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BBC ersatz trader has serious markets message

29 Sep 2011

A clip of a trader admitting to dreaming of financial doom as a money spinner has spread like wildfire. The Gordon Gekko wannabe doesn’t work on Wall St but his vulgar amorality offers a description of trading that strikes a chord with a public still smoldering over bailouts.

U.S. money markets lose scale but not power

29 Sep 2011

This source of short-term funding is much diminished from the 2008 heyday, but they still have $2.5 trln to invest in debt. That is more than enough to keep bankers up at night, especially as low rates, European bank woes and lower corporate demand have made managers desperate.

Chilean Winter tests the country’s economic model

28 Sep 2011

Mass protests over education mask a deeper divide over the post-Pinochet preference for market-based, rather than state, solutions. The Chicago Boys got it mostly right, but not on education. Resolving the current dilemma may require fundamental philosophical reform - and money.

Stock market crash more likely than new recession

28 Sep 2011

One ratio of U.S. stock market value suggests it’s expensive compared to 1995, a middling year. Low interest rates and a weak dollar have boosted profits while rapid money growth has juiced valuations. More normal monetary policy could make the market crash - without a recession.

P&G’s Pringles partner warrants careful taste test

26 Sep 2011

The consumer giant wants investors to swap P&G stock for shares in Diamond Foods as part of a $2.4 bln deal to offload the chips brand. But financial wrinkles and angry walnut growers are among possible concerns. P&G holders may want to check the contents of the package closely.

U.S. courts make death arbitrage a tougher game

26 Sep 2011

Cashing out life insurance can keep a policyholder afloat if he suddenly needs the cash. But an active secondary market tempts some to buy insurance just to sell the policy on. Delaware judges have wisely made such ghoulish bets on life expectancy easier for insurers to kill.

Berkshire buyback a move best left to Buffett

26 Sep 2011

The Sage’s conglomerate has taken the highly unusual step of repurchasing shares, at up to a 10 percent premium over book value. It doesn’t mean it’s a strategy to be followed, though. If shares of other companies were truly undervalued, Berkshire probably wouldn’t be buying its own.

Europe can protect itself against a Greek default

26 Sep 2011

A three-pronged plan is required to fight contagion: 175 bln euros for bank recaps; extra liquidity, again for banks; and a beefed-up bailout fund to help Italy, if needed. Europe looks like it is moving in this direction. But, as always, the fear is that it will be too timid.

UBS, Yahoo and HP have made failure traditional

23 Sep 2011

The Swiss bank’s $2 bln rogue trading loss echoes its U.S. mortgage misadventures while persistent strategic drift led the two tech companies to chuck out their bosses. All three have self-images that are badly out of date. Few companies can recover from this cognitive disorder.

Brazil’s Rousseff was asking for real’s selloff

23 Sep 2011

Concerns about adventurous monetary policy, central bank independence, disco-era industrial policy and even insider trading are conspiring to make the Brazilian currency the biggest loser on forex markets. While some weakness was desired, it’s tough to regain lost credibility.

Monetary moves have lost their magic

22 Sep 2011

Markets spurned the Fed’s latest love offering. The Twist was seen correctly as a small manoeuvre that can do little to speed up growth. It could even be more dangerous than helpful. Central banks should not try too hard - the pains of economic rebalancing cannot be avoided.

Singapore not quite helpless over UBS losses

21 Sep 2011

The city state’s sovereign fund is understandably disappointed with its investment in the Swiss bank. The 6.5 pct stake may still come good, especially if UBS directs future business to Singapore. Even so, GIC may want to rethink the wisdom of being a purely passive shareholder.

Can the BRICs save the PIIGS?

21 Sep 2011

Brazil’s limited offer of $10 billion of support is pure posturing. But its idea to channel it through the IMF has merit. But why limit the effort to the BRICS? Other large holders of reserves - such as Japan and Saudi - should also join the club.