Neil's Feed
Feb 2, 2012
via Breakingviews

Europe can’t force Greece into never-default land

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

A German proposal to tie Greece’s future with a pledge to never default looks barmy. The euro zone already has a hard enough time getting Greece to reform its economy, partly because Greece can wield the threat of a messy default. When Athens reaches a primary budget surplus, as it should this year, it will be in an even stronger negotiating position because it could then default on bailout loans and still pay for the government’s expenses.
Germany has come up with the idea of forcing Greece to prioritise international debt repayment over domestic bills. The euro zone would then be assured it would get its money back. This in turn would make it more credible in pressuring Greece into speedier reforms, since the Greeks themselves would feel the pain of non-compliance.

Jan 27, 2012
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Ireland’s bond swap shows how self help can work

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By Neil Unmack and Margaret Doyle

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Greece is on the cusp of a disorderly default; Portuguese bonds are tanking as investors price in sharp haircuts. But Ireland has successfully tapped international debt markets for the first time in 16 months.

Jan 24, 2012

What would a Greek plan B look like?

(The authors are Reuters Breakingviews columnists. The opinions
expressed are their own)

By Hugo Dixon and Neil Unmack

LONDON, Jan 24 (Reuters Breakingviews) – What would a Greek
Plan B look like? If brinkmanship over the so-called voluntary
debt restructuring fails, Athens will be staring at a hard
default. The challenge will be to prevent it being a messy one.
That means bailing out Greek banks.

Jan 24, 2012

Breakingviews – What would a Greek plan B look like?

(The authors are Reuters Breakingviews columnists. The opinions
expressed are their own)

By Hugo Dixon and Neil Unmack

LONDON, Jan 24 (Reuters Breakingviews) – What would a Greek
Plan B look like? If brinkmanship over the so-called voluntary
debt restructuring fails, Athens will be staring at a hard
default. The challenge will be to prevent it being a messy one.
That means bailing out Greek banks.

Jan 20, 2012
via Breakingviews

Sale of Lehman dregs shows risks of ECB largesse

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By Neil Unmack

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

The Bundesbank is no match for King Arthur. The legendary Celtic ruler drew the sword Excalibur from the stone with little effort, but the German central bank has taken over three years to start to offload its own Excalibur, a collateralised debt obligation backed by risky real estate debt constructed by the chivalrous financial engineers at Lehman Brothers. The bonds are among collateral the euro zone central banks had accepted in exchange for loans to Lehman and several Icelandic banks, which failed in 2008, forcing the euro zone to take a 5.7 billion euro provision, subsequently reduced to 2.2 billion euros.

Jan 16, 2012
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Euro zone’s New Year hopes hit triple downer

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

European governments have suffered a triple setback. Standard & Poor’s has stripped France and Austria of their triple-A ratings, and cut Italy to the same level as Ireland. Greek debt talks have broken down, while the European Central Bank has criticised the region’s fiscal pact. After a brief lull, the euro zone’s sovereign debt crisis is back with a vengeance.

Jan 11, 2012
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ECB will find it hard to avoid pain on Greek debt

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

The European Central Bank’s refusal to participate in the big Greek debt swap and take losses on its holdings is looking stranger by the day. It looks increasingly like it might confer the ECB an informal preferred creditor status that would have the unintended consequence of undermining its own bond-buying programme.

Dec 6, 2011
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ECB bazooka may be short on credibility ammo

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

The European Central Bank may be readying its bazooka. Euro zone bond markets are rallying amid hopes that an agreement by European governments on fiscal reform may clear the way for the central bank to start massive bond purchases. But bazookas can backfire.

Ideally, an intervention would create a virtuous circle whereby investors were once again willing to hold peripheral debt. That might allow the ECB to calm markets without actually buying that much.

Nov 28, 2011
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Germany needn’t fear common euro zone bonds

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

Fears that Germany will have to underwrite the debt of other euro zone countries have pushed up the country’s bond yields in recent weeks. Common bonds would end the country’s days of super-cheap borrowing. But if it was part of a genuine fiscal union, funding costs need not go sky high.

Nov 21, 2011
via Breakingviews

IMF could unlock ECB’s war chest

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

The battle for the euro zone’s survival hinges on finding a way to unlock the European Central Bank’s firepower. Even if countries such as Italy and Spain implement necessary reforms, they may not be able to borrow at reasonable rates. The ECB can prop up markets by buying bonds in the secondary market, but is forbidden by European Union treaties and its own statutes from financing countries directly. One idea doing the rounds is to use the International Monetary Fund to circumvent the rules.