Year: 2009

GM’s ghastly results shorten road towards bankruptcy

26 Feb 2009

Losing $30.9bn in a year is astonishing. True, the US car maker has done worse it lost nearly $40bn in 2007. But that figure reflected tax losses. This year s losses truly capture GM s sick state. A Chapter 11 filing is the correct medicine.

EU report goes right way in regulation

26 Feb 2009

The de Larosière commission has called for two new panEuropean regulators, one to ensure macro stability and one to supervise financial institutions. The idea of a new level of supervision may grate in some national capitals. But the plan ought to be welcomed, even in London.

Bigger US budget problems to come after year one

26 Feb 2009

President Obama's budget combines a huge deficit in 2009 with ambitious plans to reduce it sharply by 2013, as well as major new government programmes. It's a very high risk strategy, requiring the economy and markets to be as responsive as its people to Obama's magic.

Bank insurance premiums shouldn’t be pro-cyclical

26 Feb 2009

The US Federal Deposit Insurance Corporation plans to raise premiums it charges to insure retail bank accounts. Though they re admittedly cheap, that s bad timing. Like procyclical capital ratio requirements, the insurance premiums should be rethought once the crisis has passed.

Grübel lands at UBS with Obama-size expectations

26 Feb 2009

The former Credit Suisse boss is exalted in Switzerland for rescuing one of its national treasures. Now Grübel must do the same for UBS. The new CEO has gravitas and restructuring savvy. But he can t quickly undo the bank s many missteps, or turn the economy around.

Harassed funds triumph in Accor civil war

25 Feb 2009

Colony Capital and Eurazeo own only 30% of the French hotel group, but that was enough to oust the chairman. Six outside directors resigned in protest. The funds, hit hard by margin calls, may use their control to squeeze out cash. Too bad for the other 70% of the holders.

US needs to get tough with AIG

25 Feb 2009

The insurer always seemed like a black hole. Now hopes for asset sales are fading and the government may be considering swapping debt for shares. Taxpayers look like the losers in the $150bn bailout. Even if AIG is too big to fail, other creditors need to share the pain.

Japan’s export drop is not just its own problem

25 Feb 2009

Its 46% fall in exports in January does not reflect just its own weakness; other Asian countries' exports were down comparably. One hopeful possibility is that the US has outsourced its recession's inventory overhang. Or it could foreshadow a more severe global trade decline.

Cadbury looks sweet in sour times

25 Feb 2009

Nelson Peltz should be pleased. The activist s demand that the UK confectioner focus on sweets looks increasingly smart. Cadbury has joined a dwindling band of companies still able to give forecasts. Moreover, clever hedging should allay concerns about high cocoa prices.

Hedge fund slump brings office cost silver lining

25 Feb 2009

Especially in London, where West End rents fell so hard last year that Hong Kong and Tokyo have knocked the district off its world s priciest perch for the first time in nine years. It isn t pretty for property investors, but for the few looking for space it s a buyers market.

HSH Nordbank may need further running repairs

25 Feb 2009

The world s biggest shipping bank has sprung some leaks of late. An E3bn capital injection and E10bn loanguarantee scheme from its statebackers plugs a few gaps. But exposure to real estate, structured credit and its sinking core market mean further help can t be ruled out.

Microsoft gets selective with Great Depression lesson

25 Feb 2009

Boss Steve Ballmer rightly says hard times are no time to cut R&D budgets. He points out RCA s research in the 1930s led to decades of dominance in television. Curiously, he neglects to mention RCA s massive legal campaign against TV s inventor.

US banks left with chances to game stress tests

25 Feb 2009

The same watchdogs that have been repeatedly blindsided by banks woes now plan in just two months to analyse how their charges will weather further economic trouble. But they'll rely on bankers forecasts. They'll have to be vigilant referees to minimise the risk of sneaky play.

Tui shipping sale creates E4.5bn albatross

25 Feb 2009

The German group is still set to close a sale at the agreed value. But the buyer, a Hamburg consortium, can t come up with enough money. Tui may have to keep up to half the business and provide credit. But it's not clear there was a better alternative.

Obama tests limits of rhetoric

25 Feb 2009

If heartening talk could make the US economy better, recovery would be well on the way. The president s speech to Congress didn t dodge the dire current news, but focused on a rosy American future. It will take sacrifices to get there more than Obama cared to recognise.

News Corp board must show backbone on succession

24 Feb 2009

The exit of Peter Chernin should not make James Murdoch s elevation to the top of his father s media empire a fait accompli. He may well be the right man to follow Rupert Murdoch. But the board should consider alternatives especially after the group s recent poor performance.

Lloyds’ government freebie needs strings attached

24 Feb 2009

The UK government looks set to scrap the 12% coupon on its £4bn of preference shares in the bank. Granting financial flexibility is wise, as Lloyds also faces hefty costs to use the state s toxicasset insurance scheme. But taxpayers should demand a future quid pro quo.

French bloom won’t save art world gloom

24 Feb 2009

Record prices for Matisse and Brancusi at the Yves St Laurent auction in Paris may look reassuring for the ailing art market. But the setting, the seller, the selection and some Gulf support hardly made it a representative occasion. It s unlikely to mark a reversal of fortunes.

US looks on track to own big chunk of Citi

24 Feb 2009

The government says it doesn't want to own banks, but it wants them to be appropriately capitalised with high quality capital. Assuming that means a tangible common equitytoassets ratio of 3%, the US could end up with 59% of Citi and a 19% interest in BofA.

Uses of credit ratings should guide regulation

24 Feb 2009

Governments are itching to heighten scrutiny of ratings firms. But one problem in the past has been investors overreliance on officially sanctioned credit assessments. To set good rules rather than just more of them, authorities everywhere should consider why they need ratings.

US bank preferred stocks are still no bargain

24 Feb 2009

Prices on many banks preferreds have been tumbling as rapidly as their common shares lately, pushing yields up. But while the US plan to swap preferreds for common at distressed banks makes a wipeout appear less likely, more carnage could ensue if banks have to cut dividends.

Generali’s Alleanza deal may signal new ambition

24 Feb 2009

The Italian insurer is buying out minorities in Alleanza for a small premium. The deal mildly dilutes Generali s top shareholder, investment bank Mediobanca. It also bodes ill for Intesa Sanpaolo's joint venture with the insurer. Stalled Generali seems to be getting back in gear.

Sarkozy gets a bank that will listen

24 Feb 2009

Two big French mutual banks merge. A yawn? Not these days. The French state will have a big stake in the Caisses d EpargneBanques Populaires combination, with a key aide of President Nicolas Sarkozy in the top spot. The interventionist state could have a bank of its own.

Australia shouldn’t put up Chinese walls

24 Feb 2009

Chinalco s $19.5bn investment into Rio Tinto has sparked a row over Chinese ownership of prized mining assets. Australia might try to block the deal, or impose proAustralia restrictions. It should do neither. Shareholders should decide whether to sell to the Chinese.

Hedge funds should be regulated via prime brokers

23 Feb 2009

This weekend s European summit has called for hedge funds and other shadow banks to be brought within the regulatory net. But supervising them directly is impractical. Focusing on how they get their leverage will be much more productive.

Bigger tax on buyout gains is barn-door slamming

23 Feb 2009

Barack Obama wants to tax investment proceeds as ordinary income, rather than at the lower capital gains rate. That appears to be fairer. But with the alternative asset management business in the doldrums, the government may have missed its chance to reap substantial revenues.

Knocks to confidence keep investors on back foot

23 Feb 2009

US stocks slumped again, even before it emerged that AIG may need yet more taxpayer money. Then JPMorgan slashed its dividend. That could be sensible. Overall, though, investors can t be blamed for fearing the worst. Big guns speaking on Tuesday will struggle to ignite any greed.

US strains to avoid bank nationalisation

23 Feb 2009

Its planned capital buffer is designed to ensure banks such as Citi and BofA are well capitalised but kept out of state control. That s a noble desire. But in practice, taxpayers could end up with a raw deal.

Anti-greed snowball rolls over tax havens

23 Feb 2009

The political and popular will for more regulation isn t just targeting mainstream financial centres like New York and London. The drumbeat against offshore tax havens has become a thundering echo. If the US can score a point against Switzerland, smaller havens look vulnerable.

JPMorgan’s $5bn divvy cut puts pressure on rivals

23 Feb 2009

It s a smart move, even though boss Jamie Dimon expects the bank to turn a profit this quarter. But the decision by one of the country s few strong banks to tread a more cautious path turns the spotlight back on those that have less wriggle room to prepare for worse to come.