- Credit Suisse pleads guilty to tax evasion
Credit Suisse has pleaded guilty to the US prosecutor for helping US citizens to hide their money to avoid paying tax. The fine of over $2.5bn dollars far exceeds previous similar fines such as for UBS in 2009. The guilty plea however means that Credit Suisse will not have its license revoked in the US, which would have had serious implications for the banks standing. Investors and traders remain confident in Credit Suisse ability to continue and the CEO of Goldman Sachs has said he will continue to do business with the Swiss Bank. The move to prosecute Credit Suisse marks a shift in the US Justice Department’s policy since the Arthur Anderson scandal of 2002. The US Attorney General, Eric Holder, had been accused of being too lenient on Wall Street, however this move demonstrates that the US is serious about dealing with misconduct among these major banks.
- US to charge Chinese with cyber spying
In a largely symbolic move, the US Attorney General has led prosecutors in filing criminal charges against five officers in the Chinese PLA. The officers are accused of hacking the computer systems of five US companies in order to steal their secrets and provide the stolen information to Chinese companies for commercial advantage. China has rebuked the move, saying that the US is well known for having tapped foreign companies and government officials. The Edward Snowden leaks accused the US of having committed espionage against several Chinese companies. Eric Holder claims that the difference between the Chinese action and the US action is that the US never used the information taken to provide commercial benefits for domestic companies. China will not hand the officers over the US, however the move may make it difficult for them to travel as they could potentially be arrested in a foreign country and extradited to the US.
- Thai army steps in to impose martial law
The Thai army has declared martial law and soldiers have been deployed on streets of Bangkok. Thailand has been suffering from a recent escalation in political confrontation. The divide between the traditional conservative elite and the supporters of populist billionaire and politician Thaksin Shinawatra has been ongoing for over eight years now. On May 7th, Shinawatra’s sister, Yinggluk, was ousted as PM and her government toppled by the courts over an alleged abuse of power. Elections are scheduled for the 20th of July. Investors reacted to the move by the army with a drop in the value of the Thai Bhat against the dollar of 0.5%. The political instability in the country, which relies heavily on manufacturing and tourism, is likely to be damaging for the economy.
- AT&T/DirecTV: T for two
AT&T has shaken up the US telecoms industry with the purchase of DirecTV. In a move that is designed to give AT&T a foothold in all the major distribution methods of television in the US: broadband, satellite and wireless. Lex believes that the benefits of the move will be passed on to the consumer as the new giant will be able to use its position to gain leverage from studios that create programs. The argument against is that with AT&T and rival Comcast having both made major acquisitions of smaller rivals, the chance of prices rising for customers in the US is high and the two companies will have a cartel/monopoly. The deal is yet to pass regulators, who are looking for assurances that AT&T will not attempt to bully smaller companies such as Netflix out of the market.
- UK shale gas: heating up
The shale gas believed to be underground in the UK has led to a series of acquisitions. Estimates of the amount of shale gas under the North of England have driven the price of land in suspected areas up to extremely high levels. The price of an acre of land in a suspected area of the UK is now the same as it was in a proven, gas producing area of the US in the period 2008-2010. Lex believes that the estimates of the amount of gas are too high, however even if this is true, it could still potentially be greater than the total amount produced from the North Sea since the discovery in 1973. This potential windfall would be massive for the UK, and have implications similar to the effect of shale gas in the US.
Chris Holton 