United States of America

Absence of U.S. inflation is persistent puzzle

15 Aug 2012

The CPI was unchanged in July, and up only 1.4 pct year-on-year. For monetarists, that’s surprising. Broad money supply is up 8 pct, and even without QE3 the Fed’s low interest rates make deficits easy to fund. These uncharted waters could force a rethink of economic theory.

Farm subsidies need rethink in era of budget woes

15 Aug 2012

President Obama’s call to pass a $500 bln U.S. farm bill is unhelpful. OECD agriculture subsidies represent 22 pct of output and block poor nations’ exports. Slashing them would reduce deficits, increase poor-country incomes and remove a corrupt wealth-killing distortion.

StanChart has some explaining to do on settlement

15 Aug 2012

Why did the bank pay a U.S. regulator $340 mln after loudly claiming it had made just $14 mln of suspect trades? Relieved shareholders can call it the cost of a quiet life, but that doesn’t justify paying up. For credibility’s sake, StanChart should show its working.

BBC’s Mark Thompson is odd choice as NY Times CEO

15 Aug 2012

The outgoing head of the UK’s largely state-funded broadcaster has run an outfit where revenue is mostly guaranteed - a far cry from the free-market challenges faced by the Times. But a taste for a fight with Rupert Murdoch may explain Thompson’s appeal to the Times’s owners.

StanChart $340 mln settlement puts NY on the spot

14 Aug 2012

It’s a costly, but manageable, way for the UK bank to move on. It feels like a climb-down for NY regulator Benjamin Lawsky, though, who claimed the bank was a $250 bln Iran-loving rogue. Fellow watchdogs will be off his back, but banking in NY may now carry more frictional costs.

Groupon’s best days lie behind it

14 Aug 2012

The internet coupon company led by Andrew Mason lured investors into a $13 bln IPO by promising hyperbolic growth in daily deals. Less than a year later, its core business is in decline. The $4 bln company is now profitable. But there’s little assurance it will remain so.

Murdoch banks on U.S. Latinos going all-American

14 Aug 2012

News Corp’s new Spanish-language JV, MundoFox, should have little trouble piquing the interest of America’s fastest-growing minority with Colombian TV soaps. The company’s plan to package U.S.-style programs is the novelty - and could define how much market share it can grab.

Slippery witness gives Rajaratnam appeal traction

14 Aug 2012

Roomy Khan first ratted out the Galleon fraudster. But her lies are Exhibit A in another insider trading case. That boosts Raj’s claim that the U.S. government shouldn’t have wiretapped him based on her word. His appeal may give judges a chance to hold prosecutors accountable.

Citigroup CDO judge’s chutzpah admirable if doomed

14 Aug 2012

Jed Rakoff filed a feisty rebuttal to claims he overreached in rejecting Citi’s $285 mln settlement with the SEC. He secured his image as a public interest champion and likely stiffened the U.S. watchdog’s spine. But he’ll rightly lose this fight, and it’s time to move on.

Focus Media insider buyout gives investors relief

14 Aug 2012

Some of the people who brought the Chinese advertising firm public now want to take it private. Focus has suffered from a short seller’s allegation, but the suggested value of $3.5 billion doesn’t look like a steal. Worriers about Chinese accounting should take some comfort.

Google searches for local edge with guidebook deal

13 Aug 2012

Frommer’s may be better known among frugal travelers with comfortable shoes than digital kids. Yet Google’s purchase of the publisher looks like a smart way to further its push into the booming local online ad market, building on last year’s purchase of Zagat.

Archstone IPO makes Lehman look only mostly wrong

13 Aug 2012

The real-estate company could be worth $9.7 bln or more. That’s in line with the Wall Street firm’s valuation of its stake before collapsing. But ex-CEO Dick Fuld has no reason to crow. Hubris, lack of capital and poor risk controls landed Lehman with assets it couldn’t handle.

America’s corn monster is unstoppable – for now

13 Aug 2012

The UN is pleading with America to stop its drought becoming a food crisis. The global body wants Uncle Sam to suspend remaining support for corn-based fuel, which diverts crops from hungry mouths. Letting ethanol fend for itself makes sense. But it’s too late to help this time.

Julius Baer reinvention not as cheap as it looks

13 Aug 2012

The Swiss bank is paying a skinny 1.2 pct of assets for Bank of America’s non-U.S. private banking operations. Throw in restructuring costs and extra capital, though, and the $1.5 bln tag looks richer - especially for a business that’s unprofitable and hardly growing.

Besieged StanChart needs governance booster

13 Aug 2012

Chairman John Peace is spread too thinly. His peers on the bank’s board, some of whom have been around too long, lack financial oomph. A stronger board wouldn’t have prevented the attack by the New York regulator, but it might help the UK bank recover more quickly.

China mistakes foreign law firms for Party poopers

13 Aug 2012

They’re dealmakers, not threats to communist rule. Yet China’s wary leaders won’t license them. That’s no way to lure overseas investment. Change must wait until a tense murder case and political transition passes. But economic preeminence won’t come without global lawyers’ help.

It’s the budget, not the economy, stupid

11 Aug 2012

Mitt Romney’s choice of Paul Ryan as running mate can transform his mealy campaign into something substantive: a referendum on fixing the U.S. balance sheet. It’s sad that it takes a VP to give Romney appeal. But righting America’s finances is long-term legacy-setting stuff.

Goldman takes 2 legal steps forward, 700 mln back

10 Aug 2012

Both the U.S. DoJ and SEC dropped big cases against the Wall Street powerhouse, some welcome and rare relief for investors and CEO Lloyd Blankfein. But like other banks, its worries are far from over. Goldman just increased its litigation reserves by a quarter, to $3.4 bln.

Yahoo investors counting on Mayer burning cash

10 Aug 2012

The internet group led by Marissa Mayer says it may use much of the bounty from selling its Asian bits for acquisitions, rather than returning it to shareholders. That’s crummy, but already baked into Yahoo’s value. Investors seem resigned to Yahoo wasting a chunk of its cash.

Uncle Sam may never divorce Aunt Frannie

10 Aug 2012

The two mortgage agencies earned $8 bln between them in the second quarter. Rather than speed up plans to reform them, though, funding-starved politicians may get too hooked on the revenue from their bailout dividend payments. That could make Fannie and Freddie untouchable.