Year: 2009

Six Flags not a credit crunch casualty

15 Jun 2009

The US amusement park group has gone bust. Sure, its subprime client base is hurting. But even during the boom it looked so overindebted and underprofitable that buyout firms didn t want it. There's no magic fix for its Blist attractions, so cutting debt is the only hope.

Personal view: Oil economies have trouble with democracy

15 Jun 2009

In countries like Iran, most of the wealth comes from the governmentcontrolled oil industry. Voters care more about who gets which share of the booty than about the government s economic competence. That favours antimarket populists like Ahmadinejad, Chavez and Putin.

Blackstone sidesteps another bankruptcy bullet

15 Jun 2009

Like its welltimed 2007 sales of some doomed commercial real estate, it looks like Schwarzman s shop wisely passed the parcel on another troubled asset the nowbankrupt US hotel chain Extended Stay. It s hard to say how much he reaped but at least he didn t lose his shirt.

Germany signals way to avert debt crises

15 Jun 2009

The German government plans to swear off almost all fresh borrowing, but not until 2016. It s the right approach, but not fast or drastic enough. Freeborrowing Western governments risk debt crises. They must aim to run fiscal surpluses as soon as possible.

GM default swaps highlight debt recovery divide

15 Jun 2009

Senior lenders, unlike unfortunate counterparts at Chrysler, are rightly being made whole. CDS on their debt will pay next to nothing. Subordinated lenders, by contrast, are set to take a drubbing. So they ll collect under CDS contracts. That reflects the risks each group took.

Another bank faces potentially ruinous run

15 Jun 2009

After Ebank s chairman absconded with depositors money, clients have been withdrawing cash like mad. Thankfully, this is taking place in a virtual world created by an Icelandic game developer. But Rob Cox says it may offer lessons for reallife regulation and banking reform.

Punch’s £350m placing is a sticking plaster

15 Jun 2009

The troubled UK pubs company s fiddly open offer should help it deal with its most pressing problem the need to repay £215m of convertible bonds by the end of next year. But Punch still faces an uphill struggle to protect its complex securitised structure as the downturn bites.

IMF on wrong track with Latvia/Sweden band-aid

12 Jun 2009

The fund is trying to rescue the Latvian economy without a devaluation of the absurdly overvalued lat. There s no doubt devaluation would be painful for Latvia and for Sweden, whose banks are badly exposed. But Latvia simply isn t viable without one. Better get on with it.

Fink’s 11th-hour whip-round underlines BGI logic

12 Jun 2009

The BlackRock boss filled a $2bnplus hole after an investment brokered by British celebrity financier Amanda Staveley failed to fit the bill. The tale emphasises the powerful rationale of the BlackRockBGI deal. Fink s firm is emerging as a crisis winner and the one to beat.

Buffini shouldn’t slip into the shadows forever

12 Jun 2009

The Permira chairman is stepping down after just 18 months in a role specially created by the European buyout firm. When private equity was under assault in 2007, Buffini emerged as a reluctant but able ambassador for the industry. His retreat seems a shame and a bit lame.

Personal view: Flat taxes were always a pipedream

12 Jun 2009

A financial crisis is forcing Latvia to abandon flat taxes. But it s no great loss. Edward Hadas argues that flat taxes are neither flat in practice nor particularly fair in theory.

BGI deal makes SWFs partners not saviours

12 Jun 2009

Eighteen months ago, banks were begging sovereign wealth funds for help. The SWFs that complied lost out when governments came in. Singaporean and Kuwaiti funds are more like coinvestors in BlackRock s $13.5bn purchase of Barclays' fund business. They should do better this time.

Personal view: Flat taxes are still a good idea

12 Jun 2009

Latvia has retreated from a flat tax out of necessity. But the overall idea is still good. Simplicity promotes efficiency, economic growth and fairness, says Ian Campbell.

JPMorgan plays hedge fund cards well, too

11 Jun 2009

The healthiest big US bank bought 55% of Highbridge in 2004 in time to have enjoyed the boom years. Despite turmoil last year, the bank and the fund firm seem to have built a rare successful partnership. JPMorgan is now buying the rest. So far, so good but it s not over.

Dollar diversification fears overblown – for now

11 Jun 2009

Worries that foreign buyers would snub the US Treasury s 30year bond auction after Russia, China and Brazil said they wanted to reduce dependence on the dollar proved misguided. Central banks flocked to buy the bonds. Treasury may be relieved, but it shouldn t relax.

Ken Lewis’s grip slips at BofA

11 Jun 2009

So far he has survived, against the odds. Now politicians are telling the largest US bank s boss they don t believe him. Regulators think he was disingenuous over Merrill. And new directors are set to make his boardroom less friendly. Lewis looks increasingly isolated.

Ronaldo, Kaká E160m price tag may not be too high

11 Jun 2009

Real Madrid is spending 44% of 2008 revenue to buy soccer's top stars. The capital outlay will depreciate fast and cost millions to maintain. But President Florentino Pérez may be content if the investments help Real sustain its pace of revenue growth.

Slovakia shows there’s safety inside the eurozone

11 Jun 2009

Latvia s troubles show the dangers the come with fixed exchange rates. But eurozonemember Slovakia has suffered less than its neighbours, despite entering at a high exchange rate. For small countries, the euro brings investor confidence that nothing else can match.

Generali could gain from end to Deripaska impasse

10 Jun 2009

The Italian insurer wants to raise its stake in Ingosstrakh, the Russian insurance giant controlled by stretched oligarch Oleg Deripaska. So does Czech investment group PPF. With Deripaska's negotiating position softening, Generali at last has the chance to secure shared control.

Oil, bonds highlight risk of imperfect recovery

10 Jun 2009

Huge deficits and zero rates are keeping depression and deflation away. But the oil price has been swept up by the rising liquidity tide and bond yields have risen in a fearful response to free money. The two together could make for a more painful recovery than the market hopes.

Obama’s latest car sector bullying hits snag

10 Jun 2009

This time it s the planned emergence of US parts maker Delphi from a 3½year bankruptcy. A deal brokered between former parent GM, the president's auto task force and a private equity group had lenders crying foul. The court rightly asked for a more open process.

Kleinwort Benson could survive bank brandicide

10 Jun 2009

Abbey, Bradford & Bingley and Alliance & Leicester with their 19th century heritage have just been thrown to history s dustbin. Lehman and Bear Stearns survive only in memories. Now, storied Kleinwort Benson is up for sale. The main attraction may be its 223yearold name.

Central bankers should be happy with weak growth

10 Jun 2009

Bernanke, Trichet and King might want to wait for clear signs of a strong recovery before ending quantitative easing and very low rates. They shouldn t. Anaemic growth is a lesser evil than financial disorder. Central banks can lead governments in the right direction.

Geithner shouldn’t relax yet

10 Jun 2009

The US Treasury secretary is certainly right that the global storm is receding a bit . Mountains of free money have prevented a credit collapse. But Geithner s peers in the G8 should pose some tough questions in their Friday meeting. To start: how do we get from here to normal?

No bombshells in US pay guidelines

10 Jun 2009

The rules from Treasury boss Geithner are refreshingly sensible, even dull: no pay caps or other Draconian measures. The key innovation ensuring compensation committee directors are independent is welcome. But it s down to a slightly tarnished regulator, the SEC, to enforce.

Inditex performance validates model

10 Jun 2009

The world's biggest clothing retailer had a dressing down in Q1, when profits fell at their steepest rate in five years. But Inditex isn t doing so badly considering its heavy exposure to the troubled Spanish economy. And it has levers to pull to keep it ahead of rivals.

London humiliates itself again

10 Jun 2009

A twoday strike on the underground over largely trivial disputes has created gridlock. In a well run city, that wouldn t happen. But for all its global glitz, London still has weak governance and some unreconstructed unions. Sadly, improvement looks unlikely.

Citadel’s ties with E-Trade deepen

10 Jun 2009

But not in a good way. Ken Griffin s fund bought into the online broker 18 months ago and took dodgy assets off its hands for pennies on the dollar. But ETrade s remaining homeloan book has proved a dead weight. To salvage its investment, Citadel has little choice but to help.

Tackling tech monopolies takes perfect timing

10 Jun 2009

Google s digitisation of outofprint books benefits readers, authors, publishers and itself. Now the Feds are sniffing around. This project may give Google monopoly power longterm, but it benefits the public today. It isn't a good first round choice for antitrust.

Paulson’s contrarian real estate bet looks smart

10 Jun 2009

The man who made his name betting on the subprime mortgage bust has turned his eye to commercial real estate with a $100m investment in broker CBRE. That seems gutsy prices are tanking. But Paulson may not need a rebound. Indeed, he has already made $24m on the deal.