- Latin Americans save much less than the experts think they ought to. Compared with residents of developed countries, and especially those of emerging Asia, Latin Americans stand out for their lack of thrift.The IDB (Inter-American Development Bank ) identifies three main problem areas: the financial system, pensions and government spending. Although Latin America’s financial systems are more solid than they were in the past and have grown, they remain “small, expensive and inefficient”, the IDB says. On average bank loans to the private sector are equal to only 30% of GDP in Latin America, compared with 80-100% in rich countries or in emerging Asia.The pension problem is severe. Although the population is ageing, only 45% of Latin American workers contribute to any kind of pension scheme, the IDB says.Another problem is that Latin American governments save too little, and favour current spending over public investment. Subsidies and pay for bureaucrats take priority over transport, energy and water infrastructure.
- The region’s low propensity to save has historic roots. Generations of Latin Americans have seen their governments wipe out their savings either through inflation or by simply confiscating them. That is why so much capital has flown the region over the past half-century.Some economists argue that Latin Americans have developed their own common-sense instruments of saving. They invest in building their own houses and in educating their children. They trust that rental income and family solidarity will provide for them in old age.
- Even the most hawkish critics of Iran agree that it has done its bit for the nuclear deal. Within months of the deal being signed last July, Iran began to dismantle almost all of its centrifuges, which could be used to enrich uranium to weapons-grade purity, and to move its stockpile of low-enriched uranium out of the country. That work has been speedily completed.The West, too, has kept to the letter of the deal. The sanctions imposed on Iran as its nuclear programme intensified in the 2000s have been lifted.The problem lies outside the accord. Iran has tested nuclear-capable ballistic missiles and is waging wars, directly and by proxy, around the Middle East. America maintains its unilateral sanctions, which were imposed long before the nuclear crisis. They concern Iran’s dire human-rights record; its support for terrorist organisations, including Hamas in Gaza and Hizbullah in Lebanon and Syria; and its development of long-range missiles. These sanctions were excluded from the nuclear negotiations.
- America’s non-nuclear sanctions are hurting Iran in two ways. The “primary” ones ban American companies and individuals from dealing with the regime, subject only to a tightly controlled list of exceptions which include food, medicine and commercial airliners (Boeing has just signed a big order with Iran). Any transaction that passes through an American bank or insurance company, even tangentially, or uses the dollar, or involves an American citizen working for a foreign company, is theoretically subject to sanctions.Under “secondary” provisions, America reserves the right to punish foreign firms if they do business with anyone on a list of designated people and institutions, among them Iran’s Islamic Revolutionary Guards Corps. Perhaps the Supreme Leader did not understand the nuclear deal, or perhaps Mr Rohani oversold it. More likely, Iran is trying to extract extra concessions that it has not negotiated.
- Two months after opening, this Starbucks still pulls impressive queues on weekends. Famous international brands are a bit of a novelty in South Africa. Similarly enthusiastic crowds met the launches of the first Krispy Kreme Doughnuts and H&M clothing shops in Africa late last year. Burger King, which opened in 2013, had long queues for months.Shoppers have been pinched by rising food prices and a weak rand that makes imports costlier. So far, though, this hasn’t stopped the country’s aspirational middle class from splurging. When the spiffy new Mall of Africa (home to South Africa’s second Starbucks shop), opened in late April it drew more than 120,000 people and snarled up traffic for miles.Many of the new middle class are living beyond their means. South Africa has one of lowest savings rates in the world. According to the government, nearly half of South Africans with access to credit are struggling to meet their monthly payments or in arrears.