I have written a Saturday column for the FT about the UK economic downturn. I happen to be in London at the moment to witness it. You can read the column here and comment below.

Incidentally, I start the piece with an anecdote from Margaret Drabble’s The Ice Age, a novel I have always liked, which takes place in the aftermath of the 1974 property crash. In this context, I have a story to relate.

A few weeks ago, I was thinking to myself that I would like to get hold of a copy of The Ice Age because the 1970s crash seems to hold lessons for today. I was in New York and I was wondering how I could do so.

Later that morning, I was walking up Crosby Street in SoHo when I passed a second hand bookshop and looked to my left. There, in the midst of the front window display, bizarrely, sat a hardback copy of The Ice Age.

I went into the store and bought it for $10. There is serendipity for you.

My FT column this week is on Amy Winehouse. Well, not exactly. It is more about the music labels and whether they can survive. I conclude that they probably can, but it does not matter too much anyway. You can read it here and comment below.

Defy the FSA, the SEC, the CFTC or Iosco if you dare. But do not under any circumstances annoy the IRS.

This seems to be the lesson that UBS, the Swiss bank, is now learning as it lurches from the sub-prime credit crisis into another over how it allegedly helped US citizens to evade taxes.

The sub-prime crisis has cost UBS dearly. It has made $38bn in asset write-downs and its former chairman and chief executive have both departed.

But those in Switzerland could at least comfort themselves that UBS’s greatest asset – its wealth management, or private banking, arm – remained unscathed.

Continue reading "Do not tweak the tail of the Internal Revenue Service" »

Whatever expectations one has of the Russian government and civil institutions, they always disappoint. The abuse of tax and visa laws to eliminate BP’s hold on its Russian oil joint venture TNK-BP is the latest in a long line of doleful examples.

It has been obvious for some time that the rule of law does not apply in Russia to the international investors and companies which venture into the market in the hope of profiting from its natural resources.

Now comes news that the Moscow authorities, petitioned by BP’s Russian partners, with whom it has fallen out, are squeezing out BP executives by refusing them visas. It calls to mind the way in which Hermitage Capital Management and its founder William Browder have been harassed using visa and tax laws.

Continue reading "Russia behaves badly to foreign investors again" »

This morning’s Wall Street Journal story on Martin Broughton, chairman of British Airways, predicting that US airlines will soon start lobbying for the relaxation of foreign ownership rules has the ring of truth to me.

The reason is that one senior executive of a US airline said precisely that to me recently (off the record). He said that he could no longer see the point of the US law barring a foreign airline from owning more than 25 per cent of a US one and would not object to it being abolished.

The reason he gave for this was that the industry was largely financed by debt anyway and it did not make much difference who held the equity. This seemed fair enough but underlying it is financial pragmatism - US airlines need capital from wherever they can get it these days.

Of course, from the consumer’s perspective, allowing foreign ownership would be a boon. The US airlines - like those in some other countries - have existed in a protectionist world for too long and it has not helped either standards of customer service or the industry’s solvency.

The long-running battle over the ownership and control of Virgin America showed how protectionist the US market remains. Even my executive was too wary of a backlash to make his views known openly.

But there is nothing like self-interest to batter down longstanding traditions and I suspect Mr Broughton’s prediction may prove true.

There is a lot of financial action in Qatar at the moment, and that means fees for investment banks. Last week’s announcement of a strategic partnership between NYSE Euronext and the State of Qatar to boost the local stock exchange is being followed by an IPO of Vodafone’s Qatar business.

What strikes me about the latter is the financial advisers to the deal: HSBC Middle East and Qatar National Bank. Neither of these is one of Wall Street’s big swinging investment banks, which are now sweeping into the Gulf in the hope of gaining petrodollars.

The gulf is an interesting test case of longstanding relationships versus deal-making prestige. Qatar National Bank clearly has a lot of the former, but so does HSBC, which has been in the Gulf for a long time, as it has across Asia.

This counts for something but not as much as you might think. One HSBC banker in the Gulf told me last year that the bank was already under pressure from the Goldman Sachs and Morgan Stanleys of the world, which were squeezing it out of deals that it formerly expected to get.

In general, the financial world is pretty unsentimental and all of the talk about relationships mattering in China has not stopped the big Wall Street firms picking up a lot of business there. I expect the Gulf will be just as fertile territory for them.

I am on leave for a couple of weeks. Normal service will hopefully resume on or about June 30.

The glass ceiling on Wall Street is getting lower.

The abrupt removal of Erin Callan as Lehman’s chief financial officer yesterday (along with Joe Gregory as Lehman’s chief administrative officer) is first and foremost a sign of Lehman’s fight to regain credibility among investors.

But it also means that Ms Callan, who was dubbed “Wall Street’s most powerful woman” in the April issue of Portfolio magazine is powerful no more. She is being unceremoniously bumped down to “a senior position” in the investment banking division.

Ms Callan’s move follows the firing of Zoe Cruz, the previous holder of the “most powerful woman on Wall Street” title. She was dismissed as president of Morgan Stanley last November by John Mack, its chairman and chief executive.

Continue reading "The lowering of Wall Street’s glass ceiling" »

My Financial Times column this week is about the global food crisis and the stand-off about how to solve it between the US government, Monsanto and environmental activists such as Greenpeace that are opposed to genetically-modified crops. I come down on the side of the former, with caveats. You can read it here and comment below.

Lou Dobbs is very annoying.

Having got this off my chest, I can go on to say why the CNN cable news host, who takes to the air most nights in the US to complain about illegal immigration and free trade has riled me.

As detailed admirably by Andrew Ross Sorkin in the New York Times, Mr Dobbs’ latest populist crusade against foreign ownership of US assets concerns CSX, the US railway company that has been attacked by The Children’s Investment Fund, the London-based hedge fund.

Mr Dobbs described it the other night on CNN as “a new threat to national security and sovereignty” because investors in this “shadowy foreign investment fund” may include sovereign wealth funds. You can see the video here.

Continue reading "Lou Dobbs thinks the British are untrustworthy" »