Asia’s Recent Past Catches Up With It; Federal reserve ‘tapering’ is merely exacerbating problems created by earlier failures to reform

September 5, 2013, 12:39 p.m. ET

Asia’s Recent Past Catches Up With It

Federal reserve ‘tapering’ is merely exacerbating problems created by earlier failures to reform.

FREDERIC NEUMANN

As investors cast around for someone to blame for recent market turmoil in Asia, it’s easy to point the finger at the U.S Federal Reserve. Hints that the Fed may taper its massive monetary easing, the thinking goes, has pushed up interest rates in America. That, in turn, is drawing capital away from emerging economies. There’s just one problem with this conventional wisdom: The current turmoil in emerging markets, above all Asia, has mostly local roots. It’s true that easy money provided a cushy ride since 2009. With rising interest rates in the United States, those days are now over. Still, the scale of the current sell-off, such as in India and Indonesia, suggests that something more profound is going on. After years of policy neglect, emerging Asia no longer offers the returns in growth and profits that investors seek. Only far-reaching reforms can pull the region out of its malaise. Read more of this post

Stephen Hawking’s Brief History of a Best Seller; A literary agent told him a book about the universe could never become popular

September 6, 2013, 8:35 p.m. ET

Stephen Hawking’s Brief History of a Best Seller

Theoretical physicist Stephen Hawking describes the rocky origins of his popular science book

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Theoretical physicist Stephen Hawking, around 1988. A literary agent told him a book about the universe could never become popular.

STEPHEN HAWKING

I first had the idea of writing a popular book about the universe in 1982. My intention was partly to earn money to pay my daughter’s school fees. But the main reason was that I wanted to explain how far we had come in our understanding of the universe: how we might be near finding a complete theory that would describe the universe and everything in it. If I was going to spend the time and effort to write a book, I wanted it to have as many readers as possible. I contacted a literary agent and gave him a draft of the first chapter, explaining that I wanted it to be the sort of book that would sell in airport bookstores. He told me there was no chance of that. It might sell well to academics and students, but a book like that couldn’t break into best-seller territory. I gave the agent a first draft of the book in 1984. He sent it to several publishers, and I decided to take an offer from Bantam Books. Bantam’s interest was probably due to one of their editors, Peter Guzzardi, who took his job very seriously and made me rewrite the book so that it would be understandable to nonscientists. Each time I sent him a rewritten chapter, he sent back a long list of objections and questions. At times I thought the process would never end. But he was right: It is a much better book as a result. Read more of this post

Thais Debate Rising Cost of Living: Perception or Reality

September 7, 2013, 3:27 PM

Thais Debate Rising Cost of Living: Perception or Reality

By Warangkana Chomchuen

BANGKOK–For Thai consumers, September has delivered a triple whammy. The costs of cooking gas, electricity and expressway tolls rose at the start of the month. Electricity went up 0.07% per unit used. Drivers using Bangkok’s elevated highways can expect to pay about $10 more a month. Cooking gas prices will increase incrementally every month over the course of 12 months. By August next year, the cooking gas will have risen by 38% to 25 baht (80 U.S. cents) a kilogram of gas from 18 baht. These increases might not seem a big deal, and that’s what the government officials have been telling the public. The increases, they said, would barely budge the country’s inflation rate. But the new price increases have nevertheless stirred up public anger – and whipped up a debate over whether it will lead to a sharp increase to living costs. Read more of this post

Clever cities: The multiplexed metropolis; Enthusiasts think that data services can change cities in this century as much as electricity did in the last one. They are a long way from proving their case

Clever cities: The multiplexed metropolis; Enthusiasts think that data services can change cities in this century as much as electricity did in the last one. They are a long way from proving their case

Sep 7th 2013 | AMSTERDAM AND BARCELONA |From the print edition

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EVEN thieves, it seems, now have a smartphone app. Makkie Klauwe (it means something like “easy pickings” in Amsterdam slang) reveals the city’s best places for pilfering—for instance Reestraat and Tuinstraat, where bicycles appear to be a good target. The app depends for its dark arts on pulling together publicly available data on disposable income, crime levels and other problems reported in a district. A good place to steal might, for instance, have high income, low reported crime and broken streetlights. Read more of this post

Five Years Later, Fannie Mae, Freddie Mac Remain Unfinished Business; Fixing the Mortgage Giants Remains the Largest Single Piece of Unfinished Business From the Financial Crisis

September 6, 2013, 8:04 p.m. ET

Five Years Later, Fannie Mae, Freddie Mac Remain Unfinished Business

Fixing the Mortgage Giants Remains the Largest Single Piece of Unfinished Business From the Financial Crisis

NICK TIMIRAOS

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WASHINGTON—Of all the temporary patches the U.S. government slapped onto the sinking financial system in September 2008—from pumping money into banks to rescuing insurer American International Group Inc. AIG -1.01% —none was more urgent to then-Treasury Secretary Henry Paulson than saving mortgage giants Fannie Mae FNMA +0.81% and Freddie Mac FMCC -0.88% . Read more of this post

Faces of Life

James Dyson: Britain’s next industrial revolution

September 6, 2013 7:20 pm

Britain stands on the cusp of a new industrial revolution

By James Dyson

British engineers could be building power stations across the globe, writes James Dyson

After a buoyant summer, the economy seems to be returning to health. Manufacturing is coming to the fore as a driver of the economic recovery. We need to nourish, not ignore, the power behind exports and the creator of long-term and sustained wealth: exportable technology. The data ought to be good for confidence (as well as headlines), but short-term numbers must not alter long-term thinking. That is what got us into this mess. National economic output is still a long way below the levels of 2008 and our export markets are more competitive than ever. Let’s stick to the plan. We must remain steadfast in our ambition to put the development of exportable technology back at the core of the economy, and once again kindle the ambition that made the Victorians world-beaters. Our total focus must be on developing the best products and technologies of our own – to sell to the world. Read more of this post

Where’s the next Lehman? Five years after the maelstrom of September 2008, global finance is still not safe enough

Where’s the next Lehman?

Five years after the maelstrom of September 2008, global finance is safer. But still not safe enough

Sep 7th 2013 |From the print edition

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THE bankruptcy of Lehman Brothers, an American investment bank, in 2008 turned a nasty credit crunch into the worst financial crisis in 80 years. Massive bail-outs from governments and central banks staved off a second Depression, but failed to prevent a deep recession from which many rich economies have yet fully to recover. Five years after that calamity, two big questions need to be answered. Is global finance safer? And are more crises on the horizon? The quick answers are yes, and yes. Global finance looks less vulnerable because reforms to the financial industry have made it more resilient, and because America, the country at the heart of the Lehman mess, has got rid of much of the excess debt and righted many of the imbalances in its economy. Today’s danger zones are elsewhere. They are unlikely to spawn a collapse on the scale of 2008. But they could produce enough turmoil to hit growth hard. Read more of this post

Leading Indicators for Investors: Corporate spinoffs, share buybacks, insider buying and stock splits can all signal what insiders think lies ahead for their company’s share price

September 6, 2013, 6:17 p.m. ET

Leading Indicators for Investors

Corporate spinoffs, share buybacks, insider buying and stock splits can all signal what insiders think lies ahead for their company’s share price.

LIAM PLEVEN And JOE LIGHT

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With the economy recovering and markets on a tear, American corporations are snapping into action—spinning off subsidiaries, buying back stock and making other moves that are widely viewed as telling signals of how insiders value their own firms. A recent flurry of high-profile activity raises a question for investors about how to interpret those signals: Buy or beware? In addition to spinoffs and buybacks, the moves in question include insider share purchases and stock splits. Apple,AAPL +0.60% Valero Energy and Whole Foods Market WFM +0.61% are among the big U.S. companies that have made or announced such moves this year. (Among the companies that did a spinoff this year is News Corp NWSA -0.31% ., which split into a media and entertainment company named 21st Century Fox FOXA +0.47% and a publishing business called News Corp, which is the parent of Wall Street Journal publisher Dow Jones & Co.) Read more of this post

The Society for Useful Knowledge

September 6, 2013, 4:19 p.m. ET

Book Review: ‘The Society for Useful Knowledge’ by Jonathan Lyons

Benjamin Franklin did far more for science than simply fly a kite.

LAURA J. SNYDER

Benjamin Franklin once led a party of merry picnickers who, with electrified gilt goblets, toasted the international community of scientists studying electricity. The group then slaughtered a turkey with an electrical charge and roasted it with electrical fire. Franklin observed: “Birds killed in this Manner eat uncommonly tender.” Franklin was one of the foremost “electricians” of his day, winning the prestigious Copley Medal of the Royal Society of London for his theoretical and practical accomplishments in the field. Connections between Franklin’s scientific work and his role in early American politics have been explored in a number of biographies and scholarly studies. In “The Society for Useful Knowledge,” Jonathan Lyons takes a provocative turn: He claims that Franklin’s notion of “useful knowledge”—gleaned from the charter of the Royal Society—spread throughout the colonies and “made possible the Revolution and . . . America’s characteristic political and economic systems.” Read more of this post

Ice Melting Faster in Greenland and Antarctica in UN Leak

Ice Melting Faster in Greenland and Antarctica in UN Leak

Ice in Antarctica and Greenland is disappearing faster and may drive sea levels higher than predicted this century, according to leaked United Nations documents. Greenland’s ice added six times more to sea levels in the decade through 2011 than in the prior 10 years, according to a draft of the UN’s most comprehensive study on climate change. Antarctica had a fivefold increase, and the UN is raising its forecast for how much the two ice sheets will add to Earth’s oceans by 2100. Read more of this post

White Knights Dispense Short Shrift in Asia; Short Sellers in Asia Need to Be on the Lookout for Big Shareholders

Updated September 6, 2013, 6:05 p.m. ET

White Knights Dispense Short Shrift in Asia

Short Sellers in Asia Need to Be on the Lookout for Big Shareholders

ABHEEK BHATTACHARYA

Small short seller slays big Asian firm. This David-and-Goliath tale has played out many times, but a third character has shown up recently: the white knight. A string of short sellers have targeted companies with Asian operations recently. Most famously, Muddy Waters alleged in 2011 that Toronto-listed Sino-Forest overstated its timber assets in China. Sino-Forest later filed for bankruptcy protection. But the latest dust-up shows how a third-party investor can hurt the shorts. On Aug. 26, California-based Glaucus Research accused Singapore-listed vegetable producer China Minzhong Food K2N.SG -0.45% of fabricating its sales. The stock lost nearly half its value before trading was frozen later that day. Then on Sep. 2, Minzhong’s largest shareholder came to its aid. PT Indofood Sukses MakmurINDF.JK -0.83% a noodle maker run by Indonesia’s fourth-richest family, said it plans to make an offer for the shares it doesn’t own, which could effectively take the company private. It will even offer a 10% premium to where the stock traded before the Glaucus report. Minzhong’s shares have since rebounded to the offer price. That may squeeze some shorts, though it is unclear whether Glaucus exited its position in time. Indofood says this is a “strategic acquisition” that will “be mutually beneficial to both Indofood and China Minzhong.” Pre- Glaucus, Indofood owned about 29% of the company. Read more of this post

Healthcare App Makers Crowdfund to Avoid Blindside Hit of FDA Rules; “There’s a gigantic gulf between the tech industry as a whole and the medical regulatory infrastructure”

App Makers Crowdfund to Avoid Blindside Hit of FDA Rules

It sounded like a good idea at the time: A smartphone application that tapped into a growing consumer desire to self-diagnose health ailments at home. Biosense Technologies Private Ltd. made a splash in February when it unveiled a kit that lets people use their phone cameras to read subtle color differences on test strips designed to show unhealthy levels of proteins and other substances in their urine. What the creators didn’t anticipate was the need for U.S. government approval. Read more of this post

Gemalto Sees Doubling of Operating Profit on Security Software

Gemalto Sees Doubling of Operating Profit on Security Software

Gemalto NV (GTO) forecast a doubling of its operating profit by 2017 amid greater demand for its chips and software that make bank cards and mobile phones more secure. Operating profit may reach 600 million euros ($788 million) that year, doubling from 2012, the Amsterdam-based company said in a statement yesterday. Revenue from the platforms and services unit will grow more than 20 percent annually to reach 1 billion euros by 2017, accounting for about half of Gemalto’s projected sales growth in the period, it said. Under Chief Executive Officer Olivier Piou, Gemalto has shifted away from commoditized chips to sell more lucrative packages including security software. Its clients include mobile-phone carriers and banks, as well as companies ranging from Volkswagen AG’s Audi division to Facebook Inc. Piou, who so far has bet on the need to improve the security of new technologies — the likes of mobile payments and machine-to-machine transmissions — predicts there are more opportunities for Gemalto in mobile money and mobile identification. Piou returned Gemalto to profit in 2008, and last year net income rose 25 percent to 201 million euros. Joining France’s leading stock index, the CAC 40, in December, marked another milestone for the executive. A 55-year-old engineer, Piou has headed the company since the 2006 merger of Gemplus International SA and Axalto Holding NV. Shares of Gemalto have gained 27 percent this year. The stock slipped 0.7 percent to 86.26 euros yesterday in Amsterdam trading.

To contact the reporter on this story: Marie Mawad in Paris at mmawad1@bloomberg.net

European retailers have gone back to bricks and mortar in the hope of turning their online food businesses profitable – racing to build pick-up points to capitalize on shoppers’ increasing demand for “click and collect” grocery options

Retailers look to click & collect online profits

9:56am EDT

By Emma Thomasson and Dominique Vidalon

BERLIN/PARIS (Reuters) – European retailers have gone back to bricks and mortar in the hope of turning their online food businesses profitable – racing to build pick-up points to capitalize on shoppers’ increasing demand for “click and collect” grocery options. E-commerce has revolutionized trade in books, music, clothes and electronics in the last decade, but food has proved a tough segment to crack. Grocery represents almost 40 percent of retail sales, but providing a profitable internet option for a high-volume, low-margin business with products that must be chilled is more complex and pricey than for non-perishables. Read more of this post

Amazon is considering selling its smart phone for $0, even without a wireless plan

Amazon is considering selling its smart phone for $0, even without a wireless plan

By Christopher Mims @mims 9 hours ago

Amazon isn’t just working on a phone, but the company is considering giving it away, anonymous sources have told ex-Wall Street Journal reporter Amir Efrati. The same sources say that Amazon’s plan to give away phones is unlikely, but the fact that Amazon is even thinking about such a plan is indicative of the company’s long-term strategy, which is to give away hardware while making money on content and advertising. Amazon has for some time been open about its strategy of making little or no money on hardware, and there has long been speculation that eventually the price of its Kindle e-reader will drop to 0, when the price of hardware declines to the point that Amazon calculates it can recoup the cost of devices from sales of ebooks. And unlike its competitors, as a whole Amazon is content with making little or no profit. As outrageous as a free smartphone might sound, it’s worth remembering that the price of low-end Android smartphones is already approaching $50. If Amazon thinks it can make more money selling content on a phone than on a tablet or e-reader, or perhaps by taking a cut of the costs for pre-paid wireless data plans, a complete subsidy of the lowest-end smartphones might make sense. Read more of this post

3D printing: From dental braces to astronauts’ seats; The signs are that 3D printing is transforming manufacturing, but not in the ways you might expect

3D printing: From dental braces to astronauts’ seats; The signs are that 3D printing is transforming manufacturing, but not in the ways you might expect

Sep 7th 2013 |From the print edition

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EVER since 3D printing—the ability to construct solid objects by building them up, a layer at a time, in plastic or metal—hit public consciousness a couple of years ago, comment has veered towards two extremes. Fans, often in America, insist it will have a dramatic impact, undermining the economics of mass production and repatriating jobs to the West. According to the Harvard Business Review, “China will have to give up on being the mass-manufacturing powerhouse of the world.” Critics denounce it as overblown hype—“a gimmick” according to Terry Gou, the boss of Foxconn, a manufacturing giant in China: he says he will start spelling his name backwards if he is proved wrong. In fact 3D printing is evolving in a way that defies both these predictions (seeTechnology Quarterly). It is plainly a serious technology with a big economic impact. But it is not necessarily harming old-style factories or the Chinese. Read more of this post

Disney Armed With ESPN Cudgel in Next Pay-TV Fee Showdown

Disney Armed With ESPN Cudgel in Next Pay-TV Fee Showdown

Now that CBS Corp. has prevailed in its monthlong dispute with Time Warner Cable Inc., it’s Bob Iger’s turn to see how much his Walt Disney Co. can squeeze from a pay-TV carrier.

Disney, owner of the most-expensive pay-TV channel in ESPN, faces a Sept. 30 deadline to reach a new agreement with Dish Network Corp. (DISH), the second-largest U.S. satellite-TV provider. The negotiations cover how much Dish pays for content and whether it can put programs on mobile phones — the same sticking points that led to the one-month blackout of CBS on Time Warner Cable systems that was resolved this week. Read more of this post

South Korea Bans Japanese Fish Imports Over Fukushima Leak

South Korea Bans Japanese Fish Imports Over Fukushima Leak

South Korea banned imports of fish caught near the site of the Fukushima nuclear accident over concerns of radioactive contamination from the plant. The ban affects marine products from eight prefectures, including Fukushima, where the 2011 earthquake and tsunami devastated the plant, causing the worst nuclear accident since Chernobyl. Some of the fishing grounds were already closed. The decision came after the Japanese government revealed last month that 300 tons of contaminated water leaked from the site, with some making it to the ocean. Read more of this post

Japan Fishermen Reject Release of Fukushima Water to Ocean

Tepco Irradiated Water Find May Signal Problem for Bypass Plan

Tokyo Electric Power Co. (9501) found irradiated water near a storage tank that leaked last month at the Fukushima plant, complicating its plan for a pipeline to cut the volume of radioactive water it’s forced to manage. Inspectors found 650 becquerels per liter of beta radiation, which includes the contaminant strontium-90, Mayumi Yoshida, a spokeswoman for the utility known as Tepco, said today by phone. That’s more than 21 times government safety guidelines covering sea water near the plant for strontium-90, which has been linked to bone cancer. Read more of this post

Announcing this year’s traditional autumn crisis

September 6, 2013 8:32 pm

Announcing this year’s traditional autumn crisis

By John Dizard

Emerging market worries replace the time-honoured eurozone crackup farce, finds John Dizard

So, summer is over and everyone in the money world is getting ready for the traditional autumn crisis. Of course we will have the, now time-honoured, eurozone crackup farce. Show times will be set and the cast members announced after the German election in two weeks, ready for the IMF-World Bank meetings in mid-October. There may, though, be something Different This Time. You will notice that after the spring and summer market hiccups and corrections, a couple of asset classes are not only coughing, but coughing up some blood. Emerging market-traded debt and equities, even after last week’s little rally, have continued to lose international investors’ cash and confidence. Read more of this post

Bogged-Down Banking Fight Leaves EU Vulnerable to Relapse

Bogged-Down Banking Fight Leaves EU Vulnerable to Relapse

Europe’s march toward a banking union began in the early morning hours of June 29, 2012, during an overnight summit that pitted Germany against Spain and Italy over their plea for more help against the raging debt crisis. The 13 1/2-hour meeting resulted in a deal that introduced the possibility of aid to banks from the euro firewall fund. In return, leaders said the European Central Bank should take over financial supervision in the 17-nation currency bloc. Read more of this post

It’s well known that September has been the worst month, on average, for stocks. But no one has come up with a plausible explanation for why that is.

Updated September 6, 2013, 6:25 p.m. ET

How to Play the September Effect

It’s well known that September has been the worst month, on average, for stocks. But no one has come up with a plausible explanation for why that is.

MARK HULBERT

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Stock-market aficionados know that the average September over the past 100 years has been terrible for stocks. But this record, in and of itself, isn’t a good reason to sell all your stocks and leave the money in cash this month. That is because there appears to be no convincing explanation for why equities have performed poorly in September. So there is a good chance September’s dismal historical record is just a random fluke that won’t persist. Read more of this post

Mafia hurt by asset seizures but still too strong to beat

Mafia hurt by asset seizures but still too strong to beat

11:47am EDT

By Barry Moody

NAPLES, Italy (Reuters) – Syringes litter the floor of an abandoned school in the crime-plagued Scampia district of northern Naples, alongside tin foil used for crack cocaine, a filthy mattress and piles of clothing. What was once a classroom is smeared with human waste and Coca Cola bottles filled with urine are stacked in one corner, alongside an abandoned children’s toy. For years desperate addicts lived in the school, where the local mafia or Camorra sold hard drugs from a counter. Now the building is part of a nationwide campaign to use confiscated gang assets to persuade youths from sink estates like Scampia that there is an alternative to drugs and working for the mob. Read more of this post

Malaysia Risk Tops Philippines on Najib Budget Gap

Malaysia Risk Tops Philippines on Najib Budget Gap

Malaysia’s default risk climbed above that of the Philippines for the first time as Prime Minister Najib Razak seeks to avoid a debt-rating cut, while his counterpart pitches for upgrades. Contracts insuring Malaysian bonds against non-payment rose 63 basis points this year to 141, compared with an advance of 33 to 139 for its lower-rated neighbor, according to data provider CMA. Malaysia’s 10-year ringgit yield jumped 44 basis points to 3.92 percent, 16 basis points higher than the rate on similar-maturity Philippine notes, data compiled by Bloomberg show. Read more of this post

M’sia debt ratio nears ‘worrying levels’ and near the country’s mandated debt ceiling of 55 per cent of GDP: BOA; In the 1960s, the limit was made law by then-finance minister Tan Siew Sin to ensure fiscal prudence

PUBLISHED SEPTEMBER 07, 2013

M’sia debt ratio nears ‘worrying levels’: BOA

S JAYASANKARAN BTWORLD@SPH.COM.SG

A US bank has warned that Malaysia’s ratio of public debt to gross domestic product (GDP) “is approaching worrying levels”. In a report yesterday, Bank of America Merrill Lynch (BOAML) said that the country’s debt-to-GDP ratio had risen to 54.6 per cent at the end of the second quarter, from 53.8 per cent in the first quarter. If BOAML’s estimate is right, the figure is just shy of the country’s mandated debt ceiling of 55 per cent of GDP. In the 1960s, the limit was made law by then-finance minister Tan Siew Sin to ensure fiscal prudence. Read more of this post

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