Daily: On Spain’s death spiral and the exogenous threat of drought
Two topics today: The first is Spain and the second is record high oil prices.
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Browsing Tag
Spain
The unacceptable behavior of the market
I don’t want to be too glib here. I recognize that policymakers are in an extremely difficult position and that there is no longer any easy solution, but railing at the markets rather than trying to understand why they are doing what they…
Chart of the Day: Germany in breach of Maastricht Treaty in 8 of 10 years since 2002
A recent story in German magazine Der Spiegel highlights the efforts in 2005 of German Chancellor Gerhard Schroeder to relax the penalties for deficits in breach of the euro zone's stability and growth pact. It is a good review of the…
The Growing Pain in Spain
Just when you think that things can get no worse in Spain, they do.
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…
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…
On Spain’s overestimating bank profits and more on Apple’s patent wars
Here's a second batch of links. I think the Bloomberg piece on Spanish banks is a big highlight here. Essentially, Bloomberg tells us that Spain may be overestimating bank profits and therefore underestimating the capital shortfall of its…