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In Europe 20th March 2014

Better a late banking union than none

MADRID | By Julia Pastor | After a 16-hour-marathon talks until 7 a.m, 28 EU states reached an agreement on the Single Resolution Mechanism in order to achieve the long-awaited banking union. But they ignore two relevant realities about the project. First, 1989’s Second EU Banking Directive already considered the same common financial tools that today are being sold as a priority and an innovation for the European construction. Furthermore, there is no point in celebrating: a French entity still does not lend money to a Greek one. This deal is not correcting the euro zone’s financial fragmentation.

In Europe 20th March 2014

Spanish recovery gets more credit abroad -and more skeptical citizens at home

BARCELONA | By Joan Tapia | Spain has seen its credibility boosted by the European Commission and other international players like the IMF. However, this brighter image has not been translated into more confidence from its citizens.

In Europe 19th March 2014

Germany feels sure about European rescue fund- not ECB’s OMT

MADRID | By Julia Pastor| German judges are removing uncertainties little by little. The country’s Constitutional Court confirmed on Tuesday that the European Mechanism of Stability is legal and does not damage the Bundestag’s budget. Furthermore, they also approved euro zone’s fiscal pact. The court had brought an appeal against constitutionality of both treaties in June of 2012. The third appeal regarding ECB’s bond purchase program is still pending of a sentence, however, and apparently it would be more difficult to solve: Karlsruhe’s court has required European Court of Justice to decide against the program following the arguments -more economic than legal- that Bundesbank has handed to them.

In Europe 19th March 2014

Spanish Public Debt Reaches One Trillion

MADRID | By Fernando G. Urbaneja | Spanish households and businesses were the most indebted at the beginning of the crisis (80% of the total), but now their debt is getting smaller in a systematic and decided way. The same cannot be said of the State, which keeps increasing its public debt with equal zeal (or even more) and has gone from less than 20% at the beginning of the crisis to 36% this week (and still growing).

In Europe 18th March 2014

Spain’s media limited freedom of expression is a recipe for disaster

OP-ED By Julia Pastor | The decapitation of Spain’s three main newspapers – El País, El Mundo and La Vanguardia –in last three months is a symbol of the country’s weak democracy. This is, however, the tip of the iceberg. Spanish freedom of expression’s faults touch not only big and well-known media groups, but also modest-sized blogs such as Nada es gratis (No Free Lunch in English) in which Spanish economists try to explain to the citizens what is happening in the national economy and suggest possible solutions. Three of that platform’s founders and editors recently left their posts after disagreements with the managing team and the government.

In Europe 18th March 2014

If Scotland, why not Greece?

ATHENS | Yanis Varoufakis via TrumanFactor | Why an independent Scotland should get out of sterling, but Greece should not volunteer to exit the Eurozone? Scotland should state its intention to decouple from sterling, once independent, rather than petitioning for a continuation of its subservient role in an asymmetrical sterling union. But if this is good advice for Scotland, why am I arguing that Greece should not sever its links with the even more odious monetary union known as the Eurozone? Unless the two cases differ, my argument lacks consistency. But they do differ. Fundamentally too.

In Europe 17th March 2014

The extreme right vote haunts Europe

BRUSSELS | By Jacobo de Regoyos | Both financial analysts and polls forecast an ascent of the extreme right vote in the next European elections. The crisis and the discredit of traditional politics have been the breeding ground for these parties, which may earn one out of four seats in May due to the increasing anti-European feeling in the population.

In Europe 14th March 2014

Spain Wants A More Efficient Tax System- But Will It Be Socially Equal?

MADRID | By Julia Pastor | Spain could cook a historical fiscal reform to simplify complex patchwork of tax rates at national and regional level- there are more than 1,000 tax exemptions, even more than in the UK, which was the European country with the highest freedom from taxation-, and increasing revenue collection efficiency. Spanish market watchers are looking forward to see reforms in the 444 pages report presented to the cabinet by an experts committee. However, critics fear that social policies, especially those focused on employment, quality of labour force or further specialization, will be ignored. As the rest of euro zone’s southern countries walk over the same path of Spain’s, a real harmonized fiscal union still seems too far.

In Europe 14th March 2014

Spain Will Use Spies To Watch Over Banks’ Abuses

MADRID | By The Corner Team | Scandals such as Bankia’s selling preference shares to thousands of Spaniards who had no clue of what they were buying will not happen again, hopefully, if this new plan works: the country’s regulator will send spies to watch how the banks sell financial products, and to what extent their staff knows what they are. The Netherlands, Belgium and France have already implemented this ‘007 method’.

In Europe 13th March 2014

Spain’s Warning Signs Of Japanisation- Shall We Buckle Up?

MADRID | By Julia Pastor | Amid the debate on the euro zone’s eventual japanisation due to low inflation levels, we wonder if Spain could be the first member state with severe signs of this illness. Inflation is near 0% since six months ago and markets’ expectations suggest an average price index scarcely over 1% for next five years, and under 2% in a decade. Along with Portugal, Spain is the EU economy having more price indicators’ components in red year-on-year rates, namely 40% against 20% of Europe’s average. That means that 2 out of 3 goods in Spaniards’ shopping basket are affected by deflation. Although good for the country’s competitiveness, there is a risk in the process of public as well as private debt deleveraging.