Economist 1/20/15

  1. It was not until the spread of satellite observations in the 1990s that measurement of sea levels became reliable and global. All sorts of adjustments are needed to make sense of earlier data and produce a complete record.Dr Hay and her colleagues have come up with a new way of doing this, reported in this week’s Nature. They use a statistical technique called probabilistic estimation in which probabilities are assigned to estimated or unknown figures.The team re-examined records from 622 tidal gauges (about a third of the total) since 1900. Applying probabilistic techniques, she puts mean sea-level rise between 1901 and 1990 at 1.2mm a year, plus or minus 0.2mm. That is much lower than previous estimates. The most recent assessment by the Intergovernmental Panel on Climate Change (IPCC, which represents mainstream climate scientists) said sea levels had risen about 1.7mm a year in 1901-2010. But if Dr Hay is right, the puzzling difference between the predicted and real figures disappears.Dr Hay applied her probabilistic techniques to more recent tidal-gauge data (between 1993 and 2010). Her estimates give a mean sea-level rise of 3mm a year in that period, almost exactly the same as estimates from satellite data.
  2. As Colorado celebrated a year of cannabis legalisation, Founders Fund, a venture-capital firm with $2 billion in assets that backed Facebook, has announced an investment in Privateer Holdings, a marijuana outfit behind names such as Leafly and [Bob] Marley Natural. Four states and Washington, DC, have now legalised recreational weed. A further 21 allow medical consumption under differing restrictions. Legal recreational and medical sales amounted to $2.6 billion last year, most of them in California and Colorado. That is just 6% of the estimated $40 billion still going to criminals (over $200 billion a year is spent on tobacco and alcohol). Cannabis venture capital was a tiny $104m in 2014 and opportunities remain limited because of federal restrictions.
  3. LI KA-SHING has long been Asia’s premier dealmaker.The value of his sprawling empire is now approaching $100 billion. His acumen has made the octogenarian Mr Li one of Asia’s richest men, and earned him the nickname of Superman in his adopted home of Hong Kong. At the moment, most of his assets are in two sprawling, listed conglomerates, Cheung Kong and Hutchison Whampoa. He also controls Husky Energy, a Canadian firm. Under the new plan, the two largest firms would be merged as CK Hutchison Holdings; then their various property holdings will be spun out into a firm called CK Property. The two new entities will also be listed but Mr Li will retain control, with roughly a 30% share in each.Why is Mr Li shaking things up? One reason, says the firm, is to unleash value. Another reason given for the reorganisation is to make it easier for analysts to assess acquisitions the group makes. Mr Li has officially anointed his elder son Victor (aged 50) as his successor, and declared that he will finance the business ventures of his younger son, Richard (48).
  4. But one measure South Korea is far from liberal: its National Security Law punishes, with up to seven years in prison, anyone who praises the gangster regime to the north. The law was adopted in 1948 to safeguard the new country from communist infiltration from North Korea. Under Park Geun-hye, the country’s conservative president who took office in 2013, 119 were arrested on suspicion of breaking the law in her first year. The continued use of such draconian powers has prompted calls from the UN to abolish them.Fresh instances continue to justify it, say its supporters. Last year Lee Seok-ki, a member of the United Progressive Party (UPP), a minor hard-left grouping, was sentenced to 12 years in prison on charges of plotting a pro-North rebellion to overthrow the government. In December the constitutional court disbanded the UPP, stripping its five other MPs of their seats in the National Assembly. And the UPP was one of the few political groups actively promoting peaceful reunification—supposedly a national tenet.
  5. In the first two weeks of the year, when Russia was on holiday, the rouble fell by 17.5% against the dollar. Inflation is up into double figures. The price of oil, Russia’s main export, has slid below $50 a barrel, prompting economists to revise their forecasts down. GDP is now expected to contract by between 3% and 5% this year.Yet the fall in oil prices to below $50 a barrel will cost the state budget, which was calculated on the basis of $100 a barrel, 3 trillion roubles ($45 billion), or 20% of planned revenues, according to Anton Siluanov, the finance minister.The Kremlin hopes to ride out the crisis, as it did in 2008-09 when GDP contracted by 7.5%. Then the government was able to stimulate demand by increasing public spending and saving indebted firms. It no longer has that option. Russia’s reserves are lower than they were four years ago and may last only for a year and a half, at best.Alexei Kudrin, a former finance minister, and Evsey Gurvich, an economist, argue that Russia’s economy cannot be repaired by monetary or fiscal measures. Even weak institutions are a secondary issue. At the heart of Russia’s malaise is the weakening of market forces and suppression of competition, which means there is no longer much of a market economy. The expansion of the state means that, although Russia no longer has Gosplan, its economy is dominated by state or quasi-state firms whose revenues depend not on their economic efficiency but on political contacts.
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