Donald Trump’s military budget plan is less impressive than he claims

THE budget proposal that Donald Trump will send to Congress, proposing to boost the Pentagon’s spending by $54bn next year, is less transformative than the president appears to believe. As Senator John McCain, the chairman of the Senate armed services committee, swiftly pointed out, the 10% increase is only $19bn more than that forecast by the outgoing Obama administration (out of a total annual spend of close to $600bn).

Mr Trump’s conviction that this will ensure America wins its future wars, in contrast to the unsatisfactory outcomes in Iraq and Afghanistan, suggests a limited understanding of those conflicts. Few would argue that a lack of aircraft and ships were the problem. Moreover, in seeking ways to pay for a 350-ship navy, additional fighter planes and more troops for both the army and the marines, Mr Trump wants to slash spending on soft power. Cuts to the State Department’s budget and foreign-aid programmes would probably reduce America’s influence in the world and undermine attempts to make the world stable. The defence secretary, Jim Mattis, while giving testimony to Congress in 2013, warned: “If you don’t fund the State...Continue reading

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America’s Supreme Court hints it may keep a closer eye on the executive branch

ON FEBRUARY 27th, in the midst of a fresh crack-down on undocumented migrants and a pending revision of the president’s travel ban, the Supreme Court heard an immigration case with potentially wide-ranging implications. Esquivel-Quintana v Jefferson Sessions is the first Supreme Court case naming Donald Trump’s new attorney general as a party—though it concerns a matter that took place well before he joined the cabinet. Depending on how the justices rule, immigration authorities may soon either enjoy a freer hand to deport non-citizens or find themselves judicially constrained in these efforts.

Juan Esquivel-Quintana arrived in America from Mexico with his parents at the age of 12 and became a lawful permanent resident. In 2009, Mr Esquivel-Quintana served 90 days in jail and five years on probation for statutory rape. He was found to have violated California’s penal code by having sex, at the age of 20, with his 16-year-old girlfriend. (The law criminalises sexual relations between an adult and “a minor who is more than three years younger than the perpetrator”.) Later, after moving from California to Michigan, Mr Esquivel-Quintana became subject to...Continue reading

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Trumpflation vs Negative Rates: The Battle Endures

Why have U.S. bond yields stopped moving higher? Look to Europe, where German two-year yields have fallen to a record low. Monetary policy isn’t done yet in determining the path for bond markets.

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Beijing Needs To Do More To Lift Its Bonds Appeal

China’s latest effort to attract more foreign investors to its bond market likely won’t open the floodgates.

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Chinese Stocks: Don't Get Fooled Twice

The rally has more fundamental support than last time around, but has yet to prove it can survive tighter credit, weaker real estate and rising protectionism.

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Two Retailers, One Big Worry

Target and Best Buy are moving in opposite directions, but they both have reason to fear a border tax.

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Samsung's Latest Crack at Windows

Tablet sales have been falling, but Surface has proved demand for business-focused devices.

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The New Normal for Drug Makers

There were fewer double-digit price increases during the annual beginning-of-the-year price hikes as the pharmaceutical industry fights a wave of bad publicity.

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Global Exchanges Merger Game Gets a Restart---Again

The Deutsche Börse and London Stock Exchange tie-up looks set to fail. That opens the door for NYSE-owner InterContinental Exchanges.

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William Jennings Trump and the monetary elite

DONALD Trump has been compared with many past politicians—Richard Nixon for his suspicion of the press and Warren Harding for his isolationism are two obvious examples. Steve Bannon, Mr Trump's alt-right hand man, has just compared him with William Jennings Bryan, who ran unsuccessfully for President in 1896, 1904 and 1908 on the Democratic ticket.

Mr Bannon said that Mr Trump was an orator in the class of Bryan, although that seems pretty hard to credit. The current President has displayed nothing like the eloquence used by Bryan in his most famous speech, to the 1896 Democratic convention.

You come to us and tell us that the great cities are in favour of the gold standard. I tell you that the great cities rest upon these broad and fertile prairies. Burn down your cities and leave our farms, and your cities will spring up again as if by magic. But destroy our farms and the grass will grow in the streets of every city in the country.

Having behind us the commercial interests and the labouring interests and all the toiling masses, we shall answer their demands for a...Continue reading

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'Bad Banks' Spread Across China

More than three dozen asset-management companies are vacuuming up bad debts from Chinese banks. But it’s more like sweeping the problems under the rug.

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Defending the Euro Starts With Cleaning Up the Banks

Bad loans aren’t just an economic burden; they also undermine the eurozone itself

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Tom Perez is elected leader of a party in crisis

TOM PEREZ is taking over the leadership of the Democratic Party at one of the lowest points in its 189-year history. Since 2009 the party has lost more than 1,000 state legislature seats, more than a dozen governor’s mansions and numerous city halls. Its defeat at the presidential election in November was as painful as it was unexpected. It is deeply divided between a progressive wing led by Bernie Sander, the self-professed socialist senator from Vermont, and the party’s establishment, of which Mr Perez is a proper part.

“I know that Tom Perez will unite us under that banner of opportunity, and lay the groundwork for a new generation of Democratic leadership for this big, bold, inclusive, dynamic America we love so much,” said Barack Obama in a statement shortly after Mr Perez’s election on February 25th. The former president had not explicitly endorsed Mr Perez, who served as his secretary of labour for almost five years, but he was widely assumed to favour Mr Perez among the nine candidates for the chairmanship of the Democratic National Committee (DNC). His vice president, Joe Biden, and his attorney-general, Eric Holder, had come out in favour of Mr...Continue reading

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Bank Lending Signals Caution

President Donald Trump’s erratic style could be to blame for the recent slowdown in lending growth.

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Health Insurers Hope for Nothing

Health-law uncertainty shouldn’t derail insurance stocks.

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A People-Powered Pickup for the Art Market

Return of sidelined auction executives could boost high-end art sales.

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Priceline Is Ready for an Upgrade

Sticker shock aside, Priceline Group shares have more room to go assuming the travel industry stays strong.

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Donald Trump is remodelling the right

“CONSERVATISM can and does mean different things to those who call themselves conservatives,” said Ronald Reagan soothingly, in an address to the Conservative Political Action Conference in 1977. He referred to social conservatism and economic conservatism, tendrils that then seemed disparate, but which he, speaking shortly after Jimmy Carter’s inauguration, would soon unite. “What I envision is not simple a melding together of the two branches of American conservatism into a temporary uneasy alliance,” he said. “But the creation of a new, lasting majority.”

It was tempting to wonder whether the speech Donald Trump delivered on February 24th to CPAC, an annual gathering for conservatives held on a Maryland bank of the Potomac river, signalled the end of that Reaganite consensus.

Mr Trump, who had been explicitly compared to Reagan by his loyal deputy, Mike Pence, the previous day, did sound a few familiar notes. “It’s time for all Americans to get off welfare and get back to work,” he said, adding, “You’re going to love it, you’re going to love it, you’re going to love it.” Also like Reagan, he extolled the need for strong armed...Continue reading

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Apple, Samsung Need to Dazzle in a Slow Market

For the two largest players in the smartphone business, Apple and Samsung, the goal this year is to restore some luster to their brands. Both saw smartphone sales fall for the first time in 2016.

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Detroit’s long road to recovery begins downtown

“THE Corvette was designed here,” says Jacques Panis, the president of Shinola, a maker of trendy watches, bikes and turntables, at the start of a tour of the company's workshop and offices. Five years ago Shinola set up shop on two floors in Detroit's iconic Argonaut building, which used to be the design headquarters of General Motors, one of the city’s big three carmakers. Back then Shinola had 10 employees; today it employs more than 600, of which around 350 are in Detroit.

Shinola’s success is one of the stories regularly wheeled out in discussions about Detroit’s recovery. The company now has 20 shops in America, one in London and one in Toronto. It is planning to open a hotel in Detroit next autumn. Bill Clinton toured Shinola’s workshop in 2014 and the former president frequently sports its popular Runwell watch. But Shinola tells only one tale of the city. The other story remains fairly bleak.

Signs of the Shinola tale are visible everywhere in downtown and midtown Detroit. Whole Foods Market, an upmarket grocer, set up a shop in midtown in 2013. Shake Shack, a trendy hamburger chain, will open a restaurant downtown later this month. Young tech...Continue reading

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Cheap Flights to Europe: Bad for Airlines' Fat Margins

The entry of long-haul, low-cost carriers like Norwegian Air to the trans-Atlantic market is upending a profitable patch for the likes of American, Delta and IAG-owned British Airways.

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Standard Chartered and HSBC: Small Dividends From Rising Rates

Both banks are struggling for growth; interest rates will only help a little.

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Stocks are Frothy, but There's No Bubble

Stocks have soared but except for valuation there are few signs of a bubble. That doesn’t mean the market can’t fall.

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Why Chinese Men Are Dying

Mortality rates among Chinese men aged 41 to 60, who account for nearly three-quarters of the working-age population, increased by 12% over the past decade.

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The fading of South Korea’s pre-eminent political dynasty

SOUTH KOREANS used to joke that if the conservative Saenuri party put up a plank of wood as a candidate for election, voters in the city of Daegu would support it with gusto. Four-fifths of voters in the surrounding province of North Gyeongsang plumped for Park Geun-hye, the conservative candidate, in the presidential election that brought her to power in 2012. Until last year conservatives had swept every ballot since 1985 in Daegu, her home town. Yet when Ms Park’s approval rating sank to a record low of 4% in November amid a sensational influence-peddling scandal, it fell further still, to 3%, in Daegu.

Since revelations surfaced that Ms Park let a long-standing confidante, Choi Soon-sil, meddle inappropriately in presidential affairs, the city has held weekly demonstrations demanding that she should step down. Rumours of the influence of the Choi family over the Parks have swirled since the rule of Park Chung-hee, Ms Park’s late father and a former military dictator, who was born in the nearby city of Gumi. At the height of the rallies in Daegu, more than 100 civic organisations marshalled 50,000 protesters. That makes them the biggest...Continue reading

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'Tailored' Accounting Takes Companies Into Alternate Reality

Recent moves by the Securities and Exchange Commission serve as a reminder that non-GAAP corporate results should be digested with a grain of salt.

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The Trump administration reverses guidelines on transgender bathrooms

ON February 22nd, the Trump administration announced it would withdraw its predecessor’s guidelines regarding the accommodation of transgender students in America’s government-funded schools. Sean Spicer, Donald Trump's press secretary, said that the president had “made it clear throughout the campaign that he's a firm believer in states' rights”. Issues like transgender bathroom access, he added, “are not best dealt with at the federal level". The move has disheartened liberals and cheered conservatives, but its impact is likely to be more limited than either side expects.

Nine months ago, officials from the education and justice departments officials sent a letter and 25-page instructional pamphlet to school districts across the country. The message was simple: America’s schools should permit transgender students to use the bathroom that matches their gender identity. In the face of new laws in North Carolina and other states imposing a biological test on bathroom access, the Obama administration noted that “the desire to accommodate others’ discomfort cannot justify a policy that singles out and disadvantages a particular class of students.” This principle,...Continue reading

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In fintech, China shows the way

CHINESE banks are not far removed from the age of the abacus. In the 1980s they used these ancient counting boards for much of their business. In the 1990s many bank employees had to pass a basic abacus test. Today the occasional click-clack, click-clack can still be heard in villages as tellers slide their abacus beads up and down the rack.

But these days the abacus is mainly a symbol, more likely to be used in the branding of China’s online-finance companies than as a calculating tool. At least three internet lenders have paid homage to it in their names: Abacus Loans, Small Abacus and Modern Abacus. The prominence, so recently, of the abacus is testament to how backward Chinese banking was a short time ago. The rise of the online lenders shows how quickly change has come.

By just about any measure of size, China is the world’s leader in fintech (short for “financial technology”, and referring here to internet-based banking and investment). It is far and away the biggest market for digital payments, accounting for nearly half of the global total. It is dominant in online lending, occupying three-quarters of the global market. A...Continue reading

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The sanctity of trade statistics

MIGHT Donald Trump’s promise to shake up America’s trade policy extend to its statistics? According to a report in the Wall Street Journal, discussions are afoot on changing the way trade figures are tallied. The Bureau of Economic Analysis, the country’s main statistical body, calls this “completely inaccurate”. But in trade as elsewhere, the new administration seems prone to using statistics as a drunk uses a lamppost—for support rather than illumination.

The proposal reportedly involves stripping out some of America’s exports from the gross numbers. America sold $1.5trn of goods abroad in 2016, but of that $0.2trn were re-exports that left the country much as they had arrived. This type of trade has been growing, reflecting America’s role as a hub for North American trade. As a share of its combined exports to Mexico and Canada, re-exports rose from 12% to 20% between 2002 and 2016. Truckers and shippers benefit from this kind of trade. But critics see it as “padding”, obscuring gloomier trends in “made in America” exports.

Stripping out re-exports makes no sense when thinking...Continue reading

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Europe’s securitisation market remains stunted

SECURITISATION, the bundling and repackaging of income streams as tradable securities, goes in and out of fashion. America is still dealing with the fallout from the disaster in one part of the market—sub-prime mortgages—in 2008-09 (see article). In Europe, the swings in popularity have been just as marked. During the crisis, European securitised assets were hit by only small losses but the market suffered from guilt by association. It has since enjoyed a limited renaissance.

Leading the revival, oddly, are European regulators. They have sought not just to rehabilitate, but indeed actively to promote such “structured” finance. As early as 2013 the European Central Bank (ECB) was effusive not only about securitisation’s ability to spread risks, but also about its ability to channel funding to the economy, including small and medium-sized enterprises (SMEs). The ECB and the Bank of England even published a rare joint paper in 2014 making the case for a “better-functioning...Continue reading

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Investors in America’s housing-finance giants lose in court

ONE unresolved issue from the financial crisis is the future of Fannie Mae and Freddie Mac, the two firms that stand behind much of America’s housing market. Fannie and Freddie purchase mortgages, bundle them into securities and sell them on to investors with a guarantee. When America’s housing market collapsed a decade ago, the government had to bail them out. Its treatment of the firms since then has created a titanic legal struggle. Shareholders have cried foul. On February 21st, a federal appeals court upheld a ruling in the government’s favour.

At issue is the Obama administration’s decision in 2012 to hoover up all of Fannie and Freddie’s profits. Until then, it had received a fixed dividend on its investment. The timing of the shift was striking—just before a surge in the firms’ profitability. Since 2008 the Treasury has sucked in about $250bn from the firms, 30% more than the cost of the bail-out.

The change enraged hedge funds who had bought Fannie and Freddie’s shares and found themselves expropriated. The investors’ lawsuit held that the government overstepped its authority by seizing all profits....Continue reading

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Why national budgets need to take gender into account

A good investment

LIKE many rich-country governments, Britain’s prides itself on pursuing policies that promote sexual equality. However, it fails to live up to its word, argues the Women’s Budget Group, a feminist think-tank that has been scrutinising Britain’s economic policy since 1989. A report in 2016 from the House of Commons Library, an impartial research service, suggests that in 2010-15 women bore the cost of 85% of savings to the Treasury worth £23bn ($29bn) from austerity measures, specifically cuts in welfare benefits and in direct taxes. Because women earn less, rely more on benefits, and are much more likely than men to be single parents, the cuts affected them disproportionately.

The government does not set out to discriminate, says Diane Elson, the budget group’s former chair. Rather, it overlooks its own bias because it does not take the trouble to assess how policies affect women. Government budgets are supposed to be “gender-neutral”; in fact they are gender-ignorant. Ms Elson is one of the originators of a technique called “gender budgeting”—in which governments analyse fiscal policy in...Continue reading

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Why taxing robots is not a good idea

BILL GATES is an unlikely Luddite, however much Microsoft may have provoked people to take a hammer to their computers. Yet in a recent interview with Quartz, an online publication, he expressed scepticism about society’s ability to manage rapid automation. To forestall a social crisis, he mused, governments should consider a tax on robots; if automation slows as a result, so much the better. It is an intriguing if impracticable idea, which reveals a lot about the challenge of automation.

In some distant future robots with their own consciousnesses, nest-eggs and accountants might pay income taxes like the rest of us (presumably with as much enthusiasm). That is not what Mr Gates has in mind. He argues that today’s robots should be taxed—either their installation, or the profits firms enjoy by saving on the costs of the human labour displaced. The money generated could be used to retrain workers, and perhaps to finance an expansion of health care and education, which provide lots of hard-to-automate jobs in teaching or caring for the old and sick.

A robot is a capital investment, like a blast furnace or a...Continue reading

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Emmanuel Macron is edging closer to France’s presidency

FRANCE’S most pro-European presidential candidate took his campaign to London this week to a rapturous welcome. Emmanuel Macron, a 39-year-old former Socialist economy minister, was there to court the French vote abroad, and is exactly the sort of upbeat, international-minded tech enthusiast that London’s latte-drinking French voters adore. Campaigning as an independent for votes on the left and the right, Mr Macron has pulled off the astonishing feat of hauling himself up from rank outsider to joint second place in the polls. But the closer he gets to a shot at the French presidency, the tougher his campaign is turning out to be.

A few days before Mr Macron turned up in London, he had been in more hostile territory: the Mediterranean naval port of Toulon, traditionally held by the right. The entrance to his rally was blocked by scores of enraged National Front (FN) supporters and pieds-noirs (ethnic French who resided in Algeria during colonial rule), chanting “Macron traitor!” On a trip to Algeria that week, he had called France’s colonisation of the north African country a “crime against humanity”.

The...Continue reading

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Martin Schulz breathes new life into Germany’s Social Democrats

THE small branch office of Dilek Kolat, a Social Democratic (SPD) politician in Berlin’s Friedenau district, is packed with locals who have turned up for a discussion on the topic “What is social justice?” After two hours the answer is, unsurprisingly, unclear. But the crowd’s enthusiasm is undimmed. Many sense that Martin Schulz, the SPD’s candidate for chancellor, may actually defeat Angela Merkel, the Christian Democratic (CDU) incumbent, in the election on September 24th—and believe that if he does, social justice might be more than a matter for philosophical debates.

Mr Schulz’s selection as candidate in late January caused an extraordinary surge in the polls (see chart). The SPD, currently the junior partner in the coalition with Mrs Merkel’s conservative bloc, now runs neck-and-neck with it, each drawing just above 30%. If Germans could elect their chancellor directly, he would defeat Mrs Merkel 49% to 38%, according to Forschungsgruppe Wahlen, a pollster.

It is too early to tell whether this popularity is a “soap bubble” destined to pop, says Manfred Güllner of Forsa, another polling firm. As the...Continue reading

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Europe is starting to get serious about defence

THE triceratops had a gentle existence that belied its fierce appearance, keeping to itself and maintaining a strict vegetarian diet. But in his neglected classic Tarzan the Terrible, Edgar Rice Burroughs conjured the Gryf, a horrifying dagger-toothed descendant of the three-horned dinosaur that roamed the African plains and snacked on the locals. Europe is contemplating a similar evolutionary path as it gets to grips with an American administration that has tired of playing T. Rex alone. Can the herbivorous power of the past, which has long delighted in the soft tools of diplomacy, trade and aid, really transform itself into a slavering, armed-to-the-teeth carnivore?

Donald Trump’s team has spent much of the last week in Europe cleaning up the boss’s mess. At the Munich Security Conference, James Mattis, the defence secretary, called NATO (which Mr Trump had written off as obsolete) “the best alliance in the world”. In Brussels, Mike Pence, the vice-president, assured his audience of America’s “strong commitment” to the European Union, a club the president has dismissed as a “vehicle for...Continue reading

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Moscow is regaining sway in the Balkans

“HERE are the Russian missiles!” chortles Viacheslav Vlasenko, co-director of the Russian-Serbian Humanitarian Centre in Nis, a town in central Serbia. He gestures at the contents of his warehouse: tents, generators, inflatable boats and other goods one would expect to use in disaster relief. The centre, which shares a building near the airport with several local IT companies, is simply a facility for responding to floods, forest fires and other emergencies, says Mr Vlasenko.

Yet Western analysts worry that it may be something more: a spying post or even a foothold for Russian intervention. As the influence of America and the European Union has receded in the western Balkans, Russia has been trying to fill the vacuum. It has stepped up military co-operation with Serbia, and may have been involved in a recent alleged coup attempt in Montenegro. Moscow’s goal is to stop Serbia, Bosnia, Macedonia and Montenegro from joining NATO and to turn them away from the West.

The most striking allegations against Russia concern a purported coup attempt in Montenegro last October, on the day of the country’s elections. Authorities...Continue reading

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Donald Trump intends to take on Iran. Right, but risky

CHAOTIC, fractious and bafflingly inconsistent though the Trump administration may be, on one issue it appears united: Iran. There is ample evidence that since the signing in mid-2015 of the deal to curb Iran’s nuclear programme, known as the Joint Comprehensive Plan of Action, Iran has taken advantage of the easing of sanctions and the unfreezing of about $100bn worth of overseas assets to project its power across the region with greater boldness. Barack Obama, the new team believe, let it off the hook.

Since the deal, Iran has stepped up its support for Bashar al-Assad in Syria to the point where, with Russian air support, his regime’s survival appears assured for the foreseeable future. Iran has also worked with Russia to supply Hizbullah, a Lebanese Shia militia fighting in Syria, with heavy weapons. It has poured other Shia militias into Syria from Iraq, Afghanistan and Pakistan. In Iraq, meanwhile, Iranian-backed militias are fighting alongside American-supported Iraqi security forces against Islamic State (IS). But once IS is ejected from Mosul, they will be a potent weapon in Iran’s attempt to turn Iraq into a dependent satrapy. In Yemen the...Continue reading

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Iraqi forces face their toughest test in Mosul

IRAQ’S prime minister, Haider al-Abadi, had vowed to recapture Mosul from the so-called Islamic State (IS) by the end of 2016. In the weeks leading up to the battle for Iraq’s second-largest city, American military commanders echoed him: victory would be swift, they pledged. But with the jihadists still in control of half the city and the hardest part of the battle yet to come, these predictions now look naive.

In the rush to dislodge IS from its largest urban stronghold, Iraq’s security forces appear to have underestimated the militants’ ability to cause carnage. Although vastly outnumbered, the jihadists have used snipers, booby traps, improvised landmines and hundreds of suicide-bombers to bog down Iraqi security forces. Elaborate tunnel networks have allowed IS to escape bombing runs from American warplanes and to ambush Iraqi forces in areas supposedly cleared.

The grinding urban combat has taken a heavy toll on Iraqi troops. Some units of the country’s Golden Division—American-trained special forces that have spearheaded the assault on the city—have seen more than half their men killed or wounded. The UN said that...Continue reading

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Western Sahara edges closer to renewed conflict

They say they want a referendum

ACCORDING to the map sold in the gift shop at the airport in Laayoune, the capital of Western Sahara, the territory belongs solely to Morocco. But the airport itself contains signs that this is contested land. Planes bearing the UN’s marking sit on the runway, while its soldiers, sporting blue berets, roam the arrivals hall. They are there to keep the peace between Morocco and the Polisario Front, a nationalist movement that has fought for independence for more than 40 years.

Fears are growing of a return to armed conflict. Provocations by Morocco have infuriated Polisario, which has responded in kind. Since last summer the UN has stood between the two enemies, just 120 metres apart, in the remote area of Guerguerat. Diplomats worry that an itchy trigger finger could restart the 16-year war that the UN helped end in 1991. “The threat to peace and security is probably the worst we have seen since then,” says a UN official.

Hostilities between Morocco and Polisario began shortly after Spain, the colonial power, withdrew from Western Sahara in 1975, when Morocco annexed the...Continue reading

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Liberia’s bold experiment in school reform

It says here, be good

AT A school in the township of West Point, Monrovia, a teacher should be halfway through her maths lesson. Instead she is eating lunch. A din echoes around the room of the government-run school as 70 pupils chat, fidget or sleep on their desks. Neither these pupils nor the rest of Liberia is learning much. Bad teaching, a lack of accountability and a meagre budget have led to awful schools. Fourteen years of civil war and, more recently, the Ebola virus have stymied reforms. Children’s prospects are shocking. More than one-third of second-grade pupils cannot read a word; since many are held back, teenagers often share classes with six year olds (see chart). In 2014 only 13 candidates out of 15,000 passed an entrance exam to the University of Liberia. In 2013 none did.

George Werner admits that when he was made education minister in 2015, “my heart sank.” But he soon got...Continue reading

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Reducing Brazil’s pension burden

THE faded modernist façades along Copacabana’s beachfront hark back to Brazil’s optimistic past. The seaside promenade, where walking sticks outnumber G-strings, offers a glimpse of its demographic future. A quarter of the inhabitants of this part of Rio de Janeiro are 65 or older, making it one of the oldest places in Brazil. But the rest of the country is catching up fast, thanks to a drop in birth rates and rising life expectancy. Over-65s, who make up 8.5% of the population now, will reach Copacabana’s share by 2050. The country is dangerously unprepared for that shock. 

To see why, visit the Copacabana branch of the National Institute of Social Security (INSS), which administers state pensions for Brazilians employed in the private sector. Elizete Ribeiro, a vivacious masseuse, does not look ready to be pensioned off. She is just 56 years old. But, having paid into the system for 30 years, she is entitled to a basic pension worth the minimum wage (937 reais, or $304, a month). The lawyer helping her, Jorge Freire, benefits from a separate public-sector scheme. He retired as an employee of Rio de Janeiro’s state court system when he was...Continue reading

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The costs of Latin American crime

THIS month police in the Brazilian state of Espírito Santo went on strike for ten days, during which 143 people were murdered and all hell broke loose in Vitória, the state capital. In Reynosa, on Mexico’s border with the United States, two alleged robbers were beaten, bound with duct tape and dangled from a footbridge, with a message from a drug baron pinned to them. On February 17th a gunman killed five people and injured nine at a shopping centre in Lima. A day later in Flores Costa Cuca, a small town in western Guatemala, an 83-year-old woman and her disabled grandson were murdered, prompting calls for the army to patrol the streets.

A casual scan of newspapers in Latin America and the Caribbean in any week reveals a grave problem: violent crime has become an epidemic. The region accounts for only 9% of the world’s population but 33% of its murders. Its homicide rate of 24 per 100,000 people is four times the world average. Worryingly, murders have become more common even as socioeconomic conditions have improved (see chart). Robberies are increasing, too; some 60% involve violence. No wonder polls show that crime has replaced...Continue reading

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Why Chileans dislike business leaders

LAST year ended triumphantly for Andrónico Luksic, head of Chile’s richest family. On December 23rd he won a slander suit against a politician who had called him a “criminal” and “a son of a whore”. But his sense of vindication was clouded by pain. Four days earlier, as he left the courthouse, a mob, angry about a hydroelectric project in which he had invested, threw stones at him. One struck him on the head; police whisked him away.

Plutocrats are unpopular in lots of places, but Chileans seem to regard theirs with particular suspicion. MORI, a polling firm, asked Chileans in 2015 to choose which among five power centres had the most clout: 59% chose businessmen over the government, the presidency, congress and the media. Asked by Latinobarómetro, another pollster, if they had any confidence in private enterprise, just 32% said yes, the second-lowest rate among 18 countries. Chileans often say that seven families “own” the country. Together, their wealth is the equivalent of 17% of GDP. The Luksics alone are worth $14bn, equivalent to about 6% of GDP, according to Forbes.

Chile is in many ways the...Continue reading

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Breeding cows that can defend themselves against jaguars

Red hide, black belt

RANCHERS in Colombia’s Meta department can be vengeful folk. From time to time jaguars emerge from a clump of forest, streak across the savannah and attack one of a panic-stricken herd of cows. When that happens, ranchers hunt the offender down and shoot it. That practice is endangering the cats’ survival. Panthera, a charity that manages “corridors” for jaguars that stretch from Argentina to Mexico, guesses that just 5,000 of the cats are left in los llanos, Colombia’s scorching savannah. It has come up with a less violent way of protecting both the jaguars and the cattle.

The idea is to teach cattle self-defence, or rather to breed the instinct into them. The cows that graze in los llanos are mostly Zebu, which are popular with ranchers for their fast growth, large size and white hides. But they have an unfortunate habit of fleeing in all directions when danger approaches. Panthera’s idea is to replace panicky Zebu with cattle that stand their ground, or to interbreed the two. Esteban Payán, who...Continue reading

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Women in South Asian politics have not empowered women

ON THE Indian subcontinent, as in no other part of the world, women have risen to the pinnacle of politics. Indira Gandhi of India, Benazir Bhutto of Pakistan and Aung San Suu Kyi of Myanmar are all famous names. Less well known is that Sri Lanka was the first country ever to elect a woman prime minister, or that it has also had a female president. For 22 of the past 25 years Bangladesh, a largely Muslim country with more people than France and Germany combined, has been led by a woman. And the chief ministers of numerous country-sized Indian states, from West Bengal in the east to Tamil Nadu in the south, have also been women. India’s democracy is not pretty; these are the winners of bare-knuckle contests.

Yet for all such headline-grabbing successes, the fine print tells a different story. Although there has been steady progress in such things as stamping out female infanticide and spreading women’s education, statistics continue to reveal a stark sex divide. At 27%, the share of Indian women who work, for instance, is less than half the level in China or Brazil (and also in neighbouring Bangladesh, although slightly higher than in...Continue reading

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Pakistan blames Afghanistan for a spate of terrorist attacks

IN THE space of five days in mid-February, Pakistan suffered ten acts of terrorism, affecting all four of its provinces. On February 13th a suicide bomber killed 15 people outside the provincial assembly in Punjab, including two senior police officers. On February 16th more than 80 were killed and over 200 injured when another suicide bomber targeted the throngs of worshippers at Lal Shahbaz Qalandar, a Sufi shrine in the southern province of Sindh. Yet more bombs killed police and soldiers in Balochistan, Khyber Pakhtunkhwa and the Federally Administered Tribal Areas (FATA), along the border with Afghanistan.

The attacks are all the more shocking because deaths from terrorism in Pakistan have fallen dramatically in recent years (see chart), the result of a sustained counter-terrorism campaign by the security services. Swathes of territory once lost to militants have been recovered. Operation Zarb-e-Azb, launched in 2014 to retake North Waziristan, a part of FATA that had become a jihadist stronghold, was a turning point. Until then, fretful politicians had postponed confrontation with the Tehreek-e-Taliban Pakistan (TTP), the Pakistani...Continue reading

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Indonesia and the Philippines hobble the mining industry

IN THE more rugged, poor and far-flung areas of the vast archipelagoes of Indonesia and the Philippines, mining is one of the few industries that shows much promise. Last year the Philippines exported nearly $1.7bn of minerals and ore—4% of the country’s exports. Mining employs over 200,000 people. By the same token, the Indonesian unit of Freeport McMoRan, an American firm that operates Grasberg, a vast copper and gold mine high in the mountains of Papua, has paid more than $16.5bn in taxes over the past 16 years. Freeport plans to expand Grasberg; over the next 25 years it expects to cough up a further $40bn. Yet the governments of both countries are imperilling this bonanza.

Three years ago, in an effort to boost the economy by spurring domestic processing, Indonesia banned the export of unrefined metal ores. (Smelting copper ore adds little value, so it was exempted.) Mining collapsed: the output of bauxite, from which aluminium is refined, fell from 56m tonnes in 2013 to 1m tonnes in 2015 (see chart). Some firms did begin building expensive smelters—but not nearly enough to process all the ore that had previously been mined. Indonesia now has...Continue reading

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The IMF bails Mongolia out—again

WHEN Jim Anderson first lived in Mongolia in 1993, there was one local word foreigners could not help but learn: baikhgui, which translates as “absent” or “unavailable”. Bread? Rice? Electricity? Often as not, they were baikhgui, he recounts in a blog post for the World Bank, for which he has returned to Mongolia as country director. Even those lucky enough to have American currency to spend in “dollar shops” received sticks of chewing gum as change.

Mongolia thought it had left those days far behind. A mining boom (copper, coal, gold) has transformed the country, filling the shops with goods and the cities with cranes. From 2009 to 2014, the economy grew by 70%. In 2012 alone, it attracted foreign-capital inflows equivalent to some 54% of its GDP. But since 2014 commodity prices have fallen, foreign-direct investment has reversed and a number of daunting debt payments have crept closer. Mongolia’s foreign reserves have dwindled from over $4bn in 2012 to little more than $1bn at the end of September, equivalent to about four months’ imports. Foreign creditors were about to...Continue reading

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Thailand’s junta feuds with an influential Buddhist sect

The Vatican, Mecca…and Dhammakaya

SOME people think he has fled abroad. Others say he may have died. For more than a year the authorities in Thailand have been trying to get hold of Phra Dhammachayo, the reclusive former leader of a controversial Buddhist sect who is wanted for questioning in a fraud case. On February 16th a group of officers finally gained access to the vast religious complex which his Dhammakaya movement maintains on the outskirts of Bangkok. Instead of locating the septuagenarian monk—often pictured in signature sunglasses—they found an empty bed stuffed with pillows.

By February 22nd more than 4,000 police and soldiers were lingering outside the Dhammakaya compound—waiting to complete a full sweep of the massive site but apparently hindered by monks and devotees who had blocked its dozen entrances. A spokesman for the sect claimed that 30,000 people were still inside the property, having ignored orders to leave; there have been scuffles at its gates. Apiradee, a retired civil servant helping to feed Dhammakaya followers who had gathered in support outside the police cordon, said she has never seen...Continue reading

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The Philippines pivots to China

FOR some relief from the congestion, fumes and hustle of Manila, take a day-cruise to the island of Corregidor. Guarding the entrance to Manila Bay, the “Gibraltar of the East” has seen the junks that brought Chinese trade and Islam, galleons that brought Spanish Catholicism and, in 1898, the warships of Commodore George Dewey that brought American rule. In 1941 came Japanese invaders who, as tour-guides tell it, made sport of throwing Filipino babies in the air and catching them on bayonets.

The shared memory of the second world war—the rearguard defence of Corregidor by American and Filipino soldiers, the horrors of occupation such as the “Bataan death-march” of POWs to distant internment camps, and the triumphant return of General Douglas MacArthur in 1944—goes a long way to explain the affection of many Filipinos for America. It is hard to imagine other former colonised peoples putting up, or putting up with, the “Brothers in Arms” statue on Corregidor: it depicts an American GI (tall and strong, with a helmet) holding up a Filipino buddy (short and wounded, with a bandana).

Such comradeship assuages some of the resentment...Continue reading

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A scourge of the EPA takes over at the EPA

TO STAND on a pontoon besides the Anacostia River, which runs for 8.5 miles through Maryland and the southern part of Washington, DC, is to gauge the progress America has made in cleaning up its waterways. The Anacostia, which empties into the Potomac close to the Capitol, was once a slow-flowing garbage dump; on a recent sunny afternoon, hardly a soda can or plastic bag ruffled its sluggish brown surface, over which cormorants fizzed like arrows, rigid with intent. They are a sign that the river’s ravaged fish stocks are beginning to recover. But you still wouldn’t want to eat them.

Forty-five years after the federal government became obliged, under the Clean Water Act (CWA), to try to make America’s main waterways “fishable and swimmable”, the Anacostia is, despite the recent progress, in a disgusting state. Each year, two billion gallons of sewage and stormwater flow into it, making the water so cloudy with faeces that light cannot penetrate it. The weeds and mussels that once carpeted the river-bed are long gone. It is coated with black ooze, over ten feet deep in places, saturated with polychlorinated biphenyls, heavy metals and other...Continue reading

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How courts correct mistakes in the criminal justice system depends on where you live

IN NOVEMBER 1999, a 25-year-old Kansan named Tom Bledsoe confessed to the rape and murder of a 14-year-old girl. Just days later, however, Mr Bledsoe recanted, pinning the crime instead on his younger brother, Floyd. When the jury gave its verdict in April 2000, it was Floyd, not Tom, who was sent to prison, a wrongful conviction that would cost him more than 15 years of his life before he was exonerated in December 2015. With cases like this in mind, Kansas legislators are considering introducing a law that would give wrongfully convicted Kansans $80,000 for each year spent in prison. At the moment, as in some other states, Floyd is entitled to nothing.

Had he been convicted in neighbouring Colorado, which passed a law in 2013 giving those exonerated $70,000 for each year they are locked up, Mr Bledsoe would have received $1.1m. Today, 31 states and the District of Columbia provide compensation in such cases. Payments vary considerably by state. In Texas, which accounted for a third of all exonerations in 2016, individuals are awarded $80,000 for every year of prison. In California, they receive $100 per day, or $36,500 per year. In Wisconsin, one...Continue reading

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Who should lead the Democrats after their calamitous defeat?

Buttigieg, Maltese falcon

“IN TERMS of the next chair of the DNC, however, the question is simple,” according to Bernie Sanders. “Do we stay with a failed status-quo approach or do we go forward with a fundamental restructuring of the Democratic Party?” For Senator Sanders the way forward is Keith Ellison, a congressman from Minnesota, whom he is backing as next boss of the Democratic National Committee (DNC). The endorsement came shortly after Joe Biden, the former vice-president, announced his support for Tom Perez, a veteran of the Obama administration.

The contest for the DNC chair, which will be decided on February 25th in Atlanta, has become a proxy fight between those who believe that the party must move left to prosper and those who think this would be suicide. Mr Ellison is backed by Elizabeth Warren, the populist senator from Massachusetts, as well as the AFL-CIO, a federation of unions with 12m members, but also by pragmatic establishment types such as Chuck Schumer, the Senate’s minority leader, and his predecessor, Harry Reid, who are intent on making use of the Sanders supporters’ momentum. Neither...Continue reading

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Congress and the courts will poke holes in the president’s deportation plans

ICE air to Guatemala

AT ONE point as a candidate for president, Donald Trump vowed to expel all 11m undocumented immigrants estimated to live in America. At other points he also talked about concentrating deportation efforts on “bad people”, which is in fact a fair description of his predecessor’s policy. “They will be out so fast your head will spin,” he told Bill O’Reilly, a television host, last August. Two Department of Homeland Security (DHS) memos published on February 21st offer a detailed look at Mr Trump’s definition of badness, and it is broad. The documents refer to the proposed wall along the southern border, reaffirm the goal of increasing the number of border patrol and immigration officers, and herald the revival of a policy encouraging local law enforcement agencies to act as immigration agents. The memos also signal an overhaul of priorities on whom to deport, with the aim of increasing the number who could be removed speedily.

Towards the end of his second term, Barack Obama ordered federal agents to focus on deporting undocumented immigrants suspected of terrorism and those with criminal...Continue reading

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H.R. McMaster, the new national security adviser, is a great improvement

HR sent this guy

THE 22 national security advisers who served Donald Trump’s predecessors included two army or marine generals. On February 20th Mr Trump equalled that tally in less than a month, by appointing Lieutenant-General H.R. McMaster to succeed the disgraced Mike Flynn.

Like the belligerent Mr Flynn, whom Mr Trump sacked after 24 days in the job, after it was revealed that he had lied about a private conversation with a Russian diplomat, General McMaster appears to conform to the president’s idea of a fire-breathing war-fighter. He is stocky, bullishly charismatic and as a tank commander in the first Iraq war was decorated for battlefield prowess. After bumping into an Iraqi armoured column, General McMaster’s troop of nine American tanks destroyed over 80 Iraqi tanks and other vehicles without suffering a loss.

Also like Mr Flynn, who was once an innovative intelligence officer, General McMaster is a freethinker. His doctoral thesis in military history was a ruthless takedown of the pliant Vietnam-era military leadership, later published as a book entitled “Dereliction of Duty”. Yet there the...Continue reading

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Replacing Obamacare’s subsidies for the poor is no easy task

The opposition

AS REPUBLICAN congressmen were berated by constituents this week for their desire to repeal the Affordable Care Act (see Lexington), wonks in Washington continued to work on a replacement. Paul Ryan, the Speaker of the House, has promised a health-care bill soon after politicians return from their districts on February 27th. If they are to cool the protesters’ zeal, Republicans must keep health insurance affordable for everyone who already has it. That means deciding what to do about the subsidies Obamacare gives to 10m low- and middle-earners who buy coverage through government-run websites. Mr Ryan promises to replace the law’s means-tested tax credits with a discount for everyone, varying not with income but with age. Would such a switch work?

Republicans have always hated the ACA’s handouts. Because they shrink if people earn more, they discourage toil. The Congressional Budget Office has estimated that Obamacare reduces the total number of hours...Continue reading

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Protesters are confronting members of Congress in a way not seen since the Tea Party’s rise

IF THE gravest threat to democracy is indifference, have some faith in Donald Trump’s America. For the president is not just good at rallying throngs of his own supporters. He is also firing up his critics in a way that offers some echoes of the Tea Party movement that sprang up to oppose Barack Obama in 2009.

Consider the long lines of constituents wrapped around a high school in Virginia Beach on February 20th, sacrificing their time on a public holiday to meet their Republican congressman, Scott Taylor. Undistracted by a mild, golden-hued evening worthy of early summer, almost 1,000 locals waited in line for seats. A minority were conservatives, wearing the Make America Great Again hats that signal Trump-allegiance or carrying signs demanding that Mr Taylor—a 37-year-old former Navy SEAL commando, elected to Congress for the first time last year—should vote to repeal the Affordable Care Act (ACA), also known as Obamacare. A larger number carried home-made signs that spoke of “resistance” to Mr Trump or demanded that Mr Taylor “Choose our Country over your Party!” Some were old hands at activism, alerted to attend by the local Democratic...Continue reading

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Barclays Leaves Investors Behind on Road to Recovery

Barclays returned to profit in 2016 but investors aren’t getting to share in the recovery yet, even as its bankers are doing just fine.

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GM's European Exit Could Spawn New Rival at Home

Potential buyer Peugeot could use GM’s Opel and its German engineering pedigree to push into the U.S.

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Big Investors Are Too Scared to Run, Too Scared to Fight Trump Rally

Some big investors are worried about what President Donald Trump’s actions might do to the stock market. That doesn’t mean they will bet against the rally. At least not yet.

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Sina-Weibo: How to Invest in a Successful Version of Twitter

Advertising income has surged at Twitter’s Chinese counterpart, Weibo, as short video ads and live streaming take off.

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Tesla Faces Life After Subsidies In Hong Kong, 'Beacon City' For Electric Cars

Hong Kong, one of Tesla’s best markets in the world, is curbing an electric vehicle subsidy, which could prove very painful.

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Tesla Drives on the Edge

Tesla’s recent stock surge is a gift investors should accept.

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Politics Aside, Nordstrom Faces Tough Reality

Nordstrom isn’t immune to the increasingly difficult environment hurting most department-store chains.

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Cashed Up Glencore Heads Back Into The Fray

Mining giant Glencore hasn’t wasted any time since its crisis to pivot back to acquisitions.

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Beware the Fed's Warnings on Rates

The Federal Reserve signals it could lift rates as soon as March, but investors don’t believe it.

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Polls are still reliable, and they show Marine Le Pen losing

JOURNALISTS often joke that three examples make a trend. Following the votes for Brexit and Donald Trump, a victory by Marine Le Pen of the National Front (FN) in France’s presidential election would complete the anti-globalisation trifecta. She has dominated the polls ever since news broke that François Fillon, her centre-right rival, had paid his wife and children about €1m ($1.05m) over the years for jobs critics call fake. But a deeper analysis shows that Ms Le Pen is more likely to end the streak than to continue it.

After last year’s surprises, many people stopped trusting polls. This is misguided: in both cases, surveys correctly predicted that the race would be tight. If polls in France are similarly reliable, Ms Le Pen’s chances in the first round of the election are excellent. The Economist has aggregated 100 French polls (a technique that is still rare in France, though it is de rigueur in Britain and America). We find that if the first round were held today, Ms Le Pen would carry 26.1% of the vote. Emmanuel Macron and Mr Fillon would trail with 19.7% apiece.

These figures could change, but big...Continue reading

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Clean energy’s dirty secret

Could the rise of renewables be putting the traditional electricity market into a crisis? Also: Economist Diane Elson takes governments to task about the gender biases in their economic policies. And how the Brazilian government is tackling one of its biggest financial problems: pensions.

Garmin Maps a Solid Path in Wearable Tech

Garmin’s GPS-enabled wearable devices find valuable niche while larger rivals stumble.

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When do foreigners have rights under America’s constitution?

DISPUTES that reach the Supreme Court tend to be hard cases—conflicts concerning government power or individual rights that confound and divide judges serving on lower courts. Hernández v Mesa, a case revolving around the tragic death of a Mexican teenager on the Mexican border at the hands of an American border-patrol agent, is certainly such a case. After losing their district court hearing, the boy’s parents won their initial three-judge appeal at the Fifth Circuit Court of Appeals before losing again when the entire Fifth Circuit reconsidered the panel’s ruling. On February 21st, the Supreme Court went into the thicket.

Hernández’s topsy-turvy procedural path may seem surprising in light of the facts. In 2010, an unarmed 15-year-old, Sergio Hernández, was standing on Mexican soil when Jesus Mesa, an American border-patrol agent, killed him. Mr Mesa says the teenager had smuggled immigrants and, along with a few friends, was throwing rocks. But Mr Hernández’s parents insist—as video evidence appears to confirm—that he was just playing with friends. Running up the incline between the two countries (a concrete-paved “culvert” over the...Continue reading

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Lloyds Bank's Escape from Crisis Era Pays Broad Dividends

The U.K.’s market-leading lender has little room to grow its business, but that won’t hold back payouts.

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The Inevitable Turn in World's Most Important Property Market

China’s housing prices are weakening once again. While the bubble may not be getting bigger, the problems haven’t gone away.

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When Voting With Your Feet Works Better Than Shareholder Activism

Selling out is the best thing investors can do about French industrial champion Safran’s dubious decision to take over Zodiac.

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The Great Mystery Behind Tesla's Rally

Tesla investors are ignoring significant risks ahead of Wednesday’s earnings report, the first to reflect results from SolarCity.

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Air Products Bid for Chinese Rival Has Investors Pumped

Air Products bid for Yingde Gases is a major test of U.S.-Chinese cross border investing.

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Government Wins Flexibility on Fannie and Freddie

A major court ruling underscores that what to do with Fannie Mae and Freddie Mac is a political question.

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Gilead Goes to the Head of the Line

Gilead Sciences’s approach to the biotech deals market involves more than just waiting.

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A church-state case may be an early test for Neil Gorsuch

A RECENT ruling by the Sixth Circuit Court of Appeals in Ohio could set up the first major religious-liberty case Neil Gorsuch may help resolve if the Senate confirms his nomination to the Supreme Court this spring. The Sixth Circuit case concerns a dispute over legislative prayer, a topic Mr Gorsuch has never weighed in on. But in other cases touching on the Establishment Clause of the First Amendment, Donald Trump’s Supreme Court nominee has shown little inclination to buttress America’s wall of separation between church and state.

A few years into his stint as a judge on the Tenth Circuit Court of Appeals, Mr Gorsuch gave his view on a challenge to a ten commandments display on a courthouse lawn in Oklahoma. The plaintiff in Green v Haskell County said he feared that the county board of commissioners—the body that gave the go-ahead to erecting the monument at the site—would treat him “differently and more harshly” because he did not “subscribe to a particular faith that is represented by [the] monument”. After a three-judge panel sided with the plaintiff, finding the ten commandments display to violate the Establishment Clause, the Tenth Circuit...Continue reading

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Economy Up, Stocks Down? Don't Be Surprised

Investors bullish about a Trump capital expenditure boom must realize that buybacks, one of the bull market’s drivers, may suffer.

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South Africa lets 100 mental patients die

IT HAS been a disaster in agonising slow motion. To cut costs, health officials in Gauteng province (South Africa’s economic hub, which includes Johannesburg and Pretoria) decided to transfer psychiatric patients from specialised private hospitals to care homes run by charities. Family members, psychologists and advocacy groups all warned that this could be dangerous for the patients. They pleaded with Qedani Mahlangu, the provincial health minister, and even went to court to try to stop the move, arguing that vulnerable people were being rushed into dodgy homes that would not provide proper care. Ignoring their concerns, Ms Mahlangu went ahead. Some 1,300 patients were moved over several months last year. An ombudsman’s report described this process as a “cattle auction market”, with care homes jostling over which patients they wanted. Some sent pickup trucks to fetch them. Disabled patients were tied down with bed sheets for transport. Families did not know where their loved ones had gone. Soon, patients were dying.

The full extent of the horror is still being uncovered. Last week South Africa’s health ombudsman, Malegapuru Makgoba, told...Continue reading

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HSBC Feels Chill Wind From Trump on Trade

For a bank that says it generates nearly half its revenue from business that crosses international borders, protectionism and populism are clearly a threat.

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BHP: Watch Flip Side of Mining Giant's Copper Surge

BHP’s concentration on copper paid off in 2016, but the easy part is over.

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What to Learn from Kraft Heinz-Unilever Unrequited Love

Moving out of food would raise questions as to how Kraft Heinz bid for Unilever would achieve the kind of savings investors have come to expect from a deal driven by 3G Capital.

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Alzheimer's: Pharma's Great White Whale Is Still Worth Hunting

The drug industry has had multiple expensive failures trying to treat Alzheimer’s disease, yet the big potential payoff keeps it searching.

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Wal-Mart's Big Box of Trouble

From Amazon.com to Donald Trump to Warren Buffett, Wal-Mart Stores faces an uphill battle as it reports fourth-quarter earnings.

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What's Lurking in Credit Suisse's Fat Margins

The Swiss bank’s wealth business is doing better than rivals, though investors should question its sustainability.

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Chinese Bank Cleanup Plan Could Leave a Mess

Attempts by China’s regulators to stem the use of shadow financing tools by the nation’s lenders haven’t been working.

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Protesters gather in Boston to “stand up for science”

LYNYRD SKYNYRD'S “Sweet Home Alabama” is a strange choice of song to open a rally of scientists. Written in 1973, the southern anthem was a response to Neil Young’s critique of the barbaric treatment of African-Americans in the South—it tells the Canadian songwriter to mind his own business. Ronnie Van Zant, the lead singer, addresses him directly, singing: “I hope Neil Young will remember, a southern man don't need him around anyhow”. On the afternoon of February 19th, in Boston’s Copley Square, hundreds of heads, adorned in the pink hats of the women’s marches that followed Donald Trump’s inauguration in January, bobbed along to the beat.

Your blogger suspects that it was the “so blue” Alabaman skies of the chorus, rather than issues of race, that the rally organisers were aiming to evoke. “We want to protect the people and places and things you love,” said Beka Economopoulos, one of the organisers, who works for The Natural History Museum, an activist group which is not a museum at all. “Science is what makes sure that the fishing hole is still something you can enjoy when you’re old.”

The tone of the rally was set the...Continue reading

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Why the Stock Market Doesn't Like Republicans

A striking feature of the U.S. stock market is that it persistently does better under Democratic presidents than Republican ones. Two economists try to explain why.

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Applied Materials: Storm Ahead of the Calm

Applied Material saw a sharp jump in new equipment orders for the fiscal first quarter, its biggest surge in seven years. That has analysts worried about an inevitable slowdown, as Applied’s customers digest those purchases.

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Kraft Heinz Needs a Deal, But Can It Really Afford Unilever?

Even at the lowball price Kraft Heinz has offered, buying soap-to-soup giant Unilever would stretch its balance sheet to its limits. But the U.S. food group needs a deal.

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Donald Trump signs a law repealing a disclosure rule for oil companies

ON FEBRUARY 13th, Donald Trump signed his first major piece of legislation—“a big signing” as he put it. The law repealed a Securities and Exchange Commission (SEC) regulation that oil and mining companies should disclose their payments to foreign governments. Kevin McCarthy, the House majority leader, had argued that the rule added “an unreasonable compliance burden on American energy companies that isn’t applied to their foreign competitors”, which would “put American businesses at a competitive disadvantage.” Sean Spicer, Mr Trump's press secretary, suggested that, “misguided federal regulations such as the SEC rule ... inflict real cost on the American people and put our businesses, especially small businesses, at a significant disadvantage.” 

It is not the first time Mr Trump and his administration have shown a willingness to sacrifice the freedom of information for other goals. The president ignored the tradition of releasing tax returns during the election, and has since suggested that they will never be released. In the first weeks of the administration, the Environmental Protection Agency removed information regarding climate change and the...Continue reading

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Nico Colchester journalism fellowships

The Nico Colchester fellowships were established in memory of Nico Colchester, who died in 1996 after an outstanding career at the Financial Times, The Economist and the Economist Intelligence Unit. Nico had a passion for writing about European politics, economics, and society—and his sharp, witty, authoritative analysis would have been especially precious today.

Between the recent migration crisis, the threat of terrorism, the rise of populism, the euro zone’s economic struggles and the UK Brexit referendum, the foundations of European integration are in question. Undoubtedly, Nico would have been able to tell this story like few others in his profession: just consider some of his most famous work, from his creation of a Mars Bar index—“a currency for our time”—to his division of the world, and its politicians, into the “soggy” and the “crunchy”.

So, here is your chance to emulate one of the finest reporters of his generation, and launch a career in the exciting world of journalism at two of the most global and prestigious news...Continue reading

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Euphoria returns to markets

LIKE the weather in Chicago, you don't have to wait long for a new trend in the stockmarkets. Just a few weeks ago, investors seemed to have second thoughts about their Trump-related euphoria (which itself was a contrast to the widespread nervousness ahead of the election). Now they have been recording new highs again.

While the spark for the rally seems to have been a Presidential comment about forthcoming tax cuts, the causes have been much broader; the MSCI World Index has also hit new highs. Commodity prices have perked up, which may be a sign that the Chinese economy is holding up (if you recall, a Chinese slowdown was the big worry 12 months ago). Asian trade has perked up after a long period of sluggishness (the exports of South Korea, a bellwether in this respect, have risen for three months in a row). According to...Continue reading

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Allianz: Bumper Buyback Shows Insurer's Strength

People often complain their insurers don’t pay out what they should: Investors in Allianz can have no such gripes.

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Toshiba and Japan's Struggling Banks

Despite Toshiba’s negative shareholder equity, its creditors have reiterated their commitment to continuing support.

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The Unlikely Winners of the U.S.-China Trade War, Round 1

Many U.S. companies with big China exposure are outperforming, not underperforming.

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Washington's Chaos Is Far From Wall Street

The market’s postelection rally isn’t as irrational as it might seem.

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Virginia: a rights battleground

VIRGINIA prides itself on being a birthplace of enduring democratic traditions. It was here that America made its first foray into representative government: in 1619, the House of Burgesses was created to govern the Virginia colony in partnership with a governor appointed by the British crown. Since then, however, Virginia has lived down some troubling distinctions.

The year 1619 also saw the delivery of the first African slaves. Their descendants would be liberated by the Civil War more than 200 years later but were shackled anew at the start of the 20th century—by the successor to the House of Burgesses, the General Assembly—under Jim Crow segregation laws that denied most black people the vote and other rights until the federal courts and Congress intervened in the 1960s.

As Virginia settles into the 21st century—it is now a mostly suburban state that, in presidential elections, comfortably tipped to Democrats Barack Obama and Hillary Clinton—new twists on the old, disturbing ways are becoming more apparent.

A Republican-dominated General Assembly is churning out legislation targeting the new minorities: Asian and Hispanic immigrants and LGBT...Continue reading

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Who Are Snap's Real Friends?

Snap is asking a lot of its investors in its coming IPO, and that may lead them to push back.

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How Saudis Cut Oil Output Without Really Cutting

Saudi Arabia has led the way among major energy exporters in cutting oil production. At the same time, the kingdom is adding to global supply in a surprising way.

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Why Online Lenders Keep Disappointing

Shares of two online lenders are down sharply after another rough quarter.

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Sovereign-bond issuers shrug off downgrades

ONCE upon a time, countries jealously guarded their credit ratings. Before the 2010 British election, George Osborne, soon to be the chancellor of the exchequer, emphasised the importance of cutting the budget deficit in order to maintain the country’s top AAA rating.

But despite the spending cuts and the tax increases he imposed, Britain was downgraded in 2013. There are only 11 countries with AAA status, according to Fitch, a rating agency, down from 16 in 2009. By value, only 40% of global sovereign debt has the highest rating, down from 48% a decade ago.

There has been an even more dramatic downward trend in corporate debt ratings. There were 99 AAA-rated American corporations in 1992, according to S&P Global, another ratings group; now there are just two. That trend is linked to the tax deductibility of interest: in terms of tax efficiency, it has made sense to increase the amount of debt, and reduce the equity, on the balance-sheet.

Clearly, at the sovereign level, the deterioration has been driven by the global financial crisis, which dented both economic growth and tax revenue. But with bond yields very low, and with central...Continue reading

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