Something you may have picked up about Italian premier Silvio Berlusconi is that he loves to get with prostitutes. Bonus points if they’re underage and no points if they’re unfuckable lard-arses, who are by definition an exception to his rule. Some people have taken issue with Sil’s penchant for sleeping with women 57 years his junior, with several suggesting that Italy’s economic woes can in part be attributed to the premier’s inability to focus on anything but his next fix. According to Vladimir Putin, such accusations are without merit and you want to know something else? Read more »
Vladimir Putin Tells Investment Forum Berlusconi Haters Wish They Could Slay Half The Hookers Bunga Bunga Does In A WeekendBy Bess Levin
Ever the persistent bunch, the Europeans will stop at nothing to get a slice of that delectable American pie. If it’s not attempting to rename the simple hot dog into something called a Frankfurters, it’s our wallets they are after. Now it seems they want the SEC to confirm to their dodgy accounting principles. The New York Times reported today, “In a letter released yesterday, the European Association of Listed Companies said the Securities and Exchange Commission should allow the use of international accounting standards but should not insist that companies follow all the standards. Instead, the group said, the S.E.C. should accept modifications imposed by the European Commission.
Such a change, if approved by the S.E.C., would reduce the power of the International Accounting Standards Board, which is based in London and sets rules now used in many countries.
Currently, companies whose securities are registered in the United States must either prepare their financial statements in accordance with American rules (known as generally accepted accounting principles, or GAAP), or reconcile them to those rules. The proposed S.E.C. rule would eliminate that requirement starting next year.”
Sure, sure. It would probably help our exchanges out by making it easier for foreign companies to list on US exchanges. And there are some advantages to those fancy European principals based accounting standards. But we’re still suspicious of letting the E.U. start issuing instructions to the SEC.
Just keep your mayonnaise off our freedom fries you Belgian busy-bodies!
A Plan to Let S.E.C. Accept Foreign Rules Is Opposed [New York Times]
A week where July 4th falls on hump day usually means no time or incentive for major market disruptions. As long as the country doesn’t get blown up (fear of which for some reason is de rigueur for major holidays, and of course the reports of the country getting blown up this July 4th anywhere besides a couple thousand feet from the surface were greatly exaggerated) and nothing major happens abroad, we could quietly pass into the weekend, and probably take a half day Friday.
One of the only scheduled things that could’ve set the market back was the result of the European Central Bank (ECB) meeting this morning. The ECB wasn’t expected to change rates and fortunately upheld that expectation, keeping the deposit rate at 3% and the marginal lending rate at 5%. The ECB has hiked rates 8 times since the end of 2005, and is expected to jack up rates slightly by September.
One of the primary reasons rates held is that June Inflation came in at 1.9%, which meets the targeted rate of ‘just below 2,’ although inflation fears remain due to credit expansion and volatile oil prices. The current inflation rate is expected to increase in the latter half of the year.
Also expected, the Bank of England (BOE) raised rates a quarter point to 5.75% in attempts to contain inflation and the booming housing market. In the UK, consumer price inflation was 3.1% for the year ending in March, which is the highest inflation level since the BOE could adjust rates. Inflation has subsided somewhat since then, and is getting closer to the 2% target, coming in at 2.5% for the year ending in May.
Bank of England Raises Rates, But ECB Holds Steady [Wall Street Journal]
We’re not saying that Paul Wolfowitz didn’t use his position at the World Bank to get laid (by giving an unjustifiable pay raise and promotion to his girlfriend, Shaha Ali Riza), that his presidency hasn’t been a disaster, or that he’s not basically the devil incarnate. But as individuals who speak from experience about the importance of innocence until proven guilt, we kind of have to say our hearts went out to the old rapscallion after reading the Times’ lede this morning, as apparently written by CNN’s Nancy Grace:
The World Bank committee investigating misconduct charges against Paul D. Wolfowitz, the bank president, failed to complete its review on schedule this weekend, but bank officials said the panel would eventually find that he violated bank rules barring conflicts of interest.
The NYT noted that it was not clear why the committee, made up of 7 members of the bank’s board (out of 24), hadn’t be able to finish its review on schedule—especially since its already decided the outcome—but offered that bank officials had said it was “because of difficulties in drafting the particulars against Mr. Wolfowitz, not because there were any negotiations to arrange for him to resign voluntarily before the draft was completed. The committee is considering whether to recommend an outright removal or some kind of no-confidence vote that may persuade him to resign.” Though you kind of have wonder why Wolfowitz hasn’t just pulled the trigger already; things have probably gotten pretty awkward around the World Bank cafeteria.
Panel to Find That Wolfowitz Broke Rules, Officials Say [NYT]
Wolfowitz’s Ouster: The End of the Bretton Woods Carve-Up? [Portfolio]
The Royal Bank of Scotland got serious in its attempt to awkwardly cut in on the marriage dance of ABN Amro and Barclays Bank today, submitting a $96.4 billion
hostile unsolicited takeover offer today and a $24.5 billion offer for LaSalle, its Chicago-based banking unit. And ABN remained adamant in its refusal to take RBS for a swing across the dance floor.
The RBS offers top the deals ABN already has in the works to sell LaSalle to the Bank of America for $21 billion and everything else to Barclays for $87.1 billion. ABN said it would submit both offers to shareholders without endorsing them—in other words, it rejected RBS’s advances. Although the offers were higher, it said that the conditions attached to both offers and uncertainty about financing rendered both “not superior” to the Barclays and Bank of America bids.
To understand French politics, it helps to forget most of what you know about American politics and everything you know about economics. In the United States, a “conservative” candidate described as supporting “free-market economics” might be expected to oppose regulations on hedge funds and private equity firms. Indeed, even the spendthrift Republican administration of George Bush and the pro-regulatory Democrats on Capitol Hill are careful to note the economic benefits of hedge funds and leveraged buyouts. But in France, where leftists are expected to riot as a result of the decisive victory Nicolas Sarkozy in the run-off for the French presidency, even the “right-wing” candidate hates hedge funds and leveraged buyouts.
“We can’t tolerate hedge funds buying a company with debt, firing a quarter of the staff and then enriching themselves by selling it in pieces. We didn’t create the euro to have capitalism without ethics or morals,” Sarkozy said recently, according to the Telegraph. The American magazine quoted Sarkozy blasting “these aggressive [hedge] funds … that buy up a company, sell it off in pieces, sack 25 percent of the staff in the meantime, collect 25 percent profit and create zero wealth.”
Some have tried to write this off as merely a rhetorical necessity, a bit of play-acting in a European political theater that has become increasingly hostile to hedge funds and private equity. But Sarkozy is promising to go beyond rhetoric and has proposed a tax on “predators” making “speculative” investments.
“Hedge funds should remember that strong verbal denunciations by European politicians are usually followed by significant government intervention. Foretold is forewarned,” Jurgen Reinhoudt recently wrote in the American.
France is home to 92 hedge funds, according to the Telegraph. Many funds fled the country in the 1990s, despite the election of pro-market reformer Jacques Chirac and his appointment of Alain Madelin, who was possibly the most free-market oriented politician in France at the time. Stringent restrictions on their activities drove fund managers abroad, largely to London.
But the European Union is far stronger now than it was, and European politicians may find that closing off the option of exiting for other European countries has carved out room for even more regulation of the financial industry. And if Sarkozy represents the most far-flung reaches of free-market thinking in European political circles, it probably won’t be long before those now spectral regulations take substantial form.
Sarkozy turns on ‘predator’ hedge funds [Telegraph]
The European Assault on Hedge Funds [The American]