Uniting fractured GOP on finances could be winner 28 Aug 2012 In a tight election, a divided Republican party won’t beat President Obama. His opponent, Mitt Romney, must bring together old-school conservatives, Austrian economists, Bible beaters and tea partiers by focusing on common ground: repairing Uncle Sam’s balance sheet.
Romney’s U.S. oil gusher would only be a trickle 28 Aug 2012 The Republican presidential nominee boasts he can boost domestic production by opening more federal land to exploration. But his claim that 62 pct of Uncle Sam’s crude is off-limits is misleading. Ecological havens aside, Big Oil already has the run of America.
Jury’s haste takes shine off Apple’s victory 28 Aug 2012 Panel members ignored instructions, miscalculated damages and generally seemed more eager to wrap up the case than get it right. That could help Samsung overturn the $1.1 bln verdict. Even if it doesn’t, though, the judgment reveals how legal complexity muddles the smartphone wars.
Central bankers should discuss string theory 28 Aug 2012 No, monetary strongmen shouldn’t turn to abstruse physics at their annual global confab in Jackson Hole this weekend. They should worry about the possible effect of repeated pushes on monetary strings. Huge wads of money can produce not much growth and too much inflation.
Peace with rebels would solidify Colombia’s gains 28 Aug 2012 President Santos may start talks with FARC guerillas. Thanks to improved security, Colombia has already seen what amounts to a peace dividend. Still, lower military costs would further improve its finances, and coaxing fighters out of the jungle could boost economic confidence.
The what, when and Hu of China’s big changeover 28 Aug 2012 China’s political transition lacks the drama of the U.S. presidential race. There will be no televised debates or nail-biting final count. But if all goes well, the new leaders of the world’s second largest economy will be in power for a decade. It’s probably the geopolitical event of the year.
German euro differences strengthen Draghi’s hand 28 Aug 2012 Angela Merkel has given a qualified blessing to the ECB president’s plan to buy sovereign bonds, which the Bundesbank head opposes. Meanwhile the German member of the ECB board supports the idea. The cacophony helps Mario Draghi ahead of a crucial meeting next week.
India’s coalgate fiasco could be an opportunity 28 Aug 2012 The government’s flawed coal policy has caused political gridlock. New Delhi needs a plan to show it’s learned from its mistakes. Handing mines to individual firms hasn’t helped get the black stuff out of the ground. A better approach would be to break Coal India’s monopoly.
Egypt’s posturing pound pledge may return to bite 28 Aug 2012 Mohamed Mursi has ruled out a devaluation days after a senior advisor acknowledged its necessity. But Egypt would need a swift recovery in tourism and foreign investment, the end of insecurity and a deal with the IMF, for its president not to eat his words.
New York bank merger may be too good to be true 27 Aug 2012 M&T is set to pay $3.7 bln for Hudson City, less than tangible book value and only a 9 pct premium. The deal expands M&T’s reach, solves Hudson City’s troubles and boosts capital and earnings. Savings cover the premium without big job losses, too. The big risk is a rival offer.
Outfoxed Bill Ackman tries to guard mall henhouse 27 Aug 2012 The hedge fund boss is upset at how Brookfield, a fellow owner of $19 bln GGP, raised its stake in the U.S. shopping center operator. But the tactics could have come out of Ackman’s own playbook. Even so, he’s on target in suggesting what GGP should do next.
New NY Times boss should keep tight rein on cash 27 Aug 2012 The $300 mln sale price for About.com means Mark Thompson joins a Grey Lady which finally has net cash. But he should resist the temptation to splash out. Free cash flow is hardly stellar, the company still has a pension hole and it has yet to get a handle on its future.
Idle bankers can ill afford Dollar Thrifty deals 27 Aug 2012 A flurry of transactions from IBM and U.S. bank M&T marks a pleasant August surprise. But Hertz’s $2.3 bln acquisition of rival Dollar Thrifty has been three years in the making and six banks are sharing the spoils. That patient, balanced approach won’t work in this M&A market.
Refinery explosion emblematic of Hugo Chavez curse 27 Aug 2012 The blast hobbled PDVSA’s largest plant. The Venezuelan leader’s policy of placing loyalty before commercial prowess may not have caused the accident. But it has warped the nation’s business ethos. Recent moves like saddling the oil company with a weak partner make matters worse.
Consumers can hope Apple patent victory is Pyrrhic 27 Aug 2012 The iPhone maker won big with a $1 bln U.S. judgment against Samsung. In a sense that’s fair, as Apple revolutionized cell phones and rival products mostly look like copycats. But if Google and others push the technology forward to avoid further lawsuits, users may benefit.
Samsung’s stock swoon overstates Apple triumph 27 Aug 2012 The Korean company’s value dropped by $12 bln following its rival’s $1 bln court victory. But even if the damages triple and Samsung loses a year’s U.S. phone sales, the pain won’t be that severe. And it’s still beating Apple in China, where patents aren’t in dispute.
Risky borrowing rules show India’s growth anxiety 27 Aug 2012 The new Indian finance minister is anxious for growth. To bypass the high cost of capital at home, he is pushing companies to borrow in foreign currencies. That’s almost always a bad idea. India’s external debt is not a problem yet; but it can become one all too easily.
Domestic challenger revives China’s search wars 27 Aug 2012 Shares in Baidu have fallen 13 percent since popular internet browser Qihoo launched its own search engine. The internet giant, which benefited from Google’s troubles in China, now has a more formidable rival. The new fight will make the country’s search industry less profitable.
SEC flub on money market funds creates new muddle 24 Aug 2012 Other U.S. watchdogs could force changes on the $2.4 trln industry. But after SEC bigwigs couldn’t even agree to invite comment on reforms, any Plan B will be messy. The episode shows regulators’ priorities, the power of lobbying and the whole oversight structure in a bad light.
Review: Why Uncle Sam fails to fix his finances 24 Aug 2012 David Wessel’s compact accounting of American budgetary politics in “Red Ink” is required reading - along with the Bowles-Simpson plan - for understanding the current electoral battle and the massive challenge that awaits the next president in reforming the U.S. balance sheet.
Virtual foes throw down against networking giants 24 Aug 2012 The latest technology craze to follow cloud computing is software to program networks more efficiently than routers. Billion-dollar paydays for startups are evidence of the hype. Incumbents like Cisco should weather the shift, but not necessarily with their margins intact.
South African mine unrest reflects stuck economy 24 Aug 2012 The poor have gained little in 18 years of democracy. The gulf with the rich is huge, growth isn’t what it could be, and newly wealthy leaders are complacent. It’s no surprise that as, say, in pre-1917 Russia, militant opposition is rising. The ruling ANC has its work cut out.
News Corp’s UK tabloid exposes model weakness 24 Aug 2012 Britain’s best-selling newspaper has printed shots of Prince Harry in the buff. It also concedes that most readers will have seen the pictures on the internet, highlighting the main commercial problem facing the soon-to-be demerged News Corp newspapers. The Web.
China bank investors play “hunt the deposits” 24 Aug 2012 Banks’ lending is limited by their loan to deposit ratios. So they have hit on a clever trick: shift deposits on and off the balance sheet at strategic times. The window-dressing is a worrying sign that regulators are not able to keep the world’s biggest banks in check.
Dropped Aussie coal bid calls end of go-go days 24 Aug 2012 The timing of Nathan Tinkler’s abandoned bid for Whitehaven Coal is apt. A day earlier, Australia’s mining minister caused a ruckus by declaring the resource boom “over”. Mining isn’t finished. But the debt-fuelled approach favoured by this Australian magnate may be.
Indian politics turns from hope to fear 24 Aug 2012 With elections looming, the government’s economic story is deteriorating. And so, as a result, is its politics. When all else fails, communal tension helps shore up the bases of both main parties. That helps them in the face of strong regional parties. But it’s a disaster for India.
Catalonia tests Spain’s flawed regional model 24 Aug 2012 The fiscal woes of Spain’s regions could make it miss its deficit targets. But profligacy only tells part of the story. Catalonia, now pushing for greater fiscal independence, is the clearest example of why the semi-autonomous provinces model needs a revamp.
It’s risky to be big fish in murky Vietnam markets 24 Aug 2012 The arrest of tycoon Nguyen Duc Kien has roiled the country’s tiny stock market. Never mind that he no longer controls the bank he founded: with weak banks, widespread corruption and poor governance, investors fear that if he goes down, he may take the financial system with him.
Citi, UBS well suited to roast Nasdaq on Facebook 23 Aug 2012 The two banks are urging the SEC to reject the U.S. exchange’s minimal $62 mln compensation offer relating to its botching of the social network’s IPO. UBS lost a bundle and may look a bit conflicted. But both companies know all about screw-ups and how to pacify critics.
The old, the poor and U.S. healthcare explained 23 Aug 2012 Republican presidential hopeful Romney’s choice of running-mate Paul Ryan has put government programs like Medicare and Medicaid in the spotlight. Their cost – over $1 trln combined in 2011 – is spiraling. Breakingviews outlines the problem and the different candidates’ fixes.