Musk's Twitter acquisition project
On April 5, social media platform Twitter announced that billionaire Elon Musk would enter the company's board of directors after acquiring 9.2 percent of the company's stock. Musk, who has 80.5 million Twitter followers, has previously slammed Twitter for not respecting freedom of speech, launched a poll, and got many echoes. With the news of Musk joining the board, Twitter's stock price also rose at that time. However, Musk's move has also caused a lot of controversy, and many conservatives have used the polls he launched to call for the lifting of the Twitter ban on former President Trump , who was an extremely active Twitter user after last year's turmoil in Capitol Hill, was permanently banned by the platform.
However, according to Twitter's existing regulations, although Musk has become the company's largest shareholder, he will be a second-level director of Twitter until 2024. Musk's response was to buy Twitter. Musk's criticism of Twitter, and the ensuing acquisition plan, is also likely to become a breakthrough for conservative forces in the United States to seize public opinion. Just last week, Musk announced that he had completed a financing package of up to $46.5 billion in hopes of buying Twitter. This included $21 billion in self-financing, collateralized some of Tesla's auto assets, and Morgan Stanley provided $13 billion in debt financing.
To keep Musk's acquisition plans moving forward, Twitter's board has moved to prevent Musk from increasing his stake in hand without his approval — Musk, who already owns 9.2 percent of Twitter on hand, will be barred from having more than 15 percent of the company's stake. Of course, other shareholders who support Musk's takeover of Twitter also have the potential to force the board to abandon the poison pill plan they have adopted. Regardless of whether Musk's acquisition will ultimately succeed, cnn's comments believe that what he does will have a huge shock to Twitter.[2] Although Musk claims to be an ultra-democrat who advocates for free speech, many of his remarks are inherently controversial, including many misogynistic remarks. CNN's comments also quoted Amnesty International as a report released last year that the platform itself has online harassment and lacks effective control; women and vulnerable groups have become the usual targets of perpetrators. If a certain degree of optimism is maintained, we may have a chance to see Twitter, after being pressured by Musk's acquisition, to optimize its own operations and algorithmic mechanisms, and to work on cracking down on illegal content and the spread of fake news.
In addition to many members of Twitter's board of directors, there are also many people in Silicon Valley who do not want to see the success of Musk's acquisition. A recent article published by the Washington Post titled "Who's Afraid of Musk?" [3] The commentary notes that Musk will bring the same fear to Twitter as former President Trump, that is, through his huge influence, he will radicalize so-called free speech, and then incite various extreme speech, including but not limited to sexism and threats of violence. On the other hand, despite the billionaire's success in projects like SpaceX and Tesla, he's not without a history of failure — or rather, he's not a businessman who can keep his word, and once he masters Twitter, the extent to which the so-called full freedom of speech and democratic environment can be implemented deserves a question mark. Moreover, despite the fact that there is no shortage of tycoons in the history of American media to create branded media, at the moment, the complete surrender of a social media giant to a provocative and controversial mega-rich is itself a satire of Musk's statement about freedom of speech for democracy.
Why on earth would Musk want to buy Twitter? Both Politico and The New Yorker have tried to analyze the move by the world's richest man. In Politico's view[4], Musk's move is a decision that has nothing to do with money, because Twitter has lagged behind rivals Facebook and Douyin overseas versions in its own business development, and buying Twitter does not bring him much profit, even if Twitter's stock price has soared after the news of his attempt to enter the ownership has soared. The review also compared Musk to Amazon's boss, Bezos, who took home the veteran Washington Post a few years ago and has since revived the media, and Bezos himself has become an influential media tycoon like the former Mayor of New York, Bloomberg, who has experienced a journey from initial loss to becoming an industry benchmark.
Does Musk want to be like Bezos and Bloomberg? Although there is a certain degree of similarity between them, Musk's actions seem to be emotional to the outside world compared to the other two. First, Musk himself is a big user of Twitter — Politico uses the metaphor that Musk is like wanting to buy a cow because he loves milk — and he's not buying Twitter to take Twitter back to its glory moments like The Washington Post did, because Twitter doesn't need to do that so far. More likely, Musk is genuinely unhappy that his remarks have been subjected to additional scrutiny. His anger fits ironically with his long years of nonsense on Twitter: a billionaire with tens of millions of followers who are regulated by rhetoric over repeatedly try to buy back his absolute freedom of speech with money. But even so, after Trump was permanently silenced, Musk was one of the few valuable "assets" left for Twitter: his addiction to social media could still benefit Twitter to some extent.
The New Yorker's review articles[5] and Politico have a lot of consensus on Musk's acquisition motivations, for example, they believe that what Musk is doing is not entirely for money, he is not bad money, and Twitter may not be able to make money. Still, Twitter provides a great stage for Musk, a celebrity billionaire who is keen to influence his fans (and even his followers) with his words. In The New Yorker's view, Twitter is a "chaotic" but "highly influential" platform, which makes it not face complete marginalization even if it lags behind competitors such as Facebook. On the contrary, because of the existence of users like Trump before and Musk now, Twitter is always at the center of the storm of the ongoing "culture war" of the contemporary era. Of course, under the influence of trends such as the elimination of culture and political correctness, existing extreme speech has long been more strictly regulated or "restricted", but as mentioned earlier, many online harassment and incitement to violence have not been effectively addressed on Twitter. At present, Musk can also be said to be trying to restore the "glory of the past" of Twitter, but he wants to re-emerge the old days when he can speak casually on Twitter, but does not have to be responsible for offensive and even discriminatory and inflammatory extreme remarks.
In the New Yorker's report, Twitter is currently struggling to rein in illegal speech, especially given the growing reliance on social media during the COVID-19 pandemic, a struggle that has become more pronounced with the hostility of online speech, while Musk's "absolute freedom of speech" initiative is stirring up the muddy waters. In turn, Musk's advocacy of "freedom of speech" such as "anyone can say anything they want" is actually an important reason for Twitter's struggle even more. Whether his acquisition is successful or not, Twitter's dilemmas with free speech and regulation will become clearer, and the company will find it difficult to respond negatively to their plight as it has before.
Resources:
[1] Elon Musk secures $46.5bn to fund possible hostile bid for Twitter: https://www.theguardian.com/technology/2022/apr/21/elon-musk-twitter-secures-fund-possible-hostile-bid-tesla
[2] Opinion: By spurning a board seat, Elon Musk could wreak havoc for Twitter: https://edition.cnn.com/2022/04/12/opinions/twitter-elon-musk-barack-obama-misinformation-alaimo/index.html
[3] Opinion: Who's afraid of Elon Musk?: https://www.washingtonpost.com/opinions/2022/04/20/in-defense-of-elon-musk-twitter-bid/
[4] Why Elon Musk Is Buying into Twitter: https://www.politico.com/news/magazine/2022/04/04/elon-musk-anti-media-mogul-00022838
[5] Why Would Elon Musk Want to Buy Twitter?: https://www.newyorker.com/culture/infinite-scroll/why-would-elon-musk-want-to-buy-twitter
Global inflation continues to rise
On April 19, the IMF blog published an article[1] stating that as global inflation continues, the war between Russia and Ukraine will darken the prospects for global economic development. First, global economic activity is still in the process of gradually recovering from the COVID-19 pandemic, which has led to imbalances between supply and demand in many countries, and inflation rates in many countries have been rising, prompting the authorities to adopt tight monetary policies. Even though many countries have gradually liberalized the control of the epidemic, the new round of the epidemic will still have an impact on the global market. In addition, with Russia's so-called special military operations against Ukraine, whether it is the baptism of fire in Ukraine or the sanctions against Russia, a slowdown in economic growth and a worsening of inflation seem inevitable; it will be accompanied by a sharp increase in the economic risks that may occur in various countries.
Headquarters of the International Monetary Fund (IMF).
Compared with january forecasts, the IMF has lowered its global growth forecast for 2022 and 2023 to 3.6 percent, in large part because both Russia and Ukraine will experience a sharp contraction due to war and sanctions. The highly volatile political situation will subject the already battered global economic system to a new shock and spread farther through commodity markets, trade and financial linkages. Russia is the world's main supplier of oil, gas and metals, and like Ukraine, is a major supplier of wheat and corn. Reduced supply of these commodities will lead to sharp price increases, which in turn will involve imports of goods from various regions, including Europe, the Caucasus, Central Asia, the Middle East, North Africa and sub-Saharan Africa. In addition to importers in these places, soaring food and fuel prices will leave many low-income households in a bind. In Eastern Europe and Central Asia, there is a lot of direct trade and remittance exchanges between many countries and Russia. In addition, some 5 million Ukrainians have been displaced, many of them to countries such as Poland, Romania, Moldova and Hungary, which will undoubtedly increase economic pressure in these places.
The IMF believes that the top priority is to calm the fighting as soon as possible so that both sides can gradually return to normal. In addition, governments need to pay special attention to their own economic policies and financial security, and need to commit themselves to the effective functioning of the global financial safety net to ensure stable financial flows. Otherwise, once a country has a financial crisis, in addition to the inevitable larger economic crisis, it will also hurt more poor families, which may trigger a new round of humanitarian crisis.
Global inflation did not become a hot topic after the war at the beginning of this year, in fact, as early as the end of 2020, a series of inflation phenomena have aroused the attention of all parties. Prior to the IMF, the Brookings Institution published an article on April 5,[2] trying to explain the reasons for this global inflation and forecast its continuity. The article pointed out that for nearly half a century, the global inflation rate has actually been in a downward trend, but this wave of inflation since the end of 2020 is likely to make the world enter an era of high inflation. In addition to the negative impact of the epidemic and the war, many of the factors that maintained the previously low inflation rate face their own inflection points - globalization once brought cheap labor and low manufacturing costs in developing countries, but with the rise of trade protectionism in the past few years, this dividend faces unprecedented challenges; population growth and the increase in female labor force, although it helps to reduce labor prices, this trend will also face another inflection point, and aging on a global scale will also reduce the savings rate. Inflationary pressures are high.
In addition to the aforementioned Eastern Europe and Central Asia, the framework of globalization in the past has inevitably plunged Asia and Oceania into a quagmire of inflation. In Asia, recent inflation data from countries such as Japan, India and South Korea showed no optimism, with Bloomberg pointing out[3] that food and energy prices have soared in many Asian countries, synchronizing inflation with countries such as the United Kingdom and the United States, and this synchronization will cause malignant mutual influences between them. In New Zealand, where the latest consumer index shows that the country is already in the midst of the worst inflation in nearly 30 years, Reuters believes the country's central bank will have to adopt a tougher response to curb price pressures without plunging the economy into recession [4]. Statistics New Zealand said in a statement on Thursday that the country's first-quarter inflation rate rose to 6.9 per cent from 5.9 per cent in the fourth quarter of last year, the worst inflation since the 7.6 per cent increase in mid-1990. Correspondingly, new Zealand domestic food, petrol, construction and housing prices have continued to rise.
It can be seen that with the statistics of international organizations such as the IMF and the World Bank, many countries around the world will face another "war", even those with political stability, such as Ghana in Africa, which relies heavily on commodities such as grain, steel, and oil imported by Russia and Ukraine[5]. Ghana's external debt, equivalent to 78 per cent of the country's gross domestic product, has made the scope of the local government's economic flexibility narrow. Different countries have their own means of dealing with inflation, but countries like Ghana may face a dilemma that their external debt problems may become worse once western developed countries raise interest rates to curb domestic prices. This is the high risk that this massive inflation can bring – developed countries may take a series of tough measures to protect themselves, thereby hitting emerging economies[6]; whether it is an exporter or an importer, a creditor or a debtor, the response of one side will affect the economic situation and even financial security of the other. If the crisis caused by the epidemic and war is like a seismic wave, then its consequences are not only the "appearance" of things becoming more expensive, but also may lead to deeper structural shocks. Of course, for ordinary people, even if it is an appearance, the economic pressure brought about by high prices is the most obvious and practical. Perhaps this series of negative effects will have to wait for the end of the war and the epidemic before the global economy can usher in a breathing space.
Resources:
[1] War Dims Global Economic Outlook as Inflation Accelerates: https://blogs.imf.org/2022/04/19/war-dims-global-economic-outlook-as-inflation-accelerates/
[2] Is high inflation here to stay?: https://www.brookings.edu/blog/future-development/2022/04/05/is-high-inflation-here-to-stay/
[3] Charting the Global Economy: Inflation Pressures Mount in Asia: https://www.bloomberg.com/news/articles/2022-04-16/charting-the-global-economy-inflation-pressures-mount-in-asia
[4] New Zealand 30-year high inflation flags need for more tightening: https://www.reuters.com/world/asia-pacific/new-zealand-first-quarter-inflation-rate-rises-30-year-high-2022-04-21/
[5] A global response to global inflation: https://news.yahoo.com/global-response-global-inflation-154706447.html
[6] Emerging economies, global inflation, and growth deceleration: https://www.thestreet.com/economonitor/news/emerging-economies-global-inflation-deceleration