Bankers have already had a barrage of abuse, so an article in New Scientist comparing them to pond life will perhaps raise few eyebrows.

But it is worth a closer look.

The popular science journal cites experts in complexity and ecology in its latest edition explaining how the financial system is a tangled network of relationships, like the ecosystem of a pond.

Normally, life ticks over just fine. But then the wrong set of circumstances - an explosion of algae, perhaps - trigger a change, throwing the whole community of life forms off balance. The result is a stagnant, smelly swamp.

"Slow changes have been accumulating for years, such as levels of indebtedness. None on their own seemed big enough to trigger a response," says Johan Rockström of the Stockholm Environment Institute. "But then you get a trigger - one investment bank falls - and the whole system can then flip into an alternative stable state, with different rules, such as mistrust."

The $9 billion stake in Morgan Stanley that Mitsubishi UFJ Financial Group bought earlier this month was a risky bet for a Japanese bank. Often leaning heavily on state support, banks in Japan aren’t known for taking chances. Perhaps betting with house money is going to their heads. 
 
MUFG bought just over a fifth of Morgan Stanley for more than the whole bank was worth back on Oct. 13. Now it is raising up to $10.6 billion by selling new shares — 18 percent more than it paid for the Morgan Stanley stake, not even counting the huge run-up in the value of the yen that makes any local share issuance pricier than anywhere else on the planet. Meanwhile, back in the United States, shares of Morgan Stanley have fallen 9 percent since revised terms of the MUFJ deal were announced on Oct. 13, and the dollar has fallen another 8.6 percent against the yen.
 
MUFG’s fund-raising helped convince investors to dump Japanese shares today, sending the Tokyo market to its lowest level in 26 years. This prodded the Japanese government into action. Japan’s banks are heavily exposed to the local equity markets, and were bailed out less than a decade ago. The government says it wants to set up a state body to buy shares from banks, and limit bank recapitalizations.
 
Japan is the best versed industrialized economy when it comes to zero interest rates and deflation over the past two decades, though all that practice has not made it very adept at stimulating growth. With the yen soaring toward 90 to the dollar, U.S. assets are going to look mighty cheap again, and if Japan’s newly risk-embracing banks are looking for entry points, it could well be the Bank of Japan that takes on the mantle of global lender of last resort. 
 
Deals of the day:

* Porsche plans to gain control of more than 75 percent of Volkswagen in order to pass a domination and profit transfer agreement that would grant it full control of VW’s cash flows, Porsche said on Sunday.

* General Motors and Chrysler have moved closer to offloading two niche vehicle brands associated with the era of cheap gasoline and big profits for Detroit, even as both sides intensified talks on a merger that would combine the struggling automakers. The two auto makers are discussing a merger that would keep some of Chrysler’s operations intact and save jobs with the aim of securing the U.S. government financial aid the high-stakes deal would require, people familiar with the talks said on Sunday.

* CenturyTel plans to buy Embarq for $5.8 billion in stock, in an effort to cut costs and stay competitive amid a decline in the traditional phone business.

* India’s Mahindra & Mahindra repeated it was not interested in General Motors‘ Hummer brand, which the cash-hungry U.S. automaker has put up for sale.

* German oil and gas company Wintershall has bid 110 Norwegian crowns per share to buy Norwegian Revus Energy, a premium-rich offer that Revus’s board has unanimously backed, the firms said on Monday.

* Canada’s Enbridge is considering offering aboriginal groups an equity stake in its planned 525,000 barrel a day Northern Gateway oil sands export pipeline in order to secure support for the project, a company official said on Friday.

* British energy firm BG Group will buy Australian coal seam gas firm Queensland Gas in a deal worth up to A$5 billion ($3.1 billion), the Australian Financial Review reported on Saturday.

* Libya is considering investing in Telecom Italia, its ambassador to Italy told Il Sole 24 Ore newspaper, and could ask for a deputy chairman’s post at UniCredit bank, where it is now a top shareholder.

* Telecom Italia has no intention of selling its German operation despite recurring rumours that the Italian operator is looking to dispose of Hansenet, its chief executive said on Saturday.

* OAO Severstal, Russia’s largest steelmaker, said on Saturday it would pay major shareholders of PBS Coals C$382 million ($302 million) less than it agreed in August to acquire the company, reflecting a collapse in coal and steel prices.

* Saudi-owned MBI International will sign an agreement to buy 12 hotels in France from Starwood Capital in deal that could be worth $2 billion, a local newspaper reported on Sunday.

* Israel’s Bank Hapoalim said on Sunday regulators forced it to cancel a planned purchase of a controlling stake in Ukraine’s OJSC Ukrainian Innovation Bank.

* Britain’s London Scottish Bank is considering selling its debt collection division and closing its lending and other businesses after failing to find a buyer for the whole thing, the Sunday Express reported.

* Qatar Airways has expressed an interest in taking part in the privatisation of Greece’s state-owned Olympic Airlines, Greek Prime Minister Costas Karamanlis said on Sunday.

* The privatisation of Austrian Airlines will be postponed because it involves the assumption of part of its debt by the government, a supervisory board member of Austrian government holding company OeIAG said on Sunday.

* Malaysia’s state investment arm Khazanah Nasional said it has bought a 10 percent stake in Jadwa Investment, a Saudi-based shariah investment firm, for 270.9 million ringgit ($75.7 million).

* China Huaneng Group, one of the country’s largest power generating firms, has bought a 40 percent stake in Huating Coal Group, the top coal mining company in the northwestern province of Gansu, the company said.

* South African stock exchange operator JSE Ltd said on Monday it planned to acquire the Bond Exchange of South Africa for 173 million rand ($15.3 million) in cash, to compete better internationally.

* The United Arab Emirates central bank governor said on Monday mergers between banks in the Gulf state would be a good choice because consolidation would help cut costs.

This economy is a killer. Just ask New Yorkers on Craigslist. 

You may not have heard of the Killers, a music group from Las Vegas that’s been variously called the next U2 and the best Mormon rock band of all time. They are playing tonight at the Hammerstein Ballroom in New York City.

Tickets, at $45, sold out in a few minutes when they went on sale in late September, and have been reselling for 10 times that amount on the secondary market.  That’s where Craigslist, and a former hedge fund associate, come in.

A Reuters reporter was not willing to pay the $350 asking price per ticket to see the show, and emailed the seller, pointing out a recession is under way.  The former hedge fund associate emailed back: “I’m not a scalper. I’m a ticket arbitrageur.”  So we called him up.

“I really like this band. I can play some of their songs,” he said. “New York is an expensive place and I don’t have a paycheck coming in today.” He did not want to be identified since he is looking for work.

The Ivy League-educated 25-year-old, a Killers fan, bought tickets to Friday’s show a few days before his Park Avenue hedge fund laid him off, along with several others. The fund paid out unused sick days and vacation time, but no severance. He’s received inquiries about tickets from across New York’s financial industry, but mostly from its higher strata.

“Only VPs are still able to still afford luxury,” he said. ”The belt’s already been tightened. It used to be the associates and the analysts were the most visible, making money in this economy, because we walked around with new Hermes ties and bought all the hot clothes. Now that’s clearly over.”

The Killers are not much older than he is, but they also seem to know something about hard times.

“Dreams aren’t what they used to be, some things slide by so carelessly,” Brandon Flowers sings on their single “Smile Like You Mean It.”

Expect to hear that song tonight at Hammerstein — if you can afford a ticket.

(Photo of Brandon Flowers in concert from Reuters)

Tokyo stocks tumbled nearly 10 percent, the Hang Seng off more than 8 percent, S&P futures limit down and oil tumbled another five dollars despite production cuts. It's little wonder that rumors of a market holiday grew louder in London. 
 
On the firefighting front, a Treasury source tells us that the bank-funding hypodermic is filled up and ready to be injected into another group of banks, and AIG is reported to have pretty much burned through the $90 billion in bailout funds it got a month ago.
 
Both the Nasdaq and NYSE say they will open as normal, and a talking head on CNBC suggested that current market conditions could prompt a bounce in U.S. markets.  Given how far out of whack everything seems, that view may wind up being the most rational take on the markets of the day.
 
Deals of the day:
 
* A number of parties are interested in the private equity stakes being sold by Lehman Brothers, said a source familiar with the matter. Goldman Sachs, which has one of the world's largest private equity businesses, is one of the potential bidders, a second source said. A Bloomberg report named Coller Capital and Lexington Partners as other firms weighing bids, citing people with knowledge of the situation. 
 
* Jupitermedia said it will sell its online images business to Getty Images for $96 million in cash, leaving it to focus exclusively on its online media division. 
 
* Mining group BHP Billiton said the current economic turmoil may throw up takeover opportunities, but only small deals would be considered, its CEO said. 
 
* New Zealand's Port of Tauranga is expecting rival Ports of Auckland to bid for its container business, it said, as a declining shipping business has port operators looking at consolidation. 
 
* The Dutch government has no intention of selling the Dutch banking operation of Fortis and will proceed with its planned integration with ABN AMRO, a Finance Ministry spokesman said. 
 
* The Dutch government has no intention of selling the Dutch banking operation of Fortis and will proceed with its planned integration with ABN AMRO, a Finance Ministry spokesman said. 
 
* Russia's anti-trust watchdog rejected on Thursday a $140 million bid by Google to buy the Begun advertising agency, claiming the deal would reduce competition in the online advertising market. 
 
* EnCana, Canada's biggest oil and gas producer, said it will not revisit its postponed plans to split into natural gas and oil sands arms until turmoil from the credit crisis calms.
 
* Italian fashion group Mariella Burani has been approached by potential investors from the Middle East but has not yet had any formal offer, it said in a statement. 
 
* Iceland's Straumur-Burdaras said it had reached a deal to buy the rights to the name of London-based investment bank Teathers, and said it plans to hire about half of its 190 employees.
 
* Russian aluminum major RUSAL will defer a $700 million tranche to billionaire Mikhail Prokhorov for the purchase of his stake in mining giant Norilsk Nickel as it could not meet the Friday deadline.
 
* The Australian government has approved a takeover of St George Bank, the country's fifth-biggest lender, by larger rival Westpac Banking, Treasurer Wayne Swan said.
 
* Ticketmaster agreed to acquire a majority interest in Front Line Management and install its head Irving Azoff as chief executive of the combined company, the Wall Street Journal said. 
 
* Norway's oil group Det norske oljeselskap said it was selling its 10 percent stake in Yme field licences to Polish peer Lotos. 
 
* Volkswagen Chairman Ferdinand Piech expects the takeover by Porsche to move ahead smoothly and played down in a newspaper interview any differences in his extended family that owns Porsche. 
 
* The European Commission will approve an Italian investor group's takeover plan for struggling airline Alitalia but not a 300 million euro ($386 million) state loan, la Repubblica newspaper said. 
 
* Russia's flag carrier Aeroflot has asked the transport ministry to support its takeover of airline S7, which may bid for Austrian Airlines, Interfax reported, citing Aeroflot. 
 
* GlaxoSmithKline stepped up its drive to acquire more biotech assets by buying the rights to an Austrian biotech company's experimental therapeutic vaccines against Alzheimer's disease. 
 
* Interactive entertainment company Bright Things said it signed a relationship agreement for its social network site SocialGo with widget maker WidgetLaboratory, sending shares up nearly 67 percent.
 
* Greek lenders Piraeus Bank and Proton Bank said their boards had agreed to cancel a share swap agreement, after Proton said it would seek to take part in a government bank rescue plan. 
 
* U.S.-Swedish bourse operator Nasdaq has won final approval to buy Nordic power exchange Nord Pool's international business, Nord Pool said. 
 
* AIM-listed media company Coolabi said it conditionally agreed to acquire Licensing by Design Ltd (LBD) for 400,000 pounds ($652,800) in cash, sending Coolabi shares up nearly 13 percent. 
 
* Ukraine's Prominvestbank, which some Ukrainian officials have said could be nationalised, said it hoped to find a buyer in the next few days. 
 
* Spanish vending machines group Azkoyen said it expects to control 50 percent of German technology group Primion by Friday after announcing a full bid for the company in September. 
 
* Italian regional utility Hera is still open to tie-up talks with a merged Iride and Enia, Hera Chairman Tomaso Tommasi di Vignano said. 
 
* French food group Danone is set to sell its Frucor fruit juice unit by the end of the month and will garner almost 600 million euros ($771 million) from the sale, a source close to the talks told Reuters. 
 
* British publishing group Pearson said it was raising its stake in South Africa's Maskew Miller Longman (MML) to 85 percent from 50 percent, forming a new educational publishing unit in the region.

It probably wasn’t what a packed room of students wanted to hear, but legendary M&A lawyer Martin Lipton pulled no punches – a return to a healthy economy is a long way off.
Lipton, talking to a packed room at New York University’s School of Law in Manhattan, said until the mortgage and housing situation is stabilized and until the value of banks’ assets stops declining, “we will not be out of this problem.”
“I don’t think that’s a matter than can be dealt with in a short period of time,” Lipton said. “I’m afraid it will take three to five years before we can achieve that.”
Job prospects for graduating students was obviously a burning issue for the audience, evidenced by the first question which asked the panel how the crisis would affect their career.
Other members of the panel offered a more optimistic view.
“The buyout business is not going away,” said private equity firm Clayton Dubilier & Rice’s founder and chairman Joseph Rice III, when asked about the prospects for M&A
He said while clearly there’s no debt available in the U.S., small deals would start to be struck from next year and over time those would grow.
Stephen Friedman, retired chairman of Goldman Sachs, who runs private equity firm Stone Point Capital, said while this was a “brutal period”, leverage would come back into the system.
Lipton predicts that the crisis will bring about substantial changes in corporate governance, driven by lawsuits attacking directors.
For example, because of rules regarding independent directors, not to mention pressure from corporate governance advocates, too many directors have too little experience in the industry of the companies they are overseeing, Lipton said.
“The corporate governance world argues against boards capable of doing their job,” he said.

At the end of December 2007, Daimler’s 20-percent stake in Chrysler was valued at about $1.18 billion.

At the end of June, Daimler valued that investment at about $219.6 million.

Today, Daimler said the book value of that 20-percent stake is zero.

That’s right, zero.

To put that zero in perspective:

A year ago, after Daimler sold 80 percent of Chrysler to U.S. private equity firm Cerberus Capital Management, the German automaker listed the value of its minority interest at $1.8 billion.

Ten years ago, Daimler paid $36 billion for all of Chrysler.

For Daimler to disclose that the book value of its stake has come to nothing, and to do it at a time when it is in talks to sell that stake to Cerberus, is bad news for Chrysler.

In a move equally telling, Cerberus is trying to offload Chrysler and is talking to various parties about multiple options including a full sale or an asset swap, according to people familiar with the matter. In order to make any such deal simpler, it is also in talks with Daimler for the remaining stake.

Chrysler has been hit hardest by slumping U.S. auto sales. Industry-wide October auto sales are expected to hit 18-year lows. Chrysler’s sales are down 25 percent so far this year as tight credit conditions, high oil prices and a weak housing market have whacked vehicle demand.

Cerberus founder Stephen Feinberg, who bought Chrysler in a $7.4 billion deal last year, is eager to cut his exposure to the auto business and to increase his 51-percent stake in GMAC, the finance arm co-owned by GM, sources have said.

The write-down is partly bookkeeping (Daimler took a huge charge for the vanished value) and the carrying value may or may not reflect the stake’s value in a sale.

But if you couple that move with the difficulty in valuating auto assets (already considered distressed) and the poor visibility in the sector today, Daimler’s disclosure points to a fearful observation. It’s one that a few analysts and industry experts have recently cautioned about: Chrysler’s auto operations as a whole may, indeed, be worthless.

U.S. senators want bankers to eat their broccoli before gorging on taxpayer bread.

The Senate Banking Committee took a Treasury Department official to task for committing $250 billion of the $700 bailout money to buy stakes in banks without getting any guarantees that those firms wouldn't pocket the cash or use it for acquisitions.

"I remain especially concerned that, in the Treasury's zeal to make the capital injection program easily digestible for the banks, we're feeding them a little too much dessert and not making them eat enough of their vegetables," says New York Democratic Sen. Charles Schumer.

Schumer had welcomed the Treasury's decision earlier this month to shift the focus from buying troubled assets to directly injecting capital in troubled firms, but like many of his colleagues thought there should have been more strings attached.

The senators were particularly distressed over news reports that several of the banks that took the government's money said they were in no hurry to lend it out. If banks hoard the cash, that doesn't provide an immediate lift to the economy.

Taking the beating on behalf of the Treasury was Neel Kashkari (above),  the wunderkind who was put in charge of the $700 billion bailout program.

"Secretary Kashkari," said Sen. Richard Shelby, the Alabama Republican.  "Why did Treasury not attach a requirement to increase lending as a price for receiving the government money?"

"We completely agree with the spirit of that and we want our banks to lend," Kashkari said. "But we also didn't want to be in a position of micromanaging our banks.  We wanted to create a program where thousands of institutions across our country would volunteer to participate.  And if we came in with very specific guidance on you must do this, you must do that, we were afraid that we would discourage firms -- discourage healthy institutions from participating."

He did not specify which firms might still be considered "healthy" some 14 months into the credit crisis.

Kashkari also said it would be unwise to block banks from using taxpayers' money to acquire weaker rivals.

"If we have a small bank, a failing bank, in a community, that bank is not in a position to write loans for its small businesses, its homeowners. If a larger bank, a stronger bank, is able to acquire that and capital is put into that combined entity, that community is now better served," he said.

"So we have to be very careful about not discouraging prudent acquisitions because that can actually help us get through these troubled times that we're in right now."

Note to the M&A advisers: Eat your veggies. You're going to need your strength.

What restrictions should the government put on banks who accept federal funds? Leave your answer in the comments section.

Will Ticketmaster’s new duet fend off a hot rival and help it rise above an economic climate that makes pricey concert tickets seem like an extravagance?

The ticketing giant has announced a complex deal to acquire top artist-management agency Front Line, home to artists including Christina Aguilera, the Eagles and Neil Diamond. Front Line honcho Irving Azoff will run the combined company — raising questions about how Ms. Aguilera’s manager will negotiate her ticketing fees with himself.

Ticketmaster already owns a minority stake in Front Line, and will pay $123 million to Warner Music Group for an additional 30 percent stake, as the Wall Street Journal was the first to report.

As the music industry has crumbled, the concert business has been one of the sole bright spots in recent years. But with a global recession getting top billing and upstart rival Live Nation scooping up exclusive deals with artists like Madonna, it could be a tough act for Ticketmaster to follow.

Are you less likely to go to concerts now that the economy is looking grim? Leave you answer in the comments section.

DEALS OF THE DAY

** New Zealand’s Port of Tauranga is expecting rival Ports of Auckland to bid for its container business, it said, as a declining shipping business has port operators looking at consolidation.

** The Australian government has approved a takeover of St George Bank , the country’s fifth-biggest lender, by larger rival Westpac Banking Corp , Treasurer Wayne Swan said.

** Norway’s oil group Det norske oljeselskap ASA said it was selling its 10 percent stake in Yme field licences to Polish peer Lotos .

** Volkswagen Chairman Ferdinand Piech expects the takeover by Porsche to move ahead smoothly and played down in a newspaper interview any differences in his extended family that owns Porsche.

** The European Commission will approve an Italian investor group’s takeover plan for struggling airline Alitalia but not a 300 million euro ($386 million) state loan, la Repubblica newspaper said.

** Russia’s flag carrier Aeroflot has asked the transport ministry to support its takeover of airline S7, which may bid for Austrian Airlines , Interfax reported, citing Aeroflot.

** Interactive entertainment company Bright Things Plc said it signed a relationship agreement for its social network site SocialGo with widget maker WidgetLaboratory LLC, sending shares up nearly 67 percent.

** Greek lenders Piraeus Bank and Proton Bank said their boards had agreed to cancel a share swap agreement, after Proton said it would seek to take part in a government bank rescue plan.

** U.S.-Swedish bourse operator Nasdaq OMX has won final approval to buy Nordic power exchange Nord Pool’s international business, Nord Pool said.

It was a busy day for global dealmakers, with some deals going ahead, some being scuttled and yet others being given further consideration. Here are some of the key deals of the day:

YES
** Russia’s National Reserve Bank (NRB), a mid-sized lender controlled by billionaire Alexander Lebedev, will buy out troubled Russian Capital bank for a nominal price, NRB Chairman Arkady Kolodkin said on Wednesday.

** Value investment firm Southeastern Asset Management has boosted its stake in Sun Microsystems Inc and has talked to the computer hardware company about its strategic alternatives.

** Saputo Inc said that it planned to buy the Neilson Dairy division of George Weston Ltd for C$465 million ($372.5 million), boosting its presence in the Ontario fluid milk market.

NO
** Media magnate Sumner Redstone does not plan to sell any more shares in Viacom Inc or CBS Corp, two companies he controls, he told cable television network CNBC.

** Deutsche Lufthansa is not in talks now to merge its Germanwings airline unit with TUI AG’s TUIfly carrier, a spokesman for Lufthansa said.

MAYBE SO
** General Motors Corp is exploring the sale of ACDelco, its global aftermarket parts business, to raise cash, the No. 1 automaker said.

** Icelandic bank Straumur-Burdaras is in talks with troubled Landsbanki to buy parts of its UK business after ditching a similar deal earlier this month, a source familiar with the situation said.

It looks like The Guardian was the first to report that the Financial Times would cut up to 60 jobs in its editorial library and managing editor's office, as well as its advertising sales, finance, IT, conferences and marketing departments. The Guardian might have overplayed things a bit, as we hear no one has decided on final numbers and that plenty of cuts could come through leaving some jobs unfilled and various other humane means.

If the FT shed 60 non-newsroom employees, that would amount to a little under 4 percent of its total staff (1,600 positions, with about 550 in editorial). As FT chief John Ridding says in the memo, it's streamlining, not fallout from the financial crisis. In that respect, as Ridding has told us, world economic pain has been good to the FT so far. Still, it probably won't hurt to batten down the hatches before the advertising market starts taking on water.

Here's the memo:

Dear All,

As I have said in our staff presentations and business updates we are continuously looking to streamline our organisation, to make it as efficient as possible and to adapt it to the rapidly changing media industry.

This has involved creating a global management structure, integrating print and online, and bringing our acquisitions more closely into the FT.

We are now assessing further steps in this process, including the creation of a single magazine production operation, increasing the integration of our personal finance operations, further integrating our advertising sales teams, and transferring a number of financial functions to our operation in Manila. As a result, about 60 existing positions may be affected. We will obviously try to manage this as carefully and sensitively as possible, and we will now be launching a period of consultation about the proposed changes. Anyone who might be affected will be contacted by their manager today.

As you will have seen from the recent Pearson trading statement (attached), we are continuing to perform well despite the challenging market conditions. Our circulation is strong, a tribute to the exceptional coverage by our editorial team, while the efforts and expertise of our commercial team continues to drive revenues. Sustained success, however, means we must continue to adapt to market and audience demands and to look for efficiencies. The measures we are considering are designed to achieve that.

I'll keep you informed about progress.

All the best

John