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Executive Summary

Obama's Health-Care Win

It took a roller-coaster 14 months, every ounce of political capital at President Barack Obama's disposal, and a critical push from House Speaker Nancy Pelosi, but the health-care reform bill finally became law on Mar. 23 after the House passed it two days earlier by the thin margin of 219-212. Skirmishing now returns to the Senate, which is expected to approve, over bitter Republican opposition, a package of changes to the original Senate bill that the House adopted. GOP leaders predict that Democrats will pay a painful price in this year's midterm elections, but the political fallout from the most important piece of social legislation in more than three decades is far from clear. Some of the bill's most popular provisions—among them, barring insurance companies from dumping customers after they become sick and letting children stay on their parents' plans until age 26—will take effect soon, while more controversial elements will phase in slowly. Obama's win could also give his Administration impetus in grappling with other long-intractable issues, including immigration and Social Security reform.

Next: Financial Reform

Once the health-care battle ends, Congress will take up the cudgels over financial regulation. The Senate Banking Committee on Mar. 22 reported out a bill on a straight party-line vote. It would create a Consumer Financial Protection Bureau within the Fed, regulate some derivatives trading, and give the government more authority to seize firms whose failure could threaten the system. Liberal critics derided the legislation as fatally watered down by bank lobbyists, while Republicans expressed alarm that regulators would be handed too much power. Leaders of both parties, however, held out hopes that a deal could be struck that would avoid another partisan dogfight.

Google Pulls the Plug

On Mar. 22 the search king began directing users of its Chinese-language search engine,, to an alternative page run from Hong Kong, outside the jurisdiction of China's strict censorship laws. The move, which comes two months after Google (GOOG) said cyber attacks against its computers had caused it to rethink its position in China, effectively ends a four-year effort to operate a search engine on the mainland. Soon after the closure of, Chinese officials called the company's actions "totally wrong," according to the official Xinhua news agency, and Google's partners in China were expected to cancel alliances.

Meanwhile, in another closely watched China matter, four executives of mining giant Rio Tinto (RTP) pleaded guilty on Mar. 22 to accepting bribes from Chinese steelmakers. The pleas came as a surprise, since the executives had been accused of a different offense: trying to obtain secret information about the steel industry. A judge is expected to rule within weeks on the confessions and the commercial spying charges.

See "With Google Gone, Baidu Rules China"

A Giant Offering

It's the world's biggest IPO in two years and Japan's largest in a decade. Dai-ichi Mutual Life Insurance will raise $11 billion in an offering that was priced on Mar. 23 in the middle of its forecast range. Prior to Dai-ichi's move, Japanese companies had raised $490 million in six IPOs this year, compared with 15 U.S. deals totaling almost $3 billion, according to Bloomberg data. Last year was the worst in two decades for Japanese IPOs. The previous largest public offering in Japan was NTT DoCoMo's (DCM) listing in 1998. San Francisco-based Visa (V) raised $19.7 billion in 2008.

See "Dai-ichi Raises $11 billion in World's Biggest IPO of 2010"

Frowning on Toyota

In the wake of extensive recalls of cars subject to unintended acceleration, Toyota's (TM) reputation in the U.S. is badly dented, according to a Bloomberg National Survey. Just 49% of 1,002 adults in the Mar. 19-22 poll rated the carmaker as "favorable," and 44% said they definitely wouldn't buy a Toyota within the next year. Ford (F) earned the highest favorable rating, at 77%, with Toyota ranking fifth behind Ford, Honda (HMC), General Motors, and Nissan (NSANY). Toyota is using no-interest loans and lease discounts to coax back buyers after recalls of 8 million vehicles cut sales by 12% in the first two months of this year.

Arrests in Britain

As part of its largest-ever probe into insider trading, Britain's Financial Services Authority arrested seven people on Mar. 22 and 23, including a trader at hedge fund Moore Capital and bankers at Deutsche Bank (DB) and Exane, half-owned by BNP Paribas. The FSA, under pressure to take more action against insider trading, said the investigation dates to 2007.

Harold McGraw Jr. Dies

On Mar. 24, Harold W. McGraw Jr., former chairman and CEO of McGraw-Hill Inc., died at the age of 92. In 1947, McGraw joined the publishing company founded in 1909 by his grandfather, James, and became president of its book division in 1968. The unit grew rapidly during his tenure, becoming the top U.S. textbook publisher. In 1978, McGraw was named president of the parent company, now known as The McGraw-Hill Companies (MHP). In 1979 he fought off a hostile takeover offer from American Express, (AXP) and in 1980 McGraw-Hill passed $1 billion in annual revenues. The company began publishing BusinessWeek in 1929 and sold it to Bloomberg in 2009. McGraw's son Harold W. McGraw III is now CEO. McGraw was an uncommon man with a common touch—and a sense of humor. A few years ago at the annual Christmas gathering of employees who worked at McGraw-Hill for 25 years or more, he greeted them and then said with a smile as he leaned on his cane: "You all look like hell."

Is Greece Already Doomed to Default?

The suspenseful Greek drama seems well into its fifth act. In an unexpected twist, German Chancellor Angela Merkel on Mar. 21 reversed herself and said the Continent's biggest economy opposes a European Union-funded rescue for Athens, which must refinance $27 billion in debt before the summer. As EU policymakers head for a two-day summit starting on Mar. 25, Merkel warned that the meeting may not produce an aid agreement.

Some economists, however, think the dénouement of this play has already been written. In a Mar. 11 post on The New York Times Economix blog, Simon Johnson of MIT and Peter Boone of the London School of Economics argued that Greece's debt load is probably unsustainable. Their line of reasoning: Assume that the interest rate Athens must pay on new bond issues rises to 10%—a modest premium, say the writers, for a country with the highest external debt-to-GDP ratio in the world. If Greece were to roll over its existing stock of debt at such rates, it would end up transferring the equivalent of 12% of GDP abroad each year. To put that figure in context, consider that German reparation payments in the aftermath of World War I totaled some 2.4% of GDP. And in the wake of the Latin American debt crisis of the 1980s, net transfers abroad equaled 3.5% of GDP. "Seen in this comparative perspective, Greece is still going bankrupt unless it gets a great deal more European assistance or puts a more drastic austerity program in place. Probably it needs both," wrote Johnson and Boone.

As if to ratchet up the tension, Fitch Ratings on Mar. 24 downgraded the public debt of another deep-in-hock nation: Portugal. The move drove the euro to a 10-month low against the dollar.

The Optimism Meter: Job Outlook Improves Slightly

The Meter clocked in at 54 on Mar. 23, up from 45 one month earlier, as the U.S. employment picture continued to improve. The average estimated unemployment rate for 2010 is now 9.6%, down from 9.8% in late February, according to a Bloomberg survey of economists. Developed by Bloomberg BusinessWeek using data from pollster YouGov, the Meter is a proprietary measure of sentiment and expectations, economic statistics, and market forecasts. It evaluates shifts in outlook among individuals, professional investors, and economists in the areas of U.S. economic growth, jobs, equity markets, and real estate. (Calculated using consumer polling, economic forecasts, and financial markets data; 0=lowest and 100=highest)

Data: YouGov, Bloomberg BusinessWeek

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