Dixon: How to rehabilitate capitalism

By Hugo Dixon
February 1, 2016

The classic leftist response to capitalism’s unfairness - tax and spend - has failed. A better bet is to fight unfairness caused by corruption, vested interests and tax cheating, while investing in education. India and Italy show some of the right ideas.

Mediobanca gets Barclays to pay for its own pivot

December 3, 2015

The UK bank is paying its peer 237 mln euros to take its Italian branches. Barclays gets rid of an unprofitable, non-core deadweight. Mediobanca gets a leg up in the arms race for asset management fees in Italy. Just as well, given Italian retail banking is under the gun.

Italy’s zero-cost bailout is too good to be true

November 23, 2015

The Italian bank resolution fund will cough up 3.6 billion euros to restructure four failing lenders. Officially, public funds won’t be used, but the burden will hit a sector already struggling with low rates and weak demand. Rome could find itself on the hook too.

A Panglossian guide to valuing Telecom Italia

November 20, 2015

Telecom Italia’s tough home market and high debt might struggle to elicit a buy from even Voltaire’s eternal optimist. Purchases from French billionaires Vincent Bollore and Xavier Niel have driven up the price. The shares could be worth more, but only with heroic assumptions.

Italy regains market cred with Poste Italiane IPO

October 23, 2015

The 3.4 bln euro sale of shares in the post office was oversubscribed – even though the company remains mainly government-owned and it does little to cut Italy’s debt. Still, the country now looks open for business and has atoned for an earlier botched privatisation of Fincantieri.

Euro zone rediscovers sloppy fiscal policy

October 15, 2015

Deficits are creeping up in Spain, Italy and even growth star Ireland. Reasons include easy money and pre-election spending. As yet, the gaps aren’t dangerously big. What’s more worrying is poor spending decisions, slowing reforms and fiscal dissonance between member states.

Renzi shrinks Italy’s political risk premium

October 14, 2015

Prime Minister Matteo Renzi achieved an important step in his plan to reform Italy’s upper house. That should mean more stable governments. Italy’s bond yields are already close to pre-crisis levels. Narrowing the discount to France or Germany requires further economic reform.

Tsipras U-turn only lowers short-term Grexit risks

July 10, 2015

Greece’s latest bailout plan accepts most of what its July 5 referendum rejected. Creditors will have to actively want a Greek exit from the single currency for it to happen now. Yet fresh austerity, capital controls and Athens’ weak reform record mean the truce may not last.

Renzi is still dodging big Italian pension fight

May 21, 2015

The prime minister has found a clever way to blunt a constitutional court ruling on pensions that threatened to blow a hole in Italy’s budget. That avoids a conflict with Brussels. But he hasn’t bitten the bullet on the bigger pension issue: bloated spending that stifles growth.

Renzi’s Italian gamble is worth taking

April 30, 2015

Premier Matteo Renzi is using confidence votes to ram though electoral reform. He risks a government collapse, and has nearly torn his own party apart. Yet the law should reshape Italian politics for the better - and help the economy.