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Russia investors should put morals ahead of profiteering

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Russia investors should put morals ahead of profiteering

Funding financial institution merchants are famend extra for his or her pragmatic opportunism than their ethical compass. So it’s a measure of President Vladimir Putin’s pariah standing that not one of the large Wall Avenue names seems to be risking their popularity shopping for up out-of-fashion Russian belongings as they’re dumped by mainstream buyers.

Except you assume that each one Russian firms and the Russian state will stop to exist within the coming months, the worth of many shares and bonds, buying and selling at 10, 20 or 30 per cent of their prewar ranges or face worth, screams “discount”. And but, Wall Avenue’s distressed-asset desks have been shunning them.

Simply as western companies have rushed to depart Russia, so many buyers in Russian firms have been determined to ditch their exposures. Buying and selling volumes within the nation’s company bonds have almost tripled over the previous month, as mainstream buyers rush for the exit.

Beneath instruction from the Norwegian authorities, Norway’s sovereign wealth fund has frozen all new funding in Russia, and can start to divest its $3bn of investments within the nation. Abrdn, the UK asset supervisor with an rising markets specialism, has begun promoting its Russian belongings too, in keeping with insiders. This week, JPMorgan Chase will take away Russian bonds from its rising markets indices.

The gross sales up to now are only a trickle in relative phrases, although. One high Wall Avenue govt mentioned solely 3 or 4 per cent of the $50bn of belongings that might be bought had up to now traded, regardless of the majority having been written all the way down to zero on buyers’ books.

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If a few of the usual-suspect distressed patrons are staying away, realpolitik is taking part in at the very least as large a job as ethics: shareholder stress and monetary pragmatism have supplemented murderous geopolitics to make a robust cocktail of deterrence.

“Quite a lot of buyers are self-sanctioning,” mentioned Professor Florin Vasvari at London Enterprise College. “Settlement [of bond sales or coupon payments] could be very tough.” However there may be additionally widespread concern amongst asset managers that they might anger their very own buyers by persevering with to spend money on the nation, he mentioned.

That isn’t simply true of massive long-only asset managers, or certainly the carefully scrutinised behemoths of Wall Avenue. Many giant non-public fairness teams and hedge funds are precluded from investing within the nation because of the strict attitudes of their backers. “Some endowment funds and Canadian pension funds have had an absolute ban on Russian publicity since 2014 when Putin invaded Crimea,” Vasvari mentioned.

Nonetheless, because the Monetary Occasions reported final week, a posse of small specialist distressed-asset funds has been shopping for. Apparently unrestricted by the sorts of bars imposed by endowments on greater funds, the likes of Aurelius, GoldenTree and Silver Level have been snapping up Russian company debt at valuations of some cents on the greenback. Bankers mentioned one other crop of distressed buyers lively in Russian asset purchases was based mostly within the Cayman Islands, the place scrutiny is decrease.

Distressed funds concentrate on high-risk conditions like these. The blanket nature of sanctions — and public opprobrium — would possibly make the state of affairs much less simple to handle than customary company restructurings. However with much less competitors for belongings, the spoils might be greater if occasions go their method.

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There’s a parallel right here with environmental, social and governance investing. Examples have mounted over the previous yr or two of publicly owned belongings in contentious areas, resembling oil and gasoline, being snapped up by non-public capital patrons. Final yr I wrote about this for instance of “Newton’s legislation of company possession”: as listed firms have come below growing investor stress over every little thing from govt pay to carbon emissions, one response has been a spate of gross sales to out-of-the-limelight non-public patrons.

Pure-blooded capitalist principle would counsel that even essentially the most unpopular belongings have their worth and distressed funds play an vital position within the functioning of the ecosystem. Some will argue, too, that simply as Russian residents shouldn’t be generically ostracised as Putin supporters, it’s unfair to tar all Russian firms with the identical brush.

However there will be no compromise in utilizing financial measures to counter Moscow’s tanks and missiles. If the west’s sanctions on Russia are to work to most impact, and convey as early an finish as attainable to Putin’s bloody invasion of Ukraine, then hard-nosed investor profiteering wants to provide strategy to a extra ethical capitalism.

patrick.jenkins@ft.com

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As California Burns, ‘Octavia Tried to Tell Us’ Has New Meaning

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As California Burns, ‘Octavia Tried to Tell Us’ Has New Meaning

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In the wake of the devastating fires in Los Angeles, many people are referencing the work of the science fiction writer Octavia Butler. Butler, who grew up in Pasadena, was the daughter of a housekeeper and a father who was a shoeshiner. She went on to become the first science fiction writer to win a MacArthur “genius” award. Her book “Parable of the Sower,” published in 1993, paints a picture of a California ravished by the effects of climate change, income inequality, political divisiveness and centers on a young woman struggling to find faith and the community to build a new future.

The phrase “Octavia tried to tell us,” which began to gain momentum in 2020 during the pandemic, has once again resurfaced, in part because Butler studied science and history so deeply. The accuracy with which she read the shifts in America can, at times, seem eerily prophetic. One entry in “Parable of the Sower,” which is structured as a journal, dated on “February 1, 2025” begins, “We had a fire today.” It goes on to describe how the fear of fires plague Robledo, a fictional town that feels much like Altadena, a haven for the Black middle class for more than 50 years, where Butler lived in the late ’90s.

In 2000, Butler wrote a piece for Essence magazine titled, “A Few Rules for Predicting the Future.” She wrote: “Of course, writing novels about the future doesn’t give me any special ability to foretell the future. But it does encourage me to use our past and present behaviors as guides to the kind of world we seem to be creating. The past, for example, is filled with repeating cycles of strength and weakness, wisdom and stupidity, empire and ashes.”

In one of the last interviews before she died in 2006, Butler spoke to Democracy Now!, an independent news organization, about how she’d been worried about how climate could devastate California . “I wrote the two ‘Parable’ books back in the ’90s,” she said, referring to “Parable of the Sower” and her 1998 follow-up, “Parable of the Talents.” These books, she explained, were about what happens when “we don’t trouble to correct some of the problems we are brewing for ourselves right now. Global warming is one of those problems. And I was aware of it back in the ’80s.” She continued: “A lot of people were seeing it as politics, as something very iffy, as something they could ignore because nothing was going to come of it tomorrow.

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Lynell George, a writer who lives in Los Angeles and the author of a book on Butler and her creative journey, has spent many years studying Butler’s archives at the Huntington Library in Pasadena. In 2022, we asked George to write about how Butler predicted the world we live in. As so many people are turning to her work during this time of tremendous loss, we wanted to share that story with our readers again.

In her piece, “The Visions of Octavia Butler,” George wrote: “In ‘Parable of the Sower,’ Earth is tipping toward climate disaster: A catastrophic drought has led to social upheaval and violent class wars. Butler, a fervent environmentalist, researched the novel by clipping articles, taking notes and monitoring rain and growth in her Southern California neighborhood. She couldn’t help but wonder, she later wrote, what ‘environmental and economic stupidities’ might lead to. She often called herself a pessimist, but threaded into the bleak landscape of her ‘Parable’ novels are strands of glimmering hope — ribbons of blue at the edges of the fictional fiery skies.”

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Donald Trump’s inauguration to be moved indoors because of ‘bitterly cold’ weather

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Donald Trump’s inauguration to be moved indoors because of ‘bitterly cold’ weather

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Parts of Donald Trump’s inauguration will be moved inside the US Capitol because of freezing weather that is forecast for Washington on Monday.

It will be the first time since 1985 — when a severe cold snap hit Ronald Reagan’s second inauguration — that a swearing-in ceremony has been moved indoors.

The president-elect announced the revised plans in a Truth Social post on Friday, saying he had ordered the inauguration address, as well as prayers and speeches, to be delivered inside the Capitol Rotunda as Reagan had done four decades ago.

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“There is an Arctic blast sweeping the Country. I don’t want to see people hurt, or injured, in any way,” Trump wrote.

“It is dangerous conditions for the tens of thousands of Law Enforcement, First Responders, Police K9s and even horses, and hundreds of thousands of supporters that will be outside for many hours on the 20th.”

The National Weather Service said an “enhanced winter storm threat” was in place for Sunday afternoon and evening, and predicted about 2-4 inches of snow would fall, with a “reasonable worst case” scenario of 4-8 inches.

“Bitterly cold wind chills” were expected Monday to Wednesday, the NWS said on Friday, as it forecast temperatures to be “well below freezing” during this period.

The agency is forecasting a high of about -5C at 11am local time on Monday, when the swearing-in ceremony is due to begin, with a wind-chill of -13C that it warned could result in hypothermia or frostbite without appropriate attire.

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Trump said the Capital One Arena — with a capacity of 20,000 — will be opened on Monday for a live viewing of the ceremony, and that he would visit the venue, located about 2km from the Capitol, following his swearing-in.

Other events, including a victory rally at the arena are scheduled for Sunday and inaugural balls set for Monday night, will continue as scheduled, the president-elect said.

Trump encouraged supporters who choose to come to “dress warmly!”

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CNN liable for defamation over story on Afghanistan 'black market' rescues

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CNN liable for defamation over story on Afghanistan 'black market' rescues

Security contractor Zachary Young alleges CNN defamed him in a November 2021 report, shown above, about Afghans’ fears of exorbitant charges from people offering to get them out of the country after the Taliban took control of Afghanistan. CNN says it will defend the report in a trial set to start in a Florida court Monday.

CNN via Internet Archive/Screenshot by NPR


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CNN via Internet Archive/Screenshot by NPR

A Florida jury has found that CNN defamed a security consultant in presenting a story that suggested he was charging “exorbitant prices” to evacuate people desperate to get out of Afghanistan after the U.S. withdrawal in August 2021.

Jurors found the network should pay $5 million to U.S. Navy veteran Zachary Young for lost finances and suffering, and said he was eligible for more in punitive damages. The proceedings turned immediately to expert testimony as both sides presented cases over what punitive damages would be appropriate.

Young sat impassively as the jury’s verdict was read aloud in court.

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The November 2021 story focused on concerns from Afghans that they faced extraordinary costs in a “black market” to secure safe passage for relatives and friends, especially those who had worked with U.S. agencies and organizations and therefore were fearful of the takeover by the Taliban.

Young was the only security contractor named in the piece, however, and a caption warned he offered “no guarantee of safety or success.”

He was not directly accused of operating in a black market in the television or written versions of the story, but the words did appear in the caption in the TV version of the story.

On the witness stand during the trial, CNN editors defended use of the term “black market,” saying it meant operating in unregulated circumstances, such as the chaos of Kabul at that time; Young’s lawyers noted that dictionaries consistently ascribe illegality to the term.

The jury found CNN liable for defamation per se, meaning it had harmed Young by the very words it chose, and for defamation by implication, that is, it had harmed his reputation by the implications that a reasonable reader or viewer might take from the story.

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Young’s lead attorney, Devin Freedman, had argued that CNN willfully damaged Young, costing him millions of dollars and causing irreparable personal harm, and that the network should be punished for it. Toward the very end of his closing arguments, Freedman told the jury they had the rare opportunity to hold the press accountable.

“Media executives around the country are sitting by the phones to see what you do,” Freedman told jurors. “CNN’s executives are waiting in their boardrooms in Georgia to see what you decide. Make the phones ring in Georgia. Send a message.”

After the initial verdict, Judge William S. Henry instructed jurors that they could only find punitive damages against CNN for its actions in the case at hand, not over any other story or issue.

Even so, over the course of the lawsuit, lawyers for Zachary Young acquired internal correspondence showing several editors within CNN held reservations about the solidity of the reporting behind the story.

For example, Fuzz Hogan, a senior director of standards for CNN, acknowledged in testimony under oath that he had approved a “three-quarters true” story. Another editor, Tom Lumley, had said in an internal message that the piece was “80 percent emotion.” On the stand, Lumley said that it still wasn’t his favorite story, but on the grounds of the craft of story-telling involved.

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During the trial, CNN’s lawyers had contended the story’s reporting holds up as fair and true under scrutiny. CNN correspondent Alexander Marquardt had presented viewers with a LinkedIn message from Young saying it would cost $75,000 to evacuate a vehicle with five or six passengers from Kabul to Pakistan. Young said he worked with corporate sponsors, including Bloomberg and Audible, rather than individuals.

On the stand, Young acknowledged that he took a 65% profit margin from the fees he charged, and took inquiries from individuals. He also curtly and coarsely brushed off people inquiring about help who could not afford his fees.

Other groups involving U.S. veterans and non-governmental organizations sought to get Afghans out without such profits, as a former major general testifying on Young’s behalf acknowledged. The retired major general, James V. Young Jr. (not related to Zach Young), said he charged donors for the cost.

CNN’s legal team, led by David Axelrod (the lawyer is not related to the Obama White House official and CNN analyst of the same name) had told jurors they should rely on their own “common sense.”

Axelrod had been able to press Young to concede that some of his claims to potential clients were not borne out by facts; Young had not in fact evacuated people from Afghanistan by air. Nor was he in constant contact with journalists, as claimed.

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In his closing argument, Freedman presented Young as a swashbuckling former CIA operative to explain his curtness in messages to desperate people trying to help people.

On the witness stand, however, Young emerged as emotionally vulnerable himself, weeping during testimony. He recounted that, after the story ran, he became despondent, depressed, alienated from intimacy with his wife, cut off from friends and family members. HIs attorney cited “deep and lasting wounds” from the piece.

The piece was presented initially on CNN’s The Lead With Jake Tapper, and a fuller written version subsequently posted on CNN’s website. A few months later, shortly after Young’s legal team threatened legal actions, a substitute anchor apologized to Young on the air for use of the term “black market” in the story, and said it did not apply to him.

Freedman, Young’s attorney, called the apology insufficient.

“This is what makes this case historic: punitive damages,” Freedman told jurors. “A media company has to face an American jury with the power to punish. That is not a frequent event. Do you believe that CNN should be punished? Do you believe they should send a message to other media companies to avoid this misconduct?”

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This story will be updated after the jury decides on what, if any, punitive damages to award Young.

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