Failed German auction challenges stimulus plans 7 Jan 2009 Having derided Keynesian stimulus, the German government plans to have a little go at it, although on a modest scale compared with the freespending US and UK. A failed German bond auction on Wednesday is a warning, but more for the big fiscal spenders than for Germany itself.
Big pharma could replace R&D with M&A 7 Jan 2009 The ten biggest drug makers spent more than $50bn on research in 2008. For the same amount, they could own the entire US biotech industry save the five biggest companies. It might be a better use of their cash.
What does Wall Street have against porn? 6 Jan 2009 Despite a historic drought in the IPO business, no investment bank save the Cyprus unit of a Russian bank has put its hand up to handle the $460m offering of nudie magazine Penthouse s parent. Maybe that's because the business looks a little too sexy for bankers tastes.
India’s 3G auction looks shambolic 6 Jan 2009 Successive delays, confusion on eligibility and an eleventh hour proposal to double the reserve price have marred the effort to sell third generation technology licences in the world s fastest growing mobile market. It s enough to discourage any new entrants.
Russia benefits from Ukraine gas row 6 Jan 2009 Gazprom can make a good case that Ukraine is an unreliable partner to the West and gets its own gas at a steep discount to world prices. Russia will be happy with the likely result of the latest dispute greater enthusiasm for alternative supply routes from Russia to the EU.
LyondellBasell’s failure is a lesson in bad science 6 Jan 2009 It s no shock that the chemicals firm has buckled under $26bn of debt it can no longer service. That s what happens to overleveraged cyclical companies in a downturn. But the speed and intensity of Lyondell's meltdown bodes ill for other troubled deals.
How to prevent crises: fight asset-price bubbles 6 Jan 2009 This financial crisis is far from over, but a healthy debate about how to prevent the next one has already started. Central bankers want, and deserve, more power. But for that to work, they must believe that sharp rises in asset prices show that something is going badly wrong.
Madoff victims shouldn’t hope for refunds 6 Jan 2009 The Prince of Ponzi s efforts to sneak $1mplus of jewellery to family members suggests he has a few assets. But those trinkets won t help investors hit by his alleged $50bn fraud. Even longterm, they shouldn t expect to recoup much maybe pennies on the dollar at most.
Merckle suicide gives crisis grim defining moment 6 Jan 2009 The German billionaire is not the first to take his life amid the financial turmoil, but he is the most prominent. This crisis has been a sudden reversal of fortune for many. Moreover, some emerge looking like victims of folly and that can be particularly hard to bear.
Can BofA control the Thundering Herd? 6 Jan 2009 Merrill Lynch's 17,000strong broker network was its most valuable asset. So the abrupt departure of boss Bob McCann seems a bad omen for the new owner. But, barring a major business overhaul, BofA s choice of successor Dan Sontag should keep further exits to a minimum.
Obama must avoid the protectionist tide 6 Jan 2009 China opened a new protectionist front, accusing Google of pornography. Global protectionism in the 1930s worsened the Great Depression. Obama must avoid protectionist Buy America provisions now, because the real danger may come later, if monetary and fiscal expansion fail.
Unicredit/Mediobanca deal would bode ill 5 Jan 2009 Italians have been roused from the last of their holidays by an unsourced report predicting a merger between the country s second largest bank and its most powerful advisory boutique. The putative deal makes little sense.
Madoff scandal underlines need for SEC overhaul 5 Jan 2009 The alleged mother of all Ponzi schemes happened under the dilapidated US regulator s nose. Its mishandling of the case, excoriated today in Congressional hearings, is the ultimate moralebuster. To rebuild the SEC will require political backing and more industry expertise.
Dresdner deal price keeps rising 5 Jan 2009 Germany s Commerzbank wants state capital for Dresdner, the rival it is acquiring. The cost of its original E8.2bn rescue has already risen once. The deal may be wobbling but it probably won t topple: Dresdner's parent, Allianz, and the German authorities can t afford to let it.
Admitting Jobs’ illness is first step for Apple 5 Jan 2009 The communicationschallenged company finally confirmed scuttlebutt about Steve Jobs health. The problem isn t what was said, but in what wasn t for several months. Apple should articulate succession plans to restore credibility with investors.
GM unlikely to meet positive NPV hurdle 5 Jan 2009 In return for its federal loans, the carmaker must present a plan to achieve a positive net present value. Even with cost cuts, debt restructuring and union concessions not to mention rosy assumptions about sales the arithmetic doesn t add up.
SEC could ease fair-value accounting problems 5 Jan 2009 The SEC continued to back marktomarket accounting in a yearend study. However, it didn t address the system s main problems of distorted incentives and procyclicality. But disclosed hidden reserves could resolve marktomarket s defects while retaining its benefits.
IndyMac buyers extract super value deal 5 Jan 2009 The private equity firms buying the US bank will get $23bn in loans and securities, mortgage businesses and other assets for an outlay of just $1.6bn in cash. Governmentrun FDIC also handed them several other benefits. The agency should drive a harder bargain next time.
Stuart Rose needs to set out bold strategy at M&S 5 Jan 2009 The UK's premier high street retailer is strategically and financially challenged. The shares have underperformed and investors are unhappy with its corporate governance. At least Stuart Rose, the executive chairman, still has some cards to play.
Obama’s tax stimulus looks sensible but still risky 5 Jan 2009 Devoting 40% of his stimulus package to tax cuts is smart, bipartisan and should reduce the plan s unproductive public spending element. With money supply zooming, it may result in a shortterm economic boost. But the inflation and deficit hangover may be nasty nonetheless.
ECB should expand its remit 5 Jan 2009 The vice president of the eurozone central bank wants his institution to have more authority over banks. He s right. The crisis has shown monetary policy needs to be integrated with institutional regulation. But Eurozone governments may not be ready for a truly powerful ECB.
EU must take Ukraine to task over Gazprom conflict 2 Jan 2009 The gas supply row between Ukraine and Russia s Gazprom pits two monopolies Russian gas and Ukrainian pipes against each other. It could have been avoided by Ukraine paying Russian bills on time. With European supply at risk, the EU should urge Kiev to put its house in order.
Personal View: A modest proposal to save the world 2 Jan 2009 The UK prime minister, Gordon Brown, suggested it was a slip of the tongue when he recently said his bankbail out scheme had saved the world . But it s not hard to imagine Brown setting out a modest plan to be the world s saviour, says Ian Campbell.
India-Pakistan conflict would cost both dearly 2 Jan 2009 Mumbai's Taj hotel may have reopened after November's terror attacks, but tension in the subcontinent remains dangerously high. India blames Pakistani militants for the atrocity. Leaders of both nations say they don t want a war. In different ways, neither can afford one.
Chinese 3G invites protectionist row 2 Jan 2009 Thirdgeneration mobile ticks many Chinese government boxes: it will create jobs, boost spending and advance China's technical standing. With 600m users and $40bn of investment at stake, foreign firms want in but the state may have other ideas.
UK ban on short-selling should be lifted 2 Jan 2009 Some politicians think it premature for bank share prices to be the target of shortselling again. But the ban has proved ineffective in halting shareprice volatility in bank stocks. Its removal might actually bolster confidence by facilitating genuine price discovery.