The attack by Jeff Immelt, General Electric’s chief executive, on “meanness and greed” among business leaders is an interesting straw in the wind.
His speech at West Point coincided with the decision by Alistair Darling, the UK chancellor of the exchequer, to levy a 50 per cent windfall tax on the bonus pools of banks operating in Britain. Read more
The disclosure that Wipro, the third biggest Indian outsourcing company, was banned from doing business with the World Bank for four years in June 2007, does not exactly improve confidence in the sector following the Satyam Computer Services scandal.
The ban was imposed because Wipro allegedly “provided improper benefits” to World Bank staff by offering some of them shares in its 2000 initial public offering. Wipro denies doing anything wrong and says it did little business with the World Bank anyway. Read more
My FT column this week is on the Sage of Omaha:
Michael Kinsley once defined a political gaffe as the moment “when a politician tells the truth” and is embarrassed by it. By that standard, Warren Buffett’s deal to write $35bn of put options on equity markets was a financial gaffe.
On the face of it, Mr Buffett’s gambit looks both unwise and uncharacteristic. Shares in Berkshire Hathaway, his holding company, tumbled last week (they have since recovered) because it is nursing a mark-to-market loss of about $5bn on the derivatives contracts.
In fact, a casual observer might question what Mr Buffett, who once condemned derivatives as “financial weapons of mass destruction”, was playing at when he bet that four equity indexes, including the Standard & Poor’s 500, would not be below their existing level in 2019 to 2027.
What price the General Electric name? Pretty high, I would suspect, and extremely tempting for an Asian manufacturer of washing machines and air conditioners that wants to build a global business.
GE confirmed this morning that it is “reviewing strategic options” for its consumer appliances division. I guess that, in this context, “reviewing strategic options” must mean “selling, but perhaps holding on to a little stake”.
Its reasoning is interesting because it tells you all you need to know about how Asian manufacturers now dominate the consumer appliance market. Here is part of Jeff Immelt’s statement:
It remains primarily a U.S. business, meaning its fortunes are tied to the rise and fall of a single market. We want to make this good business great again by finding the right strategic solution – a solution that will give Appliances the global reach and investment required to compete more effectively.
This is one of those statements that makes a great deal of sense looked at from one perspective, and no sense whatever looked at another way. Read more