As growth dies out, it's as if the last 10 years have never happened | Business

TheLast week marked the 10th anniversary of the G20 summit in London, an event that took place at the height of the deepest crisis since the 1930s, but which nevertheless represented the culmination of international cooperation.

A decade later, the global outlook is darkening again. Global trade growth is at its lowest since 2009, the protectionism averted by the London summit has woken up the head, and central banks have responded to declining growth by reducing plans to raise interest rates. interest.

All this and more will be on the agenda when the International Monetary Fund and the World Bank hold their spring meetings in Washington this week.

An imminent debt crisis in developing countries is of concern to both the World Bank, which now has a new president appointed by Donald Trump, David Malpbad, and the IMF.

Christine Lagarde, chief executive of the fund, has already announced that her organization will reduce its growth forecasts when it publishes its global economic outlook on Tuesday.

It has been evident for some time that China's economic growth is slowing down and it is also clear that US activity in the first half of last year has been artificially stimulated by tax cuts.

But what should really worry the IMF is the slowdown in the German economy, because it is indicative of the trend observed since the middle of 2018. Last week, new data indicated that orders to German factories had dropped 4.2% in February compared to January. This is the worst monthly decline in two years and, on an annual basis, plant orders were painfully lower by 8.4%. Germany, Europe's economic power, is flirting with the recession for one simple reason: its export-sensitive growth pattern has been hit hard by the slowdown in world trade.

So what could happen next? Well, one theory is that the worst is over. China's economy has shown signs of slowing, and the Federal Reserve's decision to halt rising interest rates will limit the slowdown in US growth this year.

Good news for the IMF is that the United States and China appear to be on the verge of concluding an agreement that will end their damaging trade war. By all accounts, China has agreed to increase its imports of US products by $ 1 trillion by the middle of the next decade, to allow American companies to be full business owners in China and China. to enforce intellectual property rights. The White House insists on the target dates for compliance, in order to prevent recoil. The distinct possibility of such a regression means that the trade truce may well be short-lived.

The IMF clearly thinks that there is a scenario in which the solutions brought to the last crisis contribute to the next, because he also expressed his concern about the possibility that a widespread inflation of house prices in the United States and China can trigger recessions. The reason? Years of extremely low interest rates and aggressive lending have put growing numbers of households in the world's two largest economies at risk of falling prices.

All this sounds oddly familiar, except that, having failed to identify the risks posed by risky mortgages prior to the 2008 global financial crisis, the fund is not eager to be accused of being at risk. have made the same mistake twice.

The real headache of the IMF is that the weaknesses of the global economy exposed by the financial crisis have been covered with paper rather than being properly handled. A decade of cheap money has led to a build-up of debt, excessive speculation, badet price growth and a bursting bubble. It's Groundhog Day, in other words.

The perils of private property

There are exceptions to most rules, but here's a useful one: if private equity sells, you do not want to buy. Just ask AA investors, Debenhams and Saga.

Two of these companies – AA, Roadside Assistance, and Saga, the insurance and cruise industry for over 50s – were once housed under one roof. They were combined as Acromas during the buyout boom in 2007, in the hope that there would be mutually beneficial savings.

This thought was abandoned when the owners – Permira, CVC and Charterhouse – spotted a good time to sell. In 2014, Acromas was dismantled and heavy borrowings spread between AA and Saga as they floated.

Progress made so far: stock prices fell by about 60% and both directions felt that it was necessary to increase investments to overcome the years of underutilization expenditure created by the pressure to reduce the loans contracted during the years of private equity. AA reduced their dividend a year ago. Saga followed last week, uttering a plaintive cry of wanting to return to his "heritage".

In a rational world, stock market investors would have identified the dangers of underinvestment. In the real world, everyone wants to believe that a miracle of efficiency has occurred under private ownership. Business is rarely so simple.

In the case of Debenhams, a sale and leaseback of stores under TPG, CVC and Merrill Lynch earned him inflexible and expensive leases: exactly what he did not need in the storm of today's retail business. 'hui. Other mistakes were made after his return to the market in 2006, but the lack of freehold stability made them worse. Shareholders are now looking for wipe-outs.

Blame Private Equity? Naturally. But also blame fund managers who bought: if they bought a used car, they would wonder how much the engine had been badped.

Golden oldies make Netflix live

Thanks to the streaming and explosion of the number of multi-channel homes, television has entered a golden era of programming, Room of cards at Game of thrones and Black mirror. But much of this success rests on a decidedly retro base.

The BBC deal, announced last week, for £ 180m, aims to take control of the lion's share of the UKTV channel, which is one of his eternal favorites, including Only fools and horses, Dad's Army, Black Viper and past series of Top Gear – highlighted the often neglected value of evergreen repetition.

Sky has also not lost its commercial value and popularity last month, the conclusion of an agreement for hundreds of hours of most of these same BBC broadcasts for its service on demand. because its four million viewers could not make up for on-demand broadcasts – the reason being that these rights are mostly held by Netflix And Netflix's willingness to pay $ 100 million friends For an additional year – from which the owner of the rights, WarnerMedia will have to decide to keep it exclusively for his own service – highlights the value of the archive content that attracts as many people as possible.

Netflix previously paid about $ 30 million a year to WarnerMedia. friends, which is considered the most popular show among the 140 million global subscribers of the service.

Another issue among the top five on Netflix is ​​the US version of Office, which ended in 2013, also risks losing service when the comedy rights company, NBCUniversal, launches its own subscription offer later this year.

Netflix misleads its own television series and movies, which account for more than 85% of new content spending, but original productions account for less than 10% of the broad content library of the streaming service. The old material supports the base of subscribers who pays for the new revolutionary productions.

Television is at the zenith of creation, but repetitions help to make it last, a reference to the all-powerful and powerful franchise of Disney superheroes.