Mariano Rajoy, leader of the opposition Popular Party, is set to put two election defeats behind him on November 20 and become Spain’s next prime minister. But his all-but-guaranteed victory (opinion polls suggest the PP will win around 190 seats in the 350-seat parliament, its largest ever majority) has little to do with him. Instead, it has much more to do with a three-year economic crisis, an intractable unemployment disaster and escalating worries about Spain’s debt and public account deficits – problems, compounded, if not induced in the eyes of many, by the economic mismanagement of the current Socialist administration of Prime Minister José Luis Rodríguez Zapatero. Those issues, … [Read more...] about Ahead of election, Spain’s next prime minister leaves everyone guessing
EU bailout
Spain’s Socialists scuttle the ship
The legislature is limping to a close. Since José Luis Rodríguez Zapatero's conversion to market orthodoxy in the spring of 2010, the prime minister has made no secret of the fact that his sole obsession is to sail the Spanish ship clear of the turbulent waters of a bailout, and he seems set to succeed. But his government's final manoeuvres have unfortunately had the effect of scuttling the lifeboat of Socialism driven by the party's chosen candidate for the November 20 elections. Alfredo Pérez Rubalcaba is an able seaman, but he is navigating into an electoral storm made even worse by the last acts of his former Cabinet colleagues. First came the tawdry deal with the Popular Party (PP) … [Read more...] about Spain’s Socialists scuttle the ship
Spain: Too big to fail?
The European Union’s three victims-so-far of the global financial meltdown have, not incorrectly, been described as the economic bloc’s periphery. Their economies are relatively small and, though at times worries about their debts have undermined the euro currency, their problems – even taken in combination – are hardly likely to bring the bloc to its knees. Individually, they were sick from a debilitating cocktail of similar problems: bed-ridden with debt and weak from a bad diet of profligate government spending and loan-happy banks. Nothing, it seemed, that a dose of bailout money from the EU and IMF could not cure with a trip to the emergency ward. Spain is showing similar symptoms. … [Read more...] about Spain: Too big to fail?
Spain’s sovereign debt crisis: Round 2
It may look like a replay of last May and June, soaring bond yields and all, but there are some important differences between the current bout of financial market distemper and that of the spring. At face value, it is somewhat worse. The interest rate demanded of the Spanish 10-year bond is about 20 points higher than it was at its most back then, and the risk premium embodied in the difference between the yield on the German bund and the former is 40 basis points greater – in fact at a euro-era maximum. But looking a bit beyond the immediate it is interesting to note that all this activity has not cut into euro exchange rates remotely as much as it did in the spring, that the price of … [Read more...] about Spain’s sovereign debt crisis: Round 2
Political turmoil threatens to rock Spain’s recovery
Only a few weeks ago, the big argument raging about Spain was whether or not it was “the next Greece”. The size of its deficit, difficulties in getting the economy growing again and its harsh treatment at the hands of international markets all made it look like the prize candidate for the EU’s next massive bailout. Many observers suspected a visit by IMF head Dominique Strauss-Khan to Madrid in June was the prelude to just such a move as José Luis Rodríguez Zapatero’s handling of the economy came under immense scrutiny. Now, however, the situation is slightly different. The bailout has not transpired and while the country has certainly not emerged blinking in the sunlight of market … [Read more...] about Political turmoil threatens to rock Spain’s recovery