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Friday, 19 September 2014

BREAKINGVIEWS

Scotland

Scots' no to independence still leaves UK in limbo

19 September 2014

The roughly 55:45 vote against secession in a landmark referendum reduces many risks: financial instability, a UK exit from Europe and a sharp fall in trade. But the bribe to no-voters of more devolved powers creates other dangers – including a weakening of the union.

Co-founder and Chief Executive of Oracle Corporation, Larry Ellison introduces the company's latest SPARC servers at Oracle Conference Center in Redwood Shores, California March 26, 2013.

Larry Ellison cedes driver seat with hand on wheel

19 September 2014

The Oracle founder is stepping down as CEO, but his 25 pct stake in the software giant – and dual role as chairman and chief technology officer – ensure he’s far from relinquishing control. Splitting his old job between two executives could, however, lead to a bumpy transition.

SEC Chair Mary Jo White testifies at a Senate Banking, Housing and Urban Affairs Committee hearing on Capitol Hill July 30, 2013.

SEC mistakes minor fraudsters for squeegee men

18 September 2014

The U.S. watchdog is nailing petty offenders just as cops used to nab pesky windshield-cleaners. The idea is to nip wrongdoing in the bud. But complex securities enforcement isn’t like neighborhood crime prevention. The tactic may boost SEC statistics more than it deters fraud.

Models present creations during New York Fashion Week in New York, September 10, 2013.

Zalando would find air rarefied in upper range

18 September 2014

Europe’s No. 1 online fashion retailer is aiming for an ambitious valuation for its Frankfurt listing. Anything in the upper half of its 18 to 22.50 euro range looks rich. Zalando has yet to prove it can deliver profit as well as growth. Then there are the governance risks.

An employee monitors the high-throughput screening of substances at the Pharma Research Center of Bayer HealthCare in Wuppertal February 24, 2014.

Bayer’s plastic float sows seeds for one more sale

18 September 2014

Investors added $5 bln to the German blue-chip’s market cap after it unveiled plans to float its capital-intensive MaterialScience unit. Once again, markets are rewarding sharper focus. A logical follow-up would be to quit agrochemicals, leaving a pure healthcare business.

Chinese President Xi Jinping (R) extends his hand to greet Australian Prime Minister Tony Abbott before a meeting at the Great Hall of the People in Beijing, April 11, 2014.

Australia at sharp end of China outbound ambition

19 September 2014

Growing ties to China are a source of anxiety but the lop-sided relationship is here to stay. As Chinese buyers widen their horizons from resources to property and education, Australians have a chance to show they’re pragmatic. Beijing could help too, with a touch of soft power.

The European Central Bank (ECB) President Mario Draghi speaks during the monthly news conference in Frankfurt, February 9, 2012.

ECB can live with a pea-shooting bazooka

18 September 2014

Banks took up 83 bln euros in the first round of the ECB’s four-year liquidity injection. That’s less than hoped. Markets are sanguine, hoping sovereign debt purchases are now more likely. The limp start will at least pressure the ECB to deliver on its pledge to buy private assets.

U.S. President George W. Bush talks to Rose Friedman as her husband Milton Friedman addresses dignitaries gathered at an event held in his honor at the Eisenhower Executive Building in Washington, May 9, 2002.

Inflation refuses to bend to monetary policy

18 September 2014

Reality is not being kind to Milton Friedman’s dictum that inflation is “always and everywhere a monetary phenomenon.” The U.S. money supply is rising faster than output, yet prices are going down. For now globalization, unemployment and aging may be the keys to wages and prices.

An easyJet aircraft prepares to take off from Liverpool John Lennon Airport , northern England November 19, 2013.

EasyJet's divi policy imposes useful constraint

18 September 2014

The budget airline has said it will now distribute 40 percent of earnings, up from one-third. That’s brave given aviation’s inherent cyclicality and the need to spend on aircraft. Still, it’s a welcome step. Management has credibility and the move will enforce discipline.

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Features

Jeffrey Goldfarb

NFL only understands hits where they really hurt

18 September 2014

The U.S. football league has thrown its weight around to grow into a $10 bln entertainment colossus. Victims of the sport’s violence get trampled until the likes of Anheuser and Nike play offense. Corporate America may be all that keeps the NFL from going the way of boxing.

Edward Hadas

Why buybacks should be banned

15 September 2014

Some share repurchases get Warren Buffett’s seal of approval. But the great investor is on the wrong track. Buybacks are really dividends by another name. The price doesn’t matter. Besides, the practice is unfair to some shareholders and to governments. The world would be better without them.

Columns

Edward Hadas

Edward Hadas: The economic lessons from Scotland

17 September 2014

However the independence referendum turns out, the arguments from both sides reveal some hard truths. Governments are at the centre of modern economies. But their freedom is limited, since no nation is an island. And the toughest challenge is managing the financial system. 

Andy Mukherjee

India in depth: How not to get swamped by capital

17 September 2014

Japan wants to invest $34 billion in India. China’s pledge could be several times as large. Realizing these commitments, and digesting up to 12 percent of GDP in foreign capital over five years, will be tricky. The People’s Republic’s own growth strategy offers a useful template.