Doubling down on Alitalia bad idea for Air France 3 Oct 2013 After having burnt 1.1 billion euros since its 2009 “fresh start”, the loss-making Italian carrier is once again close to the brink. It is trying to convince Air France-KLM to add to its 25 percent stake. The French group isn’t overly excited at the prospect - for good reasons.
Euro states don’t merit sovereign debt privilege 3 Oct 2013 Banks can count most government paper as risk-free. This treatment is plain dishonest for euro zone members. Countries that can’t print their own money can default. Ending the lie would be painful, but the benefits outweigh the cost - particularly if strong states help the weak.
Political decay threatens developed economies 2 Oct 2013 The United States and Italy are bouncing along the bottom. Germany is without a government, France and the UK have weak ones. Extremism, self-serving politicians and the end of strong ideology have taken a severe toll on the single most important part of any economy.
Italy stronger after humiliation of Berlusconi 2 Oct 2013 A schism in the ex-premier’s party forced him to drop a bid to collapse Italy’s coalition government. The crisis leaves Prime Minister Enrico Letta with a stronger mandate for reforms and fiscal rigour. Berlusconi is weakened and disgraced, although he hasn’t been silenced - yet.
Portugal Telecom’s Oi deal is a good stepping stone 2 Oct 2013 The long-anticipated 5.6 bln euro merger of the Portuguese company with Brazil’s largest fixed-line operator creates a highly indebted enterprise, even after a capital hike. And claimed synergies are punchy. But teaming up makes sense in a consolidating Latin American market.
LVMH finds way to keep talent: list it 2 Oct 2013 Shares in Louis Vuitton’s parent company took a hit on news that creative director Marc Jacobs is off. He will focus on a flotation of his fast-growing namesake label, which is part-owned by LVMH. Bernard Arnault may have found an original way to keep hot designers in the family.
Edward Hadas: Elop and the neo-feudal revolution 2 Oct 2013 The Nokia executive’s $25 mln payout is typical of the prevailing approach to top executive pay - vast quantities under all circumstances. The persistence of such anti-egalitarian arrangements suggests a social move backwards: to exorbitant privileges for an undeserving elite.
Nestle lacks a good reason to sell L’Oreal 2 Oct 2013 The Swiss foods company may put its 23 bln euro stake in the French cosmetics group up for sale. If Nestle offloads, it is likely to use the money to fund a share buyback. What’s lacking is clear rationale for the KitKat company to make the break.
Global snowbelt leaves the world behind 2 Oct 2013 From a southern country and want to succeed? Head north, to the global snowbelt. That may be the message of a new Human Capital Index. Talent is squandered in much of the world while newcomers help the U.S. cover up domestic failures. Migration risks reinforcing economic gaps.
Investors rightly shrug off Catalonia’s separatism 1 Oct 2013 Catalan independence has become a hot political topic in Madrid, yet investors are ignoring the region’s threat. They bet that reason will prevail over parochialism, considering the hurdles to full-blown independence. For now Spain’s fragile recovery is a more pressing concern.
U.S. does what it can to de-reserve the dollar 1 Oct 2013 A global currency hegemon intent on shedding its status might try fiscal panics and selfishly erratic monetary policy. The world is still far too reliant on the dollar to care much. But while international clout is never lost overnight, the U.S. is speeding up the end of its era.
Unilever’s emerging weakness is a strategic hazard 1 Oct 2013 The Anglo-Dutch consumer products outfit is suffering from slower growth in the developing world. Brazil and India are tricky and currency swings are hurting too. Unilever has to be wary of complacency. But its broad plan, to run hard at faster-growing markets, remains right.
Politics stops Italy learning new economic tricks 30 Sep 2013 Survival has become the priority for the Letta government, as it was for too many of its predecessors. The longer this is the norm, the more Italy will lag other southern European countries’ success in emulating Germany’s export-reliant growth model.
Great Moderation #2 warrants a muted welcome 30 Sep 2013 Before the 2007 crisis, optimists hailed a new era of steady growth with low inflation. There’s a reprise, but the new moderation is slower and riskier, thanks to high debt and weak politics in rich countries and structural problems in developing ones. Still, it could be worse.
Siemens’ task is about more than cutting jobs 30 Sep 2013 Germany’s industrial giant is slashing headcount by 15,000. Though it has plenty of work on its books, streamlining the workforce is necessary. Yet Siemens’ woes will persist until it tackles its tendency to mismanage large-scale projects and overpay for acquisitions.
Italy’s resignation fever isn’t yet the revolution 30 Sep 2013 The country looks like it is on the verge of collapse, but the wave of resignations in politics and business could just show that it is painfully trying to get rid of its old patronage system. Yet it is too early to tell whether the latest crises are the start of a true renewal.
UK’s politicians race to the bottom on policies 30 Sep 2013 The 2015 election looms. Which party can come up with the worst proposals? The competition is fierce. Labour made an excellent start with a self-destructive cap on energy prices. The government has hit back with mortgage subsidies and bashing the unemployed. The UK lacks leadership.
Xstrata 2.0 is a bet that other miners are wrong 30 Sep 2013 Former Xstrata boss Mick Davis has raised $1 bln from commodity trader Noble and buyout fund TPG to build a new mining group. The idea is that the industry’s current conservatism provides opportunities. Even if that’s right, Davis won’t easily duplicate Xstrata’s high returns.
Berlusconi pushes Italy to the edge, again 29 Sep 2013 Il Cavaliere’s decision to pull his party’s ministers from the coalition government could spook markets, trigger chaotic elections, delay reforms and hurt the country’s fragile recovery. The only silver lining: it could also trigger the long-overdue renewal of Italy’s politics.
Royal Mail should price below middle of IPO range 27 Sep 2013 Shares in the soon-to-be privatised UK postal service would have a chunky dividend yield of 6 pct even if sold at the top of the 2.6-3.3 bln stg price range. But the uncertainty of the growth story means investors should demand more, and resist paying top whack.