Budget Issues a Concern for Williams in Second Term

As he begins his second term in office, Philadelphia District Attorney Seth Williams says he plans to continue the initiatives of his previous term while coping with the severe budgetary deficiencies in his office.

Budget Issues a Concern for Williams in Second Term

As he begins his second term in office, Philadelphia District Attorney Seth Williams says he plans to continue the initiatives of his previous term while coping with the severe budgetary deficiencies in his office.

Budget Issues a Concern for Williams in Second Term

As he begins his second term in office, Philadelphia District Attorney Seth Williams says he plans to continue the initiatives of his previous term while coping with the severe budgetary deficiencies in his office.

Concern Over Japan’s Growth Strategy

HONG KONG — Nearly a year after the Japanese began to hope that their economy could turn around under new leadership, a sense of realism is replacing the euphoria.

Economists and investors have grasped just how difficult it will be for Prime Minister Shinzo Abe to sustain the growth of the last few months. Nowhere is that sentiment more evident than the Japanese stock market. The Nikkei 225 index is now nearly 40 percent above where it started the year, but the gains during the last four months have been slight — just 3.4 percent.

The economic recovery Mr. Abe engineered during the last year has been remarkable given the decades Japan in which languished. Buoyed by a big pickup in public works spending and a Bank of Japan policy of flooding the economy with low-interest money, growth has accelerated markedly. Deflation, the country’s biggest economic problem, seems to have disappeared.

The Japanese central bank said on Thursday that it now expected the economy to expand 1.5 percent in the year starting next April, up from a previous forecast of 1.3 percent.

The yen, whose persistent strength weighed on Japan’s important export sector for years, has fallen, making Japanese goods more competitive. That has helped corporate earnings recover, too.

For many ordinary Japanese and small businesses, however, the benefits so far are less tangible. “There is no Abenomics effect at all here,” Wakana Otake, the owner of a shop that sells ties in the Ginza shopping district of Tokyo, said Thursday. “We heard luxury items sell well in department stores and so on,” but her shop had seen no benefit so far, she said. “It’s actually worse than last year, and last year was worse than the previous year.”

Economists say some of the hardest work remains. Japan’s leaders still have not taken on the far-reaching structural changes to make the country’s businesses more competitive. The economists worry that without reform, Japan could slide back into the deflation mode that had dogged it for more than a decade.

Nicknamed the “third arrow” of Mr. Abe’s economic policy, these include efforts to make the labor market more flexible, improve productivity in the service sector and bring more women into the work force. Under a growth strategy laid out in June, Mr. Abe also set the goal of creating special economic zones that would relax some regulation and attract foreign investors.

Many of the plans laid out in June, however, lack detail and risk being watered down, analysts said. Similarly, plans to lower corporate taxes — a move seen as crucial to bolstering Japan’s competitiveness and encouraging more foreign companies to bring operations to the country — will not be completed until December.

“There is a sense that the series of strong announcements earlier has been replaced by mere holding statements,” said Gary Dugan, chief investment officer for Asia and the Middle East for the wealth management company Coutts.

The third arrow of the recovery plans seems to be “veering off target,” he said. “We have scaled back our optimism on Japanese equities until there are clearer signs that measures to help the economy are being brought back on track.”

Izumi Devalier, Japan economist at HSBC, said, “The third arrow has not even been fired yet.” She said, “Investors were hoping for really game-changing chances. But that’s not how politics works in Japan. You need to build a consensus between cabinet and the bureaucracy.”

The likelihood now, she said, is that “there is not going to be a lot of progress on the third arrow in the next few months.” Another problem is that the economic improvement of the last year has yet to directly affect many of Japan’s households. Although the job market is tight and unemployment is low, companies have so far largely resisted making large investments or raising salaries.

Government data released on Thursday underlined this point. Workers’ total earnings edged up just 0.1 percent in September, compared with a year earlier, and summer bonus payments, an important indicator of whether companies are willing to pay more, rose just 0.3 percent.

Consumer prices rose 0.7 percent in September, compared with a year earlier. That means real wages actually fell, Masamichi Adachi, an economist at JPMorgan in Tokyo, said in a research note. “While there is anecdotal information that labor shortages are pushing up the wages of certain types of workers” including construction-related workers and part-timers, he wrote, “average wages remained weak.”

And even though the wages of large companies are likely to increase in the next fiscal year along with profits, “it looks difficult to see a material rise in the average wages of all workers in the near future.”

Eric Pfanner and Makiko Inoue contributed reporting from Tokyo.

China’s Export Growth Slows Amid Concern of Slowdown

HONG KONG — Chinese exports showed only modest growth in May, rising just 1 percent from a year earlier, officials said Saturday, an increase that was much lower than analysts’ expectations.

In April, the increase was 14.7 percent, a figure that was believed to have been artificially inflated. Before Saturday’s figure came out, analysts expected Chinese exports to have risen at least 7 percent in May.

Concern is rising about the sputtering Chinese economy and tightening liquidity. The European Union, China’s biggest trading partner, remains mired in a stubborn economic downturn, while in the United States, China’s next-largest export market, the Federal Reserve has recently been sending signals it may start curtailing its stimulative monetary policies.

China’s figures showed it had a trade surplus of $20.4 billion in May, up from $19.3 billion, as imports declined 0.3 percent, the Customs Administration said. The drop in imports — however slight — was a possible sign of weakness in the domestic economy.

Chinese stocks declined last week, their first weekly decline in six weeks, amid signs of tightening liquidity within China. A clearer picture of the Chinese economy is expected Sunday, when the government releases data on retail sales, industrial output and inflation.

Economists had expected the May figures to show a slowdown, as the government has begun a campaign to prevent companies from overstating their exports. Many businesses are believed to have done so in March and April as a way to bypass currency controls and bring more money into the country to speculate on further appreciation of China’s renminbi.

The main evidence for such strategies lay in official statistics showing soaring exports to Hong Kong and bonded export zones on the mainland even as exports to the rest of the world from these places remained weak.

Louis Kuijs, an economist in the Hong Kong office of the Royal Bank of Scotland, had estimated in May that more than half of the officially reported growth of 14.7 percent in April from a year earlier was the result of companies’ manipulating their statistics to place bets on the Chinese currency. The true rate of export growth in April, without the effects of these strategies, was more like 5.7 percent.

The sharp slowdown in export growth in May “in part reflects the impact of a clampdown by the government on firms dressing up financial inflows as exports,” Mr. Kuijs said in an e-mail on Saturday.

Chinese customs data compiled by CEIC Data in Hong Kong showed that the mainland’s exports to Hong Kong were up only 7.7 percent in May from a year earlier. In April, they had been up 57.2 percent from the same month last year, and in March they had been up 92.9 percent.

Changing expectations about China’s currency — fewer businesspeople now expect further appreciation — may have also reduced the incentive for companies to overstate exports, Mr. Kuijs said.

In Europe, Growing Concern Slovenia Is Next to Need Bailout

The rewards of success included an imposing mountainside retreat and frequent mention of his name as a possible future finance minister of this small, idyllic Alpine country.

Now, though, Mr. Kordez stands convicted of forgery and abuse of office for financial dealings as Merkur struggled under a mountain of debt.

“My mistake and the mistake of the banks was to vastly underestimate the risk,” Mr. Kordez, 56, said in a recent interview at his home near the picturesque town of Bled, with a view of Slovenia’s highest peak. He awaits a decision later this month on an appeal of his conviction, which could send him to prison for five years.

As fears grow that Slovenia could follow Cyprus and become the sixth euro zone country to seek a bailout, his rise and fall have come to symbolize the way easy and cheap credit, combined with Balkan-style crony capitalism and corporate mismanagement, fueled a banking crisis that has unhinged a country previously praised as a regional model of peaceful prosperity.

The recent bailout of Cyprus at a cost of €10 billion, or $13 billion, which included stringent conditions forcing losses on bank depositors, has focused minds in Ljubljana, the Slovenian capital. Slovenia’s struggling banking sector is saddled with about €6.8 billion worth of nonperforming loans, about one-fifth of the national economy. Slovenia is now in recession, and the gloom across the euro zone shows little sign of abating. A European Commission forecast released Friday said that France, Spain, Italy and the Netherlands — four of the five largest euro zone economies — will be in recession through 2013.

Last Thursday, Slovenia bought time by borrowing $3.5 billion on international markets. That was two days after Moody’s Investors Service cut the country’s credit rating to junk status, citing the banking turmoil and a deteriorating national balance sheet. Analysts said the bond sale would probably enable the government of the new prime minister, Alenka Bratusek, to stay afloat at least through the end of the year.

The Cypriot debacle has shown how bailing out even a small country can damage the credibility of the euro currency union. But Slovenia, with two million people, insists that it is not Cyprus and will not seek emergency aid.

“For the time being, I have a sound sleep,” Ms. Bratusek, the 42-year-old prime minister, said in a recent interview.

This week, on Thursday, Ms. Bratusek, only a little more than a month in office, is expected to present a financial turnaround plan to the European Commission, the executive arm of the European Union. She said that privatizing Slovenia’s largely state-owned banking sector was a priority, along with creating a “bad bank” to take over nonperforming loans.

Her government, she said, will also unveil plans by July to sell the country’s second-largest bank, Nova Kreditna Banka Maribor, along with two large state companies that she declined to specify. The sales could raise up to €2 billion, she said.

Ms. Bratusek, who once headed the state budget office at the Finance Ministry, said Slovenia’s government debt, which analysts say rose from about 54 percent of gross domestic product to around 64 percent with last week’s bond sale, still ranked at the lower end of that scale in the euro area.

But the 6 percent interest rate Slovenia offered on the 10-year bonds in last week’s debt sale, at a time when some euro zone countries are enjoying historically low borrowing costs — Germany’s equivalent bond is trading below 1.2 percent — might only add to the country’s financial problems.

Mujtaba Rahman, director of Europe at Eurasia Group, a political risk consulting firm, said the new financing could backfire if it lulled the government into laxity about making vital structural changes.

“The new financing was not a vote of confidence in the Slovenian government or in the economy, but rather reflects investors attracted by high bond yields,” Mr. Rahman said. “A bailout could still prove inevitable.”

What went wrong in Slovenia? The country, wedged between Italy, Austria, Hungary and Croatia, was considered the most promising among the 10 new European Union entrants when it joined in 2004. That was 13 years after it declared independence from Yugoslavia, avoiding a bloody Balkan war that had swept up other countries in the region.

Concern and Canceled Flights as Airlines Wait for 787

Boeing is trying to convince federal regulators that it has found ways to prevent the hazards with the lithium-ion batteries that led to the grounding of the new planes in January. On Friday, the company met for several hours in Seattle with technical representatives of the airlines to go over those plans.

Since mid-January, the eight carriers that received 50 787s have canceled thousands of flights and scrambled to rearrange their schedules.

Because airlines have few planes to spare, the grounding of the 787s has had a ripple effect throughout their networks. United Airlines, for instance, has delayed new services between San Francisco and Paris and between San Francisco and Taipei, Taiwan, for several weeks because planes originally needed on those routes were being used as replacements for the 787s.

Boeing hopes the 787s, made with lightweight carbon composites to save fuel, can fly passengers again in April. But some aviation analysts said it could be three to six months before that happened.

Michael P. Huerta, the head of the Federal Aviation Administration, told Congress this week that agency experts were evaluating Boeing’s plans to redesign and test the battery. He said his staff would provide him with its assessment of Boeing’s proposals next week.

“Once we approve a plan, then we have to go through the process of actually implementing the plan, which would involve a great deal of testing, a great deal of further analysis and re-engineering before those planes will be flying again,” Mr. Huerta said.

Officials from the federal agency said Boeing needed to conduct more laboratory tests on the proposed changes before they would consider test flights.

Safety investigators are still not certain what went wrong in two separate incidents in which one battery caught fire and another emitted smoke.

Besides dealing with the hazards, Boeing will probably end up paying the airlines tens of millions in compensation for the disruptions, analysts said.

The plane’s biggest customer to date, Japan’s All Nippon Airways, has canceled over 3,600 domestic and international flights through May.

United, the only domestic carrier with the planes so far, has taken the 787s out of its schedule until June 5, said Christen David, an airline spokeswoman. United has made one exception to its 787 cancellations. A new service between Denver and Tokyo-Narita, which was supposed to begin on March 31, is now scheduled to begin on May 12.

United declined to say how much revenue it had lost because of the 787’s grounding and what type of compensation it would seek from Boeing.

Poland’s national airline, LOT, has taken its two 787s out of its schedule through the end of September and will also seek compensation from Boeing. One of its planes is still parked at Chicago’s O’Hare Airport.

Air India has said Boeing might provide compensation for the difference in the costs of operating a larger 777 instead of the more fuel-efficient 787.

The other 787 operators are Japan Airlines, Ethiopian Airlines, LAN Airlines of Chile and Qatar Airways. Boeing has orders for about 800 additional jets.

Raymond L. Conner, the chief executive of Boeing’s commercial airplane division, visited Japanese airline executives as well as regulators on a trip to Tokyo this week.

All Nippon has 17 787s, which make up about 7 percent of its fleet. The carrier has said that its 150 787-trained pilots have been forced to remain at home while pilots for other types of planes take on the additional workload. But the airline said this week that it had no plans to cut back on its orders for 49 more 787s.

Facebook Cancels Shortcut Over Concern for Security

SAN FRANCISCO — What was supposed to be a shortcut for Facebook users to log into their pages ended up exposing their e-mail addresses — and, in some cases, potentially allowing access to their accounts as well.

A Facebook spokesman said on Friday that the company had created the shortcut, called auto login, to let some users go directly to their pages by clicking on a Web link sent to their e-mail addresses. Once they clicked on the link, they could get into their accounts, rather than having to go to Facebook.com and log in.

Some of the links required users to type their passwords, while others did not, the company said.

On the Web site Hacker News, a technology discussion board, Matt Jones, an engineer at Facebook, said the company had offered the service for “ease of use” and never made the Web addresses “publicly available.”

But they did become publicly available, as the discussion on Hacker News revealed on Friday.

The Facebook spokesman, Frederic Wolens, said some users may have posted the links on the Web, allowing anyone to search for them. Those links could give a stranger access to the Facebook pages connected to them, as well as the e-mail addresses of those users. Mr. Wolens said he had no explanation why someone would post the links.  

When Facebook found the problem, it discontinued the shortcut.

The Hacker News thread said over one million Facebook accounts had been affected. Facebook could not confirm that figure on Friday afternoon.

TrendMicro, a private security company that offers safety tools for Facebook users, said Web address shortcuts were inherently dangerous because they could ultimately end up on the Web.

“Many, many hackers are targeting these portals because of the ubiquitous trust and use of them,” said Tom Kellermann, vice president for cybersecurity at TrendMicro. He added, “You don’t take shortcuts through the woods in cyberspace.”

The news of the security hole comes a week after a Bulgarian blogger, Bogomil Shopov, said he had bought 1.1 million Facebook users’ names and e-mail addresses on the Web for $5. He found the information for sale on a marketplace site, gigbucks.com. The items are no longer available.

Mr. Wolens of Facebook said the data had been acquired and compiled by someone who took whatever information Facebook users made public on their pages — and from other publicly available data about those users.

Mr. Kellermann of TrendMicro said the problem with the shortcut could explain how the names and e-mail addresses that Mr. Shopov had found became public. Facebook said the security flaw and the user data for sale had nothing to do with each another.

“We have no reason whatsoever to believe that these two incidents are related,” Mr. Wolens said.