Year: 2009

US efforts to vilify energy traders might backfire

7 Jul 2009

The new head of America s commodity markets regulator plans to hold hearings on whether the agency should limit the activities of traders to curb excessive speculation . But any rules born of such a simplistic view are likely to be harmful.

Second US stimulus may depress more than stimulate

7 Jul 2009

An Obama advisor warns of another big fiscal infusion. And the vice president says the US misjudged the downturn s severity. But stimulus must be financed somehow. Rising interest rates suggest the US is already taxing investor patience. Bigger deficits will send them packing.

Wall Street refuses to give up capacity

6 Jul 2009

Even when one investment bank flames out its embers spark new entrants that may someday also selfimmolate. In an echo of Barclays and Nomura s global ambitions with Lehman s detritus, Wells Fargo is giving Wachovia s alsoran securities arm a new lease on life.

In death, Jackson finds his financial way

6 Jul 2009

At the end of his life, the King of Pop was struggling to make his legend pay. But posterity is proving kinder. Jackson is set to join Elvis and the Beatles as a cashspewing cultural icon. Stars, unlike businessmen, can be more valuable when they leave the stage.

Securitisation market needs the right shackles

6 Jul 2009

As markets recover, the bogeyman of the credit crunch will return. Regulators should resist the urge to strangle any revival at birth. They should instead insist on two things: that buyers know what they re doing; and that banks aren t just dodging their capital requirements.

UBS looks stuck with old Paine Webber for now

6 Jul 2009

Attempts to sell the US brokerage seem to have faltered. Thanks to merging rivals, its competitive position has deteriorated and it lags UBS s core wealth management arm. New bosses are on the way. Their one aim should be to dress up the business for some potential future buyer.

World wrestles with personal information overload

6 Jul 2009

A UK company s shares plunged 40% after an internet provider pulled its targeted advertising platform. Privacyrights groups were delighted. But the twoway flow of internet information is too attractive for advertisers just to walk away. Selfregulation may be the answer.

Ford should raise more equity

6 Jul 2009

The carmaker has avoided a governmentfunded bankruptcy and is winning market share. But it remains highly leveraged whereas rival General Motors, after its quick bankruptcy sale, now has a light debt load. Selling shares would be dilutive, but would help Ford stay competitive.

Liquidity drought could save venture capital

6 Jul 2009

New data show VCbacked liquidity fell 80% over the past two years. That s starving all save the bestconnected, like Netscape founder Marc Andreessen, who just raised $300m. Ironically, this thinning of the ranks is just what the VC industry needs.

Derivatives exchange rules may tip US/Europe scale

6 Jul 2009

The EC and the US Treasury are pushing new regulations for unlisted products. Both are being cagey about whether they ll force these derivatives onto exchanges. If they do they must coordinate their rulemaking carefully to avoid a flurry of jurisdiction shopping.

India’s budget stores up trouble

6 Jul 2009

It's hardly alone in spending to stave off decline while promising discipline later. But the budget misses reform opportunities and will strain India s reserves and credit. With a 1980s retread finance minister, there's a risk of a return to statist policies and low growth.

G8 can weep together, or fight together

6 Jul 2009

The rich country leaders who will gather in Italy this week all face the same hardships financial meltdown, crippled economies, risky bailout plans and widening deficits. They could simply commiserate. Better to listen to the rest of the world and fight off protectionism.

Rogue trader exposes fickle oil market

3 Jul 2009

How can a small trader drive up the price of a barrel of crude by $2.50 in under an hour? By putting a big bet on oil futures in the early morning. The market proved easy to move. At least traders PMV didn't lose much in unwinding the trade.

European airlines could be next to raise capital

3 Jul 2009

Air France has already tapped the market. Lufthansa and British Airways could follow. Both will struggle to finance capital expenditure programmes organically, and their debt capacity may soon be exhausted. Something has to give.

Subprime victims may have found their whipping boy

3 Jul 2009

Stefan Ortseifen won't get investors blood boiling like a Bernie Madoff. But the exCEO of Germany s IKB is the first big bank boss to face jail time on charges linked to a lender s collapse. His name doesn't have world recognition. But he may have to do as subprime s bad boy.

Where is Anglo’s Cynthia Carroll?

3 Jul 2009

The South African miner s CEO might be expected to lead the opposition against Xstrata s hostile stalking. But she has been strikingly absent from the public eye. With Carroll under a cloud even before the proposal, silence is a peculiar defence tactic.

China pushes envelope for oil

3 Jul 2009

First Iraq, now Argentina. Chinese energy groups are hunting for oil in risky places. That s good for countries with resources to sell. But it s unwelcome competition for the oil majors. At least in Argentina, a deal for Repsol s assets could make sense for all sides.

Do US bank regulators want private equity capital?

3 Jul 2009

It's clear the system needs it. And private equity wants to provide it. But FDIC s latest proposals for allowing LBO firms to dive in look too restrictive. Compromise will be necessary for the two sides ever to meet.

Dexia mostly out of monoline woods

2 Jul 2009

The BelgianFrench bank has closed the sale of FSA, its troubled US monoline insurer, for $817m. Dexia is keeping FSA s $17bn portfolio of toxic assets. But after losing E3.2bn last year, the bank is making money in the first half. Cautious confidence in its future is justified.

German tinkering doesn’t fix sputtering bad bank

2 Jul 2009

Banks will now be allowed to use older valuations when shifting toxic assets off their balance sheets. Investors got excited, hoping the new rules would create extra capital for the likes of Commerzbank. But that doesn t look likely. The banks still have all the risk.

Another story of regret involving Lear

2 Jul 2009

No, not Shakespeare's play the US car parts maker s bankruptcy. Shareholders will probably get nothing, after turning down a generous offer from Carl Icahn two years ago. They thought Lear's CEO had a sweet deal; but next time they should know to focus on what they are getting.

Italy’s wage rises don’t belong in the eurozone

2 Jul 2009

The folks in Rome don t seem to know about the recession. The wages of Italian government workers are up 7%. That s worse than a joke. For Italy to stay in the rigid eurozone, it has to learn selfcontrol. That means wage cuts when necessary. Now is the right time to start.

UK’s off-balance-sheet liabilities crash home

2 Jul 2009

The government has renationalised a failing rail franchise, sold in a flawed auction, while delaying the partprivatisation of the useless postal service. Both moves reflect current economic reality and past bad policy. The pressure on public finances is only going to intensify.

US payroll data suggest recession is worsening

2 Jul 2009

June s job losses were greater than those of any month of the 200102, 199091 or 198082 recessions. Even discounting possible noise , this shows the recession is not yet bottoming. Stocks, budget estimates and bank stress test assumptions may all have been too optimistic.

Morgan Stanley coming out on top in Mitsubishi JV

1 Jul 2009

So far, the Wall Street firm is getting the better deal from the tieup: $9bn of capital and access to the Japanese bank s balance sheet. Sure, Mitsubishi s in the money with its investment and needs to put deposits to work. But does it want to be a junior partner forever?

Bischoff is unimaginative pick for Lloyds chairman

1 Jul 2009

The UK bank needs a tough cookie to lead its board a candidate untainted by the crisis who can defend its interest amid intense EU scrutiny. The name in the frame exCiti chair Win Bischoff is certainly high profile. But a better candidate may be someone more upandcoming.

Junk-rated borrowers flex their muscles

1 Jul 2009

Lenders are supposed to be calling the shots these days. But some borrowers are using the spectre of the $460bn of loans that mature between 2011 and 2014 to get creditors to agree to new terms that may not always be in their best interests. Dwight Cass explains.

US consumer watchdog will have stretchable leash

1 Jul 2009

Obama s proposed Consumer Finance Protection Agency won t have the broad, unchecked power that bankers feared. But it could still make their lives difficult, especially if the president appoints antiWall Street militants to the board. That s a significant risk.

Evercore shouldn’t get greedy with GM

1 Jul 2009

The boutique is asking for a $15m success fee for its advice to the bankrupt carmaker. That s on top of some $24m GM already paid. But the bankruptcy overseer has reasonable objections. The government did most of the legwork typically left to an advisor.

Equity buyers should hope for duller times

1 Jul 2009

The last quarter was exciting in a good way the best gains for equities in two decades. A solid recovery is now priced in. But if the crisis takes another lurch downwards, it is likely to do so dramatically. Even the wall of cheap money would struggle to absorb the shock.