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from Edward Hadas:

In praise of restrained enterprise

By Edward Hadas

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

British supermarkets are doing something unusual. They are following the rules of textbook economics: responding to competition by cutting prices. Such behaviour is rare. While business bosses often say they admire free enterprise, we actually live in a restrained enterprise economy. Everyone should be grateful.

J Sainsbury, the No. 2 in the British grocery market, is the latest established competitor to suggest that its profit is sliding. Its admission follows grim announcements from market leader Tesco and Wm Morrison. Tesco has already cut its interim dividend by 75 percent, and Sainsbury is likely to follow.

The big problem for the established UK chains is the advent of so-called hard discounters, most notably German chains Aldi and Lidl. They have lower costs so can charge less and still earn good profits. The main response from the market leaders has been to cut prices. The battle is an excellent example of how capitalism spawns creative destruction. Shareholders of the losing companies suffer, but the overall economy benefits.

from Breakingviews:

BofA delivers good governance a kick in the teeth

By Antony Currie

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Bank of America has just delivered good governance a solid kick in the teeth. The mega-bank announced late Wednesday that its directors have voted to add the chairmanship to Brian Moynihan’s duties as chief executive. The move not only puts too much power in one person’s hands, it also reduces the position to little more than a perk to be granted or taken away, depending on performance.

from Breakingviews:

Goldman’s new conflict rules raise bigger question

By Jeffrey Goldfarb

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Another day, another conflict of interest situation for Goldman Sachs. New internal rules at the securities firm impose fresh limits on bankers investing in specific stocks, bonds and hedge funds. Goldman knows too well how easy it is to cross a line when treading at its edge. The new policy raises a bigger question, though: Why are Wall Street dealmakers allowed to own individual securities at all?

from Breakingviews:

Bill Gross and Janus Capital made for each other

By Rob Cox

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

The old saw about past performance not necessarily being indicative of future results just found a new poster child: bond king Bill Gross sitting on his Janus Capital throne.

from Breakingviews:

Santander has a 6 bln euro capital opportunity

By Fiona Maharg-Bravo

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Santander looks light on capital. The euro zone’s largest bank doesn’t disclose its current Basel III “fully loaded” common equity Tier 1 capital ratio, and no wonder: it seeks 9 percent by year-end, way off the 11 percent average of European peers. Ana Botin, Santander’s new chair, can probably get away with inaction. But given her bank’s toppy valuation, she’d be better off moving now.

from Breakingviews:

Is “stranded costs” a euphemism for fat?

By Rob Cox

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

In the electric utility industry, the term “stranded costs” refers to past investments used to build infrastructure that, as a result of deregulation, may become redundant and of no value. The jargon has surfaced lately in a different, but no less electrifying, context: uppity investor Nelson Peltz’s siege of one of America’s most venerable corporations, DuPont.

from Breakingviews:

Tesco chairman approaches his sell-by date

By Chris Hughes

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Tesco’s latest crisis has put Richard Broadbent in the last chance saloon. The chairman of the UK retailer is ultimately accountable for any failures in the UK grocer’s governance. That includes any that lie behind the 250 million pound hole in the accounts, revealed on Monday.

from Breakingviews:

Larry Ellison cedes driver seat with hand on wheel

By Robert Cyran

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

Larry Ellison is ceding the driver’s seat at Oracle while keeping one hand on wheel. The software giant’s founder is stepping down as chief executive officer, but his 25 percent stake in the company – and dual role as chairman and chief technology officer – ensure he’s far from relinquishing control. Splitting his former job between two executives could, however, lead to a bumpy transition.

from Breakingviews:

NFL only understands hits where they really hurt

By Jeffrey Goldfarb

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

The National Football League has thrown its weight around to grow into a $10 billion entertainment colossus, and already has its sights firmly set on doubling. It is swiftly becoming apparent just how many victims of the sport’s violence routinely get trampled by this gladiatorial march toward greater lucre. Only the moral compasses of sponsors and television partners have a commanding enough offense to reform this uniquely American athletic institution.

from Breakingviews:

Botin’s swashbuckling hid a conservative streak

By Peter Thal Larsen

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Emilio Botin transformed Santander from regional Spanish lender into global giant. He was a merger mastermind who usually got the upper hand. With slicked-back hair and red tie, he flew in a private jet, conferring with presidents and prime ministers as easily as bankers and chief executives. Yet unlike many of his peers during European banking’s boom years, Botin also had a cautious streak. It is that, rather than his swashbuckling style, which allowed him to keep his grip on Santander until his death at the age of 79.

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