TheChek News Flow

Berlin to ask parliament to declare ‘exceptional emergency’ allowing it to create supplementary 2023 budget

Germany is to suspend its constitutional limit on new borrowing for the fourth year running, as it rushes to deal with the fallout from a ruling by the country’s top court that has left its spending plans in disarray.

Christian Lindner, finance minister, said the government would present parliament with a supplementary budget for 2023 “that will put spending made this year on a firm constitutional footing”.

He said in a post on social media site X that it would propose that parliament retroactively declare 2023 an “exceptional emergency” that would allow it to set aside the “debt brake”, Germany’s constitutional curb on deficit spending.

The move is a setback for Lindner, who had insisted the debt brake be reinstated this year. The leader of the fiscally hawkish Free Democrats sees himself as the custodian of fiscal prudence in Chancellor Olaf Scholz’s three-party coalition.

The trigger for the announcement was a ruling from the constitutional court last week that struck down a government move to transfer unused borrowing capacity from its pandemic budget to a “climate and transformation fund”, known as the KTF. The judges said the government’s actions violated the rules of the debt brake, but left ministers scratching their heads over how to plug a €60bn hole in the public finances.

First introduced in 2009, the debt brake limits the federal government’s structural deficit to 0.35 per cent of gross domestic product, adjusted for the economic cycle, and effectively prohibits Germany’s 16 states from running any deficits at all.

But it can be temporarily set aside when the country faces a national emergency or natural disaster. It was suspended in 2020 during the coronavirus pandemic, and remained inactive when Russia’s full-scale invasion of Ukraine and huge cuts in Russian gas exports led to an explosion in Europe’s energy costs.

In a statement Lindner said the court’s ruling had created “legal clarity” about how to deal with special funds such as the KTF that have been stocked with emergency borrowing, and the government was now “drawing the conclusions”.

He said he had reached agreement with Scholz and deputy chancellor and economy minister Robert Habeck on the need for a supplementary budget for 2023. The government would not be taking on any new debt but would simply put the money spent this year on responding to Germany’s many crises “on a sound legal basis”, he added.

“We can only start talking about 2024 and the subsequent years if we have a legally watertight, constitutional state of affairs,” said Lindner.

The Karlsruhe-based court’s ruling was focused on the KTF but triggered concerns about the legal status of other off-budget funds the government has recently deployed — chief among them the €200bn economic stabilisation fund, or WSF.

This was set up at the start of the pandemic to help companies affected by lockdowns. After the war in Ukraine broke out it was repurposed to aid companies and consumers struggling with higher energy bills.

Some €37bn has been drawn down from the WSF this year, in part to finance a cap on gas and electricity prices. But the constitutional court’s verdict effectively banning the repurposing of Covid-era funds means the WSF could also be subject to legal challenge.

In his statement, Lindner said it was important that spending on the energy price caps was put on a firm legal footing.

Finance ministry officials say declaring 2023 an emergency is uncontroversial considering the economic conditions that have prevailed this year — high inflation and energy costs and a steep industrial slowdown.

Once branded ‘trophy assets’ — and an easy way to lose money — motorsport is now looking like an increasingly good investment

Just over five years ago, Canadian fashion mogul Lawrence Stroll paid £90mn to buy the defunct Force India Formula One racing outfit out of administration — the latest billionaire to be tempted into a sport notorious for its financially unsustainable teams.

Rebranded as Aston Martin F1 since 2021, the team has brought back British racing green to the grid, attracted new sponsors — including Saudi state oil company Aramco — and ridden the resurgence in the sport’s popularity.

Stroll, whose son, Lance, races for the team, has invested heavily in Aston Martin, including the development of a modern headquarters near the Silverstone circuit that hosts the British Grand Prix.

Then, last week, on the eve of the first Las Vegas Grand Prix in four decades, he sold a minority stake to US investment house Arctos Partners at a valuation north of £1bn.

The Arctos deal is just the latest to suggest that F1 teams are shedding their ‘trophy asset’ reputation, which led many to consider them the fastest way to turn a billion-dollar fortune into mere millions.

And a big factor in the higher valuations is a series of structural changes put in place by John Malone’s Liberty Media, which bought F1 in an $8bn deal almost seven years ago.

New financial regulations limit how much teams can spend on developing their cars, and the sport is experiencing a jump in popularity, thanks to social media, expansion into the US, and the Netflix Drive to Survive reality series.

Now that spending is limited, scarcity value also comes into play. There are only 10 teams on the grid, versus 32 NFL franchises, 20 Premier League football clubs, and 30 NBA teams.

Real transactions back up the belief that valuations are rising, as investors continue to pour money into the sport, as they do with other sports. However, F1 teams still lag behind the franchises in American leagues, in terms of both revenues and valuation multiples.

“These franchises should be traded on franchise multiples like US sports,” says Jefferson Slack, managing director for commercial and marketing at Aston Martin.

“There’s no promotion or relegation in F1,” he says. “The sport is in tremendous health. It has cracked the US market, and a lot of institutional capital is coming into sports in a big way: it’s a good space to be in.”

The budget cap was set at $145mn when it was implemented in 2021, and has decreased every year since.

The idea was not only to promote financial sustainability but also to ensure that championships were won on how well money is spent, rather than how much is being thrown at car development. Even so, many teams are still struggling to catch up with Red Bull’s Max Verstappen, who has now won the driver’s championship for the third year running.

As a result, despite the buzz around the sport’s expansion into the US, F1 has not treated its new American fans to a title race this season. Verstappen has ensured that the winners have been a foregone conclusion for much of the season, albeit tempered by close racing in the midfield.

Theo Ajadi, a manager within consultancy Deloitte’s Sports Business Group, says the key risk is probably revenue growth around media rights, events and sponsorship. “That may not hold true,” he adds, “if the market moves in a different direction, if F1 isn’t able to capitalise, or if F1 becomes very uncompetitive and viewers turn off.”

According to Forbes’ estimates, the average F1 team was worth about $500mn in 2019, before the spending limits came into force. These days, Forbes values the average team at about $1.9bn.

Recent deals reflect the shift. In August 2020, before the spending limits came into play, US investment group Dorilton acquired the Williams team in a €152mn deal. In December that year, McLaren Racing sold a stake to MSP Sports Capital and other investors at a valuation of £560mn. And, in a deal that completed in January 2022, Sir Jim Ratcliffe’s Ineos agreed to buy a third of the Mercedes F1 team — Companies House filings reveal that Ineos paid £208mn for the stake.

Then, this year, RedBird Capital Partners and other investors, including spin-off Otro Capital, acquired a 24 per cent stake in Alpine for €200mn. The deal valued the Enstone-based team at $900mn.

“It used to be a no-fly zone for us,” says one investor. “F1 teams used to lose a tonne of money prior to the cost cap.”

Toto Wolff, who owns another third of Mercedes F1, says the bigger teams are already starting to move to profitability, with others potentially set to follow suit.

“It is not a trophy investment any more,” Wolff tells the Financial Times. “There is economic and financial rationale for sponsors, investors and team owners because, otherwise, people wouldn’t do that just for fun.”

Mercedes paid dividends of £55mn in 2022, as annual net profit rose to £89mn from £68mn the year before, on revenues up to £474mn from £383mn — although several other teams remain lossmaking.

Under Liberty Media, more money is being shared with the teams, though.

In the first nine months of the year, F1 directed $888mn in total to the teams, up from $838mn in the corresponding period a year earlier. The teams received more than $1.1bn in 2022 as a whole, up from $919mn in 2017, which was Liberty’s first year of ownership. The debate, now, is whether to expand.

The Federation Internationale de l’Automobile (FIA), which governs motorsport, has agreed to let Michael Andretti add a team to the grid.

However, the reception for the Italian-American has been lukewarm so far. Existing participants fear that Andretti’s outfit would eat into the prize money paid out by F1 to the teams. Others argue that the addition of a US team would increase revenue for all. Under the Concorde Agreement — the contract between the FIA, F1 and the teams — any new participant must pay a $200mn fee as the price of diluting the pot. But the sport’s growing popularity has shifted the conversation towards increasing that sum to about $600mn.

The true cost to a new entrant is higher, because of the need to invest in a factory, equipment, development and recruitment. Many teams also fear the consequences of sharing the F1 prize pot across 11 rather than 10 — and a one-off fee is not enough to compensate.

“Two hundred million dollars is like giving money away,” the shareholder says.

DÉCRYPTAGE - Si certains redoutent l’émergence d’une nouvelle pandémie, les spécialistes sont globalement rassurants. L’OMS a toutefois demandé à la Chine de fournir davantage d’informations.

Quatre ans après le début de la pandémie de Covid-19, une nouvelle épidémie de « maladie respiratoire non diagnostiquée » sévit en Chine, pays qui a vu émerger le coronavirus. De quoi raviver de mauvais souvenirs. Que sait-on, et faut-il s’inquiéter ?

Mercredi, l'Organisation mondiale de la Santé a indiqué avoir demandé aux autorités chinoises des informations plus détaillées alors que ni le Centre chinois pour le contrôle et la prévention des maladies, ni le ministère de la Santé en Chine ne mentionnent encore rien à ce sujet sur la version en anglais de leurs sites internet.

Pas de chiffres communiqués

En réalité, l'épidémie n’a pas brutalement démarré cette semaine. Le 12 octobre, des pédiatres chinois alertaient dans le Global Times (un journal affilié au Parti Communiste Chinois) sur une augmentation des cas d’infection à Mycoplasma pneumoniae, une bactérie présente partout dans le monde et responsable de cas de pneumonie chez l’enfant et le jeune adulte.

Il y a 10 jours, les autorités chinoises avaient, lors d'une conférence de presse, expliqué ces cas par la levée des restrictions liées au Covid-19 et à la circulation de plusieurs pathogènes (grippe, virus de la bronchiolite, Covid-19 et Mycoplasma pneumoniae). « Une recrudescence de Mycoplasma pneumoniae a été détectée depuis trois mois, mais la circulation de cette bactérie est en phase déclinante », a indiqué jeudi au Global Times le directeur adjoint du centre de prévention épidémique de la ville de Pékin.

Même jour à Pékin, lors de son point presse quotidien, le porte-parole du ministère des affaires étrangères a botté en touche face aux questions des journalistes, les renvoyant vers les « autorités compétentes », selon son habitude. La Commission nationale de Santé a prodigué quelques conseils aux parents inquiets, appelant à la vigilance mais sur un ton rassurant.

Pour l'heure, aucun chiffre n'a été divulgué à l'échelle nationale, mais plusieurs services pédiatriques sont « sous haute pression », comme à Tianjin ou Shenyang, deux villes respectivement éloignées de 150 et 700 kilomètres de Pékin. Dans la capitale, l'hôpital de l'Aviation a vu bondir de « 30 à 50 % » la fréquentation de son service pédiatrique par rapport à la même période des années passées, selon le Global Times.

Une bactérie qui fait son grand retour

Cette épidémie signalée par la Société internationale des maladies infectieuses (ISID) est-elle due à un ou des virus connus, ou à un nouvel agent pathogène, comme l’était le Sars-CoV-2 en 2019 ? Précisons que ce type d’alertes de la part de ce réseau de surveillance n’est pas rare, et que la plupart ne débouchent pas sur des épidémies d’ampleur. Depuis début 2022, l’ISID a réalisé pas moins de 9 signalements pour des infections respiratoires « non diagnostiquées », dont aucun ne s’est révélé être lié à un virus émergent.

Interrogée par Le Figaro, le Pr Cécile Bébéar, chef du service de bactériologie du CHU de Bordeaux et responsable du laboratoire expert sur les mycoplasmes humains, penche pour une épidémie de Mycoplasma pneumoniae. « C’est une bactérie qui sévit de manière périodique tous les 3 à 7 ans, cela dépend des pays et des périodes. Avec la pandémie de Covid-19, elle a complètement disparu des radars. Mais depuis le début de l’année, nous constatons une résurgence dans de nombreux pays, et cela s’accélère », explique le médecin, coauteure d’une vaste étude qui vient de paraître sur ce sujet.

En France aussi, des cas ont récemment été signalés, notamment en Île-de-France et dans la région Auvergne-Rhône-Alpes. « La population cible, c’est-à-dire les enfants de 5 à 10 ans et les jeunes adultes, sont naïfs en termes d’immunité puisqu’ils n’ont pas été en contact avec la bactérie depuis plusieurs années », explique la spécialiste.

Pas de restriction sanitaire cet hiver

Le Pr Bébéar se veut cependant rassurante. « La forme la plus fréquente de cette maladie n’est absolument pas grave et se soigne très bien avec des antibiotiques, ou peut même guérir spontanément. » Les patients sont quasiment toujours pris en charge en ville, et non à l’hôpital. Mais alors, pourquoi des images d’hôpitaux chinois remplis d’enfants avec des perfusions ? « L'infection se traite très bien avec des antibiotiques par voie orale. Mais dans les cas graves, il arrive que les antibiotiques soient administrés par voie intraveineuse », répond la spécialiste. Autre point rassurant, il s’agit d’une bactérie.

Or celles-ci n’ont pas la capacité de muter aussi rapidement que les virus pour devenir plus dangereuses. « Et il ne peut pas y avoir de saut d’une espèce à l’autre. C’est un pathogène qui n’infecte que les humains », complète le Pr Bébéar. Il n’y a donc aucune chance que l’épidémie en Chine soit causée par un mycoplasme d’un nouveau genre.

Sur X (anciennement Twitter), les spéculations vont bon train. Alors que certains agitent déjà le spectre d’une nouvelle pandémie, la plupart des spécialistes sont plutôt confiants. « Je parie qu’il s'agit d'une ’’tripledémie’’ en Chine étant donné que leur politique zéro covid a pris fin l'hiver dernier », a par exemple lancé Caitlin Rivers, épidémiologiste des maladies infectieuses au centre de sécurité sanitaire Johns Hopkins (États-Unis). Ce n’est qu’en décembre 2022 que la Chine a en effet décidé de relâcher doucement ses restrictions sanitaires visant à endiguer le Covid-19.

« Dette immunitaire »

Un avis partagé par François Balloux, directeur de l'Institut de génétique de l'University College de Londres. « La Chine connaît probablement une vague majeure d'infections respiratoires infantiles, car c'est le premier hiver après un long confinement, qui a dû considérablement réduire la circulation des pathogènes respiratoires et donc diminuer l'immunité de la population contre eux », a-t-il déclaré. Ce phénomène de pics d’infections respiratoires post-confinement, bien connu des épidémiologistes, est appelé « dette immunitaire ».

C’est précisément la situation dans laquelle la France était plongée il y a un an. « La saison hivernale 2022-2023 est marquée par la survenue d'une triple épidémie caractérisée par une neuvième vague de Covid-19, une circulation très précoce et rapide de la grippe, ainsi qu'une circulation toujours très élevée de la bronchiolite qui dépasse les niveaux atteints lors des dix années précédentes », avait alors constaté le ministère de la Santé.

Un autre argument plaide contre l’idée qu’un nouveau pathogène aurait émergé. « Si c'était le cas, je m'attendrais à voir beaucoup plus d'infections chez les adultes. Les quelques infections signalées chez les adultes suggèrent une immunité existante suite à une exposition antérieure », a fait valoir le Pr Paul Hunter, spécialiste des maladies émergentes à l’université East Anglia (Norwich, Angleterre), interviewé par le « Science media center ». La prudence reste toutefois de mise et les scientifiques s’accordent à dire que davantage de données sont nécessaires pour juger de la gravité de la situation.

The OpenAI soap opera’s first season is over. And just in time for all involved—even reporters—to take a break for Thanksgiving. Their moods may vary. While many people, including executives, employees and investors in OpenAI, are surely thrilled the boardroom drama got resolved with Sam Altman’s reinstatement as CEO, doubtless a few aren’t so happy. Those would include Altman’s critics at OpenAI as well as the startup’s rivals, who you can imagine have been rubbing their hands with glee in recent days. But hey, all good things come to an end, eventually.

Still, those who enjoyed the drama should remember that a lot remains unresolved. OpenAI’s unconventional corporate structure, which resulted in the company’s board having no investor representation, hasn’t changed, we reported. Also unresolved is the tension between speedily developing OpenAI’s business while trying to adhere to the organization’s mission of doing so safely. That issue was, by many accounts, one that fueled the boardroom drama.

The impact of the boardroom turmoil on OpenAI’s business is uncertain—surely customers were a little rattled by the turn of events, even if they’re happy with the final outcome. Ditto for investors. One test of post-upheaval investor attitudes will come in the $86 billion stock tender, due to close next month, as we outlined here today. For more on what comes next, see here. For a great look back at the work, see our piece in The Weekend here. (Its narrative prompts a question: Just how much Boba Guys product can Sam Altman’s crew imbibe?)

The bottom line is that a second season of this drama is likely to be greenlit. Indeed, as OpenAI is going to investigate the alleged conduct that led to Altman’s ouster, some tumultuous times ahead are guaranteed. For now, though, we all need to find another soap opera to watch. For that, there’s always the marvelous adventures of Elon Musk.

Altman's back, and OpenAI's board has drastically changed. Now comes the hard part.

he OpenAI power struggle that captivated the tech world after co-founder Sam Altman was fired has finally reached its end — at least for the time being. But what to make of it?

It feels almost as though some eulogizing is called for — like OpenAI died and a new, but not necessarily improved, startup stands in its midst. Ex-Y Combinator president Altman is back at the helm, but is his return justified? OpenAI’s new board of directors is getting off to a less diverse start (i.e. it’s entirely white and male), and the company’s founding philanthropic aims are in jeopardy of being co-opted by more capitalist interests.

That’s not to suggest that the old OpenAI was perfect by any stretch.

As of Friday morning, OpenAI had a six-person board — Altman, OpenAI chief scientist Ilya Sutskever, OpenAI president Greg Brockman, tech entrepreneur Tasha McCauley, Quora CEO Adam D’Angelo and Helen Toner, director at Georgetown’s Center for Security and Emerging Technologies. The board was technically tied to a nonprofit that had a majority stake in OpenAI’s for-profit side, with absolute decision-making power over the for-profit OpenAI’s activities, investments and overall direction.

OpenAI’s unusual structure was established by the company’s co-founders, including Altman, with the best of intentions. The nonprofit’s exceptionally brief (500-word) charter outlines that the board make decisions ensuring “that artificial general intelligence benefits all humanity,” leaving it to the board’s members to decide how best to interpret that. Neither “profit” nor “revenue” get a mention in this North Star document; Toner reportedly once told Altman’s executive team that triggering OpenAI’s collapse “would actually be consistent with the [nonprofit’s] mission.”

Maybe the arrangement would have worked in some parallel universe; for years, it appeared to work well enough at OpenAI. But once investors and powerful partners got involved, things became… trickier.

Altman’s firing unites Microsoft, OpenAI’s employees

After the board abruptly canned Altman on Friday without notifying just about anyone, including the bulk of OpenAI’s 770-person workforce, the startup’s backers began voicing their discontent in both private and public.

Satya Nadella, the CEO of Microsoft, a major OpenAI collaborator, was allegedly “furious” to learn of Altman’s departure. Vinod Khosla, the founder of Khosla Ventures, another OpenAI backer, said on X (formerly Twitter) that the fund wanted Altman back. Meanwhile, Thrive Capital, the aforementioned Khosla Ventures, Tiger Global Management and Sequoia Capital were said to be contemplating legal action against the board if negotiations over the weekend to reinstate Altman didn’t go their way.

Now, OpenAI employees weren’t unaligned with these investors from outside appearances. On the contrary, close to all of them — including Sutskever, in an apparent change of heart — signed a letter threatening the board with mass resignation if they opted not to reverse course. But one must consider that these OpenAI employees had a lot to lose should OpenAI crumble — job offers from Microsoft and Salesforce aside.

OpenAI had been in discussions, led by Thrive, to possibly sell employee shares in a move that would have boosted the company’s valuation from $29 billion to somewhere between $80 billion and $90 billion. Altman’s sudden exit — and OpenAI’s rotating cast of questionable interim CEOs — gave Thrive cold feet, putting the sale in jeopardy.

Altman won the five-day battle, but at what cost?

But now after several breathless, hair-pulling days, some form of resolution’s been reached. Altman — along with Brockman, who resigned on Friday in protest over the board’s decision — is back, albeit subject to a background investigation into the concerns that precipitated his removal. OpenAI has a new transitionary board, satisfying one of Altman’s demands. And OpenAI will reportedly retain its structure, with investors’ profits capped and the board free to make decisions that aren’t revenue-driven.

Salesforce CEO Marc Benioff posted on X that “the good guys” won. But that might be premature to say.

Sure, Altman “won,” besting a board that accused him of “not [being] consistently candid” with board members and, according to some reporting, putting growth over mission. In one example of this alleged rogueness, Altman was said to have been critical of Toner over a paper she co-authored that cast OpenAI’s approach to safety in a critical light — to the point where he attempted to push her off the board. In another, Altman “infuriated” Sutskever by rushing the launch of AI-powered features at OpenAI’s first developer conference.

The board didn’t explain themselves even after repeated chances, citing possible legal challenges. And it’s safe to say that they dismissed Altman in an unnecessarily histrionic way. But it can’t be denied that the directors might have had valid reasons for letting Altman go, at least depending on how they interpreted their humanistic directive.

The new board seems likely to interpret that directive differently.

Currently, OpenAI’s board consists of former Salesforce co-CEO Bret Taylor, D’Angelo (the only holdover from the original board) and Larry Summers, the economist and former Harvard president. Taylor is an entrepreneur’s entrepreneur, having co-founded numerous companies, including FriendFeed (acquired by Facebook) and Quip (through whose acquisition he came to Salesforce). Meanwhile, Summers has deep business and government connections — an asset to OpenAI, the thinking around his selection probably went, at a time when regulatory scrutiny of AI is intensifying.

The directors don’t seem like an outright “win” to this reporter, though — not if diverse viewpoints were the intention. While six seats have yet to be filled, the initial four set a rather homogenous tone; such a board would in fact be illegal in Europe, which mandates companies reserve at least 40% of their board seats for women candidates.

Why some AI experts are worried about OpenAI’s new board

I’m not the only one who’s disappointed. A number of AI academics turned to X to air their frustrations earlier today.

Noah Giansiracusa, a math professor at Bentley University and the author of a book on social media recommendation algorithms, takes issue both with the board’s all-male makeup and the nomination of Summers, who he notes has a history of making unflattering remarks about women.

“Whatever one makes of these incidents, the optics are not good, to say the least — particularly for a company that has been leading the way on AI development and reshaping the world we live in,” Giansiracusa said via text. “What I find particularly troubling is that OpenAI’s main aim is developing artificial general intelligence that ‘benefits all of humanity.’ Since half of humanity are women, the recent events don’t give me a ton of confidence about this. Toner most directly representatives the safety side of AI, and this has so often been the position women have been placed in, throughout history but especially in tech: protecting society from great harms while the men get the credit for innovating and ruling the world.”

Christopher Manning, the director of Sanford’s AI Lab, is slightly more charitable than — but in agreement with — Giansiracusa in his assessment:

“The newly formed OpenAI board is presumably still incomplete,” he told TechCrunch. “Nevertheless, the current board membership, lacking anyone with deep knowledge about responsible use of AI in human society and comprising only white males, is not a promising start for such an important and influential AI company.”

Inequity plagues the AI industry, from the annotators who label the data used to train generative AI models to the harmful biases that often emerge in those trained models, including OpenAI’s models. Summers, to be fair, has expressed concern over AI’s possibly harmful ramifications — at least as they relate to livelihoods. But the critics I spoke with find it difficult to believe that a board like OpenAI’s present one will consistently prioritize these challenges, at least not in the way that a more diverse board would.

It raises the question: Why didn’t OpenAI attempt to recruit a well-known AI ethicist like Timnit Gebru or Margaret Mitchell for the initial board? Were they “not available”? Did they decline? Or did OpenAI not make an effort in the first place? Perhaps we’ll never know.

OpenAI has a chance to prove itself wiser and worldlier in selecting the five remaining board seats — or three, should Altman and a Microsoft executive take one each (as has been rumored). If they don’t go a more diverse way, what Daniel Colson, the director of the think tank the AI Policy Institute, said on X may well be true: a few people or a single lab can’t be trusted with ensuring AI is developed responsibly.

The fastest-off-the line production Corvette combines a naturally aspirated V8 with all-electric front-wheel propulsion—and redefines what it feels like to drive a ’Vette, writes Dan Neil.

ON A RECENT TRIP to Los Angeles, I spent a day being awesome in the new, unseemly civilized Corvette E-Ray, Chevrolet’s first hybrid-powered Corvette and the first with winter-worthy all-wheel drive. For Canadians, Christmas came early this year.

The E-Ray has the distinction of being not only the most vigorously accelerating ’Vette in history; it is also, weirdly, the most refined, versatile, usable and commodious. Our test car—in the 3LZ trim package ($123,705, as tested)—was a leather-wrapped luxury launch, buoyed on the adaptive suspension and supple, multi-mode magnetic dampers. Ahoy, sailor.

To be clear, the E-Ray is not a plug-in hybrid. The car typically recuperates enough energy through braking and coasting to stoke its small (1.1 kWh usable capacity) lithium-ion battery pack. If it needs more, it can draw energy from the fossil-fuel reactor behind the seats: a naturally aspirated pushrod V8, producing 495 hp at 6,450 rpm. I’ll give you a moment to stand and salute.

Up front, operating independently but cooperatively, is a large, easily enraged electric motor sluicing power and torque (160 hp/125 lb ft.) between the front wheels, bringing the system’s maximum combined output to 655 hp.

That, plus all the traction on the planet Vulcan, makes it surreally easy for the E-Ray to step off the line. The official 0-60 mph acceleration is 2.5 seconds ahead of a quarter-mile elapsed time of 10.5 seconds at 129 mph. The first number can be credited to the e-motor’s torque, grip and detonator-like response. But that quarter-mile time is all naturally aspirated V8.

Beyond the numbers is the E-Ray’s giddy spontaneity, the way it can effortlessly fast-forward its game play until one politely begs for mercy. The E-Ray answers the typical hammer-drop acceleration test at highway speeds with a prodigious dam burst of eye-widening, jaw-clenching omigod—enough power to “effortlessly complete passing maneuvers,” the press release deadpans. Yeah. The damn thing is a velvet bullwhip.

It will shrink a country road to nothing. In my braver moments I might have ticked up the paddle shifter three times before having to shut it down, calling on the enormous carbon-ceramic brakes (15.7/15.4 inches, f/r), which come as standard equipment. Nice package, by the way.

The E-Ray is fitted with mighty meats: a set of staggered 275/30/ZR20s in front and 345/25/ZR21s in the rear—for the metric-impaired, the rear tire is 13.4 inches wide. But the standard-issue magnetic dampers were not putting up with any nonsense. As I was recalibrating my smile on rough, twisty canyon roads in Ventura County, the chassis seemed to be laying its own asphalt.

Frankly, I wasn’t sure what I was feeling through the flat-bottomed, leather-wrapped steering wheel, except that it was expertly tuned and exquisite: light on center, pointy and precise, with effort and authority building quickly just off center. But the tactile feedback coming from the variable-ratio rack and electric power-steering unit is a highly processed signal, washed with counter-torques that null out vibration, wheel shake and torque steer. The steering feel must also pass through one of the six drive-mode algorithms—ranging from the cushiony Tour mode to the heft-filled Track mode—while looping in signals from chassis dynamics and traction management. The E-Ray puts the fast in Fast Fourier Transform.

It is likewise beyond my ken to know what happened when I stepped on the brakes, except that all my personal belongings suddenly gathered in the footwells to discuss an escape plan. The hybrid’s friction brakes and regen work together to mop up overwashes of velocity like a Swiss bartender. I couldn’t feel the regen’s uptake but I could hear the e-motor whining.

If you were curious as to why a road-focused GT with an already-stratospheric starting price of $104,295 needed the pricey carbon-ceramic brakes, me too. “Reducing weight in the car was critically important,” said executive chief engineer Tadge Juechter. Due to the battery pack stuffed in the center tunnel like salmon roe, the E-Ray is heavy, almost two tons at the curb.

With the eighth-design generation (2019-present), the Corvette went from being a midlife cry for help to a legitimate sports car legend. The first moments sitting in the test car reaffirmed my love for the 8’s swank, future-y cockpit design, with the driver’s workstation separated by a rising diagonal leather console, capped with an elegantly thin line of switches. It was not obvious at the time that this console future-proofed the packaging for batteries.

On the outside, the E-Ray shares the wider, more soul-devouring bodywork of the Corvette Z06. This hard-as-nails track toy generates its own weather with a naturally aspirated, flat-plane crank, 5.5-liter V8, soaring to an emotional 8,500 rpm. Grown men weep. Me, for instance. Anyway, compared to the Sturm und Drang of the Z06, the E-Ray sounds like Tibetan throat singing.

Is it a real Corvette? Clearly, that ontology is undergoing revision back at headquarters. The E-Ray certainly doesn’t sound familiar. At its loudest, the V8’s wail is muzzled and muffled, especially laid against the skyrocketing whine of the e-motor.

Granted, the E-Ray’s hybrid-enabled refinement, next-level performance and all-weather drivability doesn’t remind me of Corvettes past, either.

But it’s OK. I’ll adjust.

Base price: $104,295 (1LZ)

Price, as tested: $123,705 (3LZ)

Powertrain: Mid-mounted, naturally aspirated, direct-injected 6.2-liter overhead valve V8, with dry sump lubrication; automated eight-speed dual-clutch transmission; front-mounted permanent-magnet motor (160 hp/125 lb ft); gas-electric hybrid all-wheel drive

Total system power: 655 hp

Length/wheelbase/width/height: 184.6/107.2/79.7/48.6 inches

Dry weight: 3,774 pounds

0-60 mph: 2.5 seconds

¼-mile: 10.5 seconds at 129 mph

EPA fuel economy: 16/25/19

Cargo capacity: 12.5 cubic feet

Systemic risks are mounting among non-banking financial bodies that lend to struggling house developers

China’s repeated attempts to tackle its worsening property crisis resemble firework displays — full of light and sound, quickly extinguished.

Property stock prices have burst upwards with each new set of government measures to boost the market, only to collapse shortly thereafter. This week’s rally should not differ. 

Shenzhen, one of the most expensive cities in China, offered new edicts to lower downpayment ratios and relax other regulations from Thursday, according to state-run media. Beijing is also expected to provide more financial support for struggling developers in coming weeks. 

Bargain hunters have sought out shares of local developers. Country Garden, China’s largest private developer, rose by a quarter on Thursday, bringing gains for the past month to 50 per cent. Peer Sino-Ocean Group’s share price is up 45 per cent.

Countless policy changes over the past two years have done little to encourage a sustained return of buyers, necessary to stabilise property prices. Home sales at China’s 100 top developers fell by 28 per cent in October as property investment dropped the most in eight years.

Beijing must then encourage more lending, ensuring that developers have access to liquidity. But even that effort may soon hit its limit. Net interest margins at the largest state-owned lenders fell to a record low at the end of the first half. At 1.74 per cent, that has now fallen below the reference level required by the People’s Bank of China for commercial banks.

In particular, the four biggest local banks, Bank of China, Agricultural Bank of China, China Construction Bank and Industrial and Commercial Bank of China must shoulder the burden of added lending. As a result loan yields are falling. ICBC, the largest state-owned lender, now trades below 0.4 times its tangible book value, a fraction of its regional peers.

For the lending to developers, analysts expect cumulative non-performing loans to go as high as 15 per cent.

The fallout has spread to China’s shadow banking sector — non-bank financial institutions that lend to higher-risk industries. Zhongzhi, one of the biggest, may have a shortfall of $36bn. It has warned that it is “severely insolvent”. Systemic financial risks are mounting. Risk-averse investors should not chase these property companies.

Despite a drop in deal volume, prices remain steady in Prime Central London—and some are taking the leap

Lesley and Johan Denekamp are keenly aware that now isn’t a great time to be selling real estate in central London. Nonetheless, in September, they went ahead and listed their 3,800-square-foot townhouse with Knight Frank, for $5 million.

Why now? The couple are sick of waiting, having already sat out Brexit and the pandemic. “We don’t think we are going to live forever, and four million pounds is a lot of money to have tied up in a house we don’t really need,” said Johan Denekamp.

The couple bought their house in St Katharine Docks, a former dockyard now an upscale marina lined with apartment buildings and houses, in 1997 for an amount they declined to disclose.

Both had jobs in London. Johan Denekamp, 64, was in advertising. Lesley Denekamp, 62, worked for insurers Lloyd’s of London. She could walk to work since the docks are less than a mile from the City, London’s historic financial district.

About 10 years ago the couple, both now retired, built themselves a country home in the county of Wiltshire. Unfortunately, driving through London’s traffic to make the 100-mile trip made their journey unnecessarily long. They decided to relocate to west London and in 2018 moved into a new-build apartment in the Brentford neighborhood.

The couple then listed their townhouse for $6.56 million. But during 2018, the property market was hit by Brexit-related jitters and they failed to find a buyer. They decided to wait, rented the house out and sat out Brexit. Then came the pandemic and they had to sit out that, too. They have now had enough of waiting and are trying again, despite a new challenge to the market: rising interest rates.

Between November 2021 and August 2023, the Bank of England hiked rates from 0.1% to 5.25%, although it did agree to hold rates steady at its most recent meetings in September and November. Data shows that the upper end of London’s housing market appears to be bearing up well against rising mortgage costs.

According to Savills, average sale prices during the third quarter of 2023 in Prime Central London (PCL—defined as the neighborhoods encircling Hyde Park) dropped just 1.2% compared with the third quarter of 2022. They are 0.9% higher than in March 2020.

Across prime London, a wider area incorporating most central neighborhoods plus particularly affluent suburbs, such as St John’s Wood and Hampstead, average sale prices during the third quarter of this year dropped 2.1% compared with the same period last year, said Savills. Prices are 3% higher than in March 2020.

But, just like in major U.S. markets, while prices are holding up reasonably well in central London, the number of deals being done is down.

Stuart Bailey, head of prime sales London at Knight Frank, said transaction levels in October 2023 were 15% down compared with the same month last year.

The reason is that buyers are out to bag a bargain, while many sellers are holding out for a great offer, said buying agent Jo Eccles, managing director of Eccord. “PCL is really resilient, a lot of people don’t have any borrowing, and owners can afford to wait,” she said. Buyers, meanwhile, want a good discount. “London is not a compelling investment at the moment,” said Eccles.

Bailey said the performance of London’s prime market can be split into three categories. The first is homes priced at $3.75 million or less, a needs-based market of mainly domestic buyers. The second is the $12.5 million-plus super-prime market, dominated by globally wealthy and risk-averse investor buyers. These two sectors, Bailey said, are still trading well.

The market between $3.75 million and $12.5 million is flagging. “This is a highly discretionary sector, and it is the bit which is being squeezed,” he said.

Whatever the price bracket, Camilla Dell, managing partner of buying agency Black Brick, said that homes she describes as “best in class” still attract multiple bidders. These, she said, are properties on sought after streets and garden squares, in immaculate condition, with great views and good light. “They are properties which are without compromise,” she said. “They rarely come up for sale and are always competitive.”

Will Pitt, senior director at U.K. Sotheby’s International Realty, has seen the same trend, with American buyers in particular eager to take advantage of the weak pound. “Favorable exchange rates have enhanced London’s appeal for overseas investors,” he said.

Turnkey homes are in particular demand among time-poor buyers, said Pitt. “This marks a change from prepandemic trends, likely driven by soaring construction costs and labor shortages,” he said. “We expect this focus on minimizing renovation costs to intensify moving into 2024.”

Sophia Lucie-Smith, 36, believes the fully refurbished four-bedroom, four-bathroom townhouse in the Chelsea neighborhood that she bought in 2020 (she declined to disclose the purchase price) and shares with her 8-year-old daughter, Petra, meets the best-in-class criteria.

She has decided to sell the property so she can spend some time living in California, where her mother lives. In November, she listed the property for $9.9 million with Sotheby’s International Realty.

“I am conscious about the market but I think this is a really special house,” said Lucie-Smith, a nutritionist. “There is not a huge amount of good stuff on the market.”

The other homes that trade well are those that look like good value for money. “Buyers want a discount,” said Eccles. “To sell a home which is not so special you have to be bold on pricing, and if you are, then you will get interest and buyers may then bid the price back up.”

Sensible pricing is the Denekamps’ strategy. Their home’s asking price breaks down as $1,315 per square foot. Denekamp said he has seen other homes around the docks achieve $1,749 to $1,875 per square foot in recent months.

“I think it is at the cheap end of sensible,” said Denekamp. “We don’t want to sit and wait and talk about the five million pounds we could have got for it five years ago. We don’t have any children to leave it to, and we could wait 10 years for the market to change.”