United States of America

Monopolies thrive when politicians go short-term

26 Mar 2012

How else to explain the likely approval of a $17.5 bln New England power merger? Northeast Utilities’ incompetence is proven, but dangling a few politically expedient goodies seems to have won authorities over to its NSTAR takeover. Captive customers may lose, but investors win.

Botched BATS IPO at least good test of markets

26 Mar 2012

Scrapping a public debut is embarrassing for any company. But it’s a potential killer for an upstart stock exchange already being investigated over high-frequency trading. The relief for investors is that the failure by BATS wasn’t the catalyst for a broader meltdown.

Wall Street can relate to Hollywood underdog tale

26 Mar 2012

A smash debut for “The Hunger Games” makes Lions Gate the studio equivalent of a boutique bank landing the year’s biggest deal. And Disney’s $200 mln loss on “John Carter” raises questions about Tinseltown’s bulge bracket. Indies in both industries are fighting for the spotlight.

Top U.S. judges may drown out healthcare debate

23 Mar 2012

The most verbose Supreme Court on record will next week hear a hefty three days of oral argument on President Obama’s landmark reform. If past patterns hold, the justices will spend more time testing each other than listening to lawyers. It’s the legal system at its hammiest.

Obama doesn’t even name banker to run World Bank

23 Mar 2012

Nor is Jim Yong Kim a seasoned diplomat. He’s a disease fighter and president of Dartmouth, where his tenure was marked by budget struggles. Kim’s medical background and Korean birth may mollify critics of America’s monopoly on the top job. But he’s got his work cut out for him.

Bank bailout views skewer GOP star’s credibility

23 Mar 2012

Paul Ryan’s new budget takes bold steps to shrink U.S. debt, but makes a troubling error. He suggests that Dodd-Frank’s new mechanism to wind down big banks will cost taxpayers and spur bailouts. This misstep casts doubt on his ability to favor practical solutions over politics.

Watchdogs could change Vivendi’s EMI tune

23 Mar 2012

The French group’s Universal music arm feels so good about its chances of success that it agreed to pay the full $1.9 bln price even if trustbusters block the deal. But it’s actually a third possibility - being forced to sell pieces - that could be the costliest for Universal.

What’s Facebook really worth?

22 Mar 2012

A look at Google’s revenue and profit history suggests that even $75 bln is a stretch for the social network’s IPO valuation - at least on a rational discounted cash flow basis. But in Facebook’s hyped offering, anything is possible. A new Breakingviews calculator does the math.

World Bank pick may give Obama rare political lift

22 Mar 2012

Choosing a new leader for the global multilateral lending agency normally doesn’t enter into the math of a U.S. election. But putting the first woman in charge could further cement Obama’s lead with the vital female electorate. What’s more, he’s spoiled for good candidates.

Bondholders start dabbling with bad old habits

22 Mar 2012

U.S. companies refinancing debt account for much of the $367 bln of U.S. corporate debt sold this year. Such fundraising is good for Corporate America. But investors are also snapping up more dross. Such a short-term approach to risk and returns may come back to bite - again.

Paulson gets small redemption with the Hartford

21 Mar 2012

The hedge fund investor’s funds lost on average above 25 percent of their value in 2011 as bets on everything from financial sector recovery to Chinese forests went pear-shaped. A bit of activist success with the U.S. insurer is some consolation - but Paulson needs more than that.

Crowdfunding for the masses may spoil its promise

21 Mar 2012

Allowing firms to raise capital online or using social media is a good idea. But bringing in novice investors demands stronger rules for startups, which U.S. lawmakers don’t seem to appreciate. Without safeguards like audited financials, wider crowdfunding will be a disaster.

Fully-stocked Fed board needed to navigate exit

21 Mar 2012

The White House’s bipartisan duo Jeremy Stein and Jerome Powell could bring the central bank’s board back to full strength in time for what may be a rocky withdrawal from easy monetary policy. The candidates are strong - whether the Senate will also be remains to be seen.

Chevron’s criminal scrape may backfire on Brazil

21 Mar 2012

A prosecutor in Brazil is chasing the oil titan for a spill about 0.1 percent the size of BP’s Gulf gusher. This over-reaction may reflect one lawyer’s ambitions. Still the fact that Petrobras has escaped such punishment will add to worries that outsiders face a double standard.

U.S. justices put hazy patent rules back in focus

21 Mar 2012

A unanimous Supreme Court said reading medical tests is, like gravity, based on a law of nature that can’t be patented. The ruling should cut infringement claims by diluting protections for other fuzzy and overly broad ideas. The upshot could be a healthy boost for innovation.

Saudi words won’t ease pressure on U.S. fuel prices

21 Mar 2012

Despite its reassurances, Saudi Arabia has imperfect options to prevent U.S. fuel prices from reaching risky levels seven months before the presidential elections. Sanctions on Iran, meanwhile, allow Riyadh to benefit from both strong oil prices and high production.

U.S.-Russian trade relations need serious reset

21 Mar 2012

The Jackson-Vanik amendment linking U.S. trade rules with the former USSR to emigration policies is obsolete and must be repealed. Some want it replaced with a new law pressuring Moscow on human rights. But bundling the two issues together is naive and counter-productive.

Farmland promises real investment harvest

21 Mar 2012

The hunt is on, among fearful long-term investors, for inflation protection. History suggests that agricultural land could provide part of the answer. But ownership brings responsibilities, costs, and risks that need close management.

Judges’ words can speak as loudly as actions

20 Mar 2012

Leo Strine and Jed Rakoff have become known for their tough and snarky rulings, including recent ones thumping Goldman Sachs and Citigroup. Jurists don’t always have the full force of the law needed to up-end the status quo. But the bully pulpit is proving just as powerful.

Student debt may land double whammy on US growth

20 Mar 2012

Graduates are forking over far more in loan repayments than a decade ago, easily outstripping salary growth. Over time, that’ll dent GDP. Defaults are rising, too. With Uncle Sam now holding $450 bln of student debt and rising, that puts taxpayers on the hook - again.