Death Star Economics



Rajoy: We got more funds because we’re good at things

So let me kick this off by saying that I’m not really a soccer kind of person. I mean, I call it ‘soccer’. But over the weekend, as I was watching the game of the century, aka Ireland vs Croatia, I was pretty amused by the amount ofeconomic commentary mixed in with the football talk. Apparently, group C has been renamed the ‘group of debt‘. Personally, I think there should be additional points for fiscal responsibility. Oh wait, Germany just won.

At least Spain is having a good start into the week, having secured buckets full of money on Sunday. Oh happy day. It is important to note that this is the point where nobody will pay attention to the difference between ‘bailout’ and ‘assistance’ anymore. [Up to] €100bn are going to be pumped into Spain’s FROB (Fund for Orderly Bank Restructuring), conveniently €60bn more than the IMF’s necessary estimate. If that [and all the other European aid] is accounted for in Spain’s balance sheet, it raises the countries debt to GDP ratio from the reported 68.5% to 146.6%. Whoa. Spain will now face controls by the EU, which also invited the IMF to stick their nose into the country’s financials, but it avoided the sort of policy requirements forced upon Ireland, Portugal and Greece. It remainsunclear which European fund the money will come from. It’s possible that it will come from both the ESM and the EFSF, because that would be the compromise requiring the most amount of work, which seems like the EU’s style.

Obviously, bailing out the banking sector is one thing, but the fears about Spain’s sovereign debt levels remainRajoy framed the whole thing as a victory for Spanish budget management that had prevented a full European bailout of the government, the impossibility of which was not addressed in his statement any further…  read article

The FT’s macroeconomic commentator Gavyn Davies approves and calls the bailout a necessary step forward, before he points out all of the structural issues that won’t get solved by itread article

And then, after everything had calmed down a tad in the morning, Spanish yields exploded again, so here we go,bailout failout.

Greek election countdown, round 2: T-6

And as Greek politicians seems to be just as uncertain of the outcome of these elections as everyone else,Evangelos Venizelos decided to ignore the vote count and just start early on the compromising and coalition building. In a letter to all parties that could potentially secure any votes next weekend, he tries to advocate a unity governmentread article

In yesterday’s Sunday Telegraph, George Osborne commented on the European mess, the idea of a banking union and its impact on the UK. He opens saying “We are approaching a moment of truth for the eurozone,” which sure sounds epic, but I think we’re just approaching a moment of decision making under pressure in the eurozone. But his message is clear nonetheless, economic uncertainty belongs on the continent, which the UK is not and won’t ever be part of. Euroskeptics are having a field day. read article

So long.


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