Major Tom is on an aerospace oddity but risks crashing to earth in America An appearance before a sceptical congressional committee trying to understand the concept of EADS, with its French, German and Spanish influences, plus a merger with BAE, will test the diplomatic skills of Enders and King to breaking point. Both men pride themselves on their no nonsense approach to life. For the Americans, dealing with a British defence contractor is one thing. But one that suddenly becomes a European defence contractor (EADS will have 60pc of the merged entity and its chief executive) becomes a very different proposition. There'll be confident talk of "ringfences" to preserve America's national interests within the merged entity but Enders and King may as well be talking picket fences as far as some in Washington and the Pentagon are concerned. America may feel that the global security situation warrants reducing its need to trust others, rather than increasing that need. It will take a diplomatic coup of near historic proportions to persuade the Americans to throw their security lot in with the French, who are eyeing this deal as the way for EADS to access the US market. The risk to BAE's existing US business is significant. To maximise the value of that operation, shareholders may want to know why BAE hasn't considered demerging it, leaving a European rump to merge with EADS. The BAE management has considered the idea of approaching Rolls-Royce for a deal but could probably hear the sniggers emanating from Buckingham Gate before they picked up the phone in their Pall Mall HQ so didn't bother. Anyway, BAE shareholders will be looking on trying to contain their bewilderment. In essence BAE has left it too late and is merging from a position of weakness. A dozen years ago the 60:40 share split in favour of EADS would probably have been the other way round. King has a considerable long shot to deliver. Ground control to Major Tom, your circuit's dead, there's something wrong. Can you hear me Major Tom? Can you ... Direct Line sale puts RBS in the spotlight Direct Line is finally coming to the stockmarket. The insurer is surely the most successful business RBS has ever owned. Being forced to sell is symbolic of the lender's demise. The timing could not be worse for the vendor, which, of course, is us, the taxpayers who bailed out RBS in 2008. George Osborne is not getting a great price, at least not for this first tranche of shares he's selling in the insurer. Interestingly, the economist at RBS who signed off on Peter Wood's original idea back in the 1980s was one Alex Salmond - he of SNP fame. I wonder if he's enjoying a wry smile this morning. Buyers of the shares will force the offer price to rock bottom. So is it a good time to buy? Ignoring the potentially material fact that Direct Line's IT is being run by the glitch-prone RBS, a lot depends on the richness of Direct Line's dividend flows. Its best years, as far as growth is concerned, are behind it. Its return on capital is half that of rivals such as private equity-owned Esure - run by none other than Wood himself. Selling Direct Line also throws into sharp perspective the issue of what becomes of RBS? The bank will one day have to sell itself to a sceptical market and the Treasury, through UK Financial Investments, should be prodding Stephen Hester to clarify what the RBS unique selling point will be so taxpayers get a better deal than on the sale of Hester's Direct Line subsidiary.