Breakingviews

Review: “House of Debt” diagnosis beats remedies

June 13, 2014

Atif Mian and Amir Sufi make a compelling case that excess consumer debt caused the U.S. Great Recession’s severity, but their mortgage bailout proposal would make matters worse. Their shared value mortgages might help, but old-fashioned tight money is a simpler and better way.

Obama student loan fix spares rod, spoils borrower

June 11, 2014

Extending repayment caps and debt forgiveness to older graduates gives too many high earners a break. Making everyone pay a flat percentage of income would be simpler, fairer – and cheaper for taxpayers. It could also deliver a valuable lesson in financial responsibility.

Fed fundamentalists deserve fresh listen

June 3, 2014

After years of expanding policy and remit, the U.S. central bank risks biting off more than it can chew. Hawkish economists persuasively argue this creates a risk of failure, which could undermine Fed independence. More important, the Fed has to stop giving cover to a lazy Congress.

HP would make lucrative Oracle target

October 3, 2011

Investors unimpressed by Hewlett-Packard's dysfunctional governance have sold off its shares, leaving the tech company vulnerable to a bid. And Larry Ellison's acquisitive Oracle is a credible potential suitor. At least financially, a deal would stack up. A Breakingviews analysis suggests that even paying a 40 percent premium, Oracle could reap a hefty return.

Debt triangles return to haunt Chinese firms

November 2, 2011

Despite robust sales and earnings, Chinese companies’ operating cash flow deteriorated sharply in the first half - suggesting many have increased credit to customers. If they can’t pay, a wave of ugly bad debt could hit companies and their lending banks.

European bond buyers: often wrong, never in doubt

By Edward Hadas
November 14, 2011

Bond market investors are a fickle lot. They were too complacent for years and now they may be too demanding – though their reformist zeal is welcomed by most. As a result, politicians and the ECB, which might have anticipated the risks, have more complex problems to deal with.

Governments are now world’s financial engineers

November 30, 2011

The crisis exposed the trouble with complex leverage games in the private sector. But Western authorities, undoubtedly abetted by bankers, have embraced high finance for everything from housing to Europe’s rescue fund. Such finagling, however, is harder in tough markets.

Loan hangover will cast pall over European buyouts

December 2, 2011

Banks have been caught out again. As in 2008, loans for European private equity deals have proved hard to resell or refinance in the bond market. Today’s backlog is smaller and the financial hit is modest. But new buyouts can expect less debt, higher rates and tougher terms.

from Hugo Dixon:

Euro Disziplin may store up trouble

By Hugo Dixon
December 5, 2011

The euro zone will probably get another short-term fix at its summit this week. Exactly how the fix will work isn’t clear.

ECB bazooka may be short on credibility ammo

December 6, 2011

Markets are rallying on hopes that the ECB will ramp up its purchases of euro zone government debt. To be successful, the intervention will need to put a ceiling on yields, and enjoy political support. The danger is that investors view ECB buying as another opportunity to sell.