put their savings, their pension savings, their savings in college in cryptocurrency. The question is, are these investments really safe?

Marc Filippino
So what does this mean for the future of crypto investments for black Americans?

Taylor Nicole Rogers
Well, a lot of people are still very gung-ho about it.

Marc Filippino
Really?

Taylor Nicole Rogers
Yes absolutely. Something I thought was very surprising.

Marc Filippino
Yes.

Taylor Nicole Rogers
People are really, really desperate for a way to build wealth. I mean, the wealth gap in this country between blacks and whites is completely out of control and getting bigger every day. And cryptocurrency has been presented as a way to close it. And in the absence of other solutions, I think people are really going to stick to this idea, and I hope they are right.

Marc Filippino
Taylor Nicole Rogers is FT’s employment and gender equality correspondent in the USA. 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 almost gone. The government is removing Cairo’s iconic houseboats to make way for urban redevelopment. But FT’s Heba Saleh says that the city in the process loses an important part of its character.

Heba Saleh
Architectural historians say that there were hundreds of houseboats. And then in 1966 the remaining houseboats were asked to moor exactly that stretch, which is a few hundred meters, it is not large. They are built on floating platforms, barrels in general, and moored to land, of course, and the small bridge. And so it is, the rooms are surrounded by terraces. Most of them are two floors and they have an internal staircase. I mean, inside it looks very much like a home.

Marc Filippino
Heba says it is still not entirely clear why these houseboats are being removed.

Heba Saleh
What we do know is that the banks of the river in Cairo are being turned into, it is called the promenade. And then there is a concrete walkway on different banks of the river, and cafes and shops spring out on the walkway. It is a project led by the military. There are really no details about what is going to happen there. But what we were told or what we have heard, says this senior official from the Ministry of Irrigation is that this place will be rebuilt.

Marc Filippino
Now infrastructure and redevelopment can be a good thing for cities. But it always has a price, like here with the houseboats.

Heba Saleh
I think the city has lost some of its memory, really. There is a wealth of history and culture behind these houseboats. They are also involved in culture, in novels, in cinemas. And they are the last remaining houseboats in Cairo.

Marc Filippino
Heba Saleh is FT’s Cairo correspondent.

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You can read more about all these stories at FT.com. This has been your daily FT News Briefing. Make sure you come back tomorrow for the latest business news.

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