Review: Stop blaming the world’s central bankers

April 8, 2016

That’s the message of a new book, “The End of Alchemy”, from the former governor of the Bank of England, Mervyn King. It doesn’t completely wash. Low rates bear much responsibility for seeding the financial crisis - and it was central banks, after all, that set them.

Chancellor: Lessons from the Mississippi Bubble

March 23, 2016

This year marks the 300th anniversary of the start of John Law’s ambitious, and ultimately failed, economic experiment. Much like today’s central bankers, Law thought printing banknotes and forcing interest rates lower would solve all of France’s problems. He was so very wrong.

Chancellor: Buffett’s U.S. optimism long-term valid

March 1, 2016

In his annual shareholder missive, the Oracle of Omaha rejects arguments, by Larry Summers and others, that America has entered a period of “secular stagnation.” However, the Berkshire Hathaway chairman’s optimism looks misplaced for now thanks to distortive monetary policies.

Banks’ hybrid hissy fit is no disaster

February 18, 2016

Fears that Deutsche Bank may stop coupons on hybrid debt took the bank to crisis. That will be seen as proof that hybrids are no match for real equity. Yet the mess was caused by vague regulators and lazy investors. Without these obstacles, hybrids can still play a role.

Chancellor: Negative rates, negative implications

February 12, 2016

The latest weapon brandished by central banks is supposed to boost economic growth and ward off deflation by punishing cash hoarders. In practice, this radical policy damages credit creation, fuels bubbles, threatens civic freedoms and spooks the living hell out of markets.

Dear Draghi: Time to buy bank bonds

February 12, 2016

Bank shares have slumped and bank bond yields are up. ECB chief Mario Draghi can stop the rout from damaging the economy by buying lenders’ debt. The moral hazard concerns are big, but manageable. Breakingviews imagines a memo from a bank CEO.

Fed stress-tests idea of negative interest rates

February 2, 2016

That’s part of the “severely adverse” scenario that big U.S. banks have to run this year to satisfy regulators. The ECB and now the Bank of Japan are giving it a try. The Fed has started pushing rates upward – but going negative is becoming a very plausible downturn assumption.

New Greek opposition leader may cause instability

January 11, 2016

The election of Mitsotakis, a liberal reformer, as leader of the centre-right New Democracy party means PM Tsipras now faces a credible opponent. While this is in Greece’s long-term interests, it raises the risk of short-term clashes between Athens and its euro zone creditors.

Giants of central banking will be cut down to size

December 30, 2015

The limited power of the Draghis and Yellens of the world is evident. They can’t conjure up inflation and the market impact of unorthodox monetary policies has waned. Rate-setters did their bit to support the global economy. It’s time fiscal and wage policies did more work.

Euro banks’ post-Fed good cheer looks short-lived

December 17, 2015

European bank shares are up after the U.S. rate rise, aided by hints that future increases will be gradual. But EU rates won’t follow anytime soon, and $9.8 trln of non-U.S. dollar credit could get harder to service. Nor is the pace of future Fed hikes set in stone.