Business News
The Economist
Oh, brother - Fri, 12 Mar 2010
Shining a harsh light on Lehman’s bankruptcy
IT SOUNDS distinctly unpromising. A nine-volume, 2,200-page report by a court-appointed examiner into the causes of Lehman Brothers’ bankruptcy, published on Thursday March 11th, has a table of contents that lasts for 38 pages. Its most exciting finding relates to an off-balance-sheet accounting gimmick. But the work of Anton Valukas, the chairman of Jenner & Block, a law firm, is crisp, clear and explosive.
Mr Valukas and his team took more than a year to research their report. They collected more than 5m documents and reviewed an estimated 34m pages of information. Looking at Lehman’s IT systems was a particular challenge. The firm had a rat’s nest of more than 2,600 systems and applications at the time it went bust; Mr Valukas boiled that down to the 96 most relevant ones, some of which are now operated by Barclays (the buyer of Lehman’s American arm after the holding company failed). He also conducted more than 250 informal interviews, many of them with Lehman’s directors and most senior executives. ...
Cutting the clutter - Fri, 12 Mar 2010
A wireless replacement for all those pesky power cables
BENEATH your correspondent’s desk is a cat’s cradle of tangled cables linking a pair of computers to numerous peripherals and laptops around the office. On the credenza opposite is another jumbled nest of wires for recharging mobile phones, cameras, netbooks, MP3 players and other portable gizmos. When everything is humming, there are no fewer than 15 transformers plugged into various wall sockets and power strips, along with all the other electrical cables for powering computers, monitors, printers and still hungrier office gear.
Lately, your correspondent has taken to unplugging the power adaptors—at least those he can lay his hands on—when they are not being used to recharge their tethered friends. As it is, his office becomes a veritable Christmas tree of fairy lights at night with all the red, green and amber standby diodes twinkling in the dark. ...
A shaky start - Fri, 12 Mar 2010
The challenges ahead for Chile's new government
SEBATIAN PIŇERA looked shaken, rather than jubilant, as he was sworn in as Chile’s president on Thursday March 11th. Minutes before he was reminded of the scale of the task he faces in rebuilding a large swathe of the country after a massive earthquake on February 27th. The same area was hit by an aftershock that, with a 6.9 magnitude, was only slightly smaller than the quake that devastated Haiti in January.
Three other large tremors followed during the inauguration ceremony in the National Congress in Valparaiso on the coast of central Chile. Outside people started to head for the hills as the national emergency office issued a tsunami warning. The sea, in fact, remained calm but Mr Pinera cancelled a lunch with visiting foreign leaders—some of whom did not look as if they could have eaten much anyway. After sending Rodrigo Hinzpeter, his new interior minister, to the capital, Santiago, to co-ordinate a response to the emergency, the new president boarded a helicopter to the aftershock’s epicentre in the O’Higgins Region, just south of Santiago. ...
Hire or fire? - Thu, 11 Mar 2010
Where employers are most optimistic, and pessimistic
IN 27 out of 36 countries surveyed by Manpower, an employment-services firm, more companies said they expected to add jobs in the three months to the end of June than said they reckoned on reducing their workforce. The difference between the proportion of hirers and firers was highest in Brazil and India. Throughout Asia companies have become more optimistic about hiring than they were a year ago, most dramatically in Singapore but only slightly in Japan. Things look less rosy in Europe. In several countries, including Spain and Ireland, more companies expect to see cuts to their workforce than expect it to grow. Of the four countries where the outlook has darkened, three are in Europe.
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Harmony in Riga - Thu, 11 Mar 2010
For once, the anniversary of a wartime battle in Latvia should pass off peacefully
THAT March follows February is not a state secret, but it sometimes seems to come as a surprise to Latvian officials. Sometime in February, they notice that March 16th is approaching and start worrying, belatedly, about what outsiders will think.
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All for one - Thu, 11 Mar 2010
Eurocrats offer up half-baked ideas to prevent a future sovereign-debt scare
NOW that Greece has given in to pressure from its peers for a more austere budget, the euro zone’s policy brass suddenly seems more sympathetic towards its most troubled member. On reflection, perhaps the fault with Greece’s parlous public finances lay not just with its budgetary profligacy but also elsewhere: in the absence of a central euro-zone authority for helping out cash-strapped countries; or with the credit-rating agencies that had unhelpfully downgraded Greek government bonds; or with the amoral speculators who had bet against those bonds and helped drive up borrowing costs.
It was mildly surprising that some of the messages of support came from Germany, where fiscal indiscipline is least tolerated. On March 7th the finance minister, Wolfgang Schauble, floated the idea of a European Monetary Fund (EMF) to act as a lender of last resort to euro-zone countries that could not raise funds in capital markets on tolerable terms. He offered few details about how an EMF would be financed or how it would operate. It would not be a “competitor” to the IMF, based in Washington, DC, though it would seek to police the fiscal policies of lax member countries. ...
More than just a charade? - Wed, 10 Mar 2010
The Israeli-Palestinian peace process resumes, after a fashion
IT WAS a wretched beginning to what had been hailed as the hopeful resumption of peace talks, albeit indirect ones, between the Israelis and Palestinians under the aegis of an American mediator. Barely had America’s vice-president, Joe Biden, begun a visit to Israel to herald a new era of compromise and goodwill than it was announced, as if deliberately to poison the mood, that 1,600 new houses would be built for Jewish settlers in a big Jewish suburb in the Israeli-annexed eastern part of Jerusalem that Palestinians see as their fledgling state’s future capital. Palestinian politicians were united in fury. Arabs and other peacemaking outsiders viewed the action as the illest of omens. Mr Biden sharply “condemned” the action as “precisely the kind of step that undermines the trust we need right now.”
A sheepish-looking Binyamin Netanyahu, Israel’s prime minister, let his aides claim implausibly that he had been unaware of the building decision. The next day his minister of interior dismissed it as a “routine, technical” step, while conceding that the timing was unfortunate, and apologised. Unsurprisingly, the incident increased scepticism towards the promised new round of talks. ...
The name game - Wed, 10 Mar 2010
Branding in the New York art world
VIPs criss-crossed Manhattan last week to attend museum shows, conference panels, champagne brunches, curator tours and the stands of nearly 500 galleries exhibiting in 11 fairs. The week was vibrant but confusing due to poor co-operation between event organisers and some amateur branding.
The first problem was an illogical association of name and place. Every March the Armory Show sets up shop in New York. This year, the Art Dealers' Association of America (ADAA) decided to hold its smaller but more prestigious fair in the same week. While the ADAA's exhibition took place in the historic Armory building on Park Avenue, the Armory Show was held in two piers on the Hudson River (see slideshow below). “It must drive them as crazy as it drives us,” admitted Giovanni Garcia-Fenech, the Armory Show's communications director. ...
Trop cher? - Wed, 10 Mar 2010
Living costs in big cities
PARIS is the most expensive city to live in according to the latest survey from Economist Intelligence Unit, a sister company to The Economist. The survey assesses the cost of living by comparing housing, food, clothing, transport and utility bills and the like in 132 cities around the world. Tokyo comes second, up from sixth place a year ago. The fall in Russia's currency against the dollar has made Moscow cheaper than it once was.
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Snoopy sniffs an opportunity - Wed, 10 Mar 2010
AIG reluctantly hands its crown as America’s global life insurer to MetLife
ANOTHER week, another opportunity for AIG’s rivals to expand at the American insurer’s expense. Days after sealing a $35.5 billion deal for its Asian life-insurance operations with Britain’s Prudential, the firm, which is being dismembered to recoup bail-out costs, agreed on March 8th to sell another crown jewel, Alico. The acquisition propels New York-based MetLife, which is paying $15.5 billion, into the industry’s global elite. Though it is the biggest life insurer in America, where its Snoopy logo is ubiquitous, it has been tentative abroad. Alico will give it a presence in 64 countries, up from 17 now, taking its non-American revenue from 15% of the total to 40%.
The biggest leap will be in Japan, the world’s second-largest life market, in which Alico is a top-tier competitor. But MetLife’s boss, Robert Henrikson (who took over in 2006 from Robert Benmosche, now AIG’s chief executive), also has his eye on the faster-growing markets in Eastern Europe, the Middle East and Latin America that make up almost a quarter of Alico’s business. Another attraction is its distribution network: 60,000 agents, brokers and other local middlemen. ...
