The Economist: Full print edition

America, Afghanistan and Pakistan: Kayani's gambit

Thu, 29 Jul 2010 12:49:09 GMT

America is furious about WikiLeaks’ revelations on the war in Afghanistan. But Pakistan also has much to worry about

GENERAL ASHFAQ KAYANI’S moment of pleasure was fleeting. Last week the Pakistani government granted him a second three-year term as army chief—something that no elected government in Pakistan had done before. But within days, thanks to a treasure-trove of 75,000 leaked American military reports, the Pakistani army was once again in the international spotlight for its suspected role in helping the Taliban in Afghanistan.

The files released by WikiLeaks, a whistle-blowing website, are mostly sparse field reports and intelligence assessments from 2004 to 2009. They detail the grim reality of the war: the hunt to kill insurgent leaders, the death of Afghan civilians by error or callousness, bomb and shooting attacks by insurgents, the unreliability of Afghan forces, the corruption of political leaders and much more. ...

Learning about maths: Squaring a circle

Thu, 29 Jul 2010 10:55:47 GMT

For numberphiles and numberphobes

The Number Mysteries: A Mathematical Odyssey Through Everyday Life. By Marcus du Sautoy. Fourth Estate; 304 pages; GBP16.99. Buy from Amazon.co.uk

Here’s Looking at Euclid: A Surprising Excursion Through the Astonishing World of Math. By Alex Bellos. Free Press; 319 pages; $25. Published in Britain as “Alex’s Adventures in Numberland: Dispatches From the Wonderful World of Mathematics” by Bloomsbury; GBP18.99. Buy from Amazon.com, Amazon.co.uk ...

Contemporary photography from Pakistan: Mirror images

Thu, 29 Jul 2010 10:55:47 GMT

Spicing up Musee Guimet

EMILE GUIMET’S bequest of the Asian treasures he had bought on a round-the-world tour in the 1870s fuelled the French craze for Asian antiquities and helped put the Musee National des Arts Asiatiques on a par with the British Museum and the Baur Collection in Geneva.

This summer the French collection has added a twist. Amid a huge show that ranges over eight centuries of Ghandara statues devoted to depicting the face of Buddha, are scattered the works of a playful and eagerly collected young Pakistani photographer, Rashid Rana. ...

The human genome project: Ignition sequence commence

Thu, 29 Jul 2010 10:55:47 GMT

A history of twists and turns

Drawing the Map of Life: Inside the Human Genome Project. By Victor McElheny. Basic Books; 381 pages; $28 and GBP16.99. Buy from Amazon.com, Amazon.co.uk

IN THE late 1980s it occurred to a bunch of biologists, many of them Americans, that it might be possible to analyse all of the 3 billion pairs of DNA “letters” that contain man’s genes, and thus make a map of the human genome. The tools they had were crude, but the application of enough time and money to the problem, they thought, would yield the blueprint of humanity. That would be the starting point for a new sort of biology, one in which the scope of the problem was defined in the way that the scope of chemistry is defined by the periodic table. ...

Bicycling: Double whammy

Thu, 29 Jul 2010 10:55:47 GMT

How Robert Penn found himself the perfect two-wheeler

It’s All About the Bike: The Pursuit of Happiness on Two Wheels. By Robert Penn. Particular Books; 201 pages; GBP16.99. Buy from Amazon.co.uk

ROBERT PENN needs a new bike. Well, he doesn’t really as he has six already. What he really wants is a bike he can grow old with, one that is made for him, with parts sourced from the best manufacturers around the world. In this gem of a book Mr Penn, cycling fanatic and bike nut first, journalist and writer second, describes his quest to build the perfect bicycle, mixing in an entertaining dose of cycling history and culture in the process. ...

Scotland and Sir Walter Scott: Sham country, but not sham bard

Thu, 29 Jul 2010 10:55:47 GMT

As Edinburgh prepares for its annual round of summer arts festivals, a new book examines the life and influences of the poet who made modern Scotland

Scott-land: The Man who Invented a Nation. By Stuart Kelly. Polygon; 328 pages; GBP16.99. Buy from Amazon.co.uk

SIR WALTER SCOTT was a phenomenon. A poet whose first long poem, published in 1805, was such a success that he received an unprecedented advance of 1,000 guineas for his second, he was offered the post of poet laureate at the age of 42. At the time, an agricultural labourer would have earned about 40 guineas a year, yet Scott declined the honour, and turned to writing novels. These he produced at speed and in quantity: 27 in 18 years, compared with Charles Dickens’s 16 in 34, or George Eliot’s seven in 17. Many of Scott’s works were hugely popular; the first in the “Waverley” series, published anonymously, sold out in two days. He made a fortune from them, built a fairy-tale castle called Abbotsford in the Scottish Borders and, after his death in 1832, was commemorated in central Edinburgh by a colossal monument that would not have looked out of place on the launching pad of a 19th-century Cape Canaveral. ...

Growing up in the Middle East: Tomorrow, when apricots come

Thu, 29 Jul 2010 10:55:47 GMT

The Arab world in the 1950s

Crossing Mandelbaum Gate: Coming of Age Between the Arabs and Israelis, 1956-1978. By Kai Bird. Simon & Schuster; 448 pages; $30 and GBP17.99. Buy from Amazon.com, Amazon.co.uk

QUITE a few unfortunates have been bitten by the pernicious Jerusalem bug. Unless dealt with firmly at an early stage, the infection can lead to too much time spent fussing over the seemingly impossible problem of how to split the land that has Jerusalem as its capital between two peoples, Israeli and Palestinian, who each know themselves to be the rightful owner. Kai Bird, infected as a small boy, clearly tried to take remedial measures (living in south Asia, producing several biographies to do with atomic warfare) but has now given in, writing a book of childhood memories embedded in chunks of historical narrative. ...

Letters: On speculation, free trade, Indian infrastructure, wheat rust, cyber-security, mental health, car insurance, General McChrystal

Thu, 29 Jul 2010 10:55:47 GMT

SIR – You give a balanced treatment to the debate on excessive speculation in commodities markets and its effect on prices (“Buttonwood”, June 26th). There are, however, two problems with your analysis.

First, the OECD report you cite, which argues that speculation has no effect on prices, is highly flawed. The report uses a Granger causality test to measure the relationship between the level of commodities futures contracts held by swaps dealers, and the prices of those commodities. Granger tests, however, are of dubious applicability to extremely volatile variables like commodities prices. Furthermore, the Commodity Futures Trading Commission estimates that less than half of swaps dealer positions in energy markets are related to index fund speculation, which is the primary focus of the debate. Yet the OECD analysis assumes that the holdings of swaps dealers provide a perfect proxy for index speculation. ...

America's climate policy: Capped

Thu, 29 Jul 2010 10:55:47 GMT

The Senate’s retreat from cap and trade might, one day, lead to a carbon tax. For now it leaves a dreadful mess

NO ONE expected a bang; but the idea of a cap on America’s carbon emissions died with barely the bathos of a whimper. Despite months of legislative fiddle piled on procedural faddle, no one ever drafted a bill with a carbon cap, and the sort of trading system necessary for industry to meet its demands, that stood a chance on the Senate floor. So the majority leader, Harry Reid, finally decided the whole issue should be quietly flushed away (see article). With the mid-term elections sure to swing heavily away from Mr Reid’s Democrats, there is now no possibility of comprehensive climate-change legislation in America for years.

Given the murkiness of some of the bathwater involved (maybe we’ll let you have a little cap and trade if you’ll let us go on emitting neurotoxic mercury, said the electric utilities), it is easy to lose track of the attractions of the baby. America is the largest per-person emitter of carbon dioxide among the world’s big economies, and the second-largest emitter overall. If the risks of global damage through climate change are to be reduced, America’s emissions need to come under some sort of control, both because of what they do to the climate and because of the message such control would send to the world’s other large emitters—and in particular to China, the largest. ...

European banks: More stress ahead

Thu, 29 Jul 2010 10:55:47 GMT

It will take more than stress tests to resolve European banks’ funding problems

THE empty condos may have been in Florida and the mortgages that financed them repackaged on Wall Street, but it was banks in Europe that got hit first by the subprime crisis. On August 9th 2007 the European Central Bank (ECB), not the Federal Reserve, stunned the financial world by making the first giant emergency loan to banks. Europe’s banking system relied more than any other on fickle borrowing markets that had dried up. Whatever the merits of their recent stress tests, that ongoing flaw explains why Europe’s banks may still battle to finance themselves.

Some firms are still being stigmatised, and have to borrow from the ECB even as American rivals have been weaned off public money. The unspoken assumption of the regulators’ stress tests, the results of which were announced on July 23rd, is that this is due to “one-off” problems: the risk that some governments in the euro zone might go bust and the perception that the murkier bits of the system, particularly unlisted banks in Spain and Germany, are hiding their risks. If reassured that banks have enough capital and are not fibbing, the logic goes, investors will start lending freely to them again. After all, the stress tests in America in 2009 helped restore confidence there. ...

Afghanistan: Don't go back

Thu, 29 Jul 2010 10:55:47 GMT

The real lesson from the leaked records of fighting in Afghanistan

SOME people, including the group that supplied them, thought more than 75,000 secret military records released on July 25th contained devastating revelations about the war the West has been fighting in Afghanistan for the past nine years. Many more saw nothing new, but nonetheless feared that page after page of ugly detail would bring home to the public just how badly the Afghan campaign has turned out. In fact, the most voluminous leak in the history of warfare holds an altogether different message—that, for the moment, the West is tackling Afghanistan with what is probably the right strategy.

The Afghan War Diary contains over 91,000 entries filed between the start of 2004 and the end of 2009, mostly in Afghanistan, and given to WikiLeaks by an unknown hand. It takes a while to make sense of that much raw field reporting, and 15,000 sensitive records are yet to be released. But so far the diary seems to be long on detail and short of revelations. ...

Anti-poverty programmes : Give the poor money

Thu, 29 Jul 2010 10:55:47 GMT

Conditional-cash transfers are good. They could be even better

CELIA ORBOC, a cake-seller in the Philippines, spent her little stipend on a wooden shack, giving her five children a roof over their heads for the first time. In Kyrgyzstan Sharmant Oktomanova spent hers buying flour to feed six children. In Haiti President Rene Preval praises a dairy co-operative that gives mothers milk and yogurt when their children go to school.

These are examples of the world’s favourite new anti-poverty device, the conditional cash-transfer programme (CCT) in poor and middle-income countries. These schemes give stipends and food to the poorest if they meet certain conditions, such as that their children attend school, or their babies are vaccinated. Ten years ago there were a handful of such programmes and most were small. Now they are on every continent—even New York City has one—and they benefit millions. ...

World economy: The rising power of the Chinese worker

Thu, 29 Jul 2010 10:55:47 GMT

In China’s factories, pay and protest are on the rise. That is good for China, and for the world economy

CHEAP labour has built China’s economic miracle. Its manufacturing workers toil for a small fraction of the cost of their American or German competitors. At the bottom of the heap, a “floating population” of about 130m migrants work in China’s boomtowns, taking home 1,348 yuan a month on average last year. That is a mere $197, little more than one-twentieth of the average monthly wage in America. But it is 17% more than the year before. As China’s economy has bounced back, wages have followed suit. On the coasts, where its exporting factories are clustered, bosses are short of workers, and workers short of patience. A spate of strikes has thrown a spanner into the workshop of the world.

The hands of China’s workers have been strengthened by a new labour law, introduced in 2008, and by the more fundamental laws of demand and supply (see article). Workers are becoming harder to find and to keep. The country’s villages still contain perhaps 70m potential migrants. Other rural folk might be willing to work closer to home in the growing number of factories moving inland. But the supply of strong backs and nimble fingers is not infinite, even in China. The number of 15- to 29-year-olds will fall sharply from next year. And although their wages are increasing, their aspirations are rising even faster. They seem less willing to “eat bitterness”, as the Chinese put it, without complaint. ...

Closing down Guant�namo: Out of court

Thu, 29 Jul 2010 10:55:47 GMT

Lack of case law is cramping the military tribunals

ON JULY 7th a terrorist was brought to justice. Ibrahim Ahmed Mahmoud al-Qosi, a Sudanese man who was said to have worked in Afghanistan as Osama bin Laden’s bodyguard, driver, cook and paymaster, pleaded guilty to charges of conspiracy and supporting terrorism. Mr al-Qosi had been detained at America’s military detention centre at Guantanamo Bay, in Cuba, since 2002. He was one of the first enemy combatants to be tried in the controversial military-tribunal system first authorised by George Bush in 2001. His conviction was only the fourth that the tribunals have notched up since that time, and the first during Barack Obama’s administration.

It was, in other words, a qualified victory. Nearly nine years into the war on terror, America is still struggling to work out how to handle those detained in the conflict in a manner consistent with both justice and security. The worst abuses of the Bush years have been repudiated, but the questions about where detainees should be held, and whether they should be tried in the military tribunals or in civilian courts, persist. ...

Climate-change policy: Let it be

Thu, 29 Jul 2010 10:55:47 GMT

The Democrats abandon their efforts to limit emissions through legislation

“THE one approach I will not accept,” said Barack Obama in June of Congress’s faltering efforts to fight global warming, “is inaction.” Instead, the president instructed America’s lawmakers to “seriously tackle our addiction to fossil fuels”. Yet the energy bill unveiled by the Democratic majority in the Senate on July 27th does nothing of the sort. Harry Reid, the majority leader, having earlier abandoned as hopeless an effort to limit America’s emissions of greenhouse gases through a “cap-and-trade” scheme, is proposing nothing more substantial than subsidies for home insulation and trucks that run on natural gas. (The bill also removes the $75m cap on oil firms’ liability for damage from offshore spills, in response to the disaster in the Gulf of Mexico.)

Mr Obama has said he will fight on for a weightier bill. But the prospects do not look good. Mr Reid complained that inveterate Republican opposition had prevented the Senate from taking up the cap-and-trade scheme passed by the House of Representatives last year. That is true: even Republican senators who had supported the idea in the past, such as John McCain and Lindsay Graham, had pointedly backed away from it in recent months. ...

The race for Pennsylvania's 7th district: Anxiety amid plenty

Thu, 29 Jul 2010 10:55:47 GMT

A toss-up race in a district split between affluence and struggling

ON A sweltering afternoon, shoppers at the King of Prussia mall in Pennsylvania’s 7th congressional district mostly avoid the high-end boutiques, choosing instead to pack their trolleys with electric fans, barbecue food and soft drinks. Enough sodas are sold at the huge shopping complex each year to fill five Olympic-size pools. Meanwhile, Bryan Lentz, the Democratic candidate for this open seat, was preparing to engage in some retail politics, first by addressing voters on the economy in nearby Wayne, and then by speaking to supporters at a house event in Ridley Park. This is the affluent commuter belt of Delaware County, south-west of Philadelphia. The district’s median household income, at $70,800, is a third higher than the national figure, and the colonial-style houses on the tree-shaded roads around Wayne sit on plots of land that can be measured in acres, not square feet.

Yet a sizeable chunk of the district is made up of blue-collar neighbourhoods, with terraced houses lining the streets near the oil refineries and heavy industry that fringe the Delaware river. Boeing is one of the biggest employers, making helicopters for the army. The county boomed after the second world war as (mostly) white residents from Philadelphia moved to the suburbs. They have not been protected from the downturn; Delaware County’s unemployment rate has shot to over 9%. ...

Lexington: Arizona, rogue state

Thu, 29 Jul 2010 10:55:47 GMT

It is a bit too easy to bash Arizona on immigration. National and local politicians are both to blame

THE United States has a GDP per head of $46,000. Mexico’s is $8,000. So it is not surprising that millions of Mexicans have entered America illegally in search of a better life. A common estimate of the total number of illegals in the United States is 11m—roughly the population of Ohio. In these circumstances, you would think, America needs an agreed policy on immigration and a set of laws to match, with both the policy and laws being written by Congress in Washington. But that would require some responsible behaviour by politicians. Many have instead either abdicated responsibility or gone out of their way to act irresponsibly, dumping the issue in the laps of the courts and the police.

All this came to a head this week over Arizona’s law SB1070. This law had divided the nation. Supporters saw it as a long-overdue bid by a state to arrest and drive out illegal immigrants, a job they believe the federal government has wilfully neglected. Liberal America portrayed it as a draconian measure that would lead to racial profiling and worse, passed by a state legislature which Harper’s magazine said recently was composed “almost entirely of dimwits, racists and cranks”. On July 28th, the day before 1070 came into effect, Susan Bolton, a federal judge, responded to a lawsuit brought by the federal Department of Justice by putting a block on the most controversial parts of the law. Better to stick with the status quo, she said, than risk putting “a distinct, unusual and extraordinary” burden on resident legal aliens in Arizona. ...

Mandatory sentencing in California: Cooley's law

Thu, 29 Jul 2010 10:55:47 GMT

A Republican district attorney seeks to make three-strikes more humane

THE judge remembered Larry South well when he saw him in a Los Angeles courtroom in June. Twelve years had gone by since he had sentenced Mr South to life in prison for attempting to steal $29-worth of plumbing supplies from Home Depot. Now, however, Mr South was in court to be freed. “I’m so pleased,” said the judge. Emily Galvin, his lawyer, held back tears as Mr South embraced his sons, aged 19 and 12. Even the prosecutor seemed delighted.

That prosecutor’s attitude represents a potential earthquake in the evolution of California’s three-strikes law, the most severe of the mandatory-sentencing reforms adopted by 26 states in recent decades. The law, approved by voters in 1994, requires a double sentence for offenders with one previous criminal conviction and 25 years-to-life for those with two previous strikes. As a teenager in the 1980s Mr South had twice stumbled drunkenly into garages, attempting (and failing) to steal something. The prosecutor in 1998 counted these as two previous strikes and demanded life. ...

Cheerleading in court: Go Team!

Thu, 29 Jul 2010 10:55:47 GMT

A federal judge rules that leaping sexily about is not a sport

“WE’RE gymnasts, too, except no beams, no bars, no vault.” So says a cheerleader in “Bring It On”, a film about competitive cheerleading. The stereotype of a gaggle of pretty girls waving pompoms as they cheer the boys’ football teams is not quite accurate, cheerleaders feel. Many squads are made up of serious athletes who compete nationally with their flips and leaps.

Bill Seely of USA Cheer, a cheerleading governing body, is one of those who have been pushing to change the name to “competitive stunts” or “group gymnastics”. This year eight universities formed the National Competitive Stunts and Tumbling Association (NCSTA), which will act as the governing body and coaches’ association for competitive cheer. ...

Haiti's earthquake: Frustration sets in

Thu, 29 Jul 2010 10:55:47 GMT

The presidential election is a chance to rebuild ties between Haiti’s struggling government and its discouraged donors

ONE of the many differences between Haiti and the Dominican Republic, its closest neighbour, muses Jean-Max Bellerive, the stricken country’s prime minister, is that it has seen just two democratic handovers of power compared with a dozen next door. He is being tactful, since some of the Dominican Republic’s elections were far from fair. But his point is that organising a presidential election in Haiti this year will eventually be as important as giving food, shelter and jobs to the 1.5m people made homeless by January’s earthquake.

Haiti needs an effective and legitimate government if it is to rebuild itself—and if the outside world is to part with the cash it has promised the country. After a rousing show of unity at a donors’ conference in March, when Haiti was pledged $5.5 billion of aid, relations between the government and donors and charities have become increasingly strained. That has made a slow reconstruction effort still slower. ...

Mexico's environment: A breath of fresh air

Thu, 29 Jul 2010 10:55:47 GMT

The capital’s filthy atmosphere has improved at last

HEMMED in by mountains and volcanoes, Mexico City is the perfect smog-trap. At its altitude of 2,250m the air is already thin; on days when the toxic “cream”, as the familiar brown cloud of pollution is locally known, descends on the city, it is hard to breathe. Locals used to joke that the only life that could survive in the skies was jumbo jets.

Yet the smog is lifting. The average concentration of ozone, one of the most common pollutants, is about half its level in the early 1990s, when the air was at its dirtiest (see chart). In those days the national ozone limit of 0.11 parts per million was breached for at least an hour on nine days out of ten. Yet last year over half the days were below the cap. Joggers are back in parks and wildlife is airborne once more: a hummingbird regularly looks in on The Economist’s offices. ...

Brazil's presidential campaign: Vice squad

Thu, 29 Jul 2010 10:55:47 GMT

The stakes are high for the hapless running-mates

AMERICA’S vice-presidency, one of its occupants once asserted in an oft-bowdlerised remark, is “not worth a bucket of warm piss”. Brazil’s is different. The man—they have all been men—serving as vice-president has inherited the top job four times since 1954, following a military coup, a resignation, a death and an impeachment. That is only one fewer than the number of presidents who took power through election in that period.

The office is in the spotlight once again in the current presidential campaign, because the leading candidate, Dilma Rousseff of the governing Workers’ Party (PT), has been seriously ill. She spent much of the past year being treated for lymphatic cancer. So it is more than a mere curiosity that the running-mates of both Ms Rousseff and her main challenger, Jose Serra of the Party of Brazilian Social Democracy (PSDB), are causing problems. Both presidential candidates would probably have preferred different partners. ...

Thailand's state of emergency: Politics as unusual

Thu, 29 Jul 2010 10:55:47 GMT

A vote in the capital, despite a state of emergency

A PARLIAMENTARY by-election in Bangkok on July 25th was the first test of public opinion since May, when the army put down street protests in which 89 people died. The opposition Pua Thai party made the most of it, picking a jailed “red shirt” leader, Korkaew Pikulthong, as its candidate, and calling for justice for victims of the crackdown. Campaigning from behind bars, he drew a substantial 43% of the votes. And although he was beaten by the candidate of the ruling Democrat Party, the jailbird’s performance shows that the red shirts are not squashed yet.

Voting went smoothly but, as the ballots were being counted, a bomb exploded at a bus stop in a central shopping district. Eight people were injured and one died. The explosion was near the site of May’s bloody showdown between security forces and the red shirts. Security officials blamed the attack on “ill-intentioned people”, code for red-shirt militants, who were accused of a series of explosions in March and April. ...

Australia's election: Abbott's angst

Thu, 29 Jul 2010 10:55:47 GMT

The opposition faces a hard slog

IN HIS campaign for the general election on August 21st, Tony Abbott, the opposition leader, has run into a problem with women. Julia Gillard, the prime minister, easily outpolls him as a leader. One recent survey showed female voters favour Labor by a mighty 16 points, double the lead for all voters. And now Mr Abbott’s frustrated colleagues seem to be trying the “gender card”: highlighting Ms Gillard’s status as an unmarried, childless woman (and an atheist, to boot). The idea is to appeal to conservatives in the populous states of New South Wales and Queensland, but it will inevitably drive yet more women away.

A year ago, few would have given Mr Abbott much hope of leading the Liberal Party, the main partner in the conservative-coalition opposition. As an ambitious health minister under John Howard, Mr Abbott antagonised some women when he tried (and failed) to ban access to a drug allowing abortion without surgery. Critics pointed to his past as a Catholic seminarian. As an anglophile, fond of the British monarchy, some senior Liberals worried that he was too close to Mr Howard and advised him not to seek the leadership. ...

Floods in China: Gushing

Thu, 29 Jul 2010 10:55:47 GMT

The Three Gorges Dam is tested, but not to breaking point

HUNDREDS killed, hundreds of thousands of homes damaged or destroyed, tens of millions of people suffering. Many parts of China have been enduring the worst floods in years, but it is the flood-prone Yangzi river that is causing most concern. With the downpours has come an unusual sprinkling of doubts about the ability of the colossal Three Gorges Dam to keep the river in check.

The dam, completed in 2006, has been praised by officials for limiting the impact of the floodwaters that have rushed from the Yangzi’s upper reaches. Officials say that well before the first flood crest reached the dam on July 11th, the water level in the more than 600-km (370-mile) reservoir behind it had been reduced to accommodate a surge. By July 28th the level in the dam was 158 metres above the sea, well within a 175-metre limit. But the flood season still has several weeks to run. ...

Scandal in Gujarat: Murder most common

Thu, 29 Jul 2010 10:55:47 GMT

An accusation sheds light on some dirty aspects of Indian politics

IMPUNITY and power are old friends in India’s western state of Gujarat, which is home to over 50m people. In 2002 some 2,000 Muslims were murdered there, in a pogrom carried out with the collusion of police and senior members of the ruling Hindu nationalist Bharatiya Janata Party (BJP). No high-level convictions followed. But the BJP’s knack of eluding justice in the state, which it still rules, may be fading. On July 25th a minister of state, Amit Shah, was arrested in connection with the alleged murder of Sohrabuddin Sheikh, a suspected extortioner. The case, though unrelated to the events of 2002, may prove damaging for Gujarat’s chief minister, Narendra Modi, a talented politician with ambitions to lead his party and country.

When Mr Sheikh, a Muslim, and his wife were arrested in 2005 the police claimed that he belonged to a banned terrorist group and had been plotting to kill Mr Modi. Two years on, the state government admitted that Mr Sheikh had been killed in a “fake encounter”, a term that describes Indian security forces’ practice of shooting suspects rather than prosecuting them. After the Central Bureau of Investigations (CBI, the country’s answer to America’s FBI) called Mr Shah for questioning, he resigned and went into hiding. When he surfaced to deny the charges, he was promptly arrested. ...

Film-makers and Cambodia: Enemies of the People

Thu, 29 Jul 2010 10:55:47 GMT

How a low-budget film helped to catch a Khmer Rouge leader

THE Khmer Rouge “Brother Number 2”, Nuon Chea, plays with his grandchildren, watches a broadcast of Saddam Hussein’s execution and dreams of Democratic Kampuchea. For years Pol Pot’s right-hand man has had visits from Thet Sambat, a journalist whose parents and brother died in the genocide. The writer wants to learn why, but does not tell his story, hoping that the taciturn ex-leader will volunteer an explanation. He also tracks down Khuon and Suon, low-level cadres who executed villagers, slit stomachs to eat their gall bladders and buried victims in ditches.

The edgy and often surreal conversations of these men are shown in “Enemies of the People”, a prize-winning documentary made on a shoestring. It has drawn interest from the tribunal that will try Mr Nuon Chea and three other regime leaders next year, and which has tried to subpoena the footage. ...

Cambodia's war-crimes trial: Scarred, not healed

Thu, 29 Jul 2010 10:55:47 GMT

The first war-crimes conviction in Cambodia was long overdue

SLIGHT, well-kempt in grey trousers and a powder-blue shirt, the man in the dock cut the image of an ageing schoolteacher. In fact he had taught maths in the years before the Khmers Rouges seized power in Cambodia. Then he assumed a far more terrifying role: as commandant of the S-21 detention centre, overseeing the torture of some 14,000 adults and children, before they were carted off to the “killing fields”. On July 26th the ex-teacher, Kaing Guek Eav, became the first Khmer Rouge official to pay for his part in the genocide of 1975-79, when some 2m people died: a UN-backed tribunal convicted him of war crimes and crimes against humanity, and jailed him for 35 years.

Comrade Duch, as he is better known, will serve only another 19 years because of time he has already spent behind bars and as compensation for a spell of illegal detention before he got to the tribunal. One of the five judges called his offences “shocking and heinous”, but also noted how the defendant had followed orders in a coercive climate, and had since co-operated with the tribunal and shown remorse. ...

Strategic jousting between China and America: Testing the waters

Thu, 29 Jul 2010 10:55:47 GMT

Tensions rise over efforts to create a new Chinese lake

ON THE face of things, North Korea was supposed to quiver at the presence of a powerful American aircraft-carrier, the USS George Washington, at the head of a fleet of American and South Korean warships off the south-east coast of the Korean peninsula this week. The vessels fired artillery shells and lobbed anti-submarine bombs into the wine-dark sea. This was no idle show of force, but an act of intimidation aimed at deterring North Korea, which South Korea and the United States blame for the sinking in March of a South Korean corvette, the Cheonan.

But more subtly, it was also a shot across China’s bows. China refuses to condemn North Korea over the Cheonan sinking, to the irritation of America and others, while describing the exercises as unwarranted warmongering. America and China have shown growing signs of friction over their competing security presence around the trade-clogged shores of Asia. ...

Law and globalisation: Not entirely free, your honour

Thu, 29 Jul 2010 10:55:47 GMT

The legal profession, like the clients it serves, is well on the way to going global—but especially in India, obstacles to its spread remain

LAW is supposed to be about universal principles: rules that apply without prejudice to a broad category of human beings, regardless of sex, culture or economic status. So in a world where barriers to the transfer of goods, expertise and people are coming down, you might expect that the legal profession would be among the first to fuse into a seamless transnational fraternity. In history, whenever cross-border commerce has flourished, as in medieval Venice, so too have trade lawyers with broad horizons, like the ones pictured above. And today, at least from the vantage-point of the ambitious practitioner, the legal profession seems to have little respect for borders.

A talented graduate from any of the world’s top law schools can expect a life of globe-trotting. A single month’s work can include writing the small print on a Saudi investment in Africa, helping an Indonesian firm to market its shares in New York, and writing a contract under English law between two companies in Russia. Humanitarian law, as well as the commercial sort, is going global: these days nobody would be surprised to see an American lobby group test the principle of “universal jurisdiction” (for egregious crimes) by trying to get an African dictator arrested on a shopping trip to Europe. ...

Charlemagne: Bored by Brussels

Thu, 29 Jul 2010 10:55:47 GMT

Why does Italy punch so far below its weight in the European Union?

DISCUSSING his approach to foreign affairs this month, Silvio Berlusconi puzzlingly declared that he had “inaugurated the policy of the cuckoo”. This he defined as one of “being open and understanding others, of friendship”. An insight into how it works in practice is offered by a story told in Brussels. Some years ago Europe’s leaders were toiling over an important, if dreary, issue when Mr Berlusconi suddenly turned to Gerhard Schroder, Germany’s then chancellor, and said: “Let’s talk about women. Gerhard, you’ve been married four times. Why don’t you start?”

Apocryphal? Maybe. But the story has a point. For Italy’s prime minister, the EU is boring. In foreign affairs Mr Berlusconi reserves his enthusiasm for his personal diplomatic relations with the leaders of the likes of Turkey, Russia, Belarus, Libya and the Central Asian republics—all countries outside the EU, some of which inspire deep misgivings in Brussels. ...

Kosovo and Serbia: Jubilant Kosovo, chastened Serbia

Thu, 29 Jul 2010 10:55:47 GMT

The fallout from a surprisingly pro-Kosovo legal decision

HOW wrong can you be? Almost everyone had expected the International Court of Justice to give an ambiguous opinion on the legality of Kosovo’s declaration of independence. When, on July 22nd, a summary of the opinion was read, most strained to understand the legal jargon. But one line was clear. The declaration did not, said ten of the 14 judges, violate international law.

Serbs, Albanians and just about everyone else were stunned. In October 2008 Serbia had, via the UN General Assembly, asked the ICJ to give its opinion on the independence declaration of eight months earlier, and was confident of a favourable answer. After all, Kosovo was a former Serbian province (although it had been under UN rule since the end of the war in 1999). In the wake of the opinion the Serbs complained that the ICJ did not examine Kosovo’s right to secede. This is because the Serbs did not ask it to; their question was simply whether the declaration was legal. ...

NATO and Russia: Trust, but make military plans

Thu, 29 Jul 2010 10:55:47 GMT

The allies reach out to the Kremlin, and start to think about the unthinkable

IN THE heart of NATO’s military headquarters, SHAPE, near the Belgian city of Mons, an unspoken revolution is taking place: planners are thinking about how to defend eastern European members from Russian attack. For years after the cold war, the orthodoxy was that Russia did not pose a threat, so NATO did not need to draw up contingency plans to protect newer members, such as the Baltic states.

That has now changed, NATO officials say, though nobody wants to speak about it publicly. Anders Fogh Rasmussen, NATO’s secretary-general, puts it obliquely. “We have all necessary plans in place to defend and protect all allies. I think the Russians would be surprised if we didn’t. That’s the core purpose of the alliance.” ...

Russia's heatwave: A hazy shade of summer

Thu, 29 Jul 2010 10:55:47 GMT

A potent mix of heat, haze, alcohol and corruption

RUSSIA’S ability to deal with its legendarily severe winters is a source of national pride. But now Russia’s survival skills have been tested by the hottest summer since records began, 130 years ago. In the country’s central region temperatures have not dropped below 30°C since mid-June; in recent days the mercury has risen as high as 37°C.

A haze from forest and peat-bog fires around Moscow has enveloped the city, turning the multicoloured domes of St Basil’s Cathedral into ghostly apparitions. Moscow’s air is polluted at the best of times, but this smog, heavy with carbon monoxide, makes breathing difficult. Outside the city a swathe of farmland the size of Portugal has been destroyed. ...

Germany's fatal Love Parade : Death in Duisberg

Thu, 29 Jul 2010 10:55:47 GMT

The Ruhr’s attempt to reinvent itself takes a tragic turn

IN THE end the Love Parade had little to do with love and was no longer a parade. At the first parade, in 1989, 150 people cavorted down West Berlin’s Ku’damm to the blare of techno from a single Volkswagen bus. This year hundreds of thousands streamed into a disused freight-train yard in Duisburg, in Germany’s Ruhr region—or tried to. In place of the usual urban promenade, 16 lorries manned by DJs circulated through the penned-in throng. A scramble to get in caused a crush in which 21 people died and more than 500 were hurt. The tragedy would overshadow any future Love Parade, said Rainer Schaller, the impresario behind it. The Duisburg edition will therefore be the last.

Just what went wrong on July 24th is being investigated by prosecutors, who may charge those they deem responsible with negligent manslaughter. Warnings were ignored, say press reports, and agencies failed to co-operate. Access was via a single ramp, where a human clot formed. The event’s organisers failed to disperse it. Their crowd-control system “collapsed”, said North Rhine-Westphalia’s interior minister. The party went on; to stop would have caused further panic. ...

Spanish politics: Zapatero's balancing act

Thu, 29 Jul 2010 10:55:47 GMT

Nationalists to the left of him, markets to the right, Spain’s prime minister is in a tricky spot

HE WAS once considered a political magician, with a sleight of hand that distracted from his country’s problems. But now the circus skill needed by Spain’s Socialist prime minister, Jose Luis Rodriguez Zapatero, is that of a tightrope walker.

Summer holidays, Spain’s World Cup victory and positive-ish bank stress-test results have granted a lull in the storm that engulfed the country when bond markets turned their gaze from Greece to Iberia. But now Mr Zapatero must pull off a delicate balancing act if he is to stay in power until his second term formally ends in 2012. For the economy to survive, he must please the investors that lend Spain money. And for the government to survive, he must satisfy the Catalan and Basque nationalists who prop up his minority administration. ...

Bullfighting in Catalonia : The land of the ban

Thu, 29 Jul 2010 10:55:47 GMT

First the burqa, now the bullfight. What will Catalonia outlaw next?

ON JULY 28th Catalonia’s regional parliament outlawed bullfighting. It is a bit like a German state banning wurst or a French region condemning those pesky berets.

As is the way in fiercely independent Catalonia, the debate over bullfighting became caught up in regional politics. Many Catalans are concerned less about animal welfare than they are about rejecting the bull as a symbol of Spain and distancing Catalonia from Spaniards’ habit of referring to the corrida as the “national fiesta”. ...

Bagehot : Don't mess with British bins

Thu, 29 Jul 2010 10:55:47 GMT

The lessons of rubbish collection for David Cameron’s “big society”

IN MOST countries, rubbish makes headlines only when it is not collected, and stinking sacks lie heaped on the streets. In Britain bins are a front-page staple. Tabloids talk of “waste wars”, dubbing local officials “green zealots” or “the Talibin” for their fierce enforcement of rules on recycling or collection times. “Council Race Spies Rummage Through Your Bin,” thundered the Daily Mail this month, after some councils studied the waste produced by different social and ethnic groups. Electronic tags linking bins to individual homes have prompted special anger, both for their potential role in “pay-as-you-throw” bin taxes and as a “Big Brother” intrusion into family life.

This clamour is simultaneously a bit odd, and revealing about the hurdles that face David Cameron’s “big society”, the prime minister’s push to place power in the hands of local communities. Lots of countries are strict about rubbish. In parts of America, bins are checked for waste that could have been recycled: lapses may trigger warnings or even fines. In many European cities (eg, Brussels), rubbish sacks must bear a municipal tax symbol, and rogue bags are sometimes searched by police in order to track down culprits. This rarely makes the national news. ...

Police reform: Voting blue

Thu, 29 Jul 2010 10:55:47 GMT

Elected commissioners are on the way

IN 2007 Fiona Pilkington drove to a Leicestershire lay-by with her severely handicapped daughter, set fire to the car and burned the two of them to death. She wanted to end years of abuse and intimidation by local youths. Her repeated calls to the police had not been treated seriously enough, an inquest found last year (another investigation, by the Independent Police Complaints Commission, is under way). It was an especially harrowing case—one that David Cameron, now the prime minister, says he found hard to read about. But stories of the police failing to pay real attention to supposedly “low-level” disorder are common. Denis O’Connor, the inspector of constabulary, highlighted the problem earlier this year.

The government’s plan to allow police priorities to be set by locally elected officials, set out in a policing white paper on July 26th, is designed to solve this. The police often neglect the types of crimes that bother people most, according to champions of the reform. Anti-social behaviour—ranging from vandalism to the sustained harassment of vulnerable people on bleak housing estates—ranks high among them: an Ipsos MORI poll in 2008 showed that it worried Britons far more than any other kind of local crime. (Banning orders to combat anti-social behaviour, introduced by Labour, have not proved effective and may be dropped, it emerged this week.) ...

Bank lending: Never-ending story

Thu, 29 Jul 2010 10:55:47 GMT

Getting banks to step up loans for businesses

VINCE CABLE, the business secretary, whose declared ambition is to break up Britain’s biggest banks, is trying to cajole these leviathans into lending more to growing companies. On July 26th his department published a paper with the Treasury called “Financing a Private-Sector Recovery”. The villains of the piece, but also the potential heroes, are the banks, which are lending less and less to small businesses (see chart). That is despite an agreement with Lloyds Banking Group and Royal Bank of Scotland (RBS), respectively 41% and 68% government-owned, that they will lend GBP94 billion between them to businesses of all sizes in the year to February 2011.

The paper lays out plans, for consultation until September 20th, to get more finance flowing. These include redesigning or prolonging government schemes that part-guarantee bank loans to businesses; reviving regional stock exchanges; encouraging more “business angels” to put venture capital into start-ups; and promoting more competition in banking. ...

Animal testing: Tweaking the experiments

Thu, 29 Jul 2010 10:55:47 GMT

Most people now accept the growing use of genetically modified mice

THE British are notorious for preferring pets to people. They dislike the genetic modification of crops. Yet over the past decade they have come to accept not only that animal experimentation can often be justified but also the increased use of genetically modified mice in carrying out such tests. On July 27th official statistics showed that, for the first time, the use of genetically modified animals has outstripped that of conventional creatures. Hardly anyone flinched.

For a nation of animal-lovers, Britain conducts a lot of experiments on living beings—some 3.6m in 2009, of which 83% involved rodents. The numbers peaked in the early 1970s at 5.5m, then halved over the next two decades as the sorts of experiments that make even pro-science types wince were halted. All experimenting on great apes was stopped, and the use of animals to test cosmetics and household products was phased out. ...

The Conservative-Liberal government: Sure start

Thu, 29 Jul 2010 10:55:47 GMT

The mere fact of the coalition is no longer the most interesting thing about it. The state is in for radical reform

IF THE spectacle of David Cameron and Nick Clegg sitting next to each other in Parliament is beginning to lose its novelty value, if the merged manifestos and shared departmental portfolios are coming to seem like items of political furniture, stop and remember the sheer strangeness of Britain’s two-month-old government.

The country has not known a peacetime coalition for the best part of a century, when the Liberals last shared power. For decades the Labour Party was assumed to be their natural ideological partner, not the Conservatives. Days before the deal that made Mr Cameron (pictured left) the Tory prime minister, with Mr Clegg (pictured right) as his Lib Dem deputy, the partnership was an option that even insiders barely entertained. The coalition is an extraordinary thing, whether it collapses before its hoped-for shelf-life of five years or turns into a full-scale merger of the two parties. ...

Think-tanks: Send for the wonks

Thu, 29 Jul 2010 10:55:47 GMT

A new government creates a new opportunity to influence policy

WHEN ResPublica, a new think-tank, was officially launched in November last year, the guest of honour was David Cameron, then the leader of the opposition. Just six months later, the “big society” was a key theme in his election campaign, an idea that can be clearly tracked back to Phillip Blond, ResPublica’s founder.

ResPublica is just one of a series of think-tanks that enjoys links with the new Conservative/Liberal Democrat coalition government. Policy Exchange was founded in 2002 by a group including Michael Gove, now education secretary, and Francis Maude, the cabinet-office minister. One of the two founders of Reform was Nick Herbert, now the police minister. And Iain Duncan Smith, once head of the Tory Party and today secretary for work and pensions, set up the Centre for Social Justice. ...

Energy policy: Efficiency drive

Thu, 29 Jul 2010 10:55:47 GMT

Cutting carbon is appallingly complex as well as costly

ALTHOUGH Britain’s energy companies are no longer nationalised industries, they are still, to some extent, arms of the Treasury. When the government decides on a way to make Britain greener—such as joining the European emissions-trading scheme, which puts a price on carbon, or the renewables obligation, which subsidises wind, biomass and solar power, or levies to pay for carbon sequestration and storage or renewable heating—utilities pay for it and pass the costs on to their customers. As such policies grow in ambition, so does the bill to consumers.

On July 27th, as part of its new “annual energy statement”, the Department of Energy and Climate Change put some numbers to this effect. Green policies will raise domestic gas prices in 2020 by 18% and electricity prices by 33%, it said. For nondomestic users the impact will be greater—24% and 43% respectively—and other estimates put the figures higher still. ...

Public policy editor

Thu, 29 Jul 2010 10:55:47 GMT

The Economist is looking for a public policy editor to join its Britain team. Applicants should have a broad knowledge of the health, welfare, education and other aspects of public policy and an ability to write clearly and perceptively about them. Please submit a cv and an article you have written, published or unpublished, that you think could appear in the Britain section to publicpolicy@economist.com ...

Correction: Maersk Line

Thu, 29 Jul 2010 10:55:47 GMT

Correction: In our article on Liverpool (”Gissa job!”, July 10th) we said that Maersk Line UK & Ireland was part of a Swedish shipping group. It is not. Its parent, A.P.Moller-Maersk is Danish. Sorry.

...

Schumpeter: A post-crisis case study

Thu, 29 Jul 2010 10:55:47 GMT

The new dean of Harvard Business School promises “radical innovation”

HENRY KISSINGER, who started his career in the killing fields of Harvard before moving to Washington, DC, is said to have quipped that academic politics are vicious precisely because the stakes are so small. Schumpeter has no idea whether the contest to succeed Jay Light as dean of the Harvard Business School (HBS) was vicious. But he is sure that the stakes were not small.

HBS is hugely influential. The school is a training ground for America’s business elite: a striking number of the top office holders of Fortune 500 companies, including the heads of General Electric and Boeing, sharpened their skills and elbows there. The school is also the apex of the vast global industry devoted to teaching business. It sits on an endowment of $2.1 billion and employs some terrific thinkers, including Michael Porter and Clayton Christensen. It developed the “case method”—using case studies to teach students about real-world business problems. It claims to be the source of four-fifths of the case-study materials used in the world’s leading business schools. ...

Information technology in transition: The end of Wintel

Thu, 29 Jul 2010 10:55:47 GMT

As Microsoft and Intel move apart, computing becomes multipolar

THEY were the Macbeths of information technology (IT): a wicked couple who seized power and abused it in bloody and avaricious ways. Or so critics of Microsoft and Intel used to say, citing the two firms’ supposed love of monopoly profits and dead rivals. But in recent years, the story has changed. Bill Gates, Microsoft’s founder, has retired to give away his billions. The “Wintel” couple (short for “Windows”, Microsoft’s flagship operating system, and “Intel”) are increasingly seen as yesterday’s tyrants. Rumours persist that a coup is brewing to oust Steve Ballmer, Microsoft’s current boss.

Yet there is life in the old technopolists. They still control the two most important standards in computing: Windows, the operating system for most personal computers, and “Intel Architecture”, the set of rules governing how software interacts with the processor it runs on. More than 80% of PCs still run on the “Wintel” standard. Demand for Windows and PC chips, which flagged during the global recession, has recovered. So have both firms’ results: to many people’s surprise, Microsoft announced a thumping quarterly profit of $4.5 billion in July; Intel earned an impressive $2.9 billion. ...

Television in Germany: The last redoubt

Thu, 29 Jul 2010 10:55:47 GMT

Another push to sell pay-television to the Germans

THERE are plenty of things to buy in a German supermarket, but little that is truly appealing or expensive. So it is with German television. Dozens of free channels carry a mixture of home-grown stuff and dubbed Hollywood imports. They strike most people as good enough. As many investors have painfully discovered, it is perhaps harder to sell pay-television in Germany than in any other rich country. Yet they keep trying.

In a sense, Germans do pay for television. Public broadcasters levy compulsory fees of €18 ($23) per month on every TV-owning household, a quarter more than Britain’s BBC. Many viewers also receive free television via satellite or cable. Analogue cable connections are cheap—about €10 per month—and often bundled into apartment rents. Only 5.4m households plump for true pay-TV, according to Goldmedia, a consultancy. That works out to less than 15% of all television-owning homes. In America, it is more than 85%. ...

BP and golden parachutes : The wages of failure

Thu, 29 Jul 2010 10:55:47 GMT

Despite the howls, Tony Hayward’s departure as boss of BP was deftly handled. And other firms are trying harder not to reward bad leadership

WHEN Tony Hayward said “I’d like my life back” on May 30th, losing his job as boss of BP was probably not what he had in mind. But on July 27th he accepted the inevitable. On his watch, zillions of gallons of oil spilled into the Gulf of Mexico. When the microphones were on, gaffes gushed from his lips. He was a walking public-relations disaster and had to go.

His replacement will be another BP veteran, Robert Dudley, an American who grew up in Mississippi. Mr Dudley has had PR problems of his own. While head of BP-TNK, a joint venture in Russia, he fell out with BP’s Russian partners and left the country in some disarray after the Russian security services raided BP’s office in Moscow. None of this will make Americans think worse of him, however. ...

Indian textiles: Stitched up

Thu, 29 Jul 2010 10:55:47 GMT

An industry that could lift millions out of poverty, in theory

IT IS impossible to eradicate child labour, sighs Rajesh Goyal, the owner of a garment factory in Jaipur, northern India. No children sweat in his factory. But he is sure that some of the family enterprises that supply him employ their offspring. He adds, perhaps in jest, that most textile workers are Muslim, so “if a young boy doesn’t work he will end up a terrorist.”

Textiles provide work for more Indians than any other sector, bar agriculture. The industry employs some 35m people directly and 88m indirectly. But thanks to rigid labour laws, it is fragmented and inefficient. It is hard for a firm with more than 100 workers to fire any of them, so most stay tiny. Vast Chinese stitching-shops have no such worries. ...

Pardons for corporate criminals in South Korea : Pardon me?

Thu, 29 Jul 2010 10:55:47 GMT

Freeing fat-cat felons creates moral hazard, Koreans fear

ON AUGUST 15th Korea celebrates its liberation from brutal Japanese rule. For South Koreans languishing in prison it is an especially joyful day, since many of them are freed. Every year thousands of criminals, big and small, receive a presidential pardon. Some citizens worry, however, that pardons are disproportionately granted to the rich and influential.

Last December, for example, Lee Kun-hee, the chairman of Samsung Electronics and reputedly the country’s richest man, had his conviction for tax evasion expunged. This will make it easier for him to promote South Korea’s bid to host the 2018 Winter Olympics. In August 2008 Kim Seung-youn, head of the Hanwha conglomerate, was pardoned. His crime involved beating some bar workers who had attacked his son. When he grew tired, he admitted in court, he let his bodyguards take over. ...

Economics focus: A wealth of data

Thu, 29 Jul 2010 10:55:47 GMT

A useful new way to capture the many aspects of poverty

WHAT IS poverty and when is a person poor? Most would agree that poverty involves not having enough of certain things, or doing without others that richer people take for granted. But what is “enough”, which goods and services really matter, and who should decide these questions—researchers, governments or international agencies—are less tractable issues. Perhaps the poor themselves should have the final word. But this presents its own problems. Tabitha, a 44-year-old woman from a slum outside Nairobi, told researchers from Oxford University that going without meals was “normal for us”. Diminished expectations are only one of the effects of dire poverty.

In the world of international development, most have rallied around the “dollar-a-day” poverty line (or more precisely, the $1.25-a-day measure) and its less acute cousin, $2-a-day poverty. These World Bank measures judge a person to be poor if his income falls short of a given level, adjusted for differences in purchasing power. In principle poverty rates based on these measures count the fraction of people in a country who lack the resources to buy a notional, basic basket of goods. ...

European banks: Judgment daze

Thu, 29 Jul 2010 10:55:47 GMT

Europe’s stress tests were a mixed affair. Many banks still face an uphill struggle to finance themselves

“IT’S an analyst’s wet dream,” says one banker of the European stress tests announced on July 23rd. If financial detail is what turns you on, then the exercise delivered in style with hundreds of pages of information on 91 banks’ solvency and their exposures to the bonds of under-siege governments in the euro zone. As a piece of organisation, if not quite a triumph, it was an impressive feat. But whether all that new disclosure or the tests’ conclusion—that seven European banks need a piffling €3.5 billion ($4.5 billion) of new capital—help the banks escape their funding problems remains to be seen.

The initial signs were modestly encouraging. Credit-default-swap (CDS) spreads, a proxy for banks’ borrowing costs, improved slightly across Europe, according to Markit, a research firm. Banks’ share prices rose too, although that had as much to do with the news on July 27th that the new Basel 3 rules on the sector’s capital and funding would be watered down. Still, wide differences remain. Five of the seven banks to fail were Spanish savings banks (see article): many of the cajas still face CDS spreads many times those of safer firms. On July 26th Bankinter, a midsized Spanish commercial bank that just scraped through the tests, paid a record spread of 240 basis points to issue a mortgage-backed bond. ...

Spain's cajas: Thinking outside the box

Thu, 29 Jul 2010 10:55:47 GMT

Should the savings banks be embraced by investors, or avoided?

SPAIN’S savings banks, or cajas, have survived for nearly 200 years without the help of shareholders. But lots of these institutions, which are largely controlled by regional politicians, are now short of capital and on the hunt for private investors. A delegation from the Confederation of Spanish Savings Banks (CECA) toured European cities this week, touting what it called the “lighthouse of a new Spanish equity opportunity”.

Bad analogy. A lighthouse warns of dangers, and there are plenty of these in the cajas, chiefly political meddling and a high exposure to dud property loans. The state has already pumped €14.4 billion ($18.7 billion) into the sector, most of it from its Fund for Orderly Bank Restructuring (FROB). Five cajas failed the stress tests, and will require another €1.8 billion in capital. Another four came close, and may also need to raise funds. ...

Cerberus: Out of the doghouse?

Thu, 29 Jul 2010 10:55:47 GMT

After a few conspicuous flops, a private-equity firm gets back to its roots

“PEOPLE were prematurely writing the epitaph of our investments and our firm,” says Mark Neporent of Cerberus, a private-equity firm and hedge fund. “Hopefully it’s pretty apparent to people that we’re back.” The firm, named after the three-headed dog in Greek mythology that guards the gates of the underworld, has spent the past two years trying to claw its way out of hell. Two of its largest and best known investments tanked. Chrysler, a carmaker, filed for bankruptcy and GMAC, General Motors’ financing arm, had to be rescued by the American government, which now owns most of it. For Cerberus, an intensely private firm, these were very public embarrassments.

Some wondered whether the embattled firm would go the way of those two investments. But Cerberus’s flagship private-equity fund rebounded last year, making up for its 25% fall in 2008. (Its main hedge fund was still down by around 4% in 2009.) Its recent sale of Talecris Biotherapeutics, a blood-plasma company it bought in 2005 for $600m, to a Spanish health-care company for $3.4 billion has added to a sense of revival. Nor has the firm given up hope on Chrysler. Cerberus still has control of Chrysler Financial, the company’s finance arm, and there is talk of turning it into a diversified financial firm. Some say Cerberus may be able to recoup its money or even record a profit on its $7.4 billion investment in Chrysler if it plays its card right on Chrysler Financial. ...

Finance after the crisis: Vigilante on the move

Thu, 29 Jul 2010 10:55:47 GMT

In the first in a series of profiles of financial institutions after the crisis we look at PIMCO, a giant fund manager

BILL GROSS has a dual passion for philately and philanthropy. In 2007 he gave to Doctors Without Borders the $9.1m he earned from an auction of his collection of British stamps. He has said he is happy to part with “old friends” for a good cause. But the 66-year-old shows no sign of parting ways with the company he co-founded in 1971, Pacific Investment Management Co (PIMCO), one of the world’s largest bond-fund managers and, since 2000, a unit of Allianz, a German insurer. As co-chief investment officer, he manages PIMCO Total Return, the world’s largest mutual fund with $234 billion of assets. It is as successful as it is big, returning an average 7.5% over the past five years—better than 98% of its peers, according to Bloomberg.

PIMCO itself, however, is changing. Having long marketed itself as “the global authority on bonds”, it recently switched to “your global investment authority”. It is too early to claim that crown. But the asset-management industry is sure to feel the effects of any effort by its most respected—and, by many, most feared—member to diversify its portfolio of offerings into equities, exchange-traded funds, risk hedging, valuation services and more. ...

SKS comes to market: Microfight

Thu, 29 Jul 2010 10:55:47 GMT

Can microlenders serve shareholders and the poor?

THE loans that microfinance companies make may be tiny but their ambitions can be vaulting. Take SKS Microfinance. Already India’s biggest microlender, with 6.8m clients and 5.8m active borrowers in the year ending on March 31st (see chart), it intends to become the world’s largest by 2012, with 15m clients. To fund this growth, it hopes to raise nearly $350m by selling a 21.6% stake in an initial public offering (IPO) which got under way this week.

According to the Consultative Group to Assist the Poor (CGAP), a think-tank housed at the World Bank, the IPO is only the second by a pure microfinance institution, after the offer by Mexico’s Compartamos Bank in 2007. More may follow. CGAP reckons that SKS’s move “should set the stage for future IPOs in the sector.” The omens are good. On July 27th SKS announced that it had raised $64m from anchor investors, including JPMorgan Chase, Morgan Stanley, and India’s ICICI Prudential and Reliance Mutual Fund, at the top end of the expected price range. ...

Buttonwood: Paying the price

Thu, 29 Jul 2010 10:55:47 GMT

Time to reassess how fund managers are rewarded

FUND managers have been some of the biggest beneficiaries of the financial sector’s growth over the past 30 years. Bankers may routinely earn million-pound bonuses but some hedge-fund and private-equity managers have become billionaires. Seldom has so much been earned by so few.

These riches have been generated despite the ability of investors to take advantage of low-cost exchange-traded funds and index-trackers. Investors have surged off-piste in search of higher returns. In aggregate, however, they will merely end up paying higher fees (typically, a 2% annual fee plus 20% on performance), a phenomenon this column has described as “catch two-and-twenty”. ...

Correction: Big Mac index

Thu, 29 Jul 2010 10:55:47 GMT

Correction: Burger-lovers in Argentina were enjoying a special discount on Big Macs when we collected data for our index (July 24th 2010). At nornal prices the peso is undervalued by 5% not 52%. Sorry for the whopper. This has been corrected online.

...

Wealth, poverty and compassion: The rich are different from you and me

Thu, 29 Jul 2010 10:55:47 GMT

They are more selfish

LIFE at the bottom is nasty, brutish and short. For this reason, heartless folk might assume that people in the lower social classes will be more self-interested and less inclined to consider the welfare of others than upper-class individuals, who can afford a certain noblesse oblige. A recent study, however, challenges this idea. Experiments by Paul Piff and his colleagues at the University of California, Berkeley, reported this week in the Journal of Personality and Social Psychology, suggest precisely the opposite. It is the poor, not the rich, who are inclined to charity.

In their first experiment, Dr Piff and his team recruited 115 people. To start with, these volunteers were asked to engage in a series of bogus activities, in order to create a misleading impression of the purpose of the research. Eventually, each was told he had been paired with an anonymous partner seated in a different room. Participants were given ten credits and advised that their task was to decide how many of these credits they wanted to keep for themselves and how many (if any) they wished to transfer to their partner. They were also told that the credits they had at the end of the game would be worth real money and that their partners would have no ability to interfere with the outcome. ...

Particle physics: And they're off

Thu, 29 Jul 2010 10:55:47 GMT

The LHC hits its stride, but America’s Tevatron is still in the running

BESIDES providing something to bet on (see article), competition has the desirable side-effect of spurring progress. As far as the physics of tiny things is concerned, the race is a two-horse affair between the Large Hadron Collider (LHC) located at CERN in Geneva and the Tevatron at the Fermi National Accelerator Laboratory (Fermilab) near Chicago. Both are hadron colliders: machines that smash protons into each other, or into their antimatter kin, at a smidgen below the speed of light in order to create shrapnel in the form of other particles. And both have recently produced promising results, presented to the biennial International Conference on High Energy Physics held in Paris on July 22nd-28th.

The LHC’s most publicised goal is to find the Higgs boson, a particle believed to be the magic ingredient that gives other elementary particles their mass. The Higgs is the missing piece in the Standard Model, a 40-year-old mathematical framework that links all the known particles and all of the fundamental forces of nature except for gravity. Before the search can begin in earnest, though, the world’s most complicated machine has to be calibrated and fathomed by the legions of researchers who will operate it. ...

Dinosaurs and mammals: Velocisnack

Thu, 29 Jul 2010 10:55:47 GMT

Evidence that ancient mammals were dinosaurs’ prey

IN DAYS gone by, many palaeontologists thought the reason the dinosaurs became extinct was that the big, lumbering reptiles were outcompeted by small, nippy mammals who ate their eggs and generally ran rings around them. This quasi-anthropocentric view, of the inevitable rise of humanity’s ancestors, took a knock when closer examination showed that dinosaurs, too, were often nimble and warm-blooded. Then it was found that the extermination was an accident, caused when an asteroid hit the Earth. Until that moment, the dinosaurs had reigned supreme and mammals were just an afterthought.

Just how supreme is suggested by work carried out by Edward Simpson of Kutztown University in Pennsylvania and his colleagues. Dr Simpson’s analysis indicates that the relationship between dinosaurs and mammals was actually that of a diner to his lunch. ...

Betting on science: Odd and ends

Thu, 29 Jul 2010 10:55:47 GMT

Some bookmakers will take bets on anything—even the nature of reality

FOR those who enjoy the occasional wager, but know more about quark-gluon plasmas and minimal supersymmetry than they do about thoroughbreds or penalty shootouts, the Large Hadron Collider (see article) provides an ideal opportunity to pit their wits against those of the bookmakers. Backing the favourite—the detection by the LHC of a Higgs boson, an elusive object hypothesised to give mass to other particles—gets odds of 11/10 from William Hill, a British bookmaker, as long as it happens before the end of 2012 (which is odd, as the LHC is scheduled to be closed for the whole of that year). Those who think that deadline will not be met can place their own bets at 6/4 on.

For many physicists, the LHC is the most important experiment on Earth. For Paddy Power, a bookmaker based in Dublin, its activities fall into the “novelty betting” category. Alongside taking bets on conjectures such as when Facebook will attract its billionth user and the chances of Nick Clegg being made David Cameron’s new baby’s godfather, the firm also has a book on what the LHC will discover this year. As is its standard practice, Paddy Power recruited experts in the field and fed their thoughts into a computer model to generate the initial odds. Weight of money wagered then provides the fine-tuning. ...

Steve Schneider

Thu, 29 Jul 2010 10:55:47 GMT

Stephen Schneider, climate scientist, died on July 19th, aged 65

“MARK TWAIN had it backwards,” Steve Schneider joked, in a lecture he gave to the American Association for the Advancement of Science (AAAS) in 1972. “Nowadays, everyone is doing something about the weather, but nobody is talking about it.” The lecture was on the topic that Mr Schneider, then 27, had been working on for two years and would work on for another 38: what were humans doing to the climate?

The 1960s had brought a new way of talking about the weather—a way of representing it in punched cards that could be fed into a computer. These models, limited though they were, let their creators ask questions no simply tabulated data could answer, and see processes that the details of the real world obscured. ...

Business this week

Thu, 29 Jul 2010 10:55:47 GMT

The oil spill in the Gulf of Mexico continued to shake BP. The firm announced that its unpopular chief executive Tony Hayward would step down on October 1st. Robert Dudley, its American executive director, will replace him. BP reported a loss of $17 billion in the second quarter, after a pre-tax charge of $32 billion to cover the costs of cleaning up the oil spill, compensating its victims and paying fines. The embattled company intends to sell up to $30 billion of assets to settle its bills. See article

China’s banking regulator indicated that the country’s banks face serious default risks on about 20% of the 7.7 trillion yuan ($1.1 trillion) they have lent to local-government financing vehicles. ICBC, the world’s largest bank by market capitalisation, said it would raise up to $6.6 billion in a rights issue. ...

Politics this week

Thu, 29 Jul 2010 10:55:47 GMT

Tens of thousands of files were leaked from the American armed forces to WikiLeaks, a website. They related to the conduct of the war in Afghanistan and sharpened a perception that Pakistan’s military intelligence agency, the ISI, has been backing the Taliban in its fight against NATO and the government in Kabul. The Obama administration said it would punish those who leaked the material and declared that Americans “are in this region because of what happened on 9/11”. See article

Afghanistan’s president, Hamid Karzai, said an investigation by Afghan intelligence agents had found that a rocket fired by NATO forces killed 52 civilians in a village last week. The American command acknowledged that its helicopters had been active nearby, but said a joint investigation had revealed no such evidence. The UN wants a third investigation. ...

KAL's cartoon

Thu, 29 Jul 2010 10:55:47 GMT

The Economist commodity-price index

Thu, 29 Jul 2010 10:55:47 GMT

Overview

Thu, 29 Jul 2010 10:55:47 GMT

The British economy expanded by 1.1% during the three months to the end of June, after growing by a sluggish 0.3% in the previous quarter.

Brazil’s unemployment rate fell to 7% in June, its lowest in six months. ...

Online job vacancies

Thu, 29 Jul 2010 10:55:47 GMT

Recruiting in both America and Europe continued to climb in June, according to the Monster Employment Index, which measures the strength of companies’ hiring intentions by counting online advertisements. Europe saw the fifth monthly rise in a row, with more openings in production and manufacturing. Opportunities in the automotive industry, however, declined. In America managerial openings were at their highest level since November 2008, while manufacturing and transport continued to grow. Overall, the American index rose by more than 20% from a year earlier. In Europe recruitment was almost 12% higher than a year ago. The Swedish market (not shown) was the strongest performer.

...

Trade, exchange rates, budget balances and interest rates

Thu, 29 Jul 2010 10:55:47 GMT

Biggest transnational companies

Thu, 29 Jul 2010 10:55:47 GMT

According to the latest World Investment Report from the UN Conference on Trade and Development, General Electric holds foreign assets worth $401 billion, more than any non-financial firm. The American conglomerate has half of its assets abroad. For Vodafone, a British telecoms company, and ArcelorMittal, a steelmaker with its headquarters in Luxembourg, the share is more than 90%. Six of the ten biggest transnational corporations by foreign assets are from the oil or power industries. Toyota, the world’s biggest carmaker, is the only Asian firm among the top 12. Exxon Mobil had the largest foreign sales, of $322 billion. Wal-Mart, ranked only 30th by foreign assets, had the most employees abroad: 650,000.

...

Markets

Thu, 29 Jul 2010 10:55:47 GMT

Output, prices and jobs

Thu, 29 Jul 2010 10:55:47 GMT

Kenya's constitutional referendum: A chance to improve how Kenya is run

Thu, 29 Jul 2010 10:55:47 GMT

President Mwai Kibaki and his prime minister, Raila Odinga, are backing a new constitution that could change their country for the better. But tensions are high

THE referendum on a comprehensive new constitution, to be held on August 4th, is being hailed as a big step towards overhauling Kenya’s creaking political system and giving people a better chance of peaceful reform. But nerves are jangling in the run-up. The last time the country went to the polls, in a general election at the end of 2007, the ensuing violence left 1,500 people dead and 300,000-plus homeless.

Never again, said most Kenyans. This time around, the government has been assertive and astute in trying to keep the peace. Ten thousand police have been sent to the Rift Valley, the most combustible bit of the country, with youth gangs from the rival Kalenjin and Kikuyu ethnic groups facing off against each other. Militias are said to be rearming, this time with automatic rifles as well as bows and arrows. If they are not kept apart, they may fight. ...

Nigeria's art collectors: A nice new market

Thu, 29 Jul 2010 10:55:47 GMT

Another good way to spend your lovely oil money

IN A suburb of Lagos, Nigeria’s business capital, Yemisi Shyllon lives in a house full of bronze statues of African tribal rulers and brightly coloured beadwork landscapes. He may be Nigeria’s biggest art collector, with some 6,000 pieces by his count. “I don’t go out much,” he says, “I have enough to look at here.”

Mr Shyllon, who runs an engineering company, is one of a small circle of Nigerian businessmen who own huge collections of local art. Sammy Olagbaju, a 70-year-old retired stockbroker who has lived in London and New York, is another avid collector. One Lagos-based banker has over 600 pieces. ...

South Africa's opposition: Taking on the behemoth

Thu, 29 Jul 2010 10:55:47 GMT

The battle for a stronger opposition to the African National Congress

IT IS rare for the leader of a political party to appear on the platform at a rival’s congress, even more so to be welcomed with a standing ovation. But that is what Patricia de Lille of South Africa’s Independent Democrats (ID) received at a recent meeting of the Democratic Alliance (DA), the country’s main opposition party, when she indicated that the two parties were close to clinching a formal agreement to co-operate at next year’s municipal elections. This, she said, would be an “engagement” ahead of a full “marriage”. That could be consummated only at the next general election, in 2014, as South Africa’s constitution in effect bars mergers between polls; MPs who change their party allegiance automatically lose their seats.

The merger will barely affect national politics except to shore up the DA in the Western Cape, the only one of nine provinces not controlled by the African National Congress (ANC). Nationwide the ID is tiny: in the last general election, in 2009, it got less than 1% of the vote, returning four MPs. But the merger would give the new entity a chance of doing well in the Northern Cape. Its backing is biggest among mixed-race coloureds, who make up about 9% of the 49m South Africans. Ms de Lille is a coloured former trade unionist and a doughty anti-corruption campaigner. ...

Somalia and the African Union: Be beefier

Thu, 29 Jul 2010 10:55:47 GMT

More troops are promised to fight the Shabab Islamist militia

THE African Union (AU) agreed this week to strengthen its peacekeeping mission in Somalia. Two thousand troops from Guinea and Djibouti are to be made “immediately” available, bolstering the 6,000 or so from Uganda and Burundi already defending Somalia’s battered capital, Mogadishu. Their job is supposed to change too, from merely providing protection for Somalia’s weak transitional government to becoming a fighting force in the war against terrorism.

This escalation follows the bombings in Uganda’s capital, Kampala, perpetrated by suicide-bombers sent by Somalia’s Islamist rebels of the Shabab group, which has links to al-Qaeda. More than 80 Ugandans and foreigners watching the World Cup football final on July 11th were killed. ...

Iran's cross merchants: The bazaar strikes back

Thu, 29 Jul 2010 10:55:47 GMT

Iran’s muttering merchants

WITH its shutters down and shops closed, Tehran’s usually bustling Grand Bazaar has been quiet of late. In the first weeks of July Iran’s powerful merchants went on strike because the government tried to raise their annual income tax by 70%. Even when the government hastily agreed to lift taxes by only 15% after the protests spread to other cities, businesses stayed shut for several days.

The strikes have now ended but the threat of big reforms to Iran’s tax system still looms over the bazaar. Merchants argue that as the economy slows and inflation increases, they should pay less, not more, in taxes. But with lower oil prices, the government wants more money from a wealthy group that at the moment pays relatively little. Iran imposes valued-added tax (VAT) at 3% on large corporations but not on smaller and unincorporated businesses, so until now many of the bazaaris have escaped. The administration wants that to change. A report by the IMF in March detailed Iran’s plans to extend VAT and to modernise the tax system more broadly. ...

Human rights in Tunisia: No to opposition

Thu, 29 Jul 2010 10:55:47 GMT

An ageing autocrat stifles opposition as the European Union shuts its eyes

THE government of Tunisia must do more to uphold human rights and the rule of law and to allow political pluralism if the country is to win “advanced-partner status” to give it cosier relations with the European Union (EU). That, at any rate, is the view of Tunisia’s bravest human-rights campaigners who, earlier this summer, badgered officials in Spain, which then held the EU’s rotating presidency. The Spaniards duly raised the issue in Brussels.

This annoyed Zine el-Abidine Ben Ali (pictured), who has ruled Tunisia since 1987 with virtually no opposition. But far from bowing to such pressure, his parliament passed an amendment to the penal code’s section on espionage, adding a clause that anyone deemed to “harm Tunisia’s vital interests” must go to prison for at least five years. Just to be sure, officials made clear that this includes the crime of “inciting foreign parties not to grant loans to Tunisia, not to invest in the country, to boycott tourism or to sabotage Tunisia’s efforts to obtain advanced-partner status with the EU.” ...

Morocco's evangelical Christians : Stop preaching or get out

Thu, 29 Jul 2010 10:55:47 GMT

The king is unamused by Christians who proselytise

EVANGELICAL Christians in the poor world are rarely accused of undermining public order. All the more surprising, then, that in recent months around a hundred have been deported from Morocco for just that. The Christians, mostly from the United States and Europe, have been accused of trying to convert Muslims to Christianity, a crime punishable by imprisonment under Moroccan law, which protects the freedom to practise one’s faith but forbids any attempt to convert others.

Rules against proselytising are quite common in Muslim countries but Morocco has long enjoyed a reputation as a bastion of religious tolerance in the region. Almost all the country’s 32m citizens are Sunni Muslims but churches and synagogues exist, alongside mosques, to cater for the 1% of the people who are Christian or Jewish. ...

Correction: Uganda

Thu, 29 Jul 2010 10:55:47 GMT

In our article on July 3rd on the religious right in east Africa entitled “Slain by the spirit”, we misspelt Uganda's Makerere University. Sorry. This was corrected online.

...

China's labour market: The next China

Thu, 29 Jul 2010 10:55:47 GMT

As the supply of migrant labour dwindles, the workshop of the world is embarking on a migration of its own

THE angrier they become, the less intimidating they seem. The strikes, stoppages and suicides that have afflicted foreign factories on China’s coast in recent months have shaken the popular image of the country’s workers as docile, diligent and dirt cheap. America’s biggest labour federation, the AFL-CIO, blames imports from China for displacing millions of Americans from their jobs. But in June its president applauded the “courageous young auto workers” who waged a successful strike at a Honda plant in Foshan demanding higher wages.

While foreign unions cheer, multinational companies fret. According to UNCTAD, foreigners have invested almost $500 billion in China’s capital stock. Their affiliates employ about 16m people in the country. For a decade this combination has dominated global manufacturing growth, dispatching ever cheaper goods from China’s ports. Of China’s 200 biggest exporters last year, 153 were firms with a foreign stake. But the recent unrest has put Chinese labour at odds with foreign capital. ...

Brazil's Bolsa Fam�lia: How to get children out of jobs and into school

Thu, 29 Jul 2010 10:55:47 GMT

The limits of Brazil’s much admired and emulated anti-poverty programme

THREE generations of the Teixeira family live in three tiny rooms in Eldorado, one of the poorest favelas (slums) of Greater Sao Paulo, the largest city in the Americas. The matriarch of the family, Maria, has six children; her eldest daughter, Marina, has a toddler and a baby. Like many other households in the favela, the family has been plagued by domestic violence. But a few years ago, helped in part by Bolsa Familia (family grant)—which pays mothers a small sum so long as their children stay in education and get medical check-ups—Maria took her children out of child labour and sent them to school.

The programme allows the children to miss about 15% of classes. But if a child gets caught missing more than that, payment is suspended for the whole family. The Teixeiras’ grant has been suspended and restarted several times as boy after boy skipped classes. And now the eldest, Joao, aged 16, is out earning a bit of money by cleaning cars or distributing leaflets, taking his younger brothers with him. Marina’s pregnancies have added to the pressure. She gets no money for her children because she lives with her mother and the family has reached Bolsa Familia’s upper limit. After rallying for a while, the Teixeira family is sliding backwards, struggling more than it did a couple of years ago. ...

Foreign direct investment

Thu, 22 Jul 2010 13:55:19 GMT

All components of foreign direct investment (FDI) declined in 2009 and are now recovering slowly. According to figures for 35 mainly rich countries compiled by the UN Conference on Trade and Development, most of the fall can be attributed to a decline in foreign acquisitions, which contracted by 34%, compared with a 15% fall in the number of greenfield FDI projects. Reinvested earnings started to rise in mid-2009, driven by improved corporate profits. The disruption in FDI flows has not stopped the trend of globalised production. The share of GDP attributed to foreign companies reached an historic high of 11% last year, when 80m people worked for multinational companies.

...

Long term unemployment

Thu, 22 Jul 2010 11:21:19 GMT

The duration of the global recession, as well as the fact that employment usually fails to pick up in the early stages of an economic recovery, mean that many people have now been jobless for a long time. The OECD reckons that in 2009, 45.5% of jobless Germans had been out of work for at least a year, the highest such proportion among the think-tank’s mostly rich member countries. In contrast, those who had been unemployed for at least a year made up only 16.3% of jobless Americans (although America’s unemployment rate was higher than Germany’s). Long-term joblessness causes people’s skills to become rusty, which makes it harder for them to find work even when the labour market recovers.

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Africa's year of elections: The democracy bug is fitfully catching on

Thu, 22 Jul 2010 11:21:19 GMT

Africa is in the throes of election fever. But more voting does not necessarily mean more democracy

BURUNDI has just had one, as has Guinea. That came hot on the heels of the semi-autonomous region of Somaliland’s, which followed Ethiopia’s. Rwanda is bracing itself for one at the beginning of next month, and after that Tanzania, Chad and several others are due to follow. By the end of December a score of sub-Saharan Africa’s 48 countries should have gone to the polls for an assortment of local, regional and national elections. Kenya is also holding a vital constitutional referendum on August 4th. This is a big year for African voters. The electoral calendar has never been so crowded.

Indeed, elections have become a normal occurrence on a continent once better known for the frequency and violence of its coups and civil wars. Since the late 1990s the number of coups has fallen sharply (see chart), whereas the number of elections has increased, sometimes in the unlikeliest of places. ...

Israel's foreign minister: Might Avigdor Lieberman go?

Thu, 22 Jul 2010 11:21:19 GMT

Strains between the prime and foreign ministers could reshape the coalition

AVIGDOR LIEBERMAN, Israel’s foreign minister, has asked European countries to consider building a power station, a desalination plant and a harbour in the Gaza Strip, promising Israel’s full co-operation in bringing in the necessary raw materials. The aim, says Mr Lieberman, is to end Gaza’s residual dependence on Israel and let the territory’s 1.6m Palestinians fend for themselves. That would dump responsibility for Gaza on neighbouring Egypt. Its connection with the West Bank would be severed, making a territorially linked Palestinian state nigh-impossible to attain. It is an idea that no Western or Arab government could countenance. But it is making waves because Mr Lieberman, an extreme nationalist, has the second-biggest chunk of seats in Israel’s awkward coalition.

Mr Lieberman says that Israel, whose troops and settlers vacated the strip five years ago, must show the world it is no longer in any respect the occupier, as international law currently deems it to be. Western governments and international bodies should police Gaza’s borders and crossing-points to stop weapons illicitly coming in. Israel would presumably lift its naval blockade. All this, argues Mr Lieberman, could be done without talking directly to Hamas, the Islamist movement that runs the strip and which Israel, the United States and the European Union still shun as a terrorist outfit. ...

Flights to Iraq: You're welcome!

Thu, 22 Jul 2010 11:21:19 GMT

Airlines are starting to fly again to Iraq

DESPITE continuing violence and a four-month stalemate over forming a new government, at least you now can fly to Iraq a little more easily. On July 16th flydubai, a low-cost airline based in the United Arab Emirates (UAE), launched no-frills flights to Erbil, capital of Iraq’s Kurdish region. A day before, Basra airport welcomed the first civilian flight from Saudi Arabia to Iraq for 20 years, courtesy of a charter airline, Al-Wafeer. Bahrain’s Gulf Air started flights to three Iraqi cities last year and will add two more by the end of 2010. Etihad, an airline based in Abu Dhabi, the richest of the UAE’s seven statelets, started flights to Baghdad in April. Not to be outdone, its closest rival, Emirates, which is based in Dubai, another UAE state, has started too.

Fewer European airlines have yet been tempted back—and go only to the safer Kurdish area. Austrian Airlines has led the way, followed by Sweden’s Viking Airlines. Germany’s Lufthansa will start flying to Baghdad in September. Scandinavian Airlines plans a Basra route. ...

Burundi's election: Pretty squalid

Thu, 22 Jul 2010 11:21:19 GMT

East Africa’s weakest new component

TURN off the road at the appointed shack in the village of Mugere, on the Burundian side of Lake Tanganyika, and you quickly find the large rock standing alone on a hill. The view is sweeping. On the far side of the deep blue lake, Congo is just out of sight (see map). Carved into the rock are the words “Livingstone and Stanley”. This is where the missionary David Livingstone and the journalist-cum-explorer Henry Morton Stanley spent two nights in 1871, where the headwaters of the lake were discovered, and where, by some reckonings, the European race to control the heart of Africa really began.

But it was an area that no one much coveted. Disease was rife, the ocean distant, the Belgians and Germans who grabbed the territory too conservative to make it rich. So this vast region, stretching down through the Rift Valley and its lakes that punctuate the continent from Uganda down to Zambia in the south, still ranks among Africa’s poorest and least visited. ...

Burundi: A hard day's life

Thu, 22 Jul 2010 11:21:19 GMT

Africa’s unsung heroines who work themselves to the bone

ON A chill windy morning in the mountains of Burundi, six women in an “empowerment group” run by an Atlanta-based charity, CARE, sit down under a tree to talk about their day. They have 49 living children between them. Their village, Dihetu, is nondescript, the soil average. The women grow cassava, beans and bananas.

Marie-Jose, aged 42, has ten children. She wakes up at six o’clock and cleans the hut. At half past six she makes tea for the children who go to school in the morning. She is in the fields from seven. At 11 she tends the goats. At noon she prepares lunch for the children who go to school in the afternoon. She is back in the fields from one o’clock. At four she fetches water. At five she gathers firewood. She is back home to cook dinner at six. At seven she washes the children from a bucket. The family eats at eight. Usually it is porridge or beans; they have meat once a year. Often Marie-Jose will forgo dinner to give her children more. At half past eight she prays. “I pray to God that at least we are alive. After prayer I feel joy.” At nine she goes to sleep. ...

South Africa's economy: How it could do even better

Thu, 22 Jul 2010 11:21:19 GMT

A rare report by the OECD makes some trenchant observations

AFRICA’S biggest economy is being held back by one of the world’s lowest labour-participation rates and one of its highest unemployment rates. Barely 40% of South Africa’s working-age population have jobs, compared with around 60-75% in other middle-income emerging markets, according to a report out this week by the OECD. One in three South Africans in the labour force, including half of young black people aged 15-24, is unemployed. This, more than anything, most constrains South Africa’s economic growth, says the Paris-based outfit.

To create jobs for so many people would require “many years of 6% or even 7% growth”, says Angel Gurria, the OECD’s secretary-general. Pravin Gordhan, South Africa’s finance minister, puts the bar even higher, saying that average growth of 7% would be needed for 20 years “to make a significant impact”. In the past four decades South Africa has never achieved such speedy growth. Its best performance was in 2004-07, when GDP rose by an average of 5% a year. ...

American railways: High-speed railroading

Thu, 22 Jul 2010 11:21:19 GMT

America’s system of rail freight is the world’s best. High-speed passenger trains could ruin it

UNION STATION in Los Angeles has been restored as a fine example of the Art Deco architecture that typified California in the 1930s. It has served as a backdrop for many Hollywood films, from “Union Station” (naturally) to “Blade Runner” and “Star Trek: First Contact”. It was the last grand station to be built before America’s passenger railways went into what you might call terminal decline.

Today it is a hub for Metrolink commuter trains and Amtrak services to faraway cities such as Chicago and Seattle. These trains have to pull in and then back out in a clumsy manoeuvre. But there are plans for through tracks in time to carry the high-speed services that California is desperate to have by 2020 under an ambitious $42 billion plan to connect San Diego, Los Angeles, San Francisco and Sacramento. ...

Trading prisoners in the Low Countries: It's a deal

Thu, 22 Jul 2010 11:21:19 GMT

Dutch ease chock-a-block Belgium

THE border between Belgium and the Netherlands can be easy to miss: a road sign here, a flagpole there, a change in the colour of cars’ licence plates. When it comes to penal policies, though, the neighbours differ sharply. The Dutch prison population has been falling for some years and, with 14,000 cells for 12,000 prisoners, the government last year decided to close eight jails. But in Belgium the numbers locked up keep rising, causing serious overcrowding.

On February 5th this year, the Dutch and Belgian governments drew the logical conclusion, and agreed on a deal. Belgium took possession of the Dutch prison of Tilburg, a modern affair with tennis courts and a football pitch but a chronic shortage of residents. ...

Penal reform in South Carolina: Prisons full, coffers empty

Thu, 22 Jul 2010 11:21:19 GMT

Southern Republicans think it’s time to slow down the growth of locking up

ON THE outskirts of Columbia, South Carolina’s capital, lies a rolling swathe of farmland where cattle graze, tomatoes sprout and razor wire glints in the afternoon sun. This well-tended campus is home to seven of the state’s 28 prisons, including both Broad River, where inmates sentenced to die are lethally injected or electrocuted, and Campbell, which houses prisoners on work-release, who spend their days at fast-food restaurants or laundries and return to their “dorms” to sleep.

Part of their earnings goes to repay the cost of jailing them. And it is a cost: from 1983 to 2008 spending on the state’s prisons increased more than sixfold, as its prison population rose from just over 9,000 to almost 25,000. That rise had several causes, among them the greater number of people imprisoned for non-violent crimes and the heavier sentences that came with new laws laying down mandatory minimum terms. ...

Rough justice in America: Too many laws, too many prisoners

Thu, 22 Jul 2010 11:21:19 GMT

Never in the civilised world have so many been locked up for so little

THREE pickup trucks pulled up outside George Norris’s home in Spring, Texas. Six armed police in flak jackets jumped out. Thinking they must have come to the wrong place, Mr Norris opened his front door, and was startled to be shoved against a wall and frisked for weapons. He was forced into a chair for four hours while officers ransacked his house. They pulled out drawers, rifled through papers, dumped things on the floor and eventually loaded 37 boxes of Mr Norris’s possessions onto their pickups. They refused to tell him what he had done wrong. “It wasn’t fun, I can tell you that,” he recalls.

Mr Norris was 65 years old at the time, and a collector of orchids. He eventually discovered that he was suspected of smuggling the flowers into America, an offence under the Convention on International Trade in Endangered Species. This came as a shock. He did indeed import flowers and sell them to other orchid-lovers. And it was true that his suppliers in Latin America were sometimes sloppy about their paperwork. In a shipment of many similar-looking plants, it was rare for each permit to match each orchid precisely. ...

Cricket and baseball: Common ground

Thu, 22 Jul 2010 11:21:19 GMT

Comparing cricket with baseball is a good way to start a spat

BRITAIN and America are divided, not just by a common language, but also by their passion for summer ball games. The English dismiss baseball as a barbarous mutant form of rounders, a kids’ game; Americans regard cricket as a crazed English joke. Matthew Engel, a cricket writer, notes that “It is less contentious to write about religion or politics than the origins of these two games.”

Early in the 20th century Albert Spalding, an American sporting-goods manufacturer, insisted that baseball had been invented in Cooperstown, New York, in 1839 by a young soldier called Abner Doubleday who would be promoted to major-general during the American civil war. Baseball’s Hall of Fame was opened in Cooperstown when a misshapen leather ball found in the attic of a house near the town in 1934 was heralded as the ball originally used by Doubleday. This was always an unlikely tale, and Spalding’s papers, which are now housed in Cooperstown, expose his claims as a fabrication. ...

The future of the sea: Fish food

Thu, 22 Jul 2010 11:21:19 GMT

What will happen in our oceans

Four Fish: The Future of the Last Wild Food. By Paul Greenberg. Penguin Press; 304 pages; $25.95. Allen Lane; GBP14.99. Buy from Amazon.com, Amazon.co.uk

FOUR wild fish species dominate the world’s seafood markets, but that might not last much longer. As Paul Greenberg observes in a sharp and occasionally lyrical book, we are at a significant moment: farmed fish now make up around half of all the fish consumed by humans. ...

Shanty life in Brazil: Onward and upward

Thu, 22 Jul 2010 11:21:19 GMT

To get out you need education, hard work and luck

Favela: Four Decades of Living on the Edge in Rio de Janeiro. By Janice Perlman. OUP; 448 pages; $29.95 and GBP19.95. Buy from Amazon.com, Amazon.co.uk

IN THE mid-20th century Brazil was convulsed by a flood of migration from the countryside to the city. This had happened before in other places: millions of Americans moved from the fields into the cities in the 19th and early 20th centuries, creating such marvels as skyscrapers and jazz as they did so. But the scale and speed of the Brazilian migration was something new. Over the four decades covered by “Favela”, 108m people—more than half of Brazil’s population—went to town. ...

The history of historians: Not so ropey

Thu, 22 Jul 2010 11:21:19 GMT

A historian created and destroyed by Hitler

Hugh Trevor-Roper: The Biography. By Adam Sisman. Weidenfeld & Nicolson; 648 pages; GBP25. Buy from Amazon.co.uk

HUGH TREVOR-ROPER, who died in 2003 at the age of 89, was the most talented of a generation of British historians that included such illustrious names as Christopher Hill, Eric Hobsbawm, E.P. Thompson and Lawrence Stone. To many he was also the most fascinating: a wartime intelligence officer, obsessive controversialist, brilliant prose stylist, habitue of country houses and high society, and, in the last analysis, a tragic failure. ...

New fiction: Will to live

Thu, 22 Jul 2010 11:21:19 GMT

When the past becomes the present

Inheritance. By Nicholas Shakespeare. Harvill Secker; 272 pages; GBP12.99. Buy from Amazon.co.uk

NICHOLAS SHAKESPEARE’S new novel, “Inheritance”, begins with a wandering in the wilderness; a four-page piece of bravura writing in which a driven man crosses mountain and desert to peg out an Australian mineral claim that will yield 1,000m tonnes of high-grade iron ore. He calls it Mt Ararat, which should not be forgotten. ...

Anti-ageing research: Methuselah's mixture

Thu, 22 Jul 2010 11:21:19 GMT

Why do we grow old? And is ageing really compulsory?

The Youth Pill: Scientists at the Brink of an Anti-Ageing Revolution. By David Stipp. Current; 320 pages; $26.95. Buy from Amazon.com

FOR as long as people have been growing old, they’ve been wishing they didn’t have to. The “Epic of Gilgamesh”, one of the most ancient works of literature, chronicles the eponymous hero’s quest for eternal life. Most religions offer an attenuated version of immortality in which some fuzzily defined soul endures even after the body has died. Medieval alchemists hunted in vain for the rejuvenating Philosopher’s Stone; industrial-age quacks got rich off their patent elixirs. Today, cosmetics companies dance around truth-in-advertising laws to imply that their creams and lotions can keep the years at bay. ...

Letters: On the IPCC, Scottish fiscal autonomy, prison reform, counterinsurgency, bankers, the second amendment, assisted suicide

Thu, 22 Jul 2010 11:21:19 GMT

SIR – Your article “Flawed scientists” (July 10th) was uncharacteristically poorly researched. First, you suggested that my own position should be considered on the basis that I am opposed to reform of the Intergovernmental Panel on Climate Change. Yet this year I went to the UN to ask that the Inter Academy Council review all the IPCC’s processes and methods. Whilst that review is taking place—it reports in August—I have not announced major reforms of my own. To do so would be to pre-empt and to undermine the IAC.

Second, you referred to my voluntary status and the IPCC’s consequent lack of a full-time chairman, suggesting that I should be replaced by a paid appointee. At present only the small secretariat staff and technical support units are paid. This not only enables the IPCC to work to a tight budget, around GBP5m ($7.7m) a year, but allows us to deploy the top experts in their fields, all working in the spirit of public service. ...

African elections: The power of the angry voter

Thu, 22 Jul 2010 11:21:19 GMT

Even bad elections are better than none

BEFORE Sudan’s people went to the polls in April, President Omar al-Bashir invested a great deal of time and money in ensuring that there could be only one outcome. Constituencies were comprehensively gerrymandered. Fake parties were created with names that sounded very similar to the real opposition, in order to confuse the largely illiterate voters. NGOs with neutral-sounding names, paid for by the regime, pretended to monitor the results. There were few overt signs of fraud during the voting itself: there was no need for it.

African leaders are getting better at rigging elections. This leads some to despair of the democratic process in the continent. Yet gloom is the wrong response to this development. The riggers’ sophistication is testament not just to their determination to hold on to power, but also to African voters’ growing insistence on having a say. ...

America's housing market: Unnecessary evils

Thu, 22 Jul 2010 11:21:19 GMT

The next big task of financial reform: dismantling Fannie and Freddie

DIAGNOSIS is often much simpler than treatment. The failures of Fannie Mae and Freddie Mac, America’s housing-finance giants, are glaringly obvious. The two firms, which own or guarantee more than half of the country’s $10.7 trillion of mortgages, are awash in red ink. The Congressional Budget Office reckoned in August 2009 that the twosome’s cost to taxpayers could go as high as $400 billion. With housing showing renewed weakness, that number may rise.

It is also easy to see why the firms got into such a mess. These “government-sponsored enterprises” (GSEs) occupied a grey area between state and private ownership, benefiting from an implicit government guarantee on their own debt at the same time as they sought to maximise profits for shareholders. That hybrid model granted the GSEs access to cheap funding and gave them the incentive to load their retained portfolios with subprime mortgages whilst maintaining capital levels scanty enough to make investment banks blush. ...

London's Olympics: Field of dreams

Thu, 22 Jul 2010 11:21:19 GMT

Two years before the Olympics, Britain is doing well. But it’s what happens after the games that matters

FIVE years ago this month London won the right to stage the summer Olympic games in 2012. This newspaper did not share in the general rejoicing. We had argued that the games would be a waste of money and a great inconvenience to our home city. We haven’t changed our minds. We still wish that the whole circus had gone to Paris.

But we are where we are. London’s games are a mere two years away. The main stage for them is taking impressive and unstoppable shape on a tract of once deindustrialised, contaminated land in the east of the city (see article and article). What matters now is that London makes the best of its folly—and beats the sorry standards set by past wastrel hosts of the sporting jamboree. Besides staging games that are exciting and safe, three criteria will determine how well it does. ...

Colombia's presidential handover: Let Santos be Santos

Thu, 22 Jul 2010 11:21:19 GMT

Alvaro Uribe should do one more service to his country: let his successor govern

NOTHING in the way he has led his country for the past eight years suggested that Alvaro Uribe, Colombia’s outgoing president, was going to fade discreetly into the background. And so it is proving. Mr Uribe inherited a failing state in 2002. With single-minded determination and the backing of the United States, he reduced the FARC guerrillas from a mortal threat to Colombian democracy to a scattered irritant and persuaded over 20,000 of their brutal opponents, the right-wing paramilitaries, to disarm. The fall in murders and kidnaps restored morale, investment and economic growth. Colombians are grateful: Mr Uribe, whose attempt to run for a third term was ruled unconstitutional, departs early next month with an approval rating of around 70%. The voters endorsed his call for the continuation of his “democratic security” policy by voting overwhelmingly for the candidate who most closely personified it: his former defence minister, Juan Manuel Santos.

Yet there has always been a darker side to Mr Uribe. Several of his officials and allies have been accused of complicity with the paramilitaries and his army murdered many civilians. The president has seemed to want to subvert the independence of the judiciary. In foreign affairs he was sometimes naive and erratic. Colombia has been unjustly isolated abroad. ...

Crime and punishment in America: Rough justice

Thu, 22 Jul 2010 11:21:19 GMT

America locks up too many people, some for acts that should not even be criminal

IN 2000 four Americans were charged with importing lobster tails in plastic bags rather than cardboard boxes, in violation of a Honduran regulation that Honduras no longer enforces. They had fallen foul of the Lacey Act, which bars Americans from breaking foreign rules when hunting or fishing. The original intent was to prevent Americans from, say, poaching elephants in Kenya. But it has been interpreted to mean that they must abide by every footling wildlife regulation on Earth. The lobstermen had no idea they were breaking the law. Yet three of them got eight years apiece. Two are still in jail.

America is different from the rest of the world in lots of ways, many of them good. One of the bad ones is its willingness to lock up its citizens (see our briefing). One American adult in 100 festers behind bars (with the rate rising to one in nine for young black men). Its imprisoned population, at 2.3m, exceeds that of 15 of its states. No other rich country is nearly as punitive as the Land of the Free. The rate of incarceration is a fifth of America’s level in Britain, a ninth in Germany and a twelfth in Japan. ...

Unemployment benefits: Read this shirt

Thu, 22 Jul 2010 11:21:19 GMT

A titanic struggle to decide whether the jobless should get money for longer

THE news is not yet official, but America’s recession probably ended in June last year. Americans could be forgiven for failing to notice. Nearly 15m remain out of work, close to the peak that followed the recession. This summer, Congress has been busy rubbing salt in their wounds. Some 2.5m unemployed lost access to their benefits when the Senate failed to extend the government’s programme of emergency unemployment assistance in early June. This week the swearing-in of a successor to Robert Byrd, the veteran senator who died last month, delivered to Democrats the extra vote they needed to break a Republican filibuster, and the extension passed at last. But the episode is a glaring reminder of the crisis in America’s labour markets.

Congress had never before failed to extend benefits when unemployment remained above 7.2%, and this week’s action marked the seventh extension in this recession. But passage has become steadily more difficult. In February Senator Jim Bunning, Republican of Kentucky, held up an extension vote before giving ground under pressure from colleagues fearful of bad press. This time, Republicans were nearly united in their opposition. Only the defection of two liberal-minded colleagues, Olympia Snowe and Susan Collins of Maine, allowed the measure to move forward. But the delaying tactics were not entirely unsuccessful. The $34 billion extension bill was all that remained of a hoped-for mini-stimulus package, which included aid to states and business tax credits totalling $120 billion. ...

The Iroquois and their passports: Unfair play

Thu, 22 Jul 2010 11:21:19 GMT

The travails of a lacrosse team

ACCORDING to the “Great Law of Peace” of the Iroquois League, a confederation of six Indian tribes, “The Great Creator… established different hunting grounds and territories and made boundary lines between them.” Indeed, the Iroquois, or Haudenosaunee as they call themselves, are so accustomed to borders (they live astride the one between the United States and Canada) that they have issued their own passports since 1977. But when their lacrosse team, the Iroquois Nationals, attempted to use these documents to travel to Britain this month, first the American and then the British authorities turned up their noses at them, forcing the team to drop out of the world championships of a sport invented by their ancestors.

American and British officials said the Haudenosaunee passports are too easy to forge. Although the Americans ultimately relented and granted the Nationals a waiver to travel, the British would not budge. But Joe Heath, general counsel to the Onandaga, one of the “Six Nations” that make up the Haudenosaunee, points out that despite two years of discussion and $1m spent, America’s federal government has still not agreed to a design for a more secure form of identification. America, Britain and many other countries have honoured the Haudenosaunee passports in the past, he adds. The bureaucracy that stymied them this time, he says, is part of a “racist, colonial, assimilationist machine.” ...

Police charges in New Orleans: Whitewash and ham sandwiches

Thu, 22 Jul 2010 11:21:19 GMT

The Justice Department gets involved with the country’s worst cops

WHEN Ronal Serpas took the post of New Orleans police chief in May, he walked into a colossal mess. Of course, he expected it; he had worked there for more than 20 years before leaving in 2001. And when he came back to New Orleans he knew that federal authorities had launched eight active civil-rights probes into the department.

One of them had, by then, already produced explosive charges. They concerned police shootings on the Danziger Bridge in 2005, after Hurricane Katrina, which left two civilians dead and four injured. By the time Mr Serpas was sworn in, the Danziger case had yielded guilty pleas from four officers. They admitted taking part in a “bad shoot”, followed by a cover-up of stunning scope. A fifth guilty plea soon followed. ...

For-profit colleges: Monsters in the making?

Thu, 22 Jul 2010 11:21:19 GMT

Washington grapples with a booming education industry

IT SEEMS too good to be true, at least for companies. Customers arrive at for-profit colleges by the million. With them comes billions of dollars of federal student grants and loans, to be poured into corporate coffers. Public subsidies may provide up to 90% of revenue; the government bears the risk of loan defaults. This business model has served firms rather well. Its effect on students and taxpayers is less clear. This summer, however, a brawl over for-profit colleges has exploded at last.

On May 26th Steven Eisman, a big shorter, warned investors that for-profit colleges could echo subprime mortgages. June brought a Senate hearing (including testimony from Mr Eisman, to the industry’s horror) and proposed regulations from the Education Department. As The Economist went to press the department was expected to release another, even more controversial rule. Behind this fight lies a new, rather uncomfortable urgency. For-profit colleges have happily depended on government support. Now education may increasingly come to depend on for-profit colleges. ...

Georgia's governor's race: The Palin effect

Thu, 22 Jul 2010 11:21:19 GMT

An insurgent and a familiar face both finish strongly

FOUR days before Georgia’s primary election, three of the leading Republican candidates for governor gripped, grinned and sweated at a rally in suburban Atlanta organised by the state’s tea-party movement. Karen Handel, John Oxendine and Nathan Deal worked the exhibition hall hard, fighting for every vote in a race that grew tighter as election day grew nearer. For much of the race Mr Oxendine, the state’s insurance commissioner, enjoyed a commanding lead. But on July 12th Sarah Palin endorsed Ms Handel, calling her a “pro-life, pro-constitutionalist with a can-do attitude”. That helped: a Mason-Dixon poll taken before the endorsement had Mr Oxendine leading by eight points; shortly after it, Ms Handel was ahead by seven.

The lead held. Ms Handel came top of the primary heap, but fell short of a majority. She will therefore face Mr Deal, who finished second, in a run-off on August 10th. That election will pit an insurgent against an establishment Republican. Ms Handel is a Palin-endorsed, self-styled outsider, whose mail-shot sniffed that “the good ole boys are politics as usual”. Mr Deal served nine terms in Congress, six in the Georgia Senate, and was endorsed by Newt Gingrich, a former speaker of the House of Representatives and potential presidential candidate in 2012. ...

Lexington: A double blow

Thu, 22 Jul 2010 11:21:19 GMT

The Democrats may not merely lose the House in November, but the Senate too. How did it go so wrong?

SOMETIMES in politics stating the obvious can get you into trouble. So it was a fortnight ago when Robert Gibbs, Barack Obama’s spokesman, admitted on a talk show that the Democrats might lose their majority in the House of Representatives in the mid-term elections. This earned him a scolding from House Democrats, many of whom already resent Mr Obama for forcing them to vote for unpopular bills and, as they see it, failing to campaign effectively enough to save their jobs in November. It is therefore safe to bet that Mr Gibbs will not be giving public voice to a new fear now spreading through Democratic hearts, namely that it is not just the lower chamber that is vulnerable in November. The Senate may be “in play” as well.

Only 37 of the Senate’s 100 seats will be up in November. The Democrats are defending a majority of 59 to 41 (though their majority includes two independents), which means that the Republicans need a net gain of ten seats to win control. Until recently this feat was thought to be beyond their reach, and many pollsters continue to think so. RealClearPolitics, a website that publishes an average of multiple polls, is projecting a Republican gain of only six. To gain ten, as the Wall Street Journal argued recently, the Republicans would have to win virtually every competitive seat without losing any of their own. ...

Colombia's presidential transition: Still in charge

Thu, 22 Jul 2010 11:21:19 GMT

Alvaro Uribe tries to undermine his successor’s tentative reconciliation with Venezuela’s government

DURING Colombia’s presidential campaign, Alvaro Uribe supported Juan Manuel Santos, his former defence minister, as vocally as the election laws permitted. In return Mr Santos, who ran promising to continue Mr Uribe’s security policies, was appropriately grateful, making sure to credit the incumbent for his victory and promising to retain him as a “permanent adviser”. Yet Mr Uribe did not leave office willingly—his bid for a third term was found unconstitutional—and he started backing Mr Santos only after his preferred candidate lost in a primary. The cracks in this alliance of convenience are now starting to show. With Mr Santos’s inauguration just two weeks away, Mr Uribe seems to be trying to dictate his successor’s foreign policy, raising concerns that he may continue to meddle in national politics after leaving office.

Few issues are more sensitive for Mr Uribe than the alleged sheltering of Colombia’s FARC and ELN guerrillas by its neighbours. Thanks to the president’s relentless military assault, many fighters from both groups have fled across the borders. In 2008 Mr Uribe had Mr Santos raid a FARC camp in Ecuador, and complained that FARC arsenals included Swedish-made weapons that were originally sold to the Venezuelan government. ...

Honduras's post-coup president: Patching things up

Thu, 22 Jul 2010 11:21:19 GMT

The new government is doing better abroad than at home

IT IS over a year since Honduras’s leftist president, Manuel Zelaya, was bundled out of his home at dawn by the army and exiled to Costa Rica. Yet friendships, business deals and families are still split by rows over the events of June 28th 2009: whether Mr Zelaya’s illegal attempt to rewrite the constitution, seen by many as a bid to hang on to power, justified his removal at gunpoint; and whether his expulsion, backed by Congress and the Supreme Court, was a coup or a “constitutional succession”. Tegucigalpa, the small capital surrounded by empty silver mines, remains scarred by graffiti denouncing the coup’s authors, and their mothers.

The squabbling has been no less furious on the international stage. In response to the coup, Honduras was kicked out of the Organisation of American States (OAS), and lost promised foreign aid worth 6% of GDP. Constitutional order formally returned when Porfirio Lobo, who won a reasonably fair election held under the de facto regime, was inaugurated on January 27th. But Mexico and most South American countries still do not recognise his government. In May Brazil, which housed Mr Zelaya in its Tegucigalpa embassy for 129 days to shield him from arrest, stopped Mr Lobo from attending an EU-Latin America summit by warning that at least ten countries would skip it if he did. ...

Bol�var's exhumation: TB or not TB

Thu, 22 Jul 2010 11:21:19 GMT

Venezuela’s president buries bad news by disinterring a national icon

FOR a president facing a weak economy and declining popularity, a centuries-old murder mystery could prove a useful distraction. Venezuela’s Hugo Chavez is not one to let the lack of any such mystery stand in his way. On July 15th, at the president’s order, a team of white-clad soldiers and forensic scientists opened the lead coffin holding the remains of Simon Bolivar, the Caracas-born South American independence hero. He was exhumed to see if he died of tuberculosis, as historians assert, or was poisoned by political rivals—“crucified like Christ,” as Mr Chavez insists.

The president has long idolised Bolivar, the nation’s secular saint. He even renamed the country the “Bolivarian Republic of Venezuela.” Although Bolivar was in fact quite conservative, Mr Chavez sees him as a socialist, and advertises his own movement as the long-delayed realisation of the Liberator’s dream. In this scheme, the descendants of the “oligarchs” and “imperialists” who purportedly killed Bolivar are now plotting to assassinate his ideological heir. ...

Correction: Samuel Pinheiro Guimar�es

Thu, 22 Jul 2010 11:21:19 GMT

In our story on Brazil's foreign aid (”Speak softly and carry a blank cheque”, July 17th) we referred to Samuel Pinheiro Guimaraes as the secretary-general of Brazil's foreign ministry. He used to be; he is now the minister for strategic affairs. Sorry.

...

Academic fraud in China: Replicating success

Thu, 22 Jul 2010 11:21:19 GMT

Widespread academic fraud may hamper a drive for innovation

CHINA’S president, Hu Jintao, speaks often and forcefully of the need to foster innovation. He makes a strong case: sustaining economic growth and competitiveness requires China to get beyond mere labour-driven manufacturing and into the knowledge-based business of discoveries, inventions and other advances.

Yet doing so will be hard, not least because of the country’s well-earned reputation for pervasive academic and scientific misconduct. Scholars, both Chinese and Western, say that fraud remains rampant and misconduct ranges from falsified data to fibs about degrees, cheating on tests and extensive plagiarism. ...

India's currency: Whoopee for the rupee

Thu, 22 Jul 2010 11:21:19 GMT

A new symbol for the Indian rupee

A new symbol for the Indian rupee, announced on July 15th, moved some to flights of fancy. A business newspaper suggested that it would “catapult the rupee into the company of four ‘elite’ currencies” which also have symbols. A minister claimed that it would somehow “further highlight the strength and robustness of the Indian economy”. The IMF expects the economy to grow by over 9% this year, although double-digit inflation means that the rupee is losing purchasing power at an unusually rapid pace. Indians chatting on socialnetworking sites seem largely impressed with the new currency sign. The creator, a research student, D Udaya Kumar, has earned R250,000 ($5,300) for his pains. ...

Afghanistan's prospects: The great endgame

Thu, 22 Jul 2010 11:21:19 GMT

As the bigwigs hold forth in Kabul, Afghanistan’s future still looks uncertain

THE themes discussed at this week’s international conference on Afghanistan were grimly familiar. Those attending could be forgiven for pinching themselves to remember whether they had heard all this before in London in January, or in Tokyo, or Paris, or in any of the nine cities where, over the past decade, foreign ministers have met to chew over Afghanistan’s precarious fate.

Sitting around a huge table in the Afghan foreign ministry, the 68 delegates were each allotted five minutes to say what mattered to them. Some wanted progress on tackling corruption or on spending foreign aid more effectively; others sought stronger government or more training for the Afghan National Army. But with the exception of the Iranian foreign minister, who went amusingly (and at length) off message with a rant about international forces as the cause of rising insecurity, the delegates said little to set the pulse racing. ...

North and South Korea: Sabre-rattled

Thu, 22 Jul 2010 11:21:19 GMT

Sanctions, war-games and diplomatic pressure raise the stakes

FOR James Clapper, the man named to lead America’s vast intelligence system, North Korea’s sinking of the Cheonan, a South Korean corvette, may mark the start of a “dangerous new period” in which the North seeks to mount “direct attacks” on the South. As military intelligence chief in South Korea and the Pacific region in the 1980s, he told senators in a letter, it was reminiscent of the 1987 bombing of Korean Airlines Flight 858 that killed 115 people. The threat from North Korean military forces, moreover, “cannot be taken lightly”.

Much of the world does not share this grim view, or at least seems reluctant to do much about the killing of 46 South Korean sailors. A recent UN Security Council statement was underwhelming; it decried the attack but, mainly due to China’s objections, did not name North Korea as the culprit. Having adopted a firm but measured stance against North Korea, the lack of international solidarity is a disappointment for President Lee Myung-bak, so much so that some countrymen have taken to speculating about his political future. ...

Banyan: Leaving Asia's shade

Thu, 22 Jul 2010 11:21:19 GMT

Asia does exist. And this columnist greatly regrets his going from it

FIFTEEN months after we launched our column on Asia, the current Banyan is moving on. At the launch, readers and colleagues chipped in with a dire prediction. Banyan would find Asia had little in common with itself, a mere congeries of nations and occasional failed states. However defined, Asia was a geographical accident, a Western construct. Banyan himself, readers charged, entertained the fantasies of a fevered colonial mind.

Yet after plenty of roaming, the prediction has failed to come true. The case for treating Asia as a shared space, falling under a columnist’s purview, is only reinforced. But let’s be blunt: no serious project for integration is close to existing. It is inconceivable that South Korea or the Philippines would have cheered, say, Bangladesh in the World Cup, as most of Africa roared for Ghana. ...

Corruption in Taiwan: Confirming the worst suspicions

Thu, 22 Jul 2010 11:21:19 GMT

The arrest of three senior judges sparks renewed debate over corruption

RUMOURS of corruption among the judiciary have long flourished in Taiwan. Yet the news on July 14th that three high-court judges and a prosecutor had been detained amid allegations that they took bribes to fix the outcome of a high-profile case, has brought public outrage to boiling point. On July 18th Taiwan’s highest-level judicial official, Lai In-jaw, who is in charge of the island’s supreme and lower courts chose to resign because of the outcry over the case. The government is hastily promising reforms.

The case is Taiwan’s biggest judicial-corruption scandal in over a decade. It involves Ho Chih-hui, an ex-lawmaker with the ruling Kuomintang (now expelled from the party), who was convicted in 2006 by a lower court for taking kickbacks over the building of a science park. He was given a 19-year sentence. Following that, according to Taipei District Court documents, contacts of Mr Ho tried to bribe judges sitting in a higher court, in an attempt to buy his freedom. In May this year the judges did hand down a not-guilty verdict to Mr Ho, but on July 13th members of an anti-corruption task force stormed the homes and offices of the judges and prosecutor involved. The judicial officials could now each face a spell of ten years behind bars, if found guilty. Mr Ho is on the run. ...

Maoist insurgents in India: More bloody and defiant

Thu, 22 Jul 2010 11:21:19 GMT

To overcome Naxalite rebels, India’s government needs to be more adept at both using force and spreading development

AS INDIA’S Maoist rebellion deepens and grows, so too do divisions in the government over how it should be confronted. Nearly 800 people have been killed in the insurgency so far this year, close to the total for the whole of 2009–a record year for bloodshed in this conflict. The lack of a unified government response suggests this grim trajectory will continue.

On July 17th Digvijay Singh, general secretary of the ruling Congress Party, used a television interview to defend criticisms he had made earlier in print, accusing the home minister, Palaniappan Chidambaram, of mishandling the rebellion. He had written that it is wrong to treat the insurgency “purely as a law and order problem”; instead the government must “take into consideration the people living in the affected area who ultimately matter”. ...

Social networks and statehood: The future is another country

Thu, 22 Jul 2010 11:21:19 GMT

Despite its giant population, Facebook is not quite a sovereign state—but it is beginning to look and act like one

A COUPLE of months or so after becoming Britain’s prime minister, David Cameron wanted a few tips from somebody who could tell him how it felt to be responsible for, and accountable to, many millions of people: people who expected things from him, even though in most cases he would never shake their hands.

He turned not to a fellow head of government but to…Mark Zuckerberg, the founder and boss of Facebook, the phenomenally successful social network. (It announced on July 21st that it had 500m users, up from 150m at the start of 2009.) In a well-publicised online video chat this month, the two men swapped ideas about ways for networks to help governments. Was this just a political leader seeking a spot of help from the private sector—or was it more like diplomacy, a comparison of notes between the masters of two great nations? ...

Computer security : A swarm of many stripes

Thu, 22 Jul 2010 11:21:19 GMT

Hackers come buzzing in from expected, and entirely unexpected, places

WHICH countries have the cleverest hackers? In a well-guarded room near the Potomac river, north of Washington, DC—to which very few people have access (biometric scanners can prevent any unwanted human presence)—there is a laptop that is finding the answer. The little machine is a honey-trap which has detected more than 11m failed attempts to penetrate its defences since it was put in place in early June.

InZero, the web-security firm that set up the device, made it known through the shadowy world of hackers’ chat forums (a place so murky that you have to clean your computer well after going near it) that there was a document on the machine’s hard drive; and it challenged intruders to get hold of it. The results were revealing. Most would-be penetrators were polite in their self-presentation; their e-mails to the laptop had attachments which the reader was asked nicely to examine. Playing dumb, the recipients duly opened all those potentially deadly attachments, in the—so far correct—assumption that their defences would hold. ...

Turkey and its rebel Kurds: An endless war

Thu, 22 Jul 2010 11:21:19 GMT

Turkey’s long-running battle with Kurdish separatists is intensifying, again

SHOULD the Turks and Kurds live together? The answer from many of Turkey’s restive Kurds has long been no. A vicious separatist campaign launched by rebels of the outlawed Kurdistan Workers Party (PKK) has been raging since 1984. In recent months the PKK has stepped up its attacks, killing dozens of Turkish soldiers in and beyond the predominantly Kurdish south-east. Most recently, on July 20th, a Kurdish raid near the town of Cukurca killed six Turkish troops and injured at least 15.

But now a growing number of Turks are questioning the merits of cohabiting with the country’s estimated 14m Kurds. Never mind that Istanbul is the world’s largest Kurdish city, or that few of the provinces claimed by the Kurds are ethnically homogenous. In television debates and across the blogosphere support for the idea that the Kurds should go their own way is growing. Onur Sahin, who heads the Chamber of Agriculture in the Black Sea province of Ordu, says his fellow producers no longer want seasonal migrant Kurds to harvest their hazelnut crops. ...

The latest Italian scandal: Out of the shadows

Thu, 22 Jul 2010 11:21:19 GMT

The return of secret-society scandal to Italian public life

SECRET societies run through the tapestry of Italy’s history like a half-hidden thread: from the 19th-century proto-nationalists known as Carbonari to Propaganda Due (P2), a rogue Masonic lodge with a mission to infiltrate the organs of state and a membership that included politicians, soldiers, spooks and the current prime minister, Silvio Berlusconi. The discovery of the P2 in 1981 prompted a law outlawing secret societies.

It is back in use. In recent weeks prosecutors have cautioned seven people they suspect of belonging to an illegal cabal. (All deny wrongdoing.) Some are close to the prime minister. Senator Marcello Dell’Utri, who is already fighting a conviction for mafia links, created the party with which Mr Berlusconi entered politics. Denis Verdini is a national organiser of his current political vehicle, the People of Freedom movement (PdL). Nicola Cosentino was a junior economy minister until he resigned on July 14th. ...

German education: Leave them kids alone

Thu, 22 Jul 2010 11:21:19 GMT

A setback for German education reformers

“SCHOOL reform chaos?” asked a frowning satchel depicted on posters plastered around Hamburg. “No thank you.” The sorrowful satchel was the mascot of a citizens’ rebellion against a proposed school restructuring in the city-state. Voters rejected the plan in a referendum on July 18th. The stinging defeat for Hamburg’s government, a novel coalition between the conservative Christian Democratic Union (CDU) and the Green Party, has national consequences, as it may make the CDU-Green alliance a less appealing model for a future federal government. Ole von Beust, Hamburg’s mayor, announced his resignation before the result, saying he had done the job for long enough. He is the sixth CDU premier to leave office this year. Chancellor Angela Merkel, who leads the CDU, must now promote a new generation of leaders.

More important are the implications for schools. Hamburg’s plan was a bold attempt to correct a German practice that many think is both unjust and an obstacle to learning. In most states, after just four years of primary school children are streamed into one of several types of secondary school: clever kids attend Gymnasien, middling ones Realschulen and the slowest learners Hauptschulen, which are supposed to prepare them for trades. (A few go to Gesamtschulen, which serve all sorts.) Early selection may be one reason why the educational achievement of German children is linked more closely to that of their parents than in almost any other rich country. Children at the bottom often face low-wage drudgery or the dole. ...

Charlemagne : Europe's dark secret

Thu, 22 Jul 2010 11:21:19 GMT

They might not like to admit it, but Europeans don't mind a bit of capitalism

WHEN history comes to write the tale of the euro-zone crisis, the chief villains, if Europe’s leaders have any say, will be not dissembling Greeks or dithering Germans, but the financial markets. Traders subjected Greece to “psychological terror”, declared George Papandreou, its prime minister. They were “making money on the back of the unhappiness of the people”, lamented Michel Barnier, the European commissioner for the single market. The crisis was blamed on wolf-pack markets (Anders Borg, Sweden’s finance minister), cynical hedge funds, cocky credit-ratings agencies, neoconservative capitalism (Jose Luis Rodriguez Zapatero, Spain’s prime minister), a duplicitous Anglo-Saxon press (Mr Zapatero again), and other wicked forces still.

Not all Europeans demonise the market. Ex-communist Europe, which only recently threw off the command economy, is less hostile. So are the Germans, with their small-business Mittelstand and consensual labour relations. Elsewhere, though, market-aversion seems to go deeper than mere disapproval of extravagant stock options or bonuses (which is common to market-friendly Britain and America too). Fully 29% of Spaniards and Italians, and 43% of the French, told a global poll last October that free-market capitalism was “fatally flawed”. Only 13% of Americans shared that view. ...

Russia and Belarus: It takes one to know one

Thu, 22 Jul 2010 11:21:19 GMT

A media war of words breaks out between two supposed allies

RUSSIA and Belarus are unlikely champions of democracy and freedom of speech. But a postmodernist approach to politics can yield odd results in the post-Soviet world. In recent weeks these authoritarian regimes have denounced each other’s authoritarianism and deployed state-controlled media to attack each other’s lack of media freedom. Bizarrely, this war of words has been waged in the name of brotherly ties and economic union.

Hostilities broke out three weeks ago when Moscow and Minsk sparred over gas prices and Alyaksandr Lukashenka, Belarus’s president, nearly reneged on a customs union between his country, Russia and Kazakhstan, which was finally signed on July 5th. A day earlier NTV, a television channel controlled by Gazprom, Russia’s gas monopoly, aired “Godfather”, a documentary that portrayed Mr Lukashenka, long backed by Russia, as a brutal election-rigging, opposition-repressing tyrant. ...

Gay rights in Poland: Poland's pride

Thu, 22 Jul 2010 11:21:19 GMT

Not, in fact, a seething hotbed of homophobia

ANY west Europeans expecting last week’s Europride celebrations in Warsaw to trigger a homophobic backlash will have been surprised. Saturday’s gay-rights march in the Polish capital was low-key compared with previous events in Cologne and Madrid. But it was well received and excellently policed.

As the largest central European country, Poland was an obvious choice for the first ex-communist Europride. Activists have an agenda. Unlike gay Hungarians and Czechs, Poles cannot apply for civil partnership. The Catholic church continues to exercise a conservative influence over public life, and politicians are shy of voicing support for homosexuals. There are no openly gay Polish MPs. ...

Bagehot: Europe and the Trojan poodle

Thu, 22 Jul 2010 11:21:19 GMT

Britain's “special relationship” with America makes it modest, not arrogant

IT WOULD be surprising if David Cameron’s rather bumpy visit to America this week did not elicit some quiet gloating in Paris, Berlin or Madrid. For it is an article of faith in the chancelleries of western Europe that Britain suffers from two related delusions of grandeur—and that this arrogance explains its resistance to deeper European integration on defence and foreign policy.

The first grand delusion involves the “special relationship” with America. Britain’s desire to keep in with the global superpower, it is argued, makes the British into something like Trojan poodles: slavish in Washington (eg, over Iraq) yet cocky in Brussels, and willing to help America divide the EU and rule. The second accusation is that imperial nostalgia blinds Britain to the limits of its sovereign power today. To quote a senior European politician: “your country has never got over the British empire.” ...

Funding dilemma: Banks on methadone

Thu, 22 Jul 2010 11:21:19 GMT

An unhealthy addiction to cheap government money

BRITAIN’S biggest banks may pass the common “stress test” for resilience that was applied recently to banks in the European Union (results were expected on July 23rd when The Economist went to press). But that glosses over a long-term structural problem which makes them more of a burden than a benefit to the national economy. As banks struggle to deal with it, they may be smothering the chances of new entrants offering customers and small businesses a competitive alternative.

The problem is their addiction to government-supported funding: GBP165 billion of it through a Special Liquidity Scheme, which lets them refinance mortgage securities and other assets at a discount to market rates; and GBP120 billion more raised through bond issues bearing a government guarantee. These two schemes are due to come to an end in 2012, presenting the country’s big banks with a refinancing mountain. And other wholesale debt is also falling due—perhaps as much as GBP480 billion over the next three years. At the moment the banks are raising funds of around GBP12 billion a month, only half the rate they will need when the other bills are presented. Whether the Treasury will relent when the deadline arrives and keep some of its support in place is an open question. ...

The big society: Second invitation

Thu, 22 Jul 2010 11:21:19 GMT

David Cameron puts muscle into his favourite theme

POLITICIANS of the young and slick variety are often accused of dressing up hollow ideas in alluring language. David Cameron, PR man-turned-prime minister, found a way of giving a promising set of ideas a lousy name. The “big society” was his theme for this year’s general election campaign. As a sign of how well it went down with voters, he now has to share power with the Liberal Democrats.

A baggy concept that quickly came to mean too many things, the big society is really about giving power away. Traditionally, this meant beefing up Britain’s impotent local authorities. But Mr Cameron wants to push power further down, to the “nano” level. This vision sees parents helping to set up new schools, public-sector workers running their own services as co-operatives, and small groups of people volunteering on local projects. The Conservative election manifesto was an “invitation to join the government of Britain”. ...

The Chilcot inquiry: A spy speaks

Thu, 22 Jul 2010 11:21:19 GMT

A former head of Britain’s domestic spy agency gives her take on the Iraq war

THESE days Britain’s secret services have websites, press offices and public-recruitment drives. The names of their bosses are freely available, as is the nature of their work. Yet for all this openness, it is rare to hear the spies themselves speak. When Sir Richard Dearlove, a former head of the Secret Intelligence Service—better known as MI6, Britain’s foreign spying outfit—gave evidence to the Chilcot inquiry into the Iraq war, he insisted on doing so in private. But on July 20th, when Eliza Manningham-Buller, once boss of the Security Service, or MI5, MI6’s domestic counterpart, appeared before the same inquiry, she made her statements in public.

That ensured plenty of interest, and those who watched were amply rewarded by her testimony. Lady Manningham-Buller agreed that the invasion of Iraq in 2003, coming two years after the attack on Afghanistan, was seen by many British Muslims as part of a more general attack on Islam, an argument that the Labour government which launched the war refused to accept publicly for years. “Arguably,” she said, “we gave Osama bin Laden his Iraqi jihad.” ...

The 2012 Olympics: The greatest sideshow on Earth

Thu, 22 Jul 2010 11:21:19 GMT

The Olympic games are not just a sporting event but also a means of regenerating east London. On both counts, they’re expensive

IN TWO years, on July 27th 2012, London will become the first city to host the Olympic games three times. The second lot, in 1948, were “The Austerity Olympics”, the title of a book by Janie Hampton published in 2008. Post-war make-do-and-mend was the order of the day. No new stadiums were built. Athletes were put up in schools and in wooden huts in Richmond Park. The total cost was GBP732,268, about GBP20m ($30m) in today’s money. The organisers reported a profit of GBP29,240, on which tax of GBP9,000 was paid.

Austerity has not yet struck the 2012 show. Britain’s previous, Labour government set aside GBP9.3 billion to build a stage for it, mainly by transforming a post-industrial wasteland in east London into the Olympic Park. The new Conservative-led government has barely touched it. LOCOG, the organising committee for the Olympics and the Paralympics (a few weeks later), will spend GBP2 billion on producing the show, raising about a third of it from the International Olympic Committee and the rest from sponsorship, tickets, merchandise and other bits and pieces. Once the games end, still more will be spent on turning the Olympic Park into a place for people to live, work and play. ...

Olympic legacies: Show's over

Thu, 22 Jul 2010 11:21:19 GMT

When the circus leaves town

THESE days any city or country hoping to stage a big sporting festival, especially the Olympic games and the football World Cup, trumpets the “legacy” that the event will leave. The lasting benefits of such mammoth theatricals, however, are often questionable.

Barcelona, host of the summer games in 1992, is often cited as the act to follow. The athletes’ village was build on derelict land near the waterfront, opening the city to the sea. The games were part of a successful, longer-term regeneration. ...

Schumpeter: In search of serendipity

Thu, 22 Jul 2010 11:21:19 GMT

Success in business increasingly depends on chance encounters

EVERY year, hordes of free spirits gather in the Nevada desert to “breathe art”, feel at one with the cosmos and sample the delights of Bianca’s Smut Shack. The Burning Man festival is radically anti-capitalist, with a strict ban on commerce and an emphasis on “self-reliance”. In short, it is not the sort of place you would associate with corporate schmoozing.

But you would be wrong, argue John Hagel, John Seely Brown and Lang Davison. Their new book, “The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things In Motion”, celebrates unconventional networkers such as Yossi Vardi, the 68-year-old “grandfather” of Israeli venture capital. Mr Vardi attends or hosts some 40 pow-wows a year, including Burning Man. (It’s about art, sex and drugs, he muses, but “I was only involved in art.”) According to “The Power of Pull”, Mr Vardi is a “super-node”, one of the best-connected people in the high-tech industry. More than that, he is a role model: he excels in “managing serendipity”. His avid conference-going, for example, is not just for fun. By mingling with so many strangers, he finds that he often bumps into people who give him valuable information. ...

Selling luxury goods online: The chic learn to click

Thu, 22 Jul 2010 11:21:19 GMT

Luxury firms are digital laggards, but some are catching up

WHEN Oscar de la Renta, an American fashion house, launched a transactional website some years ago, it expected people to buy mostly smaller items such as belts and perfume. The firm was stunned when it received an online order last spring for an $80,000 sable coat from a new customer in New Hampshire. He couldn’t get to New York, apparently. Online customers have been snapping up the firm’s core product: $4,000 cocktail dresses. “We could not have been more wrong in our expectations of the internet,” says Alex Bolen, the firm’s chief executive. Online purchases are still a small proportion of total sales, but growing rapidly.

Most luxury-goods firms are less open-minded. Many scorn the internet as a plaything for plebs. A product sold online, wrote Jean-Noel Kapferer, a French branding guru, in “The Luxury Strategy”, published last year, ceases to be a luxury item. In early 2008, of 178 luxury firms around the world surveyed by Forrester Research, only a third sold their products on the internet. That figure has risen, but still about half of firms don’t sell online at all, estimates Federico Marchetti, the founder of Yoox Group, owner of Yoox.com, a luxury-goods website. ...

Media's analogue holdouts: Digitisation and its discontents

Thu, 22 Jul 2010 11:21:19 GMT

Why some media outfits still refuse to go online

WHAT do the Beatles, Harry Potter, Bella magazine and the grizzled crew of the Northwestern, an Alaskan crab-fishing boat, have in common? They are scarcely available digitally. Whereas most media firms scramble to create iPad applications or fret about whether to chase online advertisers or build paywalls, a few digital resisters refuse to distribute over the internet at all.

They have some good reasons. Online advertising is worth much less than television or print advertising. It is hard to persuade people to pay much (if anything) for digital content. Technology firms such as Amazon and Apple can often set retail prices. Digital products can be less beautiful than physical ones. ...

BP and the gulf: After the leak

Thu, 22 Jul 2010 11:21:19 GMT

The gusher in the gulf may soon be sealed. BP’s woes will be harder to cap

ON JULY 15th a 75-tonne cap closed off the Macondo well at the bottom of the Gulf of Mexico. The flow of oil ceased, for the first time in the three months since a blowout in the well doomed the rig which had drilled it, Deepwater Horizon. The cap is not necessarily permanent. It sits there at the government’s pleasure, and the administration is giving BP, the well’s operator, permission to keep it in place only one day at a time. But the chances of BP going on to seal the well permanently by mid-August, with little or no oil seeping out in the meantime, look good.

This may not mark a turning-point in BP’s fortunes: it still faces payouts of tens of billions of dollars, and reports and inquiries that could damage its reputation and finances yet further. But it will make it clearer that the company’s wounds are unlikely to be fatal. ...

Hospital mergers: The war of the wards

Thu, 22 Jul 2010 11:21:19 GMT

Investors are eyeing up hospitals around the world

AT FIRST glance, hospitals seem an unattractive business. They are heavily regulated and often run by governments or charities. Doctors wield immense power. Patients have high and rising expectations. Rapid advances in medical technology drive costs relentlessly upwards even as governments try harder to restrain spending on health.

And yet, consider the flurry of deals of late. On July 19th TPG and the Carlyle Group, two American private-equity firms, won a takeover battle for Healthscope, an Australian hospital chain, with a bid of $1.7 billion. In doing so, they edged out a bid by Kohlberg Kravis Roberts (KKR), another big American private-equity firm. Healthscope is Australia’s second-biggest private hospital firm, but it also has operations in New Zealand and south-east Asia. ...

Lawyers and your money: Curbing those long, lucrative hours

Thu, 22 Jul 2010 11:21:19 GMT

The billable hour is not dead, but many people would like to kill it

LAWYERS hate keeping track of their billable hours. Clients hate them even more; each month they receive bills showing that their legal representatives have worked improbably long hours at incredibly high rates. Billing by the hour often fails to align lawyers’ interests with their clients’. The chap in the wig or the white shoes has an incentive to spin things out for as long as possible. His client would rather win quickly and go home. Since there is clearly a demand for an alternative to the billable hour, you would expect someone to supply it. And indeed, this is starting to happen.

Many legal tasks, although not quite easy, are variations on a theme. The production of a certain document (such as a trademark registration) does not differ vastly from one instance to another. So more firms are using “document assembly” software such as that made by Basha Systems; Seth Roland, the company’s founder, says that his company’s software reduced the time needed to put together a certain type of real-estate lease from 40 hours to one. Automating the automatable stuff allows lawyers to spend more time talking to the client. Everyone wins (including Basha, which Mr Roland says has grown by between 15% and 20% a year for more than a decade). ...

Economics focus: Agents of change

Thu, 22 Jul 2010 11:21:19 GMT

Conventional economic models failed to foresee the financial crisis. Could agent-based modelling do better?

MAINSTREAM economics has always had its dissidents. But the discipline’s failure to predict the financial crisis has made the ground especially fertile for a rethink.

Critics tend to agree on what is wrong with current macroeconomic forecasting. A hearing of the House of Representatives Committee of Science and Technology on July 20th targeted the “dynamic stochastic general equilibrium” (DSGE) models used by the Federal Reserve and other central banks. The hearing aimed to “question the wisdom of relying for national economic policy on a single, specific model when alternatives are available.” The Institute for New Economic Thinking in New York, which had its inaugural conference in April, has attacked many of the assumptions, including efficient financial markets and rational expectations, on which these models are predicated. These assumptions were clearly too simplistic. But there is less agreement on what should replace the old ways. ...

Fannie Mae and Freddie Mac: Unfinished business

Thu, 22 Jul 2010 11:21:19 GMT

Can the American mortgage market survive without taxpayer support?

THE hefty financial overhaul that Barack Obama signed into law on July 21st (pictured) left behind one big piece of unfinished business. In 2008 Fannie Mae and Freddie Mac, mortally wounded from losses on loans acquired during the bubble, were placed in “conservatorship”, a halfway house between bankruptcy and outright nationalisation. There they remain, their losses duly covered with new injections of capital by the Treasury—$145 billion so far. Tim Geithner, the treasury secretary, has promised to address the matter of Fannie and Freddie by early next year but so far he has no answers, only questions (literally so: in April he asked the public to comment on seven of them).

The hesitancy is understandable. Millstones though they are, the two firms remain critical to the economy. In the first quarter they and Ginnie Mae (which unlike Fannie and Freddie has always enjoyed the explicit backing of the state) guaranteed 96.5% of all newly originated mortgages, according to Inside Mortgage Finance, a newsletter. ...

American bank results: Surviving, not thriving

Thu, 22 Jul 2010 11:21:19 GMT

Banks’ bad debts are shrinking but so too are revenues

“PEOPLE may look back at this quarter as essentially the first earnings period of the post-crisis era” for American banks, says Michael Poulos of Oliver Wyman, a consultancy. The comment is intentionally double-edged.

The good news is that loan losses are easing. At JPMorgan Chase second-quarter charge-offs (of loans viewed as beyond repair) fell by 28% compared with the previous quarter, for instance. That allowed the banks to release some of the reserves set aside to cover dud loans. However, this will provide only a temporary pop to earnings. Although the worst is over, many of the forces helping banks in the boom times—such as falling interest rates and buoyant employment—are gone for years. ...

Buttonwood: Losing confidence

Thu, 22 Jul 2010 11:21:19 GMT

Looking at the dollar in the old-fashioned way

WHEN the Bretton Woods system was cracking in the early 1970s the price of a troy ounce of gold, in dollar terms, was raised in two steps from $35 to $42.22. This was, in effect, a devaluation of the dollar.

The authorities then still thought it worth expressing the shift in terms of bullion, rather than against another currency like the Japanese yen or French franc. In the 1930s Franklin Roosevelt had a specific policy of devaluing the dollar against gold, pushing the price from $20.67 to $35 in the belief this would push commodity prices (and thus farm incomes) higher and reduce the burden of debt service. ...

Banking and IT: Computer says no

Thu, 22 Jul 2010 11:21:19 GMT

Big banks need IT reform almost as badly as regulatory change

WHEN Metro Bank, which claims to be Britain’s first new high-street bank for more than 150 years, opens its first branch on July 29th in inner London, customers will notice the lollipop jars and water bowls for dogs. But what really sets Metro Bank apart is its state-of-the-art IT system. New customers will be able to get their account, chequebook, debit and credit cards within 15 minutes, and all the data for each customer will be kept in one place.

That puts Metro Bank in an enviable position. IT at many other Western banks is often a hotch-potch of homemade systems. Banks were the first to use mainframes in the 1960s; many are still using the original applications because it is risky to swap them out. Over the years more and more systems have been slapped on. Banks were often profitable enough to afford big IT teams, writing programs themselves rather than buying off the shelf. ...

China's financial markets: Premium puzzle

Thu, 22 Jul 2010 11:21:19 GMT

Enthusiasm for Chinese companies abroad but not at home

OF THE many oddities surrounding Chinese stockmarkets, the most glaring has long been the premium mainland investors pay for shares listed domestically over what those same shares trade for in Hong Kong. Now the puzzle is why the premium has disappeared (see chart).

The usual explanation for the existence of the premium ran as follows. A closed capital account and a tightly run financial system left Chinese investors with only three places to put their money: property, with its high transaction costs and manic price moves; bank deposits, offering diminutive interest; or shares, with price moves as big as property but lower dealing costs. That paucity of choices drove shares higher than in places with more options. ...

Burgernomics: When the chips are down

Thu, 22 Jul 2010 11:21:19 GMT

The latest Big Mac index suggests the euro is still overvalued

Correction to this article

ASK Western policymakers how they intend to squeeze growth from their sluggish economies and most pin their hopes on higher exports. That makes exchange rates an especially sensitive topic. A weaker currency improves the competitiveness of a country by making exports cheaper. It also encourages domestic consumers to switch from expensive imports to domestic goods. The Economist’s exchange-rate scorecard, the Big Mac index, shows that currencies continue to be cheap in the developing world but overvalued in Europe. ...

The science of human sound: We've got rhythm

Thu, 22 Jul 2010 11:21:19 GMT

Scientists may have found a better way to identify voices

THESE days a lot of crime is planned, executed, and sometimes gloated over, via the medium of the mobile phone. So a new field of forensic phonetics has arisen, which tries to identify people from their voices. But the technology is fallible and criminals often have the last, unidentifiable, laugh. But the International Crime Science Conference, held recently in London, heard that better techniques are on the way.

Voices acquire idiosyncratic features from a number of sources such as parents, co-workers and school friends. Accents and vocal mannerisms can help identify a person but these can also be disguised. Something that is harder to cover up is the stamp that the anatomy of a person’s vocal tract leaves. The smaller the larynx, for example, the higher the frequency at which the vocal cords vibrate, and the higher-pitched the voice. ...

The XVIII International AIDS Society meeting: Waltzing with death

Thu, 22 Jul 2010 11:21:19 GMT

AIDS still kills 2m people a year. But the rate of new infections is falling and it is possible to imagine bringing the disease under control

TEN years ago, when the International AIDS Society (IAS) met in Durban, there was a lot of fractious debate between those who wanted to spend money on treating the sick and those who thought that stopping the epidemic was more important. It took another six years to realise that you might be able to do both. Suppressing the virus in someone’s body clearly saves his life, but it ought also to make him less likely to pass on infection. The latest evidence that this might be true was released at this year’s IAS meeting, held in Vienna on July 18th-23rd.

The meeting brought news of another long-sought breakthrough: a vaginal microbicide that will allow women to protect themselves from men who do not wear condoms. There was also much hand-wringing about money, as governments and taxpayers in rich countries feel the pinch. But even here there was a refreshing honesty, as the international agencies charged with combating the disease queued up to suggest ways of doing more with less. That businesslike approach was apparent, too, in discussions over focusing treatment on those who are most at risk. ...

The da Vinci method: Shadow strokes

Thu, 22 Jul 2010 11:21:19 GMT

Scientists at the Louvre have discovered the secret to the Mona Lisa’s face

THE Mona Lisa’s lure is so strong that Louvre Museum officials find it wise to keep her safely stowed behind bulletproof glass. She is let out of her protective cage once a year, for a whiff of fresh air. And this is when many a researcher would love to get their hands on Leonardo da Vinci’s most famous muse, in order to find out more about how she was painted.

For a long time, scientists and curators have wondered how da Vinci created shadows on her face with seemingly no brushstrokes or contours. Art experts call this shadowing technique sfumato—like the Italian word for smoke, fumo. Experts have long suspected sfumato shadowing has something to do with the glazes that da Vinci used above the paint layer. But proving this has been difficult because snatching a sample of the Mona Lisa’s face for chemical analysis is, unsurprisingly, frowned upon. ...

Funding for nuclear fusion: Expensive Iteration

Thu, 22 Jul 2010 11:21:19 GMT

A huge international fusion-reactor project faces funding difficulties

VIABLE nuclear fusion has been only 30 years away since the idea was first mooted in the 1950s. Its latest three-decade incarnation is ITER, a joint effort by the European Union (EU), America, China, India, Japan, Russia and South Korea to construct a prototype reactor on a site in Cadarache, France, by 2018. If all goes to plan, in about 30 years it will be reliably producing more energy than is put in.

The International Thermonuclear Experimental Reactor became plain ITER following public anxiety about anything that has “thermonuclear” next to “experimental” in its name. ITER aims to produce energy by fusing together the nuclei of hydrogen atoms, confined in a magnetic field at high temperatures—a process akin to that which powers the sun. ...

Mau Piailug

Thu, 22 Jul 2010 11:21:19 GMT

Pius Mau Piailug, master navigator, died on July 12th, aged 78

IN THE spring of 1976 Mau Piailug offered to sail a boat from Hawaii to Tahiti. The expedition, covering 2,500 miles, was organised by the Polynesian Voyaging Society to see if ancient seafarers could have gone that way, through open ocean. The boat was beautiful, a double-hulled canoe named Hokule’a, or “Star of Gladness” (Arcturus to Western science). But there was no one to captain her. At that time, Mau was the only man who knew the ancient Polynesian art of sailing by the stars, the feel of the wind and the look of the sea. So he stepped forward.

As a Micronesian he did not know the waters or the winds round Tahiti, far south-east. But he had an image of Tahiti in his head. He knew that if he aimed for that image, he would not get lost. And he never did. More than 2,000 miles out, a flock of small white terns skimmed past the Hokule’a heading for the still invisible Mataiva Atoll, next to Tahiti. Mau knew then that the voyage was almost over. ...