Americas

America discovers hidden cost of green energy

28 Feb 2013

California’s facing blackouts as its aging electricity grid is ill-equipped to husband the sporadic nature of wind and solar power. The rest of the country isn’t far behind. Fixing it means higher bills for consumers - it’ll cost $1 trln to upgrade the nation’s infrastructure.

Intel sets up quandary in making chip for rivals

28 Feb 2013

Offering this service on a limited basis to companies like Altera is close to a free lunch. It helps Intel maximize manufacturing capacity and defray costs: building a semiconductor plant costs $10 bln. Expanding this business too far, however, could threaten margins.

Big oil’s novel problem: fifty shades of gray

27 Feb 2013

Nearly half of petroleum engineers will hit retirement age in the next decade, leaving a skill shortage because of a 1980s hiring hiatus. Based on the last such occurrence, the lack of experience may lead to a $120 bln productivity drain. It’s a hidden risk in the price of crude.

Supreme Court unanimously orders SEC off its duff

27 Feb 2013

The U.S. justices denied the watchdog more time to sue investor Marc Gabelli, ruling it had the means to pounce sooner. That highlights a chronic problem. Rather than aim ample firepower at financial crisis cases, the SEC stuck with one a decade old. Investors deserve better.

Music upturn shows digital death isn’t forever

27 Feb 2013

The Internet didn’t kill music, after all. The industry is half its former size, but global sales rose in 2012 for the first time since 1999. Growth came from subscriptions and cheap legal downloads. There’s hope - eventually - for other industries facing a digital tsunami, too.

U.S. buyout barons have new tax-dodge rivals: MLPs

27 Feb 2013

The low tax rates on LBO bosses’ so-called carried interests save them $1.3 bln a year, an advantage critics want wiped out. But new data show investors in energy partnerships are now costing Uncle Sam a similar amount thanks to an outdated perk. Both loopholes should be closed.

Ethical economy: Salvation through work

27 Feb 2013

In 1790, Benjamin Franklin predicted the four-hour working day. He looked prescient until 1935, when the U.S. abandoned a plan to move from eight hours to six. The decision to prefer more job to more leisure is cultural, not economic - but it’s bad for both economy and culture.

Stronger economy is Bernanke’s Godot

26 Feb 2013

The Fed chairman is keen on reducing deficits, but not while the U.S. recovery is fragile. Trouble is, there’s no sign of growth gathering much more steam. Waiting for a robust recovery before making meaningful spending cuts is looking more and more like a fool’s errand.

U.S. taxes on rich and poor not created equal

26 Feb 2013

Federal government levies on the wealthy hurt the economy. But sales gloom at Wal-Mart relative to Macy’s and Saks shows that letting payroll taxes rise again has socked it to poorer consumers. That’s worse for economic growth because the less well-off actually spend their wages.

Companies need more lawyers on board

26 Feb 2013

Not so much the bill-by-the-hour variety, though they help cover bosses’ behinds. Rather, hiring attorneys as directors may cut risk, promote stability and boost value. Based on new research, investors should be glad that lawyers are turning up more often in U.S. boardrooms.

Negative intellectual equity traps mortgage reform

26 Feb 2013

The latest plan to shake up U.S. housing finance, from a bipartisan think tank, offers nothing new. It rests on the usual received wisdom that the market cannot exist without a government backstop. The idea’s prevalent among lawmakers, bankers and investors. It’s wrongheaded.

Mexican manufacturing puts China, Brazil in shade

26 Feb 2013

Exports and other data point to steady gains in competitiveness over the last decade. Mexico’s wage costs are up only 20 pct in dollar terms - a fraction of the increase in the PRC and other big emerging markets. With Europe in recession, global market share is up for grabs.

CME-DB deal is both justifiable and unlikely

26 Feb 2013

The U.S. exchange reportedly made merger overtures to its German rival. Creating a $32 bln powerhouse would mean real savings, and antitrust problems could be solved. But resistance elsewhere could be stiff. And Deutsche Boerse has no pressing reason to give up its independence.

Apple’s halo loses shine in investor fight

25 Feb 2013

Greenlight Capital founder David Einhorn won a legal point, but better governance wasn’t his main objective. Apple and its lawyers come off amateurish. Calpers, despite worthy aims, looks careless. The SEC also missed a trick. The result is a distraction for shareholders.

RBS, UK set for responsible Citizens decision

25 Feb 2013

The British government-owned bank may soon reveal plans to float its U.S. lender. That should assure taxpayers that RBS is trying to raise capital and focus on its core business. And listing a minority stake allows the still-ailing bank to book Citizens’ earnings for a while yet.

$6.6 bln won’t be enough to end Elan’s rash dreams

25 Feb 2013

The biotech has grand M&A plans after selling rights to a blockbuster drug for $3.25 bln. Royalty Pharma’s indicative offer is based on the notion that it will invest more wisely than Elan’s current bosses. It’s a credible premise, but a 4 percent premium won’t seal the deal.

Citi pay plan raises the bar, just not enough

22 Feb 2013

Shareholders forced the mega-bank to rethink its compensation scheme for top executives. New, more rigorous targets for boss Michael Corbat and others are overdue. One important performance metric, however, seems to keep expectations too low.

U.S. housing quagmire embodied in JPMorgan deal

22 Feb 2013

The bank looks set to sell its first mortgage bond without government backing in years. That hints at a belief in such products among both lenders and investors. But until mortgage finance rules are clarified and Frannie’s funding advantage is withdrawn, these deals will be rare.

Review: How economics became the hijacked science

22 Feb 2013

Mainstream economics has been hijacked by vested interests and turned into an ideological weapon, Norbert Haering and Niall Douglas claim in “Economists and the Powerful”. Their case against the profession isn’t iron-clad, but it’s definitely thought-provoking.

Apple owners don’t need consumer-like innovation

22 Feb 2013

Investor David Einhorn’s idea of creating new preference shares is essentially an idea he proposed last year, with some fresh packaging. The trouble is it lacks the simplicity that is Apple’s hallmark. And for shareholders it’s not obvious “iPrefs” will have iPhone-like appeal.