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Economist - 1/10/14

FOR years Sleep HealthCenters, an American company that ran clinics at which people with sleep disorders could stay overnight to have their ailments diagnosed, grew nicely and steadily. But in 2012 its dream business turned sour as folk began using cheap, wearable devices that let experts monitor them while they snoozed in the comfort of their homes. Sleep HealthCenters closed some of its facilities as its revenue fell, but its fortunes faded rapidly and the following year it threw in the towel.

NOW that the economy is at last growing again, the burning issue in Britain is the cost of living.In the past year wages have risen by 1%; property prices are up by 8.4%.. Though some 221,000 additional households are formed in England annually, just 108,000 homes were built in the year to September 2013.Ministers have tried to override local NIMBYs (see article). The previous, Labour, government set regional house-building targets and bullied councils to accept high allocations. The current coalition has scrapped that approach in the name of local democracy—but it, too, has resorted to strong-arming councils to release more land. It has also worked with the Bank of England to reduce the cost of credit and has subsidised high loan-to-value mortgages through a scheme called “Help to Buy”. This has boosted demand for housing but not supply.

AS THE first estimates of worldwide car sales in 2013 come in, it is clear that Toyota, when its production is combined with that of its affiliates Daihatsu and Subaru, is on the brink of becoming the first member of the “10m club”. It will swiftly be followed by GM and Volkswagen (see chart), both of which are also enjoying continued growth, especially in the world’s largest car market, China.On January 1st Fiat struck a $4.35 billion deal to buy the 41% of Chrysler it did not already own from a health-care trust for retired workers. Even the merged Fiat-Chrysler will produce only 4m cars.Carmakers used almost always to develop their own engines. But as the cost of this has risen, and as the car firms have come to realise how little mass-market customers care about who makes what is under the bonnet, Peugeot has teamed up with both Ford and BMW, and GM Europe with Fiat, to develop engine.

A Hong Kong company and a mainland firm are battling for control of Fisker, a failed maker of hybrid-electric cars based in California; a court hearing due on January 10th will consider creditors’ calls for an open auction. And BYD, another Chinese mainland firm, said this week it would start selling its own electric cars in America next year.In 2009, when America’s Department of Energy (DOE) agreed to give Fisker a big “green energy” loan to start production of its sleek Karma sports car, it looked like posing a serious threat to Tesla. But Fisker was brought down by quality problems, poor management and the financial difficulties of A123, its battery supplier (although it too enjoyed the taxpayers’ largesse). Production of the Karma ceased in late 2012 .

But what does “corporate culture” actually mean? For some people it means the image that a company projects to the world. For others it means a company’s most cherished habits—the HP Way or the Walmart Way. For others still it means its canteen culture, “the way we do things around here”, which is often the opposite of the formal rules. Goldman Sachs’s formal culture proclaims that customers come first. Its canteen culture, at least according to one former banker at the firm, proclaims that customers are “Muppets.. He also points out that the most common mistake bosses make when they try to change cultures is to think in grandiose terms, whereas it is often the little things that matter most.

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Economist - 1/9/14

 Russia has been bracing itself for an attack since July, when Doku Umarov, the self-proclaimed emir of the northern Caucasus and a Chechen terrorist leader, pledged to disrupt the Sochi winter Olympics and lifted a moratorium on civilian targets in Russia.Yet, the audacity and the deadly choreography of the twin suicide bombings in the southern city of Volgograd on December 29th and 30th stunned the country.Over the past two decades, the crisis in the northern Caucasus has mutated from a fight of separatists into a global jihad aimed at establishing Islamist sharia law across the region.

Taxpayers might think that the best family silver has already been sold, but plenty is still in the cupboard (see article). State-owned enterprises in OECD countries are worth around $2 trillion. Then there are minority stakes in companies, plus $2 trillion or so in utilities and other assets held by local governments. But the real treasures are “non-financial” assets—buildings, land, subsoil resources—which the IMF believes are worth three-quarters of GDP on average in rich economies: $35 trillion across the OECD.America’s federal government owns nearly 1m buildings (of which 45,000 were found to be unneeded or under-used in a 2011 audit) and about a fifth of the country’s land area, beneath which lie vast reserves of oil, gas and other minerals; America’s “fracking” revolution has so far been almost entirely on private land. The Greek state’s largest stock of unrealised value lies in its more than 80,000 non-heritage buildings and plots of land. With only one holiday home for every 100 in Spain, Greece should be able to tempt.

waited for the first legal recreational marijuana (cannabis) shops in Colorado to open on January 1st. It is too early to judge whether the experiment is working, but the early signs are good (see article). The first American state to allow toking-for-fun has not been seized by reefer madness. Its pot shops are more orderly than, say, a British pub at closing time. Twenty states plus Washington, DC, allow the consumption of pot for medical purposes; Washington state will soon join Colorado in licensing sales to those who simply want to enjoy a spliff.Colorado is setting the tax at more than 25%; state and federal levies on a six-pack of beer are only about 8%. The dope tax should probably be lower than those on booze, but alcohol taxes should be higher than they are now.One obstacle to Colorado’s experiment is Uncle Sam. Marijuana remains illegal under federal law. Barack Obama’s Justice Department has said it probably will not prosecute pot shops that are legal under state law, but banks shun them for fear of violating federal money-laundering rules.

France’s budget deficit is bigger than Italy’s and its current-account deficit is the largest in the euro zone. But it is the contrast with Germany that is most painful. Since the creation of the euro, in 1999, France’s GDP per head has risen by just 0.8% a year, against Germany’s 1.3%; its unit labour costs, then below Germany’s, are now higher;The response to all this from François Hollande, France’s Socialist president since mid-2012, has so far been hapless. His early objections to excessive austerity came to nothing. Rather than cut public spending (at 57% of GDP, the highest in the euro zone), he has raised taxes, including a payroll charge on high earners of 75%. Instead of the proper pension reforms seen elsewhere, he has marginally lengthened the contribution period.

In its simplest form, securitisation is straightforward and beneficial. For example, a carmaker expecting lots of monthly payments from customers who have taken out financing can get investors to fund its business more cheaply by selling them its claim to those payments. A bank on the receiving end of mortgage repayments or credit-card receivables can do something similar: bundle the loans up and sell them, or use them as collateral to get funding, which it can then use to issue more loans. This boosts both credit and growth.Europe stands to benefit most from securitisation’s return. Lenders across Europe are under pressure to improve the ratio of capital they hold to loans made. One way of doing this is to stop extending credit, which is, unfortunately, what many banks have done. If they instead slimmed themselves through securitisation, by bundling and repackaging loans and selling them to outside investors such as insurance firms or asset managers, they could lend more money to credit-starved companies

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Economist - 1/8/14

IN MANY countries, governments struggle to contain their debt. In China, the authorities struggle even to count it. Last August and September, 54,400 auditors fanned out across the country, quizzing local officials, scrutinising their books and inspecting their pet projects in an effort to tally the Chinese government’s liabilities.The audit showed that China’s local governments (and the investment vehicles they sponsor) owed 10.9 trillion yuan ($1.8 trillion) at the end of June. They had also guaranteed several trillion yuan of debt explicitly and another 4.3 trillion implicitly. Adding these three figures together yields a total of 17.9 trillion yuan, or about a third of China’s GDP.Based on past experience, the NAO believes local governments will have to bear only a fraction of these liabilities: 19% of the explicitly guaranteed debt and less than 15% of the implicit obligations.Adding the central government’s debts would bring the total to 56% of GDP, if contingent liabilities are taken at face value, or 41%, if they are counted at their expected value. China’s local governments, by contrast, borrow to invest.

CHINA’S infamous university entrance exam, known as the gaokao, has long been a target of criticism. Admissions are based solely on the points scored in one exam, and the need for rote memorisation does little to foster creative minds. Now the government has taken its first tentative steps towards reforming the system. In December it announced that the English-language part of the test can be taken several times, with the best score counting. More significantly, it said it would move towards an evaluation process where the test did not make up 100% of the score, and would include more subjective assessments.Urban education is better financed. In Beijing in 2011, annual expenditure per child in primary school was nearly 20,000 yuan ($3,100) compared with just 3,000 yuan in Henan, a poorer province in central China. Corruption and guanxi, or “connections”, also play their part. Many of the best high schools, even in small towns, are full of the children of local officials. Some students are admitted to college because of who they are or whom they bribe.Geography counts, too. Universities set quotas for the number of students they will admit from a certain province. To land one of the few spots available, students from the countryside must score as high on the gaokao as their urban peers, in spite of their often more basic high-school education.

 German couples are getting more conservative, according to a study by the Allensbach Institute on Lake Constance, which regularly polls Germans on behalf of Vorwerk, a maker of household appliances. Fathers want to take a more active role in parenting, and they make more use of paternity leave after a birth (new laws are making this easier). The share of women on boards of public German companies was only 9.5% in 2012. (The new government wants to introduce quotas to push change along a bit.) Not only is 40% of the cabinet female, but it is the women with children who are climbing the fastest. Ursula von der Leyen has all of seven and is now being saluted as the new defence minister. Andrea Nahles, the new labour minister and thus Mr Asmussen’s new boss, and Manuela Schwesig, the new family minister, both have young children.

Britain, Germany, the Netherlands and six other EU countries that fully opened their labour markets to workers from Bulgaria and Romania when transitional controls expired on January 1st.The last one (the Poles coming to Britain in the aftermath of their country’s EU accession in 2004) happened when only three big countries (Britain, Ireland and Sweden) opened their labour markets and the British economy was booming. Moreover, the population of Romania and Bulgaria combined is only three-quarters the size of Poland’s 39m.Of Romania’s 7m strong active labour force, around 1.1m have a secure job in the state sector, which they will hesitate to give up. Some 3m have already left in the wake of Romania joining the EU in 2007: about 1m went to Italy, another million to Spain, half a million to France, up to 400,000 to Germany and 120,000 to Britain. They worked in a “self-employed” capacity (40% of the workforce building London’s Olympic Stadium were self-employed Romanians) or as seasonal or low-skill workers.Although the share of Bulgarians and Romanians, who receive means-tested benefits, is at 10% slightly higher than the 7.5% of the native population, they are net contributors to the pay-as-you-go pensions system.Britain is however alone among rich EU countries to have a universalist welfare system—all the others are more contribution-based. It therefore has the strongest case for reviewing access to benefits.

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Economist - 1/7/14

THE most recent edition of the World Bank’s annual “Doing Business” report is a sobering read for Myanmar.It came 182nd out of the 189 countries surveyed, above such places as Eritrea, Congo, Libya and South Sudan. On some indicators, such as the ease of starting a business and enforcing contracts, Myanmar even ranked below these African countries. Long and costly approval procedures hamper much-needed construction work to rebuild dilapidated infrastructure. Burmese electricity is the priciest in the region.

THE first visit by a Japanese prime minister in seven years to the Yasukuni shrine in Tokyo, made by Shinzo Abe on December 26th, looks like a diplomatic disaster. China, South Korea and America had all made clear their opposition to his going to a temple where the spirits of 14 high-ranking war criminals are enshrined, along with those of 2.5m other Japanese war dead. But Mr Abe had said he regretted not having visited the shrine during his first stint in the job in 2006-07.

AS POLITICAL honeymoons go Tony Abbott’s in Australia has proved elusive, even invisible. By the end of the year, however, the unpopularity had shifted to the new government. No prime minister in memory has fallen so quickly from voters’ grace. John Stirton, of Nielsen, says that in 40 years of polling, his firm has never seen a swing of such magnitude against a new administration. The budget deficit had more than doubled from its original projection last May to A$47 billion ($42 billion).Once, the immigration department revealed numbers and nationalities of asylum-seekers arriving by boat. Scott Morrison, the new government’s immigration minister, banned such disclosures. Instead, flanked by an army commander to highlight the government’s military-led operation against boat people,

Six months after a small demonstration against a 50-cent rise in bus fares blew up into the biggest street protests Brazil had seen in a generation, few visible signs remain of the wider anger they revealed—about corruption, poor public services and rising living costs. Recent attempts to organise a reprise have attracted only a few hundred marchers. Support for the president, Dilma Rousseff of the Workers’ Party, which plummeted after June’s protests, has rebounded. A poll in November of voting intentions in next October’s elections gave her 47%, against 30% for her two likeliest adversaries combined.Political analysts say that many Brazilians’ voting strategy is to plump for the perceived front-runner, whoever that may be, meaning that a challenger who manages to advance in the polls could quickly take a commanding lead.Despite these banana skins, Ms Rousseff will be hard to beat. Recipients of the Bolsa Família, a stipend that goes to 14m poor families, are much more likely than other Brazilians to approve of her.

Mexicans would be rich. These days, girth is more likely to signal sickness. Diabetes is a particular scourge. The type-2 (or late-onset) variety, which is linked to obesity, is thought to afflict 11m Mexicans. It kills 73,000 of them a year, seven times as many as organised crime.Lack of exercise and a penchant for fatty treats and fizzy drinks—of which Mexicans quaff 40% more, on average, than Americans do—are largely to blame.Scientists have long suspected that genes are at work. Writing in the journal Nature, researchers for the appositely named Slim Initiative in Genomic Medicine for the Americas (SIGMA) have now fingered a culprit: a variant of a little-known gene called SLC16A11, which regulates one of the ways that fat is stored in cells. Inherit a copy from one parent and your risk of diabetes rises by 25%. Get one from both and it rises by 50%.y). The variant seems to come from the cohort’s Native American ancestors. Indeed, it is all but absent from better-studied European and African genomes, one reason it had not been spotted earlier.

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Economist - 1/6/14

DO ACADEMIC economists focus too much on America? Yes: a sample of 76,000 papers published between 1985 and 2005 shows that econo-nerds are infatuated with America.There were more papers focused on the United States than on Europe, Asia, Latin America, the Middle East and Africa combined (see chart).

 A fiscal reform that took effect on January 1st introduces a number of new taxes that are chiefly aimed at the rich but end up clobbering the poor. A value-added tax of 16% was slapped on various forms of public transport. In Mexico City the underground “metro” fare had already gone up before Christmas, a 66% increase from 3 pesos (23 cents) to 5 pesos. As part of a government drive to fight obesity (seearticle) the new levies also include a tax of 1 peso per litre on soft drinks and an 8% levy on some particularly calorific foods.Higher food prices eat into everyone’s income. the bottom 50% of the income scale spend almost half of what they earn on food. The top 10% spend less than a quarter.

The caterpillar in question is the hornworm, a species that eats tobacco plants without seeming to be bothered by the nicotine in the leaves. Since nicotine can work as a natural insecticide, this has led many to wonder what the caterpillars do with the toxins they consume. One clue is that some caterpillars use toxins they collect as weapons—the eastern tent caterpillar is famous for spitting hydrogen cyanide gathered from the plants it eats at its enemies. When air containing nicotine was taken from an enclosure of non-genetically modified caterpillars eating ordinary tobacco and put into a container of caterpillars with the silenced gene, the wolf spider attacks dropped by 64%.

The security system being used here is based on a technology known as distributed acoustic sensing (DAS). This allows underground fibre-optic cables, like those used by telecoms companies, to be turned into a giant string of microphones. They can then be used to monitor all sorts of sensitive locations, from oil and gas pipelines to railway tracks, military bases and international borders. In its latest guise, DAS is even being used to help make hydraulic fracturing, or “fracking” as it is known, more efficient at releasing natural gas and oil trapped in rocks.The technique relies on a phenomenon known as Rayleigh scattering.A similar light-scattering can occur inside a fibre-optic cable, caused by minute fluctuations in its molecular structure. The cables are engineered to keep such scattering to a minimum.here are some limitations to the technology. Its powers of hearing are not sufficiently acute to pick up a conversation, for example.Shell and other oil companies are using a DAS system, which OptaSense calls vertical seismic profiling, to monitor their fracking. It uses a fibre-optic cable inserted into a well bore to build up an acoustic picture of the fracking fluid going into the rock at multiple levels.

 According to the World Health Organisation, there were 14m new cases of cancer around the world in 2012. In 2030 there will be nearly 22m. The second trend is the rising price of cancer drugs, particularly in America, the biggest market. More expensive drugs increase profitability. The third is a rapid expansion of scientific knowledge about cancer, the result of both the plummeting cost of genetic sequencing.The first example of such a targeted treatment came in 2001, when Novartis launched Gleevec, a treatment for chronic myeloid leukaemia. Gleevec blocks the activity of a protein called BCR-ABL, which is the product of an abnormal gene created by a merger of chromosomes 9 and 22. Before Gleevec, less than a third of those diagnosed with chronic myeloid leukaemia were still alive five years later. After it became available, that figure jumped to 90%. Gleevec’s success inspired others to search for targeted cancer drugs. For example, Pfizer came up with crizotinib (sold under the brand name Xalkori), for lung-cancer patients with a mutated version of a gene called ALK, which encodes a protein that instructs lung cells to divide uncontrollably. And Roche developed vemurafenib (sold as Zelboraf), which goes after another rogue protein, generated by a mutated version of a gene called BRAF. It tells skin cells to reproduce, causing melanoma.Though much better than older cancer drugs, Gleevec and its successors are not perfect. Many cancers are driven by more than one mutation. Cells also tend to pick up new mutations as they divide.Identifying common genes is only the start. Some mutations seem to play starring roles in one cancer while being supporting characters in another.

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Economist - 1/3/14

 Goldman Sachs and JPMorgan Chase average pay slipped by about 5% in the first nine months of last year, a figure that is probably representative of the wider industry. Over the longer run, average pay at the world’s biggest investment banks has barely changed.In fact, the industry’s revenues and profitability have fallen far more sharply than pay and employment. McKinsey, a consultant, reckons that for the 13 biggest investment banks revenues have fallen by 10% a year since 2009, while costs have dropped by just 1% a year. Instead banks have already figured out wheezes to work around the rules.The first is to bump up basic salaries while reducing the portion of pay allocated to a bonus.A second wheeze being tried by international banks is to exploit a loophole that allows them to pay bonuses that are twice as large as normally allowed if shareholders approve this in a vote. Since many are structured as subsidiaries whose only shareholder is their parent bank, getting shareholder consent is a doddle.Other ploys include paying monthly cash “allowances” or granting forgivable loans that only have to be repaid if the banker leaves within a certain period of time. 

 Economic growth is good for the stockmarket because a healthy economy should boost profits. But the data show that profit growth slowed significantly in the third quarter. A slowdown in profit growth would hardly be surprising, given that profits are at their highest as a proportion of American GDP since the second world war.Why would a higher-than-average p/e ratio be justified? For individual stocks, the answer is clear: rapidly-growing companies trade on a high multiple of current profits because their future profits are expected to grow strongly. But American companies do not fit the template. They are trading on a high multiple at a time when profits are already historically high and growth appears to be slowing.

SINCE the financial crisis the European Central Bank (ECB) has ploughed a solitary course, reflecting its unique status as a monetary authority without a state. While other big central banks, notably America’s Federal Reserve, adopted quantitative easing—buying government bonds by creating money—to stimulate recovery, the ECB relied mainly on lowering interest rates and providing unlimited liquidity to banks on longer terms and against worse collateral.Introducing negative rates would be more radical but consistent with the current version of forward guidance, which applies to all the bank’s policy rates. The rate that would go negative is the one the ECB pays on overnight money left with it, which since July 2012 has been zero. A negative deposit rate would in effect charge banks for parking spare funds at the ECB. Though this would be unprecedented for the euro area, Denmark went negative in July 2012 (in response to the ECB’s zero rate) in order to deter inflows of foreign funds that were putting upward pressure on the krone and threatening its peg to the euro.

Nearly 11m American homes are similarly “underwater”. Despite the housing recovery, parts of the country are still struggling: 3m-4m people are in default, in foreclosure or awaiting liquidation.Hence the return of an unorthodox proposal many thought had been laid to rest: for municipal governments to use eminent-domain (or compulsory-purchase) powers to seize underwater mortgages at below the home’s market value and to refinance them at lower rates. Homeowners get to stay put, and the city and a private sector partner split the profit. Governments traditionally use eminent domain to force property owners to sell their land for public projects such as railways. But high foreclosure rates lead to problems like blight, crime and falling house prices; some argue that cities and counties ought therefore to be able to invoke eminent domain.

HOUSE prices are now rising in 18 of the 23 countries we track across the globe, compared with just 12 a year ago. America tops our table: the Case-Shiller index released on New Year’s Eve reported price increases of 13.6% in the year to October 2013.Prices in Britain increased at their fastest rate for three years in October, fuelling fears of a housing bubble (and subsequent crash), particularly in London where prices increased by 12%. Although by our measure housing is overvalued against both rents and income, Britain did not suffer a housing crash on the scale of America’s, largely because supply is so tight.rices in Germany, which has the lowest home-ownership rate in the EU at 53%, are rising at the fastest rate since reunification, although housing is still undervalued against both rents and income.on official figures from 70 Chinese cities, prices increased by 8.7% in the year to November 2013. India may follow suit: prices across 15 cities with a total population of 100m increased 7% in the third quarter of 2013.

[ecolearnings]

Economist - 1/2/14

Denmark is a tiny country, with 5.6m people and wallet-draining labour costs. But it is an agricultural giant, home to 30m pigs and a quiverful of global brands. In 2011 farm products made up 20% of its goods exports. The value of food exports grew from €4 billion ($5.5 billion) in 2001 to €16.1 billion in 2011. The government expects it to rise by a further €6.7 billion by 2020.The cluster includes several big companies, which act as its leading investors: Danish Crown, Arla, Rose Poultry and DuPont Danisco. (DuPont’s purchase of Danisco in 2011, which created a great deal of anxiety about American multinationals buying up Denmark’s crown jewels, was a sign of the agricultural sector’s vitality.) Several young companies are making information-technology tools for different bits of the business: LetFarm for fields, Bovisoft for stables, AgroSoft for pigs, Webstech for grain. ISI Food Protection focuses on dealing with organisms that spoil food or spread poisoning.The cluster also has a collection of productivity-spurring institutions such as the Danish Cattle Research Centre and the Knowledge Centre for Agriculture. Danish universities remain at the forefront of the agro-industry: at Danish Technical University (DTU) 1,500 people work on food-related subjects. A tradition of public-private partnerships, which began with farmers forming co-operatives to improve production and marketing in the late 19th century, continues to flourish.The word on everyone’s lips is “innovation”. Big companies are building centres to develop new products. Arla is spending €36m on one in the Agro Food Park. 

In the past two weeks a Turkish prosecutor has detained dozens of people as part of investigations into illicit gold transfers and bribes allegedly paid by the construction industry. The suspects include businessmen close to the ruling Justice and Development (AK) party, as well as officials, politicians and the sons of three cabinet ministers. The prime minister, Recep Tayyip Erdogan (pictured, left), combative at the best of times, reacted with fury—stoked by reports that one of his own sons was next on the list. He reshuffled his government to put loyalists in place, sought to gain control of police investigations, and got the prosecutor removed from the corruption case. His ministers justified all this with talk of a “soft coup”.

When South Africa’s government sought to legalise the import of cheap generic copies of patented AIDS drugs, pharmaceutical companies took it to court. The case earned the nickname “Big Pharma v Nelson Mandela”. It was a low point for the industry, which wisely backed down.Activists are suing to block the patenting in India of a new Hepatitis C drug that has just been approved by American regulators. Under the Trade Related Aspects of Intellectual Property Rights, a deal signed in 1994, governments can allow a generic drugmaker to produce a patented medicine. America—home of most of the world’s big pharma, whose consumers pay the world’s highest prices for drugs and thus keep down prices for others—wants to use the TPP to restrict such compulsory licences to infectious epidemics, while emerging-market countries want to make it harder for drug firms to win patents.

But crop insurance has failed to take off in much of the developing world. In 2012 only 2.5% of Africans used microinsurance, according to the International Labour Organisation.To make crop insurance attractive to farmers in America, Canada and India, premiums are currently subsidised by over 50%. Such support would be unaffordable for poorer African governments.One reason why traditional farm insurance is costly is that, since payouts are linked to the policyholder’s individual losses, insurers have to check on clients’ personal circumstances in order to price the risk, and then verify any claims farmers make. A cheaper alternative, says Shawn Cole of Harvard University, is to offer policies that pay out to all holders whenever, say, the rainfall in a region falls below a certain level.

[ecolearnings]

Economist - 1/1/14

Gazprom provides about a quarter of their gas, to heat homes, fire industrial furnaces and fuel power stations, much of it via a pipeline through Ukraine. The main battleground is the method of setting the price of gas. Gazprom is keen that its European customers continue to buy expensive gas on long contracts, sometimes lasting decades, with prices linked to the cost of oil.When gas was first sold internationally in volume, in the 1960s, there was no market to set its price. Since it was used as a substitute for oil in heating and power generation, it seemed sensible to link its price to that of crude.The proportion of Europe’s gas bought in the spot market rose from 15% in 2008 to 44% in 2012. By now it is more than half; in north-west Europe it is around 70%. Statoil, seeing how the European market is going, has embraced the shift, selling around half its gas at prices indexed to the spot market. d. Support for Nabucco, another pipeline, which would deliver gas from Central Asia to Europe, fell away. 

In a country that has long relied heavily on bank finance, turning to the markets is logical, if overdue. Since the crisis, banks everywhere have lent less to small and medium-sized firms. In Italy, 90% of companies fall into that category, and banks’ balance-sheets are in particularly bad shape. For most firms, many of them family-owned, bonds are a more comfortable route to the capital markets than selling shares and thus diluting control.

 As a business, it has just completed its best year since it was founded in 2005. In 2012 sales on Etsy totalled $895m; by October, before the busy holiday shopping season, they had already passed $1 billion for 2013. Although Etsy takes only a small fraction of that, charging 20 cents per item listed and 3.5% of every sale, it is said to be valued at more than $1 billion. . As a business, it has just completed its best year since it was founded in 2005. In 2012 sales on Etsy totalled $895m; by October, before the busy holiday shopping season, they had already passed $1 billion for 2013. In November Etsy published a study based on a survey of 5,500 of its American sellers, of whom 88% were women. Although 97% worked from home, 74% said they considered their Etsy shops to be businesses, not hobbies. Although most said they used Etsy to top up earnings from other work, 18% said that it was their full-time job.Big retailers are prepared to test this claim. In 2013 Etsy convinced several of them, including Nordstrom, a posh department-store chain, to experiment by putting its products on their shelves. s. Others are trying to do the same thing without Etsy. EBay recently started selling artisanal products selected by Martha Stewart, a lifestyle guru, branded American Made.

In Argentina their prayers do not end there. Since the country’s financial crisis in 2002, its government has taxed farmers at between 20% and 35% on their grain exports, while galloping inflation has pushed costs up by 25% a year.El Tejar, once Argentina’s largest farming group and still the largest in the Americas, harvested only 30,000 hectares (75,000 acres) in the 2012-13 growing season, down from 180,000 the year before and 300,000 at its peak. The company also moved its headquarters to Brazil.Los Grobo, a family-owned firm and the second-largest grain producer in Latin America, has chosen a different strategy: metamorphosis.This outsourcing model is now used for nearly 60% of farmland in Argentina, where strong property-rights protection and inheritance laws make it ripe for leasing. Los Grobo is credited with pioneering its application on a large scale. Since the 2004-05 harvest, Los Grobo has rented at least 170,000 hectares of farmland.At the same time as it was shedding its physical assets, Los Grobo invested heavily in developing new technology and cultivation techniques. It was one of the first big groups in Argentina to champion no-till farming, a technique that reduces soil erosion.