Berlusconi’s loss could be Murdoch’s gain in TV 17 Nov 2011 Rupert Murdoch is the most obvious business beneficiary if Silvio Berlusconi’s stranglehold on Italian media loosens. Reform of the sector is badly needed, if some way off. That could ultimately lure new players, such as Germany’s Bertelsmann.
UniCredit’s capital hike is a wager on Europe 14 Nov 2011 Given market nerves, the Italian lender’s plan to raise half its market cap from shareholders looks bold. For investors who have hung on this long, pumping in 7.5 bln euros is a bet that Italy can avoid disaster. But UniCredit’s deleveraging plan shows the broader economic risks.
Euro fate hangs on Super Mario Bros 14 Nov 2011 Even if Mario Monti can form a strong government in Italy, the euro zone is vulnerable to bank runs and a deflationary spiral. Stopping that is the role of the ECB’s Mario Draghi. The zone needs reform but looser monetary policy. With Berlusconi gone, maybe they can do a deal.
Berlusconi ouster isn’t like Arab Spring 14 Nov 2011 Some Italians see similarities with Mubarak or Gaddafi in the toppling of their PM. But while Berlusconi distorted democracy, he wasn’t a dictator. And he was removed by bondholders, not the people. If Italy is to reform, voters must acknowledge their complicity in his regime.
France fights a scary case of Italian flu 11 Nov 2011 The French bond market is starting to flash warning signals. The trauma of the Italian rout is partly to blame, but France’s own creditworthiness isn’t pristine either. If investors start to think of it as risky, the euro zone crisis will enter a whole new, dangerous phase.
Three ways to bring Italy back from brink 10 Nov 2011 An apparent U-turn by Silvio Berlusconi means there’s now a reasonable chance of a national unity government headed by Mario Monti. While that would be good, three more steps are needed to stabilise the country: a crack-down on “baby” pensions, a wealth tax and privatisation.
Euro zone shouldn’t revel in technocratic fantasy 9 Nov 2011 Italy and Greece may soon be ruled by technocrats with expertise but no political clout. That’s the wrong mix. In crisis, tough reforms must be backed by the legitimacy of a national unity government. Technocracy may look tempting, but you can’t take politics out of government.
Italy faces nerve-racking game of chicken 9 Nov 2011 Bond yields have shot through 7 pct. The PM’s resignation doesn’t instantly lead to a national unity government able to grasp the country’s problems. Bickering politicians will have to be brought into line by markets – and continued pressure from the rest of the euro zone.
Euro zone should prepare post-Berlusconi bazooka 8 Nov 2011 Germany and the ECB have been right to keep Italy on tenterhooks so long as it had a delinquent government. But even a credible new government will probably need help to get its borrowing costs under control. That means unleashing the central bank’s firepower in one form or other.
Italians unlikely to rally around bond-buying call 8 Nov 2011 An Italian businessman has bought an ad urging his countrymen to buy government bonds. It’s nice to see Italians willing to fix their problems. But bond prices are falling, and citizens already own 16 pct of Italy’s debt. They may find that lending to their country is a dud call.
No magic number can solve Italy’s bailout riddle 8 Nov 2011 Some investors think the country’s debt load will become unmanageable when bond yields hit 7 percent. Others worry about margin calls when spreads rise 450 basis points above risk-free debt. But both numbers can be confusing. Besides, the Italian bailout has already begun.
EU perched between chaos and catharsis 7 Nov 2011 The political dramas in Athens and Rome are reaching crisis point. One path leads to destruction; the other rebirth. Though there are signs of hope, a few more missteps will lead down into the chasm.
New ECB chief must shake off the Italian curse 31 Oct 2011 The incoming president of the European Central Bank inherits a strong currency in a weak monetary union. As Mario Draghi steers the bank through a series of crucial decisions, he needs to tackle Italy’s problems without worrying too much about what the Germans will say.
Roman politics could gum Europe up 31 Oct 2011 The euro’s future hangs on Italy – and Italy’s future hangs on its politics. The best way forward would be a grand coalition replacing Berlusconi’s discredited government. But after the PM’s latest Houdini act, that doesn’t seem likely and other scenarios aren’t as attractive.
It’s still Italy, stupid 28 Oct 2011 Amidst the post-euro summit euphoria, it’s easy to ignore that the cracks have only been papered over in Rome. Not only do Berlusconi’s reform promises not go far enough; there’s a risk that his government will limp on until January, and then collapse having achieved nothing.
It’s Italy, stupid 24 Oct 2011 The big issue dwarfing all others now in the euro crisis is how to save Italy. Financial engineering of the sort discussed at the weekend summit will, at best, buy time. Ultimately, Rome needs to save itself. With political will, it can.
Wall Street dealmakers get trampled by PIIGS 10 Oct 2011 The fear and uncertainty over Europe has sent the cost of U.S. credit skyward. By one closely watched gauge, junk bonds are yielding almost five percentage points more than they reasonably should. Given the bureaucratic dithering, bankers and buyout barons may be idle for a while.
How Italy could cut its yields to 3.7 percent 6 Oct 2011 First-loss insurance from the euro zone’s bailout fund should do the trick, according to Breakingviews calculations. Even after adding an insurance fee, Rome’s all-in cost would be around 5 percent.
IMF bond-buying a potential euro game-changer 5 Oct 2011 The International Monetary Fund says it might buy sovereign bonds to help the euro zone fight the contagion effects of the Greek crisis on Italy and Spain. This could work if both countries continue to reform, and once the region’s weaker banks have been shored up.
France and Italy sitting on share sale goldmine 29 Sep 2011 The halting of Spain’s giant lotto IPO doesn’t change the logic of further asset sales by euro zone members with high debt. It’s not just the peripheral countries. France alone could plausibly raise $50 bln from trimming its holdings.