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My latest in Slate, on the inverted yield curve.
Posted by dan at 05:14 PM
Apparently, Spain has realized that in the 21st century global economy, it won't do to have workplaces shut down between 2 p.m. and 4 p.m. every day. Leslie Crawford reports in the Financial Times.
Spain's Socialist government yesterday officially abolished the siesta. A new law published in the official bulletin decreed that lunch breaks would be limited to one hour to allow civil servants to clock off at 6pm.Jordi Sevilla, minister for public administration and a father of three, says the aims of the new law are to put an end to the "chaotic hours" worked in the civil service and allow Spaniards to reconcile work and family life. He hopes private sector companies will follow suit.
"We are trying to set an example by rationalising the working hours of civil servants," he said. "Henceforth, lunch time will be from 12 to 1pm, like the rest of Europe, instead of between 2 and 4pm. This will allow civil servants to leave work at six, instead of eight or nine in the evening." Mr Sevilla wants civil servants to "achieve the same amount of work in less time".
The Círculo de Empresarios (CdE), a business lobby group, also thinks Spain's long lunches are inefficient. It published a policy paper this week urging companies to rethink their working hours to allow employees to enjoy a better work-life balance. Long working hours had become a factor of stress, which diminished productivity further, it said.
"Many Spanish companies still value the quantity of time spent at work, rather than the actual quality of the work produced," says Claudio Boada, president of the CdE. He cites a recent study by Proudfoot Consulting that estimates Spaniards make full use of only 60 per cent of their working day.
"This is costing the economy as much as 8 per cent of gross domestic product," said Mr Boada.
Ignacio Buqueras, head of Spain's national commission for the rationalisation of working hours, said the Spanish working day "causes real problems and traumas for families". Women, he said, were the biggest losers. He said current working hours dated back to a time when most women did not work outside the home.
Some companies have already changed: Coca-Cola Ibérica employees get 45 minutes for lunch and clock off at 6pm; Banesto, a Spanish bank, has also introduced changes.
"We have introduced systems to measure staff according to their performance, rather than how many hours they spend in the office," says Ana Patricia Botín, Banesto's chairwoman. "And we have discovered that people are more productive, and happier, when they can work flexible hours."
But change will not be easy. Alejandra Moore, a communications consultant, said: "The lunch is the main way personal relationships are established. I cannot imagine achieving anything meaningful over a 45-minute lunch."
A communications consultant says he can't imagine achieving anything meaningful over a 45-minute lunch. Who does he consult for, Fidel Castro?
Posted by dan at 10:08 AM
Life imitates art, if you call "Wedding Crashers" art. Mylene Mangalindan reports in the Wall Street Journal:
Large, unguarded social gatherings have tempted the uninvited for centuries. But, like it or loathe it, the practice of freeloading at nuptial celebrations seems to be on the increase, thanks, at least in part, to "Wedding Crashers," the Owen Wilson-Vince Vaughn comedy that hit movie theaters in July. Since then, some hotels, event planners and newlyweds say they have noticed more, and bolder, interlopers -- a group that might well multiply following the release of the "Wedding Crashers" DVD next week.New York City's Waldorf-Astoria has encountered -- and turned away -- would-be wedding crashers weekend after weekend following the film's theatrical release, says Scott Woldman, the hotel's social-catering director. Mr. Woldman says he has had to post plainclothes security guards at the hotel's ballroom entrances to foil infiltrators. "That movie has fanned the curious and the thrill seekers a little bit more," he says.
In San Francisco, wedding planner Connie Kearns says "Wedding Crashers" almost immediately emboldened impostors. Shortly after the film's release, she says, two uninvited women wearing shorts tried to join formally clad guests attending a wedding at the Ritz-Carlton hotel. The two explained they lost their luggage en route to the wedding, but Ms. Kearns didn't buy it. "You should be ashamed of yourself," she recalls admonishing the pair, as she escorted them back to the lobby. Ms. Kearns says one of the women said: "The movie gave us the idea."
Lets hope these women haven't seen "Munich" yet.
Posted by dan at 10:05 AM
In the centuries-long clash between Islam and Christianity, Islam is triumphing -- at least in the markets. Deborah Brewster reports ($ required) in the Financial Times.
In a year when the Standard & Poor's 500 index has nudged up barely 5 per cent, investors would have done better by investing according to the principles of the Koran.Among the small but rapidly growing band of faith-based mutual funds, the main US Muslim fund has beaten funds run according to the principles of the Catholics, the Mennonites, the Presbyterians, and the evangelical Christians. In fact, with the $100m Islamic Amana Growth fund posting a 22 per cent return for the year, they have pretty much beaten everyone, according to data provided by Lipper.
Amana Growth and its sister fund, Amana Income, avoid investing in any company that derives more than 5 per cent of its revenue from alcohol, tobacco, pornography, gambling or the sale of pork. It sold stock in Albertson's, a grocery chain, when alcohol sales began to edge close to 5 per cent of revenue. The Koran's ban on money lending also eliminates most financial institutions. Morningstar, the fund tracker, notes that Amana keeps stock turnover low because the Koran warns against speculation. Apple, Qualcomm and Adobe are big holdings.
Another small fund aimed at the large US Muslim community, the Allied Dow Islamic index, has reaped only 6.9 per cent for the year. It invests 80 per cent of money in various Dow Jones Islamic indices, with the remainder actively managed.
The Timothy Plan, which appeals mainly to evangelical Christians, has a clutch of funds that avoid alcohol, tobacco, gambling, abortion, pornography and also any companies that advertise on shows which feature sex or violence. Its biggest, the Large to Midcap Value Fund, has scored a return of 17.5 per cent, this year after underperforming for some time.
Among the rest of the pack, the Ave Maria Catholic Values fund - the flagship of four Ave Maria funds which hold a total of $400m - has returned 6.3 per cent for the year. It avoids investing in companies that facilitate abortion, donate to Planned Parenthood, are involved in pornography or offer same-sex partner benefits. That last requirement eliminates about 200 of the 500 companies in the S&P.
Posted by dan at 10:02 AM
One of the underplayed themes of 2005 was the deleveraging of the developing world. More emerging economies are becoming bankable, and natural resources dependent debtors (Russia, Brazil, etc.) are using inflow of dollars to pay down debt. The end result: the International Monetary Find is finding its book of business shrinking.
Andrew Balls reports in the Financial Times:
"A decision by Brazil and Argentina to repay their loans to the International Monetary Fund ahead of schedule raises the question of whether the institution needs a new business model.The IMF, like any financial institution, lends at a slightly higher interest rate than the one it borrows at, using the proceeds to cover its operating expenses and add to its reserves. Yet for now, at least, its borrowing customers are drying up.
New loans in the last financial year, at $2.5bn (€2.1bn, £1.4bn), were the lowest since the late 1970s, even before adjusting for inflation. Brazil, Argentina, Turkey and Indonesia ac-count for more than 70 per cent of total outstanding loans - which have fallen from $90bn in April 2004 to about $66bn at the end of November.
Brazilian and Argentine repayments of about $15.5bn and $10bn respectively will wipe out another big chunk. Those repayments mean that Uruguay's much smaller loan will be the fund's largest exposure in Latin America. In Asia, following the financial crises of the late 1990s, governments built up huge financial reserves, in part to ensure that they never again had to go cap in hand to the IMF, which sets tough conditions for loans.
"With two of the big borrowers repaying, their loan book is going to be really rather small," says Desmond Lachman, a fellow at the American Enterprise Institute. "For a certain period of time there will be little income."
Low demand for IMF credit is mainly the result of emerging market countries' good economic performance, and very favourable conditions in international financial markets. Brazil's programme and early repayment can be seen as a great success for the fund - Argentina cannot.
Posted by dan at 09:59 AM
My latest in Slate. Are hedge funds the new mutual funds?
Posted by dan at 05:51 PM
John Wilke reports in the Wall Street Journal on how mutual fund maven Mario Gabelli managed to cash in bigtime on chunks of radio spectrum reserved for small businesses. The optics certainly don't look good.
When the government auctioned off slices of radio spectrum for cellphone service, one big winner was Victoria Kane, an aerobics instructor who had no experience in the industry. Her start-up firm, Aer Force Communications, paid $18.9 million for five licenses that were later sold in a deal valued at $144 million.Ms. Kane's firm entered the auction as a "very small business," a designation that brought it millions of dollars in federal subsidies. They included a 25% bidding discount and a low-interest loan through the Federal Communications Commission. But her small business was backed by a big one: that of wealthy money manager and mutual-fund impresario Mario Gabelli, one of the most prominent names on Wall Street.
Affiliates of Mr. Gabelli incorporated her firm, filed its FCC applications and handled its bidding, according to documents filed in a civil suit in federal court that names Mr. Gabelli, Ms. Kane and others. Through various entities, the documents say, he also held a large stake in her company, lent most of the money she bid and profited handsomely on the sale of the licenses. In all, Mr. Gabelli or his affiliates backed more than a dozen bidders for radio spectrum, which is a license to use a portion of the airwaves in a particular region.
Call it the friends-and-family plan: Each of the principals had social, business or family ties to Mr. Gabelli. They included Trent Tucker, a Gabelli client and former New York Knicks basketball player with a graceful outside shot; Alfred Angelo, a New Jersey accountant who had referred clients to Mr. Gabelli; Nara Cadorin, an 82-year-old retired administrative assistant for a Gabelli associate; and Kathy Stafford of Moose, Wyo., a property manager at one of his vacation homes.
They all got small-business discounts despite their dependence on Mr. Gabelli, whose extensive assets would have made him ineligible for such breaks. Many of the bidding companies were formed just weeks or days before the auctions.
Posted by dan at 09:05 AM
The things people will do to save a few Euros. Robert Anderson reports in the Financial Times:
Crematoria are among the latest battlegrounds for the liberalisation of trade in services across European Union borders.Despite German government attempts to hinder cross-border business, crematoria in the Czech Republic are doing a booming trade with Germany.
Hearses from as far away as Berlin are carrying German corpses to the year-old member of the EU, where cremation services are offered for less than a third of German prices.
One of the most successful Czech operators is the Vysocany crematorium in Hrusovany, 30km from the border. It already has contracts with seven German funeral companies and their business now represents one quarter of its cremations.
One such client is Hartmut Woite Funeral Services, which has been using Vysocany for the past five years and now sends nearly 1,000 bodies a year from Berlin. The crematorium's price of around €80 ($95, £55) allows Mr Woite's funeral parlour to undercut his local competitors.
Mr Woite is also enthusiastic about the extra services he can offer clients whose dear ones are cremated in the Czech Republic. Clients can choose frills that are not allowed or very expensive in Germany - such as scattering ashes from a balloon or on a lake, or even sending them up in a firework.
Mr Woite is so proud of his Czech connection he even organises free bus tours for clients to see where their loved ones were cremated or to visit the nearby churchyard where some are buried.
Vysocany's salmon-pink crematorium is so discreet it could be mistaken for a modern office block. Inside the cremation chapel, mourners can peer through a glass wall to see where their loved ones disappeared into the shiny, computer-operated furnaces.
The tour includes lunch in the crematorium's restaurant, located in an elegant hotel converted from an old farm.
"Everyone is satisfied and sometimes people say 'This may be my future'," Mr Woite says.
The cremation traffic has increased since the Czech Republic's accession to the EU in May 2004 thanks to easier border controls. But both Mr Woite and Michal Fueleky, director of the Vysocany crematorium, complain that the German authorities are trying to hamper the cross-border traffic to preserve German jobs.
Posted by dan at 09:02 AM
Are Americans getting more efficient in their gift giving? Or have stores simply made it more difficult for people to make returns?
Melanie Warner and Michael Barbaro report in the New York Times:
America's Research Group, which polls shoppers for retailers, said surveys indicated that significantly fewer shoppers would be returning gifts this year. Ten years ago, the group found, 38 percent of consumers said they had an unwanted gift to return after Christmas. Five years ago, that number was 33 percent; this year, it is 14 percent."There are fewer and fewer returns," said Ernest Speranza, the chief marketing officer at KB Toys, who spent yesterday morning walking through the chain's stores, where he found dozens of shoppers waving gift cards.
"It's not one of the things we look forward to," Mr. Speranza said, because returns or exchanges can almost double the time it takes to check out.
Stores have also tried to limit returns because of the cost - items need to be repackaged, relabeled and reshelved. But for shoppers, gift cards have solved the problems of having to make returns.
Posted by dan at 08:16 AM
Jane Perlez and Raymond Bonner have a great article in today's New York Times about mining company Freeport McMoran's operations in Indonesia.
Nut graph:
With a few taps on a keyboard, satellite images quickly reveal the deepening spiral that Freeport has bored out of its Grasberg mine as it pursues a virtually bottomless store of gold hidden inside. They also show a spreading soot-colored bruise of almost a billion tons of mine waste that the New Orleans-based company has dumped directly into a jungle river of what had been one of the world's last untouched landscapes.What is far harder to discern is the intricate web of political and military ties that have helped shield Freeport from the rising pressures that other gold miners have faced to clean up their practices. Only lightly touched by a scant regulatory regime, and cloaked in the protection of the military, Freeport has managed to maintain a nearly impenetrable redoubt on the easternmost Indonesian province as it taps one of the country's richest assets.
Months of investigation by The New York Times revealed a level of contacts and financial support to the military not fully disclosed by Freeport, despite years of requests by shareholders concerned about potential violations of American laws and the company's relations with a military whose human rights record is so blighted that the United States severed ties for a dozen years until November.
Company records obtained by The Times show that from 1998 through 2004, Freeport gave military and police generals, colonels, majors and captains, and military units, nearly $20 million. Individual commanders received tens of thousands of dollars, in one case up to $150,000, according to the documents. They were provided by an individual close to Freeport and confirmed as authentic by current and former employees.
Read the whole thing. It's an unsavory tale of an unsavory U.S. company having dealings with unsavory Indonesian officials, all while causing immense environmental damage -- and enriching shareholders. Here's a five-year chart of Freeport McMoran.
It's bad news. The worse news: most readers are complicit in this. Check out this list of Freeport McMoran's top institutional stock holders. If you own an index fund, or if you're a member of the College Retirement Equities Fund, you've been a beneficiary of Freeport's behavior.
Posted by dan at 08:02 AM
My economic view column in today's New York Times, on productivity.
Posted by dan at 08:54 AM