Private equity should play role as bank saviour 4 Feb 2009 Buyout bosses may be increasingly vilified as portfolio companies shed jobs or go bust. But if they begin to swoop in to save troubled banks, it could do wonders for their reputations. That s possible if the prices are right but governments shouldn t give too much away.
US pay cap is dangerously blunt instrument 4 Feb 2009 The president is right to want to constrain pay while taxpayers are on the hook. But to avoid an exodus of talented executives, Obama should consider more flexible methods than a straight $500,000 cap. One might be to let banks pay more, but only if they also repay taxpayers.
Obama’s re-regulation should avoid stimulus errors 4 Feb 2009 Like the $900bn scheme winding through the US legislature, the president s plan to improve financial regulation threatens to fall victim to political interests and expediency. He needs to ensure that not only are good policies embraced, but bad ones avoided.
BA and Iberia ought to find common ground 4 Feb 2009 The UK and Spanish carriers want to merge. But BA s shrinking market capitalisation has complicated discussions over the exchange ratio and governance. A deal that gives BA 55% of the company and clear management control would make sense for both sets of shareholders.
Google’s mobile locator not as barmy as it sounds 4 Feb 2009 Tracking people by their cell phones may seem like an invasion of privacy. But like other jazzy inventions, this one could have some practical applications. And even if those don t pan out, it s another sticky way for Google to bring in the eyeballs.
Personal view: Stimulus may bring bounce, then longer downturn 4 Feb 2009 Recent data suggest the global economy may be set for a bounce. That s a response to the record stimulus applied by governments in the US and elsewhere. Longerterm, however, such policies may prolong the recession rather than end it, raising its overall economic cost.
Glencore takes upper hand in Xstrata’s cash call 3 Feb 2009 The two hardnosed mining firms have thrashed out a complex deal where Xstrata can raise $6bn without its biggest shareholder putting up any cash. Both sides sport battle scars. But Glencore has just about come out on top.
Goldman should be losing more sleep 3 Feb 2009 The investment bank used to say fastgrowing Bric countries could sustain world growth even if the US tripped up. Risks were downplayed. Now that the crisis has broken the dream, Goldman is calling for megadoses of policy stimulus. And guess what? The risks are downplayed again.
Strike contagion poses threat to Europe 3 Feb 2009 Tensions created by unemployment are taking the foreground in much of Europe. Globalisation is under attack and industrial action is rising. As the recession bites, the risk of diverse local grievances spiralling into nationalistic reactions should not be underestimated.
Think the price is right for buyouts? Think again 3 Feb 2009 Company valuations have tumbled. Steve Schwarzman says it s time to buy. But some private equity experts differ. They worry that prices may go lower and that debt and equity funding are scarce. The riskaverse mindset could see buyout shops on the sidelines for a while yet.
The pound’s travails are not over yet 3 Feb 2009 Sterling could well fall close to one US dollar in coming months, just as US investor Jim Rogers predicts. Some of the capital that has come into the UK is flowing out. But a recovery will come after the decline. Rogers is wrong to say the UK and its currency are finished .
IMF’s stimulus prescription wrong for Asia’s woes 3 Feb 2009 Asian economies have suffered because of sharp declines in trade due to the financing crisis and weak Western demand. Most Asian countries should increase domestic consumption. However their problems won t be solved by adding stimulus packages that bloat the public sector.
What’s up with US taxes? 3 Feb 2009 No fewer than three of President Obama s nominees for senior jobs in his administration have confessed to underpayment of personal taxes. This reflects badly on them but also underlines the need for a simpler tax code that doesn t foster tolerance of errors, deliberate or not
Harley fills up the tank with pricey Buffett fuel 3 Feb 2009 The billionaire has added the motorcycle maker to Berkshire s shelf of iconic American brands. He s buying half of Harley s $600m unsecured debt offering. But rather than Buffett handing over a trophy price, Harley is paying the premium for his vote of confidence.
Could a cure for bank crises be found in Singapore? 3 Feb 2009 Much attention has rightly been given to how bankers incentives encourage excessive risktaking. But too little has been paid to the incentives of those who regulate them. Singapore, which rewards its public servants handsomely, offers a good model.
Bud needs to fight to retain its fizz 3 Feb 2009 InBev, the new owner of America s favourite beer, has a mountain of debt to repay and assets to sell. The ruthlessly costconscious Belgian brewer has enough options to avoid a cash crunch but as growth slows, InBev s $62bn binge bears a distinctly topofthemarket flavour.
Vodafone under Colao: so far, not bad 3 Feb 2009 Six months in as CEO and Vittorio Colao is upping the mobile giant s fullyear targets. That mostly reflects beneficial forex shifts. Meanwhile, inherited problems are biting in Spain and Turkey. But Colao has made some good early decisions and his defensive strategy looks right.
Wall Street trade magazines must adapt to malaise 3 Feb 2009 Financial lad mags and wealthporn titles like nowdefunct Trader Monthly are falling victim to the bust. But inventive publishers can still reach the nextgeneration masters of the universe. Tarp Lobbyist could be the next hot title.
Dutch bad bank tries to outfox markets 3 Feb 2009 The government is insuring E30bn of ING mortgage assets at a premium to their market values. It looks like a hairy transfer of risk to taxpayers. At least the government obtained independent due diligence. The scheme is clearly appealing to shareholders, but is not easy to copy.
Has Citi found a way to muzzle lending critics? 3 Feb 2009 The ailing firm s disclosures on how it s using $45bn of government capital are a tad simplistic but so are arguments that banks aren t lending enough. Breaking out the numbers is helpful, but won t silence those who assume only an absolute increase in lending is a success.
Murdoch turns up the heat on Berlusconi 3 Feb 2009 The Australian magnate is proving that he has far from met his match in the Italian premier and rival media tycoon. With advertising weakening and the digital switchover looming, Berlusconi s Mediaset looks vulnerable to a nimble and aggressive Sky Italia.
Kazakh bailout pays only lip service to Keynes 2 Feb 2009 Kazakhstan s bank bailouts and stimulus plan superficially resemble western models Keynes inspired. But nepotism, revengeseeking and Russian influence may play larger roles. With Washington Consensus policy out of fashion, it will be difficult to attract private capital later.
Private equity still alive, but hardly kicking 2 Feb 2009 Henry Kravis says the industry is not dead . But to buyout bigwigs meeting at the industry s miniDavos, survival isn t assured. Listed funds suggest portfolios are nearly worthless. New credit is nonexistent. Kravis may come out a winner but many others will disappear.
Short on cash? Feed your workers with inventory 2 Feb 2009 Sounds harsh, but it's essentially what Chrysler is doing by offering $25,000 car vouchers as part of severance packages. It's a novel way to offload excess inventory akin to Credit Suisse s bonuses backed by wobbly assets. Not everyone can pull it off, though.
Euro airlines miss cheap oil bonanza 2 Feb 2009 A drop of more than 50% in a year in a major expense should be a big help. No such luck. Poorly timed hedges and the strong dollar have exacerbated the fall in traffic. For European airlines, 2009 looks grim. But lowcost carriers Ryanair and Easyjet should have a better time.
OpenTable IPO may not be fine dining for investors 2 Feb 2009 The sadbuttrue adage is that the credit crunch has made fancy restaurant tables easier to come by. Yet online reservation service OpenTable just filed to go public. The company may have a strong following in the fine dining set, but its prospects look less than appetizing.
Europe could benefit from periphery crisis 2 Feb 2009 A Brussels bailout of the union s weakest links might cost 1.5% of GDP, but could pay dividends in structural and political reforms. If the EU summons the vision to raise debt as a group, the investment would be worthwhile.
Obama wants banks to lend, but who’s borrowing? 2 Feb 2009 The US president wants to require any bank that receives government rescue funds to crank up its lending. But the Fed s quarterly bank survey shows US demand for commercial loans just fell off a cliff. Until borrowers business prospects revive, jawboning banks won t help much.
Irish banks dodge nationalisation yet again 2 Feb 2009 First Ireland insured its banks liabilities. Then it recapitalised the sector, but not by enough. Now it s set to inject more capital and insure dodgy assets. Maintaining a privatesector banking industry is a worthwhile goal. But the rescue package must work this time.
Don’t expect China to save the world 2 Feb 2009 Prime Minister Wen has no apologies for China s huge trade surplus. His logic: why regret policies which have helped eliminate poverty, just because rich countries responded foolishly? That's fine for China, but the attitude makes it harder to resolve the current global mess.