The Economist - 15 октября 2022

Год выпуска: октябрь 2022

Автор: The Economist Newspaper and The Economist Group

Жанр: Экономика/Политика

Издательство: «The Economist Newspaper Ltd»

Формат: PDF (журнал на английском языке)

Качество: OCR

Количество страниц: 92

• The Communist Party’s obsession with control will make China weaker but more dangerous: leader, page 11.
• China wants to change, or break, the world order. See our special report, after page 42.
• Might the party have followed a more reformist path? Page 73.
• China is competing frantically with the West to foster innovation: briefing, page 18.
• The party congress will highlight Xi Jinping’s power, page 33.

Have profits peaked?

• The decades-long rise in corporate earnings no longer looks inexorable, page 55.

Liz Truss: the Iceberg Lady

• Britain’s prime minister wilts in a mess of her own making: leader, page 12.
• The government is yet to face up to the consequences of its mini-budget, page 48.

Emerging markets, the new haven

• They have weathered the rate shock, but the real test is yet to come: leader, page 13.
• The global view is grim, page 61.

Time to legalise cocaine

• The costs of prohibition outweigh the benefits: leader, page 14.
• Talking about reform, page 51.
• A shift in coca production led Peruvian children into crime: graphic detail, page 79.

The world this week Politics

• A large explosion badly damaged the Kerch road-and-rail bridge, which connects Russia with occupied Crimea and is vital for resupplying Russian forces operating in the south of Ukraine. Although Ukraine neither confirmed nor denied that it had carried out the attack, many assumed that it had done so. Only very limited traffic is now able to use the bridge. It was unclear whether the explosion was caused by a lorry-bomb, an underwater drone or a missile.
• Russia retaliated by pounding cities across Ukraine with often-inaccurate cruise missiles and drone strikes. The centre of Kyiv was struck for the first time since the start of the war. Ukraine’s engineers sought to repair damage to infrastructure and its leaders argued that the attacks would feed the will to fight. In response, NATO countries vowed to speed up their deliveries of air-defence systems to Ukraine. So far, Mr Putin’s attacks appear to have accomplished little militarily.
• Alexander Lukashenko, the dictatorial president of Belarus, sent troops to join a Russian task-force that is assembling on the country’s border with Ukraine, possibly to launch another front in the war. Mr Lukashenko claimed the task-force was preparing for a Ukrainian attack on Belarus, for which there is no evidence.
• Britain’s Supreme Court heard arguments on whether there should be another Scottish independence referendum. The Scottish National Party’s leader, Nicola Sturgeon, claims that the issue has gone to court because the British government has no respect for Scottish democracy. If the court finds against the nationalists, Ms Sturgeon says she will use the vote in Scotland at the next general election as a de facto referendum on independence. The court will deliver its ruling in the coming months.

The truth will set you free

• A jury in Connecticut ordered Alex Jones, a conspiracy theorist, to pay $965m in damages to eight families who lost loved ones in the Sandy Hook school massacre in 2012. For years Mr Jones has peddled falsehoods across his media empire that the shooting was staged by the government. His lies caused great distress to the parents. He remains defiant. After the verdict he claimed to be “proud” of being attacked for his views.
• Joe Biden said there would be “consequences” for America’s relationship with Saudi Arabia following opec’s decision to cut oil production in order to increase the commodity’s price. Some Democrats said opec was supporting Russia’s war (Russia also benefits from higher oil prices). Bob Menendez, the chairman of the Senate Foreign Relations Committee, promised to freeze arms sales to the Saudis.
• Turbulence persisted in Iran, nearly a month after it was sparked by the death of a young woman in the custody of the “morality” police for being “improperly” veiled. University students remained prominent in the nationwide protests. It was unclear how the army, as opposed to the hardline Islamic Revolutionary Guard Corps and the loyalist Basij militia, would respond.
• Under American mediation, Israel and Lebanon agreed on a maritime boundary that should allow each country to co-operate in the extraction of undersea gas. The deal may still need official approval in both countries.
• Japan’s Epsilon-6 space rocket was sent a self-destruct command less than seven minutes into its launch. The rocket and the commercial satellites it was carrying fell into the sea east of the Philippines. The aborted launch was Japan’s first rocket failure in nearly two decades.
• Kim Jong Un, North Korea’s dictator, oversaw the launch of two long-range cruise missiles. State media said the objective was to test the reliability of nuclear-capable weapons. The launch follows two weeks of tactical nuclear exercises by the dictatorship in response to joint naval drills by South Korea and America.
• Local elections in New Zealand resulted in a tilt to the right, as big cities elected conservative mayors. This may indicate a turn away from the governing Labour Party led by Jacinda Ardern.
• Nepal faced severe disruption from torrential rain and landslides, which have killed at least 33 people. The country’s western region is the worst affected, with more than 18 people still missing and hundreds of houses flooded.
• An outbreak of Ebola in Uganda has killed 19 people, including four health workers. A total of 54 people are known to have been infected in the current outbreak by the virus, which usually kills about half the people who catch it.
• Mahamat Idriss Deby, who declared himself president of Chad 18 months ago after a coup, extended his rule by another two years. This came shortly before a mid-October deadline for holding elections and handing power to a civilian government.
• Revolution for Prosperity, a political party set up just six months ago by a tycoon, won 56 of 120 seats in parliamentary elections in Lesotho. The shift away from established parties is part of a broader trend across Africa, where growing numbers of voters are backing a new style of candidate. In Nigeria Peter Obi, an outsider, took an early lead in polls as campaigning started for presidential elections in February.

Please send help

• Haiti’s prime minister, Ariel Henry, asked for intervention by a foreign armed force to avert a “major humanitarian crisis”. Gangs have been blocking deliveries from the main fuel terminal since September and have seized control of motorways, forcing businesses and hospitals to close and causing shortages of food and bottled water. A woman was killed in clashes between police and protesters. An outbreak was reported of cholera, a disease that has killed 10,000 Haitians in recent years.
• At least 43 people died and more than 50 were missing in landslides in Venezuela. Heavy rains caused by La Nina, a weather pattern that cools the Pacific Ocean near South America, caused the landslides, in Las Tejerias, 67km south of Caracas, Venezuela’s capital.
• Mexico has agreed to accept unauthorised Venezuelan migrants expelled by America. Until now most have been allowed to remain in the United States. At the same time, the United States agreed to take in for two years 24,000 Venezuelans who fly directly from their country. Some 6m have fled poverty, violence and repression in Venezuela over the past five years, mostly to other Latin American countries.

The world this week Business

• The Bank of England acted again to stabilise bond markets and increased its maximum daily purchases of long-dated gilts. The central bank is buying the bonds through a temporary programme it created after markets took fright at the government’s plans for unfunded tax cuts. The programme is supposed to end on October 14th. British pension funds want it to be extended. They are taking a hit from collateral calls on derivatives linked to bond prices, leaving them with a short-term financing problem.

Dire straits

• The turmoil pushed up the costs of financing Britain’s government debt, with the interest rate on ten-year bonds climbing back to levels that prompted the Bank of England’s first emergency intervention in September. In an attempt to regain credibility in the markets, Kwasi Kwarteng, the chancellor of the exchequer, brought forward the date of his “fiscal plan”, which will explain how his tax cuts are to be paid for, to October 31st.
• With markets expecting the Federal Reserve to continue raising interest rates, the yield on American government bonds has also increased. That has pushed up mortgage rates in America, which are linked to the yield. The rate on a 30-year fixed-rate mortgage has climbed above 6.8%, the highest level since 2006, according to the Mortgage Bankers Association.
• Global inflation is expected to peak later this year but remain elevated in 2023, said the imf in its latest outlook. Russia’s invasion of Ukraine continues to “destabilise the global economy”, said the fund, which shaved its forecast for global gdp growth next year to 2.7%. With the world economy “headed for stormy waters” the imf thinks that investors will turn to safe assets, such as us Treasuries, pushing the dollar even higher. Kristalina Georgieva, the IMF’s managing director, predicted that the near future will be “more volatile, more fragile”.
• General Motors launched a new business to help customers charge their electric cars and keep their power bills down. gm Energy’s energymanagement system is similar to the one sold by Tesla.
• A consortium backed by private equity agreed to pay $7.9bn for Westinghouse Electric, which provides nuclear services including nuclear fuel and maintenance to around half the reactors worldwide. The deal is seen as a big investment in the future of nuclear power. In order for the world to hit net-zero carbon goals, nuclear generation needs to double by 2050, according to the International Energy Agency.
• Billions of dollars were wiped off the stockmarket value of Chinese chipmakers, after the Biden administration issued new export controls that severely curtail their access to American technology. The sell-off in shares soon extended to chipmakers in other countries. The new rules will make it much harder for Chinese companies to develop supercomputers and will slow their advance in artificial intelligence, a technology in which China claims to be a world leader.
• Global shipments of personal computers fell by 19.5% in the third quarter, year on year, according to Gartner. It is the biggest decline in the consulting firm’s survey since it began tracking the market in the mid-1990s. Sales boomed during the pandemic, before inflation ate into spending budgets. Chipmakers are feeling the effects. Intel is reportedly planning to cut thousands ofjobs as demand for its pc processors slows.
• Personal computers could become a thing of the past if Meta’s new virtual-reality headset takes off. Facebook’s parent company launched the Quest Pro this week, which is marketing itself to companies as a means of improving employees’ interaction. It is Meta’s first headset with inward-facing sensors, which can replicate a person’s smile, or even eye contact with someone. Meta also announced partnerships with Microsoft and Zoom, as it seeks to expand the metaverse to home working.
• The share prices of DoorDash, Lyft, Uber and other gig-economy companies fell sharply after America’s Labour Department proposed new guidelines to determine if workers at such firms are contractors or employees. As contractors, the workers do not receive many benefits. However, the terms of the government’s proposal are limited to issues over pay.

Why worry

• lvmh reported a 28% rise in revenue for the first nine months of 2022, year on year. The return of the jet-setters after lockdown, and a weaker euro, boosted the luxurygoods company’s business in Europe. Sales highlights included the Tambour Twenty collector’s watch (as “embodied” by Bradley Cooper, an actor). “Despite everything going on in the global economy”, demand for lvmh’s wares remains “vigorous”, said its chief financial officer.