Spanish government borrowing costs continued to moderate this week, the latest consumer price index figures showed a downward trend without being full-on deflationary, and the country posted a trade surplus of around €600 million, prompting a practically giddy reaction from Economy Minister Luis de Guindos. Mr De Guindos cited the trade figures as evidence of “the economy’s transformation”. There are three ways to look at this. The first is that the economy minister is a sentimental sort of fellow whose exuberance errs a tad on the side of irrationality. The second is that there has been a transformation but – ask any of the six million unemployed – not a positive one. And the … [Read more...] about Tales for Tapas: Irrational exuberance
Guindos
Has Spain’s economic contraction become self-perpetuating?
Spain’s political leaders are in cheerful mood at the moment. According to the country’s Economy Minister Luis de Guindos, the Spanish economy will return to growth in the second half of 2013. “The perception of the Spanish economy has improved and will continue to do so over the coming weeks and months,” he told his audience at the World Economic Forum in Davos. Earth-shattering it will not be, but grow it will, he insisted. Perhaps, he suggested, the economy will be stationary in the third quarter, with very slight growth in the fourth. And quite possibly he is right. The core of the problem is whether any faltering growth emerging in the last three months of the year will be sustained … [Read more...] about Has Spain’s economic contraction become self-perpetuating?
The regions’ role in the seemingly unstoppable slide towards Spain’s bailout
Spain’s economy minister, Luis de Guindos, has insisted again that Spain will not require a full sovereign bailout. But does anyone believe him? Almost certainly not. During its seven months in power, the government of Mariano Rajoy has been repeatedly forced to backtrack on pledges and resolutions. The promise not to raise taxes has been followed by increases in income tax and VAT. The assertion that social spending would be ring-fenced has been followed by cuts to health and education. And the claim that Spain would not require a bailout for its banks…well, you guessed it. So when Guindos says there won’t be a full-blown bailout, because the Spanish economy is strong enough to withstand … [Read more...] about The regions’ role in the seemingly unstoppable slide towards Spain’s bailout