0:00

You've seen the headlines. Bonds are

0:02

making a comeback. But if you've

0:04

ever tried to invest in bonds,

0:06

you know what a clunky, complicated,

0:08

broken experience it can be. That's

0:10

why at Public, we took fixed

0:12

income and fixed it. Now you

0:15

can find, evaluate, and buy thousands

0:17

of bonds with an investing experience

0:19

designed in this century. Add fixed

0:21

income to your portfolio with corporate,

0:23

treasury, and municipal bonds. Go to

0:25

public.com/the economist to get started. Full

0:28

disclosures can be found at public.com/

0:30

bonds. Hello

0:44

and welcome to the intelligence from the economist.

0:46

I'm your host, Ora Ogunbiyi. Every

0:49

weekday we provide a fresh perspective

0:51

on the events shaping your world.

0:58

States everywhere from Bhutan to

1:00

Honduras are trying to build

1:02

shiny new cities. But

1:05

how many adjust the experiments of

1:07

vain, glorious billionaires? Can

1:09

any of these planned developments actually rise

1:11

above existing ones? And

1:15

our correspondent takes us to the

1:17

archive of retail star, Marx and

1:20

Spencer. It turns out that

1:22

knickers and cardigans can reveal quite a lot about

1:25

Britain's social history and even

1:27

help solve crimes. First

1:35

up though... It

1:42

has been called one of the biggest

1:44

financial frauds in American history. In

1:48

November last year, a jury took

1:50

just four hours to convict Sam

1:52

Bankman-Friede, the former

1:54

boss of the cryptocurrency exchange FTX,

1:57

on seven complicated charges. Sam

2:00

Bankman Freed had been found guilty

2:03

of the charges. There were seven counts,

2:05

including wire fraud, conspiracy to commit wire

2:08

fraud, as well as conspiracy to commit

2:10

money laundering, and a number of others.

2:12

Following FTX's collapse, $8

2:16

billion of its customers' money was

2:18

unaccounted for. And today, in

2:20

a New York federal court, Mr.

2:22

Bankman Freed, also known as S.B.F.,

2:25

is due to be sentenced. He

2:27

maintains that he did nothing wrong, blaming

2:30

accounting mistakes for the missing money. But

2:33

the jail time facing the 32-year-old former

2:36

king of crypto could be harsh.

2:39

The sentencing that is due today

2:42

essentially marks the completion of

2:44

the downfall of Sam Bankman

2:46

Freed, excluding any appeals that

2:48

he might file. Alice

2:51

Forward is our Wall Street correspondent

2:53

and the co-host of Money Talks,

2:55

our podcast on business and finance.

2:58

This is essentially the last step

3:00

in his conviction. Before

3:03

the collapse of his empire, he

3:05

was fabulously wealthy. He was the

3:07

leading whiz kid of the crypto

3:09

industry. He was hobnobbing with politicians

3:12

in the White House and celebrities, and

3:14

he lived this extremely glamorous life. Today,

3:16

he could face as much as 110

3:18

years in prison. Now,

3:21

his own lawyer has described this

3:23

possibility as grotesque, and

3:26

it's not the sentence that prosecutors

3:28

are seeking. They've asked for between 40 and

3:30

50 years. Meanwhile,

3:32

in their defense filings, Sam Bankman

3:34

Freed's lawyers have argued for just

3:37

six. Okay,

3:39

before we get onto the sentencing, what

3:41

exactly was the fraud and conspiracy that

3:43

Sam Bankman Freed was found guilty of?

3:46

So Sam Bankman Freed ran a

3:48

cryptocurrency exchange called FCX. Customers would

3:50

deposit money, either dollars or cryptocurrency

3:52

in that exchange, and they could

3:55

then buy and sell crypto as

3:57

they pleased. The fraudulent

3:59

past... The is that Stx loans

4:01

at various points in his life

4:04

basically all of the customer money

4:06

that had been deposited with it

4:08

to a sister company which was

4:10

this it is trading firm or

4:13

had sudden that sound like were

4:15

treated Also founded cold elevator resets

4:17

and through Alameda resets Amendment Freedom

4:19

has made a losses investments seeds

4:22

to spend money on on property

4:24

he blood and money to employees

4:26

Stx but the precipitating of said

4:28

the downfall of Stx. Was the

4:31

revelation I coined desk of a

4:33

balance sheet of from Alamo. Their

4:35

ad eight revealed that essentially all

4:37

of our limited is valued was

4:39

message a tokens that had been

4:41

issued all created by Sub Bagman

4:43

Fried. It's as have had very

4:45

very few hard assets and that

4:47

had long been question marks about

4:50

the relationship between Stx in Alameda

4:52

and seeing this balance sheet seeing

4:54

that he he really didn't seem

4:56

to have much safer itself artist

4:58

misbegotten to lose confidence in Stx.

5:00

This article joy their sons and

5:02

eventually Sx suspended withdrawals a could

5:04

no longer pay out that people

5:06

who was coming set of money

5:08

back and Asia a few days

5:10

later filed bankruptcy with roughly eight

5:12

billion dollars of costs money missing.

5:15

When it went to trial, three

5:17

of his former colleagues to the

5:19

sound against him admitted fraud, sounded

5:21

very remorseful and at times distraught

5:23

by the actions that they had

5:25

played a role. Ads and see

5:27

a said that he had directed

5:29

them to. Do everything ahead

5:31

a tad. Oh. They really

5:33

threw him under the bus. So does

5:35

that mean that Spf is likely to

5:37

see the sentence? Can a said for

5:40

the maximum a hundred years than six.

5:43

They're. All sudden the things that might make

5:45

you think that he would get a long

5:47

sentence One is that he really didn't a

5:49

d himself a tool to the jugs. He

5:51

repeatedly violated the rules of his release from

5:53

prison in the run up to the trials.

5:55

say with seized Vpn while he was on

5:58

house arrest is a contact with this. We

6:00

always do in bankruptcy proceedings. He said

6:02

lot of things in public that with

6:05

and revealed in the trial not be

6:07

truthful. He showed the private diaries of

6:09

his ex girlfriend Caroline Ellison. he was

6:11

a witness, testified against him and he

6:14

read Alameda to the New York Times

6:16

and they published excerpts from them. So

6:18

the worst case scenario this is a

6:20

judge of looks it all this behavior

6:23

and wants to give him pointed long

6:25

sentence. The. Counter arguments: that which

6:27

is lose weight is that of

6:29

the money that was lost when

6:31

Stx it had bankruptcy in November.

6:33

Message to recoup that actually altering

6:35

pretty well stays in be arguing

6:37

that they will be a full

6:39

repayment of the money that was

6:41

lost when Stx went bankrupt. pets

6:43

the plus interest and so the

6:45

total home that has been done

6:47

to people from his crimes is

6:49

actually much smaller than you might

6:51

have thought and smaller than in

6:54

others fraud cases of similar method.

6:56

She's. They will simply to

6:58

other factors like that he's already

7:00

says some time and he suffers

7:02

from autism and attention deficit disorder

7:04

and other conditions at a time

7:06

of. People seem

7:08

to think that he will end up being given

7:10

a sentence of between twenty and and twenty five

7:13

they be says he is. that the range that

7:15

Lloyds I think into a people have commented publicly

7:17

on the case seems. think that he will gets.

7:20

That. You mention that some of customs money has

7:22

been repeats. How much are we talking here?

7:24

As. Of last August which was last time

7:27

he got an update from the bankruptcy team.

7:29

Stx have recovered about seven point eight billion

7:31

dollars in class and liquid crypto assets and

7:33

that does seem to be roughly the size

7:35

of the whole that was left the Dallas

7:38

he fled the country. Sales know this is

7:40

partly been made possible by just finding more

7:42

assets and there were lots of Crypto Council

7:44

bank accounts that company had lost track of.

7:46

The have turned out to have assets in

7:49

dense but I see what's it to the

7:51

that this is a C B B Hi

7:53

recovery rate is at a loss. of the

7:55

assets that they held have actually done very

7:57

well since they that between sweaty t So

8:00

if you think about crypto, that $8 billion

8:02

in November of 2022, that was when Bitcoin

8:06

was worth maybe a sixth of its

8:08

current value. And creditors and

8:10

FDX, those who had bought crypto, bought Bitcoin

8:13

on the platform, will be paid back a

8:15

dollar amount. So because

8:17

crypto has gone up so much,

8:19

that is inflating the dollar value

8:21

of the crypto that was left. So

8:24

it does look as though most of the

8:27

money is going to be recouped. The problem

8:29

is that a lot of customers think about

8:31

their loss in terms of crypto, not in

8:33

terms of the dollar amount in November of

8:36

2022. And so

8:38

some customers even though, in theory, they're getting all

8:40

of their money back as of the dollar value

8:42

in November 22, they feel like they are being

8:44

shortchanged here. Because

8:46

now crypto is performing well. I

8:49

mean, it sounds like none of this has impacted

8:51

confidence in crypto markets. It

8:54

certainly did in the short term. So when

8:56

FDX collapsed, the price crypto fell

8:58

very sharply. And then about a

9:00

year after FDX failed, you also

9:02

saw a huge blow to FDX

9:04

rival Binance, which was fined by

9:07

the US government for its involvement

9:09

in money laundering and terrorist financing.

9:11

The CEO of Binance, Cheng Peng Zhao,

9:13

was forced to step down. The firm

9:16

is now being modest very closely. So

9:18

you said you had the two biggest

9:20

exchanges, either failing or facing huge challenges

9:22

in relatively quick succession. That

9:24

said, there are a lot of reasons why crypto might be

9:26

climbing again now. One is just interest rates

9:28

tend to move inversely with those and people

9:31

think that interest rates have peaked. The

9:33

other is that actually a lot of this close

9:35

scrutiny of crypto and regulators

9:37

and legal authorities getting involved.

9:40

There is an argument that's washed out

9:43

many of the problems in crypto and

9:45

the firms that are left are better

9:47

regulated and more compliant in general. There

9:49

have actually been some sort of positive

9:51

regulatory developments in crypto as well, which

9:53

might make it sort of easier for

9:55

more people to buy into it. So

9:58

the SEC recently approved the creation of. exchange-traded

10:00

funds that could hold Bitcoin. And there

10:02

have been huge infos into these funds

10:04

since January when they were created and

10:06

that seemed to have coincided with its

10:08

sort of most recent rise. So although

10:11

the failure of FTX was a huge

10:13

blow for crypto, it might ultimately be

10:15

good news for the industry that's left

10:17

behind. Alice, thank you

10:19

so much for coming on the show. Thank you, Ori. Always

10:21

a pleasure to be here. You've

10:34

seen the headlines. Bonds are making a

10:37

comeback. But if you've ever tried to

10:39

invest in bonds, you know what a

10:41

clunky, complicated, broken experience it can be.

10:43

That's why at Public, we took fixed

10:46

income and fixed it. Now you can

10:48

find, evaluate and buy thousands of bonds

10:50

with an investing experience designed in this

10:52

century. Add fixed income

10:54

to your portfolio with corporate,

10:57

treasury and municipal bonds. Go

10:59

to public.com/The Economist to get

11:01

started. Full disclosures can be

11:03

found at public.com/ bonds. All

11:12

around the world, cities are

11:14

rising up. Egypt is preparing to

11:16

spend billions doubling the size of its lavish

11:18

new capital, the new desert. Get ready

11:21

for Touloza, a $400 billion

11:23

proposed smart city in the

11:25

United States. Saudi Arabia's $500

11:27

billion mega project, NEARM, which is being

11:30

built from the ground up, is tapping

11:32

Asian expertise. We're building in more cities

11:34

than at any time in the

11:36

post-war period. Ninety-one of them

11:39

have been announced in the past decade,

11:41

with 15 in the past year alone.

11:44

Bhutan just announced one new city,

11:46

Iraq has started building five, and

11:49

Donald Trump says he wants to

11:51

build ten so-called freedom

11:53

cities. In the

11:55

early stages, projects have attracted their fair

11:57

share of criticism, But

11:59

the sheer... the number and diversity of

12:01

these projects suggests that at least some

12:04

will take off. On

12:06

the face with building new city should be

12:08

a great thing. Called

12:10

in, Duncan writes about business and

12:12

finance for The Economist. Some economists

12:14

think the cities of mankind's greatest

12:16

inventions. When they work well, they

12:18

make us happier, healthier, richer, brainer.

12:21

And there are some really pressing

12:23

issues with our existing urban areas

12:25

that mean that building new cities

12:27

really make sense. But despite all

12:29

this today, city builders face a

12:31

pretty cold reception. Coven.

12:33

What does a critic same? Or

12:36

a as we know, governments around

12:38

the world today love industrial policy.

12:40

Answer some credit, Think this is

12:42

just another wasteful attempt at reshaping

12:45

economy using different phones. Others.

12:47

See these as quixotic projects by

12:50

Bangor is billionaires who are looking

12:52

for a legacy project. But.

12:54

These critics often overlooked the diversity of

12:56

the city's under construction. Today they tend

12:59

to focus on flashy project slide Saudi

13:01

Arabia's neon where the government is trying

13:03

to create this one hundred and seventy

13:06

climate along building that they sang who

13:08

wean themselves off with whale dollars that

13:10

trying to attract new industries and tourism,

13:13

manufacturing and financial services. Another example might

13:15

be El Salvador's plans to sell bonds

13:17

the pay out in bitcoin in order

13:19

to fund but they call a crypto

13:22

currency city but they're also lots of

13:24

less. Flashy protests and to this and

13:26

I spoke to Stephen Jennings to say

13:28

former private equity boss time developer. Bought

13:33

a lot. More.

13:36

Interested in our disposal? The city's

13:38

worth. Of

13:41

high quality lifestyle. Entire

13:44

to city outside Nairobi in Kenya,

13:46

he's trying to create infrastructure and

13:48

institutions that would make a place

13:51

say said both capital and people

13:53

say things like that. And

13:55

traffic controllers. he's

13:58

focusing on the more boring Okay,

14:01

you've talked so far about building new cities,

14:03

but how about improving our existing ones? Wouldn't

14:05

it be better to do that? Yeah,

14:08

Orey, I've spoken to lots

14:10

of architects and developers, and all of

14:12

them are very keen to insist that

14:14

they are not giving up on our

14:16

existing cities. But from Nairobi

14:19

to San Francisco, they

14:21

face a lot of the same

14:23

challenges. Those are planning regimes, infrastructure,

14:25

and existing shortages, which aren't keeping

14:28

pace with growing urban populations. Retrofitting

14:30

existing urban infrastructure can be really

14:33

slow, expensive, and it's a very

14:35

risk averse process. And

14:37

by building new cities, there's more

14:39

opportunity for experimentation. In some cases,

14:42

people are completely rethinking how society

14:44

operates within those cities. Interesting.

14:47

Who's doing that? One

14:49

of the more experimental projects is Telosa

14:52

City, which should be built somewhere in

14:54

the deserts of western North America. The

14:56

billionaire behind that project, Mark Law, claims

14:58

to want to do away with private

15:01

ownership of land. Instead, he wants to

15:03

hold land in a communal trust and

15:05

then use the funds from leasing that

15:07

land out to pay for public services

15:09

within the city. Some

15:11

of these cities really double as

15:14

social experiments, and the ideas range

15:16

from really sensible to

15:18

quite outlandish. And as you

15:21

say, some of these really are experiments.

15:23

How many of these new cities do

15:25

you think will actually prosper? City

15:28

building is really hard, and we are

15:30

very much out of practice. There

15:32

are lots of challenges. The upfront

15:34

costs can be staggering, and that involves

15:37

years of negative cash flow. And over

15:39

that time, money and enthusiasm for the

15:41

project can run out. For

15:43

example, work on Egypt's $60 billion

15:45

capital city has really slowed as

15:47

that country's economy falters. In

15:50

Malaysia, for a city which is being

15:52

built by a Chinese property developer is

15:55

complete, but the developer has now gone

15:57

into default, and the city remains mostly

15:59

closed. But history points

16:02

to some examples that have succeeded.

16:04

So we're thinking about Milton Keynes

16:06

outside of London, Reston outside of

16:08

Washington, DC, Chandigarh in India and

16:10

Brasilia in Brazil. They all

16:12

have pretty modest growth, but it's consistent

16:14

and people are voting with their feet.

16:17

More people want to live there. It's true that

16:19

these new cities are unlikely to become

16:21

the world leading cities that we know

16:23

like London and Singapore, but

16:25

it's worth remembering that some greenfield cities

16:28

have succeeded and they can

16:30

go on to become growing sustainable mid-tier

16:32

cities. As Stephen Jennings said,

16:35

the crucial thing is getting the boring

16:37

stuff right, roads, sewerage and the like.

16:40

Getting that infrastructure in place so that people actually want

16:42

to move there. One of the people

16:44

I interviewed for this story said that in order

16:46

for a city to be mixed use, mixed income,

16:48

it needs to be all use, all income.

16:51

And that means that you need to have the infrastructure

16:53

in place for people to want to move to that

16:55

new city. So even though some

16:57

of these cities might fail, and

17:00

even if we view all of these

17:02

new cities as experiments, all of them

17:04

are learning something new about mankind's greatest

17:06

invention and we should applaud them for

17:08

that. Morgan, thank you

17:10

so much for joining us. Thanks, everyone. Is

17:27

it a corpse? Or, to be

17:29

more precise, consider it pants. Catherine

17:32

Nixsey is a Britsom correspondent for The

17:35

Economist. When

17:38

the body was pulled from the North Sea in 1994,

17:41

almost all pleased with its identity had gone. One

17:44

or two things were still obvious. It was clear that the

17:46

man had been tall. He was six foot five inches.

17:49

That he had been well dressed. He had fancy

17:51

loafers on. And that whatever had led

17:53

to him bobbing around in the North Sea hadn't been

17:56

very nice. He had a head injury. But

17:58

dating his death was clearly going to be a problem. be hard. Except

18:01

for one thing, his underwear. Because

18:05

in his pants was a small white label.

18:08

It stated that they were medium, that

18:10

they were 100% cotton, and

18:12

best of all, that they were made by St Michael.

18:16

Suddenly there was hope. This was

18:18

not just a corpse. This

18:20

was an M&S court. This

18:26

matters because M&S, or

18:28

Marks and Spencers, is a British

18:30

retailer with a rich history, and that history

18:32

is contained in its own archive. The

18:35

first Cyber City centre in Leeds are

18:38

72,000 items. 3,300 of them are clothes. On rails and

18:40

on shelves, in ghostly white

18:46

suit covers, and in boxes filled with

18:48

tissue paper, lie a nation's

18:50

castor. There

18:53

are jumpers and cardigans, suits and

18:55

romper suits, leggings and jeggings, bed

18:57

jackets and bras. And above all,

19:00

because this is not just an archive, this

19:02

is an M&S archive, there are pants. There

19:05

are tiny pants and startlingly enormous pants. There

19:07

are silky pants and bustlingly woolly pants.

19:10

There are lacy pants, racy pants

19:12

and supremely sensible pants. I,

19:15

went to look at some of these pants and

19:17

some of the other clothes that they held there

19:19

with the archivist Katie Cameron. These

19:22

are 1950s. They're amazing. They're sort

19:24

of enormous actually. They're incredibly brilliant.

19:27

I think it would

19:29

be nice. In

19:31

the 1920s, that whole

19:34

thing, we were talking

19:36

about flea cinecas, so they would have

19:38

been really, you know, really gorgeous. Oh

19:41

God, that's a more marathons than pants.

19:43

Yeah, with the added synthetic element

19:46

as well. So totally is

19:48

the word that you're looking for in Genesis early on,

19:50

isn't it? Pants

19:54

might seem trivial. They are not. Occasionally,

19:57

just occasionally, they're important to police here.

20:00

looking to solve crimes. So the

20:02

archive's detailed records and M&S's

20:04

date stamp labels can

20:06

help to date corpses. Here is

20:08

a top tip for murderers, cut the labels off your

20:10

corpse. Pants

20:12

are also extremely important to M&S.

20:15

The shop sells food and home accessories as well, but

20:17

it really is known for its underwear. Around

20:20

one in every four pairs of pants sold in

20:22

Britain today is bought there. So

20:25

for listeners in Britain there is a good chance that

20:27

you're sitting on a bottom that has been wrapped in

20:29

M&S clothing. And

20:31

though they might not see it, pants are

20:33

also important to British history because clothes and

20:35

how well they wear, and above all how

20:37

well they wash matter fundamentally to

20:40

women and M&S helps

20:42

to improve both. I

20:45

think it might be. One

20:48

of the things you notice when you go around

20:50

the archive is how much of it is synthetic

20:52

materials. There is rail after rail

20:54

of fabric such as nylon and rayon

20:56

and terra-line and crimp-line. These

20:59

sound comic to modern ears. In

21:01

fact they were of serious importance in easing

21:03

the daily burden of the British household. People

21:08

write a lot about labour-saving devices but

21:10

what people often forget is that you

21:13

need labour-saving materials which are often sturdy

21:15

synthetic ones to go in them. And

21:18

these fabrics, these rayons and terra-lines and so on,

21:21

freed women up as one expert told me. Because

21:23

long before women were liberated by burning

21:26

their bras they were liberated by being

21:28

able to pop them in the twin tub and

21:30

let them drip dry without earning. I

21:40

actually found going to the archives in Leeds

21:42

an oddly moving experience. One

21:46

of those things that captures women's history and the

21:48

loss of women's history is in fact

21:51

just washing. At

21:55

first sight it feels like any other archive but

21:57

if you open its boxes another world immediately

21:59

appears. In one box

22:01

there's a beautiful 1940s pink, silk

22:03

and bra and it comes like a stuffed tissue

22:06

paper as if almost by a ghostly bosom. On

22:09

a nearby rail there are dressing gowns, one

22:11

of them is post-war and woolly, one is

22:13

diaphanous and 1970s. One

22:16

has the kind of paisley-ish Britain that

22:18

the stern 1950s father might have worn.

22:21

Each of them is almost unbearably evocative of

22:23

its era. The

22:27

priest might have had his madamins but some

22:29

Britons have an minister and clean coat again.

22:32

That's all for this episode

22:35

of The Intelligence. Let

22:45

us know what you think of the show. You

22:50

can always email us at

22:52

podcastateconomists.com and we'll see you back

22:54

here tomorrow.

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