May 17 update

Kevin McCarthy, the Republican speaker of the House of Representatives, said that a deal to raise America’s debt ceiling was “possible” by the end of the week. On Tuesday he met President Joe Biden and demanded spending cuts in exchange for increasing the government’s borrowing cap. Janet Yellen, America’s treasury secretary, has repeatedly warned that the government could default on its debt as soon as June 1st. Mr Biden will shorten his upcoming trip to Asia for the G7 summit as negotiations continue, cancelling planned stops in Papua New Guinea and Australia.

Liz Truss became the first former British prime minister in decades to visit Taiwan, where she called for an “economic NATO” to take a tougher stance against China and urged Rishi Sunak, Britain’s current prime minister, to declare China a security threat. China’s embassy in London called the visit a “dangerous political stunt”.

The boss of OpenAI suggested empowering American regulators to licence and audit artificial-intelligence models. Testifying before Congress, Sam Altman, whose startup created ChatGPT, said that AI firms should be given “guidelines about what’s expected in terms of disclosure”. America has so far taken a more laissez-faire approach towards AI regulation than Britain or the EU.

Japan’s economy expanded by an annualised rate of 1.6% between January and March, the first time in three quarters it has grown. That was faster than economists’ predicted growth rate of 0.7%. Strong domestic demand helped offset declining exports, which fell for the first time in six quarters. Japanese stocks rose to a 33-year high on Wednesday.

UBS, a Swiss bank, reckons it got a multi-billion-dollar cash boost from its takeover of Credit Suisse, a former competitor. The combined firms’ “negative goodwill”—a type of accounting gain generated when companies buy a rival at below tangible book value—reached $34.8bn as of the end of 2022. But the merger will also increase UBS’s legal and regulatory costs, which could reach $4bn over 12 months.

Ukraine’s Supreme Court dismissed its chief justice, Vsevolod Kniaziev, after he was detained on corruption charges. Prosecutors allege that Mr Kniaziev took a $2.7m bribe from an oligarch, Konstiantyn Zhevago, in exchange for a favourable verdict. (Mr Zhevago denied wrongdoing.) Ukrainian authorities, keen to ensure continued Western support, have recently cracked down on government graft.

A French judge issued an international arrest warrant for the governor of Lebanon’s central bank as part of a probe into alleged theft of public funds. Riad Salameh had failed to appear at a hearing in Paris. He, along with his brother and assistant, are under investigation in five European countries and Lebanon. He denies the accusations.

Fact of the day: 45%, the G7 members’ share of global GDP in 2021, down from around 70% in the late 1980s. Read the full story.

---

PHOTO: GETTY IMAGES

Africa’s debt trouble

On Wednesday the IMF’s board is expected to approve a $3bn bailout for Ghana—the country’s 17th. After months of wrangling, Ghana’s bilateral creditors, including China, promised to negotiate a debt restructuring. A $600m tranche is expected immediately. Though more work will be required to unlock further funding, the news has already boosted Ghana’s struggling government bonds and flagging currency.

Ghana’s progress, and China’s willingness to engage, is a hopeful sign for other heavily indebted African countries that may need help in the future, such as Kenya. Many are in deep trouble caused by overspending, covid-19 and the war in Ukraine, which drained foreign-currency reserves through higher fuel costs. This year, on average, 17% of government revenues in Africa will go on servicing external debt, the highest share since 1999 (after which rich countries made big write-offs). Domestic debt servicing will also chew up cash needed for schools and hospitals. African governments face a damaging new age of austerity.

PHOTO: GETTY IMAGES

Taiwan’s opposition picks its candidate

In January next year Taiwanese will vote in a successor to President Tsai Ing-wen, of the ruling Democratic Progressive Party, who is ineligible for another term. The Kuomintang, Taiwan’s main opposition party, announced its candidate for the job on Wednesday: Hou Yu-ih, the moderate mayor of New Taipei City. He has occasionally come ahead of Lai Ching-te, the DPP’s candidate, in public opinion polls. Mr Hou’s main contender for the role had been Terry Gou, the billionaire founder of Foxconn, the main supplier to Apple.

One crucial factor in the election will be the positions the candidates take on Taiwan’s sovereignty. Mr Lai and the DPP support strengthening the island’s de facto independence. Mr Hou has not yet said where he stands. But the Kuomintang itself maintains that China and Taiwan are loosely one country. Given voters’ fear of China’s increased territorial aggression, that is likely to scupper KMT’s chances.

PHOTO: GETTY IMAGES

Hollywood’s writers strike on

“Upfronts” week, when studios and streamers pitch future content to advertisers, is normally an excuse for New York’s glitterati to party. This year, though, it is haunted by pay disputes. Members of the Writers Guild of America, the trade union for television and film writers, have been on strike since May 2nd. They are picketing companies’ presentations throughout the week. On Wednesday they are expected to demonstrate at events for Warner Brothers and YouTube. Netflix moved online its soirée planned for that evening to avoid a ruckus.

The strike is a consequence of the way in which streaming has upended entertainment business models, damaging writers’ salaries and working conditions. It is snarling large parts of the industry. Some shows and films have halted production. Ceremonies for the Peabody and Tony awards, which celebrate the best of broadcasting and Broadway, respectively, will be watered-down affairs. Writers used to working behind the scenes now seem to be starring in their own Hollywood drama.

PHOTO: GETTY IMAGES

An ominous climate forecast

On Wednesday the UN’s World Meteorological Organisation will deliver its predictions for the next five years. They are unlikely to be reassuring. In the forecast for 2022 to 2026 that it issued last year, the WMO put at 48% the odds that, for at least one of those years, average global temperatures would be 1.5°C higher than pre-industrial levels. In 2015 the odds of that happening were close to zero. They seem almost certain to rise again, not least because El Niño, a weather pattern that contributes to higher global temperatures, is about to take hold.

Keeping long-term global warming below 1.5°C was the more ambitious target of the Paris agreement signed in 2015. Temporarily higher temperatures alone do not prove that goal is out of reach, but it increasingly appears to be so. The latest report from the Intergovernmental Panel on Climate Change found that no matter what action humanity takes it is now more likely than not that the 1.5°C threshold will be enduringly breached by 2040.

PHOTO: CHRISTIE'S IMAGES LTD. 2023

A rare sale of JAR jewels

Diane von Furstenberg, a Belgian fashion designer, has labelled Joel Arthur Rosenthal “the Fabergé of our time”. The extravagant pieces created by JAR, as he is known, are so prized that fine-jewellery collectors (a typically refined crowd) almost descend into brawls when they come up for auction.

Mr Rosenthal, an American based in Paris, never advertises and sells mostly by word-of-mouth. On Wednesday, though, the largest collection of JAR jewels ever auctioned will appear at Christie’s in Geneva. The collection, from a private owner, showcases the bold, three-dimensional designs that are Mr Rosenthal’s signature. The 25 pieces include a pair of pansy-shaped earrings in multi-coloured gemstones and a pair of geraniums made from carved nephrite jade. A pair of diamond ivy-leaf earrings, designed in 1991, have an estimate of CHF300,000-500,000 ($334,500-557,540). But JAR has some catching up to do: his most expensive piece at auction (a ruby-studded brooch) fetched $4.3m in 2012; Fabergé’s “Rothschild” egg sold for $12.6m at Christie’s in 2007.