PERISCOPE

BUSINESS

Ups and Downs

Often, when a particular currency goes up, the stock market in that region will too. So why have European equity markets been rising over the last several weeks, even as the euro has fallen? Some economists believe that a strong euro never actually contributed to growth in Europe. "Indeed, it mainly punished exporters' profits," notes Bank of America head of international research Raja Visweswaran, who has analyzed the trend.

Now that the euro is down, European corporate profitability is going up, further aided by recent cost-cutting and reform. And slow economic growth in Europe is keeping bond yields low, which reduces interest costs for companies. The Bloomberg European 500 Index is now up by more than 7 percent since the end of April at the same time that the euro has fallen nearly 5 percent (against the dollar) creating the odd spectacle of enthusiastic markets amid high gloom about Europe's long-term political and economic prospects.

The way the EU constitution failed--decisively--is likely to help keep the markets rolling. When the EU voted last week to postpone further efforts to ratify the constitution, it put an end to uncertainty, which is what traders hate most. "Putting the constitution into deep freeze was probably the best (or least worst) result that could have been expected," says Capital Economics analyst Julien Seetharamdoo. "Further 'no' votes would have spilled over into the markets." Whether European stocks stay strong over the long term will depend on whether Europe's leaders can move beyond political wrangling, and toward deeper economic reform.

Brazil: A Powerful Punch

Veteran Brazilian legislator Roberto Jefferson likes to sing. He's no Pavarotti, but last week the head of the small Brazilian Labor Party had the whole country listening as he let loose before a congressional ethics committee. Jefferson told of a massive vote-buying scheme at the heart of President Luiz Inacio Lula da Silva's government. He accused leaders of the ruling Workers Party (PT) of dishing out monthly "allowances" of $12,500 to legislators willing to back government initiatives in Congress, and a $400,000 bonus for rivals willing to switch parties.

Jefferson offered no hard evidence, but the payola scandal is still a body blow to Lula, who has always claimed to take the high road in politics. Brasilia's spinmeisters vehemently dismissed the charges, noting that Jefferson himself is under suspicion of using political appointees to collect kickbacks from government contractors. The problem: a handful of ministers--and even Lula's own spokesman--promptly confirmed that Jefferson had warned about the "allowance" scheme months ago. The first casualty was Lula's chief of staff Jose Dirceu, who resigned late last week.

So far the markets have taken the scandal in stride. (After an initial slump So Paulo's stock exchange rallied.) The long-term worry is whether Lula can rally reluctant lawmakers to enact reforms on labor, social security and taxes. That might depend on what else Jefferson has in his repertoire.

South Korea

Bittersweet Return

South Korean tycoon Kim Woo Choong built Korea's No. 2 conglomerate, Daewoo Group, into a global empire that raked in $67 billion in annual sales. But after the Asian financial crisis drove Daewoo into bankruptcy and tens of thousands of workers lost their jobs, Kim fled the country, accused of accounting fraud, illegal borrowing and foreign-exchange smuggling.

Last week Kim, now 69, returned, saying he had been in France, Vietnam and China, and just wanted to taste Korean noodles again. He was promptly arrested, but he may just receive a slap on the wrist. South Korea has a habit of turning on its heroes and then pulling back: two former presidents received life sentences for corruption and mutiny but were released early. Some now argue that Kim was just a product of Korea's system, encouraged by government loans and tax breaks to build his house of cards. While he now admits to the embezzlement and smuggling charges, he maintains that none of his transgressions was for personal profit. That may just get him off the hook.

Africa: A Strong Letter of Recommendation

Insisting they had "no moral alternative," a group of influential black American pastors who support President George W. Bush wrote an open letter last week urging him to substantially boost U.S. aid to Africa and asking him for a meeting. The pastors say that increasing African aid is a moral and not a political issue--but timed their appeal in advance of next month's G8 summit, where aid to Africa will be on the agenda. "Africa has never before been on the top of anyone's priority list," said Bishop Charles E. Blake, who drafted the letter. Together, he and the other pastors (including T. D. Jakes of Dallas, Texas) represent churches with a combined membership of nearly 100,000 socially conservative African-Americans, a constituency coveted by GOP strategist Karl Rove. Last month Secretary of State Condoleezza Rice met with about 25 African-American ministers to discuss what the black church could do to alleviate African suffering. "It was very cordial, but not long on policy substance," said another of the open letter's signers, the Rev. Eugene F. Rivers, of Azusa Christian Community Church in Boston, Massachusetts. The White House would not say if Bush would meet with the group.

Distant Relative?

Gliese 876, a dwarf star in the constellation Aquarius, never attracted much attention. Until now. The star is orbited by at least three planets, and last week astronomers announced that one has some eerie similarities to ours. The as-yet-unnamed planet is the smallest ever detected outside our solar system, and, like Earth, it's rocky. However, the new planet probably doesn't harbor life or even liquid water. Because it's just 13,936,769,418,548, 000 kilometers from its "sun"--next door in astronomical terms--it can get as hot as 400 degrees Celsius. So close, yet so far.

Oil: Tapping the Holy Land

Most biblical references to oil allude to the kind you squeeze from an olive. John Brown, an evangelical Christian from Texas, believes the Jewish Bible also talks about petroleum--and points to its precise location in Israel. With a team of oilmen and a map drawn from Scriptures, the 65-year-old businessman began drilling in northern Israel last month. He describes the venture as grounded in theology but supported by science. "I believe God deposited the vision of oil for Israel in my heart," Brown tells NEWSWEEK. Hoping to help Israel counter Arab domination in oil markets by developing its own supply, Brown formed Zion Oil in 2000 and bought rights from the Israeli government to explore a 40,500-hectare plot in northern Israel. After raising $7 million, mostly from other evangelicals eager to support the Jewish state, he chose a spot near Kibbutz Maanit to begin the 4,500-meter drill based on his reading of the Old Testament.

Brown began with Gen. 49:22-26, where he believes a verse about God's giving Joseph "blessings of heaven above [and] blessings of the deep that couches beneath" refers to the presence of oil in an area of ancient Canaan named after the tribes of Joseph's two sons, Manasseh and Ephraim. Brown traced the geographic location of the two tribes on a Biblical map he superimposed on a map of modern Israel. A wide area around Maanit corresponded to his interpretation of the texts. It also linked with research by Stephen Pierce, a geologist who had studied the area. Now Brown's consulting geologist, Pierce says there's a Triassic reef deep below the surface of Maanit, a strong sign of oil. The site where they're drilling has been excavated before, but Brown's team is going much deeper.

Some Israelis scoff at the project. Zvi Alexander, a veteran of the Israeli oil business, says Brown's chances of hitting pay dirt are slim. He says nearly 500 holes have been drilled in Israel in the past 50 years by geologists looking, unsuccessfully, for oil. "I don't know of any other area in the world this small that has been poked so many times," he says. Brown, on the other hand, says God won't let him fail.

Books: We Are What We've Eaten

Going through his stomach may be the way to a man's heart, but for Tucker Shaw, it was the way to a book deal. Shaw, a 36-year-old writer of teen novels from Denver, took photographs of everything that entered his mouth in 2004--all the way from Jan. 1 to Dec. 31. The end product: "Everything I Ate: A Year in the Life of My Mouth," an intriguing--albeit sometimes shocking--glimpse at everything from bagels to bacon cheeseburgers to wonton soup to Cheerios, cataloged in 2,500 raw color images. The celebratory and somewhat exhibitionist journey may seem a trivial subject at first, but after leafing through the 500-page picture book, one gains a completely different sense of just how much food Americans actually consume. And like a typical American, Shaw enjoys his meat more than his recommended daily allowances of fruit and vegetables. (One memorable meal included tuna tartar with chorizo, lamb meatballs, pork bellies, caramelized cauliflower, sauteed duck breast, chili rellenos and Danish pork ribs, topped with a plate of risotto with shrimp and saffron.) On other days, he eats just cold pizza, cereal and trail mix. As a result, "Everything I Ate" makes for a remarkable journey into the unpredictable--and somewhat unhealthy--gut of the modern Western diet. One that's not for the faint of heart--or stomach.

Flamenco: An Old Art's Flamboyant New Conquistador

Spain's music scene has a history of flamboyant, sexed-up divas--think Lola Flores and Juana Reina, the grand dames of flamenco. The country's newest flamenco sensation fills the bill: Seville-born singer Falete has the voluptuous voice to match a penchant for gold jewelry and fake nails. There is, however, one peculiar, a historical, difference. Falete is a man.

Since the recent release of his debut album--titled "Amar Duele," or "Love Hurts"--the cross-dressing 27-year-old has turned the traditional (and, generally, homophobic) world of flamenco on its ear. Perpetually swathed in silk and perfectly coiffed, he is brazenly out of the closet. The nine gut-wrenching tracks on "Amar Duele" explore the dark underbelly of modern relationships: on "Payaso" Falete rails mercilessly against a former lover; in "Lo Siento Mi Amor" he wallows in post-breakup self-pity, voice cracking with self-indulgent sorrow. Some critics accuse Falete of exploiting his offbeat sexuality, but he insists he's only being himself. "I was born this way," he says. "I dress this way, I love this way and I sing this way."

Retro: Don't Ever Change

In "retro-electro: collecting Technology from Atari to Walkman," U.K. technophile Pepe Tozzo pays homage to more than 200 pioneering gadgets that we've treasured then tossed. It reads like a yearbook (minus the bad hairdos): here, the geeks (JVC's Videosphere television, class of 1970), the hipsters (Bang & Olufsen's Beogram 4000 turntable, class of '72) and the overachievers (Sony's Walkman, class of '70) stand shoulder to shoulder in tribute to the way we were. "As we get older," says Tozzo, "we pine after the items that remind us of our younger years." In 2005, that means Ataris--not antiques. BBC TV now devotes much of its "20th Century Roadshow" to retro-tech gems, and Christie's recently auctioned a cache of rare computer artifacts--for $700,000. Stocked with price information and eBay tips, "Retro-Electro" will help budding collectors rebuild their old rec-room rigs. For the rest of us, it's a welcome blast from the past. Batteries not included.