(CNN) – It has been about a year since BP sealed the oil well that had been gushing oil into the Gulf of Mexico.
Renewed exploration and drilling is in the news this week with deals being discussed in Russia, Alaska, India, and even off the shores of Cuba. But has the international business community learned enough from the Gulf oil spill one year later.
A U.S. biochemist and scholar says no way, and argues that more protections and protocols must be put in place.
In April, 1993, I was a young Canadian reporter covering politics and finance, trying daily to make sense of debt-to-GDP ratios, a falling Canadian dollar, and a good old fashioned free-for-all in Canadian politics. The political debate of the time was rife with the same threadbare arguments we hear today, from among the Keynesians who wanted to spend their way to prosperity, and the hackers-and-slashers who felt that deep cuts were the only way to save the tanking Loony and stem the rising Canadian unemployment rate.
So forgive me for wanting to crawl back into bed as I stumbled home from a vacation week of relaxing and fishing in my former homeland directly into my first day back at work in the United Sates and a 600-plus point freefall on the Dow Jones. This was not what I had in mind.
(CNN) – When it comes to tech stocks, are we partying like it’s 1999—again?
I spoke with Tiernan Ray, Senior Editor of Barrons.com and asked him that very question. He says no. This is certainly a party, but it’s different than the tech bubble that burst. Why? Valuations, plain and simple.
Right now we have a slew of high-flying IPO’s. Just look at LinkedIn. The internet darling’s shares more than doubled on the first trading day and have stayed in the stratosphere even after settling down in a rough trading week.
China’s tech boom is just beginning. Recently we’ve watched Ren Ren hit the market, along with Russia’s Yandex, and of course, just days ago, Groupon. Tiernan Ray says the hyped-up IPO’s may very well be over-priced, but to him, almost everything else looks beaten down.
Some major Groupon and LinkedIn investors spoke out last week saying the same thing: No bubble, no way. Hugh Grieves, manager of the Herald Worldwide fund was quoted online as saying, “It only becomes a bubble when you see your grandmother invest,” a great line and a reminder of the “unnatural investors” we saw buying tech stocks at random in 1999 looking to day-trade for a quick buck.
However, other analysts insist a bubble in tech is inevitable with so many IPO’s flying off the shelves, believing that the tech market remains full of lemons just waiting to die spectacular deaths, and that the continuing U.S. economic slowdown complicates the landscape considerably.
There have been many books written about the financial crisis: What caused it, who’s to blame and how it could have – and should have – been prevented.
This new one, “Reckless Endangerment: How Outsized Ambition, Greed and Corruption Led to Economic Armageddon,” lives up to its lengthy title and gets deep into the weeds of who did what, when and how. In short, Gretchen Morgenson and Joshua Rosner name names and connect the dots.
Singled out for particular criticism, James Johnson, former CEO of Fannie Mae, who the authors say built the U.S. backer of mortgages into “the largest and most powerful financial institution in the world.” And that’s not a good thing—not in this case. The authors paint a painstaking portrait of the way they allege Johnson, and so many others, used money and political influence to get around the rules, get rich, and create a catastrophe.
(CNN) - At last, someone who understands that failure is NOT the end of the world. Finally, a business book that doesn’t make me and half the people I know feel like idiots for not inventing Facebook first! A kindred spirit, I thought, as I sat down to interview Financial Times columnist Tim Harford about his new book “Adapt: Why Success Always Starts with Failure.”
You see, Harford understands that success requires failure – over and over again. Even when you don’t realize you’ve failed in business, chances are you have. Chances are you learned from it. And chances are the next thing you undertook was better because of it.
Harford advocates making room to experiment and fail in your daily work environment. Easier said than done!
His examples include Lehman Brothers – a collapse of mind-numbing complexity – and a spate of problems too big to solve. Harford makes the case that preventing colossal failures would be easier if we’d just embrace the smaller ones along the way. Failure, he says, is under-rated (be sure to tell that to your boss at your next performance review will you?)
Harford’s examples include the banking crisis, the Iraq war, even climate change. What would you be more likely to fail at: Building a toaster or staging a Broadway musical? You might be surprised. There is a lot of high economics in plain English in Harford’s book—a delightful read!
Israel and Egypt have benefited from a peace treaty for more than 30 years; however, the current uncertainty over Egypt’s political future has many wondering whether this peace will hold.
Who will succeed Hosni Mubarak? What role will the Muslim Brotherhood play in the country's future? Will democracy and free media take hold in the most populous of Arab countries? And will economic and business factors provide the glue to stop the fabric from splitting apart?
Economic ties between Egypt and Israel are limited but not nonexistent. For example, Israeli-owned textile factories employ thousands of Egyptians. They operate under the Qualifying Industrial Zones, a U.S. initiative that rewards ongoing business and trade relationships such as those in the textile industry.
More than 40% of Israel's natural gas needs are met through the gas pipelines across the northern Sinai. Can economic and trade ties in this fragile region help cement ongoing peace? Tell us your thoughts!
How much damage is the unrest in Egypt doing to the BRIC block of emerging markets? Depends on who you talk to.
This week, there have been conflicting headlines on this subject with some analysts saying the impact is marginal and others warning us to be cautious. David Spegel, Global Head of Emerging Markets Strategy for ING, puts it this way: “The BRICs have suffered somewhat, with all equity indices – with the exception of Russia – posting negative returns year-to-date.”
Concerns about Egypt are weighing on sentiment, but inflation may be the bigger worry for the BRIC economies. Global food prices have shocked the markets; however, Spegel expects the cyclical factors affecting food prices will ease after October for most emerging markets.
But he adds this caution: “In other cases, inflation has been more broad-based, with wages, service costs and tight capacity constraints all suggesting overheating risks.” If policy-makers fail to act aggressively, these factors could spell trouble for the BRICs.
Some action is already taking place. For example, Russia, the only BRIC without capital controls, is following China and relying on reserve requirements to drain cash from the economy and curb speculative inflows. In addition, Brazil has been returning to capital controls to stem rallies in the currency.
“We remain constructive on Emerging Markets investments for 2011, with a less rosy view of risks in 2012, when the United States is expected to raise rates… Elections in the U.S., Mexico and political changes in China may result in greater market jitters.” says Spegel.
And of course, we’ll keep watching.
(CNN) – Watching CNN’s fantastic Davos coverage both on television and online, I can’t help but notice we’re always talking to men. Turns out, there’s good reason for it.
According to World Economic Forum executives, women have never made up more than 17% of total attendees. The WEF has introduced a quota for female executives from major sponsors at this year’s summit. One in five delegates sent by strategic partners must be female.
I’ve never met a quota that didn’t have a long trail of strong opinion floating behind it, and this one is no exception.
As one of my Twitter followers asked: “Why does gender still count in 2011? Why don’t we talk about how qualified a person is for the job of CEO?”
(CNN) – First Indonesia, now South Africa making the argument that it’s an emerging economy worthy of the BRIC acronym.
South Africa’s leader has reportedly been invited to the next BRIC summit, coming up in April, in Beijing. China is apparently in favor, and Russia too, with both countries touting how politically significant such a decision would be.
The South Africa boosters say it’s strategically important, and with Russia’s economy struggling in the first part of 2010, very relevant.
But geopolitics aside, what about the economics? Some analysts say, look at the numbers, and forget about messing with the popular acronym.
South Africa and Russia have equity markets of comparable size at $718 billion. But South Africa’s economy is only about a quarter the size of Russia’s. Its population size, as you’ll see in my video blog posted here, is a mere fraction of the larger members.
According to David Spegel who analyzes emerging markets for ING, Russia is important because it is the only major energy exporter among the BRICS, with 68% of exports being fuels and metals. South Africa does not fill that need among the bloc.
And watch out in 2011. Russia may have a banner year if, as some analysts predict, that sleeping giant has just woken up.
A rare note of caution coming from UK businesses, in reference to BRIC economies.
The business advisory firm, Deloitte, has released its annual entrepreneurship report. It surveys about 350 entrepreneurs across the United Kingdom, and finds that the UK, Western Europe, and North America remain the preferred markets for growth.
Surprisingly, there’s an abundance of caution towards the BRIC nations, even though Brazil, Russia, India, and China represent 70% of global growth. Among the entrepreneurs surveyed, just 1.5% consider China as a prospect for the growth of their business. Less than 1% choose India and Brazil, and just 0.3% like Russia, despite its resurgent market.
Specifically, the survey asked: “Which geographic market represents the best opportunity for significant growth for your business over the next three years?” Expansion plans are predominantly focused on the UK market, although North America grew in favor over the previous year. Very few entrepreneurs are targeting the BRIC.
The head of Deloitte’s entrepreneurial business team, Tony Cohen, says “there’s less optimism and more caution for the BRIC because doing business there… opens up new risks. One has to look at culture, regulations, contacts, systems… North America speaks the same language. Western Europe is much closer.”
While entrepreneurs may be wisely managing risk as the economy recovers slowly, are they also missing out on opportunities in the fast-growing BRICs? Tony Cohen says, “It’s always possible…. But UK businesses appear happy to build growth in the UK for now, with a view to expanding in due course.”
The survey also finds that more than half (55%) of entrepreneurs surveyed expect short-term negative effects as a result of financial pressures on their business. However most report no change in their overall strategy as a result of the difficult economic times.
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CNN International's business anchors and correspondents get to grips with the issues affecting world business, and they want your questions and feedback.