Waves of Spain political instability get to US shores… tempered, though

El País newspaper published a list of papers that allegedly represented secret extra payments to the Popular Party (PP) leaders done by their former treasurer. Some interpreted them as corruption in the party governing, others as tax evasion and some found clues of illegal financing, all of them involving Spanish prime minister Mariano Rajoy. But in the US media repercussion was moderated, if any. The day after, US investors’ favorite media, The Wall Street Journal, mentioned the news only in its eight page.

Investors didn’t pay much attention, either. They were digesting latest not-that-bad unemployment figures and enjoying the rally in the stock market: Dow reached 14.000 points, after weeks of rally. No Eurodrama, no Washington fighting…

But this Monday, Spanish political scandal reached US investors’ heartbeat. All indexes were down around 1% and finished their long rally. Analyst say they went down because they follow their Europeans counterparts mood. They sailed the same wave that made European stocks went down, and that wave contained in it both Spanish’s PP troubles and Italian political instability derived from the banking scandal surrounding Monte dei Paschi.

“The Spanish scandal in combination with the upcoming political elections in Italy is likely to increase the perception of political risk in the region,” Nomura economists wrote in a research note, mentioned by CNNMoney.

The euro also went down, so did trust on Italian and Spanish bonds. It is not that the problems with the euro are on full mode after Spain and Italy developments, but memories of last year troubles made some way into the European recovery.

About the Author

Ana Fuentes
Columnist for El País and a contributor to SER (Sociedad Española de Radiodifusión), was the first editor-in-chief of The Corner. Currently based in Madrid, she has been a correspondent in New York, Beijing and Paris for several international media outlets such as Prisa Radio, Radio Netherlands or CNN en español. Ana holds a degree in Journalism from the Complutense University in Madrid and the Sorbonne University in Paris, and a Master's in Journalism from Spanish newspaper El País.

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