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Timelier loan-loss provisions may make earnings and lending choppier

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Stage fright

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Accounting and banks

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The army sidelines Robert Mugabe, Africa’s great dictator

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IN THE first quarter of 2018 thousands of banks will look a little less profitable. A new international accounting standard, IFRS 9, will oblige lenders in more than 120 countries, including the European Union’s members, to increase provisions for credit losses. In America, which has its own standard-setter, IFRS 9 will not be applied—but by 2019 banks there will also have to follow a slightly different regime.
The new rule has its roots in the financial crisis of 2007-08, in the wake of which the leaders of the G20 countries declared that …

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The big risks may be in corporate, not government, bonds

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Yielding to temptation

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Buttonwood

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Do social media threaten democracy?

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Buttonwood

FOR the umpteenth time in the past decade, a great turning-point has been declared in the government-bond market. Bond yields have risen across the world, including in China, where the yield on the ten-year bond has come close to 4% for the first time since 2014. The ten-year Treasury-bond yield, the most important benchmark, has risen from 2.05% in early September to 2.37%, though that is still below its level of early March (see chart).
Investors have been expecting bond yields to rise for a while. A survey by JPMorgan Chase found that a record 70% of its clients with speculative accounts had “short” positions in Treasury bonds—ie, betting that prices would fall and that …

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There are 767 million people in the world who live in extreme poverty — $1.90 a day or less for daily needs. But you can have more than that and still be considered poor. So the World Bank has now set two poverty lines for middle-income countries.

If you live on $1.90 a day or less, the World Bank says you are extremely poor. Two new poverty lines offer a way to measure poverty in middle income countries.

(Image credit: Matthew Zhang/NPR)

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Agreement on how to fight recessions in a low-interest-rate world remains elusive

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The low road

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Free exchange

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The right way to help declining places

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Free exchange

ONE day, perhaps quite soon, it will happen. Some gale of bad news will blow in: an oil-price spike, a market panic or a generalised formless dread. Governments will spot the danger too late. A new recession will begin. Once, the response would have been clear: central banks should swing into action, cutting interest rates to boost borrowing and investment. But during the financial crisis, and after four decades of falling interest rates and inflation, the inevitable occurred (see chart). The rates so deftly wielded by central banks hit zero, leaving policymakers grasping at untested alternatives. Ten years on, despite exhaustive debate, economists …

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A devil to sup with

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Herbert Hoover

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20th-century American history

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Hoover: An Extraordinary Life in Extraordinary Times. By Kenneth Whyte. Knopf; 752 pages; $35.
FOR his philanthropic efforts during the first world war, Herbert Hoover was described as a “man who began his career in California and will end it in heaven”. In a new biography, Kenneth Whyte lists the many hardships Hoover went through. Generally, he used them to his advantage—to increase his wealth, achieve fame and become America’s 31st president. At least, that is, until the Great Depression, which ruined him politically.

Born in Iowa in 1874, Hoover became determined early in life to earn a fortune for the security and independence it would bring. After graduating as a geologist from …

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Nearly 11 percent of the world’s population lives on less than two dollars a day, according to the World Bank.

(Image credit: EITAN ABRAMOVICH/AFP/Getty Images)

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Prices are high across a range of assets. Is it time to worry?

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The bull market in everything

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Asset prices

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It is not too late to stop the break-up of Spain

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The bull market in everything

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IN HIS classic, “The Intelligent Investor”, first published in 1949, Benjamin Graham, a Wall Street sage, distilled what he called his secret of sound investment into three words: “margin of safety”. The price paid for a stock or a bond should allow for human error, bad luck or, indeed, many things going wrong at once. In a troubled world of trade tiffs and nuclear braggadocio, such advice should be especially worth heeding. Yet rarely have so many asset classes—from stocks to bonds to property to bitcoins—exhibited such a sense …

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