If Spain goes, say adiós to the euro

By valenciaplaza.com, in Valencia | José Carrasco is private banking director at Banco Madrid in Valencia. Carrasco believes the European Central Bank buying Spanish bonds would reassure investors and negative headlines would then recede allowing foreign capital to go back to the country's market, where good value still abounds.

imagen40127pWhat is your view on the European stock markets? With France and the European Commission suggesting their support to a direct bailout of failing banks with European funds, asset prices have recovered in Spain and Italy. There are a few other reasons that could help Europe, too, like the fall of interest rates in Australia, a good purchase managers' index data in Chinese services sector and the G7 discussing a solution for the euro area.

What could reinstate investors' confidence? We must trust ourselves. The Spanish economy wasn't buoyant during the bubble days, and

it is not in such a bad shape as we are told now. Spain is too big to be bailed out, we're almost a 12 percent of the European GDP, while Greece, Ireland and Portugal together don't even make the six percent of the European GDP. Taking in account that 60 percent of all German exports depend on the euro zone, Berlin will fight for the euro's survival.

The truth is that German, British and other investors from northern Europe are already hunting for opportunities in the manufacturing and the property sectors in Spain. Let me say that our companies behave very competitively, with very good results. No only the Spanish blue chips, but medium sized companies, too, are having a good crisis. But you can't read about it in the international financial media, because everyone is panicking at the moment.

Will the European Central Bank make the move some day? It should buy again sovereign debt from Spain and Italy. This would surely bring investor confidence back and would reassure the foreign capital about the legal framework in both countries, too.


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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.