Hugo Dixon: Greece may not need debt haircut 17 Aug 2015 No single measure, such as debt to GDP, adequately captures how unsustainable Athens’ balance sheet is. Most other yardsticks show Greece needs debt relief. But cutting the face value of its borrowings is probably not required.
Greek bank bail-in threat starts to recede 13 Aug 2015 Savers have rightly feared their deposits may get turned into equity. Draft proposals for Athens’ new bailout imply this may be unnecessary. It probably isn’t enough to entice private investors, but boosting depositor confidence is an important step in clearing up Greece’s mess.
Greece deal leaves euro intact but fragile 11 Aug 2015 Athens may get its bailout after Prime Minister Alexis Tsipras gave in to reform demands. Quitting the euro is much less likely. It suggests currency union can bear the near-exit of a peripheral state. Economic rifts between core members, though, remain the big future risk.
Hugo Dixon: How to fix Greece’s banks 10 Aug 2015 The banks are the weakest point in the country’s economic system. They need to be repaired in order to lift capital controls, restore depositor confidence and finance a future recovery. There are some good ways of doing this, even if the best options aren’t making much headway.
Greece still deserves its place in the euro 10 Aug 2015 While Greece may get a bailout, the recent crisis cast doubt over its place in the euro. Ejecting Athens from the single currency would make sense if it is exceptionally bad, incapable of reform, and its exit made the euro zone stronger. None of those arguments are clearly true.
Hugo Dixon: Euro zone doesn’t need political union 3 Aug 2015 The Greek crisis has triggered renewed calls for a euro zone government, budget and parliament. But such a political union isn’t needed, desirable or achievable. Instead, the euro zone needs more market-based solutions to thrive.
IMF’s parental threat may help euro kids grow up 31 Jul 2015 The global lender only got involved in the Greek mess because the euro zone was too young to deal with its own problems. As a third bailout nears, the IMF says it wants out, unless both sides behave sensibly. This call for realism may actually be listened to.
Varoufakis gives Greece the gift of a scapegoat 29 Jul 2015 The former finance chief’s alarming tales of trying to hack state computer systems might be just what the debt-stricken country needs. Ask China, which has long recognised the value of a strategic purge. Rogue elements breed discord, but once expelled, they can create more unity.
Hugo Dixon: The optimist’s guide to Greece 27 Jul 2015 There are so many ways things could go wrong in Greece that it’s easy to miss how things could also go right. The good scenario involves the ECB buying up Greek bonds, the lifting of capital controls and a deal on debt relief – all by year-end.
ECB faces tricky call on Greek bank solvency 20 Jul 2015 With Athens’ lenders open again, attention now shifts to Frankfurt’s supervisory test of their capital strength. Half of their buffer is deferred tax credits, which supervisors hold in low regard. But taking a tough approach makes a painful bail-in of depositors more likely.
Greek anger reflects fall, not level, of income 16 Jul 2015 The bailout plan was approved, with bitterness all round. Economist Branko Milanovic’s comparison with Portugal helps explain the ire. The average Greek has consumed more over the last 20 years, but now has less. The political effect of the drop is much worse than the economics.
Greek exit talk leaves euro investors unperturbed 15 Jul 2015 A taboo was broken when Germany suggested Athens could leave the European monetary union, albeit temporarily. In theory, if one country can exit, so can another. But markets aren’t pricing in any redenomination risk. Greece is being treated as an exception, not a precedent.
Edward Hadas: Greece, China and financial failure 15 Jul 2015 Not noticing how loans were distorting the Greek economy led to a crisis. In China, the financial system’s ability to create illusory wealth is causing bother. The authorities are lost everywhere. They would do better if they treated finance as an unruly servant of the economy.
IMF gives Greek debt relief a helpful shove 15 Jul 2015 The International Monetary Fund’s conclusion that Greece’s debt is less sustainable than it was is a statement of the obvious. It’s unlikely to prevent Angela Merkel from winning approval for the country’s latest bailout. But Germany will eventually have to accept the hard truth.
Hugo Dixon: Greek PM shouldn’t waste crisis 15 Jul 2015 Now that Alexis Tsipras’ Syriza party is splitting, he can form a credible and stable new government. That could put relations with Greece’s creditors onto a constructive footing and turn the economy around. If Tsipras squanders the chance, the country will be doomed to failure.
Germany’s Greek bullying can be a one-off 14 Jul 2015 The Athens diktat is a risky deviation from German self-constraint in Europe, and would be toxic if it became a new leitmotif. But Berlin’s brute force method was provoked by a misguided Greek strategy that hit trust. German over-assertiveness can remain the exception.
Hugo Dixon: Euro zone should take over Greek banks 14 Jul 2015 Instead of lending money to Athens so it can recapitalise its stricken banks, the creditors should pump money directly into the lenders themselves. This will help sever the doom loop between the Greek state and its banks. It will also make Greece’s debt more sustainable.
Greece sends periphery bank bulls to the abattoir 14 Jul 2015 The 25 billion euro support programme for the stricken state’s banking sector means private-sector investors who bet big in recent years face losses. Canada’s Fairfax and Wilbur Ross are among them. It rather takes the shine off major gains made in other periphery euro states.
Hugo Dixon: Greek deal leaves bitter aftertaste 13 Jul 2015 Berlin was right to point out that Athens had lost Europe’s trust. But by pushing the Greeks so hard, Germany is also losing Europe’s trust. The summit’s eventual outcome is reasonably fair if tough. But both leaders, Merkel and Tsipras, need to work hard to rebuild trust.
Greek bank salvation may still have sting in tail 13 Jul 2015 Greece’s lenders are getting another 25 billion euros in bailout recap money. With a deal in place, more ECB crisis loans should also materialise. But the central bank may not provide them today, and a new Greek bail-in regime raises uncertainty for depositors.