Of Indian banknotes cancelled last year, 99% are accounted for

ON NOVEMBER 8th 2016, Narendra Modi, India’s prime minister, stunned its 1.3bn people by announcing that most banknotes would soon become worthless. Indians then queued for weeks on end to exchange or deposit their banned money at banks. The comfort for the poor was that the greedy, tax-dodging rich would suffer more, as they struggled to launder their suitcases full of cash by year-end.

Not so. A report from the central bank, the Reserve Bank of India (RBI), on August 30th suggests that of the 15.4trn rupees ($241bn) withdrawn—roughly 86% of all banknotes by value—15.3trn rupees, or 99% of them, have been accounted for. Either the “black money” never existed or, more likely, the hoarders found a way of making it legitimate.

Defenders of the scheme say it is merely one plank of a wider fight against informal economic activity and corruption. Banks have enjoyed an influx of cash. Digital payments are up (from a low base), as issuance of replacement notes has not caught...Continue reading

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The gap between India’s richer and poorer states is widening

COUNTRIES find it easier to get rich once their neighbours already are. East Asia’s growth pattern has for decades been likened to a skein of geese, from Japan at the vanguard to laggards such as Myanmar at the rear. The same pattern can often be seen within big countries. Over the past decade, for example, China’s poorer provinces have grown faster than their wealthier peers. India is different. Far from converging, its states are getting ever more unequal. A recent shake-up in the tax system might even make matters worse.

Bar a few Mumbai penthouses and Bangalore startup offices, all parts of India are relatively poor by global standards. Taken together, its 1.3bn people make up roughly the third and fourth decile of the world’s population, with an income per person (adjusted for purchasing power) of $6,600 dollars. But that average conceals a vast gap. In Kerala, a southern state, the average resident has an annual income per person of $9,300, higher than Ukraine, and...Continue reading

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Foreign jurisdictions try to lure legal business from London

National treasures

LOFTILY as they may disdain the profit motive, Britain’s judges are, on a national level, money-spinners. English law is often specified as the one under which commercial contracts are to be interpreted and enforced. And disputes often end up being heard in British courts. But, like any business, the law is competitive, and other jurisdictions want to snatch a share of this market. London is mounting its defences.

It has several hard-to-beat advantages: the use of English; a reputation for fairness; the centuries of precedent that lend predictability. Richard Caird, a partner at Dentons, a global law firm, notes that a foreign company can expect an impartial decision in an English court, even if it is pitted against a British firm. Over 70% of cases in the English commercial courts involve a foreign party. In 2015, Britain had a £3.4bn ($5.2bn) positive balance of payments on legal services.

One way for other financial centres,...Continue reading

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Russia’s largest private bank is rescued by the central bank

VADIM BELYAEV’S start in business in the mid-1980s was to sell foreign watches on the black market in the Soviet Union. He became a financier, and by 2015 had transformed his bank, Otkritie, into post-Soviet Russia’s largest private lender. Named “Businessman of the Year” by a Russian magazine, he used an English term to describe himself: “Risk-taker”. The risks have caught up with Otkritie. A run on its deposits led this week to its takeover by the central bank (CBR). The rescue is likely to be the largest in modern Russian history.

Russian banking has been plagued by lenders with bad loans and inadequate capital, and “pocket” banks that function as money-laundering hubs for influential businessmen. The CBR has embarked on a campaign to clean up the sector, taking on formerly untouchable banks with powerful shareholders and clients. Since 2013 it has shut down more than 300 banks.

Otkritie rose rapidly, out of a small predecessor bank acquired in 2006. It has...Continue reading

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On NAFTA, Donald Trump’s most dangerous opponents are at home

EVER game for a fight, President Donald Trump is picking one again with Canada and Mexico, America’s partners in the North American Free-Trade Agreement (NAFTA). On August 27th he tweeted that both were being “very difficult”, adding: “May have to terminate?” His strategy, of getting a better deal by threatening to pull out altogether, is odd. It worsens relations with America’s negotiating partners, at a time when Mr Trump’s plans face just as much opposition at home.

Before April American business was quietly hoping that a Trump presidency would lead to more tax cuts than trade tensions. That changed when news leaked that Mr Trump was poised to withdraw from NAFTA. Suddenly the deal had louder champions in American business, including the energy and technology industries.

Knowing this, Canada and Mexico seem unruffled by Mr Trump’s latest threats as they go into the second round of NAFTA renegotiations on September 1st. Earlier ones prompted panicky phone...Continue reading

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Analysts struggle to make accurate long-term market forecasts

WHAT is the right way to invest for the long term? Too many people rely on past performance, picking fund managers with a “hot” reputation or backing those asset classes that have recently done well. Just as fund managers cannot be relied on to be consistent, returns from asset classes are highly variable. The higher the initial valuation of the asset, the lower the future returns are likely to be.

That is pretty clear with government bonds. Anyone buying a bond with a yield of 2% and holding it until maturity can expect, at best, that level of return (before inflation) and no more. (There is a small chance the government might default.) With equities, the calculations are not quite so hard-and-fast. Nevertheless, it is a good rule-of-thumb that buying shares with a low dividend yield, or on a high multiple of profits, is likely to lead to lower-than-normal returns.

So a sensible approach to long-term investing would assess the potential returns from asset classes, given their...Continue reading

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Market concentration can benefit consumers, but needs scrutiny

WHEN Amazon announced in June that it would buy Whole Foods, an upmarket grocer, for $13.7bn, other firms shuddered. The spread of Amazonian tentacles is worrying to those wary of concentrated corporate power. But shoppers entering their local Whole Foods these days find oddly low prices alongside the new stacks of Echoes, Amazon’s voice-activated digital helpmate. This raises a question. Is Amazon hellbent on building a world-straddling monopoly, or merely injecting innovation and competition into yet another new market? For antitrust regulators, the welfare of the consumer is the priority. Yet working out how to protect it is harder than ever.

Competitiveness in most industries is a matter of degree. In the idealised marketplace of economics textbooks, the price people pay for goods equals the cost of producing an additional unit. Any higher, the theory goes, a competitor could cut the price a smidgen, sell another unit and profit. Yet outside commodity markets, most firms can charge...Continue reading

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Airbus on the Runway, Ready for Take Off

Airplane makers often stumble, but eventually get it right. Waiting for Airbus’s problems to be fixed will be too late for shareholders to enjoy the flight.

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Vodka Is Big Liquor's Weak Spot

Competition from home-grown upstarts continues to bedevil the vodka brands owned by Diageo and Pernod Ricard.

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The Underappreciated Risks to Canadian Banks

A frothy housing market, high debt levels and rising interest rates could spell danger for Canadian lenders.

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Why European Stocks Can Survive a Stronger Euro

The rise of the euro is weighing on stocks, but it’s a sign of the eurozone recovery.

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Time for a Rethink on Chinese Property Stocks

Shares in Chinese home builders have been on a tear this year. Investors would be wise to stick to those with better foundations.

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Workday's Very High Bar

The cloud-software maker has performed well and rewarded shareholders but may struggle to live up to expectations.

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Donald Trump’s shutdown threat intrudes on Virginia’s governor race

AN ACCIDENT of geography—that Virginia is hard by Washington, DC, albeit separated by the Potomac River—means that the federal government is a huge economic engine for the state. More than one in four dollars flowing through the state’s economy is linked to direct and indirect spending by the capital.

So when President Donald Trump suggested that he might favour a government shutdown next month to exact funding for his wall on the border with Mexico, Virginia politicians, particularly those running for governor this year, took notice.

Their concern—in the aftermath of the violence in Charlottesville that looms over the campaign—is electoral as well as economic. They know only too well the consequences of the federal government going dark.

There is little doubt that a federal shutdown would exacerbate voter hostility towards Mr Trump in a state that was comfortably carried last November by Hillary Clinton. And that would probably help the Democratic nominee for governor, Ralph Northam, who rarely misses an...Continue reading

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Costco Stock at a Discount

One of the few ways for retailers to compete against the growing might of Amazon.com is to offer something different. Costco Wholesale does that, but the market has been unwilling of late to give it credit for its uniqueness.

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The bond market defies the doomsters

THE yield on the ten-year Treasury bond fell to 2.13% on August 28th, after North Korea fired a missile over Japanese territory. Investors tend to buy government bonds when they feel risk-averse. That will have come as a surprise to those commentators who have called the bond market a “bubble” that is sure to burst; one British magazine made this a cover story back in September 2001. Every time the ten-year yield falls close to 2%, press references to a bond bubble seem to increase (see chart; the yield is inverted).

It is not just the press. Investors have been cautious about bonds for a while; the vast...Continue reading

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Oman is benefiting from the standoff over Qatar, for now

THE Omani port of Sohar usually slows down during the summer. But this year it is buzzing. According to a government official, cargo volumes are up 30% in the past few months, as more ships arrive carrying goods bound for Qatar. Such is the level of traffic that the Qatari ambassador to Oman hails the sultanate’s ports as the new gateway to his country, supplanting the port of Jebel Ali in Dubai, which is part of the United Arab Emirates (UAE).

Oman sits at the entrance to the Persian Gulf, but beyond the Strait of Hormuz there is discord. On the western and southern shores lie Bahrain, Saudi Arabia and the UAE, which have cut diplomatic and commercial ties to Qatar, their neighbour, over its alleged support for extremists and ties to Iran. Oman has stayed out of the dispute. It is helping Qatar to bypass the siege and quietly benefiting from the crisis.

Oman has often acted as a mediator of squabbles in the region. But early in the current crisis, the sultanate...Continue reading

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It has been a summer of progress for women in the Arab world

Protesting marriages made in hell

THE Koran devotes whole verses to inheritance, and Muslim scholars have spent centuries ruling on what they mean. Beji Caid Essebsi, the Tunisian president, is not happy with their conclusions. Under his country’s law, derived from Islamic jurisprudence, a daughter receives half of what a son inherits. Mr Essebsi has asked parliament to equalise it. Not content with one controversy, he also wants to let Muslim women marry non-Muslim men—a forbidden act in every school of Islam.

His announcements drew a furious reaction from many clerics, not just in Tunisia but across the region. The proposals will probably face months, if not years, of debate. Still, even putting them on the agenda was another in a summer of victories for Arab women. On August 16th Lebanon abolished a law that let rapists dodge punishment if they married their victims. Jordan did the same this month, and closed a separate loophole that allowed lighter...Continue reading

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Egypt’s surprising friendship with Hamas

TIME was when Egypt balked at involvement in Gaza. In 2005, when Israel withdrew soldiers and settlers, Egypt fretted that it would become responsible for the territory, which it saw as a liability. More recently, the enclave’s rule by Hamas, a Palestinian offshoot of Egypt’s own Islamist bugbear, the Muslim Brotherhood, made engagement toxic. Egypt has even matched Israel’s restrictions on the flow of goods and people across Gaza’s frontiers, destroying smuggling tunnels and leaving the enclave under a gruelling siege.

It is strange, then, that Egypt is now riding to Gaza’s rescue. It is revamping the border crossing at Rafah and easing the restrictions. Palestinian pilgrims bound for Mecca crossed into Egypt last week, along with a Hamas delegation. Fuel is flowing the other way and more electricity is promised. Stranger still is that Hamas is also working with the United Arab Emirates (UAE), which is vehemently anti-Islamist and, along with Egypt, regards the...Continue reading

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The high cost of red tape in Nigeria

MANY Nigerians may see building a hotel as an easy way to launder money. For legitimate entrepreneurs, however, running a hotel is far from cheap or simple. In Abuja, the capital, it is rather like erecting a sign that says: “Tax me”. In fact, erecting such a sign would result in city and local taxes of about 80,000 naira ($221) a year.

One Abuja hotelier recorded no fewer than 20 bills for various annual fees, taxes and licences. They range from a 5m-naira charge from the city council for having a car park, to demands from two different agencies for putting a logo on a company car. The hotelier has also been issued with bills for four different types of property tax and a bicycle/cart licence, despite having neither a bicycle nor a cart. Although he is challenging some of the notices in court, it is often safer to pay up and avoid facing the policemen that bureaucrats send to enforce payment on the spot. “It’s a racket …like in the mafia movies,” he says.

Trying...Continue reading

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Closing African orphanages may be less heartless than it seems

Thinkin’ about tomorrow

ARLENE BROWN is worried about her children. “I have 52,” she says. The former nurse from Pennsylvania founded Urukundo Village, an orphanage, in the Rwandan hillside town of Muhanga in 2006. Half of the children live with her permanently. The rest are at boarding school or university. “I don’t want any of my children taken away,” says Ms Brown.

But they may be. More than half of Rwanda’s orphanages have closed since 2012, when the government decided they were doing more harm than good. There are 14 left, says Hope and Homes for Children (HHC), a British charity that is helping the government. A decade ago there were some 400.

Orphanages have proliferated in Africa in recent decades in response to war, disease and natural disasters. In Uganda the number of children in them jumped from 2,900 in 1992 to 50,000 in 2013. But their number seems to have peaked. In Ghana nearly 100 were closed between 2010 and 2015. The...Continue reading

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Zimbabwe’s first lady is accused of assault, again

GRACE MUGABE, the first lady of Zimbabwe and an accomplished shopper, is no stranger to controversy, at home or abroad. The most recent revolves around allegations that she flogged a young woman, Gabriella Engels, whom she found when she stormed into her sons’ swanky apartment in Johannesburg. Photos released on social media after the incident showed Ms Engels with gashes on her head that required 14 stitches.

Charges were laid and the South African police asked Mrs Mugabe to come into a station to make a statement. But within days she had been whisked out of the country after being granted diplomatic immunity. Having to skip a country on a diplomatic passport once might be regarded as a misfortune. But to do so twice begins to look like careless disregard for the law. In 2009 Mrs Mugabe left Hong Kong under diplomatic immunity after she was accused of punching a news photographer who had dared to snap her in a high-end shopping district.

Back home, Mrs Mugabe...Continue reading

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Does ageing explain America’s disappointing wage growth?

WHEN America’s unemployment was last as low as it has been recently, in early 2007, wages were growing by about 3.5% a year. Today wage growth seems stuck at about 2.5%. This puzzles economists. Some say the labour market is less healthy than the jobless rate suggests; others point to weak productivity growth or low inflation expectations. The latest idea is to blame retiring baby-boomers.

The thinking goes as follows. The average worker gains skills and seniority, and hence higher pay, over time. When he retires, his high-paying job will vanish unless a similarly-seasoned worker is waiting in the wings. A flurry of retirements could therefore put downward pressure on average wages, however well the economy does. The first baby-boomers began to hit retirement age around 2007, just as the financial crisis started. And since 2010, the first full year of the recovery, the number of middle-aged workers has shrunk considerably. They have been replaced partly by lower-earning youngsters (see...Continue reading

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Are men more irrationally exuberant than women?

Tiger investor?

WOULD more women on the trading floor inject a dose of sanity into the world’s financial markets? This question gained prominence after the 2007-08 crisis. As Christine Lagarde, then France’s finance minister and now head of the IMF, quipped, had Lehman Brothers been Lehman Sisters, history would have been different. Many studies support this idea, showing that testosterone-laden men are prone to overconfidence in trading. Women are more cautious.

But things may not be so simple. Previous research has mostly used evidence from the West. To test if the conclusions apply universally, Wang Jianxin of China’s Central South University, Daniel Houser of George Mason University and Xu Hui of Beijing Normal University looked at both America and China. And they found that in China’s markets, women can be just as manic as men.

The economists arranged for 342 students to form experimental markets. They were allocated dividend-paying...Continue reading

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Financial-market index-makers are growing in power

IT WAS in 1896 that Charles Dow, co-founder of Dow Jones & Company, created the index that still bears his name. Today, indices such as the Dow Jones Industrial Average and the S&P 500 (for shares listed in New York), or the FTSE 100 (for London), are among the best-known brands in financial markets. The role they play has expanded massively in recent years. Index-makers have become finance’s new kingmakers: arbiters of how investors should allocate their money.

Stockmarket indices were devised as a measure of the overall market, against which those trading in shares could compare their performance. At first they were concocted by the press or by exchanges themselves. For bonds, indices were compiled by the banks that traded them. Except for a few of the very earliest indices, such as the Dow, which is weighted by share price, nearly all are weighted by market capitalisation or, in the case of bond indices, by the volume of debt outstanding.

Three large firms—FTSE...Continue reading

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How the shape of global banking has turned upside down

IN THE 1980s, when Citicorp was America’s largest bank and pursuing every avenue for international expansion, John Reed, the bank’s boss, would muse about moving its headquarters to a neutral location, notably the moon. Such sentiments are inconceivable today. Jamie Dimon, boss of JPMorgan Chase, Citi’s successor atop the league tables, recently said he is an American “patriot” first, head of a bank second. His strategy, though hardly shunning international markets, reflects this.

Mr Dimon turned down several big foreign acquisitions before and during the financial crisis. His stellar reputation may rest as much on those undone deals as on those completed. Citi, meanwhile, has been lopping off foreign affiliates. It has retail operations in just 19 countries, down from 50 in 2007. Further contraction may be in the offing. Bank of America has long chosen to live down to its name, as an almost entirely domestic bank.

The same process is under way in western Europe. Visible...Continue reading

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Private-equity returns can be replicated with public shares

IT IS hard for individual investors to match the returns achieved by private-equity funds. But what if their success in outperforming the public markets could be tracked and replicated? A few pioneering firms claim to have done just that. DSC Quantitative Group, a Chicago-based fund, and State Street, an asset manager, both offer “investable” indices, launched in 2014 and 2015 respectively, that allow investors to mimic the performance of American private equity.

Both firms needed a measure of the industry’s returns. DSC teamed up with Thomson Reuters, a data firm, to compile an index; State Street had been making one since 2004, using data it gleans as a custodian of private-equity assets.

They then match the private-equity risk-and-return profile with a basket of public assets. DSC’s index first matches the sector weights of the private portfolio with equivalent public companies, and adds a modest amount of debt (around 25%) unevenly across the sectors—all using...Continue reading

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Islamic banking grows in Bangladesh, no thanks to the authorities

Cash is still king

IN MOTIJHEEL, the main business district in Bangladesh’s capital, Dhaka, an iron fence and terrible traffic divide two branches of the country’s oldest private bank—a “conventional” one and an Islamic one. Abdus Sattar, manager of the Islamic one, says that when he joined AB Bank, in 2005, his was “a loser branch”. Today, like most Islamic banks in the country, it is more profitable and better run than its conventional peers. Islamic banking’s future in the country, however, remains murky.

Bangladesh has eight full-fledged Islamic banks; a handful of orthodox banks, like AB, also offer Islamic-banking services alongside others. Islami Bank Bangladesh, founded in 1983 by Saudi and Kuwaiti investors, commands 90% of Islamic-banking assets and deposits. It is also the biggest private lender overall, with 14,000 staff, 12m depositors and a balance-sheet of $10bn. Its success was built on the “two Rs”: remittances...Continue reading

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The “free” economy comes at a cost

FACEBOOK, whose users visit for an average of 50 minutes a day, promises members: “It’s free and always will be.” It certainly sounds like a steal. But it is only one of the bargains that apparently litter the internet: YouTube watchers devour 1bn hours of videos every day, for instance. These free lunches do come at a cost; the problem is calculating how much it is. Because consumers do not pay for many digital services in cash, beyond the cost of an internet connection, economists cannot treat these exchanges like normal transactions. The economics of free are different.

Unlike conventional merchants, companies like Facebook and Google have their users themselves produce value. Information and pictures uploaded to social networks draw others to the site. Online searches, selections and “likes” teach algorithms what people want. (Now you’ve bought “The Communist Manifesto”, how about a copy of “Das Kapital”?)

The prevalence of free services is partly a...Continue reading

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Beijing Shows Its Power With China's Latest Megamerger

The combination of the country’s leading coal miner and power producer is the clearest sign yet of Chinese leaders’ desire to enhance the role of big state-owned companies.

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Emerging-Market Bonds: The Stars Align

Low inflation is a puzzle in developed markets, but a pleasant and powerful phenomenon for emerging-market bonds

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Donald Trump visits hurricane-hit Texas

COMPASSION and competence are not President Donald Trump’s strong suits. But since Hurricane Harvey made landfall as a category four hurricane near Rockport, Texas, on August 26th, Mr Trump has done his best to empathise with south-eastern Texans struck by unprecedented life-threatening flooding, promising two visits to the affected areas this week. He also appears to be trying to help as effectively as possible. Over the weekend he frequently communicated with William “Brock” Long, head of the Federal Emergency Management Agency (FEMA). And on August 28th he vowed to push a major recovery package through Congress.

On August 29th, Mr Trump visited Corpus Christi, a town on the Gulf of Mexico that suffered relatively light damage. It seemed wise to avoid disrupting relief efforts in harder-hit Houston with presidential motorcades. Donning a white baseball cap emblazoned with USA in black letters, a rain jacket and mountain boots, Mr Trump, his wife Melania and Greg Abbott, the governor of Texas, as well as Texas senators Ted...Continue reading

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Will Harvey Soak Auto Insurers?

Home insurance doesn’t cover floods, but auto insurers will have to pay up for all of those sunken cars in Houston.

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Why Won't Wages Rise?

The weekly jobless claims report suggests a very good nonfarm payrolls figure for August, but disappointing wage growth is likely to continue to vex economists.

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Apple, Samsung Taking Phone Prices to the Edge

The newest smartphones are taking their screens to the edge. Apple and Samsung Electronics seem to be doing the same with their prices, in what amounts to a gamble to revive growth.

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Investors Overestimate Nestlé's Appetite for Radical Change

Finding a new recipe for growth at food giant Nestlé could take longer than investors like New York activist Dan Loeb seem to think.

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Another Noble Mess---This Time, It's Derivatives

A dispute over credit default swaps written on the embattled commodity trader’s debt is exposing the limitations of the system governing such products.

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Harvey's Lessons for U.S. Energy

The hurricane’s hitting the Gulf Coast of Texas highlights how the U.S. now relies on fewer refineries, run closer to their limits, to turn crude into fuel and get it to consumers.

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Uber Gets a Lift From CEO Pick

Uber’s CEO pick, Dara Khosrowshahi, has the skills needed to prepare the troubled company for an initial public offering.

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Gilead Has Earned Benefit of the Doubt

When taking a big chance, it helps to have a good track record. Such is the case at Gilead Sciences.

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Evergrande's Ever More Risky Bet on Chinese Housing

A gigantic bet on China’s housing market by its biggest property developer seems to have paid off—but only by it putting off a day of reckoning once again.

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A Surprise Lift From China for U.S. Steel

Signs of incremental progress on steel overcapacity are pushing Chinese steel margins higher for the first time in nearly a decade. U.S. Steel and other western steel firms could benefit.

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Banks Send Warning Signs for Economy

Data out of the banking sector is consistent with an aging economic expansion.

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An unforgiveable pardon for Sheriff Joe

THE powers of pardon bestowed on an American president—modelled on those enjoyed by English monarchs in centuries past—are so sweeping and awful that they impose their own discipline on chief executives, or so Alexander Hamilton predicted in Federalist 74. The responsibility of deciding the fate of a fellow-creature will “naturally inspire scrupulousness and caution,” wrote Hamilton. What is more, a president would so “dread” being accused of misusing those powers in a fit of “weakness or connivance”, that he will use them with the utmost “circumspection.”

For all his brilliance, Hamilton could not foresee the election of a president like Donald Trump, for whom acts of unblushing, explicit, crowd-pleasing connivance are a proof of cleverness. Nor could Hamilton guess that partisan factions would one day so divide the republic that a for-profit propaganda industry would cheer on a president for abandoning both scruples and caution.

But that is where America finds itself today. As evidence, consider Mr...Continue reading

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Where's Crypto? Let's Play Geographic Roulette

Investors can play geographic roulette with Exio Coin, a cryptocurrency like Bitcoin that is allegedly endorsed by some sovereign nation to be revealed at a later date.

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Buyout Funds Have Money to Burn, and That's a Problem

Private equity has a $600 billion problem. The problem is how to spend it on deals, because company valuations are very high and buyout volumes have slipped since 2015.

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Trump Gets Yellow Light From Yellen on Bank Deregulation

Fed Chairwoman Janet Yellen defended strict bank regulation at Jackson Hole, but she opened the door to some changes

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Domino's Pizza Won't Make You Dough Like It Used To

Domino’s Pizza has enjoyed an exceptional run, thanks to a drumbeat of outlet openings, prescient technology investments and missteps by key rival Pizza Hut. But, as the takeout chain’s overseas sister companies have shown this year, it is hard to keep up the pace

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Courts repeatedly chastise Texas for voting-rights violations

TEXAS has not had a good time of it this month in federal court. Four times in a fortnight, a federal judge has determined that the state legislature discriminated against black and Hispanic voters by drawing up electoral maps or voter-ID requirements that—by design, effect or both—reduce minority influence in the voting booth.

Ken Paxton, Texas’s defiant attorney-general, promises to appeal what he calls “outrageous” rulings. But the string of defeats tells a tale of race-tinged Republican electoral hardball that may earn America’s second-largest state a stint in the dog-house. The Voting Rights Act (VRA) is far from what it once was, thanks to the Supreme Court’s 2013 ruling in Shelby County v Holder gutting the law’s requirement that certain states get approval from the Department of Justice before changing electoral rules. But the VRA’s section 3(c) survives, providing that states caught discriminating intentionally could be put back under a “preclearance” requirement—and Texas’s repeated...Continue reading

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Thailand’s former prime minister, Yingluck Shinawatra, may have fled

SHELTERING under road bridges, hundreds of supporters of Yingluck Shinawatra, the Thai prime minister who was ousted in a coup in 2014, had gathered in Bangkok on August 25th. Threats of arrest and thousands of police had failed to keep them from the Supreme Court as they waited patiently on pavements and plastic chairs. They had been expecting the verdict to be announced in a case against Ms Yingluck for incompetence in a rice-subsidy scheme which cost the government around $16bn. They had also hoped to catch a glimpse of their champion.

Ms Yingluck had other ideas. Her lawyer told the court’s head judge that she was too unwell to appear. “The court does not believe she is sick,” the judge declared and sought an arrest warrant. Prayuth Chan-ocha, a former general who is Thailand’s prime minister, admitted he did not know whether she was still in Thailand. Reuters, a news agency, quoted sources close to the Shinawatra family as saying that Ms Yingluck had fled;...Continue reading

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Australia says it may curb gas exports

DIGGING stuff out of the ground and shipping it overseas has long been a mainstay of Australia’s economy. So it is rare for governments to place curbs on such wealth. Australia banned iron-ore exports for 22 years until 1960 to protect its steel industry. It still limits where it will send uranium, but only to comply with nuclear non-proliferation rules. Last month, however, Malcolm Turnbull’s conservative government said that it may restrict exports on another commodity that Australia holds in abundance underground: gas.

Mr Turnbull likes to present himself as a champion of free markets. But in energy policy, he is backtracking. He has justified introducing what he calls the “Australian domestic gas-security mechanism” in response to soaring electricity prices. This could result in export controls being imposed early next year. There is no clear evidence that limiting sales abroad will help bring down the cost of energy at home. But Mr Turnbull wants to look as if he...Continue reading

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China and India are showing muscle on their border

WHEN the Indian subcontinent bumped into Eurasia 40m years ago, the collision produced the mighty Himalayas. The world’s two most populous nations, India and China, are still colliding across that majestic range. In June, a few dozen soldiers from each side tussled in a shoving and shouting match on a remote plateau just inside borders claimed by a tiny neighbour, Bhutan. Another brawl broke out in mid-August far to the west along the shores of Pangong Tso, a desert lake that stretches between Ladakh in India and Tibet in China (see maps). The latest encounter involved sticks and stones. A few people were hurt.

It may seem more ridiculous than alarming that two ancient nations, which happen to be nuclear-armed and have a combined population of 2.7bn, should engage in garden-fence fisticuffs. The last time anyone was killed along the 3,500km frontier was in 1975. Few analysts expect the current argy-bargy to turn into full-scale war. Once winter sets in, all but a few stretches of the...Continue reading

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Pakistan inaugurates a luxury graveyard

DOWN a dusty side road in the province of Punjab stands Shehr-e-Khamoshan, a new graveyard with freezers imported from Germany and a network of 22 video cameras that will allow relatives of the deceased to live-stream footage of funerals at the $1.5m facility. Attend a ceremony in person and there is little risk of heatstroke: dozens of fans hang from the ceiling of an arched prayer zone that is almost entirely open to the air.

The state-owned “model graveyard”, with its wide footpaths and neatly trimmed lawns, will serve the 11m-strong population of Lahore, the capital of Pakistan’s richest and most populous province. Three more are under construction in the region. Across Pakistan burial grounds have struggled to cope with an urban population that has risen from 28% of the total in 1981 to 41% now (unsurprisingly land is scarce in cities). Burials have been banned in the overflowing public graveyards of the largest city, Karachi. There have been reports of policemen...Continue reading

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India bans a Muslim practice of instant divorce

India’s supreme court ruled on August 22nd to outlaw “triple talaq”, a tradition whereby Muslim men could annul a marriage simply by saying “I divorce you” three times (an Indian Muslim bride is pictured). Most Muslim-majority countries long ago abandoned the practice for being sexist or questionable under religious law. But politicians in Hindu-majority India had kept it going to win conservative Muslim votes. Hindu nationalists hailed the ruling as a blow to the “appeasement” of minorities. Muslim liberals and women’s groups that have long opposed the practice also welcomed the decision. Yet the ruling was narrow: three judges to two. Constitutional experts said their legal reasoning fell short of upholding personal rights over religious laws. The judgment did not ban other forms of Muslim divorce that favour men, only the instant kind.

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In Thailand, civic life is suffering under the junta’s tight grip

“I’LL never win, no matter how reasonable I am,” go the words of “Dictator Girl”, a song by a Thai pop band called Tattoo Colour. Their music video depicts a hapless man following the 44 rules of a tyrannical woman in a not-so-subtle allusion to life under Thailand’s military junta. “Even if I know, I’ll say I don’t. I don’t have any opinions,” the cringing crooners add.

While the song may inspire laughter, Section 44 of the country’s interim constitution, which has been in effect since July 2014, does not. It gives the junta and Prayuth Chan-ocha, a former general who serves as Thailand’s prime minister, power to stop and suppress “any act which undermines public peace and order or national security, the monarchy, national economics or administration of state affairs”. Having been one of South-East Asia’s freest countries two decades ago, Thailand is now among the region’s most repressive.

Since its introduction, Section 44 has been invoked...Continue reading

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In Afghanistan, Donald Trump has bowed to the advice of his generals

Someday this war’s going to end

IT WAS an admission of a kind that Donald Trump rarely makes. In a televised address to the nation on August 21st, America’s president admitted that he had changed his mind about the war in Afghanistan. He said his instinct, after 16 years of not winning, had been to pull out. But after a thorough policy review, he had decided to keep going.

That review, undertaken by the defence secretary, James Mattis, and the national security adviser, H.R. McMaster, was completed by June. But Mr Trump, resistant to its conclusions and egged on by Steve Bannon, a critic of military intervention abroad who was then his chief political strategist, tried hard to find an alternative.

One scheme, promoted by Mr Bannon and devised by Erik Prince, the founder of Blackwater, a controversial security firm, involved replacing American troops with mercenaries. But on August 18th Mr Trump finally acquiesced to the plan set out...Continue reading

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Eastern Europe’s wave of emigration may have crested

WHEN Richard Fetyko left his native Slovakia in 1992 for a high-school study-abroad programme, he planned to return at the end of the year. Instead he spent 22 years in America, earning university degrees and working in banking and on Wall Street. “I didn’t really see myself able to apply my skills in Slovakia,” Mr Fetyko says. But as Slovakia’s economy matured, that started to change. In 2014 he got an offer from an investment firm in Bratislava, and came home.

Mr Fetyko was part of a wave. From 1992 to 2015, so many people left eastern Europe that its population shrank by 18m, or about 6%, according to UN figures. The trend accelerated as the region’s countries entered the European Union. It was a sour turn for the EU’s new members: rather than making them as rich as western Europe, accession lured their workers to move there.

In the west, especially Britain and France, that led to fears of “Polish plumbers” undercutting local wages. On August 23rd Emmanuel Macron...Continue reading

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Ukraine’s reform activists are under attack

Making a fist of fighting corruption

“AUTHORITIES confirm they’ve made progress in an investigation into the finances of anti-corruption activist Vitaliy Shabunin,” drones the anchor of an American television network, News24, in a clip recently shared across Ukrainian social media. There is only one problem: there is no News24, and the anchor is not a journalist but an actor hired through a freelance site, Fiverr.com. “I assumed the video was a prank his friends were playing on him,” says the actor, Michael-John Wolfe.

The “fake news” bulletin was an illustration of the increasingly hostile environment facing anti-corruption activists, journalists and reformist officials in Ukraine. “I cannot escape the feeling that we’re living through a counter-revolution,” writes Yaroslav Hrytsak, a historian at Ukrainian Catholic University. This is partly a backlash against reforms, particularly the new National Anti-Corruption Bureau (NABU). By allowing...Continue reading

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The post-attack truce between Catalonia and Spain will not last

Another candlelight march

IT HAS become a heartbreaking routine. This week Barcelona has seen the outpourings of solidarity and defiance in the aftermath of terrorism that have acquired a grim familiarity for Europeans. Like their peers in London, Paris and elsewhere, the jihadists who caused carnage on August 17th were attacking Europe’s very way of life, one of freedom, tolerance, openness and hedonism. They slaughtered 15 people and injured some 130 from more than 30 countries, most of them on Barcelona’s great boulevard, the Ramblas.

Many Spaniards had hoped to be spared. They suffered the murder of 192 people in the jihadist bombing of four commuter trains in Madrid in 2004. But of late Spain has played only a minor role in military operations in the Middle East and north Africa. Its security services are effective, honed by long experience against the Basque terrorists of ETA. The country’s Muslim population is proportionately smaller than that of...Continue reading

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Germany’s far-right party will make the Bundestag much noisier

Aged but unmellowed

A CHEER goes up as Jens Maier takes the podium at a packed sports club in Dresden. The Alternative for Germany (AfD) candidate for the Bundestag, Germany’s parliament, rails against Angela Merkel’s refugee policies: “Who has to live with these ‘new citizens’? Whose children have to go to school with their children? Who produces the wealth they feed off?” Germany, he concludes, needs MPs “imbued with a sense of responsibility towards their own people” who can “show up the incompetent establishment”.

At the federal election in 2013 the just-founded AfD narrowly missed the 5% vote share required to make it into the Bundestag. Since then it has ditched free-market Euroscepticism for anti-Islam nationalism as its guiding ideology. Though it has fallen back from highs of around 15% in polls following the refugee crisis, its strategy of polarisation and provocation has allowed it to reach popularity ratings of around 9% today. If...Continue reading

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Samsung Will Soon Need a Leader Who Isn't in Jail

The tech behemoth has been doing fine in recent months. But the five-year prison sentence handed to its de facto leader should give investors pause.

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Growth Is the New HP Way, for Now

What to do with a no-growth technology company that actually manages to grow? That is the conundrum facing HP Inc.’s investors.

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Finding New Owners for Fiat Chrysler Won't Be Easy

Fiat Chrysler stock is up 30% in less than two weeks on a variety of rumors, but the auto maker may struggle to find buyers for more than its parts business.

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Peru’s indigenous-language push

All of us are newshounds

THE son of European refugees, Peru’s president, Pedro Pablo Kuczynski, is fluent in Spanish, English, German and French. He does not speak any of the country’s 47 indigenous languages. Yet his government is doing more to encourage the use of those tongues than did those of his predecessors, some of whom have indigenous roots.

In December TV Perú, the state-run television network, began broadcasting the first national daily news programme in Quechua. In April this year it started one in Aymara. On August 10th the government launched its “policy for native languages”, part of its preparations for the 200th anniversary of independence in 2021. It would require government agencies to offer services in those languages in areas where they are dominant.

Some 4m of Peru’s 31m people speak one of the country’s native languages as their mother tongue. Three-quarters of those speak Quechua, the idiom of the Inca....Continue reading

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Traducing El Salvador’s truce

FEW issues bedevil El Salvador more than how to deal with criminal gangs.One group called Mara Salvatrucha and two factions of another, Barrio 18, have carved up much of the country into zones over which they rule and from which they extract profit—mainly by extorting money from businesses and residents. Clashes between them, and with the police, help make El Salvador one of the world’s most violent countries.

A truce between the government and the gangs in March 2012, endorsed by the Catholic church and the Organisation of American States, reduced the killing dramatically (see chart). But it was unpopular, especially among prosperous Salvadoreans. Extortion continued. Citizens were revolted by reports of imprisoned gang members enjoying fried-chicken feasts and the services of strippers. 

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The future of Bannonism

TWO days after he ceased to be President Donald Trump’s chief strategist, Steve Bannon explained why he had welcomed The Economist to his house on Capitol Hill for a chat. “You’re the enemy,” he said, adding disdainfully: “You support a radical idea, free trade. I mean it, that’s a radical idea.” As he returns to his former job, running Breitbart News, a bomb-throwing right-wing website, Mr Bannon wants to make clear that he still loves a scrap. “In the White House I had influence,” he says several times during a long discussion. “At Breitbart, I had power.”

Among the particular opponents he has in his sights, said Mr Bannon, seated in a dining-room decorated with Christian iconography and political mementos, are congressional Republicans (“Mitch McConnell, I’m going to light him up”), China (“Let’s go screw up One Belt One Road”) and “the elites in Silicon Valley and Wall Street—they’re a bunch of...Continue reading

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Louisiana fights the sea, and loses

Hanging on to the Isle

WHEN Roosevelt Falgout was a boy, the brackish water that now laps within a few feet of his three-room cabin at Isle de Jean Charles was miles off. “There were only trees all around, far as you could see,” recalls the 81-year-old former oyster fisherman, at home on the Isle, a sliver of land in the vast marsh that covers much of southern Louisiana. He and his village’s other men and boys, who are members of the French-speaking Biloxi-Chitimacha-Choctaw tribe, used to hunt and trap muskrat and mink in those oak and hackberry forests.

But salty water, seeping northward from the Gulf of Mexico, killed the trees off long ago; just a few blackened stumps remain, protruding from the open water that now surrounds the Isle. With even a modest storm liable to flood the island and the narrow causeway that connects it to higher ground, the village has become almost uninhabitable. Mr Falgout’s 81-year-old wife, Rita, says she lies awake at...Continue reading

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Another collision, and more questions for the navy

In peril on the sea

TO MISQUOTE Oscar Wilde, for one of your ships to be involved in a collision may be regarded as a misfortune, but for three to meet the same fate in four months looks like carelessness—or worse. On August 23rd Vice-Admiral Joseph Aucoin, the commander of the Yokosuka-based Seventh Fleet, from which two of the three vessels involved in the accidents came, was formally relieved of duty. Two days earlier the chief of naval operations, Admiral John Richardson, had taken the highly unusual step of ordering the whole navy to take an “operational pause” for a couple of days so his sailors might reacquaint themselves with the basics of good seamanship.

The collision on August 21st between the guided-missile destroyer USS John S. McCain (pictured) and a heavier oil tanker near Singapore was the final straw for Admiral Richardson. Ten sailors are missing in the latest accident (bodies have been...Continue reading

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A Democrat in a deep red state

MCLENNAN County in Texas witnessed two unusual events on August 21st. The first was a solar eclipse, the second a Democrat running for the Senate—though the county, in sunbaked central Texas, went for Donald Trump by 27 points over Hillary Clinton. Texas may be increasingly diverse (it is 40% Hispanic) but has not elected a Democratic senator in 30 years.

The Democrat was Representative Beto O’Rourke—a rangy, earnest former punk-rock musician, software entrepreneur and congressman for the border town of El Paso. He delivered his message to a crowd at the Texas Ranger Hall of Fame and Museum in Waco. Lots of Democrats see an opportunity in Mr Trump. With each day such partisans are sure that this president will disgust more decent Americans and disappoint the bigots and chumps who still admire him. Angry resistance to such a brute, they feel, must bring victory. Mr O’Rourke, a floppy-haired 44-year-old who reminds fans of Robert Kennedy, sees a different opportunity. His campaign...Continue reading

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China's Mobile-Payment Food Fight

China’s leading internet search company, Baidu, is moving out of the food delivery business, ceding ground to its two largest domestic tech rivals, which dominate the sector.

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Merck Is Good for Your Portfolio's Health

Buying Merck gives investors exposure to the most promising cancer drug on the market at a good price.

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Why Roger Taney’s statue was removed from Maryland’s state house

A CREW came for Roger Taney in the dark on the morning of August 18th, lifting his statue off its pedestal on the lawn of Maryland’s state house and moving it to a location that has not yet been revealed. Taney was the second son of a slave-holding tobacco planter from Calvert County, Maryland. He read law, “twelve hours in the twenty-four”, he said. He got in to politics and, nominated by Andrew Jackson, became chief justice of the United States in 1836. His wasn’t quite like the other statues around the South. Taney did not defect to the Confederacy. He stayed on the Supreme Court, a staunch opponent to Abraham Lincoln, until his death in 1864. Maryland’s legislature approved the statue in 1872, before the Confederate memorials that arrived with Jim Crow and the civil rights eras. Your blogger, too, comes from Maryland and before this year, he did not believe that the Taney monument should come down. He was wrong.

Roger Taney did one terrible thing. In 1857 he not only sided with but wrote the majority opinion on the...Continue reading

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The Problem With Dissing Teen Retailers

Investing in teen retailer stocks has always been treacherous. Now their volatility is being further compounded by low expectations.

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Emmanuel Macron finds change is often unpopular

TWO months ago, France’s young leader could do no wrong. Emmanuel Macron defied all the rules to win the presidency at the age of 39. He secured a parliamentary majority for a party that did not exist 15 months before, and wowed the French with his muscular treatment of unsavoury foreign leaders. But summer has soured the mood. When ministers return to work next week after an uncommonly short break, they will find a president who has slid faster in the polls than any other under the Fifth Republic, bar Jacques Chirac.

After his first 100 days in office Mr Macron’s approval rating...Continue reading

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Invesco Has Right Mix at the Right Price

A sharp correction in asset managers provides an opportunity to buy into Invesco.

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WPP's Problems Are Already in the Share Price

The rough patch faced by WPP has gotten rougher. Investors shouldn’t forget that it is a fundamentally strong business, and its shares are very cheap relative to their history and their peers.

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Clouds Part for Europe This Year

As soon as the outlook improves in Europe, the worries start. The latest cloud on the horizon has been the rising euro, which has caused some jitters about the growth and inflation outlook, but the eurozone of 2017 appears to be proving a resilient place.

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Binyamin Netanyahu is soft on anti-Semitism when it suits him

ISRAEL has long seen itself as the protector of Jews everywhere and a bulwark against global anti-Semitism. It has brought prominent Nazis such as Adolf Eichmann to justice and it rescued Ethiopian Jews threatened by war and famine in the 1980s and 90s. Just last week it denounced a crass notice in a Swiss hotel telling “Jewish guests” to shower before entering the pool. So Israel’s government could reasonably have been expected to condemn the protests in Charlottesville, Virginia, which featured neo-Nazis chanting “Jews will not replace us”, and to criticise the mealy-mouthed response by Donald Trump, whose presidency has energised the white-supremacist movement in America.

Instead, the anti-Semitic rally, which descended into violence, and Mr Trump’s tepid early comments were met with silence by the government in Jerusalem. Only after Mr Trump’s carefully scripted denunciation of “the KKK, neo-Nazis, white supremacists and other hate groups” did Binyamin...Continue reading

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Chip Gear Makers Perfect the Earnings Machine

Makers of semiconductor manufacturing equipment are more profitable than ever, which poses an interesting dilemma for investors accustomed to buying low and selling high.

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Why the ECB Can't Catch a Break on the Euro

At the start of July, both German bond yields and the euro were moving higher. But in August they have diverged, with bond yields off the boil but the euro maintaining its poise. The answer to the conundrum may lie outside the eurozone.

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Turkey is trying to extradite its political opponents from Europe

THE Turkish government’s repression of civil society is increasingly affecting countries far from Turkey itself. On August 19th the Spanish police arrested Dogan Akhanli, a Turkish-German writer, on an Interpol “red notice”, an international arrest warrant, issued by Turkey. Mr Akhanli was conditionally released following a court hearing the next day. Turkish authorities have 40 days from the date of his arrest to request his extradition. He must remain in Spain until the Spanish judicial system makes a final decision.

Turkey has already arrested more than 50,000 people in purges following an attempted coup in July 2016. The arrest of Mr Akhanli is part of a growing effort to track down opponents living abroad, too. Earlier this month Hamza Yalcin, a Turkish-Swedish reporter and writer, was also arrested in Spain on an international arrest warrant. (Based on his reporting for left-wing newspapers, Turkey has charged him with “propaganda for a terrorist organisation”.)...Continue reading

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Free Money From a Smart Insurer

Talk of a breakup of U.K. insurer Prudential returns as regularly as summer holidays. A nuanced view of the company’s plans promises value to investors.

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BHP Rights Its Ship by Throwing Shale Overboard

Following an intense pressure campaign from shareholder Elliott Management, BHP has announced it is looking to exit U.S. shale.

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The Price Isn't Right for Home Builders

Shares of home builders look pricey and vulnerable to a correction as costs rise and affordability is strained.

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Virtual Reality's Real Sticker Shock

High-end virtual reality headsets are getting a little cheaper with price cuts by Oculus and now HTC. But compelling games still needed to make a sustainable business.

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Investors seem confident that an economic recovery is under way

AFTER a grinding two-year recession, the longest in Brazil’s history, a recovery has been slow to materialise. The IMF expects GDP growth of just 0.3% this year. The joblessness rate is 13%. Last year’s fiscal deficit, including large interest payments, was nearly 9% of GDP. Lower-than-expected tax receipts have forced the government to accept that for the next four years the budget deficit will be higher than planned.

But markets seem unperturbed. The Bovespa, Brazil’s benchmark stock index, is back at levels not seen since May, when a leaked recording of the president, Michel Temer, apparently discussing bribes threw politics into chaos and put his future in doubt. The Brazilian currency, the real, strengthened by 6% in July.

Some of the optimism is based on a conviction that after such a long slump, a rebound cannot be far away. Higher prices for commodities are helping: Brazil is a big exporter of many, including soya and iron ore. Interest rates, which were kept...Continue reading

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A massive blackout prompts questions about Taiwan’s energy policy

The blackout cast long shadows

LARGE parts of Taiwan went black: roads were lit only by the headlights of the cars driving along them, and even the capital’s landmark skyscraper, Taipei 101, was in darkness. The emergency services were inundated with calls, many from people trapped in lifts. The giant power cut on August 15th saw nearly half of all households on the island lose electricity. Power was restored everywhere in about five hours. But the questions the blackout raised about the wisdom of the government’s promise to shut down nuclear power stations will linger much longer.

When Tsai Ing-wen became president last year she promised to phase out nuclear power, which provided some 14% of Taiwan’s electricity last year, by 2025. But building new electricity-generating plants to replace the country’s six nuclear reactors will be expensive, especially if, as Ms Tsai plans, most of the new power comes from renewable sources. Higher power prices, in...Continue reading

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