Government Debt

German politics has become Europe’s weak link

15 Feb 2018

The country’s Social Democrats will ballot members on their coalition deal with Chancellor Angela Merkel. Party infighting means approval is not assured. A rejection could lead to a new vote or a minority government. Either would make it harder to push through European reforms.

Trump budget is mostly fan fiction for Republicans

12 Feb 2018

The administration called for cuts in non-military programs in its $4.4 trln budget for 2019. Last week’s two-year spending deal effectively dooms the plan, though it may offer a blueprint for GOP budget hawks. A new infrastructure push offers one hope of bipartisan dealmaking.

Congress holds its nose over U.S. fiscal restraint

8 Feb 2018

The legislature passed a deal early on Friday to raise spending by several hundred billion dollars, just two months after a $1.5 trln tax cut. The strain on government coffers during a roaring economy will leave politicians with far less ammo when the next downturn arrives.

Predictions are hard, especially about the future

7 Feb 2018

Even so, Reuters Breakingviews attempts it each year. The latest effort, “Froth and Frustration,” inspired a series of events and discussions. We also polled audiences from North America to Asia and beyond on key issues. Here’s the outlook for 2018 in text, video and graphics.

Cox: Sliding stocks don’t surprise our readers

5 Feb 2018

From Mumbai to Milan, we polled participants at our Predictions 2018 summits. Even before last week's rout, most thought investors are too exuberant, bitcoin is a bubble and Donald Trump is doing poorly. More surprising were regional takes on NAFTA, Italian elections and Brexit.

Bad things may come in threes for stock investors

2 Feb 2018

U.S. wage growth and 10-year Treasury yields are both nearing 3 percent. The former may hasten rate rises and erode companies’ profits. The latter will boost borrowing costs and make it less attractive to hold stocks. That could spook an equity market priced for near perfection.

Carillion mess puts Corbyn a step closer to power

18 Jan 2018

Even before the contractor imploded, the public contracts it operated were known to be expensive. After Carillion it’s hard to argue private sector efficiency justifies the cost. UK Opposition leader Jeremy Corbyn’s preference for a bigger public sector is increasingly in vogue.

Viewsroom: China’s dubious shot across U.S. bow

11 Jan 2018

Talk of buying fewer of Uncle Sam’s bonds may be Beijing’s way of showing some teeth as the Trump administration mulls import tariffs. But as with other retaliatory trade tactics, it would hurt China too. Plus, why Nelson Peltz doesn’t want to be called an activist investor.

German economic success lays trap for Merkel

11 Jan 2018

The strongest growth in six years and the rude health of public finances may tempt a weakened Chancellor Angela Merkel into budget giveaways. But low interest payments flatter the fiscal picture and won’t endure. Better to invest in infrastructure and education than to cut taxes.

Hadas: Fiscal debts are not our children’s burden

10 Jan 2018

When this generation dirties the water, the next has to pick up the tab. Debt is different. When governments borrow from taxpayers, the children will both pay the bill and enjoy the proceeds. The real deficit dangers lurk in foreign debt and distributional distortions.

China’s U.S debt talk reveals weak trade-war hand

10 Jan 2018

Beijing may slow or halt Treasuries purchases. It’s the biggest holder of Uncle Sam’s liabilities, so in theory the People’s Republic has leverage as the White House mulls imposing tariffs. As with other measures China could take, though, it would cause damage at home.

Greek banks’ sour loans face reality check in 2018

5 Jan 2018

Lenders plan to shrink their bad debts by 37 pct over two years, including through sales. A recovering economy and falling government bond yields should help. But without a clearer picture of what buyers might pay, shareholders have little clarity over how much pain lies ahead.

Italy will go back to its old ways in 2018

2 Jan 2018

The country’s flawed electoral law will produce a hung parliament in national polls. Reformist forces will be weaker while former Prime Minister Silvio Berlusconi will gain traction. A return to the frail coalitions of the past makes it harder to cut public debt and red tape.

China pulls disappearing debt trick

20 Dec 2017

Beijing talked up better-quality growth and risk management in its latest annual economic preview. But reducing the country’s $30 trln debt load, last year’s “top priority,” was barely mentioned. It’s a worrying sign if China’s leaders can’t kick the country’s credit addiction.

Portugal beats Italy in bond market pecking order

15 Dec 2017

The country that needed a bailout in 2011 can borrow for less than its larger peer. Investors’ preference for Portuguese debt reflects its more vibrant economy, and messy Italian politics. Lisbon can keep outshining Rome, so long as lax bond markets don’t encourage bad habits.

U.S. doesn’t even have a corporate tax problem

30 Nov 2017

Proposals in Congress would cut the levy on companies and, temporarily, on individuals. The move may give a late-cycle boost to the economy but add to the deficit and debt. The irony is that corporate profit is already plentiful while Uncle Sam's tax take is historically low.

UK plays weak hand badly in Brexit poker

29 Nov 2017

The country has reportedly bowed to EU demands that it pay up to 100 bln euros when it leaves the bloc. Months of haggling have wasted time and goodwill even before the start of talks on trading arrangements. The outcome shows the UK has a lot less leverage than it pretends.

UK’s post-Brexit industrial plan lacks ambition

27 Nov 2017

The government has promised to boost research spending, improve education and upgrade infrastructure. Leaving the EU makes this more important, but less affordable. Even if Britain was not breaking from its largest partner, however, the goals would be strangely short of oomph.

India rating upgrade confirms Modi on right track

17 Nov 2017

Moody's unexpectedly upgraded the country's credit rating for the first time since 2004, in a major boost to Premier Narendra Modi. This recognises that, despite short-term disruption and some negative sentiment, recent reforms will fundamentally improve the economy.

Venezuela’s Maduro enters alternate reality

3 Nov 2017

The OPEC member's socialist leader wants to restructure the ailing country's foreign debt, putting an alleged drug trafficker in charge of working out how. U.S. sanctions make any refinancing virtually impossible. But even default might not drive the hapless president from power.