From the New York Times - click to visit this piece of timely and clever creativity:

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Despite the investigation dating to the back end of 2008 this brilliant story broke only today. The allegations are that Michelin, Total and Adidas have not simply been (illegally) evading Le Fisc but - according to the French Ministry of Finance - have been so naughty that an indictment on the far more serious criminal charges of money laundering are likely. At stake is the better part of a billion euros.

At the center of the allegations is the use of Liechtenstein based entities structured by LGT Group. The same LGT Group who out of the blue decided to abandon the tax-shelter business earlier this month. Some coincidence.

Choice quote from the three accused comes from the Total spokesperson:

"We have no business in Liechtenstein, other than two service stations." (link)

Related links:
Michelin, Total, Adidas 'targeted in fraud probe'
Bercy à l’origine de l’enquête judiciaire
Michelin, Elf et Adidas dans le collimateur de la justice

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This paper didn't make it past the 30 Rock production team and I have a feeling it would not have made the top of Mr Bernanke's, or any other quantitative easing-inclined central bank's, tivo recording list either.

The likely judgement of QE, according to author and Professor George Bragues of University of Guelph-Humber, of four great moral philosophers:

"Accordingly, none of the moral theories sanction the Fed’s efforts: the Aristotelian view because the Fed’s actions threatens to undermine the virtues of liberality and justice; the Lockean because property rights are violated; the Kantian because the practice of copiously printing money to deal with economic difficulties cannot be logically conceptualized as a universal law and, moreover, it leaves individuals liable to being used as means to satisfy the ends of others; and the utilitarian because the flooding of liquidity overstates the threat of deflation and understates that of delaying the necessary reorganization of the economy. Simply put, the Fed is proceeding on an immoral basis."

Tune in next time when Aristotle, Locke, Kant and Bentham weigh in on the ethics of re-releasing Agadoo (clip, if you must)

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On the heels of last week's entry on this an additional link in the same vein to some 20 March Deutsche Bank research. An excerpt and a couple of discomforting charts:

"Financial markets have sharply re-priced the risk for Austrian government debt over the past few weeks. At times, Austrian 10-year sovereign bond spreads climbed to fresh multi-year highs of more than 130 bp vs. German Bunds. 5-year sovereign CDS spreads soared to around 270 bp and are still on par with highly-indebted Greece and only topped by Ireland. However, one has to bear in mind that the CDS market may not be solely driven by default risks but also by other factors. Very recently, sovereign bond and CDS spreads have narrowed again to around 110 bp and 180 bp, respectively." (link)

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Via Reuters DealZone blog, some sound advice from the Cayman Islands' Government to the private financial sector on handling those awkward Candid Camera moments from the nosy G20-inspired media...

HT, FT Alphaville

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"Tax havens" - one of the Great Sideshows of the G20 one angle of which is covered in this piece from Der Spiegel (includes the graphic at right).

A tangled web covering, amongst other matters:

  • tax minimisation vs tax dodging
  • tax harmonisation vs tax competition
  • service vs industrial company use
  • imposed information exchange protocols vs sovereign rights of smaller nations

None have particularly straightforward answers. And, although the G20 have managed to set the media agenda on the issue, there are at least some publications still capable of highlighting the hypocrisy prevailing through it all. This from the Economist:

"In practice OECD countries have much laxer regulation on shell corporations than classic tax havens...And the US is the worst on this score, worse than Liechtenstein and worse than Somalia."

Which was one conclusion from a study reported upon with some glee by the Swiss paper Le Temps under the classification "Economic criminality".

The G20 communiqué when issued will be required reading for long term policy makers in some of the smaller, honourable jurisdictions. Hypocrisy or not, will it be possible given the G20 inquisition to differentiate from the rest and maintain a significant offshore industry? With Liechtenstein (in the form of their largest bank LGT Group) appearing to give up the ghost the others may need to produce some imaginative thinking to prosper.

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A few notable weekend items ahead of another busy week...

1.) Even MPs get the blues

Apparently you get the government you deserve if you insist on subsidising their Virgin Media adult film cable television packages. A quote from the Daily Mail's report:

"Jacqui was not there when these films were watched. She's furious and mortified."

Not entirely certain how to interpret that but it was definitely the most, erm, eye catching detail, though not the most outrageous, from Mrs Smith's expense claims.

2). G20 Party great value at £19m

UK Junior Minister Mark Malloch-Brown quoted from a "web-chat" last Friday:

"This cost compares favourably to other international summits, a number of which have cost many times more than this in recent years. And if it is the signal of restored confidence in the world economy it’ll be worth every penny of it. Remember, as a national community, we’ve already spent more than $2 trillion on fiscal stimulus measures." (link)

So what's the little matter of £19m more towards the cause, eh? Still, Mr Malloch-Brown was a bit less bullish about it all last week, though, when not talking directly to tax-payers:

"If indeed we get anodyne committee conclusions where all substance has been taken out of them, the markets on April 3 will be something of a disaster zone, I have no doubt." (link)

Probably not bursting any bubbles here but might Mr Malloch-Brown be over estimating the importance and expectations financial markets are attaching to this particular posturing exercise?

3). Perhaps France will save everyone from the Credit Crisis this way...

And, yes, they did it since publication. 25 years to fully qualify seems a tad long but presumably the cultural clashes (like polygamy) will be phased out along a similar timeline.

4.) And finally, a bit of a spanking from the 3rd ODI

Yes, far better than the entertainment of the 4th ODI.

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In probably one of the tardiest RSVPs in the history of economic dinner parties the International Labour Organisation this week released The Financial and Economic Crisis: A Decent Work response. This is a discussion/preprint edition and is described as "Second item on the agenda". I truly wonder what came first.

The ILO were first moved to emit a press release on the crisis in April 2008 (think Bear Stearns) titled "ILO Director-General calls for new multilateral consensus to head off global slowdown and recession" which suggested:

"The ILO’s tried and tested mechanisms of social dialogue and tripartite discussions are particularly vital in building consensus around policies to avert a steep slowdown and move out of recession...they are an undervalued asset upon which the multilateral system should draw in shaping policies for a sustainable recovery."

which, on a fair reading, demonstrated an impressive level of calm as to the impact on labour from the then exploding crisis.

As time past and unemployment levels rose around the world - with concurrent social dislocation - nothing further emerged from the ILO Geneva offices. Not until October last year when, suddenly, the organisation published a flurry of releases one of which cited the Director-General Juan Somavia saying:

"This is not simply a crisis on Wall Street, this is a crisis on all streets."

A fine soundbite but, with the others, adding up to little more than alarm ringing when the building is well and truly conflagrated.

Now we have this report on the occasion of a "tripartite" (must be important) meeting with the IMF and the International Trade Union Confederation. It has pretty and informative graphs (three below). But, if this is the best anticipation and timeliest coordination the UN has to offer on managing the social fallout from the gravest economic downturn for over a generation, why bother?

Chart 1: Unemployed without social protection, selected countries

Chart 2: Fiscal packages, selected countries

Chart 3: Pension fund returns, first 10 months of 2008, selected countries

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...because you're about to live it. Minus the millionaire.'

Fresh from the Colbert treatment he received during interview a couple of weeks ago (from which the quote, link to vid) Simon Johnson gives it up again for the Atlantic magazine.

An except below - but there is so much more to consider all the way through the article. It is refreshing to see a discussion of borrower country realpolitik publicly put in the mix by an IMF official, albeit a former one.

"In my view, the U.S. faces two plausible scenarios. The first involves complicated bank-by-bank deals and a continual drumbeat of (repeated) bailouts, like the ones we saw in February with Citigroup and AIG. The administration will try to muddle through, and confusion will reign.


The second scenario begins more bleakly, and might end that way too. But it does provide at least some hope that we’ll be shaken out of our torpor. It goes like this: the global economy continues to deteriorate, the banking system in east-central Europe collapses, and—because eastern Europe’s banks are mostly owned by western European banks—justifiable fears of government insolvency spread throughout the Continent. Creditors take further hits and confidence falls further. The Asian economies that export manufactured goods are devastated, and the commodity producers in Latin America and Africa are not much better off. A dramatic worsening of the global environment forces the U.S. economy, already staggering, down onto both knees. The baseline growth rates used in the administration’s current budget are increasingly seen as unrealistic, and the rosy “stress scenario” that the U.S. Treasury is currently using to evaluate banks’ balance sheets becomes a source of great embarrassment." (link)

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A brief contrast of labour protest styles between France and the United States:

IBM set to layoff 5000 and offshore work to India - whilst seeking stimulus cash (link). Union reaction:

"To protest the layoffs, Alliance@IBM is asking workers to wear black and blue clothing Tuesday to represent the pain caused by the layoffs. Workers also are urged to take a 15-minute "silent break." Spouses of terminated employees are being asked to e-mail or write to IBM Chief Executive Officer Sam Palmisano "detailing the effect the job losses will have on their family." (link)

Caterpillar layoff 733 in Grenoble (link). Union reaction (from 0'29" to 2'16" probably sufficient to detect the subtle difference of approach):

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Entertaining crib sheet from Rolling Stone called the Dirty Dozen (although they are currently only eleven filthies - Phil Gramm appears twice - and John Thain appears to be Ken Lewis' twin). An excerpt:

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Off the usual topic but it would be remiss to let this pass.

Much coverage of the rumour, subsequently categorically denied by the French Government, that Christine Kelly is set to become the Overseas Minister. So far, so routine.

Ms Kelly, a television journalist/presenter, also happens to be good to look at. Which is how, on an educated guess from this le Figaro piece, she got her break into journalism in the first place many years ago (doubtful that the degree in maths & physics assisted). Since then she has build a strong journalistic track record particularly on issues concerning women, minorities and the disabled. She is, through hard work, professional and cultivée.

However, the some of the international press - ably led by the UK - has spun this appointment-to-government story further than Shane Warne. The Telegraph claims:

"she is as well known for appearing in bikinis as suits" (link)

and even managed to splash this on its front page with an appropriate photo. Sky News manage to go one worse and define her and her entire career with the words "bikini babe". Same photo. I pass over the coverage in the Sun (same photo) and Daily Mail (same photo).

Try a google image search, either for the purposes of research or titillation, and see if the angle they all take on the story is accurate - or even the usual clever headline contortion. Strange that - it's the only photo the UK dailies could find. But, in the long media tradition of some sections of the popular media, just sell the papers.

Fathers of daughters, as lightened up and cynical as the next guy that I am, this is simple misogyny - not the prima facie opposite - lurking beneath a cloak of "humour".

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The Commerce Department report.

A roundup:

  • Sales of single family homes rose 4.7%
  • Financial markets had expected a sales drop of 2.9%
  • But new home sales plunged 13.2% in January
  • And year over year new home sales fell 41.1%
  • The median price of a new home dropped 18.1% to $200,900
  • The average price decreased 16.7% to $251,000
  • Homes for sale inventories declined to 330,000 from 340,000

A graph to top it off:

The price drops suggest buyers continue to believe waiting will bring cheaper prices still. Foreclosure data and stagnant inventory support them in this - as does the continuing dislocation elsewhere in the financial sector.

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If you have ever bought or sought property in France you will know that a curiously large number of apartments are described as "appartement d'exception" whilst an equally inordinate number of houses enjoy the description "maison d'architecte" (Ed: what other kind are there?).

Whatever, neither version are doing too well just now. French site reports one lender has begun producing analysis aimed not at telling owners how much money they may make but how little they will lose depending on what city they live in.

Concurrently, a national network of property agents (ORPI) held a press briefing a couple of days ago covering the state of play and the results of their survey of buyer intentions. The first part is not exactly the stuff bonus commissions are made of and the second offers a few hints that buyers may not have entirely accepted the probability that the market will worsen materially from here.

Full presentation here with three excerpts below:

Chart 1: French GDP yoy % growth

Chart 2: French new build data by quarter

Chart 3: Existing residential property price per square metre and yoy % trend

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Admittedly on partly sophomoric grounds but this story still caught my eye. The goal, of course, is noble: cheap prophylactics to fight AIDS in the developing world.

Yet that notion appears obscured. Somehow these condoms have got caught up in the "stimulus" plan and job preservation debate; there is a spokesperson for the US manufacturer Alatech rejoicing in the first name of "Fannie"; price, quality and comfort arguments are to the fore; and the US supplier has had some, erm, delivery issues.

But post guffaws and protectionist tendencies this ought, surely, to be a debate measured in lives - and not US (or other) jobs - saved.

Crisis or not, if that goal can't focus minds...

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Last October Normura Research Institute Chief Economist Richard Koo spoke to the Centre for Strategic and International Studies about Japan's Great Recession as it related to the policy choices currently facing the US.

During this speech he samurai-ed into sushi cubes the notion of quatitative easing as a valid policy and turned on its head what has become conventional wisdom about the fiscal policies of Japan ("bridges to nowhere"). And, for an ex-central banker, was remakably supportive of those fiscal stimuli (memo to Trichet - check out the speech here). The largest peg he hangs his hat upon is that during crisis firms are no longer profit maximisers: rather, they become debt minimizers.

With the announcement of the Geithner Toxic Asset Plan his entire presentation is well worth considering afresh. The Secreatary to the Treasury certainly appears to have done so - and in much the same way John Sturges did with Akira Kurosawa.

A couple of key slides from his talk:

Slide 1: Diagnosing the problem

Slide 2: Policy options

His superb presentation is here and I tip my hat to Tim Price's discussion of Mr Koo in his March 13 article Japanese Lessons.

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The trickle of articles at month start covering Austria, the state of her banks and their exposure to Eastern Europe is becoming a bit of a stream. Useful report here from the Washington Post puts it in context while Der Spiegel has a couple of excellent pieces here and here from which the two graphics below are taken:

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The Plan (via


“This is perhaps the first win/win/win policy to be put on the table and it should be welcomed enthusiastically. We intend to participate.” (Bill Gross, PIMCO manager)

"The plan looks like the best hope yet for creating a viable market for all the toxic mortgage-based investments plaguing the balance sheets of banks large and small. The banks today don't have a suitable benchmark to guide them in valuing these assets on their books, let alone selling them." (Michael Hiltzik, LA Times)

"This is not a panacea; it is not a silver bullet. But this will take some of the overhang out of the marketplace. It is incrementally a really good thing." (Larry Fink, Blackrock)

"Clearly these assets aren't going to be sold at par...They are held on banks' balance sheets and held to maturity, which means if they were Triple-A rated securities they will have been held at par and not written down." (Ron D'Vari of New Oak Capital expressing interest in participating in the plan)


"It may well succeed in giving the bank the opportunity to dump the bad assets but I think the most likely outcome is that those assets will realize massive losses which will be charged to the Treasury and the FDIC...the Geithner plan is presuming the assets will recover over time and there's really no reason to believe that's the case." (John Galbraith, UT economist)

"For the private investors, this is an open invitation to play heads I win, tails the taxpayers lose. So sure, these investors will be ready to pay high prices for toxic waste. After all, the stuff might be worth something; and if it isn’t, that’s someone else’s problem." (Paul Krugman)

"Traders and portfolio managers don’t want to be investing with career bureaucrats."(Kevin Hebner, strategist at Third Wave Global Investors)

Noteworthy others:

"The hardest truth for Obama supporters to swallow about the Geithner plan is that it is essentially an extension of former Goldman Sachs CEO and Bush administration Treasury Secretary Hank Paulson's much derided scheme to end the credit crunch by having the government step in and buy all the toxic assets from the banks at inflated prices." (Andrew Leonard, Salon)
A tougher regulatory stick is needed to force banks to face reality. Instead, generous terms may help bridge the pricing gulf – further reason for investors fearful of a political backlash to stay clear. (Lex)
"This isn't the worst idea the federal government has ever had, and if it works it will help banks take their losses and burn down debt...we sincerely hope this works. The feds have so thoroughly botched the TARP execution and various bailouts that Treasury has few options left. No accounting change can make bank losses vanish, or inspire investors and short sellers to value bank assets at more than their market price. Yes, banks need to earn their way out of trouble, and many are doing that, but they also need to burn losses. Might as well get on with it." (WSJ)

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full index here.

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Nice little tour d'horizon from the perennially lucid Lloyd's Chief Economist Trevor Williams in this week's note "Aggressive quantitative easing is underway". Some charts:

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It has been more than 40 years since Xerox was a go-go swinger stock untrusted by staid mutual fund managers. Yet that has not stopped Citi slapping a double-your-cash "buy" on the company following last Friday's profit warning "pre-announcement".

Now, Xerox has a special place in my heart as my first private sector employer. I recall fondly the interview with the departmental finance chief in which he spent much time lambasting the "matrix management" fad the company had recently taken on board. Equally fond is the moment a later chief, in front of staff, called country headquarters to tell his boss several times during an extended rant that the latest sales targets sent by him were ''bollocks". Which they were.

Still, in spite of my empathy, I do wonder about equity research that includes the words:

"it is too late to sell XRX shares at 7X revised earnings with a 20%+ free cash flow yield"

Really? That may prove right but it does look a statement that has built in some casual macro economic assumptions. There has been, as the report mentions, an unprecedented 20+% decline in consumable revenues. So what? Well, a great many companies have in this crisis taken to touting themselves as good defensive investments because they sell into operating rather than capital budgets. Logical theory on the face of it - but check out the Xerox reality.

Citi argue half of this 20+% is might be inventory destocking. Could be. Whatever it is Xerox is sitting at frightening multi year lows and well below book. Some of that reflects the wall it faces selling big iron, some its exposure to lease defaults from customers. And those are macro factors beyond the healing powers of yet more restructuring.

The long term chart:

All the same, Citi see 107.4% upside (very precise stuff, isn't it?) and are generally all-round enthusiasts. And the chart does, in the technical analysis tea leaf way, encourage that possibility.

Finally - on an entirely unrelated matter - the first disclosure of the report caught my eye:

"A director of Citi serves as Chairman and CEO of Xerox"

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You may have noticed over the weekend how many "reports'' there were about the latest piece of the US rescue plan in the media. Say the FT:

"Mr Geithner will unveil two separate schemes: one targeting toxic credit securities, the other portfolios of more traditional loans deteriorating due to the recession." (link)

A private-public partnership! Sounds triffic.

I do note, though, a proxy parallel: where sovereign wealth funds (SWFs) have been involved in recapitalising banks over the course of this crisis the investments have not panned out quite as anticipated.

Even the Qatari SWF, shown on that October 2008 list enjoying a lovely profit on its Barclays stake, is now nursing a circa 60%, $2.6bn loss on its investment. And that is after Barclays 20% jump this very morning on the Geithner news.

Course, when policy makers take the "long term valuations" (emphasis on long) position pretty much all options can be sold to the public until they go pear-shaped with time along with one's credibility.

A separate, related FT article led off with a pithy Volker quote focused on this:

"There’s no point in trying to rebuild a burning house"

There is an arrogance in imagining we are smarter than battled-proven (though still fallible) policy makers from prior generations. But it's probably different this time.

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Little TGI Friday relaxation from Mr and Mrs Riccardo Patrese:

HT to Simon J - yes, quantitative easing may turn out like this....

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The US Conference Board released its Leading Economic Index data for February today under the tag "Negative Momentum Eases a Little". Their chart looks like this (via

Another flavour, on a longer run, using (free, downloadable and interactive) OECD data against the S&P500:

Leading indicator data has taken plenty of criticism in the not too distant past (nota bene, the OECD justify theirs in a tidy little academic-style paper). But despite the obvious question what's-it-actually-leading the numbers are not (probably) entirely worthless. It's usually the accompanying narrative that needs careful handling...

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"Shock and awe" according to the Financial Times; and the Wall Street Journal has a neat roundup of professional economist opinion here.

You might have thought the surest way to lower long term interest rates was with a sound currency that faced no threat of debasement. How naive - that applies only during "normal" (define at leisure) times.

Still, even with the sponges to soak up all the looming monetization if the Fed goes ahead, it will be a neat trick to see the timing that seamlessly dovetails the short into the medium term, smooths (or should that be "banishes") the credit cycle and weighs in with just the right amount of counterbalance to offset the massive asset destruction of the last year and a half.

Not that I'd be betting against an equity and (dollar-denominated) oil rally, for a while, from here...

Exhibit 1: One day doth not inflation make (but it does spark some thought...)

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Fabulous interactive charts from Dutch daily NRC Handelsblad. Click the graphic to go there:

Chart: Economic crisis in the European Union

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Internal Revenue Service Commissioner Doug Shulman appeared before the US Senate yesterday with this news:

"It is unfortunate in these otherwise difficult economic times that we are here today to discuss a situation where thousands of taxpayers have been victimized by dozens of fraudulent investment schemes.

These too-good-to-be true investment ruses have often taken the form of so-called "Ponzi schemes." The perpetrator of the fraud promises returns, and sometimes even provides official-looking statements showing interest, dividends, or capital gains, some or all of which is fictitious." (full link)

He was referring mainly to Bernie and Allen but one may be forgiven for wondering if AIG fit the frame too.

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Once upon a time when financing was easy to come by and wild and wacky international takeovers were what got CEOs and their Boards - as well as their "facilitating" investment bankers - excited a noticeable protectionist wall began to appear. But what with the Supercycle, Goldilocks and Decoupling no one really got too upset. Money was too easy to stress, man.

Now, though, that wall is beginning to look uncomfortably robust.

China today blocked Coca Cola, 6 months after the deal was first submitted for approval to the regulators, from buying the domestic juice maker Huiyuan in a $2.4bn purchase. It would, said the Chinese, have a "negative influence on competition". Analyst views on that appear split.

A sweet irony of this deal is that French firm Groupe Danone owns 23% of Huiyuan and had given a supposed "irrevocable" undertaking to Coke to sell their share of the firm (as had the founder who owned 36%). Danone had been looking forward to banking the triple premium offered by Coke to last autumn's Huiyuan share price.

But live by the sword etc etc. It was, of course, Danone the-very-strategic-yogurt-maker who were prevented from falling into Pepsi's hands when then President Chirac and his Prime Minister de Villepin waved with vigour the "patriotisme économique" flag in 2005. Franck Riboud, the Danone CEO, went from being vilified for closing various French operations to being idolised in some quarters as some sort of economic Charles de Gaulle.

Admittedly it does not quite add up to Smoot-Hawley even in this economic context. And there are very legitimate concerns where "strategic" industries are concerned (have fun defining that one). But, as in 1930 when that legislation was passed, the political backdrop has hardened as the cycle bites back on the societal front.

Course, the deal might still go through - the final deadline is 23 March - if Coca Cola want to dilute the terms sufficiently. The Huiyuan share price, off 20% ahead of the block, is so far unconvinced.

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Fascinating study just released by France's Institut National de la Statistique et des Études Économiques (INSEE) on the economic wealth of the country since 1978. The portrait it paints of evolving household wealth is especially interesting:

  • between 1978 and 2007 household wealth has increased 8 fold in nominal terms and doubled in real terms
  • In the 1980s household wealth was worth circa 4 years worth of GDP. Today the factor is over 6.5
  • in 1978 financial assets (principally currency, deposits, insurance, bonds and equities) represented 30% of household wealth. At end 2007 this was scarcely changed at 33% - but that hides the 46% share it held at the height of the internet bubble
  • in 1978 1 million citizens owned shares or bonds - equivalent to 10% of their financial assets. By 2007 it was 12 million and 27%.
  • property is roughly two thirds of household wealth split 27% buildings and 35% land
  • property inflation in the last decade has pushed net household wealth to nearly 7.5 times annual revenue. In the 20 years to 1997 the multiple averaged 4.4.
  • As of 2007 58% of the French owned their own home against 47% in 1978.
  • Long term loans (mainly mortgages) were only 26% of disposable income in 1978. Today the share is 69%.
  • For the first time in 30 years household wealth is expected to fall in 2008 (by a modest, say INSEE, 3%)

Chart: property and financial market factors driving French household wealth

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Last week the Le Monde graphic on job losses featured here. This is a brief contextual follow-up using data from INSEE (Institut National de la Statistique et des Études Économiques).

Chart 1: French unemployment trend

Including overseas territories the rate sits at 8.2% - or about 2.3 million people.

A sharp reveral of the prior trend but far from enough to erase job gains since 2006. Yet the social reaction has been in some cases energetically violent - and this is France with her extensive labour protections.

One of the companies mentioned last week as closing plant was German tyre maker Continental. This in this morning from Dow Jones Newswires:

"Angry French tyre factory workers burst into a management meeting Monday and pelted their bosses with eggs to protest the closure of their plant.

Hundreds of workers from the German firm Continental had traveled by bus from their plant in the northern town of Clairoix to protest outside a hotel in the nearby city of Reims where the meeting was being held."

Quite an effort by the unions and a worrying sign, perhaps, of thing to come.

NB: Photo credit Reuters. This a crop from a full image to be found here.

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AIG have kindly released this document after putting the boot into the US taxpayer with its mind-boggling announcement of huge retention and other bonuses.

Course, it's really all for the public good explained Mr Edward Liddy, the group's CEO. According to Bloomberg he argued that such payments help the taxpayer by making AIG units attractive to buyers.

That is, someone will want to buy and retain the talent that made the company what it is today.

But back to the document detailing who got paid by tax-transfer broker AIG. A summary of the main beneficiaries:

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Surely story of the month:

The aptly named (but not pronounced, thank you commenter) Shropshire-based company Wrekin Construction collapsed last week amid recriminations about the helpfulness of the Royal Bank of Scotland, the group's bankers.

Peter Greenwood, the joint Managing Director of Wrekin said of the bank:

"someone should be shot...I wouldn’t have let one of them so much as wash my car never mind run a bank."

Local Member of Parliament Mark Pritchard picked up on this and added that Wrekin had:

"...been driven into administration by the inflexibility of RBS...some of the blame has to fall on the doorstep of 10 Downing Street, given the government's majority shareholding in RBS."

Presumably both men spoke before the administrators, Ernst & Young, discovered that in order to save the business from an earlier collapse in 2007 the then new owner David Unwin had one of his other companies, Tamar Group, sell Wrekin a ruby called the "Gem of Tanzania" in exchange for £11m of preference shares. The net balance sheet position was hey-presto transformed from showing net liabilities to net assets of £6m.

The Royal Bank of Scotland car washers were at the time of this , erm, nil-cash asset infusion, described by David Unwin as "over the moon". Overdraft facilities remained in place and Mr Greenwood spoke, with no irony, of achieving a "diamond result" in 2008.

Now, the "Gem of Tanzania" is no ordinary ruby. With a fair value of £11m it is over four times the value of any other ruby ever sold by auction house Christie's. But rest assured that it was valued, say the notes to the Wrekin accounts, by the Instituto Gemmologico Italiano based in Valenza, Italy, on 31 August 2007. Can't say more kosher than that, can you?

The Instituto Gemmologico Italiano, however, say they were closed that day. Nor do they perform valuations.

The Ernst & Young search for the ruby continues.

Related links:
Wrekin ruby saga - valuation jumped from £300,000 to £11m
Hunt for £11 million ruby as owner goes under
Wrekin creditors hunt for £11m ‘ruby’

Wrekin Construction empire built on £11m ruby gemstone

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