The world this week: Business 12th

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=09Thursday?May?17th?2001
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[IMAGE][IMAGE]=09[IMAGE]=09[IMAGE]=09[IMAGE]=09Business this week
=09=09=09=09May 17th 2001
=09=09=09=09From The Economist print edition =20
=09=09=09=09
=09=09=09=09
=09=09=09=09Going down
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09[IMAGE]
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09As expected, America=01,s Federal Reserve cut interest rates by=
half a=20
percentage point to 4%, the fifth cut this year, taking the rate to its=20
lowest level for seven years. The Fed is continuing to respond assertively =
to=20
more evidence of the American economy=01,s slide. Industrial production was=
down=20
by 0.3% in April compared with March, more than predicted. The consumer-pri=
ce=20
index rose unexpectedly slowly, by 0.3% in April and 3.3% year-on-year.
=09=09=09=09
=09=09=09=09See article: The Fed=01,s interest-rate cutE+
=09=09=09=09
=09=09=09=09The Dow Jones industrial average closed above 11,000 for the fi=
rst time since=20
September, after the Fed=01,s latest interest-rate cut.
=09=09=09=09
=09=09=09=09After Turkey=01,s parliament agreed to sell off the state telec=
oms company and=20
reform the banking system, the IMF approved an $8 billion stand-by credit.=
=20
=09=09=09=09
=09=09=09=09Inflation in the euro area rose to 2.9% in the year to April. T=
he news was=20
released less than a week after the European Central Bank had surprised=20
markets with a quarter-point cut in interest rates.
=09=09=09=09
=09=09=09=09Hit by weaker exports to the United States, Mexico=01,s economy=
slowed sharply=20
in the first three months of this year, according to figures that were=20
released this week. The government of Vicente Fox has responded to the=20
slowdown with budget cuts.
=09=09=09=09
=09=09=09=09See article: Problems begin for President Vicente Fox of Mexico
=09=09=09=09
=09=09=09=09President Hugo Chavez of Venezuela denied reports that he was p=
lanning=20
currency controls, but said he might seek emergency legislative powers.=20
=09=09=09=09
=09=09=09=09See article: Is Venezuela=01,s Chavez turning left?E+
=09=09=09=09
=09=09=09=09In the markets
=09=09=09=09
=09=09=09=09The London Stock Exchange took a nose dive, with the FTSE 100 f=
alling by=20
2.2%, at the end of trading on May 14th, and then largely recovered the nex=
t=20
day. The reason for the volatility: an extra zero accidentally added to a=
=20
o30m ($43m) sell order at an investment bank, thought to be Lehman Brothers=
.=20
An investigation is taking place.
=09=09=09=09
=09=09=09=09See article: A trading cockup sends London=01,s marketE+
=09=09=09=09
=09=09=09=09Scrutiny of the dodgy dealings in the bull market carries on. A=
merica=01,s=20
Securities and Exchange Commission charged Sunbeam, an appliance maker, and=
=20
its auditor, Arthur Andersen, with rigging financial reports to beef up sal=
es=20
figures. Another case alleged insider dealing by a prominent Mexican family=
.=20
Inquiries continued into Wall Street practices in the market for initial=20
public offerings.
=09=09=09=09
=09=09=09=09See article: A spate of investigations on Wall Street E+
=09=09=09=09
=09=09=09=09Andr, Lussi, chief executive of Clearstream, a large European c=
learing bank,=20
temporarily stepped aside to deal with legal inquiries. His departure=20
prompted speculation about a possible rationalisation of Europe=01,s pletho=
ra of=20
clearing and settlement agencies.
=09=09=09=09
=09=09=09=09See article: Troubles at a European clearing organisationE+
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09[IMAGE]
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09The rich are getting richer, according to a report from Cap Gem=
ini Ernst &=20
Young and Merrill Lynch. The wealth of dollar millionaires=01*those with ov=
er=20
$1m to invest=01*rose by 6% to $27 trillion in 2000 despite crumbling=20
stockmarkets around the world. The number of millionaires grew by 2.9% to=
=20
7.2m, but 80,000 =01&minute millionaires=018 appeared and then disappeared =
with the=20
dotcom boom and bust.
=09=09=09=09
=09=09=09=09Dial M for merger
=09=09=09=09
=09=09=09=09Telenor, Norway=01,s state-controlled telecoms company, said it=
was in talks on=20
a merger with Tele Danmark through the acquisition of 42% of the company=20
owned by America=01,s SBC Communications. Danish law would require Telenor =
to=20
buy the rest of the Danish company, which would create a Nordic telecoms=20
giant worth some euro18 billion ($16 billion).
=09=09=09=09
=09=09=09=09AT&T and BT again raised the possibility of integrating their=
=20
business-telecoms services as part of a restructuring at both firms. But BT=
=20
has not ruled out selling its stake in Concert, the pair=01,s business-tele=
coms=20
joint-venture, as a better solution to its debt problems.
=09=09=09=09
=09=09=09=09BT=01,s intention to be the first to launch a third-generation =
mobile telephone=20
service, albeit on the Isle of Man, suffered a blow. Technical problems wit=
h=20
handsets will keep tech-savvy Manx residents from the mobile Internet for=
=20
another three months. NTT DoCoMo ran into similar problems and recently=20
announced the delay of its service on a slightly bigger island: Japan.=20
=09=09=09=09
=09=09=09=09Cable & Wireless, a previously dormant British telecoms company=
, made inroads=20
into its o6 billion ($8.6 billion) mountain of cash. It bought Digital=20
Island, a struggling American Internet company, for $340m and promised to=
=20
inject up to $700m more as part of a strategy to become a leading=20
Internet-services firm.=20
=09=09=09=09
=09=09=09=09Sony, a Japanese electronics giant, gained allies to play along=
side with=20
against rivals, Nintendo and Microsoft, which is soon to launch its Xbox=20
gaming system. The creators of the PlayStation 2 unveiled several alliances=
=20
including ones with America Online, to provide Internet services through it=
s=20
console and RealNetworks, a streaming media firm.
=09=09=09=09
=09=09=09=09See article: Video-game warsE+
=09=09=09=09
=09=09=09=09Gun culture
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09[IMAGE]
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09Tomkins, a British conglomerate hit last year by accusations of=
corporate=20
excess, is to get shot of Smith & Wesson, an American handgun maker, to=20
Saf-T-Hammer, an American gun-parts company, for $15m. Tomkins paid around=
=20
$112m for the gun maker but will sell a firm suffering from falling sales a=
nd=20
with contingent liabilities. Smith & Wesson=01,s .44 magnum starred in seve=
ral=20
films with Clint Eastwood.
=09=09=09=09
=09=09=09=09Bertelsmann, a German publishing giant, accepted that Amazon ha=
d won Europe=01,s=20
online bookselling battle. It announced that BOL, its attempt to compete wi=
th=20
the American e-tailer on Bertelsmann=01,s side of the Atlantic, would be fo=
lded=20
into its book club rather than go public.
=09=09=09=09
=09=09=09=09Despite months of gloom among the world=01,s car makers, Japan=
=01,s Toyota unveiled=20
record profits and sales for the year to March 31st.
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
=09=09=09=09
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