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Friday, 25 July 2014

Breakingviews
Dec 2011

This is the page text PREVIOUS ISSUES LIST HEADER. View all stories from this issue.

  • 1912ers would find the world strangely familiar

    30 December 2011

    An awakened sleeper from a century ago would be delighted with 2012 technology and not too surprised by the globalised economic system or unstable power structures. But the gigantic public sector would be puzzling, and gold-less banking and persistent fiscal deficits distressing.

  • Alwaleed pushes the limits with edgy Twitter stake

    19 December 2011

    Even though Prince Alwaleed bin Talal is known as a bold investor, his $300 mln stake in the regime-usurping social network is decisively edgy. The Saudi royal family member increases his cool factor, but supporting unregulated speech might not sit well in the kingdom.

  • Anglo-Saxon law rare winner from euro crisis

    13 December 2011

    Banks are worried that assets will be redenominated into less valuable new currencies if the euro implodes. There is little they can do to limit risks on existing bonds and loans. But they may resort to English and New York courts to protect themselves from future losses.

  • Asian banks can't fill gap as Europeans retreat

    14 December 2011

    Lenders in Asia are flush with local currency deposits. But companies in the region got used to a world of cheap dollars. The only way most banks can lay hold of dollars is to borrow them, which could leave a $390 billion gap as global lenders pull back.

  • AT&T throws in towel, but not without squawking

    19 December 2011

    The telecoms group’s $39 bln bid for T-Mobile USA has been deader than Francisco Franco for months. Now the company’s using the failed deal to fight for more spectrum. AT&T has a point – but shareholders shouldn’t let it obscure management’s risky roll of the dice.

  • Avon half-makeover doesn't make board look pretty

    14 December 2011

    Removing Andrea Jung as CEO was necessary given the cosmetic group’s performance. But keeping her on as chairman, where she can continue to meddle with strategy, is a mistake. It queers the pitch for a successor and may impede the wrenching changes that need to be made.

  • Beijing will face fresh yuan dilemma

    30 December 2011

    The yuan’s six-year rise is likely to end, if not reverse, in 2012. The trade surplus is shrinking, inflation has eroded the currency’s real value and foreign investors are selling. But the U.S. still wants a revaluation. That would only increase the chance of a hard landing.

  • Bernanke birthday brings holiday from new stimulus

    13 December 2011

    With U.S. unemployment down and growth up, the Fed’s latest statement zeroed in on global problems - and didn’t introduce a QE3 program. Under such conditions, and with money supply strong, the chairman’s gift of low rates to markets may expire by the time he turns 59.

  • Better to extend, not expand, U.S. payroll tax cut

    07 December 2011

    Democrats want to cut further the rate of Social Security tax paid by employees. That might not achieve much, as this year’s tax reduction hasn’t obviously boosted the economy. Even so, letting the rate go back up could have a negative effect. It’s safest to stand pat.

  • Big U.S. foreclosure settlement isn’t dead yet

    01 December 2011

    It sounds like the start of a Monty Python riff but also suits the Massachusetts lawsuit against major banks. Though it might seem to end a unified front by the states, it hasn’t really torpedoed their joint efforts. In fact, the suit could breathe new life into negotiations.

  • Bini Smaghi's ambiguity advice is welcome

    23 December 2011

    The departing ECB board member says there should be no theological hang-up about quantitative easing, but insists that the institution should stick to “constructive ambiguity”. This is a welcome reminder that absolute transparency isn’t a must for a central bank.

  • Bond market will grow at banks' expense in 2012

    22 December 2011

    Tougher capital rules and funding strains have pushed up the cost of bank credit. That’s giving borrowers an extra push to find other sources of funds. Big companies will increasingly seek to tap the bond market. But small companies and consumers won’t find it so easy to switch.

  • Brazil's Itaú is the bank to watch next year

    23 December 2011

    It bills itself as “The Global Latin American Bank.” Thing is, it’s not - or at least not yet. But solid finances, determined management, a robust stock-market value and a wealth of opportunities from the misfortunes of others could make Itaú’s bold ambitions come true in 2012.

  • BRICs raise relegation risk for European soccer

    30 December 2011

    World power must be shifting. Samuel Eto’o, a Cameroonian soccer star who used to play for Barcelona, has gone to Russia while Nicolas Anelka, a Frenchman, is moving from Chelsea to China. But both players are over 30. Europe, not the BRICs, still has first call on young talent.

  • Canaries in Q4 earnings coal mine looking sickly

    09 December 2011

    DuPont and Texas Instruments now expect weaker fourth quarters. Both say customers in most sectors are reducing inventory to be conservative and raise cash. U.S. multinationals’ earnings have been surprisingly robust – but these bellwethers suggest that may be changing.

  • China could be North Korea's ally of last resort

    20 December 2011

    Conventional thinking has it that South Korea will one day absorb its impoverished cousin. But if the North collapses, Beijing may have more interest in propping it back up. Like bailing out a bank, doing so would require liquidity, capital and more accountable management.

  • China firepower pips politics in $3.5 bln EDP win

    23 December 2011

    Portugal has got a neat deal from China’s TGC for 21 pct of its main utility: a top price and a jumbo credit facility. China can press its advantages when it sees strategic value like EDP’s technology and LatAm growth. That mattered more than German lobbying for E.On’s rival bid.

  • Clock is ticking on Veolia's efforts at renewal

    06 December 2011

    The French utility has been hit hard by the economy and its own hubris. Chairman Antoine Frerot is trying to regain the initiative by selling 5 bln euros of assets and widening cost cuts. That’s sensible, but he needs results fast. Investors’ patience must be wearing thin.

  • Commerzbank may not avoid state aid Groundhog Day

    05 December 2011

    The German lender may need 5 bln euros of capital – two-thirds of its market value – to ease euro woes. Having almost repaid its last slug of state cash, it will resist more. But the most plausible solutions mean Berlin pumping in more equity, or giving a leg-up by other means.

  • Confidence in cloud, cybersecurity key to growth

    29 December 2011

    They’re both hot $60 bln markets. But faith in cloud computing took a blow in 2011 with outages at Amazon and elsewhere. And the hacking of targets from Sony to Scarlett Johansson showed shortcomings in security. The tech industry needs to stay ahead if it wants to keep growth going.

  • Corporate bonds push for sovereign status

    21 December 2011

    Finance directors may start giving finance ministers a run for their money. The woeful state of national balance sheets will push risk-averse investors into highly rated companies such as Microsoft. Corporate bonds could prove more attractive than even top quality sovereigns.

  • Corzine apology little better than Fuld's defiance

    08 December 2011

    The ex-CEO of defunct MF Global told Congress he regrets the loss of money and jobs. But his prepared statement is also full of dubious excuses that are hardly better than Dick Fuld’s blame-game tactics. Wall Street bosses still haven’t learned to take responsibility.

  • Courts more willing to second-guess Wall Street

    05 December 2011

    U.S. judges have typically trodden softly over financial disputes and settlements for fear of ruffling markets. But the rejection of the SEC-Citi CDO deal is the latest sign times are changing. Activist courts aren’t good for certainty, but they’re filling a gap left by Congress.

  • Cuomo’s new millionaire tax walks knife-edge

    08 December 2011

    On its own, the New York governor’s temporary 2 pct surtax on incomes above $2 mln is well judged. But with New York City’s extra levies, the top tax rate in the metropolis is higher than in other states. Add federal tax hikes, and New York could suffer economically.

  • Dear Leader's death may prise open hermit state

    19 December 2011

    Kim Jong-il managed to keep North Korea cut off from the world. Trade flows barely exist, Chinese energy and French cognac aside. The intellectual seclusion is at least as great. Autarky has brought economic hardship, a heavy burden Kim’s successor will struggle to lift.

  • Delay takes shine off Zynga’s IPO

    02 December 2011

    Revenue at the maker of FarmVille and other Internet games is still rising fast. But on more telling measures, growth has slowed. Zynga’s hoped-for $9 bln valuation isn’t too far-fetched. But the price tag might have been even higher had it harvested IPO investors’ cash earlier.

  • Delphi slips Tokio Marine a $2.7 bln spiked cocktail

    21 December 2011

    That’s one explanation for the Japanese insurer’s Godzilla-sized overpayment for the U.S. group. Including a special dividend, it’s paying a near 80 pct premium. It’s another example of Japan Inc throwing shareholders under the bus in the name of international expansion.

  • Did MF Global clients forget Lehman's lessons?

    16 December 2011

    The bankrupt broker stands accused of misusing client funds. One theory is that it used customers’ money through a legal process called rehypothecation. The U.S. imposes limits on the practice, but the UK doesn’t. It’s a lesson investors could have learned from Lehman’s collapse.

  • Directors and officers insurance declaws clawbacks

    19 December 2011

    Forcing bosses to repay undeserved rewards is central to U.S. financial reforms. But new D&O policies are now covering the risk of lost comp - at shareholder expense. Insurers deny helping executives skirt accountability. Investors and watchdogs may see things differently.

  • Don’t boo U.S. football’s zero-coupon perpetuals

    07 December 2011

    The Green Bay Packers are selling shares that pay no dividend and can’t be sold. What sounds like a sucker’s bet - or a donation - at least gives fans a tangible stake in the local champs. And as it happens, since the team’s last sale, plenty of “real” stocks are down.

  • Don't laugh: stand-up comedy looks a bit bubbly

    22 December 2011

    Plans to float a chain of UK comedy clubs are about more than comic timing, even if the IPO market is pretty laughable at present. Stand-up has never been bigger. But consumers can be fickle, and many fans are only recent converts. Jongleurs better hope the joke doesn’t wear thin.

  • Don't shoot the emissions-market messenger

    21 December 2011

    The EU is under pressure to prop up its carbon trading market because falling prices have killed the incentive to invest in clean energy. But the market is accurately weighing supply and demand. Any intervention for public-policy goals must be within clearly prescribed limits.

  • Draghi pours cold water on euro zone grand bargain

    08 December 2011

    The European Central Bank has cut interest rates and taken steps to help banks in order to fend off a looming recession. But by insisting on the “spirit” of the EU’s founding treaties, its president has signalled that governments can’t count on him to be the euro zone’s saviour.

  • Dual Europe threatens single market

    08 December 2011

    France and Germany want the euro zone to integrate further, and the UK sees this as an opportunity to shrink Brussels’ powers. But both sides should think hard before they go for a split Europe. The main victim will be the single market they say they want to preserve.

  • Dubai debt still massive but not terrifying

    08 December 2011

    Sovereign and related debt have remained largely unchanged in the two years since the Dubai World crisis. Even so, the emirate hasn’t come close to exhausting its funding options. Today, Dubai holds more cards. But lenders shouldn’t bet haircuts are indefinitely off the table.

  • ECB bazooka may be short on credibility ammo

    05 December 2011

    Markets are rallying on hopes that the ECB will ramp up its purchases of euro zone government debt. To be successful, the intervention will need to put a ceiling on yields, and enjoy political support. The danger is that investors view ECB buying as another opportunity to sell.

  • ECB gives EU banks short-term gain, long-term pain

    15 December 2011

    Stretching the central bank’s liquidity facilities to three years reduces the risk that banks will collapse or rapidly shrink their balance sheets. But the real prize is to encourage private investors to buy bank debt again. The ECB’s largesse actually makes this less likely.

  • ECB liquidity orgy heralds two-tier banking system

    21 December 2011

    The European Central Bank’s 489 billion euros of cheap three-year liquidity means EU banks can avert a short-term crunch. But the non-users will gain in the long term. Even if lenders don’t engage in a huge carry trade, private sources of funding could stay away for a while.

  • Ethical Economy: Cooling down global warming

    14 December 2011

    The near-failure of the Durban conference on global warming is a sign that the activists’ campaign has stalled. They should stop using the story of the sorcerer’s apprentice as their model. The energy economy is not a monster that has turned against its maker.

  • Ethical Economy: Eat more, pay more

    07 December 2011

    The United States leads the world in both obesity and health care spending. The two are tied together by a wilful attitude to health. The combination of “I want what I want” with “society pays” is unjust and expensive. It’s time to consider some medical de-socialisation.

  • Ethical Economy: Escaping the Christmas cash nexus

    21 December 2011

    Is the Christmas frenzy the exaltation of the worst aspects of the modern consumerist economy and is Santa Claus only a retailers’ tool for pushing sales? No, there’s more. The gargantuan seasonal giveaway is an attempt to transform the cruel market into something more generous.

  • EU bank recap alone won’t restore confidence

    08 December 2011

    Forcing European lenders to raise 115 bln euros in extra capital is an improvement on previous efforts. But regulators will have to be vigilant to make sure banks don’t hit the targets by shrinking loans. And trust will only return when euro zone governments fix their debt woes.

  • EU banks' Coco escape route misses a trick

    12 December 2011

    The European Banking Authority will allow banks to issue contingent convertible bonds to plug their 115 bln euro capital hole. That could allow states to help without winding up with direct equity stakes. But to entice private investors, the EBA may need to allow more leeway.

  • Euro breakup could be relatively easy - at first

    01 December 2011

    Industrialists could cope with a return of national currencies. They used to manage and can relearn the tricks of the trades. But banks would be crushed, economies soured and the big challenge – keeping the European project intact – made much more difficult.

  • Euro crisis: it's fiscal mismanagement, stupid

    15 December 2011

    Some distinguished economists say the euro zone has to do more than resolve some fiscal challenges. The reasoning is that intra-zone trade deficits are the real problem, and zealous budget-balancing the wrong solution. The analysis is only partly right – and much too gloomy.

  • Euro Disziplin may store up trouble

    05 December 2011

    Germany’s insistence on fiscal discipline enshrined in a treaty may pave the way for a short-term fix for the euro crisis. But giving Brussels the power to override national budgets involves a loss of sovereignty that could be deeply unpopular with the people.

  • Euro IMF scheme raises four questions

    01 December 2011

    The latest wheeze for solving the crisis is for national central banks to lend money to the IMF which will then pass it to Italy and possibly Spain. But how much money will be available, who will provide it, where will they get it or who will bear the risk?

  • Euro zone gets tighter as Europe splits further

    09 December 2011

    Leaders have agreed strong fiscal reforms in spite of the UK refusing to go along with changes to EU treaties. The hope is that the long-term plans will reassure investors. For now, the best way to regain credibility would be for governments to swiftly implement their decisions.

  • Euro zone spells bazooka EFSF-ESM-CIF-IMF-CAC-ECB

    07 December 2011

    The monetary union’s leaders are discussing bringing forward the ESM rescue fund, raising 500 bln euros. The alphabet soup may soothe markets, but the point is to provide the ECB with a political cover to step up interventions. The effort may not be enough to restore peripheral solvency.

  • European IPOs may need big backers to turn corner

    29 December 2011

    In good times “cornerstone”-backed listings should get short shrift. Guaranteeing stakes to early, public backers makes investors unequal and prizes hype over substance. But Europe’s IPO market is dysfunctional. For big deals to succeed, cornerstones may be a necessary evil.

  • Europe's unemployed youth warn of trouble ahead

    14 December 2011

    Unemployment keeps rising in Europe, just as the euro zone and UK flirt with renewed recession. Talk of a lost generation is not overdone. Almost half of Greek and Spanish youth are unemployed. Profound reform is needed to prevent unrest and to protect the viability of the euro zone.

  • Even gold fails as markets head down from summit

    13 December 2011

    Stocks and the euro have been hit. Even gold has provided no safe haven. Investors are approaching the year-end decidedly risk averse, with concerns about near-term euro zone financing uppermost. With so many assets vulnerable, the dollar and cash are among the few refuges.

  • Exxon bets its size, not troops, will help in Iraq

    20 December 2011

    American forces may have left, but the world-dominating U.S. oil giant is still willing to take risks. Exxon is playing Baghdad off with the Kurdish government, wagering the spoils are worth it and that the company is too important for Iraq’s own oil wealth to be forced out.

  • Exxon nicely hedged against its own green guess

    08 December 2011

    Tighter environmental rules will curb coal, boost cleaner gas and cause a leap in vehicle efficiency, the energy titan says. This rosy scenario has the growth in CO2 emissions halting by 2030. But despite hefty gas investments, a less green future would also suit Exxon dandily.

  • Fan/Fred mortgage forgiveness would be weak potion

    22 December 2011

    After resisting the idea for years, the regulator of the U.S. home loan giants is humoring a new policy effectively reducing principal on loans. The plan could slow the enterprises’ near-term losses, but would prolong their agony and do little to heal the housing market.

  • Fannie, Freddie role funding tax cut is perilous

    19 December 2011

    U.S. lawmakers are struggling with the details of extending the payroll tax reduction. But both sides want to pay for it by raising the mortgage finance giants’ guarantee fees. That’s a needed change - but siphoning the extra money straight to Treasury sets a dangerous precedent.

  • FDIC's WaMu settlement is more fizzle than fight

    13 December 2011

    The U.S. watchdog has extracted only $75 mln from three former executives, mostly paid by insurance. For skeptics, it’s another inadequate rap for alleged financial rogues. But raising penalties and booting deals won’t help. Making suits and punishment more predictable might.

  • Fed needs better PR on last-resort lending, too

    07 December 2011

    The U.S. central bank is working on its monetary policy communications. But its key role as a crisis lender is also in the spotlight over a $7.8 trln number that has been mischaracterized by some news outlets. The Fed would get less flak if it managed this message better as well.

  • Fed shows outsized concern for too-small-to-fail

    14 December 2011

    The U.S. central bank spent nearly two years scrutinizing the tiny takeover of a Utah lender by prepaid debit card firm Green Dot. The soundness of even niche banks matters. But in the too-big-to-fail era, the Fed’s slow process is an unneeded deterrent to the sector’s small fry.

  • Fiscal sovereignty largely overrated in euro zone

    13 December 2011

    EU politicians are reluctant to give a higher authority veto power over euro members’ budgets. They don’t get it. They should be grateful for the discipline, which bond markets failed to provide for years. Besides, more valuable types of sovereignty are already gone.

  • Ford’s bold dividend revival looks defensible

    08 December 2011

    The automaker is reinstating a payout after a five-year hiatus despite its junk-bond rating, Europe’s debt woes and U.S. economic wobbles. The $760 mln a year represents less than 10 pct of profits. That should be manageable even in a downturn and reinforces Ford’s pole position.

  • Frackers need to get ahead of the regulatory curve

    12 December 2011

    A report linking hydraulic fracturing to polluted drinking water is a significant setback for U.S. shale gas. Fracking’s economic benefits are huge, but drillers risk losing public support. To avoid a backlash, they should embrace more centralised regulation.

  • France is serial loser in unfolding euro drama

    12 December 2011

    In spite of appearances, France has lost out to Germany on all the important arguments about how to manage the euro crisis. Nicolas Sarkozy’s theatrics have created diversions. But they can’t hide the fact that what Berlin wants, Berlin gets.

  • Gandhi-Hazare nexus important to Indian economy

    27 December 2011

    Rahul Gandhi may well succeed his mother Sonia as head of the ruling Congress party in 2012. One challenge is to claim the anti-graft message of Anna Hazare, a follower of the iconic Mahatma, before the opposition does - and harness it to help boost investment and growth.

  • German economy ploughing ahead if euro holds

    20 December 2011

    If the euro zone stays in place, its troubles may redound to Berlin’s advantage. The euro will stay weak, while Germany will enjoy a finance cost advantage over its neighbours. Next year may see German exports surging and growth well above current sub-1 percent forecasts.

  • Gingrich's volatility should worry Wall Street

    27 December 2011

    Former U.S. House of Representatives Speaker Newt Gingrich is among the front runners in the GOP presidential race. His erratic beliefs separate him from the other candidates. This should worry Wall Street, as markets will be unable to predict how he would react to a crisis.

  • Global bank capital rules add “G-Sifi envy” to mix

    20 December 2011

    Labeling 29 lenders as globally systemic will introduce a new dynamic to finance in 2012. Banks on the list must hold more capital, yet gain a too-big-to-fail halo. Smaller competitors may try to join the club. It’s a race to the top, but not in the way regulators envisaged.

  • Gray market trading sucking life from IPOs

    16 December 2011

    Facebook’s float will grab headlines next year. But as Zynga’s tepid debut shows, multiple private investment rounds and the ability to trade shares before going public mean there are slim pickings when public market investors finally get their chance to participate.

  • Greece needs to welcome foreign experts

    29 December 2011

    Athens is incapable of solving its problems on its own. The state apparatus isn’t functioning. What’s needed is outside help to rebuild it. First, though, Greeks need to stop viewing foreigners as invaders and see them as potential saviours.

  • Hard to find cheer in Russian election result

    05 December 2011

    A weak showing by Putin’s ruling party would be a triumph of democracy if the opposition was credible and elections spurred bolder reform. But with oil money flowing, the easiest way for the leadership to regain popularity is with short-sighted moves that store up pain for later.

  • Headless financial watchdogs needn't be toothless

    08 December 2011

    Senate Republicans blocked another Obama nominee to lead a key agency, the Consumer Financial Protection Bureau. Politics is making it tough to solidify leadership at a handful of top regulators. But as the FDIC is proving, acting directors can still get things done.

  • Hoare Govett should find a saviour

    19 December 2011

    The venerable UK advisory franchise is up for grabs, an innocent casualty of new regulation facing owner RBS. Financially, there’s not much to favour a sale over simple closure. Still, Hoare Govett could make good money under a new parent. And RBS won’t want to trash the legacy.

  • Hong Kong needs to add polish to its IPO crown

    09 December 2011

    Asia’s financial centre is set to cede IPO leadership back to New York. Deal flows from China are strong and global giants like to list close to the world’s biggest growth market. But HK’s listing process may have to be shorter and simpler if it is to quickly regain top spot.

  • How a 1990s sterling currency area might now look

    14 December 2011

    In 1992, the UK abandoned plans to adopt the euro. Martin Hutchinson imagines what would have happened if Britain had used its economic strength in the mid-1990s to form its own alternative currency bloc. The sterling zone would at least be insulated from troubles elsewhere.

  • How GM's Akerson can show off some Mulally mojo

    01 December 2011

    Bankruptcy gifted GM a better balance sheet and CEO Dan Akerson is revving up sales. But he still needs to fix Opel, further overhaul operations and truly bury the stodgy old GM before he can convince investors he’s capable of the turnaround Ford’s Alan Mulally has achieved.

  • Hugo Dixon: 2011, a year of Gandhian struggle

    19 December 2011

    Nonviolent conflict has enjoyed a banner year: the Arab Spring, the Occupy movements, the anti-corruption campaign in India and stirrings of protest in Russia. But for the technique to fulfil its potential, clarity of purpose, unity and nonviolent discipline are required.

  • Hugo Dixon: UK's self-immolation beggars belief

    12 December 2011

    The government’s clumsy attempt to extract concessions from euro zone countries in their time of need has set off a chain reaction which could undermine Britain’s interests and even drive it out of the EU. This vicious cycle must be stopped.

  • Imagined Goldman Sachs memo that wouldn't shock

    28 December 2011

    It has been a rough year for Wall Street’s pre-eminent firm. Its stock has even underperformed the likes of Citi and Morgan Stanley. With regulatory and other headwinds still strong, big changes can’t be ruled out in 2012. Breakingviews envisions some of the possibilities.

  • IMF needs to keep powder dry for usual suspects

    23 December 2011

    The fund is getting an extra $200 bln to aid with the rescue of wealthy Europe. But the downgrade of Hungary’s credit rating is a reminder that there could be more traditional middle-income demands for aid, too. The IMF will have to allocate its growing pot of money carefully.

  • IMF won't find it easy to tap Brazil's cash

    01 December 2011

    The fund’s chief Christine Lagarde is hoping to borrow money, a gratifying role reversal for a country which needed a record IMF loan in 2002. But getting hold of some of its $350 bln of reserves will be hard. Like the IMF itself, Brazil is attaching conditions to its help.

  • Incoming Spanish PM prepares to wield axe

    19 December 2011

    Mariano Rajoy, Spain’s incoming leader, has broken his silence as he prepares to take over the battered economy. The emphasis on reforms, jobs and austerity looks right, even though the speech was uninspiring. But the earmarked 16.5 billion euros of budget cuts is a bit short.

  • India shuts up shop

    05 December 2011

    What seemed like a turning point last week, when the Indian government announced it would allow foreign investment in retailing, now looks to have become an embarrassing U-turn by the beleaguered Indian government. India can’t afford to continue tarnishing its brand.

  • India wages inefficient war on malnutrition

    19 December 2011

    The country still suffers from this most basic sort of poverty – 74 percent of children are anaemic. The government plans to double its food subsidies, to 2 percent of GDP. The idea is good, but such programmes should be well targeted and affordable. The new plan is neither.

  • India's growth requires fundamental tax reforms

    15 December 2011

    Only 3 pct of the Indian population pays income tax and the total take, as a proportion of GDP, is well below international peers. Anti-corruption campaigners focus on riches parked offshore. But India’s economy will be threatened unless New Delhi plugs tax holes at home.

  • Indonesia risks falling out of fashion in 2012

    21 December 2011

    It passed a long-awaited law to clear infrastructure bottlenecks and won an upgrade from Fitch. Yet these were already priced in. As global investors retreat from risky markets, Indonesia’s risks for investors are on the downside - even though its economy should remain strong.

  • Investors may decide to let the euro live

    07 December 2011

    George Soros showed that there’s money to be made breaking fixed exchange rates. Destroying the euro is different; that could wreck the global economy. This fear may explain the markets’ move from pessimistic to optimistic interpretations of fairly consistent euro zone news.

  • Investors may find Citi’s the joke on them in 2012

    27 December 2011

    The bank now boasts a trimmer figure and some $65 bln of capital it should be in a position to start handing back, on top of any earnings. If Vikram Pandit can be the first CEO to steer Citi clear of crisis next year and beyond, he may even best JPMorgan in the payout department.

  • Irish tiger-turned-tortoise may need more help

    07 December 2011

    Despite several years of austerity, the country has announced more cuts. Next year’s budget deficit is still forecast at a huge 8.6 percent of GDP. Ireland has adjusted rapidly and its industry is competitive. But it may still need more support from the euro zone and IMF.

  • Italy's fate still in lap of the euro Gods

    05 December 2011

    Mario Monti’s plan includes a welcome crackdown on “baby” pensions and a property tax. Labour reform is also promised soon. There’s no silver bullet to cut Rome’s 120 percent debt/GDP ratio, but Monti has probably done enough to get help from the Gods: Merkozy and Draghi.

  • Jack Ma could pay high price to be rid of Yahoo

    23 December 2011

    The Alibaba founder wants to buy back most of Yahoo’s stake in his e-commerce giant. An earlier spat over their payment unit Alipay showed Ma has nuisance value and may deter other bidders. But financing it won’t be easy. After selling at the bottom, he risks paying a peak price.

  • Jefferies proves benefit of being small on Wall St

    20 December 2011

    The securities firm was able to swiftly cut back its risk positions in its fourth quarter. Jefferies shrank the balance sheet by a fifth to $35 billion. That’s a powerful defense against market attacks - and a good advertisement for keeping investment banks nimble and fallible.

  • JPMorgan faces tangle in cable M&A

    09 December 2011

    The U.S. bank agreed to be a backstop buyer if Liberty Global’s takeover of Germany’s KabelBW is blocked. But JPM wouldn’t find it hard to sell KabelBW on, and it shouldn’t lose money. A clean execution of the JPM plan B could be a boost for devices neutralising regulatory risk.

  • Kazakh events show EBRD failure on democracy remit

    20 December 2011

    The European bank, the only international financial institution with a mandate to promote democracy, has operated in Central Asia for 20 years. With the Kazakh regime violently suppressing a strike of its oil workers, it may be time for some soul-searching at the bank.

  • Latin America gets closer even as Europe cracks

    08 December 2011

    Cross-border deals among South American companies, like Chilean CorpBanca’s purchase of Santander Colombia, set a new record in 2011. A single Latin currency seems remote given the euro’s woes. But as the region’s private sector consolidates, it can’t be ruled out for ever.

  • LBO debt gluttons have now gorged on equity too

    23 December 2011

    Buyout barons are sitting on nearly $400 bln of cash committed by investors - or over $1 trln of purchasing power. A big slug of it belongs to mega-funds at or approaching their use-by date, pressuring firms to deploy capital or return it. Expect some overpriced deals in 2012.

  • Lehman rump moves to control firm’s former nemesis

    12 December 2011

    Its holding in property outfit Archstone helped bring Lehman down. Now the bankrupt estate may spend up to $2.6 bln to buy control and fend off Sam Zell, architect of the ill-fated Tribune buyout. It’s odd for a liquidating firm to join an M&A fight, but creditors could benefit.

  • Lloyds needs to do more to allay investor concerns

    14 December 2011

    The UK bank’s CEO Antonio Horta-Osorio will return to work in January after exhaustion led him to take two months off. If the group performs well, investors’ lingering doubts will subside. But they may require more visible evidence that Horta-Osorio now has a manageable workload.

  • Loan hangover will cast pall over European buyouts

    01 December 2011

    Banks have been caught out again. As in 2008, loans for European private equity deals have proved hard to resell or refinance in the bond market. Today’s backlog is smaller and the financial hit is modest. But new buyouts can expect less debt, higher rates and tougher terms.

  • Long live gloom - it's a great time to buy stocks

    29 December 2011

    It’s the oldest saw in the investment handbook: buy low and sell high. But with global shares at their cheapest in a generation, confident investors are a rare breed. If the bad times persist, however, 2012 could be another classic year to accumulate equities.

  • LSE pays high price for full control of FTSE

    12 December 2011

    The London Stock Exchange is paying a rich 450 mln stg to take full control of FTSE International, the index compiler it co-owns with publisher Pearson. It is betting that the boom in benchmark-based investment products such as exchange-traded funds will be sustained.

  • Main Street bonuses may again outdo Wall Street

    27 December 2011

    Investment bank chiefs bear most criticism over outlandish bonuses. But several of their Main Street cousins outdo them, paying big salaries or bonuses on terribly low hurdles. At least new U.S. say-on-pay rules better equip shareholders to push back.

  • Mercosur searching for alternatives to Adam Smith

    23 December 2011

    With members led by leftists, it’s not surprising the Latin trade bloc is raising tariffs and promoting anti-market policies. Mercosur has lots of commodities but relatively uncompetitive manufacturing, even in Brazil. One risk of economic experimentation is a return to poverty.

  • Michael Kors IPO cut from same cloth as Prada’s

    06 December 2011

    The U.S. designer’s eponymous firm is seeking a luxury price tag of up to $3.6 bln in a New York float. It’s an all-American fashion name and the high-end valuation isn’t out of line with Prada’s Hong Kong listing this year. But Kors may struggle to keep up the pace of growth.

  • Missing at the New York Times - a dividend?

    22 December 2011

    The Gray Lady has regrouped since flirting with oblivion three years ago. After purging non-core assets, cutting debt and parting ways with its CEO, the Times looks ready for a deeper digital dive. Before it can take that plunge, the firm may need to pay its controlling family.

  • Monte dei Paschi's independence looks shaky

    02 December 2011

    The foundation that controls half the ancient Italian lender’s shares is struggling to pay off its debts. But Monte dei Paschi also needs yet more capital. The bank may be able to shrink its balance sheet. If it fails, it may have to find a merger partner or seek state support.

  • Mooted Russian steel mega-merger lacks sizzle

    13 December 2011

    The chairman of Evraz sees merit in a tie-up with Severstal that would pair Russia’s two largest steel producers. The industry could do with more consolidation. But limited potential synergies mean investors may struggle to get excited about an Evraz-Severstal deal.

  • More corporate carve-ups to delight M&A bankers

    28 December 2011

    2011 was the year of the spinoff. Fiat, ConocoPhillips and ITT helped deal volume nearly sextuple to $230 bln. Rocky economic times probably won’t give CEOs much reason to shop, so 2012 could bring still more. Maybe even holdouts like GE, Goldman and Pepsi will consider a split.

  • Morgan Stanley housecleaning will please Basel

    13 December 2011

    Chief Executive James Gorman’s settlement with bond insurer MBIA puts a big chunk of the financial crisis legacy behind the firm. At $1.8 bln it doesn’t come cheap. But it puts Morgan Stanley on the right track by boosting regulatory capital and tidies up a very messy year.

  • Morgan Stanley job cuts more timing than substance

    15 December 2011

    It’s coal in 1,600 employees’ stockings. And axing jobs in capital-intensive areas makes the move the second Basel-pleaser this week. But the numbers are small, merely bringing the firm in line with Goldman’s annual cull. Rivals with larger trading desks will have to do more.

  • Mortgage reform might actually help U.S. economy

    30 December 2011

    Lawmakers have punted the problem of Fannie Mae and Freddie Mac, probably until 2013 at least. But reforms could take a decade to implement and a start is long overdue. Maybe politicians shouldn’t be so leery - greater certainty about the future might boost housing and growth.

  • New currency unions could yet see the light of day

    20 December 2011

    The euro is in deep trouble. But if leaders successfully realign political and fiscal policies with monetary facts on the ground, it could set a precedent. Single currencies have big economic and geopolitical advantages. Gulf states and South America might yet embrace the idea.

  • New England power merger deserves final nixing

    05 December 2011

    A report on Northeast Utilities’ handling of a snowstorm from a former U.S. disaster official makes it clear: the company failed in the duties that come with its monopoly. Regulators have all the evidence they need to power down the utility’s $4.7 bln takeover of rival NSTAR.

  • New Fed governors may bring new policy solutions

    28 December 2011

    President Obama may have laid a clever election-year trap by naming the balanced pair of Jeremy Stein and Jerome Powell Fed governors. Both are well qualified, while Stein’s views on financial regulation might even help prevent future MF Globals from emerging.

  • New Islamist democracies will be open for business

    29 December 2011

    The Arab rebellions have altered perceptions of the region. Islamist parties may come to power by democratic means, and at the very least will exert influence. But the Middle East economies, suffering massive investment needs, will adopt business-friendly policies.

  • New London air hub

    01 December 2011

    How much might private financiers be prepared to invest in a new London airport?

  • New London air hub plan needs public money to fly

    01 December 2011

    Heathrow is a jam-packed embarrassment for those who promote London as a global financial centre. A brand new four-runway hub in the Thames estuary is appealing but expensive. Even using rosy forecasts, it is hard to see an all-private enterprise earning a decent return.

  • Next digital tidal wave target: 3D objects

    28 December 2011

    The ability to turn music, books, films and newspapers into easily transferable electronic files up-ended these industries, destroyed old businesses and created new ones. The rise of printing technology now threatens to wreak similar havoc on producers of physical things.

  • No easy pickings for vultures in Vietnam

    13 December 2011

    Elliott Advisors is suing a state-owned shipping firm over a defaulted $600 mln loan. It’s good that punchy hedge funds are helping keep emerging-market borrowers honest, where big institutions may be more supine. But it’s a lot of hassle for what may be at most a $25 mln gain.

  • No happy euro Christmas for U.S. markets

    14 December 2011

    Last week’s European summit in the end did little to address the region’s immediate problems. That’s dragging down the euro, commodities - oil and gold by 5 pct on Wednesday - and U.S. stocks. It could all make for skittish trading as investors aim to avoid year-end surprises.

  • Obama should go big hiring watchdogs - or pass

    20 December 2011

    Senate GOPers have vowed to block any nominee to head the new consumer finance bureau. Other appointments also face opposition. But over the holidays, the president could hire people without the Senate. If he takes that contentious path, he might as well fill all the big jobs.

  • Oil price looks set for a reality check

    15 December 2011

    The oil market will remain in balance if the relatively rosy economic forecasts made by OPEC and others prove accurate. But at $106 a barrel, Brent looks vulnerable to a euro zone recession. If growth slows, OPEC’s new production ceiling might quickly seem overly generous.

  • Oil services outlook firmer than stocks suggest

    21 December 2011

    Halliburton, for one, has lost a third of its value in six months. Yet capital spending by big energy groups, which becomes revenue for services firms, is set to rise to a record $600 bln in 2012 - even if oil prices decline. It’s hard to justify the sector’s low multiples.

  • Olympus' ex-CEO no shoo-in for post-scandal return

    06 December 2011

    Michael Woodford wants his job back at the Japanese group now that those accused of covering up investment losses have left the board that fired him. But the same board hired him, and he only ran the company for six months. Olympus shareholders should make sure to look around.

  • Olympus must dump its board to save itself

    15 December 2011

    The Japanese company’s board wants to hang on until March. That’s too long. Even though it beat an earnings deadline, Olympus still risks being delisted over ongoing accounting concerns. A fresh board can only help, and should also placate creditors and help buoy up the stock.

  • OPEC desperately looking for a deal, any deal

    13 December 2011

    Global oil markets are fragile, but it might not matter whether the cartel maintains or increases its output target when it meets later this week. Quotas are already ignored. After OPEC’s last acrimonious get together, simply reaching a consensus would soothe buyers and sellers.

  • Oracle needs to read Cisco cautionary tale

    05 December 2011

    Empires built on acquisitions can run into problems as they sprawl. That’s doubly so in tech, where obsolescence is a risk. Oracle has used database profits to buy new businesses. So far, so good - but Cisco’s record suggests success will be hard to sustain.

  • Oracle’s rare stumble triggers double concern

    21 December 2011

    The software giant lost some $20 bln in market value after a subpar earnings report. The sell-off could be overdone: Larry Ellison’s firm may soon regain ground, as its bosses expect. But the rare miss could signal both a weak environment and a hiccup in Oracle’s own trajectory.

  • P&G didn't crunch its Pringles partner adequately

    15 December 2011

    Troubles have escalated for Diamond Foods, the agreed buyer of the chips brand, with the SEC now probing its accounting. The scale of issues being targeted suggests the consumer giant missed early warning signs. An obsession with taxes may have clouded P&G’s vision.

  • Payroll tax cut creates another mess in Washington

    15 December 2011

    In a bizarre irony, Republicans now want to pass a trillion dollar spending bill and raise taxes, while the Democrats fight to extend this year’s payroll tax cut and threaten a government shutdown. Whatever the outcome of the latest bickering, the victim is the same: the economy.

  • Peru surprisingly firm on keeping capital flowing

    06 December 2011

    The country needs foreign money to enrich its people. Investors worried in June when President Humala was elected, then raised taxes on miners. But now he’s shown that legitimate mines will be protected from agitators, further suggesting he may not be as leftist as many feared.

  • Pharma center of gravity shifts eastward

    06 December 2011

    Drug research tends to follow spending. Take Merck’s pledge to invest $1.5 bln in R&D in China. Emerging economies’ citizens are growing wealthier and living longer, while their governments’ fiscal health is robust. Merck’s step suggests drug development is shifting accordingly.

  • Pharma stocks no safe haven in austerity storm

    01 December 2011

    Drug shares have traditionally weathered economic storms well. Yet today the sector trades at a 20 pct discount to the market. With budget cuts the medicine of choice for solving government deficits, investors are rightly anticipating further knocks. The sector is best avoided.

  • Piecemeal solution would suit bust Spanish caja

    02 December 2011

    Sabadell was the only bank that made an offer for CAM, after other bidders backed out. Now Spain’s central bank must decide whether it sells the caja with all sorts of expensive guarantees. Alternatively, it could sell the good parts. This option may be the least painful.

  • Pleading the Fifth smart but risky for Corzine

    06 December 2011

    The U.S. Congress has ordered the former CEO of defunct MF Global to testify Thursday. For a famously garrulous ex-politician, invoking the right to clam up might seem to imply guilt. But with criminal investigators sniffing around, there’s no upside to giving them fodder.

  • Poland fears euro death and mulls euro membership

    01 December 2011

    Poland is calling on Germany and the ECB to prevent a euro collapse that would be devastating for it and central Europe as a whole. But while fearing the euro’s demise Poland remains drawn to joining the single currency. The case for staying out is stronger.

  • Prokhorov no torch-bearer for Russia's reformers

    13 December 2011

    The Russian oligarch’s motives are unclear and he has no political experience. Prokhorov just isn’t a serious alternative to Vladimir Putin. The protests against the president are growing, but the educated middle class still lacks a political party to articulate its demands.

  • Prosecutors corrupt effective anti-corruption law

    02 December 2011

    A U.S. judge just overturned the first court win against a company under the Foreign Corrupt Practices Act, ruling the government fudged evidence. It’s an extreme case of prosecutors stretching to nail firms for bribery. But it further threatens a useful law already under attack.

  • Pru's AIA mess finally claims deserved scalp

    20 December 2011

    The UK insurer’s chairman, Harvey McGrath, says he is to retire, 18 months after the badly handled bid for Asia’s AIA. It’s a shame there’s no replacement yet. But Pru won’t struggle to find one. And the board has shown accountability while avoiding a disorderly transition.

  • Publicans could help Greece with tax woes

    14 December 2011

    Before the age of tax bureaucracies, governments auctioned off the right to gather taxes. They got their money up front and the collectors worked hard – they kept any excess. In Greece, a new kind of publican could be more effective than tax inspectors demoralised by pay cuts.

  • Putin is on a collision course with change

    21 December 2011

    Russia’s mass protests against election-rigging reflect a strong yearning for change. This won’t stop Vladimir Putin winning the presidential election. But his methods of government are losing their power. And those hoping that he can move with the times will be disappointed.

  • Putin's Russia may not be so stable after all

    07 December 2011

    Even though protests against the prime minister party’s vote-rigging have been modest, they show the regime’s vulnerability. The system is corrupt and democracy badly lacking. Stability a-la-Putin requires a strong economy, but growth is slowing. What if Russians have had enough?

  • RBS shows watchdogs need power to stop bank M&A

    12 December 2011

    Flawed capital rules, reckless management, a risky takeover and supine supervision all contributed to the UK lender’s collapse, a probe has found. Many shortcomings have been fixed, but more changes are needed – such as giving regulators real power to block big bank deals.

  • Refiner's credit crunch augurs wider pains

    29 December 2011

    Petroplus, Europe’s biggest independent oil refiner, may have to close plant if it can’t refinance a $1 bln credit line. Rivals may benefit if a poor result for the Swiss firm speeds reduction in refining capacity. But weak profit margins are likely to remain a widespread problem.

  • Repsol saves Sacyr from creditor hell

    20 December 2011

    The Spanish oil and gas company is buying 10 percent of its shares currently owned by the deeply indebted construction company. Sacyr can now reach a deal with its banks. It is not a great use of Repsol’s cash but the alternatives could have left it even worse off.

  • Republican candidates share lack of tax realism

    29 December 2011

    With the Iowa Caucus soon kicking off the GOP race for the U.S. presidency, the contenders want to set themselves apart. But they don’t differ much on taxes. They would all cut them, reducing government revenue. But that undercuts another supposed shared goal: deficit reduction.

  • Rome's funding pain eases, but is not cured

    28 December 2011

    Italy’s funding costs halved in auctions on Dec. 28, as its bond market started to behave a bit more normally. Cheap ECB funds may have helped, as well as Rome’s new commitment to austerity. But while Italy has taken one step back from the abyss, it still faces huge hurdles.

  • Rumble in rock garden presages more hostile M&A

    12 December 2011

    That’s one way to read the unsolicited $4.6 bln offer that Martin Marietta Materials made for larger rival Vulcan. The deal won’t succeed without a sweetener. But the lesson is clear: if profits can’t be mined from the ground, they can still be found by cutting costs.

  • Rupee's decline adds to India's woes

    12 December 2011

    The rupee has fallen 17 percent this year. Self-inflicted wounds and worries about troubles elsewhere have led to a flight of the capital which India needs to fund its current account deficit. New Delhi, already in turmoil, is running out of firepower to deal with the impact.

  • S&P warning won't change euro zone equation

    06 December 2011

    The risk of a mass ratings downgrade won’t be the main concern of euro leaders at this week’s summit. Bond yields were already signalling some distress, and the collective threat removes some of its sting. Governments’ main problem is convincing the ECB they’re serious at last.

  • Sacyr faces steep cost of botched diversification

    14 December 2011

    The Spanish construction group must repay by next week the 4.9 billion euro margin loan it took out to finance a 20 percent stake in Repsol. With the investment underwater, there is no easy way to do it. The banks hold the whip, but they will probably have to share some pain.

  • SAP pays $3.4bln to ride rise of "cloud" computing

    05 December 2011

    The German software giant is swallowing a fast-growing yet barely profitable upstart, Successfactors. The price is a lofty 8 times sales but SAP needed a deal. It risked missing out on a huge shift by corporate clients to cloud-based technology applications.

  • Sarkozy courts danger with ECB-bank-sovereign plan

    09 December 2011

    The French president says banks will use cheap ECB funds to pile into sovereign debt. That would be convenient for stressed governments, but tough on banks. And any hint of compulsion would scare investors. Still, political arm-twisting may make it hard for some banks to say no.

  • Savvy NRG step may tip scale against utility deal

    16 December 2011

    It’s uncommon to see a supplier try to spoil a marriage between customers. But the U.S. power producer is hoping to break up Northeast Utilities’ $4.7 bln takeover of NSTAR. NRG’s arguments hint at how big and inflexible a utility the deal, if approved, could create.

  • SEC’s ballplayer cases no substitute for homeruns

    22 December 2011

    The U.S. regulator is on a streak of fraud suits against retired athletes and other minor celebrities. That may help deter wrongdoers, but it doesn’t improve a thin record against big-league financial miscreants. If the watchdog wants respect, it needs to swing for the fences.

  • SEC's GSE charges underline need for revamp

    16 December 2011

    The U.S. watchdog has charged six ex-executives of Fannie Mae and Freddie Mac, the biggest bailout recipients, over subprime loans. It’s about time. Wherever the charges go, they’re symptomatic of the twisted consequences of the U.S. mortgage lending model. Its reform is overdue.

  • Sino-Forest debt games are bad for creditors

    15 December 2011

    The decision not to pay $10 mln interest may push the scandal-hit Chinese timber firm towards default and a restructuring process. Bond holders are in a weak negotiating position. Most of the assets, if they really exist, are inside China, where it is hard to enforce claims.

  • Sino-Forest investor tests limits of activism

    21 December 2011

    Richard Chandler, the troubled Chinese firm’s biggest investor, made a fortune from contrarian bets. He may be right to back Sino-Forest amid doubts over its accounting. But its structure, which strongly favours the company, gives investors little hope of exercising their rights.

  • Slim associate bonuses fatten law partner profits

    12 December 2011

    Despite rising revenue, the big U.S. firms held year-end bounties to 2010 levels. That may reflect a junior-lawyer glut, routine-task outsourcing, client-forced savings - and some firm-owner greed. Legal grunts aren’t hurting, but the days of lavish perks and pay may be waning.

  • SocGen's wholesale arm gets new boss for new times

    22 December 2011

    Didier Valet, the French bank’s CFO, is to run its investment bank. The group is cutting staff and assets in the division as it struggles to meet new capital and funding rules. Outgoing Michel Peretie had been tasked to grow the business. But the time has come for a numbers man.

  • South Korean stimulus could follow Kim's demise

    19 December 2011

    The export-led development model of capitalist Korea still plays foil to its northern neighbour. But with growth slowing and a presidential vote coming, the contrasts could get starker. Seoul may now promote the domestic economy through lower interest rates and a weaker won.

  • South-East Asia could be 2012's safest getaway

    20 December 2011

    Asia’s emerging economies, like Malaysia, the Philippines and Thailand, should outperform as global growth stalls. Bonds will gain as policymakers fight slumping exports and sagging stocks by cutting interest rates. Foreign capital flight remains a risk, but these sovereigns offer surprising safety.

  • Spain must turn brain drain into gain

    23 December 2011

    Anecdotal evidence suggests that rising numbers of university graduates are fleeing Spain and its sky-high unemployment. A prolonged exodus is a risk, although there could be a silver lining to a temporary outflow of graduates abroad.

  • Spanish banking sector to pay for its sins

    08 December 2011

    Banco Sabadell is taking troubled lender CAM off Madrid’s hands, and Spain’s bank-backed deposit guarantee fund is helping by making a big capital injection. Such deals minimise the cost to the taxpayer, but aren’t a free lunch for the state and won’t solve the sector’s problems.

  • Stock up on gold, tinned food and shotgun shells

    30 December 2011

    OK, there’s no need to be too melodramatic. But hard times bolster the case for hard assets. When protesters fill the streets and the only cure for debt crises is printing money, it’s tempting to head for the hills. Assets offering true security fit in a suitcase.

  • Supersized IMF not just for little guy bailouts

    09 December 2011

    Europe’s promise to lend another $270 bln takes the fund’s pot over $1 trln. The move also raises the chance of fat contributions from the BRICs, who have insisted on more euro zone self-help. The muscled-up fund may soon have the scale to help rescue big nations like Spain.

  • Surviving animal finance: bear with the bull

    23 December 2011

    Just as a picture is better than a thousand words, an apt zoological metaphor conveys financial insight more effectively than the most comprehensive spreadsheet. But conjure the wrong creature out of the hat and confusion will multiply more quickly than a wrack of rabbits.

  • Telefonica's divi cut doesn't solve the problem

    15 December 2011

    The Spanish telco has bowed to what the market has long seen as inevitable. But shaving the shareholder payout by only 14 pct may still leave Telefonica short of financial flexibility. To get there, it has to take more tough decisions. Asset sales are possible.

  • The poorly performing, must-have 2012 investment

    22 December 2011

    It’s hedge funds. The typical one has lost 4 pct so far in 2011, lagging stocks and bonds. Investors aren’t deterred, though. They want 8 pct annual returns but face low debt yields and dim prospects for stocks. If fundamentals again guide markets, hedgies could bridge the gap.

  • The real UK plan B: protecting against euro chaos

    01 December 2011

    Pundits say Britain needs an alternative strategy to boost growth. What’s really needed is a contingency plan to handle a euro explosion. The central planks should be for the government to keep adequate fiscal firepower to handle a crisis and to recapitalise the country’s banks.

  • Thomson finally completes takeover of Reuters

    02 December 2011

    Tom Glocer’s bankerly CEO skills no longer suit the publishing giant. He restructured Reuters and deftly engineered its well-timed sale. But the company needs to grow – and the controlling Thomson family is weary of waiting. How it does so, though, still seems far from clear.

  • Time for Lampert to admit defeat running Sears

    28 December 2011

    The latest bad news should end the hedgie’s retail experiment. After 18 quarters of falling sales, his capex-light strategy hasn’t turned Sears into a retail winner - or into a cash cow. A good 2012 resolution for Lampert would be to go back to managing money, not stores.

  • Two more black marks for James Murdoch

    14 December 2011

    The News Corp boss has just unearthed new email evidence in the phone-hacking enquiry. That’s blot one. The message doesn’t destroy his defence that he was unaware of bad practice in 2008. But it contains serious allegations and Murdoch says he didn’t read it. Another black mark.

  • U.S housing in recovery, but morphing in shape

    20 December 2011

    Housing indicators continue to gather strength, helping the economy, in a new reality of lower home ownership with more multi-family rentals. If house prices decline and rents rise in 2012 the sector’s current huge subsidies may become irrelevant - even economically damaging.

  • U.S. bond markets not immune to bank wariness

    09 December 2011

    Bonds give American companies an alternative to bank loans – one that European counterparts often lack. But banks lubricate U.S. bond trading too. Their reluctance to use their oil cans has jammed up the $7.7 trln market. This mini credit-crunch pain may, however, bring gains.

  • U.S. Constitution's hidden parts are oddly useful

    20 December 2011

    Clauses like the ban on bills of attainder may not ring a bell, but a new book says they shed needed light on fuzzy concepts like free speech and due process. Occupiers should take note. In protesting inequality, they could do worse than cry: “Down with Titles of Nobility.”

  • U.S. energy bill beneficiary redefines going green

    13 December 2011

    Oil billionaire T. Boone Pickens and U.S. Representative Nancy Pelosi are oddly aligned. A fuel subsidy proposal, if passed, would make them both richer because of their stakes in a “green” firm that would benefit. Congressional trading rules need an overhaul now more than ever.

  • U.S. jobs picture brightens, but not for all

    02 December 2011

    Job creation is getting stronger. And the sharp drop in the unemployment rate to 8.6 pct will please Obama. But it conceals a bifurcation: those without jobs are either getting them or giving up. The danger is that worker shortages arise quickly and social problems proliferate.

  • U.S. protests won't stop Japan's yen meddling

    28 December 2011

    The Treasury has rightly criticised Tokyo for weakening the yen. Currency intervention has limited impact, and exporters have learned to live with a strong yen. But fears that traders see the yen as a one-way bet mean more meddling is likely, whether Washington approves or not.

  • UK banks need government to solve funding squeeze

    06 December 2011

    The Bank of England’s new 30-day facility should help keep lenders afloat if the euro crisis causes short-term liquidity to dry up. But banks also need help refinancing 140 billion pounds of term debt in 2012. For that, the state may need to guarantee their debt once more.

  • UK cuts pensions and workers - without a fight

    21 December 2011

    The government has compromised on public-sector pension reforms. But its deal with the unions will still reduce costs. Meanwhile, public-sector employment is back at 2003 levels. The government deserves plaudits for making the state more affordable without nasty confrontation.

  • UK Investors' bank bonus campaign needs teeth

    06 December 2011

    The Association of British Insurers has asked the UK’s five largest banks to cut compensation to the point where returns exceed the cost of equity. The request is reasonable. But it will only work if shareholders are also prepared to vote against directors who don’t respond.

  • UK's euro isolation may backfire on City of London

    09 December 2011

    David Cameron says he was defending Britain’s financial industry when he opted out of the pan-European deal to save the euro zone. But the prime minister’s stand leaves the City exposed in Europe - and at home. And it further diminishes the UK influence over designing new rules.

  • UK's tough talk on bank reform masks concessions

    19 December 2011

    The government has accepted the central proposal of its independent banking review, and expects universal banks to build a costly ring-fence between wholesale and retail businesses. It has also called for RBS to shrink further. But the fine print reveals a more lenient approach.

  • Warning to Rueschlikon: easy money can vanish fast

    07 December 2011

    The Swiss town is enjoying that something-for-nothing feeling. It has cut personal tax rates thanks to windfalls received from Ivan Glasenberg, the billionaire boss of newly listed Glencore. But as the UK has learned, such wealth can dissolve like smoke – and leave a mess.

  • What price earnings?

    29 December 2011

    How much could $1,000 be worth if equity markets perk up - or continue to slide?

  • Where the investment banking jobs may be in 2012

    27 December 2011

    The industry is shrinking globally, but opportunities abound for enterprising financiers. Sovereign debt crises are forcing companies to hedge risk. Regional banks need consolidating. Private equity is awash in cash. And forex traders may have some new currencies to play with.

  • Wins by Egypt's Islamists raise twin risks

    05 December 2011

    An Islamist-led parliament is set to replace a failed authoritarian secular one. Economic necessity should keep extremism at bay. But the Muslim Brotherhood’s long-term agenda, and the surprise success of ultra-conservative Salafis, will put investors on edge.

  • With or without reforms, Putin can't win

    12 December 2011

    The Russian government has reacted with uncharacteristic moderation to the weekend’s massive demonstrations against vote-rigging. But Vladimir Putin is unlikely to give protesters the reforms they demand. Taking on the regime’s corruption would mean alienating his power base.

  • Wukan protests rooted in finance not freedoms

    19 December 2011

    Riots over land sales by local governments are getting more common. As prices rise and land gets scarce, villagers like Wukan’s want more of the profit. A government pay-off is usually the answer. But it looks like China’s model of rapid development is due for an overhaul.