Uber-regulator opens new front with money funds 28 Sep 2012 U.S. money market funds escaped reform at the hands of the Securities and Exchange Commission. Now Tim Geithner wants the Financial Stability Oversight Council to act. But the Treasury secretary looks too ready to compromise with an industry that has lobbied hard against change.
IMF can’t take credit for poor-country prospects 28 Sep 2012 The fund pats itself on the back in the World Economic Outlook for progress in emerging markets, evoking its self-congratulation for rich-nation success in 2007. IMF policies aside, though, technology is helping the developing world grow. That’s a better reason to invest there.
Review: The real way HBOS gave us extra 28 Sep 2012 A new study into the dramatic 2008 demise of one of the UK’s oldest banks lacks some of the fly-on-the-wall drama of other financial crisis tomes. But Ray Perman’s book compensates by skewering the revenue-before-risk approach that lost HBOS its independence.
Apple’s Maps snafu nothing new – just bigger 28 Sep 2012 CEO Tim Cook has apologized for leaving users frustrated - and lost. Launch problems aren’t new. Steve Jobs flubbed iPhone pricing, MobileMe and an antenna. For now Maps is only a hiccup. But Apple’s size and rising competition make avoiding slip-ups increasingly important.
BofA keeps stacking up the Ken Lewis bookends 28 Sep 2012 The bank is paying $2.4 bln to settle a lawsuit that it misled shareholders in the 2008 takeover of Merrill Lynch. It’s by no means the biggest cost of the ex-CEO’s disastrous takeover binge. But it’s still painful. And successor Brian Moynihan still has more tabs to pick up.
Beijing can show politics don’t drive Bo case 28 Sep 2012 China’s Communist Party isn’t too embarrassed to throw the book at a former rising star. Bo Xilai is accused of taking bribes, responsibility for murder and improper sexual conduct. The CCP now has to persuade the public that Bo isn’t being punished for losing a factional fight.
Morgan Stanley keeps a rainmaker by letting him go 28 Sep 2012 Simon Robey is to leave the bank’s London office after 25 years to set up solo. It’s probably more a statement of ambition than a criticism of the integrated model, as the veteran dealmaker will keep ties to his old firm. That sets this exit apart from other boutique escapes.
LSE shock over capital rules hurts Rolet 28 Sep 2012 Boss Xavier Rolet is wisely diversifying the exchange group. But new European rules make an already pricy bid for LCH.Clearnet even harder. With watchdogs everywhere fretting about systemic risk, he might have guessed regulators wouldn’t let clearing houses stint on capital.
Malaysia’s budget goals are unrealistic and risky 28 Sep 2012 The government says it will reward civil servants with bonuses, ply the poor with handouts and still manage to cut the fiscal deficit in 2013 - a goal that’s both unrealistic and unnecessary. If infrastructure spending is cut, the still new investment revival could suffer.
How to make money out of fixing Libor (legally) 28 Sep 2012 Administrating the reformed interest rate benchmark will be put out to tender, under new UK plans. But it is not clear how the reworked scheme will be funded. There may be some licensing income to be had, but user levies may be required if the new regime is to be self-supporting.
Spanish budget sets course for rocky bailout 28 Sep 2012 Madrid’s 2013 budget ticks the right boxes for markets and Europe: a heavy dose of spending cuts and pledges of longer-term reforms. It paves the way for a bailout based on ECB bond buying. But restive regions, and a brutal economic slowdown, mean the path won’t be smooth.
Bumi fiasco shows danger of bad incentives in M&A 28 Sep 2012 Whatever the truth behind alleged financial irregularities at the Indonesian coal miner, Bumi’s woes raise questions about the incentives that drove Nat Rothschild and other big names in finance to migrate the emerging-market miner to London. Merge in haste, repent at leisure.
What’s the best gauge of China’s growth? You pick. 28 Sep 2012 Numbers abound, but good explanations are scarce. Breakingviews has chosen ten indicators - from steel output to Beijing pollution - and created an interactive index to give a picture of what’s happening. The upshot: things aren’t as bad as in 2008, but they’re not far off.
UK blazes the right trail on Libor reform 27 Sep 2012 The scandal-hit benchmark should be retained but regulated, streamlined, and based on market data, says Martin Wheatley’s official review. Picking the right body to oversee the reformed process is crucial. But the proposals are a sensible blueprint for restoring trust in Libor.
Is HP facing a Xerox or Kodak-like future? 27 Sep 2012 All three iconic companies used to be leaders in their respective industries and technologies. Today, Xerox is muddling along and Kodak is bust. The smart money is split on whether HP can return to glory. But tech history suggests the bears will print the winning ticket.
Warner Music echoes some off-key EMI chords 27 Sep 2012 With the Beatles’ parent officially swallowed up by Universal, Warner is left as a tiny number three. Like the old EMI, it is reliant on older acts, heavily indebted and led by an industry outsider. Owner Len Blavatnik has deep pockets, but the formula still doesn’t sound right.
Buyout firms risk conflicts in cosying up to SWFs 27 Sep 2012 CVC and Providence are the latest private equity houses to sell slivers of themselves to big sovereign and pension funds. A part-sale brings capital to expand, or to plough back into the group’s own funds. But it could alienate other stakeholders.
Few newly printed Fed dollars make it to consumers 27 Sep 2012 Ben Bernanke has called quantitative easing a Main Street policy. But American homeowners have only seen a sliver of the $2.3 trln of cheap money the Fed has created so far. If the central bank is really trying to juice consumption, more QE doesn’t look like the way to do it.
Americans can’t feel better than companies forever 27 Sep 2012 U.S. consumers are cheerier about life. But the corporate world is gloomier. If consumption jumps, it could soothe the business world’s blues. But the weak global economy and dysfunction in Washington are stunting hiring and could drag people down along with executives.
Advice to French refuseniks on 75 pct tax: move on 27 Sep 2012 The socialist government’s plan to take three quarters of annual income above 1 million euros may well be economic and intellectual nonsense. But in this age of austerity, clumsy protests from privileged taxpayers can only increase social resentment.
Wealthy Asians power global hybrid debt boom 27 Sep 2012 Yield-hungry Asian investors are snapping up the lion’s share of junior bond issues. Cheap financing helps to juice their returns. But with yields at record lows, piling into subordinated corporate debt is risky. Any spike in default rates would leave investors with heavy losses.
How Sahara left Indian investors feeling deserted 27 Sep 2012 The conglomerate raised $4.5 billion from millions of small investors. Now it has been ordered to return the cash, its finances face a stiff examination. The saga also raises questions about India’s financial regulation - and how such scandals can be avoided in future.
Japan’s new LDP chief a reversion to welcome past 27 Sep 2012 Budget-cutting former prime minister Shinzo Abe has been chosen to lead the opposition. The current DPJ government has done half Japan’s budget work by increasing the sales tax from 2014. Now an Abe premiership is the country’s best hope of cutting pensions and other spending.
More leeway won’t help SEC without better cases 26 Sep 2012 The watchdog is asking the U.S. Supreme Court for more time to sue investor Marc Gabelli for wrongdoing a decade ago. Granting the request could make finding fraud easier. But effective enforcement requires making solid cases against perpetrators. The SEC too often falls short.
Arctic oil setbacks may be darkness before dawn 26 Sep 2012 Warnings from Total’s CEO about the safety of drilling in the region might sound like sour grapes. But environmental issues forced Shell to delay plans and deterred peers. Technological progress and $110 crude, though, won’t keep Big Oil from tapping the Arctic’s riches for long.
Letter to the Editor: Praise for Pawlenty 26 Sep 2012 Steve Bartlett, outgoing CEO of The Financial Services Roundtable, takes issue with a Breakingviews article questioning the choice of Tim Pawlenty as his successor. Bartlett argues that the former Minnesota governor is in fact a great candidate to run the lobby group.
It’s Putin vs Lebedev now. But who’s the hooligan? 26 Sep 2012 The Russian tycoon and UK media owner spoke out against the Putin regime and has now been charged with “hooliganism” after getting involved in a brawl during a TV interview. It is too easy to see this as a precursor to the confiscation of Lebedev’s Russian business interests.
$4 bln Santander IPO puts Mexico bulls to the test 26 Sep 2012 That’s a handy sum for the Spanish bank’s coffers. And at 2.2 times book value it might look reasonable for a Mexican retail finance business churning out 20 pct returns. But fervent competition, newbie borrowers and rising default rates could soon put that under pressure.
Ethical economy: Who suffers in the U.S. economy? 26 Sep 2012 Some think the American middle class is imperilled because median income has fallen by 9 percent from the peak. But that decline is a statistical artefact. Others worry about increasing inequality in favour of the rich. The inequality against the poor is a more serious problem.
Too soon to cheer Turkey’s soft landing 26 Sep 2012 Turkey’s vulnerability to an external shock hasn’t shrunk with the current account deficit. Short-term borrowing is rising and exports are flattered by gold sales. Amid slowing economic growth and volatile domestic and regional politics, there’s plenty of reason for caution.