Obama reaches for $200 bln Band-Aid 25 May 2010 A proposed ministimulus would extend unemployment benefits, make it easier for states to borrow and boost small business lending. They re easy political wins in a tough economy. But taxpayers won t get much bang for their bucks, and the plan looks just a shortterm fix.
How bad could it get? 25 May 2010 Germany s shortselling ban provokes renewed banking crises, domino default in sovereign debt, disintegration of the euro, protectionism and global depression. Read our imaginary account of how the euro zone crisis turns into a horror story.
Global markets may be overdoing euro panic 25 May 2010 Investors seem to think the single currency will go multiple as the world enters into crippling deflation. Maybe, but the zone has circled its wagons. The euro should survive, even if a periphery member departs. And the recovery in the U.S. and Asia remains in place.
Italy tightens belt a notch, mum on growth 25 May 2010 The Italian government plans to cut its budget deficit by half to 2.7 percent in 2012 thanks to cuts in regional subsidies and attrition in the state bureaucracy. It hopes to calm market jitters about its debt level. But in the longer term, it shouldn't forget about growth.
California still showing the way on U.S. housing 25 May 2010 A key index of U.S. home prices dipped in March. But Californian cities, among the hardest hit by the credit crunch, posted gains. Yearonyear, they have appreciated far faster than the 2.3 percent seen nationally. The Golden State could pull the rest of the country along.
Tony Blair dons new cap – of a venture capitalist 25 May 2010 Britain s former prime minister will advise Silicon Valley greentech investment firm Khosla Ventures. Blair s trip to California buffs his reputation and may line his pockets. Importantly, Khosla gets government knowhow a vital competence in heavily subsidized energy markets.
Korea embargo adds to market’s political fear 25 May 2010 South Korea's economic retaliation against the North is both merited and minor in economic terms annual trade is only $286 mln. But the military tension will raise risk premiums in South Korea, and gives already frightened investors around the world a fairly big new worry.
Time for BP to share the pain 25 May 2010 BP has probably been as open about its oil spill disaster as a big company can be, but it's not enough. Paying for the cleanup is only the start. To fix the political problem, BP should now suspend dividend payments and bonuses to senior management until the incident is closed.
European bank rout includes surprising victims 25 May 2010 The region's top banks are down sharply, while the cost of insuring their debt has spiked. But UK banks led the plunge. That's despite apparently lower sovereign exposure and recapitalised, stresstested balance sheets. Still, there is a logical explanation for their pain.
Spanish banks’ virtual merger looks unconvincing 25 May 2010 Four savings banks plan a partial merger to create the country's fifthlargest lender. Pooling capital should give the banks improved access to funding, but will yield only limited cost savings and involve execution risks. Besides, the combined entity will still need state cash.
Putin shows political mettle in steel probe 25 May 2010 Russia's premier may have economic grounds for accusing metal producers of unfair pricing. But even if there is no collusion, leading steelmaker Evraz, which faces an investigation, should worry. Putin's crackdown probably reflects the lobbying power of struggling steel buyers.
Germany’s next misguided clampdown: currencies 25 May 2010 The finance ministry is proposing a possible ban on some currency derivatives in Germany's latest example of regulatory sturm und drang. It's easy to see why Berlin wants to curb euro volatility. But again, its proposals would be hard to implement and have damaging side effects.
Beware executives spouting expletives at critics 25 May 2010 Carol Bartz's Fbomb to a sassy blogger may play well in the purple bleacher seats at a demoralized Yahoo. But there's a fine line between robust discourse and shooting the messenger ask Enron's Jeff Skilling. Bartz's real problem is Yahoo's crap performance under her watch.
Upbeat M&S faces uphill struggle 25 May 2010 The UK retailer's results statement suggests that everything's coming up roses. Except that the dividend has been cut, its rivals have outperformed, it needs a chairman and a finance director, while the new CEO won't reveal his strategy until November. He has much to do.
Banks finally embrace global failure plan 25 May 2010 Big lenders are pushing for a plan to wind down failing financial groups. Constructing a credible crossborder resolution scheme is their best hope of avoiding more drastic rules. Banks should also bear the cost of any cleanup but only after the disaster has occurred.
How bad could it get? Part 1: It’s the banks, stupid. 24 May 2010 In the first episode of this fictional threepart tale of how the euro zone crisis turns into a horror story, Germany s shortselling ban provokes a renewed banking crisis.
Moelis looks increasingly built to last 24 May 2010 In just three years, the exUBS banker s advisory firm has bulged to 325 people and counting. Such growth suggests it has the revenue and backers needed for now. But with all the equity he s doling out, the pressure to go public will build before long.
UK house prices still in shark-infested waters 24 May 2010 The new government wants to jack up capital gains tax, which could prompt the wealthy to dump second homes. Public spending cuts could push up unemployment, dampening demand. Wealthy Greeks and bankers may keep London afloat. But average UK house prices could end the year down.
China needs monetary discipline, not stimulus 24 May 2010 Chinese policy makers think the recovery is fragile and are calling for global efforts to boost growth. Austerity in the euro zone is a concern. Yet China's property prices are still rising and inflation is a risk. China needs monetary discipline to combat domestic exuberance.
Ambanis’ rapprochement won’t bring huge value 24 May 2010 The billionaire Indian brothers will save themselves stress and legal fees. But their two conglomerates are different and both have ready access to capital these days. Friendly relations and even an unlikely recombination of the two groups probably won t add much value.
Spanish savings bank rescue a warning to others 24 May 2010 It's unclear why catholicowned Cajasur preferred a Bank of Spain takeover to a merger with Unicaja. Though Cajasur is tiny, speculation over its finances damages the Spanish financial system's credibility. At least the intervention should spur other cajas to save themselves.
New Obama tool unlikely to fix deficit problem 24 May 2010 While the goal of cutting budgetary waste is noble, the president s Reduce Unnecessary Spending Act (RUSA) looks more like a RUSE Really Useless Spending Exercise. Similar efforts have had a poor track record, and most of the budget would be exempt anyway.
How bad could it get? Part 2: The bond market strike. 24 May 2010 The second installment in this threepart fiction imagines a euro zone bank bailout triggering panic in the government bond market.
Morton’s Fork may come back to haunt Wall Street 24 May 2010 U.S. prosecutors seeking scalps are coming up short. They won't bring charges against AIG's former derivatives boss. Other veins, such as Lehman's demise, will be more difficult to tap. But history and Henry VII's archbishop suggests other prosecutorial avenues available.
Colombian voters may put recent successes at risk 24 May 2010 Polls suggest that the opposition s Antanas Mockus may win May 30 s presidential election. The populist mayor of Bogota has put forward no concrete policies other than an increase in corporate taxes, popular among Colombia s poor. His accession could be bad for business.
IBM machine grinds on with Sterling purchase 24 May 2010 Big Blue has a long tradition of morphing to survive technological shift. Its latest acquisition, Sterling Commerce for $1.4 bln, continues its push into higher margin software and online businesses. It s classic IBM not particularly flashy, but sensibly methodical.
HSBC needs outside candidates for chairmanship 24 May 2010 The global bank's chairman has traditionally been its most powerful figure. HSBC has already reformed by handing strategic control to its CEO. Stephen Green may not be stepping down as chairman just yet. But when he does, the bank should consider replacing him with an outsider.
How bad could it get? Part 3: Auf Wiedersehen, euro. 24 May 2010 The final episode of our financial horror story depicts the disintegration of the euro, rife protectionism, the global economy sinking into depression and moderate governments getting toppled.
Toyota, Tesla alliance helps present and future 21 May 2010 Combining the electric vehicle nous of the makers of the earnest Prius and the supercar Roadster is mainly about the future. But with both Toyota s battered U.S. reputation and Tesla s forthcoming IPO in need of a boost, the partnership also helps with today s concerns.
Strauss-Kahn must choose: IMF or French politics? 21 May 2010 The IMF's managing director says France shouldn't rush to cut its budget deficit. But it's hard to tell whether he is speaking in his current capacity or as a potential candidate for the French presidency in 2012. He must stop equivocating and clearly state his intentions.