Tag: Approved

IN 2005 and 2006, in northern Pakistan, some 900 pregnant women took part in an unusual experiment. All were in their third trimester and suffering from depression. Most families in the area rely on subsistence farming. Almost none of the women worked outside the home. This kind of life is hard. Perinatal depression (depression around the time of giving birth) is more common in poor countries than in rich ones.

As part of one of the largest psychotherapy trials ever run, the women were split randomly into two groups. Those in one received weekly visits from a health worker for the month before the birth, and less frequent visits during the ten months after. The rest received the same number of visits, but from health workers who had been trained to deliver cognitive behavioural therapy (CBT) during the visits, too.

CBT is a talking therapy that aims to break the cycle of self-reinforcing negative thoughts. It focuses on the present, rather than trying to uncover the causes of…Continue reading

WORK is like a capricious lover whose incessant demands are resented but who is missed terribly when they are not there. The relationship is long-term; an average person spends more than half their life at work. Work defines people’s social status, sets income levels and generates a circle of friends.

Attitudes to management, as to work, are double-edged. The modern economy has become immensely complex. Coordinating the production of goods and services across international supply chains represents a huge achievement. Becoming a manager is usually seen as a promotion, yet the role of a “middle manager” is often despised as a useless layer of bureaucracy. Workers simultaneously blame managers for not providing enough leadership and for interfering too much with their daily tasks.

For their part, managers desperately want to improve their performance. Enter “management books” as a search term on Amazon and you get more than 100,000 results. Budding executives solemnly learn the…Continue reading

A RECESSION strikes. Central banks leap into action, cutting interest rates to perk up investment. But what if, as now, there is not much cutting to do, with rates already at or close to zero? In such cases the manual calls for purchases of government bonds with newly printed cash—quantitative easing, or QE—swelling the reserves each bank keeps at the central bank. Imagine instead that people also kept accounts at the central bank. New money could be added to their accounts, providing a direct, equitable boost to spending. That is one of several potential benefits of individual central-bank accounts, which are among the more intriguing of the radical policy ideas in circulation.

Central banks deal in two sorts of currency: cash, which anyone can hold, and digital money, accessible only to financial institutions through their accounts at the central bank. Individuals hoping to spend digital money must use a bank card or transfer (or a service, like Apple Pay, linked to a bank account), or a private…Continue reading

REPUBLICANS in the House of Representatives had hoped to cut a swathe through the Dodd-Frank act, a titanic set of financial regulations passed in 2010 in the wake of the 2007-09 crisis. The “Financial Choice Act”, drafted last year, would have lessened bureaucratic oversight and relied more on stiff capital requirements. Responsibilities and penalties would have been made clearer and regulators’ discretionary powers would have been reined in. President Donald Trump, who had promised on the campaign trail to “do a number on Dodd-Frank”, was effusive when the House endorsed the Choice Act last year.

But the bill approved by the House on May 22nd, and expected soon to be signed into law by Mr Trump, is a distinctly tamer affair. It moves the line between big, systemically risky banks and the rest, set in Dodd-Frank at $50bn in assets, to $250bn. That cuts the number of institutions subjected to stress tests and stricter supervision from 38 to 12. It also eases some restrictions on proprietary trading. But only the very smallest banks will be allowed to substitute higher capital for strict regulation. Even as bold thinking was thrown out, one truly bad idea made it in, presumably under pressure from representatives from heavily indebted states. Municipal bonds will be granted special treatment in the composition of bank capital, incentivising lenders to load up…Continue reading

FEW firms have more power to heat up the cauldron of global geopolitics like Gazprom, the state-backed Russian energy producer. It supplies more than a third of the natural gas that Europeans use for power generation, heating and cooking, creating what many—especially Americans—see as an unhealthy dependence (see chart). It has used its strength to bully countries which are out of favour with the Kremlin, such as Ukraine and Poland. And it is engaged in a growing rivalry with American exporters of liquefied natural gas (LNG) to Europe and China, a competition which potentially adds to the world’s trade tensions.

The firm also revels in its bad-boy image. When its…Continue reading

AS A citizen, Dave Jones worries that climate change may imperil his two children, and theirs in turn. What exercises him, as California’s insurance commissioner, is the way in which a transition to a low-carbon economy might affect the financial health of his other charges—the state’s 1,300-odd insurers. On May 8th Mr Jones unveiled an examination of how well the investment portfolios of the 672 insurers with $100m or more in annual premiums align with the Paris climate agreement of 2015, in which world leaders vowed to keep global warming below 2°C relative to pre-industrial times.

The answer is, not very. In the next five years carbon-intensive firms in the insurers’ portfolios plan to produce more internal combustion engines and coal-fired electricity than the maximum the International Energy Agency (IEA) reckons is compatible with meeting the 2°C goal (see chart). Meanwhile, investment plans in renewable energy and electric vehicles lag behind the IEA’s projections of what is needed.

The results echo those of a study last…Continue reading

MOBSTERS, gangsters and bent cops have all been tried under America’s Racketeer Influenced and Corrupt Organisations (RICO) Act. Might consultants be next? McKinsey, a management consultancy, is being sued under the law by Jay Alix, the founder of AlixPartners, a competitor in the field of bankruptcy advice. Mr Alix alleges that McKinsey knowingly misled courts in order to land clients. The firm denies any wrongdoing.

Bankruptcy is lucrative, for those doling out the advice. According to Debtwire, a data provider, corporate bankruptcies generated $1.3bn in fees in 2016, with lawyers taking home over half, and the rest going to consultants, accountants and financiers. McKinsey is a relative newcomer: it set up its restructuring arm, which turns around companies in financial distress, in 2010. Though its share of the market is smaller than those of the top players, AlixPartners and Alvarez & Marsal, its entry has stiffened competition. Its clients have included American Airlines,…Continue reading

Intrepid data gatherers

UBER’s fleet of autonomous vehicles has been parked up since one of its self-driving cars struck and killed a woman in Tempe, Arizona in March. That death highlighted once again the industry’s rush to develop self-driving cars. Waymo, a sister company of Google, plans to launch a robotaxi service in Arizona this year. General Motors says it will launch a fully autonomous taxi service, using cars with no steering wheel or pedals, in an American city in 2019. Volkswagen will make autonomous vehicles available through its new ride-hailing service, Moia, in 2021. Ford says it will be mass-producing fully autonomous cars by then, too.

But not every carmaker is going at the same speed. Toyota, one of only three car companies that sells over 10m vehicles a year, has made no equivalent commitments. The Japanese firm is instead concentrating on using artificial intelligence (AI) and automation to make conventional cars safer and more enjoyable to…Continue reading

LIFE insurance is among the oldest financial products. The Amicable Society, founded in London in 1706, charged members a set contribution and paid out annually to widows and children of those who had died in the previous 12 months. Today it is a vast industry: life and health insurers employ over 800,000 people in America alone. It protects hundreds of millions against the risk of dying early, through death benefits, or the risk of living longer than expected, for example through annuities. According to Allianz, a German insurer, total life-insurance premiums are above 5% of GDP in many rich countries, including Britain, France, Italy and Japan. In America, the world’s biggest market, annual premiums total more than $550bn.

But life insurers are struggling as never before. Those parts of the industry that have not evolved fast enough, says Clive Bannister, the head of Phoenix Group, a “closed” life insurer that buys and manages old policies but issues no new ones, have experienced a…Continue reading

On May 16th Callum Williams, our Britain economics correspondent, was named joint winner of the Young Financial Journalist of the Year at the Wincott Awards, an annual set of prizes for British journalists.