16/03/2011

What is the secret to Germany's economic success?

WATCH THE VIDEO: http://www.bbc.co.uk/news/business-12462196

What is the secret to Germany's economic success?

15 February 2011 Last updated at 11:17

It has been a tough couple of years for Europe's economy.

Recession across the region has resulted in bail-outs for Greece and Ireland as well as concerns that the same may be needed for Portugal and possibly Spain.
But in the Eurozone, one economy stands out as others struggle to shake off slow growth.
Germany grew by 3.6% last year and is expected to grow by more than 2% this year.
Unemployment is falling and exports are booming.
Steve Evans reports.

LISTENING: UK citizens 'not safe to do business' in Russia.

UK citizens 'not safe to do business' in Russia.

LISTEN TO THE INTERVIEW: http://news.bbc.co.uk/today/hi/today/newsid_9398000/9398195.stm

Hermitage Capital Management's Bill Browder outlines his belief that UK citizens are "not safe to invest or do business" in Russia.
The Today Programme contacted the Russian Embassy to respond to the allegations but they were unavailable for comment.

Portugal hit by debt downgrade from ratings agency

16 March 2011 Last updated at 03:03 GMT

The ratings downgrade will make it more expensive for the Portuguese to borrow money

International ratings agency Moody's has downgraded Portugal's sovereign debt rating, citing the country's need to cut debt and its poor growth prospects.

Meanwhile Portugal's main opposition party has announced it will oppose the government's austerity plans.
The prime minister has warned the country could face a bail-out.
"The consequence of a political crisis would worsen the risks for our economy and lead to intervention," he said.
Portugal is burdened with high levels of debt, and is struggling to avoid an international bail-out similar to those of Greece and the Republic of Ireland.
Political deadlock
The government of Prime Minister, Jose Socrates, unveiled the latest in a series of austerity measures last Friday.
The plans, which included cuts to health and welfare budgets, were meant to reassure investors and fellow European Union members that it can meet its debt obligations without the need for outside help.
However, the austerity package has met with fierce opposition, and the prime minister has warned that if the measures fail to win support, his country may be forced into a bail-out.
The main opposition party has now decided to formally oppose the plans which could lead to political deadlock.
This could bring down the current minority government forcing a general election.
"I have been fighting to avoid this scenario for six months," Mr Socrates told Portuguese television.
Negative outlook
Ratings agency Moody's has decided to downgrade Portugal's sovereign debt rating by two notches from A1 to A3.
"The cost of market funding is likely to remain high until the deficit has been reduced to a sustainable level and the prospects for economic growth have improved," it said in a statement.
The downgrade will make it more expensive for Portugal to raise money on the international money markets.
Moody's has also given a negative outlook on the new rating, which means its rating could be downgraded further.
This indicates that Moody's is unsure that the Portuguese government will be able to deliver on the reforms it has recently announced.
Standard and Poor's, another ratings agency, recently announced that it is also reviewing Portugal's debt rating.

Define a Target Market in Your Business Plan

To define a target market for your business plan, you should research the potential buying audience for your product. This could range from millions of people if you are starting an online business, to a few thousand individuals if you are opening a retail store in a small town.

If you are catering to the consumer market, narrow your potential customer base to a defined demographic group. By doing so, your business will not only be more attractive to investors, but you will have a much easier time compiling a sales and marketing plan. Study your product or service and determine the most likely consumer. Define the age range, gender, marital status, and income level of the individual most likely to be your customer. Explain the motivations for purchasing your product or service. Is it a necessity or luxury? What value does this product bring? It's best not to assume or guess. Use surveys, questionnaires, or secondary research to gather your demographic data.

Once you have defined the target market:

Explain the purchase habits of this demographic group.
Show how your company will impact those purchase habits.
Explain the motivation behind this demographic group and how you will help them meet their needs.
Project future changes in this market.
Indicate how you will meet their changing needs.

Base your future projections on research and details from your findings. Make projections based on past buying habits, the average purchase amount, and other factors, such as your ability to make the products or services available. The more you know about this target market, the more confidence you will have in your sales projections.

The same need to identify your target audience (business-to-consumer market) will also hold true if you are serving a business market (business-to-business market). You need to determine which companies will benefit from your products or services. Will you meet the needs of a specific industry or several industries? Large or small businesses? Public or privately owned businesses? Define exactly the types of businesses that will buy your product or services and target them through your marketing efforts. Determine how you will reach your target market, i.e. online, by referral, by cold-calling. For more about learning about the customer you intend to pursue, read Use Demographics to Understand Your Target Market.

Another way to look at target market is to consider how you are positioning your company and your products. Read "What's Your Position in the Market?" to get the basics of this important but tricky concept.

You can also get a computer assist in creating and refining your business plan; read the AllBusiness.com Buyer's Guide to Tools that Can Help You Write Your Business Plan.

Apparently You're Not Legitimately Rich If You Have Less Than $7.5 Million

Katya Wachtel | Mar. 15, 2011, 12:40 PM | 4,145 |

Heidi Montag is apparently worth $7.5 million

Image: AP

So it turns out millionaires get money envy too.

Apparently the benchmark for when the rich actually think of themselves as rich, is about $7.5 million, according to the results of a Fidelity Investments survey on the subject, says the NY Post.

Over 1,000 households were surveyed that had an average of $3.5 million in investable assets.

Less than half of those, approximately 42 % said they don't feel like they're rich, and would need about $7.5 million to make them feel: I'm wealthy.

Apparently those that did say they think of themselves as moneyed, "were younger on average and have a greater number of remaining years in the workforce," said the Post.

"Wealth is relative, and to some extent the more you have, the more you realize how much more you need," said the president of National Financial, the subsidiary of Fidelity that conducted the survey.

Data Mining: How Companies Now Know Everything About You

By Joel Stein Thursday, Mar. 10, 2011

WATCH THE VIDEO: http://www.time.com/time/business/article/0,8599,2058114,00.html

Illustration by Joe Zeff for TIME

Three hours after I gave my name and e-mail address to Michael Fertik, the CEO of Reputation.com, he called me back and read my Social Security number to me. "We had it a couple of hours ago," he said. "I was just too busy to call."

In the past few months, I have been told many more-interesting facts about myself than my Social Security number. I've gathered a bit of the vast amount of data that's being collected both online and off by companies in stealth — taken from the websites I look at, the stuff I buy, my Facebook photos, my warranty cards, my customer-reward cards, the songs I listen to online, surveys I was guilted into filling out and magazines I subscribe to. (See pictures of a Facebook server farm.)

Google's Ads Preferences believes I'm a guy interested in politics, Asian food, perfume, celebrity gossip, animated movies and crime but who doesn't care about "books & literature" or "people & society." (So not true.) Yahoo! has me down as a 36-to-45-year-old male who uses a Mac computer and likes hockey, rap, rock, parenting, recipes, clothes and beauty products; it also thinks I live in New York, even though I moved to Los Angeles more than six years ago. Alliance Data, an enormous data-marketing firm in Texas, knows that I'm a 39-year-old college-educated Jewish male who takes in at least $125,000 a year, makes most of his purchases online and spends an average of only $25 per item. Specifically, it knows that on Jan. 24, 2004, I spent $46 on "low-ticket gifts and merchandise" and that on Oct. 10, 2010, I spent $180 on intimate apparel. It knows about more than 100 purchases in between. Alliance also knows I owe $854,000 on a house built in 1939 that — get this — it thinks has stucco walls. They're mostly wood siding with a little stucco on the bottom! Idiots.

EXelate, a Manhattan company that acts as an exchange for the buying and selling of people's data, thinks I have a high net worth and dig green living and travel within the U.S. BlueKai, one of eXelate's competitors in Bellevue, Wash., believes I'm a "collegiate-minded" senior executive with a high net worth who rents sports cars (note to Time Inc. accounting: it's wrong unless the Toyota Yaris is a sports car). At one point BlueKai also believed, probably based on my $180 splurge for my wife Cassandra on HerRoom.com, that I was an 18-to-19-year-old woman.

RapLeaf, a data-mining company that was recently banned by Facebook because it mined people's user IDs, has me down as a 35-to-44-year-old married male with a graduate degree living in L.A. But RapLeaf thinks I have no kids, work as a medical professional and drive a truck. RapLeaf clearly does not read my column in TIME. (See 25 websites you can't live without.)

Intellidyn, a company that buys and sells data, searched its file on me, which says I'm a writer at Time Inc. and a "highly assimilated" Jew. It knows that Cassandra and I like gardening, fashion, home decorating and exercise, though in my case the word like means "am forced to be involved in." We are pretty unlikely to buy car insurance by mail but extremely likely to go on a European river cruise, despite the fact that we are totally not going to go on a European river cruise. There are tons of other companies I could have called to learn more about myself, but in a result no one could have predicted, I got bored.

Each of these pieces of information (and misinformation) about me is sold for about two-fifths of a cent to advertisers, which then deliver me an Internet ad, send me a catalog or mail me a credit-card offer. This data is collected in lots of ways, such as tracking devices (like cookies) on websites that allow a company to identify you as you travel around the Web and apps you download on your cell that look at your contact list and location. You know how everything has seemed free for the past few years? It wasn't. It's just that no one told you that instead of using money, you were paying with your personal information.

Read more: http://www.time.com/time/business/article/0,8599,2058114,00.html#ixzz1GjhgYRXf

Japan Disaster Drives Oil Below $100

Business & Tech

Japan Disaster Drives Oil Below $100

By AP / PABLO GORONDI Monday, Mar. 14, 2011

A helicopter flies past Japan's Fukushima Daiichi No.1 Nuclear reactor March 12, 2011.

Kim Kyung-Hoon / Reuters

Oil prices dropped below $100 a barrel Monday after a massive earthquake and tsunami devastated northeastern Japan, denting demand for crude from the world's third-largest economy.

Officials estimate a 33-foot wall of seawater triggered by an 8.9 magnitude quake off the coast of northern Japan on Friday killed at least 10,000 people and severely damaged the country's energy infrastructure. The benchmark Nikkei 225 stock average fell more than 6 percent Monday. "This disaster has in effect temporarily frozen the world's third largest economy," said Richard Soultanian of NUS Consulting. "It seems clear that Japan's appetite for crude oil may be diminished in the near-term which should provide previously unforeseen slack in international oil markets." (See "A Father's Quest to Find a Missing Daughter in Sendai")

By early afternoon in Europe, benchmark crude for April delivery was down $1.42 at $99.74 a barrel in electronic trading on the New York Mercantile Exchange. The contract slipped as low as $98.47 earlier in the session and lost $1.54 to $101.16 on Friday.
In London, Brent crude was down $1.22 at $112.62 a barrel on the ICE futures exchange.
Three of Japan's five largest refineries have been shut down, which will immediately crimp demand for crude. Japan is the world's third-largest crude consumer at 4.5 million barrels a day, the second-largest net oil importer and the biggest importer of liquefied natural gas and coal.
On the other hand, analysts said diesel use in Japan could be on the rise. "The demand for diesel fuel to generate electricity should be higher, as the rationing of power is likely after numerous nuclear power stations have been switched off," said a report from Commerzbank in Frankfurt.
Traders were also in a selling mood Monday after disappointing U.S. February retail sales data released Friday, which suggest the recent jump in crude prices is beginning to hurt demand for gasoline. "Put simply, demand destruction is taking place, whether that's in Japan or in the U.S. at the pump," energy consultant The Schork Report said. "A very bearish picture for crude oil."
Investors had been concerned about possible unrest in OPEC leader Saudi Arabia but police prevented a protest organized by pro-democracy activists on Friday in the capital, Riyadh. "The Libyan war still rages on, but in and of itself, will likely not be sufficient to re-spark the rally in crude given that the Saudis have stepped up to replenish the market with extra barrels, and more critically, have escaped — at least for now — the debilitating impact of the massive demonstrations that have swept other countries in the region," said Edward Meir at MF Global in New York.
In other Nymex trading for April contracts, heating oil was up 0.76 cent at $3.0366 a gallon and gasoline dropped 2.81 cents to $2.9596 a gallon. Natural gas rose 6.2 cents to $3.951 per 1,000 cubic feet.

Alex Kennedy in Singapore contributed to this report.

Can the Euro Zone's New Rules Cure Its Ills?

By Leo Cendrowicz / Brussels Tuesday, Mar. 15, 2011

Italian premier Silvio Berlusconi, right, shakes hands with European Commission president Jose Manuel Barroso at Palazzo Chigi in Rome, on March 14.

Andrew Medichini / AP

It has been more than a year since financial markets began buffeting the euro and threatening its very viability, yet Europe is still battling to fix the system and restore confidence in the single currency. At a summit in Brussels on March 11, the euro zone's 17 leaders took a step toward overhauling their bailout mechanism for beleaguered members, while throwing in groundbreaking new rules to coordinate their economic policies. But looming over the so-called Pact for the Euro was the gnawing question of whether the leaders are prescribing the wrong medicine for the currency's ills. Ireland and Greece are already locked into bailout plans aimed at guiding them back to fiscal health, yet there was little sense of how or when either of them might expect to pay back their mountainous debts.

In the short term, the euro zone has staved off the prospect of collapse. At the summit, leaders agreed to expand the main bailout fund in scope and size, boosting its current lending ability from 250 billion euros ($350 billion) to 440 billion euros ($615 billion) for crisis-stricken counties. And they agreed to the foundations of the permanent euro stability fund that will replace it in 2013: it will be slightly bigger, at 500 billion euros ($700 billion), and financed through a combination of credit guarantees and cash capital. The deal, said European Central Bank president Jean-Claude Trichet, "goes in the right direction." German Chancellor Angela Merkel said it strengthened the political pledge to fight for the euro's stability: "I hope that this will also be a good message to the world in terms of the euro as a major currency."

Yet these measures are essentially firewalls. What the euro zone needs in the longer term is a structure that promises solid growth, and the prospect that the debts — which, in Greece's case, amount to a staggering 140% of GDP — will eventually be paid. And for Germany, at least, the Pact for the Euro is the route to lasting salvation.

It is a grand bargain: in exchange for fronting more cash to bail out errant euro-zone members, Merkel wants any recipients to agree to a disciplined program of economic rigor that would re-engineer them to a common standard to make them more competitive. She sees the pact as a way to harmonize budgetary, tax and social policies by making recipient countries raise the retirement age, end any pegging of wages to inflation and agree to deeper budget scrutiny. Indeed, it is an agenda to make the rest of the euro zone resemble Germany, with its enviably low debt and deficit record and its world-renowned economic dynamism. Although backed by French President Nicolas Sarkozy, the pact was widely seen as a diktat trying to foist German priorities on the rest of the euro zone. Belgium, Austria, Spain, Ireland and Portugal all said the proposals intruded too far into national economic decisionmaking. Other critics said it was cynically designed to reassure German voters that Europe's laxer economies would be held to account.

Daniel Gros, director of the Brussels-based Centre for European Policy Studies, notes that although the new mechanisms for economic-policy coordination might be useful to push euro-zone member countries to adopt more sensible policies, until recently Ireland and Spain were held up as the shining examples of competitive economies. "It is thus doubtful that tighter economic-policy coordination will prevent new bubbles from emerging," he says. "Financial markets, at any rate, do not care much about the future setup for economic-policy coordination in the euro zone. They need to know how the existing debt overhang will be dealt with today."
In the face of these objections, Merkel's proposals were watered down at last week's summit, leaving only a general appeal for wage restraint and an increase in the retirement age, a commitment to rigorous budget and labor-market reforms, and a harmonization of the corporate tax rate. The summit's closing statement referred to "a new quality of economic-policy coordination in the euro area." But these remain voluntary commitments to reform, and the pact does not contain any binding targets or sanctions.

This setback did not, however, dampen Merkel's mood, as she showed when Ireland and Greece sought an easing of their bailout terms. The other euro-zone leaders agreed to lower the interest rate charged to Greece, and Athens in turn accepted that it has to reduce its debt further by selling various public properties worth an estimated 50 billion euros. But Merkel rejected Ireland's pleas, suggesting that Dublin could secure a lower interest rate only by raising its corporate tax rate, which, at 12.5%, is half that of most European Union member states and attracts the lion's share of E.U. foreign direct investment. "We weren't very pleased with what the Irish had to offer," Merkel said after the meeting, which reportedly involved fierce exchanges with newly elected Irish Prime Minister Enda Kenny.

All this, however, still leaves many unanswered questions about the euro zone, particularly the unsustainable sovereign and banking debts held in many members. Jacques Cailloux, chief euro-zone economist at the Royal Bank of Scotland in London, says that for all the summit claims about a breakthrough, the Pact for the Euro is essentially a distraction from the bigger challenges. "None of the measures announced will reduce the debt overhang in some parts of the euro area," he says. But at the moment, they are the only measures the 17 euro-zone leaders are able to agree on.

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16/03/2011