Daily News Roundup 2012: Tuesday 15 May

Good morning

The headlines:

1. California Governor Jerry Brown suggests a 4 day work week to curb the deficit. Link: Would you take longer weekends for less pay? But yes - shorter work weeks, and about $8.3 billion in other cuts (mostly in welfare and medical aid to the poor). Apparently, trimming the work week would result in a 5% saving across the board (for a 5% pay cut - hell yes would I take a longer weekend). At the same time, Brown is trying to push through a temporary tax increase - California lost a million jobs in the post-2007 recession, which reduced tax revenues by about a quarter, so now the revenue situation needs to be addressed. From what I understand, most of this is now sitting on a ballot sheet for November. What are the chances?
2. Yahoo changes its CEO because he lied on his CV. Link: You're only finding out now? Firstly - where was the due diligence when this was first going down? Oh Yahoo - such a fail. However, that said, Scott Thomson was a Paypal exec (where was Paypal's due diligence?!) and a VISA exec (where was Visa's due diligence?!): the issue is that he has a bachelors from Stonehill College in accounting, not computer science - which is sometimes correctly designated in filings, and sometimes not. But the point is - degrees in computer science from 30 years ago? Well, they wouldn't be worth much now given that 30/40 years ago, the kids were still playing games in black and green. Surely the degree is no longer relevant - it's the experience that's important? Whatevs - the guy from Third Point, Daniel Loeb (an "activist investor") is responsible for flagging the issue and forcing the overhaul. He's not happy with management. 
3. Moody's is delaying any downgrade decisions. Until they've had a chance to assess the impact of JPM's trading losses, and the potential impact of the breakup in the Eurozone. Yes - because what we need are ratings agencies that lower ratings after the fact. I understand that rating downgrades could worsen the situation for a bank unnecessarily - but if the downgrade is warranted and you're going to do it anyway - don't wimp out. Link: Time: not of the essence.
4. JP Morgan's CIO chief retires. Farewell Ina Drew. Hello Matt Zames. It was inevitable really. Link: New guy plans a shake-up.
5. Jamie Dimon's position on the NY Fed is now up for debate. Link: Ye Olde Conflict of Interest. The question: is the Central Bank independent enough if it has members of the banking institutions it's meant to be regulating sitting on its board? But I think that there's always a conflict of interest. If it's not open, it'll be behind closed doors. Someone will be invited to a golf course, someone will get a bottle of French Claret, someone will have a little late night entertainment on the house. Short of removing the Fed altogether, you can't avoid that. So why debate it? It's like complaining that the poor are poor, or that humans don't have wings. Either ride the wave, or move to Singapore. Where the Facebook guy went.
6. The Greek Euro Exit debate goes public. Link: But hasn't it been public for some time though? Honestly, I think that Greece will leave. It'll be more painful than austerity - but the Greek people have too strong a sense of entitlement. All I read on Bloomberg are comments on articles written by the overly-arrogant anti-austerians, who make big comments about hidden oil reserves in the Aegean that the world wants to steal, and German occupation conspiracy theories, and "Greece invented democracy and it'll teach the world a new lesson". I say - let Greece burn itself on the hyperinflation stove. Let it burn.
7. Obama ad takes a knock at Mitt Romney's Private Equity past. Nothing like a TV ad interviewing steel workers that lost their jobs when Bain Capital (Mitt Romney was a co-founder of the firm) took over their steel plant. I want to use the phrase "cheap shot". Link: Politics is all about framing the issue..
8. Hollande has awkward election promise moment as corporate France prepares to start firing people. Link: You should phrase your promises more carefully, Monsieur. French companies from Peugeot to Air France-KLM are planning to restructure (euphemistic term for "downsize") in reaction to the economic slowdown in France and across Europe. It seems that their restructuring plans were put on hold before the elections to avoid becoming a campaign target - but now it's on. Some people say that Hollande's strategy includes regulated caps on firings. I always question the logic of that type of intervention - it's not sustainable. The company will file for bankruptcy if it can't make the necessary changes. And then what? The government will take them over? But that's going to require financing, which brings you straight back to a higher deficit through increased borrowing. The clear answer is economic growth. Oh yes. I see it now. Persuade Europe to quantitatively ease in order to save face.
9. Facebook is planning on raising its price range of its IPO. From $28-$35 to $34-$38. The Steve Wozniak announcement yesterday is beginning to make sense ("I'd buy Facebook at any price!") - coincidence? I think not. Get some big Apple name to throw fuel on the fire. I see that they went for the IT programming guy, not the business mastermind (probably because he's, well, late - but that can't be helped). Link: They're high.

That's all for now.

Have a good day.