LyrArc Article Gist
In this editorial the Wall Street Journal says it supports the "sequester" or trigger of automatic cuts in 2013 if the Supercommittee in the U.S. Congress fails to reach agreement on budget cuts. Across the board budget cuts are not the best option, but says the Journal given that politicians have failed to come to agreement this is the best option available. This will generate $68 billion in savings in 2013. The Congressional Budget Office estimates cuts will be 7.8% for domestic programs, and defense will take a 10% cut. Medicare spending will fall by 2%, mostly payments to providers. To put this in perspective the Journal points out that total domestic discretionary spending doubled to $614 billion in 2010 from $298 billion in 2000, providing a higher starting point for cuts. It says some of the cuts in defense could be restored through a supplemental bill as planned by Sen. McCain.

LyrArc Article Gist
As Turkey's trade ties with the other countries in the Middle East and Asia increase there is less support for joining the European Union. In 2004 12.5% of Turkey's exports went to the Middle East, today this is up to 20%. This figure is expected to increase after the Arab Spring and new economic opportunities in the region, according to one business group leader. Turkey's exports to Europe in 2010 were about 56%. As Cyprus takes the rotating presidency of the European Union in July 2012, Turkey plans to boycott the presidency and freeze negotiations. In 1974 Turkey invaded Cyprus and set up a rival government in the Turkish part of Cyprus. The talks may be abandoned if no progress is made by 2014, according to Turkish officials. Turkish public opinion is also shifting away from favoring joining the EU. Surveys by the German Marshall Fund show 38% of Turks saw membership as a good thing in 2010, compared to 73% in 2004.

LyrArc Article Gist
IBM's researchers predict five developments in new technology in the next five years to 2016- precise language translation, precise voice recognition, storing of biometric information to replace passwords, conversion of energy from walking or water moving through pipes to power small devices, search engines and software that gives people the information they want. IBM has invested $15 billion in analytics companies and other fields in the last 5-7 years to accomplish some of these tasks. Bernie Meyerson, vice president of innovation at IBM, and a scientist in advanced microprocessor design and computer systems, issued the list. He says predicting this requires a deep knowledge of what happened before in the last five decades of technological advances. A novel application is conversion of the approximately 65 watts of energy generated from walking to power devices such as a phone. Precise and ubiquitous language translation also means ease of communication and a whole range of benefits in increasing communication between people in different parts of the world....

LyrArc Article Gist
A hybrid gas-electric bus costs 60% more, but is 30% more efficient for the hybrid model and 65% more fuel efficient for plug-in models, says a Navistar executive. Navistar is the first U.S. maker to bring out a hybrid bus model. Experts say buses are ideally suited for electric versions because of short routes within city limits and predicatable routes. School buses also spend a lot of time in depots where they can be charged easily. Trans Tech Bus is planning to start production of a electric school bus in partnership with Smith Electric Vehicles. Trans Tech's president says the new electric school bus will be priced so that districts could recover the added cost- a $30,000 premium at this time- in fuel savings of 3-5 years. The savings for diesel are about $60 a day for a school district near Fresno with poor air quality. Recharging the battery costs about $17.

LyrArc Article Gist
The apartment vacancy rate declined to 5.2% in fourth quarter 2011 from 6.6% in 2010, and down from 5.6% in the third quarter, according to Reis. The vacancy rate went up to 8.5% in 2009. Data from Reis shows rents went up in 71 of 82 markets it tracks. For the U.S. rents went up by an average 0.4% in the 4th quarter, to $1064 a month, increasing from $1026 in 2009. Rent growth for 2011 was 2%. Factors helping demand for apartment rentals are the reluctance of buyers to invest in a home when prices are declining in an uncertain economy, and fears of another downturn. Factors holding price increases down in New York are the declining jobs inthe financial services industry and the already high levels of rental prices- reaching $2876 a month. Demand in San Francisco and San Jose was higher and prices were up over 5% in 2011, with better properties raising rents by 10%.

LyrArc Article Gist
Facebook says in its IPO filing that it has 845 millon users worldwide. This is up 39% from the prior year. Revenue is up 88% from the prior year. Facebook's 2011 revenue is $4.27 billion, according to eMarketer. Facebook's 2011 profit was up 65% from the prior year. Analysts say costs and expenses are growing faster than revenues. R&D costs including employee hiring and equity compensation went up to $114 million in 2011 from $9 million in 2010. Facebook had 3,200 employees in Dec. 2011, compared to 2,172 in the prior year. Revenues come from online ads. Ads on the Facebook site increased by 42% in 2011 over the prior year, and average price per ad increased by 18% in this period. Ads are generated using the information provided by users on demographic factors, age, location, gender, education, work history and specific interests- so that subsets of users can be targeted by advertiserrs of products.

LyrArc Article Gist
Spain's Budget minister, Cristobal Montero, said the government would have a new credit line and provide an early infusion of $10 billion to aid financially troubled regions. Many of the regions are in such financial straits that they are unable to pay suppliers, and this is putting many small businesses in serious difficulties. Spain's prime minister Rajoy says the Spanish government needs to be concerned about what is happening in the regions, and that he would help regions as long as they meet their budget goals. Spain adopted a decentralized model after the years of the Franco dictatorship, and regions handle education, health care and social services, culture and providing services. With the economic crisis following years of free spending by the regions, the extent of this autonomy and the lack of budget controls is being called into question. Officials from regions such as Aragon, Valencia and Murcia have called on the federal government to play a bigger role.

LyrArc Article Gist
The record shows that like other industrial states such as Illinois, Michigan and Ohio, Massachusetts lost many manufacturing jobs during the period 2003-2007, when Romney was Governor of Massachusetts. At the end of 2002 there were 338,000 manufacturing jobs in Massachusetts, by 2007 this had declined by 12% to 298,000, according to Andrew Sum, an economist at Northeastern University. Romney cites a drop in the unemployment rate from 5.6% to 4.7%. Prof. Sum who heads the University's Centre for Labor Market Studies, says this was people left the workforce during this period in large numbers. He says only Louisiana of all U.S. states had a bigger decline in the labor force when it was hit by Hurricane Katrina. The dot com bubble burst during the period before Romney took office. Massachusetts had already lost 158,000 jobs in 2001-2002 according to the Bureau of Labor Statistics. Romney was unable to do much to reverse the job losses that continued during his term in office.

LyrArc Article Gist
The lack of trust in negotiations on the terms of spending cuts between Greece and EU ministers in February 2011. In difficult exchanges between German finance minister Schauble and Greece's finance minister Venizelos, Schauble criticized the Greek government for not beginning negotiations for reduction in the minimum wage. EU ministers at a meeting with Venizelos on Feb 10, 2012, showed a distrust of Greece's figures on austerity cuts and asked for an additional $428 million in cuts to make up for the refusal of Greece to cut supplemental pensions. In Greece five ministers in the Greek cabinet resigned in protest over the conditions set by the troika of the EC, ECB and the IMF, just as unions launched a 48 hour strike in Athens. Greece is in the fifth year of a recession with unemployment at over 20%, making sharp cuts more painful. A shrinking economy makes achieving budget defict targets even more difficult and worsening the debt situation.

LyrArc Article Gist
With a 6% decline in sales in Europe expected for 2012, the problems at GM's Opel operations are expected to worsen. GM's sales in Europe declined by 2% in 2011. Critics say GM has not give enough attention to Opel's operations. Giving it only an afterthought after being overwhelmed by problems in the U.S. operations, and mostly using the design expertise of its engineering center in Russelheim, near Frankfurt. The Buick Regal is based on the Opel Insignia and the work of Opel engineers. Ferdinand Duddenhoffer, professor at the University of Duisburg-Essen, Germany, says GM has neglected Opel and is not making good use of the manufacturing capacity at Opel. The problem, he says is production management and being able to shift quickly to different models based on demand, and using Opel as part of a global factory network. The repeated restructurings at Opel for 15 years have left this problem unresolved. In his view GM is still in the Middle Ages in this respect.

LyrArc Article Gist
Lightsquared which invested about $4 billion in developing a new wireless network is facing huge losses as U.S. regulators block the proposed wireless network. Federal regulators say it will interfere with Global Positioning System devices. Investors in Philip Falcone's Harbridge Capital Partners had provided most of the funding. Before Lightsquared Philip Falcone made successful bets against the subprime mortgage market. Falcone used lobbying firms to press his position, to no avail because the GPS issue was a serious one for the federal government, as it would interfere with aircraft systems and military devices. Harbinger's biggest funds have also lost money in other fields, losing 23-27% in 2008 and Falcone had to suspend redemptions by 2009. In that situation Falcone increased his investment in LightSquared in 2010-2011. In 2011 Harbringer lost 47% in its biggest fund. Harbinger's assets declined from $26 billion in 2008 to $4 billion by Jan. 2012. The S.E.C. is now investigating his hedge fund for possible market manipulation....

LyrArc Article Gist
Spain's residential real estate mortgages are expected to be more stressed in the future as unemployment continues above 20%, and with the austerity policies of the government. Experts say that the 2.6% of residential mortgages that are 90 days past due - down from 3.1% last year- does not reflect the true condition of borrowers. Banks have encouraged low interest deals with borrowers and found ways to keep them from becoming delinquent by working with borrowers. Most loans are on first homes and on average for 60% of the value of the property. Even if a debtor defaults he keeps the mortgage debt for 15 years, which discourages default. Unemployment is lower than the 20% figure because of jobs in agriculture and services that are not reflected in the statistics. These factors have mitigated the extent of residential mortgage defaults. But a continued downturn in the economy, experts say, will show up in higher number of residential mortgage defaults in the future.

LyrArc Article Gist
Fewer than 2% of Pakistanis pay income taxes and some of the powerful landed elite and industrialists pay little or no income taxes. The result is that the government is short of funds to finance needed healthcare and education. This leaves more of these tasks for the mosques and international donors such as the Saudis, and with it brings support for militant groups. Pakistan is dependent on IMF help for its financing needs and the IMF has offered $11 billion in loans. $7.6 billion of this was transferred. But further loans were held back by the IMF since May 2010 till Pakistan made economic reforms in taxation and other areas such as energy subsidies. The US supports this effort. The government's recent effort to raise fuel prices puts the burden on the poorer sections of society. The result was deeply unpopular and the government was forced to withdraw the price increases. This was the only way to maintain the support of coalition parties in the government

LyrArc Article Gist
Sergio Marchionne, CEO of Chrysler Group, is known to take personal responsibility for getting it right for the small details of quality of Chrysler cars. When one test showed a defective door handle for a revamped Dodge Charger engineers reported on the status of the fix every couple of hours to Marchionne. He believes that if one wants to run the business right one has to get involved at this level. Marchionne has 23 people reporting to him at Chrysler and 25 more at Fiat in Italy. For Marchionne this has helped the two companies to work closely. Chrysler under Marchionne has spent $1.1 billion on revampig 14 models which are now in production. This was the only way to boost sales, as customers did not want the old models. His way to judge the performance of the revamped 2011 Jeep Grand Cherokee was to drive it 3,500 miles through Quebec, New Brunswick and New England.

LyrArc Article Gist
Michael Gerson was there in June 2005, with then Secretary of State Condoleeza Rice and nine Egyptian opposition figures, including presidential candidate Ayman Nour, in a shabby Cairo conference room. Rice was in that room to call on President Mubarak to allow free elections. Nour was skeptical about the result. The Mubarak legacy was to undermine all legitimate opposition to thirty years of rule. Gerson makes a remarkable statement when he says that the universal desire for self-government is rooted in the natural human resentment of humiliation. A 26 year old fruit vendor in Tunisia is humiliated and set himself on fire in protest, setting off protests against servility, oppression and silence. He calls the lack of faith in American ideals a pervasive failure of foreign policy elites. Someday he says, Americans are likely to say the same for China, with the complete absence of a policy for anticipating a democratic transition.

LyrArc Article Gist
Niederauer brings a straightforward style to his efforts to bring together NYSE Euronext and Deutsche Bourse in a new combination. He joined Goldman in 1985, after studying business at Emory University in Atlanta. In his 22 year career at Goldman he worked his way up as a stock trader. He worked in Tokyo where he supervised efforts for electronic trading. He was brought to NYSE in 2007 by Mr Thain, a former Goldman executive. The NYSE has seen its dominance erode since 2000, as investors shifted to fast trading. In the U.S. the NYSE traded 34% of NYSE listed shares bought or sold in January 2011, a significant drop from the 54% in late 2007, and more than 80% when the NYSE was the dominant exchange. This is reflected in the stock price, which is down 56% for NYSE shares since the end of 2007. With a merger Niederauer will be the leading executive of the merged company.

LyrArc Article Gist
Illinois uses a discount rate of about 8% for its pension liabilities. This makes them look smaller than they really are. The 8% represents expected return on assets. Illinois's five pension pllans assume returns ranging from 7% to 8.5%, yet their average 10 year returns ranged from 2.4% to 3.6%. The Netherlands uses a discount rate equal to government borrowing rates, which would be 4% for the U.S. And Dutch plans have to be fully funded or take steps to make up the difference. Illinois will have its plans 90% funded by fiscal 2045. Canada uses a government return adjusted for inflation and an additional premium, which is about 6%. The Ontario Teacher's Pension Plan for instance uses a discount rate of 5.4% and is about 85% funded. The Ontario plan's CEO, Jim Leech, says his fund would be 200% funded if it used the Illinois approach. Which raises the question is the Illinois approach realistic and isn't the best approach to be realistic about the finances.

LyrArc Article Gist
Paul Barrett, Assistant Managing Editor of Business Week says the year 2009 will represent a year of lost opportunity to reform the financial system. The Obama administration and Congress did not have the courage to do what is needed, and did not take Paul Volcker's advice on the danger of ahandful of banking institutions controllig a major portion of global banking assets. The WSJ reported that the world's 10 biggest banks account for about 70% of global banking assets, up from 59% before the crisis. It is ayear he says of missed opportunities and little was done in so many areas, including derivatives regulation and the credit rating agencies continue doing business as before with clear conflict of interest inherent in their practices. Barrett says genuine reform fizzled, and we will regret it. The Obama administration and Congress let themselves be influenced by the banking lobbyists and bankers, just as they allowed genuine health reform opportunities to slip in 2009.

LyrArc Article Gist
Corio NV, a Dutch shopping centres company, has invested 600 million euros in Turkey after entering that market in 2005, with a strategy of introducing modern shopping centres to Turkish consumers. It has concentrated on secondary locations outside of Ankara and Istanbul, and encountered different cultural pattern of consumers there; with Turkish women in these cities not doing much driving, and mostly male shoppers. And women in these secondary cities do not buy the same forward fashion as women in Istanbul or Ankara. The Turkish real estate market and the economy is also relatively weak, and Corio is expected to take a loss of 15% on its investments since 2005, according to analysts. This also shows how markets in the bigger cities in emerging markets do not reflect life in the secondary cities. And competition is already intense in the bigger cities. Corio had to provide transportation to help women get to the malls.

LyrArc Article Gist
Analysis by the Wall Street Journal shows companies in the S&P 500 stock index earned second quarter profits of $189 billion. This was up 38% from 2009, without the inflation adjustment. For all American companies, Commerce Department estimates second quarter after tax profits rose to an annual rate of $1.208 trillion, up 3.9% from the first quarter, and up 26.5% from year earlier. Companies are doing this with layoffs of workers, closing less profitable units, and shifting work to cheaper locations, and introducing more efficient processes. Texas Instruments shut down a unit making cellphones, Electronic Arts pruned its videogames by about 50%. These profit increases were achieved by reducing costs on flat or declining sales compared to 2008, just prior to the financial crisis. Companies are not expected to increase spending through new hiring or adding equipment in the current economic environment. From the Journal's analysis of the 500 S&P companies, it shows sales were 6% less than 2008, with second quarter profits 10% higher....

LyrArc Article Gist
A multi-billion dollar auction of new bandwidth for phone operators in India was rigged to favor certain companies, according to a report by the auditor -general of India. The report says the auction was conducted by the Communcations ministry in a way "that lacked transparency and fairness." The report focusses on a few of the operators including Reliance Communications. The result is a loss of 1.76 trillion rupees or $39 billion, according to auditors. The cellphone industry in India is seeing rapid growth- 18 million new users were added in October 2010, with the total reaching 671 million. By comparison China has 830 million users. Of 122 licenses granted in the 2008 auction, 85 went to companies that "suppressed facts, disclosed incomplete information and submitted fictitious documents," according to the auditor's report. and in at least one instance, the Ministry's department of Telecommunications "miserably failed to do the due diligence in the examination of the applications," the report said....

LyrArc Article Gist
Adidas plans to open 2500 stores in China by 2015, including 500 in 2010, up from 112 today. Upscale outlets planned for the larger cities in China. The distribution will widen to 1400 cities by 2015, from 500 currently, by moving to smaller towns and cities in China's interior. Adidas also plans to ramp up its presence in basketball, a sport that Nike emphasizes. In China it will offer the NEO brand in smaller cities, targeting teens with prices about 50% of other Adidas brands. The strategy is to introduce Adidas products to people with lower incomes at lower price points, a strategy being used by Nestle, P&G and Unilever in consumer products for emerging markets. Adidas has opened an online retail store with Taobao.com and plans to bring in $500 in internet sales by 2015. Still North America with 14% growth will be Adidas's largest market, and sales in China are not likely to overtake sales in North America by 2015, according to CEO Hainer.

LyrArc Article Gist
From the 1950's to the 1980''s profits earned by financial firms excluding insurance and real estate accounted for 10% of total US profits. This grew to 22% by the 1990's and jumped to 34% from 2001 to 2005. A financial sector of this size becomes a danger for the US economy, especially with overleveraging, high-frequency trading, excessive risk-taking and other practices common before the crisis of 2008. It also does not add to the productive strength of the US economy, and diverts human and capital resources that can be productively used elsewhere in the US economy. A large sector also creates its own self-perpetuation mechanisms such as efforts to dilute or reduce the regulation needed for it to function safely and productively. By diminishing the power of the legislative and executive branches of the US government to regulate this sector, it also reduces public confidence in government.

LyrArc Article Gist
Ford CEO, Alan Mulally, says the electric battery in the newly designed Ford Focus EV electric car costs about $12,000 to $15,000. The car price is $39,200. The similiar gasoline powered car price is about $22,000. This car has a 23 hour kilowatt hour battery pack. Based on this information the cost is $522- $650 per kilwatt hour. The U.S. Department of Energy has set a goal reaching $300 per kilowatt hour by 2013, as it funds new electric car development in the U.S. The Ford Focus EV is directly competing against the Nissan Leaf. The Leaf starts at $35,200, with a range of 73 miles on a full charge compared to 76 for the Focus EV. The Focus can be recharged in three and half hours using a 240 volt charger, compared to 7 hours for the Leaf. What the battery cost tells us is that the electric car development has to bring costs down rapidly for electric cars to become price competitive.

LyrArc Article Gist
President Hollande of France appoints Jean-Marc Ayrault, as the next prime minister. Hollande plans to set the priorities and direction of policies as President and work with Ayrault in getting this implemented. Ayrault, 62 years old, is a professor of German for 13 years. He was a three term mayor of Nantes, a city in western France, which is the 6th largest in the country. He is a member of the French parliament since 1986, experience that will be important to get legislation passed. Elections to the National Assembly will be held in June 2012. His German skills will be useful in reaching out to Germany to forge a common policy for the eurozone. The tone for this was set by the SPD Social Democratic party chairman, Sigmar Gabriel when he said about Ayrault: "He speaks excellent German and understands our political culture very well. This is a strong signal to Germany."