15 January: Fed bosses gang up on errant US banks
Also today: Battered PC industry sees storm clouds dispersing after Intel results; Whistle-blower files lawsuit over misuse of US medical stents; Cadbury milks American candy makers for a better deal; French show distaste for Google’s role in their culture; Thailand’s export upswing not followed by domestic demand; US authorities pre-empt trouble over Monsanto patent expiry.
Fed bosses gang up on errant US banks
Federal Reserve chairmen Ben Bernanke and former Fed chief Paul Volcker say the nation’s central bank must stay in charge of regulating the biggest US financial firms. The issue is causing a huge ruckus in Washington, as President Barack Obama’s administration seeks to rein in the largely unfettered capitalism that nearly brought the house down in late 2008. The Fed’s main role is maintaining economic stability through changes in interest rates, but since the global meltdown, it’s keen to play an even greater role in its oversight of complex financial institutions. President Barack Obama’s administration wants to restructure financial regulation, after the government prevented a complete collapse of the country’s economy by pumping in $700 billion of taxpayer money. But some Wall Street giants say they would have made it out of penury alone, and along with the Senate Banking Committee, lean more toward creating a new federal banking regulator outside of the Fed, leaving it to only manage the nation's monetary policy. There’s bipartisan support for Obama wanting the Fed to remain chief regulator of the nation's banks, and Congress has already passed legislation that more closely resembles his approach.
Battered PC industry sees storm clouds dispersing after Intel results
The future is looking rosier for the battered PC industry, after Intel's fourth-quarter earnings shot past Wall Street expectations. The world’ premier chip-maker is the bellwether for the global PC market and technology spending in general, so its profit of $2.3 billion, nearly 10 times what it earned in the same quarter last year, should have set markets alight. But they didn’t, and its shares crept up less than 1% in after-hours trading, after earlier gains of 2.5% to $21.48 at the bell. Considering the company also posted a record gross profit margin of 64.7%, you’d have thought investors would be more generous. Revenues in the quarter rose 28% over last year, but the big picture shows the company actually had a better year in all of 2008 than in 2009. Its 2009 revenues were 7% down on 2008’s $37.6 billion. So, the market is playing it safe while the aftershocks of the global financial collapse continue to buffet investors.
Whistle-blower files lawsuit over misuse of US medical stents
It’s enough to give medical ethicists a cardiac infarction. A whistle-blower who has brought a lawsuit in Dallas, Texas, says that stents approved to treat digestive tract cancers were illegally marketed to treat blocked blood vessels elsewhere in the human body. Kevin Colquitt, a former regional sales director for stent maker Guidant, says he was trained to market the devices to medical practitioners for uses not approved by the US Food and Drug Administration. Defendants in the suit include Abbott Laboratories, which bought out Guidant’s stent operations, Boston Scientific and Cordis, a division of Johnson & Johnson. Colquitt has powerful backing in his case, as the FDA approval process for vascular stents is far more rigorous than the one for biliary devices, the ones he says were placed in the wrong parts of people’s bodies.
Cadbury milks American candy makers for a better deal
You can’t have your chocolate and eat it. That what Britain’s Cadbury told US candy maker Hershey, when it said the American firm would have to "pay a great price" if it made a bid for the company that puts a glass-and-a-half of milk in its chocolate bars. Cadbury is busy defending itself against a $16.5 billion hostile bid by another US firm, Kraft Foods, and seems keener on a Hershey offer. By buying Cadbury, Hershey would overnight become a global business, rather than the best-known American sweets brand. So by using phrases such as "For a great prize, you have to pay a great price", the Brits sound as if they want to encourage their cousins across the pond to consolidate their existing partnership in international product licenses, while allowing Cadbury's to maintain brand independence. Kraft has increased the cash portion of its offer, but not the overall price of its bid, after its biggest shareholder Warren Buffett told it not to sweeten its offer with more undervalued shares.
French show distaste for Google’s role in their culture
Some American conservatives renamed French fries to Freedom fries after France strongly opposed the 2003 invasion of Iraq. But now the chauvinistic French want to digitise their history, and can’t really do so without the help of Google. France has been on the offensive ever since English became the official global diplomatic language. They even have an official body, L'Académie française, which looks after the integrity of French language and cultural affairs. So being the world’s number one search-engine company, Google is viewed with deep suspicion by a people who believe a PC is in fact an “ordinateur personnel”. So, much so, that Frédéric Mitterrand, France's culture minister, says he’s off to visit Google's headquarters, to ensure that no Englishmen are hiding out there. Google is very popular in France, and controls about 80% of the search market. But the country’s cultural elite are worried about French dependence on the company to develop digital media in France. C’est la vie!
Read more: The New York Times
Thailand’s export upswing not followed by domestic demand
Thailand’s economy looks to be on the mend, and may expand 5% in the first quarter of 2010 on the back of a rise in exports and government infrastructure spending, government says. But domestic demand is not keeping up with export growth, which climbed for the first time in 13 months in November, even as December consumer confidence hit the highest level since August 2008. The head of the Asian Development Bank, Haruhiko Kuroda, says the regional economy, excluding Japan, will expand 6.6% this year, from 4.5% growth in 2009. But market fears of a looming bubble in China’s real-estate sector means that things could still be bumpy for a while, causing the Bank of Thailand to keep borrowing costs at the lowest level since July 2004, because domestic demand is still weak.
US authorities pre-empt trouble over Monsanto patent expiry
Monsanto, the world’s largest seed producer, is facing investigation by the US Justice Department over anticompetitive practices in its herbicide-tolerant soybean seed business. American regulators want to know if its competitors and farmers will have access to the seed after its patent expires in 2014. But Monsanto chief executive Hugh Grant (not the one who starred in LA Vice from the back of a car on Sunset Boulevard) says the firm won’t stop other seed makers from creating generic versions of any of its gene-modified seeds as they lose patent protection. Monsanto is known for playing hardball with US and Canadian farmers in its numerous patent lawsuits. Looks like the regulators are getting a head start on this issue.
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