For a young entrepreneur with an idea for a digital business, the last two years have been golden. The monetary authority in the US injected $7 trillion into the financial system to soften the blow of the pandemic and interest rates were at zero, which generated a sense of invincibility in the markets. In this climate, 12 Latin American companies became unicorns last year, a term reserved for firms that are valued at over $1 billion, setting a new record for this low to middle-income region. Moreover, there were hundreds of other businesses that raised large amounts of capital from Wall Street, just falling short of this benchmark.
But what goes up must come down and now the party is over. Such an injection of capital by the US Federal Reserve generated high inflation; the Fed is now reversing course to control the rise in prices and the market has reacted aggressively. On the morning of May 20, the financial media officially declared a bear market, which refers to the decline of major stock indexes by at least 20% from their highs. Inflationary concerns, rising interest rates, persistent supply chain disruptions from Covid-19 and the war in Ukraine are wreaking havoc on the global economy and consequently on its backbone, the global financial system.
Investors who once felt invincible are now seeing losses and red numbers. In the first three months of the year, funding for new businesses dropped 60% from its peak in 2021, when it reached $7.3 billion in the second quarter, according to Latin American data from analyst firm CBInsights. Meanwhile, in the first quarter of this year, the number of new unicorns reached its lowest level globally in five quarters. On top of this, not a single Latin American company had an initial public offering on the international market.
“The best way to read the market, I find, is to view it as a pendulum that swings between stories and fundamentals,” says Scott Galloway, a professor at New York University’s business school and one of the world’s most influential technology and financial analysts. “Stories, as in, the narrative, vision, and sentiment that drives the company forward. Fundamentals, as in, how the business is making money. For the past few years we’ve been deep in the story phase, and this is especially true in Latin America”.
The region had become an “assembly-line for unicorn production,” in Galloway’s opinion, boosting the global unicorn count to stratospheric levels. However, many of these companies will have no choice but to greatly reduce their operations as the pendulum swings back, and this already appears to be happening. Examples include digital companies like Netflix, which has just had massive layoffs, to smaller companies like Brazil’s QuintoAndar and Loft Brasil Tecnologia, both of which made more than 100 people redundant last month.
“The pain you’re seeing in the public markets — especially among the more narrative-driven stocks —eventually bleeds into the private markets,” says Galloway. “Many of these young entrepreneurs have spent their careers in a bull market, and have never heard of a down round. But that’s about to change. Valuations will fall, capital won’t be so cheap, and investors in early-stage companies will not feel as smart as they did a year ago”.
Criticisms and dangers
The timing for a bear market is coinciding with the difficulties that come with unbridled and sudden growth. Mexico’s Kavak, a digital platform for buying and selling used cars operating not only in its home country but also in Argentina and Brazil, went from 300 employees in 2020 to 8,500 after becoming a unicorn. But the start-up, which operates through a mobile app, is facing an image crisis after complaints from a slew of users went viral on social networks about poor service.
“Torture from start to finish,” reported one client on Twitter on April 1 in a thread cataloging her experience that subsequently went viral. Thousands added to the complaint. The noise was such that Kavak CEO, Alejandro Guerra, was forced to respond. “We are not perfect. We make mistakes; technology fails,” Guerra said at a recent conference. “We are fully aware of what happens on social networks.”
For many in countries in this region, digital startups that have grown into huge structures have failed to live up to expectations. Despite raising billions in capital, their business model continues to rely on the low wages and precarious job security which is standard for millions of Latin Americans. A report published in March by the non-governmental organizations Oxfam Mexico and the Institute for Inequality Studies (Indesig) found that the average income of a delivery driver for platforms such as Uber, DiDi and the Colombian unicorn Rappi is 2,085 pesos ($104) per week. In contrast, the companies are enjoying profits running into the millions.
These are “the shades of light and dark of an industry and a business model that is here to stay,” says Alexandra Haas, director of Oxfam Mexico. “This is why it is extremely important to flag up the situation and improve the work model used by the platforms, as well as the labor system and access to rights in our country. Companies, authorities and society in general must promote a universal social protection agenda that, on the one hand, maintains the labor flexibility desired by the delivery workers and, on the other hand, means rights are guaranteed across the board.”
This is where the big challenge lies for Latin America, according to Galloway. “Big Tech has generated enormous wealth in the U.S., which is something we should be grateful for,” he says. “But over the past decade, we allowed Big Tech to overrun our nation and this is something Latin America should learn from as these tech companies expand. Our biggest mistake was chronically underinvesting in our regulatory bodies, leaving private capital to emerge as a shadow government. This stemmed from a major cultural problem — specifically, our idolatry of innovators. We equate wealth with virtue and do not hold the innovator class, or their firms, to the same standards as old economy firms (or the general population)”.
According to Galloway, “the path forward in high-growth nations is to balance technological progress with respect for the rules and referees of business, i.e. regulation. Without regulation, monopolies emerge, stamping out competition and progress below. The state of American democracy in a digital era should be a warning sign for emerging nations around the globe.”
Ukraine war: The luck of the Ukrainian oligarchs is beginning to change | Economy and Business
In the room of former Ukrainian president Viktor Yanukovych, in his residence on the outskirts of Kyiv, there is no trace of the Picassos or the Aivazovskys that used to hang on its walls. What does remain are the gigantic empty dressing rooms where the president’s girlfriend once had a space with capacity for a thousand rings. There were also many, many television sets. In the ample residence where the couple lived more than comfortably, there were up to 18 Samsung sets, sometimes several in the same room. Books, on the other hand, were practically non-existent.
However, the most valuable objects – works of art, furniture, jewelry – are no longer here. The former president took them in his hasty flight to Russia during the 2014 Maidan uprising that would change the country’s history. Anyone who is curious can see on YouTube how Yanukovych’s assistants loaded trucks for three days in order to get the spoils from so many years of looting out of the country. After his departure, shocked citizens entered the mansion to discover the shameless ostentation in which their leader had lived.
The mansion where Yanukovych spent his days of relaxation is much more than a house. Not only because the 150 hectares of the Mezhyhirya estate housed a zoo (with the friendly ostriches that are still there today, undaunted by the distress that Ukraine is experiencing), a museum with the luxury cars that the former president collected, a heliport, a tennis court, two huge golf courses, a spa with several saunas and 40 pieces of sports equipment, a shooting range, endless fountains and lakes, and even an artificial mountain complete with a waterfall. All this, just for the man who ruled Ukraine and his girlfriend. If his children visited, they slept in another house. Russian President Vladimir Putin also had another residence in the complex, in case he ever went to Kyiv. And at banquets with many diners, a dining boat received the guests. “During construction, it was estimated that each day of work cost $2 million. It would be impossible to calculate the value of all this,” certifies the guide Genadii Nikolaenko.
Since his flight to Russia, Yanukovych has been an outcast in Ukraine. But Rinat Akhmetov, the oligarch who sponsored his political career, catapulting him to the top, is still the first fortune of his country, with a wealth that Forbes estimated last year at about $7.6 billion. Akhmetov is the most prominent name in the list of Ukrainian oligarchs who control the country through a network of companies and connections. However, luck seems to be changing for this select group.
A dangerous mix
Several factors threaten the position of the men who, until now, have defined the map of power, and who also managed to create political parties that obeyed their personal interests. On the one hand, the war launched by Russia is striking some vital nerves in their finances. On the other, the simultaneous political pressure from Kyiv and Brussels threatens to hurt them even more; a dangerous mix for those who filled their pockets with the privatizations of the 1990s after the collapse of the Soviet Union.
“To understand the role of the oligarchs, it is enough to think of medieval Europe, with kings who competed for power with feudal lords,” explains Volodimir Yermolenko, director of the Ukraine World website, from a placid terrace in Kyiv. This journalist admits that the excessive power of this small number of people is a burden for the country, but he also believes that, to a certain extent, the competition between the powerful entails a kind of balance game that prevents the authoritarian drift of the country that a single leader would imply, as is the case in Russia, where all the oligarchs are subject to the will of the Kremlin.
Akhmetov is the owner, among many other things, of Azovstal, the steel mill that gained worldwide notoriety for becoming the last point of resistance against the Russians in Mariupol, in southern Ukraine. This gigantic complex, one of the sources of Akhmetov’s fortune, generated tens of thousands of jobs, produced 40% of the country’s steel and had its own port at the Sea of Azov.
In May, the tycoon who used to boast privileged ties to Moscow – and who sponsored Yanukovych – announced a $17-20 billion dollar lawsuit against Russia for the destruction of the plant and other assets in the Donbas area. Some analysts estimate that Akhmetov has lost two-thirds of his fortune since the beginning of the war. But for many businessmen the problems are not new; they began in 2014, with the seizure of Crimea and the beginning of the war in Donbas. “The key to seeing if they will recover their former power will be in how the reconstruction tasks are executed and who is entrusted with them,” says a European source. Another oligarch who’s fallen from grace is Viktor Medvedchuk, the Ukrainian billionaire closest to Putin; he was arrested in April accused of “high treason” by the Kyiv authorities.
The oligarchs are not only haunted by financial problems. Perhaps more dangerous for their interests is the political crusade against them. In November 2021, before the Russian troops entered with force and fire, President Volodimir Zelenskiy had already promoted a law to reduce the weight of the tycoons, a group that included some 40 people with an industry monopoly, media outlets, a fortune of more than $90 million, and who take part in political activities. Some critical voices pointed out that, with this initiative, Zelenskiy was not seeking to balance the map of power, but rather to undermine the influence of former President Petro Poroshenko. Zelenskiy himself also has a group of oligarchs around him.
In addition to leading the opposition, Poroshenko is one of the richest men in the country thanks to an empire of candy, cars, media outlets and much more. The tycoon faces up to 15 years in prison for high treason, for the purchase of coal from the pro-Russian separatists of Donetsk, as well as other charges of corruption, trials that he sees as politically motivated.
In an interview with EL PAÍS, last week Poroshenko made the case for demanding responsibility from those “who ruin the country by stealing billions of euros.” Reminded that he too is an oligarch, he angrily protested. “Please don’t use that word!” he exclaimed. “We are in a war right now. And who has stayed here to defend their country, and who has fled? Who is spending their money to support the army and who is stealing? Who pays their taxes and who doesn’t?” His spokesmen assure that he has invested more than €10 million out of his own pocket to help defend Ukraine.
The pressure also comes from Brussels, who wants to get its hands on the Ukrainian super-millionaires. When approving the country’s candidacy to join the EU, the European Commission demanded seven chapters of reforms, one of them to advance the anti-oligarch law. But this must be done, according to Brussels, avoiding arbitrariness. The document also recalled the “disproportionate” influence of these businessmen on the media, especially on television.
Before the war, the gardens that witnessed Yanukovych’s excesses were full of families having picnics. This place, which the guide considers “the heart of Ukraine” due to a story that goes back to the 12th century when a monastery was founded there, is now a public museum and it also served as a refuge when Russian troops approached Kyiv. But it also symbolizes the rise and fall of the man who wanted to control the entire country. Yanukovych, in the words of the journalist Yermolenko, tried to be king and feudal lord at the same time. The question is whether the oligarchs who accompanied him in his career will know how to adapt to a new era of an increasingly European Ukraine, or if they will fall by the wayside.
Bolivia’s corrupt system failed to stem femicide. Now, feminists are fighting back | Women’s rights and gender equality
In parts of La Paz, every surface is papered with layers of bleached and peeling posters: adverts for events, jobs, apartments – and missing women.
In 2021, there were at least 108 femicides in Bolivia, among the highest rates in South America. Many of the perpetrators are either never caught, not punished or go free soon after.
In January, fresh outrage was prompted by the case of Richard Choque, a serial rapist and murderer who was given house arrest and then continued to commit crimes. The wave of fury prompted by the scandal has since driven Bolivia’s feminist collectives to spectacular measures in an effort to force government action against femicides – and the corrupt justice system that allows them.
It started with perhaps the biggest feminist protest seen in El Alto, the one-time satellite city that now flows into La Paz. The march began outside Choque’s house in El Alto and culminated at the courts of justice, where activists covered the walls with graffiti, red paint and the names of unpunished rapists and murderers.
“We wanted to redirect the discourse,” said María Galindo, founder of Mujeres Creando, a feminist collective in La Paz. “For it not to be a discourse of victimhood, nor a tabloid nor a police discourse. Because what Richard Choque shows is that the central problem is state corruption. This man was a prisoner, and yet he went free.”
Galindo has since proved the sharp point of the pressure campaign on the government.
She took to barging into state institutions and putting civil servants on the spot, livestreamed on social media. The one-liners she whipped them with went viral on TikTok. Then she teased a run to be Bolivia’s ombudsman – before tearing her application up in front of the cameras, in a typically flamboyant outfit of fishnet leggings, black eyeshadow and irreverent takes on patriotic symbols, not least a giant crown capped with an Andean condor.
Meanwhile, Mujeres Creando catalogued ignored reports of gender violence and investigated San Pedro prison, where Choque ought to have been held. They found a system of corruption, where inmates bought privileges including house arrest.
In response, the government set up a commission to re-evaluate cases like Choque’s, which, though extreme, was not unique. Twenty-one others released to house arrest inappropriately have since been reincarcerated, while another 50 arrest warrants have been issued. Eighteen judges are facing criminal proceedings and more than 300 of their cases are being re-evaluated.
Such numbers come as no surprise to activists in La Paz and El Alto where gender violence has been accentuated by two factors, said writer Quya Reyn. First, the absence of the state, which creates insecurity. And second, the fact that the city draws migrants – many of them young women – from across Bolivia’s western highlands.
These women are vulnerable to abuse. “If you go to [the centre], you’ll find posters looking for nannies, looking for women to work in restaurants,” said Reyna. “And they are always looking for women – only women.”
“You see this with Richard Choque,” Reyna added. “He would go on Facebook and say that he could offer work. These young women were murdered looking for work.”
In 2013, the government introduced Law 348, which, among other things, made femicide a crime punishable by 30 years in prison – Bolivia’s maximum sentence.
The law was welcomed as progressive legislation at the time, and Adriana Guzmán, a feminist activist based in El Alto, believes the text remains generally sound – the problem is implementation.
First, there is a lack of resources. “Right now, there aren’t enough judges, there aren’t enough prosecutors, there aren’t enough investigators.”
Then there’s corruption, as demonstrated by the case of Choque. “The entire justice system is corrupt – not just with regard to crimes against women.” Guzmán notes that this discriminates most against the poor.
There is some scepticism that the government’s commission will address these root problems.
Galindo, for one, views the commission as an attempt to deflate their pressure campaign. “It’s for the media. It’s a commission that serves to make declarations, not effective policies.”
Meanwhile Guzmán says that it was limited from the start, since it is only reviewing a fraction of gender violence cases. “For it to really be a historic commission, and not a ridiculous one – because it is ridiculous that the state has created a commission to return those to prison who should already be there – the commission needs to finish with a proposal to reform justice and the state.”
Among Bolivia’s feminists there are varying views on how that sort of reform will be achieved.
“The system has to be changed with huge social pressure,” said Galindo. “And we’re building a movement to achieve that.” She believes the campaign Mujeres Creando has led over the last months has strengthened their social legitimacy: “No one can buy us. We are incorruptible.”
But Guzmán is sceptical that this movement reaches much beyond the urban middle classes. And the true forces in Bolivia, says Guzmán, are the campesino and Indigenous organisations. “Within them, feminism isn’t a thing. There are lots of prejudices against feminism.”
In El Alto, meanwhile, Reyna pointed to the lack of feminists in politics pushing for reform. She believes change will come when a new, diverse generation of women enter government and shape it from within.
“I don’t want to fight the state,” said Reyna. “I want to be the state.”
Forty-six migrants found dead inside abandoned trailer in San Antonio, Texas | USA
The bodies of at least 46 migrants were found on Monday inside an abandoned tractor-trailer in San Antonio, Texas, around 155 miles (250 km) from the border with Mexico. The finding has been confirmed by local authorities.
The vehicle was found next to the railroad tracks in the southwestern part of the city, according to local media reports. Emergency services rescued at least 16 other people who were still alive inside the trailer, including four children, and sent them to hospital for treatment.
This is not the first time that San Antonio experiences such a tragedy, although it is the deadliest in memory. Ten migrants died in 2017 after being trapped inside a truck that was parked at a local Walmart, and in 2003, 19 migrants were found in a sweltering truck southeast of the city.
Mexico’s Foreign Minister Marcelo Ebrard said that a Mexican official was on his way to the site. “We still don’t know their nationalities,” specified a spokesperson for Mexican Foreign Affairs. President Andrés Manuel López Obrador is scheduled to meet with Joe Biden at the White House in July, and migration will feature prominently on the agenda. The recently concluded Americas Summit also sought to address growing migration flows to the US, largely from Mexico and Central America.
Monday’s was the latest human tragedy involving busy irregular immigration routes. May broke records for illegal crossings into the US with more than 239,000. The largest access point is through the border shared by Mexico and the State of Texas. This intense migratory flow has created a problem for Joe Biden and the Democrats, who will go to the polls in November in midterm elections with immigration policy as one of the issues of most concern for voters.
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