Economist 7/27/16

  1. In Transparency International’s Corruption Perceptions Index, Nigeria is 31st from the bottom.Nigeria’s president, Muhammadu Buhari, a former military ruler, wants to change this.Many locals think the problem reached unprecedented heights under the previous administration of Goodluck Jonathan. In March an official audit found that the state-owned oil company withheld over $25 billion from the public purse between 2011 and 2015.Since Mr Buhari came to power in May 2015, dozens of public officials and their cronies have been arrested by a beefed-up Economic and Financial Crimes Commission (EFCC). The most famous of those, the former national security adviser Sambo Dasuki, is charged with dishing out $2 billion worth of fake contracts for helicopters, aeroplanes and ammunition. Under new management, the Nigerian National Petroleum Corporation has grown slightly less opaque: it now publishes monthly financial reports.
  2. His political opponents, who ruled Nigeria for 16 years until 2015, call the campaign a witch-hunt. The EFCC is yet to send down any of its most influential adversaries. Most government agencies, including the one that collects taxes, do not make their budgets public. Nor do most state and local governments, which suck up about half of public revenues.The finance minister, Kemi Adeosun has struck thousands of ghost workers off the public payroll. Her “treasury single account” may be the biggest coup of all. It replaced a labyrinth of government piggy banks, giving Nigeria more control of its earnings. Financiers reckon that it could serve as a lesson to others in West Africa as well.
  3.  In a bid to convince the country that his wife is a caring as well as a clever woman, Mr Bill Clinton combined folksy story-telling with patient exposition.There was politics in Mr Clinton’s decade-old memories, as when he described driving his future wife home to her family in suburban Illinois, and waxed lyrical about its post-war prosperity.Daring the crowd to lose interest, the former president told stories about his wife holding a listening tour of all 75 counties of Arkansas to investigate pre-school education. But all the folksiness was building up to a point. If the country is anxious and unhappy and longing for change: “She’s the best darn change-maker I have ever met in my entire life.”Will this work? Mr Clinton is a fine speaker and explainer of things. But is he tackling the right problem?But critics do not think his wife is lazy, or stupid. They think she is a crooked schemer, and a big-government liberal who wants to tax them, regulate business into ruin and take away Americans’ guns.
  4. Tens of thousands of Palestinians in Salfit and the surrounding villages are suffering through a months-long drought. Most of Israel’s water is artificially produced. About a third comes from desalination plants that are among the world’s most advanced. Farmers rely on reclaimed water for irrigation. Israel recycles 86% of its wastewater, the highest level anywhere; Spain, the next best, reuses around 20%.None of these high-tech solutions helps the Palestinians, though, because they are not connected to Israel’s water grid. They rely on the so-called “mountain aquifer”, which sits beneath land Israel occupied in 1967. The 1995 Oslo Accords stipulated that 80% of the water from the aquifer would go to Israel, with the rest allocated to the Palestinians. The agreement, meant to be a five-year interim measure, will soon celebrate its 21st birthday. During that time the Palestinian population in the West Bank has nearly doubled, to almost 3m. The allocation has not kept pace.On average they get 73 litres per day, less than the 100-liter minimum recommended by the World Health Organisation.Israel’s water authority sells the Palestinians 64m cubic metres of water each year. It says they cause their own shortages, because up to a third of the West Bank’s water supply leaks out of rusting Palestinian pipes.
  5. The American Psychological Association (APA) suggests that, at least in America, the most common causes of Stress  are to do with money, work and family. Women report being more stressed than men and are twice as likely to be diagnosed with anxiety disorders. Men may also be more likely to conceal their distress. Black and Hispanic Americans, as well as poor people and parents, also report higher levels of stress. In 2015 half of Americans starting university reported being stressed most or all of the time.n 1979 Peter Nixon, a consultant at Charing Cross Hospital in London, described a “human function curve”: a moderate amount of stress, such as a deadline or race, was now understood as not just harmless, but beneficial.Recognising that stress can be beneficial seems to help in two main ways. People who have a more positive view of stress are more likely to behave in a constructive way: a study by Alia Crum of Stanford University’s Mind and Body Lab.In less extreme situations, the body and brain should react somewhat differently. When people perceive they are being challenged rather than threatened, the heart still beats faster and adrenalin still surges, but the brain is sharper and the body releases a different mix of stress hormones, which aid in recovery and learning.

Economist 2/1/16

  1. A NEW ranking of restaurants in American airports has been released by the makers of AirportXP, a market-research smartphone app. Based on the responses of around 88,000 of its users, it found that Honolulu is the worst airport in the country for a pre-flight meal, followed by Washington Reagan and Los Angeles. Tampa, Salt Lake City and Minneapolis St. Paul, meanwhile, came top. There are many reasons why airport dining is so terrible. For a start, there is rarely enough competition. In the terminal, a small number of establishments vie for a large, captive clientele. Restaurants do not rely on repeat trade—at least not to the extent that a local eatery does—so there is even less incentive to offer high levels of service.There is also the lack of space problem. It is difficult to hive off an area in a cramped terminal and make it beautiful.
  2. Brokers are now putting probability estimates on the chance of a recession in America this year. Royal Bank of Canada uses the jobless claims numbers to come up with a 15% probability; Bank of America comes up with 20%.This blog has returned from time to time to some old-fashioned measures; the goods that are being moved by truck and train. The American Trucking Association reports that December’s volumes were 1.1% higher than the same month in 2014. This hardly suggests an economy at full throttle but nor does it point to outright recession.Those figures look pretty upbeat compared with the data out of the Association of American Railroads; its latest weekly numbers (to week ending January 23) show a 10.5% decline in shipments over a year ago. The decline in the oil price may have played a big part.Separate Bank of America research suggests that declines in railroad freight volume tend to be associated with recessions. Perhaps the shale effect destroys the usefulness of this as an indicator.
  3. Of 168 countries surveyed by Transparency International, an anti-corruption group Germany, in its annual Corruption Perception Index, Nigeria ranks 32nd from the bottom.Whistleblowers sometimes try to estimate how much cash has gone missing from Nigeria’s public purse. In 2014 a respected former central-bank governor lost his job after claiming that $20 billion had been stolen. But this captures only a small share of the damage done by corruption.Nigeria’s tax-to-GDP ratio is only about 8%, compared with more than 25% in South Africa. Given rampant theft, many people are reluctant to pay their taxes on the ground that the money will just be squandered.This may in part explain why, despite its oil wealth, there is a rising share of Nigerians who are classified as below the poverty line. A survey of living standards (using data from 2010, the most recent figures available) suggested that 61.2% of the population lives in absolute poverty, an increase of over six percentage points on the previous figures from 2004.
  4. The term “shadow bank” was coined in 2007 by Paul McCulley of PIMCO, a big bond fund to describe risky off-balance-sheet vehicles hatched by banks to sell loans repackaged as bonds. Today, the term is used more loosely to cover all financial intermediaries that perform bank-like activity but are not regulated as one. These include mobile payment systems, pawnshops, peer-to-peer lending websites, hedge funds and bond-trading platforms set up by technology firms. Among the biggest are asset management companies. In 2013 investment funds that make such loans raised a whopping $97 billion worldwide.Shadow banks have flourished in part because the traditional ones, battered by losses incurred during the financial slump, are under pressure.
  5. Critics worry that unlike banks, which lend against deposits from customers, non-banks loan money using investor’s cash and rotating lines of credit. This is especially risky when skittish investors who bet on short term gains withdraw their money at once. But non-bank financing need not always be a bad thing. It offers an additional source of credit to individuals and businesses in countries where formal banking is either expensive or absent.In January last year, America’s Federal Housing Finance Agency proposed new rules that would require all non-banks to have a minimum net worth of $2.5m plus a quarter percentage point of the outstanding loan stock that they service. Only then would they be able to sell their loans to Fannie Mae and Freddie Mac, which buy American mortgages from banks.