April 21, 2018

European Central Bank Commits to Low Rate

FRANKFURT — The European Central Bank said Thursday it would keep interest rates low “for an extended period of time,” an unprecedented commitment for an institution that had steadfastly refused to offer guidance on its future policy.

With the promise of easy money, Mario Draghi, the president of the E.C.B., offered more certainty to investors at a time when tensions in the euro zone are rising again. So-called forward guidance is considered one of the tools available to central banks, but one the E.C.B. had never used before.

The E.C.B. kept its main rate at a record low of 0.5 percent, as expected. The relative calm in the euro zone has been threatened in recent weeks by a political crisis in Portugal, a rise in the risk premium that investors demand on bonds issued by Italy and other troubled countries, and reluctance by political leaders to take bold steps to build a stronger currency union.

The commitment to keep rates low may be intended to amplify the effect of the current low rate by reassuring investors that they can count on easy money for the foreseeable future. The statement may also be intended to counteract any effect in Europe from expectations that the U.S. Federal Reserve may gradually begin to tighten its monetary policy.

Mr. Draghi has in recent weeks stressed that policy makers were ready to take action if needed, but he and other members of the governing council have few obvious options left to stimulate the slumping euro zone economy.

“The bank has nothing more it can do within its institutional framework to help return the euro land economy to prosperity,” Carl Weinberg, chief economist at High Frequency Economics in Valhalla, New York, wrote in a note to clients Wednesday.

Mr. Draghi has often stressed that E.C.B. anti-crisis measures could only buy time for political leaders to take action, for example by removing barriers to entrepreneurship in countries like Italy or cooperating more closely to fix ailing banks.

But now that fear of a euro zone breakup has ebbed, political leaders seem to have lost the will to address flaws in the currency union. An agreement by national leaders last month on a so-called banking union, designed to make the euro zone less prone to financial crises, fell short of what economists say is needed to deal with weak lenders and restore the flow of credit.

In recent days market borrowing costs for Italy and Spain have risen again, after a political crisis in Portugal raised questions about whether governments will be able to withstand public discontent about budget cutting and joblessness.

Further increases in government borrowing costs could test whether the E.C.B. can deliver on its promise last year to buy bonds of troubled countries if needed to eliminate fear of a euro zone breakup. Some analysts doubt whether the program could be deployed quickly in a crisis, since it requires countries to request help and agree to economic reforms and other conditions.

The E.C.B. appears unwilling to take more radical steps to stimulate the economy, such as massive, broad-based bond purchases similar to the quantitative easing used by the U.S. Federal Reserve or Bank of England. Already, the E.C.B. faces a legal challenge in Germany’s Constitutional Court to the bond buying program and is probably reluctant to further alarm Germans fearful that they will wind up paying for problems in Italy and Spain.

The E.C.B.’s job is further complicated by signs that the Federal Reserve could begin to gradually roll back its economic stimulus in the United States. Expectations of tighter monetary policy in America have rattled financial markets in Europe, and Mr. Draghi may try to reassure investors that the E.C.B. is a long way from going in the same direction.

“President Draghi might note that contrary to market expectations the E.C.B. has not followed the strategy pursued by the Federal Open Market Committee in recent years,” economists at Royal Bank of Scotland wrote in a note to investors earlier this week, referring to the Federal Reserve’s policy-making panel.

Article source: http://www.nytimes.com/2013/07/05/business/global/european-central-bank-leaves-interest-rates-at-record-low.html?partner=rss&emc=rss

In a Race to Out-Rave, 5-Star Web Reviews Go for $5

Or so the reviewers say. As online retailers increasingly depend on reviews as a sales tool, an industry of fibbers and promoters has sprung up to buy and sell raves for a pittance.

“For $5, I will submit two great reviews for your business,” offered one entrepreneur on the help-for-hire site Fiverr, one of a multitude of similar pitches. On another forum, Digital Point, a poster wrote, “I will pay for positive feedback on TripAdvisor.” A Craigslist post proposed this: “If you have an active Yelp account and would like to make very easy money please respond.”

The boundless demand for positive reviews has made the review system an arms race of sorts. As more five-star reviews are handed out, even more five-star reviews are needed. Few want to risk being left behind.

Sandra Parker, a freelance writer who was hired by a review factory this spring to pump out Amazon reviews for $10 each, said her instructions were simple. “We were not asked to provide a five-star review, but would be asked to turn down an assignment if we could not give one,” said Ms. Parker, whose brief notices for a dozen memoirs are stuffed with superlatives like “a must-read” and “a lifetime’s worth of wisdom.”

Determining the number of fake reviews on the Web is difficult. But it is enough of a problem to attract a team of Cornell researchers, who recently published a paper about creating a computer algorithm for detecting fake reviewers. They were instantly approached by a dozen companies, including Amazon, Hilton and several travel sites, all of which have a strong interest in limiting the spread of bogus reviews.

“The whole system falls apart if made-up reviews are given the same weight as honest ones,” said one of the researchers, Myle Ott. Among those seeking out Mr. Ott, a 22-year-old Ph.D. candidate in computer science, after the study was published was Google, which asked for his résumé, he said.

Linchi Kwok, an assistant professor at Syracuse University who is researching social media and the hospitality industry, explained that as Internet shopping has become more “social,” with customer reviews an essential part of the sales pitch, marketers are realizing they must watch over those opinions as much as they manage any other marketing campaign.

“Everyone’s trying to do something to make themselves look better,” he said. “Some of them, if they cannot generate authentic reviews, may hire somebody to do it.”

Web retailers are aware of the widespread mood of celebration among their reviewers, even if they are reluctant to discuss it. Amazon, like other review sites, says it has a preponderance of positive reviews because of a feedback loop: Products with high-star ratings sell more, so they get more reviews than products with poor ratings.

But they are concerned about the integrity of those reviews. “Any one review could be someone’s best friend, and it’s impossible to tell that in every case,” said Russell Dicker, Amazon’s director of community. “We are continuing to invest in our ability to detect these problems.”

The Cornell researchers tackled what they call deceptive opinion spam by commissioning freelance writers on Mechanical Turk, an Amazon-owned marketplace for workers, to produce 400 positive but fake reviews of Chicago hotels. Then they mixed in 400 positive TripAdvisor reviews that they believed were genuine, and asked three human judges to tell them apart. They could not.

“We evolved over 60,000 years by talking to each other face to face,” said Jeffrey T. Hancock, a Cornell professor of communication and information science who worked on the project. “Now we’re communicating in these virtual ways. It feels like it is much harder to pick up clues about deception.”

So the team developed an algorithm to distinguish fake from real, which worked about 90 percent of the time. The fakes tended to be a narrative talking about their experience at the hotel using a lot of superlatives, but they were not very good on description. Naturally: They had never been there. Instead, they talked about why they were in Chicago. They also used words like “I” and “me” more frequently, as if to underline their own credibility.

How far a business will go to get a good review is a blurry line. A high-end English hotel, The Cove in Cornwall, was recently accused in the British media of soliciting guests to post an “honest but positive review” on TripAdvisor in exchange for a future discount of 10 percent. Nearly all the recent reviews of the Cove are glowing except for the one headlined, “Sadly let down by overhyped reviews.”

The hotel said it was a loyalty scheme that was being misconstrued. TripAdvisor, though, posted a warning about the Cove’s favorable notices on its page for the hotel. The site declined to say how often it has had to post such caveats.

Founded 11 years ago, TripAdvisor never expected to see so many positive reviews. “We were worried it was going to be a gripe site,” said the chief executive, Stephen Kaufer. “Who the heck would bother to write a review except to complain?” Instead, the average of the 50 million reviews is 3.7 stars out of five, bordering on exceptional but typical of review sites.

Negative reviews also abound on the Web; they are often posted on restaurant and hotel sites by business rivals. But as Trevor J. Pinch, a sociologist at Cornell who has just published a study of Amazon reviewers, said, “There is definitely a bias toward positive comments.”

Mr. Pinch’s interviews with more than a hundred of Amazon’s highest-ranked reviewers found that only a few ever wrote anything critical. As one reviewer put it, “I prefer to praise the ones I love, not damn the ones I did not!”

The fact that just about all the top reviewers in his study said they got free books and other material from publishers and others soliciting good notices may have also had something to do with it.

Even if you get a failing grade or two, all is not lost. Dot-coms like Main Street Hub manage the reputations of small businesses for a fixed fee.

“A courteous response to a negative review can persuade the reviewer to change their reviews from two to three or four stars,” said Main Street’s chief executive, Andrew Allison. “That’s one of the highest victories a local business can aspire to with respect to their critics.”

The result, he said: “It’s like Lake Wobegon. Everyone is above average.”

Article source: http://feeds.nytimes.com/click.phdo?i=0ba5d844fe27a0437adaeda12c5f2658