Aug 18 update

Evergrande, a beleaguered Chinese property giant, filed for bankruptcy in America. The company sought protection under Chapter 15 of America’s bankruptcy code, which shields foreign firms undergoing restructuring from being sued by creditors. In its petition the firm, which has liabilities worth $300bn, said that restructuring proceedings were under way in Hong Kong and the Cayman Islands. Evergrande defaulted on its debt in 2021, triggering a property crisis in China that continues to stew.

America has reportedly allowed Denmark and the Netherlands to send F-16 fighter jets to Ukraine. Any transfer of the aircraft requires America’s approval. According to Reuters, Antony Blinken, America’s secretary of state, will support Danish and Dutch proposals to transfer the jets and train Ukrainian pilots. Ukraine has long sought F-16s to counter Russia’s air superiority.

Officials in Georgia are investigating threats made against the grand jurors who voted last week to indict Donald Trump and 18 of the former president’s associates. Many of the jurors have had their personal details shared on right-wing websites, including Mr Trump’s own social-media platform, Truth Social. The local sheriff’s office did not comment on whether jurors had reported harassment.

Inflation in Japan slowed in July, as energy prices fell. Core consumer prices, which excludes volatile food costs, increased by 3.1% year on year, down from 3.3% in June. The Bank of Japan has continued to maintain an ultra-loose monetary policy, although core inflation has exceeded its 2% target for a 16th straight month.

Relations between Iran and Saudi Arabia are “on the right track”, according to Iran’s foreign minister. Hossein Amirabdollahian’s remarks came after a meeting with Faisal bin Farhan, his Saudi counterpart, in Riyadh. The kingdom cut ties with Iran in 2016 after its embassy in Tehran was attacked. The countries resumed diplomatic ties following a China-brokered deal in March.

Walmart reported revenue of $162bn in the three months to July, a 5.7% increase on the same period last year. The American retail giant revised its sales-growth forecast for this year from 3.5% to 4-4.5%. The firm credited its strong numbers to easing inflation and high demand for low-priced groceries, but warned that rising fuel prices and high borrowing costs could still hurt consumer confidence.

The drinking water of up to 26m Americans is contaminated with toxic per- and polyfluoroalkyl substances, according to new data from the Environment Protection Agency. PFAS, sometimes called “forever chemicals” because of their durability, are found in household items and have been linked to cancer and infertility. The EPA said it would finalise new PFAS regulations by the end of this year.

Figure of the day: 304, the number of Metro stations in Paris’s underground, 32 more than on London’s Tube. Read the full story.

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PHOTO: GETTY IMAGES

America, Japan and South Korea go camping

Even uneasy bedfellows huddle together for warmth on a cold night. China’s assertiveness, North Korea’s belligerence and Russian aggression have pushed America, Japan and South Korea closer into each other’s arms. When their leaders meet at Camp David, the American president’s retreat, on Friday, countering these threats will be high on the agenda.

The two East Asian countries, both American treaty allies, have not always got on well. But an attempt at reconciliation, mostly driven by Yoon Suk-yeol, South Korea’s president, has created a rare possibility of greater co-operation, albeit one which could be undone by a change in administration in any of them. This is especially true of South Korea, where memories of Japan’s colonial misdeeds, and a feeling that it has not properly atoned for them, remain strong. If the amity is to last, the leaders need to create structures, such as regular trilateral meetings or a communication hotline, that will outlast their terms in office.

PHOTO: GETTY IMAGES

How Estée Lauder lost its charm

Estée Lauder is not looking her best. In May the grande dame of the American cosmetics industry reported quarterly net sales of $3.75bn, a 12% drop from the same quarter last year. The conglomerate also lowered its sales forecast for 2023—from a year on year decrease of 5-7% to 10-12%—as sales at Asian airports and other travel-retail outlets, an important market, recovered more slowly than anticipated. Its latest quarterly earnings will be released on Friday.

It was not meant to be this way. High-end cosmetics brands thought that the easing of China’s covid restrictions would lead to a boom for the lucrative duty-free travel business. Long locked-down consumers, it was thought, would enjoy new-found freedoms. But China’s economic recovery has spluttered; now the world’s second-largest economy is flirting with deflation, which would hit revenues and profits. Time, perhaps, to work some of Estée Lauder’s revitalising magic on its own brand.

PHOTO: SPL

What is a human embryo?

Because human embryos—usually defined as cells in the first eight weeks of development—can develop into fetuses and ultimately people, research on them is in most countries restricted to the first 14 days. But scientists can now make embryo-like models, called “embryoids”, from human stem cells. The legal status of these remains unclear. This has prompted an international group of eminent biologists to suggest a new legal definition of embryos, to help clarify when society should limit research.

Writing in the journal Cell, they propose that an embryo be defined as a group of human cells that, combined with a womb-like environment, has the potential to form a fetus. That breaks with many countries’ current definitions, which state that embryos arise from fertilisation, and introduces the idea that an embryo is not just a clump of cells, but also must be in surroundings that allow it to develop. If adopted, the new definition would put embryoids outside current restrictions on research.

PHOTO: GETTY IMAGES

America’s flood-insurance mess

Although floods in America have caused at least $323bn of direct damage since 1960, private insurers generally do not offer residential coverage. That is sold by the federal government. But a history of underpricing risk and allowing development in floodplains has left its National Flood Insurance Programme more than $20bn in debt to the Treasury.

Congress has repeatedly failed to reform the programme. Legislation passed in 2012 that updated flood maps, for example, was reversed when voters realised that their premiums would shoot up. In 2021 the NFIP unilaterally changed how it determines premiums. Risk Rating 2.0 includes more sources of flooding, such as heavy rainfall.

Again, homeowners with higher premiums are unhappy. On Friday ten states, led by low-lying Louisiana, will ask a federal judge to make the NFIP ditch its new methodology. The Government Accountability Office, an auditor for Congress, has warned of a further budget crisis if the reform is rolled back. For Congress, simply treading water may soon become impossible.

PHOTO: SHUTTERSTOCK

Talking Heads, twice in a lifetime

In 1983 Talking Heads released their fifth album, “Speaking In Tongues”. It was a commercial and critical hit. With an expanded line-up of first-rate funk musicians, the influential New York art-pop quartet embarked on a tour, including three nights at the Pantages Theater in Hollywood, which were set up to be filmed by director Jonathan Demme. His film, “Stop Making Sense” would go on to be acclaimed as the greatest concert movie ever made.

A newly expanded soundtrack to the film is re-released on Friday. It underlines a belief by David Byrne, the lead singer, that many of the movie’s songs are now the definitive versions, surpassing their original studio counterparts. A remastered film will return to cinemas in the autumn. The irresistible joy in the performance, ingenious staging by Mr Byrne (inspired by traditional Japanese theatre) and the open artifice of arranging the shows for cinematic effect make it a peerless big-screen music experience.