College-sports fraud case obscures the real crime 26 Sep 2017 Federal prosecutors have charged 10 people, including four coaches, with using bribes to influence university basketball players. The government says the case exposes the dark underbelly of the sport. But fraud flourishes largely because the NCAA cartel refuses to pay athletes.
U.S. will pay for Puerto Rico one way or another 26 Sep 2017 The already-bankrupt commonwealth is reeling from the devastation wreaked by Hurricane Maria. Blackouts may persist for months even as a $72 bln debt bill looms. Without swift and generous aid from Washington, a mass exodus for the mainland will only increase the ultimate cost.
Botched SEC hack probe a warning for other agencies 26 Sep 2017 Chair Jay Clayton says he doesn’t know the exact timing of a 2016 breach and his predecessor may not have been notified. It’s troubling given the sensitive market data kept there, and a heads up for the CFTC and other watchdogs. Investor worry over their defenses is justified.
Macron’s European vision too honest for own good 26 Sep 2017 The French president set out comprehensive proposals to overhaul defence, taxes, social policy and more. Though he deserves credit for articulating Europe’s potential, his detractors have many targets to attack. Candour about EU integration makes such dreams harder to realise.
Italian banks become unlikely governance converts 26 Sep 2017 UniCredit will give its board authority to propose directors. Mediobanca has taken similar steps. This reflects the loss of power of foundations and investor blocks. Broader shareholder representation could make banks healthier, if boards resist the urge to feather their nests.
German vote bodes ill for utilities and autos 26 Sep 2017 Chancellor Angela Merkel may well turn to the Greens to form a coalition government. The party’s priority is combating climate change. Carbon-heavy power producers like RWE and carmakers wedded to the internal combustion engine are likely to be the first in the firing line.
AIG deserves to be SIFI-free, with caveats 25 Sep 2017 Watchdogs delayed a decision on whether to remove the insurer’s status as a systemic risk. It seems justified, as AIG has halved in size since its $182 bln bailout and long ditched the unit behind its collapse. But regulators should use safeguards to avoid deregulating too far.
Italy’s 5-Star puts respectable face on radicalism 25 Sep 2017 The protest movement, doing well in opinion polls, has named a 31-year-old lawmaker as its leader. Luigi Di Maio’s cool appeal contrasts with founder Beppe Grillo’s vitriolic style and may win over moderate voters in 2018. But going mainstream could undermine its basic appeal.
Diminished Merkel will choke ambitious euro reform 25 Sep 2017 One of Chancellor Angela Merkel’s prospective coalition partners rejects closer euro zone fiscal ties. A weak election showing has made her own party restive and the right-wing AfD will hound her. Preserving the euro's status quo is the best that Europe can expect from Germany.
Germany’s Caribbean coalition will shake Europe 24 Sep 2017 The country’s two biggest parties suffered their worst post-war election result. That leaves Chancellor Angela Merkel with little choice but to forge a tricky and fragile “Jamaica” coalition with the pro-business FDP and the Greens. It’s a blow to hopes for European Union reform.
Theresa May embraces “extend and pretend” Brexit 22 Sep 2017 Fifteen months after Britain voted to leave the European Union, the prime minister still has no coherent idea how to deliver it. Her proposal to keep things as they are until 2021 lowers the risk of a chaotic Brexit. If accepted, the temptation will be to delay further.
Russia’s state banks profit from financial turmoil 22 Sep 2017 The rescue of two private lenders has raised fears about the country’s banking sector. Savers have flocked to state-owned Sberbank and VTB, which have seen deposits swell by 1.2 pct and 18 pct, respectively this year. The tumult could leave the pair with better lending margins.
Siemens-Alstom train-deal economics trump politics 21 Sep 2017 The German firm may merge its train unit with the French peer Alstom, rather than Bombardier. That would create a global player in high-speed rail, but leave Siemens in an awkward embrace with joint-owner French government. It’s a price worth paying to create a European champion.
SEC failure puts U.S. cyber security on back foot 21 Sep 2017 Unlike the Equifax hack, the breach into the watchdog’s systems doesn’t put people’s data at risk. But the SEC buried its belated disclosure of the attack in a broader statement on cyber issues. It sets a terrible example on transparency for the publicly traded firms it oversees.
Hadas: Crypto-currencies presage new monetary era 21 Sep 2017 No, bitcoin and its peers won’t become an electronic version of the gold standard. Rather, the speculation surrounding them indicates a financial system out of control. If the frenzy ends in a crash, it’s a chance to revive the old idea of a centrally controlled money supply.
What Carney can learn from Yellen 21 Sep 2017 Fed Chair Janet Yellen showed rate-setters can shock markets even when they stick to the script. That’s a lesson for the Bank of England’s Mark Carney, who has talked up a rate rise this year. Like her, he may have to hike without having solved a host of economic puzzles.
UniCredit has narrow lead in Commerzbank M&A fight 21 Sep 2017 The Italian bank wants to buy the 14 bln euro lender. BNP Paribas is also a reported partner. A deal makes sense: the target is cheap, and Germany needs to sell a stake. UniCredit’s scale gives it an edge, but Berlin may favour the French bank, or a domestic peer like Deutsche.
Russian bank aid plea tests too-big-to-fail triage 20 Sep 2017 B&N Bank, the country’s 12th-largest lender by assets, has asked for help less than a month after the central bank rescued rival Otkritie. Support would blur the line between systemically important banks and others. But rejecting the request could cause problems to spread.
China “Belt and Road” waves red flag for investors 18 Sep 2017 Beijing’s vision of infrastructure connecting some 70 countries already has fund firms rushing to create vehicles to lure investment. But broad index ETFs miss that many projects make little commercial sense. Skeptical punters should focus on a narrower set of potential winners.
What we’ve learned about Brexit so far 19 Sep 2017 Britain’s divorce from the European Union is reaching the critical stage where talks are meant to shift from principle to detail. Progress is being slowed by bickering, technicalities and economic fog. Despite the risk of Brexit fatigue, five clear lessons stand out.