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‘Crypto-Panic’ Grips Markets After Luna Crash: Why Are Investors Fleeing?

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The future may be too distant a place for some cryptocurrency investors. The collapse of many digital currencies in recent days is sowing doubts among many of those who predicted a bright future in which cryptocurrencies would replace traditional money and break the monopoly of central banks. The virtual disappearance of Luna, the star of one of the biggest fiascos in the industry – its value plummeted from $20 billion to nearly zero in just a few days – has left a trail of victims among investors. It has also spread to the main cryptocurrencies: bitcoin shed 17% in five days, and ethereum, the second most-important cryptocurrency, lost 23%.

Why are they falling?

The trigger for the crisis was the fact that Luna’s sister currency, the stablecoin TerraUST, lost its peg to the US dollar. This stable currency was associated with the greenback by means of an algorithm that has been shown to be ineffective, and which immediately caused a domino effect that has wiped out Luna and infected other cryptocurrencies due to a loss of confidence. Enrique Moris, a professional investor in the stock market and cryptocurrencies expert, sees the effect as normal. “Panic has spread and logically the entire market has been infected. If I may make a bad comparison, if tomorrow Facebook or Apple fell 99%, the same thing would happen and people would rethink their investments in other technology firms.” Moris believes that over time the market will make distinctions. “That this has happened to Luna does not mean that it will happen to the rest of the cryptocurrencies. People are selling bitcoin even though it has nothing to do with it,” he says.

Is it the beginning of the end?

All together, cryptocurrencies are worth $1.2 trillion, according to CoinMarketCap, so despite the setback, they still have a capitalization equivalent to that of online retail giant Amazon. Bitcoin is being traded for around $28,000, its lowest levels since the end of 2020. The recent crash, therefore, is a dint on its credibility but does not signal the end. In fact, bitcoin fell by 80% in 2018, a higher percentage than now. Later, the cryptocurrency was able to fully recover and went on to set new highs. Its defenders are clinging to those precedents in the midst of the current selling panic, although history does not have to repeat itself. But even if it manages to bounce back and return to new highs in the future, many investors will have lost their money along the way, because as the economist John Maynard Keynes once pointed out, “the markets can remain irrational longer than you can remain solvent,” that is, there may be people who need the money to cover expenses or who sell because they consider the drop excessive.

In times of difficulty, one of the most repeated war cries among small investors who bet on cryptocurrencies is to hold, that is, to weather the storm without selling. Moris maintains that the Luna case is a lesson in this regard: “Holding for the next 10 years on the premise that tomorrow you will earn more money if you are patient does not work in the world of crypto, because there are projects that can fall by 99%, as is the case with Luna.” A lack of financial education is in certain cases behind the large losses of small savers, he believes. “There are people who are new to the world of investment, and just because a project is among the 10 largest, they take it for granted that tomorrow it will be worth more,” says Moris.

Correction or collapse?

The ups and downs of bitcoin and other cryptocurrencies are not new. Since their birth more than a decade ago, the difficulty in determining their real value has caused strong oscillations. In the beginning, the strong revaluations helped support the legend that it was a relatively simple way to multiply your savings. But past benefits do not guarantee future ones. There are unconfirmed expectations about their future use, and certain doses of FOMO (fear of missing out) among small investors. There is a huge division of opinion among the experts. There are those who believe that the only reason why the value of cryptocurrencies keep rising is that someone else keeps buying them, and others who see in them a reserve that is only in its infancy. When bitcoin hit highs near $68,000 in November 2021, the latter view seemed reinforced, but now the opposite is true.

What about those who have lost money?

The thousands of small investors who entrusted their money to Luna or TerraUST have no means of recovering what they lost. Cryptocurrencies are now high-risk assets moving in something akin to a financial Wild West. And the messages of those who have seen their accumulated savings of months or years evaporate in a few days are flooding online forums like Twitter or Reddit. The case might indeed encourage greater interest by the authorities to regulate its operation. The US Treasury Secretary, Janet Yellen, has recently made such a request. And the European Union is finalizing regulation that should be ready by the end of the year.

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Biden On Texas Shooting: ‘When Are We Going To Stand Up To The Gun Lobby?’

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US President Joe Biden lamented on Tuesday afternoon the attack on the Robb Elementary School in Uvalde, a town of 16,000 in the state of Texas. According to Texas police, an 18-year-old shot dead 18 children and two adults, including a teacher at the school.

In giving his heartfelt condolences, Biden sent a clear message to the gun industry about the need for greater controls on the sale and use of firearms. “Gun manufacturers have spent two decades aggressively marketing assault weapons which make them the most and largest profit,” he said. “As a nation, we have to ask: When in God’s name are we going to stand up to the gun lobby?”

In his address, Biden referred to previous massacres and noted that 10 years have passed since he was offering his condolences at Sandy Hook Elementary School in Newtown, Connecticut, when a 20-year-old shooter killed 26 people.

“I had hoped, when I became president, I would not have to do this again,” he said. “I am sick and tired of it. We have to act. And don’t tell me we can’t have an impact on this carnage. I spent my career as a senator and as vice president working to pass commonsense gun laws. We can’t and won’t prevent every tragedy. But we know they work and have a positive impact.”

As a senator for the state of Delaware in 1994, Biden supported a bill banning assault weapons and high-capacity bullet cartridges that was signed into legislation by then-president Bill Clinton. The law stayed in effect until 2004 when it was repealed by George W. Bush.

“When we passed the assault weapons ban, mass shootings went down. When the law expired, mass shootings tripled,” said Biden. “The idea that an 18-year-old kid can walk into a gun store and buy two assault weapons is just wrong.”

The US president, who had just returned from an Asian summit, also pointed out that “mass shootings rarely happen anywhere else in the world.”

“Why are we willing to live with this carnage?” he asked. “Why do we keep letting this happen? Where in God’s name is our backbone to have the courage to deal with it and stand up to the lobbies?”

“To lose a child is like having a piece of your soul ripped away,” said Biden, who has lost two children. “There’s a hollowness in your chest, and you feel like you’re being sucked into it and never going to be able to get out.”

The shooting in Uvalde is the second to occur in the United States in just 10 days. Last Saturday, May 14, another 18-year-old killed 10 people in Buffalo in the state of New York. The shooter, Payton Gendron, was reportedly motivated by racist conspiracy theories.

The massacre in Uvalde took place in Robb Elementary School, where 90% of students are Latino and many come from low-income backgrounds. The murderer, who was shot by the police, had just turned 18.

US Vice President Kamala Harris delivers remarks at the Asian Pacific American Institute.
US Vice President Kamala Harris delivers remarks at the Asian Pacific American Institute. SHAWN THEW / POOL (EFE)

Before Biden’s speech, US Vice resident Kamala Harris also addressed the public regarding Tuesday’s shooting. “Every time a tragedy like this happens, our hearts break, and our broken hearts are nothing compared to the broken hearts of those families. And yet, it keeps happening,” Harris said.

“Enough is enough,” added the vice president, who was attending the annual awards gala of the Asian Pacific American Institute for Congressional Studies. “As a nation, we have to have the courage to take action and understand the nexus between what [makes] for reasonable and sensible public policy to ensure something like this never happens again.”

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Uvalde: School Shootings As A US Norm

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Survivors of the 2017 school shooting in Parkland speak during a March for Our Lives demonstration in Washington DC.
Survivors of the 2017 school shooting in Parkland speak during a March for Our Lives demonstration in Washington DC.JIM WATSON (AFP)

Although the installation of metal detectors and the adoption of other security measures such as video cameras or backpack searches have contributed to the decrease in the number of shootings in educational centers, the massacre that Salvador Ramos perpetrated this Tuesday in a high school in Uvalde (Texas), which has left at least 18 children and two adults dead, bears the signature of a tragedy foretold.

Mass shootings have become a sinister pattern at elementary schools, middle schools, high schools and universities in the United States. Two were registered in September alone , also in Texas, after the total or partial closure of educational centers due to the pandemic temporarily stopped the bleeding. The trend resumed on the last day of November with a deadly attack in Oxford, Michigan, when a 15-year-old boy, also a student, killed four high school classmates. The teen used a weapon that had been legally purchased by his father, and the authorities announced that from then on the parents or guardians would be charged and tried for the criminal actions of the minors in their care.

The Michigan attack was by no means the most deadliest; the cases of Sandy Hook or Parkland, scenes of two separate shootings with a shocking trail of fatalities, have remained in the memory of parents, fearful of a bloodbath in the centers their children attend, as well as those who defend a much stricter regulation of access to weapons, in what has become a very bitter political and ideological battle.

On December 14, 2012, a young man named Adam Lanza killed 26 people: 20 students, mostly young children, and six teachers at Sandy Hook Elementary School in Newtown, Connecticut. To the balance must be added the lives of Lanza, who committed suicide, and his mother, whom he had killed before undertaking the massacre as if he had to get rid of an obstacle in his way. It was a Friday, in the midst of the usual anticipation that precedes the weekend. Lanza used a nine-millimeter gun, like the Oxford murderer, although he also used a rifle owned by his mother to open fire on the entrance doors to the school. His action, premeditated according to the prosecution, became the deadliest shooting in an elementary, middle or high school in the US, and the fourth committed by a single person. There were over 450 students enrolled at the school, and the security protocols – a video camera – had been updated shortly before the massacre.

On February 14, 2018, a sullen, gun-obsessed former student killed 17 people (two more than Columbine in 1999, including the two teenage assailants) at a Parkland, Florida, high school. a center with 3,200 students that had expelled the murderer a year earlier for indiscipline and problematic behavior. The shooter threw smoke bombs to create confusion, fired an assault rifle and was detained outside the school after an uneasy hour-long wait. Nikolas Cruz, 19, had started a junior military training program after leaving high school, Pentagon sources reported at the time.

Cruz shot outside and inside the educational compound, indiscriminately, at children and at teachers or auxiliary personnel. He had threatened his classmates in the last months he attended school, and school officials had prohibited him from entering the center with a backpack, according to local media. None of the survivors was greatly surprised that Cruz was the author of such carnage: “Many had said it before. Everyone had foreseen it,” said a student. Cruz had posted threatening messages on social networks, but nobody noticed the potential risk that his anger with the world posed.

According to FBI records, from the Columbine massacre in 1999 to 2016, 50 attacks or attempted attacks with a firearm were recorded in US schools, with a balance of 141 dead. Including the Parkland shooting, in the first month and a half of 2018 there were 18 incidents involving firearms at schools across the country.

Parkland’s attack marked a turning point, for better and for worse. For worse, because months after the event, two survivors ended up committing suicide, in the same week. The hashtag #17plus2 was then popularized to reflect the last victims, afflicted according to psychologists by survivor’s guilt syndrome. Those two victims were a young woman whose closest friend was killed in the shooting, and the father of one of the slain students. The only positive consequence of the tragedy was the constitution and mobilization of an activist group, March for Our Lives, made up of students from the attacked high school and which is still active, as evidenced on May 14 when the group demonstrated against the poor control of weapons that makes these events possible, following the shooting in a supermarket in Buffalo that left 10 people dead

In the last two decades there have been too many cases. From the first major one, the Columbine massacre, through Virginia Tech in 2007, when a student named Seung Hui Cho killed 32 people, including students and teachers, before committing suicide. Nine dead at a school on an Ojibwe Indian reservation two years earlier; seven, including the killer, at an Illinois college in 2008; another seven in 2012 at a private university in Oakland; 10 people, including the attacker, in Oregon in 2015; a Santa Fe high school, the same year as the Parkland tragedy. In many cases, the repercussions are ongoing as the pain of survivors and families of the victims persists. The gunmaker Remington will compensate families of Sandy Hook massacre victims after reaching a $73 million settlement agreement in February with nine families who lost loved ones in the shooting. The reason for the compensation was the fact that assault rifles were sold to civilians.

Among the testimonies collected after an event of this type, the phrases that the surviving students dedicate to the instruction they receive periodically to know how to face and repel an attack with a firearm always stand out. Going under tables, barricading themselves in classrooms with locked doors, locking themselves in bathrooms… protection is already a compulsory subject in the US and American children regularly participate in mock shootings. The protocol that the survivors boast of having learned and that, in Uvalde, has not been able to save the lives of 14 children and one adult.

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Independent Unions In Mexico Use The USMCA To Stop Abuse At Multinational Plants

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A woman protest in front of the Silao´s General Motors factory, this February.
A woman protest in front of the Silao´s General Motors factory, this February.SERGIO MALDONADO (REUTERS)

The United States-Mexico-Canada Agreement (USMCA), the free trade treaty formerly known as NAFTA (North American Free Trade Agreement), has apparently enabled some of Mexico’s independent unions in their defense of worker’s rights. Since the USMCA came into effect in July 2020, US trade authorities have lodged three complaints against production plants in Mexico for allegedly violating the agreement’s provisions on freedom of association.

New Mexican unions claiming to be independent of government and other interference see the treaty as a useful and quick resource to force some democratization of unions in the country, where worker representation is dominated by a handful of large groups. However, experts say that the USMCA clauses on freedom of association are far from a panacea for defending worker’s rights.

At the Panasonic plant in Reynosa (a city in the state of Tamaulipas in north-eastern Mexico) in October, workers rejected an agreement posed by the Japanese multinational following negotiations with the Confederation of Mexican workers (Spanish acronym CTM) – then in April this year voted overwhelmingly to be represented by new independent union, the 20/32 Movement Union (Spanish acronym SNITIS).

The SNITIS says that not only has Panasonic signed an agreement with the union rejected by the workers, but has also been deducting CTM dues from their salaries. The independent union has thereby filed a complaint to US trade authorities under the USMCA’s Rapid Response Labor Mechanism.

Susana Priero is a labor lawyer, SNITIS leader and deputy for the governing MORENA party in the Mexican national congress.

“I look for whatever recourse there is to defend labor rights,” Prieto tells EL PAÍS, adding that the ability to litigate violations of the USMCA is such a recourse.

“Let’s see how it works out.”

The US accepted SNITIS’ evidence this week and filed the complaint with the Mexican authorities. Under the Mechanism, Mexico has ten days to respond and then 45 to complete an investigation and propose a solution.

The Panasonic case is the third reported by the US in just over a year. All three are related to the automotive industry, the jewel in the crown of the Mexican export sector.

The complaint against the General Motors plant in Silao, which was already being investigated by the Mexican government, led to a repeat vote, in which the CTM was defeated. The second case, against the Tridonex plant in Matamoros, was rejected by Mexico because it preceded the entry into force of the mechanism. In any case, the US pressed to extract certain concessions from the company: severance payments to the dismissed workers and its commitment to respect freedom of association.

The first complaint concerned the General Motors plant in Silao, a city in the central Mexican state of Guanajuato, and also resulted in workers electing a new independent union to represent them. The second case was filed against the Tridonex plant in Matamoros in Tamaulipas state but rejected by Mexico because its content preceded the entry into force of the Mechanism.

The Mechanism is unique among trade agreements that Mexico has signed. The new independent unions particularly value its speed: responses are sought and investigations carried out immediately, and, if, when the investigation is concluded the complainant country does not agree with its conclusions it can convene an arbitration panel that has four months to resolve the matter.

Graciela Bensusán, a labor studies professor at the Autonomous University of Mexico is positive about these timeframes for resolution, noting that “the NAFTA procedures could take years.”

For Kenneth Smith Ramos, who was Chief Negotiator for Mexico when the previous administration of Enrique Peña Nieto signed NAFTA, the new agreement has appropriate consequences for those who breach it. Tariffs may be imposed on the products of plants found to be non-compliant or their export prohibited.

“The possibility of losing access to the US due to labor violations does not exist in any free trade agreement in Mexico. Not even in their wildest dreams did trade unionists [previously] imagine that there would be mechanisms of this nature,” says Smith.

The Mechanism was not part of the original USMCA negotiation. It was added after the treaty was signed following pressure from the Democrats, then in opposition in the US Congress, and agreed to by Mexico.

Experts say that this process has led to an asymmetry between Mexico and its partners within the USMCA. To make a complaint about Mexico, the US or Canada can simply consider that there is a possible violation of the agreement, and the burden of proving innocence then falls to Mexico. But if Mexico wants to make a complaint about its partners, the complaint must have been previously admitted by the labor authorities of those countries. “The dice are loaded against Mexico,” says Bensusán. “The US and Canada preserve more sovereignty.”

More complaints of the type seen at Panasonic can be expected. This week, US Trade Representative Kathterine Tai, said in a letter to Mexico’s economics secretary Tatiana Clouthier that “when concerns arise, we will work swiftly to stand up for workers on both sides of the border.” Smith also cautioned against overuse of the mechanism by parties seeking to block Mexican imports.

The administrative power imbalance between the US and Mexico under the USMCA is not of so much concern to the small independent unions seeking to dislodge the older, state-aligned groups, as Susana Prieto indicates:

“We are going to continue using the USMCA until the companies … respect the law,” says the union leader. Prieto says they may also use the Rapid Response Labor Mechanism to remedy the exploitation of Mexican agricultural workers in the US.

The power of the old unions may still hinder the progress of cases that proceed under the Mechanism, notes Prieto. The complaints against Panasonic, General Motors and Tridonex were possible due to the work of the independent unions; SNITA for example spent eight months collecting evidence against Panasonic.

These conditions are an exception – typically the old unions have blocked such organizing, intimidating workers and having them fired, explains Prieto

“It is difficult for them to dare to raise their voices.”

Graciela Bensusán says the Mechanism functions to dissuade more than punish labor abuses by parties to the USMCA.

“The very fact that it exists is a warning [to them] of what can happen,” says the professor.

Bensusán says that positive changes to labor conditions in Mexico will depend not only on the provisions of the USMCA but on a labor reform that was authorized by Mexico’s national Congress in 2019. The new law mandates that workers elect their union representatives by free vote and that collective agreements are made every two years.

Bensusán says it is through this change in law and policy on the southern side of the US border that Mexican workers will achieve “authentic unionism.”

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