The Distillery: Fed filibuster

Jotters swap theories about Ben Bernanke's taper delay and one delves into ANZ's Indonesian operations.

Federal Reserve chairman Ben Bernanke surprised just about everyone with his decision to keep printing money flat chat. While there are some theories floating around about why the Fed is forging ahead, none are particularly reassuring.

Also in Friday’s dirty shot from The Distillery, ANZ Bank’s Indonesian operations get a closer look from a visiting business scribe, while Billabong’s deal with the Centerbridge-Oaktree will please its utterly exhausted shareholder base.

But first, The Australian Financial Review’s Philip Baker argues that Bernanke risks the Fed’s reputation by not opting for tapering yet in any capacity.

“A token $US5 billion reduction would have kept everyone happy and the Fed would have been able to say it stuck to its word. Instead the world’s most powerful central bank has exposed the real problem of quantitative easing – it’s not working that well.”

Fairfax’s Malcolm Maiden says the US1.5 cents jump in the Australian dollar underlines just how surprised the market was with the Fed’s call…

“…and there are several theories about what happened. One is that Fed chairman Ben Bernanke has become a ‘lame duck’ as his retirement approaches. Another is that he has played the markets like a Stradivarius, creating a market rally out of nothing. A third, the most popular, is that the Fed underestimated the impact of its messages that the taper was coming, and now needs time to assess how much collateral damage it has caused.”

The Australian’s John Durie talks to ANZ Bank’s Indonesian boss Joseph Abraham about the company’s footprint in Australia’s closest big-time neighbour as part of the columnist’s reports from up north.

“ANZ, like all the Australian banks, has had a representative office in the country for more than three decades, but expanded in 1993 after taking over Westpac’s operations in Indonesia when that bank stepped back. The local Westpac people are quick to note at least it didn’t withdraw altogether, like ANZ did when it sold Grindlays and departed the Middle East and India. In contrast to the Commonwealth Bank, which runs a network of 91 branches with 2500 staff and 30 life offices, ANZ’s focus is more on its corporate business. Resources, infrastructure and agriculture are home turf for ANZ.”

And in other company news, The Australian’s Richard Gluyas says the Billabong International’s Centerbridge/Oaktree offer was superior to the Altamont proposal that originally won over the board.

“Altamont effectively pulled Billabong out of a death spiral, but Centrebridge/Oaktree will give it some much-needed spine, with $180 million of equity set to flow in. The fact that Billabong has even reached this stage is remarkable, given the struggle to drag a single serious bidder to the starting line. The magic ingredient was competitive tension, which came in the form of Centrebridge/Oaktree’s arrival in the distressed debt market in July. Suddenly, with the new players’ track record in loan-to-own corporate restructuring, there was an injection of real urgency: in contrast to the fluffing about of Altamont and the departed Sycamore consortium.”

The Australian’s Chris Merritt says the business community will be happy with the Productivity Commission’s decision to give some attention to class action and litigation funders.

And finally, The Australian’s economics correspondent Adam Creighton writes on the growing number of wealthy Australians throwing what money they can into housing as bank deposit returns dwindle and borrowing rates linger at tempting levels.