ECONOMIST:WHEN Siemens, Europe’s biggest engineering firm, adopted the slogan “be inspired” in the mid-1990s, bribery was not what it had in mind. But no one can accuse its managers of lacking inspiration when it came to devising novel ways to funnel huge sums in backhanders to corrupt officials and politicians across the globe. On Monday December 15th Siemens pleaded guilty to charges of bribery and corruption and agreed to pay fines of $800m in America and €395m ($555m) in Germany, in addition to an earlier fine of €201m.
Take the three “cash desks” it set up in its offices, to which employees could bring empty suitcases to be filled with cash. As much as a €1m ($1.4m) could be withdrawn at a time to win contracts for its telecoms-equipment division, according to America’s Department of Justice (DoJ).
Few questions were asked, no documents were required and managers who applied for money were allowed to approve their own requests. Until 1999 Siemens openly claimed tax deductions for bribes, many of which were listed in its accounts as “useful expenditure”.
Thursday, December 18, 2008
Saturday, December 13, 2008
Iceland- Cracks in the crust ( lessons)
ECONOMIST: Iceland’s banking collapse is the biggest, relative to the size of an economy, that any country has ever suffered. There are lessons to be learnt beyond its shores.
From the central bank, the view of snow-dusted Mount Esja across the estuary is blocked by a half-finished grey edifice, sprawled like a dead whale across the harbour-front. This was to have been Iceland’s most spectacular building, crowning 15 years of economic growth: a concert hall facing out to the North Atlantic, covered in glass prisms imported from China meant to resemble glaciers and lava. But since the collapse of the bank that led the funding, construction has almost ground to a halt.
Likewise, blocks of half-built luxury flats stand half-finished along the waterfront. Instead of glass prisms, Icelanders are looking forward to a different Chinese cargo in the dying weeks of the year: fireworks. They set off more per person each new year than any other country in the world. Such is the demand that the Chinese manufacturers are making a special loan to Icelanders to buy them, according to a local newspaper.
Many workers have been laid off but, thanks to Iceland’s labour laws, they have three months’ notice, so the impact is not yet being fully felt. Many young Icelanders, who have never known unemployment, are expected to lose their jobs as businesses shut down. Vilhjalmur Egilsson, head of the Confederation of Icelandic Employers, the main business organisation, says that “corporate Iceland is technically bankrupt” because of its foreign debts. It is unable to refinance loans because the new capital controls mean all credit to the country has dried up.
With unemployment rising, citizens talk openly about defaulting on their home and car loans (those flashy Range Rovers are now known dryly as “Game Overs”).
From the central bank, the view of snow-dusted Mount Esja across the estuary is blocked by a half-finished grey edifice, sprawled like a dead whale across the harbour-front. This was to have been Iceland’s most spectacular building, crowning 15 years of economic growth: a concert hall facing out to the North Atlantic, covered in glass prisms imported from China meant to resemble glaciers and lava. But since the collapse of the bank that led the funding, construction has almost ground to a halt.
Likewise, blocks of half-built luxury flats stand half-finished along the waterfront. Instead of glass prisms, Icelanders are looking forward to a different Chinese cargo in the dying weeks of the year: fireworks. They set off more per person each new year than any other country in the world. Such is the demand that the Chinese manufacturers are making a special loan to Icelanders to buy them, according to a local newspaper.
Many workers have been laid off but, thanks to Iceland’s labour laws, they have three months’ notice, so the impact is not yet being fully felt. Many young Icelanders, who have never known unemployment, are expected to lose their jobs as businesses shut down. Vilhjalmur Egilsson, head of the Confederation of Icelandic Employers, the main business organisation, says that “corporate Iceland is technically bankrupt” because of its foreign debts. It is unable to refinance loans because the new capital controls mean all credit to the country has dried up.
With unemployment rising, citizens talk openly about defaulting on their home and car loans (those flashy Range Rovers are now known dryly as “Game Overs”).
Friday, December 12, 2008
BANGLADESH-ELECTIONS
ECONOMIST: NEARLY two years after the army stepped in to end the predatory rule of civilian politicians in Bangladesh, the most visible evidence of that corrupt era is strewn along the streets and dirt roads: unused electricity poles lying about in their thousands. The government of the former prime minister, Khaleda Zia, had bought the poles from a syndicate controlled by Mrs Zia’s elder son, Tarique Rahman. Yet the electricity generated during her rule from 2001-06 grew by not a single megawatt, even though the economy’s size increased by a quarter. Bangladeshis are, like the poles, still waiting for their electricity.
Under army-backed rule, each spent a year in detention on charges of corruption. Although these have not been dropped, Mrs Zia and Sheikh Hasina, along with their coteries, are in practice immune from prosecution. Western donors tacitly gave the soldiers two years to fix the mess in Bangladesh’s politics and bring the country back to the polls. In return for the interim government not pursuing charges, the parties have agreed to contest the election.
Under army-backed rule, each spent a year in detention on charges of corruption. Although these have not been dropped, Mrs Zia and Sheikh Hasina, along with their coteries, are in practice immune from prosecution. Western donors tacitly gave the soldiers two years to fix the mess in Bangladesh’s politics and bring the country back to the polls. In return for the interim government not pursuing charges, the parties have agreed to contest the election.
Near the end of the road
I DREAD looking at Wall Street tomorrow. It's not going to be a pleasant sight,” said Harry Reid, the Senate majority leader late on the night of Thursday December 11th after the collapse of an effort to keep General Motors and Chrysler on the road with an emergency package of loans worth around $14 billion. Ford, the third of the Big Three Detroit-based carmakers, is not looking for emergency loans, though it has asked for an emergency credit line. Ford says it can remain afloat though admits that its ability to do so is dependent on the continuing solvency of the other two firms. Their collapse could bring down the car-parts manufacturing industry on which Ford also depends.
Thursday, December 11, 2008
Oversized Clothes: Truly Passé
WSJ: QUESTION:I'm a guy who is six feet tall and weighs about 190 pounds. I always buy my tops and sweaters in size large, but now my girlfriend insists that I should go with a medium because the oversized look is out. What do you think?
ANSWER: Fellows, there's a reason why the 80%-off sale rack still has so many oversized clothes: They are truly passé. No matter how old you are, you should think trim -- though not necessarily tight -- for all your shirts, sweaters, jacket and pants. You will smile when you look in the mirror, because body-conscious clothes make you look thinner, taller and, yes, even younger.
When you're shopping for sweaters, remember sizes aren't standard, so take a couple of different sizes into the dressing room. Guys, stop thinking that "small" is for wimps. I have personally steered three six-foot guys into wool sweaters with an "S" on the label. These men were surprised to discover that the small sweaters were comfortably snug and the sleeves were long enough. (If the sleeves are just a tad short, you can push them up slightly on your arm, which looks better anyway.)
For dress shirts, check out the styles labeled "European fit" or "tapered" fit. Whenever you fall between shirt sizes, choose the larger garment and then have it altered for your silhouette.
Email askteri@wsj.com
ANSWER: Fellows, there's a reason why the 80%-off sale rack still has so many oversized clothes: They are truly passé. No matter how old you are, you should think trim -- though not necessarily tight -- for all your shirts, sweaters, jacket and pants. You will smile when you look in the mirror, because body-conscious clothes make you look thinner, taller and, yes, even younger.
When you're shopping for sweaters, remember sizes aren't standard, so take a couple of different sizes into the dressing room. Guys, stop thinking that "small" is for wimps. I have personally steered three six-foot guys into wool sweaters with an "S" on the label. These men were surprised to discover that the small sweaters were comfortably snug and the sleeves were long enough. (If the sleeves are just a tad short, you can push them up slightly on your arm, which looks better anyway.)
For dress shirts, check out the styles labeled "European fit" or "tapered" fit. Whenever you fall between shirt sizes, choose the larger garment and then have it altered for your silhouette.
Email askteri@wsj.com
House Passes Rescue Plan for Big 3
WASHINGTON -- Auto Makers Poised to Get $14 Billion in Loans, but Bill Will Be Tough Sell in Senate
The House of Representatives approved a wide-ranging rescue Wednesday of the nation's auto makers, sending the plan to the Senate where Republican critics could endanger the initiative.
Pulled down by a steep drop in sales, General Motors Corp., Chrysler LLC and Ford Motor Co. are seeking $34 billion in loans or lines of credit to weather the recession. Ford says it needs taxpayer-backed financing only for the long-term. GM and Chrysler say they need the cash before the end of the year to avoid collapse.
The legislation would authorize immediate release of $14 billion in emergency loans for the companies and open the door for approval of long-term financing if the companies can agree on plans to restructure.
The House of Representatives approved a wide-ranging rescue Wednesday of the nation's auto makers, sending the plan to the Senate where Republican critics could endanger the initiative.
Pulled down by a steep drop in sales, General Motors Corp., Chrysler LLC and Ford Motor Co. are seeking $34 billion in loans or lines of credit to weather the recession. Ford says it needs taxpayer-backed financing only for the long-term. GM and Chrysler say they need the cash before the end of the year to avoid collapse.
The legislation would authorize immediate release of $14 billion in emergency loans for the companies and open the door for approval of long-term financing if the companies can agree on plans to restructure.
Chinese trade - Falling Apart
Economist: JUST how worrying are the figures, published on Wednesday December 10th, showing that China’s exports and imports plunged in November? Exports fell by 2.2% last month from a year ago; imports plummeted by an astonishing 17.9%. One analyst sums up the news as “a shock figure”.
The gloom is spread all over the place. Exports dropped across all big traded goods and all parts of the world. Exports to America fell by 6.1%; those to the ASEAN countries, which had grown by 21.5% in October, fell by 2.4%. The faster decline in imports meant that China’s monthly trade surplus reached a record $40.1 billion. Exports last fell in 2001.
Chinese workers, who are already restive, may find the new year increasingly difficult. Labour disputes almost doubled in the first ten months of 2008 and sacked workers from closed toy factories rioted. If export growth ceases entirely, and jobs are threatened, social responses could be more severe. An estimated 130m people have moved from the countryside to the cities, many for jobs in factories that make goods for export. Zhang Ping, the country’s top planner, has given warning of the risk of social instability arising from massive unemployment.
The gloom is spread all over the place. Exports dropped across all big traded goods and all parts of the world. Exports to America fell by 6.1%; those to the ASEAN countries, which had grown by 21.5% in October, fell by 2.4%. The faster decline in imports meant that China’s monthly trade surplus reached a record $40.1 billion. Exports last fell in 2001.
Chinese workers, who are already restive, may find the new year increasingly difficult. Labour disputes almost doubled in the first ten months of 2008 and sacked workers from closed toy factories rioted. If export growth ceases entirely, and jobs are threatened, social responses could be more severe. An estimated 130m people have moved from the countryside to the cities, many for jobs in factories that make goods for export. Zhang Ping, the country’s top planner, has given warning of the risk of social instability arising from massive unemployment.
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