Rolf Benders has a interesting article today in the German business newspaper Handelsblatt (“Wall Street’s old rules”) that points out something important which nonetheless few of us (including certainly myself) have realized: this “Great Recession” that kicked off in 2007 has wreaked pure havoc on the Dow Jones Industrial Average.

That is of course the mostly widely-watched stock exchange index, which additionally serves as the basis of numerous index funds as well as derivatives traded on the Chicago exchanges. But lately, as Benders points out, it has been all messed up. Those that determine the make-up of the elite 30 companies that make up the Dow don’t like to change that very often; there have been only 27 changes since 1976, and no changes made at all in the periods Nov. 1999 – Apr. 2004 and Nov. 2005 – Feb. 2008. But such stability also can be bad: it’s only recently that GM, AIG, and Citigroup were removed from the Index, i.e. long after it was clear in all three cases that catastrophic misfortune (to give a charitable interpretation) together with substantial government intervention were making any objective valuation of their outstanding stock’s value impossible. GM had been part of the Dow since 1923; now the only company left of the original 12 (from the beginning in 1896) is General Electric, which itself is not doing so well these days either. (The three kicked-out were replaced by Kraft Foods, Cisco, and Travellers Corp.)

The Index is too volatile; it’s not volatile enough; but forget all that, boiled down to its essence Benders’ complaint against the Dow is simply that it is composed according to the decisions of the editor-in-chief of the Wall Street Journal. Here he has his own agenda, which is precisely to talk down the Dow and so talk up the DAX (or Deutscher Aktien IndeX, essentially the “Dow” or blue-chip index for the Frankfurt Stock Exchange). It’s true that the latter has had its composition changed 29 times already since it was created in 1988, so Benders is willing to call it “shameless” (schnöde) – but it’s at least also put together in a transparent way,* unlike the Dow which remains subject to the opaque and arbitrary whims of one particular editor.

Anyone in the know about the American securities markets has long known anyway that the Dow Jones Industrial Average inevitably gives a distorted picture of the state of the securities markets there. But Benders is living in his own fantasy-land – the one clearly marked “Off limits!” for serious business reporters of all stripes, German or otherwise – if he really believes that the DAX will take over the Dow’s place anytime soon as a closely-watched indicator. This issue transcends mere questions of the validity of one index’s composition versus another’s, in favor of larger issues like the world-wide impact of one country’s securities markets versus another’s. Ground-shifting changes along those lines in the future can certainly not be ruled out – no more than anyone should bet that the US dollar will remain the world’s reserve currency forever – but minor objections over one index’s “transparentness” versus that of some other index will hardly be the way that we all get there.

* Benders doesn’t specify in his article how the DAX is “more transparent,” but the claim is probably valid since it is automatically calculated from the current share-prices of whichever happen to be the 30 largest German companies in terms of order book volume and market capitalization.

“Eick is being rewarded for a task that he did not fulfill!” is the complaint from labor-council chairman Ernst Sindel featured prominently in a new article in Die Zeit by David C. Lerch over the bankruptcy of German retail-giant Arcandor. Welcome to the Anglo-American business culture, Herr Sindel! Isn’t that something that Germans have always been striving to emulate? Well, now you’ve arrived, complete with around 38,000 company employees about to lose their jobs and unsure about where their next paychecks will come from, while Arcandor’s CEO (one Karl-Gerhard Eick) also loses his job but receives a €15 million “golden handshake” to help ease his transition. At least that money will not come directly out of Arcandor’s empty coffers, but rather from those of the private bank Sal. Oppenheim, the bankrupt concern’s majority shareholder.

Money for nothin’ and your chicks for free: that peculiarity has now also reached Deutschland, although at least – thank Goodness – there it does not (yet) involve financial institutions or taxpayer monies. But Arcandor’s plight typifies the way the German economy has been hit hard by the Great Recession, since that business-speak, focus-grouped moniker dates back only to March, 2007, and encompasses two more-serious names, venerable pillars of (West) Germany’s post-war retail world, namely the ubiquitous department-store chain Karstadt and the mail-order house Quelle. Karstadt, in particular, is like Sears in America: every city and town has had one for decades on end, so that you could never even imagine life without it (although, for that matter, Sears has itself been suffering financially for rather a long time now). In another way it is like Macy’s: just like that department-store chain’s world-famous flagship store in New York City’s Herald Square, Karstadt itself boasts of the renowned KaDeWe (Kaufhaus des Westens) in the center of former West Berlin, a gigantic and opulent department store in its own right and the very symbol of Germany’s 1950s-60s era Wirtschaftswunder.

The exact occasion for Lerch’s article is not the sudden discovery of Eick’s generous “golden parachute,” but rather the fact that the three-month “freezing” period, mandated by German law, after Arcandor filed for bankruptcy on June 9 is shortly to come to an end. This means that it will soon be time to liquidate Arcandor, erase that particular business-speak, focus-grouped name from the official business-register, and find buyers for the firm’s component-pieces (or for pieces of those component-pieces, if necessary). Surely someone will be willing to purchase jewel-in-the-crown KaDeWe! It also seems that another big German retailer, Metro, is willing to take up most of Karstadt’s stores to fuse with its own Kaufhof chain. But the mail-order concern Quelle might have a harder time finding a buyer. No interested parties have stepped forward as of yet, and you’d be excused for suspecting that such a business-model might be somewhat outdated, unless it can re-make itself more along the lines of Amazon (which itself certainly already has a robust presence in Germany).

The issue hasn’t recently cropped up spectacularly for a while, like it did during 2005-2006’s Muhammed cartoons controversy, but the problem of integrating immigrants – particularly from non-Western cultures – has certainly never left Denmark, not to mention most other Western European countries. Now the head of one of the main Danish political parties, one that is actually part of the current ruling coalition, Det Konservative Folkeparti (the Conservative People’s Party), Lene Espersen, has put forward a solution, as reported by Anita Sørensen in Berlingske Tidende.

(Please don’t confuse Det Konservative Folkeparti with Dansk Folkeparti, or the Danish People’s Party, which made its name with its aggressively anti-immigrant stance and is not currently in the government – although it effectively is, since its support enables the current coalition to carry on without being voted down in the Parliament. Also of note: Lene Espersen, a woman, is consistently labeled in the newspapers as the Conservative People’s Party’s formand or “spokesman”; I guess they don’t get all hung up about gender- or politically-correct terminology in Denmark.) (more…)

Too many articles from Germany have been brought up for discussion lately in this forum, I know. But I still want to briefly discuss the treatment by Thierry Chervel of Rupert Murdoch’s recent announcement that people will soon have to pay for access to his on-line journalistic properties. (And that treatment is to be found on the perlentaucher.de website – German for “pearl-diver” – that isn’t even any recognized newspaper but rather just an on-line “culture magazine”!)

Right then, Murdoch has announced he will be putting his properties’ content behind a pay-wall soon, and the New York Times is reportedly considering the same thing. You can cut to the chase and read Chervel’s summing-up of his reaction in a paragraph at the mid-point of his piece: “A few years ago the withdrawal of newspapers from the free Net would still have been painful, today one would miss a few sources, but the Internet has also developed sources and formats that would quickly compensate for that loss.”

He cites the New York Times and the Guardian as the best newspapers currently around. Why? Because they have so successfully woven together what’s on paper and what’s on-line. For example, you can read the Times’ review of a particular book in the paper edition, and then go on-line to read the free extract from that work itself (and then of course click on over to Amazon to purchase it, if you desire). Chervel is particularly enamored of the Times’ “Lede” news blog, which did in fact distinguish itself covering the Iranian civil demonstrations back in the second half of June. (more…)

The Dutch daily Trouw has a brief piece about the success Indonesia has had lately in rounding up a terrorist network established in that country. These suspects are thought to have been involved in the suicide-bombings that occurred at the Marriott and Ritz Carlton hotels in Jakarta last July 17, and to have been planning a further attack on the president himself on the upcoming (next Monday) Indonesian Independence Day.

Then again, let’s remember that reports of “terrorist suspects” being rounded up should always be met with skepticism, given the propensity to label as “terrorists” anyone they don’t like that has been repeatedly demonstrated by governments from the Third World to Russia to the United States. However, it’s also true that that aforementioned Indonesian president, Susilo Bambang Yudhoyono, was handily re-elected to his position last month, just before those attacks, in an election widely regarded as free and fair.

Anyway, it’s easy to see why Yudhoyono would continue to attract electoral support, if the rest of his rhetoric matches his recent message to suicide-attack terrorists: “This is not the way that leads to Paradise. On the contrary, it is a stupid death.”

Word is from over there on the West side of the pond we call the Atlantic Ocean that your Great Recession is coming to an end, to the point that the Federal Reserve is starting to move “back toward normal policy.” Well, it seems the same is true for Europe’s largest economy, Germany, as we learn today in the Frankfurter Rundschau: new data out from the Statistical Office there show that there was growth of 0.3% in the second quarter, even though 35 analysts surveyed by Reuters had earlier collectively counted on further GDP-shrinkage by about minus 0.3%.

In fact, that Office reports that there were signs that growth actually re-commenced already in this year’s first quarter, although the cumulative total for 2009 does stand now at minus 3.5% (and is still expected by the government and some leading economic institutes to come out at minus 6% for the year). Even better is the year-on-year comparison with 2008’s second quarter, which itself was minus 7.1%. (I’m assuming all these growth/shrinkage percentage figures are normalized to an annual basis.) Increased private and governmental consumption, as well as construction, get the main credit for the upturn – plus the singular fact that German imports have lately contracted even more than their exports, thus sharpening further the world-beating performance of that champion German export-surplus machine.

Still, you don’t have to be too much of a skeptic to ask “So what? What does this new, surprising, but small growth number really mean?” So the (uncredited) FR reporter turned to a handfull of economic analysts from leading banks and think-tanks to get their opinions. Analysts from Commerzbank and Unicredit (an international bank, Italian in origin) are very optimistic, stating for example that “The recession is over, and has reached its end earlier than everyone thought. . . . According to our calculations we will see a V-shaped recovery in the second half of this year.” Call me congenitally gloomy, but I find the remark from Jens-Oliver Niklasch, of the Landesbank Baden-Württemburg, to be rather more enlightening:

The question is, how enduring [this “end-of-recession”] is. Many problems we have not solved, the banking sector just like before is especially reliant upon the State’s debt-shield. As long as it is not clear that the banks’ capital base is robust, we cannot assume that the Crisis is past. Japan is a cautionary example here.

As we’ve mentioned before in this space, but in other contexts, there is a German general election due on Sunday, 27 September. To mention yet another context: that happens to be the middle-Sunday of the two weeks of Oktoberfest, so perhaps we can expect reduced electoral turnout among Munich polling-places and/or increased incidents of voting-while-drunk.

Berlin, on the other hand, is already having to deal with a new (yet also very, very old) method of trying to provoke a cleft within the body politic, as you can see from the above illustration, and as Die Tageszeitung columnist Ines Kappert – that’s a woman’s name – complains about in a brief essay entitled Aha, Titten (which I won’t translate for you from the German; I think you can get the sense on your own). Vera Lengsfeld is the lady with the green necklace, which stands in stark contrast to her more-natural adornments, on the right side of this electoral poster from Germany’s CDU, or Christlich Demokratische Union, also the party of Chancellor Angela Merkel, who is the similarly-adorned lady to the left. Lengsfeld posed explicitly for this poster, while Merkel’s picture comes from her appearance last year at the ceremony for the inauguration of the new Oslo (NO) opera house, where her choice of apparel excited considerable comment in the German media. (more…)

The swine flu’s a-coming, it’s a coming! There’s no ignoring it now, not after today’s front-page story, top-of-the-fold and complete with color-coded maps, in the Washington Post. “‘The virus is still around and ready to explode,’ said William Schaffner, an influenza expert at the Vanderbilt University School of Medicine who advises federal health officials. ‘We’re potentially looking at a very big mess.'”

Wow. You may wonder, as I did: “OK, we had swine flu in the spring, and now they say it’s going to come back soon. Where has it been off to in the meantime?” The answer: in the Southern Hemisphere! It’s winter there now, so I guess it has something to do with cold weather – although it has stuck around to an alarming degree nonetheless in the UK. That could be a function of the rather “un-summery” (i.e. cool, cloudy, rainy) summer we’ve mostly had here so far in Northern Europe.

Turning back to the Northern European press – i.e. to something you may not be able to just read yourself – the French-language Belgian paper Le Soir has picked up on those reports that we discussed here earlier about swine-flu cases being discovered that are resistant to Tamiflu. Once again with Le Soir, the article includes a brief mention of how “The Roche laboratory [maker of Tamiflu] had indicated that it expected a 0.5% rate of resistance to its antiviral [drug] according to results from clinical tests,” and that makes me see red. That’s just marketing propaganda; how can they truly know how widespread the resistance to their drug will be through “clinical tests”?

Here’s what Le Soir has that’s new about the swine flu, however (although they tend to call it the “Flu A/H1N1,” which seems standard for French media): the Tamiflu used to combat it also induces undesirable side-effects in children – “important” effects, according to the article, effects “quite a bit more than the preliminary studies done to get the medicine approved allowed us to guess.” This is evident from the unpleasant experiences of pupils at one particular elementary school in England where they all were given Tamiflu after it was found that one of them had returned from a vacation to Mexico with the swine flu virus, and it obviously argues against that kind of preventive prescription of the drug.

It’s fascinating and horrifying at the same time to read the recent news reports about the violent, intimidating turn the debate in the US over health care reform has taken. But that is not going to be the subject of this particular post per se, mainly because I have not picked up any European coverage of the same – yet, I’m sure. Arthur Touchot of Le Figaro instead gives us a bit of this flavor with a brief piece: Obama receives thirty death-threats daily. Touchot here draws mainly upon a book brought out just this month by Ronald Kessler entitled In the President’s Secret Service: Behind the Scenes with Agents in the Line of Fire and the Presidents They Protect. (Kessler is a former New York Times and Washington Post reporter who has written a number of other books such as The CIA at War – and in 2006 Laura Bush: An Intimate Portrait of the First Lady, which I confess does hurt his credibility with me a tiny bit. But he’s clearly a James Bond fan.)

Yes, as Kessler reports in his new book for which he interviewed scads of Secret Service operatives, Barack Obama is on the receiving-end of about 30 death-threats per day, as opposed to the “only” nine per day that George W. Bush enjoyed. (Now, America is a country of some 300 million, but still . . . perhaps that is a tad much?) The main thrust of his message, as reported by Touchot, is fairly predictable: in these days of government cut-backs, the Secret Service also considers itself to be rather alarmingly starved of resources to be able to respond appropriately to this level of threat against the President’s person. They have only half the level of personnel that they consider necessary, and too often those agents who are on the job have to forego training in order to go investigate and/or guard against various new hazards. If they complain, then they are apparently met with a Marine-type, hoo-ha attitude from their superiors: “You can get it done, and with the resources you have, because you are a Secret Service Agent!” You are Clint Eastwood!

Touchot passes on something else that also isn’t very surprising, namely that Obama has stayed cool in the face of these threats, both on the campaign trail and as president. He then unfortunately feels the need to pad out his piece by reciting the Secret Service code-names for Obama and his brood: the President is “Renegade,” Michelle is “Renaissance,” and on down. Isn’t it obvious that, once revealed like this (and we all know that they were made public long ago), these “code-names” rather lose any functionality they ever had as tools to keep anyone eavesdropping on the Secret Service from knowing who they’re talking about? It’s clear that there must be some other reason for them, and for their repeated revelation, probably having to do with PR and Americans’ love for spy-thrillers and all appurtenances thereto. If the Ph.D. thesis about this phenomenon from some sociology student has not yet been written, I’m sure it will be forthcoming soon.

Close observers of the NATO effort in Afghanistan (including EuroSavant) have always been aware that there is something strange about the deployment of German troops there, which now has passed the eight-year mark. For starters there is their exclusive placement in the north of the country, when all the meaningful anti-Taliban action is in the south (or at least used to be!), this deployment also features fairly absurd rules-of-engagement designed to restrict the German Army (or Bundeswehr) there to defensive duties only. Now you can add into this mix a strong and growing skepticism among the public back home whether the Bundeswehr should be there in the first place, if we can credit an article by Hauke Friederichs in the prestigious German opinion newspaper Die Zeit, entitled Germany’s self-delusion in the Hindu Kush.

That caustic title is actually the very same as that of a new book out by Stefan Kornelius, head of the foreign affairs department at Munich’s Süddeutsche Zeitung. The expanded list he provides of “defense-only” rules under which the German troops have to work is truly ridiculous. They may fire at targets only after they have first been attacked, and even then may not pursue those enemy forces if they should then try to flee; no night flights are allowed by either fixed-winged or helicopters – and, in any case, anything German pilots may learn up there in the way of intelligence on the enemy cannot be radioed back directly (i.e. in “real-time”), but must be debriefed only after that aircraft is back on the ground. For the rule that takes the cake I almost chose the one reading “No counter-narcotics activity; you’re not here for that,” which among other things supposedly has resulted in opium poppies for harvesting being grown right next to a German base! But no, that has to yield pride-of-place to Friederichs’ mention that German government lawyers are still filing legal complaints against soldiers who fire their weapons in self-defense when it’s not clear that the Taliban have indeed fired first! (more…)

If you’ve been following the news out of the US recession at all, you’ll be aware of how General Motors recently beat all the experts’ expectations by successfully reorganizing under American bankruptcy laws (“section 363” and twenty-three skidoo!) within the actual forty days that the company and the Obama administration claimed was all that was needed. But according to Matthias Ruch, New York correspondent for the Financial Times Deutschland (GM, the little giant), it’s all going to be uphill from here on out. From his lede: “Opel’s mother-company is now celebrating her own rebirth. But this new beginning is more form than substance [German: mehr Schein als Sein]: the former auto-giant is just blundering on aimlessly.”

That rapid reorganization was indeed an impressive achievement, though it necessarily had to be accomplished in broad, slashing strokes: $40 billion in debts were canceled outright, and the former auto-making colossus was split into a “good” and a “bad” company, the latter (now with the catchy monniker Motors Liquidation Company, if you’re in the market for some cheap assembly-line equipment) now little more than a pile (better in German: a Schrotthalde) of discontinued brands and factories. But Ruch lets us know that the new company still retains financial “obligations” in the double-figure $ billions range. (more…)

With a skewed, vertigo-inducing photo taken at the top of a Strip roller-coaster at the head of their piece, Julie Hjerl Hansen and Thomas Hebsgaard of the Danish commentary weekly Information recently presented an interesting profile of the recession travails of Sin City itself: Las Vegas, Nevada (An Amusement Park in Decline). Their lede here provides a good summary, here it is:

A bad hand. Las Vegas is used to pulling through even when the rest of the USA is in crisis. But it’s not like that anymore. The financial crisis has hit the casinos, while the housing market has collapsed – and these days Las Vegas is the city in the USA where the most people are put out on the street.

It’s easy to see why Hansen and Hebsgaard chose Las Vegas specifically for their “US metropolis in economic crisis” feature. Predominating above all must have been the way that city exerts a certain fascination upon most foreigners, in that it is literally impossible for them to find an analogue to it in their own countries (no matter where they may be from – the gambling paradise of Macao, off the southern coast of China, probably comes the closest), and therefore to easily understand the place. Like an unconquered peak to a mountaineer, Vegas must represent to the ambitious journalist the same sort of challenge, defying one to ever come to grips with it, to ever master what really makes the place tick. (more…)

Any residence of Texas knows about “The Valley,” even if he or she doesn’t happen to live there. Not really a valley it all, it’s that area down along the Rio Grande that constitutes the border there between the US and Mexico, a handy place for new Mexican immigrants to the US (legal or otherwise) to get their start, but otherwise producing little of note for the world other than folk singer Kris Kristofferson and legends from the Streets of Laredo.

Now The Valley has produced something else, something that has caught the attention of the Pan American Health Organization (PAHO): a new strain of swine flu that is resistant to the main drug the world is relying on to counter its effects, Tamiflu. Reports about this come both from France’s Le Point and (perhaps somewhat strangely) Denmark’s leading business newspaper, Børsen, which cite PAHO spokeswoman Maria Teresa Cerqueira, attending a swine flu conference currently happening in La Jolla, California.

Granted, this same Tamiflu-resistant strain has already been spotted in Denmark, Japan, Hong Kong, and even once before in North America, namely in Canada. But how did it come about? Cerqueira: “In the USA Tamiflu is sold by prescription, but in Mexico and Canada they sell it over-the-counter and take it at the first sneeze. And now that it is really needed, it doesn’t work anymore.” In other words, if you grant the assumption that the swine flu we can expect in the autumn is likely to be deadlier than what we’ve encountered so far (although, to be fair, the past strain did kill 353 persons in the USA and 143 in Mexico, among others), then pill-popping Mexicans and Canadians have exhausted the world’s Tamiflu firepower on the earlier, safer version – which reportedly merely caused symptoms comparable to any common, garden-variety flu – and thus have left everyone vulnerable to the more dangerous strain.

There’s perhaps a glimmer of hope in the Le Point piece, namely that one patient found to have the Tamiflu-resistant virus was able to be cured with another drug, “Zanamivir,” made by GlaxoSmithKline. So maybe there’s still an alternative cure available – until the virus in short order develops resistance to that!

Interesting news comes from the Danish commentary weekly Information, best summarized by the lede from a recent article by Jørgen Steen Nielsen:

The EU punks the American government on climate questions, and the USA is behind due to the Bush administration. But when it comes to measures for the coming years, the EU has nothing for the Americans to hear, say experts.

(Yes, I have to assume that that Danish punker corresponds to “punks,” from “to punk,” as in “to rag on, to give someone a hard time about,” even though that meaning of “punk” is some rather obscure American street-slang – with which I myself am nonetheless familiar from the past, by the way. That’s simply the meaning called for by the context.)

The ultimate point here is a counterintuitive one. As Nielsen notes, the EU in particular loves to upbraid the American authorities for dragging their feet on anti-climate change measures, and it’s true that there was absolutely no progress on this during the George W. Bush years while the Europeans already succeeded in reducing their greenhouse-gas emissions somewhat compared to the 1990 baseline. But going forward, US “ambitions” for addressing climate change can actually be regarded as superior to those of Europe. (more…)

“Snoutbook”? “My Dish”? Exporting the social networking paradigm to the canine world was probably only just a matter of time, and you can still legitimately debate how such a service might best be named, but there is already a notable site of that kind in existence, and it is called honden.be (“honden” being Dutch for “dogs”). The Belgian daily Het Nieuwsblad has an article up now on-line in its “Lifestyle” section about the new project of one Jan van Vlimmeren, a Fleming, to set up that site to bring social networking functionalities like the “Wall” (to relieve oneself on?) and “pokes” (here “sniffs”?) to man’s best friends, as represented by their owners. Specifically, on honden.be you can already set up your dog’s profile, join groups, post a doggie-diary, and even hook up with Google Maps to locate the nearest veterinarian and canine hair-salon (although I suspect that that latter functionality does not extend beyond Belgium). Features that are soon to come include a new category of profiles for dog-breeders as well as checklists to compare your own dog’s personality with the character-traits that his/her particular breed suggests that he/she should have. What’s more, according to the Nieuwsblad article 220 dogs have already been signed up to the site!

Van Vlimmeren does stay aware of other dog-oriented sites which might pose a bit of competition. There’s dogster.com, for example (“for the love of dog”), which he dismisses as “not very user-friendly.” It’s also true that dogster.com is not really structured to be a social-networking site, although it does have private accounts, discussion fora, and groups. It also has a companion site called, of course, catster.com, with much the same pluses and minuses. One has to assume that Van Vlimmeren is well aware of the obvious main limitation of his own honden.be: he’s going to find it hard to make it appeal to anyone with no capability in Dutch!

UPDATE: I should have known that Facebook itself would be on the case. Ladies and gentlemen, I give you: Dogbook!