Euro Zone

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. 

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.

Euro zone economic bright spots conceal a malaise

30 Jul 2015

The region’s recovery continues, with extra sunshine in Spain. However, inflation remains disturbingly weak, and monetary union is failing at its most basic task, economic convergence. A new ECB study shows that differences between members’ real GDP per person have grown.

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.

Edward Hadas: Stop knocking the euro

22 Jul 2015

Ben Bernanke thinks the single currency is failing. He is not alone. But the former Fed boss is too short term and too financial. The euro zone has tough structural economic problems. The currency is different. Its future is political, and bright. 

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. 

Hugo Dixon: Mario Draghi is having a good war

20 Jul 2015

The ECB president has done almost everything he can to keep Greece in the euro without breaking the central bank’s rules. Although Draghi has been attacked by Athens for asphyxiating the country and hardliners for showing excessive leniency, he has got the balance about right.

Schaeuble looks immune to Varoufakis-style exit

15 Jul 2015

Like his former Greek colleague, Germany’s finance minister has become a liability. After openly calling for Grexit and then questioning an agreed deal, he is not the man to lead future negotiations. The catch is German political realities mean Angela Merkel needs him.

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: Greek deal leaves bitter aftertaste

13 Jul 2015

Berlin was right to point out that Athens had lost Europe’s trust. But by pushing the Greeks so hard, Germany is also losing Europe’s trust. The summit’s eventual outcome is reasonably fair if tough. But both leaders, Merkel and Tsipras, need to work hard to rebuild trust.

Greek bank salvation may still have sting in tail

13 Jul 2015

Greece’s lenders are getting another 25 billion euros in bailout recap money. With a deal in place, more ECB crisis loans should also materialise. But the central bank may not provide them today, and a new Greek bail-in regime raises uncertainty for depositors.  

Hugo Dixon: Syriza split best outcome for Greece

11 Jul 2015

PM Alexis Tsipras secured overwhelming parliamentary backing for his U-turn on austerity and reform, but his party has splintered. A new government, which is more serious about implementing whatever bailout programme is negotiated with creditors, will now probably be formed.

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.

Hugo Dixon: Blame game is spur for any Greek talks

6 Jul 2015

Athens and its euro zone creditors may restart negotiations in the next few days. But the gap between them is huge. The protagonists may go through the motions to show they have tried rather than because they expect a deal will be clinched.

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.

Tsipras departure could unlock Greek debt relief

3 Jul 2015

European creditors are wary of writing off Athens’ debts because it could set a precedent. Yet if Prime Minister Alexis Tsipras resigns after the referendum, a deal should be doable. Few politicians would follow his path of capital controls, economic strife and career implosion. 

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.