United States of America

Texas governor unlikely small government champion

19 Aug 2011

Rick Perry likes to boast of the jobs created on his watch. Yet while he wants to make the federal government “inconsequential,” he has presided over more new government jobs per head than Washington. If nothing else, it’s a reminder that economics can’t be reduced to soundbites.

Rivals unlikely to crash HP’s punchy Autonomy deal

19 Aug 2011

Autonomy would be a nice-to-have for Oracle or IBM. But Hewlett-Packard’s $11.7 bln offer for the UK software group is already rich, and rivals don’t need Autonomy quite so badly. Add in falling markets and the ugly reaction of HP shares, and a bidding war doesn’t compute.

Downgrade of U.S. debt upgrades risk to raters

19 Aug 2011

Credit rating firms have somehow alienated both parties in Congress. And government investigations of S&P may spur legislative efforts. On partisan lines, these range from tightening Uncle Sam’s grip to removing his helpful imprimatur. Either result could change the rating game.

HP says goodbye Compaq, hello IBM

19 Aug 2011

The U.S. tech giant may spin off its PC unit and stop making some mobile devices. It has also offered to buy UK data search software group Autonomy for $10 bln. Leaving the cutthroat hardware market for higher margin software can work, as IBM shows. But it won’t be quick or easy.

High volatility the price for still unfixed system

18 Aug 2011

The tail-risk fear of a Lehman sequel in the euro zone has whipsawed stocks, bonds and just about every other market. Gloomy data on the U.S. economy didn’t help on Thursday. While policymakers and fundamentals alike offer no conviction, global volatility is set to stay high.

Upstart M&A boutiques earn place at fee table

18 Aug 2011

Two newish shops opened by Blair Effron and Frank Quattrone worked on Google’s $12.5 bln deal this week. Along with firms run by Ken Moelis and Joe Perella, this quartet is eating away at the fee pool of big Wall Street banks. Conflicts and cash should keep them nourished.

Doubts over $29 bln pharmacy deal look overdone

17 Aug 2011

Based on the yawning 26 pct gap between the Express Scripts offer and where Medco shares trade - lower than even before the bid came along - investors are super-spooked about antitrust issues. The market pricing in zero chance of success makes it a cheap option to buy.

Targeting Sun Belt should be on Obama’s new list

17 Aug 2011

Swathes of the U.S. South and Southwest have replaced the Rust Belt as the nation’s economic runt. Housing-bust states like California and Nevada now have worse unemployment. The president’s fresh plans to jump-start the economy would do well to aim support at the region.

Balanced budget laws are flawed but not useless

16 Aug 2011

Sarkozy and Merkel like them, and they feature in America, too. But politicians often fudge the numbers, or just change the rules. Nonetheless, in reasonably honest systems such laws slow the build-up of deficits. Perhaps as importantly, they also stigmatize bad behavior.

Rick Perry needs to backtrack on Fed charge

16 Aug 2011

The Texas governor and GOP White House candidate, like the U.S. central bank’s Dallas branch, doesn’t much like its money-printing policies of late. But words like “treasonous” cross a line and further dent Fed independence. Perry could struggle if he doesn’t tone it down.

Battered U.S. junk deserves high-yield name again

16 Aug 2011

With markets volatile, typical junk bonds are yielding north of 8 pct. That’s tasty for those starving on the Fed’s zero-rate diet. And default rates look low, refinancing needs limited and the deal flow manageable. Despite investor wariness, today’s junk looks almost nutritious.

Over-reaction to BP Gulf spill costing U.S. jobs

16 Aug 2011

Oil regulators may have swung from gung-ho to too cautious. Painfully slow drilling approvals mean America could be missing out on 230,000 jobs - and tax revenue, too. Safety matters. But with unemployment and the deficit top national concerns, red tape should be kept in check.

World must let U.S. win currency war

16 Aug 2011

With the Fed bent on inflating the U.S. economy with cheap dollars, export economies may be tempted to suppress their currencies in response. They must resist. Painful as it seems, stronger currencies are a necessary cost of reviving customer No. 1 and preserving global growth.

Solar firm’s demise signals gray industry forecast

16 Aug 2011

Onetime investor darling Evergreen Solar, among the first U.S. green energy companies to go public, just went bankrupt, victimized by a global supply glut. Growing Chinese competition and waning European subsidies mean the solar sector will probably get darker before the dawn.

Texas governor creates two-man GOP 2012 race

15 Aug 2011

Rick Perry’s record, Tea Party bona fides and deep pockets make him the prime rival to Republican front runner Mitt Romney, a former private equity boss. Yet flaws in both candidates mean either one would need help from the economy to push Barack Obama out of the White House.

Return to gold standard seems less unthinkable

15 Aug 2011

Fiat money has worked well in the 40 years since Richard Nixon ended the peg, but this latest recession must gnaw at believers. If years of ultra-cheap cash give rise to serious inflation or a dollar collapse, the gold standard, however erratic and deflationary, may appeal again.

Citadel shows some moats are still hard to cross

12 Aug 2011

Ken Griffin’s hedge fund is abandoning its foray into investment banking. Internal clashes didn’t help and adding a middle man to a trading business creates conflicts, too. But bulge-bracket firms also held up better than expected. Wall Street turf has some solid defenses.

Fretting frackers restrain economic opportunities

12 Aug 2011

Critics of the controversial drilling process contend its hazards have been downplayed and the benefits exaggerated. A new U.S. report suggests just the opposite. Yet until safety concerns are tackled, as with New York’s proposed cleanup fund, shale’s potential won’t be realized.

Financial lifeboats starting to get crowded

11 Aug 2011

Safety from sinking stocks has been sought in Treasuries, and even bonds backed by U.S. homes. But other places of refuge like the Swiss franc and gold showed on Thursday how quickly they can be rocked when too many investors pile in. Havens aren’t immune to mania either.

Nomura’s Wall Street push will be tough to pull off

11 Aug 2011

The Japanese broker is focusing its investment banking ambitions on the United States while trimming its European headquarters. Nomura reckons it can establish itself by hiring rather than buying. But it’s hard to see it succeeding where so many others have failed.