Wilbur Ross is taking the mickey on Greek banks

Taking the mickey

Reuters

The eurozone won't accept the write-off of the 'zero-coupon' debt. But the Greek government's proposal to split most of the eurozone debt into two parts could be modified to make it workable

Hugo Dixon: Financial engineering to Athens's rescue

Europe needs a growth strategy. In the short term, that means preventing an austerity spiral. In the long run, it means structural reform and a drive to create a genuine single market. The European Union (EU) summit this week is a chance to aim at both targets.

Hugo Dixon: A real common market

Business Standard

The Greek deal, hammered out in a marathon overnight negotiating session, makes the best of bad job. Of course, it would have been better to have bitten the bullet earlier by restructuring Athens&rsquo; debt sooner. And, Greece is still unlikely to pull through without further economic and political shocks. But, the debt restructuring cum euro 130-billion bailout keeps the pressure on Athens and has, probably, defused a wider blow-up.

Marathon not over

Since BSkyB was founded, it has been chaired by either James Murdoch or his father, Rupert. Murdoch Junior&rsquo;s decision to jump before he might have been pushed means the pay-TV group finally has an independent chairman.

Like son, like father?

Spain is replacing Italy as the euro zone&rsquo;s bad boy. Since August, when markets started seriously worrying about Silvio Berlusconi&rsquo;s inability to govern, Italy has been seen as the big troubled euro economy, with higher yields than Spain. At one point in December, Rome&rsquo;s 10-year bond yielded 1.94 percentage points more than Madrid&rsquo;s. But, Italy&rsquo;s borrowing costs are now a touch tighter than Spain&rsquo;s. Economics and politics are responsible for the flip.

Latin flip

If $120-a-barrel Brent crude is a threat to the global economy, someone had better tell the stock market. The MSCI World Index has largely kept pace with the rising price of oil this year. For now, stronger-than-expected economic growth appears to be overshadowing equity investors&rsquo; concerns about tight supplies of oil. Worries about Iran may keep trading volatile. But, absent a serious flare-up in the Persian Gulf, any spike in crude prices should be mostly self-correcting.

Oil and trouble

Britain is an island and doesn&rsquo;t use the euro. But it will not be able to avoid the fallout if the euro explodes. The good news is that both the government and the Bank of England (BoE) realise that a break-up of a single currency is a real possibility. David Cameron, the prime minister, openly speculated on Wednesday about a break-up. Meanwhile, Mervyn King, the BoE&rsquo;s governor, confirmed that the authorities have been discussing contingency plans &mdash; in particular, what banks should do to protect themselves.

Be prepared

Euro zone banks are being rescued with IOUs rather than cash. First, Ireland&rsquo;s banks got euro 31 billion in so-called promissory notes from their government in 2010. Now Greek lenders are to receive euro 18 billion in bonds from the European Financial Stability Facility, the zone&rsquo;s bailout fund. Spain&rsquo;s BFA/Bankia group could be saved by the same fudge: It may receive euro 19 billion in the form of bonds issued by its own government.

Fudge to the rescue

The first lesson of managing a crisis is to get a grip fast. This, in turn, requires those in charge to appreciate &mdash; even exaggerate &mdash; the severity of the problem.

Reeling and rudderless

Greece needs a positive shock. It didn&rsquo;t get one at the overnight Eurogroup meeting. While a deal may be struck when finance ministers reconvene next week, it risks being a fudge. The International Monetary Fund (IMF), which is demanding a proper plan to make Athens&rsquo; debt sustainable, should stand its ground.

No to Greek fudge

The Greek vote is cause for relief but not rejoicing. The Greeks have bought themselves a breathing space by voting for pro-bailout parties. But the resulting coalition may be weak, and the economy is still shrinking, and markets are still sceptical about the Euro zone&rsquo;s ability to find a comprehensive solution to the crisis.

No time to cheer

Marcus Agius said &ldquo;the buck stops with me&rdquo;, in resigning after the interest-rate rigging scandal. But the buck shouldn&rsquo;t stop with the Barclays chairman. It is appropriate that Agius has fallen on his sword because he hasn&rsquo;t acted as a strong counterweight to Chief Executive Bob Diamond. But the chief executive was responsible for the culture at the Barclays Capital investment banking arm, where the manipulation took place, as well as other lapses.

Diamonds aren't for ever

What if Barclays hadn&rsquo;t lowered Libor submissions? The bank certainly reduced its vulnerability by submitting lower rates in the midst of the crisis. But what would honesty have cost? Would Barclays have secured funds from Middle East investors, avoided nationalisation and protected its bosses&rsquo; bonuses? No one knows, but the timeline is suggestive.

The Barclays counterfactual

One doesn&rsquo;t have to be a Mayan to believe that tomorrow represents a numerological end of an era. Apocalyptic visions stem from reading the Mesoamerican Long Count Calendar.

Dates that count

Marjorie Scardino once famously said she would sell the Financial Times &ldquo;over my dead body&rdquo;. Her exit as chief executive of Pearson after 16 years in charge will reignite speculation that the pink paper might be up for grabs. Scardino&rsquo;s successor, John Fallon, has been at the group for 15 years, and Chairman Glen Moreno is also fond of the FT. So this is no revolution. Still, post-Scardino, Pearson will be less attached to the barely profitable newspaper.

No need for corpses

The old dogs of war have secured one of the biggest M&amp;A mandates of the year. Bankers often say they are in the relationship business. With the proposed $45 billion tie-up between EADS and BAE Systems, this sales patter is actually true.

War games

The break-up of the euro would be a multi-trillion euro catastrophe. An interest subsidy costing around euro 50 billion over seven years could help save it.

Hugo Dixon: The euro zone's last hope

Greece needs to go to the brink. Only then will the people back a government that can pursue the tough programme needed to turn the country around. To get to that point, bailout cash for both the government and the banks probably has to be turned off.

Hugo Dixon: Greece's last, best chance

These questions are raised by the increasingly lively debate over how to break the link between troubled states in the euro zone periphery and their equally troubled banks. In some countries, such as Ireland, the lenders have made so many bad loans that they have had to be bailed out &mdash; in turn, dragging down their governments.

Hugo Dixon: Not banking on union

The European Union&rsquo;s plan to put an impost on financial transactions, popularly known as the &ldquo;Robin Hood tax&rdquo;, is dying. That&rsquo;s a good thing. The idea was taken up by the Occupy movement as well as luminaries such as Bill Gates. But it never made economic sense. Taxing transactions wouldn&rsquo;t have dealt with any of the causes of the financial crisis, such as too much leverage and too much reliance on hot money. It would just have driven business offshore.