Review: Putting a face on the Kremlin’s autocrat 23 Mar 2012 In a book that is both thoroughly reported and unashamedly militant, Masha Gessen throws unforgiving light on the mysteries, omissions and lies at the core of the Vladimir Putin story.
What’s Facebook really worth? 22 Mar 2012 A look at Google’s revenue and profit history suggests that even $75 bln is a stretch for the social network’s IPO valuation - at least on a rational discounted cash flow basis. But in Facebook’s hyped offering, anything is possible. A new Breakingviews calculator does the math.
World Bank pick may give Obama rare political lift 22 Mar 2012 Choosing a new leader for the global multilateral lending agency normally doesn’t enter into the math of a U.S. election. But putting the first woman in charge could further cement Obama’s lead with the vital female electorate. What’s more, he’s spoiled for good candidates.
Myanmar still far from ready for investment rush 22 Mar 2012 New draft laws to let in foreign capitalists suggest it could follow Vietnam and Cambodia. But with the official exchange rate over 120 times the market rate, the economy is distorted and official data hard to take seriously. Ironing out the creases could take years.
ECB short of firepower as Europe gets worse again 22 Mar 2012 Data suggest continued recession in the euro zone, with weakness even in its core economies. Spanish yields are up again. But it’s harder now for the ECB to respond. Its expanded balance sheet can’t easily spray more liquidity. And German inflation worries make a rate cut tricky.
UBS rolls the dice with Andrea Orcel grab 22 Mar 2012 The Swiss group is preparing to install the Merrill Lynch rainmaker as co-head of investment banking. It’s a sign that crisis- and scandal-scarred UBS can still attract big names. But Orcel’s patchy management track record raises questions about how well he’ll fit in.
Monti may need market backup for labour battle 22 Mar 2012 Labour reforms announced by Italian prime minster Mario Monti have enraged unions and weakened unity within the coalition government. A wave of strikes could rattle confidence, and pressure politicians to dilute reforms in parliament. Bond markets may need to go on strike too.
Bondholders start dabbling with bad old habits 22 Mar 2012 U.S. companies refinancing debt account for much of the $367 bln of U.S. corporate debt sold this year. Such fundraising is good for Corporate America. But investors are also snapping up more dross. Such a short-term approach to risk and returns may come back to bite - again.
India’s $211 bln coal saga can’t be brushed away 22 Mar 2012 The authors of a leaked official study into the sale of Indian coal mines are desperately trying to retract the whopping figure of $211 bln in lost revenue. But there is no way this news will go up in smoke. The economic, political and legal implications are far-reaching.
Slowing China may bring relief to commodity buyers 22 Mar 2012 China’s manufacturing activity looks to have shrunk in March. As the economy cools, so will China’s appetite for globally traded commodities like oil and iron ore. The shift away from heavy industry, and exploitation of cheap domestic shale gas, should continue the trend.
UK’s post deal should have pension bosses drooling 22 Mar 2012 Britain is to assume responsibility for Royal Mail pensions. Ministers get to offset 28 bln pounds of assets against the UK’s debt and - for now - ignore liabilities that are 10 bln pounds larger. If other pension managers could follow, they’d be queuing all along Downing Street.
Jaguar far from becoming China’s next top model 22 Mar 2012 The luxury carmaker owned by India’s Tata will join Mercedes and BMW in producing in China. It’s smart to get a local badge, since things are likely to get tougher for foreign auto firms. But the regulatory road is long, and low-end carmaker Chery is a curious choice of partner.
Paulson gets small redemption with the Hartford 21 Mar 2012 The hedge fund investor’s funds lost on average above 25 percent of their value in 2011 as bets on everything from financial sector recovery to Chinese forests went pear-shaped. A bit of activist success with the U.S. insurer is some consolation - but Paulson needs more than that.
Crowdfunding for the masses may spoil its promise 21 Mar 2012 Allowing firms to raise capital online or using social media is a good idea. But bringing in novice investors demands stronger rules for startups, which U.S. lawmakers don’t seem to appreciate. Without safeguards like audited financials, wider crowdfunding will be a disaster.
Fully-stocked Fed board needed to navigate exit 21 Mar 2012 The White House’s bipartisan duo Jeremy Stein and Jerome Powell could bring the central bank’s board back to full strength in time for what may be a rocky withdrawal from easy monetary policy. The candidates are strong - whether the Senate will also be remains to be seen.
UK budget deserves lukewarm applause 21 Mar 2012 George Osborne has trimmed income tax for the very rich and less well-off, and further eased the burden on corporations. But fiscal restraints mean that what the UK chancellor gives with one hand, he has to take with the other. Rebuilding Britain’s finances remains a long road.
Chevron’s criminal scrape may backfire on Brazil 21 Mar 2012 A prosecutor in Brazil is chasing the oil titan for a spill about 0.1 percent the size of BP’s Gulf gusher. This over-reaction may reflect one lawyer’s ambitions. Still the fact that Petrobras has escaped such punishment will add to worries that outsiders face a double standard.
EU eases insurers’ worst capital fears – for now 21 Mar 2012 The European Parliament has accepted that British insurers need protection from the EU’s sprawling new regulatory framework. That’s a relief. But the Solvency II rules could yet have unpleasant consequences. The likes of Pru could still move their headquarters away from Europe.
U.S. justices put hazy patent rules back in focus 21 Mar 2012 A unanimous Supreme Court said reading medical tests is, like gravity, based on a law of nature that can’t be patented. The ruling should cut infringement claims by diluting protections for other fuzzy and overly broad ideas. The upshot could be a healthy boost for innovation.
Ethical economy: More charity, less bureaucracy 21 Mar 2012 The growth in prosperity over the last century has been a boon to the poor, but the welfare state has not done them many favours. It’s time for the state to retreat from poverty relief. More charity and less bureaucracy would ultimately be better for the whole society.
Saudi words won’t ease pressure on U.S. fuel prices 21 Mar 2012 Despite its reassurances, Saudi Arabia has imperfect options to prevent U.S. fuel prices from reaching risky levels seven months before the presidential elections. Sanctions on Iran, meanwhile, allow Riyadh to benefit from both strong oil prices and high production.
U.S.-Russian trade relations need serious reset 21 Mar 2012 The Jackson-Vanik amendment linking U.S. trade rules with the former USSR to emigration policies is obsolete and must be repealed. Some want it replaced with a new law pressuring Moscow on human rights. But bundling the two issues together is naive and counter-productive.
Farmland promises real investment harvest 21 Mar 2012 The hunt is on, among fearful long-term investors, for inflation protection. History suggests that agricultural land could provide part of the answer. But ownership brings responsibilities, costs, and risks that need close management.
Judges’ words can speak as loudly as actions 20 Mar 2012 Leo Strine and Jed Rakoff have become known for their tough and snarky rulings, including recent ones thumping Goldman Sachs and Citigroup. Jurists don’t always have the full force of the law needed to up-end the status quo. But the bully pulpit is proving just as powerful.
Student debt may land double whammy on US growth 20 Mar 2012 Graduates are forking over far more in loan repayments than a decade ago, easily outstripping salary growth. Over time, that’ll dent GDP. Defaults are rising, too. With Uncle Sam now holding $450 bln of student debt and rising, that puts taxpayers on the hook - again.
UK’s credit easing should be just a first step 20 Mar 2012 The government has earmarked 20 billion pounds in guarantees to help provide cheaper loans to small businesses. Harnessing the UK’s low borrowing costs is welcome. But if SMEs are genuinely being starved of credit, there are several other ideas the government could explore.
Glencore tiptoes onto the Canadian prairies 20 Mar 2012 The commodity trader has roped in two local partners for its $6.1 billion purchase of Viterra, the Canadian grain firm. That setup nearly halves its outlay and takes out some unwanted businesses. It also reduces the risk of a BHP-style political backlash.
Amazon hedges against the rise of the machines 20 Mar 2012 That’s one way to explain the kooky $775 mln purchase of Kiva. Either that or Jeff Bezos has a robot fetish. It’s not clear what the deal offers shareholders. Automating Amazon’s warehouses makes sense. Buying Kiva droids, rather than their maker, seems the more rational approach.
Vatican bank struggles to be cleansed of past sins 20 Mar 2012 JPMorgan has closed the Holy See’s account due to a lack of transparency. The Vatican is also straining to be admitted to the list of countries that comply with anti-fraud and money laundering rules. It should either close the bank, or come clean about its shady past.
Jefferies heralds Wall Street return to mediocrity 20 Mar 2012 The New York securities firm reported a one-third jump in revenue powered by fixed income. That’s a welcome relief for the industry at large. But it only lifts Jefferies’ ROE to 9.5 pct. Absent all the juice from Europe’s bailouts it looks like another so-so year in finance.