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									                                                                                                                                                                                                                                          ARAB TIMES, TUESDAY, JUNE 7, 2011
    BUSINESS                                                                                                                                                                                                                                                                       39

 In this May 24,
2011 file photo,
    teachers and                                                                                   UK ‘tragedy’ repeat warned                                                        PC forecasts cut                                               GM eyes center
 others demon-
   strate against
proposed budg-                                                                               Treasury Secretary Timothy Geithner vowed not to repeat                     Research firm International Data Corp.                   General Motors says it will invest $130
      et cuts, that                                                                          the mistakes of Britain’s “light touch” financial regulation                expects sales of personal computers to                   million to consolidate global data opera-
would eliminate                                                                              Monday, as the United States and Europe continued to tan-                   grow 4.2 percent this year, down from a                  tions to its technical center in the Detroit
 many teaching                                                                               gle over banking reforms.                                                   previous forecast of 7.1 percent.                        suburb of Warren.
  and staff posi-                                                                               Speaking days after a senior European envoy pointedly                       The latest projection comes after IDC’s                  The company says the move will cre-
  tions and edu-                                                                             called on the United States to quicken the pace of reform,                  tally showed PC sales dropped by 1.1                     ate 25 jobs. GM will renovate an admin-
     cational pro-                                                                           Geithner said Washington did not want to see “another race                  percent in the first quarter compared to
grams through-                                                                               to the bottom around the world.”                                            last year.                                               istrative building to house the company’s
      out the Los                                                                               During a visit to the United States on Friday, EU internal                  The company says the slow economic                    computer infrastructure. GM says the
Angeles Unified                                                                              market commissioner Michel Barnier pressed Washington to                    recovery, competition from smartphones                   center will help it keep pace as comput-
 School District,                                                                            fully implement laws aimed at mending the banking system                    and tablets and the fact that most house-                ers are used more to design vehicles and
at district head-                                                                            — after shoddy practices plunged the world economy into                     holds in the developed world already                     for safety, fuel economy and other func-
 quarters in Los                                                                             crisis. (AFP)                                                               have PCs are holding back sales. (AP)                    tions. (AP)
   Angeles. (AP)

                                                                                                International, inter-firm cooperation vital

Stigma puts many firms off reporting cyber attacks
LONDON, June 6, (RTRS): Wary of                  sure.                                       profile attacks. Sony probably suf-            Sarkissian, CEO of security firm               new national policies on cyber securi-           were losing so much money through
alarming customers, many firms never                “One of the reasons we do not know       fered the worst damage to its reputa-          Knightsbridge Cybersystems.                    ty — such as the new US doctrine                 fraud it no longer made sense to pass
report the kind of cyber attacks suf-            the scale of this is that organisations     tion, with the personal details of mil-           “If you can’t value the cost of the         published by the White House — are               the problem from company to compa-
fered by Sony, Google and others —               are embarrassed to reveal the impact,”      lions of Playstation users compro-             attacks, you don’t know how much               welcome, more global coordination is             ny,” said Martin Sutherland, CEO of
and as long as the stigma holds, tack-           BT chairman Sir Michael Rake said in        mised and hackers crowing about                you can spend to prevent them ... We           needed between governments and                   defence firm BAE subsidiary Detica.
ling the growing problem may prove               a speech.                                   other data losses.                             need a way of sharing information              firms.                                           “I think cyber is a few years behind
impossible. Data theft is a menace that             Speakers called for greater trans-          Other high-profile victims of hack-         anonymously.”                                     “Critical to this is the free passage         that.”
looms especially large, given compa-             parency, but few were willing to dis-       ing attempts include defence giant                Some argue the answer may be                of information, not just between com-               But some experts say deterring
nies’ increasing reliance on online              cuss attacks on their own systems in        Lockheed Martin and Internet firm              some form of regulation in which               panies and also between governments              many cyber attacks is often not all that
storage. At risk can be cutting-edge             detail publicly. Sometimes, experts         Google, with security experts in both          companies are required to divulge              and intelligence agencies,” said                 difficult. The trick, they say, is to raise
copyrights, privileged commercial                say, that extends to simply not looking     cases pointing the finger at hackers in        much more about security breaches.             Matthew Kirk, external relations man-            their defences to the level where it is
information such as tips on takeover             for problems.                               China. Chinese officials angrily deny          But in the short term, experts say the         ager for UK-listed mobile telecom                no longer cost-effective for hackers to
bids and — perhaps most crucially for               “Companies often don’t understand        this, particularly any suggestion of           importance of good electronic                  operator Vodafone.                               penetrate and they simply seek anoth-
a business’s reputation — customers’             the threats and if they do, they hide       official complicity.                           defences is finally getting through.              “Understandably, companies are not            er target.
personal details.                                it,” said Natalia Kapersky, co-founder         But most specialists say that is only          “I think we’ve reached a tipping            used to sharing information with their              Matt Bross, a former security chief
   Computer security and corporate               of Russian software security firm           the tip of the iceberg, with little con-       point,” Melissa Hathaway, a former             closest competitors but they are the             at credit card firm MasterCard whos
intelligence specialists say they are            Kapersky Labs.                              sensus on tackling the problem.                US National Security Council cyber             ones they need to share with the                 now chief technical officer for
often sworn to secrecy by firms scared              While some accuse IT security               Firms often understand so little            security chief who now heads her own           most,” he said.                                  Chinese telecom company Huawei,
of the potential reaction of corporate           experts of talking up the threat to         about the threat facing them that they         consultancy, told Reuters at the con-             Several security experts pointed to           said his approach to stopping hacking
partners and investors.                          boost business, most agree the prob-        do not even know how much money                ference.                                       the example of the insurance sector,             had always been simple.
   Some companies, said experts gath-            lem is on the rise. Hackers — whether       they are losing. The difficulty in put-           “With the recent breaches ... and           where firms share information in a                  “The aim was to raise the cost of
ered at a cyber security conference in           criminals, state-linked spies or those      ting a price on lost prestige compli-          increased reporting of the issues firms        way that still largely allows open com-          entry so copying a credit card cost more
London last week organised by the                in between — are all seen increasing        cates this further.                            will be working harder to manage               petition.                                        than forging $100 bill,” he said. “If you
EastWest Spell Institute, may not                in sophistication.                             “Everyone is getting attacked but no        their risks and limit their liability.”           “What happened with the insurance             raise the cost of entry of a threat, the
know the extent of their own expo-                  Recent weeks saw a host of high-         one is talking about it,” said Vartan             But global companies say that while         industry was that they realised they             threat will go another way.”

                      Accord, discord to pursue
                                                                                             IMF backs UK deficit reduction
    Parties maneuvering
    on debt, health care                                                                     policy but warns of growth risks
    \WASHINGTON, June 6, (AP): The
    threat of a first-ever default by the fed-
                                                 of low- income children and the dis-
                                                 abled. And the president just feels
                                                                                                                                                     Osborne defends economic plan
    eral government is pushing President         that that’s unacceptable.”
    Barack Obama and Republicans                    A few moments later, Carney
    toward a sweeping agreement to cut           called the Republican plan “premium         LONDON, June 6, (Agencies): The International Monetary                                        economies.
                                                                                                                                                                                      These risks include euro zone debt problems, volatile commodity prices, the health
    government spending and increase the         support or privatization or voucher-        Fund backed the British government’s plans to reduce the                              of Britain’s housing market and the amount of spare capacity in the UK economy.
    Treasury’s borrowing authority. Yet a        ization.”                                   budget deficit on Monday, but said tax cuts or more quanti-
    perennial partisan struggle over the            None of these can be considered                                                                                                   Finance minister George Osborne welcomed the IMF’s annual economic assessment,
    Medicare program for seniors’ health         terms of endearment, politically, par-      tative easing may be needed if growth proves persistently                             which comes after he dismissed criticism from more than 50 left-leaning economists
    care drives them apart.                      ticularly not by Republicans. They                                                                                                over the weekend that his plans risked derailing economic recovery.
                                                                                             weak.                                                                                    If the economy grew as expected, the government and Bank of England policy looked
       Remarkably, the two sides seem            say their Medicare plan, developed             Britain’s economy is likely to grow by around 1.5 percent in 2011 before about right, the IMF said. “We consider the current deviations from forecast represent
    determined to pursue both accord and         by Rep. Paul Ryan, the House Budget
    discord simultaneously, sparing the          Committee chairman, is designed to          achieving growth of about 2.5 percent in the medium term, the IMF estimated. temporary factors and that the current policy mix strikes us as appropriate,” IMF Acting
    still-wobbling economy from threat-          save the program from bankruptcy            But it acknowledged that there were major risks to this outlook, as for all big Managing Director John Lipsky told a news conference after the report was published.
    ened calamity while preserving               and preserve it for future generations.                                                                                                                                            Economists saw little change in the
    Medicare as a political issue in the            In the meeting the president hosted                                                                                                                                          tone of the IMF’s assessment of the UK,
    2012 elections.                              for rank-and-file Republicans, Ryan                                                                                                                                             despite the fact that growth had been
       “I’m willing. I’m ready. It is time       and Obama clashed.                                                                                                                                                              slower than the IMF had forecast when it
    to have the conversation” about                          Bankruptcy                                                                                                                                                          made its last so-called Article IV report in
    deficit cuts and the debt limit, said                                                                                                                                                                                        September.
    House Speaker John Boehner, urging              The congressman told Obama it                                                                                                                                                   “All told ... the IMF statement gives
    Obama to become personally                   was not leadership to demagogue a                                                                                                                                               the Treasury a useful thumbs-up,” said
    involved. “It is time to play large          good-faith attempt to save Medicare,                                                                                                                                            David Tinsley, a UK economist at
    ball, not small ball.”                       when it is clear the program is head-                                                                                                                                           National Australia Bank.
       But a few days later, House               ed for bankruptcy, according to sev-                                                                                                                                               The new 2011 forecast is slightly
    Democratic leader Rep. Nancy Pelosi          eral participants in the session.                                                                                                                                               below the 1.7 percent estimated in the
    said, “I could never support any                Obama replied it wasn’t leadership                                                                                                                                           IMF’s April set of global economic fore-
    arrangement that reduced benefits for        to shift billions in costs from the fed-                                                                                                                                        casts, and the 2 percent forecast in the
    Medicare. Absolutely not,” she told          eral government to states and indi-                                                                                                                                             September report.
    CBS television’s “Face The Nation,”          viduals who can’t afford it.                                                                                                                                                       Lipsky said unemployment remained
    emphasizing a position she and other            Ryan responded that wasn’t what                                                                                                                                              “unacceptably high” and encouraged the
    Democrats had laid out at their own          his plan did, explained it in some                                                                                                                                              government to press ahead with increas-
    meeting with Obama.                          detail and drew an ovation from fel-                                                                                                                                            ing the retirement age, cutting public sec-
       Given the sheer size of Medicare,         low Republicans.                                                                                                                                                                tor pensions and relaxing planning rules
    nearly $500 billion a year to provide           The Ryan plan retains Medicare in                                                                                                                                            to boost the economy.
    health care coverage for the elderly,        its present form for current benefici-                                                                                                                                             Business Secretary Vince Cable
    any deal on reducing future deficits is      aries and those age 55 and older.                                                                                                                                               warned trade unions earlier on Monday
    likely to include savings from the              For anyone younger, Medicare                                                                                                                                                 that the government would legislate to
    program, if not the benefit cuts many        would consist of a government-man-                                                                                                                                              make it harder for them to call strikes if
    Democrats oppose.                            dated package of benefits, purchased                                                                                                                                            they opposed this type of plan.
                                                 on the open market from private                                                                                                                                                    Lipsky did not back opposition calls
                      Thought                    insurers. Federal funds would help                                                                                                                                              for the government to set out a clearer
       But if any Republican thought that        defray the costs for beneficiaries.                                                                                                                                             “Plan B” to slow cuts if growth falters.
    the White House and congressional               Polls and recent events such as the                                                                                                                                             However, the IMF did say that if
    Democrats might agree to even a              unexpected loss of a House seat in                                                                                                                                              growth proved persistently slow and
    temporary cease-fire on Medicare,            strongly Republican district in                                                                                                                                                 inflation fell, then the government should
    they may want to reconsider.                 upstate New York and criticism from                                                                                                                                             think about tax cuts to help the poor and
       Boehner and fellow House                  presidential       contender      Newt                                                                                                                                          boost investment, and the Bank of
    Republicans had scarcely left a White        Gingrich make clear that the                                                                                                                                                    England would need to consider more
    House meeting with Obama on                  Republican plan is not favorable                                                                                                                                                quantitative easing.
    Wednesday when presidential press            political terrain for the party.                                                                                                                                                   Nonetheless, action to boost the econ-
    secretary Jay Carney told reporters             They are on far safer turf, they                                                                                                                                             omy in a renewed downturn depended on
    that Obama “doesn’t believe that we          concede, when they stress that job          British Finance Minister George Osborne (left) shakes hands with John Lipsky, acting head of the International Monetary Fund        inflation being under control, the IMF
    need to end Medicare as we know it,          creation is their top goal and spend-       (IMF), after a press conference at the Treasury in central London, on June 6. The International Monetary d said Monday it           said.
    to dismantle the program as it cur-          ing cuts the surest way to achieve it.      saw no reason for the British government to change its economic policy as it seeks to slash a massive deficit. (AFP)
    rently exists, in order to achieve sig-         Even some House Democrats who                                                                                                                                                                           Inflation
    nificant deficit reduction.”                 once talked of wanting to allow more                                                                                                                                                          If inflation remained high and growth
       Within seconds, he said the               government borrowing without tak-                                                                                                                                                          slow, the government and BoE would be
    Republican plan for Medicare “puts           ing steps to rein in future spending                                 Talk of another Fed buying spree intensifies                                                                          in a trickier position. While high inflation
    too much of the burden of deficit            voted against legislation last week to                                                                                                                                                     due to further temporary spikes in com-
    reduction on the shoulders of seniors,       do precisely that.                                                                                                                                                                         modity prices could probably be ignored,

                                                                                             Fine line between slowdown and stall                                                                                                           inflation caused by a shortage of capacity
                                                                                                                                                                                                                                            in the British economy would need high-
                                                                                                                                                                                                                                            er interest rates.
               Agrees to assist prosecutors                                                  SINGAPORE, June 6, (RTRS): The                 Federal Reserve would not “close the           than in China. Economists are looking for
                                                                                                                                                                                                                                               “A narrower output gap would also
                                                                                                                                                                                                                                            imply a higher than currently estimated
                                                                                             world economy appears headed for sever-        door” on purchasing more assets once its       just 8.7 percent growth in exports, down         structural deficit and therefore would
                                                                                             al months of sub-par growth, and there is      $600 billion bond-buying program wraps         from 24.6 percent in the prior month’s
Madoff’s ex-employee guilty                                                                  no clear source of strength to lead it back
                                                                                             to health.
                                                                                                After a week filled with disappointing
                                                                                                                                            up later this month. Talk of another Fed
                                                                                                                                            buying spree intensified last week.
                                                                                                                                               “I expect these noises will only get
                                                                                                                                                                                              The United States and Germany are
                                                                                                                                                                                           also due to release their trade figures this
                                                                                                                                                                                                                                            require further fiscal tightening over the
                                                                                                                                                                                                                                            medium term,” the IMF said.
                                                                                                                                                                                                                                               Inflation was likely to remain above 4
                                                                                                                                                                                                                                            percent this year before falling back to
NEW YORK, June 6, (RTRS): A former               investment fraud in history. A Ponzi        economic data, the debate is no longer         louder as the summer progresses,”              week, although the data covers April, not        near its 2 percent target by the end of next
employee at convicted financier Bernard          scheme is one in which early investors      over whether the economy has hit a soft        Komileva said. Figures due this week           May, making it less valuable as a guide to       year, the IMF added. If growth strength-
Madoff’s firm admitted to adding fake            are paid with the money of new clients.     patch but how long it will last.               will probably provide even more evi-           what is happening to the economy now.            ened as expected, the BoE would proba-
employees to the payroll, part of a plea            Lipkin told the judge that from at          Friday’s poor US employment figures         dence that demand world-wide has faded.           For central bankers, the cool-down            bly also need to raise interest rates at a
deal on Monday to bank fraud and other           least 1986, “I created false payroll        suggest demand will remain subdued in             China reports its May trade figures on      takes away some of the rate-hiking impe-         gradual pace, it said. Faster growth would
charges.                                         records.” As one example, he said that      the world’s biggest economy. Europe is         Friday, and the only real question is how      tus. The European Central Bank and               require a faster pace of rate rises.
   The former payroll manager, Eric              in 2008 he was instructed by the firm’s     still struggling to put an end to its sover-   sharply the pace of growth slowed.             Bank of England both hold policy-setting            Prime Minister David Cameron’s
Lipkin, told US District Judge Laura             operations manager, Daniel Bonventre,       eign debt troubles.                               Economists polled by Reuters expect         meetings on Thursday, and both are wide-         coalition government has faced calls to
Taylor Swain in New York that in 22              to put Bonventre’s son on the payroll          As for the big emerging economies,          the report to show exports rose 21 percent     ly expected to keep short-term borrowing         slow its programme of deep spending
years of employment in the investment            even though he did not work at the          their inflation-fighting efforts appear to     from a year earlier, still solid but a big     costs steady.                                    cuts because economic recovery has fal-
advisory arm of Bernard L. Madoff                firm.                                       have succeeded in cooling growth.              step down from April’s torrid 29.9 per-           Underneath all the doom and gloom,            tered since Britain pulled out of a record-
Investment Securities LLC, he conspired             Bonventre has also been charged and is   Although that was the intended result, it      cent pace.                                     there are a couple of reasons to feel more       length recession in late 2009.
with others to falsify records and deceive       free on bail pending trial.                 means they are not in a position to grow          Even in April, there were signs that        upbeat about the second half of the year.           Finance minister George Osborne has
authorities.                                        Under Lipkin’s plea agreement, he will   as fast as they did last year.                 demand was cooling.                               Commodity prices have come down in            brandished the support of international
   Madoff, 73, and eight others have been        cooperating with the office of the             Ironically, the country with the bright-       US retail sales were lackluster, and fig-   recent weeks, which will eventually ease         organisations such as the IMF and the
criminally charged with running a multi-         Manhattan US Attorney and the FBI in its    est near-term prospects may be Japan as it     ures due on Tuesday are expected to            pressure on household budgets.                   OECD for his economic policies in the
billion-dollar Ponzi scheme that col-            investigation of the Madoff fraud.          recovers from the March earthquake and         show euro zone April sales were tepid as          In addition, the Institute for Supply         face of the criticism from the opposition
lapsed in December 2008, shaking up                 Lipkin, also said in Manhattan federal   tsunami. Still, even a strong rebound          well. That means businesses may be             Management said on Friday that the pace          and trade unions. But the government
regulators who missed years of warning           court that he created false reports to be   there may not be enough to lift the global     stuck with more inventory than they            of growth in the US services sector              was surprised last month when the chief
signs of the fraud.                              sent to the Depository Trust Co (now        economic clouds.                               would like, and orders may stay weak.          picked up modestly in May, with its              economist of the OECD, the Organisation
   Madoff is serving a 150-year prison           called the Depository Trust & Clearing         Lena Komileva, a strategist with               Taiwan’s May export figures, sched-         measures of new orders and employment            for      Economic       Cooperation      and
sentence after pleading guilty in March          Corp) clearing house for buyers and sell-   Brown Brothers Harriman in London,             uled for release on Wednesday, are             higher. The services sector accounts for         Development, said there was “scope for
2009 for what is considered the biggest          ers of securities.                          said the weak US jobs data meant the           expected to show an even sharper decline       about 70 percent of the economy.                 slowing the pace” of the cuts.

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