Jan 17, 2012 11:04 UTC

Stalling German motor is Europe’s other difficulty

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By Ian Campbell
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

There’s no downgrading Germany. Standard and Poor’s spared the country in its Friday attack on European sovereigns. No wonder – the German fiscal deficit came in at just 1 percent of GDP in 2011. But Germany is a big problem in another way. Its motor has just stalled again. The euro zone needs growth. Germany, its power plant, can’t even propel itself.

Jan 12, 2012 11:24 UTC

Predictions 2012: Upside down and inside out

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By Robert Cole

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Planet finance has a propensity to turn itself upside down and inside out. It’s up to its old tricks again. A new collection of commentaries from Breakingviews sets the financial agenda for the next 12 months.

Jan 11, 2012 23:31 UTC

Double-dipping Twinkies tarnish bankruptcy process

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By Agnes T. Crane

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Wednesday marked a day of mourning for American junk food aficionados – and not for the first time. Hostess Brands, maker of the cream-filled bright yellow Twinkie snack, filed for Chapter 11 bankruptcy just three years after emerging from the court’s protection. That’s not just a kick in the gullet for Ripplewood Holdings, the private equity owner that sank $40 million into the baker last year. The company’s failure leaves a greasy stain on the American bankruptcy process itself.

COMMENT

Chapter 11 is for creditors. It’s intended to be used when continuing the company will return more to existing creditors than an immediate liquidation (think 20 cents on the dollar instead of 5 cents on the dollar). It is not supposed to ensure the long-term viability of a company. It merely gives creditors a chance to come together a say, “after discounting the 20 cents/dollar forecasted return by the risk that the reorganized company will fail again, the expected return is still higher than the liquidation value of the company, so keep the company in business.”

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Jan 11, 2012 18:19 UTC

Ron Paul’s staying power threatens to alter debate

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By Daniel Indiviglio and Martin Hutchinson

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Mitt Romney won the New Hampshire primary but Ron Paul’s showing could have as big an effect on the race. After finishing third in Iowa, the Texas Republican placed second in the Granite State, securing nearly one in four votes. That keeps him in the hunt to challenge Romney for now and could inspire him to make a third-party run later. Either way, the longer Paul sticks around, the more the national debate is likely to shift on important economic issues.

COMMENT

Romney CAN NOT BEAT OBAMA … and the gangster GOP machine keeps trying to ignore him … WHY ? Paul can get many independents = and democrats to vote for him … Romney CAN NOT ! … Fox news is lousey and won’t even show ron Paul in the running … yet they show the bottom bunch of the GOP loosers … ????

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Dec 22, 2011 10:52 UTC

Bond market will grow at banks’ expense in 2012

By Peter Thal Larsen
The author is a Reuters Breakingviews columnist. The opinions expressed are his own

Can the bond market take the place of banks? That question will be partially answered in 2012, as borrowers seek to bypass strained lenders in search of cheaper sources of credit. For big companies, tougher regulation of banks has accelerated a long-term shift to seeking funds directly from investors. But small companies and consumers won’t find it so easy to make the switch.

Dec 20, 2011 21:07 UTC

Global bank capital rules add “G-Sifi envy” to mix

By Rob Cox and Peter Thal Larsen

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

The G20’s decision to designate 29 banks as global systemically important financial institutions will introduce a new competitive dynamic to international finance in 2012: “G-Sifi envy.” Banks that made the list last month will be required to hold more capital. But they will also benefit from being codified as banks that are effectively too big to fail. That puts smaller rivals at a disadvantage. It’s a race to the top, but not in the way regulators envisaged.

Dec 15, 2011 10:27 UTC

Sino-Forest’s debt games are bad for creditors

By Wei Gu
The author is a Reuters Breakingviews columnist. The opinions expressed are her own

Sino-Forest has sent a chilling message to its bondholders. The Chinese timber company, embroiled in an accounting scandal, has decided not to pay $10 million of interest, even though it purports to have more than enough cash to do so. That leaves it in breach of its debt covenants, and heading towards a default on its bonds. Why it has done this is a puzzle.

Dec 13, 2011 23:00 UTC

Morgan Stanley housecleaning will please Basel

By Agnes T. Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Morgan Stanley chief James Gorman’s settlement with bond insurer MBIA puts a big chunk of the financial crisis legacy behind the firm. At $1.8 billion, it doesn’t come cheap. But it puts the investment bank on the right track by boosting regulatory capital and tidying up a very messy second year for Gorman.

Dec 9, 2011 20:07 UTC

UK’s euro isolation may backfire on City of London

By Peter Thal Larsen
The author is a Retuers Breakingviews columnist. The opinions expressed are his own.

The City of London may regret David Cameron’s euro isolation. Britain’s prime minister opted out of a pan-European deal to save the euro zone after failing to secure special protection for the UK financial services industry. But his stand leaves Britain’s dominant economic sector exposed – both in Europe and at home.

COMMENT

The British were never stupid enough to buy into the euro franc. Why would the collapse of this currency be to Britain’s detriment? How does delaying the inevitable by throwing away billions in British cash do the British people any good?

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Dec 8, 2011 12:11 UTC
Edward Hadas

Investors may decide to let the euro live

By Edward Hadas
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Speculators can make a fortune by making the highly likely become inevitable. In 1992, George Soros made one billion pounds by pushing the UK out of a fixed exchange rate it was not willing to maintain. Investors betting that the euro will break up may want to repeat the Soros accomplishment.

COMMENT

Investors – how kind of you, thank you for ‘allowing’ the Euro to live.

re. Soros in 1992. A totally different situation, Sterling was thrown out of ERM because it was not economically reasonable level to be fixed to the DEM.

Those who bet against the Euro will lose (in the medium term). Make no mistake.

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