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New European
10-04-2025
- Business
- New European
Trump's tactics to stitch up the market won't work
Only a few hours before his announcement to reverse his policy, the president took to his own social media platform to inform his followers that, 'This is a great time to buy' along with the stock market code for his own company's shares. When he announced that the tariffs were being paused, markets surged. The second that Trump surrendered, announcing that the worst of his tariffs would be paused for 90 days with the exception of those levied on China, the markets surged. Shortly afterwards, the Democrats' House Committee on Financial Services tweeted: 'The President of the United States is literally engaging in the world's biggest market manipulation scheme.' In footage posted on social media by a White House official, Trump is seen crowing in the Oval office in front of a crowd of his courtiers about the amounts of money that had been made by members of his entourage. Pointing to the investor Charles Schwab, Trump tells the crowd that 'he made two and a half billion today', before pointing to another individual and announcing 'and he made nine hundred million'. The crowd laughs. The Democrat senator Adam Schiff announced that he was launching an investigation into the way in which the policy was so suddenly reversed. 'Who knew what the president was going to do?' asked Schiff, in a video released on social media. 'And did people around the president trade stock knowing the incredible gyration the market was about to go through?' But any profit from the chaos will be cold comfort for Trump. He cannot hide the fact that he was forced into a humiliating reversal. He has claimed that countries are queueing up to negotiate with the White House, but governments everywhere will see that Trump has blinked before the tariff talks have even started. Beijing is showing no signs of blinking at all, despite the tariffs of 125% on its exports to America. Instead it responded by imposing an 84% tariff on American goods. The Chinese Communist party is not going to back down. It has not pulled itself back onto the world stage in order to be humiliated by Trump. It also has a strong hand, America's largest export to China is soya beans, which can be easily sourced elsewhere. America's farmers will be hit hard by this. In return, China exports billions of dollars of cheap goods into the US, a process by which America has effectively imported deflation. America's remaining manufacturers also rely heavily on components imported from China. Despite his ludicrous attempt to present the market rally as some kind of success, what Trump discovered to his cost is that you can intimidate universities, lawyers, scientists and fellow politicians, but no one can threaten the bond market. James Carville, Bill Clinton's adviser once famously quipped that if he were ever to be reincarnated, he would want to come back as the bond market. 'You can intimidate everyone,' Carville said. And it intimidated the hell out of Trump. His disastrous policies had sent the bond market into a state of collapse. The consequences of this are increased borrowing costs for the US government, which began moving alarmingly upwards, from 4% to 4.5%, and showed few signs of stopping. Governments need the bond market's trust so they can borrow cheaply in order to finance the deficit. For America this is vital, as its deficit this year will be just under $2 trillion. But the higher the interest rate governments have to pay on their bonds, the more expensive that deficit becomes. What made this all the more alarming is that, normally when the global economy starts to wobble, the American bond market usually improves as investors move their money into the dollar, the world's reserve, 'safe-haven' currency. When this happens, borrowing gets cheaper for America, not more expensive. But the opposite was happening. Trump's wild decisions were so damaging for the US's economic reputation that investors were becoming less and less willing to lend to America. China noticed this. Beijing's key weapon in its confrontation with Trump is not tariffs, but the dollar. China has huge reserves of dollars and American government bonds, and currently holds around $760bn-worth of US Treasuries. Beijing just needs to sell some of those Treasuries, or even simply threaten to sell some of them, or hint that it is swapping dollars for euros or Swiss francs or gold, and the markets will notice. It seems that, if like America, you have a huge trade deficit and borrow from global investors to fund your deficit, the rest of the world has you over a barrel. It also appears that, in the spirit of grim opportunism, people around the president profited from the movement in market prices that were caused by his policies. If that turns out to be the case, we might just have seen the biggest stock market swindle in history.
Washington Post
09-04-2025
- Business
- Washington Post
Trump told people to buy. Hours later, his tariff pause sent markets soaring.
Less than four hours before President Donald Trump's tariff pause announcement sent markets soaring, he posted online telling his 9.4 million followers that it was a good time to buy. 'THIS IS A GREAT TIME TO BUY!!! DJT' he posted on social media site Truth Social at 9:37 a.m. Wednesday. Shortly after 1 p.m., he announced on the same site that he would pause most new tariffs, causing the ailing stock markets to sharply rise. Democrats are now accusing Trump of 'market manipulation,' and the term is trending on the social media platform X, with more than 33,000 posts. 'The President of the United States is literally engaging in the world's biggest market manipulation scheme,' the Democrats from the House Committee on Financial Services posted on X Wednesday afternoon. Trump has long drawn questions from ethics experts about his various business holdings, and he made no promises after he was elected to divest from any of his financial interests. Trump's assets are in a trust managed by his children, the White House said. The president holds much of his net worth in his stake in Truth Social's parent company, Trump Media & Technology Group. That company trades at the ticker DJT, the president's initials and the sign-off he used in Wednesday morning's Truth Social post. The company's stock rallied with the broader markets after the tariff announcement, closing the day up more than 21 percent. The White House pushed back Wednesday on the idea that Trump improperly manipulated the markets. 'It is the responsibility of the President of the United States to reassure the markets and Americans about their economic security in the face of nonstop media fearmongering,' White House spokesman Kush Desai said in an emailed statement. It's not the first time Trump has encouraged people to buy stock — in 2018, during his first term, he told reporters it was a 'tremendous opportunity to buy' during a market slide. In an interview, Rep. Steven Horsford (Democrat, Nevada) said Trump's Wednesday post raised suspicion that members of the administration may be trading on information about tariffs in advance of it being disclosed to the public. 'It's my concern that the administration may be using trade policy to give insider information to individuals before impending actions or inactions,' he said. 'If it occurred, that is market manipulation.' Horsford said he is calling for a full investigation into who may have profited from this information, but acknowledged that carrying out such a probe would be difficult when the administration has fired many of the inspectors general who normally provide such oversight. Typically, cases of potential market manipulation are first investigated by exchanges, including NASDAQ and the New York Stock Exchange, whose investigators look for trading anomalies and unusual patterns by individual traders, said Jim Angel, a finance professor at Georgetown University. If they find evidence of unusual activity they report it to the SEC, which determines whether enough evidence exists to build a case against someone for improper disclosures or trades, he said. In this case, it's unclear who the SEC would build a case against, since nobody knows who may have benefited from Trump's post. Officers and large shareholders of companies are required to disclose their trades, but private individuals who may have benefited from Trump's post are generally not required to disclose that information to the public. As the key decision-maker around tariff policy, Trump did have access to information that regulators would consider 'material' to the value of stocks when he made his 'good time to buy' post. However, his comment was so general that it would be difficult for anyone to build a case that it represented a disclosure violation, Angel said. 'Our securities laws outlaw any kind of fraud or manipulation but it's often hard to prove manipulation,' Angel said. 'I doubt regulators would go after someone who says it's a good time to buy.' But others say the president is opening himself up to scrutiny with his posts. Richard Painter, a former chief ethics lawyer for the George W. Bush White House, said Trump was taking big risks by posting on social-media in ways that explicitly refer to the markets. Trump exposes himself to allegations that he's engaging in market manipulation, potentially giving insider tips 'or other forms of securities fraud,' he said. The posts could also trigger federal investigations or private lawsuits from any investors who lose money on his recommendations. 'He's playing with fire,' Painter said, adding that he didn't believe the conduct would count as 'official acts' as part of his duties as president. Major stock indexes climbed sharply Wednesday after days of losses following the tariff announcements last week. The S&P 500 closed up 9.5 percent, and the narrower Dow Jones Industrial Average rose nearly 8 percent. Trump's posts may have at least one less visible effect than the stock market swings. 'After today, a bunch of hedge funds are going to have their computers following Truth Social and trading on the president's tweets,' Angel said. Andrew Ackerman contributed to this report.
WIRED
18-02-2025
- Business
- WIRED
Chokepoint 2.0: An Investigation Promises the Truth About Crypto's Biggest Conspiracy
Feb 18, 2025 5:33 AM Did bureaucrats in the US plot to cut the crypto industry out of the banking system? An investigation begins. Photo-Illustration:Last spring, Austin Federa was eyeing up a new property in Brooklyn, New York. After passing an initial round of vetting for a mortgage with HSBC, he put in an offer, eager to avoid getting beaten to the punch. But then the bank began to ask about his job. Federa worked as head of strategy at the Solana Foundation, a non-profit in the cryptocurrency industry, he told HSBC. That didn't go down well: After repeated delays and back-and-forth, the bank said it would grant the mortgage only if Federa left his job, he claims. Federa was dumbstruck: 'The guy explicitly told me: 'It's because of crypto,'' he claims. 'How could I be a more attractive person to lend to as someone who is unemployed?' HSBC did not respond to a request for comment. In crypto circles, tales of difficulties in securing loans, banking and other ordinary financial services in the US are common. Multiple firms report being stonewalled by tens of different banks before finding one willing to provide a checking account; others say banks have closed their accounts at short notice, sometimes without giving a reason. That's a major problem: Without a banking partner, crypto firms cannot accept dollars in exchange for services, store funds raised from investors, nor pay employees or vendors. Their quest to build a peer-to-peer financial system free of rent-seeking intermediaries is dependent, inconveniently, on an accord with those same intermediaries—the banks. Large US banks have been reluctant to do business with crypto firms for many years; in 2017, the JP Morgan CEO Jamie Dimon described bitcoin as 'fraud.' But during the Joe Biden administration, members of the industry—with crypto venture capitalist Nic Carter leading the chorus—began to cry conspiracy. The federal government was deliberately trying to destroy crypto businesses by surreptitiously cutting them out of the banking system, they claimed. In the end, Federa managed to secure a mortgage with Citizens Bank, which he had been speaking to at the same time as HSBC. Though his friends were sympathetic, they were largely skeptical of the idea of a conspiracy to debank crypto. 'They thought it must have been an anomaly,' says Federa. However, under the Donald Trump administration, the debanking allegations are being taken seriously by Congress. In early February, both the House Committee on Financial Services and the Senate Banking Committee held separate hearings on the topic, at which crypto executives testified. The hearings mark the start of an inquiry into Operation Chokepoint 2.0, the term widely used to describe the alleged anti-crypto conspiracy, coined by Carter. 'Consider what happens when a bank refuses to provide services to your company at the direction of a bank regulator,' said Republican congressman French Hill, chair of the House Committee on Financial Services, at one of the hearings. 'That is exactly what was happening under the Biden and Harris policy of Chokepoint 2.0, which nearly severed the digital asset ecosystem from financial institutions,' he alleged. The term Operation Chokepoint was first used in reference to a program launched by the Barack Obama administration under which US officials were said to have pressured banks into severing ties with pornography, payday lending, and other disfavored industries. This time, the argument goes, crypto was in the crosshairs. Specifically, the theory is that the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC), the agencies responsible for the stability of the US banking system, strong-armed banks into refusing to serve the crypto industry. They did so by issuing informal guidance, skirting the public consultation process required to instate formal policy, crypto figures have claimed. In a joint statement issued in January 2023, in the wake of the spectacular collapse of crypto exchange FTX and various other crypto businesses, the three agencies claimed that crypto represented a 'significant risk' for banks. 'It is important that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system,' the agencies wrote, although they also made clear that US banks are 'neither prohibited nor discouraged' from servicing crypto businesses. In additional statements issued around that time, both the banking regulators and White House further warned banks to limit their exposure to crypto. In a statement to WIRED, Rodney Hood, acting comptroller of the currency said, 'The OCC does not direct banks to open, close, or maintain individual accounts. Nor does the OCC recommend or encourage banks to engage in the wholesale termination of categories of customer accounts.' The Federal Reserve declined to comment, but pointed to statements made by its chairman Jerome Powell at a January press conference: 'Banks are perfectly able to serve crypto customers, as long as they understand and can manage the risks,' he said at the time. 'We certainly don't want to take actions that would cause banks to terminate customers who are perfectly legal.' The FDIC did not respond to a request for comment. Previously, crypto entrepreneurs have been reluctant to go public with tales of their debanking, partly to avoid being stigmatized and partly for fear of jeopardizing their new banking relationships, says Nick Neuman, CEO at crypto custody firm Casa. In 2021, Silicon Valley Bank informed Casa that it would close its bank account, which the company had held for three years. Neuman's cofounder wanted to tweet about it, but he objected. 'You're worried that if you talk about this publicly you're going to flag yourself to the current banking relationship that you barely got by the skin of your teeth, then they are going to debank you too. You're back to square zero,' says Neuman. 'You're in this mode where you're hoping that nobody in the bank's risk committee realizes that you're a crypto business. You want to stay under the radar.' Now that Donald Trump has assumed the White House, having vowed on the campaign trail to 'immediately shut down Operation Chokepoint 2.0,' members of the industry feel emboldened. After the issue was mentioned by venture capitalist Marc Andreessen on the Joe Rogan podcast in December, they flooded X with war stories about their dealings with banks. 'The tide had turned and the new administration was clearly coming in and changing things,' says Neuman. Few would now dispute that crypto businesses had trouble accessing financial services in the US—the anecdotes are too many. But it remains for Congress to firmly establish why. While Trump and other politicians have spoken in terms that imply the Operation Chokepoint 2.0 theory has been proven categorically, no smoking gun—whether documentary evidence or insider testimony—has yet emerged. At the hearing held by the House Committee on Financial Services on February 6, the discussion returned repeatedly to 700 pages of documents released by the FDIC, partly in response to a request filed under the Freedom of Information Act by crypto exchange Coinbase. The documents chronicle the FDIC's communications with banks about crypto during the Biden presidency. The document payload contains letters in which the FDIC directed banks to pause plans to provide various crypto-related services to clients. In other examples, the regulator posed long lists of questions to banks about their crypto activities. There is no explicit instruction for banks to withhold or withdraw accounts from crypto businesses in the documents, but industry executives have argued that the impression given to banks of a general suspicion towards crypto at the FDIC had the same practical effect. 'The pause letters show that, over and over again, banks were subject not to regulation by examination but regulation by exhaustion,' said Paul Grewal, chief legal officer at Coinbase, in his testimony. 'You had question after question raised.' The perceived implication that the FDIC was likely to subject crypto-curious banks to heightened scrutiny was sufficient for financial institutions to decide that the hassle of working with crypto businesses was not worth the revenue they would bring in, others have claimed. 'These efforts make it uneconomic to serve the crypto industry. While there is no legal ban, there is a functional ban,' argued Austin Campbell, an adjunct professor at NYU Stern School of Business and CEO at crypto payments company WSPN, in his testimony. At a separate hearing held by the same congressional committee on February 12, proponents of the Operation Chokepoint 2.0 theory received the closest thing yet to confirmation of discrimination faced by crypto businesses, claims Caitlin Long, CEO at Custodia, a crypto-focused bank in an ongoing licensing dispute with the Federal Reserve. 'We are all struck at the number of complaints and the breadth of them…We are not telling banks that they can't bank certain people or anything like that. But nonetheless we are hearing [that crypto companies are being refused bank accounts],' said Powell, chairman of the Federal Reserve, in his testimony. 'I take at least some of it as real. We need to understand it, and stop it from happening.' However, not everyone believes that conspiracy is the most likely explanation for the caution or aversion towards crypto among banks. 'I don't believe that there was any conspiracy,' says Mercedes Tunstall, a partner at law firm Cadwalader, formerly an inhouse lawyer at the Bank of America and HSBC. 'You've got a real concern about money laundering, fraud and terrorist financing occurring with cryptocurrency.' After FTX collapsed amidst allegations of fraud, says Tunstall, the banks had particular reason for limiting the number of crypto clients they worked with: Both to protect themselves from the reputational risk associated with providing services to a company later revealed to be fraudulent, and operational risk tied to the possibility that other crypto businesses might become casualties in the FTX fallout. 'The banking industry is very gossipy,' says Tunstall. 'I think there was maybe a crowd mentality driving [the unwillingness to work with crypto businesses,] but not anything more nefarious than that.' Nevertheless, crypto figures are using this opportunity to call for various reforms. During the hearing held by the House Committee on Financial Services, Campbell recommended that banks be required to provide a written justification to any client whose account they intend to close, and that banking regulators should be permitted to deliver guidance only in writing, never verbally. Others are baying for Congress to name the individuals involved in the alleged Operation Chokepoint 2.0 plot. 'The truth is going to come out,' Long told WIRED in an interview late last year. 'If they follow through [with the investigation,] a lot of faceless bureaucrats' names will be out there.' But irrespective of whether Congress unearths a genuine conspiracy, the very existence of an investigation is already making a difference, Federa claims. In November, Federa left the Solana Foundation to launch DoubleZero, a new crypto venture incorporated in the Cayman Islands. Initially, the organization was turned away by a range of US banks. But two of those banks have since agreed to supply DoubleZero with an account, Federa claims, after a sudden change in policy. 'The last thing anyone building a company wants to worry about is banking. But for years there was no other option,' says Federa. 'Something has changed—and that change is good. If the political process wants to assign repercussions, godspeed. But hopefully this is something I never have to think about again.'
