Germany

Euro zone not yet ready for Greek game of chicken

3 Nov 2011

Merkel and Sarkozy have threatened to cut Greece loose if it doesn’t back the latest bailout plan. But Europe isn’t prepared to handle the backlash. With barely a month to get its act together and a history of dysfunctional decision-making, there’s a big risk of a mega crash.

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.

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.

Subprime CDO case tests Deutsche public relations

20 Oct 2011

A defunct lender which was bailed out by the state is suing Germany’s biggest bank over subprime losses. Deutsche disputes the suit. But claims the lender cost taxpayers $440m won’t help CEO Josef Ackermann’s already frosty relationship with German Chancellor Angel Merkel.

Deutsche may not escape state grip in forced recap

14 Oct 2011

The German lender could need 9 bln euros to pass Europe’s latest stress test. If the government puts up the cash, it could own a large chunk of the bank. But even if Deutsche sells businesses, places shares and cuts its dividend, it will struggle to raise the capital privately.

Vietnam could use capitalist pep talk from Merkel

12 Oct 2011

The German chancellor’s trip to Hanoi may bring tough questions on the capitalist model. Vietnam grew rapidly by opening to trade 25 years ago, but Europe’s woes are causing pressure on reserves and capital flight. It shows how the euro crisis is a developing world problem, too.

Deutsche poorly handles predicted profit warning

4 Oct 2011

The German bank has ditched the 10 bln euro 2011 pre-tax profit target the market long discounted. Unsurprisingly, it blames depressed investment bank revenue. But it also cites a mysterious tax hit. Such opacity is unhelpful at a time of intense investor scepticism toward banks.

Qatar risks a foreign investment pile-up

19 Sep 2011

The gas-rich state might have around $100 bln to throw at foreign assets, based on guesses at the size of its sovereign fund. A 7.5 pct stake in Franco-German EADS would cost less than $2 bln. But Qatar’s overseas spending doesn’t look as focused as its domestic growth ambitions.

Germany sends hopeful signals on euro future

16 Sep 2011

Berlin’s attitude towards the euro zone has become more positive, and less inconsistent, in recent weeks. Its partners should welcome the change and be encouraged. Germany, however, is still to fully appreciate that austerity for all will mean recession for everyone.

Stark resignation won’t alter ECB policy

9 Sep 2011

The unexpected departure of its chief economist is only the latest sign of ECB divisions on the debt crisis. His opposition to bond buying was already public. Stark’s decision will accelerate the changing of the guard in Frankfurt, but it won’t affect the ECB’s course.

German high court spares euro zone a major crisis

7 Sep 2011

The Karlsruhe constitutional court has thrown out complaints against the region’s bailout facility, and its ruling shouldn’t overly hurt the fund’s flexibility. Disaster may have been averted on the German front, but the euro crisis is still looking for a long-term solution.

Obama’s watchdogs call AT&T’s $39 bln wager

31 Aug 2011

The No. 2 U.S. mobile company bet it could persuade regulators that buying No. 4 T-Mobile would benefit consumers. The U.S. DOJ senses a weak hand. With the industry a near duopoly, the government’s read looks right. AT&T isn’t folding but looks on the verge of a bad beat.

Diving bond yields mask investor ambivalence

25 Aug 2011

Fear still trumps greed in the minds of most investors. It allowed the German government to sell 10-year bunds at super-punchy prices on Aug. 24. There may well be enough buyers to push real yields negative. But the investment appetite is far from overwhelming.

Merkel and Sarkozy live down to low expectations

17 Aug 2011

The Franco-German summit produced proposals for further euro zone integration. But the demand for balanced budgets was unmatched by any promise of more aid for peripheral states, while the mooted tax on financial transactions misses the point. Investors are rightly sceptical.

Balanced budget laws are flawed but not useless

16 Aug 2011

Sarkozy and Merkel like them, and they feature in America, too. But politicians often fudge the numbers, or just change the rules. Nonetheless, in reasonably honest systems such laws slow the build-up of deficits. Perhaps as importantly, they also stigmatize bad behavior.

German slowdown adds to pressure on euro zone

16 Aug 2011

Weak Q2 GDP confirms fears that the EU’s largest economy has entered a soft patch. That makes it harder for Europe to grow its way out of crisis. The euro zone can’t afford to relax near-term fiscal austerity just yet. But further rate hikes by the ECB must now be on hold.

Solar firm’s demise signals gray industry forecast

16 Aug 2011

Onetime investor darling Evergreen Solar, among the first U.S. green energy companies to go public, just went bankrupt, victimized by a global supply glut. Growing Chinese competition and waning European subsidies mean the solar sector will probably get darker before the dawn.

Sweet Swiss-German tax deal will be hard to repeat

11 Aug 2011

Bern has agreed to collect tax and penalties from accounts held by tax-dodging Germans. But Swiss bank secrecy remains intact, and lenders will avoid prosecution for past crimes. The revenue hit is also manageable. An investigation by U.S. authorities is unlikely to end so well.