"Everyone who is going to miss the consensus number is going to throw out the hurricane as an excuse." -- Ben Dell, an analyst at Sanford C. Bernstein & Co., to The New York Times about fourth-quarter earnings reports
In his column in The New York Times (NYT), Paul Krugman is one of President George W. Bush's most outspoken foes. "Heck of a Job, Bushie," the Princeton University economist taunted on Dec. 30, accusing the President of breaking the law and misleading the public. But Krugman is far more generous to the President in his introductory textbook, Economics (Worth Publishers), which came out on Dec. 22. There he praises Bush's advisers for supporting "aggressive" measures to fight the 2001 recession. Photos contrast a confident Bush with a squinting Herbert Hoover, whose policies worsened the Depression. Far from picking fights with Republican academics, Krugman writes that "media coverage tends to exaggerate the real differences in views among economists."
The homogenization of Paul Krugman may illustrate a basic principle of economics: The customer is always right. Textbooks are chosen by professors of all political stripes. Krugman says in an interview that he and his wife and co-author, Robin Wells, were "extremely careful" to be evenhanded.
So far, Krugman says, there's no evidence that buyers have been turned off by his column. Good thing. His competition includes two of Bush's former chief economic advisers: R. Glenn Hubbard of Columbia University, who has a new textbook, and best-selling N. Gregory Mankiw of Harvard University, whose fourth edition arrives in March.
In the midst of Iraq's violence, Finance Minister Ali Allawi is starting to impose order on the country's chaotic financial picture. In the latest milestone, most of Iraq's largest corporate creditors, dating to before the 1990 invasion of Kuwait, have accepted a deal to swap the bulk of Iraq's commercial debt -- nearly $14 billion -- for new dollar-denominated notes. Those notes will have a face value of 20% of what companies are owed. "This will make it easier for Iraq to start getting the type of credits it needs for trade and business," says William Rhodes, senior vice-chairman of Citigroup (C), which arranged the deal along with J.P. Morgan Chase (JPM).
The pact gives Iraq a shot at rebuilding global financial credibility at a time when the U.S. is expected to trim its aid. The securities, with a yield of 5.8% per year, should start trading on Jan. 19. They're expected to be in demand, in part because they are backed by the world's second-largest oil reserves. Among the largest creditors signing on is South Korea's Hyundai Engineering & Construction, with $1.65 billion owed. Others, sources say, include Japan's Mitsubishi (MSBHY) and France's BNP Paribas. Companies receiving the securities are expected to sell them to emerging-market funds, hedge funds, and other players.
India's $17 billion-a-year software export industry has spent the past 15 years establishing the southern city of Bangalore as the country's version of Silicon Valley. But for some Indians, Bangalore's becoming synonymous with a tech boom didn't change the fact that its name was a vestige of British colonialism. Now the leaders of Karnataka state, home of the city of 6 million, want to change Bangalore's name to something closer to its original, pre-colonial moniker, Benda Kaal Ooru. Their choice: Bengaluru.
That would be in keeping with a wave of nationalism sweeping the nation. Other Indian cities that have restored their earlier names include Bombay, which switched back to Mumbai, and Madras, to Chennai. But some in the booming software industry say changing Bangalore would be counterproductive. "Bangalore is so much part of the global lexicon now. It has even become a verb," says Nandan Nilekani, CEO of Infosys Technologies, one of India's leading tech outfits. Western companies are said to be "Bangalored" when they lose out to lower-cost Indian competitors.
The name change isn't a done deal. Before it can take effect in November, 2006, it must be approved by federal officials. Also, the local government might be voted out of office -- in a sense, Bangalored.
For a glimpse into the future of text messaging, look at South Korea. This month the government started a program to deliver via cell phone progress reports on legal proceedings and notices of fines for traffic and environmental violations. It could go nationwide, says Jun Dae Jin at the Supreme Prosecutors' Office. The goal: to shave $1.2 million from the government's $2.3 million yearly bill for postage on such notices. Texting already is ubiquitous among Koreans -- nearly 80% use cell phones. Banks confirm financial transactions via text, doctors and dentists use it to confirm appointments, and in 2004 credit-card issuer KEB Credit Service even delivered layoff notices to 161 employees.
WHY READ IT: To get the dirt on Wall Street personalities. An anonymous author posts inside dope from tipsters and links to the Web's dishiest finance news. Written with humor, irreverence, and sometimes raunch. (Note: Not for the easily offended.)
NOTABLE POST: Using e-mail tips, the blog announced when investment banks would disclose 2005 yearend bonuses. On Bear Stearns (BSC): "The word is that first-year associates took home $250,000 to $300,000, while first-year vice-presidents banked between $400,000 and $500,000."
This promises to be the year Washington goes to war over tax cuts for the rich. Much attention will fall on the fate of high-profile levies on capital gains, dividends, and the dreaded alternative minimum tax. But keep an eye on an obscure change that will let high earners reclaim some personal exemptions and itemized deductions.
Back in 1990, those exemptions and deductions were curbed by President George H. W. Bush and Congress, effectively raising taxes for many upper-middle-class families. In 2001, the current President Bush and Congress quietly agreed to dump the limits. One reason for the lack of fanfare: The cuts largely benefit those making $150,000 a year or more, eventually delivering more than $19,000 a year for those making over $1 million. Also, by decade's end the change is expected to boost the deficit by $10 billion a year. Congress delayed the changes until 2006 and will phase them in over five years.
Now that the tax breaks are about to resume, Democrats are sure to make a fuss. But expect GOP votes to prevail.
Skyrocketing costs have many corporations scrambling to turn down thermostats, and a few are even installing solar panels. But as energy misers, companies can't hold a candle to educators. Pittsburgh Public Schools is considering charging employees $25 to $50 annually for every space heater or coffee pot they plug in. The idea emerged from the district's energy labor-management committee, which was formed in September and charged with finding ways to cut costs. Meanwhile, staff at Minnesota's Saint Paul Public Schools received letters in November asking employees to voluntarily pay a $25 "reimbursement fee" for the energy consumed by their personal appliances.
Over the Christmas holiday, North Carolina State University housekeeper Evelyn Hill had to resort to wearing three shirts and a pair of gloves to clean campus buildings. The temperature had been lowered to about 55F in a cost-saving move. Most professors and students were gone, but administrators and facilities staff were left to toil in the cold. "They think it's O.K. to affect our livelihood to save a few bucks; I find something wrong with that," says Hill. Despite a petition signed by 150 people, the school stuck with its plan; administrators say their natural gas bill rose 55% last year.
The belt-tightening may have other costs, though. A 2004 productivity study by Cornell University found that when office temperatures were lowered nine degrees, to 68F, typing errors rose 74%, and output dropped 46%.
As growing numbers of people skip TV and radio commercials, ads continue migrating to unexpected places:
Monster Media and Viacom Outdoor (VIA) have dressed nearly 400 turnstiles in Chicago's transit system with their "AdSleeves" for Geico (BRK).
PARKING LOT STRIPES
Greg Gorman's new venture, Parking Stripe, makes vinyl ads to install over parking lot lines. Home Depot (HD) and others have signed on.
CBS (VIA) has used AquaCell water-cooler "billboards" to promote shows such as Out of Practice and Courting Alex.
AIRPLANE TRAY TABLES
Scandinavian Airlines rents out the backs of its aircraft tray tables in business and economy sections.
Dresser Wayne's Ovation iX gas pump broadcasts video commercials on a built-in screen and offers printable coupons.