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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India, Pakistan and Kashmir: the stand-off on the roof of the world
* Silvio Berlusconi still gives Italy a bad name * Germany's election
* Libya and America * Argentina's banks * China's middle class *
Company health plans * Fingerprint evidence * Internet shares *

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ENRON AFTERSHOCKS

The ENRON scandal hit Washington, with links between Kenneth Lay,
Enron's chairman, and George Bush and other Texas Republicans coming
under scrutiny. ANDERSEN, Enron's auditor, admitted that thousands of
documents relating to the audit had been destroyed, some after an
investigation by the Securities and Exchange Commission had begun. An
inside letter came to light warning Mr Lay in August that Enron could
"implode in a wave of accounting scandals". And some reports suggested
that Andersen knew of Enron's troubles as long ago as last February.

- - - - - See article: The twister hits
http://news.economist.com/cgi-bin1/flo?y=eVJ0UBQN0Mo0qjY0AX

KPMG also suffered severe censure at the hands of the SEC. The "big
five" auditor had invested funds with Short-Term Investments Trust, an
investment firm that it also audited. KPMG pleaded that it had made the
investment through a third party.

- - - - - See article: The real scandal uncovered by Enron
http://news.economist.com/cgi-bin1/flo?y=eVJ0UBQN0Mo0qjZ0AY

J.P. MORGAN CHASE announced a fourth-quarter loss of $332m, compared
with a profit of $708m a year earlier. Much of the loss was due to
Enron and Argentina. The bank earlier revised estimates for its total
exposure to Enron from $900m to $2.6 billion.

NOT FOR SALE

Investors reacted angrily on discovering that RHODIA, a French
chemicals company, had rejected an offer, with a hefty premium, from
DSM, a Dutch rival. Rhodia has struggled in a consolidating industry
but its management rebuffed the offer, perhaps as it would have lost
influence.

Three rivals made a successful joint bid of EURO2.5 billion ($2.2
billion) for RODAMCO NORTH AMERICA, America's third-largest
shopping-mall company. Australia's Westfield Holding (which has a 24%
stake in the company), America's Simon Property Group, the country's
largest mall owner, and Rouse will divide up Rodamco's 35 malls.

CAR TROUBLE

FORD announced a fourth-quarter loss of $5.1 billion, bringing losses
for the year to $5.5 billion. The loss included a $4.1 billion charge
for a restructuring that will include capacity cuts, plant closures and
the loss of 35,000 jobs.

GENERAL MOTORS said that profits for the fourth quarter were down by
58% to $225m from a year earlier. A faltering economy and an
interest-free financing deal slashed profits at its mainstay North
American vehicles business.

GENERAL ELECTRIC, the world's biggest company by stockmarket
capitalisation, reported a 9% rise in profits for the fourth quarter,
to $3.9 billion.

The online auctioneer, EBAY, made record profits in the fourth quarter.
Operating profits jumped by 56% over a year ago, to $42m.

AMR, the parent company of American Airlines, reported losses for the
fourth quarter of $798m. The economy and the after-effects of September
11th contributed to the record loss.

KMART suffered the indignity of a "junk" debt rating from Moody's and
relegation from the S&P 500 index after its shares slumped and
bankruptcy loomed. America's second-biggest discount retailer has
failed to do better after its latest restructuring and suffered a
dismal Christmas. Its shares hit a 36-year low.

- - - - - See article: Kmart's woes
http://news.economist.com/cgi-bin1/flo?y=eVJ0UBQN0Mo0qja0Af

The WORLD TRADE ORGANISATION ruled in favour of the EU and ordered
America to repeal a system of tax breaks for its exporters. However,
Europe's right to retaliate with sanctions equal to the $4 billion
hidden subsidy will be tempered by reluctance to start a full-blooded
trade war.

- - - - - See article: Transatlantic trade
http://news.economist.com/cgi-bin1/flo?y=eVJ0UBQN0Mo0qjb0Ag

SUCCESSION PLANNING?

A possible successor to Sandy Weill at CITIGROUP emerged. Robert
Willumstad assumed the newly created post of president. But Mr Weill,
chairman and chief executive of the financial-services giant, may have
acted to keep investors happy by seeming to anoint a crown prince while
keeping his options open; he may stay put for many more years.

DEUTSCHE BANK is preparing a big shake-up that would shift away from
its consensus-based management board and instead give its prospective
chairman, Josef Ackermann, power akin to an American chief executive
when he takes over in May.

The chairman, chief executive and a senior manager at SOCIETE GENERALE
became the latest bankers to be questioned by French police looking
into money-laundering allegations. A wider probe by the French
authorities has lasted three years and involved many of the country's
leading banks.

PRICES DOWN

America's consumer-price index fell by 0.2% in December to 1.6% for the
year as energy costs dived. The diminishing fear of INFLATION may make
it easier for the Federal Reserve to consider cutting interest rates
yet again at its next meeting at the end of the month.

- - - - - See article: The case for using fiscal policy
http://news.economist.com/cgi-bin1/flo?y=eVJ0UBQN0Mo0qjc0Ah

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The world this week: Business This Week is a summary of the world's
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