Off the Wires

The Euro Was a Bad Idea From the Start

February 25th, 2015  |  Source: Foreign Policy

Can Europe finally admit it?

After frantic eleventh-hour negotiations and continent-wide hand-wringing, eurozone authorities and Greece’s new left-wing government have reached a deal. If you’re surprised, you shouldn’t be. A deal was in the cards from the beginning for one simple reason: Ultimately, neither the Greek government nor Germany and other euro member states could risk triggering a financial crisis by cutting off Greek banks.

Financial stability in the 19-country currency area has been preserved — at least for now. But patching up the situation has not removed the key question of where to go from here. There is a lot of “austerity fatigue” in Europe right now. That’s understandable, but it shouldn’t be allowed to distort the debate and allow Europe to dodge the much-needed thorough assessment of the entire euro project: Does it still make sense, given its constraints and limits? What should be the way forward? And was it even a good idea to begin with?

Europe’s monetary union has been based on bad economics from the start. As German economist Rudiger Dornbusch wrote in Foreign Affairs in 1996, “If there was ever a bad idea, EMU is it.” The eurozone does not have the features of what economists call an “optimal currency area.” According to the standard definition, an optimal currency area is characterized by perfect labor mobility, perfect wage flexibility, and a risk-sharing system, such as fiscal transfers when a region — or a member country — is affected by an economic or financial shock.

Read on here:

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Apple to Spend $1.9 Billion Building Two Europe Data Centers

February 23rd, 2015  |  Source: Bloomberg

Apple Inc. plans to spend 1.7 billion euros ($1.9 billion) building data centers in Ireland and Denmark in its biggest European investment, with the facilities set to run services such as iTunes and maps for users of its devices.

The centers, located in Athenry, Ireland, and Viborg, Denmark, will be powered by renewable energy, Cupertino, California-based Apple said on Monday. The facilities are scheduled to begin operations in 2017 in the two countries known for their use of wind power.

The project lets Apple address European requests for data to be stored closer to local users and authorities, while also allowing it to benefit from a chilly climate that helps save on equipment-cooling costs. Google Inc. opened a data center in Finland in 2011 and in September unveiled plans for one in the Netherlands. Facebook Inc. started one in Sweden in 2013.

Spying threats, in the aftermath of leaks about the U.S. National Security Agency’s data-collection programs, have prompted governments including France and private companies in Europe to adopt stricter data-protection requirements.

Those tighter rules have meant asking providers to host more customer information, such as health records, locally. To tend to this demand, U.S. providers including Salesforce.com Inc. have bulked up their data-center presence in Europe.

World’s Largest

The Europe investment marks a push by Apple in a continent where sales rose 66 percent last quarter from the preceding period, outpacing the 55 percent growth in the Americas. Sales in Europe were $17.2 billion, accounting for 23 percent of the total.

The new facilities will have the lowest environmental impact yet for an Apple data center, and the company said it will work with local partners to develop additional renewable-energy projects from wind or other sources.

Earlier this month, Apple made an $848 million commitment to obtain electricity from a solar farm that’s big enough to power its offices in California, along with 52 retail stores and a data center.

The Irish and Danish centers, each measuring 166,000 square meters (1.8 million square feet), will be among the largest in the world, Denmark’s Ministry of Foreign Affairs said in a statement. Apple said the projects are set to create hundreds of local jobs.

“This is an important strategic investment with significant local economic benefits,” Martin Shanahan, head of the Irish foreign investment agency IDA, said in a statement. “Ireland has for several years successfully attracted data center investments from major corporates.”


Record-breaking cold in U.S. Midwest heads to frigid East Coast

February 19th, 2015  |  Source: Reuters

Bone-chilling cold in the U.S. Midwest shattered records in Chicago on Thursday, closing schools and starting its trudge eastward to an already frozen Boston and New York.

Arctic air was expected to keep its grip on the nation's midsection on Friday morning, a day after the minus 8 degrees Fahrenheit (minus 22 Celsius) measured in Chicago broke the low temperature record of minus 7 degrees for the day set in 1936, said National Weather Service meteorologist Bob Oravec.

The wind chill made temperatures in Chicago feel like minus 25, he said.

Chicago public schools, serving 396,000 students in the third largest U.S. school district, canceled classes on Thursday and many commuters there were bundled so heavily that only their eyes could be seen.

But not everyone hates the weather. Teejay Riedl, 54, was filming the steam rising from the Chicago River before work.

"I love it. It's crisp, it's clean, there are no bugs," he said.

Farther north, Sarah Applin, who works for Travel Market Vacations in the Milwaukee area, has seen a surge in business.

"We have been very, very busy. It's cold here so everyone wants to leave," she said.

Bitter cold was headed east, meaning a frosty Friday morning commute was in store for East Coast residents from Boston down to Richmond, Virginia, Oravec said. More records are expected to fall.

With temperatures in Washington, D.C. forecast to reach 3 F (-19 C) overnight, schools and local governments across the region were closed or opening with delays on Thursday.

It has been cold enough in New York this week to bring the roaring Niagara Falls to a halt, as parts of the waterfall trio on the Canadian border froze over, leaving long spears of ice cascading down from the falls' edges and glacier-like mounds rising up from their plunge pools.

Cabin fever appears to have taken hold in Boston, which broke its own record this week for the snowiest February in the city's history. Residents in Boston, which has had more than 8 feet (2.4 meters) of snow this winter, are using the social media hashtag #BostonBlizzardChallenge to share videos of themselves - wearing only swimsuits - diving into snow banks.


Norway’s pension fund to divest from unsustainable assets

February 10th, 2015  |  Source: climateactionprogramme.org

Norway’s Government Pension Fund Global, the world’s wealthiest sovereign wealth fund, will divest from a range of sectors including coal mining companies according to an announcement.

The pension fund is worth US$850 billion and has come under growing pressure to use its influence to promote more sustainable and responsible investments.

Environmental groups and some Norwegian politicians have called for the fund to move away from fossil fuels and in 2014 the fund removed 40 companies working in the coal-mining sector from its portfolio.

The fund noted that companies with a high level of greenhouse gas (GHG) emissions could be exposed to risk from regulatory changes with the move towards binding global climate targets leading to falling demand and increased risk to investment.

The fund divested from a total of 49 companies in 2014 based on environmental, social and governance (ESG) factors.

Yngve Slyngstad, CEO of Norges Bank Investment Management, said: “We have gradually increased the scope of risk-based divestments, both geographically and thematically. In total, we have divested from 114 companies in the past three years.”

The fund published its first report looking at its work on responsible investment last week and covers standard setting, active ownership and risk management.

Last year the fund held 2,641 meetings with companies to increase knowledge and understanding of their business and to present expectations and views on ownership

Slyngstad added: “Our aim with this report is to provide a full overview of the many different areas we are working on and so increase transparency on the management of the fund. We recognise that there is still much to be done, and that we will encounter a number of challenges in the years ahead. Our role is to think long-term and protect value for future generations.”


Oil Falling to $20? Citigroup Thinks It Can Happen

February 9th, 2015  |  Source: Bloomberg

Citigroup has laid out a path that sees oil potentially falling to $20 per barrel.

Bloomberg’s Alix Steel reports on “Market Makers.” http://www.bloomberg.com/news/videos/2015-02-09/oil-falling-to-20-citigroup-thinks-it-can-happen


London site of Madame Tussauds up for sale for $450 million

February 4th, 2015  |  Source: FT.com

The landlord of Madame Tussauds hopes to raise more than £300m [$450m] by selling the building that has housed the waxworks since 1884, in a further sign of London’s booming commercial property market.

Property entrepreneur Nick Leslau has instructed agent CBRE to market the freehold of the central London premises in Marylebone and is seeking offers in excess of £300m, according to people familiar with the situation.


France gripped as Dominique Strauss-Kahn vice trial set to begin

February 2nd, 2015  |  Source: FT.com

A Belgian brothel owner called “Dodo la Saumure”, orgies at luxury hotels and accusations of pimping against a former French presidential hopeful — it sounds like the plot to a sensationalist police drama.

This week Dominique Strauss-Kahn, the former head of the International Monetary Fund and 12 others face charges of “aggravated pimping as part of a group” for participating in high-level orgies with prostitutes. The so-called Carlton Affair, which centres on allegations that businessmen and police officials in the northern French town of Lille supplied women for sex parties in Lille, Paris and Washington, has gripped and titillated the French establishment since details first emerged four years ago.


More Super Bowl Coin-Toss Wagers

February 1st, 2015  |  Source: Bloomberg

Super Bowl gamblers are betting heads, not necessarily with their heads.

“Bettors favor heads so much that some sports books are actually making it cheaper to bet tails in an effort to take even action,” according to RJ Bell, who runs betting information website Pregame.com.

Such is the frenzy surrounding Super Bowl wagering, where betting by recreational gamblers dwarfs professionals. They are investing in any and every possible outcome tied to the most-watched U.S. television event. Bookmakers, however, are usually the big winners.

The New England Patriots are a consensus one-point favorite at Nevada sports books to keep the Seattle Seahawks from successfully defending their National Football League title when the teams square off today at University of Phoenix Stadium in Glendale, Arizona.

Sports books move betting lines in an effort to generally take the same amount on both sides of a bet, making money from the fees they charge to place the wagers. They’ve profited during 22 of the last 24 Super Bowls, due in part to the growth of casino-friendly proposition bets -- hundreds of them -- which begin even before the game kicks off and run through the champion coach’s probable Gatorade bath. Most of these bets are not directly tied to the result of the game.

In 48 earlier Super Bowls, the coin tossed to determine which team gets the ball first has landed exactly half the time on heads and half on tails. Heads came up five years in a row until last year, when tails broke the streak.

Gamblers also can wager on whether Idina Menzel will take over or under 2 minutes, 1 second to sing the national anthem before kickoff.

MVP Odds
As for the game, New England quarterback Tom Brady has the best odds to be named Most Valuable Player. A $100 bet on Brady to win his third Super Bowl MVP Award will pay $180 plus the original wager. That same bet on Seattle quarterback Russell Wilson would net $350.
Other props being offered include whether New England coach Bill Belichick will smile on camera during the game, whether commentator Al Michaels will refer to the gambling odds during the telecast and what hair color Katy Perry will have for her halftime show.

“I’ve never been betted on before,” Perry said at a news conference this week. “I feel like, ‘Wow, nobody has ever invested in me this much.’ This is exciting.”
The New York Giants’ 2008 Super Bowl win over New England was the last time Nevada casinos lost money on the game, after New York won the title as a 12-point underdog. With 24 years of data available, the only other time casinos lost on the championship was during the 1995 game between the San Francisco 49ers and San Diego Chargers, according to Nevada-based Pregame.com.

Record Handle
Nevada casinos took in a record $119.4 million in bets for last year’s Super Bowl as the Seahawks beat the Denver Broncos 43-8. The American Gaming Association estimates that $3.8 billion will be wagered illegally on the game in the U.S. Prop bets, such as whether “deflated” balls will be mentioned more or less than three times in the NBC broadcast, will probably make Las Vegas the big winner.

“At some sports books, prop bets are now upwards of 50 percent,” Bell said, noting how much casinos pull in from fees associated with such wagers. “Those bets are so heavy with juice, that it’s going to almost be impossible for the books to lose them in aggregate.’
Bettors, however, aren’t buying into Deflategate.
‘‘The deflated football controversy has had no effect on the betting market,” Bell said.

Patriots Favorites
The game comes two weeks after a conference-championship round that turned the Patriots into Super Bowl favorites, while sullying their reputation after being accused of letting air out of their footballs before the game -- perhaps aiding their offense. They beat the Indianapolis Colts 45-7, while Seahawks barely survived the Green Bay Packers, winning 28-22 in overtime after erasing a 16-point halftime deficit.

The NFL has said the footballs will be handled differently during the Super Bowl, though New England remains the popular pick among what will be 90 percent recreational gamblers, the highest percentage for any sports event, according to Pregame.com. Before the conference title games, the Seahawks were 2 1/2-point favorites for a possible matchup with New England at many sports books.

“Just based on the power ranking of the pro bettors I’m talking to, Seattle is the better team and getting points, that seems like the opportunity for a bet,” Bell said.


How does Apple top a record quarter?

January 28th, 2015  |  Source: FT

How do you follow the most profitable quarter in corporate history?
That is the question now hanging over Apple.
The popularity of larger iPhones and success in China helped Apple to post $18bn in net profit on $75bn worth of sales for the three months that ended in December, beating forecasts on almost every metric.

That marks the fourth quarter in a row that Apple has burst through Wall Street’s estimates, a return to the expectation-beating ways that eluded the iPhone maker through much of 2013.

As Apple’s marketing tagline for the iPhone 6 puts it, the quarter was “bigger than big”.
Alongside the strong numbers, Tim Cook, chief executive, put paid to investor concerns about how much room was left for iPhone sales to grow, its manufacturing capabilities after September’s spate of complaints about bent devices, and the company’s ability to fend off competition from the likes of Samsung and China’s Xiaomi.

Now, with Apple’s share price heading back towards its all-time highs, it faces the greater challenge of living up to its own raised expectations.

The stock gained 5.7 per cent to $115.40 in after-hours trading following Tuesday’s results. Its record high was $119.75.


Venture Capitalist Draper Bets $400,000 More on Bitcoin Revival

January 27th, 2015  |  Source: Bloomberg

One of bitcoin’s biggest backers, billionaire venture capitalist Tim Draper, recently wagered about $400,000 that the digital currency will rebound from its recent plunge.

Draper, who co-founded investment firm Draper Fisher Jurvetson, said in an e-mail that he bought 2,000 bitcoins for “around $200” last week. Draper, one of the biggest buyers in U.S. government auctions of bitcoin last year, is betting that the virtual currency will bounce back after prices dropped 70 percent in the past year.

Bitcoin’s price dipped by more than 30 percent in two days this month to below $200. Skeptics were already questioning the currency’s future amid increasing regulatory oversight and after bitcoin’s slide had made it one of the biggest money-losing investments of 2014, worse than oil or the ruble. Bitcoin was valued at about $272 on Monday, compared with more than $1,100 in late 2013, according to CoinDesk Bitcoin Price Index.

Draper bought about 32,000 bitcoins at government auctions last year. He’s been investing them in various startups building on bitcoin technology, which can be used to facilitate cheap international money transfers or buy assets like gold. While he didn’t specify the price paid in either auction, bitcoin was valued on the market at more than $600 at the time of the June auction.




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