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  • Derivatives Regulation Has Loopholes

    Wall Street's biggest banks aren't just back to handing out fat bonuses. They're also engaged in a stealth lobbying effort to keep one of their main sources of profits—derivatives—free of government control. These are the unregulated financial instruments, like credit default swaps, that helped cause the crash. To take the heat off itself, the banking industry has stood aside as a newly formed group, the Coalition for Derivatives End-Users, fights efforts to curb the use of exotic securities. The group includes Wall Street's biggest corporate customers, from Apple to Whirlpool, organized by the Chamber of Commerce, the National Association of Manufacturers, and the Business Roundtable. The lobbying met with some success last week, finding support among Wall Street–friendly "new Dems." The House Financial Services Committee passed a bill that its chairman, Rep. Barney Frank, said would force "large numbers" of derivatives trades to be done on open and regulated exchanges. But critics...
  • 6 Myths About China

    The conventional wisdom is that China is steaming through the global financial crisis by building on the momentum generated by its 30-year boom. Indeed, ever since it sailed through the last big global crisis—the Asian contagion 10 years ago—Beijing has been feted for uniquely steady helmsmanship in financial storms. So perhaps it's natural for forecasters to assume that the Chinese supertanker of state is not turning sharply now, particularly since it continues to grow rapidly even as other economies sink in the recession. Yet this crisis is different—bigger and more damaging than any seen in generations—and it is exposing limits and forcing change in just about every key piece of the China model: the supremacy of the one-party state, the smart economic management, the export-driven growth, the emerging consumer class, the burgeoning private sector, the headlong focus on growth at any environmental cost, and the drive to build world-class companies. What follows is a look at why...
  • Auction Houses Look to Asian Collectors

    The contemporary-art market is not much more robust in Asia than it is anywhere else. But in other genres, Asian buyers are showing some surprising muscle, snatching up pieces that Western buyers have shunned and creating a lone bright spot in an otherwise bleak market. Collectors from mainland China continue to bid aggressively on imperial artworks and porcelains viewed as heirlooms that must be repatriated. At Sotheby's New York auction last month, Asian buyers took all but one of the top 10 lots; at Christie's, 14 of the top 20 went to Asians. An Asian buyer spent $362,500 on a 12th- or 11th-century B.C. bronze food vessel, which Christie's had estimated at $20,000 to $30,000, while a rare imperial zitan stand and cover, also estimated at $20,000 to $30,000, went for $1.42 million.Asian buyers are proving to have deep pockets in new auction categories: those associated with a high-end lifestyle. Asian oenophiles, demonstrating an educated palate and an appetite for rare wines,...
  • Dominique Strauss-Kahn on the Financial Crisis

    The sense of relief at last week's G20 summit was nearly palpable: thanks to their decisive actions over the last year, world leaders had staved off a second Great Depression. But Dominique Strauss-Kahn, managing director of the International Monetary Fund, cautions that "crises never end." NEWSWEEK's Tony Emerson and Barrett Sheridan spoke with him about the knock-on effects of the recession, from war to banking reform. ...
  • Free Trade Policy: Intelligence Squared Debate

    Call it the Rubber-Chicken War—the looming trade dispute between the United States (which has announced punitive tariffs on imports of Chinese tires) and China (which is threatening retaliation against American poultry exports). Against the background of the G20 trade talks in Pittsburgh, that contretemps made this an auspicious time to examine the age-old question of protectionism. Last week, beginning the fourth season of public debates sponsored by Intelligence Squared US, six panelists discussed the proposition that "Buy American/Hire American policies will backfire." ...
  • Japan's Luxury Market Won't Recover Soon

     By Daniel McGinnJapan has half the population of the U.S., and less land than California, yet there are more than twice as many Burberry, Hermès, and Prada stores in the Land of the Rising Sun than in all of America. For decades they've been full of brand-conscious Japanese shoppers who typically dig deep for luxury labels, fueling a $20 billion-a-year market. But even before the global recession, there were signs of a slowdown. When McKinsey & Co. principal Brian Salsberg wanders through Tokyo's shopping district, he notices that "for every one luxury [brand] bag, there are 10 Uniqlo, Forever 21, or H&M bags," referring to trendy lower-priced labels. "It's easier and cheaper today to be fashionable in Tokyo [at] a 10th the cost," he says. In a new report, Salsberg cites several reasons for Japanese consumers' shifting taste. It partly stems from growing confidence: instead of relying on labels to ensure stylishness, Japanese women...
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    Green Rankings 2009

    Newsweek's debut list of environmentally-conscious businesses, in the United States.
  • Why the Solar Industry Is Struggling

    Last summer the future of the solar industry looked bright. Demand was high thanks to generous government subsidies, and solar stocks were soaring. But now it resembles a classic bubble. The solar industry overbuilt and is now struggling under the weight of excess capacity and falling prices. As the global recession took hold, credit dried up and governments cut subsidies, most notably in Spain, where the world's largest subsidy program blew up after spurring nearly 10 times the growth it had intended. When Spain capped it last year, the world's second-biggest solar market collapsed─and so has the price of solar panels, down 50 percent in 2009. That's great news for consumers but terrible news for manufacturers now sitting on warehouses full of overpriced panels. Most companies took huge write-downs in the second quarter, driving their stock prices even lower. Germany's biggest solar company, Q-Cells, had traded near 100 euros early last year; it's now about...
  • Scenes from Federal Hall Before and After Obama Speech

    The Big Money's Chadwick Matlin has been down in the financial district all morning watching Obama's speech to the financial world. Here's a dispatch from the field:A year ago, Lehman Brothers forced Washington to make a decision: bailout or bust. Paulson, Bernanke, and Geithner chose bust, and then the economy had to be bailed out. Today, Barack Obama came to Wall Street to ask that Washington never be given that choice again.   This shot was snapped just before the address. Note that the Suits don't know how not to schmooze.  Obama’s speech was positioned to help remind Congress and Wall Street that financial regulatory reform is still sitting on a long list of to-dos. With light coming in from a skylight cupola, Obama delivered his speech to more than a hundred people. They were all gathered at Federal Hall in the financial district, the capitol back when New York was the capital. A vault door was purposefully ajar, a reminder that Federal Hall once served as...
  • The Waning Power of the Bully Pulpit

    President Barack Obama didn't reveal any sweeping new policies in his speech on financial reform at Federal Hall today. In fact, most of it was a rehash of the wonkish proposals already put forward by Treasury Secretary Tim Geithner and others. Most notably, the Administration will work with Congress to create a Consumer Financial Protection Agency that will -- in theory, at least -- keep banks from pushing exploding mortgages to uninformed consumers. They'll make the Federal Reserve responsible for the keeping the whole system humming along, and create a new bankruptcy process for too-big-to-fail institutions that, well, fail....
  • Stonyfield Yogurt's Bumpy Start Up Story

    Stonyfield Yogurt helped develop America's taste for organics. But early on, even the company's founder was unsure just how sustainable the company's business model would be.