Global business

  • December 17, 2012 - 5:47 PM

Thyssen Krupp, a German conglomerate known mostly for steelmaking, reported a $6.1 billion loss for the year to September. Most of this was caused by a writedown of its steel business in Alabama and Brazil, which CEO Heinrich Hiesinger called a "disaster." Three of the company's most senior executives were sacked.


Diageo, a liquor group that includes Baileys and Johnnie Walker among its labels, gave up its lengthy pursuit of Jose Cuervo. The decision came after a final failure to agree on a price with the Beckmann family, who are sixth-generation owners of the business. Diageo has been distributing their tequila outside Mexico since 1986, but that agreement will end in June.


The U.S. Treasury began selling its remaining shares in AIG. The government plowed $182 billion into the insurance giant during the crash in a virtual nationalization of the firm. Since then it has gradually reduced its stake. The bailout netted the government a positive return of $22.7 billion.

The first arrests were made in connection with the Libor scandal. Three British men who work in financial services were questioned in London by the Serious Fraud Office about the past manipulation of Libor, a benchmark interest rate that is used to determine the prices of assets worldwide.

Two big British banks reached settlements with U.S. authorities in separate cases of alleged wrongdoing. HSBC paid penalties of $1.9 billion and submitted to a deferred-prosecution agreement with the Justice Department. The bank admitted to "past mistakes," which include laundering drug-money transactions through its Mexican division. Meanwhile Standard Chartered shelled out an extra $327 million for its failure to heed U.S. sanctions against Iran between 2001 and 2007.

Delta Air Lines bought Singapore Airlines' 49 percent stake in Virgin Atlantic for $360 million. It was considerably less than the $960 million that the Singaporean carrier paid for it in 1999. Richard Branson's Virgin Group holds the remaining 51 percent. Delta and Virgin, which is the fourth-biggest airline operating at Heathrow Airport, will cooperate on lucrative transatlantic routes between America and Britain.

The British government gave the go-ahead to fracking for shale gas. Operations had been suspended due to concerns that the process causes minor Earth tremors, but new safety rules were introduced to reduce that risk. Britain hopes to boost the proportion of its energy that comes from shale.


Political economy

After four months of political wrangling, the European Union's finance ministers agreed to let the European Central Bank supervise big eurozone banks, the first step toward a full banking union. Financial integration has been resisted by some countries, notably Germany.

Turkey's GDP grew by 1.6 percent in the third quarter, far below expectations. This makes it the latest emerging-market economy to report disappointing growth. Turkey had excited investors during the past decade as its economy expanded rapidly -- by more than 8 percent in 2010 and 2011. The crisis in the eurozone, Turkey's biggest trading partner, and nervousness about the conflict in neighboring Syria have put a damper on growth. Industrial production fell by 5.8 percent in October.

Prime Minister Mario Monti of Italy, a nonpartisan technocrat, said he would resign by the end of the year. The resignation, which will take effect after a parliamentary vote on the budget, came because Silvio Berlusconi's PdL party had withdrawn its support for the government. Monti is credited with bringing some stability to Italy's chaotic finances.


President Hugo Chavez of Venezuela announced that his cancer had returned and named Vice President Nicolas Maduro as his chosen successor. He then went to Cuba for a six-hour operation.


The European Parliament approved free-trade agreements between the European Union and Colombia, Peru and six Central American countries.


Canada's Conservative government finally approved a $15.1 billion bid by CNOOC, a state-owned Chinese oil company, for Nexen, a tar-sands producer. Canada has strict rules on foreign takeovers of natural-resource companies. Prime Minister Stephen Harper said that future foreign offers for tar-sands firms would be barred, except in "exceptional circumstances."

As Japan slipped back into recession, the country went to the polls in a general election. Prime Minister Yoshihiko Noda and his liberal Democratic Party of Japan, which swept to a historic victory in the previous election in 2009, lost their majority in parliament to the conservatives, who will form the next government.

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