Archive
Business this week: 25th November – 1st December 2006
Business this week
From The Economist print edition
The weakness of the dollar came under the spotlight as it continued to slide, reaching a 20-month low against the euro and falling against other leading currencies. In an effort to soothe markets, Ben Bernanke, the chairman of America’s Federal Reserve, tried to dampen speculation that interest rates would be cut next year in order to boost economic growth, which would put more pressure on the greenback. The currency fell further after he spoke. See article
The slack dollar was one factor that led stockmarkets to shed some of their recent gains. On November 27th the Dow Jones Industrial Average and the NASDAQ witnessed their sharpest declines since the summer, falling by 1.3% and 2.2% respectively. Asian markets also caught the jitters and the next day Hong Kong‘s Hang Seng index fell by its largest amount since September 11th 2001.
Ford said it was seeking to raise $18 billion in loans. Because of the carmaker’s poor credit-rating it will, for the first time in its history, put up its factories and other assets as collateral. The company, which is restructuring, has lost around $7 billion so far this year as its share of the American market continues to erode.
Bharti, an Indian conglomerate, confirmed it would work with Wal-Mart in a joint venture to open hundreds of Wal-Mart franchised stores in India, starting next year. It is the biggest push yet by a foreign shopkeeper into India’s booming retailing sector, which remains largely closed to foreign investment.
Iberdrola, a Spanish energy company, offered to buy Scottish Power for £11.6 billion ($22.5 billion). The friendly deal is the latest effort among big European utilities to consolidate ahead of next year’s deregulation of energy markets. However, some deals remain mired in political wrangling. This week the European Commission criticised Spain, again, for the conditions it has attached to a bid for Endesa, the country’s biggest utility, from Germany‘s E.ON. Spain wants Endesa to merge with Gas Natural, the country’s biggest gas supplier. See article
Ryanair raised its stake in Aer Lingus, its Irish compatriot, to more than 25%. Ryanair, Europe‘s biggest low-cost carrier, launched a hostile takeover for Aer Lingus in October, soon after Aer Lingus made its stockmarket debut, but has failed to win the support of big shareholders. A rival bid is improbable, given that the Irish government insists it will not sell its 25.4% stake in Aer Lingus to anyone.
The management of Eurotunnel, the operator of the tunnel that links Britain and France, breathed a sigh of relief as the company’s core creditors voted (by a slim margin) in favour of a restructuring plan. Some of the debt-holders, including several hedge funds, abstained from the vote. They, and smaller bondholders, remain unhappy with the blueprint, which restructures Eurotunnel’s £6.2 billion ($12 billion) debt, because it undervalues their investments.
EMI’s share price surged as the music company confirmed it had been approached about a possible takeover, reportedly by two private-equity firms. Merger talks between EMI and Warner Music proved fruitless earlier this year.
The retrial of Josef Ackermann and five others on criminal charges stemming from the awarding of executive bonuses at Mannesmann in 2000 ended when the judge accepted a settlement from the prosecution. The deal requires Mr Ackermann, who is now chief executive of Deutsche Bank, to pay euro3.2 million ($4.2 million) but without admitting to wrongdoing. See article
Sales of existing homes in America increased by 0.5% in October compared with the previous month, the first time sales have risen since February, according to the National Association of Realtors. But the median price for a home remained $221,000, a drop of 3.5% compared with a year ago. It may be a buyer’s market for some time to come: the inventory of unsold homes was also up sharply.
The European Union’s trade commissioner, Peter Mandelson, proposed a meeting of the world’s trade ministers before the end of the year in an attempt to revive the Doha round of talks. American officials backed away from the idea and said they preferred the “quiet conversations” going on in a series of smaller, informal meetings.
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The OECD issued its latest economic outlook. The forum for 30 industrialised countries said a “rebalancing” in the world’s economy will see growth in Europe and Asia compensate for a slowdown in America. The OECD cut its estimate for GDP growth in the United States to 2.4% in 2007 from the 3.1% it forecast six months ago.
Politics this week: 18th – 24th November 2006
Pierre Gemayel, Lebanon’s minister of industry and a member of a famous Christian political dynasty, was shot dead in Beirut, inflaming sectarian tensions. The Lebanese army took to the streets while the country observed three days of mourning. Many fingers pointed at Syria, but Damascus strongly denied any involvement. See article
Syria and Iraq agreed to restore diplomatic relations after a break of 24 years. The charm offensive by Syria, long suspected of stirring turbulence in Iraq, followed a visit by its foreign minister to Baghdad, the first by a senior official since the toppling of Saddam Hussein. Meanwhile, Iraq‘s president planned a visit to Iran. And George Bush said he would travel to Jordan next week to meet Iraq‘s prime minister.
A new UN report noted that this year more than 2m Africans will die of AIDS, nearly three-quarters of all the AIDS-related deaths on the planet. See article
The Supreme Court in Kinshasa, Congo‘s capital, was set on fire by supporters of Jean-Pierre Bemba, the losing candidate in last month’s presidential election. Mr Bemba had asked the court to rule that the victory handed to Joseph Kabila was unfair. See article
A French judge said that Rwanda‘s president, Paul Kagame, should be put on trial for allegedly orchestrating a plane crash in 1994 that killed his predecessor, Juvénal Habyarimana. The incident marked the beginning of the genocide there. Rwanda‘s government said the French claim was baseless.
Responding to an order to clamp down on a spate of kidnappings in Nigeria‘s Delta region, the country’s army carried out an operation to free seven foreign workers who had been captured from a ship. One British hostage and two kidnappers were killed.
Mexico’s president-elect, Felipe Calderón, unveiled his economic team, naming Agustín Carstens, a former IMF official, as finance minister. Earlier, Andrés Manuel López Obrador, the narrow loser of last July’s presidential election, proclaimed himself the “legitimate” president at a rally of tens of thousands of his supporters.
Six of the nine elected regional governors in Bolivia said they were breaking relations with Evo Morales, the socialist president, over a bill that would allow the central government to scrutinise their funds and the Congress to sack them. The opposition walked out of the Senate in protest over that, land reform and other measures. See article
Nicaragua‘s outgoing president signed into law a measure outlawing all abortions, including when a woman’s life is in danger. Chile‘s Congress rejected a bill that would have legalised abortion in some circumstances.
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The Dutch election produced an inconclusive result, but it gave the ruling Christian Democrats under the outgoing prime minister, Jan Peter Balkenende, the most seats. Mr Balkenende must now scrabble around for coalition partners; the negotiations could take months. See article
Allegations continued to fly that Russian intelligence agents had poisoned a renegade comrade who defected to Britain. Alexander Litvinenko remained in intensive care in a London hospital after his apparent poisoning. Several prominent critics of the Kremlin have been poisoned or shot in the past few years. See article
Italy‘s government sacked the chiefs of all three of its intelligence agencies. The cause was apparently the involvement of one agency in a CIA kidnapping of a Muslim cleric in Milan some years ago; but others said the spies were not proving loyal to Romano Prodi’s centre-left government. See article
The European Union gave Turkey a deadline of December 6th to open its ports and airports to Greek-Cypriot ships and aircraft, but Turkey has already said it will refuse. The likely outcome is that those chapters in the EU accession negotiations with Turkey relating to trade and free movement will be frozen.
In Poland, 23 miners were killed in a gas explosion at their mine in the Silesia region. It was the country’s worst such disaster since 1979.
In the United States the Democrats continued to put their new leadership team in place but insisted they were still united after rejecting John Murtha for majority leader in the House of Representatives, choosing Steny Hoyer instead. Mr Murtha was championed by Nancy Pelosi, who will become speaker when the new Congress starts in January.
Rupert Murdoch made a rare apology and agreed that the decision of his company to publish a book by O.J. Simpson recounting hypothetical details of the murder of his ex-wife and her friend was “an ill-considered project”. The book has now been scrapped and a television interview cancelled after a backlash. See article
NASA scientists conceded that they had probably lost the Mars Global Surveyor in space. The probe, launched ten years ago, has been one of the most successful missions run by America’s space agency, photographing Mars in unprecedented detail.
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The government in Nepal signed a comprehensive peace agreement with the country’s Maoist rebels. On paper, this brings an end to ten years of conflict. Maoist fighters started arriving at the cantonments where they are to be confined. See article
Marking a visit to Delhi by the Chinese president, Hu Jintao, India and China signed a raft of mainly trivial agreements. The two countries said they would try to double their bilateral trade by 2010.
In Washington, DC, the Senate approved controversial legislation that would open the way to nuclear co-operation with India, despite its having tested nuclear weapons and never having signed the non-proliferation treaty.
In Hanoi, leaders of the Asia-Pacific Economic Co-operation (APEC) forum held their summit and made their usual vague commitments to freer trade. George Bush discussed North Korea‘s bomb with his Russian, Chinese and South Korean counterparts.
Correction: Last week we erroneously reported that the summit George Bush was headed to in Hanoi was being held by ASEAN. Sorry for the confusion.
Business this week: 18th – 24th November 2006
The London Stock Exchange rejected a second takeover bid by the American NASDAQ exchange. The LSE said the new £2.7 billion ($5.1 billion) offer still “substantially” undervalued it, and spurned a proposal for further talks. After NASDAQ revealed it had increased its stake in the LSE to almost 29%, attention turned to the Americans’ chances of getting the LSE‘s biggest investors to support their offer. See article
Tributes were paid to Milton Friedman, who died on November 16th, aged 94. The American economist, a champion of free markets, laid the intellectual foundations for the ending of the post-war Keynesian consensus. Mr Friedman urged governments to cut spending and privatise state services, but gave warning that “Hell hath no fury like a bureaucrat scorned.” See article
America’s treasury secretary, Hank Paulson, gave a speech in which he called for balance in regulatory oversight of capital markets. Mr Paulson said that legislation should not be “excessive” or impose “needless costs”, but he stopped short of calling for an overhaul of Sarbanes-Oxley rules, which critics say are intrusive. See article
A fight broke out for control of ITV, Britain’s biggest commercial broadcaster. BSkyB, a pay-TV channel that is part of Rupert Murdoch’s empire, bought a 17.9% stake in ITV, which was interpreted as an attempt to stymie a £4.7 billion ($8.9 billion) merger bid from NTL, a cable and phone operator in which Sir Richard Branson is the largest shareholder. Sir Richard called on regulators to intervene in what he fumed was BSkyB‘s “blatant attempt to distort competition”, but ITV rejected NTL‘s offer as too low. See article
In a significant step towards an accommodation between newspapers and internet companies in lucrative classified advertising, several firms representing 176 newspapers in America reached a partnership with Yahoo! to share content and advertising online.
Google’s share price continued to rise and pushed past $500 for the first time. The share price has gone up by around 40% since February, when investors took fright at negative reports about future growth. Google now has a market capitalisation of some $155 billion, more than eight times that of General Motors.
General Motors’ share price came under pressure as it emerged that Kirk Kerkorian has cut his stake to 7.4% from 9.9%. Mr Kerkorian recently failed to persuade GM to create an alliance with Renault and Nissan and remains critical of GM‘s own blueprint to restructure its business.
Hot on the heels of last week’s $26.7 billion agreement to buy out Clear Channel Communications, a radio and outdoor-advertising company, the rush for big private-equity deals continued. In the largest-ever leveraged buy-out, Blackstone continued its property-acquisition spree by offering $36 billion for Equity Office Properties, America’s biggest real-estate investment trust. It also emerged that Australia‘s Qantas Airways had been approached about a potential buy-out, said to value the airline at around A$11 billion ($8.5 billion). See article
Mining and metals firms also had an acquisitive week. Freeport-McMoRan secured a $25.9 billion deal for Phelps Dodge, a bigger mining rival which failed to cement an ambitious three-way merger with Inco and Falconbridge earlier this year. And in the largest investment by a Russian firm in America, Evraz, a steel group controlled by a Russian oligarch, Roman Abramovich, said it was buying Oregon Steel Mills for $2.3 billion.
CSN, a Brazilian steelmaker, approached Corus, an Anglo-Dutch rival, about a takeover. The move puts pressure on India’s Tata Steel to raise its recent offer for Corus. See article
The planned merger between Gaz de France and Suez was thrown into doubt again when the French courts said the deal could not be completed until workers facing privatisation at GDF had had more time to consider the agreement. The combination of the two utilities has been mired in controversy since the French government unveiled the plan in February.
Markets responded positively as the Ifo institute’s index of German business confidence, seen as an indication of future growth in the euro area, reached a 15-year high.
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Construction started on new homes in America at an annual rate of 1.49m in October, the lowest level for six years. The rate was 27% below October 2005—the biggest year-on-year decline since March 1991 (the housing market’s slump has been blamed for weak growth in the third quarter). Meanwhile, the White House lowered its GDP growth forecast for 2007 to 2.9%.
Web 3.0; Valleywag Fired; 2008 Prez Watch
It was a rough week for Web 2.0. Bloggers like Rough Type declared Web 2.0 sooo over following a dull Web 2.0 Summit last week. Why? Maybe the Summit’s $3,000 price tag kept out everyone but those preaching to the converted, blogs Mark Evans. But over at The New York Times, John 
Markoff has anointed Web 3.0 as the Next Next Big Thing. More like Psychobabble 3.0, blogs /Message, snarking that Markoff talking about a meme makes people talk about it. Scobleizer blogs that in 50 interviews in the past three months no one ever mentioned a Web 3.0. Looks like the Times is just mentioning a trend in case one emerges. All this leads Ross Mayfield to say that if Web 2.0 is a bubble, Web 3.0 will just be a disaster. After all, Web 2.0 isn’t even a buzzword yet in the real world, as Blog Herald found out.
Speaking of bubbles, owner Nick Denton ejected Valleywag writer Nick Douglas-and wants to focus more on money than sex, blogs Good Morning Silicon Valley. That’s right: Denton will it for now and is looking for an experienced reporter rather than, ahem, another college kid. Old
Valleywag: Is Marissa Meyer sleeping with Sergey Brin? New Valleywag: John Batelle gets Farked and Michael Arrington is the new Red Herring.
Could Douglas have been fired for this interview with 10 Zen Monkeys, where he hints that Denton’s bad-boy image is just an act? Douglas made enough enemies while at Valleywag, meaning he did a good job, blogs Deep Jive Interests-but despite the rumors, Douglas is not about to partner with Amanda Congdon. But don’t worry about her – she’s busy with a new TV gig for ABC and will appear on the 24-hour ABC News Now 
digital channel (via Gawker) and Micro Persuasion reports Congdon will also keep doing her vlog.
Online ad revenues for Q3 2006 hit $4.2 billion, up 2 percent over Q2 and up a heady 33 percent over Q3 2005 (via John Battelle). It’s figures like this that make Google’s Eric Schmidt bullish on the possibility of free, ad-supported mobile phones (via GigaOM). Ad sales notwithstanding, wet blanket Steve Ballmer of Microsoft reminds media companies that money from their copyrights now flows toward Google.
Speaking of Microsoft, the Zune media player launched this week and it didn’t take JANE magazine‘s editors too long to figure out it’s great for meeting boys on the bus. It’s also the first player that will work with the iTunes store-call it iZunes, blogs TechNudge Live but it’s not compatible with Vista. Oops. Also new this week, Confabb which helps conference junkies find over 16,000 conference options (via Next Net), and the relaunch of Jookster, which will let users search MySpace, YouTube and Grouper simultaneously and adds options for digging, del.icio.using and profiling anything you find (via Mashable!). Oh, and Microsoft released Microsoft Firefox 2007 Professional Edition-enjoy the spoof with the coffee you just spit up (via Register).
Finally in politics, While Nancy Pelosi and other Dems pull out the stops to make Jack Murtha the new House Majority Leader (via Huffington Post), Power Line reports the 
GOP has quietly named Trent Lott its majority whip in the Senate despite Lott’s disgrace for saying a segregationist Strom Thurmond should have won the presidency in ’48. Murtha is no saint either, 
blogs Riehl World View, considering he barely ducked punishment in the 1980s Abscam scandal. But Skippy the Bush Kangaroo says Murtha was the only Dem with the cojones to stand up on the Iraq war-not Harry Reid, Chuck Schumer or Barack Obama.
’08 Presidential Watch: From Taegan Goddard, John Edwards hints to Jon Stewart that he may run, but The Next Prez says Hillary is twice as popular in the ’08 contest, while Rudy Giuliani and John McCain lead for the GOP.
Politics this week: 11th – 17th November 2006
President Bush, battered by the mid-term elections, embarked on a long foreign trip seemingly designed to boost his image as a global statesman. He was to drop in on Moscow and Singapore before heading to Hanoi in Vietnam for the summit of ASEAN, the Association of South-East Asian Nations. See article
The victorious Democrats served notice that the promised spirit of bipartisanship will have its limits. They say they will block the confirmation of John Bolton’s appointment as ambassador to the UN. The White House is still determined to get Mr Bolton confirmed. See article
Senator Trent Lott, who was forced to resign from the Republican leadership in December 2002 after he made racially insensitive remarks at a birthday party, returned to the Senate’s centre of power by winning election as the minority whip in the next session. Mr Lott will be second-in-command to Senator Mitch McConnell, who replaced Bill Frist as minority leader in the Senate. See article
Work began on a memorial to Martin Luther King on Washington, DC‘s National Mall. King’s will be the first memorial there to someone who was neither a president nor a war hero, and the first to a black American. Work is due to finish in 2008.
Leaders of Mexico’s main opposition, the Party of the Democratic Revolution (PRD), called on their legislators to disrupt the inauguration of the new president, Felipe Calderón, on December 1st. The PRD‘s candidate, Andrés Manuel López Obrador, who narrowly lost the presidential election in July, named a “shadow government” and plans to proclaim himself the “legitimate” president on November 20th. See article
Argentina’s President Néstor Kirchner sacked his housing secretary, Luis D’Elía, after he criticised a warrant issued against nine former Iranian officials for helping to plan the bombing of a Jewish community centre in Buenos Aires in 1994. Mr D’Elía is a sympathiser of Hugo Chávez, Venezuela‘s pro-Iranian president, and a leader of an unemployed workers’ movement. See article
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In Iraq 11 people were killed at a Baghdad market; more than 35 were killed in American raids; and 20 bound bodies were found in the cities of Mosul and Baquba. Kidnappers, apparently from the interior ministry, abducted dozens of men after storming the education ministry in Baghdad; most were released later the same day.
Mahmoud Ahmadinejad, the president of Iran, said that the world now accepted that his country would master the nuclear-fuel cycle. But after a meeting with George Bush, Israel’s prime minister, Ehud Olmert, said that Israel could not accept a nuclear-armed Iran, and that he and Mr Bush had “complete understanding” over their approach. See article
Hamas and Fatah were reported to have agreed on Muhammad Shubair, an academic from Gaza who is close to Hamas but not a party member, as new prime minister of the Palestinian Authority. But Hamas continues to vow that it will not recognise Israel. Meanwhile, one Israeli was killed and others injured by a series of rockets fired into Israel from Gaza. See article
South Africa‘s Parliament voted to legalise same-sex marriages, the first African country to do so. The ruling African National Congress party ordered all its MPs to vote for the bill to bring the law into line with the country’s constitution, despite opposition from churchmen and traditional leaders.
With all the votes counted, the incumbent president, Joseph Kabila, was declared the winner of Congo‘s presidential run-off election against Jean-Pierre Bemba. But Mr Bemba’s supporters have alleged widespread fraud and the result is likely to be contested in the Supreme Court and on the streets, where the two candidates’ private armies have been exchanging gunfire. See article
Severe flooding in eastern Kenya has killed at least 21 people and made a further 60,000 or so homeless.
The European Parliament approved a law, much delayed and watered down, boosting cross-border competition in services from 2010. Supporters say it could create 600,000 new jobs.
In return for diplomatic help against Iran, America is backing Russia‘s entry bid to the World Trade Organisation. That removes one of the last big obstacles to Russia‘s membership, although Georgia and Moldova, both of which are suffering Russian sanctions, have yet to confirm their agreement.
Less than two weeks before a planned Russia-EU summit, Poland vetoed the start of talks covering energy, trade and human rights. It wants the Kremlin to lift a ban on Polish food imports and ratify an earlier treaty liberalising Russia‘s energy market.
The Center for Constitutional Rights, an American pressure group, has asked Germany to sue the former defence secretary, Donald Rumsfeld, over alleged prisoner abuse in Iraq and Guantánamo Bay. See article
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Senior diplomats from India and Pakistan resumed talks, broken off after India accused Pakistan‘s intelligence forces of involvement in bomb blasts in July that killed almost 200 people in Mumbai. They put a little flesh on skeletal proposals for a “joint mechanism” to combat terrorism and build trust.
On the eve of George Bush’s departure on his trip that will take in the ASEAN summit in Hanoi at the weekend, America’s State Department removed Vietnam from a list of countries accused of suppressing religious freedom. But Congress failed to approve a proposal that the two countries normalise trade relations.
After shutting down Bangladesh for four days in protest at the alleged bias of the authorities due to oversee elections in January, the opposition called off its national strike, at least until November 20th. See article
In the latest twist in Taiwan‘s continuing corruption scandals, prosecutors interviewed Ma Ying-jeou, the mayor of Taipei and likely future presidential candidate for the opposition Kuomintang, over allegations that he had misappropriated funds. Mr Ma denied any wrongdoing.
Business this week: 11th – 17th November 2006
US Airways offered to buy its bankrupt rival Delta for $8.7 billion, in a hostile bid analysts hailed as proof that the outlook for America’s struggling airlines was improving. The deal would create America’s biggest carrier, and might prompt other mergers. See article
The boss of Deutsche Telekom, Kai-Uwe Ricke, resigned after shareholders complained about falling profits. The head of the firm’s mobile unit, René Obermann, will succeed him. But strict German labour laws will make it difficult for Mr Obermann to pare costs by cutting jobs. See article
Benetton’s chief executive, Silvano Cassano, also quit abruptly. He had rowed with the Benetton family, which owns a controlling stake in the firm, over the fashion retailer’s plans to expand internationally. The chief financial officer resigned at the same time. Benetton’s shares fell by almost 9% on the news.
The job of Arun Sarin, the embattled boss of Vodafone, appeared secure, however, after the mobile-phone operator’s results proved better than expected. Earnings for the six months to October reached £6.2 billion ($11.5 billion). The firm projected revenue growth for the full year of 6%.
Sony launched a new games console, the PlayStation 3, which it hopes will revive its fortunes after a year of embarrassing scandals and expensive technical faults. But because of further glitches, the firm could supply Japanese retailers with only 93,000 units, which sold out within hours. See article
In the latest proof of Gazprom’s growing clout, ENI, an Italian energy firm, agreed to cede 3% of Italy‘s retail gas market to the Russian state-controlled giant. In return, Gazprom will extend contracts to sell gas to ENI, its largest foreign customer, until 2035. The pair also agreed to look for and develop new fields together in Russia and Africa.
General Electric and Hitachi agreed to set up joint ventures in America and Japan to vie for contracts to build nuclear power plants. Their main rivals in the industry have already forged similar alliances.
The price of copper and other metals dropped as inventories rose. That led to a fall in the shares of mining firms and a slide in the currencies of countries that export lots of minerals, including Australia, Canada and South Africa. See article
Anglo American, a mining conglomerate with big assets in South Africa, said it would invest $4 billion in coal mining and processing in China. Earlier, Larry Yung, a Chinese tycoon, had spent $800m on a 1.1% stake in the firm, in the latest example of Chinese investment in natural resources in Africa.
Deutsche Börse, which runs Frankfurt‘s stockmarket, dropped its bid to buy Euronext, an operator of exchanges in London, Paris, Brussels, Amsterdam and Lisbon. The decision clears the way for a rival offer from the New York Stock Exchange, and leaves Deutsche Börse searching for another partner. See article
Meanwhile, a consortium of big investment banks unveiled their plans for a new share-trading platform that would compete with European stock exchanges. Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill Lynch, Morgan Stanley and UBS will all own shares in the new venture.
Russia reached a deal with America on joining the World Trade Organisation, a big boost to its 13-year-old campaign for accession. The two countries plan to sign an agreement on November 19th in Vietnam, which is about to become the WTO‘s 150th member. No sooner had Vietnam‘s WTO membership been formally approved last week than Intel, a computer-chip maker, announced that it would raise its investments in the country by $700m.
Marshall Wace, a British-based hedge-fund manager, plans to raise as much as €1.5 billion ($1.9 billion) on the Euronext stock exchange for a new fund. If successful, MW Tops may be the largest such listing. Traditionally, investors have been able to buy stakes only in funds-of-funds, not individual ones, through the stockmarket. See article
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The economy of the euro area grew by a sluggish 0.5% in the third quarter compared with the previous one, according to preliminary estimates. Economists had predicted a better performance, but stagnation in France, lacklustre growth in Italy and a slowdown in Germany all weighed on the numbers. Japan‘s GDP also expanded by 0.5% in the third quarter compared with the previous one, but that was higher than most economists had forecast. Compared with the same period last year, the economy grew by 2.7%. See article
Web 2.0 Malaise; Election Fallout; Brit Splits
The Web 2.0 Summit opens against a backdrop of Web 2.0 funding doubling over the previous year to $455.5 million. Hype is also soaring; witness the breathless piece on Web 2.0 in the San Francisco Chronicle‘s pre-conference coverage, (colorful commentary via Valleywag) followed by a Top 10 Lies of Web 2.0, including “We learned our lesson last time.”
See Read/Write Web and TechCrunch for a whole bunch more logos-er, start-ups-who presented at the Summit’s LaunchPad, including Adify (virtual ad networks), Stikkit (digital sticky notes) and Klostu (single sign-on for message boards). VentureBeat gravitates toward useful products like Omnify, which saves data from multiple sources to a single place. One thing that did get attendees jazzed was the interview with Google’s Eric Schmidt in which he denied the YouTube legal fund rumors.
Still, few bloggers seem excited about the 13 LaunchPad presenters, and Monkey Bites thinks only one in three companies at the Summit were even Web 2.0. Om Malik complains of Web 2.0 fatigue, citing excess spin from companies desperate for some Web 2.0 fairy dust-but Deep Jive Interests shoots back that Om purveys some of that same spin. Silicon Valley Watcher wonders where all the Web 2.0 users are-not registered users, but user communities.
Even if the Web 2.0 Summit kick-off seemed anemic, the blogosphere added a healthy 100,000 blogs per day during the third quarter of 2006, according to Technorati’s State of the Blogosphere report (via Technorati Weblog). And
vlogger creativity was on display at the Vloggie videoblog awards, with Alive in Baghdad taking Best Vlog and Best Political Vlog for its Iraq coverage.
The Web giants were also busy this week: MySpace is expanding into Japan, where it would go head-to-head with Mixi (via Mr. Wave Theory). Meanwhile, Microsoft announces it’s turning its Xbox360 into an HDTV and movie machine (via jkOnTheRun). Unfortunately, Kotaku blogs, the content will include items like Batman Forever and Pimp My Ride.
In politics, election night started out strangely enough what with Dan Rather appearing with Jon Stewart and Stephen Colbert on Comedy Central. But reality soon trumped comedy as a huge freshman class of Democrats won election to the House (via Eschaton). RCP Blog‘s gallery of big-newspaper front pages says it all. The hunt for reasons the Republicans lost started immediately: their role in runaway federal spending, blogs Instapundit. A failure to deal with illegal immigration, writes Radio Equalizer from the Republicans’ No-Sulk Zone. A failure to stop
looting in both Iraq and the U.S., blogs Huffington Post. Or maybe just a habit of taking up big issues and doing nothing with them, muses Hugh Hewitt. Expect a lame-duck Congress that tries passing a lot of bills, and (gulp) Nancy Pelosi as Speaker, blogs The Agonist.
There was another electoral casualty as President Bush announced Donald Rumsfeld’s resignation as Defense Secretary, with former CIA director Robert Gates to take his place (via Yahoo News). Gates was offered the job Sunday while Bush was in Crawford, Texas, having previously turned down the director of national intelligence spot, blogs Confederate Yankee. So much for the Joe-Lieberman-becomes-SecDef rumors, chuckles Daniel Drezner. Too bad Bush didn’t cut Rumsfeld before the election, blogs Blackfive-it would have shown those 
who voted against staying the course that he was making important changes. Maybe Rumsfeld just couldn’t face the idea of endless grillings before Democrat-controlled panels, blogs Tom Watson. On Deadline wraps up some of the early analyses.
Finally in entertainment, Gawker hails the end of our long national nightmare as Britney Spears files to divorce Kevin Federline (call him Fed-Ex) and asks for full custody of their offspring. Time to start looking for the next ill-advised marriage, snarks Defamer, but Popsugar loves Britney’s ironclad prenup while PerezHilton.com provides the ugly blow-by-blow of Mr. and Mrs. Spears’ last bitter days. Phew.
Politics this week: 4th – 10th November 2006
The Democrats did better than expected in America’s mid-term elections. They handily won the House of Representatives, ousting the Republicans who have controlled the chamber since 1995 and positioning Nancy Pelosi as the first female speaker, and seemed to have secured the Senate by a narrow margin. See article
With the issue of Iraq prominent in the elections, a prominent casualty of the Republican rout was Donald Rumsfeld, who resigned as defence secretary. Earlier, the Army Times, the voice of America’s troops, had called for him to go. George Bush nominated Robert Gates, a former head of the CIA, as his new defence chief. See article
Democrats also did well in the various governors’ races, giving them control of the majority of governorships for the first time in 12 years. Colorado and Ohio, seen as bellwether states in the 2008 presidential race, were among the states they picked up. They also won Massachusetts, making Deval Patrick the second black man to be elected to a governor’s office. There was consolation for the Republicans in California, where Arnold Schwarzenegger romped to victory, and Florida, where Charlie Crist won, but only after he embarrassed George Bush by ducking out of a campaign rally with him. See article
Plenty of state initiatives were on the ballot. South Dakota‘s voters rejected stringent restrictions on abortion that had been passed by the legislature and which anti-abortion advocates were hoping would provide a test case in the Supreme Court. Arizona passed a raft of measures targeting illegal immigrants, such as making English the state’s official language, but produced a surprise by becoming the first state to reject a constitutional ban on gay marriage. Measures banning same-sex nuptials were passed elsewhere. See article
Political parties and Maoist rebels in Nepal reached a peace agreement. The Maoists will submit to United Nations supervision of their fighters and weapons, and will join an interim government. See article
Thailand‘s authorities, seeking to pacify its troubled Muslim-majority south, freed 92 southerners detained over the 2004 Tak Bai protest, in which the police and army killed more than 80 Muslims.
A suicide bomber killed more than 40 soldiers at an army training camp in north-west Pakistan. The army blamed the attack on militants taking revenge for the bombing of an Islamic college in a nearby tribal area on October 30th, which killed 80.
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Protesters took to the streets of Taiwan‘s capital to demand the resignation of the president, Chen Shui-bian, after prosecutors said they had evidence of corruption by both himself and his wife. He denied the charges and stayed put, with the support of his party. See article
In eastern Sri Lanka, at least 45 civilians were killed when army shells hit a camp sheltering people displaced by the war with Tamil Tiger rebels.
Daniel Ortega, the leader of Nicaragua‘s Sandinistas, won a presidential election. With 91% of the vote counted, he had 38%, a nine-point lead over his nearest rival, Eduardo Montealegre, who was backed by the United States. Mr Ortega was Nicaragua‘s president during the Sandinista revolution from 1979-90. See article
In Mexico, bombs damaged the Federal Elections Tribunal, a Canadian bank and the offices of the formerly ruling Institutional Revolutionary Party (PRI) in the capital. A small leftist group said it placed the devices to support a five-month uprising against the PRI governor of the southern state of Oaxaca.
Cuba‘s foreign minister said he did not want to ���speculate��� about whether Fidel Castro, the country’s ailing president, would be well enough to attend an official celebration of his 80th birthday next month. In July Mr Castro was operated on for ���intestinal bleeding���. He is widely thought to be suffering from cancer.
The European Commission published its annual report on Turkey and other candidates for membership of the European Union. The report was highly critical of Turkey‘s progress, though it stopped short of recommending a suspension of the membership talks. An EU summit in December will now consider that option. See article
An attempt to end the British opt-out from the EU‘s maximum working-time rules failed. But several countries may now be taken to court for not counting doctors’ on-call time against the limits.
In an unexpected development after last week’s election, the Spanish region of Catalonia is to have a new government made up of three left-wing parties, led by the Socialists. That consigns the centre-right nationalist party which won the largest share of the vote to opposition.
The three candidates for the Socialist Party’s nomination in France’s presidential election held a final televised debate. The frontrunner, S��gol��ne Royal, is clinging to her lead, though it has shrunk and some doubt whether she will win on the first round. See article
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Saddam Hussein was sentenced to death for ordering the killing of 148 people in the mainly Shia town of Dujail in 1982. He then appeared in court again, on trial for the slaughter of more than 100,000 Kurds during the Anfal campaign in 1987 and 1988. See article
Iraq prepared a law to allow former members (excluding the most senior) of Saddam’s Baath Party to return to the public-service jobs they were ousted from in 2003. Separately, Iraq‘s interior ministry charged 57 employees with torturing prisoners at a detention centre in Baghdad.
Hours after the Israeli army ended its six-day occupation of Beit Hanoun in Gaza, its artillery bombarded the town, killing���by accident, it said���at least 19 Palestinians.
Talks on forming a Palestine national unity government were resumed but got off to a slow start. Hamas, which runs the Palestinian Authority, proposed an alternative to the current prime minister, Ismail Haniyeh. Its opponents did not accept him. See article
Chad accused Sudan of ���exporting the genocide��� from its Darfur region over the border. Chad’s army has been engaged in fierce fighting with rebel forces which it says are backed by Sudan.
Business this week: 4th – 10th November 2006
Private-equity firms came under scrutiny on both sides of the Atlantic. It emerged that America’s Justice Department has expanded its informal inquiry into possible antitrust practices among firms that join together in giant “club” buy-outs. And Britain’s Financial Services Authority published a detailed paper on private equity that highlights possible dangers. It says private-equity firms appear to pose fewer risks than hedge funds, and are unlikely to threaten the broader economic system. See article
Meanwhile, the rush of private-equity deals continued. Linde, which specialises in industrial chemicals, sold its forklift truck business for euro4 billion ($5 billion) in Germany‘s biggest-ever leveraged buy-out. And the parent of the Outback Restaurant chain, based in Tampa, was picked up for $3.2 billion. Vivendi, a French media group, revealed it had rejected an “expression of interest” from Kohlberg Kravis Roberts, reportedly worth up to $50 billion.
Four Seasons Hotels received a $3.7 billion buy-out proposal from Isadore Sharp, its chief executive and founder. As in other recent bids from management to take companies private, concerns were raised about a potential conflict of interest in the sale. Mr Sharp stands to gain $288m from the deal and indicated he would not welcome rival offers.
FedEx cancelled its order for ten cargo-carrying versions of Airbus’s A380 and placed an order with Boeing instead. It was the first customer to cancel a contract for the super-jumbo. The logistics and freight company said delays to the troubled project were hindering its expansion plans. Meanwhile, EADS, Airbus’s parent company, reported a net loss of euro195m ($250m) for the third quarter on the back of the production woes. See article
In a surprise announcement, Bernd Pischetsrieder said he was stepping down as Volkswagen’s chief executive, a decision viewed as a victory for the carmaker’s chairman, Ferdinand Piëch, with whom Mr Pischetsrieder has had a rocky relationship over VW‘s restructuring plans. See article
Toyota issued a forecast showing it was on track to make an operating profit of ¥2.2 trillion ($18.7 billion) for this fiscal year, which would be the biggest profit ever for a Japanese company. The carmaker also unveiled a partnership with Isuzu, a truck- and engine-maker, to develop Toyota’s range of fuel-efficient cars.
General Motors also said it was expanding its manufacturing of energy-efficient cars—in China. From 2008 GM will make petrol-and-electric hybrid cars in the country, which is a bright spot in an otherwise bleak sales landscape for the company. Separately, GM said its third- quarter loss, which it reported two weeks ago as being $115m, was actually $91m.
In a decision that some analysts said was inevitable, Lakshmi Mittal was appointed chief executive of the newly merged Arcelor Mittal, the world’s biggest steelmaker. Mr Mittal fought a protracted battle to combine Mittal Steel with Arcelor that annoyed some politicians in Europe, where Arcelor is based. In order to secure the deal, he had agreed to take a non-executive position.
Abbott Laboratories agreed to buy Kos Pharmaceuticals for $3.7 billion. The deal gives Abbott, based in Illinois, greater access to the growing market for pharmaceuticals that boost “good” cholesterol (or high-density lipoprotein), and thus help fight heart disease.
Eli Broad, a billionaire philanthropist, and Ronald Burkle, a supermarket mogul, both based in Los Angeles, submitted a joint bid to buy the Tribune media group, which includes the troubled Los Angeles Times among its assets. Earlier, the newspaper’s editor resigned after refusing to implement job cuts demanded by the paper’s owners. Several private-equity firms launched bids for Tribune last month.
Vietnam gained the formal approval of the World Trade Organisation to become its 150th member. The process for negotiations with Vietnam began in January 1995, some one-and-a-half years after Russia‘s started. Russia is still waiting to join.
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China’s trade surplus rose to a record $23.8 billion in October on the back of strong demand for its exports ahead of the Christmas shopping season. With its foreign-currency reserves also reported to have passed $1 trillion, the largest amount held by any country, analysts predicted more souring in trade relations between China and America and the European Union. Some wondered whether, with the Democrats in the ascendant, stiff tariffs on Chinese goods would now be back on the agenda in Washington.
Ballot questions across the US
Here are the results of 51 key ballot questions being decided across the United States on Nov. 7, 2006. Winners declared by the Associated Press are denoted by a check mark (
); (i) denotes an incumbent.
Other results: 
President US Senate US House Massachusetts
Copyright 2006, Boston.com and the Associated Press. All rights reserved.
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