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The Economist - Finance and economics
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Finance and economics | Thu, 02 Sep 2010 10:46:15 GMT |
The world economy: The odd decouple
Theories about why some rich-world economies are doing better than America’s don’t stand up
AMERICA is used to making the economic weather. It has the world’s largest economy, its most influential central bank and it issues the main global reserve currency. In recent months, however, some rich-world economies (notably Germany’s) have basked in the sunshine even as the clouds gathered over America.
On August 27th America’s second-quarter GDP growth was revised down to an annualised 1.6%. That looked moribund compared with the 9% rate confirmed in Germany a few days earlier. America’s jobless rate was 9.5% in July (figures for August were released on September 3rd, after The Economist went to press). But in Germany the unemployment rate is lower even than before the downturn. Other rich countries, including Britain and Australia, have enjoyed sprightlier recent GDP growth and lower unemployment than America. ... |
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| | Thu, 02 Sep 2010 10:46:15 GMT |
Economics focus: War footing
Monetary and fiscal stimulus make a potent, if uneasy, combination
THE Federal Reserve Bank of Kansas City’s annual conference in Jackson Hole, Wyoming, is the big event of the year for central bankers. But defining monetary policy is far harder than it used to be. In recent years central bankers have lurched ever closer to the realm of fiscal policy, mainly by buying government debt with freshly printed money. They can justify such “quantitative easing” (QE) on monetary grounds since they have already lowered short-term interest rates to, or close to, zero. But they also worry it is a slippery slope from QE to monetising government deficits and thence, inevitably, to inflation. When Phillip Swagel, then an official with the US Treasury, was asked why he attended the conference in 2008, he shrugged: “Fiscal policy, monetary policy—what’s the difference?”
For central bankers this is an unsettling thought. Their mistrust of fiscal... |
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| | Thu, 02 Sep 2010 10:46:15 GMT |
Rare earths: Digging in
China restricts exports of some obscure but important commodities
BEHIND the rise of resource-poor countries like Japan, South Korea and China into industrial giants has been the readiness of other countries to sell them critical commodities, albeit sometimes at excruciating cost. An unfolding collision around a group of elements known as “rare earths” is seen by some as a test of China’s willingness to reciprocate.
Rare earths have become increasingly important in manufacturing sophisticated products including flat-screen monitors, electric-car batteries, wind turbines and aerospace alloys. Over the summer prices for cerium (used in glass), lanthanum (petrol refining), yttrium (displays) and a bunch of other –iums have zoomed upward (see chart) as China, which accounts for almost all of the world’s production, squeezes supply. In July it announced the latest in a series of annual export reductions, this time by 40% to precisely 30,258 tonnes. |
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| | Thu, 02 Sep 2010 10:46:15 GMT |
Finance after the crisis: Deutsche Bank: A tamer casino
Germany’s biggest bank is trying to make investment banking boring. The latest in our series of profiles of financial institutions after the crisis
JOSEF ACKERMANN, the head of Deutsche Bank, combines a silky manner with blunt words. When the German government set up a bail-out fund to stabilise the country’s banking system, he said he would be “ashamed” to use it. When Europe and the IMF bailed out Greece, Mr Ackermann said he doubted it would pay back the loans. And when regulators and economists say that big banks should be broken up, with “casino” investment banks split off from “utility” retail banks, Mr Ackermann retorts that “smaller banks will not make us safer.”
Mr Ackermann speaks with the authority of a man who steered his bank through the crisis more deftly than most. Deutsche did not escape unscathed. In 2008, a year in which it had confidently forecast a record profit of more than €8 billion... |
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| | Thu, 02 Sep 2010 10:46:15 GMT |
Carbon markets: The smoking greenhouse gun
An alluring trade in “supergreenhouse” gas emissions is coming under scrutiny
ONE of the curiosities of carbon markets is that they do not just trade in carbon. Other greenhouse gases can be given a value, too—sometimes a very high one. Claims that these prices promote scammery are now prompting some searching questions.
The gas at the centre of the controversy is HFC-23, a greenhouse gas which, on a weight-for-weight basis, is 14,800 times better at trapping heat than carbon dioxide. HFC-23 is produced as a by-product of the manufacture of HCFC-22, an ozone-destroying refrigerant. HCFC-22 is banned in developed countries, but developing countries can keep making it until 2030. ... |
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| | Thu, 02 Sep 2010 10:46:15 GMT |
Sovereign debt: Wiggle room
The IMF offers indebted governments some reassurance
ONE consequence of the deepest recession since the Depression has been the biggest peacetime build-up of public debt the rich world has ever seen. Some reckon that the debt position of many rich countries is now unsustainable. It is a measure of just how nervous people have become about the mountain of debt that the IMF—not usually known for taking doveish views—concluded in two papers released on September 1st that there is too much pessimism about public finances.
The IMF argues that despite historically high debt-to-GDP ratios, many countries still have room for fiscal manoeuvre. Typically, the debate on the point at which a country’s debt burden spirals out of control has tried to identify a single debt-to-GDP threshold, above which things are no longer sustainable. The fund’s economists argue that a universal debt limit does not make sense. ... |
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| | Thu, 02 Sep 2010 10:46:15 GMT |
Buttonwood: Divvying up returns
Investors should pay more attention to dividends
DIVIDENDS do not get the respect they deserve. Over the long run they provide the bulk of equity investors’ returns. Work by Elroy Dimson, Paul Marsh and Mike Staunton of the London Business School* found that over the period from 1900 to 2005, the real return from global equities averaged 5%. The mean dividend yield over that period was 4.5%.
Despite this, stockmarkets devote a lot more time to forecasting and analysing profits than they do to thinking about payouts. Profits can be easily manipulated and come in a bewildering variety of forms (operating, reported, post-tax, pre-exceptional, etc). Dividends are (mostly) paid in cash and so are hard to fake. ... |
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| | Thu, 02 Sep 2010 10:46:15 GMT |
Private equity: Candover and out
A once-revered buy-out firm is going under. Who’s next?
FOR years people have been predicting the demise of private equity. Now they have a proper tombstone to point at. On August 31st Candover, once one of Britain’s leading private-equity firms, announced that it would unwind its assets and return money to shareholders and investors. The 30-year-old firm is the biggest buy-out victim of the crisis so far.
Bad investments during the boom helped undo Candover. Several companies in its portfolio have struggled under their debts over the past two years, including Ferretti, a luxury-yacht maker. In June Candover relinquished control of Gala Coral, a gambling company, to creditors. It has had to write down several other investments. ... |
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| | Thu, 26 Aug 2010 10:50:43 GMT |
Economics focus: Bad circulation
There is more to America’s stubbornly high unemployment rate than just weak demand
AMERICANS are used to thinking of their job market as lithe and supple. Employment snaps back quickly after recessions. Workers routinely shuttle between industries and cities to wherever jobs are abundant. But in the past decade, the labour market has resembled an ageing athlete. Each new injury is more painful and takes longer to heal. More than a year into the current economic recovery the unemployment rate remains stuck close to 10%, raising concerns about the kind of sclerosis that continental Europe suffered in the 1980s.
The slow rehabilitation is in part because the economy suffered a trauma, not a scrape. The fall in GDP during the last recession was easily the largest of the post-war period, and output remains well below its potential. Few had expected a rapid return to full employment, but even modest expectations for jobs growth have not been met. Employment has actually... |
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| | Thu, 26 Aug 2010 10:50:43 GMT |
Emerging-market debt: A run for your money
Developing countries in Latin America and Asia can borrow for longer
PERU is not an obvious investment darling. For much of its existence, the country has been in a state of default. As recently as 1990 the inflation rate was 7,500%. Yet in the past few years Peru has persuaded creditors to lend it money for ever-longer periods in its own currency. It issued its first 20-year local-currency bond in 2006; its debut 30-year bonds followed a year later. Earlier this year Peru was able to issue 300m soles ($105.2m) of 32-year local-currency bonds. Investors in these bonds are compensated for the risk of inflation by yields of just 6.9%, a once unthinkable prospect.
Peru is not alone. Anxious to wean themselves off flighty foreign funding after the crises of the 1990s, many emerging-market governments sought to build up local-currency bond issuance. Extending the maturity of bonds is the next step. In 2007 around 40% of Peru’s local-currency debt was short-term (ie,... |
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The Economist - Economics
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Economics | Thu, 02 Sep 2010 10:46:15 GMT |
Economics focus: War footing
Monetary and fiscal stimulus make a potent, if uneasy, combination
THE Federal Reserve Bank of Kansas City’s annual conference in Jackson Hole, Wyoming, is the big event of the year for central bankers. But defining monetary policy is far harder than it used to be. In recent years central bankers have lurched ever closer to the realm of fiscal policy, mainly by buying government debt with freshly printed money. They can justify such “quantitative easing” (QE) on monetary grounds since they have already lowered short-term interest rates to, or close to, zero. But they also worry it is a slippery slope from QE to monetising government deficits and thence, inevitably, to inflation. When Phillip Swagel, then an official with the US Treasury, was asked why he attended the conference in 2008, he shrugged: “Fiscal policy, monetary policy—what’s the difference?”
For central bankers this is an unsettling thought. Their mistrust of fiscal... |
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| | Thu, 02 Sep 2010 10:46:15 GMT |
Global economic policy: Monetary illusions
Central bankers are not magicians. Don’t count on them to conjure up remedies if the rich economies flag
OVER the past few years the reputations of the rich world’s central bankers have fluctuated wildly. When the financial crisis struck, they were blamed for allowing the housing and credit bubbles to build, and for failing to foresee the bust. Later they were lionised for preventing a new Depression with bold actions to support the financial system. Now a third stage is at hand, one of dangerously outsized expectations.
With most governments unable, or unwilling, to offer more fiscal stimulus, central banks are left solely responsible for propping up the flagging recovery. The phenomenon is most obvious in America. Its economy has weakened, yet the default path for fiscal policy is a hefty tightening as the Obama stimulus wanes, the states slash spending to balance their budgets and the Bush tax cuts expire. With any discussion of remedies by politicians... |
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| | Thu, 26 Aug 2010 10:50:43 GMT |
Economics focus: Bad circulation
There is more to America’s stubbornly high unemployment rate than just weak demand
AMERICANS are used to thinking of their job market as lithe and supple. Employment snaps back quickly after recessions. Workers routinely shuttle between industries and cities to wherever jobs are abundant. But in the past decade, the labour market has resembled an ageing athlete. Each new injury is more painful and takes longer to heal. More than a year into the current economic recovery the unemployment rate remains stuck close to 10%, raising concerns about the kind of sclerosis that continental Europe suffered in the 1980s.
The slow rehabilitation is in part because the economy suffered a trauma, not a scrape. The fall in GDP during the last recession was easily the largest of the post-war period, and output remains well below its potential. Few had expected a rapid return to full employment, but even modest expectations for jobs growth have not been met. Employment has actually... |
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| | Thu, 19 Aug 2010 11:47:28 GMT |
Economics focus: Paper chains
Tight policies in surplus countries helped undo the gold standard, which is a lesson for the euro
CHRIS ROCK, a comedian, is a big fan of Oprah Winfrey, a television host and philanthropist. He recalls one of Ms Winfrey’s shows during which a woman confessed to her husband that she had frittered away $300,000 and as a consequence their home was about to be repossessed. “By the end of the show, it was all the guy’s fault,” a clearly impressed Mr Rock told David Letterman, another talk-show host. “He was apologising for not loving her enough—it was the greatest ‘Oprah’ of all time.”
This may seem an odd sort of blame-shifting. Yet reasoning of this kind is increasingly used to explain how spendthrift countries get into trouble. On this view America’s credit boom and bust owed as much to a savings glut in Asia as to laxity at home. A new paper* by Barry Eichengreen of the University of California, Berkeley, and... |
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| | Thu, 12 Aug 2010 11:39:26 GMT |
Economics focus: Fiscal fundamentalists
Austerity or stimulus? Some economists have much more extreme views than that
BY MOST people’s standards, George Osborne, Britain’s 39-year-old chancellor of the exchequer, is a fiscal hawk. In his first budget, announced in June, he promised to raise taxes and cut spending without flinching. As a result, Britain’s net public debt should peak at about 70% of GDP in March 2014. According to the Institute for Fiscal Studies, a think-tank, his spending proposals are even more mortifying than the hair shirt imposed on Britain in 1976 by the IMF.
But Mr Osborne’s efforts look dainty compared with the rigours some economists think necessary. For example, Christian Hagist and his colleagues at Freiburg University believe Britain’s fiscal condition is far worse than the official figures suggest. In 2005, a time of prosperity and tranquillity, the country’s “fiscal gap” already amounted to 505% of GDP, they calculate, almost 14... |
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| | Thu, 12 Aug 2010 11:39:26 GMT |
The world economy: Joy, pain and double dips
Fear of renewed recession in America is overblown; so is some of the optimism in the euro area
SELDOM does the United States look at Europe with economic envy. The past few weeks, however, have been one of those rare phases. Concern about America’s stumbling recovery has been rising, just as anxieties about the euro area’s economy have faded. The dollar is the weakling among rich-world currencies (see article). But Americans should take a little heart: it is too soon to despair about their economy. And Europeans should show a little caution: it is too soon to be sure that theirs is firmly back on its feet.
Some forecasters believe that America’s disappointing GDP growth in the second quarter, 2.4% at an annualised rate, could be the start of a slide towards a second recession. One worry is jobs, or the lack of them. American business created only 71,000 in July, too few to match the growth in the population of those of working age and far too few to... |
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| | Thu, 22 Jul 2010 11:21:19 GMT |
Economics focus: Agents of change
Conventional economic models failed to foresee the financial crisis. Could agent-based modelling do better?
MAINSTREAM economics has always had its dissidents. But the discipline’s failure to predict the financial crisis has made the ground especially fertile for a rethink.
Critics tend to agree on what is wrong with current macroeconomic forecasting. A hearing of the House of Representatives Committee of Science and Technology on July 20th targeted the “dynamic stochastic general equilibrium” (DSGE) models used by the Federal Reserve and other central banks. The hearing aimed to “question the wisdom of relying for national economic policy on a single, specific model when alternatives are available.” The Institute for New Economic Thinking in New York, which had its inaugural conference in April, has attacked many of the assumptions, including efficient financial markets and rational expectations, on which these models are predicated. These... |
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| | Thu, 22 Jul 2010 11:21:19 GMT |
Buttonwood: Losing confidence
Looking at the dollar in the old-fashioned way
WHEN the Bretton Woods system was cracking in the early 1970s the price of a troy ounce of gold, in dollar terms, was raised in two steps from $35 to $42.22. This was, in effect, a devaluation of the dollar.
The authorities then still thought it worth expressing the shift in terms of bullion, rather than against another currency like the Japanese yen or French franc. In the 1930s Franklin Roosevelt had a specific policy of devaluing the dollar against gold, pushing the price from $20.67 to $35 in the belief this would push commodity prices (and thus farm incomes) higher and reduce the burden of debt service. ... |
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| | Thu, 22 Jul 2010 11:21:19 GMT |
Burgernomics: When the chips are down
The latest Big Mac index suggests the euro is still overvalued
Correction to this article
ASK Western policymakers how they intend to squeeze growth from their sluggish economies and most pin their hopes on higher exports. That makes exchange rates an especially sensitive topic. A weaker currency improves the competitiveness of a country by making exports cheaper. It also encourages domestic consumers to switch from expensive imports to domestic goods. The Economist’s exchange-rate scorecard, the Big Mac index, shows that currencies continue to be cheap in the developing world but overvalued in Europe. ... |
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| | Thu, 08 Jul 2010 11:50:50 GMT |
Rebalancing economies: Hair-shirt economics
Getting Germans to open their wallets is hard
BERLIN’S supermarkets may not be quite as drab today as they were in the communist era, when party officials ordered that special care be taken not to “do anything that might awaken people’s needs”. But with their long queues, poor choice, baffling arrangement of goods and grumpy assistants, they still have a long way to go before they awaken anything but resignation.
Yet the state of Germany’s supermarkets is of far more than casual interest to outsiders. For when German politicians are urged to adopt policies to stimulate domestic spending and help revive flagging European economies, their standard retort is that there is little they can do to convince Germans to spend rather than save. Foreigners are often quick to dismiss this argument. They point, for instance, to the German economy’s weak service sector as an area of potential growth. Yet facts suggest that Germans really are more... |
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Banking | Thu, 02 Sep 2010 10:46:15 GMT |
Finance after the crisis: Deutsche Bank: A tamer casino
Germany’s biggest bank is trying to make investment banking boring. The latest in our series of profiles of financial institutions after the crisis
JOSEF ACKERMANN, the head of Deutsche Bank, combines a silky manner with blunt words. When the German government set up a bail-out fund to stabilise the country’s banking system, he said he would be “ashamed” to use it. When Europe and the IMF bailed out Greece, Mr Ackermann said he doubted it would pay back the loans. And when regulators and economists say that big banks should be broken up, with “casino” investment banks split off from “utility” retail banks, Mr Ackermann retorts that “smaller banks will not make us safer.”
Mr Ackermann speaks with the authority of a man who steered his bank through the crisis more deftly than most. Deutsche did not escape unscathed. In 2008, a year in which it had confidently forecast a record profit of more than €8 billion... |
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| | Thu, 26 Aug 2010 10:50:43 GMT |
Finance after the crisis: Pactual: The origins of a new species
The latest of our profiles of financial firms after the crisis looks at BTG Pactual, Brazil’s investment-banking powerhouse
IN RECENT years investment banks were supposedly hijacked by boffins who used their nuclear-physics doctorates to devastating effect. Yet the industry has long been slave to a different tribe of scientists: the bulge-bracket Darwinists. They reckon only giant global firms can survive.
Until last year, Pactual, a Brazilian outfit, had conformed to their doctrine. In 2006 it sold out to a big foreign firm, UBS, for $3.1 billion, making its partners some of Brazil’s richest men. But then in 2009 the Swiss bank, reeling from losses, unexpectedly sold Pactual back to BTG, a local investment fund co-founded by Andre Esteves, one of the bank’s former top brass, for $2.5 billion. Today the renamed BTG Pactual is owned again by its partners and led by Mr Esteves who has a 25-30% stake. ... |
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| | Thu, 26 Aug 2010 10:50:43 GMT |
European banks: A glow from the east
A slow fuse still burns on eastern Europe’s foreign-currency debts
AFTER firefighters extinguish a blaze they usually look carefully for glowing embers before rolling up their hoses and heading off. With the worst of the banking crisis now receding in most rich countries, it is tempting to send the financial firefighters home. But wafts of smoke from eastern Europe suggest the job of stabilising Europe’s banking system is not yet done.
In early August a number of banks operating in the region reported sometimes startling rises in loan losses. Among them were UniCredit, Erste Group and OTP. It had been hoped that loan losses would start falling. Instead they have continued to climb—alarmingly in some cases. In Kazakhstan more than a third of outstanding debt is non-performing. In Latvia, almost a fifth of debt is going bad. ... |
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| | Thu, 26 Aug 2010 10:50:43 GMT |
HSBC and Nedbank: Mutual attraction
HSBC learns to play the vuvuzela
THE closest HSBC traditionally got to sub-Saharan Africa was sending its Hong Kong-bound staff round the Cape of Good Hope before the Suez Canal opened in 1869. It is a sign of the region’s vastly improved prospects and the bank’s evolving strategy that HSBC is now in talks to buy a controlling stake in Nedbank, one of South Africa’s big four banks, with a market value of $9 billion.
As Africa gets richer and does more trade with Asia, foreign banks are becoming more interested. That was the logic cited in 2007 when China Development Bank bought a stake in Barclays, which owns a big African business, and a few months later when ICBC, China’s biggest bank, bought a 20% stake in Standard Bank, South Africa’s largest, which has operations in some neighbouring countries. Citigroup and Standard Chartered, which along with Barclays have the biggest pan-African networks, now talk more about their prospects there. |
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| | Thu, 26 Aug 2010 10:50:43 GMT |
Regulating finance: Killing them softly
International regulators are making progress on tackling too-big-to-fail banks
TALK is cheap when it comes to solving the problem of too-big-to-fail banks. From the luxury of even today’s stuttering economic recovery it is easy to vow that next time lenders’ losses will be pushed onto their creditors, not onto taxpayers.
But cast your mind back to late 2008. Then, the share prices of the world’s biggest banks could halve in minutes. Reasonable people thought that many firms were hiding severe losses. Anyone exposed to them, from speculators to churchgoing custodians of widows’ pensions, tried to yank their cash out, causing a run that threatened another Great Depression. Now, imagine being sat not in the observer’s armchair but in the regulator’s hot seat and faced with such a crisis again. Can anyone honestly say that they would let a big bank go down? ... |
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| | Thu, 19 Aug 2010 11:47:28 GMT |
Bank-capital rules: Super model
The Basel club publishes new analysis on the impact of higher capital
WHEN asked, before the crisis, about the right level of capital they should have, the bankers’ answer was simple: “As little as possible”. Now that the world has changed, their response has morphed to “less than what the regulators want”. Lenders, they say, will have to hammer borrowers to recoup the costs of carrying bigger capital and liquidity buffers. The Institute of International Finance, a lobbying group, reckons the proposed “Basel 3” rules might knock 3% off the absolute level of rich-world GDP by 2015, a scary result. A study by the French Banking Federation concluded that the long-term level of GDP would be 6% lower in the euro area.
In fact, the bankers, like everyone else, have not had much clue what effect tighter rules would have. Calculating their impact is tricky. Not only is there much argument about the impact of credit on the economy, there... |
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| | Thu, 12 Aug 2010 11:39:26 GMT |
Finance after the crisis: Citicorp redux
In the third of our profiles of financial institutions after the crisis, we look at Citigroup, a tarnished American icon
WALTER WRISTON liked to contend that banks needed little capital as long as they were run well. On several occasions since the legendary Citicorp boss retired in 1984, the bank and its successor, Citigroup—created in a merger in 1998—have been caught embarrassingly short of the stuff. The latest blow-up was the nastiest. Enormous mortgage losses confirmed fears that the group, which grew into a gigantic financial supermarket under Sandy Weill, one of Wriston’s successors, had become too complex to manage—a “frankenbank”, as an insider puts it. Citi almost drowned in the red ink. It ended up needing three bail-outs, the last of which saw the government take a 23% stake.
Citi must now show that it can thrive on its own. Critics argue that Vikram Pandit, who took over as chief executive in December 2007, has been too... |
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| | Thu, 05 Aug 2010 10:56:47 GMT |
European banks: Letting the bottom line talk
Europe’s banks are making money hand over fist. How odd
A FEW weeks ago Europe’s banks were in real trouble. Many struggled to borrow from their peers or from capital markets amid concern that bad debts could soar or that faltering government finances in Europe could start toppling them like dominoes. Now investment analysts are falling over one another to raise their profit forecasts and slap “buy” recommendations on the stocks.
That has less to do with the results of the relatively lenient “stress tests” the banks were subjected to in July, although they clearly played a part, than with the revelations that the first half of 2010 was highly profitable. Among the firms that comfortably beat analysts’ forecasts were Deutsche Bank, UBS and BNP Paribas, the biggest banks in Germany, Switzerland and France respectively. ... |
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| | Thu, 05 Aug 2010 10:56:47 GMT |
Brazil's development bank : Nest egg or serpent's egg?
Ahead of presidential elections, BNDES comes under scrutiny
EIKE BATISTA, Brazil’s richest man, calls BNDES, the country’s state-owned development bank, “the best bank in the world”. But a former BNDES chairman, Luiz Carlos Mendonca de Barros, says it is a serpent’s egg—a reference to a film about the origins of the Nazi party. And a former central-bank chief, Gustavo Loyola, dubs the bank “Jurassic” and reckons its links with the treasury recall one of the worst periods of military rule. The violence of the rhetoric reflects growing controversy over BNDES and over state interference in the economy.
BNDES’s rate of new lending now far exceeds that of the World Bank. Its gross disbursements reached 137 billion reais ($69 billion, see chart) in 2009, double the amount in 2007. Its political connections are impressive, too. The finance minister is a former head of the bank and the bank’s current head is favourite... |
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| | Thu, 05 Aug 2010 10:56:47 GMT |
Finance after the crisis: Out of the bush league
Our series of profiles of firms after the crisis continues with Australia’s ANZ
FOR its new headquarters in Melbourne, ANZ skipped the portraits of yesteryear’s leaders and the money museum that underpinned its lovely old cathedral of finance on Queen Street. Its new lobby is, in effect, an airport lounge, complete with showers and internet connections for travelling staff and clients. The architecture echoes the bank’s strategy: seize a moment when many of the world’s large financial institutions have been hopelessly distracted to carve out a franchise across Asia.
Australian banks have taken tentative steps in this direction before, with disheartening results. ANZ itself gave up on Grindlays, its Indian business, in 2000. Standard Chartered picked up what soon proved to be a jewel, and ANZ lost access to a market that has yet to be regained. It has set aside such disappointments. Since the end of 2007, just after Michael Smith arrived from HSBC... |
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The Economist - Mergers and acquisitions
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Mergers and acquisitions | Thu, 26 Aug 2010 10:50:43 GMT |
Mergers and acquisitions: Waiting for a wave
A flurry of deals makes bankers salivate
FIRMS with interim bosses usually opt for the quiet life, but the lack of a permanent boss did not stop Hewlett-Packard (HP) from launching a bidding war on August 23rd. The computer giant offered to buy 3Par, a data-storage firm, for $1.5 billion, topping the $1.15 billion offered a week earlier by Dell, a longtime rival of HP. On August 19th Intel, a chipmaker, splashed out $7.68 billion to buy McAfee, an antivirus-software firm. Nor is the fun confined to high-tech. On August 17th PotashCorp, a firm that mines potash, from which fertiliser is made, received and promptly rejected a $38.6 billion offer from BHP Billiton, a mining giant. BHP is now pursuing a hostile bid.
... |
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| | Thu, 22 Jul 2010 11:21:19 GMT |
Hospital mergers: The war of the wards
Investors are eyeing up hospitals around the world
AT FIRST glance, hospitals seem an unattractive business. They are heavily regulated and often run by governments or charities. Doctors wield immense power. Patients have high and rising expectations. Rapid advances in medical technology drive costs relentlessly upwards even as governments try harder to restrain spending on health.
And yet, consider the flurry of deals of late. On July 19th TPG and the Carlyle Group, two American private-equity firms, won a takeover battle for Healthscope, an Australian hospital chain, with a bid of $1.7 billion. In doing so, they edged out a bid by Kohlberg Kravis Roberts (KKR), another big American private-equity firm. Healthscope is Australia’s second-biggest private hospital firm, but it also has operations in New Zealand and south-east Asia. ... |
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| | Thu, 10 Jun 2010 10:39:49 GMT |
Automotive alliances multiply: All together now
The Renault-Nissan alliance has become a template for the car industry
EVER since the forging of Renault’s alliance with Nissan in 1999, Carlos Ghosn, the boss of both carmakers, has been on the lookout for new partners. He passionately believes that the alliance model he has created is superior both to the full mergers the car industry has often mucked up and to the limited co-operation deals that are two a penny. But attracting others to his big tent has taken time.
In 2002 Nissan launched what has proved to be a successful joint venture in China with Dongfeng: it has become the leading Japanese brand in China, now the world’s most important car market. In late 2007 Nissan beat out General Motors to become a “strategic partner” of AvtoVaz, a big but sickly Russian carmaker, taking a 25% stake. Since then, Russian car sales have nearly halved. But Mr Ghosn believes that the tie-up with AvtoVaz will bring his alliance a 40% share of a market that... |
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The Economist - The World Bank and the IMF
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The World Bank and the IMF | Thu, 02 Sep 2010 10:46:15 GMT |
Sovereign debt: Wiggle room
The IMF offers indebted governments some reassurance
ONE consequence of the deepest recession since the Depression has been the biggest peacetime build-up of public debt the rich world has ever seen. Some reckon that the debt position of many rich countries is now unsustainable. It is a measure of just how nervous people have become about the mountain of debt that the IMF—not usually known for taking doveish views—concluded in two papers released on September 1st that there is too much pessimism about public finances.
The IMF argues that despite historically high debt-to-GDP ratios, many countries still have room for fiscal manoeuvre. Typically, the debate on the point at which a country’s debt burden spirals out of control has tried to identify a single debt-to-GDP threshold, above which things are no longer sustainable. The fund’s economists argue that a universal debt limit does not make sense. ... |
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 | , 04 Sep 2010 18:36:58 BST |
"Ed does not need to hold the broccoli"
A Thick of It style interlude from Ann Treneman's interview (£) with Ed Miliband today:
"There is also a visit to something called a 'communiversity' where he is confronted with what, for a Miliband, is a scary sight: a bowl of fruit.
'Us Milibands are funny about funny shaped fruit,' he notes, plucking out an apple and avoiding the yellow peril that gave his brother the nickname Milibanana after he was pictured holding one and looking, well, a bit bananas. Later, on a trip to a community farm I |
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| | , 04 Sep 2010 12:25:31 BST |
Miliband D tries to break out of the Blairite box
With ballot papers out, the Labour leadership contest is entering its most critical phase. It is striking that David Miliband has taken this moment to co-author an essay with his most significant left-wing supporter, Jon Cruddas. Indeed, a casual observer looking at the piece would assume that the two men were running on a joint ticket.
The language in the article is very Cruddas, it talks of a ‘new covenant’ (one of Cruddas’ favourite phrases) with Britain. The intellectual heart of the piece is an attempt to break away from the |
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| | , 04 Sep 2010 10:39:06 BST |
Surmountable problems for Nick Clegg
Curious times, getting curiouser, for Nick Clegg. The Lib Dem leader might have thought that bringing his party into government would ensure him a triumphant reception at their conference in two weeks. But, instead, he faces a number of stories that could unsettle proceedings. Today, we hear that more Liberal Democrat councillors have resigned in what they claim is protest at the cuts being implemented by central government. What's more, a number of Lib Dem figures have added their voices to the general cacophony surrounding Andy Coulson. And that's before we |
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| | , 03 Sep 2010 23:43:33 BST |
First free schools will open next September
Tomorrow’s Guardian front page says Michael Gove dealt fresh blow as only 20 'free schools' approved. But this is actually not a bad rate of progress.
The 20 refers only to the new schools that will open in September 2011, more will open in 2012 and 2013 and so on. One would expect the numbers to increase as momentum behind the programme builds. As soon as parents see what these schools can do, there’ll be greater demand for them.
Ed Balls is out tonight with a typically pugnacious statement claiming that |
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| | , 03 Sep 2010 18:56:50 BST |
Labour turn up the heat on Coulson
As we drift into the weekend, Labour are stepping up their attacks on Andy Coulson. Already today, Tom Watson, Alan Johnson, John Prescott and Chris Bryant have all drawn noisy attention to the allegations made in that New York Times Magazine article about phone tapping and the News of the World – and their efforts have already pushed the story to the top of the BBC news agenda. Indeed, Bryant has even called for David Cameron to sack Coulson. Labour types will no doubt repeat that message constantly over the |
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| | , 03 Sep 2010 16:44:30 BST |
The decline of the Gap Year
When I say that I doubt that I will take a Gap Year, many adults are surprised. “Why”, they say, wide-eyed, “it's such a wonderful growing experience / important rite of passage / chance to save the world.” Hm. All this may be so, but I am by no means alone in dismissing a year spent abroad.
I can see many reasons for this. The first comes from the infamous video “Gap Yah.” Everyone has seen it. My grandmother has seen it. If you haven’t seen it, then you can find it Liam Fox rows back on carrier sharing
For a while then, it looked as though Britain and France really were going to share aircraft carriers as a mesure d'austérité. But, today, Liam Fox seems to have put a block on the idea, describing it in Paris as "utterly unrealistic". He did, though, add that we could pool some of our transport planes and helicopters with the French (which sounds like the military equivalent of hitching a lift, if we happen to be going in the same direction). And Fox's spokesman has since said that there still might |
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WSJ.com's inside look at the markets | Fri, 03 Sep 2010 21:01:22 GMT |
Data Points: U.S. Markets
This week, the Dow Industrials rose 297.28 points, or 2.93% to 10447.93, the Nasdaq Composite gained 80.12 points, or 3.72% to 2233.75 and the S&P 500 added 39.92 points, or 3.75% to 1104.51.
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| | Fri, 03 Sep 2010 19:32:40 GMT |
Data Points: Energy & Metals
This week, Nymex crude fell 57 cents per barrel, or 0.76% to $74.60, Nymex natural gas rose 23.4 cents per million BTU?s, or 6.32% to $3.939, Comex gold gained $13.60 per troy ounce, or 1.10% to $1249.20 and Comex copper gained 13.05 cents a pound, or 3.88% to $3.4935.
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