Friday, 29 June 2018
Thursday, 28 June 2018
China starts easing monetary policy. Or does it?
CHINESE investors often refer in jest to the central bank as “central mama”. The idea is that it can be counted on to provide tender love—that is, policy easing—when market conditions are rough. But during the past couple of years it has been more of a disciplinarian, taking cash away from reckless investors. Its latest move, a cut of banks’ required reserves, has triggered a debate about which school of parenting it subscribes to these days. Is central mama turning soft again, or is she still cracking the whip?
On June 24th the People’s Bank of China said it would reduce the portion of cash that most banks must hold in reserve by 50 basis points. This was equivalent to deploying 700bn yuan ($106bn) in the financial system, or nearly 1% of GDP, which might sound like a healthy dose of liquidity to shore up growth. But the central bank insisted that it was not easing policy.
Many analysts take the central bank at its word. In the past, when it focused on the quantity of money in the economy, reducing required reserves could be seen as a form of loosening. But in recent years it has placed more emphasis on interest rates. Its most important target is banks’ short-term cost of borrowing from each other. That remained stable over the past week at about 2.8% in annual terms, proof that the announcement had little discernible...Continue reading
from Business and finance https://www.economist.com/news/finance-and-economics/21745236-challenges-interpreting-central-banks-latest-move-china-starts-easing?fsrc=rss
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Tortured by meetings
MOST workers view the prospect of a two-hour meeting with the same enthusiasm as Prometheus awaited the daily arrival of the eagle, sent by the gods to peck at his liver. Meetings have been a form of torture for office staff for as long as they have pushed pencils and bashed keyboards.
One eternal problem has been their inefficiency. In 1957, C. Northcote Parkinson, an academic and legendary writer on management, came up with the law of triviality, that “the time spent on any item of the agenda will be in inverse proportion to the sum [of money] involved.” In that same spirit, this columnist would like to propose an even broader principle, applying to gatherings of ten people or more, and immodestly called Bartleby’s Law: “80% of the time of 80% of the people in meetings is wasted.”
Various corollaries to this law follow. After at least 80% of meetings, any decisions taken will be in line with the HIPPO, or “highest-paid person’s opinion”. In short, those who backed a...Continue reading
from Business and finance https://www.economist.com/news/business/21745278-you-take-minutes-and-waste-hours-tortured-meetings?fsrc=rss
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America Inc and the rage against Beijing
ONE of the naughty secrets about America’s trade war with China is that it has the tacit support of much of America’s business establishment. For the past 20 years big firms’ default mode has been Sino-infatuation. Schumpeter attended a dinner in 2016 between the captains of USA Inc and Li Keqiang, China’s premier, and you could taste the deference in the air more keenly than the beef on the plates. But lately bosses’ mood has flipped into a hostility that risks becoming jingoistic and unhelpful.
While a few Sino-dependent companies such as Apple and Boeing want to lower the temperature, many others consider themselves mistreated by China; for them, it is payback time. This stance has two flaws. The sense of victimhood is over the top; American firms have done reasonably well in China. And it is stoking the White House to escalate a conflict that may spill over from trade tariffs into a war over investment by multinationals.
China may have been bad for steel workers in Cleveland...Continue reading
from Business and finance https://www.economist.com/news/business/21745276-boohoo-just-how-badly-has-us-business-been-treated-china-america-inc-and-rage-against?fsrc=rss
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A disciplined startup emerges from the Wild West of crypto-currency
MOST startups proudly announce their presence on buildings, billboards and any surface offering visibility. Not Coinbase, a crypto-currency startup. Visitors to its headquarters on a high floor of an office tower in San Francisco find themselves before an unmarked door and doorbell. They are asked to confirm by intercom which firm they intend to see. An online search for Coinbase shows its offices at a different location, a diversion tactic to keep away disgruntled crypto-currency investors, thieves who are trying to get access to crypto-assets, and other malefactors.
Such inconspicuousness contrasts with the company’s high profile. Coinbase is one of Silicon Valley’s fastest-growing young firms and by far the most prominent business to emerge from the mania around crypto-currencies. The six-year-old startup, an online brokerage for buying and selling bitcoin and other crypto-currencies, claimed a valuation of $1.6bn when it raised $100m from venture capitalists last year. It reportedly now has a...Continue reading
from Business and finance https://www.economist.com/news/business/21745275-yet-coinbases-future-depends-volatile-appetite-currencies-disciplined-startup?fsrc=rss
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The changing world of work
“MONEY often costs too much,” quipped Ralph Waldo Emerson. But a new study suggests that since 1950, the price of buying it with labour in America has fallen. Greg Kaplan of the University of Chicago and Sam Schulhofer-Wohl of the Federal Reserve Bank of Chicago have linked measures of how Americans today feel about various jobs to changes in employment.
Both men and women are less likely to be farmers, for example, now than in 1950, and more likely to be in management. Women are less likely to be secretaries, and men more likely to be in service-sector jobs. Assuming that people in 1950 felt the same way about particular jobs as people do now, workers today are less sad, less tired and in less pain.
But changes in other measures of well-being, and a separate analysis of men and women, are less uniformly positive (see chart). The economists find that modern employment patterns probably mean that today’s workers are more stressed. And although the jobs women have moved into are ones they...Continue reading
from Business and finance https://www.economist.com/news/finance-and-economics/21745271-women-are-much-happier-work-1950-men-have-fared-less-well-changing?fsrc=rss
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Italy’s resilient savers are driving consolidation in asset management
THE rumour mill is grinding again. In early 2017 reports swirled of a possible merger between Generali, Italy’s biggest insurer, and Intesa Sanpaolo, the country’s second-biggest bank. That deal came to nothing. But Intesa is still looking for a partner. Now it is said to be in talks with BlackRock, the world’s biggest asset manager, about a stake in Eurizon, the bank’s asset-management unit. Deal or no deal, two things are clear. Italy’s asset-management industry is consolidating. And though investors fret over a populist government and towering public debt, its pool of private savings will keep them keen.
Last year Amundi, a French asset manager, bought Pioneer, the fund-management arm of UniCredit, Italy’s biggest bank. Over half of assets under management are owned by 10% of Italians, which makes the wealthier end of the business especially appealing. Mediobanca, an investment bank, last year opened a private bank and bought 69% of RAM Active Investments, a Swiss investment manager. And in May Indosuez, the wealth-management arm of Crédit Agricole, a French bank, acquired Leonardo, a private bank.
There is lots to fight for. Although Italy’s savings rate has fallen by more than half since the 1990s, at 10% of personal income it still beats Britain’s or Spain’s. The financial crisis a decade ago saw assets under management contract by...Continue reading
from Business and finance https://www.economist.com/news/finance-and-economics/21745270-intesa-sanpaolo-said-be-talks-blackrock-worlds-biggest-asset?fsrc=rss
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European state rail firms face scrappy new competitors
THE opening of Britain’s Liverpool and Manchester Railway in 1830 marked several firsts in rail history. It was the world’s first inter-city line. It was the scene of the first widely reported passenger fatality. And it was also the first where all trains were hauled by the track owners. Previous lines had seen competition between operators, leading to the drivers of horse-drawn passengers trains and steam-pulled coal trucks having fisticuffs on the tracks. Two centuries later, the question of whether train and tracks should be operated by the same firm still simmers across Europe.
That is because new EU rules, enticingly called the “fourth railway package”, will force all state rail firms to open their tracks to rivals from next year. It means a “tectonic shift” for the industry, argues Leos Novotny of LEO Express, a rail startup based in Prague. And it comes at a time when commuters are particularly grumpy about trains. In France three months of labour strikes at SNCF, the state rail...Continue reading
from Business and finance https://www.economist.com/news/business/21745269-some-worry-established-giants-may-play-dirty-order-survive-european-state-rail-firms?fsrc=rss
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Contrition wins the day for Uber in a big market
SECOND chances exist, after all. Last September Uber was sideswiped when Transport for London (TfL), the city’s transport regulator, revoked the ride-hailing giant’s licence to operate in the capital, citing concerns related to public safety and reporting of drivers’ criminal offences. The decision appeared to dent the prospects of the firm, which counts London as its largest European market and one of the most lucrative of its 600 cities. Uber continued to operate in London while appealing the decision, but a lot still hung in the balance.
Welcome news came on June 26th when a judge in London awarded the firm a licence for 15 months. In court Uber had taken a contrite and muted stance, promising to do more to provide support for riders and drivers, including launching a telephone hotline for passengers. The chief magistrate for the case, Emma Arbuthnot, decided that Uber had not acted in a sufficiently “fit and proper” manner previously, but that its new approach and leadership suggests it is ready to do so now.
TfL will still monitor it over the next 15 months, which will serve as a probationary period of sorts before its licence is again reviewed. Some doubt if Uber has really changed its rough-and-tumble ways. Gerald Gouriet, a lawyer representing the Licensed Taxi Drivers’ Association, said that an “Uber in sheep’s clothing” had...Continue reading
from Business and finance https://www.economist.com/news/business/21745267-regaining-its-london-licence-was-key-test-dara-khosrowshahis-overhaul-contrition-wins?fsrc=rss
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VW opens Rwanda’s first car-assembly plant
HOW to sell cars when most people can’t afford to buy one? That is the conundrum for Volkswagen in Rwanda, where it is opening the country’s first car-assembly plant. A new Polo costs 33 times the average Rwandan income. Most cars on the road are second-hand imports. Rwanda absorbs perhaps 3,000 new cars a year, says Thomas Schäfer, VW’s chief in Africa. Past projects by carmakers in Africa, he admits, have ended in “monumental failure”.
Yet there was a hopeful mood when VW launched its operations in Kigali, the Rwandan capital, on June 27th. The moment opens ”a new chapter in Rwanda’s journey,” said Paul Kagame, the president, after taking a demonstration model for a spin. In truth, little of the manufacturing will happen locally, at least to begin with. VW will build its vehicles elsewhere, partly dismantle them, then put them back together in Rwanda.
The real novelty is how the cars will be used. VW is linking production to a ride-hailing and car-sharing service,...Continue reading
from Business and finance https://www.economist.com/news/business/21745266-vehicles-will-be-used-new-car-sharing-and-ride-hailing-service-vw-opens-rwandas-first?fsrc=rss
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Fighting the resource curse through online gaming
ALAIN LILLE is not pleased. His wildcat oil firm spent a fortune looking for oil in Petronia, a former colony known for cashmere wool, long before anyone else was willing to take the risk. After sealing a deal with the long-ruling government, he was poised to reap the rewards. But in last year’s election, a new president came to power, promising a better deal for the people. Mr Lille fears she will reopen negotiations, further delaying any profits for the company or revenues for the country. She has invited four foreign “experts”, who have never set foot in the country before, to advise her. As he shares these concerns at a drinks reception at Hôtel Capitale, Mr Lille notices one of these foreign advisers sidling up to listen in.
Mr Lille does not exist. Neither does the country, Petronia. They appear instead in a new online game created by the Natural Resource Governance Institute (NRGI), a think-tank based in New York and London that seeks to improve the management of oil, gas and mineral wealth in developing countries. As a player, you take on the role of that pesky foreign adviser eavesdropping on Mr Lille. As well as the drinks reception, your adventures will take you to the presidential palace, the capital city’s cafés and markets, and the coastal district of Neftala, where the oil was discovered.
In its training courses NRGI has long...Continue reading
from Business and finance https://www.economist.com/news/finance-and-economics/21745245-welcome-petronia-fighting-resource-curse-through-online-gaming?fsrc=rss
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The Trump administration plans to crack down on Chinese investment
PRESIDENT Donald Trump’s view of investment depends on who is doing it. On June 22nd he railed against Europeans exporting cars to America, demanding that they “build them here!” On June 26th he tweeted that all Harley-Davidson motorcycles should be made in America (see article). But when it comes to Chinese investors buying American technology, Mr Trump would prefer a frostier approach.
Investors have feared a clampdown since March, when the administration concluded that China’s unfair actions against American companies merited retaliatory restrictions on Chinese investments in “industries or technologies deemed important to the United States”. Mr Trump directed Steven Mnuchin, the treasury secretary, to come up with options. On June 24th it appeared policy might tighten dramatically, with reports of plans to limit investment in America in the...Continue reading
from Business and finance https://www.economist.com/news/finance-and-economics/21745243-once-goes-grain-american-policymaking-trump?fsrc=rss
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Wednesday, 27 June 2018
John Flannery gets down to business restructuring General Electric
THIS should have been one of the darkest weeks in the history of General Electric (GE). The firm founded by Thomas Edison has been a member of the Dow Jones Industrial Average, a stockmarket index comprised of leading American companies, for over a century. Alas, mismanagement and a failure to move with the times have turned the erstwhile icon of innovation into a disorganised, debt-laden mess. GE’s shares have plunged to below a quarter of their peak value in 2000. On June 26th GE was ejected from the Dow index and replaced by Walgreens Boots Alliance, a big health-care firm.
Yet on that same day a ray of sunshine also fell on GE. John Flannery, an insider known for his number-crunching skills who took over as the troubled firm’s boss last August, announced details of a much-awaited restructuring plan. Over the next couple of years GE will spin off its healthcare division and unwind its newish stake in Baker Hughes, a petroleum-services firm. He had previously confirmed the sale of...Continue reading
from Business and finance https://www.economist.com/news/business-and-finance/21745150-booted-dow-week-ge-becoming-humbler-fitter-john-flannery-gets-down?fsrc=rss
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Sunday, 24 June 2018
The founder of JetBlue is about to start a new airline
TWO decades ago, David Neeleman founded JetBlue Airways, promising to “bring humanity back to air travel.” It has since grown to become one of America’s largest airlines. But stories of poor service and a lack of humanity still abound in the country’s aviation industry. And so it appears that Mr Neeleman is back and preparing to launch a new airline.
Airline Weekly, a magazine, reports that Mr Neeleman, with $100m in financial backing, plans to create a new carrier called Moxy. The airline will aim to fill a niche in the American market by offering low-cost direct services between smaller airports,...Continue reading
from Business and finance https://www.economist.com/blogs/gulliver/2018/06/if-you-do-succeed-first-time?fsrc=rss
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Thursday, 21 June 2018
Sino-American interdependence has been a force for geopolitical stability
IN THE 1990s America and Europe had a trade dispute over bananas. No one worried that tanks might soon roll as a result. But trade is about more than economics. The European Union, the world’s most ambitious free-trade area, was founded on the idea that trade integration would make war between members “not merely unthinkable, but materially impossible”. As the risk of a serious Sino-American trade war grows, attention is mostly focused on the prospect of dearer iPhones and unhappy soyabean farmers. But the stakes are much higher.
China’s economic miracle could not help but provoke geopolitical stress, given its size and illiberality. Relations between America and China are built on mutual suspicion. Geopolitical rivalry has been moderated, however, by economic interdependence: a mutual entanglement some economics wags have dubbed “Chimerica”.
As China opened up, American consumers hoovered up cheap Chinese goods. American firms built China into their supply chains, enjoying...Continue reading
from Business and finance https://www.economist.com/news/finance-and-economics/21744822-full-blown-trade-war-would-harm-more-two-countries?fsrc=rss
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As China mulls its response to Donald Trump’s tariffs, cool heads are prevailing, for now
FOR now, at least, when speaking of the trade dispute with America, China’s government is taking a more-in-sorrow-than-in-anger tone. That helps explain the Chinese public’s surprisingly measured views of Donald Trump, and gives the Chinese government some breathing room to consider its options.
The state media have so far taken the high ground. True, the Global Times, a chest-thumping tabloid, accused the American president of “gambling” that China will be cowed by his “capricious and obstinate attitude”. No country can isolate itself from globalisation, said the Xinhua news agency: “The wise man builds bridges, the fool builds walls.” A new Xinhua web page popped up on June 20th, tracking multilateral deals that Mr Trump has quit, including on trade, climate change and Iranian nuclear arms.
But China has yet to debate, publicly, how to handle an American president who is an avowed populist...Continue reading
from Business and finance https://www.economist.com/news/finance-and-economics/21744831-yantaithough-america-has-more-firepower-china-can-still-do-it-lot-damageat?fsrc=rss
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A wave of new environmental laws is scaring shipowners
THE shipping industry has encountered rough seas over the past decade. Between 1985 and 2007 trade volumes shot up at around twice the rate of global GDP but since 2012 their rate of growth has barely kept pace, leaving the industry with overcapacity. Freight rates for containers have plunged by a third since 2008. Worse may be to come. The industry does not regard as good news President Donald Trump’s announcement on June 15th of tariffs of 25% on up to $50bn of Chinese goods, which will slow trade growth further. Now a veritable hurricane of new environmental laws is about to hit.
Shipping accounts for only around 2% of global carbon emissions, but is quite dirty. Burning heavy fuel oil, the industry produces 13% of the world’s sulphur emissions and 15% of its nitrogen oxides. And by 2050 ships will be producing 17% of all carbon emissions if left unregulated, according to research by the European Union.
The International Maritime Organisation (IMO), the...Continue reading
from Business and finance https://www.economist.com/news/business/21744873-cap-sulphur-marine-fuel-could-cost-industry-60bn-wave-new-environmental-laws?fsrc=rss
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A maverick French telecoms firm attempts Italian conquest
“CHOOSE truth. Choose Iliad,” entreats the voice-over of a television advertisement after images of President Donald Trump speechifying and footballers feigning injuries flash across the screen. That may seem pretentious for a mobile provider, but the advert is part of Iliad’s entry into Italy, which began on May 29th. The group, led by one of France’s most prominent businessmen, Xavier Niel (pictured), is credited with having shaken up the telecoms industry at home. He wants to have a similar impact in Italy.
Mr Niel started out with a porn-chat service for Minitel, a French antecedent to the internet. In 2002 he launched his Freebox, which combined cheap web access, TV and fixed-line telephony, and in 2012 started selling low-cost mobile telephony. Growth came easily for years, allowing Mr Niel to spend time on other things, such as launching Station F, the world’s largest startup incubator, in Paris, and free coding schools in...Continue reading
from Business and finance https://www.economist.com/news/business/21744869-xavier-niels-style-may-suit-italys-anti-establishment-mood-maverick-french-telecoms-firm?fsrc=rss
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Glencore dodges American sanctions rather than spurn its friends
AMONG Africa’s many foreign fixers and mining tycoons, few are more colourful than Dan Gertler, an Israeli diamond trader. Just over 20 years ago at the age of 23 he took a punt on Laurent Kabila, the rebel who in 1997 had just seized the Democratic Republic of Congo (then Zaire) from Mobutu Sese Seko, its dictator for the previous 32 years. Having met him through his son, Joseph, he lent the president $20m to buy weapons. He could have lost everything, but instead made it back a hundredfold. By the time Joseph Kabila took over from his father, after the latter’s murder in 2001, he had become the man largely in charge of distributing Congo’s mining licences to international mining companies.
Two decades on, Mr Gertler’s clout in Congo is undiminished. That was proved on June 15th when Glencore, the world’s largest commodities trader, decided it would rather evade sanctions than not pay the billionaire the royalties he was owed from a Glencore-owned mine. The American government...Continue reading
from Business and finance https://www.economist.com/news/business/21744868-worlds-largest-commodities-trader-resuming-payments-dan-gertler-congo-glencore?fsrc=rss
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How two-wheelers are weaving their way into urban transport
THE streets of Beijing are thronged with two-wheeled contraptions. Some appear to be conventional petrol mopeds but as they zoom through red lights at pedestrian crossings their eerie silence and lack of exhaust reveals them as electric. Executives in suits cruise by on electric kick-scooters, looking like big kids on their way to school, though travelling much more enthusiastically. Electric bicycles, hacked together with a battery strapped to the frame and wired to a back-wheel hub containing a motor, crowd the edges of roads.
China’s cities are at the forefront of a quiet swarm of electric two-wheeled vehicles. Millions now roam their centres. This transformation of urban mobility is also happening in the West, albeit with a notable addition that has yet to take off in China: firms that rent out electric kick-scooters. These are taking many American cities by storm and are arriving in Europe.
In the bike-mad Netherlands nearly one in three newly bought bikes last year was electric,...Continue reading
from Business and finance https://www.economist.com/news/business/21744866-electric-bikes-and-e-scooters-are-flummoxing-regulators-while-exciting-consumers-and-venture?fsrc=rss
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Yacht-sharing startups vie to rule the waves
ONE of the busiest times of the year at Arzal marina on the coast of western France is a wooden sailing-boat festival in early summer. Hundreds of enthusiasts join Breton dances on the quayside, but as usual most of the 1,000-or so yachts, catamarans, day-sailers and motor-cruisers remain tied to the pontoons.
Few boat-owners make regular use of their expensive assets. By one estimate, a French yacht slips its moorings on average for just ten days a year, and for America’s 12m recreational boats, typical annual usage is two weeks. Meanwhile, would-be sailors have had few options, beyond pricey short charters.
Marine versions of property-sharer Airbnb or ride-sharer BlaBlaCar are trying to match the two. In Europe a French firm founded in 2013 by Jeremy Bismuth and Edouard Gorioux sets the pace. Click&Boat has 70 staff crammed onto a barge, its headquarters, on the Seine in Paris. They manage bookings for a fleet...Continue reading
from Business and finance https://www.economist.com/news/business/21744864-two-firms-boatsetter-and-clickboat-would-most-privately-owned-boats-be?fsrc=rss
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Abraaj, a Middle Eastern private-equity firm, files for bankruptcy
UNTIL recently the Abraaj Group, aprivate-equity firm based in Dubai, was riding high. It was one of just a few such firms focused on emerging markets, and a darling of “impact investors”, who seek social or environmental returns, not just financial ones. Assets under management of $13.6bn made it the largest private-equity firm in the Middle East, and the 42nd-largest globally in 2017. Its Pakistani founder and boss, Arif Naqvi, a regular at Davos and a patron of the arts, had won awards for philanthropy. It is all the more surprising, then, that basic corporate-governance missteps led his firm to file for provisional liquidation on June 14th.
The problems began in late 2017 when four investors in its $1bn health-care fund, including the Bill & Melinda Gates Foundation and the private-sector arm of the World Bank, grew worried. Nearly $280m of $545m they had been asked for was not promptly spent on acquisitions, as is standard in the industry. Abraaj blamed delays in the...Continue reading
from Business and finance https://www.economist.com/news/finance-and-economics/21744862-firm-dipped-investor-funds-its-own-corporate-purposes-abraaj-middle?fsrc=rss
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Most stockmarket returns come from a tiny fraction of shares
IN his book about the use of language, “The King’s English”, Kingsley Amis describes a tug-of-war. On one side are “berks”, careless and coarse, who would destroy the language by polluting it. On the other side are priggish “wankers”, who would destroy it by sterilisation.
The battle lines look similar in investment. The divide is not on points of grammar but on attitudes towards a handful of modish companies, known as FAANG. These stocks (Facebook, Amazon, Apple, Netflix and Google) have been the motor of the S&P 500 (see chart). All but Apple hit record highs on June 20th. Fill your boots is the attitude of coarse stockmarket berks. FAANG makes more sense than stocks in dying industries. For the prigs, the mania for FAANG stocks is as abhorrent as a split infinitive. The high-minded investor stands apart from the herd.
In matters of grammar, the unsure often follow the sticklers. They at least have rules. But they are often too rigid. Stockmarket sticklers can similarly lead others...Continue reading
from Business and finance https://www.economist.com/news/finance-and-economics/21744861-facebook-amazon-apple-netflix-and-google-faang-have-been-motor?fsrc=rss
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Hedge funds worry about the legal risks of using “alternative” data
“QUANT” (quantitative) hedge funds, which craft elaborate algorithms to make trading decisions, rely on access to information. That used to mean market data, such as prices and trading volume. But some now seek an edge in novel sources. An industry has sprung up to serve them with, and help them analyse, “alternative” data, such as those gleaned from satellite images or by scraping websites. Many of these data firms have been founded by entrepreneurs, but some quant funds themselves are getting involved. Winton, a large London-based fund, is spinning off Hivemind, a data-analysis unit. A full-time management team was announced on June 18th.
For funds making macroeconomic bets by trading in, say, currencies or government bonds, real-time measures of inflation (scraped from e-commerce sites) or trade flows (from shipping data) can be better and more timely than the output of national statistics agencies. Funds trading in individual firms’ shares can infer information on sales from satellite...Continue reading
from Business and finance https://www.economist.com/news/finance-and-economics/21744851-dubious-data-providers-emerge-established-players-start-offering-analysis?fsrc=rss
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How an algorithm may decide your career
WANT a job with a successful multinational? You will face lots of competition. Two years ago Goldman Sachs received a quarter of a million applications from students and graduates. Those are not just daunting odds for jobhunters; they are a practical problem for companies. If a team of five Goldman human-resources staff, working 12 hours every day, including weekends, spent five minutes on each application, they would take nearly a year to complete the task of sifting through the pile.
Little wonder that most large firms use a computer program, or algorithm, when it comes to screening candidates seeking junior jobs. And that means applicants would benefit from knowing exactly what the algorithms are looking for.
Victoria McLean is a former banking headhunter and recruitment manager who set up a business called City CV, which helps job candidates with applications. She says the applicant-tracking systems (ATS) reject up to 75% of CVs, or résumés, before a human sees them. Such systems...Continue reading
from Business and finance https://www.economist.com/news/business/21744850-getting-job-means-getting-past-computer-how-algorithm-may-decide-your-career?fsrc=rss
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Giddy property prices are a test for Swedish policymakers
ULF DANIELSSON is thinking of buying a holiday home—or even a new house, so that he, his wife and two children can have a garden and more space than in their flat in Uppsala. He can afford either, he says, and as a professor of astrophysics is surely able to work that out. But he is hesitating, lest the giddy rise in Swedish property prices end in an ugly crash. “You risk having a big loan that’s worth more than the house,” he says.
The property market has fallen a little closer to Earth: prices dropped by 9% between September and January, largely because of a surfeit of pricey new flats. They then steadied, and are around 5% below the peak—and 50% higher than at the start of 2013, calculates Valueguard, a data provider. As Swedes have borrowed to buy, their debts have risen. Finansinspektionen (FI), the financial-stability supervisor, estimates that borrowers’ debts rose by 36% between 2012 and 2017, while disposable incomes went up by 13%. Almost a fifth of households with new mortgages owe more than six times net income.
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Michel Foucault’s lessons for business
NOT many businesspeople study post-war French philosophy, but they could certainly learn from it. Michel Foucault, who died in 1984, argued that how you structure information is a source of power. A few of America’s most celebrated bosses, including Jeff Bezos and Warren Buffett, understand this implicitly, adroitly manipulating how outsiders see their firms. It is one of the most important but least understood skills in business.
Foucault was obsessed with taxonomies, or how humans split the world into arbitrary mental categories in order “to tame the wild profusion of existing things”. When we flip these around, “we apprehend in one great leap…the exotic charm of another system of thought”. Imagine, for example, a supermarket organised by products’ vintage. Lettuces, haddock, custard and the New York Times would be grouped in an aisle called “items produced yesterday”. Scotch, string, cans of dog food and the discounted Celine Dion DVDs would be in the...Continue reading
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Tuesday, 19 June 2018
Thursday, 14 June 2018
Can refugees help to plug Europe’s skilled-labour gaps?
THE canteen of Stockholm University could scarcely be more Swedish. Young blond students sip coffee and tap away on Macs. In room 3.89, an outpost of the campus, is another, newer Sweden. Refugees, all of them teachers, from lands far to the south and east are preparing for the classrooms of their new home. Several keep their coats on as Khadije Obeid takes them through the basics of the curriculum and shows a YouTube clip about education law. “In Syria the teacher has much authority,” says Samer, an English teacher, as he raises his hand above his head. “Here he is equal to the students,” he adds as he lowers it.
The ten women and seven men are on a “fast-track” programme for refugees with experience in occupations where labour is short. As well as learning Swedish, they get 26 weeks of daily classes, teaching practice and mentoring. The hope is that they will then train or, if their previous qualifications are recognised, go straight to the classroom. The government is running some 30...Continue reading
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A new breed of German startups
At a rooftop bar in Berlin on May 29th, the glitterati of Germany’s startup scene toasted a new arrival. Silicon Valley Bank, a commercial lender which counts as customers half of American startups that went public in 2017, has just opened an office in the country. “They are doing unique, cool things here,” gushed Greg Becker, the bank’s boss. One of his first German clients is Lilium Aviation, whose electric flying taxis have mastered the tricky combination of a drone-like vertical take-off and forward jet propulsion.
Silicon Valley Bank arrives as a new breed of German startups is gaining altitude. At first e-commerce firms dominated the scene, often by copying ideas from abroad. Rocket Internet, an early success, went further, cloning American e-commerce models in other countries, too. Rocket and Zalando, a fashion e-tailer, did initial public offerings in 2014. After that only two big stockmarket debuts followed, of HelloFresh (which sells meal-kits) and Delivery Hero (a...Continue reading
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Trends in extortion payments by companies to Italy’s Mafia
THE toll of “pizzo” protection payments made by firms to Sicily’s Mafia is closely monitored. Nearly half pay up these days, according to estimates from the Confartigianato, a national business association—a big improvement from the early 1990s, when at least four-fifths of Sicilian firms paid it. Back then the levy claimed nearly a tenth of the turnover of victimised businesses. Today’s ratio is around half that. Other regions in Italy’s south, where the pizzo system is most entrenched, have also seen big drops.
For that businesses can thank a clutch of anti-pizzo groups. One is Addiopizzo (“goodbye, pizzo”) in Palermo, which advises businesses on pressing charges against crooks. It also encourages them to publicly forswear pizzo payments. Extortionists now think twice before bullying shopkeepers, knowing there will be a flurry of...Continue reading
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The murky future of two Latin American oil giants
IT SEEMED like such a comeback. When Pedro Parente took over as boss of Petrobras in 2016, Brazil’s state oil firm was drowning in $130bn of debt. It had lost $200bn in shareholder value, and its executive board had been gutted by the massive Lava Jato corruption scandal. Mr Parente slashed subsidies, sold assets and adopted a market-friendly pricing policy. The company’s debt shrank and the share price reached a 3½-year high in May.
Then, on June 1st, Mr Parente resigned and Petrobras’s shares plunged by over 20%. The cause was a ten-day lorry drivers’ strike that crippled Brazil’s economy and forced Petrobras to freeze diesel prices for ten days and the government to subsidise them for two months. That revived a conversation about price controls and fuelled concerns about future state meddling.
The same fears hang over Pemex, Mexico’s state-owned oil giant, ahead of a general election on July 1st....Continue reading
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How open is America?
“JUSTIN has agreed to cut all tariffs and all trade barriers between Canada and the United States,” claimed President Donald Trump to laughter on June 8th, at the G7 summit in Quebec. The next day, in apparent seriousness, Mr Trump—who has slapped tariffs and quotas on imports of aluminium and steel from all the G7 countries, and others—called for unfettered trade within the group: “No tariffs, no barriers. That’s the way it should be.”
Over the next two days a more familiar Mr Trump reappeared. After Mr Trudeau said, at a post-summit press conference, that Canada would not be pushed around, he fired off a barrage of tweets calling him “very dishonest & weak”. He blasted Europe too. And he tweeted: “Sorry, we cannot let our friends, or enemies, take advantage of us on Trade anymore.”
Suspend disbelief and suppose that Mr Trump’s offer of a barrier-free world is serious. He may want to tear down tariffs and quotas out of a yearning for open markets and lower...Continue reading
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Can the solar industry survive without subsidies?
A LITTLE over a decade ago, when JinkoSolar, a Shanghai-based company, entered the solar business, it was such a novice that when it visited international trade fairs, all it had was a bare table and a board with its name scribbled on it. But it also had luck, a technological edge and lots of public money on its side.
The industry globally was riding high on subsidies. Generous feed-in-tariffs (FITs), financial incentives for installing solar, made Germany the world’s largest solar market by around 2010. Germans turned to China for cheap sources of crystalline silicon solar panels, not least because subsidised land and loans enabled China’s fledgling manufacturers to undercut European and American competitors.
When European solar subsidies slumped during the euro crisis, the Chinese government once again stepped in to support its renewable-energy champions. It offered FITs to slather the remote west of China with solar farms. By 2013 China had eclipsed Germany as the world’s largest...Continue reading
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How to play Argentina
THERE is a type of footballer who inspires the affection of fans and the ire of coaches. He is talented, usually extravagantly so. But he is also wayward to the same lavish degree. Discipline seems beyond him, on or off the pitch. It was said of one of this kind, Stan Bowles of Queens Park Rangers and England, that if he could pass a betting shop as well as he passed a ball he’d be a rich man.
Which brings us, naturally, to Argentina—not to its footballers, who have mostly fulfilled their potential, but to its economy, which has not. A century ago, it was the country of the future. It betrayed that promise without ever quite extinguishing hopes that it might eventually live up to it. Like a talented but troublesome sportsman, it keeps being given another chance. The board of the IMF will soon approve a $50bn support package for Argentina. It has had countless such programmes in the past without much changing. The fund is betting that this time is different. Should investors make a similar...Continue reading
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Google runs into more flak on artificial intelligence
DISCOVERING and harnessing fire unlocked more nutrition from food, feeding the bigger brains and bodies that are the hallmarks of modern humans. Google’s chief executive, Sundar Pichai, thinks his company’s development of artificial intelligence trumps that. “AI is one of the most important things that humanity is working on,” he told an event in California earlier this year. “It’s more profound than, I don’t know, electricity or fire.”
Hyperbolic analogies aside, Google’s AI techniques are becoming more powerful and more important to its business. But its use of AI is also generating controversy, both among its employees and the wider AI community.
One recent clash has centred on Google’s work with America’s Department of Defence (DoD). Under a contract signed in 2017 with the DoD, Google offers AI services, namely computer vision, to analyse military images. This might well improve the accuracy of strikes by military drones. Over the past month or so...Continue reading
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Why Japan’s sharing economy is tiny
AIRBNB, an American platform for booking stays in other people’s houses, can barely conceal its frustration. A law passed last year for the first time legalised minpaku, or home-sharing, in Japan, but also sharply restricted it. From June 15th hosts can rent out their property for a maximum of 180 days each year, provided they register with the local authorities. Most hosts will not meet that deadline because they are still obtaining their registration numbers, and on June 1st Japan’s main tourism body unexpectedly decreed that any without them had to cancel reservations at once. Airbnb accordingly eliminated four-fifths of its roughly 60,000 listings in Japan. Holidays are at risk.
The experience illustrates the country’s hesitant approach to the sharing economy, in which people rent goods and services from one another through internet platforms (a broader definition includes companies renting out goods they own, such as bikes, for a short time). A generous estimate of...Continue reading
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China’s tighter regulation of shadow banks begins to bite
THE teller at ICBC, China’s (and the world’s) biggest bank, ushers a new, well-heeled customer into a private room. It is not for VIP treatment but a stern warning. The customer wants to invest in products offering higher returns than a basic savings account. The teller fixes a camera on her and reels off a series of questions. Are you aware that prices can go down as well as up? Do you understand that the bank does not guarantee this product? Only when the customer has been recorded saying “yes” does she get her wish.
Some complain that these videotaped agreements, now mandatory at Chinese banks selling similar investment products, feel like interrogations. But for the financial system, they are a step away from the precipice. Banks have used such transactions to channel cash into off-balance-sheet loans, serving riskier corners of the economy. Firms with little lending expertise have also muscled into the same space.
The catch-all phrase to describe this is shadow banking. It is...Continue reading
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The insecurity of freelance work
THE decline of the conventional job has been much heralded in recent years. It is now nearly axiomatic that people will work for a range of employers in a variety of roles over their lifetimes, with a much more flexible schedule than in the past. Opinion is still divided over whether this change is a cause for concern or a chance for workers to be liberated from the rut of office life.
Is the shift really happening? Some figures from the Bureau of Labour Statistics (BLS), released on June 7th, showed that only 10.1% of American workers were in “alternative employment” last year, a lower proportion than the 10.7% recorded in 2005. In contrast, a study of the British economy by the Institute for Fiscal Studies (IFS) shows that the self-employed sector has been growing, with the number of self-employed sole traders rising by 25% between 2007-08 and 2015-16.
These two measures are different. But getting a good statistical fix is not easy when the jobs are hard to define. The ecology of...Continue reading
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Other American banks may have misbehaved as Wells Fargo did. Which ones?
IF THERE is a single example of how dramatically the regulatory environment has changed for American banks in the past 18 months, it may be the trickle of information that has recently emerged about an inquiry into their sales practices. The Office of the Comptroller of the Currency (OCC), a banking watchdog, began it in 2016 after widespread malpractice was uncovered at Wells Fargo, one of the country’s biggest banks. It ended the inquiry quietly by writing to several banks on June 4th; it sent the letters to Congress on June 11th. The public learned of the probe only because of diligent reporting by American Banker, a trade publication which appears to have gleaned its information mainly from banking consultants.
The OCC responded to American Banker’s report by releasing enough information to suggest that some banks were guilty of at least minor jiggery-pokery. It confirmed as much in testy exchanges between...Continue reading
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Monday, 11 June 2018
Donald Trump lobs a grenade from afar into the G7
FOR a moment, the Group of Seven (G7) leaders attending their annual summit, in a mountain village in Quebec, looked like they had managed to paper over their differences with President Donald Trump and present a united front. They found just the right wording to secure American agreement on matters that never used to be in question, such as supporting democracy, abiding by international-trade rules and fighting terrorism. Even Mr Trump professed himself pleased, calling the summit wonderful and rating his relationships with other leaders as ten out of ten.
Yet barely ten minutes after the official communiqué was published, he changed his mind. He tweeted from somewhere over the Pacific, en route to his “mission of peace” in Singapore with Kim Jong Un, North Korea’s despotic ruler, that he had instructed his officials not to endorse the communiqué. He attacked Justin Trudeau, Canada’s prime minister and host of the summit, for making “false statements” at his closing news...Continue reading
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Friday, 8 June 2018
Aviation’s most outspoken boss thinks women cannot do his job
THE International Air Transport Association (IATA), a trade association for airlines, was founded in 1945 to promote the interests of carriers around the world. In recent years the airline cartel of old has been accused of being out of tune with the times, particularly by low-cost carriers such as Ryanair, which is Europe’s biggest. At this week’s AGM in Sydney the message from IATA was as dated as the organisation itself: women were not suited to running airlines. Akbar al Baker, the group’s new chairman and the boss of Qatar Airways, a Gulf carrier, told attendees that “of course”, his airline “has to be led by a man, because it is a very challenging position”. He later apologised for what he claimed was a joke blown out of proportion by the media. Yet this was not Mr al Baker’s first foray into misogyny. Last year he mocked American carriers for hiring “grandmothers” as flight attendants, boasting that the average age of his cabin crew is 26 years. Until recently, he forbade female staff from marrying or getting...Continue reading
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Thursday, 7 June 2018
A case for owning euro-zone shares
IN AN episode of “Seinfeld”, a 1990s television comedy, George Costanza, a serial failure played by Jason Alexander, decides that every instinct he has is wrong. So he resolves to do the opposite. He is soon squiring a new girlfriend and is up for a dream job. “It’s all happening because I’m completely ignoring every urge towards common sense and good judgment I’ve ever had,” he says.
Success in investing often means going against the grain—and your own feelings. To do otherwise is to be swept along by the general greed and fear. Still, fear is a useful emotion. It would be unwise, for instance, to ignore the recent turmoil in Italy, where bond yields spiked in response to concerns that the country might be on the road to leaving the euro. Though the worst fears have subsided, the coalition that was eventually given the president’s blessing to form a government looks capable of causing trouble.
A natural inclination in the circumstances is to turn away from euro-zone...Continue reading
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Plans to privatise India’s flag-carrier have run into predictable turbulence
AFTER a plane crash, air-safety investigators are dispatched to the wreckage site to find out what went wrong and ensure it never happens again. Their financial counterparts have a similar job to do with the Indian government’s proposed sale of Air India. Mooted for nearly a year, the first round of preliminary bids ended on May 31st having attracted not a single offer.
Bureaucrats running the divestment process had expected many suitors. Domestic aviation is booming. Air India has a modern fleet, an enviable brand and valuable landing rights in many foreign airports. No fewer than 160 queries had come in from interested parties, said to include local and foreign airlines as well as Tata, a conglomerate. Might a bidding war ensue, some wondered?
Not quite. Bidders were seemingly never as keen as government leaks to the media suggested. For one, Air India came saddled with unwanted cargo in the form of 334bn rupees ($5bn) of debt. And a potential buyer would also be expected...Continue reading
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The world’s first commercial drone-delivery service is operating in China
LATE on a Monday morning the village of Zhangwei is quiet. Chickens scratch and cluck at the side of the road. Workers use wooden spades to spread grain on the highway to dry, using half its width so that traffic can still pass on the other side. Yet at the community centre at the village’s heart, two objects hint at a feat of ultra-modern logistics about to unfold: a circle of green astroturf laid down in the central courtyard, and a billboard on the front of the building bearing the logo of JD.com, China’s second-largest online retailer.
A low whirr breaks the stillness as a spiky dot appears on the horizon. The drone arrives overhead with a roar, hovers for a moment, then lowers itself towards the green circle like a mantis, three sets of propellers churning the air into whorls of straw and dust. Slung beneath it is a red cardboard box branded with JD’s cheery dog mascot. Just a few feet above the ground, the drone drops the box then zips back...Continue reading
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Rent the Runway is taking clothes-sharing mainstream
AT ABOUT 4.30am the first of thousands of black garment bags arrive by truck at a vast warehouse less than ten miles (16km) from Lower Manhattan. The bags brim with designer dresses and other trendy clothing and accessories. Workers begin inspecting the garments. A billowy, patterned blouse smells a bit ripe. A floor-length red gown has a tear. A stain sullies the floral pattern of a silk sundress.
Turnaround is quick. The blouse is sent to washing machines, the gown goes to one of the 75 seamstresses lined up next to a wall of thread, zippers, buttons and other adornments in every imaginable colour and the silk dress makes its way to the “spotters”: experts who know how to get tough stains out of delicate fabrics. Most items are in and out in less than a day.
Such efficiency is essential for Rent the Runway (RTR), a New York-based, privately-owned startup with a value of almost $800m that rents out...Continue reading
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In developing countries, many people cannot afford not to work
AMERICA’S unemployment statistics attract close attention, even from presidents. Early on June 1st President Donald Trump tweeted that he was looking forward to the latest figure (3.8%), released that morning. China’s unemployment numbers, by contrast, attract mostly ridicule. They have barely budged since 2011 despite the upheavals of the period.
Many China-watchers therefore hoped that a new measure of unemployment, dating from 2016 but published monthly since April, would be more revealing. Unlike the older statistic, which counts only those registered as jobless at local labour offices, the new measure draws on a survey of the labour force, collected by trained enumerators and beamed directly to Beijing beyond the grasp of local officials. It now covers 120,000 households across urban China (on top of a longer-running survey of 31 cities), providing, in theory, a representative snapshot of the biggest unemployed population in the...Continue reading
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A tax-evasion scandal ensnares Chinese film-production companies
IT IS hard to go a day in China without seeing Fan Bingbing. The doe-eyed starlet gazes from film posters (she has averaged four films a year for the past decade), airbrushed ads for global brands and glossy magazine covers. But in the past week she has graced articles about tax evasion. Shares in a film-production firm that she partly owns fell by 10% on fears that it might be ensnared in a scandal in which actors have allegedly concealed their salaries. Ms Fan has denied wrongdoing. On June 3rd the government began a probe into tax compliance in the entertainment industry.
The controversy began when Cui Yongyuan, a TV presenter, described two anonymous contracts on Weibo, a microblog, one for 10m yuan ($1.6m) and another, linked to the first, for 50m yuan. He said it was a case of the “yin-and-yang” payments prevalent in the film business: reporting a low salary for taxation and pocketing a larger sum. Share prices of big film...Continue reading
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Artificial intelligence is awakening the chip industry’s animal spirits
SUPERCOMPUTERS usually fill entire rooms. But the one on the fifth floor of an office building in the centre of Bristol fits in an average-sized drawer. Its 16 processors punch more than 1,600 teraflops, a measure of computer performance. This puts the machine among the world’s 100 fastest, at least when solving certain artificial-intelligence (AI) applications, such as recognising speech and images.
The computer’s processors, developed by Graphcore, a startup, are tangible proof that AI has made chipmaking exciting again. After decades of big firms such as America’s Intel and Britain’s ARM ruling the semiconductor industry, the insatiable demand for computing generated by AI has created an opening for newcomers. And it may even be big enough to allow some startups to establish themselves as big, independent firms.
New Street, a research firm, estimates that the market for AI chips could reach $30bn by 2022. That would exceed the $22bn of revenue that Intel is expected to earn...Continue reading
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Buying GitHub takes Microsoft back to its roots
ALMOST to the day 17 years ago Steve Ballmer, then boss of Microsoft, the world’s biggest software firm, called Linux a “cancer”, meaning that the open-source operating system would spell the death of proprietary software. On June 4th, his successor, Satya Nadella, announced that the firm would take over GitHub, the main source of such tumours today, for $7.5bn. The deal is yet another sign of Microsoft’s startling recent metamorphosis.
GitHub is no household name, but among programmers it is as important as Facebook—which explains the impressive price tag for a firm that earned only an estimated $200m of revenues last year. More than 28m developers globally keep their code on the website, which offers all kinds of tools and services. Most important of these is allowing software projects, whether open-source or not, easily to pull together code from different contributors.
For Microsoft the deal is a homecoming. It used to be a kind of GitHub itself. When Windows,...Continue reading
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A referendum on the way money is created
TO ITS opponents, the Vollgeld initiative is “suicidal” and a “dangerous experiment”. To its supporters, it is the ticket to a “fairer and more stable banking system”. Swiss voters will decide for themselves on June 10th, when the proposal for sovereign money, which would rewire the country’s banking system, are put to a referendum that, in theory, would be binding.
The heart of the argument is whether private-sector banks should be able to create money. In modern economies, most money takes the form of deposits in commercial banks, rather than the cash in circulation and the reserves determined by the central bank. And bank deposits are mainly created through bank lending. Lenders can thus lend far more than they hold in central-bank reserves.
Vollgeld supporters want to take such money-creating powers away from banks. Bank deposits are not as safe as sovereign money, they say. If a bank collapses, depositors lose...Continue reading
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A judge blames all parties in the Gulf’s biggest-ever corporate scandal
THE glitzy Gulf states take pride in superlatives. They have the world’s tallest building, the biggest shopping mall, even (for a time) the most expensive cocktail. To that list, add a slightly less glamorous entry: what a judge has called one of the largest Ponzi schemes in history. On June 1st a court in the Cayman Islands issued a verdict in the long-running saga of Ahmad Hamad Algosaibi & Brothers Company (AHAB), a conglomerate. When the Saudi company defaulted in 2009, its creditors scrambled to recoup billions in losses. The effective bankruptcy touched off lawsuits from Saudi Arabia to Switzerland. At last, after the longest trial in Cayman Islands’ history, it is one step closer to resolution.
No one emerged from court looking good. Central to the case was whether the founding Gosaibi family knew about fraud carried out by Maan al-Sanea, one of their firm’s executives. Born to a Kuwaiti family, Mr Sanea married into the family in 1980 and...Continue reading
from Business and finance https://www.economist.com/news/business/21743675-maan-al-saneas-business-empire-amounted-one-largest-ponzi-schemes-history-said?fsrc=rss
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Two Asian stock exchanges tussle over market data
BUYING and selling shares in India is not for the faint of heart. Its own central-bank governor reckons equity capital is taxed up to five times. Never fear. There is a well-established alternative. Investors can just as easily buy financial instruments that track share prices but are not themselves shares. Such “derivatives” are used across the world to mirror markets in everything from platinum to pork bellies. But they also raise awkward questions: can the exchange that generates prices by matching buyers and sellers stop a rival using the data to create its own derivatives?
A quarrel between the Singapore Exchange (SGX) and the National Stock Exchange (NSE) in Mumbai touches that very issue. Since 2000 global investors wanting exposure to Indian shares but not Indian red tape and tax have gone via SGX. Under a licence from NSE, punters could trade a derivative linked to the Nifty 50, an index which is to India what the FTSE 100 is to Britain or the S&P 500 is to...Continue reading
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Xiaomi’s forthcoming IPO shows how the rules of business are changing
IN 1987, when Lei Jun was a computer-science student in Wuhan, on the banks of the Yangtze River, he read a book about Steve Jobs and vowed to emulate him. If all goes to plan, this summer Mr Lei will take a leap towards that dream with the flotation of his firm, Xiaomi, at a valuation of $50bn-75bn. It is set to be the world’s largest initial public offering (IPO) since Alibaba in 2014.
Xiaomi is probably China’s most successful consumer brand, but ever since it started selling smartphones in 2010 it has also been difficult to categorise. Yes, Mr Lei sometimes dresses in black, as Mr Jobs did, but it has never been clear if Xiaomi is China’s Apple or if it is more like Samsung, Sony, Nokia, or even Costco, a bulk-discount retailer.
Schumpeter’s answer is that Xiaomi does not resemble any rich-world firm. For decades a particular American ideal of the public company has dominated: focused, widely owned and predictable. Xiaomi is a supercharged champion of a new Chinese model that...Continue reading
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President Trump’s tariffs have united his opponents at home and abroad
“HOW am I going to compete?” asks Sohel Sareshwala. He runs Accu-Swiss, a Californian company making customised components for the manufacture of semiconductors and cars. President Donald Trump’s tariffs on steel and aluminium, both of which he uses as inputs, are eating into his profit margins and delaying his orders. Meanwhile, Mr Sareshwala’s competitors abroad, free of such concerns, can undercut him.
Mr Sareshwala is not alone in his frustration. On June 1st Mr Trump extended tariffs to countries that supplied 81% of America’s steel imports and 96% of aluminium imports in 2017, arguing that this was necessary to protect national security. Tight quotas apply to most of the rest. Only Australia was let off, perhaps because of a friendship between the president and Greg Norman, an Australian golfer, who lobbied on his government’s behalf. Mr Trump’s tariffs and quotas have drawn a chorus of disapproval from American buyers of metal, the governments of Mexico, Canada and the European...Continue reading
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Britain’s government cuts its losses on Royal Bank of Scotland
IF YOU are selling shares, they are worth not what you paid for them, but what someone else will offer. For the Royal Bank of Scotland (RBS), the sum that counts is £2.71 ($3.62). On June 5th UK Government Investments, which manages the state’s stakes in companies, said it had placed 7.7% of RBS at that price—10p below the previous day’s market close—with institutional buyers, reducing its holding to 62.4%. The government paid £5.02 per share to rescue the bank in 2008. So on those 925m shares, taxpayers have lost £2.1bn.
The state has long looked unlikely to recoup its fivers, let alone the £6.25 per share that the National Audit Office, a public-finance watchdog, reckoned last year was a fair benchmark after adding the cost of financing the bail-out. (In 2015 it sold 630m shares, or 5.4% of RBS, for £3.30 a pop.) Even if the stockmarket valued RBS as highly as the book value of its assets—which is true of few big European banks—the price would still be only £4, a level...Continue reading
from Business and finance https://www.economist.com/news/finance-and-economics/21743508-state-resumes-sales-shares-nationalised-lender-britains-government?fsrc=rss
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