Japan-style deflation in Europe getting harder to dismiss

February 13, 2014

To most people, the idea of falling prices sounds like a good thing. But it poses serious economic and financial risks – just ask the Japanese, who only now finally have the upper hand in a 20-year battle to drag their economy out of deflation.

Ireland: bailout poster child, but hardly textbook

January 23, 2014

Amid the euphoria surrounding Ireland’s removal from junk credit rating status, it’s easy to get swept along by the consensus tide of opinion that the Emerald Isle is the “poster child” for euro zone austerity.

In euro bond markets, world still upside down

December 11, 2013

Corporate bonds normally yield more than sovereign debt since companies are seen as more likely than states to go bust. But during the euro zone debt crisis, when various governments had to be bailed out, that relationship broke down in Spain and Italy.

ECB rate cut takes markets by surprise – time to crack Draghi’s code

By Eva Taylor
November 7, 2013


After today’s surprise ECB move it is safe to forget the code words former ECB President Jean-Claude Trichet never grew tired of using – monitoring closely, monitoring very closely, strong vigilance, rate hike. (No real code language ever emerged for rate cuts, probably because there were only a few and that was towards the end of Trichet’s term.)

Will bank lending finally start to rise?

By Mike Peacock
January 7, 2013

Big news over the weekend was the world’s banks being given an extra four years to build up their cash piles, and given more flexibility about what assets they can throw into the pot. This is a serious loosening of the previously planned regime and could have a significant effect on banks’ willingness to lend and therefore the wider economy.

Mario and Angela — the euro zone’s pivotal pair

By Mike Peacock
December 17, 2012

European Central Bank chief Mario Draghi and Germany’s Angela Merkel – the two most important people in the euro zone debt crisis response – take to the stage today, the former giving lengthy testimony in the European Parliament, the latter holding a news conference with foreign journalists.

Europe ends year on front foot

By Mike Peacock
December 14, 2012

Credit where credit’s due, the EU has surprised on the upside over the last 24 hours or so, not only signing off on a revised Greek bailout plan to keep that show on the road and agreeing that the ECB will supervise 150 or more of the bloc’s biggest banks, but then pledging to set up a mechanism to wind down problem banks.

Greek bailout deal tantalisingly close

By Mike Peacock
December 12, 2012

The Greek bond buyback has fallen a little short, leaving Athens and its lenders to plug a 450 million euro hole. The euro zone and IMF had given Greece 10 billion euros to buy back enough debt at a sharp discount so that it could retire 20 billion euros worth of bonds and knock that amount off its debt pile. Without that, the deal to start bailout loans flowing to Athens again would fall through.

Italy gives new bite to euro zone crisis

By Mike Peacock
December 10, 2012

Don’t start putting out the tinsel yet. Just when we thought we had a smooth glide path into Christmas the euro zone has bitten back.

Calm after the storm

By Mike Peacock
December 3, 2012

After months of bickering and struggle, the euro zone and IMF have agreed on a scheme which will notionally cut Greece’s mountainous debt to a level they view as sustainable in the long-term. Athens has now launched a buyback of its debt at a sharp discount from private creditors which should wipe 20 billion euros of its debt pile – a key plank of the plan.