The other D-word

Is Japan back in a deflationary trap?

WHILE investors have been fretting recently about Japan’s huge debt, another of the dreaded D-words has come back to haunt them. On Friday November 20th, Japan’s Cabinet Office issued a monthly report that for the first time since 2006 acknowledged that the country was suffering from deflation.

Consumer prices have actually been falling for months, but the pace of decline accelerated over the summer. In September prices slumped by 2.2% compared with a year earlier. This is partly because the country is still loaded with excess capacity after the collapse in exports during the global financial crisis, and partly because oil prices were lower in September than in the same month last year. But there are more structural problems, too. As Japan’s population declines, for instance, retailers are being forced to cut prices to gain market share.
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Cern Large Hadron Collider machine restarts

The Large Hadron Collider (LHC) experiment has been re-started after a hiatus of 14 months.

Engineers have now made two stable proton beams circulate in opposite directions around the machine.

If all continues to go well, the team might even try to increase the collider’s energy to record-breaking levels this weekend.

The LHC is housed in a 27km-long circular tunnel built about 100m beneath the French-Swiss border.

The experiment is designed to smash together beams of protons in a bid to shed light on the nature of the Universe.

Among other things, scientists will search for signs of the Higgs boson, a sub-atomic particle that is crucial to our current understanding of physics. Although it is predicted to exist, scientists have never found it.

Dozens of giant superconducting magnets that accelerate the particles at the speed of light have had to be replaced after faults developed just days after the collider was inaugurated last year.

Operated by the European Organization for Nuclear Research (Cern), the LHC will create similar conditions to those which were present moments after the Big Bang.
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Google previews Chrome open source operating system

Internet search giant Google has lifted the lid on its operating system, known as Chrome OS.

The free and open source system is initially aimed at low-cost netbooks and does away with many of the features of a traditional program.

All applications are designed to run in a web browser and all the user’s data is stored on Google’s servers.

Engineers from the firm said the first computers running the system would be available before the end of 2010.

“We are trying to offer a choice for users,” said Sundar Pichai, vice-president of product management, during an event at the firm’s headquarters in California.

“This model of computing is fundamentally different.”

The event follows the recent launch of Microsoft’s Windows 7 and Apple’s operating system upgrade, Snow Leopard.
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‘Fat for cosmetics’ murder suspects arrested in Peru

Four people have been arrested in Peru on suspicion of killing dozens of people in order to sell their fat and tissue for cosmetic uses in Europe.

The gang allegedly targeted people on remote roads, luring them with fake job offers before extracting their fat to sell it for $15,000 (£9,000) a litre.

Other suspected gang members, including two Italian nationals, remain at large.

Police said the gang could be behind the disappearances of up to 60 people in the region.

At a news conference in the capital, police showed reporters two bottles containing human body fat and images of one of the alleged victims.

One of the alleged killings is reported to have taken place in mid-September, with the person’s body tissue removed for sale.

Cmdr Angel Toledo told Reuters some of the suspects had “declared and stated how they murdered people with the aim being to extract their fat in rudimentary labs and sell it”.
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Belgian PM named as EU president

EU leaders have chosen the Belgian Prime Minister, Herman van Rompuy, to be the first permanent European Council President.

The other top job created by the Lisbon Treaty – foreign affairs supremo – has gone to the EU Trade Commissioner, Baroness Catherine Ashton from the UK.

Both are seen as consensual politicians with limited foreign policy experience.

Both had unanimous backing from the 27 EU leaders at the summit in Brussels, UK Prime Minister Gordon Brown said.

Earlier, the UK government had said it was no longer pushing for former PM Tony Blair to get the presidency post.

Mr Van Rompuy, 62, had crucial French and German support. He has a reputation as a coalition builder, having taken charge of the linguistically divided Belgian government and steered it out of a crisis.
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Pleased to meet you

Barack Obama’s trip to China may encourage a warming of relations

MUTUAL suspicion and mutual attraction are powerful and competing forces in the relationship between China and America. President Barack Obama hopes his first visit to China, which began on Sunday November 15th, will enable the two countries to work more closely on global problems, from climate change to the economy. His hosts appear to agree, but misgivings are still abundant.

Mr Obama began his trip in Shanghai, China’s financial capital. Part of his mission was to reassure city leaders that America would be an enthusiastic participant in the World Expo which is due to be held there next year. The American government—as is its custom for such events—will not pay for a pavilion. Corporate sponsorship has been proving hard to drum up in these troubled economic times. To help the effort, America’s secretary of state, Hillary Clinton, who is travelling with Mr Obama, paid a visit to the half-built pavilion. The leader of America’s pavilion committee, Jose Villarreal, introduced her by saying she would “personally build the pavilion brick by brick if she had to”.

Such rhetoric may help to dispel what could have become a dark cloud over the relationship (China regards putting on the World Expo as something akin to staging the Olympic Games, and would have been deeply resentful of any sign of American diffidence). But Mr Obama still has to tread carefully during his trip, which ends on Wednesday. He has to balance his desire to secure China’s co-operation on global matters against demands at home that he takes China to task over issues such as human rights and trade.
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Brazil takes off

Now the risk for Latin America’s big success story is hubris

WHEN, back in 2003, economists at Goldman Sachs bracketed Brazil with Russia, India and China as the economies that would come to dominate the world, there was much sniping about the B in the BRIC acronym. Brazil? A country with a growth rate as skimpy as its swimsuits, prey to any financial crisis that was around, a place of chronic political instability, whose infinite capacity to squander its obvious potential was as legendary as its talent for football and carnivals, did not seem to belong with those emerging titans.

Now that scepticism looks misplaced. China may be leading the world economy out of recession but Brazil is also on a roll. It did not avoid the downturn, but was among the last in and the first out. Its economy is growing again at an annualised rate of 5%. It should pick up more speed over the next few years as big new deep-sea oilfields come on stream, and as Asian countries still hunger for food and minerals from Brazil’s vast and bountiful land. Forecasts vary, but sometime in the decade after 2014—rather sooner than Goldman Sachs envisaged—Brazil is likely to become the world’s fifth-largest economy, overtaking Britain and France. By 2025 São Paulo will be its fifth-wealthiest city, according to PwC, a consultancy.

And, in some ways, Brazil outclasses the other BRICs. Unlike China, it is a democracy. Unlike India, it has no insurgents, no ethnic and religious conflicts nor hostile neighbours. Unlike Russia, it exports more than oil and arms, and treats foreign investors with respect. Under the presidency of Luiz Inácio Lula da Silva, a former trade-union leader born in poverty, its government has moved to reduce the searing inequalities that have long disfigured it. Indeed, when it comes to smart social policy and boosting consumption at home, the developing world has much more to learn from Brazil than from China. In short, Brazil suddenly seems to have made an entrance onto the world stage. Its arrival was symbolically marked last month by the award of the 2016 Olympics to Rio de Janeiro; two years earlier, Brazil will host football’s World Cup.
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She’ll be back

Sarah Palin and the state of the Republican Party

EVER since Abraham Lincoln made a virtue of log cabins and splitting railway sleepers, crafting the right autobiography has been an essential task for anyone seeking high office in America. On Monday November 16th Sarah Palin, ex-governor of Alaska and failed vice-presidential candidate in 2008, made an eagerly awaited appearance on the Oprah Winfrey show, as part of the launch of her biography. That book, “Going Rogue”, is already topping the bestseller charts, as readers rush to read about gossip and infighting during last year’s presidential campaign and to size up Mrs Palin herself.

On television on Monday Mrs Palin talked about her time as John McCain’s running mate. She recalled an awkward series of unflattering television interviews with Katie Couric, in which Mrs Palin struggled to answer simple questions about international affairs, calling the occasion a “gotcha” moment. She added that the media had no understanding of ordinary people like her and her family. Mrs Palin has also given an acerbic narrative of how she was “mishandled” by Mr McCain’s advisers, whom she says tried to hide her away from the spotlight. Mr McCain has diplomatically called the book “a good account” of the campaign, but he has not responded to Mrs Palin’s claim that she was not repaid a $50,000 fee for vetting her background.
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Full steam ahead for US railways

The story of the railroad is written like a thread of thick and shining steel woven into the tapestry of American history.

There is a poetry to the names of the trains and the tracks that bound this great land together as it expanded west towards California in the 19th Century.

Perhaps it is no coincidence that the names of the Wabash Cannonball or the Atchison, Topeka and Santa Fe are remembered in song where those of the London and North Eastern Railway or the French national SNCF by and large are not.

This month’s business headlines though are a reminder that America’s railways have a future, as well as a past.

It was the announcement that Warren Buffet – the man often described as the world’s greatest investor – was forking out $44bn (£26bn) for the Burlington Northern Santa Fe (BNSF) which made the news.

If the Oracle of Omaha was convinced there was money to be made on the rails, ran the argument in many investment columns, then surely he must be right.
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‘Female Viagra’ discovery claim

A drug that failed tests as an antidepressant is being hailed as “Viagra for women” after surprising but not unpleasant side effects.

In three separate trials, the drug flibanserin did wonders for women’s flagging sex drive despite doing nothing to lift mood.

The accidental discovery is akin to Viagra’s – it was originally designed as a heart medicine but failed.

The US work was presented at a sexual medicine meeting in Lyon, France.

Lead researcher Professor John Thorp, of the University of North Carolina, told the European Society for Sexual Medicine: “Flibanserin was a poor antidepressant.

“However, astute observers noted that it increased libido in laboratory animals and human subjects.
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