The Economist November 19th, 2011 volume 8760 PDF
Preview The Economist November 19th, 2011 volume 8760
The world this week Leaders Letters Briefing United States The Americas Asia Middle East and Africa Europe Britain International Business Finance and economics Science and technology Books and arts Obituary Economic and financial indicators The world this week Politics this week Business this week KAL's cartoon Correction: UN General Assembly Politics this week Mario Monti, a former European commissioner, was sworn in as Italy’s prime minister following Silvio Berlusconi’s resignation. Mr Monti’s technocratic cabinet contains bankers, ambassadors and bureaucrats but no politicians. Mr Monti reserved the finance portfolio for himself and said he intends to serve a full term, until 2013. See article Greece’s new government of national unity, headed by Lucas Papademos, another technocrat, won a parliamentary vote of confidence. The government enjoys the backing of Greece’s main parties, but is likely to serve only until an election in February. See article At the annual congress of her Christian Democratic Union, Germany’s Angela Merkel said that Europe was facing its worst crisis since the second world war. Although she said that “political union” was necessary to save the euro, she also ruled out the use of Eurobonds. See article About time The Arab League voted to suspend Syria’s membership and apply sanctions, after President Bashar Assad’s regime failed to implement a plan to end the violence sweeping the country. Turkey joined the calls for action and King Abdullah of Jordan said Mr Assad should go. The league gave Syria three days “to stop the bloody repression”. See article Seventeen members of Iran’s Revolutionary Guard Corps died in a blast at an arms depot near Tehran, the capital. The dead included Hassan Tehrani Moghaddam, an architect of Iran’s missile programme. Officials said the explosion was an accident. An Egyptian court ruled that members of former President Hosni Mubarak’s National Democratic Party, which was dissolved after he was ousted in February, will be allowed to run in forthcoming parliamentary elections. A lower court had banned party members from standing. Fighting between rival Libyan militias near the city of Zawiya left at least ten people dead. Leaders of the ruling National Transitional Council said the dispute had been resolved, but the episode raised concerns about the stability of Libya. Swaziland failed to pay more than $10m in grants to AIDS orphans because of the country’s financial crisis. South Africa offered to bail out Swaziland if the kingdom enacted political and economic reforms. King Mswati has so far refused its money. Comrade Timochenko Colombia’s FARC guerrillas named Rodrigo Londoño-Echeverry, better known as “Timochenko”, as their new leader. His predecessor, Alfonso Cano, was killed by the army earlier this month. Álvaro Colom, the president of Guatemala, said that he would authorise the extradition of his predecessor, Alfonso Portillo, to the United States on embezzlement charges. Police in Brazil moved into Rocinha, Rio de Janeiro’s biggest favela (slum), regaining control of the area from drug gangs. They captured Antônio Francisco “Nem” Bonfim Lopes, the neighbourhood’s kingpin. See article Mexico’s interior minister, Francisco Blake Mora, died in a helicopter crash. He is the second interior minister to be killed in an aviation accident during the presidency of Felipe Calderón. No signs of foul play have been detected. Mexico’s leftist Party of the Democratic Revolution (PRD) chose Andrés Manuel López Obrador as its candidate in the 2012 presidential election. He finished a close second in the 2006 race, which he believes he lost because of fraud. See article Darwin selection In Canberra Barack Obama announced that America would begin stationing marines near Darwin, on Australia’s north shore, strengthening America’s presence around the disputed South China Sea. The deployment is expected to reach 2,500 men over the coming years. Mr Obama told the Australian Parliament that America was ready to play “a larger and long-term role” in shaping the region, which will include providing humanitarian relief. The floodwaters that have surrounded central Bangkok for the past few weeks started to recede. Three months of flooding in Thailand have killed more than 500 people. It will take several more months for Thailand’s many tech factories to recover capacity. Authorities in China issued new directives aimed at controlling the news media, in line with a broader effort to curtail the influence of radically popular Twitter- like microblogs. Journalists are to be banned from passing along rumour or information that has been gleaned from the microblogs, unless they have verified it in other ways. “Critical” reporting of any kind will now require at least two sources. Kazakhstan’s long-serving president, Nursultan Nazarbayev, called a parliamentary election for January. The vote is supposed to usher in a multiparty system, though the only other party expected to join the race is sympathetic towards Mr Nazarbayev. The president brought forward the date of the election, he said, in anticipation of a global economic crisis; politicians shouldn’t be campaigning at such a time, apparently. A healthy deliberation America’s Supreme Court said it would hear a challenge to Barack Obama’s health-care law, the implementation of which is in a muddle following mixed decisions in the appeals courts. Opponents of the law contend that the mandate to buy health insurance is unconstitutional. The ruling will come by the end of June. Protesters from the Occupy Wall Street movement tried to regroup in lower Manhattan, after police cleared their main camp at Zuccotti Park in an early- morning operation. The protesters moved into the park in September. Authorities in other cities around the world are also taking action to dismantle anti-capitalist sites that have sprung up in their jurisdictions, including in London outside St Paul’s Cathedral. America’s total outstanding public debt rose above $15 trillion for the first time. The yields on American Treasury bonds remain at close to record lows. Business this week The European Central Bank reportedly intervened heavily in the bond markets again, by purchasing Italian and Spanish government debt. In a worrying portent of contagion the spread of Austrian, French and Dutch bond yields over German Bunds also shot up, though to levels still well below those of Italy and Spain. The markets were rattled by uncertainty about the willingness of the ECB to stand behind euro-zone governments, as senior German officials insisted that the bank should not be a lender of last resort. See article Junk status Credit-rating agencies criticised formal proposals from the European Commission that would require companies to rotate rating agencies and also give regulators the power to approve the methodology behind the agencies’ analyses. But the commission backed away from recommending an outright ban on providing credit ratings for countries seeking a bail-out. Josef Ackermann stunned colleagues at Deutsche Bank by deciding that he would not take up the position of chairman. Mr Ackermann is stepping down as the German bank’s chief executive. A succession plan was in place that envisaged Mr Ackermann staying on at the bank as chairman, with the job of chief executive being shared between Anshu Jain and Jürgen Fitschen, but shareholders disliked the idea. Deutsche Bank now wants Paul Achleitner, Allianz’s chief financial officer, as chairman. See article UBS unveiled its new strategy, which curtails its investment-banking activities and focuses on its core wealth-management business. The Swiss bank also appointed Sergio Ermotti as chief executive (after some speculation that Mr Ackermann would get the job). Mr Ermotti took the position on an interim basis, when Oswald Grübel resigned over the lack of supervision of an alleged rogue trader. The British Treasury sold Northern Rock, the “good” part of a failed British bank that was taken into public ownership, to Virgin Money for £747m ($1.2 billion). Price components America’s annual overall inflation rate fell in October, for the first time in four months, to 3.5%, mostly because the fast pace of rising energy prices slowed a bit. Britain’s annual inflation rate also dropped, to 5%. The Bank of England indicated that it would undertake more quantitative-easing measures over the coming months, as it reported that the prospects for the British economy have “worsened”. Britain’s unemployment rate rose to 8.3%, the highest since 1996. The price of West Texas Intermediate oil jumped sharply after a Canadian company agreed to buy a stake in a pipeline that helps feed an important storage hub at Cushing, Oklahoma, and reverse the flow in order to relieve a build-up of oil there. The glut of oil in Cushing has dragged down the price of WTI, causing it to diverge from other oil prices. The pipeline’s oil will in future flow to refineries in the Houston area. See article China’s regulators announced an antitrust investigation into whether China Telecom and China Unicom, state-owned giants that dominate the communications sector, are abusing their position in the market for broadband internet connections. The move surprised many, given the government’s previous tolerance of anti-competitive practices by favoured local firms. Sceptics are unlikely to be won over unless the tough talk leads to tough action to curb abuses. Boeing sealed its biggest single order for commercial aircraft to date when Emirates, an airline based in Dubai, announced that it would buy 50 777 jets with a listed dollar value of $18 billion, with an option to buy another 20. See article The auction to find a buyer for EMI concluded with the music label being split in two. Universal Music is to pay $1.9 billion for EMI’s recorded-music division, and a consortium which includes Sony Music and the estate of Michael Jackson will buy EMI’s music-publishing unit for $2.2 billion. Rolling in the deep Google launched its own online music store, in an ambitious attempt to challenge Apple’s iTunes. Along with more established players in the market, Google is basing its service in the cloud. See article Warren Buffett revealed that his Berkshire Hathaway investment company has been buying shares in IBM since March, the value of which amounts to a stake of around 5.5% in the information-technology company. It is the first time that Mr Buffett has taken such a big bet on a stock in the tech industry, on which he has been famously lukewarm. He said he made an exception for IBM as he is impressed with its long-term strategy and because IBM treats its share price “with reverence”. See article
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