Economist 9/23/14

  1. The collapse of a large independent mobile phone retailer in Britain, Phones 4U, announced on September 15th, still came as a shock, the more so as it seemed to be in a good market. Administrators are now scrambling to find buyers for the company’s 550 stores.The immediate cause of Phones 4U’s collapse was the decision by Britain’s biggest mobile-phone operator, EE, owner of the Orange and T-Mobile brands, not to renew a contract to sell its products in Phones 4U shops. This followed a similar decision by Vodafone earlier this month. Phones 4U had already been deserted by two other operators, O2 and Three. This leaves only one independent mobile-phone retailer on the high street, Dixons Carphone, itself a recent merger of Dixons, an electrical retailer, and Carphone Warehouse.Vodafone and EE both deny any wrongdoing, and instead blame the current private-equity owners of Phones 4U, BC Partners, for leaving it short of financial wiggle-room when it came to negotiating the new contracts.
  2. ADULTS in developing countries are half as likely to have an account at a formal financial institution as those in the rich world. Only 18% of people in the Middle East and north Africa do, compared with 89% in high-income countries.For many, the answer is to tie up money in livestock, which can be sold if necessary, or to join a rotating savings and credit association (ROSCA), which pools members’ savings and disburses them to those in need.Hence the growing enthusiasm for “commitment-savings accounts” (CSAs), which attempt to tie people’s hands to prevent myopic spending. Those who open an account typically cannot withdraw funds until a certain date, or until they have deposited a certain amount. But there is a big problem: few people seem to want CSAs. New research in Kenya finds that only 19% of households had one, whereas 78% saved via a ROSCA.A study in Kenya found that demand for CSAs rises if the funds can be used for emergencies.
  3. “LA BESTIA” (“The Beast”) still trundles along the length of Mexico, from Guatemala to the United States. But the infamous freight train has fewer people perched on its roof and clinging to its sides. Since last month the Mexican authorities have been cracking down on Central American migrants clambering on board; their ranks have dwindled from hundreds to dozens on each journey. The government’s tougher policies seem to be motivated more by pressure from the United States to tackle a rise in the number of unaccompanied child migrants coming north from Honduras, El Salvador and Guatemala.. The numbers of unaccompanied minors making it to the United States have fallen sharply in recent weeks: detentions at the border have declined from over 10,000 in June to 3,100 in August.
  4. CAIXABANK is a rare breed in Spanish banking. The financial crisis brought most of the country’s 45 cajas—regional savings banks with a commitment to social welfare—to their knees. But CaixaBank, based in Barcelona, has grown. On September 1st it became the largest domestic bank by loans, after buying the Spanish retail business of Barclays, a British bank.The bank avoided the worst of the euphoric lending during Spain’s decade-long construction boom that felled many of its peers. Its current exposure to property is €31 billion ($40 billion), but it has set aside 42% of that sum in provisions. CaixaBank’s scale helped it stave off the political interference that added to the mess at other cajas. Better management, in turn, led to bigger profits, some of which it spent on big stakes in blue-chip Spanishfirms such as Telefónica and Repsol.
  5. Mr Kazuo Hira, chief executive of Sony, was presumably reminded of that chilling sensation this week, when he was obliged to announce that Sony would take a $1.7 billion impairment charge on the value of its mobile-phone unit, because of lowered expectations for sales of smartphones. For the first time since 1958, when Sony was first listed, the firm will not pay a dividend this year. Its achievements in smartphones have now proved too little, too late. It missed out on the category’s earlier boom, and Apple and Samsung swiftly came to dominate.The news will pile on still more pressure to increase the pace of restructuring. In July Sony spun off its television unit into a separate entity, and sold its Vaio personal-computers division. Yet other than PCs, Sony still makes all the same products—and often, too many versions of them—as it did five years ago.

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