A “blasphemy killing” at a university shocks Pakistan

IN THE room of Mashal Khan, a student at Abdul Wali Khan University in Mardan, a dusty town in north-west Pakistan, the late occupant’s handwriting is on almost every surface. Some of his scribblings in felt-tip pen are banal (“You beauty”) or crude (“Get your burger-flipping ass outta here”). But many hint at an idealistic and fiercely independent young mind: “Freedom is the right of every individual” and “Be crazy, curious and mad!” These were injunctions that Mr Khan, a journalism student, upheld—and that got him killed.

On April 13th Mr Khan was pulled from the room by a crowd of fellow students. The violence that followed, partially recorded on a mobile phone, was staggeringly brutal. The attackers shot Mr Khan twice, dragged his corpse through hallways, beat it with planks and stripped it naked.

Earlier in the day a fellow journalism student had accused Mr Khan of blasphemy. That allegation appears to have triggered the attack. The penalty for blasphemy under Pakistani law is death. But it is increasingly common that vigilantes take the law into their own hands before courts get involved. At least 65 people have been murdered by mobs for...Continue reading

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A new bill reveals the Japanese government’s authoritarian streak

FOR several weeks Japan’s Diet has been debating a law that would punish people who plan to commit crimes. The government says the conspiracy bill will protect the nation from terrorism. In a country where crime has fallen to a record low (a single fatal shooting was recorded for the whole of 2015) and where the last big terrorist attack was more than 20 years ago, that justification sounds feeble to many.

Japan’s federation of bar associations questions whether the police need more powers. It says they can use existing laws to pursue criminal conspiracies. Critics of the ruling Liberal Democratic Party (LDP) suspect ulterior motives. “The need for a new law is very small but the dangers of having the law are enormous,” says Takeshi Shina of the Democratic Party, the main opposition. Passage of the bill, he argues, will lead to an erosion of personal liberty: “The government is far more passionate about the freedom of the state to act than about protecting the constitutional rights of the individual.”

To be fair, the LDP, which has dominated Japanese politics for 60 years, has never hidden its authoritarian streak. It wants to do away with the liberal...Continue reading

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Vietnam uses an old naval base to make new friends

Diplomacy by other means

NEAR the point where Vietnam bulges deepest into the South China Sea lies Cam Ranh Bay, perhaps the finest natural deepwater harbour in South-East Asia. France based a fleet there in colonial times. Russian ships made use of it in the Russo-Japanese war, Japanese ones during the second world war and American ones during the Vietnam war.

After the American withdrawal and communist triumph, the government of the newly reunited Vietnam leased the naval base to the Soviet Union. Russia gave up the facility in 2002. Today it is Russian tourists who flock to Cam Ranh International Airport, with its American-built airstrip, on their way to the beaches of nearby Nha Trang.

These days Vietnam ostensibly follows a policy of “Three Nos”: no military alliances, no foreign bases and no joining with another country to fight a third. Nonetheless, adjacent to the Vietnamese naval base at Cam Ranh is a facility that receives foreign military vessels. In theory it is a purely commercial venture, open to the ships of any country willing to pay for the maintenance and refuelling it provides. But it also serves a strategic purpose:...Continue reading

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What the trials of migratory birds say about Asia’s development

KATHERINE LEUNG was hunting for birds—black-tailed godwits to be precise. Armed with a wide net, she stood at dusk amid the Mai Po Marshes, a wide expanse of mudflats, mangroves and shrimp ponds on Hong Kong’s border with mainland China, trying to nab a couple of birds as they came to roost after feeding. In her pocket were two tiny and expensive radio transmitters. An employee of the World Wide Fund for Nature (WWF), which manages Mai Po, she was hoping to affix them to the backs of two godwits heading north for the summer. By the time she gave up, at midnight, she had not caught any godwits, but she had snared three gorgeous greater painted snipe. She had also spotted an eagle owl out hunting and a leopard cat prowling nearby. She will be hunting herself again soon, as the godwits’ twice-yearly transit reaches its peak.

Astonishingly little is known about the godwits that arrive at Mai Po in full breeding plumage at this time of year—neither where exactly in the warmer parts of Asia they have wintered nor where, in the far north, they will breed. Most of the world’s migratory waterbirds barrel up and down one of eight big north-south “flyways”. The East...Continue reading

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Managing financial risk on London’s massive Crossrail project

THE eastbound platform on the Elizabeth line at Farringdon Station in central London is 30 metres below ground. Its length is as striking as its depth. At more than 200 metres, it is almost twice as long as the typical platform on the Tube. When service begins in December 2018, it will increase rail capacity in central London by 10%, thanks to the longer trains. Travellers nearest to the terminal stations at Reading and Heathrow, to the west of the city, and Shenfield and Abbey Wood, to the east, have a shot at the acme of commuter luxury: a seat.

Crossrail, as the £14.8bn ($19bn) infrastructure project is known, is on track to deliver other small miracles. With 85% of the work completed, the project is on-budget and on-time, in spite of its size and complexity. The programme required ten new stations, some with passenger tunnels linking them to existing Tube lines. The Elizabeth line itself will snake through 13 miles (21km) of twinned tunnels, including a section under the Thames. Tunnelling is a risky business. You never can tell if you’ll run into a hold-up. The Crossrail dig has yielded 10,000 items of interest to archaeologists. At Farringdon the diggers found 25...Continue reading

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How and when to use private money in infrastructure projects

WHEN the Indiana Toll Road was opened in 1956, there were eight pairs of travel plazas, or rest stops, along the 156-mile (250km) stretch linking Chicago to Ohio and points eastward. As cars became faster and less thirsty, travellers had less reason to stop regularly for petrol or snacks. Three of the travel plazas closed in the 1970s. Restaurants shuttered, even if offered free rent. The remaining plazas, dwindling in number, fell into disrepair. The abiding memory some road users had of Indiana was of grubby toilets along the toll road.

Those rest-stops are at last getting a makeover. IFM, an Australian infrastructure fund, is investing $34m in the toll-road’s plazas, part of a $200m-plus upgrade. Half of the road’s length, with 57 bridges, is being resurfaced, using a treatment known as “crack-and-feed”, which lasts longer than simply patching the top. IFM, which acquired a 66-year lease on the road in a $5.8bn deal in 2015, says a private-sector operator has the right incentives to invest for the long term. Fewer tyre blowouts mean less gridlock, more road users and more revenue.

Politicians across the spectrum agree on the need to upgrade America’s...Continue reading

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Digitisation shakes up corporate-bond markets

JUST a few decades ago, an asset manager wanting to trade shares, bonds or derivatives almost always had to call up the trading desk at a big investment bank. Today shares and many derivatives can be traded with a few simple clicks (or even in fully automated fashion, using algorithms). But buying and selling bonds, especially corporate bonds, is still an old-fashioned business. Over four-fifths of trading in American corporate bonds still takes place with a dealer, usually over the phone. Yet digitisation is at last beginning to change the structure of bond markets: witness the announcement on April 11th by Tradeweb, an electronic-trading platform, that it is to offer “all-to-all” trading in European corporate bonds, ie, a system in which any market participant can trade with any other.

Electronic bond-trading is not in itself new. Tradeweb’s platform, initially limited to trading of American Treasuries, was unveiled in 1998. Around half of Treasuries, and nearly 60% of European government bonds, are now traded electronically, reckons Greenwich Associates, a consultancy. But for corporate bonds, progress has been slower: only 25% of global trading volume in...Continue reading

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America’s big banks have an encouraging first quarter

WHAT a difference a year makes. When America’s big banks reported first-quarter earnings for 2016, the mood was glum. The Federal Reserve was proving tardier than hoped in raising interest rates, which held down lending margins. Jitters about the world economy meant rotten results for investment-banking units, in what is usually their best season of the year. Regulators added to the misery: last April the Fed rejected the “living wills”—plans for liquidating lenders that get into trouble—of five of the six largest banks.

This spring bankers are happier. Business perked up last year after that dismal start. Donald Trump’s election in November, accompanied by promises to ginger up the American economy, cut corporate taxes and roll back regulation of finance, gave banks’ shares a lift (see chart). The Fed raised rates in December and again in March and is likely to keep increasing them. And 2017’s first-quarter results have, mostly, seen an improvement—though the cheer was not evenly shared.

“Wall Street activities have performed better than Main Street ones,” says Mike Mayo, an independent bank analyst. Revenues from capital-market...Continue reading

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The IMF nudges up its forecast for global growth

APRIL is the cruellest month, breeding lilacs out of the dead land, and, in Washington, chirpy forecasts from the IMF that often prove a bit too chirpy. On April 18th the fund released its semi-annual World Economic Outlook (WEO), raising its forecast for global growth in 2017 to 3.5%.

Growth forecasts for the emerging world have not changed. The IMF’s global optimism is based instead on hopes of increased growth in the rich world. The fund takes a rosy view of the American economy, citing both high levels of consumer confidence and Donald Trump’s plans for more government spending. In Britain the IMF now reckons GDP will grow by 2.0% in 2017, up from earlier estimates of 1.5% (issued in January) and 1.1% (last October). The IMF has also raised its forecasts for Japan and the euro area.

Snipers point out that IMF forecasts have been far from perfect. Some glitches are excusable. In the spring of 1990, it predicted that Kuwait’s economy would grow by 0.8% that year. It actually fell by 26%. The IMF’s model did not allow for an Iraqi invasion. But other errors are less easily explained: between 1990 and 2007, the IMF’s spring forecasts...Continue reading

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A trade economist wins the John Bates Clark medal

IN 1853 the government of India, then directed by Britain’s East India Company, began construction of a vast rail network, continued by the British Raj, established in 1858. At the time, most inland transport in India was hauled by draught animals: with carts where roads existed and were passable; packed on animals’ backs when they were not, which was often. Moving goods across the great expanse of the subcontinent was costly and painfully slow. That changed with the arrival of the railway. Between 1853 and 1930 more than 67,000km (42,000 miles) of rail was laid across India, providing transport that was fast, cheap and reliable. A bullock could carry a pack 30km a day; an engine could haul freight 600km over the rails in the same time.

Working out the impact of this took Dave Donaldson (a PhD candidate at the London School of Economics when he started trying) nearly a decade. He dug through mountains of yellowed colonial-era records that had never before been collated and digitised. He found that eight different kinds of salt were sold across India, each sourced from just one region: this quirk allowed him to use local differences in the price of salt to calculate transport...Continue reading

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America and Canada, divided by a common border

A MILE of water divides the American village of Morristown from its Canadian neighbour, Brockville. Their economies were once closely linked, with small factories on each bank of the St Lawrence river producing patent medicines such as Dr Morse’s Indian Root Pills and Dr Williams’ Pink Pills for Pale People. Old folk remember winters when the river froze, and trees jammed into the ice marked a path to Canada. Both towns are conservative. The elected town supervisor of Morristown, Frank Putnam, a Republican, is especially exercised by welfare spending in his county, a struggling tract of upstate New York sustained by dairy farms, summer tourism and two state prisons.

Now a debate with worldwide resonance has revealed differences between the two settlements. In common with cities across Canada, Brockville has volunteered to host Syrian refugees. Residents, church groups and civic leaders are raising about $25,000 in private funds to sponsor each family for a year. Across the St Lawrence, by contrast, Mr Putnam is sure that the cost of receiving refugees would cause “alarm” in Morristown. He supports President Donald Trump’s attempts to halt refugee arrivals from Syria and...Continue reading

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Immigration cannot plug the hole in America’s budget

ON APRIL 12th almost 1,500 economists of varied political hues wrote to Donald Trump, urging him to consider the advantages of immigration. The benefits to America “far outweigh” the costs, they explained. Not only are immigrants often skilled (especially in the sciences) and entrepreneurial, they also tend to be young. As the baby-boom generation enters retirement, a demographic counterweight will come in handy.

Mr Trump, who did not win the presidency by listening to economists, proceeded to order a review of high-skilled visas on April 18th. The order is vague; his language was not. “We’re going to defend our workers, protect our jobs and finally put America first,” he said. On this issue the wonks can stand firm: highly educated immigrants are indisputably good for America. Still, they should not claim too much. As a treatment for America’s long-term budgetary malaise, immigration is probably more of a painkiller than a cure.

The effects of...Continue reading

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For posties, online shopping has an unpleasant bite

CHISELLED in granite on a post office in Manhattan is the United States Postal Service’s unofficial motto: “Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds.” Dogs sometimes do, though. The number of canine attacks on postal workers has climbed from 5,581 in 2013 to 6,755 in 2016. Most attacks occur in cities, where postal workers often walk to make deliveries. Los Angeles has the worst record, with 80 dog attacks last year, followed by Houston with 62.

Thanks to e-mail, online banking and the like, the postal service delivers many fewer letters than it used to. The volume of first-class mail it handles has dropped from 91bn items in 2008 to 61bn in 2016. But internet shopping has led to a jump in parcel deliveries—up from 3.3bn to 5.2bn in the same period. Posties with parcels often knock on doors, which gives the dogs an opportunity.

Following a rise in canine attacks in 2015, the post office launched an app on postal workers’ hand-held scanners that warns of dogs at certain houses. Owners of repeat offenders are told to pick up post at a nearby post office. If a loose dog plagues a...Continue reading

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Even with insurance, American medical care can be ruinous

ALTHOUGH Donald Trump occasionally pokes it in the ribs, the fight seems to have gone out of the Republican effort to reform America’s health-care system. That is a shame, not because the first attempt at reform was well-judged, but because the system badly needs attention. Seven years after Obamacare became law, health care remains ruinously expensive.

Even as the number of people without insurance has fallen, the proportion of Americans who struggle to pay for treatment has hardly budged. In February of this year, 29% of people said they or a family member had struggled to pay a medical bill, according to a poll by the Kaiser Family Foundation; in March 2010, 30% said the same thing. About 60% of the strugglers in the latest poll had used up most or all of their savings; nearly three-quarters had cut back spending on food, clothes and basic household items.

Strikingly, 30% of people with health insurance reported struggling—not much lower than the 41% without insurance who did so (retired people, who are covered by a government scheme, fared better: only 20% said they struggled). One reason is that insurers have been passing on more medical charges to...Continue reading

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Migration southward and westward is picking up again

LIKE birds, people tend to move from place to place along established routes. Since the second world war, among the most travelled of these routes in America has been from the “snow belt” in the Midwest and north-east to the “sun belt” in the south and west. The recession that began in 2007 knocked Americans off course for a while, and led to confident predictions that old cities would recover some of their population losses. But people have begun to head southward and westward again.

According to recently released estimates by the census bureau, Maricopa county in Arizona, which includes Phoenix and its suburbs, grew by 222 people a day on average in the year to July 2016. It overtook Harris county in Texas, home to Houston, as the county with the highest annual population growth. Cook county, which includes Chicago, saw the largest population fall in the same period, with a net loss of more than 21,000 people. Seven of America’s eight fastest-growing states are in the west. (In addition to Arizona, they are Colorado, Idaho, Nevada, Oregon, Utah and Washington; the eighth state is Florida.) Illinois, which contains Chicago, has lost more people than any other state for three years in a row.

People tend to move for...Continue reading

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Not so hot on the border wall

WILLIAM, a tractor-trailer driver, leans against his navy blue truck and stares across the highway to the crowded hills of Tijuana. He voted for Donald Trump, but roundly opposes the president’s plans for a new border wall. “People will find a way around any wall. And it’s going to be you and me paying for it,” he warns, as NPR, a public-radio station, streams from his radio. His attitude, which is surprisingly widespread along the border, hints at trouble for the president.

On April 10th the customs and border protection agency announced that it will test prototypes of Donald Trump’s proposed wall somewhere in the Otay Mesa area after it chooses finalists this summer. A barricade covered in solar panels, a wall topped by a monorail and an obstacle course in which one of the barriers is a 100-foot ditch full of nuclear waste are just some of the hundreds of proposals the department will choose from.

Otay Mesa is a natural place to test a wall (which is unlikely to be so whimsical), suggests Eric Frost, who directs the homeland-security graduate programme at San Diego State University. The border crossing is one of the county’s busiest but Otay Mesa still has enough open land for new construction. “The prototypes need to interact with real people and real cars and real trucks. It doesn’t make sense to build them in the middle of the...Continue reading

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Arkansas fails to break an execution speed record

IT WAS 11.15pm at the Cummins Unit, the facility on the Arkansas plains where death sentences are supposed to be carried out, and the clock was ticking. Not in the usual way, however: rather than the condemned man, Don Davis, seeking an emergency stay, on April 17th the state was asking the Supreme Court in Washington, DC, to lift one. The death warrant would expire at midnight; if it did, Arkansas might be unable to dispatch Mr Davis for the foreseeable future. That is because its supply of a drug it intended to use in a run of eight back-to-back lethal injections—a glut of executions unprecedented in the modern era—will soon expire, too.

The journalists who had been ushered through the electric fences, then past the watch towers and the incongruous rose garden, drew lots to decide who would serve as witnesses. It was unclear whether there was still time for a legal kill. Finally, at a quarter to midnight, the justices declined to lift the stay. Increasingly and chaotically, a gruesome plan that, had it been realised, might have suggested a revival of America’s death penalty, has come instead to seem further evidence of its anachronism.

Arkansas has an unhappy...Continue reading

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Stability or stagnation in Algeria?

The pitfalls of Islamic fashion

Keeping covered

ISLAMIC fashion websites can be pretty drab. KhaleejiAbaya.com, an outlet based in Teesside, North England, plies its selection of faceless black coverings under the somewhat overstated slogan “effortlessly elegant”. Alongside, its website carries a health warning on the “dangers of al-tabarruj”, the impermissible exposure of beauty. Defying such prudishness, leading Muslim designers recently took part in London Fashion Week, a global showcase of threads, to prove that what they called “Modest Fashion” could be as sleek as a bedtime story from a Thousand and One Nights.

The organisers avoided the word sexy, since that would be un-Islamic, explained one. But their models on the catwalk wore make-up, nail-polish, and figure-hugging costumes. Some had veils, though these tended to slip from their heads as they strutted to techno beats. Abayas were embellished with leather straps, transforming nun-like uniforms, said the publicity, into “edgy urban wear perfect for warrior princesses”. Nearby, cosmetics companies plied alcohol-free perfume and lipsticks free of animal fat, which made the products...Continue reading

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Signs of tension within the Palestinian group that runs Gaza

AT DAWN earlier this month three men were led to the gallows in Gaza, the first executions for nearly a year. Hamas, the Islamist group that controls the strip, had earlier offered clemency to Palestinians who collaborate with Israel—promising that the “doors of repentance” would be open if they confessed. That was the carrot. The hangings were the stick.

These are tense times in Gaza, after the assassination on March 24th of Mazen Fuqaha, one of Hamas’ military commanders. A native of the West Bank, he was arrested in 2002 for his role in a suicide bombing in Israel, then freed in a prisoner swap in 2011 in return for a captured Israeli soldier, Gilad Shalit. He died in his garage after an afternoon outing with his family, shot four times with a silenced pistol. It was a professional job. The gunmen collected their shell casings and disabled a nearby security camera. Hamas was quick to blame Israel.

The men hanged as collaborators with Israel probably had nothing to do with it: all three were arrested long before Mr Fuqaha’s death. But their hasty executions, after years languishing in prison, were a sign of how badly the hit had rattled Hamas. The...Continue reading

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Exploitation and short-sightedness in Africa’s slums

STANDING on a muddy patch of grass in Mathare, a district in the eastern part of Nairobi, Kevin surveys his handiwork. From an electricity pylon, a thick bundle of crudely twisted wire hangs down into a tin-roofed shack. From there it spreads to a dozen more. Single wires run perilously at eye level over open sewers, powering bare light-bulbs, kettles and blaring speakers. In exchange for a connection, Kevin and six of his friends collect 200 shillings per month each (about $2) from about a hundred shacks in his corner of the slum. To protect the business, the gang pays off police officers and intimidates the competition. The connections, Kevin insists, are cheaper than official ones, and safer too. The rotting body of a fried rat near one of the lines suggests otherwise.

So goes the provision of public services in Nairobi’s poorest districts. These warrens of shacks and crudely built apartment blocks are home to 40% of the city’s population, according to one recent World Bank survey (others put the figure even higher). As the city’s population has exploded—from a third of a million at independence in 1963 to over 4m now—so too have the slums. Across Africa, they are the...Continue reading

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Martin Schulz wants to emulate his “idol”. It won’t be easy

WHEN Martin Schulz entered the village hall in Nunkirchen on March 24th, in the hilly German state of Saarland, the cheer nearly blew the roof off. To a beery crowd of villagers and party activists, the candidate for Germany’s centre-left Social Democrats (SPD), who hopes to replace Angela Merkel as chancellor, was introduced as a near-messiah: “the man who made politics in Germany interesting again, who has reinstated the SPD’s self-belief, who has put social justice back on the agenda, who will be our next chancellor!” As he ascended the stage a hush fell. The bells of the church next door began to peal: “I didn’t ask for that!”, he insisted.

His speech quickly transcended the borders of Saarland, which was about to elect a new government. Mr Schulz ruminated on Europe; cracked folksy jokes; solemnly intoned about Germany’s historical burden; cast his family, neighbours and acquaintances from the campaign trail as characters in a compendium of parables about the country. He lingered on Willy Brandt, the SPD chancellor of West Germany from 1969 to 1974, who had once spoken in the very same hall. In reverential tones Mr Schulz recalled his 20-year-old self...Continue reading

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French Guiana, in South America, seeks more autonomy from France

Not quite Le Marais

OF ALL the voters fuming about neglect by out-of-touch politicians in distant Paris, the people of French Guiana have perhaps the strongest case. It is the second-poorest of France’s five overseas departments (DOMs). The unemployment rate, at over 20%, is more than double that of the mainland. Some 40% live in poverty. The murder rate is the highest in France.

The department is entering its fifth week of a general strike. Thousands of Guianese have taken to the streets to protest against high living costs, lack of jobs and crime. The demonstrations started on March 20th, when workers from Endel-Engie, an engineering firm, and EDF, the local energy utility, blocked roads outside the coastal city of Kourou to prevent the launch of a rocket from the Guiana Space Centre, which is based near the city.

The space centre is the main launching pad for the European Space Agency, owing to Guinea’s location close to the equator (to take advantage of the earth’s spin) and by an ocean (to reduce the chances that a botched launch will rain debris on people’s heads). It is also a symbol of the mainland’s apathy: a few...Continue reading

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Workers in southern Europe are stuck in lousy jobs

EMA ZELIKOVITCH, a 24-year-old philosophy graduate in Madrid, takes a deep breath before listing the jobs she has held over the past few years. While at university she worked as a dance teacher, waitress, street fund-raiser for NGOs, call-centre operator and greeter at political conferences for Podemos, a far-left party. Since graduating she has juggled jobs at two restaurants, but one recently sacked her. Every job was on a temporary, or “fixed-term”, contract. And while some paid her a living wage, none came with a path to promotion.

Dead-end, fixed-term jobs have haunted southern Europe for decades. In 2015 over half of employed 15-to-29 year olds in Spain were on temporary contracts, compared to two-fifths in Italy and just under a quarter in Greece; the average across the European Union is 14% (see chart 1).

More flexible northern countries tend to protect the worker rather than the job, allowing their economies to adjust more quickly to shocks...Continue reading

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The Emerging Markets Consumer Stirs Again

Results from global consumer giants Unilever and Nestlé show that even as the U.S. is a trouble spot, emerging markets are reasserting themselves. Of the two, Unilever appears better situated.

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Unshackling Europe’s sugar producers

Can cane be beet?

IN A rickety warehouse on the banks of London’s Thames sit mountains of caramel-coloured raw cane-sugar. For centuries the sweet stuff has come across the seas to Tate & Lyle Sugars’ dockside factory, to be refined into the white stuff. Cane accounts for four-fifths of global sugar production, but only one-fifth of Europe’s. Most of the continent’s sugar is made from beet, thanks to a technique developed in the Napoleonic wars, when an English blockade hit French cane-sugar imports.

No surprise, then, that the sugar-beet industry has been well guarded by Europe’s Common Agricultural Policy. But in recent years the EU has reformed its system of quotas and subsidies to lower food prices and enhance its farmers’ competitiveness; production quotas for milk were dismantled in 2015, for example. Now it is sugar’s turn. From October this year, the EU will abolish its minimum price and production quota for beet. Its complex restrictions on sugar imports will remain, however, as will its income support for farmers.

The beet sector has already been restructured in anticipation. EU compensation schemes have...Continue reading

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Markets worry more about political turmoil than encroaching autocracy

THE VICTORY of Recep Tayyip Erdogan, Turkey’s president, in a referendum on April 16th is seen by many observers as a worrying step on the road to autocracy. The vote handed Mr Erdogan far-reaching new powers. But the Turkish lira, government bonds and stockmarket all gained ground as the results came in.

It was a reminder that the relationship between markets and democracy is not rock-solid. Like an errant husband, investors may proclaim their fidelity to democracy but are not averse to seeing someone else on the side.

In Turkey investors may have feared turmoil if Mr Erdogan’s proposal had been defeated. It is an old, but fairly reliable, rule that investors dislike uncertainty. And the early years of Mr Erdogan’s tenure, when he was seen as a liberalising democrat, saw rapid economic growth; his transformation into an emerging autocrat has not put investors off. Since he took office, the Istanbul market has gained 760% (see chart).

An authoritarian government can provide certainty, at least in the short term. In 1922, when Mussolini took power in Italy, its equity market returned 29% and its government bonds 18%, according to...Continue reading

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Too Soon for MSCI to Give Chinese Stocks Its Blessing

Investors should be wary if MSCI includes domestically-listed Chinese stocks in its key indexes.

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America first frightens South Korea, then tries to reassure it

MUCH of the language used by Mike Pence, America’s vice-president, on his three-day trip to South Korea this week was familiar: America stands “shoulder-to-shoulder” with South Korea in an alliance that is a “linchpin” for peace, he said; its commitment to its ally is “ironclad”. The partnership, Mr Pence insisted, will be stronger under Donald Trump than under his predecessor, Barack Obama.

The vice-president’s trip provided a little reassurance to South Korean officials, who have been feeling queasy about Mr Trump’s pronouncements. He once threatened to bring home the 28,000-odd American troops that have been stationed in South Korea for decades to guard against a North Korean attack. More recently Mr Trump seemed to be contemplating a pre-emptive strike on North Korea, prompting a frenzy of speculation in the South Korean media about whether he was serious. The local press is now worrying about “Korea passing”—the idea that America and China will strike a deal on North Korea without consulting the South.

Unease spiked on April 9th as reports emerged that an American flotilla led by the USS Carl Vinson, an...Continue reading

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A tense election threatens Indonesia’s religious tolerance

How would God vote?

THE mood in Jakarta was jittery in the days leading up to its gubernatorial election on April 19th. Around 64,000 police, soldiers and other security personnel were deployed to keep the peace. At least one policeman guarded every one of the 13,000-odd polling stations.

Islamist agitators implied the incumbent governor, Basuki Tjahaja Purnama, known as Ahok, was planning to steal the election, and threatened to flood the city with supporters to safeguard the vote. They accused Ahok, who is both Christian and of Chinese ancestry, of “Christianising” Jakarta because, to some paranoid minds, a mosque built by the city government resembles a cross. A Facebook user claimed the gang rape and murder of Ahok’s supporters would not be sinful.

Anxious ethnic-Chinese, in turn, shared posts warning that the election of Ahok’s rival, Anies Baswedan, would lead to the forcible imposition of Islamic law. “People are saying, ‘Behave yourself, or we’ll make another May 1998,’” said one Chinese Christian Jakartan—referring to the month when deadly pogroms against Chinese broke out across the city.

The head of...Continue reading

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Let's Make a Deal, for TV Stations

The U.S.’s Federal Communications Commission is expected to reinstate a discount that could spur a new round of deal-making among U.S. TV station owners.

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China's Oil Refiners Are Coming for Your Market Share

Like steel and aluminum before, Chinese oil refining overcapacity is spilling into global markets and depressing profits.

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Qualcomm's Leap of Faith

Qualcomm’s forecast doesn’t include worst-case scenario on royalties from Apple products

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The Supreme Court appears to side with a church in a funding battle

NEIL GORSUCH sat silently through much of his first oral argument on April 19th in a constitutional case, a church-state battle over funding for pre-school playgrounds in Missouri. But a string of questions he posed to the state’s lawyer just before the end of the hour-long hearing suggests the 113th justice is sympathetic to Trinity Lutheran Church’s claim that its rights were violated when, in 2012, Missouri rejected its bid for a grant to resurface its day-care centre’s playground with used tire scraps. As our preview of the case noted, Trinity Lutheran’s application for the programme was denied, despite being highly rated, because Missouri’s constitution bars state funds from flowing, directly or indirectly, “in aid of any church, sect or denomination of religion”.

America’s separation of church and state has never been a cinch to define. In Everson v Board of Education, the 1947 case first interpreting the First Amendment rule that “Congress shall make no law respecting an establishment of religion”, a 5-4 majority saw no constitutional problem with a New Jersey law reimbursing...Continue reading

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It Is Time for Verizon to Make a Deal

Verizon’s growth is slowing and its stock is sputtering ahead of Thursday’s earnings report

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Ireland is ditching peat for energy from wind

PEAT has a lot to recommend it. It imparts a delicious flavour to whiskey. It emits an agreeable aroma when burned. It is a cheap source of energy; at its simplest it involves no more than digging by hand. Ireland, which has vast quantities of the stuff, uses it for 6% of its energy.

But peat is also one of the dirtiest fuels available, emitting 23% more CO2 than coal. Ireland is unusual among developed countries in burning it for energy on an industrial scale. A geological precursor to coal, it has been used on the island for at least 1,000 years. But it may at last be on its way out as Ireland turns to another energy source of which is has unlimited quantities: wind.

Galway Wind Park, in the remote, soggy hills of Connemara facing the Atlantic Ocean, will be Ireland’s largest wind farm when it is completed this summer, generating 169MW of power at peak capacity, or about 3% Ireland’s average needs. Some turbines are already generating electricity. It is only the latest development in Irish wind power, which has tripled in the last decade to more than 3GW of capacity. The renewable resource now provides a quarter of the electricity Ireland consumes every...Continue reading

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The Democrats fall just short in Georgia

“NO RUN-OFF”, exhorted a sign at Jon Ossoff’s campaign office in Sandy Springs. As it turned out, in the special election for Georgia’s 6th congressional district on April 18th—for a seat vacated by Tom Price, now Donald Trump’s health secretary—the Democrat fell just short of the 50% needed to avoid a second round. Mr Trump thus narrowly escaped an ominous rebuke in the sort of place Democrats hope to flip in elections next year.

Mr Ossoff was a somewhat unlikely face for the resistance. Just 30 years old, he has managed a short stint as an investigative filmmaker and a longer one as a congressional aide. Yet, with 48% of the vote, he almost seized what has been safe Republican territory since the 1970s. He was propelled by three big factors, not all of which will apply elsewhere.

First, Republican voters in the district—a stretch of mostly well-heeled, white and well-educated Atlanta suburbs—were never wild about Mr Trump. He only just prevailed there in November, whereas Mr Price, and Mitt Romney in 2012, won it thumpingly. That left the Republicans in the race ambivalent about how tightly to embrace him; the most devoted of them fared...Continue reading

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More Color Doesn't Make Akzo Nobel's Defense More Convincing

When a company unveils a €1 billion special dividend, punchy new margin targets and quarterly earnings a fifth above forecasts, you might expect its shares to leap. The exception, as Akzo Nobel showed, is when the announcement is designed to block a takeover.

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Morgan Stanley Makes CaseWhy Banks Can Go Higher

Morgan Stanley capped earnings season for top U.S. banks by turning the focus back on capital requirements.

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Bond Markets Send Jitters, But Is Anyone Listening?

Bonds have rallied sharply in the past six weeks, but other assets appear unfazed. Political jitters and positioning explain some of the moves, but it also leaves the possibility that investors should be more worried about the future.

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Eight years after a coup, a heated election in Honduras

IN THE early hours of June 28th 2009 a unit of the Honduran army stormed the house of the president, Manuel Zelaya, disarmed his guard and spirited him onto a plane bound for Costa Rica. The army sent tanks onto the streets, silenced radio and television stations and cut off electricity and water to parts of Tegucigalpa, the capital. A fake letter of resignation from Mr Zelaya was read out to Honduras’s congress, which approved his ousting. It was Latin America’s last real coup.

As a general election approaches in November, those events are uppermost in Hondurans’ minds. That is partly because Mr Zelaya has not gone away; his wife, Xiomara Castro, is a presidential candidate. More important, the current president, Juan Orlando Hernández, is breaking a taboo which Mr Zelaya was thrown out of office to protect: he is running for re-election. That, plus Mr Hernández’s authoritarian style, has made the main election issue the fate of democracy itself.

The authors of the constitution, adopted in 1982, wanted to prevent would-be strongmen from entrenching themselves in power. Unambiguously, the document declares that anyone who has exercised “executive power”...Continue reading

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A Brazilian inflation fighter becomes immortal

BRAZILIANS who remember the hyperinflationary 1980s cheered the news on April 7th that prices rose by just 4.57% in the year to March. Inflation has not come that close to the central bank’s target of 4.5% in seven years. In a fitting coincidence, on the same day one of the architects of the Real Plan, which tamed inflation in 1994, donned the gold-and-green livery of the “immortals”, as members of the Brazilian Academy of Letters are known.

Edmar Bacha is just the third economist to join the august group, whose 40 lifetime appointments are reserved for towering intellectuals and the finest wordsmiths. His election last November (by members of the academy) was one of the most contentious in its 120-year history. It may also be a sign of the times.

Besides wrestling with inflation, Mr Bacha was head of the statistics office and the state development bank. He later became an investment banker. He has a way with words. In “Fable for technocrats”, an essay published in 1974, he described Brazil as “Belíndia”, a tiny, rich Belgium surrounded by a vast, poor India. In “End of inflation in the kingdom of Lizarb”—where “everything is back to...Continue reading

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Santiago’s transport system is sputtering

Not going round fast enough

TRANSANTIAGO, the Chilean capital’s public-transport system, had its tenth birthday in February, but no one celebrated. Launched with much fanfare, the scheme was supposed to integrate bus and metro lines and speed up traffic. Smog-spewing yellow buses disappeared. Smart cards replaced cash.

But Transantiago is sputtering. Fare evasion is rampant, journeys are getting slower and the state has spent billions of dollars to prop up private bus operators. Passengers sometimes wait ages at stops scrawled with graffiti with no inkling of when the next bus will arrive. Espacio Público, a think-tank, calls Transantiago Chile’s worst public-policy project since the country returned to democracy in 1990.

Despite all that, Transantiago has brought some improvements. The number of fatal accidents has dropped sharply, as has pollution from exhaust fumes. The system’s 20,000 employees are now on formal contracts and have better working conditions than before. Because bus drivers no longer handle cash, the number of robberies has fallen. Compared with transport in many other Latin American cities, Santiago’s works...Continue reading

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Canada agrees on free trade with itself

But is it locally spawned?

DOING business across Canada is not for the impatient. Its ten provinces and three territories see themselves as quasi-countries. They set standards and write laws with little regard for what their neighbours are doing. In Ontario petrol must be at least 5% ethanol; Manitoba insists on an 8.5% blend. Each province has its own ideas of how much grain dust people can be exposed to, and what sort of packages coffee creamer should come in. Ontario requires that toilets at construction sites be equipped with “open-front” seats; Alberta is toilet-seat neutral. If you buy booze in one province you had better drink it there. New Brunswick is pursuing a resident all the way to the Supreme Court for refusing to pay a fine of C$292.50 ($220) when he was caught bringing in beer and wine he had purchased in Quebec. Trade among provinces is less free than it is among the 28 members of the European Union.

So politicians from the regions and federal government were in a self-congratulatory mood after they signed a “Canadian Free-Trade Agreement” on April 7th. Brad Duguid, Ontario’s economy minister, who hosted the gathering,...Continue reading

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The markets adjust their Brexit calculations

SOMETIMES the markets are genuinely surprised. On the morning of April 18th, news that the British prime minister was to make an announcement at 11.15am caused the pound to dip. What could the news be? Retirement due to ill health? Several pundits went on Twitter to proclaim their belief that it would not be an early election; after all, Theresa May, the prime minister, has said repeatedly that the poll would not occur until 2020. But the news was indeed that an election will happen on June 8th. The pound then stormed higher and is now more than $1.28, around its strongest level this year (but well below the $1.50 touched on the day of the Brexit referendum).

So what explains the switcharound? The hope is that the election will lead to a softer Brexit result and thus be better news for the British economy. Deutsche Bank, previously bearish on sterling, was the most prominent convert to this view.

First, it makes the deadline to deliver a “clean” Brexit, without a lengthy transitional arrangement, by 2019 far less pressing given that no general election will be due the year after. Second, it will dilute the influence of MPs pushing for hard Brexit, strengthening the government’s...Continue reading

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'Hire American' Plans Could Hobble India's Outsourcers

Plans to reform the U.S. visa system are bad news for the likes of Infosys and Tata Consultancy Services.

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Namibia’s president is flirting with racial quotas and expropriation

HAGE GEINGOB is in a bind. After years of perkiness, Namibia’s economic growth rate shrank from more than 5% in 2015 to a dismal 0.2% last year—and may now have stalled. But though President Geingob is an avowed friend of the market and seeks foreign investors, populists within his ruling South West Africa People’s Organisation (SWAPO) are calling for measures that would hobble the economy still more, by implementing a draft bill known as the National Equitable Economic Empowerment Framework (NEEEF). It would knee the business class in the groin, especially the white part of it, which still drives the economy.

Under NEEEF, all businesses, however small, would have to be at least 25%-owned by “previously disadvantaged persons”, broadly meaning black Namibians. No company would be allowed to “allot, issue, or register the transfer of any portion of its ownership…to a person that is not previously disadvantaged or to a domestic or foreign enterprise owned by a person that is not previously disadvantaged”. At least half of all company boards and management would have to be black, too.

If NEEEF were enacted, it would likely be abused by ruling-party...Continue reading

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On the Right Track, CSX Is Now One Pricey Bet

Investors are optimistic about CSX’s new CEO Hunter Harrison, but he faces a high bar following the stock’s sharp rally.

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Goldman's Mighty Traders Strike Out

A weak quarter could put pressure on Goldman Sachs to cut costs further.

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Unicorns Looking Less Magical Through IPO Lens

Cloudera is cutting its last private valuation to sell its IPO, which bodes ill for other tech unicorns.

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