Immelt’s conflicts don’t undermine energy critique 24 Sep 2010 The GE boss castigated Washington for neglecting the U.S. energy industry, calling current policy stupid. Immelt was talking his own book a third of GE profit last year came from its power unit. But the lack of a comprehensive energy strategy is still an economic drag.
Bond issue won’t fix Spain’s absurd power market 24 Sep 2010 Power producers have racked up huge deficits because they are forced to sell electricity below cost. The government plans to issue up to 25 bln euros of bonds to fill the gap. That will help the electricity companies, but Spain must now find the guts to raise prices further.
U.S. and China must both give way in currency war 23 Sep 2010 China must revalue the yuan, says America. Chinese premier Wen Jiabao dislikes the message and is talking down expectations. But the dollar is cheap against the euro, yen and many Asian currencies. Compromise is needed: China should let the yuan rise, the U.S. should be patient.
GM sensibly eases off the gas on IPO 23 Sep 2010 The offering may now wind up at only $10 bln. There s even a chance Uncle Sam will remain the majority shareholder. Tempering earlier ambitions might mean eating humble pie. But with GM still recovering and markets choppy, a smaller IPO stands more chance of success.
Liverpool’s owners and lenders face deserved pain 23 Sep 2010 The UK soccer club is unlikely to repay 237 mln stg to its banks by next month's deadline. Even Blackstone's financial whizzes couldn't devise a viable refinancing. Liverpool needs a conservative capital structure under a solid owner. Getting there will be tough for all involved.
Zuckerberg gives it away at Internet speed 23 Sep 2010 Andrew Carnegie said a man who dies rich dies disgraced. Facebook s 26yearold founder is taking note early, giving $100 mln to a troubled U.S. city's schools. It s a generous move and a burnished reputation will probably help the social networking magnate s business, too.
Reversing Obama is insufficient agenda for GOP 23 Sep 2010 The party of no has revealed what it will say yes to. But a new Republican manifesto offers little more than undoing Obama s reforms, with vague talk of balanced budgets. Maybe that s smart politics. But America s longterm economic and fiscal woes call for bolder leadership.
U.S. has much to prove on new bank capital rules 23 Sep 2010 America delayed and then barely implemented the last set of Basel standards, so Europeans are rightly skeptical about the new accord's fate. The FDIC's Bair and Treasury's Geithner are pushing deadlines. But U.S. bank regulation remains fragmented and similar pitfalls may await.
China Sea skirmish a worrying sign for trade 23 Sep 2010 A territorial spat with Japan has reopened old wounds with China even reportedly blocking some key exports by way of reprisal. China's ascent will cause more frictions with trade partners over time. But for now, deep trade linkages mean both countries need to work it out.
Economy tests diminishing return of college degree 23 Sep 2010 The salary differential with nongraduates has shrunk even as the cost of a fouryear university degree keeps rising. Like home ownership, education provides more than just a financial benefit. But it's another part of the American dream that needs rethinking.
HSBC shouldn’t rush into chairman compromise 23 Sep 2010 The latest idea to resolve the impasse over who should lead the bank is Douglas Flint, the finance director. Though the mess is embarrassing, HSBC should take time to consider external candidates. Then it must lay down strict guidelines to ensure the fiasco doesn't happen again.
BHP exposes flaws in UK corporate broking model 23 Sep 2010 Neither of the miner's corporate brokers have a mandate on its $39 bln bid for Potash Corp. Merrill was an adviser to the target; Citi is now advising a potential interloper. Clearly lowpaying broking relationships aren't always rewarded with a big ticket from the client.
Sarkozy’s lows aren’t just a local matter 23 Sep 2010 France is on strike again, the president's popularity is at an alltime low and EU allies have been antagonised over the Roma. Sarko is due to be G20 chairman next year. If tensions flare up over global imbalances, the last thing the world will need is a weak chairman.
HSBC’s home team triumphs in boardroom brawl 23 Sep 2010 With CEO Michael Geoghegan following the chairman out the door, HSBC is fortunate Stuart Gulliver and Douglas Flint can step in. But both are untested and the row over succession has stained the bank s reputation. The board needs to make sure it can t happen again.
Moscow mayor’s troubles catch out an oligarch 23 Sep 2010 The Kremlin's battle to oust Moscow's influential mayor Yuri Luzhkov has caught an oligarch, potashandgold king Suleiman Kerimov, in the crossfire. Kerimov can probably weather the storm. But the freezing of his assets in Cyprus is a timely reminder of Russia's political risk.
Too soon to take Spain out of PIGS 23 Sep 2010 Spanish bonds are trading closer to Italy's than Ireland's. Some think the S should be taken out of the acronym PIGS. But the property crash has yet to be absorbed, unemployment is terrible, competitiveness will be hard to regain and Spain's private debt is big.
Deutsche lowers the bar for i-banking earnings 22 Sep 2010 The German bank says its Q3 results will be significantly down yearonyear. With markets treading water, Deutsche won't be the only firm reporting soggy numbers. But it's not all bad. If a weak quarter results in lower pay, banks may at least face less of a row over bonuses.
If Geoghegan vows to go, HSBC should let him 22 Sep 2010 The bank's CEO reportedly threatened to quit unless given the chair. Elevating Geoghegan never looked ideal. If true, the leak makes it impossible to appoint him. But HSBC has options. It must pick the right chairman, ideally an outsider, even if it has to replace the CEO too.
Daimler interest shows sense of Fiat demerger 22 Sep 2010 A mooted approach by the German carmaker for its Italian rival's trucks and engines makes sense. Fiat's plan to reveal value by splitting its cars and industrial business appears to have worked. Consolidation is overdue, although Daimler may face some antitrust issues here.
Wall Street squeeze explains i-bank job jitters 22 Sep 2010 A couple of tough quarters right after starting to hire again means the industry has less revenue to feed more mouths. Some banks, like BofA, may already be trimming staff. Others, like Morgan Stanley, have more leeway. But if business doesn t pick up, there ll be cuts all round.
Petrobras deal fees not as paltry as they appear 22 Sep 2010 The Brazilian energy giant is paying just 0.21 pct to underwriters of its $79 bln stock sale. Even stingy Uncle Sam is paying triple the gross spread on its GM IPO. But don't cry for São Paulo's bankers in reality, they're doing less than half a job.
Bank boss survivors are a dwindling band 22 Sep 2010 Resignations at UniCredit and Lloyds have further thinned the ranks of bank chiefs who made it through the crisis. Those that remain all avoided state bailouts. But the prospect of regulatory battles and years of slower growth may prompt others to throw in the towel as well.
Summers’ exit a chance for détente with business 22 Sep 2010 If deftly handled, the departure of brilliantbuttesty White House economic adviser Lawrence Summers could be addition by subtraction. Summers' departure gives President Obama an opportunity to fill a gaping hole in his administration's skill set: private sector experience.
Potash lawsuit defence risks looking desperate 22 Sep 2010 The Canadian group has asked a U.S. court to halt BHP's hostile $39 bln bid. The move may delay the AngloAustralian miner's advance and force it to come clean about its plans. But the flimsy case could undermine Potash Corp's claims to be maximising value for its shareholders.
Right infrastructure bank could help U.S. makeover 22 Sep 2010 American transport and power systems need an overhaul that could cost $2 trillion. But if Washington wants to create a bank to fund big projects, it needs to be worthy of the name. Lending decisions must be based on transparent financial criteria, not subject to political whims.
Vatican still at pains to deal with Mammon 22 Sep 2010 Two executives at the Vatican's bank are being investigated for money laundering. The Catholic Church is perplexed and amazed. However painful it may be to submit to Man's laws, Rome must accept the fact that the rising demand for transparency extends to its financial empire.
U.S. yuan raid idea is fascinating but flawed 21 Sep 2010 A top think tank proposed a U.S. raid on China's forwards market to force the currency to appreciate. It sounds neat, but would be difficult to execute, and Beijing could neutralise its effects. Washington stands a better chance using multilateral pressure to force change.
Petrobras $79 bln capital hike relies on bull case 21 Sep 2010 Despite potential for underperformance and government meddling, the Brazilian oil giant s upsizing of its already huge offering hints at keen demand maybe even from sovereign wealth funds. If investors really think Petrobras can deliver on its plans, there s hefty upside.
Fed readies second mortgage on U.S. future 21 Sep 2010 Continued nearzero interest rates and the additional monetary stimulus hinted at by the Fed are meant to nurse sluggish growth. But the policy risks encouraging bad lending and corporate investment decisions. America s competitive capital edge looks increasingly threatened.
UniCredit’s Profumo pays price for his missteps 21 Sep 2010 Alessandro Profumo, until now one of banking's great survivors, is set to quit as CEO of Italy's UniCredit. The government and local shareholders may have had it in for him. But poor performance also made him vulnerable. Still, his disorderly exit reflects badly on the bank.