Germany’s thriving job market no solace for Merkel 3 Jan 2017 Unemployment has fallen to its lowest since 1981, and the number of people in jobs is at a record. Chancellor Angela Merkel presided over this happy state but will struggle to leverage it in upcoming elections. Voters are more focused on less predictable flows of migrants.
Best of Breakingviews 2016: Our readers’ top picks 30 Dec 2016 You demonstrated a varied, voracious appetite for insight in 2016. The most-clicked columns, podcasts and graphics encompassed the rise of Trump and Brexit Britain to Singapore, Saudi Arabia, negative rates, tech titans and an ethical dilemma for Harvard's business school dean.
Investment banks’ next trade will be EU education 30 Dec 2016 No European city has as many international school places as London. That’s a problem for firms thinking of asking staff to move their families out of the UK capital following the Brexit referendum. The solution will be for banks to get into the education business themselves.
Hadas: Russian Revolution won’t be the last 30 Dec 2016 Soviet communism initially looked like the future, but rapidly became a cruel failure. Its disappearance left big-government democratic capitalism as the sole surviving system. A century later, that hybrid model is now under global threat. It might not last another century.
Hadas: Four resolutions for a more humane economy 3 Jan 2017 Brexit and Donald Trump’s election are part of a rebellion against the social and economic establishment. Changes are needed to prevent a dangerous disintegration. Here are some suggestions: forget GDP, fight alienation, support communities and promote local decision-making.
Psychedelic drugs enlighten $2.5 trillion problem 29 Dec 2016 That was the cost of mental illness in 2010, an expense set to double by 2030, says the World Economic Forum. Psilocybin, magic mushrooms' active ingredient, has alleviated suffering in clinical trials. Illicit stigma aside, high returns on investment could make it worth a trip.
Banking whales have had their day 29 Dec 2016 A year ago, Bank of England boss Mark Carney suggested regulators had cracked the "too big to fail" bank problem. Yet new rules keep coming, and international cohesion is fading. The biggest cross-border lenders like HSBC will find it ever harder to make their cost of capital.
Diverging central banks will power dollar in 2017 28 Dec 2016 Donald Trump’s promise of increased U.S. government spending and the likelihood of tighter Fed policy contrast with continued weak growth and loose monetary conditions in the euro zone and Japan. That means the greenback is set to get stronger against most other currencies.
ECB’s tough love is good for banks, bad for Italy 28 Dec 2016 The European Central Bank says Monte dei Paschi needs 9 bln euros of extra capital - up from 5 bln euros - after seeking state aid. Raising the bar is a prudent response to prolonged uncertainty. But it adds to Rome’s debt, and may push up the bailout bill for other banks.
Europe’s best antidote to populism is unpopularism 28 Dec 2016 Parties that promised to take on the elite had a roaring 2016. Even so, the withering of the moderate centre isn’t inevitable. In Greece the pendulum is swinging away from radical government. Liberals with sound economic policies can win – if they’re willing to make enemies.
Spanish banks get their mortgage comeuppance 21 Dec 2016 Domestic lenders must refund excess interest charged on housing loans with floor clauses, after the European Court of Justice unexpectedly overturned a Spanish ruling. Fair enough: the original verdict was too kind on banks. The hit to earnings looks painful, but manageable.
EU’s de-stressed insurer test is self-defeating 16 Dec 2016 Life insurers look weak in their first stress test since so-called Solvency II reforms. Regulatory carve-outs mean they may not necessarily need capital. But the anonymous nature of the exercise means that investors can't be certain which are the ones to avoid.
Brexit transition deal offers Lloyd’s scant cover 15 Dec 2016 The London insurance market is pushing ahead with the launch of a subsidiary that could conduct EU business after Britain leaves the bloc. Lloyd’s of London is not waiting to see whether politicians can secure extended access to the single market. Banks may take a similar view.
EU bank forbearance trade may get another boost 14 Dec 2016 Europe's lenders may need 276 bln euros of new debt to shield taxpayers from bailouts, says a regional watchdog. The market might struggle to absorb the volume. However, most banks are yet to face hard deadlines. It’s another area where regulators might help out investors.
Basel set to fill bank capital holes – with fudge 13 Dec 2016 Global standard setters could allow lenders to hold less capital against assets than previously flagged. It's a predictable compromise to help the worst affected European banks, while heeding U.S. calls for more uniformity. Banks will be pleased; hairshirt supervisors less so.
Brexit transition may ease not remove uncertainty 13 Dec 2016 UK Chancellor Philip Hammond sensibly wants banks to have continued access to Europe's single market after Britain's departure to protect financial stability. That would give them longer to make alternative plans - but also risks prolonging doubts about the final arrangements.
Italy’s next PM is a Five Star gift for populists 12 Dec 2016 Paolo Gentiloni has to fix the banks, sort out voting rules and steer the country to elections. A replacement for Matteo Renzi is better than a vacuum. But given the new leader is from the same party, doing too good a job might just hand power to the populist 5-Star Movement.
Draghi’s market first-aid kit ready for 2017 8 Dec 2016 The ECB boss is extending the central bank’s asset buying until the end of next year but will unexpectedly reduce purchases from April. It may sound muddled. In fact, these and other changes give Draghi more scope to support markets throughout a politically fraught year.
MPS solution requires further bondholder sacrifice 7 Dec 2016 The Italian bank has secured a fifth of the 5 billion euros it needs in new equity by turning some bonds into shares. The priorities are to protect retail depositors and attract outside investment. Institutional investors, and Brussels, will both have to give a little.
French bond rot has capacity to spread 7 Dec 2016 Gallic bonds are trailing euro zone peers. This suggests investors are worrying that the far-right's Marine Le Pen might do better in the 2017 presidential elections than polls show. Were her chances to improve materially, market damage would quickly spread across the region.