China needs political reforms for future growth 6 Sep 2010 President Hu Jintao said economic zones should test political reforms. China's authoritarian system has shown its merit during the crisis. Although changes may be disruptive in the short run, more checks and balances and rule of law are indispensable for sustainable growth.
Disclosing banker pay is too much of a good thing 6 Sep 2010 George Osborne says he's committed to making banks disclose how many staff are paid a million pounds. But the UK finance minister would be right to rethink the idea. Disclosure is generally a good thing, but banks are right when they say the plan could drive up pay inflation.
Bob Geldof’s African buyout fund shows good timing 3 Sep 2010 The rock star wants to invest $1 billion in Africa. Even Goldman guru Jim O'Neill says the continent may be the next BRIC. Africa's been the next big thing for ages. But there are reasons to think it's different this time, and Geldof's established connections will open doors.
EU timidly moves towards better banking regulation 3 Sep 2010 European Union bodies have finally reached a compromise on the new financial regulatory framework suggested by the Larosière report eighteen months ago. The new panEuropean bodies will lack a full set of teeth, but they might still be able to help in times of crisis.
U.S. jobs figures provide subdued reassurance 3 Sep 2010 The private sector employment gains in August, together with positive revisions for previous months, should dispel fears of an economic doubledip for now. With just one more jobs report before November's elections, the latest data also offer a glimmer of hope for Democrats.
Regulatory gaps let banks off the bonus hook 3 Sep 2010 Investment banks have reined in their worst pay excesses. But inconsistent enforcement of rules in the United States and Europe means some are still getting away with bad behaviour. If banks and regulators can't agree common bonus standards, they risk another political backlash.
Export ban ruins Russia’s agricultural dream 3 Sep 2010 Just a couple of years ago, the Kremlin boasted of Russia's ambitions to feed the world. Investors poured into Russian agriculture to tap its huge export potential. But economic slump, drought and now a prolonged grain export ban show how far the dream is from becoming reality.
A Labour leader who could upset the UK coalition 2 Sep 2010 Two Eds, two Milibands, and about half a policy between five candidates. One will lead Britain's opposition Labour party, but only David Miliband, front runner ahead of his younger brother Ed, appears to have grasped the scale of the UK's problems.
Blankfein gets downgraded like Goldman stock 2 Sep 2010 The investment bank's CEO went from the cultural equivalent of a strong buy to a sell on Vanity Fair's 100 most influential people list. While Blankfein dropped to last, Facebook's founder replaced him at the top spot with an outperform. Both ratings probably miss the mark.
Basel’s Coco plan is step in right direction 2 Sep 2010 The body that sets global banking rules wants all capital instruments to be written down if a lender gets into trouble. The plan will help to reduce moral hazard, though it may increase the cost of credit. There are also some imperfections in Basel's plan.
Obama pulled two ways on stimulus 2.0 2 Sep 2010 Departing White House economic adviser Christina Romer says last year's $814 bln package fell short. That may suggest those arguing for more are gaining ground with the administration. But short of a renewed economic slump, electoral politics are working against more spending.
Petrobras deal shows it’s more Gazprom than Exxon 2 Sep 2010 By overpaying for 5 bln barrels of reserves the Brazilian statecontrolled oil group is transferring up to $17 bln of value to the government, whose stake will also rise. Petrobras is looking like an instrument of the state rather than a guardian of shareholder interests.
Sinochem could struggle to frustrate Potash bid 2 Sep 2010 Intervening in the battle for control of the Canadian fertiliser group would fit with the stateowned firm's aim to be a mainstay for China's agricultural safety. Financing won't be a barrier. But Sinochem will face other hurdles if it wants to block BHP Billiton's $39 bln bid.
Burger King swaps buyout barons for private equity 2 Sep 2010 The capitalists behind Anheuser InBev are relieving TPG, Bain and Goldman of command of the fastfood chain for $4 bln. While the sponsors relied on typical financial engineering, BK's new Brazilian owners have a grander plan: to do for burgers what they did for beer.
Are Dell’s shareholders on Xanax? 2 Sep 2010 The company has finally bowed out of its mad bidding war for 3PAR. Yet its investors displayed neither much concern about overpayment nor relief about the deal being dropped. After a decade of scandals, missed opportunities and dismal performance, they may have stopped caring.
Reviving recovery story puts bonds at risk 2 Sep 2010 The market mood has swung back from double dip to recovery. Solid U.S. manufacturing was the chief catalyst, though fast growth in exportoriented Australia is another sign that Chinese growth is holding up. Bonds that are priced for a deflating world now look vulnerable.
Reheating Burger King won’t be another LBO whopper 1 Sep 2010 Buyout houses had it their way with the chain in 2002: a desperate seller and little competition for the necessary turnaround. The equity sliver TPG, Bain and Goldman still own in the $2.5 bln firm is worth nearly four times their whole investment. The next bite looks gristly.
State capital sounds alarm on muni defaults 1 Sep 2010 Harrisburg, Pennsylvania, is skipping a general obligation bond payment. The default is small but the significance potentially much larger. The struggles of municipalities tend to lag the economic cycle and a sluggish recovery could very well produce a surge of them.
Blair’s economic policy claims are absurd 1 Sep 2010 Tony Blair, UK prime minister until 2007, asserts in his new memoir not only that he ran economic policy for most of his 13 years in power but that all the best ideas were his. Gordon Brown, his finance minister, made many mistakes, but Blair s version is simply not credible.
At Apple the gadget, not content, is still king 1 Sep 2010 Nearly every day brings a new contestant in the fight for the American couch potato. Netflix, Amazon, Hulu and YouTube all want to serve up content. While Apple also rents out video, its new TV device allows users to stream rival services. It's still all about the hardware.
Deripaska will struggle to keep a hand in Norilsk 1 Sep 2010 The oligarch has suffered a setback in his row with the Russian nickel miner, after Vladimir Putin rejected his criticisms of Norilsk's dividend policy. Without political support, Deripaska may be better selling the 25 pct stake held through debtridden aluminium giant Rusal.
China antitrust scrutiny no trifle for BHP/Potash 1 Sep 2010 The idea that China may probe BHP's $39 bln bid for the Canadian fertilizer maker sounds odd, as the miner's proposed deal wouldn't concentrate the market. But the young antitrust regime has bent logic before. And while Beijing can't nab BHP assets, it can curb its opportunities.
It may be too late for Obama to cut taxes 1 Sep 2010 The administration is possibly warming to the idea of tax breaks to boost the economy. Such a plan would have landed plenty of Republican votes 18 months ago. But with the president s popularity falling and elections looming, congressional support won t be so easy to coalesce.
Genzyme opens door to Sanofi’s advances 1 Sep 2010 The CEO of the U.S. biotech company says he'd be willing to sell to Sanofi, if the French pharma group raises its $69ashare offer before talks start in earnest. That's sensible, but there's still risk that Sanofi turns away once it takes a closer look at its target's problems.
Fuld may have a point mixed in with his Kool-Aid 1 Sep 2010 Blaming Lehman s demise on the lack of a bailout neglects years of hubris. It was Fuld s job to watch his firm s back. But his charge that regulators were damagingly inconsistent is fair. The U.S. crisis commission should get to the bottom of why and how to avoid it next time.
M&A alone will not solve Greek bank woes 1 Sep 2010 The state has hired advisers to examine options for its bank stakes. Consolidation could create stronger lenders and eventually make the system more robust. But it won't end worries about the sector's holdings of Greek government debt, or its dependence on central bank funding.
China’s manufacturing rebound looks hard to sustain 1 Sep 2010 The muchwatched PMI measure showed manufacturing bouncing back. But external forces threaten. China still depends on the U.S. market, and its export recovery might tempt neighbours to snatch back market share. Meanwhile, domestic markets won't easily pick up any slack.
Investment banking finds sweet spot in forex 1 Sep 2010 Foreign exchange trading provided the industry with a muchneeded boost this year. As well as smoothing earnings volatility, the business looks a relative winner in a tougher regulatory climate. Even if secondquarter performance isn't repeated soon, forex has a lot going for it.