Breakingviews

Bond turmoil signals new era of return-free risk

May 15, 2015

Forget the risk-free rate - investment safe havens are in short supply. Cash can be costly. Gold is a dollar proxy. And recent gyrations in the largest debt markets have undermined the concept of risk-free returns. When this last compass fails, investors are really at sea.

Elliott emits ray of pragmatism in Argentina feud

March 23, 2015

The hedge fund and a U.S. judge say Citi can process two of the country’s bond payments, despite a court-ordered block. It’s a concession to cover the bank’s back, not a broader shift in holdout creditors’ intractable spat with Argentina. But it may qualify as progress.

New Greek debt deal will mean more brinkmanship

January 27, 2015

Markets are relaxed that the anti-bail out Syriza government can cut a new deal with creditors. But pressure points lie ahead, with 6.6 bln euros due in the middle of the year. Getting over the hump will need quick progress on tackling Greece’s big, long-term challenges.

Euro zone’s biggest problem is debt, not slow growth

By Edward Hadas
August 7, 2014

Growth is stumbling in Italy, Germany and elsewhere. That in itself would not be a huge problem – except that the sovereign debt mountain has kept growing even in “austere” years. This means states cannot spend their way out of trouble, and another crisis remains a real risk.

Argentine opportunity cost is reason to cut deal

July 29, 2014

Another default arguably might not make things immediately worse. But it would set back recent efforts to curry favor with international financiers. With maybe $300 bln needed to develop shale oil and gas alone, swallowing national pride and ponying up $15 bln look worth it.

Greek bond fever may do economy few favours

April 10, 2014

Greece’s first bond in four years has met roaring demand. The 3 bln euro deal suggests past bondholder losses and present economic woes are forgiven and forgotten. But the country still has big problems. Excessive investor enthusiasm could reduce the pressure to reform.

Taking the leverage out of economic growth

By Edward Hadas
June 21, 2012

For two decades private sector debt in the U.S. and euro zone expanded at a faster rate than nominal GDP. The binge helped boost output, but led to the crisis. Reducing leverage without choking growth is a challenge that economists and central bankers have just begun to ponder.

Spain’s bank rescue is part bail-in, part bail-out

November 29, 2012

Madrid has lopped 10 bln euros off its bank rescue tab by cutting the value of its worst lenders’ hybrid debt. Ireland’s 2011 haircuts were steeper. Politics means Spain had to balance burden-sharing with ways to soften the blow for the retail punters who must share the pain

Europe’s two challenges: economy, unity

By Pierre Briancon
December 24, 2012

The euro crisis will become the European crisis as governments realise that among all the things they’ve done in the last two years, austerity is what has failed. And the split will widen inexorably between the 17-member zone and the rest of the EU.

Mario Draghi’s three challenges

December 28, 2012

2012 was the year of the Dragon. Mario Draghi’s promise to buy bonds prevented a calamitous loss of confidence and brought stability to the zone. Next year he will have to deliver on that promise, and more besides.