Tag: Business and finance

“HELICOPTER parent” may sound like an insult, but given the chance, most parents would probably opt for the help of a chopper to zoom little ones between school, football practice and piano lessons. Getting children where they need to go is a huge hassle and expense, especially in homes where both parents work. Hailing rides through firms like Uber and Lyft has made life more convenient for adults. But drivers are not supposed to pick up unaccompanied minors (although some are known to bend the rules).

Youngsters represent a fresh-faced opportunity. Ride-hailing for kids could be a market worth at least $50bn in America, hopes Ritu Narayan, the founder of Zum, one of the startups pursuing the prize. These services are similar to Uber’s, except they allow parents to schedule rides for their children in advance. Children are given a code word to ensure they find the right driver, and parents receive alerts about the pick-up and ride, including the car’s speed. These services promise more rigorous background checks, fingerprinting and training than typical ride-hailing companies.

Annette Yolas, who works in sales at AT&T, a wireless…Continue reading

Still waiting for the invoice approval

GROWING up on a sugar-cane farm in Australia, Lex Greensill had a front-seat view of the strains suppliers suffer as they wait to be paid. After harvesting his crops, Mr Greensill’s father had to wait a year or more to receive payment. Across industries, buyers are eager to conserve their cash. Delaying payment is one way to do it: among the most important for some, such as big retailers, says Mr Greensill. Many buyers expect their suppliers to accept payment months after delivery. Even so, many still pay late—47% of suppliers surveyed by Taulia, a fintech firm, said they had this problem. In 2011 Mr Greensill founded Greensill Capital, one of a cluster of new fintech firms overhauling how supply chains are financed.

The details vary but their basic approach is to take advantage of buyers’ low credit risk to pay suppliers’ invoices promptly. The buyer—a large supermarket chain, say—approves a supplier’s invoice and transmits it to the fintech lender. (The lender can raise money in different ways: Greensill raises funds in the capital markets.) The lender pays the supplier on…Continue reading

Now everyone sees red

ON THE flanks of the Simandou mountains in south-eastern Guinea live remote colonies of West African chimpanzees. They alone should be grinning over the fate of those who have sought to turn their tropical habitat into Africa’s biggest iron-ore mine. No one else is laughing. Rarely has such a group of billionaires, hedge-fund barons, mining firms, government officials and go-betweens been snagged in such a woeful saga.

In theory, the prospect of digging up 2bn tonnes of ore from a country that is among the poorest on Earth should be encouraging, if corruption is kept in check. The government of Alpha Condé promised to do so upon taking office in 2010. But in reality the line between paying go-betweens to help win concessions and lining officials’ pockets is so blurry that it can cause mining firms endless trouble.

In recent months the plotline has shifted. During the past half-decade the businessman painted as the saga’s pantomime villain has been Beny Steinmetz, a globe-trotting Israeli diamond merchant, worth billions, whose lurid battles over Simandou with Rio Tinto, one of the…Continue reading

IT WAS telling that Germany, a country with a phobia of rising prices, in the first week of 2017 reported a jump in inflation. Its headline rate rose from 0.8% to 1.7% in December. After two years of unusually low price pressures, inflation across the rich world is set to revive this year. Much of this is because of the oil price, which fell below $30 a barrel in the early months of 2016 but has recently risen above $50 (see chart). Underlying inflation, too, seems poised to drift up. That is good news. The story for 2017 is not of inflation running too hot but rather of a welcome easing of fears of deflation.

To understand why, consider the three big drivers of inflation in the rich world: the price of imports, capacity pressures in the domestic economy and the public’s expectations. Start with imported inflation. A year ago, global goods prices were falling because of a slide in aggregate demand and a seemingly endless glut of basic commodities and manufactures. China’s economy wobbled. Emerging markets in general were in a funk; two of the largest, Brazil and Russia, were deep in recession.

Things look perkier now. Emerging markets…Continue reading

EMERGING markets have not been the same without Argentina, a country that embodies the promise and peril, the romance and the rockiness of the asset class. In 1988 it was one of the ten original members of the most popular emerging-market equity index, introduced by MSCI. In the late 1990s it was also the biggest member of the benchmark-bond indices compiled by JPMorgan Chase. But once it defaulted at the end of 2001, Argentina was exiled from global debt markets. And after it subsequently imposed capital controls on “hot money”, its shares suffered a similar banishment, ejected from MSCI’s index in 2009. It became a remote “frontier market”, like countries such as Bangladesh.

Since Mauricio Macri succeeded Cristina Fernández de Kirchner as president at the end of 2015, Argentina has been finding its way back from the financial periphery. It has floated its currency and lifted capital controls, recently abolishing a remaining requirement that foreign investors keep their money in the country for at least 120 days. In April the government sold $16.5bn of dollar bonds to international investors in a single day (a record for an…Continue reading

HOW do you solve a problem like Marine? Ms Le Pen, leader of France’s far-right National Front, has indicated that she hopes to reintroduce a national currency if she is elected president in May. In a recent speech, she suggested that government bonds would be redenominated in francs instead of euros.

The proposal was dressed up in technicalities. The franc would be revived as a “parallel” currency for official transactions and used alongside the euro in a version of the systems (the snake and the exchange-rate mechanism) that existed in the 1970s and 1980s. Such schemes tied European currencies together but were subject to regular crises, with France periodically devaluing the franc.

Investors would pretty quickly see through the façade. There is not much point in bringing back a national currency unless you want the right to devalue it. And there is not much point in redenominating government bonds in francs unless you want to pay creditors back less than they expected. (This might technically count as a default, according to Moody’s, a rating agency; it depends on the exact circumstances.) If that happened, it…Continue reading

EVERY January more than 10,000 economists meet for the annual conference of the American Economic Association (AEA). This year, the shindig was in balmy Chicago, a stone’s throw from its second-tallest building, the name TRUMP stamped in extra-large letters across its base. Most papers had been written months in advance; few sessions tackled the electoral earthquake in November. Yet there was no mistaking the renewed sense, following its failure to foresee the 2007-08 financial crisis, of an academic field in a crisis of its own. The election was seen as a defeat for liberalisation and globalisation, and hence for an economics profession that had championed them. If economists wish to remain relevant and useful, the modest hand-wringing at this year’s meetings will need to yield to much deeper self-reflection.

Their theories had always shown that globalisation would produce losers as well as winners. But too many economists worried that emphasising these costs might undermine support for liberal policies. A “circle the wagons” approach to criticism of globalisation weakened the case for mitigating policies that might have protected it from a…Continue reading

Awards: Tom Easton, our American finance editor, was named journalist of the year by the CFA Society of the UK in a ceremony on January 11th. The Economist was named publication of the year.

BUSINESS travellers have innumerable reasons to look forward to a visit to New York, and a few grounds to dread getting there. Chief among them are the city’s hellish airports. A study in November found that New York’s three international airports are the very worst among America’s 30 busiest hubs, in terms of ease of access, wait times and amenities.

The oft-derided LaGuardia came in dead last, with the highest rate of flight delays and cancellations, but the city’s bigger problem is John F. Kennedy Airport, which has more international passengers than any other airport in America. According to the study, it is massively inconvenient, with the longest drive time to the city centre and the longest waits to get through security.

That might be about to change. Last week, New York Governor Andrew Cuomo laid out a plan for a $10bn overhaul of JFK. One-fifth of that funding could go toward improving road access, which is described in the plan as a “confusing spaghetti network for on-airport roads that lead to multiple bottlenecks and…Continue reading

WHY has economic growth been so sluggish in the developed world? The previous post showed that productivity in the global economy had been flat or falling in the last three years. And it suggested that the existence of «zombie» firms—uncompetitive survivors—might be one explanation.

As it happened, the OECD published a new paper yesterday which showed that might indeed be the case. The paper concludes that

the prevalence of, and resources sunk in, zombie firms have risen since the mid-2000s, which is significant given that recessions typically provide opportunities for restructuring and productivity-enhancing allocation

and that

a higher share of industry capital sunk in zombie firms tends to crowd-out the growth—measured in terms of investment and employment—of the typical non-zombie firm. 

All in all

a 3.5% rise in…Continue reading