Debt

Hugo Dixon: Tsipras looks like he is crumbling

1 Jul 2015

With Athens defaulting to the IMF, public opinion moving against the Greek PM and the banks closed, Tsipras seems desperate for a deal with his creditors. But it is not clear they will cut him any slack. They may prefer to deal with his successor.

New Greek bailout bid mixes chutzpah with caution

30 Jun 2015

Athens wants a last-minute EU backstop loan to avoid a technical default if it doesn’t repay the IMF on Tuesday. Assuming the answer is no, it might convince Greeks to vote for euro exit. It could also serve as a signal to the ECB not to cut off emergency Greek bank loans.

Puerto Rico mixes bitter sovereign-muni cocktail

29 Jun 2015

The U.S. territory says it can’t repay $72 bln of debt. A national borrower could try to devalue its way out of the mess. But Puerto Rico, like Greece, doesn’t have that option. A Detroit-style bankruptcy would require changes in U.S. law. It’s the worst of both worlds.

Hugo Dixon: It’s still possible to stop Grexit

29 Jun 2015

Athens has declared a six-day bank holiday after talks with its creditors broke down. But there are several ways Greece can still avoid quitting the euro. The most obvious is to vote in the coming referendum for the terms offered by the euro zone and International Monetary Fund.

ECB should resist giving Tsipras more ammunition

28 Jun 2015

Greece will shutter banks and limit withdrawals after the ECB refused to increase funding. That could help leader Alexis Tsipras convince Greeks to back euro exit in a July 5 referendum. The ECB could counter by maintaining its loans even if Greece defaults on the IMF this week.

U.S. justices leave door ajar to risky home loans

25 Jun 2015

The Supreme Court confirmed that even neutral housing policies can be illegal if they have a prejudicial effect. That keeps banks and other mortgage providers vulnerable to claims of unintentional bias. More bad lending practices, not less discrimination, could be the result.

Guest view: What Argentina teaches about Greece

25 Jun 2015

The South American nation tried to live a currency lie in 2001. But even clever schemes could not stave off crisis. Fernando Fernandez of IE Business School argues that Greece is in a similar situation. Clever plans cannot save the country from an untrustworthy government.

Time for EU to end Greek debt relief omerta

25 Jun 2015

Euro leaders in Brussels are refusing to discuss an easing of Athens’ debt pile until Greece makes solid reform pledges. That may make sense politically. But debt relief is a necessity, rather than a nice-to-have. If it were offered now, Greeks might budge on structural reform. 

Greece stumbles towards dissatisfying compromise

23 Jun 2015

Any deal would be good, but the agreement being cooked up by Greece and its creditors in the EU and IMF looks decidedly unappetising. Athens’ government may introduce growth-slowing tax rises. More substantial reforms remain far distant. The crisis is far from over.

One of America’s best-run banks curiously kowtows

11 Jun 2015

U.S. Bancorp, the nation’s fifth-largest lender, is cranking up in big mortgages. CEO Richard Davis admits it’s merely to please shareholders hungry for loan growth, even if it’ll fall short of the bank’s 15 pct return of equity. Though small, such pandering can presage a crisis.

Student loans flunk lessons of Wall Street crisis

9 Jun 2015

Uncle Sam may forgive up to $3.5 bln of debt for students who attended a now-defunct college network accused of fraud. That’s good for grads. But the government’s shoddy approach to lending to its students smacks of banks in the mortgage boom. Time to pay more attention in class.

New debt rules squeeze India’s crony capitalists

9 Jun 2015

Lenders will now be able to convert debt into a controlling equity stake in failing companies. It sounds like basic capitalism. But in India’s skewed system, the relationship between banks and borrowers is more complex. The central bank’s move is necessary micro-management.

Hugo Dixon: How Greece can cut a goodish deal

4 Jun 2015

Athens’ creditors haven’t quite delivered an ultimatum. Greece can probably get somewhat less austerity and an indication of some debt relief if it plays ball. The PM’s best option is to make one last push for concessions, then sign the deal, even if it splits his party.

Supreme Court gives risky home loans a welcome mat

2 Jun 2015

The U.S. justices say second mortgages survive borrower bankruptcies – even when a first lien exceeds a property’s value. That shelters the kind of lending that helped inflate the housing bubble. Banks need incentives to offer credit carefully, not raise the roof like it’s 2006.

ECB can live with bankrolling Greece

19 May 2015

Athens’ borrowing from the European Central Bank has Germany’s Jens Weidmann fretting over euro zone rules that prohibit monetary financing. The ECB’s guilt depends on the severity of its judge. In the real world, its pragmatic approach looks defensible and effective.

Junk status complicates Windy City’s fiscal fix

15 May 2015

A Moody’s downgrade on over $8 bln of Chicago’s debt reflects years of mismanagement. But the move has a rare whiff of credit-agency activism that could spark a downward spiral. No wonder the city of big shoulders is angry. Luckily its mayor, Rahm Emanuel, knows how to brawl.

Bond turmoil signals new era of return-free risk

15 May 2015

Forget the risk-free rate - investment safe havens are in short supply. Cash can be costly. Gold is a dollar proxy. And recent gyrations in the largest debt markets have undermined the concept of risk-free returns. When this last compass fails, investors are really at sea.

Draghi is winning the main QE battle

12 May 2015

Had European Central Bank bond-buying aimed to depress yields, Mario Draghi would be in a bad way. Yields have risen since the ECB chief pushed the button. But inflation expectations are a more critical target, and they are up, albeit partly because of an oil price rebound. 

Edward Hadas: The great British deficit confusion

6 May 2015

David Cameron and Ed Miliband both want to balance the UK government’s budget. But the prime minister and the opposition leader seem to misunderstand how government debt works. They are not alone. The obsession is shared by some deficit-loving and deficit-hating economists.

ECB’s limits fuelled flash crash in German debt

6 May 2015

The rules of the euro zone central bank’s debt-buying encouraged investors to pile into relatively scarce Bunds. But a small market shift spurred a rush to sell. Rational trading in this irrational QE game led to non-linear – that means big – price changes. More can be expected.