Year: 2009

CIT’s semi-rescue suggests slow climb up

20 Jul 2009

A $3bn loan has warded off a Monday bankruptcy filing, but the US lender still doesn t have a viable business model. It will struggle and shrink and may yet fail. CIT s woes are a reminder: while traders rake in profits, the real economy and normal banking continue to struggle.

Cowdery and pals could make nearly £100m from Friends

20 Jul 2009

And that wouldn t be a stretch. To achieve that, they would merely need to boost its value by 15% a year. For a proposed acquisition that is neither in cash nor involves a premium, this incentive structure is too rich. Something will have to give.

Swine flu unlikely to make UK economy sicker

20 Jul 2009

According to some UK economists, the country s next crisis will be epidemiological. But predictions that swine flu will cut the country s GDP by 5% look overdone. Only a virulent mutation could do that. Fear may hurt a little, if it cuts into leisure and tourism.

Porsche-VW truce wouldn’t end bad governance

20 Jul 2009

The feuding families which control the debtladen sports car maker seem finally to be close to the obvious deal: VW buys out Porsche s car division. But the row has highlighted both companies strange corporate arrangements. Other disputes will arise unless these are changed.

Tory bank plans deserve two cheers

20 Jul 2009

The UK opposition which is likely to be in government in a year has many good things to say about how to prevent future bubbles. But the Tories are too fixated on abolishing the FSA. This, at best, would amount to rearranging the deckchairs.

Fortress faces up to reality

20 Jul 2009

CEO duties at alternative investment firms were light while the boom lasted. No longer. Fortress founder Wes Edens is following peers such as Guy Hands at UKbased Terra Firma in handing over the top spot to focus on investing. The move, while overdue and imperfect, makes sense.

Jenkins exit good for Barclays PR – and business

20 Jul 2009

The UK bank s top earner may want to set up on his own or keep his huge pay package secret. Whatever his reasons for going, Barclays should have few regrets. Jenkins was an easy target for regulators, investors and the public. And Barclays can now afford to hire more rainmakers.

Why does Morgan Stanley want to hire a hedgie?

20 Jul 2009

The Wall Street firm is supposed to have disavowed prop trading. But bringing Jack DiMaio back to banking could be a smart move. He was a seasoned sellsider before, and knows what clients want. And if Morgan Stanley ever restarts risktaking, DiMaio would be an asset.

India right to reject US line on global warming

20 Jul 2009

A hard cap on emissions would unfairly stunt growth for a relatively low emitter. And US carbon tariffs could damage India's exports. But the populous country matters to global emissions goals. The US should compromise a carbon tax could be India's best option.

Turkey’s courts have chance to help stability

20 Jul 2009

The legal system is set to decide if two retired army generals are guilty of plotting to overthrow the government. Badly handled, the case could reignite the country s blistering political divide. But if the rule of law prevails, one base for a sound economy could become firmer.

China’s new triumphalism is premature

17 Jul 2009

Arrests of Rio Tinto staff on bribery charges look like a power play, to be filed with swipes at US monetary policy. Economic success gives China's policymakers more global clout. But they should be careful. China still needs the world almost as much as the world needs China.

Friends calls Resolution’s bluff on consolidation

17 Jul 2009

Just day after rejecting the chance to join Clive Cowdery s nascent insurance empire, the UK insurer offered to buy his company out. If he really cares more about consolidation than about his highly lucrative management structure, it will be difficult for him to say no.

Jon Huntsman turns poacher

17 Jul 2009

The angry chemical company boss won a $1bn settlement from Apollo's Leon Black after the private equity firm walked away from buying his business. Now Huntsman has raised his own $1.1bn buyout fund. It's like turning from victim to vigilante and he'll need to remain hardnosed.

Uncle Sam may do GE shareholders a favour

17 Jul 2009

If the Obama administration's proposed regulatory reforms happen, the industrial group would probably have to hive off its GE Capital finance arm. The conglomerate s bosses are adamantly opposed to the idea. But GE s secondquarter results don t really help their case.

Iceland’s pain moves closer to EU gain

17 Jul 2009

A close vote in the midAtlantic island s parliament has moved the ravaged economy closer to EU safety. The ultimate harbour is eurozone membership. That is still years away, but the humbled Vikings journey will be smoothed by the willingness to wear the economic hair shirt.

Great company curse stalks Nokia

17 Jul 2009

Apple and other smaller rivals are running rings around the Finnish giant in the smartphone sector. Nokia recovered from similar design lags when the fastchanging, cyclical handset market was growing. This time it will be harder to catch up because sales have plateaued.

Citi, BofA hide losses behind asset sales

17 Jul 2009

The two struggling megabanks secondquarter earnings revealed a few rays of hope for the future. But their seemingly decent results relied on a combined $20bn from asset sales and a bit of help from the taxman. Strip those out and both firms lost more than $2bn apiece.

UK bank governance plan misses tricks

16 Jul 2009

Bank boards failed to hold executives to account during the bubble; and shareholders failed to monitor the boards adequately. While the governmentappointed Walker Review has some useful things to say on both points, it is insufficiently radical.

JPMorgan shows banks can learn from dumb mistakes

16 Jul 2009

In the last big downturn, JPMorgan was laid low by a poorly performing investment bank and a muddled retail banking strategy. Under Jamie Dimon s leadership the bank has fixed both, creating one of the winners in the industry. The big test will be to keep it that way.

Could CIT and Lehman have saved each other?

16 Jul 2009

Uncle Sam won t send the $76bn lender a lifeboat, dooming it to the same bankrupt fate as the Wall Street firm. Ironically, if Lehman had consummated talks to buy CIT back in 2002, the resulting pig s breakfast might have been considered too big to fail.

Google’s Q2 killer app: cost-cutting

16 Jul 2009

Revenue at the search giant has stagnated amid the downturn. Yet the company has found a way to deal with this dilemma. It is cutting costs and reducing its focus on wacky ideas. It s not rocket science, but it s a sign Google is accepting its increasing maturity.

Lloyds, RBS unlikely to do a BofA walk-away

16 Jul 2009

The US bank's decision to ditch $118bn of state guarantees on toxic assets could theoretically be copied by its UK peers. But don t bet on it. They are looking at two years of savage losses. Without the state s commitment to take most of the pain, investors could panic again.

As California goes, so goes the nation

16 Jul 2009

US states and municipalities are in a budget bind. While they have the ability to tax, they can t bail themselves out by printing cash like the federal government. California s handling of the matter will be the best sign of whether a broader crisis occurs.

US right to demand renminbi rise as China bubbles

16 Jul 2009

The US Commerce Secretary made a blunt call for China to let the renminbi rise. Beijing should listen. A new policy would reduce global risk and assist recovery. Closer to home, a lower surplus would slow the dangerously fast expansion of China s money supply and stock market.

Starbucks gets into the poetry beat

16 Jul 2009

The java giant is restyling three Seattle stores as indie coffee houses, serving up wine and poetry slams. This could be a smart extension, like the ones some clothing retailers have managed. But it s not without risks of its own.

City pay proposals don’t hit mark

16 Jul 2009

The UK s Walker Review is torn between trying to stop a future crisis, helping banks maximise shareholder value and giving politicians a stick with which to beat highlypaid bankers. Not surprisingly, its proposals on remuneration are a bit muddled.

Hedge funds thrive with less cash to bet

15 Jul 2009

After a dismal 2008, they had a strong first half. One reason: with losses, withdrawals and, above all, a huge reduction in leverage, they wield only about a quarter of the nearly $10 trillion firepower they had at their peak. So trades are less crowded and more profitable.

North Korea needn’t fear life after Kim

15 Jul 2009

The reported illness of the hermit state's Dear Leader suggests the prospect of a longmooted merger with the South. Both would need help to avoid the mistakes Germany made in its reunification. But a combined Korea could be good for both sides, and for the world.

It’s too early for the SEC Preservation Society

15 Jul 2009

That s a big part of the agenda of the Investors Working Group, cochaired by two former SEC heads. The body wants to give the agency more power and resources. But without a clear examination of the SEC s failings and the origins of the crisis, this is cart before horse.

Chinese GDP a case of fake it ‘til you make it

15 Jul 2009

Economists eagerly await China s imminent output figures, but few take them at face value. That s wise some numbers are too important to be reliable. Fortunately, less sexy figures, from car sales to steel demand, also suggest the economy is tentatively recovering.