Stefan Theil

Stories by Stefan Theil

  • Greece Is Far From The EU's Only Joker

    First there was Enron; then, subprime. Now it turns out that some governments have been just as adept at using financial alchemy to hide debts. Take Greece, a country with a $350 billion national debt that is now under investigation by the European Commission (EC) for underreporting its deficit by as much as 9 percent of GDP in 2009. It used derivatives devised by Goldman Sachs to give itself an off-the-book loan, sold future EU subsidies and lottery earnings to investment banks for upfront cash, and raised money by mortgaging its highways and airports....
  • Peter Sands, Robert Diamond on the Global Economy

    Where is the global economy headed in 2010, and is the financial crisis really behind us? Two banking heavyweights, Barclays president Robert E. Diamond and Standard Chartered CEO Peter Sands, give their take to NEWSWEEK's Stefan Theil. Excerpts: ...
  • A Q&A With the Head of Doctors Without Borders

    As other organizations were still trying to get into Haiti last week, Doctors Without Borders was already there, with more than 800 doctors, nurses, and other medical professionals on the ground—though getting supplies and more people in proved a critical problem. Just before taking off for the island, the group's president, Christophe Fournier, spoke to NEWSWEEK's Stefan Theil. Excerpts: ...
  • Europe's About-Face on Offshoring

    When $145-a-barrel oil sent shipping costs skyward in 2008, it was the first hint that globalization might have its limits. Now the downturn is forcing companies to think twice before heading abroad. An October survey by Cognizant, an IT outsourcing company, found 40 percent of European companies cut back outsourcing plans in 2009. The drop was even sharper in manufacturing. A November survey by Germany's Fraunhofer Institute showed a trend toward "backshoring"--bringing production home. One company is now returning to Germany for every three going abroad, compared with one in six in 2003. For the first time since 1995, many firms are abandoning China. Job losses to offshoring have slowed to a trickle.Steffen Kinkel, the study's author, says the big difference from past recessions is that firms are focused less on slashing costs than cutting excess capacity amid reduced global demand. They've also found many offshore factories didn't deliver the...
  • Brazil Fights Warming One Leaf at a Time

    The Copenhagen climate talks may have been a flop, but there was one piece of good news: a plan for rich states to pay the developing world to stop destroying tropical forests. That's key because deforestation represents about 15 percent of annual greenhouse gas emissions--more than all the world's cars, trucks, planes, trains, and ships combined. While countries couldn't agree on binding targets, it was the first time they had made halting deforestation central to the fight against climate change....
  • Europe's Next Financial Crisis

    If the collapse of Dubai's credit-fueled bubble in November was a late ripple of the last financial crisis, events in Europe last week seemed like an omen of the next: out-of-control government deficits. Markets headed lower after rating agencies downgraded the public debt of Greece and warned about the outlook for several others. Greece could become the first developed country since 1948 to default on its debt, thanks to a deficit running at more than 12 percent of GDP and few signs that the government is willing or able to cut it. More seriously, Standard & Poor's last week slapped a negative outlook on Spain, a much larger economy....
  • East European Writers Take on Communism

    György Dragomán was 3 when his father taught him to protect the family's privacy by lying to neighbors and teachers who were often informants for the Hungarian regime. "From then on I lived a double life," says the 36-year-old author, "telling one thing to one set of people and something else to another." For millions of Eastern Europeans, that was the basic survival strategy under communist regimes whose tentacles—and secret-police informants—reached deep into every facet of life. Today, Dragomán makes that past come alive again in his novels. The White King, based loosely on his family's experience, depicts totalitarianism though the eyes of a young boy as his family is terrorized by the secret police. The work recreates the struggle for freedom and decency amid gripping fear and oppression. Yet at readings in Poland, Romania, and eastern Germany, Dragomán says, he has drawn people nostalgic for the communist era who were disappointed when he confronted them with an account of the...
  • Dining at Berlin's Hidden Gems

    In the 20 years since the fall of the wall, Berlin has turned from a town where eating was best avoided to one of Europe's culinary capitals. Berlin's newest food trend, however, is the rise of cheap, divey restaurants as an unlikely backdrop for delicious food. Themroc, a grungy hole in the wall, has a few mismatched tables and worn-out sofas huddled around a small open kitchen that turns out one delectable dish per night (no substitutions, please), such as osso buco with fresh gremolata. In the immigrant-heavy Kreuzberg district, Schlesisch Blau offers German comfort food like sauerbraten (rich beef braised in a sweet dark sauce) in a living-room-like setting. G wie Goulash serves nothing but its namesake dish, alternately made from veal, venison, or horse. Some of these restaurants have no signs and no marketing—not to evoke a secret, in-crowd supper club (that would be so 1990s) but just to keep things simple. That grungy and low-key can be high trend is nothing new in Berlin,...
  • Rising Risk of Debt and Default in Rich Nations

    if act I of the recent economic turmoil was the banking crisis and Act II the recession, then the final act will be the crisis from exploding government deficits. By 2014, says the IMF, total public debt in the advanced economies will balloon to an unprecedented 115 percent of their GDP, compared with 75 percent in 2008 (60 percent is generally considered sustainable). Two IMF directors warned last month that in order to get debt back down to more controllable levels, governments will have to move from an average 3.5 percent deficit in 2010 to a 4.5 percent budget surplus by 2020--and hold it there for 10 years, mostly by freezing spending and cutting entitlements. The planet where such budget-cutting discipline exists has yet to be discovered. ...
  • How Europe's Right Stole the Left

    With Angela Merkel's reelection in Germany on Sept. 27, and her subsequent ejection of the Social Democratic Party (SPD) from the ruling coalition, conservatives have come close to sweeping Europe. Center-right parties now govern Germany, France, Italy, and many historically progressive states like the Netherlands, Denmark, and Sweden. Of continental Europe's major countries, only Spain is now led by a socialist. While the hemorrhaging Labour Party holds on in Britain, it will need a miracle to survive next year's election....
  • Opel Declares War On GM

    Check out this take on troubles brewing at General Motors' German Opel unit, from our European economic correspondent, Stefan Theil. Is this the beginning of a new union stand in Germany? ...
  • Porsche Raided on Insider Trading Suspicions in Germany

    Porsche headquarters were raided by German investigators Thursday due to suspicions of insider trading by former CEO Wendelin Wiedeking, who was ousted last month following an epic takeover battle in which the luxury carmaker almost swallowed Volkswagen─Europe's largest carmaker, which is more than 10 times Porsche's size─before VW turned the tables. It is now set to gobble up Porsche instead. In trying to buy up Volkswagen, Wiedeking had accumulated 43 percent of VW's shares but secretly held options on another 32 percent. Porsche did not disclose the options until October 2008, roiling the markets. The company said yesterday that the trades were perfectly legal under German law.Under Wiedeking, Porsche turned itself into something like a hedge fund that happened to make fast cars. In the first half of the company's accounting year that ended March 31, Porsche reported $9.5 billion in profits from trading Volkswagen shares, versus the $700 million it earned by...
  • Why Are Germany and Japan Beating the Recession?

    What happened to the idea that the U.S.—thanks to massive and early stimulus, radical financial-sector restructuring, and the innate flexibility of the American economy—would recover from the global recession before Europe, and certainly before Japan, the perpetual sick man of Asia?This week, unexpected OECD data showed Japan growing 0.9 percent in the second quarter. That's on top of the surprise news last week (PDF) that Germany and France each grew 0.3 percent from April to June, after the consensus predicted another contraction. That means three of the G7 economies are now officially out of recession, while three are still in it (the U.S. at minus 0.3 percent in the second quarter, Italy at minus 0.6 percent, and Britain at minus 0.8 percent). Canada, the other G7 member, has yet to report Q2 data.France and Germany rebounded on the back of rising exports, mainly to Asia where China is growing at a clip of 8 percent a year. Europe's two biggest economies have also been...
  • Europe's Debt May Cause Recession to Linger

    As much as the U.S. economy has taken a hit from overindebted consumers winding down their credit-fueled binges, Europe's own mountain of debt could cause the recession to linger longer there than in America. Just like the U.S., Europe faces a ­consumer-loan crisis, with up to $175 billion in ­consumer-debt defaults over the course of the downturn. On top of that, European companies--traditionally reliant on house banks for financing--are having a much harder time than their U.S. competitors at finding the capital they need. In the euro zone, where companies are most reliant on bank loans, credit flows turned negative this year as banks tightened lending and cleaned up their balance sheets. In June alone, banks lent non-financial-sector firms $49 billion less than they took in from them in repayments, the biggest such decline on record.  ...
  • German Banks are Among the World's Worst

    How is it that supposedly rock-solid germany is home to some of the world's worst banks, while profligate Italy's rank among the best? With no housing bubble or consumer-credit boom (most Germans don't even use credit cards), German banks had to work overtime to amass the ¤700 billion in impaired assets they're estimated to hold. And with few opportunities to grow business at home, they plowed a big share of Germany's massive trade-and-savings surplus into high-risk foreign assets. Among the worst offenders: the Landesbanken, seven major public banks supervised directly by politicians, for which Berlin is creating a "bad bank" to soak up as much as ¤500 billion in assets. Contrast this with Italy, long Europe's poster child of fiscal profligacy and shady dealings. According to Daniele Antonucci at Capital Economics, Italian banks like Intesa Sanpaolo and UniCredit largely stayed out of toxic assets, thanks to tight regulations and a...
  • Berlin Is Cheap

    In Paris, laid-off factory workers have taken to kidnapping their bosses. London riots in early April left one man dead outside the Bank of England. In laid-back Berlin, the global economic crisis has, so far, been just another reason to party. On May 1, the International Workers' Day holiday that brings anticapitalist street fights to Europe's capitals, the Berlin air smelled not of burning tires but of fresh-grilled kebabs and cannabis, whose use the city's courts stopped prosecuting in the 1990s. A multicultural street fair in the heavily immigrant Kreuzberg district has long replaced the traditional riots with musical attractions such as Turkish-German rap stars and three bands billed as "trash metal gore." The protest was best summed up by a guy holding a placard that read ARBEIT NERVT—work sucks.It's not just Berlin's protest crowd that couldn't care less about the worst global downturn in 70 years. As the days get longer and temperatures warmer, Berliners do as they always do...
  • The Coming Green Trade War

    The U.S.'s coming around on climate change was supposed to be good news. Instead, it's trouble.