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Spanish economy 16th March 2012

Friday’s chart says Spanish bond sales are fine, thanks

Before someone else sets sight on this graph and rolls out the Armageddon tale about the fall of the euro empire because of Spain’s disgrace, we would like to make available this explanation, which came via Madrid-based Link Securities. Is this chart indicative of a trend change in terms of buyer appetite of investors? “We think not. The abundance of liquidity in the system and its channelling by the banks (mainly residents) into assets with a profitable spread, should serve to maintain the strength of demand in future Spanish…

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Spanish economy 16th March 2012

Spain’s government has no time to be nice: cuts aren’t, but must be done

MADRID | Spanish Finance minister Luis de Guindos bears the unpleasant task of playing the wet blanket, being realistic, not promising anything but selling a future. His role is that of the victorious Caesars’ companion, who had to whisper in their ears: “remember you are mortal”. In the government and in front of the citizens, he is the one who spoils the fun. For that he needs a great deal of…

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Spanish economy 15th March 2012

Austerity romance: two towns merge in Spain seeking savings breakthrough

MADRID | Cesuras and Oza agreed this week the first merger between towns in Spain. The villages will become one local authority in a decision that was pushed by the need of public spending rationalisation, and that is likely to trigger a municipal restructuring in the region of Galicia. In fact, the president of Galicia’s province of A Coruña, Diego Calvo, admitted there are at least nine other towns currently…

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Spanish economy 14th March 2012

The Spanish LTRO2 correlation

Long term refinancing operation 2 or liquidity injections into Spanish credit entities via the European Central Bank rose in February to €152.432 billion from €133.177 in January. But, contrary to what most European banks seem to be doing, that is, parking capital in the central bank’s deposit facility, Spain’s banks prefer to take advantage of the rate gap and let slip in profits by purchasing sovereign debt. Bond holdings have…

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Spanish economy 14th March 2012

Bidders welcome Madrid’s push for privatisation of water services

MADRID | Privatisation of Canal de Isabel II, the company that manages water services in the autonomous region of Madrid, attracted this week one more potential investor. Insurance firm Mutua Madrileña has expressed its intention to officially bid for the water company. The insurer, chaired by Ignacio Garralda, has confided in Mediobanca to advise on the operation. Esperanza Aguirre, president of the Community of Madrid, and the Spanish capital’s mayor Ana Botella have…

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Spanish economy 13th March 2012

“Stake prices in Spanish companies have dropped from 6 to 9 times ebitda”

By Fernando Rodríguez, in Madrid | Maite Ballester is president at the Spanish Venture Capital Association ASCRI, which is a non profit entity born in 1986 to develop and promote temporal investment in private companies. She also is managing director at 3i. In what way will Spain’s venture capital sector be affected by the financial system reform and more stringent rules on bank capital reserves? In the short term, these two factors will mean less…

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Spanish economy 12th March 2012

Don’t blame Spain’s public sector payroll: it’s 6pc smaller than the EU average

Catalan economist Vicenç Navarro delivers view points whose argument sounds completely contrarian at this stage. While austerity may be debated over –at which degree should it be imposed and how quickly, so further spikes in sovereign debt can be avoided?–, the consensus bears little doubt: public investment must be dramatically lowered. It is the right medicine. But confronted with an increasingly stalled productivity and a disquieting unemployment rate, those of…

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Spanish economy 12th March 2012

Worrying facts about the Spanish deficit

By Juan Pedro Marín Arrese, in Madrid | The way the data on the Spanish deficit snowballed from 6% in mid-December to 8% a few weeks later and to 8.51% now, has led many to raise their eyebrows in utter disbelief. Even allowing for some benign neglect shown by the out coming government, such a huge deviation adds little credit to budgetary figures outside central administration boundaries. It not only proves…

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Spanish economy 7th March 2012

Internal devaluation in Spain and unemployment

By Luis Arroyo, in Madrid | I give you today a couple of graphics, which measure how the process of internal devaluation is going in that peripheral crown, Spain. First, the industry labour costs (wages, red line) and producer prices. Then, industrial production. Everything in annual variations. As readers can see, the boom years were not quite as buoyant in terms of industrial production. Meanwhile, wages were well above the prices, at 4%, trimming production margins. It is a reflection of the brick-and-morter boom, which revitalised wages and sturdy houses…

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Spanish economy 6th March 2012

What they said when president Rajoy bent the deficit target bar

LONDON | Odd. After months of mild fireworks of demonstrations against austerity throughout Spain, it seems hard to believe that Ambrose Evans-Pritchard, international economics editor at The Daily Telegraph, would be struck. Even president Mariano Rajoy acknowledged that his reform plans for the labour market would probably spark a general strike. But Evans-Pritchard was struck, nevertheless: “In the twenty years or so that I have been following EU affairs closely, I cannot remember such a…