HTTP://WWW.STOPNATO.ORG.UK ---------------------------Business this year
December 19th 2001
From The Economist print edition
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The world economy suffered a worse-than-expected downturn. Since December
2000, The Economist's panel of forecasters has lowered its estimates of
GDP growth almost everywhere. America and Japan fell into
recession in 2001; so did Germany. Among G7 rich countries,
Britain weathered the year best.
See
article: The risk of world recession
World stockmarkets continued a sedate decline until hit by September 11th. That triggered a sharp fall followed by a rally as hopes grew of an early economic recovery. Slashed interest rates and cheaper oil made that plausible; weak investment and high consumer debts raised doubts. Mexico and some Central European markets were steadier; Russia soared.
See
article: World stockmarkets
World leaders agreed after long negotiation in Doha to launch a new trade round.
The world airline industry split into two. Mainstream carriers were all heading for record losses even before September 11th slashed traffic by 25%. But no-frills, low-fare carriers such as Southwest in America and Ryanair and easyJet in Europe prospered.
See
article: The aviation aftershocks from September 11th
The wheels came off the car industry. Ford fired its chief executive, Jacques Nasser. Volkswagen named Bernd Pischetsrieder its new boss. DaimlerChrysler's woes continued in America; General Motors, Ford and Fiat retrenched in Europe.
See
article: America's car industry
Steel producers continued to be plagued by inefficiency and overcapacity, as prices slipped to 20-year lows. Two of America's biggest producers, LTV and Bethlehem Steel, filed for bankruptcy. Their plight moved America's government to threaten tariffs of up to 40% on steel imports. That, said the EU, would spark a trade war.
See
article: US steel producers talk mergers
The European Commission blocked the biggest-ever industrial merger, between two American giants, General Electric and Honeywell. Americans were infuriated and aghast that the deal, already approved at home, could be thwarted in Europe.
See article: Mario Monti, Europe's fearless diplomat
Enron, a once high-flying American energy trader, fell to earth amid questions over its off-balance-sheet debts and murky accounts. Its collapse, the biggest bankruptcy in American history, triggered multi-million-dollar lawsuits against the company, its executives and its auditors.
See article: Auditors under fire
Microsoft appealed against a judgment ordering it to be split in two for acting as an illegal monopolist. The appeals court rejected the break-up, but upheld the finding that Microsoft had broken the law. A new judge ordered Microsoft's opponents to propose alternative punishment. Some of Microsoft's foes, including America's Department of Justice and nine states, agreed a settlement. But nine states refused to go along with it.
See article: The Microsoft settlement
Hewlett-Packard and Compaq, two computer makers, announced their intention to merge. The plan was widely criticised, not least by the Hewlett and Packard families, who said they would oppose the deal. Carly Fiorina, HP's chief executive, said she would press ahead regardless.
See
article: Can the HP-Compaq deal be saved?
France's Vivendi, the least exposed of the media giants to the world advertising slump, continued an American shopping spree. Gerald Levin, architect of the merger of Time Warner and AOL and the combined group's chief executive, annnounced that he would resign in 2002. Rupert Murdoch failed to get his hands on DirecTV and so a significant satellite-TV presence in America. The company fell instead to EchoStar, though the deal awaits regulatory approval.
See article: Media and the economic downturn
It was a tough year for investment banks, as a sharp decline in merger activity, initial public offerings and share-trading volumes hit profits. Commercial banks used their huge balance sheets to offer cut-price loans to companies in return for securing investment-banking mandates. If this continues, the pure investment banks may struggle to stay independent. As profits fell, many bankers lost their jobs; bonuses on Wall Street are expected to be 30% down from a year ago.
See article: Investment banking
The terrorist attacks on September 11th led to the biggest losses ever in insurance and reinsurance. Terrorism became the risk that no insurer wanted. France is set to launch a reinsurance scheme like Britain's government-backed, mutually owned firm that reinsures terrorist risk. America is shying away from a similar permanent role.
See article: The biggest bill of all
It was a year of problems, and promise, for the drug industry. Blockbusters, such as Eli Lilly's Prozac, went off-patent and drug makers came under public pressure to soften their stance on drug pricing and patent enforcement in poor countries. But fears of bioterrorism gave drug firms a new, and potentially lucrative, role in national defence.
See
article: The pharmaceutical industry is in good shape
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