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Gold drops by more than five per cent as equities spring back
GOLD plummeted by over five percent yesterday -- its sharpest decline innearly three years -- as some investorscashed in on its recent surge andswitched to equities ahead of FederalReserve chief Ben Bernanke’s hotly-anticipated speech at Jackson Hole. The precious metal – which soaredto over $1,900 an ounce earlier in the week – sank as low as $1,756. TheCME Group exchange hiked gold mar-gins by 27 per cent last night, effec-tive from the close of play thisevening.European stocks closed at a one- week high, with the Dow Jones up1.29 per cent -- boosted by surprisingly positive US durable goods data, as well as hopes that Bernanke will sig-nal more quantitative easing onFriday.Last year Bernanke used the eventto lay the path for the second phaseof asset-purchases, dubbed QE2. The Fed could instead go for“Operation Twist” -- seeking to flattenthe US yield-curve by purchasinglong-term Treasuries while issuingshort-term bills, analysts have specu-lated.But hedge funds opened the biggest short positions on the US S&P500 index since 2008, data showed, inanticipation of more stock price fallsto come if QE3 isn’t implemented.Meanwhile the CongressionalBudget Office (CBO) said that the US will rack up $3.487 trillion in cumula-tive deficits over 10 years, some $3.3trillion below its last projection,although unemployment and growthcould turn out worse than expected.
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www.cityam.comIssue 1,454 Thursday 25 August 2011
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BUSINESS WITH PERSONALITY
Certified Distribution04/07/2011 till 31/07/2011 is 93,093
STEVE JOBS QUITSAS APPLE’S CHIEF
 Apple stock was briefly suspend-ed following the post-bell announce-ment, after which it slid as much asseven per cent – knocking $25bn(£15.3bn) from its value.In an emotional letter, Jobs toldthe Apple board: “I have always saidif there ever came a day when Icould no longer meet my duties andexpectations as chief executive, I would be the first to let you know.Unfortunately, that day has come. Ihereby resign as chief executive of  Apple.”He went on to say that he believes Apple’s “brightest and most innova-tive” days are ahead of it, adding helooks forward to “contributing to itssuccess in a new role”.His departure is the second timehe has left the top job, the first com-ing in 1984, when he was forced outafter a boardroom struggle. In hisabsence the company almost went bankrupt, its value consistingalmost entirely of cash and proper-ty. His return in 1997 was wildly transformative, leading to anunprecedented string of iconic prod-ucts including the iPod, iPhone andiPad. The unparalleled success guided Apple to the summit of the S&P 500– a feat that only a year ago seemedall-but impossible. Apple briefly passed Exxon Mobilto join an exclusive club of just 10firms to top the index, alongside thelikes of Ford, General Electric andMicrosoft.
 
STEVE JOBS last night resigned aschief executive of Apple, telling the board he is no longer able to meethis duties.His shock departure heralds theend of an era for one of the world’s biggest firms and most colourfulchief executives. The decision follows a sevenmonth medical leave of absence,during which his public appear-ances have been limited. His healthhas been a persistent source of spec-ulation since he battled pancreaticcancer in 2004 and underwent aliver transplant five years later. The talismanic figure will stay onas chairman of the Cupertino-basedfirm. Tim Cook, the former IBMdirector who is currently standing-in as chief executive, has been hand-ed the top job on a permanent basis.
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Steve Jobs will stay on at  Apple as chairman. TimCook (right) will take over as chief executive. Picture: REX 
 
News
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CITYA.M.
25 AUGUST 2011
Libyan rebelsstart with oil
LIBYAN rebel leaders have already called workers back into the nation’soil refineries and say pre-conflict lev-els of production could be reached within a year. The country’s TransitionalNational Council (TNC) said damageto its oil infrastructure is not as badas previously feared, adding resump-tion of its 1.6m barrels a day outputis an achievable goal.Meanwhile, Libya’s new mastersoffered a million-dollar bounty forthe fugitive Muammar Gaddafi, afterhe urged his men to fight on in bat-tles across parts of the capital.Mustafa Abdel Jalil, head of the TNC, said: “Gaddafi’s forces and hisaccomplices will not stop resistinguntil Gaddafi is caught or killed. Theend will only come when he’s cap-tured, dead or alive.”In a poor-quality audio tape broad-cast by satellite, Gaddafi urged Libya’stribes to “exterminate traitors, infi-dels and rats”. Defectors say Gaddafiplans to drop out of sight and thenlaunch a guerrilla war. There is no clear indication of  where Gaddafi is, though his oppo-nents believe he is still in or around Tripoli after what Gaddafi himself described as a “tactical” withdrawalfrom his Bab al-Aziziya compound before it was captured on Tuesday.
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It can’t be wrong to work for a living
HOLD the front page – or rather,please don’t. Page 2 will do just fine. What I’m about to “reveal” is only news to a small, close-minded elite of out of touch politicians, left-wing aca-demics and social engineers. Believe itor not, but given the choice, people will pick a well-paid job with a lesshappy lifestyle (long hours, stress,uninteresting tasks) over a less well-paid job with a happier lifestyle. Thatis the main finding from an experi-ment involving thousands of adultsand students conducted by a team of economists. Obvious, really, to any- body who knows anything – yet bizarrely, the news will have come as ashock to many of those in and aroundthe government, especially those whohave inherited large sums of money. Itis easy for people who have the luxury of pursuing a career that satisfiesthem to look down on those for whom work is primarily a means to an end –providing for themselves and theirfamilies – yet those who sneer at suchmotives are being shockingly patronis-ing in an age of austerity, declining liv-ing standards, wealth-destruction andelevated unemployment. The study refutes the view that thegoal of government policy should beto directly pursue happiness ratherthan to create the conditions for pros-perity. Happiness – as measured insurveys – is not a goal for many peopleand is intentionally traded-off withother aspects of life. As Alex Rees-Jonesof Cornell University, one of theauthors, points out, if governmentsdesign policies to maximise happi-ness, they will end up imposinglifestyle choices and policies that peo-ple don’t actually want. The researchdoesn’t mention this, but we saw thatin France a few years ago when absurdlimits were imposed on people’s work-ing hours, partly in the name of boost-ing happiness: millions were angry,and ultimately undoubtedly lesshappy, as they genuinely wanted to work more and earn more to providefor their families. The best policy, asever, is freedom and individual liberty. The researchers asked people tochoose between a number of scenar-ios. Choices included picking either a job paying £49,000 per year which lets you get 7.5 hours of sleep a night or a job that pays £73,000 but whichallows just 6 hours sleep. Many gaveone answer for what would makethem happiest (usually more sleep,less money) and another answer for what option they would choose (moremoney, less sleep). They would oftenchoose an unhappy option if they thought it would give them greaterpurpose, social status, control or helptheir family. The lesson for the government issimple: ditch all the nonsense abouttrying to promote happiness, which infact merely reduces opportunities. Ata time when the proportion of youngpeople not in work, education ortraining is at a record high, we needmore jobs and more economicgrowth, not mumbo-jumbo and com-pulsory reeducation. We need to boostGross Domestic Product (GDP), not worry about Gross National Happiness(GNH). The previous government’sobsession with our “work-life” balance was always based on a meaninglessartificial dichotomy. It some cases itssole purpose was to justify lazinessand a culture of entitlement. It cer-tainly feels very 2007 to speak in thoseterms these days. If we want to affordto consume more in the years ahead –including more healthcare and otherservices – we will need to work harder,longer and smarter to pay for it.
allister.heath@cityam.com Follow me on Twitter: @allisterheath
GOOGLEhas agreed to pay a $500mto settle a probe into adverts it dis-played for Canadian online pharma-cies illegally selling prescriptiondrugs into the US. The settlement, one of the largestever in the US, represents Google’srevenue from Canadian pharmacy advertisements to US customersthrough its AdWords programmeand Canadian pharmacies’ revenuefrom US sales.Google announced in February last year that it would no longer allow Canadian pharmacies to advertise toUS customers. It had already set the$500m aside for a possible settle-ment. A Google spokesman said: “It’sobvious with hindsight that weshouldn’t have allowed these ads onGoogle in the first place.” The agreement with theDepartment of Justice sets compli-ance and reporting measures whichGoogle must take.
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Google in $500m payout
Google, led by Larry Page, say the adverts should never have appeared on their site
NEWS | IN BRIEF
Hulu draws lots of bid attention
The deadline for initial bids in the auc-tion for US television service Hulu wasextended from yesterday until the end of the week to allow interested partiesmore time to examine the online videosite's financial information, according topeople familiar with the situation.Yahoo, Google, DirecTV and Amazonwere among the parties preparing tosubmit an offer for the company, thepeople said. Hulu’s joint owners NewsCorp, Disney, NBC and ProvidenceEquity Partners hope to net at least$2bn for the company.
Oil price trading case nears end
High-frequency trading firm OptiverHolding has set aside $19.3m to dealwith one of the biggest oil-manipulationcases ever brought by the US futuresregulator, according to a copy of the pri-vate firm's annual report. The three-year-long case, brought by the USCommodity Futures Trading Commission(CFTC) against the Amsterdam-basedfirm, may now be heading for settle-ment. The second of two August media-tion sessions took place in New York thisweek.
EDITOR’S LETTER
ALLISTER HEATH
Editorial Statement
This newspaper adheres to the system of  self-regulation overseen by the Press ComplaintsCommission. The PCC takes complaints about theeditorial content of publications under the Editor’sCode of Practice, a copy of which can be found at www.pcc.org.uk 
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Colonel Gaddafi’swhereabouts were stillunknown last night asthe rebels moved toget Libya on its feet
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COULSON LEGAL PAYMENTS COULD BESTOPPED
News International’s senior manage-ment has met to consider stoppingpayments to Andy Coulson’s legalteam. Mr Coulson, the former editorof the News of the World who wasarrested in July as part of an investiga-tion into phone hacking, is takinglegal advice on the testimony he givesto parliament, and on the evidencehe gives to police in their two investi-gations into phone interception andinto corrupt payments to police.
WIND TURBINE PROJECT IS SHELVED
 A project to build the world’s largest wind turbine blade in Newcastle has been shelved. Clipper Windpower, aCalifornian company, was to havedeveloped and built the blade for theCrown Estate’s Britannia Project.United Technologies Corporation ter-minated the project.
PHOENIX EQUITY POISED TO SELL ASCO
Phoenix Equity Partners is preparingto sell Asco Group, the fast-growingoil and gas logistics business based in Aberdeen. The UK mid-market privateequity group has appointed advisory  boutique Lexicon Partners to soundout a possibble full disposal or partialsale of the company, two people closeto the situation said. The move comesas the oil and gas logistics businessseeks fresh capital to enter the nextphase of its international expansion.Lexicon started talks this week.
HEWLETT-PACKARD CHIEF SEEKS TOCALM IMPACT OF PC UNIT SPIN-OFF
Léo Apotheker is confident thatHewlett-Packard’s personal computer business will continue operating as well as it has been, “if not better”, inspite of plans to spin off the $40bn-revenue unit from the parent compa-ny. The chief executive of HP is keento reassure investors, suppliers andcustomers, who have been alarmedabout the effect of the move.
POUND FOR POUND, IRELAND IS THEWAY FORWARD
 With unemployment and austerity rising, now would not appear themost opportune moment for a grow-ing business to enter the Irish mar-ket. Unless you are a pound shop. 99pStores Group, one of several discountretailers to have taken advantage of empty shops to expand during therecession, is opening its first store inthe Republic of Ireland this month.
BIDDER TOLD TO DIG DEEPER AS AXIS-SHIELD WINS OVER CITY
 The embattled healthcare company  Axis-Shield shored up City support infending off a £230m Americantakeover by revealing a surge in salesof its machines to diagnose diabetes,flu and heart disease. Seven City ana-lysts published research yesterday arguing that a 460p-a-share bid fromthe Boston-based Alere was too low.
US EAST COAST RECOVERS AFTER RAREEARTHQUAKE
 Two nuclear reactors that were shutdown after a 5.8 magnitude earth-quake struck Virginia, sendingtremors across America’s east coast on Tuesday, have been restarted. Thereactors at the North Anna powerplant, just seven miles from the epi-centre in the town of Mineral, Virginia, shut down automatically  when the earthquake took place.
SILVIO BERLUSCONI HINTS HE WILLWRITE TELL ALL BIOGRAPHY
Silvio Berlusconi has said he may  write a memoir in which he will docu-ment all his sexual conquests. The 74- year-old prime minister dropped thehint at a recent dinner when the con- versation turned to claims made by anItalian footballer in an autobiography that he had slept with around 600 women.
APPLIED MATERIALS GLOOMY ONOUTLOOK
 Applied Materials Inc. provided a dis-mal fourth-quarter outlook amidslowing personal-computer sales anda weakening economy, overshadow-ing a leap in quarterly profits for the big Silicon Valley maker of machinetools. The company, which makesequipment used to manufacturesemiconductors, yesterday predictedthat net sales in the fourth fiscalquarter will decline 15 per cent to 30per cent from third-quarter levels.
GUESS PROFIT FALLS 9.1 PER CENT ONSETTLEMENT CHARGE
Guess Inc’s fiscal second-quarter prof-it fell 9.1 per cent on a settlementcharge, though the apparel makerposted better-than-expected revenueon double-digit sales growth inEurope and Asia. Shares fell 3.1 percent to $32.25 in after hours trading.
WHAT THE OTHER PAPERS SAY THIS MORNING
 
GERMAN president Christian Wulff  blasted the European Central Bank’smass acquisition of government debtas “legally questionable” yesterday. Wulff cited an article in theEuropean Union’s fundamental treaty, which prohibits the ECB from buying bonds directly from governments.“This ban only makes sense if thoseresponsible don’t circumvent it withcomprehensive purchases on the sec-ondary market,” he added.On a fiery day in the Eurozone’s biggest economy, German chancellor Angela Merkel – fresh from beingnamed the world’s most powerful woman – reasserted her objection toeuro bonds. “It is politically irresponsi- ble to succumb to the longings for aquick fix,” Merkel said.“If the euro were to fail, the entireEuropean project would be at risk,”she warned, yet described euro bonds– which would spread the burden of troubled states’ debts across all mem- ber countries – as “not at a solution”. Yields on Greek two-year bonds roseto their highest levels since the launchof the euro in 1999, to reach 44 percent; five-year Greek credit defaultswaps jumped 106 bps to 2,200 bps.Furthermore, the ECB revealed yes-terday that lending to banks shot up to
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2.8bn on Tuesday, a two week high.Germany’s economy had been dealtanother knock earlier, with the Ifo business confidence index showing itssteepest drop this month since soonafter the Lehman Brothers collapse. The index fell to 108.7 in Augustfrom 112.9 in July. Business confidencealso plummeted in neighbouringBelgium, falling at its quickest raterate since December 2008. The downbeat surveys are mirroredcloser to home today, withNationwide’s consumer confidenceindex sinking again. The index slippedfrom 51 in June to 49 in July, it said.Official data from the Eurozone wasalso bearish, with industrial ordersacross the 17-nation single currency area dropping by 0.7 per cent in June.
Legal doubtsover Europe’sbond buying
NICOLASSarkozy yesterday said he will tighten France’s belt to the tuneof 
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11bn (£9bn) next year to ensure itstays on track with deficit targets. The budget savings announce-ment came after France was forcedto scale back its economic growthforecasts for 2012 from 2.25 per centto just 1.75 per cent. It has alsotrimmed its 2011 growth forecastfrom two per cent to 1.75 per cent.Prime Minister Francois Fillon saidthe rich will be asked to put theirhands in their pockets, with a new three per cent tax on annual rev-enues above
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500,000 and changes totaxes on real estate capital gains.He said: “This is a rigorous policy that will allow France to remainrelaxed. Our country must stick toits commitments. It’s in the interestof all French people.”Meanwhile, a small group of super-rich French businessmen, backed by Publicis boss Maurice Lévy and L’Oréal heiress LilianeBettencourt, have formed a lobby group calling for the country’s wealthiest to make an “exceptionalcontribution” to the government’srevenues.
Sarkozy aims for €11bnin extra savings by 2012
 France's President Sarkozy has been wary of imposing austerity measures Picture: REUTERS
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CITYA.M.
25 AUGUST 2011
 THE UK and Switzerland last nightunveiled a landmark deal that will seeover 15,000 British holders of Swiss bank accounts pay up to £5bn in tax.Under the historic agreement,funds held by UK taxpayers inSwitzerland will be subject to a one-off levy of between 19 per cent and 34per cent, depending on the amountkept in the account, to settle all pasttax liabilities. The Treasury estimates that thereis some £20bn in UK funds stashed inSwiss accounts and that the totalhaul from the one-off levy could netthe exchequer up to £5bn, making asignificant one-off contribution torepairing the public finances.Swiss banks will initially make aone-off payment of SwFr500m(£384m) to Britain, with the remain-der likely to be paid in the 2013-14 tax year once legislation has been passedin the Commons.In a concession to Switzerland’smuch-cherished principle of bankingsecrecy, the taxes will be collected atsource and paid directly to theexchequer by the banks. All accountholders will remain anonymous.Chancellor George Osborne said of the deal: “The days when it was easy to stash the profits of tax evasion inSwitzerland are over.”
Treasury looksto net £5bn inSwiss tax grab
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