20120731-065519.jpgGood morning

The headlines:

  1. Russians complain about the iPhone price tag.

    Link: $1,000 be OTT.

    Apple’s pricing in emerging economies is a quite-the-unfortunate function of their market structures.

    In the US, buying phones on contract is both standard and sustainable. Because, well, how comfortable are the first world countries with consumer credit? And how competitive are the cellular service providers?

    In the emerging world, no such luck. Hence the $200 (US) versus $1,000 (Russia) story. Tim Cook’s argument is that the emerging market folk are just as committed to quality over price.

    I think he needs to come to South Africa and see the commitment to Blackberry…

    Could he be too naive?

  2. Manchester United seeks $333 million in IPO.

    Link: bemusement.

    The raising of money to pay down debt… The Man U folk are looking to list 16.7 million shares for between $16 and $20 each.

    Currently, the club appears to be making a profit of around 38 million pounds a year. I wonder if that’s before or after interest? Because the long term debt burden sits at around 417 million pounds. My personal vote is that the club is currently making profit because interest rates today are so low.

    When/if that changes…

  3. Berkshire bank sues.

    Link: no relation to Hathaway.

    Suing Barclays and Citibank and all the rest (about 21 banks) over the Libor rigging and the paying too much interest.

    I think that everyone needs to calm down. “Rigging” can be demonstrated by dirty emails and comparisons to credit-default swap spreads*. Suing needs to demonstrate that the rigging resulted in loss. That is not so easy. Mainly because the current measurement of Libor disregards outliers; a measurement that was put in place to prevent individuals from being able to influence the rate.

    Which leaves you trying to prove collusion between the banks, because that’s where the real rate rigging will lie.

    And that, frankly, sounds like more of a headache than it’s worth.

    *Credit-default swaps measure likelihood of default (credit risk). The interest rate you can get will be linked to your credit risk (higher credit risk = higher interest rate). When your credit risk is higher than your submitted interest rate: then either your lender is an idiot, or you’re an idiot, or you’re telling porkie pies.

  4. After much debating, it seems that the Libor rigging can be prosecuted criminally.

    Link: and how long exactly did it take to reach that conclusion?

    Well done, the Serious Fraud Office.

  5. India blacks out.

    Link: the infrastructure crisis.

    Seven Indian states were without power yesterday as the national grid gave out.

    Mr Singh is looking for around $400 billion in investment to fix up India’s power.

    Sometimes, we forget that infrastructure is the great delineator between developing and developed. Companies cannot run indefinitely without electricity, water, rail, roads, and telephone lines. In many ways, it’s the reason we need to pay tax.

    India needs to do something about that. The estimate is that the bad electricity about reduces GDP by around 1.2% every year. It doesn’t sound like much – until you do the math… GDP in 2011 was $1.85 trillion. 1.2% of that?!

That’s all for now.

Have a good day.