On austerity and the economic outlook in Portugal and Spain
In today's links were two articles which highlighted the juxtaposition between declining sovereign yields and worrisome economic fundamentals in Spain and Portugal.
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liqudity
On the need for Spain to formally apply for an OMT-style bailout
Spanish Prime Minister Mariano Rajoy's economic policy is in tatters. Spain's economic descent is now accelerating, with output shrinking 0.7% in just the last quarter alone - the worst since crisis began in 2009. For the full year, output…
The ECB is losing the currency wars
Earlier today I posted an article in the links on the euro's move up to a 14-month high. As I write this, the euro is trading a 1.3568 to the US dollar, up markedly from 2012's low during the sovereign debt crisis of 1.2063 on 25 July. And…
What’s happening in Spain?
I have come across a number of Spanish-language links that I believe collectively add good colour to our understanding about the current economic and political situation in Spain. I am going to use them as a jumping off point for this quick…
Confirmation of my view on Ireland and Portugal from Olli Rehn
This is an update to today's weekly on Ireland and Portugal. Olli Rehn, the European Economics Commissioner has just confirmed my months' long forecast on how the Irish and Portuguese bailouts would proceed: with an OMT-style exit…
On the Portuguese and Irish bailout extension
Last October, I highlighted the issue of bailout extensions to Ireland and Portugal and so I want to re-visit this theme now that Portugal and Ireland are in the news looking to change the terms of their existing bailouts.
The dearth of safe assets most benefits sovereign issuers… for now
The financial crisis has reduced the ranks of countries with pristine macro fundamentals. Thus, the availability of safe assets has declined precipitously. Investors in a bind where they have funds to invest but a limited number of options,…
Spain: Bad debts’ rise to record is why crisis will return
The key to Spain's turning the corner as 2013 begins is the housing market. This takes on increasing importance given the reprieve in crisis interest rates. House prices are still falling and the economy is contracting despite the…
Converting Irish debt controlled by Troika
Back in October of last year the Irish Finance Minister Michael Noonan said that his government's goal is to be able to complete the three-year Troika bailout on time and resume normal operation late in 2013. Now that Ireland has regained…
Spanish bond auction is a success
This morning, the Spanish government initiated its bond auction process this year. The auctions were a success with the yield on 10-year government bonds falling to 4.95%, below 5% for the first time since March 2012.