Moscow attacks highlight Russia’s weak security 29 Mar 2010 After an initial shock, investors will probably shrug off the fatal terrorist blasts in Moscow's metro. But the incident is a reminder of the country's ineffective law enforcement system, which is a serious blot on the investment picture. There are few signs of improvement.
EBay inches from auctions to outlet sales 29 Mar 2010 The Internet auction giant s latest attempt to revive its core marketplaces division is by selling overstocked items for fashion designers. If it really wants to build a business running other companies web sales efforts, though, perhaps eBay should do a little shopping itself.
Uncle Sam’s Citi exit partly vindicates bailout 29 Mar 2010 The U.S. Treasury is set to unload its 27 pct stake in the banking behemoth two years after rescuing it. The exit should deliver billions in profit for taxpayers. That s a relief and a financial success. But Citi has hardly been turned around since the government stepped in.
Greek interest rates should stay high 29 Mar 2010 Athens will almost certainly get its latest 5 bln euro bond away, thanks to a generous coupon and the promise of an EU/IMF safety net. But to keep default away, Greece has to combine wages cuts with fast GDP growth. It's possible, but current yields reflect justified doubt.
Too big to fail worth $30 bln a year to big banks 29 Mar 2010 A U.S. bank big enough to be certain of a bailout in the event of trouble isn't just reassuring to risktaking employees. Customers also value infallibility. The 10 biggest banks pay far less interest on deposits than their smallenoughtofail brethren. It's an unfair subsidy.
Sin City reveals price of private equity’s vices 26 Mar 2010 Harrah s is outperforming publicly listed rival casino MGM Mirage, and reducing leverage too. But investors still consider Harrah s, owned by buyout firms TPG and Apollo, riskier. Private equity may be paying for its history of piling on debt and walking away in tough times.
Counterpoint: Good balance of bailout & discipline 26 Mar 2010 Other euro zone member states will provide cash but only as a last resort and not at cheap rates. Meanwhile, the IMF will be there to keep Athens from losing resolve during the hard years of fiscal and economic restructuring. Greece and other weak EU countries will benefit.
Open skies dream not yet shattered 26 Mar 2010 European airlines wanted to get more out of the latest draft EU agreement with the U.S. than a few almost token improvements. But considering the domestic American political situation, the deal plus a commitment to keep on pushing forward is not a bad outcome.
New U.S. mortgage plan: progress but not panacea 26 Mar 2010 Previous efforts to modify U.S. mortgages have had little impact. Treasury s new plan to entice banks to cut principal voluntarily could achieve more, and would force lenders to take losses. If the allcarrots approach fails, however, regulators could eventually turn to sticks.
Credit Suisse may let bankers turn junk into gold 26 Mar 2010 The Swiss bank is mulling letting staff sell shares in its pool of distressed assets to outside investors. Handed out as part of bonuses during the crisis, the shares have risen over 70 percent. But allowing an early exit might dilute the plan's intended austerity.
Greek deal sets bad precedent for euro zone 26 Mar 2010 The agreement to let the IMF help sort out the Greek mess is an admission that euro countries are not yet able to deal with internal problems on their own. The deal may help Athens borrow cheaply, but it sows doubts on the zone's commitment to solidarity.
Dubai debt restructuring is only first step 26 Mar 2010 The emirate's plan to restructure $24 bln debt at Dubai World and its subsidiaries is a welcome contrast with the chaotic announcement of its trouble last year. But for Dubai to rebuild market credibility, it needs to keep up the momentum. Here's how.
RBS debt swap could have been sweeter 26 Mar 2010 The UK bank is finally buying back some of its hybrid debt. The move offers an escape route for investors facing two years without income, boosts capital and tidies up the lender's balance sheet. But the delay in doing the deal has made it less attractive for both sides.
Matalan restarts European dividend recap game 25 Mar 2010 The UK retailer has sold a 225 million pound bond to pay a dividend to its founder, the first deal of its kind in Europe in two years. Buyout firms, heavy users of recaps in the boom times, will be glad Matalan has blazed a trail. But don't expect a flood of copycats just yet.
Spain could face years of housing woe 25 Mar 2010 House sales perked up in January, but it's far too early to call the end of the slump. Unwanted new homes are still hitting the market, while more than 1 million stand empty. Even if the unemployment rate starts to fall soon, the market may not fully clear until 2013.
Ukrainian pipeline consortium could be win-win-win 25 Mar 2010 The new government wants a threeway consortium, including Russia and the European Union, to manage its gas network. The bold plan could end the gas wars, provide security to Russia and its customers and avoid the need to invest in expensive alternative pipelines.
Ambac regulator’s move threads CDS needle 25 Mar 2010 The Wisconsin insurance watchdog is forcing haircuts on holders of CDS contracts written by the troubled bond insurer. The move also protects muni bond insurance policies. It s an echo of what might have been done with AIG had regulators had the power and the guts.
Shareholders can’t do board’s work on bank bonuses 25 Mar 2010 The UK government wants to give shareholders a bigger say on bankers' pay. It's sensible to let investors vote on compensation beforehand. But there are limits to what shareholders of public companies can be asked to do. Detailed scrutiny has to be the board's responsibility.
ICBC high on stimulus – but hangover will come 25 Mar 2010 China's biggest bank grew earnings by 16 percent in 2009, helped by rising markets and bad debts that turned back into good ones. A $3.6 billion convertible bond will keep its balance sheet healthy for now, but ICBC's rapid growth brings risks even if they take years to appear.
Healthcare shows U.S. not so un-European 25 Mar 2010 In terms of political rhetoric, the Atlantic is wide. But the economic structures of the proudly free market United States and equally proudly social democratic Europe are actually pretty close already and will be closer still after the Obama healthcare reforms.
U.S. retiree fund gap aids conspiracy theorists 25 Mar 2010 Payouts will exceed taxes paid in this year, far sooner than expected. Fewer jobs are to blame. Though 2010 Social Security benefits won t be hit, the shortfall may fuel whispers of a plot to ding Uncle Sam s credit rating to get the scheme privatized. If only it was true.
Dubai close to ending Dubai World nightmare 25 Mar 2010 The government will convert $10 bln of loans in Dubai World and Nakheel into equity and inject $9.5 bln of new money. That allows lenders full repayment of their principal. The banks still face a haircut on interest payments, but it could have been a lot worse.
Time is ripe to phase out corporate debt subsidy 25 Mar 2010 Allowing companies to deduct interest from their profits before calculating tax has never made sense. It encourages them to take on excess leverage. In the wake of the debt crisis, policymakers are finally talking about reforming the system. But change will require a big push.
BSkyB dominance may survive regulator’s crackdown 24 Mar 2010 Britain s media watchdog is expected to order the broadcaster to cut wholesale prices for its sport and film channels. That could help rivals which have tried for years to loosen Sky s grip. But while the curbs may cut prices for viewers, Sky could hold onto its market share.
First post-crisis bank IPO offers play on failure 24 Mar 2010 As the list of U.S. problem banks balloons, healthy institutions are poised to capitalize on others misfortune. Such may be the case of First Interstate BancSystem, the first bank IPO since 2007, which plans to use the proceeds of its offering to pick off failed brethren.
Budget for votes riskily delays UK debt pain 24 Mar 2010 The preelection budget could have been even worse. But it still includes populist measures like a tax cut on property purchases. And while deficit forecasts have been shaved, they remain optimistic and alarming. At best the UK delays its pain; at worst it heads for crisis.
Keeping Post Bank government-owned will hurt Japan 24 Mar 2010 The retreat from postal privatization would make it easier for Japan to fund budget deficits, because the Post Bank buys government debt. But the move, if carried through, risks distorting financial markets, stifling private sector finance and hurting economic growth.
Investors may feel undue pain of healthcare reform 24 Mar 2010 U.S. taxes on capital gains and dividends are already set to rise sharply unless lawmakers act soon. To pay for the healthcare system overhaul, rates would go higher still. After years of consumption and debt excess, it sends the wrong message to penalize savings and investment.
Bond buyers test company-government tipping point 24 Mar 2010 Western government profligacy has long seemed immune to bond market consequences. But with a weak auction of U.S. debt triggering a Treasury selloff while investors lap up lowyielding corporate debt, there are signs that market players are concerned the turn is near.
IMF in Greece is euro’s disgrace 24 Mar 2010 To soothe Germany's concerns, euro zone leaders are working on a compromise that would tap IMF money to help Greece solve its financing problems. This wasn't necessary, but illustrates the euro's basic flaw: the lack of a credible crisisresolution mechanism.