Spain

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Being rescued doesn’t amount to be saved

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…


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European banks flee Greece

José Luis Marco, CAPITAL MADRID | Although Spanish banks have little direct exposure in Greece, the country over which hangs the euro zone exclusion threat, something different happens with several European banks: they have a direct interest in the Hellenic country both with their branches in the country and with the assumption of Greek sovereign debt. Some of the biggest banks are partners or shareholders of several Spanish banks. Banco…


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ECB’s help will reduce financing costs but also outstanding debt payment period

The mere announcement of an intervention by the ECB has already had a clear effect on the evolution of the yields on Spanish and Italian bonds in the shortest time. The Spanish two years bond that skyrocketed in July to 7.1%, has fallen to 3.072%. A very different story is however the 10 years bond, currently at 6.57%, far from the peak of 7.7% in July but still very high….


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Debt difficults Spanish banks mergers and auctions

José Luis Marco, CAPITAL MADRID | Spanish government’ two first RDL condemned more than one financial institution to the red throughout this exercise. The sentence has not been limited to the four entities under the FROB umbrella but has also reached some entities that are in the process of integration with other groups, such as CEISS Bank, Caja Duero Spain, in full merger with Unicaja, to take losses of 125…


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Wanna bet the ECB won’t disclose its plan?

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…


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Spanish and German SMEs’ huge different access to finance

Spanish SMEs pay the higher interest rates of the past four years at the time of borrowing, while the cost for German companies is at historic lows, according to financing costs for families and businesses in the euro zone published on Monday by the ECB. This trend puts markedly divergent increasingly southern European companies at a competitive disadvantage to rivals in Northern Europe. “We all know that financing costs are…


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There will not be Spanish debt buying unless profitability goes up (JP Morgan)

By Tania Suárez, Madrid | It seems that September will be a busy month, the beginning of a year full of interesting appointments for investors. As noted from JPMorgan, markets have already priced in aggressive Spanish debt buying by the European Central Bank, “but the risks shall remain high.” Many sources agree that the ECB is not expected to provide many details of the SMP. “There’s not a clear indication…


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Bundesbank’s lack of adaptation will be its end

By Tania Suárez, Madrid | Three resignations are likely to take place soon in the Bundesbank: Weber, Stark and now Weidmann. Barclays experts say “the death rate in this institution seems unusually high.” The Bundesbank is impressive in its power and majesty, but analysists consider “their lack of ability to adapt to the circumstances” is going to lead to its disappearance. Barclays team suggests that “the ECB’s adaptation contrasts with…


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China urges Europe to work on its debt

China is willing to help, but everyone has limits. Premier Wen Jiabao told visiting German Chancellor Angela Merkel at a state visit in Beijing on Thursday that Beijing plans to continue buying European sovereign debt, the strongest sign of support for its biggest trading partner in months, although it urged further measures to be taken. “The European debt crisis has continued to worsen, giving rise to serious concerns in the…


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Eurozone recovery signs (Barclays)

By Tania Suárez, Madrid | European markets suffered form a slight contraction on Wednesday whereas the U.S. stood firm, not influenced by the European weakness nor the consumer confidence data and the Richmond. Barclays team suggest that money supply data meant both good news and bad news. Good ones first: “The trend in Europe is to raise liquidity, and usually (not always), that is associated with an economic recovery.” According…