Euro Zone

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.

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.

Hugo Dixon: Tsipras gambles Greece

27 Jun 2015

The Greek PM is offering the people a choice between bad and extremely bad. Capital controls are likely before a July 5 vote on the creditors’ terms. It’s not clear their offer will be on the table even if the people want it. If they don’t, the drachma and more misery lie ahead.

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.

EU top brass take a sunny view of banking union

22 Jun 2015

The bloc’s five most senior leaders are calling for a common deposit guarantee scheme for euro zone banks. That would push EU harmonisation forward - a much needed tonic with Greece on the brink of an exit. Yet political suspicion over fiscal transfers may still muddy their rosy vision.

Euro is poor yardstick for euro existential stress

22 Jun 2015

The Greek crisis is compromising FX traders’ reputation for being the first and fastest to react to big news. Currency market signals are currently so muddied that stocks and bonds are better barometers of investors’ views on how close Athens is to default or euro exit. 

Hugo Dixon: The big fat Greek blame game

22 Jun 2015

If Greece collapses, the biggest chunk of the blame will go to whoever behaves most unreasonably in the final stages of the current game of chicken. So both sides have an incentive to accommodate each other’s reasonable positions. Hopefully, they realise this.

Hugo Dixon: Greek negotiations need extra time

17 Jun 2015

Despite the inflammatory rhetoric and lack of trust, Athens and its creditors might still be able to do a deal. But to get an agreement, a little more time may be needed. The creditors shouldn’t truncate the talks.

Europe has power to contain Greek bond contagion

16 Jun 2015

Immunity to infection is fading in euro zone debt markets. The gap between German and other yields is widening sharply as Athens and its creditors harden positions. EU authorities can offer boosters to restore the power of their peripheral debt inoculation. They may have to.

Greek bank bad debts as scary as liquidity woes

16 Jun 2015

If and when Greeks stop draining deposits, the country’s banks still face a big problem: not enough equity to absorb losses on bad loans. Soon 40 pct of assets will be in trouble. Some will recover with the economy, but lenders need lawmakers to amend bank-unfriendly rules too.  

Sacyr sale shows Spanish property market split

10 Jun 2015

The 1.8 bln euros paid for the builder’s commercial property unit is at a hefty premium to net asset value. Investors are piling into funds focussed on offices or hotels. The residential market is a different story. The worst is over but it’s likely to bump along the bottom. 

ECB cares about some markets more than others

8 Jun 2015

Mario Draghi is calm about the volatility in government bonds. The European Central Bank president doesn’t share the American fixation with equities. Commodities are out of his control. But an overly strong euro could nip budding inflation. He’ll be watching FX trends closely.

Hugo Dixon: What sort of man is Tsipras?

8 Jun 2015

The next days will define Greece’s PM. He must choose between saving his country and sticking with a bankrupt ideology. If he is brave and smart, he can secure a few more concessions from creditors and a goodish deal for Greece. If not, he will drag Greece into the abyss.

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.

For bonds, crowds are more dangerous than Draghi

4 Jun 2015

The ECB chief’s relaxed attitude to volatility is fuelling gyrations in euro zone debt markets. But Mario Draghi is only stating the obvious. Supposedly risk-free assets have become some of the most perilous. The biggest hazard for investors is being part of too big a herd. 

Bundesbank squeezed by euro’s design flaws

3 Jun 2015

The ECB’s quantitative easing rules reflect the incomplete unity of the single currency. They’re forcing the German central bank to buy more of its government’s bonds than the market can easily provide. In May, the mix of maturities purchased probably added unwanted volatility. 

Euro zone prices give Draghi reason to crow

2 Jun 2015

Prices in the single currency zone are rising a tiny bit. That is welcome news for European Central Bank President Mario Draghi even if he doesn’t deserve much credit, and even though producer prices are still very weak. But the ECB’s fight against disinflation isn’t done yet.

Immigration is crucial to euro zone’s fortunes

2 Jun 2015

The flow of people into the single currency area could account for most of the region’s GDP growth over the next few years. Migration magnifies trends. The slower flow of new workers made the recession worse. A speed-up could turn a tepid recovery into a surprisingly strong one.