The Economist: News analysis

Retailing in America: Ghosts of Christmas past

Sat, 05 Dec 2009 09:46:40 GMT

America’s holiday shopping season will bring little yuletide cheer to ailing retailers

THINGS had begun to look better. In October, after a bad year for the industry, retail sales began to show signs of improvement, exceeding forecasts and rising 1.4% compared with the previous year. Even one of the most battered retailers, Saks, a luxury department store, announced a small profit for the year to the end of October. This spurred cautious hope of a revival for retailers. Much was pinned on holiday season shopping.

News of November sales, delivered on Thursday December 3rd, dampened any holiday cheer. Sales were up by only 0.7% in November in comparable shops compared to the previous year according to Retail Metrics, a research firm. Sales at Saks and Abercrombie & Fitch, a clothes retailer, were down by 26% and 17% respectively. Even discount stores, such as Target, did not live up to analysts’ forecasts. ...

Climate change e-mails: Reply all

Fri, 04 Dec 2009 17:00:54 GMT

A row over climate change e-mails grows louder

AS POLITICIANS, policy wonks, businessmen, NGO types, hacks and hangers-on converge in Copenhagen for the forthcoming climate conference, a row over a set of e-mails from a previously obscure part of Britain's University of East Anglia is becoming ever louder, if no more illuminating. Two weeks ago e-mails and other documents that had been leaked or hacked from the university's Climatic Research Unit (CRU) were sent to various websites. Those with a longstanding opposition to action on climate change, from bloggers to members of the American Senate to the Saudi government, are touting the e-mails as a resource with which to derail the Copenhagen talks.

CRU's researchers use various techniques to reconstruct the temperatures of times past. Some of the reconstructions they have been party to have long been the subject of technical criticism, sometimes in peer-reviewed literature, more frequently on blogs, notably Climate Audit, an award-winning blog by Stephen McIntyre. The critics have made many attempts to get CRU to distribute the raw data and computer codes which its scientists work on. The e-mails and other documents read as though the researchers were obstructive in dealing with some of these requests, that some of the data they used were in poor shape, that they may have indulged in spin when presenting some results and that they really did not care for their critics. ...

This week's top stories [04 December 2009]

Fri, 04 Dec 2009 15:03:26 GMT

Our top articles ranked by reader popularity.

This week's top stories [04 December 2009]

Fri, 04 Dec 2009 14:01:02 GMT

Our top articles ranked by reader popularity.

Unemployment in America: A glimmer

Fri, 04 Dec 2009 12:04:56 GMT

The unemployment rate falls slightly in America

THE American economy has been shedding jobs for nearly two years, but now comes a sign that the gloom could eventually lift. The Bureau of Labour Statistics released new data on payroll employment on Friday December 4th, and across the board the numbers came in better than had been expected.

Some 11,000 jobs were lost in November, the smallest total since the recession began late in 2007. And despite the continued job losses, the overall unemployment rate fell from 10.2% to 10.0%. So, too, did broader measures of unemployment which include marginally attached workers and those who work only part time (for economic reasons). The total number of hours worked ticked up, as did earnings. The statisticians also sharply revised down previously reported job losses for the months of September and October. ...

Bank of America: Ken’s last act

Thu, 03 Dec 2009 06:53:47 GMT

Bank of America makes a surprise escape from government clutches

YOU can almost hear the gritting of those perfect teeth. In a statement on Wednesday December 2nd announcing Bank of America’s intention to repay $45 billion in government money, Ken Lewis, the outgoing chief executive, thanked the authorities for their role in stabilising the financial system last autumn. He will be less appreciative in private.

Alleged arm-twisting by the government pushed BofA to consummate its acquisition of Merrill Lynch, despite misgivings over Merrill’s mounting losses. Lawsuits, probes and recriminations followed. Mr Lewis was stripped of the chairmanship of the bank in April and abruptly announced his retirement in September. Rising write-offs forced BofA to take a second tranche of capital from the Troubled Asset Relief Programme (TARP), putting it under the thumb of Kenneth Feinberg, America’s pay tsar. The threat of constant government meddling and constraints on compensation have complicated the board’s search for a successor to Mr Lewis. ...

General Motors: Fritzkrieg

Wed, 02 Dec 2009 13:23:20 GMT

General Motors has ditched its chief executive after just eight months on the job

FRITZ Henderson was due to deliver a speech at the Los Angeles Motor Show on Wednesday December 2nd, to give an update on General Motors’ progress since its spell in bankruptcy this summer. Instead his place had to be taken by Bob Lutz, a former GM executive in his late 70s but recently recalled from retirement to supervise the company’s marketing. The silver-haired showman tried to talk up GM’s prospects, but what his audience really wanted to know was why it had suddenly lost its second boss this year.

The short answer is that GM’s independent directors had decided that Mr Henderson, who had spent almost his entire career at the firm, was not the man to get it out of the mire it had sunk into over the decades. Both Ford and Chrysler, GM’s two big American rivals, have installed outsiders to lead dramatic overhauls. Moreover, GM’s new chairman, Edward Whitacre—put there by the government, which now owns a majority stake in the firm—has his own ideas about the way forward, and has taken over as interim chief executive. ...

The Afghan surge: Obama's war

Wed, 02 Dec 2009 05:37:47 GMT

The American president’s new plan for Afghanistan is roughly what the generals ordered

AMERICA will win in Afghanistan, said Barack Obama on December 1st. He told an audience at West Point, a military academy, “our cause is just, our resolve unwavering. We will go forward with the confidence that right makes might”. Yet he made it clear that his patience is limited. At a time when many Americans are out of work and struggling to pay the bills, he promised that “America has no interest in fighting an endless war in Afghanistan.”

President Obama outlined a three-pronged strategy for “disrupting, dismantling, and defeating” al-Qaeda and the “ruthless, repressive and radical” Taliban. The first prong will be a military surge. He promised to send 30,000 more troops early next year, to join the 68,000 Americans and 39,000 other NATO forces already in Afghanistan. NATO allies will also send reinforcements. This is about 10,000 less than requested by his commander in Afghanistan, General Stanley McChrystal, but some of the difference will be made up by greater contributions from NATO allies. The new force will be large enough to seize back the initiative from the Taliban, he predicted, by killing insurgents and protecting population centres. ...

Battling deflation in Japan: Feeling deflated

Tue, 01 Dec 2009 10:08:22 GMT

Japan’s central bank takes an overdue swipe at an old foe

THE Bank of Japan (BoJ) must feel as if it has a bad case of deja vu. Three years after the central bank thought it had ended deflation, it has returned. And to fight it, the bank has had to resurrect a policy tool it tried to bury long ago—quantitative easing. If that is not bad enough, the BoJ once again has to deal with a government breathing hotly down its neck.

The BoJ’s discomfort explains why, on Tuesday December 1st, it made what analysts considered to be a half-hearted attempt to reflate the Japanese economy and weaken the yen. What the bank did was better than nothing, but it did not go as far as some had hoped—nor as far as Japan needs. ...

Kosovo and Serbia: A legal separation?

Tue, 01 Dec 2009 07:32:21 GMT

Kosovo’s independence from Serbia is scrutinised in the international court

SAY “Battle of Kosovo” and those who live in the Balkans will instantly recall Serbia’s defeat at the hands of the Ottoman Turks in 1389. So it is clearly no accident that Serbia’s leaders have taken to talking about a new “diplomatic” battle of Kosovo. That fight moved to the UN’s International Court of Justice in The Hague on Tuesday December 1st, which has begun hearing submissions on whether Kosovo’s declaration of independence from Serbia in February 2008 was legal or not.

What the 15 judges have to say will be of keen interest from Catalonia to Tibet and indeed wherever the argument about a people’s right to self-determination appears to clash with a state’s right to preserve its territorial integrity. ...

After Dubai: A financial sandstorm

Mon, 30 Nov 2009 11:12:39 GMT

The global consequences of Dubai's debt problems

FOR years, Dubai strove to capture the imagination of the financial world, projecting its young financial centre as a “global gateway” for capital. Last week it succeeded in grabbing attention. Its announcement that it would delay repayment of the debts of Dubai World, a vast government-owned conglomerate, swept through global markets like one of the blinding sandstorms that occasionally afflict the emirate, obscuring the gleam of its skyscrapers.

Like those storms, Dubai’s announcement was so damaging because it reduced visibility. Investors had assumed that the Dubai government was willing to rescue the indebted conglomerates it sponsors, and that Abu Dhabi, its well-heeled neighbouring emirate, was willing, in turn, to rescue Dubai. In particular, they had looked forward to the full and timely repayment of a $3.5 billion Islamic bond issued by Nakheel, a Dubai World subsidiary, on December 14th. ...

Elections in Honduras: Lucky Lobo

Mon, 30 Nov 2009 06:13:09 GMT

Has a successful presidential election in Honduras helped to legitimise a military coup?

THE members of a conservative coalition behind the toppling of Manuel Zelaya as president of Honduras, on June 28th, have since been betting that presidential elections would serve to legitimise their military coup. Despite intense pressure from abroad, the de facto regime that has been running the country in recent months was convinced that foreign leaders would in the end refuse to punish a successor government for earlier sins. The test came on Sunday November 29th with the completion of a relatively peaceful vote, which the centre-right candidate Porfirio Lobo Sosa won comfortably. To the great chagrin of observers across the hemisphere, it seems the result will be respected and the strategy of the coup-plotters will be rewarded.

Local human-rights groups insist that a free and fair election was impossible in the current situation. They point to a series of abuses ahead of the vote: intermittent suspension of anti-coup media outlets, suppression of large opposition rallies and the declaration of a state of siege shortly before the polls opened. Moreover, the self-described “resistance” movement appeared to have the de facto president, Roberto Micheletti, in a bind. By calling for massive protests on election day, they would either discourage many prospective voters from turning out, or force him to disperse them by force in front of international observers. ...

The coming days: The week ahead

Sun, 29 Nov 2009 06:31:02 GMT

Barack Obama announces his strategy for Afghanistan, and other news

• AFTER lengthy deliberations, Barack Obama will announce whether he is sending more American soldiers to Afghanistan on Tuesday December 1st. He is expected to announce a “surge” of as many as 35,000 extra soldiers. He will try to persuade an increasingly weary American public that an expansion of forces in Afghanistan is the best hope for creating conditions to allow eventual withdrawal. Although he is unlikely to commit to a timetable for getting out of Afghanistan, Mr Obama will make it clear that America’s commitment is not open-ended. See article

• AMERICA’S Senate will start debate on a health-care bill on Monday November 30th, with the Democratic leadership keen to pass it before Christmas. Many Republicans and some Democrats have made it clear that they do not like parts of the bill as crafted, and intend to offer difficult amendments. If the bill were to pass, it would then need to be reconciled with a version recently passed by the House, before Barack Obama could sign it. See article ...

This week's top stories [27 November 2009]

Fri, 27 Nov 2009 14:00:34 GMT

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Japan's appreciating currency: Time for action

Fri, 27 Nov 2009 09:29:29 GMT

As the yen soars, the need for intervention grows

AFTER taking office in September, Hirohisa Fujii, Japan’s finance minister, widely let it be known that he was happy with a strong yen. But he had not anticipated that the currency would so soon become a bolt hole for panicky investors fleeing turmoil in world financial markets.

Fears of a renewed bout of financial turbulence caused by Dubai World’s debt standstill this week drove the yen to a 14-year high against the dollar on Friday November 27th, its strength exacerbated by thinly traded markets because of America’s Thanksgiving holiday. The rally, which coincided with a slump in Japanese and other Asian stockmarkets, as well as a decline in most of the other widely traded currencies, forced Japan’s new government to convene to discuss its impact on the economy and, possibly, to reconsider its non-intervention line. ...

India and Pakistan: Seeking justice

Wed, 25 Nov 2009 13:54:47 GMT

Pakistan charges seven over the Mumbai terrorist attack. Ties with India may improve

ALMOST a year to the day after a spectacular three-day assault by Pakistani terrorists on the Indian city of Mumbai, in which at least 170 people were killed, a court in Pakistan has charged seven men with organising it. The announcement of the prosecution on Wednesday November 25th appears to represent a hopeful step in relations between Pakistan and its old rival India. India withdrew from a promising four-year diplomatic peace process after the Mumbai attack and, in July, its prime minister, Manmohan Singh, reiterated that talks would not restart until suspects within Pakistan were brought to justice.

Thus the trial is an important test of Pakistan’s promises to punish those thought to be responsible for the carnage of November 26th 2008 (dubbed as “26/11” in India). The arrested men have all, reportedly, pleaded not guilty. They are accused of training and equipping the heavily armed gunmen who opened fire in Mumbai at the swanky Taj hotel, a train station, a hospital, a Jewish centre and a cafe popular with foreigners. Those charged include Zaki-ur-Rehman Lakhvi, the alleged mastermind of the plot. Nine others have been charged in absentia. ...

Bing and online newspapers: Web-wide war

Wed, 25 Nov 2009 06:26:25 GMT

Microsoft opens a new front in its battle with Google

EVEN technology pundits can sometimes be right. Jason Calacanis, an entrepreneur and noted agent provocateur, recently argued that there is a simple solution to the woes of both Microsoft and big media companies. The world’s largest software firm should pay Time Warner, News Corporation and others firms to block Google, the search giant, from indexing their content—and make it searchable exclusively through Bing, Microsoft’s new search service. Media companies would thus get badly needed cash and Bing a chance to gain market share from Google.

This week it emerged that Microsoft and News Corp are talking about just that. Although the discussions may come to naught, or prove a mere ploy in the media firm’s ongoing negotiations with Google, the news caused a stir. It is a sign not only of how far Microsoft is willing to go in order to turn Bing into a serious rival to Google, but also of how the entire internet could well evolve. ...

AIDS: Turning the screw some more

Tue, 24 Nov 2009 07:56:04 GMT

A UN report suggests that striking progress is being made in the fight against AIDS

ALL epidemics run their course. AIDS will be no exception. But concerted action can give them a helping hand to the finish line, and the latest report from the World Health Organisation and UNAIDS, the two United Nations agencies charged with tackling the epidemic, claims that is what is happening.

The most important figure in the report, which was published on Tuesday November 24th, is 17%. This is the estimated drop in the annual number of new infections compared with 2001, the year that the United Nations Declaration of Commitment on HIV/AIDS was signed. The biggest proportionate fall, 25%, has been in East Asia. In sub-Saharan Africa, where the disease is most rampant, the decline is estimated at 15%. That corresponds to 400,000 fewer African infections in 2008 than in 2001, though 1.9m Africans are still becoming infected each year. ...

US health-care reform: Proceed with caution

Mon, 23 Nov 2009 06:14:53 GMT

A health-care reform bill gets to the floor of the Senate. A rowdy debate will follow

DEMOCRATS in the Senate defeated a Republican attempt to block their health-care bill on Saturday November 21st, just days after Harry Reid, the Senate majority leader, unveiled the long-awaited legislation, which amalgamates proposals from various Senate committees. Republicans tried, with a filibuster, to stop the measure from even proceeding to the floor, providing an early test of Democratic resolve. To get the 60 votes he needed, Mr Reid had to cajole three wavering Democrats—Mary Landrieu of Louisiana, Blanche Lincoln of Arkansas and Ben Nelson of Nebraska—and their support came at a price. Republicans are calling an extra $100m doled out in federal money for Ms Landrieu's state “the Louisiana purchase”. All three have since pointed out that a final “yea” is far from certain.

The Senate bill is similar in scope to the measure passed by the House of Representatives on November 7th, although there are differences. The Senate bill, for instance, relies much more on expanding Medicaid, the system of provision for the poor. As in the House, the Senate legislation creates insurance “exchanges” and a government-run insurance scheme that would compete with private plans, but it allows for states to opt out. Ms Landrieu and others would like to go further and adopt a “trigger” that would implement a public plan in five years, but only if private plans are no more affordable by then. Joe Lieberman, an independent Democrat, has insisted he will vote against any final bill that contains a public option “as a matter of conscience”. ...

The coming days: The week ahead

Sun, 22 Nov 2009 11:34:15 GMT

Retailers hope that Thanksgiving will mark the start of an intense festive shopping season

• AFTER the frugality of the economic slump, America's retailers are hoping for a stampede of eager shoppers on “Black Friday”, a traditional day of buying frenzy after the Thanksgiving holiday on Thursday November 26th. Sales figures should give some indication of consumers’ confidence in the tentative economic recovery on one of America's busiest days for retailers, which marks the beginning of the Christmas shopping season. Will consumers forget about the recent recession or will they stay away, hoping to pick up better bargains on the internet on “cyber Monday” after window shopping over the weekend? See article

• A DEAL to exchange hundreds of Palestinian prisoners in Israel for Gilad Shalit, an Israeli soldier held captive in the Gaza strip may be concluded soon. German intermediaries have been attempting to hammer out a deal between Israel and Hamas that would see Mr Shalit, captured in a raid on an Israeli border post in 2006, win his freedom. In early October, 20 Palestinian women were freed from Israeli jails in return for a video proving that Mr Shalit was still alive. Some sources suggest that Mr Shalit could be released by Friday November 27th to coincide with Eid al-Adha an important Muslim festival that marks the end of the haj, the annual pilgrimage to Mecca. See article ...

This week's top stories [20 November 2009]

Fri, 20 Nov 2009 14:00:36 GMT

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Japan’s ailing economy: The other D-word

Fri, 20 Nov 2009 11:12:53 GMT

Is Japan back in a deflationary trap?

WHILE investors have been fretting recently about Japan’s huge debt, another of the dreaded D-words has come back to haunt them. On Friday November 20th, Japan’s Cabinet Office issued a monthly report that for the first time since 2006 acknowledged that the country was suffering from deflation.

Consumer prices have actually been falling for months, but the pace of decline accelerated over the summer. In September prices slumped by 2.2% compared with a year earlier. This is partly because the country is still loaded with excess capacity after the collapse in exports during the global financial crisis, and partly because oil prices were lower in September than in the same month last year. But there are more structural problems, too. As Japan’s population declines, for instance, retailers are being forced to cut prices to gain market share. ...

The EU presidency: Name a famous Belgian

Thu, 19 Nov 2009 18:17:24 GMT

Two minor but competent figures will be president and high representative of the EU

A MAN who has been Belgian prime minister for less than a year and a British technocrat who has never held elected office were chosen by European Union leaders on Thursday November 19th to represent their 27 countries around the world, and lead their policymaking at the highest level. It seems odd to appoint people as little-known as Herman Van Rompuy and Catherine Ashton to such big jobs.

For nearly a decade, EU politicians have been wrangling about a new rule book, calling for Europe to equip itself with leadership posts that would help their club to stride the world stage. Yet by the time national leaders arrived at a Brussels summit to fill the new posts of president of the European Council and EU foreign-policy chief, or high representative, their boasts and ambition were a sad memory. ...

Israel's settlement policy: Settling for less

Thu, 19 Nov 2009 10:57:32 GMT

The latest row over Israeli settlements in Palestinian territory

BINYAMIN NETANYAHU, Israel’s prime minister, came under pressure this week when news leaked of a new plan to build 900 homes in the occupied Jerusalem suburb of Gilo. His aides say that he knew nothing about the scheme before a local planning committee considered it.

True or not, the latest settlement expansion is exasperating for those who have been involved, for several months, in negotiations between the United States and Israel. Mr Netanyahu’s colleagues are bristling that previous efforts to prevent new building will now be forgotten. George Mitchell, America’s special envoy to the region, has been in talks with Mr Netanyahu over settlement building and the need to find ways to assuage Palestinian resentment of it (or even to find ways to freeze or stop it). These, so far, have proved fruitless, although Mr Netanyahu did meet Barack Obama in the White House two weeks ago for what he had hoped would be a tension-easing conversation. ...

Afghanistan’s anti-corruption drive: Taming the mafia state

Thu, 19 Nov 2009 05:57:14 GMT

Anti-graft pressure mounts in Afghanistan, as Hamid Karzai is again sworn in as president

IT WAS no secret what the world wanted to hear from Hamid Karzai when Afghanistan’s president was sworn in for a second term on Thursday November 19th: a commitment to get tough on corruption. Visiting Kabul for the inauguration, Hillary Clinton, America’s secretary of state, said Mr Karzai had a “window of opportunity” to show tangible results. American officials say he has just six months to tackle what one calls “Afghanistan’s mafia state”.

In his inauguration speech, he said ministers in his administration must be “competent and just”. But heeding Western concerns about their behaviour does not come naturally to Mr Karzai. He has been in a combative mood since the West’s much-resented demand that he accept that his re-election was marred by massive vote-rigging. In a recent American television interview he batted back questions about corruption in his government with his oft-repeated line that foreign donors must clean their own act up and stop development funds from being wasted. Such wastage, however, is at least lawful, unlike the Afghan government’s practice of selling jobs to officials who then repay themselves through extortion. Nor is it akin to the impunity the well-connected enjoy. ...