[华尔街日报亚洲版].WSJA-180711-COMPLETE

VOL. XXXV NO. 224 * * Monday, July 18, 2011 OPINION: Jim Grant on a New Gold Standard Page 14 Ruin and Rebirth: AHigh-SchoolBaseballTeam—andJapan—Recovers WORLDNEWS Page 4 ASIA As of 4 p.m. ET DJIA 12479.73 À 0.34% FTSE 100 5843.66 g 0.06% Nikkei 225 9974.47 À 0.39% Shanghai Comp. 2820.17 À 0.35% Hang Seng 21875.38 g 0.30% Sensex 18561.92 g 0.30% S&P/ASX 200 4473.50 g 0.38% asia.WSJ.com (India facsimile Vol. 3 No. 29) Australia:A$6.00(InclGST),Brunei:B$7.00,China:RM B25.00,Hong Kong:HK$18.00,India:Rs25.00,Indonesia:Rp18,000(InclPPN),Japan:Yen500(InclJCT),Korea:W on2,500, M alaysia:RM 6.00,Pakistan:Rs140.00,Philippines:Peso80.00,Singapore:S$4.00(InclGST),SriLanka:Slrs180(InclVAT),Taiw an:NT$60.00,Thailand:Baht50.00,Vietnam :US$2.50 KKDN PP 9315/10/2011 (026992) M ICA (P) NO.164/10/2010 SK.M ENPEN R.I.NO:01/SK/M ENPEN/SCJJ/1998 TGL.4 SEPT 1998 FewSigns OfGains InDeficit Showdown WASHINGTON—The White House and Republican leaders appeared to have made little progress over the weekend in fashioning a deal to raise the nation’s borrowing limit, with just 15 days left before the U.S. might begin defaulting on its obligations if Congress doesn’t act. Both sides have struggled for weeks to come up with a deficit-reduction package that they hope would win enough support in Congress for law- makers to also raise the $14.29 trillion debt limit be- fore Aug. 2. After that date, White House officials say the country could begin start missing payments, including to Social Security recipients and creditors. White House budget direc- tor Jacob Lew and Sen. Jon Kyl (R., Ariz.) said separately Sunday the government would not default on its debts, but they suggested a pathway for Please turn to page 18 BY DAMIAN PALETTA AND KRISTINA PETERSON U.K. PoliceArrest Brooks in Probe The U.K. police investiga- tion into alleged phone hack- ing took a dramatic turn Sun- day with the arrest of Rebekah Brooks, the former chief of News Corp.’s U.K. newspaper unit who resigned Friday. London’s Metropolitan Po- lice, known as Scotland Yard, arrested her around noon Sunday when she appeared by appointment at a London po- lice station. She hadn’t been charged. It was the 10th arrest by police in a dual probe investi- gating allegations of voice- mail interceptions and cor- rupt payments to police. The allegations focus on the News of the World, News Corp.’s Sunday tabloid that the com- pany recently closed after 168 years amid an escalating scandal. News Corp. owns Dow Jones & Co. and The Wall Street Journal. By midafternoon on Sun- day, Ms. Brooks remained in police custody along with her legal representation, accord- ing to a spokesman for the former News International chief executive. “She is assist- ing police at the moment,” the spokesman said, noting that the appointment with police was prearranged. “Until that’s completed, I can’t really say any more.” Ms. Brooks is due to come under public scrutiny this week when she is due to ap- pear before a parliamentary committee alongside News Corp. Chairman and Chief Ex- ecutive Rupert Murdoch and his son, James Murdoch, News Corp.’s deputy chief op- erating officer. The trio will face questioning from U.K. politicians about the hacking and whether executives previ- ously misled Parliament. The News Corp. phone- hacking scandal involves alle- gations that the company’s News of the World tabloid il- legally accessed mobile-phone voice mails and bribed police to get information. The scan- dal has been simmering for years but escalated to a new level recently with the allega- Please turn to page 16 BY CASSELL BRYAN-LOW AND PAUL SONNE Rebekah Brooks resigned Friday as head of News International. D em ot ix ChinaBlasts DalaiLama’s ObamaVisit BEIJING—China lodged formal protests with the U.S. government over President Barack Obama’s private meet- ing with the Dalai Lama, ac- cusing Washington of “grossly” interfering in China’s internal affairs and damaging bilateral relations. The protests were ex- pected as China always ob- jects to the exiled Tibetan spiritual leader meeting for- eign leaders. But they none- theless threaten to sour the atmosphere for planned visits to China by U.S. Secretary of State Hillary Clinton next week and Vice President Joe Biden next month. China’s Foreign Ministry said Sunday that Vice Foreign Minister Cui Tiankai sum- moned Robert S. Wang, the charge d’affaires at the U.S. Embassy in Beijing, to regis- ter an official complaint over the 44-minute meeting in the White House on Saturday. “The Chinese side pointed out that regardless of China’s firm opposition and solemn representations, the U.S. side insisted on arranging for President Obama to meet the Dalai Lama at the White House,” the Foreign Ministry said in a statement on its website. “This seriously inter- fered in China’s internal af- fairs, hurt the feelings of the Chinese people, damaged China’s core interests, and damaged China-U.S. relations. The Chinese side expressed its strong indignation and firm opposition.” China regards Tibet as part of its territory and sees the Dalai Lama, who fled into exile in India in 1959, as a separatist. He says he is cam- paigning peacefully for greater autonomy and reli- gious freedom, not indepen- dence. The Dalai Lama, who won the 1989 Nobel Peace Prize, met with President Obama near the end of a 10-day trip to the U.S. during which he presided over a Buddhist teaching ritual and met with Please turn to page 18 BY JEREMY PAGE Darren Clarke of Northern Ireland celebrated after winning the British Open in Sandwich, England, on Sunday, ending the tournament at 5-under-par. WSJ.com/sports British Open: Darren Clarke Claims the Claret Jug European Pressphoto Agency dingbat Election in 2012 shadows deficit, debt-limits talks......... 8 Do impossible things as a team. “Salesforce Chatter onmy iPad allowsme to easily collaborate with our employees at a speed never before possible.” Michael Chasen President and CEO, Blackboard Inc. 2011 salesforce.com, inc. Salesforce, salesforce.com, Chatter, and chatter.com are trademarks of salesforce.com, inc. iPad is a trademark of Apple Inc. Othermarks used are property of their respective owners. 2 THE WALL STREET JOURNAL. Monday, July 18, 2011 THE WALL STREET JOURNAL ASIA Dow Jones Publishing Company (Asia) 25/F, Central Plaza, 18 Harbour Road, Hong Kong Tel 852-2573 7121 Fax 852-2834 5291 www.wsj-asia.com SUBSCRIPTIONS and Address Changes, please telephone our local customer service hotline, Hong Kong/Taiwan: 852-2831 2555; Beijing: 86-10 6581 4090; Shanghai: 86-21 5836 8228; Indonesia: 62-21 527 7592; Japan: 81-3 6269-2760; Korea: 82-2 756 1695; Malaysia: 60-3 2026 4061; Philippines: 63-2 848 5873; Singapore: 65-6415 4000; Thailand: 66-2 690 4222 to 7; India: 91-11 6462 0215. Or email: service@wsj-asia.com ADVERTISING SALES worldwide through Dow Jones International. Hong Kong: 852-2831 2504; Singapore: 65- 6415 4300; Tokyo: 81-3 6269-2701; Frankfurt: 49 69 29725390; London: 44 207 842 9600; Paris: 33 1 40 17 17 01; New York: 1-212 659 2176. Or email: wsja.publisher@dowjones.com Trademarks appearing herein are used under license from Dow Jones & Company. USPS 337-350ISSN 0377-9920 PAGE TWO ONLINE TODAY Most read in Asia 1. Why My Father Hated India 2. China to Release Pork Reserves as Prices Soar 3. Election Shadows Deficit Battle 4. Google: The Beginning 5. U.S., Vietnam Begin Naval Exercises Most emailed in Asia 1. Why My Father Hated India 2. Why China Looks Like a Buy 3. Kelly Wearstler 4. Google: The Beginning 5. If Treasury Bonds Aren’t Safe, What Is? Venture Capital Dispatch blogs.wsj.com/venturecapital A look at Tangoe, a Connecticut-based technology start-up that saw its valuation jump 38% in 75 days. Continuing coverage Find the latest insight and analysis on China at: blogs.wsj.com/chinarealtime Speakeasy blogs.wsj.com/speakeasy Author Lisa See discusses the film version of her bestselling 2005 novel, ‘Snow Flower and the Secret Fan’ by director Wayne Wang. i i i Business & Finance n ECB President Trichet re- peated his objection to any in- volvement of investors in Greece’s government bonds that would constitute a default. 3 n European regulators said just eight of the 90 banks it examined fell short of the required amount of capital under “stress test” sim- ulations, but it failed to provide relief for the euro. 19, 29, 34 n Investors are weighing alterna- tives for Treasurys—gold, German government bonds and FDIC-in- sured deposits that offer no inter- est—as they envision the worst case on the U.S. debt talks. 19 n The U.S. told Credit Suisse that it is a formal target of a criminal investigation into how Swiss financial institutions alleg- edly helped U.S. citizens avoid paying U.S. income tax. 21 n Citigroup earnings rose 24% in the second quarter, aided by strong growth overseas and fall- ing loan losses, but said rising ex- penses would remain elevated. 27 n The first share listing on the Tokyo Aim market for profes- sional investors was left untraded on Friday, a bleak sign for the fu- ture of the fledgling exchange. 18 n Activist investor Carl Icahn has moved to put Clorox in play, launching a bid that values the 98-year-old maker of household products at $10.2 billion and pressing the company to seek other possible buyers. 20 nMcDonald’s is raising prices of some of its menu items in China to help offset food-cost and wage inflation in the country. 23 n A Chevron email blunder gave an unintended glimpse on Friday into the inner workings and rich profits of the company’s energy- trading operations. 21 i i i World-Wide n Syria’s political opposition elected part of a standing commit- tee to push for the ouster of Presi- dent Bashar al-Assad, but fell short of the hopes of some mem- bers to create a shadow govern- ment at a weekend conference in Istanbul. 10 n Egypt’s prime minister named two deputy prime ministers in the first phase of a cabinet reshuffle aimed at appeasing protesters who have continued to occupy Cairo’s Tahrir Square for more than a week. 10 n Japan’s Fukushima Daiichi nu- clear plant largely met the three- month goals laid out in the road map for bringing the plant to a safe condition. 4 n Japanese authorities plan to ban cattle shipments from Fuku- shima prefecture as more animals have been identified as having consumed contaminated feed. 4 n The U.S. and Vietnam launched a series of naval exchanges in the latest sign of warming ties as both nations grapple with ways to contain a more-assertive China. 6 nMumbai is unprepared to han- dle large-scale terror attacks based on details that emerged about the city’s response to blasts that rocked the city last week. 6 Mount Lokon spewed volcanic ash Sunday, as seen, above, from Tomohon, North Sulawesi, Indonesia. The volcano unleashed its most powerful eruption yet Sunday, spewing hot ash and smoke into the air and sending panicked villagers racing back to emergency shelters. There were no immediate reports of casualties. A ss oc ia te d Pr es s What’s News— Inside In Depth: How studio aims to keep Harry Potter in business. 17 Business & Finance: Will Australia begin cutting rates? 19 Heard on the Street: Solving Japan’s electri- city problems. 34 Management: Piyush Gupta lays out growth strategy for DBS. 36 Monday, July 18, 2011 THE WALL STREET JOURNAL. 3 WORLD NEWS Trichet, Banks Jostle Ahead of Greece Summit As euro-zone leaders prepare to meet Thursday to hash out a new funding package for Greece, Euro- pean Central Bank President Jean- Claude Trichet repeated his objec- tion to any involvement of investors in the country’s government bonds that would constitute a default. In a newspaper interview, Mr. Trichet again warned that the cen- tral bank would refuse to accept Greek government bonds as collat- eral for short-term loans, potentially depriving Greek banks of access to their main source of funding. “All over the world, the best pri- vate-sector involvement is foreign direct investments, privatization and going back as soon as possible to spontaneous market financing,” Mr. Trichet said in an interview with Financial Times Deutschland. But despite Mr. Trichet’s objec- tions, some form of private-sector involvement seems likely. In a state- ment Sunday, the Institute for Inter- national Finance said progress has been made in the continuing talks between banks and euro-zone offi- cials on funding for the Greek gov- ernment, without being more spe- cific. The IIF, which represents more than 400 financial institutions world-wide and has taken a leading role in the talks, said bondholders met euro-zone officials in Rome on Thursday and Friday in talks hosted by Vittorio Grilli, head of the Euro- pean Union’s Economic and Finance Committee. “Participants representing pri- vate investors in Greek bonds con- tinued to explore with public-sector officials several options related to Greece’s financing needs and longer- term debt sustainability,” the IIF said. “Progress has been made and the discussions are continuing.” Euro-zone governments and the ECB have been arguing for three months about whether banks and other bondholders should be made to share the burden of funding Greece, with the ECB and some na- tional governments arguing that im- posing costs on private investors could wreck the market’s confidence in many other euro countries. But Germany, Europe’s biggest economy, has insisted there can be no new money for Greece without private-sector involvement, and is now close to a deal that would im- pose Berlin’s will on the euro zone. The ECB appears to have lost the support of national governments in recent days, as euro members have swung behind Germany’s desire for bondholder participation. However, one option that may appease the ECB is a buyback of Greek government bonds using funds provided by the European Fi- nancial Stability Facility, the euro zone’s bailout fund. In an interview with Greek news- paper To Vima published Sunday, ECB Executive Board Member Lorenzo Bini Smaghi endorsed that option, which is also favored by the IIF. Mr. Bini Smaghi said a buyback would be beneficial for investors and the government, although it would require a change to the EFSF’s rules of engagement. “This would allow the private sector to sell while the public sector would save money,” Mr. Bini Smaghi said. Senior officials from euro-zone countries are rushing to complete technical negotiations in coming days so leaders can approve a blue- print at Thursday’s summit. The blueprint will aim to reduce Greece’s crushing debt burden, which most euro-zone policy makers now pri- vately accept is unsustainable, peo- ple familiar with the matter said. In recent days, Germany had been publicly skeptical about the point of holding an early summit, arguing that more time was needed to prepare an agreement. But Berlin has now accepted that urgent action is needed, because continuing un- certainty over Greece’s fate has led to a widening investor panic in the past week, according to people fa- miliar with the situation. A sharp selloff of Italian and Spanish bonds in recent days fueled fear that the debt crisis might esca- late beyond Europe’s control, and led to pressure from Southern Euro- pean countries on Germany to take decisive action. Speaking to German broadcaster ARD on Sunday, German Chancellor Angela Merkel said she isn’t seeking a Greek default. “We’re trying everything we can to prevent” a default, she said. “But I say very clearly: a partnership with private investors shows that in Greece we have a unique problem because of the very, very high amount of debt.” Investors may be offered a num- ber of options under the new fund- ing plan for Greece, with one being an exchange of existing Greek bonds for new, long-term Greek debt obli- gations. Whatever option they choose, bondholders would be expected to take a write-down on their Greek debt holdings if they haven’t done so already. It isn’t clear how far such plans would go toward reducing Greece’s overall debt, since their impact de- pends on the fine print and on how financial markets respond, analysts said. European leaders on Thursday may only sign off on an outline of a deal, leaving officials to finalize the details in coming weeks, including in continuing talks with European banks. Although officials say the plan will be presented as voluntary, gov- ernments expect that credit-rating firms will declare that Greece is in “selective default,” meaning that part of its debt isn’t being serviced fully. But governments believe that outcome is unavoidable if there is to be any burden-sharing with inves- tors. The rescue package for Greece aims to cover a financing gap in Greece’s public finances of €100 bil- lion ($141.57 billion) in coming years that wasn’t covered by last year’s initial, €110 billion bailout of the country by the euro zone and the International Monetary Fund. The full package may take until September to complete. The ex- panded bailout of Greece requires Athens to implement drastic auster- ity measures, on top of existing spending cuts and tax increases, and to raise €50 billion by privatizing state assets. Even if euro-zone leaders agree on a plan to fund Greece, it may be too little, too late to help other euro-zone members facing fiscal dif- ficulties. Under its November bailout agreement, Ireland had hoped to re- start bond sales in the second half of next year. But European Commis- sioner for Economic and Monetary Affairs Olli Rehn on Sunday admit- ted that was now unlikely to hap- pen. —Charles Forelle, Eamon Quinn and Patrick McGroarty contributed to this article. BY PAUL HANNON 4 THE WALL STREET JOURNAL. Monday, July 18, 2011 WORLD NEWS: JAPAN Takata Team Plays in Baseball Series KANEGASAKI, Japan—Early in the second inning, Takata High School infielder Shin Takita cracked a line drive into left field. Team cap- tain Masato Owada sprinted in to score the game’s first run. Hundreds of fans from Rikuzen- takata, the school’s hometown, erupted in cheers and applause. It was an auspicious start for a team that in many ways was lucky even to take the field. Their city was one of the hardest hit when a deadly tsunami slammed into northeastern Japan on March 11. Takata High was destroyed. Play- ers’ homes were washed away. Their family members, classmates and friends were killed. Starting shortstop Yosuke Sato lost his house and nearly all of his possessions in the tsunami. Catcher Shinnosuke Yoshida’s father remains missing. Relief pitcher Kou Iwabu- chi’s grandfather was killed. Still, on Saturday morning, it was all smiles and high fives in the dugout as Takata took the lead in its game with Morioka Technical High School in the first round of the sum- mer high-school baseball tourna- ment. The Takata team was determined to do well in what is one of Japan’s biggest sporting events, which in- volves high schools across the coun- try. It starts with prefectural compe- titions like the one this weekend, with winners advancing until finally a national champion is declared later in the summer in Osaka. For many, baseball has helped re- store some semblance of normalcy to upended lives and offered an es- cape from the often discouraging re- alities off the field as Rikuzentakata struggles to rebuild. But it is hard to outrun tragedy. On the Takata bench Saturday was a picture of popular pitcher Akitoshi Kanno and his family. Akitoshi’s par- ents died in the tsunami, and he had to leave to live with relatives in an- other city. When the tsunami struck, the team was practicing at its hilltop training ground behind the school. The players, along with scores of others fleeing the waves, spent the night huddled in the frigid dirt- floored field house. Nearly a tenth of Rikuzentakata’s 23,000 people were lost in the di- saster, which left the city’s down- t