Euro crisis: A growing sense of urgency
“Do whatever is necessary.” That was the message to European leaders at last weekend’s International Monetary Fund meeting in Washington, D.C., said Howard Schneider in The Washington Post. Economic policy makers from around the world urged Europe to act swiftly to stem the eurozone’s widening debt crisis, which already threatens global growth. Unless the risk of a Greek default is dispelled soon, said U.S. Treasury Secretary Timothy Geithner, the world economy could face “cascading default, bank runs, and catastrophic risk.”
European leaders are debating whether to increase their nearly $600 billion bailout fund to “perhaps trillions of euros” to help Greece and other debt-laden countries like Italy and Spain, said Sudeep Reddy in The Wall Street Journal. But those talks remain at an early stage, and European officials say it could be at least six weeks before the markets see coordinated EU action, because of anti-bailout political pressures in countries like Germany. Over the next few weeks, the legislatures of all 17 eurozone countries must approve changes made to the bailout fund in July, when the EU agreed to a second Greek bailout. Some European officials fear that pushing for still bigger changes now might jeopardize the July agreement and push Greece closer to default.
Internet: Groupon’s revenue cut ahead of IPO
Groupon, the much-hyped ‘deal-of-the-day’ coupon site, has changed the way it reports revenues after receiving pushback from regulators, said Michael J. de la Merced in The New York Times. Under the accounting change, Groupon will remove from its reported income the money it later pays to its merchant partners, a move that “essentially halves its once-jaw-dropping revenue.” The company also announced that its chief operating officer is stepping down. The Securities and Exchange Commission has been raising questions about Groupon’s accounting methods ahead of a highly anticipated IPO this month.
Economy: The recession’s ‘lost generation’
New census figures suggest that today’s high unemployment will “haunt young people for at least another decade,” said Hope Yen in the Associated Press. The jobless rate of young Americans is the highest since World War II, and nearly one in five lives in poverty. These young people “will be scarred,” said Harvard economist Richard Freeman. “They will be called the ‘lost generation,’ in that their careers would not be the same way if we had avoided this economic disaster.”
Banking: UBS chief resigns over rogue-trading scandal
Oswald Grübel, CEO of Swiss bank UBS, resigned last weekend after a rogue trader in the bank’s London office allegedly lost $2.3 billion in unauthorized trades, said Deborah Ball in The Wall Street Journal. Calling himself “shocked” that such a large loss could have occurred, Grübel said he was “convinced it was in the best interest of UBS” to have a new leader. The “surprise resignation” comes at a difficult time for the Swiss bank, “which has lurched from one crisis to another” since 2008. Sergio Ermotti, Grübel’s interim replacement, may now shrink the investment banking side of the business.
Companies: SABMiller laps up Foster’s
SABMiller, the world’s second-largest beer company, gets “one of the last remaining prizes in international brewing” with its $10.2 billion takeover of Foster’s, said Peter Smith in the Financial Times. The iconic Australian brewer initially resisted SABMiller’s takeover efforts, leading to a sweetened purchase price. “It’s a massive result for Foster’s,” said one adviser to the brewer. The deal gives SABMiller about half of the beer-loving Australian market.