ECB’s Draghi Vows to Defend the Euro
More relief today for Europe and global stocks after European Central Bank president Mario Draghi pledged to defend the Euro. “Within our mandate, the ECB will do whatever it takes to preserve the euro,” he said. “Believe me, it will be enough.” In central-bank speak, this is one of the strongest statements made since the beginning of the crisis, as well as the closest thing to a guarantee that the euro will pull through. Central banks have many tools to protect their economies and their currencies—from adjusting interest rates to printing and lending money—though they use them sparingly for fear of distorting the markets. Even suggesting that they may help helps, so they are careful with their words, which is why decoding central bank announcements takes skill. It may not be enough to keep Greece in the monetary union, though: Greek leaders struggled to agree on a new €11.5 billion package of spending cuts required to receive another bailout payment.
Court Rules Against Deals to Keep Generic Drugs Off the Market
A U.S. federal appeals court ruled against three other federal circuit courts of appeal today, saying the practice of paying a competitor to keep a generic drug off the market is anticompetitive. The matter could end up at the Supreme Court, which has called cartels, or competitor collaboration, “the supreme evil of antitrust.” This would have a significant impact on drug prices and health care costs. Large pharmaceutical companies are bracing themselves for lower profits, while patients and pharmacies are hoping for bigger savings. The Congressional Budget Office said that a law to ban the practice could cut government spending by $4.8 billion over a decade, lowering drug costs by $11 billion.
Political Crisis in China as Gu Kailai Is Charged with Murder
Gu Kailai, wife of Bo Xilai, a deposed official of China’s Communist Party Central Committee, was charged today with poisoning British businessman Neil Heywood. She did so to protect her son Bo Guagua, whom Heywood helped send to a private school in Britain and whom he was threatening, according to the news report. The authorities first blamed Heywood’s death on excessive drinking (despite his family’s claim that he was sober), but Bo’s former police chief, who sought refuge at the American consulate in Chengdu three months later, provided details of the killing (rumor is he will be tried for treason). This sparked a political crisis in the country, shedding a harsh light on murky practices and corruption, as well as rifts within the party. China is preparing for the 18th Party Congress, which will set the stage for a transition that only happens once every ten years, and during which a new president, a prime minister, and seven Politburo Committee members will be appointed. Analysts say timing is crucial: conducting the trial during the Olympics should divert attention from the proceedings.
First Olympic Athlete Claims Political Asylum in the U.K.
An olympic athlete from West Africa is said to have claimed political asylum in the U.K., asking not to be sent back to his country, where he is being persecuted. He is the first to do so, and British authorities are looking into his request. Immigration services expect that two percent of athletes, officials, and supporters attending the Olympics, especially from Africa and the Middle East, will make similar claims or simply “disappear.” Some may follow Mark Stephens’ advice, who called gay athletes to come out during the games and claim asylum if they fear for their safety. Facial scanners and fingerprinting systems were installed at airports to deter people from staying illegally.
Facebook’s Profit Drops on Higher Operating Cost
Facebook’s first public quarterly earnings report showed a profit squeeze today as sales and marketing expenses rose to four times what they were in the same period last year, dragging the share price down to $24 after the announcement. Investors still worry about Facebook’s ability to make money from advertisement on the mobile version of its site, and the market became jumpy yesterday after Zynga, whose products are also a source of revenue for Facebook, announced its quarterly earnings fell short of estimates. Facebook began trading publicly in May at $38 a share.