A Philosophy of Life

The Credit Suisse Magazine Since 1895 Issue 2 International Edition/English June/July 2 011

West a philosophy of life

Announcing the new, dAily Shortcut to SINGAPORE Fly the shorter, faster route via Helsinki to all major destinations in Asia. See our opening offers at finnair.com/ch Flights start 30.5.

Flying often to Asia? Contact our sales team for Corporate Agreements at [email protected] and start saving money on your next flight. Editorial 1

“OH, East is East, and West is West, and never the twain shall meet …” Rudyard Kipling

Where is West? What is West? For one person, West may describe a position; for another, West may refer to direction. Paradoxically, whether you head west or east, you will eventually arrive at the same point if you just keep going long enough.

For my part, if I suggest heading to the West Side, I’m referring to all neighbor- hoods west of Fifth Avenue in Manhattan. This could mean the West Village, with its tree-lined, cobblestone streets and charming brownstones, so prominently displayed in the TV series “Sex and the City”; or the neighborhood known as Hell’s Kitchen, the backdrop of the musical and film “West Side Story.” Readers living in Beverly Hills, California, on the other hand, say West when referring to Santa Monica – and to Japan and China, which I think of as East, if not Far East. The point I’m making is that the term West is quite relative! Image Recognition The kooaba app – description and West and East were for many people defined during the Cold War, when West and instructions page 32 East battled for global power and influence. As a boy growing up in Europe, West to me meant the United States, and my image of the US came from American movies that ended with a cowboy riding alone into the sunset. I doubt that Euro- pean 10 -year-old boys today spend their Saturdays watching American Westerns. So, West probably means something quite different to them than it used to mean QR Code QR Code for the mobile bulletin’s to me. Indeed, it is impossible to come up with a definition of West that will be the Internet link page 32 same for all people or that will never change. (After all, when the Cold War ended and Germany was reunified, part of the East suddenly became the West, which would have upended Rudyard Kipling’s worldview.)

The dominant economic power of the West perhaps has reached its tipping point, as it did for Rome and as it did for so many other (former) superpowers. Obviously, no one knows how this “tipping” will play out – if indeed the West is eclipsed – or who will be the next dominant player, although China is an obvious candidate. What is certain, though, is that a new definition of the West is slowly but surely taking shape. Let’s watch these developments together to see which cowboy will end up riding alone into the sunset at the end of the movie.

Philipp Lisibach, Senior Portfolio Strategist at Credit Suisse Private Banking Americas

Gold Winner

Award Recipient Photo: Credit Suisse Credit Photo:

Contents 3

Economy 33 _ Global Accounting Rules Differ Widely How 12 a Credit Suisse tool corrects these distortions 34_ What to Expect When Expecting a Recovery The different shapes of economic upturns 38_ Public Finance Crisis Looms The present value of unfunded public liabilities is huge

Credit Suisse 42 _ Funky Business Economist inspires at Forum

Photo: Dennis Sterne Dennis Photo: for Swiss Foreign Trade and Investment | 44_ Japanese Recovery Dialogue with experts at the Asian Investment Conference 47 _ Europe, Middle East and Africa Fawzi Kyriakos- Saad introduces the region in an interview

Cover photo: Dennis Sterne Cover photo: 49 _ Latin American Wealth Conference West is a state of mind, a feeling of being alive that New realities and responses emerge on all fronts is palpable on the streets of London’s West End. 50 _ Entrepreneurs Summit Entrepreneurs explain A feature about the most famous among London’s why their firms opted to be socially responsible districts and the c haracters who inhabit it. 52 _ Global Citizens Program A new initiative promotes corporate volunteering worldwide 4_ Heinrich August Winkler The German historian on 54 _ Singapore Biennale An exhibit featuring an the enduring strength of Western freedoms. inspiring selection of new projects 56 _ Bolshoi Theatre The fully renovated Moscow 9 _ West Under Pressure Professor Simon Evenett theater is set to reopen its doors in November considers the new balance of power in the 21st century. 12 _ London’s West End The world-famous district is fight- Leader ing for its reputation as the city’s top address. 57 _ Roger Federer On his foundation as well as the chronology of the new Malawi project 22 _ Laws of Nature The Western search for an ultimate 60_ Jimmy Wales The Wikipedia founder on his world formula has failed according to Robert Laughlin. vision of freely accessible world knowledge 26 _ Twelve -Tone Technique Why atonal music Service never really gained a foothold in Eastern cultures. 56 _ Masthead All the focus articles are linked with kooaba paperboy image recognition

Your link to our know-how: www.credit-suisse.com/bulletin 4 bulletin 2/11 West Credit Suisse History U DIMIN ISHED T W F HE REEDO ESTERN A PPEAL

N MS

OF I S

- -

Fotos: Muster Mustermann | Muster Mustermann History West 5

Text: Ingo Petz

History of the West: These are the four words written on the door of room 221. The door opens. A small man with white hair and alert eyes appears. Heinrich August Winkler’s tenure at the department of history at Berlin’s Humboldt University officially ended back in 2007. But the concept of retirement is alien to this 72-year-old, one of Germany’s most famous historians. The first volume of Winkler’s seminal “History of the West” appeared in 2009. The second volume is due to be unveiled this year at the Frankfurt Book Fair, while the third remains a work in progress. And this is why we are here. The issue is the West or, more precisely, the “community of Western values.” What precisely are these? How did they evolve? What kind of shape is the West in today? On television, the German defense minister, Karl-Theodor zu Guttenberg, is pictured at a special sitting of the Bundestag, the lower house of the German federal parliament, trying to refute charges that he plagiarized his doctoral thesis. Zu Guttenberg has since resigned. Winkler shakes his head and turns the TV off. The interview can begin.

bulletin: For how long has it been possible to speak of the West as a “ community of values” as we know it today? Heinrich August Winkler: The American Revolution of 1776 and the French Revolution of 1789 are interconnected to the extent that makes it possible to refer to a transatlantic or Western “project.” The Virginia Declaration of Rights of June 12, 1776, had a major impact on the French Declaration of the Rights of Man and of the Citizen, which was adopted on August 26, 1789. That said, the term “the West” only really entered the political vernacular as the 19th century drew to a close. It was then that Europeans came to appreciate that the US was a pioneering force of modernity, and could no longer be viewed merely as an offshoot of Europe. But the concept of “the West” only really became widespread when the United States and the Soviet Union confronted each other in the Cold War after 1945. That’s right. Though it shouldn’t be forgotten that it wasn’t until 19 8 9 that East and Central Europe – historically a part of the Occident – was finally able to return to the West. Willy Brandt’s famous words of November 10, 19 8 9 – “That which belongs together now grows together” – referred not just to Germany, but to Europe as a whole. The reunification of the old Occident was then reinforced with the EU accession of Poland, Hungary, the Czech Republic, Slovakia and the Baltic states in 2004. Your book “History of the West” begins with the sentence “At the beginning there was belief: belief in one deity.” Why should belief in a single deity mark the beginning of Western history – rather than Athenian democracy, for example? However great an impact Greco-Roman antiquity came to have on Christianity and on European intellectual history in the common era, a much stronger continuity arises when we ask ourselves what the consequences were of people starting to believe in a single God. Because that’s how the separate realms of deity and ruler evolved. So even at the dawn of modern history we begin to discern the “normative” or standard-setting project of the West. The saying that all

Photos: Christian Schnur Christian Photos: people are equal before the law has a theological predecessor, >

Credit Suisse bulletin 2/11 DIvISION OF POWERS

CAPACITY FOR SELF-CRITICISM History West 7

namely that all people are equal before God. The very words of J esus – “Render unto Caesar that which is Caesar’s, and unto God that which belongs to God” – already hint at the possibility of the emancipation of mankind and the secularization of the world. That’s a truly revolutionary phrase. Distinguishing between the divine domain and the earthly domain also paves the way for distinguishing between divine law and earthly law. Something that also hints at an early form of pluralism. It’s an idea that contains the possibility of pluralism. Responsibility for this world is handed over to man – and here, “Caesar” is just a metaphor for worldly rule. But that’s still a far cry from the adoption of a democratic outlook. The archetypal Western dualism only truly arises more than a millennium later in the form of the Investiture Controversy – a standoff between pope and monarch that paves the way for a separation of powers. Just a little later, in the Occident of the Middle Ages, things move to another level as a distinction is made between princely powers and estate powers as exercised by nobility, clergy and city burghers. The most meaningful document in this respect is England’s Magna Carta in 1215. You mean as a foundation for the development of those political freedoms that you describe as an integral part of the old Occident? Heinrich August Winkler was The phenomenon we are dealing with here encompasses the whole born in Königsberg in 1938. of the Western world, with no parallel existing in Orthodox/Byzantine He studied history, philosophy, Europe. Because there the dualism between pope and monarch didn’t and civil law in Tübingen, Münster and Heidelberg. Winkler exist, and spiritual power remained subservient to worldly power. The wrote his postdoctoral thesis historian Otto Hintze discerns an age-old Western principle in du- in 1970 at Freie Universität Berlin. alism, as seen, for example, in the coexistence of self-administrating He taught in Freiburg from 1972, and returned to Berlin in 1991, civic orders in towns and the feudal environment that held sway out- where he has since held a chair side of them. And when we follow this thread a little further, we see in contem porary history at a foundation for the development of individualism, as well as the Humboldt University. personal and political freedoms that would then be further developed through humanism and the Enlightenment. M ontesquieu’s classical separation of powers into the legislative, the executive and the judicial therefore has a prehistory stretching back into the Middle Ages. Germany, Spain, Portugal and Italy – in particular – had strong reservations about Western values for a long time. Why did the key stimuli for the development of representative democracy come first and foremost from the Anglo-Saxon realm? In Britain and the British colonies in North America, the importance of checks and balances was recognized at a very early stage – the importance of reciprocal, mutually balancing counterweights that would make it more difficult to concentrate power in a single hand. Indeed, the tradition of a parliamentary monarchy in England actually dates back to the Middle Ages. This is also partly explained by the fact that England was an island, and therefore more confident with regards to its external security than countries on the European mainland. In the 17th century, England thwarted the attempt to create an absolutist regime on the continental model. This was accompanied by a process of “parliamentarization,” but even this was far from a true process of democratization, as only a very few were involved in the electoral process. The entire 19th century, by contrast, is characterized by its success in broadening the electoral process. This is when we see the gradual process of democratization take hold in Britain, while in Germany we can identify what I term a process of “nonsimultaneous democratization” at work: on the one hand the very early introduction of universal male suffrage by the North

Photos: Christian Schnur Christian Photos: German Confederation in 1867 and its adoption by the German >

Credit Suisse bulletin 2/11 8 West History

Reich in 1871, yet on the other, a refusal to make the Reich’s lead- will never create democracy. It’s important not to lose sight of the ers accountable to parliament. cultural and social prerequisites that true democracy demands. How would you evaluate the role of Switzerland in the The former US President George W. Bush took the view development of the Western community of values? that Iraq could be democratized. He even compared Iraq to the The case of Switzerland immediately evokes the idea of direct de- German situation after World War II. mocracy. And the fundamental question that arises here is whether That was a very flawed comparison, and its repercussions will trouble a state encompassing a very large area – with its complex foreign the West for a long time to come. The policy pursued by Bush called policy ties – can realistically adopt the Swiss model. The influence the normative authority of the West into question and quite radi- of England, France and the US on the formation of the Western world cally. But as the implementation of Western values is not something is certainly greater than that of Switzerland. In Germany, Switzerland that can be forced, the best the West can do is to deal with its tra- is admired as a democratic and peaceful country, but its popular ditions in a self-critical way, hold on to its own values, disseminate decision-making model is not perceived as an obvious one to follow. those values, and wherever possible combat the very worst violations Despite all its positive achievements, the West has of human rights with all the means at its disposal, including human- its share of issues. itarian intervention. The inalienable rights of mankind are deserved Yes, but violations of human rights and even violations of the West’s by all, even if they are only respected in certain parts of the world. own values do not invalidate the “normative” project of the West. Is the West still a dominating power? There is no escaping the contradictory nature of the West. The ques- No. The nations that understand themselves as part of the Western tion we have to ask ourselves is this: Does not precisely this norma- community of values make up only a small proportion of the world’s tive project confer an obligation to continually challenge and correct population, but the political ideas of the West still burn bright. one’s own practices? Another important element in Western culture Will the “project of the West” ever truly be completed? is the ability to take a critical look at one’s own history, and accept I don’t think so. It is in the nature of the West’s normative project what one has done wrong in history. The phenomenon of guilt is an- to act as a corrective to the status quo. It has always transcended other of Christianity’s lasting legacies for the West: Coming to terms the extent of what has been achieved to date. And that’s unlikely to with one’s own errors is an intrinsic part of Western culture. change in the future. < Is the success of the West an inevitable historical de velopment – or a matter of coincidence? The project was not a coincidence, nor was its success inev itable. It arose from extremely heterogeneous influences. The Puritans of Massachusetts and the enlightened freethinkers of Virginia had any number of differences. But on one point in particular they came together – the notion of certain basic freedoms and the dignity of man. The Puritans were of course anything but religiously tolerant, whereas the enlightened political thinkers of Virginia were heavily influenced by the European Enlightenment. Yet at the same time many of the latter were also slave-owners and racists. The Southern states in particular denied Afro-Americans basic human rights. The initiators of certain Western rights and freedoms frequently failed to grasp the revolutionary nature of the processes that they were setting in motion. This gave rise to an extremely subversive kind of power, which has since been unleashed beyond the Western world. Precisely what we’re seeing in the Arab world at the moment … Who would have believed just a year ago that revolutionary freedom movements would be springing up around the Arab-Islamic world? But we can also go back to the last century and the early indepen- dence movements in Asia and Africa to see how peoples outside the West were inspired by the liberal values it created. The appeal of Western freedoms is undiminished. And the Chinese declaration of human rights Charter 08, signed most notably by Nobel Peace Prize winner Liu Xiaobo, is another manifesto true to the spirit of 1776 and 1789. It is a classic document that will be the source of pride to future generations of Chinese. Can any country become part of “the West”? More on this topic >>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Theoretically, yes, any country that embraces the values of democ- kooaba paperboy turns the print edition of bulletin racy, the constitutional state and above all human rights. There are into an interactive experience. Use the app to a number of good examples of partial Westernization around the send additional info such as videos, photo galleries and links to your smartphone. world. Democracy, civil society and the constitutional state belong together. But free elections and the principle of majority rule alone >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> bulletin 2/11 Credit Suisse Politics West 9

By Simon J. Evenett

In recent years it has become fashionable to comment on the decline of the Western power, highlighting an era that probably began with the tenacious exploration of Henry the Navigator in the 15th century. Western dominance of the world economy was to come later, taking off in the 19th century with the relative demise of those Asian giants, China and India (see figure 1). Now they are back with a vengeance. Accelerated economic growth rates of 10 percent for many years, combined with a fast bounce back from the recent global economic crisis that contrasted favorably with the performance of many hobbled Western nations, has led to talk of the eclipse of American power, an Asian century etc. What should policymakers and analysts make of these developments? Should the West worry about its decline?

A Relative Decline

Let’s start with a perhaps obvious, but nonetheless important, observation. Any Western decline in terms of economic output is relative rather than absolute. Spain, Holland and the UK were at different times dominant powers, yet their relative decline was associated with rising living standards. History strongly cautions against

Photo: AWEN art Shutterstock studio,Yui claims that relative decline must lead to impoverishment. After all, >

Credit Suisse bulletin 2/11 10 West Politics

China may be an export powerhouse, but it is also one of the world’s of another nation, then relative position matters. This applies not only largest importers and Chinese payments for those imports support to military conflict, but also to the appointment of heads of interna- the livelihoods of many abroad. tional institutions. Witness, for example, Asia’s complaints every time It is also important to recall the distinction between stocks and the Europeans and Americans stick to their postwar arrangement flows. It may be the case that the West is in decline when national that the president of the World Bank is an American and the manag- incomes – a flow – are considered. But what matters in certain situ- ing director of the International Monetary Fund is a European. ations are stocks, notably stocks of accumulated knowledge, capital Relative position also matters in determining who writes the rules and expertise. Should China’s economy outgrow that of the US – for the world economy. American economic preeminence during which according to the latest estimates could happen as soon as World War II enabled it to effectively overcome any opposition to 2030 – it’s very doubtful that China will by then have the array of its plans at the Bretton Woods conference in 1944 that did much to first-rate universities found in the US. The latter’s investments in its create the postwar architecture for the world economy. The British graduate schools and the like will pay off for decades to come. Many saw their proposals turned down one after the other – leaving John advantages are very firmly entrenched in the West, such as high- Maynard Keynes a very frustrated man. Additionally, a US veto of quality car production in Germany, fashion houses in Milan and Par- ambitious plans to create a powerful International Trade Organization is, and investment banking, law and marketing in London. Cutting- in the late 1940s made it clear that the nation could at the time reject edge competitiveness is often based on prior investments (stocks), the plans of others with impunity. and it will take many years and much else before Asian investments Some might object to the centrality given to the dominant nation (flows) break down these Western citadels of commercial dominance. in the above examples. After all, weren’t the French and British at the forefront of a UN-sanctioned intervention in Libya in early 2011? When Does Relative Position Matter? Examples such as these typically don’t bear scrutiny. Dig deeper and Still, there are nagging doubts that Western relative decline must analysts will find that this operation was possible only with US presage other setbacks. How can this concern be best articulated? diplomatic support backed up by military hardware that only the Surely the central question is: “When does relative position matter Americans could get in place so quickly. Moreover, the acquiescence in global affairs?” But when does a nation holding second rank (or of Brazil, China, India and Russia, all voting members of the UN third or fourth for that matter) actually matter? Moreover, can we Security Council, was required too. It may be the case that middle- think of examples where the ranking of nations is an important de- ranked powers can make occasional accomplishments, but the terminant of outcomes? facilitating conditions are rarely of their own making. While, as argued above, coming second doesn’t seem to matter Perhaps a more persuasive criticism of these examples where in terms of growing living standards, coming second is often very relative position mattered is that, unlike the postwar era and most bad news in the military arena. The difference of course is that eco- definitely unlike the era since the fall of the Berlin Wall, the future nomic exchange is a positive sum game, while military conquest is is likely to involve the simultaneous rise of sufficiently powerful play- often zero sum (there can, for example, be only one overall ruler at ers that no single player is likely to be able to dictate terms. After all, any point in time). Whenever the spoils of victory come at the expense while most projections on economic growth expect China’s economy

A History of World GDP China and India dominated the world economy between the years of 1000 and 1820. Their economic weight then plummeted for the next 170 years, before picking up around 1990. Sources: Angus Maddison, University of Groningen, The Economist

Percentage of total, 1990 US dollars at PPP (Purchasing-power parity)

60 United Kingdom Italy Germany

France

30 US

Japan India 0 China

1000 1500 1600 1700 1820 1870 1900 1913 1940 1970 2008 bulletin 2/11 Credit Suisse Politics West 11

to grow faster than that of India’s until 2020, from that date on India cially if such interventions don’t threaten the direct interests of is expected to take off. Moreover, Brazil and Russia, while not match- the BRIC countries: Brazil, Russia, India and China. The same in- ing India and China in economic size, appear determined to play a stinct, however, will likely make it harder to sign wide-ranging greater role on the world stage. international accords. Ironically, the ensuing stalemates in the talks These developments beg the question that what, if any, is the on trade, climate change and the like, might actually extend the life relevant historical parallel to a world with (at least) four emerging of the Western-shaped postwar rules for the world economy. market powers plus the US, the European Union and Japan? If Fear of the reaction of others – rather than fear of international dominance by any one power is unlikely, then a world in which major law and arbitration bodies, such as those at the World Trade Orga- nations jockey for influence may be a more plausible assumption, nization – is more likely to keep the major nations in line as the East just as in mid-19th-century Europe. This alternative raises all sorts rises. National interest, realpolitik and realism will gain in prominence of interesting possibilities, not least for projecting and prolonging in discussions of international relations, while discussions of shared Western influence. Indeed, why should each major international pol- values, responsibilities to others and common goals will recede. For icy question fragment along Eastern versus Western lines? The West many this will be a step backwards, for others it will lay bare the may be able to side with some rising powers against others. Com- eternal drivers of statecraft. < mon development status may provide a very poor guide to predicting who allies with whom in the 21st century. History also teaches us that some nations in decline play a very effective game, Metternich’s Austria in the 19th century comes to mind. For that matter, some nations that have never made it to great power status appear to get the better hand in many negotiations. Although it gives no pleasure to state it, any fair assessment puts contemporary North Korea in this category! There are probably plen- ty of lessons here for Western strategists as their countries face relative decline in the 21st century. In a world of many powers, what may matter most is being able to stay at the “top table” and to influence others. In these circumstances, rankings of national economic output may not be a reliable indicator of each diplomatic outcome, even if they are an important conditioning factor.

Living Standards Set to Remain High

In tangible terms, what do these considerations mean? Unless dread- ful economic policy decisions are taken in the West, the rise of the East should not mean falling living standards in the West. A little perspective indicates why. At current official exchange rates, the world economy’s annual output totals between 60 and 65 trillion US dollars. Over the next 30 to 40 years, it is not implausible that this total quadruples in real terms to nearly 250 trillion dollars. Given their entrenched advantages, only a complete failure of ambition could possibly result in Western nations – which account for a relatively small share of the world’s population – not obtaining a sizeable slice of the world economic pie. And only such a failure Profile >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> could cause their living standards to fall. Asian economic domination should not be encountered with fear. Protectionism and other forms Simon J. Evenett is director of MBA programs and professor of International of exclusion and discrimination are not the answer. Capitalizing on Trade and Economic Development at Asian growth is. the University of St. Gallen and co-director In military matters and science (in particular as they relate to the of the International Trade and Regional Economics program at the Centre for US), relative economic clout probably belies entrenched Western Economic Policy Research (CEPR) in London. He studied at advantages. Put another way, it will take many more years – possibly the University of Cambridge and gained his doctorate at decades – before the rising powers of Asia match the technologi- Yale University in 1995. His subsequent roles have included employment as a World Bank official, senior fellow in the cal sophistication of certain Western firms and industries. Even if Economic Studies program of the Brookings Institution in China and India continue to grow fast – and this should not be taken Washington, D.C. and professor at the University of Oxford. for granted either, as many growth spurts have petered out in the  www.evenett.com past – then analysts should not let relative economic income color >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> every assessment of Western prowess. kooaba paperboy turns the print edition of bulletin Next, since all of the emerging market powers appear to share into an interactive experience. Use the app to a reluctance to intervene in other countries’ affairs as well as jeal- send additional info such as videos, photo galleries ously safeguard their own sovereignty, it is not clear that these rising and links to your smartphone.

Photo: Thalmann Hannes Photo: powers will necessarily oppose every Western intervention, espe- >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Credit Suisse bulletin 2/11

London West End West 13

Photography: Dennis Sterne

Credit Suisse bulletin 2/11 Adele Woodthorpe Executive director of Woodthorpe Communications “Most of the large publishing houses have located here or nearby. A central location is also critical to the success of the agency. We want our clients to know that we work hard to keep our finger on the pulse of the times.”

Meanwhile, the residents share favorite morning coffee spots or legendary teatime with the many tourists who flood the district throughout the day.

bulletin 2/11 Credit Suisse London West End West 15

Text: Josh Sims

The City may be where the money is made in London, but it is in its ence. “The West End is always on. It’s not a nine-to-five place. And famed West End that it is spent. It goes on fast cars and penthouse everything going on is linked to some kind of business. It still feels apartments, five-star hotels and Michelin-star dining, in grand mu- like the place where you can speak face to face with top dogs, like seums and on cheesy musicals, but more so in the West End’s true a place of opportunity.” vocation, shopping, to the tune of 120 million pounds (195 million But its position as the most desirable or vibrant part of London US dollars) in a record two days over last Christmas – and that de- is not so assured. Certainly the last two decades have seen a chal- spite the recession. lenge to its supremacy, ironically as a result of money. Cheaper But money was always the overwhelming factor in determining rents and affordable housing has seen a boom time in the east of the West End’s evolution: In 1097, when the foundations of what the city, bringing with it not only the wealthy – especially those would become the Palace of Westminster were laid, it was decided wishing to live near to London’s regenerated financial heartlands – to do so upstream, more westerly along the river Thames, all the but also the creative, a trendsetting type who has done much more better for nobility to distance itself from the working populace of the than ready cash to make the East conspicuously cool. No-go areas easterly river widening, with its promise of trade, rough and ready. have become go-to ones. And the centuries-old divide between And half a millennia later, in 1666, its reputation as the place in which West and East has been revived –one formal, the other fashionable, to hobnob, rather than for the hoi polloi, was tempered by fire: The one traditional, the other progressive, one all bright lights and show, Great Fire of London destroyed much of the old City and many of its the other more dark lanes and mystery. aristocratic residents never returned, preferring to take homes fur- Investments Now Pouring Into the East End ther west. Piccadilly, a rural lane, became a thoroughfare of courtiers’ mansions. The East, meanwhile, became the city’s powerhouse, the Unfortunately for the West End, radicalism – driven by youth culture, docklands generating its own districts – Whitechapel, Wapping and now piggy-backed by even luxury brand giants – is in vogue: And its Stepney among them – and all of them slums. The idea of ‘going up natural home is East, as it has been since the end of the 19th cen- West’ – with all it suggested of getting a brief taste of the high-life, tury, when Jewish, German and Russian free-thinkers first emigrat- of dipping a grubby toe in glamour – soon became part of modern ed there to avoid persecution, and since Lenin and Stalin attended parlance. The poor came to look. The rich looked on in distaste. the 1907 congress of the Russian Social Democratic Labor Party – in a backstreet church in Hoxton. The East End may historically have Britain’s Most Covetable Postal District been a hotbed of social reform, disease, prostitution and, during the Over three centuries later, not much, it might seem, has changed. 1950’s, the gang warfare of the Kray brothers, but that has only The West End still has the power to impress. “It’s the heart of Lon- sharpened its edge. More regeneration money is now pouring into don and just being here means you’re perceived in a certain way,” the area – it is, after all, the site of next year’s Olympics, with the reckons Adele Woodthorpe, executive director of Covent Garden- nearby City also earmarked for a new 1.5 million square feet (139,350 based Woodthorpe Communications. “People look at your business square meters) retail space designed specifically to rival the West card and suddenly take you more seriously ...” The West End cer- End. Does the West End still have an effective counter, its old-style tainly has the UK’s most expensive residential property and is grandeur to the East End’s grit? Europe’s most expensive for office space, with a 40-percent jump “I remember going to the West End as a child and dressing up in prices expected over this year alone. No wonder it is mostly stu- to do so – it was a big occasion. But it’s changed radically and dents sharing one-room flats, or the rather comfortably well-off, who doesn’t have that same cachet anymore,” says Helen Franks, head actually live here – but also why it is an area in constant tidal flux, of commercial leasing for the Grosvenor Estate. And she should with workers, tourists and fun-seekers flooding in daily, and then know: Grosvenor is the Duke of Westminster’s property company, flooding out to their homes and hotels, like an invasion force occu- and owns some 300 acres (1. 2 square kilometers) of the West End. pying some of the capital’s most famous districts – among them “It still has an energy from its unique social mix. But it’s not, for Mayfair, Belgravia, St. James, Marylebone and a newly sanitized example, a family-friendly place. Money has changed that. And go Soho – before retreating after pillage. to the East End now and there is an entirely different feel – it’s more Indeed, it is hard to imagine that this itinerancy allows for any relaxed, more contemporary and, to many people, more appealing. community in W1, Britain’s most covetable postal district. But there The city is split.” is one. “It still draws people of a certain level of success or affluence, West End Remains Stuffier because you need that to be able to live here [over half of all the apartments bought are now paid for in cash], but those people know The wall that halves it is, of course, psychic rather than physical. “You each other and socialize,” says Bobby Jenkins, head of Mayfair Pub- can feel the culture changing the further east you walk out of the lishing, publishers of specialist magazines for a West London audi- West End, even see it in the way people dress,” reckons Luke >

Credit Suisse bulletin 2/11 16 West London West End

bulletin 2/11 Credit Suisse Burlington Arcade (left) and Royal Academy of Arts. 18 West London West End

Pino Ragona Owner of Giorgo’s Restaurant “I prefer to be in Covent Garden, the area of West London that has real magical appeal, and the perfect mix of people as a result. I find this part of the city simply wonderful, and that’s why I spend almost all of my time there.”

Old and new are mixing ever- more, but tradition and quality consciousness prevail, creating the charm.

bulletin 2/11 Credit Suisse Bobby Jenkins Head of Mayfair Publishing “The thing about Mayfair that fascinates me is the blend of historical and modern: You go down one street and end up at Buckingham Palace. Turn into the next street, and you find The Ritz.” Luke Sweeney Co-owner of Thom Sweeney bespoke tailors “I find Mount Street just beside Berkeley Square a very interesting street because it’s home to a wide variety of businesses: designers, car dealers, restaurants, tailors. And just across the street there’s a great pub!”

Sweeney, of Mayfair bespoke tailors Thom Sweeney. “The East End ton. These days the “gentlemen’s clubs” are as likely to include is quirky and original, while the West End is stuffier, more grown-up. Spearmint Rhino. But fine art, as much as that of striptease, is That’s why I think it still has, for example, all the great restaurants also a barometer of the West End’s fluctuating fortunes. The White here. I suppose the real division is between old money and new Cube – arguably London’s most contemporary gallery, representing money. In the East it is mostly bankers spending their bonuses. The the likes of Damien Hirst and Tracey Emin – originally opened in customers we have here typically have fathers and grandfathers who St. James. But then it moved to Hoxton Square, in East London. have always been customers of bespoke – it’s a West End attitude Then, five years ago, it decided to open a second gallery – back in that is passed down.” St. James. That culture is undeniable, even if much of it is more the stuff Indeed, Helen Franks argues that the West End is now in rapid of tourist trails than everyday life for Londoners. It is the culture of ascendance again, but that this time around it is less the coherent, Claridge’s, The Ritz and The Dorchester hotels, of the Royal Acad- glitzy entity captured by the lights of Piccadilly Circus as what she emy of Arts, of the auction house Christie’s and the Queen’s calls “pockets of the special.” The entire area may not have recov- d epartment store Fortnum & Mason; of Jermyn Street and Savile ered its chic, but certain streets have seen revival, largely as a Row, the headquarters (until prices forced them out) of esteemed consequence of a kind of retail gentrification, which in turn has Victorian companies the likes of Cadbury’s; and the many embas- brought new bars, restaurants and clubs. sy offices dotted around Mayfair – which, with good reason, is the Its Future Lies in the Hands of the Landlords most expensive property on the British Monopoly board. That it has been the traditional home of the gentleman is perhaps It is, once more, the story of the passage of money – brands have reflected in the number of exclusive clubs that have been located been driven to these new corners of the West End by the need to in the West End for generations too, from the Garrick to the Carl- find affordable rents in order to service an ever-more retail-led >

Credit Suisse bulletin 2/11 Stacey Smith Fashion buyer for Matches Fashion Group “My favorite in the West End is Portobello Road, which is on my way to work. I drink my morning coffee there every day.”

Simon Thomas Concierge at Brown’s Hotel “The West End continues to change and evolve. Despite all the developments, it remains the cradle of museums, art galleries and traditional businesses. And that results in a unique and exciting mix.”

tourist. “The huge, classic thoroughfares like Bond Street have lost Street. “Look at how the buildings have all been polished up over their gloss, but other destination streets have come up,” Franks the last few years,” he says. “They needed it. Even Buckingham says – Marylebone High Street or Mount Street, for example. Next Palace was looking shabby. That is a sign of how fresh air is being up: Duke Street and North Audley Street (both north of Oxford pumped into the area, so that it better embodies both its historic Street), whose future appeal will be anchored to a hotel concept character and a more up-to-the-moment outlook. You still see all in development with the owners of Piccadilly’s ultra-hip Wolseley walks of life here. The West End of London still has a unique per- restaurant. It is also the old cycle of rise and fall: While local resi- sonality.” < dents and shop-keepers are now more organized in seeking to block arrivistes that might change the tone of an area, inevitably this is subject to steadily rising rents and the homogeneity of brand giants that can afford them. More on this topic >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> “It’s true that the future of the West End lies in landlords’ hands. Scan the code below or visit us online to watch statements by our But, in the meantime, it has certainly benefited from breaking free six West End personalitities:  www.credit-suisse.com/bulletin/ of being perceived as just Bond Street and Regent Street,” says Sta- westend cey Smith, fashion buyer for Matches, an independent fashion retail group that was among the first to colonize Marylebone. “It means that, if you’re prepared to go off the beaten track, the West End has become more eclectic and unusual, which has attracted younger people to an area of London that is generally older – more wine bar than trendy club. For the moment the West End is in a virtuous circle.” What is likely to come out of that is a more contemporary, more >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> inclusive West End, one in line with societal changes in general. kooaba paperboy turns the print edition of bulletin Look up to the architecture if you want a measure of its future, says into an interactive experience. Use the app to Simon Thomas. He has been a head concierge in the area for 15 send additional info such as videos, photo galleries years, now with Brown’s Hotel, snug between Piccadilly and Bond and links to your smartphone. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> bulletin 2/11 Credit Suisse Credit Suisse bulletin 2/11 22 West Natural Laws

THE

Isaac Newton (1642–1727) bulletin 2/11 Credit Suisse Natural Laws West 23

Natural laws are a profoundly Western idea. They have enabled physics to achieve stupendous successes, says Nobel Laureate Robert Laughlin – but the quest for a definitive “theory of everything” has failed.

Text: Mathias Plüss

The planets circle the sun in stable orbits. The speed of light is con- not untypical of physics, accustomed as it is to success. There were stant. Magnetic needles reliably point north. Energy is never lost. indications, said Stephen Hawking in his inaugural lecture in Cam- Natural laws are something we take for granted. Or at any rate, bridge in 1980, that a “complete theory” describing “all physical ob- they rarely amaze us. And yet only 400 years have passed since a servations” would be discovered “within the lifetimes of some of those physical law was quantitatively formulated for the first time. It was present here today.” Hawking was given emeritus status nearly two Galileo Galilei (1564–1642) whose experiments led him to discover years ago, and there is still no sign of this longed-for theory of ev- the law of falling bodies: Objects always fall at the same speed, re- erything. Could it be that physics is fundamentally on the wrong track? gardless of location, time, material and form. And he also formu- This question embodies the splendor and the misery of 400 years lated the principle that has been guiding physics ever since: The of mathematical physics. First we must note that in its quest for in- universe is “a grand book written in the language of mathematics.” terconnections, physics has been extraordinarily successful. The very Without knowing that language, according to Galileo, we can only existence of natural laws that we can detect and calculate is not “wander endlessly in a dark labyrinth.” What came next was a unique something that can be taken for granted. Let’s stick to Galileo for a success story. Newton discovered the laws of gravitation; Maxwell moment. It could well be that an object falls at different speeds in discovered electrodynamics, Einstein the theory of relativity. Mankind Berne and Pisa. That a stone falls faster than a fragment of metal. has explored the very large – stars, galaxies and black holes – and Or that there is no regularity at all. But none of these is the case. The the very small: molecules, atoms and quarks. Everywhere we found devil is in the detail, though. A feather really does fall more slowly laws; everywhere it was possible to construct mathematical formulae. than a stone. And you can work out just how much more slowly by The entire universe looked calculable. taking air resistance into account. But what if a truck drives past at the same time, creating turbulent air currents? The feather’s result- The Theory of Everything ing movements can no longer be calculated, not even with the fast- Penetrating ever more deeply into matter has a very particular ob- est of supercomputers. This objection may look a little petty, but it jective: the theory of everything. The laws that we discover, most demonstrates the problem: When it comes to practicalities, your physicists believe, will become more and more fundamental, and equations often quickly come up against a brick wall. Physicists con- some day we shall find that ultimate law from which everything else fine themselves to simplified situations. “A great deal must be taken can be derived. “Our objective,” said Paul Dirac (1902–1984), “is to away from nature to make the math work,” says Viennese mathema- arrive at a single comprehensive theory that will describe the whole tician Rudolf Taschner. “If you look at a tree growing, your laws of of physics.” Once this objective was achieved, according to Russian- nature are not much use to you.” American physicist George Gamow (1904–1968), physics would have Inventions Come First come to an end: Continuing research into it would not provide any excitement whatsoever and all that would be left for a physicist to And in practice, the tree growing is not the exception – it’s the rule. do would be “dreary work on unimportant details, study as an au- Not just in nature, but in technology as well. Hardly any of the won- todidact, and admiration of the splendor of the completed, perfect derful inventions that made the rise of the West possible in both

Photo: SSPL, Getty Images system.” The arrogance inherent in every word of this statement is commercial and military terms, from the steam engine to the >

Credit Suisse bulletin 2/11 24 West Natural Laws

Physicist Albert Einstein (left) visiting the Mount Wilson Observatory in California.

semiconductor, resulted from the thinking of theoretical physicists. oretical physicists turn their noses up at their experimental colleagues “The inventions generally came first,” says Robert Laughlin, professor to this day. And the reverse is also true: It is often particularly those at the University of Stanford, California, and winner of the Nobel theoreticians who seek the most fundamental laws who are held in Prize for Physics in 1998, “and it was only later that we were able to the most reverent awe. explain them.” His fellow physicists regard Laughlin as a maverick who The Idea of Natural Laws Is Profoundly Western raises fundamental questions about the development of science – particularly since his book “Farewell to the Theory of Everything” A few years ago, in all seriousness, the German magazine Stern published in 2007. Laughlin cites the example of metallurgy, the sci- presented “the 100 cleverest people in the world.” All of them without ence of metal extraction and processing, which is hugely important exception were string physicists who were looking for the theory of to modern society. “Without metals,” he says, “you can’t construct a everything. And stupidly enough, there is no way of testing their high-rise building, or an airplane – in fact hardly any machines at all. highly abstract theories by any kind of experimentation or observa- And in metallurgy everything operates after the manner of kitchen tion. Ultimately, our reverence for the theory of everything and its recipes: Melt the iron, let it simmer for a while, blow oxygen over it, researchers has its basis in religion. “We see fundamental laws as and so on. Or take the lubrication of metals, that’s more like black sacred,” says Robert Laughlin. “We associate them with God because magic. Now, of course, there are lots of theoretical studies of how we are simply made that way.” The Stoics of ancient Greece, he molecules slide over each other. But they did not come up with the points out, came up with the idea of the “logos,” which means nature, idea of lubrication: People simply discovered that it works, and it was God and logic all at the same time. “Our culture is permeated by this not until later that we got round to explaining it.” There are countless idea to this day. That’s why it seems reasonable to us that nature is examples. X-rays, radioactivity, nuclear fission: These phenomena logical, that there are any such things as natural laws.” were discovered by chance, not on the basis of logical deduction. The Actually, the idea of natural laws is a profoundly Western one. In fundamental molecular structure of cement – what gives it stability, the Middle Ages, China was ahead of us in terms of technology, yet in other words – was decoded in 2009, more than 2,000 years after the scientific revolution took place not in Asia, but in Europe. Many it was first used. authors see the reason for this as lying in occidental monotheism: It Something similar applies to numerous medical advances: They was the concept of an all-powerful, regulating God that gave Euro- are based mainly on experimentation, not on understanding. The ac- peans the very idea of seeking out natural laws. And accordingly, the Neumann und Rodtmann, Corbis, Outline, Neumann und Specter tion of paracetamol, one of the most common analgesics, was mis- idea of a theory of everything – the ultimate explanation forming the understood for decades – and even today we do not fully understand basis of everything that ever happens in the universe – is closely it in detail. We learned how to combat yellow fever before viruses had bound up with monotheism. The Chinese, in contrast, had no con- even been discovered. This disinfectant effect of moldy rags has been cept of God as lawgiver – so the very idea of natural law was alien known since ancient times, thousands of years before penicillin was to them. Until well into the 20th century, most physicists took it as discovered by Alexander Fleming – and even that was a fortunate self-evident that their work was revealing the divine plan for creation. series of chance events. It can hardly be disputed that progress is “The task of natural science,” Isaac Newton (1642–1727) wrote in

based to a considerable extent on trial and error. And yet many the- his “Principia Mathematica,” “is to investigate how the nature that Photos:Time Life Pictures, Getty Images | bulletin 2/11 Credit Suisse Natural Laws West 25

Maverick physicist Robert Laughlin: “The quest for the theory of everything is akin to chasing rainbows.”

God has created works.” Taking this view, every newly discovered are meaningless colored dots. But when you take a few steps back natural law provides further evidence of the existence of an intelli- and look at it as a whole, then you can see what it is. That is typical gent creator: The “most beautiful system of the sun, planets and of emergence.” There are many laws like that. Robert Laughlin is comets,” said Newton, “could only proceed from the counsel and even convinced that all natural laws are of an emergent nature, and dominion of an intelligent and powerful Being.” The form taken by that view is uncommonly refreshing. On the one hand, it liberates natural laws suggests that this ruler must himself be proficient in the physics from the ideological ballast that it has been carrying around science of higher mathematics. “God calculates,” Gauss concluded, for centuries. The world is not regulated by abstract mathematics and and Leibniz penned that: “as God calculates, so the world is made.” metaphysical laws: Instead, order is inherent to nature itself – and it is that order which, in certain fields, brings to the fore those laws The World Is, However, Not Calculable and principles that we are then able to read. This also gets rid of the Coherent though this view may appear at first sight, the thesis of a inordinately odd idea of a God who creates the world while con- thoroughly mathematicized, ultimately calculable world is not tenable. stantly solving mathematical equations. On the other hand, we can Each physical law has its field of application, within which it is ca- abandon with a clear conscience the eternal hunt for the theory of pable of making amazingly precise statements – but it is restricted. everything. If natural laws are not supernatural directives, but instead The laws of the very small – quantum mechanics – have not the slight- the expression of emergent order on various scales, then the supposed est significance for our everyday world. The idea that in theory all hierarchy disappears as well – and all laws have equal value, from science, from biology through chemistry to macrophysics and micro- microphysics to behavioral biology. Nature, says Robert Laughlin, is physics, can be reduced to a single theory of everything loses its “an enormous tower of truths. The quest for a single ultimate truth meaning if the program cannot be carried out in practice. Robert has reached its end, but it has also failed.” < Laughlin gives the example of the stability of solid objects: “Stability is a natural law,” he says. “Every time we board an airplane or enter a high-rise building, we rely on the stability of solid objects.” That More on this topic >>>>>>>>>>>>>>>>>>>>>>>>>>>>>> stability is created by the extremely precise arrangement of atoms in a crystal lattice. But that arrangement cannot be predicted by quan- Book tip Robert Laughlin, “A Different Universe – Reinventing Physics From the Bottom tum mechanics. “Stability is an example of a very important natural Down.” Basic Books, February 2006. law that cannot be derived from something more fundamental.” 272 pages, paperback. Laws of this sort are called “emergent.” They are based on col- ISBN: 9780465038299 lective self-organization, and their existence is always confined to a >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> particular scale of magnitude. If you look more closely – with an kooaba paperboy turns the print edition of bulletin electron microscope, for example – stability disappears completely. into an interactive experience. Use the app to “The concept itself loses all meaning,” says Laughlin. “You can’t even send additional info such as videos, photo galleries and links to your smartphone. tell whether you are looking at a fluid or a solid object. It’s like one of those pictures: If you stand very close to them, all you can see >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Credit Suisse bulletin 2/11 26 West Atonal Music

bulletin 2/11 Credit Suisse Atonal Music West 27

“I FEEL THE AIR FROM OTHER PLANETS” The viennese composer Arnold Schoenberg established himself as the creator of the 12-tone system in 1921. The unusual sounds of his atonal music had already caused a sensation. Today he has long been counted among the classics. Internationally widespread though it may be, the 12-tone technique never really gained a foothold in other cultures. The reasons for this, according to musicologist Roman Brotbeck, are rooted in Western thought. A search for clues.

Photography: Regina Hügli

Credit Suisse bulletin 2/11 28 West Atonal Music

Text: Maria Ryser

“Just think what self-restraint it must have taken to express himself so succinctly. Every glance can become a poem, every sigh – a novel.” With these thoughts, Arnold Schoenberg – the central figure in the Second Viennese School – attempted to get to grips with the “Six Bagatelles for String Quartet” by his one-time pupil Anton We- bern, an attempt repeated this year, in the 100th anniversary of their composition, by the four young musicians of the Asasello Quartet (see infobox on p. 31). In doing so, they draw on the exuberant cultural wealth of Europe in the 1920s – a period that, in addition to the avant-garde, expressionism, Dada and other experiments, also gave us the new compositional technique of what is called 12-tone music, or dodecaphony. “The 12-tone technique has its origins in atonality and represents the culmination of a long musical development that began in the 19th century and increasingly deconstructed ton ality,” explains musicologist Roman Brotbeck. “It insists on treating each of the 12 semitones in an octave as being of equal value. To enforce this, the rule was conceived that no single note could be repeated until the other 11 had all been played. That leads to a basic figure of 12 notes that Schoenberg called a tone row.” In consequence, chords are no longer based – as they are in the old harmony – on the triad: Instead they emerge from the tone row itself. 12-tone equal temperament is comparable with the function of concrete in the contemporane- ous Bauhaus School, with which everything can be linked, all forms constructed, walls and floors, roofs and foundations (vertical and horizontal elements alike) cast. Also called a “conservative revolutionary,” Schoenberg saw himself far more as an architect in sound than a composer. The objective of his attack on the dominance of the classical-romantic major/ minor tonality was thus not to create tonal anarchy, but to establish clarity within a rigorous, highly organized system.

Democratic Control of Notes

If we trace the historical origins of dodecaphony, we can see that it is intimately bound up with European history in general. In Vienna, Composer Schoenberg on the “Six Bagatelles”: the interface between East and West, and hence a melting pot as well as a place of deliberate demarcation, after the First World War “To understand these pieces, you have to Schoenberg evidently longed for a certain order – and for a more believe that sounds can express something “democratic” control of musical notes. This is highlighted by the fol- that can only be said with sounds.” lowing passage from his theoretical work “Composition with Twelve Tones”: “The regular application of a set of 12 tones emphasizes all the other tones in the same manner, thus depriving one single tone of the privilege of supremacy.” The last vestige of hierarchy in musical space disappeared: “In this space there is […] no absolute down, no right or left, forward or backward.” The Third Reich banned the 12 -tone technique as “degenerate art,” and it drove the “new Mozart” into exile in America. After 1945, dodecaphony found itself historically vindicated, as it were – and until 1965 or thereabouts it was Western music’s most influential compositional technique. But that meant it was no longer new and iconoclastic, at least in Western Europe and the US. Among com- posers in the totalitarian East, in contrast, its prohibition made it the subject of keen interest during the Cold War as a symbol of resistance. Arvo Pärt was initially a 12 -tone composer. But with the fall of the Berlin Wall and the collapse of the Soviet Union, the 12-tone technique instantly lost the attractions it had previously enjoyed. > bulletin 2/11 Credit Suisse Atonal Music West 29

Credit Suisse bulletin 2/11 30 West Atonal Music

Arnold Schoenberg on the compulsion to impose classification and laws:

“The conviction that these new sounds obey the laws of nature and of our manner of thinking, the conviction that order, logic, comprehensibility and form cannot be present without obedience to such laws, forces the composer along the road to exploration.”

bulletin 2/11 Credit Suisse Atonal Music West 31

Hardly anybody uses it now. But one thing that has obstinately per- where you are coming from, or where you are going to. The listener sisted to the present day is the Nazis’ dismissal of it as “top-heavy, is gripped by a sense of being at the mercy of elementary existence.” intellectual, nonsensical music.” Roman Brotbeck counters: “On the In order to do justice to Webern’s music and its striving for contrary, the music of the Second Viennese School is extremely p erfection, Asasello and the Blinker label have decided to go for emotional, even ebullient, erotically sensual: Top-heavy is one thing an analogue, uncut vinyl recording. A bespoke garment, as it that it’s not.” He compares Schoenberg’s place in music with Freud’s were, for the inner life of the “Bagatelles,” and utterly in line with place in psychology. “Historically, what Freud achieved in psychol- what Schoenberg himself said: “To understand these pieces, you ogy – namely a positive evaluation of human motivating forces – is have to believe that sounds can express something that can only what Schoenberg had the courage to do in music: He liberated it be said with sounds.” He ends his foreword to the “Bagatelles” from bourgeois rules of propriety.” with words of the greatest reverence: “May they hear what this still- ness offers!” < The Western Urge for Classification and Laws

The unusual sequence of sounds required a new understanding of music. This requirement was the real revolutionary achievement of Schoenberg. But Roman Brotbeck believes the main reason for seeing atonality and later the 12 -tone technique as a specifically West- ern concept lies not in the moment of liberation, which Schoenberg so aptly portrayed with the song “I Feel the Air from Other Planets” in the scandal-arousing “Second String Quartet,” but in Western More on this topic >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> thought. “Its radical simplification of the Western pitch system plac- Pictures in the Article Regina Hügli (born 1975) is a freelance 12 es -tone music firmly within that tradition of Western thought that photographer. She includes picture languages and photographic calls always, everywhere, first and foremost for standards, unifor- concepts among her specializations. The sequence of mity and (mono-)classification – in all fields of life, from electric plugs pictures shows various attempts at interpretation of atonal music and lettuce sizes to our fellow men. Standards make it easy to ex- in photographic images. She has made use of a number of techniques to achieve this: punch card photography (page 26), change, to shift, to travel and to move house – but they also make prism photography (page 29), the photogram (page 30, top), it easy to both adopt and discard what is different and alien.” and light painting (page 30, bottom). It is here that Brotbeck sees both the achievement and the limi- The Film on How the Pictures Were Made: tations of the 12 -tone technique: “Never before had there been a  www.credit-suisse.com/bulletin/12ton compositional technique able to create liaisons, to establish links – >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> to show that everything is related to everything else. Like that of West- New Recording of Webern’s “Bagatelles” ern thought and action in general, its international dissemination was on vinyl The Asasello Quartet is collaborating very rapid. But its rigid insistence on classification prevented it from with Manuel Schwiertz of the blinker – Marke understanding other systems, and it therefore had to supplant them. für Rezentes – record label and Frank Kämpfer of German radio station Deutschlandfunk And this, broadly speaking, is the general achievement – and also to make a new recording of the work “Six the general curse – of Western thought in the 20th century.” Bagatelles for String Quartet,” op. 9 by Anton In his writings, Schoenberg clearly expresses this urge to impose Webern. The analog and uncut recording will appear on vinyl in the fall of 2 011 in a limited edition of 500. classification, laws, and the theoretical underpinning of the new  www.asasello-quartett.ch sounds: “The conviction that these new sounds obey the laws of  www.blinkerblinker.eu

nature and of our manner of thinking, the conviction that order, log- Regina Hügli was on hand with the Quartet during the ic, comprehensibility and form cannot be present without obedience recording sessions. Her photo series can be viewed at: to such laws, forces the composer along the road to exploration.”  www.credit-suisse.com/bulletin/12ton The word “law” is a key term for Webern, too: “At that time we were >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> not yet conscious of the law, but we had long sensed it.” Twelve-Tone and Atonal Music: Recommended Works Magical Treatment of Time • Alban Berg: op. 7 “Wozzeck” (1917–1922), “Lyric Suite for String Quartet” (1925–1928), “Lulu” (1929–1935), To this day people find it difficult to listen to Schoenberg and Webern. “Violin Concerto to the Memory of an Angel” (1935 ) Why, then, record Webern’s “Bagatelles” – six pieces of irritating brev- • Arnold Schoenberg: “Moses and Aron” (1923–1937), op. 30 “Third String Quartet” (1927), op. 37 “Fourth String ity that require the utmost attentiveness on the part of the audience? Quar tet” (19 3 6 ), op. 46 “A Survivor from Warsaw” (19 47 ) “Webern was a composer who devoted body and soul to music,” • Anton Webern: op. 5 “Five Pieces for String Quartet” (19 09 ), says Barbara Kuster of the Asasello Quartet. “It’s obviously not the op. 9 “Six Bagatelles for String Quartet” (19 11), op. 20 “String Trio” (19 2 6 –19 2 7 ), op. 21 “Symphony” (1927–1928), sort of music to which you can hum along. There’s nothing for the op. 22 “Quartet” (1928 –19 3 0 ) listener to hold on to. Webern demands the courage to let go. What • Ruth Crawford Seeger: “String Quartet” (19 31) fascinates us above all is his treatment of time: It is simply magical. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> If you open yourself up to Webern, you can fly!” Kurt Furtwängler, kooaba paperboy turns the print edition of bulletin composer and conductor, speaks of a sense of being at the mercy into an interactive experience. Use the app to of something: “The atonal composer leads you by the hand […] as send additional info such as videos, photo galleries if through a thick forest. Along the path your attention is captured and links to your smartphone.

Photo: blinker-Marke für Rezentes by the most remarkable flowers and plants. But you have no idea >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Credit Suisse bulletin 2/11 32 WestenWest

Make the Most of Your Print version version of bulletin!

bulletin Image Click Once to Go Recognition to the video

Paperboy by kooaba gives you access to A QR code leads you to useful information further links, picture galleries, or videos on on the Internet in three steps. your smartphone.

How it works: Cracking a QR code is simple: Download the kooaba Paperboy Launch the free iPhone app for free (iPhone/Android), BeeTagg Reader app, photograph take pictures and receive links. the code and receive the link. 1 1

Use the app to photograph one of Launch the BeeTagg Reader Pro app the marked pages and confirm with that is free for all mobiles. the “Use” button.

2 2

The app then displays a list Focus on the QR code until of all available information, links the green frame appears and the and options. mobile vibrates.

3 3

Anyone with a free kooaba Web A browser opens automatically with account can gain online access to additional content on the subject. all photographed objects, including additional information.

bulletin 2/11 Credit Suisse Accounting Economy 33

“We’ve been focusing on off-balance-sheet issues for 20 years; we’ll penalize a com- The 14 Trillion pany for having underfunded pension obliga- tions, for example,” said Jim Ostry, head of HOLT Strategy and Branding. “This is one of Dollar Difference the things that are often eye-opening to portfolio managers as well as to the firms they’re investing in.” Wide variations in accounting standards around the world make Over the past several years the HOLT team it difficult to achieve an apples-to-apples comparison between has concentrated on expanding the database companies in different countries. By correcting for these distortions, to cover companies in fast-emerging regions HOLT ® helps Credit Suisse clients not only reach across borders, like Asia, the Middle East, Latin America and but make better-informed decisions about a company’s true North Africa. HOLT now covers 98 percent e conomic performance. of the world’s stock market capitalization. Patchwork of Accounting Rules

Ron Graziano, HOLT global accounting specialist, said the patchwork of international accounting rules is one of the biggest stum- bling blocks for investors who want to build a truly global portfolio. Text: Jack Grone “Globally, about a third of companies use U.S. GAAP for their accounts; another third Perched on the desk of Tim Bixler is a giant al Securities in the Investment Banking use the international IFRS system and an- apple made of wood. For the Chicago-based division that makes its presence felt across other third is local GAAPs. These create global head of HOLT, the apple offers an Credit Suisse – and by extension across a signi ficant differences for how companies everyday reminder of the ways in which his large part of the bank’s client base. Taking report their financials,” Graziano said. The list team at Credit Suisse helps investors look at its name from the initials of its four founders, of differences covers operating and balance- companies and portfolios from a different who started it as an independent company sheet items like goodwill, pension contribu- perspective. “Back in 1991/92, I was meet- two decades ago, HOLT has carved out a tions, plants & equipments, operating leasing ing with a HOLT client in San Francisco. We unique identity for itself inside the bank since and research & development costs. “All of were discussing his portfolio, and one of Credit Suisse acquired the company in early these things can be distorted,” Graziano said. the stocks he owned was Apple,” Bixler re- 2002. Clients who use HOLT data, tools and In fact, he notes, that if an investor were to called. “I agreed with him that it was a great investment products apply its proprietary add up all the distortions that HOLT identifies company, but that the market was already methodology to a database of 20,000 com- in the balance-sheet assets of the compa- paying for that fact, and Apple’s prospects panies in over 60 countries to gain an objec- nies in its database, the total figure would be for creating true economic value were fading. tive view of corporate income statements and an eye-popping 14 trillion US dollars. “We So I told him he should sell the stock.” The balance sheets, ironing out the distortions want to hold companies account able for what client didn’t believe it. “The market was say- caused by traditional – and inconsistent – they’ve spent, so we’ll drill into a portfolio to ing Apple would grow 20 percent a year and accounting methods. find differences, and rank companies on a return 20 percent. But I kept hammering him The heart of the HOLT methodology is a “clean” price/earnings (P/E) ratio versus a month after month, and finally he said that metric known as cash flow return on invest- traditional P/E ratio,” Graziano said. “For an he would sell it,” Bixler recalled. “A short time ment (CFROI ®), which helps investors judge auto company the main distorting factor after that, the stock started falling, and it not only whether a company is creating or might be pensions; for retail companies it kept falling, and it ended up dropping by half. destroying value, but whether the market is might be leases.” A couple of months later, I went in to see him, fairly valuing the company’s prospects. This Launch of New Tool Scheduled and there was a gift for me. It was this big unconcealing approach is useful for challeng- wooden apple. This was the client’s way of ing the received wisdom about firms that are Next up for the group: the launch later this thanking us. He ran a fairly concentrated darlings of the market, as well as for spotting year of HOLT Lens, a web-based product portfolio, with just 50 stocks or so, and we diamonds in the rough that others have over- designed to be more intuitive for users to had helped him avoid a big loss.” looked. Clients use HOLT for tasks ranging navigate. The HOLT team is counting on Lens from portfolio reviews and the filtering of new to make it easier for portfolio managers, an- Database With 20,000 Companies ideas to the creation of custom baskets and alysts and companies to compare the mar- Stories like this have shaped the history of indices that address special geographies or ket’s view of a stock, HOLT’s view and their HOLT, a business group ensconced in Glob- themes. own view – and objectively judge the plausi- bility of each. Ostry and Bixler say HOLT Lens reflects feedback from the group’s Disclaimer: The reference to specific securities is for illustrative purposes only. Past performance is not an indication or guarantee of future results.

Photos: Mathias Hofstetter This material should not be regarded as an offer or solicitation of an offer to invest in any security. primary source of new ideas: its clients. <

Credit Suisse bulletin 2/11 34 Economy Recoveries Slingshots and Snowballs

Business Services

Manufacturing

Transportation

Leisure & Hospitality

Retail

Construction

–15% –10% -5%

2008–2009 Employment Growth (Annualized) Finance

Information Technology

US Payroll Growth by Sector The US construction, IT and finance sectors have lost jobs over the 2008–2010 period, while the health care and education sectors have posted an employment growth over the period. Source: Credit Suisse 45 degree line: growth in 2010 = growth in 2008 and 2009 Recoveries Economy 35

The goods sector typically recovers like a slingshot, with growth rates peaking soon after a recession ends. The service sector recovers like a rolling snowball, broadening out and gathering strength with time. As services account for a majority of jobs and spending in developed countries, they drive a recovery’s sustainability and strength.

4% 2010 Employment Growth affair that tends to cumulate and, if anything, gently accelerate over time: more of a snowball than a slingshot pattern. This is partly because overall services spending usually does not decline in recessions – it merely 3% Education grows below trend – and partly because the initial slingshot rebound in production provides the platform for renormalization of employment, spending and labor income growth in the service sector. Once that happens the 2% recovery in effect broadens out, and steady service sector growth becomes the more important driving force. These contrasting Health Care trajectories are essentially the two core processes of recovery and growth. And to a 1% great degree, actual GDP growth reflects a weighted average of the two (see Figure 1 on next page). Government Often, but not always, this combination of slingshot and snowball means that overall GDP growth rates hit their peak very early in the cycle, and then settle down into a steadi- 5% er or even slowly fading rhythm (especially if housing follows the slingshot pattern too). Broadly speaking that was true of the early Text: James Sweeney, Global Fixed Income 1980’s recovery, and of the last recovery –1% cycle. But the early 1990s’ recovery followed Initial recovery in the goods sector is a sling- a rather different pattern, with GDP growth shot phenomenon, with the fastest growth rebounding sharply but only reaching 4.4 per- rates almost always posted very early in the cent per annum on a two-quarter moving recovery. This is called the rebound phase, average basis in 1992, well below the re- –2% because it is marked by a V-shaped bounce bound growth rates of 8.7 percent in 1983 in goods output, profits and profit margins, and of 5.2 percent in 2003. And the 1990s’ as well as by a more muted recovery in labor expansion had several minicycles, with a lo- income. This is also the point in the cycle cal peak cycle above 5 percent per annum in when inventory swings (lower rate of de- 1994, and peak growth rates of about 6 per- –3% stocking) usually make the biggest positive cent per annum occurring late in the cycle, contribution to gross domestic product (GDP) in 1998 and in 2000, by which time the tech growth. Growth rates in goods production do boom was in full swing. oscillate in the later phases of recovery, but By coincidence or not, real GDP growth generally within a smaller range. In short, re- hit its initial rebound peak for this cycle in the covery growth rates in the goods sector tend first quarter of 2010, at exactly 4.4 percent –4% to be front-loaded. Typically, that is also true per annum. Over the second and third quar- for residential construction. ter it grew around 2.5 percent per annum, By contrast, recovery in the services com- and the likelihood is that it will be nearer to ponent of GDP is typically a more gradual 3.5 percent or slightly more in coming >

Credit Suisse bulletin 2/11 36 Economy Recoveries

1 Strong Correlation Between US 2 Pick Up in US Consumption Slightly 3 Strong Correlation Between Growth and the ISM New Orders Index Lags Retail Sales US Real Housing Services PCE and In the US, the 80/20 percent mix of the ISM Discretionary services spending has been Household Formation new orders index correlates very closely with recovering with a slight lag to retail sales since Household formation and housing personal GDP growth. early 2010. Source: Credit Suisse consumption expenditure (PCE) – goods Source: Credit Suisse, Thomson Reuters DataStream and services consumed by individuals – have been roughly in line historically. Source: Credit Suisse

% % log levels = Dec 07 % % 8 70 6.02 3.5 7

6 65 6 3.0 6 4 60 5.98 2.5 5 2 55 5.96 2.0 4 0 50 5.94 1.5 3 –2 45 5.92 1.0 2 –4 40 5.9 0.5 –6 35 5.88 0 1 30 –8 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 –0.5 0

US Real Retail Sales US Real Discretionary Services Spending Jun 2005 Jun 1994 Mar 1959 Mar 1964 Mar 1969 Mar 1974 Mar 1979 Mar 1984 Mar 1989 Mar 1994 Mar 1999 Mar 2004 Mar 2009 Sep 1991 Sep 2002 Mar 1997 Mar 2008 Dec 1999 Dec 1988 Dec Nov2010 Number of households, year-on-year US Real GDP growth, second quarter annualized Real Personal Consumption Expenditure: ISM New Orders Composite Index (rhs) Housing, year-on-year (rhs)

quarters. If and when the services snowball when labor income began to grow, and paused ing services consumption in 2004/5, and the gathers pace, and allowing for gradual recov- early during the summer of 2010, before re- beginning of a revival this time around that ery from the current very depressed level of suming sharp growth in August. has recently faded. This is another aspect housing starts, we could easily see local peaks Meanwhile, the rest of consumption has of the housing market dynamics caused by above 5 percent per annum later on. done little. Since the recovery began real expiry of the homebuyers tax credit, but ex- spending on nondiscretionary services – pect the cyclical component of household At Your Service which include rents and bills, medical costs formation to resume its cyclical recovery in In advanced “postindustrial” economies most and financial costs – is up just 0.8 percent. coming quarters, especially if we get confir- of us make our living by providing services of Nearly all of that growth is originated by mation of better jobs growth and consumer one sort or another to other people. So, how- medical spending. confidence. Meanwhile, the long-term trend ever important the global production cycle in household formation has been slowing for Two Holes in Global Aggregate Demand is for risk appetite, corporate earnings and years, partly due to secular increases in p olicy, the “story” of GDP is very much about US spending on household operation began “multi-family households” and immigration. services income, jobs and spending, which stagnating in 2006, well before the last The trend of people marrying later in life has in turn impact the underlying trend of goods recession began. Spending on housing ser- led to people living for longer with their par- demand. And as noted above, that’s more vices is mainly driven by the number of ents, and immigrants on average tend to live important now than during the rebound phase. households or household formation. Figure in larger family groups. The first point to make is that not all ser- 3 shows that the general trends of household The economic weakness of the past few vice sector spending is in the dumps (see formation and housing personal consumption years, and especially the severe weakness Figure 2): In the US and elsewhere, discretion- expenditure (PCE) – goods and services con- in the labor market, has caused a sharp ary services spending is already recovering sumed by individuals – have been roughly in cyclical exaggeration of this trend. According with a slight lag to retail sales. This is a very line historically. There is a clear long-term to the US census bureau, the number of 25- important development because it means shift down in each line, but it belies what has to 34 -year olds living with their parents has Americans are raising their spending where happened recently. Between 1990 and 2006, risen 8.4 percent in two years, and the num- they have a choice. It is a telltale sign of im- the growth rates were reasonably stable, ber of multi-generational households has proving animal spirits. Goods spending and with household formation averaging 1.1 per- risen 11.6 percent. There are many fewer discretionary services – transportation, rec- cent per annum and PCE consumption aver- households now than anyone would have reation, social and religious, personal care, aging 2.7 percent. However, since the first expected a few years ago. This doesn’t just and food services – make up 33 percent and quarter of 2010, these numbers have fallen drive up inventories of empty houses and 16 percent of personal consumption, respec- to 0.5 percent and 0.9 percent. Fewer house- reduce housing prices; it also affects GDP tively. Discretionary spending began to re- holds equal less consumption. Note the very growth via consumption of housing services. cover in earnest in the fourth quarter of 2009, sharp cyclical bounce in formation and hous- Of course, growth is weak across sectors, bulletin 2/11 Credit Suisse Recoveries Economy 37

many economies, especially those where The Ongoing Recovery Is Booming Services Sector 4 5 housing cycles have become more pro- Slower Than Usual The services sector today represents more The US economy is recovering at a slower pace than two thirds of the GDP of the developed nounced. Figure 5 shows the increase in than usual from the 2009 recession. economies (as percent of GDP). services spending across the G3 (US, Japan Source: Credit Suisse Source: Credit Suisse and EU), the key driver of the changing recession dynamics. Services spending has been weak in the recovery across the G3,

% % contrarily to goods spending. 5 85 In the UK nondiscretionary services spend- 4 80 ing is particularly weak, perhaps reflecting the big roles of housing and financial 3 75 services. Meanwhile, goods-oriented econo- 2 70 mies, which include many in the emerging 1 65 markets, as well as raw materials exporters 0 60 in the developed world, have recovered –1 55 sharply. In many of these economies mon- –2 50 etary policy is already being tightened. In- 1 5 9 13 17 21 25 29 33 37 41 45 deed, in these places, the recovery has been Month from start of recovery 40 1991 2001 2009 of the slingshot variety. And because capac- 1970 1976 1982 1988 1994 2000 2006 ity utilization in the industrial sector is still

United Kingdom United States Japan very low, we should expect ongoing strong goods demand and above-trend indus- EA4 = Germany France Italy Spain trial production growth. Credit Suisse estimates that global industrial production momentum troughed in Octo- ber 2010 at 4.5 percent (only slightly below its but financial services and housing-related driver of output but also a key driver of reces- long-term average) and is about to continue categories are recovering especially slowly. sion dynamics. The services sector has be- the above-trend growth that began in 2009. The figure featured on p. 33–34 shows the come bigger as a share of output, more cycli- Meanwhile, the snowball-style services sector change in nonfarm payrolls by US sector cal during recessions, and slower to recover recovery rolls on where there was a housing in 2008–2009 versus 2010. Financial and after recessions. bubble. Obviously, there are exceptions in construction employment are notably lagging In previous recessions services spending economies where fiscal policy has needed to behind the recovery in other sectors. The generally was growing just below 2 percent tighten so much that the whole process is keys to recovery in both sectors are an avoid- per annum when recessions ended, and by undermined. But we see no such shocks of ance of severe deflation (especially in house around 3 percent during the recovery. The similar magnitude emerging in the US. prices) and a rebound in the labor market. current recession’s performance is the worst Full Recovery Still Far Off Broad recovery will likely kick in when house- of all (see Figure 4). Credit Suisse believes this hold formation picks up. Household forma- increasingly weak profile for services spend- The most likely recovery profile is continued tion, however, requires labor demand. Jobs ing early in recoveries is the key reason for solid growth on the goods side with building growth is steadily improving. As this contin- jobless recoveries. There is a silver lining: momentum on the services side. Eventually, ues, it will eventually have nonlinear effects Recovery still happens, it just takes longer when slowly rising labor demand activates not just on housing expenditure, but also on when the service sector weakens. household formation on a sufficient scale, financial revenues and goods and services Contrast this behavior with the goods above-trend services growth will kick in, and associated with housing. Household forma- sector. Inventory dynamics require strongly the world will be surprised by the above-trend tion will bring with it spending multipliers that above-trend growth in industrial production growth in the current “very troubled” econo- are key to getting growth back on its long- immediately when a recovery begins. Expec- mies. The cycle should swing to favor the term trend and closing output gaps. A look tations of above-trend GDP growth early in service-dominated world. That will be the at previous recessions suggests this process recovery are based on outdated stylized time to worry about exit policy, higher interest tends to happen naturally. facts. Now that the services sector is larger rates, and possibly even inflation. But be- and more cyclical, its recovery profile – which cause the adjustment mechanisms of housing The Postindustrial Recovery builds up gradually and reaches peak mo- and financial wealth take time to develop, pa- Common adjectives for the recovery include mentum well into recovery – is very different tience is required before these challenges “subpar” and “jobless,” but the same were from the slingshot action of the goods sector. become immediate. Credit Suisse believes used at this point in the past few US recov- full recovery will be a cumulative, not an in- Situation Outside the US eries. Comparisons of postwar recessions tensive event, with the highest GDP growth miss a key point: The nature of recessions This article has focused on the US be- and employment growth still far off, more like has been evolving in major economies where cause the data is more granular, but the the recovery witnessed in the 1990’s, than in services have become not just the dominant phenomena we have described are visible in the 1980’s or between 2003–2007. <

Credit Suisse bulletin 2/11 38 Economy Assets

All Assets Are Someone’s Liability

The question is whether governments in the developed countries can cope with their unfunded liabilities in the long term. In Greek mythology, Cassandra’s warnings were accurate, but went unheeded. We should be wiser.

bulletin 2/11 Credit Suisse Assets Economy 39

The present value of unfunded liabilities in most developed countries is huge. Estimating exact figures can be a distraction and excuse for inaction in the face of a glaring fact: There is no plausible scenario under which these issues will resolve themselves spontaneously.

Text: Neal Soss, Chief Economist, Investment Banking Americas

The story begins around 1980 when global- This moved the responsibility from one set we think that we learned in the last decade ization of the economy took off. One conse- of balance sheets (corporate) to another is that leverage as a way of manufacturing quence of the quantum increase in the (household), but did nothing to alter the lia- financial duration is not a stable solution to effective global labor force was the down- b ility: People will grow old, stop working and the problem. ward pressure on wages in developed coun- live as many years in retirement just like When responsibilities cannot be borne a ny tries. The downtrend of labor share of GDP b efore. Evidence suggests that households longer they tend to devolve onto govern- particularly affected low-income and low- collectively did not accumulate an adequate ments. Federal government outlays on enti- skilled workers – the ones most exposed to volume of assets to defray that liability. Two tlement programs for health care and old- the stiffening competition from their coun- stock market breaks in a 10-year stretch, age support plus interest on the debt cur- terparts in the emerging markets. At the turning 401(k)s into “201(k)s,” didn’t help. rently account for 48 percent of all federal other end of the income distribution, know l- The undiversified aspect of longevity risk spending and consume 79 cents of every edge workers and owners of capital were (“outliving your money”) in a 401(k) relative federal tax revenue dollar. Astonishingly, the relatively advantaged by the facilitated to the actuarial diversification of the defined Congressional Budget Office projects that access to a larger pool of cheap low-end benefit pension structure implies the need these figures will reach 63 percent of outlays, labor. As Figure 1 shows, the income distri- for an even larger stock of assets because 84 percent of revenues by 2020 under rea- bution has become less equal. individuals are self-insuring their longevity sonable assumptions about an intervening risks. Simulating a 90-percent chance of economic recovery and “politics as usual.” Keeping Social Harmony? having “enough” money means having a It’s really not clear how to bring the entitle- Such a pattern would not ordinarily be a 10-percent probability of coming up short. ment spending down without “reneging” on recipe for social harmony. Given that the Public sector employees at the state and some of the implicit promises we have made early postwar American dream was “every local level typically retained defined benefit to ourselves. Means testing entitlements is Christmas better than the one before,” the plans. As is now being revealed, some admin- one way to package the “reneging.” Renego- solution lay in sustaining consumption even istrations seem to have been relatively gener- tiated payments to bondholders another. as labor income became less secure. Wheth- ous in promising future benefits (deferred Either way, it is difficult to imagine enough er coincidentally or causally, financial dereg- compensation) while, in some cases, being of a productivity and economic growth boom ulation and financial innovation became the somewhat lax about funding those commit- to assure that all the promises can be kept > balancing or, should we say, the unbalancing ments. The problem now is that these com- mechanism in the US. This financial deregu- mitments are starting to come due in accel- lation and innovation democratized credit. erating size (see Figure 4). Household sector assets like human capital The size of the baby boom generation has 1 Income Distribution Ratio* The US income distribution has become and accumulated residential equity were been well-known for decades. The trend that much more unequal since globalization took made more liquid (credit cards and home was less predictable was the extension of off in the early 1980s, with low-income equity credit lines known as HELOCs, to pick life expectancy. Back in the 1960s, employ- and low-skilled workers losing out to their counterparts in the emerging markets. two examples). This reduced precautionary ers based their models on having 45 years Source: Census, Credit Suisse demands for saving, and the personal saving to fund pensions that would on average last rate dutifully fell as household indebtedness for 12.8 years (for males) and 15.8 years (for 0.46 soared (see Figures 2 and 3). females). However, life expectancy at age 65 0.44 Just as households were being enticed has extended by more than four years since 0.42 into the credit and consumption boom of the 1960, with more than three or more of those 0.40 two decades following 1980, private sector years added since 19 8 5. 0.38 employers were incentivized to off-load their The extension of life expectancy and the 0.36 commitments to the retirement support of consequent lengthening of the duration of 0.34 their workers. The proliferating replacement society’s liabilities came at a time when the of defined benefit pensions by defined con- duration of the economy’s productive assets 1950 1960 1970 1980 1990 2000

tribution 401(k) plans shifted the risks of old shrank as a result of the information technol- 0 = completely equal income distribution age from corporations (shareholders) to their ogy revolution. This is an unprecedented 1 = completely unequal income distribution

Photo: Jeffrey Coolidge, Getty Images workers (individuals). challenge for the financial system. One thing *US Gini ratio for families

Credit Suisse bulletin 2/11 40 Economy Assets

ing back on the government’s collateral to 2 US Personal Saving Rate 4 Retiree Growth Trend meet debt service carry one strong warning: The personal saving rate in the US declined The annual change in the US resident popula- sharply between 1980 and 2008, when it tion aged 65 and over is projected to soar The proceeds must be used solely for debt suddenly rose as a result of the financial crisis. as of 2012 and peak around 2025 as the baby service; using the proceeds to meet the gov- Source: BEA, Credit Suisse boom generation retires. ernment’s operating budget barely kicks the Source: Census, Haver Analytics, Credit Suisse can down the road. Indeed, it’s likely to make

% in millions the road ahead tilt more steeply upward. 12 2.0 Before we get more nervous than neces- 10 1.8 sary, remember that being insolvent is not 8 1.6 the same thing as being out of business. 6 1.4 Households, companies, banks and govern- 4 1.2 ments can operate indefinitely with zero or 2 1.0 negative net present value as long (but only 0 0.8 as long) as they have the cash to meet obli- 0.6 gations as they become due. This is one rea- 1950 1960 1970 1980 1990 2000 2010 Census Bureau son that capital structure matters, particu- 0.4 Projection 0.2 larly t he maturity schedule of outstanding 0.0 debt. Simply stated: You can’t trigger a de- fault on a payment that isn’t due and owing. 1940 1960 1980 2000 2020 2040 2060 Still Some Years of Respite

In fits and starts, the trend toward questioning the credit quality of governments around the world seems likely to continue for some 3 US Household Debt to GDP 5 Entitlements and Interest years to come. Greece and Ireland are cur- The ratio soared from 24 percent in 1952 Payments to Tax Revenues to a record 98 percent in 2008. This figure The total sum of entitlements and interest rent examples of how abrupt and intense the currently stands just below 90 percent. payments in the US are forecast to absorb 100 questioning and the consequent adjustment Source: BEA, FRB, Credit Suisse percent of tax revenues by 2025. Source: CBO, Credit Suisse can be. Other countries still have time to adjust. In the US, the National Commission

% % on Fiscal Responsibility and Reform set a 100 160 Alternative Fiscal Scenario suitably somber tone about a looming crisis 90 140 2025: Entitelments + Interest in a report published in 2010 : “Over the long Absorb 100% of Revenue 80 run, as the baby boomers retire and health 120 2018: Revisit Great 70 100 Recession Level care costs continue to grow, the situation will 60 80 become far worse. By 2025, revenue will be 50 60 able to finance only interest payments, Medi- 40 40 Extended Baseline care, Medicaid and Social Security. Every 30 20 CBO Projections other federal government activity – from 20 0 national defense and homeland security to transportation and energy – will have to be 1952 1966 1980 1994 2008 2000 2008 2016 2024 2032 paid for with borrowed money. Debt held by the public will outstrip the entire American economy, growing to as much as 185 percent of GDP by 2035. Interest on the debt could in a harmonious way as these societies get are operated by the public sector precisely rise to nearly 1 trillion dollars by 2020. These older and older. because they are not profitable in private mandatory payments – which buy absolutely hands. Other activities, such as national no goods or services – will squeeze out fund- Sell Public Assets to Finance Pensions? d efense which accounts for 1. 25 trillion dol- ing for all other priorities.” Turning now to collateral, the public sector lars of America’s public assets, do not lend As this article implies, the crippling end- has a lot of assets. In the US, the Bureau themselves to privatization because of po- game of current trends is still a few years of Economic Analysis estimates the public litical culture and philosophy. away (see Figures 4 and 5). That is both good s ector owns in excess of 10 trillion US dol- The 10-plus-trillion-dollar figure cited news and bad. The challenge to financial the- lars in fixed assets. Presumably, some (large) does not include the value of public lands, of ory and practice is that much of how we think fraction of these assets could be monetized which there is a lot in North America. It’s not and what we do is grounded in concepts of through sales, sale-leasebacks or privatiza- clear what New York’s Central Park would risk-free interest rates. How will we adjust tion of activities. Infrastructure is a tempting fetch from a private real estate developer in as the universe of risk-free rates, especially candidate for privatization, but it should be a local government fiscal crisis, but the op- longer-term rates, shrinks under the burden recognized that activities like mass transit tion is there. All these considerations of fall- of our unfunded liabilities? < bulletin 2/11 Credit Suisse Credit Suisse 41

Credit Suisse Business / Sponsorship / Responsibility

General Counsel of the bank. 01 Taipei Fine Arts Museum 02 Eye of the Times Before, he was t he CEO of ProSiebenSat.1 M edia AG The first half of 2 011 saw and a partner in a leading significant exhibitions in the business law firm in Zurich. fields of painting, architec- Rohner replaces Hans-Ulrich ture and photography at the Doerig, who served as Taipei Fine Arts Museum Chairman between 2009 and (TFAM). Held in parallel to its 2 011, and as Vice-Chairman successful Monet exhibition, between 2003 and 2009. the recent show “Eye of the Doerig retires after a 38-year Times – Centennial Images of career at Credit Suisse, 02 Taiwan” highlighted the multi- where he notably acted as Chief Risk Officer of the New York Philharmonic faceted and shared memo- Group, and as Chairman and 01 Summer of Music ries of its citizens, allowing for insights into the evolution CEO of the Investment Bank. This spring saw the long- of Taiwanese society and culture. Over 200 photographs Annual Reporting Suite awaited return of the New 04 2010 Reports Available York Philharmonic to Europe- documented this century- an stages. Launched in long evolution, including doc- Credit Suisse’s annual 03 Basel, the tour took the umentary registry collected reporting suite is now avail- orchestra to perform major during the Japanese occupa- able. The Company Profile symphonic works in nine tion and photo journalism provides insights about the cities, all of which witnessed samples of the 1980s. Fur- work of each of the bank’s Alan Gilbert as music director thermore, the museum con- divisions and regions, as well for the first time. The reper- tinues to promote its popular as a summary of the bank’s toire highlighted an all- TFAM Nights. In association financial performance in the Mahler program, commemo- with Credit Suisse, it stays Business Review. Key finan- rating the Philharmonic’s open late every Saturday, cial and strategic information former music director Gustav offering the general public a can be found in the Facts Mahler, reflecting the or- chance to fully enjoy the and Figures brochure. The chestra’s deep ties to the museum’s comprehensive Corporate Responsibility composer and celebrating program of exhibitions, Report shows how Credit the 100th anniversary of his performances and lectures. Suisse assumes its responsi- death. Other concerts also bilities when conducting its included Beethoven’s Sym- business. It is complemented phony No. 3, better known Board of Directors by an online Chronicle that as “Eroica,” and Lisa Batiash- 03 Chairman Change

Alberto Venzago adds a multimedia dimension vili’s performance of Sibel - | providing a selection of ius’ Violin Concerto in Urs Rohner was elected as reports, videos and picture Munich, Vienna and Dresden, Chairman of the Board of 04 Credit Suisse Group AG fol- galleries. The Annual Report Credit Suisse and Bartók’s Violin Concerto provides detailed information No. 2 in Budapest and lowing the bank’s Annual on Credit Suisse’s financial Prague. “International touring General Meeting held in results, structure, corporate is an integral part of the New Zurich on April 29. Rohner governance and risk man- York Philharmonic’s mission,” has been serving as full-time agement. said Gary W. Parr, chairman Vice-Chairman, and as a of the New York Philharmon- member of the Chairman’s The reports can be ic. “We are able to fulfill our and Governance Committee viewed as PDFs at: and the Risk Committee since www.credit-suisse.com/ role of cultural ambassador investors/en/reports/ annual _ April 2009. Rohner joined

Li Ming-Dyao,Taipei Fine Arts Museum | because we have the vision- reporting.jsp ary and reliable support of Credit Suisse in 2004 as Credit Suisse, the orchestra’s Group General Counsel. Two Print versions can global sponsor.” years later he was named be ordered at: Chief Operating Officer and www.credit-suisse.com/ publications Photos: Chris Lee |

Credit Suisse bulletin 2/11 42 Credit Suisse

Osec – Forum for Swiss Foreign Trade and Investment Text: Fabienne de Lannay Funky Business for a Temporary Monopoly To succeed in a globalized world, businesses need to stand out from the rest – not by perfecting what already exists, but through original and exceptional ideas. That is the firm belief of economics expert Kjell A. Nordström.

ussia is one of the leading exporters of oil and gas, China manufactures toys for

01 the whole world, while India is the site of the largest data and call centers. As these Rexamples show, markets for goods and services are no longer concentrated on Western countries and instead now span the entire globe. “There’s no longer a single center of gravity – there are many of them,” says Kjell A. Nordström, guest speaker at the Forum for Swiss Foreign Trade and Investment held in Zurich, Switzerland. This new reality affects us all. We can either sit on the sidelines and watch or we can play a key role in helping shape this new reality. But we must recognize that change is happening – with or without us. There’s no getting away from that. As Nordström highlights, the genie has es- caped from the bottle and cannot be put back in. It therefore makes a lot of sense to get on board, and to turn our awareness of these new circumstances into action – as well as ultimately turn the situation to our own advantage. 01 Nordström as pop star The Zurich Exhibition Center was “Funky Business” Isn’t Business As Usual an ideal platform for Kjell A. Nordström, who has a wonderful way of sharing his expertise in In a virtually unlimited market place that is a humorous and engaging manner. characterized by strong competitive pres- The Swedish economist is a sures, how do businesses keep pace and pioneer of creativity. stand out from the rest? Nordström answers 02 Barend Fruithof, head of the question with his slogan “funky business,” 02 03 Corporate and Institutional Clients at Credit Suisse, is meaning that in today’s economic environ- convinced of the mutual benefits

ment, conformity and mediocrity are simply David Schätti, Credit Suisse of the partnership agreement between Osec and Credit Suisse, not enough. Only those businesses able to which was sealed break down the old rules and establish new in 2009. ones will be successful, he says. The key to 03 Daniel Küng, CEO of Osec, is a the future lies in the questions, rather than driving force behind Swiss exports. the answers: “There will be more and more

questions, and increasingly few universally Photos: Marcel Bieri, Keystone | bulletin 2/11 Credit Suisse 04 Credit Suisse 43

valid answers.” Nordström firmly believes that “only those who ask the questions more quickly than others will get there first.”

Emotion Is Key

Karaoke is a spent force in the business world. Something different is now required. 04 Jean-Claude Biver, a creative Unlike in the past, businesses – in order to watchmaker. create competitive advantage – do not need 05 Prize-giving ceremony for the to have the best technology: Instead, they Osec Export Award (left to right): must be able to translate simple things into Sergio Dawidowicz and Rolf Sonderer, OVD Kinegram, 05 something exciting. Only businesses that Daniel Küng, CEO of Osec make their products more attractive through and Marcus Hausser, Baumot. intangible values such as image, customer service or design, will be able to create a temporary monopoly. because we can’t expect the customer to goes hand in hand with the formulation of “We’re not competing for market share: imagine the unimaginable. That’s the job of new ideas – take the example of the furnish- We’re competing for attention,” is Nordström’s the manufacturer of a product. They must ing chain IKEA, which destroys any competi- firm belief. Feelings play a key role in this have the knack of conjuring up miracles, and tion when it enters a market – makes innova- regard. “Market mechanisms can only be also producing them. But they also have to tion a competitive advantage for democratic overridden if you manage to address people learn to ignore customers – if not actually countries. China, for example, is able to at an emotional – rather than rational – level. forget them.” manufacture products more quickly and more This is essential in a world where supply ex- He sees innovation as being a state of cheaply, yet as a communist country it has ceeds demand, as it is the only way products mind, not least because new and creative hardly any homegrown creative brains to can stand out from the rest.” ideas only develop in an open and liberal revolutionize the market place. The West is The responsibility for original products lies society. “Innovation these days means you’re still some years ahead on this score. What it with businesses, says Nordström: “Surveys creating conditions that enable and foster needs to do now is to identify and exploit this and market research don’t offer much help, creativity.” The fact that destruction always competitive advantage.

spoke from the perspective of an innovative Osec is a door young SME. The second one led by Charly Suter talked about the challenges of interna- opener to numerous tionalization. While Rico Baldegger, professor at the School of Business Administration in export opportunities. Fribourg, put forward scientific arguments, Contrinex AG’s Annette Heimlicher shed light on practical matters. Half of all export-led Swiss SMEs expect with his call to enjoy capitalism. For Jean- Finally, Daniel Küng, CEO of Osec, Barend growth in exports in the next few months. Claude Biver, the CEO of the watchmaker Fruithof, head of Corporate and Institutional This is despite the strong Swiss franc, which Hublot, this was obviously not necessary as Clients Credit Suisse, and jury chairman Peter is leaving its mark in the form of falling orders he is already no stranger to the use of buzz- E. Naegeli, Abegglen Management Consul- and reduced profit margins. Thanks to words like creativity, i nnovation, passion and tants AG, gave the Osec Export Award 2011 stepped-up marketing and product innova- love. to two SMEs: Baumot AG, which is ideally tions, however, this can largely be compen- The forum’s program also included Ger- equipped to tap the Chinese market with its sated. Foreign demand for Swiss products man best-selling business author Peter particulate filters for diesel engines andOVD is at its highest level since 2000. This is one Kreuz, as well as successful Swiss exporters Kinegram AG, which has made major inroads of the findings of the latest Export Baro- such as coffee-roaster Daniel Badilatti, data in Brazil as a specialist in s ecurity features meter produced by Osec, the Swiss umbrel- center expert Mathias-Ulrich Koch, vehicle for government documents. Andreas Schiendorfer la organisation for export, import and inves- tracking specialist Daniel Thommen, steel tement promotion, and Credit Suisse. This cable manufacturer Peter Jakob and the air of optimism was also felt at the Forum for inventor of the scanning computer mouse, Swiss Foreign Trade and Investment, not Michael Born. Five workshops were also held, only among the more than 500 participants two of them led by Credit Suisse. In the first To get an opportunity to win 35 kilograms of but also among the speakers. It seemed as of these, Jürg Graf talked about growth Jean-Claude Biver’s exclusive cheese, go to: if Kjell A. Nordström had infected everyone financing, while Carlo Centonze,CEO of HeiQ, www.credit-suisse.com/bulletin

Credit Suisse bulletin 2/11 44 Credit Suisse

Asian Investment Conference Text: Dan Scott Yuan, Japanese Recovery, Global Trade, Commodities On the AIC’s Agenda

Welcoming over 2,250 investors and 270 corporations to Hong Kong from March 21 to 25, the Asian Investment Conference (AIC) presented Credit Suisse clients with a unique opportunity to gain access to expert insight into the global economy, hear more about key investment topics and listen to presentations from global thought leaders.

Prowess on the Sporting Field The week culminated in the Cathay Pacific/Credit Suisse Hong Kong Sevens, arguably the world’s greatest seven-a-side rugby tournament, sponsored by Credit Suisse for 14 years. While this year marked a poignant end to the bank’s sponsorship of the sporting event, spirits were high for New Zealand supporters, as their team claimed overall victory in the Cup Final.

bulletin 2/11 Credit Suisse Credit Suisse 45

areth Evans, Australia’s former its population, but they were also home to foreign minister, told the audience 9.2 percent of the country’s output of elec- of the 14th Asian Investment Con- tronic parts and devices. ference he was cautiously opti- Internationalization of the Renminbi Gmistic about the political risk outlook for the Asia Pacific region. His address was timely, Meanwhile, a panel on China’s renminbi, held just days after the earthquake, tsunami also known as the yuan, concluded that the and nuclear disaster that struck Japan. “I am internationalization of the currency could rap- well aware that to be an optimist in interna- idly fuel a boom in offshore renminbi capital tional affairs, in today’s world of recurring markets. The renminbi’s internationalization disaster and drama, is to run a strong risk of has rapidly accelerated since 2009, when being branded ignorant, incorrigibly naïve or China introduced a pilot scheme for offshore outright demented,” he said. “But nonethe- trade settlement in its currency. This pheno- less I think there are some solid foundations menon would have an impact across the finan- for me taking that risk.” North Asia and South cial world, in areas from the reserve currency East Asia have undergone an extraordinary system to Asian capital markets, according transformation in recent decades, from being to the panelists. Cao Wenlian, the director the most war-torn region in the world to now general of the International Cooperation being “just about the least violent region in Center and the Consulting Center for Open- the whole international system.” The future ing-up of China’s National Development and of the region will be determined by four cru- Reform Commission (NDRC), said China’s cial sets of relationships between countries rising share of global trade meant the renmin- in the months and years ahead – China and bi was on course to become part of the basket the US, China and its neighbors, China and of currencies represented by the International India, and India and Pakistan, according to Monetary Fund’s Special Drawing Rights Evans. “If these can all be managed reason- (SDR) unit. “You can foresee that, in the fu- ably smoothly, with no more than the normal ture, the renminbi will be a constituent curren- quota of bumps and grinds along the way, cy in SDRs,” said Wenlian. “It’s more accepted then the future is very bright indeed,” he said. across the globe and used more frequently.” “But if any of them go bottom up in a really The SDR basket of currencies presently com- major way, you’ll wish you’d kept your money prises US dollars, euros, Japanese yen and in a mattress.” With the political backdrop of British pounds. the region framed, investors then dug into Dong Tao, Credit Suisse’s Chief Regional some of the most pressing financial and eco- Economist for Non-Japan Asia, offered a nomic issues at hand. prediction on when the Chinese currency would become freely tradable. “By 2015, 90 Japan’s Road to Recovery to 95 percent of the renminbi capital account Credit Suisse’s Chief Economist for Japan, will be fully convertible. There will be no one Hiro Shirakawa, called for the Bank of Japan historic moment,” he said, arguing that Chi- (BoJ) to cut its key policy rates closer to na’s currency will move toward convertibility zero, in order to reduce the value of the yen gradually. John Tan, head of Global Markets and support Japan’s economic recovery in for China and co-head of Wholesale Banking the aftermath of the March 11 earthquake. at Standard Chartered’s Chinese unit, fore- The country’s 2 011 gross domestic product saw that the so-called Dim Sum bond mar- (GDP) could fall by around 0.6 percent, but ket – in which renminbi-denominated bonds be pushed back up by around 0.2 percent to are sold in Hong Kong – will double in size 0.3 percent as a result of reconstruction. by 2015. Dim Sum bond issuance exceeded

Photo: IRB, Martin Seras Lima “The question is whether this decline … will 40 billion renminbi (6.1 billion US dollars) in be offset by public works in that region,” 2010. “Renminbi internationalization is going Shirakawa said, calling for the BoJ to cut its to bring a lot of business opportunities to overnight rate it pays banks from 0.1 percent commercial banks globally,” he said. to 0.01 percent. The damaged region, span- Future of the Commodities Market ning the Iwate, Miyagi, Fukushima and Ibaraki prefectures, only accounts for 6.4 Tom Albanese, CEO of the mining conglome- percent of Japan’s GDP and 6.8 percent of rate Rio Tinto, gave insights into the future >

Credit Suisse bulletin 2/11 46 Credit Suisse

that there had been dramatic changes in both 01 Gareth Evans, Australia’s former thinking and policy in two areas since the foreign minister, financial crisis: capital flows and inflation. “I was among the speakers addres- expect that the general level of inflation will sing the AIC. Other be higher in the future than before the crisis,” speakers included: he said, adding that this was due to a diluted 02 Tom Albanese, focus on price stability and huge public debt CEO of the mining in advanced economies leading to inflation- conglomerate Rio Tinto, ary financing. Global economic imbalances should not be overplayed as they will always 03 Jagdish Bhagwati, professor of econo- exist, and just have to be managed. “This is an mics and law at unequal world,” he said, adding that the eco- 01 Columbia University in New York, and nomic and social consequences of the management of the crisis, including the various 04 Yaga Venugopal Reddy, former stimulus packages, were still unfolding. governor of the Jagdish Bhagwati, professor of economics Reserve Bank of and law at Columbia University, also discus- India and emeritus professor at the sed global economic imbalances. His view University of Hyde- was that “surpluses and deficits come and rabad in India. go,” and that the notion that the current im- 02 balances were here to stay was short-sight-

04 ed. He told the conference that at the start of the global financial crisis, many commen- tators feared the world was in for an ongoing, long-running crash, but that the discussion had moved on to the “shape” of the recovery. “In fact what you actually have is a debate about whether you have an L-shaped curve, or a V or a W. Actually we have run out of room in the alphabet – we should probably draw from the Arabic alphabet or Chinese letters,”

03 he said. Summing up where the global economy stands, Bhagwati left the audience by saying, “I don’t think we have had a freefall –  of the commodities sector and explained the that’s the good news. But there is also bad profound effect commodities will have on the news and the bad news is that vulnerabilities emerging and developed markets. The indus- persist, and those are hard to assess.” try has moved on significantly since News- Positive Outlook for the Region week ran the following headline in the 1980s: “The Death of Mining.” “At the demand rate the sector are the constraints on supply, and As the Asian Investment Conference drew to we are seeing now, at the GDP growth that in particular the resources that are needed a close, Brady Dougan, CEO of Credit Suisse, everyone would be projecting for China, India, to bring commodities to the market. It is taking expressed his confidence in the Asian markets South East Asia, Brazil and other emerging companies such as Rio Tinto longer to bring over the coming five years. Osama Abbasi, market countries, we could be in an environ- commodities to the market due to the depth CEO of the bank’s Asia Pacific region, echoed ment where, over the next 20 to 30 years, of mining, more challenging locations, a lack these sentiments while recognizing that we the world will consume as much copper as it of infrastructure, difficult governance, in- must remain prepared for what the future consumed for the whole of human history. I creased stakeholder engagement and “my holds: “It is very clear that in the past two could make the same prediction for steel, alu- backyard” attitudes. This has implications for years Asia has stepped up in a big way – eco- minum and everything else we produce,” he capital expenditure, which is significantly hig- nomically, socially and politically. It has as- said. her than it was five to ten years ago. In addi- sumed a new leadership role in the global era, Whilst most of the growth in supply would tion, companies also invest in environmental but another crisis will occur, that’s for sure,” come from China, Albanese predicted that and biodiversity research. he said. “The questions, however, that we now growth in Chinese demand will slow over the seek to answer are: ‘Should those events Negative Impact of Trade Imbalances next three to five years, but that there would occur, how will that impact Asia, and what Alberto Venzago | be new supply coming from India and South Meanwhile, two experts talked down the ne- will the opportunities and risks be here in our East Asia. There may be a short period of gative impact of global trade imbalances. home markets?’” The next edition of the AIC oversupply, but post 2015 this would be bal- Yaga Venugopal Reddy, former governor of will be held in Hong Kong from March 19 to

anced out by demand. The key issues facing the Reserve Bank of India, told attendees 23, 2012. Suisse Credit Photos:

bulletin 2/11 Credit Suisse Credit Suisse 47

Fawzi Kyriakos-Saad CEO of the EMEA Text: Jack Grone

Fawzi Kyriakos-Saad, CEO of the Europe, Middle East and Africa (EMEA) region, has firsthand knowledge of the increasingly important role that country CEOs play at Credit Suisse. He explains how the country CEOs successfully drive the bank’s integrated bank strategy.

bulletin: At Credit Suisse, country CEOs are often referred to as “engines of inte- gration.” What are they trying to achieve? Fawzi Kyriakos-Saad: The role evolved with the introduction of Credit Suisse’s integrated banking strategy in 2005, which leveraged the power of our three divisions – Private Banking, Investment Banking and Asset Management. Now, we look at the country CEO’s role from the point of view of the client. Country CEOs are supposed to deliver the bank’s entire franchise to our clients in a given country. They have three primary areas of focus: the external world, which is focused on clients; the internal world, which is driving collaboration across various business lines to deliver solutions to our clients, and third, the regulatory world, where the country CEO Combining the acts as the interface with our local regulators. As the former country CEO for Russia, you are well placed to understand the Strengths of Private role. What were the biggest challenges and opportunities there? The main opportunity was the development Banking, Investment of a holistic strategy to increase the size of the client franchise. From the outside, that Banking and Asset looks like a simple thing; from the inside, it is more complicated. In Russia, one of the Management most successful things we did was to >

Credit Suisse bulletin 2/11 48 Credit Suisse

Europe, Middle East and Africa Credit Suisse has an onshore presence in every major EMEA country, with offices in 78 cities across 26 countries. The region comprises developed markets such as France, Germany, Italy, Spain and the UK, as well as emerging markets including Russia, Poland, Turkey and the Middle East. We have 9,200 employees in the region, with a majority working from our regional headquarters in London.

There is not one particular profile, but one requirement is that they are well respected in their local markets. This means they are well connected to our local clients and well placed to recruit the most talented bankers in their respective countries. What’s ahead for the integrated bank model? Will regional management play an increasingly important role? Fawzi Kyriakos-Saad was appointed CEO of the Europe, As the bank deploys its capital-efficient and Middle East and Africa (EMEA) client-focused model, it becomes more im- region in July 2010 and joined the portant to serve our clients, rather than just Executive Board of Credit Suisse  rethink the way we manage relationships at the same time. Based in London, offering them products. So yes, the role of with the major Russian corporations and he also acts as Credit Suisse’s client-facing people such as the country co-head of the Global Emerging their main shareholders. Traditionally, Invest- Markets Council and Chairman of CEOs is becoming increasingly important. ment Banking covered the companies, while the EMEA Operating Committee. Clients are becoming more sophisticat- Kyriakos-Saad previously served Private Banking covered their sharehold- as CEO of Russia, the countries of ed and see themselves as active partners of ers, often ultra-high-net-worth individuals the Commonwealth of Independent the bank. How do you think they perceive States and Turkey. (UHNWI) the role of the country CEO? – with assets under management exceeding 50 million Swiss francs (55 million He joined Credit Suisse from Clients like to know that there is one person US dollars) or a total wealth exceeding 250 JPMorgan Chase in 2006, where they can call if they need help putting things he worked in a variety of senior million Swiss francs. fixed income and emerging market into context. They also want to make sure By combining our coverage, we were able management roles. Prior experience that the country CEO is sharing initiatives includes eight years at Goldman to offer a much broader range of services, Sachs in New York and London. being developed by the bank. and ended up capturing a larger share of the Kyriakos-Saad holds a Bachelor of Is the country CEO business model Civil Engineering from the American Russian market, in investment banking, as University of Beirut and an M.B.A unique to Credit Suisse? If not, how does it well as in private banking. from Columbia University. He is differentiate itself from other banks? an architecture enthusiast and an How do you encourage collaboration avid collector of art. It seems that when you talk to our competi- between the three divisions? tors, one of the things they often single out By demonstrating that there is a strong about Credit Suisse is the ability of the coun- value-added component to the integrated try CEOs to integrate and unite the bank’s approach. Often it is most compelling when products and services. They know through bankers from various divisions hear it direct- benefit of clients in other regions. There are their own experience that this is difficult ly from a client that they expect a unified concrete examples: Our CEO in China, for to do. offering from Credit Suisse, not three sepa- example, might have clients in his country Given the increasing importance of man- rate approaches. The country CEOs focus on that are big exporters of capital, so he might aging risk and controls, are there consistent the whole picture. They want to build a rela- pick up the phone and call the Co-CEOs in processes and disciplines applied to each tionship that ensures we win 80 percent of the Middle East, who can help find relevant country? the business from our top 20 clients in any investment opportunities. Besides being the “owner” of the franchise, given country. What do you look for in a country CEO? the country CEO is the head of the legal We also have a very strong network for Our country CEOs are a diverse group. Some structure in their country, and is therefore bringing our country CEOs together, through of them come from a private banking back- the counterparty to the local regulators. One formal regional management structures, but ground, others have backgrounds in special- of the most important roles for a country CEO also through bodies such as the global ized investment banking areas, such as equi- is to be accountable to the regulators and Emerging Markets Council. This means we ties. A few of our CEOs have also spent part take responsibility for the entire bank’s busi- leverage our client base in one region for the of their careers managing major companies. ness in that country.

bulletin 2/11 Credit Suisse Credit Suisse 49

Wealth Management Conference Text: Jack Grone Latin America New Realities Emerge On All Fronts

01 Miami was the site of Credit Suisse’s inaugural Latin America Wealth Management Conference, where the theme “New Realities, New Responses” underscored the region’s position at the fulcrum of a global economy being rapidly remade by shifting dynamics in finance, trade and geopolitics.

ntonio Quintella, Chief Executive

Officer of Credit Suisse Ameri- 02 cas, welcomed attendees to the

conference, noting that the 180 03 Aparti cipants represented over 15 countries in addition to the US, reflecting Credit S uisse’s broad presence in the region. “Our goal is to 01 Antonio Quintella, Chief Executive try to understand the forces driving change Officer of Credit in the global economy, including the chang- Suisse Americas es in Latin America, and bring all of that 02 William Taylor, a together in meaningful investment opportuni- best-selling author, co-founder and ties,” Quintella said. During a day that com- editor of Fast Company 04 bined keynote addresses with interactive magazine

general sessions and breakout panel discus- 03 Alvaro Uribe Velez, sions, conference participants discussed former Colombian topics including trade flows, public policy, president commodities, real estate and the rise of the 04 Richard Nalley, co-founder and editor of Fast Company ma- global consumer. editor-in-chief of gazine, told conference attendees they are ForbesLife magazine living in an “age of disruption.” “You can’t do Rapidly Expanding Middle Class big things anymore if you’re content with Alvaro Uribe Velez, former two-term presi- doing things a little differently than they’ve dent of Colombia who served from 2002 to been done in the past,” Taylor said. “Winning 2010, offered a view of Latin America in the forceful case for the role that private com- organizations have figured out how to become conference’s opening speech that blended panies must play in these efforts. “Govern- the “most” of something – the most cost ef- optimism for the future with a strong degree ments in the region must not be childish fective, the most global, the most efficient, of pragmatism about the challenges the re- about defending the private sector,” he told etc. The middle of the road has become the gion continues to face. “In my opinion, with the audience. “We have to convince people road to ruin.” And during a session on the rise the exception of two or three countries, all in Latin America and the Caribbean that if of the global consumer, Richard Nalley, edi- the countries in Latin America and the Carib- we want to overcome poverty and create a tor-in-chief of ForbesLife magazine, said bean will fulfill the (UN’s) Millennium Devel- more balanced distribution of income, we businesses must recognize that young con- opment Goals,” Uribe said, noting that almost need to rely on long-term investment from sumers view shopping as entertainment. two-thirds of the region’s 600 million people the private sector.” “Nearly every business that deals with con- belong to the rapidly expanding middle class. sumers is going to have to be in the entertain- Middle Road Is Not Good Enough “However, we need to be much more ambi- ment business going forward,” Nalley assert- tious when it comes to improving the social The conference’s other keynote speaker, ed. “If you want to capture these consumers,

Photos: Credit Suisse Credit Photos: fabric of the region,” he added, making a William Taylor, best-selling author as well as you’ve got to make it entertaining.”

Credit Suisse bulletin 2/11 50 Credit Suisse

Entrepreneurs Summit Text: Jack Grone Succeeding in a Socially Aware Business World

Credit Suisse Private Banking USA hosted its annual Entrepreneurs Summit in Utah, returning to a place famed for its emphasis on sustainable living. Some 100 participants had the opportunity to listen to the co-founders of Twitter and Ben & Jerry’s explain why their com panies opted to be socially responsible and how it has helped them succeed.

n line with the theme “Innovation in the New Decade: Succeeding in a Socially Aware Business World,” participants lis- tened to the experiences of entrepreneurs, engaged in wide-ranging discussions on energy, venture philanthropy and social impact investing, and questioned I 01 speakers about the best ways to raise capital, set goals and participate in the rise of emerg- 01 ing markets around the world.

The Two-Part Bottom Line

The summit’s theme was framed by a pre sentation held by Jerry Greenfield, co- mental) create more challenges for them- our employees accountable for how well they founder of Ben & Jerry’s Homemade, who selves in the short term, but stand to reap care for each other, then we almost never recounted the key ingredients that helped bigger rewards over time. “We wanted to need to worry about that same behavior him and his partner Ben Cohen build their create a bond with our customers that was transferring itself to our guests,” Meyer said. ice cream business into an iconic brand. “If so much stronger than anything based on a Good Outweighs the Bad business is the most powerful force in the clever marketing campaign or making great world, and the people running it are good flavors.” A more recent start-up was the focus of people, why isn’t business a force for good?” attention when Biz Stone, co-founder of Hospitality Quotient Greenfield asked. “The reason is that you Twitter, shared his experiences in helping to only get back what you can measure, and Insights into another food-driven business create one of the world’s most widely fol- many businesses only measure profit.” were given by Danny Meyer, president of lowed websites with 200 million account Ben & Jerry’s was an early proponent of Union Square Hospitality Group, which oper- holders. He touched on topics ranging from what Greenfield calls “the two-part bottom ates landmark New York restaurants includ- the continuing evolution of social media to line”: measuring success not only in terms of ing Union Square Cafe. Meyer said that when Twitter’s crucial role in the revolutions and money, but also in terms of how a business he’s hiring staff, he always looks for people demonstrations across North Africa and the can benefit its local community. “The oppor- with a high HQ – shorthand for what he refers Middle East that began in early 2 011. tunities to address both bottom lines are es- to as a “hospitality quotient.” And, somewhat Services like Twitter can be used for good sentially limitless,” said Greenfield, adding counterintuitively, he makes his employees and ill, but Stone said the good outweighs the that businesses which focus on multiple bot- – rather than his customers – the top priority bad. “Working at Twitter has taught me that

tom lines (social, educational and environ- for his business. “We find that if we first hold people are basically good. When you give Suisse Credit Photos:

bulletin 2/11 Credit Suisse Credit Suisse 51 02

Do you expect your employees to give back as well? Yes. We don’t tell them which causes they have to support, but we let them know that they are working for a company, where our hospitality extends beyond the four walls of 01 This year’s Entrepre- neurs Summit our restaurants into the communities in which was held in Sundance, we do business. against the backdrop of the slopes What is your message to entre preneurs of Mount Timpanogos 03 about the importance of having a com- in Utah’s Wasatch Range. munity-minded bent? You’ve got to love your (business) idea to get 02 Danny Meyer, the into business in the first place. But you’ll president of the Union Square Hos pi ta- realize sooner than later that there’s going lity Group, a com - to be a competitor who’s going to copy you pany with acclaimed restaurants throughout if your idea is great. They won’t be able to New York City. copy the heart and soul of your organization. 03 Isaac “Biz” Stone, So there will be a huge wedge between you 04 co-founder of Twitter, and your competitors the sooner you put the a real-time micro- blogging service. following notion into your business plan: your company is not only going to be the best in 04 Jerry Greenfield, the world at what it does, it’s also going to the co-founder of the ice cream maker be the best for the world. Ben & Jerry’s Home- made.

Biz Stone interview

How important is social awareness to them a tool that’s relatively simple to use, Twitter’s business? they’ll use it for good things and prove that on Biz Stone: It is one of the cornerstones of a daily basis. This isn’t about a technology we our corporate culture. We noticed early on are building, but how people around the world that people used Twitter to help one another are using it to effect real, positive change. It issues. They want to address those issues during natural disasters, emergencies, poli t- will be a triumph of humanity, not technology, through their business, but they don’t know ical unrest ... You don’t have to wait until your if it’s to be successful.” how to do it or if it’s going to make them less company makes billions of dollars to do profitable. Our experience clearly shows this something good. In fact, the earlier you get isn’t the case. It actually made Ben & Jerry’s started, the greater the impact. much more successful. If you as an entre- Has it helped you to recruit people? Jerry Greenfield interview preneur want to integrate social and environ- Yes. When people come to interview, they Your company was socially responsible mental concerns into your day-to-day busi- very much get that vibe and catch that (social before it was in vogue. Why? ness, you can do it and on top do very well. awareness) bug. Jerry Greenfield: It was an evolutionary pro- What’s your message to entrepreneurs cess. In the beginning, we just tried to be who are starting a business and want to be a community-based company. As we be- socially aware? Danny Meyer interview came more successful, we started to under- My message is twofold. You have to be stand the role that business plays in society Is it good in terms of business to willing to fail spectacularly if you want to and that we could have a bigger impact. be community-minded? succeed spectacularly. Secondly, start-ups There has been an enormous shift in atti- Danny Meyer: Absolutely. Firstly, you can are uniquely positioned to weave the idea of tudes. Some comes from the companies recruit much, much better employees when doing good into the very core of the com- themselves and some from the consumers, your company stands for something beyond pany. It’s more difficult for an established who are insisting that businesses should be the product that you’re selling. People want company. more involved in society. It’s interesting to to affiliate with a company that lines up with You mentioned Twitter being used in note that when consumers speak, the busi- their set of values. social situations. Did you see this coming? nesses listen. Secondly, we’re living in a world where In a way. But going from a project that Isn’t addressing social and environmental the shelf life of innovation is about two sec- everyone initially derailed as some useless issues too costly for companies? onds. Customers therefore want to associate technology, to being involved in civil unrest There are a lot of people in business who are themselves with a company which respects halfway around the world in such a short time concerned about social or environmental their ideals. span was kind of a shock.

Credit Suisse bulletin 2/11 52 Credit Suisse

Employee Engagement Text: Valérie Clapasson Fahrni Global Citizens Program

In 2010, Credit Suisse launched the pilot project “Global Citizens Program” in addition to its existing volunteering programs. The Global Citizens Program was conceived to improve the exchange of knowledge and know-how between employees and the partner organizations in the field of development brace a culture that was unfamiliar to me, and work. Qualified employees c an use to show tolerance. I now use this openness 01 their expertise and professional in my role at the bank. Since the project in- skills to support projects run by our volved working independently, I also had to partner organizations. devise my own solutions to a number of problems and this has increased my confidence to make decisions and manage issues on my Elizaveta Timasheva own. Anne Ackermann How is this reflected in your daily work What was the nature of your assignment? What exactly did your work entail? at the bank? Elizaveta Timasheva: I worked with CARE Anne Ackermann: I developed a risk manage- I have learned a great deal about how micro- International in Tanzania, where I was re- ment training module for the ACCION training finance programs function. At Credit Suisse, sponsible for documenting the progress of center in Bangalore (India) that trains em- I advise clients on investment funds, includ- its school projects in Mela. It is important for ployees from microfinance institutions. Our ing funds that invest in microfinance institu- aid organizations to be able to report on the Western understanding of risk management tions. Since I returned, I’ve been trying to success of their programs both in their own not only includes credit risks but also corpo- give my clients a clearer insight into microfi- publications as well as in the press in order rate governance, employee-related risks nance programs and to refine the advice I to raise the profile of their work and thus such as corruption and exploitation, and en- offer them. attract financial support. vironmental risks such as the threat of natu- Has your time in India changed your How did CARE benefit from your work? ral disasters. perception of microfinance programs? I wrote a newspaper article and created pre- A survey of microfinance institutions re- I was already very interested in microfinance, sentations for CARE using information I ob- vealed that credit risks tend to be evaluated and my time in India has now fully convinced tained in interviews with schoolchildren, quite accurately, whereas these other types me of the merits of these programs. During teachers, parents and community leaders in of risk are neglected. This is why I developed my field trips, I met large numbers of people Mela. This material will be valuable to the a training program that would address issues who regularly take out and repay microloans, organization in its fundraising work. Another such as these and demonstrate comprehen- and this showed me that the programs important aspect of my role was the transfer sive risk management solutions. really do work. of knowledge: During my assignment, I spent How did your work benefitACCION ? What is especially important is that micro- a lot of time discussing ways to promote the Every company can benefit from external finance clients can trust their own lenders charity’s activities on different levels. I also input. The specialist risk management knowl- and are able to repay the money on a grad- left video equipment so that they can con- edge I have gained at Credit Suisse was ual basis, without being subject to the exor- tinue to document their work. particularly useful when it came to formulat- bitant interest rates charged by other lenders How will your experiences in Tanzania ing a structured and detailed concept for the in the market. help you in your role at Credit Suisse? training programs and developing the new My placement with a Masai community gave module. me an opportunity to immerse myself in an Elizaveta Timasheva | In which way did you – as a Credit Suisse entirely new culture and step outside my More information employee – benefit from this experience? about Anne Ackermann’s comfort zone. It has given me more confi- I believe that I can now bring more innovation, assignment: dence. I also improved my communication creativity and perhaps even better manage- http://microfinanceindustrystandards. and organizational skills and I am more dis- wordpress.com/ ment skills to my work. In India, I had to em- ciplined when starting new projects. MartinPhotos: Stollenwerk bulletin 2/11 Credit Suisse Credit Suisse 53 03 Supporting Volunteering

Many of our employees volunteer their time and expertise to help good causes – not only increasing the value of our financial contributions but also helping them to develop their interpersonal skills and team spirit in the process. We also offer each employee the opportunity to dedicate an entire working day on full pay to charity work as part of our support for social initiatives. In addition to our two global volunteering programs, which we are constantly expanding in conjunction with our partners Junior Achievement Worldwide and Habitat for Humanity International, we work with selected organizations in all our regions to coordinate employee volunteering. In 2010, we focused primarily on volunteering programs that promote the transfer of skills and knowledge between our people and social organizations. This was the aim of the Global Citizens Program launched in June 2010. The pilot program enabled qualified employees to contribute their professional skills to projects run by our partner organizations in the areas of education and

02 microfinance. By working at a local level, we can respond to the specific needs of our partners and help to develop their projects. Last year, 15 Credit Suisse volunteers were sent to How has this altered your everyday life? 10 countries to complete one-week training and educa- I now think more about the way my actions tion assignments with five partner organizations. The affect others. I have recognized that even as volunteers performed a broad range of tasks – from an individual, I can truly make a difference 01 Elizaveta Timasheva teaching to drawing up strategic business plans for the by devoting my time, skills and energy to sup- She is from Russia and works as a proj- partners’ local branches. porting the work of charitable organizations. ect manager at Credit Three of our employees were deployed with three of Why did you apply for the Global Citizens Suisse in Zurich. As a marketing expert, our microfinance partner organizations for a period of Program? she completed an three months. During their assignments, they notably I was very keen to participate in the program assignment in 2010 for the development helped to develop a risk management course that enables after reading about the pilot scheme. In view organization CARE our partner organizations to train microfinance specialists of my marketing background and experience in Tanzania on behalf locally. They also designed a model to help microfinance in conducting interviews, I thought I had the of the global training initiative. institutions create products that are better aligned to the right skills for this role. Having never previ- needs of their clients and helped improve banking pro- ously visited Tanzania, I found the prospect of 02 Anne Ackermann She is from Switzer- cesses and standards. working there both challenging and exciting. land and works as a The program will be broadened in 2 011, with up to 25 What have you told your colleagues, fam- fund advisor for Credit Suisse in Hong employees volunteering their skills and expertise. ily and friends about your experience? Kong. She put her I was eager to share my positive experiences risk management expertise to good use with as many people as possible. I have on an assignment in therefore given a number of presentations 2010 in Bangalore for You can find out more about this topic in the Corporate about the program at Credit Suisse events, the benefit of the development Responsibility Report (pages 22–25) and at: during which I encouraged other employees organization ACCION. www.credit-suisse.com/responsibility/focusthemes to get involved. 03 School children in Watch video reports about the Global Citizens Program Mela, Tanzania in the Responsibility Chronicle on pages 88 and 91 and at: A school project run www.credit-suisse.com/chronicle by the development organization CARE in- tegrates children from nomadic shepherd More information tribes, such as the about Elizaveta Timasheva’s Masai, into the gener- assignment: al school system. http://microfinanceindustrystandards. wordpress.com/

Credit Suisse bulletin 2/11 54 Credit Suisse

Art Text: Stefan Behmer The Third Singapore Biennale: Up Close and Personal

Brought to life by the Singapore Art Museum in 2006, the latest edition of the Singapore Biennale itled “Open House,” the Bien- featured an inspiring selection nale captivated audiences be- of new projects by over 60 artists tween March and May as the from 30 countries. Credit Suisse lead theme was projected is the key sponsor of the event’s onto various exhibition venues most talked about artwork throughout Singapore. Spe- by Berlin- and Tokyo-based artist cially conceived, site-specific works dotted Tatzu Nishi in the city’s iconic T around the city’s perimeter have drawn on Merlion Park. iconic spaces including housing development block flats, shopping centers and night markets, as well as international air and sea ports, heightening individual experiences in rooms – around existing public monuments. this multicultural Asian metropolis and estab- The result is as conceptual as it is spatial, as lishing diversiform perspectives and myriad the statue literally disappears from the public creative approaches. Viewers were invited to eye, while being highlighted to the audience question the crossing of rational borders, the within Nishi’s manufactured and temporary consideration of cutting-edge points of view environment. This dramatic shift from public and the concomitant ways in which we form to private is the focal point of the artist’s dia- connections with our peers. logue, aiming to promote awareness of egal- As the Biennale’s first Singaporean Artis- itarianism in art, controversially, by excluding tic Director Matthew Ngui plays a vital role the piece from mass viewing. It is a change in the event’s development and ascendancy. of perspective, not of visual ownership that Elaborating on the title “Open House” – which preoccupies Nishi. stems from the local tradition of opening As the allegorical creature on Merlion one’s home to one another on festive occa- Park’s waterfront was enveloped by provi- sions – Ngui envisioned the accessibility of sory walls, it operated as an adhoc hotel, creative spaces within the Singaporean land- accommodating visitors for one evening, al- scape for artists from around the globe to lowing them to get up close and personal with draw inspiration from and create works that one of the country’s most iconic landmarks reflect the local lives and the unique DNA of within the context of a fully operational, pur-

01 the city. pose-built, luxury suite. Around two weeks prior to the official opening of the Biennale, Familiar Icons – New Perspectives the contingent of tickets allowing visitors to Hailed as the event’s centerpiece, Tatzu Nishi’s spend the night at the Merlion Hotel had al- construction installation around Singapore’s ready been sold out, bearing witness to the landmark Merlion statue aspired to promote tremendous success of the project. public encounters by “amplifying the indi- Tribute to Singapore vidual experience on a grander scale,” as the artist stated. The prestigious work titled “The The hybrid animal pays a figurative tribute to Merlion Hotel” continued the Japanese art- Singapore’s name and history, the Merlion is ist’s series and tradition of challenging the the city’s main symbol. The creature was

ordinary. Nishi builds structures – often hotel originally dreamed up by the city-state’s tour- Photos: Courtesy of the Singapore Art Museum, SAM

bulletin 2/11 Credit Suisse Credit Suisse 55

01 Artist Tatzu Nishi with Singapore’s iconic Merlion monument in the background.

02 Left: The Merlion Hotel’s external view with Singapore’s skyline as a backdrop. Above: The interiors of the purpose- built suite constructed around the monument.

dialogue in contemporary art, the Singapore Biennale places the city-state firmly on the map of the international art circuit. With a representative focus on Asia and local contemporary creative practice, more than half of the commissioned artists have created new ism board back in 1964 and, having proved the world. “The museum is pleased to work and exciting site-specific works. Tan Boon extremely popular, it was later enshrined in with our long-term partner Credit Suisse to Hui concludes: “The third edition of the Sin- a statue in 1972. According to historical data, bring these extraordinary experiences to the gapore Biennale has a significant Asian focus the lion element refers to the city’s original public,” says Tan Boon Hui, director of the presented within an international frame- name Singapura (Lion City), while the fish Singapore Art Museum. Credit Suisse has work.” torso commends its maritime antecedents. also announced the renewal of its engage- Collectively enhancing Singapore’s cos- “The center of Nishi’s idea is really about bring- ment until the end of 2013. mopolitan profile, installations, exhibitions ing art to the masses”, says Ngui. “People can Singapore as an Art Hub and events from the old Kallang Airport to get to know the Merlion a lot better by coming Marina Bay and many of the city’s landmark very, very close to it. Normally, we view it from Under the auspices of the Singapore Art museums have favorably led the Biennale to the pier or from over the bridge.” Museum, this third edition of the Singapore cultivate a deeper public engagement with Collaborating closely with the museum, Biennale has been a resonant success, fea- the arts throughout the region and, indeed, the Credit Suisse Innovation in Art Series – turing foreign guest artists but also solidify- the world. along with other significant projects – enables ing the museum’s strong position as the the Singapore Art Museum to showcase im- holder of one of the world’s largest public portant Asian contemporary art practices, collections of modern and contemporary featuring ground-breaking artists as well as Southeast Asian art. Established as a plat- www.singaporebiennale.org hosting reputable exhibitions from around form to foster an active and cross-cultural www.singaporeartmuseum.sg

Credit Suisse bulletin 2/11 56 Credit Suisse

Art Masthead Text: Stefan Behmer Publisher Credit Suisse AG P.O. Box 2 Curtain Call and CH-8070 Zurich Phone +41 44 333 11 11 Fax +41 44 332 55 55

Editors Grand Reopening Stefan Behmer (sb), Dorothée Enskog (de), Daniel Huber (dhu), Mandana Razavi (mar), Moscow’s most iconic cultural landmark prepares Andndreas Schiendorfer (schi). for its grand reopening this fall. After an extensive Contributors to this issue Valérie Clapasson Fahrni, Simon Evenett, Jack Grone, and ambitious restoration project, the Bolshoi Philipp Lisibach, Ingo Petz, Matthias Plüss, Maria Ryser, Theatre has been brought back to its former glory. Jososhh Simims, DDaan ScScotttt, NeNeaall Sossss, Jamameess Sweeneneey.

With Credit Suisse as the theatre’s general sponsor, E-mail the new season is scheduled to start this October [email protected]

as the Bolshoi reclaims center stage. Internet wwwwww..crcreediditt--ssuiuissssee..ccoomm//bbullulleettinin

oscow’s celebrated Bolshoi The- Marketing Veronica Zimnic (vz) atre prepares for its much-an- Proofreading ticipated reopening this fall. Text Control AG With its curtains drawn for the Translations Mlast six years, the renovation period has been Credit Suisse Language Services extended repeatedly as restoration teams Design/Layout/Project management determined that the actual work load was far wwwwww..aarrnnoolldd..inhinhaallttununddffoorrmm..ccoomm

greater than initially established. Bringing the AdvAdvererttiissiinngg After the extensive remodeling, the print-ad kretz gmbh, Andrea Hossmann und Esther Kretz, iconic structure back to its former glory, in end result is nothing short of extra- General-Wille-Strasse 147, CH-8706 Feldmeilen, addition to the implementation of state-of- ordinary, considering that the building’s Phone +41 (0)44 924 20 70, [email protected] found ation and brickwork had to be the-art technical accents, was no small task repaired entirely by hand. Certifi ed WEMF circulation in2009 and engaged over 3,000 workers on-site and 143,892 a further 1, 5 0 0 artisans from external ate- ISSN registration liers. ISSN 1662-4572 with clay and other ingredients. Finished off Egg Whites, vodka and Gold with vodka, it is then used to apply gold leaf Printing Swissprinters Zürich AG onto the curved ceilings and decorative fea- In addition to the numerous structural chang- tures. “This method keeps gold from being Editorial committee es, such as the reduction of seats from 2,10 0 Richard Bachem (head of Marketing, Private and overused and helps retain its luster for lon- to 1,7 2 0 and the introduction of a new revolv- B usiness Banking Switzerland), Nicole Brändle (Econo- ger,” he adds. mic Research), René Buholzer (head of Public Policy), ing stage, the extensive undertaking is de- Urs P. Gauch (head of Corporate Clients Switzerland – Large Corporates), Fritz Gutbrodt (Chairman of Credit lineated by extraordinary attention to detail. New Acoustic Resonance Suisse Foundation), Anja Hochberg (head of Investment The gold-plaited decorative accents, for in- Strategy Asset M anagement), Angelika Jahn (Investment The Bolshoi’s iconic tilted stage qualities Services & Products), Bettina Junker Kränzle (head of stance, required over five pounds (2.3 kilos) have been thoughtfully preserved, keeping I nternal Corporate Publishing & Services), Hanspeter of mosaic gold, used for the gilding of the Kurzmeyer (head of Private Clients Switzerland), Andrés its distinctiveness and noticeable sense of L uther (head of Group Communications), Charles Naylor theater and its massive chandelier. The res- history. The orchestra pitch has also been (head of Corporate Communications), Christian Vonesch toration of the ceiling’s historic fresco alone, (head of Private & Business Banking Aarau). enlarged and overall, the renovations were depicting Apollo, the Greek god of prophecy, intended to restore the original acoustics of 117th year of publication music and the arts, surrounded by 10 muses (Five issues per year in English, German, French, the theater. After the extensive remodeling, and Italian). Reprinting of texts permitted with against a blue sky backdrop, took 10 months the end result is not only outstanding but acknowledgment of source (Credit Suisse bulletin). to complete. nothing short of extraordinary, considering Changes of address Mikhail Sidorov, spokesman for Summa Please send notifi cation in writing, accompanied by that the building’s foundation and brickwork Capital, the company responsible for the the original envelope, to your Credit Suisse branch or to: had to be repaired entirely by hand. As the Credit Suisse AG, SULA 213, P.O. Box 100, restorations, says “gilding was done by an CH-8070 Zurich. theater’s general sponsor, Credit Suisse is old Russian vodka-based method.” Interest- particularly proud of the association with This publication is for information purposes only. It does not consti- ingly, the secret formula for the finishing tute an offer and is not a recommendation by Credit Suisse to buy or the home of such world-renowned talent sell securities. Indications of past performance are no guarantee of a touches of the renovation of Moscow’s Bol- and looks forward to the reopening perfor- positive performance in the future. The analysis and conclusions con- shoi Theatre is a concoction made of egg tained in this publication were established by Credit Suisse and may mances of Moscow’s Bolshoi Theatre this already have been used for transactions by Credit Suisse Group com- whites, Russian vodka and gold. To bring panies prior to being made known to clients of Credit Suisse. The opi- coming November. nions expressed in this document are those of Credit Suisse at the ti- back the imperial sheen the medieval recipe me of going to press. (We reserve the right to make amendments). requests that the egg whites be kept in a Credit Suisse is a Swiss bank. www.bolshoi.ru warm room for 40 days before being mixed Photos: Pieter Estersohn, Getty Images | Andreas Meier

bulletin 2/11 Credit Suisse Roger Federer Leader 57

Roger Federer On His Foundation At the age of 22, Roger Federer decided to start his own foundation to support children in Africa. In an exclusive interview, the tennis champion talks about the people who inspired him to take this step and the difficulties and challenges his foundation faces.

Credit Suisse bulletin 2/11 58 Leader Roger Federer

0 7/ 2 010 By the end of es and the need July 2010 the Board for early-childhood Chronology of the of Trustees decides education has already that any additional been identified by resources made avail- the government and New Malawi Project able through the corresponding partnership with measures taken – Credit Suisse will be albeit to an insufficient 04/2010 used to launch and degree due to a lack In April 2010, manage a new of necessary 12/2009 representatives 10-year program in resources. Research 01/2010 December 2009 sees from the RFF and 06/2010 the field of early- shows that Malawi At an initial meeting the agreement of a Credit Suisse attend A second workshop childhood education already hosts 44 local in January 2010, closer collaboration a workshop with to discuss the in Malawi. The organizations active representatives of with the Roger three external experts. geographical scope country was favored in the field of early- the RFF and Credit Federer Foundation The aim is to narrow of such a major not only because it childhood education. Suisse agree that (RFF) as part of the down the wide range project is held in June has met the founda- The RFF has asked a the additional funds newly established of possibilities in 2010, culminating tion’s guidelines as number of the largest, will mainly be used sponsorship deal. relation to education in recommendations being one of Africa’s most established to launch a new, Over a 10-year initiatives in Africa. for two members of poorest countries, organizations to draw long-term education period, Credit Suisse The idea of a the Board of Trustees. but also due to a long- up and submit key initiative. will support the long-term project in standing political proposals for a RFF to the tune of the field of early- stability and Malawi’s 10-year program by one million US dollars childhood education size – with 12 million the end of 2010. annually. is born. citizens – making it relatively manageable. It is also easily accessible, English is widely used as one of its official languag-

bulletin: Many young music stars and well to say “You know what? I’ll put my feel very honored by their confidence in sport champions buy a Ferrari with name to a foundation and take it from my foundation, that they consider it will their first big paycheck. You instead there.” That’s easier said than done, and it put their funds to good use. chose to set up a foundation. Why? was a great learning process. But here I am But I try not to be dependent on just Roger Federer: Well, I was obviously still eight years later – I’ve learned a lot and am private donors. I provide funds myself both very young when I set up my foundation still really excited about what lies ahead. directly and indirectly, through merchan- on Christmas Day 2003. Agassi was a What is your role in the foundation dising, sponsorship and so forth. That’s major influence, I guess. I remember him given that your time is so limited? how it’s worked over the last couple of saying that he wished he had started his What do you do? What don’t you do? years. With special events like the Match philanthropic commitment much earlier – The annual meetings are key. We then for Africa, we are also finding new ways he only launched his foundation when come together as a family – because my of financing the Roger Federer Foundation. he was 28 years old. And we all know parents are very involved, as is my Where exactly does the money go? what great things he does today. manager Tony Godsick and Janine Händel, Does it go into infrastructure or to pay the But my parents were also a great the managing director of the foundation. wages of teachers or how do you split it? inspiration, especially with my mother We have a great team. We always get Well, I guess the money goes into a bit being South African. Thanks to her together to debate which projects we should of everything. In Ethiopia for instance we I traveled a lot over there and was inspired support and look at how the projects built a fountain. We also make sure that by my experiences in this wonderful we’re already supporting are doing. These sanitation is better taken care of, that country – but of course it also brought are important meetings, as they set the teacher training is better organized. We me into contact with poverty at times. tone as well as the direction we want to go. provide some sports material and obviously My mother always told me that I should Can you explain a bit more about some learning material. These efforts try to give something back when I had how the foundation is financed? Obviously enable more kids to get access to basic the opportunity – and that’s what I’m now you provide funds yourself. Do others education. Sometimes however, the need trying to do. provide funds? How does it work? to build or to renovate a school surfaces. Was it a difficult task? Yes. The foundation is lucky enough to These are the kind of things we do. It’s a Starting things off was quite a challenge – enjoy support from private donors. I am bit of everything, not just having more and effrey Barbee

particularly as I was so young. It’s all very obviously very grateful to them. I also more kids going to school. One thing we Photo: J bulletin 2/11 Credit Suisse Roger Federer Leader 59

11/2010 In mid-November 01/05/2011 2010, Actionaid is May 1, 2011, sees commissioned to 10/2010 the Roger Federer produce a baseline By the end of October 07/04/2011 Foundation’s biggest study by the end 2010 the RFF Board 03/2011 At a meeting of the project in Malawi to of January 2011. of Trustees decides At the end of March RFF Board of date officially get off 09/2010 The 80 young in favor of the 2011, RFF’s Trustees on April 7, the ground. The aim A narrower selection children’s centers proposal submitted Managing Director 2011, Janine Händel is to promote of the proposals covered by the 15/03/2011 by Actionaid Interna- Janine Händel talks about the significant improve- submitted is prepared proposed program, On March 15, 2011, tional Malawi. This traveles to Malawi in impressions she ments in early-child- and presented to a located in six of partner organization entirely local organiza- the company of gained in Malawi hood education committee of experts Malawi’s 28 districts, Actionaid submits tion has operated member of the Board and the status of the for around 60,000 at the end of are visited and a concrete proposal in the country for of Trustees Christoph project. Only now children over the next September 2010. analyzed in order to for the initial more than 20 years, Schmocker to gain a does the Board give 10 years in what is This results in two take stock of the three-year phase. and is embedded in first-hand overview of the definitive green one of the world’s recommendations, current situation. an international the current situation light to implementa- poorest countries one of which emerged The results of the federation of more on the ground and to tion of the initiative, and give the children as a clear favorite. baseline study than 40 national meaning an initial concerned a better are important for discuss the proposed organizations. The substantial sum start in life and defining the most program with the headquarters of the of money is handed therefore the keys to realistic – and there- responsible counter- federation are located over to Actionaid their own destiny. fore effective – pack- parts at Actionaid. in Johannesburg, in Malawi. The project was made ages of measures. South Africa. possible thanks to the long-standing partnership with Credit Suisse.

don’t do is to pay for the wages of teach- really measure the progress. And when of the country. So it’s basically ignored ers. We believe that paying these is not it can’t be measured, it’s not good for by the government. And when you sustainable. They are a national obligation. anyone. I think that’s why we have to be are working on basic educational projects, It is the government’s obligation to stick very precise with them. It’s not to control then you are basically judged as money into the education sector or it turns them. It’s really to help them and to being apolitical. into a private schooling system. What’s help us as well. What are your visions for your very important is equipment, schooling You mentioned one of your first projects foundation in the next five years in terms material, infrastructure, capacity building, being located in Zimbabwe. Considering of projects and in terms of reach on the but not paying for the wages of teachers. the political difficulties in this country, African continent? In the countries where you are active, wasn’t it a problem to be present there? Well, a lot of things can change in do you have local people employed I don’t think you should shy away just five years or in ten years. And like I said, that supervise the programs and the because of what’s happening at the top. while I’m playing tennis things could targets you have agreed on? I still think you can have an impact on be very different too, once I stop playing. Well, we’re working with local and national the lower level. And that’s why we’re not As I don’t know when I’m going stop NGOs. We obviously speak to them and scared of going to Zimbabwe. playing at the moment we have to go to the people on the ground. That’s why I My parents recently made a trip there step by step. We would obviously like to think the contact with them is very impor- to get a sense of the situation, to see increase the number of projects we are tant. At the same time references are if it was possible to do something there. involved in, increase the available capital also very important. So we learn from the And it was. That’s why we now support and then we will take it from there. dhu past experiences of other foundations. a project there. But in Africa there are always things Many donors have had to pull out of that can go wrong. That’s why you always Zimbabwe because of political restrictions. have to stay on top, carry out visits, stay So sometimes it can be an opportunity in touch, have baseline studies carried out for family foundations or private donors to so you can measure them. How has it fill this gap. And we are actually far away been today? How will it be in two years or from Harare, the capital. We are active in five years? Otherwise you cannot in a minority area located in the very south

Credit Suisse bulletin 2/11 60 Leader Jimmy Wales

Title image Discussion Read View source View history Search

Jimmy Wales Free Knowledge bulletin 2/11 Credit Suisse Jimmy Wales Leader 61

Credit Suisse bulletin 2/11 62 Leader Jimmy Wales

Article Discussion Read View source View history Search

Jimmy Wales

Jimmy Wales is the co-founder and promoter of Wikipedia. He still edits on Wikipedia on a regular basis under the pseudonym Jimbo Wales. Wales, who holds a master’s degree in fi nance, fi rst worked as an investment banker at a Chicago - based futures and options trading fi rm before founding the online open-content encyclopedia Nupedia in2000 . This project was characterized by an extensive peer-review process, with academic review committees examining all entries prior to their publication. The tedious submission process resulted in a slow growth of entries, forcing Nupedia to close less than three years later. In 2001, a competing online encyclopedia project based on the wiki model – a model that allows editors to contribute simultaneously and incrementally – was launched by Jimmy Wales and Larry Sanger. It was the beginning of Wikipedia.

Jimmy Wales, 2010

Title [edit] Making Knowledge Available To Everyone

Jimmy Wales, or Jimbo Wales as he is known within the For Free Wikipedia community, edits on the encyclopedia on a nearly daily basis.

Lead [edit] Jimmy Wales’ dream of having a free online encyclopedia accessible to everyone in their own language is slowly but surely coming true. Launched 10 years ago, Wikipedia now exists in 280 languages with a total of more than 18 million articles.

Interview: Dorothée Enskog [edit]

bulletin: You are one of the two founders of Wikipedia. before. Sometimes it is even the first time knowledge is Did you ever, even in your wildest imagination, expect made available to them in their own language. A proper this success? encyclopedia for instance never existed in the Swahili lan- Jimmy Wales: I was always very optimistic about the possi- guage. The Swahili Wikipedia now contains more than bility for Wikipedia. I remember looking at a list of the top 20,000 entries. 100 websites and seeing an encyclopedia at around num- Similarly, I recently visited a slum in the Dominican ber 50. I thought if we do a great job, it could reach the Republic, which had no electricity three years ago. Com- top 100. It is now the world’s fifth most-viewed website. puter labs have since been built in the slums and the How would you say Wikipedia has changed the world? kids there are now surfing on the Internet, using Google, It has changed the world in many different ways. We YouTube, Wikipedia, etc. The world has truly opened actually face too much information in the wealthy devel- up to these kids, who only knew their small neighborhood oped countries. Wikipedia provides a very fast access before going online. to basic and condescended information. What are its strengths? In the developing countries, it gives people going Its neutrality. Wikipedia tries to be as unbiased as possi-

online access to knowledge that they never could access ble. Another strength is the speed with which it is updated. HofstetterWetli | Mathias | WikipediaMarc Photos: bulletin 2/11 Credit Suisse Jimmy Wales Leader 63

Article Discussion Read View source View history Search

Any new information that comes to life tends to be incorporated You occasionally act as a final arbiter on the English Wikipe- into Wikipedia very quickly. Take a presidential election for india. Can you give as a recent example? stance. If you want to know who won, you can look it up and the We recently tested new features of the software used. There information will be updated within hours or days. were long discussions on how it should be carried out. Here, I had And its weaknesses? to set the framework to avoid ambiguity. Because it is an open public project, it is always in working Your own Wikipedia entry is quite long. Have you process, growing and changing. There can be errors. These are drafted parts of it? usually corrected fairly quickly. That is part of the process. It is not against the rules to edit your own biography, but I Wikipedia does not have a single paid employee responsible do not edit mine. I do however edit on Wikipedia nearly every day for writing or editing. What do you think motivates hundreds on topics that I enjoy. I try to stay out of any controversial of thousands of people to contribute to Wikipedia? areas, but do work on some biographies under the pseudonym There are probably two basic reasons. We are a charitable, Jimbo Wales to stay active and have fun. humanitarian project bringing free knowledge to everyone. That is Could you cite a couple of controversial topics? inspiring to people, a cause worth spending their time on. These are controversial topics in the big picture sense: the Israel- Secondly, it is fun. People enjoy the process of writing and edit- Palestine conflict, climate change or George W. Bush. These ing Wikipedia. If they really thought of it as work, they would topics generally do not generate a lot of controversy within the com- not do it. It is a fun project, because contributors “meet” other in- munity, as its users know what we are aiming at. It is more a teresting people virtually. We also try to avoid conflict and strive problem for people coming in from outside. for a cooperative and uncompetitive environment. What is the typical profile of your contributors? Quote [edit] It is quite a wide mix. The average age of our contributors is 26 years – still much older than users of other websites. The amount of contributors holding a PhD, however, is double “In the developing countries, the amount found in the average population. So it is quite an Wikipedia gives people going intellectual group. I recently met a woman in New York known as the “shell lady.” She is a retired biology professor whose ex - online access to knowledge that per tise is in snail shells and mollusks. She has published acade- they could never access before.” mic papers in this field. She edits a lot on Wikipedia in this par tic ular area, in close collaboration with graduate students and other people interested in this field. Interview cont. [edit] Wiki is the Hawaiian word for “quick.” How long does it actually take for a contribution to appear after it Are there really no controversial topics within has been submitted? the active community? It is instantaneous. It goes live immediately with a few ex ceptions, Controversial topics inside the Wikipedia community are often such as when the entry is submitted by a new member or when obscure editorial matters. How comprehensive should Wikipedia it refers to a high-risk topic. The German-language Wikipedia is be? When is something notable enough to be included? This the exception to this rule. Here, every submis sion is reviewed is mostly settled with reference to the existence of reliable third before it goes live. party sources. But at the fringe, it becomes difficult to say if it is Do you have to block many contributors for legitimate to have an entry or not. This is often linked to human submitting false or biased information? dignity. There may be 20 newspaper articles about one person, We ban a lot of people from editing every day. Many people but what they are famous for is for committing a stupid crime that just cannot believe they are allowed to edit freely on Wiki - triggered press coverage one day. That is probably not worth pedia and put nonsense live to test it. These people are first an encyclopedia entry. We have ongoing debates on where the warned and then blocked for 24 hours or longer if they line should be drawn. continue sub mitting gibberish. What is Wikipedia’s current policy with regard How does Wikipedia protect itself against libel lawsuits? to the entries of living persons? Have there been any? Our biography policy is the strongest. If there is a negative state- It has very strong rules, particularly with regard to biographies. ment in a biography, it needs to be sourced. You can be blocked A negative entry in a biography is required to have a reliable for inserting negative statements about a living person without source. If some libelous rant is posted, the community reacts a source. It is different if you write about a 12th-century politician and it is the surest way to be blocked from editing. Such who is long since gone. It should have a source, but it is not entries are deleted fairly quickly. There have been a few libel as intensely important. lawsuits, but these are not against Wikipedia as such, as it What are the criteria to be included in your encyclopedia? is an Internet service provider. They have been directed against There are very detailed standards of notability. These vary accord- individual contributors. ing to category. For musicians for example, a high school band >

Credit Suisse bulletin 2/11 64 Leader Jimmy Wales

Article Discussion Read View source View history Search

playing in a garage does not warrant an entry. But if it does have Wikipedia went live on January 15, 2001. A decade later it exists in obtained press coverage or has won an award, it does. 280 languages with more than 18 million entries available for free on the Web.The English-language Wikipedia is by far the largest encyclopedia Why is Wikimedia, the company behind Wikipedia, with more than 3.6 million entries, followed by the German version with a nonprofit charitable organization? 1.2 million entries and the French version with 1.1 million entries. I want it to be very special; a place of beauty, reflection and Even Afar, spoken in the Horn of Africa (Ethiopia, Djibouti and Eritrea) learning. As a volunteer-written encyclopedia, the volunteers want by less than 1.5 million people, has its own version, though it only has 6 articles live. According to Wikipedia itself its main competitors are the it to be financed without advertising. print and online versions of Britannica, Encarta and World Book. How does Wikipedia finance itself? Wikipedia considers breaking news, current news and popular culture We have an annual giving campaign every fall, launched in as its strengths, with medicine cited as an area of weakness. November. We get donations from all over the world, with most money coming from the US, Europe and Japan. The average donation is 35 US dollars. We also have some major donors and philanthropic foundations supporting us, but the bulk of our funds come from the small contributors. That helps us to preserve the integrity of the project, as we do not have to worry about any demands from our donors. We remain independent this way. Have you ever considered selling Wikipedia? No. (laughs) This would be like selling the Red Cross. You are also the founder of Wikia, that allows people to create their own wiki communities. Contrarily to Wikipedia, it is a for-profit company funded through advertising. Why was it set up? Aren’t they potential competitors? We definitely do not want to compete with Wikipedia, but rather Wi-Fi. But pure technological progress is not the end of inno- complement it. Wikipedia is an encyclopedia, which does not fill vations. There have been a lot of very interesting social innovation an entire library. Wikia complements it, with any other topic people on the Internet, new ways of meeting people. want to contribute on. Wikipedia is neutral, while Wikia has poli- In which areas do you think humankind must make tical activist sites, communities about video gaming to very deep further progress and innovation? dives on all types of topics. There is for example a “Lostpedia” There is a certain scientific way of looking at the world which about the TV series “Lost” with some 7,000 articles. Contrarily to is incredibly beneficial. This point of view is not fully embraced in Wikipedia, Wikia contains speculation as sources are not all parts of the world. That is problematic. A lot of the violence required. It is more open-ended. and terrorism happening around the globe is totally senseless, Have you ever regretted that you have turned into resulting from problems that could be resolved. The ultimate long- “Mr Wikipedia”? term solution for peace is to provide opportunities for people No. It feels very good to have an impact. to become prosperous, to provide education. When people see no Do you consider yourself as a role model or leader? chance of progress and prosperity, they become easily mani- I do not think in those terms. I think of myself as a carpenter, pulated into doing very bad things. There is no simple technologi- someone who likes to build things, not as an architect. cal or social solution in this area, but it is certainly an area ripe Do you have role models? for lots of innovation on how we can transform society in a way so I draw inspiration from a lot of different people; the people editing that people can aspire for prosperity. Farsi Wikipedia in Iran for instance. They are possibly at risk for What are your future plans? what they write, as there is a lot of supervision of the Internet I am increasingly focusing on the developing world, on the growth going on there. I think they are very brave and heroic. That inspires of knowledge sharing there. In India, for example, we already me greatly. have more than 20 Indian-language Wikipedias. A common mis- In the aesthetic sense, I admire Steve Jobs’ product sensibility. conception about India is to think that all literate people speak His products are both functional and beautiful, an inspiration for English. That is definitely not the case. Some 95 percent of those the design of our websites. who are literate do not understand English. These people are What does it take to be a leader? now going online for the first time. A leader’s role is to organize, help resolve conflict and create a You have been quoted as saying that you want Wikipedia unity of purpose. That involves finding a middle ground, think to one day contain the sum of human knowledge. Do you think Muster Mustermann

about any objections seriously and figure out solutions. It all boils this is a realistic goal? | down to respect people as individuals, understand their motives Yes. One of the key words here is sum, in the sense of a sum - and help them accomplish these. mary. Wikipedia is not a data dump for every topic. It obviously has Which innovation has impressed you most? limitations on what it is possible to create in terms of reference The Internet. When we think of innovation we tend to solely think and quality. But the general concept of an encyclopedia for every-

of technological innovation. I am highly impressed with broadband one is achievable. < Muster MustermannPhotos:

bulletin 2/11 Credit Suisse Haute Couture

The new BRABUS customizing program for your Mercedes-Benz CLS

Rear skirt and sport exhaust system Side skirts with LED illumination Sports fenders and light alloy wheels up to 20“

High-end Tuning and Lifestyle for Mercedes-Benz High-performance engines - high-performance brake systems - sports suspensions - light alloy wheels - Aerodynamic components - sport exhaust systems - ﬁ ne leather interiors - multimedia options -

BRABUS by Sahli & Frei AG Industriestrasse 2 8307 Effretikon Infoline: +41 (0)52 355 30 60 Safe for business use protects from intrusion and fire.

Security safe Safe for personal use with individual interior custom-made and with design according to individual design. your request. Ask for documentation. www.rigi-tresorbau.ch

Rigi Tresorbau AG Luzernerstrasse · CH-6415 Arth Phone +41 41 855 18 88 [email protected] Show-Room in Affoltern am Albis Quality at its best Phone +41 43 322 81 81 since 30 years