Greece

Hugo Dixon: Greek election may reopen can of worms

31 Aug 2015

Given that no party is likely to emerge from next month’s vote with a majority, it may be hard to form a strong government that can implement the country’s new bailout deal. There’s even a risk that there will be yet more elections. That could tip Greece back into crisis.

Greek elections no cause for great worry

20 Aug 2015

Alexis Tsipras is likely to win a mandate for his U-turn in accepting a tough bailout programme and re-emerge as leader of a more moderate government. The main problem is there will now be a one-month hiatus when little will be done.

Rebellious Germans ignore Greek silver lining

19 Aug 2015

German Chancellor Angela Merkel is facing a revolt from her own party over the Greek bailout. The fear that Greece is a bottomless pit is fair. But it’s not all lost money: nearly a third of the 86 bln euro loaned will repay debt to public creditors, including Germany.

Hugo Dixon: Greece may not need debt haircut

17 Aug 2015

No single measure, such as debt to GDP, adequately captures how unsustainable Athens’ balance sheet is. Most other yardsticks show Greece needs debt relief. But cutting the face value of its borrowings is probably not required.

Greek bank bail-in threat starts to recede

13 Aug 2015

Savers have rightly feared their deposits may get turned into equity. Draft proposals for Athens’ new bailout imply this may be unnecessary. It probably isn’t enough to entice private investors, but boosting depositor confidence is an important step in clearing up Greece’s mess.

Greece deal leaves euro intact but fragile

11 Aug 2015

Athens may get its bailout after Prime Minister Alexis Tsipras gave in to reform demands. Quitting the euro is much less likely. It suggests currency union can bear the near-exit of a peripheral state. Economic rifts between core members, though, remain the big future risk.

Hugo Dixon: How to fix Greece’s banks

10 Aug 2015

The banks are the weakest point in the country’s economic system. They need to be repaired in order to lift capital controls, restore depositor confidence and finance a future recovery. There are some good ways of doing this, even if the best options aren’t making much headway.

Greece still deserves its place in the euro

10 Aug 2015

While Greece may get a bailout, the recent crisis cast doubt over its place in the euro. Ejecting Athens from the single currency would make sense if it is exceptionally bad, incapable of reform, and its exit made the euro zone stronger. None of those arguments are clearly true. 

Hugo Dixon: Euro zone doesn’t need political union

3 Aug 2015

The Greek crisis has triggered renewed calls for a euro zone government, budget and parliament. But such a political union isn’t needed, desirable or achievable. Instead, the euro zone needs more market-based solutions to thrive.

IMF’s parental threat may help euro kids grow up

31 Jul 2015

The global lender only got involved in the Greek mess because the euro zone was too young to deal with its own problems. As a third bailout nears, the IMF says it wants out, unless both sides behave sensibly. This call for realism may actually be listened to.

Varoufakis gives Greece the gift of a scapegoat

29 Jul 2015

The former finance chief’s alarming tales of trying to hack state computer systems might be just what the debt-stricken country needs. Ask China, which has long recognised the value of a strategic purge. Rogue elements breed discord, but once expelled, they can create more unity.

Hugo Dixon: The optimist’s guide to Greece

27 Jul 2015

There are so many ways things could go wrong in Greece that it’s easy to miss how things could also go right. The good scenario involves the ECB buying up Greek bonds, the lifting of capital controls and a deal on debt relief – all by year-end.

ECB faces tricky call on Greek bank solvency

20 Jul 2015

With Athens’ lenders open again, attention now shifts to Frankfurt’s supervisory test of their capital strength. Half of their buffer is deferred tax credits, which supervisors hold in low regard. But taking a tough approach makes a painful bail-in of depositors more likely. 

Greek anger reflects fall, not level, of income

16 Jul 2015

The bailout plan was approved, with bitterness all round. Economist Branko Milanovic’s comparison with Portugal helps explain the ire. The average Greek has consumed more over the last 20 years, but now has less. The political effect of the drop is much worse than the economics. 

Greek exit talk leaves euro investors unperturbed

15 Jul 2015

A taboo was broken when Germany suggested Athens could leave the European monetary union, albeit temporarily. In theory, if one country can exit, so can another. But markets aren’t pricing in any redenomination risk. Greece is being treated as an exception, not a precedent.

Edward Hadas: Greece, China and financial failure

15 Jul 2015

Not noticing how loans were distorting the Greek economy led to a crisis. In China, the financial system’s ability to create illusory wealth is causing bother. The authorities are lost everywhere. They would do better if they treated finance as an unruly servant of the economy.

IMF gives Greek debt relief a helpful shove

15 Jul 2015

The International Monetary Fund’s conclusion that Greece’s debt is less sustainable than it was is a statement of the obvious. It’s unlikely to prevent Angela Merkel from winning approval for the country’s latest bailout. But Germany will eventually have to accept the hard truth.

Hugo Dixon: Greek PM shouldn’t waste crisis

15 Jul 2015

Now that Alexis Tsipras’ Syriza party is splitting, he can form a credible and stable new government. That could put relations with Greece’s creditors onto a constructive footing and turn the economy around. If Tsipras squanders the chance, the country will be doomed to failure.

Germany’s Greek bullying can be a one-off

14 Jul 2015

The Athens diktat is a risky deviation from German self-constraint in Europe, and would be toxic if it became a new leitmotif. But Berlin’s brute force method was provoked by a misguided Greek strategy that hit trust. German over-assertiveness can remain the exception.

Hugo Dixon: Euro zone should take over Greek banks

14 Jul 2015

Instead of lending money to Athens so it can recapitalise its stricken banks, the creditors should pump money directly into the lenders themselves. This will help sever the doom loop between the Greek state and its banks. It will also make Greece’s debt more sustainable.