What’s most important: dealing with the deficit and the perceived threat of debt default, or cutting unemployment? The US government seems to be relaxed about employment or lack of it at the moment. For President Obama the imperative is to agree a deal with Congress to let the deficit ceiling rise while committing to cutting it in the next few years. Without an agreement the US Treasury could, in effect, be unable to continue spending and in theory public services would cease to be funded.
Boom and Bust Blog
Stay-at-Home Shoppers 3
In earlier blog entries this week, I have analysed the UK’s online grocery market. Two players at the high end of the sector have caught my attention: Ocado and Waitrose. These two have been engaged in a quasi-fraternal fight over valuable territory – notably home grocery deliveries within the M25 (London orbital) zone. Waitrose is investing £10m in its online service and some observers fear the impact this will have on recently floated Ocado.
Stay-at-Home Shoppers 2
In the first entry on the topic of the UK’s online grocery market I ended by noting the sometimes feisty relationship between Ocado and Waitrose. Waitrose’s parent company, John Lewis Partnership (JLP), was one of Ocado’s original backers and while Waitrose runs its own home delivery network, Ocado has its own, very different business model.
Stay-at-Home Shoppers
It has been said that a trip to a major retail outlet, on the edge of town and offering a hypermarket’s range of groceries, clothing, electronics and electricals, is like visiting a cathedral of consumerism. Such is the scale of the operation that people cannot help but feel in awe and perhaps prone to worship at the altar of their god. In this case, of course, the god in question is Mammon and the place of worship is the superstore.
The World’s Biggest Company that Nobody’s Ever Heard of…. Until Now
So far this week I have concentrated on technology firms and their M&A or flotation activities. Focusing on the merger of Microsoft with Skype, or the IPOs of LinkedIn, Yandex and Baidu, we have seen how firms seek to build market power and gain savings through M&As, while in seeking a stock market flotation they look to access new sources of capital, promote their products, services or brands and gain status.
Mergers, Acquisitions and Flotations 2
Yesterday I mentioned that M&A activity is being driven by more activity in emerging markets such as China. I also focussed on the apparent tech-bubble forming around the stock issues of firms like Skype and LinkedIn, as they attract a takeover from Microsoft in the case of the former and stock market flotation for the latter.
Mergers, Acquisitions and Flotations
When UK shoe design company, Jimmy Choo, was sold last week for £500m, it marked a return to confidence in the merger and acquisition sector. Choo was set up in 2006 by a former editor of Vogue, Tamara Mellon and shoemaker, Jimmy Choo. Previously owned by a private equity group which paid £185m for the firm in 2007, Choo’s was acquired by luxury brands group Labelux, based in Vienna, Austria.
Non-League Football Finance 4: The Return of Wimbledon
“Footballers come and go, so do managers and owners. All that remains are the fans and, in the case of Wimbledon, we never left.” So said AFC Wimbledon’s Commercial Director in 2003, when Wimbledon FC's directors took the decision, supported by the FA, to move the club 70 miles from its base in south London to Milton Keynes. Biz/ed analysed the governance and financing of football back in 2004, noting the power of supporters and communities to resist threats to the grassroots of football and protect clubs’ heritage.
Non-League Football Finance 3: The Rise of Crawley Town
Over the last couple of postings I have looked at reasons why promotion to higher leagues may pose a financial problem for non-league football clubs. We have also seen why relegation exposes financial constraints on many of these clubs, especially as attendances drain away while costs remain stubbornly fixed. In yesterday’s entry I noted the Football Conference’s efforts to impose greater fiscal discipline on its member clubs, through quarterly reports under the Financial Reporting Initiative.
Non-League Football Finance 2: Regulation
The availability of finance to a football club at the lower levels of the professional or semi-pro game impacts on all facets of a football club. If inadequate funding is to hand then clubs may find themselves lacking all manner of essential items for them to function effectively as a business. Anything from matchday programmes, food supplies for stadium catering, staff for stewarding operations or other stadium personnel may be in short supply or withdrawn completely in the event of late-payment or unresolved disputes with suppliers.
Non-League Football Finance 1: The Cost of Promotion
The ascent of Queens Park Rangers and Norwich City to the top table in English football, soon to be followed by the winners of the playoffs (Cardiff City, Reading or Swansea City), triggers all manner of estimates of the financial boost that these clubs will experience.
Hyperinflated Fears
At the end of my recent run of entries on the work of the credit ratings agencies (CRAs), I said that one consequence of CRAs warnings of ‘high’ government deficits for sustained periods is the increased fear of hyperinflation. Search through the blogosphere and you’ll find many references to this phenomenon.
Credit Rating and the Markets
Completing the series on the role of Credit Ratings Agencies (CRAs) in assessing sovereign government debt, today’s entry borrows heavily from the financial markets themselves. I’m going to pick through the main messages contained in a report from HSBC Global Research on the risks of certain European governments defaulting on their debt.
CRAs in the Firing LIne
In yesterday’s blog entry I began the process of investigating the credit ratings agencies (CRAs) in light of Standard and Poor’s alteration of its advice on US government debt from ‘positive’ to ‘negative’. I said that this would be the start of a series of entries on the CRAs. Today, here’s more on the sector, including Standard & Poor’s (S&P).
The Emperor's Clothes
Typical isn’t it? Go away for a few days and in your absence, the world’s biggest economy has its credit rating dubbed ‘negative’ by one of the biggest agencies, Standard & Poor’s. The language used by ratings agencies can appear a little obscure, but suffice it to say that AAA is good. AAA Stable is OK, AAA Positive is better, but AAA Negative means flashing warning signs.
ECB Tightens at Wrong Time?
The European Central Bank’s (ECB) decision to raise interest rates in the Eurozone by a quarter of one percentage point to 1.25% is either an understandable form of protective action against inflation, or destructive economic mismanagement, depending on your point of view. The timing of the rate hike, to coincide with Portugal’s appeal for a financial bailout from the European Financial Stability Fund (EFSF), is insensitive at best.
Portugal Bailout: Impacts and Alternatives
The inevitable has happened with Portugal following Greece and Ireland in asking the European Union (EU) for a bailout. Today the country managed to sell government bonds in order to raise 1bn Euro funds to cover its debt payments over the next few months. But it did so at a price; the bond sale was successful only at rates twice the level they were a year previously.
The Roosevelt Recession: Echoes Through History
In yesterday’s news it was reported that a senior government minister had admitted the UK economy was in crisis and that plans to boost growth and jobs were needed. The comments by Cabinet Office minister, Oliver Letwin, to the Environmental Audit Committee, were made in response to a question about economic decisions in the lead-up to last month’s Budget.
Financing the State Payback
In a final entry about the UK Budget, here’s a little gem of a chart from the Office for Budget Responsibility (OBR). This is the agency, you’ll remember, charged with bringing back credibility to the government’s forecasts, due to its independence and academic rigour.
The IFS Analyses the Pain
Yesterday’s blog entry identified growth, or the lack of it, as the biggest problem underlying the UK’s 2011 Budget and the credibility of the coalition government. Without substantial growth, which was originally forecast for this year at 2.6%, but is now expected to be 1.7%, there can be little hope that the ‘broken’ public finances will be mended. Higher public spending in the form of increased benefits and lower tax receipts are likely to derail deficit reduction plans.