Issue 220: 2019 10 24: Lens on the Week

24 October 2019

Lens on the Week

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UK

A MATTER OF TIMING:  The Withdrawal Agreement Bill passes its second reading by a majority of 30 but the Commons throw out the Government’s three-day timetable.  The result is that the Prime Minister calls for a general election.

At first sight this might look like an overreaction but that is to ignore the practicalities.  Any businessman will tell you that difficult deals are agreed immediately before the deadline and the Shaw Sheet has always said that the same logic applied to the Withdrawal Agreement.  No deadline, no agreement, just a lot of posturing and fluffing around.  The Government sees that clearly and used the imminence of a no deal Brexit to push its new deal with the EU over the line.  It had hoped to use the 31st October drop dead to force the Bill to go through its committee stages (which follow the second reading) in short order.  That has now been thwarted by a combination of the Benn Act, The Letwin Amendment and Donald Tusk making it clear that extensions of time will be available.

So where does that leave us?  With the prospect of months of Parliamentary posturing while much other vital business sits on hold and the economy is left in a state of uncertainty.  The question for the Government is how to break the logjam and the obvious answer is a general election but that cannot be called without the assistance of other parties which to date has not been forthcoming.  Still, as J.R.Thomas says today, the gap between the public’s view and that of their representatives is widening.  Something has to give.

HORROR IN ESSEX:  The bodies of 29 immigrants have been found in a lorry in Essex and the driver has been arrested on suspicion of murder.  There was a similar incident in 2000 when 58 Chinese immigrants were found suffocated at Dover and the driver was jailed for manslaughter.  The difficulty in securing a murder conviction under such circumstances arises because of the need to prove an intention to do serious harm to the victims as opposed to gross negligence as to their welfare.

DUNN ENQUIRY:  Anne Sacoolas, the US citizen who used diplomatic immunity to leave the country following her involvement in a collision which killed British teenager Harry Dunn is to be questioned under caution in the US by Northamptonshire police.  It seems unlikely, however, that she will return to the UK to face any charges.

International

In recent weeks, the Lens has commented on widespread protests in Russia, Indonesia, Egypt, Peru, Ecuador, Hong Kong, Iraq and France.  Demonstrations seem to be spreading around the world like some kind of divine scourge or outbreak of plague (depending on your political outlook):

SPAIN:  Protests and counter-protests have rocked Barcelona and brought much of Catalonia to a halt following the heavy jail sentences handed out to Catalonian separatist leaders last week.  The demonstrations have turned violent; almost two hundred protesters have been arrested, two have been seriously hurt, and almost three hundred police have been injured.  See J R Thomas’s Homage To Catalonia in this edition of Shaw Sheet.

BOLIVIA:  Violent protests have broken out in Bolivia following the weekend’s presidential elections.  The electoral authority abruptly stopped releasing results on Sunday evening when it looked like President Morales would not secure the 10% lead he needed to avoid a second round run-off in December (which he would be unlikely to win if the opposition united against him); and when the broadcasting of results was resumed on Monday evening, with 95% of the votes counted, the president was only 0.5% away from total victory.

The Organisation of American States described this “drastic and hard to explain change in the trend” as of “deep concern and surprise”.  President Morales’ main rival, former president Carlos Mesa, described it as “a shameful, consummate fraud”.  Protesters set fire to the electoral body’s offices in the capital Sucre, burnt ballot boxes in Tarija and faced police firing tear gas in La Paz.

President Morales has been in power for fourteen years, longer than any other Latin American leader.  Three years ago, he had the constitution changed to allow him to stand for a fourth term; the change was defeated in a referendum but upheld by a court.

CHILE:  Anti-government protests were triggered by a rise in underground fares in the capital Santiago.  Demonstrators are complaining about high living costs and claim that only the wealthy elites are benefiting from increased prosperity.  Protests became violent, with rioting, arson and looting following attacks on shops, trains and banks.  At least fifteen people have been killed and hundreds have been arrested.  Curfews and a state of emergency have been declared across the country.  The army has been deployed and President Piñera declared that “We are at war”.

IRAQ:  Anti-government protests are due to resume this week, following last month’s protests in which one hundred and forty-nine civilians were killed by the security forces (eight members of the security forces were also killed).  The protesters are mostly young men who, although Shia, are protesting against corruption and the growing influence of Iran and Iranian-backed militias in the country.

HONG KONG:  Pro-democracy protests continue; hundreds of thousands of demonstrators took part in a march in support of democracy and autonomy last weekend.  The police used water canon to fire a mixture of stinging chemicals and a staining blue dye at them, and also fired tear gas.  Last week Jimmy Sham, a protest leader, was attacked by hammer-wielding thugs.

LEBANON:  A government proposal to charge a tax of $6 per month on users of Whatsapp and other internet systems triggered massive anti-government protests in cities across the country.  Demonstrators are protesting against government corruption and inefficiency.  The proposal was dropped and the prime minister is trying to put together a package of reforms and threatening to resign if his cross-sectarian government doesn’t support it.  But protests continue (at least one person has died) and the government is in danger of collapsing.

Financial

SPACED OUT AND CASHED OUT:  The WeWork troubles which we covered last week have reached a fast conclusion, which seems to ensure the business lives to fight another day – albeit on a smaller scale.  The company’s principal bankers, Softbank, who already own about a third of the WeWork parent company and are its main lenders, have decided to rescue the business, not least to stop the ebbing of tenants from WeWork office buildings as confidence in its future declines.  They have bought the shareholding of founder Adam Neumann for about US$1.7bn and written down the value of the business to $8bn (as against the $47bn projected flotation value a few months ago).  They will also provide a new loan facility of $5bn and immediate credit support of up to $1.5bn, to enable the business to get through the next few months.  Mr Neumann will immediately step down from his positions with the company, and Softbank will bring in new senior management.  And WeWork will consolidate its existing operations with less focus on expansion.  That all sounds as though it will stabilise the business – as long as office occupancy levels and rents generally do not fall.

WHAT A LOAD OF SXXT:  Toyota, the worldwide Japanese owned car maker has never been quite as convinced as other car makers that battery electrical propulsion is the future for powering motorcars.  It is running a bet on hydrogen power – a bet supported by many technical experts on non-carbon propulsion, who see advantages in portability, much faster refuelling, no bad by-products (only water), and less need for rare battery components.  Certainly, nobody can criticise Toyota for lack of innovative thinking.  Its latest wheeze, to produce the hydrogen, really tests the imagination.  Toyota propose using a certain output of the average cow to help produce the fuel.  No, not milk, it’s what comes out of the far rear and it is said to be a very efficient energy producer.  The annual output of one cow is sufficient to power a car for a year.  Visions of each Toyota Prius with a cow in a trailer behind (and milk always on hand) are alas not how it will work – but one useful side effect, if it works, is that the methane impact on the environment of all those windy cows will be curtailed.  It is not yet clear if this will be a vegan friendly solution though…

JUST BUY:  You may eat up what they deliver, but there’s a number of investors out there who want to devour food delivery firm Just Eat.  Back in July, Just Eat agreed to merge with Takeaway.com, in a deal which valued Just Eat shares at 731p.  Takeaway has suffered a lack of shareholder support since then, so the effective price has dropped to 600p.  That has awoken several stalkers now lining up their best offers – with the latest being the Dutch firm Prosus, owned by South Africa technology specialist Naspers, at around 800p.  The deal has been rejected by the Just Eat board, whose appetite is for yet more.

TOUGH AT THE TOP:  Latest research (by Credit Suisse, and they should know) says that there are now more rich Chinese nationals in the top 10% of the world’s rich than Americans (100 million versus 99 million).  The barrier is not quite so high to join that 10% as you might think – net worth of £84,000 will get you there.  Maybe more impressive is that 1 in every 14 Americans is a dollar millionaire.  We won’t tell you the proportion of Brits, not wanting to depress you.

 

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