![]() | Climate-change assessment: Must try harder |
A call to reform the IPCC IF THIS week’s report into the workings of the Intergovernmental Panel on Climate Change (IPCC) by a council of national academies of science were the sort of report children take home from school, its main themes would be expressed as “could do better” and “needs to show workings”. Stern parents might read it as calling for a Gradgrind-like clampdown; more indulgent ones as an inducement for the little darlings to try a little harder. At a meeting in Busan, South Korea, this October, the parents in question—the representatives of the IPCC’s member governments—will decide which sort they want to be. Read in detail, the report suggests that if they want credible climate assessments, a firm hand will be required. ... | |
![]() | Mont Liggins |
Graham “Mont” Liggins, investigator of the mysteries of birth and breath, died on August 24th, aged 84 HE FORGOT about the sheep. He had meant to dump it in the incinerator on the way home from work. It was still in the car boot, and starting to smell. When he remembered, and forced it down the incinerator chute, it was already bloating, and the gassy innards instantly caught fire. The force of the explosion sent ash 200 feet into the air over Auckland. Graham Liggins (grinning, above) was trying to find out what triggered labour. As a New Zealander, he had naturally turned to sheep. But his pursuit led to some of the most important discoveries in obstetrics, and the saving of hundreds of thousands of tiny, struggling lives. ... | |
![]() | Monitor: Putting your money where your mouse is |
Crowdfunding: Artists, musicians and writers are using the internet to aggregate lots of small donations to fund their work WIKIPEDIA, a giant online encyclopedia compiled by volunteers, is the product of the aggregation of lots of people’s spare time. An example of “crowdsourcing”, it demonstrates that on the internet, as in the real world, many hands make light work. Can the same approach be applied to money as well as time? That is the idea behind “crowdfunding”, in which lots of small contributions are aggregated online to support artistic or creative ventures. As crowdfunding has matured from a series of one-off efforts into something reproducible, the money has followed. Millions of dollars, in increments as small as $5, have poured into efforts that connect artists, musicians, writers and others with people willing to fund their projects. Venture capitalists have also shown an interest by investing in start-ups that facilitate crowdfunding. ... | |
![]() | Monitor: An online medic |
Emergency medicine: Field medicine, for soldiers and civilians alike, gets smarter as medical monitoring technology improves HALF way through a flight from Mumbai to London, a male passenger complained of a swollen right hand and an inability to bend his fingers. The flight attendants were uncertain about what to do and hooked the passenger up to a small device which took and transmitted vital signs, including his pulse, blood pressure and a picture of his hand, to a ground-based medical team. As the passenger’s condition worsened, the device was also used to transmit an electrocardiographic (ECG) trace. The resulting information was used to rule out heart problems, and the passenger was stabilised and monitored with the assistance of a doctor on the flight. The decision was made to continue the journey rather than divert to the nearest airport. ... | |
![]() | Monitor: Powering up |
Jet engines: A nifty new engine design promises to improve combustion efficiency, thus cutting fuel consumption and reducing emissions IN A world worried about global warming, improving the cleanliness and efficiency of jet engines is a priority for airlines and aircraft manufacturers. It is not just altruism: greener engines also use less fuel, and so cut costs. Incremental improvements over the years have made a difference. Modern jets burn only half as much fuel per unit of thrust as their 1960s counterparts. But some people think it is time for a radical redesign. One of those people is David Lior, the boss of a small Israeli firm called R-Jet Engineering. Jet engines rely on Isaac Newton’s third law of motion: for every action there is an equal and opposite reaction. When a jet is running, a compressor at the front draws in air and compresses it (see illustration). This air is guided and diffused by static blades to allow for easier ignition when it is mixed with fuel and ignited in a combustion chamber. The reaction comes in the form of rapidly expanding hot gases, which blast out of the rear of the jet and thus drive the aircraft forward. As they do so, they pass through another set of static blades which direct and accelerate the hot gases to turn a turbine. The turbine is connected by a shaft to the compressor at the front, thus turning it and keeping the whole process running. ... | |
![]() | Inside story: Hot rocks and high hopes |
Geothermal power: Deriving energy from subterranean heat is no longer limited to volcanic regions. By drilling deep wells into the ground, it can be made to work almost anywhere. Just watch out for the earthquakes OVER the course of the next ten years a company called Geodynamics, based in Queensland, Australia, is planning to drill as many as 90 wells, each 4,500-5,000 metres deep, in the Cooper Basin, a desert region in South Australia with large energy reserves. But the company is not drilling for oil or gas. It is looking for an energy source that is far cleaner and more abundant than any fossil fuel: heat emanating from hot rocks deep beneath the Earth’s surface, a promising emerging form of geothermal energy. Conventional geothermal power exploits naturally occurring pockets of steam or hot water, close to the Earth’s surface, to generate electricity. (Heat from the water is used to boil a fluid and drive a steam turbine connected to a generator.) Because such conditions are rare, the majority of today’s geothermal power plants are located in rift zones or volcanically active parts of the world. In Iceland, around one-quarter of the country’s electricity is produced by geothermal power stations; at the Svartsengi power station, the naturally occurring hot water also flows into a lagoon, which is a popular (and photogenic) bathing spot. ... | |
![]() | Energy in the developing world: Power to the people |
Technology and development: A growing number of initiatives are promoting bottom-up ways to deliver energy to the world’s poor AROUND 1.5 billion people, or more than a fifth of the world’s population, have no access to electricity, and a billion more have only an unreliable and intermittent supply. Of the people without electricity, 85% live in rural areas or on the fringes of cities. Extending energy grids into these areas is expensive: the United Nations estimates that an average of $35 billion-40 billion a year needs to be invested until 2030 so everyone on the planet can cook, heat and light their premises, and have energy for productive uses such as schooling. On current trends, however, the number of “energy poor” people will barely budge, and 16% of the world’s population will still have no electricity by 2030, according to the International Energy Agency. But why wait for top-down solutions? Providing energy in a bottom-up way instead has a lot to recommend it. There is no need to wait for politicians or utilities to act. The technology in question, from solar panels to low-energy light-emitting diodes (LEDs), is rapidly falling in price. Local, bottom-up systems may be more sustainable and produce fewer carbon emissions than centralised schemes. In the rich world, in fact, the trend is towards a more flexible system of distributed, sustainable power sources. The developing world has an opportunity to leapfrog the centralised model, just as it leapfrogged fixed-line telecoms and went straight to mobile phones. ... | |
![]() | Brain scan: The virtual curmudgeon |
Jaron Lanier, a pioneer of virtual-reality technology, has more recently become an outspoken critic of online social media FROM “Wikinomics” to “Cognitive Surplus” to “Crowdsourcing”, there is no shortage of books lauding the “Web 2.0” era and celebrating the online collaboration, interaction and sharing that it makes possible. Today anyone can publish a blog or put a video on YouTube, and thousands of online volunteers can collectively produce an operating system like Linux or an encyclopedia like Wikipedia. Isn’t that great? No, says Jaron Lanier, a technologist, musician and polymath who is best known for his pioneering work in the field of virtual reality. His book, “You Are Not A Gadget: A Manifesto”, published earlier this year, is a provocative attack on many of the internet’s sacred cows. Mr Lanier lays into the Web 2.0 culture, arguing that what passes for creativity today is really just endlessly rehashed content and that the “fake friendship” of social networks “is just bait laid by the lords of the clouds to lure hypothetical advertisers”. For Mr Lanier there is no wisdom of crowds, only a cruel mob. “Anonymous blog comments, vapid video pranks and lightweight mash-ups may seem trivial and harmless,” he writes, “but as a whole, this widespread practice of fragmentary, impersonal communication has demeaned personal interaction.” ... | |
![]() | Rewiring nerves: How to rewire the nervous system |
Biomedicine: Doctors are rerouting nerves to give patients more natural control of prosthetic arms and bring paralysed limbs back to life IT IS known as “phantom limb syndrome” or “phantom pain”. But this strange phenomenon feels all too real to the people it affects, and can be agonisingly painful. Amputees and people who have become paralysed may still “feel” a missing limb or a part of their body, even though it is no longer connected to their nervous system. Yet such sensations offer confirmation that even when a limb has been severed or cut off from the nervous system, the nerves that once serviced it remain alive and well. Doctors are now finding ways to put these nerves to good use, by rewiring them to control prosthetic limbs or reanimate paralysed limbs. Moreover, rewiring the nervous system should allow amputees to gain a sense of “embodiment” of a prosthetic. That is, by controlling and sensing the prosthetic using the same neural pathways and parts of the brain that once governed the real limb, the prosthetic can be made to feel and act like a genuine extension of the user’s body. And by stimulating the nerves in the legs or arms of paralysed patients—nerves that have been cut off from the central nervous system—it is possible to create co-ordinated movement of great subtlety. For example, the hands of paralysed patients have been stimulated to enable them to grasp and turn door knobs. And with careful control and co-ordination of the muscle groups in their legs, patients can even rise from their wheelchairs and take steps. ... | |
![]() | Monitor: Correct me if I'm wrong... |
Software: A new approach to speech recognition gives users the chance to fix misunderstandings without having to repeat themselves THERE is often something sweet, intimate even, about couples who finish each other’s sentences. But it can also be a source of irritation, especially when they get it wrong. A similar irritation (minus the sweetness) is often felt by users of speech-recognition software, which still manages to garble and twist even the most clearly spoken words. Might the solution lie in a more intimate relationship between the user and the software? Modern speech-recognition programs do not merely try to identify individual words as they are spoken; rather, they attempt to match whole chunks of speech with statistical models of phrases and sentences. The rationale is that by knowing statistical rules of thumb for the way in which words are usually put together—an abstract probabilistic approximation of grammar, if you will—it is possible to narrow the search when attempting to identify individual words. For example, a noun-phrase will typically consist of a noun preceded by a modifier, such as an article and possibly also an adjective. So if part of a speech pattern sounds like “ball”, the odds of it actually being “ball” will increase if the utterances preceding it sound like “the” and “bouncy”. ... | |
![]() | Monitor: Fast-track testing |
Magnetic levitation: The same technology used to make trains go fast can help identify unwanted substances in food and water TO MOST people magnetic levitation (maglev) connotes high-speed passenger trains. It is what enables the Shanghai Transrapid to glide over the tracks at speeds of as much as 430kph (267mph). But the same technology has recently found a much more pedestrian use in testing food and water. One way to identify a substance without resorting to fiddly chemical methods is to determine its density. This will not provide a precise composition but it can give a decent approximation. The purity of minerals is often assessed in this way, as are things like the amount of fat in milk or salt in water. (The less fat there is in milk, the more dense it is; the less salt there is in water, the less dense it is.) ... | |
![]() | Monitor: Schrödinger's cat and mouse |
Computing: Quantum cryptography is unbreakable in theory. But like any security system, in practice it is only as safe as its weakest link IT SOUNDS foolproof. One of the fundamental tenets of quantum mechanics is that measuring a physical system always disturbs it. If the system in question is a message written as a series of digital bits encoded in the polarisation of light, this means that intercepting and reading the message can no longer be done surreptitiously. The receiver should be able to detect an eavesdropper and take appropriate countermeasures. To a hacker, though, the word “foolproof” is a challenge. And to prove the point, two groups of academic spies have now shown that whatever the theory says, practical attempts to hide messages this way can still be vulnerable. ... | |
![]() | Offer to readers |
Buy a PDF of this complete quarterly, including all graphics, for saving or one-click printing. The Economist can supply standard or customised reprints of special reports. For more information and to place an order online, please visit the Rights and Syndication website. ... | |
![]() | Monitor: A suit that can sing and hear |
Materials: Optical fibres made of piezoelectric materials can turn sound into subtle electrical signals, and vice versa “GUITAR HERO”, a hugely popular video game, has done wonders to transform the flamboyant strumming of closet air guitarists into at least some approximation of music. But soon even the feigned exertions of fantasy rock stars may become unnecessary because researchers in America have developed an acoustic fibre, like a guitar string, capable of electrically plucking itself. Electrical signals make the fibre vibrate to produce a sound (although rather quietly, so you must listen to it closely). But the process can also be reversed, which is potentially more useful. When acoustic waves cause the fibre to vibrate, it produces a corresponding electrical signal that can be detected. This means the fibres can also work much like a microphone. In short, the fibres can both sing and hear. ... | |
![]() | Monitor: Memory upgrade |
Software: A novel approach to generating images of suspects uses a range of tricks to achieve a dramatic improvement in accuracy THE human brain is hard-wired to recognise faces. Babies learn to identify their parents’ faces within hours of being born, and even in old age people can remember what their childhood friends looked like. But remembering faces is not the same as being able to describe them. This is particularly apparent when witnesses are asked by the police to create a composite picture of a suspect. Even when the result is thought to be a good likeness by the witness, that does not mean that other people will also be able to recognise the face and thus identify the suspect. Indeed, even when working from a fresh memory, the composite pictures people produce are, on average, recognisable to others only 20% of the time. And this percentage dwindles further if the witness is working from a memory more than a few days old. The problem is that face recognition is a holistic process: people are good at recognising faces as a whole, but struggle to identify or describe individual facial features, such as a person’s eyes, nose or mouth. ... | |
![]() | Mining social networks: Untangling the social web |
Software: From retailing to counterterrorism, the ability to analyse social connections is proving increasingly useful TELECOMS operators naturally prize mobile-phone subscribers who spend a lot, but some thriftier customers, it turns out, are actually more valuable. Known as “influencers”, these subscribers frequently persuade their friends, family and colleagues to follow them when they switch to a rival operator. The trick, then, is to identify such trendsetting subscribers and keep them on board with special discounts and promotions. People at the top of the office or social pecking order often receive quick callbacks, do not worry about calling other people late at night and tend to get more calls at times when social events are most often organised, such as Friday afternoons. Influential customers also reveal their clout by making long calls, while the calls they receive are generally short. Companies can spot these influencers, and work out all sorts of other things about their customers, by crunching vast quantities of calling data with sophisticated “network analysis” software. Instead of looking at the call records of a single customer at a time, it looks at customers within the context of their social network. The ability to retain customers is particularly important in hyper-competitive markets, such as India. Bharti Airtel, India’s biggest mobile operator, which handles over 3 billion calls a day, has greatly reduced customer defections by deploying the software, says Amrita Gangotra, the firm’s director for information technology. ... | |
![]() | Monitor: Ruses to cut printing costs |
Office technology: All kinds of technological tricks are being used to reduce the cost and environmental impact of office printers THE dream of the paperless office has been around for years, but it has remained just that, despite the rise of e-mail and the web. True, paper consumption in American offices peaked in 2001, but since then it has declined only slightly from its high of around 150 pounds (68kg) of paper per worker per year. In Europe, meanwhile, each worker prints an average of 31 pages a day, seven of which were not even wanted, according to recent research by Lexmark, a printer manufacturer. The cost of all that paper, toner and ink quickly adds up. Which is why, earlier this year, the University of Wisconsin-Green Bay adopted a novel strategy to save money on print supplies: it changed its fonts. Programs like Microsoft Outlook default to Arial, but a thinner-lined typeface such as Century Gothic requires less toner or ink to form its characters. A study in 2009 showed that switching to Century Gothic could save businesses as much as $80 per printer per year. The university predicts that this year it will reduce its $100,000 print-supplies bill by around 10% by making this simple change. ... | |
![]() | Monitor: Gently does it |
Motoring: Spies on the dashboard can teach people to drive more economically—and tick them off if they fail to do so SOME people always take things to extremes. For those trying to save fuel there is hypermiling, in which the really dedicated try to use less than 4.5 litres/100km (ie, travel more than 80 miles on a gallon) in a car that under normal use might do only half as well. Apart from driving very slowly and trying not to use the brakes (which dissipates energy), hypermilers employ other tricks, such as wiring the fuel injectors up to lights mounted on the dashboard so they can see whether or not they are squirting fuel into the cylinders. Although this is all too much trouble for most motorists, the hypermilers do have a point: driving technique plays a big part in how much fuel a car consumes. Now various devices are being used to help teach more moderate ways of driving economically. Not surprisingly, companies that operate fleets of cars and trucks are among the first users of fuel-saving “eco-assist” systems. The most popular of these are global-positioning system (GPS) units that use live traffic information and other data, such as weather and past trends, to plot not the fastest but the most economical route to a destination at a particular time. According to iSuppli, a Californian research firm, fewer than 1% of new cars have such “eco-routing” systems fitted, but it expects that by 2020 a third will. ... | |
![]() | Business this week |
Ben Bernanke told economists and central bankers at a meeting in Jackson Hole that the Federal Reserve would resume “unconventional measures” if the economy deteriorated again. The chairman of America’s central bank said the economic recovery was weaker than had been expected, but that deflation was not a significant risk. See article Purchasing-managers’ indices showed that manufacturing growth in August had accelerated in America and China. The American PMI grew faster than expected, offering a positive note amid worries about the state of the economic recovery. In China, the increase in manufacturing growth came as reassurance that an expected slowdown in economic activity would be smooth and gradual. ... | |
![]() | Politics this week |
The first direct Israeli-Palestinian peace negotiations in 20 months began in Washington. Binyamin Netanyahu and Mahmoud Abbas began talks urged on by President Barack Obama along with President Hosni Mubarak of Egypt, King Abdullah of Jordan and Tony Blair for the “Quartet”. See article In the run up to the talks, four Israeli settlers were shot dead and two injured in two separate incidents in the West Bank. Hamas claimed responsibility for the attacks. ... | |
![]() | KAL's cartoon |
![]() | Markets |
![]() | Global foreign-exchange market |
According to the latest survey of foreign-exchange markets from the Bank for International Settlements (BIS), trading in currencies surged by 20% in April this year from April 2007, when the last such survey was conducted. This marks a significant slowdown from the 72% growth seen between 2004 and 2007. Foreign-exchange swaps accounted for 44% of transactions in April this year, down from 52% three years earlier. Inter-bank trading accounted for only 39% of foreign-exchange transactions this year, down from 63% in 1998. For the first time this year, the BIS found that non-bank institutions like hedge funds and pension funds accounted for over half the transactions on the spot market. ... | |
![]() | Trade, exchange rates, budget balances and interest rates |
![]() | Manufacturing activity |
Surveys of purchasing managers by Markit, a research firm, suggest that manufacturing expanded at a faster pace in August than a year earlier in most countries. A year ago, 11 countries had purchasing managers’ indices (PMIs) below 50, indicating that manufacturing industries there were still contracting. Now, contraction is apparent in only three of the 25 countries for which August data are available. After dipping into contractionary terrain in July, China’s August PMI of 51.9 once again signalled growth, though Chinese manufacturing has clearly slowed from a year earlier. In America, the Institute of Supply Management’s index for August pointed to growth for the 13th month in a row. ... | |
![]() | The Economist commodity-price index |
![]() | Output, prices and jobs |
![]() | Overview |
America’s GDP growth in the three months to the end of June was revised down sharply to an annualised quarter-on-quarter rate of 1.6% from the previous estimate of 2.4%. In the three months to the end of March, GDP had risen at an annualised rate of 3.7% from the previous quarter. An early estimate put euro-area inflation at 1.6% in August 2010, a tenth of a percentage point lower than in July. The region’s unemployment rate remained at 10% in July, unchanged from a month earlier. ... | |
![]() | Middle East peace talks: Back to the table |
Israel’s prime minister sounds upbeat, even if no one else does YET another bout of Israeli-Palestinian peace negotiations was launched this week amid a splurge of pious public talk tempered by sceptical punditry. Not much new in that, it seems, though it is almost two years since the previous direct talks took place (and ran aground). Nothing new, either, in two ghastly shootings on the West Bank in the days before the talks. The first left four Israeli civilians dead, two of them the parents of six children and another a pregnant woman. Hamas proudly took the “credit” as a means of exposing, it said, the collusion between the Palestinian Authority and the occupying forces of Israel. The following day two more Israelis were wounded. ... | |
![]() | Maids in the Middle East: Little better than slavery |
Domestic workers in the Middle East have a horrible time AS a maid working in Saudi Arabia, Lahanda Purage Ariyawathie suffered at the hands of her Saudi employer and his wife, who skewered her body with at least 24 nails and needles (pictured). Her case was unusually brutal, but the abuse of domestic workers in the Middle East is all too common. Huge numbers of migrant domestic workers, mostly from Asia and Africa, are employed throughout the region. Some 1.5m work in Saudi Arabia, 660,000 in Kuwait and 200,000 in Lebanon. Many work very long hours and receive little food, no time off and pay that is a fraction of any minimum wage, if it materialises at all. Human Rights Watch (HRW), a New York-based group, says at least one domestic worker died every week in Lebanon between January 2007 and August 2008. Almost half were suicides and many were as a result of falling from high buildings, often while trying to escape their employers. Mistreatment is so widespread that the Philippines, Ethiopia and Nepal no longer let their citizens go to Lebanon to work as maids, though such bans have had little effect. ... | |
![]() | Rwanda's meddling in Congo: Revisiting the killing fields |
A leaked UN report looks very bad for Rwanda’s government IN 1996 Rwandan troops descended on the Chimanga refugee camp in east Congo, to which their compatriots had fled to avoid genocide at home. The soldiers gathered the refugees together with promises of meat to fortify themselves for a promised return to Rwanda. “At a given moment,” says the draft of a new report from the United Nations, “a whistle sounded and the soldiers positioned all around the camp opened fire on the refugees. According to different sources, between 500 and 800 refugees were killed in this way.” In the 16 years since his rebel forces halted the Rwandan genocide, the country’s president, Paul Kagame, has earned a reputation for steering his country firmly towards stability, economic growth and a measure of reconciliation. Lately, that reputation has come under attack. Before a landslide election victory in August Mr Kagame found himself under heavy fire for the mysterious murders, oppression and censorship that marred the run-up to the polls. Grim-faced and impatient of critics, Mr Kagame weathered the storm. ... | |
![]() | South African politics: With friends like these |
President Jacob Zuma is badly bruised by weeks of crippling strikes THE public-sector strikes that have paralysed hospitals, schools and other essential services across the country since August 18th have damaged South Africa’s image abroad. They have also undermined relations between the ruling African National Congress (ANC) and the Congress of South African Trade Unions (Cosatu), part of the ruling tripartite alliance, together with the communists. On September 1st Cosatu rejected the latest pay offer from the government, so as The Economist went to press the strikes seemed destined to continue, and even intensify. President Jacob Zuma, who ordered both sides back to the negotiating table on August 30th in a last-ditch attempt to end the strike, has emerged weakened from the fray. Cosatu, with a membership of 2m, has been feeling increasingly aggrieved since Mr Zuma took over as president 16 months ago. Having helped elevate him to power, the country’s biggest union federation thought that he was their man. Cosatu had expected to play an important role in the new administration. Instead, it has repeatedly found its policies ignored. In June relations reached near breaking-point when the ANC threatened to bring disciplinary proceedings against Cosatu’s leader, Zwelinzima Vavi, for having accused the government of failing to take action against corrupt ministers. ... | |
![]() | The future of the internet: A virtual counter-revolution |
The internet has been a great unifier of people, companies and online networks. Powerful forces are threatening to balkanise it THE first internet boom, a decade and a half ago, resembled a religious movement. Omnipresent cyber-gurus, often framed by colourful PowerPoint presentations reminiscent of stained glass, prophesied a digital paradise in which not only would commerce be frictionless and growth exponential, but democracy would be direct and the nation-state would no longer exist. One, John-Perry Barlow, even penned “A Declaration of the Independence of Cyberspace”. Even though all this sounded Utopian when it was preached, it reflected online reality pretty accurately. The internet was a wide-open space, a new frontier. For the first time, anyone could communicate electronically with anyone else—globally and essentially free of charge. Anyone was able to create a website or an online shop, which could be reached from anywhere in the world using a simple piece of software called a browser, without asking anyone else for permission. The control of information, opinion and commerce by governments—or big companies, for that matter—indeed appeared to be a thing of the past. “You have no sovereignty where we gather,” Mr Barlow wrote. ... | |
![]() | Game conservation in Africa: Horns, claws and the bottom line |
Governments have mostly failed to protect Africa’s wildlife. But other models— involving hunters, rich conservationists and local farmers—are showing promise ONLY eight specimens of the northern white rhino are left alive on the planet, and they are all in captivity. The handful that remained in the wild in Congo have not been seen in years; they are almost certainly dead. A final effort to save the sub-species earlier this year saw four northern whites shipped from a zoo in the Czech Republic to the Ol Pejeta conservancy on the Laikipia reserve in Kenya. The senses of these rhinos had been dulled by the cold concrete of Slav zoo life. In Africa, by contrast, they found themselves under open skies, with wild browse, the trees filled with weaver birds, the red soil interrupted with termite mounds and the land sweeping away to the icy peak of Mount Kenya. In such an environment the hearing of the rhinos soon sharpened and their agility returned. “They became wild again,” says Berry White, a rhino expert who oversaw the move. ... | |
![]() | Ife sculpture: Magnificent mysteries |
Ancient West African treasures embark on a journey round America AFTER acclaim in Spain and Britain, “Dynasty and Divinity”, the first big exhibition devoted to sculpture from the Kingdom of Ife (in present-day Nigeria), begins an 18-month tour of America in Houston on September 19th. The show, which consists of works in stone, terracotta and metal made between the 9th and 15th centuries, is a revelation and a treat. Art from dramatically different cultures is often hard to connect with, but these sculptures are naturalistic and remarkably accessible. Whether the subject is an animal, a person or a mythical creature, each image is well observed and has tremendous presence. More than 100 works are on view. All are loans from Nigeria’s National Commission for Museums and Monuments. Some have left Africa for the first time. Text and photo murals on the walls instruct visitors about the kingdom, an unbroken monarchy for more than 800 years. Today Ife is a city of 600,000 people. Its present ruler or Ooni is Alayeluwa Oba Okunade Sijuwade, Olubuse II; now aged 80, he studied in Britain, became a businessman and is enjoyably wealthy. ... | |
![]() | Social history: Home comforts |
Bill Bryson's book about his house At Home: A Short History of Private Life. By Bill Bryson. Doubleday; 512 pages; $28.95 and GBP20. Buy from Amazon.com, Amazon.co.uk THE fruits of Bill Bryson’s fluent and amusing writing have been fame and fortune, so he now lives in one of the most desirable dwellings in the world: an old rectory in an English country village. The social and technological history of this lovely old house is the theme of his latest book, published earlier this year in Britain and coming out in America next month. ... | |
![]() | Climate change: The ways of a warmer world |
Books about how people can and will adapt to climate change need not be Panglossian—as these two show Climatopolis: How Our Cities Will Thrive in the Hotter Future. By Matthew Kahn. Basic Books; 288 pages; $26.95 and GBP16.99. Buy from Amazon.com, Amazon.co.uk Turned Out Nice: How the British Isles Will Change as the World Heats Up. By Marek Kohn. Faber & Faber; 368 pages; GBP14.99. Buy from Amazon.co.uk ... | |
![]() | Myanmar's Than Shwe: A tyrant nobody knows |
A biography of Myanmar's dictator Than Shwe: Unmasking Burma’s Tyrant. By Benedict Rogers. Silkworm Books; 256 pages; $30. Buy from Amazon.com “PERFECTION, of a kind, was what he was after” wrote W.H. Auden in his “Epitaph on a Tyrant”. Perhaps it is this ambition that moves Than Shwe, the “senior general” in the junta which has run Myanmar into the ground. It may explain an inexplicable folly: building Naypyidaw (“Seat of Kings”), a grand new capital in a remote malaria-ridden area 320km (200 miles) from Yangon, Myanmar’s main city and former capital. ... | |
![]() | New thriller: Oily conspiracies |
A new thriller about oil and finance The Garden of Betrayal. By Lee Vance. Knopf; 320 pages; $24.95. Corvus; GBP14.99. Buy from Amazon.com, Amazon.co.uk SINCE oil lubricates almost every geopolitical machination, triggering wars, coups and uprisings, it is a bit curious that there are so few thrillers written about the stuff. “The Garden of Betrayal” is a welcome addition to a tiny subgenre. ... | |
![]() | Walking in Africa: In the steps of the master |
An adventure-laden expedition to Sierra Leone and Liberia Chasing the Devil: The Search for Africa’s Fighting Spirit. By Tim Butcher. Chatto & Windus; 325 pages; GBP18.99. Buy from Amazon.co.uk IN HIS bestselling book about the Congo, “Blood River”, Tim Butcher, a reporter for the Daily Telegraph, followed the route of Henry Stanley, an explorer with a reputation for colourful exaggeration, “a cocky chancer”. One place that Mr Butcher conspicuously failed to visit during his hectic dash through “the most daunting, backward country on Earth” was the leper colony that inspired Graham Greene’s 1960 novel, “A Burnt-Out Case”. Now he has made good this omission by trekking in the novelist’s footsteps through another neglected region of Africa, an expedition that resulted in Greene’s “Journey Without Maps”. For Mr Butcher it meant a 350-mile (560km) walk into the forests of Sierra Leone (“the poorest country on Earth”) and Liberia (“one of the world’s most failed and scarred states”). ... | |
![]() | Correction: King George II |
In "Sham country, but not sham bard" (July 31st) we wrote that the kilt was banned by King George IV’s grandfather. We were a generation wrong: George II, who did the banning, was George IV’s great-grandfather. This has been corrected online. ... | |
![]() | Letters: On industrial policy, Lexington, Australian elections, Club Med, legalising drugs, Jews and Muslims, punks |
SIR – Recent interest in industrial policy (“Picking winners, saving losers”, August 7th) has turned the discussion to how and when to do it better, rather than simply how to do it less. The distinction between leading and following the market is useful. Public investment in new industries where private investors have shown little interest (“leading”) is obviously riskier than where the private sector has already had some success (“following”). Leading can be made less risky by studying products being made in economies with incomes two- or three-times higher to see what domestically-based firms might be able to upgrade to or diversify into. However, public assistance must be given against performance indicators, which may relate to export success, or product quality, or prices moving towards international levels. Failure to specify performance conditions has been the bane of industrial policy from India to New Zealand. And as for how to improve success—it is worth bearing in mind the dictum attributed to Thomas Watson, founder of IBM, “If you want to be more successful, increase your failure rate.” ... | |
![]() | The internet: The web's new walls |
How the threats to the internet’s openness can be averted WHEN George W. Bush referred to “rumours on the, uh, internets” during the 2004 presidential campaign, he was derided for his cluelessness—and “internets” became a shorthand for a lack of understanding of the online world. But what looked like ignorance then looks like prescience now. As divergent forces tug at the internet, it is in danger of losing its universality and splintering into separate digital domains. The internet is as much a trade pact as an invention. A network of networks, it has grown at an astonishing rate over the past 15 years because the bigger it got, the more it made sense for other networks to connect to it. Its open standards made such interconnections cheap and easy, dissolving boundaries between existing academic, corporate and consumer networks (remember CompuServe and AOL?). Just as a free-trade agreement between countries increases the size of the market and boosts gains from trade, so the internet led to greater gains from the exchange of data and allowed innovation to flourish. But now the internet is so large and so widely used that countries, companies and network operators want to wall bits of it off, or make parts of it work in a different way, to promote their own political or commercial interests (see article). ... | |
![]() | Global economic policy: Monetary illusions |
Central bankers are not magicians. Don’t count on them to conjure up remedies if the rich economies flag OVER the past few years the reputations of the rich world’s central bankers have fluctuated wildly. When the financial crisis struck, they were blamed for allowing the housing and credit bubbles to build, and for failing to foresee the bust. Later they were lionised for preventing a new Depression with bold actions to support the financial system. Now a third stage is at hand, one of dangerously outsized expectations. With most governments unable, or unwilling, to offer more fiscal stimulus, central banks are left solely responsible for propping up the flagging recovery. The phenomenon is most obvious in America. Its economy has weakened, yet the default path for fiscal policy is a hefty tightening as the Obama stimulus wanes, the states slash spending to balance their budgets and the Bush tax cuts expire. With any discussion of remedies by politicians drowned out by partisan positioning before the mid-term elections in November, disproportionate hope is pinned on Ben Bernanke’s Federal Reserve. Hence the attention paid to his recent speech at Jackson Hole, which laid out, with great confidence, what further steps the Fed could take. ... | |
![]() | Japan: Self-destruction |
Japan’s ruling party should cast its most famous member, Ichiro Ozawa, into the wilderness NOT for nothing is Ichiro Ozawa known as “The Destroyer”. Over a career spent scheming in the back rooms of Japanese politics, he has made and broken alliances, toppled governments and, with laconic disdain, treated transparency and other democratic norms as so many Western pretences. Yet his latest ploy is one of his darkest. In challenging Naoto Kan, the prime minister, as leader of the ruling Democratic Party of Japan (DPJ), he threatens to bring down Japan’s third government in 12 months. Worse, he may destroy what remains of the trust that voters put in the DPJ when it ended 55 years of one-party rule last year. For the good of Japanese democracy, not to mention its own future, the DPJ must reject Mr Ozawa and all that he stands for. If the challenger does pull off a victory in the vote on September 14th—and he may—he would take over the DPJ a mere three months after he had been forced to step down as secretary-general under the cloud of a political-funding scandal. He would also replace Mr Kan as prime minister—or, if he preferred to stay in the shadows, install a puppet leader in his place. That would be a disaster, even by the sorry standards of recent Japanese politics, in which four prime ministers have come and gone in the past four years. ... | |
![]() | Pakistan's cricket scandal: Crossing the boundary |
The responsibility for Pakistan’s cricketing scandal lies ultimately with the country’s elite NOT much unites Pakistanis more than cricket. The national game inspires widespread devotion and the national team justified pride. Led by wristy batsmen, like Javed Miandad, and blood-curdling fast bowlers, like Imran Khan, Pakistan has often excelled at the world’s most popular sport after football. Its side has tended to beat India’s, despite its more modest population. In a country suffering devastation from flooding, and long divided by ethnicity, region, religion and sect, which often seems to have little to boast of, or even reason for being, cricket should be a boon. But Pakistan’s cricketers are advertising much that is wrong with their country. In-fighting (including with cricket bats), drug-taking, feigned injury, allegations of players being coerced into Islamic fundamentalism and other scandals have plagued the national side. But the most egregious involves match-fixing, to which Pakistani cricketers, allegedly including several of today’s crop, seem especially prone. ... | |
![]() | South Africa's politics: Zuma's two bad calls |
Seeking to buy off allies and cracking down on dissent: bad signs in South Africa WHEN he became president of South Africa just over a year ago, Jacob Zuma promised to quench South Africans’ thirst for renewal. After the aloof and idiosyncratic Thabo Mbeki, here was a big-hearted, charismatic “man of the people” who would unite a fractious country and help it make itself felt in the world. Sure enough, Mr Zuma was at his beguiling best during the football World Cup, a festival that passed off even better than most had dared hope. Yet even at the time of his election, it was not clear what Mr Zuma stood for. At home, in front of African National Congress audiences, he sounded like a nationalist and socialist. Abroad, he sounded like a free-market liberal. He never properly explained what he believed in. Pessimists suggested it was getting power and holding on to it. ... | |
![]() | The Iraq war: Mission truncated |
A stance that helped Barack Obama and the Democrats to victory has become a near-irrelevance WHEN he ran for president, few subjects distinguished Barack Obama more than his views on the war in Iraq. He had opposed it from the start, so he constantly reminded the electorate, unlike his main rival for the Democratic nomination, Hillary Clinton. He was determined to withdraw the majority of American troops from the country within 16 months of coming to office, unlike his Republican opponent, John McCain, who had spoken of American troops being in Iraq for 100 years. All this formed a big part of Mr Obama’s appeal to voters, who were sick of the conflict and dismayed by George Bush’s handling of it. So when Mr Obama declared the fulfilment of his pledge (a little over three months late) and the “end of our combat mission in Iraq” in an address from the Oval Office on August 31st, it should have been a triumphant moment for the president and a cathartic one for the American public. Instead, the speech was a sombre affair, and the popular reaction muted. In part Mr Obama was simply determined to avoid the mistakes of Mr Bush, who was endlessly lampooned for hopping gleefully out of a fighter jet dressed in a flightsuit in front of a banner reading “Mission Accomplished”, just as Iraq began to sink into a bloody insurgency. As Mr Obama was quick to concede, Iraqi politics are a muddle and “extremists will continue to set off bombs”. ... | |
![]() | The salmonella outbreak: Un oeuf is enough |
Unsafe eggs are the latest food scare AMERICANS are known as hearty eaters, so a string of recent food-safety scares has shaken them to their rather wide cores. The country has already endured the economic and gastronomic damage inflicted by recent recalls of unsafe spinach, peanut butter, beef and peppers. Now insult has been added to injury. The latest scare involves eggs. Officials confirm that from May to July nearly 2,000 people have been sickened by salmonella traced back to tainted eggs. As this is several times the baseline rate of affliction, it has forced the recall of over 500m eggs. That is not a deadly blow, as the country produces over 6 billion eggs each month, but more recalls may be coming. ... | |
![]() | The Bush tax cuts: A slight reprieve? |
Extending the cuts for a while may turn out to be prudent policy HOW dramatically the pendulum of fear has swung in the past year—from worries about the fragile recovery, to panic about the level of the national debt, and back to anxiety about growth again. Swinging along with it has been the fate of George Bush’s tax cuts, which are due to expire at the end of this year. Democratic Party leaders had hoped to make political capital, just before the mid-term elections in November, from the extension of the cuts for households earning less than $250,000 ($200,000 for single earners). At the same time, they hoped to paint the Republicans as hypocrites for moaning about the deficit while fighting to keep low taxes for the very rich. But these hopes, like the recovery, have withered away. The tax cuts, which were supposed to last for only ten years, had their genesis in the 2000 presidential campaign, when both Mr Bush and Al Gore, the Democratic candidate, proposed to return a portion of the then budget surplus to voters. As the economy tipped into recession in 2001, stimulus became the rationale for the cuts, and for the 2003 law that phased them in more rapidly than originally planned. By then, reduced tax revenues were contributing to a steady increase in the deficit. The Congressional Budget Office has estimated the cost of the cuts over the ten years to 2011 at $1.7 trillion. ... | |
![]() | Ohio's 1st congressional district: In black and white |
Democrats must energise their base if they are to win in November STEVE DRIEHAUS is ready to speak to old folk at a community centre in Cincinnati’s western suburbs, but their game of bingo is not quite finished and the Democratic congressman has to wait. A woman sidles over to warn that it’s a tough crowd. She is right. Some in the audience are vexed at the $26 billion package of aid for teaching and other jobs that Mr Driehaus and his colleagues in the House recently passed. “It’s another union bail-out!” yells one lady. Mr Driehaus’s suggestion that some of the blame for America’s economic ills lies with the Bush administration does not go down well, either. This is Ohio’s 1st congressional district. Covering most of Cincinnati and surrounding Hamilton County, it is a diverse political barometer with a Democratic urban core and suburbs full of Republicans and independents. George Bush carried the district in 2004; Barack Obama won it in 2008, by 11 points. Mr Driehaus was elected that year, defeating Steve Chabot, a Republican who had held the seat for 14 years and who now wants it back. ... | |
![]() | Savannah's port: A man, a plan, a canal |
Why digging in Panama is bringing out the shovels on America’s east coast SOMETIMES what is absent is more important than what is present. So it is with Savannah’s port, the fourth-busiest container port in America and one of its fastest-growing, where what is absent is the sea. Its busier rivals—Los Angeles, Long Beach and New York/New Jersey—sit on saltwater bays; Savannah’s port is almost 20 miles (32km) inland on the Savannah River, far from the city’s charming Victorian centre, in the distinctly unlovely suburb of Garden City. Yet it is precisely that remote site that has allowed Savannah to grow as swiftly as it has: land is cheap and available. Home Depot, IKEA, Target and Wal-Mart all have distribution centres of more than 1m square feet (100,000 square metres) in the Savannah area to handle cargo coming through the port, which sits at a nexus of interstate highways and railway lines that provide quick access to the south-east and Midwest. During fiscal 2009 another 1.5m square feet of warehouse space came on-stream in the region; a further 20m square feet are planned. Georgia’s ports (of which Savannah is the largest) are a big economic engine for the state, responsible in 2009 for 8.6% of Georgia’s total production income ($61.7 billion), 6.7% of its employment (295,443 jobs) and $6.1 billion in federal, state and local tax revenue. ... | |
![]() | Atlantic City: A struggling city by the sea |
New Jersey’s governor has a plan to help America’s playground FOR centuries Atlantic City has been a holiday spot. The Lenni-Lenape Indians spent their summer months there, though they called it “Absegami”. In 1850 Jonathan Pitney, a local doctor, saw the then undeveloped island as a “city by the sea”, a health resort where people could escape the dirty towns. Within a few years a train full of Atlantic City’s first spa guests arrived. A century and a half later that city by the sea boasts 11 casinos and the famous Boardwalk; but its fortunes have declined of late. People think of it as unsafe and unclean. Its jobless rate, at 12%, is higher than the national rate of 9.5%. A reported 24% of its housing units are empty. The city’s poverty rate is slightly higher than it was in 1978, when the first casino opened. Gambling, long considered recession-resistant, was one of the first industries to be affected by the latest recession. It may also, according to Moody’s, a ratings agency, be one of the last to recover. On August 18th the Casino Control Commission announced that Atlantic City’s casinos had reported a 23% decline in operating profits during the second quarter of 2010. Net revenues were down by 7%. ... | |
![]() | Lexington: The charge of the Brat Pack |
A moderate force takes shape inside the Republican Party THE Weekly Standard, the parish magazine of American conservatives, is not merely a wry observer of the political scene. From time to time it plays a direct part in Republican politics. In 2007 a clutch of its senior editors, visiting Alaska for a luxury cruise and lecture tour, were entertained by Sarah Palin in her governor’s mansion. They came away mightily impressed. On returning to Washington Fred Barnes wrote a gushing article about her. Bill Kristol later started to push her name as a possible running mate for John McCain. You might say that the rest is history, except that Ms Palin’s history in politics is far from over. Later that year the Standard indulged in another round of Republican talent-spotting when it ran a cover story about three promising Republicans in the House of Representatives whom it called the “young guns”. The three men thus flattered—Eric Cantor from Virginia, Paul Ryan from Wisconsin and Kevin McCarthy from California—liked and adopted the moniker. They have since turned the Young Guns into a bigger, formal group, working with the National Republican Congressional Committee to pick talented congressional candidates. ... | |
![]() | Energy in Brazil: Ethanol's mid-life crisis |
The sugar industry produces food, fuel and environmental benefits. How fast it grows may depend on an argument about how it should be regulated IT IS what passes for a winter’s day in upstate Sao Paulo. The sun is blazing from a blue sky feathered lightly with cirrus cloud. In a large, sloping field overlooking the city of Piracicaba, a mechanical harvester chomps through a stand of three-metre-high sugar cane, fat and juicy from months of sunshine. The harvester slices the cane into 20cm chunks and regurgitates them into a 30-tonne trailer moving alongside that will lug them a few kilometres to the Costa Pinto mill (pictured). There the cane is weighed, washed, tipped onto a conveyor belt, crushed and then, depending on market conditions, crystallised into sugar or distilled into ethanol. The woody residue—the bagaco—is burned in two high-pressure boilers that, according to the flickering needle in the control room, are supplying around 50 megawatts (MW) of electricity to the local grid—enough to power half of Piracicaba. Sugar has been grown in Brazil for 500 years, and the country is by far the world’s biggest exporter of it. But sugar now also forms the nucleus of a new agro-industrial and renewable-energy complex. Biofuels, mainly derived from sugar, are Brazil’s most important source of energy after oil. For a unit of energy, the production and use of sugar-based ethanol generates only two-fifths of the carbon emissions of petrol, and half those of corn-based ethanol, according to the United States Environmental Protection Agency. And bioplastics made from sugar cane are poised to move from the laboratory to the corner store, with the launch of soft-drink bottles. ... | |
![]() | Mexico's ruling party: The new old guard |
How ten years in power have changed the former opposition leaders SKULKING around Morelia after dark, a 17-year-old Agustin Torres would wait until midnight before sticking up posters for the National Action Party (PAN). Any earlier, and he risked being photographed by authorities monitoring subversives in the western city. “I wanted to be against the system, so I joined the PAN,” says Mr Torres, now 33 and a congressman. These days, the PAN is part of the system. After 61 years in opposition, it wrested the presidency from the hegemonic Institutional Revolutionary Party (PRI) in 2000 and held it in 2006. Its strengths reflect its legacy as the protagonist of Mexico’s transition to multi-party democracy. Unlike the big-tent PRI, the conservative PAN knows what it stands for. “Whereas the PRI is driven by power, the PAN tends to be driven by ideology,” says Luis Rubio, the head of CIDAC, a think-tank. And unlike the fractious Party of the Democratic Revolution (PRD), its leftist counterpart, the PAN runs a slick operation. It even boasts an international reach, winning 57% of the expatriate vote in 2006. ... | |
![]() | Banyan: Afloat on a Chinese tide |
China’s economic rise has brought the rest of emerging Asia huge benefits. But the region still needs the West WITH markets still on edge after the worst financial crisis in decades, and fears of renewed recession stalking the West, this week seemed a poignant moment for China’s People’s Daily to detect a “golden age of development”, for Asia at least. Yet developing Asia, led by China itself, is booming. China’s GDP barrelled along in the first half of the year, growing by 11.1% compared with a year earlier. The newly industrialised little tigers—Hong Kong, Singapore, South Korea and Taiwan—as well as most of South-East Asia seem to have fully recovered from the downturn. Even Thailand, mired in political turmoil, grew by 9.1% in the second quarter. The dream is that this gilded future is now insulated from rich-world downturns: that China—now having, after all, officially overtaken Japan as the world’s second-largest economy—can drive growth for the whole region. One day, maybe. Not yet. ... | |
![]() | China and North Korea: Greetings, comrades |
What lies behind the Dear Leader’s latest trip to China? NORTH KOREA’S leader, Kim Jong Il, must have been on an urgent mission when he boarded his bulletproof train and headed to China for the second time in less than four months on August 26th. With America’s former president Jimmy Carter in town, devastating floods in the north and a rare conclave of his ruling party only days away, Mr Kim had much to keep him at home. But buttering up China appears to be a new priority. Both China and North Korea, as is their wont, kept quiet about the visit until after Mr Kim’s return on August 30th. By then Mr Carter had left with an American, Aijalon Gomes, who had been serving eight years’ hard labour for entering the country illegally in January. Mr Gomes’s release was a rare gesture of conciliation to America after months of heightened tension caused by the sinking in March of a South Korean naval vessel. ... | |
![]() | Football and Korean reunification: Dreaming of 2022 |
The South waves sticks and dangles footballs at the North SOUTH KOREANS are unsure precisely how best to respond to the uncertain changes in the regime to the North. A hardline approach to its neighbour has been the official stance ever since the Cheonan, a Southern military corvette, was torpedoed in March. Sanctions, a diplomatic freeze and military exercises with the Americans all suggest that the authorities in Seoul are in no mood to back down. Yet this week, the South Korean Red Cross said that it would send emergency aid, mostly food and medicine, worth $8.4m to help the North cope with floods. This would be the first aid to flow north since May, but the South’s government insists it is merely a temporary humanitarian measure. ... | |
![]() | India's disappointing government: Much less than promised |
The economy is powering on, but the Congress-led coalition is squandering an opportunity to improve India THE weightlifting auditorium has a leaky roof. The athletes’ village has no kitchen. Stagnant monsoon water, abuzz with dengue-carrying mosquitoes, collects at most of the stadiums being hurriedly built for the Delhi Commonwealth games, which are due to begin on October 3rd. The security arrangements, in terrorism-stricken India, are shot to pieces because of 24-hour processions of workmen at most venues. Manmohan Singh, the prime minister, reiterates the official line that these will be the “best games ever”. That may depend on how you define “best”. This shambles, for which corruption, feuding ministries, sapping bureaucracy and shoddy workmanship are all to blame, does not matter to many Indians. Athletics is not cricket. And few know much about their country’s image abroad. Yet it is depressing, not least because it mirrors how large parts of India are run. ... | |
![]() | Nalanda university: Ivory pagodas |
An ancient pan-Asian university might yet open again NALANDA is an unlovely place in the poorest state in India. Yet, as in much of Bihar, a prosaic present belies a poetic past. It is the site of one of the first great universities which, half a millennium before the founding of Oxford, flourished with some 10,000 students and monks from all over Asia. Mango groves and lotus pools circled its halls, and an 8th-century inscription touted its “row of pagodas the spires of which touched the clouds.” If some scholars and diplomats have their way, a new generation of students will be enrolled. A bill has just snaked through India’s parliament calling for Nalanda’s revival, at a likely cost of several hundred million dollars. The Nalanda Mentor Group, led by Amartya Sen, an economics Nobel laureate, has overseen the project since it was first proposed in 2006. The Bihar state government has agreed to provide 500 acres for a new campus and India’s Planning Commission has proffered 1 billion rupees (some $21m) to get the project started. A chancellor has also been appointed. ... | |
![]() | Vietnam's economy: Plus one country |
Cheap labour will not yield gains for ever. But what comes next is unclear ON THE edge of Hanoi brick-walled factories lie abandoned, weeds sprouting in their ruins. Surprisingly, this is a sign of progress. The land is slated for new housing; the state-owned textile firm that operated there is moving to an industrial park, where it can better meet booming demand for Vietnamese garments. Exports of textiles and garments rose by 17% in the first seven months this year, to $5.8 billion, suggesting that investors still favour Vietnam as a base for cheap manufacturing. Its advantages have been amplified by recent labour unrest and rising costs in southern China’s factories. In Hanoi there is renewed talk of “China Plus One” as a strategy for multinationals keen to spread their bets. Vietnam could gain handsomely, thanks to its labour which is cheaper than China’s and its neighbours’ (see chart). Even after a pay rise, the monthly wage for a textile worker starts at $84, says Nguyen Tung Van, head of the Communist Party-run textile workers’ union, from his office in the abandoned compound. The industry employs around 1.7m people. Makers of footwear, furniture and more also gain from supplies of cheap labour. ... | |
![]() | Parliamentary polls in Afghanistan : Bloody democracy |
Elections this month should not be quite as awful as last year’s presidential one THE presidential poll in Afghanistan is still the stuff of nightmares for the technicians, diplomats and officials who had the misfortune to be involved in it. They shudder at the orgy of Taliban violence unleashed across the country on voting day, August 20th 2009, the most violent day in recent years. Voters stayed away from many polling stations, leaving corrupt supporters of the incumbent, Hamid Karzai, to stuff ballot boxes with perhaps 1m votes. And during the months of ballot auditing and recounts that followed, the business of government ground to a halt. Relations between Afghanistan’s Western backers and Mr Karzai also sank to a wretched low after the West dared to point out the extraordinary level of electoral fraud. “God, it was just terrible,” says one shaken foreign election expert. “It just can’t happen again.” ... | |
![]() | Technology and protest: A town crier in the global village |
A cross-border fraternity that strives to be seen, heard and heeded NEARLY four years ago, a web-based political movement set itself the modest task of “closing the gap between the world we have and world most people everywhere want”. Calling their group Avaaz, which means “voice” in several languages, the founders aimed to reproduce globally some of the success which their progenitors—like America’s Moveon.org, and Australia’s Getup!—had enjoyed in national political arenas. By its own lights, the movement, using 14 languages and engaged in a mind-boggling list of causes, has had some spectacular successes. Within the next few months, membership will top 6m. The number of individual actions taken (from bombarding a politician with a well-aimed message, or funding a poster campaign, to helping provide satellite phones to Burmese monks) is estimated at over 23m. Among the recent developments Avaaz claims to have influenced are a new anti-corruption law in Brazil; a move by Britain to create a marine-conservation zone in the Indian Ocean; and the spiking of a proposal to allow more hunting of whales. ... | |
![]() | E-communication and society: A cyber-house divided |
Online as much as in the real world, people bunch together in mutually suspicious groups—and in both realms, peacemaking is an uphill struggle IN 2007 Danah Boyd heard a white American teenager describe MySpace, the social network, as “like ghetto or whatever”. At the time, Facebook was stealing members from MySpace, but most people thought it was just a fad: teenagers tired of networks, the theory went, just as they tired of shoes. But after hearing that youngster, Ms Boyd, a social-media researcher at Microsoft Research New England, felt that something more than whimsy might be at work. “Ghetto” in American speech suggests poor, unsophisticated and black. That led to her sad conclusion: in their online life, American teenagers were recreating what they knew from the physical world—separation by class and race. ... | |
![]() | Charlemagne: Long live the Karlings |
The emperor Charlemagne is the wrong father-figure for Europe BEYOND the octagon of Aachen cathedral lies the golden shrine of St Mary, holding ancient relics that are displayed every seven years: the cloak of the Virgin, the swaddling clothes of the infant Jesus, the loincloth of the Saviour on the Cross and the cloth that held the severed head of John the Baptist. Such wonders made Aachen one of the great pilgrimage sites of medieval Europe. In these more sceptical times, it is the other golden casket here that commands the visitor’s attention: the one bearing the remains of Charlemagne. The Frankish warrior-king, crowned as heir of the Roman emperors by Pope Leo III in 800, is still revered locally as a saint. More importantly, he is the icon of Europe’s newer, secular faith: political and economic integration. Since 1950 Aachen has bestowed a yearly Charlemagne prize on the figure deemed to have done most to promote European unity. The winners are mostly a predictable cast of grandees. In 2002 the prize was awarded not to a person but to the euro. And in 2004 the judges conferred the prize on Pope John Paul II; a reversal, perhaps, of Leo’s coronation of Charlemagne. ... | |
![]() | Europe's Roma: Hard travelling |
Scapegoated abroad and the victims of prejudice at home, eastern Europe’s Roma are the problem no politician wants to solve SLOVAKIA is in shock; France in uproar. The cause of both nations’ turmoil is the Roma (gypsies), or, rather, what is being done to them. This week a gunman in the Slovak capital, Bratislava, killed seven people and injured 14, before shooting himself dead. Six of the victims were a Roma family, killed inside their apartment; they appear to have been deliberately targeted. In France the expulsion of hundreds of Roma immigrants, whom Nicolas Sarkozy’s government says were in the country illegally, has galvanised opposition from the pope, French churches, a UN committee and even several ministers in Mr Sarkozy’s own government. Yet further tough legislation is promised. ... | |
![]() | The French opposition: Maybe he Strauss-Kahn't |
What looks obvious to outsiders is not clear to France’s Socialists FRANCE’S opposition Socialist Party should be building up for its best crack at the French presidency in over a decade. The incumbent, Nicolas Sarkozy, is unpopular. Polls find that a majority of the French want the left to return to power. And, in Dominique Strauss-Kahn (pictured), the boss of the IMF in Washington, DC, the Socialists have a potential candidate with a real chance of victory in 2012. One new poll finds that, if a presidential election were to take place today, Mr Strauss-Kahn would beat Mr Sarkozy in a second-round run-off by a crushing 59% to 41%. If only it were that simple. After its summer conference at the Atlantic resort of La Rochelle last weekend, where delegates discussed socialism over platters of fruits de mer, the party is certainly feeling upbeat. It put on a show of unity, with rival grandees posing together for the cameras in studious harmony. Yet Mr Strauss-Kahn, the party’s best potential candidate, may not get the nomination. ... | |
![]() | Germany's energy policy: Nuclear power? Um, maybe |
Angela Merkel agonises over a planned phase-out of Germany’s nuclear capacity WHEN Angela Merkel cares about an issue she does not give a speech. Instead, she hits the road. Lately Germany’s chancellor has travelled to a wind park in Mecklenburg-West Pomerania, a nuclear reactor in Lower Saxony, and an energy-generating house in Hesse. Aiming to draw attention to Germany’s dilemmas in deciding how much and what sort of power to produce and consume in the coming decades, Mrs Merkel will bundle her answers into a comprehensive “energy concept”, to be unveiled at the end of September. This is like coming up with a menu that pleases both carnivores and herbivores. Much of the debate revolves around whether to scrap a plan devised by an earlier government to cease nuclear-power generation by 2022. The decision will affect Mrs Merkel’s political standing and the public finances, as well as Germany’s energy future. With roughly a quarter of generation capacity due to reach retirement age by 2020, decisions made now will shape the energy profile of Europe’s biggest economy for years. There is “a window of opportunity for good changes or for messing up the situation for the next 50 years,” says Olav Hohmeyer, an economist at the University of Flensburg. ... | |
![]() | Correction: Czechoslovakia |
Last week’s story on drug use in the former Czechoslovakia incorrectly conflated the velvet revolution and the velvet divorce. The country split into the Czech Republic and Slovakia in 1993, not 1989. Our apologies for the error, which has been corrected online. ... | |
![]() | Catholics in Britain: The fruits of adversity |
Bolstered by immigration and challenged by the economic downturn, the church is playing an ever more active role TO SEE two faces of Catholic Britain, you need only walk a short way from Parliament. The train and bus stations of Victoria, where many migrants arrive to seek their fortunes, are even closer. First there is the squat red brick of Westminster cathedral, home of England’s Catholic hierarchy; its Byzantine mosaics, glinting in candlelight, are a splendid setting for one of the country’s finest choirs. Round the corner things are more down-to-earth at a hostel and day-centre for the homeless (the largest in London, it is claimed) set up by a religious order, the Daughters of Charity. Among the duties of the priests and nuns who work at The Passage is liaison with police, hospitals—and undertakers, in the fairly common event that homeless people, often young, succumb to addiction or despair. ... | |
![]() | State schools and selection: The religious and the rational |
Excellent schools tend to choose their pupils. Is there another way? PARENTS seeking the best education for their offspring often look to ancient institutions. Small wonder that schools run by either the Catholic church or the Church of England are often high on their list. Almost a quarter of all children in the state system attend a religious school, most of them Anglican- or Catholic-run primary schools. In his drive to give parents more choice in educating their children, Tony Blair raised the profile of church schools by encouraging existing ones to expand and new ones to set up shop. The former prime minister was also keen on incorporating other religions into the state system. The first state-funded Muslim and Sikh schools opened soon after he took power, and the first Hindu school in 2008. ... | |
![]() | The Cambridge cluster: University challenge |
The town’s high-tech industry is weathering recession well NEITHER the drab modernity of the suburbs nor the beautiful buildings in the centre hint that Cambridge is at the heart of one of Britain’s biggest clusters of high-tech businesses. But on the outskirts of the city, just off a busy dual carriageway, is the collection of low-rise, landscape-gardened buildings that make up the Cambridge Science Park. The resemblance to the architecture of Silicon Valley is striking, and deliberate: the high-tech industry that has grown up around Cambridge is known as “Silicon Fen”. Built on the solid scientific research provided by Cambridge University—currently ranked fifth in the world by Shanghai Jiaotang University, which compiles an international league table—it features firms in sectors such as electronics, computing, software, scientific instruments and pharmaceuticals. The number of jobs in research and development is around five times the British average. ... | |
![]() | Bagehot : Lessons from 35,000 feet |
Tony Blair’s rather odd memoirs contain important truths for his successors JUST who does Tony Blair think he is? In a revealing quirk of the English language, to ask the question is to level an accusation at the same time. The former prime minister has always been hard to pigeon-hole, by class or political tribe. He is the Oxford-educated barrister with unabashedly bourgeois tastes who led the Labour Party to three victories over Conservative rivals of humbler upbringing. The social liberal and self-proclaimed “progressive” who forged close bonds with George Bush (recently declaring the Texan an “idealist” of “genuine integrity”). The devout Christian who led his country into four wars. Along with the invasion of Iraq, those shape-shifting qualities may go some way towards explaining the real loathing Mr Blair inspires in many British hearts. At least in his home country, three years out of office have done little to dim the dislike. The publication of his memoirs on September 1st was presented by much of the press as a trial to be endured. Even the announcement that he would give all the proceeds (amounting to millions of pounds) to a charity for wounded soldiers was greeted with eye-rolling, and talk of blood money. ... | |
![]() | Billingsgate fish market: Economies of scale |
An ancient market in need of an overhaul THE City of London Corporation fears draconian financial reforms that might drive banks and brokers elsewhere. It has fewer qualms, however, about overhauling another market in its fief: that for wet fish. Billingsgate, controlled by the City since 1327, lies a stone’s throw from the towers of Canary Wharf. Yet unlike those computer-driven establishments, the trading floor at Billingsgate is populated by boxes of glistening fish: eels, mackerel, salmon and exotics such as swordfish, octopus and barracuda. Merchants serve their customers while licensed porters, wearing special badges, manhandle the fish and lug them around on trolleys. ... | |
![]() | Voting reform: The new mapmakers |
The first battle of the new parliament is already well under way UNTIL it was abolished by the Reform Act of 1832, the “rotten borough” of Old Sarum elected two MPs with fewer than a dozen registered voters. If you believe Labour bigwigs, those days are back. The government proposes to redraw constituencies to make them much more equal in terms of voter population, and to shrink the House of Commons from 650 to 600 members. To create constituencies with around 75,000 voters, bits would be chopped off giant seats such as the Isle of Wight (which has more than 100,000 voters now), while sparsely peopled rural seats in places like Wales would be merged. A handful of (mostly Liberal Democrat) constituencies in the Scottish Highlands would be exempted. In order to have new boundaries ready for the next general election, the government would scrap the formal public inquiries that have dragged out previous boundary reviews for years. In response Labour frontbenchers talk of the “worst kind of gerrymandering” and of abuses to rival rotten boroughs. ... | |
![]() | Mackerel wars: Overfished and over there |
Scotland’s fishermen are up in arms as rivals commandeer a valuable catch SCOTTISH skippers are not the cheeriest lot at the best of times. Now the escalating row over mackerel is adding to their dourness. This summer first Iceland and then the Faroe Islands unilaterally jacked up the amount of the fish they intend to let their fishermen catch. This will endanger stocks, complain Scottish fishermen, who land three-quarters of Britain’s mackerel quota and earned GBP135m from it in 2009. Rich in trendily nutritious substances such as Omega 3 fatty acids, the Atlantic mackerel is big business. Every year the fish migrate northwards to summer feeding grounds around the northern coasts of Britain and Ireland and off southern Norway. These migrations are when fishermen lie in wait. Recently, however, the shoals have been foraging further north, to Iceland and the Faroes. Warmer temperatures are the most plausible explanation. ... | |
![]() | Schumpeter: Declining by degree |
Will America’s universities go the way of its car companies? FIFTY years ago, in the glorious age of three-martini lunches and all-smoking offices, America’s car companies were universally admired. Everybody wanted to know the secrets of their success. How did they churn out dazzling new models every year? How did they manage so many people so successfully (General Motors was then the biggest private-sector employer in the world)? And how did they keep their customers so happy? Today the world is equally in awe of American universities. They dominate global rankings: on the Shanghai Ranking Consultancy’s list of the world’s best universities, 17 of the top 20 are American, and 35 of the top 50. They employ 70% of living Nobel prizewinners in science and economics and produce a disproportionate share of the world’s most-cited articles in academic journals. Everyone wants to know their secret recipe. ... | |
![]() | Fake drugs: Poison pills |
Counterfeit drugs used to be a problem for poor countries. Now they threaten the rich world, too DRUG smugglers can expect harsh penalties nearly everywhere—if the drugs in question are heroin or cocaine. Those who smuggle counterfeit medicines, by contrast, have often faced lax enforcement and light punishment. Some governments deem drug-counterfeiting a trivial offence, little more than a common irritant. After all, whose spam filter does not groan with ads for suspiciously cheap “Viagra”? This could be changing, however. The pharmaceutical industry has persuaded several governments to stiffen regulations against fake drugs and to conduct more aggressive raids (see chart). Companies are also devising novel technologies to outfox the criminals. Even the Catholic church is joining the cause, issuing a stern statement in August that it is in “the best interest of all concerned that smuggling of counterfeit drugs be fought against”. ... | |
![]() | Intellectual-property battles: Patent lather |
Paul Allen has rekindled a controversy over patent trolls DEEP-FRIED beer may sound scrumptious, but is it patentable? Mark Zable, an inventive Texan, thinks it is. To protect his novel production process, which involves encasing the alcohol in batter and dunking it in a fryer, he recently applied for a patent. He wants to profit if others exploit his beery brainwave. Without patents to protect their creations, inventors would have little incentive to invent. But some Americans fret that patent protection has grown too strong. The system breeds so many lawsuits, they worry, that it throttles the innovation it is supposed to promote. ... | |
![]() | Mobile internet in emerging markets: The next billion geeks |
How the mobile internet will transform the BRICI countries BUYING a mobile phone was the wisest $20 Ranvir Singh ever spent. Mr Singh, a farmer in the north Indian state of Uttar Pradesh, used to make appointments in person, in advance, to deliver fresh buffalo milk to his 40-odd neighbours. Now his customers just call when they want some. Mr Singh’s income has risen by 25%, to 7,000 rupees ($149) a month. And he hears rumours of an even more bountiful technology. He has heard that “something on mobile phones” can tell him the current market price of his wheat. Mr Singh does not know that that “something” is the internet, because, like most Indians, he has never seen or used it. But the phone in his calloused hand hints at how hundreds of millions of people in emerging markets—perhaps even billions—will one day log on. Only 81m Indians (7% of the population) regularly use the internet. But brutal price wars mean that 507m own mobile phones. Calls cost as little as $0.006 per minute. Indian operators such as Bharti Airtel and Reliance Communications sign up 20m new subscribers a month. ... | |
![]() | Online television: Hogging the remote |
Old-media firms are firmly in control of internet video LIKE stallholders in a busy market, technology companies hawked their online-video services this week. In Berlin, Sony announced it would begin selling films over the internet to Europeans. In San Francisco, Apple unveiled a smaller, cheaper Apple TV, a set-top box designed to play videos. It also said some television shows would be available a la carte for 99 cents. YouTube, a video-streaming website owned by Google, is trying to cut deals with studios that would allow it to rent newly released films. Amazon too is reportedly trying to build a subscription service. But while technology companies are making all the noise, old-media firms are quietly steering the market. The main reason for all the activity is the abrupt appearance in shops of televisions that can plug into the internet, either through cables or wirelessly. NPD, a research firm, reckons that 12% of all the flat-screen televisions sold in America in the first seven months of this year were “connected”. That share is likely to soar. Technology firms spy an opportunity to bypass old-fashioned distributors and bring online video directly to the living room. ... | |
![]() | Petrobras: Over a barrel |
Brazil's oil giant may be paying too much to pump the stuff FOUR years ago Brazil struck oil—up to 350km (220 miles) offshore and buried under deep water and thick layers of rock, sand and corrosive salt. In places, the oil fields are 7km below the surface, so getting the black stuff out was always going to be hard. Now it looks like finding the funding will be tricky too. On September 1st, two months later than planned, Brazil’s government made public the price it will demand for an estimated 5 billion barrels, mostly in the Franco field off the coast of Rio de Janeiro. Petrobras, the national oil company that was partially privatised in 1997 (Brazil’s government still owns 40% and a majority of voting rights), will have to pay $8.51 a barrel. Analysts frown that $6 would be more reasonable. Oil is $74 a barrel, on the surface, but is worth much less underground. ... | |
![]() | Car-sharing: Wheels when you need them |
Renting cars by the hour is becoming big business CAR clubs, whose members pay an annual fee and then rent a car by the hour on a pay-as-you-go basis, are moving from a fringe fad for greens to a big global business. Carmakers have no choice but to pay attention: one rental car can take the place of 15 owned vehicles. Car-sharing started in Europe and spread to America in the late 1990s, when the first venture opened in Portland, Oregon, a traditional hangout of tree-huggers. For years it was organised by small co-operatives, often supported by local government. It still has a green tinge. One in five new cars added to club fleets is electric; such cars are good for short-range, urban use. But sharing is no longer small. ... | |
![]() | Burger King: Whopper to go |
Will Burger King be gobbled up by private equity? SHARES in Burger King (BK) soared on September 1st on reports that the fast-food company was talking to several private-equity firms interested in buying it. How much beef was behind these stories was unclear. But lately the company famous for the slogan “Have It Your Way” has certainly not been having it its own way. There may be arguments about whether BK or McDonald’s serves the best fries, but there is no doubt which is more popular with stockmarket investors: the maker of the Big Mac has supersized its lead in the past two years. Recession has favoured McDonald’s over BK, whose share price has fallen by half since the economy was flame-grilled in the summer of 2008. Shares in McDonald’s have risen, reaching an all-time high in August. Same-store sales at BK have fallen for five successive quarters. ... | |
![]() | A minimum wage for Hong Kong: So much for red in tooth and claw |
An enclave of unbridled capitalism thinks again IT HAS been mooted since 1932, but Hong Kong has never had a minimum wage. It soon will, however. In July a law was passed. And on August 30th, after endless meetings, an official commission agreed to recommend what the minimum hourly wage should be. That figure was not disclosed, but leaks suggest it will be HK$28-29 ($3.60-3.70). That is halfway between what labour groups demanded and what business groups reluctantly suggested. It will please no one: the territory’s largest labour organisations vowed to fight for at least HK$33, plus annual increases. Prices are rising and wage grumbles are rife. Bus workers briefly went on strike in August. ... | |
![]() | Correction: Accounting rules |
Our story on shocking new accounting rules (“You gonna buy that?” August 21st) contained a shocking error. We should have said that the obligation to pay for a leased item will go in the liabilities column, not the debit column. Sorry. ... | |
![]() | Economics focus: War footing |
Monetary and fiscal stimulus make a potent, if uneasy, combination THE Federal Reserve Bank of Kansas City’s annual conference in Jackson Hole, Wyoming, is the big event of the year for central bankers. But defining monetary policy is far harder than it used to be. In recent years central bankers have lurched ever closer to the realm of fiscal policy, mainly by buying government debt with freshly printed money. They can justify such “quantitative easing” (QE) on monetary grounds since they have already lowered short-term interest rates to, or close to, zero. But they also worry it is a slippery slope from QE to monetising government deficits and thence, inevitably, to inflation. When Phillip Swagel, then an official with the US Treasury, was asked why he attended the conference in 2008, he shrugged: “Fiscal policy, monetary policy—what’s the difference?” For central bankers this is an unsettling thought. Their mistrust of fiscal policy was nicely captured in a paper presented at this year’s Jackson Hole conference by Eric Leeper of Indiana University*. As central bankers have become more independent, they have increasingly based their policies on rigorous economic analysis. By contrast fiscal policy is deeply politicised, with haphazard methods and few, if any, defined goals. ... | |
![]() | The world economy: The odd decouple |
Theories about why some rich-world economies are doing better than America’s don’t stand up AMERICA is used to making the economic weather. It has the world’s largest economy, its most influential central bank and it issues the main global reserve currency. In recent months, however, some rich-world economies (notably Germany’s) have basked in the sunshine even as the clouds gathered over America. On August 27th America’s second-quarter GDP growth was revised down to an annualised 1.6%. That looked moribund compared with the 9% rate confirmed in Germany a few days earlier. America’s jobless rate was 9.5% in July (figures for August were released on September 3rd, after The Economist went to press). But in Germany the unemployment rate is lower even than before the downturn. Other rich countries, including Britain and Australia, have enjoyed sprightlier recent GDP growth and lower unemployment than America. ... | |
![]() | Rare earths: Digging in |
China restricts exports of some obscure but important commodities BEHIND the rise of resource-poor countries like Japan, South Korea and China into industrial giants has been the readiness of other countries to sell them critical commodities, albeit sometimes at excruciating cost. An unfolding collision around a group of elements known as “rare earths” is seen by some as a test of China’s willingness to reciprocate. Rare earths have become increasingly important in manufacturing sophisticated products including flat-screen monitors, electric-car batteries, wind turbines and aerospace alloys. Over the summer prices for cerium (used in glass), lanthanum (petrol refining), yttrium (displays) and a bunch of other –iums have zoomed upward (see chart) as China, which accounts for almost all of the world’s production, squeezes supply. In July it announced the latest in a series of annual export reductions, this time by 40% to precisely 30,258 tonnes. That is 15,000-20,000 tonnes less than consumption by non-Chinese producers, says Judith Chegwidden of Roskill Information Services, a consultancy. ... | |
![]() | Private equity: Candover and out |
A once-revered buy-out firm is going under. Who’s next? FOR years people have been predicting the demise of private equity. Now they have a proper tombstone to point at. On August 31st Candover, once one of Britain’s leading private-equity firms, announced that it would unwind its assets and return money to shareholders and investors. The 30-year-old firm is the biggest buy-out victim of the crisis so far. Bad investments during the boom helped undo Candover. Several companies in its portfolio have struggled under their debts over the past two years, including Ferretti, a luxury-yacht maker. In June Candover relinquished control of Gala Coral, a gambling company, to creditors. It has had to write down several other investments. ... | |
![]() | Carbon markets: The smoking greenhouse gun |
An alluring trade in “supergreenhouse” gas emissions is coming under scrutiny ONE of the curiosities of carbon markets is that they do not just trade in carbon. Other greenhouse gases can be given a value, too—sometimes a very high one. Claims that these prices promote scammery are now prompting some searching questions. The gas at the centre of the controversy is HFC-23, a greenhouse gas which, on a weight-for-weight basis, is 14,800 times better at trapping heat than carbon dioxide. HFC-23 is produced as a by-product of the manufacture of HCFC-22, an ozone-destroying refrigerant. HCFC-22 is banned in developed countries, but developing countries can keep making it until 2030. ... | |
![]() | Sovereign debt: Wiggle room |
The IMF offers indebted governments some reassurance ONE consequence of the deepest recession since the Depression has been the biggest peacetime build-up of public debt the rich world has ever seen. Some reckon that the debt position of many rich countries is now unsustainable. It is a measure of just how nervous people have become about the mountain of debt that the IMF—not usually known for taking doveish views—concluded in two papers released on September 1st that there is too much pessimism about public finances. The IMF argues that despite historically high debt-to-GDP ratios, many countries still have room for fiscal manoeuvre. Typically, the debate on the point at which a country’s debt burden spirals out of control has tried to identify a single debt-to-GDP threshold, above which things are no longer sustainable. The fund’s economists argue that a universal debt limit does not make sense. ... | |
![]() | Buttonwood: Divvying up returns |
Investors should pay more attention to dividends DIVIDENDS do not get the respect they deserve. Over the long run they provide the bulk of equity investors’ returns. Work by Elroy Dimson, Paul Marsh and Mike Staunton of the London Business School* found that over the period from 1900 to 2005, the real return from global equities averaged 5%. The mean dividend yield over that period was 4.5%. Despite this, stockmarkets devote a lot more time to forecasting and analysing profits than they do to thinking about payouts. Profits can be easily manipulated and come in a bewildering variety of forms (operating, reported, post-tax, pre-exceptional, etc). Dividends are (mostly) paid in cash and so are hard to fake. ... | |
![]() | Finance after the crisis: Deutsche Bank: A tamer casino |
Germany’s biggest bank is trying to make investment banking boring. The latest in our series of profiles of financial institutions after the crisis JOSEF ACKERMANN, the head of Deutsche Bank, combines a silky manner with blunt words. When the German government set up a bail-out fund to stabilise the country’s banking system, he said he would be “ashamed” to use it. When Europe and the IMF bailed out Greece, Mr Ackermann said he doubted it would pay back the loans. And when regulators and economists say that big banks should be broken up, with “casino” investment banks split off from “utility” retail banks, Mr Ackermann retorts that “smaller banks will not make us safer.” Mr Ackermann speaks with the authority of a man who steered his bank through the crisis more deftly than most. Deutsche did not escape unscathed. In 2008, a year in which it had confidently forecast a record profit of more than €8 billion ($11.7 billion), it posted a net loss of almost €4 billion because of a huge hit to its investment bank (see chart). Yet it emerged from the crisis as the leading member of an exclusive club of large banks—others include Barclays and Credit Suisse—that did not have to take direct injections of public funds (although all, of course, benefited from a wide range of other government props to the system). ... | |
![]() | The nature of the universe: Ye cannae change the laws of physics |
Or can you? RICHARD FEYNMAN, Nobel laureate and physicist extraordinaire, called it a “magic number” and its value “one of the greatest damn mysteries of physics”. The number he was referring to, which goes by the symbol alpha and the rather more long-winded name of the fine-structure constant, is magic indeed. If it were a mere 4% bigger or smaller than it is, stars would not be able to sustain the nuclear reactions that synthesise carbon and oxygen atoms. One consequence would be that squishy, carbon-based life would not exist. Why alpha takes on the precise value it does, so delicately fine-tuned for life, is a deep scientific mystery. A new piece of astrophysical research may, however, have uncovered a crucial piece of the puzzle. In a paper just submitted to Physical Review Letters, a team led by John Webb and Julian King from the University of New South Wales in Australia presents evidence that the fine-structure constant may not actually be constant after all. Rather, it seems to vary from place to place within the universe. If their results hold up to scrutiny they will have profound implications—for they suggest that the universe stretches far beyond what telescopes can observe, and that the laws of physics vary within it. Instead of the whole universe being fine-tuned for life, then, humanity finds itself in a corner of space where, Goldilocks-like, the values of the fundamental constants happen to be just right for it. ... | |
![]() | Emerging infections: No good deed goes unpunished |
Smallpox has gone, but monkeypox is now rearing its ugly head ONE of the greatest public-health victories of the last century was the eradication of smallpox. After the disease was pronounced extinct, in 1980, people stopped using the smallpox vaccine. That seemed the ultimate symbol of technology’s triumph over a medieval scourge. Alas, it turns out that the end of vaccination has unleashed new demons. Researchers have long suspected that smallpox vaccine also provides protection against diseases such as monkeypox and cowpox, and three decades ago a committee of experts weighed up whether ending vaccination for smallpox might allow one of those diseases to spread in humans. They decided this was unlikely. Now, a study published in the Proceedings of the National Academy of Sciences suggests they may have been wrong. A team led by Anne Rimoin of the University of California, Los Angeles, conducted surveys of people living in the centre of the Democratic Republic of Congo. They found a dramatic surge in monkeypox—a disease which, though not as bad as smallpox, kills up to 10% of those it infects. ... | |
![]() | Mental stimulation and dementia: Brain gain |
Stimulating the brain delays, but does not prevent, dementia AS THE baby-boomer generation contemplates the prospect of the Zimmer frame there has never been more interest in delaying the process of ageing. One consequence has been a dramatic rise in the popularity of brain-training games. But how effective really is a daily dose of cryptic crossword? Robert Wilson, a neuropsychologist at Rush University in Chicago, and his colleagues decided to find out, by following a group of people without dementia. Participants were asked to rate how frequently they engaged in cognitively stimulating activities. The researchers were looking for such things as reading newspapers, books and magazines, playing challenging games like chess, listening to the radio and watching television, and visiting museums. ... | |
![]() | New theatre: Scottish tragedy as burlesque |
“Caledonia”, at the Edinburgh festival, does less than justice to its subject THE foolhardy attempt by the Scots to establish a foreign colony of their own at Darien on the isthmus of Panama in the 1690s has all the ingredients for a perfect drama. It reveals greed, ambition, ignorance, folly, suffering and forbearance, all washed with an essential nobility of spirit. The venture would have circumvented attempts by the English king, William of Orange, to stop the Scots from playing their part in international trade. A new and exciting entity, a joint-stock company created by act of Parliament and financed by public subscription, would oversee the project. The Company of Scotland caught the national mood. No longer simply a business speculation, it became a patriotic crusade. ... | |
![]() | Philanthropy: Do-gooders in 1790s London |
A bid to end slavery The Clapham Sect: How Wilberforce’s Circle Transformed Britain. By Stephen Tomkins. Lion Hudson; 272 pages; $16.95 and GBP10.99. Buy from Amazon.com, Amazon.co.uk THE group called the “Clapham Sect” is best known now for its contribution, under William Wilberforce’s leadership, to the campaigns for the abolition of the British slave trade and, ultimately, of slavery itself. It was a collection of evangelical, philanthropic families, spread across three generations, many of whom settled during the 1790s in Clapham, then a prosperous village just outside London. The name itself, given later, was a mild dig at their religious clannishness. A contemporary, the Rev Sydney Smith, had been sharper, calling them the “Clapham Church”. ... | |
![]() | Japanese cartoons: The professor to the rescue |
A cartoon strip takes on the repatriation of treasures from the British Museum “THE Stonehenge megaliths have been stolen!?” So exclaims Professor Munakata at the outset of a rollicking adventure set at the British Museum, in the form of a manga, or Japanese cartoon. Over the past five months, readers of Big Comic, a Japanese fortnightly magazine, have followed the exploits of the fictitious ethnographer as he gets embroiled in a bizarre plot to force the repatriation of the museum’s prized objects. The strip, called “The Case Records of Professor Munakata”, was introduced 15 years ago by Yukinobu Hoshino, one of Japan’s most notable manga artists. Portly, bald and impeccably dressed with cap, cape and cane, the professor is Japan’s anti-Indiana Jones. He does not invite danger but bumbles into it. The strip does not follow any set formula but takes on serious issues. ... | |
![]() | New fiction: The stuff of life |
Jonathan Franzen’s brilliant new novel studies the planet, happiness and marriage Freedom. By Jonathan Franzen. Farrar, Straus & Giroux; 576 pages; $28. Fourth Estate; GBP20. Buy from Amazon.com, Amazon.co.uk IT WAS John DeForest, a writer of the civil-war period, who defined the Great American Novel in an 1868 essay for the Nation as “painting the American soul within the framework of a novel”. DeForest was arguing over the relative merits of Nathaniel Hawthorne and Harriet Beecher Stowe, two writers who definitely fit the bill. Others have laid claim to the title (or had claim laid to it by their hopeful publishers), including J.D. Salinger, Don DeLillo, Tom Wolfe and John Updike. ... | |
![]() | Black migration in America: From hominy grits to cold shoulder |
An account of the 20th-century exodus of millions of African-Americans The Warmth of Other Suns: The Epic Story of America’s Great Migration. By Isabel Wilkerson. Random House; 622 pages; $30. Buy from Amazon.com THE words ring out on Sundays from pulpits in America’s inner cities as well as its Deep South: “We ain’t what we oughta be. We ain’t what we gonna be. But thank the Lord God Almighty, we ain’t what we was.” Read Isabel Wilkerson’s account of the 20th-century exodus of millions of her fellow African-Americans from the states of the old Confederacy and the only possible response is “Amen!” ... | |
![]() | A biography of Simon Wiesenthal: The pursuit of evil |
A complicated man, obsessed by his search for justice Simon Wiesenthal: The Life and Legends. By Tom Segev. Doubleday; 482 pages; $35. Jonathan Cape; GBP25. Buy from Amazon.com, Amazon.co.uk AMONG the 300,000 pieces of paper in Simon Wiesenthal’s private archive is a letter from a Holocaust survivor explaining why he had ceased to believe in God. In Tom Segev’s description: “God had allowed SS troops to snatch a baby from his mother and then use it as a football. When it was a torn lump of flesh they tossed it to their dogs. The mother was forced to watch. Then they ripped off her blouse and made her use it to clean the blood off their boots.” ... | |
![]() | Letters: On British universities, Myanmar, bubbles, American railroads, Brussels, Japanese society, Proposition 8 |
SIR – You were right that too many universities see the international student market as the panacea for their domestic ills (“Hustling spires”, August 7th). In a recent survey of British university heads we found that over two-thirds cited increasing their international presence among their top priorities. It is questionable whether these ambitions can be supported, or indeed whether the fruits of doing so are as profitable as the numbers suggest. But more importantly, why do universities continue to seek ways to subsidise inherently uneconomic ways of working rather than rethinking outmoded business models that have changed little in 50 years? Mike BoxallPA Consulting GroupLondon ... | |
![]() | American power: After Iraq |
America has had a bruising decade. But do not underestimate either the superpower or its president WHEN Barack Obama confirms next week that all American combat forces have left Iraq, you can be sure of one thing. He will not repeat the triumphalism of George Bush’s suggestion seven years ago that America’s mission there has been accomplished. Mr Obama always considered this a “dumb” war, and events have proved him largely right. America and its allies may have rid the Middle East of a bloodstained dictator, but Saddam Hussein’s vaunted weapons of mass destruction turned out to be a chimera and the cost in American and especially Iraqi lives has been hideous. Iraq, it is true, is no longer a dictatorship. Thanks in part to Mr Bush’s lonely refusal in 2007 to heed the calls to cut and run, the sectarian bloodletting that followed the invasion has abated. But the country’s new democracy remains chronically insecure (see article), which is one reason why some 50,000 American “support” troops are to stay behind to shore it up. To many Americans, the misadventure in Iraq has come to symbolise a broader wrong turn America made after Osama bin Laden assaulted it on September 11th nine years ago. Nearly six out of ten Americans now say that they oppose even Mr Obama’s “good” war—the one against al-Qaeda and the Taliban. An America that is bleeding economically at home, with unemployment stuck at nearly 10% and debts as tall as the eye can see, is losing confidence in its ability, and perhaps in its need, to shape events in far-flung regions such as Central Asia and the Middle East. Even in an age of austerity America still towers above all-comers in military power, as well it should given its annual defence spending of $700 billion, almost as much as the rest of the world put together (see article). But the past decade has laid bare the limits of high-tech power. Whizz-bang technology enabled America to conquer Afghanistan and Iraq in the twinkle of an eye with negligible losses. Subduing them has been harder. Of the 2m Americans who have served in the two wars over the past decade, some 40,000 have been wounded and more than 5,000 killed. ... | |
![]() | Joblessness in America: A stickier problem |
America’s jobs woes cannot be cured just by waiting for economic recovery THE economy stopped shrinking a year ago, but America’s unemployment problem is as big as ever. The official jobless rate was 9.5% in July, and would be higher still had many people not given up searching for work. Some 45% of the unemployed have been out of a job for more than six months—the highest proportion since the 1930s. And judging by the recent rise in applications for unemployment benefits, the situation may soon get worse rather than better. Why is joblessness still so high? The prevailing view among policymakers is that unemployment is a painful reflection of the economy’s weakness. Americans are out of work because the slump was deep and the recovery has been lacklustre. Stronger demand will eventually solve the problem. ... | |
![]() | Regulating finance: Killing them softly |
International regulators are making progress on tackling too-big-to-fail banks TALK is cheap when it comes to solving the problem of too-big-to-fail banks. From the luxury of even today’s stuttering economic recovery it is easy to vow that next time lenders’ losses will be pushed onto their creditors, not onto taxpayers. But cast your mind back to late 2008. Then, the share prices of the world’s biggest banks could halve in minutes. Reasonable people thought that many firms were hiding severe losses. Anyone exposed to them, from speculators to churchgoing custodians of widows’ pensions, tried to yank their cash out, causing a run that threatened another Great Depression. Now, imagine being sat not in the observer’s armchair but in the regulator’s hot seat and faced with such a crisis again. Can anyone honestly say that they would let a big bank go down? ... | |
![]() | Brazil's agricultural miracle: How to feed the world |
The emerging conventional wisdom about world farming is gloomy. There is an alternative THE world is planting a vigorous new crop: “agro-pessimism”, or fear that mankind will not be able to feed itself except by wrecking the environment. The current harvest of this variety of whine will be a bumper one. Natural disasters—fire in Russia and flood in Pakistan, which are the world’s fifth- and eighth-largest wheat producers respectively—have added a Biblical colouring to an unfolding fear of famine. By 2050 world grain output will have to rise by half and meat production must double to meet demand. And that cannot easily happen because growth in grain yields is flattening out, there is little extra farmland and renewable water is running short. The world has been here before. In 1967 Paul Ehrlich, a Malthusian, wrote that “the battle to feed all of humanity is over… In the 1970s and 1980s hundreds of millions of people will starve to death.” Five years later, in “The Limits to Growth”, the Club of Rome (a group of business people and academics) argued that the world was running out of raw materials and that societies would probably collapse in the 21st century. ... | |
![]() | The Australian election: When the hat doesn't fit |
Australia’s dead-heat election was exciting. But the drama masks a desperately impoverished politics “THE bigger the hat the smaller the property.” Perhaps that piece of Aussie wisdom is what voters had in mind when they went to the polls on August 21st. Posture and pontificate as they might, Julia Gillard, the prime minister and Labor leader, and Tony Abbott, the right-wing coalition leader, were both rejected for being several hat-sizes too big. Their empty, cynical campaigns leave Australia in a mess, facing its first hung parliament since 1940, politics that is poisonous even by Australian standards, and a dangerous policy vacuum. With one lower-house seat still in doubt, the vote is as close as a Queensland afternoon. As The Economist went to press the right and left both had 72 seats—four short of a governing majority. But, counting second-preferences, the left had a tiny advantage in the popular vote. The balance of power in the lower house will rest with a Green, and four independents, who are understandably playing one side off against the other (see article). ... | |
![]() | Unemployment and the mid-terms: To help or not to help |
The parties wrestle over whether America can afford to create more jobs THE gargantuan statue of a dining-room chair that graces the centre of Martinsville is a tribute to the legacy of the local furniture-making industry. That legacy is grim, however: for decades, local factories, bested by foreign competition or automating to keep pace with it, have been shedding workers or shutting up shop altogether. Earlier this year American of Martinsville, a 100-year-old furniture manufacturer whose headquarters overlooks the giant seat, declared bankruptcy and closed its local factory, eliminating 225 jobs. Another local firm, Stanley Furniture, recently laid off 530 workers. Two other big local industries, textiles and tobacco, are equally sickly. Unemployment in the town, which was already 9% before the recession, is now 20%. Martinsville also happens to sit in one of the most marginal congressional districts in the country. At the most recent election, in 2008, Tom Perriello, a Democrat, ousted the Republican incumbent by just 727 votes, even as the district voted against Barack Obama for president. In November Robert Hurt, a popular state senator, aims to recapture the seat for the Republicans. Both candidates agree that the biggest local concern is unemployment. The same is true of America as a whole, where polls consistently rank the state of the economy, and unemployment in particular, as the voters’ main worry (see chart). But the two candidates, in keeping with the orthodoxy of their parties, have very different ideas about how to reduce it. ... | |
![]() | New Orleans five years after Katrina: Chins up, hopes high |
The budget’s holed, the police are bent, but good times keep rolling—somehow IT IS still obvious to any visitor—especially one who ventures out of the French Quarter, with its restaurants and night clubs, into the unstarred districts of the city. Something awful happened here in the not-too-distant past. The signs are everywhere: empty lots overgrown by weeds, ramshackle, leaning houses, derelict public buildings still awaiting restoration. Some houses feature “Katrina tattoos” sprayed by rescuers as they completed house-by-house searches in 2005. Nobody at home. And yet New Orleans has undoubtedly recovered its essence. The old neighbourhoods are almost intact, and the city’s irrepressible people have mostly returned. Experts estimate that perhaps 360,000 people now live in a city that was home to around 100,000 more on the day disaster struck. Those who left were probably disproportionately black and poor. Yet the city’s large black majority, still there and mostly still poor, has ensured that the extravagant culture of New Orleans has survived the flood unharmed. ... | |
![]() | The latest primaries: Squandered millions |
Neither money nor dynasty guaranteed success IT’S amazing how little $25m buys you these days; $50m, on the other hand, is something to work with. That seems to be the moral pundits are drawing from this week’s primaries in Florida, where dazzlingly wealthy political novices spent small (by their standards) fortunes vying for the Democratic nomination for senator and the Republican nomination for governor. In the end the $25m-odd that Jeff Greene, a property mogul, devoted to the Senate race won him less than a third of the vote—at $90 apiece. But the $50m that Rick Scott, a hospital tycoon, lavished on the governor’s race secured a slender victory. The two multi-millionaires are both unlikely candidates. Mr Greene made a mint betting that America’s property bubble would burst, and therefore profited, in a sense, from the present misery of millions of Florida homeowners. It did not help that he had run (unsuccessfully) as a Republican for Congress in the 1980s, had moved to Florida only two years ago and keeps getting into scrapes involving his 145-foot yacht and assorted tabloid celebrities. Mr Scott, for his part, founded a hospital chain that paid $1.7 billion to settle charges of defrauding the government during his time as chief executive. He maintains that he was not aware of any wrongdoing, but did not let this apparent laxity stop him from running as a can-do businessman. ... | |
![]() | Managing the West’s forests: For fun and profit |
Forest jobs are disappearing, too. Perhaps strategic alliances with tree-huggers can help AMERICA’S most sparsely populated states were among its more resilient during the recession. Before the downturn, places like Montana and North Dakota poked along with slow growth and greying populations. When the wheels came off the national economy, they began to move up the rankings. They were doing well from commodities, had never known housing bubbles and were not especially vulnerable to the financial sector’s troubles. In 2008 Montana’s growth rate was the highest in the country. But no state has escaped unscathed, and a good example of that is Montana’s timber industry. A furious national rate of homebuilding kept lumber prices high at the beginning of the decade, but as the markets collapsed, so did housing starts. In 2008, according to the University of Montana’s Bureau of Business and Economic Research, the state’s overall sales of wood and paper products were roughly $710m, down from about $1.2bn in 2005. ... | |
![]() | Housing sales: Grinding to a halt |
Loss of a credit collapses the market THERE was always some concern that the Obama administration’s attempts to prop up the housing market with a generous housing-tax credit could end badly. Opponents of the policy—worth up to $8,000 for first-time buyers—argued that it would merely move sales around, from after the deadline to before, and could produce a slump when the deadline passed. Such fears helped clear the way for an extension of the programme from its first 2009 deadline to April of this year. Despite some effort, Congress in the end decided against a second extension. With the support of the credit gone, a period of housing-market weakness was inevitable, but the actual decline has been distressingly bad. ... | |
![]() | Lexington : The president and the peace process |
A thankless task, but at least Barack Obama seems to be trying WHY, you have to wonder, do they bother with it? The “peace process”, that is. The present conflict between Arabs and Jews in Palestine has been going on for about a century. And yet every American president is implored upon entering office to bring the quarrel swiftly to an end. Most have a go—or at least go through the motions. Some actually make progress. Jimmy Carter owes his Nobel peace prize in large part to the peace deal he brokered between Israel and Egypt in 1978 (and has never let the world forget it). Bill Clinton got Yitzhak Rabin and Yasser Arafat to shake hands on the White House lawn, but no peace, and no prize, followed the unhappy Camp David summit of 2000. Since the Nobel committee saw fit to reward Barack Obama virtually the instant he was elected, it cannot be the lure of that prize that explains why he is investing in this thankless conflict so early. Doing so is not, after all, compulsory—nor always wise, since the reaction to peacemaking that fails can be violent. Soon after Mr Clinton’s failure at Camp David, for example, the Palestinians mounted their second intifada, a wave of suicide-bombings that blew away the modest store of goodwill that Rabin and Arafat had built during the 1990s. After his own election in 2000, George Bush took one look at the blood and muddle and decided that America had better things to do. Plenty of rueful diplomats in Washington, with long experience of upset tummies and smoke-filled rooms in Cairo, Jerusalem and Ramallah, are willing to argue, sotto voce, that it is more realistic for America to “manage” the conflict in Palestine than to seek actually to solve it. ... | |
![]() | Business and politics in Cuba: Potbelly and rumbling stomachs |
What the fall from grace of Fidel Castro’s Chilean business crony says about Cuba’s uncertain economic times MAX MARAMBIO, a Chilean businessman, can claim an unusual consequence of his friendship with Fidel Castro. It made him rich. A guerrilla in the 1960s and then a bodyguard of Chile’s socialist president, Salvador Allende, Mr Marambio set up one of the earliest business joint-ventures with Cuba’s Communist regime. For the past two decades this company, Rio Zaza, enjoyed a near-monopoly on sales of packaged fruit juice and milk across the island. Mr Marambio, dubbed in Cuba “the potbelly” because of his portly figure, became a multimillionaire. That apparently did not offend Mr Castro. Neighbours at the businessman’s grand 1950s home on the outskirts of Havana recall that the Cuban leader was a frequent evening guest (the home itself is believed to have been a gift from Mr Castro). But now the house lies empty, its rolling lawns unkempt. Mr Marambio is a wanted man. Cuba’s government, led now by Fidel’s brother Raul, ordered him to return to the island by August 23rd for questioning about bribery and fraud at Rio Zaza. Mr Marambio, who denies all the allegations, declined the invitation. ... | |
![]() | Gender politics in Mexico City: Pink cabs rev up |
A blow for feminism—or against it? SINCE electing its first left-wing mayor in 1997, Mexico City has been a self-consciously liberal oasis in a conservative country. The current mayor, Marcelo Ebrard, has legalised abortion on demand, gay marriage and gay adoption in his first four years in office. His latest move, cheered by environmentalists, was a ban on free plastic shopping bags, implemented on August 19th. Eye-catching reforms such as these are enhancing Mr Ebrard’s profile ahead of a likely presidential bid in two years’ time. The latest controversy concerns women-only public transport. During rush hour, men have long been barred from a third of the carriages of metro trains. Some see that as offering a blessed sanctuary from wandering macho hands; for others it is a backward step on the march to equality. But whereas Puebla, a nearby city of more conservative bent, runs a women-only “pink taxi” service (pictured above), Mexico City had resisted. Susana Sanchez, a Mexico City taxista, first requested permission to run such a service in 1998. She was told it would be discriminatory. ... | |
![]() | A mining miracle |
Chileans have celebrated the discovery that 33 miners trapped 700 metres (2,300 feet) below ground when the San Jose mine collapsed on August 5th are alive and well. The task now is to keep them that way during the four months or so it may take to get them out. The government will also have to look at why regulators allowed San Jose to re-open in 2008 as copper prices peaked before it implemented promised safety improvements. ... | |
![]() | Canada's Liberal leader: Trial by barbecue |
The struggles of Michael Ignatieff FOR the past seven weeks Michael Ignatieff, the leader of the opposition Liberals, has submitted to trial by barbecue. He has crossed Canada on a summer bus tour, with a daily dose of seared beefsteak, extemporaneous speeches, endless handshaking, interviews with local media and even some dancing. The purpose, party officials say, is to sharpen the political skills of Mr Ignatieff, a former journalist and academic more at home with broccoli and bucatini, and to test his stamina and his party’s readiness for an election campaign. The verdict has been mixed. A leader often seen as wooden and aloof has revealed a glimmer of popular appeal. The Liberals have crept up in the opinion polls, but still trail the Conservative Party, which has formed a minority government under Stephen Harper, the prime minister since 2006. Some of the Liberals’ most experienced campaigners remain sceptical. When the party’s parliamentary caucus gathers on August 30th there will be no repeat of Mr Ignatieff’s bold call at the same event last year of “Mr Harper, your time is up.” The party recoiled from this electoral bravado. It almost cost Mr Ignatieff his job and led to a shake-up of his advisers. ... | |
![]() | Banyan: Vale of tears |
In Kashmir freedom is much farther than a stone’s-throw away OWAIS hardly looks like a serious danger to the security of India. Slender and frail, he says he is 17 but seems younger as he basks shyly in the praise of the men gathered in a garden in Srinagar, summer capital of Indian-ruled Kashmir. But he is proud to show off the scars and stitch-marks that cover his belly. He has just emerged from hospital, lucky to be alive. He took a bullet in an anti-Indian protest on August 2nd in Kupwara, some 90km (56 miles) away. His uncle died that day, one of more than 60 people, mostly young, killed in a wave of unrest that began on June 11th. Owais and those like him have presented the Indian government with a new and perhaps insoluble Kashmir crisis. They are self-proclaimed “stone-pelters”, named after their weapon of choice. Well-organised—on Facebook, to a large extent—the pelters emerge at short notice to throw stones at police stations and other targets, and get shot at. In response to their protests much of the Kashmir valley that surrounds Srinagar has been shut down—both by hartals, or strikes, called by separatist leaders, and by government-imposed curfews. On most days, Srinagar is a ghost town of shuttered shops and empty streets. Paramilitaries point their rifles out from bunkers or lounge on street corners, idly tapping their lathis (heavy batons) on their padded legs. On the one or two designated “shopping days” each week, the traffic is gridlocked. ... | |
![]() | Nepal's perilous politics: Summer reruns |
Bovine politicians fail to pick a prime minister THE monsoon brings Nepal’s annual cow festival, a chance for ordinary people to mock their rulers in traditional street performances. This year the comedians were blessed with plenty of material. Two months after the prime minister resigned, on the grounds that he was unable to advance the country’s peace process, Nepal remains without a leader. As a result, the tenuous peace stands in dire need of some process. Five rounds of voting in the democratically elected Constituent Assembly, which also serves as a parliament, have failed to produce a new prime minister. A sixth round, scheduled for September 5th, is unlikely to do any better. ... | |
![]() | The floods in Pakistan: Washed up |
The misery shows no sign of abating, even as waters recede in some places PAKISTAN’S floods are looking ever more monstrous. In the south waters continue to rise, eating up new areas and swamping districts such as Jaffarabad, in Baluchistan province, a full 100km from the Indus river. Farther north the tide is now receding, only to reveal the many homeless and hungry, their stores of wheat and their crops and livestock destroyed. Everywhere it is becoming clearer how social, economic and political misery will endure for a long time yet. Overall 1.2m homes have been damaged or destroyed. Some 800,000 people remain cut off from all help. Even where the government or aid agencies are present, the help is patchy at best, with many left to fend for themselves. Now dark (and plausible) accusations are circulating: the well-connected chose which areas were purposefully flooded to relieve pressure elsewhere; aid is being diverted to constituencies of powerful figures; woefully feeble flood-protection infrastructure was left badly maintained. ... | |
![]() | The police in the Philippines: Manila showdown |
A bungled rescue of Hong Kong hostages sparks a diplomatic row AS A policeman ineffectually sledgehammered the windows of a hijacked bus, in a desperate effort to reach 15 hostages trapped inside, it became sickeningly clear that a rescue operation had gone dreadfully wrong. More than an hour later the police got in by opening the emergency exit, and found proof of their bungling: eight of the 15 hostages, all Hong Kong tourists, had been shot dead, as had the hostage-taker, a former policeman. August 23rd thereby became a shameful day for the Philippine National Police. Battered by criticism at home and abroad, the police admitted to “defects” in their handling of the hijack. Survivors and relatives of the victims were more explicit in their anger. It was obvious to millions in the Philippines and beyond, watching the drama unfold live on television, that the rescue squad lacked training and equipment. As serious are chronic weaknesses in the country’s law-enforcement system. ... | |
![]() | Australia's dead-heat election: Hung, drawn, now courting |
The Australian electorate falls out of love with the two main parties, while each tries to woo independents and form a government EVERYONE had expected a long night waiting for a result in the closely fought general election on August 21st. Instead, it looks like turning into a long fortnight. The contest between the ruling Labor party, under Julia Gillard, and the conservative Liberal-National opposition, led by Tony Abbott, produced some exotic outcomes: Wyatt Roy of Queensland, at 20 the youngest federal MP; and Adam Bandt of Victoria, the first Green elected to the lower house in a general election. But it failed to yield a clear verdict, leaving the first hung parliament in 70 years. Australia’s political culture seems set for upheavals. The last time the country found itself in this state was in 1940. Robert Menzies, who later founded the conservative Liberal Party, which Mr Abbott now leads, relied on two independents to stay in power; that arrangement collapsed a year later. This time, neither Ms Gillard nor Mr Abbott will command the 76 seats needed in the 150-seat House of Representatives, so each has set out to woo Mr Bandt and four independents, who hold the balance of power. The romancing may yet turn ugly. ... | |
![]() | Talking about reform in China: Change you can believe in? |
The prime minister calls frankly for political reform CHINA is enjoying its new status as the world’s second-largest economy, but the prime minister, Wen Jiabao, is refusing to relax. During a visit to a southern boomtown he declared that economic gains could yet be lost without reforms to the political system. One official newspaper called his speech one of “extraordinary importance”, but sceptics abound. His remarks on August 20th and 21st in the city of Shenzhen have been compared by some optimists to those made by the late Deng Xiaoping during a tour of the same city in 1992. Deng’s calls for market-oriented reforms sent central-planners scurrying and unleashed the entrepreneurial energy that has helped China to grow at giddy rates since. During his trip Mr Wen laid flowers before a statue of Deng, who turned Shenzhen into a test bed for economic change exactly 30 years ago. ... | |
![]() | Jam tomorrow, tomorrow and tomorrow |
A booming economy and middle class means painfully slow roads. Drivers beware: a booming economy and middle class may result in painfully slow roads. One traffic jam this month, along a highway leading to Beijing, stretched over 100km and lasted for nine days. Some 248,000 additional cars were registered in Beijing in the first four months of this year alone, snarling up the streets. Lots of roadworks are causing short-term grief. But the main problem seems to be demand for goods and energy, as lorries carrying coal crawl endlessly towards the city. Beijing is said to be spending 80 billion yuan ($11.8 billion) this year on transport infrastructure. It might be wiser to invest in alternative forms of power generation. ... | |
![]() | Japan's dysfunctional politics: Ichiro Ozawa strikes back |
The return of a destructive force in Japanese politics ICHIRO OZAWA, Japan’s most Machiavellian politician, recently dismissed Americans as “monocellular”—using a Japanese term that roughly means simplistic. Compared with his scheming mind, Americans should take that as a compliment. On August 26th Mr Ozawa dropped a bombshell that could bring down the government, launching a leadership challenge to the prime minister, Naoto Kan, in an internal election of the ruling Democratic Party of Japan (DPJ). If he were to win on September 14th, Mr Ozawa, 68, would automatically become prime minister, Japan’s third this year alone. That would mark a remarkable comeback. Less than three months ago, on June 2nd, he was forced out as the DPJ secretary-general alongside the previous prime minister, Yukio Hatoyama, because of poor leadership and his links to a foul-smelling campaign-funding scandal for which he may possibly still face indictment this year. ... | |
![]() | UNESCO and Georgia: Rising defiantly from the ruins |
Georgia’s mercurial leader cocks a snook at art-historical convention IN MANY European countries, dwindling Christian flocks can barely cope with the patrimony they have inherited, from steeples to statues. Georgia, which adopted Christianity 17 centuries ago, faces almost the opposite problem: such is the strength of a religious revival that began after the fall of communism that a hectic programme of building and restoring churches—from tiny chapels to Tbilisi’s vast new Holy Trinity cathedral—can hardly keep up with demand. And perhaps inevitably, the rush to refit ancient places of worship can easily run up against other priorities, including the latest international thinking about archaeology and conservation which holds that intervention should be kept to a minimum. ... | |
![]() | UNESCO's world heritage sites: A danger list in danger |
In its care for precious places, the UN cultural agency is torn between its own principles and its members’ wishes; the principles are losing ground WHEN an archipelago famed for its flora and fauna is deemed to have escaped from environmental peril, that might sound like good news for anyone with an interest in the fate of life on Earth. But UNESCO’s recent clean bill of health for the Galapagos islands was greeted with dismay by many of the people who care passionately about the place. The decision to remove the islands from the list of “world heritage sites in danger”—taken at a meeting in Brasilia that concluded on August 3rd—was only one of several signs that the UN agency is bending its own rules under pressure from member states. And since UNESCO is supposed to be an unprejudiced protector of the whole world’s built and natural environment, such slipping standards are not merely of concern in remote Pacific islands. ... | |
![]() | Correction: Bald Hills wind park |
In last week’s story on wind energy, we said Australia’s Bald Hills wind park was in Queensland. It is in Victoria. Sorry. ... | |
![]() | French politics resumes: Tough-guy Sarko |
Drowning in unpopularity and beset by scandal, the French president lashes out at some easy targets AFTER a three-week holiday at his wife’s family villa on France’s Mediterranean coast, President Nicolas Sarkozy returned to work this week for what could be the most testing autumn of his presidency. Deeply unpopular—a poll this week found that 62% of the French do not want him to seek re-election in 2012—the president faces four sources of trouble in the coming weeks: pension reform, the budget, nationality law and the expulsion of Roma (gypsies), and an ongoing political scandal linked to Liliane Bettencourt, the heiress to the L’Oreal cosmetics empire. Mr Sarkozy’s management of them will set the tone for the remainder of his presidency. The first two will test Mr Sarkozy’s reformist resolve. On September 7th parliament will start to debate his proposal to raise France’s legal retirement age from 60 to 62. The plan may not look revolutionary. But it breaks a cherished French pattern of progressively shortening the amount of time people spend at work. Trade unions are furious, and plan a series of strikes starting on the same date. The opposition Socialist Party is also against. But under the close watch of credit-rating agencies, which want to see proof of France’s will to control its public finances, Mr Sarkozy cannot afford to give ground. ... | |
![]() | Italy's highway code: Roads to ruin |
An optimistic attempt to impose order on Italy’s roads ANARCHY, ignorance of the law or just a belief that rules are optional: Italian behaviour in traffic is a colourful, and worrying, mosaic. Government ministers with seat belts left unbuckled; police cars that ignore red lights; parking on pedestrian crossings; mobile phones glued to drivers’ ears; and widespread speeding on every road from country lanes to autostrade—such is the anarchy of the road in Italy. Five times as many people are injured on Italian roads as on French ones and, although the number has fallen in recent years, road deaths in Italy are still far higher than in many other large European countries. A new highway code offers hope that Italians will improve their behaviour behind the wheel. Parts of the code await ministerial decrees, some of which will be issued over the next six months. But important sections covering road safety have already entered into force. One deals with pedestrian crossings, where injuries and deaths are common, thanks in part to the failure of town councils to ensure that road markings are clear and crossings well lit. Yet although the new code promises a “more rigorous right of way” for pedestrians, instructing drivers to stop at crossings when a pedestrian is about to cross, this will be difficult to enforce in a country where the car has always come first. ... | |
![]() | Oil in Greenland: Black stuff in a green land |
After decades of searching, evidence of oil is found off the coast of Greenland WHEN Cairn Energy, a British petrochemicals company, this week announced the first firm indication of worthwhile oil deposits off Greenland’s coast, inhabitants of Nuuk, the island’s gritty capital, greeted the news with their customary equanimity. “That’s nice,” said a housewife less interested in the implications of a possible oil bonanza than in negotiating her country’s sole pedestrian crossing in the sleeting rain. Several hundred miles north in Baffin Bay, Greenpeace eco-warriors seeking to halt offshore oil exploration in the Arctic faced down a Danish warship. The government hotly contests Greenpeace’s claim that, because oil degrades far more slowly in freezing waters, a Mexican Gulf-style oil spill would mean calamity for the fragile environment. “Our safety standards are the highest in the world,” says Henrik Stendal, chief geologist at the Government Bureau of Minerals and Petroleum. ... | |
![]() | Spanish politics: Losing his grip |
Spain’s prime minister faces a minor insurrection within his own party IT IS a brave act of defiance. It is also a sign that Jose Luis Rodriguez Zapatero, Spain’s prime minister, is losing the iron grip he once held on his Socialist Party. A row has erupted over Mr Zapatero’s attempt to impose a candidate to lead the party into elections for the Madrid region’s parliament next May. Mr Zapatero’s candidate for the post, one of Spain’s 17 powerful regional premierships, is Trinidad Jimenez (pictured), Spain’s health minister. She is opposed by Tomas Gomez, the pugnacious leader of the Socialists’ Madrid branch, who wants to stand himself. Rather than bow to his boss’s demands, as expected, Mr Gomez has forced a party vote, which will be held in October. ... | |
![]() | Drugs in the Czech Republic and Slovakia: High contrast |
Why are the Czechs more lenient on narcotic use than the Slovaks? FOR many Czechs, CzechTek, an outdoor rave where revellers danced for days, often on a cocktail of speed, ecstasy and methamphetamine, was once a highlight of the summer. Authorities concerned about drug use found it less attractive. Five years ago 80 people were hurt when police used water cannon and tear gas on a crowd of 5,000 ravers. Jiri Paroubek, the prime minister, described them as “obsessed people with anarchist proclivities…who provoke massive violent demonstrations, fuelled by alcohol and drugs, against peaceful society”. So it came as a surprise when Czech politicians liberalised the country’s drug laws. Since January 1st techno fans (and other users) have faced nothing worse than a fine if caught with an amount the law considers intended for personal use. ... | |
![]() | Skopje: A Macedonian makeover |
The capital city gets a controversial facelift ITS charms are many, but architecture is not usually seen as one of them. Rebuilt after an earthquake in 1963 wiped out most of the city, Skopje, the capital of the ex-Yugoslav republic of Macedonia, was for years characterised by ugly concrete blocks and strange empty spaces. But earlier this year Nikola Gruevski's conservative government produced a video that revealed the full ambition of “Skopje 2014”, its plan for a radical reinvention of the city centre. It was hard to take the scheme seriously. Fifteen grand buildings, including a new foreign ministry and a constitutional court, were to be built from scratch. Older structures, such as the parliament, were to be tarted up with domes and other accoutrements. In the city's main square, the government would erect a giant statue of Alexander the Great. ... | |
![]() | Bagehot: Britain's high-minded government |
David Cameron’s coalition will struggle to agree on crudely populist policies. That is both welcome and perilous LOOK around the democratic world, and it would be easy to conclude that voters are very angry indeed. In country after country, political leaders seem intent on singling out scapegoats, and stoking the fires of resentment against them. In France an unpopular government has spent the summer clearing camps of foreign-born gypsies with the maximum fuss (never mind that, as European Union citizens, most can swiftly return). In Australia the opposition leader, Tony Abbott, fought the incumbent Labor Party to a draw in elections on August 21st, in part by talking up the problem posed by asylum seekers who arrive by sea and vowing at every turn to “stop the boats”. ... | |
![]() | Raising the state-pension age: When I'm 66 |
And the reforms won’t stop there NOT SO long ago the right to receive a state pension from the age of 65 seemed inalienable. That threshold had, after all, first been set in 1925. It was lowered to 60 for women in 1940, but was due to be equalised between 2010 and 2020, so that by the end of the decade 65 would apply to all workers. But in 2005 a pensions commission headed by Adair Turner, a troubleshooter who now chairs the Financial Services Authority, shook the status quo. It recommended that the state-pension age should go higher than 65 to make pensions in an ageing society more affordable. Under Tony Blair Labour decided to raise it to 66 between 2024 and 2026, and to 68 by 2046. ... | |
![]() | Micro-distillers: Brimming over |
Start-ups are shaking up an old and staid industry BEHIND a homely blue garage door in a genteel corner of Hammersmith sits Prudence, a complicated and expensive young lady, and the focal point of an ancient British industry that is undergoing a remarkable and timely revival. Prudence is a GBP200,000 copper still—the first of its kind to be launched in the capital for nearly 200 years—turning out small batches of exquisitely palatable London dry gin. Named after a certain former chancellor of the exchequer who gained an ultimately unwarranted reputation for fiscal austerity, Prudence is the brainchild of Sam Galsworthy and Fairfax Hall. They are the entrepreneurs behind one of Britain’s fastest-growing young micro-distilleries, Sipsmith. In the year since its launch, Sipsmith has sold 5,000 half-cases of its signature dry gin, a bottle of which retails at something between GBP22 and GBP26, mostly through national chains such as Waitrose and Majestic Wine. Financing came from within—both founders sold their houses to finance the venture—and Mr Galsworthy expects the firm to break even by 2012. But Sipsmith is just one of an array of start-ups injecting spirit and panache into Britain’s often bland distilling industry, with its ubiquitous brands and obsession with bulk sales. ... | |
![]() | The Claudy killings: Not peace but a sword |
A long-awaited report into a shocking incident has failed to assuage grievances ANOTHER troubled piece of Northern Ireland’s violent past caught up with it this week with the publication of a report on the disturbing case of a Catholic priest involved in an IRA bombing in 1972. In a single incident in the religiously mixed village of Claudy, in County Londonderry, three car bombs killed nine innocent bystanders ranging from an eight-year-old girl to a 65-year-old man. Years of rumours that Father James Chesney had taken part in the attack were formally confirmed in a report on August 24th by Northern Ireland’s police ombudsman, Al Hutchinson. But this was only the start. The eight-year investigation laid bare a high-level conspiracy to hush up his involvement and whisk him out of Northern Ireland. ... | |
![]() | Scotland's budget: Dismantling the welfare state |
Thanks to the new austerity, the complexion of Scottish politics is changing ALEX SALMOND’S has always been a high-wire act. First minister of devolved Scotland since 2007 in a minority government, he has had to woo, cajole and jolly along rival parties, local governments and voters in order to exercise power. That he has done so owes more to his own political deftness than to any sweeping appeal of his independence-minded Scottish National Party (SNP), and even more to the pots of money he has thrown at public services. Austerity is fast altering that. During the days of solid economic growth, government expenditure in Scotland increased by an average 5% a year. For historical reasons, spending per head in Scotland is higher than in England—nowadays almost 20% higher. This extra cash has been used to fuel a supercharged welfare state. It has also enabled the government to hang on to industries that were privatised long ago south of the border. ... | |
![]() | Hearty holidays: The call of the wild |
How Britain fell in love again with nature ROGER DEAKIN, a much-loved nature writer, called swimming a “subversive activity”. He embarked on a watery journey across Britain from his home near the river Waveney, which forms the border between Suffolk and Norfolk. His bestselling book published 11 years ago, “Waterlog”, inspired what has become known as the “wild-swimming movement”—and, some argue, rekindled Britain’s love affair with nature and hearty outdoor pursuits. Enthusiasts have set out to popularise what Mr Deakin sketched. Daniel Start, a naturalist, spent five years swimming Britain, grid-referencing and photographing 150 of its “hidden dips”. His publisher, Punk, was in at the beginning of another key trend, the renaissance of camping. Its glossy books, including tips on glamorous camping (now known as “glamping”), have transformed the nylon tents and grubby communal showers of yesteryear. ... | |
![]() | Schumpeter: The innovation machine |
Two gurus look at the perspiration side of innovation IN HIS new book, “Still Surprised: A Memoir of a Life in Leadership”, Warren Bennis, a management theorist, tells a story about Sigmund Freud’s flight from Vienna to London in 1938. On arriving in his new home Freud asked Stefan Zweig, a fellow Viennese intellectual, what it was like. “London? How can you even mention London and Vienna in the same breath?” Zweig thundered. “In Vienna there was sperm in the air!” Today there is no hotter topic in management theory than “sperm in the air”. How do companies generate new ideas? And how do they turn those ideas into products? Hardly a week passes without someone publishing a book on the subject. Most are rubbish. But “The Other Side of Innovation: Solving the Execution Challenge” is rather good. Its authors are Vijay Govindarajan and Chris Trimble, two professors at the Tuck School of Business at Dartmouth College. Last year Mr Govindarajan and Mr Trimble (hereafter: G&T) published a seminal article, with Jeff Immelt, the head of General Electric, on frugal innovation. In their new book they address two subjects that are usually given short shrift: established companies rather than start-ups and the implementation of new ideas rather than their generation. ... | |
![]() | High-speed rail in Europe: Trouble ahead |
The train giants of France and Germany are at war over European high-speed rail AT THE Gare de l’Est in Paris, Franco-German co-operation seems on track. Deutsche Bahn inter-city express (ICE) trains glide in from Frankfurt and SNCF sends trains deep into Germany, thanks to a joint venture between the two firms. Every train has a French and a German controller on board. Despite wrangling over details—French unions, for instance, refused to let their head conductors serve meals to first-class passengers, so the Germans have to do it all—they get along well. “When we’re on the same train, we’re a team,” says Marine Dubois, the French controlleur on the 13.09 ICE to Frankfurt. The joint venture between Deutsche Bahn and SNCF, the German and French rail giants, was launched in 2007 amid high hopes. Boosters predicted an open European market where trains and passengers would cross borders without fuss. But old national rivalries are resurfacing. Relations at the top have turned nasty. The joint venture could even be at risk. ... | |
![]() | Disney's schools in China: Middle Kingdom meets Magic Kingdom |
A Western media company offers a product the Chinese can’t resist: education ON A Tuesday at 6pm, children begin arriving at a bland commercial building just as the office workers are leaving. A small storefront leads to an English-language school run by Disney. It is not much of an entrance, squashed between a dusty drugstore and a fast-food joint. This being China, many passers-by assume it is a fake. But word is spreading through the pushy-parent network: this is the real thing. Children as young as two toddle in and climb the stairs. At first glance, their classrooms look like dreary boxes, but two of the four walls are interactive video monitors. Each lesson is assisted by virtual mermaids, ducks, mice and other Disney icons. Touch the answer to a question (a fried egg, for example) on one screen, and it plops out of the sky on the other. While teachers instruct, the classroom seems to move. ... | |
![]() | South Korea's thirst for oil: KNOC comes knocking |
A South Korean state firm joins the scramble for oil IN THE clubby world of Korean commerce, hostile takeovers are rare. The idea of a state-owned firm attempting one seemed unthinkable until recently. But when the board of a British target rejected a friendly offer, the Korea National Oil Corporation (KNOC) took off its gloves. KNOC is offering GBP1.9 billion ($2.9 billion) for Dana Petroleum, an Aberdeen-based oil explorer with a knack of finding new fields. At GBP18 a share, that is a 59% premium to Dana’s closing price on June 30th, the day before the first approach was made. The offer now looks likely to be accepted: KNOC has won over shareholders who own nearly half of Dana’s stock. ... | |
![]() | Israeli entrepreneurs: MBAs are for wusses |
Military service makes Israeli techies tougher MANY Israeli start-ups should pay royalties to the army, says Edouard Cukierman, a venture capitalist in Tel Aviv. He is only half joking. Despite the recession, Israel’s technology exports grew by more than 5% last year. Mr Cukierman thinks military service deserves some of the credit. Israel’s army does not just train soldiers, he says; it nurtures entrepreneurs. Teenagers conscripted into high-tech units gain experience “akin to a bachelor’s degree in computer science”, says Ruvi Kitov, co-founder and chief executive of Tufin Technologies, an Israeli software firm. Almost all of Tufin’s employees in the country are, like Mr Kitov himself, veterans of the Israel Defence Forces (IDF). One of the firm’s cash cows is software that finds spam servers and blocks their transmissions. It is based on IDF cyberwarfare technologies that developers first used as soldiers. ... | |
![]() | Location-based social networks: Where are you? |
A tale of fake mayors and real deals MARKETING, its veterans like to say, is all about the “three Rs”: reaching the right person in the right place at the right time. Hence the growing interest in marketing circles for mobile-phone-based social networks such as Foursquare and Gowalla that let users “check in” to shops or restaurants and instantly tell their friends where they are. Fans of such services gush that they will mint money by allowing ads to be targeted at folk who are about to make a purchase. But the networks must negotiate some important hurdles first if such lofty predictions are to come true. Location-based networking won an important convert recently in the shape of Facebook. For some time, the 800-pound gorilla of social networking had tracked the progress of firms such as Foursquare, which boasts some 3m members. Now it has entered the market with its own service, dubbed “Places”, which is currently available only to American users of its mobile application. Places lets them signal where they are to their friends on the network, in much the same way that they can “tag” themselves in photos. ... | |
![]() | Mergers and acquisitions: Waiting for a wave |
A flurry of deals makes bankers salivate FIRMS with interim bosses usually opt for the quiet life, but the lack of a permanent boss did not stop Hewlett-Packard (HP) from launching a bidding war on August 23rd. The computer giant offered to buy 3Par, a data-storage firm, for $1.5 billion, topping the $1.15 billion offered a week earlier by Dell, a longtime rival of HP. On August 19th Intel, a chipmaker, splashed out $7.68 billion to buy McAfee, an antivirus-software firm. Nor is the fun confined to high-tech. On August 17th PotashCorp, a firm that mines potash, from which fertiliser is made, received and promptly rejected a $38.6 billion offer from BHP Billiton, a mining giant. BHP is now pursuing a hostile bid. ... | |
![]() | The revival of Alfa Romeo: Another chance for Alfa |
Alfa Romeo’s cars have not always lived up to its stellar brand. That is changing IN 1995 Alfa Romeo ignominiously pulled out of America, having managed to sell only 400 cars there that year. Yet this month the sporting Italian marque, which is celebrating its centenary, was the star of the annual Pebble Beach Concours d’Elegance in California, a show for classic and concept cars. Alfa brought over seven cars from its museum in Milan, but none of its current offerings. It is testimony to the enduring power of a brand that has a wonderful history but which for many years has over-promised and under-delivered. There are signs, however, that this may be changing. Last year even Sergio Marchionne, the boss of Fiat, which owns Alfa, seemed to be running out of patience. Mr Marchionne had set Alfa a target to reach sales of 300,000 cars a year by 2010, but in 2009 it sold barely 100,000. In December he ordered a review of Alfa’s operations, which according to Max Warburton of Bernstein Research were losing up to $575m a year. ... | |
![]() | Economics focus: Bad circulation |
There is more to America’s stubbornly high unemployment rate than just weak demand AMERICANS are used to thinking of their job market as lithe and supple. Employment snaps back quickly after recessions. Workers routinely shuttle between industries and cities to wherever jobs are abundant. But in the past decade, the labour market has resembled an ageing athlete. Each new injury is more painful and takes longer to heal. More than a year into the current economic recovery the unemployment rate remains stuck close to 10%, raising concerns about the kind of sclerosis that continental Europe suffered in the 1980s. The slow rehabilitation is in part because the economy suffered a trauma, not a scrape. The fall in GDP during the last recession was easily the largest of the post-war period, and output remains well below its potential. Few had expected a rapid return to full employment, but even modest expectations for jobs growth have not been met. Employment has actually fallen since the end of the recession; and unemployment would be even higher than it is were it not for discouraged would-be jobseekers quitting the workforce. Some economists now fret that other barriers besides weak demand stand between workers and jobs, and that high unemployment is partly “structural” in nature. ... | |
![]() | Finance after the crisis: Pactual: The origins of a new species |
The latest of our profiles of financial firms after the crisis looks at BTG Pactual, Brazil’s investment-banking powerhouse IN RECENT years investment banks were supposedly hijacked by boffins who used their nuclear-physics doctorates to devastating effect. Yet the industry has long been slave to a different tribe of scientists: the bulge-bracket Darwinists. They reckon only giant global firms can survive. Until last year, Pactual, a Brazilian outfit, had conformed to their doctrine. In 2006 it sold out to a big foreign firm, UBS, for $3.1 billion, making its partners some of Brazil’s richest men. But then in 2009 the Swiss bank, reeling from losses, unexpectedly sold Pactual back to BTG, a local investment fund co-founded by Andre Esteves, one of the bank’s former top brass, for $2.5 billion. Today the renamed BTG Pactual is owned again by its partners and led by Mr Esteves who has a 25-30% stake. ... | |
![]() | Hedge funds: Bigger, safer but duller |
A secretive industry opens up to meet the demands of investors and regulators FOR much of the past two years hedge-fund managers have tried to convince queasy investors not to give up on them. Now it seems that some of the industry’s biggest names have given up on themselves. Stanley Druckenmiller, a celebrated hedge-fund manager and protege of George Soros, announced on August 18th that he would close his fund, Duquesne Capital Management, because he was “dissatisfied” with its performance. Two days later it emerged that another well-known manager, Paolo Pellegrini, plans to hand back investors their remaining money by the end of September, after making losses. Messrs Druckenmiller and Pellegrini are not the only hedge-fund managers to have been humbled. Hedge funds used to boast of their ability to deliver “absolute returns”—to make money regardless of the ups and downs in financial markets. That illusion was shattered in 2008 when the funds’ average returns were -19%, according to data from Hedge Fund Research, which tracks the industry. Funds clawed back some of the losses last year but have struggled to build on that recovery. Returns were -0.2% in the first half of 2010 (although stockmarkets fell by much more). Capital losses and withdrawals by investors have left hedge-fund assets at around $1.6 trillion, down from a 2007 peak of almost $1.9 trillion (see chart). ... | |
![]() | HSBC and Nedbank: Mutual attraction |
HSBC learns to play the vuvuzela THE closest HSBC traditionally got to sub-Saharan Africa was sending its Hong Kong-bound staff round the Cape of Good Hope before the Suez Canal opened in 1869. It is a sign of the region’s vastly improved prospects and the bank’s evolving strategy that HSBC is now in talks to buy a controlling stake in Nedbank, one of South Africa’s big four banks, with a market value of $9 billion. As Africa gets richer and does more trade with Asia, foreign banks are becoming more interested. That was the logic cited in 2007 when China Development Bank bought a stake in Barclays, which owns a big African business, and a few months later when ICBC, China’s biggest bank, bought a 20% stake in Standard Bank, South Africa’s largest, which has operations in some neighbouring countries. Citigroup and Standard Chartered, which along with Barclays have the biggest pan-African networks, now talk more about their prospects there. Portugal’s banks, which dominate in Angola and Mozambique, view their operations there as jewels. ... | |
![]() | ShoreBank: Small enough to fail |
The sorry end to a bold banking experiment “LET’S change the world”: ShoreBank’s slogan shouted that the Chicago-based lender saw itself as not just a bank but the leader of a movement. Founded in 1973, it set out to prove that money could be lent profitably to poor people in poor neighbourhoods. For 35 years it thrived but the financial storm that hit in 2008, and the economic downturn that followed, proved its undoing. On August 20th the Federal Deposit Insurance Corporation (FDIC), the bank’s regulator, called time on its experiment in what became known as community-development finance. Like many financial institutions, ShoreBank was hit hard by America’s housing bust. Yet in the first few months after the house-price bubble burst, Ron Grzywinski, a founder of the bank, was able to contrast the low default rates on ShoreBank’s mortgages with the higher ones of less responsible subprime lenders, such as Countrywide. The difference, he argued, was that ShoreBank did it the “old-fashioned way”—getting to know the borrower and securing a significant down payment against a realistically-valued property. ... | |
![]() | Bank capital: Foundations of jelly |
A lawsuit in Germany highlights the flaws of hybrid securities “MORE capital, better capital” has been the chant of central bankers and regulators, as they strive to rebuild the banking system on more solid foundations. The debate about how much capital banks should hold against unexpected losses has captured much attention. But a lawsuit in Germany raises equally pressing questions about the sorts of capital banks hold. The thinking behind the regulatory push for simplicity and solidity is that over the past few decades banks have been allowed to build complex capital structures made from inferior materials. The best sort of capital to ensure a stable banking system is equity, because it directly absorbs losses and can thus cushion against systemic shocks. It is, however, expensive, so banks have sought to dilute it with cheap fillers, such as the delightfully-named “hybrid capital” and other fancy instruments. One reason for their popularity with the banks that issued them was that they paid fixed interest, which was tax-deductible. Regulators, for their part, took comfort from the fact that hybrids were a bit like equity in that payments could be stopped to preserve capital should a bank run into trouble. ... | |
![]() | European banks: A glow from the east |
A slow fuse still burns on eastern Europe’s foreign-currency debts AFTER firefighters extinguish a blaze they usually look carefully for glowing embers before rolling up their hoses and heading off. With the worst of the banking crisis now receding in most rich countries, it is tempting to send the financial firefighters home. But wafts of smoke from eastern Europe suggest the job of stabilising Europe’s banking system is not yet done. In early August a number of banks operating in the region reported sometimes startling rises in loan losses. Among them were UniCredit, Erste Group and OTP. It had been hoped that loan losses would start falling. Instead they have continued to climb—alarmingly in some cases. In Kazakhstan more than a third of outstanding debt is non-performing. In Latvia, almost a fifth of debt is going bad. ... | |
![]() | Emerging-market debt: A run for your money |
Developing countries in Latin America and Asia can borrow for longer PERU is not an obvious investment darling. For much of its existence, the country has been in a state of default. As recently as 1990 the inflation rate was 7,500%. Yet in the past few years Peru has persuaded creditors to lend it money for ever-longer periods in its own currency. It issued its first 20-year local-currency bond in 2006; its debut 30-year bonds followed a year later. Earlier this year Peru was able to issue 300m soles ($105.2m) of 32-year local-currency bonds. Investors in these bonds are compensated for the risk of inflation by yields of just 6.9%, a once unthinkable prospect. Peru is not alone. Anxious to wean themselves off flighty foreign funding after the crises of the 1990s, many emerging-market governments sought to build up local-currency bond issuance. Extending the maturity of bonds is the next step. In 2007 around 40% of Peru’s local-currency debt was short-term (ie, maturing in less than a year). That had fallen to 30% by 2009, according to the Bank for International Settlements. In Mexico average maturities have gone from 1.5 years in 2000 to seven years a decade later, says Gerardo Rodriguez, who heads the country’s debt office. ... | |
![]() | Scientific misconduct: Monkey business? |
Allegations of scientific misconduct at Harvard have academics up in arms RARELY does it get much more ironic. Marc Hauser, a professor of psychology at Harvard who made his name probing the evolutionary origins of morality, is suspected of having committed the closest thing academia has to a deadly sin: cheating. It is not the first time the scientific world has been rocked by scandal. But the present furore, involving as it does a prestigious university and one of its star professors, will echo through common rooms and quadrangles far and wide. The story broke on August 10th when the Boston Globe revealed that Dr Hauser had been under investigation since 2007 for alleged misconduct at Harvard’s Cognitive Evolution Laboratory, which he heads. This investigation has resulted in the retraction of an oft-cited study published in 2002 in Cognition, the publication last month of a correction to a paper from 2007 in the Proceedings of the Royal Society, and doubts about the validity of findings published in Science, also in 2007. All three studies purported to show that the cognitive abilities of some monkeys are closer to those of people than had previously been assumed. Dr Hauser was the only author common to all three papers. ... | |
![]() | Energy conservation: Not such a bright idea |
Making lighting more efficient could increase energy use, not decrease it SOLID-STATE lighting, the latest idea to brighten up the world while saving the planet, promises illumination for a fraction of the energy used by incandescent or fluorescent bulbs. A win all round, then: lower electricity bills and (since lighting consumes 6.5% of the world’s energy supply) less climate-changing carbon dioxide belching from power stations. Well, no. Not if history is any guide. Solid-state lamps, which use souped-up versions of the light-emitting diodes that shine from the faces of digital clocks and flash irritatingly on the front panels of audio and video equipment, will indeed make lighting better. But precedent suggests that this will serve merely to increase the demand for light. The consequence may not be just more light for the same amount of energy, but an actual increase in energy consumption, rather than the decrease hoped for by those promoting new forms of lighting. ... | |
![]() | Psychology: Faith and faithfulness |
Praying for your partner stops you straying INFIDELITY is rampant in nature. Birds, mammals, amphibians and even fish all cheat if the conditions are right, forcing mates to remain perpetually vigilant. People are no different. Although cheats are publicly condemned, or in some cases impeached, infidelity is common and public disapproval does little to dissuade the sinner. The disapproval of God, however, is a different matter, and a new study suggests that prayer can indeed guide people away from adulterous behaviour. Frank Fincham at Florida State University and his colleagues knew from looking at past studies that couples who attend religious services are more likely to be satisfied with their marriages and less likely to be unfaithful than those who do not, but they did not understand why. Speculating that the act of praying might itself cause romantic relationships to become more resilient, the team set up an experiment to explore prayer and fidelity. ... | |
![]() | Obesity: Drink till you drop |
A magic elixir is shown to promote weight loss CONSUME more water and you will become much healthier, goes an old wives’ tale. Drink a glass of water before meals and you will eat less, goes another. Such prescriptions seem sensible, but they have little rigorous science to back them up. Until now, that is. A team led by Brenda Davy of Virginia Tech has run the first randomised controlled trial studying the link between water consumption and weight loss. A report on the 12-week trial, published earlier this year, suggested that drinking water before meals does lead to weight loss. At a meeting of the American Chemical Society in Boston this week, Dr Davy unveiled the results of a year-long follow-up study that confirms and expands that finding. ... | |
![]() | Bill Millin |
Bill Millin, piper at the D-Day landings, died on August 17th, aged 88 ANY reasonable observer might have thought Bill Millin was unarmed as he jumped off the landing ramp at Sword Beach, in Normandy, on June 6th 1944. Unlike his colleagues, the pale 21-year-old held no rifle in his hands. Of course, in full Highland rig as he was, he had his trusty skean dhu, his little dirk, tucked in his right sock. But that was soon under three feet of water as he waded ashore, a weary soldier still smelling his own vomit from a night in a close boat on a choppy sea, and whose kilt in the freezing water was floating prettily round him like a ballerina’s skirt. But Mr Millin was not unarmed; far from it. He held his pipes, high over his head at first to keep them from the wet (for while whisky was said to be good for the bag, salt water wasn’t), then cradled in his arms to play. And bagpipes, by long tradition, counted as instruments of war. An English judge had said so after the Scots’ great defeat at Culloden in 1746; a piper was a fighter like the rest, and his music was his weapon. The whining skirl of the pipes had struck dread into the Germans on the Somme, who had called the kilted pipers “Ladies from Hell”. And it raised the hearts and minds of the home side, so much so that when Mr Millin played on June 5th, as the troops left for France past the Isle of Wight and he was standing on the bowsprit just about keeping his balance above the waves getting rougher, the wild cheers of the crowd drowned out the sound of his pipes even to himself. ... | |
![]() | Steel production |
From a pre-crisis peak of 121.1m tonnes in May 2008, world steel production plummeted to a low of 81.7m tonnes in December that year. It has since recovered, but remains below its level two years earlier. Because steel production in rich countries fell much more than in countries like China, the latter increased its share of global output. In May 2008 China produced 38% of the world’s steel; by August 2009, its share had soared to 49%. Since then, steel production in other countries has recovered too, causing China’s share of world output to slip to 45% in July. But China’s dominance of the global steel industry is not under threat. In July it produced more than five times as much steel as Japan, its closest rival. ... | |
![]() | Visa-free travel |
According to Henley & Partners, a consultancy, Britons face the fewest visa restrictions among citizens of the 190-odd countries (and territories) for which data are available. British citizens can take a short trip to 166 countries without needing to apply for a visa. People from other rich countries, like Germany and America, can also cross borders with relative ease. In contrast, people from developing countries need visas to enter most countries. Only 38 countries will let in a Chinese citizen without a visa. But citizens of war-torn countries like Afghanistan and Iraq face the most onerous visa requirements: there are only 26 countries to which Afghans can travel without one. ... | |
![]() | Iraq's uncertain future: The reckoning |
American troops are leaving a country that is still perilously weak, divided and violent. Little wonder that some Iraqis now don’t want them to go THE last American combat soldiers in Iraq shuffle through a half-empty base as they prepare for the one-way journey to the Kuwaiti border. Some recall their exploits during many tours of duty over the past seven years, charting their fortunes with language that has become common currency on television back home. The shock and awe of the invasion was eclipsed by insurgents using IEDs. Backed by contractors who erected blast walls around a green zone, the soldiers eventually inspired an awakening among Iraqi tribes that, aided by a surge of extra troops, in time brought something like order. In the soldiers’ telling, the names of places that were little known before the war have acquired the resonance of history: Najaf, Sadr City, Abu Ghraib. Some 50,000 American troops will stay on in a support role, to “advise and assist” the Iraqi forces that are now supposed to be in charge of the country’s security. Nonetheless, August 31st marks the official end of Operation Iraqi Freedom, the combat mission that began with the invasion in March 2003. As a sign of America’s changing role in the country, the State Department will now assume some of the responsibilities that were previously undertaken by the Pentagon. Chief among them is the training of Iraqi policemen, a key to keeping the peace. Consular offices will be opened across the country to replace military bases. Since the State Department does not have its own forces, it is hiring private gunmen. They will fly armed helicopters and drive armoured personnel carriers on the orders of the secretary of state long after the last American soldier has gone home. ... | |
![]() | Egypt's presidential hopeful: Of course I don't want to be president |
Gamal Mubarak begins to test the ground for his bid for the succession FOR the past decade, Gamal Mubarak, the son of President Hosni Mubarak and now the number two in Egypt’s ruling National Democratic Party (NDP), has denied any wish to succeed his father. When asked about his future, the younger Mubarak prefers to say only that his work in the party is quite enough to keep him busy. But this summer’s speculation that the president is grievously ill is now rekindling interest in Gamal. His 82-year-old father flew abroad for hospital treatment in March; there are unconfirmed reports that he has cancer. Then, a month or so ago, posters calling for his son’s candidacy for president began to spread in cities and in the countryside. They are usually presented as private initiatives backed by local businessmen wanting to pledge their affection for the self-styled reformer. ... | |
![]() | Iran's nuclear programme: Game resumed |
Iran pockets Bushehr and plays on IT WAS meant as a marker for the world’s readiness to accept Iran’s right to benefit from the peaceful uses of nuclear power, despite its provocative behaviour. By this reasoning, the fuelling this week by Russia of the Bushehr nuclear reactor, Iran’s first power-generating nuclear plant that is due to start supplying electricity to the national grid by year’s end, could help persuade the regime to return to the negotiating table over United Nations demands that it suspend more troubling nuclear work. For Iran, however, Bushehr symbolises something altogether different: the fruits of defiance. It comes alongside recent reports that Iran has acquired a clutch of advanced air-defence missiles on the black market, developed its own new attack drone and supplied advanced radar to Syria, a neighbour of Israel, a country that Iran’s fiery president, Mahmoud Ahmadinejad, has talked of being wiped off the map. Such an attitude augurs ill for new talks about talks that Iran hints might resume in September with the six countries (America, Russia, Britain, France, Germany and China) that have been trying to negotiate it round. ... | |
![]() | South Africa's strikes: After the party… |
…comes an almighty hangover THE warm, fuzzy feeling of national pride and unity engendered by South Africa’s hosting of the football World Cup did not last long. As a strike by more than 1m public-sector workers enters its second week, hospitals, schools and other services across the country remain closed. Women in labour are being turned away from hospitals, the sick and the dying left unattended and pupils trying to get into school beaten up by their own teachers. The army has been called in to help. Police have been using water cannon and rubber bullets to break up the most violent protests. Dozens have been arrested. The Congress of South African Trade Unions (Cosatu), the biggest union federation and a supposed ally of the ruling African National Congress, is now threatening to shut down the entire economy by calling all its members out in a sympathy strike next week unless the government gives in to the public-sector unions’ demands for an 8.6% wage rise—more than double the inflation rate—plus a housing allowance of 1,000 rand ($135) a month. The government says it cannot afford more than its final offer of a 7% rise plus a 700 rand allowance along with a previously agreed on 1.5% performance bonus. ... | |
![]() | Ethiopia's capital city: Make it prettier and cheaper |
Architects want to make the city that hosts the African Union so much nicer AMHARIC has no precise word for architecture, but it needs one. Ethiopia’s capital, founded by Emperor Menelik II in 1886, now has 4.6m people but that figure may well double by 2020. Dirk Hebel of Addis Ababa’s revamped architecture school says that “the first thing we do is to sit down with the students for a day and explain what [it] is”. According to the UN, Addis has one of the higher densities of slum dwellers in the world. But their geographical pattern is unusual. Most African cities separate fairly neatly into poor and rich areas “like a sunny-side-up egg”, with slums spreading out from the rim, says Mr Hebel. But Addis is “more of a scrambled egg”. A lack of crime and a tradition whereby the rich seem to tolerate the poor living among them mean that Addis’s slums often lie in the seams between office buildings and flats in the more affluent parts of the city. ... | |
![]() | Brazilian agriculture: The miracle of the cerrado |
Brazil has revolutionised its own farms. Can it do the same for others? IN A remote corner of Bahia state, in north-eastern Brazil, a vast new farm is springing out of the dry bush. Thirty years ago eucalyptus and pine were planted in this part of the cerrado (Brazil’s savannah). Native shrubs later reclaimed some of it. Now every field tells the story of a transformation. Some have been cut to a litter of tree stumps and scrub; on others, charcoal-makers have moved in to reduce the rootballs to fuel; next, other fields have been levelled and prepared with lime and fertiliser; and some have already been turned into white oceans of cotton. Next season this farm at Jatoba will plant and harvest cotton, soyabeans and maize on 24,000 hectares, 200 times the size of an average farm in Iowa. It will transform a poverty-stricken part of Brazil’s backlands. Three hundred miles north, in the state of Piaui, the transformation is already complete. Three years ago the Cremaq farm was a failed experiment in growing cashews. Its barns were falling down and the scrub was reasserting its grip. Now the farm—which, like Jatoba, is owned by BrasilAgro, a company that buys and modernises neglected fields—uses radio transmitters to keep track of the weather; runs SAP software; employs 300 people under a gaucho from southern Brazil; has 200km (124 miles) of new roads criss-crossing the fields; and, at harvest time, resounds to the thunder of lorries which, day and night, carry maize and soya to distant ports. That all this is happening in Piaui—the Timbuktu of Brazil, a remote, somewhat lawless area where the nearest health clinic is half a day’s journey away and most people live off state welfare payments—is nothing short of miraculous. ... | |
![]() | The cost of weapons: Defence spending in a time of austerity |
The chronic problem of exorbitantly expensive weapons is becoming acute THERE were the starlings: aerobatic teams with mesmerising group displays. There were the albatrosses: Boeing’s 787 Dreamliner and Airbus’s A380, heavy airliners that still manage long, effortless flight. And there were the buzzing propeller-driven military transporters, including the latest, the Airbus A400M. But the star turn was reserved for the birds of prey, the jet fighters. At this summer’s Farnborough air show, outside London, America’s most advanced fighter, the F-22 Raptor, announced its power with a thunderous roar. Many think of fighters in terms of speed, altitude and agility. But even more impressive is to see the Raptor at low speed, hovering almost stationary in the air, its nose pointing upwards, like a child’s toy strung up to the sky. In mock battles, its stealth and sensors allow a lone Raptor to kill a flock of any other kind of aircraft. ... | |
Copyright Economist |
