Welcome to The world this week: Business
A summary of the world's main events from The Economist.
Also available at http://www.economist.com


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America's energy policy was wrong before September 11th. Now it is even
more so * Japan's economy * The future of American farming * Race
and poverty in Britain * European merger rules * Kenya's dynastic
politics * The origins of racism  *  Spherical robots * Classical CDs *

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DOWNWARD MARCH

America's Federal Reserve responded to continuing signs of economic
weakness with its eleventh INTEREST-RATE CUT of the year. A reduction
of a quarter-point brings rates down to 1.75%, the lowest for 40 years.

- - - - - See article: Don't bet on a swift recovery
http://TheEconomist.s.maildart.net/link_36738_6723637_1_79944192_60299072_1_69

The value of GLOBAL MERGER AND ACQUISITION ACTIVITY in 2001 was $1.6
trillion, half what it was worth the previous year, according to data
from Dealogic. In 2000, the inflated value of high-tech shares fuelled
many a deal that now looks unwise.

CSFB is to hand over some of the cash it had made from the dotcom boom.
The investment bank has reportedly agreed to pay $100m to settle an
investigation by America's regulators into claims that it had rigged
initial public offerings of high-tech shares by allocating big tranches
to favoured customers in return for a slice of the profits in the form
of inflated commissions.

ZURICH FINANCIAL SERVICES reshuffled its top management yet again.
Dinos Iordanou, who had been promoted to head of group operations last
year and was tipped to take over the top job, left to run an insurance
start-up. Perhaps as a result, Converium, a reinsurance business Zurich
has spun off, made a quiet stockmarket debut.

The weak economy claimed more victims at AMERICAN EXPRESS. It announced
that up to 6,500 more jobs would go, on top of the 7,700 announced in
the past 12 months, a total of 15% of its workforce.

COMPAQ'S merger with HEWLETT-PACKARD seemed doomed after the Packard
foundation rejected the deal. Hewlett family members had already
dismissed the merger; together they own 18% of the company. Compaq
shares sank, but both it and HP optimistically insisted that the deal
would succeed with the aid of institutional shareholders.

- - - - - See article: Carly Fiorina of Hewlett-Packard
http://TheEconomist.s.maildart.net/link_36737_6723637_1_79944192_60299072_1_68

TELECOM TROUBLES

The global telecoms slump hit Eastern Europe. TELEKOMUNIKACJA POLSKA
announced that it would get rid of 12,000 employees next year, some 20%
of its workforce. France Telecom, which acquired 35% of the former
state monopoly from the Polish government last year, had said that job
cuts would come but had agreed with powerful unions that it would wait
four years.

Struggling BRITISH TELECOM appointed Ben Verwaayen, a Dutchman from
struggling Lucent Technologies, as its new chief executive, to replace
Sir Peter Bonfield, who recently said he would depart from BT a year
ahead of schedule.

NOKIA provided some relief from the gloom surrounding high-tech
companies. The Finnish mobile-phone behemoth announced that
fourth-quarter profits were likely to be better than previously
forecast after handsets sold in greater quantities than expected. But
fourth-quarter profits will not match last year's; and its
infrastructure business still languishes.

CONSIGNIA, once known as Britain's Post Office, may have to lay off
some 30,000 workers over the next year and a half, twice previous
estimates for redundancies needed to save costs as postal growth slips.
Unions reacted to the state-owned company's announcement with outrage
and threatened to strike.

YAHOO!, the world's biggest Internet portal, made an unsolicited offer
of $436m for HOTJOBS, a careers website that was planning to merge with
its rival, TMP Worldwide.

DRUG CULTURE

Corporate Japan suffered its biggest foreign intrusion with the
purchase by ROCHE of a controlling interest in CHUGAI, a large drug
company, for up to YEN198 billion ($1.59 billion). The Swiss drug firm
assuaged Japanese sensitivities by dressing the deal up as an alliance
with Roche as an invited partner.

PFIZER threatened to stop supplying France with new medicines in
protest at the country's drug-pricing policies. It hopes competitors
will join the struggle to squeeze extra cash from France's government;
it would go to research and developing better cures, says Pfizer.

MERCK shocked investors and sent its shares reeling with the news that
profits would not grow in 2002. The American drug firm blamed the
expiry of patents and slowing sales.

FIXING THE CAR MAKER

FIAT unveiled plans for a restructuring that would see the loss of
6,000 jobs, the sale of non-core assets and the possible demise of up
to 18 of its factories. The head of its car-making division, Roberto
Testore, resigned.

- - - - - See article: Fiat's problems
http://TheEconomist.s.maildart.net/link_36736_6723637_1_79944192_60299072_1_67

Five GERMAN BANKS felt the wrath of the European Commission. In its
latest round of cartel-busting, the commission levied fines of EURO101m
($90.4m) for fixing commissions on the exchange of the 12 euro-area
currencies since 1997. Three banks said they would appeal.

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The world this week: Business is a summary of the world's main events
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