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Much has been done to strengthen Europe’s banking system. But not enough

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A job half-finished

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European banks

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How—and why—to end the war in Yemen

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A job half-finished

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THE permanent revolution rumbles on. Ten years after the financial crisis, Europe’s bankers must wonder whether the regulatory upheaval will ever cease (see article). Next month two European Union directives start to bite. MiFID2 will make trading more transparent and oblige banks to charge clients separately for research; PSD2 will expose banks to more competition from technology companies, and each other, in everything from payment services to budgeting advice. A new accounting rule, IFRS 9, also kicks in, demanding timelier provisions for credit …

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Europe’s boom will not last; it had better make the most of it

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The second chance

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Free exchange

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How—and why—to end the war in Yemen

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“WHAT does not kill me makes me stronger,” wrote Nietzsche in “Götzen-Dämmerung”, or “Twilight of the Idols”. Alternatively, it leaves the body dangerously weakened, as did the illnesses that plagued the German philosopher all his life. The euro area survived a hellish decade, and is now enjoying an unlikely boom. The OECD, a club of mostly rich countries, reckons that the euro zone will have grown faster in 2017 than America, Britain or Japan. But, sadly, although the currency bloc has undoubtedly proven more resilient than many economists expected, it is only a little better equipped to survive its next recession than it was the previous one.
Europe’s crisis was brutal. …

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Douglas Irwin corrects the record of American trade policy over the years

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Sticking up for a scapegoat

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A history of trade

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A hated tax but a fair one

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Scapegoating trade

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Clashing over Commerce: A History of US Trade Policy. By Douglas Irwin. University of Chicago Press; 832 pages; $35.
TRADE-policy wonks are gluttons for punishment. In good times, their pet topic is dismissed as dull. In bad, they find trade being faulted for everything. As Donald Trump blames America’s economic woes on terrible trade deals, one geek is fighting back. In “Clashing over Commerce”, Douglas Irwin of Dartmouth College tells the history of American trade policy, showing that trade is neither dull nor deserving of the attacks on …

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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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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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