Should we call it a Russian rebound? Not yet. Moscow's stock exchange soared 3% midweek, after the rating agency Moody's upgraded Russia's sovereign credit rating by two notches to Baa3. Although the bourse ended the week on a flatter note and the other top rating agencies, S&P and Fitch, held off following Moody's example it's clear Russia has come a long way from the 1998 crash, and is once again an attractive investment opportunity. Giddy investors would do well to keep things in perspective, though: Moody's is considering downgrading El Salvador from Baa3. And not all the economic news was rosy. Third-quarter balance-of-payment figures revealed that the flow of capital into the country had suddenly reversed. In the second quarter €3.2 billion more had come in than had left. In the third quarter, however, net capital outflow stood at €6.6 billion. Analysts hastily revised predictions that Russia would attract more money than it would lose this year. Why is Russia's business élite sending its money back abroad? Because it's spooked by the government's aggressive investigation widely viewed as politically motivated of the oil giant Yukos, which has so far resulted in the arrest of two senior figures.
Chad joined the ranks of oil producing nations with the opening of a 1,000-km pipeline to the Cameroon coast. The World Bank says the pipeline should raise per capita income from €210 to €470 a year by 2005. But local civic groups held a "day of mourning" over the "impunity with which basic human rights are routinely being violated," and predicted that the wealth would be siphoned off.
Ford Hits The Brakes
To Ford's growing list of problems in Europe, add labor woes. Belgian unions and government officials are reacting furiously to the automaker's decision to cut 3,000 jobs a third of the workforce and cancel a planned €900 million investment at its Genk plant. The cuts come as Ford struggles with slumping sales and market share in Europe, where it lost €447 million before tax in the second quarter to June. Workers at Genk last week staged two 24-hour strikes at the plant, which makes the Mondeo sedan and Transit minivan; they're threatening more stoppages. It's a baptism by fire for Lewis Booth, 54, the former head of Mazda who took over at Ford of Europe in August. "The automotive market in Europe has deteriorated dramatically since only a year ago," he says. The risk for Ford is that if it can't get the Belgian unrest under control, it could spill over and impact its production elsewhere in Europe.
|The Bottom Line|
| The cost of living has grown ...because a reference for
value has been lost. With a €1 note, everything would be different and better.
|Giulio Tremonti, Italian Economics Minister, making the case for a €1 bill|