The Wall Street Journal Europe - 2013 - 01 - 04

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FRIDAY - SUNDAY, JANUARY 4 - 6, 2013 WSJ.com
Fed Divided Over Bond Buying

BY JON HILSENRATH Minutes of the Fed’s Dec. the minutes left little clear in- purchases would likely be also held out midyear as a for Ben Bernanke in what
AND JEFFREY SPARSHOTT 11-12 policy meeting showed dication which course the warranted until about the end possible endpoint. could be his final year at the
that officials were divided central bank would choose. In of 2013,” the minutes said. A The Fed is often intention- helm of the central bank,
A new fault line has about when to stop the pro- its official policy statement, it few others called broadly for ally vague in meeting minutes where he has been chairman
opened up at the often-di- grams, with a few wanting to has been saying since Septem- “considerable policy accom- and other documents to as- since 2006.
vided Federal Reserve: When continue them until year-end, ber that it would continue the modation” without specifying sure the officials have room Please turn to page 6
to halt the bond-buying pro- several others wanting to end bond-buying programs until a date, while several others to maneuver as circumstances
grams that are adding $85 the programs well before then the job market substantially “thought that it would proba- and their outlooks change. U.S. budget crisis returns in
billion a month of Treasury and some wanting to halt improved. bly be appropriate to slow or The next decision on bond late February................................ 9
and mortgage securities to them right away. “A few members expressed to stop purchases well before buying is significant and Opinion: The Fed’s dangerous
the central bank’s assets. While exposing the rift, the view that ongoing asset the end of 2013.” The minutes likely the next big challenge direction........................................ 18
FiveCharged
In India
Rape Case
Some 600 guitarists gath-
ered in Darjeeling, India, on
Thursday to play the John
Lennon song “Imagine” in
tribute to a 23-year-old gang
rape victim. Indian Police
Thursday filed formal charges
against five men for the al-
leged rape and killing of the
physiotherapy student in New
Delhi last month, a case that
has shocked India. The inci-
dent has attracted interna-
tional attention and blanket
TV coverage in India, sparking
Agence France-Presse/Getty Images
a national debate on the lack

of women’s safety in the coun-
try as well as sharp criticism
of the police and politicians
for their perceived insensitiv-
ity to crimes against women.
Rape cases often take years to
reach a court verdict.
Article on Page 3
Google Is Cleared in U.S. Inside Transocean Settles

All Claims in Oil Spill
Of Bias in Search Results BY TOM FOWLER settle all criminal and some
civil charges related to the ac-
BY BRENT KENDALL manage ad campaigns with ri- suggested that Google was Offshore driller Trans- cident.
AND AMIR EFRATI val websites. trying to eliminate competi- ocean Ltd. will pay $1.4 bil- The Transocean settle-
Also, Google agreed to a tion, Google’s primary reason lion to settle all U.S. federal ment agreement Thursday,
U.S. federal regulators who settlement resolving FTC for changing the look and feel civil and criminal claims re- and its implications for fur-
spent nearly two years prob- charges that the company was of its search results to high- lating to the 2010 Deepwater ther claims against BP, will
ing Google Inc.’s search en- stifling competition by misus- light its own products was to English Premier League Horizon accident in the Gulf help define the liability costs
gine for possible antitrust vi- ing key mobile-device patents improve the user experience,” aristos step up for the of Mexico, the U.S. Depart- from the disaster. Investors
olations came up virtually it acquired when it bought said FTC Chairman Jon Lei- soccer giant-killers ment of Justice said. in Europe on Thursday bid
empty-handed, confounding handset maker Motorola Mo- bowitz. Sport .................... 30 Transocean was the owner up shares of both companies
the company’s competitors by bility. Microsoft Corp. and other of the drilling rig that ex- as The Wall Street Journal
upholding Google’s central ar- But the FTC’s five commis- technology companies had ploded in April 2010, killing 11 reported news of the poten-
gument that its innovations sioners voted unanimously to pushed the FTC to bring a Sandy’s victims wait workers and triggering the tial settlement around mid-
benefited users. close without action the core broad antitrust case against while GOP feuds largest offshore oil spill in day U.S. time. Transocean
The Federal Trade Com- investigation into whether Google, similar in scope to the U.S. News ............... 8 U.S. history. Oil giant BP PLC, shares leapt 11% in Zurich
mission won some narrow Google favored its own prod- landmark case the Justice De- which had been leasing the and BP’s shares rose 2.4% in
concessions from Google. The ucts and services in its search partment brought against Mi- Deepwater Horizon to drill an London.
company agreed to make vol- results and unfairly harmed Please turn to page 22 What a difference a exploratory well and was pri- Transocean will plead
untary changes to its search rivals, a practice commonly year makes in Spain marily in charge at the time guilty to one criminal misde-
practices and to give online known as “search bias.” How Google+ is challenging Heard .................... 32 of the accident, agreed to pay meanor violation of the Clean
advertisers more flexibility to “Although some evidence Facebook....................................... 19 $4.5 billion in November to Please turn to page 6
2 | Friday - Sunday, January 4 - 6, 2013 THE WALL STREET JOURNAL.
PAGE TWO
What’s News—
i i i
Business & Finance
n Unemployment stabilized at
low levels in Germany in Decem-
ber and fell sharply in Spain,
boosting hopes for a modest euro-
zone recovery after more than a
year of stagnation and contraction
across the currency bloc. 5
n Turkey’s banks are riding a

boom in emerging-market debt,
selling a record $7.9 billion of dol-
lar-denominated bonds in 2012. 19
n U.S. auto sales reached fresh

highs in December and finished
2012 on a stronger-than-expected
note, raising expectations that re-
sults this year could rise to prere-
cession levels. 19
n U.S. furniture makers Ethan

Allen and Ashley are increasing
their sales efforts in China, turn-
ing the tables on Asian rivals. 20
n Fiat formally asked to buy a

second tranche of shares in Chrys-
ler Group held by a United Auto
Workers’ health-care trust that is
the U.S. auto maker’s second-larg-
est holder after Fiat. 21
n A Shell oil rig doesn’t appear

to be spilling any fuel after run-
ning aground this week off the
Reuters
coast of Alaska, the U.S. Coast

Guard said. 21
BRAZIL ON ALERT: A man carries a TV set as he crosses the Capivari River on Thursday in the Xerém section of Duque de Caxias, where one person died and at
n News network al-Jazeera least 255 were dislodged after heavy rain in the Rio de Janeiro region. Alerts were posted after nearly 215 millimeters of rain fell in 24 hours in some areas.
agreed to buy Current TV, the cur-
rent-affairs channel partly owned lieutenants a total of $65 million nancial crisis has caused global n Japan’s new government has n A U.S. drone strike killed the
by Al Gore, seeking to boost its in restricted stock before higher farmers to use cheaper alternative moved swiftly to engage Myan- Pakistani leader of a militant
presence in U.S. television. 22 U.S. tax rates took effect. 24 fertilizers. 26 mar, saying it will start waiving group operating on the Afghan
some debt, but stopped short of border, news reports said. 12
n Swiss bank Wegelin pleaded n Munich Re said U.S. super- i i i committing to a development
guilty to a U.S. criminal charge storm Sandy will cost global in- World-Wide project in the country. 10 n A car-bomb explosion in Iraq
and admitted it helped wealthy surers $25 billion, and it criticized tore through a crowd of Shiite pil-
Americans avoid at least $20 mil- the U.S. for insufficient defenses n Putin granted Russian citizen- n As South Africa’s mining firms grims returning home from a reli-
lion in taxes by hiding funds in se- against natural disasters. 24 ship to French actor Depardieu, struggle, communities are facing a gious commemoration, killing at
cret accounts abroad. 23 whose bitter fight over taxes with double hit as rural villages are least 20 and reinforcing fears of
n After a rally in bonds backed France’s government led him to grappling with large-scale job renewed sectarian violence, ac-
n Security companies in Asia are by mortgages on commercial renounce his citizenship. 4 losses and cuts to social services cording to Iraqi officials. 12
expanding their high-security properties, some investors say the the mining firms supported. 11
vault capacity as investors boost risks are growing. 25 n A multimillion-dollar embez- n Syrian troops and rebels
their gold holdings. 23 zlement case involving Greece’s n South Sudan accused Sudan of fought around a strategic air base
n Big potash producers have in- national tourism agency has dealt attacking its troops ahead of a in the country’s north and in a
n Goldman Sachs gave insiders creased capacity in recent years, a new blow to the crisis-hit coun- summit aimed at reducing border suburb of the capital, activists and
including CEO Blankfein and top but demand is slipping as the fi- try’s political establishment. 5 tensions. 11 state media said. 13
ONLINE TODAY
Most Read in Europe Depardieu’s Move Conflict in Syria Question of the Day
europe.wsj.com
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THE WALL STREET JOURNAL. Friday - Sunday, January 4 - 6, 2013 | 3
NEWS
Suspects Charged in India Rape Case

NEW DELHI—Indian authorities,
moving swiftly to assuage public an-
ger, filed formal murder charges
against five men alleged to have
gang-raped and killed a student on a
bus in the capital in December.
By Krishna Pokharel,
Vibhuti Agarwal
and Shefali Anand
The 23-year-old physiotherapy

student, who died Saturday in Singa-
pore from organ failure due to inju-
ries incurred during the rape, has be-
come an emblem for many Indians
who have taken to the streets to de-
mand harsher punishment for rapists
and better security for women.
Rape cases registered by Indian
police can often take months, or even
years, to reach a court verdict be-
cause of an overburdened legal sys-
tem. Of the 95,000 pending rape
cases in 2011, only 15% made it to
trial, according to the National Crime
Records Bureau.
In this case, proceedings are mov-
ing much more quickly. Authorities
in a south Delhi court on Thursday
also filed charges of gang rape, rob-
bery and banditry against the five
men. They include the man who was
European Pressphoto Agency
driving the bus around the capital as

the men allegedly assaulted and
raped the student and beat up a male
friend who was with her. Police are
pursuing a case against a sixth sus-
pect in juvenile court.
Authorities have set up a special
fast-track court to try the five men, Indian women and children participate in self-defense training in Bhopal on Thursday, the day five men were charged with murder that resulted from a brutal rape.
who could face the death penalty for
murder if found guilty. police charge was brutally raped by the nation’s Parliament. A representative for the Congress rape occurred. A police spokesman
A judge on Saturday is expected the men on Dec. 16, has put pressure And police on Thursday arrested party in Assam said the allegations said Mr. Yadav was detained for pro-
to issue warrants for the men to ap- on authorities to implement broader Bikram Singh Brahma, a leader of the of rape, if proven against Mr. viding a false address to register 10
pear to hear the charges and then measures to counter rape and sexual ruling Congress party in the north- Brahma, “would not be tolerated by buses. Attempts to reach Mr. Yadav
will decide when the case will be molestation. eastern state of Assam, for allegedly the party.” weren’t successful.
transferred to the fast-track court. Politicians and the police face ris- raping a woman. The allegations In Delhi, protesters calling for a Women’s groups have praised re-
Lawyers at the court have de- ing scrutiny and criticism over the were made by the woman’s husband. crackdown on rapists and better cent police action but said authori-
clined to represent the accused, cit- incident, which has highlighted po- A police officer involved in the case public security clashed with police in ties need to push through more
ing the heinous nature of the alleged lice failings in handling rape cases in said authorities were investigating December, causing scores of injuries sweeping changes.
crime. The court is expected in the general and political insensitivity to- whether the incident involved rape on both sides, although such demon- India’s police force defends its
next few days to appoint legal repre- ward women’s safety. or consensual sex. strations have died down. performance combating rape, point-
sentation. Attempts to reach the Next week, the Supreme Court Mr. Brahma, currently in police The public anger has pushed au- ing to the quick arrest of the five
men, who are in detention, weren’t will hear a petition from a lawyer custody, couldn’t be reached for thorities to take other steps. On men and the juvenile in the New
successful and it was unclear seeking to bar a number of sitting comment. Police officials declined to Wednesday, police arrested Dinesh Delhi rape case.
whether they have entered pleas. lawmakers who face rape charges provide information on either the Yadav, the owner of the chartered- —Amol Sharma
The death of the woman, whom from contesting future elections for husband or the alleged victim. bus company on whose vehicle the contributed to this article.
Emirates’ Arrest of Egyptians Raises Ire in Cairo

DUBAI—Egyptian President Mo- In appearing to implicate Mr. Morsi, flew to Dubai on Wednesday
hammed Morsi dispatched top aides Morsi’s power base, the latest ar- Emirati Crackdown amid a growing public outrage
to the United Arab Emirates to quell rests underscore the mistrust that among members of the Brotherhood
a diplomatic dispute sparked after many Gulf Arab nations feel toward July 15, 2012 U.A.E. public online forums to organize or attract in Egypt about the arrests.
Emirati authorities said they had ar- the new Egyptian leadership and the prosecutor unveils charges against membership to ‘unlawful groups,’ Emiratis have sought to play
rested Egyptian citizens accused of various threats they see to their Emiratis accused of membership in which rights activists say could be down any crisis with Egypt, saying
fomenting terrorism in the oil-rich rule. They also stand to complicate an organization with foreign ties applied to outside political parties or the meeting was on their schedules
Gulf nation. the Egyptian government’s attempts that aims to commit crimes against religious groups. before the arrests were announced.
to raise funds from the conservative the state, a reference to Egypt’s The U.A.E. government said
By Leila Hatoum and Gulf monarchies as it grapples with Muslim Brotherhood. Lawyers for Dec. 26 U.A.E. security authorities Thursday that officials in the bilat-
Margaret Coker in Dubai an acute economic crisis. the accused deny the charges. announce arrest of alleged Emirati- eral meetings had discussed issues
and Matt Bradley in Cairo In recent days, Emirati officials Saudi terrorist cell they accuse of of common interest. “The Egyptian
have announced the arrests of what October Foreign Minister Abdullah trying to overthrow government. delegation has discussed with U.A.E.
Earlier this week, Emirati author- they characterized as two separate bin Zayed al-Nahyan characterizes officials various schemes that would
ities said they had detained 11 Egyp- terrorist cells—the Egyptian group, the Muslim Brotherhood as Jan. 1, 2013 U.A.E. security settle the hanging issues relating to
tians as part of what one Emirati se- and another involving what they say threatening sovereign Arab nations. sources announce arrest of 11 Egyptian nationals in U.A.E.,” Egyp-
curity official described as a are Saudi and Emirati Islamists. Egyptians as part of what they call tian Ambassador Tamer Mansour
“Muslim Brotherhood-linked” terror- Those follow arrests earlier in 2012 Nov. 12 U.A.E. president signs law a Muslim Brotherhood-linked said late Thursday.
ism cell. Founded in Egypt, the Mus- of dozens of Emirati members of a making it a criminal offense to use terrorist cell. But the latest Egyptian accusa-
lim Brotherhood is the Islamist local religious group that operated tions hit a particularly sensitive dip-
movement from which President peacefully for decades in the coun- lomatic nerve between the sides.
Morsi draws his core support. try. These Emiratis are accused of ported this week that the Egyptians pendent from the ruler’s wishes. U.A.E. authorities didn’t support the
The arrests are the latest in a con- being linked to the Muslim Brother- allegedly collected security informa- Emirati officials have responded overthrow of former President Hosni
troversial security crackdown waged hood and fomenting an armed over- tion about the U.A.E., held secret to such accusations by saying the ar- Mubarak. They made no secret
by Emirati authorities in the past two throw of the government here. meetings, and attempted to recruit rests are necessary to protect na- about their distrust for President
years, as the Arab Spring has pro- No charges have been filed members to their cause, actions that tional security. The U.A.E.’s state se- Morsi or the Brotherhood.
vided an opening for Islamic-tinged against those arrested in December. are criminal offenses. curity apparatus, the agency Mahmoud Ghozlan, a senior offi-
reform movements across the region. Under U.A.E. law, terror suspects Judging the credibility of the au- responsible for the arrests, didn’t re- cial and spokesman in the Muslim
The U.A.E. federal government has can be held for a month without ap- thorities’ terrorism accusations is spond to requests Thursday to com- Brotherhood, said that at least two
moved to quash dissent among Emir- pearing before a judge, who can then difficult, according to Western diplo- ment about the detained Egyptians. of the detainees were members of
ati citizens, as well as among foreign- extend detentions. mats in the U.A.E. and human-rights The Egyptian presidential delega- Egypt’s Muslim Brotherhood but de-
ers who make up the majority of the The U.A.E.’s Al-Khaleej newspa- activists, who say the Emirates’ tion, including the nation’s intelli- nied Emirati claims that they consti-
work force and residents. per, citing security officials, re- court system isn’t impartial or inde- gence chief and a top aide to Mr. tuted a terrorist cell.
EUROPE NEWS
EU Faces Tests on Foreign Policy French

Actor Wins
[ Brussels Beat ]
BY LAURENCE NORMAN
Russian
In many respects, 2012 was a
wait-and-see year for foreign
Citizenship
policy in Brussels. BY LUKAS I. ALPERT
The U.S. election put trans-
Atlantic ties on hold and meant MOSCOW—Russian President
other initiatives, like a fresh push Vladimir Putin granted citizenship
for an Israeli-Palestinian peace Thursday to French actor Gérard De-
deal, were unlikely to emerge. pardieu, whose bitter fight over
Europe waited for Iran to decide taxes with France’s government has
whether to engage in nuclear talks led him to renounce his citizenship.
and awaited a new generation of A statement posted on the gov-
Chinese leaders. Russian ties ernment website said Mr. Putin had
barely budged as Vladimir Putin signed a decree in response to “an
returned to the Kremlin. application for citizenship of the
In Cairo, Tunis and Tripoli, the Russian Federation” on behalf of
European Union was more in “Depardieu Gérard Xavier, who was
evidence. Aid and trade were used born in France in 1948.”
as incentives in an effort to prod In a letter Russia’s main state-
post-Arab Spring regimes toward run broadcaster said it had received
democracy. But diplomatic from the actor, Mr. Depardieu said

engagement remained mainly he was pleased his request had been
reactive as policy makers watched accepted.
a patchwork of new, Islamist-led “I adore your country, Russia,
governments emerge. your people, your history, your writ-
The new year promises to be ers. I like to make films here,” the
more exacting: Brussels faces letter said. “I love your culture, your
decisions that are unlikely to way of thinking.
brook delay. Here are five of the “My father was once a Commu-
biggest: Iran’s top nuclear negotiator, Saeed Jalili, left, and EU foreign-policy chief Catherine Ashton at nuclear talks in September nist,” it continued. “This is also part
of my culture.”
Iran “containment strategy” if Syria status at the U.N. There are once a new parliament is elected, The letter said Mr. Depardieu
Efforts to restart EU-led talks remains a hub for violence and growing calls from within the EU it would be a bitter blow for EU planned to learn Russian, but didn’t
between Tehran and the five instability for years to come. for some kind of consequence to policy and ties would likely be say if he intended to live in Russia. A
permanent members of the United “That’s a very different challenge follow Israel’s settlement plans. reassessed. woman who answered the phone at
Nations Security Council plus than facilitating regime change,” The EU is also considering an Mr. Depardieu’s office couldn’t con-
Germany—known as the P5+1— he said. expanded Gaza role. The first hint Ukraine firm if the actor had sent the letter
dragged on through 2012. The of a debate emerged in recent 2012 was a wipeout for EU- and his spokesman didn’t respond to
P5+1 are expected to reformulate Mali/Sahel weeks on whether the EU should Ukraine ties, with some EU leaders a request to comment.
their proposal to get Tehran to The EU finally agreed the re-examine its no-contact boycotting Ukraine-based games Mr. Putin’s spokesman, Dmitry
scale back uranium enrichment, blueprint for an army training approach to Hamas, classified as a during Europe’s soccer Peskov, said Mr. Depardieu had ap-
but top EU officials say they are mission for Mali in December and terrorist group. With Israel championship amid charges that plied for citizenship and that it had
determined to keep the bulk of Brussels hopes to have its 200- seemingly resigned to Hamas rule President Viktor Yanukovych’s been granted on the basis of his “in-
sanctions, at least initially, to strong force in place by midyear. in Gaza, some officials say government was deploying fluence in the cultural realm,” and
maintain leverage on Iran. While The aim is to turn Mali’s Brussels should open a channel to “selective justice” against political his “significant role in films about
some form of direct Iran-U.S. talks ramshackle military into a force the group. opponents. With former Prime Russian history and historical fig-
will surely make or break the that can work with West African In contrast, Europe could Minister Yulia Tymoshenko still ures.”
nuclear negotiations, Brussels will troops to fight Islamist militants return to an older debate over jailed, the EU nonetheless said in In 2011, Mr. Depardieu starred as
face questions on how to keep the that control Mali’s north. whether to cut ties with the December it hopes to enact a Grigori Rasputin in a French-made
P5+1 united and when to decide Yet multiple concerns persist. political wing of Lebanon’s frozen political and trade accord TV-movie chronicling the life of the
the process has failed if Iran The launch of a political process Hezbollah. The U.K. and the by November if Ukraine advances controversial and influential Russian
doesn’t engage. If there was time that could see Mali returned to Netherlands last fall called for overhauls. A summit is due to take mystic. In his letter, Mr. Depardieu
for patience in 2012, that is less civilian rule has made little relations to be cut over place in February. specifically expressed his gratitude
likely to be true in 2013. progress. There are worries about Hezbollah’s terrorist activities and Some senior Brussels officials to a co-star on the project, Vladimir
the expertise of the West African ties to the Assad regime. said they believe Ukraine’s Mashkov.
Syria troops and fears that a retrained This is part of a broader debate leadership doesn’t deserve closer Mr. Peskov said Mr. Depardieu
With sanctions policy now Mali military could exact revenge over how “how Europe deals ties. Others say Ukraine is wouldn’t have to reside in Russia to
close to its limits and the on the country’s ethnic-Touareg collectively with Islamist strategically crucial and want to maintain his citizenship. “It is en-
opposition coalition recognized, rebels in the north while dodging movements,” Mr. Lesser said. avoid pushing Kiev toward Russia tirely up to him,” Mr. Peskov said.
the EU must decide whether to the tougher task of battling al Egypt remains the other key and the Moscow-dominated French government spokes-
modify the arms embargo to Qaeda linked Islamist forces. With test for this debate. In 2012, Eurasian Union customs bloc. woman Najat Vallaud-Belkacem said
provide more direct assistance to top EU officials warning the chaos Brussels stuck its neck out to offer One other relationship is hardly it was “entirely the prerogative of
Syria’s opposition. France and the in the region poses a direct help to Mohammed Morsi, who led a problem but still critical. the head of the Russian state to
U.K. are pushing for that and EU terrorist threat to Europe, the Muslim Brotherhood to victory President Barack Obama’s re- grant citizenship to a foreign na-
leaders agreed in December to pressure may grow on the EU to in June’s elections. The EU offered election in November means EU- tional, so there is no need for me to
consider “all options” for doing so step up intervention there. a $5 billion aid and investment U.S. ties will be more about comment.”
when the sanctions regime expires package in November, but Mr. continuity than change. U.S. In December, Mr. Putin publicly
March 1. Others, including Israel and Islamists Morsi’s move to concentrate pressure for Europe to pull its offered the 64-year-old thespian—
Germany and Sweden, have Ties between Israel and powers in the executive and force weight on defense will continue, whom he called a “friend”—citizen-
serious doubts. Questions about Brussels soured again in late 2012 through a speedy referendum on a but EU diplomats hope a possible ship, after a report appeared in
some form of no-fly zone or as the EU said it was “dismayed” new constitution has rattled EU-U.S. trade deal could remind French newspaper Le Monde stating
humanitarian-aid corridor persist. by plans to expand Israeli confidence. Washington that, even as it turns that the actor had told friends he
The biggest challenge, said Ian settlements and Israel bristled at Engagement remains the policy, its attention to Asia, it shouldn’t was considering moving to Belgium,
Lesser of the German Marshall the lack of EU opposition to the but if Mr. Morsi were to reverse forget vital economic and Montenegro or Russia to escape
Fund, will be designing a regional Palestinians’ bid to upgrade their his pledge to surrender powers diplomatic links with Europe. France’s tough new tax regime.
“If Gérard really wants to have
either a residency permit in Russia
or a Russian passport, we will as-
Gunman Kills Three, Injures Two in Swiss Village sume that this matter is settled and
settled positively,” Mr. Putin said
during his annual televised news
Associated Press ployed man living on disability pay- “The shooter pointed his weapon Guns are popular among the conference Dec. 20.
ments, fired about 20 shots at our colleagues, so they had to Swiss—the Alpine country has at The Academy Award-nominated
GENEVA—A shooting in southern Wednesday night in the village of open fire to neutralize him, to avoid least 2.3 million weapons among a Mr. Depardieu said in December that
Switzerland left three women dead, Daillon, authorities in the Swiss being injured themselves,” police population of less than eight million. he was surrendering his French
two men wounded and raised ques- canton of Valais said Thursday. spokesman Jean-Marie Bornet told The suspect was using a military passport and social security after
tions about how a troubled suspect He opened fire from his apart- Swiss radio. rifle that was once standard issue in the country’s Socialist government
was able to go on a rampage with an ment and pursued people in the The suspect, who police didn’t the Swiss army, interim cantonal proposed a top income-tax rate of
old military rifle. street, police said. Armed with a identify, was arrested and taken to police chief Robert Steiner said. 75% on high-wealth residents as part
The shooting also highlighted Swiss military rifle and a handgun, the hospital with serious wounds. Prosecutor Catherine Seppey of its austerity budget. Russia has a
the easy access to firearms in gun- the man then threatened to shoot The spokesman said the suspect said the suspect was unemployed flat income tax of 13%.
loving nations. the officers that were sent in to stop lived in Daillon but the motive for and had been receiving psychiatric —Mimosa Spencer in Paris
The suspect, a 33-year-old unem- him, police said. the shooting was unclear. care since at least 2005. contributed to this article.
EUROPE NEWS
Scandal Hits Greek Tourism Agency

BY ALKMAN GRANITSAS
AND NEKTARIA STAMOULI Steep Climb for Athens
ATHENS—A multimillion-dollar
embezzlement case involving The travel industry has bolstered Greece’s bottom line…
Greece’s national tourism agency
has dealt a new blow to the crisis-
16.5% 18.4% 758,300 $13.9B 16.4M

hit country’s political establishment,
which already is reeling from a
scandal over its failure to go after
wealthy suspected tax evaders. Contribution to gross Contribution to Employment International tourism International
Auditors in December were employment
asked to examine what government
domestic product receipts tourist arrivals
Note: Data from 2011
officials say is a hole in the agency’s Sources: Association of Greek Tourism Enterprises; Greek Tourism Facts Figures 2012 Edition
books, after an incident involving an
allegedly fraudulent check raised
questions about possible corruption
at the agency. The auditors have
discovered a series of improper
transactions totaling about €12 mil-
lion ($15.8 million) and extending
back as far as 2003, two senior gov-
ernment officials said.
Political appointees connected to
Greece’s two mainstream parties—
both of which are part of the coun-
try’s current, fragile coalition gov-
ernment—could be implicated,
officials and analysts said.
The officials said that, at the
very least, past appointees to the
agency should have had better over-
sight of the agency’s finances.
The developments underscore
how, despite years of international
monitoring and efforts to control
state spending, Greece has yet to
fully address its past practices,
which analysts said contributed to
its current crisis.
Reuters
How the government handles the

case could indicate whether the par-
ties—conservative New Democracy Above, tourists at the Parthenon temple on the Acropolis in October. Greece’s tourism sector is one of the nation’s only money makers.
and Socialist Pasok—that have alter-
nately ruled Greece for most of the
past four decades are serious about But the government remains plagued by corruption allegations
tackling corruption, analysts said.
“If this proves to be a big scan- March 8, 2012 Six employees at officials on island of Zakynthos for Dec. 24 Joint report by the hole in the agency’s accounts is
dal, all hell will break loose. I have Greece’s main IKA pension fund are granting hundreds of subsidies for International Monetary Fund and disclosed.
no doubt this may even cause the arrested on suspicion of fraud. vision impairment to persons who European Union says Greece hasn’t
fall of the government,” said Thanos weren’t blind. done enough to crack down on tax Dec. 28 Greek prosecutors disclose
Veremis, a professor of political his- Early March Two employees at evasion. that earlier version of the Lagarde
tory at the University of Athens. development ministry arrested on Oct. 2 Greece’s Socialist party leader List has been tampered with to
“Public opinion is looking for blood suspicion of seeking bribes. hands over previously missing list of Dec. 24-25 Greek police arrest five remove the names of relatives of a
and rightly so. So the government some 2,000 Greeks with Swiss bank people on suspicion of defrauding former finance minister.
cannot afford not to do something. April 11 Former Greek defense accounts, known as the Lagarde List. Greece’s national tourism agency.
It had better do so, otherwise it minister arrested in judicial probe into Dec. 31 Greek government asks for
could fall.” money laundering. Dec. 5 Greece ranked most corrupt Dec. 27 Greece’s general special parliamentary probe into
The allegedly missing money at European Union country in annual accounting office ordered to begin former finance minister’s handling of
the tourism agency comes on the Sept. 19 Greek health ministry Transparency International corruption special audit of national tourism Lagarde List.
heels of a public outcry over the takes disciplinary action against local index. agency after an alleged €12 million Source: staff reports
failure of politicians to pursue tax-
evasion investigations against thou-
sands of Greeks who have some $2 the alleged actions of a former fi- The check was made out to a is tasked with promoting Greece in the agency’s accounts.
billion in Swiss bank accounts, some nance minister, who the government hotel on the tourist island of Syros abroad, mainly through marketing After learning of the case, his
of whom authorities suspect of hav- has accused of tampering with the and was discovered after one of campaigns and promotions. boss, Tourism Minister Olga Kefalo-
ing salted away income abroad that list during his term in office in an those arrested tried to cash it at One of those arrested was a 39- gianni, also from New Democracy,
was never declared. effort to shield family members Greece’s central bank on Dec. 21, year-old former special adviser to ordered that it be immediately re-
That scandal over the so-called from potential tax audits. police said. the recent general secretary of the ferred to a public prosecutor.
Lagarde List, after International The former finance minister, When trying to confirm the pay- agency, Nikos Karahalios, whose sig- Greece’s general accounting of-
Monetary Fund chief Christine George Papaconstantinou, has de- ment, an official at the central bank nature was purportedly on the fice rushed a special three-person
Lagarde, who passed the informa- nied any wrongdoing and suggested called the tourism agency, and was check. The special adviser hasn’t auditing team to the agency’s offices
tion to the Greek government when others had tampered with the list. told to stop the check, police said. publicly commented on the case. late last week. A formal report isn’t
she was French finance minister, has The problems at the tourism Greece’s tourism sector is one of Mr. Karahalios, a stalwart of the expected for a month.
tarnished the reputation of the agency emerged when Greek police the few money generators for the New Democracy party who had just One of the officials familiar with
country’s political leaders. arrested five people for allegedly at- country’s recession-ravaged econ- stepped down as head of the agency the case said the probe is looking
Greece’s coalition government tempting to defraud the tourism omy, and accounts for roughly one- after only 12 weeks in office, said into years of alleged overspending
this week formally petitioned Parlia- agency by trying to cash a €147,600 sixth of gross domestic product. his signature was forged and that he on media campaigns and hotel stays
ment to launch a special probe into check for services never rendered. The national tourist organization was set up after uncovering the hole by the agency.
German and Spanish Job Data Bring Some Comfort

BY BRIAN BLACKSTONE positive reports will be needed be- as policy makers struggle to resolve bor-market reports, he added. an 11,000 increase. It has risen for
AND TODD BUELL fore declaring a turnaround in the a debt crisis that began three years Last month’s unemployment nine straight months, but December’s
economy, which has failed to expand ago in Greece and last year threat- drop in Spain was largely driven by gain was the smallest since May.
FRANKFURT—Unemployment in the euro zone since the third ened Spain and Italy. a 1.6% decrease in the number of job Despite a modest pickup in job-
stabilized at low levels in Germany quarter of 2011. December labor- “It’s clearly positive news,” said seekers in the services sector. Much lessness last year, Germany’s unem-
in December and fell sharply in market data are subject to volatile Anatoli Annenkov, economist at So- of the change took place in the pop- ployment rate of 6.9% is one of the
Spain, boosting hopes for a modest swings and revisions because of hol- ciété Générale, referring to a nearly ulous region of Andalusia, which has lowest in Europe. The latest figures
euro-zone recovery in 2013 after iday-related hiring of temporary re- 60,000 drop in the number of Span- one of the country’s worst unem- also showed a continued shift into
more than a year of stagnation and tail workers. ish jobless claims last month, the ployment problems. permanent jobs, for which companies
contraction across the 17-member Still, any improvement in unem- sharpest decline yet for a month of Germany’s labor agency said un- pay into the social-security system.
currency bloc. ployment—which is at a record high December. “We need to see if this employment rose by 3,000 in Decem- —David Román in Madrid
Analysts cautioned that more in the euro bloc—is welcome news number is confirmed” by coming la- ber, well below analysts’ forecasts for contributed to this article.
U.S. NEWS
Promising Firms a Better Life Elsewhere

BY HANNAH KARP Historically, few of California’s
Golden Bear | Businesses look to leave costly, restrictive California job losses have stemmed from relo-
In 2011, Replico Corp. CEO cation. Only 2% of jobs lost in Cali-
Michael Whitehead decided it was In 2011, California Best states fornia between 1992 and 2006 went
becoming too expensive to do busi- Massachusetts out of state, according to a study by
accounted for for business,
ness in California. So he made up by rank, 2012
47th the Public Policy Institute of Califor-
his mind to move his logistics com- 12.6% New York nia. About 9,000 jobs—less than 1%
pany’s western distribution center 1-10 of the state’s 18.5 million jobs—go
of U.S. GDP, 49th
from Gilroy, southeast of San Jose, 11-20 Nevada out of state each year. That number
but only
to somewhere with less red tape 21-30 12th Illinois stayed relatively consistent each
and cheaper real estate. California
48th Virginia year regardless of how the economy
31-40
Soon after making inquiries 2.2% 50th 6th fared, says study author Jed Kolko,
about new locations, Mr. Whitehead 41-50 Arizona Tennessee now chief economist at real-estate
of manufactur-
got a call from a local business-de-
ers’ expansions 10th 4th website Trulia.
velopment consultant recently hired Based on a survey of Georgia “The claim that California’s busi-
by the state of Nevada, who calcu-
and new sites, 650 business leaders,
conducted by
Texas 8th ness climate is forcing jobs out of
lated the amount Mr. Whitehead
nationwide Chief Executive 1st the state is not supported by facts,”
Magazine. Alaska Florida
could save by moving there. Follow-
Source: California 2nd said Riley Ray Robbins, a spokesman
ing several meetings with the Ne- Manufacturers and Hawaii for California’s Governor’s Office of
vada representative, Replico relo- Technology Association The Wall Street Journal Business and Economic Develop-
cated its Gilroy operations—and ment, adding that he doesn’t expect
one-third of its employees—to Reno recent policy changes to cost the
last year. Now, states that have tradition- state jobs. “The competition on our
“California is not a business- ally staffed external business-devel- radar isn’t Tennessee—it’s Brazil.”
friendly state,” said Mr. Whitehead. opment offices only overseas are Recruiters say most of their
Though the decision was “hard be- adding manpower in the Golden work centers on companies that are
cause of the employee impact,” the State. It isn’t the only place under expanding, not relocating alto-
staff who made the move appreciate siege—Virginia’s Fairfax County, for gether. Ron Frierson, a Los Angeles-
Nevada’s lack of income tax, he said. example, has also opened an office based representative for Kansas,
Nevada is one of a growing num- in Boston to lure biotech firms—but says he spends his days scouring the
ber of states stationing full-time many are zeroing in on California, state for businesses that may want
John Francis Peters for The Wall Street Journal
business recruiters in California, as betting that new policies going into to open out-of-state plants, ware-
the nation’s economy recovers and effect there will begin to push more houses or data centers. Doug Kig-
the competition for jobs heats up. businesses and entrepreneurs out. gins, one of Arizona’s two new Cali-
Economic-development bureaus Last year, Californians voted to fornia recruiters, said he has been
seek to attract business and jobs raise taxes on the state’s wealthiest spending about six hours a day driv-
from wherever they can, but Califor- residents. They also voted to close a ing around to promote Arizona’s
nia has become a particularly at- tax loophole that had allowed multi- business-friendly climate.
tractive target lately thanks to the state corporations to avoid paying Pat Dinon, formerly a Long Beach,
prospect of rising taxes and new tax based on their California sales. Calif., shipping-company president
regulations that other states think Meanwhile, auctions got under way now recruiting for Georgia, says
could make companies there easier in November for California’s cap- most of the job is “cloak-and-dag-
to lure away—an idea disputed by and-trade program for emissions, Pat Dinon, right, a recruiter for Georgia, talks about his surfboard at a meeting ger.” For privacy’s sake, he takes
California officials. forcing businesses to start paying with John Long, a commercial real-estate agent, at California’s San Onofre State some of his meetings in the Pacific
California also has more business for the rights to release more than a Beach last month. More California businesses are considering relocation. Ocean, inviting executives and bro-
to steal. Apart from its sheer size, certain amount of greenhouse gases. kers to surf with him at San Onofre
its job growth, in the past few years This year, California companies will tention of Silicon Valley venture October—one near Los Angeles, the State Beach, north of San Diego.
at least, has been nearly twice as be held responsible if the ware- capitalists as well as California’s other in Silicon Valley. Tennessee in “When you have a prospect
fast as the rest of the country’s, as houses they contract with underpay large number of entrepreneurs and November posted an ad for a new that’s interested in doing something
the state has emerged from a partic- employees. CEOs, and to make sure they are on government position looking for outside California, they don’t want
ularly steep downturn, caused in Companies rarely relocate purely the shortlist for any expansions or California businesses to poach. Ne- it out,” says Mr. Dinon. “It may cost
large part by a collapsing real-estate at a recruiter’s suggestion. But relocations. Arizona opened its first vada hired its own representatives jobs, and it may create a lot of ner-
market. states are hoping to capture the at- two domestic out-of-state offices in in California two years ago. vous people.”
Transocean Settles Spill Claims Fed Divided on Bond Buying

Continued from first page tinue, “participants were approxi-
Continued from first page took issue with the size of the pen- could total more than $20 billion. If the Fed buys bonds at the cur- mately evenly divided between
Water Act for failing to properly alties. If BP agrees to settle the civil vio- rent pace through the end of the those who judged that it would
monitor the well at the time of the Given the amount the company lations, the payments would likely year, it will be expanding its $2.9 likely be appropriate for the [Fed]
blowout and pay a $100 million fine, had disclosed it was girding for, be much lower. But if it chooses to trillion portfolio by another $1.02 complete its asset purchases some-
according to documents filed Thurs- Prof. Uhlmann said, “it is curious fight the claims in court, it could trillion. Ending the program could time around the middle of 2013 and
day. that the Justice Department has face fines of $4,300 for each of the send shock waves through markets, those who judged that it would
The company will also pay $1 bil- agreed to a settlement that is bet- estimated 4.9 million barrels of oil which have grown accustomed to re- likely be appropriate for the asset
lion in fines for civil violations of ter than what Transocean was pro- spilled if the company is found to peated Fed stimulus measures. purchases to continue beyond that
the Clean Water Act. Additionally, it posing.” have been grossly negligent. Officials believe the programs date,” the minutes said.
will pay $150 million each to the Na- BP spokesman Geoff Morrell help push down long-term interest Though the Fed has tied its deci-
tional Fish and Wildlife Foundation said Transocean’s settlement “un- rates; drive investors into stocks sion to the performance of the labor
and the National Academy of Sci- Transocean, which derscores what every official in- and other risky assets; and spur in- market, it hasn’t set down firm
ences for oil-spill response and hab- vestigation has found: that the vestment, spending and borrowing benchmarks for how it will judge
itat rehabilitation. owned the drilling rig Deepwater Horizon accident re- to get the economy going. But the whether the job market has im-
“This is a positive step forward, that exploded, triggering sulted from multiple causes, in- Fed made clear in the minutes re- proved “substantially.”
but it is also a time to reflect on volving multiple parties.” leased Thursday that officials re- In a September news conference,
the 11 men who lost their lives the largest offshore oil Tom Claps, an analyst with main preoccupied with uncertainties Mr. Bernanke said, “We’re looking
aboard the Deepwater Horizon,” spill in U.S. history, will Susquehanna Financial Group, said about the benefits of the programs for something that involves unem-
Transocean said in a statement. Transocean’s settlement could be and their potential costs. ployment coming down in a sus-
“Their families continue to be in pay $1.4 billion. seen as a positive for BP because it “While almost all members tained way, not necessarily a rapid
the thoughts and prayers of all of doesn’t include language that thought that the asset-purchase way, because I don’t know if our
us at Transocean.” Transocean was grossly negligent program begun in September had tools are that strong, but we’d like
The Swiss offshore drilling con- Analysts with Wells Fargo Secu- in connection with the spill. been effective and supportive of to see an economy which is strong
tractor said previously in Securi- rities called the settlement a wel- “The Justice Department said growth, they also generally saw that enough that it will support improv-
ties and Exchange Commission fil- come surprise for Transocean in- repeatedly in filings that both the benefits of ongoing purchases ing labor-market conditions and un-
ings that it had discussed a $1.5 vestors who were worried the Transocean and BP were ‘grossly were uncertain and that the poten- employment that’s declining gradu-
billion payment with the Justice spill-related liability could grow. negligent’ in their conduct,” Mr. tial costs could rise as the size of ally over time.”
Department to resolve the civil and “We think the quantification of Claps said. He added that if the the balance sheet increased,” the The unemployment rate dropped
criminal claims. The company has the liability should give ratings Justice Department concluded minutes showed. to 7.7% in November from 8.3% in
set aside a $2 billion noncash re- agencies more comfort in rating Transocean was merely negligent, Officials appeared to be focused July, but throughout the recovery it
serve for all Deepwater Horizon- RIG’s debt,” Wells Fargo analysts “it would improve the chances that on three potential endpoints for the has moved in fits and starts. The La-
related claims. said in a note to clients, referring BP would also just be called negli- program, with one group centered bor Department will report the un-
David M. Uhlmann, a University to the company’s stock symbol on gent and could mean their Clean on midyear, another cluster around employment rate for December on
of Michigan law-school professor U.S. exchanges. Water Act fines would be much year-end and the policy hawks, who Friday. Officials also are looking at
who used to be head of the Justice While BP settled much of the smaller than many have pre- are in a minority and oppose the other indicators, including payroll-
Department’s environmental- federal case against it, the com- dicted.” program, wanting to end it right employment growth, overall eco-
crimes unit, commended the de- pany must still contend with civil —Alison Sider away. nomic growth and labor-force par-
partment for settling the case but Clean Water Act violations, which contributed to this article. Among those who want to con- ticipation.
Don’t Miss the Bigger Picture.
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U.S. NEWS
Vote Is Set
On Sandy Aid
After Uproar
Associated Press ers in Congress after being prom-
ised a vote earlier this week.
Many home and business owners If the House, as expected, ap-
flooded out by Superstorm Sandy proves the flood insurance proposal,
could get insurance payouts soon the Senate plans to follow with a
through congressional action ex- likely uncontested vote later Friday,
pected Friday on a $9.7 billion bill according to a Senate Democratic
to replenish the National Flood In- leadership aide.
surance Program. About 140,000 Sandy-related
The Federal Emergency Manage- flood-insurance claims have been
ment Agency, which runs the pro- filed, FEMA officials said, and most
gram, warned that it will run out of have yet to be closed out. Many
money next week if Congress flood victims have only received
doesn’t give it additional borrowing partial payments on their claims.
authority to pay out claims.
Congress created the program in ‘Total Loss’
1968 because few private insurers Philip Rock has received $8,000
cover flood damage. in flood insurance payments so far, Above, Gov. Chris Christie speaks to
Northeast lawmakers say the but said he is awaiting a statement reporters on Wednesday. Rep. Peter
money is urgently needed for storm on the final amount, which he ex- King joined by other New York area-
victims awaiting claim checks from pects to be much more. A house he lawmakers Wednesday affected by
Associated Press; New Jersey Governor’s Office/Associated Press (above)
the late October storm that was one owns in Toms River, N.J., had a Superstorm Sandy.
of the worst to strike the Northeast, $220,000 flood-insurance policy. The
ravaging the coast from North Caro- house, which he rents out, was de-
lina to Maine, with the worst flood- stroyed, and he needs to know the fi-
ing occurring in Atlantic City, N.J., nal payout before he can demolish it. Slower Than After Katrina
New York City and Long Island and The house is a “total loss,” Mr. Northeast lawmakers have com-
along the Connecticut coastline. Rock said. “We don’t want to demol- plained that it took just 10 days for
“People are waiting to be paid,” ish the house and have them say, Congress to approve about $50 bil-
said Rep. Frank LoBiondo, R-N.J., ‘We have to go around and take lion in aid in the wake of Hurricane
whose district includes Atlantic City more pictures.’” Katrina but that it hasn’t provided
and many other coastal communi- New York, New Jersey and Con- aid for Sandy relief in more than
ties hard hit by the storm. necticut were the states hardest hit two months.
“They’re sleeping in rented by the storm in terms of damage “States and local communities
rooms on cots somewhere and from high winds, flooding and storm need to know the money will be
they’re not happy,” the congressman surges. there before they can give a green
continued. “They want to get their The storm damaged or de- light to start rebuilding,” said Mr.
lives back on track and it’s cold out- stroyed more than 72,000 homes LoBiondo.
side. They see no prospect of relief.” and businesses in New Jersey. In More than $2 billion in federal
New York, 305,000 housing units money has been spent so far on re-
Party Infighting were damaged or destroyed and tion on that measure is expected the struggling to pick up the pieces of lief efforts for 11 states and the Dis-
House Speaker John Boehner more than 265,000 businesses were following week. Fiscally pressured their lives,” said Rep. Michael trict of Columbia struck by the
promised a House vote on Friday af- affected. local governments are awaiting that Grimm, R-N.Y., whose district in- storm.
ter his decision earlier this week to The flood-insurance measure is money. cludes Staten Island, one of New New York, New Jersey, Connecti-
delay an action on a broader Sandy the first phase of a proposed Sandy “This funding will give the city York’s hardest-hit areas. cut, West Virginia, Virginia, Mary-
relief package provoked outrage aid package. Under Mr. Boehner’s and state the much-needed re- Sandy was the most costly natu- land, New Hampshire, Delaware,
from Northeast Republicans, includ- new schedule, the House will vote sources to rebuild our damaged in- ral disaster since Hurricane Katrina Rhode Island, Pennsylvania, Massa-
ing New Jersey Gov. Chris Christie, Jan. 15 on an additional $51 billion frastructure and provide further aid in 2005 and was blamed for at least chusetts and the District of Colum-
who said he’d lost trust in GOP lead- in Sandy recovery money. Senate ac- to individuals and small businesses 120 deaths. bia are receiving FEMA aid.
Jobs Survey Stirs Optimism A Mixed Holiday Season

BY KATHLEEN MADIGAN
AND ERIC MORATH
wires expected 363,000 new benefit
applications last week.
Among large firms, businesses with
500 or more employees created
For Retailers in the U.S.
Jobless claims often bounce 87,000 positions. BY KAREN TALLEY Overall, the 17 retailers tracked
A strong report on private-sec- around during holidays, but the fig- Service-sector jobs increased by AND ANNA PRIOR by Thomson Reuters reported 4.5%
tor hiring in December overshad- ure is still trending below year-ear- 187,000 last month, but factory jobs same-store sales growth in Decem-
owed rising jobless claims last lier levels. The four-week moving lost 11,000 slots. Construction jobs Cautious U.S. consumers re- ber, compared with an expected
week, lifting some economists’ ex- average of claims, which smooths jumped by 39,000 last month, most strained their spending in Decem- 3.3%. The figure compares with 4.2%
pectations for the federal employ- out volatile weekly data, was likely reflecting rebuilding after Su- ber, making for a generally mixed a year earlier.
ment snapshot due out Friday. 360,000 last week, compared with perstorm Sandy, the report said. holiday season for retailers at what It is likely there will be gross
Private-sector jobs in the U.S. 377,000 a year earlier. Some investors and economists is usually their busiest time of the margin pressure on at least some
increased by 215,000 last month, “The claims data are not always view the ADP report as a bellwether year. retailers’ fourth-quarter results
according to a report Thursday by reliable labor-market indicators for the tally of nonfarm payrolls to A reluctance to spend as the fis- given the way December played out
payroll processor Automatic Data around the holiday season because be released Friday. But the reports’ cal cliff loomed held some purchas- for many of them.
Processing Inc. and forecasting firm of issues seasonally adjusting the conclusions often vary widely—and ing in check, compounded by super- Several said sales didn’t come
Moody’s Analytics. Economists sur- data, but it is still a somewhat en- what they measure also differs. The storm Sandy in the Northeast and a until late in the month. By then, to
veyed by Dow Jones Newswires ex- couraging sign to see the trend in ADP survey tallies only private-sec- lack of the kind of cold weather that clear out product that wasn’t mov-
pected ADP to report a gain of the data remain relatively low,” said tor jobs. The federal report includes generally spurs buying. ing, retailers likely took significant
150,000 private jobs. J.P. Morgan Chase Bank economist government workers. Among the better performers markdowns. That means less profit
The November job gain was re- Daniel Silver. After the ADP report, a few last month were Costco Wholesale on sales they did make at the end of
vised higher to 148,000 from Mark Zandi, chief economist at economists revised upward their Corp., Gap Inc., and Macy’s Inc., the month.
118,000 reported a month ago. Moody’s Analytics, which compiles expectations for Friday’s numbers. while Target Corp., Limited Brands Target reported flat comparable-
A separate report Thursday, the ADP data, called that report Forecasters at Goldman Sachs now Inc. and some apparel retailers were store sales, when a 0.8% rise was ex-
from the Labor Department, said “very good, very solid.” The fiscal- expect a gain of 200,000 jobs, and weak. pected, but it said it sees fourth-
new filings for jobless benefits cliff debate during December Credit Suisse is calling for 185,000. “It was a very complicated quarter earnings meeting or
ended 2012 at a higher-than-ex- doesn’t seem to have damaged the The upward revisions mean the month, with all sorts of events that somewhat exceeding the low end of
pected level. labor markets, Mr. Zandi said. median forecast from all econo- threatened fragile expectations,” its expectations.
New unemployment claims According to ADP, companies mists surveyed by Dow Jones News- said Barbara Kahn, marketing pro- “December sales were slightly
jumped by 10,000 to a seasonally employing between one and 49 wires now calls for a payrolls in- fessor at the University of Pennsyl- below our expectations, as strong
adjusted 372,000 in the week ended workers increased jobs by 25,000 in crease of 160,000 in December, up vania’s Wharton School. “Online was results late in the month did not
Dec. 29. The previous week’s figure December. Medium-size businesses, from a pre-ADP estimate of 150,000. a saving grace for some of the re- completely offset softness in the
was revised up to 362,000. Econo- with payrolls of 50 to 499 workers, December’s unemployment rate tailers as people shift in that direc- first three weeks,” said Target Chief
mists surveyed by Dow Jones News- hired 102,000 new employees. is projected to hold at 7.7%. tion.” Executive Gregg Steinhafel.
U.S. NEWS
Boehner Wins Re-Election as Speaker

BY COREY BOLES the need to address the country’s to pursue a ban of earmarks that
debt, saying it was putting the will continue in the next two years.
WASHINGTON—Rep. John Boeh- American dream in peril. But he Throughout 2012 Mr. Boehner
ner (R., Ohio) was re-elected for a didn’t offer specifics about the had difficulty rallying his troops.
second two-year term as House coming fiscal policy debates. In- He was unable to bring a highway
speaker Thursday, despite a bruis- stead, he urged the assembled law- bill to the floor, despite personally
ing two weeks in which the major- makers “to do something—to do championing a proposal to pay for
ity of his party and two of his top the right thing.” a portion of its costs through di-
lieutenants voted against a fiscal- While Mr. Boehner will retain verting new oil and gas revenues.
cliff tax law. the speaker’s gavel in the 113th The House was also unable to
Mr. Boehner received 220 votes, Congress, there is little to suggest pass a long-term extension of the
compared with 192 votes for House his next two years will be any more farm bill before it expired at the
Minority Leader Nancy Pelosi (D., smooth sailing than his first term. end of September. Some elements
Calif.), who was backed by the bulk Lawmakers will have to navigate of farm programs were included in
of Democratic members. While through a tricky fiscal path, with the fiscal-cliff agreement that
most Republicans backed Mr. Boeh- debates in the next two months passed the House this week, largely
ner, a handful of lawmakers voted about spending levels and the on the back of Democratic votes.
for other candidates such as GOP country’s borrowing limit sure to Mr. Boehner will have 35 new
Reps. Michele Bachmann of Minne- divide Republicans. They also will freshmen in the new Congress and
sota, Jim Jordan of Ohio, Raul La- need to address the deferred imple- will miss the support of a number
brador of Idaho and House Major- mentation of across-the-board of moderate Republican allies, like
ity Leader Eric Cantor from spending cuts and the threat of a Rep. Steve LaTourette of Ohio, who
Virginia. Mr. Cantor received three government shutdown at the end of decided to retire.
votes, the most of any alternative March when a temporary funding He’ll also enter the new Con-
candidate. arrangement expires. gress with a leadership team that
Some backers of alternative Mr. Boehner struggled to shep- didn’t back the fiscal cliff tax law
candidates, including Rep. Justin herd a House over the last two that cleared Congress on New
Amash of Michigan and Tim Huel- years that included 87 freshmen Year’s Day, as both Mr. Cantor and
skamp of Kansas, both Republicans, GOP members, many of them Majority Whip Kevin McCarthy of
were stripped of prized committee backed by elements of the tea California join 149 other GOP rebels
assignments in the new Congress party. and voted against the deal.
as part of an attempt by leaders to Of his own insistence, he was Messrs. Cantor and McCarthy
clamp down on unruly backbench- without the tool most often used were reappointed to their leader-
ers. by previous House speakers to win ship positions, while Ms. Pelosi and
Getty Images
An emotional Mr. Boehner was votes for their agenda: the ability House Minority Whip Steny Hoyer
handed the ceremonial gavel of the to dole out funding for lawmakers’ of Maryland will both retain their
House by Ms. Pelosi. In a short pet projects, known as earmarks. roles as leaders of the House Dem-
speech, Mr. Boehner spoke about One of his first acts as speaker was ocratic caucus. Mr. Boehner was re-elected for a second two-year term as House speaker.
Fresh Fights Are Already Brewing Over Budget

BY DAMIAN PALETTA raise the $16.394 trillion debt ceil- diate opportunity to act…to put our
A Dent in the Deficit ing. country back on a sound financial
The sense of relief in Washington Impact of the fiscal-cliff deal on annual U.S. deficit projections If Congress doesn’t boost it soon, footing.”
after the completion of a tax deal to the government—which is spending But Republican hopes of focusing
In trillions
skirt the fiscal cliff Tuesday belied far more than it takes in—won’t be exclusively on the debt ceiling are
Actual Projected
the fact that more tax-and-spending Projections able to pay all its bills. now complicated by pressure to
t
$1.25
brinkmanship is expected as soon as before the deal* Analysts have warned in recent avert across-the-board spending
February. Savings from days that the political showdown cuts that were written into law in
1.00
There was muted satisfaction changes to tax over whether and how to raise the August 2011 to try to force a
that Congress had sent to President and spending laws debt ceiling could be bitter and fuel broader deficit-reduction effort.
0.75
Barack Obama legislation to avoid Interest savings market volatility, an echo of an Au- The New Year’s Day agreement
sudden tax increases and spending from reduced gust 2011 showdown over the bor- replaced the first two months of
cuts that threatened to provoke a 0.50 borrowing rowing limit. those cuts, known as a “sequester.”
recession. Revised deficit The Treasury Department has The remaining $88 billion in cuts
Moody’s Investors Service, one 0.25 projections begun taking steps to buy additional are scheduled to kick in on March 1.
of the firms that rate government time, such as halting contributions
debt, warned after the agreement 0 to federal pension funds, but ana-
that the it didn’t do enough to re- 2012 '14 '16 '18 '20 '22 lysts say it will run out of maneu- The most serious
duce the deficit. vering room in February.
If Congress doesn’t do more in
*Congressional Budget Office August 2012 alternative scenario, which assumes then-current policies,
including extension of all Bush tax cuts and alternative minimum tax fix Mr. Obama has said he wants to skirmish will come next
the coming months, Moody’s Sources: U.S. Congressional Budget Office (previous projections); work with Republicans on further month, when the U.S.
warned, the company could follow White House Office of Management and Budget (changes) The Wall Street Journal deficit-reduction measures, includ-
Standard & Poor’s in downgrading ing slowing the growth of federal Treasury is expected to
U.S. debt. spending on Medicare and other be unable to pay all of the
“Further measures that bring fiscal year, which ends Sept. 30. Russ Koesterich, global chief in- benefits.
about a downward debt trajectory In the wake of the tensions and vestment strategist for BlackRock, But he says he won’t negotiate government’s bills.
over the medium term are likely to recriminations of the fiscal-cliff bat- called the deal “a stopgap, not a so- over the debt ceiling which, he said,
be needed to support the AAA rat- tles, lawmakers and analysts see an- lution” in a note to clients, arguing reflects money Congress has already
ing,” Moody’s said. other last-minute showdown as al- that the deal’s “limited scope and spent. “Congress has delayed the worst
The battles on how to do that most inevitable. the need for additional negotiations “If Congress refuses to give the possible outcome by delaying se-
are far from over. Republicans say The eventual agreement, op- will likely translate into increased United States government the abil- questration for two months,” De-
any further deficit reduction or leg- posed by a majority of House Re- volatility for financial markets.” ity to pay these bills on time, the fense Secretary Leon Panetta said
islation to avoid across-the-board publicans, left bruises on nearly all “Expect more late-night drama from consequences for the entire global Wednesday. “Unfortunately, the
spending cuts should come from re- the major players and did nothing Washington in the coming months,” economy would be catastrophic—far cloud of sequestration remains.
ducing spending. President Obama to foster an atmosphere in which Mr. Koesterich said. worse than the impact of a fiscal Congress cannot continue to just
and many Democrats advocate a compromises are likely. By raising tax rates on upper-in- cliff,” Mr. Obama said Tuesday. kick the can down the road.”
combination of tax increases and The 11th-hour passage of the come Americans and limiting cer- Republican leaders, though, see Congress and the White House
spending cuts. agreement crafted by Senate Repub- tain deductions for those house- the debt ceiling as a lever to get Mr. also confront the threat of a partial
The most serious skirmish will lican leaders and the White House holds, among other things, the law Obama to agree to reduce federal government shutdown at the end of
arrive toward the end of February, eliminated the most threatening that Mr. Obama is expected to sign spending. March because Congress last year
when the U.S. Treasury is expected economic cloud hanging over the within days is estimated to reduce “The Speaker’s position is clear: agreed to fund the government only
to be unable to pay all the govern- economy. But it made only a dent in budget deficits by about $737 billion any increase in the debt limit must through March 27.
ment’s bills unless Congress boosts the long-term deficit. over 10 years from what the Con- be matched by spending cuts or re- Without action, many federal
the federal borrowing limit. “We shouldn’t be sitting here gressional Budget Office projected it forms that exceed the increase,” employees could be furloughed.
Then on March 1, the across-the- slapping ourselves on the back for a would otherwise be, the White said Brendan Buck, a spokesman for There hasn’t been such a shut-
board spending cuts of the fiscal great job. It didn’t really do anything House said Wednesday. House Speaker John Boehner (R., down since the 1990s, but Washing-
cliff, deferred in this week’s deal, to address our long-term debt prob- About $104 billion of that comes Ohio). “The president knows that.” ton has come close in recent years
are scheduled to begin slicing into lem,” said David Cote, chief executive from interest savings because the And Senate Minority Leader as talks dragged on until the final
military and domestic programs. of Honeywell International and a government will be borrowing less; Mitch McConnell (R, Ky.), calling for day.
And on March 27, a government leader of a business coalition pushing nearly all the rest comes from “a serious effort to reduce Washing- —Kate Linebaugh,
shutdown looms unless Congress for deficit-reduction. “All it did was higher taxes. ton’s out-of-control spending,” de- Dion Nissenbaum
approves funding for government address the fiscal-cliff problem and The next—and potentially most scribed the debt-ceiling vote in a and Jonathan Cheng
operations for the remainder of the set us up for a debt-ceiling debacle.” ominous—hurdle is the need to statement Wednesday as “an imme- contributed to this article.
WORLD NEWS
Japan Will Waive Some Myanmar Debt

Abe’s Government Maintains Country’s Lead on Relief and Seeks to Gain Entry for Japanese Businesses
BY MITSURU OBE to its fledgling democracy. “While
the ethnic violence continues, inves-
NAYPYITAW, Myanmar—Japan’s tors would be reluctant to invest in
new government has moved swiftly the country,” said Yuji Mori, direc-
to engage Myanmar as it looks to the tor for international programs at
long-isolated Southeast Asian nation the Tokyo-based Nippon Foundation.
as a potential market for Japanese Mr. Aso did steer clear of a spe-
goods, confirming it will start waiv- cific commitment to the ambitious
ing some debt claims on Myanmar Dawei project, a $50 billion deep-
although it stopped short of commit- sea port industrial zone in the south
ting to a major development project of the country that Thailand has
in the south of the country. been helping to develop with the
Finance Minister Taro Aso, ap- Myanmar government.
pointed only a week ago, chose Mr. Thein Sein said Japan’s par-
Myanmar for his initial overseas ticipation in the Dawei project
trip—the first by a member of Ja- would be much appreciated as it
pan’s cabinet of Prime Minister would potentially allow Myanmar to
Shinzo Abe—as Tokyo seeks gener- become “an east-west corridor”
ally to bolster ties with emerging connecting the Indian Ocean and the
economies in Asia, meeting Thurs- Pacific Ocean via Thailand, the Jap-
day with Myanmar’s President Thein anese official with knowledge of the
Sein. The two held discussions for talks said.
more than an hour in the capital But while Mr. Aso replied that
Naypyitaw. Japan would consider that request,

Myanmar for more than two de- he gave no specific indication as to
cades shut itself off from the inter- when or if Tokyo might join the
national community, having been project. The Japanese official added
condemned for cracking down on that Tokyo hadn’t been fully briefed
pro-democracy movements in 1988. about the project and it would be
But the former military regime difficult for Japan to ascertain at
handed power in 2011 to a quasici- Myanmar leader Thein Sein, left, met with Taro Aso in Naypyitaw on Thursday. Japan seeks to boost relations. this point how it could contribute.
vilian government that has em- Japan’s aid package is condi-
barked on a series of overhauls and Myanmar this month and will ex- estate on the outskirts of Yangon, The new loans include ¥17 billion tional upon overhauls being imple-
encouraged foreign investment. tend some ¥50 billion ($573 million) Myanmar’s largest city and its eco- for rural development, in addition mented in Myanmar. Japan officials
Japan has been taking the lead of new loans to the country. Japan nomic capital. Japan and Myanmar to ¥19 billion for power-plant reha- have described Myanmar’s efforts so
on Myanmar’s debt relief, putting is the largest creditor of Myanmar, last month agreed to jointly develop bilitation around Yangon and as far as deserving of support, and
the issue on the front line of the an- with $6 billion currently in arrears. the site, a 23-kilometer stretch of much as ¥20 billion for the Thilawa Myanmar officials said they were
nual International Monetary Fund Japan will eventually forgive more empty land, into a manufacturing project, and likely reflect some con- serious about reform.
meeting that Tokyo hosted in Octo- than half that debt, lending to the hub. “We want to focus on making a cern on Japan’s part over continuing “Myanmar is undergoing a major
ber, in an effort to facilitate the en- country afresh to finance develop- success of the Thilawa project for conflicts between the central gov- change. We have embraced a new
try of Japanese businesses to the re- ment projects. now,” he told Mr. Thein Sein, a Jap- ernment and ethnic minorities in system and a new age. We are un-
source-rich country with cheap “Myanmar has been unable to anese official with knowledge of the rural areas. dertaking various initiatives under
labor. Japan is also trying to regain make new investments because it is talks said. The Rakhine region has been em- this new framework. One of the
the influence it lost during Myan- bound to the old debts. The debt Myanmar’s Finance Minister Win broiled in violence in recent months most symbolic signs of change is the
mar’s quarter-century isolation un- waiver is meant to remove this ob- Shein, speaking to Mr. Aso with re- that has left tens of thousands of fact [opposition leader] Aung San
der its military dictatorship, where stacle to Myanmar’s economic porters present, said: “Our relation- minority Muslim Rohingya people Suu Kyi is now allowed to do politi-
China’s presence looms. growth,” Mr. Aso said. ship with Japan has passed a major homeless. Analysts have warned cal activity as a member of Parlia-
Mr. Aso confirmed Thursday that Mr. Aso also affirmed Japan’s milestone. With Japanese technol- that various ethnic and sectarian ri- ment,” Aung Min, minister responsi-
Japan as an initial step will waive support for the Thilawa project, ogy, I am convinced the Thilawa valries that had been suppressed by ble for ethnic minority groups, said
about a quarter of its debt claims on which aims to create an industrial project will be successful.” the military now present a challenge Thursday.
Tokyo Sends Envoy to Help Mend Ties With Seoul

BY EVAN RAMSTAD IN SEOUL AND YUKA pan’s most important neighbor.” “seems to have adopted policies
HAYASHI IN TOKYO Ms. Park’s ability to respond is based on pragmatic and creative re-
constrained by a sharp divide in alism, and not chauvinistic national-
Japan’s new prime minister, South Korean public sentiment, re- ism, as was feared by some before
Shinzo Abe, is moving quickly to flected in the election’s outcome. he took office.”
quell one of several disputes with Having won 51% of the vote over a Mr. Abe starts at a disadvantage
nearby countries by reaching out to liberal candidate with more nation- with the public and media in South
South Korea, calling it Japan’s most alist views, she will face pressure Korea, where he is remembered for
important neighbor. from the other side not to show suggesting in 2007 that there is no
On Friday, Fukushiro Nukaga, a weakness in the disputes with Ja- evidence that Japan’s military
Japanese lawmaker with long ties to pan. forced Korean women into sexual
South Korea, will meet South Ko- For Mr. Abe, the conciliatory ges-
rean President-elect Park Geun-hye ture toward Seoul contrasts with his
in Seoul and deliver a letter from confrontational rhetoric before and Mr. Abe’s conciliatory
Mr. Abe. By sending the special en- during Japan’s election campaign.
voy, Mr. Abe hopes to signal his de- The LDP aimed to tap nationalistic gesture toward Seoul
sire to mend ties between the two sentiment swelled by the territorial contrasts with his
neighbors—strained in the past year spats with South Korea, Russia and
by a territorial dispute and World China—and by voter unease over confrontational rhetoric
War II legacy issues. their growing economic power. before and during the
Bloomberg News
The visit comes just weeks after Still, the postelection change is
Mr. Abe’s conservative Liberal Dem- no surprise. Policy watchers had election campaign.
ocratic Party returned to power predicted Mr. Abe, once in office,
with a landslide election victory, would pursue reasonable policies to-
ending three years in opposition, Japanese lawmaker Fukushiro Nukaga will visit South Korea on Friday. ward China and South Korea to keep servitude during the World War II
and Ms. Park sealed control of the the current tensions from flaring era. Those remarks set off a world-
South Korean government for her Liancourt Rocks, a set of islets con- Cheol-hee, professor of international further. As prime minister in 2006, wide uproar and led the U.S. Con-
conservative New Frontier Party trolled by South Korea but also relations at Seoul National Univer- he visited China days after his ap- gress to pass a resolution calling on
with a victory in the country’s presi- claimed by Japan. sity. “In order to have solid propos- pointment to mend bilateral rela- Japan to apologize.
dential election. Friday’s meeting is unlikely to als, there would need to be deci- tions that had cooled during his The suffering of the Korean vic-
Though the two countries have produce immediate measures to put sions between Abe and Park, so I predecessor’s term. tims, euphemistically called “com-
strong economic ties and share po- aside the disputes, analysts said— don’t think they will mention any Katsuhiko Togo, a professor at fort women” by the Japanese, is one
litical and security outlooks, several for one thing, Ms. Park won’t take concrete ideas put forth.” Kyoto Sangyo University and former of several old wounds South Kore-
issues of territorial control and his- office until late February. Speaking to reporters after visit- foreign-ministry official, called Mr. ans nurse from the decades when
toric slights divide them. South Ko- “Japan will show that South Ko- ing Mr. Abe at his home on Wednes- Abe’s initial foreign-policy moves a the Korean peninsula was a Japa-
rea’s current president, Lee Myung- rea is a strategically important day, Mr. Nukaga, a former finance “promising start.” In an essay for nese colony.
bak, triggered the most recent flare- country and that it would be best to minister, said Mr. Abe asked him to the Pacific Forum CSIS, a Honolulu —Min Sun Lee in Seoul
up this past August by visiting the improve the relationship,” said Park tell Ms. Park, “South Korea is Ja- think tank, he wrote that Mr. Abe contributed to this article.
WORLD NEWS
Armed Forces Clash

At Sudanese Border
BY NICHOLAS BARIYO no intentions of attacking them,”
Mr. Abdelaty said.
Sudanese and South Sudanese The SPLM-N fought alongside the
troops clashed late Wednesday South Sudanese army during the
along the poorly marked common two-decade civil war with Sudan and
border for the first time in more is currently battling Sudanese troops
than six months, ahead of a planned in the border states of South Kordo-
summit aimed at diffusing tensions fan and Blue Nile. South Sudan says
between the two former war foes, it has since severed ties with the
officials said Thursday. rebels, although Sudan insists that it
South Sudan’s military spokes- continues to render them support.
man, Colonel Phillip Aguer, said that The two countries edged closer
Sudanese forces launched a ground to an all-out war this past April fol-
and aerial attack targeting a South lowing clashes along their 1,800-ki-
Sudanese army unit along the bor- lometer common border.
der in the Western Bahr el Ghazal
state. The clash underscores a major
escalation in the simmering ten- The clash underscores a
sions after a lull in fighting since
the middle of last year and threat- major escalation in the
ens the fragile security situation simmering tensions after
along the oil-rich border.
People gathered in Marikana last August after a service for the 44 killed in a wildcat strike at Lonmin’s Marikana mine. “The attack was repulsed but we a lull in fighting.
did not pursue them inside Sudan,”
Series of Mine Closures

Col. Aguer said. “This is another indi-
cator that Khartoum is not interested In September, South Sudanese
in peace. It seems they have more to President Salva Kiir signed a num-
benefit from war than peace.” ber of deals with his Sudanese coun-
Col. Aguer declined to delve into terpart, Omar al Bashir, to restore
Hit South Africa Towns

details of the casualties sustained border security. But an impasse over
but local media reported that more the implementation of the deals
than 32 civilians and soldiers were continues to hamper the resumption
killed in the attack. Sudanese troops of South Sudan’s crude shipments
overran the army unit and occupied through Sudanese territory, threat-
BY DEVON MAYLIE tricity prices have risen some 20% a it for more than an hour before be- ening both economies.
Dwindling Resources year, wage growth has outstripped ing driven back across the border. In December, Sudan demanded
SIYATHEMBA, South Africa— Unrest and closures at South inflation and commodity prices have Sudanese government spokes- that South Sudan must first disarm
Residents near the Burnstone gold Africa’s mines fallen. man Rabie Abdelaty denied the ac- the SPLM-N before resuming crude
mine here burned tires three years Meanwhile, several mines are cusations, saying that the Sudanese shipments. Juba described the de-
ago as part of a protest to demand June 2012 Three platinum closing or restructuring. In Novem- army is conducting an offensive mand as unrealistic, insisting that
the mine’s owner provide them with mines—including Marikana, jointly ber, Gold Fields Ltd., the No. 2 against former South Sudan rebel the SPLM-N is an independent rebel
jobs and housing. Many got both, run by Aquarius Platinum and miner of South African gold, spun allies of Sudan People’s Liberation group.
though not for long. Anglo American Platinum—suspend off two of its oldest mines in the Movement North “inside the Suda- Messrs. Kiir and al Bashir are ex-
In September, the mine’s owner, output. country into a separate company be- nese territory.” pected to meet in Ethiopia on Friday
the South African subsidiary of Ca- cause it said the mines required a “I am not aware of any attack on under an African Union-mediated
nadian-listed Great Basin Gold Ltd., Aug. 1 Three die as fired different management approach to SPLA [South Sudan army] in West- summit to resolve the impasse, but
filed for bankruptcy protection. workers storm Aquarius’s Kwezi extend their life span. AngloGold ern Bahr el Ghazal state.…We have analysts expect little headway.
Most of the mine’s 1,400 employees platinum mine. Ashanti Ltd. said it is in the middle
were fired. Projects the miner had of reviewing its mines in the coun-
Aug. 10 Workers begin striking
agreed to take on to improve this
mostly black township in northern
Mpumalanga province—a 500-unit
for higher pay, better living
conditions at Lonmin platinum
try and that it may have to shut
some that aren’t profitable. Aquar-
ius Platinum Ltd. put two mines in
Service-Sector Growth
housing development and a school
for disabled children—were left un-
finished.
mine. Clashes leave 46 dead.
Strikes over pay and housing also
hit Anglo American platinum
South Africa on what is known as
care and maintenance in the past
year and said that it had to cut
Continues Rising in China
For years, South African authori- mines. spending on community projects as BY AARON BACK reading too much into monthly PMI
ties have required global miners to a result. readings, saying: “As a principle I
help prop up public services. Now, Sept. 11 Great Basin Gold Ltd. Companies like Impala Platinum BEIJING—An index of service-sec- don’t look for broad structural
as economic and labor troubles stops production at Burnstone gold Holdings Ltd. said they are building tor activity in China rose for the third changes in these highly cyclical PMI
shake up the mining industry, com- mine, dismissing almost all of its new family units to replace the cur- straight month in December, adding indicators.”
munities are facing a double hit: 1,400 employees. rent hostel system. Anglo American to recent signs of a rebound for the Earlier this week, two indexes of
With many companies closing PLC is building 25,000 houses world’s second-largest economy. China’s manufacturing activity
mines, rural communities are grap- Sept. 17 Lonmin suspends work around its mines in the next five China’s official nonmanufactur- painted a mixed but mostly positive
pling not only with large-scale job at its K4 platinum mine, leading to years. Yet the pace has been slow ing Purchasing Managers’ Index rose picture. CFLP’s manufacturing PMI
losses, but also with a blow to social 1,200 job losses. across the industry. Recent weak to 56.1 in December from 55.6 in No- was unchanged at 50.6 in December,
services the mining firms supported. earnings will lead companies to vember, according to a statement meaning that activity continued to
That leaves local governments to Oct. 12 Fluormin suspends build fewer houses and fund fewer Thursday from the China Federa- modestly increase.
fill the void in areas that are already production at its Witkop mine. projects, according to Vusi Mabena, tion of Logistics and Purchasing, However, a separate index re-
struggling to cope following a half- a senior executive at the Chamber of which issues the data with the Na- leased by HSBC, which is more
year of labor actions over wages and Dec. 12 Following worker strikes Mines, an industry lobby group in tional Bureau of Statistics. heavily weighted to smaller, private
poor living conditions, often shacks since August, Rockwell Diamond Johannesburg. The December reading marks the sector companies, rose sharply to
without running water or plumbing. suspends production at Tirisano When Great Basin Gold got into highest level for the index since Au- 51.5 from 50.5.
“They have left a huge gap in the diamond mine, dismissing around financial trouble in August, it told gust. A reading above 50 indicates Both manufacturing indexes
community,” says 27-year-old Yo- 90 employees. local government and union leaders expansion in nonmanufacturing ac- showed weakness in export orders,
landa Nkosi, a former Burnstone it had no choice but to put the mine tivity from the previous month, suggesting China still faces head-
mine employee. on care and maintenance, firing all while anything below that indicates winds from a weak global economy.
Alvarez & Marsal Canada ULC, quires companies seeking mine li- but about 40 workers needed to run a contraction. China’s stock markets remained
which Great Basin appointed in De- censes to promise to spend a por- security and basic maintenance. New orders were especially closed for a third day on Thursday
cember to help with restructuring, tion of profits on community At the time, Mr. van Vuuren said strong in the construction industry, because of the New Year holiday.
didn’t immediately respond to re- development projects. In 2011, min- the company was spending roughly according to the CFLP data, which They will resume trading on Friday.
quests to comment. ing companies spent 1.3 billion rand $700,000 to $950,000 a year in the suggests the government’s increased Other stock markets around Asia
Lou van Vuuren, Great Basin ($153 million)—or 1.4% of profits be- community, the equivalent of almost spending on infrastructure and were mostly higher on Thursday, af-
Gold’s former interim chief execu- fore taxes—on community develop- one-third of the annual budget of other projects is supporting growth. ter U.S. markets rallied on the
tive officer, said the company had ment, according to South Africa’s Dipaleseng municipality, where the The nonmanufacturing PMI covers short-term resolution of “fiscal
suspended work at Burnstone after mine industry body, the Chamber of mine is located. Still, many of the service sectors including retail, avi- cliff” fears. Hong Kong’s Hang Seng
overall costs rose and production Mines. township’s roads are dotted with ation and software, as well as real Index gained 0.4% to 23398.60.
targets were missed. While electric- But across the mining sector, potholes and few people have jobs estate and construction. The CFLP nonmanufacturing PMI
ity prices and labor account for the company executives say miners outside a local butchery. “Property and other domestic data are based on replies to monthly
bulk of mining costs, social spend- alone can’t bear the burden for serv- “If the mine can come back it factors will lead the recovery,” said questionnaires sent to purchasing
ing also contributed, he said. The ices that in other countries are would be a big plus,” said Sarah UBS economist Wang Tao. Exports executives at 1,200 companies in 27
the company was looking for buyers funded from public coffers. Nhlapho, the mayor for the region are largely a function of European nonmanufacturing sectors.
or other funds to save the mine and They say the cost is greater than around Siyathemba. “They assist the and U.S. demand, which is likely to HSBC is due to release its own
revive community projects. that borne by other industries and municipality with projects it can’t be subdued for a while, she added. service-sector PMI for the country
South Africa’s government re- has become harder to bear as elec- do alone.” But Ms. Wang cautioned against on Friday.
WORLD NEWS
Bomb Kills at Least 20 Iraqi Pilgrims

Associated Press
BAGHDAD—A car bomb explo-

sion tore through a crowd of Shiite
pilgrims returning home Thursday
from a religious commemoration,
killing at least 20 and reinforcing
fears of renewed sectarian violence,
according to Iraqi officials.
The blast erupted late in the af-
ternoon in the town of Musayyib,
about 60 kilometers south of the
Iraqi capital. It targeted worshipers
returning from the Shiite holy city
of Karbala following the climax of
the religious commemoration known
as Arbaeen.
Children were among the 20 peo-
ple confirmed killed, according to a
police official. He said at least 50
people were wounded.
The explosion went off in the
middle of a gathering of pilgrims
changing buses coming from Kar-
bala on their way to other destina-
tions in the country, according to
police.
A hospital official confirmed the
casualty toll. The officials spoke on
condition of anonymity because

they weren't authorized to release
the information to reporters.
Thursday marked the height of
Arbaeen, when hundreds of thou-
sands of Shiite pilgrims converged
on Karbala to mark the passing of
40 days after the anniversary of the Iraqi Sunni Muslims wave national flags during an antigovernment demonstration in Samarra city Thursday.
seventh-century martyrdom of the
revered Shiite saint Imam Hussein, confront all the security risks that nation and unfair application of
the grandson of the Prophet Mu- we might face on our way to Kar- laws against their sect by Shiite Spillover Effect
hammad. bala.” Prime Minister Maliki’s government. Sectarian tensions in Iraq are increasing, fueled by the nearly two-year-old
Shiite pilgrims are one of the fa- State television earlier Thursday Vice President Tariq al-Hashemi, war in neighboring Syria. Some recent fatal attacks:
vorite targets for Sunni insurgents aired video of Prime Minister Nouri another high-ranking Sunni official,
during Shiite religious events. al-Maliki walking among the pil- is living in exile in Turkey after he Dec. 9: A bombing near the house people and injures dozens.
Iraqi authorities typically tighten grims. was handed multiple death sen- of an anti-al-Qaeda militiaman south
security in Karbala and along routes Thursday’s attack came after tences in absentia for allegedly run- of Baghdad kills the man, his 8-year- Dec. 22: An explosion at a shop
used by pilgrims, but security forces Iraqi authorities ordered the release ning death squads, a charge he dis- old son and another relative. selling CDs northeast of Baghdad
acknowledge they are unable to pre- of 11 women facing criminal charges misses as politically motivated. kills four people and injures 11.
vent all attacks. and pledged to transfer other Justice Ministry spokesman Dec. 13: Two soldiers are killed
As in previous years, the pil- women prisoners to jails in their Haider al-Saadi said the families of when a bomb explodes near their Dec. 31: Explosions primarily
grims practiced the ritual of self- home provinces the imprisoned women can secure observation post in Fallujah. On the targeting Shiite communities and
flagellation on the streets, hoisted The move appeared aimed at ad- their release by paying bail. He same day a car bombing on a pilgrims kill at least 23 people and
Shiite religious flags on trees and dressing a main demand during a added that 13 Sunni women con- commercial street in western leave 76 wounded across Iraq.
lamp posts and served food from wave of protests by the country’s victed on criminal charges will be Baghdad kills four people.
tents pitched on street corners. Sunni minority against the Baghdad transferred from a Baghdad jail to Jan. 2, 2013: Separate shooting
Zaid Mohammed, a 21-year-old government. prisons in their home provinces of Dec. 16: Bombings rattle two and bombing attacks kill five people,
student, said he walked to Karbala The demonstrations erupted fol- Anbar, Salahuddin and Nineveh to cities in disputed areas in the north, including a policeman and his
from a nearby city to show his deep lowing the arrest of bodyguards as- serve out their sentences. killing at least eight people. brother who was a member of anti-
respect for Imam Hussein. signed to Finance Minister Rafia al- The detention of female prison- al Qaeda group north of Baghdad. In
“All the people came here to Issawi, one of the central ers has been a focus of the demon- Dec. 17: A wave of bombings Anbar province, a car bomb targeting
show their gratitude and apprecia- government’s most senior Sunni of- strations, but it wasn’t clear across the country targeting the house of a police colonel kills the
tion for the sacrifices made by ficials. whether the decision to release residents of ethnically disputed officer’s neighbor.
Imam Hussein while fighting injus- The protests tap into deeper some of them will satisfy the pro- areas and Shiite pilgrims kills 19 Associated Press
tice,” he said. “We have decided to Sunni feelings of perceived discrimi- testers.
Senior Pakistan Militant Reported Dead in Strike

BY TOM WRIGHT that held for the past four years, showcasing new schools, roads and
said Imtiaz Gul, author of “Paki- other infrastructure.
A U.S. drone strike killed Mullah stan Before and After Osama.” But Mr. Nazir also continued to
Nazir, a Pakistani militant leader That allowed Pakistan’s army to allow foreign militants to take
who maintained a truce with the concentrate on targeting the Teh- shelter in his territory, undercut-
Pakistan army but U.S. command- rik-e-Taliban Pakistan, known as ting any chance for long-term sta-
ers said cooperated with Afghan the Pakistan Taliban, a militant bility in the region, Mr. Gul said.
Taliban fighters in attacks on U.S. group that regularly attacked gov- Those militants, he said, likely in-
troops, according to news reports. ernment, military and civilian tar- cluded Arab members of al Qaeda
Mr. Nazir was one of nine peo- gets. who are believed to have taken
ple killed in the strike on a house In 2009, the army invaded part in attacks on Pakistani targets.
in a village in the Pakistani terri- South Waziristan and largely “It was a double game he was
tory of South Waziristan, the Asso- pushed out the group, also many of playing,” Mr. Gul said. “I don’t
ciated Press reported, citing Paki- whose fighters found shelter in think the Pakistanis would be an-
stani security officials. North Waziristan and other tribal noyed” by his killing.
Another drone strike hit a vehi- regions. Pakistan’s military has publicly
cle in North Waziristan, killing four Pakistan’s truce with Mr. Nazir, condemned U.S. drone strikes.
people, the AP said. who led the Ahmadzai Wazir tribe, Many in Pakistan consider them an
In Washington, U.S. officials was an attempt by the government affront to Pakistani sovereignty
stopped short of confirming Mr. Mullah Nazir spoke to media representatives in South Waziristan in 2007. to show progress in bringing South and say the strikes kill innocent ci-
Nazir’s death, but said his elimina- Waziristan back under the writ of vilians, which the U.S. denies. But
tion would be a “significant blow.” who has a great deal of blood on his He used that position to team up the state after years of lawless- Pakistan military leaders also have
“It would be helpful not just to hands... This would be a major de- with Afghan Taliban fighters bat- ness, Mr. Gul said. acknowledged cooperating on some
the United States, but also to our velopment.” tling coalition troops across the In recent months, the military attacks by giving intelligence on
Pakistani partners and the Afghans,” Mr. Nazir’s militant organiza- border, U.S. commanders said. has allowed hundreds of refugees potential targets.
said George Little, the Pentagon tion controls areas of South Wa- Mr. Nazir refrained from attack- from the fighting in 2009 to return —Julian E. Barnes
press secretary. “This is someone ziristan that border Afghanistan. ing Pakistani troops under a truce to South Waziristan and has been contributed to this article.
WORLD NEWS WORLD WATCH

ARGENTINA of $308.8 billion in the first 10 months
Kirchner Calls on Britain of 2012.
The Economy Ministry said Central
To Give Up Falkland Islands America is the fourth-biggest
Argentina’s president called on destination of Mexican foreign direct
Britain on Thursday to relinquish investment in Latin America, with
control of the Falkland Islands, $5.2 billion invested in telecom-
accusing London of taking part in an munications, food, manufacturing,
act of “blatant colonialism” in claiming energy and other industries.
the wind-swept archipelago. Anthony Harrup
Cristina Kirchner published an open
letter in the Guardian newspaper SOUTH AFRICA
urging Prime Minister David Cameron Olympic Mountain Biker, 25,
to honor U.N. resolutions that she says
backs her case for the return of the Is Killed in Road Collision
islands, which Argentina calls the South African Olympic mountain
Malvinas. She has made several similar biker and former age-group world
demands in the past. champion Burry Stander was killed in
“One hundred and eighty years ago a road accident while training near his
on the same date, January 3rd, in a home on Thursday. He was 25.
blatant exercise of 19th century The South African Sports
colonialism, Argentina was forcibly Confederation and Olympic Committee
stripped of the Malvinas Islands, which confirmed the two-time Olympian’s
are situated 14,000 kilometers (8,700 death and said the country’s leading
miles) away from London,” she says in mountain biker died after a collision
the letter, copied to U.N Secretary- with a taxi in the Kwazulu-Natal
General Ban Ki-moon. province on South Africa’s east coast.
Britain asserted control of the Mr. Stander competed at the 2008
Reuters
south Atlantic islands by placing a and 2012 Summer Olympics and came
naval garrison there in 1833. Britain in fifth last year in the mountain-bike
A father reacts after two of his children were killed in fighting between Syrian government and rebel forces Wednesday. and Argentina fought a brief war in race at the London Games. He was
1982 after Argentina invaded the also a former under-19 and under-23
Fighting Rages Around

islands. More than 900 people died, world champion and South Africa’s
most of them Argentines. biggest star in the sport and one of
Mr. Cameron rebuffed the the world’s top riders.
Argentine president’s demand that the “I’m totally shattered,” SASCOC
islands be handed over. “The future of president Gideon Sam said, calling Mr.
Syrian Military Airfield

the Falkland Islands should be Stander “talented, ultra-competitive
determined by the Falkland Islanders but at the same time extremely
themselves, the people who live there,” humble and a true gentleman.”
the British prime minister said. Mr. Sam said the entire South
He said Ms. Kirchner should pay African sporting community mourned
Associated Press Daraya and inflicted heavy losses, rebels attacked a power station in heed to the result of a referendum to Mr. Stander, a message that was
adding that the area would be de- the central province of Hama. Syrian be held on the islands this year, noting underlined by a flood of tributes on
BEIRUT—Syrian troops and reb- clared safe later in the day. TV said troops protecting the sta- that whenever the islanders “have social media from fellow sportsmen
els fought intense battles Thursday Daraya lies in a key location, and tion repelled the attackers. been asked their opinion, they say and women—but also from politicians
around a strategic air base in the a government takeover there would The Observatory and the Local they want to maintain their current and celebrities.
country’s north and a suburb of the provide a boost to the regime’s de- Coordination Committees reported status with the United Kingdom.” Multiple Paralympic medalist and
capital that government forces have fense of Damascus. fighting and shelling in different ar- The government of the Falklands double-amputee athlete Oscar
been trying to capture since last The suburb is just a few miles eas of the southern province of Islands attacked Ms. Kirchner’s letter Pistorius said on Twitter he was
month, activists and state media from the strategic military air base Daraa, which borders Jordan. Daraa as “historically inaccurate,” saying that “utterly devastated” by Mr. Stander’s
said. of Mazzeh in a western neighbor- was the region where the anti-Assad its relationship with the U.K. is “by death.
The fighting is part of the esca- hood of the capital. It borders the uprising began in March 2011. choice” and based on shared ideals of “A South African Icon and sporting
lating violence in a Syrian civil war Kfar Sousseh neighborhood that is In Jordan, the U.N. refugee “democracy, freedom and self-reliance.” great. RIP my friend,” Mr. Pistorius
that the United Nations estimates home to the government headquar- agency said that there has been a The islands have a right, enshrined wrote.
has killed more than 60,000 people ters, the General Security intelli- steady increase of Syrians fleeing in the U.N. charter, to determine their Cycling South Africa said Mr.
since the revolt against President gence agency head office and the In- into Jordan over the past two own future and have exercised that to Stander was the country’s most
Bashar al-Assad began in March terior Ministry, which was the weeks. UNHCR reporting officer retain links with the U.K, the successful mountain biker and “a true
2011. target of a recent suicide bombing Danita Topcagic said in the past government said in a statement. icon and sporting role model.”
The U.K.-based Syrian Observa- that wounded the interior minister. three days, an average of 1,200 to Associated Press Mr. Stander won South Africa’s
tory for Human Rights said rebels Al-Watan said thousands of rebel 1,300 crossed the border, mainly be- Cape Epic stage race with Swiss
stormed parts of the Taftanaz air fighters from the Jabhat al-Nusra cause of fighting and the skyrocket- CENTRAL AMERICA teammate Christoph Sauser in 2011
base in the northwestern province group have holed up in Daraya in ing prices of basic commodities. Honduras Joins Trade Pact and the pair successfully defended
of Idlib before withdrawing. The preparation to storm Damascus. Ms. Topcagic said refugees told their title in 2012.
state-run SANA news agency said Jabhat al-Nusra, which has been UNHCR that the Free Syrian Army Honduras has joined Mexico and “Never felt so empty since my dad
government forces protecting the branded a terrorist organization by was also encouraging them to flee other Central American countries in a passed away when I was a kid.
base “repelled the terrorists’ at- because of increased fighting in the free-trade agreement, which is @africanmtbkid I will never forget you,”
tempt to attack the airport” and in- area. Also, markets and shops are expected to boost trade and promote Mr. Sauser posted on Twitter, using
flicted heavy losses. The Syrian re- The U.N. estimates the often closed, making it difficult for investment among countries in the Mr. Stander’s Twitter name.
gime routinely refers to rebel forces people to find food. Electricity and region, the Economy Ministry said Associated Press
as “terrorists.” escalating Syrian civil water supplies are intermittent and Thursday.
The Observatory said rebels re- war so far has claimed hospitals in many places have shut. The ministry said the pact, which INDIA
sumed their assault early Thursday She said that in mid-December a Mexico’s Senate approved in late 2011, Record Cold Temperatures
in an attempt to capture the base, more than 60,000 lives. daily average of 757 Syrians had is still awaiting ratification by
which has resisted several opposi- crossed Jordan’s northern frontier, Guatemala and Costa Rica. That is Leave More than 100 Dead
tion efforts to take the facility in re- while in November the average expected in the first half of this year, Police say more than 100 people
cent months. the U.S. and which Washington number was around 600. a day while Nicaragua and El Salvador have have died of exposure as northern
The rebels have been pursuing a claims is affiliated with al Qaeda, Syria’s civil war has turned more been active members since September. India deals with historically cold
strategy of attacking airports and has been among the most effective than half a million Syrians into refu- The agreement supersedes previous temperatures.
military airfields, targeting five air fighting forces on the rebel side. gees. Most have sought safety in bilateral and multilateral trade pacts Police spokesman Surendra
bases in Idlib and the nearby prov- One of the airstrikes hit a build- Jordan, Lebanon and Turkey. among the members. Aside from Srivastava said Thursday that at least
ince of Aleppo, trying to chip away ing in the Damascus suburb of Meanwhile preliminary figures streamlining rules and certificates of 114 people have died from the cold in
at the government’s air power, Douma. Amateur videos showed the from the Swedish Migration Board origin, it aims to promote investment the state of Uttar Pradesh. At least 23
which poses the biggest obstacle to top floor of the building heavily indicated some 7,800 Syrians sought through integration of production of those died since Wednesday.
advances by opposition fighters. damaged as the wounded were refuge in Sweden during the past 12 chains, generating economies of scale Mr. Srivastava said many of the
With its troops struggling to rushed away in cars and pickup months, making the Scandinavian for companies in the region, the dead were poor people whose bodies
make headway—let alone gain trucks. Many of the wounded were country the top European destina- ministry added. were found on sidewalks or in parks.
ground—against the rebels in the covered with dust. tion for Syrians fleeing the country Mexican exports to Central The weather department said
field, the government has increas- People rushed to rescue the civil war. America, including Panama, totaled temperatures in the state were 4 to
ingly relied on its warplanes and he- wounded in a street that was cov- The agency said around 5,000 of $5 billion in the first 10 months of 10 degrees Celsius below normal.
licopters to target opposition forces. ered with debris and mangled metal. the Syrians were granted asylum in 2012, according to central bank data, Temperatures in New Delhi, which
The Observatory and the Local The Observatory and the LCC said 2012, adding that, “Sweden thereby while Mexican imports from those borders Uttar Pradesh, hit a high
Coordination Committees, another eight people were killed Thursday in confirmed its position as the pri- countries were $3.98 billion. Wednesday of 9.8 degrees (49.6
activist group, reported clashes, air Douma and nearby areas. mary destination- and recipient Guatemala is the biggest buyer of Fahrenheit), the lowest maximum
raids and shelling in several suburbs The videos appeared genuine and country for asylum-seeking Syrians Mexican goods in the region, and temperature in the capital since 1969.
of the capital Damascus, including corresponded with other AP report- in Europe.” Costa Rica the biggest exporter of Associated Press
Daraya, which the regime has been ing on the events. The Nordic nation of 9 million goods to Mexico.
trying to capture from hundreds of In another air raid, the Observa- inhabitants is known for its gener- Mexico, which has free-trade
opposition fighters for weeks. tory said dozens of people were ous welfare system and humane im- agreements with 44 countries Online>>
The pro-government al-Watan killed or wounded in the town of migration laws, and it has long been including the U.S. and Canada, the For more breaking news, go to
daily said Thursday that the army Hayan in Aleppo province. perceived as a safe haven for people European Union, and Japan, had total WSJ.com/World and follow
destroyed rebel strongholds in The Observatory reported that fleeing war zones and persecution. exports of $309.3 billion and imports @wsjworld on Twitter..
IN DEPTH
U.S. Fiscal Cliff Deal:

Made, Unmade, Saved
BY PATRICK O’CONNOR Senate Democratic leader Harry Reid (left) had
AND PETER NICHOLAS misgivings about talks with Republican Mitch
McConnell (center photo). Mr. McConnell turned
T
he morning after, as so often happens, to Vice President Biden, asking ‘Does anyone
there were regrets. By early Wednes- down there know how to cut a deal?’ Mr. Biden
day, partisans on the left and right (bottom at left) with President Obama after the
had found plenty to grumble about in Con- House passage of the bill late Tuesday night.
gress’s New Year’s deal to avoid going off
the fiscal cliff. But it is unlikely there would Boehner’s earlier request to preserve Bush-
have been any deal at all to grumble about era rates on all income under $1 million, ac-
if not for a Sunday afternoon phone call cording to people familiar with the offer.
from one end of Pennsylvania Avenue to the Still, that was far from the president’s
other. last offer in negotiations with the House
With time running out before a year-end speaker—to raise rates on income over
deadline to prevent big automatic tax in- $400,000.
creases and spending cuts, Senate Republi- Mr. Reid’s office didn’t respond until the
can leader Mitch McConnell had reached an following afternoon, which raised red flags
impasse with his Democratic counterpart, among McConnell aides that the Senate ma-
Harry Reid. So Sen. McConnell turned to jority leader might be trying to slow-walk
the one remaining Democrat he thought the negotiations.
could break the impasse: Vice President Joe They suspected he wanted to delay to
Biden. the last minute to force Republicans to ac-
In a Sunday afternoon phone call, Mr. cept a backup deal that simply raised tax
McConnell asked the vice president: “Does rates for everyone making over $250,000 a
anyone down there know how to cut a year and extended federal jobless benefits.
deal?” recalled a Republican aide who over- Aides to both senators spent the rest of
heard the call. On a subsequent call, this the day shuttling offers between their of-
aide said, the Kentucky Republican implored fices, located just a few paces apart in the
Mr. Biden: “You and I should be able to get Capitol.
this done, but I need you to engage.” By the end of the day, Mr. McConnell had
In the ensuing daylong sprint, the two lowered his request, asking to preserve ex-
men cobbled together a last-minute deal. All isting tax rates for income under $450,000
told, they talked 15 times over a day and a for individuals and $550,000 for families.
half, aides said. That night, an aide to Mr. Reid told Mr. Mc-
Congress approved the deal late Tuesday Connell’s staff not to expect another offer
night. The bill’s passage came despite Sen. that night, but to expect something in the
Reid’s deep misgivings about the talks with morning.
Mr. McConnell, and his advice to the White The next day, McConnell aides grew im-
House at one point that a better deal would patient as the morning hours ticked by. At 1
emerge if they stopped negotiating and p.m., Mr. Reid’s chief of staff, David Krone,
moved forward with backup legislation. called Mr. McConnell’s top aide to say the
The agreement also had to survive a majority leader would not be sending a
conservative rebellion in the House that re- counteroffer.
quired a last-minute legislative pirouette by At that point, Mr. McConnell had his
Speaker John Boehner. scheduler place her first call to Mr. Biden.
In the end, Mr. McConnell and Mr. Biden, She couldn’t connect with the vice presi-
two veteran deal-makers who crafted the dent, so Mr. McConnell made the trip to the
last big tax compromise in 2010, achieved a Senate floor to announce that he had called
breakthrough that had eluded everyone else. Mr. Biden.
The two took over the negotiations so thor- “The vice president and I have worked
oughly that President Barack Obama and together on solutions before, and I believe
Mr. McConnell spoke only once in the clos- we can again,” Mr. McConnell declared. “I’m
ing stages. Messrs. McConnell and Biden willing to get this done, but I need a dance
were winning praise on Wednesday for their partner.”
efforts, but also were taking some lumps. The announcement took the vice presi-
Some conservatives were dubbing the dent’s office by surprise. Before Mr. Biden
deal’s tax increases on the wealthy “the Mc- returned the McConnell call, he talked to
Connell tax hike,” and some liberals were Mr. Obama about how to proceed. The two
calling the deal the “Biden Cave” because decided the new path was worth a shot.
the tax increase on the wealthy wasn’t as Around 3:30, the vice president called
big as Mr. Obama once promised. back and made his first offer. The White
The deal also postponed debate on some House wanted to raise rates on individuals
of the most divisive issues—including a who make more than $260,000 and couples
search for more spending cuts and a plan that make more than $450,000. Mr. Biden
for raising the nation’s borrowing limit— told Mr. McConnell the administration was
into the New Year. willing to show some flexibility on the in-
The final push began in the afternoon of come thresholds if the Republicans would
Dec. 28, when Mr. Obama summoned con- bend when it came to taxing large estates.
gressional leaders to the White House. He Over the next nine hours, Mr. McConnell
asked Messrs. McConnell and Reid to hash and his staff held a series of calls with the
out a deal that could pass the Senate, ac- vice president and the White House aides
cording to people familiar with that session. helping to broker the deal. Aides said the
The Senate Republican leader offered to two sides marched through sticking points
delay a series of across-the-board spending one by one.
cuts set for 2013 in exchange for changing Around 8:00 Sunday night, the president
the way the federal government gauges in- and Mr. Biden joined senior aides in the
Getty Images (2), Reuters (top)
flation—a step that would reduce benefits Oval Office to discuss the McConnell offers.
paid to Social Security beneficiaries over Mr. Obama told the vice president he
time. wouldn’t accept a deal that preserved tax
Hours later, aides to Mr. McConnell made rates on income over $450,000.
their first offer to Mr. Reid. In a previously The president insisted that the final
undisclosed offer, they proposed raising tax package extend federal jobless benefits for
rates on families earning more than a full year without offsetting spending cuts
$750,000 a year, a slight move from Mr. Please turn to next page
IN DEPTH
Deduction Limits Will Affect

Continued from previous page
to pay for the extension, and that Republi-
cans postpone automatic spending cuts set
to take hold in a matter of days.
Many Taxpayers in the U.S.

The two sides spent the next several
hours closing in on an agreement on a tax
plan, only to see it almost fall apart over a
dispute about the other half of the fiscal-
cliff equation—spending cuts. Democrats
wanted to delay the automatic cuts without
any offsetting cuts, while Republicans in-
sisted that any delay be paid for. The two BY JOHN D. MCKINNON
sides spent most of Monday hammering out Cash Flow
a compromise. WASHINGTON—One of the biggest tax Estimated revenue over 10 years from tax provisions in the fiscal-cliff deal
The effort nearly collapsed when Mr. increases in the fiscal-cliff bill is also one of
Obama caught Republicans off-guard by the least understood: a set of limits on tax Raise top marginal Limit personal exemption
speaking about the negotiations in an ap- deductions and other breaks that will hit income-tax rate to and itemized deductions
pearance in Washington. After the president far more households than the bill’s rate in- 39.6% from 35% on high-income filers
spoke, Mr. McConnell went to the Senate creases for top earners.
floor to say the tax issues had been re- The bill that cleared Congress Tuesday
solved. He called on Senate Democrats to boosts the tax rate for single filers making
vote solely on a tax package, delaying the more than $400,000 and married couples $395 billion 55 150 20
fight over spending cuts. filing jointly making more than $450,000,
After a few more hours of negotiations, or roughly the top 1% of filers.
the White House and Mr. McConnell’s staff But provisions that reduce the value of
devised a way to raise enough tax revenue personal exemptions as well as most item-
to make up for the delay in spending cuts. ized deductions, including those for mort- Raise top rate on long-term Increase estate-tax rate
Early Tuesday morning, the Senate ap- gage interest and state income-tax pay- capital gains and dividends to to 40% from 35%
proved the compromise, 89-8. ments, will affect about twice as many 20% from 15%
The deal hit a snag in the House. Repub- people since they carry a lower income Source: Committee for a Responsible Federal Budget The Wall Street Journal
lican conservatives seethed that the deal threshold—$250,000 for singles and
would raise tax rates on income over $300,000 for married couples.
$450,000 without making major spending Those new limits drew complaints from were originally part of a budget deal passed tem,” given the growing number of tax
cuts or reforms in Medicare and other enti- some groups that benefit from deductions, by Congress in 1990, and were in effect for breaks that were being passed by Congress,
tlement programs. Even the No. 2 House Re- particularly charities that depend on tax- more than a decade. The Bush-era tax cuts said William Goold, his former chief of
publican, Eric Cantor, raised objections. deductible donations. They worry that new of 2001 gradually got rid of PEP (which staff. The limit might be viewed now as
Mr. Boehner privately expressed con- curbs on deductions, coupled with other stands for “personal exemption phaseout”) dated, but “the goal remains as valid now
cerns about the Senate deal. But when Ten- taxes on higher-income Americans, will put and Pease (named for a Democratic con- as it did then,” he added.
nessee Rep. Steve Fincher asked him in a a damper on giving. gressman who pushed for the deduction From a political standpoint, the limits
late Tuesday meeting how he planned to “We are concerned,” said Diana Aviv, limit). allow the Obama administration to achieve
vote, Mr. Boehner said he would support the president of Independent Sector, a coalition Now the fiscal-cliff bill calls for their re- its long-sought goal of raising taxes on peo-
bill, according to someone who was present. of foundations, nonprofits and other chari- turn, at least for higher-income people. ple making more than $250,000. PEP and
Mr. Boehner gave his rank-and-file a table groups. “The big question for us now The PEP and Pease limits work on the Pease represent about $150 billion of the
choice: vote on the Senate bill as it is, or is, if we are [also] increasing rates on same basic principle, limiting the value of tax increase of about $620 billion over 10
vote to amend it with legislation that folks…does the combination create a exemptions and deductions for households years, making them a key element of the
sought to cut $300 billion from the federal greater disincentive for people to give?” that exceed a threshold. For example, the deal.
budget. But he warned that altering the The debate foreshadows bigger fights in Pease limitation reduces a household’s But some groups that benefit from item-
Senate bill would likely kill it, sending the 2013, when Congress likely will try to over- itemized deductions by 3% of the amount ized deductions—charities, for example—
country over the fiscal cliff. haul the federal tax code, in part by further over the threshold. The reduction can’t ex- worry that the Pease provision might cause
In the end, conservatives backed away narrowing tax breaks. ceed 80% of the total deductions. donors to be less generous.
from that idea. The bill passed around 11 The new limits are “like another cannon- A couple with income of $400,000 aver- A coalition of nonprofit groups, the Alli-
p.m. on New Year’s night, with 151 Republi- ball being fired across our bow,” said Jerry age about $50,000 in itemized deductions, ance for Charitable Reform, said this week
cans, including Mr. Cantor, opposing it. Howard, chief executive of the National As- according to IRS statistics. Because their in- that lawmakers should consider excluding
sociation of Home Builders. “Clearly, it come would exceed the $300,000 threshold charitable-donation deductions from the
shows that the notion of limiting deduc- by $100,000, their allowed deductions new limits, in order to protect charitable
Watch a Video>> tions is still one that’s being considered by would be reduced by about $3,000 to giving. The coalition also said that lawmak-
Scan this code for a video on policy makers.” $47,000—potentially boosting their tax bill ers should take other steps to “continue to
how the cliff deal came But a J.P. Morgan analyst, Michael Fer- by about $1,000. preserve the charitable deduction…as we
together or go to WSJ.com/ oli, predicted that the new tax-break limits The original proponent of the deduction move forward into both tax reform and
FiscalCliff. “should not directly affect…giving to chari- limit, the late Rep. Donald Pease of Ohio, measures to address the federal deficit.”
ties or taking on more mortgage debt.” viewed it as “the best available means…to —Alan Zibel
The limits—known as PEP and Pease— ensure that nobody could game the sys- contributed to this article.
Cliff Fix Hits Small Business

BY EMILY MALTBY company to a corporation isn’t an which allows them to sell equity to
AND ANGUS LOTEN option, Mr. Secor says, because he pools of investors online. It’s still
and his partners would end up pay- not clear, though, what regulations
Michael F. McElroy for The Wall Street Journal
It’s likely to be a year of painful ing taxes twice, at the corporate and will govern this practice because the
decision-making for small-business individual levels. Tax experts say it key rules for the law haven’t been
owners like Tom Secor of Norwalk, is also difficult to switch back once set. About a third of small compa-
Ohio, one of hundreds of thousands a business has become a C-Corp, nies rank economic uncertainty as
of Americans who could face a and some believe it’s easier to sell a the single biggest obstacle to long-
higher tax bill after Washington’s business that is an S-Corp. term growth in the year ahead, ac-
last-minute deal to avoid the fiscal The five co-owners also can’t re- cording to a survey fielded from
cliff. duce staff because the plant is al- Dec. 10 to 19 by The Wall Street
Mr. Secor co-owns Durable Corp., ready operating with the minimum Journal and Visage International, a
a 90-year-old maker of rubber mats number of employees it needs after peer-advisory group. The heads of
and loading-dock bumpers with 36 nine workers were laid off two years 926 small firms in a range of indus-
employees and just under $10 mil- ago and five more who have left tries, all of them with less than $20 Tom Secor says converting Durable Corp. to a corporation isn’t an option.
lion in revenue last year. Because since weren’t replaced. Nor can they million in annual revenue, com-
the company is structured as an S- move their business to the Cayman pleted the online survey. fiscal-cliff talks, about 29% of the counting, tax and advisory firm in
Corp, or partnership, the 55-year- Islands or some other tax haven, be- Here’s a glimpse at challenges in chiefs of small firms planned to hire New York that expects the new law
old Mr. Secor and his four partners cause the legal fees to do so would store for small businesses in 2013. fewer workers, according to Vistage to drive up labor costs for small em-
each pay taxes on their share of the be too steep. Many business owners who polling in December. An additional ployers. Only 14% of the business
profits at their personal income-tax In addition to higher taxes, claim business profits on their per- 32% expected lower investment owners said they had a clear under-
rate. In Mr. Secor’s case, that rate small-business owners must contend sonal income taxes are likely to be spending, or fewer purchases of ve- standing of the health-care law, ac-
was 35% last year. with planning for provisions in the affected by the higher tax rates. The hicles, property and equipment. cording to The Wall Street Journal
But this year, the company’s health-care law that take effect this compromise called for taxes to rise Small-business owners now /Vistage Small Business CEO survey.
profits are likely to boost Mr. Se- year and could significantly increase to 39.6% from 35% on personal in- have just 12 months to prepare for Banks appear to be loosening
cor’s personal income above their costs if they have 50 or more come above $400,000. In a 2011 new rules under the 2010 health- the purse strings for small compa-
$400,000. And, as a result of the fis- full-time-equivalent employees. study, the Treasury Department care overhaul law. The law requires nies as rising sales enable more bor-
cal-cliff compromise struck Tuesday, Some of them have already re- found that raising taxes on incomes employers with 50 or more full- rowers to take on debt. Still, more
that means his tax rate on the in- sponded by turning to part-time and over $500,000 would affect roughly time-equivalent workers to offer business owners appear to be turn-
come over that amount would jump contract workers. 750,000 small businesses organized health insurance by 2014 or poten- ing to alternative forms of borrow-
to 39.6%. Meanwhile, owners may find it as S-Corps, partnerships and other tially pay a penalty. Dealing with ing such as asset-based lending.
The fiscal-cliff deal didn’t change easier to access capital thanks to small entities. higher labor costs is a big concern, These options are expected to get
the corporate tax rate, which is no the Jumpstart Our Business Start- Due to anticipated tax increases according to Gary Levy, a partner at cheaper as demand grows and the
more than 35%. But converting the ups, or JOBS, Act passed last year, and spending cuts sparked by the CohnReznick LLP, a national ac- market broadens.
OPINION: REVIEW & OUTLOOK
Crony Capitalist Blowout

I
n praising Congress’s huge new tax tracks (cost: $78 million) to benefit the and don’t you forget it. Meanwhile, consumers will get tax
increase, U.S. President Barack Obama paupers who control the Michigan Inter- The Joint Tax Committee says this credits for buying plug-in motorcycles ($7
said Tuesday that American “million- national Speedway. New Mexico’s Jeff Hollywood special will cost the Treasury million), while the manufacturers of en-
aires and billionaires” will finally “pay Bingaman saved a tax credit for compa- a mere $248 million over 10 years, but ergy-efficient appliances ($650 million)
their fair share.” That is, unless you are a nies operating in American Samoa ($62 over fiscal years 2013 and 2014 the cost is and builders of energy-efficient homes
Nascar track owner, a wind-energy com- million), including a StarKist factory. really $430 million because it is supposed ($154 million) also retain tax credits.
pany or the owners of StarKist Tuna, Distillers are able to drink to a $222 to expire at the end of this year. In reality Manufacturers like Whirlpool love these
among many others who managed to get million rum tax rebate. Perhaps this will Mr. Dodd will wrangle another extension subsidies, and they are one reason that
their taxes reduced in Congress’s New help to finance more of those fabulous next year, and the year after that, and . . company paid no net taxes in recent
Year celebration. Bacardi TV ads with all those beautiful . . Investing a couple million in Mr. Dodd years.
There’s plenty to lament about the rich people. Businesses located on Indian in return for $430 million in tax breaks The great joke here is that Washington
capital and income tax hikes, but the bill’s reservations will receive sure beats trying to make pretends to want to pass “comprehensive
seedier underside is the $40 billion or so $222 million in accelerated A tax increase for better movies. tax reform,” even as each year it adds
in tax payoffs to every crony capitalist depreciation. And there everyone but the Then there are the more tax giveaways that distort the tax
and special pleader with a lobbyist worth are breaks for railroads, green-energy giveaways code and keep tax rates higher than they
his million-dollar salary. Congress and the “New York Liberty Zone” favored wealthy few. that are also quickly be- have to be. Even as he praised the bill full
White House want everyone to ignore this bonds and so much more. coming entitlements. The of this stuff, Mr. Obama called Tuesday
corporate-welfare blowout, so allow us to But a special award wind production tax credit night for “further reforms to our tax code
shine a light on the merriment. goes to Chris Dodd, the former Senator got another one-year reprieve, thanks to so that the wealthiest corporations and
Senate Finance Chairman Max Baucus who now roams Gucci Gulch lobbying for Mr. Obama and GOP Senators John Thune individuals can’t take advantage of loop-
got the party started this summer when Hollywood’s movie studios. The Senate (South Dakota) and Chuck Grassley holes and deductions that aren’t available
he said he would subject 75 special-inter- summary of his tax victory is worth quot- (Iowa). This freebie for the likes of the to most Americans.”
est tax breaks to a “tax reform” review. ing in full: “The bill extends for two years, neediest at General Electric and Sie- One of Mr. Obama’s political gifts is
That was pretty funny. Nearly every at- through 2013, the provision that allows mens—which benefit indirectly by making that he can sound so plausible describing
tempt by Tom Coburn (R., Okla.) and oth- film and television producers to expense wind turbine gear—is now 20 years old. the opposite of his real intentions.
ers to pare back the list was defeated in a the first $15 million of production costs Cost to American taxpayers: $12 billion. The costs of all this are far greater
bipartisan rout. incurred in the United States ($20 million Cellulosic biofuels—the great white than the estimates conjured by the Joint
The Senators even voted down, 14-10, if the costs are incurred in economically whale of renewable energy—also had Tax Committee. They include slower eco-
an amendment to list the corporate inter- depressed areas in the United States).” their tax credit continued, and the defini- nomic growth from misallocated capital,
ests that receive tax perks on a govern- You gotta love that “depressed areas” tion of what qualifies was expanded to in- lower revenues for the Treasury and thus
ment website. This “tax extenders” bill bit. The impoverished impresarios of clude producers of “algae-based fuel” more pressure to raise rates on everyone,
passed Mr. Baucus’s committee, 19-5, and Brentwood get an extra writeoff if they ($59 million.) Speaking of sludge, biodie- and greater public cynicism that govern-
then sat waiting until Harry Reid and the take their film crews into, say, deepest sel and “renewable diesel” will continue ment mainly serves the powerful.
White House stuffed it wholesale into the Flatbush. Is that because they have to pay receiving their $1 per gallon tax credit Republicans who are looking for a new
“fiscal cliff” bill. extra to the caterers from Dean & DeLuca ($2.2 billion). The U.S. is experiencing a populist message have one waiting here,
Thus Michigan Democrat Debbie to make the trip? It sure can’t be because natural gas and oil drilling boom, but and they could start by repudiating the
Stabenow was able to retain an acceler- they hire the jobless locals for the pro- Congress still thinks algae and wind will corporate welfare in this New Year dis-
ated tax write-off for owners of Nascar duction crew. Those are union jobs, mate, power the future. grace.
The Kyoto Scorecard

T
he Kyoto Protocol on climate growth has been more robust, pledged to efficient Soviet-era industries. Europe’s ber, the U.N. announced a last-minute
change used to be a big deal. So let carbon increase by no more than 8%. cap-and-trade system also encourages “extension” of the protocol until 2020,
big that the future of humanity Instead its 1990-2010 emissions rose industry to move production abroad though this is life-support by press re-
was said to hinge on its implementation. 47.5%. while pocketing payments in the form of lease. New Zealand, Russia and Japan
Did you know it expired on New Year’s The Netherlands promised a 6% cut but “carbon credits.” have followed Canada’s lead and are now
Day? We’re guessing you didn’t, but don’t wound up with 20% higher emissions by As for the U.S., it saw an emissions in- officially out of Kyoto’s carbon strictures,
worry. It’s no big deal. the end of 2010. Canada, one of the pact’s crease of only 10.3% between 1990 and while the world’s largest emitters in
Adopted in 1997 and in force since most enthusiastic early backers, commit- 2010, despite economic and population China and the U.S. were never in. Now
2005, the U.N. compact was intended to ted to a 6% cut but saw a 24% emissions growth that outpaced most of the indus- only Australia and the EU remain.
lock in its signatories into curbing or cut- increase above 1990 levels. In 2011 Ottawa trialized world. Some of the thanks here In its day, the Kyoto Protocol did its
ting their greenhouse-gas emissions rela- announced it was withdrawing from Kyoto go to the shale-gas revolution, which uses share of economic damage by distorting
tive to 1990 levels. It didn’t work out as to avoid the penalties it would have owed technology that still hasn’t gotten past energy markets and encouraging job-kill-
planned. for missing its target. most European regulators. This triumph ing legislation. Some of that damage will
Japan promised a 6% reduction rela- On paper, the EU as a whole looks set of American ingenuity might never have remain. Still, count this as another eco-
tive to its 1990 levels, but instead saw a to meet its overall 2012 emissions tar- happened if Al Gore had managed to drag cure that arrived with a bang and de-
7.4% increase, despite 20 years of eco- get. But that’s mainly thanks to eco- the U.S. into Kyoto 15 years ago. parted, as so many of them do, with a
nomic stagnation. Australia, where nomic stagnation and the closure of in- So is that it? Not precisely. In Decem- whimper.
New York’s Fracking Phobia

M
ost Americans by now know an environmental review in February regulatory green light, and the industry able fact: Overall U.S. carbon dioxide
about the natural gas revolu- and perhaps issue drilling regulations is now saying 2013 looks like it will be emissions—the majority of which come
tion and its potential. It’s be- by the end of that month. Theoretically a lost year in New York. from electricity generation—had fallen
come possible through a process called this would end a four-year moratorium The larger irony is that, in the wake to their lowest level in 20 years, some
hydraulic fracturing, whereby water on fracking. of Hurricane Sandy, Mr. Cuomo is now 14% off the peak in 2007. This didn’t
and chemicals are used to force previ- But Mr. Cuomo said recently that talking up the risks of climate change. happen with command-and-control reg-
ously unrecoverable deposits from he’ll have to await word from a newly If the Governor really believes carbon ulation. U.S. emissions are lower be-
shale rock. The technology is bringing appointed health review board. His ap- emissions are a major threat, the big- cause utilities have responded to the
new wealth to workers in many states. pointees are being cheered by drilling gest contribution Mr. Cuomo could market incentive of cheaper natural
Except New York. Governor Andrew critics, perhaps because they have pre- make would be to allow fracking. The gas.
Cuomo seems content to let the people viously criticized the health risks of more U.S. power plants burn natural Mr. Cuomo is surely aware of all
in the depressed counties of upstate fracking. The process of delays gives gas instead of coal, the less particulate this. For now the Governor’s political
New York watch the rest of the country the strong impression that Mr. Cuomo pollution and carbon dioxide are put read looks to be that New York’s up-
benefit from fracking. is looking for a pretext to keep the ban into the atmosphere. state economy can sit hostage to the
The state’s Department of Environ- in place. Fracking opponents have Last year the U.S. Energy Informa- antigrowth energy agenda of wealthy
mental Protection is expected to finish vowed to mount legal challenges to any tion Administration reported a remark- downstate environmentalists.
OPINION
From Heavy Metal to Heavy Industry

BY ANNE JOLIS 85 million Maiden albums since he and said it will propose new legis-
first joined the band in 1981, and lation this year to target “abusive
London created more jobs for T-shirt ven- tax avoidance” of the sort that’s
For three decades, Bruce Dick- dors than any ministry could hope perfectly legal today.
inson has been an object of wor- to count. The 54-year-old super- The alternative, endorsed by
ship in the headbanging world of star—also a competitive fencer, Mr. Dickinson, would be a flat rate.
hard rock and heavy metal music. successful novelist, licensed pilot “You simply say everybody has to
Last May, the Iron Maiden front- and serial entrepreneur—has resur- pay it—if you’re born in this coun-
man became a hero to an entirely rected heavy metal from the com- try, you pay 20%. End of story, no
different crowd—namely, a politi- mercial trash-heap more than once. tax exiles, you want to live in Mo-
cal establishment desperate to Surely he could do the same for naco, fine—20%.”
claim industrial revival. heavy manufacturing. Inescapable income taxes are a
“This is exactly the type of in- So what specifically is standing feature of the U.S. fiscal code,
vestment needed,” declared the between him and his best-case vi- though it’s hardly flat. I put that to
Welsh business minister of Mr. sion in Cardiff? Mr. Dickinson and ask if—given the
Dickinson’s plan to “create hun- “Clearly aviation is a highly reg- costs, regulations and rigamarole
dreds of highly skilled engineering ulated industry, and it does take in Britain—he’s ever considered
jobs” with a new aircraft-mainte- time for the wheels to grind,” Mr. taking his projects to the U.S.
Zina Saunders
nance venture in Cardiff. His own Dickinson says carefully. At first “Well sadly, I think I’d rather
glance, he almost blends in with the open a business in this country
dark-suited bankers milling through than the U.S.,” he says. “The U.S.
Iron Maiden’s Bruce the courtyard of the Royal Ex- is—it’s a minefield. Open a busi-
Dickinson on risk, reward, change. Look closer and you’ll spot tion in Wales’s official “Aviation En- April). “I live here. And I pay my ness in California? You must be
the rocker, his navy suit in pinwale terprise Zone” is helping with the tax here. Whilst I think the rate of joking. The lawyers, the taxes—
and the ‘common sense’ corduroy, the hair a good two fin- red tape. Mr. Dickinson responds tax is too high,” he shrugs, “I like people talk about high taxes here.
required even of gers longer than City standard. with a chuckle: “I wish I could tell living here.” Well, yes they are high, but in
While governments like to tout you exactly what an ‘Enterprise That arrangement not only sets America, in the places you might
rock-star entrepreneurs. their courtship of skilled manufac- Zone’ is.” him apart from the likes of Ringo really want to open a business—
turing jobs, in practice “civil ser- “No, there are some benefits,” and Mick (respectively domiciled in New York, L.A.—you’ve got state
vants, on some level, are almost in- he says, such as “direct access to Monaco and the Virgin Islands). It taxes, city taxes, state income
statements at the time had featured stitutionally prejudiced against some very very proactive civil ser- also means that “I pay about 500 taxes, city income taxes—you add
the words “cautious projection” and entrepreneurial activity and risk,” vants” in Wales. “And they can give times more tax than Amazon,” that lot up, you’re paying more
“up to,” but no matter: “Iron Mr. Dickinson goes on. “Of course us some breaks—temporary breaks which makes a quarter of its non- over there than here.”
Maiden singer pledges 1,000 new nobody wants to return to the dark on things like business rates,” a U.S. sales in the U.K but bases its None of that makes the U.S.
jobs to Wales,” read one typical ages, no one wants to return to fun- form of property tax. European operations in Luxem- coasts particularly attractive for
headline. The U.K. Trade and In- damentally unsafe work practices.” “But they are limited,” he adds bourg, thus escaping most U.K. cor- employers of any kind, let alone
vestment bureau promptly began But he warns that overregulation of the Welsh authorities, with no porate taxes. multimillionaire rock stars. And
figuring the top-end projections and the burgeoning “health and control over most regulations or, “It amused me when I found out Mr. Dickinson is firm that, whether
into its tally of “jobs new and safe- safety thing” add up to “an industry for example, British value-added how much tax they didn’t pay, and you’re touring the world with a
guarded.” that is eating itself, that has been tax rates. “If they could defer VAT, how much tax I pay as a personal metal band or trying to run a more
Seven months and a few reams created and is creating an entire in- so you don’t have to charge 20% tax individual,” he says, with a smile mundane business, “You’ve got to
of paperwork later, Mr. Dickinson dustry which will eventually con- on everything you do, that would that suggests he wasn’t all that have a vision, but you’ve also got
was good enough to meet me for sume manufacturing and retailing.” be massive.” amused. to have common sense.”
coffee and an update: Cardiff Avia- The result is that Cardiff Avia- i i i What really seems to get him, He learned that a while ago.
tion Ltd. now employs a grand to- tion, for instance, currently has The retort that lower taxes though, is that “there is so much “One of my earliest ventures was
tal of 40 people, and expects to “five million dollars worth of heavy would fund less government is un- money wasted on the inland reve- when I was nine years old,” he re-
have between 100-125 by the sum- engineering machinery—we have likely to go far with Mr. Dickinson, nue. It’s vast, the costs involved, on calls. “I realized there was a short-
mer. enough stuff in our hangar to build who says he “would cheerfully pay both sides. People employing clever age of pencils at school, so I
“And, well, that’s not bad!” says an airliner, let alone maintain it,” the amount of tax I do at the mo- accountants and lawyers and all started Rent-a-Pencil. But I made a
Mr. Dickinson, who’s quick to note says Mr. Dickinson. But the comment if I didn’t pay it to the gov- this nonsense, and then a massive fundamental mistake”—he’d failed
that even rock gods live in “the pany is still waiting on its certifica- ernment.” amount is spent by the Exchequer to secure his inventory. “Everybody
wonderful world of practicality.” tions for heavy-duty work, and in As it stands, “No, I’m not a fa- chasing them all over the world.” stole my pencils.”
i i i the meantime, “we can’t afford to mous British tax exile,” he sighs, As if to prove his point, Her
That can be easy to forget, given have people sitting around doing confirming that he pays the cur- Majesty’s treasury last month an- Miss Jolis is an editorial page
Mr. Dickinson’s record. His tenor nothing.” rent 50% rate outright on his per- nounced it would spend an extra writer for The Wall Street Journal
belting has helped sell more than I ask how the Cardiff site’s loca- sonal income (dropping to 45% in £77 million on more tax inspectors, Europe.
The Menace of Syrian Chemical Weapons

BY JAMIE M. FLY weapons stockpiles. But as science phones, Twitter and Facebook, it is was quickly secured, as were sev- planning to stabilize a post-Assad
and weapon technology pro- likely that any such use today eral other small caches that Gad- Syria.
After standing on the sidelines gressed, chemical weapons became would immediately be broadcast hafi had failed to declare. But thou- Veiled threats against the As-
for 21 months while Syrian dicta- increasingly irrelevant to modern around the world, hopefully short- sands of conventional weapons sad regime—after nearly two years
tor Bashar Assad slaughtered tens war fighting. Today, all but eight ening the time it takes for the proliferated because of American of benign neglect toward the chaos
of thousands of his own people, countries—Syria, Angola, Egypt, international community to re- and European unwillingness to in Syria—won’t be enough to pro-
U.S. President Barack Obama re- Israel, Burma, North Korea, Soma- spond. In 1988, it took seven back an external stabilization force. tect Americans and our allies. And
cently warned that Assad will lia and South Sudan—are party to weeks before the U.N. Security The Obama administration, fail- they certainly won’t help Syrians
cross a “red line” if he uses his the 1997 Chemical Weapons Con- Council (indirectly) condemned ing to learn the lessons of Libya, is rid themselves of Bashar Assad.
chemical arsenal. “If you make the vention that bans the stockpile Saddam Hussein’s use of chemical reportedly planning for a light-
tragic mistake of using these and use of such weapons. The U.S., weapons against the Kurdish town footprint approach in Syria should Mr. Fly is executive director of the
weapons,” he said, “there will be Russia and Libya are in the proof Halabja, an attack that killed the Assad regime fall. Options Foreign Policy Initiative.
consequences, and you will be cess of destroying their arsenals, some 5,000 men, women and chil- include relying on small teams of
held accountable.” and several others, including Alba- dren and injured many more. Special Operations Forces, thou-
Western officials should be con- nia and India, already have. Given that the use of chemical sands of Jordanian soldiers, or EUROPE
cerned about any attempt by Assad There is always the concern weapons in Syria would likely contractor-trained rebel forces to
Tracy Corrigan, Editor in Chief, Europe
to use mustard gas or nerve agents that some states, such as China, result in outside intervention, secure the chemical-weapons sites.
Neil McIntosh, Deputy Editor, Europe
against his brutalized people. But Russia or Iran, may be violating which Assad clearly wishes to Large-scale transportation of
Terence Roth, Managing Editor, Europe
this attention on Syria’s chemical their treaty obligations. But most avoid, a greater threat might be Syria’s stockpile will be difficult
Brian M. Carney, Editorial Page Editor
weapons overshadows the stark attention in the nonproliferation what happens to his chemical and on-site destruction will take
fate of the Syrian people and exag- community has shifted away from arsenal once his regime collapses time, likely years. Relying on a rag- Lauren Berkemeyer, Advertising
gerates the importance of chemical the use of chemical-weapons and the stockpiles go unprotected. tag, outsourced force for security Kate Dobbin, Communications
weapons in 21st-century warfare. stockpiles on the battlefield to the This could result in chemical over a long period of time would Florence LeFevre, Institutional Sales Europe
Chemical weapons were first dangers of their proliferation and weapons or related materiel falling be the height of wishful thinking. Paul Little, Consumer Sales
used on a large scale amid the potential use by terrorists. into the hands of a terrorist group If Mr. Obama is serious about Michael Lloyd, Institutional Sales U.K.
trench warfare of World War I, re- This isn’t to say that the U.S. that could use them elsewhere in ensuring that terrorists don’t get Kelly Leach, Publisher
sulting in as many as 90,000 and its allies shouldn’t be con- the region. When the regime of their hands on weapons that could Published since 1889 by
deaths and a million casualties by cerned about Assad’s chemical Libyan dictator Moammar Gadhafi be used against American interests Dow Jones and Company
war’s end. During the Cold War, arsenal. These weapons can have a fell in 2011, its small declared or personnel in the region or even © 2013 Dow Jones & Company. All Rights Reserved
the U.S. and the Soviet Union accu- devastating impact. chemical-weapons stockpile (un- on the U.S. homeland, the only
mulated significant chemical- However, in the age of cell- dergoing destruction at one site) solution is early and sustained
OPINION
The Fed’s Dangerous Direction

BY MARTIN FELDSTEIN institutions and pension funds. ing to do, and even technical mon-
Long-term interest rates are also etary experts will be unable to an-
The Federal Reserve is heading likely to rise in the future because ticipate when and by how much
in the wrong direction. What the of the higher inflation induced by the Fed will change the federal-
central bank describes as “uncon- the Fed’s current policy. Because of funds rate. The outlook for mone-
ventional monetary policy” is creat- the Fed’s purchases of bonds and tary policy is further confused by
ing dangerous bubbles in asset mortgage-backed securities, com- the Fed’s comment that the new
markets that will lead to higher fu- mercial banks have $1.4 trillion unemployment and inflation guide-
ture inflation and is supporting the more in reserves than is legally re- posts apply only to the fed-funds
explosive growth of the national quired by the size of their balance rate and not to the Fed’s purchases
debt. Its new “communications sheets. The banks can use these ex- of Treasury bonds and mortgage-
strategy” will, moreover, only fur- cess reserves to create loans and backed securities.
ther confuse markets. deposits, which will increase the The final problem with the Fed’s
The Fed’s recently announced money supply and fuel inflation. unconventional policy is perhaps
Getty Images
plan to buy $85 billion a month of For now, the banks are content the most obvious. By keeping long-
government bonds and mortgage- to leave their excess reserves at term interest rates low, it removes
backed securities will keep long- the Fed in exchange for a low rate pressure on Congress and the
term interest rates at historic lows, of interest. But the day will come Obama administration to deal with
when aggregate demand is increas- also likely to warn that raising inter- a dual-mandate monetary policy budget deficits.
ing, companies want to borrow, est rates while unemployment is that is implied by simulations with The deficit has increased to 7%
By keeping long-term U.S. and the banks are willing to lend still high could cause Congress to the Fed’s macroeconometric model of gross domestic product this year
interest rates low, the Fed aggressively. When the increase in punish the Fed with new restric- of the U.S. economy. from 1.5% in 2007. The ratio of debt
money starts to cause a rapid in- tions. These pressures may cause This communications strategy to GDP has doubled in that time to
has removed pressure on the crease in prices, the Fed will need the FOMC to delay in raising rates, may be persuasive to a small group 73%. Even if the president’s original
president and Congress to to limit the banks’ credit creation allowing inflation to get out of hand. of academic specialists and others proposed budget was enacted and
by raising the interest rate it pays Although Mr. Bernanke and oth- versed in modern monetary theory. accomplished all the deficit reduc-
deal with deficits. for banks to keep their reserves at ers at the central bank declare their But the Fed’s statement and the action that the administration claims,
the central bank. commitment to price stability, the tions it implies will confuse the the debt-to-GDP ratio would still be
That is the “exit strategy” that Fed’s new “communications strat- general public and undermine con- above 70% in 2022 and would be
with a 1.6% yield on 10-year Trea- Fed Chairman Ben Bernanke and egy” runs the risk of undermining fidence in the bank’s commitment expected to rise after that. The Fed,
surys and a negative yield on 10- others are counting on to prevent public confidence in the Fed’s ap- to price stability. in short, has killed the bond vigilan-
year TIPS (Treasury Inflation-Pro- future inflation. Unfortunately, no proach to policy. After its December In the first place, the Fed’s new tes before they could have forced
tected Securities). The Fed sees its one knows how high rates will meeting, the FOMC announced that approach appears to raise the infla- Congress to act.
strategy as a way of boosting the have to go to restrain the commer- it would keep the federal-funds rate tion threshold above 2%. Moreover, The Fed would do well to gradu-
prices of equities, real estate and cial banks. at its current near-zero level until at his news conference after the De- ally end its program of buying long-
other assets. It has indeed boosted Moreover, because of the large the unemployment rate is less than cember FOMC meeting, Mr. Ber- term securities and shift its com-
asset prices, although the increase number of very long-term unem- 6.5%—as long as the predicted in- nanke made it clear that there is munications to a simple statement
in individual balance sheets has had ployed, unemployment may remain flation rate between one and two both flexibility and ambiguity in that it will do whatever it takes to
very little positive impact on real high even as prices climb. And so, years ahead is no more than 2.5%. how the central bank will apply this achieve long-term price stability.
economic activity. just when the Fed should act to The rationale for this radical new approach. It won’t judge labor-
Once the Fed stops buying secu- tighten the money supply, there will announcement was discussed last market conditions by the unem- Mr. Feldstein, chairman of the
rities, however, interest rates will be strong voices in the Federal Open month in a brilliant lecture by Ja- ployment rate alone, and its expec- Council of Economic Advisers un-
rise and asset prices, including Market Committee emphasizing the net Yellen, vice chair of the Fed, at tation of inflation will reflect a der President Ronald Reagan, is a
stock prices, will fall. This will have Fed’s dual mandate to achieve “max- the University of California, Berke- variety of indicators. professor at Harvard and a mem-
serious adverse effects on inves- imum employment” as well as price ley. She explained that it It will be difficult for the public ber of The Wall Street Journal’s
tors, particularly highly leveraged stability. Congressional leaders are approximates the optimal path for to understand what the Fed is try- board of contributors.
There and Back Again

Who are these hardy folks? ders from the Napoleonic wars than participating newspapers and Plant put it ominously, “everything
[ Bookshelf ] Mostly they are French—the a real-life adventure tale. The title 200,000 school kids following his is 30. The wind blows 30 knots, the
Vendée Globe was founded by the is reflective of the book in whole, exploits. That is what Sites Alive!, waves are 30 feet high, the air and
French ocean racer Philippe Jean- which was published through the his nonprofit, is about. water are 30 degrees.” He saw all of
Race France to France tot in 1989—but from time to time educational foundation Mr. Wilson Mr. Wilson has been promoting that and more—including seven
By Rich Wilson an interloper pops up in the qua- heads, Sites Alive!, and lacks the so- it with modest success for two de- gales of 40 knots or more between
(SitesALIVE!, 321 pages, $15) drennial race. Such a fellow is Rich phisticated editing and graphics a cades, linking it to his string of sea- the Cape of Good Hope and Austra-
Wilson, whose background makes big publishing house would have going adventures, the most notable lia, by which half his competitors
BY ANGUS PHILLIPS him a curious contender in an ex- provided. What it doesn’t lack is ac- of which was his first, unsuccessful, were knocked from the running.
treme sailing race. When he fin- tion, excitement or enthusiasm. attempt in 1990 to set a record for Mr. Wilson takes us there and
As you read this from the com- ished the 2008 Vendée—9th of 30 fastest passage from San Francisco back again with openness and hon-
fort of your easy chair, a dozen or competitors, and one of only 11 to to Boston via Cape Horn. He and esty, displaying the ocean sailor’s
so madmen are hunkered down in make it all the way ‘round—he was The Vendée Globe is the partner Steve Pettengill were requisites—modesty, humor, vigor
the Southern Ocean, weary and far 58, the oldest skipper and only toughest sailboat race on wrecked in 85-knot winds and 65- and a willingness to admit fear,
from land, hurrying as fast as ever American in the fleet. foot seas off the Horn and were exhaustion, depression and even
they can to get back to where they If age set him apart, so did his earth—28,000 miles solo miraculously rescued from the sheer terror. “How to explain this
started last November and com- background. He is a graying aca- around the world. Rich swamped remains of their 60-foot violence to those ashore?” he
plete a circumnavigation in demic, having studied math at Har- trimaran by a passing freighter, an writes. “Take your house. Sit or
whatever is left of their battered vard and then done postgraduate Wilson finished it at age 58. experience he relates concisely and stand in it. Get a crane and lift it 10
boats. work at MIT in oceanography. He terrifyingly in the book. feet off a solid concrete slab. Then
This is the Vendée Globe, the started his career teaching high His Vendée Globe wasn’t that drop it, with you in it. . . . Now lift it
most challenging sailboat race on school in a tough Boston neighbor- “Race France to France” is full of exciting, but it had its moments. In up again and hover it over a con-
earth: 28,000 miles around the hood in 1974, the year cops busted the jargon of the ocean-racing the first days out on the Bay of crete slab tilted to 45 degrees. Drop
world, nonstop, single-handed in heads at the beginning of one of game, with references to keel hinge Biscay, the fleet hit a horrendous the house again from 10 feet. Now
60-foot-long, overpowered seago- the most contentious busing pro- pins and baby stays and PBO rig- November gale that knocked sev- when it crashes it also bounces vio-
ing survival capsules, crossing grams in the land. Nearsighted, ging, but there is enough mayhem eral top-rated boats out and sent lently sideways, out from under
three oceans, north to south and modestly built and hampered by and side-story-telling to keep even Mr. Wilson skittering across the you. . . . OK, now do that another
east to west, slashing past Antarc- severe asthma, this bookish young the uninitiated engaged. cabin hard enough to break two thousand times.”
tic icebergs at speeds more suit- man developed a penchant for dan- When Mr. Wilson sailed out of ribs. The next four weeks were ag- Welcome to the Vendée Globe.
able to thrill sports like windsurf- gerous ocean adventures that has Les Sables d’Olonne, an Atlantic ony. He struggled to raise and And, by the way, “Don’t forget to
ing or kiteboarding—20 knots, 25 scarcely abated over 30 years and port in France’s Vendée region, on lower sails as the breeze came and eat, sleep, write, make sail changes,
knots, 30 and even more, includes successful efforts to break Nov. 9, 2008, his goal wasn’t to win. went, to cook and clean and make analyze the weather, charge the
uninterrupted for days on end. long-standing sailing speed re- His low-budget effort in an eight- the repairs that are the day’s work batteries, bail the forepeak, drain
When conditions are right, the cords from New York to Mel- year-old boat had a higher pur- of the ocean sailor. the cockpit compartment and, oh,
best of the lonesome racers reel off bourne, Hong Kong to New York pose—to help promote science and He was mostly healed when he be really careful brushing your
500 miles in a day, a feat that and San Francisco to Boston. learning. From the cockpit of Great sailed into the really scary waters teeth, so you don’t stab yourself in
would leave many of us fatigued if Mr. Wilson gives this back- American III, Mr. Wilson fed a net- south off Africa, Australia and the throat.”
we tried it in a Buick on the ground concisely in his book, “Race work of educational outlets around South America—the so-called
Interstate. The Vendée Globe racers France to France, Leave Antarctica the globe with real-time informa- Southern Ocean where storms circle Mr. Phillips was the outdoors edi-
stay at it, alone on hostile seas, for to Starboard,” which, I know, tion on geography, math, oceanog- the globe unimpeded by land and tor of the Washington Post for 30
over three months. sounds more like secret British or- raphy and other disciplines to 25 where, as the late ocean racer Mike years.
Pound/Euro 0.8118 g 0.02% Yen/$ ¥86.93 g 0.19% Global Dow 2043.33 g 0.01% Gold 1673.70 g 0.84% Oil 92.92 g 0.21% 3-month Libor 0.30500 10-year Treasury g 17/32 yield 1.899%
U.S. Companies Buck Trend BBVA Bond Shows

By Selling Furniture in China Growing Hunger for Yield
BUSINESS & FINANCE 20 HEARD ON THE STREET 32
Friday - Sunday, January 4 - 6, 2013 THE WALL STREET JOURNAL. europe.WSJ.com
In Turkey,
Bank Bonds
Google Pushes Users to Get Social
BY AMIR EFRATI catch up to Facebook while others
Social
Lure Foreign Google Inc. is challenging Face-
book Inc. by using a controversial
Ploys
Google is boosting its Google+ social-networking
service by integrating it with other services.
believe it is the company’s best path
to being relevant in the age of social
media, said people familiar with the
Investors tactic: requiring people to use the

Google+ social network.
The result is that people who
TOTAL UNIQUE
U.S. VISITORS,
OCT. 2012*
matter.
Mr. Page, the CEO, about a year
ago pushed the idea of requiring
BY EMRE PEKER create an account to use Gmail, You- GOOGLE SEARCH SEARCH ADS Google users to sign on to their
Tube and other Google services—in- in millions Google+ accounts simply to view re-
INSTAGRAM Google+ profile pages of Many search ads
ISTANBUL—Turkey’s banks are cluding the Zagat restaurant-review brands, local businesses include Google+ views of businesses, the people say.
riding the boom in emerging-market website—are also being set up with and individuals are information, such as Google executives persuaded him
debt, capitalizing on the country’s public Google+ pages that can be PINTEREST promoted in search how many people not to pursue that strategy, fearing
recent credit-rating upgrade and in- viewed by anyone online. Google+ is results. recommended a brand. it would irritate Google search us-
GOOGLE+
vestors’ pursuit of higher yields. a Facebook rival and one of the ers, the people say. A Google spokes-
Turkish banks sold a record $7.9 company’s most important recent woman declined to comment on the
MYSPACE
billion of dollar-denominated bonds initiatives as it tries to snag more matter.
in 2012, according to data provider online advertising dollars. TUMBLR
In recent months, Google has
BUSINESS LISTINGS REVIEWS
Dealogic, mostly to foreign inves- The impetus comes from the top. pressed ahead with other forms of in-
tors. That is triple the amount of Google Chief Executive Larry Page has Google moved millions Writing a review of a tegration. This past fall, for instance,
TWITTER of Web pages showing local business, movie
debt sales in 2011 and vaults the sought more aggressive measures to Google began requiring people who
local-business or mobile app requires
country’s lenders to third place in get people to use Google+, two people LINKEDIN information to Google+. a Google+ account. want to post their reviews of restau-
bond issuance among banks in familiar with the matter say. Google rants or other businesses to use their
emerging markets behind Russia created Google+ in large part to pre- FACEBOOK Google+ profiles to do so. The same
and Brazil. vent Facebook from dominating the rule applies for reviews of smartphone
Bank executives and analysts social-networking business. software “apps,” as well as physical
0 40 80 120 160
said they expect dollar-denomi- Both Facebook and Google make goods, obtained through Google.
nated-bond sales to set another high the vast bulk of their revenue from *Does not include mobile-device users Sources: comScore (visitors); WSJ analysis Links to Google+ also appear in
in 2013, the latest sign that Turkey’s selling ads. But Facebook has some- Google search-engine results involving
financial sector continues to mature thing Google wants: Facebook can people and brands that have set up a
after weathering a banking crisis a tie people’s online activities to their tomatically upload new photos to a improve the quality of the critiques, Google+ account.
decade ago. Some observers, real names, and it also knows who Google+ folder—one that he kept which was lower when people were Vic Gundotra, who is in charge of
though, warn that the industry risks those people’s friends are. Market- private. Later, he says, he was sur- able to leave reviews anonymously. Google+, says he sees little in-house
becoming too dependent on interna- ers say Google has told them that prised to see that his Google+ pro- The change also allows people to see controversy today. “There was more
tional markets for funding. closer integration of Google+ across file page—which includes his reviews by their friends, she says. resistance two years ago,” when the
The rise in bond sales is also an- its many properties will allow name—was tied to a software re- A Facebook spokesman declined to project wasn’t well understood inter-
other vote of confidence in Turkey’s Google to obtain this kind of infor- view that he wrote recently on the comment. nally, he says.
economy, which government offi- mation and target people with more Google Play online store. Google executives say more inte- The integration has helped in-
cials predict will expand 4% in 2013, relevant (and therefore, more profit- Google is “trying too hard to gration is coming. “Google+ is crease Google+ usage. Google last
compared with 3% in 2012. able) ads. compete with Facebook, and if peo- Google,” says Vice President Bradley month said 235 million people used
While banks from Ukraine to Mo- Some users of Google’s services ple aren’t going to share willingly, Horowitz. “The entry points to Google+ features—such as clicking
rocco are seeking long-term financ- are startled to learn how far the in- they’ll make them share unwill- Google+ are many, and the integra- on a “+1” button, similar to Face-
ing at a time of low interest rates, tegration can reach. Sam Ford, a 26- ingly,” he says. tions are more every day.” book’s “Like” button—across
“Turkey’s banking system is a much year-old Navy petty officer, says he A Google spokeswoman says the The initiative has been controver- Google’s sites, up from 150 million
better investment,” said Viktor signed up for Google+ on his smart- company began requiring use of sial within Google. Some employees in late June.
Szabo, who helps manage about $11 phone because it would let him au- Google+ profiles to write reviews to viewed it as a desperate attempt to Please turn to page 22
billion in emerging-market debt at
Aberdeen Asset Management in
Auto Makers Post Improved U.S. Sales

London.
Mr. Szabo recently has added
Turkish bank bonds to his portfolio,
citing the banks’ large capital cush-
ions and relatively low rate of delin- BY MIKE RAMSEY website, forecast a 9.6% increase in
quent loans compared with banks in AND JEFF BENNETT December sales over a year earlier.
many other parts of Central and Some auto makers are still tallying
Eastern Europe. U.S. auto sales reached fresh sales, and full results for the month
Four of Turkey’s top six banks— highs in December and finished and year were due out later in the
Turkiye Is Bankasi AS, TC Ziraat 2012 on a stronger-than-expected day. For 2012, the auto industry
Bankasi AS, Akbank TAS and Tur- note, raising expectations that re- likely exceeded 14.5 million cars and
kiye Halk Bankasi AS—already have sults this year could rise to prere- light trucks, compared with 12.78
disclosed plans to raise a combined cession levels. million in 2011.
$7.75 billion in international bond General Motors Co. said its car Still, Ford economist Ellen
markets this year. and light-truck sales rose 4.9% in Hughes-Cromwick cautioned that
Credit-ratings firms already had December, while Ford Motor Co. re- uncertainty in Washington, D.C., re-
upgraded many of Turkey’s banks to ported a 1.6% gain and Chrysler mains a concern. “There are several
investment grade, higher than dou- Group LLC, a unit of Italy’s Fiat fiscal matters that remain unre-
ble-B-plus or the equivalent, over SpA, said its sales jumped 10%, all solved and will continue to weigh on
the past year, citing their financial compared with a year earlier. consumer and business confidence
strength as well as Turkey’s stable Other auto makers reported in the months ahead,” she said in a
Getty Images
economic outlook. Most of the big strong gains. Toyota Motor Corp. conference call on Thursday. “But
banks are rated investment grade by said its December sales rose 9% to the housing recovery and a little
two of the three ratings firms, en- 194,143 vehicles and Honda Motor more certainty at least on our tax
abling a wide range of money man- Co. notched a 26% rise to 132,774. Ford and its rivals capped off a strong year with sales gains in December. bill is a favorable development.”
agers to buy their debt. Sales of Volkswagen AG’s name- Ms. Hughes-Cromwick said this
Turkey’s sovereign debt, how- sake brand rose 35%, marking the cember sales rose 35% to 43,855 ve- the Washington debate over the fis- week’s congressional agreement to
ever, was given an investment-grade auto maker’s best December in the hicles, while U.S. sales for Daimler cal cliff, as they had in November, increase rates for taxpayers making
rating for the first time since 1994 U.S. since the final month of 1970. AG’s Mercedes-Benz rose 12% to and moved to replace vehicles that $400,000 a year or more is unlikely
by Fitch Ratings in November. Many For the full year, Audi, the luxury 31,372, capping off its highest an- are on average 11 years old. to have a big impact on sales, but
investors expect Moody’s Investors car brand owned by VW, sold a re- nual tally on record. Chrysler said it expects the sea- the increase in the payroll tax might
Service, which has a positive out- cord 139,310 vehicles in the U.S., an December typically is one of the sonally adjusted annualized rate of “crimp consumer spending some-
look on Turkey’s debt, to raise Tur- increase of nearly 19%. strongest sales months of the year, sales in December could hit 15.8 mil- what.”
key to investment grade in coming Among other Europe auto mak- and car makers weren’t disap- lion vehicles, the strongest pace of Sales of pickup trucks helped the
Please turn to page 26 ers, BMW Group reported its De- pointed. Consumers largely ignored 2012. Edmunds.com, a car-shopping Please turn to page 21
BUSINESS & FINANCE
Ethan Allen Turns the Tables in China

Chain Pushes to Sell Its U.S.-Made Furniture to Affluent Chinese Shoppers; the Brand ‘Looks Expensive’
BY JAMES R. HAGERTY
DANBURY, Conn.—Furniture
from China has gobbled an in-
creasing share of the U.S. market
in recent years, leading to the clo-
sure of hundreds of American fac-
tories. Now, turning the tables on
their Asian rivals, two big U.S. pro-
ducers are trying to sell more fur-
niture in China.
The companies, Ethan Allen In-
teriors Inc. and Ashley Furniture
Industries Inc., are pursuing dif-
ferent approaches. Most furniture
Ethan Allen sells in China is made
in its seven plants in the U.S. and
Mexico. Ashley relies on furniture
made at its own plant near Shang-
hai and elsewhere in Asia, though
it ships small amounts from its
eight plants in the U.S.
“There’s a big appetite for U.S.-
made goods” among the wealthier
Chinese, said Steve Lush, president
of Robb & Stucky International
Inc., a Florida retailer of high-end
home furnishings owned by Sam-
uel Kuo, a furniture entrepreneur
from Taiwan.
Robb & Stucky, which doesn’t
sell Ethan Allen or Ashley furni-
ture, also aims to expand in China
within the next few years with
stores that would sell mostly U.S.-
Mark Leong for The Wall Street Journal
made products to the affluent, Mr.

Lush said.
Ethan Allen furniture already is
available in 77 stores in China op-
erated by the U.S. company’s local
retailing partner, Markhor Fur-
nishings Co. Ethan Allen’s chief
executive, Farooq Kathwari, said in
an interview that he expects the
number of Markhor stores carrying A three-generation family checks out Ethan Allen furniture at the Beijing store of Markhor Furniture, the American company’s partner in China.
Ethan Allen products to reach at
least 100 within a year. industry isn’t completely surren- At Ethan Allen, based in Dan- grandfather sent him a dozen of furniture factories and parts
On a recent shopping excursion dering to Asian dominance. bury, Conn., foreign sales, mostly wicker baskets of Kashmiri arts suppliers. But Mr. Kathwari said
to a Markhor store in Beijing, Da- Closely held Ashley Furniture, in China, accounted for 6.6% of and crafts to sell in the U.S. Chinese furniture plants typically
vid Huang, a film director, said based in Arcadia, Wis., has been $729 million in sales for the fiscal Among the buyers: Ethan Allen. aren’t set up for customized uphol-
Ethan Allen chairs and tables buying furniture from China for year ended June 30, up slightly Mr. Kathwari became a regular stery choices that Ethan Allen em-
didn’t strike him as exceptional. about 30 years and importing from 6.3% the prior year. But Mr. supplier to the furniture company phasizes.
“But I expect many Chinese people much to the U.S. for sale under its Kathwari is putting a higher prior- and made his first visit to China in For now, he said, Ethan Allen
will like this brand because it brand in Ashley and other furni- ity on international sales. Sales 1975 to attend a trade fair, scour- can handle that custom business
looks expensive and is made in the ture stores. abroad can help offset downturns ing for new sources of home décor. from North American plants.
U.S.,” he said. But Ashley also has big ambi- in the U.S., such as the 2008-09 re- He later joined Ethan Allen as an Almost all Ethan Allen furniture
These efforts are too small to tions in the Chinese market. A cession, he said, and give the com- executive and focused mainly on sold in the U.S. is made to order
reverse the general flow of furni- 35,000-square-foot Ashley furni- pany more long-term growth po- the U.S. market. on a custom basis. “If you were
ture trade dominated by power- ture store, its first in China, tential. In 2000, Richard Feng, chair- trying to make it as a commodity
houses China, Indonesia and Viet- opened in Shanghai last May. The Along with its focus on China, man of China-based Markhor, then (in the U.S.), it would be hard to
nam. Imports accounted for 63% of company aims to open 15 more in Ethan Allen recently opened a primarily a furniture maker, ap- compete” with imports, he said.
the $34.5 billion U.S. wholesale China in 2013. The stores will be store in Brussels, in that city’s chic proached Mr. Kathwari to seek ad- Another consideration: Ocean
furniture market in 2011, up from owned by local entrepreneurs un- Place du Grand Sablon. From there, vice on retailing. Ethan Allen shipments from the U.S. to China
41% in 2002, according to Mann, der license from Ashley. Ethan Allen aims to expand into agreed to sell its furniture at are about two-thirds of the cost of
Armistead & Epperson Ltd., an in- “We have decided to really fo- Germany and France. It also plans Markhor stores in China, starting shipping goods in the other direc-
vestment-banking firm in Rich- cus on China stores,” said Todd stores in Saudi Arabia and India. in 2002. tion.
mond, Va., as Asian producers un- Wanek, chief executive of Ashley, Longer term, “South America is an About half of the Ethan Allen Ethan Allen, with plants in
dercut their U.S. rivals on costs. which has stores in Vietnam, Ja- opportunity,” Mr. Kathwari said. furniture sold at those China North Carolina and Vermont, relies
In the first 10 months of 2012, pan, Jordan, Mexico and Central The courtly Mr. Kathwari, who stores comes from U.S. plants, with more heavily on U.S. production
the U.S. imported about $29.7 bil- America. Ashley furniture is much is 68 years old and owns about the remainder from Mexico, Hon- than most American furniture
lion of furniture and bedding, lower priced than that of Ethan Al- 14% of Ethan Allen’s stock, got into duras and other countries. companies. Mr. Kathwari said he
while exporting $4.8 billion. len. Sofas made by Ashley typically furniture and China by chance. A Shipping furniture from North may eventually open a plant in
Still, the efforts to expand in retail for $300 to $1,500, while native of Kashmir, he moved to the America to China seems counterin- Asia.
China and elsewhere overseas Ethan Allen’s are mostly in a range U.S. to study business at New York tuitive, given the distance and —Lilian Lin
show the battered U.S. furniture of about $1,500 to $3,000. University in the mid-1960s. His China’s vast and efficient network contributed to this article.
INDEX TO BUSINESSES
Businesses Al Jazeera.....................22 Brink's...........................23 Edmunds.com................19 id8 Group R2 Studios...23 Noble.............................21 Uralkali JSC .................. 26 Beneficiary
This index of businesses Alvarez & Marsal Bumi..............................23 Ethan Allen Interiors ... 20 Impala Platinum Potash of U.S. Coast Guard..........21 Association................21
mentioned in today’s Canada ....................... 11 China Federation of Facebook ....................... 19 Holdings.....................11 Saskatchewan............26 Volkswagen...................19 Wegelin.........................23
issue of The Wall Street Anglo American............11 Logistics and Federal Trade Janus Capital Group.....25 Replico.............................6 Voluntary Employee World Gold Council.......23
Journal is intended to AngloGold Ashanti.......11 Purchasing.................11 Commission.................1 Magneti Marelli............21 R.L. Polk........................21
Apple.............................23 China Overseas Land & Fiat S.p.A.................19,21 Royal Dutch Shell.........21
include all significant Malca-Amit...................23
Aquarius Platinum ....... 11 Investment ................ 32 Ford Motor....................19 Sinofert Holdings.........26
reference to companies. Markhor Furnishings....20
Ashley Furniture General Motors.............19 Société Générale .......... 32
First reference to the Industries...................20
China Vanke..................32
Gold Fields....................11 Microsoft....................1,23 Swiss Re.......................24 Corrections Amplifications
companies appears in Chrysler Group.........19,21
Banco Bilbao Vizcaya Goldman Sachs Group..24 Muenchener Time Warner.................22
bold face type in all Argentaria S.A. ......... 32 CohnReznick LLP .......... 15 Rueckversicherungs- Readers can alert the London newsroom of The
Google...................1,19,23 Time Warner Cable ...... 22
articles except those Corus Group..................23 Gesellschaft...............24 Wall Street Journal to any errors in news articles
BHP Billiton..................26 Great Basin Gold..........11 Toyota Motor................19
on page one and the Costco Wholesale.........24 by emailing [email protected] or by calling
BMW Group..................19 Honda Motor.................19 National Bureau of Transocean......................1 +44 (0)20 7842 9901.
editorial pages. BNP Paribas S.A...........32 Current TV....................22 Honeywell International 9 Statistics...................11 UBS .......................... 11,23
BP....................................1 Daimler..........................19 HSBC Holdings ............. 11 News Corp.....................22 United Auto Workers...21
BUSINESS & FINANCE
Fiat Aims to Boost

Chrysler Holdings
BY GILLES CASTONGUAY ployees, wants about $343 million
for the first tranche.
Italian auto maker Fiat SpA for- The trust gained its stake in
mally asked to buy a second tranche Chrysler following the Detroit auto
of shares in Chrysler Group LLC maker’s 2009 bankruptcy and is
held by a United Auto Workers disputing Fiat’s valuation of the
health-care trust that is the U.S. shares. Fiat has argued a clerical er-
auto maker’s second-largest holder ror tied the shares’ value to its
after Fiat. North American unit, rather than to
Fiat said the second tranche rep- the market value of its Italian par-
resents about a 3.3% stake in Chrys- ent. The UAW trust disagreed.
ler, the same amount as the first “A determination by the court is
tranche. Fiat has the right to buy currently expected within the next
shares from the Voluntary Em- several months,” Fiat said in a state-
ployee Beneficiary Association ev- ment.
ery six months; beginning this Fiat wants to increase its Chrys-
month, the health-care trust has a ler stake to gain more control be-
U.S. Coast Guard/Associated Press
right to request a public offering of cause the U.S. car maker’s cash
its roughly 41% stake in Chrysler. would help ease the strain on Fiat’s
A VEBA spokesperson declined finances caused by its struggling op-
to comment on Thursday. erations in Europe, where sales are
The two sides are fighting in a at their lowest level in decades.
U.S. court in Delaware over the Some analysts doubt Fiat has the
price of a first batch of Chrysler money to buy the rest of Chrysler.
shares, which the VEBA refused to Fiat has denied the need for a
The Shell oil rig Kulluk, aground off the coast of Alaska this week. The Kulluk was carrying 574,000 liters of diesel fuel. turn over to Fiat after a similar re- capital increase although it has
quest last year. A purchase of both raised the possibility of selling one
of its divisions, Magneti Marelli,
No Signs of a Fuel Leak

tranches would bring Fiat’s stake in
Auburn Hills, Mich.,-based Chrysler which makes components for cars.
to about 65.2%. Fiat declined to elaborate on the
Fiat valued the second tranche of statement issued on Thursday.
VEBA’s stake in Chrysler at $198 Fiat has said in the past that it
From Shell Rig in Alaska

million—more than the about $140 would keep exercising its options to
million value it put on the first buy more shares in Chrysler at reg-
tranche. ular intervals as stipulated under an
The trust, which pays the health- agreement signed with the VEBA in
BY BEN LEFEBVRE as belonging to the rig, he said. in an area not easily accessible to care costs of retired Chrysler em- 2009.
AND ERIC YEP “We will have more additional in- cleanup crews.
formation tomorrow [Thursday] af- “It is clear from multiple inci-
The U.S. Coast Guard said a ter we have the details from the sal- dents that oil companies cannot cur-
Royal Dutch Shell PLC oil rig that

vage team’s assessments, as we rently drill safely in the foreboding
ran aground this week off the south- move forward with the recovery conditions of the Arctic, and drilling
ern coast of Alaska doesn’t appear plan,” Capt. Mehler said. expansion could prove disastrous for
to be spilling any fuel, adding that a The rig, which until last fall had this sensitive environment,” U.S.
recovery plan won’t be completed been drilling the tops of exploratory Rep. Ed Markey, a Massachusetts
until a full assessment of the situa- wells in the Arctic off Alaska’s Democrat, said in a written state-
tion is available. northern coast, has inches-thick ment Wednesday.
Shell said a five-person salvage steel walls to ward against punc- Shell said the accident stemmed
crew boarded the Kulluk late tures. But it lacks equipment to pro- from marine transport issues and
Wednesday and spent three hours pel itself through choppy seas. The didn’t reflect on its Arctic drilling Fiat formally offered to buy more shares of Chrysler. Above, a brand logo.
examining the drilling rig, which is rig was carrying 574,000 liters of operations. The company will offer
owned by Shell and operated by diesel fuel and lubricants used for its expertise and employees to an in-
Switzerland-based contract driller
Noble Corp. Late Monday, the drill-
ship struck Sitkalidak Island, an un-
its own operation.
The Kulluk had encountered trou-
ble since Friday, when the tug boat
vestigation the companies and Coast
Guard are conducting into what
went wrong, Shell spokeswoman
On a Roll, Auto Makers Post
inhabited area about 480 kilometers
southwest of Anchorage in the Gulf
of Alaska.
pulling the rig toward Seattle for
maintenance experienced engine
failure during a storm near Kodiak,
Kelly op de Weegh said Wednesday.
“This is a marine transport situa-
tion, one that we are taking seri-
Gains in U.S. Monthly Sales
“I can report that there are still no leaving the rig adrift. ously and aren’t happy about,” Ms. Continued from page 19 is an important driver of pickup
signs of any sheen or environmental op de Weegh said. “If there are les- three domestic auto makers last sales as builders and contractors,
impact, and the Kulluk appears to be sons to come from this incident, month. GM, which sold a total of punished by the steep drop in new
stable,” Capt. Paul Mehler, the Coast Shell said the grounding those will be taken very seriously 245,733 light vehicles, said Chevro- home building, will need to replace
Guard federal on-scene coordinator, into account.” let Silverado sales rose 6.1% to old vehicles.
said during a conference call late didn’t affect its drilling Shell’s exploratory wells off 50,699 while sales of the GMC Si- Chrysler sold 152,367 cars and
Wednesday after the salvage crew re- and doesn’t involve any Alaska’s northern coast, started last erra model climbed 13% to 18,710. trucks in December. Sales of its Ram
turned from the rig. year, were the first such operations GM, which used heavy incentives to pickup jumped 16% to 30,211 vehi-
The crew was taken to the Kulluk possibility of oil release. in U.S. Arctic waters in more than pare a large inventory of trucks, cles for the month.
rig by a Coast Guard helicopter, two decades. The ambitious venture sold 69,409 trucks combined, ex- For the full year, GM’s sales rose
which also carried an emergency has been plagued with problems, ceeding Ford’s pickup sales for the 3.7% to 2.6 million vehicles, making
towing system intended for use dur- Other tug boats arrived Sunday however, with lingering sea ice and month. 2012 the company’s best year in the
ing salvage operations, according to but by the following day were fight- technical problems forcing delays in GM’s U.S. dealer inventory stood U.S. market since 2008. For Ford,
Shell and the Coast Guard. Shell, the ing 11- to 14-meter seas and 50-knot the project’s start. Shell was able to at 717,025 vehicles on Dec. 31, a 76- whose 2012 sales rose 4.7% to 2.24
Coast Guard and other participants winds. Tow cables repeatedly drill just two top holes for its wells day supply at current sales rates, million light vehicles, and Chrysler,
will use the information gathered by slipped from the Kulluk, and the rig in the Arctic last year, compared down from 106 days of sales at the whose full-year sales increased 14%
the salvage crew to evaluate how the crashed into the island’s shore Mon- with an initial plan for as many as end of November. Around midday to 1.15 million, it was the best year
rig will be moved. day night. The Kulluk’s crew was six exploratory wells, after an im- Thursday, GM shares were up 2.7% since 2007.
Aerial inspections were con- evacuated before the tow ship that portant piece of spill-response at $29.93, while Ford was up 2.5% at Toyota’s full-year total was 2.08
ducted throughout Wednesday to ex- had been tethered to the rig discon- equipment was damaged during $13.53, both 52-week highs. million cars and light trucks, up 27%
amine the rig, Shell and the Coast nected, fearing for its own crew. testing. Shell can only drill in the Ford’s December sales totaled compared with 2011, when it was
Guard said. The weather cleared The accident gives ammunition Arctic until October, because of esti- 212,902 light vehicles, including slowed by an earthquake in Japan.
enough that the salvage crew were to critics of Arctic drilling, who say mates on the return of sea ice. 68,787 F-series pickups, just about In 2013, new-vehicle registra-
able to board the rig for a limited the region’s extreme weather and re- The rig’s grounding didn’t affect the same as in December 2011. For tions—a key indicator of auto
amount of time. “As we flew along moteness makes drilling and equip- drilling operations and doesn’t in- the full year, Ford topped GM, sell- sales—are expected to climb about
the shoreline we did see four life- ment transportation more difficult volve any possibility of crude-oil re- ing 584,917 F-series trucks com- 6.6% to 15.3 million as consumers
boats that we believe to be from the than normal. Although no signs of a lease, Shell said in a written state- pared with GM’s combined 575,497. with more access to loans continue
Kulluk,” said Capt. Mehler. Kulluk spill are apparent, the inci- ment Monday. GM hopes to turn the tables in 2013 buying, according to automotive
Steve Russell, of Alaska’s Depart- dent has underscored concerns that Shell used the Kulluk and another with the introduction of freshened forecasting firm R.L. Polk & Co.
ment of Environmental Conserva- despite costly precautions, even a rig, Noble’s Discoverer, to begin Sierra and Silverado models set to Since registrations slightly lag sales,
tion, said on the conference call that major oil company like Shell can drilling its Arctic wells last year. In make their debuts midyear. the number of new vehicles sold
the lifeboats’ position relative to the have difficulties navigating what is July, the Discoverer slipped its Dearborn, Mich.,-based Ford said could actually reach 15.4 million. Be-
platform was significant because considered typical weather in the re- moorings while anchored off the full-size pickups made up 13% of to- fore the U.S. recession in 2008 and
any other debris would be in the gion around the Arctic—and that Aleutian Islands near the southern tal sales in the industry, one of the 2009, U.S. auto sales typically
same area. The team didn’t see any even a routine towing operation can Alaskan coast and narrowly missed highest percentages of the year. The ranged between 15 million and 17
other debris that could be identified become a potential fuel-spill hazard crashing into the shore. recovery of the U.S. housing market million vehicles a year.
BUSINESS & FINANCE
U.S. Clears Google

Of Bias in Searches
Continued from first page opt out of having their content ap-
crosoft in the 1990s. pear on some Google websites, with-
Google’s foes expressed dismay out being penalized or demoted in
at Thursday’s outcome. Google’s general search results.
The FTC’s move “represents a The changes, however, weren’t
deeply disappointing missed oppor- part of a binding legal settlement.
tunity to protect innovation in the That drew a dissent from FTC Com-
Internet economy, and the consum- missioner J. Thomas Rosch. Mr. Ro-
ers and businesses that rely upon sch said he didn’t believe Google’s
it,” said a spokesman for Yelp Inc.. actions amounted to antitrust viola-
The company’s website hosts user tions, but he said other FTC com-
reviews of restaurants and other missioners should have pushed for
businesses. binding commitments from Google
The commission said it would if they had concerns.
“remain vigilant and continue to “After promising an elephant
monitor Google for conduct that more than a year ago, the commis-
may harm competition and consum- sion instead has brought forth a
ers.” couple of mice,” Mr. Rosch said.
David Drummond, Google’s chief In the patent settlement, Google
legal officer, said in a post on the agreed that it would grant fair and
company’s blog: “The conclusion is reasonable licenses to mobile-device
Associated Press
clear: Google’s services are good for competitors whose products use es-
users and good for competition.” sential wireless technologies that
The voting showed some lack of are covered by Google’s patents. The
consensus among the FTC’s five settlement also requires that Google
Qatar-owned news network al-Jazeera is buying Current TV, a current-affairs channel partly owned by Al Gore, above. commissioners. Three of the five not use its key patents to seek court
didn’t sign on to Mr. Leibowitz’s injunctions that would block the
Al-Jazeera Makes Move

concern that Google had placed un- sale of competitor products.
reasonable restrictions on advertis- European antitrust officials also
ers’ ability to use Google and com- are investigating Google and are ex-
peting search engines. Two of the pected to extract more extensive
five didn’t endorse his reservations and binding commitments from the
Into U.S. Cable Market

about whether Google misappropri- company as part of any legal settle-
ated online content from rival sites, ment there.
such as restaurant and travel re- Europe’s regulators face less
views. constraints on their antitrust au-
Google took voluntary action in thority, and Google has a larger
BY KEACH HAGEY channel. Instead it will create a new share Current’s ideology were re- response to the concerns. The FTC market share on the Web-search
AND JOHN JANNARONE channel, al-Jazeera America, and buffed. Glenn Beck’s The Blaze ap- said the company will allow rivals to market in Europe than in the U.S.
will “invest significantly” in new proached Current about buying the
News network al-Jazeera agreed programming, Mr. Hyatt wrote in a channel last year, but was told that
to purchase Current TV, the cur-
rent-affairs channel partly owned by
Al Gore, seeking to boost its pres-
note to Current TV staff announcing
the deal.
The channel will be based in New
“the legacy of who the network goes
to is important to us and we are
sensitive to networks not aligned
Chasing Facebook, Google
ence in American television.
Financial terms of the deal
weren’t disclosed, but a person fa-
York and expand al-Jazeera’s U.S.
staff to more than 300, the company
said in an announcement.
with our point of view,” according
to a person familiar with the negoti-
ations.
Pushes Users to Get Social
miliar with the matter said al- Not all cable operators are on Launched in 2005, with a focus on Continued from page 19 Web visits and interests to help mar-
Jazeera paid a few hundred million board with the change. Time War- user-generated content, Current has By using its top websites to help keters target ads more accurately,
dollars for Current TV. The network, ner Cable Inc., the second-largest evolved in recent years into a left- Google+, the company has shown how Google says. Mr. Gundotra, the
which was co-founded by Mr. Gore cable operator, said late Wednesday leaning professionally produced out- far it is willing to go to battle Face- Google+ chief, says the company
and entrepreneur Joel Hyatt in it was dropping Current TV. The let. But it has struggled to boost its book to become a gateway for Internet won’t share data about individual us-
2005, has recently been struggling network’s owners acknowledged the ratings—parting ways with its most users to communicate with each other ers with advertisers and that it is im-
with low ratings. deal was the reason. prominent host Keith Olbermann last and businesses. portant for the company to maintain
Al-Jazeera, which is owned by “This is unfortunate, but I am March—and gain broad distribution. Because using Google+ requires users’ trust.
the government of Qatar, became fa- confident that al-Jazeera America Current had 59 million subscribers in people to sign in to their Google ac- Google encourages account hold-
mous in the U.S. about a decade ago will earn significant additional car- 2012, according to SNL Kagan, out of counts, Google will be able to blend ers to use Google+ to share photos
when its Arabic-language outlet riage in the months and years a total pay-television universe of mounds of data about individual users’ and thoughts with friends or other
aired videos of Osama bin Laden in ahead,” Mr. Hyatt wrote. about 100 million households. search habits and the websites they Google+ users who share their inter-
the wake of the Sept. 11 attacks. The deal comes several months Only about 22,000 households on visit with their activities on Google+. ests. Integrating Google+ with the
Since then the English-language ver- after Messrs. Gore and Hyatt, the average tuned into Current TV be- That is a potential boon to Google’s ad rest of the company’s properties
sion of the channel, which is avail- two largest owners of Current TV, tween January and November. By business, from which the company de- helps users glean more information
able online in the U.S. and on TV in put the channel on the market. comparison, since late September, rives about 95% of its more than $40 about apps, businesses, websites,
a few cities, has gained plaudits for Mr. Hyatt said they agreed to Time Warner Inc.’s CNN has aver- billion in annual revenue, excluding its products and—most important for
its international coverage. sell to al-Jazeera in part because aged about 700,000 households dur- new Motorola phone-making unit. Google’s business—ads for those
The purchase of Current TV “al-Jazeera was founded with the ing primetime with about 1.9 million Google is “sitting on a mountain products. That is because Google+
could give al-Jazeera national cable same goals we had for Current,” in- tuning into Fox News, according to of data,” says Alan Osetek, president users can be notified if their
distribution in the U.S., something it cluding “to give voice to those Nielsen. Fox News is a unit of News of Resolution Media, which helps Google+ friends or other contacts
has been seeking for years. But al- whose voices are not typically Corp., owner of The Wall Street marketers buy ads on Google. He recommend the items.
Jazeera doesn’t plan to replace Cur- heard” and “to speak truth to Journal. says “click-through rates”—the rates “You’ll go to search for a camp
rent TV with its English-language power.” Other suitors who didn’t Current TV’s poor ratings threat- at which Google search users click stove on Google, and you’ll find that
ened its distribution. It has lately on ads—have increased for his cli- your friend just bought one, and you’ll
been operating under an unusual ents’ ads when they include infor- be able to ask him about it,” says Dy-
contract stipulation with Time War- mation from Google+, such as the lan Casey, a former Google+ product
ner Cable: It had to meet certain number of people who have recom- manager who now works at Path Inc.,
minimum audience thresholds every mended a brand by clicking the +1 a smartphone-based social network.
quarter or risk being dropped. button on the brand’s Google+ page. Since Google+ made its debut in
Al-Jazeera believes a new chan- “In the majority of cases, lift in mid-2011, the Mountain View, Calif.,
nel has potential because it draws a click-through rates ranged from 2% company has had limited success
large U.S. audience on its website. to 15%,” he says. getting people to spend time di-
The reputation of al-Jazeera im- Users’ Google+ profile pages typ- rectly on the Google+ site. Research
proved in the U.S. during the Arab ically include their real names, and firm comScore Inc. a year ago esti-
Spring two years ago, when State they can add other details such as mated that Google+ users spent an
Department officials began to praise their hometowns. By default, the average of three minutes on the site
its coverage and Americans tuned page is public and will turn up in a each month, versus more than 400
into its online channel. During the Google search. It is possible, how- minutes for the average Facebook
Arab Spring, 60% of al-Jazeera Eng- ever, to change a setting so that the user. In the U.S., Google+ had nearly
lish’s online viewership came from page doesn’t show up in search re- 28.7 million unique visitors through
within the U.S. sults. There is also a way for people personal computers in October—
Associated Press
News of the pending deal was to disable or delete their Google+ well below Facebook’s 149 million,
first reported by the New York accounts. comScore says. Those numbers
Times on its website. Although Google doesn’t reveal a don’t include mobile-device users.
—Shalini Ramachandran user’s name to advertisers, Google —Evelyn M. Rusli
Host Keith Olbermann left Current TV in March. The channel faces low ratings. contributed to this article. uses information about the person’s contributed to this article.
BUSINESS & FINANCE
Oldest Swiss Bank

Pleads Guilty Over
U.S. Tax Evasion
BY CHAD BRAY As part of its plea, Wegelin,
based in St. Gallen, Switzerland,
In the latest blow to Switzer- agreed to forfeit $15.8 million and
land’s centuries-old banking prac- give up an additional $20 million
tices, the country’s oldest bank representing the amount of taxes
pleaded guilty to a criminal conspir- avoided as a result of its conduct.
acy charge in the U.S. on Thursday The bank also faces a fine of be-
and admitted that it helped wealthy tween $14.7 million and $29.4 mil-
Americans for years avoid tens of lion.
millions of dollars in taxes by hiding Sentencing is set for March 4.
their income from secret accounts In court documents, the U.S.
Bloomberg News
abroad. claimed that Wegelin “deliberately
Wegelin & Co., founded in 1741, set out” to capture illegal banking Malca-Amit’s Hong Kong gold-storage facility can hold bullion worth more than $54 billion.
is the latest Swiss bank to reach a business lost by UBS AG and an-
A Gold Rush for Vaults

deal with U.S. prosecutors as they other unnamed Swiss bank after the
crack down on Americans who kept U.S. began investigating their opera-
their money in secret accounts over- tions in 2008 and in 2009. UBS and
seas and the entities that helped the other bank have since stopped
them. Three Wegelin bankers also servicing undeclared Swiss accounts,
were charged criminally in the U.S. according to prosecutors. BY CLEMENTINE WALLOP tons in the third quarter, up 56.8% sites in New York and Zurich, but
last year. UBS entered a deferred-prosecu- from the third quarter of 2009. the focus of its expansion is firmly
However, the private bank, which tion agreement in 2009, in which it Investors in Asia are increasingly Singapore imported 36.7 tons of on Asia, executive director Joshua
plans to close once the matter wraps admitted to conspiring to defraud dealing with a seemingly anachro- gold in the first 10 months of 2012, Rotbart said. Some Asian investors
up, is the first to plead guilty to a the U.S. government out of billions nistic problem: finding a place to well down from 62 tons for all of who are storing their gold in the U.S.
criminal charge in the U.S. govern- of dollars in taxes and avoided crim- stash their bars of gold. 2011. The government’s announce- and Europe are keen to move it
ment’s probe. inal charges. As part of the agree- Gold is a popular choice for those ment in February that, in a bid to closer to home as more storage
The broad investigation, which ment, UBS turned over the names of seeking to diversify their holdings become a gold-trading hub, it would space becomes available, he said.
began in 2008, has set off tensions more than 4,000 U.S. account hold- and spread risk, but it isn’t the most scrap a 7% goods-and-services tax Vault operators say banks are
between the U.S. and Switzerland ers and paid a $780 million fine. mobile of assets. Still, gold has been on gold, silver and platinum hurt im- among those seeking to spread their
over its bank-secrecy laws. U.S. au- The U.S. claimed that more than moving east, and that has created ports for much of the year. Fourth- risk by holding gold in a variety of
thorities have pressured the Swiss $1.2 billion was hidden by Wegelin opportunities for security companies quarter gold-import figures for Sin- locations, rather than a single
for the names of Americans with from tax authorities in undeclared in Singapore, Hong Kong and Shang- gapore are expected to be stronger, stronghold in London or Zurich.
Swiss accounts. accounts overseas. hai—financial hubs where the World Gold Council executives say. Some private investors fret about
Meanwhile, Swiss authorities The bank allowed some U.S. cli- metal’s popularity is soaring. While physical gold requires tougher rules and the scrutiny of
gave banks permission last year to ents to open accounts using code Security companies are busy or- storage space, it does offer a lot of Swiss and other Western banks, they
provide some information to U.S. au- names or numbers in order to mini- dering two-ton steel doors and so- value in a relatively small package. say. “Western clients are getting a
thorities. They have since been hop- mize references to their real names, phisticated monitoring systems, and At around $1,690 a troy ounce, a bit nervous; people are afraid of in-
ing to reach a settlement with the prosecutors said. hiring more armed guards as they metric ton of gold is valued at $54.3 creased regulation and doomsday
U.S. that would address handing Bankers also opened accounts in expand their vault capacity in Asia. million, but would take up only scenarios,” Mr. Rotbart said.
over information about Swiss ac- the name of offshore sham corpora- Brink’s Co., for example, has in- slightly more space than a standard Marc Faber, editor and publisher
counts to the U.S. and the U.S. taxing tions and foundations in order to creased its storage space for pre- case of 12 wine bottles—though of the online financial journal
of assets held in Switzerland. avoid detection, including entities cious metals in Singapore more than most gold is stored in ingots. Gloom, Boom & Doom Report, is one
Otto Bruderer, Wegelin’s manag- formed under the laws of Liechten- threefold over the past year, to 200 Malca-Amit, a company that such investor. “Individuals are mak-
ing partner, entered a guilty plea on stein, Panama and Hong Kong, pros- square meters, and is building a stores and transports diamonds and ing a mistake if they’re holding all
the bank’s behalf at a hearing in fed- ecutors said. bonded warehouse in Shanghai to precious metals, has lockups in Hong their assets in one country.…I still
eral court in Manhattan on Thursday Wegelin bankers went to great store high-value consumer goods Kong and Singapore, and is prepar- have the majority of my gold in
and said the bank, between 2002 lengths to hide transactions, includ- and precious metals. ing to open one in Shanghai in the Switzerland, but I am already mov-
and 2010, knew U.S. taxpayers main- ing communicating with U.S. taxpay- “We are growing, and driving first quarter. The Shanghai vault ing gold to Asia,” he said.
tained secret accounts at Wegelin in ers using their personal email ac- that growth is the storage of pre- also will hold art and luxury goods Mr. Faber said his Asian storage
order to evade U.S. taxes. counts and avoided mailing account cious metals and also bank notes,” such as high-value mobile phones center of choice is the Singapore
“Wegelin was aware that this statements, prosecutors said. said Jos van Wegen, the company’s and designer handbags. FreePort, located in its own duty-
conduct was wrong,” Mr. Bruderer One unnamed client traveling to senior manager of global services in Malca-Amit’s Singapore vault, ca- free zone near the city’s airport. It
said during the hearing. “However, Africa on safari allegedly sent an en- Singapore. pable of holding 600 tons of gold, is opened in 2010 and is already dou-
Wegelin believed that, as a practical velope with a single piece of paper Comprehensive data on the vol- almost full, and the company is bling in size to 50,000 square
matter, it would not be prosecuted on which the client had written only ume of high-security storage capac- seeking more space. meters, including more storage
in the United States for this conduct the amount of money needed pay for ity in the region isn’t available. But Its recently opened Hong Kong space for precious metals. Brink’s
because it had no branches or of- the safari, approximately $37,000, demand for gold is clearly rising. vault can hold 1,000 tons of gold, and Malca-Amit have vaults there.
fices in the United States and be- prosecutors said. China’s gold demand in the third which would be worth more than The team behind the Singapore
cause of its understanding that it Wegelin sold its non-U.S. opera- quarter of 2012 was 176.8 tons—16% $54 billion. It is almost large enough FreePort, Euroasia Investments SA,
acted in accordance with, and not in tions to Swiss retail bank Raiffeisen of global demand and up 47.1% from to hold the official reserves of China, is planning an expansion into Bei-
violation of, Swiss law and that such in January 2011 in a bid to protect the same period three years ago, ac- which total 1,054 tons, according to jing, where the facility will mostly
conduct was common in the Swiss its assets from charges it had helped cording to the World Gold Council. World Gold Council data. store art for wealthy Chinese inves-
banking industry.” U.S. clients avoid paying taxes. Hong Kong’s demand totaled 6.9 Malca-Amit has gold-storage tors.
BUSINESS BRIEFS
RESOURCES month loss, $422.04 million, was from according to people familiar with the Street Journal earlier reported that the regarding the attractiveness of India
Bumi Resources Posts Loss losses on derivatives transactions. The matter. company was in acquisition talks. as an investment destination, despite
company posted a net profit of The company, id8 Group R2 Jessica E. Lessin and an economic slowdown and weak
Coal miner PT Bumi Resources $175.55 million for the first nine Studios Inc., was created by Shira Ovide consumer sentiment.
posted a $632.49 million loss for the months of 2011. entrepreneur Blake Krikorian in May It heralds a sign of optimism after
first three quarters of last year, Revenue fell 3.1% to $2.77 billion 2011. Mr. Krikorian will be joining the MATERIALS the previous chairman, Ratan Tata,
further complicating its controlling from $2.86 billion. Bumi Resources’ Redmond, Wash., software company Tata Sets Investment Plans cautioned last week in his farewell
shareholder’s attempt to juggle billions shares fell 4.8% to 590 Indonesian with a small team. As part of the deal, message to the Indian group’s
of dollars in debt and exit a messy rupiah (six cents) on Thursday in Microsoft also acquired some patents The Tata Group plans to invest employees that the difficult economic
corporate tie-up. Jakarta. The company’s stock dropped owned by the startup related to more than 450 billion rupees ($8.3 environment will likely continue for
Bumi Resources, a majority of 73% last year, hurt by lower global controlling electronic devices. billion) in India during the next two most of 2013 and prompt the
which is owned by the family of prices for thermal coal and a dispute The price of the deal couldn’t be years and broaden the conglomerate’s conglomerate to cut costs.
Indonesian tycoon Aburizal Bakrie, among Bumi PLC shareholders. learned. global expansion efforts, especially in Tata expanded globally during Mr.
must pay off more than $3 billion in I Made Sentana and The company, known as R2 Studios, the emerging markets of Asia, Africa Tata’s tenure, acquiring companies
debt by 2017. The family also is Edhi Pranasidhi has been working on technology and Latin America, new Chairman such as steelmaker Corus Group PLC.
embroiled in a battle with London related to distributing and displaying Cyrus Mistry said. Santanu Choudhury
shareholder Bumi PLC and is seeking TECHNOLOGY digital media on television sets, a new The investment will add to the 500
essentially to buy back the Indonesian Microsoft Deal Buoys Xbox battleground for technology giants. billion rupees spent by Tata companies
company’s coal assets for $1.2 billion. The Silicon Valley-based business also in India during the past three years, Online>>
Bumi Resources, Indonesia’s biggest Microsoft Corp. has acquired a talked to Google Inc. and Apple Inc. Mr. Mistry said. For more breaking news, go to
producer of thermal coal, late small home-entertainment technology about a possible deal, people familiar The plan comes as a stamp of WSJ.com/Business and follow
Wednesday said the bulk of the nine- startup to beef up its Xbox unit, with the matter have said. The Wall approval for local and foreign investors @wsjbusiness on Twitter.
BUSINESS & FINANCE
Goldman’s Rewards High Cost | Hurricane Sandy, like other disasters, took a heavy financial toll.
Beat the Tax Clock

Goldman Sachs Group Inc. At Goldman, Mr. Blankfein, Presi-
handed insiders including Chief Ex- dent and Chief Operating Officer
ecutive Lloyd Blankfein and his top Gary Cohn and Chief Financial Of-
lieutenants a total of $65 million in ficer David Viniar each received to-
restricted stock just hours before tal vesting of 66,065 shares worth
this year’s higher tax rates took ef- $8.4 million.
fect. Mr. Blankfein received 2011 com-
pensation valued at $16.2 million
By Liz Moyer, and Messrs. Cohn and Viniar each
Steven Russolillo received $15.8 million, according to
and Patrick McGee regulatory filings.
John Weinberg and Michael Ev-
The New York securities firm ans, vice chairmen, each also re-
gave 10 of its directors and execu- ceived a total of 66,065 shares, ac-
tives early vesting on 508,104 cording to Goldman’s disclosures
shares previously awarded as part this week.
of prior years’ compensation, ac- Others whose restricted shares
cording to a series of filings with were vested on Monday included
the Securities and Exchange Com- John Rogers, an executive vice pres- A worker removes the debris of a home destroyed by Hurricane Sandy in Union Beach, New Jersey.
mission late Monday. ident and chief of staff; Edith Coo-
Almost half the shares were per, executive vice president and World’s largest natural disasters by cost, from 2005-2012
withheld to satisfy the insiders’ tax global head of human capital man-
obligations, according to the filings. agement; Alan Cohen, executive vice Date Event Location Cost in billions Total Insured
Such vesting of previously president and global head of compli-
March 11, 2011 Earthquake and tsunami Japan $210
granted restricted shares typically ance; Gregory Palm, executive vice $35-40
takes place in January, when Gold- president and general counsel; and
man also pays out bonuses for the Sarah Smith, principal accounting Aug. 25-30, 2005 Hurricane Katrina U.S. $125
prior year. officer. $62.2
The early awards weren’t limited Two other members of Gold- $85
to the top officers, a Goldman man’s executive committee, Michael May 12. 2008 Earthquake China
$0.3
spokesman said. He declined to say Sherwood and Mark Schwartz,
how many people at Goldman re- didn’t have any shares vest on Dec. $50
Oct. 24-31, 2012 Hurricane Sandy U.S., Caribbean
ceived the early vesting or to elabo- 31. Mr. Sherwood is based in Lon- $25
rate on the timing of the move. don, while Mr. Schwartz rejoined
Goldman’s decision is the latest Goldman in June. $43
Aug. 1-Nov. 15, 2011 Floods and landslides Thailand
illustration of the lengths large U.S. Some 483 companies announced $10
companies have gone to shield their special dividends in December, com- Source: Munich Re Photo: Reuters Note: Figures are not inflation adjusted The Wall Street Journal
stakeholders from the higher taxes pared with 142 in the same month a
that loomed throughout the so- year ago, according to Howard Sil-
called fiscal cliff standoff at the end verblatt, senior index analyst at S&P
Munich Re Pegs Sandy’s Bill

of 2012. Congress on early Tuesday Dow Jones Indices.
morning passed legislation that in- All told, 1,056 special dividends
cludes the largest tax increases in were announced in 2012, Mr. Silver-
the past two decades. blatt said. That is up from 460 a
For Insurers at $25 Billion

Goldman’s move could shield its year earlier and the most since 1973,
executives from increased tax rates, according to Mr. Silverblatt.
which will rise as high as 39.6% in
2013 from 35% last year.
Goldman isn’t the only U.S. com- BY ULRIKE DAUER reinsurers paid $65 billion for claims mates for overall costs related to
pany taking action in response to caused by hurricanes, droughts, tor- Sandy are $50 billion, Munich Re
the higher taxes. Corporations an- FRANKFURT—Munich Re AG, the nadoes, earthquakes and other di- said.
nounced more special dividends last world’s largest reinsurance com- sasters in 2012. That figure is a little In November, the company esti-
month than in any other December pany, criticized the U.S. for insuffi- more than half the $119 billion in the mated its own bill for Sandy to be a
since at least 1955. cient natural-disaster defenses and previous year, when earthquakes in “mid-three-digit-million euros
Warehouse retailer Costco said better coastal and infrastruc- Japan and New Zealand and severe amount.” This assessment was based
Wholesale Corp., casino operator ture protection would help curb the floods in Thailand hit the sector on estimates for an insured industry
Las Vegas Sands Corp. and depart- higher insurance rates the industry hard and made 2011 one of the cost- loss at the upper end of forecasts of
ment store chain Dillard’s Inc. are will push for in areas affected by liest years on record. around $20 billion then available by
among the large U.S. companies an- last year’s heavy losses. Sandy alone cost insurers and re- risk-modeling agencies. Munich Re
nouncing accelerated or special divi- The German reinsurer said insurers $25 billion, Munich Re esti- hadn’t previously published its own
Bloomberg News
dends in late 2012. Thursday that global insurers and mated, at the upper end of the range assessment for the insured market
The tax on dividends, about 15% reinsurers will pay an estimated $25 of $20 billion to $25 billion that loss caused by Sandy.
in 2012 thanks to cuts that took billion for the widespread damage in peer Swiss Re AG issued in Decem- A spokesman said Thursday that
place under President George W. the U.S. caused by superstorm ber. It would be the third-costliest the company won’t update the esti-
Bush, will rise to as high as 20% in CEO Lloyd Blankfein received over Sandy, pegging the figure at the high event since 1980, after Hurricane Ka- mate for its own bill for Sandy until
2013. 66,000 shares in December. end of recent industry estimates. trina in 2005 at $62 billion and the it publishes 2012 earnings figures
“The heavy losses caused by Japan earthquake and tsunami in later this year.
weather-related natural catastro- 2011 at $35 billion to $40 billion. Analysts said Munich Re’s 2012
ADVERTISEMENT phes in the U.S.A. showed that Sandy made landfall Oct. 29 near profit guidance, which it had raised
The Mart
greater loss-prevention efforts are Atlantic City, N.J., on the U.S. East in November, wasn’t threatened by
needed,” Munich Re board member Coast, south of New York City, but the higher estimated loss.
Torsten Jeworrek said in a news re- losses extended over a vast area. “Their profit guidance is so cau-
lease. Protecting area such as New The worst losses were caused by a tious and is certainly based on all
AUCTIONS FINANCIAL SERVICES York from storm surges “would storm surge on the north side of the possible scenarios,” said Equinet an-
make economic sense and insurers storm, which extended along several alyst Philipp Haessler. “If the Sandy
Earn 12% return on your could also reflect the reduced expo- hundred miles of coastline from New claims estimate had been doubled,
investment! sure in their pricing.” Jersey to Massachusetts. the guidance would have been
Guaranteed!
Invest $10,000 to $1,000,000 and Reinsurers take on policies from “Sandy’s flood wave hit New York threatened, but not by a figure that’s
receive interest payments transmitted
to you monthly or annually.
primary insurers looking to spread with full force,” said Peter Hoeppe, €5 billion ($6.6 billion) higher.”
out their risks. In general, after
Full Details: who heads Munich Re’s Geo Risks The Munich Re spokesman also
Starley Roehl high-loss years, reinsurers are able Research. “Its coincidence with the declined to comment on expected
[email protected]
1-855-669-7426 to push for rate increases, but be- spring tide was a most exceptional rate increases in the U.S. ahead of

cause overall losses were moderate circumstance. But such aspects also the industry’s renewals releases in
in 2012, rates are expected to remain have to be borne in mind when as- early February.
TRAVEL largely stable when the annual con- sessing risks relating to” metropoli- Traditionally, reinsurance poli-
tracts come up for renewal this year, tan areas, Mr. Hoeppe said, adding cies for Europe, North America in-
reinsurers have said. that the losses “revealed a signifi- cluding Canada, and some parts of

But in areas hit by large claims cant degree of vulnerability, espe- Asia are renewed Jan. 1, and negoti-
last year, reinsurers hope to be able cially where infrastructure is con- ations for those contracts have just

to get higher rates from their cus- cerned.” finished. Policies covering Japan,
tomers, the primary insurers. In 2012, the U.S. was responsible Korea and India are renewed April 1;
In its natural-catastrophe statis- for most of the world-wide disaster and policies for some parts of the
tics for 2012 published Thursday, bill. Insured losses generally are U.S., Australia and Latin America are
Munich Re said global insurers and only a portion of total losses. Esti- renewed July 1.
MARKETS
Risks Seen in Mortgage-Bond Market After Rally

BY AL YOON data provider Trepp. The building record 1.69% in mid-December from
was completed in 1992 amid a glut Tamped Down 3.62% at the start of 2012.
After a surge in bonds backed by of office space in downtown Los An- Commercial-mortgage bonds re-
mortgages on commercial proper- geles, and its original owners strug- Yields on commercial-mortgage bonds are setting record lows, turned 10% last year, according to
ties, some investors are finding gled to attract tenants from the prompting some investors to re-evaluate the bonds’ risks. Barclays, roughly the same as invest-
cracks in the foundations. start. Lenders took over the building Yield on investment-grade commercial-mortgage bonds ment-grade corporate debt.
Investors piled into these bonds, in the mid-1990s, and at one point it 20% Yields on commercial-mortgage
which are made up of pools of loans was owned by real-estate investor bonds surged during the financial
linked to properties such as shop- Sam Zell. crisis amid fears that waves of loans
ping malls and hotels, because of In 2007, the building was offered 15 would go into default because bor-
the relatively high yields they of- as collateral for a $470 million loan. rowers couldn’t get refinancing. The
fered. In 2009, one of the biggest tenants, panic has since abated.
10
But that demand has sent prices a subprime-mortgage lender, de- Mr. Parikh is staying with bonds
Dec. 28
soaring, and yields tumbling to re- clared bankruptcy backed by multifamily properties.
1.831%
cord lows. As well, some investors Two California Plaza is particu- 5 Loans for these apartment proper-
remain worried that defaults on larly important because it is one of ties, which are still classified as
these loans remain at historically the biggest loans in the second-larg- commercial mortgages, are often
Weekly data
high rates. est commercial-mortgage bond ever 0 guaranteed by the federal govern-
“There are investors who have issued. 2008 '09 '10 '11 '12 ment, meaning they aren’t likely to
been lulled into a false sense of se- Despite the woes of some under- Source: Barclays The Wall Street Journal suffer steep losses.
curity,” believing that “they could lying properties, the value of this Other investors are looking for
buy anything and the price would bond has soared and its yield, which ways to give themselves a bigger
keep going up,” says John Kersch- moves in the opposite direction to cial-mortgage loans tied to these se- vider Commercial Mortgage Alert. cushion against losses.
ner, global head of securitized prod- price, tumbled to a record of 2.05% curities were at least 30 days delin- Richard Hill, a strategist at RBS Sreeni Prabhu, chief investment
ucts at Janus Capital Group. “There in early December and continues to quent, according to Trepp. Securities in Stamford, Conn., fore- officer at Angel Oak Capital, which
are a lot of bonds out there where trade near that level, according to Delinquency rates were below 1% in casts sales will rise to $65 billion in manages $1.4 billion, says he is
yields have moved too far, too fast. RBS Securities. October 2008. 2013, the highest since the record sticking to triple-A-rated debt that
The room for error now is almost Two California Plaza’s struggles “I don’t think the market is cor- high of $228 billion in 2007. will incur a loss only after 30% of
nil.” are emblematic of the problems that rectly pricing in those outcomes,” Mr. Hill says he made the predic- mortgages in the specific bond de-
Two California Plaza, a 54-story are likely to be reflected in debt says Sagar Parikh, a trader at $90 tion with a sense of “trepidation,” fault.
office building in downtown Los An- markets in coming months. billion bond-fund manager TCW saying that the market is suscepti- The bonds are often structured
geles, is an example of what is caus- Cautious investors are eyeing the Group. ble to “daunting macroeconomic and in tiers, with the bottom pieces take
ing investors some heartburn. health of other properties in the Nevertheless, investors are buy- geopolitical risks that continue to losses first.
Occupancy at the 1.3-million- bond, such as the Lewisohn building ing both older bonds, which were is- loom in the background.” The rally in commercial-mort-
square-foot tower has plummeted in at 119 West 40th St. in Manhattan sued when underwriting standards As demand has soared, yields on gage bonds has squeezed yields so
recent years, and owner MPG Office and 550 South Hope St. in Los Ange- were looser, as well as new ones. investment-grade commercial-mort- much that “we don’t feel you are
Trust lost the property to foreclo- les. Sales of such bonds rose 46% to $44 gage bonds that mature within three getting paid for the risk,” Mr.
sure this past October, according to In November, 9.71% of commer- billion in 2012, according data pro- to four years have plummeted to a Prabhu says.
Data provided by:
Advertisement INTERNATIONAL INVESTMENT FUNDS

NAV —%RETURN— NAV —%RETURN— NAV —%RETURN— NAV —%RETURN—
FUND NAME GF AT LB DATE CR NAV YTD 12-MO 2-YR FUND NAME GF AT LB DATE CR NAV YTD 12-MO 2-YR FUND NAME GF AT LB DATE CR NAV YTD 12-MO 2-YR FUND NAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
n ALEXANDRA INVESTMENT MANAGEMENT GH FUND S EUR OT OT CYM 12/14 EUR 140.48 5.2 5.8 2.2 Pictet-Asian Eq ExJpn-I USD OT OT LUX 01/03 USD 195.44 2.7 17.6 -1.3 MENA UCITS Fund OT OT IRL 12/20 USD 1037.29 11.8 11.1 -2.1
AlexandraConvertibleBondFundI,Ltd.(ClassA) OT OT VGB 08/31 USD 2155.22 NS NS NS GH FUND S GBP OT OT CYM 12/14 GBP NS.00 5.7 6.3 2.4 Pictet-Asian Eq ExJpn-P USD OT OT LUX 01/03 USD 181.43 2.7 16.7 -2.1 UAE Blue Chip Fund OT OT ARE 12/20 AED 5.10 18.0 15.9 0.5
GH Fund S USD OT OT CYM 12/14 USD NS.00 5.6 6.2 2.2 Pictet-Biotech-P USD OT EQ LUX 01/02 USD 369.95 3.1 30.3 10.0
GH Fund USD OT OT GGY 12/14 USD NS.00 4.6 5.1 1.1 Pictet-Conv. Bonds-P EUR OT OT LUX 01/02 EUR 97.49 1.3 7.7 -4.1
Hedge Investments OT OT GGY 07/20 USD NS.00 1.3 -2.9 2.5 Pictet-Digital Comm-P USD OT EQ LUX 01/02 USD 150.47 1.8 14.9 3.5
Pictet-Eastern Europe-P EUR EU EQ LUX 12/31 EUR 366.74 24.1 24.1 -4.9
Leverage GH USD OT OT GGY 12/14 USD NS.00 7.1 8.1 -0.1
Pictet-Emerging Markets-P USD GL EQ LUX 01/03 USD 542.11 2.7 13.7 -6.6
MultiAdv Arb CHF Hdg OT OT JEY 12/14 CHF NS.00 3.6 3.4 -0.3 Pictet-Eu Equities Sel-P EUR EU EQ LUX 01/02 EUR 499.49 2.0 23.6 4.6
MultiAdv Arb EUR Hdg OT OT JEY 12/14 EUR NS.00 3.9 3.8 0.5 Pictet-EUR Bonds-P EU BD LUX 01/02 EUR 460.90 -0.1 13.8 7.5
MultiAdv Arb GBP Hdg OT OT JEY 12/14 GBP NS.00 4.3 4.2 0.6 Pictet-EUR Bonds-Pdy EU BD LUX 01/02 EUR 305.83 -0.1 13.8 7.5
n BANC INTERNACIONAL D'ANDORRA. BANCA MORA.
MultiAdv Arb S EUR OT OT JEY 12/14 EUR 118.41 5.3 5.2 1.8 Pictet-EUR Corporate Bonds-P EU BD LUX 01/02 EUR 172.47 -0.2 14.1 6.2
Avgd. Meritxell 96, Andorra la Vella. Andorra. Ph. +376.884884 www.bibm.ad MultiAdv Arb S GBP OT OT JEY 12/14 GBP 124.60 5.7 5.6 2.0 Pictet-EUR Corporate Bonds-Pdy EU BD LUX 01/02 EUR 104.55 -0.2 14.1 6.2
Andfs. Anglaterra UK EQ AND 11/16 GBP 8.47 2.8 3.6 14.9
JEY
n YUKI MANAGEMENT & RESEARCH
Andfs. Borsa Global GL EQ AND 12/28 EUR 5.91 4.2 5.0 -5.7 MultiAdv Arb S USD OT OT 12/14 USD 135.34 5.6 5.5 1.9 Pictet-EUR High Yield-P EU BD LUX 01/02 EUR 199.67 0.6 26.2 8.1
Andfs. Emergents GL EQ AND 11/02 USD 14.77 -20.4 -19.2 -4.7 MultiAdv Arb USD OT OT JEY 12/14 USD NS.00 4.2 4.1 0.6 Pictet-EUR High Yield-Pdy EU BD LUX 01/02 EUR 91.54 0.6 26.2 8.1
Andfs. Espanya EU EQ AND 12/28 EUR 10.33 1.3 3.6 -5.1 Pictet-Europe Index-P EUR EU EQ LUX 01/02 EUR 123.69 2.0 20.5 4.6 n YMR-N Series
Andfs. Estats Units US EQ AND 12/28 USD 16.12 9.7 10.5 0.7
n HSBC Uni-folio Pictet-European Sust Eq-P EUR EU EQ LUX 01/02 EUR 159.46 1.7 16.9 4.0
Asian AdbantEdge EUR OT EQ JEY 12/14 EUR NS.00 -0.1 -0.4 -6.0 Pictet-Glo Emerging Debt-P USD GL BD LUX 01/02 USD 330.63 0.8 17.2 12.1 YMR-N Growth Fund JP EQ IRL 12/28 JPY 8678.00 12.9 15.0 -4.0
Andfs. Europa EU EQ AND 12/28 EUR 6.35 7.4 9.1 -7.0
Andfs. Franca EU EQ AND 12/28 EUR 9.12 15.8 18.1 -2.1 Asian AdvantEdge OT EQ JEY 12/14 USD NS.00 0.8 0.7 -5.3 Pictet-Glo Emerging Debt-Pdy USD GL BD LUX 01/02 USD 185.66 0.8 17.2 12.1
Emerg AdvantEdge OT EQ JEY 09/28 USD 151.22 3.4 -2.4 -5.5 Pictet-Greater China-P USD AS EQ LUX 01/03 USD 392.39 2.5 21.8 -1.6 n Yuki 77 Series
Andfs. Japo JP EQ AND 12/28 JPY 469.85 17.9 18.6 -2.7
Andfs. Plus Dollars US BA AND 10/22 USD 9.66 2.3 3.0 6.2 Emerg AdvantEdge EUR OT EQ JEY 09/28 EUR 82.99 2.8 -3.0 -5.9 Pictet-Indian Equities-P USD EA EQ LUX 01/03 USD 315.27 2.3 22.5 -14.3
Pictet-Japan Index-P JPY JP EQ LUX 01/03 JPY 8731.36 0.0 21.2 -1.0 Yuki 77 General JP EQ IRL 12/28 JPY 5268.00 13.4 15.0 -4.5
Andfs. RF Dolars US BD AND 12/28 USD 12.22 5.4 5.6 1.8 Europ AdvantEdge EUR OT EQ JEY 06/30 EUR 127.84 -3.4 -1.3 2.2
Andfs. RF Euros EU BD AND 12/28 EUR 11.56 4.8 4.9 2.9 Europ AdvantEdge USD OT EQ JEY 06/30 USD 135.07 2.0 4.3 5.1 Pictet-Japanese Eq Opp-P JPY JP EQ LUX 01/03 JPY 4742.64 0.0 21.6 1.8
Pictet-Japanese Eq Sel-I JPY JP EQ LUX 01/03 JPY 7900.03 0.0 21.6 -0.2 n Yuki Asia Umbrella Series
Andorfons EU BD AND 12/28 EUR 15.30 5.3 5.3 3.2 Real AdvantEdge EUR OT OT JEY 04/30 EUR 104.69 1.3 -9.5 -1.9
Andorfons Alternative Premium GL EQ AND 11/30 EUR 93.81 0.6 0.0 -2.8 Pictet-Japanese Eq Sel-P JPY JP EQ LUX 01/03 JPY 7519.51 0.0 20.8 -0.8 Yuki Rebounding Gro Fd JP EQ IRL 12/28 JPY 9157.00 12.9 14.3 NS
Real AdvantEdge USD OT OT JEY 04/30 USD 105.31 1.5 -8.8 -1.7
Andorfons Mix 30 EU BA AND 12/28 EUR 9.82 5.4 5.7 -0.1 Pictet-Pac (ExJpn) Idx-P USD AS EQ LUX 01/03 USD 351.37 2.6 27.9 5.4
Trading AdvantEdge OT OT GGY 12/14 USD 144.17 -4.0 -4.1 -1.9
Andorfons Mix 60 EU BA AND 12/19 EUR 8.96 4.4 7.1 -2.5 Pictet-Piclife-P CHF OT OT LUX 01/02 CHF 842.54 0.8 9.6 3.3 n Yuki Chugoku Series
Trading AdvantEdge EUR OT OT GGY 12/14 EUR 130.33 -4.1 -4.2 -1.8 Pictet-Premium Brands-P EUR OT EQ LUX 01/02 EUR 106.90 1.9 22.5 6.9
Trading AdvantEdge GBP OT OT GGY 12/14 GBP 139.15 -3.7 -3.8 -1.7 Pictet-Russian Equities-P USD EE EQ LUX 01/02 USD 67.51 2.7 19.5 -9.0 Yuki Chugoku Jpn Gen JP EQ IRL 12/28 JPY 6198.00 14.7 16.4 -3.9
n CG Portfolio Fund Ltd
NAV OT OT CYM 12/14 GBP 25249.51 6.6 6.7 8.8 Pictet-Security-P USD GL EQ LUX 01/02 USD 135.22 1.9 18.4 3.4 Yuki Chugoku JpnLowP JP EQ IRL 12/28 JPY 6417.00 2.7 3.6 -9.4
n HSBC Trinkaus Investment Managers SA Pictet-Short-T Money Mkt CHF-P CH MM LUX 01/02 CHF 124.29 0.0 0.0 0.1
n CHARTERED ASSET MANAGEMENT PTE LTD - TEL NO: 65-6835-8866 E-Mail: [email protected] Pictet-Short-T Money Mkt CHF-P dy CH MM LUX 01/02 CHF 91.22 0.0 0.0 0.1 n Yuki Hokuyo Japan Series
Fax No: 65-6835 8865, Website: www.cam.com.sg, Email: [email protected] Telephone: 352 - 47 18471 Pictet-Short-T Money Mkt EUR-P OT OT LUX 01/02 EUR 137.79 0.0 0.2 0.5 Yuki Hokuyo Jpn Gen JP EQ IRL 12/28 JPY 4116.00 15.3 16.6 -2.3
CAM-GTF Limited OT OT MUS 12/28 USD 401993.01 30.9 30.2 -0.8 HSBC Trinkaus Golden Opportunities OT OT LUX 01/02 USD 134.45 4.0 6.7 -2.4 Pictet-Short-T Money Mkt EUR-Pdy OT OT LUX 01/02 EUR 95.60 0.0 0.2 0.5 Yuki Hokuyo Jpn Inc JP EQ IRL 12/28 JPY 4722.00 13.5 14.7 -3.3
Prosperity Return Fund A JP BD LUX 12/17 JPY 9464.94 10.5 9.8 -0.3 Pictet-Short-T Money Mkt USD-P OT OT LUX 01/02 USD 132.07 0.0 0.4 0.3 Yuki Hokuyo Jpn Sm Cap JP EQ IRL 12/28 JPY 5215.00 25.8 27.8 3.1
n Citadele Prosperity Return Fund B OT OT LUX 12/17 JPY 8447.62 22.7 19.8 -0.3 Pictet-Short-T Money Mkt USD-P dy OT OT LUX 01/02 USD 84.33 0.0 0.4 0.3
Republikas square 2a, Riga, LV-1522, Latvia Prosperity Return Fund C OT OT LUX 12/17 USD 90.40 13.7 11.4 0.5 Pictet-Small Cap Europe-P EUR EU EQ LUX 01/02 EUR 638.26 1.7 29.7 3.4 n Yuki Mizuho Series
Citadele Eastern Europ Bal EU BD LVA 01/02 EUR 16.23 0.2 16.3 1.0 Prosperity Return Fund D OT OT LUX 12/17 EUR 134.01 26.6 27.8 12.6 Pictet-Sov. ST Money Mkt-P EUR OT OT LUX 01/02 EUR 102.87 0.0 -0.1 0.2 Yuki Mizuho Gen Jpn III JP EQ IRL 12/28 JPY 3219.00 -3.9 -2.8 -11.0
Citadele Eastern Europ Bd EU BD LVA 01/02 USD 19.85 0.2 15.3 7.1 Renaissance Hgh Grade Bd A JP BD LUX 12/17 JPY 10404.61 18.1 17.8 2.9 Pictet-Sov. ST Money Mkt-P USD OT OT LUX 01/02 USD 101.94 0.0 0.2 0.1 Yuki Mizuho Jpn Dyn Gro JP EQ IRL 12/28 JPY 3750.00 12.5 14.1 -7.3
Citadele Russian Eq EE EQ LVA 01/02 USD 23.01 2.7 20.0 -6.6 Renaissance Hgh Grade Bd B JP BD LUX 12/17 JPY 9198.54 29.0 26.5 2.6 Pictet-Sov. ST Money Mkt-Pdy EUR OT OT LUX 01/02 EUR 99.95 0.0 -0.1 0.2 Yuki Mizuho Jpn Exc 100 JP EQ IRL 12/28 JPY 6159.00 15.6 17.0 -1.8
Renaissance Hgh Grade Bd C JP BD LUX 12/17 USD 97.84 19.5 17.7 3.3 Pictet-Sov. ST Money Mkt-Pdy USD OT OT LUX 01/02 USD 99.95 0.0 0.2 0.1 Yuki Mizuho Jpn Gen JP EQ IRL 12/28 JPY 7688.00 11.0 12.5 -5.3
n DJE INVESTMENT S.A. Renaissance Hgh Grade Bd D JP BD LUX 12/17 EUR 107.96 16.7 18.5 3.4 Pictet-Timber-P USD GL EQ LUX 01/02 USD 134.82 2.4 32.7 6.5 Yuki Mizuho Jpn Gro JP EQ IRL 12/28 JPY 5352.00 9.3 11.2 -7.5
internet: www.dje.lu email: [email protected] phone:+00 352 269 2522 0 fax:+00 352 269 25252 Pictet-USA Index-P USD US EQ LUX 01/02 USD 122.99 2.6 17.7 9.2 Yuki Mizuho Jpn Inc JP EQ IRL 12/28 JPY 6955.00 12.5 13.8 -3.8
DJE Real Estate P OT OT LUX 01/03 EUR 5.13 0.2 -5.0 -8.1 Pictet-USD Government Bonds-P US BD LUX 01/02 USD 591.15 -0.4 1.9 5.1 Yuki Mizuho Jpn Lg Cap JP EQ IRL 12/28 JPY 4386.00 13.0 14.2 -6.1
DJE-Absolut P OT OT LUX 01/03 EUR 238.58 1.3 17.6 1.1 Pictet-USD Government Bonds-Pdy US BD LUX 01/02 USD 388.35 -0.4 1.9 5.1 Yuki Mizuho Jpn LowP JP EQ IRL 12/28 JPY 10167.00 9.1 9.7 -5.4
DJE-Alpha Glbl P OT OT LUX 01/03 EUR 175.07 1.3 10.2 -5.5 Pictet-Water-P EUR OT OT LUX 01/02 EUR 171.83 2.8 16.8 6.4 Yuki Mizuho Jpn PGth JP EQ IRL 12/28 JPY 6257.00 11.2 12.8 -7.5
DJE-Div& Substanz P EU EQ LUX 01/03 EUR 256.65 0.4 14.0 1.1 Pictet-World Gvt Bonds-P USD OT OT LUX 01/02 USD 186.01 -0.4 1.0 3.9 Yuki Mizuho Jpn SmCp JP EQ IRL 12/28 JPY 6820.00 19.2 20.5 -0.7
DJE-Gold&Resourc P OT EQ LUX 01/03 EUR 175.36 1.7 -6.4 -15.7 Pictet-World Gvt Bonds-Pdy USD OT OT LUX 01/02 USD 140.22 -0.4 1.0 3.9 Yuki Mizuho Jpn Val Sel AS EQ IRL 12/28 JPY 5090.00 18.0 19.5 -4.5
DJE-Renten Glbl P EU BD LUX 01/03 EUR 151.35 0.0 9.3 4.8
n POLAR CAPITAL PARTNERS LIMITED
LuxPro-Dragon I AS EQ LUX 07/20 EUR 144.57 -8.5 5.0 7.6 n MP ASSET MANAGEMENT INC.
LuxPro-Dragon P AS EQ LUX 07/20 EUR 140.29 -8.8 4.4 7.0 International Fund Managers (Ireland) Limited PH - 353 1 670 660 Fax - 353 1 670 1185
Tel: + 386 1 587 47 77 Global Technology OT EQ IRL 12/31 USD 17.27 11.3 11.3 -1.7
LuxTopic-Aktien Europa EU EQ LUX 01/03 EUR 19.74 -0.4 14.9 3.3 MP-BALKAN.SI EE EQ SVN 08/12 EUR 19.29 -1.9 -8.4 -10.9
LuxTopic-Pacific OT OT LUX 01/03 EUR 21.45 0.0 23.3 -0.3 Japan Fund USD JP EQ IRL 12/28 USD 17.84 4.4 7.1 -1.4
MP-TURKEY.SI OT OT SVN 01/02 EUR 49.06 0.7 58.5 3.5
Polar Healthcare Class I USD OT EQ IRL 01/02 USD 18.51 1.7 27.3 17.5 n OTHER FUNDS
Polar Healthcare Class R USD OT EQ IRL 01/02 USD 18.23 1.7 26.8 16.9 For information about these funds, please contact us on Tel: +44 (0) 207 842 9694/9633
n HERMITAGE CAPITAL MANAGEMENT LTD. Medinvest Plc Dublin OT EQ IRL 09/30 USD NS.00 NS 1.3 -4.4
Tel: +7501 258 3160 www.hermitagefund.com n Hemisphere Management (Ireland) Limited
The Hermitage Fund GL EQ JEY 03/12 USD 963.12 4.5 105.6 -23.2
Discovery USD A GL OT CYM 12/31 USD 101.35 NS NS NS n WINTON CAPITAL MANAGEMENT LTD
Elbrus USD A OT OT CYM 10/31 USD 10.48 NS NS NS Tel: +44 (0)20 7610 5350 Fax: +44 (0)20 7610 5301
n HORSEMAN CAPITAL MANAGEMENT LTD. Winton Evolution EUR Cls H GL OT CYM 11/30 EUR NS.00 -9.6 -7.2 -1.5
Europn Conviction USD B EU EQ CYM 12/07 USD 155.30 6.6 5.6 6.7
T: +44(0)20 7838 7580, F: +44(0) 20 7838 7590, www.horsemancapital.com Europn Forager USD B EU EQ CYM 11/30 USD 278.27 10.6 10.4 7.4 Winton Evolution GBP Cls G GL OT CYM 11/30 GBP NS.00 -9.3 -6.8 -1.5
Horseman EurSelLtd EUR EU EQ GBR 11/30 EUR 252.32 26.7 23.8 8.2
GBR
n MERIDEN GROUP Latin America USD A GL EQ CYM 06/30 USD NS.00 NS NS NS Winton Evolution USD Cls F GL OT CYM 11/30 USD NS.00 -9.5 -7.1 -1.6
Horseman EurSelLtd USD EU EQ 11/30 USD 252.32 17.5 15.0 5.0 Paragon Limited USD A EU EQ CYM 12/31 USD NS.00 12.7 12.7 14.2 VGB
Tel: + 376 741 175 Fax: + 376 741 183 Email: [email protected] Winton Futures EUR Cls C GL OT 11/30 EUR 228.05 -4.9 -3.3 2.6
Horseman Glbl Ltd EUR GL EQ CYM 11/30 USD 440.47 16.1 16.9 4.9 UK Fund USD A OT OT CYM 04/13 USD 157.94 1.8 NS NS
Antanta Combined Fund EE EQ AND 12/28 USD 262.59 -14.5 -13.8 -22.3 Winton Futures GBP Cls D GL OT VGB 11/30 GBP 247.25 -4.6 -3.0 2.6
Horseman Glbl Ltd USD GL EQ CYM 11/30 USD 440.47 16.1 16.9 4.9 VGB
Antanta MidCap Fund EE EQ AND 12/28 USD 398.87 -18.5 -15.6 -32.6 Winton Futures JPY Cls E GL OT 11/30 JPY 15834.65 -5.4 -4.0 1.7
n PT CIPTADANA ASSET MANAGEMENT VGB
n HSBC ALTERNATIVE INVESTMENTS LIMITED Meriden Opps Fund GL OT AND 12/26 EUR 25.35 -11.3 -11.4 -24.4 Winton Futures USD Cls B GL OT 11/30 USD 809.62 -4.8 -3.3 2.4
Meriden Protective Div GL EQ AND 11/24 EUR NS.00 -2.8 NS NS
Tel: +6221 25574 883 Fax: +6221 25574 893 Website: www.ciptadana-asset.com
T +44 20 7860 3074 F + 44 20 7860 3174 www.hail.hsbc.com Indonesian Grth Fund GL EQ BMU 12/27 USD 179.22 -0.4 -1.6 0.8
INDICES
HSBC ALTERNATIVE STRATEGY FUND
Special Opp EUR OT OT GGY 12/14 EUR NS.00 16.5 17.5 6.2
Special Opp Inst EUR OT OT GGY 03/31 EUR 88.51 0.7 -0.3 13.3
Special Opp Inst USD OT OT GGY 12/14 USD NS.00 17.8 19.0 7.2
Special Opp USD OT OT GGY 12/14 USD NS.00 17.0 18.1 6.5 NAV ——————%RETURN ——————
FUND NAME GF DATE CR NAV 1-WK 1-MO 1-Q 1-YR 2-YR
n HSBC Portfolio Selection Fund
GH Fund CHF Hdg OT OT GGY 12/14 CHF NS.00 3.7 4.1 0.0
GH Fund EUR Hdg (Non-V) OT OT GGY 12/14 EUR 127.83 4.1 4.5 NS n Pictet Funds (Europe) SA, ROUTE DES ACACIAS 60, CH-1211 GENEVA 73 n THE NATIONAL INVESTOR n ARIX ABSOLUTE RETURN INVESTABLE INDEX
GH Fund GBP Hdg OT OT GGY 12/14 GBP NS.00 4.6 5.1 1.1 PO Box 47435, Abu Dhabi, UAE Web:www.tni.ae Feri Institutional Advisors, www.feri.de
Tel: + 41 (58) 323 3000 Web: www.pictetfunds.com ARIX Composite Gross USD OT OT GBR 12/31.00 USD1474.27 4.8 4.8 0.0
GH Fund Inst USD OT OT GGY 12/14 USD NS.00 5.1 5.7 1.7 Pictet-Agriculture-P EUR OT OT LUX 01/02 EUR 150.84 2.6 16.3 -1.3 MENA Special Sits Fund OT OT BMU 11/29 USD 1035.69 5.0 5.8 -3.8
Data as shown is for information purposes only. No offer is being made by Morningstar, Ltd. or this publication. Funds shown aren’t registered with the U.S. Securities and Exchange Commission and aren’t available for sale to United States citizens and/or residents
except as noted. Prices are in local currencies. All performance figures are calculated using the most recent prices available. 12-month and 2-year returns may be calculated over 11- and 23-month periods pending receipt and publication of the last month end price.
For information about listing your funds, please contact: Lauren Berkemeyer tel: +44 20 7572 2102; email: [email protected]
MARKETS
Weak Demand Turns Fed Pours Ice Water

Tables on Potash Firms On U.S. Stock Rally
BY NINA BAINS getting the message that the Federal
AND SARA SJOLIN Reserve was going to print money
BY ALISTAIR MACDONALD until the end of time,” Mr. Flynn
AND BIMAN MUKHERJI Closed Market Euphoria over the U.S. budget said.
deal began to fade, and doubts Oil for February delivery settled
The world’s biggest potash pro- Potash production, concentrated in the hands of a few large suppliers, emerged about when the Federal down 20 cents, or 0.2%, at $92.92 a
ducers bet for years on growing de- is outpacing demand. Reserve might end its bond-buying barrel on the New York Mercantile
mand for fertilizer. Now they find Potash supplier market share Potash demand and supply* program, leaving U.S. stocks with Exchange.
themselves at the mercy of small their first loss of the year. Gold for February delivery had
farmers like Virender Kumar Rai. 100 million metric tons “We had the rally after the fis- already settled down $14.20, or
On his patch of land in eastern Estimate
cal-cliff deal and now there’s the 0.8%, at $1,674.60 a troy ounce on
India, Mr. Kumar Rai is switching 80 story of stepping back Comex when the minutes were re-
from potash to cheaper nutrients, BPC Canpotex MARKET from that and working leased. The futures continued to
like urea, for his crops. “Urea suits 32% 34% 60 REPORT out what will happen slide, falling 1.3% in late trade.
me fine now,” he says. when we get back to In Europe, the benchmark Stoxx
For a decade through 2009, the 40 discussing it again in February and 600 index rose 0.5% to 286.83. The
price of potash increased by around what will happen with the debt ceil- U.K.’s FTSE 100 index gained 0.3% to
five times on the expectation that Other 20 ing,” said Victoria Clarke, economist 6047.34, Germany’s DAX retreated
demand for the fertilizer ingredient 34% at Investec Securities. 0.3% to 7756.44 and France’s
would soar as populations grew and 0 The Dow Jones Industrial Aver- CAC-40 shed 0.3% to 3721.17.
diets improved in markets like '12 '14 '16 '18 '20 age declined 21.19 points, or 0.2%, to Swiss stocks, which reopened for
China and India. Large producers Sources: BMO Capital Markets (supply *Supply includes BHP Jansen mine 13391.36. The Standard & Poor’s trading Thursday, benefited from
expanded mines. By 2015, Potash and demand); Scotiabank (market share) The Wall Street Journal 500-stock index lost 3.05 points, or the U.S. budget news and rallied to
Corp. of Saskatchewan Inc., the 0.2%, to 1459.37, and the Nasdaq catch up with other markets’ recent
world’s second-largest producer by Composite Index pulled back 11.70 gains. The Swiss Market Index
volume behind Russia’s Uralkali dia’s eastern state of Bihar, says he American suppliers, said it reached points, or 0.4%, to 3100.57. jumped 2.9% to 7020.46.
JSC, will have doubled its capacity now pays 2½ times more for a bag a new supply deal with China’s European stock markets ended Munich Re, the world’s largest
from 2003 levels. of potash than he did a year ago. Sinofert Holdings Ltd. for the first with modest moves after Wednes- reinsurer, lost 0.7% as it warned
They were joined by a group of The falling demand has saddled half of 2013 for $70 a metric ton day’s global rally. global insurers and reinsurers will
small startups, along with giants like the industry with overcapacity. BMO less than the last contract price es- Prices fell for longer-dated Trea- likely pay $25 billion for claims re-
Australia’s BHP Billiton Ltd., that Capital Markets predicts that even if tablished in March 2012. sury debt as investors sold in related to U.S. superstorm Sandy. The
piled into the industry. BHP initially no mines get built or expanded, ca- This price, which is about a 15% sponse to news that at the Fed’s De- figure is at the high end of recent
tried to buy its way in by acquiring pacity will be about a fifth greater drop, will provide a benchmark for cember rate-setting meeting, several industry estimates.
Potash Corp. When the Canadian gov- than demand in three years. other contracts, including with In- policy makers pushed to end the BP rose 2.4%. After the close of
ernment blocked the move in 2010, it Prices have tumbled. Potash dian buyers who say they also are bank’s bond-buying program before European trading, the U.S. Depart-
pushed to build its own mine in Sas- shipped out of Vancouver, British demanding sharply lower prices. the end of the year. The 10-year ment of Justice said offshore driller
katchewan, home to around half of Columbia, is selling at around $425 Executives at major potash pro- note fell 17/32 to 97 18/32, boosting Transocean Ltd. will pay $1.4 billion
the world’s potash reserves. a metric ton, less than half its peak ducers say they have seen such the yield to 1.899%. to settle all U.S. federal civil and
Since 2002, global potash capac- in 2009, according to Scotiabank. troughs before, and that the long- The dollar strengthened and criminal claims relating to the 2010
ity has risen by around 30% to A handful of companies account term fundamentals are attractive. commodity prices weakened after Deepwater Horizon accident in the
about 64 million metric tons a year, for 66% of the world’s potash pro- Amid the uncertainty, BHP Billi- minutes of the meeting were re- Gulf of Mexico..
according to Bank of Nova Scotia. duction, and they sell most of that ton hasn’t given a final greenlight leased Thursday. The bond pur- Next rose 2.7%. The U.K.-based
But demand in 2012 is expected to through two international market- for its $14 billion Jansen mine in chases have stoked demand among retailer raised its guidance for its
be 9% lower than its peak in 2007. ing groups. That allows the industry Saskatchewan. Most analysts are investors for raw materials by rais- full-year profit because margins
The financial crisis sent farmers to function essentially like a cartel. betting it won’t proceed. A spokes- ing worries that the Fed’s buying were better than expected.
looking for cheaper alternatives. Still, the group hasn’t been able woman for BHP said engineering would undermine the value of the In U.S. trading, General Motors
Meanwhile, much of the emerging- to do much about recent price continues, ahead of a board decision currency over time. gained 2.1% after it reported that
market demand never materialized. drops. The producers have scram- after June. The euro, which was weakening car and light-truck sales rose from a
In India, demand has fallen amid bled to reduce output. Potash Corp. At the other end of the scale, even before the Fed news emerged, year earlier.
rising prices. The government re- has temporarily closed four of its startups are struggling to raise capi- was at $1.3064 in late afternoon in Hormel Foods agreed to buy the
duced subsidies of the nutrient two Canadian mines. tal. In December, Potash Ridge Corp. New York. Late on Wednesday, it Skippy peanut butter business from
years ago, while a 30% depreciation Uralkali said it would use only raised 20 million Canadian dollars was at $1.3185. Unilever for about $700 million.
of the rupee since 2008 has made 50% of its capacity for the first ($20.1 million) from its initial public The oil market was “blindsided” Hormel rose 3.9%, and the U.S.-
imported potash more expensive. quarter of 2013. That compares to offering, about half of the amount by the news, sending Nymex futures listed shares of Unilever declined
Potash is a compound of potas- 70% in the first quarter of last year originally targeted. into negative territory, said Phil 0.8%.
sium, which with nitrogen and phos- and almost 100% the year before. —Ben Dummett and Flynn, an analyst with the Price Fu- —Owen Fletcher and Alexandra
phorous is essential for plant life. On Monday, Canpotex Ltd., which Robb M. Stewart tures Group, a brokerage. “We were Scaggs contributed to this article.
Mr. Kumar Rai, the farmer in In- sells potash for the largest North contributed to this article.
Fund Scorecard
Turkish Bank Bonds Lure Investors EUR High Yield Bond

Funds that invest in higher yielding securities denominated/hedged in European
currencies 40% of assets in securities with a credit quality equivalent to BB, or lower.
Ranked on % total return (dividends reinvested) in Euros for one year ending January
Continued from page 19 Mr. Brewin said the yields on the jian and Goksenin Karagoz wrote in
03, 2013
months. bonds, which hover in the range of a Dec. 5 report. “They now rely on
Such a move would further stoke 4% to 6% for 10-year maturities, are external sources much more heavily Leading 10 Performers
demand for both Turkish govern- “generous” for investment-grade than do banking systems in most FUND FUND LEGAL % Return in $US **
RATING * NAME FUND MGM'T CO. CURR. BASE YTD 1-YR 2-YR 5-YR
ment and corporate bonds, analysts debt. emerging markets.”
NS SICAV Cofibol EURLUX 39.84 40.44 11.04 7.06
and investors said. Many investors To be sure, some analysts warn Turkey’s banking regulators have
PlaceuroEuroHighYieldDist
started to pile into the country’s that the sums pouring in from tightened restrictions on lending,
debt market ahead of the Fitch up- global investors pose a threat to partly to avert a repeat of the coun- NS Schelcher Schelcher Prince EURFRA 0.93 32.74 11.70 7.14
grade. Money managers poured Turkey’s banking system. Some $19 try’s financial crisis in 2001, when Prince Haut Rendement I Gestion
some $600 million into Turkey’s for- billion of dollar- and euro-denomi- an accumulation of bad loans wiped NS ING (L) Eur ING TFI S.A. PLNPOL 2.68 30.38 4.34 NS
eign- and local-currency-denominated debt comes due this year, ac- out half of Turkey’s banks, and sur- Spólek Dyw A
nated debt markets in October, the cording to BGC, a New York broker- viving financial institutions required NS HI-High Helaba Invest KAG EURDEU 0.33 30.23 12.23 11.06
biggest monthly inflow since at age. a $50 billion government bailout. Yield-Fonds mbh
least April 2004, when data pro- If investors pull back from risky Central-bank officials forecast NS DWS Euro DWS Investment JPYLUX 0.74 29.75 10.36 NS
vider EPFR Global started keeping assets, the country’s banks could that the sector will boost lending High Yield Bd MF JPY S.A.
records. have trouble refinancing that debt, 15% this year, down from a peak of NS UBS (Lux) BF UBS Fund EURLUX 0.52 29.54 10.68 10.79
With the upgrade, the bonds are analysts said. 39%, in annualized terms, in August Euro High Yield P-dist Management (Luxembourg) S.A.
“on the radar screen of a lot of po- Turkey’s banks are relying on in- 2011.
NS AB SICAV AllianceBernstein EURLUX 0.37 29.15 11.17 NS
tential investors who didn’t see ternational debt markets to fund a For now, rising foreign investor
Turkish banks before,” said Jeremy rapid increase in lending. The banks’ appetite for Turkish bank debt is al- Euro High Yield A (Luxembourg) S.à r.l.
Brewin, head of emerging-market loan-to-deposit ratio has climbed to lowing the banks to shore up their NS Switzerland Hauck Aufhäuser EURLUX 0.38 28.61 5.69 NS
investments at Aviva Investors in 100% from 40% over the past de- balance sheets and continue to in- Inv - Fixed Inc H/Y HAIG Inv Gesellschaft S.A.
London. Aviva’s $5 billion emerging- cade, meaning the banks now lend crease lending at the same time. NS Danske Danske Invest EURDNK 0.53 28.21 NS NS
market debt portfolio includes Turk- more than they have on deposit, ac- “The banks are expanding credit Invest Euro HY Bonds Acc
ish bank bonds. Meanwhile, as the cording to Standard & Poor’s. in a very positive way,” said Ersin NS Ålandsbanken Ålandsbanken EURFIN 0.29 28.16 4.75 9.77
world’s central banks keep pumping “The Turkish banking system has Ozince, chairman of Turkiye Is Euro High Yield A Rahastoyhtiö Oy
money into financial markets, keep- increasingly resorted to foreign Bankasi. “That’s why the banking NOTE: Changes in currency rates will affect performance and rankings. Source: Morningstar, Ltd
ing interest rates low, investors are funding as the growth in loans was sector is going abroad: to raise long- KEY: ** 2YR and 5YR performance is annualized 1 Oliver’s Yard, 55-71 City Road
NA-not available due to incomplete data; London EC1Y 1HQ United Kingdom
searching for yield and turning to unmatched by deposit growth,” S&P term debt that doesn’t exist in Tur- NS-fund not in existence for entire period www.morningstar.co.uk; Email: [email protected]
debt from emerging markets. banking analysts Magar Kouyoumd- key and bring it back home.” Phone: +44 (0)203 107 0038; Fax: +44 (0)203 107 0001
GLOBAL MARKETS LINEUP

Major stock market indexes Stock indexes from around the world, grouped by region. Shown in local-currency terms.
PREVIOUS SESSION PERFORMANCE PREVIOUS SESSION PERFORMANCE
Region/Country Index Close Net change Percentage change Yr.-to-date 52-wk. Region/Country Index Close Net change Percentage change Yr.-to-date 52-wk.
EUROPE Stoxx Europe 600 286.83 1.50 0.53% 2.6% 14.9% Spain IBEX 35 8403.4 -44.20 -0.52% 2.9 -2.1
Stoxx Europe 50 2640.37 18.59 0.71 2.4 9.2 Sweden OMX Stockholm 351.74 0.22 0.06% 2.3 12.0
Euro Zone Euro Stoxx 267.19 -0.40 -0.15% 2.4 16.4 Switzerland SMI 7020.46 198.02 2.90 2.9 16.5
Euro Stoxx 50 2701.22 -10.03 -0.37 2.5 15.0 Turkey ISE National 100 80033.33 391.25 0.49 2.3 55.3
Austria ATX 2486.88 10.64 0.43 3.6 28.3 U.K. FTSE 100 6047.34 19.97 0.33 2.5 6.7
Belgium Bel-20 2516.85 1.58 0.06 1.7 18.7 ASIA-PACIFIC DJ Asia-Pacific 134.93 0.32 0.24 1.3 12.1
Czech Republic PX 1063.0 -2.97 -0.28 2.3 14.6 Australia SPX/ASX 200 4740.70 34.80 0.74 2.0 14.4
Denmark OMX Copenhagen 463.83 1.87 0.41 2.5 26.8 China CBN 600 20794.07 Closed ... 9.1
Finland OMX Helsinki 6049.65 43.56 0.73 4.3 9.7 Hong Kong Hang Seng 23398.60 86.62 0.37 3.3 24.4
France CAC-40 3721.17 -12.76 -0.34 2.2 16.5 India Sensex 19764.78 50.54 0.26 1.7 24.6
Germany DAX 7756.44 -22.34 -0.29 1.9 26.9 Japan Nikkei Stock Average 10395.18 Closed 22.9 22.9
Hungary BUX 18626.78 139.27 0.75 2.5 12.4 Singapore Straits Times 3224.80 23.06 0.72 1.8 18.9
Ireland ISEQ 3478.41 22.21 0.64 2.4 19.6 South Korea Kospi 2019.41 -11.69 -0.58 1.1 8.4
Italy FTSE MIB 16909.83 16.44 0.10 3.9 10.3 AMERICAS DJ Americas 379.96 -0.39 -0.10 2.4 13.4
Netherlands AEX 350.74 0.53 0.15 2.3 11.5 Brazil Bovespa 63232.18 682.08 1.09 3.7 6.5
Norway All-Shares 502.36 0.89 0.18 2.4 11.9 Mexico IPC 44457.15 152.98 0.35 1.7 18.9
Poland WIG 48222.72 114.83 0.24 1.6 26.3 Note: Americas index data are as of 3:00 p.m. ET. Sources: SIX Financial Information; WSJ Market Data Group
Portugal PSI 20 5867.87 55.77 0.96 3.8 4.9
Russia RTSI 1526.98 Closed 10.5 10.5
Dow Jones Indexes MSCI indexes

Price-to- Price-to-
Dividend earnings PERFORMANCE (euros) PERFORMANCE (U.S.dollars) Dividend earnings PERFORMANCE (euros) PERFORMANCE (U.S.dollars) Developed and emerging-market regional and country indexes
yield* ratio* Dows Jones Index Last Daily 52-wk. Last Daily 52-wk. yield* ratio* Dows Jones Index Last Daily 52-wk. Last Daily 52-wk. from MSCI Barra as of January 03, 2013
2.48% 17 Global TSM 2720.54 -0.08% 14.6% Turkey Titans 20 -c 744.90 1.51% 65.0% 997.87 0.63% 59.7% Price-to- LOCAL-CURRENCY
2.43 21 Global Dow 1469.00 1.07% 9.4% 2043.10 -0.03 12.0 5.97% 14 Global Select Div -d 199.50 0.83 9.1 223.59 -0.26 11.6 Dividend earnings PERFORMANCE
yield ratio Morgan Stanley Index Last Daily YTD 52-wk.
2.41 15 Global Titans 50 203.70 0.81 10.1 199.22 -0.29 12.7 5.70 14 Asia/Pacific Select Div -d 330.76 0.17 18.2
2.80% 14 ALL COUNTRY (AC) WORLD* 347.09 -2.10% 2.2% 15.9%
2.94 18 Europe TSM 2786.98 -0.55 19.0 4.27 14 U.S. Select Dividend -d 420.36 -0.10 8.7
2.80 14 World (Developed Markets) 1,367.38 -2.11 2.2 15.6
2.49 18 Developed Markets TSM 2667.55 -0.15 14.6 1.96 16 Islamic Market 2349.25 -0.03 11.7
2.60 15 World ex-EMU 166.85 -1.99 2.0 14.9
2.49 12 Emerging Markets TSM 4359.45 0.48 15.0 2.06 15 Islamic Market 100 2246.70 0.94 8.8 2517.91 -0.16 11.4
2.70 15 World ex-UK 1,367.67 -2.08 2.1 15.9
3.03 14 Africa 50 925.20 1.34 18.4 768.99 0.23 21.2 Islamic Turkey -c 1892.40 0.95 42.5 4351.95 0.07 37.9
3.40 14 EAFE 1,631.65 -1.69 1.7 15.5
3.35 9 BRIC 50 441.90 1.86 5.1 551.75 0.75 7.6 2.67 17 Sustainability 978.90 0.83 11.2 1082.27 -0.27 13.8
2.70 12 Emerging Markets (EM) 1,078.16 -2.08 2.2 17.7
3.41 12 GCC 40 589.90 1.87 3.0 490.30 0.77 5.5 3.09 22 Brookfield Infrastructure 2256.60 0.73 10.0 2817.41 -0.36 12.6
3.70 13 EUROPE 98.22 1.98 2.0 15.6
2.15 17 U.S. TSM 15196.44 -0.11 14.6 1.29 18 Luxury 1576.40 1.73 25.0 1750.16 0.62 27.9
3.90 13 EMU 161.96 -2.93 3.0 20.7
Kuwait Titans 30 -c 194.17 0.36 4.6 UAE Select Index
3.70 14 Europe ex-UK 102.94 1.99 2.0 18.1
RusIndex Titans 10 -c 4009.20 1.82 15.3 6579.51 1.07 11.4 DJ-UBS Commodity 146.10 0.56 -4.6 138.94 -0.54 -2.4
4.80 10 Europe Value 99.24 2.34 2.3 14.2
*Fundamentals are based on data in U.S. dollar. Footnotes: a-in US dollar. b-dividends reinvested. c-in local currency. Note:All data as of 2 p.m.ET. Source: S&P DowJones Indices 2.60 17 Europe Growth 93.68 1.63 1.6 16.8
2.90 224 Europe Small Cap 203.76 1.95 2.0 26.2
Cross rates U.S.-dollar and euro foreign-exchange rates in global trading 3.70 6 EM Europe 315.30 1.56 1.6 19.8
3.80 11 UK 1,785.83 2.21 2.2 8.3
USD GBP CHF SEK RUB NOK JPY ILS EUR DKK CDN AUD 3.60 14 Nordic Countries 177.35 2.61 2.6 19.9
Australia 0.9511 1.5359 1.0312 0.1462 0.0315 0.1709 0.0109 0.2537 1.2468 0.1671 0.9652 ... 3.60 5 Russia 771.52 0.61 0.6 5.8
Canada 0.9853 1.5913 1.0684 0.1514 0.0327 0.1771 0.0113 0.2628 1.2917 0.1732 ... 1.0360 3.20 15 South Africa 1,022.86 1.15 1.2 22.0
Denmark 5.6904 9.1896 6.1698 0.8745 0.1886 1.0227 0.0655 1.5176 7.4598 ... 5.7750 5.9831 3.00 13 AC ASIA PACIFIC EX-JAPAN 476.27 -2.10 2.2 21.3
Euro 0.7628 1.2319 0.8271 0.1172 0.0253 0.1371 0.0088 0.2034 ... 0.1341 0.7742 0.8020 2.20 24 Japan 530.30 ... ... 18.9
Israel 3.7495 6.0553 4.0654 0.5762 0.1242 0.6739 0.0431 ... 4.9155 0.6589 3.8053 3.9424
2.90 11 China 64.89 3.28 3.3 22.6
Japan 86.9294 140.3861 94.2529 13.3593 2.8805 15.6233 ... 23.1840 113.9600 15.2766 88.2225 91.4006
1.30 16 India 776.06 0.73 1.6 29.8
Norway 5.5641 8.9857 6.0329 0.8551 0.1844 ... 0.0640 1.4839 7.2943 0.9778 5.6469 5.8503
1.10 10 Korea 591.59 2.00 2.0 13.9
Russia 30.1786 48.7368 32.7211 4.6378 ... 5.4238 0.3472 8.0486 39.5626 5.3034 30.6275 31.7308
3.50 21 Taiwan 279.84 1.16 1.2 10.1
Sweden 6.5070 10.5085 7.0552 ... 0.2156 1.1695 0.0749 1.7354 8.5304 1.1435 6.6038 6.8417
Switzerland 0.9223 1.4895 ... 0.1417 0.0306 0.1658 0.0106 0.2460 1.2091 0.1621 0.9360 0.9697
2.20 15 US BROAD MARKET 1,648.80 -2.48 2.5 16.8
U.K. 0.6192 ... 0.6714 0.0952 0.0205 0.1113 0.0071 0.1651 0.8118 0.1088 0.6284 0.6511 1.60 23 US Small Cap 2,417.43 -2.61 2.7 19.4
U.S. ... 1.6149 1.0842 0.1537 0.0331 0.1797 0.0115 0.2667 1.3109 0.1757 1.0149 1.0514 3.20 16 EM LATIN AMERICA 3,891.54 -2.41 2.5 8.0
Source: ICAP Plc. *Twenty-three developed and 26 emerging markets Source: MSCI Barra
Taiwan dollar 38.004 0.02631 28.990 0.03450

Commodities Prices of futures contracts with the most open interest Currencies London close on Jan. 3 Thailand baht 39.793 0.02513 30.354 0.03294
EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.MDEX: Bursa Malaysia Per In Per In
Derivatives Berhad; LIFFE: London International Financial Futures Exchange; COMEX: Commodity Exchange; LME: London Metals Exchange; AMERICAS Per euro In euros U.S. dollar U.S. dollars EUROPE Per euro In euros U.S. dollar U.S. dollars
NYMEX: New York Mercantile Exchange;ICE-EU: ICE Futures Europe
Argentina peso-a 6.4587 0.1548 4.9268 0.2030 Euro zone euro 1 1 0.7628 1.3109
ONE-DAY CHANGE Year Year
Commodity Exchange Last price Net Percentage high low Brazil real 2.6705 0.3745 2.0371 0.4909 1-mo. forward 0.9997 1.0003 0.7626 1.3113
Corn (cents/bu.) CBOT 690.25 -0.50 -0.07% 707.25 685.00 Canada dollar 1.2917 0.7742 0.9853 1.0149 3-mos. forward 0.9992 1.0008 0.7622 1.3120
Soybeans (cents/bu.) CBOT 1373.50 -18.75 -1.35 1,435.00 1,372.50 Chile peso 619.29 0.001615 472.40 0.002117 6-mos. forward 0.9984 1.0016 0.7616 1.3131
Wheat (cents/bu.) CBOT 757.50 2.25 0.30% 788.00 749.75 Colombia peso 2307.59 0.0004334 1760.24 0.0005681 Czech Rep. koruna-b 25.250 0.0396 19.261 0.0519
Live cattle (cents/lb.) CME 133.850 1.475 1.11 134.000 131.950 Ecuador US dollar-f 1.3109 0.7628 1 1 Denmark krone 7.4598 0.1341 5.6904 0.1757
Cocoa ($/ton) ICE-US 2,264 5 0.22 2,280 2,237 Mexico peso-a 16.7106 0.0598 12.7470 0.0785 Hungary forint 288.65 0.003464 220.19 0.004542
Coffee (cents/lb.) ICE-US 145.85 -3.55 -2.38 151.95 144.95 Peru sol 3.3465 0.2988 2.5527 0.3917 Norway krone 7.2943 0.1371 5.5641 0.1797
Sugar (cents/lb.) ICE-US 19.06 -0.63 -3.20 19.75 18.89 Uruguay peso-e 25.379 0.0394 19.360 0.0517 Poland zloty 4.0876 0.2446 3.1181 0.3207
Cotton (cents/lb.) ICE-US 75.70 0.34 0.45 76.34 75.04 U.S. dollar 1.3109 0.7628 1 1 Russia ruble-d 39.563 0.02528 30.179 0.03314
Rapeseed (euro/ton) LIFFE 447.25 -0.75 -0.17 466 444 Sweden krona 8.5304 0.1172 6.5070 0.1537
Venezuela bolivar 5.70 0.175358 4.35 0.229885
Cocoa (pounds/ton) LIFFE 1,434 5 0.35 1,446 1,420
ASIA-PACIFIC Switzerland franc 1.2091 0.8271 0.9223 1.0842
Robusta coffee ($/ton) LIFFE 1,945 3 0.15 1,969 1,908
Australia dollar 1.2468 0.8020 0.9511 1.0514 1-mo. forward 1.2084 0.8275 0.9218 1.0848
Copper ($/lb.) COMEX 3.6980 -0.0380 -1.02 3.76 3.64 1-mo. forward 1.2497 0.8002 0.9533 1.0490 3-mos. forward 1.2072 0.8284 0.9209 1.0859
Gold ($/troy oz.) COMEX 1665.20 -23.60 -1.40 1,695.40 1,668.50
3-mos. forward 1.2552 0.7967 0.9575 1.0444 6-mos. forward 1.2052 0.8298 0.9193 1.0878
Silver ($/troy oz.) COMEX 30.470 -0.537 -1.73 31.54 30.23
6-mos. forward 1.2633 0.7916 0.9637 1.0377 Turkey lira 2.3337 0.4285 1.7802 0.5618
Aluminum ($/ton) LME 2,145.50 17.50 0.82 2,145.50 2,128.00
China yuan 8.1719 0.1224 6.2336 0.1604 U.K. pound 0.8118 1.2319 0.6192 1.6149
Tin ($/ton) LME 24,150.00 -195.00 -0.80 24,345.00 24,150.00
Hong Kong dollar 10.1608 0.0984 7.7508 0.1290 1-mo. forward 0.8119 1.2317 0.6193 1.6148
Copper ($/ton) LME 8,166.00 54.00 0.67 8,166.00 8,112.00
India rupee 71.4467 0.0140 54.5000 0.0183 3-mos. forward 0.8120 1.2315 0.6194 1.6144
Lead ($/ton) LME 2,419.50 29.00 1.21 2,419.50 2,390.50
Indonesia rupiah 12660 0.0000790 9657 0.0001035 6-mos. forward 0.8124 1.2310 0.6197 1.6137
Zinc ($/ton) LME 2,127.00 9.00 0.42 2,127.00 2,118.00
Nickel ($/ton) LME 17,595 95 17,595 17,500 Japan yen 113.96 0.008775 86.93 0.011504 MIDDLE EAST/AFRICA
0.54
1-mo. forward 113.93 0.008777 86.91 0.011506 Bahrain dinar 0.4943 2.0229 0.3771 2.6520
Crude oil ($/bbl.) NYMEX 93.01 -0.11 -0.12 93.87 91.56
3-mos. forward 113.88 0.008781 86.87 0.011512 Egypt pound-a 8.4222 0.1187 6.4245 0.1557
Heating oil ($/gal.) NYMEX 3.0205 -0.0258 -0.85 3.0702 3.0050
6-mos. forward 113.79 0.008788 86.80 0.011520 Israel shekel 4.9155 0.2034 3.7495 0.2667
RBOB gasoline ($/gal.) NYMEX 2.7932 unch. -0.07 2.8150 2.7605
Natural gas ($/mmBtu) NYMEX 3.223 -0.032 3.3710 3.0630 Malaysia ringgit-c 3.9739 0.2516 3.0313 0.3299 Jordan dinar 0.9301 1.0752 0.7095 1.4095
-0.98
Brent crude ($/bbl.) ICE-EU 111.99 -0.48 -0.43 112.90 111.27 New Zealand dollar 1.5747 0.6350 1.2012 0.8325 Kuwait dinar 0.3690 2.7103 0.2815 3.5530
Gas oil ($/ton) ICE-EU 936.00 -7.50 -0.79 949.00 931.75 Pakistan rupee 127.759 0.0078 97.455 0.0103 Lebanon pound 1973.57 0.0005067 1505.45 0.0006643
Philippines peso 53.389 0.0187 40.726 0.0246 Saudi Arabia riyal 4.9163 0.2034 3.7502 0.2667
Sources: SIX Financial Information; WSJ Market Data Group
Singapore dollar 1.6020 0.6242 1.2220 0.8183 South Africa rand 11.2142 0.0892 8.5543 0.1169
South Korea won 1393.60 0.0007176 1063.05 0.0009407 United Arab dirham 4.8153 0.2077 3.6732 0.2722
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BLUE CHIPS & BONDS

Below, a look at the Dow Jones Stoxx Dow Jones Industrial Average P/E: 15
Major players & benchmarks 50, the biggest and best known
companies in Europe, including the U.K. LAST: 13406.26
YEAR TO DATE:
t 6.29, or 0.05%
s 302.12, or 2.3%
Stoxx Europe 50: Thursday's best and worst... OVER 52 WEEKS s 990.56, or 8.0%
Previous
close, in STOCK PERFORMANCE
Company Country Industry Volume local currency Previous session YTD 52-week
14000
Financiere Richemont Switzerland Clothing & Accessories 2,213,758 75.50 5.74% 58.9% 58.9%
UBS Switzerland Banks 14,330,374 14.85 4.06 32.8 32.8 50–day
ABB Switzerland Industrial Machinery 6,959,845 19.36 3.25 9.5 9.5 moving average 13500
t
Roche Holding Part. Cert. Switzerland Pharmaceuticals 1,641,718 189.50 2.99 19.0 19.0
BP PLC United Kingdom Integrated Oil & Gas 25,404,818 441.70 2.41 4.0 -6.7
13000
Anheuser-Busch InBev Belgium Brewers 1,246,147 66.54 -1.20% 1.2 41.6

High
BASF Germany Commodity Chemicals 1,913,819 72.35 -1.13 1.7 27.5 12500
Reckitt Benckiser Grp United Kingdom Nondurable Household Products 656,028 3,939 -0.91 1.5 20.6 Close
Rio Tinto United Kingdom General Mining 3,348,956 3,659 -0.88 4.2 9.5 Low
12000
H&M Hennes & Mauritz B Sweden Apparel Retailers 2,085,630 226.10 -0.79 0.7 4.1
...And the rest of Europe's blue chips 11500

5 12 19 26 2 9 16 23 30 7 14 21 28
Latest, Latest, Oct. Nov. Dec.
in local STOCK PERFORMANCE in local STOCK PERFORMANCE
Company/Country (Industry) Volume currency Latest YTD 52-week Company/Country (Industry) Volume currency Latest YTD 52-week Note: Price-to-earnings ratios are for trailing 12 months
Novartis AG 4,452,216 58.70 2.18% 9.3% 9.3% Siemens 1,540,951 83.86 0.07% 2.0% 10.5%
Switzerland (Pharmaceuticals) Germany (Diversified Industrials) DJIA component stocks
Tesco 21,216,877 350.00 2.12 4.2 -13.7 Diageo 3,030,200 1,818 0.03 1.7 28.8
United Kingdom (Food Retailers & Wholesalers) United Kingdom (Distillers & Vintners) Volume, CHANGE
Stock Symbol in millions Latest Points Percentage
Zurich Insurance Group 488,234 248.40 2.05 16.9 16.9 BNP Paribas 1,719,620 44.46 ... 4.4 53.3
Switzerland (Full Line Insurance) France (Banks) AT&T T 24.8 $35.03 0.03 0.09%
Nestle 5,169,566 60.65 1.76 12.3 12.3 National Grid 4,637,936 706.50 ... 0.5 12.1 Alcoa AA 19.5 9.06 0.07 0.78
Switzerland (Food Products) United Kingdom (Multiutilities) AmExpress AXP 4.0 59.10 0.35 0.60
Imperial Tobacco Grp 1,304,121 2,412 1.13 1.6 -1.3 Bayer 1,387,572 71.96 -0.01 0.1 37.7 BankAm BAC 138.7 11.98 –0.05 –0.42
United Kingdom (Tobacco) Germany (Specialty Chemicals)
Boeing BA 3.4 77.37 0.30 0.39
Deutsche Bank 3,791,647 34.54 1.10 4.8 23.5 Vodafone Group 80,934,699 157.40 -0.03 1.9 -12.6
Germany (Banks) United Kingdom (Mobile Telecommunications) Caterpillar CAT 8.1 94.29 0.79 0.84
British American Tobacco 2,154,297 3,124 1.07 0.1 1.9 Deutsche Telekom 8,422,179 8.75 -0.06 1.8 -1.7 Chevron CVX 4.9 109.69 –0.70 –0.63
United Kingdom (Tobacco) Germany (Mobile Telecommunications) CiscoSys CSCO 41.8 20.43 0.09 0.44
GDF Suez 2,808,815 15.94 0.79 2.3 -23.3 SAP 1,627,871 62.00 -0.13 2.2 47.1 CocaCola KO 13.3 37.59 –0.01 –0.03
France (Multiutilities) Germany (Software)
Disney DIS 5.7 51.17 0.07 0.14
BG Grp 5,905,977 1,030 0.78 1.7 -27.9 Telefonica S.A. 9,529,944 10.46 -0.19 2.6 -20.3
United Kingdom (Integrated Oil & Gas) Spain (Fixed Line Telecommunications) DuPont DD 5.6 45.20 –0.67 –1.46
Telefon L.M. Ericsson B 5,346,396 67.30 0.75 3.4 -1.0 Sanofi SA 1,547,913 72.81 -0.26 2.0 31.2 ExxonMobil XOM 9.3 88.50 –0.21 –0.24
Sweden (Telecommunications Equipment) France (Pharmaceuticals) GenElec GE 38.7 21.07 –0.27 –1.27
Royal Dutch Shell A 2,022,954 2,139 0.73 0.8 -9.7 ENI 7,401,928 18.94 -0.26 3.3 16.6 HewlettPk HPQ 37.7 15.15 0.13 0.87
United Kingdom (Integrated Oil & Gas) Italy (Integrated Oil & Gas)
HomeDpt HD 4.8 63.25 –0.23 –0.36
Anglo American PLC 2,345,089 2,015 0.55 6.4 -18.5 Allianz SE 1,007,067 108.00 -0.28 3.1 44.3
United Kingdom (General Mining) Germany (Full Line Insurance) Intel INTC 35.0 21.28 –0.10 –0.47
Standard Chartered 2,500,250 1,619 0.53 2.9 12.2 Total 2,820,938 39.86 -0.30 2.2 -0.0 IBM IBM 2.5 194.87 –1.48 –0.75
United Kingdom (Banks) France (Integrated Oil & Gas) JPMorgChas JPM 20.5 44.59 –0.07 –0.16
AstraZeneca 1,764,435 2,980 0.37 2.4 -1.8 Daimler 2,342,646 42.46 -0.34 2.7 15.1 JohnsJohns JNJ 7.7 70.66 –0.19 –0.26
United Kingdom (Pharmaceuticals) Germany (Automobiles) McDonalds MCD 4.5 90.65 0.53 0.59
GlaxoSmithKline 6,220,172 1,364 0.37 2.1 -8.1 Banco Santander S.A. 27,786,500 6.31 -0.35 3.4 16.4 Merck MRK 20.3 42.38 1.04 2.52
United Kingdom (Pharmaceuticals) Spain (Banks)
E.ON SE 8,064,721 14.40 0.31 2.2 -15.5 BHP Billiton 5,184,662 2,200 -0.41 3.3 11.4 Microsoft MSFT 37.6 27.28 –0.34 –1.23
Germany (Multiutilities) United Kingdom (General Mining) Pfizer PFE 28.6 25.82 –0.09 –0.35
Unilever 1,256,201 2,399 0.29 1.4 11.3 HSBC Hldgs 10,831,799 662.50 -0.48 2.4 32.5 ProctGamb PG 5.5 69.05 –0.34 –0.49
United Kingdom (Food Products) United Kingdom (Banks) 3M MMM 2.2 94.80 0.02 0.02
ING Groep 11,470,993 7.30 0.27 3.4 32.8 Banco Bilbao Vizcaya Argn 16,403,803 7.25 -0.58 4.1 16.2 TravelersCos TRV 1.6 73.54 0.68 0.93
Netherlands (Life Insurance) Spain (Banks)
UnitedTech UTX 3.0 84.21 0.21 0.25
Unilever CVA 2,224,149 29.25 0.19 1.4 8.4 L'Air Liquide 487,095 95.35 -0.69 0.3 0.2
Netherlands (Food Products) France (Commodity Chemicals) UtdHlthGp UNH 12.1 52.00 –2.54 –4.66
Barclays 28,312,308 276.00 0.15 5.2 48.1 Moet Hennessy Louis Vuitt 467,638 141.15 -0.70 1.7 28.4 Verizon VZ 9.2 44.02 –0.25 –0.55
United Kingdom (Banks) France (Clothing & Accessories) WalMart WMT 7.2 68.69 –0.55 –0.80
Sources: SIX Financial Information Source: WSJ Market Data Group
Credit derivatives
Tracking Spreads on credit derivatives are one way the market rates
creditworthiness. Regions that are treading in rough waters
Credit-default swaps: European companies
At its most basic, the pricing of credit-default swaps measures how much a buyer has to pay to purchase-and
credit can see spreads swing toward the maximum—and vice versa.
Indexes below are for five-year swaps.
how much a seller demands to sell-protection from default on an issuer's debt. The snapshot below gives a
sense which way the market was moving yesterday.
markets & Markit iTraxx Indexes

Index: series/version
Europe: 18/1
Mid-spread,
in pct. pts.
1.06
Mid-price
99.69%
Coupon
0.01%
SPREAD RANGE, in pct. pts.
since most recent roll
Maximum Minimum
1.41 1.06
Average
1.25
Showing the biggest improvement...
CHANGE, in basis points
Yesterday Yesterday Five-day 28-day
And the most deterioration
CHANGE, in basis points
Yesterday Yesterday Five-day 28-day
dealmakers Eur. High Volatility: 18/1

Europe Crossover: 18/1
Asia ex-Japan IG: 18/1
1.60
4.36
1.08
97.20
102.68
99.62
0.01
0.05
0.01
2.11
5.81
1.43
1.60
4.36
1.07
1.90
5.11
1.21
Landbk Baden Wuertbg
Porsche Automobil Hldg
Commerzbank
94
61
136
–13
–8
–16 –14
–1
–8
–6
–11
–34
BASF Schweiz
Svenska Cellulosa
IMPERIAL Chem Inds
25
75
25
...
1
...
...
...
...
1
3
...
Japan: 18/1 1.56 97.36 0.01 2.27 1.56 1.93 ING Bk 96 –11 –12 –24 Utd Utils Wtr 88 ... –2 –14
Note: Data as of January 2 Bco de Sabadell 403 –47 –50 –61 Technip 119 1 1 ...
In percentage points HBOS 73 –7 –6 –8 MAN 109 ... 1 –2
Spreads
Index roll Cr LYONNAIS 148 –14 –5 –12 YORKSHIRE WATER 69 ... ... 1
Spreads on five- 3.00 SERVICES Fin
UniCredit 268 –24 –21 –10
year swaps for Japan CABLE WIRELESS 53 ... 2 4
2.25 Iberdrola 183 –16 –11 –7 WORLDWIDE
corporate debt; t
Iberdrola Intl 180 –16 –13 –10 Man Gp 330 1 –2 –5
based on Markit 1.50 Rheinmetall 199 1 5 –3
t
iTraxx indexes. 0.75 Source: Markit Group
Australia
0
July Aug. Sept. Oct. Nov. Dec. Jan.
Behind global deals: Bank revenues from equity capital markets
2012 2013
Source: Markit Group Behind every IPO, n Equity capital markets n Debt capital markets (both in billions, left axis)
follow-on or ECM as a percentage of total
convertible equity 12 (right axis) 60%
t
offering is one or
more investment
banks. At right, 8 40
investment banks
historical and year-
to-date revenues 4 20
WSJ.com>> from global equity-
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PERSONAL JOURNAL: LIFE/WORK
How to Talk to Kids About Money

BY KATY MCLAUGHLIN est and what it means for both
debts and investments, and to un-
“Katie is richer than me, isn’t derstand what stocks and bonds
she?” My 6-year-old son Paul are. We also want them to know
asked the question in a near-whis- what we will pay for and what
per while we were visiting my they will be responsible for them-
best friend—whose name happens selves.
to be the same as mine. To that end, we have already
We had spent Thanksgiving shown the kids websites devoted
with my aunt, uncle and cousins to the stock market, and we talk
in Philadelphia, and were spend- to them about what companies
ing the rest of our vacation with are and what different people do
Katie and her family in their for a living. We also attempt to
brownstone in Brooklyn, N.Y. bend a little and try on each
Paul is at the age where he other’s strategies. Alejandro has
wants answers to some of life’s started telling them that we can’t
mysteries—he’s already asked us get certain things—that iPad they
how babies are made and what wanted for Hanukkah, for exam-
happens when you die. ple—because they “cost too
Nonetheless, I was taken aback much.”
by his blunt net-worth query. The To answer Paul’s question
value of Katie’s house is apparent about our friends, I fought my in-
to anyone familiar with per- stinct to simply explain that yes,
square-foot real-estate values near they have more money than we do
Manhattan, but how could a child and that’s life, kid. Instead, I tried
have so quickly perceived the dif- Alejandro’s more touchy-feely ap-
ferences in our two families’ eco- proach.
Lars Leetaru
nomic realities? I hated to think “In this world, Paul, you’re go-
that Paul’s relationship with my ing to find that there are always
closest friend and her family could people who have more and who
be colored by jealousy or a sense have less than you. We are very
of division between us. money. If the boys ask for a Play- ered earning power when choos- I want to respect Alejandro’s fortunate that we have everything
Another reason for my hesita- Station or a new bike or a trip to ing a career, and I didn’t have a desire for a household free from we need and a lot of things that
tion was the fact that my husband England to watch Liverpool play, credit score or even basic knowl- the oppressive idea that life all we want. It’s important for us to
and I differ in our approach to Alejandro usually just tells them edge of economics until I was well boils down to dollars and cents. love our friends for who they are,
talking to the kids about money. they’ll get it soon. If they com- into my 30s. But I also want to raise children not for what they have,” I said.
Alejandro thinks I am overly di- plain about his work, he promises Alejandro, on the other hand, more savvy and realistic than I “She is richer!” Paul said tri-
rect with such young kids. I will them he’ll take a day off. Money, I grew up in a household where was. umphantly, seeming to have read
frequently tell them the exact feel he is teaching them, is no ob- money was the consuming focus. To work out a joint approach, between the lines.
price of something and say it’s ject. From the youngest age, he knew Alejandro and I have agreed to fo- “She has 18 bucks and I only
“too expensive” and that we “can’t For all parents, finding the what his parents earned, owed cus on some long-term goals for have five!” he proclaimed. I had
afford it.” When our 4-year-old right balance between “too much and paid in rent. His intimate the boys. We decided that by the forgotten that at the Thanksgiving
expressed anger over my work information” and a “data shutout” knowledge of their financial situa- time they turn 18, we want them table in Philadelphia, my cousin—
schedule, I set him on my knee is challenging. For us, we’re up tion—which was frequently dire— to have a basic grasp of financial had won a jackpot of $18 in a
and explained that Mommy and against our own biographies as we shaped his youth, propelling him issues—to know what jobs pay family game and that Paul got a
Papi both have to work so we can try to hit the sweet spot. to drop out of college and work to which kind of salaries, and what $5 consolation prize.
afford our house, cars and food. I grew up with upper-middle- help support them. lifestyles different incomes can “Eighteen is more than five,”
Alejandro looked on, appalled. class parents who never discussed “I definitely don’t want that for buy. We want them to understand said Paul, whose financial educa-
My husband never brings up money with me. I never consid- my kids,” Alejandro has told me. the principle of compound inter- tion is off to a fine start.
M.B.A. Pop Quiz: Are You Employable?

BY MELISSA KORN to match student skills with in- plicants early in the game, says
dustry need. For example, for an Graham Richmond, a former ad-
Want to get into business applicant with a stated interest in missions officer at University of
school? Be employable. consulting, she may pay particular Pennsylvania’s Wharton School
Emily Berl for The Wall Street Journal
As schools focus more atten- attention to whether he or she and founder of admissions con-
tion on their job-placement num- can manage ambiguity. She also sulting firm Clear Admit.
bers, several M.B.A. programs are seeks out candidates with strong This past fall, the new director
now bringing in career-services interviews and leadership poten- of career services at University of
staff to evaluate candidates for tial, a plus in both classroom and California, Los Angeles’s Anderson
admission and set expectations corporate realms. School of Management began at-
for prospective students on what While she doesn’t have veto tending admissions events. After
the school can, and can’t, do in an power over an admissions repre- hearing positive reviews from ap-
uncertain job market. sentative’s suggestion—about 10 plicants, the school is including
Business schools have long people are involved in each dis- Alex Lawrence, of UCLA’s Anderson School of Management, says the school is those representatives at all do-
considered applicants’ career cussion—Ms. Gauthier has pushed including career representatives at all of its domestic events. mestic events, said Alex Lawrence,
goals, though admissions staff the committee to “think more UCLA’s assistant dean and direc-
rarely sought input from the ca- critically” about borderline candi- with the admissions team at least Johnson wasn’t interested in tor of M.B.A. admissions.
reer office on whether a particu- dates, said Niki da Silva, director twice a month. He provides data breaking into an entirely new in- To be sure, making employabil-
lar candidate’s aims were realistic. of recruitment and admissions for on which firms or industries are dustry; the 29-year-old plans to ity too weighty a factor in admis-
But when the financial crisis up- Rotman’s full-time M.B.A. She said recruiting at Simon. That informa- return to a job in marketing after sions can backfire. Looking at ap-
ended the banking sector and Ms. Gauthier’s input has bumped tion helps admissions officers un- graduation. plicants through a narrow
sure-thing jobs on Wall Street dis- some students onto the wait list, derstand which students might be As recruiting creeps into the vocational lens may deter schools
appeared, schools began formally or rescued others from that no most in demand come graduation. early days of the school year, from accepting riskier candidates,
tying input (applicants) to output man’s land. “There is some give He also shares files on recent schools have less time to train such as entrepreneurs or career-
(graduates). The change also and take,” Ms. da Silva said. graduates who fared particularly students on interview etiquette or switchers, Mr. Richmond said.
comes as prospective students are Admissions and career services well to use as a guide when se- the art of the thank-you note. So Students with more audacious
weighing the potential return on teams at University of Rochester’s lecting the newest cohort. career-services staff are inter- goals may be wary of sharing
an M.B.A. investment, and seeking Simon Graduate School of Busi- It’s still too early to determine viewing more applicants, stepping their real plans, too. For example,
assurances that a chosen school ness joined forces about a year whether these moves will improve in, as Mr. Park’s team has at Si- someone who works in a family
will propel them on a desired ca- and a half ago, as the school placement figures, but Messrs. mon, when the admissions team is farming business and wants to ex-
reer path. adapted to a job market that no Park and Zupan said first-year on the fence about a candidate. pand the operation globally after
Leigh Gauthier, the director of longer favored its finance-focused students are expressing more in- Mr. Park said he’s keen on as- school may instead tell of a career
careers for the full-time M.B.A. at talent. terest in fields beyond finance. sessing an applicant’s presenta- plan that involves a middle-man-
University of Toronto’s Rotman “Adversity has a way of creat- Charles Johnson, a first-year tion and communication skills. ager job at agribusiness giant Car-
School of Management, last year ing motivation,” said Mark Zupan, M.B.A. at Simon, said he thinks While the newly integrated ad- gill Inc., he said. “They’ll play it
began sitting in on committee Simon’s dean. the school’s attempt to diversify missions approach is mainly close to the vest,” rather than say
meetings to help assess appli- Bob Park, Simon’s executive di- students’ career paths beyond fi- aimed at finding employable pros- they want to take a small business
cants. rector of corporate relations and nance helped him land a spot pects, career-services officers also into a new market, Mr. Richmond
Ms. Gauthier said she’s looking career management, now meets there. So did the fact that Mr. provide a key reality check for ap- said.
SPORT
HEARD ON
THE PITCH
AC Milan Walks Off Field
After Racist Taunts
Kevin-Prince Boateng, a forward
HEARD ON
with AC Milan and the Ghanaian
national team, staged a protest
THE FIELD
against European soccer’s racism
problem on Thursday by walking
off the field in the middle of an ex-
hibition game after being taunted
by a group of fans near the pitch.
With Italian soccer on its winter
break, AC Milan was playing a
friendly match against Aurora Pro
Patria, a fourth-tier club located
north of the city. After being sub-
jected to allegedly racist taunting
from some supporters for the first
26 minutes, Boateng decided he’d
had enough.
He stopped the game, picked up
the ball and punted it toward the
abusive fans in the stands. He then
spoke to the referee and left the
field, removing his jersey. Soon, a
few of his teammates joined him,
despite the apparent pleas of some
Pro Patria players to continue. The
officials announced that the match
had been abandoned.
Milan manager Massimiliano
Allegri defended his player and said
that “these uncivilized gestures”
from racist fans needed to stop.
Press Association
Allegri added that he hoped
Boateng’s decision would send a
“signal” to the rest of the soccer
world and that Milan would not be
Stevenage’s Peter Winn celebrates scoring his side’s third goal in the 2011 FA Cup win against Newcastle United—a team 73 places above it in English soccer. afraid to walk off again under simi-
FA Cup Giant-Killers are Waiting

lar circumstances.
AC Milan organizing director
Umberto Gandini pledged his sup-
port for Boateng on Twitter.
“Very proud of the Milan players
who decided to walk off the pitch
today for racist abuse from few idi-
BY JOSHUA ROBINSON spirit of FA Cup minnows could pro- and, if needed, a penalty shootout. the 2007-08 season, the lower- ots!” he wrote. “No racism, no stu-
duce historic results. So for many smaller clubs, a sec- ranked team won only eight times. pidity!” —Joshua Robinson
Until it reaches the third round “Our focus before the game was ond chance to sell tickets and poten- Which makes sense: Whatever ele-
every January, the FA Cup is a fairly how we would win 5-0,” he told re- tially have the game televised makes ment of surprise the underdog had Mancini and Balotelli in
minor competition, the stuff of wet, porters. “We established that if we a replay against a big team almost in the first game has usually evapo- Training Ground Bust-Up
midweek nights and sports-section did just 20% of what it would take as desirable as an upset. In 2005, a rated by the second. The love-hate history between
filler. But once the Premier League to win 5-0, we’d win the game.” replay actually saved Exeter City. 2. Don’t sweat the road trips. Manchester City manager Roberto
clubs enter the fray, the whole na- Like for so many FA Cup giant- The club had been crippled by When people picture third-round Mancini and his striker Mario Balo-
ture of the competition changes. It killers, it was the only surprise up debt and was on the verge of liqui- upsets, the scene is usually along telli is well documented by now.
becomes about upsets, any-given- Stevenage’s sleeve. It was knocked dation when it was drawn against these lines. A richer, more experi- There have been the icy stares and
Saturday twists that see millionaires out by Championship side Reading— Manchester United. The sides tied enced team is drawn on the road the impassioned defenses. But on
knocked out by unknowns. which had notched its own third- 0-0 at Old Trafford in front of al- against a weaker club, located in the Thursday, an argument seemed to
“So people will speculate a lot round upset against West Bromwich most 70,000 fans and United won middle of nowhere. It’s an uncom- turn physical at Manchester City’s
about who will win it in the end,” Albion of the Premier League. the replay 2-0 on the road. Exeter fortable bus trip to a crumbling sta- training field.
Arsenal manager Arsene Wenger But Stevenage is just one of City might have been eliminated, dium, a relic from another era with Toward the end of practice, Ba-
said Thursday. “To have a chance to countless small teams to turn the but those two games changed the stands on three sides. The locker lotelli made a reckless tackle on a
do that, you just need to get competition’s third round into a sea- course of the club’s history. room is cramped and still smells teammate and Mancini immedi-
through the first round [you play son highlight. So for any club trying “These Manchester United games like the last team to use it. The field ately ran to confront him, according
in].” to pull off a minor miracle of its are a lifesaver,” Neil Le Milliere, a is muddy. It comes apart in clumps, to several reports. Photographs
And even that round is littered own, here are some tips. founder member of the Exeter City like a horse race just came through. from the training ground show
with potential pitfalls. In the past 1. Do the business in the first Supporters’ Trust, wrote in the And, of course, it’s raining. Mancini shouting at Balotelli and
five years alone, underdogs have game. Guardian in early 2005. He said the Which is exactly how the small grabbing him by the jersey. The
won 40 of the 160 third-round The FA Cup is a single-elimina- $1.3 million the club generated from teams like it, or so the thinking two men were ultimately sepa-
match-ups. And these teams weren’t tion tournament with a twist: aside TV rights and ticket sales over two goes. If the conditions are bad rated by members of the coaching
just underdogs because they were a from the final and semifinals, which meetings allowed it to clear its im- enough, then it might just be staff. Balotelli reportedly left the
few points behind their opponents are settled in one day, games in the mediate debt and keep operating. enough to put the Premier League training facility shortly thereafter.
in the league standings. A vast ma- earlier rounds are replayed if they Yet when it comes to pulling off millionaires off their game for a day. Neither man has spoken publicly
jority of these winners (32) actually are tied after 90 minutes. Only in an upset, the replay can be the kiss Except, as it turns out, home ad- about the incident yet. —J.R.
played one to three divisions lower the second meeting between the of death. Of the 38 third-round vantage in the third round is a
than the teams they stunned. teams can the game go to extra time match-ups to go to a replay since myth. Of the 40 upsets in the past
Inter-divisional upsets have been five years 22 have gone to the home
so frequent, in fact, that third-tier team with 18 for the away team.
Oldham Athletic’s 2008 takedown of Suprise Ending 3. League form means nothing.
Everton—a club that sat 51 spots Burton Albion was 17th in
The biggest FA Cup third-round upsets of the
above it in the English soccer lad- Number of League Two when it beat Middles-
last five years:
der—doesn’t even make the top five league places brough, a side from the Champion-
upsets of the past five years. Winner Loser Score Season between them ship, in 2011. Notts County was 14th
By that measure, the biggest sur- Stevenage Newcastle 3-1 2010-2011 73 in League One when it beat Sunder-
prise was Stevenage’s victory over (League Two) (Premier League) land that same year. And Oldham
Newcastle in 2011. Stevenage was a was 13th in League Two when it
Crawley Town Derby County 2-1 2010-2011 61
middling team in League Two, the (Conference) (Championship)
beat Everton, which was sixth in the
fourth tier on the ladder, and New- Premier League. In such moments,
castle was sitting eighth in the Pre- Torquay United Blackpool 1-0 2008-2009 60 any concerns about getting dragged
mier League, 73 spots higher. (Conference) (Championship) into a relegation battle or pushing
With a nearly full-strength side, Swindon Town Wigan Athletic 2-1 2011-2012 53 for a playoff spot are forgotten.
the Premier League club floundered (League Two) (Premier League) “I’ve told the lads, ‘Go out and
so badly that manager Alan Pardew Notts County Sunderland 2-1 2010-2011 52 have a pint tonight, enjoy the occa-
could only apologize to the fans af- (League One) (Premier League) sion,’ ” then-Oldham manager John
Associated Press
ter the game. Stevenage manager Sheridan told reporters. “Because it
Graham Westley, meanwhile, took it Source: Statto.com The Wall Street Journal might not happen very often in their A Mancini and Balotelli moment
as proof that the nothing-to-lose careers.”
OFF THE WALL
Authors’ Trash Is Bankable in Right Hands

BY BARRY NEWMAN
Hadley, Mass.
T
he Green Library at Stan-
ford University houses Wil-
liam Saroyan’s mustache
clippings. Timothy Leary’s Nin-
tendo Power Glove has been ac-
quired by the New York Public Li-
brary. At the Harry Ransom
Center of the University of Texas
Barry Newman/The Wall Street Journal, Harry Ransom Center
at Austin, Norman Mailer’s bar

mitzvah speech is preserved in
perpetuity.
Authors, take notice: Remem-
ber those crates of scratch pads
and tax returns in the garage? The
trunkful of hotel bills and child-
hood doodles in the garden shed?
Don’t junk any of it—not before
you call up somebody in Ken Lo-
pez’s line of work. The Beinecke doesn’t make its
Mr. Lopez, who has a book- own checkbook public, but it buys
jammed office in this small town, enough stuff each year to fill 300
is a broker—one of a dozen in the meters of shelving; 2,100 meters
U.S.—who deals in the flotsam of of it has yet to be cataloged. So
authorship. He sells to rich re- Mike Rush, above, looks through author N. Scott Momaday’s record collection at Yale’s Beinecke Library; top right, Bob Mr. Momaday’s boxes would have
search libraries, which sort it and Woodward’s notes from the Watergate collection at the Harry Ransom Center in Austin, Texas. to wait their turn.
shelve it so scholars can mine it Mr. Rush, however, was taking
for clues to creativity. maday gave their stuff away. But into the hands of their buyers. tained a grayish powder. It turned one step right away: Bagging them
“If you had William Faulkner’s in 1969, Congress ended tax de- Four archivists wheeled them out to be the ashes of Robert Hei- up to be left for three days in
laundry list, would you care?” Mr. ductions for creators of their own into a room of wood-topped ta- necken, an artist who died in Yale’s industrial blast freezer. It’s
Lopez said not long ago. “The an- gifts. bles. Mike Rush lifted the lid on 2006, mailed on his behalf as a one thing to buy the contents of a
swer is, ‘Yes.’ So if it’s true for Richard Nixon signed the law Mr. Momaday’s LP records. “The posthumous gift. living writer’s cellar, but the Bei-
Faulkner,” he added rhetorically, and, in donating his papers, ran first few minutes get your heart “That was fun,” said Mr. Rush, necke Library had to be sure that
“it could be true for you.” afoul of it himself when his advis- racing,” he said, flipping through reaching into playwright John nothing else Mr. Lopez sold it was
Being dead helps but isn’t re- ers tried to claim a deduction af- them. Guare’s cache. He extracted an en- still alive.
quired. Mailer sold his 1,062 boxes ter the law took effect. Dozens of On the floor and surrounding velope from which slid five
for $2.5 million in 2005 and died libraries with big budgets have shelves, the accumulations of oth- watches and three wallets, one
in 2007. In 2003, Bob Woodward since been bidding up the stashes ers were in early stages of screen- containing a note for 200 Greek Online>>
and Carl Bernstein sold 83 Water- in authorial attics. ing. A box from a photographer, drachmas. Mr. Rush said, “We get See more photos from the Harry
gate boxes, also to the Ransom, Hundreds, less endowed, are Lee Friedlander, had recently uncashed checks. We send them Ransom Center and Beinecke archives
for $5 million. After 20 years of left with shelf space reserved for yielded a salt shaker that con- back, if recent.” at WSJ.com/OffTheWall.
marketing for the likes of William literary altruists.
S. Burroughs (dead) and Peter “Authors would love for us to
Matthiessen (alive), Mr. Lopez have their archives, but they want
puts prices for interesting paper to sell,” says Chantel Dunham,
piles at $30,000 to $300,000. who raises money for the Univer-
His emphasis is on the paper. sity of Georgia’s libraries in Ath-
Digitization has made correspon- ens, Ga. “People ask for hundreds
dence more searchable but less re- of thousands. We’re a state insti-
vealing. Still, Wendy Cope, a poet tution. We can’t pay anything like
of light verse, recently sold the that.”
Don’t Miss
British Library 40,000 emails for Emory University, 100 kilome-
$50,000. “A lot of them are ex- ters away in Atlanta, can. In 2006,
tremely boring,” she told the BBC. for an undisclosed amount, Sal-
the Bigger
One of her poems explains why. man Rushdie sold it 200 “falling
“Don’t answer emails,” it goes, apart, crappy cardboard boxes,” as
“when you’re drunk.” he said at the collection’s opening
Typescripts that used to be in 2010. After Emory’s archivists
Picture.
cut, pasted and put his “mess” in order,
blue-penciled are Mr. Rushdie capitalized
spotlessly digital on their tidiness to re-
now. Word pro- search his own 2012
cessing has ob- memoir.
scured the pro- Some authors, like
cess of writing. Philip Roth, say they
“The archaeology want their scribbles
of it, seeing paths burned after they die,
not taken,” Mr. so the public won’t
Lopez said early one Monday. “At root through them. (Kafka tried
this point, that’ll all be lost.” that; it didn’t work.) Some toss
Long-haired and 60 years old, their trash, like ordinary folk do.
he had just driven a Penske rental A few devote deep thoughts to the
truck from Arizona with the trove fate of their Post-it Notes.
of a Native American writer, N. “What if I’m one of those peo-
Scott Momaday. His office this ple that people study?” says Ron-
day was crowded with the uncen- lyn Domingue. “What am I going
sored (and as yet unsold) dis- to leave behind for them?”
patches of George Weller, a re- Ms. Domingue, who is 43 and
porter who sneaked into Nagasaki lives in Baton Rouge, has one pub-
after the atomic bomb dropped. In lished novel with two on the way. Deeper, broader coverage of breaking news in all markets and asset
tight quarters, Mr. Lopez repacked She writes in longhand, types it
Mr. Momaday and got him on the up, makes changes by hand, and
classes to keep you ahead of the competition.
road again—for New Haven. dumps it all into a box in her
Yale University’s Beinecke Li- closet marked “Archive.” She has To learn more, visit: dowjones.com/wsj/bigpicture
brary would be the new home of willed the box to Louisiana State
the Momaday archive—100 boxes University, her alma mater. “I
of manuscripts and shopping lists. never thought of asking for money
“I wish I’d kept it all in longhand,” for it,” she says.
says Mr. Momaday, who is 78 and Ms. Domingue hasn’t met Mr.
lives in Florida now. “It would Lopez.
have been much more valuable.” “A lot of writers don’t know
Yale won’t name its price. Mr. Mo- about this market,” he was saying
maday will: $500,000. Mr. Lopez as he backed the Penske truck into © 2012 Dow Jones & Company, Inc. All rights reserved. 3EFNW110
gets 15%. a dock at a Yale warehouse and
Once, writers like Mr. Mo- delivered Mr. Momaday’s crates
HEARD ON THE STREET

Email: [email protected] FINANCIAL ANALYSIS & COMMENTARY WSJ.com/Heard
BBVA Bond Shows a Hunger for Yield China Vanke

Could Close Gap
What a difference a year makes. over benchmark interest-rate swap and elsewhere providing welcome
In 2012, it took until Jan. 31 for a
Southern European bank to issue
senior unsecured bonds—and then
rates for investors. With the aver-
age five- to seven-year industrial-
company bond yielding just 2.02%,
Better Banks
Annual cost of insuring €10 million of
diversity, its credit rating is still
closely linked to that of Spain,
perched uncomfortably on the
In Hong Kong
it was an 18-month deal. This year, according to Barclays, the higher financial-company debt via Markit brink of “junk” status. A down- The potential arrival of China’s
Spain’s Banco Bilbao Vizcaya Ar- yield on BBVA’s deal is hard to re- iTraxx Europe Senior Financials index grade, while less of an immediate biggest property developer by reve-
gentaria reopened the market sist. €350 thousand threat than in the past, still could nue on the Hong Kong stock ex-
globally on Jan. 3, selling €1.5 bil- Two factors stand out on BBVA’s cause problems. change could shake up valuations for
lion ($1.98 billion) of five-year bond sale. First, demand was 300 BBVA wasn’t alone; France’s the company and the sector.
bonds—and paid less than the spread across Europe, with just 10% BNP Paribas and Société Générale China Vanke’s A and B shares
Spanish government to do so. That going to Spain and nearly 70% go- 250 also sold debt Thursday. The bond listed in mainland China have been
is encouraging news for Europe’s ing to Northern European inves- market is clearly wide open for suspended from trading since late
200
banks, but also a sign of investors’ tors, showing a strong revival in borrowers, with both the U.S. “fis- December. The company hasn’t said
increasing hunger for yield. cross-border lending. Second, the 150 cal cliff” receding and the euro- why. But Vanke may be planning to
For BBVA, the deal was a blow- bond was priced to yield about 0.25 zone crisis dormant. Issuers are convert its 13 billion yuan ($2.1 bil-
out. It quickly drew orders of more percentage point less than a com- 100 likely to make the most of that op- lion) of Shenzhen-listed B shares
than €5 billion from more than 400 parable Spanish government bond. 2012 '13 portunity. Investors may feel they into Hong Kong-listed H shares, says
investors, even as it cut the yield Both factors suggest interna- Source: Markit The Wall Street Journal have little choice but to buy higher- Jinsong Du, a Credit Suisse analyst.
on offer by 0.15 percentage point to tional investors now are willing to yielding paper from Europe’s more The move would make sense. B
around 3.8%. That delivered an at- consider banks and companies troubled economies but need to re- shares are a little-traded relic of an
tractive funding cost for BBVA, more on their own merits than at they were Spanish or Italian. That member that is unlikely to be a experiment to allow foreigners ac-
while still generating a chunky some points last year, when they has risks, however; while BBVA has one-way bet. cess to mainland markets. Moving
spread of 2.95 percentage points shunned borrowers simply because major operations in Latin America —Richard Barley the B shares to Hong Kong would in-
crease liquidity for investors and
could lead to a better valuation.
Investors, Beware the ‘Washington Put’ OVERHEARD

Vanke cleared 72.6 billion yuan in
revenue in 2011. A focus on the buy-
to-live market, and a strong balance
The good news is that the econ- is somewhat akin to the old “Green- sheet, has enabled it to withstand
omy appears to have easily weath- Return on Capitol span put.” Just as investors in the French actor Gérard Depardieu three years of government efforts to
ered Washington’s recent histrion- Dow Jones Industrial Average, 1990s came to believe the Federal once starred in the romantic com- pop China’s real-estate bubble.
ics. The bad news? This will only daily closes Reserve would bail them out when- edy “Green Card,” about a man hop- Yet the weak performance of
inure politicians to acting in ways ever markets went awry, now they ing to stay in the U.S. through a mainland China’s equity markets
14000
that could cause some real damage. seem to believe that even in today’s marriage of convenience. In real life, means Vanke trades at a significant
For all the worries it engendered, intensely partisan environment, pol- Russia is laying out the welcome discount to mainland peers listed in
the “fiscal cliff” debate seems to 13500 iticians won’t tank the markets and mat. The Kremlin said it granted Hong Kong. Vanke’s shares trade at
have delivered no more than a economy. Call it the Washington put. Mr. Depardieu Russian citizenship, 7.9 times next year’s expected earn-
glancing blow to the economy. De- 13000 The problem? Politicians are act- following up on a pre-Christmas of- ings and two times book value, com-
spite confidence measures deterio- ing as if it is really they who hold fer from President Vladimir Putin. pared with 11 times next year’s fore-
rating last month, people apparently the put option. The 2011 impasse Mr. Depardieu will surely find in cast earnings and 2.5 times book for
12500
shopped through their glum mood. over the debt ceiling, which pro- Russia a bastion of artistic free- China Overseas Land & Invest-
Thomson Reuters said Thursday its voked a U.S.-government-debt down- dom, providing he overlooks last ment. Converting Vanke’s B shares
index of nondrug same-store sales 12000 grade from Standard & Poor’s and a year’s imprisonment of punk band to H shares could close the gap.
gained 4.5% last month versus a J A S O N D J sharp drop in the market, weighed Pussy Riot. But the chance to be- “We expect a potential switch of
year earlier. Car makers, meanwhile, Note: As of 3:30 p.m. EST Thursday on but didn’t buckle the U.S. econ- come Russian also comes as Mr. investors of some stocks with rich
Source: WSJ Market Data Group
said December was the best month omy. The economic fallout from the Depardieu is fighting the French valuation to China Vanke’s H shares,
The Wall Street Journal
for light-vehicle sales in five years. fiscal-cliff fight was even smaller. government over proposals for a especially if China Vanke is gradu-
Peering over the cliff doesn’t Such apparent immunity gives 75% top income-tax rate. Russia’s ally added into major indices,” Mr.
seem to have worried the job market them in its stride. That sent a mes- the D.C. denizens the all-clear to rate, by contrast, is 13%. It’s unclear Du says.
too heavily, either. The pace of sage to consumers and businesses concentrate on political point scor- whether Mr. Depardieu intends to Vanke would need approval of
weekly initial jobless claims has that Washington would work out ing, rather than economic conse- move to Russia—it is more likely he regulators in both Shenzhen and
slipped back to its pre-superstorm some sort of deal. It wasn’t until the quences, in the coming battles over will move to Belgium. But making Hong Kong plus buy-in from share-
Sandy levels, and economists polled last 10 days of the year that inves- the debt ceiling, spending cuts and Russia seem a better option than holders. But China International Ma-
by Dow Jones estimate Friday’s em- tors showed signs of sweating. But government funding. France might help his PR campaign. rine Containers converted its B
ployment report will show the econ- the downturn in stocks that followed The Greenspan put encouraged For Mr. Putin, getting a famous shares to H shares last year, and its
omy added 150,000 jobs last month. was neither deep nor long enough to investors to take a one-sided view of movie star to move in might seem share price jumped 15.7% on the first
A big part of why the cliff negoti- have much of an effect on actual risk that unraveled in the 2008 fi- like a good way to soften his and day of trading in Hong Kong. If
ations didn’t hurt as much as many economic activity. nancial crisis. The Washington put is Russia’s image. Another marriage Vanke closes the gap with China
economists feared is that, until the The market’s trust that Washing- leading politicians onto similarly of convenience, then. Overseas Land, it could bounce even
final innings, the stock market took ton will eventually work things out dangerous ground. —Justin Lahart more. —Tom Orlik

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DJIA 13406.26 g 0.05% Nasdaq 3100.57 g 0.38% Stoxx Eur 600 286.83 À 0.53% FTSE 100 6047.34 À 0.

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