Economist 5/24/14

  1. Pope Francis’s visit to Israel on May 25th is stirring ambivalence, if not soul-searching, about the Israeli state’s attitude to other religions, particularly Christianity.A ceremony was recently held in the Knesset, Israel’s parliament, to honour John XXIII, which organisers said was the first commemoration there of a non-Jew. He was praised for enabling thousands of Jews to flee from Nazi-occupied Europe. It was also noted that he was the nuncio to France who promoted the UN resolution in 1947, creating Jewish and Arab states in Palestine. The greater frequency of recent papal visits to Israel is proof of a sea-change in the Vatican. The restoration of Jewish sovereignty over Israel in 1948 came as something of a jolt to a church whose fathers condemned Jews to wander until they accepted the true Messiah. 
  2. One of the undersold boons of the internet is that it functions a bit like a permanent, rolling global coffee break. A good example of the result is OpenWorm, an informal collaboration of biologists and computer scientists from America, Britain, Russia and elsewhere.C. elegans is a scientific stalwart.On May 19th this group managed to raise $121,076 on Kickstarter, a crowd-funding website. The money will be put towards the creation of the world’s most detailed virtual life form—an accurate, open-source, digital clone of a critter called Caenorhabditis elegans, a 1mm-long nematode that lives in the soils of the world’s temperate regions.  Despite 40 years of technological progress, C. elegans remains the only animal for which such a diagram is available.
  3. EVA ULLMANN founded the German Institute for Humour in Leipzig. It is dedicated to “the combination of seriousness and humour”. She offers lectures, seminars and personal coaching to managers, from small firms to such corporate giants.There is nothing peculiarly German about humour training. It was John Morreall, an American, who showed that humour is a market segment in the ever-expanding American genre of self-help.The issue is not comedy, of which Germany has plenty.At a deeper level, the problem has nothing do with jokes. What is missing is the trifecta of irony, overstatement and understatement in workaday conversations.
  4. THE Letpadaung copper-mine project in northern Myanmar has an image problem. The kidnapping by opponents of the mine on May 18th of three men working for a contractor to its Chinese developer, Wanbao, added to the impression of an unpopular project imposed on resentful locals by a greedy foreign firm. The kidnappers, who quickly freed their victims unharmed, had demanded the cancellation of a project that was already notorious. Wanbao is trying hard to get on with local people. Geng Yi, its local boss, says the firm spent $1.8m on “corporate social responsibility” work last year.
  5. On May 21st these showed that 93% of 313,000 valid votes had gone to Abdel Fattah al-Sisi, a former field-marshal who as defence minister led the coup that toppled Egypt’s last elected head of state, Muhammad Morsi, in July 2013. In the immediate wake of the coup Mr Sisi denied any ambition to become president. His backers include not just Egypt’s powerful army and lumbering, 7m-strong civil service, but rich businessmen who own much of its press; minority groups made anxious during the brief rule of the Muslim Brotherhood ended by the coup.Reputed for his piety, Mr Sisi has insisted that a leader bears responsibility for moral values and religion. The role of the press, he says, is to forge national unity. During his term as defence minister, Egypt’s armed forces further entrenched their role in the civilian economy, adding giant infrastructure and housing projects to an already sprawling portfolio. Such deeply conservative instincts, reflecting the enduring legacy of decades of dictatorship and a state-led economy, play well with many Egyptians.
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Economist 5/23/14

  1. Miami makes it extremely hard for Food Trucks to operate, as do Baltimore and Chicago. Rochester, Pittsburgh and San Diego are nearly as stern. In New York City, a cap on the number of food-truck licences available has created a black market, pushing up prices into the thousands of dollars. food trucks are typically required to cook their food in inspected commercial kitchens.Not only is street vending an important step for aspiring entrepreneurs, but food trucks have enlivened the gastronomic scene. 
  2. Pakistan’s biggest, brashest television station – Geo News both conservative and liberal commentators have a pulpit; sensationalist news is leavened with variety shows and political satire.Once the darling of the army and the religious right, Geo got its broadcasting licence in 2002, during the rule of a former general, Pervez Musharraf. But recently, under a Dubai-based mogul, Mir Shakil-ur-Rahman, it has turned for the worse. It has even teamed up with the Times of India, campaigning vigorously for peace and trade with its giant neighbour. The generals regard India with eternal suspicion. Geo has also dared to criticise the army for human-rights abuses in its counterinsurgency campaign in Balochistan.Yet the army establishment is struggling to take down the channel, which is backed by a government embroiled in its own spats with the armed forces.Geo’s fate is in the hands of the Pakistan Electronic Media Regulatory Authority. On May 20th five members of the 12-man board announced the suspension of Geo’s licence. Farcically, the authority swiftly declared the decision null, since there was no quorum when the government-appointed members refused to show up.
  3.  Last year over a fifth of South Korean farmers and fishermen who tied the knot did so with a foreigner.They are expected to exceed 1.5m by 2020, in a population of 50m. That is remarkable for a country that has long prided itself on its ethnic uniformity. But a preference for sons has led to a serious imbalance of the sexes. In 2010 half of all middle-aged men in South Korea were single, a fivefold increase since 1995. The birth rate has fallen to 1.3 children per woman of childbearing age, down from six in 1960. It is one of the lowest fertility rates in the world. Without immigration, the country’s labour force will shrink drastically.The government is the biggest enthusiast for a multi-ethnic country. Its budget for multicultural families has shot up 24-fold since 2007, to 107 billion won ($105m). Some 200 support centres offer interpreting services, language classes, child care and counselling. School textbooks now include a section on mixed-race families. And in 2012 mixed-race Koreans could join the army for the first time. The government is now tightening up the marriage rules. Last month two new requirements came into force: a foreign bride must speak Korean, and a Korean groom must support her financially. Koreans are now limited to a single marriage-visa request every five years.
  4.  The rich world’s economy still looks disappointingly weak. America’s GDP grew at an annualised rate of only 0.1% in the first quarter. Euro-area growth, at 0.8%, was only half the expected pace.In Britain and Germany, for example, growth has accelerated, and Japan has put on a brief spurt.What should be done to forestall that outcome? The standard answer is that central banks need to loosen monetary conditions further and keep them loose for longer. In some places that is plainly true. The euro area’s weakness has a lot to do with the conservatism of the European Central Bank, which has long resisted the adoption of unconventional measures to loosen monetary policy, even as the region has slipped ever closer to deflation.But if loose monetary conditions are a prerequisite for a more vigorous recovery, it is increasingly clear that on their own they are not enough. Indeed, over-reliance on central banks may be a big reason behind the present sluggishness.What is really needed, though, is a more balanced growth strategy that relies less exclusively on central banks.One is to boost public investment in infrastructure. From American airports to German broadband coverage, much of the rich world’s infrastructure is inadequate. Borrowing at rock-bottom interest rates to improve it will support today’s growth, boost tomorrow’s and leave the recovery less dependent on private debt. 
  5. BEFORE the Clean Air Act was passed in 1970 many Americans led shorter, sicker lives because of pollution. Between 1980 and 2012 total emissions of six common air pollutants in America dropped by 67%, according to the Environmental Protection Agency (EPA). This happened even as the country’s population grew by 38% and Americans consumed 27% more. energy. Yet despite these gains, around 142m Americans still live in counties with dangerously polluted air, says the EPA. The problem is especially serious for those who are poor and not white.NO2 comes primarily from vehicles and power plants, and is most concentrated in cities. The study found that the difference in exposures between whites and nonwhites is 38%, and this gap is largely constant at every income level.NO2 comes primarily from vehicles and power plants, and is most concentrated in cities. The study found that the difference in exposures between whites and nonwhites is 38%, and this gap is largely constant at every income level. A cap-and-trade programme for nitrogen oxides in eastern and midwestern states between 2003 and 2007 cost as much as $3.4 billion

Economist 5/22/14

  1. Lufthansa’s decision to install humidifiers in its first-class cabins, ensuring that the people at the front of the plane enjoy air with 25% humidity, as opposed to 5-10% in coach.Delta and United whisk their first-class passengers to connecting flights in Porsches and Mercedes, respectively. A first-class ticket on Emirates Air from Los Angeles to Dubai entitles you to a private compartment—complete with a sliding door, a lie-flat seat and mattress, a vanity, a minibar, a flat-screen TV and luxury bathroom with shower—for a tidy $32,840.Airlines are responding to market pressures—specifically, the unwillingness of air travellers to spend a little extra to fly in a bit more comfort.But there is already an airline that offers better service and more comfortable seats. It’s called Virgin America, and it lost $671 million between 2007 and 2012. Meanwhile, Spirit Airlines—the airline that draws the most customer ire in America, and is also very cheap—was doing just fine
  2. In a world first, Collins Dictionary is going to add a word to its dictionary based on votes collected via Twitter. Collins has narrowed down your choices, which you can vote for by tweeting your choice and including the hashtag #twictionary. lexicographers have seen it as their job to find the words that people actually use and then to record them. They are not gatekeepers or guardians but a certain kind of slow-moving stenographers.That said, and with a tip of the cap to Collins for being creative, this seems a bit of a gimmick. First, lexicographers can easily monitor Twitter without inviting people to vote.Plus, the overlap of the “ack” sounds makes for a nice portmanteau. (A portmanteau differes from a compound in that one or both elements are trimmed before joining, like brunch.) The same goes for “gaybourhood”, the meaning of which is obvious. 
  3. THE net makes tragedies global events: a missing plane, a capsized ferry full of kids, kidnapped schoolgirls. Even the infamous squabble between Jay-Z and Solange, a pair of pop idols. Our chart compares the attention each event received on Twitter, measured by how much messages were re-tweeted with descriptive hashtags in English. The situations usually capture immediate attention and quickly settle down. Just as online activism (known as “hacktivism”) is considered “slacktivism” (or armchair activism) because it is rarely sustained, so too the concerned tweets might be called “twactivism”. The crossover came around May 7th for the Nigerian kindapping, when—partly fuelled by Michelle Obama joining the campaign—more retweets came from America (38%) than Nigeria (24%). But eventually, the data show, the twitterverse moves on.
  4. IT HAS been a rough month for Joko Widodo, universally known as Jokowi, the governor of Jakarta who had been expected to stroll to victory in Indonesia’s presidential election on July 9th. First, on April 9th, came a setback in parliamentary polls. His Indonesian Democratic Party of Struggle (PDI-P) won only 19% of the popular vote, a long way short of the 25% that it needed to nominate a presidential candidate on its own.His team set about trying to regain the initiative and on May 14th they scored a success, announcing an alliance with Golkar, the party of Suharto, the late dictator, to form a new coalition with which to contest the presidential election and form a government. Golkar is now the political vehicle of Aburizal Bakrie, a tycoon, and came second in the parliamentary elections with 15% of the vote.Jokowi has also been spelling out what he would do if he wins. He has promised to scrap fuel subsidies and channel the money that saves to the poor and into infrastructure.
  5. In much of the world, traditional mood-altering substances such as cocaine and heroin are in decline. But a pharmacopoeia of synthetic drugs is rapidly taking their place. By 2013, 348 new psychoactive substances had been reported to the agency, almost all of them since 2008 (see chart). T In America and Britain, where the authorities conduct regular surveys of drug-taking, cocaine use has fallen steeply since around 2008. In most of Europe heroin addiction is becoming rare. Wholesale cocaine prices have risen sharply over the past decade, partly thanks to eradication efforts in Colombia and elsewhere squeezing supply, pushing up prices and hitting quality.  In 2010, when ecstasy (MDMA) was particularly scarce, 4.4% of British 16- to 24-year-olds tried mephedrone, an ecstasy-like drug, and 2.1% tried ketamine, a powerful tranquiliser used most often in veterinary medicine. One in nine Americans in their last year of high school now report having tried a synthetic form of cannabis. All of these were unknown a decade ago. In parts of the developing world ketamine is the latest poison of choice. Among those imprisoned for drug use in Macau, 18% have used it, second only to methamphetamine. Seizures of ketamine in China made up almost 60% of the global total between 2008 and 2011.In poorer countries methamphetamine remains the rage. In Central and South Asia it seems to be taking the place of heroin as the product of choice for drug gangs. Between 2011 and 2012 the quantity of methamphetamine seized in Myanmar more than tripled.Meth labs have even been found in Afghanistan, where the poppy crop has long sustained farmers. Ketamine has proven far more addictive and physically damaging than ecstasy, and some synthetic cannabinoids have worse side-effects than real cannabis.

Economist 5/21/14

  1. On March 19th the FBI charged five members of China’s People’s Liberation Army (PLA) with breaking 31 laws, from relatively minor counts of identity theft to economic espionage, which carries a maximum sentence of 15 years. This is the first time the government has charged employees of a foreign government with cybercrime. The accused are unlikely ever to stand trial in America. Even so, the Justice Department produced posters with mugshots of the men beneath the legend “wanted by the FBI”. Last year Mandiant, a cyber-security firm based in Virginia, released a report that identified Unit 61398 of the PLA as the source of cyber-attacks against 140 companies since 2006.Hackers stole designs for pipes from Westinghouse, an American firm, when it was building four nuclear power stations in China, and also took e-mails from executives who were negotiating with a state-owned company
  2.  The Polio virus looked close to extinction: just five countries reported new instances of polio in 2012. The World Health Organisation (WHO) declared that by 2018 it should be history, alongside smallpox, another once-feared killer. And in March of this year India, which five years ago accounted for nearly half of all cases, was declared polio-free. So far this year 77 polio cases have been reported, up from 33 in the same period of 2013, despite it being the disease’s low season. These are spread across eight countries: Pakistan, Afghanistan, Cameroon, Equatorial Guinea, Ethiopia, Iraq, Syria and Nigeria. Laboratory analyses of faecal samples show that three of the countries (Pakistan, Syria and Cameroon) have recently transmitted the virus to neighbours—particularly alarming for the WHO. Pakistan is the big backslider, accounting for the vast majority of cases (61 out of 77) this year, compared with just eight during the same period in 2013.In recent years Pakistan has allowed some of its most lawless regions to become havens for the virus.
  3. In 1914 half of Buenos Aires’s population was foreign-born.Argentina ranked among the ten richest in the world in 1914, after the likes of Australia, Britain and the United States, but ahead of France, Germany and Italy. Its income per head is now 43% of those same 16 rich economies; it trails Chile and Uruguay in its own back yard.The country’s dramatic decline has long puzzled economists The first explanation is that Argentina was rich in 1914 because of commodities; its industrial base was only weakly developed.The landowners who made Argentina rich were not so bothered about educating it: cheap labour was what counted. That attitude prevailed into the 1940s, when Argentina had among the highest rates of primary-school enrolment in the world and among the lowest rates of secondary-school attendance.Without a good education system, Argentina struggled to create competitive industries.The divide between farmers and workers endures. Heavy export taxes on crops allow the state to top up its dwindling foreign-exchange reserves; limits on wheat exports create surpluses that drive down local prices. But they also dissuade farmers from planting more land, enabling other countries to steal market share.
  4. Hamid Reza Mazaheri-Seif, head of the Spiritual Health Institute in Qom, said that yoga’s new-age spiritualism was corrupting Islam and urged all decent Iranians, particularly members of the baseej, to protect the Islamic Republic against the “irreversible damages” yoga could cause. According to Iran’s Yoga Association, the country has around 200 yoga centres, a quarter of them in Tehran, the capital, where groups can often be seen practising in parks—to the chagrin of religious hardliners.
  5. Critical to this $2.5m techno-Eden, run by a firm called Green Sense Farms, are the thousands of blue and red light-emitting diodes (LEDs) supplied by Philips, a Dutch technology firm. The light they give off is of precisely the wavelength craved by the crops grown here, which include lettuce, kale, basil and chives.The idea of abandoning the sun’s light for the artificial sort is not new. It offers plenty of advantages: no need to worry about seasons or the weather, for instance, not to mention the ability to grow around the clock.Philips reckons that using LED lights in this sort of controlled, indoor environment could cut growing cycles by up to half compared with traditional farming.

Economist 5/20/14

  1. AT 3AM Thailand’s army, the institution that determines the fate of the country’s civilian governments, declared martial law. It invoked a draconian 100-year-old law that was most recently used by Sarit Thanarat, a military dictator, following his second coup in 1958. This time the army took up positions in key areas in the capital, Bangkok, but kept a light footprint. The army insists this is not a coup, and that the civilian government is still in placeThe army will be keen to keep it regarded as a “non-coup” to prevent Thailand’s being cut off from international capital markets, and to prevent its officers’ prosecution at a later date.So what are the more immediate possible outcomes? One idea is that martial law will create a face-saving exit for Suthep Thaugsuban, the leader of the anti-government protests. He has led the movement for six months now and so far failed to topple the elected government.
  2. Credit Suisse would admit guilt in helping American clients sidestep their country’s complex tax regime, and that the financial penalty would dwarf that imposed in 2009 on UBS, another big Swiss bank, for offenses that may have been far more extensive. When the settlement was finally announced on May 19th, the tally was $2.6 billion for Credit Suisse compared with $780m for UBS. Yet the most important difference with 2009 is not the money, but the charge and the plea. UBS was permitted to enter a deferred-prosecution agreement, enabling guilt to be expunged. Credit Suisse was forced to plead guilty to aiding tax evasion—making it the first big firm with ties to the financial industry to be tagged with a criminal charge since Arthur Andersen in 2003.Two aspects of the agreement will surely prove controversial. One is the survival of current senior management. Only five lower-level employees, who had been indicted for their involvement in the tax scheme but were still being paid, will be terminated.The other aspect that will certainly provoke criticism is a provision allowing the American clients who dodged taxes to remain protected. 
  3. MERGERS can be tricky. The biggest challenge facing “X-Men: Days of Future Past”, which brings together the illustrious cast of the first batch of films—Sir Ian McKellen as Magneto, Sir Patrick Stewart as Professor X, et al—with those of the 2011 reboot, “X-Men: First Class”—Michael Fassbender as a young Magneto, Jennifer Lawrence as Raven/Mystique. The story comes from a 1981 two-issue special of the comic series, in which it is actually Ms Pryde who goes back to rewrite history.
  4. THE tiny island of Kish off the southern coast of Iran resembles a building site.With its spotless beaches, Kish was a playground for Iran’s Shah and was later designated as one of the country’s free zones in 1989. Visitors can enter without a visa and the authorities charge no taxes. Yet until now this has failed to lure tourists and businessmen. Currently only 20% of the companies in Kish’s free trade zone involve foreign partners. Visiting foreigners are mainly migrant workers from the United Arab Emirates (UAE) who make the half-hour plane hop to renew their visa. Visitors are still expected to adhere to Iran’s stringent dress code, but both hijabs and morals are a bit looser on the island. Couples can be seen canoodling close at the viewpoint over a stranded Greek ship, with no morality police in sight. This makes the island an attractive destination for Iranians, who still make up the bulk of the island’s 1.5m visitors each year.
  5. Mr Gabriel was responding to last week’s European Court of Justice ruling regarding Google and the “right to be forgotten”. The court ruled that under certain circumstances, Google must remove links to (even accurate and legal) information about people if the information is old or irrelevant and yet damaging to the individual.. A convicted owner of abusive child pornography has also asked for links to be deleted, as has a criminally convicted celebrity relative. Whatever the merits of link deletion, Google is in an awkward position to be able to judge them. If it says no and the requester than successfully convinces a national privacy body, Google will face big fines. This weights the scales towards near-automatic link deletion.

Economist 5/19/14

  1.  BUYING ‘Fair Trade’ coffee is not really helping the very poor, new research suggests. By comparing living standards in Fair Trade-certified producing areas in Ethiopia and Uganda with similar non-Fair Trade regions, four development economists from the School of Oriental and African Studies (SOAS) in London found that Fair Trade agricultural workers often earned lower incomes.SOAS researchers found regular rural communities enjoy a higher standard of living than seasonal and casual agricultural workers who received an apparently subsidised wage for producing Fair Trade exports.
  2. MUCH of Serbia, Bosnia and eastern Croatia are under water. Flood maps marking the affected areas make it look as though a vast inland sea has suddenly appeared across the region. Tens of thousands of people have been evacuated. In Serbia some 300,000 do not have access to clean water or electricity. One third of Bosnia, an area that is home to 1.2m people, has been affected by the floods. So far the number of dead in Serbia and Bosnia is believed to be just under 50, a toll likely to rise.In only a few days around three months’ worth of rain has fallen, so even the most prepared of countries would have been in trouble.In only a few days around three months’ worth of rain has fallen, so even the most prepared of countries would have been in trouble.The trauma of the floods has triggered a wave of solidarity across the former Yugoslavia. Croatian and Slovene military helicopters are flying rescue missions in Bosnia. 
  3. China’s Environmental Protection Law has been amended for the first time since it was passed in 1989. The new provisions, due to take effect in January, will allow for stiffer fines against polluting companies, detention of negligent executives, protection for whistleblowers, and penalties for officials who fail to enforce laws. In much of China’s countryside, water and soil are as badly polluted as the air in its cities.Another recent report, based on official statistics from a range of government agencies, said that 85% of the length of China’s six biggest river systems consisted of water deemed undrinkable even after treatment. The proportion of groundwater that is polluted rose from 37% in 2000 to 60% in 2013.
  4. Federal Reserve’s programme of quantitative easing (QE) is what will happen to the vast stockpile of bonds it has accumulated in its efforts to lower interest rates. The problem with the Fed’s pile of assets is that it has a corollary in the form of a hoard of cash kept at the Fed by banks. It now stands at around $2.6 trillion Of the inflation that was supposed to erupt when the banks began lending this money there is little sign. Instead, the Fed has the opposite problem. There are so many dollars sitting idle that they risk interfering with the Fed’s conventional method for setting short-term interest rates.Before QE came along, the Fed would raise what is known as the Federal-funds rate by selling assets and thus draining the supply of reserves, forcing banks who need more to borrow from others. But it is hard to drive rates up like this if banks have so much cash they need never borrow. The Fed can also offer banks term deposits and since September has experimented with “reverse repurchase agreements”, in which it in effect borrows from money-market funds using some of its bonds as collateral.
  5. A RECENT move to introduce physical education to government girls’ schools met the same response as most attempts to give Saudi women equal rights with men. Since last year the authorities have been giving licences to private sports clubs for women, a far cry from 2006 when Lina al-Maeena had to register her ladies’ basketball team in Jeddah as a company. Since taking power in 2005, King Abdullah, the ageing monarch, has given women a bigger role in public life. In 2009 Norah al-Faiz was appointed deputy minister for education, the highest post attained by a woman in government. Last year 30 women took their seats in the Shura Council, a consultative body of 150 members, also appointed by the king. And women are due for the first time to vote and stand in municipal elections—the only ones permitted in the kingdom.  The guardianship rule—under which women must get permission from their husband, father or, less commonly, brother or son, to travel, work or get medical treatment—remains in place, in effect treating half the adult population as minors. Yet women can be held criminally responsible. Last month the local media reported that a woman had been sentenced to 150 lashes and eight months in jail for the crime of driving a car. The kingdom still ranks 127th of 136 in the UN’s gender-gap index.

Economist 5/18/14

  1. Although Asia’s emerging economies are slowing, the rise of their middle classes is continuing.Rising incomes mean rising demand for health care.Indonesia has only nine for every 10,000 people and the Philippines ten. America and Britain each have 29. Siloam is part of a booming private business for hospital care in Asia. A bidding battle is under way for Healthscope, an Australian hospital firm which runs pathology services in Malaysia, Singapore and Vietnam. HCA of America, the world’s biggest hospital firm, is reportedly prepared to pay $5 billion to outdo Fosun, a giant Chinese conglomerate. Last month a consortium agreed to pay $461m for Chindex, which owns a chain of hospitals in China.  China, which boasts that it has extended basic medical coverage to 97% of its people, continues to make reforms. The Philippines is in the midst of a rapid expansion of insurance. Indonesia is in the first year of a plan to bring health coverage to the entire population by 2019.IHH is now the largest hospital company in Asia and the second-largest in the world by market value. Its business stretches from Abu Dhabi to Vietnam. Many obstacles lie in the path of Asia’s ambitious private hospital companies. The first is simply that doctors and nurses are scarce. Second, regulations can be treacherous.he third obstacle is uncertainty.
  2. AlixPartners v Eric Thompson and Ivo Naumann, which was filed last month, will probably not become a Hollywood film. The mundane truth is that AlixPartners is a professional-services firm specialising in corporate restructuring and that Mr Thompson and Mr Naumann, the defendants, now work for McKinsey, a firm of consultants.Nonetheless, the case illustrates the heating-up of competition between corporate-turnaround advisers and strategy consultants. Companies in or near insolvency could not afford this luxury, and both AlixPartners and its bigger peer, Alvarez & Marsal, were founded in those years to cater to them.In order to diversify, Alvarez & Marsal set up a division to serve private-equity investors. AlixPartners founded a strategy-consulting arm of its own. Today, a minority of their revenue comes from turnaround work. Nonetheless, it remains their forte and a lucrative niche: Alvarez & Marsal earned $627m from the Lehman Brothers case alone in the four years after the bank went under. In 2010 McKinsey set up a Recovery and Transformation Services (RTS) practice. For McKinsey, the turnaround business is unfamiliar turf.
  3. In just ten years, according to the Centre for Asia Pacific Aviation (CAPA), low-cost carriers’ share of the Asia’s aviation market has soared from almost nothing to 58%. In Europe, where cheap airlines have been flying for much longer, easyJet and its fellows account for only about 40%.Of the world’s 15 busiest low-cost international routes, nine are in South-East Asia. All this demand requires aeroplanes: CAPA says South-East Asia is the only region where there are more planes on order than in existing fleets.However, the expansion of airlines’ capacity seems to be getting ahead of the growth in demand. Some low-cost carriers are struggling to fill their seats.On May 2nd Singapore-based Tigerair announced a loss of $177m in the year to March, up from $36m the year before. Several of its national affiliates, notably in Indonesia and Singapore, have fared particularly badly. Carriers’ costs are not as low as they would like. Most of South-East Asia’s showy, expensive airports are running at full capacity. Scoot, the low-cost arm of Singapore Airlines, and Cebu Pacific of the Philippines have also been exploring this business.
  4. La Michoacana ( ice-cream parlours ) is a Mexican business success story, possibly as well known as Dunkin’ Donuts is in the United States. But it is not a corporation, nor a brand, nor a franchise. It is a confetti of independent, family-owned ice-cream parlours. To find its roots, you must travel to Tocumbo. people from Tocumbo have set up ice-cream shops around Mexico (and even in America) and sent money home. They also epitomise Mexico’s stubborn attachment to smallness in business. The OECD says Mexico has more businesses with ten workers or fewer, as a share of the total, than any other big economy in Latin America: 95.5%, compared with 80-90% in Argentina, Brazil and Chile. Small firms are much less productive than large ones, and only a handful are exporters or integrated into modern supply chains. cKinsey talks of “two Mexicos” moving in opposite directions: a modern, export-oriented one, and a traditional one of small businesses where productivity is plunging by 6.5% a year.Staying small has other benefits, besides facilitating tax avoidance.any companies choose to avoid banks altogether: the banks’ association says that more than half of SMEs do not want a loan.Most lack electronic payment systems and have failed to branch out into the sale of mobile airtime and other billing services that are highly profitable for Oxxo and its peers.
  5. On May 9th a terse joint statement from their bosses confirmed that Publicis and Omnicom, two advertising giants, would not be getting married after all.  Corporate marriages often go wrong, but mergers of equals—in which two firms of roughly similar size combine, there is neither buyer nor target and typically no cash changes hands—account for a disproportionate share of the most notorious failures. In May 1998 Daimler and Chrysler announced their union, creating a giant German-American carmaker. The marriage struggled on until May 2007, when a divorce was announced. Worst of all was the merger in January 2000 of Time Warner, a media giant with 70,000 staff and revenues of $27 billion, with AOL, an internet firm whose 12,000 employees generated less than $5 billion. In 2009 AOL was spun off. So why does anyone enter into such a deal? Both firms tend to be big and similar, which holds out the possibility of lots of lucrative cost-saving. The rare merger of equals that succeeds, such as the creation of Lockheed Martin, a defence firm, in 1994, or of ConocoPhillips, an oil giant, in 2001, tends to have a detailed integration plan agreed in advance,