Posts by Andy Serwer

'I would be quite surprised if there wasn’t a recession in the UK'

Is Brexit the "most disastrous single event in British history since the second world war?" So says Martin Wolf, London-based chief economics commentator at the Financial Times, and one of the world’s most thoughtful business columnists. So, could it really be that bad? “I think so, in terms of its economic effects over the short and medium term and its political effect over the longer term. I can’t think of an event comparable. The only one that has come to mind was our decision to invade the Suez Canal back in 1956 which lead to the fall our prime minister and ignominy. But it didn’t do anything like economic damage it looks like this one could likely to do,” Wolf says. Wolf isn’t particularly sanguine about the financial markets, especially Britain’s over the short term: “I think the main point is the uncertainty is unavoidable until this is revolved one way or another, and it’s difficult to see that happening quickly. I think investors will make the decision to delay their decisions. So there will be less investment. That is bound to lower activity [and] demand in the economy significantly. The banks have been very badly hit already in terms of their stock prices. I...

What to expect from the markets Monday morning, and beyond

Even if markets don’t tank Monday morning — the second trading day after Britain’s historic Brexit vote — it will likely be a very bumpy ride. That’s because most analysts expect the best-case scenario on Monday — and in fact over the near and medium term — to be instability.

Worst case is a downright bloodbath, not so much in the US market and economy, but especially of course in Britain, and in Europe and emerging markets. Yes, fortress America will most likely be less affected, but ironically, globalism, the very mega-trend that was at the root of the Brits voting to decamp from the European Union, means that those of us in the US are more tied than ever to destabilization in Europe.

As the Brits are so famous for saying: “Keep calm and carry on.” No doubt that will be put to the test.

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How Trump benefits from Brexit

How Trump benefits from Brexit

UK voters shocked just about everyonewhen they voted Thursday to leave the European Union. The Brexit shows the weakness not only of the EU and globalization — but also of polling. And doesn’t Donald Trump love that!

Wall Street too was caught completely off guard because it appeared that firms did independent polling that they believed showed the "remain" votes would win, traded the pound sterling up on that notion and then got crushed when the news came out the other way. It really was a rejection of the British establishment by the voters, with a great deal of voting falling along class lines. There are many exceptions, but generally Brexit voters tended to be working class while the "stay" crowd was more upper-crusty.

 

 

As deadline looms, here's how to fix Puerto Rico

With all the hullabaloo over Brexit, Americans may forget there is another sovereignty controversy simmering much closer to home, that being Puerto Rico’s dire economic straits. It’s a crisis that could be coming to a head—or perhaps on the road to resolution—over the next few days. I recently sat down with Richard Ravitch, former Lieutenant Governor of New York and a longstanding authority on restructuring who helped fix the New York City debt crisis of the 1970s. Now Ravitch has been offering his expertise to help resolve the Puerto Rican crisis. “I’m a kibitzer,” he explains. “I talk to everybody about the subject giving them the benefits of my experience, such as it may be.” I asked Ravitch a fundamental question: Why is Puerto Rico in so much trouble? “Because the politicians did the same thing they did 40 years ago in New York and what they did the last 15 years in Illinois and New Jersey,” Ravitch says. “They prefer to borrow rather than tax or cut expenditures in order to meet the obligations that they and their predecessors incurred…Puerto Rico was an egregious case of that.” Ravitch points to excessive borrowing, the withdrawal of a federal subsidy that was key to...

‘Stairway to Heaven’ case could mean millions for Led Zeppelin

Hey, man! Led Zeppelin’s “Stairway to Heaven” isn’t a ripoff! Or so says one prominent rock critic. And if he’s right, that could mean tens of millions dollars for the band. In case you haven’t heard, the estate of an obscure rock musician, Randy California, who played in a rather obscure rock band, Spirit, is suing Led Zeppelin for copyright infringement, alleging that the first few bars of the rock anthem “Stairway to Heaven” – released in 1971 – were cribbed from, you guessed it, an obscure Spirit song. (You can hear both tunes in the interview above.)

Here's why the government should give you $1,000 a month

It sounds more like a pipe dream than government policy. It’s called Universal Basic Income, a proposed government program that would essentially give every citizen a guaranteed floor income of say $1000 a month from Washington. It’s an idea that’s been around for a while and has more credibility than you might think—and not just from left-wingers. Richard Nixon and conservative uber-economist Milton Friedman were both proponents.

So too is Andy Stern, former president of the powerful Service Employees International Union and now a professor at Columbia University. In his new book ‘Raising the Floor,’ Stern lays out the case for UBI, and he suggests that it isn’t some pie-in-the-sky notion that would never see the light of day. I sat down with Stern to discuss.

“It is an old idea,” Stern points out. “Thomas Paine proposed it early on when we were forming the nation.”

As for why we need the program, Stern says that “at a time when our anti-poverty programs aren’t really working,” and with technology bringing massive job disruption, “we need to provide a safety net, a floor for every single American.”

Bottom line: UBI is an interesting idea and even better grist for debate.

Here's why all those big mergers are failing

CEOs just can’t seal the deal anymore.

I say that because the number of so-called withdrawn mergers and acquisitions—meaning proposed takeovers falling through—has soared to a record high, and we’re not even halfway through the year yet. According to Dealogic, the dollar amount of busted deals hit $401 billion through June 1, easily exceeding the previous annual record of $362 billion in 2014.

You want names? How about Pfizer calling off its $150 billion bid for Allergan, the failed $35 billion hook up between Halliburton and Baker Hughes, the torpedoed Honeywell $90 billion takeover of United Technologies. The list goes on and on.

One: There are very few businesses —particularly mature ones — capable of generating double-digit, or even high single-digit, growth. Buying a company at the right price might provide that, but the number of failed deals suggests that some executives, desperate to buy earnings growth, are chasing after targets that, oops, maybe aren’t such a good fit.

Stay tuned for more blown deals too: Bayer-Monsanto may fall through, ditto AB InBev-SAB Miller.

Obama's former economic advisor calls Trump's debt idea 'borderline insane'

President Obama’s former economic advisor Austan Goolsbee called Donald Trump’s idea of not fully repaying investors in U.S. Treasuries “borderline insane.” Pulling no punches, Goolsbee, currently a professor of economics at the University of Chicago Booth School of Business, continued about Trump saying, “Either he’s confused or he’s completely off-base…or both.” In an interview at the SALT Conferences in Las Vegas, Goolsbee noted that while so called “haircutting” may have worked for the presumptive Republican presidential nominee while he was a businessman, particularly in the junk bond market, U.S. Treasuries are a very different kind of animal and that treating them like junk bonds would have dire consequences. Last week on CNBC , Trump said, of dealing with the national debt: "I would borrow, knowing that if the economy crashed, you could make a deal." “Treasuries are the opposite of junk bonds,” Goolsbee said. “It’s the safest asset on the planet. Whenever anything goes wrong, money floods into Treasuries and actually our interest rates go down when there’s a crisis. To propose anything that would threaten that is, it sounds extreme... It really doesn’t make any...

Munger: Donald Trump's behavior reflects a 'form of sickness'

Charlie Munger, the outspoken and iconoclastic 92-year-old vice chairman of Berkshire Hathaway (BRK-A) says that Donald Trump is “A true believer. He truly believes in himself.’

Munger went on to call that behavior a “form of sickness.” Asked if Trump would be harmful to America if elected, Munger responded that “He’d be far from ideal.” As for the chances of Trump getting elected, Munger characterized them as “far above zero.”

Related: Warren Buffett isn’t worried about President Trump

I sat down with Munger for an interview in Omaha the day after Berkshire Hathaway’s annual meeting which you can watch here.

Munger addressed a number of Berkshire related issues in a wide-ranging discussion, including the company’s exposure to the insurance business, which Munger said had been “dramatically reduced.”

More from Yahoo Finance

Former Goldman Sachs president says our economic situation 'will end in tears'

Taking the long view is one of those easier-said-than-done propositions, right? For instance, while you might think that the economy has pretty much recovered from the Great Recession of 2008, one prominent financier thinks the problems that caused that big meltdown have been papered over and will come back to hurt us again. And then there’s the little issue of China’s economy surpassing ours soon. John Thornton, the former president of Goldman Sachs (GS), who likes to take the long view, says he’s “feeling uneasy” about the global economy right now and thinks we’re living on borrowed time. 

“After the events of 2008, really since then, the central banks either collectively or individually have tried to implement policies which would, in effect, buy time for individual governments to take the actions they should take to put their houses in order,” Thornton says.

Thornton made these comments speaking at a reception for his son, J.R. Thornton’s new book “Beautiful Country,” hosted at Yahoo in New York City on April 21.

And who knows what the long-term implications are of that?