Selections From The Economist - Print Edition

Home discomforts

After a long winter, spring brought a touch of sunshine to American house prices. The latest Case-Shiller indices, released on June 30, showed that prices continued to fall in April: the ten-city index was 0.7% lower than a month earlier, and the 20-city index went down by 0.6%.

Put out

Having raised the alarm on deflation, the Federal Reserve has now begun to sound the all clear. The statement it released after its policy meeting on June 24 notably omitted the warning from its three prior meetings that “inflation could persist for a time below rates that best foster economic growth and price stability”.

The boom in busts

It is not quite the Armageddon that was being predicted in the weeks after Lehman Brothers became America’s biggest corporate bankruptcy last September.

Hard talk, soft policy

The global economy has stopped sinking and central bankers are pausing for breath. As The Economist went to press on July 2nd, the European Central Bank was expected to keep its main “refi” interest rate unchanged, at 1%.

Escaping the shakedown

Governments are not raising corporate tax, but firms can no longer count on the taxman to treat them ever more kindly

Alternative social investments

This has been the worst year or so in history for the hedge-fund industry, with many funds suffering deep losses and record numbers of them going out of business. Yet some leading hedge-funders remain firmly committed to giving away a chunk of their fortunes.

The end of retirement

When Otto von Bismarck introduced the first pension for workers over 70 in 1889, the life expectancy of a Prussian was 45. In 1908, when Lloyd George bullied through a payment of five shillings a week for poor men who had reached 70, Britons, especially poor ones, were lucky to survive much past 50.

Can pay, won’t pay

House prices in America have fallen so far that as many as one in five households have mortgage debt greater than the value of their homes. In a few states, borrowers are not liable for the shortfall between an unpaid loan and the resale value of the home it is secured upon.

Shopaholics wanted

Asia's emerging economies are bouncing back much more strongly than any others. While America’s industrial production continued to slide in May, output in emerging Asia has regained its pre-crisis level...

Chinese IPOs resume

It is like a downpour after a drought. In 2007 and early 2008, hundreds of Chinese companies worked feverishly with accountants and bankers to prepare for initial public offerings.

Parting company

Will the Obama administration’s reforms of the financial system hurt retailers and manufacturers with lending arms?

Duties call

Despite the periodic sighting of green shoots elsewhere in the economy, the landscape of global trade remains resolutely bare. The World Bank said on June 22 that world-trade volumes, reeling from a drastic collapse in global demand, will shrink by nearly 10% this year.

Deliver us from competition

Ricky Gervais, a comedian, tells a story about an anxious flight. When informed that the airline no longer offered newspapers to passengers, in order to cut costs, he found it all too easy to imagine a maintenance worker inspecting the plane’s undercarriage and asking.

The quiet Americans

Back when times were better and the newspaper industry wasn’t fighting for dear life, reporters at the Cleveland Plain Dealer would regularly grumble at the measly pay increases their union negotiated.

Not so dreamy

Only a few days ago staff at Boeing were opening a ceremonial barrel of sake at the factory in Seattle where assembly was starting of the first 787 Dreamliner aircraft to be delivered to All Nippon Airways...

Whiter than white

Bermuda, a British territory in the North Atlantic, proudly announced this month that it had made it on to the OECD’s white list of benign tax regimes. That puts it among the countries that have “substantially implemented” internationally agreed tax standards, as monitored by the OECD, a club of industrial nations.

Pain and pleasure

Next month the shareholders of British Airways will enjoy the services of the firm’s embattled boss and finance chief, free of charge, as the pair do their bit to cut costs by foregoing a month’s wages.

Breaking free

In recent months Toyota has replaced its bosses, halted pet projects and temporarily cut production in Japan almost in half. Toshiba took control of affiliates and said it would shut down unprofitable businesses.

New foundation, walls intact

Even Merton Miller, a Nobel prize-winning economist with a passion for financial arcana, found it “deadly dull”. But if ever there was a week when financial regulation set pulses racing, this was surely it—at least for those too young to remember the great reforms of the Depression.

Not so fast

Low interest rates are intended to ease the burden on debtors, discourage saving, encourage spending and thereby revive the economy. But they also have a distorting effect on asset markets. By reducing the cost of speculation, they encourage bubbles.

Competitive failure

Economists tend to think that an industry divided between hundreds of players, each with a tiny market share, should be fiercely competitive, with prices cut to the bone. But economic theory struggles to explain the bizarre world of fund management, where the market is fragmented but fees stay stubbornly high.

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