The Economist: Daily news and views

The week ahead

Sun, 08 Nov 2009 03:07:06 GMT

Barack Obama travels to Asia, taking in visits to Japan and China

• BARACK OBAMA begins a trip to Asia on Thursday November 12th. A visit to Japan could prove to be frosty, even though the country is America's most important ally in the region, as the newly elected government has seemed unwilling to back American foreign policy, for example in Afghanistan. Mr Obama will also attend a summit of leaders from the Asia-Pacific region, the part of the world demonstrating the most robust economic growth. Most notable, the American president will spend four days in China, where talks may focus on international efforts to curb carbon emissions in the hope of limiting global climate change. Economic relations, in particular American concern about the weakness of the yuan, may also be discussed.

• CELEBRATIONS will be held in Germany, and elsewhere, on Monday November 9th to mark the 20th anniversary of the fall of the Berlin Wall. Despite current economic difficulties in the region, opinion polls suggest that the populations in eastern and central European countries that had previously been subject to Soviet style rule remain resolutely committed to liberal democracy and capitalism. See article ...

China syndrome

Sat, 07 Nov 2009 10:11:18 GMT

London’s Asian art festival is full of surprises

ASIAN Art in London—the city’s week-long late-autumn flowering of dealers’ shows and daily auctions, which ended on November 7th—was characterised by some beautiful exhibitions, an unprecedented flood of Chinese visitors and an assortment of auction sales that included some lots that went through the roof, others that failed utterly and a few notable pieces that were withdrawn on suspicion that they may have been fakes.

Christie’s had the hardest time of it. Despite the bullish market for Chinese ceramics and fine art, 104 of the 319 lots offered in its November 3rd auction failed to sell, suggesting that buyers, even those who have travelled far, are quick to punish sellers who are too greedy or cataloguers who are too enthusiastic in their assessments. Gilt-bronze figures were cast aside willy-nilly, as was a consignment of bronze plaques and, perhaps more surprisingly given their popularity, a number of jade animals and figures. ...

After the horror at home

Sat, 07 Nov 2009 06:00:32 GMT

Is there any lesson to be drawn from the shootings at Fort Hood?

FORT HOOD is one of the largest army bases in America, sprawling over more than 300 square miles (some 780 square kilometres) of nondescript central Texas grassland between Austin and Waco. It is home to more than 50,000 active-duty soldiers, many of whom pass through on their way to Iraq or Afghanistan. One of their errands before deploying is to stop at the Soldier Readiness Processing Centre for last-minute medical and dental checks. It was here, on Thursday November 5th, that soldiers preparing for and returning from war encountered a tragedy no one expected.

Early in the afternoon a major, Nidal Malik Hasan, who worked as an army psychiatrist, walked into the centre and opened fire with two weapons. He shot dozens of people before Kimberly Munley, a civilian police officer serving on the post, shot him. The bloody rampage lasted for about 10 minutes: 13 people died of their injuries and 28 more were wounded, including Ms Munley. For several hours the based was locked down and plunged into confusion, amid misplaced fears that more than one gunman was at large. Most of the dead were young soldiers. Five had been specially trained to deal with stress among soldiers in combat. ...

This week's top stories [06 November 2009]

Fri, 06 Nov 2009 14:00:39 GMT

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Jobs gloom, with glimmers

Fri, 06 Nov 2009 12:31:59 GMT

America's jobless rate passes 10% but the job market should start to improve soon

IT WAS widely expected to happen at some point, but not yet. The unemployment rate in America jumped to 10.2% in October, up from 9.8% the month before, an increase that was far more dramatic than most economists had projected.

The grim milestone demonstrates that, even though the recession is apparently over, for the average worker it remains in force. The misery is actually greater than the headline number suggests: an alternative unemployment rate that includes those who would like to work but are not looking for a job, and those who are employed part-time but would rather work full-time, rose by half a percentage point to 17.5%. This rate has jumped almost nine percentage points since the recession began in December 2007, compared with an increase of 5.3 points in the regular unemployment rate. The median spell of unemployment now stands at a record 18.7 weeks. ...

For peat's sake

Fri, 06 Nov 2009 09:31:58 GMT

The world’s wetlands are big sources of greenhouse gases

PEATY wetlands emit about 1.3 billion tonnes of CO2 a year as a result of human activity that drains them and thus exposes them to the oxidative effect of the atmosphere. This figure does not include the effect of fire on dried-up bogs, which can double the amount. That, at least, is the conclusion of a report published by Wetlands International, a lobby group, this week. Drained peat occupies 0.3% of the world’s land surface, but is responsible for 6% of man-made CO2 emissions. Indonesia is the biggest emitter, but richer countries are guilty too. However, the report's findings contrast with the conclusions of a paper on deforestation also published this week in Nature Geoscience. The conventional figure is that tree-felling causes 20% of man-made CO2 emissions, but the new paper puts that figure at closer to 12%. Together, both studies suggest a change of emphasis may be needed, and that efforts should be made to preserve not just forests, but also bogs.

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Fighting fire with fire

Fri, 06 Nov 2009 07:40:41 GMT

Wildfires are getting fiercer and more frequent

AS WOODLANDS in the warmer parts of the northern hemisphere come to the end of their fire season and their counterparts south of the equator prepare for the worst, people have begun to rethink how best to fight the wildfires, which seem to be getting fiercer and more frequent. With less winter snow on mountains as average temperatures rise, woods in many regions are drying out and becoming ever more vulnerable to fire.

The deadliest wildfire in Australia’s history, which scorched a broad swathe of the landscape north-east of Melbourne earlier this year and killed more than 200 people, has prompted local authorities to question the country’s long-standing policy of allowing residents to stay behind to defend their homes as the flames roar through. Meanwhile, mistakes made in the early stages of a wildfire that raged across the mountains overlooking Los Angeles in August turned a containable blaze into the county’s worst conflagration ever. In both instances, a heatwave following years of drought provided tinder for an arsonist’s match. ...

Going global

Thu, 05 Nov 2009 10:49:44 GMT

Articles mentioning “globalisation” in The Economist

“GLOBALISATION” is a relatively recent term. A search in the archives of this newspaper, perhaps the one most closely associated with globalisation, shows the word first used in 1961 in an article on the need for economic reform in Spain. Only in the 1980s did the term get the meaning it now has, when Theodore Levitt, a Harvard academic, used it to refer to the spread of corporations around the world. By the end of the decade, with the Berlin Wall in pieces, the number of articles (and letters to the editor) mentioning globalisation surged. Protests in Seattle in 1999 and in Genoa two years later encouraged more uses of the term, as did global trade negotiations in 2006. But with the current recession, the term is somewhat out of fashion.

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Green November

Thu, 05 Nov 2009 08:13:21 GMT

Iran's opposition takes to the streets again

THIRTY years ago, the world was mesmerised by pictures of 52 blindfolded Americans being taken hostage in their embassy in Tehran by Iranian students. This week’s anniversary provided more gripping scenes, as Iranians used the official celebration of that event to take to the streets once again, this time to protest against their own government and their country’s controversial president, Mahmoud Ahmadinejad, whose re-election in June they still hotly dispute.

The green movement, as the opposition calls itself, had held no big rally since Jerusalem Day in mid-September, when protesters turned an officially sponsored event into an anti-government one. On November 4th they did it again. Thousands came on to the streets, despite dark warnings from the authorities. There were big demonstrations in Tehran, and reports of others in provincial cities such as Arak, Isfahan, Mazandaran, Rasht, Shiraz and Tabriz. The internet hummed with tales of opposition protests, replete with videos and photographs. It was hard, however, to assess the size of the crowds. ...

An easterner to the front

Thu, 05 Nov 2009 08:12:39 GMT

Could a former president of Latvia make it as the European Union president?

OPTIMISTIC Latvians are thin on the ground these days. The combination of fractious politics and a dismal economic outlook blunts the enthusiasm of even the most cheerfully patriotic soul. All the more reason, therefore, to applaud the announcement that the country’s former president, Vaira Vike-Freiberga, is running for the job of president of the European Union.

At first sight, Ms Vike-Freiberga’s chances seem vanishingly slim. And at a second glance they don’t look much fatter. On the plus side, she speaks perfect French. She is a woman. And she has no big enemies. Observers of Latvian politics in the years 1999-2007 (admittedly, not exactly a mainstream hobby in Brussels) remember her as an uncommonly effective president of that country. She proved a powerful bulwark against over-mighty tycoons bent on suborning Latvia’s independent institutions and a strong defender of probity in public office. ...

Handbrake turn

Wed, 04 Nov 2009 11:07:57 GMT

GM’s decision to keep Opel causes anger in Germany

THE decision by General Motors to abandon its sale of a controlling stake in Opel to a consortium led by Magna, an Austrian-Canadian partsmaker, has embarrassed and angered the German government and alarmed workers. After months of negotiations, and with an agreement about to be signed, GM made a last-minute handbrake turn, unexpectedly announcing on Tuesday November 3rd that it will now hang on to all of its carmaking operations in Europe except Saab of Sweden, and try to revive them.

Germany’s economy minister, Rainer Bruderle, denounced GM’s behaviour as “completely unacceptable”. Equally angry German trade unions are calling a strike at Opel, fearing that GM’s turnaround plans, unlike Magna’s, will involve huge job cuts. GM is likely to demand substantial state aid for its restructuring plan; the German government, having assured the European Commission in writing that the aid it had offered to Magna was available to anyone seeking to save Opel, may find it awkward to resist this. ...

The glow fades

Wed, 04 Nov 2009 10:49:36 GMT

Public enthusiasm for democracy and capitalism is waning in many former communist countries

THE fall of the Berlin Wall in November 1989 marked the beginning of the end of communism in Europe and, for many, the dawn of a new, democratic era. Two decades later, however, enthusiasm for democracy and capitalism east of the former Iron Curtain appears to have waned considerably. In a survey of nine countries in 1991, large majorities of citizens in each said they approved of the move from a single-party state to a multi-party political system. But a new poll shows support has now fallen drastically, especially in poorer countries such as Ukraine and Lithuania. And in every country, fewer people now approve of the change to a free-market economy. The belief that the changes have benefited business and political elites far more than ordinary people is widespread.

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The shine coming off

Wed, 04 Nov 2009 06:02:54 GMT

Voters punish Barack Obama and the Democrats in two states, but offer solace in New York

A YEAR after winning America's presidential election, Barack Obama and the Democrats have suffered two big defeats in governors races in Virginia and New Jersey. Last year Mr Obama won in Virginia in a particularly sweet moment for his party. This time the Republican, Bob McDonnell, trounced the Democrat, Creigh Deeds, by 59% to 41%. In northern corners of the state, which form part of Washington's suburbs and are vital to Democratic chances in statewide contests, the Republican did even better in some places, winning Loudoun county by 61% to 39% for example. In the much deeper-blue state of New Jersey, the loss was narrower for the Democrats. Chris Christie, the Republican, won with 49% of the vote, defeating Jon Corzine, the incumbent governor, who picked up around 45%.

There were also various mayoral contests on Tuesday November 3rd. In New York Michael Bloomberg won a third term, but by a much narrower margin of victory than had been expected. Mary Norwood led the field in Atlanta but faces a run-off on December 1st, which if she wins will make her the first female white mayor in the historically black city. And in Houston Annise Parker picked up 31% of the vote and faces Gene Locke in a run-off on December 12th, which if Ms Parker wins would make her the first openly gay person to be elected to the mayor's office in Texas's largest city. ...

How to change the system

Tue, 03 Nov 2009 15:26:22 GMT

In praise of the ideas of Russ Ackoff

IT IS hard to imagine a less enticing title for a book than “Introduction to Operations Research”. Yet Russ Ackoff, one of the authors of this tome of 1959, who died on October 29th aged 90, did not just help to define a nascent branch of industrial engineering. He wrote 30 other books, becoming one of the most influential management gurus of the 20th century in the process. His ideas about systemic thinking are vitally important today if the world is to come out of the current economic crisis in better shape than it went into it.

Today’s crisis is the result of a catastrophic failure, primarily in the financial system but also of our economic and political systems. Mr Ackoff spent most of the past half-century as the premier evangelist of systemic thinking, which he contrasted with the reductionist, atomistic thinking that had long dominated humanity’s approach to problem-solving in his view. Time and again, he would point out, decision-makers faced with crises failed to heed Albert Einstein’s warning that “we can’t solve problems by using the same kind of thinking we used when we created them.” ...

An electoral test

Tue, 03 Nov 2009 11:27:38 GMT

“Mini mid-term” elections get under way in America, with Democrats braced for bad news

VOTERS were at the polls to elect governors in New Jersey and Virginia on Tuesday November 3rd and others were voting in a special election to fill a vacant congressional district in upstate New York. Together, these three races (numerous mayoral contests and state referendums are also taking place) provide the biggest political test for the parties since last year's presidential election. A year since Barack Obama won that prize, these elections will be studied for clues about the electorate's mood. Facing what looks likely to be a heavy defeat for the Democrats in Virginia and a fight to keep the governor's mansion in New Jersey, the president would be wise to remind people of Tip O'Neill's famous dictum that “all politics is local”. But Mr Obama will not be able to avoid some of the finger-pointing if things go very badly.

At the weekend Mr Obama supported Jon Corzine, the embattled governor of New Jersey, appearing at two rallies. Over the summer polls suggested that Mr Corzine was trailing Chris Christie, his Republican challenger, by large margins. Mr Christie attacked Mr Corzine's record on the local economy and found some traction on ethics issues. Mr Christie has been embarrassed in the last days of campaigning by a bizarre political advert he made featuring a Monty Python sketch. Michael Palin, who appeared in it, criticised the advert and said he was surprised that Mr Christie, a former federal prosecutor, was not aware about copyright infringement. ...

Red alert

Tue, 03 Nov 2009 09:13:41 GMT

The number of species in danger of extinction

MORE than a third of the 47,677 species of plant and animal surveyed this year by the International Union for Conservation of Nature were found to be at risk. The IUCN's latest “Red List” includes 17,291 species in some degree of danger. This is an increase from 2008, although since more species are examined each year, more are found to be endangered. A further 875 species are considered extinct including 66 that are extinct in the wild. Habitat loss or a change in land use are frequently to blame. One of the six species categorised this year as being extinct in the wild is the Kihansi Spray Toad, which was last seen in its natural habitat in Tanzania in 2004. Nearly a third of all amphibians assessed by the IUCN are under threat, though that pales by comparison with the three-quarters of plant species found to be in danger.

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Putting competition first

Tue, 03 Nov 2009 06:53:10 GMT

Lloyds and Royal Bank of Scotland are forced to sell businesses

AT THE height of the banking crisis, restoring financial stability was paramount for the British government. Worries about limiting the taxpayer’s exposure came second. Ensuring that banking customers continued to enjoy a competitive market was a distant third. Indeed, the government waived competition rules to let Lloyds TSB take over Halifax Bank of Scotland (HBOS), Britain’s biggest mortgage lender, in what proved to be a disastrous move for Lloyds, as the merged group then required a massive state bail-out.

Now that the crisis has abated, fostering a competitive banking market is becoming more significant again, though mainly because of the intervention of Neelie Kroes, the European Union’s competition commissioner. Last week she forced ING, a rescued Dutch bank, to split its banking and insurance operations. She also imposed restrictions on lending and deposit-taking at Northern Rock, a nationalised mortgage lender which the British government is splitting into a “good” bank, to be privatised, and a “bad” part, to be wound down. ...

Tricks of the trade

Mon, 02 Nov 2009 16:43:47 GMT

Can the world stop governments from paying for the over-exploitation of fish?

OVERFISHING erodes future prosperity by destroying today a resource that could yield benefits indefinitely. Yet it is subsidised by billions of taxpayer dollars, euros and yen. Now a new chance to halt this insanity has emerged in the unlikely form of climate-change negotiations.

Landlubbers hand pots of money to fishermen. Rashid Sumaila, a researcher at the University of British Columbia, estimates that in 2003 (the most recent year for which data are available), the world’s fishing subsidies were $25 billion-30 billion. The value of fish landed in the same year was $82 billion. Furthermore, Dr Sumaila reckons that $16 billion of the subsidies either promote overcapacity by helping fishermen buy new or bigger boats or encourage overfishing by subsidising fuel. ...

A prepackaged pratfall

Mon, 02 Nov 2009 05:08:22 GMT

CIT, a lender to thousands of small businesses, files for bankruptcy

THE most gut-wrenching failures may be over, but the financial crisis continues to claim the occasional big victim. CIT, a lender to small and medium-sized businesses, from clothing retailers to Dunkin’ Donuts franchisees, filed for bankruptcy on Sunday November 1st after failing to garner enough support for a debt-restructuring plan. With $71 billion in assets, the century-old firm is only one-ninth the size of Lehman Brothers, which collapsed in September 2008. Nevertheless, its Chapter 11 filing augurs ill for America’s corporate minnows, whose financing options have narrowed dramatically over the past year.

Financial-services firms have a harder time than most bouncing back from bankruptcy, because their business relies so heavily on trust, which has a tendency to evaporate in such situations. CIT has improved its chances by securing the support of the vast majority of its bondholders for a “prepackaged” filing that will reduce its debt by $10 billion while allowing its subsidiaries to go on operating. Among those persuaded to come on board is Carl Icahn, a veteran corporate gadfly who had been trying to derail CIT’s restructuring in the hope of profiting by picking through its entrails; he has even offered a $1 billion back-up loan. The firm’s advisers say it could emerge from bankruptcy by the end of the year. ...

Out of the running

Sun, 01 Nov 2009 09:56:41 GMT

Abdullah Abdullah pulls out of the presidential race, deepening the political crisis in Afghanistan

TO THUNDEROUS applause Abdullah Abdullah announced yet another twist in Afghanistan’s convoluted path to finding a new leader. The second-placed candidate for the presidency announced on Sunday November 1st, to a tent full of thousands of his supporters, that he would not participate in a run-off vote set for Saturday.

Virtually all the conditions he set for reform of Afghanistan’s blatantly partisan Independent Election Commission (IEC) had been rejected out of hand. So had his requests for the suspension of some of Hamid Karzai’s cabinet ministers in the run up to the vote. But as his flag-waving audience roared approval, diplomats across Kabul groaned at the prospect of a run-off vote with just one candidate, Mr Karzai, in contention. ...

The week ahead

Sun, 01 Nov 2009 06:08:56 GMT

Marking a year since Barack Obama's victory in the presidential election

• THE first anniversary of the general election that brought Barack Obama to the American presidency will be marked on Wednesday November 4th. Democrats and Republicans will have a chance to guage the public mood in some states the day before, when voters in 380 cities—including New York, Boston and Houston—elect mayors. Polls for governors will take place in Virginia and New Jersey and a special election is scheduled in New York's 23rd congressional district. With America's economy apparently leaving recession in the third quarter, the next statistic to be studied will be the monthly report on unemployment, which is due to be published on Friday. See article

• AFGHANS are set to go back to the polls to decide whether to re-elect Hamid Karzai as president for another five years on Saturday November 7th. The election may go ahead without Abdullah Abdullah, Mr Karzai's only competitor, who withdrew from the poll after demands he made about the running of the election were not met. Such was the fraudulence of the first round that UN investigators threw out more than a million votes, enough to force Mr Karzai into a run-off. But little has been done to prevent a repeat of the fraud, prompting Mr Abdullah's decision. If the election is cancelled it is unclear whether Mr Karzai will retain the presidency. See article ...

Out from storage

Sat, 31 Oct 2009 21:08:25 GMT

A successful Romano sale in Florence proves there are exceptions to recessionary rules

Sotheby’s recent four-day sale of the Salvatore and Francesco Romano collection in Florence contained more than 1,800 lots. International interest in the auction was keen, even though there was not a single masterpiece among the antique statues, Old Master paintings, textiles, pieces of furniture or objets d’art. Many foreign dealers and collectors who had come to Italy for the sumptuous and lively Biennale dell’Antiquarioto (which ended on October 4th) crossed the Arno to the Palazzo Magnani Ferroni for a look even before the official public viewing began. (The auction, which went from October 12th to the 16th, was timed with the Biennale in mind.)

Once the sale started, as many as 22 employees worked the phones, taking bids from Italy and elsewhere in Europe, America and Russia. The first-floor terrace of the palace was tented for the event, and rows of folding chairs were occupied by a changing cast of paddle wielders, many of them dealers. Others loitered in the vast, art-filled, adjoining rooms waiting for their chosen lots to come up. By its end, the sale made more than €10.5m ($15.5m), exceeding the low estimate by a little more than €72,000. Sotheby’s says it is delighted and so are the consigners. ...

Back in his old hat?

Sat, 31 Oct 2009 08:01:33 GMT

A deal brings hope of an end to the political crisis in Honduras

FOUR months after Manuel Zelaya was hauled out of bed at gunpoint, flown to Costa Rica in a military plane, and replaced by Roberto Micheletti as president of Honduras, negotiators for the two sides have reached an agreement to put an end to the country’s political crisis. On Thursday October 29th, representatives of both the deposed and de facto presidents declared they would ask the Congress—which voted to name Mr Micheletti president after Mr Zelaya was exiled—to hold a new vote on whether to reinstate him for the remaining three months of his term. They pledged to abide by the result.

The deal was hailed for its importance in the consolidation of democracy in the region. There is no doubt that the agreement represents a significant victory for foreign leaders, and particularly for Barack Obama, whose decision to send a high-level diplomatic mission to Honduras two days earlier provided the decisive push to conclude the talks. It establishes both a path for a possible return to office for Mr Zelaya and stops him from calling a constituent assembly, a body with the job of rewriting the constitution. His opponents say this would have enabled him to eliminate the country’s ban on presidential re-election. ...

Seeing in the dark

Fri, 30 Oct 2009 14:01:12 GMT

Car headlamps that turn night into day

ONE of the most enduring urban myths is how the patent for an ever-lasting light bulb pioneered by a lone inventor was snapped up by a cartel of lighting manufacturers, who promptly secreted it away to protect their hugely profitable replacement business.

The fact is, lots of long-life bulbs have been invented over the years since Thomas Edison borrowed the best from the dozen or so different light-bulb designs patented during the early days of electrification and came up with a winner. Practically all the improvements in terms of life and brightness since then have come from the bulb-makers themselves. One of the most recent was Philips’s incandescent light bulb that lasts for 60,000 hours. ...

This week's top stories [30 October 2009]

Fri, 30 Oct 2009 14:00:32 GMT

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