Year: 2009

Mexico can find better advisors than US or IMF

1 Apr 2009

Its wish to have the buffer of a $47bn IMF credit line makes sense. It always hated tied loans, which came with gratuitous IMF or US advice. Mexico s economic policies need changing, but this time it can get help from less patronizing sources: Latin friends Brazil and Chile.

World faces crisis of finance, not capitalism

1 Apr 2009

As protestors gather to denounce capitalism on the occasion of the G20 summit in London, it is worth remembering that free markets and free trade are not to blame for the current economic mess. The real culprit has been distorted finance.

UBS hires ambitious Swiss cost-cutter: expect pain

1 Apr 2009

Ulrich Körner missed out on the top job at Credit Suisse in 2007. The ambitious Swiss may now hope to have a second bite of the cherry at rival UBS, where his former boss has hired him as chief operating officer. His job is to cut costs. He has every reason to be tough, fast.

Layoffs may give lift-off to language IPO

1 Apr 2009

Rosetta Stone is set to go public in only the third US debut of 2009. Even unforgiving investors might credit the seller of language learning software with some recession protection. After all, jobless bankers and others now have time to perfect their French or pick up Mandarin.

UK bank rally has gone far enough

31 Mar 2009

The sector has more than doubled in value from its January low following recapitalisations and statefunded insurance against losses. While steep discounts to book value persist, investors should be wary of chasing the shares higher.

Google VC fund shouldn’t be zany side pocket

31 Mar 2009

The internet giant has launched a venture capital arm with $100m. This looks a formality Google has funded new businesses for years. Shareholders may worry that it s simply a repository for the wackiest ideas. One way to defuse such fears would be to bring in outside money.

Google may find it hard to land Disney

31 Mar 2009

The search giant is in negotiations with the media company to bring its content and some sorely needed revenue to YouTube. But Disney is also in talks with NBC and News Corp s Hulu. Google may find it hard to match the benefits of its competitor s cooperative structure.

Fiat’s front-row seat on Motown meltdown gets hot

31 Mar 2009

The Italian carmaker is in a tricky negotiating position. Climbing into Chrysler before its April bankruptcy deadline looks foolhardy. Still, waiting could lose Fiat the chance of a ready made US dealer network. Fiat is smart, but this would challenge even the smartest.

Gloomy OECD figures show danger of debt spiral

31 Mar 2009

The OECD forecast of a 2.7% decline in global GDP is gloomy enough. However, its growth forecasts for the US, Britain and Japan are much worse than those countries own budget assumptions. That means their high fiscal deficits will be worse than forecast.

China will struggle to build its own Nasdaq

31 Mar 2009

Beijing's latest financial adventure, a bourse for startups, sounds disastrous. China s markets and regulators are not mature enough to host a dedicated alternative exchange. The result is likely to be less like Nasdaq or Aim, and more like Germany s illfated Neuer Markt.

Two ideas to solve global imbalances

31 Mar 2009

The G20 looks like it is going to shirk the issue of massive trade surpluses in China and deficits in the US. That s largely because confronting the issue would cause a diplomatic row. But these imbalances are a principle underlying cause of the crisis. A solution is needed.

Total real winner in Santander’s E2.8bn Cepsa sale

31 Mar 2009

The Spanish bank sold its 32% stake in the oil company to Abu Dhabi. The French oil company, which owns a 49% stake in Cepsa, gains a friendly partner and effective control of the company. Santander took too long to sell the stake. But it managed a decent price in a dire market.

Tax-avoidance backlash poses dilemma for Barclays

31 Mar 2009

The UK bank does well from legal tax avoidance. But the G20 is on the rampage against the practice, and Barclays faces demands to respect the spirit of UK tax law. With all the political risk, investors may put less value on Barclays profits from this source however rich.

Ireland faces painful adjustment or ugly euro exit

31 Mar 2009

S&P has downgraded Ireland's credit rating, as the country's growth and tax revenues have plummeted. Ireland's fiscal accounts look unsustainable. A big, painful adjustment is required if it is to remain in the eurozone. But exiting would be agony too.

Will Buffett banker’s gain be Goldman’s loss?

30 Mar 2009

Probably not at least not much. Byron Trott is leaving Goldman to set up an advisory and private equity firm focused on family companies, with Buffett as a partner. That may not look great for the Wall Street firm, but it is likely to remain in the billionaire s good graces.

US takes on auto reform – good luck

30 Mar 2009

Think restructuring banks is tough? The US car industry s problems are deeper and harder to solve, especially in a recession. Obama will try. He is right to be be harsh on GM and Chrysler. But his administration will struggle to remake a sector that has been mismanaged so long.

Leveraged ETFs confounded by math

30 Mar 2009

Investors seeking a turbocharged play on market moves have ploughed into leveraged exchangetraded funds. Yet they are really only good for daytrading. Even the doubleshort US financial and China funds that should have benefited from the 2008 market carnage had negative returns.

Russia gains from Austro-Hungarian energy spat

30 Mar 2009

Austrian OMV s attempt to take over Mol last year was rebuffed. The Hungarians feared the Austrians would sell out to Russia. But Russia s Surgutneftegas has snapped up OMV s 21% stake in Mol for E1.4bn a 93% premium to the market. That leaves Mol even closer to the Kremlin.

New Peugeot boss brings steely restructuring nerve

30 Mar 2009

Philippe Varin made tough cuts at steel group Corus and then sold out at the top. He will need his nononsense restructuring skills in his new role as head of French carmaker PeugeotCitroën. He has to please both a newly assertive controlling family and the French government.

Blackstone IRR shyness could unnerve shareholders

30 Mar 2009

The buyout firm has told the SEC it won t disclose returns on its funds. It does show the current value of investments. But providing more can t hurt. Fund investors know the returns already. Without the data, investors in the company's stock might expect the worst.

Barclays’ gamble could pay off

30 Mar 2009

By rejecting UK balancesheet insurance, the bank has escaped state clutches yet again. The authorities and Barclays are still living dangerously. But retaining control of strategy and pay may keep shareholders sweet enough for this selfhelp plan to work.

Latin America for once exemplifies sound policy

30 Mar 2009

Brazil and Chile have recently followed sounder policies than most rich countries as both their presidents have pointedly told Gordon Brown. A country with Brazil s monetary policy and Chile s fiscal policy would have been insulated against this downturn.

Obama’s rhetoric doesn’t match GM’s woes

30 Mar 2009

It s encouraging to see the president embrace Chapter 11 for the ailing car maker. But he reckons a short bankruptcy to slash debt will suffice. It won t. To have a chance at profitability, GM needs to shrink. That may require a breakup, despite Obama s remarks to the contrary.

Wagoner’s exit from GM helpful but no panacea

30 Mar 2009

The White House is pushing the General Motors CEO out the door in return for more aid for the ailing car maker. That s just how this pseudobankruptcy should work. But as emergency loans add to GM s leverage, the government needs to show it has a credible plan.

Spain’s savings bank bailout may not be the last

30 Mar 2009

The Bank of Spain has taken over the management of Caja Castilla La Mancha. Madrid will guarantee up to E9bn of CCM s liabilities. It insists this is an isolated case. But other savings banks have heavy exposure to real estate developers, and the economy is deteriorating fast.

Calpers piles pressure on hedge funds

30 Mar 2009

The giant US pension fund wants to rejig its relationships with hedge funds to make fees fairer and to give it more control. One specific idea: managed accounts rather than pooled funds. Calpers isn t the first into this fight, but its weight will make a difference.

G20 retreats from fiscal boost

30 Mar 2009

There probably won t be a bustup between the AngloSaxons and the continental Europeans on the need for more stimulation. Everybody is realising that borrowing has limits. But the G20 still needs to show how it will get its budgets back into balance in the medium term.

Volcker is best midwife for US tax reform

27 Mar 2009

Asking the former Fed chief to oversee tax overhaul may appear a waste of talent. Entrenched interest groups repeatedly torpedo needed reforms. But his reputation combines with the government s need for cash to give him a shot at success.

US should force Chrysler and GM into bankruptcy

27 Mar 2009

Neither will meet restructuring targets by month s end. And for GM, more government loans may soon offset any gains gleaned from bondholder and union concessions, leaving it on the brink anyway. Forcing bankruptcy now might at least mean it could be ready when car sales improve.

FSA plans risky sink or swim policy for Barclays

27 Mar 2009

The regulator looks unlikely to force the UK bank either to insure its assets or raise capital. Barclays is better placed than RBS and Lloyds, but the FSA won t want to be proved wrong on its stress tests again. It hopes unexpected losses won t leave Barclays short of capital.