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Each day FT Leader writers on the Editorial Board meet to discuss the topics to be considered for Leader columns. Here are the issues that dominated this week:

Today we opined on one of the biggest stories of the week, the US midterms , concluding that “the forecast ‘red wave’ [for Republicans] proved rather a tame breaker”.

Despite the prospect of a very split Congress, the bad night for Donald Trump gives “reason to breathe a little more easily over the wider threats to US democracy”.

Earlier in the week we looked at US-China relations with some concern. "At a stroke last month, Joe Biden did potentially more to sever trade ties between the US and China than Donald Trump ever managed, despite the ex-president’s bombast."

As the US midterm elections loomed, our Editorial Board took aim at one of the few policies that Biden inherited from his Republican predecessor - and then hardened.

"Controls barring US companies from exporting critical semiconductor manufacturing tools to China mark a further junking of the theory that the US could tame Beijing’s geopolitical ambitions through closer trade ties." Our conclusion? "They are a significant gamble."

As the week's other big event - the Cop27 climate conference - rumbled on, our leader team urged EU policy makers not to be complacent about the energy challenges ahead.

"Fears that Europe might run short of energy reserves to get households and businesses through the colder months have been assuaged by rapid action to build up stocks, boost efficiency and procure alternate supplies. But the region is not out of the woods yet. Getting through winter 2023 could be an even greater challenge."

In the coming days we will look again at the future for the crypto market - and lessons for a gullible establishment from the near-collapse of crypto exchange FTX.
From wave to ripple

Presidential parties are supposed to fare badly in midterm elections, which is one reason why pollsters predicted a Republican wave of support in Tuesday’s vote. The final tally could take days to verify. But with most states’ results in, that wave looks to have turned into a ripple.

The Democrats’ limited losses under Joe Biden, against a backdrop of inflation and dismal ratings, are unusual. Since the second world war, only Bill Clinton in 1998 and George W Bush in 2002 saw their party gain House seats.

And it was a poor result for Donald Trump. The former president endorsed hundreds of candidates at a congressional and state level in a bid to assert himself as the Republican party’s kingmaker and set the scene for a possible return to the presidency. But the performance of those he backed was disappointing .

Voters, particularly women, were more concerned over the overturning of Roe vs Wade than many pollsters, pundits and politicians had realised. Pollsters had wrongly predicted the Supreme Court’s decision would have faded in voters’ minds. But a third of voters in some battleground states were angered by the loss of abortion rights.

Ed Luce argues Biden is still Trump’s worst nightmare , and that the former president’s retained grip on the Republican party explains its failure to close the deal with voters.

“The fact that the red wave became a red ripple suggests the anger of America’s voters does not equate to recklessness,” he writes.

Most ominous for Trump was the decisive reelection of Ron DeSantis as governor of his home state of Florida. DeSantis, whom Trump has nicknamed “DeSanctimonious”, is Trump’s most plausible rival for the 2024 nomination. Biden has suggested he intends to run again.

Business leaders are hoping that a split in Congress  is reason to celebrate . The midterm results may herald a less extreme legislature. “There is a huge opportunity for bipartisan collaboration,” says Jeffrey Sonnenfeld, a Yale School of Management professor.

Follow the final count with our live results map and tracker here .

No bailout for FTX

FTX, Sam Bankman-Fried’s beleaguered cryptocurrency exchange, has lost its rescue deal .

Binance, its rival and one of the world’s largest crypto trading venues, had tentatively agreed to buy FTX after a liquidity crunch. But that deal has fallen apart after due diligence threw up concerns about FTX’s business practices and investigations by US financial regulators, Binance said.

Bankman-Fried says he needs up to $8bn after being inundated with withdrawal requests. His company is now fighting to avoid collapse.

Bitcoin’s value fell 11 per cent on contagion fears, hitting its lowest level since late 2020. Changpeng Zhao, Binance’s chief executive, told employees that FTX’s near collapse has “severely” eroded confidence in the crypto industry.

What went wrong? Alphaville points out that FTX’s business was brought down by “major vulnerabilities”, while Robert Armstrong sets out how Bankman-Fried went from crypto industry saviour to the one in need of saving in such a short space of time.

Will private investment save the world?

World leaders met for Cop27 in the Egyptian resort of Sharm el-Sheikh this week with the intention of ensuring a continuation of life on Earth.

Much of the agenda was dominated by the so-called loss-and-damage debate . For countries where lives and livelihoods are most at risk from rising sea levels and violent storms, measures such as an international insurance system or a global fund bankrolled by richer countries could help cover those losses.

Should rich countries pay to cover the costs of climate change? Many say yes. But Boris Johnson, the former UK prime minister, told delegates the UK, for one, cannot afford “ repatriations ”. Net zero would have to be achieved through private investment.

Martin Wolf agrees, arguing that repatriations would have little effect on immediate priorities: “Diverting attention from the priorities of today to compensation for injustices in the past will lead not to action, but to endless unproductive disputes,” he writes.

Leaders should instead have the highest ambitions for reducing emissions. “The problem is soberingly clear: we have a global challenge that can only be solved with huge investments, notably in new energy systems.” And rich countries should underwrite that risk.

One example is the US plan for companies to fund emerging economies’ fossil-fuel switch with carbon credits to be sold to business, the proceeds from which could fund new clean energy projects.

But existing carbon credits are a controversial and unregulated solution: in theory, one credit represents one tonne of carbon avoided or removed, but critics say they do not always deliver the emissions savings they promise.

Meanwhile, Mark Carney’s $130tn alliance to build a greener finance industry, announced last year at Cop26, risks falling short of expectations and promises.

Carney envisaged four in every 10 dollars under management globally should be deployed to limit global warming and the promise on behalf of “Gfanz” - a group of banks, asset managers, insurers, pension funds and others was greeted as a shift from purely profit-driven capitalism. One year on, the pledge is in trouble , as Kenza Bryan explains.

Keep up to date with developments at Cop27 here .

Twitter: too fast, too soon?

Twitter and its new owner have had a terrible week. Elon Musk dumped another load of Tesla stock , selling almost $4bn of shares in the carmaker and taking his total sales to nearly $20bn since he launched his $44bn takeover bid for the social media platform this year. Tesla shares are down 42 per cent since April.

In the fortnight since he took over, Musk has drawn fire for loosening moderation on the site , with cyber experts warning of misinformation risk during the US midterm elections. Days earlier, Musk fired the staff who policed user content as part of a plan to sack half of Twitter’s 7,500-strong workforce , including members of the “trust and safety” team.

Twitter also suffered a “massive drop in revenue due to activist groups pressuring advertisers,” said Musk. Brands such as General Motors, Mondelez, Carlsberg, Volkswagen and General Mills halted their marketing spend on the site, with some fearing Musk would allow a wave of hate speech and misinformation.

Hannah Murphy and Ian Johnston explain how Musk’s secretive “war room” of advisers are transforming Twitter from the company’s San Francisco headquarters.

Best of business news

UK FTSE chairs sounded the alarm over declining relations with institutional investors this week, warning “box-ticking exercises” are risking growth.

Interviews with 35 named chairs — including 26 from the FTSE 100 — revealed frustration with institutional shareholder relationships. Some heads of the UK’s leading companies called for a reappraisal of how they work together.

Many complained about shareholders’ use of third-party proxy voting agencies to “outsource” voting decisions on board resolutions. Chairs called for proxy voting agencies to fall under an officially supervised code of conduct.

But British boards should get over themselves , says Cat Rutter Pooley. The report, she argues, can broadly be summed up as “board knows best”.

“Except it should be abundantly clear that boards, in fact, do not always know best,” she writes. “One of the lessons of the financial crisis that spurred the development of the UK’s Stewardship Code is that a thriving ecosystem of engagement between companies and all their stakeholders has to be regarded as desirable rather than an inconvenience.”
Wanted: directors who can take the client’s view

This article is brought to you by FT Specialist’s Agenda, a publication that focuses on corporate boards.
Join the FT’s Peggy Hollinger and international business leaders on November 11 online, for the next chapter of corporate climate action, a virtual seminar to explore the progress and pitfalls of attaining net zero. They will discuss best practice on setting and implementing net-zero strategies, and the multiple decarbonisation levers companies can use to reach their goals faster and with higher impact. Find out more here.

What is the smartest way out of the energy crisis? How can Europe’s energy system become less centralised, more renewable and more resilient? Why should business be involved, and what can they do? Join business leaders and FT journalists on November 16 for Energy Crisis Live, a free online seminar. Find out more here.
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