The next emerging market: A billion women
You would never dream of not investing in India. You would never dream of not investing in China. So why wouldn’t you invest in women? That question was posed by Beth Brooke of Ernst & Young at the launch on Wednesday of a campaign called The Third Billion that aims to empower women as a means to drive economic growth. The campaign is based on the notion that there are a billion women not participating in the global economy who should be.
“Every country, every company in the world is looking for growth wherever they can find it,” Brooke said at a panel discussion (which I moderated) at Thomson Reuters headquarters in New York. “Where is the growth coming from? It’s coming from the emerging markets … We historically think of those emerging markets as India and China and many others. But it is clear that women are an emerging market.”
DeAnne Aguirre, senior vice-president at Booz & Company, said the concept of the “Third Billion” comes from the notion that if China and India each represent 1 billion emerging participants in the global marketplace, then a third billion is made up of women around the world whose economic lives have been “stunted, underleveraged or suppressed.”
The figure is based on a Booz & Company analysis of International Labor Organization data on women in the global workforce that showed some 860 million women were excluded for one reason or another, a number forecast to rise to 1 billion in the next decade. (Many of those women are in India and China, of course, so there is overlap with the first and second billions.)
La Pietra Coalition, the global alliance behind the campaign, has identified five factors that contribute to keeping women from playing a more productive role: access to finance; legal and social status; barriers to entrepreneurship; lack of education and training; and labor policy and practice.
The group wants to bring together corporations, governments, NGOs and institutions such as the World Bank to address each of those issues.
Among those that have already partnered with La Pietra are Coca Cola, Wal-Mart, Goldman Sachs and Standard Chartered Bank. Brooke, who is global vice-chair for public policy at Ernst & Young, said a key goal of the campaign is to enlist more big companies.
Behind the scenes at UBS
Emma Thomasson and Edward Taylor tell the inside story of UBS’s turbulent week in today’s second special report “How a rogue trader crashed UBS.”
UBS chief Oswald Gruebel’s decision to resign after the bank said a rogue trader lost as much as $2.3 billion was not just a response to the immediate crisis. It was also an admission that the bank’s latest scandal has effectively undone all his efforts over the past two years to lobby against tougher bank regulations.
The alleged rogue trades have killed any remaining ambitions UBS might have to compete with the titans of Wall Street. They also cast a huge shadow across the entire industry and make tough new regulations far more likely, as the 67-year-old hinted in a memo to staff after he quit. “That it was possible for one of our traders in London to inflict a multi-billion loss on our bank through unauthorised trading shocked me, as it did everyone else, deeply. This incident has worldwide repercussions, including political ones,” he wrote.
After a round of job cuts, the recent events sparked some gallows humor in the banking world. As one senior banker in Zurich put it:
“The joke going around is that Gruebel didn’t need to sack 3,500 people to save 2 billion. He could have just sacked ONE.”
UBS had only recently started to win back the trust of its wealthy private banking clients after risky bets on subprime mortgages came close to felling it in the financial crisis of 2008, as this graphic shows:
Nevada’s Big Bet
What happens in Nevada, stays in Nevada. Literally. Especially when it comes to Nevada shell companies.
That’s the gist of our latest special report in the SHELL GAMES series, “Nevada’s big bet on secrecy.”
The story takes a close look at how changes to Nevada’s incorporation laws a decade ago have made it a haven for U.S. shell companies, as well as a hub for current executives of mass-incorporators who previously went to prison, in large part for using Nevada shell companies for illegal activities.
The state’s liberal incorporation laws – which allow for nominee officers and directors and a higher degree of liability protection than any other state – are a magnet for questionable corporate behavior, it appears.
“Nevada’s Big Bet on Secrecy” had some immediate impact: Ross Miller, Nevada’s Secretary of State, said in August that he planned to introduce a bill which would bar former felons from running mass-incorporators. In September, his office announced a new Corporate Ownership Fraud Task Force, in collaboration with the Internal Revenue Service and the Nevada Attorney General’s office, based in part on data contained in questions posed by Reuters.
The data are sure to raise eye-brows. Reuters found four former felons who run or until recently ran three mass-incorporators in the state which have formed or represented more than 14,000 companies. Over 3,000 of those firms have been the subject of state and federal tax liens and civil judgements, or have been named in federal civil and criminal litigation.
Stress testing the UAW
Today’s special report from Detroit, “Crunch time for America’s richest union,” takes a close look at the finances of the historic United Auto Workers union.
Over its 76 years, the UAW has built up a more than $1 billion war chest that has proven to be its big stick at the negotiating table and on the political stage.
Most of the UAW’s wealth sits in its strike fund, which stood at $763 million at end 2010. That money can only be used to fund strikes unless UAW representatives approve a change to the constitution, a step possible every four years.
The sheer size of the strike fund hides the weakening of the UAW’s finances, particularly since 2007, a period when the U.S. auto industry nearly collapsed and membership fell by about a fifth.
At first glance, the UAW’s financial reports show that overall cash receipts and disbursements have fallen almost exactly in tandem. But a deeper look shows that since 2007, the UAW has relied more and more on selling its investments to offset the sharp drop in dues, its largest source of annual funding.
As shown in the graphic below, in 2007 dues represented more than half the UAW’s incoming revenue, while investment and assets sales were just over 6 percent, according to U.S. Labor Department filings. By 2010, dues composed 43 percent of the UAW’s income, while sales of investments and assets were 23 percent.
New York City gets back to business after Irene
NEW YORK (Reuters) – New York City was slowly getting back to business as usual on Monday after Hurricane Irene but hundreds of thousands of people who normally travel in from the surrounding area faced a hellish commute as flooding knocked out some transit routes.
Downgraded to a tropical and then a post-tropical storm, Irene pelted eastern Canada with rain and 50-mile-per-hour (80-kph) winds late on Sunday after killing 20 people in the United States. It cut power to 5 million homes and businesses and choked towns with floodwaters, especially in Vermont and New Jersey.
Financial markets were expected to open as normal, albeit with reduced volume.
New York subways and air travel at major airports slowly started to resume service but there were expected to be delays and overcrowding and commuter rail services feeding the city from the north and from New Jersey were out indefinitely.
Brian Pearson, 59, who works at the CBS television show called “The 22″ and took the Long Island Railroad to Penn Station, said he was “fashionably late,” but at least he made it. “The show must go on,” he added, as he bought a coffee from a street vendor outside the station.
Those who could avoid public transport seemed to be resorting to driving. Traffic was unusually heavy on Manhattan’s West Side Highway in the early hours, with cars nearly bumper-to-bumper at one point.
In one small, residential northern Manhattan neighbourhood that is ordinarily well-served by the subway system, no fewer than 13 cars-for-hire were idling on the side of the road at 5:30 a.m., waiting for fares.
NY City back to business after Irene, Vermont flooded
NEW YORK (Reuters) – New York City was back to business on Monday after Hurricane Irene but hundreds of thousands of people who normally travel in from the surrounding area faced a difficult commute as flooding knocked out some transit routes.
Farther north, Vermont was battling the state’s worst flooding since 1927 after Irene swept through as a tropical storm late on Sunday. It dumped huge amounts of rain in New Jersey and other states on its way up to Canada.
The storm killed at least 21 people in the United States and cut power to 5 million homes and businesses.
Financial markets were opening as normal, although volume was expected to be reduced. Federal courts in New York also were due to be open.
New York subways and air travel at major airports slowly started to resume service but commuter rail services feeding the city from the north and from New Jersey were out indefinitely, plagued by debris on the tracks and standing water.
On Sunday the doors of the New York Stock Exchange had been lined with sandbags and tarps in anticipation of a flood but they were were nowhere to be seen on Monday morning.
Paul Orlando, 45, who works at a private bank, stood outside two blocks from Wall Street smoking a cigarette and laughed that, in anticipation of a difficult commute, he had gotten to work two hours early from his home in the borough of Queens.
Hurricane Irene poised to hit New York hard
NEW YORK, Aug 28 (Reuters) – The force of Hurricane Irene began to build in New York City early on Sunday morning, with major roads already flooding and the tourist mecca of Times Square abandoned to a hearty few.
Local forecasters said the path of Irene was shifting westward, putting the city squarely on the wrong side of the storm and raising the prospect of 10-foot storm surges.
If the forecasts bear out, it would lend some support to Mayor Michael Bloomberg’s order for the evacuation of low-lying areas such as Manhattan’s financial district. Just across the Hudson River from the district in Hoboken, New Jersey, an evacuation shelter had to be evacuated itself due to flooding.
“Conditions are expected to deteriorate rapidly,” a tired-looking Bloomberg told a news conference late on Saturday, urging people to stay indoors. “The storm is now finally hitting New York City. The winds will increase, the rain will increase and the tidal surge will increase.”
By all accounts, most heeded his plea to shelter in place, but Times Square still proved irresistible to some tourists who had nothing better to do.
“We just came to see how few people are in Times Square and then we’re going back,” said Cheryl Gibson, an Edmonton, Canada, resident who has been on vacation in the city for a week and had been planning to go to the other side of the Hudson River on Sunday.
“We can’t get to New Jersey and I’m not sure it’s any better there,” she said.
More bloodshed in Monterrey
After the latest news from Mexico where armed men torched a casino in Monterrey, killing at least 52 people, it’s a good time to re-read Robin Emmott’s special report “If Monterrey falls, Mexico falls.”
As the story says:
In just four years, Monterrey, a manufacturing city of 4 million people 140 miles from the Texan border, has gone from being a model for developing economies to a symbol of Mexico’s drug war chaos, sucked down into a dark spiral of gangland killings, violent crime and growing lawlessness.
Since President Felipe Calderon launched an army-led war on the cartels in late 2006, grenade attacks, beheadings, firefights and drive-by killings have surged.
That has shattered this city’s international image as a boomtown where captains of industry built steel, cement and beer giants in the desert in less than a century — Mexico’s version of Dallas or Houston.
By engulfing Monterrey, home to some of Latin America’s biggest companies and where annual income per capita is double the Mexican average at $17,000, the violence shows just how serious the security crisis has become in Mexico, the world’s seventh-largest oil exporter and a major U.S. trade partner.
Is it time for a stockation?
By Matt Goldstein
It’s too soon to say whether the recent madness on Wall Street will drive away ordinary investors from the stock market, but the trend lines certainly aren’t looking good.
In the past two weeks, retail investors pulled $17.4 billion out of U.S. equity mutual funds, according to the mutual fund information service Lipper. But the exodus from stock funds really began in late 2008 at the height of the financial crisis. And the move of retail money out of stock funds continued through 2009, even as the markets bottomed and rallied back.
To some degree, it’s perfectly rational for ordinary investors and flee the stock market and take a stockation, if you will. As we point out in today’s Special Report, The Madness of Wall Street, the terrain for investors has become increasingly hard to navigate with the rise of superfast computer trading and a large degree of group think by big institutional money managers. To some degree, trying to fight the bizarre and out of control forces that now rule Wall Street is pointless.
When it comes to things like liquidity black holes (see our story): Resistance is futile.
But at the same time, retails investors are notoriously bad market timers and often are pulling out of stock at just the wrong time and failing to get back in when they should. And right now the alternatives to stocks, other than gold, are not particularly appealing from a yield perspective.
Venezuela’s embarrassment of riches — oil
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Today’s special report, “Pension fund scandal shakes up Venezuelan oil giant,” examines state oil company PDVSA and the problems it has exploiting what are said by OPEC to be the world’s largest known reserves of crude oil.
At the heart of the latest scandal is a Connecticut hedge fund manager named Francisco Illarramendi who has pleaded guilty to multiple counts of wire fraud, securities and investment advisor fraud. Prosecutors say he ran a Ponzi scheme that lost up to half a billion dollars, most of it money that had been entrusted to Illarramendi by PDVSA’s pension fund.
Check out this interactive graphic which shows how Venezuela has taken the top spot in terms of world oil reserves.
This one shows how despite rising estimates of the country’s reserves, PDVSA’s production has actually declined in the decade since Chavez came to power.
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