By LaCaixa Research Team, in Barcelona | In the years prior to the recession that started in the last decade, in many countries the gradually increasing debt of the private sector allowed for much more intensive economic growth than would have been seen without it. The abrupt appearance of the crisis frustrated this expansion and revealed an excessive level of debt. This debt is now a heavy burden that can counteract…
MADRID | The German Treasury placed Wednesday €2.4 billion in 30-year bunds with an average return of 2.41%, down from 2.62% in the previous auction. The bid to cover dropped to 1.1 times from 2.1 times. Berlin admitted that demand had been lower than expected, and the total sale volume planned had been left uncovered. In a note to investors, Citigroup in Spain commented on the German explanations and made an interested, interesting comparison: “This reflects a context of volatility and uncertainty, but more importantly, the…
By Carlos Díaz Guell, in Madrid | The crisis has led to a rapid accumulation of public debt as a result of the deterioration in economic growth, the functioning of automatic stabilisers, fiscal incentives and public capital support for the banking sector. In the euro zone, the European Central Bank estimates that the ratio of public debt as a percentage of GDP has risen 22 points since 2007 so it reached…
NEW YORK | A big amount of pain in the Spanish economy could have been avoided. But the Germany authorities chose not to. This is pretty much the line of thought that The New York Times has been sharing with its public for months. So far, the excessive “German-led mismanagement of the euro-zone crisis” has been the focus of as many op-eds as the war in Afghanistan or the US healthcare…
MADRID | Analysts at Barclays in Spain felt so shocked by how little knowledge some market participants can display about the actual situation of the Spanish economy, that decided to act. Why Spain does so poorly compared to the rest of Europe? Well, does it? This is the quick note they wrote on Friday aimed at lending a hand to “some brokers and fund managers, mostly foreign, [who] seem to…
MADRID | According to Alberto Vigil, analyst at Barclays in Madrid, the peripheral euro risk and particularly Spain’s has been exaggerated by the markets, which would be discounting an economic situation perceived as poor and with a very limited range of choices. Yet, Vigil maintained an optimistic opinion and said investors will reconsider their position when reviewing the strengths of the country. “Spain could have done its reforms much better, but…
LONDON | Another day spent with the euro area teasing markets’ anxieties, another voice in the background alerting of a wall of trouble building up on the other side of the Atlantic. The US budget deficit is reaching a size many feel uncomfortable about: in Wednesday’s fundamentals briefing, Legal & General Investment LGIM suggested that the outlook for US debt is actually worse than most people currently believe. “Not many…
LONDON | Budget Battle began Wednesday after midday in the House of Commons at the rhythm of Hollywood action blockbuster-like slogans, with which chancellor George Osborne wrapped his delivery speech. The Coalition government aimed at convincing Britons in and out the Parliament that it will be able to reduce the deficit while supporting growth. “Britain is going to earn its way in the world,” Osborne shouted at the traditional belligerent level…
LONDON | UPDATE | Unanimously. The International Swaps & Derivatives Association resolved Friday evening the last unknown about Greece’s restructuring debt process. The Greek government used collective action clauses to drag a small group of investors into accepting losses under the nation’s laws. The association ruled that this could be considered as a credit event that triggers payouts on credit default swaps or CDS, a market whose participants were anxious while waiting…
By Julia Pastor, in Madrid | Spain’s government is about to attack another of the ills afflicting the country’s economy: the debt that regional governments and municipalities owe to their service providers. The minister of Finance Cristóbal Montoro announced Tuesday that the cabinet will finalise a macro financial operation to cancel this debt, which has reached the €35bn level and has been suffocating Spanish SMEs’ liquidity for years (SMEs’ weight…