Inventory Check: We Went to the Stores

Heard on the Street is conducting an experiment to see how retailers’ claim that low inventory will mean less discounting is playing out.

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Little Slack But Not Much Heat in Labor Market

Unemployment hits nine-year low but modest wage growth shows there is still some slack in labor market.

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Chips Need a Nick, Not a Cut

Semiconductor stocks are vulnerable after big run-up, but strong fundamentals remain.

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Global Bond Markets: Into the Maelstrom

The storm that battered bond markets in November doesn’t seem likely to abate just yet.

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Donald Trump kicks off his victory tour in the Midwest

MIDWESTERN voters decided the election for Donald Trump. So it is hardly surprising that the president-elect would start his thank you tour in two Midwestern states. In the early afternoon of December 1st he visited Indianapolis, Indiana’s capital, to claim credit for Carrier, a local maker of air conditioners and heaters, deciding to keep some 1,000 manufacturing jobs in America rather than move them to Mexico, as planned. The same evening he celebrated his victory at a rally of thousands of raucous supporters in Cincinnati, Ohio.

Revelling in the adulation of the Cincinnati crowd, Mr Trump used the rally to blast “extremely dishonest” people in the media, who he says were in denial of his victory even after he won important swing states on November 8th. He recounted examples of how the media underestimated his pull, exclaiming, “I love this stuff. Should we go on with this a little longer?” His supporters, some clad in T-shirts reading “Deplorable Lives Matter”, loved it too.

Burying hopes that the next president would moderate his tone after his election victory, he smiled like a Cheshire cat when the crowd chanted “lock her up” and...Continue reading

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France’s François Hollande gives up on running for a second term

SINCE France’s fifth republic began in 1958, no president in good health has ever failed to stand for re-election. Yet last night that is what François Hollande decided to do. “I have served the country with sincerity,” the Socialist president declared, in an unexpected television broadcast. But with unemployment high and the left at risk of fragmentation, he said, he would not run again in next spring’s presidential election. Mr Hollande’s decision underlines the chronic weakness of the French left and opens up its leadership to a new generation.

Mr Hollande’s retirement was not as obvious a decision as it might appear. Although his approval ratings had dropped to levels beyond parody—4% in one poll—he has always had uncommon confidence in his capacity to vanquish conventional wisdom. Until recently, even those around him thought he might run again. After a testy lunch this week with Manuel Valls, his centre-left prime minister (who had begun to defy his boss), Mr Hollande appeared to put his junior in his place.

In the end, though, common sense prevailed. Confidence and trust in Mr Hollande have collapsed. The left is dismayed by his failure to...Continue reading

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Baby Boomers vs. Millennials: The Uneven Jobs Recovery

Ahead of Friday’s jobs report, the economic recovery has produced uneven results and unintended consequences for baby boomers and millennials.

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Glencore Moving Too Quickly on Dividend

Glencore is healthier thanks to China, but uncertainty in demand and heavy debt means calls for caution.

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Passive Investors Get Sucked Into Hong Kong Market Failures

Multibillion-dollar bubbles like Fullshare may end up fitting a pattern: stocks with small floats that get added to major benchmarks and then plunge.

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OPEC Windfall Shows Talk Isn't Cheap

Oil producers in the 14-member group have earned billions from the anticipation of Wednesday’s cut and now will earn billions more even if the deal fails to reduce supply.

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Insurers grapple with cyber-attacks that spill over into physical damage

AS HACKERS wreak havoc with depressing regularity, the insurance industry finds itself forced to contemplate a whole new set of risks. They range from the theft of millions of credit-card numbers from American retailers to the disabling of the power grid, as happened in Ukraine last December. The dedicated “cyber-insurance” policies that companies offer against data breaches have become relatively routine. But the risks they insure under other policies are also affected by cyber-risks—and they are still struggling to understand this so-called “silent” cyber-exposure.

Insurance that protects firms who suffer data breaches has been on offer for around 15 years. It is much harder to put a precise value on, for example, stolen health records than on a property or car. Insurers sidestep the problem by covering only the direct costs that a company incurs from a hack. Typically, these include hiring a specialised forensics firm to work out exactly what was stolen, notifying affected customers (which 47 American states currently require), short-term business interruption and fines.

The industry will be shaken up by new EU data-protection...Continue reading

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Africa’s stock exchanges meet but size holds them back

 

AS THE trading bell rings, a handful of brokers, in crisp scarlet jackets, gather around a whiteboard at the Rwanda Stock Exchange in Kigali. There are only seven listed companies, and it takes just a couple of minutes to write up the day’s bids. But Celestin Rwabukumba, its chief executive, is excited for the future. “If it works elsewhere, then why not here?” he asks.

Why not indeed? Johannesburg, with a market capitalisation of nearly $1trn, is in a league of its own. But sub-Saharan Africa has many small exchanges, lots of them created in the 1990s to help privatise state enterprises. Most struggle to attract new issues. Seven of the eight domestic listings on the Uganda Securities Exchange came from government divestments. Older exchanges, in Kenya and Nigeria, are dominated by big firms: a third of Nigeria’s market is the Dangote Group, a conglomerate with interests from cement to salt.

Stock-exchange leaders were in Kigali this week for the annual conference of the African Securities Exchanges Association. Much of the talk was about coaxing smaller, family-owned businesses to list. But many owners are loth...Continue reading

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Sell-side share analysis is wrong

“SELL-SIDE” analysts, whose firms make money from trading and investment banking, are notoriously bullish. As one joke goes, stock analysts rated Enron as a “can’t miss” until it got into trouble, at which point it was lowered to a “sure thing”. Only when the company filed for bankruptcy did a few bold analysts dare to downgrade it to a “hot buy”.

Economic research shows that there is some truth to the ribbing. The latest figures from FactSet, a financial-data provider, show that 49% of firms in the S&P 500 index of leading companies are currently rated as “buy”, 45% are rated as “hold”, and just 6% are rated as “sell”. In the past year, 30% of S&P 500 companies yielded negative returns.

Profits forecasts made more than a few months ahead have a dismal record of inaccuracy. According to Morgan Stanley, a bank, forecasts for American firms’ total annual earnings per share made in the first half of the year had to be revised down in 34 of the past 40 years. Studying their forecasts over time reveals a predictable pattern (see chart 1).

In theory, a diligent share analyst should do his own...Continue reading

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Revising bank-capital standards

A STEEP climb awaited the Basel Committee on Banking Supervision in Santiago on November 28th and 29th. The central bankers and regulators hoped to agree on revisions to Basel 3, the post-crisis version of bank-capital standards. On November 30th Stefan Ingves, the group’s chairman and head of Sweden’s central bank, said that “the contours of an agreement are now clear”. But the climbers are still short of the summit.

The committee had proposed restricting the use of banks’ internal models for calculating risk-weighted assets—which in turn help determine how much capital banks must have at hand. Models varied too much, it said; low risk-weights were flattering some banks’ ratios. But European bankers and officials had complained for months that the proposals would penalise banks that have lots of (low-risk) corporate loans or mortgages (eg, in Germany or Sweden). They sniffed an American plot: American banks, holding fewer such assets, would be untouched.

Mr Ingves gave few details, but said that the new set-up would “largely retain” internal models, though with minimum values for important parameters (such as the probability of default). A “standardised” approach will replace alternatives based on banks’ models for estimating operational risk (big fines, say, or cyber-security breaches).

Not surprisingly, the thorniest topic...Continue reading

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The yuan’s weakness is a dilemma for China’s central bank

YUAN forecasters have had it easy for the past decade. But for a few isolated days, China’s currency has been a one-way bet for years on end, whether appreciating against the dollar, pegged to it or, more recently, depreciating. The pace at which it has risen and fallen has also been predictable: the central bank always made it gradual. So Guan Qingyou, of Minsheng Securities, thought himself on solid ground when he predicted in early November that the yuan would stay above 6.82 per dollar for the rest of the year. Less than a week later he was proved wrong: the yuan fell to an eight-year low. Mr Guan published an apology: the art of knowing the yuan’s future with any precision, he conceded, had become rather tricky.

Most analysts, investors and companies believe that the Chinese currency has further to fall against the dollar, but can only guess as to how far and how quickly. Their uncertainty reflects a new reality. The government, long able to exercise tremendous control over the yuan, has started to lose its grip. A new exchange-rate mechanism, introduced last year, has made the currency more flexible but also more responsive to...Continue reading

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Patent Feud Is Underappreciated Risk at Biogen

Biogen’s big patent dispute puts blockbuster drug revenues at risk.

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Europe's Forgotten Election: Spare a Thought for Austria

Investors will be watching out for the result of Italy’s constitutional referendum Sunday. They shouldn’t forget Austria’s presidential vote.

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François Fillon mixes rural conservatism with Thatcherism to fend off the far right

GENTLY sloping hills and medieval churches: the charms of La Sarthe in rural western France are as discreet as its people. There is nothing quite grand enough to catch the eye, nor grimy enough to avoid. In the little town of La Ferté-Bernard, there is an active parish and scout group. Rabbit is on the menu du jour at Le Dauphin restaurant. Yet local talk is about the new discount grocer, Lidl. And 70 volunteers at Secours Catholique, a charity, help with warm clothes, tinned food and weekly homework for families in difficulty. “We ask for a small contribution to preserve people’s dignity,” explains Monique Bouché, who runs the charity in the town. 

Dignity and respect are words that recur often in La Ferté-Bernard. And they help explain why, in this provincial town, François Fillon secured a colossal 89% of the vote at the primary run-off to become the presidential candidate for the centre-right Republican party on November 27th. He beat Alain Juppé, his rival and fellow ex-prime minister. Mr Fillon, who comes from La Sarthe, is in tune with a conservative Catholic part of the electorate that feels that the French...Continue reading

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Tart response

No questions, you dirty anti-Slovak

IN FEBRUARY Zuzana Hlavkova, then an employee at Slovakia’s foreign ministry, came to believe that inflated contracts tied to the country’s presidency of the European Council were being awarded to firms allied with the governing Smer party. The 26-year-old Ms Hlavkova did something unusual: she reported it to her bosses, including the foreign minister, Miroslav Lajcak. When nothing happened, she quit her job and took her evidence to the local branch of Transparency International, a watchdog, and at the end of November they went public. Local media picked up the allegations, forcing the prime minister, Robert Fico, to respond. In a press conference on November 23rd he called the reporters “dirty, anti-Slovak prostitutes”.

The pugnacious Mr Fico, who has been in power for nine of the past eleven years, has a habit of insulting journalists. In August he compared one to a “toilet spider”. But if he seems nervous, one reason may be his sliding popularity. In 2014 he tried to move from prime minister to president, but lost in a landslide to Andrej Kiska, an entrepreneur. In...Continue reading

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Matteo Renzi wants more power to change Italy in a constitutional referendum

Voting with his Fiat

A TREMOR of magnitude 4.5 shook central Italy on November 29th, rattling areas that had been devastated by heavier quakes weeks earlier. It was a reminder that there is much to fear in the bel paese: seismic shocks, organised crime and, most urgently, the outcome of a constitutional referendum on December 4th.

The referendum will endorse or reject changes that include drastically reducing the powers of the Senate. And future Italian governments would have a much firmer grip on parliament since a new electoral law engineers for the leading party—even one that secures only a modest plurality—an assured majority in the lower house (the Chamber of Deputies). The prime minister, Matteo Renzi, argues that this streamlined legislature is essential in order to pass the structural reforms that Italy’s sluggish economy needs.

Many fear the changes remove needed checks and balances, granting the government too much power. They would make it easier for the prime minister to determine who becomes president, and thus influence who sits in the constitutional court. (Most of its...Continue reading

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Turkey’s effort to join the EU is on life support

JUST before the Gulf war in 1990 (which he backed despite popular opposition), Turgut Ozal, then president of Turkey, squeezed into an army tank, posed for the cameras and proclaimed: “I am taking the shortcut to the European Community.” A quarter-century later Turkey’s dream of joining the European Union is all but dead. Denouncing the purges that followed July’s brutal coup attempt, on November 24th the European Parliament called on EU leaders to freeze accession talks, which have been dragging on since 2005.

Turkey’s current president, Recep Tayyip Erdogan, responded the next day by threatening to open the route to Europe to the 3m refugees living on his side of the Aegean. “You have betrayed your promises,” he said, referring to a deal with the EU that commits Turkey to harbouring the refugees in exchange for billions of euros in aid and a promise of visa-free travel to Europe for Turkish citizens.

Leaders of EU states, who will discuss Turkey at a summit on December 15th, are unlikely to take the parliament’s advice. Mr Erdogan is very unpopular in Europe, and mainstream politicians in France, Germany and Holland, all facing elections next year,...Continue reading

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Tired of Syriza, Greece embraces a mainstream party

THE headquarters of New Democracy, a centre-right political party, is in an unexpected part of Athens. The building, surrounded by warehouses, housed a branch of a Japanese technology firm before standing derelict for years. Few other political types are nearby. The rent, at €9,800 ($10,400) a month, is a tenth of what the party’s old office used to cost. Yet the relocation, which happened in August, is also symbolic. As the opposition party has moved to a cheaper part of town, so too does it hope that it can present itself to the public as a new, improved alternative to the Greek government. With Alexis Tsipras, the prime minister (pictured, on the left), growing less popular, New Democracy may well have a chance.

It has been a miserable year for Mr Tsipras and his left-wing Syriza government. A deal struck in March by the European Union and Turkey stemmed last year’s surge of migrants through Greece to northern Europe, but left 60,000 of them stuck in Greece in conditions that are often grim. Yet this is the least of the government’s problems. In May, after much squabbling, it pushed through €1.8bn of tax increases needed to qualify for the...Continue reading

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France’s election shows Europe’s line against Russia is fraying

VLADIMIR PUTIN must wonder what he did right. From the refugee crisis to Brexit, Europe’s troubles have allowed the Russian president to portray himself as a bulwark of stability in a region of chaos. America’s election brought an apparent Kremlin sympathiser to the White House. And now France is on the same track. François Fillon’s victory over Alain Juppé in the presidential primary of the centre-right Republican Party leaves an avowed friend of Mr Putin as the favourite to occupy the Élysée after next spring’s election. (Mr Fillon’s most serious rival, the nationalist Marine Le Pen, has a yet more marked Moscow tilt.)

Mr Fillon’s Russophilia is born of conviction rather than expediency, and he does not hide his views. During last week’s debate with Mr Juppé he compared the Russian annexation of Crimea to Kosovo’s declaration of independence from Serbia, an argument he could have lifted directly from the Kremlin. The expansion of NATO to Russia’s borders in the 1990s, he muses, was a provocation bound to generate blowback. Little wonder Mr Putin singled out the “upstanding” Mr Fillon for praise before the...Continue reading

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South Korea’s president half-offers to resign

IT WAS her reputation for integrity that helped bring Park Geun-hye to power. Unmarried, childless and estranged from her siblings, Ms Park said shortly before she was elected president in 2012 that the South Korean people were her family: not for her the household corruption scandals that had dogged every previous president. 

Yet four years on Ms Park’s image is in tatters. And it is a friendship that she formed as a result of her “lonely life”, as she put it, in the presidential Blue House that looks set to be her undoing. Choi Soon-sil, a confidante of Ms Park, was indicted on November 20th on charges of attempted fraud and abuse of power, and will face trial this month. Prosecutors say she used her connections to coerce 50-odd conglomerates to funnel 80bn won ($70m) to two cultural foundations, K-Sports and Mir, that she controlled.

The prosecutors have accused Ms Park of ordering aides to assist Ms Choi in the alleged shakedowns. One aide, Ahn Chong-bum, has been indicted for abuse of power and coercion; another, Chung Ho-sung, for divulging state secrets. In documents regarding the arraignment of Cha Eun-taek, a pop-video...Continue reading

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Afghanistan’s vice-president is accused of kidnapping a rival

In his element

THE vice-president of Afghanistan, Abdul Rashid Dostum, spent November 25th watching a game of buzkashi, a traditional version of polo in which the carcass of a goat serves as the ball. With his boss abroad, Mr Dostum was acting president. But his behaviour allegedly became downright unpresidential when he encountered Ahmad Ishchi, a political rival, amid the crowd. Mr Dostum is said to have punched Mr Ishchi in the face and then pinned him to the ground with his boot. His bodyguards administered a further beating before carting the injured Mr Ishchi away in an armoured vehicle. He has not been seen since. Protesters demanding his release were turned away when they visited Mr Dostum’s palace, a sprawling pink and baby blue compound plastered with large posters of its owner.

Mr Dostum likes to talk about himself in the third person. He is a warlord first, politician second. He is known to Westerners chiefly for the time his henchmen packed hundreds of Taliban prisoners into shipping containers, leading to mass suffocation. It was startling, then, when Ashraf Ghani, a technocratic...Continue reading

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Taiwan debates gay marriage

ON THE eighth floor in a gritty suburb of the capital, Taipei, sits the ten-year-old Wei-ming temple, a Taoist house of worship—but an unusual one. Nearly all the visitors buying bundles of prayers or bringing handwritten ones of their own to be burnt by the priest at the altar are gay. The deity receiving the prayers, and to whom the shrine is dedicated, is the Rabbit Spirit, a 17th-century folk deity from Fujian province in mainland China who protects men who have sex with men. In late imperial China, “rabbit” became a derogatory term for homosexual. In this temple the rabbits are reclaiming the label.

Warren peace

Taiwan’s open tolerance of homosexuality and its liberal view of sexual minorities generally is unique within Asia. Taipei’s annual gay-pride parade is a lively celebration that draws 80,000 people or so a year, including gay people from all over Asia. Perhaps religion has something to do with it: Taoism and Buddhism, the country’s most widespread faiths, have less doctrinal objection to homosexuality than many religions. Some in Taiwan ascribe its tolerance to the island’s long history of influences from the...Continue reading

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Thailand’s stalled royal succession is at last under way

A seven-week switcheroo

FOR two centuries a hoary prophecy held that Thailand’s Chakri dynasty would produce no more than nine kings. That curse looks to have been lifted in Bangkok on November 29th, when the ruling junta’s rubber-stamp parliament invited Crown Prince Maha Vajiralongkorn—soon to be King Rama X—to take the throne. As The Economist went to press Thais were awaiting the completion of the last legal formalities required before the succession can be officially proclaimed.

The parliament’s five-minute meeting ended an odd interregnum following the death of King Bhumibol Adulyadej on October 13th. That evening the government reported that the prince had chosen to delay taking the throne, to allow more time to grieve. This breached the palace’s own rules and surprised the junta, igniting fears among outsiders that the succession was being contested behind the scenes. The high-living prince is unpopular among Thais and loathed by the elites, many of whom would have preferred his younger sister, Princess Sirindhorn, as monarch.

As it turns out, the seven-week hiatus may...Continue reading

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Binyamin Netanyahu is in a commanding position

THESE should be the best of times for Binyamin Netanyahu. At no point in the Israeli prime minister’s almost 11 years in office has he enjoyed such supremacy at home, coupled with an absence of any serious difficulties or pressure from abroad. In the past few months he has expanded his coalition’s majority from only one to six; tamed his most ferocious critic, Avigdor Lieberman, by giving him responsibility for the defence ministry; and purged his own Likud party of several rivals. The Knesset (parliament) is about to pass a two-year budget which should ensure political stability until 2019. The economy is growing at a sprightly 3.2% a year. 

The opposition is in tatters. The main opposition grouping is the Zionist Union; its hapless leader, Yitzhak Herzog, has seen his credibility with his colleagues, and according to the polls with many of his voters, seep away towards Yair Lapid’s small Yesh Atid party.

These are sunny days, too, for Israel’s foreign relations. Boosted by trade in technology and arms, ties with African and Asian nations are flourishing. Mr Netanyahu has met Russia’s president Vladimir Putin four times in the...Continue reading

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Assad’s forces advance into eastern Aleppo

WHEN Russia dispatched its warplanes to prop up the dictatorship of Bashar al-Assad, Barack Obama warned Moscow that its Syrian adventure was doomed to fail. Russia will get “stuck in a quagmire and it won’t work”, Mr Obama confidently predicted in October 2015. Russia’s air force has since proven the American president profoundly wrong.

On November 28th pro-government forces backed by Russian bombers finally punched through rebel lines in the east of Aleppo. The breakthrough came two weeks after pro-regime forces launched an operation to recapture the rebels’ last big urban stronghold. With the regime now in control of at least a third of the city’s east, the fall of Aleppo looks almost certain.

For months the regime has sought to strangle the city’s rebel-held east into submission. A siege has slowly sapped the strength and morale of its defenders. As the blockade tightened, Russian and Syrian warplanes relentlessly bombed civilian infrastructure, destroying hospitals, schools and bakeries in a bid to drain support for opposition fighters by making life unbearable for the east’s 250,000 or so remaining civilians. These tactics, which have forced...Continue reading

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Sudan, a rump state run by an alleged war criminal

DR MUNA ABDU, an ophthalmologist, is worried. “I am afraid of leaving my country for a long time,” she says, her back to the Blue Nile, dark but for the lights of a few riverside restaurants as it flows towards its embrace with the White Nile in Khartoum. But she still plans to move to Saudi Arabia, where she will earn $6,000 a month—a sum that would take her three years to make in Sudan.

On some measures Sudan’s economy is recovering, after the southern part of the country broke away to form South Sudan in 2011, taking with it 75% of the old nation’s oil revenues. GDP has grown at around 3% a year since 2013. Inflation is in double digits, but well below its level in 2012-14, when it averaged almost 40%. However, on the black market the Sudanese pound trades at only a third of its official value against the dollar. There are just $800m of foreign exchange reserves left in the central bank, according to the IMF—enough to cover only a month of imports.

Businessmen are quick to blame American sanctions. These have been in place since 1997 (Khartoum harboured terrorists including Osama bin Laden in the mid-1990s) and were extended in 2007 because of the...Continue reading

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A report shows HIV in retreat in many African countries

FOOTPRINTS painted in bright colours on the floor pass through the bustle of the Themba Lethu clinic in Johannesburg. They lead to a room where every week dozens of men are circumcised. Heterosexual men who get the snip cut their chances of contracting HIV by more than half, since the foreskin is delicate and tears easily. In South Africa, the country that has the world’s largest number of HIV-infected people, such initiatives can save a lot of lives.

Even more important has been a huge expansion in the number of infected people receiving antiretroviral drugs. These not only keep people alive but also suppress the virus, making its carriers less contagious. In September South Africa became one of the first African states to adopt a “test and treat” protocol whereby anyone infected with the virus can get the drugs immediately, instead of waiting until the immunological symptoms of full-blown AIDS appear. By this time the patient may have infected other people.

Some researchers predict that several African countries will soon achieve “epidemic control”, meaning that fewer people are newly infected each year than die of the disease. New data from the American...Continue reading

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Kuwait fails to keep up with its neighbours

Trouble in the family business

KUWAITIS often compare their country with the other states of the Gulf, leading to something of an inferiority complex. Yes, it has the second highest GDP per person in the region (and the fourth-highest in the world), thanks to its large oil reserves and small population. But it has fallen behind countries like Qatar and the United Arab Emirates (UAE) in terms of dynamism and international appeal. Nowadays even Saudi Arabia looks more freewheeling, economically speaking.

Still, Kuwait distinguishes itself in one respect. It is the closest thing to a democracy in the Gulf. The ruling Al Sabah family is firmly in charge—it limits speech and appoints the most important figures in government, including the prime minister (who selects the rest). But a 50-member National Assembly is elected by the people (including women) and is often truculent. Indeed, in an election on November 26th voters kicked out over half the incumbents in favour of candidates who promised to confront the government over recent austerity measures.

The emir, Sheikh Sabah al-Ahmad al-Sabah, cited “security...Continue reading

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Long-haul charters

IN 1983 the Reagan administration published “A Nation At Risk”, an apocalyptic report into the state of American schools. It ushered in 33 years of uneven yet enduring bipartisan support for presidents’ efforts to raise school standards. George W. Bush’s No Child Left Behind Act and its successor, the Every Student Succeeds Act (ESSA), share more than quixotic names. Both were backed by majorities of both parties in Congress. Unfamiliar with such harmony, Barack Obama called ESSA, signed into law last December, a “Christmas miracle”. 

That sort of collaboration could soon become a rarity. On November 23rd Donald Trump, the president-elect, nominated Betsy DeVos, a philanthropist, as the next secretary of education. For three decades Mrs DeVos has used her family foundation and her leadership of conservative groups to lobby for “school choice”, a broad term that can divide Republicans even from moderate Democrats.

For Mrs DeVos this has meant support for two causes. The first is the rapid expansion of charter schools, fee-free schools that are publicly subsidised but independently run. Her activism is one reason why...Continue reading

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Disruptive innovation

It’s a bargain

MOST of the employees at the Centre for Out-of-Court Divorce in Denver are trained in mediation or social work, but they also pay close attention to interior design. The centre, on the ground floor of a nondescript office block, is decorated with photos of smiling children and stocked with dolls’ houses, stuffed animals and board games. It has three exits in case tensions flare and the separating partners need personal space. They have been used a few times since 2013, when the centre began helping to dissolve marriages, says Susan Carparelli, the centre’s executive director; but not many.

The centre is one of several new enterprises that seek to make divorce cheaper and more amicable. Another, Wevorce, uses mostly online methods to guide couples through the process. Based on their answers to a survey, potential divorcees are assigned one of 18 “archetypes” and walked through the legal, financial and emotional processes of ending a marriage. Its website promises to help couples divorce in less time, for less money, with less conflict. Separate.us, which began operations in 2015, offers online legal...Continue reading

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Alamo on the bayou

John Kennedy, in pursuit of voters

FOSTER CAMPBELL, the Democratic candidate in Louisiana’s unfinished Senate race, is thrilled by the influx of support from beyond the state. “Send it on!”, he says of the donations from Hollywood stars and others in the wake of Hillary Clinton’s defeat. For some, his campaign has become a last stand against Republican hegemony, a political Alamo on the bayou. “Hallelujah!”, he exclaimed at an event this week in Baton Rouge.

In a parallel universe, the outcome of the run-off on December 10th might have determined control of the Senate. In that case, chuckles Senator Roger Wicker, chairman of the National Republican Senatorial Committee, “there would probably be $10bn” pouring in. Still, he says at a gathering of Republican volunteers in Metairie, on the outskirts of New Orleans, “a one-vote majority”, his party’s current advantage in the incoming Senate, “is pretty precarious.” Extending it is important enough for Mike Pence to visit on December 3rd.

He may be too late—because, as Robert Mann of Louisiana State University says, the “real race” may...Continue reading

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Could a recount overturn the election result?

MOST voters yearn for closure after an unusually bitter election campaign, but three of the four candidates for the presidency now claim that the election may not have been free and fair. The loudest is Donald Trump. The president-elect frequently alleged that the election process was rigged and voter fraud common in the run-up to the election. On November 27th he tweeted that he had won the popular vote, “if you deduct the millions of people who voted illegally.” Jill Stein, the Green Party’s candidate, raised millions of dollars for a recount of votes in Wisconsin, Pennsylvania and Michigan, where Mr Trump’s margins of victory were thin. And after initial hesitations, Hillary Clinton’s campaign joined the drive for a recount in the three Midwestern states which, together, handed Mr Trump his victory.

Ms Stein denies that she is pushing for a recount to overturn the election result. She says she is spurred by worries about the “hackability” of voting systems in the wake of the hacking of the Democratic National Committee’s network, voter-registration databases in Illinois and Arizona and the e-mail account of John Podesta, Mrs Clinton’s campaign manager. Some...Continue reading

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Novel justice

Smart enough to execute?

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 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 with an IQ in the 70s, 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 v Virginia, a ruling of 2002 banning the execution of intellectually disabled people. But a year later the Texas Court of Criminal Appeals (CCA) sent him back to death row. The quarrel in Moore v Texas is whether the CCA used the right standard when it decided that Mr Moore—who at 13 could name neither the days of the week nor the months of the year, nor distinguish between...Continue reading

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You’re hired

Steve Mnuchin: gold-man hired

IN SOME respects, Steve Mnuchin is a typical nominee for the post of treasury secretary. Like two of his last seven predecessors—and his father and brother—he climbed the ranks at Goldman Sachs, a bank. In the 2000s he briefly worked for George Soros, an investor. (On the eve of the election, Mr Soros featured alongside Lloyd Blankfein, Goldman’s CEO, as a target of a Donald Trump attack on the “global power structure”.) As the news of Mr Mnuchin’s nomination broke, he spoke soberly on CNBC, a business news channel, of the need to reform the tax code.

Yet in other ways Mr Mnuchin is a rather unconventional nominee. In recent years he has mostly swapped finance for films. His entertainment company, in partnership first with Fox and later with Warner Bros, has produced blockbusters including “Avatar” and “Gravity”. In his latest effort, a romantic drama about 1950s Hollywood, Mr Mnuchin even makes a cameo appearance—though that was not enough to stop it flopping over the Thanksgiving weekend. Earlier in 2016, Mr Mnuchin’s fiancée, a British actress, drew some notoriety for...Continue reading

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The impresario-elect

THE elites of Washington are starting to feel better about Donald Trump. A sense of relief is creeping over them after the president-elect ditched several impossible campaign promises and named conventional conservatives, including a former Goldman Sachs banker, for some big jobs, offsetting the hard-right nationalists and populists given posts in his inner circle. For a moment they thought America might have elected a true demagogue, beholden to a pitchfork-wielding mob. They wondered if the businessman meant it when he roared “Drain the swamp in Washington!” at pre-election rallies, and vowed to ban lobbyists from his government. Now they think they see a cynic like so many others in politics, who ran as an outsider but will govern as an insider. He seems more manageable than they had feared.

Mr Trump is not an ideologue, the lobbying, business, diplomatic and political classes murmur approvingly. Just you wait, they predict, he will ditch his most crazily populist ideas, from starting a trade war with China to mass deportations, while allowing Republicans in Congress to cut taxes and slash business regulations. True, if he increases spending on...Continue reading

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Haiti’s probable new president

FOLLOWING the example of the United States, Haiti has elected as its new president a businessman with no experience in government. Jovenel Moïse, the smooth-domed nominee of the Haitian Shaved-Head Party (this is where the parallel with the American election breaks down), won outright in the first round of voting, held on November 20th. His plans for governing his impoverished country are fuzzy. If Mr Moïse simply brings political stability, many Haitians will be grateful.

That is no certainty. Last month’s election was a re-run of a vote in October 2015, the results of which were annulled after several candidates alleged electoral malpractice. They included Jude Célestin, a leftist, who had come second to Mr Moïse. He fared no better in the re-run. Mr Moïse beat the field decisively, taking 56% of the vote, according to preliminary results. Haitian and international observers said the election was conducted fairly. 

But there are problems. Turnout was a miserable 21%. It was held down by the devastation caused by Hurricane Matthew, which struck Haiti’s south-west in October, and by voters’ disillusionment with politics and...Continue reading

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Brazil’s president weathers multiple storms

MICHEL TEMER, Brazil’s president, was as shocked as all his countrymen by the crash of an aeroplane in Colombia in which 71 people died, including most members of a popular Brazilian football team (see article). The tragedy also had the effect of removing from the headlines other bad news that affects the president more directly. Data published on November 30th suggest that the economy will recover more slowly from a severe recession than many analysts had expected. A fresh scandal has forced yet another member of the cabinet to resign, the sixth in the six months since Mr Temer took charge. His efforts to reform Brazil’s economy are making progress, but his government is in turmoil.

The latest scandal looks more like an embarrassment than a threat. Geddel Vieira Lima, who was in charge of the president’s relations with congress, quit after the former culture minister, Marcelo Calero, accused him of demanding that an arm of the ministry unblock construction of a high-rise building in Salvador, in which Mr Vieira Lima had bought a...Continue reading

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The crash in Medellín

Brazil’s wretched year got worse on November 28th when a chartered plane crashed into muddy slopes near Medellín, Colombia’s second-biggest city. Most of the 77 people on board were Brazilians; all but six were killed. Among the passengers were 22 players from Chapecoense, an unglamorous football team from southern Brazil. It had been enjoying a run of success that reminded people of Leicester City’s unlikely conquest of England’s Premier League last season. The team was on its way to play its biggest-ever game, the final of the Copa Sudamericana, a continental club competition, against Atlético Nacional, a team from Medellín. Investigators have not established the cause of the crash. A leaked audio tape captures a pilot telling air-traffic controllers that the plane was running out of fuel and suffering from electrical failure. Brazil’s president declared three days of national mourning. Several players from Atlético Nacional asked that the Copa Sudamericana be given to the grief-stricken Brazilian football club.

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OPEC reaches a deal to cut production

EXACTLY two years after Saudi Arabia coaxed its fellow OPEC members into letting market forces set the oil price, it has performed a nifty half-pirouette. On November 30th it led members of the oil producers’ cartel in a pledge to remove 1.2m barrels a day (b/d) from global oil production, if non-OPEC countries such as Russia chip in with a further 600,000 b/d. That would amount to almost 2% of global production, far more than markets expected. It showed that OPEC is not dead yet.

The size of the proposed cut, the first since 2008, caused a surge in Brent oil prices to above $50 a barrel. Some speculators think it may mark the beginning of the end of a two-year glut in the world’s oil markets, during which prices have fallen by half and producers such as Venezuela have come close to collapse. As long as prices continue to recover, Saudi Arabia can probably shrug off the fact that its previous strategy damaged OPEC at least as badly as non-members, and that this week’s deal gave more breathing space to its arch-rival Iran than it would have liked.

The rally’s continuation, however, depends on non-OPEC members such as Russia reliably committing...Continue reading

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Regional inequality is a hard problem to solve

THE political shock of Brexit and of the election of Donald Trump have led to new interest in the problem posed by regional inequality. Both shocks drew support from places to which recent economic trends have not been especially kind, and both were reactions, at least in part, against the economic success enjoyed by elites concentrated in a relatively small number of rich metropolitan areas. Even economists, whose "nihilism...about what we can do to help struggling places in the U.S. is, quite frankly, strange" (in the words of Adam Ozimek) have taken to reconsidering their priors on the issue. Myself included; as I noted recently:

The economic literature is pretty clear that moving people from low productivity places to high productivity places is very good for both the people that move and the economy as a whole. It’s also pretty clear that place-based policies designed to rejuvenate regions which have lost their economic reason for being tend not to work very well. And one logical...Continue reading

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The dollar’s strength is a problem for the world

WHEN economic historians look back on the years following the global financial crisis, they might ponder the exact moment at which the boom in offshore dollar-lending reached its zenith. Was it September 2012, when Zambia issued its debut Eurobond (dollar-denominated bond), at a yield of 5.4%, and received $12bn of orders? Perhaps it was a year later, when investors gobbled up an $850m Eurobond issue by a state-backed tuna-fishing venture in Mozambique. In between Petrobras, Brazil’s state oil company, was able to issue $11bn of ten-year bonds in May 2013, a record for an emerging-market firm, at a generously low yield of 4.35%.

Investors had reason to regret those purchases even before the dollar’s latest surge. Between November 9th, when Donald Trump won the presidential election in America, and the Thanksgiving holiday, the dollar rose by 3% against a basket of rich-world currencies. Such a jump in so short a time is rare. The dollar-borrowing binge during these years helps explain why the greenback bounced so sharply.

By the end of last year, governments and businesses outside America had racked up $9.7trn of debts denominated in...Continue reading

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What Donald Trump’s election means for government-bond markets

THE death of the long bull market in bonds has been called many times in recent years. Such a consummation is devoutly wished for by those who think the global economy will never get back to health until short- and long-term interest rates return to more normal levels.

Following the election of Donald Trump as American president, the funeral rites are being read again. The yield on the ten-year Treasury bond jumped from 1.73% (while the votes were being counted) to 2.36% at one stage; the yield on the two-year bond rose from 0.78% to 1.12%. (Bond prices fall as yields rise.)

The rationale for the shift is the belief that Mr Trump will push through a fiscal stimulus, in the form of tax cuts and infrastructure spending. Not only will that boost the American economy but it will allow the Federal Reserve to return monetary policy to more “normal” levels by pushing up rates from the current 0.5%. It could also lead to higher inflation in the medium term. Forecasts for American inflation in the early 2020s can be derived from the bond market. In July, they pointed to 1.4%; now they imply 2.1%. All three factors—faster...Continue reading

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The dire consequences of India’s demonetisation initiative

SUPPOSE that one day the government of a large and fast-growing economy became convinced that its highest priority was to purge the country of black-economy millionaires hoarding piles of illicit cash. Seeking popular approval, it sent the printing presses into overdrive, hoping to inflate away the value of these secret piles of wealth. It worked: rising prices struck a blow against the undeserving rich, and by egging on others to deposit their money in banks (where it could at least earn interest), the shadow economy shrank. The government could plough the newly created money into tax breaks and public-works schemes.

Critics, rightly, would stand aghast. Inflation would affect everyone who held cash, law-abiding or not. Much of the wealth of those enriched by the black economy would be insulated, because lots of their lucre is held not in cash but in property, gold or jewellery. Such heavy-handed measures could undermine the credibility of important government institutions. Fear that they might be used again in future could weaken confidence in the currency as a store of value—paving the way for some broader institutional failure, like hyperinflation....Continue reading

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Modi’s attempt to crush the black economy is hurting the poor

FOR the Nuxalbari Estate in the lush hills of India’s north-east, relief came in the nick of time. With winter pruning of its tea plantations at hand, 600 workers were threatening to strike. They could scarcely be blamed: the estate had not paid them in mid-November and now owed another fortnight’s wages. This was not for lack of funds. Nuxalbari’s account showed a healthy balance. But day after day its bank repeated the same refrain: yes, the government says it has a plan to help tea estates, but our local branch has no rupees. At his wits’ end, the estate manager marched into the branch, along with bosses of trade unions and a tea planters’ group, even as Nuxalbari’s owners barraged the bank’s headquarters with pleas. The bank at last relented, dispatching a courier weighted with sacks of cash from its vault on a night flight from Kolkata. The workers got their money in the morning.

Nuxalbari is lucky. Its owners enjoy sound finances and influence. As India enters its fourth week since Narendra Modi, the prime minister, abruptly voided 86% of the country’s paper currency, many of its 1.3bn people have had no such luck. The Reserve Bank of India (RBI), the central...Continue reading

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India's Cash Dash Stuffs Banks With Problems

India’s demonetization has ended up squeezing banks, eroding their role as agents of monetary policy.

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In Trump Win, Gun Stock Smith & Wesson Loses

Donald Trump’s election victory could make times more difficult for gun maker Smith & Wesson.

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