ECB’s crisis tool works best if it’s never used 30 May 2023 The European Central Bank is touting its powers to buy sovereign bonds if they come under attack from the market. That has kept traders in check, so far. The trick for Frankfurt officials is to convincingly threaten to deploy emergency measures without ever having to.
Capital Calls: US debt deal 30 May 2023 Concise views on global finance: The pending deal for raising the debt ceiling would shift $20 billion out of the government’s tax collector. The move eases some short-term budget pressures, but could surrender a seven-fold payoff down the road.
Biden gives little, gets less in debt ceiling deal 28 May 2023 The White House reached an agreement with Republicans to raise the debt limit for two years. The deal will avoid a big knock on Biden’s reelection plans, but the victories end there. Spending caps and social-aid restrictions give Democrats little else to cheer.
Economic stability hangs on US love of BBQ 26 May 2023 The US government is racing to ink a deal to avoid default ahead of the long weekend that marks the start of summer. Agreeing on how to handle the debt ceiling would relieve US creditors and calm markets. The rush will almost certainly leave big problems unfixed.
Macron’s neglect is France’s main fiscal problem 25 May 2023 National debt is above 110% of GDP and will keep rising if the government’s rosy forecasts don’t pan out. Austerity isn’t the answer now, but the president doesn’t seem interested in crafting a long-term plan to cut indebtedness. That will hit the economy and future generations.
Debt ceiling crash will have few victims 25 May 2023 President Joe Biden is trying to hammer out a deal with Republican lawmakers to ensure the United States can keep its lights on. In this Viewsroom podcast, Breakingviews columnists explain how even if the world’s largest economy defaults on its debts the damage will be limited.
Greek vote can bear gifts for debt investors 22 May 2023 A big win by Kyriakos Mitsotakis in Sunday’s polls makes him odds-on to stay as Greece’s premier. That will help the $200 bln economy continue its rebound after crises in the 2010s. Forthcoming investment-grade status is another reason for Greek sovereign debt to keep rallying.
Benched legislation has hidden costs 19 May 2023 Washington is laser-focused on raising the debt ceiling. But as spending debates rage, Congress’s back burner is getting crowded. Pending legislation, like one that secures bank services for cannabis businesses, enjoy broad support, but the window for easy passage is closing.
Debt conundrum gives Italy weak hand in EU talks 18 May 2023 The pandemic and the war have taken the country’s indebtedness off investors’ radar. Yet high interest rates, slower growth and a budget deficit mean Rome will struggle to cut its fiscal burden. That makes it harder for PM Giorgia Meloni to ask for lenient European rules.
Debt-ceiling talks are more theater than substance 16 May 2023 The few areas being discussed on Tuesday – food stamps and drilling permits - are hot political buttons. But they would shrink the deficit by only 2%. Lawmakers either have a long way to go to solve the debt problem, or they are favoring pet projects at the expense of insolvency.
EU debt’s credibility problem is worsening 9 May 2023 Borrowing costs of the bloc’s jointly issued bonds have risen above those of similarly rated sovereigns. The EU’s inability to deliver on promised joint revenues is exacerbating the impact of higher rates. That in turn reinforces investor fears that Brussels debt isn’t permanent.
Digital “Chicago Plan” fixes many financial woes 28 Apr 2023 In the 1930s, economists drew up a radical blueprint to create safer banks. The advent of digital currencies issued by central banks is an opportunity to revisit the idea, writes Edward Chancellor. A shift could stabilise banking, reduce inflation, and even lower government debt.
Capital Calls: Exxon, US regional banks 28 Apr 2023 Concise views on global finance: Exxon’s two golden eggs are the Permian and Guyana; market composure gives time for a First Republic fix.
Capital Calls: US GDP, Eli Lilly, EU budget 27 Apr 2023 Concise views on global finance: Consumer spending provided fragile support for the US economy in the first quarter. Meanwhile pharma group Eli Lilly is racing against rising obesity expectations, and the European Commission faces German hurdles to replacing its budget rules.
Debt crisis is a scary white swan for US economy 25 Apr 2023 The US debt ceiling is Biden’s first re-election test, but Washington has made little progress toward averting a government default. Flirting with the deadline in 2011 rocked the financial system. Partisan bickering could inflict pointless and predictable harm on fragile markets.
A flawed but useful economic model for a bleak age 14 Apr 2023 Ideas become fashionable when they meet the needs of the era. John Cochrane’s fiscal theory, which states that governments ultimately determine the level of inflation, fits the bill. Despite its shortcomings, the model may be helpful, says Edward Chancellor.
New EU debt rules have way to avoid past mistakes 4 Apr 2023 The European Union’s old stability pact was a poorly fitting straitjacket, yet recrafting it is politically fraught. The bloc now aims to replace strict diktats with medium-term goals. A successful framework can revive growth. But it will only work if countries follow it.
Biden budget misses opportunity to aim low 9 Mar 2023 Seasoned negotiators often set a lofty target, then offer small concessions. The US president’s budget follows that strategy. But Republicans won’t play ball. A more modest plan – including spending cuts – would have been harder to reject out of hand, and saved valuable time.
Africa debt stalemate will reverberate across West 27 Feb 2023 More than half the countries in sub-Saharan Africa may default on loans worth over $300 bln. Those which sought IMF relief are awaiting the resolution of a standoff between Western lenders and China. The crisis will leave debtors and creditors worse off and fuel migration.
Rolling EU debt would boost investment and markets 21 Feb 2023 European Union bonds to fund 900 bln euros in pandemic aid have cheered investors. The bloc needs ongoing debt sales to buoy traders’ confidence, invest cross-border and challenge the U.S. dollar. Separating borrowing plans from spending rows could make the politics possible.