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Economy

Economy

Low-Cost Carrier Flybondi Creates First-Ever Transferable Airline Tickets

The innovative airline based in Argentina is offering plane tickets that can be given as a gift, or even sold, in what it says is a first anywhere in the world.

BUENOS AIRES — An Argentinian low-cost airline is letting ticket buyers change their details after purchase and has created a "unique" ticket that can be transferred, gifted, and presumably even sold to others. The firm says nobody else has this at the minute.

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A Cold French Shower On All The De-Dollarization Hysteria

Sure, financial instability in the U.S. and the weaponization of the dollar have raised crucial questions about how long the dollar can remain the world's de-facto currency. But France's leading business daily says don't expect major changes any time soon.

-Analysis-

PARIS — Americans are a strange bunch. Fifteen years after allowing the eruption of the largest global financial crisis in nearly a century, they were not even able to prevent a bank with more than $200 billion in assets from collapsing in a few hours.

These people are as careless with their public accounts as they are with their private finances. This year, the U.S. public deficit is expected to approach 6% of GDP, almost double that of the European Union. As if this impasse were only a minor problem.

Can we continue to trust a country's currency so inconsistent with money?

More and more countries are answering this question by buying gold. After beginning their return to the yellow metal in 2009, just after the great financial crisis, central banks acquired 1,136 tons last year. A record for over half a century!

And if they have increased their purchases, especially in emerging countries, it is not only to protect their reserves from inflation or banking crises. It may also be with monetary plans in mind.

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France, Portrait Of A Nation In Denial — In Our World In Denial

The continuous increase of public debt and a tone-deaf president in France, the rise of authoritarian regimes elsewhere in the world, the blindness to global warming: realities that we do not want to see and that will end up destroying us if we do not act.

-Analysis-

PARIS — In France, the denial of reality seems to be the only thing that all of our public figures have in common: The president (who is right to say that it is his role to propose unpopular measures) refuses to see that other solutions than his own were possible and that institutions will not be sufficient in the long term to legitimize his solitary decisions.

The parliamentary opposition groups refuse to see that they do not constitute a political majority, since they would be incapable of governing together and that they have in common, for too many of them, on both sides of the political spectrum, left and right, only the hatred of money, the mistrust of success, and the contempt for excellence.

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Globalization Takes A New Turn, Away From China

China is still a manufacturing juggernaut and a growing power, but companies are looking for alternatives as Chinese labor costs continue to rise — as do geopolitical tensions with Beijing.

-Analysis-

PARIS — What were the representatives of dozens of large American companies doing in Vietnam these past few days?

A few days earlier, a delegation of foreign company chiefs currently based in China were being welcomed by business and government leaders in Mexico.

Then there was Foxconn, Apple's Taiwanese subcontractor, which signed an investment deal in the Indian state of Telangana, enabling the creation of 100,000 jobs. You read that right: 100,000 jobs.

What these three examples have in common is the frantic search for production sites — other than China!

For the past quarter century, China has borne the crown of the "world's factory," manufacturing the parts and products that the rest of the planet needs. Billionaire Jack Ma's Alibaba.com platform is based on this principle: if you are a manufacturer and you are looking for cheap ball bearings, or if you are looking for the cheapest way to produce socks or computers, Alibaba will provide you with a solution among the jungle of factories in Shenzhen or Dongguan, in southern China.

All of this is still not over, but the ebb is well underway.

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Society
Grégoire Poussielgue

French Protests: Risk Of A "Yellow Vest" Rerun

The pushing through of a bill to raise the retirement age in France has caused widespread, sometimes violent, protests. The government is worried the movement will spread, as unions warn the protests are just beginning.

-Analysis-

PARIS — The peaceful ambiance last month of anti-government demonstrations in France has given way to something else. But what exactly is the new nature of the protests? Are we witnessing the emergence of a social movement destined to last, and paralyze the country like the so-called "yellow vests" five years ago?

Since last Thursday, when the French government passed a bill on pension reform increasing the retirement age from 62 to 64, President Emmanuel Macron and his government have been facing a new form of protest. It is more radical, sometimes more violent, but also more diffuse and especially uncontrollable.

In Paris, after two evenings of "wild" demonstrations, people were forbidden from gathering and protesting at Place de la Concorde, one of the city's major public squares, on Saturday evening and the area was placed under heavy police surveillance. The problem was only averted because another demonstration took place in another square, Place d'Italie, leading to clashes with the police.

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Economy
Pierre Haski

Lithium Mines In Europe? A New World Of Supply-Chain Sovereignty

The European Union has a new plan that challenges the long-established dogmas of globalization, with its just-in-time supply chains and outsourcing the "dirty" work to the developing world.

-Analysis-

PARIS — It is one of the great paradoxes of our time: in order to overcome some of our dependencies and vulnerabilities — revealed in crises like COVID and the war in Ukraine — we risk falling into other dependencies that are no less toxic. The ecological transition, the digitalization of our economy, or increased defense needs, all pose risks to our supply of strategic minerals.

The European Commission published a plan this week to escape this fate by setting realistic objectives within a relatively short time frame, by the end of this decade.

This plan goes against the dogmas of globalization of the past 30 or 40 years, which relied on just-in-time supply chains from one end of the planet to the other — and, if we're being honest, outsourced the least "clean" tasks, such as mining or refining minerals, to countries in the developing world.

But the pendulum is now swinging in the other direction, if possible under better environmental and social conditions. Will Europe be able to achieve these objectives while remaining within the bounds of both the ecological and digital transitions? That is the challenge.

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Green
Jan Schulte

Urban Mining: How Sustainable Cities Are Recycling Buildings Down To The Bone

As material costs skyrocket, an old practice is becoming popular again: reusing building materials. In Germany, the first projects are already underway – and so far, results are promising as a model for sustainable cities.

BERLIN — At first glance, Huthmacher Haus at Number 2 Hardenbergplatz in Berlin is nothing special: a large white concrete block.

The 60-meter-tall building opposite the Zoologischer Garten train station is rather inelegant – perhaps an acquired taste for lovers of post-War architecture. Having been built in 1957, non-architecture buffs might be more interested in the iconic yellow giraffe painted on the façade, a reference to the zoo around the corner.

Three years ago, investor Newport Holding wanted to tear the building down and replace it with a 95-meter-tall office complex. But the German historic monuments commission was against the idea – and suddenly, what was considered a useless concrete building became an example of a sustainable approach to using building materials.

The current owners, Bavarian company Bayerische Hausbau, want to renovate the building, preserving as much as possible and laying the groundwork for the materials to be reused in the future – an approach called urban mining.

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Geopolitics
*Rubén M. Perina

How Argentina Has Become China's Foothold In Latin America

China has become one of Argentina's most important trading partners and is increasing its military bases in the country. As China seeks to challenge the liberal world order, Argentina risks rifts with other key allies.

-Analysis-

BUENOS AIRES — There was a media furore worldwide in February over the sighting and subsequent downing of mysterious Chinese balloons by the U.S. coastline. The unnerving affair naturally raised a question mark in countries beyond the United States.

Here in Argentina, currently run by a leftist administration with leanings toward Russia and China, we might pertinently wonder whether or not the secretive Chinese base set up in the province of Neuquén in the west of the country in 2015-17 had anything to do with the communist superpower's less-than-festive balloons. It is difficult to say, of course, given the scarcity of information on the base, but the incidents are an opportunity to revise China's presence in Argentina.

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Economy
Pierre Haski

Will China Invade Taiwan? Volkswagen's €180 Billion Bet Says 'No'

German automobile giant Volkswagen will invest billions in China to manufacture electric vehicles. It has deemed the risk of China invading Taiwan "unlikely," a peek into the calculations that private-sector conglomerates make, just like state actors.

-Analysis-

PARIS — Automaker Volkswagen has decided to accelerate its investments in electric vehicles: €180 billion, mainly in the United States and China. The Financial Times has reported that the company's management evaluated the risk and concluded that China would not invade Taiwan in the short term. It decided as a result that it was reasonable to invest in China, one of its main markets.

It's an interesting vantage point to undertand events. Governments around the world are questioning China's intentions towards the island of Taiwan, which Beijing claims as its own. What is less known is that large companies also need to calculate geopolitical risk and conduct their own analyses.

A few months after Russia's invasion of Ukraine, the President of the European Chamber of Commerce in China, which represents thousands of companies, sounded the alarm in an interview with an economic magazine. Joerg Wuttke mentioned the trauma of Western companies forced to leave Russia and lose everything, and warned Chinese authorities that the same thing could happen if China invaded Taiwan.

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Economy
Jean-Marc Vittori

How SVB Is Different Than Lehman — And Not Different Enough

The fall of Silicon Valley Bank revives memories of Lehman Brothers' bankruptcy. The two situations have some fundamental differences, but there is enough in common that the risks that SVB could spark a new global financial crisis is very real.

-Analysis-

PARIS — In finance, brands can be the omens of disaster. On Monday, April 2, 2007, New Century Financial collapsed. The fall of this "financial institution of the new century," which had failed to properly assess risks, was the true starting point of the great financial crisis that culminated 18 months later with the bankruptcy of Lehman Brothers.

On Friday, March 10, 2023, Silicon Valley Bank (SVB) was shut down by U.S. authorities following the largest bank run in history. Its clients wanted to withdraw $42 billion in a single day.

The closure of the Silicon Valley bank was a result of disastrous management, but also from its central role in a start-up ecosystem that's been weakened by a scarcity of money.

The key question is: Is this closure the starting point of a new crisis?

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Economy
Alexandre Counis

The World Watches Silicon Valley Bank's Collapse And Braces For 2008 Déjà Vu

The effects of the fall of Silicon Valley Bank show the limits of the tech world, but also the current fragility of the international financial system a generation after the 2008 global financial crisis that was sparked by U.S. bank failures.

-Analysis-

PARIS — Five months after the collapse of cryptocurrency exchange FTX, which continues to shake the crypto world, it's the turn of Silicon Valley Bank, which was at the heart of U.S. start-up financing until it failed on March 10.

It is still too early to know if this new fire will spread or be contained quickly, but lessons can be drawn from the bank's failure, which looks like the consequence of the abrupt transition from the era of free money to the era of rapidly rising interest rates.

The first lesson concerns the world of start-ups.

It is surprising and distressing that this ecosystem, so quick to disrupt the models of the past, should find itself trapped by the simple fact that a traditional bank has become a must-have in Silicon Valley.

This has left the entire venture capital world on edge.

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Ideas
Hector Zajac

The Direct Link Between Turkey's Earthquake Toll And Global Real Estate Markets

The shoddy homes that collapse on their inhabitants in Turkey's recent earthquake were badly, and hastily, built as part of a worldwide real-estate fever typically fueled by greedy governments indifferent to safety norms and common sense.

-Analysis-

There is bitter irony in an earthquake striking a zone already decimated by terrorism and war, where the vulnerable must suffer from natural destruction on top of their rulers' cruelty or, at best, cynical indifference. Under such calamitous conditions, how is one to interpret the observation of Turkish President Recep Tayyip Erdogan that the February quakes that killed more than 40,000 were fate's work?

The countries hit, Turkey and Syria, lie on a seismic powder keg. They have shaken before and will keep shaking, and nothing can be done about that. But much can be done to prevent the natural vulnerabilities that threaten so many countries becoming disasters of Biblical proportions. Something can always be done to mitigate the harm of even a 7.8-level quake and its aftershocks striking at the end of a freezing winter night.

Talking of the clash of tectonic plates is confusing, as the scale can boggle the mind. But it refers to the movements of vast plaques, 70 kilometers thick, that rub against each other while shifting in opposing directions. Even without a cataclysm like the earthquakes, such movements can push up the ground a few centimeters a year to form mountain ranges over millions of years.

In this process, rocks on their edges accumulate enormous amounts of pressure that are suddenly released in quakes as they snap, before moving.

Our short time on this planet has amply shown the impact of a shifting earth on our fragile civilization and socio-economic organization.

And while science has evolved and can better predict earthquakes, it has yet to do it well enough to allow for a city's evacuation.

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