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BW Businessworld

Honours List

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Britain’s Peter Higgs and Francois Englert of Belgium (in pic) won the Nobel prize for physics for predicting the existence of the Higgs boson particle that explains how elementary matter attained the mass to form stars and planets. In literature, Canadian Alice Munro won for her tales of the struggles, loves and tragedies of women that made her what the award-giving committee called the “master of the contemporary short story”. Americans James Rothman and Randy Schekman, and German-born Thomas Suedhof won in medicine, for plotting how cells transfer vital materials such as hormones and brain chemicals to other cells. Fellow Americans M. Karplus, M. Levitt and A. Warshel won the chemistry Nobel. And at the time of going to press, Malala Yousafzai, the Pakistani girl who was shot by the Taliban for going to school, was a strong contender for the peace prize.

Nick Of Time

Britain told European regulators in July it was considering a break-up of part-nationalised Royal Bank of Scotland (RBS), pre-empting tough European Union (EU) rules on state support for banks which came into effect in August. The UK Treasury’s early notification means regulators will examine any proposals on an RBS break-up under the old EU rules, potentially making it easier to execute. “We made a precautionary notification to the European Commission in July of a potential restructuring measure at RBS,” a Treasury spokesman said. The Treasury is considering whether RBS, 82 per cent-owned by taxpayers following a £45.5 billion 2008 bailout, should hive off its riskiest loans into a separate legal entity, leaving the rest of the bank better placed. But the new EU rules would have required the bank to put a cap on the earnings of RBS executives and prevented the government from buying out minority shareholders, making the plan harder to implement.


The probe into possible rigging of the $5.3 trillion foreign currency market is widening, with European Union regulators joining the hunt for evidence that banks may have tried to manipulate exchange rates. They suspect that competition rules had been broken. The currency probe marks the latest crackdown by regulators on banking misconduct. A global investigation into the setting of Libor has squeezed billions of dollars out of banks in fines and prompted regulatory changes. Investigations have also been launched in Switzerland and the UK.

Looking Up
Periphery countries in the euro zone do not need to review their fiscal adjustment policies unless growth slows significantly, the International Monetary Fund (IMF) said. Jörg Decressin, the deputy director of the IMF’s research department, said austerity in countries like Portugal has already been less this year than in previous years, while growth is likely to rebound. These countries are struggling to tame their debt while coming out of a prolonged recession sparked by a sovereign debt crisis across the bloc. “Only if growth were to disappoint in a major way would one have to go and revisit this,” he said about the austerity targets. The IMF now expects Greece, Italy, Portugal and Spain to exit recession and start growing from next year. Ireland has already been growing, albeit slowly.

Debt Trap
US President Barack Obama acknowledged that the White House and Treasury are planning for “all contingencies” if Congress doesn’t raise the debt ceiling in time. But the contingencies won’t be silver bullets. “No option is good in that scenario,” Obama said. “There’s no magic wand that allows us to wish away the chaos that could result if...we don’t pay our bills on time.” The Treasury is expected to do what it can to prioritise payments to bondholders. But there’s no guarantee markets will be sanguine if investors keep getting paid but many segments in the US economy are put on hold.

The financial clouds that settled over US cities during the 2007-09 recession are lifting, with a recent survey showing cities’ revenues likely increased in 2013 for the first time in seven years, helping to boost their reserves. According to the annual survey conducted by the National League of Cities, which represents civic officials across the country, 72 per cent of city finance officers believe their municipalities are better able to meet financial needs this year than they were last year. In 2012, only 57 per cent said they were more capable of paying for services and other demands than in the previous year. “While conditions are no longer deteriorating, the capacity of city budgets remains weakened coming out of the Great Recession,” the survey says.

Gearing Up
Ford Motor is poised to overtake its Japanese rivals on the top seller’s list in China as Toyota Motor and Honda Motor struggle to regain market share following a flare-up in anti-Japanese sentiment a year ago. Ford is likely to sell more than 900,000 vehicles, including passenger cars and commercial vehicles, in China this year thanks to its beefed-up product line-up. Sales have been growing in leaps and bounds and should become even stronger next year. Ford is expected to start production at a major assembly plant in the eastern city of Hangzhou around 2015.

Phoney Wars
Some older Samsung smartphones and tablets may be taken off store shelves in the US after the US Trade Representative opted not to reverse a ban ordered because the devices infringe Apple patents. The decision is the latest step in a patent battle across many countries as Samsung and Apple vie for market share in the lucrative mobile industry. Samsung and Apple are the No. 1 and No. 2 smartphone makers globally. So far, the models of the affected Samsung devices haven’t been disclosed.

Mid-Air Strike
Stung by the loss of a multi-billion-dollar jet order from Japan Airlines (JAL) to arch-rival Airbus, Boeing will mount a all-out defence of its position with Japan’s other major airline, ANA, say sources. Boeing executives are still trying to understand why long-time customer JAL ordered 31 Airbus A350s — worth $9.5 billion. ANA Holdings wants around 35 aircraft to replace its long-haul Boeing 777s and, like JAL, is considering both the A350 and the Boeing 777X. But the US’s close diplomatic ties with Japan could help Boeing’s cause, according to industry sources.

Power Off
Panasonic Corp will pull out of the plasma TV panel business by the end of the financial year, sources familiar with the situation said, marking a key milestone in the long-term decline of Japan’s TV industry. Panasonic had been expected to back out of the unprofitable business, but the exit comes sooner than predicted, underlining the firm’s determination to weed out weak operations.

(This story was published in BW | Businessworld Issue Dated 04-11-2013)