A row over a wedding cake pits religious liberty against LGBT rights

THE contours of two First Amendment rights—freedom of speech and the free exercise of religion—will be on the Supreme Court’s plate on December 5th when the justices take up Masterpiece Cakeshop v Colorado Civil Rights Commission, a key battle over same-sex marriage. This post examines the religion question; next week, your blogger will look at the issue of free speech.

The conflict in Masterpiece Cakeshop dates to 2012, when Charlie Craig and David Mullins were shopping for a wedding cake and walked into a bakery near Denver, Colorado. Jack Phillips, the proprietor of Masterpiece Cakeshop, told the couple he would be willing sell them a birthday cake or some cookies but that he does not, as a policy, “provide cakes for same-sex weddings”. Mr Phillips, a Christian who “strives to honour God in all aspects of his life”, considers gay marriage “sacrilegious” and refuses “to express through his art an idea about marriage that conflicts with his religious beliefs”.

In many corners of...Continue reading

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North Korea tests its most powerful missile yet

FOLLOWING a brief hiatus in its testing programme, North Korea launched a missile in the small hours of November 29th that, unlike any previous missile, appeared to have the range to strike any city in America. It was the third test of an intercontinental ballistic missile (ICBM) since July, and 20th missile test this year. After watching the launch the country’s leader, Kim Jong Un, who had spent the previous day visiting a catfish farm, announced: “We have finally realised the great historic cause of completing the state nuclear force, the cause of building a rocket power.”

Mr Kim eschewed the extravagantly bellicose rhetoric he normally indulges in after a successful missile launch. His “solemn declaration” emphasised that North Korea would be a “responsible nuclear power” that “would not pose any threat to any country and region” as long as the interests of North Korea “are not infringed upon”. It sounded like a plea for North Korea to be respected as a nuclear state, not vilified as a...Continue reading

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Suspicions of vote-rigging in Honduras’s election

ON NOVEMBER 25th The Economist published an article suggesting that Honduras’s ruling party may have had plans to distort the results of a general election to be held the next day. Here we present excerpts and transcripts from the tape of what appears to be a training session for National Party poll workers, on which the article was based. The Economist received the recording from a participant, who also described what was happening in the room at the time. Our descriptions of the gestures of the woman leading the session are based on that testimony. We have distorted her voice.

With roughly 75% of ballots counted, Salvador Nasralla of the opposition Libre party leads the presidential race by less than one percentage point. Both he and the incumbent, Juan Orlando Hernández of the National Party, are claiming...Continue reading

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The Australian state of Victoria legalises assisted dying

THE quest has failed many times. The past 20 years have seen around 50 attempts to pass laws in different Australian states to allow doctors to help terminally ill people to end their lives. All have suffered defeat, three in the past year alone: in New South Wales, South Australia and Tasmania. But on November 29th Victoria finally made history, when its parliament passed Australia’s first state law to legalise doctor-assisted dying.

The law, which will take effect in 2019, allows people with an advanced, incurable illness to request “assisted dying” if their suffering cannot be relieved “in a manner that the person considers tolerable”. Patients must make three successive requests for such help; doctors are banned from initiating discussion of it as an option. The original bill had proposed limiting eligibility to those who were expected to live no more than a year. Victoria’s lawmakers reduced that to six months, with a few exceptions.

Most earlier attempts to legalise assisted dying were private members’...Continue reading

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Will Tesla Die for Lack of Cobalt?

Cobalt, a critical part of batteries, has nearly tripled in price since last summer as concerns grow about whether there will be enough cobalt to meet demand.

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Why Tax Cut Winners are Losing

Many of the stocks that would benefit the most from a tax cut have fallen out of favor with growth-obsessed investors.

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Shell's Gift to Investors Could Prove Premature

Shell is finally scrapping its much-hated scrip-dividend program, with its accompanying shareholder dilution. Great news—but a closer look at the company’s financials and strategy raises some questions.

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German Banks: Chronically Sick and No-One Has a Cure

For all of Germany’s economic strength and discipline, its banking system remains a mess.

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Heads Roll at LSE and the Timing Is Terrible

The fight to keep Xavier Rolet as chief executive of the London Stock Exchange is over, but that doesn’t mean its problems are too.

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HUD embodies the pathologies afflicting the White House

BEN CARSON, a celebrated neurosurgeon and unsuccessful presidential candidate, had no experience in political office or housing policy before Donald Trump nominated him to lead the Department of Housing and Urban Development (HUD). It was unclear what Dr Carson, a longtime sceptic of government assistance, and of social engineering more generally, would do with an agency that funds rental-assistance schemes for the poor, only half of whom actually live in cities—despite what the department’s name would suggest. The administration proposed a 13% cut in HUD funding in its first budget. Dr Carson seemed not to know how individual programmes would be affected when testifying before Congress. HUD, with its annual budget of $46bn is a tiddler compared with other federal departments, but in several ways it is a sort of miniature version of the Trump administration.

In the nine months since he took the post, Dr Carson has stayed inconspicuous and inscrutable. The agency seems directionless. Only four of the 13 top positions, which must be...Continue reading

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The outsize influence of the gun lobby

GUN violence killed 34,000 people in America in 2014, the most recent year for which data is available. That is about the same number of people who died in traffic accidents. But firearms are considerably less regulated than vehicles, thanks largely to a powerful political machine that in recent years has rolled back some of the few limits to gun ownership. It is surprising, therefore, that while the industry may have political might, the economics point to a diminutive industry dealing predominantly with a niche consumer group. 

While domestic production has increased from 4.2m firearms in 2008 to 8.9m in 2015, the firearms industry remains relatively small. The National Shooting Sports Foundation, an industry group, produces an economic impact report that claims arms and ammunition production and sales support 141,500 jobs. That is less than 0.1% of total employment in America, fewer than the number of people who work in wholesale bakeries and tortilla manufacturing, and about the same as the number employed in gift, novelty...Continue reading

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Amazon's Early Christmas Bonus

Projections for retail and cloud businesses are growing as Amazon’s already-rich valuation gets another boost.

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Batteries Are Taking Over the World

The battery industry is mustering for exponential growth as car makers electrify their fleets. But for investors the path to profitability is far from clear, and technological breakthroughs could upset the competitive order.

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UnitedHealth Reaches an Unhealthy Altitude

UnitedHealth’s stock has more than quadrupled over the past five years. But its high valuation means that the health insurer has a lot to live up to.

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Barclays at the Back of the Class in U.K. Stress Tests

Even though all seven banks passed, some will still face higher capital demands to counter a consumer credit boom in which they are systematically underestimating the risk of losses.

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Trump Is Ignoring a Healthy Opportunity in China

What’s the highest-margin, protected growth industry in China? Hint: It isn’t energy, finance or beef.

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Is Honduras’s ruling party planning to rig an election?

IN THE days leading up to Honduras’s contentious national election on November 26th, one might expect to see candidates tossing bags of beans from pickup trucks and party workers handing out benefit cards. Such methods to sway poor voters have been used before by the National Party of Juan Orlando Hernández, who is running for re-election as president. Opposition parties have used the same techniques, which are frowned upon but not illegal.

Allegations of outright vote-rigging are widespread in Honduras but difficult to prove. The Economist has obtained a recording that, if authentic, suggests the ruling party has plans to distort results in the upcoming elections. Hondurans will be voting in congressional and municipal elections as well as the presidential one.

Roughly two hours long, the recording appears to be of a training session for members of the National Party who will be manning voting tables at polling stations on election day. The Economist received the recording from a participant. At the...Continue reading

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Coal becomes a flashpoint in a close election in Australia

Crooks in Japan are getting older and more hardened

THE 74-year-old burglar evaded police in Osaka, Japan’s second-largest city, for eight years. He committed more than 250 burglaries, making off with items worth some ¥30m ($266,500), the police said, before he was finally caught last month. But he has at least told his captors that he is ready to retire.

Not all Japan’s elderly criminals are willing to follow suit. New figures from the government show that almost a quarter of criminals aged over 65 reoffend within two years, more than double the rate of those under 29. Some 70% of the wrinkly wrongdoers in prison in 2016 had previously spent time behind bars. And there are ever more of them: in 2015 more than 20% of arrests were of people aged over 65—up from 6% in 2005. In America, in comparison, over-65s account for barely 1% of arrests.

The majority of crimes the grey-haired commit are petty, such as theft and shoplifting. Analysts reckon it is a sign of poverty, which is relatively widespread among the old (by the...Continue reading

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A kickback scandal ensnares the speaker of Indonesia’s parliament

Incapacitated by a fender-bender

IT WAS a sight many Indonesians thought they would never see. On November 19th the speaker of parliament, Setya Novanto, was taken into custody after being wheeled out of a Jakarta hospital wearing the bright orange vest of a suspected criminal. He is accused by the anti-corruption commission, the KPK, of playing a pivotal part in a huge kickback scheme—the biggest scandal it has ever investigated.

Mr Setya, who is also the leader of Golkar, the second-biggest party in parliament, denies wrongdoing. But he has been dodging the KPK’s investigators for months. Most recently, while supposedly on the way to present himself for questioning, he suddenly changed course and rushed to hospital instead, after a minor traffic accident. Police ruled that the accident was genuine, but the sturdy four-wheel-drive vehicle in which Mr Setya was travelling was barely dented. It was the second time he had been admitted to hospital—where the...Continue reading

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Nepal’s election may at last bring stability

No one is paying the politicians much attention

THE people of Nepal are said to be a stoical lot. But fatalism is not the only reason for the Himalayan republic’s palpable lack of excitement on the eve of what ought to be a historic election. The vote, to be held in two stages on November 26th and December 7th, is for both a new national legislature and new state governments, under a crisp new constitution. It follows nearly three decades of what C.K. Lal, an acerbic columnist, describes as “history on steroids”, during which Nepal’s 29m people endured a ten-year armed insurgency that left some 18,000 dead, a machine-gun rampage by an angry prince who slaughtered nearly the entire royal family, a revolving door of governments under 25 different prime ministers, including spells of arch-conservative dictatorship and of rule by Maoist guerrillas, the abolition of the 240-year-old monarchy, a massively destructive earthquake, devastating floods and a ruinous...Continue reading

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South Korea’s spymasters admit giving the former president cash

President and cashier

“WE WORK in the shadows to protect the sunlit land.” So ran the founding motto of South Korea’s most secretive agency, the National Intelligence Service (NIS), tasked with foiling North Korean plots. Recently other branches of government have been exposing the shadows to a little sunlight. Earlier this year massive protests led to the impeachment of the president, Park Geun-hye, who was found to have abused her authority for personal ends. Prosecutors investigating how far the rot went have discovered that successive directors of the NIS had been delivering bags of cash to Ms Park on a regular basis. Two have been arrested, pending trial; a third has been questioned.

All deny wrongdoing. Although they admit to handing over the money, they say they thought it was for some legitimate, if unknown, purpose. The payouts came from the NIS’s “special activity funds”. This money is set aside for classified operations, and is disbursed...Continue reading

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The Philippines has the most persistent poverty in South-East Asia

“JACKFRUIT is really good because you can make proper money from it,” confides Dominador Villasis, an elderly farmer whose fields lie near the town of Inopacan on the island of Leyte. Nineteen years since he planted his first tree, money from the fruit, which tastes faintly of pineapple with wafts of banana, has allowed him to swap a bicycle for a motorbike and to care for his extended family. Jackfruit trees can be planted alongside coconut palms, the main local crop, and a hectare of them can bring in $12,000 a year, says Joe Bacusmo of Visayas State University.

Leyte lies among the islands of the Eastern Visayas, one of the most deprived parts of the Philippines. About 30% of the people in the region are poor, according to the government; in the country as a whole the share is around 17%. This represents progress of a sort. Over the past three decades extreme poverty has more than halved in the Philippines by the World Bank’s measure. But several nearby countries, such as Vietnam,...Continue reading

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The Supreme Court takes up a major digital privacy case

FOR all its convenience, the digital age has made privacy an increasingly rare commodity. Search engines are familiar with users' favorite haunts. Internet service providers share individuals' web browsing habits with other companies. And as Timothy Carpenter found out when he was arrested for masterminding a string of armed robberies in 2011, mobile-phone companies have data showing roughly where their owners are at any point in time.  

On November 29th, the Supreme Court will consider whether Mr Carpenter’s constitutional rights were violated when authorities obtained several months of mobile-tower data placing him near the scene of the robberies in Michigan and Ohio. Under the Stored Communications Act of 1986, investigators who have “reasonable grounds to believe” that a suspect’s electronic data includes “specific and articulable facts” that are “relevant and material” to their investigation can secure an order compelling providers to hand it over. That’s a far easier bar to reach than reasonable...Continue reading

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Tax Reform Is a Game Changer for Buyouts

Proposed tax changes could shift incentives for private equity, changing how deal making is done in the U.S.

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Samsung's Tumble Sounds a Warning for Tech Stocks

The 5% fall in the Korean tech giant’s shares followed a mild analyst report on its outlook—a sign of the market’s current high state of nervousness.

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Julius Baer Loses CEO and Some of Its Luster

When a chief executive jumps ship suddenly it is a cause for concern. When that CEO had led an aggressive, acquisitive expansion, investors may worry even more. So it is with Boris Collardi’s departure from Julius Baer.

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Beijing is Making Its Most Serious Effort Yet to Tackle Its Financial-System Issues

New rules to crimp China’s ballooning shadow banking system are a healthy step. The government must persist through any market fallout.

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Will Investors' Low-Rate Mistake Kill the Stock Market?

Why are stocks so expensive? In part it may come down to a behavioral quirk that could be putting the market at risk.

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Investors Must Focus on Big Picture on Black Friday

There is a predictability to Black Friday stories each year, yet there also is a predictability to what they tell us about how stores will do over holidays—not much.

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The Keystone XL pipeline has won approval in Nebraska

IN THE nine years since Keystone XL was first proposed it has become the most political of pipelines, pitting environmentalists, ranchers and Native Americans against oil companies, state officials and unionists. Barack Obama’s administration delayed its construction in 2011, then rejected it in November 2015. Shipping oil from Canada’s tar sands, which is one of the dirtiest sources of crude, threatened to undercut the leadership role the government wanted to play on climate change. “So sad that Obama rejected Keystone Pipeline. Thousands of jobs, good for the environment, no downside!” tweeted Donald Trump, then a presidential candidate.

As soon as Mr Trump was in office he revived the proposal for a large tube running from Alberta, Canada, to the Gulf of Mexico. Russell Girling, boss of TransCanada, the Canadian operator of Keystone, said he was “very relieved” to see the $8bn project finally approved. On November 20th Nebraska’s regulators had more good news for Mr Girling. The...Continue reading

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Teenagers are growing more anxious and depressed

BlackDog.gif

THE final bell rings at a high school in downtown Los Angeles, and nearly every pupil spilling onto the pavement either clutches a smartphone or studies a screen, head bowed. A group of boys strolls down the street laughing at a YouTube video, while a girl waiting for her lift home catches up with the Kardashian sisters on Instagram. Since 2007, when Apple released the first iPhone, such scenes have become the norm in America. The Pew Research Centre found that three-quarters of teens have access to a smartphone. According to one Facebook executive, millennials look at their phones on average more than 150 times a day.

Over the past decade, the number of American children and teenagers admitted to children’s hospitals for reporting suicidal thoughts has more than doubled. Some have not received help in time; after declining for years, the suicide rate for 15-to-19-year-olds shot up between 2007 and 2015, increasing by 31% for boys and more than...Continue reading

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Conservative lawyers are among the president’s biggest enablers

ADDRESSING over 2,000 conservative lawyers and friends at a banquet in central Washington, DC, last week, Neil Gorsuch was in jocular form. “If you’re going to have a meeting of a secret organisation, maybe don’t have it in the middle of Union Station!” quipped the newest Supreme Court judge. This was disingenuous. The reason many worry about the Federalist Society, the legal organisation whose annual bunfight Justice Gorsuch was addressing, is not because it is shadowy, but because its influence is vast, brazen and part of a wider politicising of the last branch of American democracy to succumb to partisanship. His speech suggested those worries are if anything underplayed.

Two things about it were most striking. First, the triumphalist tone Mr Gorsuch, a supposedly impartial steward of the constitution, struck in celebrating the legal philosophy and activism of a group closely linked to the Republican Party. “Tonight, I can report, a person can be both a committed originalist...Continue reading

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Replacing bail with an algorithm

Freedom just across the Jersey line

“HE WAS listed as a three, your honour.” “He’s a two on the raw score.” “On danger to the community, he scores a five.” The defendant, a lean, bearded man in an orange jumpsuit and shackles, sits next to his lawyer, listening intently to his rankings on a six-point scale. Welcome to the world of pre-trial hearings in New Jersey, which on January 1st became the first state to eliminate almost completely the use of bail. Instead of relying on hunches, or a fixed schedule matching bail amounts to crimes and lawyers’ arguments to set bail, judges there now use a nine-factor algorithm to assess whether a defendant is dangerous or likely to flee. Those thought to be in either category can be detained; the rest are released, but monitored.

Defenders of New Jersey’s experiment point to a dramatic decline in the state’s jail population, driven by a reduction in the number of poor, non-dangerous offenders who are...Continue reading

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A performer, a parasite and the prickliness of Egypt’s courts

Egypt’s terrorist sexpot

AFTER centuries of abuse, the Nile river will finally get its day in court. At a concert in the United Arab Emirates, a fan asked Sherine Abdel-Wahab to perform her patriotic song “Mashrebtesh Min Nilha?” (“Haven’t You Drunk From the Nile?”). The Egyptian chanteuse replied with a joke about the notoriously polluted river: “You’ll get bilharzia [a disease caused by parasitic worms] if you do.” Better to drink Evian, she said. It was sound advice. Though the government insists that the water is safe, people are often poisoned by it. But her comments sickened a lawyer called Hany Gad, who sued Ms Wahab for insulting Egypt. She will stand trial in December.

In many countries this case would be laughed out of court. No one has standing to sue on behalf of a resentful river. But in Egypt judges are often eager to restrict free speech and promote a paranoid strain of nationalism. In 2014 they investigated a puppet after...Continue reading

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Although persecuted, Sudan’s Christian population is growing

“IF SOUTH SUDAN secedes,” Omar al-Bashir told supporters at a rally in 2010, “we will change the constitution”, paying no attention to “diversity of culture”. The Sudanese president revisited the subject two years later. “Our template is clear: a 100% Islamic constitution,” he said in a speech to Muslim leaders in the capital, Khartoum. As for non-Muslims: “Nothing will preserve your rights except for Islamic sharia.”

The south seceded in 2011, taking with it most of Sudan’s Christians. After the split churches in the north were burned. Then came demolitions: at least 20 since 2011. Four took place in August this year. About 27 other churches are listed for bulldozing. The government says it is merely removing unlicensed buildings. But only churches seem to be getting knocked down. In any case, the government announced in 2013 that it would no longer grant licences for the construction of new churches. “Christians have no rights here any longer,” says Reverend Kuwa Shamal of the Sudanese Church of Christ, one...Continue reading

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Saudis applaud the anti-corruption drive, but investors fret

CHECKING into Riyadh’s Ritz-Carlton usually costs about $300 per night. Checking out could cost the current guests billions. This month the Saudi authorities commandeered the hotel to serve as a gilded prison for more than 200 princes, ministers and businessmen held in an anti-corruption sweep. Though the kingdom has not released a list of suspects, some big names have been leaked. Among them are Prince Alwaleed bin Talal, a billionaire investor; Khaled al-Tuwaijri, the former head of the royal court; and Waleed al-Ibrahim, the chairman of the region’s largest satellite broadcaster. The arrests were engineered by King Salman and his son, Muhammad, the young crown prince.

Some of the suspects could soon buy their way to freedom. A new anti-corruption committee, led by Prince Muhammad, is offering release in exchange for a portion of their assets. Officials hope to recover at least $50bn this way. That figure may be too optimistic, and represents only a fraction of what graft has cost the kingdom. Still, it would boost a government...Continue reading

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Decoding Donald Trump’s efforts to draw a road map for Israel and Palestine

How hard can this peace thing be anyway?

PRESIDENT DONALD TRUMP casts himself as a master negotiator. But when he talks of trying to achieve peace between Israel and the Palestinians, he often sounds less confident. It is a “complex subject”, the “toughest deal of all”, said Mr Trump in September. Still, he rates his chances of success as “very, very good”.

A peace plan from the administration, expected in September, is now due in January. Mr Trump’s son-in-law and adviser, Jared Kushner (pictured, centre), is leading the effort. He is being helped by Jason Greenblatt, the president’s envoy to the Middle East; David Friedman, the ambassador to Israel; and Dina Powell, a deputy national-security adviser. The first three are orthodox Jews who do not conceal their pro-Israel sympathies.

Initially dismissed as neophytes, the team has won over sceptics with its willingness to listen. Even the Palestinians admire their readiness to take...Continue reading

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Will Zimbabwe’s new president make things better?

IT TOOK time for the dancing and honking of horns to die down. After 37 years in power, Robert Mugabe resigned on November 21st. Long-suffering Zimbabweans went wild. But as the party ended, many began to ask whether and how his successor, Emmerson Mnangagwa, would be any better. Mr Mnangagwa, a former Mugabe henchman notorious for persecuting the opposition and for organising the rigging of elections, returned from a short exile on November 22nd, promising “a new democracy”. “We want to grow our economy, we want peace, we want jobs,” he told supporters in Harare, the capital.

Hope that Mr Mnangagwa will deliver any of these rests on two pillars. The first is that he plainly realises that Zimbabwe desperately needs economic help from abroad. The fiscal deficit, according to various analysts, is a whopping 12-15% of GDP. Inflation, variously measured, is 25-50%. Foreign reserves could run out in months. The infrastructure is falling apart. “Harare is the pothole capital of the...Continue reading

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Pictures of Robert Mugabe are being torn down all over Zimbabwe

ROBERT MUGABE SQUARE, a grassy patch in central Harare, will host a congress of Zimbabwe’s ruling party in December. Unforeseen events have made this an awkwardly named venue. Since Mr Mugabe was booted from power his comrades have scrubbed his image from the home page of the party’s website. As the congress tent goes up, everyone is trying to remember to call the spot by its informal name, Freedom Square. Like countless other places in Zimbabwe—including Harare’s airport—it had been renamed in honour of the man who bragged that he would rule until he died.

At the corner of Robert Mugabe Road and Rotten Row, a hawker describes how people celebrating Mr Mugabe’s ouster shimmied up poles to tear down street signs. Some kept them as souvenirs. Others stamped on them. “I saw one tied to a dead dog,” says Raymond Gotora, who sells bottled water and airtime at the intersection (the dog was hit by a car in a separate incident). “People now have a lot of freedom to express...Continue reading

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Sustainable investment joins the mainstream

IN 2008, when she was in her mid-20s and sitting on a $500m inheritance, Liesel Pritzker Simmons asked her bankers about “impact investing”. They fobbed her off. “They didn’t understand what I meant and offered to screen out tobacco,” recalls the Hyatt Hotels descendant, philanthropist and former child film star. So she fired her bankers and advisers and set up her own family office, Blue Haven Initiative. It seeks investments that both offer market-rate returns and have a positive impact on society and the environment. “Financially it’s sensible risk mitigation,” she says. “Our philanthropy becomes far more efficient if we don’t need to undo damage done in our investment management.”

Such ideas are gaining ground, particularly among the young. Fans of “socially responsible investment” (SRI) hope that millennials, the generation born in the 1980s and 1990s, will drag these concepts into the investment mainstream. SRI is a broad-brush term, that can be used to...Continue reading

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Italy’s new savings accounts fuel a boom in stockmarket listings

ITALY seems an unlikely place to be enjoying a boom in new listings on the stockmarket. It is full of family-run small and medium-sized enterprises (SMEs) that mostly rely for their finance on banks; and Italy’s banks are notorious for the bad debts still lingering on their balance-sheets. But Borsa Italiana, Milan’s stock exchange, has already seen 33 share issues so far this year, of which 24 have been full-fledged initial public offerings (IPOs). The number of listings so far already equals that seen in previous boom years in 2007 or 2015. With more expected before January, the exchange is likely to achieve the highest number of listings since the height of the dotcom bubble in 2000 (see chart).

A big reason for the surge is the Italian government’s roll-out in February of new individual savings accounts, known as PIRs, which offer favourable tax treatment. These have done better than expected. Asset managers have amassed €7.5bn ($8.3bn) in new PIR funds in the first three quarters of...Continue reading

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A purge of Russia’s banks is not finished yet

Elvira’s mad again

WHEN Elvira Nabiullina took over the governorship of the Russian Central Bank (CBR) in 2013, she faced a bloated and leaky finance sector with over 900 banks. Since then, more than 340 have lost their licences. Another 35 have been rescued, including, in recent months, Otkritie, once the country’s biggest private lender by assets, and B&N Bank, its 12th largest. The costs have been steep. According to Fitch, a ratings agency, over 2.7trn roubles ($46bn, some 3.2% of GDP in 2016) have been spent on loans to rescued banks and payments to insured depositors. Fitch reckons another few hundred banks could go before the clean-up concludes. More large private banks are whispered to be among them.

The CBR has rightly been praised for preventing a wider crisis and undertaking a clean-up during a punishing recession. Non-performing loans are at a manageable level, of around 10%. Bringing Otkritie and B&N under CBR stewardship calmed panicked markets. Yet nationalisation also raises...Continue reading

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Wealth inequality has been widening for millennia

THE one-percenters are now gobbling up more of the pie in America—that much is well known. This trend, though disconcerting, is not unique to the modern era. A new study, by Timothy Kohler of Washington State University and 17 others, finds that inequality may well have been rising for several thousand years, at least in some parts of the world. The scholars examined 63 archaeological sites and estimated the levels of wealth inequality in the societies whose remains were dug up, by studying the distributions of house sizes.

As a measure they used the Gini coefficient (a perfectly equal society would have a Gini coefficient of zero). It rose from about 0.2 around 8000BC in Jerf el-Ahmar, on the Euphrates in modern-day Syria, to 0.5 in around 79AD in Pompeii. Data on burial goods, though sparse, point to similar trends.

The researchers suggest agriculture is to blame. The nomadic lifestyle is not conducive to wealth accumulation. Only when humans switched to farming did people...Continue reading

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Does Hong Kong’s Octopus card have too many tentacles?

Your extensible friend

IN 1997, two months after Hong Kong reverted to Chinese sovereignty, it acquired a cutting-edge payment technology. People could rush through turnstiles with a wave of their colourful Octopus cards—stored-value cards pre-loaded with cash. Its latest advance, however, is risibly low-tech. On October 30th Octopus launched an extensible pole with a plastic hand to help drivers pay at toll booths. Critics of Hong Kong’s cautious approach to fintech snorted in derision. Meanwhile, a government official was quoted as blaming Octopus for stifling the city’s shift to cashlessness. Both criticisms are unfair. Hong Kongers enthusiastically embrace electronic payments and do well from the fierce competition between different platforms.

The Octopus card, designed for journeys on Hong Kong’s trains, buses, trams and ferries, soon stretched its tentacles into shops. In 2016 the company generated revenues of HK$956m ($122m) for its owners (mostly...Continue reading

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How to survive as a bank in Afghanistan

ECONOMISTS think of the opportunity cost of money as one reason to hold a bank deposit: rather than skulk under a mattress, cash could earn interest. In volatile, war-torn Afghanistan, neither option appeals. Money has to be kept secure somehow, but a bad bank might make off with its depositors’ money. In 2010 Kabul Bank collapsed after a spree of insider loans to shareholders, including a brother of the then president. A central-bank bail-out cost nearly 7% of GDP. Much of the nearly $1bn stolen has not been recovered.

A bank that customers trust, though, is in a strong position. So Afghanistan International Bank (AIB) does not pay any interest on its deposits, says Anthony Barned, its British chief executive. AIB was set up by the Asian Development Bank and private investors in 2004, and is the largest private bank in Afghanistan, holding $790m in deposits, around one-fifth of the country’s deposit base. It is also the most profitable.

As the only private institution with a dollar-clearing facility with big...Continue reading

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In a pre-Brexit skirmish with the City, Eurex takes on LCH

SEEN from the continent, it just isn’t right. LCH, a firm mostly owned by the London Stock Exchange (LSE), dominates the clearing of interest-rate derivatives. Each day it clears $3.4trn-worth, counting both sides of a trade. (The simplest variety is a swap of fixed and floating rates, allowing counterparties to reduce or increase their exposure to changes in rates.) In euro-denominated derivatives, the biggest category after dollars, LCH’s market share comfortably exceeds 90%, according to Clarus Financial Technology, a research firm.

Eurex, the derivatives arm of Deutsche Börse, owner of the Frankfurt Stock Exchange, wants to change that. So do European Union politicians and regulators, once Britain quits the EU. On November 20th Eurex’s clearing division said that so far around 20 banks, including lots of heavyweights, had joined a “partnership programme” to boost its interest-rate business. (The most notable absentees are Goldman Sachs and two big French banks, BNP Paribas and Société Générale.)

Though...Continue reading

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Buying local is more expensive than it looks

RANDY KULL, a businessman based in Illinois, sells traffic signs. His products have international appeal, with signs for anglophones (STOP), Spanish-speakers (ALTO) and horses (WHOA). But for some customers, he must stay local. When America’s Department of Transportation is involved, he must use American-made sign-mounting brackets, and fill in a form confirming their source. Mr Kull’s supplier in Arkansas is happy, but he himself is dubious. “We live in a global economy,” he scoffs. The weight of the evidence backs his instinctive scepticism.

To many, buying local seems sensible—wholesome, even. Keeping money close to home is supposed to foster thriving communities and generate jobs. To the administration of President Donald Trump, it is a source of national strength. Around the world, such sentiments are gaining ground. Global Trade Alert, a watchdog, has picked up 343 examples of new local-content requirements imposed since November 2008. In America, it estimates that the...Continue reading

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Ethical investors set their sights on index funds

The revolutionary vanguard

VANGUARD, an American fund-management giant, promises “the highest standards of ethical behaviour”. Its low fees, helpful call centres and lack of scandal give the claim credence. It is by far the largest mutual-fund group, with $4.8trn under management. It receives more than half of all the new money going into American mutual funds. Most ends up in its passively managed offerings that track indices.

So you might think its shareholder meetings would be pious celebrations. Instead, Vanguard tries to avoid them. On November 15th it held its first since 2009, to satisfy a legal requirement that two-thirds of fund directors are elected rather than appointed. It held the meeting near its Arizona satellite office, far from its Philadelphia-area headquarters. Only 200 of its 20m clients showed up, trudging through metal detectors and tight security.

Vanguard may have been pleased by the small turnout. Among those dogged 200 who attended were representatives of an...Continue reading

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The craze for ethical investment has reached Japan

JAPAN is prone to fads—usually in fancy desserts or fashion ripe for Instagram. A less photogenic one has hit finance: investing in assets screened for ESG (environmental, social and governance) factors. In 2014-16 funds invested in ESG assets grew faster in Japan than anywhere else (and not just because of better reporting and a low base).

Today Japan’s sustainable-investment balance is $474bn, or some 3.4% of the country’s total managed assets—low compared with Europe or America, but high for Asia. The shift is driven from the top down, rather than, as elsewhere, by ethically minded individual investors.

When he returned to power in 2012 with a plan to revitalise the economy Shinzo Abe, Japan’s prime minister, wanted to reform Japan’s conservative business culture. A code for institutional investors was introduced in 2014, followed by one on corporate governance a year later. The government’s aim is not only to get firms to distribute some of their vast piles...Continue reading

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