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Daily commentary: On Spain’s death spiral and the nationalism of depression

Spain is involved in two stories today that point to the difficulties that surround sovereign governments that are overindebted in foreign currency. There are a ton of Spanish-language links for that reason.

In Argentina, the story is about Spain’s oil giant Repsol having it’s stake in Argentina’s YPF being forcibly taken by the Fernandez de Kirchner government in Argentina. This is a populist move which brings Argentina ever closer to Chavez in Venezuela and definitely reminds us that the country is still a ‘banana republic’.

Argentina is not the model. Argentina shows one very clearly that the move toward economic nationalism and unilateral action is part of a whole psychology of nationalism that pervades all parts of the political economy of a country in a debt deflation and depression. Clearly this has implications for the EU. The euro zone needs to handle the periphery including Spain carefully because Argentina is showing us what happens when national socialism becomes the governing raison d’etre.

In the second piece of news, Spain’s yields are spiralling ever higher. They are now above 6%. To me, it looks like a death spiral. When and how does Spain pull out of this?

That’s it. Here are the links.

  • Calderón lamenta la expropiación de YPF y pide a Argentina rectificar | Economía | EL PAÍS
  • De Kirchner pide ahora que las empresas extranjeras reinviertan en Argentina – ABC.es
  • En 1992 Cristina impulsaba la privatización de YPF – lanacion.com
  • Kirchner extiende su amenaza a otros grupos como "telefónicas o bancos" | Economía | EL PAÍS
  • La Comisión Europea advirtió a la Argentina que la expropiación de YPF tendrá consecuencias
  • El Gobierno tomó el control de YPF y echó a directivos de su sede
  • Insane in Spain – NYTimes.com
  • First Read – Romney offers policy details at closed-door fundraiser
  • Argentina storms out of Americas summit – Americas – Al Jazeera English
  • JPMorgan Said to Transform Treasury to Prop Trading – Bloomberg
  • Spain Jolts Global Markets – WSJ.com
  • Americans Favor "Buffett Rule" by 60% to 37%
  • BBC News – Google profits higher as it announces stock-split
  • BBC News – JP Morgan reports rebound in business
  • Obama needs more than symbolism of ‘Buffett Rule’ – CNN.com
  • Quantitative impact study results published by the Basel Committee
  • González: "Me preocupa la falta de orientación de Gobierno y oposición" | Política | EL PAÍS
  • Kirchner no se pronuncia sobre la posible intervención de YPF | Economía | EL PAÍS
  • El Gobierno convoca al embajador argentino por el conflicto con Repsol | Economía | EL PAÍS
  • Mato ve factible aplicar este año un sistema de copago en función de la renta – CincoDías.com
  • Rajoy: "No es posible rescatar a España, no hay intención" – CincoDías.com
  • El Ejecutivo ahorrará 2.500 millones con la ampliación de la jornada en el sector público – CincoDías.com
  • Economy would likely have to worsen for Fed to act | Reuters
  • Leaving New York, June 1958 | Retronaut
  • 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.