In the news: Wednesday


Budget hotel chain, Travelodge to get rid of porn
In a move that will eliminate many millions of dollars from Travelodge’s revenue stream, the hotel chain will remove “all pornographic pay-per-view TV channels from its 20,000 bedrooms, in an effort to become more family-friendly.” This move comes shortly after the budget hotel chain went above and beyond the law by banning smoking in all of its rooms. The company plans to distract its guests – because who doesn’t enjoy porn with loved ones while vacationing on a budget – with approximately $20m worth of flat screen televisions packed with family programming. Despite the fact that income from ‘adult programming’ amounts to 10% of an annual stream of hundreds of millions of dollars for the hotel industry, Travelodge hopes to attract more of the middle-class vacationers who currently contribute about 70% of the hotel chain’s sales. Considering that cheap hotels and porn are about as complimentary as peanut butter & jelly, and vacationers – as opposed to business people, traveling salesman, circus performers, etc. – are the first to drop out of the customer base on account of minor trifles such as recessions and the like, this seems like a risky move. [Daily Telegraph]

Italy forced to bail out Italian bank, Italease
Italease is reported to have lost approximately 75% of its value since April on bad – and leveraged, lets not forget – trades in the derivatives markets. In response Italy’s central bank plans to “install its own interim management after conducting a review (“very harsh criticisms,” apparently) of Italease’s disastrous bets on leveraged credit futures.” This situation is somewhat odd in that it spiraled out of control in a matter of weeks, and at a bank that went from generating none of its income in 2003 to roughly a quarter of its income in 2006 from futures contracts. A representative from the Italease told London’s Daily Telegraph, “These derivatives were very complex [duh, they’re derivatives] and suddenly turned against us. They started moving in a non-linear way [duh, not all movements in the market are linear], so the losses were rising exponentially.” If you don’t understand a product, or aren’t prepared to deal with its non-conforming feature in an erratic setting, then you shouldn’t bet the bank on it. [Daily Telegraph]

Surprise: Bank of Israel raises interest rate
In an unexpected move, Israel’s central bank raised its benchmark lending rate to 3.75% from 3.5%. Some describe the decision as “panic,” and are concerned about shekel appreciation and its affects on exports. BOI cited the following as reasons (note the persistent citing of ‘expectations’):

  • Rapid economic expansion –expected at 5.1% this year, after y/y growth of 6.3% and the lowest unemployment rate in a decade during the first quarter

  • Expectations for higher worldwide inflation, specifically in the energy and food-stuffs sectors, which will affect prices for Israeli imports. To which an Israeli economist aptly responds, “higher Israeli rates won’t offset the inflationary impact of higher world commodities prices.”

  • Israel’s current-account surplus is expected to reach $6.6 billion, falling from a record $8b. last year

  • Wages are expected to increase 3% this year after a 2% rise in 2006

  • Forecasters expect inflation to rise by 2.7% within the next 12 months [Jerusalem Post]

Toastmasters coming to Abu Dhabi: A beginning to the end of a once decent track for owning most of the world – Abu Dhabi’s Chamber of Commerce and Industry (ADCCI) plans to work with Toastmasters, a US company that encourages public speaking through local club membership, in order to develop some sort of communication/leadership program to serve government and local businesses. A representative for the ADCCI says that “the programme aims at supporting the society’s needs and requirements, so that it may add knowledge and experience to all those working for different government bodies, local companies, private and official institutions.” When thinking of Toastmasters, as I do never, impressions of global dominance and constructiveness almost never cross my mind. If you have to teach people to listen, then you have bad people. [Khaleej Times]

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