Letter from the Editor

As recovery takes hold in the US, even beleaguered carmakers are beginning to regain their va-va-voom. Ford, the only large US automaker to avoid bankruptcy this year, registered its first quarterly profit since 2005. The salvaged GM and Chrysler are getting back into gear too. After seven months of politicised bickering the former decided to retain its European operations while the latter introduced ambitious “stretch” targets to reach solid profitability by 2014. But BMW, whose luxury brand has not benefited from scrappage schemes, is still struggling to get up to speed.

While some investors were looking at cars, Warren Buffett was playing with trains. Berkshire Hathaway’s $44bn deal to buy the part of Burlington Northern Sante Fe that it did not already own is a big bet on US economic recovery. His wager may pay off as manufacturing in the US, UK, eurozone and China has picked up and there are signs that US companies may begin rehiring soon. But the Indian central bank governor does not seem to be convinced of the dollar’s enduring strength as he opted to swap $6.7bn of the currency for 200 tonnes of the IMF’s gold. Other central banks were busy devising exit strategies and anticipating rate rises, but the Bank of England was forced to inject a further £25bn into the faltering UK economy.

At the same time, the UK government was also busy, pumping £37bn more into Royal Bank of Scotland and Lloyds Banking Group as Brussels continued to cut state-supported banks down to size. Barclays decided to get there first by untangling its retail and investment banking divisions. The US government thought better of throwing good money after bad in CIT’s $70bn bankruptcy.

Carmakers may be doing better, but bankers will be buying fewer shiny new speedsters this year.

John Casey, Lex publisher

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