The Week: Most Recent Business:World Business

The Costa Concordia disaster: How badly will it hurt the cruise industry?

The Week — Thu, 19 Jan 2012 08:00:00 -0600

Following last weekend's Costa Concordia disaster, shares in Carnival Corp., which owns the doomed Italian cruise ship, dropped a sharp 17 percent. Competitor Royal Caribbean's stock fell too. The fallout from the tragedy, which left at least 11 people dead, worsened with the release of a recording in which the captain refused to return to his sinking ship and lead the evacuation (he now claims he "tripped and fell" into a lifeboat). Will the deadly wreck scare away passengers and damage the entire cruise industry?

Cruise lines are in trouble: The timing couldn't be worse for the cruise industry...

Will debt downgrades doom the eurozone recovery?

The Week — Tue, 17 Jan 2012 13:45:00 -0600

In the last few days, S&P has docked the credit ratings of France, Italy, Spain, Portugal, Cyprus, Austria, Malta, Slovakia, Slovenia, and the European Financial Stability Facility — the temporary bailout fund charged with rescuing debt-plagued nations. French President Nicolas Sarkozy has shrugged off the loss of his country's sterling AAA credit rating with Standard & Poor's, saying it "changes nothing" for Europe's second-largest economy. And at least initially, investors have taken the news that France is now a mere AA+ in stride — France's borrowing costs...

The German economic colossus

The Week — Fri, 13 Jan 2012 10:37:00 -0600

How did Germany become Europe's dominant economy?
Mostly through simple diligence. Germany doesn't owe its success to spectacular innovations or new industries; it's largely the product of steady, stable growth in existing niche industries, a government/private sector partnership, and the German aversion to excess spending and debt. This successful formula has put Germany radically at odds with its deeply indebted European Union partners. Germany's unemployment in December stood at 6.8 percent; Spain's, by contrast, had risen above 20 percent. While Greece, Spain, Portugal, and Italy are now swallowing...

The 'historic' economic deal to unite Europe -- without Britain

The Week — Fri, 09 Dec 2011 17:22:00 -0600

Friday was a "historic" day for Europe. After British Prime Minister David Cameron vetoed a European Union treaty aimed at saving the euro, the eurozone countries plowed ahead with a new treaty for deeper fiscal integration. Britain's refusal to join leaves the island nation economically isolated from the continent, and raises questions about Cameron's leadership, the British economy, and the country's future place in the EU. Here's what you should know:

What exactly happened?
During a dramatic meeting of European leaders that went into the wee hours of Friday morning, British Prime...

Will the Merkel-Sarkozy plan fix Europe?

The Week — Tue, 06 Dec 2011 11:48:00 -0600

On Monday, German Chancellor Angela Merkel and French President Nicolas Sarkozy unveiled a proposal to amend the European Union's governing treaties and impose greater central control over member nations' finances. Stocks ticked higher on the news, suggesting the plan made investors a little more optimistic that European leaders might find a way to dig out of their debt crisis. But the Standard & Poor's rating agency still issued a warning that it might downgrade the debt of 15 eurozone countries. Is a solution at hand, or is that just wishful thinking?

Finally, a promising plan: A cynic would...

The West's attempt to rescue Europe: A mere band-aid?

The Week — Wed, 30 Nov 2011 18:31:00 -0600

Bankers to the rescue? On Wednesday, the West's major central banks launched a coordinated effort to prop up the floundering eurozone. Essentially, the banks moved to lower the cost of loans by making more dollars readily available, all in an attempt to help stave off a credit crunch. "At last, somebody does something!" says Tim Worstall at Forbes. Many investors shared that sentiment, and markets shot up on the news. The Dow Jones Industrial Average surged an incredible 490 points — its best day since March 2009. But will the banks' revised monetary policy do much beyond...

Democratize the EU

The Week — Wed, 30 Nov 2011 14:55:00 -0600

You know what's in bigger trouble than Herman Cain's marriage? The global economy.

This may be the week that decides whether we stumble into — or avert — a second Great Depression. May I entice you to pay brief attention to a possible solution? Afterwards, we can quickly return to our regularly scheduled sex scandals.

On Monday, Polish Foreign Minister Radek Sikorski gave one of the most important speeches yet delivered on a way past the euro crisis. Sikorski happens to be a good friend of mine, but I'd think the speech important even if I could not pick him out of a police lineup...

5 ways to save Europe

The Week — Tue, 29 Nov 2011 10:47:00 -0600

Debt-addled Europe is leading the world toward a devastating financial meltdown that could be much worse than the frightening 2008 financial crisis, says The Economist. Until recently, most observers presumed that European leaders would deal with their debt crisis and do whatever it took to save the continent's common currency, the euro, "because the consequences of the euro's destruction are so catastrophic that no sensible policymaker could stand by and let it happen." But august financial analysts are now giving Europe about a week to get its house in order — and many don't sound...

The rise and fall of Silvio Berlusconi

The Week — Fri, 18 Nov 2011 11:01:00 -0600

How did he get to the top?
By leveraging a roguish charm and a gift for demagoguery with great wealth and influence. Berlusconi started out his career as a crooner on cruise ships, before getting a law degree and starting a local cable TV company. He eventually grew that company into Italy's biggest media empire. Along the way, he bought a soccer team, AC Milan, and then founded a political party he called Forza Italia (Go Italy), after a popular fan chant for the national team. When vast bribery scandals in the early 1990s swept away the parties that had dominated the country's politics, many Italians...

Benetton's world-leaders-kissing ads: 'Brilliant' or 'hateful'?

The Week — Thu, 17 Nov 2011 15:49:00 -0600

The image: For decades, Italian clothing company Benetton was known for its randomly provocative ads, which featured everything from an AIDS-ravaged man on his deathbed to a black horse mounting a white horse. In recent years, the company has largely avoided such controversial campaigns — until now. On Wednesday, the fashion label released "Unhate," a series of six ads in which world leaders appear to kiss their adversaries: Israeli Prime Minister Benjamin Netanyahu and Palestinian Authority President Mahmoud Abbas pucker up, as do President Obama and Chinese leader Hu Jintao (see below...

Is Silvio Berlusconi really gone for good?

The Week — Mon, 14 Nov 2011 12:12:00 -0600

After dominating Italian politics for 17 years, Silvio Berlusconi was forced to resign as prime minister on Saturday. Italy has piled up $2.6 trillion in sovereign debt — an incredible 130 percent of the nation's gross domestic product of $2 trillion — and Berlusconi's government crumbled when it failed to pull the country back from the brink of financial disaster. After resigning, the 75-year-old media magnate was jeered by angry crowds who hurled coins at his limousine and called him a clown. Still, Berlusconi has rebounded before from innumerable political setbacks...

Italy's debt crisis: Why everyone is panicking

The Week — Thu, 10 Nov 2011 11:37:00 -0600

World financial markets erupted in turmoil this week, as fears mounted that Italy could default on its massive government debt. The crisis has already cost Italy's controversial prime minister, Silvio Berlusconi, his job. But why is it scaring people across Europe, and even here in the U.S.? Here, a brief guide:

Is Italy really in such bad shape?
In a word, yes. The country has financed years of lavish social benefits by borrowing and borrowing, piling up $2.6 trillion in sovereign debt. That's 130 percent of the country's gross domestic product of $2 trillion — way beyond what economists say...

Will getting rid of Berlusconi solve Italy's debt problems?

The Week — Wed, 09 Nov 2011 09:52:00 -0600

On Tuesday, colorfully controversial Italian Prime Minister Silvio Berlusconi agreed to resign, as soon as lawmakers pass an austerity plan intended to keep the floundering southern European nation from defaulting on its debts. Berlusconi, long dogged by sex scandals and corruption charges, is considered a major cause of the country's political gridlock, and news of his promised departure sparked a brief rally in world markets. But stocks plunged early Wednesday as investors continued to worry about Italy's uncertain future. Will replacing Berlusconi make it easier to pull Italy...

Europe's Catch-22

The Week — Mon, 07 Nov 2011 10:45:00 -0600

The ongoing eurozone crisis continues to spotlight the folly of a monetary union that lacks a unified fiscal policy. It has also betrayed how deeply committed leading European governments are to the project of deeper integration of the European Union in spite of its problems. Nothing could have better vindicated opponents of adopting the euro than the debt crisis that has gripped Europe for the last three years. And yet, the resolve of the major EU states to keep the euro and their larger political projects has never been stronger. Europe's debt crisis is reminding the world that Western democratic...

Does Greece need a new government?

The Week — Fri, 04 Nov 2011 12:54:00 -0500

Greek Prime Minister George Papandreou is struggling to hold onto power after balking at implementing a European bailout deal intended to save debt-plagued Greece — and throwing world markets into turmoil. Papandreou sparked panic by proposing a referendum on the agreement, which includes $180 billion in rescue loans that are essential to saving Greece from default and preventing its troubles from spreading across Europe. In a humiliating retreat, Papandreou quickly scrapped the referendum. But now he's facing a confidence vote on Friday as rivals call for his resignation. Would Greece, and...

Pay up, Germany

The Week — Wed, 02 Nov 2011 15:20:00 -0500

The other day, a financial friend repeated a joke. "A Greek, an Italian, a Spaniard, and a German walk into a bar. Who pays? The German of course …"

Bzzzt. Let's stop the tape right there.

That joke — and many comments like it — reveals a broad misunderstanding in the U.S. about the currency crisis destabilizing Europe. Since that same crisis is ravaging U.S. financial markets, Americans ought to understand better.

The euro currency was not a favor done by Germany to the rest of Europe. In fact, you could much more convincingly argue that Germany was the biggest single winner...