December 3, 2023

Sketch Guy: Be Wary of Even ‘Safe’ Investments

What makes an investment “safe”?

I’ve always considered this a loaded question (what does “safe” actually mean, anyway?). It’s rarely the right question to ask. But it comes up pretty often for an average investor, and rarely for the right reasons.

Consider the recent allegations leveled by the Securities and Exchange Commission at a financial adviser and wedding singer (apparently a successful one), Larry Dearman Sr., and his friend Marya Gray. According to the commission, Mr. Dearman and Ms. Gray convinced investors that “they were investing in an Internet company, a real estate business and another firm that were controlled by Ms. Gray.”

Instead, the S.E.C. said in its complaint that the pair defrauded investors of $4.7 million in investments, and stole about $700,000. And they persuaded people to invest by assuring them that the investments “bore little to no risk.”

How did they persuade the 30 people to invest? According to the complaint, many had known Mr. Dearman and his family since childhood, “thought of him as an active member of their church and knew him as a popular local wedding singer.” In other words, they thought it was safe to invest because they knew Mr. Dearman. After all, why would a guy who sings at weddings steal your money?

But it’s not just people that you personally know who are promising safety and then failing to deliver, as a recent example out of Spain made clear. A few weeks ago The New York Times highlighted a “safe” investment that was promoted to Spanish investors by Spanish bank officials. As a result, about 300,000 Spanish investors over the last four years lost $10.3 billion collectively, and it was in investments that they were told qualified as “safe.” I encourage you to read the original article, but the basics are this:

During the economic crisis four years ago, Spanish bank officials started recommending an investing “product” with a 7 percent return. That’s a great return, right? Investors, on average, put in $40,000. It’s not a huge amount, but it reflected the type of individuals who were pitched this “product” — lifelong savers who wanted to protect their money. As with the S.E.C.’s complaint against Mr. Dearman and Ms. Gray, it turns out that what the banks offered wasn’t much of an investment:

“Bank officials hit on the idea of raising capital and cleaning debts off their books by getting people with savings accounts to invest in their banks instead,” the Times article recounted. “For many of these savers, the first hint of trouble — and understanding that they had bought into risky investments — was when some of these banks essentially failed about two years ago. Overnight, they were unable to withdraw their money. Soon, they came to understand that they had purchased complex financial products, originally designed for sophisticated investors. They had become creditors, and not at the head of the line, either.”

Both of these episodes, and the many comparable stories we’ve heard over the years, should make us think hard about pursuing the idea of “safe.” So next time your friend or a big bank suggests a great deal for you that is just as safe as a CD, but will deliver amazing returns, keep a few things in mind:

■ There are people out there trying to sell you junk. They know it’s bad, and they don’t really care much about you and your needs. They will even lie to you.

■ When something is too complex to understand, either run as fast as you can or hire an independent professional to help you navigate the complexity. Don’t just guess and hope you understood correctly.

■ That said, getting professional advice at some level requires trust, but not blind trust. You can’t trust anyone blindly. I’d suggest following the Russian proverb that Ronald Reagan adopted during the cold war: trust, but verify.

■ When something appears too good to be true, it often turns out that it is. It may not happen immediately, but at some point there will be a consequence.

■ Ultimately we have to take responsibility for our own decisions. This is painful. After all, the system doesn’t always work the way we think it should. People lie. People steal. And institutions we thought we could trust let us down. But it’s the system we have right now, and even as we look for ways to improve it and get justice for bad behavior, we can’t pretend that how we behave isn’t part of the solution, too.

I feel horrible for the investors who lost money to the wedding singer and to Spanish banks. Both stories, however, reinforce the reality that the question — is it safe? — doesn’t tell us much. If we want to protect ourselves from individuals and institutions alike, we need to ask questions that help us uncover the real motives and whether it’s in our best interest to trust what we’re being sold.

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It’s the Economy: Is It Nuts to Give to the Poor Without Strings Attached?

A month earlier, Omondi told me, a couple of strangers showed up in his village, and explained that they worked for a charity, GiveDirectly, that gave money to poor people without any preconditions. They had chosen this area, they said, because it was among the most impoverished they could find — most people grew vegetables on small plots, lived in dirt-floored houses and worked sporadically at informal jobs. The poorest people in the village, the strangers explained, would be eligible to receive $1,000, about a year’s income for a family, spread over two payments. Not surprisingly, many villagers were incredulous. Some thought a politician was trying to buy their votes; others presumed it was some sort of trick. “My friends didn’t believe it at all,” Omondi said. “They told me, ‘They will come for it one day.’ ”

A charity that gives away money, as opposed to, say, offering agricultural training or medicine, does seem a bit unusual. That’s partly because governments and philanthropists have emphasized solving long-term economic problems rather than urgent needs. But in the past decade it has become increasingly common to give money right to the very poor. After Mexico’s economic crisis in the mid-1990s, Santiago Levy, a government economist, proposed getting rid of subsidies for milk, tortillas and other staples, and replacing them with a program that just gave money to the very poor, as long as they sent their children to school and took them for regular health checkups.

Cabinet ministers worried that parents might use the money to buy alcohol and cigarettes rather than milk and tortillas, and that sending cash might lead to a rise in domestic violence as families fought over what to do with the money. So Levy commissioned studies that compared spending habits between the towns that received money and similar villages that didn’t. The results were promising; researchers found that children in the cash program were more likely to stay in school, families were less likely to get sick and people ate a more healthful diet. Recipients also didn’t tend to blow the money on booze or cigarettes, and many even invested a chunk of what they received. Today, more than six million Mexican families get cash transfers.

Dozens of countries imitated Mexico’s example and their results inspired the founders of GiveDirectly, a handful of graduate students at Harvard and M.I.T., who were studying the economics of various developing countries. They chose to situate the charity in Kenya because it was a poor country with a well-developed system for sending money to anyone with a cheap cellphone. But they also planned to differentiate their charity; whereas most of the government programs give people money for as long as they qualify, GiveDirectly offers people a one-time grant, spread over the course of several months, and without any requirements.

“I’m hopeful about GiveDirectly’s model, but what they’re doing is very different from what some of the research has suggested is really working,” Chris Blattman, an economist who teaches at Columbia and who studies cash transfers, told me. “They’re just giving away money with no strings. It’s just manna falling onto your mobile phone.” An outside group is studying GiveDirectly’s impact; final results are expected later this year.

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Syria Weighs Its Tactics As Pillars of Its Economy Continue to Crumble

Two years of war have quintupled unemployment, reduced the Syrian currency to one-sixth of its prewar value, cost the public sector $15 billion in losses and damages to public buildings, slashed personal savings, and shrunk the economy 35 percent, according to government and United Nations officials.

The pillars of Syria’s economy have crumbled as the war has destroyed factories, disrupted agriculture, vaporized tourism and slashed oil revenues, with America and Europe imposing sanctions and rebels taking over oil fields.

Increasingly isolated in the face of a growing economic crisis that has reduced foreign currency reserves to about $2 billion to $5 billion from $18 billion, a government that long prided itself on its low national debt and relative self-sufficiency has now been forced to rely on new credit lines from its main remaining allies — Iran, Russia and China — to buy food and fuel.

The government has a $1 billion credit line with Iran, and borrows $500 million a month to import oil products delivered on Russian ships, a government consultant, Mudar Barakat, said in a recent interview in Beirut. Some analysts believe the government will need even more aid from those countries to keep paying government workers and a growing roster of security forces.

Now, some officials hope to push through measures to tighten state control of the economy, rolling back some of the modest economic liberalization and support for private business that President Bashar al-Assad introduced early on, in a departure from his party’s socialist roots.

“We’re thinking of going back to the way it was in the 1980s, when the government was buying the main necessities of daily life,” Mr. Barakat said. “We, as a government, must cover the daily needs of the people, no matter how much the cost is, and keep the prices low.”

Syria’s economic problems, in Mr. Barakat’s view, are rooted in the loosening of state control by reformers favored early in Mr. Assad’s tenure, who he said “vandalized” the economy “into this liberalized sort of chaos.”

A faction that includes Kadri Jamil, a Russian-educated, socialist former professor who was appointed deputy prime minister in charge of the economy in a shake-up last year, hopes Syria can weather the storm by raising wages, tightening price controls on subsidized goods like bread, cracking down on black-market currency traders and even ceasing government trade in dollars and euros.

The government, Mr. Barakat said, now signs new foreign trade deals only in the currencies of friendly countries to insulate itself from what it sees as an economic conspiracy orchestrated by its international enemies.

But such measures — met with ridicule and even defiance by some Syrian businesspeople — will provide at best short-term relief, economists say.

Even the free-flowing aid from Iran and other allies inspires little confidence among Syrians, said an economist in Damascus who asked not to be identified publicly as criticizing government policies, because it shows the government “has no means and depends on others to save it.”

A Damascus businessman derided the new policy of doing business in Iranian, Russian and Chinese currencies.

“These countries themselves do business in dollars and euros,” he said, adding: “Syria today is not Syria in the 1980s. It is easy to keep the door closed, but it is hard to close it after it has been open 13 years and people are used to breathing the fresh air.”

This month, the government banned food exports and announced a crackdown on black-market money traders. The value of the Syrian pound plunged to 330 to the dollar, down from 47 before the war.

On Wednesday, amid a flurry of panicked dealing, the Central Bank tried and failed to strong-arm traders into selling the Syrian pound at a higher, preset price. Dealers said Central Bank officials offered to guarantee a tiny profit if they would sell the pound at a rate of 250.

Reporting was contributed by an employee of The New York Times from Damascus, Syria; Hala Droubi from Dubai, United Arab Emirates; Hania Mourtada and Hwaida Saad from Beirut; and Ben Hubbard from Cairo.

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Spaniards Fight to Get Savings Back

He and his wife put aside $87,000. But four years ago, as the economic crisis took hold here, a bank official called Mr. López at home to suggest he move his money into a new “product” that would give him a 7 percent return.

“I asked, ‘Is this safe?’ ” Mr. López said. “I trusted him. He knew the money was for my son.”

Today, Mr. López is one of about 300,000 Spaniards who, in the midst of a brutal recession, have seen their life savings virtually wiped out in what critics call a deceptive and possibly fraudulent sales campaign by banks that were threatened by the implosion of Spain’s property market. Many, like Mr. López, are older and lack formal education, and were easily misled when bank officials hit on the idea of raising capital and cleaning debts off their books by getting people with savings accounts to invest in their banks instead.

For many of these savers, the first hint of trouble — and understanding that they had bought into risky investments — was when some of these banks essentially failed about two years ago. Overnight, they were unable to withdraw their money.

Soon, they came to understand that they had purchased complex financial products, originally designed for sophisticated investors. They had become creditors, and not at the head of the line, either.

The plight of these small-time savers — who invested $40,000 on average but have lost a collective $10.3 billion — has captured headlines and left the country torn about what should be done for them. Some say no matter how unsophisticated they were, they should have known better, especially when they were offered such a relatively high interest rate. They signed pages of documents saying they understood.

But others accuse Spain’s savings banks of fraud, by taking advantage of their most vulnerable customers when they already knew they were in trouble and facing possible bankruptcy. Spain’s construction boom collapsed in 2008, and according to a recent government report, the peak sales of these hybrid financial instruments occurred the next year.

Miguel Duran, a lawyer who is representing about 1,800 investors, including Mr. López, said almost all his clients had been called at home and told to ignore the pages of forms they were signing because the contents were only formalities.

He said even the name of the preferred shares they had been sold, called “preferentes” in Spanish, was deceiving. He said most of the clients believed they were getting a good rate because they, as longtime clients of the banks, were preferred customers.

In the past two years, the Spanish banking sector has been restructured and bailed out by the European Union. Most of the savings banks have been merged or absorbed into the country’s sturdier banks.

But most of those rescued were big international banks and investors, not the small timers who were steered into these risky investments — and who, like Mr. López, have lost about 88 cents on the dollar.

“I have such a sense of impotence,” Mr. López said. “And anger. It is hard to believe that it is all gone.”

Among the unhappiest investors are those who had their money in the seven failed savings banks that were merged into Bankia, a new nationalized bank. Last month, the bank exchanged their hybrid products for shares in the new bank, discounting them by 38 percent as dictated by the terms of the bailout. But once these shares went on the open market, their value plunged to 18 percent of their original value.

Hundreds of these shareholders have taken to protesting every Thursday night in the Puerta del Sol here, in front of a Bankia building that still bears the signage of the now defunct Caja Madrid savings bank. They chant accusations of fraud, their anger and despair close to the surface. Some are unemployed, behind in their mortgage payments or scraping by on state pensions, badly in need of the cash they had painstakingly saved.

Rachel Chaundler contributed reporting.

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Inside Europe: Protest Vote Likely to Grow in European Parliament’s Next Elections

BRUSSELS — In the diplomatic parlor games popular in Brussels, few issues are generating more gossip or being talked about more animatedly than next year’s elections to the European Parliament.

They may be 11 months away, but anyone following European affairs closely knows the vote has the potential to shake the ground under the political establishment and bring about a fundamental shift in the balance of power in Europe. Frustration with how leaders have handled the economic crisis over the past three years, coupled with rising populism, has raised expectations that the anti-E.U. vote will surge in the polls.

That would undermine the traditional blocs, which range across the political spectrum but for the most part are in favor of the Union. And because they will be the first European elections since the introduction of the Lisbon Treaty in 2009, which gave the Parliament additional powers, it means the outcome will directly influence the appointment of the Union’s most important jobs.

“Most people I’ve talked to are predicting that parties on the extreme wings of the politics of Europe, both the far right and the far left, will pick up seats in this election,” said William Kennard, the U.S. ambassador to the European Union for the past four years.

“There is a not-insignificant prospect that the populists, particularly on the far right, will have more influence in the Parliament than they’ve had in this particular term, and I think that could affect politics in an interesting way,” he added.

If there was any complacency about the potential impact of the vote, which takes place in all 28 E.U. member states from May 22 to 25 next year, it was displaced recently by Britain’s Nigel Farage, the leader of the rightist, anti-E.U. party U.K. Independence Party.

“There is a gathering electoral storm. It’s coming on the left, on the center and on the right,” he warned the European Commission president, José Manuel Barroso, as he addressed the full European Parliament. “The European elections next year present the opportunity to show you, Mr. Barroso, that the European project is reversible and it needs to be reversed for the betterment of the peoples of Europe.”

A year is an extremely long time in politics, and there is every likelihood that electoral predictions made now will prove to have been dramatically off-base come April or May next year. But polling conducted by Gallup and research by Debating Europe, a youth politics group, point to two trends that could prove important: Turnout may be substantially higher next year than in the past, and the youth vote may be much stronger.

At every poll since the first direct elections to the European Parliament were held in 1979, turnout has fallen, dropping to just 43 percent for the last vote in 2009. But in a survey carried out in May, Gallup found 68 percent of Britons said they would vote if the elections were held next week, double the British turnout for the 2009 ballot. The figures were similar for France, with the survey finding 73 percent of French were ready to vote this time, versus 40 percent in 2009.

Gallup also found increasing disapproval in most large E.U. countries over the direction in which Europe is moving, suggesting that many of those who do turn up to vote could cast anti-Union ballots or go against how they have voted in the past. Add to that the prospect of hundreds of thousands of young people who have never voted before turning up at the polls, especially those who are unemployed and frustrated.

“Young people are angry, and they want to have a voice,” Adam Nyman, the director of Debating Europe, said earlier this year. “I don’t think they will shy away from the next election.”

No one knows how large the anti-Union vote will be, but speculating about it has become a favorite Brussels pastime. Some see a 25 percent to 30 percent “protest vote” as possible, a figure that alarms sitting members of the Parliament, who tend to break the issue down into individual member states, where anti-Union or protest parties have their national quirks.

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Economic Scene: Making the Case for a Rise in Inflation

So I understand Paul Volcker’s impatience with those tempted to let inflation rip — at least a little bit — to spur economic growth.

“The implicit assumption behind that siren call must be that the inflation rate can be manipulated to reach economic objectives — up today, maybe a little more tomorrow, and then pulled back on command,” Mr. Volcker said in a speech at the Economic Club of New York a few weeks ago. “All experience amply demonstrates that inflation, when fairly and deliberately started, is hard to control and reverse.”

And yet despite Mr. Volcker’s enormous skepticism about the merits of inflation, a heretical thought that first surfaced as the economic crisis gripped the world five years ago is again gaining traction among experts: economic policy should be aiming for significantly higher inflation than the 1 to 2 percent annual rate that the United States economy is currently experiencing.

When Mr. Volcker took the helm of the Federal Reserve in 1979, inflation neared 12 percent — a catastrophe by American standards. He spent much of his eight-year tenure strangling the economy with high interest rates. By 1983 the unemployment rate surpassed 10 percent — a feat not replicated even in the latest recession. He was reviled by home builders and auto dealers, whose businesses depend on credit. Prominent members of Congress asked him to resign.

Mr. Volcker ultimately won his battle. In 1986 he brought inflation below 2 percent. That’s the pace that has since become the de facto definition of “price stability,” a target for central banks around the world. Among economic policy types, he is considered a hero.

But now mainstream economists like Kenneth Rogoff at Harvard are pressing the case that “a sustained burst of moderate inflation is not something to worry about.”

“On the contrary,” he wrote, “in most regions, it should be embraced.”

The prescription fits the worldview of some “monetarist” economists, who argue that the Fed should set a higher target for the nominal gross domestic product, to be met through real economic growth and inflation. Conservative pundits like Josh Barro of Business Insider have welcomed inflation as the right’s answer to fiscal stimulus — a way to juice the economy without increasing government spending.

But it is hardly a conservative idea. Paul Krugman, a Nobel laureate and liberal columnist for The New York Times, has been writing about the benefits of higher inflation, arguing that policy makers should be using any available tool — fiscal or monetary — to try to reduce an unemployment rate stubbornly stuck at more than 7.5 percent for over four years.

To be sure, economists agree that inflation is no panacea. Higher inflation does not produce more growth or lower unemployment over the long term. There is a fairly solid consensus that unstable, volatile prices depress growth by short-circuiting decisions to spend and invest. That is why central bankers work so hard to “anchor” inflation expectations to a number.

But economists have also come to understand that an economy can suffer from too little inflation as well. Janet Yellen, the Fed’s current vice chairwoman, convinced Alan Greenspan more than 15 years ago, when she was serving an earlier term on the Fed, that setting zero inflation as a target was a bad idea that would complicate the necessary adjustment of relative prices in the economy.

The experience of the Great Recession over the last five years has persuaded many economists, among them Olivier Blanchard, the chief economist at the International Monetary Fund, that a higher inflation target in good times would allow central banks to do more to fix things when the economy went bad.

With inflation anchored at 2 percent, real interest rates could fall no further than a negative 2 percent, hitting a floor when the nominal interest rate reached zero. If it had been anchored at 4 percent, real rates would have had further to go, providing a more robust boost to investment and spending.

These arguments apply to steady-state inflation in normal times. But with the economy still mired in the mud, and the odds of more fiscal stimulus near zero, economists like Mr. Rogoff and Gregory Mankiw of Harvard want to give the monetary screw another turn and have called on the Fed to engineer higher inflation now, aiming for maybe 4 percent or even 6 percent.

One main feature of inflation is that it reduces the real value of debt. Think of the $13 trillion in outstanding mortgages or the $12 trillion in government debt held by the public. Inflation would eat away at those obligations, without any need for bankruptcy lawyers. And it would leave more disposable income for Americans to spend.

Higher inflation in the United States would also weaken the dollar, helping exports. It would encourage people to spend now rather than sit on their cash.

And if the government engineered “monetary repression” to keep long-term interest rates below the economy’s nominal growth rate, effectively forcing banks to buy lots of government bonds, a few years’ worth of higher inflation could do wonders to reduce the public debt.

Mr. Rogoff points out that the case for higher inflation was stronger in 2008, when mortgage debt reached $14.5 trillion and debt service swallowed almost a fifth of households’ disposable income. Still, he notes, a solid case remains for faster-rising prices around the world.

Higher inflation in Germany, Europe’s juggernaut, would make it easier for the damaged economies that share the euro — like Greece, Portugal and Spain — to reduce their relative labor costs and increase their relative competitiveness.

Japan is finally giving higher prices a shot. In April, the new central bank governor, Haruhiko Kuroda, announced that he would pump huge amounts of yen into the economy to try to shake nearly two decades of stagnant, even falling, prices and raise inflation to 2 percent. While this would count as price stability by American standards, in Japan it amounts almost to runaway inflation. 

Yet for all the merits of the argument, the chances of the policy’s being more widely adopted are close to nil.

There is resistance from more than Mr. Volcker. Jeremy Stein, on the board of the Fed, has taken to worrying that the central bank’s loose monetary policy is already imperiling the financial system, stoking future bubbles as banks load up on risky assets to achieve their profit targets. Mark Gertler at New York University worries that long-term interest rates would simply follow inflation up — negating much of its benefit.

The Fed chairman, Ben Bernanke, told Congress last month that the central bank might soon move in the opposite direction, tightening monetary policy by cutting back on its program of bond purchases, which today total $85 billion a month.

And here’s the best reason to be skeptical: even if the Fed wanted to engineer higher prices, it is far from obvious how it would do that.

The Fed is not just buying bonds. It is also keeping short-term interest rates at zero. And it promised to keep pushing the economy at least until the unemployment rate fell below 6.5 percent or inflation surpassed 2.5 percent.

And yet, inflation is going the other way. The economy is even flirting with deflation. The bigger risk in the United States is not that our money will buy fewer oranges tomorrow. It’s that it will buy more.

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You’re the Boss Blog: S.B.A. Administrator Announces Resignation

The Agenda

How small-business issues are shaping politics and policy.

Karen Mills, administrator of the Small Business Administration, announced her resignation on Monday.

Ms. Mills became increasingly visible as a messenger for the Obama administration, which has been eager to present itself as relentlessly pursuing an entrepreneurial agenda. She helped lead the administration’s Startup America program, which pairs government initiatives with private-sector stars in an effort to foster high-growth entrepreneurship. In January 2012, President Obama elevated the position of S.B.A. administrator to his cabinet.

In a statement released by the White House, Mr. Obama thanked Ms. Mills for her tenure. “I asked Karen to lead the Small Business Administration because I knew she had the skills and experience to help America’s small businesses recover from the worst economic crisis in generations — and that’s exactly what she’s done,” he said. “Because of Karen’s hard work and dedication, our small businesses are better positioned to create jobs and our entire economy is stronger.”

The administrator, in turn, praised her staff. “Four years ago, when I arrived at the S.B.A., America’s small businesses and entrepreneurs were struggling in the face of the worst economic environment since the Great Depression — and a banking sector that was frozen,” Ms. Mills wrote in a memo. “Together, we rolled up our sleeves and went to work.”

She will remain at the agency’s helm until the Senate confirms her replacement. A White House spokesman would not say when President Obama would name that successor. Ms. Mills, who was a venture capitalist before she joined the agency in 2009, did not say what she planned to do next.

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Porcelain Factory’s Fate Reflects Fragile Time for Italy

All of that is little consolation, however, to the more than 300 workers of the factory who now face unemployment. After years of wobbly bottom lines, the factory was declared bankrupt in January.

On a chilly morning recently, workers milled about the entrance, hoping for a new owner who could save the company and preserve the heart of this town, barnacled snuggly to Florence, where every family is connected to the factory in one way or another.

“There are laws to save pandas,” Valentina Puggelli, an employee in the company’s communications office. “We want to save something as rare.”

How a company founded in 1735, having long withstood various revolutions in industry and popular tastes, went bankrupt is the subject of considerable debate here. The answers say as much about the demise of Richard Ginori as they do about the larger forces buffeting nearly all of Italy’s small- and medium-size manufacturers at a time of increased global competition and domestic economic crisis.

Formal dining is gradually dying out, and with it the market for hand-made porcelain, which is painstakingly slow and expensive to produce. Like so many similarly sized Italian industries, the company faced a choice between trying to preserve its status — and market — as a high-end niche product with a “Made in Italy” cachet, or to appeal to the broader, less expensive, tastes of a global marketplace.

It chose the latter, and began producing more quotidian products — including tableware as a promotional give-away for a supermarket chain — putting the company in direct competition with more commonplace ceramics. Yet Italy’s high labor costs and high taxes left it at a distinct disadvantage. It was a decision that many employees now blame for the company’s decline.

“Richard Ginori has to capitalize on its high quality,” said Giovanni Nencini, an employee and factory spokesman for the trade union Cobas. “We are the Ferrari of porcelain, but the strategic plans of recent years have lowered the quality of the brand.”

Certainly, Richard Ginori was not alone in the pressures it faced. It has been a fragile time for porcelain makers worldwide. Many storied brands — Wedgwood, Spode, Rosenthal — have similarly been unable to survive in a market flooded by cheaper, more utilitarian tableware, often from China, which first developed ceramics with a white clay body some 1,500 years ago.

Italians now buy about 60 percent of their tableware from China, according to Confindustria Ceramica, the business lobby that represents 273 Italian ceramics manufacturers and their 37,000 employees. In recent months, the association accused the Chinese of dumping products in the Italian market below the cost of manufacturing, prompting the European commission to impose import duties — temporarily for now — of up to 59 percent on some Chinese tableware.

Despite the efforts of some past owners to turn Richard Ginori around and bring in top-notch designers, like Paola Navone, the current artistic director, investment fell short, critics say, and Italy’s business climate hobbled the company.

Today, workers fantasize that a new owner will bring “the same illumination and heart,” said Letizia Filippini, a decorator, as did Carlo Ginori, the Florentine marquis who opened the original factory here in 1735, after scouring Tuscany to find kaolin, the white clay that is the essential ingredient of porcelain.

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DealBook: As Unwanted Suitor Looms, KPN Struggles to Find Buyer for German Unit

KPN’s last-ditch efforts to forestall a hostile bid by América Móvil, Latin America’s largest mobile operator, may have ended after it broke off talks to sell its German business.

KPN, the Dutch telecommunications company, has been trying fend off the unwanted advances of América Móvil for weeks. In May, América Móvil, which is owned by the Mexican billionaire Carlos Slim Helú, offered 8 euros a share to increase its stake in KPN to 28 percent.

After rejecting the offer, KPN moved to block América Móvil by putting its German unit, E-Plus, up for sale. While KPN never disclosed the nature of the discussions, Telefonica was the suitor, according to a person with the knowledge of the matter.

Telefonica, which is América Movil’s rival in Latin America, has reason to hamper América Movil’s move into Europe, where Telefonica is the No. 1 operator in terms of customers but has been struggling amid the economic crisis in Spain. A fusion of E-Plus and O2, Telefonica’s German carrier, would have merged the No. 4 and No. 3 carriers in the country, creating a new market leader by leapfrogging over T-Mobile and Vodafone Germany.

But a potential deal was stifled by the region’s economic woes. In a statement, the Dutch operator called off the discussions, blaming “current adverse conditions in the financial markets.”

“This means either that KPN and Telefonica couldn’t agree on a price for E-Plus or Telefonica had trouble raising financing for the acquisition,” said Jeffrey Vonk, an analyst at ING Bank in Amsterdam.

Stephen Hufton, a spokesman for KPN, said the Dutch operator was still interested in a sale or other solution for E-Plus as part of its strategy to focus on its home market.

“We believe there is still considerable value to be unlocked in the German market through consolidation but that wasn’t possible given the situation with the financial markets at this time,: Mr. Hufton said. “But that doesn’t exclude it later.’’

Even so, analysts say América Móvil now has the upper hand. Shares of KPN were down by 4 percent on Thursday, to 7.58 euros per share, below América Móvil’s offer.

“I think it is now likely that América Móvil will succeed in its bid for a bigger stake in KPN,’’ Mr. Vonk said.

Since making an offer, América Móvil has been slowly increasing its stake. America Movil said on Wednesday that it had so far acquired 8.7 percent in KPN, up from 4.8 percent when it first approached the company.

Mr. Vonk, the ING analyst, said the decline in KPN’s share price and high trading volume in the stock today in Amsterdam indicated that Mr. Slim may be moving quickly toward his goal.

“I think he is probably taking advantage of the current share price,’’ Mr. Vonk said.

América Movil’s bid for KPN is the company’s second move into Europe. On June 15, America Movil said it had reached an agreement to acquire a 21 percent stake in Telekom Austria, increasing its total stake to 23 percent in that country’s market leader, in a transaction that will conclude by the end of the year.

“I think there is certainly a possibility that América Móvil will become a factor in Europe,’’ said Pete Cunningham, an analyst at Canalys, a research firm, in Reading, England. “If you look at the economic pressures in Europe, operators are in a difficult position. And Latin America is growing faster.’’

Under Dutch law, Mr. Slim’s bid is intended to acquire the most influence at the least cost. By limiting his stake to less than 30 percent, America Movil doesn’t have to extend its offer to all KPN shareholders, as per the rules in the Netherlands.

If Mr. Slim acquires 28 percent in KPN, he could gain effect control or wield outsize influence at KPN shareholder meetings. Typically, only 45 percent of KPN investors vote, according to the operator.

“But if América Móvil does succeed in its bid, and I think it will, then the participation at KPN shareholder meetings may increase, which could dilute his influence,’’ Mr. Vonk said.

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Portugal’s Financial Crisis Leads It Back to Angola

The hands-out visit on Thursday of Prime Minister Pedro Passos Coelho of Portugal to its former colony Angola — once a prime source of slaves, then a dumping ground for the mother country’s human rejects and now swimming in oil wealth — was a milestone of sorts.

While Europe’s financial distress has already revived bad historical memories — 70 years after Nazi occupation, Greeks are grumbling about taking marching orders from German gauleiters — and reversed others — there was talk of a Chinese rescue for the continent that once humiliated it — the Angola-Portugal moment has had no equal in its upfront plaintiveness.

“Angolan capital is very welcome,” Mr. Passos Coelho said in Luanda, the capital city. That may be an understatement: the former colony’s cash could be essential as Portugal is forced to sell off state-owned companies and shutter embassies after a $105 billion International Monetary Fund bailout this year.

“We should take advantage of this moment of financial and economic crisis to strengthen our bilateral relations,” he said gingerly, mindful that Angola’s economy is predicted to grow 12 percent next year while his own country’s is expected to shrink almost 3 percent.

The Angolan president, José Eduardo dos Santos, was gentle after his meeting with Mr. Passos Coelho, using language African leaders are more accustomed to hearing from their European counterparts. “We’re aware of the difficulties the Portuguese people have faced recently,” Mr. dos Santos said. “Angola is open and available to help Portugal face this crisis.”

Angola is rich in cash thanks to its huge oil reserves and its equally significant underinvestment in its own 18 million people. By the end of 2010 it was Africa’s biggest oil exporter, and by the end of June it had $24 billion in international reserves, according to the State Department. But it ranks only 148th on the United Nation’s 187-nation Human Development Index; around two-thirds of the population lives on less than $2 a day.

The Angolan state oil company already owns 12.4 percent of Portugal’s biggest private bank, Millennium BCP, and the president’s daughter Isabel, said by scholars to be not coincidentally the country’s leading businesswoman, bought 10 percent of a dominant Portuguese media company, Zon, in 2009.

“There is this unusual situation where the former colonial power, Portugal, is desperately looking for financial investors,” said Paulo Gorjao of the Portuguese Institute of International Relations and Security. “The Angolans have the money.”

In Portugal, it is not uncommon to hear citizens grumble that the only people who can now afford the luxury shops in Lisbon are Angolans, or to be seated next to businesspeople who are seeking their fortunes in Angola. Hundreds of Portuguese companies operate there, and every major Portuguese construction company and all the major banks have interests there.

Angola has come a long way since it won independence from Portugal in 1975, when the statues of the former colonial masters, explorers and governors were torn from their plinths in Luanda, and 90 percent of the Portuguese settlers fled. A bloody 27-year civil war followed.

The tables have turned; the Portuguese want to come back. The Portuguese or Portuguese-descended population in Angola increased to 91,900 in 2010 from 21,000 in 2003.

Portuguese commentators insisted there were no hard feelings. A headline in the leading newspaper Diário de Notícias read simply: “The power of Angolan oil.”

But government critics in Angola saw irony in Portugal’s quest. “The capital barely has any electricity,” said Rafael Marques de Morais, an anticorruption campaigner. “The basic infrastructures are not being done. And yet the president can say we are ready to bail out Portugal. It’s very offensive.”

“There is still the colonial mentality in Portugal,” he added. “They just want to extract resources and plunder the country. The only difference is this time they didn’t take them by force.”

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