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SEC Chairman Gary Gensler confirms ongoing review, and talks potential benefits of Bitcoin ETF

By
Paul Ugbede Godwin
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0
WASHINGTON, DC - OCTOBER 03: Securities and Exchange Commission (SEC) Chair Gary Gensler listens during a meeting with the Treasury Department's Financial Stability Oversight Council at the U.S. Treasury Department on October 03, 2022 in Washington, DC. The council held the meeting to discuss a range of topics including climate-related financial risk and the recent Treasury report on the adoption of cloud services in the financial sector. (Photo by Anna Moneymaker/Getty Images)

SEC Chairman Gary Gensler has confirmed that the agency is conducting an ongoing review of several applications for Bitcoin exchange-traded funds (ETFs) and discussed some of the potential benefits of such products. In a blog post published on Thursday, Gensler said that Bitcoin ETFs could provide investors with more transparency, liquidity, and efficiency in the crypto market, as well as reduce the risks of fraud and manipulation.

Gensler explained that the SEC’s review process involves evaluating whether the proposed ETFs meet the standards set by the federal securities laws, such as ensuring fair and orderly markets, protecting investors and the public interest, and preventing fraudulent and manipulative acts and practices. He added that the SEC staff is working diligently and expeditiously to review the applications and provide feedback to the applicants.

Gensler also highlighted some of the potential benefits of Bitcoin ETFs, such as:

– Providing investors with access to a regulated and transparent market for Bitcoin exposure, rather than having to deal with unregulated or offshore platforms that may have lower standards of investor protection and market integrity.

– Enhancing the liquidity and efficiency of the Bitcoin market, as ETFs could attract more institutional and retail investors, as well as facilitate price discovery and arbitrage opportunities.

– Reducing the operational and custody risks associated with holding Bitcoin directly, such as hacking, theft, loss of private keys, or technical glitches. ETFs would allow investors to hold Bitcoin indirectly through a regulated intermediary that would be responsible for safeguarding the underlying assets and ensuring compliance with applicable rules and regulations.

Gensler concluded his blog post by stating that he is optimistic about the potential of Bitcoin ETFs to foster innovation and competition in the crypto space, while also serving the needs and interests of investors. He said that he looks forward to working with his fellow commissioners and the SEC staff to advance the agency’s mission of protecting investors, maintaining fair and efficient markets, and facilitating capital formation.

Two of the most prominent entrepreneurs and investors in the US, Elon Musk and Mark Cuban, have teamed up to challenge the authority and legitimacy of the Securities and Exchange Commission (SEC), the federal agency that regulates the securities markets. In a joint amicus brief filed at the Supreme Court on Monday, Musk and Cuban argued that the SEC’s administrative proceedings, which are used to enforce securities laws and impose sanctions on violators, are unconstitutional and unfair.

The brief was submitted in support of a petition by Michelle Cochran, a former chief financial officer of a Texas-based company, who was accused by the SEC of fraud and fined $300,000 in an administrative proceeding. Cochran appealed the SEC’s decision, claiming that the administrative law judges (ALJs) who preside over such proceedings are not appointed by the President or confirmed by the Senate, as required by the Constitution’s Appointments Clause. She also claimed that the ALJs are insulated from removal by the President, which violates the Constitution’s separation of powers principle.

Musk and Cuban, who have both faced SEC investigations and lawsuits in the past, echoed Cochran’s arguments and added their own criticisms of the SEC’s administrative proceedings. They claimed that the SEC has an unfair advantage over defendants in such proceedings, because it can choose the venue, the rules of evidence, and the standard of review.

They also claimed that the SEC’s ALJs are biased in favor of the agency, because they are influenced by its performance metrics and incentives. They cited statistics showing that the SEC wins more than 90% of its administrative cases, compared to less than 70% of its cases in federal court.

Musk and Cuban urged the Supreme Court to grant Cochran’s petition and review the constitutionality of the SEC’s administrative proceedings. They said that such a review is necessary to protect the rights and interests of millions of Americans who participate in the securities markets, either as investors, issuers, or professionals. They also said that such a review would promote innovation and entrepreneurship, which are vital for the economic growth and competitiveness of the US.

The Supreme Court has not yet decided whether to take up Cochran’s case. If it does, it could have significant implications for the SEC’s enforcement powers and practices, as well as for the securities industry as a whole.

How The Emerging New World Order Could Shape the Global Price of Crude Oil

By
Paul Ugbede Godwin
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0

This is a question that many people are asking, especially in the wake of the recent OPEC+ meeting, where the major oil-producing countries agreed to increase their output gradually over the next few months.

The decision was seen as a compromise between the competing interests of Saudi Arabia, which wanted to maintain tight supply and high prices, and Russia, which wanted to boost production and market share.

But what are the underlying factors that are driving the oil price dynamics, and how does the world order play a role in them?

One way to approach this question is to look at the supply and demand sides of the oil market. On the supply side, there are several factors that affect the availability and cost of oil, such as:

The level of production by OPEC and its allies, which account for about 40% of global output. OPEC has a history of using its market power to influence prices by adjusting its output quotas, either to increase or decrease supply.

However, OPEC’s influence has been challenged by the rise of US shale oil, which has increased its production significantly in the past decade and become a major competitor in the global market.

The level of production by non-OPEC countries, such as the US, Canada, Brazil, Norway, and others, which account for about 60% of global output. These countries have different production costs and capacities, and their output decisions are influenced by market forces, technological innovations, environmental regulations, and geopolitical factors.

The level of spare capacity, which is the amount of oil that can be brought online quickly in case of a supply disruption or a surge in demand. Spare capacity acts as a buffer that can stabilize prices and prevent volatility.

However, spare capacity has been declining in recent years, as many producers have been operating at or near their maximum capacity, leaving little room for flexibility.

The level of inventories, which is the amount of oil that is stored in tanks, pipelines, ships, and other facilities. Inventories act as another buffer that can smooth out fluctuations in supply and demand.

However, inventories have also been declining in recent years, as demand has recovered from the pandemic-induced slump and supply has been constrained by OPEC+ cuts and other factors.

On the demand side, there are several factors that affect the consumption and price sensitivity of oil, such as:

The level of economic activity and growth, which determines the overall energy demand and oil consumption. Oil is still the dominant source of energy in the world, accounting for about 33% of total energy consumption.

Therefore, oil demand is closely linked to economic performance and outlook. The global economy has been recovering from the pandemic-induced recession, but at an uneven pace across regions and sectors.

The recovery has been boosted by fiscal and monetary stimulus measures, but also hampered by new waves of infections and variants, vaccine inequality, trade tensions, and social unrest.

The level of consumer preferences and behavior, which determines the demand for specific oil products and services. Oil is used for various purposes, such as transportation, heating, electricity generation, industrial processes, petrochemicals, etc. Different oil products have different demand elasticities, meaning how responsive they are to changes in price. For example, gasoline demand tends to be more elastic than jet fuel demand, meaning that consumers are more likely to reduce their gasoline consumption when prices rise than their jet fuel consumption.

The level of technological innovation and efficiency, which determines the energy intensity and oil intensity of economic activity. Energy intensity is the amount of energy needed to produce one unit of GDP, and oil intensity is the amount of oil needed to produce one unit of GDP. Technological innovation and efficiency can reduce both energy intensity and oil intensity,meaning that less energy and oil are needed to produce the same amount of output. This can lower the demand for oil and put downward pressure on prices.

The level of environmental awareness and regulation, which determines the demand for alternative energy sources and low-carbon solutions. Environmental awareness and regulation can affect both the supply and demand sides of the oil market,but they have a more direct impact on the demand side, as they can shift consumer preferences and behavior away from oil-based products and services towards cleaner options, such as renewable energy, electric vehicles, hydrogen, biofuels, etc.

This can also lower the demand for oil and put downward pressure on prices. These factors interact with each other in complex ways, creating a dynamic and uncertain oil market environment.

However, they do not operate in a vacuum, but rather within a broader context of global politics, economics, and security, which shapes the world order.

The world order can be defined as the set of rules, norms, institutions, and power relations that govern international interactions and cooperation.

The world order can affect the oil market in various ways, such as:

– The level of stability and predictability

of the international system, which affects the risk perception and confidence of oil producers and consumers. A stable and predictable world order can foster a cooperative and constructive oil market environment, where supply and demand are balanced and prices are stable and reasonable.

However, an unstable and unpredictable world order can create a competitive and conflictual oil market environment, where supply and demand are imbalanced and prices are volatile and extreme.

The level of integration and interdependence of the global economy, which affects the trade flows and investment patterns of oil producers and consumers.

An integrated and interdependent world order can facilitate a free and fair oil market environment, where oil is traded and invested across borders without barriers or distortions.

However, a fragmented and protectionist world order can hamper a free and fair oil market environment, where oil is traded and invested across borders with barriers or distortions.

The level of cooperation and coordination of the international community, which affects the policy responses and collective actions of oil producers and consumers. A cooperative and coordinated world order can enable an effective and efficient oil market environment, where oil policies and actions are aligned and harmonized to address common challenges and opportunities. However, an uncooperative and uncoordinated world order can disable an effective and efficient oil market environment, where oil policies and actions are divergent and contradictory to address common challenges and opportunities.

Therefore, the world order is not only a backdrop, but also a driver of the oil market dynamics.

The world order can influence the oil price trends by affecting the supply and demand factors, as well as the market sentiment and expectations.

However, the relationship between the world order and the oil market is not one-way, but rather two-way. The oil market can also influence the world order by affecting the economic performance, political stability, and strategic interests of oil producers and consumers.

For example, high oil prices can benefit oil-exporting countries by increasing their revenues, fiscal space, and geopolitical leverage, but they can also harm oil-importing countries by increasing their costs, inflation, and trade deficits.

Conversely, low oil prices can benefit oil-importing countries by decreasing their costs, inflation, and trade deficits, but they can also harm oil-exporting countries by decreasing their revenues, fiscal space, and geopolitical leverage.

These effects can have implications for the world order by altering the balance of power, the distribution of wealth, the patterns of cooperation or conflict, and the prospects of development or instability among countless countries.

The world order is a cause and a consequence of the decline in oil price globally. The world order affects the oil market by shaping the supply and demand factors, as well as the market sentiment and expectations.

The oil market affects the world order by shaping the economic performance, political stability, and strategic interests of countries. The interaction between the world order and the oil market creates a feedback loop that can amplify or dampen the oil price movements.

Therefore, understanding the world order is essential for understanding the oil market, and vice versa.

Nigeria is Broke, the Government is Just Managing to Pay Salaries – Budget Minister

By
Samuel Nwite
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0

Nigeria’s Minister of Budget and National Planning, Atiku Bagudu, has openly acknowledged that the country is grappling with a severe financial crisis.

He stated that the government is presently just managing to pay salaries while dealing with a slow economic growth rate, a rapidly increasing population, surging unemployment, and high inflation.

Minister Bagudu expressed his concerns at the 30th Annual Development Forum organized by the Live Above Poverty Organization (LAPO) in Abuja. Represented by Dr. Sampson Ebimaro, the Director of Bilateral Economic Cooperation in the Ministry, Bagudu urged non-governmental organizations (NGOs) to assist the government in bridging the gaps it faces.

He disclosed the current financial predicament by stating, “Government faces enormous challenges, especially now; the government is facing a revenue deficit. There is no money anywhere in the country; the government is just managing to pay salaries. The growth rate is very slow, and the population growth is rapidly increasing. Unemployment is surging amid high inflation.”

Bagudu’s call to NGOs was to support the government in enhancing performance in critical areas and to facilitate the delivery of quality services to civil and public servants.

In response to the financial crisis, discussions with the World Bank are reportedly underway to secure a $1.5 billion concessionary loan to bolster budgetary provisions. This financial struggle coincides with a significant forex crisis in Nigeria, leading to the depreciation of the Naira to N1,200/$1 in the parallel market, and inflation surging to 26.72% in September.

The nation’s financial challenges are further exacerbated by the ongoing crisis in the oil sector, which has significantly impacted oil output. As a result, Nigeria heavily depends on external lenders.

In the first quarter of 2023, Nigeria’s net earnings from crude oil and gas stood at N486 billion, while net earnings from solid minerals amounted to N1.99 billion. In contrast, personnel cost reached N978 billion during the same period.

Economic experts have warned that the situation could worsen if the government does not take swift action to address the issues hindering economic growth. The need for comprehensive economic reforms and measures to boost forex earnings, particularly from the export of crude oil, is becoming increasingly urgent to tackle the nation’s financial crisis.

Besides boosting oil output, Olusegun Aganga, a former Minister of Finance, emphasized that Nigeria must reduce its dependence on imports and prioritize local production to bolster the strength of the naira. Speaking at the 3rd Adeola Odutola lecture during the 51st Annual General Meeting of the Manufacturers Association of Nigeria, Aganga underscored the critical role that local production and exports play in fortifying the country’s currency.

Aganga’s remarks came as part of a broader discussion on the economic challenges facing Nigeria and the steps needed to address them. He highlighted the adverse effects of a weak naira on the nation’s economy, which includes increased inflation and currency depreciation, among other issues.

The former finance minister emphasized that a strong naira is contingent on Nigeria’s ability to produce goods for both domestic consumption and export. He argued that the country’s reliance on imports perpetuates the naira’s vulnerability and exacerbates economic challenges. To address these issues, Aganga suggested a concerted effort to boost local production across various industries.

“Unlike the trillions spent on subsidies, bailouts, the Agric Anchor Borrowers Programme, the refineries, I can assure you that every naira, no matter how large, that is well spent on the strategic industrial sectors can be easily recovered and will deliver tremendous benefits to the economy and the nation,” he said.

Artificial Intelligence in the Metaverse

By
Paul Ugbede Godwin
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0

The metaverse is a term that describes a shared virtual space where people can interact, create, and explore. It is often seen as the next frontier of the internet, where immersive technologies such as virtual reality (VR), augmented reality (AR), and artificial intelligence (AI) will enable new forms of social and economic activities.

Artificial intelligence (AI) is one of the most powerful and influential technologies of our time. It has the potential to transform every aspect of our society, from health care and education to business and entertainment.

But what does this mean for our future? Are we heading towards a utopia or a dystopia? And how much control do we have over the direction and impact of AI?

AI offers many benefits and opportunities for improving our lives and solving some of the world’s biggest problems. Some of the areas where AI can make a positive difference include:

Health care: AI can help diagnose diseases, recommend treatments, monitor patients, discover new drugs, and personalized medicine.

Education: AI can help teachers and students with personalized learning, adaptive assessment, feedback, and tutoring.

Environment: AI can help monitor and protect the environment, reduce greenhouse gas emissions, optimize energy consumption, and support sustainable development.

Economy: AI can help boost productivity, innovation, and competitiveness, create new jobs and industries, and enhance customer service and satisfaction.

Security: AI can help prevent and detect cyberattacks, fraud, and terrorism, enhance public safety and law enforcement, and support humanitarian and disaster relief efforts.

Entertainment: AI can help create and enhance content, such as music, movies, games, and art, provide interactive and immersive experiences, and cater to individual preferences and tastes.

AI Challenges However, AI also poses many challenges and risks for our future. Some of the areas where AI can cause harm or disruption include:

Privacy: AI can collect and analyze massive amounts of personal data, potentially violating our privacy rights and exposing us to identity theft, surveillance, and manipulation.

Bias: AI can reflect and amplify human biases, such as racism, sexism, or ageism, leading to unfair or discriminatory outcomes or decisions.

Accountability: AI can make complex and autonomous decisions, potentially causing harm or damage, without clear responsibility or liability.

Transparency: AI can operate in opaque or incomprehensible ways, making it difficult or impossible to understand how or why it works or what it does.

Security: AI can be hacked or misused by malicious actors, such as criminals or terrorists, for nefarious purposes or goals.

Ethics: AI can challenge or conflict with our moral values or principles, such as human dignity, autonomy, or justice.

Society: AI can affect our social norms or relationships, such as trust, empathy, or cooperation, creating social isolation or polarization.

Humanity: AI can surpass or replace human intelligence or capabilities, potentially threatening our identity or existence.

As we can see, AI has both positive and negative implications for our future. Therefore, we need to be careful and responsible in how we design and use AI systems. We need to ensure that AI is aligned with our human values and goals, respects our rights and dignity, promotes fairness and justice, enhances our well-being and happiness, and empowers us rather than enslaves us.

AI is a key component of the metaverse, as it can provide various functions and services that enhance the user experience and enable new possibilities. Some of the roles that AI can play in the metaverse are:

Content creation: AI can help generate realistic and diverse content for the metaverse, such as avatars, environments, objects, sounds, and animations. AI can also help users customize and personalize their content according to their preferences and needs.

Interaction: AI can facilitate natural and engaging interactions between users and the metaverse, such as voice, gesture, eye gaze, and emotion recognition.

AI can also enable interactions with intelligent agents, such as chatbots, NPCs, and digital assistants, that can provide information, guidance, entertainment, and companionship.

Simulation: AI can simulate complex and dynamic phenomena in the metaverse, such as physics, weather, ecology, economy, and culture. AI can also create realistic and adaptive behaviors for the agents and entities in the metaverse, such as animals, plants, vehicles, and crowds.

Learning: AI can help users learn new skills and knowledge in the metaverse, such as languages, arts, sciences, and professions. AI can also help users track their progress and achievements and provide feedback and recommendations.

Security: AI can help protect the metaverse from malicious attacks and threats, such as hacking, phishing, spamming, trolling, and cyberbullying. AI can also help enforce the rules and norms of the metaverse and ensure fair and ethical practices.

AI in the metaverse is not only a technological challenge but also a social and ethical one. As the metaverse becomes more integrated with our lives, we need to consider how AI will affect our identity, privacy, rights, values, and well-being. We also need to ensure that AI in the metaverse is inclusive, accessible, diverse, transparent, and accountable.

The metaverse is an exciting vision that promises to transform our world. AI is a powerful tool that can help us realize this vision.

However, we also need to be aware of the risks and responsibilities that come with it. We need to collaborate and co-create the metaverse that we want to live in.

Some of the steps that we can take to achieve this include:

Developing ethical principles and standards for AI that reflect our shared values and aspirations

Implementing technical methods and tools for ensuring the safety, reliability, explainability, and accountability of AI systems

Establishing legal frameworks and regulations for governing the development and deployment of AI systems

Fostering public awareness and education about the benefits and risks of AI

Engaging in multidisciplinary dialogue and collaboration among stakeholders from academia, industry, government, civil society, and the public

Encouraging human-centric and inclusive design of AI systems that cater to the needs and preferences of diverse users

Supporting human-AI interaction and collaboration that augment rather than replace human skills and abi

AI is a powerful force that can shape our future for better or worse. It is up to us to decide how we want to use it. We have the opportunity to harness its potential for good while avoiding its pitfalls.

We have the responsibility to ensure that it serves us rather than harms us. We have the choice to make it a friend rather than a foe. The future is in our hands.

This Could Make Nigeria’s Naira To Appreciate Over The US Dollars in Weeks

By
Ndubuisi Ekekwe
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2
Naira USD

I know that Naira is now well above N1000/$ in the black market. Lack of policy clarity is the reason the Naira is still struggling. You may not believe this but it is the fact, as I have written here: Nigeria went into massive de-industrialization at the onset of the poorly implemented border closure. That policy decimated industrial output in Nigeria by more than 20%.

Many small producers in Lagos, Aba which produce for Benin Republic, Cameroon, etc collapsed as a result of that poison-pill-like policy. When we closed the borders, many closed their shops! Yes, when we closed the borders, many closed their shops! (A Nigeria’s former minister noted how this has played in the last few years)

Nigeria’s Minister of Budget and National Planning, Atiku Bagudu, has openly acknowledged that the country is grappling with a severe financial crisis.

He stated that the government is presently just managing to pay salaries while dealing with a slow economic growth rate, a rapidly increasing population, surging unemployment, and high inflation.

But in the next few weeks and months, Nigerian Naira will likely get help. I expect oil prices to rise more, and if that happens with higher production output, Nigeria’s external reserves will improve. Typically, when that happens, Naira strengthens, ceteris paribus.

That postulation is anchored on one thing: if Israel moves on with a ground invasion in Gaza, other players could join the conflict. As that happens, the oil market will be rattled, with nations like Nigeria benefiting since anything which affects the  Strait of Hormuz will trigger oil crises around nations.

Yet, the question remains: the Naira may appreciate under that turbulence, but what will make it have a sustained strength? That is where re-industrializing Nigeria matters, even at the light manufacturing level, understanding that industries today include the old type and the modern type (startups and digital firms).

Former Minister of Finance and Trade, Industry and Investment, Mr Olusegun Aganga has stated that Nigeria has been de-industrializing for the past 8 years since 2015. ..In his words,

“The best year for the industry was between 2011 and 2014. That was when there was active collaboration between MAN and the government.

The numbers will tell you that Nigeria has been de-industrialising since 2015, not improving”  

“The numbers will also tell you that when government promotes and supports industrialisation, the industry responds positively, and we all benefit as a country” 

[…]

“The lack of electricity alone adds about 20% to 30% of the production cost and of course, the recent increase in fuel subsidy has further increased the cost of production.”

“The problem has persisted due to the poor implementation of various infrastructure development plans” 

[…]

“Apart from a very low manufacturing base, the major problem of Nigeria’s export of non-oil commodities is standards.

The summary: be careful as you play the Naira because one bomb could re-align imbalances which will help the Naira to appreciate in value. And it does not have to depend on what the Central Bank of Nigeria is doing or not doing. We just need to have a working bank account in America with the oil flowing in the Niger Delta.

Comment on Feed

Comment: I think I’m one of those who see Nigeria as a very difficult economy to predict given the forces at play. The Nigerian economy for some strange reasons have some other artificial factors which may prevent it from obeying the natural laws of demand and supply .

An increase in global oil price and more production output from our fields may still not revive the economy. Nigeria is a strange turf .

My Response: “An increase in global oil price and more production output from our fields may still not revive the economy.” – check data, Naira has always appreciated whenever oil goes north. What happens is that Nigeria has money in the American banks to fight for Naira. It has nothing to do with our efforts in Nigeria.

Comment 2: Nigeria is yet to start building from strength, thus the many reactionary policies, including economic policies. Without an ‘intelligent and proactive’ long term economic development plan that will outlive and outlast any one administration, I am afraid, we are not going anywhere, yet. The continued devaluation of the Naira, in my opinion, is a response to our inability to create and exchange economic value locally and abroad. And, should we maintain this trajectory, it may only get worse.

We are importing our consumption and exporting all our production (and with the increasing japa epidemic – our human capital too), to the extent that most of the resources powering the most vibrant SMEs in the country are foreign.

For as long as local factors of production do not contribute to producing for our consumption and export, we just dey play!

We HOPE too much. If personal economic growth does not respond to hope, but value exchange, how much more a National economy?

Nigeria is Broke, the Government is Just Managing to Pay Salaries – Budget Minister

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