Jihadists continue to torment Egypt

IT WAS as if the militants knew they were coming. When the Egyptian police drove into the desert 135km (84 miles) south-west of Cairo on October 20th, toward a suspected terrorist hideout, their convoy was met with a barrage of gunfire and rockets. In the ensuing firefight some officers ran out of ammunition, and were captured and killed. Others fled and spent hours lost in the desert. It was the deadliest shoot-out in more than two years.

The government’s response, as ever, was to obfuscate. The interior ministry kept silent for a day, then said 16 officers had been killed. In private officials said the death toll was much higher—above 50. Local websites published lists of victims that included names not on the official rolls. The government has not tried to explain the discrepancy, nor has it identified the culprits.

A week later Abdel-Fattah al-Sisi, the president, did a late-night housecleaning of the security services. He fired a dozen top police officials and, unexpectedly, sacked the army chief, Mahmoud Hegazy....Continue reading

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Venezuelan Debt Crisis Will Be Huge and Devilishly Complex

A government looking to restructure its debt might usually choose to conserve financial resources. But for Venezuela, any restructuring is set to be fearsomely complex.

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Eight Catalan leaders are jailed

 

TO MANY in Catalonia it looks like politicised justice. To many elsewhere in Spain it is merely the overdue application of the rule of law to serial abusers of it. What is clear is that the decision on November 2nd by a high-court judge to jail eight members of the sacked Catalan government, pending trial on charges of rebellion, sedition and misappropriation of funds, will have political consequences.

The court case follows the illegal declaration of Catalan independence on October 27th, orchestrated by the separatist regional administration of Carles Puigdemont. In response, Mariano Rajoy, the prime minister, invoked Article 155 of Spain’s constitution to impose direct rule in Catalonia, sack Mr Puigdemont and his 13 counsellors and call a regional election for December 21st.

Now the courts have weighed in. In her ruling Judge Carmen Lamela justified the jailings by the seriousness of the charges—rebellion carries up to 25 years in prison—and the risk that the defendants might flee. That is indeed what Mr...Continue reading

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Zimbabwe’s deepening crisis

Do you take electronic dollars?

A MONEY-CHANGER deftly flicks through a brick of bills, her fingernails a sparkly purple that matches her eye-shadow. She keeps the stack of “bond notes” (Zimbabwe’s ersatz money) bundled inside a sock in a plastic carrier bag. Real American dollars are hidden in her bra. Although bond notes are officially worth the same as American dollars, here on a pavement in Harare, the capital, greenbacks trade at a premium of 20-30% to the bills printed by Mr Mugabe’s government. Those wanting to buy dollar bills with mobile money, which is also supposedly denominated in the American currency, must pay a further premium of 30%.

Such a range of values for Zimbabwe’s money ought not to be possible since, officially at least, it does not have a currency. The country adopted the American dollar almost a decade ago after the central bank’s profligate printing of Zimbabwe dollars led to hyperinflation that peaked at 500,000,000,000%....Continue reading

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Despots are pushing the Arab world to become more secular

DURING Friday prayers the congregation of Muhammad Yousef, a young puritanical preacher in the Egyptian town of Mansoura, once spilled out into the alleys surrounding his mosque. Now Sheikh Muhammad counts it a good week if he fills half the place.

In Cairo, 110km (68 miles) to the south, unveiled women sit in street cafés, traditionally a male preserve, smoking water-pipes. Some of the establishments serve alcohol, which Islam prohibits. “We’re in religious decline,” moans Sheikh Muhammad, whose despair is shared by clerics in many parts of the Arab world.

According to Arab Barometer, a pollster, much of the region is growing less religious. Voters who backed Islamists after the upheaval of the Arab spring in 2011 have grown disillusioned with their performance and changed their minds. In Egypt support for imposing sharia (Islamic law) fell from 84% in 2011 to 34% in 2016. Egyptians are praying less, too (see chart). In places such as Lebanon and Morocco only half as...Continue reading

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Morocco’s little idyll of Jewish-Muslim coexistence

Striking a harmonious note

ONCE a year the little seaside town of Essaouira, in Morocco, reclaims its lost Jewish community. Sephardic trills echo from its whitewashed synagogues. The medieval souks fill with Jewish skullcaps. Rabbis and cantors wish Muslims “Shabbat Shalom” and regale them with Hebrew incantations. “It’s our culture,” says a merchant from Marrakech, who travelled 200km (124 miles) to hear them this year.

The revival is the initiative of André Azoulay, a 76-year-old Jew from Essaouira (one of just three) and a former counsellor to Morocco’s kings. Each autumn he stages a colourful festival of Andalusian music aimed at bringing hundreds of Jews and Muslims together for a weekend of concerts and dialogue. Locals pack the small stadium to watch Hebrew cantors and Koran-reciters sing arm-in-arm. Israelis and Palestinians flock there, too. “Essaouira is what the Middle East once was and might yet be again,” says Mr...Continue reading

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Uhuru Kenyatta’s hollow victory

KENYA, according to its deputy president, William Ruto, “is not the type of country where you find a president getting 99% of the vote”. That statement, made on October 16th, was tested just a week later when Kenyans went to the polls for a re-run of the election on August 8th, which the country’s supreme court annulled. When the final results were announced by the electoral commission on October 30th, Uhuru Kenyatta, the incumbent, had won (again) with 98.3% of the vote. Yet the sweeping victory seems unlikely to bring to an end Kenya’s political and emerging economic crises.

The reason for Mr Kenyatta’s huge victory was that his main opponent, Raila Odinga, an opposition stalwart and perennial candidate, withdrew from the race and called on his supporters to refuse to vote. Turnout collapsed to just 38% from almost 80% in the annulled poll of August. In two of Kenya’s 47 counties—both strongholds of Mr Odinga in western Kenya—voting did not happen at all, as Mr Odinga’s...Continue reading

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Syria’s regime is stealing land from its opponents

YOUSOF AKASHEH, a rebel fighter, was astonished to find out that the regime of Bashar al-Assad in Syria was planning to seize his wife’s property. For one thing, she is dead, killed three years ago when a warplane bombed her apartment block. For another, she never owned property.

Such is the arbitrariness of the regime’s counter-terrorism court, which has branded tens of thousands of opponents of Mr Assad enemies of the state and sent them to the country’s hellish prisons. Those lucky enough to escape arrest are tried in absentia. As punishment, the court routinely seizes their property.

The civil war in Syria has driven more than 12m people from their homes, contributing to the largest refugee crisis in recent history. But in his typically appalling way, Mr Assad has spied opportunity amid the tragedy. “We have lost the best of our young people…but in return we have gained a healthier and more harmonious society,” the dictator said in August of a war that has...Continue reading

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The French are fretting over a sudden butter shortage

“IT’S A true catastrophe, monsieur,” says a baker in central Paris as she places warm, flaky croissants in a paper bag. The price of local butter has soared in the past year, she says: “We are used to costs going up, but this is really extreme.” Her pastry counter is well stocked, but margins per croissant are squeezed.

Elsewhere it is shortages that bite. In a nearby Carrefour supermarket, fridges that are usually crammed with packets of butter are mostly empty. Social-media users around France share photos of bare shelves using the tag #BeurreGate. A prankster on an online-auction site offered to sell a slice of buttered toast. Press reports talk of hoarding. Because butter is essential for much local cuisine—the French eat more of it than anyone—scarcity spreads dismay.

Various factors explain the current churn. Global appetite for dairy products is rising. “China has discovered croissants,” notes Emmanuelle Auriole of the Toulouse School of Economics....Continue reading

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Britain’s planned departure is already changing Brussels

SCRATCH your head and the memory flickers into life. Britain was once an influential member of the European Union. Its politicians were infuriating but effective, its diplomats skilled at crafting alliances, its officials adept at the push-me-pull-you of shaping EU law. This is how Britain earned a budget rebate, an opt-out from the euro, and, under David Cameron, a “renegotiation” of its membership (since voided by the Brexit vote). Nor were its energies devoted solely to carving out special treatment. Vital EU achievements like the single market and post-1989 enlargement owe their existence to dogged British diplomacy.

How things change. British officials describe a chill that set in the moment voters elected to leave. Ostensibly Britain remains fully signed up to the EU, with voting rights, representation and all the paraphernalia of membership. In reality, its influence has largely evaporated. That has a potent effect on the remaining 27 members. “The balance of power is changing...Continue reading

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The man who wasn’t there

ON THE morning of October 30th five police vans staked out the Palace of the Generalitat, the part-medieval seat of the government of Catalonia on the Plaça Sant Jaume in Barcelona’s gothic quarter. But there was no sign of Carles Puigdemont, Catalonia’s now ex-president, nor of any demonstrators protesting against his dismissal by the Spanish government. Instead, there were foreign journalists waiting for the clash that didn’t happen.

Three days earlier, Plaça Sant Jaume overflowed with a euphoric crowd celebrating a declaration of independence by the Catalan parliament. “Freedom”, they chanted. “It’s a dream, it’s marvellous,” said David Regalos, an estate agent who had brought his teenage daughter for what he saw as a historic occasion. “It may hurt the business I work in,” he admitted, “but I’m thinking of the future of my children.”

But as dusk fell with an autumnal chill, the dream was revealed to be delirium. Even as the crowd caroused, in...Continue reading

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How “Wagner” came to Syria

“I AM Roman Sergeyevich Zabolotny, born in 1979, and I have been taken prisoner,” says a Russian-speaking man in a video released last month by the jihadists of Islamic State (IS). A second soldier, his right eye swollen shut, sits silently in grey robes. Both were reportedly captured during a battle near Deir ez-Zor, a city in Syria’s east and the site of a recent offensive by Russian and Syrian government forces. Yet the Russian defence ministry denied that any of its soldiers had gone missing. Friends and relatives told Russian media that the men had gone to Syria not with the Russian army, but as part of a shadowy mercenary force known as “Wagner”.

The group has come to play a key role in Russian operations in Syria. Though Russian law officially bans private military companies (PMCs), a St Petersburg-based independent news site, Fontanka.ru, reported in late 2015 that ex-soldiers were being recruited to serve in Wagner by a former special-forces officer, Dmitry Utkin. Numbering as many as 2,500 men, the group is...Continue reading

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Donald Trump’s agenda in Asia is a mystery

FOR those concerned about American neglect of Asia, it is an accomplishment of sorts that Donald Trump is coming to the region at all. A creature of habit, America’s president is uncomfortable spending nights away from his own bed. And now, with the first indictments in Robert Mueller’s investigation into Russian interference in the election that put Mr Trump in office, foreign policy is likely to have fallen even lower down his list of priorities. Yet on November 3rd Mr Trump begins a 12-day trip, his longest foreign excursion as president and his first to Asia. He will take in (via Hawaii) Japan, South Korea, China, Vietnam and the Philippines.

The first rule in Asian politics, where form trumps content, is just showing up. So far, so promising. What is more, although one of Mr Trump’s first moves as president was to pull out of the Trans-Pacific Partnership (TPP), a 12-country free-trade deal—“the greatest self-inflicted wound on American regional influence since the Vietnam...Continue reading

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India’s previously unstoppable ruling party loses momentum

IF SUCCESS is the sweetest revenge then the makers of “Mersal”, a Tamil-language action-romance, must be feeling smug. Supporters of the Hindu nationalist Bharatiya Janata Party (BJP) vented fury when the film was released in mid-October. Some shouted that it should be banned, unless a scene mocking government policy was cut. Others sniffed that the film’s lack of patriotic spirit might reflect the fact that its star, Thalapathy Vijay, is Christian. But for “Mersal” all this ugly talk was just good publicity: it has already grossed over $32m, close to a record for Tamil cinema.

The backfiring of this attack might be read as a parable for the troubles facing the BJP. It had seemed an unstoppable juggernaut, set to roll through a string of state polls up to the next general election in 2019 and beyond. It still holds trumps that any party would envy: a network of more than 110m members, generous funding, a largely sympathetic press and an energetic, charismatic leader in Narendra Modi, the prime minister. His government can...Continue reading

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Kazakhstan wants Kazakh written in Latin, not Cyrillic script

Apostrophe-free but humiliating

RARELY has the humble apostrophe caused such commotion. Nursultan Nazarbayev, Kazakhstan’s president, wants the punctuation symbol to play a much bigger part in public life. Ordinary Kazakhs are objecting. Some feel so strongly that they have launched an anti-apostrophe campaign on social media, adorning their Facebook pages with crossed-out apostrophes.

At issue is the apostrophe-peppered alphabet that the government wants to introduce over the next eight years, to replace the current rendering of the Kazakh language in Cyrillic—the alphabet used to write Russian, among other languages. The new script is a modified form of the Latin alphabet, which is used to write not only English but many other languages, including Turkic ones related to Kazakh, such as Turkish.

Officially, the switch is about equipping Kazakhstan for the digital age. (The new script should be easier to type and to render online.) But the...Continue reading

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Donald Trump has friends, but few ambitions, in South-East Asia

Mr Trump and his favourite prime minister

AMONG recent guests to the White House, Donald Trump has welcomed Prayuth Chan-ocha, the Thai general who overthrew an elected government in 2014, and Najib Razak, the prime minister of Malaysia, whom America’s Justice Department has accused of participating in the theft of as much as $3.5bn from a Malaysian government fund. Mr Trump has referred to Mr Najib as “my favourite prime minister”. Mr Trump’s presidency has coincided with a lurch towards authoritarianism around South-East Asia. Such matters seem to be far less of a concern to him, however, than they were to his predecessor, Barack Obama. For the region’s democrats, the discrepancy stings.

On his visit to Asia next week, Mr Trump will call on Rodrigo Duterte, the president of the Philippines, who has boasted about killing people and has instituted a campaign against drug dealers and users that has led to perhaps 9,000 deaths. Mr Trump apparently...Continue reading

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An antiquated rule claims another scalp in Australia’s parliament

A fair dinkum battling ex-Kiwi

WHERE will it end? On October 27th the High Court stripped four senators and an MP of their seats, adopting a strict interpretation of the rules on eligibility for parliament. The MP was Barnaby Joyce, the deputy prime minister, whose ejection has cost the government its majority in the lower house. Then on November 1st Stephen Parry, the president of the Senate, announced that he, too, suffered from the same affliction: he was a dual national, able to claim British citizenship as well as Australian. He resigned the following day.

Mr Joyce was one of the “citizenship seven”, parliamentarians who discovered that they were deemed to be citizens, variously, of Britain, Canada, Italy and New Zealand, even though they had not formally claimed citizenship. Australia’s constitution bans from parliament anyone who is under “acknowledgment of allegiance, obedience or adherence to a foreign power”, or who is a citizen of a...Continue reading

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Apple Calls Up Its Supporting Cast

Mac, iPad and services deliver strong sales while the iPhone cycle gets stretched.

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A grilling on Capitol Hill

ON NOVEMBER 1st, Facebook was pulled between two cities and two divergent realities. In Washington, DC, Colin Stretch, the company’s general counsel, was chastised during two Congressional hearings about how the social network, along with Twitter and Google, had failed to detect Russian meddling on their platforms in the run-up to the 2016 election. Furious senators issued stern warnings to Mr Stretch and his counterparts at Google and Twitter, who tried to appear humble in their responses. “You have to be the ones who do something about” the misuse of online platforms “or we will,” warned Dianne Feinstein, a Democratic senator.

Meanwhile, on the other side of the country, Mark Zuckerberg, Facebook’s boss, was explaining the social networking firm’s record results. The political “techlash” in Washington, DC seems to have had no impact on the company’s business. Facebook’s quarterly profits rose around 80% and sales were up almost 50%, to $10.3bn. Its shares surged to an all-time high. Mr Zuckerberg’s decision...Continue reading

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AIG Needs a Refresher in Insurance Basics

Brian Duperreault’s turnaround job at American International Group will be harder and take longer than it first seemed.

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The Tax Plan's Pleasant Surprises for Investors

The Republican tax plan contains most of what prompted investors to bid the stock market up to a record in recent months with only a few twists, but the economic boost is less than it could have been.

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Mexico’s presidential front-runner misunderstands his leftist role model

WHEN Latin America zigs, Mexico seems to zag. In the mid-2000s a political “pink tide” swept left-of-centre leaders into power across the region, while Mexico elected two conservative presidents. Now that tide has ebbed, as Brazil, Argentina, Peru and others have swung to the right. But Mexico may again prove an exception. The front-runner in its presidential contest in 2018 is Andrés Manuel López Obrador, a left-wing populist.

He is no policy wonk, and prefers fiery speeches to ten-point plans. As mayor of Mexico City from 2000 to 2005, he focused on motorways and local pensions. Even so, it is hard to predict how he might govern as president. He lists three former presidents—Benito Juárez, Francisco Madero and Lázaro Cárdenas—as his heroes. Of these, Cárdenas, Mexico’s foremost leftist, appears uppermost in his mind.

Tata (“Papa”) Lázaro is remembered above all for two achievements. In 1938 he seized British- and American-owned...Continue reading

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How Canada’s unique research culture has aided artificial intelligence

AI’s nerve centre

ROBOTS controlled by remote supercomputers. Self-driving cars on narrow, winding streets. Board-game players of unimaginable skill. These successes of artificial intelligence (AI) rely on neural networks: algorithms that churn through data using a structure loosely based on the human brain, and calculate functions too complex for humans to write. The use of such networks is a signature of firms in Silicon Valley. But they were largely invented not in California but in Canada.

How did this breakthrough emerge from the land of moose and maple syrup? Canada cannot compete with America in research funding. Instead, it has made a virtue of limited resources, developing an alternative model of innovation based on openness to unorthodox ideas.

The roots of Canada’s contributions to AI reach back decades. In 1982 Fraser Mustard (pictured, centre), a doctor, founded the Canadian Institute for Advanced Research (CIFAR). He envisioned it...Continue reading

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How long can Venezuela avoid default?

THE mere mention of Venezuela should make most investors shudder. Its president, Nicolás Maduro, says that capitalism has “destroyed the planet” and vows to build a socialist Utopia. The country’s economic output has shrunk by more than a third since 2014, and it is suffering from dire shortages of food and medicine.

Nonetheless, one class of Venezuelan assets has delivered returns in recent years that would leave any investor licking his chops: bonds issued by the government and by PDVSA, the state oil company. Since January 2015 they have risen in value by nearly 60%, while every coupon has been paid at sky-high interest rates. “There has never been a bondholder’s better friend than Venezuela,” says Ray Zucaro of RVX Asset Management, a Florida-based investment firm.

The spectacle of foreign creditors growing fat off Venezuelan debt while the country’s people go hungry—on average, respondents to a recent survey said their weight had fallen by 9kg (20lbs)...Continue reading

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Bank of England Raises Rates Amid the Brexit Gloom

The U.K. economy is lagging the world, and the Bank of England says that Brexit is having a “noticeable impact” on the economic outlook. That is a gloomy place to start from for a rate increase.

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As the global economy picks up, inflation is oddly quiescent

A FEW years ago, the news about the euro-zone economy was uniformly bad to the point of tedium. These days, it is the humdrum diet of benign data that prompts a yawn. Figures this week show that GDP rose by 0.6% in the three months to the end of September (an annualised rate of 2.4%). The European Commission’s economic-sentiment index rose to its highest level in almost 17 years. Yet when the European Central Bank’s governing council gathered on October 26th, it decided to keep interest rates unchanged, at close to zero, and to extend its bond-buying programme (known as quantitative easing, or QE) for a further nine months.

The central bank said it would slow down the pace of bond purchases each month, to €30bn ($35bn) from January. But Mario Draghi, the bank’s boss, declined to set an end-date for QE. A hefty dose of easy money will be necessary, he argued, until inflation durably converges on the ECB’s target of just below 2%. It shows few signs of doing so, despite the...Continue reading

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Investors call the end of the government-bond bull market (again)

FOR the umpteenth time in the past decade, a great turning-point has been declared in the government-bond market. Bond yields have risen across the world, including in China, where the yield on the ten-year bond has come close to 4% for the first time since 2014. The ten-year Treasury-bond yield, the most important benchmark, has risen from 2.05% in early September to 2.37%, though that is still below its level of early March (see chart).

Investors have been expecting bond yields to rise for a while. A survey by JPMorgan Chase found that a record 70% of its clients with speculative accounts had “short” positions in Treasury bonds—ie, betting that prices would fall and that yields would rise. Meanwhile a poll of global fund managers by Bank of America Merrill Lynch (BAML) in October found that a net 85% thought bonds overvalued. In addition, 82% of the managers expected short-term interest rates to rise over the next 12 months—something that tends to push bond yields...Continue reading

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Catalonia and the perils of fiscal redistribution

POPULISM is the weapon not just of the downtrodden. As the crisis in Catalonia demonstrates, the rich have economic anxieties of their own. Catalonia has an identity distinct, in important ways, from that of the rest of Spain. But the recent drive for independence has been energised by anger over the flow of fiscal redistribution from rich Catalans to their countrymen: people seen, in parts of the restless north-east, as thankless and lazy as well as alien. Paradoxically, globalisation has inflamed separatism around the world by raising the question Catalans now confront: to whom, exactly, do we owe a sense of social responsibility?

Every country or restive region has its own idiosyncratic history. Yet over the long run national borders are surprisingly malleable. Some circumstances offer better prospects for the small and newly independent than others. The smaller the country, the more easily its government can satisfy its people’s political preferences. A broadly satisfying compromise...Continue reading

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Asian households binge on debt

ONE of the more persistent beliefs about the global economy is that Asians are more frugal than others. Explanations have drawn on culture (the self-discipline of Confucianism), history (memories of privation) and public policy (flimsy social safety-nets forcing people to save). For Lee Kuan Yew, the founding father of Singapore, and other theorists of “Asian values”, thrift was one of them. Whatever the true reason, data long supported the basic claim that Asian households were indeed careful with their cash. But over the past few years consumers across the region have done their best to prove that prudence was perhaps just a passing phase.

Household debt in advanced economies has generally declined as a percentage of GDP since the 2008 global financial crisis, according to the Bank for International Settlements. In a number of Asian countries, however, it has been going in the opposite direction (see chart). The biggest increase has been in China, where households have borrowed about $4.5trn over the past decade. But Chinese...Continue reading

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October 30th marked the 70th birthday of the WTO’s precursor

Britain signs up

SUPERLATIVES surrounded the General Agreement on Tariffs and Trade (GATT) when it was signed on October 30th 1947. A press release heralded it as “the most far-reaching negotiation[s] ever undertaken in the history of world trade.” The Economist grumbled it was “one of the longest and most complicated public documents ever issued—and one of the hardest to comprehend.” The Daily Express, a British newspaper, growled: “The big bad bargain is sealed.”

The agreement’s complexity matched the tangle of global trade affairs. In the preceding decades a thicket of protectionism had strangled commerce and slowed recovery from the Depression of the 1930s. The GATT’s length matched its scope. It included both tariff cuts and promises to forswear new duties. Covering 23 countries responsible for 70% of world trade, it came to embody the rules-based multilateral system.

After 48...Continue reading

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Increasingly, hunting money-launderers is automated

KEEN, no doubt, to stay alive, drug traffickers tend to be prompter payers than most. For software firms, this is just one of many clues that may hint at the laundering of ill-gotten money. Anti-money-laundering (AML) software, as it is called, monitors financial transactions and produces lists of the people most likely to be transferring the proceeds of crime.

Spending on this software is soaring. Celent, a research company, estimates that financial firms have spent roughly $825m on it so far this year, up from $675m last year. Technavio, another research firm, reckons the market is even bigger and will grow at more than 11% annually in coming years. This is partly because authorities are increasingly quick to punish institutions that let down their guard. Deutsche Bank, for example, has been hit with fines worth at least $827m this year alone. Governments, eager to appear tough on crime, are urging prosecutors to go after not just institutions, but also their employees.

The...Continue reading

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Jerome Powell is poised to be named chairman of the Fed

Heir to the chair?

YOU could forgive Janet Yellen, the chair of the Federal Reserve, for feeling peeved. With unemployment at just 4.2%, and inflation at 1.6%, she is close to achieving the Fed’s two goals of curbing joblessness and pinning price rises at 2%. Ms Yellen is a Democrat appointed by Barack Obama in 2014. The tenures of past three Fed chairs were all extended by presidents from the other party. Yet as we went to press, President Donald Trump was expected to nominate Jerome Powell, a Republican on the Fed’s board, to replace Ms Yellen.

If picked, Mr Powell—also an Obama appointee—would stand out from recent incumbents. He would be the first Fed chairman since William Miller, who left office in 1979, with no formal economics training; and, according to the Washington Post, the richest since the 1940s.

Mr Powell, who is 64, is a lawyer-turned-banker. His first role in Washington was at the Treasury during the...Continue reading

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In Japan, the move from cash to plastic goes slowly

BIC CAMERA, a Japanese electronics retailer, accepts payments in so many ways that the list nearly obscures the till: credit, debit and pre-paid cards; mobile wallets; ApplePay and Alipay; and, in some stores since April, bitcoin too.

Efforts are under way to wean Japan off genkin, or cash. Handling notes and coins is expensive for businesses; many operate on tight margins because a persistent lack of inflation has inhibited price rises. The government reckons more cashless payments could help the economy, too, encouraging people, including a growing number of tourists, to spend more. (And help it collect more tax.) Entrepreneurs think the data that come with cashless methods could promote new business.

Yet cash still dominates. Thank a preponderance of ATMs in ubiquitous konbini (convenience stores), safe cities where people are happy to carry wads of cash, and wariness about handing over personal data. Last year cash accounted for 62% of consumer transactions by value,...Continue reading

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Hasidic Jews in upstate New York

Cheaper by the dozen

KIRYAS JOEL is not like other New York suburbs. Although surrounded by bucolic winding roads and stunning vistas of the wooded foothills of the Catskill mountains, there are few stand-alone houses with big back gardens or picket fences. Almost everyone lives tightly packed in a square-mile labyrinth of multistorey condominium complexes. The population of the village, which forms part of the town of Monroe, about 40 miles (65km) north of New York City, has grown by 5% a year since 2000. For the past few years, its surging population and the resulting demands for land have put it at odds with long-time locals. After lawsuits and tense negotiations, Monroe voters will decide in a referendum on November 7th whether to separate Kiryas Joel, add some land and create a new town, to be called Palm Tree.

Kiryas Joel was founded in the 1970s by Joel Teitelbaum, the grand rebbe of the Satmar Hasidic sect. The community has grown from 500 in 1977 to...Continue reading

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Chipped away

CONGRESS seldom agrees on health care, as is shown by the Republicans’ fruitless attempts to rip up the Affordable Care Act, or Obamacare. A longtime exception to partisan feuds was the Children’s Health Insurance Programme (CHIP), established in 1997. The scheme, which covers some 9m American children, has been credited, along with Medicaid, health insurance for the poor, and Obamacare, with reducing the share of children without health insurance from 14% to a record low of 5% over the past 20 years. But on September 30th federal funding for CHIP expired. State agencies, which administer the programme with federal grants, are running short of cash and are on the cusp of issuing notices cancelling policies.

Lawmakers, who must offer a fix to restore the funds, are dithering while Republican leaders concentrate on grander legislation. Senators Orrin Hatch of Utah, a rock-ribbed Republican and a grandfather of CHIP, and Ron Wyden, a Democrat from Oregon, have offered a bipartisan patch...Continue reading

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Republicans are struggling to find money to pay for tax cuts

REPUBLICANS have spent years talking about the need to cut and simplify taxes. In June 2016 Paul Ryan, the Speaker of the House of Representatives, released a plan to do so. President Donald Trump released no fewer than three tax plans during his campaign for office. In September the administration championed an outline sketch it had agreed with Republican leaders in Congress. Yet as The Economist went to press, Republicans had delayed the release of their tax bill by a day, having failed to iron out the details.

The main problem the party will face as the legislation moves through Congress is finding the money to pay for tax cuts. Republicans like to talk about abolishing tax deductions, but every loophole has a lobbyist to defend it. Having given up on deficit-neutral reform, Congress has budgeted for the tax package to increase the deficit by $1.5trn. But the Tax Policy Centre, a think-tank, puts the likely cost of the package $2.4trn. The main source of revenue...Continue reading

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New York is attacked again, but remains remarkably safe

IS in NY

JUST a few blocks away from where around 2,750 people were killed on September 11th 2001, New York suffered another deadly attack on October 31st. This time the attacker used a low-tech, less lethal method, illustrating how the threat from terrorism is changing. Children were about to be dismissed from school and tourists were enjoying the afternoon sun when Sayfullo Saipov, a 29-year-old immigrant from Uzbekistan, mounted the curb in a pickup truck and drove along the pedestrian and cycle path between the West Side highway and the Hudson River, hitting people on the mile-long stretch. He rammed into a school bus, injuring those inside. In all he killed eight people. Most were tourists from Argentina.

Ray Kelly, New York’s former police commissioner, told NPR, a radio station, that he was surprised this had not happened before, “because it is so easy to do”. The incident mimicked recent attacks in Europe, in which vehicles were used as weapons....Continue reading

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Texas politics after Joe Straus

SIX days after upending Texas politics by suddenly announcing his retirement, Joe Straus sounds like a man at peace. “I feel confident it was the right decision,” says Mr Straus, who has served as House Speaker since 2009, longer than any other Republican. “I didn’t want to be one of those people who held on to an office just because he could…There are new players and they deserve to have their voice heard.” Not everyone believes his reasons for leaving are so high-minded. Mark Jones, a political scientist at Rice University, believes that Mr Straus “grew weary and tired of saving the Republican Party from itself, and not only not getting thanked for it, but getting blasted and attacked for it.”

During Mr Straus’s dozen years in office, Texas Republicans have marched further right. Mr Straus, by contrast, is a moderate. Though he worked for Ronald Reagan, Mr Straus drives a hybrid car and his wife served on the board of Planned Parenthood, which provides birth-control...Continue reading

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Democrats will struggle to win back Obama-Trump voters

IT IS WORTH underlining, in a week dominated by reminders of the skulduggery that helped send Donald Trump to the White House a year ago, that the main reason for his victory was democratic. Mr Trump persuaded about 7m people who voted for Barack Obama in 2012, most of them white, working-class and malcontent, to vote for him. Many had not voted Republican before.

In north-eastern Pennsylvania, where Lexington went to talk to some of these switchers, the rush to Mr Trump was dramatic. A birthplace of trade unionism, the region’s main towns, Wilkes-Barre and Scranton (which was also the birthplace of Hillary Clinton’s father), were so Democratic that Republican gerrymanderers designed the 17th congressional district that contains them as a Democratic sink. Mr Obama won the district in 2012 by double digits. So did Mr Trump. “Soon as I went to vote and saw like 50 people queueing up, I knew it was over,” says the barman at the Anthracite Café, a popular joint in Wilkes-Barre, with...Continue reading

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Shell's Caution May Prove Better Part of BP's Valor

Brent oil has rallied above $60 a barrel for the first time since 2015, and oil majors such as BP, left for dead just a few years ago, are busy buying back shares. Is it game on again for energy shares?

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World Record $5 Billion Skyscraper Sale a Tall Order

A consortium led by a Chinese Communist Party-backed oil company has bought a landmark building in the world’s biggest commercial property deal.

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Donald Trump’s former campaign chief is indicted

BLAME it on “The Godfather”. For days the political village in Washington, DC has been consumed by the wrong argument about Robert Mueller, the special counsel tasked with investigating Russian interference in the 2016 election. It began on October 30th when Mr Mueller, a former FBI boss, unveiled his first criminal charges against members of Donald Trump’s presidential campaign. Partisans and pundits responded by squabbling about who is the bigger villain: Mr Trump, or his erstwhile rival, Hillary Clinton?

Mr Mueller’s investigation charged the former Trump campaign chairman, Paul Manafort, and his business partner, Rick Gates, with a scheme to conceal some $20m, much of it earned for lobbying work in Ukraine undertaken for pro-Russian interests. The indictments—to which both men plead not guilty—allege Mr Manafort spent millions on Range Rovers and landscaping at properties in Florida, Manhattan and the Hamptons (he also dropped $934,000 at an antique rug shop, $849,000 on...Continue reading

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Tesla Drives Farther Off Course

Tesla moved the goal posts again for its Model 3 and revealed a slowdown in its older luxury models, making Chief Executive Elon Musk’s goals appear even less realistic.

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Facebook Needs the Right Kind of Friends

Facebook is still making a lot of new friends, but the company is learning the hard way that there is a cost to not having the right ones.

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What to Do if You Inherit $140 Million in Bitcoin?

SoftBank has stumbled into a bitcoin treasure in buying Fortress Investment. With the CME launching bitcoin futures, SoftBank may hang on to its digital ducats.

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Donald Trump dominates Virginia’s tight governor race

SINCE the 1976 presidential election Virginia’s gubernatorial politics have been guided by the “Virginia curse”: the party that wins the White House loses the governor’s mansion the following year. The pattern is regarded as a bellwether of shifting national tastes. Only once has it been disturbed. In 2013, Terry McAuliffe, a Democrat, was elected governor while Barack Obama was president. This was partly because of defections by Republicans offended by their nominee’s rigid conservatism.

This time round, given the deep distaste for Donald Trump, Democrats in Virginia want to believe the governorship is theirs for the taking on November 7th. But it will not be so simple. While public opinion polls have mostly shown Ralph Northam, a Democrat, leading Ed Gillespie, his Republican rival, the increasingly nasty campaign in Virginia—a state that twice fell to Mr Obama and last year tipped to Hillary Clinton—could ultimately be decided by turnout.

This is because voter participation, which exceeds 70% in...Continue reading

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The bitcoin bubble

PUT the word Bitcoin into Google and you get (in Britain, at least) four adverts at the top of the list: "Trade Bitcoin with no fees", "Fastest Way to Buy Bitcoin", "Where to Buy Bitcoins" and "Looking to Invest in Bitcoins.". Travelling to work on the tube this week, your blogger saw an ad offering readers the chance to "Trade Cryptos with Confidence". A lunchtime BBC news report visited a conference where the excitement about Bitcoins (and blockchain) was palpable).

All this indicates that Bitcoin has reached a new phase. The stockmarket has been trading at high valuations, based on the long-term average of profits, for some time. But there is nothing like the same excitement about shares as the was in the dotcom bubble of 1999-2000. That excitement has shifted to the world of cryptocurrencies like Bitcoin and Ethereum. A recent column focused on the rise of initial coin offerings, a way for...Continue reading

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Razer's IPO Looks an Expensive Game

Will people buy new keyboards and mice the way they buy iPhones? That’s the question investors should ask before they jump into Razer’s initial public offering.

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Apple Hopes iPhone X Buyers Stay on Hold

Near-term forecasts have been tempered, but investors still looking for “supercycle” once Apple’s production issues are settled.

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An act of terror in New York

IT WAS a beautiful, sunny afternoon, the perfect day to cycle or walk along the Hudson river on Manhattan’s west side. Parents were beginning to gather at schools to pick up their excited children, many wearing Halloween costumes. But the idyllic autumn day came to an abrupt end at 3.05pm when a man in a hired pickup truck hopped the curb and began driving southbound on the pedestrian and bicycle path along the West Side Highway. He struck several pedestrians and cyclists along his 20-block route. At Chambers Street the truck rammed into a school bus, injuring children and adults inside. In all, eight people, including tourists from Argentina and Belgium, were killed. A dozen more were wounded, some critically. 

The driver then stepped down from the truck, brandishing what appeared to be two handguns. A police officer on patrol confronted him with his own weapon and fired, striking him in the abdomen. The driver is now in police custody, in hospital. (His guns were later found to be a paint-ball pistol and a pellet gun.) Bill...Continue reading

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