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What if the dotcom boom and bust hadn’t happened?

THERE IS A lovely quotation at the start of “Security Analysis”, a canonical text by Benjamin Graham and David Dodd published in 1934. “Many shall be restored that now are fallen and many shall fall that are now in honour.” It is by Horace, a Roman poet who knew all about reversals of fortune, having lived through Rome’s bloody transition from republic to empire. Two millennia later, amid the ruins of the dotcom mania, Warren Buffett was moved to recall Horace’s words. “My appreciation for what they say about business and…

Economists grapple with their race problem

IN JANUARY 1970 a group of black economists wrote a letter to the American Economic Association (AEA). They criticised colleagues who ignored discrimination in the profession and paid no heed to racial inequality in their own research. Just over half a century later, similar complaints have resurfaced. This time the AEA seems to be listening. On June 5th it issued a statement saying that “we have only begun to understand racism and its impact on our profession and our discipline.”Openness to more diverse groups of people and…

China is the world’s factory, more than ever

NORMALLY 200,000 buyers, hailing from just about every country, would have flocked to the Canton Fair, the world’s biggest trade show. This year, because of the pandemic, it has been conducted entirely online, running for ten days and ending on June 24th. Although no substitute for meetings in the flesh, the virtual fair was a spectacle in its own right, testament to China’s manufacturing muscle. Some 25,000 exhibitors have hosted live-streams simultaneously, often from their factories, chatting to anyone interested in their…

China’s poverty line is not as stingy as commentators think

SINCE 2017 China’s government has described fighting poverty as one of three “tough” or “critical” battles (alongside quelling pollution and financial risk). Despite the covid-19 pandemic, it still seems confident of victory this year. In March Xi Jinping, the president, pointed out that the number of rural poor fell to 5.51m in 2019. That is only 0.4% of China’s vast population. Regional overall poverty, he said, had been basically eradicated.The claim seemed wildly at odds with another statistic, cited last month by Li…

The successes of the Fed’s dollar-swap lines

THE FEDERAL RESERVE steadfastly refuses to view itself as the world’s central bank, which is a pity, because it is becoming quite good at the job. One sign of its success is the stabilisation of the world’s reserve currency. The dollar spiked by over 8% against a basket of six other widely traded currencies between March 9th and 20th, as covid-19 panicked investors. But now the greenback is roughly back to where it was at the beginning of the year.Central banks usually concern themselves with their own country’s money…

The Fed has been supporting markets. Now it must find ways to boost growth

IT SEEMS AS if there is nobody to whom the Federal Reserve will not lend. Since the covid-19 pandemic wrought havoc on financial markets in March, America’s central bank has promised to buy up to $750bn in corporate bonds and $500bn in state- and local-government debt. It has stood behind the market for commercial paper, behind money-market funds and behind foreign central banks in need of dollars (see article). On June 15th lenders were invited to register for its “Main Street Lending Programme”, which will purchase loans…

Covid-19 has squeezed migrants’ remittances to their families

FIVE YEARS ago the UN proclaimed June 16th the International Day of Family Remittances. Since then money sent home by migrant workers has only become more important. In 2019 remittances amounted to $554bn, beating all other forms of cross-border financial flows to poor countries (see chart). Some 200m expatriate workers worldwide help four times as many relatives meet basic needs, set up businesses or pay school fees. These flows, on average, make up 60% of recipients’ family income; in the eight largest receiving countries,…

As the virus rages on shore, merchant seamen are stranded on board

“I’m not comfortable in my chair with such a crew,” says the captain of a cargo vessel in the South Atlantic en route from Bermuda to Singapore. He is eight months into a four-month contract, and almost everyone on board has also already worked at least double his contracted time. He hopes Singapore will accept that sailors who have seen almost no one but each other for months pose no infection risk and permit a crew change. If not, some may refuse to keep working. On June 16th an industry-wide agreement to allow emergency…

The yuan has been one of the world’s most stable major currencies

IN THE “Three-Body Problem”, a popular Chinese science-fiction novel, the planet Trisolaris lurches between climatic stability and chaos as it follows an unpredictable orbit around the three suns in its star system. The solution, the inhabitants conclude, is to invade the Earth, so as to enjoy its smooth single-sun orbit. China’s central bank has been making a similar monetary voyage, in reverse.For years the yuan revolved around the dollar. That benefited China, but it also stored up problems, which were exposed most…

India avoids junk status

LARGE AND leaky, India’s lockdown became “localised” this week. In the parts of the country hit hardest by covid-19, restrictions remain. Elsewhere, they have been largely relaxed. People can visit places of worship, but cannot touch idols. They can go outside to shopping malls, but not the gaming arcades or cinemas inside. In Punjab, mall-goers can buy clothes but cannot try them on first.The lockdown, which began on March 25th, has failed to stop the virus—the caseload continues to grow alarmingly. But it has succeeded in…