Sunday, July 20, 2014

With Jet Strike, War in Ukraine Is Felt Globally - New York Times

http://www.nytimes.com/2014/07/20/world/europe/with-jets-fall-war-in-ukraine-is-felt-globally.html?emc=edit_th_20140720&nl=todaysheadlines&nlid=56381892&_r=0

By PETER BAKERJULY 19, 2014

    Emergency workers on Saturday carried a body from the site of the Malaysia Airlines Flight 17 crash in the Donetsk region. For many, the disaster brought home a struggle that had seemed distant. CreditMaxim Zmeyev/Reuters
    WASHINGTON — From the start, the telephone call did not go well. Dispensing with pleasantries, President Vladimir V. Putinlaunched into an edgy and long-winded complaint about the new American sanctions imposed on Russia the day before.
    President Obama, on the phone from the Oval Office on Thursday morning, responded that Russia was arming rebels in Ukraine — citing among other things the antiaircraft weapons that the United States believed they had been sent. “This is not something we’re making up,” Mr. Obama said, according to an American official.
    Then, more than halfway through the tense, hourlong call, Mr. Putin noted, almost in passing, that he had received a report of an aircraft going down in Ukraine.
    Mr. Putin was vague about the details, and the conversation moved on. But in that instant, the monthslong proxy war between East and West took a devastating turn, one that would shift the ground geopolitically amid the charred wreckage and broken bodies in a Ukrainian wheat field.
    C


    The downing of Malaysia Airlines Flight 17 rippled across multiple continents — from Amsterdam, where friends and family had just seen off their loved ones, to the distant shores of Asia and Australia that had been waiting for 298 passengers and crew who would never show up. The tragedy reached as far as a college campus in Bloomington, Ind., shocked to find one of its doctoral students among the dead.
    It was a day of confusion and anger, of grief and disbelief, of charges and countercharges, of politics and war. It was a day that brought home in vivid relief the consequences of a struggle in a torn society that had seemed far removed for many. And it was a day that was a long time in the making.
    Cor Schilder had been looking forward to his vacation with his girlfriend. Two months ago, he posted pictures of an Indonesian resort on his Facebook page. “We will stay with a private pool with rose petals floating in it,” he wrote in Dutch on May 17. “We won’t leave before all those petals have withered away.”
    A florist and amateur musician who played drums in a band called Vast Countenance, Mr. Schilder, 33, and his girlfriend, Neeltje Tol, 30, closed up their Amsterdam flower shop on Wednesday, leaving a sign saying that they would reopen on Aug. 4. As they passed through customs at Amsterdam’s Schiphol airport the next day, Mr. Schilder kept updating his Facebook page.
    “Mind your step, mind your step,” he wrote two hours before the flight, echoing the automated warning message of the airport’s moving-walkway system.
    Before boarding, he posted a picture of the plane, exactly the same model owned by the same airline as one that vanished mysteriously in March en route to China. “In case it goes missing,” he wrote wryly, “this is what it looks like.”
    That may have been less amusing for a couple who were also passengers, Maree Rizk and her husband, Albert, who lost relatives aboard the never-found Malaysia Airlines Flight 370. Ms. Rizk’s stepmother’s brother and his wife were among those lost in March. The couple was returning home to Australia after a four-week vacation in Europe. “We thought it was unusual they would fly Malaysia because that earlier flight had gone down,” said Phil Lithgow, a friend.
    Photo
    Flowers were laid amid the wreckage on Saturday at the site of the crashed Malaysian passenger plane, shot down by a missile.CreditAlexander Khudoteply/Agence France-Presse — Getty Images
    The flight took off from Amsterdam and headed east along a flight plan filed before departure. As it crossed over Ukraine, it cruised at an altitude of 33,000 feet, making sure to stay above a new minimum of 32,000 feet set just three days earlier so as to avoid any fighting on the ground or in the air. Some airlines had stopped traversing Ukraine altogether because of its violent insurgency in the east, but most had not.
    Until that week, pro-Russian separatists fighting in the east had been known to possess shoulder-fired, heat-seeking missiles known as Manpads, weapons that can typically fire to a maximum altitude of roughly 12,000 feet. But in the days before the doomed Malaysia Airlines flight, combatants had made clear they now had access to a weapon of a different magnitude, a radar-guided SA-11 that can deliver warheads at three times the speed of sound to a target as high as 70,000 feet.
    On Monday, such a missile had brought down a Ukrainian Antonov-26 military transport plane flying at 21,000 feet, a feat requiring expertise and training that only a military could provide. American intelligence agencies believe the missile came from the Russian side of the border, which Moscow denied. Separatists said they brought the plane down themselves.
    Either way, Ukraine that same day set the 32,000-foot minimum for civilian airliners. Russia followed suit two days later. But no one banned passenger jets from the area, despite the obvious change in the threat.
    Dramatic Shift in Battle
    The missile strike that brought down the Malaysia flight was in many respects a result of a dramatic change in the battlefields of eastern Ukraine. After declaring unilateral cease-fires that failed to lead to meaningful negotiations, Ukraine’s president, Petro O. Poroshenko, let the latest cease-fire lapse and ordered his military to resume efforts to crush the insurrection by force.
    After the military plane was shot down on Monday, fighting escalated. On Tuesday, a blast destroyed a residential building in Snizhne, a town 12 miles from the Russian border controlled by rebels. Ukraine said a Russian plane had carried out the attack; the rebels blamed the Ukrainian military. Whoever was responsible, a new air war was clearly underway. On Wednesday evening, Ukraine said Russia had sent a MIG-29 fighter jet across the border to engage with Ukrainian Su-25s. In the ensuing dogfight, one Su-25 was shot down, while another was damaged but escaped

    A Ukrainian security official was complaining about the Russian incursion at a briefing on Thursday around the same time Malaysia Airlines Flight 17 was taking off from Amsterdam.
    In eastern Ukraine several hours later, residents noticed what they presumed was a missile climbing into the sky. American intelligence analysts later traced the launch to an area around Snizhne and the nearby town of Torez. The plane exploded in midair and plummeted down into a series of large fields of wheat, grass and sunflowers, its fuselage and landing gear twisted into a mountain of metal, wires, engines and seats.

    Bodies lying in the field struck strange, unnatural shapes in the tall grasses, many naked but for their shoes. Some were nestled together among piles of open suitcases, including a man in a mint-colored T-shirt lying near a woman in torn jeans whose right arm was thrown up over her head as if she were trying to protect herself. Others lay alone, like the tiny girl, probably no older than 3, dressed in a red T-shirt without pants.
    The sight was overwhelming, even to rebels, who stood in stunned groups trying to comprehend. “I have four children,” said a miner named Sergei who said he had found many bodies of children. “I’m in shock.”
    New Shock in Malaysia
    The shock was felt nearly as powerfully in Kuala Lumpur, where the Malaysian government and its people remain deeply traumatized from the March episode. Prime Minister Najib Razak was at his personal residence when he was notified that Flight 17 had apparently gone down. He rushed to the Malaysia Airlines emergency response center at Kuala Lumpur’s airport and ordered his defense minister, foreign minister, aviation director and airline executives to meet him there.
    “People were incredulous, but people weren’t emotional,” said a Malaysian official who spoke on the condition of anonymity because he was not authorized to comment on the government’s response. “You looked at the faces around the room, and everyone had been battle-scarred from MH-370.”
    Photo
    A candlelight vigil was held on Saturday in Kuala Lumpur, Malaysia, for the air-crash victims.
    After bruising international criticism of the response to that catastrophe, Mr. Najib was determined to handle this one more smoothly. The last time, he waited a week to make a public statement. This time, he appeared before cameras within hours. Last time, it took Malaysia Airlines six weeks to release a cargo manifest. This time, it would take 36 hours.
    In Moscow, the first news reports appeared in early evening as RIA Novosti, a state-run agency, said that the separatists — Russia’s news media often refers to them as “volunteers” — had downed another Ukrainian Antonov-26 military transport plane.
    Mr. Putin was also in the air above Eastern Europe that afternoon, as he was returning from a six-day tour of Latin America aboard his presidential Airbus, referred to as Aircraft No. 1 by the media. The Russian jet apparently passed near the doomed Malaysian plane, both flying in roughly the same airspace over Warsaw at 33,000 feet some 37 minutes apart, according to an Interfax report. He got on the telephone with Mr. Obama shortly after landing.
    As soon as it became clear that the downed plane was not a military craft but a civilian passenger plane, Russian news media shifted their narrative from a separatist attack to a variety of other explanations, including the possibility that Ukraine’s military had shot it down. The coincidental proximity of Mr. Putin’s plane even led to conspiracy theories that whoever destroyed the Malaysia jet was actually trying to target the Russian president. Rossiya 24, the state-run cable network, played past clips of Ukrainian public figures saying they wished Mr. Putin dead and then interviewed supposed experts about how the two planes might have been confused.

    Mr. Putin released a statement 40 minutes after midnight, blaming Ukraine. “Certainly,” he said, “the government over whose territory it occurred is responsible for this terrible tragedy.”
    Obama and the Disaster
    After hanging up with Mr. Putin, Mr. Obama boarded his Marine Onehelicopter to fly to Andrews Air Force Base. During the flight, news broke that Ukraine was blaming a Russian-made missile. Dan Pfeiffer, the president’s senior adviser, received an email and told Mr. Obama about the allegation.


    Once he boarded Air Force One, which was scheduled to take him to Delaware and New York for a policy speech and political fund-raisers, Mr. Obama was briefed by his national security aide, Brian McKeon. By the time the president landed outside Wilmington, Del., it was clear he would need to address the disaster. Speechwriters at the White House emailed a statement to the plane.
    Josh Earnest, Mr. Obama’s press secretary, gave him a copy and explained that a line about concern for Americans stemmed from reports that as many as 23 were on board.
    Mr. Earnest told the president that the number came from Ukrainian officials and seemed dubious. But even as Mr. Obama went before cameras and made his brief comments, Vice President Joseph R. Biden Jr. got on the phone with Mr. Poroshenko, who told him the Ukrainians had intercepted conversations indicating the separatists had shot down the plane.
    Mr. Obama was briefed by telephone after his speech by Antony J. Blinken, his deputy national security adviser, who told him about the Poroshenko call, and the president decided to call the Ukrainian leader as well as Mr. Najib from Air Force One. The flight to New York was so short, however, that the pilots had to fly a long, looping route to give the president enough time to talk with the leaders.
    Once in New York, he headed to his first fund-raiser at an upscale apartment. In a den, where a secure telephone line had been set up, Mr. Obama convened a conference call with his staff for an update. He was told most of the dead were from the Netherlands and so arranged to call the Dutch prime minister.
    The next morning, back at the White House, he was told that one American had been on board, as well as AIDS researchers and activists heading to a conference that he himself had addressed two years earlier. He recognized that he had probably met some of them. “That seemed to kind of rattle him,” an aide said.
    As a cloudy morning dawned on Ukraine on Friday, the horror of the crash site was on full display. Small white pieces of cloth dotted the grassy farmland, marking the locations of bodies. The smell of burned flesh hung heavily near a broken hulk of metal on the road. A foot with part of a leg lay nearby.
    The scene was strangely empty. There was no yellow tape, no investigators poring over the giant metal carcass. Four local rebels wearing fatigues and carrying hunting rifles wandered through the ruins, poking around the debris more out of curiosity. On the grass were photographs of a family vacation, a baby announcement postcard and a boarding pass.
    One of the men, who had never seen a boarding pass, asked what it was. Another picked up an English-language tour book and flipped through it before throwing it back in the heap. “I can’t read it anyway,” he said.

    Reporting was contributed by Keith Bradsher and Chris Buckley from Kuala Lumpur, Malaysia; C.J. Chivers and David Montgomery from the United States; Nicola Clark from Paris; Thomas Erdbrink from Amsterdam; David M. Herszenhorn from Kiev, Ukraine; Michelle Innis from Sydney, Australia; Neil MacFarquhar from Moscow; Michael S. Schmidt from Washington; and Sabrina Tavernise from Grabovo, Ukraine.

    Friday, July 18, 2014

    Jetliner Explodes Over Ukraine; Struck by Missile, Officials Say - New York Times

    http://www.nytimes.com/2014/07/18/world/europe/malaysian-airlines-plane-ukraine.html?emc=edit_th_20140718&nl=todaysheadlines&nlid=56381892


      GRABOVO, Ukraine — A Malaysia Airlines Boeing 777 with 298 people aboard exploded, crashed and burned on a flowered wheat field Thursday in a part of eastern Ukraine controlled by pro-Russia separatists, blown out of the sky at 33,000 feet by what Ukrainian and American officials described as a Russian-made antiaircraft missile.
      Ukraine accused the separatists of carrying out what it called a terrorist attack. American intelligence and military officials said the plane had been destroyed by a Russian SA-series missile, based on surveillance satellite data that showed the final trajectory and impact of the missile but not its point of origin.
      There were strong indications that those responsible may have errantly downed what they had thought was a military aircraft only to discover, to their shock, that they had struck a civilian airliner. Everyone aboard was killed, their corpses littered among wreckage that smoldered late into the summer night.

      Russia’s president, Vladimir V. Putin, blamed Ukraine’s government for creating what he called conditions for insurgency in eastern Ukraine, where separatists have bragged about shooting down at least three Ukrainian military aircraft. But Mr. Putin did not specifically deny that a Russian-made weapon had felled the Malaysian jetliner.


      Flight Was Headed Toward Closed Routes
      PUBLISHED JULY 18
      The Malaysian plane was flying on an active route used by commercial airlines every day. Hours before the crash, Russia closed four airways near the Ukrainian border, including one that was a continuation of Flight 17’s route.Related Maps and Multimedia »
      Sources: Eurocontrol; Federal Aviation Administration


      Whatever the cause, the news of the crashed plane, with a passenger manifest that spanned at least nine countries, elevated the insurgency into a new international crisis. The day before, the United States had slapped new sanctions on Russia for its support of the pro-Kremlin insurgency, which has brought East-West relations to their lowest point in many years.
      Making the crash even more of a shock, it was the second time within months that Malaysia Airlines had suffered a mass-casualty flight disaster with international intrigue — and with the same model plane, a Boeing 777-200ER.
      The government of Malaysia’s prime minister, Najib Razak, is still reeling from the unexplained disappearance of Flight 370 over the Indian Ocean in March. Mr. Najib said he was stupefied at the news of Flight 17, which had been bound for Kuala Lumpur, the Malaysian capital, from Amsterdam with 283 passengers, including three infants, and 15 crew members. Aviation officials said the plane had been traveling an approved and heavily trafficked route over eastern Ukraine, about 20 miles from the Russia border, when it vanished from radar screens with no distress signal.
      “This is a tragic day in what has already been a tragic year for Malaysia,” Mr. Najib told reporters in a televised statement from Kuala Lumpur. “If it transpires that the plane was indeed shot down, we insist that the perpetrators must swiftly be brought to justice.”
      Mr. Najib said he had spoken with the leaders of Ukraine and the Netherlands, who promised their cooperation. He also said that he had spoken with President Obama, and that “he and I both agreed that the investigation must not be hindered in any way.” The remark seemed to point to concerns about evidence tampering at the crash site, which is in an area controlled by pro-Russia insurgents.
      Continue reading the main storyVideo

      Ukraine released what it said was audio of phone calls between rebels and Russian officers. In one call, a rebel is heard saying, “We have just shot down a plane.”
       Publish DateJuly 18, 2014.
      Mr. Obama and Mr. Putin also spoke about the disaster and the broader Ukraine crisis, White House officials said, and Mr. Putin expressed his condolences. But in a statement quoted by Russia’s RIA Novosti news agency, Mr. Putin said, “This tragedy would not have happened if there was peace in the country, if military operations had not resumed in the southeast of Ukraine.”
      Continue reading the main story

      The United Nations Security Council scheduled a meeting on the Ukraine crisis for Friday morning.
      Adding to Ukrainian and Western suspicions that pro-Russia separatists were culpable, Ukraine’s intelligence agency, the State Security Service, known as the S.B.U., released audio from what it said were intercepted phone calls between separatist rebels and Russian military intelligence officers on Thursday. In the audio, the separatists appeared to acknowledge shooting down a civilian plane.
      The Ukrainian Foreign Ministry sent reporters a link to the edited audio of the calls, with English subtitles, posted on YouTube by the S.B.U.
      According to a translation of the Russian audio by the English-language Kyiv Post, the recording begins with a separatist commander, identified as Igor Bezler, telling a Russian military intelligence official, “We have just shot down a plane.”
      Photo

      Separatists at the site of the crash of Malaysia Airlines Flight 17, near the settlement of Grabovo. The region has been roiled by fighting between pro-Russian militants and the Ukrainian government, and at least one military aircraft has been shot down. CreditMaxim Zmeyev/Reuters
      In another call, a man who seems to be at the scene of the crash says that a group of Cossack militiamen shot down the plane. He adds that it was a passenger jet and that the debris contains no sign of military equipment. Asked if there are any weapons, he says: “Absolutely nothing. Civilian items, medical equipment, towels, toilet paper.”
      Asked if there are any documents among the debris, the man says, “Yes, of one Indonesian student.”
      Myroslava Petsa, a Ukrainian journalist in Kiev, said that the people in the audio sounded shocked by what they had found in the wreckage.
      By Thursday night, American intelligence analysts were increasingly focused on a theory that rebels had used a Russian-made SA-11 surface-to-air missile system to shoot down the aircraft and operated on their own fire-control radar, outside the checks and balances of the national Ukrainian air-defense network.
      “Everything we have, and it is not much, says separatists,” a senior Pentagon official said. “That said, there’s still a lot of conjecture.”
      Photo

      The crash site of a Malaysia Airlines 777 carrying 298 people in the Donetsk region of Ukraine.CreditDmitry Lovetsky/Associated Press
      Russian troops, who have been deployed along the border with eastern Ukraine, have similar SA-11 systems, as well as larger weapons known as SA-20s, Pentagon officials said.
      Petro O. Poroshenko, Ukraine’s president, said he had called the Dutch prime minister, Mark Rutte, to express his condolences and to invite Dutch experts to assist in the investigation. “I would like to note that we are calling this not an incident, not a catastrophe, but a terrorist act,” Mr. Poroshenko said.
      Reporters arriving at the scene near the town of Grabovo described dozens of lifeless bodies strewn about, many intact, in a field dotted with purple flowers, and remnants of the plane scattered across a road lined with fire engines and emergency vehicles. “It fell down in pieces,” one rescue worker said as tents were set up to gather the dead. The carcass of the plane was still smoldering, and rescue workers moved through the dark field with flashlights.
      For months, eastern Ukraine has been the scene of a violent pro-Russia separatist uprising. Rebels have claimed responsibility for attacking a Ukrainian military jet as it landed in the city of Luhansk on June 14, and for felling an AN-26 transport plane on Monday and an SU-25 fighter jet on Wednesday. But this would be the first commercial airline disaster to result from the hostilities.
      Despite the turmoil, the commercial airspace over eastern Ukraine is heavily trafficked and has remained open. Questions are likely to be raised in the coming days about why the traffic line, which is controlled by Ukraine and Russia, was not closed earlier.
      Continue reading the main storyVideo

      PLAY VIDEO|1:02

      Amateur Video of Malaysia Airlines Crash

      Amateur Video of Malaysia Airlines Crash

      After a Malaysia Airlines jet crashed in Ukraine on Thursday, several amateur videos were posted online.
       Publish DateJuly 17, 2014.
      With the news of the crash on Thursday, Ukraine declared the eastern part of the country a no-fly zone. American and European carriers rerouted their flights, and Aeroflot, Russia’s national carrier, announced that it had suspended all flights to Ukraine for at least three days. The conspicuous exception was Aeroflot flights to Crimea, the southern peninsula that Russiaannexed in March, a pivotal point in the Ukraine crisis.
      It was unclear late Thursday whether any Americans had been aboard the flight. Russia’s Interfax news agency said there had been no Russians aboard.
      In Amsterdam, a Malaysia Airlines official, Huib Gorter, said the plane had carried 154 Dutch passengers; 45 Malaysians, including the crew; and 27 Australians, 12 Indonesians, nine Britons, four Belgians, four Germans, three Filipinos and one Canadian. The rest of the passengers had not been identified.
      Prof. David Cooper, director of the Kirby Institute at the University of New South Wales in Sydney, Australia, said that a prominent AIDS researcher traveling to the 20th International AIDS conference in Melbourne was among those on the flight.
      Professor Cooper, who was heading to the conference from Sydney, said he was unaware how many other passengers were also on their way to the conference, which is scheduled to start on Sunday.
      Andrei Purgin, deputy prime minister of the Donetsk People’s Republic, an insurgent group in eastern Ukraine, denied in a telephone interview that the rebels had anything to do with the crash. He said that they had shot down Ukrainian planes before but that their antiaircraft weapons could reach only to around 4,000 meters, far below the cruising level of passenger jets.
      “We don’t have the technical ability to hit a plane at that height,” Mr. Purgin said.
      Mr. Purgin did not rule out the possibility that Ukrainian forces themselves had shot down the plane. “Remember the Black Sea plane disaster,” he said, referring to the 2001 crash of a Siberia Airlines passenger jet, bound for Novosibirsk from Tel Aviv, that the Ukrainians shot down by accident during a military training exercise.
      In comments broadcast on Ukrainian television, Vitali Klitschko, the mayor of Kiev, said the crash illustrated the threat to peace in Europe posed by the fighting in eastern Ukraine. “This is not just a local conflict in Donetsk and Luhansk, but a full-scale war in the center of Europe,” he said. “I’m certain the international community this time will pay attention and understand.”
      Correction: July 17, 2014 
      An earlier version of this article misspelled the surname of Ukraine’s president. He is Petro O. Poroshenko, not Poroschenko. An earlier version also misstated the title of Najib Razak. He is the prime minister, not president, of Malaysia. The article had also misstated the direction a Siberian Airlines passenger jet was flying before it was shot down by Ukraine in 2001. It was flying from Israel, not to it.

      Sabrina Tavernise reported from Grabovo, Ukraine, Eric Schmitt from Washington, and Rick Gladstone from New York. Reporting was contributed by Neil MacFarquhar, David M. Herszenhorn and Andrew E. Kramer from Moscow; Noah Sneider from Grabovo; Michael D. Shear and Peter Baker from Washington; Thomas Erdbrink from Amsterdam; C. J. Chivers from the United States; Michelle Innis from Sydney, Australia; and Masha Goncharova and Robert Mackey from New York.

      Thursday, July 17, 2014

      Rupert Murdoch Made $80 Billion Offer for Time Warner - TIME

      http://time.com/2991384/murdoch-time-warner-bid/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

      July 16, 2014
          
      Rupert Murdoch, Executive Chairman of News Corp. and Chairman and CEO of 21st Century Fox, attends the Allen & Co. 32nd annual Media and Technology Conference, in Sun Valley, Idaho, July 10, 2014.Gary He—Insider Images/Polaris

      Time Warner rejected an offer that could have reshaped the media landscape, the New York Times reports


      Updated 9:20am ET
      Rupert Murdoch’s media conglomerate Twenty-First Century Fox admitted Wednesday to making an unsuccessful $80 billion offer in recent weeks to take over Time Warner.
      The New York Times reported that Chase Carey, the president of Fox and longtime top deputy to Rupert Murdoch, met with Time Warner’s chief executive Jeff Bewkes in early June.
      After the private meeting, Fox reportedly made a formal takeover proposal worth $85 in stock and cash for each Time Warner share, amounting to about a 25 percent premium to Time Warner’s stock price at the time. Time Warner’s board sent Fox a brief letter after discussing the proposal, saying that the company would remain independent.
      Fox made a statement Wednesday after the Times reported the proposal: “21st Century Fox can confirm that we made a formal proposal to Time Warner last month to combine the two companies. The Time Warner Board of Directors declined to pursue our proposal. We are not currently in any discussions with Time Warner.”
      Time Warner said early Wednesday that there were considerable “strategic, operational, and regulatory risks” to being acquired by Twenty-First Century Fox, adding that rejecting the proposal was in the best interests of its shareholders.
      The deal would have effectively put Murdoch at the head of a portfolio of major household media brands, including TNT, TBS, HBO, Warner Brothers, Fox News and others, as well as assets controlled through his company News Corp., like the Wall StreetJournal and HarperCollins.
      CNN, a subsidiary of Time Warner, would reportedly have been spun off as part of a deal because of possible antitrust concerns, as it competes with Murdoch’s Fox News.
      Murdoch has built a global media empire over nearly fifty years that includes television channels, newspapers and studios, often by making deals that were at first rejected.

      TIME.com is owned by Time Inc, which was spun off from Time Warner earlier this year.

      Wednesday, July 16, 2014

      China’s Economy Continues to Defy Gravity. That May Not Be a Good Thing - TIME

      http://time.com/2990640/chinas-economy-continues-to-defy-gravity-that-may-not-be-a-good-thing/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

          
      A container truck drives past the container area at the Yangshan Deep Water Port, part of the Shanghai Free-Trade Zone, on Sept. 26, 2013Carlos Barria—Reuters

      China announced better-than-expected growth over the second quarter. Despite optimistic official figures, there's plenty to worry about in the world's second largest economy


      China announced its GDP figures for the second quarter on Wednesday and — surprise, surprise — they were better than expected. Growth clocked in at 7.5% — which just so happens to be the government’s official target. The statistics will likely give a boost to sentiment globally. Investors have been worried that a slowing China would hit the entire world economy. More buoyant Chinese growth will probably calm those jitters.

      Yet China is also something of a puzzle. Somehow the economy continues to power through all sorts of issues that should be slowing it down. The all-important property sector, which accounts for some 16% of its GDP, is undergoing a major downturn. For most of the year, the government has tried to control dangerous levels of debt in the economy and clamp down on “shadow banking,” which encompasses alternative financial networks and lending practices. Tighter credit should translate into slower growth. Beijing is also supposedly on a mission to streamline bloated industries like steel by eliminating excess capacity, which, though healthy for the future prospects of the economy, should also act as a drag on short-term growth. So should President Xi Jinping’s ongoing anticorruptioncampaign, which in theory should be disrupting policymaking and creating uncertainty.


      So how is China defying gravity once again? There is always the perennial suspicion that the numbers are inflated. Capital Economics looks at statistics that aren’t as easily manipulated as GDP, such as freight shipments and electricity output, to gauge the economy’s performance, and figures GDP has probably been expanding more like 6% in recent quarters. But economists are crediting the latest growth rate to government stimulus, carefully targeted at infrastructure and public housing, both investments the economy still needs.
      This is a smart move. The Chinese government has ample ability to keep growth humming while it attempts to implement more substantial reforms. However, the reliance on stimulus also raises doubts about what might be ahead. Some economists see growth “bottoming out” and a revival continuing through the rest of the year. Others believe continued headwinds, especially the struggles of the property sector, are too strong for the government to counter — without even greater largesse. That might be on its way. New loans made in June were the highest in five years, according to research from Barclays, which suggests that the government is loosening up credit once again.
      That begs the most important question facing China’s economy right now: Will Beijing sacrifice reform for growth? So far, China’s leaders have controlled their usual urge to pump up growth rates, an indication they realize the dangers lurking in the economy. Since the 2008 financial crisis, debt in China has risen to dizzying heights. A recent report from Standard & Poor’s calculated that China’s corporate sector has more debt outstanding than any other in the world. Combined with tremendous excess capacity, a risky increase in shadow banking and signs of a property bubble, the Chinese economy is rampant with problems that threaten its future. Some economists believe Beijing needs to address these ills and resist efforts to use credit and other stimulus to rev up growth — or else face a possible financial crisis.
      Yet the reforms necessary to fix these problems are coming very slowly. Beijing has pledged to undertake a bold slate of measures — to liberalize interest rates and other prices, improve the performance of bloated state-owned enterprises, open protected markets to competition, strengthen the financial sector and allow private enterprise greater sway in the economy. All of these steps, if implemented, would make the Chinese economy healthier and more advanced. But so far, only the most minor of experiments have started, such as the approval of a handful of small private banks and the opening of a free-trade zone in Shanghai to tinker with more open capital flows. Even more, once the greater reforms fall into place (if they ever do), it could take years before they have an impact on the economy.
      There are two ways of looking at what’s going on. One is that China’s policymakers are wisely going slow on potentially painful reforms while the economy works out some of its messiest problems in an environment of relatively stable growth. The other, less optimistic, view is that the problems rotting away at the Chinese economy are so complex and entrenched that policymakers are prioritizing continuing growth over tough reforms. In that scenario, China’s broken-down growth model will be kept alive with debt and government spending, while the fundamental change necessary to take China to the next level stalls.

      I continue to be afraid of the latter. And with China the world’s second largest economy, we all should be too.

      Tuesday, July 15, 2014

      10 Best Fast Food Restaurants in America - Financial Times

      http://time.com/2981596/best-fast-food-restaurants-america/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

      5:45 AM ET
          
      In-N-Out Burger's signature Double-Double cheeseburger and french fries.Bloomberg—Bloomberg via Getty Images

      There are a few surprises on the Consumer Reports’ list this year of the best fast food restaurants in America – and a few names that are not that well known nationally.

      The bottom line is that whether we’re aiming to eat pizza, burgers, chicken or grilled sandwiches, Americans want a lot more than just food on the cheap when we eat out. We care about the quality and freshness of our food; we care about the quality of the service we receive. These priorities when choosing a destination for grabbing a quick bite emerged in Consumer Reports’ most recent ranking of our nation’s fast food restaurants.

      The magazine asked more than 32,000 readers – who ate more than 96,000 meals at 65 chains – what they thought. The less ubiquitous fast food restaurants and the regional ones were the most popular with diners.
      Respondents looked at five criteria to rank each chain: food quality and freshness, value, politeness, speed of service, and cleanliness of the dining area. Based on these criteria, they had to come up with a grade out of 100.
      The top winner: In-N-Out Burger, which has a cult following of fans from across the country. Its restaurants are only available in a handful of states, mostly on the West Coast, which means that for many Americans, vacationing in California often includes paying a visit to an In-N-Out Burger restaurant.
      Other names that made the list of the best fast food restaurants include Chick-fil-A and Potbelly Sandwich Shop, but most of the other chains on the list aren’t that well known.
      “You’ll find many fine national (defined as operating in six or more states) and regional restaurants,” noted Consumer Reports.

      10) Culver’s

      Consumer Reports Grade: 84/100
      Started in Wisconsin in the 1980s, Culver’s, which offers fresh frozen custard and burgers, is still predominantly in the Midwest but has also expanded into Texas. Culver’s also features its own brand of root beer. Politeness of its staffs and dining-area cleanliness were among its highlights.

      9) Rubio’s Fresh Mexican Grill

      Consumer Reports Grade: 84/100
      Rubio’s, which was founded in California in the 1980s, offers Mexican food using fresh sustainable seafood with an emphasis on tacos. The company operates 190 locations in California, Arizona, Utah, Colorado and Nevada. Noteworthy for Rubio’s: quality of the food, its staffs’ politeness, and cleanliness of dining areas.

      8) Potbelly Sandwich Shop

      Consumer Reports Grade: 84/100
      Another fast food chain that specializes in subs, Potbelly, which was founded in Chicago in 1977, has locations in 23 states. It often has local musicians performing live at a Potbelly Sandwich Shop – whose staffs’ politeness helped it earn this spot on the list.

      7) Firehouse Subs

      Consumer Reports Grade: 84/100
      Founded just 20 years ago in Jacksonville, Florida, by former firefighters, Firehouse Subs specializes in hot subs and also offers subs and salads under 500 calories. It has more than 700 restaurants in 36 states. It earned this spot on the list because of its staffs’ politeness and the cleanliness of its dining areas.

      6) Chick-Fil-A

      Consumer Reports Grade: 85/100
      Chick-fil-A, which is headquartered in Atlanta and specializes in chicken sandwiches, made the news three years ago because of its opposition to same-sex marriage legislation – but it also made theConsumer Reports list of the best fast food restaurants in America for the quality of its food and of its service.

      5) Jason’s Deli

      Consumer Reports Grade: 85/100
      Founded in Texas in 1976, Jason’s Deli offers a deli-style menu with sandwiches, salads and soups. It boasts 240 locations across 28 states. In the last decade, the company has eliminated trans fats, high fructose corn syrup and MSG from all of its food. It rated highly for its food quality, politeness of its staff, and the cleanliness of its dining areas.

      4) The Habit Burger Grill

      Consumer Reports Grade: 86/100
      The Habit Burger Grill was started in California in 1969 and like In-N-Out Burger, it has remained on the small side, with only 100 locations in California, Arizona and Utah. Food quality, politeness of staff, and cleanliness all rated high for this restaurant.

      3) Portillo’s Hot Dogs

      Consumer Reports Grade: 87/100
      Portillo’s specializes in Chicago-style hot dogs and sandwiches. It has less than 50 locations, mostly in the Chicago area, as well as in Arizona and California, but you can order some items online. Like the other winners on this list, its food quality, politeness of staff, and cleanliness of its dining areas stood out.

      2) Papa Murphy’s Take N’Bake Pizza

      Consumer Reports Grade: 88/100
      Papa Murphy’s, which ranks as the best pizza fast food restaurant in the country in this list, is actually a take-and-bake pizzeria. Customers order their pizza in the store but take it home to bake, reducing the restaurant’s costs significantly. The company, which has more than 1,400 locations in the U.S., went public in May, and is noted for the quality of its food, politeness of its staff, and the speed of its service.

      1) In-N-Out Burger


      Consumer Reports Grade: 88/100
      One of the cruelest April Fool’s jokes to New Yorkers a few years ago was the announcement by an anonymous prankster that In-N-Out Burger was going to open a location in the Big Apple. The top burger chain in the country, however, actually wants to remain small and confines itself to the West Coast. The quality of its food helped it win this highly coveted spot.

      Monday, July 14, 2014

      Yes, You Can Be Too Talented for Your Job - TIME

      http://time.com/2977435/yes-you-can-be-too-talented-for-your-job/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

      6:45 AM ET
          

      If you always sort of suspected that some of the problems you encountered at work were because you were just too smart for the job — well, you may be onto something. New research looks at how people perform when they’re part of a team, and it turns out there is such a thing as too much talent.
      The study’s lead author, INSEAD assistant professor of organizational behavior Roderick Swaab, writes that almost everybody has a linear view of talent: that is, if a little bit is good, a lot must be better. But an analysis of how well sports teams perform based on the overall amount of talent among members finds that it doesn’t usually work like that — and Swaab says this has important implications for organizations and management.
      “[They] are similar to organizational teams that require a high level of coordination between team members,” Swaab says. Soccer and basketball teams have parallels to consulting and strategy groups, emergency response units and surgery teams, he says, whereas baseball teams resemble sales departments.
      More talent translates to better performance, up to a point, but Swaab finds that after you hit a certain level, adding more talent doesn’t produce as much of a boost to results. And if the coach (or boss, or company) keeps piling on more talent — hiring away superstars from rivals, bringing on new members who are at the top of their game — the effect actually becomes negative.
      “Teams with levels of top talent that are too high perform worse than teams with lower levels of top talent because they coordinate less effectively,” Swaab writes.
      It’s basically scientific proof of the old saying, “Too many cooks spoil the broth.”
      These top performers are driven to succeed, but looking out for number one is a big part of that strategy, and when you have a lot of people with that mentality on the same team where there can only be one actual number one, you wind up with a situation where people start focusing on their own status within the group and their own performance rather than doing what’s best or most productive for the team as a whole.
      “It is likely that top talented individuals who are perceived as having high status are more dominant and competitive because they want to maintain the status quo and keep their high status, especially when they need to work with others who are also perceived as having high status,” Swaab says.
      In sports like basketball, where every point relies heavily on everyone pitching in all at once, too much talent can be detrimental because of this clash between individual and team priorities. “When teams need to come together, more talent can tear them apart,” Swaab writes. But in sports like baseball, where the score is earned on more of an individual basis, teams don’t run into a problem with too much talent having a negative effect on performance, although after a certain point, the benefits of adding more talent grow smaller.
      So if you suspect your workplace is like this, the research offers one possible solution in this comparison of how talent affects performance across different sports. You might need to shift your focus to work more independently if what Swaab calls “status conflicts” are detracting from your productivity.
      “When coordination and collaboration with others is required to perform well, the superior task expertise of top talent is not sufficient,” he says. “Top talented individuals will also need to learn how to cooperate effectively” as a team.

      Sunday, July 13, 2014

      Negative views of Russia and Putin on the rise globally - BBC NEWS

      http://www.bbc.com/news/magazine-28233825

      12 July 2014 Last updated at 02:08 BST
      Russia's global image is increasingly negative, according to a surveyfrom the Pew Research Center.
      This is despite Russians believing that President Vladimir Putin's actions in Ukraine would improve the country's reputation abroad.
      Pew Research found that increasing numbers of people around the world held unfavourable views of Russia and its president, especially in Europe and the United States.
      And as the violence in Ukraine continues, 60% of people there had negative views of Russia - a huge increase from 11% in 2011.
      The BBC's Ashley Semler looks at the results.
      Edited by Dave Mayers

      Saturday, July 12, 2014

      Bill Gates's Favorite Business Book - Wall Street Journal - essay by Bill Gates himself

      http://online.wsj.com/articles/bill-gatess-favorite-business-book-1405088228?mod=e2fb

      

      John Brooks's 1960s collection 'Business Adventures' still offers many insights into running a strong business

    • By 
    • BILL GATES 
      CONNECT
      Updated July 11, 2014 6:20 p.m. ET
      The rules for running a strong business haven't changed, says Bill Gates. John Keatley for The Wall Street Journal
      Not long after I first met Warren Buffett back in 1991, I asked him to recommend his favorite book about business. He didn't miss a beat: "It's 'Business Adventures,' by John Brooks, " he said. "I'll send you my copy." I was intrigued: I had never heard of "Business Adventures" or John Brooks.
      Today, more than two decades after Warren lent it to me—and more than four decades after it was first published—"Business Adventures" remains the best business book I've ever read. John Brooks is still my favorite business writer. (And Warren, if you're reading this, I still have your copy.)
      A skeptic might wonder how this out-of-print collection of New Yorker articles from the 1960s could have anything to say about business today. After all, in 1966, when Brooks profiled Xerox, XRX +2.58% the company's top-of-the-line copier weighed 650 pounds, cost $27,500, required a full-time operator and came with a fire extinguisher because of its tendency to overheat. A lot has changed since then.
      It's certainly true that many of the particulars of business have changed. But the fundamentals have not. Brooks's deeper insights about business are just as relevant today as they were back then. In terms of its longevity, "Business Adventures" stands alongside Benjamin Graham's "The Intelligent Investor," the 1949 book that Warren says is the best book on investing that he has ever read.
      Brooks grew up in New Jersey during the Depression, attended Princeton University (where he roomed with future Secretary of State George Shultz ) and, after serving in World War II, turned to journalism with dreams of becoming a novelist. In addition to his magazine work, he published a handful of books, only some of which are still in print. He died in 1993.
      As the journalist Michael Lewis wrote in his foreword to Brooks's book "The Go-Go Years," even when Brooks got things wrong, "at least he got them wrong in an interesting way." Unlike a lot of today's business writers, Brooks didn't boil his work down into pat how-to lessons or simplistic explanations for success. (How many times have you read that some company is taking off because they give their employees free lunch?) You won't find any listicles in his work. Brooks wrote long articles that frame an issue, explore it in depth, introduce a few compelling characters and show how things went for them.
      In one called "The Impacted Philosophers," he uses a case of price-fixing at General Electric GE +1.34% to explore miscommunication—sometimes intentional miscommunication—up and down the corporate ladder. It was, he writes, "a breakdown in intramural communication so drastic as to make the building of the Tower of Babel seem a triumph of organizational rapport."
      In "The Fate of the Edsel," he refutes the popular explanations for why Ford's flagship car was such a historic flop. It wasn't because the car was overly poll-tested; it was because Ford's executives only pretended to be acting on what the polls said. "Although the Edsel was supposed to be advertised, and otherwise promoted, strictly on the basis of preferences expressed in polls, some old-fashioned snake-oil selling methods, intuitive rather than scientific, crept in." It certainly didn't help that the first Edsels "were delivered with oil leaks, sticking hoods, trunks that wouldn't open and push buttons that…couldn't be budged with a hammer."
      One of Brooks's most instructive stories is "Xerox Xerox Xerox Xerox." (The headline alone belongs in the Journalism Hall of Fame.) The example of Xerox is one that everyone in the tech industry should study. Starting in the early '70s, Xerox funded a huge amount of R&D that wasn't directly related to copiers, including research that led to Ethernet networks and the first graphical user interface (the look you know today as Windows or OS X).
      But because Xerox executives didn't think these ideas fit their core business, they chose not to turn them into marketable products. Others stepped in and went to market with products based on the research that Xerox had done. Both Apple andMicrosoft, MSFT +0.97% for example, drew on Xerox's work on graphical user interfaces.
      I know I'm not alone in seeing this decision as a mistake on Xerox's part. I was certainly determined to avoid it at Microsoft. I pushed hard to make sure that we kept thinking big about the opportunities created by our research in areas like computer vision and speech recognition. Many other journalists have written about Xerox, but Brooks's article tells an important part of the company's early story. He shows how it was built on original, outside-the-box thinking, which makes it all the more surprising that as Xerox matured, it would miss out on unconventional ideas developed by its own researchers.
      Brooks was also a masterful storyteller. He could craft a page-turner like "The Last Great Corner," about the man who founded the Piggly Wiggly grocery chain and his attempt to foil investors intent on shorting his company's stock. I couldn't wait to see how things turned out for him. (Here's a spoiler: not well.) Other times you can almost hear Brooks chuckling as he tells some absurd story. There's a passage in "The Fate of the Edsel" in which a PR man for Ford organizes a fashion show for the wives of newspaper reporters. The host of the fashion show turns out to be a female impersonator, which might seem edgy today but would have been scandalous for a major U.S. corporation in 1957. Brooks notes that the reporters' wives "were able to give their husbands an extra paragraph or two for their stories."
      Brooks's work is a great reminder that the rules for running a strong business and creating value haven't changed. For one thing, there's an essential human factor in every business endeavor. It doesn't matter if you have a perfect product, production plan and marketing pitch; you'll still need the right people to lead and implement those plans.
      That is a lesson you learn quickly in business, and I've been reminded of it at every step of my career, first at Microsoft and now at the foundation. Which people are you going to back? Do their roles fit their abilities? Do they have both the IQ and EQ to succeed? Warren is famous for this approach at Berkshire Hathaway, BRKB +0.14%where he buys great businesses run by wonderful managers and then gets out of the way.
      "Business Adventures" is as much about the strengths and weaknesses of leaders in challenging circumstances as it is about the particulars of one business or another. In that sense, it is still relevant not despite its age but because of it. John Brooks's work is really about human nature, which is why it has stood the test of time.
      — Mr. Gates is the co-chairman of the Bill & Melinda Gates Foundation and the co-founder of Microsoft.

      Friday, July 11, 2014

      The U.S. Has Good Reason to Be Fed Up With China’s Economic Policy - TIME

      http://time.com/2975757/the-u-s-has-good-reason-to-be-fed-up-with-chinas-economic-policy/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

          
      U.S. Treasury Secretary Jacob Lew listens during a panel discussion at the North American Energy Summit in the Manhattan borough of New York, June 10, 2014.Adam Hunger—Reuters

      Talks in Beijing between American and Chinese officials made little progress on key economic issues


      No one expected big breakthroughs from the latest round of the annual U.S.-China Strategic and Economic Dialogue, held this week in Beijing. But the results didn’t even meet those lowly expectations. After two days of talks with Chinese officials, U.S. Treasury Secretary Jacob Lew left empty-handed. A much-coveted but long-discussed treaty to boost investment between the two countries only inched forward. Nor did China offer firm commitments to further liberalize its currency — an issue of great importance to Washington. That apparently left Lew searching for something positive to say to his Chinese hosts. “The commitments China has made here in Beijing over the past two days reflect the economic reform goals set forth” previously, Lew said on Thursday, “and we look forward to future progress.”

      Washington has been waiting for progress for quite a while. U.S. officials have been repeatedly pressing Beijing to open markets wider to American companies, improve the protection of intellectual property, and make the economy more transparent and market-oriented. But in return, Washington just gets vague pledges and expressions of caution. Meanwhile, the two continue to bicker over trade practices — most notably these days, Washington’s punitive tariffs on Chinese solar panels. The stalemate in economic ties between the U.S. and China is symbolic of the greater strain between the two nations. China has responded angrily to U.S. charges that its military cyberspies on American companies, while officials from both sides have exchanged hostile barbs over China’s territorial disputes with Japan and other neighbors. Relations between the U.S. and China are arguably at their lowest point in years.
      That’s bad news. What happens between the world’s two largest economies has ripple effects around the world. Each country, furthermore, needs the other for its own economic growth. U.S. companies require access to Chinese consumers to keep their profits growing, while China badly needs advanced U.S. technology to upgrade its industry. Still, the two sides often look upon each other warily. As China’s clout increases, the U.S. is frustrated that Beijing is not making the Chinese economy more open or playing by the perceived rules of international commerce. Beijing’s policymakers get upset when Washington badgers them on reforms they consider none of America’s business.
      But the U.S. has good reason to be annoyed. Many of the issues that matter to Washington have been dragging on interminably with no resolution in sight. Take, for instance, the sticky issue of China’s currency, the yuan. Washington has complained for many years that Beijing manipulates the value of the yuan to promote its own exports, and during this week’s meetings, Lew again pressed his Chinese counterparts to make the process by which it is valued more market-driven. Though I have written on many occasions that the U.S. has exaggerated the impact the yuan’s value has had on the country’s trade deficit with China, Lew has a right to be fed up with the slow pace of change. The Chinese have been blabbering about allowing market forces to determine the yuan’s exchange rate for ages, and the reform is considered an integral part of China’s greater goal of liberalizing capital flows in and out of the country. But the government still wields tremendous influence over the direction of the yuan — a degree of control is has been reluctant to relinquish, promises aside. In this week’s meetings, China offered only more excuses. “If we move too fast, we will be tripped by the demons of details,” Chinese Vice Premier Wang Yang cryptically responded to Lew. Instead, Wang said Beijing was looking for “balance.”
      “Balance,” however, has become Beijing-speak for “do nothing.” Currency reform is only one of many changes Chinese policymakers have promised, but never seem to implement. President Xi Jinping and his team have pledged to liberalize markets, fix the financial sector and allow private businessmen a bigger role in the economy. Economists swooned over a bold policy document released in November that committed the leadership to a sweeping reformation of China’s economic system. No one should expect such major changes to happen overnight, of course. But the fact is we’re still waiting for the process to really get started. Meanwhile, the Chinese economy is facing a host of unresolved problems that threaten its future. Growth has slowed, debt has mounted to dizzying levels, the financial sector is fundamentally flawed, and a property bubble appears to be bursting.

      What Lew wants to see from China is a true effort to overhaul an economic model that is badly broken. That would be good for China, the U.S., and everybody else.