The Economist Latin America December 11, 2021

Politics Olaf Scholz was sworn in as chancellor of Germany, ending the 16-year tenure of Angela Merkel. Mr Scholz, a Social Democrat, leads a three-party coalition, Germany’s first since the 1950s, which includes the Greens and the pro-enterprise Free Democrats. The parties have approved a detailed plan for governing, which includes a higher minimum wage and building more homes. First, however, they must contend with a fourth wave of covid-19. Austria’s chancellor, Alexander Schallenberg, resigned after less than two months in the job. The new chancellor, Karl Nehammer, now has the job of enforcing a controversial vaccine mandate that covers all Austrians. Look back in anger Pandemic restrictions were tightened in England as Omicron infections surged. The government advised people to work from home and ordered them to wear masks in more circumstances. Proof…

EIGHTY YEARS ago Japan bombed Pearl Harbour. It was a grave error, bringing the world’s mightiest country into the war and dooming the Japanese empire to oblivion. A clear-sighted Japanese admiral supposedly lamented: “I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve.” Today Japan is peaceable, rich and innovative (see Leader). It was the Japanese who rebuilt their country, but their task was made easier by the superpower that defeated them. Not only was America midwife to a liberal, capitalist democracy in Japan; it also created a world order in which Japan was free to trade and grow. This order was not perfect, and did not apply everywhere. But it was better than anything that had come before. Unlike previous great powers,…

THE FEDERAL RESERVE has spent most of 2021 saying that high inflation would be temporary. And yet price rises have persistently overshot forecasts, reaching 5% in October, on the Fed’s preferred measure, even as employment remains about 4m short of its pre-pandemic level. On December 15th the Fed will decide whether to tighten monetary policy, probably by accelerating the pace at which it “tapers” its monthly purchases of assets, mostly government bonds, which are currently running at $90bn per month. It should go ahead and take action. Though uncertainty is high, the Fed must rapidly respond to the data it has today and then adjust as necessary as conditions evolve. Those data indicate that it has already fallen behind. The rise in prices cannot be explained by a few shortages, such…

TWO TALES are often told about Japan. The first is of a nation in decline, with a shrinking and ageing population, sapped of its vitality. The second is of an alluring, hyper-functional, somewhat eccentric society—a nice place to eat sushi or explore strange subcultures, but of little wider relevance to the outside world. Both tales lead people to dismiss Japan. That is a mistake. As our special report this week argues, Japan is not an outlier—it is a harbinger. Many of the challenges it faces already affect other countries, or soon will, including rapid ageing, secular stagnation, the risk of natural disasters, and the peril of being caught between China and America. The fact that some of these problems hit Japan early makes it a useful laboratory for observing their effects…

Politics Olaf Scholz was sworn in as chancellor of Germany, ending the 16-year tenure of Angela Merkel. Mr Scholz, a Social Democrat, leads a three-party coalition, Germany’s first since the 1950s, which includes the Greens and the pro-enterprise Free Democrats. The parties have approved a detailed plan for governing, which includes a higher minimum wage and building more homes. First, however, they must contend with a fourth wave of covid-19. Austria’s chancellor, Alexander Schallenberg, resigned after less than two months in the job. The new chancellor, Karl Nehammer, now has the job of enforcing a controversial vaccine mandate that covers all Austrians. Look back in anger Pandemic restrictions were tightened in England as Omicron infections surged. The government advised people to work from home and ordered them to wear masks…

EVER SINCE the start of the trade war between America and China, investors, politicians and businesses have been trying to gauge how far and how fast the world’s two biggest economies will decouple from each other. The pattern in finance is becoming clearer with the news that Didi Global, a Chinese ridehailing firm, plans to delist its shares from New York, just six months after an initial public offering (IPO) there. It is likely that all the $2.1trn of other mainland Chinese firms’ shares traded in the Big Apple will eventually follow suit, with the approval of the Chinese Communist Party. Yet do not imagine that China’s rulers seek financial isolation. For at the same time, they are busy welcoming Wall Street firms into the mainland’s financial system. China is pursuing…