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El Salvador prepares to launch bitcoin bond: ‘If this fails, a lot of doors close’

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El Salvador prepares to launch bitcoin bond: ‘If this fails, a lot of doors close’

Josué País, proprietor of an El Salvador taxi enterprise that accepts funds in bitcoin from the vacationers who use the service, is enthusiastically backing the nation’s newest plan to money in on the cryptocurrency craze.

“The curiosity is what will get me,” stated País, 36, who was planning to purchase about $200 of the central American nation’s “bitcoin bond” set to launch this week. “Primary, I’m going to do it to help the nation. Quantity two, as a result of it’s a giant, engaging guess.”

The nation’s millennial president Nayib Bukele is counting on curiosity within the bitcoin-backed bond from the likes of País and retail traders worldwide. It was one of many few choices left to assist bail the nation out of its monetary gap, analysts stated, however with institutional traders reluctant to take part and the worth of bitcoin in decline, the launch might not be successful.

Six months after El Salvador turned the primary nation to make bitcoin authorized tender, the federal government is scrambling for funds to repay and refinance expiring debt. Its sovereign bonds have fallen to junk standing up to now yr as traders fear that the price range deficit, which the IMF says might attain 5 per cent this yr, is unsustainable. The fund has urged El Salvador to revoke bitcoin’s standing.

The ten-year bond is a key aspect of Bukele’s daring financial experiment. He hopes to boost a minimum of $1bn to extend the nation’s bitcoins shares and to finance a brand new “bitcoin metropolis” close to the Honduran border powered by geothermal power from a close-by volcano. Any extra funds raised might assist it keep away from a stringent IMF programme or a sovereign debt restructuring, consultants stated.

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“If it is a failure, quite a lot of doorways shut,” stated Carlos Acevedo, a former president of El Salvador’s central financial institution. “This issuance goes to outline so much.”

A number of institutional traders stated they have been watching the bond with curiosity however wouldn’t take part, noting that patrons have been extra prone to be retail crypto traders. Some analysts suppose the launch will probably be delayed however Bukele’s tight management of Congress means the related laws might be authorised rapidly — the invoice to make bitcoin authorized tender handed in a matter of hours.

Anti-bitcoin graffiti in San Salvador: 70% of Salvadoreans have little or no belief in bitcoin, in keeping with polling © Jose Cabezas/Reuters

For Bukele, the embrace of crypto has produced restricted outcomes. The federal government had argued that El Salvador’s giant migrant labour drive would discover bitcoin a less expensive and higher solution to ship cash house. However central financial institution knowledge confirmed that simply 2 per cent of remittances in January have been despatched utilizing digital wallets.

Seventy per cent of Salvadoreans have little or no belief in bitcoin and suppose it principally advantages foreigners, just like the crypto fanatics who go to the nation, enterprise leaders and wealthy folks, polling by Central American College from December confirmed.

“I’m probably not certain find out how to use it, it scared me that it goes up and down, it’s very unstable,” stated Alejandro Jiménez, 23, who works in a name centre within the capital San Salvador. “It’s a fairly dangerous guess by our authorities.”

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A senior govt at one financial institution stated fewer than 0.01 per cent of debt funds have been being made in bitcoin, whereas one other from a rival stated they’d seen an “irrelevant” variety of transactions.

Tourism stays depressed, with customer numbers in 2021 nicely under pre-pandemic years, official knowledge confirmed. However the authorities stated tourism had elevated in November and December and estimated that 20 per cent of transactions within the sector have been in bitcoin.

The price of the crypto experiment, together with contracts regarding Chivo — the official bitcoin app which has 2mn energetic customers in keeping with the federal government — or how Bukele buys the nation’s bitcoin haven’t been made public. Traders attempting to know financial coverage search conferences with Bukele’s brothers, who’re key figures in a small circle of choice makers.

President Nayib Bukele
President Nayib Bukele kinds himself because the ‘CEO of El Salvador’ on Twitter © Camilo Freedman/Getty

“The clearest authorities coverage is opaqueness with public cash,” stated Ruth López, anti-corruption director at non-profit Cristosal. “Particularly in public purchases and the event of the ecosystem to again up bitcoin and the federal government app.”

The federal government didn’t reply to requests for remark on the bitcoin bond. Finance minister Alejandro Zelaya stated in an internet interview final month that there was “zero per cent” probability of a default on its sovereign bonds and that the crypto bond issuance would adjust to “know your buyer” guidelines to stop cash laundering.

A number of components might prohibit curiosity within the bond. With one bitcoin buying and selling at roughly $40,000, the cryptocurrency is about 20 per cent under its stage the day earlier than it turned authorized tender in El Salvador.

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The bond sale additionally comes as cryptocurrency exchanges attempt to withstand strain to dam transactions from Russia, amid considerations that crypto investments make it simpler to evade sanctions. El Salvador abstained in a current UN vote to sentence Russia’s invasion of Ukraine, and Bukele is planning a visit to Moscow in July.

The crypto bond will probably be issued by state thermal power firm La Geo, in keeping with traders and bankers. People will probably be unable to purchase the bonds as they’re prohibited from utilizing Bitfinex, the buying and selling platform which is able to promote them. In El Salvador’s unique presentation, it stated that investments could be allowed in greenback, bitcoin and tether.

The monetary points of interest of the bond have been restricted, analysts stated. The bond presents an annual coupon of 6.5 per cent — a lot lower than the yield presently accessible on El Salvador’s sovereign bonds — plus 50 per cent of the achieve within the worth of bitcoin after 5 years. That made it extra suited to traders who wish to again El Salvador’s broader crypto experiment reasonably than search the most effective revenue, stated analysts.

“If El Salvador had strong public funds . . . it [the bitcoin bond] might be a special story,” Acevedo stated. “Anybody who does a chilly evaluation will simply purchase bitcoin instantly.”

Extra reporting by Jonathan Wheatley

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Crews race to contain LA wildfires as menacing winds may ramp up: Live updates

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Crews race to contain LA wildfires as menacing winds may ramp up: Live updates
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LOS ANGELES − Fire crews on Sunday were racing to gain an upper hand against infernos that have ignited across the Los Angeles area amid ominous new wind warnings as flames threatened additional Southern California communities.

Aircraft unloaded water and fire retardant on hills where the Palisades Fire − the most destructive in the history of Los Angeles − ballooned another 1,000 acres to a total of 23,654, destroying more homes. The expansion of the fire, which was 11% contained, to the north and east spurred officials to issue more mandatory evacuations to the west of the 405 freeway as the blaze put parts of Encino and Brentwood in peril.

Cal Fire official Todd Hopkins said the Palisades Fire had spread into the Mandeville Canyon neighborhood and threatened to jump into the upscale Brentwood community and the San Fernando Valley.

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The Palisades Fire is one of six blazes that have erupted since Tuesday, leaving at least 16 people dead. Four of the six fires remained active on Sunday.

Santa Ana winds that have fueled the blazes for the past week were expected to strengthen Sunday morning in Los Angeles and Ventura counties and again late Monday through Tuesday morning. Sustained winds could reach 30 mph, with gusts up to 70 mph possible , forecasters said.

“Critical fire-weather conditions will unfortunately ramp up again … for southern California and last through at least early next week as periodic enhancements of off-shore winds continue,” the National Weather Service said. “This may lead to the spread of ongoing fires as well as the development of new ones.”

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Developments:

∎ About12,000 structures have been damaged or destroyed from the wildfires, which have consumed about 38,000 acres of land total, according to CalFire.

∎ Evacuation orders throughout the Los Angeles area now cover 153,000 residents. Another 166,000 residents have been warned that they may have to evacuate, Los Angeles County Sheriff Robert Luna, said.

∎ Gov. Gavin Newsom announced an investigation into water supply issues that may have impeded firefighters’ efforts.

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At least 16 people have died between the Eaton and Palisades fires, the Los Angeles County Medical Examiner said Saturday.

The Palisades Fire had at least five deaths, according to medical examiner records, and 11 people have died in the Eaton Fire.

Of the 16 total deaths in both fires, the only victim identified by officials was Victor Shaw, 66, who died Wednesday protecting his home in Altadena. Another victim was man in his 80s, but authorities did not release his name, pending notification of next of kin.

To the northeast, the Eaton Fire stood at 14,117 acres and was 15% contained after ripping through parts of Altadena and Pasadena. More than 7,000 structures were damaged or destroyed,  Fire Chief Anthony Marrone said.

In Altadena, California official Don Fregulia said managing the Eaton Fire and its impact will be a “huge, Herculean task” that he said will take “many weeks of work.”

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Progress was reported Saturday in bringing electrical power back to some Los Angeles neighborhoods.

Southern California Edison CEO Steven Powell said there are now about 48,000 customers without power, “down from over half a million just a couple days ago.”

Yes fire officials warned public safety power shutoffs were again likely to prevent new fires being ignited.

“They help save lives,” Marrone said. “Yes, they’re a challenge to deal with, but it’s certainly better than having another fire start.”

Richard and Cathryn Conn evacuated from the Pacific Palisades neighborhood earlier this week, only to find out that much of their neighborhood had been decimated. But they still aren’t sure about their four-bedroom house where they’d lived for over a quarter-century.

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“You can visualize every room,’’ Richard Conn, 75, said, “and then you know there’s a 50% chance it doesn’t exist anymore.”

“If you have ever wondered what it was like living in Dresden after the World War II firebombing, you should come to the Palisades,” he said.

They also don’t know what’s going to happen next as dangerous weather conditions have made it difficult to contain the fires, and more brush fires seem to keep popping up all over the county.

“I feel like people are panicking,” said Gary Baseman, 64. Read more.

As California fire officials are still getting to the bottom of what sparked the wildfires raging across Los Angeles, and politicians point fingers at one another, climate change is helping drive an increase in large wildfires in the U.S.

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“Climate change is leading to larger and more severe wildfires in the western United States,” the latest National Climate Assessment previously reported. These fires have “significant public health, socioeconomic, and ecological implications for the nation.”

But is climate change the main factor in California? It’s not quite that simple. Reporters from the Arizona Republic, part of the USA TODAY Network, dive into this topic. Read more here

Contributing: Jeanine Santucci, Eduardo Cuevas; Reuters

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Video: Community L.A. Fire Brigade Steps In to Help Evacuate Residents

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Video: Community L.A. Fire Brigade Steps In to Help Evacuate Residents

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Community L.A. Fire Brigade Steps In to Help Evacuate Residents

Deep into the evacuation zone, volunteers are stepping in to evacuate L.A. residents from encroaching wildfires. Armed with radios, hoses and knowledge of the area, this brigade offers help to overextended fire departments as they try to reach people who have yet to flee.

“Top is Yankee.” “Victor’s your side. Yankee is the other side of Topanga, OK?” Community fire brigade volunteers are on the streets of Topanga, California. The Palisades fire was encroaching on this home, and Keegan Gibbs and his team were working to evacuate the owner. “OK, hi. So I gotta do this fast, so.” “I honestly just kind of want you to leave, because it’s getting bad.” “No we’re out of here in five minutes.” The brigade works to back up the fire department when resources are stretched thin. “L.A. County and the other supporting agencies are the best in the world at what they do. Events like this, it’s not enough.” The Palisades fire has now been burning for several days, and has destroyed tens of thousands of acres. “It makes no sense for somebody to try to stay here. It’s so unbelievably dangerous.” “I walked kind of with Keegan a little bit. We were going to stay, probably going to stay for a little while, but we walked the property and it’s just almost like, I just don’t think it’s safe. Can you just open that? I’m want to throw some more stuff in here, and then we’ll be good. Just going to put pictures, important memorabilia.” “There’s a huge denial that people won’t be affected by fire, and we have to be advocates for people to realize and accept that risk.” With firefighters still unable to contain two of the region’s largest fires, more L.A. residents are expected to join the tens of thousands who have already been forced to evacuate. “Our mission is to make sure people are safe, just full stop.”

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Malaysia expects surge of Chinese investment, economy minister says

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Malaysia expects surge of Chinese investment, economy minister says

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Chinese chipmakers and technology companies are heading to Malaysia in droves, its economy minister Rafizi Ramli said, as Beijing prepares to face more tariffs when Donald Trump returns as US president this month.

The moves by Chinese companies, which are expected to result in billions of dollars of investment in Malaysia in the coming years, would rival the US companies that have dominated the country’s market, he said.

“Chinese [companies] are very keen to go outside and expand beyond their domestic market,” Rafizi told the Financial Times in an interview. “Those companies are now looking at relocating or expanding into Malaysia.”

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Trump has threatened to impose 60 per cent tariffs on Chinese imports when he re-enters the White House on January 20, rattling investors and putting companies on alert to restructure their supply chains.

Malaysia has been a big beneficiary over the past decade of such “China-plus-one” strategies, where multinational companies complement their Chinese operations with investments in regional countries to diversify risk and lower costs.

It has also positioned itself as a crucial player in global supply chains for high-tech industries such as artificial intelligence, with long-standing semiconductor manufacturing operations in Penang in the north and a burgeoning hub for data centres in the southern state of Johor.

US companies have dominated these sectors in Malaysia, but Rafizi said he expected a wave of Chinese investment on the back of initiatives his government was putting in place to develop the industries further.

Joe Biden’s administration has restricted sales of advanced chips by US companies to China, posing a potential threat to their investments in Malaysia, where many of the products are manufactured, and opening the door for Chinese competitors.

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Rafizi said he made a 10-day trip in June to China, where he met 100 AI, tech and biomedical companies to assess their appetite for investing in Malaysia. He added that these efforts had resulted in two investment delegations from China in the past few months.

“Chinese investments usually come with their own ecosystem,” he said. “We will be seeing more and more, especially if we can secure the first two or three anchor investors from China.”

He added that many companies were also seeking to increase exposure to the fast-growing south-east Asian market as China’s economic momentum slows and trade with the US faces additional barriers.

This week, Malaysia signed an agreement with Singapore to create a vast special economic zone between the two countries. Malaysia hopes the initiative will add $26bn a year to its economy by 2030, bringing in 20,000 skilled jobs and 50 new projects.

Between 2019 and 2023, Malaysia attracted $21bn of investment into its semiconductor industry and $10bn into data centres — the storage facilities that enable fast-growing technologies such as AI, cloud computing and cryptocurrency mining. In the past year alone, US tech companies Amazon, Nvidia, Google and Microsoft committed nearly $16bn, mostly for data centres in Johor.

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TikTok owner ByteDance is the largest Chinese group to invest in Johor, with a $2bn commitment last year.

Rafizi said that while historically, Malaysia had been happy to accept any foreign investment, it was becoming more selective as it sought to contribute more value to the products and services it produced.

He added that while increasing US-China tensions would harm global trade, it could prompt Chinese companies to give Malaysia a bigger role in chip design, rather than just manufacturing, which would generate more income as the country climbed the value chain.

“The unintended consequence of some tariff measures targeted at Chinese companies basically helps countries like Malaysia to weed out the more genuine and long-term investments from China compared to the ones that just look to use Malaysia as a manufacturing outpost,” he said.

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