“Complete insanity” is how Prime Minister José Luis Rodríguez Zapatero summed up speculation that his government had approached the International Monetary Fund to request a €280-billion bailout. “These rumours can increase differences and hurt the interests of our country, which is simply intolerable and of course we intend to fight it,” he told reporters in Brussels ahead of an emergency summit among leaders of countries using the euro currency. The IMF also denied the speculation. The rumours that Spain was looking for help started circulating after the European Union and the IMF agreed on Sunday to the first bailout of a euro-zone country, giving Greece a €110-billion loan over … [Read more...] about Not yet a Greek tragedy, but still a Spanish drama
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What now for the “PIGS”?
Spanish savings bank La Caixa recently brought to market a €1-billion issue of three-year cédulas territoriales at 70 basis points over similar sovereign debt. As for the investors – 49 percent of these securities backed by loans to Spanish public administrations were picked up by German or British parties and 36 percent by locals. Given the horrific recent treatment of Greek debt, this benign event probably invites a closer look at the tenets behind the classification of a nation as one of the “PIGS” - as if the mere fact that Spanish sovereign 10-years are yielding approximately the same as when the crisis broke last December, whilst the Italian equivalent pays investors 10 basis points … [Read more...] about What now for the “PIGS”?
The curse of the EU presidency
In retrospect, Spain might be seen as one of the unluckiest ever holders of the EU rotating presidency. A host of unfortunate developments – most not of his own making – have conspired to make the first half of José Luis Rodríguez Zapatero’s six-month term, which began on January 1, difficult and at times hapless. With Spain among the bloc’s most economically troubled members, it was always going to be hard for Zapatero to lead the EU out of recession from the front. Moreover, major institutional changes were implemented just as the term presidency was starting, with a degree of mystery surrounding the new system and its roles, including that of European Council president. As if that were … [Read more...] about The curse of the EU presidency
History repeats in Portugal
Walk the streets of any Portuguese city and sooner or later you will come across a scene that seems unchanged for decades: shoe-shiners on Lisbon’s Avenida da Libertade, elderly ladies hanging laundry from tumbledown balconies in old Porto or fish sun-drying on the beach in Nazaré. One of Europe’s most unassuming and introverted countries, Portugal is a place where the past is gazed upon with a sense of melancholy – until, of course, the past comes back with a bite. Since late January, Portugal has taken a battering on international markets, as its bond prices have plunged and ratings agencies have threatened to cut the country’s credit grade amid fears over rising budget deficits and … [Read more...] about History repeats in Portugal
Navigating the impossible?
For someone who sets such great store by being photographed alongside the right people, January 28 was a fairly awful day for the Spanish prime minister. At the Davos World Economic Forum, José Luis Rodríguez Zapatero was pictured sitting between Greece’s Giorgos Papandreou and Latvia’s Valdis Zatlers. The inference was clear: Spain was in the same boat as Greece, which the EU has now agreed to help resolve its enormous public financing problems, and Latvia, which has Europe’s highest unemployment rate at nearly 23 percent. Much was made of the gaff by Zapatero’s handlers, who failed to put him in more reassuring company. But it was only the beginning of a perfect economic and political … [Read more...] about Navigating the impossible?