The coming days

The week ahead

The pope goes to America, and other news

• VOTING in Italy's general election concludes in the afternoon on Monday April 14th. The main candidates of the right and left, Silvio Berlusconi and Walter Veltroni, have been doing much to downplay the chances of a post-ballot deal. But Italy's messy electoral law means that neither may be able to govern even after securing a majority of votes cast. Monday could bring a clear victory and a new leader for Italy or chaos followed by an uncomfortable compromise.

For background see article

• THE pope arrives in America for his first official visit on Tuesday April 15th. During his five-day trip he is expected to address sensitive topics in his public speeches, such as the child-abuse scandal that has riven the Catholic church. But the Vatican has not revealed what he will actually say; American conservatives (not all of them Catholic) hope to claim the pope as one of their own, but those of a leftish persuasion hope he might note the church’s opposition to the war in Iraq during his speech to the UN, or its critical view of unfettered capitalism.

• INTEREST in the Democratic campaign to find a nominee to seek election as president will pick up again with a debate televised from Philadelphia on Wednesday April 16th. Hillary Clinton and Barack Obama will try to squeeze whatever advantage they can from the event before an important Pennsylvania primary on April 22nd. Expect lots of sparring over free-trade agreements, ex-pastors and tax returns.

For background see article

• HOLLYWOOD, striving to get over the effects of a three-month strike by writers that ended in February, faces fresh industrial action that could bring productions to a standstill once again in Tinseltown. The Screen Actors Guild, the main union representing the “talent” begins negotiations over a new three-year contract with the film and television bargaining body on Tuesday April 15th. The old contract expires at the end of June and studios are already nervous about starting to shoot films that could remain unfinished during a protracted stoppage.

Italy's election

Grasping for victory

Italy goes to the polls

THE main candidates in Italy's general election, which begins on Sunday April 13th, both spent the final hours of the campaign trying urgently to dispel the idea that they would do a deal after the ballot. Silvio Berlusconi and Walter Veltroni are uneasily aware that they could top the poll, yet be unable to govern Italy alone. A messy electoral law, introduced in 2005 when Mr Berlusconi was prime minister, applies different rules to each of the two houses of parliament. These work in such a way that it is quite conceivable that a party could triumph in the Chamber of Deputies, yet be left with little or no majority in the Senate.

Earlier this week, Mr Berlusconi said that his conservative People of Freedom movement needed an edge of at least 20 seats in the upper house, which has 315 elected members. Earlier projections had suggested he would do well to get half that number. Every vote for the People of Freedom, or for Mr Veltroni's centre-left Democratic Party, will count. Yet the prospect of a hung parliament makes it more likely the two big parties will be forced into a post-electoral pact, or even a left-right “grand coalition”, to ensure the country is governable after the ballot.

The leading candidates seemed to be preparing for this at the start of the campaign, both sounding oddly conciliatory. Only recently do they appear to have woken up to the risk that floating voters might conclude that opting for one side was much the same as opting for the other, and abstain. In a webcast for the site of Corriere della Sera, a daily newspaper, Mr Veltroni denied that he was anticipating any sort of broad-based government. “I want to say it in capital letters”, he said. “Whoever gets the majority will govern”.

Mr Berlusconi also strove to put as much distance as possible between himself and his rival. “At the start, I gave him a certain credit”, he admitted in an interview with La Stampa. “But then he took back everything he had said”.

By aiming the spotlight at each other, the main contenders also succeeded in diverting attention from two smaller parties whose role may be crucial. The centre-right Union of Christian and Centre Democrats and the Rainbow Left, an alliance of Greens and Marxists, both have enough support to rob the two bigger movements of vital seats in the Senate.

In Lazio, the area around Rome and one of the five regions where the result is highly uncertain, Mr Berlusconi faces another problem—a far-right splinter group that could drain crucial votes from his alliance. He did little to bolster his position with a rally at the Colosseum on Thursday.

Just a few thousand supporters turned out, and Mr Berlusconi made what appeared to be a serious error, mocking a local soccer hero. Francesco Totti, AS Roma’s captain, had said he would vote for the centre-left candidate, Francesco Rutelli, in the mayoral ballot that is taking place at the same time as the general election. Mr Berlusconi said it showed he was “off his head”.

It was the latest in a string of slips that hinted at anxiety in the Berlusconi camp. Under Italian law, no polls can be published in the final two weeks of campaigning. The last poll published before the final fortnight showed that Mr Berlusconi was comfortably ahead, by between five and nine percentage points. That was little different from the situation at the beginning of the race.

But on Thursday Mr Veltroni attracted a crowd of tens of thousands in Milan, a Berlusconi stronghold. The centre-left leader's biggest handicap is that he is lumbered with the unpopularity of the outgoing, centre-left government of Romano Prodi and its tax and economic policies. But the more Mr Prodi's memory fades, the greater the willingness of voters to give his replacement a chance. Mr Berlusconi promised a “surprise” in the dying hours of the race. Mr Veltroni is hoping the real surprise comes after the polls close on Monday.

U.S., Europe Warn of Further `Bad News;' Strengthen Regulation

April 13 (Bloomberg) -- Finance chiefs from the U.S. and Europe said the eight-month credit squeeze is still festering and urged banks to take steps to relieve it.

``The chain of bad news may not have come to an end,'' Italian Finance Minister Tommaso Padoa-Schioppa said yesterday as the International Monetary Fund held its semi-annual meetings in Washington.

The collapse of the U.S. subprime-mortgage market led to a seizing up in capital markets and has triggered $245 billion in asset writedowns and losses since the start of 2007. Finance ministers and central bankers from the Group of Seven are trying to strengthen market regulation and want banks to speed disclosure of losses and improve the way they value assets.

``The market is still adjusting, the turmoil has not yet settled down,'' Federal Reserve Vice Chairman Donald Kohn told reporters in Washington. ``It's still a fragile situation out there.''

The G-7 on April 11 endorsed proposals by the Basel, Switzerland-based Financial Stability Forum to impose tougher oversight on financial markets. The cost of borrowing in euros and dollars for three months was still at the highest since December in the past week.

New York Fed President Timothy Geithner indicated that regulators may have relied too much on financial companies and investors to police themselves.

`Better Balance'

``What we have to do is find a better balance between market discipline and regulation,'' Geithner said. ``I don't think anybody can look at the system and say we got that balance right.''

By the end of July, the G-7 wants financial companies to ``fully'' disclose in mid-year earnings reports their investments that are at risk of loss. Firms should also establish ``fair-value estimates'' for the complex assets that investors have shunned and boost their capital as needed, the G- 7 said.

Regulators must revise liquidity risk management rules, improve accounting standards for off-balance-sheet units and enhance guidance on how assets are fairly valued, the group said. International panels of supervisors will also be formed by the end of this year for each of the largest global financial companies.

Bear Collapse

The investor exodus from securities linked to subprime U.S. mortgages caused the credit crisis that began in August, and led to the collapse of Bear Stearns Cos. last month. Credit markets remain ``substantially impaired,'' Geithner said April 3.

``March was a very, very tough month,'' Lehman Brothers Holdings Inc. Chief Financial Officer Erin Callan said in a Bloomberg Television interview last week. General Electric Co. Chief Executive Officer Jeff Immelt said ``the last two weeks in March were a different world in financial services.''

While urging stronger supervision, officials agreed that they still won't be able to eliminate the chance of another financial crisis.

``I don't think we can prevent the kinds of waves of optimism and pessimism that pass over the market,'' Kohn said. ``There will be future events. Our role as regulators is to try to make the system more resilient.''

Geithner said the goal is to make the system more resilient and have financial institutions with better ``cushions'' and ``shock absorbers'' in place to weather crises.

`Very Hard'

``If we could figure out a way to have on our desks a screen that gave us the capacity to predict financial crises of this magnitude, we would do it in a second,'' Geithner said. ``It's a good thing to work on, but it's very hard to do.''

The G-7 officials dined April 11 with chief executive officers from banks including Deutsche Bank AG, Credit Suisse Group and Lehman Brothers Holdings Inc.

Bank of Italy Governor Mario Draghi, who chairs the Financial Stability Forum, said the response of banks to the report had been ``possibly favorable,'' while acknowledging the 100-day deadline for action is a ``tight one.'' ECB council member Nout Wellink said banks had been constructive in reacting to the report.

Wellink said the reason it's hard to foresee financial crises is that ``innovation has outpaced risk management, supervision and regulation.''

CEOs Pushing Ayn Rand Studies Use Money to Overcome Resistance

-- Ayn Rand's novels of headstrong entrepreneurs' battles against convention enjoy a devoted following in business circles. While academia has failed to embrace Rand, calling her philosophy simplistic, schools have agreed to teach her works in exchange for a donation.

The charitable arm of BB&T Corp., a banking company, pledged $1 million to the University of North Carolina Charlotte in 2005 and obtained an agreement that Rand's novel ``Atlas Shrugged'' would become required reading for students. Marshall University in Huntington, West Virginia, and Johnson C. Smith University in Charlotte, North Carolina, say they also took grants and agreed to teach Rand.

The author, who died in 1982, used her self-righteous heroes to promote objectivism, a philosophy that embraces reason and individualism, while rejecting religion. While Rand, an advocate of free markets, would support a university's getting paid to teach her works, the idea riles academic ethicists.

``A corporation crosses a line and a university is complicit in crossing the line if it accepts money'' and accedes to a request to assign specific books, said Jonathan Knight, director of the program on academic freedom, tenure and governance for the American Association of University Professors, in Washington. ``It's unique in my experience.'' Knight has worked in the field for 31 years.

As universities seek ways to bolster finances, such as with top level sports teams, donations to dictate curricula are still rare. Yaron Brook, the executive director of the Ayn Rand Institute, a nonprofit organization in Irvine, California, that promotes objectivism, said some professors are re-evaluating Rand.

``We're definitely seeing more of an interest in the academic world,'' Brook said. He said he senses a softening of opposition from academics and sees more conferences and articles about Rand.

`Absolutist Ethics'

``Ayn Rand has a kind of absolutist ethics,'' Brook said. ``She believes in right or wrong, good and evil, but based on secular principles, not religious principles, and I think there's an appeal for that now.''

Alan Greenspan, later the U.S. Federal Reserve chairman, was among Rand's early disciples, in the 1950s. Mark Cuban, the billionaire owner of the National Basketball Association's Dallas Mavericks, calls Rand's ``The Fountainhead'' one of his favorite business books. John Allison, chief executive officer of BB&T, deems ``Atlas Shrugged'' the best defense of capitalism ever written, and requires managers to read it.

Rand believed American universities had been taken over in the 20th century by thinkers who rejected her notion that many of life's questions have one right answer, said Judith Wilt, an English professor at Boston College.

`Places for Discourse'

``Universities as places for discourse and argument and a kind of searching tend to be more interested in what Rand would call vagueness,'' said Wilt, 66, who is teaching a seminar on Rand and contemporaries such as John Steinbeck and Arthur Miller. ``Universities tend to be interested not in closing the argument, but in keeping it open.''

Rand was born in Russia in 1905 and emigrated to the U.S. in 1926. Businessmen who were guided by their own consciences or self-interest were the heroes of her novels. ``The Fountainhead,'' published in 1943, tells the story of architect Howard Roark, who blows up a housing project he designed rather than compromise his vision.

`I Love It'

``I love it because it's so motivating,'' Cuban, 49, said in an e-mail. ``It's about an individual standing up for and believing in himself, ignoring what others think.''

In ``Atlas Shrugged,'' Rand describes the collapse of the U.S. economy when the most productive industrialists, led by John Galt, withdraw from society.

``Atlas Shrugged'' has sold 6 million copies since its first printing in 1957. After sales sagged to an average of 77,000 a year in the 1980s, they climbed steadily and topped 185,000 last year, the Rand institute said, citing publishers' data.

Allison's BB&T, based in Winston-Salem, North Carolina, in March pledged $2 million to establish the first U.S. chair in the study of objectivism, at the University of Texas at Austin.

That school and 27 others have accepted an aggregate $30 million from the bank's foundation in the last decade.

``These gifts are really about the study of capitalism from a moral perspective and all we want is to make Rand part of the dialogue,'' said Bob Denham, a spokesman for BB&T, the parent of Branch Banking & Trust Co.

The BB&T Charitable Foundation made a five-year, $1 million commitment to the University of North Carolina Charlotte in January 2005 after a dinner meeting between Allison and Claude Lilly, then dean of UNC Charlotte's business school.

`Required Reading'

The grant agreement described ``Atlas Shrugged'' as ``required reading'' in a course about the fundamentals of capitalism.

BB&T donated $500,000 last year to Johnson C. Smith University to help endow a professorship on capitalism and free markets, with lessons including ``Atlas Shrugged.'' It's the fourth endowed chair at the historically black college in Charlotte.

`` I don't believe I have to advocate that people accept Ayn Rand's philosophy,'' said Patricia Roberson-Saunders, who holds the chair. Roberson-Saunders, who will present Rand with other texts, said students will benefit from reading about a world view held by ``people with whom they will have to work and for whom they will have to work.''

Marshall announced in January that it received $1 million to establish the BB&T Center for the Advancement of American Capitalism. As part of the curriculum, an upper-level course will focus on ``Atlas Shrugged'' and Adam Smith's ``The Wealth of Nations.''

Marshall spokesman Dave Wellman wasn't immediately available for comment.

`Crossing the Line'

After BB&T mandated that some schools teach ``Atlas Shrugged,'' grant seekers became aware of Allison's interest and now tailor their applications by stating up front their interest in Rand, Denham said.

Scholars scoff at the Rand bounty, saying her ideas are too shallow to build courses around her.

``Rand could not write her way out of a paper bag,'' said Harold Bloom, a professor of the humanities and English at Yale University in New Haven, Connecticut. Bloom, 77, is the author of ``The Western Canon: The Books and School of the Ages'' (Harcourt, 1994), an examination of the most important works in Western literature. Rand isn't on the list.

Italians Vote for New Government as Economy Stagnates (Update1)

April 13 (Bloomberg) -- Italians began voting today to choose a new government with polls suggesting Silvio Berlusconi may be elected for a third time as prime minister to manage a $2.4 trillion economy on the brink of recession.

Berlusconi, 71, and Democratic Party leader Walter Veltroni, 52, are competing for the premiership just two years after the previous vote. Elections to choose Italy's 62nd government since World War II were called three years early after Prime Minister Romano Prodi's government collapsed in January.

``The situation isn't good,'' said Salvatore Zecchini, a professor of economic policy at Rome's Tor Vergata University. ``Whoever wins will have to do something for the economy, but the measures will be modest and they won't be able to revive growth.''

The International Monetary Fund forecast April 9 said the Italian economy, Europe's fourth biggest, would expand just 0.3 percent, the slowest of the more than two dozen ``advanced economies'' included in its World Economic Outlook report. Italy is Europe's most-indebted country, and ranks last in labor productivity among the 30-member Organization for Economic Cooperation and Development.

Turnout Lower

More than 47 million Italians are eligible to vote. Ballot booths opened today at 8 a.m. and close at 10 p.m. Voting continues tomorrow from 7 a.m. to 3 p.m. Italians who are least 18 years old can vote for the Chamber of Deputies, while those who are 25 or older vote also for the Senate.

Turnout at 12 p.m. was slightly lower than two years ago, with 15.2 percent voting compared with 16.4 percent in 2006 with a third of the 8,101 sections studied reporting, the Interior Ministry said .

Berlusconi held a lead in opinion polls of between 6 and 9 percentage points, according to polls conducted before March 29. No polls are allowed during the two weeks preceding the vote.

Both candidates have made similar pledges of tax cuts and increased social and public works spending to revive confidence and growth in an economy that some analysts say may already be in recession.

Berlusconi, the billionaire media magnate, entered politics 14 years ago promising to bring about an economic miracle. In his last stint as prime minister between 2001 and 2006, Italy slipped into recession three times, the budget deficit reached the highest in the European Union and the debt increased. This time around he has toned down the rhetoric, saying he couldn't ``perform miracles'' given the current climate.

Veltroni, the former Rome mayor, has painted himself as the candidate of change. In his final campaign rally in Rome's Piazza del Popolo he called on Italians to ``turn the page'' on the aging political class represented by Berlusconi. He even adopted Barak Obama's ``Yes, We Can'' slogan -- ``Si Puo Fare'' in Italian -- for the campaign and was backed by popular figures such as George Clooney and soccer star Francesco Totti.

Senate Race

All polls during the campaign predicted Berlusconi would win a comfortable majority in the Chamber of Deputies, the race in the Senate will likely be much tighter. The seats in the upper house are distributed through 20 regional contests on a proportional basis, so smaller parties will win seats and that will narrow the difference between the two main blocs.

Berlusconi changed the voting rules prior to the 2006 election when he trailed in the polls to make it harder for his challenger to build a stable government. Prodi's administration fell after he lost his one-seat majority in the upper house. Now the law may come back to haunt Berlusconi, with some polls indicating that Veltroni could win the Senate. The two houses of parliament, which have equal powers, have never been controlled by rival parties.

Contemporaneously with parliamentary elections, there will be voting on eight provincial governments and 423 city governments, including Rome, the capital. Sicilians and residents of Friuli Venezia Giulia will be called to vote to choose regional governments.

G-7 Signals Concern on Dollar's Slide, Weaker Growth (Update2)

- Finance chiefs from the Group of Seven nations signaled concern on the dollar's slide and said the global economic slowdown may worsen amid an ``entrenched'' credit squeeze.

``Since our last meeting, there have been at times sharp fluctuations in major currencies, and we are concerned about their possible implications for economic and financial stability,'' the G-7's finance ministers and central bankers said in a statement after talks in Washington yesterday.

The officials downgraded their outlook for the world economy from that of two months ago, blaming the U.S. housing recession, credit-market turmoil, commodity prices and inflation pressures. The dollar has lost 8 percent against the euro and 6 percent versus the yen since the G-7 last met in Tokyo in February.

``They ratcheted up the currency rhetoric a notch or so,'' said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York. ``They're trying to buy some time for the dollar.''

The new language was the first significant change in the G- 7's view of currencies since a February 2004 meeting in Boca Raton, Florida. The U.S. currency reached a record low of $1.5913 against the euro this week.

Monitoring Markets

``We continue to monitor exchange markets closely, and cooperate as appropriate,'' the G-7 said.

Treasury Secretary Henry Paulson said the change in the G-7 statement on currencies ``reflects market developments and changes in the markets.'' He also said he told the G-7 ``in very strong terms our commitment to a strong dollar.''

``They're trying to discreetly throw a lifeline to the dollar,'' said Sophia Drossos, a currency strategist at Morgan Stanley in New York, who used to help manage the Federal Reserve's foreign-exchange holdings. ``Had they not said anything, the dollar would have resumed its sell-off. This acknowledges there has been increased volatility.''

Policy makers laid out a 100-day plan to strengthen regulation of capital markets. They urged financial companies to ``fully'' disclose in their mid-year earnings reports their investments at risk of loss. Firms should also establish ``fair value estimates'' for the complex assets that investors have shunned and boost their capital as needed, the G-7 said.

`Entrenched' Turmoil

``The turmoil in global financial markets remains entrenched and more protracted than we had anticipated,'' the officials said in their statement. ``Near-term global economic prospects have weakened.''

The G-7 pledged to implement further monetary and fiscal policies ``as appropriate'' without giving details.

The officials met after the International Monetary Fund this week estimated a 25 percent chance of a global recession this year. A collapse in the market for U.S. subprime mortgages has pushed the U.S. toward its first contraction in seven years and prompted banks to shun lending after $245 billion of asset writedowns and credit losses since the start of 2007.

While the dollar's drop has helped support the U.S. economy by boosting exports, its acceleration triggered criticism from officials abroad worried that their own shipments may be hurt.

``We don't like the recent moves,'' Luxembourg Finance Minister Jean-Claude Juncker, who heads a group of counterparts from the euro area, told reporters in Washington. Canadian Finance Minister Jim Flaherty said the dollar's drop ``has been borne primarily by the Canadian dollar and also by the euro and the yen.''

Skepticism

The G-7 may fail to reverse the dollar's slump because there's no sign it's willing to intervene and the U.S. economy is weaker than its counterparts, said Samarjit Shankar, director of global strategy for the foreign exchange group at Bank of New York Mellon in Boston.

The Fed has tried to avert recession by cutting its benchmark interest rate 3 percentage points since August, yet the European Central Bank has left its unchanged at a six-year high of 4 percent amid inflation at a 16-year high.

``Growth differentials are still stacked up against the dollar and since there's no sign whatsoever that the group is about to intervene, that clears the way for further dollar weakness,'' said Shankar, who predicted the dollar will reach $1.60 per euro.

China's Yuan

The G-7 again urged China to allow ``accelerated appreciation'' in its currency, while acknowledging its recent rise through 7 per dollar for the first time since a fixed exchange rate ended in 2005.

The group pledged ``rapid implementation'' of recommendations from the Basel-based Financial Stability Forum published yesterday. The FSF report aims at increasing transparency and cooperation among international bank supervisors.

In the next 100 days, the G-7 demanded that regulators revise liquidity risk management rules, improve accounting standards for off-balance-sheet units and enhance guidance on how assets are fairly valued.

With the credit squeeze now in its ninth month, the G-7 highlighted ``downside risks'' to growth in a ``challenging and uncertain environment.''

Since the G-7 met in February, Bear Stearns Cos. was rescued by JPMorgan Chase & Co. with the help of the Fed, U.S. employers cut jobs for a third month and the price of oil and other commodities reached record highs.

`Very Tough'

``March was a very, very tough month,'' Lehman Brothers Holdings Inc. Chief Financial Officer Erin Callan said in a Bloomberg Television interview yesterday. General Electric Co. Chief Executive Officer Jeff Immelt said ``the last two weeks in March were a different world in financial services.''

Other than promising to ensure ``orderly'' financial markets, the central bankers and finance ministers stopped short of introducing new measures to boost liquidity, even as the cost of borrowing euros and dollars for three months holds at the highest since December. The group said previous efforts by some central banks to bolster liquidity were ``helping.''

French Finance Minister Christine Lagarde said she hoped the warning from the Group of Seven nations against ``sharp fluctuations'' in currencies will strengthen the dollar.

``I hope this concerted wording on currencies will help,'' she said in a Bloomberg Television interview in Washington yesterday when asked how worried she was by the dollar's slide.

Bankers' Dinner

President Nicolas Sarkozy's government recently stepped up complaints that the euro's appreciation against the dollar is pushing France-based companies, including planemaker European Aeronautic, Defence & Space Co., to cut jobs at home and relocate some activities abroad.

Composed of the U.S., Japan, Germany, France, Italy, the U.K. and Canada, the G-7 oversees two-thirds of the world economy. Its officials dined last night with 10 executives from financial companies, including Deutsche Bank AG Chief Executive Officer Josef Ackermann, Lehman Brothers CEO Richard Fuld and Credit Suisse Group chief Brady Dougan.