Euro displaces dollar in bond markets By David Oakley and Gillian Tett in London Published: January 14 2007 http://www.ft.com/ The euro has displaced the US dollar as the world’s pre-eminent currency in international bond markets, having outstripped the dollar-denominated market for the second year in a row. The data consolidate news last month that the value of euro notes in circulation had overtaken the dollar for the first time. Outstanding debt issued in the euro was worth the equivalent of $4,836bn at the end of 2006 compared with $3,892bn for the dollar, according to International Capital Market Association data. Outstanding euro-denominated debt accounts for 45 per cent of the global market, compared with 37 per cent for the dollar. New issuance last year accounted for 49 per cent of the global total. That represents a startling turnabout from the pattern seen in recent decades, when the US bond market dwarfed its European rival: as recently as 2002, outstanding euro-denominated issuance represented just 27 per cent of the global pie, compared with 51 per cent for the dollar. The rising role of the euro comes amid growing issuance by debt-laden European governments. However, the main factor is a rise in euro-denominated issuance by companies and financial institutions. One factor driving this is that European companies are moving away from their traditional reliance on bank loans – and embracing the capital markets to a greater degree. Another is that the creation of the single currency in 1999 has permitted development of a deeper and more liquid market, consolidated by a growing eurozone. This has made it more attractive for issuers around the world to raise funds in the euro market. And, more recently, the trend among some Asian and Middle Eastern countries to diversify their assets away from the dollar has further boosted this trend. René Karsenti, executive president of ICMA, said: “It is the stable interest rates in Europe that have helped and the fact that [the euro] has strengthened and shown resilience.” Since the start of 2003, the European Central Bank’s main interest rate has fluctuated only 1.5 percentage points, ranging from a low of 2 per cent in the middle of that year to 3.5 per cent, its rate today. In comparison, the Fed funds rate, the main US interest rate, has fluctuated 4.25 percentage points, ranging from 1 per cent in the middle of 2003 to 5.25 per cent, its level today. The euro has also risen to trade around $1.30 against the dollar, from around parity three years ago. Sterling issuance has grown in the past three years, reinforcing its attraction as a niche currency among some investors. The yen, in comparison, has fallen out of favour. Overall, international capital markets have doubled in size in terms of bond issuance during the past six years. ***** Lethal secrets of 1918 flu virus BBC NEWS http://news.bbc.co.uk Published: 2007/01/18 Scientists who recreated "Spanish flu" - the 1918 virus which killed up to 50m people - have witnessed its remarkable killing power first hand. The lungs of infected monkeys were destroyed in just days as their immune systems went into overdrive after a Canadian laboratory rebuilt the virus. The reason for the lethal nature of the 1918 flu was never fully understood. But the experts behind this test say they have found a human gene which may help explain its unusual virulence. They are hoping to help control any future pandemic and believe that the strain may hold clues that will help them. Despite the large number of casualties at the time, doctors had no way to preserve tissue samples taken from infected patients, so researchers used an ingenious method to overcome this. Frozen body The preserved body of a flu victim buried in Alaskan permafrost was exhumed, and they painstakingly extracted the genetic material needed to work out the structure of the H1N1 virus. Then, in a maximum "biosafety" facility at Canada's National Microbiology Laboratory they reconstructed a fully functioning virus, and infected macaque monkeys to see what would happen. Writing in the journal Nature, they reported that the results were startling. Symptoms appeared within 24 hours of exposure to the virus, and the subsequent destruction of lung tissue was so widespread that, had the monkeys not been killed a few days later, they would literally have drowned in their own blood. The results match those seen when mice were infected in an earlier study and are very similar to those described in human patients at the time the virus was at its height. Dangerous virus Darwyn Kobasa, a research scientist with the Public Health Agency of Canada, and lead author of the research, defended the decision to recreate one of the most dangerous viruses in history. He said: "This research provides an important piece in the puzzle of the 1918 virus, helping us to better understand influenza viruses and their potential to cause pandemics." However, it is not the virus that is directly causing the damage to the lungs - it is the body's own response to infection. Immune system proteins that can damage infected tissue were found at much higher levels following H1N1 infection compared with other viral infections. Analysis at the University of Wisconsin at Madison (UW) revealed that a key component of the immune system, a gene called RIG-1 appeared to be involved. Levels of the protein produced by the gene were lower in tissue infected with the 1918 virus, suggesting it had a method of switching it off, causing immune defences to run wild. This ability to alter the body's immune response is shared with the most recent candidate for mutation into a pandemic strain, the H5N1 avian flu. Experts are worried that if the virus changes so that it can infect humans easily, it could again be far more lethal than normal seasonal flu. "What we see with the 1918 virus in infected monkeys is also what we see with H5N1 viruses," said Yoshihiro Kawaoka, who led the analysis at UW. "Things may be happening at an early time point (in infection), but we may be able to step in and stop that reaction." Preparing for pandemic Dr Ronald Cutler, an infectious diseases researcher at the University of East London, said: "Knowing how that over stimulation takes place could lead to the development of new methods to treat these diseases so we are better prepared for any future pandemic." Dr Jim Robertson from the UK's National Institute for Biological Standards and Control, said the decision to recreate the virus was justified. "Many influenza virologists remain nervous about creating and experimenting with a reconstructed 1918 Spanish flu virus, an extremely dangerous virus which disappeared from the world long ago. "However, it cannot be denied that the information that has been derived from this experiment is exciting and represents an important milestone in understanding the severity of these highly pathogenic types of influenza viruses." ***** BusinessWeek.com January 18, 2007 Are Wal-Mart's "Organics" Organic? Wisconsin officials have launched an investigation into the giant retailer's practices after complaints that it may be misleading consumers by Pallavi Gogoi A year after Wal-Mart (WMT) laid out ambitious plans to become a much bigger player in the organic foods business, the giant retailer is running into trouble over its organic effort with consumer activists and government regulators. It was March of 2006, at an analysts' conference, when Wal-Mart's vice-president of marketing, Stephen Quinn, said that the company would double its offerings of organic products within weeks. The company promised to make organics affordable to more consumers by offering what executives called "the Wal-Mart price." In July, the Bentonville (Ark.) retailer even launched an ad campaign on The Food Network, HGTV, and parenting and women's magazines, with tag lines like: "Know what goes well with organic milk? Organic cereal and knock-knock jokes" (see BusinessWeek.com, 3/29/06, "Wal-Mart's Organic Offensive"). "An Isolated Incident" Now there are questions about whether "the Wal-Mart price" might come at a cost to organic foods. State officials in Wisconsin have launched an investigation into the retailer's practices after complaints that Wal-Mart may be misleading consumers. A central question is whether signs on store shelves and banners above the shelves describe foods as "organic," while the foods nearby do not qualify for the label, under federal guidelines. "We are beginning an investigation that will look into signage and whether it can be considered misleading," says Jim Rabbitt, director of the Bureau of Consumer Protection at the Wisconsin Department of Agriculture, Trade & Consumer Protection in Madison. The bureau plans to examine the practices of Wal-Mart and other retailers for 30 to 60 days to determine how big an issue this is. The U.S. Agriculture Dept. is reviewing a complaint about Wal-Mart's practices from the same watchdog group that notified Wisconsin officials. The USDA has not decided whether to pursue its own investigation. "We are seeking more information to determine what action should be taken," says Joan Schaffer, spokeswoman for the national organic program at the USDA. Wal-Mart officials say that the company has done nothing wrong. A spokeswoman points out that the company has more than 2,000 locations that offer up to 200 organic selections, in addition to thousands of nonorganic offerings. Karen Burk, company spokeswoman, wrote in an e-mail that if there were any inaccurate signs or banners around organic foods "we believe it to be an isolated incident." She added that, "The USDA certification label is featured on the packaging of the organic selections we offer for further customer information and verification. We have sent procedural guidelines to our stores for proper management of these identification tags." Strict Requirements Retailers and farmers involved in organic foods worry that giants like Wal-Mart may muddy the waters about what is and is not organic. Some are upset over the allegations and wonder whether other supermarkets will take steps similar to those alleged. "A huge amount of work went into coming up with a standard of quality in the organic industry," says Randy Lee, CFO at PCC Natural Markets, the largest co-op operating in the U.S., which runs eight stores in the Seattle area. "If these allegations are true, then it very easily erodes those standards and comes with a significant business impact on other retailers that have higher standards." The watchdog group that prompted the Wisconsin investigation is called The Cornucopia Institute and has been active in what it calls "family-scale" farming. It has produced photographs of items that are not certified organic or are only partially organic that appear on shelves at Wal-Mart with banners or signs that say "Wal-Mart Organics." The photos from Cornucopia show items that could be easily mistaken for organic. Many have descriptions such as "all natural" or "natural," including Stonyfield Farms All Natural Yogurt and Florida Crystals natural sugar. Organics have been a booming business for food manufacturers and for retailers, growing 15% annually for the last five years. It's extremely lucrative: Supermarkets typically charge a 30% to 40% premium in price for organic food, compared with conventionally grown food (see BusinessWeek.com, 5/25/06, "Going Organic: The Profits and Pitfalls"). Diluting the Movement? Retailers and farmers are anxious to protect this growing business. Lee, of PCC Natural Markets, says that if Wal-Mart is placing nonorganic items under its organic banner, then it will have a ripple effect on other national grocery chains. PCC and other organic retailers say that they train their employees and store managers rigorously to ensure high organic standards. They wonder how strong Wal-Mart's commitment to organics is. "Where is the USDA in all this?" asks Lee. The USDA has come under fire in the past for not taking action on similar complaints. Two audits of its organic program, performed by the American National Standards Institute in 2004 and by the USDA's Office of Inspector General in 2005, were highly critical of how the USDA has handled complaints of potential violations of organic standards. The 2005 report states that "in fiscal year 2003, the eight complaints referred to the national organic program for a decision have not been resolved, one of which involved a possible prohibited substance being added to an organic product." The USDA counters by saying that complaints about organic food aren't treated like an emergency. "It's not like this is a food safety issue," says spokeswoman Schaffer. Mark Kastel, co-director of The Cornucopia Institute, says that it launched its inquiry after a visit in September to Wal-Mart's prototype store in Plano, Tex. After noticing labeling problems in its organic offering, it sent off a letter to Wal-Mart's CEO Lee Scott suggesting that the company correct the problem. Kastel says that consecutive visits to Wal-Mart showed that the company hadn't heeded its advice, so Cornucopia filed a legal complaint with the U.S. Agriculture Dept. in November and followed up with a complaint with the Wisconsin Agriculture Dept. on Jan. 13. The latest assessment came after visiting stores and finding alleged violations in at least four states—Wisconsin, Illinois, Iowa, and Minnesota. "Wal-Mart is coming up with a different kind of organic for its consumers," says Kastel. Gogoi is a contributing writer for BusinessWeek.com. ***** Controversial Google library project grows AFP Jan 19, 2007 Google announced that another major US college library had joined its controversial project to put the world's books online. The more than one million written works at the University of Texas library in Austin will be converted to digital format and added to Google Books Library Project, according to the Internet search powerhouse. The university's collection includes rare books and manuscripts from early Latin American history, Google said. "Intellectual discovery is at the heart of the scholarly research process," university director of libraries Fred Heath said in a statement. "The best collections of information are only as useful as the quality of the tools available for discovering and accessing that information." The Google Book Search project was initiated in 2004 with the aim of scanning every literary work into digital format and making them available online. Google has partnerships with the New York Public Library and major universities such as Harvard, Oxford, Complutense of Madrid and the University of California to add their collections to its virtual book shelves. The Mountain View, California-based company has stored on its searchable database classic works in the public domain, along with copyrighted books either sent with or without the publishers' permission. After outcries from publishing houses and authors, Google modified its online library to offer only summaries of copyrighted works along with information regarding where to buy or borrow the books. Google has rejected claims that, being based in the United States, it has favored English and it promised it would next roll out a Google Book Search in French. Opposition to the project, particularly by French and US editors, resulted in a group of book publishers forming the Open Content Alliance (OCA) in October of 2005. The OCA is a non-profit organization which joins together an array of universities, foundations, and data processors to create a "common pot" of digitized books available online for download or printing. The OCA got the support of Sunnyvale, California-based Yahoo, which was to tailor a search engine for the alliance and finance converting 18,000 books to digital format. Microsoft promised to contribute 150,000 digitized books to the OCA collection. The OCA hoped to recruit the National Library of France, where 90,000 books have already been scanned. Microsoft launched an online library in December in a move that pits the world's biggest software company against Google's book project. Microsoft said the US test version of Live Search Books featured tens of thousands of out-of-copyright books, including works held by the British library and major universities in the United States and Canada. Microsoft has book-scanning partnerships with New York Public Library and the American Museum of Veterinary Medicine. It also has agreements with the University of California system and the University of Toronto. At stake for the companies were revenues that could be raked in by placing ads on web pages visited by book-seeking Internet surfers. ***** Sony says no to porn on Blu-ray Disc Dan Nystedt and Martyn Williams IDG News Service January 19, 2007 Sony Corp. said it will not work with the adult film industry to help put its movies on its Blu-ray Disc format, although the company will not try to stop it completely. The company will not allow its disc-replicating subsidiary, Sony DADC Global, to handle adult film titles, it said this week. In markets where Sony operates around the world, it won't duplicate any movies that are above a certain rating or that have not been certified by a local motion picture association. Sony wouldn't disclose exactly where it draws the line, but the rule means that adult movie makers will have to find someone else to reproduce their films in bulk. While other companies offer such services, the adult industry feels it is being cut out of the Blu-ray camp altogether. The choice of which high-definition disc format to use was "kind of made for us, so everything we are replicating right now is in the HD-DVD format," said Robby D, a director at popular adult film maker Digital Playground Inc. "As far as I understand, Sony has said to the replicators that if you replicate adult, you'll lose your license." Sony's decision to stay away from pornography could have wide implications for Blu-ray Disc. Not only could some companies backing Sony's format miss out on a lucrative market, but analysts say it could eventually mean that Blu-ray loses out to HD-DVD in the battle to become the next-generation DVD format. Many believe that Sony's Betamax video tape format, while technologically superior to VHS, died because the adult movie industry was barred from using Betamax, noted Jake Richter, an analyst at Jon Peddie Research in Tiburon, Calif. "Is Sony doomed to repeat one of the mistakes of the past? It seems like that may be the case," he wrote in a report. Several adult film companies said the issue is not just about gaining access to the "stampers" that reproduce their movies in bulk, but about their inability to get help with technical issues from the companies backing Blu-ray Disc. "Nobody comes out and says, 'No, we won't work with adult.' But Blu-ray just offers no help," said Jackie Ramos, vice president of DVD production at Wicked Pictures, another popular adult movie company. The Blu-ray Disc Association, which oversees the licensing of the technology, says it has not banned anyone from using the format. "We look forward to working with any content providers interested in providing their audience with the best possible high definition home entertainment experience," the group said in a statement. One major adult film company, Vivid Video, plans to release a sequel to the classic Debbie Does Dallas on both Blu-ray Disc and HD-DVD this spring, its first high-definition video offering. A spokesman for the company, Shylar Cobi, declined to comment on how Vivid would gain access to stampers but said he does not expect it to be a problem. Still, several other adult film companies interviewed said the industry as a whole plans to use HD-DVD because of the problems of working with Blu-ray Disc. Wicked Pictures chose HD-DVD for the first-ever high-definition adult film released this month at the AVN Adult Entertainment Expo in Las Vegas. Several other companies plan to release high-definition movies this year, including Digital Playground, which is releasing its first HD-DVD title this week. "Sony is really protective of proprietary information and proprietary products, especially when it comes to the adult market. Sony is always a little more standoffish and hands-away from it," said Jay Grdina, president of adult entertainment company ClubJenna Inc. ***** Toyota plans ultra-cheap car AFP 22/01/2007 Tokyo - Toyota Motor Corp plans to build a low-cost car undercutting Renault's emerging-market Logan through a "radical" rethink in design and production, the president of the fast-growing Japanese automaker said. "The focus is on low-cost technology," Toyota president Katsuaki Watanabe told Britain's Financial Times newspaper in an interview published on Monday. He declined to set a price for a low-cost car but said it would be "at least" less than the Logan. Renault has started production of the Logan, which will cost from €5,000 ($6,200) on up, touted as a budget model for consumers in emerging economies such as China and Russia that conforms to European standards. Watanabe said that Toyota could slash the price by targetting costs throughout production. "Everything from design to production methods will be radically changed and we are thinking of a really ultra-low-cost way of designing, using ultra-low-cost materials, even developing new materials if necessary," he said. The plan would create a new challenge to struggling US automakers. Toyota is set this year to overtake General Motors as the world's largest automaker. The Japanese automaker has cashed in by pioneering environmentally friendly hybrid cars and has also seen success with its luxury Lexus line.