Nabors’ $100 mln payout to CEO offers warning 31 Oct 2011 To hand Eugene Isenberg that much just to give up one of two titles seems absurd. But the board was stuck with a 1987 contract and did reduce his golden parachute. Even so, Nabors has underperformed for a decade. It shows the danger of companies binding themselves too far ahead.
Occupy themes won’t easily dazzle like Tea Party’s 31 Oct 2011 The movement that started in lower Manhattan has rightly put attention onto America’s wealthy. And though the Tea Party started out just as ragtag, it’s hard to see Occupy Wall Street catching on the same way politically. Deficits are an easier pitch than inequality.
Rock’n’roll becomes form of economic stimulus 31 Oct 2011 That, at least, is the message from the Moogfest, which took place in Asheville, North Carolina, this past weekend. Aside from giving synthesizer geeks an outlet, Rob Cox found the three-day festival making good use of Asheville’s facilities and boosting local businesses.
New ECB chief must shake off the Italian curse 31 Oct 2011 The incoming president of the European Central Bank inherits a strong currency in a weak monetary union. As Mario Draghi steers the bank through a series of crucial decisions, he needs to tackle Italy’s problems without worrying too much about what the Germans will say.
MF Global’s failure vindicates Volcker Rule 31 Oct 2011 Adding the complex proposal to sweeping financial regulation looked like overkill to some at the time. But the bankruptcy of the brokerage run by Jon Corzine suggests otherwise. MF Global reinforces the idea that prop trading belongs where its damage to the system can be limited.
Jobs bio sequences his DNA but doesn’t unravel it 31 Oct 2011 It could be that’s what biographer Walter Isaacson intended. His book provides plenty of new material from the Apple co-founder and those around him. But this early, authorized tome leaves to others any serious verdict on the man or the sustainability of his business legacy.
Spain isn’t as uncompetitive as you think 31 Oct 2011 The country’s unemployment rate scales new heights even as Spain’s exporters seem surprisingly resilient. The snag is that there aren’t enough of them to get the country growing again.
Greek privatisation could produce double bonus 31 Oct 2011 Flogging the country’s state-owned businesses and land is mainly viewed as a way of reducing its crippling debt. But if properly handled, the process could also be a spur for broader economic reform. Dag Detter, who led the restructuring of Sweden’s public assets, explains.
Greek creditor losses could top 50 percent 31 Oct 2011 Banks have provisionally agreed to haircut their bond holdings by half, but the coupon on the new bonds they will get is still being negotiated. If the euro zone plays hardball, losses could reach 60 percent, Breakingviews latest calculator shows.
Japan acts alone in global financial mess 31 Oct 2011 Monday’s unilateral effort to keep the yen from rising will probably work as well as the last one – not very much. Tokyo can’t easily resist the pressure from foreigners fleeing troubled currencies. The G20 could move the world towards financial balance, but won’t try hard soon.
Roman politics could gum Europe up 31 Oct 2011 The euro’s future hangs on Italy – and Italy’s future hangs on its politics. The best way forward would be a grand coalition replacing Berlusconi’s discredited government. But after the PM’s latest Houdini act, that doesn’t seem likely and other scenarios aren’t as attractive.
Barclays sets bar high and low for peers 31 Oct 2011 The UK lender’s flagship investment bank performed well in the maelstrom of the third quarter. But while BarCap’s top-line income was relatively strong, job cuts across the group have also ticked up. It shows that even stronger players are on the defensive.
China’s regulatory reshuffle avoids real change 31 Oct 2011 Three retiring top financial regulators have been swapped with former bank heads, trained for life in the system. Overlapping roles mean their powers will be constrained. It suggests China’s banks won’t get the sweeping reforms they need.
Egyptian economy hangs on smooth, timely elections 31 Oct 2011 Aid pledged by Gulf countries will help bring Egypt’s finances back from the brink. But a rapid transition to democracy is needed to allow a gradual fall in the pound and to lure risk-averse foreign investors back to help Egypt finance its ballooning fiscal deficit.
U.S. pipeline bottlenecks favor Chevron 28 Oct 2011 Third-quarter profit more than doubled at the $220 bln energy giant, justifying the strength of its shares. Its U.S. operations are relatively free of infrastructure constraints that have hit crude prices for others. The advantage will fade, but Chevron is milking it for now.
The Avon lady needs to look in the mirror 28 Oct 2011 Andrea Jung may be a powerful figure in U.S. business, but as CEO of the $8 bln cosmetics company she has twice failed to turn it around. Never mind the federal probe into possible wrongdoing, Avon’s dismal performance is reason enough for Jung to give someone else a chance.
U.S. housing has added problem: mortgage insurance 28 Oct 2011 Many legislators want the government out of housing. Fair enough. But a look at the private business of mortgage insurance serves as a reminder that the private sector also needs an overhaul. Former highflier PMI’s takeover by regulators last week is a case in point.
It’s still Italy, stupid 28 Oct 2011 Amidst the post-euro summit euphoria, it’s easy to ignore that the cracks have only been papered over in Rome. Not only do Berlusconi’s reform promises not go far enough; there’s a risk that his government will limp on until January, and then collapse having achieved nothing.
India’s anti-graft movement has life after Anna 28 Oct 2011 Anna Hazare’s anti-corruption campaign is imploding. There are differences between the group’s leaders, and allegations of financial irregularities. But whatever happens to Team Anna, there are signs that the movement he has come to embody will have a life of its own.
Russian delay adds to Polyus UK listing concerns 28 Oct 2011 A regulatory delay to the gold miner’s London listing may have political motives. The timing is suggestive, coming after public outbursts by owner Mikhail Prokhorov. The setback underlines risks that make it unwise for London to waive its rules for Russian companies.
Sahara’s $5 bln savings spat is India’s loss 28 Oct 2011 The Indian savings house has been ordered to return a whopping $4.9 bln raised from nearly 30 million mostly rural investors. The episode is unlikely to help confidence among small savers. Yet accessing their capital is vital to help India’s development.
Enron’s worst legacy: auditors too big to fail 27 Oct 2011 Arthur Andersen sealed its fate when it shredded Enron documents 10 years ago. But prosecutorial zeal may have created a moral hazard monster. Concerns that the world can’t afford to lose another green eyeshade run the risk of diluting standards in the industry.
New Freddie Mac boss needs low pay expectations 27 Oct 2011 The outgoing chief executive of the U.S. mortgage finance behemoth stood to make up to $6 mln a year. But times are, or at least should be, a lot tougher now. A new CEO needs administrative skills, a thick skin and little to no ambition. Breakingviews suggests a help wanted ad.
Brazil’s corruption best tackled on soccer field 27 Oct 2011 Losing the minister of sport to scandal seems the least of President Dilma Rousseff’s worries amid an increasingly troubled coalition. But it may be a symbolically significant opportunity. Restoring broader trust could start with soccer, Brazil’s epicenter of national pride.
Europe’s bank recap won’t need much state help 27 Oct 2011 EU lenders need 106 billion euros to maintain a 9 percent core capital ratio after sovereign haircuts. Greek and Portuguese banks aside, most can plug the shortfall on their own. But while equity investors may be relieved, the exercise does little to reopen funding markets.
Banking boutiques aim to rise above puny moniker 27 Oct 2011 Lazard has long hated being grouped with its smaller brethren. Now, after another quarterly earnings record, Evercore’s bristling at the label, too. Their rise in M&A makes them much stronger rivals to the bulge bracket. But their niche nature means the boutique shoe still fits.
Gassier Exxon’s brave new world isn’t here yet 27 Oct 2011 Alongside a 41 pct profit surge, the $400 bln energy group’s third quarter showed a further rise in gas output relative to oil. That may set Exxon up for the future. But for now, with crude pricier than gas, it could help explain its shrinking valuation premium to oilier Chevron.
U.S. GDP is good news by today’s low standards 27 Oct 2011 The first estimate of third-quarter GDP puts it a scant 0.2 pct above the previous peak, in 2007. But 2.5 pct growth is high enough to calm fears of a double-dip. Even though consumers remain squeezed - real disposable personal income fell - Obama’s 2012 prospects look brighter.
No going back on Britain’s ill-judged Big Bang 27 Oct 2011 Changes imposed on the City of London 25 years ago intensified conflicts of interest and sparked takeovers by global behemoths. The crisis makes a return to a less greedy era appealing. Some steps may be retraced, but rebuilding prestigious merchant banks would take decades.
The euro zone has a deal. Now for the hard part 27 Oct 2011 Leaders of the monetary union have agreed to force large losses on Greece’s creditor banks; to recapitalise banks; and to increase the capacity of the EFSF bailout fund. But before celebrating, crucial details need to be filled in. And implementation must be airtight.