If Madrid is taking its time to officially sign for the inevitable rescue, it’s because someone else bought it time. Check with the European Central Bank and Berlin before blaming Spain for the delay.
MADRID | This doesn’t work as a safety net for the Spanish banking sector to recover from its current weaknesses. It would amount to a neat, direct mechanism for entities to cash their toxic loans at the taxpayer’s expense. But Madrid is still in time to amend its bad bank, advises economist JP Marín Arrese.
Although the latest intervention from the European Central Bank may have opened a window of respite for Spain’s president Mariano Rajoy, economist Juan Pedro Marín Arrese alerts he should be wary of delaying decisions.
There is a saying in Spain about building a house from the roof down. Economist Juan Pedro Marín Arrese says that is exactly what Jose Manuel Barroso, president of the European Commission, proposes with his talk of federation. And it’s not going to work.
Community jargon shows how mere wishful thinking is turned into what seems a rock-solid reality-to-be. The EU is full of expectations that never materialize. Yet, this shortcoming does not deter officials from bombastically naming policies or mechanisms as if there was no chance they might derail. Just take the rescue label so often applied to Greece. One takes for granted that once you are rescued from peril you can consider…
Governments and markets are anxiously waiting for Draghi’s words to know what the ECB plans to do. They might be deceived by the lukewarm message he is likely to deliver. Central bankers have a keen expertise in saying as little as possible. Greenspan was an outstanding master in playing that game. Draghi while following his path, still needs some training to develop a fully persuasive oratory laden with a string…
The Catalonian regional government has filed a request for help warning Madrid it will not accept any condition linked to such rescue. For a Cabinet in desperate need of cash to keep running its services, the flat refusal to take on board any tip seems a bit reckless. But it has a trump card in its bid to soften Madrid resistance. It is threatening to trigger a full fledged confrontation…
Now that full rescue seems an unavoidable option, overtly accepted by Madrid, the main opposition party in Spain has found some way to deliver a scathing attack on government. For all its dismal delivery while in power, it managed to avoid such unpalatable scenario. The current cabinet, supposedly better equipped to bring Spain out of trouble, has already being forced into a €100 billion banking salvage package and now it…
The new set of rules on restructuring and liquidation of ailing banking institutions planned to be approved next Friday confers full command to the Spanish government. The Bank of Spain will exclusively identify solvency failures and pit in place an early warning mechanism to redress potential deviations. But once public money is involved the task is conferred to a formally independent body, the FROB, but under tight governmental control. Politicians…
MADRID | Draghi’s apparent resoluteness in shouldering the euro has dramatically turned the tide. No action has followed his words and yet the July nightmare has switched this month into a soothing dream. Undoubtedly investors were eager to take on board any good news reversing the excessive downside overshoot in the markets. Europeans leaders have also helped by wholeheartedly enjoying their holidays. For once, they have refrained from voicing the…