Business news for Thu, 29 Nov 2007 & with words american+european. 4 news.

Japan is reluctantly embracing globalisation THROUGHOUT its history Japan has oscillated between openness to foreign ideas and fierce isolationism. This ambivalence is still reflected in its attitude to globalisation. Despite the worldwide presence of companies such as Toyota, Honda, Canon and Sony, Japan's integration into the world economy is surprisingly weak. Japan has the lowest levels of import penetration, inward foreign direct investment (FDI) and foreign workers in the OECD (see chart 8). Foreign affiliates' share of turnover in manufacturing and services, at 3% and 1% respectively, is the lowest in the OECD. Nor has Japan participated in the global wave of cross-border mergers and acquisitions (M&A). In 2004 the sale of companies in the European Union to foreign firms accounted for 47% of global M&A by value, and that of American firms for a further 22%. The Japanese share, by contrast, was just 2.3%. In an era of unprecedented mobility of people, as well as goods and services, Japan's net migration since the second world war has been approximately zero. And so on. ...

On trade or the exchange rate "LET China sleep, for when she wakes the world will shake." So, purportedly, said Napoleon some 200 years ago. In Beijing this week European leaders have been telling their Chinese counterparts that such unease is at risk of spreading. Once content to let the Americans do the worrying, the EU is joining in. In the build-up to an annual China-EU summit in Beijing on November 28th, European officials raised hackles by complaining about Chinese trade practices and exchange-rate policy in the kind of direct language that China had thought an annoying American trait. The European Commission's president, Jose Manuel Barroso, told Communist Party officials that the emergence of China risked being seen by Europeans "as a threat". Mr Barroso gave warning of "protectionist pressures which would be very difficult to contain" if nothing were done to curb the EU's huge trade deficit with China. ...

There is no Spanish or Italian solution to the problems of Iberia and Alitalia FOR all the brave talk of liberalisation, the airline business has yet to escape the bane of economic nationalism. American airlines will still be out of bounds to foreign ownership when the new "open skies" agreement with Europe comes into force next April. And within the European Union, although such obstacles officially do not exist, the reality is rather different. This week a EURO3.4 billion ($5 billion) consortium bid for Iberia, the Spanish "flag carrier" by British Airways (BA), Texas Pacific Group and three Spanish private-equity firms crumbled in the face of political resistance. Caja Madrid, a savings bank controlled by Madrid's regional government, raised its stake in Iberia to 23.3%. The move was designed to force BA, which owns 10%, to exercise pre-emption rights and raise its own stake, or back off. Having promised not to spend BA's cash on the bid, Willie Walsh, its chief executive, had no option but to retreat. ...

How long will banks worry about liquidity? WRITE-DOWNS of $45 billion, and billions more to come. A collapse in share prices that has destroyed even more value. The blood of two Wall Street chieftains and many more underlings on the carpet. The fallout from the credit crunch has been so intense that some feel a pain barrier may have been breached. On November 27th and 28th the S&P 500 posted its first consecutive daily gains since October, partly on hopes of a cut in American interest rates and on some rare good news about Citigroup. Abu Dhabi Investment Authority paid $7.5 billion for a 4.9% stake, boosting the bank's faltering capital ratio. But four months after they first seized up, the credit markets remain in a state of paralysis. The banks still have a long, hard slog ahead. Short-term interbank rates at which banks lend to each other, and which are a good gauge of concern, have risen steadily since mid-November. On Wednesday November 28th the two-month London Interbank-Offered Rate hit its highest level in euros since May 2001. Rates in euros and dollars tower obdurately above central-bank targets, despite announcements from both the European Central Bank and America's Federal Reserve that they will inject extra funds into the money markets. ...