European support rising for Lagarde's IMF bid

PARIS (AP) -- France's frank, hard-working and chic finance minister, Christine Lagarde, emerged Friday as Europe's likely choice to lead the International Monetary Fund.

The IMF insists the departure of former chief Dominique Strauss-Kahn has not hurt its day-to-day operations, but it is clearly under pressure to find a successor fast to lead an organization that provides billions in loans to stabilize the world economy. A new chief would also draw attention away from the seamy scandal surrounding Strauss-Kahn, who quit this week to face charges in New York that he tried to rape a hotel maid.

The 24-member executive board, which will pick Strauss-Kahn's successor, outlined late Friday the procedures it will use to pick the next IMF leader. Nominations will be accepted starting Monday until June 10, after which the board will choose the top three candidates to interview.

While the nominations will be secret, the board said it would release the names of the three top candidates as chosen by the board. That change could be an effort to address the complaints of critics that the process has been too secret in the past. The board said it hoped to select the next IMF director by June 30.

Lagarde's chances for the top IMF job got a boost Friday when Kemal Dervis, a former finance minister for Turkey, said he did not want to be considered for the position.

Dervis, who had been considered perhaps the leading non-European candidate, said he was happy in his current position at the Brookings Institution, a Washington think tank. Dervis is a prominent economist who had spent 24 years at the World Bank, the IMF's sister lending institution.

Treasury Secretary Timothy Geithner said in a statement Friday that the United States was consulting broadly with IMF member countries "from emerging markets as well as advanced economies" during the search process for a new IMF leader.

A Treasury official on Thursday said the United States had not decided whether to support Lagarde or a non-European for the job.

The IMF may face a choice between naming its first woman leader or its first leader from the developing world. Emerging economies see Europe's traditional stranglehold on the position as increasingly out of touch with the world economy, but have not yet united around a candidate.

German Chancellor Angela Merkel said Friday that she "very much appreciates the French finance minister." She insisted she wasn't announcing Lagarde's candidacy, just sharing her views.

Merkel has also said the next IMF chief should be a European, since the fund is deeply involved in tackling the eurozone's sprawling debt crisis. Germany's view is critical, since as the continent's economic powerhouse it funds much of the bailouts to weaker eurozone nations.

Lagarde, 55, has a clean-cut image and has been praised for her acumen in helping steer Europe through the global financial crisis and its more recent debt woes. She speaks impeccable English and spent much of her career in the United States as a lawyer. One of the longest-serving ministers under French President Nicolas Sarkozy, Lagarde eased French labor laws and helped France weather its worst recession since World War II better than many other developed countries.

A champion swimmer as a teen, Lagarde is known for her colorful language and a sense of humor, and for being vocally pro-market in a capitalism-wary nation. When she took over as finance minister, she urged compatriots to stop their endless ideological yammering and "roll up your sleeves."

Italian Prime Minister Silvio Berlusconi has openly endorsed Lagarde for the job, saying she would make "a great choice." That view was backed by Swedish Finance Minister Anders Borg, who told journalists that Lagarde carries weight internationally and has a lot of experience.

Sarkozy hasn't spoken publicly about Lagarde, possibly because that would feed domestic conspiracy theories that Strauss-Kahn's troubles are a plot by political rivals. Strauss-Kahn, a Socialist, had been seen as the potential winner of France's presidential election next year, while the conservative Sarkozy's poll ratings are dismal.

The French foreign minister, however, expressed confidence that his continent would keep the job.

"Europe still has IMF leadership guaranteed," Alain Juppe said Friday. "We have excellent candidates for the position and it would be wonderful if we agreed on a candidate that would then be accepted by the IMF board."

French economist Nicolas Bouzou said Lagarde is "eminently competent" but the fact that she's French "could pose problems."

The IMF has already had four Frenchmen at its helm since its inception in the 1940s.

Her gender "on the contrary, could help her," Bouzou said. The IMF has never had a woman managing director.

Questions have also surfaced about Lagarde's role in getting arbitration for maverick businessman Bernard Tapie, who won euro285 million ($449 million) as compensation for the mishandling of the 1990s sale of sportswear maker Adidas in 2008. Lagarde was finance minister at the time. No formal investigation has been announced, but prosecutors are looking into the matter.

John Lipsky, the IMF's acting managing director, and other IMF officials are stressing that the work of the agency will go on without interruption during the search for a new leader.

In a sign of business as usual, the IMF board on Friday gave formal approval to providing Portugal $36.8 billion in IMF loans as part of a $111 billion rescue package approved earlier in the week by European finance ministers.

Lipsky led the board discussion on Portugal, a job that would have been handled before his resignation by Strauss-Kahn, who was released from a New York City jail late Friday after spending nearly a week behind bars on the attempted rape charges.

IMF officials on Friday disputed a New York Times article that described an atmosphere in which women could be subjected to sexual harassment from "alpha male economists." Spokesman William Murray said the IMF's conduct code, which was updated this month, makes clear that "harassment in any form is not tolerated."

France hosts a meeting of the G-8 -- a group of eight developed countries -- next week in the seaside resort of Deauville, and all the major decision-makers will be there.

Together, the U.S. and Europe control more than 50 percent of the votes on the IMF's board. A simple majority is all that is required to select the group's leader.

With Dervis withdrawing from consideration, remaining candidates from outside the EU include Singapore's finance chief, Thurman Shanmugaratnam and Indian economist Montek Singh Ahluwalia.

Poland said it may propose its own candidate, former Finance Minister Leszek Balcerowicz, who turned Poland's post-communist economy into a market-driven one.

Gordon Brown, Britain's former Labour prime minister, also ruled himself out Friday.

"No I am not pitching for the job," he said while visiting a primary school in Soweto, South Africa. Another potential candidate, Mohamed El-Erian, the head of bond giant PIMCO, has also taken himself out of the running. In a commentary posted by the company, he said, "I will not be a part of the process; I already have a great job, here in California."

Associated Press writers Christopher S. Rugaber and Martin Crutsinger in Washington, Alessandra Rizzo in Rome, Geir Moulson in Berlin and Ed Brown in Johannesburg, Karl Ritter in Stockholm and Monika Scislowska in Warsaw contributed to this report.

source : finance.yahoo.com

7 Traps to Avoid When Starting Your Business

While economists continue to debate whether we're truly rising out of the recession or entering into a double-dip, one thing is clear: The employment sector is still in a slump. The strongest job growth seems to be in the small business sector, which has accounted for 65% (or 9.8 million) of the net new private sector jobs created in the US between 1993 and 2009, according to the Small Business Administration. The small business sector has actually seen a surge in activity: Research from the Kauffman Foundation indicates that the number of American businesses created in 2009 marked a 14-year high, surpassing the number of businesses created during the 1999 and 2000 high-tech boom.

If you're thinking about starting or joining a small business in this economy, here are seven traps to avoid:

1. Don't let the economy get you down. While many workers view precarious economic conditions as a time to hunker down in their jobs and try to weather the economic storm, others see it as a window of opportunity. Starting a business in a weak economic environment can have several clear benefits: The cost of doing business can decline because suppliers and partners may be more willing to negotiate on pricing and conditions, and the opportunity cost of lost income from a traditional job may be lower. Access to capital is also improving: The Small Business Administration's Office of Advocacy reports that in mid-2010 commercial banks started easing lending conditions while levels of venture capital investments increased.

Of course, there are also precautions to starting a business in a weak economy: Discretionary spending is down, so businesses selling goods or services that appeal to budget-minded customers may have an easier time gaining new customers in this economy than sellers of full-priced luxury items. Similarly, do-it-yourself services and low-cost substitutes may fare better than full-service or premium alternatives. For example, self-service storage and organizational retailer Organize.com saw a greater than 10% increase in year-over-year sales from 2007 to 2008 and again in 2009. Explains Terry Shearer, CEO of Organize.com, "Even in a recession, people want to improve their homes, but they want to do it inexpensively. Buying good home products from a reasonably priced online retailer is a much less expensive way to improve your home than, say, hiring a construction team or designer."

2. Don't think that an idea equals a plan. Too often people start businesses with a general notion of what they want to accomplish but lack a solid, well-conceived plan. While a business plan is always important, in a tough economy, it's even more vital to think critically about your product or service, customer acquisition strategy, pricing and promotion plans, and key logistics like inventory management and fulfillment. Similarly, it's important to be very clear about your unique business angle and your differentiation from competitors.

3. Don't be an island. Though entrepreneurs tend to be well versed in a wide variety of areas, even the most skilled entrepreneur cannot expect to be an expert in every aspect of business. From IT issues like network maintenance and website development, to marketing and customer acquisition, to accounting, payroll and legal services, there's too much for most people to handle alone. Have a clear sense of your own strengths, and surround yourself with the right partners and advisors for the remaining tasks.

4. Don't expose yourself to unnecessary financial stress. Starting a business can be extremely costly, both in terms of lost income from a full-time job and in terms of capital investments — but it doesn't have to be. Don't quit your day job too soon, seek outside investors in addition to your own personal assets, and consider lower-cost options for starting your business. For example, if you're going into a retail business, make sure you consider both brick and mortar and online business models, given the considerable difference in capital requirements for each model.

5. If you build it, they may not come. Having a great idea and even a great skill and product are very useful in starting a business, but you also need to have a carefully thought-through marketing plan. Customers won't just come to you. You need to think through all of the tactics at your disposal — from newspaper and radio advertising, to online marketing, to good old-fashioned referrals — to consider how to acquire customers and then turn those customers into repeat buyers.

6. Don't launch without specific goals in mind. Starting a business can be as simple as turning your hobby into an online store or as complicated as building a capital-intensive new product or service requiring research and development. In any scenario, it's important to map out clear goals for yourself and set up times to reassess your progress. Consider setting targets for product availability, establishments of key partnerships and vendor relationships, sales levels, and profitability levels. You don't want to wait until you're two years into a business to discover that you need to make fundamental shifts in your strategy that could have been identified 18 months earlier. Set regular, realistic goals and review periods to learn from your experiences and make changes as needed.

7. Don't be afraid to fail. Many of the most successful entrepreneurs failed before they were successful, and most have had significant failures along their paths to success. Henry Ford failed multiple times before finally launching his successful car company, and Bill Gates and Paul Allen formed a firm called Traf-O-Data before going on to create Microsoft.

Fortunately, more new businesses succeed than fail. According to the Census Bureau, nearly 7 in 10 new small businesses survive at least two years. What's most important isn't whether you succeed or fail in your intended milestones, but rather that you assess and learn from your actions along the way so that no mistake — or spectacular success — takes place in vain.

Test Your Small Business IQ at Yahoo! Small Business

source : finance.yahoo.com