Greece

Euro zone first default gives few reasons to cheer

9 Mar 2012

Most Greek creditors have agreed to take a loss on their 206 bln euro holdings. The euro zone’s first restructuring should not be chaotic. But it has done away with the pretence that a sovereign’s signature is always golden. And Greece still struggles with a heavy debt load.

Now prepare for the next crisis

9 Mar 2012

The euro zone has overcome enough of its fundamental weaknesses to defuse the Greek debt bomb. But the financial system is as distorted as ever. A purely financial crisis is possible in the next two years. A financially enhanced political crisis may be even harder to avoid.

Greek debt threat won’t trigger Armageddon

7 Mar 2012

Athens is threatening not to pay holdouts in its debt swap, dispelling any pretence of a voluntary restructuring. The sabre-rattling is spooking markets, but an outbreak of minor chaos should help bring stragglers on board. A disorderly default still looks remote.

Euro cost studies are misleading and meaningless

6 Mar 2012

The IIF puts the price of a Greek default at 1 trln euros. Lombard Street Research reckons the cost of keeping the euro zone intact is even greater. But predicting alternate economic outcomes is subjective. Beyond advancing specific agendas, the exercise has little merit.

Greek banks head for supranationalisation

23 Feb 2012

The country’s lenders will get a 50 billion euro capital injection as part of the latest bailout. Normally this would mean nationalisation. But Athens’ saviours are putting in place buffers to stop Greek politicians meddling. While sensible, this could cause friction.

Greek rescuers rise haltingly to historic occasion

21 Feb 2012

The latest deal with Athens falls short, like all its predecessors. But the inadequacies should not be seen as a European failure. The world is rising to the most profound challenge of modern finance. The response may be slow, but it is authoritative and just.

IMF strategically withdraws from Greek campaign

21 Feb 2012

The agency played a big role in the first bailout of Athens but will provide just 13 bln euros more for the second, enough to service existing loans. With the EU taking greater responsibility for the Greek mess, the IMF may find it easier to build a broader euro-zone firewall.

Greek deal makes best of a bad job

21 Feb 2012

It would have been better to have bitten the bullet earlier and Athens is still unlikely to pull through without further economic and political shocks. But the debt restructuring cum bailout keeps the pressure on Greece and has probably defused a wider blow-up.

ECB Greek loss dodge heralds end of bond buying

17 Feb 2012

The ECB will avoid losses on Greek bonds through a legal manoeuvre. Such special treatment will not please the bondholders asked to take losses on their Greek debt. That’s bad for other countries whose debt the ECB owns. And it will make bond buying difficult in the future.

Delay gives Europe better grip in Greco wrestling

16 Feb 2012

Euro zone governments are in a bind; how can they give Greece a second bailout if the country’s politicians reject reforms after the April parliamentary elections? The best bet may be to delay.

Chaos in Greece is not just a Greek problem

13 Feb 2012

Investors may take a sanguine view of the euro zone crisis now that the Greek parliament has approved the troika’s latest, toughest austerity plan. But while contagion fears are rightly receding, disorder in Athens would bring financial and political pain for all of Europe.

ECB’s graceful surrender may lend Greece more time

8 Feb 2012

The European Central Bank bought Greek bonds at a discount. It has now reportedly agreed not to demand repayment at face value. That makes sense. Without a deal, the next Greek bailout might fall through, and the ECB is anxious to help delay Europe’s day of reckoning in Athens.

EU needs contingency plan to handle Greek blow-up

6 Feb 2012

The latest game of brinkmanship being played in Athens will probably end in a fudge. But if it doesn’t, Greece’s banks will go bust and the rest of the euro zone will need a plan to prevent a panic in its own banking industry.

Europe can’t force Greece into never-default land

1 Feb 2012

Germany would like to prevent Greece from ever defaulting, by forcing it to dedicate its resources to service its debt first. This looks both legally unenforceable and politically untenable. The reality is that Greece will default if it wants to.

Euro zone ill-suited for long-term economic task

31 Jan 2012

Yesterday’s problem - fiscal insouciance - has been addressed. Now euro zone leaders need to find ways to boost their economies, and keep Greece and Portugal from turning into economic deserts. That calls for long-term thinking from governments obsessed by the next election.

Hugo Dixon: Three bad fairies at euro feast

30 Jan 2012

The Super Mario Bros - Draghi and Monti - have started well; and a deal for building a bigger firewall to stop contagion as well as a short-term fix for Greece may be in the works. But new worries are emerging about Spain and France - and of course Greece is still a mess.

EU must learn to cope with new German leadership

30 Jan 2012

Berlin will get the euro fiscal treaty it wants, and even Nicolas Sarkozy is using Germany as an example for French reforms. The euro zone has to get used to the new regime. The shock over the tough German line on Greece shows adjustments are needed - from both sides.

How ECB could help solve Greek deadlock – for now

27 Jan 2012

The European Central Bank is under pressure to join private creditors in taking a loss on its Greek bonds. But if the ECB merely agreed not to make a profit, Athens could save up to 15 bln euros. That would clear the way for Greece’s next bailout – and buy politicians some time.

Shrinking deficits needn’t cause death spiral

24 Jan 2012

It’s a Keynesian nightmare: government spending cuts shrink GDP and tax revenues, prompting more austerity and even lower GDP. Greece’s badly deformed economy will struggle to avoid a deep decline. But elsewhere in the world, contractions should soon become expansionary.

What would a Greek plan B look like?

24 Jan 2012

If brinkmanship over a “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. But even after that, the country’s official creditors may save money.