Greece Still Needs a Long-Term Growth Plan

Even by the standards of the sovereign-debt crisis, the provisional agreement reached yesterday by euro-area finance ministers and the International Monetary Fund (IMF) on a second Greek rescue package looks like a messy fudge. It is clear that Greece’s euro-area partners are determined to avoid a near-term euro-area exit, but a long-term solution will require [...]

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Euro Area Still in Denial about Failure in Greece

Despite the Greek government’s best efforts, last night’s meeting of euro-area finance ministers failed to approve the release of new funding. We think it’s only a matter of time before Greece gets its money. But the latest delay reflects deep disagreement about how to reduce current unsustainable debt levels. Until the euro area addresses this [...]

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Time to Buy Peripheral Corporate Bonds?

Amid growing confidence in euro-area authorities’ response to the regional debt crisis, yield-hungry investors have been returning to the riskier categories of corporate debt, including the peripherals: Portugal, Italy, Ireland, Greece and Spain. Is it safe to go back into the market?

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Are European Value Stocks Poised for Recovery?

For the last few years, the sovereign debt crisis in Europe has caused equity investors to flee the continent. Today, that exodus has set up an attractive opportunity for value investors.

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ECB Bond Buying Is a Double-Edged Sword

European Central Bank (ECB) president Mario Draghi’s promise to do “whatever it takes to preserve the euro” and create a new bond-purchase program has been positive for market sentiment. But the program also carries real dangers if it breaks the fragile consensus on the board of the ECB and eases the pressure on governments to create a [...]

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Bank of England Still Aiming at the Wrong Target

The UK is celebrating a near three-year low in consumer price inflation, but we think the Bank of England (BOE) should be more worried about the role that money and credit play in the inflation process.

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Collapse in UK Investment Income Is Cause for Concern

A collapse in direct investment income was the main factor behind the UK’s record second-quarter current account deficit. It’s too early to know whether this represents a permanent shift. But, if it does, it would make rebalancing the economy more difficult and have important implications for the pound.

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Euro-Area Interest Rates: To Zero and Beyond?

There has been some speculation that the European Central Bank (ECB) may soon push its deposit rate into negative territory.

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Cracks Appear in Europe’s Credit Rally

We’ve seen some dramatic price moves in the riskier European bonds since 26 July, when European Central Bank (ECB) president Mario Draghi assured the markets that “whatever it takes” would be done to save the euro.

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Policymakers Powerless to Stem Capital Flight from Spain

Capital flight from Spain is accelerating. As foreign investors and banks pull massive sums out of the country, policymakers look powerless to stop it.

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