Year: 2009

Supplier aid could speed Motown restructuring

19 Mar 2009

The US has been talking down the threat of forcing Chrysler or GM into bankruptcy. And now it s offering guarantees to car parts makers. But these could strengthen carmakers hands in negotiations with unions and bondholders and reduce the systemic risk of a Chapter 11 filing.

Whose finger will be on the anti-bubble button?

18 Mar 2009

Adair Turner, boss of the UK s FSA, has rightly identified the need for new weapons to stop the next bubble. But he has left open the question of whether his finger, the Bank of England s or both will be on the button. Resolving this is critical.

Unicredit defies its worst critics

18 Mar 2009

The Italian bank s results were better than feared. Maybe the 80% share price plunge in the last year was too steep. Still, Italy is looking worse, eastern Europe is a mess, there s no cash dividend, and the bank wants E4bn of new capital. Unicredit is not yet in the clear.

Vodafone Qatar plans a safe $1bn IPO

18 Mar 2009

The telecom giant s Qatari joint venture will float on the Doha market in May, after a long wait for calmer markets. Vodafone and Qatar would look silly if the shares tanked on debut as a new listing in Dubai just did. But this exercise in wealthsharing is primed for success.

US college hoops to boost online video and betting

18 Mar 2009

The annual March Madness basketball tournament is a pressure cooker for the 65 teams involved. Bricksandmortar casinos and media group CBS also have plenty at stake. But the online video and gambling businesses may turn out to be the upandcoming teams to watch.

Asia must develop local currency bond markets

18 Mar 2009

With stock markets down and banks not lending, Asian countries need to develop domestic corporate bond markets. That requires macroeconomic and tax policies that encourage bond investment, transparent price discovery and an investment culture oriented toward the long term.

Germany pays for past and future virtues

18 Mar 2009

During the boom years, Germans practised restraint but exported to overspenders. Weak exports mean the recession looks worse in Germany than in the US. Stimulus? Yes, but not too much. Future inflation is a worry. So is the cost of expensive bailouts for reckless neighbours.

IBM-Sun deal would be part cheap, part fearful

18 Mar 2009

The tech conglomerate is pondering a bid for the server maker. Potential cost cuts and Sun's depressed valuation make a deal opportunistically attractive for IBM. The two also need to ready for Cisco s entrance into the crowded server market. Joining forces could help.

China’s blocking of Coke deal needs explanation

18 Mar 2009

If China feared the creation of a drink monopoly from Coke s $2.4bn purchase of Huiyuan it should make a convincing case. Otherwise it will appear to be employing a double standard. That would be damaging not just to Chinalco s Rio deal, but to future capital flows as well.

Fed stimulus accelerator is inflationary

18 Mar 2009

The Fed is increasing its balance sheet by another $1 trillion, including $300bn of Treasury bonds. Yet the pace of US economic decline seems to be slowing, while deflation is nowhere visible. Fed policy is now highrisk, and resurgent inflation may strike sooner than expected.

Liddy needs to open up to taxpayers

18 Mar 2009

AIG s CEO is under fire for paying out retention bonuses. The public outrage means future bailout funds could be at risk. Taxpayers already own 80% of AIG. But Liddy still sounds like a typical cautious company boss. However tough it may be, he must answer to his new owners.

ArcelorMittal shows strength with E1bn convert

17 Mar 2009

Investors lapped up the steel giant s bond. But the fourtimes oversubscription reflects generous terms; a near 8% yield with a modest conversion premium. ArcelorMittal is paying up to get financial flexibility, and support for its claim that it doesn t need a rights issue.

Guy Hands wisely focuses his efforts

17 Mar 2009

The Terra Firma founder is giving up his CEO role to focus on investing. With private equity under a cloud, it's easy to find sinister explanations. But running a buyout firm is different from investing its funds. Private equity investors should welcome such divisions of labour.

Goldman risks Tarp rage to protect business model

17 Mar 2009

The bank is lending employees money to meet their capital calls to its funds. Doing so after taking government funds sounds like a recipe for a PR disaster. But it s essential if Goldman is to ensure that third parties in its funds follow through on their own commitments.

Italian banks are right to be wary of Tremonti

17 Mar 2009

The Italian finance minister wants the interior ministry to oversee bank lending. It looks like the crisis is being used as an excuse to undermine the Bank of Italy. The banks recognise the costs of such political meddling. It harms Italy s reputation and growth prospects.

Brown’s sorry doesn’t go far enough

17 Mar 2009

The UK PM says he takes full responsibility for his role in the economic crisis. But the only failure he admits to was not pressing for tougher global supervision of banks after the Asian financial crisis. That was an error, but not the only one.

Can defunct finance brands be resurrected?

17 Mar 2009

London is abuzz with talk that Citi bankers may set up a boutique using the Schroders moniker. That s a stretch, but many big firms that bought merchant banks in London and New York now have tarnished brands. So reviving storied names denoting quality advice is alluring.

Tax loopholes should be consigned to history

17 Mar 2009

It s hard to blame the likes of Barclays for avoiding tax by elaborate fiscal engineering. The real error is that governments have allowed loopholes to mushroom. Normally, cracking the problem would be hard. But the financial crisis may have changed the zeitgeist.

Rio Tinto gets chance to offer olive branch

17 Mar 2009

The AngloAustralian miner has named Jan du Plessis as its new chairman. Investors disgruntled with Rio s plans to raise capital from Chinese miner Chinalco shouldn t get too excited, as he s firmly committed to the deal. But it may be easier for du Plessis to rewrite the terms.

Mexico’s tariff pebble threatens trade avalanche

17 Mar 2009

Its levy on $2.4bn of US exports is modest and permitted under Nafta. But it runs two risks: that protectionists both sides of the border will use it to pick apart the trade agreement, and that resulting economic problems could further stoke antiUS feeling and harm relations.

Taxing AIG bonuses would waste time and effort

17 Mar 2009

The payouts rightly raise popular and political ire. But one idea for redress loading tax on recipients risks the same damaging fallout as breaking the contracts: uncertainty. Besides, they're a historical distraction. US lawmakers have more than enough to do for the future.

Citi’s new board picks hit the right note

16 Mar 2009

The ailing bank sorely needs some experienced and respected market heavyweights as directors. Pimco s former head honcho, a retired Fed president and two savvy bank bosses could do the trick assuming they and Citi chief Vikram Pandit can work together effectively.

China should invest in the barons of bling

16 Mar 2009

Talk of sovereign investments in a Cartier, Vuitton or Gucci makes sense. Prices are down. As with mining companies, there are Chinese profits to be recaptured and skills to be learned. Europe s fashion houses don t urgently need the cash but they could use the contacts.

AIG’s disclosure should just be the beginning

16 Mar 2009

The US insurer finally revealed that nearly twothirds of its $180bn bailout cash has already gone, mostly to US and foreign banks. AIG should disclose more, but it s a start. At least annoyed policymakers now have data to inform their critique of the AIG bailout and others.

Citic returns to Bear necessities

16 Mar 2009

The Chinese broker is commemorating the anniversary of Bear Stearns demise by hiring the defunct bank s Asia boss for a new advisory joint venture with Evercore. Donald Tang s contacts should bridge Citic s ambitions and Evercore s expertise. Now all they need are some deals.

Obama’s AIG populism undermines his authority

16 Mar 2009

The US president said Tim Geithner should pursue every legal avenue to block bonuses to AIG executives but it seems like Geithner already has. The bonuses stink. But raising doubts over contract commitments and contradicting his officials is unwise. Obama needs to be smarter.

US backtrack on mark-to-market is badly timed

16 Mar 2009

FASB s imminent easing of rules for reporting financial asset values looks like a rush job under bankled political pressure. It will also confuse investors the group supposed to benefit from accounting standards at an already volatile moment. It s bad policy at a bad time.

No need for European banks to say sorry about AIG

16 Mar 2009

NonUS banks have received $60bn from AIG in the costliest bailout in history. US taxpayers may not be happy about helping foreigners, but the banks got no more than their contractual due. That s how bailouts should work. There s nothing for the Europeans to feel guilty about.

What exactly is wrong with the banks?

16 Mar 2009

The problem is no longer liquidity. It may be solvency, for some. But the biggest problem is uncertainty. That s undermining not just the banks but also the wider economy. Bringing uncertainty to an end is the priority, says Hugo Dixon.

Barclays’ tax wheezes may explain state aid dodge

16 Mar 2009

The bank s strong practice of helping clients avoid tax was highlighted at the weekend by a whistleblower. That wouldn t sit easily with the government owning shares. No wonder Barclays is trying every other avenue, such as selling its £4bn iShares business, to boost its capital.