Japan enters a recession

Japan's economy fell into recession in the third quarter of 2008, as businesses sharply cut back on spending and as net exports made a negative contribution to growth. The data underline the impact that the global financial crisis has begun to have on Japan's real economy, and worse is almost certainly to come.

Japan's GDP contracted by a seasonally adjusted 0.1% quarter on quarter in the three months to September, according to data published by the Cabinet Office on November 17th. This marked the economy's second successive quarterly contraction—putting Japan firmly in recession. Although the decline in GDP was less severe than in the preceding quarter, the country's economic prospects look especially gloomy for two reasons. ...

How many years of healthy living before you die?

PEOPLE are mostly living longer, but are those extra years healthy ones? Whereas the life expectancy for men aged 50 in European countries varies by some nine years, the years of healthy life differ enormously. In 2005, an Estonian man of 50 could look foward to just over nine years more of good health (defined as having no limits on activity). In contrast a typical Danish man could expect 23.6 years, according to a new study published in the Lancet, a British medical journal. The gap between East and West in both life expectancy and years spent in good health is considerable.

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The surprising idea that Hillary Clinton could become Barack Obama's secretary of state

IN THE absence of fact, rumour will dominate: and the latest exciting rumour to emerge from Chicago, where Barack Obama's transition team is headquartered, and Washington, DC, where the political pundits live, is that Hillary Clinton is going to be the new president's secretary of state. “Sources” claim this, though all that is known for sure is that Mrs Clinton visited her former adversary last week; and, of course, that the job has not yet been given to anyone else.

To outsiders, used to administrations in other countries changing top-to-bottom the day after an election, that Mr Obama has made no cabinet appointments a full two weeks after his election might seem sluggish. In fact, he is moving quite fast. He has already named his White House chief of staff, an important position, as well as his press secretary and his chief counsel, and has been filling in some of their deputies and assistants as well. This is quite a bit faster than his recent predecessors managed. ...

A vital but shrinking industry

MOST passengers ignore the earnest safety briefings given at the start of every flight. But as water began gushing into the helicopter cabin, I was doing my best to remember. Use one hand to find your nearest exit (in my case, a window that looked rather too small to fit through). Use the other to find the release mechanism for your four-point seatbelt, but do not activate it immediately. Instead, use the same hand to open the compartment on your lifejacket that contains the rebreather. Put it in your mouth, and the noseclip on your nose. Take a deep breath, squeeze the red sphere to close the valve, and exhale into the bag.

At that point, we began to capsize. It is surprising how easily you become disoriented. You struggle to remain seated upright as the rolling cabin carries you into the air, and then as you are plunged into the water your head is forced sideways against the wall. You know, intellectually, that you must remain in your seat for a few seconds to give the rotors time to stop spinning, but strapped into a chair, upside down, and submerged in a confined space, deep-seated instincts are insisting—vehemently—that you do something, and quickly. ...

Yahoo!’s boss, Jerry Yang, a nice person and a pioneer of the web, is quitting

JERRY YANG of Yahoo!, one of the world’s largest internet companies, appeared at an industry conference in San Francisco in early November to explain how it had all gone so wrong. This has been a “pretty amazing year”, he said with understatement. But he couldn’t quite bring himself to admit that he had made a mistake in June 2007 by taking over as chief executive of the firm that he and his friend David Filo had founded in 1994, at which they had since held only the tongue-in-cheek titles of “chief Yahoos”. Yet a mistake it clearly was and, on Monday November 17th, Mr Yang at last faced that fact and announced that he would step down as soon as a suitable replacement could be found.

Mr Yang had thought that he could, through sheer passion for his creation, revive the ailing company. He had been one of those who, during the dotcom depression, invited a Hollywood mogul, Terry Semel, to run Yahoo! and turn it into a media company. Both Mr Semel and Mr Yang, however, missed the significance of a new rival, Google, even though Messrs Yang and Filo had helped Google’s two founders—all four had been graduate students at Stanford—to get started only a few years earlier. ...

Citi will lay off tens of thousands of workers, but it needs to do more to show it is in control of its destiny

ANNOUNCING 50,000 job cuts is a strange way to reassure staff. That, however, was the main message to emerge when Vikram Pandit, Citigroup’s chief executive, addressed his 352,000 employees during a town-hall meeting on Monday November 17th. The purpose of the unusual gathering was to assure staff that Citi is heading into 2009 stronger than it entered 2008. That was no easy point to get across, even given the awful year that the bank has had so far. Its share price, at less than $9, is in single digits for the first time in a dozen years. It has racked up accumulated losses of $20 billion over the past year.

Staff might have hoped that Mr Pandit would offer a rough guess on when Citi would return to profit, but that was not to be. Under a slide buoyantly entitled “Getting Fit—Fast!” he told them that revenues were flat, expenses would tumble by 16-19% next year and headcount would drop to less than 300,000, down from a peak of 375,000 at the end of last year. Some of those job cuts have already been announced. Still, that is not the sort of fitness regime many in the bank will celebrate. Nor did it particularly impress shareholders. ...

Asian countries lend each other a financial hand

On the sidelines of the G20 summit, China, Japan and South Korea on November 14th said they would expedite a joint effort among Asian countries to help each other weather the global financial storm. Their decision to bolster the existing regional currency-swap arrangement was, like the G20 communique itself, only an agreement in principle lacking the nitty-gritty details. But the renewed push for the so-called Chiang Mai Initiative (CMI) by three of Asia's biggest economies means that this brainchild of the regional financial crisis of 1997-98 may at last live up to its promise.

Reeling from a sinking currency and shrinking foreign-exchange reserves, South Korea reached out to China and Japan for concerted action. In Washington, Seoul obtained Beijing's and Tokyo's consent to consider bigger limits for bilateral currency swaps among them. (The current amount between South Korea and Japan is US$13bn, and between South Korea and China is US$3bn.) And the three countries pledged to expand similar co-operation with the ten members of the Association of South-East Asian Nations (ASEAN). ...

Where will President Barack Obama visit first?

THANKS to its “special relationship” with America, Britain is firm favourite to be the first country that Barack Obama will visit as president, according to Paddy Power, an Irish bookmaker. Although Nicolas Sarkozy will no longer be president of the European Union in 2009, France is offered at 4/1 to receive President Obama. Germany, despite Mr Obama's rapturous welcome in Berlin earlier this year, is given longer odds not only over its Gallic neighbour, but also Iraq and Afghanistan. At 10/1, Kenya is reckoned a more likely first stop than Israel or Japan.

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George Bush’s environmental legacy

WITH the elections over, one might be forgiven for thinking that George Bush has nothing left to do. Any large or controversial measures can be undone when the new administration arrives in January. So what is there left to occupy a president except long walks and a spot of fishing? In fact, there is at least one last big environmental project that Mr Bush wants to complete: creating a vast new marine nature reserve in the Pacific.

Last year, Mr Bush established the world’s largest marine protected area—Papahānaumokuākea Marine National Monument, in north-western Hawaii. The monument became the largest single conservation area in American history, home to some 7,000 species, including the monk seal, spinner dolphins and the green sea turtle. It was a big step, but now the question is whether he can pull off the same trick on an even grander scale, by fully protecting two vast areas of the Pacific Ocean from fishing and mineral exploitation. ...

The G20 meeting in Washington, DC, did not fix global finance. But it brought more than empty rhetoric

JUDGED by the hubristic promises that preceded it, the G20 meeting was bound to disappoint. The leaders of the world’s 20 biggest rich and emerging economies, who had gathered in Washington, DC, on Saturday November 15th, did not remake global finance as some of them had promised. Nor, as others had hoped, did they come up with a detailed set of co-ordinated fiscal measures to counter the deepening global downturn (although they did talk of using fiscal measures “to rapid effect”). Nonetheless, the five-page communique contained more than just diplomatic blather.

As well as promising a “broader policy response” to the current crisis, the G20’s leaders laid out a detailed plan for financial reform. They promised to “strive” for a deal on the stalled Doha round of world trade talks by the end of the year and, more importantly, made a collective pledge not to raise any barriers to trade and investment over the coming year. Add in the promises made around the gathering’s fringes, particularly Japan’s pledge to bolster the IMF’s kitty by lending it $100 billion, and the weekend yielded enough to justify the traffic jams in Washington, DC–and to mark an important shift in global economic governance. ...

When rational behaviour produces unwanted results

INVESTORS are being buried by an avalanche of bad news. On the economic front, there has been confirmation that Germany, Italy and the euro zone in general are all in recession (two quarters of declining output). In America, the four-week average of initial jobless claims hit 491,000, the highest in 17 years. That was followed by Friday’s big decline in retail sales. In China, industrial output growth is at a seven-year low.

The news on the corporate front has been equally awful, with the likes of Best Buy and Starbucks warning of a weakening in consumer spending while Intel and Arcelor Mittal have highlighted a slump in corporate demand. ...

America considers a bail-out for its troubled carmakers, and other news

• RUSSIA and Georgia are due to hold talks on the breakaway regions of South Ossetia and Abkhazia in Geneva on Tuesday November 18th convened by the United Nations, European Union and the Organisation for Security and Co-operation in Europe. The talks, originally set to take place in October, broke up amid claims that Georgian representatives objected to the presence of officials from South Ossetia and Abkhazia. Georgia says it is prepared to take part this time and blames Russia for the abandonment of the previous talks aimed at defusing tensions in the region.

For background, see article ...

Peace brought Romanticism to 19th-century Holland

THE stolid, clog-wearing, cheese-making Dutch are not your obvious Romantics. But when Holland gained independence in 1813, after decades spent fighting the French, a resolute high-mindedness that was thrifty, intimate, idealistic and in its way peculiarly Dutch, finally settled on the Low Countries.

These good people had no time for the high Romanticism of the Germans, who hankered after the lances and legends of the Middle Ages, or the leafy ideals of the English with their love of daffodils and the bucolic greenery of the Lake District. ...

World leaders are meeting in Washington, DC, to fix finance. They have their work cut out

THE leaders arriving in Washington, DC, for this weekend’s economic summit are being presumptuous. If they want what they are calling Bretton Woods 2 to live up to the original, which took place in New Hampshire overshadowed by war and the Depression, it will have to establish a new economic order for the capitalist world. In 1944 that meant creating the IMF, the World Bank and a body to oversee world trade. Imagine Hank Paulson, America’s treasury secretary, as John Maynard Keynes; or picture Gordon Brown, Britain’s prime minister, as Winston Churchill (as Mr Brown himself secretly may), and you get a sense of the task ahead.

The Bretton Woodsmen of 2008 are grabbing the credit before they have earned it—rather as all those subprime householders did. More than two years of gruelling technical work laid the ground for the wartime conference of officials and finance ministers (prime ministers and presidents had other things to deal with). By contrast, the leaders gathering this weekend from the G20, a mix of industrial and emerging countries, plus the European Union, have cobbled together an agenda in a few frenetic weeks. They will doubtless produce no shortage of promises. Just what these are worth will depend on sweat and summits yet to come. ...

Worsening forecasts for jobs and growth in the OECD

Correction to this article

AS THE leaders of the G20 countries gather in Washington, DC, to discuss the financial crisis on Saturday November 15th, the economic outlook is grim. Gloomy forecasts just released by the OECD predict that America, Japan, the euro area and the OECD as a whole will slide into recession in 2009—if they are not already there. Barack Obama faces a tough challenge: America's output is set to shrink by 0.9%, although it should bounce back more strongly the following year. Inflation will continue to fall, although Japan will again suffer from deflation. And the unemployment rate will climb to 7.5% in America and 9% in the euro area. ...

Which is best-analogue or digital?

A MUSIC lover but no audio zealot, your correspondent has often wondered whether analogue recordings really are “warmer” than digital ones. In other words, do audio amplifiers and microphones with old-fashioned thermionic valves (“vacuum tubes” to Americans) inherently produce a sound more natural and satisfying than those with transistors and other solid-state devices?

He suspects it’s mostly a myth, stemming from the days when analogue was in its prime and digital recording in its infancy. ...

The global economic slowdown may affect Saudi Arabia less than some

The sharp fall in oil prices and the steadily worsening outlook for the world economy have punctured the optimism that has pervaded the Gulf Arab region for the past few years. The change of mood has been particularly noticeable in Dubai, the regional boom town par excellence, where the real estate and equity markets are in steep decline. However, the picture is more nuanced in Saudi Arabia, by far the largest economy in the region. Some of the kingdom’s more ambitious industrial and infrastructural projects are being reappraised—to take into account both market trends and the falling costs of equipment and materials—but there is still no sign of any general slowdown in investment by either the state or the private sector.

The current crop of upstream oil and gas projects is proceeding broadly according to schedule, although Saudi Aramco, the national oil company, is now unlikely to commit to a new phase of oil production capacity expansion until it sees clear evidence of a recovery in global demand. By 2010 the company aims to have brought its oil production capacity up to 12.5m barrels/day with the completion of a series of major investments in developing new oilfields and expanding output in existing fields. The Saudi oil minister, Ali Naimi, has made clear that it would be quite feasible to push sustainable production capacity up further by 2020, but that Saudi Arabia would do this only if it was convinced that it could find buyers for the extra crude. ...