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In Europe 5th June 2014

Draghi will have to do more than lowering interest rates

MADRID | By The Corner | Head of economic analysis at Link Securities Juan José F. Figares explains that if the ECB only reduces interest rates (i.e. intervention and deposit rates), stock markets will plummet since investors’ expectations will not be fulfilled.  Should the central bank activate a new conditioned LTRO and open the door to a new asset purchase program, he adds that markets will react neutrally first and then, they will become positive. Note that the Eurozone’s GPD grew only by 0.2% in the 1Q14, according to the Eurostat.

DB on Spain

In Europe 4th June 2014

Spain’s lessons to give and learn

MADRID | The Corner | Assessing Spain’s economic decisions in the years of crisis led Deutsche Bank’s analysts to fix the main five lessons their European counterparts should learn from the country’s experience. One of Madrid’s clearest success was to firstly manage the private sector adjustment  then implement fiscal consolidation. All this would not have been possible without the “crucial”, though sometimes “subtle” support from the EU.

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In Europe 4th June 2014

Nascent signs of lending recovery in Europe

LONDON | By Barclays analysts | We announce the end of credit restrictions to the European banking thanks to the latest credit data, which went from -3% yoy to -2.8%. Our market strategist reaches the conclusion that we are seeing signs of lending recovery (see chart).

Money supply

In Europe 3rd June 2014

Looking forward the ECB’s relief

MADRID | By Luis Arroyo | The ECB’s Thursday upcoming meeting will be historical for the EU economy. Any move will mean some easing, even if it will be very difficult that it reactivates the euro zone. What it should definitely do is to massively buy public debt, removing it from financial assets for the banks to find fresh liquid assets as well as capital gains to cover its holes and thus cut interests of private sector’s credit.

Austerity

In Europe 2nd June 2014

What 20 years of austerity mean

MADRID | By Luis Arroyo | Despite Italy’s PM Matteo Renzi is the only one fighting the hard EU economic line, Italian public debt reaches 135% of GDP. The country is required by the fiscal compact to return to 60% in 20 years, which would involve perpetual austerity for an entire generation at least. However, the problem does not only affect Italy but all the European Southern countries.

felipe king

In Europe 2nd June 2014

BREAKING: Prince Felipe to be the next King of Spain

MADRID | The Corner | After almost four decades on the throne, Spain’s King Juan Carlos will be stepping down, paving the way for his son, Felipe, and opening a new chapter in the country’s history. The 76-year-old monarch is considered a key actor in the transition from Franco’s dictatorship to democracy. In the recent years he has been suffering from health problems and lost public support due to his gaffes and the corruption scandal involving his daughter and son in law.

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In Europe 31st May 2014

“Ukraine sees EU as governance model”

BRUSSELS | By Jacobo de Regoyos | After Mr Poroshenko’s victory in Ukraine elections, expectations have risen to end the profound civil unrest. And many citizens are “identifying the EU with governance quality,” former head of the Spanish diplomacy (2002-04) and MEP Ana Palacio pointed out. She just came back from Kieve, where she was part of an international poll observers’ mission together the former US Secretary of State Madeleine Allbright.

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In Europe 30th May 2014

Why does the ECB feel so uneasy?

MADRID | By J.P. Marín Arrese | Markets are discounting an easing in European monetary policy in the forthcoming days. Yet, the mood in the ECB is far from cheerful. It feels being dragged into action by political constraints.

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In Europe 30th May 2014

Spanish GDP: The crystal clear lie

MADRID | By Luis Arroyo | Spanish 1Q GDP was released on Friday. Data were shameful and let me explain you why: in order to reduce the public deficit, the government transfered 2013 4Q public spending to 2014 1Q. So these last numbers are those they had tried to hide under the carpet. In the graph above, the blue and line represent private and public consumption, respectively.