United States of America

Imagine if Merrill had been smart like Goldman

13 Oct 2011

That’s the basic conceit behind the latest film to emerge in the financial crisis genre, “Margin Call.” Kevin Spacey stars as the head of a desk overloaded with MBS about to blow that his boss forces him to unload to unwitting buyers. It’s simplistic, but eerily familiar.

Rajaratnam sentence shows value of court process

13 Oct 2011

The 11-year term handed to the Galleon fraudster may seem excessive to those who think insider-trading penalties are overdone. But it looks about right in context - and it has unusual credibility. Not only was there no shortcut deal, the legal battle was also fully engaged.

Jamie Dimon puts brave face on tough quarter

13 Oct 2011

JPMorgan’s boss confronted a triple whammy of falling revenue, lower reserve releases and fallout from his incendiary comments. Dimon made a good stab outlining the benefits of banking. And there are signs of a middling, not reeling, economy. But investors may be less reassured.

New U.S. trade deals are political, economic wins

13 Oct 2011

After an overlong hiatus, the passage of laws fostering commerce with Korea, Colombia and Panama is a welcome boon for free trade. While bilateral deals are only modest job-creators, they deepen economic links, enhance efficiency and build friendships. Next up? Indonesia.

Dow Jones doesn’t need scandal-by-association

13 Oct 2011

The Wall Street Journal Europe’s publisher quit just before a report of controversial deals to boost circulation. The full facts aren’t clear, and such practices could happen anywhere. But when the parent is scandal-prone News Corp, it’s harder to avoid coming under suspicion.

Occupy Wall Street may share fate of Coxey’s Army

12 Oct 2011

Like today’s demonstrators, Coxey’s 1894 march on Washington followed a period of deflation that increased inequality and a financial crash. Coxey failed, but his demands for stimulus spending and printing money became the standard response to recession. OWS should be so lucky.

Outage hastens BlackBerry’s slide into irrelevance

12 Oct 2011

A three-day global disruption has left users of the handheld gadget struggling to access email. The growth of other mobile devices and tablets means it’s less of a hassle than it once might have been. It may also persuade customers to dump their BlackBerries for good.

Harrisburg’s fall should inspire U.S. city leaders

12 Oct 2011

A costly incinerator debacle has sent the capital of Pennsylvania into Chapter 9 bankruptcy. It’s a wakeup call for other cities grappling with their own revenue shortfalls. The ability to govern in a crisis could be as important as fiscal prudence.

Alcoa’s miss could belie better earnings surprises

11 Oct 2011

Equity investors are braced for terrible Q3 earnings. On that basis, aluminum giant Alcoa lived up to expectations with the season’s results debut. But there may yet be bigger potential for shares on the upside. Investors appear to have already priced in much of the global gloom.

Obama’s jobs council promotes distorted reality

11 Oct 2011

Its report includes some good ideas, especially on deregulation. But it ignores the role of domestic savings; its ideas on infrastructure investments would be unproductive; and its support of immigration would worsen unemployment. You can tell GE’s Jeff Immelt chaired the panel.

Patent litigation becoming a vicious circle

11 Oct 2011

Motorola, which Google is buying, is the target of Intellectual Ventures, a patent-holding firm backed by Google. Such tail-chasing is a bad sign for the business of acquiring invention rights and suing for dollars. Innovative pursuits might yield better returns than lawsuits.

Embattled Wall Street should prepare for worse

11 Oct 2011

Bankers are already on the defensive. Third-quarter earnings look set to be shoddy. Another 10,000 job cuts may be in the offing. And protesters are ready to camp outside Jamie Dimon’s house. Yet financials have grown as a share of GDP since 2006, suggesting more pain is to come.

Private bondholders won’t make the IMF better

11 Oct 2011

Proposals to let the IMF tap private investors by issuing bonds look desperate. It could use extra cash to aid the euro crisis, but new funding might delay restructuring. It could also give the fund too much firepower and risk leaving it beholden to fickle market sentiment.

99 Cents Only shows the way to handle an MBO

11 Oct 2011

Instead of cozying up to the first buyout firm that came along, the discount retailer appointed independent directors to run an auction. They found a new buyer and 15 pct extra for shareholders, including the family owners. After the J Crew debacle, a fresh example is welcome.

Will Wells Fargo get hooked on Wall Street crack?

10 Oct 2011

The California-based lender has mostly resisted lower Manhattan’s siren call. New rules would make it even costlier. But Wells kept Wachovia’s investment bank and is hiring. Ailing Morgan Stanley could even be a good fit. But such temptation can become a debilitating addiction.

Sprint’s splat opens up U.S. wireless dance floor

10 Oct 2011

Bodies are piling up in the industry’s increasingly complicated waltz. Cash concerns tripped up Sprint and partner Clearwire, after AT&T and Phil Falcone’s LightSquared stumbled earlier. That makes space for a possibly jilted T-Mobile and a surprisingly dexterous Dish.

Wall Street dealmakers get trampled by PIIGS

10 Oct 2011

The fear and uncertainty over Europe has sent the cost of U.S. credit skyward. By one closely watched gauge, junk bonds are yielding almost five percentage points more than they reasonably should. Given the bureaucratic dithering, bankers and buyout barons may be idle for a while.

Volcker Rule draft still leaves many gray areas

7 Oct 2011

U.S. regulators have made a good stab at trying to minimize the prop-trading ban’s impact on market-making. But their 200-page draft still raises many questions. It confirms that the former Fed chairman’s know-it-when-you-see-it mantra was too simplistic for this complex task.

Latest U.S. tax on rich would be counterproductive

7 Oct 2011

A 5.6 percent millionaire’s surtax is being pushed by Senate Democrats. Unlike Obama’s original scheme to limit deductions, which would help fix part of the tax code, this one doesn’t. The high marginal rates would encourage avoidance and risks dinging the already ailing economy.

U.S. jobs data confirm economy is muddling along

7 Oct 2011

The six-figure increase in employment in September beat expectations but wasn’t enough to cut long-term unemployment, which increased. Still, alongside positive manufacturing data, it suggests the outlook is for slow, patchy growth rather than a relapse into recession.