Olaf's Feed
Oct 14, 2013
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Split Nobel prize shows bubbles are worth watching

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By Olaf Storbeck and Viktoria Dendrinou

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Economics is the only field in which two people can share a Nobel prize for saying opposing things. This old joke, provoked by the 1974 prize that went to ideological antagonists Friedrich August von Hayek and Gunnar Myrdal, is proving relevant again. Eugene Fama, Lars Peter Hansen and Robert Shiller all worked on financial markets efficiency and drew separate, if not opposing, conclusions. This is a welcome reminder that the dismal science has few absolute truths to offer – mostly questions to explore.

Sep 23, 2013
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Merkel’s triumph maintains Europe’s muddle-through

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By Olaf Storbeck

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

The German election has brought big shifts at home, but it will not shake up the country’s approach to European issues. Angela Merkel’s next government will look different to the last. However, it will be just as focused on structural reforms and fiscal discipline in the periphery. Europe’s muddle-through is not going away.

Sep 20, 2013
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Review: Merkel’s hidden European agenda

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By Olaf Storbeck

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

Angela Merkel is usually described as an utterly pragmatic politician, lacking either strong convictions or a grand political vision. Stefan Kornelius, foreign editor of Germany’s Sueddeutsche Zeitung, takes issue with this view. In his biography of the German chancellor, published in English on the eve of the Sept. 22 German elections, he claims that Merkel has a bold blueprint of Europe’s future. She just stays mum about it in public.

Sep 16, 2013
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Memo to Fiat on Chrysler listing: Drop it!

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Fiat’s Chief Executive Sergio Marchionne passes for a tough and canny negotiator. These skills have brought him control over 58.5 percent of Chrysler at a bargain basement price of less than $2 billion. However, in his attempt to buy the remaining 41.5 percent currently owned by VEBA, a healthcare trust affiliated with the United Auto Workers, Marchionne may over-egg the pudding.

Fiat and VEBA have been embroiled for more than a year in a spat about Chrysler’s appropriate valuation. The tussle, which already involves a court case, may lead to the listing of a 16.6 percent Chrysler stake in the coming months.

Sep 10, 2013
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Beware the Italian risk in German elections

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By Olaf Storbeck

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

Germany’s parliamentary elections are expected to bring continuity and stability. In fact, they may well usher in a period of paralysis and uncertainty. German politics turning Italian is a possible scenario. Europe’s biggest economy might be stuck in protracted and difficult coalition negotiations – and it could be months before there is a working government in Berlin.

Aug 16, 2013

Breakingviews-Liberty Global’s M&A upset doesn’t make sense

(The authors are Reuters Breakingviews columnists. The opinions
expressed are their own.)

By Olaf Storbeck and Quentin Webb

LONDON, Aug 16 (Reuters Breakingviews) – Liberty Global’s
(LBTYA.O: Quote, Profile, Research) German M&A upset is problematic. Nearly two years
after the country’s cartel office allowed John Malone’s cable
group to buy local outfit Kabel BW for 3.2 billion euros, a
court in Duesseldorf has overturned that decision. The legal
uncertainty could drag on for several more years. It’s probably
inevitable that the wheels of justice grind slowly. But the
“nein” itself depends on flimsy thinking.

Aug 14, 2013
via Breakingviews

Battered E.ON and RWE still far from bottom

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By Olaf Storbeck

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

Shareholders of German utilities have gone through three horrible years. Since April 2010, E.ON’s stock-market value has declined by 55 percent and RWE’s by 68 percent. The German stock market as a whole gained more than a third in the same period. But the battered shares probably have further to fall.

Jul 16, 2013

Breakingviews-Berlin should sit tight on Commerzbank

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

By Olaf Storbeck

LONDON, July 16 (Reuters Breakingviews) – The German
government might be running out of patience with Commerzbank
(CBKG.DE: Quote, Profile, Research), the country’s second-largest bank and a recipient of
massive taxpayer investment in 2008 and 2009. Finance Minister
Wolfgang Schaeuble has talked to UBS (UBSN.VX: Quote, Profile, Research) Chairman Axel
Weber about a possible takeover of the bank by the Swiss,
according to Focus magazine, and Spain’s Santander (SAN.MC: Quote, Profile, Research)
could be interested in Berlin’s 17 percent stake, says Die Welt.
However, the financial logic of exiting is questionable right
now.

Jun 11, 2013
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German court pragmatism tested by ECB bond buying

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By Olaf Storbeck

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

The German constitutional court’s hearing on the European Central Bank’s bond-buying programme will be another opportunity to show how fragile the basic agreement at the heart of the monetary union really is. The judges in Karlsruhe are being asked to say whether Berlin is at risk of agreeing to an ECB policy that violates the conditions they had previously set on the monetary union. Should they make the programme known as outright monetary transactions (OMT) verboten, the euro crisis might be reignited. That looks unlikely, although a negative verdict cannot be ruled out.

Jun 6, 2013

Breakingviews-SAP fixes e-commerce weakness at hubristic price

(Adds Context News) (The author is a Reuters Breakingviews
columnist. The opinions expressed are his own.)

By Olaf Storbeck

LONDON, June 6 (Reuters Breakingviews) – If you can’t make
it, buy it. Europe’s largest software maker SAP (SAPG.DE: Quote, Profile, Research) has
been following this principle with the vigour of a late convert.
The German company ditched its longstanding penchant for organic
growth only a few years ago. Since then, it has been buying,
spending about $9 billion on acquisitions, about 10 percent of
its current market capitalisation, in the last 18 months.