Debt

American Dream wakes amid home rental deal signs

21 Sep 2015

The merger of Starwood Waypoint and Colony American to create a company with $8 bln of homes suggests U.S. rentals will keep thriving. Cost savings will add financial strength as youngsters take baby steps into the housing market. Ownership prospects are on the rise, too, though.

German sovereign bail-ins work in alternate world

11 Sep 2015

Finance Minister Wolfgang Schaeuble wants automatic extensions in state bailouts, as a riposte to proposals for common bank insurance. It’s a logical plan. Yet given it looks hard to implement and could undermine fragile euro zone stability, it’s more of a delaying tactic.

Moving millennials may unpack $600 bln punch

9 Sep 2015

Despite better job prospects, many young Americans are living longer with their parents. That curbs spending on housing, as well as on internet service, refrigerators and such. A Breakingviews analysis suggests millennials exiting attics could add 4 pct to GDP within a few years.

Renzi turns reform steamroller to Brussels

8 Sep 2015

Italy’s prime minister, dubbed “the scrapper”, is promising tax cuts. It looks like a challenge to Europe’s fiscal rules. Yet lower corporation taxes are needed, and the ECB will probably keep markets calm. The flipside is that Matteo Renzi’s plan requires that mooted spending cuts actually happen.

Italy rushes through one last flawed bank bailout

7 Sep 2015

Europe is weeks away from a new regime that makes creditors and depositors pay for bank rescues. Yet Rome is still asking Italian banks to pony up 1.4 billion euros to save three small lenders. Bail-ins are unpredictable, but the proposed solution risks leaving the system weaker.

American Express may face its Microsoft moment

4 Sep 2015

The $75 bln credit-card firm led by Ken Chenault is ValueAct’s latest target. It’s not clear how breaking up or returning capital will remedy Amex’s subpar growth and lagging stock. Going after the long-serving boss, ValueAct’s successful strategy at the software giant, might.

Bondholders escape Ukraine with only mild scratch

27 Aug 2015

War-torn Ukraine has agreed a 20 percent haircut with a group of rebellious creditors. That’s half the loss Kiev originally wanted. Yet it’s not much of a victory for lenders either: with the economy in tatters and doubts continuing, creditors will be lucky to escape another hit.

Investors struggle to find true safe havens

26 Aug 2015

Boltholes like U.S. and German bonds or the Swiss franc are benefiting less than might be expected amid equity swings and concern over a slowing China. Investors are rightly wary of once-safe assets that have moved erratically of late. The mystery is where they are going instead.

Yellen may relish opportunity not to communicate

25 Aug 2015

The Fed chair is skipping central bankers’ annual shindig in Jackson Hole this week. For all her institution’s professions of transparency, recent global market ructions mean nothing she might have said would have satisfied anyone. Better to wait until the FOMC meets next month.

Credit doomsayers offer confusion not foresight

24 Aug 2015

Investors were selling corporate bonds before the latest global stock market slide. That could be an echo of the 2008 financial crisis, when equities ignored warnings in credit markets. The message, though, is mixed. Credit pros aren’t reliably prescient Cassandras.

Portugal offers drama without a crisis

20 Aug 2015

Debt is too high, investment too weak, and reforms patchy. Still, the country’s politics are relatively stable, the economy is growing and unemployment is falling. Lisbon has done more to avoid collapse than Greece but has yet to find a way of lightening its fiscal burden.

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. 

Asia’s sly austerity makes debt challenge worse

5 Aug 2015

The region’s companies and households are nursing a debt hangover. Blame China’s credit binge and cheap Western money. But tight fiscal policies are pushing the region in the wrong direction by worsening an economic slowdown. It’s time for governments to loosen the purse strings.

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.

Fannie and Freddie cozy up in Uncle Sam’s basement

24 Jul 2015

Congress wants to fund highway repairs by raising mortgage insurance fees and cap pay for bosses of the two rescued GSEs. Both proposals are well intentioned but encourage the idea that Fannie and Freddie are permanent wards. It’d be better to find ways to help them leave home.

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: Greece could do with a new referendum

10 Jul 2015

Given the havoc caused by the July 5 vote, it might seem crazy to advocate a second one. But Tsipras could this time campaign for Greeks to say “Yes”. If the people took his advice, sceptical creditors would have more confidence that the reforms would be implemented.

Greek "No" vote means ECB can no longer sit on fence

5 Jul 2015

A convincing anti-euro zone vote means the European Central Bank must decide whether to cut the Greek banks off from crisis loans, risking financial meltdown. In theory the ECB may be able to keep the sector going while the dust settles. But that may be politically impossible.

Hugo Dixon: Greece will struggle to stay in euro

5 Jul 2015

After the people gave an emphatic “No” to the creditors’ proposals, there are still several ways Athens could avoid the drachma. But none seems terribly likely. All routes will lead to further hardship.