The US Federal Reserve: End of an era as Greenspan leaves
New York: January 31, 2006, marks the end of a financial era as longtime chairman of the Federal Reserve, Alan Greenspan, retires after eighteen years at the helm of the United States' central bank. Analysts and historians concur that Greenspan's legacy, as the most powerful man in the financial universe, will profoundly affect investors worldwide for many years to come.

Meanwhile, incoming Federal Reserve chairman Ben Bernanke, steps into his new job as the Fed chief with decidedly mixed responses from the markets. Merrill Lynch has lowered its ranking of the financial sector from seventh to ninth among Standard & Poor's ten stock sectors, with concerns about Bernanke given as one reason for the downgrade. UBS is asking how the new Fed chairman can allay doubts about himself.

Analysts say that it is natural to be nervous about the transition, especially when someone has been immensely successful at this job, like Alan Greenspan has been. Even more so when people like Greenspan have been on the job for a long time.

Concerns about Bernanke range from the position that he will adopt with regard to short-term rate hikes to his academic background. But amongst the flurry of doubts being raised about his background and his abilities, there are some who also like to point out a crucial difference between him and the outgoing chairman. Greenspan is 79, while Bernanke is 52.

They feel that a generational difference might well see the new incumbent adopt a different approach to the needs of the market.
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Trial of Enron chiefs begins
Houston, USA: A landmark trial in the corporate world has begun four years after the energy group Enron crashed into bankruptcy from a stock-market value of US$68bn. The trial of its former chairman, Ken Lay, and his chief executive, Jeff Skilling, began with the slow process of jury selection.

Defence lawyers lost a pre-trial application to have the case moved from Houston, where, they argued, there is still raw anger at Enron. Lay and Skilling have denied forty-two charges relating to the orchestration of a complex accounting scandal. In effect they are accused of covering up the spiralling debts at America's seventh largest company even as they publicly hyped the company's performance and stock price.

The Justice Department's Enron task force, led by Sean Berkowitz, is expected to open its case today.

The Enron collapse left more than 5,000 people jobless, and thousands more former employees had their pension finances decimated. Lay and Skilling are not expected to claim ignorance of the main fraud alleged. Instead, they will insist there was nothing wrong at Enron apart from an isolated profit-skimming scam conducted by the finance director, Andy Fastow, and a few of his closest colleagues.

Fastow has pleaded guilty to limited fraud charges and agreed to testify against his former bosses in exchange for a maximum jail sentence of ten years. Fifteen other Enron executives have also struck plea-bargain deals.

Skilling, a former McKinsey management consultant, has already suggested that prosecutors are seeking to criminalise what was normal, if highly complex, business practice. He has blamed the company's collapse on a "liquidity crisis" precipitated by banks spooked at certain off-balance-sheet accounting treatments.
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HMV confirms takeover approach
London: HMV, the struggling music and books retailer, has confirmed that it has received a takeover approach. The offer is widely thought to be from Permira, a private equity firm.

Permira refused to confirm the move but market sources said that it may be considering an offer of about 200p, which would value the group at more than £800mn. HMV, which also owns Waterstone's, had earlier this month rocked the markets with a profits warning.
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Arcelor attacks Mittal Steel bid
Paris: Arcelor, the European steelmaker, yesterday launched its defence against Mittal Steel's hostile €18.6bn (£13bn) takeover bid attacking Mittal's track record, claiming that he had destroyed shareholder value and jobs and had a shoddy record on corporate governance and safety.

Guy Dollé, Arcelor chief executive, virtually ruled out any deal with Mittal now or in the future. "It is too late. It cannot be done after an offer of this kind," he said, criticising Lakshmi Mittal, the group's chairman, and his family for failing to enter prior talks about a friendly merger of the world's two biggest steelmakers.

Dollé conceded that Luxembourg-based Arcelor's supervisory board would have to consider an improved offer but said that he thought the €28.21 a share on the table was "light years" from his group's value.

Arcelor shares rose close to €30 as analysts estimated Mittal could win with a bid of €35 a share.

Arcelor executives gave little or no indication of how they intended to persuade all shareholders, including the 81% in free float, to maintain the group's independence. Meanwhile sources ruled out a merger with Germany's ThyssenKrupp or Anglo-Dutch company Corus under EU competition rules.

Mittal at his end has presented the merger as the creation of a European global champion and insists that he had no plans to axe Arcelor jobs or plants. Though he refused to raise his offer, he repeated his promise to keep the headquarters of the merged group in Luxembourg and honour social commitments. Arcelor employs almost 30,000 people in France.
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