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2008/09/01

Millions evacuated, Republican convention trimmed due to Hurricane Gustav

BusinessWeek Executive Summary
Your update of the most important business news from dozens of respected news sources, selected by the editors of BusinessWeek.

Early Edition September 01 2008 at 05:55 AM Chi-Chu Tschang and Harry Maurer

Millions evacuated, Republican convention trimmed due to Hurricane Gustav

Almost 2 million Louisianans -- 95% of the state's coastal residents -- have been evacuated in preparation for Hurricane Gustav, which is expected to hit the U.S. coast by midday local time. Mississippi and Alabama also issued mandatory evacuation orders for coastal areas, although forecasters expressed optimism that predictions of flooding along the coastline might be less than expected.

Due to the approach of Hurricane Gustav, U.S. Senator John McCain decided on Aug. 31 to halt all but the most essential activities for the Republican National Convention on Sept. 1, sacrificing a major televised platform for his political message as he seeks to project a forceful response to the threat. The programming for the rest of the four-day convention will be determined on a day-to-day basis.

Source: Washington Post, New York Times

India floods leave 1.2 million people homeless

About 1.2 million people have been left homeless and many have been killed in the Indian state of Bihar in the two weeks since the monsoon-swollen Kosi river in neighboring Nepal burst its banks. Nearly 700,000 people have been marooned and an estimated three million affected in five districts of the state.

Source: Press Association

Commerzbank buys Dresdner for $14.5 billion

German financial giant Commerzbank will buy its rival Dresdner Bank for $14.5 billion from Allianz, creating a competitor to Deutsche Bank in Europe's biggest economy. The German financial institution aims to cut almost $3 billion in costs by slashing 9,000 jobs. Much of the purchase price will be paid to Allianz in the form of shares, leaving Europe's biggest insurer with a 30% stake in Commerzbank.

Source: Reuters

Announcement expected on Air Force tanker deal

The U.S. Department of Defense could make an announcement as early as Sept. 1 regarding a new competition for a $35 billion contract for aircraft refueling tankers to the U.S. Air Force. The DoD is expected to publish the final requirements for bids, which would come two weeks later than originally expected.

Source: Financial Times

BA mulls link-up with Alitalia

British Airways is considering a partnership with struggling Italian airline Alitalia, according to people familiar with the matter. A group of Italian investors on Sept. 1 will launch a formal offer for Alitalia's potentially profitable assets -- including its newer planes and airports slots -- with the aim of merging them with smaller Italian carrier Air One.

Source: Wall Street Journal

Baird expands Chinese operations

US-based investment bank and asset manager Baird will expand on Sept. 1 investment banking operations in Asia as it grows its Chinese business, highlighting the growing opportunities for mid-sized banks seeking to service deal activity involving mid-market Asian companies. Milwaukee-based Baird will hire Anthony Yan-Hong Siu, a former senior banker at Standard Chartered in Hong Kong, who will focus on cross-border mergers and acquisitions activity.

Source: Financial Times

ECB expected to hold interest rates

Experts expect the European Central Bank to keep interest rates at a seven-year high this week, with some predicting the bank possibly could raise them at the risk of prolonging the economic slump. All but one of 47 economists surveyed think the Frankfurt-based central bank will leave the benchmark rate at 4.25 percent on Sept 4.

Source: Bloomberg

Banks turn to Europe for safe investments

Banks transferred funds out of the U.S and into Europe in the first quarter of 2008 as institutions turned to safer assets amid the global credit crunch, according to the Bank for International Settlements. Net outflow from the U.S. topped $259 billion during the first quarter of year, following a net outflow of $238 billion during the second half of 2007.

Source: Reuters

Zipcar faces tough times

Soaring gas prices should be benefiting car-sharing club called Zipcar. Yet although the privately held company expects to pull in about $100 million in revenues this year, up from $60 million last year, it won't be in the black until 2009, at the earliest. That's because Zipcar's all-in-one price scheme leaves it vulnerable to volatile fuel prices and other costs.

Source: BusinessWeek

Iraqi bonds post big returns

Iraq's bonds are delivering the biggest returns in emerging markets as oil export revenue bolsters government finances and violence declines. The country's $2.7 billion of 5.8% bonds due 2028 gained 45% since August 2007, according to Merrill Lynch. Investors demand 4.84 percentage points more in yield to own the debt instead of Treasuries -- a spread that's narrower than for notes of Ohio banks National City Corp. and KeyCorp.

Source: Bloomberg

Conversation of the Day: MBA Moms Who Opt Out

Reader Ajj Writes: "I am an MBA mom and I have lots of friends in the same position. We spend our time fund-raising to improve schools, leading scout troops, volunteering in the classroom, chaperoning field trips, and driving 'working parent's' kids to after-school activities."

Tell Us: Is an MBA Good Prep For Parenting?

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