Monthly Archives: October 2008

John Gapper

There is a fascinating analysis of how the financial crisis is affecting the United Arab Emirates – including Abu Dhabi and Dubai – in the FT this morning, co-written by Lionel Barber, our editor, who was visiting when a bank bail-out was being crafted.

It makes me think that my recent note on the booming residential property market in Abu Dhabi may have coincided with the top of the market. (I also like the photograph that goes with the article, of Roger Federer playing Andre Agassi on a helipad on top of the Burj Al Arab hotel.) Read more

John Gapper

James Surowiecki of the New Yorker, one of the brightest and most illuminating writers on business and finance, has started a blog.

What with him, Joe Nocera of the New York Times, Justin Fox of Time/Fortune, Daniel Gross of Newsweek, Robert Peston of the BBC and many other print and broadcast journalists drifting online, it feels like a tipping point for business blogging. Read more

John Gapper

Chapter 11 bankruptcy looms for a lot of companies in the US after the initial shock of the financial crisis gives way to recession. This time, however, the likelihood of them being able to re-emerge again after a couple of years in Chapter 11 is not looking high.

Standard & Poor’s estimated this week that the default rate among companies with high-yield debt will rise to 7.6 per cent over the next 12 months. That means that 125 issuers will default in the coming year, which frankly seems more than likely given the shaky state of the US economy. Read more

John Gapper

Oh dear. I suspect that this is only the start of a cavalcade of naming and shaming of Wall Street companies involved in the financial crisis. It is also very bad news for all of those multi-million dollar pay packages and related perks.

Andrew Cuomo, the New York attorney general, has just announced his crackdown on expenses at American International Group, the insurance company that was bailed out after hitting trouble with its financial products business.

Here are the painful details, from Mr Cuomo’s press release this afternoon:

Attorney General Andrew M. Cuomo met today with Edward M. Liddy, the new Chairman and Chief Executive Officer of American International Group, Inc. (“AIG”) In a candid discussion, the Attorney General laid out his serious concerns regarding executive compensation issues and exorbitant expenses at AIG.

 Read more

John Gapper

bush-and-brown.jpg

My column in the FT this week is about the way that banking bail-outs by government became correlated, and the US ended up looking suspiciously multilateral in adopting recapitalisation of banks: Read more

John Gapper

I have been feeling a bit guilty recently about whether I am partly to blame for the global financial crisis.

My guilt relates to the column I wrote on September 10 - which seems like an eternity ago – urging Hank Paulson, the US Treasury Secretary, not to rescue Lehman Brothers. Since then, the received wisdom has become that Lehman’s demise set off the crisis that is still unfolding. Read more

John Gapper

Royal Bank of Scotland is only one of the British banks facing being nationalised by the UK government as a way to prop it up. But its downfall, along with the departure of Fred Goodwin, its chief executive, is the greatest.

The rise of the Scottish banks – HBOS, the group that includes Bank of Scotland – is also receiving an injection of public funds – was one outcome of the last British banking crisis in the early 1990s. They gained a reputation among investors for having handled that downturn better than the English clearing banks. Read more

John Gapper

I have a column in the Weekend FT about bankers’ bonuses and whether they will be able to resume earning lots of money after a pause for the next year or so. I conclude that they have a shock in store.

Gordon Brown, the UK prime minister, says that he is upset at the bankers whom his government has been forced to bail out. “I am angry – I am angry at irresponsible behaviour,” he said this week. “The days of big bonuses are over.” Read more