World Business

RUSUTSU, Japan Russian President Dmitry Medvedev came to his grandest global meeting yet through a mixed mandate: Start mending ties with the West, but stand fast on policies set by his predecessor and patron, Vladimir Putin.

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His good luck, too, was decidedly mixed.

Medvedev’s mostly solid performance at the meeting of leaders from the Group of Eight industrial nations placed him by itself from Putin, who cut a more confrontational figure than his hand-picked successor.

But it was unlikely to settle doubts near his authority in Russia, where the popular Putin has formed power bases as the new opening minister and leader of the dominant political party - and has not ruled out a return to the presidency.

There also was in no degree public sign that Medvedev convinced his G-8 counterparts that the force of utterance he has placed on individual freedoms and the rule of law will bring real change in Russia, where Putin consolidated and expanded the Kremlin’s power.

Putin, a longtime KGB officer, built much of his popularity at home by reasserting Moscow’s global clout, and relations with the West have suffered from clashes attached energy policy, jousting over predominance in ex-Soviet republics and care above the freedom from disease of democracy in Russia.

Part of the brief for Medvedev, a 42-year-old former lawyer, appears to be to soothe rifts and help further Russia’s efforts to increase its global economic and political authority - without backing down in crucial disputes.

Speaking in quest of a resurgent Russia at a G-8 sitting shadowed by soaring firing material and food prices, Medvedev vowed to use his country’s “growing capabilities” and abundant resources to help solve world problems.

But conciliation wasn’t in continuance the table for the missile defense arrangement the U.S. wants to erect in oriental Europe. Medvedev angrily echoed Putin’s highly noxious obstacle to the plan - although he stopped short of repeating the Russian Foreign Ministry’s threat of a military response.

Medvedev did meet the West halfway on Zimbabwe. He signed on to a G-8 specification promising punishment for culprits in election violence, but he balked at U.N. sanctions against President Robert Mugabe’s government.

Although he spent years in the corridors of power as Putin’s campaign comptroller and first of staff, Medvedev had the gas of a male person appease finding his balance at the vertex of the ladder.

Sometimes he seemed “comfortable and confident,” as President Bush described him in relation to their first sit-down interview since his inauguration. At other times he seemed in some degree awkward or lost in the crowd. Still, there were no gaffes.

In reply to BusinessWeek Economics Editor Peter Coy, Ed Wallace clarifies why the oil futures market is not working properly

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by Ed Wallace

"When money has nowhere to proceed, it is parked in wares, as this is one of the few investment instruments that actually rises the more money you pour into it." —Oliver Jakob, an algebraist at Petromatrix in Switzerland.

"Oil Near $143 on View Dollar Will Keep Falling," —John Wilen, Associated Press, June 27, 2008

Dear Peter,

First of all, I would like to thank you for your response (BusinessWeek.com, 7/8/08) to my recent column (BusinessWeek.com, 6/27/08) on the oil futures markets. I would besides, humbly, allied to thank you for pointing lacking that I’ve become something of a hero to the middle class in America for my columns on energy. Obviously, I didn’t set out with that particular goal in mind. Nor do I have a problem with futures markets in general; they are responsible for injecting badly needed liquidness into commodities for our future use. From what you have written, I can perceive numerous areas where we agree completely.

But I don’t be persuaded that either united of us has helped our readers grasp any rigid reality: By 2015 the world will be faced with a legitimate and serious oil supply-and-demand problem. Many oil insiders be under the necessity told me that it will be some enduring energy crisis that has the potential to fundamentally reorganize our economic society.

While the International Energy Agency is not usually my especially liked source of information, I put great credence in Charley Maxwell of Weeden & Co.; Maxwell was quoted on Energytechstocks.com in February for the reason that predicting oil supplies would straiten starting in 2010. He said that peak production would come a scarcely any years later and that oil might exist priced at $180 a barrel by 2015; and he added that it will make prisoner of "$12 to $15 a gallon [for gas] to get Americans to let go of their precious freedom of mobility." Scary stuff—and hitherto, looking at the charts for increased oil production in the futurity against growing worldwide consumption, I tend to believe Charley’s prognostication. As I told a group of students at Texas A&M earlier this year at the annual Student Conference in continuance National Affairs, "We are leaving you a far worse world than our parents left us."

On the other hand, in a BusinessWeek.com column (BusinessWeek.com, 8/15/07) I wrote last year, I suggested that, to alleviate our current and future energy problems, Americans should meliorate our energy efficiency—and was roundly blasted by readers. I wasn’t their man of superhuman achievements that day.

We besides are in agreement considered in the state of to the profitability of refining diesel. You are exactly equitable in stating that we are not able to refine enough lower-sulfur diesel. That Middle East refiners find it greater degree profitable to sell their sulfur-laden fuels to Asia, while Europe’s product constraints make it incapable of exporting a great quantity diesel to the U.S., is besides true.

Still, we have a scarcely any items on which we disagree.

First, you mentioned that I be seized of put much of the reproach on speculators and manipulators for today’s current oil prices, adding something to the effect that I should not put abundant faith in any statement of fact by a member of Congress. Let me clarify: It wasn’t politicians but expert witnesses and their testimony in fit with a front of Congress that formed the basis of my articles.

Next, I’m sure you didn’t mean to suggest that speculation and manipulation are the one and the other acceptable behaviors in fast article of merchandise markets. As we both apprehend, there are three classes of traders in the futures market:

1. Traders—population who are bidding with the intent of actually taking delivery of the goods on the contract’s due date;

2. Speculators—those who are merely there for the profits to be made by flipping paper; and

3. Manipulators.

To the best of my knowledge, manipulation of the market is still unlicensed. In fact, principally have forgotten that BP (BP) was caught manipulating the propane mart in the winter of 2004 and fined $373 the multitude.

SANDWICH, Mass. Two 17-year-old jewelry makers from Cape Cod, Massachusetts are hoping swarms of customers will want their latest creations: earrings and necklaces made from dead bugs.

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Katheryn Maloney and Brady Cullinan are selling jewelry made extinguished of the cicadas that swarmed their town of Sandwich this summer.

The pair charges $10 for earrings or necklaces made out of the bugs’ lacquered carcasses.

They express the Cape Cod Times that more people remark the jewelry flagrant, but others are impressed with its uniqueness.

Maloney and Cullinan began making the bug jewelry in mid-June after Cullinan’s mother suggested the idea.

Writedowns and ballooning inventories plague the biggest companies, but for long-term investors, the shares may soon be buys

through Mark Scott

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Recently constructed homes built by Taylor-Wimpey remain to have existence bought at one of the company’s developments in Northwich, England. Christopher Furlong/Getty Images

Sudden stock plunges get become totality too usual since the global economy started to sour last year. Yet at the time that Taylor Wimpey (TW.L), Britain’s largest homebuilder by revenue, obdurate 42%—or roughly $600 the great body of the people—of its market capitalization on July 2 after failing to secure a bridge lend, investors realized something was seriously wrong.

Now, Britain’s other large homebuilders, Persimmon (PSN.L) and Barratt Developments (BDEV.L), are set to unveil quarterly financial results on July 8 and 10, respectively. Analysts don’t expect the numbers to be pretty. After years of sizzling growth, Britain’s bubbly housing market has fallen apart in the wake of the reputableness crunch. Sentiment is at a 15-year low, and mortgage approvals have plummeted 64% in the past year.

Britain’s real estate downturn isn’t as important as the critical situation in the U.S. But the problems facing homebuilders are the latest indication that weakness in the financial sector is finding its way into Britain’s wider economy. Signs of pester are rife: Inflation is rising, pertaining production is down, and consumer confidence is at its lowest level since 1990. Countries well beyond Britain’s borders would feel the effects if the world’s fifth-largest management fell into recession.

The sudden downturn among British homebuilders has caught many investors off take care. Since the seasonably 1990s, the country’s hot economic growth and scurvy unemployment—other thing demand for housing that continually outstripped supply—helped average home prices double. Shares of such builders as Barratt, Taylor Wimpey, and Persimmon soared in tandem. As tardily as last discharge, it appeared that British property developers might be spared (BusinessWeek.com, 9/28/07) the calamity facing their American counterparts.

But a slow-motion reversal took grasp as credit standards tightened and resales dried up. According to the British government’s real estate registry, banks’ reluctance to lend money has cut the number of home sales by 42% since the start of this year, as long as mortgage lender Nationwide says average prices already bring forth fallen 6.3% over the identical period. The Royal Institution of Chartered Surveyors (RICS) now predicts that Britain’s housing mart won’t pick up until the further half of 2009, at the earliest.

Investors in homebuilders have fled in droves. Barratt’s market capitalization has fallen 91% from the time of the beginning of this year, and Taylor Wimpey’s is down 84%. "The construction industry is in a really bad state," says David Stubbs, a older economist for RICS in London. "It has basically run off a cliff."

As bad as that sounds, the situation remains worse in the U.S., to which place such builders since Lennar (LEN), KB Home (KBH), and Hovnanian Enterprises (HOV) have been slammed by the agency of the housing meltdown. According to the National Association of Home Builders, U.S. industry sentiment has fallen to its lowest level since 1985, and housing prices have dropped well-nigh 20% from hand to hand the past 18 months.

But for the first time in years, British homebuilders face slumping demand, leaving them sitting on billions of dollars’ worth of unsold new homes. In adding to likely writedowns, firms effrontery huge financing costs for the unwanted inventory.

The ay extent of the problem became clear on July 2, at what time Taylor Wimpey unveiled its financial results. The homebuilder was forced to write down more than $1 billion in new construction, including $140 the multitude worth of properties in the U.S.

Shares of Nasdaq and the NYSE have been pummeled as the current frightful environment puts the brakes on trading. Are the worries overblown?

by Ben Steverman

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Is this bear market different? That’s the key question for Nasdaq OMX (NDAQ) and NYSE Euronext (NYX), the operators of the pair greater U.S. equity exchanges.

Nasdaq and the New York Stock Exchange don’t due facilitate trading in other stocks; they also list their own shares. And it has been a cruel year. The value of both exchanges’ equities have been cut roughly in half since the start of the year.

The main worry is that the relentless gloom hanging transversely the pillar market is making the Nasdaq and NYSE’s U.S. equity platforms smaller quantity busy, and thus less profitable. With major indexes 20% off their peaks (the official definition of a "bear market"), investors justifiably move suddenly the summer with little enthusiasm for shares.

True, "an exchange can profit regardless of which way the markets are moving," says Bill Cline of the Cline Group, a first in importance markets training and consulting firm. However, in bear markets—particularly when the mart funk lingers—"investors do attend to to trade less."

At first, in late 2007 and especially early in 2008, commercial volume was strong jointly the turmoil of the pecuniary crisis. A bear market with a fate of volatility can benefit exchanges, says Raymond James (RJF) analyst Patrick O’Shaughnessy. The big danger for Nasdaq and the NYSE is that the frivolity is subsiding, and the stock market is facing many months in the doldrums.

Among the worries dampening investors’ willingness to make trades: inflation and expensive fuel, the housing slowdown, continuing credit troubles, and falling incorporated earnings (BusinessWeek.com, 7/2/08).

In this year’s second divide in four equal parts, trading power was compose recondite compared through a year earlier, but average daily trading in the U.S. ruthless 11% from the tumultuous first quarter. Keefe, Bruyette & Woods (KBW) analyst Niamh Alexander says she expects light trading volume in the third quarter, which will hurt profits. "The relentless bear market crushing…appears to be slowing equity trading volume at last," she wrote adhering July 2.

In an interview, David Warren, Nasdaq’s chief financial officer, says volume onward his bourse remains "quite robust."

But he argues that investors are putting too abundant significance adhering the exchanges’ trading business. For Nasdaq, only about 16% of revenue comes from U.S. equity trading. Nasdaq also makes currency onward the sale of market data, fees to connect to its trading systems, services for companies that desire on the exchanges, and technology sold to other exchanges about the world.

"To think about us as a trading company really misses the cape," Warren says.

Executives at NYSE Euronext weren’t available for interviews. But since the NYSE’s merger be unexhausted year with the European exchange Euronext, the company relies less on stock trading than Nasdaq, analysts say. Nasdaq completed its own European merger earlier this year, to Swedish-Finnish exchange OMX.

Industry experts insist, however, that trading volume is a key determinant of the great exchanges’ profits—from this time forth their diversification into new trading products, such considered in the state of futures contracts or exchange-traded funds. "Trading is mute very influential for these companies," O’Shaughnessy says.

Exchanges spend heavily on commercial technology and, in the NYSE’s case, maintaining a trading knock down. But once those fixed costs are covered, reaped ground additional trade can subsist extremely profitable. Still, another gainful commerce as antidote to exchanges—initial public offerings, or IPOs—has slowed to a trickle as a result of weak mart conditions.

For Frances Farrow, the central blind is to see the business from the customer’s perspective and respond to the customer’s necessarily

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Frances Farrow

The Executive: Frances Farrow, 44

Background: Farrow, an executive branch of the table of Virgin Atlantic Airways since 1993, arrived in New York eight years ago to help build Virgin USA, the headquarters of the Virgin Group in North America, to which place she is currently chief executive. Virgin is already a domestic name in Europe, with more than 200 companies hurry by the agency of charismatic entrepreneur Sir Richard Branson. Farrow’s job is to expand the Virgin brand in North America.

The Company: Virgin USA was established in 2001 and currently consists of relative to 15 various brands (BusinessWeek.com, 7/8/08). This year, the company launched Virgin America, a domestic airline service based in San Francisco.

Revenues: $23 billion (Virgin Group global revenue)

Her Story: Everyone’s got something to say about Virgin. With an unusual brand name and a mold-breaking leader in Richard Branson, that’s hardly surprising. From commendation of his commerce acumen and curiosity in various places his home on Necker Island in the British Virgin Islands to head-shaking at our wild company stunts, I have heard them all. But the ones I appreciate most are comments about the brand’s elasticity and its unique ability to succeed in differing markets: "I run away your airlines, my kid uses your cell phones, we rock out at the music festival, and we’re excited for Richard to be the first to contrive other energy options."

It is a reminder of Virgin’s immense opportunities, but also of the risks of letting the brand stray facing course.

My job is to help start just discovered Virgin companies in North America while making sure the global bolt remains strong. The mission is pretty clear: Our brand values have been the identical since 30 years ago, when Richard went from running a student magazine to running a record company and then an airline. And even for the reason that we are expanding the global brand, including to this place in the States, with much higher stakes, the approach is still the same.

First of all, the customer viewpoint remains the heart of our companies’ origins: We blemish gaps in the market where consumers have needs, and we have knowledge of to fill them. Richard himself was a frustrated consumer who found a better way. Stranded at an airport, he chartered a plain and got himself and his fellow passengers home. That experience inspired him to start an airline that he himself would want to fly. Virgin Atlantic introduced the seatback entertainment system and every onboard bar, and it taught cabin crews to constitution friendliness a priority, to name a few innovative firsts.

How does our startup process operate? Even as a global enterprise, Virgin Group starts companies with the same liveliness and speed as when Richard primitive began to build the mark. Consistent with Virgin’s entrepreneurial genesis, the process is not complicated, and we keep pace by market changes. Our corporate development team has experience with secluded equity, investment banking, and entrepreneurial activities. Together with the stain team, it looks for sectors currently experiencing consumer "headaches," which to us are opportunities. The teams work together to make safe these opportunities fit our brand values and be at hand event better and fresher in their sectors. Partners and other investors come to us through the whole of sorts of ideas, to which my teams ask and answer the following questions: Are we meeting a gap where there is a need? Does it offer consumers a better deal? Is it the right paroxysm for our brand? Can we offer the couple substance and a unique Virgin flair across many consumer touchpoints?

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Reopening the multibillion-dollar tanker competition between Boeing and Northrop Grumman and its Airbus parent, European Aeronautic Defence & Space (EADS), is considerable for this case and necessary for the nation. But it has to be done not crooked.

Boeing’s initial bid was a sordid affair that gave cause for Sen. John McCain and others to open the contract to participation by the Northrop-Airbus team. Then a thumb was put on the scale to help the Northrop-Airbus consortium win.

Boeing protested this, backed by Sen. Patty Murray, Rep. Norm Dicks and others in our delegation. The Government Accountability Office explosion gave them ground to stand on, and they made the most of it. When the national constrain refers to “lawmakers from Washington and Kansas” raising hell, Murray’s name comes up first. For this, our senior senator deserves senior credit.

Credit also Defense Secretary Robert Gates’ decision to assume away the decision-making power from the Air Force. As Rep. Dicks said, on this matter “no one has any faith in the Air Force.”

Whether the Pentagon will vouchsafe it not oblique odds and ends to be seen. Gates would like to make the judgment by the agency of means of December, in the van of he leaves office. But the central problem was that Air Force brass changed their minds about the kind of tanker they wanted, and did not accord. Boeing clear direction.

If the Air Force wants a larger tanker than originally specified

No rush to act this by December. It must be completed right. This is a behemoth contract, worth profits and jobs and votes in Mount Rainier proportions. Each side has tasted the juices of victory, only to hold it ripped from its teeth. Each side will examine every step notwithstanding evidence of propensity.

We hope Boeing wins. But it has to be a fair fight. If the Northrop-Airbus bid has the best product, judged by veritable military needs and filled life-cycle cost, so be it.

But, as Sen. Murray says, “It is time to go back and clinch a without equivocation transparent rivalship that does our war fighters and taxpayers justice.”

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Goldman Sachs is lacking this morning with an comprehensive re-examine of the software industry as second-quarter earnings begin rolling in next week. Broadly, the analysts see chief notice officers — CIOs — tightening their belts.

“Our latest IT spending indicators suggest ongoing caution in 2008 spending plans on a year-over-year ground. CIO expectations of growth in budgets remains well below 1-year and 2-year ago levels,” the analysts wrote.

Goldman asked CIOs in a inspection last month, “Which of the following software-related projects are most likely to get delayed if your IT roll continues to make tight in 2H2008?”

Upgrades to Microsoft’s flagship products, Windows Vista and Office 2007, topped the think best, with 43 percent of respondents saying they would delay upgrading to Vista and 39 percent saying they would stay upgrading to Office 2007.

Despite that, Goldman writes, Microsoft’s three elephantine product cycles “still remain in fairly timely stages (Windows Vista, Windows Server 2008 and Office 2007) and while not immune to IT slowing, they do create some top-line momentum.”

Microsoft reports its fiscal fourth-quarter and full-year results on Thursday, July 17, after the markets close.

Goldman expects Microsoft earnings per share for the year of $1.88, up 32 percent.

Original text: http://blog.seattletimes.nwsource.com/techtracks/2008/07/vista_office_2007_top_cios_lists_of_software_proje.html

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Since BW published my invention raising questions about Brown & Wilson and their Black Book of Outsourcing rankings, I have received dozens of e-mails from people in the outsourcing industry thanking me with a view to publishing the story. I’m going to do some more snooping around looking for supplemental story angles. Meanwhile, the Wall Street Journal yesterday published the top level rankings from B&W’s June make known on the best managed outsourcing companies. Also, B&W published a 10-page document upon the body their Web site explaining their survey methodology.

What’s abundantly clear from this document is that there’s rate of ascent inflation in the outsourcing industry–at least in the same proportion that moderate by B&W. Scores of 9 to 10 on each of the 26 questions in the management section of their survey indicate “overwhelming enjoyment,” “exceeds expectations,” and “highly recommended seller.” In this year’s survey, the mean scores for companies on the top-50 list ranged from 9.5149 for Hewlett-Packard to 9.2525 for KPN Getronics, which able 50th. So, in this village, everybody’s a genius. An analyst from one of the top outsourcing mart research firms sent me an e-mail calling these “exceptionally oppressive average satisfaction scores, that strongly suggests ballot box stuffing to me.”

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The doldrums of summer

I lived in Edmonds. I didn’t start to know downtown Seattle until my dad set me up with a year of kung fu lessons at a place accurate First and Pike. At age 12, I was expected to take a bus downtown, get off at the right spot, find my lesson, find dinner and afterwards take the bus home. Dad walked me through it once. That was the beginning of my mental map of downtown.

First and Pike was a questionable locality for a sixth-grade boy, in like manner one conscious instructed in the Chinese art of kicking men in the groin. But my folks saw inexistence inherently dangerous in pawnshops, look slyly shows and drunks, similar to long of the same kind with I minded my own dealing, which I did. Parents were less protective in those days.

Dinner was in a dwelling seat at Third and Seneca called the Missouri Bar BQ, but which I called the Mule since its sign was a mule’s category bobbing up and down. The Mule’s specialty was the French dip sandwich, price $1.25. The chef had a roast of beef and would divide a single one part, from “vital fluid red” to “burned ends,” slap it on freshly toasted and buttered French bread and serve it . I could add Tabasco, sliced onions, pickles and extra juice myself. The final product could not be consumed through capital table bearing or without joy.

Since then, I have lived through decades of spongy and flaccid French dip sandwiches. I miss the Mule.

A few years later, I was coming to downtown Seattle with my friends to endurance to movies at the Blue Mouse or the Coliseum

By 16, I had developed an self-interest in political books, and would comb the musty shelves at Shorey’s on Third Avenue. Downtown Seattle furthermore had a couple of radical bookstores

It was called Co-op Books, and looked untouched since the 1930s. It had the collected works of Marx, Lenin, Stalin and Mao, more of them stamped through Customs with disapproving notices. At the counter was a sign-up sheet because of a mailing list.

On the way home, one of my buddies mentioned that he had filled it out, and I said, “Larry, you’ve just given your name and address to the Communist Party.” He made a special trip to ask the clerk to eject it, and the man wanted to know for what cause. Had Larry been contacted through anyone? “No, no, no. Just take my name off. take it off.” The man did.

The only time I got in trouble downtown was when I was a sophomore in obscure school. I found out about a appointed time in which Edmonds kids had to go to school and Seattle kids didn’t, and devised a plan for playing hooky. My buddies and I caught a bus to Seattle, where we figured the truant officers jaywalking.

The cop, who had no idea we were skipping school, declared he would mail the jaywalking tickets to our parents, including a requirement they take us to the Police Department for a safety rank.

We were stunned, ruined, doomed

; for a podcast Q&A with the author, go to www.seattletimes.com/edcetera