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In Hong Kong, Bitcoin Is The Last Chance For Freedom

As tightening authoritarianism from China strips Hong Kong of financial freedom, Bitcoin offers its people a chance at forging their own paths.

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As tightening authoritarianism from China strips Hong Kong of financial freedom, Bitcoin offers its people a chance at forging their own paths.

This is an opinion editorial by Margarita Groisman, a technology engineer invested in the power of Bitcoin to help people around the world.

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Many remember the intensity and incredible spirit of the people of Hong Kong during the 2019 protests that went viral all over our screens. Thousands of everyday citizens took to the streets to protest Chinese use of excessive force and an aggressive legislative takeover that went against Hong Kong’s Basic Law. Beginning in March 2019 with a sit-in at government headquarters following an amendment to the extradition policy to mainland China, the demonstrations went on and on with mounting grievances.

Hong Kong, once a beacon of free economic activity, a center of trade and commerce, and a democratic and free state with a level of sovereign control, would be rapidly taken over by mainland China.

The outbreak of COVID-19 largely ended the protests, and the west turned away from the plight of the people of Hong Kong. A 2020 document out of Beijing declared that “comprehensive jurisdiction” would be achieved by the Chinese Communist Party (CCP) over Hong Kong, with people’s observance of COVID-19 restrictions giving China the ability to quickly sweep away opposition using force and without the interference of foreign powers.

Freedoms that those in the West take for granted, such as the right to protest and to free speech, no longer exist in Hong Kong with all forms of political opposition now silenced. The new National Security Law, designed to prevent “secession, foreign interference, terrorism and subversion against the central government” was passed in May 2020, bypassing the local legislative process and allowing China to take unprecedented control of Hong Kong.

Hong Kong’s once-enshrined Basic Law, granting it a “capitalist system and way of life” and granting “a high degree of autonomy,” including executive, legislative and independent judicial powers for 50 years, has been broken and ended by the will of the CCP.

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Since then, we’ve seen a mass exodus of the people of Hong Kong as basic freedoms that the residents used to enjoy have virtually all been taken away. We’ve also seen a weakening of the economic strength of Hong Kong

COVID-19 And Continued Suppression Of Freedom In Hong Kong

While Hong Kong has implemented a stringent response to the COVID-19 pandemic with a “zero-COVID” policy, in March 2022, it reported one of the highest Covid death rates in the world.

This fascinating Atlantic article described the situation in Hong Kong, where COVID-19 has been used by the government to justify and demand absolute control of the population. Hong Kong faced extreme and consistent shutdowns and continues to dramatically fail and yet ceaselessly defends a zero-covid policy:

“With opposition voices silenced, Hong Kong’s rulers claimed they could more efficiently govern. But in the city legislature, overhauled last year to ensure that nationalism and obedience are valued over competence and political know-how, suggestions on how to tame the outbreak have included the wildly impractical (using cruise ships as temporary isolation facilities) and the patently absurd (dropping fresh food into Hong Kong by drone). Even this newfound sense of urgency on the part of lawmakers and the government has emerged only after Chinese President Xi Jinping spoke last month of the ‘overriding mission’ to bring the current outbreak under control.”

“‘Hong Kong’s pandemic response definitely shows the NSL [national-security law] new order is not only about election and activists, but extends to all realms of life,’ Ho-Fung Hung, a professor at Johns Hopkins School of Advanced International Studies and the author of the forthcoming book City on the Edge: Hong Kong Under Chinese Rule, told me by email.”

This strategy has had significant effects on unemployment and financial troubles for the city:

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Hong Kong’s Dollar Is Pegged To The U.S. Dollar

Despite all of the authoritarian changes, Hong Kong still operates on a currency pegged to the U.S. dollar. The Hong Kong Monetary Authority aims to keep the currency trading at HK$7.75 to HK$7.85 per $1. But as the U.S. has begun to raise interest rates, and Hong Kong lost significant liquidity even as the city fought to maintain its peg. In fact, just between May and July, the balance of Hong Kong dollars shrank by more than half.

“For example, the gap between the Hong Kong Interbank Offered Rate (Hibor) and its US counterpart (dollar Libor) widened significantly after the Fed began its aggressive rate hikes, because liquidity in Hong Kong was still very ample. (Hibor and Libor represent a daily average of what banks say they would charge to lend to one another.) That gap makes it attractive for traders to borrow in Hong Kong dollars to buy US dollars to earn the higher yield. That so-called carry trade can push the local currency toward its weak end of HK$7.85, prompting the HKMA to intervene.”

The Washington Post

In some ways, this means that Hong Kong is caught between the political control of the Chinese Communist Party and financial reliance on the U.S. dollar and fiscal policy. Despite Hong Kong seeing a stable currency, as Hong Kong's inflation rate for 2021 was 1.57%, a 1.32% increase from 2020, it saw a significant uptick in borrowing costs due to this significant selloff. And while the peg to the U.S. dollar allows Hong Kong to at least financially remain semi-autonomous, the combination of the population decline hitting real estate prices in Hong Kong so significantly due to a demand dropoff and the increased borrowing costs to maintain the peg has hit the economy hard. Hong Kong faced very significant COVID-19 restrictions, and as a result, joblessness is somewhat mirroring the trends within China.

Speaking to Bloomberg, George Magnus, an economist and associate at the University of Oxford China Centre, made it very clear: “It’s China’s choice whether it wants to keep the peg in place.”

And it seems clear that the CCP now holds soft power over the local government of Hong Kong and could possibly decide to move Hong Kong under complete economic control. Especially as China and Russia work together to create a new reserve currency and the long-term future of the reserve capacity of the dollar depending on the Federal Reserve’s success in curbing rising inflation, it seems that Hong Kong’s days of financial autonomy may be limited.

Is Bitcoin A Way Out For Hong Kong?

Interestingly enough, considering this precarious financial and political position, Hong Kong was listed as the most “crypto-ready” country in 2022.

This statistic was determined by “factors such as crypto ATM installations, pro-crypto regulations, startup culture and a fair tax regime signal a country’s readiness to adopt cryptocurrencies.” Considering these factors, a Forex Suggest study revealed Hong Kong’s position as the best-prepared country for widespread cryptocurrency adoption, with a crypto-readiness score of 8.6,” per CoinTelegraph. And as previously reported in Bitcoin Magazine, Hong Kong saw an uptick in bitcoin trading during the 2019 protests, showing a need for an effective peer-to-peer exchange that would not be controlled by the government of Hong Kong (now a pawn of the CCP).

Those who stay in Hong Kong stay because it is their home. But as China strengthens its control more and more over the region, COVID-19 restrictions seem to be never-ending, and even the most basic of freedoms for the population of the city continue to be eliminated. Hong Kong’s long-term outlook is looking increasingly bleak.

This will become increasingly clear if China moves Hong Kong to a currency tied to the yuan or one under a Chinese-state-sponsored digital currency. In fact, China has already made efforts to move Hong Kong under the state-sponsored e-CNY, or the CCPS, a centralized digital currency. After all, “Experts close to the People’s Bank of China and state-owned bank officials believe, however, that e-CNY will ultimately contribute to the yuan’s internationalization in the long term,” per Carnegie Endowment Scholar Robert Greene.

This would signal a complete end to Hong Kong's autonomy.

The people of Hong Kong have few options left available to them in terms of hope of regional autonomy or any sort of freedoms given to individuals. If citizens are to act quickly, they could choose to move toward a different path than the one they are currently tumbling down. If the incredible talent and intelligence of the people of Hong Kong adopt the Lightning Network to conduct peer-to-peer exchange on top of Bitcoin, for instance, they could perhaps chart a difficult but promising path out of the complete control of China.

The alternative is the current path that Hong Kong is one, where it loses regional autonomy, individual freedoms and the ability to make its own destiny.

This is a guest post by Margarita Groisman. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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Key shipping company files for Chapter 11 bankruptcy

The Illinois-based general freight trucking company filed for Chapter 11 bankruptcy to reorganize.

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The U.S. trucking industry has had a difficult beginning of the year for 2024 with several logistics companies filing for bankruptcy to seek either a Chapter 7 liquidation or Chapter 11 reorganization.

The Covid-19 pandemic caused a lot of supply chain issues for logistics companies and also created a shortage of truck drivers as many left the business for other occupations. Shipping companies, in the meantime, have had extreme difficulty recruiting new drivers for thousands of unfilled jobs.

Related: Tesla rival’s filing reveals Chapter 11 bankruptcy is possible

Freight forwarder company Boateng Logistics joined a growing list of shipping companies that permanently shuttered their businesses as the firm on Feb. 22 filed for Chapter 7 bankruptcy with plans to liquidate.

The Carlsbad, Calif., logistics company filed its petition in the U.S. Bankruptcy Court for the Southern District of California listing assets up to $50,000 and and $1 million to $10 million in liabilities. Court papers said it owed millions of dollars in liabilities to trucking, logistics and factoring companies. The company filed bankruptcy before any creditors could take legal action.

Lawsuits force companies to liquidate in bankruptcy

Lawsuits, however, can force companies to file bankruptcy, which was the case for J.J. & Sons Logistics of Clint, Texas, which on Jan. 22 filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Western District of Texas. The company filed bankruptcy four days before the scheduled start of a trial for a wrongful death lawsuit filed by the family of a former company truck driver who had died from drowning in 2016.

California-based logistics company Wise Choice Trans Corp. shut down operations and filed for Chapter 7 liquidation on Jan. 4 in the U.S. Bankruptcy Court for the Northern District of California, listing $1 million to $10 million in assets and liabilities.

The Hayward, Calif., third-party logistics company, founded in 2009, provided final mile, less-than-truckload and full truckload services, as well as warehouse and fulfillment services in the San Francisco Bay Area.

The Chapter 7 filing also implemented an automatic stay against all legal proceedings, as the company listed its involvement in four legal actions that were ongoing or concluded. Court papers reportedly did not list amounts for damages.

In some cases, debtors don't have to take a drastic action, such as a liquidation, and can instead file a Chapter 11 reorganization.

Truck shipping products.

Shutterstock

Nationwide Cargo seeks to reorganize its business

Nationwide Cargo Inc., a general freight trucking company that also hauls fresh produce and meat, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Illinois with plans to reorganize its business.

The East Dundee, Ill., shipping company listed $1 million to $10 million in assets and $10 million to $50 million in liabilities in its petition and said funds will not be available to pay unsecured creditors. The company operates with 183 trucks and 171 drivers, FreightWaves reported.

Nationwide Cargo's three largest secured creditors in the petition were Equify Financial LLC (owed about $3.5 million,) Commercial Credit Group (owed about $1.8 million) and Continental Bank NA (owed about $676,000.)

The shipping company reported gross revenue of about $34 million in 2022 and about $40 million in 2023.  From Jan. 1 until its petition date, the company generated $9.3 million in gross revenue.

Related: Veteran fund manager picks favorite stocks for 2024

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Key shipping company files Chapter 11 bankruptcy

The Illinois-based general freight trucking company filed for Chapter 11 bankruptcy to reorganize.

Published

on

The U.S. trucking industry has had a difficult beginning of the year for 2024 with several logistics companies filing for bankruptcy to seek either a Chapter 7 liquidation or Chapter 11 reorganization.

The Covid-19 pandemic caused a lot of supply chain issues for logistics companies and also created a shortage of truck drivers as many left the business for other occupations. Shipping companies, in the meantime, have had extreme difficulty recruiting new drivers for thousands of unfilled jobs.

Related: Tesla rival’s filing reveals Chapter 11 bankruptcy is possible

Freight forwarder company Boateng Logistics joined a growing list of shipping companies that permanently shuttered their businesses as the firm on Feb. 22 filed for Chapter 7 bankruptcy with plans to liquidate.

The Carlsbad, Calif., logistics company filed its petition in the U.S. Bankruptcy Court for the Southern District of California listing assets up to $50,000 and and $1 million to $10 million in liabilities. Court papers said it owed millions of dollars in liabilities to trucking, logistics and factoring companies. The company filed bankruptcy before any creditors could take legal action.

Lawsuits force companies to liquidate in bankruptcy

Lawsuits, however, can force companies to file bankruptcy, which was the case for J.J. & Sons Logistics of Clint, Texas, which on Jan. 22 filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Western District of Texas. The company filed bankruptcy four days before the scheduled start of a trial for a wrongful death lawsuit filed by the family of a former company truck driver who had died from drowning in 2016.

California-based logistics company Wise Choice Trans Corp. shut down operations and filed for Chapter 7 liquidation on Jan. 4 in the U.S. Bankruptcy Court for the Northern District of California, listing $1 million to $10 million in assets and liabilities.

The Hayward, Calif., third-party logistics company, founded in 2009, provided final mile, less-than-truckload and full truckload services, as well as warehouse and fulfillment services in the San Francisco Bay Area.

The Chapter 7 filing also implemented an automatic stay against all legal proceedings, as the company listed its involvement in four legal actions that were ongoing or concluded. Court papers reportedly did not list amounts for damages.

In some cases, debtors don't have to take a drastic action, such as a liquidation, and can instead file a Chapter 11 reorganization.

Truck shipping products.

Shutterstock

Nationwide Cargo seeks to reorganize its business

Nationwide Cargo Inc., a general freight trucking company that also hauls fresh produce and meat, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Illinois with plans to reorganize its business.

The East Dundee, Ill., shipping company listed $1 million to $10 million in assets and $10 million to $50 million in liabilities in its petition and said funds will not be available to pay unsecured creditors. The company operates with 183 trucks and 171 drivers, FreightWaves reported.

Nationwide Cargo's three largest secured creditors in the petition were Equify Financial LLC (owed about $3.5 million,) Commercial Credit Group (owed about $1.8 million) and Continental Bank NA (owed about $676,000.)

The shipping company reported gross revenue of about $34 million in 2022 and about $40 million in 2023.  From Jan. 1 until its petition date, the company generated $9.3 million in gross revenue.

Related: Veteran fund manager picks favorite stocks for 2024

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Tight inventory and frustrated buyers challenge agents in Virginia

With inventory a little more than half of what it was pre-pandemic, agents are struggling to find homes for clients in Virginia.

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No matter where you are in the state, real estate agents in Virginia are facing low inventory conditions that are creating frustrating scenarios for their buyers.

“I think people are getting used to the interest rates where they are now, but there is just a huge lack of inventory,” said Chelsea Newcomb, a RE/MAX Realty Specialists agent based in Charlottesville. “I have buyers that are looking, but to find a house that you love enough to pay a high price for — and to be at over a 6.5% interest rate — it’s just a little bit harder to find something.”

Newcomb said that interest rates and higher prices, which have risen by more than $100,000 since March 2020, according to data from Altos Research, have caused her clients to be pickier when selecting a home.

“When rates and prices were lower, people were more willing to compromise,” Newcomb said.

Out in Wise, Virginia, near the westernmost tip of the state, RE/MAX Cavaliers agent Brett Tiller and his clients are also struggling to find suitable properties.

“The thing that really stands out, especially compared to two years ago, is the lack of quality listings,” Tiller said. “The slightly more upscale single-family listings for move-up buyers with children looking for their forever home just aren’t coming on the market right now, and demand is still very high.”

Statewide, Virginia had a 90-day average of 8,068 active single-family listings as of March 8, 2024, down from 14,471 single-family listings in early March 2020 at the onset of the COVID-19 pandemic, according to Altos Research. That represents a decrease of 44%.

Virginia-Inventory-Line-Chart-Virginia-90-day-Single-Family

In Newcomb’s base metro area of Charlottesville, there were an average of only 277 active single-family listings during the same recent 90-day period, compared to 892 at the onset of the pandemic. In Wise County, there were only 56 listings.

Due to the demand from move-up buyers in Tiller’s area, the average days on market for homes with a median price of roughly $190,000 was just 17 days as of early March 2024.

“For the right home, which is rare to find right now, we are still seeing multiple offers,” Tiller said. “The demand is the same right now as it was during the heart of the pandemic.”

According to Tiller, the tight inventory has caused homebuyers to spend up to six months searching for their new property, roughly double the time it took prior to the pandemic.

For Matt Salway in the Virginia Beach metro area, the tight inventory conditions are creating a rather hot market.

“Depending on where you are in the area, your listing could have 15 offers in two days,” the agent for Iron Valley Real Estate Hampton Roads | Virginia Beach said. “It has been crazy competition for most of Virginia Beach, and Norfolk is pretty hot too, especially for anything under $400,000.”

According to Altos Research, the Virginia Beach-Norfolk-Newport News housing market had a seven-day average Market Action Index score of 52.44 as of March 14, making it the seventh hottest housing market in the country. Altos considers any Market Action Index score above 30 to be indicative of a seller’s market.

Virginia-Beach-Metro-Area-Market-Action-Index-Line-Chart-Virginia-Beach-Norfolk-Newport-News-VA-NC-90-day-Single-Family

Further up the coastline on the vacation destination of Chincoteague Island, Long & Foster agent Meghan O. Clarkson is also seeing a decent amount of competition despite higher prices and interest rates.

“People are taking their time to actually come see things now instead of buying site unseen, and occasionally we see some seller concessions, but the traffic and the demand is still there; you might just work a little longer with people because we don’t have anything for sale,” Clarkson said.

“I’m busy and constantly have appointments, but the underlying frenzy from the height of the pandemic has gone away, but I think it is because we have just gotten used to it.”

While much of the demand that Clarkson’s market faces is for vacation homes and from retirees looking for a scenic spot to retire, a large portion of the demand in Salway’s market comes from military personnel and civilians working under government contracts.

“We have over a dozen military bases here, plus a bunch of shipyards, so the closer you get to all of those bases, the easier it is to sell a home and the faster the sale happens,” Salway said.

Due to this, Salway said that existing-home inventory typically does not come on the market unless an employment contract ends or the owner is reassigned to a different base, which is currently contributing to the tight inventory situation in his market.

Things are a bit different for Tiller and Newcomb, who are seeing a decent number of buyers from other, more expensive parts of the state.

“One of the crazy things about Louisa and Goochland, which are kind of like suburbs on the western side of Richmond, is that they are growing like crazy,” Newcomb said. “A lot of people are coming in from Northern Virginia because they can work remotely now.”

With a Market Action Index score of 50, it is easy to see why people are leaving the Washington-Arlington-Alexandria market for the Charlottesville market, which has an index score of 41.

In addition, the 90-day average median list price in Charlottesville is $585,000 compared to $729,900 in the D.C. area, which Newcomb said is also luring many Virginia homebuyers to move further south.

Median-Price-D.C.-vs.-Charlottesville-Line-Chart-90-day-Single-Family

“They are very accustomed to higher prices, so they are super impressed with the prices we offer here in the central Virginia area,” Newcomb said.

For local buyers, Newcomb said this means they are frequently being outbid or outpriced.

“A couple who is local to the area and has been here their whole life, they are just now starting to get their mind wrapped around the fact that you can’t get a house for $200,000 anymore,” Newcomb said.

As the year heads closer to spring, triggering the start of the prime homebuying season, agents in Virginia feel optimistic about the market.

“We are seeing seasonal trends like we did up through 2019,” Clarkson said. “The market kind of soft launched around President’s Day and it is still building, but I expect it to pick right back up and be in full swing by Easter like it always used to.”

But while they are confident in demand, questions still remain about whether there will be enough inventory to support even more homebuyers entering the market.

“I have a lot of buyers starting to come off the sidelines, but in my office, I also have a lot of people who are going to list their house in the next two to three weeks now that the weather is starting to break,” Newcomb said. “I think we are going to have a good spring and summer.”

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