Could the U.S.’ Rating Be Downgraded?

The U.S. could eventually lose its top AAA credit rating, according to Bill Gross, co-chief investment officer of Pacific Investment Management Co — the world’s biggest bond fund. The announcement spooked the financial markets on May 21 and could keep the dollar, stocks, and bonds under heavy selling pressure in the near future.

The U.S. isn’t the only country facing issues with its credit rating. Standard & Poor’s has lowered its outlook on Britain to “negative” from “stable,” threatening the nation’s top AAA rating. According to Gross, the recent market declines were due to investor fears the U.S. is “going the way of the UK — losing AAA rating which affects all financial assets and the dollar.”

Source: Reuters

Florida’s BankUnited in Largest Bank Failure of 2009

BankUnited — Florida’s biggest regional bank — was seized by regulators on May 21 and sold to a consortium of private equity firms in the largest bank failure so far in 2009. Under the deal, the buyers will inject $900 million of new capital and assume $12.7 billion in assets and $8.3 billion in deposits.

Source: New York Times

China Faces Uphill Struggle to Dislodge Dollar

China is on the offensive. Long a bystander in international economic affairs, Beijing has announced initiatives to remold the global financial system. The aim? To knock the U.S. dollar off its perch. But before China gets ahead of itself, there are a number of challenges that Beijing must overcome.

Source: Financial Times

Chinese Bidder for GM’s European Division

A Chinese carmaker has submitted an expression of interest in buying General Motor’s European division, Opel. The unknown Chinese company sent a letter a day after the May 20 deadline for bids, according to people close to the matter.

Source: Bloomberg

General Motors Bankrupt by End of Next Week

The Obama administration is preparing to send General Motors into bankruptcy as early as the end of next week under a plan that would give the automaker tens of billions of dollars more in public financing. The move comes as the White House prepares to lift struggling Chrysler from bankruptcy protection as soon as next week.

Source: Washington Post

GlaxoSmithKline in $1.9 Billion Tax Fight

British-based drug company GlaxoSmithKline is fighting U.S. authorities over $1.9 billion in back taxes, interest and penalties. GSK already had outlined the dispute in its annual report, but the IRS is now investigating a tax-savings technique known as “earnings stripping.” The practice involves a company reducing taxable profits in the U.S. by claiming excessive interest deductions on intercompany loans from units abroad.

Source: Reuters

Johnson & Johnson Forks out $970 million for Cancer Drug

Drugmaker Johnson & Johnson said it had agreed to acquire a cancer drug developer Cougar Biotechnology on May 21 for $970 million. The company said it had agreed to pay $43 a share — a 16% premium to Cougar’s May 21 closing price.

Source: New York Times

Citigroup Targets Tech for $1 Billion Savings

Financial giant Citigroup wants to slash its huge technology costs in an attempt to save more than $1 billion this year alone. The company declined to comment, but people close to the situation said the bank’s internal projections were higher than the $1 billion originally identified for technology savings in 2009.

Source: Financial Times

U.S. Carbon Emissions Legislation Approved

On May 21, a U.S. House of Representatives’ committee approved a bill to create the first national limit on greenhouse gas emissions. The legislation would create a cap-and-trade system. Over the next decades, power plants, oil refineries, and manufacturers would be required to obtain allowances for the pollution they emit. Those who need more or less could turn to a Wall-Street-like market in the allowances.

Source: Washington Post

British Airways Posts $595 Million Loss

British Airways — Europe’s third-largest airline — reported its first full-year loss since 2002 on May 22 and said it will slash capacity as the global recession hits air travel. The company announced an annual net loss of $595 million, compared with net profit of $1.1 billion a year earlier.

Source: Bloomberg

Profiting From Online Networks

Companies are working fast to figure out how to make money from the wealth of data they’re beginning to have about our online friendships. The relationships speak volumes about us as consumers and workers, and decoding the data can lead to profitable insights. Calculating the value of these relationships has become a defining challenge for businesses and individuals.

Source: BusinessWeek

Conversation of the Day: MBAs – Public Enemy No. 1?

Reader Craig Writes::”Another culprit is spreadsheets—they are a powerful tool for spinning fantasies. Just because something can be extrapolated doesn’t mean it can be achieved.”

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