America’s companies have binged on debt; a reckoning looms

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AMERICA’s companies have been powering ahead for years. Amid growing profits, the recession that began in 2007 seems an increasingly distant memory. Yet the situation has a dark side: companies have binged on debt. For now, as the good times have coincided with a period of record-low interest rates, markets have been untroubled. But a shock could put corporate America into trouble.No matter how it is measured, the debt load looks worrying. When calculated as a percentage of GDP, the total debt of America’s non-financial corporations reached 73.3% in the second quarter of 2017 (the latest available data). This is a record high. Measured against earnings before interest, tax, depreciation and amortisation (EBITDA), the net debt of non-financial companies in the S&P500 hit a ratio of 1.5 at o

Mining data on cab rides to show how business information flows

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AS COMPUTING power has grown, it has become easier to uncover information hidden inside datasets that seem totally unconnected. Some recent studies have used this approach to reveal business-related information flows. One linked the movements of 18th-century share prices with the arrival of ships bringing news. Another looked at the relationship between business activity and the movements of corporate jets. A third mined White House visitor logs for the names of executives and examined their companies’ subsequent stockmarket returns.A paper in this vein published on March 5th pores over a dataset released by New York City’s government covering more than 1bn cab rides between 2009 and 2014. David Finer, a graduate student at University of Chicago’s Booth School of Business, analysed trips c

A Chinese oil baron is reportedly detained by the authorities

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Ye Jianming in bloomSTAFF had routinely been directed to pore over their chairman’s speeches and learn from them. One which Ye Jianming, the 40-year-old founder of CEFC, delivered last autumn—“Only One Step From Midsummer to Harsh Winter”—was a historical tale meant to motivate the troops. In it he compared his firm’s swift rise to that of Hu Xueyan, a 19th-century merchant banker. Hu amassed a fortune trading in salt, tea, arms and silk through close ties to China’s imperial elites, then fell from grace and went bankrupt.Mr Ye did not mean the lesson to be pertinent to his own situation. CEFC was then enjoying its own midsummer. As China’s largest private oil group, it had just won a 14.2% stake in Russia’s state-backed oil firm, Rosneft, paying $9.1bn for one of the most significant shar

Inside Warren Buffett’s deal machine

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SOME things about Warren Buffett never change, including his non-stop jokes, famous annual letter and his reputation as the world’s best investor. What is less understood is that over the past decade Mr Buffett’s company, Berkshire Hathaway, has sharply altered its strategy. For its first 40 years Berkshire mainly invested in shares and ran insurance businesses, but since 2007 it has shifted to acquiring a succession of large industrial companies.In some ways it is hard to criticise Berkshire. Its shares have kept up with the stockmarket and its standing is exalted. It is the world’s seventh-most-valuable publicly traded firm (the other six are tech concerns). But Mr Buffett’s behemoth is a puzzle. Its recent deals have had drab results, suggesting a pivot to mediocrity.It has been quite a

How digitisation is paying for DBS

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MOST banks gush about digital technology, fearing all the while that some born-digital usurper, large or small, will do to them what Amazon has done to retailers, Uber to taxi-drivers and Airbnb to hoteliers. Some have reorganised themselves to become nimbler, copying startups by forming small teams to generate, test, reject and improve ideas at speed. Apps are improving, new products are appearing and online marketplaces are being built. Only a few are turning enthusiasm into money. One of those is DBS.Singapore’s (and South-East Asia’s) biggest bank is a stockmarket darling. Its share price has roughly doubled in the past two years, outstripping the gains of Oversea-Chinese Banking Corporation (OCBC) and United Overseas Bank (UOB), its main local rivals (see chart). The price exceeds DBS

Will China’s Belt and Road Initiative outdo the Marshall Plan?

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SEVENTY years ago America passed the Economic Co-operation Act, better known as the Marshall Plan. Drawing inspiration from a speech at Harvard University by George Marshall, America’s secretary of state, it aimed to revive Europe’s war-ravaged economies. Almost five years ago, at a more obscure institution of higher learning, Nazarbayev University in Kazakhstan, China’s president, Xi Jinping, outlined his own vision of economic beneficence. The Belt and Road Initiative (BRI), as it has become known, aims to sprinkle infrastructure, trade and fellow-feeling on more than 70 countries, from the Baltic to the Pacific.Mr Xi’s initiative, which also has geopolitical goals (see Banyan), has invited comparison with America’s mid-century development endeavour. Some even suggest it will be far bigg

Sweden tries to increase gender equality on Wikipedia

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EVER since Julian Assange, founder of WikiLeaks, referred to Sweden as a “hornets’ nest of revolutionary feminism” and as a “Saudi Arabia of feminism”, Swedes have worn this as a badge of honour. Now its foreign ministry has an ambitious plan to increase gender equality on the internet.Its precise target is Wikipedia, a user-generated online encyclopedia on which some 90% of the content is created by men. Of its biographies, 80% are about males. On International Women’s Day on March 8th (as The Economist went to press) the Swedes were hosting “WikiGap” edit-a-thons and seminars in 54 of its embassies, from Abuja to Vilnius, in partnership with Wikimedia, the foundation behind the platform. The hope was that participants would write more entries about notable women.“Knowledge is power,” exp

Investment by women, and in them, is growing

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MARCH 8th, International Women’s Day, always brings a flood of reports about gender inequalities in everything from health outcomes to pay and promotion. But one gap is gradually narrowing: that in wealth. As money managers seek to attract and serve rich women, and as those women express their values through their portfolios, the impact will be felt within the investment industry and beyond.According to the Boston Consulting Group, between 2010 and 2015 private wealth held by women grew from $34trn to $51trn. Women’s wealth also rose as a share of all private wealth, though less spectacularly, from 28% to 30%. By 2020 they are expected to hold $72trn, 32% of the total. And most of the private wealth that changes hands in the coming decades is likely to go to women.One reason for women’s gr

An attempt to revise the Dodd-Frank Act reaches a milestone

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AFTER 25 hearings, thousands of pages of comments and many unworkable bipartisan working groups, America’s Senate has finally produced a possible consensus bill to tweak the Dodd-Frank Act, the vast swathe of banking regulation passed soon after the 2008-09 financial crisis. On March 6th, in a technical move that counts as significant progress in Washington’s creaky bureaucracy, 16 Democrats and one independent joined Republicans in voting to allow several hours of debate before passing the bill on to the Senate leadership.Amendments may yet be added and the entire edifice could fracture, but the vote, after years of effort, suggests a bill might now pass. If it does, it would then have to be reconciled with a different bill passed by the House of Representatives. But this now seems possib