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The Economist – 07/07/07
July 15, 2007, 2:30 pm
Filed under: current affairs

The Economist

07/07/07 – 13/07/07

  • Blackstone acquires Hilton Hotels for $26b.
  • Unemployment in the Euro area is decreasing; it’s at its lowest ever in May at 7%.
  • Lead article in the Economist: Private equity. The headiest days are probably over; long-term interest rates are rising which makes money more expensive for private equity firms. Most depend on cheap debt.
  • Mali is one of the more hopeful African countries; Nigeria and Guinea is not. Chinese, Western governments and aid agencies are flocking to Mali; this is largely due to better governance. They expect Mali to be the breadbasket of Africa.
  • Chinese exporters faces the problem of tainted Chinese goods, which triggered safety scares in the world. While China exports a lot, many of the goods are defective.
  • Record labels are turning to the “360 degrees” contract: instead of settling on a cut of CD sales, record labels offer artistes a broad range of contracts, ranging from merchandise to live music. This is a response to increased music piracy and the trend of artistes earning more money from live concerts and merchandise rather than CD sales. For example Prince was the industry’s top earner in terms of concert in 2004; he is distributing his latest CD for free.
  • Terrorism no longer has such a great impact on markets since 9-11; markets seem to have adjusted to it.
  • The Big Mac Index. The most overvalued currencies are found on the rich fringes of the EU: Iceland, Norway and Switzerland. The Yuan seems undervalued.
  • Housing bubbles: talk of a housing bubble in China is much exaggerated. Income has grown faster than housing prices in China and South Korea, but according to the statistics provided, Singapore, India and the US have housing prices growing faster than income. In Singapore, house prices has jumped 12% in the last 12 months to May while luxury house prices have increased 30-40%. India seems to be in a bubble.

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