EMEA

Orderly euro exit virtually impossible

26 Oct 2011

A UK businessman has promised a 250,000 pound prize for the best explanation for how a country could quit the single currency in an orderly fashion. Hugo Dixon gives his best shot, but still concludes there would be mayhem.

UK bank default swaps anticipate bail-in too soon

26 Oct 2011

The cost of insuring UK bank debt has rocketed. Investors are fretting that ring-fencing reforms make senior debt more risky. It’s good that bondholders are no longer betting on a bailout. But they’re ignoring phase-ins designed to delay the pain until the crisis abates.

ArcelorMittal chickens out to hoard its cash

25 Oct 2011

The world’s largest steelmaker abruptly bailed on a joint takeover of Australia’s Macarthur Coal, selling out to partner Peabody, as investors tendered their shares with unexpected alacrity. It may be a sensible move, but it certainly makes the billionaire Mittals look a nervy bunch.

Banks have two aces in Greek default poker

25 Oct 2011

The euro zone wants private creditors to take a 60 percent haircut on Greek debt. But this negotiating position is undermined by an irrational fear of triggering CDS, and reluctance to take a loss on governments’ Greek exposure. Banks may use this to go for a sweeter deal.

Euro-recession, not rebellion, is what boxes UK in

25 Oct 2011

An EU protest vote by members of his own party has knocked the UK prime minister. But David Cameron has a bigger and more immediate European problem. An already-weak UK economy is likely to be dragged into recession by the euro zone. Fiscal policy revisions may be necessary.

Turkish banks still shine despite musical chairs

25 Oct 2011

Dexia has joined the foreign lenders looking to exit the country after just a few years. But Turkey’s banks are well capitalised in an underpenetrated market, and valuations are near historic lows. Even with an economic slowdown looming, they offer a potential bargain for buyers.

Rupert Murdoch’s sham governance on full display

25 Oct 2011

A majority of stockholders who don’t share the media mogul’s last name snubbed his sons, James and Lachlan, along with three other News Corp directors. The emphatic vote may be only symbolic. But even a board so entrenched as this one can’t ignore the angry mob.

Deutsche holds firm in turbulent markets

25 Oct 2011

The German lender made a pre-tax return on equity of just 7.2 pct in its third quarter. This reflects poor trading in the investment bank. But that part of the business is gaining share. And it may now avoid having to raise fresh equity.

BP’s turnaround still work in progress

25 Oct 2011

The UK oil major says it has reached a turning point in its operations. It plans to grow cash flow by 50 pct in the next three years and make more divestments. The strategy is right. But a real recovery would require more clarity about Russia and the Gulf of Mexico litigation.

Vatican’s monetary ideals suit practical reforms

24 Oct 2011

The spirit of new Roman proposals, including a central world bank and taxing financial transactions, makes sense. Global finance needs better governance than can be provided by today’s system of strong, would-be isolated states. Nice, but such noble virtue won’t catch on easily.

Europe’s financial alchemy starts to look SPIVvy

24 Oct 2011

The euro zone is considering subsidising leveraged funds to help fund bailouts and bond interventions. Such a scheme could support demand for sovereign debt. But Europe may need to get comfortable with using taxpayer funds to subsidise hedge-fund level returns.

Euro zone bank funding backstop might need UK help

24 Oct 2011

As well as fresh capital, EU banks need term funding. But guaranteeing bank debt is beyond the remit and current firepower of Europe’s bailout fund. The European Investment Bank could help out. But that would involve putting non-euro zone states like Britain on the hook too.

Economic stress adds to Turkey’s quake woes

24 Oct 2011

The human cost of the Ercis disaster comes as Turkey fights to keep its once-booming economy on track. Ankara is playing a high-risk game by intervening in markets. It needs higher interest rates to shore up the lira, but the cost may be recession.

It’s Italy, stupid

24 Oct 2011

The big issue dwarfing all others now in the euro crisis is how to save Italy. Financial engineering of the sort discussed at the weekend summit will, at best, buy time. Ultimately, Rome needs to save itself. With political will, it can.

Internal devaluation: it’s worth a try

24 Oct 2011

Big wage cuts should be almost as good as currency devaluation at reducing large trade deficits – in theory. In Europe, no one knows if practice will follow conjecture. But Latvia is trying and Greece is likely to follow. It’s not nice, but it might be a least bad alternative.

Tunisian economic recovery is reason for optimism

24 Oct 2011

Barring a violent backlash against the likely Islamist party victory, Tunisia can hope for a strong rebound following the country’s first ever democratic elections. Libya’s liberation might also help. For now, that outweighs the looming risks posed by the European slowdown.

France can’t afford major euro split with Germany

21 Oct 2011

Divisions over the euro zone’s bailout fund have delayed the much-ballyhooed Franco-German “grand plan”. Nicolas Sarkozy seems ready to compromise yet again to keep Angela Merkel on board. He knows the euro zone wouldn’t survive a major split between Paris and Berlin.

Europe’s bailout fund: a guide for the perplexed

21 Oct 2011

Getting more mileage out of the 440 bln euro European Financial Stability Facility is key to easing the euro zone’s debt woes. But the ECB and governments disagree about how to best stretch the fund’s finite resources. Breakingviews offers a road map through the confusion.

Spain hasn’t seen the end of its pain

21 Oct 2011

Profligate regions may push the country’s budget deficit above the 6 percent-of-GDP target. The electoral cycle isn’t helping. A minor slippage doesn’t matter much, but in the current slump, anything more than a percentage point will make next year’s goals particularly challenging.

Postponing Greek pain will be costly for taxpayers

20 Oct 2011

To get Greece’s debt under control, the private sector and EU governments have to take a haircut. If a restructuring happened now, private bondholders would bear most of the losses, according to a Breakingviews calculation. But if the euro zone delays, taxpayers will suffer more.