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A Wave of Setbacks May Push Europe Into a New Downturn

August 14, 2011 by Leave a Comment

Mr. Knott, who runs Furness Heating Components, has cut his work force to 18 people from 25 and said business is tougher than he has ever seen it. “There’s a lot of competition, and people are just not building that many houses anymore,” Mr. Knott, 53, said.

Data released Friday leaves little doubt that the European economy is losing momentum before most countries have even recovered to the level of output they had in 2008, when the recession hit.

But the larger question is whether an increasingly toxic brew of flagging output and sovereign debt crisis — along with the market downturn — will create something more sinister than a mere slowdown, and lead more businesses to cut jobs and investment as Mr. Knott has.

In France, the second-largest economy in the European Union after Germany, growth came to a standstill in the three months through June, according to official figures. Meanwhile, industrial production in the 17-nation euro area fell 0.7 percent in June compared with May, more than analysts had forecast.

On Tuesday, economists expect a report on euro area economic activity to show that gross domestic product slowed to 0.3 percent in the second quarter, from 0.8 percent in the first three months of the year.

If there is less economic growth, governments will collect less tax revenue. They will have more trouble paying their debts. That could make investors even more nervous and add to turmoil in the stock and bond markets, which will undercut business and consumer confidence, which will lead to yet slower growth, and so on.

“There is a real risk that there is a self-enforcing cycle under way here,” said Martin Lueck, an economist at UBS in Frankfurt.

Mr. Lueck said he believes the most likely prospect is less dire, but even his more optimistic view calls for a brief slowdown on the way to a “new normal” of weaker growth in Europe and the United States. And he acknowledged that, in 2008, many economists underestimated how quickly and severely the financial crisis would spill into the broader economy.

“We learned the hard way,” Mr. Lueck said. “The links between the financial world and the world economy are very strong.”

Another recession is already well under way in Greece and Portugal, while growth in countries like Spain, Italy and Britain has been very slow since last year. But now Germany, which has been remarkably strong, hauling the rest of the Continent along with it, seems to be decelerating. The Ifo Business Climate Index, considered a reliable predictor of German growth, fell in July as executives became less optimistic about exports.

“It is more than a soft patch,” said Eric Chaney, chief economist at a French insurer, the AXA Group. “The business cycle is really coming to a quasi-standstill in Europe.”

Disappointing earnings reports from companies like Daimler, Deutsche Bank and Siemens in the last month have reinforced the feeling that Germany’s extraordinary boom is near an end. E.On, Germany’s largest utility, said on Wednesday that it might need to cut as many as 11,000 jobs after suffering the first loss since it was created a decade ago from a group of state-owned utilities.

E.On attributed the loss chiefly to the government’s decision to force some of the company’s nuclear power plants to close early, but sales declines in foreign markets like Britain and Hungary also played a role.

Even companies that have done well are warning about risks ahead. “The coming months will be challenging for us,” Martin Winterkorn, the chief executive of Volkswagen, said in late July after the carmaker reported that profit more than tripled to 4.8 billion euros ($6.8 billion).

A big problem for Europe is that domestic demand is weak and growth has become primarily dependent on sales from abroad, where the signals are flashing yellow. The United States, still the largest foreign market for companies like BMW, is slowing and could slip into recession. The earthquake, tsunami and nuclear disaster in Japan had a greater impact on global trade than economists expected. And demand from China and emerging markets is slackening.

“Germany is so leveraged in global trade that if something happens, then Germany slows immediately,” Mr. Chaney said. “That makes the recovery more fragile. It depends on the good health of the rest of the world.”

Julia Werdigier reported from London.

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Growing Concern Over France’s Top Credit Rating Spreads Market Anxiety

August 11, 2011 by Leave a Comment

Shares of French financial institutions were hammered Wednesday on the Paris stock exchange on mounting fears that France’s own sterling credit rating could be cut, if the cost of cleaning up the European debt crisis weighs on the nation and its banks.

French banks are loaded up on the debt of Italy and Greece, among other troubled European countries that share the euro.

It seemed not to matter that the French government — along with the credit raters Standard Poor’s, Moody’s and Fitch — issued statements on Wednesday insisting France’s rating was not at risk. The market anxieties spread wildly, engulfing Société Générale, the second-largest French bank. Its shares slumped as much as 21 percent before closing down by 14.7 percent.

Stock in BNP Paribas, France’s largest bank, fell 9.5 percent.

President Nicolas Sarkozy interrupted his vacation on the French Riviera to return to Paris for an emergency meeting with finance officials to discuss “the economic and financial situation” of France, whose government debt and budget deficit make it look the weakest of any big AAA-rated nation.

Mr. Sarkozy gave his ministers a deadline to prepare measures to ensure that France meets its deficit reduction targets, which it had trouble doing in the past. Analysts say France also needs to stoke growth and cut its high sovereign debt, which S. P. cited in its note accompanying the American downgrade on Friday.

That note projected that France’s debt in the year 2015 would be 83 percent of its gross domestic product — even higher than the 79 percent S. P. forecast for the United States by that year.

S. P. also indicated that it expected France and other AAA-rated nations to have their debts and deficits more under control than the United States by then. But the vultures now circling France apparently did not read, or at least heed, that caveat.

“There has been a lot of market noise about France, rather than ratings agency noise,” said Gary Jenkins, a strategist at Evolution Securities. “On the other hand, there was market noise about the PIGS and the United States before they were downgraded,” he noted, using an acronym for the European countries swept up in the debt crisis — Portugal, Ireland, Greece and Spain.

The annual cost to insure $10 million in French government debt against default jumped to a record $175,000 on Wednesday, up from only $100,000 three weeks ago. The cost also hit records for Société Générale and BNP Paribas.

French banks are among the most exposed to Greek, Spanish and Italian debt, and they also hold huge amounts of French sovereign debt.

Société Générale, a globally interconnected bank that the French government regards as too big to fail, moved closer to the eye of the storm recently. It has significant exposure to Greece through a retail subsidiary there, and it holds vast sums of troubled debt from small and large European economies.

On Wednesday, it was hit in particular by talk that Groupama, a large French insurer that owns about 4 percent of Société Générale, needed to raise money. Groupama did not return calls for comment.

But David Thébault, head of quantitative sales trading at Global Equities in Paris, noted that many other European insurance companies, as well as banks, were scrambling after S. P. downgraded the United States to AA+ from AAA. Many of those companies and banks need to replace their United States Treasury securities because they are required to hold only top-rated sovereign debt.

“Volatility is very high — we’re in quasi-crisis mode,” he said.

Société Générale issued a lengthy statement after the close of trading, saying it “categorically and vigorously” denied all the “completely unfounded” market rumors that affected its share price. The bank, which reported a 1.6 billion euro ($2.28 billion) first-quarter profit last week, said it had asked the French stock market regulator to investigate the source of the rumors.

The big fear in the markets, though, is the threat of contagion — whatever the reason for the tumult.

“We’ve been really cautious, and the sovereign crisis is now escalating,” said Philip Finch, global bank strategist for UBS. “It boils down to a crisis of confidence. We haven’t seen policy makers come out with a plan that is viewed as comprehensive, coordinated and credible.”

Despite France’s undisputed influence as Europe’s biggest power broker next to Germany, its debt as a percentage of gross domestic product is expected to reach 85.3 percent this year, according to the International Monetary Fund. That would be the highest among any European country in the AAA club.

France’s budget deficit, meanwhile, will hit 5.7 percent of G.D.P., the I.M.F. said, well above the 2.3 percent forecast for Germany, and the second-highest in Europe after Britain.

And despite an array of world-class companies like LVMH Moët Hennessey Louis Vuitton, L’Oréal, Renault and Danone, France’s economy is gripped by labor market rules and other factors that keep it from growing faster.

The economy is expected to grow only 2 percent this year and next, slower than the 3.4 percent pace of Germany. Unemployment is around 9 percent.

Mr. Sarkozy pledged on Wednesday to find new ways to cut the deficit and reduce France’s huge debt ratio, which would swell if a widening crisis forced France to supply tens of billions more euros to pay the cleanup bill. But just as President Obama’s speech on the American economy on Monday fell on deaf ears, so, too, did markets ignore Mr. Sarkozy’s promises.

The French president has made it a priority to avoid a sovereign debt downgrade on his watch, especially as he girds for a campaign in the presidential elections scheduled for 2012.

Mr. Sarkozy has emphasized France’s strong stewardship of the European crisis. But that could come back to haunt his political ambitions if the crisis devours his own country.

David Jolly contributed reporting from Paris, Nelson Schwartz and Louise Story from New York and Landon Thomas Jr. from London.

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The Lede: Latest Updates on the Financial Markets

August 10, 2011 by Leave a Comment

August 09

Riots in London and Paris: Plus Ça Change?

For many, the images from London called to mind the 2005 riots in France, but the events themselves appear to have less in common than meets the eye.

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Media Decoder: Soft-Pedal Captain America Overseas? Hollywood Says No

July 4, 2011 by Leave a Comment

“Captain America: The First Avenger” stars Chris Evans in the leading role.Paramount Pictures and Marvel Entertainment“Captain America: The First Avenger” stars Chris Evans in the leading role.

LOS ANGELES — Last week, Marvel Studios started to roll out ads for its newest movie star. He’s big and brawny! He’s star-spangled! He’s Captain America, marching into multiplexes everywhere!

Well, um — hold that. Almost everywhere.

Marvel knew it faced a marketing battle when it decided to make a movie about a 71-year-old Nazi-fighting supersoldier named Captain America.

Selling a quaintly patriotic war hero in a politically divided United States would be tricky enough. What about overseas, where movies can generate over 70 percent of their total box-office revenue and the word “America” can be a downright dirty one?

Marvel and Paramount Pictures, which is distributing “Captain America: The First Avenger,” figured they would simply release the film as the truncated “The First Avenger” in foreign countries. But in a surprise, Paramount’s overseas operation objected, arguing that Captain America had too much brand value, even in spots like France that are leery of embracing Team America too readily.

Hollywood renames movies for distribution overseas all the time, usually for translation purposes. “The Hangover Part II” became “Very Bad Trip 2” in France, for instance.

And studios routinely avoid overt Americana in marketing materials. In 2006, a nervous Warner Brothers changed the well-known Superman line “truth, justice and the American way” to “truth, justice and all that stuff” in “Superman Returns.” Paramount dropped the tagline “A Real American Hero” for its 2009 film about G.I. Joe, replacing it with “The Rise of Cobra.”

In the end, the studios decided that Captain America would keep his name in all but three countries: Russia, Ukraine and South Korea.

Why the change in those places? Spokeswomen for Marvel and Paramount declined to comment. But people with knowledge of the decision, speaking on the condition of anonymity to avoid a conflict with the studios, cited reasons of culture and politics in addition to brand awareness.

The cold war kept the comic book version of Captain America from putting down roots in Russia and Ukraine as he did elsewhere in the world, these people said. But anti-American sentiment was also a factor.

The studios ultimately decided too much ticket revenue was on the table in Russia and Ukraine, both fast-growing movie markets, to take a risk over the title.

South Korea is another story. Although that country is one of Hollywood’s top-performing territories, resentment about the continued presence of the United States military runs deep. Marvel and Paramount worry that those feelings are particularly strong among younger South Koreans, the ones who powered “Iron Man 2” to $27 million in ticket sales in that country last year.

Captain America sprang to life in Marvel Comics in 1940 as overt anti-Hitler propaganda. Marvel’s film, which will arrive in North American theaters on July 22, is set in that period and focuses on the character’s origin as a sickly guy who, after being rejected for enlistment, is transformed through science into a secret military weapon.

“Captain America: The First Avenger” is unlikely to be distributed under any title in China, which has become a hugely important box office market. Because China allows only 20 non-Chinese films to be shown in local theaters each year, it seems like a stretch that Cap, as he’s known to fans, would make the cut. But a final ruling has not been made.

Not that the film itself is taking any controversial stances on American foreign policy. Chris Evans, starring as Captain America, spouts lines like, “I don’t like bullies, wherever they’re from.”

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Merkel Changes Stance on Aid to Greece

June 18, 2011 by Leave a Comment

Her critics in the European Central Bank and in many European capitals had argued that any requirement that private investors absorb some losses risked plunging Greece into a disorderly default on its enormous debt.

But after a two-hour meeting with President Nicolas Sarkozy of France, whose banks are among the most heavily exposed in the Greek debt crisis, Mrs. Merkel relented, saying, “We would like to have a participation of private creditors on a voluntary basis.” She acknowledged, too, that there was no legal way of forcing banks to participate.

“This should be worked out jointly with the E.C.B,” she added, referring to the European Central Bank. “There shouldn’t be any dispute with the E.C.B. on this.” It was her second major political reversal in a month and could compound her political woes at home.

Mrs. Merkel spoke shortly after the embattled Greek prime minister, George Papandreou, reshuffled his cabinet after days of turbulence on the streets of Athens and within the political elite. In the most prominent change, he named Evangelos Venizelos, the former defense minister, as finance minister in place of George Papaconstantinou, who has been the highly visible face of the austerity drive.

Critics dismissed the change as cosmetic. Yanis Varoufakis, a political economist at the University of Athens, told Skai television that “not even God almighty” as finance minister could redeem the situation. Nevertheless, the combination of the cabinet changes and the agreement between France and Germany on Friday calmed jittery markets.

Behind most calculations about the Greek crisis lies the much broader worry about whether financial woes in Athens will lead to a domino collapse of other weak euro zone economies, such as those of Portugal and Ireland, and create a “credit event” similar to the one that froze global markets after the Lehman Brothers bankruptcy. To stave off an imminent default, Greece needs the next $16.8 billion installment of a $155 billion loan package it received a year ago. But Greece is also likely to need another longer-term bailout — estimated at up to $84 billion — before it can get its budget deficit, currently at 7.5 percent of gross domestic product, into a surplus.

The potential for European chaos is immense. The European Central Bank itself holds billions of euros in shaky Greek debt and has firmly opposed anything that could set off what rating agencies call a “credit event,” or default.

Officials with the European Union and the International Monetary Fund have expressed confidence that an agreement to release the next loan installment could emerge from a meeting of euro zone finance ministers on Sunday in Luxembourg, while the question of the proposed second rescue package could be put off until July. Mrs. Merkel’s retreat was all the more significant because German voters have registered loud concerns that their tax money, levied on a country known for prudence and restraint, is being used to spare Greece from the results of its own mismanagement and profligacy. With the demand for private lenders to be brought into the rescue, Mrs. Merkel had hoped to show German voters that the banks would share their pain.

The German leader also reversed her energy policies this month, moving up the deadline for Germany to close down most of its nuclear power stations to 2022. While she said publicly that her change of mind was a result of the nuclear disaster in Japan, many analysts saw it as a desperate attempt to recover political ground after a series of defeats in local elections.

Mrs. Merkel’s junior coalition partners, the Free Democrats, are also weak, leaving her bereft of powerful allies. “This coalition, as everyone knows, is an alliance for ill, not good,” The Süddeutsche Zeitung of Munich said in an editorial on Friday.

Article source: http://www.nytimes.com/2011/06/18/business/global/18euro.html?partner=rss&emc=rss

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DealBook: Avis Budget to Buy Avis Europe for $1 Billion

June 14, 2011 by Leave a Comment

Avis Budget Group said Tuesday that it would buy Avis Europe for $1 billion, in a sign that the car rental company may be moving on from its long campaign to take over Dollar Thrifty.

The deal, which values Avis Europe at £3.15 ($5.16) per share, is set to close in October, pending the customary approvals.

Avis Budget said it had received “irrevocable” commitments from the target company’s board as well as its controlling shareholder, D’Ieteren, a publicly traded Belgian company that holds nearly 60 percent of Avis Europe.

“The transaction reunites the global operation of the Avis and Budget brands under one corporate umbrella, and is both financially and strategically compelling,” said Ronald L. Nelson, chief executive of Avis Budget Group, predicting that operating synergies would reach $30 million a year.

“Because Avis Europe and Avis Budget generally do not have operations in the same jurisdiction, the acquisition is not expected to face significant antitrust obstacles,” he said.

Antitrust obstacles have been holding back Avis’s $1.8 billion offer for Dollar Thrifty, made last September and under review by the Federal Trade Commission.

It is also being challenged by Hertz, which has offered $2.24 billion to combine with Dollar Thrifty, the fourth-largest rental car company in the United States.

Both Hertz, the second-largest, and Avis Budget, the third-largest, having been trying to rival Enterprise, which dominates the sector.

But now Avis is looking abroad.

“While Avis Budget will continue to monitor the Dollar Thrifty situation, the company’s focus squarely will be on completing and integrating the significant acquisition of Avis Europe,” the car rental firm said, noting that it had “made progress” with the Federal Trade Commission.

The deal with Avis Europe, which draws 86 percent of its revenue from France, Germany, Italy, Spain and Britain, would give the newly combined group yearly revenue of about $7 billion and operations in 150 countries.

The European company, listed in London and based in the British town of Bracknell, employs more than 5,000 people and reported revenue of more than 1.5 billion euros last year, based on seven million rental transactions. It holds 18.3 percent of the European market, and has a presence in the continent’s 75 major airports.

Avis Europe shares rose 113 pence, or 57.7 percent, to 310 pence in early morning trading in London.

Avis Budget will finance the acquisition with a combination of cash reserves, debt and the issuance of $250 million in Avis Budget common stock.

The American group hired Morgan Stanley and Citigroup as its advisers and Kirkland Ellis as its legal counsel. Avis Europe hired Barclays Capital as its sole financial adviser, and chose Freshfields Bruckhaus Deringer as legal counsel.

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Europeans Act to Stem Drought Damage

June 10, 2011 by Leave a Comment

PARIS — Suffering from a record-shattering drought, European nations started preparing emergency plans this week to conserve water and provide millions of euros in aid to farmers, including the deployment of soldiers to deliver hay for cattle grazing on sun-baked soil.

On Thursday, President Nicolas Sarkozy toured a cattle farm in western France to announce an aid package and the service of soldiers and national trains to deliver fodder for livestock farmers. They are comparing the warm temperatures to the heat wave in the summer of 2003, when more than 10,000 people died in Europe.

The aid, which officials said could reach €1 billion, or more than $1.4 billion, also includes a year deferment on paying back government farm loans, a land-tax exemption, and the development of a five-year plan to improve water reserves and management.

“It is essentially a cash flow problem,” Mr. Sarkozy said in his tour of a farm in Montemboeuf. “We will find you room to maneuver.”

Farmers are facing difficult conditions. Before rainstorms last week, the period from March to May in France was the driest in the previous 50 years and the warmest since 1900, according to Météo France, the public weather service.

Records have also fallen in England, where the spring has been the driest since 1910 and the warmest since 1659. In Germany, the weather service said the drought was the worst since the nation started measuring rain in 1893.

Friedrich-Wilhelm Gerstengarbe, a scientist and assistant director of the Potsdam Institute for Climate Impact Research, said he considered global warming a factor in a changing pattern of extreme weather conditions of drought, storms, and floods.

“The stable climate we had for 100 years before is now changing to an unstable one,” he said. “The question is, what kind of plans will nations use in the next decade if droughts increase?”

This year’s drought is already starting to have a cascading effect, from a 13 percent decline in the French wheat crop that could lead to an extra five cents for a daily baguette to the early slaughter of cattle because parched grazing lands are brown with dead grass.

A plunge in the rapeseed harvest in Germany, which produces about a quarter of the Europe Union’s crop, is expected to depress biodiesel production.

In some parts of the Netherlands, the river levels have fallen to a 90-year low and dikes are being monitored for risks of drying out and cracking.

Wheat and barley are wilting in England, which will have an effect on beer production.

A few industries have remained immune to the drought. Salt harvesters in Guérande, in western France, have gathered the salt almost two months earlier then usual because of the dry conditions.

The dearth of rain has not affected the French wine industry so far. The deep roots of grave vines extend meters into the ground, tapping water reserves longer then other crops. In Burgundy and Bordeaux, for example, grape development is about three weeks ahead of schedule because of warm weather, according to regional trade associations.

“We have no worries about the weather, at least for the moment,” said Eve Gueydon, who heads technical communications at the Bureau Interprofessionnel des Vins de Bourgogne, the trade association for Burgundy wines. “Other dry years have produced great vintages.”

But for other farmers, like Ralf Schaab, who runs Hof Erbenheim, a fruit and vegetable farm in Germany, the soil remains parched even after some rain fell in early June.

“Normally, we have no artificial irrigation because we have very good soil that can store a lot of water,” Mr. Schaab said. “So it’s not such a big problem if it does not rain for four to six weeks. But eventually good soil reaches its limits and that exactly was the case after a three-month dry spell.”

In Europe’s capitals, the authorities are considering conservation and relief measures, in particular for livestock producers. The payment of cattle subsidies to farmers will be advanced to October from December, said Roger Waite, a spokesman for the European Commission. He said a working group of the beef industry had been formed to develop relief measures this summer.

“From what we’ve seen, the lack of rainfall is most significant in the Netherlands, Belgium, France and areas of Spain, Germany and England,” Mr. Waite said. “It varies from crop to crop. Above all, the livestock will be the worst hit, especially cattle because of the cost of feed. The trouble is that if grass doesn’t grow, the farmer has to provide extra feed and they are hit with an unexpected cost.”

In England, farmers, government officials and utility companies plan to meet this week to evaluate the drought’s impact on southern and eastern England. Caroline Spelman, the environment secretary, has commissioned a report on the effect on food production and water and power supplies.

France has also set up a monitoring committee for its energy industry, as the authorities are concerned about the impact on electricity supplies and the control of river flows. France is home to more than 50 nuclear power plants, which generate most of its electricity and use river water to cool their systems.

The Energy Ministry has insisted that the drought does not present a safety problem. But critics recall that during the hot summer in 2003, low river waters forced the government to turn off several nuclear plants.

Eric Pfanner contributed from Paris, and Stefan Pauly from Berlin.

Article source: http://www.nytimes.com/2011/06/10/world/europe/10iht-drought10.html?partner=rss&emc=rss

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Google Tries to Make a Name in Europe as Local Player

May 15, 2011 by Leave a Comment

PARIS — Chiseled into the stone facade of the vacant Second Empire building at 8 rue de Londres here is the name of the French national railroad, a former occupant. Most recently, the site housed another conservative pillar of the French corporate establishment, the insurer AXA. The proud new owner is a company with a very different image in France, more bomb-thrower than bourgeois: Google.

Google, the U.S. Internet giant, acquired the building, around the corner from the Saint-Lazare train station, for an estimated €150 million, or $210 million, and Google employees are expected to move from their current nondescript Paris office by the end of the year.

The investment is part of a campaign by Google to win hearts and minds across Europe as it confronts legal, regulatory and political challenges on issues including privacy, copyright dispute, antitrust actions and taxation. The company is spending hundreds of millions of euros to try to demonstrate that it is a responsible corporate citizen and a valuable contributor to the local economy, not the willful opportunist it is often portrayed as in France.

Google executives said that their strategy had been formulated late in 2009, when they realized that their problems in Europe were more serious than in any other part of the world, with the exception of China, and could no longer be brushed aside with recitations of the company’s slogan: “Don’t be evil.”

“We were hearing from people in government, the media, in our industry: ‘You need to be more of a part of the culture writ large,”’ said David C. Drummond, the chief legal officer at Google. “We took these criticisms to heart, and we’ve been working to defuse these issues.

“We’re really trying to work with folks in Europe to establish ourselves as more of a local player that is investing in jobs, in facilities, our physical presence, and all the ancillary things that come with that,” he added.

Mr. Drummond said he had adopted the role of Google’s “chief diplomat” in Europe, meeting regularly with politicians, business leaders and regulators. Other top executives, including Eric E. Schmidt, the former chief executive and current executive chairman, and Larry Page, the co-founder and current chief executive, have jetted to Europe to make speeches and to dispense chunks of the company’s $36 billion in cash reserves.

Many of the investments seem to be tailored to align with issues of particular concern to local policy makers and populations. In Ireland, for example, where the bursting of a huge real estate bubble has left the economy in tatters, Google recently acquired, for €100 million, the tallest office building in Dublin, buying it from the government agency managing bad loans held by Irish banks.

In Germany, where Google is under criminal investigation over whether its Street View mapping service broke laws on data protection, the company plans to open an Institute for the Internet and Society. The center, to be set up in Berlin with an academic institution still to be identified, will study issues like privacy in the digital era.

In April, as German concern over nuclear power grew after the accident at the Fukushima Daiichi plant in Japan, Google announced plans to invest €3.5 million in a solar power facility near Berlin.

In France, where Google’s efforts to digitize books and other cultural material have been denounced as cultural imperialism by some critics, the new Paris headquarters will house what Google calls a European cultural center.

Employment is also a perennial concern in France, and Google says it plans to double its French payroll, to 500, over the next two years. Over all, the company plans to hire 1,000 new employees across Europe this year, Mr. Schmidt has said.

“We have been accused of doing these things sometimes only to clean our image,” said Carlo d’Asaro Biondo, a Google vice president who oversees the company’s business in southern Europe. But he insisted that the company’s motives were pure. “All of these plans are ways to show respect to local cultures,” he said.

Google contends that the campaign is working, with previously strident critics recently having softened their tones.

President Nicolas Sarkozy of France, once declared, “We are not going to be stripped of our heritage for the benefit of a big company, no matter how friendly, big or American it is”; more recently he quoted from a Google-sponsored study in a speech about the economic benefits of the Internet. When Google announced plans for the cultural center in Paris, Mr. Sarkozy welcomed “Google’s important investment to be made in France, in addition to the dialogue between Google and people who play an important role in the French culture.”

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Energy Agency Sees Slowdown in Oil Demand

May 12, 2011 by Leave a Comment

In its monthly report, the agency, an adviser to industrialized nations, trimmed its full-year 2011 global oil demand estimates to 89.2 million barrels a day, 190,000 fewer barrels than its previous estimate. That would still be 1.5 percent more than 87.9 million barrels in 2010.

The agency said it acted because of “persistent high prices” and weaker projections for advanced economies by the International Monetary Fund.

The I.E.A. said several factors contributed to the uncertain economic outlook, including the effects of the Japanese earthquake in March, political and social unrest in several large countries in the Middle East, the recent surge in commodity prices, risks associated with current-account imbalances and possible asset bubbles in large emerging economies.

At the same time, higher prices at fuel pumps in Europe and the United States are starting to reduce consumption, the agency said.

In the United States, gasoline prices rose to almost $4 a gallon in early May. In France, they have surpassed 1.50 euros a liter, or more than $8 a gallon. Higher prices in Europe reflect a heavier tax burden.

The report said that if gasoline prices remained at current levels, demand would be weak in the United States as the summer driving season approached.

Demand for oil products in Europe sank 4.1 percent in March from a year earlier, the report said, because of weak demand for heating oil, resulting from higher seasonal temperatures, and falling demand for diesel, gasoline and other oil products.

The governments of Russia, Brazil and China face difficulties passing on recent price increases to consumers, the report said, which helps sustain robust demand growth in countries outside the Organization for Economic Cooperation and Development.

The agency said that apparent growth in Chinese oil demand accelerated slightly in March, reversing a slowdown observed in the previous two months.

China faces a “paradox,” it said. Wholesale prices are too low to guarantee positive refining margins, but retail prices have increased enough to foster popular discontent. The authorities have increased prices three times since December.

Despite expectations that the Organization of the Petroleum Exporting Countries would increase output to replace supplies lost because of the uprising in Libya, the cartel’s production is now running 1.3 million barrels a day below the level before the crisis, the International Energy Agency said.

“While the loss of Libyan supplies in March and April was partially mitigated by the spring seasonal drop in refinery throughputs, forecast product demand for the second half of the year suggests a much tighter market balance,” it said.

OPEC representatives are scheduled to meet in Vienna on June 8 to discuss supply.

Article source: http://www.nytimes.com/2011/05/13/business/energy-environment/13iea.html?partner=rss&emc=rss

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Europe Seeks to Set Standard for Protecting User Data

May 3, 2011 by Leave a Comment

BRUSSELS — As pressure grows for technology companies like Apple and Google to adjust how their phones and devices gather data, Europe seems to be where the new rules are being determined.

Last year, Google generated a storm of controversy in Germany when it had to acknowledge it had been recording information from unsecured wireless networks while compiling its Street View mapping service.

Then, last week, regulators in France, Germany and Italy said they would examine whether Apple’s iPhone and iPad violated privacy rules by tracking the location of users.

Also, reports emerged last month that the Dutch police had obtained information from TomTom, a maker of popular satellite navigation devices, while setting up speed traps, prompting concerns by users and an apology from TomTom.

The companies all said there was nothing sinister about their activities, though Apple said it would issue a software update limiting the time that location data was kept to seven days. None of the information, the companies said, is particularly sensitive from the point of view of personal privacy, and they claim it will help them to deliver better services in many cases.

To address concerns about data protection, Viviane Reding, the European justice commissioner, said in a speech Tuesday that she would propose extending unionwide rules about breaches of privacy to online banking, video games, shopping and social media.

The rules require phone companies and Internet service providers to inform customers of any data breach “without undue delay.”

“European citizens care deeply about protecting their privacy and data protection rights,” Ms. Reding said in a separate statement.

“Any company operating in the E.U. market or any online product that is targeted at E.U. consumers should comply with E.U. rules.”

Ms. Reding made her remarks shortly after Sony apologized for a data theft involving 77 million account holders of the PlayStation Network, and a week after Apple said it would change the software that logs the location of users of its iPhone and iPad tablet computer.

“Seven days is too late,” Ms. Reding said Tuesday, referring to how long it took Sony to inform account holders.

Regarding Apple, she said she understood how the discovery that the iPhone collected location data had eroded “the trust of our citizens.”

Abraham L. Newman, an assistant professor at Georgetown University and a specialist in European privacy issues, said Europe’s spotlight on privacy could offer companies like Apple and Google the chance to reorganize the way they handled policies worldwide, using European standards in their corporate strategy.

Alternatively, he said, the companies could develop policies to ensure that data gathered in Europe was sufficiently “quarantined” to comply with rules, but limit changes in the rest of the world.

“Apple is entering a political dynamic in Europe which is similar to Google’s experience,” Mr. Newman said. “Authorities in Europe have decided that consumers better not be duped in a world of unlimited location data where companies know literally every step you take.”

What particularly distinguishes Europe is the strong role played by so-called national data protection authorities in keeping tabs on privacy issues, he said.

In the United States, there is no single agency dedicated to privacy, and while the Federal Trade Commission and the Federal Communications Commission can deal with violations of privacy, those agencies are mainly focused on enforcing fair business practices.

But Ms. Reding said the differences between Europe and the United States should not overshadow signs of convergence, like the work by the Obama administration and Congress to pass a privacy bill of rights that would stop companies from collecting or sharing personal information without an Internet user’s consent.

“Until recently, there was a common belief that the E.U. and U.S. have different approaches on privacy and that it would be difficult to work together,” Ms. Reding said.

“This can no longer be argued in such simple terms.”

Article source: http://feeds.nytimes.com/click.phdo?i=64b50a380e34e8b3249d866c831b3a82

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