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10 августа, 17:41

Letters: Letters to the editor

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Print section Print Headline:  Letters to the editor UK Only Article:  standard article Issue:  The death of the internal combustion engine Fly Title:  Letters Main image:  20170812_LTP001_0.jpg Brexit’s new frontier You described vividly the hurdles that the traffic of people and goods would face if a hard border were to be established between the Irish Republic and Northern Ireland as a consequence of the United Kingdom leaving the European Union (“The border that isn’t—yet”, July 15th). Yet this does not need to be so. Article 24 of the General Agreement on Tariffs and Trade, which lays down the rules to be respected by member countries when they establish customs unions or free-trade areas in order that other countries are not discriminated against, contains a little-used provision on “frontier traffic”. It allows members of the World Trade Organisation to deviate from these constraints in respect of “advantages accorded to adjacent countries in order to facilitate frontier traffic”. There ...

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09 августа, 14:10

Ten years on: Where might the next crisis come from?

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Main image:  TEN years ago, BNP Paribas, a French bank, temporarily suspended dealings in three funds, citing “the complete evaporation of liquidity in certain market segments of the US securitisation market”. Many people treat this as the start of the credit crunch but one can trace it back to the need for Bear Stearns to rescue hedge funds that invested in mortgage-backed securities in June, or the signs of home loan defaults and failing mortgage lenders that emerged in late 2006. The subsequent tightening of credit and loss of confidence in the banking system eventually led to the collapse of Lehman Brothers, when the crisis reached its height in the autumn of 2008 (see picture).The inevitable question on the occasion of such anniversaries is: could it happen again? Total debt has risen, rather than fallen, over the last decade, reaching $217trn or 327% of GDP, according to the Institute for International Finance. But the debt is differently distributed from 2007; more of it is owed by governments and more of it is owned by central banks. Since these banks have no incentive to hassle countries for repayment, the air of crisis has dissipated. Banks have more capital, making them more secure. And low interest rates have made servicing debt more affordable for both consumers and ...

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03 августа, 17:49

National treasures: Is Emmanuel Macron serious about privatisation?

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Print section Print Rubric:  The French state is mismanaging its valuable corporate assets Print Headline:  National treasures Print Fly Title:  Privatisation in France UK Only Article:  standard article Issue:  How to avoid nuclear war with North Korea Fly Title:  National treasures Location:  PARIS Main image:  20170805_WBP001_0.jpg ONE reason for Italian anger over the decision on July 27th by Emmanuel Macron, France’s president, to stop Fincantieri, a shipbuilder from Trieste, winning control of a French shipyard at Saint-Nazaire, was that recent cross-border deals have mostly gone France’s way. Italian businesspeople have grown nervous about French firms’ “colonisation” by means of acquisitions in luxury goods, media and telecoms, including the €46bn ($55bn) merger between Luxottica, an ...

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03 августа, 17:49

Reforming France: Emmanuel Macron must keep his nerve

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Print section Print Rubric:  Emmanuel Macron has promised to nationalise France’s biggest shipyard. He is entering dangerous waters Print Headline:  Keep your nerve Print Fly Title:  French reforms UK Only Article:  standard article Issue:  How to avoid nuclear war with North Korea Fly Title:  Reforming France THINK of it as a Macron micro test: the first industrial intervention by the man French voters put into the Elysée Palace, although he had never held elected office. It involves France’s biggest shipyard, at Saint-Nazaire, on the Atlantic. At the end of last month, rather than see the yard sold into Italian hands, the government of Emmanuel Macron pledged to nationalise it instead. A fervent supporter of the European Union and globalisation, Mr Macron is being accused of nationalism, protectionism and of trying to shore up his declining popularity. It is not that bad—yet. But Mr Macron should be wary of being sucked into ...

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03 августа, 14:53

The buck drops here: A tale of two markets

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Main image:  THE Dow Jones Industrial Average closed above 22,000 on August 2nd, something President Trump is almost certain to mention in a tweet soon*. So it might seem as if the “Trump bump”, which began perking American stocks on the night of the election, is continuing smoothly. But the picture is a lot more complex than that as a look at the dollar’s performance against the euro shows (see chart below). The euro fell (and the dollar rose) between election day and the end of 2016. But then came a turning point. The euro has been climbing (and the dollar retreating) for much of 2017. For dollar-based investors, that means European shares have been a much better bet this year. As of August 2nd, euro-zone shares (as measured by the FTSE Euro 100) were up 19.9% since the start of the year, while the S&P 500 was up 10.7%. Looked at another way, the American market has dropped by 8% in euro terms since February 2nd.  It is a similar story to the British market after Brexit; the FTSE 100 index jumped in sterling terms, but in dollar terms it was down because of the pound’s decline. The two markets interact. A falling currency is good for a country’s exporters and for its multinationals (whose overseas earnings are worth more in domestic-currency terms). That explains some of the resilience ...

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03 августа, 12:48

The punishment continues: America’s new economic sanctions may hurt Russia’s recovery

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Print section Print Rubric:  Do economic restrictions change Russian behaviour? Print Headline:  The punishment continues Print Fly Title:  Sanctions on Russia UK Only Article:  standard article Issue:  How to avoid nuclear war with North Korea Fly Title:  The punishment continues Location:  MOSCOW Main image:  20170805_EUD001_0.jpg IN LATE June Daimler, a German carmaker, broke ground on a new Mercedes-Benz plant north-west of Moscow. “We are confident in the long-term potential of Russia,” Markus Schäfer, a board member, said at the ceremony. The €250m ($296m) factory marked the first investment by a Western carmaker since America and the European Union slapped sanctions on Russia as punishment for its aggression in Ukraine three years ago. After more than two years of recession, Russia is ...

26 июля, 13:25

Five years of Super Mario: The euro’s obituaries were premature

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Main image:  FIVE years ago, Mario Draghi, head of the European Central Bank, pledged to do “whatever it takes” to save the euro. At the time, many people were predicting that the euro zone would break up. But Mr Draghi pulled off the trick; no countries have left the single currency. Borrowing costs have come down and even Greece has been able to tap the markets.Keeping the euro together may have been the aim of the game, but was it worth it? As M&G, the fund management group, points out, the record has been mixed. Economic growth has rebounded to a respectable 1.5% year-on-year. This is not stellar but it is hard for the euro zone to grow rapidly when its population is ageing; the IMF suggests a greater proportion of older workers may weigh on productivity growth.  Of course, the euro zone could get more of the current workforce into the job market; unemployment remains too high. Economists debate whether this is down to a lack of demand (caused by overly tight fiscal policy) or by structural barriers such as an inflexible labour market (which creates insiders, who are hard to dismiss, and outsiders, whom employers are unwilling to hire). Neither issue has anything to do with the ECB. The bank could be criticised for not getting inflation up to 2%. On the other hand, if you had told people ...

24 июля, 16:39

Daily chart: Britain’s JAMs are living up to their name

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IN HER maiden speech as Britain’s prime minister roughly a year ago, Theresa May addressed her remarks “directly” to families who were struggling, and pledged to do everything she could to help them. But their economic situation has not improved since then. In fact, people who are “just about managing”, or JAMs—a vaguely defined group of roughly 6m working-age households on low to middle incomes—are likely to be worse off than a year ago.One way to gauge their situation is by comparison with the minimum income standard (MIS), a measure devised by the Joseph Rowntree Foundation, a think-tank, in conjunction with Loughborough University. It is based on public consultations with a panel of experts that estimate the lowest socially acceptable standard of living in Britain for various types of family. Since 2010 the MIS for most family types has risen substantially, outstripping all gains from wage rises, tax cuts and benefits. Last year alone it jumped 4%.All family types in the JAM group are worse off than they used to be in real terms. Singletons need to earn around £300 ($388) a week. Eight years ago the comparable figure was less than £230, so the MIS for this group has risen 30%. Full-time earnings at the 10th percentile have increased by less than half, meaning more single people are seeing their earning power fall behind. A similar pattern is true for single ...

20 июля, 17:44

Charlemagne: Emmanuel Macron is revitalising the European Union—and dividing it

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Print section Print Rubric:  Emmanuel Macron is both revitalising the European Union, and dividing it Print Headline:  Sea change Print Fly Title:  Charlemagne UK Only Article:  standard article Issue:  Britain faces up to Brexit Fly Title:  Charlemagne Main image:  20170722_EUD000_0.jpg LIFE comes at you fast in the European Union. Barely a year ago, with the wounds from the refugee crisis still gaping, Donald Tusk, the president of the European Council, could be heard warning that a British vote to quit the EU threatened to bring about the collapse of western civilisation. In half the countries on the continent, snarling populists eager for European disintegration were terrifying the pro-EU establishment. Yet over the past few months, gloom has turned to sunshine. In June Mr Tusk declared that he had never felt so optimistic about the EU. Much of the credit ...

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20 июля, 13:03

Britain and the European Union: The six flavours of Brexit

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Print section Print Rubric:  The EU offers many menus, from Norwegian to Turkish. But Britain cannot expect to choose à la carte Print Headline:  The six flavours of Brexit Print Fly Title:  Britain and the European Union UK Only Article:  standard article Issue:  Britain faces up to Brexit Fly Title:  Britain and the European Union Main image:  20170722_BRD001_0.jpg JUST over a year has passed since Britain voted to leave the European Union and Theresa May subsequently became prime minister. Nearly four months have elapsed since Mrs May invoked Article 50 of the EU treaty, setting a two-year deadline for Brexit that will expire on March 30th 2019. The clock is ticking. And at first blush there has been much activity: a big speech by Mrs May at Lancaster House in January; several government white papers; bills introduced in Parliament; and the start of formal ...

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13 июля, 18:21

The other handover: An illustrious Hong Kong container firm sells to China

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Print section Print Rubric:  An illustrious Hong Kong company sells to a mainland rival Print Headline:  The other handover Print Fly Title:  Container shipping UK Only Article:  standard article Issue:  Liu Xiaobo’s death holds a message for China Fly Title:  The other handover Location:  HONG KONG Main image:  Terminal value Terminal value STONECUTTERS ISLAND in Hong Kong used to be a favoured habitat for poisonous snakes and eye-catching birds such as the white-bellied sea eagle. Thanks to Hong Kong’s rapid development, it is no longer so hospitable. Its sky is full of gantry cranes, stacking 20-foot-long shipping containers in multicoloured tessellations, like giant Lego bricks. A cluster of decorative containers, daubed in graffiti, line the perimeter of container terminal eight, which is ...

11 июля, 17:31

Buttonwood: How to kill a corporate zombie

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Print section Print Rubric:  The answer may hold the key to enhancing productivity Print Headline:  How to kill a corporate zombie Print Fly Title:  Buttonwood UK Only Article:  standard article Issue:  Liu Xiaobo’s death holds a message for China Fly Title:  Buttonwood Main image:  20170715_fnp501.jpg WHAT is the best way to kill a zombie? Fans of Daryl Dixon, a character in “The Walking Dead”, a television series, will know the answer: a crossbow bolt to the brain. Getting rid of corporate zombies, however, is a much more complicated process. Ageing populations mean that the workforces in developed economies are likely to stagnate, or even shrink, in coming decades. That means almost all the burden of economic growth is likely to fall on productivity improvements. There has been a lot of focus on labour-market flexibility as the key to solving this problem, ...