Wallstreetjournaleurope 20160314 The Wall Street Journal Europe
Wallstreetjournaleurope 20160314 The Wall Street Journal Europe
Wallstreetjournaleurope 20160314 The Wall Street Journal Europe
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
Voters
What’s
Punish
News
Business & Finance
Merkel on
S ome economists say the
2% inflation rate, long
Migration
pursued by central banks,
BY ANTON TROIANOVSKI
should be adjusted, but they
differ on the direction. A1
BERLIN—German voters
The ECB decision to offer dealt a stinging rebuke to
no-cost loans was welcomed Chancellor Angela Merkel and
by struggling banks in her open-door refugee policy in
southern Europe but criti- three state elections Sunday,
cized in Germany. B5 delivering historic gains for an
upstart anti-immigrant party
Italy’s Eni began pump-
and showing how the migra-
ing oil in the Arctic after
tion crisis is scrambling poli-
getting final approval from
tics in Europe’s largest econ-
Norway following long de-
omy.
lays and cost overruns. B1
A recent rise in oil prices,
boosted by talk of output Slipping Support
caps, has some questioning
DEFNE KARADENIZ/GETTY IMAGES
of rising tensions among Frankfurt prices everywhere and that of monetary economics at the
regime opponents. A4 Central bankers over the central banks fight at their University of Giessen in Ger-
past two decades pursued 2% peril. many.
Terrorists stormed a inflation as a Goldilocks stan- Another takes the opposite European Central Bank
beach town in Ivory Coast, dard—neither too hot nor too view, arguing the inflation tar- President Mario Draghi sig-
killing at least 12, in an at- cold. After years of under- get should be raised to help naled which side he’s on last
tack that bore the hallmark shooting in ad- central bankers avoid their week, launching a second ma-
of an al Qaeda affiliate. A3 ANALYSIS vanced econo- current fix: With interest rates jor stimulus boost in three
Western powers threat- mies, some at or near zero and inflation months after inflation in the
ened sanctions against Liby- economists now rates low, they can’t cut the euro area slid back below zero
ans who block the formation say that target should be ad- real interest rate—after sub- in February. Mr. Draghi has
of a unified government. A4 justed. tracting inflation—as far be- vowed not to “give up” in his
Trouble is, they can’t agree low zero as they would like to pursuit of near-2% inflation.
GOP rivals wavered on whether it should be higher or stimulate the economy. At the heart of the tussle is
whether they could back ON EDGE: Gunmen stormed a beach town in Ivory Coast on Sunday, lower. A third group warns that Please see TARGET page A2
Trump if he is the nomi- killing at least 12 in what authorities said appeared to be a terrorist One faction says ultralow the entire debate is toxic.
nee after fights broke out attack. Above, security forces evacuating people afterward. A3 inflation rates are the result of “Credibility means keeping the ECB’s cheap loans expose
before a planned rally. A1 long-term economic trends target fixed, not lowering it banks’ divide............................... B5
Doctors who treated the
German co-pilot who inten-
Body Politic Rebuffs French Island’s Nudist Past
tionally crashed a jet refused
to speak with investigators,
citing privacy laws. A3
Candidates Waver i i i
Some big U.S. cities, in-
cluding Chicago and Los An-
geles, have seen an increase
in murders this year. A7
On Backing Trump ‘Textiles’ and other newcomers want locals to be better dressed
BY NOEMIE BISSERBE year, in the buff. French doctors and brothers,
Mr. Gacon, 67, wearing a André and Gaston Durville, relo-
Brazilians called for the Ohio Gov. John Kasich planned and then canceled a ILE DU LEVANT, France—On black shirt, white trousers and cated to the sun-splashed island
ouster of Rousseff, who many blamed Republican presidential Friday-night rally. a blustery morning on this Med- sunglasses inside his office, re- with the dream of fostering a
blame for corruption and front-runner Donald Trump for The situation also comes just iterranean island, dozens of na- fuses to back down. “Asking a back-to-nature community.
an economic meltdown. A4 creating a “toxic” environment ahead of pivotal primaries Tues- ked men and women marched person to throw on a Clothing was op-
and suggested he may not be day in the home states of arm-in-arm in defense of their beach wrap is hardly pressive, the settlers
CONTENTS Opinion.............. A12-13 able to back him if he is the Messrs. Kasich and Rubio, right to bare bottoms. the apocalypse,” he believed, because it
Business & Tech. B1-4 Review................. A8-10
Crossword.............. A14 Sports....................... A14
whose fortunes appear to be The target of their protest says. obscured and disfig-
Europe File............... A2 Technology............... B3 By Reid J. Epstein in heading in opposite directions, was Jean-Yves Gacon, who is The clash, which ured the body, break-
Heard on Street.... B8 U.S. News.................. A7 Sharonville, Ohio, according to a new poll. wielding his authority as head raged last summer ing the human form
Markets Digest..... B6 Weather................... A14 Mr. Kasich narrowly leads of the island’s homeowners as- and is set to resume into pant-legs, skirts
Money & Inv...... B5-8 World News....... A2-4
Patrick O’Connor in
Largo, Fla., and the GOP field in Ohio heading sociation to force people to this year as the and shirt sleeves.
€3.20; CHF5.50; £2.00; Colleen McCain Nelson into its winner-take-all primary, wear clothing. The coverup has weather warms, has With no running
U.S. Military (Eur.) $2.20
in St. Louis a new Wall Street Journal/NBC the backing of the mayor’s of- exposed rifts between water or electricity,
News/Marist poll shows. The fice as well as local police who nudists and “textiles,” Elizabeth Varet the island’s first in-
party’s nominee. Florida Sen. governor is the preferred pick are stopping anyone who dares caused a jurisdictional habitants lived a sim-
Marco Rubio also expressed of 39% of likely primary voters, stroll through the village square battle with the mainland and ple and secluded life. The
doubts about whether he stands followed by Mr. Trump at 33% without clothes. prompted Mr. Gacon to reinter- brothers sold parcels of land to
by his pledge to support the and Texas Sen. Ted Cruz at 19%. “The traditions of this place pret the colony’s history as part newcomers who later formed a
eventual GOP choice. The prospects aren’t quite so need to be preserved,” says of his campaign. homeowners’ assembly to lay
s Copyright 2016 Dow Jones & The candidates’ remarks rosy for Mr. Rubio in Florida, a Elizabeth Varet, a 70-year-old The nudist colony, one of Eu- down rules for the island.
Company. All Rights Reserved
came after fights broke out at a state he needs to win to stay in retired English teacher who at- rope’s most storied, was In the 1960s, the island be-
Chicago arena where Mr. Trump Please see RACE page A7 tended the protest, held last founded in the 1930s when two Please see NUDE page A2
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To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A2 | Monday, March 14, 2016 THE WALL STREET JOURNAL.
WORLD NEWS
EU-Turkey Deal Goes After Migrant Smugglers governments are wary that
the European Commission
may try to water down its
assessment of these condi-
tions to facilitate a deal.
A third challenge is what
to do about the asylum seek-
EUROPE FILE ers already stranded in
SIMON NIXON Greece. In theory, their ap-
plications should be assessed
in Greece and those qualify-
There is now a well-es- ing for protection resettled
tablished pattern to the Eu- across the EU according to
M
a plan of action that may not eanwhile the biggest
remove the underlying issues obstacle, say EU offi-
but at least holds the union cials, may lie in Tur-
together. key’s demand that the EU ac-
This was celerate its application to
how the EU join the bloc. That would re-
handled the quire Cyprus to drop its veto
euro crisis, A man collected firewood Sunday at a makeshift camp for migrants stranded in northern Greece. on five of its so-called “ac-
and the same cession chapters,” or areas
playbook has multibillion-dollar people- allow one Syrian refugee to an 11th-hour meeting be- migrant trail that left thou- of policy discussions that are
been followed in the migra- smuggling industry with an come to the EU—but cru- tween Turkish Prime Minis- sands stranded in Greece. part of the road map to be-
tion crisis—a crisis the bloc apparently inexhaustible cially, not those who made ter Ahmet Davutoglu and Even so, there are four coming an EU member. The
initially chose to treat as a supply of potential custom- the illegal crossing. They will German Chancellor Angela major obstacles to a success- government in Nicosia is un-
local Italian and Greek diffi- ers from the fast-growing go to the back of the asylum Merkel, Turkey offered to ful deal. The first is legal: likely to do that while Tur-
culty. It now hopes to re- populations of Africa and line. The goal: anyone who take back all migrants in re- United Nations High Com- key is, in the eyes of interna-
solve it via a comprehensive Asia. These smugglers are pays a smuggler won’t only turn for an extra €3 billion missioner for Refugees has tional law, illegally
deal with Turkey that EU taking advantage of the EU’s lose their money but also ($3.34 billion) of aid and a warned that mass expulsions occupying the north of the
leaders hope to seal at a deep commitment to human worsen their prospects of re- deepening of Turkey’s rela- are illegal under interna- island.
summit this week. rights to make a mockery of settlement. tionship with the EU. tional law and could only be Does this mean the EU re-
its efforts to control its bor- Of course, the deal is con- To some Europeans, this allowed if Turkey met the in- sponse will fall short again?
T
his migration crisis is ders. troversial, not least because deal smacked of a desperate ternational standards on the Not necessarily. The stakes
the biggest threat to The proposed deal with of the manner in which it capitulation by Ms. Merkel treatment of refugees to are so high that compro-
the survival of the EU Turkey is a potential water- emerged. When European ahead of Sunday’s regional qualify as a safe country. mises may yet be found to
because, in contrast to the shed because it marks the leaders gathered in Brussels elections in Germany. But A second obstacle is Tur- ensure the right message is
euro crisis, there is no Euro- first serious attempt by the for a summit with Turkey Turkey also had good rea- key’s demand that the EU sent to the smugglers. The
pean Central Bank to make EU to destroy the people- last week, they were expect- sons to strike a deal. Is own waive visa restrictions for its challenge then will be to en-
the problem go away or, at smugglers’ business model. ing to sign up to a less ambi- negotiating leverage had 80 million citizens by June, sure that what is agreed
least, hide it from voters. In- tious deal negotiated by Eu- been weakened by Austria’s four months earlier than upon is actually delivered.
U
stead, voters see a problem nder the deal, every- ropean Council President decision—ironically, opposed previously envisaged. This But the lesson of past EU
that already appears unman- body who illegally ar- Donald Tusk. This would by Ms. Merkel—to close its would still depend on Ankara crises is that even a success-
ageable and unending. What rives in Greece will be have seen only those ineligi- borders to new asylum seek- complying with 72 condi- ful deal will likely only buy
the EU is confronting isn’t sent back to Turkey; and for ble for asylum returned to ers, thereby causing a dom- tions laid down by the EU, of time—in this case, until the
just the tragic displacement every bona fide asylum Turkey. Syrians would have ino effect of border closures which it has so far fulfilled smugglers figure out a new
of refugees from Syria but a seeker sent back, the EU will been allowed to stay. But at along the Western Balkan only 10. But many European way into Europe.
summer, many of them sleeping the French Treasury in Paris, also lined up against Mr. Ga-
under the stars. who was elected president of con’s regulatory zeal. Gilles Go-
As the colony grew, Ile du the homeowners’ assembly in iset, a hotel owner who heads
Levant became divided into 2013 after buying a house on the island’s small-business as-
zones with varying codes of un- the island. sociation, says the island
dress. The beach and hiking The newly installed presi- needed to show off its nudist
trails were strictly clothes-free. dent was cut from different traditions to attract new visi-
Nudity was banned inside the cloth than his nudist neighbors. tors, not conceal them.
barbed wire confines of a mili- Mr. Gacon enjoyed skinny dip- Asking tourists to cover up
tary base set up in the 1950s ping in Ile du Levant’s pristine as they cross the village square
and used for missile testing. waters. But whenever he left on their way to the beach, Mr.
Going nude in the village square the beach, the clothes came on. Goiset says, sows confusion.
was also against the rules, but “I’m not even sure he’s na- Dozens protest on the village square in Ile du Levant, France, in defense of nudism. Under pressure, the mayor
nudists say enforcement of the ked at home!” says Jean-Albert has offered a compromise: Peo-
clothing requirement in town Vaillant, a 69-year-old who gen- the colony and its founders. The A majority of the island’s grab that tread on Hyères sov- ple will be allowed to cross the
was lax. erally wears reading glasses— Durville brothers, he says, 240 property owners voted in ereignty. village square naked as long as
The 1980s drew a curtain on and nothing else—when run- didn’t go entirely nude but in- favor of it. Local authorities re- Ile du Levant “is a private is- they don’t stop and stand still.
the island’s hippie culture. Va- ning the village grocery store. stead wore a stringy garment to fused to implement it. land. It’s not the Vatican. I am Many of the island’s resi-
cationers deserted the island in These days, Mr. Gacon make sure they weren’t inde- Ile du Levant’s police fall un- in charge of public order,” he dents see the compromise offer
favor of more buttoned-up holi- stands at the center of a cul- cently exposed. “The Durville der the jurisdiction of Hyères, a added. as a mere fig leaf.
day destinations, fueling a spike tural revolution. He has advo- brothers respected the law,” Mr. town on the coast of the main- The island’s die-hard nudists “It’s better than nothing, but
in real-estate prices in nearby cated for a zero-tolerance ap- Gacon says. land where nudism isn’t gener- chafed over the mayor’s intran- that’s not going to solve any-
Riviera towns such as St. Tro- proach to enforcing the island’s Mr. Gacon’s opponents orga- ally practiced. “I respect nud- sigence. In an act of civil dis- thing in the long run,” says Mr.
pez. The average age of Ile du skimpy dress code. Anyone nized a referendum to roll back ism, but it shouldn’t be obedience, 76-year-old Doris Vaillant, in his grocery store. He
Levant’s residents also rose. caught naked in public spaces the island’s piecemeal clothing decadent,” says Jean-Pierre Gi- Mertiny showed up naked at a thinks some people will always
The tourist flight left Ile du in the village got fined. requirement, allowing nudism ran, the mayor of Hyères. Ile du meeting of the homeowners’ as- be uncomfortable with nudity.
Levant’s vacation homes rela- The retired civil servant be- to be practiced in the village Levant’s referendum, he sembly last summer. “We’re all bathing in hypoc-
tively cheap. That attracted a gan re-examining the history of square and surrounding shops. warned, amounted to a power A room full of clothed resi- risy.”
AMPLIFICATIONS
While inflation rates in the Shin, head of research at the the International Monetary atile as it rises, he said, so The News Building, 1 London Bridge Street,
London, SE1 9GF
U.S. are rising back toward the Bank for International Settle- Fund—have called for a 4% in- that annual price growth
Federal Reserve’s 2% target— ments, said in December. flation target, to give central might occasionally reach Thorold Barker, Editor, Europe
Bruce Orwall, Senior Editor, Europe
hitting 1.3% in January accord- That said, reducing the tar- banks more room to maneuver 7%—a level many would find Cicely K. Dyson, News Editor, Europe
ing to its preferred measure— get, or accepting it won’t be in a crisis. objectionable. The National League for Margaret de Streel, International Editions Editor
Darren Everson, Deputy International Editor
they have languished below 1% reached anytime soon, carries “Once we reached the new There are other reasons to Democracy party nominated
in the euro area for more than aim for 2%. The way inflation Htin Kyaw as its candidate to Joseph C. Sternberg, Editorial Page Editor
two years, and show no signs is measured tends to overstate be Myanmar’s president. A Anna Foot, Advertising Sales
of recovering. Low Expectations it, by about 1.3 percentage World News article Wednes- Jacky Lo, Circulation Sales
Stuart Wood, Operations
Many Germans see nothing Advanced economies have worked mightily in recent years to prop up points in the U.S. prior to day ahead of the nomination Jonathan Wright, Commercial Partnerships
wrong with that. Otmar Issing, inflation, but the share experiencing chronically low prices has swelled. 1996, according to a study incorrectly said the parlia-
a former chief economist at commissioned by the U.S. Sen- ment would name a nominee. Katie Vanneck-Smith,
Global Managing Director & Publisher
the ECB who helped shape its Distribution of inflation rates for advanced economies* ate. “So, if the target would be Also, Mr. Htin Kyaw was edu-
near-2% inflation target, has zero, very likely we would be cated at Rangoon University, Advertising through Dow Jones Advertising
100% Sales: Hong Kong: 852-2831 2504; Singapore:
urged policy makers to be pa- targeting a negative inflation and he later studied in the 65-6415 4300; Tokyo: 81-3 6269-2701;
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called for research into 80 10% or more Constâncio said in October. said he was an Oxford gradu- 1-212 659 2176
whether the benchmark is still Likely reasons for the over- ate.
Printers: France: POP La Courneuve; Germany:
appropriate. High statement, according to the Dogan Media Group/Hürriyet A.S. Branch; Italy:
One reason to shoot for 2% 60 3% to 9.99% Senate report, include failure In an experiment, a dose Qualiprinters s.r.l.; United Kingdom: Newsprinters
(Broxbourne) Limited, Great Cambridge Road,
inflation rather than zero is to properly account for of 25 milligrams of cinnamon Waltham Cross, EN8 8DY;
the so-called zero lower bound Ideal range higher-quality new products, per milliliter of food resulted Registered as a newspaper at the Post Office.
problem: Central banks can’t 40 1% to 2.99% like more powerful computers, in fruit flies living up to 37% Trademarks appearing herein are used under
license from Dow Jones & Co.
cut nominal interest rates or to reflect how consumers longer. A Personal Journal ar- ©2015 Dow Jones & Company. All rights reserved.
much below zero because at Low switch to cheaper goods when ticle Tuesday about research Editeur responsable: Thorold Barker M-17936-
2003. Registered address: Avenue de Cortenbergh
some point, people would 20 –1% to 0.99% relative prices change. into how common substances 60/4F, 1040 Brussels, Belgium
rather hoard cash than pay Very low inflation rates also could help lengthen lifespans
fees to deposit it. If inflation Very low increase the cost of servicing incorrectly said the dose was NEED ASSISTANCE WITH
is 2%, cutting the nominal in- 0 Less than –1% debt, which is problematic for 25 milligrams. YOUR SUBSCRIPTION?
terest rate to zero reduces the 1995 2000 ’05 ’10 ’15 highly indebted economies, By web: http://services.wsje.com
Readers can alert The Wall Street By email: subs.wsje@dowjones.com
inflation-adjusted rate to mi- *As defined by the IMF; excludes Taiwan for which comparable figures are not available like Europe’s. And central Journal to any errors in news articles By phone: +44(0)20 3426 1313
nus 2%. That provides a fur- Source: International Monetary Fund THE WALL STREET JOURNAL. bankers are eager to keep by emailing wsjcontact@wsj.com.
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THE WALL STREET JOURNAL. Monday, March 14, 2016 | A3
WORLD NEWS
Gunmen Strike Ivory Coast Beach ATTACK Continued from Page One
Deadly assault follows Turkish government. But
other Turkish officials said it
similar strikes by al was too soon to tell who
Qaeda affiliate in might be responsible.
The explosion comes less
neighboring countries than a month after a car
bomber killed more than two
BY DREW HINSHAW dozen members of the Turk-
ish military heading home
Gunmen stormed a beach from work in a convoy of
town in Ivory Coast, killing at buses. A small Kurdish sepa-
least 12 people in what had ratist group took responsibil-
been a quiet West African ity for last month’s attack,
country and confirming fears which Turkey said was the
that terrorists in the region are work of a Syrian affiliate of
SIA KAMBOU/AGENCE FRANCE-PRESSE/GETTY IMAGES
bers of some of the victims to go underground and hide Doctors in Germany are years, such voluntary pro-
and highlights why the fi- their affliction. concerned that failing to grams encourage aviators
nal investigative report re- In the four months lead- comply with the country’s to self-report problems in a
leased Sunday calls for ing up to the crash, at least nearly ironclad privacy setting “minimizing career
more-precise laws and six doctors—including Mr. laws—considered among jeopardy,” the report said.
guidelines that would allow Lubitz’s main psychiatrist— the strictest in the world— Europe’s air-safety regu-
physicians world-wide to saw the German pilot for could result in the loss of lator welcomed the recom-
breach patient confidential- his mental-health problems. their medical license if they mendations, saying they
ity to protect the flying Some gave him notes for fail to strictly comply, ac- confirm that progress is
public. sick leave, including one cording to medical experts. being made and vowed to
From the World Health who recommended just “Doctors are very reti- propose relevant regulatory
Organization to the Euro- seven days before the crash cent to take any initiative” changes by the end of 2016.
pean Union to German au- that Mr. Lubitz take five to declare that a patient Germany’s primary pi-
thorities, the report says, days off, the report said. poses an immediate threat lots union welcomed what
“the absence of a formal Concerned that Mr. Lub- to public, said Rémi Jouty, Andreas Lubitz running in a half-marathon in September 2009. it called a “balanced” set of
definition of ‘imminent itz was psychotic, another director of the BEA., add- recommendations, and
danger’ and ‘threat to pub- physician gave him a refer- ing that the rules for such tors, the co-pilot never in- The report concludes urged implementation of
lic safety’ drives doctors to ral for psychiatric hospital- disclosure in Germany are formed the airline or that Mr. Lubitz’s efforts to them all.
adopt a conservative ap- ization two weeks before “very general.” sought help from aviation hide his illness stemmed, at —Robert Wall in London
proach and may lead them the crash, investigators de- According to investiga- medicine specialists. least in part, from the contributed to this article.
WORLD NEWS
will push federal lawmakers to economy had deteriorated and the deficit to disappear
impeach the unpopular leader since he set out his tax and entirely by early 2020.
on charges that she manipu- spending plans in November But recent public-borrowing
lated public accounts to mask and that further action was figures show the chancellor is
a growing budget deficit—alle- needed to close the U.K.’s bud- set to overshoot borrowing
gations she denies. get deficit. forecasts this fiscal year.
In the northeast city of Sal- “The world is a much more Economists warned that Mr.
vador, traditionally a strong- Hundreds of thousands took part in protests against Brazil’s leaders and the ruling PT party. difficult and dangerous place,” Osborne was at risk of missing
hold for Ms. Rousseff’s Work- he said on the BBC’s Andrew his self-imposed targets with-
ers’ Party, known as the PT, an 100,000 people braved a blis- by late morning for a protest portunity, with many holding Marr show. “We need to act out extra spending cuts or
estimated 20,000 people tering sun to throng parks and not scheduled to start until 3 the PT accountable. now so we don’t pay later.” higher taxes.
turned out, according to police plazas, according to military- p.m. Imitrios Fyskatoris, the Matthew Taylor, an associ- The Chancellor of the Ex- Wednesday’s budget comes
figures. Organizers put the police estimates. A large ban- head of the military police, ate professor at American Uni- chequer said he would detail as the U.K. prepares to vote in
number at 50,000. ner read “Enough!” not far said march organizers were versity in Washington, D.C., on Wednesday new savings a June referendum on whether
Among the demonstrators from a giant balloon showing expecting one million or more said that Sunday’s demonstra- that would shave an extra to remain a member of the Eu-
was Oscar Cezar Magalhães, a former President Luiz Inácio people to show up along tions need to evince more of 0.5% off projected public ropean Union. Economists say
geologist with Petróleo Brasil- Lula da Silva dressed in a Avenida Paulista, the city’s the bipartisan authenticity spending annually over the uncertainty surrounding the
eiro S.A., the state-run oil striped prison uniform. landmark thoroughfare. that marked the 2013 street next four years to allow him to outcome risks sapping growth
company that is at the center In Rio de Janeiro, lines of The demonstrators directed protests that rocked Brazil meet his goal of pushing Brit- in the run-up to the vote.
of a graft probe that threatens protesters, many dressed in their ire not only at Ms. Rouss- ahead of the World Cup tour- ain’s public finances into sur-
to upend Ms. Rousseff’s gov- the nation’s distinctive yellow- eff but at her political mentor nament. plus by 2020.
ernment. and-green soccer jerseys, and predecessor, Mr. da Silva, “I think that if they are “We’ve got to live within
A former member of the PT, stretched for more than a mile and the PT, which has led Bra- close to what we saw in 2013, our means to stay secure,” Mr.
Mr. Magalhães, 60 years old, along the famous Copacabana zil for the past 13 years. that will be an important Osborne said. Delivering news and insight
said he doesn’t recognize his beachfront. Protesters expressed frus- sign,” Mr. Taylor said. The chancellor’s move to on finance and markets
former party, which prosecu- In São Paulo, Brazil’s largest tration that their country—a —Paulo Trevisani, William further squeeze public spend- from London
tors say pocketed millions city and a hotbed of antigov- rising economic star on the Connors, Rogerio Jelmayer ing follows lower-than-fore-
looted from the company. ernment sentiment, thousands world stage just a few years and Luis Garcia cast growth and tax receipts Download on the App Store
In the capital of Brasília, of demonstrators had arrived ago—has wasted a historic op- contributed to this article. that economists say threat-
The strikes came after mili- campaigned ahead of a coming ruptcies in reorganizing state
World tants in Gaza fired several rock-
ets at Israel on Friday night,
state election in the Borneo
state of Sarawak.
companies, a senior official said,
suggesting a go-slow approach
Watch causing no injuries. No militant
group took responsibility for the
On assignment for the
weekly current-affairs program
in an effort seen as key to revi-
talizing the slowing economy.
barrage. Four Corners, reporter Linton Xiao Yaqing, director of the
Israel holds Hamas, the Is- Besser and cameraman Louie powerful government commis-
lamic militant group that rules Eroglu were detained in Kuching, sion that oversees state assets,
Gaza, responsible for all attacks the capital of Sarawak, late Sat- said his agency will protect
GAZA STRIP from its territory. urday and released Sunday workers’ rights as it balances
Israel is struggling to contain morning, the ABC reported. Their competing interests in overhaul-
Israeli Airstrike near-daily Palestinian attacks. A passports were seized and they ing the state sector.
Kills 10-Year-Old Boy
SANJEEV GUPTA/EUROPEAN PRESSPHOTO AGENCY
Palestinian shooting and stab- have been told not to leave Ma- China “won’t experience a
A 10-year-old boy was killed bing Friday wounded two sol- laysia, according to the report. wave of layoffs” as seen in the
in an Israeli airstrike that tar- diers and a civilian. Malaysian police confirmed late 1990s, Mr. Xiao said at a
geted a Hamas military base, —Associated Press the arrest, saying the crew were news conference Saturday, refer-
the Gaza health ministry said detained after they allegedly ring to an earlier period of re-
Saturday, after militants had MALAYSIA crossed a security cordon while structuring when tens of mil-
fired rockets at Israel. trying to interview Mr. Najib. lions of state workers lost their
The ministry said shrapnel
Australian Reporter, —Yantoultra Ngui jobs.
from an airstrike on a Hamas Cameraman Held He praised progress made to
base hit a nearby house, killing A television reporter and CHINA date in reorganizing the state
the boy, Yassin Abu Khoussa, cameraman with the Australian firms that tower over the econ-
and wounding two of his sib- Broadcasting Corp. were briefly
Government to Add omy in diverse strategic sectors
lings, one seriously. detained in Malaysia after at- To Consolidations such as oil, banking and tele-
It said Israel carried out five tempting to interview Prime China’s government is priori- communications. STRIKING DISPLAY: Streaks of lightning lit up the sky during
air raids on Hamas facilities. Minister Najib Razak while he tizing consolidation over bank- —Lingling Wei heavy thunderstorms and rain in Bhopal, India, on Saturday.
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THE WALL STREET JOURNAL. Monday, March 14, 2016 | A5
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A6 | Monday, March 14, 2016 THE WALL STREET JOURNAL.
Germans
Turn Cool
To Migrants
BY ZEKE TURNER a vast inflow of people different
in culture, attitudes, skills and
BERLIN—When migrants be- economic status.
gan pouring into Germany last Ms. Merkel faces no immi-
fall, Andreas Tölke decided to nent threat to her rule. Even
host some of the newcomers in with her popularity sharply di-
his spacious Berlin apartment. minished, it exceeds that of
With authorities struggling many ruling politicians around
to accommodate the flow, the Europe, and she faces no obvi-
former social worker took in ous rival.
asylum seekers from Syria, Iraq
and elsewhere, sometimes a
dozen at a time, letting them Threat of instability
sleep on his Armani/Casa Yet analysts warn that
leather sofa and use the $30-an- mounting political fragmenta-
ounce Etro Patchouly cologne in tion could make Europe’s largest
his bathroom. democracy less stable, more in- Helmut Dudenhöffer, above tionaries and voters. In all
At the start of this year, he troverted and less inclined to with other refugee help-center cases, she had support from the
asked his last guests to leave. play the regional leadership role workers, bemoans a scarcity of broader electorate. The migrant
“I just can’t anymore,” Mr. it has assumed since the end of housing; Andreas Tölke, right, policy might change all that.
Tölke said. “I need a place the last decade. If AfD enters let migrants live in his home Now, amid widespread mis-
U.S. NEWS
Murders on the Rise Again
Source: WSJ/NBC News/Marist telephone polls conducted March 4–10 of 511 likely Republican
and 500 likely Democratic primary voters in Florida, 421 likely Republican and 529 likely
Democratic primary voters in Illinois and 564 likely Republican and 453 likely Democratic
primary voters in Ohio; margins of error: +/– 4.1 to 4.8 pct. pts.
THE WALL STREET JOURNAL.
TRADE
Clinton Hits Auto
ARIZONA Rules in Trade Pact
Hillary Clinton called for
Jury to Decide Fate of tougher rules for auto imports in
Alleged ISIS Plotter a weekend speech in Ohio. She
An Arizona jury is expected said she would oppose stan-
to begin deliberating this week dards that would allow auto
on the fate of the first alleged makers to build cars with mostly
plotter of an Islamic State at- cheaper parts from China or
tack to go to trial in the U.S. other countries and then reap
Prosecutors allege that Abdul the benefits of trade agree-
Malik Abdul Kareem helped plan ments such as the Trans-Pacific
an attack in which two gunmen Partnership.
opened fire on a controversial Mrs. Clinton said the weak-
event in Garland, Texas, last year ness of rules that would allow
billed as a contest for the best cars made with cheap materials
cartoon of the Prophet Muham- from China or elsewhere to re-
mad. Islamic State claimed re- main eligible for preferences un- CME Group is a trademark of CME Group Inc. The Globe logo is a trademark of Chicago Mercantile Exchange Inc. All other trademarks are the property of their respective owners.
sponsibility for that attack. der trade agreements was one Copyright © 2016 CME Group. All rights reserved.
The case is a test for the Jus- of the reasons she came out
tice Department, which won its against the Pacific pact.
first trial conviction of an Islamic —Colleen McCain Nelson
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BOOKS | CULTURE | SCIENCE | COMMERCE | HUMOR | POLITICS | LANGUAGE | TECHNOLOGY | ART | IDEAS
A8 | Monday, March 14, 2016 THE WALL STREET JOURNAL. © 2016 Dow Jones & Company. All Rights Reserved.
BY CHRISTOPHER CALDWELL
DONOR
his splashiest gift yet. He put up $400
million of a $750 million endowment,
meant to pay for young leaders from
around the world to attend graduate
school at Stanford. The so-called Knight-
Hennessy scholarships—Mr. Knight
shares billing with outgoing Stanford
BEWARE
president John L. Hennessy—will be a
21st-century equivalent of the ones set up
at the turn of the 20th by the African
mining magnate Cecil Rhodes to bring
student-athletes to Oxford.
And there’s the rub. Anyone who has
watched the fortunes of Rhodes’s legacy
in the past year can be forgiven for won-
dering whether these scholarships will
Today’s big-name provide Mr. Knight with a legacy as per-
manent as he intends.
philanthropists Last year, students at the University of
Cape Town in South Africa waged a suc-
should worry about cessful campaign to remove a statue of
how history will Rhodes. They also rampaged through uni-
versity buildings gathering “symbols of
judge their gifts the colonizer”—mostly portraits from the
period of white
(and their fortunes). rule—and threw
There is no them on a bon-
The rest of us may way to figure fire. In recent
months, stu-
wonder why we out which of dents led by a
subsidize their giving. today’s South African
Rhodes scholar
failings will have called for
elicit the Oriel College,
Oxford, to re-
wrath of move a statue
tomorrow’s of Rhodes, who
revisionists. studied there.
They called
him the “Hitler
of southern Af-
rica.” In turn,
Oriel alumni threatened to withdraw fi-
nancial support for the college unless it
rebuffed the protesters.
Universities and donors today must be
alert to the possibility that the acts of
philanthropy on which they collaborate
might someday be denounced by the
grandchildren of those they aimed to
help. There is no reason to assume that
today’s philanthropic largess will neces-
sarily escape the fate of last century’s.
When it comes to philanthropy, nam-
ing rights are often essential. They moti-
vate donors, and they get fought over. In
1924, James Buchanan “Buck” Duke, the
tobacco baron, left $40 million to Trinity
College in Durham, N.C., which used the
occasion to change its name to his. A
$100 million gift from Hollywood pro-
ducer David Geffen toward the rebuilding
of Lincoln Center in New York was suffi-
cient to bring about the renaming of Av-
ery Fisher Hall.
Sandy Weill, former Citigroup CEO,
and his wife Joan have a foundation that
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REVIEW
Sells Vaccines and his wife Roberta ($50 million for Denning House, which
will be home to the scholars themselves).
ing the paycheck of one of Nike’s Indonesian workers, who, it
alleged, was making $37.46 a month. Golfer Tiger Woods, the
Against Measles
The muckraker Gustavus Myers, whose “History of the Great company’s best-known celebrity endorser, found himself ques-
American Fortunes” was a reference work for angry egalitarians tioned about Nike’s labor conditions by reporters at the 1997
for decades after it was first published in 1907, was fascinated by British Open. The company has since adjusted workers’ salaries
IN 2000, the U.S. considered how common it was for “plutocratic nabobs,” after years of roll- and started community development and micro-credit pro-
measles eradicated, but the ing in the dough, to start paying out. Their need, Myers believed, grams in an effort to improve its practices and recover its rep-
picture has changed alarm- was to “give themselves a new character.” utation.
ingly since then. In 2014, 667 Consider Alfred Nobel, the inventor of dynamite. In 1888, Still, this election season indicates that we might be enter-
unvaccinated people con- when his brother died, French newspapers confused the two, ing a more protectionist and egalitarian age. If we are, Nike’s
tracted measles. Last year, an and Nobel received the dubious privilege of reading the head- early years will not go unremembered.
outbreak that began in California’s Disney- line on his own obituary: “The merchant of death is dead.” The Big philanthropy tends not to be egalitarian. It is often, in
land infected more than 100. episode may have spurred him to endow the prizes that today fact, explicitly elitist. Andrew Carnegie, whose gifts form the
Many Americans have been refusing to bear his name. bedrock of the nation’s public-library system, believed that
protect themselves and their children with Myers insisted that the libraries endowed by Andrew Carne- “wealth, passing through the hands of the few, can be made a
the measles vaccine. According to a recent gie should not lead us to forget that his wealth had its source much more potent force for the elevation of our race than if it
study in the American Journal of Public in “underpaid and overworked employees.” Never, though, did had been distributed in small sums to the people themselves.”
Health, as much as 5.5% of children are un- Myers suggest that one of these institutions un-name itself on For Carnegie, the best gifts were not only from elites but for
vaccinated in some U.S. communities, and the the grounds that its origins were tainted. elites. “The 37,000 frequenters of the Pratt Library,” he wrote,
parents most likely to refuse vaccines tend to Today’s student radicals are different. They are sensitive to “are of more value to Baltimore, to the State, and to the coun-
be affluent, well-educated and white. Their try than all the inert, lazy, and hopelessly-poor in
resistance can largely be traced to a 1998 ar- the whole nation.”
ticle in a British medical journal that falsely This philosophy now goes under the name of
linked childhood vaccines to autism. That “leadership,” and it is a philosophy to which Stan-
study was debunked, but the damage had ford’s donors subscribe heartily. Mr. Knight told
been done. the Stanford Report that “John [Hennessy] and I
Now doctors must figure out how to per- dream of a future 20, 30 or 50 years from now,
suade these parents to change their minds. when thousands of graduates—who can think out-
Late last year, they got some help from a team side the box as skilled problem-solvers—will be
of psychologists from the University of Illinois working together for a more peaceful, habitable
at Urbana-Champaign and the University of world.” But does building a leadership class help
California, Los Angeles, who were interested in the world or does it help the leadership class?
what might sway anti-vaxxers’ opinions. That depends on what those leaders do. At the
Measles can be devastating. A highly con- height of President Lyndon Johnson’s Great Soci-
tagious and virulent disease, it can lead to ety, the political scientist and future senator Dan-
convulsions, hearing loss, brain damage and iel Patrick Moynihan called foundations “a new
even death. Vaccination efforts have been so level of American government.” They underwrite
successful up to now, however, that almost experiments in “governance” that, over time, turn
half of the nation’s pediatricians have never into government-with-a-capital-G. Philanthropy is
seen a real case. The question is how to make thus a means by which elites can control the rules
people understand that the threat is real. that govern the replication of elites.
Would correcting misconceptions about In an age of widening inequality, this can lead
the childhood vaccine-autism myth do the to distrust. The double favoring of philanthropists
trick? Or would testimonials and graphic pho- in the federal tax code—tax preference for gifts
tos of sick children be more effective? and tax-free growth for endowments—means that
The study, led by Zachary Horne of the the philanthropists set policy priorities that other
University of Illinois and published last Au- taxpayers subsidize.
gust in the Proceedings of the National Acad- The $400 million in assets that Mr. Knight has
emy of Science, or PNAS, asked 315 partici- dedicated to Stanford’s new scholarships will pass
pants to complete questionnaires about their into a project wholly of his own choosing. Had he
attitudes to vaccines and their plans to vacci- left the money to a family member in his will, the
nate their children. The subjects were chosen federal government would tap about 40% of it, or
at random and not prescreened, although $160 million, and a state government might also
some dropped out or were later disqualified take its share—which these public authorities would
for not paying attention to the testing. then invest, following priorities established in a
The researchers randomly divided subjects more democratic fashion. Had Mr. Knight sold his
into three groups. They showed the “disease stock, the government would get 20% of the appre-
risk” group photos of young, infected children ciation in the form of capital-gains taxes.
with florid rashes and a paragraph written by People differ on what the proper tax rates are for
a mother of a child with measles, as well as all of these things. But it is clear that, when the rich
three short warnings about the disease. The divert their assets to
“autism correction” group read research sum-
maries showing that childhood vaccines do
Big tax-free purposes,
however laudable
not cause autism. And a control group read philanthropy those purposes may
unrelated scientific vignettes.
Once again, all the participants completed
is often be, it is other, non-
rich taxpayers who
the questionnaire about attitudes to vaccines. explicitly must pick up the
Which intervention was most likely to alter elitist. budgetary slack.
their views? When there is a
Surprisingly, the “autism correction” ap- trend toward in-
proach was no more influential in changing
anti-vaxxers’ minds than the control condi-
tion. Telling people that their beliefs aren’t the slightest evidence of TOP, a defaced statue of
true just didn’t work. But showing people im- human failing or frailty Cecil Rhodes before its
ages of sick children with ugly rashes did, as in matters of race, just removal at the University
did reading a parent’s account of how it feels as 65 years ago people of Cape Town, South
to have a baby with measles who is spiking a were sensitive to the Africa, April 9, 2015.
fever of 106 de- slightest evidence of RIGHT, Nike founder
grees. “We sympathy for commu- Phil Knight, Sept. 2015.
Up to 5.5% of spent three days nism. Princeton has
children are in the hospital
fearing we
been riven by demands that the university rename
buildings and graduate schools that honor Woodrow
unvaccinated might lose our Wilson, on the argument that, while president, he ad-
FROM TOP: RODGER BOSCH/AGENCE FRANCE-PRESSE/GETTY IMAGES; DAVID DOW/NBAE/GETTY IMAGES
based appeals on changing people’s behavior. history books, will face reappraisal and possible repudiation. Knight’s are fairly commonplace. Time will tell whether we are
So, public officials, go ahead—scare par- From our vantage point, there is no way to figure out which of looking at the dawn of a new egalitarian age, or just looking a
ents silly. today’s failings will elicit the wrath of tomorrow’s revisionists. gift horse in the mouth.
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A10 | Monday, March 14, 2016 THE WALL STREET JOURNAL.
REVIEW
Workplace Bias
Danielle Gaucher and Justin Friesen of the Uni- Smart design allows a way out of this thicket
versity of Waterloo and Aaron C. Kay of Duke of biases. In recruitment: Be vigilant about the
University, published in the Journal of Personal- language you use. If you want to benefit from
ity and Social Psychology (2011), found a clear the whole available talent pool, use gender-neu-
pattern in how men and women responded to tral wording. When hiring, learn from the blind
to our everyday decision making, not least in certain words on job search websites. Men were auditions of symphony orchestras and stop ask-
To ensure that women get how we see and evaluate others. And decades of drawn to jobs looking for candidates who were ing for demographic information. Take advan-
a fair shot, focus on how research on cognitive biases have revealed that competitive, assertive, individualistic and ambi- tage of new tools that easily allow firms to ano-
companies hire and promote our minds are amazingly difficult to change.
But what if we took a different approach?
tious; women, to jobs seeking
applicants who were commit-
nymize applicant information.
And level the playing field in
BY IRIS BOHNET
What if we stopped focusing on trying to change
the biases of individuals and instead turned our
ted, supportive, compassion-
ate and understanding.
At auditions, performance management.
Rely on data to understand
efforts to fixing the design of institutions them- New, more sophisticated putting what is broken, and measure
CORPORATIONS, not-for-profit groups and
governments spend billions of dollars every
selves? The record here is much more promis-
ing, especially when it comes to ensuring that
tools also can help. The use
of big data in human-re-
musicians whether there are biases in
how employees are supported
year on diversity training—without knowing women get a fair shot in the workplace. sources management, often behind a in performing their jobs and
whether the programs work. A review of al- Consider a small design innovation that has referred to as “people ana- curtain went a evaluated for results.
most 1,000 studies on interventions aimed at transformed symphony orchestras in the U.S.: lytics,” enables companies Smart antibias design can
reducing prejudice found that most programs a curtain to shield auditioning musicians from to track biases much more long way. change the way that we run
weren’t tested. For the few that were, includ- the evaluation committee. This has helped precisely. Based on such any organization, not just
ing media campaigns and corporate-diversity judges to focus on the music played instead of data, Janice Fanning Mad- businesses. It may not free
training, the effects, wrote Elizabeth Levy Pa- what the musician looks like, as Claudia Goldin den of the Wharton School our minds from prejudice,
luck of Princeton and Donald P. Green of Yale of Harvard and Cecilia Rouse of Princeton discovered, in a study published in Gender but it can make our biases less influential
in the Annual Review of Psychology (2009), showed in a paper for the American Economic and Society (2012), that the female stockbro- and help us to make our major institutions
“remain unknown.” Review (2000). Curtains increased by 50% the kers in two of the largest U.S. brokerage firms more inclusive and productive.
It is hard to ignore the possibility that all the likelihood that women advanced to future made less money than their male counter-
time and money devoted in recent decades to rounds of tryouts. Today, almost 40% of musi- parts because they were given worse-per-
promoting diversity at our major institutions cians at major American orchestras are female, forming accounts to start with. Dr. Bohnet is the author of “What Works: Gen-
has largely been wasted. a contrast to the 1970s, when curtains were Using data to learn about the possible dispa- der Equality by Design,” recently published by
This shouldn’t come as a surprise. As my own seldom used and women made up only about rate treatment of employees shouldn’t be con- Harvard University Press. She is a professor of
field of study, behavioral economics, has docu- 5% to 10% of musicians. troversial. No company runs its finances based public policy at Harvard’s Kennedy School of
mented so well, all of us bring a bundle of biases What would it mean to transfer such insights just on intuition, and the same should hold for Government.
there. Today, Al Durra General Trading and In- proliferated. Since 2011, when Syria’s uprising
vestment Co. shares a “free zone” (as free-trade began, the total capital of businesses set up by
zones tend to be called in the region) with more Syrians and their Egyptian partners in Egypt is
than 20 other enterprises that have also left $792 million, according to the country’s General
Syria. Hundreds more have relocated to else- Authority for Investments and Free Zones.
where in Jordan as the bloody conflict in their Syria’s neighbors, overwhelmed by the exo-
home country enters its sixth year. dus, have pared back support for bulging refu-
With the implosion of the Syrian economy, gee populations and partially sealed once-open
businesses such as Al Durra have relocated to borders. Turkish, Lebanese and Jordanian offi- SYRIAN REFUGEE Abdul Halim al-Attar, left, watches an employee at his Beirut restaurant,
many of the same Middle Eastern countries to cials say that the investment and skills that Syr- Nov. 26, 2015—one of three small businesses the entrepreneur runs in Lebanon’s capital.
which their customers have fled in vast num- ian businesses bring don’t compensate for the
bers. The success of these companies has chal- burden of caring for so many refugees—and that Romman, chairman of the Jordan Free Zones In- 1.2 million Syrians.
lenged the idea that Syrian refugees are a drain massive amounts of foreign aid are still needed. vestors Commission. Al Durra had 1,500 employees and three fac-
on host economies and steal jobs from locals. “Lebanon is unable [to] finance the enormous For displaced Syrians, re-establishing them- tories back in Damascus. Now, 450 Syrians and
Capital flight and a brain drain from Syria burden alone,” said Prime Minister Tamam selves in new countries means having to deal Jordanians work shoulder-to-shoulder in its Ir-
have especially benefited Jordan, Lebanon and Salam at a high-level U.N. donor conference on with local competition and legal hurdles. Obtain- bid complex, packing stuffed vine leaves and
Turkey, which have seen jobs and new busi- Syria’s crisis in London last month. ing work permits can be tough. Syrian refugees stirring caldrons of sesame halwa. The company
nesses spring up as a result. Among the refu- King Abdullah of Jordan, which hosts some cannot work legally in Lebanon; Turkey recently has also opened a smaller factory in Egypt,
gees are Syrian business owners who saw their 600,000 Syrians registered with the U.N. refugee moved to make it easier for them to obtain the which it says operates legally.
factories and offices destroyed. Others decided agency, said at the same conference that the ref- required permits. Al Durra’s executives hope to change the im-
to leave as their customers disappeared and ugees consume more than 25% of Jordan’s an- A Syrian who owns a fragrance shop in Trip- age of Syrians from helpless refugees to ready
their distribution networks collapsed. nual budget. “It is as if the U.K. had to absorb oli, Lebanon, said that most Syrian business- investors and able workers. Some 70% of Al Du-
“Investments need stability and security,” the entire population of Belgium,” he said. people operate without registration, often em- rra’s workforce in Irbid is Jordanian; the rest
said Khaled Khamees, Al Durra’s director of ex- Despite the financial strains, Jordan is reap- ploying fellow Syrians without work permits. are Syrian, all on work permits, the firm said.
ports. “The conditions in Syria forced us to ing the dividends of Syrian business investment. More than half of Syrian businesses in neigh- “There’s a difference between investors and
move our business.” Jordan’s free zones have annual exports of $5 boring Lebanon were established after the refu- refugees,” said Mr. Khamees.
In Turkey, Syrians set up 1,429 registered billion, and of that, a half-billion dollars comes gee influx began in 2011, the World Bank said —Dana Ballout, Emre Peker, Felicia Schwartz
companies last year and have become an “im- from Syrian companies, according to Nabeel last year. Lebanon has since taken in more than and Dahlia Kholaif contributed to this article.
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THE WALL STREET JOURNAL. Monday, March 14, 2016 | A11
© 2016 Dow Jones & Co., Inc. All rights reserved. 6DJ1752
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A12 | Monday, March 14, 2016 THE WALL STREET JOURNAL.
OPINION
REVIEW & OUTLOOK
Hillary’s Other
The Donald and The Barack Server Scandal
P
resident Obama is said to be a reflec- economic revolution. Bernie Sanders is Mr.
tive man, and often he is the one say- Trump’s leftward duplicate. The difference is Bernie Sanders keeps Clinton at State (unpaid), while on
refusing to hit Hillary the foundation payroll.
ing so, but you wouldn’t know it from that the Democratic establishment is doing a
Clinton over her email. While in government, Ms. Mills was
his Thursday press confer- better job keeping their out- Or so it seems. But paid by an outside entity to negotiate
ence with Canadian Prime Obama is Trump’s more sider away from a delegate maybe the Vermont with a foreign country (the United
Minister Justin Trudeau. sophisticated, articulate majority. senator’s relentless as- Arab Emirates) that had donated to the
Asked about political polar- The source of this public
ization and the Donald liberal antecedent. frustration is no great mys- POTOMAC sault on Mrs. Clinton’s Clinton Foundation. She was also
corporate ties is about among those who reviewed Bill Clin-
WATCH
Trump phenomenon, Mr. tery. For the 10th straight By Kimberley
her email after all. ton’s speaking events.
Obama denied all responsi- year, the U.S. economy is Maybe Mr. Sanders is Ms. Abedin held her own clintone-
A. Strassel
bility. He doesn’t seem to appreciate the kind growing by less than 3%. Such a long stretch of betting that Hillary has mail.com account. We recently found
of country he will leave behind. underperformance hasn’t happened since the a bigger problem than out that the State Department’s in-
“What I’m not going to do is to validate some 1930s. Slow growth for a decade means middle- classified information. spector general issued a subpoena to
The question hanging over the Clin- the foundation last fall, demanding
notion that the Republican crack-up that’s been class incomes are stagnant, which in turn in-
ton campaign is whether she will be documents about projects it engaged
taking place is a consequence of actions that creases economic anxiety, which in turn creates indicted for mishandling state secrets. in while Mrs. Clinton was the na-
I’ve taken,” Mr. Obama said. He explained Mr. political unrest. Grilled by Jorge Ramos at the Demo- tion’s top diplomat. That subpoena
Trump’s ascent as the result of “the nasty tone As for tone, the 1980s and 1990s featured bit- cratic debate Wednesday, Mrs. Clinton specifically asked for records related
of our politics, which I certainly have not con- ter partisan conflicts—and for that matter so was again forced to roll out a trail of to Ms. Abedin.
tributed to.” He blamed Republicans for this did the 1880s and 1790s. But the late 20th cen- misdirection, to insist (with astonish- Mrs. Clinton would have us believe
tone, as ever. tury had popular two-term Presidencies almost ing brazenness) that an indictment is that the 31,830 emails she deleted
“Objectively,” Mr. Obama said, “it’s fair to back to back, and the era didn’t produce back- “not going to happen.” from her server pertained to yoga
say that the Republican political elites and lash candidates promising to burn Washington Classified information matters, and and weddings. Yet look at what the
many of the information outlets—social media, to the ground and salt the earth. The reason is Mrs. Clinton stands accused of sloppy press has gleaned even from the few
handling. Yet the former secretary of emails and foundation details that
news outlets, talk radio, television stations— that the economy was booming.
state didn’t set up a home-brew server were released.
have been feeding the Republican base for the Mr. Obama’s apologists claim 2%-2.5% to expose national secrets—that was in-
last seven years a notion that everything I do growth is the best we can do, but the truth is cidental. Mrs. Clinton went to elaborate
is to be opposed; that cooperation or compro- that the natural dynamism of the U.S. economy lengths to build a secret, private system The focus is on state secrets
mise somehow is a betrayal.” He listed a few has been swamped by waves of Mr. Obama’s bad for some other reason. She says it was
more GOP shortcomings, but you’ve got to hand policy. Instead of a second term that is bereft for “convenience.” Others speculate she
in her email—but what
it to him for that “objectively.” of domestic achievements, in an alternate uni- did it out of the Clintons’ longtime personal favors lay within?
As Mr. Obama tells it, all of this reflexive verse he might have worked with the duly paranoia over paper trails.
Obama bashing created “an environment where elected Republican majority and started to re- Mr. Sanders is likely hitting closer
somebody like a Donald Trump can thrive. He’s pair the economy from the center out. to the truth. Lost in the kerfuffle is the Foundation cash after Russian min-
just doing more of what has been done for the Instead, Mr. Obama has shown contempt for other, lately ignored but still potent, ing approvals. More than a dozen
scandal: the Clinton Foundation, and speeches by Bill to corporations and
last seven and a half years.” In other words, Re- institutions that he doesn’t run, and, notably,
the unethical mixing of Mrs. Clinton’s governments with business pending
publicans didn’t clean up the standing water in most of his growth-subtracting policies have public work and her personal fundrais- before Hillary’s State Department. Doz-
their own backyard and now they’re complain- been imposed through unilateral executive ac- ing/speech-giving/favor-doing. The ens more donations to the foundation
ing about mosquitoes. tion. He doesn’t do persuasion and compromise. more evidence that comes out, the from companies that were lobbying the
One irony is that even as Mr. Obama denied Some policies were intended to sow division, like more it looks as if that server was set State Department. Checks to the foun-
any liability for Mr. Trump, he lapsed into the his lawless immigration order that inflamed the up to provide an off-the-grid means for dation from a Swiss bank after Secre-
same rhetorical habit that helped fuel the busi- restrictionist right, divided Republican elites those two worlds to interact. tary of State Clinton solved its IRS
nessman’s ascent. For Mr. Obama, principled and was only stopped by the courts. Take Bryan Pagliano, now reported problem. An email to Ms. Abedin,
opposition to his policies is always illegitimate The nature of Mr. Trump’s appeal can be ex- to have received U.S. Justice Depart- while she was at State, asking for help
or motivated by bad faith. plained by Mr. Obama’s own rule-by-regulation ment immunity in return for talking winning a presidential appointment for
Like the President’s nonstop moral lectures governing methods and polarizing political about his email services rendered. Mr. a Clinton Foundation donor.
Pagliano ran Mrs. Clinton’s IT shop What else? Plenty, surely. The Clin-
about “our values” and “who we are as Ameri- style. You might even call him The Barack, the
during her 2008 presidential cam- ton Foundation existed in recent
cans,” by which he means liberal values and more articulate and sophisticated liberal ante- paign, then worked for her political-ac- years to serve as an unofficial PAC for
who we are as Democrats, he reads his critics cedent to The Donald. tion committee. She custom-built a job Mrs. Clinton’s expected presidential
out of politics. No wonder so many Americans The stability of the American political sys- for him at the State Department. He run. Mrs. Clinton’s job at State was
feel disenfranchised and powerless. tem depends on deeply rooted norms. What this arrived only a few months after her in designed to serve the same end. Of
And if we’re being objective, maybe Mr. primary season has revealed is that when a 2009, and he left when she left. course the business of the two was
Obama could account for the populist uprising President violates these unwritten rules, the Mr. Pagliano maintained Mrs. Clin- intertwined. Here’s to betting the
among disaffected Democratic primary voters damage to self-government leads into un- ton’s server in her New York home. server was maintained to facilitate
for a 74-year-old Vermont socialist vowing an charted territory. The State Department paid him, but a that intertwinement.
Clinton official confirmed to the Wash- Mr. Sanders started ramping up his
ington Post that the Clintons paid him attacks on Mrs. Clinton for her ties to
Accountability for Preet Bharara in addition. Mr. Pagliano didn’t report
that outside money on disclosure
“billionaires” and “Wall Street” in mid-
January. That’s almost precisely the
W
forms—as he was required to. And time that news organizations reported
all Street holy warrior Preet Bhar- the Level Global search contained false and State claims to have been unaware that (without garnering much public atten-
ara may finally answer for abuses perhaps deliberately fabricated claims about Mr. Pagliano was getting personally tion) that the FBI had expanded its
of his prosecutorial power. On his personal involvement. He says in his suit paid by the secretary of state. email probe to examine the “intersec-
Thursday a federal district court ruled that a against Mr. Bharara that FBI agents deprived So Mr. Pagliano gets added to the list tion” between Mrs. Clinton’s State De-
lawsuit alleging that the U.S. Attorney for the him of due process. of insiders compensated to work partment and the foundation. What is
Southern District of New York violated the This is a major development in the case simultaneously for the government and Mr. Pagliano now telling as part of his
civil and constitutional rights of former hedge- that we first wrote about last year (“Preet the Clintons. Huma Abedin at one point immunity deal?
fund manager David Ganek can proceed to dis- Bharara’s Methods”). Prosecutors and law en- worked for the State Department, the Mr. Sanders knows that his corpo-
Clinton Foundation, Mrs. Clinton and a rate-special-interest line already plays
covery and trial. Hear, hear. forcement enjoy qualified immunity that
private company tied to the Clintons— well with crowds; it reminds people of
This fiasco began in 2010 when the Federal shields government officials from being sued all at the same time. the stench of the Clintons’ ethics. But
Bureau of Investigation publicly raided Mr. for all but the most egregious violations of Cheryl Mills worked for Mrs. Clin- he may also be betting that the FBI
Ganek’s Level Global for insider trading, and legal rights. ton at State while holding a position finds more to peg on Mrs. Clinton
Mr. Ganek was forced to liquidate the fund Yet New York Judge William Pauley rejected at the Clinton Foundation. Sidney than simply classified emails. And he
amid the damage to his reputation. The Second the government’s motion to dismiss. “Discov- Blumenthal secretly assisted Mrs. may be right.
Circuit Court of Appeals has since overturned ery is now appropriate to ascertain whether
the conviction of the Level Global portfolio this is a case about a simple misunderstanding
manager who had been found guilty, noting
there was “no evidence” he committed securi-
ties fraud, and the Securities and Exchange
or whether something more troubling was
afoot,” he writes, referring to the question of
how and why the false allegations that de-
Zimbabwe May Starve,
Commission is disgorging penalties.
Mr. Ganek was never charged, even under
stroyed Level Global entered the warrant.
Mr. Bharara’s media image is the Elliot Ness
But at Least It’s GMO-Free
the theory of insider trading that the Second of Wall Street. Now we may learn if he has his
M
Chikombedzi, Zimbabwe that has studied them knows.
Circuit tossed, and the FBI affidavit to support own house in order. y country’s government would They are also positively good for the
rather see people starve than environment, allowing farmers to fight
let them eat genetically modi- soil erosion by planting high-yield crops
A Trade Tutorial for Trump fied food.
That’s the only conclusion to draw
that need less water, reduce greenhouse
gases—and, most important, grow more
W
ith the presidential frontrunners of Nonetheless, Mr. Trump on Tuesday rapped from the announcement in February food on less land.
both parties flogging made-in- Japan for “playing around with the yen,” which that Zimbabwe will reject any food aid For too long African countries have
America populism, it’s no surprise he claimed has undercut U.S. companies. “Cat- that includes a genetically-modified-or- looked to Europe for economic and in-
ganism ingredient—such as grains, corn tellectual leadership—and now we’ve
that voters are turning against erpillar is being hurt very and other crops made more vigorous or accepted Europe’s sweeping opposi-
free trade. So allow us to add A few facts beyond that badly by Komatsu” of Japan, fruitful through GMO breeding. The ban tion to GMOs. The difference is that
some facts to this so far data- misleading Komatsu- he The said. comes just as Zimbabweans are suffer- Europe is a wealthy continent that can
free debate, and we’re avail- yen has fallen by about ing from our worst drought in two de- afford this ideological luxury. In Af-
able to give Donald Trump a Caterpillar anecdote. 25% to the dollar since 2012, cades and up to three million people rica, we can’t. Grinding poverty is nor-
tutorial upon request. when it was widely thought to need emergency relief. mal here. We need an agricultural sec-
The real-estate developer be overvalued, and this has “The position of the government is tor that keeps up with population
recently added Japan to his most-wanted list benefited Japanese exporters. But the Bank of very clear,” said Joseph Made, the min- growth, rather than one that keeps on
of job killers, which includes China and Mexico. Japan’s monetary interventions have been ister of agriculture. “We do not accept falling behind.
“We have a trade deficit with Japan of over aimed at stimulating domestic demand and in- GMO as we are protecting the environ- A handful of African countries appre-
ment from the grain point of view.” ciate the value of GMOs. Across the
$100 billion a year,” he said during his postpri- flation, not boosting exports. In any case, Cat-
In other words, my country—which southern border of Zimbabwe lies
mary press conference in Florida on Tuesday. erpillar’s recent struggles are mainly due to can’t feed itself—will refuse what mil- South Africa, where farmers are grow-
“They’re killing us. You know what we sell to plunging commodity prices that have hurt lions around the world eat safely every ing more than five million acres of GMO
Japan? Practically nothing.” global sales for its mining equipment amid day in their breakfasts, lunches and din- corn each year.
Is $116 billion worth of annual goods and slowing demand from China. ners as a conventional source of calo- In Burkina Faso farmers plant GMO
services exports to Japan practically nothing? By the way, Komatsu employs thousands of ries. It doesn’t matter whether the aid cotton. Last month Kenya approved the
Japan is the fourth-largest U.S. export market workers at nine U.S. locations. Notwithstanding arrives as food for people or feed for an- first field trial for corn genetically mod-
in goods after Canada, Mexico and China. In the weakening yen, Japanese auto makers have imals. Our customs inspectors will make ified to fight pests. The commercializa-
2013 the top U.S. exports to Japan were agricul- also increased production in the U.S., in part sure that no food with GMOs reaches a tion of this GMO corn could come next.
tural products ($12.1 billion), machinery ($10.7 to avoid import duties, hedge foreign-exchange single hungry mouth. But these bright spots are the rare ex-
billion), medical devices ($8 billion) and air- risks and reduce shipping costs. More than The drought has devastated my fam- ceptions, proving the sad rule that in Af-
ily’s farm, which will produce almost no rica farmers lack access to the basic
craft ($7.1 billion). three-quarters of Nissans sold in the U.S. are
sorghum or corn this year. We’re short seed technologies that peers in the U.S.,
According to the U.S. Census Bureau, the produced domestically. on money and the drought has caused Brazil and India take for granted as they
overall U.S. trade deficit in goods with Japan The best way to boost American exports is prices to soar, even for the simplest produce record-setting harvests.
was $68 billion last year. Vehicles accounted to remove trade barriers with new trade agree- goods. In the markets, cabbages the There are no easy solutions to a
for much of the deficit, but that’s primarily ments. U.S. farm producers would particularly size of tennis balls sell for $1. drought, and even crops with GMOs
because Japanese car makers can produce su- benefit from the Trans-Pacific Partnership with People are desperate for work. Last can’t bring us the rain we need. Yet the
perior small cars at a lower cost than U.S. Japan and 10 other countries. Japanese tariffs week I watched a man my grandfather’s drought may serve the purpose of high-
manufacturers. Federal fuel-economy stan- on beef would fall to 9% in the 16th year of the age carry a hoe from house to house, try- lighting the madness of Africa’s anti-
dards harm American automakers more than deal from 38.5% while the 20% tariff on ground ing to trade whatever labor he could of- GMO extremism. After all, we need
trade does. pork would be eliminated in six years. Japan’s fer for a meal. He wound up performing these GMOs in the form of emergency
Notably, the U.S. enjoys large comparative 21.3% levy on poultry and eggs would be abol- backyard chores for a cup of tea. food aid. But we should be able to enjoy
The rejection of GMO food aid is a them soon as an ordinary part of farm-
advantages in high-value manufacturing and ished in six to 13 years. humanitarian outrage—a man-made di- ing and food production.
agriculture. In 2012, according to the White Mr. Trump claims that as President he saster built on top of a natural disaster.
House trade rep, the U.S. ran a $20 billion trade would make smarter and “fairer” trade deals. Yet something even worse lies behind Ms. Mudukuti is a biotechnology stu-
surplus with Japan in private commercial ser- He could help persuade voters by showing it: a denial of science. GMOs pose no dent at Chinhoyi University of Technol-
vices such as consulting, legal services and in- that he knows more than nothing about for- threat to human health, as virtually ev- ogy in Zimbabwe, and a member of the
formation technology. eign trade. ery scientific and regulatory agency Global Farmer Network.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Monday, March 14, 2016 | A13
OPINION
‘S
New York Disenchantment with Trump food and that is “splurge.” These reviewers
o you have the water, is a running motif. “After all, how bad are not regular patrons of establish-
you have the steaks, can a restaurant be that has Donald ments where the faucets are gold-
you have the airline. I Trump’s name on it?” a TripAdvisor plated, and they typically discuss one-
mean, what’s wrong user wonders about DJT, a restaurant or two-day getaways to celebrate a
with selling?” Donald J. at Trump Hotel Las Vegas. “Well, special occasion.
Trump asked Tuesday in his remark- pretty bad,” he concludes. “Donald, “This is a place everyone should
able election-night defense of his they don’t deserve your initials,” splurge on at least once in their life-
business empire. “Every once in a somebody else says. time,” says a TripAdvisor user about
JOE SKIPPER/REUTERS
while you can sell something. You Drinkers can also no longer enjoy the Trump Chicago. Another notes,
have the wines and all of that, and “Donald J. Trump: The World’s Finest “For the average person like me, one
Trump University, we’re going to Super Premium Vodka, Success Dis- would think it would be unaffordable
start it up as soon as I win the law- tilled,” which was discontinued in and out of reach . . . I think once in a
suit.” He went on to invoke other “as- 2011, though it is unclear if anyone lifetime everyone should surround
sets” including his hotels, Trump ever enjoyed it. A connoisseur at the themselves with this kind of luxury. I
Vodka, the New York towers, the golf website Vodkaphiles compares the The candidate and his merchandise at a March 8 news conference in Jupiter, Fla. was quite happy with the TV in the
links and the Mar-a-Lago club—but flavor to “gas station burritos, bathroom, so I could take a shower
missed the opportunity to plug his slightly expired 2% milk, hard boiled Trump Restaurant than Gucci is a the best hotels I’ve ever stayed at.” and continue watching my show I
Trump-branded neckties, restaurants, eggs, and canned pears.” Trump Store. A few did seem to dislike Trump was watching in the bedroom.”
jewelry and mattresses. Perhaps Mr. Trump’s people simply A spokeswoman wrote back that hotels because they disliked the The nature of luxury economics is
Mr. Trump says he’s the candidate have different preferences when it the condo building where Daniel is man. Brett M. says the Trump Ocean that the more so-called Veblen goods
of the common man, and, well, the comes to the human senses. On a fra- housed is now managed by a differ- Club in Panama “is a bit like Donald cost, the more they are desired.
common man now regularly shares grances bulletin board, a reviewer ent real-estate company and Trump himself: showy and full of Nearly all of the splurgers were satis-
online his opinions of the stuff he says the notes of Success by Trump emphasized that the Trump Organi- flashy style and big rhetoric, but al- fied, by their own testimony. But
buys. By coincidence, a few weeks be- eau de toilette spray evoke adjectives zation “had no direct relationship most wholly lacking in substance when you read person after person
fore Mr. Trump’s speech, I wondered like “cloying, synthetic, annoyance, with the restaurant other than as and attention to detail.” describing once-in-a-lifetime Trump
what the amateur critics who contrib- headache inducing and maybe even manager of the building . . . Daniel is In general, a consensus jells about purchases, it’s hard to shake the woe-
ute to websites like TripAdvisor, Yelp household cleanser.” Another chimes not appropriately listed on the the merits of Trump properties, begone impression they’re being sold
and Amazon were saying about his in, “Maybe it could make the dump- Trump website, which we are which fall into the upper half of the an overpriced caricature of what
consumer-facing products, and I ster outside my house smell better, addressing with them now.” ratings distribution on both TripAdvi- someone who is not rich imagines be-
started to comb through their reviews but I doubt it.” The Daniel trophy has disappeared sor and Yelp. It’s weird the bathrooms ing rich would be like.
whenever I had a spare half-hour. “We were almost violently ill from from the Trump website, but I saved in the guest rooms of the Trump Soho i i i
the smell,” TripAdvisor’s Rady re- the screenshots. don’t have doors. Trump Las Vegas is Deep into Amazon reviews of
ports about the Trump Taj Mahal ca- i i i too far from the strip. Guests like the Trump apparel—“This shirt makes no
Trump say he’s the tribune sino in Atlantic City. “The ‘roof deck Mr. Trump seems to do better as a welcome letters from Mr. Trump that pretense of being top quality. But it’s
of the common man. I read pool’ was nothing but a used hypo- hotelier than steak merchant, albeit are left on the beds. Trump Interna- not cheap garbage either”—I became
dermic needle collection area,” notes with his usual overcooking. “I mean, tional Hotel & Tower Waikiki Beach fatigued and decided I needed to give
26,000 online reviews to Lauren W. Chicago, I have one of the greatest Walk sounds lovely. something back after taking so much.
find out what the common Alas, the Taj is just another bank- buildings, rated the No. 1 hotel in There is less unanimity about I went with a friend to get lunch at
rupt Atlantic City casino, not another North America, and I’m very proud of value for money. Reviewers conduct the notorious tourist trap that is the
man thinks of his products. Atlantic City casino whose bank- it. It’s great, great,” he said Tuesday. debates about whether Trump accom- Trump Grill, in the gilded atrium of
ruptcy Mr. Trump caused. He took a Yet Trump International Hotel & modations, however opulent, are Trump Tower on Fifth Avenue. My
buyout in 2009, and his trademark re- Tower isn’t even the greatest hotel in worth the high prices. review: This place couldn’t make a
According to my spreadsheet, I’ve mains because the hedge funds that Chicago, according to TripAdvisor. “Pricey as hell—but what do you Gentleman’s C at Trump University.
now read about 26,000 individual re- run the joint told a chapter 11 judge Users rank the place No. 12, behind expect? It’s the Trump!” notes Steph- A lobster ravioli appetizer ($14)
views. It has been slow, bleary-eyed that they lacked the funds to change the Langham (the winner) and the anie L. “If you don’t have the money appeared to be frozen food, which of-
scutwork, trust me, and remember, the “ubiquitous” Trump signage. Talbot (the runner-up), as well as the to spend, go to a cheaper option.” Ev- fered reassurance: “unlikely to be poi-
kids, this is what happens if you go This brings us to Mr. Trump’s un- mass-market chain Radisson Blu elyn A. adds, “I’m not going to pre- sonous.” Meat was riskier. To the
into journalism. conventional conceptions of ownership Aqua (No. 11). tend the price tag isn’t etched in gold, cows that gave their lives in vain for
The digital portrait of Mr. Trump and property. Buildings he no longer Then again, Mr. Trump’s celebrity but screw it. You’re worth it!” the Gold Label cheeseburger ($20)
that emerges, review by review, is in- controls live on in the Trump pantheon, and mythology profoundly shape per- Keri N. provides the opposing and the Trump Tower steak sandwich
structive, however subjective and im- sometimes because of insolvency but ceptions of his properties. “You really argument in a post on the Trump Las ($23), we apologize.
pressionistic. You might call it an un- more often because he claims anything do feel as rich as Donald Trump is Vegas. “While the hotel is nice, it’s Our glasses of “red wine blend”
scientific poll—Mr. Trump’s favorite with his name on it is “his.” Even com- when you come here,” explains Valer- comparable to your average business from Trump Winery—a Meritage, the
kind—of his achievements, failures panies he has nothing to do with can ian L. “Trump knows how to entertain hotel that you would find in any 2013 vintage ($11), and a 2012 New
and the relationship between his become Trump companies. his rich guests,” Petras B. says. “I’m not other city.” World Reserve ($16)—also disap-
grandiosity and reality. Mr. Trump likes to boast that “I one of them, but it’s nice to pretend.” “I travel a lot,” remarks Mercedes pointed. The esophageal burns speak
i i i have a store worth more than Mitt Amelia568 even says the Trump M., “and frankly, what you get at a for themselves.
Mr. Trump was flanked on Tuesday Romney”—as if the Gucci flagship Hotel Collection delivered “the most Courtyard Marriott far exceeds what Afterward we repaired to Trump
by a pile of what he called Trump that leases commercial real estate in amazing experience of my life!!!” She I’ve experienced the last couple of Bar and did catch sight of Don Jr. The
Steaks, but his mail-order beef busi- Trump Tower agreed as a tenant to adds that “One special feature among days.” thrill was no compensation for my
ness is defunct. The label on the become the landlord’s possession. If too many to mention was Trump Bill Z. puts it more bluntly in a friend’s signature cocktail, the Doral
steaks indicated that they were sold that’s how it worked, at least it Tower Sparkling Water! I am quite an post about Trump International Hotel ($16), which he said tasted like the
by Bush Brothers Provision Co., a would explain this Yelper’s outlook: expert in this field and this was the & Tower Toronto: “At the risk of golf course it is named after. The Bil-
West Palm Beach grocery. “99 Cent Store quality and even best in the world!” The point goes to sounding condescending, I can’t help lionaire Martini ($20) was unworthy
The reviews for Trump Steaks are worse service.” Mr. Trump. but wonder how many of these five- of a mere millionaire, much less the
still posted on the QVC website, how- True to form, this week I noticed One takeaway is that reviewers are star reviews were written by people average-looking Americans who were
ever. One reports that the Classic Col- that the “Trump Restaurants” section as willing to overlook Mr. Trump’s who frequent five-star hotels on a opening their wallets for products
lection, which cost $199 for two filets, of the Trump Organization website politics as GOP voters are. “Trump, regular basis and know what their ex- that had been expertly hyped but
two bone-in rib-eyes and a dozen claimed Daniel, the Upper East Side himself, is horrible, but man, are his pectations of such hotels should be. I couldn’t deliver. Sad!
burgers, had “no redeeming quali- dining room that is among the hotels nice,” Ghia G. writes. do . . . As a hotel, the Trump is above
ties.” “Dreadful pieces of meat for a world’s finest. It has great reviews— Alma L. adds, “As much as I despise average. As a five-star, elite luxury Mr. Rago is a member of the Jour-
high price,” reads another. “It’s hard though I figured Daniel is no more a Donald Trump, this has to be one of hotel, the Trump falls short.” nal’s editorial board.
F
the banks or turn them into public bank’s business and be led by the bank- bankruptcy involved dozens of com- brokers, and investment banks would
or months Democratic presi- utilities. Instead, we should do what ruptcy estate’s chosen private-sector plex proceedings in the U.S. and be less likely to turn to the govern-
dential hopeful Bernie Sanders Dodd-Frank failed to do: Make big- managers. With regulations requiring abroad, creating huge uncertainty and ment for financing.
has been telling Americans that bank failures feasible without tank- minimum long-term debt levels, the making it impossible for even part of Eventually, the new company
the government must “break up the ing the economy by writing a pro- new firm would be solvent. The bank- the firm to remain in business. would make a public stock offering to
banks” because they are “too big to cess to do so into the bankruptcy ruptcy would be entirely contained, When Lehman went under it had value the bankruptcy estate’s owner-
fail.” This is the wrong role for gov- code through a new amendment—a $20 billion of book equity and $96 bil- ship interest, and the estate would
ernment, but Sen. Sanders and others “chapter 14.” lion of long-term debt, while its per- distribute its assets according to stat-
on both sides of the aisle have a Chapter 14 would impose losses on Bernie Sanders is right, ceived losses were around $54 billion. utory priority rules. If the valuation
point. The 2010 Dodd-Frank financial shareholders and creditors while pre- If the costs of a chapter 14 proceeding came in at $52 billion, Lehman share-
law, which was supposed to end too venting the collapse of one firm from Dodd-Frank doesn’t work, amounted to an additional (and con- holders would be wiped out, as they
big to fail, has not. spreading to others. It could be initi- but his solution is wrong. servative) $10 billion, then the new were in 2008. Long-term debtholders,
Dodd-Frank gave the Federal De- ated by the lead regulatory agency company would be well capitalized with $96 billion in claims, would re-
posit Insurance Corp. authority to and would begin with an over-the- Here’s what would work. with around $52 billion of equity. cover 54 cents on the dollar, more
take over and oversee the reorganiza- weekend bankruptcy hearing before a The new parent company would than the 37 cents they did receive. All
tion of so-called systemically impor- preselected U.S. district judge. After take over Lehman’s subsidiaries, all of other creditors—the large majority—
tant financial institutions whose fail- the hearing, the court would convert both because the new bank would keep which would continue in business, would be paid in full at maturity.
ure could pose a risk to the economy. the bank’s eligible long-term debt into operating and paying its debts, and be- outside of bankruptcy. And the new Other reforms, such as higher capi-
But no one can be sure the FDIC will equity, reorganizing the bankrupt cause losses would be allocated en- company would honor all obligations tal requirements, may yet be needed
follow its resolution strategy, which bank’s balance sheet without restruc- tirely to the old bank’s shareholders to short-term creditors, such as re- to reduce risk and lessen the chance of
leads many to believe Dodd-Frank will turing its operations. and long-term bondholders. purchase agreement and commercial financial failure. But that is no reason
be bypassed in a crisis. A new nonbankrupt company, An examination by one of us (Em- paper lenders. to wait on bankruptcy reform. A bill
Reflecting on his own experience owned by the bankruptcy estate (the ily Kapur) of previously unexplored The result: Short-term creditors along the lines of the chapter 14 that
as overseer of the U.S. Treasury’s temporary legal owner of a failed discovery and court documents from would have no reason to run on the we advocate passed the House Judi-
bailout program in 2008-09, Neel company’s assets and property), Lehman Brothers’ September 2008 bank before the bankruptcy proceed- ciary Committee on Feb. 11. Two ver-
Kashkari, now president of the Fed- would assume the recapitalized bal- bankruptcy shows that chapter 14 ing, knowing they would be protected. sions await action in the Senate. Let’s
eral Reserve Bank of Minneapolis, ance sheet of the failed bank, includ- would have worked especially well for And they would have no reason to run end too big to fail, once and for all.
says U.S. government officials are ing all obligations to its short-term that firm, without adverse effects on afterward, because the new firm
once again likely to bail out big creditors. But the failed bank’s share- the financial system. would be solvent. Ms. Kapur is an attorney and eco-
banks and their creditors rather holders and long-term bondholders Here is how Lehman under chapter Without a run, Lehman would have nomics Ph.D. candidate at Stanford
than “trigger many trillions of addi- would have claims only against the 14 would have played out. The pro- $30 billion more liquidity after reso- University. Mr. Taylor, a professor of
cess would start with a single, brief lution than it had in 2008, easing sub- economics at Stanford, co-edited “Mak-
hearing for the parent company to fa- sequent operational challenges. In the ing Failure Feasible” (Hoover, 2015)
cilitate the creation of a new recapi- broader marketplace, money-market with Kenneth Scott and Thomas Jack-
PUBLISHED SINCE 1889 BY DOW JONES & COMPANY talized company—a hearing in which funds would have no reason to curtail son, which includes Ms. Kapur’s study.
Rupert Murdoch Robert Thomson
Executive Chairman, News Corp Chief Executive Officer, News Corp
Gerard Baker
Editor in Chief
SPORTS
In Tennis, No Tears
Shed for Sharapova
Facing a lengthy ban side an email. “I think most fact that Sharapova tested
people would call it too hard positive at a Grand Slam
and receiving little to find,” she said. She tested event made her defense even
sympathy, the ex-No. 1 positive for meldonium after more difficult.
losing in the quarterfinals of “She played a Grand Slam
has a long road ahead the Australian Open and was with a performance-enhanc-
notified by the International ing drug—there’s not too
BY TOM PERROTTA Tennis Federation. many ways you can talk your
“I want to believe that for way out of that,” Davenport
Indian Wells, Calif. sure it’s a mistake for Maria, said. “It’s pretty tough to ask
When Maria Sharapova ad- she didn’t want to do it, but the players to be sympa-
mitted last week that she had it’s obvious that it’s negli- thetic.”
failed a drug test at the Aus- gence,” Rafael Nadal said last Sharapova, the winner of
tralian Open, she hoped her week ahead of the BNP five Grand Slam singles ti-
explanation—that she didn’t Paribas Open in Indian Wells. tles, could be suspended for
know a drug she had used for “The rules are like this. It’s four years, which would
a decade was recently fair and now she must pay for likely end her career. Provi-
banned—would garner a le- it.” sions in tennis’s anti-doping
nient sentence and support Novak Djokovic, the top- program allow for reduced
from the tennis community. ranked man in world and a sanctions, and several sus-
As more details have friend of Sharapova’s, said pensions have been reduced
emerged, though, it’s clear that he felt sorry for her, but to 6 months or less because
that the 28-year-old that she still must be ready of tainted supplements or
Sharapova is facing the most for punishment. “The player other factors.
difficult challenge of her ca- that has made this mistake John Haggerty, Sharapova’s
reer, against both anti-doping has to suffer certain kind of lawyer, said her defense
authorities and the so-far un- consequences,” he said. would rely in part on her will-
sympathetic opinions of her ingness to admit this error.
colleagues on the tennis tour. Haggerty said he hopes to
Sharapova said she had
Sharapova could be have a hearing before a panel
taken Mildronate, the brand suspended for four by May.
name of a Latvian-made car- “In our view, there is no
diac drug called meldonium,
years, which would possibility for a four-year
likely end her career.
MONEY &
INVESTING
ECB Cheap Loans
Valeant Weighed CEO Ouster Show Banks’ Rift
Replacement sought during Pearson’s medical leave BUSINESS | B4 MARKETS | B5
© 2016 Dow Jones & Company. All Rights Reserved. THE WALL STREET JOURNAL. Monday, March 14, 2016 | B1
Virtual
Reality to
Eni Starts Pumping Oil in Arctic
BY GIADA ZAMPANO well over budget when they be just below $50 a barrel. technology aimed at minimiz-
Game Event
Ryanair’s
globe will be
hoping for a peek at new VR
gear from the likes of Sony
New Strategy:
Corp. The five-day gathering,
which is geared toward in-
dustry professionals, also
gives game creators a chance
Being Nice
to explore emerging strate-
gies and technologies in the
nearly $100 billion industry.
GDC covers myriad indus-
try angles, but this year it
will be dominated by ses-
sions dedicated to VR as well
as augmented reality, which
blends digital images with a
person’s view of the real
world. The burgeoning tech-
nologies are poised to hit it
big in the coming years, with
applications for gaming,
travel, health care and more.
Investors already have
pumped $1.1 billion into aug-
mented- and virtual-reality
companies this year, more
than the total for any prior
RUI VIEIRA/PA WIRE/ZUMA PRESS
Anbang Insurance
A
Air India......................B4
Alphabet ................ B1,B3
Group.........................B5
Ford Motor.............B3,B7
G
General Motors ..... B3,B7
Glaser Weil Fink
Howard Avchen &
R
Rabobank Group ......... B7
Ryanair Holdings ........ B1
S
Sequoia Capital...........B2
Munoz Faces Big Hurdles
On Oct. 15, union leaders at making him the point man on
Apple......................B3,B8
Shapiro......................B2 Sidecar Technologies..B3
Audi.............................B4
Goldman Sachs Group B8
United Continental Holdings some of the many visits to
Skopos Financial.........B5
B Inc. waited in Chicago for a shareholders. “They have to
H Sony.............................B1
Banco Popular Spirit Airlines ............. B1
“labor summit” with Oscar schlep all over the country,”
Espanol......................B5 Hewlett Packard
Enterprise.................B3 Statoil....................B1,B4 Munoz, the airline’s new chief said one of the advisers.
Bank of America.........B8 executive. He never showed. A spokeswoman said United
Blackstone Group ....... B5 Huawei Technologies..B3 T
I is eager for Mr. Munoz to re-
C Teneo Intelligence......A6
Intel.............................B8 Terna............................B8 By Susan Carey, sume his duties.
Chevron ....................... B7
China Oilfield International Business U Rachel Feintzeig Mr. Munoz’s doctors signed
Services.....................B4 Machines...................B3 UniCredit.....................B5 and Joann S. Lublin off March 4 on his full-time
Commerzbank ............. B7 K United Continental return to work. He began tak-
Cruise Automation.....B3 Holdings....................B2 A heart attack that day had ing part in some key meetings
Kroll Bond Rating
D Agency ...................... B7 V landed Mr. Munoz in the hos- earlier and participated on the
Deutsche Bank ...... B5,B8 L pital and a heart transplant in airline’s fourth-quarter earn-
Valeant Pharmaceuticals
Die Zeit.......................A6 early January has mostly kept ings call in late January. In
Lyft..............................B3 International ....... B4,B5
E Volkswagen.................B4 him on the sidelines. But on the past two weeks, he visited
P
Electricite de France...B4 X Monday Mr. Munoz is return- employees at several airports.
ENI...............................B1 Pfizer...........................B4
Etro..............................A1 Philidor Rx Xiaomi Corp ................ B3 ing to full-time work with the But for medical reasons, he
Exeter Finance............B5 Services.....................B5 Z long-delayed labor meeting on is for now traveling by private
F Q Zoomlion Heavy his agenda and even bigger plane, most likely a precau-
Flagship Credit Quinn Emanuel Urquhart Industry Science & challenges ahead. tion because he is on immu-
Acceptance................B7 & Sullivan ................. B2 Technology................B5 Mr. Munoz faces a lengthy nosuppressive drugs intended
Sequoia Partner
ernmental operator of one of at odds with the demands of ters and extensive travel to ramping up too quickly may
its hubs in Newark, N.J. waging a successful proxy meet important shareholders. have contributed to a ruptured
Three big unions represent- fight like the one United faces, Advisers in other proxy appendix that kept her out of
ing pilots, airport ground as two hedge funds—PAR Capi- fights said United will want to the office for several more
BY SCOTT MARTIN tor in at least 27 private start- pendent scientists and compile
ups valued at over $1 billion, Millions data to challenge the govern-
of acres
Venture-capital firm Se- more than any other venture ment over its handling of bio-
150
quoia Capital said it parted firm, according to Dow Jones tech crops.
50
ways with longtime partner VentureSource. 10 In 2005, she filed a petition
Michael Goguen in the wake of Sequoia’s rival next door in with India’s Supreme Court
allegations he sexually abused Menlo Park, Calif., Kleiner Per- seeking a moratorium on GMO
a woman and failed to follow kins Caufield & Byers, last field trials, arguing that such
through on a $40 million set- year was embroiled in a gen- crops would damage the nutri-
tlement. der-discrimination suit that it tional qualities of the food.
A breach-of-contract suit, later won after a five-week Biotech Bloom The court accepted her pe-
filed last week on behalf of trial. That case galvanized Sili- tition, which is still winding
Amber Baptiste in San Mateo con Valley into conversations Commercial cultivation its way through India’s notori-
County Superior Court in Cali- across corporations and ven- of government- ously slow judicial system.
fornia, claims that Mr. Goguen ture firms about concerns over approved biotech crops As public pushback in-
abused her “sexually, physi- alleged misogyny, gender in- by type, as estimated creased, India in 2010 placed a
cally and emotionally” for equality and pay. at the end of 2014 surprise moratorium on an in-
over 13 years. It further al- Sequoia has no U.S.-based sect-resistant brinjal, or egg-
leges that Mr. Goguen agreed female investing partners, but plant, which had been set for
to settle claims with Ms. Bap- it does have five female in- Allowed GM crops Corn Cotton Soybeans Canola Other* approval. India’s potential
tiste, paying her $10 million in vesting partners in other areas nevertheless persuaded Mon-
compensation but balking at of the world. U.S. Colombia Portugal santo to continue research
the remaining $30 million. Ms. Baptiste stated in the China Uruguay Spain here and it continued to get
Mr. Goguen denied the alle- complaint, filed Tuesday, that approvals for trials, including
Canada Australia Sudan
gations in a statement on Sat- she had been the victim of hu- biotech corn. Other companies
urday, saying they came at the man trafficking since she was Brazil Cuba Burkina Faso pursued rice, mustard, pea-
end of a lengthy romantic re- 15 years old and that after she Paraguay Honduras Pakistan nuts, potatoes and sorghum.
lationship with Ms. Baptiste was brought to the U.S., she “We never lost hope that
that ended badly. A partner at was introduced to Mr. Goguen Chile Bolivia Bangladesh things were moving,” said
Sequoia for nearly 20 years, in 2001. Argentina Czech Republic India Monsanto Treasurer D. Narain,
Mr. Goguen said he would file Ms. Baptiste’s complaint al- who led its India business
South Africa Slovakia Myanmar
on Monday a cross-complaint leges that she “submitted to from 2010 to 2013.
alleging extortion. Mr. Goguen’ s constant sexual Mexico Romania Philippines India’s Supreme Court is ex-
abuse, relying on his promise Costa Rica *sugar beet (U.S., Canada), alfalfa (U.S.), papaya (U.S., China), squash (U.S.), pected to rule soon on the pe-
that he would help her break poplar (China), eggplant (Bangladesh), tomato (China) or sweet pepper (China) tition to bar GMO-crop culti-
Michael Goguen free of the human traffickers Source: International Service for the Acquisition of Agri-Biotech Applications THE WALL STREET JOURNAL. vation. But Monsanto faces
denies allegations who held her in perpetual more immediate challenges in
that he sexually
abused a woman.
debt.”
Ms. Baptiste is only suing
for breach of contract and to
claim the remaining amount
GMO ant, the company had intro-
duced the world’s first
genetically modified cotton in
the U.S. in 1996.
Monsanto’s success seemed
to augur well for GMOs in In-
dia, which boasts the most ar-
able land of any country and is
cotton, after India’s agricul-
ture ministry this month im-
posed a 70% cut in the royalty
fees that Monsanto and
she is allegedly owed. The suit Continued from the prior page India cultivated the world’s projected to surpass China as Mahyco had charged for their
“This matter is purely per- claims she and Mr. Goguen had in a case opposing genetically largest cotton-growing area, the world’s-most-populous by crop genes.
sonal and has no connection to previously agreed to a settle- modified food crops before de- yet produced among the few- 2023. By late 2006, Mon- The companies also face an
Sequoia,” Mr. Goguen said. ment in May 2014, in which Mr. ciding on their commercial est bales per acre. Four mil- santo’s Bt genes blanketed inquiry from India’s antitrust
“My departure from there al- Goguen would pay $40 million cultivation. lion Indian cotton farmers bat- about 40% of India’s cotton enforcer over pricing of their
lows me to focus with full in four separate $10 million in- Meanwhile, Monsanto’s es- tled many of the same pests fields, according to the Inter- pest-resistant cotton genes,
force on clearing my name and stallments. He made the first tablished cotton business in that U.S. farmers did—pests national Service for the Acqui- and some Indian seed compa-
vigorously pursuing justice.” $10 million payment in May India faces new threats, in- that could resist a gene Mon- sition of Agri-Biotech Applica- nies have withheld tens of mil-
Sequoia said it learned of 2014, according to the suit. cluding new government price santo created with a bacte- tions, or Isaaa, a nonprofit lions of dollars in royalty pay-
the allegations on Thursday. In December 2014, Mr. controls around seed genetics rium called Bacillus thuringi- that tracks and promotes agri- ments, according to Monsanto.
“We understand that these alle- Goguen allegedly sent a letter and an antitrust probe into ensis, or Bt, that lets plants cultural biotechnology. The price controls on crop
gations of serious improprieties to Ms. Baptiste refusing to pricing practices, prompting secrete a bug-killing protein. “I had gravitated to Bt cot- biotechnology—which Mon-
are unproven and unrelated to make the second payment and Monsanto on March 4 to warn Monsanto in 1997 formed a ton because my yields used to santo and Mahyco license to
Sequoia,” said a Sequoia was said to have rescinded the that it could withdraw its bio- joint venture to pair its bio- be poor,” said Dheeraj about 50 Indian seed compa-
spokesman in a statement. contract, claiming their settle- tech crop genes from the technology with Mahyco seeds Chhaganbhai Wadodariya, a nies—may force the companies
“Nevertheless, we decided that ment agreement was null and country. The backlash has suited to India’s soil. When farmer in India’s Gujarat state. to reassess all aspects of their
Mike’s departure was the ap- void as procured under extor- slowed global-sales growth of Mahyco won permission to sell Genetically modified seeds in- joint venture in India, they
propriate course of action.” tion, according to the com- genetically modified seeds. India’s first biotech cottonseed creased his earnings so much, say.
Sequoia declined to com- plaint. Sales grew 4.7% to $21 billion in 2002, scientists and staff he said, he can now buy cattle, “We need innovation in ag-
ment further on the lawsuit. Mr. Goguen is being repre- in 2014, compared with 8.7% threw a party at its research do up his home and occasion- riculture in the country,” said
Sequoia is a fixture of sented by attorney Diane growth in 2013 and average center in Dawalwadi, said Mr. ally travel. Shilpa Divekar Nirula, chief ex-
famed Sand Hill Road and an Doolittle of Quinn Emanuel annual growth of 21% from Char, who joined Mahyco in Fears that India’s govern- ecutive of Monsanto’s India
early investor in some of the Urquhart & Sullivan LLP. 2007 through 2012, according 1999. ment relied too heavily on bio- unit. “The government seems
most valuable companies in The plaintiff is being repre- to research firm PhillipsMc- “It was like India winning tech companies to research intent on promoting innova-
the world, including Apple sented by Glaser Weil Fink Dougall Ltd. the cricket world cup,” said safety and that GMO plants tion…but something like this is
Inc., Google Inc. (now Alpha- Howard Avchen & Shapiro India appeared fertile Monsanto Treasurer D. Narain, would mix with wild versions at cross-purposes with what
bet Inc.) and Oracle Inc. The LLP, which didn’t respond to a ground for Monsanto two de- its India unit’s chief financial prompted nutritionist Aruna the government is seeking to
firm is also currently an inves- request for comment. cades ago. Once a pesticide gi- officer in the late 1990s. Rodrigues to seek out inde- do.”
REBECCA COOK/REUTERS
NEW DELHI—Chinese market are still dominated by are sold with semiautonomous to Sidecar Technologies Inc.
smartphone maker Xiaomi carrier-subsidized handsets, features, such as automatic In an interview, GM Presi-
Corp. is betting on an e-com- which makes it hard for Xi- braking or lane-keeping assis- dent Dan Ammann said the
merce boom in India to help aomi’s model to work, Mr. Lin tance, but the introduction of Cruise acquisition provides
offset slowing sales at home. said. vehicles capable of operating foundation for faster develop-
The Indian market is still Mr. Lin’s prognosis for In- without human intervention ment and the company will re-
tiny compared with China’s, dian e-commerce is sunnier still faces regulatory and tech- GM’s Dan Ammann says the company will boost recruitment. cruit to expand the team. ”We
but Xiaomi’s sales here are than that of some startup in- nological hurdles. think this capability is critical
climbing. And Xiaomi’s presi- vestors, who have dialed back Terms of GM’s pact with ready begun touting the rela- PLC, Inrix Inc. and Continental to where we want to be in the
dent, Bin Lin, said that means their bets amid fierce competi- Cruise weren’t disclosed. Ac- tionship on its website, AG are among companies re- future,” Mr. Ammann said.
its growth prospects are tion and blistering discount cording to people familiar inviting potential job candi- cently disclosing investments Cruise founder Kyle Vogt
brighter than in China. wars. Some mutual-fund inves- with the matter, the deal is dates to “join the driverless in smaller startups to keep said tying up with the manu-
The reason, Mr. Lin said, is tors in Flipkart Ltd. recently valued north of $1 billion in revolution.” Fortune earlier re- pace with autonomous-vehicle facturing experience and re-
India’s budding love affair with wrote down the value of their cash and stock. ported on the deal’s value. research or other technology sources of GM should allow
online shopping. “E-commerce stakes, as concerns mount that By snapping up Cruise’s Detroit is racing to keep up developments poised to re- Cruise’s engineers to achieve
has proven to be a very power- the flow of easy money to small operation, GM adds a with Silicon Valley, which has shape the car industry. goals sooner. About 40 Cruise
ful tool in China, and now in cash-hungry startups could be team of engineers who have made big strides in penetrat- Myriad tie-ups, however, employees will join GM, but he
India,” he said. drying up. Flipkart previously been developing sophisticated ing the auto industry follow- can’t solve regulatory puzzles wouldn’t say whether he has
In China, Xiaomi holds a slim declined to comment on the autonomous-vehicle software ing the initial success of Tesla complicating the effort to in- made a commitment to stay
lead over rivals Huawei Tech- markdowns by its investors. on a relative shoestring in an Motors Inc., Uber Technolo- troduce driverless cars. Indus- on board for a specific time
nologies Co. and Apple Inc. It is also unclear how environment much nimbler gies Inc. and other startups try experts and rule makers period.
Each sold nearly as many large Xiaomi can grow in India and more casual than Detroit’s that are credited with shaking believe these cars will be far Mr. Vogt tinkered with cars
phones last year, but Huawei without selling more phones in sprawling engineering centers. up the car business. Alphabet safer than vehicles operated when young and participated
and Apple are growing faster. the mom-and-pop stores where Cruise employees are accus- Inc.’s Google X project and Ap- by people, but big engineering in autonomous-vehicle pro-
Xiaomi sells almost all its most Indians still shop. Sam- tomed to catered lunches and ple Inc. are both working on hurdles present uncertainty. grams while attending the
phones online to hold costs sung Electronics Co. extended snacks, for instance, a practice cars in a potential threat to A report U.S. regulators re- Massachusetts Institute of
down. Its flagship Mi 5 costs its lead in the Indian smart- virtually unheard of in the Mo- established auto makers. leased Friday highlights po- Technology. He was inspired
$250, compared with $650 that phone market last year by fo- tor City. The auto maker Ford Motor Co. on Friday tential conflicts between exist- to start Cruise with a team of
Apple charges for an iPhone cusing on brick-and-mortar spends billions of dollars on said it created a new subsid- ing federal rules and co-founders after working on
6s. Xiaomi recently launched a sales, analysts say. research and development an- iary focused on autonomous- automated vehicles like those another Silicon Valley startup,
made-in-India smartphone, the Just over 100 million smart- nually and has been working car development and other being developed by Google Twitch.TV.
Redmi Note 3, here for $150. phones were sold in India last on autonomous driving for de- projects, mirroring a move GM that lack controls for human Cruise’s RP-1 is a system
In China, one-in-three of all year, compared with 434 mil- cades. made in January. Toyota Mo- drivers, such as steering that puts vehicles into high-
phones are sold online, Mr. Lin lion in China, according to In- Cruise, founded in 2013 by tor Corp. on Wednesday dis- wheels or pedals. way autopilot mode. The com-
says. In India, he hopes that ternational Data Corp. a 20-something entrepreneur closed hiring the entire staff In hopes of cutting red pany designed it to be com-
number will be 50% in a few While analysts and investors with venture backing, has of Cambridge, Mass.-based tape, U.S. officials said their patible with certain Audi
years. It is now 30%. worry about losses at Indian e- raised $20 million and was re- Jaybridge Robotics Inc., a immediate focus will be on ad- vehicles. It is not designed for
“Look at the growth of Flip- commerce firms, online sales cently valued at less than $100 company providing technology vising individual states on new cars.
kart, Amazon, Snapdeal, are expected to grow rapidly million. The deal is expected for autonomous tractors and driverless cars instead of un- —Christina Rogers and
Paytm, all these guys. We ha- over the next few years. Last to close by the end of the sec- mining equipment. dertaking a lengthy rule-mak- Mike Spector
ven’t even remotely seen the year, 50 million Indians were ond quarter, but Cruise has al- Audi AG, Delphi Automotive ing process for federal stan- contributed to this article.
limit of that,” Mr. Lin said. E- regular users of online shop-
commerce startups have re- ping websites and apps. Mor-
GAME
ported booming sales in India gan Stanley analysts expect
as millions of Indians access that number to hit 320 million
the Internet for the first time. by 2020.
Xiaomi is counting on sales Xiaomi ranks seventh in
in India to rise after missing its terms of market share in India, Continued from page B1
global sales target of 80 mil- close behind Apple. But Mr. Lin gins about 3,000 years ago in
lion phones last year. said it ranks third in terms of China, has a near-infinite num-
Other Asian markets are rel- online sales. ber of moves and is played
with intuition as much as cal-
culation. That has made it
HP Enterprise Bets
hard to crack for computers
that rely on brute-force num-
ber crunching.
On ‘Machine Learning’
AlphaGo uses programming
modeled on biological pro-
cesses to replicate human in-
stincts, as well as self-learning
BY DON CLARK But the company in October an- through millions of games
nounced that it would discon- against itself.
Hewlett Packard Enterprise tinue that service, though it Demis Hassabis, the head of
Co., having backed away from a still helps customers develop the U.K.-based team that de-
key portion of the cloud com- cloud-like services run on their veloped AlphaGo, has de-
puting-on-demand market, is own premises. HP Enterprise scribed it as a “Mount Ever-
expanding into cloud services the following month announced est” challenge for computers.
to help companies analyze data plans to collaborate with Mi- All other board games have
LEE JIN-MAN/ASSOCIATED PRESS
such as photos, audio clips and crosoft Azure in several areas. been mastered by computers
comments on social media. The company can use new to the level of grandmasters.
Haven OnDemand, which businesses. HP Enterprise, re- Mr. Hassabis congratulated
runs on computers operated by porting its first separate fi- Mr. Lee on his win, which he
Microsoft Corp.’s Azure cloud- nancial results since its said would help his team learn
computing division, gives users breakup with Hewlett-Packard about AlphaGo’s weaknesses to
access to sophisticated tech- Inc., said earlier this month make it stronger. “This is why
niques such as machine learn- that total first-quarter reve- we came here: to test AlphaGo
ing without the need to main- nue declined 2.5%. to its limits,” he said. Go grandmaster Lee Se-dol claimed his first victory against artificial-intelligence program AlphaGo.
tain a data center or develop Machine learning refers to The matchup has enthralled
the underlying technology. programming that enables com- South Korea, where Mr. Lee is streamed live online, have bol- orthodox moves. “It might be a sists of a 19-by-19 grid of lines,
puters to make inferences. In- by far the most successful stered the story line of rising bug. I don’t know if I can call it on which players place coun-
stead of defining attributes of a player of a game that has two machine intelligence by refer- that,” he said. ters on each intersection and
Haven service helps face, for example, a programmer dedicated television channels ring to AlphaGo as “he” and He also said AlphaGo try to claim the most territory.
companies analyze may show the computer numer- and a dedicated fan base. describing moves with adjec- seemed to be weaker when Toward the end of the
ous photographs of faces and al- Mr. Lee has deflected sug- tives such as “beautiful.” playing with black counters, game, AlphaGo played desper-
data such as photos low the machine to come up gestions that he has the “[Mr. Lee] finally won. This which make the first move of ate moves similar to those of
and audio clips. with its own criteria to detect weight of mankind on his is touching. I don’t want to see the game against an opponent humans facing defeat, com-
the presence or absence of one. shoulders, but newspaper, TV humans succumb to machines playing with white counters. mentators said. AlphaGo re-
One initial Haven customer and social-media commentary someday,” Lee Oi-soo, a Korean After winning on Sunday signs by displaying a pop-up
HP Enterprise and others, is Blink, a startup developing a has been full of humor about novelist with more than two while using white counters, message when it calculates
including Microsoft and Inter- kind of mobile speed-dating computers gaining conscious- million followers on Twitter Mr. Lee said he wanted to play that its probability of winning
national Business Machines app that sets up two-minute ness and challenging humans. wrote on the microblogging with black in the final game to falls below a preset threshold,
Corp., are setting up such ser- video chats between users. The Some observers have made service soon after the latest test his theory. Mr. Hassabis Mr. Hassabis said.
vices in part to court software company every three seconds references to movies such as game. He is unrelated to Lee agreed to the proposal. “Congratulations! [Mr. Lee]
developers—an audience that sends to Haven a still image the “Terminator” series, in Se-dol. Commentators on the latest was too good for us today and
increasingly defines capabilities from each participant’s camera which machines try to wipe Mr. Lee, the Go champion, game said Mr. Lee’s victory pressured AlphaGo into a mis-
of all kinds of products used by to verify the presence of out humans. said after the game that Al- largely stemmed from a deci- take that it couldn’t recover
companies and consumers. faces—rather than potentially Commentators at the Go phaGo appeared to have a sive attack on the middle of from,” Mr. Hassabis tweeted
“Developers are everything,” obscene imagery, said Evan tournament, which has been weakness in responding to un- the board. The Go board con- immediately after the game.
said Colin Mahony, an HP En- Gow, chief executive of the Aus-
terprise senior vice president tin, Texas, company.
VIRTUAL
who oversees its efforts in the If the computer determines six-minute VR game demo the the conference for the first competitive gaming, or so-
field known as big data. that a face isn’t present, it inter- 29-year-old helped create for time. He is eager to get insight called e-sports, and to the
The company, one of two re- rupts the video conversation. Facebook’s Rift. It is impor- into whether his VR ideas will free-to-play strategy that has
sulting from the breakup of HP Enterprise says Haven tant that developers share work. “I want to know where become the gold standard for
Hewlett-Packard Co. in Novem- offers more than 60 such com- Continued from page B1 knowledge with each other so to put my time and money, mobile-gaming apps in recent
ber, announced Haven in late mands that invoke particular toolbox Unreal. “We need to that poor early-adopter expe- and what kind of things I years. There will also be ses-
2014 and began offering it for computing functions. They in- give consumers as many rea- riences don’t turn off future should be creating,” he said. sions on artificial intelligence,
sale last week. clude the ability to recognize sons as possible to buy the buyers, he said. “We definitely “Getting some feedback would community management and
Haven initially was expected barcodes, transcribe speech to hardware.” don’t want to poison the well.” be useful.” storytelling in games.
to run on Helion Public Cloud, a text from audio or video files, Mr. Donaldson is scheduled Michael Angel, a 27-year- The virtual world won’t be
computing-on-demand service and analyze text for positive or to give a talk Tuesday on the old mobile-app developer in the only hot topic at hand. The Week Ahead looks at
developed by the combined H-P. negative sentiments. making of “Bullet Train,” a Plano, Texas, will be attending GDC has panels dedicated to coming corporate events.
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B4 | Monday, March 14, 2016 THE WALL STREET JOURNAL.
BUSINESS NEWS
Chipotle
Executives’
Valeant Considered Firing CEO
Drugmaker’s board can generate enough sales to
Investments
or crizotinib, is the first and only earlier last week that it was
FDA-approved treatment for pa- disappointed and disagreed
tients with the ROS-1 gene al- with Statoil’s contract termina-
Wherever Life
VOLKSWAGEN teration. tion, which was announced on
Crizotinib was designed and Sunday. “It’s incredibly sad that
Global Sales Drop approved in 2011 to treat the so many competent and loyal
Auto Debt
Oil Price Rise Could Be Its Own Undoing Hints That
BY NICOLE FRIEDMAN
AND IRA IOSEBASHVILI
Nikkei 225 Index STOXX 600 Index S&P 500 Index Data as of 4 p.m. New York time
Last Year ago
16938.87 s 86.52, or 0.51% Year-to-date t 11.01% 342.23 s 8.73, or 2.62% Year-to-date t 6.45% 2022.19 s 32.62, or 1.64% Trailing P/E ratio * 23.02 20.19
High, low, open and close for each 52-wk high/low20868.03 14952.61 High, low, open and close for each 52-wk high/low 414.06 303.58 High, low, open and close for each P/E estimate * 16.72 17.55
trading day of the past three months. All-time high 38915.87 12/29/89 trading day of the past three months. All-time high 414.06 4/15/15 trading day of the past three months. Dividend yield 2.27 1.98
All-time high: 2130.82, 05/21/15
DOWN UP
t
International Stock Indexes Data as of 4 p.m. New York time Global government bonds
Latest 52-Week Range YTD Latest, month-ago and year-ago yields and spreads over or under U.S. Treasurys on benchmark two-year
Region/Country Index Close NetChg % chg Low Close High % chg and 10-year government bonds around the world. Data as of 3 p.m. ET
World The Global Dow 2287.66 42.43 1.89 2047.44 • 2639.52 –2.1 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1644.94 32.79 2.03 1491.52 • 1950.85 –4.2 Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
MSCI EM USD 800.91 10.17 1.29 688.52 • 1066.71 0.8 5.500 Australia 2 2.034 107.4 104.1 110.8 119.1 1.975 1.765 1.875
4.250 10 2.688 71.1 66.7 72.3 49.0 2.601 2.384 2.600
Americas DJ Americas 484.55 8.15 1.71 433.35 • 524.44 –0.5
3.500 Belgium 2 -133.1 -123.0 -110.8 -84.8 -0.295 -0.450 -0.164
-0.371
Brazil Sao Paulo Bovespa 49638.68 67.57 0.14 37497.48 • 58051.61 14.5
0.800 10 0.529 -144.8 -136.4 -107.7 -178.0 0.570 0.584 0.331
Canada S&P/TSX Comp 13522.00 142.86 1.07 11843.11 • 15450.87 3.9
4.250 France 2 -0.397 -135.6 -131.6 -110.3 -84.6 -0.381 -0.445 -0.161
Mexico IPC All-Share 44735.50 398.46 0.90 40265.37 • 45773.31 4.1
1.000 10 0.541 -143.6 -134.5 -107.2 -163.9 0.590 0.589 0.471
Chile Santiago IPSA 3058.09 4.45 0.15 2759.77 • 3359.04 3.9
0.500 Germany 2 -0.461 -142.0 -138.3 -118.6 -91.8 -0.448 -0.528 -0.234
U.S. DJIA 17213.31 218.18 1.28 15660.18 • 18312.39 –1.2
0.500 10 0.270 -170.7 -162.1 -147.0 -193.7 0.314 0.190 0.173
Nasdaq Composite 4748.47 86.31 1.85 4266.84 • 5218.86 –5.2
4.500 Italy 2 -0.037 -99.7 -97.6 -53.9 -52.9 -0.042 0.119 0.155
S&P 500 2022.19 32.62 1.64 1829.08 • 2130.82 –1.1
2.000 10 1.333 -64.4 -49.1 5.7 -98.2 1.443 1.717 1.128
CBOE Volatility 16.50 –1.55 –8.59 11.95 • 40.74 –9.4
0.100 Japan 2 -0.162 -112.1 -110.3 -86.9 -64.6 -0.169 -0.211 0.038
EMEA Stoxx Europe 600 342.23 8.73 2.62 303.58 • 414.06 –6.4 0.100 10 -0.011 -198.8 -195.2 -164.7 -168.8 -0.018 0.014 0.422
Stoxx Europe 50 2864.88 71.72 2.57 2566.26 • 3591.47 –7.6 0.500 Netherlands 2 -0.449 -140.9 -134.9 -116.5 -86.9 -0.415 -0.507 -0.184
Austria ATX 2284.02 55.09 2.47 1957.05 • 2681.44 –4.7 0.250 10 0.379 -159.8 -154.0 -132.0 -185.6 0.394 0.341 0.255
Belgium Bel-20 3425.80 70.76 2.11 3130.76 • 3905.71 –7.4 4.350 Portugal 2 0.261 -69.9 -66.3 12.0 -61.7 0.271 0.778 0.067
France CAC 40 4492.79 142.44 3.27 3896.71 • 5268.91 –3.1 2.875 10 2.754 77.7 97.7 224.1 -49.9 2.911 3.902 1.612
Germany DAX 9831.13 332.98 3.51 8752.87 • 12374.73 –8.5 4.500 Spain 2 -0.019 -97.9 -87.7 -58.2 -55.6 0.058 0.076 0.128
Greece ATG 566.20 2.08 0.37 440.88 • 851.81 –10.3 2.150 10 1.482 -49.5 -32.4 11.1 -93.8 1.610 1.771 1.172
Hungary BUX 25608.69 354.04 1.40 18522.42 • 25608.69 7.1 3.750 Sweden 2 -0.599 -155.8 -154.0 -128.5 -84.8 -0.605 -0.627 -0.164
Israel Tel Aviv 1478.61 … Closed 1383.34 • 1723.56 –3.3 2.500 10 0.615 -136.2 -138.1 -125.9 -138.5 0.553 0.402 0.725
Italy FTSE MIB 18987.75 869.52 4.80 15773.00 • 24031.19 –11.3 1.250 U.K. 2 0.564 -39.6 -39.8 -35.2 -31.0 0.537 0.306 0.374
Netherlands AEX 441.75 11.57 2.69 382.61 • 509.24 –0.02 2.000 10 1.577 -40.0 -39.4 -35.6 -26.5 1.541 1.305 1.846
Poland WIG 47182.13 495.39 1.06 42152.70 • 57379.45 1.5 0.750 U.S. 2 0.960 ... ... ... ... 0.935 0.658 0.684
Russia RTS Index 845.59 11.35 1.36 628.41 • 1082.21 11.7 1.625 10 1.977 ... ... ... ... 1.934 1.661 2.110
Spain IBEX 35 9090.60 323.70 3.69 7746.30 • 11866.40 –4.8
Sweden SX All Share 490.21 9.98 2.08 435.21 • 564.90 –3.0 Commodities Prices of futures contracts with the most open interest 3:30 p.m. New York time
Switzerland Swiss Market 7998.43 104.77 1.33 7496.62 • 9526.79 –9.3 EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.; MDEX: Bursa Malaysia
South Africa Johannesburg All Share 51739.83 206.05 0.40 46282.02 • 55188.34 2.1 Derivatives Berhad; TCE: Tokyo Commodity Exchange; COMEX: Commodity Exchange; LME: London Metal Exchange;
NYMEX: New York Mercantile Exchange; ICE-EU: ICE Futures Europe. *Data as of 3/10/2016
Turkey BIST 100 79380.18 355.49 0.45 68567.89 • 88651.88 10.7
One-Day Change Year Year
U.K. FTSE 100 6139.79 103.09 1.71 5536.97 • 7103.98 –1.6 Commodity Exchange Last price Net Percentage high low
364.25 1.50 0.41% 378.25 354.25
Asia-Pacific DJ Asia-Pacific TSM 1333.27 12.17 0.92 1190.45 • 1619.39 –4.1 Corn (cents/bu.) CBOT
Soybeans (cents/bu.) 894.25 5.00 0.56 896.75 856.00
Australia S&P/ASX 200 5166.40 16.30 0.32 4765.30 • 5982.70 –2.4
Wheat (cents/bu.)
CBOT
CBOT 476.25 -0.75 -0.16% 493.50 442.25
China Shanghai Composite 2810.31 5.58 0.20 2655.66 • 5166.35 –20.6
Live cattle (cents/lb.) CME 128.550 0.925 0.72 129.775 118.775
Hong Kong Hang Seng 20199.60 215.18 1.08 18319.58 • 28442.75 –7.8
Cocoa ($/ton) ICE-US 3,051 -11 -0.36 3,215 2,738
India S&P BSE Sensex 24717.99 94.65 0.38 22951.83 • 29044.44 –5.4
Coffee (cents/lb.) ICE-US 126.10 3.95 3.23 128.25 113.35
Japan Nikkei Stock Avg 16938.87 86.52 0.51 14952.61 • 20868.03 –11.0
Sugar (cents/lb.) ICE-US 15.21 0.39 2.63 15.34 12.61
Singapore Straits Times 2828.86 19.74 0.70 2532.70 • 3539.95 –1.9
Cotton (cents/lb.) ICE-US 57.14 0.31 0.55 64.30 54.53
South Korea Kospi 1971.41 2.08 0.11 1829.81 • 2173.41 0.5 Robusta coffee ($/ton) ICE-EU 1428.00 26.00 1.85 1,568.00 1,342.00
Taiwan Weighted 8706.14 45.44 0.52 7410.34 • 9973.12 4.4
Copper ($/lb.) COMEX 2.2415 0.0215 0.97 2.3040 1.9440
Source: SIX Financial Information;WSJ Market Data Group Gold ($/troy oz.) COMEX 1253.00 -19.80 -1.56 1,287.80 1,061.90
Silver ($/troy oz.) COMEX 15.530 -0.019 -0.12 16.005 13.760
Currencies London close on March 11 Aluminum ($/mt)* LME 1,574.00 10.00 0.64 1,588.50 1,451.50
Tin ($/mt)* LME 16,800.00 170.00 1.02 17,225.00 13,225.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Fri YTDchg Copper ($/mt)* LME 4,911.00 -10.00 -0.20 4,989.50 4,320.50
10% Country/currency in US$ per US$ (%) Lead ($/mt)* LME 1,842.00 -9.00 -0.49 1,888.00 1,598.00
8 s Europe Zinc ($/mt)* LME 1,797.00 -4.00 -0.22 1,843.00 1,467.00
6 Euro
Bulgaria lev 0.5715 1.7498 –2.8 Nickel ($/mt)* LME 8,780.00 -45.00 -0.51 9,400.00 7,750.00
4
Yen
s Croatia kuna 0.1476 6.774 –3.4 Rubber (Y.01/ton) TCE 171.40 2.50 1.48 180.00 154.10
2
Euro zone euro 1.1173 0.8951 –2.8
0 Palm oil (MYR/mt) MDEX 2607.00 61.00 2.40 2,653.00 2,425.00
Czech Rep. koruna-b 0.0413 24.216 –2.7
–2 Denmark krone 0.1498 6.6769 –2.8 Crude oil ($/bbl.) NYMEX 40.09 0.69 1.75 41.35 29.85
–4 s WSJ Dollar index
Hungary forint 0.003592 278.40 –4.1 NY Harbor ULSD ($/gal.) NYMEX 1.2287 0.0035 0.29 1.2563 0.8950
–6 Iceland krona 0.007896 126.65 –2.7
–8 RBOB gasoline ($/gal.) NYMEX 1.4786 0.0086 0.59 1.5782 1.1488
Norway krone 0.1188 8.4173 –4.8
0.2602 3.8426 –2.1
Natural gas ($/mmBtu) NYMEX 1.917 0.034 1.81 2.5490 1.7310
2015 2016 Poland zloty
Russia ruble-d 0.01432 69.844 –2.9 Brent crude ($/bbl.) ICE-EU 40.42 0.37 0.92 41.48 28.58
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1199 8.3398 –1.3 Gas oil ($/ton) ICE-EU 365.00 3.50 0.97 374.00 260.25
Fri Fri
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 1.0190 0.9814 –2.1
Turkey lira 0.3484 2.8702 –1.6 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1289 7.7583 0.1
Ukraine hryvnia 0.0399 25.0585 4.4
Argentina peso-a 0.0667 14.9960 15.9
India rupee
Indonesia rupiah
0.0149
0.0000769
66.9517
13001
1.1
–6.0
U.K. pound 1.4410 0.6940 2.3 Cross rates London close on Mar 11
Brazil real 0.2762 3.6210 –8.6 Middle East/Africa
Japan yen 0.008798 113.67 –5.5
Canada dollar 0.7566 1.3218 –4.5 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.002907 343.96 1.5 Bahrain dinar 2.6525 0.3770 –0.03
Chile peso 0.001465 682.70 –3.7 Australia 1.3224 1.9059 1.3475 0.0116 0.1705 1.4776 1.0008 ...
Macau pataca 0.1252 7.9881 –0.2 Egypt pound-a 0.1277 7.8335 0.05
Colombia peso 0.0003163 3161.15 –0.4 Canada 1.3218 1.9045 1.3470 0.0116 0.1704 1.4766 ... 0.9992
Malaysia ringgit-c 0.2458 4.0686 –5.4 Israel shekel 0.2579 3.8780 –0.37
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.6749 1.4817 1.2 Kuwait dinar 3.3242 0.3008 –0.9 Euro 0.8951 1.2898 0.9120 0.0079 0.1154 ... 0.6771 0.6768
Mexico peso-a 0.0564 17.7242 3.0
Pakistan rupee 0.0096 104.590 –0.3 Oman sul rial 2.5976 0.3850 0.003 Hong Kong 7.7583 11.1812 7.9053 0.0683 ... 8.6690 5.8697 5.8668
Peru sol 0.2905 3.4429 0.8
Philippines peso 0.0215 46.445 –0.9 Qatar rial 0.2746 3.641 –0.04 Japan 113.6660 163.8000 115.8100 ... 14.6520 127.0000 86.0020 85.9400
Uruguay peso-e 0.0313 32.000 7.0
Singapore dollar 0.7288 1.3721 –3.3 Saudi Arabia riyal 0.2666 3.7504 –0.1 0.9814 1.4143 ... 0.0086 0.1265 1.0966 0.7424 0.7421
Venezuela bolivar 0.158595 6.31 0.005 Switzerland
South Korea won 0.0008435 1185.50 0.8 South Africa rand 0.0656 15.2440 –1.5
U.K. 0.6940 ... 0.7071 0.0061 0.0894 0.7755 0.5251 0.5247
Asia-Pacific Sri Lanka rupee 0.0068937 145.06 0.6 Close Net Chg % Chg YTD % Chg
0.7562 1.3224 –3.6 Taiwan dollar 0.03064 32.641 U.S. ... 1.4410 1.0190 0.0088 0.1289 1.1173 0.7566 0.7562
Australia dollar –0.8 WSJ Dollar Index 87.88 –0.32 –0.36 –2.54
China yuan 0.1539 6.4978 0.1 Thailand baht 0.02851 35.070 –2.7 Sources: Tullett Prebon, WSJ Market Data Group Source: Tullett Prebon
3-Sigma Value LP in New York from 2014, according to Asset- stretched for cash and in turn
and who has bearish bets on Backed Alert, an industry news- struggle to keep up after bor-
some auto lenders. He said de- letter that has flagged concerns rowers get them to pay. “That
mand for auto debt has led around Skopos and other “deep could quickly change perfor-
lenders to systematically loosen subprime” lenders. mance across the spectrum,”
underwriting standards, which Skopos sold its first bond said Kevin Duignan, a managing
he predicts will result in higher deal backed by pools of sub- Cars await shipment from Lansing, Mich., to dealers in the U.S., where auto sales have been on a tear. director at Fitch.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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B8 | Monday, March 14, 2016 THE WALL STREET JOURNAL.
Email: heard@wsj.com
HEARD ON THE STREET FINANCIAL ANALYSIS & COMMENTARY WSJ.com/Heard
Qualcomm’s
New iPhone
ECB Wakes Up to Bank-Profit Nightmare
Mario Draghi is worried negative rates to retail de- Mr. Draghi closed his
out West to look at possibly Bonuses paid for 2015 will total ulating group confirmed Friday without the affiliate’s or the
scooping up promising startup €2.4 billion ($2.7 billion), the German that the Wall Street firm sus- firm’s knowledge or approval.”
companies. lender said, citing Deutsche Bank’s pended him for making “inaccu- Goldman placed Mr. Leissner
Thong Nguyen, Bank of “negative result” last year, when it rate and unauthorized state- on leave after executives inter-
America’s president of retail reported a net loss of €6.8 billion, its ments” in a reference letter he viewed him on Jan. 19. A day
banking, said the bank wants first full-year loss since 2008. wrote without its consent. later, he told the firm he planned
to be a bigger player in the Co-Chief Executive John Cryan, Tim Leissner, Goldman’s for- to retire, according to the Finra
business of handling consumer Bank of America CEO Brian Moynihan in December. who succeeded Anshu Jain in July, mer Southeast Asia chairman, filing. —Justin Baer
payments, even though that
field is increasingly crowded. Francisco is designed to make ers’ embrace of online spend-
“All options are on the ta-
ble. That includes partnerships
or an acquisition,” he said in
an interview.
it easier for the bank to meet
more frequently with potential
technology partners and Bay
Area recruits that can help the
ing. Also, regulations and low
interest rates have pummeled
other core banking businesses
like trading and lending.
HOTELS
The pursuit of potential bank develop its mobile apps Overall, global payments- Continued from page B5
deals marks a major shift for and cut costs associated with related income accounted for Waldorf Astoria, and will ben-
Bank of America, which was so paper checks and cash pay- 40% of total bank revenue in efit from a growing number of
scarred by ill-fated purchases ments. The bank declined to 2014, or $1.7 trillion, up from Chinese travelers abroad.
during the financial crisis that discuss specific potential part- 38% in 2013, according to Many Chinese companies are
Chief Executive Brian Moyni- ners. McKinsey & Co. The consulting also seeking to acquire U.S.
han declared “No Acquisi- Mr. Nguyen’s move shows firm estimates that bank pay- businesses that can help China
tions” in one of his first inves- increasing focus on the fast- ments revenues will exceed $2 upgrade its domestic indus-
tor slideshows. growing digital payments trillion by 2020. tries with better technology.
CHARLIE NEUMAN/U-T SAN DIEGO/ZUMA PRESS
That policy hasn’t changed business, which promises Still, only about 13% of U.S. Anbang has also cut a num-
with respect to buying banks faster service and more secure adult smartphone owners have ber of deals in the insurance
or other large operating com- transactions than traditional downloaded a digital wallet world. It agreed to buy U.S. in-
panies. But with digital pay- credit and debit cards. app, where customers pay for surer Fidelity & Guaranty Life
ments and financial technol- items and services without a for $1.57 billion last year. It
ogy, or “fintech,” being one of plastic credit card. Of those, paid around $1 billion for a
the few clear-cut growth op-
An acquisition of a only one in four use it regu- majority stake in a South Ko-
portunities in the industry, Mr. company would be larly, according to a survey in rean insurer and has pur-
Moynihan and Mr. Nguyen July by research firm Gallup. chased insurance companies in
agreed that Bank of America
the big lender’s first Consumers who do use dig- Belgium and the Netherlands.
has to look at outsiders that since 2009. ital wallets have gravitated to Bloomberg News first re-
have succeeded in making nonbank offerings. Only 2% of ported that Anbang had agreed
transactions simpler and more consumers list their bank as to purchase Strategic Hotels Anbang is buying Strategic Hotels, whose prime assets include
user-friendly. Banks, credit-card networks the digital wallet they use from Blackstone Group. luxury properties such as the Hotel del Coronado near San Diego.
“Payments is going to be and other financial intermedi- most often, compared with
the thing we’re going to focus aries overall command $590 35% for Alphabet Inc.’s Google
on,” Mr. Nguyen says. “We
have a lot to learn from the
billion in fees globally by en-
abling business-to-consumer
Wallet, according to Gallup.
Rather than develop its own
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