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Business this week – The Economist


Investors welcomed the announcement by General Motors that it is to shut four factories in the United States, one in Canada and two others elsewhere in order to focus on making profitable SUVs and prepare for the shift towards electric-powered and autonomous vehicles. Donald Trump wasn’t happy. The loss of 14,000 jobs and closure of plants in Michigan and Ohio prompted him to threaten to end the federal subsidies that GM receives for electric cars. See article.

Curiouser and curiouser

Prosecutors in Japan continued their inquiries into Carlos Ghosn’s alleged underreporting of his salary at Nissan. Mr Ghosn, the architect of a three-way alliance between Nissan, Renault and Mitsubishi, was stripped of the chairmanship of Mitsubishi this week, following a similar move by Nissan. Renault, which in effect controls the alliance, has retained him as chief executive and chairman, appointing a deputy to lead the company in his “temporary” absence. See article.

An expert in DNA sequencing in China claimed that he had edited the genomes of twin baby girls while they were embryos. Scientists working in the field of genetics roundly condemned the news. See article.

Bitcoin see-sawed, dropping at one point to its lowest level since September 2017. Underlining the speculative nature of investment in cryptocurrencies, it then rose by 6% in a day to above $4,000, its biggest leap since July. But bitcoin’s overall trend is down; it has fallen by almost 40% since early September. See article.

In a big speech to Wall Street bankers, Jerome Powell, the chairman of the Federal Reserve, defended the central bank’s policy of gradual interest-rate rises. He also dropped what investors took to be a hint that a pause may come soon, pointing out that interest rates were just below the broad range of estimates that would be neutral for the economy. That will please President Trump, who has criticised Mr Powell for his “way off base” approach. Stockmarkets perked up after the speech.

Randal Quarles, who is responsible for financial supervision at the Fed, was appointed chairman of the Financial Stability Board, an international body created at the height of the financial crisis to advise the G20. Mr Quarles takes over from Mark Carney, the governor of the Bank of England, and is the first American to be handed the job.

Mario Draghi said it remained highly likely that the European Central Bank would decide at its next meeting to end its quantitative-easing programme, despite recent disappointing growth figures in the euro zone. The central bank’s president described the slowdown as “temporary”. Other data point to rising inflationary pressures. The euro area’s unemployment rate is at its lowest level since 2008.

The Trump administration raised the stakes in its trade war with China. Donald Trump reiterated his threat to raise tariffs on Chinese goods to 25% from 10% unless progress is made on trade issues at his meeting with Xi Jinping at the G20 summit in Buenos Aires. Larry Kudlow, Mr Trump’s chief economic adviser, confirmed that the two sides have been negotiating ahead of the meeting, but contended that China “must do more”.

Oil prices struggled to recover after a steep sell-off pushed them to their lowest point of the year. Brent crude fell below $58 a barrel. Various factors, including a lingering glut in supplies and American pressure on Saudi Arabia to keep energy costs low, have resulted in oil prices falling by a third since early October.

Danish prosecutors brought criminal charges against Danske Bank over a €200bn ($230bn) money-laundering scandal that involved Russian funds flowing through one of its branches in Estonia. Investigators are still trying to establish if any senior managers at Danske should face prosecution.

Unilever announced that Paul Polman is to step down as chief executive after ten years in the job. Mr Polman has become a cult figure among activists and NGOs for his support of virtue-driven capitalism. He has sat on the UN High-Level Panel of Eminent Persons, helped found a Dutch group working for sustainable growth and has written about hunger, among other things. His successor is Alan Jope, who runs the Anglo-Dutch conglomerate’s beauty-care business.

A workers’ revolution

Hundreds of Google’s employees signed an online letter calling on the company to cancel its project to create a censored search engine for the Chinese market. The tech giant’s vociferous staff, who recently staged a walkout in support of the #MeToo movement and also forced Google to cancel work for the Pentagon earlier this year, said that they “object to technologies that aid the powerful in oppressing the vulnerable, wherever they may be”.



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