Spain, which is plunged into crisis and social unrest, seemed unable Monday to restore confidence in panicked markets that bet on the overall rescue, although the Government ruled it out.
Spain does not need rescue, said Monday the Minister of Economy of the fourth largest euro zone economy, Luis de Guindos, before the economic committee of the Chamber of Deputies, where he explained the plan of European aid to Spanish banks, formally adopted Friday.
“Spain has a capacitad growth and has no problem in other countries rescued and that’s not going to be rescued,” settled the minister, who said that Spain is “solvent”, which will be overcome “difficulties in We are currently experiencing. ”
Guindos attributed to “uncertainty” and “volatility” to the “irrational behavior” of the markets, so that “the only way to go” beyond the “capacitad of governments,” said the minister, referring to the need for the European Central Bank debt buy troubled countries in the secondary market, such as Spain and Italy.
On Saturday, the Foreign Minister, Jose Manuel Garcia-Margallo, had urged the European Central Bank to buy Spanish debt to end market speculation against the country.
Meanwhile, the Spanish stock exchange authorities banned from Monday for three months and short sales, in a move that appeared in concert with Italy, although the Alpine country has banned only for shares of banks and insurance companies and only this week.
This is a speculative tool of selling borrowed securities in hopes of buying them soon after at a lower price to return them to the owner, while the operator pockets the difference.
Spain became the eye of the storm despite the European plan to help banks signed on Friday and offers a line of credit of up to 100,000 million euros.
But the effect disappeared quickly by the announcement of Valencia, one of the 17 most indebted regions requested financial assistance to the State by the lack of liquidity, triggering panic.
The markets know that other communities will follow him. “The problem of autonomy makes it more likely that Spain needs a global rescue” summed Christian Schulz, senior analyst at Berenberg Bank.
Distrust of markets pushed the Spanish risk premium-the difference you pay for the bond debt to ten years in Germany, which rose to 642 points, but then dropped to 632, while the performance is required in the secondary market amounted to 7.49%, the highest since the creation of the euro area and an unsustainable level for the solvency of Spain.
Also, the Bolsa de Madrid he lost more than 5% part-time, but then limited its losses to close at 1.10%.
On Tuesday, the Treasury makes a bond issue of between 2,000 and 3,000 million euros in the short term. “The Spanish Treasury currently has around 30,000 million euros. With that amount, you can cover the maturities until October, but beyond that, does not seem possible,” said Daniel Pingarrón, an analyst at IG Markets.
As the bad news never come alone, the Bank of Spain announced an acceleration of the recession in the second quarter, with a GDP contraction of 0.4% instead of 0.3% of the previous two quarters.
A bad data is added the social outrage. The unions are demanding a referendum on the government’s austerity plan, which foresees a rise in VAT and the abolition of the Christmas bonus for civil servants, among other measures to save 65,000 million euros for 2014.
Hundreds of officers went back to the streets on Monday during their lunch hour, shouting “Hands up, this is a robbery!”
The opposition questions the effectiveness of the plan to help banks and against the new cuts, in addition to those listed in the 2012 budget.
Category: Business News