Love was in the air this week — and we’re not just talking about Valentine’s Day. Businesses and investors also had their hearts aflutter.
American Airlines and US Airways announced wedding plans. The boards of both carriers approved a merger. And Warren Buffett’s Berkshire Hathaway said it is starting up a relationship with Heinz. Buffet’s company will help buy Heinz for$23 billion in cash.
“There’s almost a perfect combination of factors leading to a kind of dealmaking right now,” says FT Alphaville’s Cardiff Garcia. “Interest rates are low, expected to remain low. It’s cheap to borrow money. The companies doing the buying have a lot of cash on their balance sheets.”
Congress, meanwhile, is still having marital difficulties. With the massive spending cuts known as “the sequester” just two weeks away, Republicans and Democrats are no closer to seeing eye to eye.
“I’ve lived in this town long enough to know that the government moves very slow,” says Nela Richardson of Bloomberg Government. “Until it doesn’t. And then it moves very quickly.”
In Richardson’s estimation the effects of sequestration — a reduction in GDP, 750,000 jobs cut — “That’s enough to get people’s attention and actually make them get back to work and do this deal.”
In his State of the Union address on Tuesday, President Obama offered his own ideas on how to improve another long-term relationship — the economy. He talked about deficit reduction and balancing the budget, while offering a long list of government programs he hopes to grow over the next four years.
There has to be some give and take for the relationship to work though, warns Richardson. Americans can’t want everything wihtout wanting to pay for anything.
“Having your cake and eating it too is a perfectly fine state of being,” she says, “until you run out of cake.”
And we asked them to give us some suggestions for some weekend reading:
- An in-depth look at the effects of the oil boom in North Dakota — both good and bad.
- The FT’s Lucy Kellaway on the gambling addictions of London traders.
- A visit to Burning Man … with dad.
And Richardson chose:
- For those still on the fence about owning versus buying, some help from Bloomberg Businessweek.
- The next big thing Washington, D.C. will be buzzing about.
- A fascinating, and deeply philosophical, treatment of race and ethnicity. (You may need to have coffee first for this one.)
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