The Growing Pain in Spain
Just when you think that things can get no worse in Spain, they do.
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Browsing Tag
Europe
On euro weakness and capital flight out of the euro zone
The large increases in Target2 imbalances at the heart of the euro zone's banking system are widely considered not just a risk to national governments in the event of a eurozone breakup, but also a sign of capital flight. We have seen the…
Europe will need to accelerate implementation of its bail-in and bank resolution scheme
As I wrote regarding the Spanish bank bailout just now, large losses at European financial institutions likely mean that equity will be wiped out. Government will then need to decide how the losses will be paid for. In Spain's case, the…
Following the US bailout model will create losses for Spanish bank preferred and sub debt
In Spain, it is well-known that many of the financial institutions need more capital. However, the question is how much capital. Spain has run dubious quality stress tests that say the banks need less than 40 billion euros. Others believe…
Why the Spanish Memorandum of Understanding is a disaster for Spain and Europe
We now know that Spain has received a standard bailout package like Greece, Portugal and Ireland before it despite attempts by the Spanish government to dress this bailout up as something different. Below is a quick analysis of just what…
Rajoy’s humiliating defeat to Merkel narrows options to sovereign bailout, monetisation or…
German Chancellor Angela Merkel is a brilliant political tactician. After the latest EU Summit, it seemed she had capitulated after being rounded on by France's Hollande in an effort by Italy's Monti and Spain's Rajoy to prevent the market…
European banking union done properly
The EU Summit decision on banking union is being questioned by some economists in Germany. This column argues that a banking union is a critical step in ending the EZ crisis and building a more stable EZ financial architecture. It is a…
Daily: Already backtracking on European summit details
The biggest news is that the EU is already backtracking on the Euro summit deal that decoupled the sovereign-bank tie which had been causing Spanish and Italian yields to rise. And predictably, Spanish and Italian yields have risen once…
Ireland is the biggest winner from last European summit
Last week's newsletter focused on Monti and Rajoy forcing Europe into true EuroTARP as the chief headline coming out of the latest European summit. A lot of other commentary focused on the agreement to let the ESM/EFSF buy up sovereign…
Data out of Brazil, Italy show slowing global growth
The data today were pretty mixed. Brazil is showing more signs of slowing as industrial production there dropped for the third month in a row. What's more is that this puts Brazil back to numbers from 2009 when we were recovering from a…