Argentina’s embattled central bank chief, Martin Redrado, has resigned after weeks of battling the president over her desire to deploy some of the central bank’s $48 billion reserves to pay down government debt. The global economic crisis has spurred politicians in a number of countries to meddle with the instruments of monetary policy, which are best left independent in good times and bad. Argentina’s crisis has been marked by a particularly blatant brand of monetary meddling by President Cristina Fernandez – and has provided a window into the country’s fascinatingly flawed governance. I can’t say how large Argentina’s reserves should be and whether there’s slack that can be used for debt repayments. What I do know is when a politician tries to make such decisions in defiance of the central bank’s governor, the risk is that her own – and her party’s interests – may clash with the country’s long-term interest. All this said, it’s odd that Redrado quit rather than continuing to fight the politicization of his institution. Perhaps we’ll find out why as this story unfolds.
Archive for January, 2010
Argentina, Central Banks, Latin America / Comments Off
Corporate Governance, Food, Law, Mergers & Acquisitions / Comments Off
Colleague Joe Checkler has updated us on the Landry’s saga – this is the company that runs some restaurant chains and a casino – Rainforest Cafe and Las Vegas’s Golden Nugget casino, among others. I blogged about this some months ago – noting that the Landry’s Chairman, CEO and majority owner, Tilman J. Fertitta, seems more interested in the financial acrobatics of acquiring the firm than running it. The latest is the Landry’s share price has risen about 40% above Fertitta’s latest buyout bid, indicating that the hot money (including Bill Ackman’s Pershing Square) expects him to go higher if he wants to get a deal done. As the U.S. economy recovers, people will return to restaurants in the Landry’s category – mid-price joints with novelty concepts – and for the sake of Landry’s long-term shareholders (if there are any left) one hopes Fertitta knows enough to keep an eye on the food, the service and the ambiance. The legal wrangling pitting big shareholders against Fertitta is surely a distraction as he defends his efforts against allegations that the CEO and his board have violated their fiduciary duties in supporting the boss’s takeover efforts. Given this very tangled web, Joe writes, with understatement, that getting into Landry’s shares now “could be risky.”
Bank Rescue Plan, Banks, Central Banks, Economy, Government, World Economic Forum / Comments Off
More than once at Davos a quote from Ronald Reagan has been taken in vain.
The quote from the former U.S. president is said to go something like this: “The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.’”
After getting an audience chuckle, the speakers using the line go on to say that during the height of the financial crisis, bankers and others were for once indeed glad to see the government, riding to the rescue.
Compensation, Economy, Employment, World Economic Forum / Comments Off
The chief executive of temporary employment powerhouse Manpower Inc. is clear on his views of banker compensation.
“I’m not happy about it,” said Jeffrey A. Joerres, chairman and CEO of Manpower, which in 2009 ranked 119 in the Fortune 500 list of American companies. “I believe in great compensation for great performance,” but banker pay in many cases has “gotten out of whack” and is a “distraction to us all.”
Singapore / Comments Off
Singapore is extraordinary for all the reasons you’ve read about: it’s clean, safe, well-off and HOT, with a micro-managing, essentially one-party governing establishment whose leader spoke up yesterday to say: Singapore’s economic growth will now be slower than before because its economy is maturing. “We must acknowledge that we are now more developed economically than we were 10 or 15 years ago, and we can no longer grow as rapidly as before,” said Lee Hsien Loong, the prime minister and son of modern Singapore’s founding father, Lee Kuan Yew. I felt a little melancholy when I read Lee’s remarks – partly because I still miss that amazing island, where we lived for three years until last June. But also: Singapore’s rise from a swampy cast-off of the British and Malays to the modern pride of Southeast Asia has been nothing short of extraordinary. What now for this less-than-45-year-old city-state? The outlook is far from bleak, even if Singapore’s economic development will lag behind its Asian neighbors and rivals.
President Obama announced $8 billion in high-speed rail grants today. (As a quick aside, that $8 billion is part of the $787 billion stimulus package that simply HAD to be passed immediately last year to help improve the economy in 2009. The $8 billion is part of the majority of the $787 billion that wasn’t spent in 2009. But I digress.)
Who can be against high-speed rail? It brings distant cities closer together, making for more mobile populations, and presumably, easier access to high-job-growth areas from population centers; it’s greener than driving or flying; and of course, the point of the stimulus, it creates jobs.
The first point is true, the second not as true as it first appears, and the third true mainly in the short term. But as the states continue to fight their way through a persistent economic slowdown, let’s focus on the cost of these projects, which is enormous.
Consumer electronics, Consumer Products, Retailing, Technology / Comments Off
Amazon just reported strong financial results – net income up 71% in the fourth quarter versus a year ago. And sales up 42% to $9.52 billion, also 4Q year-over-year. But the real story re Amazon remains with yesterday’s unveiling by Apple of the iPad. There are a lot of people who think Apple didn’t go far enough with the iPad – my fellow blogger Gabriella is one, see her post below. But when Apple figures out all that should be on this thing, the iPad will be a force to be reckoned with. Apple has been on a roll and no reason to believe it won’t continue to be.
Which brings us back to Amazon. CEO Jeff Bezos said in the company’s press release that when Amazon has both the electronic and physical version of a book, “we sell 6 Kindle books for every 10 physical books.” (Kindle is Amazon’s electronic book reader that also offers newspapers and magazines.) The Kindle has been a big success for Amazon. But it will have to figure out a way to get some of the buzz back that it lost yesterday to the iPad – and that’s real product buzz, not PR spin buzz. Stay tuned for an epic battle.
If you have friends, or offspring, in their teens, you know what’s wrong with the new iPad: there’s no video camera, so you can’t see your pals while chatting with them when you’re supposed to be doing your homework. Lack of video chat capability is a yawning gap in the iPad’s functionality. It might be precisely what makes it more of a niche than a mass-market product. The blogosphere is full of speculation that the next version of iPad (iPad 2.0) will in fact have video chat capability. If so – and surely Apple wants to fix this flaw – it’s worth holding off on an immediate iPad purchase.
Presented as part of a panel discussion about India at the annual meeting of the World Economic Forum here in Davos, a majority of global Facebook users, responding to the question of what the world should expect from India, said they want India to be a leader on climate change issues.
When Facebook users within India were asked what India should expect from the world, the largest portion – 42% – said a seat on the United Nations Security Council. The next biggest chunk – 28% – want the world to look after India’s security interests.
Anand Sharma, India’s minister of commerce and industry, protested that the global economic architecture and the U.N. stemmed from post-World War II realities and don’t reflect today’s world, including the role of India, the world’s largest democracy.
Robert Hormats, U.S. undersecretary of state for economic, energy and agricultural affairs, agreed that if the U.N. was created today the Security Council would look a lot different.
Hormats noted the rise of the G20 group of nations as a key policy group – supplanting the G7 – and India’s key role in the G20.
Consumer electronics / Comments Off
The reviews are already starting to trickle in on Apple’s latest product, which hasn’t even hit the stores yet. Apple’s tablet, called the iPad, will have a 9 inch or so screen and combines much of the functionality of an iPhone (minus the phone) with a laptop. It will work on WiFi and have 3G cellphone connectivity. The only carrier mentioned by Apple yesterday was AT&T.
AT&T has had serious performance issues on its network, in large part because of the success of the iPhone. At one point recently, it made the decision to briefly halt sales of the iPhone in New York City because of the problems.