Hugo Dixon: LTRO was a necessary evil 5 Mar 2012 The ECB’s decision to pump 1 trln euros into European banks could reduce the pressure on governments to reform, while allowing undeserving banks to make bumper profits. But the bailout prevented an even worse outcome. The priority now is to limit the bad side-effects.
Reform no sure bet as winner Putin loses his grip 5 Mar 2012 Investors are wrong to hope that Vladimir Putin will use his new presidential mandate to bring reform and stability. Russia’s strongman isn’t likely to pursue policies which could speed up his political demise. But if he doesn’t reform, the end of his rule will not be peaceful.
Wen passes ball on China’s needed reforms 5 Mar 2012 The outgoing premier cut China’s growth target in his last parliamentary address, but gave little news on big issues like inequality, the yuan and food safety. A focus on stability makes sense, but the longer important reforms are ignored, the more costly they may be to implement.
Citi steals governance march as Parsons quits 5 Mar 2012 The recovering megabank is keeping the split at the top when the current chairman leaves in April. That’s an example other Wall Street firms should follow. After sitting on Citi’s board for 16 years through several crises, it’s finally a decent legacy for Parsons’s reputation.
Apax finds French twist on bankruptcy tourism 5 Mar 2012 Buyout house Apax may use French law to weaken creditors’ hands in a debt restructuring. It is risky, and may draw accusations of opportunism. But this novel twist on the way continental companies relocate to the UK to use its bankruptcy law may appeal to other buyout firms.
Zynga has less to fear from mobile than Facebook 2 Mar 2012 The online gaming company is diversifying away from the social network. But one trend affecting its giant symbiotic partner shouldn’t much worry Zynga - the shift to mobile devices. Ad-dependent firms like Facebook and Yelp could lose out, but Zynga’s revenue model is different.
Corporate political donors don’t need SEC policing 2 Mar 2012 As election spending soars, the watchdog faces pressure to make firms disclose their campaign contribution largess. Some already do, thanks to shareholder proposals. A broad rule would be an unnecessary venture into politics and stretches the idea of investor protection.
Would-be U.S. TV disrupter reveals flaws in law 2 Mar 2012 Broadcasters claim online TV startup Aereo is violating copyright by streaming programs with tiny antennas. The company says it merely mimics what viewers did for decades with set-top and roof-top versions. The legal contortions show how old rules often fail new technology.
Review: Free will, shopping and bad habits 2 Mar 2012 We have free will, but less than we think - unconscious routines fill our lives. Charles Duhigg’s “The Power of Habit” taps brain science to explore the ramifications of this, both hopeful and sinister. We can change habits, as people and groups. But habits destroy, too.
Deficit target fetishism could deepen EU recession 2 Mar 2012 Euro zone leaders are wasting an opportunity to be more flexible about deficit targets. Their blind discipline-obsession is self defeating. In the short term, excessive austerity will worsen the recession. In the long term, it will compromise efforts to ensure fiscal prudence.
ECB handout carries risks of renewed bank backlash 2 Mar 2012 Barclays says the profit from 8.2 bln euros of cheap central bank loans won’t be included in bonuses. But benefits of the rally triggered by the ECB’s largesse will be harder to strip out. Unless the broader economy shares in the recovery, banks will become targets again.
ING victory may be game-changer for 2008 fall guys 2 Mar 2012 An EU court has found in favour of the Dutch bank in its battle against the European Commission over state aid penalties imposed after its 2008 bailout. That’s good for ING. But it could also ease the burden on other crisis casualties like RBS, Lloyds and Commerzbank.
Dutch houses are another euro zone drag 2 Mar 2012 Which country outside the euro zone periphery is in recession? It’s the Netherlands. A house price bubble is deflating. Tax deductibility for mortgages needs to go, but that’s another concern for consumers. The Dutch burst bubble is a troubling drag on euro zone growth.
India should hold its nerve on stock auctions 2 Mar 2012 New initiatives don’t always succeed first time. The Indian government’s auction of shares in ONGC, the oil and gas group, could have flopped had it not been for last-minute intervention. But as long as Delhi learns, auctions can still play a valuable role in privatisations.
Spain must fix absurd electricity market 2 Mar 2012 Power producers have for years been forced to sell electricity at below cost. It’s hard to see how consumers can now be migrated to economic pricing without further damaging the economy. There’s no easy way of normalising the situation. The government faces some hard decisions.
Top hedgies show Wall Street how it’s done 1 Mar 2012 The $3 bln paycheck for Bridgewater’s Ray Dalio, as calculated by Forbes, hasn’t generated the outrage directed at investment bankers. The message seems pretty clear: Create your own business, reward investors, too, and don’t go public. Oh, and skip the government bailout.
Brazilian banking star puts $15 bln value to test 1 Mar 2012 In three short years, André Esteves has dealt his way to a six-fold increase in the price of his BTG Pactual. Wall Street can only dream of such riches. Former owner UBS must be quietly weeping. But the planned IPO will reveal just how solid the investment bank’s foundations are.
Kinder deal conflicts deserve a second hearing 1 Mar 2012 A judge was right not to block the pipeline owner’s $21 bln acquisition of El Paso over the skewed motives of Goldman, Morgan Stanley and the target’s CEO. But it’s also a good idea for shareholders to keep the fight going. Penalizing misaligned incentives is the best way to stop them.
Strong-arming YPF would do Argentina few favours 1 Mar 2012 Fears that President Fernandez will nationalise the country’s biggest oil company have receded. But the state is still cajoling YPF to boost output. Such Chavez-like tactics are counterproductive, scaring off foreign investors needed to exploit Argentina’s new oil and gas finds.
Euro zone crisis over – for now 1 Mar 2012 Italian and Spanish 10-year bond yields have fallen below 5 percent. Cheap money and new governments’ ability to reform have won over markets. But the ECB will be reluctant to help more, Greece and Portugal are still problems – and the whole periphery is mired in recession.
UK needs a plan B before abolishing 50 pct tax 1 Mar 2012 The government is under fresh pressure to scrap its top tax rate. That would make economic sense. The snag is that it would be politically difficult. The way forward is to introduce a more intelligent levy on the wealthy – say, a revamped property tax.
Don’t penalize money funds for the sins of banks 1 Mar 2012 The SEC wants to step up regulation of money market funds. But their losses have been relatively trivial and mostly non-systemic, while providing savers with diversification from insured deposits. A better idea would be to clearly delineate their risks from those of banks.
Man’s new dividend policy leaves plenty of flex 1 Mar 2012 The hedge fund group’s modified payout policy gives shareholders some of the assurances of a traditional progressive dividend policy. If the good times roll, investors may get extra cash too. But Man is also reducing the risk of being cornered by its own generosity.
Scarce U.S. small-cap IPOs need nurturing 1 Mar 2012 Efforts in Washington to cut regulation for emerging firms won’t reverse a decade-long slide in smaller offerings. Technology has done more to keep companies away from public markets than red tape. One way to escape the hyper-liquidity squeeze may be to embrace the past.
Weidmann’s ECB agitation more dangerous than Weber 1 Mar 2012 The Bundesbank head has warned the ECB over the dangers of loose liquidity. The move echoes the battle over bond-buying that led to the resignation of his predecessor, Axel Weber. Weidmann’s worries are more controversial in that they appear to stem from the risks of a euro exit.
China’s march to currency dominance just got longer 1 Mar 2012 When the yuan looked bound to rise, investors abroad were desperate to hold it. That boosted the currency’s global profile. Now expectations have changed, and yuan deposits in Hong Kong have fallen 8 percent in two months. There are no short cuts to displacing the dollar.
Paranoid Putin could still sink Russian hopes 1 Mar 2012 Once elected president, Putin can choose to implement a reformist agenda. That would be the best choice for Russia. But if he lets his paranoid self take over, he will be tempted to prolong his rule at all costs. Then the nation would be headed for trouble.
Kim Jong-un could thaw dictatorship into growth 1 Mar 2012 If North Korea’s basketball-loving young master really wants to build on his limited nuclear deal with the U.S., land reform would be a good place to start. That should boost food supplies and stimulate small business. Privatizations, big finance and crony capitalism can wait.