Junk bonds: Easy money has been kind to risky companies and their lenders. Firms like Clearwire Communications and HCA found critical funding in 2010, while investors in their bonds have enjoyed stellar double-digit returns, with the Bank of America Merrill Lynch high yield index returning nearly 14 per cent by early December. So much money sloshing around the global financial system, however, also makes for outsized distortions and in 2011 could trigger a junk bond correction.

Trash bash

Business Standard

Finance directors may start giving finance ministers a run for their money. The woeful state of national balance sheets will push risk-averse investors into highly rated companies like Microsoft and other cash-rich issuers best positioned to withstand uncertain times. Corporate bonds could prove more attractive than even top-quality sovereigns.

Sovereignty

Four years ago, General Electric lived up to its reputation as a bellwether for the global economy. The maker of gas turbines and jet engines issued a profit warning that foreshadowed the financial calamity ahead. On Friday, the US conglomerate, which generates half of its sales abroad, revealed it merely fell five per cent short of revenue estimates in the fourth quarter of last year. That&rsquo;s hardly ideal for investors still pining for the $41 apiece GE shares once fetched (they&rsquo;re at $19 on Monday), but it should be reassuring for those worried about a retrenchment of global growth.

Armageddon, not

The European Central Bank&rsquo;s cheap money and the siren call of high yields are luring global investors into the European junk bond market. High-yield bond issuance is up nearly 70 per cent so far this year over the same period of 2011, according to Thomson Reuters data. It may seem odd given the uncertain future for the euro zone, but the ECB&rsquo;s move to flood the banking system with three-year loans has given investors confidence that a financial meltdown can be averted. The Federal Reserve&rsquo;s commitment to near-free funds is encouraging US investors to look to European debt for juicer returns. Some 63 per cent of high yield bonds sold by European companies in January were issued in dollars, according to Morgan Stanley.

Sailing into a storm

Sticking it to Uncle Sam should attract harsh punishment. But, the fines Citigroup and Bank of America (BofA) will pay &mdash; $158 million and $1 billion, respectively &mdash; to settle claims they defrauded the US government look easily handled. Citi has even admitted fraud in its dealings over home loan insurance. A ban from participating in the government&rsquo;s mortgage insurance programs would be a better deterrent. But, unfortunately, Washington needs big banks too much.

Too big to punish

Warren Buffett says he has at last identified someone to replace him when he&rsquo;s gone. Anointing a successor at Berkshire Hathaway is an important step in what will be one of the most significant corporate transitions since the torch was passed at Apple. Yet in his annual letter published on Saturday, Buffett demurred on saying exactly who. Given recent events, his &ldquo;trust me&rdquo; plan doesn&rsquo;t fly.

Name game

JPMorgan Chief Executive Jamie Dimon loves citing how much media companies spend on pay to deflect criticism of banker compensation. Now The New York Times has presented him with a golden opportunity to bring the topic up again when he hosts his firm&rsquo;s Investor Day on Tuesday. The Gray Lady is paying former boss Janet Robinson $4.5 million this year for a part-time consultancy gig. That looks egregious enough to raise eyebrows even on Wall Street.

Pay Porn

Sometimes, the world of finance is based on guesswork. Investigations into the alleged manipulation of the London interbank offered rate &mdash; known as Libor &mdash; have laid bare a flaw in the benchmark interest rate: banks can essentially make it up. That&rsquo;s unsettling, since their submissions help shape the value of some $360 trillion of loans and derivatives. A better approach would be to base Libor on real transactions.

Finger in the air

The Federal Reserve is one of the most powerful institutions in the world.

Time to govern

Golf and business often mix well. But Augusta National Golf Club, which hosts the famed Masters tournament, staunchly remains an all-boys club. That conflicts with the diversity aims of tournament sponsor IBM. The difficulty is particularly noticeable this year, given the gender of the technology company&rsquo;s new chief executive, Virginia Rometty.

Not only for Masters?

If General Electric were a superhero, GE Capital would be its kryptonite. The industrial giant has taken extraordinary measures to reduce its subsidiary&rsquo;s toxicity, but Moody&rsquo;s credit rating downgrades on Tuesday are a reminder that the conglomerate needs to wrap its finance arm in the only thing that will neutralise the threat of a market-run: deposits.

Lead casing

All is not lost for Vikram Pandit. While a majority of Citigroup shareholders voted against the chief executive&rsquo;s pay package at this week&rsquo;s annual meeting, there&rsquo;s still a way to incentivise him while also benefiting investors. General Electric, which faced similar unrest over pay last year, offers a good starting point.

Pay it forward

We need to talk about Deloitte. The Big Four accounting firm has popped up in yet another financial scandal. This time its consultants allegedly abetted Standard Chartered&rsquo;s financial transactions with Iran. Added to reports of shoddy work elsewhere, including its involvement in HSBC&rsquo;s money laundering mishap, it&rsquo;s hard to avoid the impression that something&rsquo;s not right at Deloitte.

Number crunching

One of the 20th century&rsquo;s most influential American publishers, Arthur Ochs Sulzberger, died on Saturday. He was 86. The grandson of Adolph S Ochs who bought The New York Times more than a century ago, Sulzberger transformed what had been a struggling paper into a media empire. Upheaval in the news business, however, has forced his son Arthur Sulzberger, Jr to dismantle it. The elder Sulzberger&rsquo;s gravitas will be missed as his heir struggles to keep the paper a family affair.

Generational shift

The US central bank is running out of taboos to break. This week, Boston Federal Reserve President Eric Rosengren admitted that the latest quantitative easing broadside would debase the dollar. His counterpart in Minneapolis, Narayana Kocherlakota, traditionally on the hawkish side, said that an above-target inflation rate of 2.25 per cent would be tolerable.

No sacred cows

Money market funds are creating a new muddle in US regulation. The Securities and Exchange Commission couldn&rsquo;t agree this week to invite comment on possible reforms. Other watchdogs may take on the $2.4-trillion industry. But the episode shows America&rsquo;s system of regulation in an unflattering light.

Agnes T Crane