Economist 4/20/15

  1. On April 24th 1915, scores of Armenian intellectuals were rounded up in Istanbul and most were later murdered. But as the centenary approaches, what followed is still bitterly contested. Turkey claims that around 500,000 Armenians died of hunger and disease en route to the Syrian desert. They were being deported, it says, because Armenian revolutionaries were siding with Russia against the Ottomans during the first world war. Survivors and their scattered descendants put the toll as high as 1.5m, insist the deaths were largely intentional rather than a regrettable side-effect, and want the events recognised as genocide.But Turkey is mounting a vigorous counter-campaign. A year ago Recep Tayyip Erdogan, the president, became the first Turkish leader to acknowledge Armenian suffering under the Ottoman empire when he offered condolences. Three big political parties, including Mr Erdogan’s own Justice and Development party (AK), are fielding Armenian candidates for winnable seats in the election on June 7th, a first.
  2. On April 21st Google, the world’s biggest online-search engine, will start implementing another major overhaul of its mobile-search algorithm. The latest change is not meant to discriminate against rivals, but demote sites in Google’s mobile-search results that are not deemed “mobile-friendly”. it is bad news for many operators: 40% of the leading sites failed Google’s “mobile-friendly” test and may be down-ranked in search. Google regularly updates its algorithms, but big revisions are rare. It announced its plans more than two months ago and posted a step-by-step guide for developers to upgrade their site in time.
  3. ON APRIL 19th an estimated 700 migrants were killed when their boat capsized in the Mediterranean, one of the worst refugee drowning episodes in decades. That puts the total number of deaths in the Mediterranean over 1,500 this year. That’s a tenfold increase over the same period in 2014, and as the sea warms more are likely to attempt the journey to Europe.Rough weather is partly to blame, as is a rise in violence associated with political instability in Africa and the Middle East. Humanitarian-aid officials emphasise two other factors. One is the suspension last October of Italy’s Mare Nostrum search-and-rescue mission. The second factor is that the smugglers are cramming more and more people on ever more vulnerable craft as they run short of boats.
  4. EXPECT the diplomatic equivalent of a love-in now that China’s president, Xi Jinping, has landed in Islamabad, Pakistan’s capital, for a two-day visit.He is to sign agreements fleshing out a “China-Pakistan Economic Corridor”, which is to stretch from a Chinese-built port at Gwadar in Pakistan’s southern province of Balochistan to Kashgar in China’s western region of Xinjiang, and to cost an estimated $46 billion. It will involve road, rail and pipeline links.The two countries have also agreed to co-operate on natural gas, coal, and solar-energy projects that should provide 16,400 megawatts of electricity: roughly doubling present generating capacity, and tackling one of the country’s most serious economic bottlenecks.China has also helped Pakistan build six nuclear reactors. Economic interactions between China and Pakistan have a history of ending in disappointment. Gwadar was opened with great fanfare in 2007 but remains something of a white elephant.
  5. THE question of whether businesses should dabble in finance was supposedly settled in America after the 1929 crash, when the mixing of commerce and banking was banned. But those rules were watered down and circumvented by GE and many others. The share of American profits from finance is 33%, as measured by its national accounts, which include the finance arms of industrial companies. This is far higher than the 20% share of the profits generated by S&P 500 companies that is attributed to “pure” banks and insurers.firms can get involved with “vendor financing”—lending to customers to help them buy their products. But customers can default: Motorola and Nokia lost, in total, $3 billion in Turkey in 2001.Second, consumer firms can sell retail financial services to their customers. Walmart, a grocer, offers banking products to shoppers.The most gung-ho strategy is to set up a fully-fledged finance subsidiary, as GE did. Sometimes it works. Warren Buffett’s conglomerate, Berkshire Hathaway, contains a huge insurance unit whose cash float finances its investments. But it is opaque, with $37 billion of notional derivatives exposure.

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