Archive for August, 2007

Politics this week: 11th – 17th August 2007

August 18, 2007 Leave a comment

Politics this week

Aug 16th 2007
From The Economist print edition


In Iraq at least 250 people were killed and hundreds more injured in a co-ordinated four-bomb attack on the Yazidi community in the north-west of the country. It was the single deadliest insurgent strike in more than four years of war. The American army blamed al-Qaeda for the bombings. Meanwhile the prime minister, Nuri al-Maliki, held a series of meetings with the main Sunni, Shia and Kurdish party blocks in an effort to break the political deadlock in the country. See article

Binyamin Netanyahu, Israel’s former prime minister, comfortably retained the leadership of his centre-right Likud party in a primary election. Moshe Feiglin, a once-marginal figure from the extreme right, garnered 23%, stoking fears in the Likud mainstream about the party’s future.

America confirmed that it was considering designating Iran’s Revolutionary Guards as a terrorist organisation. The force is a political and commercial as well as military power in Iran. The move might make it vulnerable to international sanctions.

Sierra Leone went to the polls to elect a new president. Observers declared the election, the second since the end of the country’s civil war in 2002, to be free and fair.

A home-made bomb exploded on a railway line in Russia, derailing the Moscow-St Petersburg express and injuring scores of passengers. Russia has had a recent lull in terrorist attacks. The police are looking for two suspects.

Turkey’s ruling Justice and Development (AK) Party nominated Abdullah Gul, the foreign minister, to the presidency. It was the fiercely secular army’s objections to the previous nomination of Mr Gul that led to the recent election, which AK won handsomely. See article

Poland is likely to have an early election after its government fell apart. The prime minister, Jaroslaw Kaczynski, sacked all four ministers from his two junior coalition partners. Mr Kaczynski’s party, Law and Justice, is trailing its right-wing rival, Civic Platform, in the opinion polls. See article

Six Italians thought to be linked to a feud within the Calabrian ‘Ndrangheta organised-crime group were shot dead in the centre of Duisburg, Germany. See article


India celebrated 60 years of independence from Britain with Manmohan Singh, the prime minister, promising that ���the best is yet to come���. Meanwhile, Pakistan marked the 60th anniversary since its bloody partition from India, unsure how its president, General Pervez Musharraf, would overcome his declining fortunes. America has dissuaded him, for now, from declaring a state of emergency. See article

Severe flooding is thought to have left 300,000 North Koreans without homes and ruined a tenth of all farmland in what is already an economic basket case. International agencies are eager to help, but find it hard to operate in the world’s most repressive state. A decade ago, famine killed up to 2m people, and many in North Korea are malnourished today. See article

A court in Taiwan cleared Ma Ying-jeou, the opposition Kuomintang’s candidate for presidential elections next March, of charges of corruption while he was mayor of Taipei, boosting his chances of succeeding Chen Shui-bian. The ruling party’s contender, Frank Hsieh, faces similar allegations of corruption.

Myanmar’s military junta doubled the price of petrol and diesel, sending cars and buses off the road. The Burmese are already suffering from economic mismanagement and from Western embargoes imposed in protest against the detention of the democratic opposition leader, Aung San Suu Kyi.

Venezuela’s president, Hugo Ch��vez, announced proposals to change his country’s constitution, which dates from the early years of his rule. They include the abolition of term limits to allow indefinite re-election of the president. Mr Ch��vez said the changes were necessary to make Venezuela a socialist country. See article

Hundreds of people were reported to have died in Peru when a powerful earthquake hit Ica, a prosperous farming area 265km (165 miles) south of Lima.

Cuba’s government released two political prisoners, including Francisco Chaviano, who was arrested in 1994 for allegedly revealing state secrets while researching rafters who disappeared or died while trying to flee the island.

Canada’s prime minister, Stephen Harper, reshuffled his cabinet. He removed Gordon O’Connor, the defence minister, who had clashed with the army commander, replacing him with Peter MacKay, who had been foreign minister.

Karl Rove announced his departure from the White House. George Bush‘s closest political adviser, credited with being ���The Architect��� of a string of Republican election victories, has received some of the blame for the party’s current political woes. The Democrats rejoiced, but said they still wanted Mr Rove to testify in Congress about the sacking of nine federal prosecutors. See article

Mitt Romney won the Republicans’ Iowa straw poll, viewed as a measure of organisational strength in the state ahead of their caucus, the first hurdle in the presidential election cycle. Mr Romney took almost 32% of the vote, but the three other leading candidates did not take part and dismissed the result as meaningless. Tommy Thompson dropped out of the race. See article

Meanwhile, Iowa’s governor indicated that the preferred date for the state’s caucus would remain sometime in early January, and not December as mooted by some. He was responding to the decision by Republicans in South Carolina to change the date of their primary to January 19th.


Mr Bush held an informal lunch for Nicolas Sarkozy at the Bush summer home in Kennebunkport, Maine. The meeting of the American and French presidents, over a menu of hot dogs and blueberry pie, was intended to mark a break with the strained relationship that developed between Mr Bush and Mr Sarkozy’s predecessor, Jacques Chirac. Asked by a journalist if he thought Mr Sarkozy would bring cheese to the meal, Mr Bush replied, ���I think he’s bringing goodwill.���

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Business this week: 11th – 17th August 2007

August 18, 2007 Leave a comment

Highlights from this week’s edition of The Economist
Risk and the new financial order | Karl Rove quits | China’s toxic toymaker | Latin America’s new middle class | The scramble for the Arctic | Asia’s skills shortage | Italy’s sunglass firms conquer all | Yet more difficulties modelling the climate | A second-rate espionage agency | Jean-Marie Lustiger, Cardinal-Archbishop of Paris

Business this week

Aug 16th 2007
From The Economist print edition

Financial markets around the world endured another tumultuous week as nervousness spread about the full extent of the credit squeeze. Several central banks, led by the European Central Bank, intervened to shore up liquidity by providing short-term cash infusions. In an effort to calm investors, Jean-Claude Trichet, the ECB‘s president, put out a statement declaring that the money markets were returning “progressively back to normal”. But in his first public comments on the situation, Hank Paulson, America’s treasury secretary, said he believed the turmoil would slow growth in America, without causing a recession. See article

Stockmarkets in America, Europe and Asia continued to plunge. Investors took fright at an analyst’s report that suggested Countrywide Financial, America’s biggest mortgage lender, might seek bankruptcy protection. Several banks, including UBS, Europe’s biggest, said their profits would suffer if the present conditions persisted. See article

Goldman Sachs said it and other investors would inject $3 billion into one of Goldman’s quantitative funds that had “suffered significantly” in the market. The firm said it was not rescuing the fund and described the move as an investment. Nevertheless, the news underscored the recent problems encountered by various “quant funds”, which trade on the basis of mathematical models. See article

Iceland’s Kaupthing Bank agreed to buy NIBC, a Dutch merchant bank, for euro3 billion ($4 billion). NIBC is one of a number of banks that has reported losses stemming from mortgage defaults in America’s housing market. As part of the takeover deal, Kaupthing will avoid that portfolio of debt, leaving it in the hands of NIBC‘s present owners, a consortium led by J.C. Flowers, a private-equity firm.

Blackstone Group reported that its second-quarter net profit was almost $775m when it released its first earnings statement since making its stockmarket debut in June. The private-equity firm also predicted that the rate of multi-billion dollar buy-out deals would slow in light of the credit markets’ difficulties, a situation which, it said, also offered an opportunity to buy debt securities at a discount.

America’s two biggest retailers, Wal-Mart and Home Depot, lowered their profit forecasts for the year, citing the sluggish housing market.

Quarterly net income at Macy’s, a department store chain that includes the Bloomingdale’s brand, slumped by 77%, compared with a year earlier, to $74m. The company (which recently changed its name from Federated Department Stores) acquired May Department Stores in 2005 for $11 billion, but sales have been tepid.

Mattel‘s share price fell after it issued a second global recall for some of its toys in as many weeks. This time the company recalled 436,000 toy cars because of “impermissible levels of lead” and up to 18.2m toys containing small magnet pieces that were “potential safety risks”. The products were made in China. See article

Nokia said that 100 reported incidents of overheating mobile-phone batteries had prompted it to offer replacements to customers. Nokia identified a dodgy batch of 46m batteries supplied by a Japanese firm (but made in China). Last year Sony had to replace 9.6m laptop batteries because of fears they could overheat.

China’s inflation rate jumped to 5.6% in July, year-on-year, up from 4.4% in June and its highest level for more than ten years. Rising food prices were to blame; the central bank expressed concern.

Two months after a deal was first proposed, Britain’s Imperial Chemical Industries agreed to an £8 billion ($16.2 billion) takeover from Akzo Nobel, its Dutch rival. To help secure the transaction, Akzo teamed up with Henkel, a German consumer-goods group, to which it will sell ICI‘s adhesives business (glue products, which include Loctite and Pritt, account for 44% of Henkel‘s sales). However, the deal must still be approved by Akzo’s investors, some of which think Akzo is paying too much for ICI.

One bright spot amid another dismal week for the markets was the stockmarket flotation of VMware. The software and data-systems company saw its share price rise by 76% on its first day of trading, drawing comparisons with the successful IPO of another technology company, Google. See article

The rate of economic growth in the euro area slowed to 0.3% in the second quarter compared with the previous quarter, raising some doubts about whether the European Central Bank would soon raise interest rates.

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