iPhone anniversary marks triumph over crisis 29 Jun 2012 Apple rolled out its iconic gadget five years ago, just as Bear Stearns subprime hedge funds sounded the alarm on systemic trauma. Financial woe often impedes development by stifling R&D budgets. But the iPhone is proof of how innovation can defy the odds and overcome hard times.
Mexico’s election provides chance to break taboos 29 Jun 2012 The party that ran the country for 71 years is set to regain the presidency. Enrique Peña Nieto has a historic opportunity to bend the PRI’s power-broking machinery toward long-resisted reforms like freeing up the energy sector. If he doesn’t, stagnation - or worse - may loom.
Review: Looking for an honest man 29 Jun 2012 Most people will cheat, but only to the point where they can still say they are honest, behavioral economist Dan Ariely writes in a new book. Dishonesty is contagious and can be fostered by anger, fatigue, self-regard and even altruism. Yet simple tools can temper the lying urge.
Carlos Brito pays through the nose for Modelo 29 Jun 2012 The Bud boss is drawing a cool $20 bln from the keg to acquire the half of the Mexican brewer he doesn’t already own. To make that work Brito is going to need to brew up more than the $600 mln of synergies he is promising. History suggests that is possible - but it’s a stretch.
Billionaire’s fall from grace has a familiar ring 29 Jun 2012 Stop us if you’ve heard this before. A flamboyant energy boss running a maze-like empire built on lofty promises and burning cash suffers a big loss of confidence from investors. Yes, it’s Chesapeake Energy and CEO Aubrey McClendon. But it’s also Brazil’s EBX and Eike Batista.
Libor rigging looks like victimless crime 29 Jun 2012 Barclays’ deception is bad for the banking industry, but the artificial quotes probably didn’t significantly distort borrowing costs or the economy. There may have been big losers in this scandal, but they aren’t likely to be found too far afield from other banks’ trading desks.
Plenty of room for wrangling over Spanish recaps 29 Jun 2012 Madrid has won a victory of sorts: the euro zone can prop up its banks directly. So the state’s debt load won’t need to shoot up by 100 billion euros. But there are many unanswered questions - including when, on what terms and even if Spain will tap the funds.
Austrian abundance hampers peripheral EU lifeline 29 Jun 2012 On the streets and in the taverns, Austrians are in a surly mood. Selling bailouts of profligate states is tough in a nation with a fifth Spain’s unemployment and solid finances. Such resentment - shared by other core states - helps keep the EU one step behind the crisis.
Euro leaders throw big sandbags on the levee 29 Jun 2012 The euro summit’s decisions will give Italy and Spain some breathing space, with the bailout funds being encouraged to stabilise bond markets and allowed to recapitalise banks once a single banking supervisor is set up. But Germany can still demand its pound of flesh in a few months’ time.
Euro sovereign bond plan may just work 29 Jun 2012 The details are still vague. But if funds are used to provide cash directly to governments rather than buy bonds in the secondary market, there may be enough money to bail out Italy and Spain. But if the countries aren’t held to tough reform, it could be a bridge to default.
Bob Diamond can easily afford his bonus sacrifice 29 Jun 2012 The Barclays boss is waiving his annual bonus for 2012, at a potential cost of 3.4 mln stg. His total pay is a moving target, but at most the bonus sacrifice will torch around half the overall package. Factor in previous awards and the scale of the sop is even smaller.
China samples Hong Kong’s secret sauce 29 Jun 2012 A planned $45 billion financial zone just over the border in Qianhai won’t just allow for experiments with currency conversion. It’s also set to test incorporating Hong Kong legal ideas into China. It shows influence doesn’t only go one way.
Juilliard improves tone of China’s urbanisation 29 Jun 2012 The U.S. fine arts school’s new Tianjin campus will avoid some political problems that beset Western universities chasing the Chinese dollar. For the host city, Juilliard may be largely a trophy - but any idea that improves the quality of China’s city life deserves a hearing.
UK mis-selling case adds to anti-bank frenzy 29 Jun 2012 Britain’s regulator has slapped lenders for flogging interest rate hedges to unsophisticated small businesses. Compensation claims will be another drag on earnings, while new business will be squeezed. Amid the furore over rigging interbank rates, it’s another reputational blow.
Barclays’ board should replace Bob Diamond 28 Jun 2012 A $450 mln regulatory fine, on top of rows over tax and bonuses, has tarnished the CEO’s track record and undermined efforts to revamp the UK bank. Diamond has many strengths and his shoes will be hard to fill. But as long as he is in charge, Barclays will struggle to move on.
Jamie Dimon should be judged on his words 28 Jun 2012 A $9 bln Whale hit would contradict the JPMorgan CEO’s claims that the $2 bln loss could eventually double and that no fire-sale was planned. Even $6 bln would look bad. After his “tempest in a teapot” blunder, Dimon can’t afford to damage his credibility with shareholders again.
Splitting chairman and CEO roles is cheaper too 28 Jun 2012 Good governance dictates that consolidating corporate power with one person, as JPMorgan and AT&T do, is generally a bad idea. New research shows it also costs about 50 pct more for a single chairman-CEO. The value proposition makes two heads even more compelling than one.
Obamacare is here, it’s clear, get used to it 28 Jun 2012 Talk of overturning the Supreme Court’s ruling is empty rhetoric. Even if Mitt Romney defeats Obama, he won’t have the votes to repeal the healthcare law. Republicans and corporate America obsess over the broad lack of certainty. They should embrace the fact they just got some.
Petronas may outsmart market on $4.7 bln gas deal 28 Jun 2012 By paying a 77 pct premium for Canada’s Progress, the Malaysian state firm would seem to confirm clichés about dumb government money. But the world’s third-largest liquefied gas exporter is taking a longer view. Gas-hungry Asia can pay top dollar for Canada’s exported energy.
Libor fallout could trash UK bank earnings again 28 Jun 2012 Profits were savaged in 2011 by huge provisions for mis-selling duff insurance. The hit for Barclays and any other miscreants from rigging interbank rates could be just as painful in 2012. With earnings tight and regulatory burdens to come, no wonder bank shares are tanking.
Vivendi CEO ouster doesn’t count as a strategy 28 Jun 2012 Jean-Bernard Lévy is being shown the door, having failed to close the French telecom and media group’s longstanding conglomerate discount. His exit paves the way for a breakup. Even so, that still leaves big strategic questions unresolved.
Court upholds Obamacare with barely a legal ripple 28 Jun 2012 Saving the president’s healthcare reform may roil the election but won’t change U.S. legal precedent much. Congress stays powerful subject to useful limits in the Medicaid context. The Supreme Court ruling is a reminder of the Constitution’s resilience amid political turmoil.
Murdoch deal is a non-core disposal – not a split 28 Jun 2012 After Brangelina or bananas split, two more or less equal halves remain. To suggest that News Corp’s doing anything similar sounds more like wishful journalistic thinking than clear arithmetic. The Printco’s value amounts to no more than around 6 pct of News Corp’s market cap.
India’s Singh needs cunning to boost economy 28 Jun 2012 The technocrat-turned-politician has said he wants to revive the economy’s “animal spirits”. A wily fox is the species that’s needed. There are ways the prime minister, now also finance chief, can get India moving again without tackling the political opponents of reform head-on.
Euro seniority fiddling may not impress markets 28 Jun 2012 EU leaders today may seek to change the senior status of the euro bailout fund’s loans. This is designed to assuage markets’ fears. But after the treatment of private creditors in Greece’s debt swap, investors know that even equal-ranking public creditors can still avoid losses.
Would the ECB downgrade France? 28 Jun 2012 The European Central Bank is toying with using its own credit assessments when taking sovereign collateral. That would mark a big and welcome step in curbing the power of the ratings agencies. But it’s questionable whether it could exercise judgment free from meddling.
Is this the real Hong Kong handover? 28 Jun 2012 With the British gone for 15 years, the prosperous Chinese territory is about to get its first chief executive who wasn’t in the colonial club: CY Leung. Economically, Hong Kong is firmly hitched to China. The trick for Leung will be to set a course that keeps it distinct.
Brazil’s richest man overpromises, underdelivers 28 Jun 2012 Billionaire Eike Batista is swiftly falling from favor. His flagship oil company OGX lost 25 pct of its value Wednesday after massively cutting output expectations. Batista is a savvy salesman and wheeler-dealer but his failed promises are building up rapidly. Investors beware.
Mission creep may harm China Development Bank 28 Jun 2012 Beijing’s top policy bank, with a $1 trln balance sheet, is spreading the love far from its roots to California and Chinese e-commerce. It may win new influence for China. But as CDB’s fast-growing book becomes more exotic, its minimal losses and low-cost funding are at risk.
Barclays overtakes Goldman for email idiocy trophy 27 Jun 2012 The UK bank’s Libor fixers didn’t just chummily collude on email and add reminders to their calendars. They went a step further by warning each other not to tell anyone. Goldman merely discussed the poor quality of securities it was dumping. A new leading knucklehead is born.