Opinion

Hugo Dixon

James Murdoch shouldn’t be kicked out of BSkyB

Hugo Dixon
Jul 18, 2011 19:37 UTC

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

James Murdoch shouldn’t be kicked out of BSkyB. Some observers want to use the Murdoch clan’s troubles at News International, their UK newspapers company, to run them out of town completely. But BSkyB, the pay-television group, is a separate business. And Murdoch Jr has done a good job first as its chief executive and now as its chairman.

Admittedly, Murdoch Jr hasn’t covered himself in glory in handling the alleged phone hacking and police bribery scandal. As well as being chairman of BSkyB, he has indirect responsibility at News Corp for the UK newspaper arm. He was slow to grip the problems — not least by allowing Rebekah Brooks, who ran the papers and reported to him, to stay in her position for too long. There are now multiple probes into the saga which could embroil him further. But nothing has yet come out which should disqualify him from his BSkyB role.

It is also true that Murdoch Jr’s original appointment as BSkyB chief executive was nepotistic. But he then proved himself in the role. The business is now generating piles of cash –- in part because of the strategy he pursued. His track record isn’t perfect. But even the main cloud in his tenure -– his swoop on ITV –- had a silver lining. Although BSkyB wasn’t allowed to buy the TV group and lost a huge amount of money in the process, the raid did stymie a rival plan by Virgin Media to create a stronger anti-BSkyB front.

It might further be argued that BSkyB should have a chairman who isn’t also an employee of News Corp, which holds a 39 percent stake. But this needs to be weighed against the benefit in having that shareholder fully engaged in driving performance. What’s more, BSkyB’s eight independent directors, who constitute a majority of the board, have been robust in defending shareholders in the one case where there was a conflict of interest: News Corp’s attempt to acquire the remaining 61 percent. That bid has now been pulled. But there’s every reason to suppose that the independent directors would be equally robust if the furor over the hacking scandal dies down and the Murdochs return with a new bid.

Berlusconi really must go

Hugo Dixon
Jul 13, 2011 14:04 UTC

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

Silvio Berlusconi really must go. It’s no longer about abuse of power and “bunga bunga” sex parties. His continuation as Italy’s prime minister could drive the country into a financial death spiral. His own supporters are shaken and the public is afraid. But the left-wing opposition is behaving responsibly, so there’s some hope.

Italy pulled back from the brink — slightly -– on July 12. After nudging above 6 percent, the yield on 10-year government bonds fell back to a still uncomfortable 5.6 percent. Part of the explanation is that the opposition agreed to a fast-track parliamentary vote on the government’s new austerity program. The multi-year fiscal squeeze of more than  40 billion euros should therefore be approved by the end of the week.

The way to end the Greek farce

Hugo Dixon
Jul 12, 2011 14:10 UTC

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

The Greek crisis is fast descending into farce. The position of Germany, the euro zone’s main lender, is increasingly absurd. It is adamant that there will be no restructuring of Greek debt — at least, until 2013. And yet it is equally insistent that Athens’ private-sector creditors should contribute up to 30 billion euros to a new, 120 billion euro bailout. That would effectively amount to a half-cocked restructuring.

German Chancellor Angela Merkel’s inconsistencies seem based on her view that a sovereign restructuring won’t happen before 2013 just because she said it won’t. But her conflicting demands are becoming virtually impossible to reconcile. The ratings agencies are threatening to say that Greece has defaulted if there’s so much as a whiff of arm-twisting in the supposed “voluntary” rollover.

The EU has only itself to blame for ratings mess

Hugo Dixon
Jul 7, 2011 12:53 UTC

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

Europe has only itself to blame for the mess created by the ratings agencies. Luminaries including Jose Manuel Barroso, the president of the European Commission, and Wolfgang Schaeuble, Germany’s finance minister, have lambasted Moody’s for downgrading Portugal. But Europe has wasted many chances to neuter the power of credit ratings agencies. Instead they choose to fetishize them. An especially stark instance can be seen in the European Central Bank’s current approach to Greece.

For years it has been apparent that the financial world pays far too much attention to the three big ratings agencies — Moody’s, Standard & Poor’s and Fitch. They should be treated like any other opinion in the market. But their special position allows them to create havoc. It is not just that investors hang on their every word, they are also embedded in the system for regulating banks and other official mechanisms. Yet the agencies are often too slow to spot trouble, with the result that borrowers are able to run up excessive debts. And when they do change their minds, they can help provoke a stampede.

Letter to the Greeks

Hugo Dixon
Jun 29, 2011 13:38 UTC

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

Dear Greeks,
The anger you feel about your plight is understandable. You are staring at several unpalatable alternatives, all of which will involve big cuts in living standards for years to come. But the options you face are not all equally bad. You must avoid an emotional reaction that leaves you in an even worse state — and you must ostracise those who resort to violence.

One option is to persuade your politicians to say “no” (or “ohi”) to the euro zone/International Monetary Fund austerity plan. The scheme is not perfect. But rejecting it out of hand would be childish. If there is no agreed plan, you will get no money. The consequence isn’t just that the government would default on the loans it took out on your behalf. There would be a run on your banks and an even deeper recession. You would probably also lose your remaining friends in Europe who would consider you spoiled brats.

Greek Plan B needs two elements

Hugo Dixon
Jun 28, 2011 21:06 UTC

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

LONDON — The European Union is finally working on a plan B in the unlikely case that Greece’s parliament votes against austerity later this week. The priority in such a plan should be swift action by the European Central Bank to protect the rest of Europe’s banking system from mayhem. The EU should also try to give Athens a second chance to reflect on its folly.

The most dangerous immediate consequence of a No vote would be an acceleration of deposit flight from Greek banks. This could sow panic in banks in other peripheral nations. One way of stopping that would be for the ECB to immediately make clear that buckets of liquidity are available for non-Greek banks. Ideally, this shouldn’t just be short-term money, but medium-term money too. Euro zone governments should underwrite any losses the ECB incurred on such emergency support.

How the euro zone can save itself

Hugo Dixon
Jun 20, 2011 15:05 UTC

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

By Hugo Dixon

Greece is likely to receive another short-term sticking plaster after the euro zone’s leaders stared into the abyss. But a repeat of the drama of recent days is all too possible. The region can, and must, protect itself against Athenian delinquency.

Euro zone finance ministers have postponed a final decision on extending 12 billion euros of emergency loans to Greece. But the country should get the next tranche of its EU/IMF bailout program in early July. Around the same time, the authorities should agree to a new package of perhaps 120 billion euros that sees Greece through until end 2014 –- with private-sector creditors helping by rolling over their debts in some yet-to-be-determined quasi-voluntary manner. Athens still has the capacity to mess things up if it can’t get its parliament to approve the new austerity program. But following Friday’s cabinet reshuffle, the government looks like it will at least survive a no-confidence vote on June 21.

Greece mustn’t waste its second chance

Hugo Dixon
Jun 6, 2011 20:00 UTC

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

LONDON — Greece mustn’t waste its second chance. Athens looks like it will receive enough bailout cash to see it through to end-2013. But if it veers off track again, as is all too possible, any third chance might come with such extreme conditions that a messy default and a humiliating exit from the euro wouldn’t be far away.

The euro zone and International Monetary Fund are willing to provide more cash partly because the European Central Bank has scared Athens’ saviours into believing that a Greek default now would trigger a nightmarish set of domino collapses across the continent. In return, Greece has promised to raise the equivalent of 22 percent of GDP through privatisation by 2015, as well as squeezing another 10 percent of GDP from its fiscal deficit. There is also a plan to bail in private-sector creditors, albeit on a “voluntary” basis. That could cut the amount of new bailout money to perhaps 30 billion euros, out of a total funding hole of 65 billion euros.

Moral hazard is clue to solving euro crisis

Hugo Dixon
May 20, 2011 18:20 UTC

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

LONDON — Moral hazard is the clue to solving the euro crisis. The idea that entities don’t learn lessons unless they feel pain is valid in the euro zone — but only if the blame is shared properly. The mess isn’t just the responsibility of profligate Greeks, but also of foolish banks and hypocritical Germans and French. Each needs to suffer.

One of the main reasons the region’s financial crisis is so intractable — with endless wrangling over what is the best way forward — is because the different players haven’t fessed up to their own sins. There is therefore a tendency to proclaim their own virtue and pin the blame on others. This makes it hard to come up with a fair settlement.

The China files, postscript: Feisty females

Hugo Dixon
May 12, 2011 12:40 UTC

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

By Hugo Dixon

My first visit to China was in 1979. I was a schoolboy. It must have been one of the earliest Western school trips to the mainland. Mao Zedong had died three years before, Deng Xiaoping had launched the country on three decades of supercharged growth and the one-child policy had just been initiated. I hadn’t been back until this March.

Back then, Mao’s image was plastered everywhere and almost everybody wore Mao suits. I even bought one for myself. I also bought a Mao poster and stuck it in my bedroom at school. Nowadays, the posters have virtually vanished, along with the suits.