9.24.14: War, Disease, Low-Cost Banking

Paula Dwyer writes editorials on economics, finance and politics for Bloomberg View. She was London bureau chief for Businessweek and Washington economics editor for the New York Times, and is a co-author of “Take on the Street: How to Fight for Your Financial Future.”
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TODAY AND TOMORROW IN BUSINESS
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Cancer of Extremism

President Barack Obama implored the world's leaders to join him in fighting international crises ranging from the militant jihadists of the Islamic State to the Ebola epidemic in West Africa to Russia's moves on Ukraine. In his annual United Nations speech, Obama cited the "cancer of violent extremism" in the Mideast as the issue that could set back global progress.

ZMapp's Delayed Birth

The U.S. government hasn't done a good job taking the idea behind ZMapp -- the experimental cocktail of Ebola-fighting antibodies -- and turning it into a treatment. The technology has been around for decades and, given the public-health emergency, the U.S. government could have moved it along faster, Brendan Greeley and Caroline Chen report in Bloomberg Businessweek. The treatment sat dormant for two years after coming into the hands of a little-known Pentagon agency in 2010.

Banking the Unbanked

Wal-Mart Stores Inc.'s deal with Green Dot Corp., known for its preloaded payment cards, is just the latest effort to supply checking accounts to the unbanked. Wal-Mart hopes to reach an estimated 10 million unbanked U.S. households, and hundreds of millions more households outside the U.S. have no access to traditional banks. The new service, to be called GoBank, will have no fees for overdrafts or bounced checks and no minimum account balance. The cost will be $8.95 a month if the customer makes direct deposits. Wal-Mart tried to obtain a federal bank charter in 2007 but dropped the effort once the banking industry lobbied heavily against it. An FT report reviews the many ways the banks are threatened by technology companies such as Apple Inc. and Facebook Inc.

Bent Out of Shape

A small but growing number of iPhone 6 owners say their phones have become warped from carrying the devices in their pockets. As iPhones get thinner and larger, pressure points from sitting or bending might cause the longer iPhone to flex in a way that damages the device. Adding to the snafus, Apple Inc. pulled an update to its iOS 8 operating software after scores of customers experienced dropped cellular service or couldn't use the fingerprint reading feature. Other customers reported that iOS 8 was causing apps by Facebook Inc. and others to crash.

Back to Square One

"I would challenge you guys to bend our Passport," a cheeky John Chen, BlackBerry Ltd.'s chief executive officer, said in introducing his company's new smartphone. The Passport screen is a perfectly square 4.5 inches (like an actual passport). The phone, aimed at business users who prefer BlackBerry's qwerty physical keyboard and want to review spreadsheets more than watch videos, retails for $599 (about $250 with a two-year carrier contract). One problem: It doesn't fit into a car's cup holder or the phone pocket in most purses. And if it doesn't catch on, the Passport could be BlackBerry's last gasp as a handset maker. It has been one-upped by Apple's iPhones and the Android models of Samsung Electronics. Samsung hopes to steal a march on Apple by putting its new Galaxy Note 4 on sale in China next week, ahead of the iPhone 6.

Amazon Antitrust

Hundreds of authors, including bestsellers Stephen King, Donna Tartt and Malcolm Gladwell, will ask the U.S. Justice Department to open an antitrust inquiry into Amazon.com Inc.'s business practices, especially its dispute with Hachette over e-book prices.

Russian Debt Sale

After cancelling nine sovereign-debt auctions, Russia completed the sale of $261 million (10 billion rubles) in 10-year bonds. The sale resulted in an average yield of 9.37 percent. It was the first Russian debt sale since the U.S. and European Union slapped sanctions on the country.

Homebuilder Happiness

New home sales had been a disappointment most of this year, yet homebuilders' confidence remained high. Today we found out why: New home sales surged 18 percent to an annualized 504,000 in August, far more than the projected 4.4 percent increase, and the highest level in more than six years. Housing's recovery has come in fits and starts all year, so it will take several more months of data to know if the improvement is real.

Climate-Change-Onomics

The cost of curbing carbon emissions may be considerably cheaper than earlier estimates suggested and may even enhance growth, writes the NYT's Eduardo Porter. He cites data from an international commission appointed by a handful of rich and poor countries to take a fresh look at the economics of climate change.

Changing of the Guard

China's reform-minded central banker, Zhou Xiaochuan, has been the face of China's economy to global markets for 11 years but may be swept out of office soon, the WSJ reports. Chinese leader Xi Jinping is considering replacing Zhou as part of a wider personnel reshuffle that also comes amid battles over how far to take economic reforms. The top contender to succeed Zhou is Guo Shuqing, a former banker and securities regulator who is currently governor of Shandong, a prosperous eastern province.

Pimco Probed

The Securities and Exchange Commission is investigating bond-trading powerhouse Pacific Investment Management Co. for possible fraudulent pricing of an exchange-traded fund. The issue is whether Pimco bought thinly traded securities at discounted prices, then valued the same securities at higher prices when setting the fund's daily value. The probe is another headache for Pimco, having just gone through a management upheaval and a cash drain. It could also dent the popularity of ETFs more broadly. They mimic an index, like a mutual fund, yet trade on an exchange, like a stock. Yet the actively managed variety (like the Pimco fund) aren't as simple, transparent or low cost as the passive kind and may have moved too far afield to be useful to retail investors, the FT reports.

Greenberg's Revenge

Maurice Greenberg, the wily former chief executive officer of American International Group, is seeking more than $40 billion from the U.S. in a lawsuit that is set to go to trial in Washington next week. Greenberg claims that the U.S. cheated him and other AIG shareholders when it rescued the insurer in 2008. The NYT reports that he is covering some of his legal costs by raising millions from Wall Street friends and investors, who will get a cut of any damages awarded should Greenberg win.

Yale Beats Harvard

Yale University, with one of the most closely watched education endowments, said its fund had earned a 20.2 percent return for the fiscal year, bringing its value to $23.9 billion. Harvard University's gain for the year ended June 30 was 15.4 percent but its value is higher than Yale's (and the largest in higher education) at $36.4 billion.

Hillary's Agenda

In a possible preview of a 2016 presidential campaign agenda, Hillary Clinton called for more company-paid family leave and child care at the Clinton Global Initiative. She and daughter Chelsea Clinton also unveiled a $600 million effort, with the Brookings Institution, to help disadvantaged girls in Sub-Saharan Africa and Southwest Asia attend secondary school.

And Don't Forget

  • U.S. President Barack Obama will deliver remarks at a UN meeting on the Ebola epidemic.
  • Congressional Black Caucus Foundation holds a national town hall meeting in Washington on voting rights, the midterm elections and the state of black America.
  • The Information Technology and Innovation Foundation holds a briefing on Indian Prime Minister Narendra Modi's Sept. 29-30 visit to Washington.
  • Brookings examines whether the Internet is fracturing and other challenges facing cross-border data flows in the digital economy.
  • Heritage Foundation previews the 2014 term of the U.S. Supreme Court.
  • On the economic data front, we will get orders for U.S. durable goods in August (they probably slumped); weekly natural gas supply report from the U.S. Energy Information Administration; and U.S. initial jobless claims.
  • European central bankers attend a conference on the euro's future in Vilnius, Lithuania.
  • German Foreign Minister Frank-Walter Steinmeier holds a press conference as chairman of the Group of Seven after a meeting with its foreign ministers and Middle Eastern counterparts in New York.
  • Nike Inc. and Hennes & Mauritz AB announce earnings.

Top This

A triplex penthouse at Zeckendorf Development Co.'s tower under construction on Manhattan's Upper East Side will be offered for sale at $130 million, making it New York's most expensive apartment listing. The record for Manhattan's most expensive completed residential deal is held by former Citigroup Inc. Chairman Sanford Weill, who sold his Central Park West penthouse or $88 million in 2012.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Paula Dwyer at pdwyer11@bloomberg.net

To contact the editor on this story:
James Greiff at jgreiff@bloomberg.net