Proposed tariffs on Chinese goods are forcing retailers to buy early for the holidays to beat the tax but that could leave them with bloated inventories.
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Thursday, 19 July 2018
As inequality grows, so does the political influence of the rich
SQUEEZING the top 1% ought to be the most natural thing in the world for politicians seeking to please the masses. Yet, with few exceptions, today’s populist insurgents are more concerned with immigration and sovereignty than with the top rate of income tax. This disconnect may be more than an oddity. It may be a sign of the corrupting influence of inequality on democracy.
You might reasonably suppose that the more democratic a country’s institutions, the less inequality it should support. Rising inequality means that resources are concentrated in the hands of a few; they should be ever more easily outvoted by the majority who are left with a shrinking share of national income.
Indeed, some social scientists think that historical expansions of the franchise came as governments sought credible ways to assure voters that resources would be distributed more equitably. Daron Acemoglu and James Robinson argue that in the 19th century governments across the West faced the threat of...Continue reading
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David Solomon will be the new CEO of Goldman Sachs
LAME-DUCK periods can last for only so long. It was clear beforehand that a Goldman Sachs earnings call this week would be packed with questions about succession. When would the chief executive, Lloyd Blankfein, step down? (He had said in March he was leaving, but gave no date.) What would his departure mean for the firm’s other over-achievers? Several had already decamped, including Harvey Schwartz, the bank’s co-president and co-chief operating officer. Left as heir-apparent was the man he had shared both jobs with, David Solomon, but with no hint of when his elevation would take place.
On July 17th Goldman ended the speculation by confirming the choice of Mr Solomon as CEO and saying that he would take over in October, earlier than predicted. Quarterly results presented that day by Martin Chavez, the chief financial officer, who is thought to be in his own succession battle to replace Mr Solomon, beat forecasts. Still, the share price sagged....Continue reading
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What Venezuelan savers can teach everyone else
ASK the chief investment officer of a fund-management firm how to spread your investments and you will be told to put so much in stocks, so much in bonds and something in hedge funds or private equity. Chances are that white-elephant buildings, eggs and long-life milk will not feature. But in Venezuela, where the inflation rate is in the tens of thousands, things that people elsewhere would shun for fear they will lose value have become stores of real wealth.
That is why you can see scaffolding and other signs of a building boom dotted around Caracas, the capital of a country that has endured an economic collapse. Businesses need to park their earnings where they will not be wiped out by inflation. A smaller-scale response to galloping prices is the emerging “egg economy”. Eggs hold their value better than cash, for a while at least. They make for a convenient currency, too. It is easier to carry around a half-dozen eggs than a trunkful of banknotes. And many tradespeople would be happier to...Continue reading
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Football talent scouts become more rational
CHEERS erupted from Calais to Cannes when Kylian Mbappé, a 19-year-old striker, thumped in France’s fourth goal in the World Cup final on July 15th. Among the smuggest onlookers were the accountants at Paris Saint-Germain, Mr Mbappé’s club. He was already a prized asset before the tournament, having broken the record for goals scored by a teenager in the Champions League, Europe’s premier-club competition. CIES Football Observatory, a research organisation, reckoned then that his club could charge €190m ($223m) for him. But an electrifying World Cup, with four goals, has surely increased his value.
That, at least, is how the transfer market usually responds to international tournaments. According to 21st Club, a consultancy, each time a player found the net in the World Cup and European Championship tournaments in 2004-16, his price went up by, on average, 13%. After the 2014 World Cup James Rodríguez, whose six goals for Colombia made...Continue reading
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Mario Draghi’s replacement is already being discussed
A LOT rests on the shoulders of the euro zone’s top central banker. The president of the European Central Bank (ECB) is not just in charge of ensuring monetary and financial stability in one of the world’s largest economies. In the absence of a single European fiscal authority, it also falls to the ECB to act as a backstop for the currency bloc. In times of crisis, the very survival of the monetary union seems to depend on the president’s words and actions. Central-bank bosses in America, Japan or Britain bear no burden as great.
With such demands, though, comes great influence. Those in need of convincing need only cast their minds back to July 2012. Greek interest rates were soaring and investors were entertaining the possibility that the euro zone would break up. But Mario Draghi, the ECB’s boss, soothed markets with a promise to do “whatever it takes” to save the euro. Six years on, that commitment still helps to contain Italy’s sovereign-bond yields, despite unease about its new...Continue reading
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Donald Trump’s defensiveness about Russian hacking is revealing
AMONG the Republicans cowering before President Donald Trump, the presence of Marco Rubio and Paul Ryan has been especially disheartening. Yet both threatened to regrow spines this week. “Russia is an adversary,” declared Senator Rubio, in response to the president’s fraternising in Helsinki. “Russia is a menacing government that does not share our interests,” said the Speaker of the House of Representatives. These were, if not stinging rebukes, better than Mr Rubio’s usual habit of keeping shtum and tweeting Bible verses whenever Mr Trump does something horrid, or Mr Ryan’s of offering a wry half-smile and a comment on tax reform. Yet both men, formerly known as principled conservatives, sullied their moment of revertebration. Both claimed the Russian election-hacking effort on Mr Trump’s behalf had been a failure. “It is also clear,” said Mr Ryan, that “it didn’t have a material effect on our elections.”
Not so. The margin of Mr Trump’s victory in the electoral college...Continue reading
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How the decline of unions will change America
EVEN before the Supreme Court piled in, American unions were in a bad way. In their heyday in the mid-1950s, more than 30% of workers were members. Today just 11% are. With only a toehold in the private sector—where they cover a mere 7% of workers—unions have become increasingly reliant on faithful public-sector employees, 34% of whom are members, to stay financially afloat and politically relevant. The Supreme Court’s ruling in the case of Janus v AFSCME at the end of June will shrink the rump of union members even further. What will the consequences of even lower union membership be?
Unions engage in both collective bargaining for their workers and political lobbying, typically for progressive causes and Democratic candidates. Among white Americans, blue-collar workers have had their heads turned by President Donald Trump even as union bosses remain steadfast Democrats, so that many members disagree with their union’s politics. Opting out of union membership—and its...Continue reading
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The flourishing Midwest
AS HE gesticulates on the rooftop terrace of the new Kimpton Hotel, Dennis Klein, a retired property developer, is visibly proud. One of his sons developed the hotel in Milwaukee’s third ward, a project that attracted scepticism from local grandees, who doubted anyone wanted it. Another son developed some of the buildings that are visible below. The third ward was once a dreary part of town filled with warehouses. In 1984 it had only 28 residents, says Mr Klein. Today it has boutiques, cafés, bars and many thousands of oat milk-drinking hipsters.
The Midwest is not monolithic but rather a tale of at least two rustbelts, says John Austin of the Michigan Economic Centre, a think-tank. Bigger old industrial cities such as Minneapolis, which used to live off flour-milling, Pittsburgh, which made steel for the whole country, and Indianapolis, once home to dozens of carmakers, have turned a corner. Not long ago Milwaukee was in decline, like many old...Continue reading
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Male voters are sticking with the Republican Party
MEN have long tended to favour Republican candidates; women have voted more for the “mommy party” than men in every election since 1992. Yet the gap now looks like a chasm. In 1992 women and men disagreed over which party they identified with by 11 points. The margin has since widened to 23 points (see chart). For comparison, Donald Trump won white voters by 21 points in 2016 and lost Hispanics by 36 points.
It is no mystery why so many women are abandoning the Republican Party. Lots of the party’s elected officials have vowed to defund Planned Parenthood, which in addition to its other activities provides abortions. They often have...Continue reading
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Voting machines in America are reassuringly hard to hack
IN THE run-up to the attacks of September 11th 2001, said George Tenet, the former director of the CIA, America’s intelligence system was “blinking red”. On July 13th Dan Coats, the current director of national intelligence, invoked Mr Tenet’s language to convey the magnitude of the threat posed by foreign hackers. “The digital infrastructure that serves this country is literally under attack,” he said. “The warning lights are blinking red again.” Although Mr Coats expressed concern about infiltration from numerous countries, he called Russia “the most aggressive foreign actor”. Meanwhile, the president seems indifferent when it comes to the risk of Russian meddling with the mid-terms in November. How vulnerable are American elections?
If Vladimir Putin’s hackers did seek to intervene in the congressional elections in November, they would have two avenues. One, familiar after 2016, is to use social media and pretend news sites to spread disinformation or propaganda. It seems...Continue reading
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Why the Cook Islands fears rich-country status
MOST political leaders play up their country’s economic performance. Those on the Cook Islands, a collection of 15 islets spread over 2m square kilometres in the South Pacific, are doing the opposite.
At issue is whether the country of 17,000 people has become wealthy enough to warrant a reassignment by the OECD, a club of mostly rich countries, from upper middle-income to high-income status. The rub is that “graduation” would make it more difficult for the country to claim it qualifies for aid. This amounted to NZ$33m ($22m) in 2016, or just under 8% of the islands’ GDP. However, New Zealand, the biggest donor country to date, has said it will continue to give an unspecified amount of financial assistance if the Cook Islands graduates.
Henry Puna, the prime minister, has acknowledged that achieving high-income status would be a source of national pride. It would be a first for a Pacific-island...Continue reading
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Violence and claims of election-rigging overshadow Pakistan’s election
“FOR the first time in our history, fair elections are going to be held,” insisted Fawad Chaudhry, a spokesman for the opposition Pakistan Tehreek-e-Insaf (PTI) party, this week. Unfortunately, this view is not universally held. The national and state elections on July 25th, in which 100m people are registered to vote, should mark a further stage in the country’s progress towards democracy, for the transfer of power thereafter will be only the second from one civilian government to another in the country’s seven decades of coup-studded history. But the poll takes place amid accusations that the powerful military establishment is tilting the field in favour of the PTI and its leader, a former cricket star, Imran Khan (pictured, on the flag).
There is another dark cloud over the campaign: violence. On July 13th a suicide-bomber, alleged to have links with Islamic State, killed 149 people in an attack on a rally in Mastung, a town in the south-western province of Balochistan. It was the...Continue reading
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The idea of Eurasia is once again the subject of geopolitics
OH, EAST is East, and West is West, and never the twain shall meet. Perhaps that was true when an Iron Curtain ran down the middle of Europe, and Mao Zedong’s China had turned disastrously inward. But now? This week leaders of the European Union and China met at a summit in Beijing to praise “EU-China connectivity”. It is more than an empty phrase, even if European leaders, distracted by political and migrant crises at home, are less clear-sighted about its implications than are their Chinese counterparts. China has hugely ambitious plans to connect the commercial worlds of Europe and East Asia via infrastructure links that will knit the vast—and till now seemingly inchoate—land mass of Eurasia together. But Chinese efforts are only the most notable of many modernising impulses that are beginning to mesh Eurasia into something resembling a whole.
In a stack of recent books and papers, a growing number of strategists argue that the emergence of a cohering Eurasia is the key feature of a new...Continue reading
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In Singapore, thousands will attend this year’s LGBT rally
BLACK-and-white photographs in the foyer of an arts cinema are filled with smiling, pouting and laughing faces—young and old, of various races. The portraits are of members of Singapore’s lesbian, gay, bisexual and transgender (LGBT) community. The fact that those pictured are willing to be identified publicly, in such a conservative country, is part of what makes the display striking. A grandson of Lee Kuan Yew, the country’s modern founder, is among them, as is a Paralympian medallist and a policewoman. Leslie Kee, a Singaporean photographer who lives in Japan, took the 150-odd pictures for the exhibition, called “Out in Singapore”. It is one event of many which comprise a festival linked to Pink Dot, a rally on July 21st which thousands are expected to attend.
Pink Dot has been held annually since 2009. It is the city-state’s version of a pride celebration and is tightly regulated (participants in last year’s event are pictured)....Continue reading
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Stopping the flow of arms to South Sudan
IS THAT a light at the end of the tunnel? Since South Sudan’s war began nearly five years ago, tens of thousands have died and more than 4m—one in three South Sudanese—have been forced from their homes. The country teeters, for the second year running, on the brink of famine; more than half the population do not have enough to eat. At least nine ceasefires have been struck, none lasting longer than a month, including the latest, which was signed on June 30th and has already been violated. Observers have warned repeatedly of genocide. Yet tentative signs offer hope that the world may act to stop the bloodshed.
On July 13th the UN slapped an arms embargo on the world’s youngest nation, in the hope of stopping atrocities against civilians. Under the resolution all countries are barred from supplying arms until May 2019, following in the footsteps of America, which imposed its own embargo in February, and the European Union, which has barred weapons sales to Sudan since 1994 (this was...Continue reading
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France’s victorious footballers do Emmanuel Macron a favour
WHEN Emmanuel Macron was a child, growing up in the northern French town of Amiens, he was a fervent supporter of a southern club, Olympique de Marseille. In 1993, the year they won the European Champions League, the club’s captain was a certain Didier Deschamps. On July 15th, under torrential rain after France’s victory at the World Cup final, it was as president that Mr Macron clasped in a tight embrace the same Mr Deschamps, captain of the French team that won the World Cup back in 1998, and now manager of the French champions.
Today France welcomes home Les Bleus, their national team, after a 4-2 defeat of Croatia in Moscow. A million people descended last night on Paris as the sun began to set, chanting, rocking Metro carriages, clambering onto bus shelters and up lamp posts, and setting off flares and firecrackers. The capital’s arteries emptied of cars and turned into a flag-waving, chanting human flow.
The team will this afternoon parade down the Champs-Elysées...Continue reading
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Biotech IPO Boom Comes With Side Effects
Biotech stocks are hot tickets once again on Wall Street and that is bringing a wave of initial public offerings. The risk is the high demand for these companies is offset by a wave of new supply.
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Wednesday, 18 July 2018
Brett Kavanaugh’s years as a government lawyer
WHEN Donald Trump was considering his choice for Justice Anthony Kennedy’s seat on the Supreme Court, Senator Mitch McConnell reportedly asked the president to steer clear of Brett Kavanaugh, the long-time circuit court judge Mr Trump tapped on July 9th. Mr McConnell is said to have told Mr Trump that someone with a paper trail as long as Mr Kavanaugh’s could hit more snags and give Democrats more to gripe about than one of the greener judges on the list. Mr McConnell’s hesitations seem to have since vanished. The 12-year veteran of the Appeals Court for the District of Columbia Circuit is a “superb” choice, he says.
But Mr Kavanaugh’s documentary history is indeed extensive. It includes not only 300-some opinions he wrote as an appellate judge but untold thousands of documents connected to his near-decade of service in the executive branch. Before donning his black robe, he spent four years in the 1990s as an assistant to Kenneth Starr (pictured above, centre) investigating Bill Clinton and five years in the George W. Bush...Continue reading
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Why Binyamin Netanyahu is fudging east European history
YAD VASHEM, Israel’s national authority for research and commemoration of the Holocaust, is a staid institute, as befits its role, and usually shies away from political controversy. So a public announcement by its leading historians on July 5th, denouncing a joint statement by the prime ministers of Israel and Poland, which it said contained “grave errors and deceptions”, was highly unorthodox.
The statement had been issued a week earlier by Binyamin Netanyahu and Mateusz Morawiecki, to end a crisis in relations between the two countries caused by a new Polish law on the death camps in Poland. It had threatened fines or imprisonment for anyone who blames the Polish nation or state for their part in the Holocaust. Many historians viewed this law as an attempt by the conservative Polish government to revise history, by playing down the willing participation of many Polish citizens in the murder of 3m Polish Jews by Nazi Germany. After months of talks, the Polish government agreed to...Continue reading
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Tuesday, 17 July 2018
America’s cultural divide isn’t growing
THE idea of two Americas is a trope of political commentary: a population divided in mutual incomprehension by income, race, religion or region—flyover country versus coastal elite. The idea that cultural fissures are growing is used to explain increasing political rancour and the rise of Donald Trump. But those explanations may need tempering. Two papers on cultural distance, published by the National Bureau of Economic Research in June, suggest the idea of cavernous and expanding cultural fissures is over-wrought.
The papers both use data from the General Social Survey, a long running poll of Americans’ attitudes towards issues including free speech, same-sex relations and crime. They examine how closely respondent’s characteristics including where they live, what they earn, their education level and religion, are associated to particular attitudes and suggest that, at the level of individual attitudes, the relationship is weak. Marianne Bertrand and Emir Kamenica, the authors of “Coming Apart? Cultural Distances in the United States...Continue reading
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Big Tech's Growth Comes With a Big Bill
Tech giants like Amazon, Apple and Google are delivering above-average growth, but the cost of staying competitive is rising more.
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Netflix's Intermission Was Long Overdue
Streaming company’s market value got too rich even despite strong growth.
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Why Tapping the U.S. Oil Reserve Is an Awful Idea
Using the reserve to curb summer pump prices at a time the economy is booming and midterm elections loom would be a strategic blunder, leaving the country exposed in the event of an actual oil shortage.
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The Dark Side to Rising Consumer Spending
Retail sales are strong, but shoppers are borrowing more to fund their purchases. That may make sense, or leave people struggling to pay off debt.
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The missing middle of the Trump-Putin meeting
THE story of the meeting between President Donald Trump and President Vladimir Putin in Helsinki has a beginning and an end, but no middle.
It began with a statement from the president that the lowly state of Ruso-American relations were not the fault of the Russian government for seizing Crimea, shooting down a passenger airliner, interfering in America’s presidential election or using a banned nerve agent to kill citizens of a close ally on its own soil. No, they were the fault “of US foolishness and stupidity and now, the Rigged Witch Hunt”.
It ended with a joint press conference that Senator John McCain described as, “one of the most disgraceful performances by an American president in memory.”
In the middle was a void, in which the two presidents met with nobody else in the room but their interpreters. For those who watch Mr Trump daily and have observed his habit of being confrontational with other people when at a safe distance and then seeking to please them when face-to-face, this encounter seemed freighted...Continue reading
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Monday, 16 July 2018
Vladimir Putin’s hopes for his long-awaited meeting with Donald Trump
THE summit had yet to finish when Vladimir Putin decided to split. That was in the autumn of 2014: war was raging in eastern Ukraine, the Group of 20 was meeting in Australia, and the Russian president faced a frosty reception from Western leaders. He had been booted out of the Group of Eight (G8) and, in Barack Obama’s words, “isolated”. Cameras captured him eating lunch alone like a shunned schoolboy.
Though Russia’s posture has hardly changed since, the times have. This week Mr Putin has been hosting his own parade of world leaders in the run up to the World Cup final in Moscow on July 15th. The following day he will be in Helsinki to meet Donald Trump, who has called for Russia to be readmitted to the G8. Their tête-à-tête, to be held, as it happens, on the eve of the anniversary of the downing of Malaysia Airlines Flight 17 over eastern Ukraine in 2014, will double as the death knell for the West’s policy of isolating Russia. “There’s an asymmetry: for Russia, the...Continue reading
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Growth Still Trumps Politics for Markets
For fans of high political drama, recent months have been packed with excitement. For markets, not so much. In the battle between economics and politics, faith in growth still has the upper hand for now.
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The Real Growth Numbers to Watch in China
A sharp slowdown in investment and contracting shadow-banking credit are reliable signs of difficulties ahead for China.
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The Netflix Squeeze
Netflix has had an astonishing year. Its shares surpassed $400, up 110% since January, and it was nominated for 112 Emmy Awards, more than any other television network, including HBO, which had held that distinction for 17 years.
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Saturday, 14 July 2018
Nawaz Sharif returns to Pakistan, and jail
SITTING stony-faced at the back of a business-class cabin on an Etihad flight from London to the Pakistani city of Lahore, Nawaz Sharif waited patiently for his arrest on the evening of July 13th. His only sign of stress was a balled-up napkin in his right fist. Journalists ignored the pleas of cabin staff to stay in their seats. They clustered around the former prime minister of Pakistan and jabbered reports into smartphones held out on selfie-sticks. Mr Sharif sat still. To his left his 44-year-old daughter, Maryam, occasionally adjusted her white veil. At last around a dozen camouflaged paramilitary police in red berets boarded the plane. Those who reached Mr Sharif first paused by his seat. Supporters yelled from economy class. Mr Sharif slowly rose.
A week earlier Pakistan’s National Accountability Bureau (NAB), an anti-graft court, had sentenced Mr Sharif, in absentia, to ten years in prison for corruption in connection with the purchase of luxury apartments in London’s Park Lane...Continue reading
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The president of Kazakhstan throws himself a modest birthday bash
IT WAS in June of 1998 that oil-rich Kazakhstan officially inaugurated its purpose-built capital, Astana. But when the 20th anniversary of the city’s founding rolled round this year, the government decided to mark the occasion a few weeks late, on July 6th, as it has in previous years. That, after all, is the birthday of a much older fixture in the country’s life: the president, Nursultan Nazarbayev, who has run it since it became independent in 1991.
On the day, a colourful cascade of fireworks illuminated Astana’s gleaming space-age facades. There was also a tournament of kokpar (a traditional game played on horseback with a dead goat instead of a ball) and a circus featuring elaborate shows of horsemanship. The latter ended with an acrobatics display in which the performers’ costumes fanned out to send the turquoise and yellow of the Kazakh flag rippling across the stage.
At Bayterek Tower, a...Continue reading
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Pakistan’s former prime minister embraces jail to rally his party
WHEN Nawaz Sharif recently announced that he would return to Pakistan, not everyone believed him. On July 6th the National Accountability Bureau (NAB), an anti-graft court, had sentenced the 68-year-old former prime minister to ten years’ imprisonment. In such circumstances, Pakistani politicians usually head to London, rather than leave it. Moreover, Mr Sharif’s wife is on a ventilator in a London hospital. Yet as The Economist went to press, Mr Sharif continued to insist that he would board a flight back to Lahore, his home town, on July 13th. His advent could alter the course of national and state elections on July 25th.
That the NAB, pronounced “nab”, convicted Mr Sharif had come as little surprise. In part, it was because he did not satisfactorily explain how his family came to own four luxury apartments on Park Lane, a posh street in London. The ownership of the flats was made public by the leak in 2016 of the Panama Papers, a trove of...Continue reading
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India’s government claims to subsidise farmers, but actually hurts them
INDIA’S farmers should be the happiest in the world. For decades governments have showered them with perks including a blanket tax exemption; subsidies on fertiliser, seeds, energy and water for irrigation; low-interest loans; cheap crop insurance; high tariffs to block food imports; and price supports for more than 20 crops. Lately, the authorities have become more generous still. Since 2014 no fewer than eight states have waived a total of well over $25bn in farmers’ debts.
Narendra Modi, the prime minister, for whom elections loom, has promised to double farm incomes by 2022. Recently he announced a fresh bonanza. Sharply raising support prices for the coming harvest, he vowed that henceforth the government would pay growers 150% of the cost of their inputs, guaranteeing a healthy profit.
How can it be, then, that experts speak of a chronic and deepening crisis in agriculture, that polls show mounting rural anger and that farmers are protesting ever more forcefully? Last year, for...Continue reading
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On the hanging of Shoko Asahara, Japan’s nerve-gas guru
ON THE morning of March 20th 1995 your columnist arrived at work to see the pavements outside his office covered with poisoned commuters. Some were unconscious. Some were twitching or choking, like soldiers in a Wilfred Owen poem. Men in hazmat suits were everywhere. Office workers sat in a nearby park repeating like a mantra: “It’s so terrifying.”
It was the worst terrorist attack in modern Japanese history. Members of Aum Shinrikyo, an apocalyptic cult, had released nerve gas on the Tokyo subway. Their targets were crowded trains that converged on Kasumigaseki, in the heart of Japan’s government district. The aim was to kill officials on their way into work, and somehow hasten the end of the world. Twenty-three years later, on July 6th, Shoko Asahara, the bearded guru who masterminded this atrocity, was hanged, along with six accomplices.
He was the first truly modern terrorist. As David Kaplan and Andrew Marshall note in “The Cult at the End of the World”, Aum was the first...Continue reading
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Croatia stands on the cusp of World Cup victory
FOOTBALLERS as soldiers of the nation, violence in the stands that heralded war, outrageous corruption and fans belting out fascistic slogans: Croatian football has been a dramatic affair for the past three decades. In few other countries are politics and the beautiful game as closely entwined. When Croatia beat Russia on July 7th its president gyrated for joy in front of Dmitry Medvedev, Russia’s prime minister. With reason: she, her party and other Croatian political parties have all benefitted from football-related election financing. On July 15th Croatia’s footballers, spurred on to avenge defeat at the hands of France in the World Cup semi-finals in 1998, take on les bleus again in Moscow.
“Football victories shape a nation’s identity as much as wars do,” said Franjo Tudjman, independent Croatia’s first president and the man who led the country through the traumatic disintegration of Yugoslavia and the wars of the 1990s. It is sometimes said that Croatia’s war of...Continue reading
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Trade Tensions Help BMW Enter China's Fast Lane
German company could become the first foreign car maker to majority own its operations in China.
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Fear of Missing Out Drives Stock Performance
Fear of being left behind is a powerful force among fund managers, even if it means taking big risks.
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China's Land Grab Could End Badly
Investment in China is faltering just as trade tensions heat up. But the situation is actually even worse than it appears—a sign the long-awaited hit from China’s debt crackdown has arrived.
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Robert Mueller indicts 12 more Russians
IF ALL America can be said to have been under attack when hijackers turned four airliners on it in 2001, the assault Russian agents launched on American democracy in 2016 represented a full-blown war. The 12 fresh charges against Russian intelligence officers unveiled by the deputy attorney-general, Rod Rosenstein, on July 13th, offered a few important new details about that attack, confirmed many long-held fears, and suggested there may be much more of the scandal to unfold.
A previous round of indictments against Russian hackers, which then as now sprang from the investigations of Robert Mueller, the special counsel who is investigating the Russian attack, suggested it was audacious and flagrant but relatively limited. It focused on a godless Russian effort to flood social media with images of Jesus rooting for Donald Trump and Satan for Hillary Clinton. The latest indictment points to a much more complicated, multifarious effort to swing the election for Mr Trump.
It included hacking the computer systems of Mrs Clinton’s...Continue reading
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Friday, 13 July 2018
The Dutch underground bicycle-park arms race
THE trilling of spokes, cyclists rounding the bend in unison: no, this is not the Tour de France. It is the new underground bicycle park at Utrecht Central railway station, which opened last year. Three storeys deep, with electronic monitors indicating where spaces are available, it has room to park 7,500 bicycles. “It’s a bit of a maze,” says Xander Staal, who takes a picture of his bike’s berth as an aide-memoire each morning before commuting to Amsterdam.
The Netherlands is experiencing an underground bike-park boom, as cities race each other to build the largest. The Hague had hoped to overtake Utrecht this spring with a new park with 8,500 places, but that has been delayed by construction problems. Later this year Utrecht’s park will expand to 12,500 slots, surpassing a 9,400-space one in Tokyo to become the largest in the world. Amsterdam is playing catch-up: a 4,000-space garage is to be built next to its central...Continue reading
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An interview with Germany’s finance minister, Olaf Scholz
FOLLOWING a dismal campaign, the centre-left Social Democrats (SPD) fell to their lowest post-war result in Germany’s general election last September. Early this year they quarrelled over whether to enter another coalition with Angela Merkel. Lefties warned that without a spell in opposition to formulate more distinct policies, the party would be doomed. But the leadership won over members at a vote in March with promises of renewal within government, greater distance from the centre-right, investment increases and, most of all, a “European awakening” beside Emmanuel Macron, the French president.
As the new SPD finance minister and vice-chancellor, Olaf Scholz has more power to enact that plan than anyone else. He is widely tipped to be the party’s candidate for chancellor at the next election, which is due to take place in 2021 but may come sooner. Yet talking to The Economist in his office in the finance...Continue reading
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Emmanuel Macron’s popularity hits a new low
A YEAR ago, as a young freshly elected president eager to look the part, Emmanuel Macron summoned a joint sitting of both houses of parliament in the former royal palace at Versailles, and spoke loftily of grandeur and destiny. On July 9th, for his second speech to Congress, it was a more humble head of state who stepped into the chamber. “I know that I can’t do everything,” he declared, “I know that I won’t succeed in everything.” The setting was unchanged, but the tone was markedly different. A chastened president, it seems, is trying to recover his touch.
In a stiflingly hot chamber, as parliamentarians fanned their moist faces, Mr Macron sent two broad messages. First, that the president, so often accused of arrogance, is in fact listening. He spoke of voters’ anger and fear, of those who feel they are “ignored, held in contempt”, and struggle to make ends meet. Results, he warned, could take time to come through. But he would keep trying. Jupiter, in other words, may still be...Continue reading
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How policy debates in Europe become untethered from reality
IN 2016 the election of an American president with a wilful disregard for the truth inspired some observers to return to “On Bullshit”, a monograph on hot air written in 1986 by Harry Frankfurt, a philosopher. Europeans delight in this sort of thing. They enjoy contrasting the “fake news” and “alternative facts” that characterise the Trump administration with their own, more honest, brand of politics. Yet they should not be so sanguine. Worryingly, bovine waste seems to be spreading in Europe.
Take the recent spat in Germany, where Horst Seehofer, the interior minister, came close to blowing up the coalition between his Bavaria-based Christian Social Union and Angela Merkel’s Christian Democratic Union. Although migrant arrivals in Germany have plummeted, Mr Seehofer wanted to turn back from the southern frontier asylum-seekers registered in other countries, an action that could have triggered a domino effect of border controls elsewhere. Denied by Mrs Merkel, Mr Seehofer...Continue reading
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Even stockmarket bulls are more cautious than at the start of the year
BEARS sound clever; bulls make money. This piece of financial acumen, imparted by a trader to a colleague, is hard to beat for brevity. It also makes a good point. There is something about market pessimism that endows bears with an aura of wisdom that is not always deserved. The cautious sound clever because they appear to have weighed the odds. Optimists seem heedless by comparison. Yet it is only by taking on risk that investors can hope to make money.
So it is telling that even bulls are now sounding cautious. The economy and stockmarket in America have had a good run, after all. The expansion, which started in 2009, is now the second-longest on record. Unemployment is low. The Federal Reserve is hawkish. This mix tends to kill a bull market sooner rather than later. The question is how much further stocks can rise. Is there still time for bulls to make money? Or will being a bear save you money as well as make you sound clever?
In this debate, each side has a distinctive way of looking at...Continue reading
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Why the euro zone hasn’t seen more cross-border bank mergers
MERGERS of euro-area banks from different countries, a banker jokes, are “very much like teenage sex. There’s a lot of talk, but little action. And when it does happen, there’s a lot of disappointment.” In recent months gossip has linked each of France’s three biggest banks (BNP Paribas, Crédit Agricole and Société Générale), as well as UniCredit, Italy’s largest, with Commerzbank, Germany’s second-biggest listed bank. Lately chatter has connected UniCredit and Société Générale. But no big, cross-border takeover is imminent.
A stream of deals in the 2000s—notably UniCredit’s purchase of HypoVereinsbank, another leading German lender, in 2005—has slowed to a trickle (see chart, top panel). Policymakers at both the European Commission and the European Central Bank (ECB) would like the flow to revive. The euro area’s banking markets are still essentially national ones. “European banking remains as fragmented today as it was in 2012,” notes Magdalena Stoklosa...Continue reading
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Development-impact bonds are costly, cumbersome—and good
IF A girl in a poor country goes to school, she will probably have a more comfortable life than if she stays at home. She will be less likely to marry while still a child, and therefore less likely to die in childbirth. So, not surprisingly, there is an Indian charity that tries to get girls into school and ensure they learn something, and there are Western philanthropists willing to pay for its work. What is noteworthy is how they have gone about this transaction.
On July 13th the Brookings Institution, a think-tank, presents the results of the world’s first large development-impact bond, which paid for girls’ education in the northern Indian state of Rajasthan. In this novel way of funding charitable work, a financial institution gives money to a charity, which tries to achieve various specified outcomes. If a neutral arbiter rules that it has succeeded, a donor or philanthropist repays the investor, plus a bonus. If it fails, the investor loses some or all of its money.
This is...Continue reading
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