Europe holds a key to Turkey’s crisis 24 Dec 2013 Prime Minister Erdogan has upped the conspiracy rhetoric to criticise a corruption probe engulfing government officials. Investors are edgy. The intra-government issues are domestic, but without a clear prospect of joining the EU, Turkey has less incentive to liberalise.
Western debt magic is poison for Africa 24 Dec 2013 A poor continent with limited savings is hugely vulnerable to a credit crunch. Africa desperately needs capital, but only the sort that can’t easily leave. Speculative investors and yield-hunters will eventually do more harm than good. There’s a caution here for Bob Diamond.
Carney will struggle to sustain BoE governorship 23 Dec 2013 The UK’s central bank chief is a vulnerable hostage to fortune. The Canadian thinks the British economy will enjoy economic recovery with low inflation and no housing market mess. If he’s right, he’ll be fine. If he’s wrong, Carney will find himself friendless.
Hollande could use electoral defeat to change tack 23 Dec 2013 No French president has been more unpopular than François Hollande, and the economy is stalling. Major defeats loom for his Socialist party at the municipal and European elections. That needn’t be such a bad thing if terrible results prompt him to change both style and substance.
Germany will lift the soccer World Cup 20 Dec 2013 The football-mad Brazilian hosts have won five times, more than any other country. But on Breakingviews’ analysis of the hard numbers – the players’ transfer value, population, participation and public engagement – Teutonic power will squash the romantic dream of a sixth win.
Spain embarks on dispirited recovery 20 Dec 2013 The country may be growing again, but it won’t feel like it in 2014. Few will find jobs. The proportion of temporary workers will stay high. More people will emigrate. Without further action, Spain’s unemployment rate could remain double digit for the next 15 years.
Deutsche, MPS find convenient exit from swaps mess 20 Dec 2013 Monte dei Paschi has settled a lawsuit with Deutsche Bank over their controversial financing deal. MPS pays 220 mln euros less to close the position and pleases regulators by cutting exposure to Italian government bonds. Deutsche gets shot of one of its trickier legal issues.
China is moving closer to its “Dubai moment” 20 Dec 2013 The emirate in 2009 shocked lenders who assumed it stood behind all local debt. As China shifts to a more market-based financial system, it will have to draw a clearer line between public and private loans. A system for protecting bank deposits is crucial to limiting the fallout.
Markets quaff perfectly mixed punch 19 Dec 2013 It sounds like a paradox: stocks go up when the Fed takes some money away. But investors have figured out that central bankers see economies which are strong enough to provide profit growth but too weak for serious tightening. The party could last until inflation reappears.
Khodorkovsky pardon comes too late to matter 19 Dec 2013 Russian President Vladimir Putin says he will pardon the jailed former oligarch. Years ago, such clemency might have signalled openness to reform. Today it has nothing to do with political or economic liberalisation. It just reflects a desire to make the Sochi games run smoothly.
Fixed income trading goes from bad to worse 19 Dec 2013 Revenue from rates, credit, currencies and commodities was down 18 pct in 2013. The effects of scandals, new rules and central bank policy could lop off at least as much again in the next 12 months. Recent changes at investment banks mean some will suffer more than others.
Italy gathers ingredients for a slow-cooked reform 19 Dec 2013 Shifts in Italian politics are making reform possible. Silvio Berlusconi has been chased out of government; a reformist leader is taking over the centre-left. Italy needs speedy political and economic medicine to escape its debt trap. At least 2014 won’t be worse than 2013.
Roland Berger offers strategic dilemma case study 19 Dec 2013 The professional know-it-alls dithered over selling their management consultancy to Deloitte, PwC or E&Y, and then opted to stay independent. Being swallowed would have changed the firm. But staying small in a consolidating sector will involve some suffering.
The wrongs and rights of the euro banking union 19 Dec 2013 The EU governments’ agreement on how to resolve failing lenders looks complex and hard to implement, and it could worsen the fragmentation of euro zone banks. But it is a start. And the final compromise lowers the political barriers to fixing the southern countries’ lending woes.
Astra’s $4.1 bln divorce from BMS JV looks happy 19 Dec 2013 The pharma group is taking full control of its diabetes venture with Bristol-Myers Squibb. It’s a logical and fairly priced move enabling each firm to focus on core strategies. The assets may not be great, but Astra’s fightback against its fundamental challenges is gaining ground.
Sochi showcases sub-zero Russian investment appeal 19 Dec 2013 The most expensive Olympics in the games’ history will be a window for Russia’s corruption and economic degradation. Investors will be reminded that Vladimir Putin is not a man to do business with.
Raise a glass to Graham Mackay, king of Big Beer 18 Dec 2013 The SAB chairman, who died at 64, used M&A and a London listing to create South Africa’s most successful multinational. But the man who kicked off global consolidation of the brewing business didn’t live to see its logical apotheosis – a deal with Anheuser-Busch InBev.
Inflation is the sleeping dog in UK recovery 18 Dec 2013 Britain is creating jobs faster than expected, yet inflation is surprisingly benign. A high-employment recovery is welcome. But the housing market is bubbly and inflationary pressure will gradually build - in defiance of the Bank of England’s low-for-long policy on rates.
Edward Hadas: a Christmas message for lenders 18 Dec 2013 This is the season for racking up debts in the provision of seasonal goodwill. It should also be a time to think about debt forgiveness. Excessive borrowing brought five years of global suffering. Obligations shouldn’t be sacrosanct; generosity to borrowers makes economic sense.
Ukraine’s Russian lifeline means European pain 18 Dec 2013 Vladimir Putin has agreed to buy $15 billion worth of Ukrainian bonds and to sell gas to Kiev at a discount. The deal gives relief to Russia’s troubled neighbour but costs Moscow little and buys valuable influence. Pro-EU demonstrators in Kiev and other cites won’t go home soon.