Talking points
- Facing Russian and Syrian troops, Turkey agreed to a brief ceasefire
- Esther Duflo broke the mould of Economics Nobel Prize laureates
- Lawyers gave final arguments in the epic Ayodhya land dispute
- The Booker Prize committee hedged its bets between old and new
- Super Typhoon Hagibis killed 70 despite Japan's preparations
- Another creepy old man, another terrorised family in a basement
- Facebook tried the national security line in a flailing defence of Libra
- Hong Kong protest leader Jimmy Sham was attacked with hammers
- Scientists uncovered how malaria made the ape-human jump
- Last minute pleas to vote went out ahead of Canada's election
Deep Dive
The world's finance ministers, central bankers and other assorted bean-counters met in Washington this week for the annual meeting of the International Monetary Fund (IMF) - the institutions' institution, as it were. Look, to be honest they were there for the World Bank's yearly powwow as well, but we won't put you to sleep with the details of that. The IMF had all the juicy tidbits.
Perception management
The IMF carries a certain gravitas; it's what wonks have in mind when they wax lyrical about an international "rules-based system", and what conspiracy theorists sneer at when they describe the new world order. But hate it or love it, most people take the IMF's pronouncements seriously. As they should. It is, after all, a body comprising 189 member states that are charged with ensuring the stability of the international monetary system. This week the IMF published its World Economic Outlook and Global Financial Stability reports. Both publications are worth noting for their less-than-rosy outlook on the current state of the world.
Before we dive into the particulars, it's important to note the peculiarities of the job that the IMF is tasked with. They are, much as Erwin Schrödinger (Germany's most-famous cat-owner) once was, grappling with the problem of observation altering the state of the observed. Given its mandate to surveil and provide an outlook on the global economy, the IMF compiles and releases its report. But that report in turn changes the thing it has surveilled. Which leaves the IMF Director Kristalina Georgieva with the delicate task of calling it how she sees it, but without being so gloomy as to spook the finance ministers, nor so rosy as to lull the central bankers into a false sense of security. It's good to know that in some places at least, words still matter.
Manufacturing slows, geopolitical tensions rise
If we were to summarise the Global Economic Outlook Report in a word, it would be 'gulp'. Dark clouds are gathering, and that slowing whirring sound you can hear is emanating from factory equipment spooling down, from Leipzig to Shenzhen. Germany is experiencing a slowdown that can be traced to many of the issues that have appeared in this column: an export sector thwarted by the US-China trade war, and an auto-heavy industrial base suffering from the VW emissions scandal. Germany's growth estimate has been revised down to 0.5% this year, a worrying sign for the rebound that was meant to materialise. This is a dark omen for eurozone countries already tossed about by the vagaries of Brexit (see: Georgieva said she "jumped for joy" on hearing about the recent breakthrough in Brussels).
The other manufacturing hub mentioned above, Shenzhen, is also experiencing a slowdown. But China's problems are far greater than mere weak factory output. The headline figure of 6.1% growth – down 0.1% on the last outlook – disguises the growing cost of tariffs that Washington and Beijing have hung around one another's necks . Punitive trade action has weakened consumer and business sentiment in the People's Republic. If the trade war continues, the IMF believes it will wipe a whopping 0.8% off global growth next year. And just as Germany brings down the eurozone, China brings down the entire Asian region. India, Hong Kong, Singapore and Korea are also slowing – Japan is the only real exception this quarter. But even there, Softbank's world-bestriding $100 Billion Vision Fund is in diabolical trouble after the recent debacle of the WeWork non-IPO, auguring a fall in investors' risk appetite.
Corporate debt and some risky business
If all of that sounds difficult, how about the rising risk of a "sharp, sudden" financial tightening? This should sound a warning bell for board members, corporate bankers and regulators the world over. It appears that the lessons of the last financial crisis (which some parts of the world are still recovering from) simply have not been learned. Greed is winning out, yet again. In 2008 it was the banks going broke in days that brought bad bets and vanishingly small cash reserves home to roost. In 2019, yes, barely a decade on, the IMF is warning that corporations have been gorging themselves on cheap cash. The historically low interest rates that central banks deployed to ward off near-term risks may in fact have laid the ground work for an even more vulnerable corporate sector when the next downturn arrives.
The IMF hasn't just been reading, it has also done a great deal of modelling. The next financial crisis is a when, not an if, and were it to occur in the near future, some 40% of the companies surveyed by the IMF would not be able to meet their interest payments from earnings. It's a $19t – yes, that's a t, not b, or m – corporate debt time-bomb . This is what economists call "distressed debt", and what the rest of us just call "distress".
Worldlywise
Republica Catalana
This week the Tribunal Supremo in Madrid delivered long-anticipated sentences to the nine Catalan politicians involved in the 2017 independence referendum. While the charges of rebellion (and the 25-year sentences they carried) had been dropped, each of the accused was handed a jail-term of between 9- and 13-years for the crimes of sedition and misuse of public funds. Spanish President Pedro Sánchez, with more than a hint of what was to come, declared that "nobody is above the law." These heavy sentences reflect the wishes of right-wing nationalists within Spain and will, needless to say, hardly be considered justice by the many supporters of Catalan independence.
Barcelona was both inflamed and aflame as a result. The rest followed a script you'll be familiar with: candle-lit vigils, swelling marches, and protests that boiled over into violence. A freshly-galvanised protest movement reclaimed the streets and shut down El Prat airport ; certain radical elements wasted no time in setting things on fire . So we're back to square one: the people of Catalonia on the streets, and a leader – regional president Quim Torra – calling outright for another independence referendum . A general strike has been called, and things have gotten so bad that La Liga is threatening to move El Clásico from Camp Nou to the Santiago Bernabeu. The same as it ever was, really.
Two weeks to go!
One day, far from now, you'll open an edition of The Wrap and not see a single mention of the B word. But, until we reach those greener pastures, we're unfortunately stuck on the merry-go-round. There was a breakthrough of sorts this week as British Prime Minister Boris Johnson received European Union assent for his Brexit deal. The PM does deserves a patter of applause for patching things up with Leo Varadkar (is there anything a lengthy stroll won't fix?) and for learning the art of compromise. However, this new Boris is not the result of deep reflection on moral and political philosophy. He is simply being squeezed by the same indisputable logic of Brexit – sure as gravity – that reduced his predecessors to husks of their former selves.
For those in the back: if Britain is to leave the European Union (thank you yet again, David Cameron) a border will have to materialise on the Irish frontier or in the middle of the Irish Sea. The first option is near enough an impossibility; the second is completely unacceptable to the Ulster unionists on whom the Tories rely (thank you, Theresa May). Boris Johnson once described the second option as an "annexation". But it is, of course, the model he has taken to the European Union, won a deal on, and is now heading back to London with, to seek approval from the British parliament. So the Commons sits down today (or reposes, in the case of Rees-Mogg) to duke it out. It's expected to be a nail-biter ; the Tory majority is rather slim without the support of the Northern Irish unionists. If it passes, those greener pastures are looking mighty verdant indeed. But if it doesn't, expect yet another extension from Brussels, and another general election in the UK.
Whatever the decision, there'll likely be an awful din outside Westminster with near a million protesters converging on central London to demand a second referendum. Not that anyone's really listening to them.
The Best of Times
Move over, Titian
As any student of the Italian Renaissance knows, the current Italian curricula veers away from the accomplishments of women, leaving space for only the occasional brilliance of Isabella d'Este, or the extremely salacious Lucrezia Borgia. No longer – the nonprofit, Advancing Women Artists, has resurfaced the artworks of Renaissance women , like those of Tuscan nun Plautilla Nelli pictured above. A less gendered view of history, and a truer one.
A discovery worth recalling
In India, scientists believe they've isolated a protective molecule in your grey matter – Glutathione – that in states of disrepair is responsible for the onset of Alzheimer's disease. Controlling the variable amount of Glutathione may help ameliorate some of the worst effects of this most pernicious disease of ageing.
The Worst of Times
A sport marred by racism
On Monday night England flogged Bulgaria six zip at the national stadium in Sofia. They did so, or rather, their black players did so under a constant hail of racist abuse. Bulgarian football fans displayed a behavioural range from typically vile monkey noises through to open fascist salutes . The 2018 World Cup victory of France's largely brown and black national team was a clarifying moment for racism in European football. There is clearly so much more work to be done.
Dual-cycle means air-conditioning and ventilation, right?
We usually wouldn't dish it up so often to a nation as small as Qatar, but this story is truly one for the record books. It is so hot there (46°C in summer) that the government has installed air-conditioners in roofless stadiums ahead of the 2020 FIFA World Cup. Air-conditioners. Outside. We could quote Ozymandias until the cows come home, but no historical or literary allusion could possibly add anything new to this perfect distillation of short-term thinking.
Weekend Reading
Quote of the week
"To my dad, the idea that people would simply throw these away would be bizarre."
– Raoul Thulin , the son of the man who invented plastic bags, is not impressed with our disposable tendencies.
Headline of the week
Cops tell Florida man to stop reporting his stolen drugs.
– BGR
Special mention
Maddison Yetman . For obvious reasons.
Some choice long-reads
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The Economist applies the credibility test to you-know-who
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Businesweek asks why a vacuum company tried to make electric cars
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Foreign Policy tastes the superfood that nearly saved millions
Tom Wharton
