Sri Lanka picks a new leader

This is an audio transcript of the FT News Briefing podcast episode: Sri Lanka picks a new leader

Marc Filippino
Good morning from the Financial Times. Today is Monday, July 18th, and this is your FT News Briefing.

[MUSIC PLAYING]

Sri Lanka’s lawmakers start to rebuild their government this week. Financial technology companies were so hot, and now they’re not. Plus, offices may have reopened, but a lot of us still work remotely. In the US, this untethering is changing the country’s economic geography. I’m Marc Filippino, and here’s the news you need to start your day.

[MUSIC FADES]

Lawmakers in Sri Lanka will vote for a new leader this week. Protesters ousted the former president who then fled the country. Now, Sri Lanka must start digging out of a political and economic mess. The country’s opposition leader has called on the International Monetary Fund for help. To find out more, I’m joined by the FT’s Antoni Slodkowski, who’s in Sri Lanka’s capital, Colombo. Hi, Anthony.

Antoni Slodkowski
Hi there.

Marc Filippino
Anthony, before we get into politics, you know, what’s it like in the capital? As I understand, protests are ongoing. But it’s a, it’s a real different mood now that President Gotabaya Rajapaksa is gone. You recorded this sound . . . 

[STREET SOUNDS IN SRI LANKA PLAYING]

Marc Filippino
Can you can you tell us what’s going on?

Antoni Slodkowski
So I went out Saturday night and the students were basically dancing, celebrating. This surreal landscape where you have tens, if not hundreds of tents put up by students and various organisations, smack bang in the middle of the most important part of Sri Lanka and the most important part of Colombo, basically, right in front of the presidential secretariat. These activists include poets, they include playwrights, they include software engineers and monks and clergy as well. So there’s just a whole sort of spectrum of the Sri Lankan society converging on Colombo and demanding change.

[STREET SOUNDS IN SRI LANKA PLAYING]

And essentially there are people quite late at night it was like 9-9.30pm, still dancing, milling around, talking to each other, saying that, you know, we’ve reclaimed power, we’re here, this country belongs to us . . . 

[SOUNDS OF PROTESTERS IN SRI LANKA PLAYING]

. . . and we’re not afraid to, you know, to tell you what we think.

Marc Filippino
Anthony, these protesters seem just so triumphant that they could force so much political change. But, you know, there’s still this horrendous economic crisis. How bad is it?

Antoni Slodkowski
I’ve been able to kind of take a walk around the biggest sort of market, you know, you know, maybe a few kilometres north of this protest area. And I’ve spoken to people who would normally kind of push carts filled with textile or sugar or fruit, you know, between stalls and between merchants. And these people told me that they’re now using firewood to cook their meals, and the only thing they can afford is bread with a little bit of coconut oil because there is nothing else to eat.

Marc Filippino
And to add to it, there’s no sense of when things will get better. Sri Lanka can’t even start to rebuild its economy before there’s political stability. And, you know, as I mentioned, lawmakers plan to elect a new leader on Wednesday. Is this the start to getting things back on track?

Antoni Slodkowski
A lot depends on whether the protests will become more violent after Wednesday or whether they or whether the protesters are willing to give the acting president, who’s most likely to become the next president, a chance. And he’s had experience in sort of dealing with the IMF and discussing, negotiating previous bailouts and is seen as a sort of a capable technocrat, if somehow beholden to the Rajapaksas as well. If they’re willing to give him a chance, then over time there might be some kind of you know, he might get enough breathing room to get the economy slowly back on track. But as the opposition leader told me today, before it gets better, it’s more likely to get worse first.

Marc Filippino
Antoni Slodkowski is covering the ongoing crisis in Sri Lanka for the FT. Thanks, Anthony.

Antoni Slodkowski
Thank you for having me.

[MUSIC PLAYING]

Marc Filippino
High-flying fintech start-ups are now crashing to earth. Shares in financial technology companies like Klarna, Upstart and Robinhood soared during the pandemic. But this year, fintech shares have collectively lost nearly half a trillion dollars in value compared to their pandemic peak. That’s according to data from CB Insights. They’re suffering from broader economic concerns dragging down the entire stock market like inflation and recession fears. But investors are also turned off by fintech companies’ lack of profits and untested business models.

[MUSIC PLAYING]

OK, I want to introduce you to one of our listeners in the US. Her name is Gayle Krueger. She’s from Detroit, Michigan, spent her whole life there, and she works for Ford Motors in finance management. When her workplace closed because of the pandemic, Gayle decided to go to South Carolina to be closer to her parents, and it was just more appealing than Detroit.

Gayle Krueger
It was like, OK, it’s really cold outside, like all the restaurants are closed, like I’m like in my house by myself hearing doom and gloom on the news and not able to see my family. And as long as the offices aren’t open, why would I spend another Michigan winter sitting in my house by myself?

Marc Filippino
Gayle’s office in Michigan has reopened, but she decided to stay in South Carolina for good to be near her family. As for her colleagues, she said her company’s so big . . . 

Gayle Krueger
. . . we’d all be sitting on Webex calls anyway.

Marc Filippino
Her decision is part of a broader shift that’s changing the economic geography of the US. To talk more about what this means, I’m joined by the FT’s US national editor and columnist Ed Luce, as well as our global business columnist Rana Foroohar. They write our twice weekly Swamp Notes newsletter. Thanks for joining me, guys.

Rana Foroohar
Thanks for having us.

Edward Luce
Pleasure to be here.

Marc Filippino
So what are the big trends in where people are moving from and where people are moving to? And what do you think this shift means?

Edward Luce
I mean, that’s a very important question. Clearly, most of these shifts that we’ve seen in the last two years, sort of accelerated by the pandemic, have been from high-tax to low-tax states, and they’ve been from blue states to, for the most part, red states. So Florida, Texas, North Carolina, places like that have really benefited. And places like San Francisco and New York continue to lose taxpayers. I think it’s more than just a tax base question. I think a lot of people were reacting to the fact that their children had far more remote learning in the blue states than they did in the red states. Parents pretty much overwhelmingly want their children to learn in-person. I’m now getting more and more persuaded that this is a serious trend and it will have political implications.

Rana Foroohar
Yeah, I 100 per cent agree. And I think actually it’s interesting some of the Supreme Court rulings just amplify that in the sense that we now have a court that is essentially trying to decommission the administrative state at a federal level and give more power to individual states. Well suddenly, if you’ve got a flood of money going from one state to another and that state has a lot more power about how to use it, that gets very interesting politically and economically.

Marc Filippino
You bring up a really good point because I was going to ask about the political implications that, you know, you have more people possibly from New York who are blue moving to Florida. But you bring up the Supreme Court and states' rights. Those more liberal-minded people who would be attracted to a low-tax base place might not go there if their, if rights that are important to them, like access to abortion, you know, gun restrictions, they’re not there.

Rana Foroohar
Absolutely. And throw in the fact that, you know, it’s destabilised business as well. I mean, business is in the crosshairs of all this because suddenly what can you do across borders? I mean, in a way, I’m beginning to take more seriously something that, you know, some of our British colleagues have talked about, which is, are we going to see a US in pieces, you know, in our lifetime or is secession a possibility? And I used to just dismiss those sorts of thoughts. I’m not dismissing them so much anymore.

Edward Luce
I take them pretty seriously. I mean, the fact that these conversations, you know, now serious, supercharged by various gun rights rulings and Roe v Wade, of course, and the possibility all the other socially liberating rulings of the last generation coming under challenge, something that Clarence Thomas has said is now logically next, it’s gonna crystallise the growing differences between these states.

Marc Filippino
I guess the thing that sticks out to me is that we’ve seen, maybe not to this extent, but we’ve seen migrations before. What’s to say that this one is the one that radically changes the way that our countries and our states operate?

Rana Foroohar
Well, first of all, the jury is out, still, on the question. I mean, I’m watching the housing market very carefully. And I do think that this housing boom that we’ve seen post-Covid is different than, say, the subprime boom and bust or previous boom-bust cycles. Broadband has now fundamentally changed along with the pandemic and the possibility of work from home. I mean, I’m never going back.

Edward Luce
And I think, I certainly hope, that the cities like New York and San Francisco, this tax exodus is going to prompt a strong revisitation of what it is that makes cities attractive. And so cities are going to have to reinvent themselves. And I hope in that sense the market works.

Marc Filippino
Ed Luce is our US national editor and columnist. Rana Foroohar is the FT’s global business columnist. You can subscribe to their twice weekly Swamp Notes newsletter at FT.com/newsletters. We’ll also have that link in the show notes. Thank you for your time, guys.

Edward Luce
Thank you.

Rana Foroohar
Thank you.

[MUSIC PLAYING]

Marc Filippino
You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.