Neil's Feed
Jun 12, 2012
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Spain still stuck in downward spiral

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By Neil Unmack

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

Euro zone countries that receive bailouts are generally locked out of capital markets for years. Spain is hoping to break the cycle; while it may ask for up to 100 billion euros to prop up its banks, it wants to avoid a full rescue. But the deal has failed to pull Spain out of its downward spiral.

Jun 7, 2012
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Germany could live with Eurobills

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By Neil Unmack

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

Full mutualisation of euro zone government debt looks like a pipe dream for now. But pooling together short-term debt could help weak countries, without incurring the risk of moral hazard and potential losses of full-blown euro bonds.

May 31, 2012
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Super Mario Bros need a relaunch

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By Neil Unmack and Hugo Dixon

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

The Super Mario Brothers need a relaunch. At the end of last year, the near simultaneous appointments of Mario Monti to replace Silvio Berlusconi as Italy’s prime minister and Mario Draghi as president of the European Central Bank helped turn around the euro crisis, at least temporarily. But fear is back. Italy will be next in the firing line if the Spanish and Greek crises worsen.

May 24, 2012
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Italy’s new off balance sheet wheeze

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By Neil Unmack

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

Rome is in a bind. Arrears to local companies are choking the economy, but funding them upfront could push up the country’s debt and spook markets. So Italy is using banks to front some of the money in a way that avoids pushing up its debt at least for the time being.

May 22, 2012
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Direct bank recaps won’t give Spain quick fix

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By Neil Unmack and Fiona Maharg-Bravo

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

If Greece quits the euro, Spain’s banks will be the next weak link in the single currency. Hence, the frantic search for ways to prop them up. One solution, advocated in recent days by France’s president and Ireland’s central bank governor among others, involves the direct injection of capital by a euro zone fund into Spain’s lenders. The appeal is obvious: Spain’s banks would be recapitalised but Madrid’s own debts wouldn’t rise. The country would therefore avoid the fate of Ireland which was dragged down by bailing out its lenders – even though its financial system is proportionately a lot smaller.

May 10, 2012
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Euro zone carry trade has limited shelf life

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By Neil Unmack and Fiona Maharg-Bravo

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

The carry trade is alive and well in Spain and Italy. Banks are loading up on sovereign debt, thanks to the wave of liquidity from the European Central Bank’s cheap three-year loans. But local lenders can’t fund Madrid and Rome indefinitely, and with markets still dysfunctional, money could run out sooner than expected.

Apr 19, 2012
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Ackman gets closer to permanent capital grail

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By Neil Unmack and Jeffrey Goldfarb
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Bill Ackman looks decidedly closer to the holy grail of permanent capital. The founder of activist U.S. hedge fund Pershing Square Capital Management is planning a London-listed vehicle with a market value of at least $4 billion. That would dwarf other public funds, many of which trade at a big discount to net asset value. Ackman’s scale, plus some fee sweeteners, may give him an edge. And his focus on easily priced bets could minimize the NAV problem.

The initial public offering of a new fund, which would invest in Pershing Square’s offshore hedge funds, next year is designed to let Ackman do more of what he does best. The bulk of his 22 percent annualized net return over the last eight years comes from successfully agitating at companies like JCPenney and Fortune Brands. By tapping the market, he wouldn’t need to keep half his assets in cash and other liquid investments, as he does now to accommodate investors who want to exit.

Apr 17, 2012
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Portugal doesn’t require Greek remedy for now

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By Neil Unmack

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

Portugal can avoid becoming a new Greece. There’s a strong likelihood that Lisbon won’t be able to fund itself on financial markets in the second half 2013 – contrary to the timetable agreed in the country’s May 2011 bailout plan. Yet when it turns to its euro zone partners for help, there’s a chance Portugal won’t have to force losses on its private creditors, like Greece did. Still, no one can rule out a worsening of the economic outlook that would tip it into Greek territory.

Apr 5, 2012
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Spain reveals holes in Europe’s crisis plan

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By Neil Unmack

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

Rising Spanish yields have thrust Europe back into crisis mode. Policymakers thought the European Central Bank’s three-year loans had bought the euro zone some time, but markets are catching up fast.

Apr 5, 2012
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Greece faces new taboo: not defaulting

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By Neil Unmack

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

Greece’s debt restructuring has been a total success – almost. A small number of bondholders have rejected the debt swap. The holdouts could drag Athens through international courts. But paying them off would be difficult too.