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Oct 11, 2012

Wall Street, City pay still must fall by a third

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

By Antony Currie and Richard Beales

NEW YORK, Oct 11 (Reuters Breakingviews) – James Gorman is
right that investment banking is overstaffed and underpaid, as
he told the Financial Times last week. But neither the Morgan
Stanley (MS.N: Quote, Profile, Research) boss nor his global peers have proven adept at
taking action. Last year, total wages at securities firms that
are members of the New York Stock Exchange and the average pay
per employee in New York increased even as industry profit fell,
according to a report this week from the state’s comptroller.

Oct 4, 2012

New U.S. stress test needed: higher interest rates

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

By Agnes T. Crane and Richard Beales

NEW YORK, Oct 4 (Reuters Breakingviews) – “Don’t fight the
Fed,” the saying goes. The U.S. Federal Reserve is promising
ultra-low interest rates into 2015. Yet the buildup of
low-yielding debt on financial firms’ balance sheets means they
may suffer badly if rates jump. The central bank aside, prudent
bosses – and their watchdogs – need to ensure they are avoiding
fights with history, too.

Sep 28, 2012
via Breakingviews

Apple’s Maps snafu nothing new – just bigger

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


Apple Chief Executive Tim Cook has apologized for leaving customers frustrated – and lost. The problem is a new mapping application, rife with both errors and omissions. Launch problems aren’t new. Steve Jobs flubbed pricing of the original iPhone, went too early with a flawed MobileMe cloud service, and had to deal with the iPhone 4’s imperfect antenna. But Apple’s increased size and rising competition make avoiding slip-ups increasingly important.

Sep 18, 2012
via Breakingviews

Leap off fiscal cliff is bad option, but not worst

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

Leaping off the so-called fiscal cliff is a bad option for the United States. But it might not be the worst. If U.S. politicians can’t wrangle a deal first, January will bring tax increases and spending cuts. The economic shock could bring another recession. But it could also improve the political chances of a real fix.

Sep 11, 2012

James Gorman edges Vikram Pandit in JV showdown

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

By Richard Beales

NEW YORK, Sept 11 (Reuters Breakingviews) – Chalk one up for
James Gorman in the latest showdown of bank bosses. The Morgan
Stanley (MS.N: Quote, Profile, Research) chief executive and Vikram Pandit, his
counterpart at Citigroup (C.N: Quote, Profile, Research), were miles apart on the value of
Morgan Stanley Smith Barney, the joint venture wealth management
unit Gorman’s firm is gradually buying from Citi. The agreed
$13.5 billion price tag is closer to where Morgan Stanley pegged
it. More significantly, Gorman now knows what the whole deal
will cost.

Sep 5, 2012
via Breakingviews

Buyout bosses lose another layer of their mystique

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

U.S. Republican presidential hopeful Mitt Romney’s background at Bain Capital has directed a spotlight onto the unusually low tax rates paid by buyout firm executives. But a New York probe into a complex technique used by private equity firms to pay less tax on fee income may take more sheen off the industry. Even if legal, it’s yet more evidence of financial engineering.

Aug 3, 2012
via Breakingviews

Knight shows that next creative loss is never far

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By Richard Beales
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Knight Capital’s “technology issue” turned out to be a monster, not just a bug. A software update that sent erroneous orders and rocked 150 or so New York Stock Exchange issuers on Wednesday has cost the market-maker $440 million. The coding error that caused it proves that investors can never be too imaginative about the ways in which financial firms will lose money.

Knight handles massive volume for customers. Its market-making business traded $19.5 billion of equities a day on average in June. Yet as an intermediary, it wasn’t supposed to be massively exposed at any given time. So losses equal to almost a third of the company’s $1.5 billion of book equity at the end of June are a shock. Investors slammed Knight’s stock, knocking two-thirds off its $1 billion market value earlier in the week. The company is seeking cash to shore up its finances – or maybe a buyer.

Jun 28, 2012
via Breakingviews

Is this the real Hong Kong handover?

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By Richard Beales

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

Hong Kong is on a long journey from foreign outpost to just another province of China. The Special Administrative Region is commemorating one milestone, 15 years since that storm-lashed night when Britain handed it back to China. It is also embarking on a new phase with the appointment of the first chief executive who wasn’t a member of the old colonial club. Leung Chun-ying, also known as CY Leung, is a local policeman’s son who is seen as close to Beijing. It could almost be called the real Hong Kong handover.

Jun 22, 2012
via Breakingviews

Review: Is inequality a crisis or just capitalism?

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

Is rising U.S. income inequality a disaster, or just capitalism? In “The Great Divergence”, Timothy Noah analyses the 30-odd year trend, and concludes it’s a crisis. Yet earning differences are inevitable in any kind of market system. It’s arguably not so much inequality per se as the real decline in middle-class incomes that justifies serious concern.

Jun 12, 2012
via Breakingviews

Nobel endowment deserves prize for realism

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

Winners of Nobel Prizes for sciences, literature and peace will get 20 percent less cash this year – 8 million Swedish crowns, or about $1.1 million each. That’s because the foundation wants to live within the long-term means provided by its endowment.

    • 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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