Year: 2009

China and markets play inflationary chicken

13 Jul 2009

The finance ministry has suffered three flaccid bond auctions amid investor fears of soaring inflation. Beijing has its foot hard on the floor in driving forward its stimulus package. But inflating asset prices show investors are right to be cautious.

CIT provides scary glimpse of GE Capital’s future

13 Jul 2009

Without the kind of US government loan guarantees that GE has generously availed itself of, CIT with $76bn of assets won t be able to fund its balance sheet and will need to shut down. This is GE Capital without the mother ship or Uncle Sam.

Blank cheque companies better off staying blank

10 Jul 2009

Most of the special acquisition vehicles that went public in the boom look set to hand investors' money back. Ironically, these failed Spacs outperformed those that succeeded in doing deals. Lauren Silva Laughlin explains why few should lament their demise.

G8 commitment to trade talks may have some legs

10 Jul 2009

Participants in the L Aquila summit have pledged to conclude the Doha trade talks next year. It would be tempting to see this as another empty promise. But the new US administration s commitment to tackle looming protectionism seems more serious than in years past.

UK bank funding in vicious circle

10 Jul 2009

The sector has £800bn more loans than deposits to fund them. Government funding schemes plugging the gap expire in 2012. If banks can t either deleverage or find substitute funding, the state support will have to continue at a price.

Metlife should take advantage of buyer’s market

9 Jul 2009

The US insurer s strong balance sheet means it is better placed than others to take advantage of rivals low valuations. AIG s sale of its international life insurance business looks ideal the sale is forced and the fit is good.

Geithner drives harder bargain on Tarp warrants

9 Jul 2009

The US Treasury sold warrants attached to bailout loans too cheaply to the first bank to buy them back. Since then, it has got its act together, getting much closer to realistic estimates of market value. Good thing too, with the biggest banks warrants still outstanding.

Russia can’t reform without press freedom

9 Jul 2009

Five years after the assassination of Forbes editor Paul Klebnikov, journalists in Russia are still harassed and the media are under tighter state control. If Dmitri Medvedev is serious about his fight against corruption, he should make sure that the press can operate freely.

BoE adds to doubts over UK

9 Jul 2009

The Bank has put back any pronouncement on quantitative easing until August. By adding to the UK s uncertainties, that is probably a mistake. The likelihood is that a weak economy will prompt the BoE to continue its moneyprinting policy. And that will bring heightened risks.

Citi tries to make nice-nice with its regulators

9 Jul 2009

The latest management shuffle brings Fleet s former president Gene McQuade in to run the core retail franchise answering critics of Vikram Pandit s lack of experience on that front. And the CFO who once called FDIC a tertiary regulator steps aside.

BAA still on a tightrope

9 Jul 2009

The UK airport group avoided a fire sale of Gatwick last week but the need for a quick sale remains. And even after BAA sells Gatwick, it will have to find extra cash to repay maturing debt. Shareholders, led by Ferrovial, could eventually be pressurised to put in more equity.

News Corp £1m gag claim raises awkward questions

9 Jul 2009

Rupert Murdoch has denied knowing that his newspapers coughed up to settle legal action over stories allegedly based on illegal reporting. If true, the claims pose difficult questions about who really runs News Corp. Murdoch s pervasive influence may even be at risk.

Indonesia hustles towards joining the Brics

9 Jul 2009

President Yudhoyono deserves his apparent reelection. He has done a sound economic job in a tough place. Indonesia's size and Islamic majority make it an intriguing potential addition to the quartet of Brazil, Russia, India and China. But corruption could be the sticking point.

Spy scandal puts Deutsche Bank bosses in hot seat

8 Jul 2009

The German lender has admitted to snooping on a former director and is still investigating other similar allegations. So far, it has handled this tricky affair well. But if similar espionage cases are any guide, the episode may hang over the top brass for some time.

Chinese settlement won’t end iron ore spat

8 Jul 2009

The resourcehungry nation might be ready to agree the same 33% cut in contract prices agreed elsewhere in Asia. But miners shouldn t expect China to stop fighting for lower prices. Price volatility is as old as the benchmark pricing system. China s determination is new.

China gambles trade relations with Rio spy row

8 Jul 2009

The arrest of Rio Tinto staff for alleged espionage risks being seen as retaliation for the miner's tough stance on ironore prices. Perceptions of heavyhanded, paranoid behaviour may reinforce economic sinophobia. China risks being viewed externally as another Russia.

G8 summits have outlived their purpose

8 Jul 2009

The meeting of the rich world s leaders in Italy should be the last. G8 summits have rarely produced anything of substance. With China and India missing, the group is now too small to do much. The G8 no longer serves a serious purpose. It should disband.

Meriwether demise would test investor forgiveness

8 Jul 2009

The legendary trader bounced back fairly promptly after his first venture, LongTerm Capital Management, went spectacularly bust in 1998. Now his latest hedge fund, JWM, may be closing. Investors might decide this second fall makes Meritwether untouchable. Don t bet on it.

Keeping hedge funds and private equity in check

8 Jul 2009

The EU wants to include hedge funds and private equity investments in its new system of financial regulation. The leading figures in those businesses aren t keen on the idea. Breakingviews.com writers debate this thorny issue.

Personal view: Pope offers healthy economic ideas

8 Jul 2009

It's easy to dismiss the Vatican's ideas on business as otherworldly. And it will be a while before broker notes discuss integral human development or the market's cultural configurations . But Edward Hadas argues that Benedict XVI's views deserve serious attention.

KKR/Bertelsmann music JV strikes the right note

8 Jul 2009

By joining forces, the buyout firm and media group can pounce on the choicest bits of the music business copyrights to artists songs. With the ructions of the recorded segment and the ownership of libraries like Michael Jackson s uncertain the timing looks impeccable.

UK plumps for regulatory fudge

8 Jul 2009

The old tripartite system for managing crises involving the Treasury, the BoE and the FSA is merely being retuned. And the government has deferred the question of how to prevent future bubbles. Unless momentum is maintained, it could end up wasting a good crisis.

Google goads Microsoft with operating system

8 Jul 2009

The search firm will take the software giant headon with a cheap alternative to Windows. Yet the operating system will only arrive in limited form by mid2010. Google s plan will be more effective at freaking out its rival than changing the software market.

UBS tax case now needs diplomats more than lawyers

8 Jul 2009

Switzerland says it will seize the bank s client information before it lets the US taxman get it. The threat raises the stakes in a looming court battle. The Swiss have made concessions on secrecy, but the US isn t relenting. It might be time for a US compromise.

Politics gets in way of UK bank regulatory reform

7 Jul 2009

A proper debate about the relative merits of returning bank oversight to the Bank of England or leaving it with the FSA is essential. But with a general election looming, the two options are too closely linked to the two main parties. That s a recipe for moralesapping inaction.

Rating boost would rightly reward Brazil’s strategy

7 Jul 2009

Moody s may bestow its investmentgrade blessing on the country, after similar upgrades by Fitch and S&P. That would reward Brazil s monetary and fiscal policies. It would also cement its status both as an example for other developing countries and as the best Bric investment.

US mobile crackdown promises iPhones for all

7 Jul 2009

That could be one result if antitrust investigations eliminate deals that restrict devices such as Apple s to one network. Mobile phone makers with hit products won t be happy. But the dominant network operators, Verizon Wireless and AT&T, have more to fear.

Riots may be deadly price of China’s growth

7 Jul 2009

Conflagrations that killed 156 people in Xinjiang had little to do with economic woes. Yet China s economic policy has everything to do with civil stability. Sadly, Beijing may not realise that the purblind pursuit of rapid growth makes unrest more likely.

Value of a Goldman education: three times salary

7 Jul 2009

That s what a hapless Russian computer programmer who allegedly tried to steal the firm s vaunted proptrading code was offered to defect. Nobody expects recruits to steal trade secrets, but the premium paid to leave Goldman suggests the expectation of some transfer of knowhow.

Private equity falls short of management boasts

7 Jul 2009

That s the conclusion of a new study that finds companies owned by buyout firms are about as likely to fail as nonbuyouts ignoring leverage. Add extra debt and companies are more likely to go under, of course. That s not a big endorsement for a struggling industry.