Government & Agencies

EU debt’s credibility problem is worsening

9 May 2023

Borrowing costs of the bloc’s jointly issued bonds have risen above those of similarly rated sovereigns. The EU’s inability to deliver on promised joint revenues is exacerbating the impact of higher rates. That in turn reinforces investor fears that Brussels debt isn’t permanent.

Joined-up G7 is best China deterrent

8 May 2023

To discourage the People’s Republic from invading Taiwan, US allies in Europe must first agree it’s in their vital interest to do so. Then Group of Seven leaders, who meet in Hiroshima this month, need to cut dependence on China while ramping up their defences, says Hugo Dixon.

Beijing expects foreigners to trust, not verify

5 May 2023

Officials say they welcome overseas investors while they raid due-diligence firms and restrict corporate and economic data. China’s confidence in its attractiveness and ability to fund its own companies is not baseless. Yet it’s a risky time to take foreign cash lightly.

Hot money is cold comfort for China shares

2 May 2023

Foreign interest in Chinese equities revived in the start of 2023. Yet recent routs in New York, Hong Kong and Shanghai suggest inflows came mostly from fickle quick-hit traders. Beijing wants long-term investors to stabilise the market, but reassuring them will be tricky.

Jamie Dimon bails out First Republic – and FDIC

1 May 2023

Even after JPMorgan’s boss vowed never to ride to the rescue again, he’s leading another one. His mega-bank gets nearly $229 bln of assets at a discount, a government loan and a loss-sharing deal. It’s good for shareholders but also entrenches the too-big-to-fail mentality.

Digital “Chicago Plan” fixes many financial woes

28 Apr 2023

In the 1930s, economists drew up a radical blueprint to create safer banks. The advent of digital currencies issued by central banks is an opportunity to revisit the idea, writes Edward Chancellor. A shift could stabilise banking, reduce inflation, and even lower government debt.

Capital Calls: US GDP, Eli Lilly, EU budget

27 Apr 2023

Concise views on global finance: Consumer spending provided fragile support for the US economy in the first quarter. Meanwhile pharma group Eli Lilly is racing against rising obesity expectations, and the European Commission faces German hurdles to replacing its budget rules.

TikTok ban is the least palatable of options

26 Apr 2023

Montana wants to block the Chinese-controlled short-form video service from operating in the state. The White House is mulling a similar strategy. But banning the app from 150 mln US phones is hard and legally fraught. Outside of a sale, a data privacy law is the best outcome.

Debt crisis is a scary white swan for US economy

25 Apr 2023

The US debt ceiling is Biden’s first re-election test, but Washington has made little progress toward averting a government default. Flirting with the deadline in 2011 rocked the financial system. Partisan bickering could inflict pointless and predictable harm on fragile markets.

Exploring the City of London’s existential dread

25 Apr 2023

The global financial centre is suffering a spasm of anxiety about its status, while the government is pushing post-Brexit reforms. In this Exchange podcast William Wright, founder of the New Financial think tank, discusses the roots of the malaise and what can be done to fix it.

Credit Suisse mess leaves scattered Swiss debris

24 Apr 2023

A $3 bln state-sponsored UBS takeover prevented the failure of Bern’s other big bank. Yet small, export-oriented Swiss firms now only have one large lender for their needs, and additional bank regulation is likely. Meanwhile, historic US tax issues may come home to roost.

Chile’s lithium grab puts foreign miners on notice

21 Apr 2023

President Gabriel Boric will force producers of the EV battery metal to be junior joint-venture partners to the state. Foreign miners expected a tax hike, and global lithium supplies are diversifying. But Boric’s gambit means copper players like BHP will wonder if they’re next.

Politicians and policy wonks diverge on economy

20 Apr 2023

Prominent policymakers and world leaders met in Washington last week to discuss the economic outlook. In this Viewsroom podcast, Breakingviews columnists explain why US politicians are taking a rosier view of inflation and vulnerabilities in the banking sector than the IMF.

Chinese financiers’ pay cut could cut too deep

20 Apr 2023

Salaries are being slashed and executives arrested as campaigns attacking bad debt and excessive wealth converge. Few sympathise with flashy capitalists, but the private sector could take collateral damage if President Xi Jinping’s rectification push goes too far.

UK growth hinges on more than a new pension giant

19 Apr 2023

Low investment holds back Britain’s economy. To help, politicians and bankers want to consolidate the 2.2 trln pound retirement system into large, Canadian-style pools buying UK assets. Yet better taxes and planning, and more foreign money, would yield a happier ending.

EU bank crisis plan makes best of bad landscape

18 Apr 2023

The European Union’s proposal to extend its bank-failure system to smaller lenders is an attempt to work around political constraints. Broader use of deposit guarantee schemes should limit bailouts and help troubled banks find buyers. But even sensible tweaks may not be possible.

Italy’s corporate power grab nears expiry date

18 Apr 2023

Premier Giorgia Meloni promised to rely on merit to pick new directors at state-backed firms like $54 bln Eni and $7 bln Leonardo. Instead, she’s stuffing boards with loyalists. Hedge fund efforts to push back at $64 bln green star Enel are a reminder the market also has a say.

Rome foot-dragging can help EU kick bad aid habits

18 Apr 2023

The Italian government is clashing with Brussels over 19 bln euros in pandemic loans. Missing milestones is bad policy for the biggest recipient of European aid. But the country’s pushback may have a silver lining if it prompts the bloc to be more flexible with money.

Central bank pilots risk leaving cockpit too soon

14 Apr 2023

Western policymakers at the IMF Spring Meetings hinted that their mission to slay inflation without a recession is nearly accomplished. Investors agree, and hope for rate cuts. That’s overdone. A soft landing is in sight, but so too is the danger of complacency.

A flawed but useful economic model for a bleak age

14 Apr 2023

Ideas become fashionable when they meet the needs of the era. John Cochrane’s fiscal theory, which states that governments ultimately determine the level of inflation, fits the bill. Despite its shortcomings, the model may be helpful, says Edward Chancellor.