MADRID | The Spanish Economy minister Mr Luis de Guindos boldly stated to feel much the same as in the midst of the sell-out tempest, shortly after Draghi’s soothing promise. No one took seriously his assessment and yet he might be right. After all, Draghi is at best offering extra time to put the house in order. His pledge to save the euro has being interpreted as a clear signal to…
MADRID | The importance of being a central banker was starkly shown by the dramatic change in market mood following Thursday’s soothing statement by Draghi. His open commitment to support the euro skyrocketed share quotes and drove sharply lower Spanish and Italian risk premium. All of the sudden doomsday scaremongering vanished, an overwhelming wave of up-beat optimism taking its place. Draghi’s closing remarks that the ECB would keep to its mandate…
MADRID | The Spanish government had good reasons to avoid Mr Ordóñez’s appearance in the parliamentary committee reviewing Bankia’s plight. His cold determined performance flatly exposed gross government failure in addressing the financial crisis. His indictment was based on the nagging fact Spain risk premium ranked last December markedly lower than Italy’s and now even Ireland shows a better record. He accused the government of leaving aside the Bank of…
MADRID | Irritation is high in Madrid for partners’ lack of support in enforcing a curfew, let alone a truce, in the raging battle it holds against overwhelming market forces. As leaders go on holiday they leave Spanish assets exposed to utter onslaught. The massive sell-out of sovereigns, securities and shares cannot continue for long without throttling any chance of survival by the time Brussels returns to normal business. Desperate attempts…
MADRID | The extensive sell-out on Friday shows the desperate situation Spain is facing. Shattered confidence on the government ability to overcome a looming crash landing, is sending shivers down the spine of investors. People are starting to bet Spain will be forced to bailout one of these days. But, unlike other salvaged countries, its sheer size prevents a rescue package from providing a way out in soothing its woes….
MADRID | Most observers take for granted that the rescue seems the most likely scenario. They simply look at the rising trend risk premium shows. They may be right. But the right question to ask is why confidence on Spain is faltering so much.
MADRID | Words containing the Latin suffix “tio” tend to raise passionate sentiments. Just think of “revolution” or even “Constitution”, a rather harmless expression nowadays that fuelled bloody rifts in the 19th century. Banking “resolution” is leading to similar high-pitched controversies. Not to mention “liquidation”, a reference readily subject to censorship as the Bank of Spain governor has recently discovered. The recommendation to ensure his full independence apparently will have to wait…
MADRID | Everyone seems to skip the nagging fact that stress tests undertaken by Oliver Wyman and Roland Berger only focused on credit risk. Thus, the extra capital requirements only reflect shortcomings in the banking book due to potential bad loans. But any serious test has to embody securities risk in general and sovereign bonds in particular. The European Banking Association has performed it every time it has put European…
MADRID | One-off cuts and further squeezing measures have been taken in a desperate attempt to avoid budgetary discomfiture. By mid-term central government deficit had already attained its full year target, not to mention a regional and local performance no one knows for sure where it stands. A drastic brake to such blatant slippery became an unavoidable option. The markets and Brussels have done the rest. Free-running risk premium has not…
MADRID | The Spanish government has adamantly refused to accept any macro conditioning that might portrait it as falling under a full-fledged intervention. Markets hold a different view witnessing how recommendations advanced by the Brussels bureaucracy are taken to the line. VAT increase stands as the paramount example of an ill-judged proposal Spain is implementing under euro-pressure. Wasn’t the party now in power forcefully opposed to a similar measure not so…