Economist 11/2/15

  1. SINCE the 1990s the global market for full-sized commercial airliners has been a duopoly. The market, which by some estimates will be worth $4.6 trillion over the next 20 years, is dominated by Airbus, a European firm, and Boeing, its American competitor.In theory, at least, airlines will soon have a wider choice of planes. On November 2nd COMAC, a Chinese state-owned aircraft manufacturer, revealed its C919 plane (pictured), a competitor to Airbus’s A320 and Boeing’s 737, the two most popular planes in the skies.After several delays, Irkut, part of Russia’s state-owned United Aircraft Corporation (UAC), hopes to launch its MC-21 aircraft, another potential rival to the 737 and A320, into service in 2017.
  2. Many aviation analysts remain sceptical about whether these rivals, even with generous state backing, will ever put a significant dent in the bulging order books of Airbus and Boeing.Although the Russians and the Chinese may well be good at designing aircraft, they have little experience in creating the hugely complex production systems and supply chains needed to build them to the extremely high standards of reliability and safety that airlines expect.Incumbents are just as hard to dislodge in the market for smaller “regional” jets (ones with up to around 100 seats), which is dominated by Bombardier and Embraer of Brazil, but which COMAC, UAC’s Sukhoi subsidiary and Mitsubishi of Japan are all trying to break into.Mitsubishi’s MRJ and Sukhoi’s Superjet were also delayed by technical problems. The Superjet is now in service with a handful of airlines, though orders have been sparse.
  3. FIVE years after the house price crash that nearly took down an entire financial system, America’s property market appears to be in rude health: prices have appreciated by 17% over the past three years. But that statistic hides vast differences in housing markets across America. In San Francisco, thanks to a tech boom and constrained supply, prices have increased by 50% over the same period, and have now surpassed their 2005 peak.As a gauge of frothiness, The Economist has compared prices against two affordability metrics: income and rents. On this basis, affordability looks stretched in San Francisco with prices at nine times household income and nearly 20 times annual rents. This compares to a long-run city average of six times income, and a national average of 3.3 for income and 11 for rents. By comparison, housing looks particularly cheap in Detroit and Pittsburgh where prices are just over two-times median household income.But gauges of affordability are affected by interest rates, which are at an all-time low, making housing artificially cheap to buy. As and when interest rates do normalise, prices will face pressure to return towards their long-run relationship with income and rents.
  4. Except for a few messages, most of which are believed to be hoaxes, he has not been heard from since. Nobody has ever met the mysterious creator of bitcoin,Satoshi Nakamoto in person, no photos exist. Even the roughly 1m bitcoin (currently worth more than $400m) which sit in digital wallets once controlled by him have not been touched.Most books on bitcoin feature a lengthy chapter about who Mr Nakamoto may be. Each has its own theory, often based on the same sources.Speculation about Mr Nakamoto’s identity is likely to continue.A more interesting question is whether Mr Nakamoto’s absence is a good thing for bitcoin.The vanishing act not only guaranteed ongoing publicity, it bequeathed bitcoin with a powerful creation myth, helping the currency attract followers and gain momentum.But bitcoin has grown so fast that its community of developers has yet to agree on the kind of robust decision-making processes it needs in the absence of a benevolent dictator. Currently, the rule is unanimity among the project’s lead developers: a recipe for stasis. And now they may be heading for a schism: two camps are locked in an ugly fight over how to expand the system’s capacity.

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