The world must learn to deal with failure; Regulators lack the wherewithal to try and eliminate the risk of collapse

July 30, 2013 4:11 pm

The world must learn to deal with the reality of failure

By John Kay

Regulators lack the wherewithal to try and eliminate the risk of collapse

Last week, the Financial Stability Boardidentified nine international insurance companies as GSifis. For those uninitiated in the acronyms beloved of the regulatory community, a GSifi is a global systemically important financial institution. Finding GSifis in the insurance sector is a solution in search of a problem. Having invented the concept of GSifi to describe too-big-to-fail banks, the world’s financial regulators are on the hunt for other businesses which can be treated in a similar way. Read more of this post

7-Eleven wizard, 80, to take on U.S.; With 50,000 global outlets, time said ripe to expand convenience store chain where it was born

7-Eleven wizard, 80, to take on U.S.

With 50,000 global outlets, time said ripe to expand convenience store chain where it was born

BY YUKI YAMAGUCHI

BLOOMBERG

JUL 30, 2013

Over the past 39 years, Toshifumi Suzuki has expanded 7-Eleven to 50,000 outlets, more than any other retail chain. Now, at the age of 80, he says he has no interest in retiring. He’s got too much work to do. “I’m not thinking about it at all yet,” said Suzuki, chief executive of Japan’s Seven & I Holdings Co., global owner of the home of the Slurpee. High on Suzuki’s to-do list is a renewed focus on the U.S., where the chain was founded 86 years ago when a Dallas ice maker began selling eggs, bread and milk. Suzuki opened Japan’s first 7-Eleven in Tokyo’s bayside Toyosu district in 1974 and built the brand into Japan’s biggest convenience store chain. Then in 1991, after 7-Eleven brand owner Southland Corp. filed for bankruptcy, he turned around and bought the mother company. Read more of this post

Luxottica Has Its Eyes on Brazil and Asia; Andrea Guerra, head of Luxottica Group, on leadership, listening, and competing for customers

July 30, 2013, 9:58 p.m. ET

Luxottica Has Its Eyes on Brazil and Asia

MANUELA MESCO

Andrea Guerra, head of Luxottica Group, on leadership, listening, and competing for customers.

The overall global luxury market may be cooling, but for sunglasses and eyewear in emerging markets, the future looks hot. That’s good news for Luxottica S.p.A.,LUX.MI +0.73% the world’s largest eyewear group. The Italian company, which owns iconic brands like Ray-Ban and holds licenses to produce eyewear for designer labels such as Burberry, Chanel and Armani, logged €7 billion ($9.29 billion) in sales last year and recently reported a 7% year-on-year increase for second-quarter revenue. Andrea Guerra, the company’s chief executive since 2004, has spearheaded an acquisition drive intended to establish Luxottica in new markets around the globe. Last year alone, it made four acquisitions, including Grupo Tecnol Ltda, a leading eyewear maker in Brazil, as well as retail chains in Spain, Portugal and Italy. Read more of this post

Korean President Park Geun-hye is backpedaling on her pledge to uproot unfair business practices by conglomerates and improve their corporate governance structure by limiting the power of owners

2013-07-29 17:54

President backpedals on chaebol reform

By Na Jeong-ju
President Park Geun-hye is backpedaling on her pledge to uproot unfair business practices by  conglomerates and improve their corporate governance structure by limiting the power of owners, critics say.
The administration has become soft-handed on inter-affiliate deals that have been abused by chaebol owners to expand their business empires. Tax officials have hinted at reducing the scope of audits into conglomerates.
The finance ministry is moving to ease business regulations in order to draw more investment from chaebol firms and create more jobs. These changes are in stark contrast to Park’s presidential campaign pledge — she vowed to achieve “economic democratization” by toughening punishment for violations committed by big businesses and ensuring fair competition between large and small firms. Read more of this post

What It Means When Charlatans Have Access to Our Leaders

07.30.2013 18:01

Closer Look: What It Means When Charlatans Have Access to Our Leaders

Government and business elites can preach materialism all they want, but when they take advice from frauds they’re showing how little faith they have

By staff reporter Wang Xiaoxiao

ang Lin with photos of some of the people he has advised

The name of a qigong master, Wang Lin, has become an Internet buzzword because he has high-powered followers and the public wonders why.

Wang, a 61-year-old native of the eastern province of Jiangxi, made his name in the late 1990s when qigong – an ancient admixture of breathing exercises and meditation – was a national fad, although he was able to keep a low profile. He claimed some unusual abilities: he said he treated various heads of state for their diseases and showed visitors how he could make a snake appear in an empty pot. Wang has garnered a circle of followers, and is continually referenced and visited by various celebrities and officials. Read more of this post

Private Investigators Tracking Fraud Face Risks in China

July 30, 2013, 7:30 p.m. ET

Private Investigators Face Risks in China

Detention of British Gumshoe Highlights Danger

JAMES T. AREDDY

SHANGHAI—The police detention this month of a British private investigator here amid a pharmaceutical bribery probe highlights the growing risks for private gumshoes tracking fraud in the world’s No. 2 economy. Shanghai police detained a prominent commercial sleuth, Briton Peter Humphrey of ChinaWhys Co., according to the British government. Authorities won’t say why he is being held, and he isn’t reachable. In China, a detained person isn’t necessarily a criminal suspect. Mr. Humphrey’s detention comes as Chinese officials investigate bribery allegations against U.K. drug maker GlaxoSmithKline PLC. GSK.LN -0.03% Glaxo is a longtime client of Mr. Humphrey, according to people familiar with the situation. It isn’t clear whether Glaxo is a current client. Glaxo has said Mr. Humphrey isn’t an employee and declined further comment. Read more of this post

Why is China auditing local government debt again?

Why is China auditing local government debt again?

by China Seminar on July 29, 2013

Here is what the FT says:

China will conduct an urgent audit of all government debt, underlining concerns over rising financial risks in the world’s second-biggest economy.

The National Audit Office said in a one-line statement on Sunday that it had been instructed by the state council, China’s cabinet, to come up with a tally of how much money is owed by all levels of government from villages up to central authorities.

So why do we ask the question in the title? Because this would be the third audit report on local government debt, only one month after the last report was published, and it comes much earlier than everyone expected, including the National Audit Office (NAO) itself. Two audits have been done on this subject so far. The first audit covering more than 3000 local governments was conducted from March to May in 2011 and the report was published in June 2011. Thesecond audit was done on a much smaller scale as it only included 36 local governments. It was done during November 2012 to February 2013 and a report was published on June 10^th, just a month ago. According to the information provided by the People’s Daily, the official newspaper of the Party (in Chinese, for English see the FT report), the third round of the audit was required by the State Council and it will start immediately on August 1^st. The NAO has called off other projects to focus on this one and many auditors were asked to cancel their holidays.  Read more of this post

China Stocks World’s Worst Losing $748 Billion on Slump

China Stocks World’s Worst Losing $748 Billion on Slump

Four years after China’s growth helped lead the global economy out of a recession and won the admiration of luminaries from billionaire George Soros to Nobel laureate Joseph Stiglitz, the nation’s stock market has lost more money for investors than any other in the world.

The Shanghai Composite Index (SHCOMP), which doubled in 10 months through August 2009 as the government poured $652 billion of stimulus into building roads, railways and housing, has tumbled 43 percent from its high, destroying $748 billion in market value. Only Greece’s ASE Index (ASE) has fallen more in percentage terms. The Standard & Poor’s 500 Index, the benchmark gauge of American equity, erased all of the losses from the worst recession since the Great Depression and has gained 68 percent since the China peak, reaching a record this month. Read more of this post

Jakarta Ramadan bazaar feels the pinch of rising costs, which force them to raise prices

Jakarta Ramadan bazaar feels the pinch

Wednesday, July 31, 2013 – 03:00

Wahyudi Soeriaatmadja

The Straits Times

JAKARTA – For an entire month, Bendungan Hilir in central Jakarta transforms into the capital’s largest Ramadan food bazaar, with some 100 food stalls offering a wide range of food and drinks, from grilled fish to sticky rice treats and sweet porridge. The Benhil bazaar, as residents call it, has been around since the 1990s but stallholders say they are feeling the impact of rising costs, which force them to raise prices, as well as greater competition from bazaars nearby. Read more of this post

UBS Has Relationship With 80% of Asia’s Billionaires

UBS Has Relationship With 80% of Asia’s Billionaires

UBS AG (UBSN), the Swiss lender that’s shrinking its investment banking business to focus on wealth management, said it has a business relationship with as many as eight out of 10 billionaires in Asia. “We have a penetration of one in two billionaires in the world,” Chief Executive Officer Sergio Ermotti told analysts and reporters on a call after second-quarter earnings today. “In Asia, this was much deeper.” The Zurich-based bank has a relationship with as many as 80 percent of the billionaires in Asia, a UBS official said in an e-mail following the call. UBS is targeting affluent clients in emerging markets as indebted economies and a crackdown on offshore tax evasion cloud European growth prospects. Switzerland’s largest bank, ranked No. 1 globally by client assets by Scorpio Partnership, is boosting business with ultra-wealthy families with at least 50 million francs ($54 million) of investable assets. Read more of this post

Oil drillers in North Dakota’s Bakken shale fields are allowing nearly a third of the natural gas they drill to burn off into the air, with a value of more than $100 million per month

Bakken flaring burns more than $100 million a month

3:31pm EDT

By Ernest Scheyder

NEW YORK (Reuters) – Oil drillers in North Dakota’s Bakken shale fields are allowing nearly a third of the natural gas they drill to burn off into the air, with a value of more than $100 million per month, according to a study to be released on Monday. Remote well locations, combined with historically low natural gas prices and the extensive time needed to develop pipeline networks, have fueled the controversial practice, commonly known as flaring. While oil can be stored in tanks indefinitely after drilling, natural gas must be immediately piped to a processing facility. Flaring has tripled in the past three years, according to the report from Ceres, a nonprofit group that tracks environmental records of public companies. Read more of this post

Asia’s Rice Glut Expected to Worsen

Updated July 30, 2013, 6:48 p.m. ET

Asia’s Rice Glut Expected to Worsen

Good Harvests Loom, on Top of Already Burgeoning Supply

SAMEER C. MOHINDRU and WARANGKANA CHOMCHUEN

BANGKOK—Asia is awash in rice, as favorable weather and government support for farmers combine to produce a bumper crop. The glut is driving down prices for big rice importers in Africa and China. But consumers in some of the biggest rice-producing nations, including Thailand and India, are paying higher prices as surplus supplies sit in government warehouses. Asia’s surplus will have little impact in the U.S., which produces different varieties of rice. When traveling by train from New Delhi to neighboring states, a common sight in the countryside is rice piled high on wooden plinths, protected only by plastic tarps. In Thailand, the government has considered using a warehouse at the city’s old airport to store rice because other storage facilities are full. Read more of this post

The collapse of a cartel in the potash market slams producer stocks—and is another blow to commodities bulls; How a determined China broke up a global fertilizer cartel

Updated July 30, 2013, 10:19 p.m. ET

Russian Potash Producer Signals End to Global Cartel

Uralkali Pulls Out of Sales Partnership With Belarus

ALISTAIR MACDONALD And LUKAS I. ALPERT

The collapse of a cartel in the potash market slams producer stocks—and is another blow to commodities bulls. Tatyana Shumsky reports.

MOSCOW—A cartel that effectively set prices for one of the world’s most important agricultural commodities tottered Tuesday, sending markets into disarray while perhaps promising lower food prices around the globe. The upheaval began here, after Russian potash producer UralkaliURALL -14.62% said it was pulling out of its sales partnership with Belarus, the linchpin of one of two groups in a global cartel commanding two-thirds of a nearly $22 billion market for the fertilizer ingredient. The announcement sent potash-mining stocks into a tailspin around the world after Uralkali predicted the move would slash prices by 25% to about $300 a metric ton by the end of year. Read more of this post

What Are Banks Doing in Energy and Aluminum Anyway?

What Are Banks Doing in Energy and Aluminum Anyway?

The largest U.S. banks are accused of causing problems in markets ranging from energy to aluminum. Regardless of whether they’re guilty of market-rigging, as critics say, the charges raise another question: Why are the banks active in these businesses in the first place?

Part of the answer is a point we’ve stressed before: They’re among the country’s most subsidized enterprises. The Federal Deposit Insurance Corp. and the Federal Reserve, both backed by taxpayers, provide an explicit subsidy by ensuring that banks can borrow money in times of market turmoil. Banks that are big and connected enough to bring down the economy enjoy an added implicit subsidy: Creditors will lend to them at low rates on the assumption that the government won’t let them fail. Read more of this post