IN THE ECONOMIST THIS WEEK -

- IN THE ECONOMIST THIS WEEK -


An index of WORLD FOOD PRICES compiled by the UN reached a record level
in December, surpassing its previous high of June 2008, a year in which
the cost of food sparked rioting in Haiti and elsewhere. Unlike then,
the prices of some staple cereals such as rice remain relatively
stable, though the price of wheat is rising. The increasing costs of
other cereals and sugar were the main factors behind the rise in the
index.

The presidential commission investigating the causes of last year's OIL
SPILL in the Gulf of Mexico released a chapter containing the key
findings of its final report, due on January 11th. The chapter stated
that "most of the mistakes and oversights" leading to the explosion at
BP's well "can be traced back to a single overarching failure--a
failure of management". - See article
http://news.economist.com/cgi-bin1/DM/t/eCUiF0cLBql0Mo0NTQS0EE

THE PRIVATE NETWORK

It emerged that FACEBOOK has secured $500m in financing from Goldman
Sachs and Digital Sky Technologies, a Russian investment firm, to fuel
its expansion plans. Goldman also set up an investment vehicle for its
clients to buy into privately held Facebook's equity. The arrangement
values Facebook at $50 billion, up from an estimated $10 billion just
18 months ago, prompting questions about whether the rules for
disclosure on trading in the stock of private firms need to change. -
See article
http://news.economist.com/cgi-bin1/DM/t/eCUiF0cLBql0Mo0NTQT0EF

The European Financial Stabilisation Mechanism issued a bond to raise
money for bailing out IRELAND. There was strong demand for the sale of
EURO5 billion ($6.7 billion) in five-year debt.

Markets kept a wary eye on other bond issues in the euro zone. PORTUGAL
successfully sold EURO500m ($665m) in six-month treasury bills, though
the average yield was 1.64 percentage points higher than at its last
sale of a similar maturity in September. SPAIN received a boost,
however, when Li Keqiang, China's deputy prime minister, said that his
country would still buy Spanish debt and had particular confidence in
the Spanish financial market.

TRICHET'S POTENTIAL HEADACHE

INFLATION in the euro zone rose to 2.2% in December, the highest since
October 2008 and above the European Central Bank's target of close to
but below 2%.

Chile's central bank announced that it was committing $12 billion over
the next year to intervening in foreign-currency markets in an effort
to keep the value of the Chilean peso down. It is the latest shot in
the "CURRENCY WARS", in which some emerging economies are using a
variety of measures to stop their currencies appreciating. But India's
Financial Stability Development Council, at its first meeting,
criticised policies that attempt to keep currencies artificially low,
which was seen as a dig at China.

QUALCOMM, the world's biggest maker of chips for mobile phones, said it
was buying ATHEROS COMMUNICATIONS, which is based in San Jose. The $3.1
billion acquisition is Qualcomm's biggest to date and expands its
business in wireless chipsets of the kind used in smart-phones and
tablet computers. Separately, Microsoft said its next version of
WINDOWS would run on chips designed by ARM, which are better suited to
mobile devices than those supplied by Intel, Microsoft's established
partner.

BANK OF AMERICA paid $2.8 billion to settle claims brought by FANNIE
MAE and FREDDIE MAC, two housing-finance giants, against the
mortgage-lending practices of Countrywide Financial, a distressed bank
that BofA acquired in 2008. BofA still faces potentially large claims
from insurers and private investors seeking to get their money back for
home loans that purportedly failed to meet the proper underwriting
criteria. - See article
http://news.economist.com/cgi-bin1/DM/t/eCUiF0cLBql0Mo0NTQU0EG

Sergio Marchionne suggested that FIAT could obtain a controlling stake
in CHRYSLER before the Detroit carmaker's stockmarket flotation later
this year. Mr Marchionne has been chief executive of Fiat and Chrysler
since 2009, when Fiat took a 20% stake in Chrysler as part of a rescue
plan engineered by the American government. Meanwhile, Fiat officially
demerged its carmaking operations from its truck and farm-equipment
business.

RENAULT suspended three senior managers. The company did not say why,
but the suspensions are thought to be related to the suspected leaking
of its secrets about electric-car design.

PROMPTED TO CHOOSE

More Europeans now use Mozilla's FIREFOX web browser than Microsoft's
INTERNET EXPLORER, according to data compiled by StatCounter, a
market-analysis company. Firefox took 38.1% of the European market in
December, compared with 37.5% for Internet Explorer and 14.6% for
Google's Chrome. Microsoft's browser still predominates in America and
Asia.


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