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Aug 7, 2011

Credit ratings love-hate has simple answer

By Richard Beales

NEW YORK (Reuters Breakingviews) – It’s a love-hate relationship. The White House doesn’t like the fact that Standard & Poor’s downgraded America’s debt on Friday — it even picked holes in the firm’s numbers. European officials don’t welcome critiques of sovereign credit, either. Yet governments seem broadly inclined to regulate rating firms tightly. The better answer is to cut them loose.

Without official recognition, the powerful big three raters — S&P, Moody’s Investors Service and Fitch Ratings — would eventually become just competitors with other credit researchers. Investors would have to decide whose analysis was most credible. They could ignore S&P if they chose, or discount all three firms’ views because of their many failures to spot early warning signs ahead of the 2008 crisis and look elsewhere for insight.

Aug 5, 2011
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Latest rout a reminder recovery will be a slog

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

Contrary to the chatter, slumping financial markets aren’t a repeat of 2008. The action, though alarming, is more like a belated recognition that unwinding the rest of the pre-crisis excesses will take years. Politicians may have made the aftermath of the crunch less bad. Now they need to avoid action that makes things worse.

Jul 20, 2011
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Year-old Dodd-Frank punches, if below its weight

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

NEW YORK –  Happy Birthday, Dodd-Frank. With a final 848 closely-printed pages of law and over 3,300 pages of rules (and counting, thanks to bank lobbyists), the U.S. financial reforms passed a year ago are cumbersome. But they can’t be written off as a useless doorstop. Despite flaws and financial industry bleating, sound new measures are taking shape.

Jun 27, 2011
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Undead Tepco echoes U.S. housing zombies

Tokyo Electric Power is looking like an undead relative of America’s housing zombies. Shareholders of the Japanese utility meeting on Tuesday have seen the value of their holdings tumble 85 percent since the March earthquake caught them unawares, similar to the way the U.S. housing crunch eviscerated Fannie Mae  stock. Like those companies, it’s questionable whether Tepco’s next chapter involves public shareholders at all.

Tepco’s mess echoes that of Fannie and Freddie in significant ways. The utility — valued at 3.4 trillion yen ($42 billion) in early March, but now worth less than a sixth of that — is a central part of the industrial infrastructure underpinning Japan’s economy. The two U.S. mortgage giants boosted, and still support, America’s huge housing sector — though their shares, once worth well over $100 billion combined, are now essentially worthless.

Jun 23, 2011

How to make Greece more like GM than Lehman

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

By Rob Cox and Richard Beales

NEW YORK (Reuters Breakingviews) – Investors fixated on the possibility that a Greek default would deliver a shock akin to the Lehman Brothers collapse in 2008 may want to consider another analogy. A restructuring of Greece’s obligations could more closely resemble the orderly wind-down of General Motors. The U.S. carmaker’s bankruptcy filing didn’t spark the market or economic Armageddon that followed Lehman’s demise.

Jun 9, 2011
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U.S. default deniers could get what they wish for

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

Fitch Ratings is the latest credit watchdog to warn about the consequences of a missed interest payment by the United States. Yet there’s a faction in Washington that seems increasingly inclined to push the country’s debt fight that far. Maybe only the ensuing mess could persuade the brinkmen to back off.

May 27, 2011
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Microsoft’s Ballmer hardly the worst veteran CEO

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

Microsoft has missed too many opportunities under Steve Ballmer’s stewardship. It’s a fair criticism reignited this week by hedge fund boss David Einhorn’s call for the software giant’s chief executive to step down. But that alone doesn’t necessarily mean Ballmer will, or should, be in line for the chop. Using one significant measure, other long-time U.S. bosses — including Jeff Immelt at General Electric — have fared worse.

May 19, 2011
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Even LinkedIn’s bankers underestimate the hype

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

By Richard Beales

It looks as if even LinkedIn’s bankers underestimated the hype. Based on the doubling of the stock on its debut, underwriters left as much money on the table as they harvested for the professional social network and its selling shareholders. But if the hype doesn’t wear off soon, the scarcity value of social network investments surely will.

May 10, 2011
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Microsoft’s $8.5 bln Skype price is in the cloud

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

Microsoft has only recently embraced the Internet cloud. But from shareholders’ perspective, that’s certainly where its $8.5 billion deal to buy Skype belongs. In theory, there are potential advantages. In practice, Microsoft’s poor M&A track record and the high price mean the transaction is unlikely ever to connect for investors.

May 5, 2011
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Flagging bank reform could take heart from Nigeria

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

Nigeria isn’t the obvious source of sound financial advice. But as part of a post-crisis cleanup, the central bank of Africa’s most populous nation fired the bosses of flailing financial firms. If only Western officials would talk and act so plainly, financial reformers might take heart.

    • About Richard

      "Richard Beales joined Breakingviews.com in 2007 from the Financial Times, where he was US markets editor and a Lex columnist. Prior to the FT, he spent more than 10 years as an investment banker, based largely in Hong Kong. He was a director in Citigroup’s mergers team, and before that head of Schroders’ regional project finance group. He has also lived briefly in Sydney, Australia, and began his working life in London at Mars & Co, a management consultancy, in 1989. Richard holds a masters in business journalism from New York University and a degree in biochemistry from St John’s ..."
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