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News Links: Spain becomes eurozone’s weaker link

  • Spain Set to Vote for Rajoy Cuts as Crisis Claims Fifth Leader – Bloomberg

    Spaniards may hand the biggest majority in three decades to opposition People’s Party leader Mariano Rajoy as polls suggest Europe’s debt crisis will push a fifth government from power. Rajoy will win as many as 198 of the 350 seats in Parliament in tomorrow’s federal elections, the largest majority any Spanish government has secured since 1982, polls show. Set to inherit a 23 percent jobless rate and the highest financing costs since Spain joined the euro, Rajoy has pledged to deepen spending cuts and overhaul the economy after a four-year downturn.

  • BBC News – Spain becomes eurozone’s weaker link

    In 1989, Spain’s ratio of government debt to GDP – the value of what the country produces – was just 39%. Its ratio of corporate debt to GDP was 49%, the ratio of household debt to GDP was just 31% and financial sector debt was just 14% of GDP. The aggregate ratio of debt to GDP was 133%. By the middle of this year, the picture was utterly different. The aggregate ratio of debt to GDP had soared to 363% of GDP. And it was really from 2000 onwards, the euro years, that Spain really got the borrowing bug, with the ratio of aggregate debt to GDP rising by a staggering 171 percentage points of GDP. The biggest increment over the past 20 odd years has been in the ratio of corporate debts to GDP, which has soared to a staggering 134% of GDP. Spanish companies have become addicted to debt.

  • Spanish Banks Have $41B of ‘Unsellable’ Real Estate – Bloomberg

    Spanish banks, under pressure to cut property-backed debt, hold about 30 billion euros ($41 billion) of real estate that’s "unsellable," according to a risk adviser to Banco Santander SA (SAN) and five other lenders. "I’m really worried about the small- and medium-sized banks whose business is 100 percent in Spain and based on real- estate growth," Pablo Cantos, managing partner of Madrid-based MaC Group, said in an interview. "I foresee Spain will be left with just four large banks."

  • ‘It’s all i,i,i’: Chief Rabbi slams Steve Jobs for ‘coming down the mountain with his two tablets’ and creating a selfish society | Mail Online

    The Chief Rabbi today launched an eyebrow-raising attack on late Apple founder Steve Jobs – who he says helped create a selfish consumer culture that has only brought unhappiness. Lord Sacks, who represents Britain’s 300,000 Jews, singled out Jobs for blame likening his iPad tablets to the tablets of stone bearing the Ten Commandments given by God to Moses.

  • Was the New York Times Embedded with the NY Police Department Prior to the #OWS Raid? « naked capitalism

    In the photo series, the high resolution image from South Street Seaport is indeed a bit sus, unless the NYPD has started memorializing its operations for the benefit of posterity and favored media outlets. And in the background story on the raid, I was troubled by how fawning it was, a classic example of stenography masquerading as reporting. The brilliant tactical execution by New York’s finest! And the only people who were manhandled clearly deserved it!

  • Bull market in bonds is almost over: David Rosenberg – The Tell – MarketWatch

    "Most of this bull market in bonds is over," Rosenberg said in an interview. "The mathematics are telling you that were in the late stages. I’m not bearish on fixed income but when the 5-year [Treasury] note 5_YEAR is below 1% you know the game is not over, but it’s close to being over."

  • Analyst’s Longtime Skepticism on Euro Gains Traction – NYTimes.com

    "The current policy of lending plus austerity will lead to social unrest," Mr. Connolly told investors and policy makers at a conference held this spring in Los Angeles by the Milken Institute, arguing the case that Greece, Italy, Portugal and Spain could not simply cut their way to recovery. "And one should not forget that of the four countries we are talking about, all have had civil wars, fascist dictatorships and revolutions. That is history," he concluded, his voice rising above the chortles and gasps coming from the audience and the Europeans on his panel. "And that is the future if this malignant lunacy of monetary union is pursued and crushes these countries into the ground."

  • Gilt Yields Fall to Record Lows as BOE Reduces Growth Outlook – Bloomberg

    "The inflation report and the lowering of the growth outlook helped gilts," said Vatsala Datta, an interest-rate strategist at Lloyds Bank Corporate Markets in London. "It seems that the Bank of England may do more quantitative easing in February. That will benefit the long end," she said, referring to the effects of asset-purchase stimulus on longer- dated maturities. The yield on the 10-year gilt fell to 2.26 percent as of 4:53 p.m. London time yesterday, from 2.29 percent on Nov. 11. It reached 2.107 percent on Nov. 16, the least since Bloomberg began collecting the data in 1992. The 30-year gilt yield was at 3.19 percent, down from 3.27 percent at the end of last week. It reached 3.062 percent on Nov. 17, according to Bloomberg data.

  • What price the new democracy? Goldman Sachs conquers Europe – Business Analysis & Features – Business – The Independent

    While ordinary people fret about austerity and jobs, the eurozone’s corridors of power have been undergoing a remarkable transformation

  • Robert X. Cringely On His ‘Lost Interview’ With Steve Jobs – Forbes

    It’s a little absurd to interview someone about an interview. But back in 1995, Robert X. Cringely landed a hell of an interview with a hell of a subject, at what was – in retrospect – a hell of a moment. Steve Jobs was just two years away from retaking the Chief Executive role at Apple and beginning a run that would transform the Cupertino, Calif.-based Mac maker from loser to leader in the digital economy.

  • EU exec to propose tough euro zone budgets control, offer eurobond prospect | Reuters

    The European Commission will propose on Wednesday much tighter control of euro zone countries’ budgets and closer economic monitoring which, if proven to work, could lead in a few years to some form of eurobonds, a senior euro zone official said.

  • Greek Haircut Plan May Come Unraveled: Goldman Sachs – MarketBeat – WSJ

    "Barely a month ago we had the grand plan announced by officials only to have the pundits reveal the deal was vague at best, empty at worst," wrote David Ader, head of government bond strategy at CRT Capital. "In the subsequent three weeks we’ve had nothing, literally nothing, that further defines or refines any plans." And now there’s some grumbling that a big part of the plan – the one about private sector involvement (PSI) in Greek debt, hammered out by the Institute of International Finance (IIF) – might have to be retooled.

  • Ireland’s budget leak to Germany brings home some harsh realities | Siobhán Dowling | Comment is free | guardian.co.uk

    The fact German finance ministers have already viewed Ireland’s upcoming budget will anger those who fear a loss of sovereignty

  • Manchester City Has Record $312 Million Loss on Sheikh Mansour’s Spending – Bloomberg

    Manchester City, the Premier League team owned by Abu Dhabi’s Sheikh Mansour bin Zayed Al Nahyan, had the largest fiscal loss ever in English soccer. City, which is five points clear at the top of the league, had a loss of 197.5 million pounds ($312.4 million) in the 12 months ended May 31, the team said today on its website. That’s 76.2 million pounds more than last year’s loss and surpasses the record 132.8 million-pound loss posted by Chelsea in 2005.

  • Google Music vs Amazon MP3 vs iTunes: Which Online Music Store is the Best for You?

    Each music store is a little different. This showdown is all about the music stores that these companies offer-not their respective players, applications, or services. We can’t help but mention them in terms of usability and integration with the store and the user experience, but we’re going to try and focus on the features of the stores and steer clear of the bugs or quirks of each player.

  • SwiftKey X 2.2 Arrives With More Languages, Multi-Touch Support and New Keyboard Layouts

    The beta for the new update to SwiftKey X has been in the hands of VIP for a little while not but it’s finally landed in the Android market as Android 2.2. This is a pretty significant upgrade so you’ll want to grab the new version right away. We’re getting improved accuracy through their new multi-touch framework, new languages to bring their total to 35, including the oft-desired Arabic and Hebrew. There are also new keyboard layouts for Colemak and Dvorak users. Swiftkey X is quickly evolving into the keyboard for everyone with all of these updates and we can’t wait to see what they’ll be cooking up next. Find the upgrade in the Android market.

  • London property draws eurozone investors – FT.com

    London’s housing stock is fast becoming the wealth haven of choice for Italian and Greek investors, with buyers from the troubled eurozone economies on course to double their spending on property in the capital this year. So far in 2011 buyers from Italy and Greece have poured £406m into London bricks and mortar, compared with just £245m during 2010, according to research by Knight Frank, the estate agent, for the Financial Times.

  • Hungary’s false dawn | beyondbrics | FT.com

    IMF connoisseurs will quickly understand that the Fund has little respect for what is being done in Budapest. Let’s face it, the chance of the IMF agreeing any sort of policy programme with the Hungarian authorites is very slim at this stage. The IMF would first have to ask for an unwind of the rather dubious policy measures we have seen in recent weeks – which would be a major blow to the government. Where does this leave us? The answer is: With reasons to be even more bearish about Hungary, now that the IMF is properly irritated, and with great entry levels to re-open bearish trades after Thursday’s far-fetched rally.

About 

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.

5 Comments

  1. Oldrich says:

    Ladies and gentlemen that is what we call a protest vote out sheer hopelessness and desperation. Young poor unemployed Spaniards voting en masse for a right-wing conservative party. From the frying pan straight into the fire.

    • I tend to agree. It doesn’t seem like PP has a fix for what ails Spain (high corporate sector debt and bankrupt financial institutions). Until they fix the debt problems, unemployment will remain high.

      Also, according to research, higher per capita GDP growth is negatively linked to support for right-wing and nationalist parties. So it makes sense that these incumbent governments would be overthrown by right-leaning parties. Obviously, unless those parties are willing to break from orthodoxy, there will be further political radicalisation. This process is just beginning.

      http://www.creditwritedowns.com/2011/04/rising-economic-nationalism.html

      • Oldrich says:

        Yeah. I like Spain a lot and I know the country pretty well having lived there for a couple of years and nowadays I help my brother who is importing trucks and other industrial vehicles from Spain. It is beautiful country with a very rich and colorful history. The situation is  is definitely nowhere near the light at the end of the tunnel. It is a gradual slow but sure process of sliding down. And knowing the Southern temperament (which obviously applies not only to Spain but also to other Southern European countries) things might get pretty hot down there. As Hemingway wrote (who loved Spain and Spaniards) wrote in “For whom the bell tolls”, there something really cruel, irrational and violent in dreaming latently in their psyche which comes out in the moments of tension. If you haven’t read I do recommend a great book from Anthony Beevor “Spanish civil war”. Also there is a brilliant BBC documentary from the 80ties of the same name. There are interviews with actual people who participated in the conflict from both side (communists, fascists, anarchists…)

        By the way since you disallowed comments under Obama I just wanted to say that I like him a lot. I believe he is in extremely smart and shrewd person with a deep understanding of how the US political and power system works. I found it preposterous when they called him a socialist or even communist. This is one glaring example media picture can totally distort reality or even to create alternative reality of its own.

      • Oldrich says:

        By the way just read your piece and find enlightening. Good job of tying together what is happening in different and adding a historical context. 

  2. Oldrich says:

    Ladies and gentlemen that is what we call a protest vote out sheer hopelessness and desperation. Young poor unemployed Spaniards voting en masse for a right-wing conservative party. From the frying pan straight into the fire.

    • I tend to agree. It doesn’t seem like PP has a fix for what ails Spain (high corporate sector debt and bankrupt financial institutions). Until they fix the debt problems, unemployment will remain high.

      Also, according to research, higher per capita GDP growth is negatively linked to support for right-wing and nationalist parties. So it makes sense that these incumbent governments would be overthrown by right-leaning parties. Obviously, unless those parties are willing to break from orthodoxy, there will be further political radicalisation. This process is just beginning.

      http://www.creditwritedowns.com/2011/04/rising-economic-nationalism.html

      • Oldrich says:

        Yeah. I like Spain a lot and I know the country pretty well having lived there for a couple of years and nowadays I help my brother who is importing trucks and other industrial vehicles from Spain. It is beautiful country with a very rich and colorful history. The situation is  is definitely nowhere near the light at the end of the tunnel. It is a gradual slow but sure process of sliding down. And knowing the Southern temperament (which obviously applies not only to Spain but also to other Southern European countries) things might get pretty hot down there. As Hemingway wrote (who loved Spain and Spaniards) wrote in “For whom the bell tolls”, there something really cruel, irrational and violent in dreaming latently in their psyche which comes out in the moments of tension. If you haven’t read I do recommend a great book from Anthony Beevor “Spanish civil war”. Also there is a brilliant BBC documentary from the 80ties of the same name. There are interviews with actual people who participated in the conflict from both side (communists, fascists, anarchists…)

        By the way since you disallowed comments under Obama I just wanted to say that I like him a lot. I believe he is in extremely smart and shrewd person with a deep understanding of how the US political and power system works. I found it preposterous when they called him a socialist or even communist. This is one glaring example media picture can totally distort reality or even to create alternative reality of its own.

      • Oldrich says:

        By the way just read your piece and find enlightening. Good job of tying together what is happening in different and adding a historical context.