It was Saturday, Oct. 1, and Jim Lewis, who frequently posts on Twitter under the moniker Wall Street Silver, made that assertion to his more than 300,000 followers. “Markets are saying it’s insolvent and probably bust. 2008 moment soon?”
Mr. Lewis was among hundreds of people — many of them amateur investors — who had been speculating about the fate of Credit Suisse, the Swiss bank. It was in the middle of a restructuring and had become an easy target after decades of scandals, failed attempts at reform and management upheavals.
There seemed to be no immediate provocation for Mr. Lewis’s weekend tweet other than a memo that Ulrich Körner, the chief executive of Credit Suisse, had sent employees the day before, reassuring them that the bank was in good financial health.
But the tweet, which has been liked more than 11,000 times and retweeted more than 3,000 times, was one of many that helped ignite a firestorm on social media forums like Twitter and Reddit. The rumor that Credit Suisse was in trouble ricocheted around the world, stumping bank executives and forcing them to call shareholders, trading partners and analysts to reassure them that everything was fine before markets reopened on Monday.
prop up the shares of GameStop, the video game retailer, determined to outsmart hedge funds that had bet the company’s shares would fall.
Our Coverage of the Investment World
The decline of the stock and bond markets this year has been painful, and it remains difficult to predict what is in store for the future.
A Bad Year for Bonds: This has been the most devastating time for bonds since at least 1926 — and maybe in centuries. But much of the damage is already behind us.
Discordant Views: Some investors just don’t see how the Federal Reserve can lower inflation without risking high unemployment. The Fed appears more optimistic.
Weathering the Storm: The rout in the stock and bond markets has been especially rough on people paying for college, retirement or a new home. Here is some advice.
College Savings: As the stock and bond markets wobble, 529 plans are taking a tumble. What’s a family to do? There’s no one-size-fits-all answer, but you have options.
But what started as a spontaneous effort to take down Wall Street has since become an established presence in the market. Millions of amateur investors have embraced trading, including more sophisticated strategies such as shorting. As the Credit Suisse incident shows, their actions highlight a new source of peril for troubled companies.
Founded in Switzerland in 1856 to help finance the expansion of railroads in the tiny European nation, Credit Suisse has two main units — a private wealth management business and an investment bank. However, the bank has often struggled to maintain a pristine reputation.
It has been the repository of funds from businesspeople who are under sanctions, human rights abusers and intelligence officials. The U.S. government has fined it billions of dollars for its role in helping Americans file false tax returns, marketing mortgage-backed securities tied to the 2008 financial crisis and helping customers in Iran, Sudan and elsewhere breach U.S. sanctions.
In the United States, Credit Suisse built its investment banking business through acquisitions, starting with the 1990 purchase of First Boston. But without a core focus, the bank — whose top bosses sit in Switzerland — has often allowed mavericks to pursue new revenue streams and take outsize risks without adequate supervision.
collapsed. Credit Suisse was one of many Wall Street banks that traded with Archegos, the private investment firm of Bill Hwang, a former star money manager. Yet it lost $5.5 billion, far more than its rivals. The bank later admitted that a “fundamental failure of management and controls” had led to the debacle.
surveillance of Credit Suisse executives under his watch. He left the bank in a stable and profitable condition and invested appropriately across its various divisions, his spokesman, Andy Smith, said.
Credit Suisse replaced Mr. Thiam with Thomas Gottstein, a longtime bank executive. When Archegos collapsed, the bank kept Mr. Gottstein on the job, but he started working with a new chairman, António Horta-Osório, who had been appointed a few months earlier to restructure the bank.
resigned after an inquiry into whether he had broken quarantine rules during the pandemic. But he made swift changes in his short tenure. To reduce risk taking, Mr. Horta-Osório said, the bank would close most of its prime brokerage businesses, which involve lending to big trading firms like Archegos. Credit Suisse also lost a big source of revenue as the market for special purpose acquisition companies, or SPACs, cooled.
By July, Credit Suisse had announced its third consecutive quarterly loss. Mr. Gottstein was replaced by Mr. Körner, a veteran of the rival Swiss bank UBS.
Mr. Körner and the chairman, Axel Lehmann, who replaced Mr. Horta-Osório, are expected to unveil a new restructuring plan on Oct. 27 in an effort to convince investors of the bank’s long-term viability and profitability. The stock of Credit Suisse has dipped so much in the past year that its market value — which stood around $12 billion — is comparable to that of a regional U.S. bank, smaller than Fifth Third or Citizens Financial Group.
appeared on Reddit.
Mr. Macleod said he had decided that Credit Suisse was in bad shape after looking at what he deemed the best measure of a bank’s value — the price of its stock relative to its “book value,” or assets minus liabilities. Most Wall Street analysts factor in a broader set of measures.
But “bearing in mind that most followers on Twitter and Reddit are not financial professionals,” he said, “it would have been a wake-up call for them.”
The timing puzzled the bank’s analysts, major investors and risk managers. Credit Suisse had longstanding problems, but no sudden crisis or looming bankruptcy.
Some investors said the Sept. 30 memo sent by Mr. Körner, the bank’s chief executive, reassuring staff that Credit Suisse stood on a “strong capital base and liquidity position” despite recent market gyrations had the opposite effect on stock watchers.
Credit Suisse took the matter seriously. Over the weekend of Oct. 1, bank executives called clients to reassure them that the bank had more than the amount of capital required by regulators. The bigger worry was that talk of a liquidity crisis would become a self-fulfilling prophecy, prompting lenders to pull credit lines and depositors to pull cash, which could drain money from the bank quickly — an extreme and even unlikely scenario given the bank’s strong financial position.
“Banks rely on sentiment,” Mr. Scholtz, the Morningstar analyst, said. “If all depositors want their money back tomorrow, the money isn’t there. It’s the reality of banking. These things can snowball.”
What had snowballed was the volume of trading in Credit Suisse’s stock by small investors, which had roughly doubled from Friday to Monday, according to a gauge of retail activity from Nasdaq Data Link.
Amateur traders who gather on social media can’t trade sophisticated products like credit-default swaps — products that protect against companies’ reneging on their debts. But their speculation drove the price of these swaps past levels reached during the 2008 financial crisis.
Some asset managers said they had discussed the fate of the bank at internal meetings after the meme stock mania that was unleashed in early October. While they saw no immediate risk to Credit Suisse’s solvency, some decided to cut trading with the bank anyway until risks subsided.
In another private message on Twitter, Mr. Lewis declined to speak further about why he had predicted that Credit Suisse would collapse.
“The math and evidence is fairly obvious at this point,” he wrote. “If you disagree, the burden is really on you to support that position.”
Voters will choose Tuesday between U.S. Rep. Jerry Nadler and U.S. Rep. Carolyn Maloney in a rare face-off between incumbents due to redistricting.
He helped lead the fight to impeach Donald Trump. She battled for people sickened by clouds of toxic soot after the Sept. 11 attacks.
At least one of New York City’s most veteran members of Congress will be voted out of office Tuesday in a Democratic primary pitting U.S. Rep. Jerry Nadler against U.S. Rep. Carolyn Maloney in a race both hoped to avoid.
At least one of New York City’s most veteran members of Congress will be voted out of office Tuesday in an unusual Democratic primary between incumbents.
Neither was willing to run in another part of the city.
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Nadler and Maloney are joined in the race by 38-year-old Suraj Patel, a lawyer and lecturer at New York University who also challenged Maloney in Democratic primaries in 2018 and 2020. A fourth candidate, Ashmi Sheth, a former Federal Reserve Bank of New York employee, is on the ballot but did not meet fundraising benchmarks to qualify for debates.
Nadler, 75, was first elected to Congress in 1992. As chair of the House Judiciary Committee, he led both impeachments of Republican former President Donald Trump. He was buoyed in the last weeks of the campaign by endorsements from The New York Times and Senate Majority Leader Chuck Schumer.
Maloney, 76, was also first elected in 1992. She is the first woman to chair the House Oversight and Reform Committee. She is known for her longtime advocacy for Sept. 11 first responders seeking compensation for diseases they attribute to contamination from the destruction of the World Trade Center. She wore a firefighter’s jacket on Capitol Hill and at the 2019 Met Gala.
Few policy differences between Nadler, Maloney and Patel emerged during the primary campaign.
All support abortion rights, the Green New Deal and tighter restrictions on gun ownership. Patel argued that Nadler’s and Maloney’s generation failed to achieve Democratic goals like codifying Roe v. Wade and should cede to new blood.
Nadler and Maloney countered that their seniority in Congress brings clout that benefits New Yorkers.
Friends for many years, the two Democrats lamented having to run against each other — something that only happened after a court redrew the boundaries of the state’s congressional districts after concluding the legislature botched the process.
“I didn’t want to run against my good friend, Jerry Nadler,” Maloney said at a recent debate. “We have been friends and allies for years. Unfortunately, we were drawn into the same district.”
Still, on the campaign trail Maloney said that as a woman, she would fight harder to protect abortion rights than Nadler.
Asked at a debate how his record differed from that of Maloney, Nadler cited his votes against the Iraq War and the Patriot Act, and in favor of the Iran nuclear deal. Maloney, also elected to Congress in 1992, voted the other way on all three.
Maloney also came under fire from her opponents for her past positions on vaccines, including in 2006 when she introduced legislation directing the federal government to study the debunked theory that vaccines can cause autism. Maloney insisted that she supports vaccines and regretted ever questioning vaccine safety.
The primary winner in the overwhelmingly Democratic district will face Republican Michael Zumbluskas in the November general election.
The former NBA superstar has said he intends to travel to Russia to seek the release of WNBA star Brittney Griner from prison.
State Department Spokesman Ned Price says a visit to Russia from former professional basketball player Dennis Rodman would only “hinder and complicate” the negotiations that are currently happening to free Brittney Griner and Paul Whelan.
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Griner, an eight-time all-star center with the WNBA’s Phoenix Mercury and two-time Olympic gold medalist, was convicted Aug. 4 after police said they found vape canisters containing cannabis oil in her luggage at Moscow’s Sheremetyevo Airport.
Reflecting the growing pressure on the Biden administration to do more to bring Griner home, U.S. Secretary of State Antony Blinken took the unusual step of revealing publicly in July that Washington had made a “substantial proposal” to get Griner home, along with Paul Whelan, an American serving a 16-year sentence in Russia for espionage.
Blinken didn’t elaborate, but The Associated Press and other news organizations have reported that Washington has offered to free Viktor Bout, a Russian arms dealer who is serving a 25-year sentence in the U.S. and once earned the nickname the “Merchant of Death.”
Price also spoke about the government’s response to negotiate a return to the 2015 nuclear deal with Iran.
A resolution may be tantalizingly close.
But as the U.S. and Europe weigh Iran’s latest response to an EU proposal described as the West’s final offer, the administration faces new and potentially insurmountable domestic political hurdles to forging a lasting agreement.
Hadi Matar, 24, appeared in a New York courtroom after a grand jury indicted him on charges that he rushed the stage and stabbed Salman Rushdie.
A judge refused to grant bail Thursday to the man accused of trying to kill Salman Rushdie as the acclaimed author prepared to give a talk in western New York.
Hadi Matar, 24, appeared in a western New York courtroom after a grand jury indicted him on charges that he rushed the stage at the Chautauqua Institution and stabbed Rushdie multiple times in front of a horrified crowd.
Dressed in a black and white jail uniform, Matar stayed quiet during the hearing while his lawyer unsuccessfully tried to persuade the judge that he should be released while he awaited trial. Public defender Nathaniel Barone said Matar had no criminal record and wouldn’t flee the country if released.
Barone also asked the judge to do something to stop reporters from trying to contact Matar at the Chautauqua County jail. The lawyer said the jail had received “several hundred phone calls” from people trying to reach Matar.
Some of that media outreach resulted in Matar giving a brief interview to The New York Post, in which he talked about disliking Rushdie and praised Iran’s late supreme leader, Grand Ayatollah Ruhollah Khomeini.
Khomeini issued an edict in 1989 demanding Rushdie’s death over his novel “The Satanic Verses,” which some Muslims consider blasphemous. A semiofficial Iranian foundation had posted a bounty of over $3 million.
Related StoryIran Denies Involvement But Justifies Salman Rushdie Attack
Matar’s lawyer complained that the media coverage could potentially lead to a biased jury.
“He’s entitled to a fair trial. He’s entitled to due process, no matter what he’s accused of,” Barone said.
Judge David Foley declined that request, but he ordered the lawyers involved in the case not to give interviews.
“No speaking to the press until we have resolved this issue,” the judge said.
Rushdie, 75, is getting treatment in a Pennsylvania hospital for severe wounds. His literary agent, Andrew Wylie, has said Rushdie had a damaged liver and severed nerves in an arm, and could lose an eye.
Related StoryAgent: Rushdie Off Ventilator, Talking Day After Attack
Chautauqua County District Attorney Jason Schmidt called the attack “preplanned.”
The author had just taken the stage at the normally tranquil lakeside retreat for a discussion of protections for writers in exile and freedom of expression when Matar jumped onstage.
Henry Reese, 73, the cofounder of Pittsburgh’s City of Asylum, was onstage with Rushdie and suffered a gash to his forehead, bruising and other minor injuries.
Matar, who lived in Fairview, New Jersey, with his mother, is charged with attempted murder and assault. He could get decades in prison if convicted. He has pleaded not guilty.
Women who served in Afghanistan’s security forces are one of the most vulnerable groups in Afghanistan a year after the collapse.
One year after the U.S. pullout, these women who served in Afghanistan’s security units are among the most endangered — even outside of Afghanistan.
Meet a woman we’re calling “Fatima” for her security. She was part of a covert unit inside the Afghan National Army. It’s called the Female Tactical Platoon. These so-called “FTPs” fought the Taliban, alongside male commandos.
U.S. Army Special Operations trained Fatima on assault rifles, machine guns, and rocket launchers. She says her job was to recruit female forces and help the families of Afghan soldiers who died in the line of duty.
In early August, after a year of hiding and living in fear in Afghanistan, she quietly fled to Turkey on foot. She says she didn’t get help from Americans; her family sold all their possessions to pay for a smuggler. They walked for 11 days. But when they crossed into Iran, her parents and two siblings couldn’t run fast enough to escape soldiers. They were sent back to Afghanistan.
She was in pain when we spoke, saying she broke her finger and lost her toenails on the journey. But she can’t see a doctor, or find a job, because she’s living in Turkey illegally.
A source familiar with rescue operations for this covert group says about 26 women remain in Afghanistan. They don’t have exact numbers. They lost track of some, and one woman died a few days before her evacuation began; that woman, Mahjabin Hakimi, was found hanged. For those who made it to the U.S., there was talk of transferring them into the U.S. Army and one day putting them in special operations forces. But that plan has been delayed.
We also found a former intelligence and security officer, living in a secret like Fatima. This time, in Pakistan. Nahid let Newsy use her real name because she was already featured in documentaries and recruitment videos.
She says she lost contact with U.S. intelligence forces. They taught her how to fire glock pistols and interrogate prisoners. She also learned to read the faces of female relatives of Taliban fighters during dangerous night raids. But she still gets regular text messages from the Taliban, and fellow officers who have switched sides.
But even in Pakistan, Nahid worries. She fears the police or military will conspire with the Taliban against her. And she has good reason. She says a distant friend who worked with her vanished when she tried to pick up her immigrant card.
Nahid says she would fight the Taliban again, if she ever gets the chance. But Afghanistan cannot depend on other countries to solve its problems.
WASHINGTON — The Biden administration’s push to form an international buyers’ cartel to cap the price of Russian oil is facing resistance amid private sector concerns that it cannot be reliably enforced, posing a challenge for the U.S.-led effort to drain President Vladimir V. Putin’s war chest and stabilize global energy prices.
The price cap has been a top priority of Treasury Secretary Janet L. Yellen, who has been trying to head off another spike in global oil costs at the end of the year. The Biden administration fears that the combination of a European Union embargo on Russian oil imports and a ban on the insurance and financing of Russian oil shipments will send prices soaring by taking millions of barrels of that oil off the market.
But the untested concept has drawn skepticism from energy experts and, in particular, the maritime insurance sector, which facilitates global oil shipments and is key to making the proposal work. Under the plan, it would be legal for them to grant insurance for oil cargo only if it was being sold at or below a certain price.
Mike Salthouse, global claims director at The North of England P&I Association Limited, a leading global marine insurer. “If you have sophisticated state actors wanting to deceive people, it’s very easy to do.”
He added: “We’ve said it won’t work. We’ve explained to everybody why.”
That has not deterred Ms. Yellen and her top aides, who have been crisscrossing the globe to make their case with international counterparts, banks and insurers that an oil price cap can — and must — work at a moment of rapid inflation and the risk of recession.
“At a time of global anxiety over high prices, a price cap on Russian oil is one of the most powerful tools we have to address inflation by preventing future spikes in energy costs,” Ms. Yellen said in July.
The Biden administration is trying to mitigate fallout from sanctions adopted by the European Union in June, which would ban imports of Russian oil and the financing and insuring of Russian oil exports by year’s end. Britain was expected to enact a similar ban but has not yet done so.
not solve the world’s oil supply problems. European officials, who have been skeptical, continue to say they are analyzing its viability.
restricted natural gas flows to parts of Europe in retaliation for sanctions, would curb oil exports because of their importance to its economy.
senior fellow at the Atlantic Council who works in the financial services industry, said of Russia’s cooperation with a price cap. “If that were the case, he wouldn’t have invaded Ukraine in the first place.”
But proponents believe that if the European Union bans insurance transactions, an oil price cap may be the best chance to mitigate the economic fallout.
John E. Smith, former director of the foreign assets control unit, said the key was ensuring that financial services firms and maritime insurers were not responsible for vetting every oil transaction, as well as providing guidance on complying with the sanctions.
“The question is will enough jurisdictions agree on the details to move this forward,” said Mr. Smith, who is now co-head of Morrison & Foerster’s national security practice. “If they do, it could be a win for everyone but Russia.”
Matina Stevis-Gridneff contributed reporting from Brussels.
Russian officials are asking that a former colonel from Russia’s domestic spy agency be included in the proposed prisoner swap, according to CNN.
As WNBA star Brittney Griner and American businessman Paul Whelan sit in prison, Russia and the U.S. continue discussions about the possibility of a prisoner swap.
The Biden administration has reportedly offered to release Russian arms dealer, Viktor Bout, if the Kremlin would release Griner and Whelan.
“We had a frank and direct conversation. I pressed the Kremlin to accept the substantial proposal that we put forth on the release of Paul Whelan and Brittney Griner,” said U.S. Secretary of State Antony Blinken.
But the proposal might not be enough for Russia, according to CNN sources.
s familiar with the discussions say the Russians suggested adding former soviet colonel, Vadim Krasikov, to the swap, CNN reports.
Krasikov worked for Russia’s domestic spy agency and is serving life in prison in Germany for the murder of a former Chechen fighter last December in broad daylight.
“Here we are asking for, you know, a basketball player back and somebody we know to be innocent. You don’t want to get China and Russia and Iran used to the notion that they just need to clip an American on their street, throw them in, and they get to trade for the worst of the worst,” said Rep. Jim Himes.
Earlier this week, Griner explained to a judge “my rights were not read to me,” after Russian authorities dug through her luggage and found illegal marijuana vape cartridges and demanded she sign papers she didn’t fully understand.
As friends, loved ones, and supporters, continue to speak about her detainment, Griner testified about her case for the first time since her arrest in mid-February. The 31-year-old basketball star said injuries led to a doctor recommending she use marijuana to treat nagging pain, adding she might have accidentally packed the vape cartridges in her luggage.
“She had no intention to break any Russian law. She knows that this is prohibited in Russia. She knows Russian law. So, there is no intent in her actions. That, we think, is key for the case,” said Mariya Blagovolina, Brittney Griner’s lawyer.
Griner faces up to 10 years in prison if convicted of transporting drugs. Earlier this month, she wrote in a letter to President Biden, “I am terrified I might be here forever.” Her attorneys may be recommending a fine or a lighter prison sentence, but experts say a prisoner swap is perhaps Griner and Whelan’s fastest shot at freedom.
“Holding two American citizens hostage in exchange for an assassin in a third-party country is not a serious counteroffer,” said John Kirby, National Security Council Coordinator for Strategic Communications.
“We’re going to continue to monitor the case of Ms. Griner very closely as well as the cases of all US citizens detained or imprisoned in Russia,” said Elizabeth Rood, U.S. Embassy Chief of Mission.
When it comes to the swap, a German source tells CNN, U.S. officials have inquired about including Krasikov. but say the conversations never made it to the top levels of the German government and say including him in a potential trade has not been seriously considered.
Griner’s trial is expected to wrap up sometime next week.
Parliament Speaker Mohammed Halbousi suspended future sessions until further notice.
Thousands of followers of an influential Shiite cleric stormed into Iraq’s parliament on Saturday, for the second time this week, protesting government formation efforts lead by his rivals, an alliance of Iran-backed groups.
The alliance showed signs of internal division, with some calling for counter-protests — a development that would raise the specter of civil strife — while others later urged for dialogue.
Iraqi security forces initially used tear gas and stun grenades to try to repel the demonstrators, who are followers of cleric Muqtada al-Sadr. Once inside, the protesters declared an open-ended sit-in and claimed they would not disperse until their demands are answered.
As the numbers of protesters swelled, the police backed off. An expected parliament session did not take place and no lawmakers were in the hall. By late afternoon, the Ministry of Health said about 125 people were injured in the violence — 100 protesters and 25 members of the security forces.
Parliament Speaker Mohammed Halbousi suspended future sessions until further notice.
Earlier in the day and heeding al-Sadr’s calls, the demonstrators used ropes and chains to pull down cement barricades leading to the gate of Baghdad’s heavily fortified Green Zone, which houses government buildings and embassies.
The development showed al-Sadr was using his large grassroots following as a pressure tactic against his rivals, after his party was not able to form a government despite having won the largest number of seats in the federal elections held last October.
With neither side appearing willing to concede, and al-Sadr intent on derailing government formation efforts lead by his rivals, Iraq’s limbo and political paralysis has ushered in a new era of instability in the beleaguered country.
Al-Sadr has used his followers as leverage against rivals and ordered them to occupy the parliament in the past — as in 2016, during the administration of Prime Minister Haidar al-Abadi.
Now, 10 months since the last elections, the political vacuum is shaping up to be the longest since the U.S.-led 2003 invasion to oust Iraqi dictator Saddam Hussein had reset the country’s political order.
Al-Sadr’s rivals in the Coordination Framework — an alliance of Shiite parties backed by Iran and lead by former Prime Minister Nouri al-Maliki — showed signs of internal divisions later on Saturday.
At first, the alliance called for “peaceful” counter-protests to defend the state, raising fears of possible street clashes and inter-ethnic violence.
“Civil peace is a red line and all Iraqis must be prepared to defend it in all possible, peaceful, means,” the alliance said. Three Shiite officials said this statement was written by al-Maliki and militia leader and political figure Qais al-Khazali.
Later, Hadi al-Amiri, also an alliance leader, issued a statement inviting our “dear brother” al-Sadr to “a serious dialogue” to find a way out of the impasse. Al-Maliki appeared to pivot also and issued a statement saying the day’s tumultuous events had prompted him to call for dialogue with al-Sadr.
Al-Maliki is al-Sadr’s chief rival and both men are powerful in their own right.
The United Nations expressed its concern of further instability and called on Iraqi leaders to de-escalate. “Voices of reason and wisdom are critical to prevent further violence. All actors are encouraged to de-escalate in the interest of all Iraqis,” the U.N. said.
In a speech, caretaker Prime Minister Mustafa al-Kadhimi called for restraint.
“The political blocs must sit down and negotiate and reach an understanding for the sake of Iraq and the Iraqis,” he said and ordered security forces to protect demonstrators.
Shiite leader Ammar al-Hakim — who is allied with the Framework but has announced he would not participate in the next government — echoed al-Kadhimi’s words and called for both sides to make concessions to avoid “the irreplaceable loss of the homeland.”
Throughout the day, al-Sadr supporters — many had come not just from Baghdad but other provinces as well in order to stage the sit-in — continued to throng the parliament building, raising the Iraqi flag and portraits of al-Sadr. They chanted against the intrusion of foreign states, a veiled reference to Iran.
It was the second time in four days that the cleric ordered his followers to take their cause inside the Green Zone. On Wednesday, after protesters stormed the parliament in a similar fashion, they left shortly after getting inside, at al-Sadr’s command.
Wednesday’s show of force came after al-Sadr’s rivals had made a step forward in their government formation efforts by naming Mohammed al-Sudani as their nominee for the premiership.
Inside the parliament, as the day unfolded, the defenses of the security forces grew less intense and many were seen sitting and conversing with demonstrators. Later, some protesters began moving from the parliament toward the Judicial Council building.
“We came today to remove the corrupt political class and prevent them from holding a parliament session, and to prevent the Framework from forming a government,” said Raad Thabet, 41. “We responded to al-Sadr’s call.”
Al-Sadr’s party left the government formation talks in June, giving his rivals in the Coordination Framework the majority they needed to move forward with the process.
Many protesters wore black to mark the days leading to Ashura, which commemorates the death of Imam Hussein, the grandson of the Prophet Mohamed and one of Shiite Islam’s most important figures. Al-Sadr’s messaging to his followers has used the important day in Shiite Islam to kindle protests.
It’s unclear to what extent Saturday’s events could derail efforts to muster enough support for al-Sudani’s bid for premiership. Al-Maliki had wanted the premier post himself, but audio recordings were leaked in which he purportedly cursed and criticized al-Sadr and even his own Shiite allies, which effectively sank his candidacy.
By targeting Russia’s central bank with sanctions, experts said, American and European leaders have taken aim at what could be one of President Vladimir V. Putin’s greatest weaknesses: the country’s currency.
In Russian cities, anxious customers started lining up on Sunday in front of A.T.M.s, hoping to withdraw the money they had deposited in banks, fearful it would run out. The panic spread on Monday. To try to restore calm, the Bank of Russia posted a notice on its website: “The volume of bank notes ready for loading into A.T.M.s is more than sufficient. All customer funds on bank accounts are fully preserved and available for any transactions.”
Even before the sanctions were announced over the weekend, the ruble had weakened. On Monday it plunged further, with the value of a single ruble dropping to less than 1 cent at one point. As the value of any currency drops, more people will want to get rid of it by exchanging it for one that is not losing value — and that, in turn, causes its value to drop further.
In Russia today, as the purchasing power of the ruble drops sharply, consumers who hold it are finding that they can buy less with their money. In real terms, they become poorer. Such economic instability could stoke popular unhappiness and even unrest.
nuclear forces on a higher level of alert. The United States, the European Commission, Britain and Canada agreed to remove some Russian banks from the international system of payments known as SWIFT and to restrict Russia’s central bank from using its storehouse of hundreds of billions of dollars’ worth of international reserves to undermine the sanctions.
Kicking banks out of SWIFT has gotten the most public attention, but the measures taken against the central bank are potentially the most devastating. Ursula von der Leyen, the president of the European Commission, said it would“freeze its transactions” and “make it impossible for the central bank to liquidate its assets.”
On Monday, the U.S. Treasury Department offered more details on how the sanctions would work, saying they would paralyze the Bank of Russia’s assets in the United States and stop Americans from engaging in transactions involving the central bank, Russia’s National Wealth Fund or the Russian Ministry of Finance. As expected, there are exemptions for transactions related to energy exports, on which Europe relies.
British government banned transactions with the Russian central bank, the foreign ministry and the sovereign wealth fund.
But if the allies were to impose a full-fledged freeze of the vast amount of dollars, euros, pounds and yen that are owned by Russia but held in Western banks, it could devastate the Russian economy, causing spiraling inflation and a severe recession.
At the heart of the move to restrict the Bank of Russia are its foreign exchange reserves. These are the vast haul of convertible assets — other nations’ currencies and gold — that Russia has built up, financed in large part through the money it earns selling oil and gas to Europe and other energy importers.
Lenin himself reportedly made more than a century ago, which was repeated by the economist John Maynard Keynes: “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.”
The Bank of Russia can try to prop up the value of the ruble by using its reserves to buy up rubles that people are selling. But it can do that only as long as it has access to foreign reserves.
dizzying spikes in prices for energy and food and could spook investors. The economic damage from supply disruptions and economic sanctions would be severe in some countries and industries and unnoticed in others.
The cost of energy. Oil prices already are the highest since 2014, and they have risen as the conflict has escalated. Russia is the third-largest producer of oil, providing roughly one of every 10 barrels the global economy consumes.
Gas supplies. Europe gets nearly 40 percent of its natural gas from Russia, and it is likely to be walloped with higher heating bills. Natural gas reserves are running low, and European leaders have accused Russia’s president, Vladimir V. Putin, of reducing supplies to gain a political edge.
Shortages of essential metals. The price of palladium, used in automotive exhaust systems and mobile phones, has been soaring amid fears that Russia, the world’s largest exporter of the metal, could be cut off from global markets. The price of nickel, another key Russian export, has also been rising.
Financial turmoil. Global banks are bracing for the effects of sanctions designed to restrict Russia’s access to foreign capital and limit its ability to process payments in dollars, euros and other currencies crucial for trade. Banks are also on alert for retaliatory cyberattacks by Russia.
Yet the central bank has just about $12 billion of cash in hand — an astonishingly small amount, he said. As for the rest of Russia’s foreign exchange reserves, roughly $400 billion is invested in assets held outside the country. Another $84 billion is invested in Chinese bonds, and $139 billion is in gold.
took steps on Monday to restore confidence, and more than doubled interest rates to 20 percent from 9.5 percent in order to offset the rapid depreciation of the ruble. The bank also released an additional $7 billion worth of reserves that had been set aside as collateral for loans and closed down the Moscow stock exchange for the day. Meanwhile, the foreign ministry moved to order companies to sell 80 percent of their foreign currencies, in a bid to gin up demand for rubles and prevent them from stockpiling dollars and euros.
Mr. Bernstam warned that the West’s attack on the Russian ruble needed to be handled with care. “We don’t want to destroy them,” he said. “We don’t want the political system to collapse.”
After getting battered by the pandemic, supply chain chokeholds and leaps in prices, the global economy is poised to be sent on yet another unpredictable course by an armed clash on Europe’s border.
Even before the Kremlin ordered Russian troops into separatist territories of Ukraine on Monday, the tension had taken a toll. The promise of punishing sanctions in return by President Biden and the potential for Russian retaliation had already pushed down stock returns and driven up gas prices.
An outright attack by Russian troops could cause dizzying spikes in energy and food prices, fuel inflation fears and spook investors, a combination that threatens investment and growth in economies around the world.
However harsh the effects, the immediate impact will be nowhere near as devastating as the sudden economic shutdowns first caused by the coronavirus in 2020. Russia is a transcontinental behemoth with 146 million people and a huge nuclear arsenal, as well as a key supplier of the oil, gas and raw materials that keep the world’s factories running. But unlike China, which is a manufacturing powerhouse and intimately woven into intricate supply chains, Russia is a minor player in the global economy.
spikes in heating and gas bills, which are already soaring. Natural gas reserves are at less than a third of capacity, with weeks of cold weather ahead, and European leaders have already accused Russia’s president, Vladimir V. Putin, of reducing supplies to gain a political edge.
United Nations report. Russia is the world’s largest supplier of wheat, and together with Ukraine, accounts for nearly a quarter of total global exports. For some countries, the dependence is much greater. That flow of grain makes up more than 70 percent of Egypt and Turkey’s total wheat imports.
This will put further strain on Turkey, which is already in the middle of an economic crisis and struggling with inflation that is running close to 50 percent, with skyrocketing food, fuel and electricity prices.
And as usual, the burden falls heaviest on the most vulnerable. “Poorer people spend a higher share of incomes on food and heating,” said Ian Goldin, a professor of globalization and development at Oxford University.
Ukraine, long known as the “breadbasket of Europe,” actually sends more than 40 percent of its wheat and corn exports to the Middle East or Africa, where there are worries that further food shortages and price increases could stoke social unrest.
Lebanon, for example, which is experiencing one of the most devastating economic crises in more than a century, gets more than half of its wheat from Ukraine, which is also the world’s largest exporter of seed oils like sunflower and rapeseed.
On Monday, the White House responded to Mr. Putin’s decision to recognize the independence of two Russian-backed territories in the country’s east by saying it would begin imposing limited sanctions on the so-called Donetsk and Luhansk People’s Republics. Jen Psaki, the White House press secretary, said Mr. Biden would soon issue an executive order prohibiting investment, trade and financing with people in those regions.
range of scenarios from mild to severe. The fallout on working-class families and Wall Street traders depends on how an invasion plays out: whether Russian troops stay near the border or attack the Ukrainian capital, Kyiv; whether the fighting lasts for days or months; what kind of Western sanctions are imposed; and whether Mr. Putin responds by withholding critical gas supplies from Europe or launching insidious cyberattacks.
“Think about it rolling out in stages,” said Julia Friedlander, director of the economic statecraft initiative at the Atlantic Council. “This is likely to play out as a slow motion drama.”
As became clear from the pandemic, minor interruptions in one region can generate major disruptions far away. Isolated shortages and price surges— whether of gas, wheat, aluminum or nickel — can snowball in a world still struggling to recover from the pandemic.
“You have to look at the backdrop against which this is coming,” said Gregory Daco, chief economist for EY-Parthenon. “There is high inflation, strained supply chains and uncertainty about what central banks are going to do and how insistent price rises are.”
at 7.5 percent in January, and is expected to start raising interest rates next month. Higher energy prices set off by a conflict in Europe may be transitory but they could feed worries about a wage-price spiral.
“We could see a new burst of inflation,” said Christopher Miller, a visiting fellow at the American Enterprise Institute and an assistant professor at Tufts University.
Also fueling inflation fears are possible shortages of essential metals like palladium, aluminum and nickel, creating another disruption to global supply chains already suffering from the pandemic, trucker blockades in Canada and shortages of semiconductors.
The price of palladium, for example, used in automotive exhaust systems, mobile phones and even dental fillings, has soared in recent weeks because of fears that Russia, the world’s largest exporter of the metal, could be cut off from global markets. The price of nickel, used to make steel and electric car batteries, has also been jumping.
Understand How the Ukraine Crisis Developed
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Failed diplomatic efforts. The United States, NATO and Russia have been engaged in a whirlwind of diplomacy to prevent an escalation of the conflict. In December, Russia put forth a set of demands, including a guarantee that Ukraine would never join NATO. The West dismissed those demands and threatened economic consequences.
It’s too early to gauge the precise impact of an armed conflict, said Lars Stenqvist, the chief technology officer of Volvo, the Swedish truck maker. But he added, “It is a very, very serious thing.”
“We have a number of scenarios on the table and we are following the developments of the situation day by day,” Mr. Stenqvist said Monday.
The West has taken steps to blunt the impact on Europe if Mr. Putin decides to retaliate. The United States has ramped up delivery of liquefied natural gas and asked other suppliers like Qatar to do the same.
negotiations to revive a deal to curb Iran’s nuclear program. Iran, which is estimated to have as many as 80 million barrels of oil in storage, has been locked out of much of the world’s markets since 2018, when President Donald J. Trump withdrew from the nuclear accord and reimposed sanctions.
Some of the sanctions against Russia that the Biden administration is considering, such as cutting off access to the system of international payments known as SWIFT or blocking companies from selling anything to Russia that contains American-made components, would hurt anyone who does business with Russia. But across the board, the United States is much less vulnerable than the European Union, which is Russia’s largest trading partner.
Americans, as Mr. Biden has already warned, are likely to see higher gasoline prices. But because the United States is itself a large producer of natural gas, those price increases are not nearly as steep and as broad as elsewhere. And Europe has many more links to Russia and engages in more financial transactions — including paying for the Russian gas.
Oil companies like Shell and Total have joint ventures in Russia, while BP boasts that it “is one of the biggest foreign investors in Russia,” with ties to the Russian oil company Rosneft. Airbus, the European aviation giant, gets titanium from Russia. And European banks, particularly those in Germany, France and Italy, have lent billions of dollars to Russian borrowers.
“Severe sanctions that hurt Russia painfully and comprehensively have potential to do huge damage to European customers,” said Adam Tooze, director of the European Institute at Columbia University.
Depending on what happens, the most significant effects on the global economy may manifest themselves only over the long run.
economic ties to China. The two nations recently negotiated a 30-year contract for Russia to supply gas to China through a new pipeline.
“Russia is likely to pivot all energy and commodity exports to China,” said Carl Weinberg, chief economist at High Frequency Economics.
The crisis is also contributing to a reassessment of the global economy’s structure and concerns about self-sufficiency. The pandemic has already highlighted the downsides of far-flung supply chains that rely on lean production.
Now Europe’s dependence on Russian gas is spurring discussions about expanding energy sources, which could further sideline Russia’s presence in the global economy.
“In the longer term, it’s going to push Europe to diversify,” said Jeffrey Schott, a senior fellow working on international trade policy at the Peterson Institute for International Economics. As for Russia, the real cost “would be corrosive over time and really making it much more difficult to do business with Russian entities and deterring investment.”