Year: 2009

Yen intervention is another Depression portent

10 Feb 2009

Policymakers blame Japan's peculiar recession on the yen's strength. Manipulating the currency's value could export the country's problems to the world and risks competitive devaluations that could exacerbate the growing protectionist environment.

New Tarp still lands US taxpayers with downside

10 Feb 2009

Like Bush s, Obama s crowd is shying away from attaching aggressive conditions or much upside sharing to bailouts. It will also have to pay up to make a publicprivate bad bank attractive to the private sector. Taxpayers are stuck subsidising past and future private investors.

Oil at $45 is not cheap

10 Feb 2009

It s easy to lose perspective on the oil price given the $147 high it hit last year. But it traded below $35 for decades before the recent superspike. If producers think its current level is too cheap, that s because they have grown accustomed to high prices.

China’s new challenge: wonky prices

10 Feb 2009

Inflation was a menace in China only a few months ago. Now it is falling so fast that deflation could be a threat. Along with falling exports and a wave of 20m jobless migrant workers, volatile prices are another unwanted ball for the authorities to keep in the air.

Geithner should know better than to over-promise

10 Feb 2009

The lack of substance in his plan helped bring the S&P 500 down 5% on Tuesday. Banks were hit harder. The Obama administration s failure to deliver on its promise of a detailed, coherent rescue plan squandered precious market confidence. That will be hard to rebuild.

UBS beats a fresh retreat home

10 Feb 2009

If it s Swiss, it s core. That seems to be the Zurichbased bank s strategy after its latest restructuring. Investment banking is deemed core too, if in a savagely shrunken form. The approach is unsurprising given UBS took state capital. But it also plays to the bank s strengths.

Freescale’s swap is a smart way to buy some time

10 Feb 2009

The semiconductor company offered subnote holders the chance to swap their debt for senior loans. The catch: they have to cut principal by as much as 75%. Bondholders may be willing to take the deal and it helps equity investors too. But it could just prolong the inevitable.

Music deal is marriage of convenience, not love

10 Feb 2009

Sure, the concert and ticket empires of Live Nation and Ticketmaster fit perhaps too well for regulators' liking. But the combination otherwise looks a bit defensive, matching Ticketmaster's uninspiring but cashed up business with strapped Live Nation's hope of profits later.

Profumo dodges a bullet

9 Feb 2009

The Unicredit boss survived a weekend crisis after the bank s biggest shareholder opted out of a capital call. The E500m shortfall was made up by other holders, providing Profumo with capital and a vote of confidence. But the narrow escape doesn t mean he s out of the crosshairs.

Fortis rescue looks headed for the courts

9 Feb 2009

Ping An, the Chinese insurer and largest shareholder of the collapsed Benelux financial group, is to oppose the carveup and partial sale to BNP Paribas. A lastminute resolution looks unlikely. With other shareholders backing Ping An, a messy court battle is in prospect.

Accounting quirks not all gold for Barclays

9 Feb 2009

The UK bank s 2008 results have been flattered by some extremely helpful accounting rules a gain on the Lehman acquisition alone has raised profits by £2.2bn. But other conventions have swollen Barclays balance sheet, and those that appear helpful now could reverse over time.

Securitisation caught in vicious circle

9 Feb 2009

The economy needs its largest funding market back on its feet. But the mortgage crisis destroyed confidence in the structure. Practitioners are full of ideas but conflicting interests make many hard to implement. No wonder the industry's annual shindig resembles a talking shop.

Barclays inches back to credibility

9 Feb 2009

The UK bank s profits for 2008 are impressive, though flattered by gains on own debt and acquisitions. It is even talking about a return of the dividend later this year. Barclays is giving shareholders one hell of a ride. But it may have done just enough to keep them on side.

Credit crunch achieves global synchronicity

9 Feb 2009

A buyout boom posterchild, yachtmaker Ferretti, is reportedly in default. A UK commercial property firm is raising equity. An Indian retailer ran out of cash to pay security guards. While recent business surveys have been getting better, it feels like the crunch just gets worse.

Rio Tinto gaffe leaves board discredited

9 Feb 2009

The mining giant has lost its chairman a mere three weeks after giving him the job. It seems Rio s nonexecs didn t do their homework on Jim Leng, and didn t much like his questioning of plans to raise capital from Chinese miner Chinalco. The board needs to explain itself.

Sirius will struggle to attract a white knight

9 Feb 2009

In theory the US satellite radio broadcaster could be worth $1bn more than its current enterprise value. But it needs patience and capital to get there. With both in short supply, finding a rival to Echostar willing to recapitalise Sirius is a stretch.

Iran offers economic upside for friendlier US

9 Feb 2009

A less hostile US could help reformist former President Khatami s candidacy which in turn offers hope for a USIran nuclear agreement. If opened up, Iran s economy has excellent growth potential, so a deal with a Khatamiled Iran has huge potential upside for both sides.

US banks shouldn’t hurry to pay back Tarp

9 Feb 2009

Sure, it would be nice for banks to get Uncle Sam off their backs. But the money has been provided at such fantastic rates and the government s pay curbs will only really bite those that need a doubledip in the trough that it doesn t yet make economic sense to pay it back.

Can Frank Quattrone go global?

9 Feb 2009

That depends on whether the former CSFB tech impresario can make a go of his new boutique at home first. The market is bad, but independent shops are in a good spot. Weakened bulge bracket firms leave a sizable hole for wellconnected rainmakers.

Geithner mustn’t repeat UK error

8 Feb 2009

The UK communicated last month s bank rescue plan so appallingly that it undermined confidence in both its banks and its currency. The key to avoiding a repeat performance is for the US Treasury secretary to keep his message simple and precise and get some sleep tonight.

US should back private infrastructure investment

8 Feb 2009

Despite a potentially bigger bang for buck, Obama's stimulus plan fails to encourage private investment in infrastructure. Private funds are sitting on the sideline. The government should try to lure them into action rather than having taxpayers foot the whole bill.

Babcock & Brown felled by Macquarie model

6 Feb 2009

Banks have seized control of the Australian investment firm, wiping out equity and subordinated debt holders. Macquarie, the larger rival imitated by B&B, is suffering but isn t in dire straits. Still, Babcock s demise raises serious doubts about such highly leveraged structures.

Temasek makes progressive CEO choice

6 Feb 2009

The Singaporean sovereign fund is breaking the mould by appointing foreign national and former BHP Billiton boss Chip Goodyear as its new CEO. Goodyear replaces Ho Ching, the prime minister s wife. For Temasek, and sovereign funds everywhere, it s a radical move

Murdoch crystallises Dow Jones value destruction

6 Feb 2009

News Corp took $3bn of goodwill writedowns related to the barely yearold purchase of the Wall Street Journal publisher. Yet even this may not reflect the full cost of the trophy purchase. For once, Murdoch didn t get the better side of a deal.

Bonus attacks could cost taxpayers dear

6 Feb 2009

For politicians, picking on overpaid bankers at banks taking state aid looks like a nobrainer. But as Deutsche s Josef Ackermann crudely points out, the talented can find megabonus jobs elsewhere in finance. Governments risk being left with the dross to run crucial banks.

Legalising pot won’t save California

6 Feb 2009

But it would certainly take the edge off the state's fiscal pain. Decriminalising ganja could save $1.7bn in enforcement and incarceration costs baked into the budget while bringing in nearly $1bn in revenues.

Less is more on RBS’s board

6 Feb 2009

New chairman Philip Hampton has moved fast to strip the UK bank s board of surplus nonexecs. Having a smaller board, even after some new arrivals, should bring discipline and focus as RBS weighs the potentially conflicting interests of government and minority shareholders.

Tarp revamp should follow Warren, not Hank

6 Feb 2009

The US bank bailout monitor reckons former Treasury boss Hank Paulson didn t strike a hard enough bargain when he recapitalized banks. Warren Buffett and others, the watchdog says, did better. New Treasury honcho Tim Geithner should take the message on board.

French banks fight for their dividends

5 Feb 2009

French bankers yielded to the government's insistence that they forego bonuses but are resisting pressure to cut their dividends. The country's major banks remained profitable in 2008, but they might want to halve their payout ratio to show the government they care.

Santander deserves benefit of the doubt

5 Feb 2009

The Spanish bank made E8.9bn in profits in a year when many of its peers were getting bailed out by taxpayers. This year will be tougher. But Santander s ability to withstand further shocks is convincing.