Austerity in Doubt, Some MF Global Clients Wait for Dollar One, Buffett Says ‘Peanuts’: Roundup

Austerity plans will be reexamined after elections in France and Greece, though one country is more likely to adopt radical change. Not all MF Global clients were created equal when it comes to recovering funds from the failed derivatives broker. Buffett says his investment in Goldman Sachs was just peanuts. Read about it in today’s Wall Street roundup.

Change of tide? François Hollande defeated Nicolas Sarkozy, as expected, in a runoff election, installing as French president a socialist party leader who has promised to revisit austerity plans negotiated between Mr. Sarkozy and German Chancellor Angela Merkel. In Greece, voters shifted support away from political mainstays to extreme parties, placing the future of austerity in that country in question. The “bitter reality” of the European economic situation may preclude Mr. Hollande from straying too far from his predecessor’s path.

In Greece, on the other hand, the election results increase chances that the country will exit the euro to 50-75 percent, according to two Citigroup economists, though they say that a broad break-up of the monetary union is unlikely.

Zero Hedge has your guide to Europe for Dummies.

Preferred customers: Some MF Global clients have recovered holdings from the failed broker, while others have yet to see a dollar, the Wall Street Journal reports. The difference: where the clients invested their money. Funds invested in the U.S. have been at repaid 72 percent, but regulatory quirks leave those with money invested overseas waiting to recover funds.

Seeking allies: Reuters digs into the state of affairs at Ally Financial, “one of the least scrutinized bailouts of the financial crisis,” and hears that mortgage-lending unit ResCap may be placed in bankruptcy within the next week. Ally, meanwhile, has been the victim of competing interests internally and lax government oversight. With indications that General Motors and Chrysler are less likely to auto loans to Ally, the Treasury’s 74 percent stake in the company could lose value.

Buffett bailouts: Warren Buffett said his investments in Goldman Sachs and General Electric were of little importance to Berkshire Hathaway when compared to longer-term stock holdings and company acquisitions. Buffett invested a combined $8 billion in the two companies in the depths of the financial crisis, but profits from those deals are just “peanuts,” according to Bloomberg. “They’re not remotely as important as buying Coca-Cola stock,” Buffett said at Berkshire’s annual meeting on Saturday. “The values in Berkshire that have been accumulated by some special security transaction are really just peanuts compared to buying businesses like Geico, or Iscar or BNSF.”

Public equity: The Washington Post gains access to the Carlyle Group dealmakers behind the 2005 takeover of a beleaguered auto parts company, and finds unsentimental capitalists wielding “a blunt instrument to reorder unproductive businesses and create vast wealth.” Which is a mighty good thing, when it works.

Hiring rebound: New job openings in the City of London rose 9 percent in April from the month prior, as liquidity from the European Central Bank drove staffing in fixed income units, and lenders continued to take on compliance experts in adapting to new regulations. Openings are still down 27 percent from the year before, according to the Financial Times.

Bang the drum slowly: Management at embattled Dewey & LeBouef acknowledged in a Friday afternoon memo that the firm may close and employees may lose their jobs, Dealbook reports. They might have guessed something was up when the firm closed the mailroom and copy center.


  Austerity in Doubt, Some MF Global Clients Wait for Dollar One, Buffett Says ‘Peanuts’: Roundup