Present, tense: Biden and Putin meet

Hey, Ryan Reynolds here for Mint Mobile. You know one of the perks about having four kids that you know about is actually getting a direct line to the big man up north. And this year he wants you to know the best gift that you can give someone is the gift of Mint Mobile's unlimited wireless for $15 a month. Now you don't even need to wrap it. Give it a try@mintmobile.com Switch upfront payment of $45 for a three month plan equivalent to $15 per month. Required new customer offer for first three months only.

Speed slow after 35 gigabytes if network's.

Busy, taxes and fees extra.

See mintmobile.com hey, Ryan Reynolds here wishing.

You a very happy half off holiday.

Because right now Mint Mobile is offering you the gift of 50% off unlimited. To be clear, that's half price, not half the service. Mint is still premium unlimited wireless for a great price. So that means half day.

Yeah.

Give it a try@mintmobile.com Switch upfront payment of $45 for three month plan equivalent to $15 per month. Required new customer offer for first three months only. Speed slow. 135 gigabytes of network busy taxes and fees extra. See mint mobile.com foreign. Hello and welcome to the Intelligence on Economist Radio. I'm your host Jason Palmer. Every weekday we provide a fresh perspective on the events shaping your world. Bitcoin is just the most well known of a number of cryptocurrencies, a number that's growing fast. Each has its strengths and weaknesses. We sift through all the coins and the tokens to understand how crypto is creeping through financial systems. And how would you like to put down a hefty deposit on a home, start making monthly payments, but not get the keys for years or even decades? We take a look at a curious corner of France's property market. But first, President Joe Biden's string of foreign meetings and summits continues. And today's is going to be the trickiest yet. Mr. Biden will meet with his Russian counterpart, Vladimir Putin in Geneva. They'll have plenty to talk about. Russian cyber attacks have moved from espionage information warfare to disrupting America's critical supply chain.

Reports of a Russian military buildup. Ukraine says 28 Russian battalion groups involving.

Some disturbing developments overseas this weekend, where Putin critic Alexei Navalny is reportedly very close to death in a Russian prison.

He's been on a Critics worry that even holding the meeting is a tactical mistake for Mr. Biden. But he's made clear he knows what he's up Against.

I have met with him. He's bright, he's tough, and I have found that he is a, as they say, when he used to play ball, a worthy adversary.

It's a fair guess that the two men don't specifically like each other. For the cameras, both will probably put on a show of respecting each other. But with so many flashpoints between the countries, the real goal may be ensuring that they fear each other.

Well, Joe Biden's default mode is the big grin and the back slap. I don't expect that to be the demeanor he brings into the room with Vladimir Putin.

James Bennett is a visiting senior editor at the Economist and is based in New York.

I think both of them are likely to cultivate a much more workmanlike atmosphere. That's closer to Putin's own default mode, which is to be fairly fish eyed. I mean, they've met before, they've taken the measure of each other. Joe Biden has called Vladimir Putin a killer.

So you know Vladimir, you think he's a killer?

Mm, I do.

So what price must he pay?

The price he's going to pay.

Well, you'll see shortly.

Vladimir Putin has been less cutting about Biden. He's called him basically a career politician, but his allies have called him essentially a feeble old man. And more important, the two countries are in a very adversarial relationship at the moment, and the politics on both sides dictate that the two men treat each other very coolly.

And how is it that this meeting has actually come about?

Joe Biden asked for this meeting as a way to try to essentially calm Russia down. He asked for it at a moment that Vladimir Putin had massed troops on the Ukrainian border and had also just jailed the opposition leader, Alexei Navalny, who was then on a hunger strike and appeared near death. This meeting was a real concession to Putin. It's something that the Russian leader really, really wants. And at least in the short term, it seems to have worked in that Navalny is still alive, though still in jail, and Russia has said it would pull some of those troops back from the border.

And aside from assurances on Ukraine and Mr. Navalny, what does Mr. Biden want to get out of this?

Biden has a long list of matters that he wants to raise with Putin. A lot of things he intends to press him and scold him for in some areas of potential cooperation. Right now, top of mind is ransomware attacks. The administration is very frustrated that Vladimir Putin's done nothing to crack down on these attacks. Biden has already hinted that he is going to threaten to retaliate with America's own cyber weapons against these groups if Putin doesn't do anything.

So it's clear what Mr. Biden wants from this meeting. But you say it's a meeting that Mr. Putin himself would very much want. What does he want out of this?

Well, Putin has already, in a sense, gotten the thing he wants most just by getting the meeting. He wants to be taken seriously. He wants to be in the global spotlight. He wants to be seen as the president of a superpower, not the leader of a declining Petro state that just happens to have nuclear weapons as a legacy of the Soviet era. In the Trump era, it was all about the drama of the two leaders meeting together. Joe Biden is bringing a much larger frame of reference to the picture. He's presenting himself as the leader of an effort to rebuild the democratic ideal, to rebuild the institutions of the Cold War, in order to confront a new authoritarian threat that's represented partly by Russia, but particularly by China. And that's why he's made a great show of going and meeting first with the G7, meeting then with NATO, displaying great unity with America's democratic allies before he sees Vladimir Putin. Now, the kind of perverse consequence of this is that all of that makes Vladimir Putin look like a really big deal. And that's very much in Putin's interest.

And you say there are also some points to be discussed in terms of cooperation, what amounts to normalizing relations. I mean, how to strike a balance there between the scolding and the more cooperative efforts.

Yeah. You know, in some ways, this also isn't that different than the Soviet era when there was an adversarial relationship, obviously a deeply adversarial one. Yet the two powers were able to work together on some really consequential areas. And some of those are the same in this case. Number one is arms control. Putin and Biden have both expressed interest in a new arms control agreement beyond New Start, which is the last one the two countries signed. And that's an important area for real potential progress. But there are other areas where outside experts, administration say interests potentially align. Putin is not interested in seeing the Afghan government collapse and chaos in Afghanistan after the US Withdraws. The US and Russia are already working together as members of the so called P5 1 that's trying to restore the nuclear deal with Iran that Donald Trump abrogated. And there's some areas, including potentially on climate change, where there are opportunities for greater, closer scientific cooperation.

So how will Mr. Biden be judged on this, what will success look like for his domestic audience, for all of the other world leaders who have said they're happy this meeting is happening in.

The short term at home, he's going to be very much judged on whether he seems tough and strong, whether he delivers the stern messages that are expected to Putin. And he's in a bit of a box there because he will deliver, I'm certain, those messages. He will want to seem strong, but at the same time, he doesn't want to so antagonize Putin that he can't make progress in these other areas. In the very long term, he's going to be judged, I think, on whether he's actually successful in restoring American leadership. And a lot of that depends on his ability to succeed at home in revitalizing the economy, the infrastructure, you know, restoring some measure of sanity to America's intensely polarized politics. He's just got a tremendous series of domestic challenges to achieve what are his global objectives. So this one meeting is not, in the end, going to determine that the longer term questions.

James, thank you very much for your time.

Thank you. Jason.

Sino Hay Observacion.

In El Salvador's legislative assembly last week, bitcoin became legal tender. It's the first country in the world to oblige individuals and businesses to accept it for payments.

Bitcoiners around the world. The time has come. We are ready.

But the move poses risks for the country. For one thing, bitcoin is volatile. It's gained almost 20% since the bill was passed. And there are other concerns. The mining of bitcoin, the creation of new ones, and is energy intensive. Globally, it consumes about as much power as the whole of the Netherlands. Despite making history in El Salvador, more and more rivals to bitcoin are emerging, some of which promise to fix its flaws.

Well, bitcoin is now in its 13th year, and on the face of it, it's doing really well.

Matthew Favas is a finance correspondent for the Economist.

Lots of small investors and big ones actually are starting to invest in it. However, it's not widely used as a medium of exchange. You can't pay for much in bitcoin. And also it's facing more competition than ever. A host of smaller cryptocurrencies are rushing in.

How many other cryptocurrencies are we talking about here?

So There are over 10,000 cryptocurrencies listed on CoinMarketCap, which is a website that counts these sort of things, which is nearly twice as many as a year ago. And also, if you look at the value of them. So bitcoin used to account for 70% of their total value back in January, and now it's come down to 40%. And then finally, if you look at this universe, in fact, there's the coins that really aspire to be like the analog version of money as we have it in the real world. And you also have a lot of other crypto assets that you could call tokens. So it's a very diversified, complex universe that is no longer just about bitcoin.

Well, let's try to navigate the universe here. Before we talk about coins, let's talk about tokens. What are they?

So tokens can become tools of speculation in the sense that people can buy them to try and wait and see whether the price will inflate and therefore they can make a profit. But they don't really aspire to gain the full functions of money. And tokens perhaps can be split into two categories. The first is security tokens. They're a bit like stocks and bonds. So they're used for investment. They represent ownership in firms or other assets like fine art or classic cars. And then you've got the utility tokens, which are tradable credits bought and used in exchange for a service. So if you perhaps remember back in the days we would go to video game arcades and you could change your cash in exchange for tokens that could only be used for these video game machines in the arcade. Well, the utility tokens are a bit like that.

Okay, and what about the ones that would be money, that want to be money coins? Tell me about those.

Well, many are tiny. Only 110 have a market cap that exceeds $100 million. But quite a bit of the ones that are a bit bigger are what we call bitcoin clones. They basically seek to fix some of the cryptocurrency's flows when it comes to being a means of payments. So one of the flaws of Bitcoin is that it's very volatile, that is to say, its price varies a lot. And so so called stablecoins try to solve that problem by pegging themselves to government issues, currencies. So one Stablecoin is worth $1. Another flaw that Bitcoin Close tries to fix is the lack of privacy that Bitcoin has. So you might think that bitcoin are anonymous, that it's really easy to make transactions without revealing your identity, but in fact you use a nickname. And all bitcoin transactions are recorded on a public blockchain. And so very recently, American Officials, for example, recovered some of the ransom paid in Bitcoin to the hackers of the colonial pipeline in America. So they managed to find which virtual wallet was used, and they cloned the money back from it. And so a few of the new bitcoin clones, they have better masking tech.

A lot of the conversation around Bitcoin and crypto more generally is around just how much energy it costs to mine these things, to bring them onto the market.

That's right. And some of the coins are trying to be cheaper and quicker than Bitcoin, which would make them less energy intensive. Brickon relies on what is called the proof of work system. Transactions have to be verified by other entities, which essentially are a number of users in the system that are called miners. This is a very complex process. It consumes a lot of energy. It's also very slow. The Bitcoin system can only handle seven transactions per second. So a number of the coins are trying to solve that problem in various ways. A litecoin is one, and it creates a tweak to the algorithm that is used to validate these transactions. So new blocks of transactions are processed more often. Then you've got dogecoin, which is a coin that was developed as a joke. It has a dog as its symbol. It has no cap on its supply, and it's also faster to process. And then you've got a number of other more radical solutions to the problem. So two of them are called Cardano and Tron, and they use a system called proof of stake, where validators get rewarded in proportion to the number of coins they lock into an escrow wallet while transactions are verified. So essentially, they use their own coins that they have to put in a specific wallet. The coins are frozen for the duration of the transaction, and they get rewarded in proportion of how much they've put into that wallet. It involves less hardware and fewer energy costs.

So all of these different coins trying to be better than Bitcoin, are they succeeding? Will they surpass Bitcoin, do you think?

Well, the problem is that for every flaw that they try to fix, they generally lose something else, which is a desirable attribute of Bitcoin. So, for example, stablecoins, they require users to trust the issuer of the stablecoin, because this issuer has to have cash to back the value of the currency. And they also have to trust the government that issues this currency. And also, some of these big stablecoins don't look very trustable. So Tesla, for example, the biggest one, was fined $18.5 million by authorities in New York earlier this year for lying about how much dollar it had in its stash of hard cash. Then, when it comes to privacy, there's worries about money laundering. Dogecoin is actually even more volatile than bitcoin. And then proof of stake, because you have to lock all these coins into a single wallet. Ankle ridge is hoarding, which is bad for the liquidity of the currency, which means there is less of it that is in free circulation. So you can't use it for anything else than just putting it into these wallets. And if the point is to pay for things with them, that defeats the purpose of it.

So as things stand now, Bitcoin, for all its flaws, is still the king.

Well, it's still by far the currency that has the biggest market cap. It's over $600 billion. But the number two is a currency called ether. It's hosted on a blockchain, so a database that is called ethereum, which is nimbler than the one that bitcoin uses or is recorded on, because it can execute automated programs that are not just about recording transactions, but also about doing other things that are more complicated. One of them, for example, is to move money between wallets only after a specific event. And these sorts of wallets or sort of programs are central to what is called decentralized finance or defi for short, which revolves around smart contracts that are used to replicate complex financial transactions that we make in the real world. So, for example, borrowing money or buying insurance products, you can do that with defi without relying on an intermediary, a centralized institution like a bank or an insurance firm. And DeFi drove 40% of transactions in ether in the last 12 months, up from 7% in the previous 12 months. It's still quite small. It's only about $62 billion that are deposited in ethereum defi applications. But it's growing really fast and you know, things change really fast in the crypto market. So even though bitcoin looks pretty safe in some respects, crypto is very turbulent and revolutions are always possible, which is.

To say we'll have to navigate this universe again in not too long. Matthew, thank you very much for joining us.

Thank you, Jason.

In 1965, a 47 year old notary made a deal with a 90 year old widow. He would buy her apartment in URL in the south of France, but he would let her live in it until she died. Until then, he would pay her a monthly fee, gradually buying her out of the property while he awaited his occupancy but his occupancy never arrived. Thirty years later, the notary was dead. The widow was still alive, having received more than double the property's value in payments. Jeanne Colemont lived to a record setting 122 years. It's a cautionary tale in an unusual real estate market that still exists in France. And in the pandemic, the sell now, die later property deal has a new lease on life.

A viager is a property sale still found occasionally in France, with a kind of life insurance twist.

Stanley Pignoll is the Economist's European business and finance correspondent and is based in Paris.

A buyer puts money down for a residence, but they only get the keys to the place once the current owner dies. So it's a mix of property investment and basically betting on somebody else's death.

And how does it work in practice?

So there are many different variants of vias, depending on the buyers and the sellers. But very broadly, buyers will put up maybe a third of the value of the house upfront, and then they agree to monthly payments that run until the seller dies. So it's like a reverse rent or a kind of annuity that, taken together, should add up over time to the value of the house being bought. But that assumes, of course, that the seller dies when they're meant to die.

And how common are these kinds of deals?

Well, it's an unusual arrangement, right? So they're not that common. By estimates that I've heard, there may be 5,000 a year that are signed in France, maybe about 1% of property sales. That having been said in places with lots of older people to whom this is attractive, like Paris or the south of France, the figure is a little bit higher. What's weird is that people expected this viage system to die off, and it hasn't. Authorities are oddly keen on it. They give it very favorable tax treatment. And in fact, during the pandemic, specialist brokers reported a surge in inquiries about vias.

And why is that? Why the increase during the pandemic?

Essentially, viages are an alternative to retirement homes. And retirement homes became pretty dangerous places during COVID Not only were death rates pretty high, especially in France, but people were barred from receiving visitors for months on end. So for someone who was hesitating between staying in their own home, but maybe not being able to fund it, or selling up their house and moving into a retirement home, the kind of middle way might have been, for some, having a viage where you sell your home, you still have access to it, and on top of which, you can arrange to have this annuity which would help you pay for care.

So the benefits in a broad sense seem clear for the seller. What's in it for the buyer?

Well, a couple of things. The first one is the discount. The listing value of a Viget house is lower. You might be looking at a discount of around a quarter or a third and there's no interest. Vias can be a good way to invest in property without a mortgage. Really, the loan is coming from the seller. So for some people it can be an attractive deal.

Right.

If you're a middle aged buyer and you're looking for a home to retire to, if again, everybody dies at the time they're meant to die, it can work out very well. The downside, of course, is that you don't know when you're going to take possession and you're on the hook for monthly payments until you do. And if the seller takes a long time to die, those payments can exceed the value of the house.

And so in some morbid sense, you might end up kind of hoping for the seller to get on with it.

Oh, explicitly. But if you think about it, that's not that unusual in finance. Your pension provider is also going to hope that you die sooner rather than later. The thing that's unusual here is that instead of institutions betting on large groups of people living longer or dying sooner, here you have one person betting on one other person to die or to live a certain span of time. An ad for Viager not only tells you how wonderful the apartment in question is, but it also tells you how old the seller is. There are kind of tricks of the trade if you are selling your house in Viage. One of them that an agent told me was obviously you want to send the signal that you are going to die soon if you are selling in Viage, because then you're going to get a higher annuity and a higher price. And so what you can do is you can light a couple of cigarettes before visitors come to hint at a very unhealthy lifestyle and a rapid demise and boost the value of your property that way it can get even more sinister. There are some buyers who've been suspected of hurrying nature along. There are currently two murder cases in front of courts in France where authorities allege that the buyers essentially murdered their tenants to gain possession of their Viager properties.

And if you could get good terms, would you buy a place on Viager?

So I know people who've done it and as it turns out, they've been lucky. There's no stigma around it. I think three French presidents have bought houses in Viajes, which what estate agents recommend now is maybe it's not such a good idea to do it for your principal home. But if it's for a country house, for example, or like a retirement home, and you're really not too desperate as to when exactly you're going to get the keys, then, yeah, it can be a good deal.

Stanley, thank you very much for joining us.

Thank you.

That's all for this episode of the Intelligent. If you like us, leave us a rating and a review and you can subscribe to the economist@examiner.com intelligenceoffer. The link is in the show notes. See you back here tomorrow.