Corporate profits and the American stockmarket

AS corporate profits go, so goes the American stockmarket. But the profits picture is very confused at the moment—one reason, no doubt, why the market has been so volatile.

Three contradictory factors are at work. The first is the massive decline in financial sector profits, prompted by write-downs in the values of mortgage-related securities. The second and third factors are offsetting that huge blow. Energy profits have been boosted by the strength of the oil price, and the profits of companies with overseas subsidiaries have been boosted by the weak dollar and the relative strength of the global economy. According to Martin Barnes of the Bank Credit Analyst (BCA), overseas profits have increased for 22 consecutive quarters. ...

Previewing the Biennale des Antiquaires

THE Biennale des Antiquaires, launched in 1956, is the most opulent antique fair in the world. Its organiser, the Syndicat National des Antiquaires, is spending a whopping €32m ($46.5m) on staff, security and decor at the Grand Palais (including plants, shrubs and seven tonnes of earth to plant them in). The Syndicat provides deco-inspired shop fronts for each of the 95 invited exhibitors, but it does not insure their paintings, porcelain, furniture and jewels.

The dealers pay those premiums, as well as €1,300 per square metre for their stands (€40,000 is the minimum; double or even triple that is not rare) and tens of thousands more on decor—when you include wining, dining and the other costs of wooing prospective customers, a dealer’s total bill can easily exceed €500,000. ...

Is China's pool of surplus labour drying up?

A SEEMINGLY unlimited supply of labour has been one of the main forces behind China's rapid economic growth. But factory bosses have recently complained of labour shortages and wages have been rising more rapidly, leading some to conclude that China's “surplus” labour has been used up. The country's one-child policy, introduced in 1979, has caused the growth in its labour supply to slow sharply. The growth in the working-age population is expected to drop from an annual rate of 1.3% in 2005 to 0.1% by 2015. At the same time, the migration of workers from agriculture to industry will slow. In addition, the population is ageing, and there will be fewer of the young, single workers who are preferred by many industries.

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One day, a machine will outsmart its maker

IN ONE of William Gibson’s early mind-bending stories, the protagonist suddenly needs to fly a jump jet. In the cockpit, he finds his employer has thoughtfully stashed a biochip containing all the necessary piloting skills for him to plug into his own nervous system. While your correspondent applauded the idea at the time, he nevertheless dismissed it as pure science-fiction. Today, he’s not so sure.

The progress being made in neuroengineering—devising machines that mimic the way the brain and other bodily organs function—has been literally eye-opening. In the decade since Kevin Warwick, professor of cybernetics at Reading University in Britain, had a silicon chip implanted in his arm so he could learn how to build better prostheses for the disabled, we now have cochlear implants that allow the deaf to hear, and a host of other spare mechanical parts to replace defective organs. ...

Taro Aso is favourite to take over as prime minister in Japan

Is Taro Aso the man to rescue Japan's ruling Liberal Democratic Party (LDP), and cure the country's political drift, following prime minister Yasuo Fukuda's resignation? With Mr Aso's emergence as the front-runner to become the next LDP leader, and thus prime minister, this question has dominated the political pages since Mr Fukuda's surprise announcement on September 1st. The Economist Intelligence Unit believes that the answer is ultimately "no", although Mr Aso does offer the party its best chance of improving its desperate standing before the next general election. Nonetheless, there is a high risk that, if elected as LDP president on September 22nd, he will fare little better than his predecessor.

Mr Aso's hopes rest on his potential to emulate Junichiro Koizumi, a prime minister who oversaw the LDP's thumping lower-house election win in 2005 before retiring the following year and watching the party stumble from one crisis to the next, as a political maverick. With a rasping voice, a well-known love of manga comics and a notorious tendency to outspokenness, Mr Aso is popular with voters, including the young. He is not, strictly speaking, very much like Mr Koizumi at all, representing a conservative wing of the party and lacking a similar vision of policy reform. In fact he is a blue-blooded member of the LDP establishment, but his appeal lies in the perception that he is at the same time an outsider. At any rate, he is currently the only LDP figure with anything like the national standing required to lead the party into the next lower-house election, which must be held by September next year but which is looking increasingly likely to be called before the end of 2008. ...

Daily dispatches from St Paul

THE most important feature of this year’s Republican convention is not its location, purpose or personalities. It is timing: for the first time in decades, the two parties convene in successive weeks. While most people celebrate the Labour Day holiday at home, the journalist class will arrive in St. Paul barely having recovered from Denver: the heat, the death-march-length walk from the security perimeter to the Pepsi Centre, the lack of seats, the alcohol. ...

Faced with big penalties, carmakers are improving efficiency

THERE is nothing like high oil prices and swingeing new penalties on carbon-spewing vehicles to concentrate the minds of carmakers. The European Commission plans to impose penalties on companies by 2012 if their fleets emit over 130 grams of carbon dioxide per km (g/km). After much complaining about the technical impossibility of compliance (especially from German makers of big luxury cars), companies have got on with rolling out new technologies to improve efficiency. BMW cut its average fleet emissions by 7.3% last year by using “efficient dynamics” across its range, according to T&E, a transport think-tank. Many carmakers saw little improvement, partly because cars got 10kg heavier on average. PSA Peugeot-Citroen and Renault are best placed to meet the 2012 target.

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BP and its Russian partners appear to make up and vow to move on

LITTLE more than a week after Russia’s government had declared itself ready for a new cold war, one big foreign investor has emerged intact from a nasty dispute with its local partners and the authorities. TNK-BP, an oil company that produces 1.6m barrels a day and which is owned jointly by Britain's BP and Russian private investors, AlfaAccessRenova (AAR), was for months paralysed by war in the boardroom. The Russian investors, unhappy at the way the company has been run by Bob Dudley, an American appointed by BP, blocked the renewal of work permits for many foreign staff. This included Mr Dudley, who since late July has tried to direct TNK-BP from a secret location abroad. Despite denials, Russia’s tax and immigration inspectors seemed to be helping AAR. BP looked poised to join the ranks of foreign oil companies forced to sell stakes in big projects, on the cheap, to Kremlin-friendly concerns.

On Thursday September 4th, however, the two sides agreed to make up. BP’s 50% stake appears to be safe. Mr Dudley will go at the end of this year, to be replaced by a BP nominee who must be approved by the board. One AAR director and one BP director will also depart, making way for three independents. Much could depend on how independent these individuals really are. The squabbling management committee will be shrunk and the most disruptive members thrown out. In time, as much as 20% of the venture could be sold in an initial public offering (IPO)—if both partners, plus Russia’s regulators, agree. ...

Naming the stand-off between Russia and the West

DEFINING the beginning and end of the old cold war—let alone is the issues at stake—is tricky. Did it start with Lenin? With Stalin? Or with the Iron Curtain’s erection in Europe at the end of the second world war? And when did it end? With the Helsinki Accords of 1973, or with Mikhail Gorbachev’s glasnost and perestroika?

Historians can quibble indefinitely, but a rough definition might be that the cold war was an era of rivalry, both military and ideological, between two global superpowers. It started with the Berlin airlift of 1948, and petered out in the 1980s. ...

Ukraine’s pro-Western coalition is unravelling

Ukraine’s government, comprising the allies from the Orange Revolution, is poised to collapse after the prime minister, Yuliya Tymoshenko, allied with the opposition to strip the presidency of its powers. It is not clear whether Ms Tymoshenko has done this to pressure the president to back her policies, to boost her power as an alternative to seeking the presidency herself, or to trigger her departure from government ahead of tough economic times—and with an eye on the 2010 presidential election. The coalition could yet be saved, or a new one established; failing that, a parliamentary election must be held. With political tensions high in the wake of Russia’s attack on Georgia, the timing could hardly be worse.

On September 2nd the pro-presidential Our Ukraine-People's Self-Defence (OU-PSD) voted to leave its coalition with the Yuliya Tymoshenko Bloc (YTB), bringing the "Orange" government, which was only formed in late 2007 following an early parliamentary election, to the verge of collapse. ...

The rubbish mountains grow

OVER 2.1 billion tonnes of rubbish were dumped around the world last year. Rich countries are the most wasteful, with each person chucking away 1.4kg of solid trash every day, but this has levelled off in recent years as the rich try to create less of it and to recycle more. As poorer nations grow richer they will produce more waste. In 2004 China surpassed America as the largest producer of rubbish: by 2030 it will be churning out nearly 500m tonnes a year.

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Google’s new web browser is its most direct attack on Microsoft yet

SEVERAL years ago, Silicon Valley was rife with rumours that Google, then primarily a search engine, might be building a new web browser to rival that of Microsoft, called Internet Explorer (IE), or even an operating system to rival Microsoft’s Windows. Google mocked those rumours and they died down. But if Sergey Brin, Google’s co-founder, is to be believed, the speculation itself made him think that “maybe it’s not a bad idea”. And so this week Google did launch a new browser, called Chrome, that is also, in effect, a new operating system. The rumours, says Mr Brin cheekily, “just happened to migrate from being false to being true.”

Chrome amounts to a declaration of war—albeit a pre-emptive one, in Google’s mind—against Microsoft. So far, Google has been coy about admitting the rivalry (whereas Microsoft’s boss, Steve Ballmer, is obsessed with it). In web search and advertising, Google dominates roughly as Microsoft does in operating systems and office applications. To the extent that Google has challenged Microsoft’s core business at all, it is through its web-based word-processing, spreadsheet and presentation applications. But these, so far, have few users. ...

Google’s new web browser is its most direct attack on Microsoft yet

SEVERAL years ago, Silicon Valley was rife with rumours that Google, then primarily a search engine, might be building a new web browser to rival that of Microsoft, called Internet Explorer (IE), or even an operating system to rival Microsoft’s Windows. Google mocked those rumours and they died down. But if Sergey Brin, Google’s co-founder, is to be believed, the speculation itself made him think that “maybe it’s not a bad idea”. And so this week Google did launch a new browser, called Chrome, that is also, in effect, a new operating system. The rumours, says Mr Brin cheekily, “just happened to migrate from being false to being true.”

Chrome amounts to a declaration of war—albeit a pre-emptive one, in Google’s mind—against Microsoft. So far, Google has been coy about admitting the rivalry (whereas Microsoft’s boss, Steve Ballmer, is obsessed with it). In web search and advertising, Google dominates roughly as Microsoft does in operating systems and office applications. To the extent that Google has challenged Microsoft’s core business at all, it is through its web-based word-processing, spreadsheet and presentation applications. But these, so far, have few users. ...

But a few reasons for hope in Kashmir

NOT so long ago, Kashmir seemed a rarity among the globe’s interminable, intractable conflicts, in that it actually seemed to be improving. It was no longer cited as the conflagration most likely to spark a nuclear war. The two countries contesting sovereignty—India and Pakistan—were not about to resolve their dispute; yet, slowly but surely, they were building better relations.

The international press ran articles about peace settling on the area most scarred by bloodshed—the Indian-administered, Muslim-majority Kashmir valley. Tourists were returning, lolling on houseboats on the magical lakes, skiing in the gorgeous mountains, or enjoying a golfing paradise. ...

Gulf Arab states are fretting at the rising number of foreign workers

Governments in the booming Gulf Arab states are becoming increasingly anxious at the erosion of their national cultures, as their growing economies suck in ever-larger numbers of expatriate workers. They are now devising a range of measures to limit the growth of segments of the expatriate population—in particular those at the less skilled end of the spectrum—while not impinging on the continued expansion of their economies. The concerns call into question the entire basis of the Gulf development model, entailing ambitious targets for economic growth and diversification, which cannot feasibly be achieved without a substantial increase in the expatriate population.

The problem is most clearly evident in the United Arab Emirates, where expatriates account for more than 90% of the private-sector labour force, and where the population is thought to have grown by almost one-third over the past three-four years. According to the most recent census, whose results were published in 2005, the UAE's population was 4.3m; it is now generally estimated to be about 6m. The UAE government announced in early September that it is setting up a national demographic agency that will be tasked with finding ways to slow down the growth of expatriate labour imports. Among the initial measures that have been proposed is a scheme to allow students who are enrolled in UAE universities and who are the children of foreign residents to take up part-time jobs. This measure appears to be targeted at children of long-term residents from other Arab countries, who have more cultural affinities with Emiratis than do Asian and European residents, who predominate in the expatriate community. The students would be expected to gravitate towards semi-skilled jobs in the services sector that tend to be performed by Asians. ...

More upheaval in English football, as investors from the Middle East spend $360m on Manchester City

FANS were surprised, in 2003, when a little-known Russian oil billionaire splashed out $226m for Chelsea football club. These days foreigners spending fortunes on English clubs is far more common. The Premier League has become the richest and most famous in the world. On Tuesday September 2nd, Manchester City, a mid-table team, changed hands for the second time in little over a year. Abu Dhabi United Group, a Middle-Eastern consortium backed by oil-rich royals, will pay $360m for the club, quite an improvement on the $165m paid in 2007. We have left out another club, Derby County, which was bought for some $100m in January but relegated in June.

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The Republican convention, though battered, goes ahead

IT HAS been a rocky week for the Republican Party, as its convention gets under way in St Paul, Minnesota. After the focus on the Democrats last week, John McCain snatched back attention at the weekend with his choice of Sarah Palin, the young governor of Alaska, as his running mate. But little since that announcement has gone according to plan.

The first difficulty was Hurricane Gustav which crossed the Gulf of Mexico before hitting Louisiana on Monday September 1st. The storm provoked memories of Katrina, the hurricane which drowned New Orleans in 2005 and whose aftermath was mishandled by George Bush’s administration. Nearly 2m people left their homes in Louisiana this week, fleeing the storm. And as a result of the upheaval, Mr Bush and his vice-president, Dick Cheney, decided to stay away from the Republican convention, scrapping planned speeches. Mr McCain was no doubt relieved: the less he is associated with the deeply unpopular incumbent, the happier he will be. ...

Workers in Ireland are struggling, hit especially by a slump in construction

The effects on Ireland's labour market of a deep slump in the construction sector are becoming increasingly stark. Second-quarter data from the Central Statistics Office show that job creation has almost stagnated, with the numbers in employment increasing by just 0.3% year on year in the second quarter of 2008. This represents a sharp slowdown from a rate of 4% recorded for the same period a year earlier, and that of 2.6% in the first three months of the year.

While a number of sectors recorded declining employment in the second quarter, the overall weakness of jobs growth was clearly driven by a collapse in the construction sector, where employment fell by 26,800 over the year—equivalent to 9.5% of the sector's workforce. There were also drops of between 2.5% and 3% in industry, in the hotels and restaurants sector and in the transport, storage and communications industry. Net job creation was confined to a small number of service sectors, mostly in wholesale and retail and in healthcare. ...

Innovative things to do with a banana

“BEHOLD, the atheist’s nightmare,” declares Ray Comfort, an Australian evangelist, as he holds up a banana in a hugely popular video on YouTube. The fruit, he says, testifies to God’s creative genius. It comes with a colour-coding system that shows when it is ready to eat (green is too early, black too late); an easily gripped, biodegradable wrapper; and a “tab at the top” which, unlike that on a can of soda, works so well that when you pull it “the contents don’t squirt in your face.”

Not everyone is convinced. One video response points out that the banana only achieved its user-friendly qualities through evolution over many centuries of farming. ...

The army is called in as pro- and anti-government protesters clash

WITH protesters occupying Government House in Bangkok for the past week, several tourist airports being blocked by demonstrators and union leaders calling for strikes to bring down Samak Sundaravej, the prime minister, it had seemed only a matter of time before things turned violent. In the early hours of Tuesday September 2nd, they did. Supporters and opponents of the government armed with a variety of weapons clashed in the capital, leaving one person dead and dozens injured. Mr Samak called a state of emergency, putting the army in charge of security.

Rumours in Bangkok in the past few days had suggested that General Anupong Paochinda, the army chief, was resisting Mr Samak’s request for a state of emergency. If so, the violence changed his mind. The army has a low tolerance for political disorder and has frequently used it as an excuse to seize power. Indeed, Mr Samak has accused his opponents in the People’s Alliance for Democracy (PAD)—which is staging the sit-in at Government House—of trying to provoke another coup, so as to force Mr Samak and his People’s Power Party (PPP) from office. ...