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
spanish economy
Bare-faced cheek gives Spain air of election fever
Sexist taunts, allegations of extremism and the hint of an economic plan – it must be an election campaign. That, at least, is the overwhelming suspicion in the wake of Spanish politics’ recent “cheekgate” affair, which saw the Popular Party mayor of Valladolid, Javier de la Riva, comment of newly instated Health Minister Leire Pajín that “every time I see that face and those cheeks [pun intended], I have the same thought.” De la Riva’s curious train of thought also led him to describe Pajín as “a very well prepared girl who is able and discreet, and will dish out condoms left and right wherever she goes.” Pajín, who at 34 is the youngest member of the Cabinet, has for some time been … [Read more...] about Bare-faced cheek gives Spain air of election fever
Spain’s Socialist reshuffle reaches out to left
If Spain’s Socialists manage to engineer an incredible turnaround in the polls and win the 2012 general election, the chances are they will look back at October 21 of this year as the day when the comeback started. Such a result still looks a long way off, but José Luis Rodríguez Zapatero’s biggest Cabinet reshuffle of his six years in power was one of the boldest moves of his career and it looks certain to invigorate a party that was limping along under a leadership with shrinking capital. Zapatero’s seventh reshuffle sees six ministers depart, four new ones arrive, with two changing portfolios and two ministries scrapped altogether. While the scale of the move is noteworthy, the … [Read more...] about Spain’s Socialist reshuffle reaches out to left
The mystery of Rajoy and the Spanish economy
“I know about economics. I’m not an economist but I know about economics and I have aides whom I consult.” This comment, made during a recent television interview, is not very reassuring coming from a man who aspires to become Spain’s prime minister in the near future. But then Mariano Rajoy is rarely unequivocal in his handling of the conservative Popular Party (PP) he leads. According to many, his reluctance to be clear-cut and firm is typical of the ambiguous Galician character. One obvious example is Rajoy’s management of the ongoing corruption scandal rocking his party. The lack of a clear policy on this has meant that some PP politicians facing investigation for the Gürtel … [Read more...] about The mystery of Rajoy and the Spanish economy
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
Ideology is first casualty of Spain’s economic crisis
The day José Luis Rodríguez Zapatero’s dream ended was not even marked by a speech from the unlikely new champion of glum realism. As Congress in Madrid debated in late May cutbacks effectively imposed by Frankfurt and Brussels, the Spanish prime minister, who had tended his very personal flame of optimism with so many smiling words, saw his political future turn to ashes without even taking the stand. The Socialist who had vowed to bring the benefits of economically successful Spain to the disadvantaged now looked on as Catalan nationalist Antoni Duran i Lleida announced that his bloc would save the government in the vote to cut public workers’ wages and freeze pensions, but declared that … [Read more...] about Ideology is first casualty of Spain’s economic crisis