BofA keeps stacking up the Ken Lewis bookends 28 Sep 2012 The bank is paying $2.4 bln to settle a lawsuit that it misled shareholders in the 2008 takeover of Merrill Lynch. It’s by no means the biggest cost of the ex-CEO’s disastrous takeover binge. But it’s still painful. And successor Brian Moynihan still has more tabs to pick up.
Morgan Stanley keeps a rainmaker by letting him go 28 Sep 2012 Simon Robey is to leave the bank’s London office after 25 years to set up solo. It’s probably more a statement of ambition than a criticism of the integrated model, as the veteran dealmaker will keep ties to his old firm. That sets this exit apart from other boutique escapes.
Is HP facing a Xerox or Kodak-like future? 27 Sep 2012 All three iconic companies used to be leaders in their respective industries and technologies. Today, Xerox is muddling along and Kodak is bust. The smart money is split on whether HP can return to glory. But tech history suggests the bears will print the winning ticket.
Warner Music echoes some off-key EMI chords 27 Sep 2012 With the Beatles’ parent officially swallowed up by Universal, Warner is left as a tiny number three. Like the old EMI, it is reliant on older acts, heavily indebted and led by an industry outsider. Owner Len Blavatnik has deep pockets, but the formula still doesn’t sound right.
Few newly printed Fed dollars make it to consumers 27 Sep 2012 Ben Bernanke has called quantitative easing a Main Street policy. But American homeowners have only seen a sliver of the $2.3 trln of cheap money the Fed has created so far. If the central bank is really trying to juice consumption, more QE doesn’t look like the way to do it.
Americans can’t feel better than companies forever 27 Sep 2012 U.S. consumers are cheerier about life. But the corporate world is gloomier. If consumption jumps, it could soothe the business world’s blues. But the weak global economy and dysfunction in Washington are stunting hiring and could drag people down along with executives.
More leeway won’t help SEC without better cases 26 Sep 2012 The watchdog is asking the U.S. Supreme Court for more time to sue investor Marc Gabelli for wrongdoing a decade ago. Granting the request could make finding fraud easier. But effective enforcement requires making solid cases against perpetrators. The SEC too often falls short.
Arctic oil setbacks may be darkness before dawn 26 Sep 2012 Warnings from Total’s CEO about the safety of drilling in the region might sound like sour grapes. But environmental issues forced Shell to delay plans and deterred peers. Technological progress and $110 crude, though, won’t keep Big Oil from tapping the Arctic’s riches for long.
Ethical economy: Who suffers in the U.S. economy? 26 Sep 2012 Some think the American middle class is imperilled because median income has fallen by 9 percent from the peak. But that decline is a statistical artefact. Others worry about increasing inequality in favour of the rich. The inequality against the poor is a more serious problem.
World without dollar primacy a blast from the past 26 Sep 2012 Goldman boss Lloyd Blankfein reckons the dollar’s reserve status may be at risk. Having no dominant currency would hark back to the 18th century, when silver pieces of eight competed with many other coins. Specialist currencies might emerge, but trading costs could rise.
BBA ouster is right first step for Libor reform 25 Sep 2012 The British Bankers’ Association is resigned to losing its role setting and overseeing the critical interest rate benchmark. After this summer’s rate-fixing scandal, that’s no surprise. Still, it’s an encouraging sign that Libor reform will be meaningful rather than piecemeal.
Law schools owe students truth about job market 25 Sep 2012 Goosing graduates’ employment statistics isn’t illegal, several courts have ruled. But it’s shameful nonetheless. With work scarce and tuition soaring, lawyer wannabes deserve honesty from institutions that teach legal ethics. Caveat emptor makes for a lousy school motto.
Who will run Murdoch’s grand newspaper spinoff? 25 Sep 2012 With a key UK regulatory judgment on BSkyB out of the way, News Corp can focus on cleaving its newspaper empire. Critically for investors, that means picking a CEO. Wall Street Journal boss Robert Thomson appears in pole position. His appointment would spark a chain reaction.
Shale gas-led U.S. boom is lesson for wary Europe 25 Sep 2012 In five years, the price of natural gas has halved in the U.S. and doubled in the UK. One result is an industrial renaissance in America. Europe could do with the economic and political benefits of plentiful gas, too. EU governments, reluctant to allow fracking, need to rethink.
iPhone 5 will live up to the hype – in time 24 Sep 2012 The 5 mln handset sales, worth some $3 bln, on debut fell well short of Wall Street’s whisper number. The figure still outpaced its predecessor’s and the iPhone 5 couldn’t meet demand. Supply-chain glitches and map-app hysteria won’t derail Apple’s chugging smartphone train.
Americans’ improved finances could help Obama 24 Sep 2012 Mitt Romney likes to ask if people feel better than four years ago. Unemployment remains a problem. But consumers have reduced debt, and a new survey suggests they feel their personal finances are in better shape. They may be happier about Obama’s tenure than Romney thinks.
Foxconn brawl reflects China’s economic challenges 24 Sep 2012 Reports of violence from one of the Apple supplier’s factories conjure up Western prison riots. That’s unfair, but 79,000 migrant workers, excess hours and dependence on a tough employer make a recipe for tension. It’s the dark side of supplying shiny gadgets to the world.
GE deal epitomizes U.S. bank regulation folly 24 Sep 2012 To free itself from the Fed’s strong grip, MetLife opted to unload $7 bln of deposits to the U.S. conglomerate. Tired of waiting for the headless FDIC’s OK, the insurer is enlisting the OCC instead. This classic arbitrage illustrates the trouble with the whole oversight regime.
Percentage-mania builds confidence in 50-50 world 24 Sep 2012 Romney’s 14.1 percent tax rate is the latest headline-grabbing hard number. It follows his 47 percent of slackers, Occupy’s unequal 1 percent, and the euro 7 percent yield-cliff, to name a few. The percentage fixation can make the world look clearer, sometimes dangerously so.
Federal Reserve running out of taboos to break 21 Sep 2012 One regional head of the U.S. central bank admitted the latest QE broadside would debase the dollar. Another said an above-target inflation rate would be tolerable. Both follow from the Fed’s war on stagnation, but actually saying so could bring domestic and foreign brickbats.