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Wednesday, 26 November 2014

Breakingviews
Nov 2011

View all stories from this issue.

  • "No harm, no foul" legal concept worth preserving

    25 November 2011

    The U.S. Supreme Court is due to hear arguments on Monday over a consumer’s right to sue despite suffering no obvious injury. That only encourages dubious litigation against corporate America and upends constitutional logic. The high court now has a chance to squelch such cases.

  • A revived drachma would plunge - but could heal

    07 November 2011

    Greece wants to stay in the euro zone. If it were to leave, the new drachma might well follow an Argentine trajectory. The peso fell 66 percent in a few months. Then comes 30-50 percent inflation – or more. Greeks would be impoverished. But a more competitive country could emerge.

  • AIG just can't resist financial tinkering

    04 November 2011

    The U.S. insurer’s latest idea is to buy back $1 bln of stock. On that scale, it won’t do much damage. But AIG has plenty of external risks and internal business challenges to handle, plus a huge overhang of government-owned shares. The buyback looks like a gimmicky distraction.

  • Another European credit crunch looks unavoidable

    14 November 2011

    A wholesale funding drought, dollar shortage and demands for higher capital ratios are forcing banks to shrink their balance sheets. That’s bad news for companies and consumers who depend on bank credit. The only question is how long the crunch lasts – and how widely it is felt.

  • Apple rightly keeps chairman, CEO roles split

    16 November 2011

    The divide may have looked temporary when Tim Cook replaced the ailing Steve Jobs as chief. But making Arthur Levinson chairman is smart. He’s a canny operator and his appointment lets Cook concentrate on running Apple day to day. The separation of duties is long overdue.

  • Asia's half-hearted reform exposed by Western woes

    23 November 2011

    Eastern economies are grappling with slowing exports and receding investment from Western partners. It didn’t have to be this way. Asian economies failed to use boom years to uproot their outmoded development model. Making those changes now promises to be doubly painful.

  • AT&T boss should pay price if T-Mobile deal fails

    28 November 2011

    The telecom giant bet big it could get the $39 bln acquisition past regulators. Now, AT&T is acknowledging how tough the fight is. It’s looking more likely shareholders will be on the hook for $6 bln. If so, CEO Randall Stephenson should lose some comp - and his chairman’s seat.

  • Australia still vulnerable despite triple-A crown

    29 November 2011

    Investors love the low official debt, high yields and strong exports to China. A Fitch upgrade makes Australia one of 14 nations with top marks from all three rating agencies. But there’s kryptonite: indebted households and reliance on foreign investors and high commodity prices.

  • Bagehot to cenbanks: liquidity needn’t be cheap

    30 November 2011

    The 19th-century British financier believed in lending freely during crises but at high rates. Wednesday’s coordinated action by the ECB, the Fed et al boosted liquidity and reduced its cost. That could worsen imbalances. A Bagehotian approach would be workable and less risky.

  • Bank of England reaches limits of independence

    08 November 2011

    UK parliamentarians have called for the central bank to be better governed and more accountable. Keeping the government at arm’s length is important. But the Bank of England’s new powers for financial stability and bank supervision make greater political scrutiny inevitable.

  • Banker rehab requires more than good intentions

    07 November 2011

    Ken Costa worries that his old trade has lost its moral moorings. The ex-head of Lazard is probably right, but the disease is much easier to identify than the cure. Saying sorry would be a start. Bankers should admit that they profited unfairly before and after the crisis.

  • Bankers not entirely political pariahs

    16 November 2011

    The banking crisis might have made financiers unacceptable in the corridors of government. Yet Italy’s new premier – once an adviser to Goldman Sachs – just handed Intesa’s CEO a key position. New leaders of the ECB and FSB are also ex-Goldman. Oddly this all makes some sense.

  • Banks can't have it both ways on sovereign debt

    10 November 2011

    Lenders don’t want Greek sovereign losses to set a precedent. That’s hypocritical – the spread of yields on euro zone debt showed default was always possible. Regulators have made the problem worse. But the fact is sovereign defaults will always create a mess for banks.

  • Becalmed UK in danger of double dip

    01 November 2011

    British GDP grew by 0.5 percent in the third quarter – and over the past year. A recession looms as the euro zone crisis brews up another storm. The government and the Bank of England hope credit easing will stave off the worst – but a fiscal U-turn may be hard to avoid.

  • Beijing's big bazooka packs diminishing punch

    24 November 2011

    Chinese banks may soon have their lending capacity relaxed, freeing them to juice up the economy. But another 4 trillion yuan of stimulus might add just 2 percent to GDP – assuming banks could find willing borrowers. China doesn’t need to lend more, but more wisely.

  • Berlusconi ouster isn't like Arab Spring

    14 November 2011

    Some Italians see similarities with Mubarak or Gaddafi in the toppling of their PM. But while Berlusconi distorted democracy, he wasn’t a dictator. And he was removed by bondholders, not the people. If Italy is to reform, voters must acknowledge their complicity in his regime.

  • Berlusconi's loss could be Murdoch's gain in TV

    17 November 2011

    Rupert Murdoch is the most obvious business beneficiary if Silvio Berlusconi’s stranglehold on Italian media loosens. Reform of the sector is badly needed, if some way off. That could ultimately lure new players, such as Germany’s Bertelsmann.

  • Big Oil chief payouts flow too freely

    16 April 2012

    Rex Tillerson and John Watson, the respective bosses of Exxon and Chevron, earned $60 mln between them last year after big pay hikes. But Exxon’s lead is shrinking and Chevron’s newish CEO can’t take credit for closing the gap. Rising oil prices don’t make such packages deserved.

  • Bill Miller sails into retirement humbled

    17 November 2011

    His painful last few years at Legg Mason are an object lesson for investors. Years of outperformance mean nothing if a fund grows so large it’s unwieldy. And inflexible betting on growth can be counter-productive.

  • Biotech firm Verastem's IPO carries some big risks

    11 November 2011

    Founded by the man who sold GSK his last creation for $720 mln, the firm wants to raise $50 mln. Yet it has no revenue, no drugs in trials and looks predicated on unproven science. Verastem may deserve funding - but from venture capital, not public market, investors.

  • BNP debt sale bad news for euro zone governments

    03 November 2011

    The French lender has slashed its exposure to Greek, Spanish and Italian debt at a cost of 3 bln euros. Though BNP can afford to take the hit, smaller rivals are less robust. Banks’ aversion to sovereign bonds is also bad news for governments that need to finance their deficits.

  • Bob Diamond sets high bar for bank rehabilitation

    04 November 2011

    Banks should serve a social purpose and meet real client needs, Barclays’ CEO argued in a thoughtful lecture. Though the change of tone is refreshing, lenders must now show that reality reflects the ideals. For Diamond, that also means exercising restraint on bonuses.

  • BofA card climbdown may push fees back in shadows

    01 November 2011

    Like rivals, the bank is scrapping plans to charge customers using debit cards. That may seem a win for consumers. But banks will find other, less transparent ways to make up for $8 bln in lost fees. The upshot of Durbin’s bill: consumers get fleeced by both banks and retailers.

  • BofA considers right stock swap at wrong time

    04 November 2011

    Exchanging up to $6 bln of common shares and debt for prefs could save the bank some $300 mln a year and lift regulatory capital a bit. Yet the move could be a tactical error for CEO Brian Moynihan. The resulting dilution risks alienating investors at a vulnerable time for BofA.

  • Bounced Citi CDO payout tests SEC's credibility

    28 November 2011

    Judge Jed Rakoff isn’t convinced Citi’s $285 mln deal with the U.S. regulator serves the public interest. The watchdog can only blame itself. With few exceptions, lax enforcement has earned it a toothless reputation. Going to trial gives the SEC a chance to prove it has bite.

  • BP making a habit of botched M&A

    07 November 2011

    Closing a $7 bln disposal in Argentina is not as urgent today as it was a year ago, when the oil major was reeling from the Gulf of Mexico disaster. But setbacks look bad, coming after the collapse of the Rosneft deal. BP is now stuck with a challenging partner in Buenos Aires.

  • Brazil won't solve all of TNK-BP's problems

    02 November 2011

    The Anglo-Russian venture’s $1 billion deal to explore for oil in the Amazon is its most significant international foray. TNK-BP needs to diversify away from Russia, where its mature fields are declining. But such expansion is only a partial solution to its strategic dilemma.

  • Brazilian billionaire banker tests investor mettle

    16 April 2012

    Just days ahead of an IPO of his BTG Pactual, Andre Esteves has been fined for insider trading by Italian watchdogs. The firm shrugged off the case and says the boss will appeal. But JPMorgan’s Ian Hannam resigned to fight similar charges. The risks look big for this high-flyer.

  • BRIC success shows the power of a good idea

    28 November 2011

    Goldman’s Jim O’Neill invented the acronym for the leading emerging markets 10 years ago. What started as a good economic theme became a state of mind – the embodiment of a global power shift. So far, so good, but at least one BRIC is likely to disappoint in the next decade.

  • Budapest needs IMF cash and its bitter medicine

    18 November 2011

    Hungary is likely to be central Europe’s first casualty of euro zone crisis. Growth is poor, debt is high and a credit ratings downgrade to junk is likely. Disquiet over government policy is a problem and risks of deleveraging by Western banks are large. Hungary needs IMF funds.

  • Buffett steals page from odd playbook: Murdoch's

    30 November 2011

    The Berkshire Hathaway boss is buying his local newspaper publisher, defying his own investment advice. The Sage of Omaha can’t need more influence in his own backyard. But like other fogeys including Rupert Murdoch, he can’t shake a soft spot for print and its enduring clout.

  • Buffett's IBM has rare mix of growth and value

    15 November 2011

    Berkshire Hathaway’s investment success is built on common sense stock picks such as the tech-turned-consultancy firm. But only four other global large-cap stocks match Big Blue’s downhome growth-and-value qualities of a sort so admired by the Sage of Omaha.

  • Calculator: Italian debt spiral

    09 November 2011

    If yields stay at 7.5 percent, Rome would need a 6 percent primary surplus just to keep its debt/GDP ratio static – and that’s assuming it meets its growth forecasts.

  • Capitalism takes three big hits in one day

    01 November 2011

    Blame past exuberance for the grim headlines. It created the Greek mess. Dangerous optimism also made investment banks too large. And now private equity hubris has led to the failed ISS sale. These monuments of financial folly are falling apart. The debris is hazardous.

  • Central banks take on market fears

    30 November 2011

    A six-nation coordinated move to make cheaper dollars available globally seems aimed initially at European banks. Like it or not, it shows a willingness to do what private investors won’t. If politicians show similar unity, they could win the standoff with markets over the euro.

  • Cheap loans for UK firms will need robust policing

    28 November 2011

    The government is set to launch a 20 billion pound scheme to help credit-starved businesses. It’s an improvement on previous attempts to force banks to lend to small businesses. But ministers will have to ensure that the subsidised loans help companies, not just banks.

  • Chesapeake's Utica sales signal shale's next phase

    04 November 2011

    Fetching a whopping $15,000 an acre for unproven reserves in the Ohio formation takes shale optimism to a new level. Yet environmental and political resistance to fracking remains strong. Low gas prices don’t offer much reassurance either. This new frontier is still plenty risky.

  • China could gain from helping Europe via IMF

    28 November 2011

    Rescuing the euro zone is a tough sell for a still-poor nation. But like Saudi 35 years ago, China could parlay some of its $3.2 trln of reserves into greater international clout through the IMF. It would be saving a big export market and a reserve diversifier into the bargain.

  • China must hurt the rich to save the rich

    03 November 2011

    Half the country’s well-off want out, a recent survey argued. Despite their considerable wealth, it’s not so bad if they go. More important is ensuring China creates a new generation to replace them. That means making reforms that might speed the old hands on their way.

  • China won't be Asia's importer of last resort

    25 November 2011

    Slower manufacturing in the second-largest economy is bad news for other Asian exporters like Japan and Korea. They’re counting on China as U.S. and European demand ebbs. But at least a fifth of China’s imports go to making exports, so China may not prove the hedge they hope.

  • China's own "Little Greeces" should help themselves

    18 November 2011

    Shanghai became the first local government to sell bonds this week. Provinces like Hainan, which has debts of almost 100 percent of GDP, cannot easily go down that route. Beijing might not come to the rescue, so they need help themselves with austerity and asset sales.

  • China's rich splash out despite slower growth

    30 November 2011

    Macro data is weakening but art auctions and handbag sales are still going gangbusters. The disconnect is disconcerting. When growth is rapid, conspicuous consumption looks like progress. Now it suggests waste. The callous rich could become targets of political and popular ire.

  • China's Tencent slows as new Internet models bloom

    09 November 2011

    China’s second-biggest dot-com by market value saw its slowest quarterly earnings growth in four years. Gaming customers are defecting to new Internet models. Higher costs in micro-blogging and video are hurting margins. Tencent needs a strategy beyond simply getting bigger.

  • Chinese accounting paranoia finds new victim

    22 November 2011

    Focus Media’s stock fell 40 percent after it was accused of overstating assets by the same short-seller that targeted Sino-Forest in June. This time the target is a bigger name, and the claims more far-reaching. Fast growth and powerful insiders make Chinese firms easy targets.

  • Citi risk measurement scheme warrants closer look

    08 November 2011

    CEO Vikram Pandit is touting a plan for financial firms to disclose regularly how risk scenarios play out for a standard, hypothetical portfolio, as well as their own assets. Such a comparative tool might have raised red flags about MF Global -one reason it deserves attention.

  • Citi's CDO settlement now seems to pass muster

    08 November 2011

    Judge Jed Rakoff raised tough but fair questions about the bank’s $285 mln deal with the SEC. Though Citi initially appeared to get off light compared to Goldman, its responses to the court show the case’s many gray areas. The watchdog may in fact have exacted all it could.

  • Coal industry blowing smoke with jobs claims

    16 November 2011

    A U.S. TV ad depicts Americans losing their jobs because of new pollution rules. The analysis is questionable even in isolation. But any loss for coal is a gain for other fuels like gas. And an estimated $200 bln in health savings from cleaner air counts for something, too.

  • Collapse not yet likely for battered Olympus

    11 November 2011

    The scandal-racked Japanese company could see its shares delisted, and its debt burden is formidable. But its core medical equipment business provides strength. A strike by suppliers, creditors and customers could push Olympus over the edge, but that still looks remote.

  • Confidence best built without tricks

    17 November 2011

    Confidence surveys do well at predicting near-term trends, but economic moods mostly reflect economic reality. Emotions matter more in finance. Still, the best way to calm today’s roiled markets – and raise low animal spirits – is for the euro zone to address its real problems.

  • Could a UBS-CS joint venture solve Swiss problems?

    16 November 2011

    JPMorgan analysts have suggested the lenders combine their investment banks. It would boost returns, speed balance sheet shrinkage, and might pass muster with regulators wary of cross-border deals. But while consolidation is welcome, combining the arch-rivals would be tricky.

  • Credit Suisse cuts necessary but not sufficient

    01 November 2011

    The Swiss lender plans to slash risk-weighted assets in its weak fixed-income business by half, and lose 1,500 more jobs. This should boost return on equity, which fell to 6 pct in the third quarter. But the bank is making some optimistic assumptions to hit its 15 pct target.

  • Credit Suisse loses some of its comp cred

    15 November 2011

    The Swiss bank typically sets the pace on bonuses with innovations like paying staff with toxic assets. Now, it’s caving to peer pressure and raising the threshold for deferrals. The move seems unnecessary given the weak job market and will make fewer staff think longer term.

  • Crisis anniversary marked with much dead wood

    08 November 2011

    Five years ago today, Meritage became the first notable subprime mortgage lender to fail. Too few heeded this canary in the coal mine. Now, while there are some signs of progress, the mortgage market remains moribund. It’s worth a look back - and forward.

  • De Beers buyout adds polish to Anglo American

    04 November 2011

    The miner is paying the Oppenheimer family a reasonable $5.1 bln to take majority control of De Beers, the world’s top diamond producer. It’s another step to a streamlined Anglo, making it look like a more straightforward takeover target.

  • Debt triangles return to haunt Chinese firms

    02 November 2011

    Despite robust sales and earnings, Chinese companies’ operating cash flow deteriorated sharply in the first half - suggesting many have increased credit to customers. If they can’t pay, a wave of ugly bad debt could hit companies and their lending banks.

  • Deutsche wisely bids Joe Ackermann auf Wiedersehen

    14 November 2011

    After building a world-class investment bank, the German lender’s boss is leaving on downbeat notes: a cut profit target and prosecutors examining his testimony in the Kirch case. Keeping him as chairman would have been a distraction. Allianz’s Paul Achleitner is a safer choice.

  • Devil still in the detail for souped-up EFSF

    28 November 2011

    At best, plans to leverage up the bailout fund are part of the solution to the euro crisis. But for the EFSF to fulfil even that limited role, investors will need to believe the complex structures work and that their interests can be reconciled with those of member states.

  • Did accounting help sink MF Global?

    02 November 2011

    Much has been made of Jon Corzine’s attempt to remake the firm in the image of Goldman Sachs with risky bets on European debt. But Bethany McLean says beneath the riches-to-rags headlines are some curious choices about how MF Global paid for the purchases and disclosed them.

  • Don't leave plan B too late

    28 November 2011

    Germany is determined to try its plan A for solving the euro crisis, though it has little chance of working. While Berlin, the ECB and the Bundesbank aren’t totally opposed to a plan B, by the time they implement one, the zone could be in deep recession or even have exploded.

  • Don't privatise infrastructure, outsource it

    28 November 2011

    The British government wants pension funds to help bankroll big infrastructure schemes. But with sovereign bond yields at record lows, private finance could be much more expensive. Better for governments to take advantage of cheap funding while outsourcing management.

  • Draghi-led ECB keeps Greece at arm's length

    03 November 2011

    The bank’s new president jolted markets with a surprise cut in interest rates while his benign tone on the Greek crisis implied that he thinks that is an issue for governments to resolve. It’s hard to believe the ECB isn’t concerned. But the aloof approach may pay off.

  • Dynegy failure provides a wake-up call to lenders

    08 November 2011

    The power provider’s partial bankruptcy comes with a twist - creditors exposed to losses ahead of equity investors. Bondholders stand a good chance of turning the tables in court but may have avoided the drama with better protection. It’s a reminder of how much covenants matter.

  • ECB funding aid needs to be wider, not just longer

    25 November 2011

    The central bank is considering offering longer-term loans to the euro zone’s stricken lenders. Bankers also want it to broaden the pool of collateral it will lend against. Though the ECB will not want to get swamped, easing some rules might help prevent small banks going bust.

  • ECB on track to waste a good crisis

    02 November 2011

    Draghi will chair his first meeting of the central bank on the week of the euro zone’s great Greek scare and as all data point to a recession. The ECB should lower rates and make clear it’s prepared to be a lender of last resort to responsible governments – but probably won’t.

  • EEA could be right place for UK in Europe

    15 December 2011

    After the Cameron veto, Britain’s status in the EU is precarious. It won’t move forward into the euro zone and cannot really turn its back on Europe. Some losses are inevitable, but the UK could gain by beefing up the European Economic Area – a fairly happy half-way zone.

  • Egypt fosters false economic expectations

    29 November 2011

    In the post-Mubarak era, the Muslim Brotherhood’s call for “social justice” is now popular with every political force. But the concept means different things to rich and poor. Delivering the democratic dividend will be hard for any new government. Failure may lead to more unrest.

  • Egypt threatened by full-blown economic crisis

    22 November 2011

    The country’s political unrest puts economic problems on the back burner. But they can’t be ignored. The pound is under pressure, investors are wary and social spending is beyond the government’s means. Egypt can limit the fallout by acting now. The odds it will are low.

  • Egypt's political mess casts doubt on aid

    24 November 2011

    The country needs cash, fast. But to secure a previously rejected $3 bln loan from the IMF, and potentially unlock billions more from elsewhere, Egypt has to show it can fulfil its side of the aid bargain. With the army in charge and no government, that’s a tall order.

  • Elections are least bad option for Greece

    01 November 2011

    A collapse of the Papandreou government followed by early elections, as now seems possible, would be fraught with problems. But it wouldn’t be quite as suicidal for Greece as a referendum. At least elections would be quicker and less likely to lead to a disorderly default.

  • Equity-bond decoupling shows risks have changed

    17 November 2011

    Investors may be rethinking the inherent riskiness of equities, especially compared to sovereign bonds. That is a logical response to seismic shifts in the european debt markets. Shares aren’t invincible but they are pretty well equipped for these rough times.

  • Ethical economy: euro caught in historic battle

    16 November 2011

    The current crisis is not simply about finance or even politics. It’s about the direction of history. The great forces that brought Europe together, fear of war and hope of prosperity, have lost strength. Something more relevant is required to preserve the euro from nationalism.

  • Ethical Economy: Good and bad news on inequality

    23 November 2011

    Before worrying too much about the excessive gains of rich country elites, rejoice in the steady global decline of inequality in the access to basic economic goods. Then worry, but not too much. Inequality at the very top is a relatively minor problem that is easy to solve.

  • Ethical economy: Greed is not limited to bankers

    09 November 2011

    Barclays’ Bob Diamond is right that his industry needs an ethical rejig, but the problem of wanting too much from finance is everywhere. To get to a healthier system, homeowners, investors and politicians need to learn moderation.

  • Ethical Economy: Mr Fine Suit comes to Europe

    30 November 2011

    Here is a story of prosperous merchants with an unfortunate taste for debt and a lender who changes from kind to cruel. It should sound familiar. The moral is simple – governments should rely on taxes, not markets, for their money.

  • Ethical economy: The 7 billion people question

    02 November 2011

    The world’s population has increased seven-fold since Thomas Malthus first predicted demographic disaster. And misery is receding. Economists should stop thinking of population growth as an economic drag. They should join parents in considering new life a cause for celebration.

  • EU audit reforms are no more than a start

    30 November 2011

    Draft proposals include various ploys to unpick the auditor oligopoly. But they omit reforms that would offer real help to new entrants. Other suggestions look ripe for watering down. The Big Four may have more to fear from the UK’s Competition Commission probe.

  • EU perched between chaos and catharsis

    07 November 2011

    The political dramas in Athens and Rome are reaching crisis point. One path leads to destruction; the other rebirth. Though there are signs of hope, a few more missteps will lead down into the chasm.

  • EU pressure on Italian powder keg is a risky game

    09 November 2011

    The euro zone and the ECB are playing with fire in Italy. They hope rising yields will force Rome to act. But a meltdown of the world’s third-largest bond market could have damaging consequences. Serious contagion is being averted for now, but the game needs a speedy end.

  • EU-like tricks loom as U.S. budget deadline nears

    18 November 2011

    The “super committee” has till Monday to reach consensus. That looks hard, so the temptation to fiddle a way to $1.2 trln of cuts is intense. Doing so would ape how states fudged euro entry rules. Markets and the public will probably be far less tolerant this time.

  • Euro can still gain from bondholder discipline

    30 November 2011

    As the zone charges ahead with plans to impose fiscal rigour by bureaucratic diktat, France and other countries want to drop plans that would enhance scrutiny by the bond markets. That would be a mistake. Keeping investors on their toes would help avoid future crises.

  • Euro crisis back to square one - or worse

    01 November 2011

    Greece’s planned referendum on last week’s bailout, announced as polls show its citizens reject it, has thrown the whole pack of cards up into the air. Bank runs, disorderly default, an exit from the euro and vicious contagion elsewhere are no longer wild scenarios.

  • Euro crisis worsens the currency wars

    10 November 2011

    Once there was just one big controlled currency, China’s. Now there are three, as Switzerland and Japan try to counteract euro fear and safe haven flows. But these interventions could enlarge global imbalances. China is best placed to help, by letting the yuan rise.

  • Euro fate hangs on Super Mario Bros

    14 November 2011

    Even if Mario Monti can form a strong government in Italy, the euro zone is vulnerable to bank runs and a deflationary spiral. Stopping that is the role of the ECB’s Mario Draghi. The zone needs reform but looser monetary policy. With Berlusconi gone, maybe they can do a deal.

  • Euro mess shows five types of dysfunctionality

    04 November 2011

    It takes many breakdowns to turn a problem into a crisis. The Europeans did it. Governments and investors have been fighting reality for years. Then the central bank and regulators underestimated the challenges. The Greeks also tried hard to discredit democratic rule.

  • Euro split fears are self-fulfilling

    21 November 2011

    Banks and investors are beginning to act as if the euro zone might fall apart – which, in turn, makes such a break-up more likely. Politicians and the ECB need to restore belief that the single currency is here to stay; otherwise it could unravel pretty fast.

  • Euro zone gets tougher in bid to soften Germany

    23 November 2011

    Berlin’s euro zone partners are rushing to agree on the fiscal reforms that Angela Merkel has demanded. They hope to soothe her fears about future probity, so that Germany becomes more flexible right away. If all goes well, the euro will be stronger and the ECB more active.

  • Euro zone mustn't rush towards two-speed union

    10 November 2011

    Paris and Berlin want the monetary union to integrate further, and even talk about a “core” euro zone. A two-speed EU is already emerging. But forcing the pace will needlessly antagonise non-euro members. And reforms in the pipeline should first be given a chance to work.

  • Euro zone not yet ready for Greek game of chicken

    03 November 2011

    Merkel and Sarkozy have threatened to cut Greece loose if it doesn’t back the latest bailout plan. But Europe isn’t prepared to handle the backlash. With barely a month to get its act together and a history of dysfunctional decision-making, there’s a big risk of a mega crash.

  • Euro zone should prepare post-Berlusconi bazooka

    08 November 2011

    Germany and the ECB have been right to keep Italy on tenterhooks so long as it had a delinquent government. But even a credible new government will probably need help to get its borrowing costs under control. That means unleashing the central bank’s firepower in one form or other.

  • Euro zone should prepare to let Greece go

    01 November 2011

    The EU has tried to help Greece deal with insolvency, but a country cannot be saved from itself. The right response to a possible referendum on austerity is to draw up plans for a Greek exit from monetary union. With the right firewalls, that might even make the euro better off.

  • Euro zone shouldn't revel in technocratic fantasy

    09 November 2011

    Italy and Greece may soon be ruled by technocrats with expertise but no political clout. That’s the wrong mix. In crisis, tough reforms must be backed by the legitimacy of a national unity government. Technocracy may look tempting, but you can’t take politics out of government.

  • Europe slowdown threatens a still-weak world

    04 November 2011

    However the euro zone’s systemic crisis plays out, the mix of austerity and uncertainty is already pushing Europe into recession. With the U.S. recovery still tentative and emerging markets looking a bit less robust, the threat of global slowdown looms.

  • European bond buyers: often wrong, never in doubt

    14 November 2011

    Bond market investors are a fickle lot. They were too complacent for years and now they may be too demanding – though their reformist zeal is welcomed by most. As a result, politicians and the ECB, which might have anticipated the risks, have more complex problems to deal with.

  • Europe's ELAstic money: a guide for the perplexed

    16 December 2011

    Banks in Ireland, Greece and elsewhere are receiving life support from their local central banks in addition to loans from the ECB. This emergency liquidity assistance is cloaked in secrecy, but poses risks for the euro zone. Breakingviews explains what is going on.

  • Europe's great bank balance sheet fiddle

    14 November 2011

    EU lenders can meet capital targets by raising equity, selling assets or shrinking loan books. But they may also change their risk-weighted asset calculations. The process looks open to abuse. Far from restoring confidence in the sector, it may have the opposite effect.

  • Europe's Iranian oil ban is affordable but risky

    30 November 2011

    Attacks on the UK’s Tehran embassy have added momentum to calls for an embargo. As the economic slowdown hits demand, cutting off Iranian supply won’t be too hard. But a ban could be in place for years. And it’s not clear Saudi Arabia would be willing to fill the gap in the long term.

  • Europe's mega-buyouts too big to exit

    02 November 2011

    Denmark’s ISS found three exits blocked: it couldn’t sell to new private-equity owners, nor stock-market investors, nor a listed rival. Europe’s mega-buyouts may be in a bind. Waiting for the IPO market to reopen, and deleveraging in the meantime, seems to be the only course.

  • Europe's sovereign SPIVs will need slick salesmen

    07 November 2011

    The euro zone hopes special purpose investment vehicles can help leverage up its EFSF bailout fund. But investors are already turning their noses up at EFSF debt. The euro zone will need to persuade buyers that SPIV bonds are super low-risk government debt, not financial alchemy.

  • EU's rating agency overhaul is more bad than good

    15 November 2011

    The European Commission rightly wants to make investors less dependent on credit ratings. But its plan to boost competition by forcing issuers to switch agencies every three years looks confused. And making credit raters liable for mistakes is hardly going to entice new entrants.

  • Exclusive: Ditching CEO won't save US utility deal

    18 November 2011

    Northeast Utilities parted ways with the head of its biggest division, CL&P, after the utility’s bungled storm response. Investors think that makes the pending $4.7 bln takeover of NSTAR more likely. Not so fast: Connecticut plans to reopen the merger review by hook or by crook.

  • Fed may now be too pessimistic on U.S. jobs

    04 November 2011

    The U.S. economy added only 80,000 jobs last month. But the private sector did better, and earlier readings were revised up. With labor costs still lower than in 2008, unemployment could decline faster than the central bank thinks. That’s good for the unemployed - and for Obama.

  • Fed might actually need maligned savers

    07 November 2011

    Ben Bernanke said last week that low interest rates, which penalize savers, served the greater good of economic growth. But high savings rates correlate with growth over both the long and short term. Bernanke’s discouragement of prudence could yet stymie his objective.

  • Fed's stress-test revamp brings good and bad news

    23 November 2011

    Submitting top U.S. banks to awful scenarios will force them to preserve precious capital, possibly delaying dividends. However, the tests will take time. And fear of scrutiny may cause U.S. lenders to speed their withdrawal from the euro zone, worsening the continent’s woes.

  • Fellow Greeks: don't be cast as lazy donkeys

    10 November 2011

    Apologise to Europe for past failings, welcome foreign experts to help build a functioning state and embrace reform whole-heartedly. Or get kicked out of the euro. Hugo Dixon imagines what Lucas Papademos, the new prime minister of Greece, should tell his compatriots.

  • Finmeccanica is threat and opportunity for Italy

    22 November 2011

    A long-running corruption investigation into the defence firm has flared up, engulfing executives and politicians. A scandal could be a spur for needed business reform. But for now, the fragile consensus government may not be helped by a corporate crisis with political fallout.

  • Fiscal fear keeps UK clinging to plan triple-A

    29 November 2011

    George Osborne warns of a growth stall that will worsen deficit and debt. But he is doing little for growth. His fear: that straying from austerity plan A would deprive the government of its AAA rating. The result: a long wait for recovery that will test the UK.

  • Fiscal union not the answer to euro problems

    02 November 2011

    Conventional wisdom has it that there are only two ways forward for the euro zone: fiscal union or breakup. But there’s a third, preferable option based on market discipline and tough love. In a crab-like manner, Europe may even be heading there.

  • For France, fear is a powerful fiscal force

    07 November 2011

    The French government has opted for more fiscal tightening to meet deficit targets in spite of the slowing economy. It’s heavy on taxes and light on spending, but there wasn’t much of a short-term choice. A credit downgrade would signal the end of Sarkozy’s meagre re-election hopes.

  • Forget PIGS, Europe's problem is broken EEGs

    21 November 2011

    Now that the crisis has moved beyond Portugal, Ireland, Greece and Spain, the euro zone needs a new acronym to describe its troubled countries. With all but one of the single currency’s members feeling the strain, it’s time to start worrying about EEGs: Everyone Except Germany.

  • Fortis India's $665 mln u-turn hard to justify

    08 November 2011

    The family-controlled Indian group is buying an unlisted, Singapore-based healthcare operator from its own founders. Yet a year ago Fortis claimed its focus was purely domestic. Minority shareholders would probably have got a better deal if the cash had been spent in India.

  • Fracking tie-up makes sense for shale-rich China

    16 December 2011

    Buying a piece of Frac Tech, a U.S. gas services company, for a mooted $2.2 billion would be a savvy move by China’s national energy majors. Frac Tech’s drilling technology should be easy to copy, and could help China unlock 140 years of gas supplies. The strategic benefits justify a premium price tag.

  • France fights a scary case of Italian flu

    11 November 2011

    The French bond market is starting to flash warning signals. The trauma of the Italian rout is partly to blame, but France’s own creditworthiness isn’t pristine either. If investors start to think of it as risky, the euro zone crisis will enter a whole new, dangerous phase.

  • France isn't ready for recession

    29 November 2011

    The government’s budget is based on rosy forecasts and neither of the two leading presidential candidates is willing to speak of more austerity. But that is exactly what might be required if high government bond yields tip the euro zone into a full-blown recession in 2012.

  • France plays risky game with Dexia

    23 November 2011

    The French government is refusing to renegotiate the 90 bln euro deal to guarantee the stricken Franco-Belgian bank’s debts. With its triple-A rating under threat, this is understandable. But the hardball approach risks putting further pressure on Belgium’s sovereign yields.

  • France, Germany could agree on ECB's euro role

    22 November 2011

    Berlin stands right behind the ECB’s reluctance to engage in quantitative easing. Better to let governments take care of reform and rescue. Paris has joined the chorus asking the bank to reconsider, but France isn’t on a collision course with Germany. It all comes down to timing.

  • French election could help propel reform

    16 November 2011

    The presidential contest could waste precious time – and scare investors – by unleashing rival populist proposals. But if Sarkozy and Hollande agreed that more growth is needed, the debate on the how best to reform the economy would be productive for the nation and the euro.

  • FTSE should favour 50 percent free floats

    09 November 2011

    Mooted reforms of London’s FTSE indices are insufficiently bold. The UK financial centre can afford to be welcoming of all sorts of companies. But index construction should not push funds into companies where outside investors hold less than the majority of shares.

  • Genel Energy: the potential returns

    30 November 2011

    Who makes what from Vallares/Genel?

  • Germany needn't fear common euro zone bonds

    28 November 2011

    Investors have begun to worry that the country will have to backstop other countries’ debts. Common bonds would end Germany’s days of ultra-cheap borrowing, but if it was part of a genuine fiscal union funding costs need not go sky-high. A botched job could be costly, though.

  • Gingrich candidacy evokes elements of Nixon’s run

    28 November 2011

    The former House speaker brings wits and experience along with his spotty ethical and political track record - like fellow Republican Richard Nixon in 1968. Tricky Dick later went against the party grain opening ties with China. Gingrich could do the same on taxes and healthcare.

  • Gloats about India's Icarus miss the point

    16 November 2011

    For many, Vijay Mallya embodies the unsavory flamboyance of India’s newly rich. Some see the problems at the Kingfisher airline he founded as comeuppance. But though grave dangers stalk the entrepreneur, the turbulence in Mallya’s flight path is not all of his own making.

  • Gloomy outlook doesn’t thwart Netflix optimism

    22 November 2011

    The company is selling shares for a third of the price at which it recently bought them. Claims that it has enough capital despite shrinking cashflow, an expected loss next year and $3 bln of content costs due by 2014 add to the misguided cheer. Netflix prospects aren’t so rosy.

  • Goldman and JPMorgan get one job split right

    30 September 2013

    Neither bank will cleave the chairman and CEO roles, but they’ve at least figured out that allowing the general counsel to also run regulatory compliance invites trouble. Interpreting the rules and ensuring they’re followed too often conflict. Other companies should follow suit.

  • Governments are now world's financial engineers

    30 November 2011

    The crisis exposed the trouble with complex leverage games in the private sector. But Western authorities, undoubtedly abetted by bankers, have embraced high finance for everything from housing to Europe’s rescue fund. Such finagling, however, is harder in tough markets.

  • Greece's zombie banks need rapid recaps

    07 November 2011

    The political crisis in Athens has triggered further deposit erosion and a terrible liquidity squeeze at the country’s lenders. With the ECB unwilling to provide more cash, the Greek central bank has thrown them a new emergency lifeline. But extra capital is also needed – fast.

  • Greek politics rocks Europe's leaky lifeboat

    02 November 2011

    The European Financial Stability Facility has scrapped a 3 bln euro bond for Ireland’s bailout. Though the delay is prudent, uncertainty caused by Greece’s referendum isn’t the only problem. Investors don’t know what the EFSF will do with its cash, or how much debt it will issue.

  • Greek standoff has explosive potential

    15 November 2011

    The new coalition’s second party says it would be humiliating to sign a declaration of support for the latest bailout as demanded by the European Commission. If neither side backs down, Athens will be heading for a disorderly default the rest of Europe is ill-prepared to contain.

  • Green Mountain shows how momentum works both ways

    10 November 2011

    The coffee company’s stock is the latest to crash down from a nose-bleed trading multiple, following Netflix and OpenTable. Fast growth can help paper over valuation or accounting worries, but in time they often catch up. Chipotle and Salesforce.com investors should take note.

  • Groupon makes IPO of scarce shares look cheap

    04 November 2011

    The Internet coupon firm’s stock popped as much as 50 pct. Short-term excitement was assured by signing up most of Wall Street to peddle 6 pct of its stock. Longer term, keeping a valuation approaching $20 bln will require more tangible things like profit.

  • Gulf airlines can afford a little arrogance

    16 November 2011

    Qatar Airways’ CEO gave Airbus a lecture on strategy before placing a $6 bln order, just after rival Emirates did an $18 bln deal with Boeing. It may sound like hubris. But it’s not hard to see how investment could become market share in a recovering world.

  • How to fix Spain's real estate problem

    18 November 2011

    The country’s main opposition party is mulling the creation of a state-backed bad bank to deal with dud real estate loans. This approach has worked elsewhere. But the government can force entities to own up to losses without saddling taxpayers with the dross.

  • HP finally addresses root of problems - its board

    18 November 2011

    The flailing tech giant has paid too much for targets, skimped on R&D, and flip-flopped on leadership and strategy. Its spectacularly dysfunctional board should shoulder much of the blame and needs an overhaul. Appointing heavyweight activist Ralph Whitworth is a belated start.

  • HSBC's good intentions collide with market reality

    09 November 2011

    The lender’s pre-tax profits halved in Q3 from the prior quarter, as loan impairments rose and the European business dipped into the red. CEO Stuart Gulliver’s turnaround should still make HSBC a leaner, better bank. But his targeted 15 percent return on equity now looks optimistic.

  • IBM bet doesn't mean Buffett's tech spots changed

    14 November 2011

    The Oracle famously avoids tech stocks but bought a $10.7 bln stake in Big Blue. Once at the cutting edge of supercomputers, IBM just pulled out of a next-generation project. It’s now a predictable, well-branded consulting firm. IBM’s investment profile evolved, not Buffett’s.

  • IMF could unlock ECB's war chest

    21 November 2011

    The European Central Bank is reluctant to fund euro zone governments for fear of breaking its own rules and EU treaties. But the law could allow it to channel cash via the International Monetary Fund. That may sound dodgy, but could be a safer way for the ECB to fire its bazooka.

  • IMF cracks the door for Europe’s ‘bystanders’

    22 November 2011

    The fund’s new loan plan would allow some countries to borrow chunky sums in the heat of the crisis without the typical policy demands. The $400 bln or so will help but can’t alone save Europe. Making cash easier to access also risks allowing “innocent” nations to delay fixes.

  • IMF gets euro negotiator with more clout

    17 November 2011

    The sudden exit of the fund’s top European negotiator is embarrassing. Still the outgoing Borges blundered by hinting the IMF might scoop up bonds of troubled euro nations, before recanting. As the euro crisis worsens, the IMF needs a veteran untainted by such screw ups.

  • India edges open the door to more foreign capital

    18 November 2011

    There are signs that India is getting serious about allowing more international funds to flow into its economy. External pressure for reform is slowly starting to tell on New Delhi’s policy makers. But shortage of capital is the key driver.

  • India is still rising, but it is not shining

    15 November 2011

    The World Economic Forum - best known for its Davos shindig – is holding a summit in Mumbai for the first time. The rhetoric from participants suggests the “India Shining” story is still burning brightly. But the refrain is failing to resonate. The numbers tell a different story.

  • India ratchets up currency pressure on China

    02 November 2011

    Tired of a ballooning trade deficit, Indian trade negotiators are threatening duties on Chinese goods, starting with power equipment. Tit-for-tat tariffs are fruitless, but as a fellow emerging giant, Indian calls for China to revalue its currency would add weight to the debate.

  • Indian privatisations need time, and hard work

    10 November 2011

    Practical problems often come with moves that are sound in principle. Indian authorities are mulling the part privatisation of four general insurers. As with many other state-owned assets, there’s a tonne of preparatory work to be done before the firms can contemplate a float.

  • India's inflation puzzle may have unusual answer

    16 December 2011

    It’s not intuitive, but cutting rates may be the best bet in fighting rising prices. The central bank can’t really raise rates because the economy is weak, and flat rates will achieve little. Dropping them, meanwhile, could perk up the market and halt the pressure on the rupee.

  • India's quest for foreign coal looks here to stay

    03 November 2011

    The country has the world’s fourth largest coal reserves, but environmental restrictions result in a struggle to keep up with demand. Indian firms have already spent $10 bln this year on mines overseas. Though imports are pricier, the domestic alternatives don’t look much better.

  • Insider trading another reason to Occupy Congress

    14 November 2011

    Forget Wall Street for a bit. Politicians, especially those keen on light regulation, did much to create the financial crisis. Fresh news of U.S. lawmakers trading on inside information is further reason for mistrust. Public ire could usefully target this big problem.

  • Insider trading isn't always about the money

    21 November 2011

    It may drive the modestly paid. But corporate honchos would be nuts to take the risk for that. New research, though, shows the better compensated the U.S. executive, the more likely a dodgy trade. Maybe they don’t feel rich enough. But hubris or peer envy seem a better bet.

  • Investment banks braced for a painful correction

    02 November 2011

    Earnings fell sharply in the third quarter. Several banks are already axing jobs. Others will sit tight, worrying about missing a rebound. But the industry has too much capacity for an era of higher capital requirements and lower revenue. Reality is bound to sink in this winter.

  • Investors may come to rue Egyptian army rule

    21 November 2011

    This weekend’s deadly clashes could trigger a downwards economic spiral if elections are delayed. The military overplayed its hand. But a financial disaster may not follow – if the generals are forced to lay out a clearer, quicker roadmap to civilian rule.

  • Investors start to notice Germany is in euro zone

    23 November 2011

    Neither an undersubscribed Bund auction nor yields crossing the 2 percent threshold is a sign of total panic. Still, Germany is looking less like a safe haven. That makes sense - it would struggle if the euro came unstuck. All the more reason for EU leaders to stop squabbling.

  • Investors too skeptical on Gilead’s $11 bln bet

    21 November 2011

    Helped by acquisitions, the biotech made it big with drugs for HIV. Now, by buying Pharmasset, it’s trying the same trick with hepatitis C. Sure, Gilead is paying a stonking 89 pct premium. But wiping some $3 bln off the buyer’s market value looks like an over-reaction.

  • Iran conflict would worsen bad economic situation

    15 November 2011

    After sanctions failed to end Tehran’s nuclear ambitions, a U.S. or Israeli-led attack on the Islamic Republic would come at a steep cost for the global economy. Sky high oil prices would delay any recovery, and threaten financial chaos across an unstable region.

  • Italian debt spiral

    16 November 2011

    What’s needed to stabilise Rome’s debt/GDP ratio?

  • Italians unlikely to rally around bond-buying call

    08 November 2011

    An Italian businessman has bought an ad urging his countrymen to buy government bonds. It’s nice to see Italians willing to fix their problems. But bond prices are falling, and citizens already own 16 pct of Italy’s debt. They may find that lending to their country is a dud call.

  • Italy faces nerve-racking game of chicken

    09 November 2011

    Bond yields have shot through 7 pct. The PM’s resignation doesn’t instantly lead to a national unity government able to grasp the country’s problems. Bickering politicians will have to be brought into line by markets – and continued pressure from the rest of the euro zone.

  • Italy shakes off the Berlusconi stigma

    24 November 2011

    Angela Merkel and Nicolas Sarkozy will treat Mario Monti, conspicuously, as an equal at their three-way meeting today. The days when Italy was shunned because of its shady leadership are past. The rehabilitation will help Monti at home, as he pushes through difficult reforms.

  • Italy, Spain may be best off with fast trip to IMF

    28 November 2011

    If market confidence can’t be restored rapidly, Monti and Rajoy – the countries’ new PMs – should consider asking for help while they can still blame their predecessors. The snag is the IMF doesn’t have enough cash. So its resources would need beefing up, probably by the ECB.

  • James Murdoch no longer alone in BSkyB hot water

    29 November 2011

    The shareholder revolt against the satellite broadcaster’s chairman was no worse than he probably feared. But investor discontent is spreading. Other BSkyB directors are now also coming under fire for failing to represent the dissatisfaction of independent investors.

  • James Murdoch weaker after UK phone-hack grilling

    10 November 2011

    Lawmakers didn’t land a decisive punch on the News Corp scion, in spite of likening him to a Mafia boss. But they exposed incompetence. And with questions unanswered, the inquiry may now drag on longer. That makes it harder for Murdoch to be effective as BSkyB chairman.

  • Japan Inc's earnings problems are home grown

    07 November 2011

    Honda, Panasonic and Sony all reported grim quarterly earnings. Weak global demand, a strong yen and natural disasters are partly to blame. But they underscore deeper problems caused by domestic policies and Japanese exporters’ long-standing neglect of profit margins.

  • Jefferies' differences with MF Global are notable

    03 November 2011

    Both Wall Street brokers took advantage of larger rivals’ regulatory pain - and bragged about it. But Jefferies has stressed client, rather than prop, trading. Its finances are clearer too. These are important distinctions getting lost in the panic after MF’s failure.

  • Jefferson County isn’t a recession victim

    10 November 2011

    The Alabama county’s bankruptcy stands to be the largest in U.S. history, but investors shouldn’t see it as a sign of more to come as municipalities suffer in the wake of the recent downturn. Corruption and woeful mismanagement sank the county, not recession and falling revenue.

  • Joining "too big to fail" club is a bonus for BOC

    07 November 2011

    Bank of China has been added to the list of globally systemic banks at the request of domestic regulators. Though it already has government backing, SIFI status could help BOC win more business abroad. And it doesn’t need extra capital. More Chinese lenders may want to sign up.

  • Jon Corzine becomes poster child of the times

    02 November 2011

    The boss of bankrupt MF Global embodies all that Occupy Wall Street opposes - the elite 1 pct, failed high finance and compromised politics. Meanwhile, Corzine’s liberal agenda helped catalyze the Tea Party. His downfall could yet turn him into the fall guy of the crisis.

  • KKR’s $7.2 bln Samson deal looks more BO than LBO

    23 November 2011

    The private equity firm and its partners are putting more than 50 pct equity down to buy the Oklahoma energy firm. That surely reflects more than Henry Kravis’ desire to bet on a hometown play. Banks are understandably nervous about lending against the promise of wildcat riches.

  • Kodak's long-running woes are coming to a head

    03 November 2011

    The once high-flying photo company’s sales continue to slide. Kodak now says it needs to raise cash or sell more intellectual property inside a year if it’s to keep going. But offloading the firm’s crown jewels hasn’t worked in the past. And it may be harder than it appears.

  • Korea may change monetary tack to placate young

    02 November 2011

    Exports are slowing. That used to be a signal for the central bank to ease interest rates to help the big exporters cope. But they are no longer creating jobs young Koreans want. Political pressure from the young may push the bank to be tighter – even if that slows growth.

  • Less, not more, better for New England utilities

    03 November 2011

    Too many customers of Northeast Utilities lost power for too long after recent storms. As with banks, risk management and regulation failures are to blame. Towns that run their own utilities offer an alternative; meanwhile, Northeast’s planned $4.7 bln deal needs to be torpedoed.

  • Leverage too risky for U.S. public pension funds

    23 November 2011

    Many still reckon on making an 8 pct annual return. That’s now unrealistic for a fairly safe portfolio, as a new Breakingviews calculator shows. Fund managers need to bring expectations down to earth. But instead, some like the dangerous idea of borrowing to juice returns.

  • LG rights issue won't help it win smartphone wars

    03 November 2011

    Investors dumped shares in the Korean electronics maker even before it announced a surprise $1 billion cash call. Loss-making LG has fallen behind Samsung and Apple in the race to make trendy smartphones. It’s not clear how throwing good money after bad will help.

  • Life continues sweetly for the .001 percent

    10 November 2011

    Hours after another market meltdown, plutocrats spent over $300 mln at Sotheby’s in what connoisseurs called an epic auction of contemporary art. Celebrity chef Mario Batali also learned that even besieged bankers wield clout. This time doesn’t seem all that different.

  • Lloyds needs CEO shortlist ASAP

    18 November 2011

    The UK bank’s board is meeting to discuss its leadership vacuum. Investors need to know if CEO Antonio Horta-Osorio will return after illness. If not, there aren’t many replacements with experience running public companies. Ex-HSBC boss Mike Geoghegan could be one place to start.

  • Lloyds' plan A should be to retain current boss

    02 November 2011

    CEO António Horta-Osório is taking a six-week break due to illness. That’s bad news for the state-backed UK bank. The board needs a plan B if he doesn’t return. But Horta-Osório has done enough in his eight months in the job to justify Lloyds enduring a period of uncertainty.

  • M&A gives no reprieve for China's global lawyers

    25 November 2011

    Mallesons of Australia plans to merge with King & Wood, a Chinese rival. It sounds harmonious, but won’t do much to change the fact that foreign counsels get short shrift in the People’s Republic. When the WTO let China in, it largely forgot lawyers. Their prospects look bleak.

  • Markets start to reflect euro zone's darkest fears

    16 November 2011

    Government bond yields across the single currency are showing signs of severe strain. Only Germany is viewed as a reliable safe haven. An Italian default and euro zone breakup may still be unlikely. But investors are now clearly factoring such a scenario into their calculations.

  • Mark-to-market rethinks imply bank pain goes deep

    10 November 2011

    Fear of losses isn’t what’s prompting Goldman and Morgan Stanley to reconsider hallmarks of their accounting. Rather, it’s a need to juice profit. Though it may not amount to much, every dollar counts nowadays. As long as the shift stays at the margins, it’s not terrible policy.

  • Mars flop hurts Russia's pocket as well as pride

    11 November 2011

    The failure of the Phobos-Grunt probe is a blow to Russia’s commercial ambitions as well as its prestige. Russia is investing heavily in its space industry with a view to capturing a bigger share of a lucrative global market. It may be better off scaling back its ambitions.

  • Mayhew's JPMorgan Caz legacy hard to sustain

    29 November 2011

    The veteran banker is retiring as chairman after four decades with the UK broker. The deal he engineered with JPMorgan is a rare success, with the U.S. bank’s balance sheet complementing Caz’s relationships. Maintaining the trust he engendered while flogging services will be tough.

  • MF Global could finally help SarbOx prove itself

    15 November 2011

    The Enron-inspired Sarbanes-Oxley Act helped clean up U.S. companies’ books, albeit at a cost. But approaching 10 years on, enforcers have filed few cases, despite glaring failures in the crisis. Jon Corzine’s fallen firm may at last offer a chance to test the reform’s teeth.

  • MF Global exposes regulators as slow learners

    01 November 2011

    Lehman’s collapse was a stark warning of the need to handle cross-border bankruptcies better. Yet three years on, Jon Corzine’s failed brokerage shows little has changed. It’s even accused of mishandling customer accounts, a basic error. Watchdogs need yet more remedial lessons.

  • Music gods again divert EMI's destiny

    11 November 2011

    With both EMI and Warner under new owners, it seemed the stars might finally uncross for their long-awaited union. But Sony and Universal brought their own karma and cash to the EMI auction, and Warner is again alone at the altar. Further twists of fate are in regulators’ hands.

  • Myanmar forms centre of economic love triangle

    30 November 2011

    A visit from Hillary Clinton marks the end of Myanmar’s pariah status, but there is much work to be done before the country can offer investors sustainable returns. With the United States, China and India all jockeying for position, capital flows may come too quickly.

  • Nat Rothschild's Bumi broadside reveals weakness

    10 November 2011

    The investor’s coal bet looks messier by the day. He’s now trying to embarrass his Indonesian partners into fixing governance shortcomings that were apparent from the start. Outside investors could ultimately benefit. But by going public Rothschild has shown his lack of power.

  • New Delhi's fiscal profligacy starts to bite

    01 November 2011

    India is set to bust its fiscal deficit/GDP target. Half way through the year, it has used two-thirds of the sums set aside. With inflation close to 10 percent and growth sluggish, there is an urgent need for the government to get a grip of public spending.

  • New U.S. poverty tally offers budget cuts warning

    08 November 2011

    Revamped poverty data show an extra 3 mln Americans barely scraping by. Yet the figures also suggest that federal programs targeted by cost-cutters do actually help. Trimming help for the poorest risks worsening poverty and stoking the disquiet evident in Wall Street protests.

  • No magic number can solve Italy's bailout riddle

    08 November 2011

    Some investors think the country’s debt load will become unmanageable when bond yields hit 7 percent. Others worry about margin calls when spreads rise 450 basis points above risk-free debt. But both numbers can be confusing. Besides, the Italian bailout has already begun.

  • Nokia Siemens Networks makes up for lost time

    24 November 2011

    After fruitless talks with private equity, the telecom-gear joint venture has launched a huge, home-grown plan to cut jobs and costs. But the sector remains fiercely competitive. The parents will be lucky if, even several years from now, this problem child is ready to leave home.

  • Noose set to tighten around Syrian economy

    15 November 2011

    Not only does the Arab League’s move to suspend Damascus further isolate the country diplomatically. It may pave the way for crippling sanctions, which in some scenarios could shrink GDP by 10 percent.

  • Nord Stream launch can't hide Gazprom's woes

    08 November 2011

    The opening of the 1,200 km Baltic pipeline is a geopolitical victory for Russia. But it says more about its past ways of doing business than about the future of its energy relations with Europe. Nord Stream can’t hide Gazprom’s failure to adapt to new market realities.

  • Northern Rock sale barely dents UK bailout tab

    17 November 2011

    Selling the good part of the collapsed UK lender to Virgin Money raises up to 1 billion pounds for the government. But the proceeds are small beer compared to the 21 billion pounds the state has lent to Rock’s bad bank. Fully reimbursing taxpayers will take well over a decade.

  • Not saving Italy works best for ECB

    15 November 2011

    The central bank could easily keep Italy afloat. Printing money on the Bank of England’s scale would fund the government for all of 2012. But playing tough suits the ECB. Berlusconi is out and the chances for serious reform are better. Still, the pressure to print won’t go away.

  • Noyer's ratings-rage is right for wrong reason

    15 December 2011

    The Bank of France chief is enraged by the prospective downgrade of his sovereign. The UK should get snipped first, he says. The fury is excessive, but not crazy. While Britain’s creditors may face a lower risk of nominal default, they’re in more danger of default-by-inflation.

  • Obama’s healthcare gets help on way to top court

    14 November 2011

    U.S. judges have ruled on the divisive law largely along party lines. But a right-wing icon helped break that pattern last week with a powerful opinion in support. The Supreme Court has a mind of its own but the precedent will be hard to ignore, even for conservative justices.

  • Ohio vote shows deficit realities haven't hit home

    09 November 2011

    The state’s voters overturned Republican attempts to limit bargaining rights of public sector organized labor. Even when they accept the need for cuts, Americans - like Greeks - are struggling to embrace structural change. The fight over national entitlements is looking grimmer.

  • Old ghosts still haunt new GM

    09 November 2011

    The Chevrolet centennial is reason to celebrate tradition. And GM’s Q3 profit reflects well on the recent past - its quickie bankruptcy. But the automaker is still cutting costs, has big unfunded liabilities and a gloomy end-of-year outlook. History may still be holding GM back.

  • Olympus casts shadow over corporate Japan

    08 November 2011

    The Japanese group admitted covering up investment losses for 20 years. That could spell fines and even jail sentences. But Olympus isn’t the only company that lacked necessary checks and balances. Its listed peers may now need to prove that shady accounting wasn’t catching.

  • Olympus investors price in a worst-case scenario

    08 November 2011

    Shares in the Japanese company have fallen 70 percent as gruesome news of misdeeds in deals has emerged. But assuming the core business is viable – and Olympus escapes giant penalties – significant value may lie beneath the mess. Only the bold will be tempted, though.

  • Olympus mystery may hinge on M&A accounting

    09 November 2011

    The company hasn’t said how it used takeovers to hide decades of investment losses. Japanese goodwill accounting might provide a way, by allowing companies to pay big takeover premiums and advisory fees and write them down over time. It’s time Japan closed this loophole.

  • P&G deal partner probe proves shorts aren't nuts

    03 November 2011

    Skeptical investors piled into Diamond Foods, agreed buyer of the consumer giant’s Pringles brand, doggedly questioning the firm’s accounting. Further scrutiny uncovered more oddities and led Diamond to investigate. The sound response underscores the value of salty market views.

  • P&G may need to pop a plan B for Pringles

    29 November 2011

    Diamond Foods, agreed buyer of the consumer giant’s chips brand, keeps losing sparkle. Buried news about its internal audit investigation, rising payments to walnut-growing directors and other inconsistencies don’t seem to augur well for the probe - or P&G’s deal.

  • Papandreou's climbdown brings high-priced relief

    03 November 2011

    The Greek prime minister’s referendum call amplified an already severe crisis. But the gambit may have pushed the opposition to endorse the latest EU austerity demands. If so, it’s a big relief. It is less consoling to think how much brinkmanship was needed to gain so little.

  • PCCW spinoff can't unwind tycoon discount

    23 November 2011

    Richard Li’s conglomerate snagged a generous $3.8 bln price tag for its Hong Kong telecom business, thanks to a promise of fat dividends. But the spinoff exposes an inconvenient truth: the mogul’s own holding company is valued at almost 40 percent less than the sum of its parts.

  • Pension funds and the temptation of leverage

    22 November 2011

    How could U.S. public pension funds juice returns?

  • Pricey oil doesn't insulate Russia from euro woes

    25 November 2011

    High oil prices have done little to boost Russia’s economic growth, which is now heading for a slowdown. More euro zone turmoil will hit Russia hard, even if prices stay resilient – which is far from certain.

  • Putin's popularity slide bodes ill for reform

    21 November 2011

    The Russian premier’s decision to run again for president was partly attributed to his strong rapport with the public. But Putin’s ratings are sliding, along with support for his government and party, and this trend is likely to continue. That makes unpopular reforms unlikely.

  • Qantas vindicated in workforce battle

    04 November 2011

    The Australian airline’s decision to ground its fleet a week ago looked like commercial madness, and followed tactical errors by the CEO. But a resolution with recalcitrant unions is in sight. The gamble will pay off as long as Qantas wins back passenger confidence.

  • RBS investment bank faces tortured decline

    04 November 2011

    The state-controlled UK lender says weak growth and reforms will make it focus on retail and commercial banking. Future job cuts will fall in its wholesale division. With no bonuses accrued in the third quarter, the future for RBS’s investment bankers looks bleak.

  • Repsol has to fight Argentina's oily expropriation

    16 April 2012

    Buenos Aires’ leftist government is taking control of YPF, the oil and gas company 57 percent owned by Repsol of Spain. Worse, it seems that the state may be nationalizing only Repsol’s shares. Argentina’s naked power play may be overwhelming, but the Spanish should not just roll over.

  • Retail bonds can't plug euro zone bank funding gap

    17 November 2011

    With wholesale markets closed, euro zone lenders are hoping to sell more bonds to retail customers. But the overall stock of savings is flat at best, so the drive may just shift cash around the banking system. Then lenders will end up paying more for the same balances.

  • Retooled U.S. refi program won't do much for housing

    16 November 2011

    Revamping the rules for refinancing home loans is an old-fashioned, and limited, stimulus, not a cure for what ails America’s housing market. With $711 bln of negative equity and more than 10 million homes underwater, only higher prices or smaller loans will make a difference.

  • Rights issues need a straightforward story in Asia

    10 November 2011

    Five recent equity raisings worth a total $4.5 bln triggered plunging share prices. Yet rights issues don’t themselves hurt investors. For issuers with a good story, like Thailand’s Big C, the damage will be temporary. Others, like Korea’s LG Electronics, show how not to do it.

  • Russian WTO benefits could prove elusive

    03 November 2011

    A deal with Georgia means Russia should soon be invited to join the global trade body, ending an 18-year odyssey. This will be an important reform symbol. But without liberalisation measures at home, the much-touted benefits of membership may be elusive.

  • Santander’s stingy bond swap a sign of the times

    23 November 2011

    The Spanish lender’s plan to exchange junior debt for less attractive senior paper may be unpalatable for bondholders. But holding out isn’t much more attractive. With EU lenders under pressure to boost capital and refinancing rates high, investors had better get used to it.

  • Saudi ripe for Chinese-style stock market opening

    02 November 2011

    Improved access to the kingdom’s bourse is an emerging market investor’s dream. The move, touted for early next year, isn’t without risks. But letting in qualified outsiders would line domestic pockets and aid efforts to expand the private sector.

  • Sino-Forest pays high price for valuable lessons

    15 November 2011

    An independent committee cleared the Chinese group of major accounting worries. But $3 billion of lost market value won’t be easily recouped. Sino-Forest could have helped itself with a simpler structure, more disclosure and by focusing on quality as well as speed of growth.

  • Sinopec's M&A strategy gets a little smarter

    11 November 2011

    The Chinese oil major’s $5.2 billion investment in Brazilian oil resembles a deal it did last year – but at 20 pct less per barrel. Non-financial considerations explain some of the difference. But state-owned Sinopec appears to be learning more tricks of the M&A trade.

  • Sky's the limit on euro zone disaster scenarios

    28 November 2011

    The Lehman failure set a stupidly grim precedent. Fear cut trade and froze finance, amplifying what should have been a manageable adjustment into a big recession. It could be worse if the euro went pop, since governments are already short on credibility. But despair is premature.

  • SocGen dividend cut better than capital-raising

    08 November 2011

    The French lender is aiming to plug a third of its 3.3 billion euro capital deficit by scrapping its dividend. Investors may complain. But with SocGen shares down almost two-thirds since February, skipping a payout is better than the risk of dilution from an equity issue.

  • Spain SA braces for change in political guard

    25 November 2011

    Unlike the outgoing socialists, the conservative party was notorious for its interventionism when it was in power in the 1990s. Much has changed since then. But the new government will inevitably have a greater say – particularly with the banks.

  • Spain's next government: now for the hard part

    21 November 2011

    Mariano Rajoy’s People’s Party has won an absolute majority. The new prime minister has made all the right commitments, but markets are sceptical. He needs to show he’s serious even before he takes office in a month. He – and the markets – also need support from the ECB.

  • Spanish campaign can't keep ignoring euro crisis

    08 November 2011

    A televised debate this week between the two contenders for the Spanish prime minister’s job only made passing reference to the euro zone crisis, even as it engulfs Italy. Spain should realise it is beholden to forces outside its borders.

  • Spanish debt storm piles the pressure on Rajoy

    16 November 2011

    At current yields, Spain would need a primary surplus of 1.8 percent just to keep its debt/GDP stable in the long run, according to a Breakingviews calculator. Madrid is forecast to have a deficit of 3.5 percent in 2012. The next PM will need to re-establish confidence fast.

  • Spanish storm

    16 November 2011

    What primary surplus does Spain need to keep debt to GDP stable on a long-term basis?

  • Still time to undo EU bank test fiasco

    24 November 2011

    Europe’s latest stress test encourages lenders to shrink their balance sheets by giving them until June 2012 to meet the target. It would be far better for banks to be stuffed with capital now – and to sweeten the pill by also giving them access to longer-term funding.

  • Sub-$90 oil would quickly restore OPEC harmony

    29 November 2011

    Spats like the one at the oil cartel in June once often stemmed from the hugely different crude prices members needed to balance their books. Now, even Nigeria’s ultra-low $20 a barrel mark six years ago is up to $80. If prices fall anywhere near that level, OPEC will reunite.

  • Swiss private bank stress forcing consolidation

    24 November 2011

    The strong Swiss franc, tax deals and market turmoil are squeezing the industry. That’s prompted Dutch lender Rabobank to weigh bids for its 46 pct stake in Sarasin. Any buyer risks culture clash and customer loss. But the benefits of size may outweigh those of independence.

  • Tata keeps things in the family

    23 November 2011

    Cyrus Mistry’s appointment as Ratan Tata’s successor continues the habit of dynastic succession in Indian companies. That may not be such a bad thing. But Mistry can promote outside talent by stepping back from the chairmanships of Tata Steel and Tata Motors.

  • Team Rothschild can't lose in Kurdish oil

    30 November 2011

    Shares in Nat Rothschild’s cash shell wilted on their re-listing after merging with Kurdish oil group Genel. This risky asset may yet pay off handsomely for Genel’s outside investors, politics permitting. But slick reward schemes mean Nat and his co-founders win either way.

  • Technical measures won't curb pay extravaganza

    22 November 2011

    The UK High Pay Commission has a 12-point plan to limit the “gross inequality” of corporate compensation. It’s worthy stuff – more disclosure, stronger boards and so forth. But the trend to ever more money at the top will not change until voters and citizens get really angry.

  • Ted Forstmann: a financier the 99 pct could admire

    21 November 2011

    The buyout pioneer, dead at 71, was a hard-nosed “barbarian at the gate.” But he re-engineered companies, not just their finances, and disliked junk bonds. And while Forstmann made society pages, he also donated much of his fortune. His was the kind of greed that can be good.

  • Three ways to bring Italy back from brink

    10 November 2011

    An apparent U-turn by Silvio Berlusconi means there’s now a reasonable chance of a national unity government headed by Mario Monti. While that would be good, three more steps are needed to stabilise the country: a crack-down on “baby” pensions, a wealth tax and privatisation.

  • Timing is key for Super Mario's Italian rebirth

    17 November 2011

    Anyone hoping Mario Monti’s maiden speech would be a game-changer will be disappointed; there were no big numbers for taxes or privatisations. Still, Monti’s reforms go in the right direction, and he has popular support for the challenges ahead. He must use it quickly.

  • Tobin tax is confused in principle and practice

    03 November 2011

    Taxing financial transactions looks a neat way to raise revenue from an unpopular sector. However, reducing liquidity won’t make markets more efficient. It also won’t make banks any safer, or stop asset bubbles. There are better ways for politicians to get their pound of flesh.

  • Tough markets prompt Nomura soul-searching

    01 November 2011

    After a $589 million quarterly loss, the Japanese group is shrinking its investment bank. It’s not alone. But unlike peers, Nomura was sub-scale to begin with. Without a sustained market recovery, it is hard to see how Nomura’s global ambitions can survive.

  • U.S. deficit drama needs to play well overseas

    03 November 2011

    Foreign central banks, among America’s most reliable lenders, have been cutting their exposure to Uncle Sam’s debt since August. As Washington readies “Deficit Debacle: The Sequel” for primetime this month, legislators should keep foreign audiences in mind.

  • U.S. economy still blessed with loose policies

    15 November 2011

    Unlike Europe, the United States has avoided crushing austerity and tight monetary policy, while tapping housing agencies for added support. That has juiced growth, as Tuesday’s data indicate. Yet it also makes a potential hit to Uncle Sam much bigger if the tactics don’t work.

  • U.S. housing policy veers toward madness

    18 November 2011

    Congress has given bipartisan approval for putting the wobbly FHA back on the hook for mortgages as big as $729,750. It’s yet another sign that lack of leadership results in batty decisions. Those borrowing such large sums don’t need federal aid. And Uncle Sam needs a break.

  • U.S. lawmakers squandering gift from markets

    21 November 2011

    Global investors have given Congress lots of rope to rein in long-term deficits before they enter crisis mode. The committee charged with the task failed to make any progress. So far, markets are enabling such inaction. Washington, and the world, won’t always be so lucky.

  • U.S. money funds may not be players in next crisis

    09 November 2011

    Money market funds have a bit part in the euro zone crunch as short-term lenders to European banks. U.S. regulators, meanwhile, want to end the fiction that they are just rebadged savings accounts. The industry won’t like that, but the global financial system could be safer.

  • U.S. patent law mission creep needs to be reversed

    17 November 2011

    The system is supposed to reward inventors but not stifle innovation. Fuzzy concepts like the interpretation of data aren’t protected. Yet one firm says it owns a way to read medical tests. The U.S. Supreme Court has a chance to serve the law’s original intent by disagreeing.

  • U.S. plea deal flaws are warning for UK

    01 November 2011

    Britain’s law enforcers may let companies avoid criminal charges if they agree to mend their ways. This would empower prosecutors. But in the U.S., where deals get little court scrutiny, it has tempted them to overreach. The Brits might do well to keep judges closely involved.

  • U.S. price pause no excuse for more Fed activism

    16 November 2011

    Inflation ebbed 0.1 pct in October after an ominous run-up earlier this year. That will bolster Fed doves like Chicago’s Evans who argue the country’s central bank should fire another burst of unconventional easing. But that is risky and is unlikely to pack much of a punch.

  • U.S. shutdown is only preamble to bigger battle

    30 September 2013

    Budget impasses that force Uncle Sam to close shop aren’t that rare and seldom last long. The bigger problem is a likely rematch over the federal debt ceiling. Back in 2011, even a distant threat of technical default rattled markets. Today’s politics make the danger more real.

  • UBS reshuffle provides management certainty

    15 November 2011

    The Swiss lender has given interim CEO Sergio Ermotti the job permanently, and is putting Axel Weber in the chair a year ahead of schedule. Both men have a lot to learn – and to prove. But as UBS prepares to unveil its new strategy, it’s good to have the top team in place.

  • UBS's slimming strategy deserves two cheers

    17 November 2011

    The Swiss lender is halving its investment bank’s risk assets, closing units and putting its private and Swiss banking ops front and centre. It’s also cutting jobs and return targets. It’s all sensible stuff, but UBS has taken its time and must prove it can stick with the plan.

  • UK investors still on guard against hubris in M&A

    01 November 2011

    Britain’s worst shareholder revolt since Pru-AIA has nixed G4S’s $8 bln move into cleaning. The security group’s management couldn’t sell a strategic shift funded by a jumbo share issue. Failure sullies the record of CEO Nick Buckles. But he can probably keep his post.

  • UK's bank levy hike is wrong on three counts

    29 November 2011

    Upping Britain’s balance sheet tax may look like a clever way of extracting cash from an unpopular sector. But the fiddling undermines confidence. It also gives banks another reason to shrink. If they do, there’s a third problem: Ministers may have to raise the rate even further.

  • UK's housing plan won't deliver what's needed

    21 November 2011

    Building more homes could ease Britain’s housing shortage and create jobs. But the government’s 400 million pound scheme to help housebuilders is modest, while stimulating sales by subsidising some mortgages looks a mistake. The plan is unlikely to make much of an impact.

  • Uncle Sam has a $1 trln repatriation concern

    02 November 2011

    That’s a rough estimate of how much U.S. companies have overseas invested in Treasuries. Lawmakers want the cash brought home at lower tax rates to foster employment, growth and government revenue. But dumping that debt on the market would inevitably have consequences of its own.

  • UniCredit's capital hike is a wager on Europe

    14 November 2011

    Given market nerves, the Italian lender’s plan to raise half its market cap from shareholders looks bold. For investors who have hung on this long, pumping in 7.5 bln euros is a bet that Italy can avoid disaster. But UniCredit’s deleveraging plan shows the broader economic risks.

  • Unlikely Mussolini muse guides Wall Street protest

    07 November 2011

    Occupy Wall Street is really a campaign against economic inequality. Ironically, the work of fascist thinker Corrado Gini - he of the coefficient - may be most useful to their cause. Other statistics also show that the top 1 percent is pulling far away from the madding crowd.

  • Usual suspects finally drag down American Airlines

    29 November 2011

    Parent company AMR was the only big U.S. airline to avoid bankruptcy - until now. Rivals had already scrubbed out the worst of their handicaps. Now American gets its chance to cut its labor costs and debt load and fight again despite high fuel costs and ruinous competition.

  • Vacate Wall Street movement tests protest strength

    15 November 2011

    Zuccotti Park has been temporarily returned to its owners. Mayor Bloomberg spoke of sanitation, but the eviction reflects a political calculus, that the protest isn’t gathering steam. While that may be right, the resulting trail of tears up Broadway runs the risk of backfiring.

  • Valero's next rainy day may not be so far away

    01 November 2011

    The biggest independent U.S. oil refiner reported a quadrupling of profit and has been buying back stock. After lean years, investors deserve a return. But the cheap U.S. crude that has been helping margins won’t last forever. Valero could do more to brace for harder times ahead.

  • Wall Street might just miss Barney Frank

    28 November 2011

    On the face of it, the co-author of the Dodd-Frank reforms has been more a scourge than a supporter of the finance industry. But at least the congressman, who won’t stand again next year, has a grasp of the issues. Bankers could face more uncertainty and less understanding.

  • Warburg and Paulson catch falling knife in bakery

    08 November 2011

    Britain’s biggest food producer is now a struggling penny stock. Two of Premier Foods’ largest investors, Warburg Pincus and John Paulson, appear lousy bargain-hunters. Buying a listed stake probably also hindered Warburg in taking private equity’s typical hands-on approach.

  • Weibo set to get duller but more valuable

    16 December 2011

    China’s Twitter has proved a thorn in the side of the Party. Now comes the clampdown, including new plans to force microbloggers to use their real names. Being brought to heel will make Sina Weibo less controversial and less interesting. But it needn’t hurt its commercial value.

  • Wen paves way for yuan depreciation

    21 November 2011

    China’s premier said the currency should be more flexible “in either direction”. The idea of devaluation might sound strange, but the Chinese trade surplus is shrinking and inflation is cutting into the yuan’s real value. This could be a good time to let the market decide.

  • What's stopping the ECB firing its bazooka?

    17 November 2011

    The central bank is facing mounting pressure from around the world to act more freely as a lender of last resort to euro zone governments. The ECB has been reluctant to move. But even though it is hemmed in by law, ideology and past positions, it does have wiggle room.

  • When is a merger-of-equals really a takeover?

    07 November 2011

    One easy way to tell is when the top brass get rich, undeserved paydays. Take NSTAR’s pending $4.7 billion “merger” with Northeast Utilities. NSTAR’s top five executives could feast on $50 mln of payouts from change of control even though they’ll stay, and even run, the place.

  • YPF seizure follows long, sad Argentine tradition

    16 April 2012

    One of the world’s first state-controlled oil firms is being reclaimed. Such nationalistic tendencies stretch back nearly a century. Juan Peron, founder of President Fernandez’s party, also grabbed many businesses in the 1940s. But commodity prices don’t stay high forever.