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	Thursday?May?17th?2001
	
	
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[IMAGE][IMAGE]	[IMAGE]	[IMAGE]	[IMAGE]	Business this week
				May 17th 2001
				From The Economist print edition  
				
				
				Going down
				
				
				
				
				
				
				
				
				
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				As expected, America,s Federal Reserve cut interest rates by half a 
percentage point to 4%, the fifth cut this year, taking the rate to its 
lowest level for seven years. The Fed is continuing to respond assertively to 
more evidence of the American economy,s slide. Industrial production was down 
by 0.3% in April compared with March, more than predicted. The consumer-price 
index rose unexpectedly slowly, by 0.3% in April and 3.3% year-on-year.
				
				See article: The Fed,s interest-rate cutE+
				
				The Dow Jones industrial average closed above 11,000 for the first time since 
September, after the Fed,s latest interest-rate cut.
				
				After Turkey,s parliament agreed to sell off the state telecoms company and 
reform the banking system, the IMF approved an $8 billion stand-by credit. 
				
				Inflation in the euro area rose to 2.9% in the year to April. The news was 
released less than a week after the European Central Bank had surprised 
markets with a quarter-point cut in interest rates.
				
				Hit by weaker exports to the United States, Mexico,s economy slowed sharply 
in the first three months of this year, according to figures that were 
released this week. The government of Vicente Fox has responded to the 
slowdown with budget cuts.
				
				See article: Problems begin for President Vicente Fox of Mexico
				
				President Hugo Chavez of Venezuela denied reports that he was planning 
currency controls, but said he might seek emergency legislative powers. 
				
				See article: Is Venezuela,s Chavez turning left?E+
				
				In the markets
				
				The London Stock Exchange took a nose dive, with the FTSE 100 falling by 
2.2%, at the end of trading on May 14th, and then largely recovered the next 
day. The reason for the volatility: an extra zero accidentally added to a 
o30m ($43m) sell order at an investment bank, thought to be Lehman Brothers. 
An investigation is taking place.
				
				See article: A trading cockup sends London,s marketE+
				
				Scrutiny of the dodgy dealings in the bull market carries on. America,s 
Securities and Exchange Commission charged Sunbeam, an appliance maker, and 
its auditor, Arthur Andersen, with rigging financial reports to beef up sales 
figures. Another case alleged insider dealing by a prominent Mexican family. 
Inquiries continued into Wall Street practices in the market for initial 
public offerings.
				
				See article: A spate of investigations on Wall Street E+
				
				Andr, Lussi, chief executive of Clearstream, a large European clearing bank, 
temporarily stepped aside to deal with legal inquiries. His departure 
prompted speculation about a possible rationalisation of Europe,s plethora of 
clearing and settlement agencies.
				
				See article: Troubles at a European clearing organisationE+
				
				
				
				
				
				
				
				
				
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				The rich are getting richer, according to a report from Cap Gemini Ernst & 
Young and Merrill Lynch. The wealth of dollar millionaires*those with over 
$1m to invest*rose by 6% to $27 trillion in 2000 despite crumbling 
stockmarkets around the world. The number of millionaires grew by 2.9% to 
7.2m, but 80,000 &minute millionaires8 appeared and then disappeared with the 
dotcom boom and bust.
				
				Dial M for merger
				
				Telenor, Norway,s state-controlled telecoms company, said it was in talks on 
a merger with Tele Danmark through the acquisition of 42% of the company 
owned by America,s SBC Communications. Danish law would require Telenor to 
buy the rest of the Danish company, which would create a Nordic telecoms 
giant worth some euro18 billion ($16 billion).
				
				AT&T and BT again raised the possibility of integrating their 
business-telecoms services as part of a restructuring at both firms. But BT 
has not ruled out selling its stake in Concert, the pair,s business-telecoms 
joint-venture, as a better solution to its debt problems.
				
				BT,s intention to be the first to launch a third-generation mobile telephone 
service, albeit on the Isle of Man, suffered a blow. Technical problems with 
handsets will keep tech-savvy Manx residents from the mobile Internet for 
another three months. NTT DoCoMo ran into similar problems and recently 
announced the delay of its service on a slightly bigger island: Japan. 
				
				Cable & Wireless, a previously dormant British telecoms company, made inroads 
into its o6 billion ($8.6 billion) mountain of cash. It bought Digital 
Island, a struggling American Internet company, for $340m and promised to 
inject up to $700m more as part of a strategy to become a leading 
Internet-services firm. 
				
				Sony, a Japanese electronics giant, gained allies to play alongside with 
against rivals, Nintendo and Microsoft, which is soon to launch its Xbox 
gaming system. The creators of the PlayStation 2 unveiled several alliances 
including ones with America Online, to provide Internet services through its 
console and RealNetworks, a streaming media firm.
				
				See article: Video-game warsE+
				
				Gun culture
				
				
				
				
				
				
				
				
				
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				Tomkins, a British conglomerate hit last year by accusations of corporate 
excess, is to get shot of Smith & Wesson, an American handgun maker, to 
Saf-T-Hammer, an American gun-parts company, for $15m. Tomkins paid around 
$112m for the gun maker but will sell a firm suffering from falling sales and 
with contingent liabilities. Smith & Wesson,s .44 magnum starred in several 
films with Clint Eastwood.
				
				Bertelsmann, a German publishing giant, accepted that Amazon had won Europe,s 
online bookselling battle. It announced that BOL, its attempt to compete with 
the American e-tailer on Bertelsmann,s side of the Atlantic, would be folded 
into its book club rather than go public.
				
				Despite months of gloom among the world,s car makers, Japan,s Toyota unveiled 
record profits and sales for the year to March 31st.
				
				
				
				
				
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