United States of America

When your town is Newtown

17 Dec 2012

The scene of last week’s school massacre is a bucolic New England town with a deep sense of community. That will play a crucial role as its residents deal with their grief, says Breakingviews Editor Rob Cox, who grew up in Newtown and returned to live there with his family.

Review: Every monetary system needs a Paul Volcker

14 Dec 2012

William Silber’s biography praises the man whose determination and integrity overcame U.S. inflation with monetary policies the opposite of today’s, against opposition from politicians and economists. Yet once his work was done, policy slid back and his abilities were wasted.

Other banks may take most of the UBS Libor pain

14 Dec 2012

The Swiss lender is set to pay $1 bln for fiddling interbank rates. That’s more than twice as much as Barclays, which lost a CEO over the case. After many reputational blows, UBS has less to lose. But fellow Libor miscreants will be looking at an even more hostile world.

What if regulation makes finance more efficient?

13 Dec 2012

Though technology and innovation have squeezed trading costs, the industry’s profits are accounting for a bigger share of U.S. GDP, a former Goldman banker says, needlessly diverting some $635 bln from the broader economy. It lends credence to ideas like a transaction tax.

Brazil’s ailing oil industry needs a nudge

13 Dec 2012

Petrobras can’t meet output targets. The fallout from Chevron’s spill is making it hard for companies to hire. And Eike Batista overhyped OGX, whose value has plummeted. The country’s once-promising oil bounty is going to waste. A revival may need fresh thinking from Brasilia.

Sprint confronts starry-eyed activists

13 Dec 2012

The U.S. mobile operator being acquired by Japan’s Softbank is offering $2.1 bln to buy the rest of Clearwire. The 5 pct premium won’t satisfy uppity investors who want Clearwire to seek other options. Sprint’s control limits their power, but they could elicit a sweetener.

Central bankers may embrace old enemy: inflation

13 Dec 2012

Central banks in developed economies have been trying to juice the economy for years, without much success. As they run out of fresh ideas to battle the doldrums in 2013, they may reluctantly decide that debt-melting price increases are the least bad way forward.

Difference between "and" and "or" could undo Fed

12 Dec 2012

As well as saying it will buy more bonds, the U.S. central bank replaced its estimated duration for low interest rates with thresholds for the unemployment rate and inflation. If reality makes the two measures diverge, the new approach could prove rocky for markets.

TripAdvisor deal excludes regular shareholders

12 Dec 2012

Barry Diller sold shares in the internet travel group to Liberty Interactive at a 63 pct premium. John Malone’s group paid up to regain voting control over its other shares. As so often where there’s supervoting stock, the moguls’ games have left ordinary owners powerless.

Too big to fail looks on its way to being licked

12 Dec 2012

The Bank of England and FDIC sound pretty confident they could resolve a massive bank failure. It’s hard to know without a test case. But by making bigger U.S. banks pay more to fund themselves in the capital markets, investors may be showing they agree with the watchdogs.

Michigan opens up to good and bad of globalization

12 Dec 2012

The home of the U.S. auto industry has joined 23 other states that allow workers to opt out of union membership. That could attract jobs, but is also likely to bring lower average wages. In a global market, becoming sustainably competitive isn’t necessarily comfortable.

SolarCity IPO valuation approaches earth

12 Dec 2012

The U.S. solar panel installer slashed its expected sale price by more than 40 pct at the last moment. The old price, some six times 2012 revenue, always looked starry-eyed - even with the involvement of Tesla guru Elon Musk. The new price merely requires optimism.

Criminal charges aren’t corporate death sentences

11 Dec 2012

Arthur Andersen’s post-Enron demise made U.S. prosecutors skittish about indicting the likes of HSBC, which just settled for $1.9 bln. But new research suggests convictions don’t cause company failures. Banks may be special cases, but enforcers should question their assumptions.

Delta buys premium Heathrow seat for economy fare

11 Dec 2012

Being Richard Branson’s junior partner cost Singapore Airlines two-thirds of its investment in Virgin Atlantic. Delta, however, is buying the 49 pct stake at a discount to what slots at London’s premier airport usually command. That should help the new joint venture take flight.

AIG exit ties up one loose end for Geithner

11 Dec 2012

The Treasury secretary can rest a tad easier. He can now claim to have extracted the U.S. from its contentious $182 bln bailout of the insurer with a profit of $23 bln. But other Geithner legacies will weigh on his successor - notably an unreformed housing finance system.

Record fine shows some banks are too big to indict

11 Dec 2012

HSBC’s $1.9 bln fine may look big, but for the bank it’s small beer. Regulators reportedly wanted to go the whole hog and indict the UK lender, but backed down on systemic risk fears. Yet another sign that four years after Lehman’s collapse, finance is far from fixed.

Bank fines go from irritant to hefty business cost

11 Dec 2012

HSBC’s $1.9 bln money-laundering bill is the biggest ever, but StanChart and ING have been forced to hand over a similar proportion of earnings. Legal expenses and tougher internal compliance add to the burden. Even if such giant fines are infrequent, the bar is now set high.

Fannie, Freddie employees don’t need outsized pay

10 Dec 2012

Whatever their quasi-private sector past, they’re now managing Uncle Sam’s money. The Treasury secretary and the Fed chairman take home just under $200,000. There’s no reason for dozens of housing agency staff to pocket multiples of that. Pay scale reductions are overdue.

Diamond Foods still can’t get its story straight

10 Dec 2012

The scandal-ridden U.S. snack producer dodged a delisting by issuing earnings in the nick of time. But even after Diamond’s yearlong cleanup effort, auditors still found weak controls. New capex claims also seem to contradict earlier ones. Investors shouldn’t be surprised.

Bank crisis plans strike discordant note

10 Dec 2012

U.S. and UK regulators are sensibly singing from the same hymn-sheet on how to deal with failing global banks. Yet they sound out of tune with other regulatory calls for subsidiarisation. More global conducting is needed to create workable cross-border resolution schemes.