Altice Chooses Spending Over Saving

Altice’s planned fiber-to-the-home project could eat up the cost savings it promised to wring from its purchase of Cablevision.

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Numbers Don't Add Up for Trump's Trillion-Dollar Building Plan

Donald Trump’s infrastructure plan has sent construction stocks soaring, but the proposed funding plan has glaring flaws.

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Divorce is on the rise in China

WITH his slick navy suit, silver watch and non-stop smoking, Yu Feng is an unlikely ambassador for Chinese family values. The office from which he operates, in Chongqing in western China, looks more like a sitting room, with grey sofas, cream curtains and large windows looking out on the city’s skyscrapers. Women visit him here and plead for help. They want him to persuade their husbands to dump their mistresses.

Mr Yu worked in family law and then marriage counselling before starting his business in 2007. He charges scorned wives 100,000-500,000 yuan ($15,000-75,000); cases usually take 7-8 months. He befriends both the two-timing husband and the mistress, encouraging them to find fault with each other, and gradually reveals that he has messed up his own life by being unfaithful. Most clients are in their 30s and early 40s. “This is the want, buy, get generation,” he says; sex is a part of China’s new materialism. But changing sexual mores and a rocketing divorce rate have prompted soul-searching about the decline of family ties. He claims a 90% success rate.

The ernai, literally meaning “second wife”, is increasingly...Continue reading

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Why an electoral college rebellion would be a bad idea

MOTIVATED reasoning—ignoring inconvenient truths on a cognitive path toward conclusions that match our pre-existing beliefs or commitments—afflicts all of us from time to time. The phenomenon has been demonstrated in abundance in the wake of the election of 2016, an event that has provoked unusually strong emotions in just about everybody. So it is perhaps not surprising that even an illustrious intellectual aghast at the prospect of Donald Trump assuming the presidency might talk himself into an ill-advised proposal. 

That is what happened last week when Lawrence Lessig, a Harvard law professor, proposed in the Washington Post that members of the electoral college should ignore the November 8th vote in their home states and choose Hillary Clinton when they meet on December 19th to officially elect America’s 45th president. Mr Lessig’s main argument proceeds in two steps. First, he says, there is no rule in the constitution compelling electors to vote for the candidate who received the most votes in their respective states. In fact, nothing in the document suggests “that electors’ freedom should be constrained in any way”. True...Continue reading

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GoPro's Hero Shot Comes at a Price

Hero5 camera is selling, but failed expansion leaves company too reliant on a single market.

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The Trump Traders Show Up Late to Stocks

Stocks have been the place to be for a long time. It’s odd that investors are only now realizing it.

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John Kennedy leads in Louisiana’s Senate race

SINCE the morning of November 9th, Americans have known who would occupy 99 of the 100 seats in the Senate when the 115th Congress is seated in January. The only wild card left is in Louisiana. The state’s unusual system features a “jungle primary”—in which candidates from all parties square off in a sort of mad steeplechase—on November 8th. Assuming no one gets 50% or more of the vote, the two top finishers then meet a month later, when few voters are usually paying attention. 

The December 10th run-off might have had high stakes had Democrats captured two more Senate seats in November. But with Republicans already assured of at least a 51-49 majority in the upper chamber, the drama will be muted. Given Louisiana’s deep-red leanings—Hillary Clinton captured just 38% of the vote in the state—it is difficult to picture a happy outcome for Foster Campbell, a Democrat, over John Kennedy. In the jungle primary, Mr Kennedy took 25% of the vote to Mr Campbell’s 17%. It wasn’t a runaway, but Republicans taken together outpolled Democrats by a nearly 2-1 ratio.

What is interesting about the race this year is the way in which Mr Campbell is setting...Continue reading

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Trump Treasury Pick Could Boost Small Banks

Not much is known about Steven Mnuchin’s policy positions, but his background suggests he could be an ally to small and midsize lenders.

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Stress Shows How Far Fates of Lloyds and RBS Have Diverged

U.K. bank stress test showed one big failure and one clear winner.

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Turkey’s Islamist president is embracing Donald Trump

IN JUNE, a few months after Donald Trump, then a candidate for the Republican nomination, called for a ban on Muslim immigration, Turkey’s Islamist leader objected. President Recep Tayyip Erdogan demanded that Mr Trump’s name be removed from Trump Towers in Istanbul. “The ones who put that brand on their building should remove it immediately,” he said.

Mr Erdogan appears to have changed his mind, both about the towers and about the man whose name appears on them. Although polls show that most Turks would have preferred to see Hillary Clinton as America’s new president, Mr Trump’s election has been greeted in Ankara with a mix of schadenfreude and hope. “We were suffering from [American] policies towards the Middle East and Turkey under the Democrats and Obama,” says Yasin Aktay, a deputy chairman of the ruling Justice and Development (AK) party. “This opens a new page.” The Turkish president has been even more emphatic, calling protests against Mr Trump’s election in America and Europe “a disrespect to democracy”.

Flattery may have gotten Mr Trump somewhere: he reportedly told Mr Erdogan over the phone that his...Continue reading

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Brazil's Economy Shrinks Again

Brazil’s two-year economic recession continued in the third quarter, as the country’s heavily indebted companies held investment to a minimum and consumers reined in spending.

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South Africa’s president escapes a political coup

WHEN African National Congress (ANC) bigwigs met last weekend, the debate was reportedly so heated that it almost came to blows. In an unprecedented show of defiance against Jacob Zuma, some cabinet ministers asked the scandal-plagued president to step down. The intense reaction among the ANC’s 104-member executive committee saw the meeting drag on for an extra day. But in the end Mr Zuma stayed. Unpopular even among ANC supporters, he has nonetheless proved adept at remaining in office by corralling support from a majority of the ANC executive. These people have the power to order Mr Zuma to step down as president of South Africa. But despite near-constant accusations of corruption, Mr Zuma has survived the latest mutiny, just as he has survived previous ones.

The ANC is divided, and this attempt to oust Mr Zuma has exposed its divisions anew. At a press briefing on November 28th the ANC secretary-general, Gwede Mantashe, said the party had rejected a request that Mr Zuma step down after “robust” debate. According to reports, Derek Hanekom, the tourism minister, led the call for the president to go, supported by other cabinet ministers. Other...Continue reading

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Europe: A Tale of Two Inflation Rates

Headline inflation is rising in Europe, albeit slowly. But core inflation just isn’t budging.

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Why Italian Stability Is in the Hands of One Bank's Bondholders

Monte dei Paschi’s debt-for-equity swap to be concluded by Friday is key to the future of Italian banking.

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Schrödinger’s Brexit

SOMETIMES an analogy strikes you on the head with the force of a plummeting cricket ball. On Radio 4 yesterday, Hamish Johnson, editor of physicsworld.com, had the brilliant insight to explain the British government’s policy in terms of physics; Schrödinger’s Brexit.

The poor cat is stuck in a box with a radioactive substance and a poison; when the substance decays, the poison is released. Since it is impossible to predict when the substance will decay, the cat may be deemed simultaneously alive and dead. The only way to know is to open the box.

Before Britain voted to leave the European Union in June, then prime minister David Cameron promised to trigger Article 50 (the exit mechanism) immediately. Five months on, Article 50 has yet to be triggered. The new prime minister, Theresa May, has promised to do so by the end of March. But in terms of what Britain wants, we have heard nothing but platitudes: “Brexit means Brexit”, or “have our cake and eat it”. Pushed for details, Ms May has said there will be “no running commentary” on negotiations. In fact, it is quite easy to do a running...Continue reading

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Is the anger over trade justified?

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China Has To Get Creative to Buy Assets Abroad

Even as China cracks down on outflows, its state companies find novel ways to fund far-flung deals for natural resources.

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Two Stock Bubbles, One Ready to Prick

The remarkable rise of Hong Kong’s Zall Group and Fullshare Holdings will run out of air eventually.

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Higher Rates Don't Mean Lower House Prices After All

With home values recovering, now comes the hard part: sustaining prices in a period of rising rates.

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Auto Loans Get Even Dicier

Record numbers of shoppers are trading in cars while still underwater on their loans.

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Fed Won't Stand in Workers' Way on Wages

One argument for the Federal Reserve to stay cautious on rates: Workers are only starting to gain back the ground they lost.

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The Supreme Court is critical of Texas’s stance on IQ and execution

WHEN the Supreme Court ruled in 2002 that “mentally retarded” persons’ diminished powers of reasoning and culpability made them ineligible for the death penalty, a dissenting Justice Antonin Scalia wrote that his six colleagues’ “newest invention” would turn “capital trial[s] into a game”. Fourteen years later, that prediction in Atkins v Virginia looks about right. But the game is a grim one, and its main players—contrary to Mr Scalia’s impression—are not prisoners “feign[ing]” retardation but die-hard supporters of capital punishment who resist the principle that executing people with intellectual disabilities amounts to “cruel and unusual punishment” under the 8th Amendment.

On November 29th, justices heard the case of Bobby Moore, a man of limited intelligence who was sentenced to die 36 years ago for killing a store clerk during a robbery. In 2014, Mr Moore had his death sentence revoked after successfully making a claim under Atkins, but a year later the Texas Court of Criminal Appeals (CCA) sent him back to death row. The question in Moore v Texas is whether the CCA used the right standard when it decided Mr...Continue reading

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Amazon's Cloud Growth Unlikely to Dissipate

AWS makes biggest price cuts in more than two years from a position of strength.

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Luxury Industry Can't Count on China's Reverse Silk Road

What will be the luxury industry’s new China? Today’s standard answer has a familiar ring: new parts of China.

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Rising Rates Could Be a Chinese Phenomenon, Too

With inflation reviving in China, authorities may have no choice but to stand aside in the face of rising bond yields

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Samsung Keeps Investors Waiting for Big Move

Samsung is moving at a snail’s pace in improving shareholders’ returns. It’s worth it to keep prodding.

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Another Arab awakening is looming, warns a UN report

IN DECEMBER 2010 Egypt’s cabinet discussed the findings of their National Youth Survey. Only 16% of 18-29-year-olds voted in elections, it showed; just 2% registered for volunteer work. An apathetic generation, concluded the ministers, who returned to twiddling their thumbs. Weeks later, Egypt’s youth spilled onto the streets and toppled President Hosni Mubarak.

The UN’s latest Arab Development Report, published on November 29th, shows that few lessons have been learnt. Five years on from the revolts that toppled four Arab leaders, regimes are ruthlessly tough on dissent, but much less attentive to its causes.

As states fail, youth identify more with their religion, sect or tribe than their country. In 2002, five Arab states were mired in conflict. Today 11 are. By 2020, predicts the report, almost three out of four Arabs could be “living in countries vulnerable to conflict”.

Horrifyingly, although home to only 5% of the world’s population, in 2014 the Arab world accounted for 45% of the world’s terrorism, 68% of its battle-related deaths, 47% of its internally displaced and 58% of its refugees. War not only kills and...Continue reading

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Trouble at Tiffany, and Donald Trump Isn't Helping

Protests and high security at Trump Tower, next door to Tiffany’s flagship store, add to macro pressures facing the luxury retailer.

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How Tim Kaine might use his new clout in the Senate

TIM KAINE is quietly returning to the office he, and nearly everyone else, thought he would give up to become vice president.

After the unanticipated Democratic catastrophe of 2016, Mr Kaine is still a United States senator, representing Virginia, the only state in the Old Confederacy won by his presidential running mate, former Secretary of State Hillary Clinton.

Serving his first six-year term, Mr Kaine, who says he has no interest in running for president in 2020, has two years until he stands for re-election to the Senate. It is not a lot of time, but enough perhaps for Mr Kaine—having recently established a national profile—to establish himself as a counterweight in the Senate to the new Republican president, Donald Trump.

“There is a lot of work to do to make Congress the branch that it is meant to be,” Mr Kaine told his hometown newspaper, the Richmond Times-Dispatch, in a recent interview. “In terms of where there is the most need for good to be done, I think it’s here,” he said, adding, “I’ve built very, very good relations, even in a short time, with Republican members in the Senate and some in the House side… I kind of...Continue reading

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Mom's Big Oil Bet Bites the Dust

The demise of two hugely popular ETNs shows the peculiarities and risks of such investments.

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The Biggest Loser in Pay TV Price War ​

DirecTV Now, which AT&T will unveil Monday afternoon, is already pressuring shares of cable companies.

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Costly Biotech Bet Still Worth It for J&J

A deal for Actelion Pharmaceuticals would help Johnson & Johnson generate growth.

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Emerging Market Fund Managers Trampled by Trump

Aberdeen Asset Management shows how a tough year isn’t getting easier for the sector.

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Politics and Markets: Won't Get Fooled Again?

Shocked both by June’s Brexit vote and November’s victory for Donald Trump, investors appear to have realized that paying lip service to political risk isn’t good enough.

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China's Debt-Laden Companies Take a Load Off---for Now

If Chinese companies don’t take advantage of rising prices to rapidly pay down debt, more problems will be just around the corner.

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France’s Republicans choose François Fillon to battle Marine Le Pen for the presidency

DIGNITY, liberty and authority. With this Gaullist trinity at the centre of his campaign, François Fillon has secured the primary nomination of the French centre-right Republicans for next year’s presidential election. With over 95% of the vote counted he had won a resounding 67% of the votes, to 33% for his run-off opponent, Alain Juppé. “Now,” declared Mr Fillon in his sober victory speech, “I need to convince the whole country.”

It was a stunning victory by one former prime minister over another. Barely a month ago, polls showed Mr Fillon trailing in fourth place. But his promises to restore respect to the presidency, freedom to the economy and firmness to social policy resonated with the country’s traditional centre-right, which turned out en masse to make sure that his name would be the one on the presidential ballot next year.

Mr Fillon’s nomination represents both a form of reassurance for the centre-right, and a massive gamble. Reassurance because he is in tune with a provincial, conservative Catholic part of the electorate that feels that the French presidency has been damaged over the past decade—first by Nicolas...Continue reading

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A Double-Digit Return Is Hiding in Plain Sight at Under Armour

The yawning gap between Under Armour’s voting and nonvoting shares offers an opportunity for investors.

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Warning Ahead: The Pitfalls of Dow Milestones

The Dow topped 19000 and 20000 could come sooner than later, but holding that major milestone might prove to be problematic.

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Virtual Reality's Long Walk Before Running

Early VR headset sales hurt by limited supply and high prices

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Rising Mortgage Rates Are Two-Edged Sword for Banks

Rising rates are generally good for banks, but mortgages are a special case.

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The mood in Havana

ESTELLE has never been a supporter of Fidel Castro’s Cuban revolution. The poverty, the restrictions on freedom, the false promises—she despises all of it. But when the 78-year-old accountant awoke on November 26th, switched on her radio and learned that the Maximum Leader of the revolution had died overnight, she cried. “Whatever you feel about Fidel, he was always there,” she explained.

 

Estelle’s ambivalence is shared by many Cubans as they begin to get used to life without the man who dominated the country for more than half a century. “He was a good president”, said Yusi, a housewife in Old Havana, but “nobody’s perfect”.

 

The government has banned all public music performances during the nine-day official mourning period, a directive that has enveloped Havana in gloom. A much-heralded concert starring Placido Domingo, an opera singer, has been cancelled. Nightclubs are closed.

 

Unlike leaders of other successful communist revolutions, Mr Castro will not have an embalmed afterlife. The body of the former president was cremated in a private ceremony...Continue reading

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After Fidel Castro

THE statement was terse but its import was great. In the early hours of November 26th in Havana, Cuba’s president, Raúl Castro, announced that his elder brother, Fidel, “commander-in-chief- of the Cuban revolution”, had died at the age of 90. Cubans woke up to the prospect of life without the man who dominated them and their country for more than half a century. In Miami, the dwindling hard core of anti-Castro exiles took to the streets of the district known as Little Havana in celebration. They had done so several times before over the past decade on rumours of his death. This time it was real.

 

Fidel’s death will be marked by nine days of official mourning in Cuba and by recognition around the world of his extraordinary achievement in turning his small country into a pocket superpower that defied the United States for decades. Many others will hope that Cuban communism will die with Fidel. For all its achievements in health care and education, it has impoverished the island and deprived generations of Cubans of freedoms and opportunities.

 

Since Fidel stepped down from Cuba’s presidency...Continue reading

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The life and times of Fidel Castro

TO MEET Fidel Castro was to notice, first of all, his sheer physical presence. He was tall, erect and had a high, domed forehead that made him look naturally imperious. He was strong: as a youth he was awarded a prize as the best all-round sportsman in Cuba; he received (and rejected) a professional contract to become a baseball pitcher for the New York Giants. He was brave to the point of recklessness; as a boy, he once rode a bicycle straight into a wall to prove his mettle. And he was determined, absolutely convinced of his own rightness, intolerant of contradiction and immune to compromise. These characteristics he had inherited from his father, a Spanish migrant who brought with him to Cuba the innate stubbornness of the gallego and who became a prosperous landowner.

The son, who was born illegitimate in Birán, in rural eastern Cuba, in 1926, added a prodigious ambition for power. Even the Jesuits who taught him saw danger coming in the big, headstrong boy, whose country slang from the cane fields of Oriente marked him out among his urban classmates. The Cuban revolution as it turned out—though not as many of its supporters had originally...Continue reading

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Trade War's Biggest Loser---Stocks

If Donald Trump acts tough on trade, corporate profits would be hit hardest, threatening heady stock market.

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Another Shoe Drops at comScore

ComScore’s latest revelation about its accounting investigation should mean a hit to past profits, in addition to revenue.

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Why Investors Should Build Their Own Global Banks

When investors buy into a global bank they aren’t just buying one institution: increasingly they are funding multiple banks in different regions.

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Lufthansa Pilots Strike Distracts From Real Problems

Glimmers of improved demand have buoyed the German airline’s shares, but supply growth remains rampant.

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As Egypt quarrels with Saudi Arabia, it is finding new friends

IT SEEMS that $25bn does not buy you much in the way of loyalty these days. That, give or take a few billion, is how much Saudi Arabia has pumped into Egypt since 2013, when Abdel-Fattah al-Sisi, then a general, toppled the country’s first democratically elected—and Islamist—president. The cash helped Egypt avoid an economic collapse. But lately it has shown little devotion to its benefactor. And the kingdom, in turn, has cut off its needy neighbour.

The principal cause of the rift is the war in Syria, which has upset a regional order that tends to divide along sectarian lines. Sunni powers, led by Saudi Arabia, have backed rebels trying to oust Bashar al-Assad, Syria’s blood-soaked dictator. Shia powers, such as Iran and Lebanon’s Hizbullah militia, back Mr Assad, who is Alawite (an offshoot of Shiism). So far, so predictable. But Egypt, which is mostly Sunni, has also quietly sided with the dictator.

That much was evident in October, when Iran’s foreign minister, Javad Zarif, lobbied to have Egypt join international talks over Syria in order to bolster the pro-Assad contingent. Days later Egypt voted for a UN Security...Continue reading

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China Drags Toyota Into Electric Future

Toyota is finally edging into electric-only vehicles, and China is a big reason why.

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BlackFriday: Retail Stocks Aren't on Sale

The all-important holiday shopping season for retailers typically isn’t the best time to own retail shares.

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Turkey's Rate Rise Can't Stop Dollar Storm

First Mexico, now Turkey. Faced with a rapidly sliding currency in the wake of the U.S. presidential vote, the Turkish central bank raised interest rates by more than expected. But Turkey’s problems won’t be solved by that.

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Rémy Cointreau: Pricey Liquor, Pricey Shares

The French cognac make is benefiting from recovering sales in China and Russia and buoyant demand in China, but its shares are expensive as its products.

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The Problem With Lilly Is the Problem With Pharma

Eli Lilly’s Alzheimer’s drug trial failure spotlights the industry’s main problem.

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China's Travel Giant Takes Expensive European Adventure

Ctrip’s deal for Skyscanner gives China’s top travel website a footprint in Europe, but at a fulsome valuation.

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India grapples with the effects of withdrawing 86% of cash in circulation

A short, sharp liquidity shock

A NEW strain of trickle-down economics has been spawned by the decision, on November 8th, to withdraw the bulk of India’s banknotes by the end of this year. As holders of now-useless 500-and 1,000-rupee ($15) notes rushed to deposit them or part-exchange them for new notes, an e-commerce site offered helpers, at 90 rupees an hour, to queue outside banks in order to save the well-off the bother.

Elsewhere, a chronic shortage of banknotes in a cash-dominated economy has left most trades depressed. Seven out of ten kiranas (family-owned grocers) have suffered a decline in business, according to a survey by Nielsen, a consultancy. Supply chains, in which wholesalers and truckers deal mostly in cash, have fractured. Some 20-40% less farm produce reached markets in the days after the reform. City folk admit to hoarding the 100-rupee note, the largest of the old notes to remain legal tender. Taxi drivers refuse to break the new 2,000-rupee note. Road-tolls have been suspended until at least November 24th, to prevent queues. Beggars have disappeared from parts of Delhi; no one has...Continue reading

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American bankers look forward to a bonfire of financial rules

BEFORE the presidential election, Wall Street dreaded Donald Trump as a dangerous, unpredictable and disruptive, if improbable, president. Since his victory, fear has turned to hope. Stockmarkets are at record highs and shares in financial institutions have been among the best performers. Mr Trump, it turns out, looks to big finance like good news. 

Partly this reflects Mr Trump’s change of tack. He campaigned as the leader of a rustbelt revolt against the besuited, pampered elites. As president-elect, he seems less of an outsider. Among the rumoured names he has been mulling as his choice for treasury secretary are Jamie Dimon, boss of JPMorgan Chase, and Steven Mnuchin, a 17-year veteran of Goldman Sachs. Wall Street’s access to the corridors of power seems likely to be unimpaired.

But the euphoria mostly reflects the finance industry’s excitement at one of the more achievable of Mr Trump’s campaign promises: to cut red tape. In a YouTube video this week outlining his priorities, he announced a new rule: for every new regulation, two old ones must be eliminated. No industry in America feels as browbeaten by regulators as does...Continue reading

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Malaysia’s central bank tries to stem a slide in the ringgit

“THERE is no new policy on capital flows. There is no proxy capital control either,” insisted Muhammad Ibrahim, governor of Malaysia’s central bank, in a dinner speech on November 18th. This echoed a similar central-bank promise 15 months ago. For those hoping to bring money in and out of Malaysia, the commitments are reassuring. The frequency with which they need reiterating is less so.

It is no secret that the central bank is worried about the sharp drop in Malaysia’s exchange rate. Like other emerging-market currencies, the ringgit has suffered from China’s slowdown in the past two years and Donald Trump’s upset victory on November 8th. But, like Malaysia’s politics, beset by lurid tales of financial malfeasance, the currency has been unusually skittish (see chart).

Mr Muhammad blames what he calls “the arbitrary and unpredictable devices of the offshore markets”. Whereas China has been keen to “internationalise” the yuan, Malaysia’s central bank has an equally determined policy of “non-internationalisation”. It prohibits the trading of ringgit assets outside of its...Continue reading

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You may be higher up the global wealth pyramid than you think

The global bond-market rally tests Japan’s ability to keep yields down

HARUHIKO KURODA is not a man to be put off by an unexpected setback. On November 17th the governor of the Bank of Japan (BoJ) gave his defiant take on the implications for Japanese monetary policy of the global market gyrations that have followed the surprise election of Donald Trump. Interest rates, he noted, have risen in America. “But that doesn’t mean that we have to automatically allow Japanese interest rates to increase in tandem.”

A sell-off triggered by Mr Trump’s win wiped more than $1.2trn off the value of the world’s bond markets as investors bet that his administration will stoke America’s economic engines and drive up inflation. Bond yields rose sharply around the world as investors sold assets to buy dollar-denominated ones. In Japan the yen weakened and the yield on ten-year government bonds (JGBs) crept above zero for the first time in nearly two months. Since he was appointed by Shinzo Abe, the prime minister, in March 2013 as custodian of the monetary wing of “Abenomics”, Mr Kuroda has been fighting to end years of debilitating deflation. Keeping bond yields down is an important part of that...Continue reading

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British mutual-fund fees are too high

BANKS tend to grab the headlines when it comes to financial scandals and systemic risk. But many people have a lot more money squirrelled away with the asset-management industry, in the form of pensions and lifetime savings, than they do in their bank accounts. A new report* from one of Britain’s regulators, the Financial Conduct Authority (FCA), suggests that the industry is not doing a great job at looking after investors’ interests.

The British fund-management industry is huge, with some 1,840 firms managing around £6.9trn ($8.6trn) of assets. With the ten biggest fund managers representing only around 47% of the market, competition ought to be pretty intense. But the FCA report finds that fees in the actively managed sector (ie, funds that try to beat the market by picking the best stocks) have barely shifted in the past ten years. Operating margins across a sample of 16 fund-management firms have averaged 34-39% in recent years, one of the highest of any industry. Profits that heady smack more of an oligopoly than of a cut-throat battle for business.

There is one part of the market where fees have come...Continue reading

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A showdown looms over bank-capital rules

THEY lack the magic of “Harry Potter” and provoke even less laughter than “Police Academy”, but the sequels keep coming. In Santiago on November 28th and 29th the committee of central bankers and supervisors from nearly 30 countries that draws up global bank-capital standards is due to thrash out revisions to Basel 3, the version agreed on after the financial crisis of 2008. European (and some Asian) bankers and officials fear additional capital requirements are coming; Americans are all for the changes. Stand by for a standoff in Chile.

Spurred by Basel 3, banks have stuffed billions into capital cushions that the crisis showed to be woefully thin. Between mid-2011 and the end of last year, 91 leading lenders bolstered their common equity by €1.4trn ($1.5trn), or 65%, according to the Bank for International Settlements (BIS), which provides the Basel committee’s secretariat. The ratio of equity to risk-weighted assets, an important regulatory gauge, climbed from 7.1% to 11.8%. Although Basel 3 need not be fully honoured until 2019, most banks are far above the minimum of 4.5% (additional buffers, some at national level, raise the actual floor...Continue reading

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Economists are prone to fads, and the latest is machine learning

WHAT is the collective noun for a group of economists? Options include a gloom, a regression or even an assumption. In January, when PhD students jostle for jobs at the annual meeting of the American Economic Association, a “market” might seem the mot juste. Or perhaps, judging by the tendency of those writing economic papers to follow the latest fashion, a “herd” would be best. This year the hot technique is machine learning, using big data; Imran Rasul, an economics professor at University College, London, is expecting to read a pile of papers using this voguish technique.

Economists are prone to methodological crazes. Mr Rasul recalls past paper-piles using the regression-discontinuity technique, which compared similar people either side of a sharp cut-off to gauge a policy’s effect. An analysis by The Economist of the key words in working-paper abstracts published by the National Bureau of Economic Research, a think-tank (see chart), shows tides of enthusiasm for laboratory experiments, randomised control trials (RCTs) and the difference-in-differences approach (ie, comparing trends...Continue reading

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By running for a fourth term, Angela Merkel is protecting her legacy

THE politician most thrilled by Angela Merkel’s announcement on November 20th that she will run for a fourth term as German chancellor next autumn was Frauke Petry. The leader of the populist, anti-immigrant Alternative for Germany (AfD) termed it the ultimate campaign gift: the chance to run against the very chancellor who caused the “migrant chaos”.

In fact, Mrs Merkel remains the odds-on favourite. Her support sagged during last autumn’s refugee crisis but has recovered to 55%, up from 42% in August. Recent polls suggest that the only plausible coalition against her—a left-wing combination of the Social Democrats, the Greens and the ex-communist Left party—will not win a majority (see chart). Mrs Merkel, who took office in 2005, will probably stay through 2021, overtaking Helmut Kohl to become the longest-serving German chancellor (not counting Otto von Bismarck).

Before she became chancellor, Mrs Merkel...Continue reading

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François Fillon’s win in France’s Republican primaries upends the presidential race

HE WAS mocked by advisers to his former boss, ex-president Nicolas Sarkozy, as “Mister Nobody”. A month before the vote, he languished in fourth place in the polls. But François Fillon, a former prime minister and amateur racing driver, surged from nowhere to take a stunning lead in the French centre-right Republican primary on November 20th. He took 44% of the vote, next to 29% for the other qualifier and fellow ex-prime minister, Alain Juppé. Mr Fillon is now favoured to win the run-off on November 27th, and possibly become French president next spring.

Mr Fillon’s remarkable last-minute acceleration, which led to the eviction of Mr Sarkozy, was partly thanks to a convincing performance in the primary debates. He came across as measured, sharp and trustworthy—and, at the age of 62, a younger alternative to the disliked Mr Sarkozy than the 71-year-old Mr Juppé. The scale of Mr Fillon’s lead was not captured by polls, in part because many of the 4m voters made up their minds late: fully 53% of his supporters said they decided in the final days.

French centre-right voters now have a choice between two candidates who broadly...Continue reading

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America’s alt-right learns to speak Nazi: “Lügenpresse”

A message strangely popular with Americans, too

GERMANS are usually proud of their exports, including their words. What better term than Fahrvergnügen (“driving pleasure”) to sell cars? They are less pleased when foreigners import words that hark back to Germany’s darkest chapter. It was therefore horrifying to see white nationalists at a rally in Washington, shortly after Donald Trump’s victory, saluting with outstretched arms and shouting “Hail victory!”—a conscious echo of the Nazi greeting, Sieg Heil! It has also been disconcerting to hear Mr Trump’s supporters adopt the term Lügenpresse to refer to the mainstream media, or to any journalists who criticise the president-elect. For in America as in Germany, the term, which means “lying press”, is used not only as a cudgel against allegedly out-of-touch media elites but also to validate whatever conspiracy theory the shouter espouses.

Lügenpresse has a long and ugly history in Germany. It was first used after the failed revolutions of 1848, mainly in Catholic...Continue reading

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Estonia counts on NATO, but worries about Donald Trump

Airiin, get your gun

THE morning after celebrating her husband’s birthday earlier this month, Barbel Salumae rose at 6am, donned fatigues, and made for a compound outside Tallinn to practice her marksmanship. “I tell my children it’s my hobby,” says Ms Salumae, a member of Estonia’s volunteer Kaitseliit, or Defence League (EDL). “I can’t tell them I have to train because maybe there is war coming.”

Such talk once struck many outside the three ex-Soviet Baltic states as hyperbolic. Then came Russia’s annexation of Crimea in 2014. Now, with American president-elect Donald Trump having questioned commitments to longtime allies, Estonia, Latvia and Lithuania have new reasons to worry. Issues that seemed settled after their ascension to NATO in 2004 have been reopened. “It’s living proof that history never ends,” says Juri Luik, a former Estonian foreign and defence minister.“We have to explain who we are all over again.”

The Baltic states, with their bitter memories of Soviet occupation, have much to lose if America’s stance in Europe shifts. During the campaign Mr Trump called NATO...Continue reading

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Even without winning elections, populists are setting the European Union’s agenda

WHERE next? After the one-two punch of Brexit and Trump, Europeans are watching every coming election, from Austria to the Netherlands to France, for fear it could become the next staging post in the long march to illiberalism. Europe’s centrists have begun to see themselves as modern-day defenders of the Alamo, desperately standing their ground as marauding populists advance on all sides. The siege of the Alamo ended when the Mexican army overran the fortress, slaughtering the doughty Texans inside. Today’s equivalent might be the elevation of Marine Le Pen, leader of France’s far-right National Front, to the Élysée in next year’s presidential election. Victory for Ms Le Pen, it is widely assumed, would herald a new age of anti-European nationalism. Quite possibly it could mean the disintegration of the European Union itself.

Perhaps. But Ms Le Pen has amply demonstrated that she does not need electoral victory to bend French politics to her will. Indeed, the lesson from elsewhere in Europe is that the responsibilities of power can be poisonous for populists: support for the nationalist Finns Party has halved since it joined a coalition in...Continue reading

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Brazil’s three southern states escape the worst ravages of recession

MAKESHIFT stalls appear on every country road in Brazil, usually laden with bananas and coconuts. On the back roads of Brazil’s three southern states—Paraná, Santa Catarina and Rio Grande do Sul—the staple is loops of smoked sausage. Like the garden gnomes that sometimes stand guard, the Wursts are a legacy of immigrants from Germany, Poland and other central European countries who, along with northern Italians, settled the region from the mid-19th century.

Southern Brazil, an area the size of France with a population of 29m, feels like a region apart in other ways. Temperatures can drop below freezing on hilly terrain; shacks in poor neighbourhoods of coastal cities are topped with pitched roofs, as if built for snow. Southerners prefer yerba mate tea to cafezinhos, and look as much towards Uruguay and Argentina as to the rest of Brazil. Florianópolis, Santa Catarina’s capital, has flights to Buenos Aires but not to Belo Horizonte, the capital of Minas Gerais, Brazil’s second-biggest state. 

These days, the difference southerners most want to talk about is an economic one....Continue reading

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Skiers v the religious rights of Canada’s indigenous peoples

The day the grizzlies have their protest

THE Ktunaxa First Nation, an indigenous group in south-eastern British Columbia, believes that the grizzly-bear spirit resides in a sacred part of the Purcell mountains that they call Qat’muk. For 25 years they have resisted a scheme to build a ski resort in this wilderness. On December 1st the Ktunaxa will bring their fight to Canada’s Supreme Court. They will argue that their religious freedom takes precedence over the right of mountain-bombing masses to experience the deep powder for which the area is famed.

The case will set a precedent in Canada and reverberate abroad. Sacred sites are an issue in protests against the Dakota oil pipeline in the United States. New Zealand’s government recently conferred the rights of a person on a national park sacred to the Maori people. Canada’s Supreme Court has ruled before on indigenous people’s rights over land use, but never on the basis of their religious beliefs.

The nature of that faith, which assigns sacred value to features of the landscape, poses a puzzle for the courts. The Ktunaxa maintain that skiers will...Continue reading

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Polish Brazilians remember their culture

ÁUREA, a town in the northern part of Rio Grande do Sul, calls itself the “Polish capital of Brazilians”. To a visitor, it is the Slavic personality that comes through at first. The children tumbling out of school are mostly fair-haired. Wheat and thickets of pine cover the surrounding hills. An occasional palm tree is the only sub-tropical feature.

Áurea makes the most of its Polishness. More than 90% of its 4,000-odd residents say their origins are in the central European country. It hosts an annual czernina festival; last year 1,000 people came to savour the black soup thickened with duck blood.

But ties with the mother country are loosening. Although Polish can still be overheard on the street, mass was last celebrated in the language three years ago, reports Artêmio Modtkowski, in Portuguese-inflected Polish. His grandfather, Jan, was among the 12 founders of the settlement in 1906. Despite appearances, Áurea’s inhabitants are as Brazilian as members of the other groups that make up the country’s ethnic mishmash.

Some 60,000 Poles, mostly impoverished peasants, landed in Brazil between 1869 and 1920. Nearly all went to Paraná, another southern state. Its capital, known to Poles as Kurytyba (and to everyone else as Curitiba), is the only city in South America that has a polonised name. From there the newcomers...Continue reading

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With an unfriendly neighbour, Mexico needs to strengthen itself

ALMOST 25 years ago a Mexican president, Carlos Salinas, took a historic decision. He decreed that his country’s future lay in setting aside its fear and resentment of its mighty neighbour to the north and embracing economic integration with the United States through the North American Free-Trade Agreement (NAFTA). The agreement underpinned the modernisation of part of Mexico’s economy. So the imminent arrival in the White House of Donald Trump, a critic of NAFTA who threatens to build a migrant-blocking wall between the two countries, looks like a disaster for Mexico.

It would be easy to say that Mr Salinas made the wrong bet, as his many critics charged at the time. He didn’t. For Mexico, geography is destiny. Anyway, with $1.4bn in goods crossing the border each day, the country’s economy is now inextricably bound to that of the United States. So what is Mexico to do? Today’s president, Enrique Peña Nieto, who was excoriated when he invited Candidate Trump to visit, trusts that he can interest President Trump in a “modernisation” of NAFTA. He has some leverage: Mexican non-co-operation on trade, drugs and migrants could hurt the United...Continue reading

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Taking on West Africa’s terrorists

THE capital of Niger is not known as a hotspot for planespotters. But passengers waiting to take off at Niamey’s airport are sometimes in for a treat: the sight of an American Predator drone elegantly gliding down ahead of them on its only runway. If they take off and look out of the window, they will see a generously sized base with new-looking hangars and several American transport aircraft.

It is not the only sign of America’s presence in Niamey. The embassy is unusually large; the city’s best restaurants buzz with American accents. And now, at Agadez, an ancient desert city in the north of the country, that is a transit point on the route to Europe, mixed in with the smugglers and migrants are contractors from Europe and South Africa, quietly building another base for drones. Niger, a desperately poor country on the edge of the Sahara—in the semi-arid region known as the Sahel—with a population of some 20m, has become a key location for America’s expanding security presence in West Africa. It is a sign of growing worries about jihadism in the region and of America’s stepped-up efforts to contain it. But the local effects of importing...Continue reading

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A Western-backed deal to salvage Libya is falling apart

The worst job in the world?

WHEN Fayez al-Serraj returned to Libya in March the situation looked unusually hopeful. For two years, rival governments in the east and west of the country had fought over a disputed election. In December representatives from both sides of the country (but not their leaders) agreed to a UN-backed peace proposal. Powerful players in the war withheld their support, but they could be brought in later, said advocates. The deal, known as the Skhirat agreement after the Moroccan town in which it was signed, empowered Mr Serraj (pictured), then a relatively unknown politician, to form a government of national accord (GNA). His smooth arrival in Tripoli, the capital, in March seemed to herald a brighter future.

It has not turned out that way. The new government, though ostensibly backed by some powerful militias, has failed to gain broad support. The eastern parliament, called the House of Representatives (HOR), has refused to approve the body, as required under the Skhirat agreement. Remnants of the old government and legislature in the west, known as the General National Council (GNC), unsuccessfully...Continue reading

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How corruption and bad policies are strangling South Africa

THE sprawl of cranes around Sandton, South Africa’s swanky financial district, and a dearth of empty beds in Cape Town, its tourist Mecca, point to an economy that shows some signs of rebounding from a deep slump earlier this year. Taken individually many indicators are buoyant: good rains mean that farmers are likely to plant 35% more maize this year; a weak rand has encouraged a 20% jump in the number of international tourists.

Yet add these numbers up and the equation still turns out badly: the economy will be lucky to limp in with growth about 0.5% this year and will not do very much more than 1.5-2% over the next few years. This is a percentage point or two below the long-run trend rate of 3%.

So what explains this black hole in the economy? The answer is almost entirely poor governance by Jacob Zuma, a president who may soon face 783 charges of fraud, corruption and racketeering.

Foolish policies play a part. Take tourism. Although the number of holiday-makers has soared, the government itself reckons that there ought to have been many more bottoms on South African beaches. Thousands have been turned away by...Continue reading

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Despite tough talk, Indonesia’s government is struggling to stem deforestation

TEGUH, chief of the village of Henda, in the Indonesian portion of Borneo, enters his office brimming with apologies for being late. The acrid scent of smoke wafts from his clothes. He explains that he was guiding police and firefighters to a fire just outside the village. A farmer had decided to clear his land by burning it. Henda sits amid Borneo’s vast peatlands; the fire had set the fertile soil smouldering for nearly 24 hours. It was a small fire, he says—perhaps a couple of hectares—but Mr Teguh still struggled to contain his exasperation, given the destruction wrought by fires set for land-clearance just a year ago.

Last year, in the autumn for the most part, at least 2.6m hectares of Indonesia’s forests burned—an area the size of Sicily. The fires blanketed much of South-East Asia in a noxious haze and released a vast plume of greenhouse gases. Much of the island’s interior was reduced to sickly scrub; along its roads stand skeletal trees, reproachful witnesses to the ravages they endured. Indonesia’s forest fires alone emitted more greenhouse gases in just three weeks last year than Germany did over the whole year. The World Bank...Continue reading

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A plan to legalise Vietnam’s private charities and clubs is shelved

Fans, but no papers

EVERY Sunday deaf children meet to learn sign language in a borrowed classroom in Ho Chi Minh city, Vietnam’s southern metropolis. Pham Cao Phuong Thao began organising the lessons after her own son was born with hearing difficulties; her students include street children whom disability has made hungry. But after years of effort Ms Thao has still not obtained the permits that would make her charity legal. She says the paperwork produced to support her applications forms a stack a metre high.

Ms Thao’s small organisation is among more than 300,000 charities, clubs and associations operating in Vietnam, a single-party state with an increasingly vibrant civic life. Yet the country’s Byzantine bureaucracy—and the ruling Communist Party’s paranoia—leaves these outfits in a bind. For years campaigners had dared to hope that a proposed law, which was supposed to pass on November 18th, would help cement citizens’ right to associate. Instead lawmakers talked of tightening restrictions on civil society before shelving the bill altogether.

In theory the needs of Vietnamese are met by a suite...Continue reading

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Is Australia letting firms pump natural gas too cheaply?

IN GREEK mythology, a gorgon was a creature so hideous that anyone who looked at one turned to stone. In contemporary Australia, Gorgon is an enormous liquefied natural gas (LNG) project which was supposed to pay huge economic dividends. It is the centrepiece of a decade-long, A$200bn ($148bn) construction boom in gas-export facilities. In 2019 Australia is likely to surpass Qatar to become the world’s biggest exporter of LNG. The benefits to the government, however, have not been as quite as entrancing as expected.

At one point Chevron, the company running Gorgon, promised the government so much revenue that it would be able to lower personal income taxes. As recently as March the energy minister, Josh Frydenberg, hailed “the golden age of gas” and forecast that Gorgon alone would add a total of A$440bn to the economy. Yet the Treasury says that revenue from the petroleum resources rent tax (PRRT), through which energy firms pay the federal government for the right to extract oil and gas, is forecast to fall from A$1.2bn in the fiscal year that ended in mid-2015 to A$800m in 2020—even as the volume of exports soars.

That is down...Continue reading

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Japan’s efforts to make it easier for women to work are faltering

SHINZO ABE, Japan’s prime minister, is an unlikely champion of women’s empowerment. A lifelong conservative and the leader of a party that for decades battled feminism, Mr Abe has undergone a conversion, prompted by Japan’s alarming demography: the workforce is projected to shrink by about 25m people—well over a third—by 2060. Meanwhile, millions of university-educated women sit at home, their talents squandered, says Kathy Matsui of Goldman Sachs. “Japan has more to gain than most countries from raising female labour participation.”

Yet, four years into Mr Abe’s stint in office, and 17 years since Ms Matsui coined the term “womenomics”, the government is still struggling to make Japanese women “shine”, its clumsy rhetorical catchphrase for raising the standing of women at work. The latest gender-gap index published by the World Economic Forum (WEF) ranks Japan 111th out of 144 countries, a fall of ten places since 2015. Just 9.5% of the members of Japan’s lower house are women, putting the country 155th in the world by that measure. Under Mr Abe, the number of female directors at Japanese firms has inched up—to a paltry...Continue reading

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Russia’s pivot to Asia

RUSSIA’S twin-headed eagle faces east towards Asia as well as west towards Europe. This far-sighted beast is near-as-dammit the heraldic coat-of-arms of Vladimir Putin, who revived the old imperial symbol. So why does the president of a country with half its vast lands lying east of Singapore need to make so much of his “pivot to Asia”, declared two years ago? That many readers familiar with the much-maligned Asia pivot of Barack Obama will not have heard of Mr Putin’s hints at a gap between rhetoric and substance. And yet the prevailing view among pundits is that Russia is indeed back in Asia.

Once the Soviet Union and China were a hair-trigger away from war along their long border. Today many see a new strategic convergence or even an alliance in the making between Russia and China, the world’s second- and third-biggest military powers. The two states’ media paint Mr Putin and Xi Jinping, China’s president, as strongmen buddies. In 2014 they signed a huge deal to bring Russian gas to China. Recently, Russian sales to China of advanced weapons resumed after being halted a decade ago because of technology cloning.

In September,...Continue reading

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Donald Trump’s national-security team takes shape

No zdorovie

WHAT can be deduced from Donald Trump’s confirmed and likely picks for key national security posts? The answer is not much, apart from an apparent enthusiasm for generals—which is slightly odd, given the way Mr Trump lambasted them during the campaign for their failure to win America’s wars.

Mike Flynn, a retired military-intelligence general who guided Mr Trump’s views on national security throughout his campaign, and whose strident views on Islam were reflected in the candidate’s speeches, will be the national security adviser. General Flynn is a divisive figure, who spooks Republican foreign-policy thinkers as much as Mr Trump does. By contrast Jim Mattis, a former Marine general who is likely to be defence secretary, would reassure them; as would David Petraeus, another general, who has been mooted as a potential secretary of state if the job does not go to Mitt Romney. Despite General Mattis’s nickname, “Mad Dog” (earned for his aggression in combat and a talent for cheerfully menacing quotes), he is regarded as combining military dash with intellectual seriousness.

Moreover his...Continue reading

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King of debt

SINCE the financial crisis, many left-leaning American commentators have yearned for more deficit spending to reflate the economy. Few would have predicted that a Republican administration would be the one to heed their calls. Yet financial markets seem to be betting that President-elect Donald Trump, backed by Republican majorities in the House and Senate, will go on a budgetary binge that ignites economic growth. Since the election the S&P 500 index of shares has jumped 3%, led by stocks like banks and retailers that soar and sink with the economic cycle.

Such expectations are not baseless. During the campaign Mr Trump called for tax cuts which, according to the Tax Policy Centre, a think-tank, would cost an eye-watering $7trn over a decade, raising the debt-to-GDP ratio by 26 percentage points (or, based on current projections, to 111% of GDP) by 2026. He promised new infrastructure spending worth $1trn, more money for defence and no cuts in spending on pensions and health care for the elderly (which is forecast to soar over the next decade). All else equal, such largesse should indeed give the economy some temporary vim. But there are three main...Continue reading

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In one state, the 2016 election is still not over

Raleigh pushing it

RUTHLESS politicians often try to pin their own vices on their critics: anti-corruption campaigners, for example, frequently find themselves accused of graft. So it has proved with North Carolina’s Republicans. A federal court recently found that voting restrictions they passed in the state legislature targeted African-Americans with “almost surgical precision”. Now, having botched the race for governor, some are baselessly alleging voter fraud among their opponent’s supporters.

Before the election, several opinion polls in North Carolina suggested that both Hillary Clinton and Deborah Ross, the Democratic candidate for the Senate, would win. In the event, both lost soundly. But Roy Cooper, the Democratic contender for governor, narrowly held on to his lead over Pat McCrory, the incumbent. At the last official count, Mr Cooper was ahead by over 7,000 votes, though his team thinks the real figure is higher. He has duly declared himself the victor. But, facing the prospect of becoming the first governor of North Carolina to fail in a re-election bid, Mr McCrory has refused to accept...Continue reading

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Donald Trump has a team of rivals too

THE president-elect’s first administration hires had all been middle-aged white men who had backed him to the hilt when others wrinkled their noses. But with a pair of nominations announced on November 23rd he rang the changes. He named Nikki Haley, the Indian-American governor of South Carolina, to be his ambassador to the United Nations, and Betsy DeVos, a billionaire Republican benefactress, as his education secretary. As The Economist went to press, he was also reported to have invited Ben Carson, a retired neurosurgeon whom he defeated in the Republican primaries, and who is black, to be his secretary of housing and urban development.

All three possible appointments are intriguing, perhaps Mrs Haley’s especially. She is a first-generation American—her parents migrated from the Indian state of Punjab in the 1960s—who converted from Sikhism to Christianity before her marriage, yet still occasionally attends gurdwara. Sparky, personable and, at the age of 44, an acknowledged Republican star, she could be the first Indian-American to hold a cabinet office. She is also a former opponent of Mr...Continue reading

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Treasure-hunting in the American West

The voracity of hope

IN THE mid-19th century, hundreds of thousands of Americans flocked west in search of gold. Today those with an appetite for treasure head to the Rocky Mountains, where Forrest Fenn, an octogenarian art collector, claims to have hidden a bronze box containing gold coins, Chinese jade, emerald jewellery and other riches, including two gold nuggets “as large as chicken eggs”. Mr Fenn first had the idea to stash away the treasure nearly 30 years ago, when he was diagnosed with aggressive kidney cancer and told his chances were slim. Over the decades he spent hawking art to the likes of Steve Martin, an actor, and former President Gerald Ford from his gallery in Santa Fe, New Mexico, Mr Fenn had built up an enviable personal collection of art and artefacts. He decided to pack as much as he could carry and hike to his favourite spot to die. The only way to track him—and his cache—would be to solve the riddle he would leave behind.

Mr Fenn’s cancer later vanished, but the idea of hiding the treasure continued to grip him. “When I hid my treasure about six years ago, this country was in a deep...Continue reading

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The next attorney-general opposes immigration and has defended torture

THE nomination of Jeff Sessions as attorney-general is a reminder that words spoken on the campaign trail have meaning, that politics is not show business, and that governments take decisions that make or break lives. The 69-year-old senator from Alabama, one of Mr Trump’s earliest supporters and closest adviser from the world of politics, will have sweeping powers over immigration enforcement. If confirmed by the Senate, he will hold in his hands the fate of the 740,000 migrants who arrived as children and were granted the right to stay and work by Barack Obama under the Deferred Action for Childhood Arrivals scheme (DACA).

Mr Sessions has several times sought to pass laws abolishing DACA. He has spent the past decade leading opposition to bipartisan immigration reform bills. He is a sceptic of the H1-B visa scheme that helps companies recruit skilled foreigners, such as scientists or engineers. Mr Sessions has opposed curbs on harsh interrogations for terror suspects (see Continue reading

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Donald Trump and the dark side

INTERVIEWED by German reporters this month, President Barack Obama was asked whether his failure to close the Guantánamo Bay prison camp, or his drone strikes against terror suspects, marked his presidency’s “darkest moment”. It was a very European question, of the sort that leaves many American politicians spluttering with impatience. Mr Obama offered a downbeat reply. He expressed pride at ending all use of torture and reducing Guantánamo’s population to 60 detainees. He boasted of creating terror-fighting rules that are “much more disciplined and consistent with the rule of law and international norms”—including the obligation to minimise casualties when using drones, while still allowing strikes in countries unable to capture terrorists. He did not boast of leaving Donald Trump a solid legal foundation for using force against Islamic State (IS), because he cannot. Pondering the dilemmas of terrorist-fighting, Mr Obama mused aloud: “How do we make sure that we don’t change, even as we protect our people?” He did not answer his own question.

Such ambiguities alarm those who remember the last time America was accused of being a rogue...Continue reading

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Donald Trump shuts down midtown Manhattan

Welcome home

CONCRETE barriers have been installed along the streets surrounding Trump Tower. Police have blanketed the area, setting up security checkpoints. Metal barricades corral pedestrians. The media are penned across the road from the tower, while their satellite trucks are parked round the corner on busy 57th Street. Two of Fifth Avenue’s five traffic lanes are closed. Part of East 56th Street (the main entrance to Mr Trump’s penthouse) is closed indefinitely to both vehicles and pedestrians.

Traffic is nothing new to New Yorkers. Sam Schwartz, a transport engineer, likes to joke about the two New Yorkers who asked each other, “Should we walk or do we have time to take a cab?” He thinks the mess could hasten the introduction of congestion pricing. New Yorkers are also accustomed to high-profile visitors, like President Barack Obama, causing temporary chaos. The new gridlock may last much longer. Mr Trump’s wife and youngest son, who is still at primary school, may continue to live in their Trump Tower penthouse. Mr Trump likes to sleep in his own bed, which suggests he will often come back from Washington. The...Continue reading

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America’s election has led to a boomlet for therapists

IT SEEMS fitting that after an election that many believe went to the dogs, quite a few Americans are seeking comfort from canines. Groups that offer therapy hounds, which are known to reduce stress and anxiety, have seen more demand for their furry, wet-nosed services in recent weeks. “This nation needs to have some hard conversations,” says Rachel McPherson of the Good Dog Foundation, a New York city non-profit. “People open up and feel more secure when there’s a dog in the room.” 

As Americans gather around tables for the holidays, many will wish they had a pooch at hand. Thanksgiving, a national holiday of gratitude, togetherness and caloric excess, often gathers generations of relatives who have little in common besides blood. The timing this year, on the heels of a uniquely adversarial presidential contest, has some hosts nervous. The etiquette experts of the Emily Post Institute have fielded “an unusual volume of questions” about how to handle political discord at the holiday table, says Daniel Post Senning, an heir and spokesman. Agita over the election and the coming holidays has already been keeping therapists plenty...Continue reading

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Don't Bank on Relief for These Lenders

Investors shouldn’t count on lighter capital requirements for the biggest U.S. banks.

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Aluminum Giant's Armor as Thin as Foil

China Hongqiao’s remarkable success has rightly drawn suspicion from investors.

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Flawed Chicken Index Could Mean Dark Times for White Meat

Troubles with the Georgia Dock, a price index for chickens, could prove costly for poultry producers.

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The Supreme Court is set to review a death sentence grounded in fiction

FANS of “Of Mice and Men”, the 1937 novella by John Steinbeck, will recall the character of Lennie Small, an oafish, dim-witted man whose physical strength is ill matched to his love of rabbits. On November 29th, in a remarkable example of law imitating art, a hearing at the Supreme Court will put Lennie back in the spotlight. The question is whether the fictional man’s intellectual profile should help determine the fate of Bobby Moore, a real-life Texan awaiting execution. 

Mr Moore, a man of limited intellectual capacity, was sentenced to death in 1980 after killing a grocery store clerk during a bungled burglary in Houston, Texas. Aged twenty at the time, Mr Moore had not enjoyed a happy or productive childhood. He failed first grade—twice—and was promoted to second grade only to “keep him with children of a similar age”. Subsequent years remained a struggle. Mr Moore, unable to keep up with the lessons, was often relegated to drawing pictures while other students were doing classwork. He endured taunts of “stupid” from classmates, teachers and his own father....Continue reading

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The changing face of global trade

TRADE has changed a lot in the last 25 years. Indeed, we are still struggling to understand why trade growth was so rapid before the 2008 crisis, and has been relatively sluggish since. Richard Baldwin's new book "The Great Convergence: Information Technology and the New Globalization" was reviewed in last week's issue. But the book is so important that it is worth looking again at some of its insights.

The first is that we tend to think of competitiveness of individual states (particularly in an era of populist nationalism) - the US is competing against China and Germany. But goods are no longer assembled entirely within the bounds of one factory in one country. Instead, many goods are assembled in "global value chains" in which products are designed in one country, but made from parts built in several countries and assembled in another country. As Mr Baldwin writes

The contours of industrial competitiveness are now increasingly defined by the outlines of international production...Continue reading

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The fate of Trump Inc.

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East Africa’s booming camel trade

“ALLAHU akbar!” the boys shout gleefully from atop their camels, the reins of others held in their raised fists, their backs to the setting sun. Beside them a metal-fenced racing track cuts through the pancake-flat desert. Every dawn and dusk the camels are trained to run on this plain outside Kassala, a city in eastern Sudan. Their owners hope they will catch the eye of the wealthy Emiratis who visit two to four times a year to buy steeds for multimillion-dollar prize races in Dubai.

The Rashaida, a tribe that migrated to Sudan and Eritrea from Saudi Arabia in the mid-19th century, are infamous for kidnapping and trafficking Eritreans who cross the border, around 20km (12 miles) from Kassala, in the hope of eventually reaching Europe. But they are also renowned for breeding some of the world’s speediest racing camels. Emiratis buy between 100 and 300 young camels a year from the village of Abu Talha, some for as much as $80,000, says Hamed Hamid, a mustachioed patriarch. There are around 800 racing beasts in a settlement of 1,200 people, he estimates, and many more being raised for slaughter. “The camels are everything. They give us milk,...Continue reading

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