By economist Jordi Paniagua, in Valencia | In principle, whether managing a company or the economy of a country, the message of do not spend more than earnings seems perfectly reasonable. Indeed, it has found a comfortable place in the collective mind. Even governments nowadays express themselves and their policies as though it were the stuff of domestic accounting. But enterprise and economy are quite different concepts. The manner in which…
After the Draghi’s drag, deciding not to take any immediate action to stop the euro bleeding, markets are digesting a very awaited yet not so bright U.S. job report. It was the best data in five months -July was the best hiring month since February- but still not sufficient to reassure. America added 163,000 nonfarm payroll jobs in July, the Labor Department said (compared to a revised 64,000 jobs in…
By JLM Campuzano, analyst, in Madrid | If the governor of the European Central Bank (ECB) said nothing new, why did the markets drop? To be sure, there was a deep sense of disappointment. His comments a week ago had sparked high expectations and, whether Mario Draghi admits it or not, hopes haven’t been met. And there is nothing worse than disillusioned investors. More disquieting, though, is that Draghi acknowledged…
Ben Bernanke is not taking the wallet out of his pocket, at least not yet. The Fed will first assess July and August US unemployment reports and also “financial developments”, as it said in a statement at the conclusion of a two-day meeting in Washington. Meaning what? Meaning financial stability in Europe, which is one of US main concerns. We’ll have to wait until September, but there are some hints…
“I don’t think ultimately that the Europeans will let the Euro unravel, but they are going to have to take some decisive steps,” US President Barack Obama said in a fundraiser event Monday night held in a New York high end hotel. Only four months before the U.S. election, Euro worries are inevitably playing a major role on this side of the Atlantic. Any worsening in the Euro zone situation…
By Íñigo Villegui | Capitalmadrid.com | Something is happening in the euro zone. The possibility of a purchase of bonds by the European Central Bank or by a bailout fund, which would favour the tightening of risk premiums and facilitate access to markets for public and private sectors, is getting closer. Or, at least, that’s what investors assume. They have gone from considering that Spanish finances were doomed to dismiss…
MADRID | The Spanish Economy minister Mr Luis de Guindos boldly stated to feel much the same as in the midst of the sell-out tempest, shortly after Draghi’s soothing promise. No one took seriously his assessment and yet he might be right. After all, Draghi is at best offering extra time to put the house in order. His pledge to save the euro has being interpreted as a clear signal to…
MADRID | The importance of being a central banker was starkly shown by the dramatic change in market mood following Thursday’s soothing statement by Draghi. His open commitment to support the euro skyrocketed share quotes and drove sharply lower Spanish and Italian risk premium. All of the sudden doomsday scaremongering vanished, an overwhelming wave of up-beat optimism taking its place. Draghi’s closing remarks that the ECB would keep to its mandate…
Economist Ricardo R. Reis expects “better policymaking from the European authorities now.” Originally from Portugal, Reis teaches at Columbia University, he is a former graduate from the London School of Economics and Harvard Ph.D and has worked extensively on inflation dynamics and monetary and fiscal policy, including evaluation of fiscal stimulus programs. He gives his take on the current economic turmoil for our readers in the first of a summer…
MADRID | Irritation is high in Madrid for partners’ lack of support in enforcing a curfew, let alone a truce, in the raging battle it holds against overwhelming market forces. As leaders go on holiday they leave Spanish assets exposed to utter onslaught. The massive sell-out of sovereigns, securities and shares cannot continue for long without throttling any chance of survival by the time Brussels returns to normal business. Desperate attempts…