November 29, 2007

Shareholders in Politics: Keeping an Eye Open

Filed under: Thinking Again — ThinkingAgain @ 3:12 pm

The issue of states or state-owned enterprises investing in foreign companies comes back and forth in the press.
Sovereign investors trigger some attention, either because people feel proud about a certain brand, or because there is a feeling that a foreign control might be a cause for trouble. The Dubai Ports story is well known. The US Congress’ reaction on that was not different from that of Jacques Chirac publicly opposing the rumor of Pepsico buying Danone.

With a falling dollar, US companies become very cheap. And with foreign states having bought US debt over many years, and accumulating dollars, you can easily see their appetite for a purchase or two in America. Be prepared.

Abu Dhabi is now one of the largest shareholder in Citigroup, at 4.9 percent but said it would not be involved in Citi’s affairs, and not even seeking a seat on the company’s board, according to the Wall Street Journal. It may have learned some lesson from next door emirate Dubai.

Temasek, the investment arm of the government of Singapore, also indicated a shift in its approach to business and keep a lower profile, especially with “iconic” brands.

“Traditional” shareholders come from all over the world. Nestle is not a Swiss company, if you look at the geographic breakdown of its shareholders. But when states become shareholders, should the rules of capitalism be changed? No, unless there is willingness from the sovereign investor to go into politics when it should only be in for business. Mr Chavez tried to make OPEC more political recently but received a rebuttal from the Saudis.

States and companies should keep an eye open when shareholders try to advance a political agenda.

November 24, 2007

Las Dubai

Filed under: Thinking Again — ThinkingAgain @ 2:34 pm

Dubai last week was hot, foggy and busy working. That was not surprising to me. The greater surprise came from the fact that no terrorist attack has taken place there, or that no social explosion has affected the emirate.

On terrorism, consider this: a place focused quasi exclusively on money and consumer goods. What you wear, what car you drive, where you live, where you shop, what club or bar you go out to, what cell phone you have. These are the real questions. And seeing some Eastern European women dressed very provocatively (by Western standards) crossing paths with Emirati, dressed in the traditional Arab outfit (gallabiyah), it seems very strange that the two co-live in peace. In brief, it’s a celebration of capitalism and, sometimes, of the worst of Western culture. Las Vegas on the Gulf, without the gaming industry. Great if it can continue to function smoothly, but frankly, surprising that Islamists have not launched attacks on a place which seems very far away from their interpretation of Islamic values.

And then, on the social outburst front, consider this demographic situtation: 20% Emiratis (locals), 20% rich expats and 60% Pakistanis, Indians and others working mostly on construction sites. Somebody needs to be there to build the crazy hotels and apartment buildings of Dubai. Some estimates indicate 25% of the world’s total cranes are in Dubai. And these construction workers have no rights, except the one to work and the one to return home if they are sick. So with such a majority in terms of number of people, yet no rights at all, I believe this is a time bomb.

The ruler of Dubai has made great reforms to make the emirate very modern, by Western standards. It should serve as an example for many economies of the region. At some point, and I would think pretty soon, he will need to tackle the social cohesion of his country before more instability comes, this time from Islamists.

Raclette at the White House

Filed under: A Table! — ThinkingAgain @ 1:27 pm

A fun and very quick read about the Swiss chef who served 5 US presidents. I knew Swiss diplomacy was discrete but not up to that point…

November 20, 2007

Royal Words

Filed under: Current Affairs — ThinkingAgain @ 1:08 pm

The small clash between the King of Spain and the Venezuelan President is well known by now. And I love the story that Juan Carlos’ “Why don’t you shut up?” burst is now a rallying sign against Chavez. How did this happen? The market picked it up quickly and created a ringtone out of the royal words… A call for resistance!

November 8, 2007

Giuliani: 1-1

Filed under: Current Affairs — ThinkingAgain @ 3:50 pm

2 news today: up to you to decide which will have the greater effect on voters

The Economist: Rudy Giuliani’s bid for the presidency received a big boost with an endorsement from Pat Robertson, a prominent televangelist. Mr Giuliani has been attacked by many on the right for not being willing to ban abortion

ABC News: In an exclusive interview with ABC News, Republican presidential front-runner Rudy Giuliani said he “made a mistake” by not vetting his former police commissioner, Bernard Kerik, indicted today in a public corruption case. Giuliani also said he wouldn’t contribute to Kerik’s legal defense fund because it “wouldn’t be appropriate.”

Ultra-Orthodox Free Ride

Filed under: Current Affairs — ThinkingAgain @ 2:59 pm

This sort of article makes me shiver. The violence and intolerance of some branches of the Jewish ultra-orthodox community are so remote from the biblical texts they are reading and preaching that it makes me wonder how much longer the Israeli society can accept that.
All this while they are being graciously sponsored by their government. Talk about free-ride.

A Modern Marketplace for Israel’s Ultra-Orthodox
By STEVEN ERLANGER
November 2, 2007
The New York Times

BEIT SHEMESH, Israel — When Larry Pinczower switches on his cellphone, the seal of a rabbinate council appears. Unable to send text messages, take photographs or connect to the Internet, his phone is a religiously approved adaptation to modernity by the ultra-Orthodox sector of Israeli life.

More than 10,000 numbers for phone sex, dating services and the like are blocked, and rabbinical overseers ensure that the lists are up to date. Calls to other kosher phones are less than 2 cents a minute, compared with 9.5 cents for normal phones. But on the Sabbath any call costs $2.44 a minute, a steep religious penalty.

“You pay less and you’re playing by the rules,” Mr. Pinczower, 39, said. “You’re using technology but in a way that maintains religious integrity.”

A community of at least 800,000 people — out of 5.4 million Jews living in Israel, a country of 7.1 million — the ultra-Orthodox, though comparatively poor, form a distinct, growing and important market, and Israeli companies are paying attention. While there are rabbinical strictures against watching television, using computers for leisure, immodest attire and unsupervised mixing of men and women, the Israeli market economy has adjusted in creative and surprising ways.

Some 60 percent of ultra-Orthodox men do not work regular jobs, preferring religious study. More than 50 percent live below the poverty line and get state allowances, compared with 15 percent of the rest of the population, and most families have six or seven children, said Momi Dahan, an economist at the School of Public Policy at Hebrew University.

But because they live in tight communities like this one, and obey their rabbis, they have significant power in the marketplace, as well as in the voting booth, said Rafi Melnick, dean of the Lauder School of Government at the Interdisciplinary Center, Herzliya.

“You see it in sectors like food, consumer products and transport companies,” he said. The Israeli airline El Al is now privatized. “But they continue not to fly on Saturday,” Mr. Melnick said, in order to keep ultra-Orthodox customers.

Tamar El-Or, an anthropologist at Hebrew University, studied ultra-Orthodox shopping patterns. “There are lines of cellphones and credit cards and Internet suppliers and software and DVDs and clothes and so many things produced or altered or koshered for them, because they have a certain organized power to get the producers to make what they want,” she said.

Beit Shemesh is a good example, a modern, attractive town of 73,000 people. There is a more secular part, with a large mall, and an ultra-Orthodox district, Ramat Beit Shemesh, which is divided into two. Bet, or B, is very strict, with 15,700 people. Aleph, or A, up the hill, is somewhat more flexible and contains 17,100 people, including a growing number of North American and European Jews who wanted to join an ultra-Orthodox community in Israel.

Though the sections look similar, there are more wall posters and angry graffiti in B, and streets are quieter, with fewer women visible. One spray-painted warning reads: “Going here you must be appropriately attired. Modest attire only.”

The Egged bus company has special routes for the ultra-Orthodox, so that men and women are segregated, sometimes in separate buses. But there have been riots in Ramat Beit Shemesh B over certain bus routes, with graffiti comparing the company and the police to Nazis and calling Israel “the regime of the apostates,” rejecting the government as nonreligious.

On Oct. 21, five ultra-Orthodox Jews assaulted a woman and an Israeli soldier on a bus bound for Beit Shemesh. The men demanded that the woman sit in the back of the bus; when she refused and asked the soldier to sit next to her, they beat them both. When the police came, dozens of ultra-Orthodox men attacked them while the assailants escaped.

Some ultra-Orthodox communities have set up private bus companies, which separate the genders.

The supermarkets, too, are different, with stricter kosher products and Costco-size packages of basic items, from cornflakes to shampoo, toilet paper to diapers, for large ultra-Orthodox families.

Here in Ramat Beit Shemesh A, the spacious “Shefa Shouk” is an outlet for the ultra-Orthodox segment of a large grocery chain, Blue Square-Israel Ltd. Shefa Shouk has its own food labels with the strict “Badatz” kosher certificate. There is special clothing — undergarments with fringes, for example — and a large baby section.

Shlomit Feder, 45, Swiss-born, shopped for her husband and six children, ages 18 months to 14 years. Her husband works long hours for a minimum salary, “and it’s hard to get by to the end of the week.” But the family gets help from local charities and rabbinical funds, she said, pulling down a 56-roll package of toilet paper. The community takes care of its neediest; the supermarket, too, has a charitable fund.

Strauss Israel, one of the country’s largest food companies, with thousands of employees worldwide, has its own brands for the ultra-Orthodox, said Giora Bar-Dea, executive vice president and chief executive officer.

To make its Megadim brand of ultrakosher confectionary or its Strauss Mehadrin dairy products requires special facilities, because milk from only Jewish sources can be used.

But it is profitable. The ultra-Orthodox market is between 8 percent and 10 percent of domestic sales for Strauss, he said, representing about $73 million a year.

To reach these customers, Strauss uses a different advertising agency and public relations strategy, including contributions to community activities for children and the poor.

“These people don’t watch television,” Mr. Bar-Dea said. “They read different newspapers. They live in closed neighborhoods. It’s a unique market, almost from A to Z.”

There are at least 400 or 450 shops in Israel focused on the ultra-Orthodox, he said, and 100 or so more mixed markets in smaller cities.

The impact of this community is visible in smaller outlets, too. In more liberal Ramat Beit Shemesh A, Itzik Paloch, 25, himself ultra-Orthodox, runs a video and music store, a delicate proposition in a community where movies and television are forbidden by many rabbis — but not for children, if the intention is educational.

“Everything here is for haredim,” Mr. Paloch said, using the Hebrew word for ultra-Orthodox. He has a large stock of nature documentaries — National Geographic videos are considered fine, so long, as he says carefully, that there is no human nudity or sexuality, or even sexuality from animals.

Uncle Moishe, a children’s entertainer who teaches the Torah, is especially popular. But there are also suspense and war films for youth, approved by rabbis. “The Aryan Brigade” is about an immigrant persecuted by neo-Nazis. “Escape” concerns a Christian cleric on the run, with a Jewish brother.

Mr. Paloch sells an ultra-Orthodox doll, with long side curls, that recites prayers. The same doll is sold, with different scripts and without side curls in what he called “the secular community.” Here, the doll is called “Shimeleh”; in the larger world, “Chico.”

Ora Yazdi, 36, came with one of her six children to find a nature video. “It’s just for my children,” she said. “If it’s good for them, it’s good for me.”

She moved from Tel Aviv and loves it here, she said. “In Tel Aviv, it wasn’t haredi. Here, it’s all haredim, and it’s better for the children.”

But the tensions between the two ultra-Orthodox communities are real. Ilan Shmueli, 35, runs “American Pizza” in Beit Shemesh A. He opened in the stricter B in August 2005, based on his work in a Deal, N.J., pizzeria.

After six months, he said, “the problems started — they began to throw things at us: tomatoes from the market, hot oil, gasoline.” Some ultra-Orthodox from B were customers, but “the Hasidim, who were a bit nuts,” started demonstrations, which became violent. His sin was to sit men and women in the same restaurant. “I went to their rabbi and I said, ‘Look, it’s like the war of Gog and Magog,’” Mr. Shmueli said. “And he said, ‘You might end up dead.’”

He closed at a big loss, then reopened in A last December with his father’s help. “Lots of very pleasant ultra-Orthodox people come in,” he said, especially new American immigrants.

American Pizza’s sign shows the twin towers of the World Trade Center. Asked why, Mr. Shmueli said he consulted his rabbi. “The rabbi told me that the Statue of Liberty is a problem, spiritually speaking,” he said. Liberty is “chofesh,” which implies pure freedom. “Haredis don’t have chofesh,” he said. “We are servants of God.”

His rabbi said that the twin towers were much better. “People initially complained because it was heavy on their hearts,” Mr. Shmueli said. “I was going to put up an American flag as well, but I decided just to leave it. After all, we’re in Israel.”

November 7, 2007

The Price of Coughing

Filed under: All the Other Stuff — ThinkingAgain @ 6:57 pm

I was at a Milken Institute conference last week and heard two good quotes on pollution and cigarettes:

- The pollution in Beijing is such that it is as if each individual was smoking 52 cigarettes a day
- The social cost of a pack of cigarettes in the US is $ 78

You can’t really multiply the two factoids to see what’s happening in China (healthcare is not exactly at the same level as the US!) but if you were not already alarmed by the tobacco figures in emerging countries, you are probably now.

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