Why Spain’s regions are still a financial risk 19 Apr 2012 Madrid is offering carrots and sticks to get the country’s regions to better control their budgets. These might be enough, but the market won’t really know until the end of the year.
Argentina’s oil-asset grab is both normal and odd 19 Apr 2012 The decision to take control of YPF puts Argentina in the oil industry mainstream - 75 percent of global production comes from government-controlled companies. What is odd, though, is the desire to micromanage the company and the willingness to annoy the rest of the world.
IMF’s euro gloom points to right fiscal path 18 Apr 2012 Spain, France and Italy won’t be able to meet their fiscal targets next year, according to the latest IMF forecast. This is a wake-up call for both austerity fundamentalists and insouciant spenders. Fiscal discipline remains a must. But too much, too fast could be lethal.
Repsol nearly pricing in the worst 17 Apr 2012 The Spanish energy group has been hard hit by the expropriation of most of its shares in Argentina’s YPF. Investors are pricing in zero compensation and wipeout on a YPF-backed loan. But with the strategy upended and a long legal fight ahead, the market pessimism is justified.
Repsol has to fight Argentina’s oily expropriation 16 Apr 2012 Buenos Aires’ leftist government is taking control of YPF, the oil and gas company 57 percent owned by Repsol of Spain. Worse, it seems that the state may be nationalizing only Repsol’s shares. Argentina’s naked power play may be overwhelming, but the Spanish should not just roll over.
Spanish house prices poised for more falls 13 Apr 2012 The property bubble in Spain has deflated lethargically in the past three years. New bank rules on property provisioning will accelerate declines this year. The trough is still far away. Adjustment is necessary, but will only sustain the sense of crisis in Spain.
UK devaluation has a message for Greece and Spain 13 Apr 2012 The latest British trade figures might suggest otherwise, but a devalued pound has bolstered UK exports and growth. Big devaluations would turn the beleaguered Greek and Spanish economies around. But the competitive cheapening would come at a high price in lost wealth.
Spain’s fiscal amnesty sends wrong message 10 Apr 2012 The government is hoping to raise 2.5 billion euros with a no-questions-asked amnesty for tax evaders. The move could demoralise taxpayers, and may be ineffective. A better approach would be to beef up resources on tax inspection.
Spain reveals holes in Europe’s crisis plan 5 Apr 2012 Rising Spanish yields have thrust the euro zone back into crisis mode. The ECB’s liquidity boost is fading, and the obsession with austerity looks self-defeating. Though Madrid could use some support for its banks, a full bailout will be difficult. Self-help is the only answer.
Spain can’t avoid austerity conundrum 29 Mar 2012 A general strike won’t turn back the clock on labour market reform and the coming budget cuts look inevitable. Too much austerity could be self-defeating and even unrealistic, but Prime Minister Rajoy cannot afford to waver after his earlier deficit faux pax.
Spanish bank take-under reveals real estate mess 27 Mar 2012 Caixabank is buying smaller rival Banca Civica and its dud property loans at a discount to market value. Caixa reaps savings from cutting costs, including its own network, and avoids being pushed into a deal with larger Bankia. Without state support, though, it’s still a risk.
Rajoy’s poll loss no ground for wavering on reform 26 Mar 2012 The ruling PP party failed to get a majority in Andalucia, eroding the Spanish PM’s mandate. It’s a setback more than a disaster. With yields back under pressure, the real battles begin now. To meet the deficit goal, the government must wield the axe in the upcoming budget.
Repsol shares betray leveraged Latam risks 23 Mar 2012 Shares in the Spanish oil major have lost more than 10 pct since troubles began in Argentina with its listed subsidiary, YPF. This looks overdone compared to YPF’s own market fall. But Repsol’s exposure to Argentina is bigger than it looks.
Hugo Dixon: Rajoy’s ploys risk stoking cynicism 19 Mar 2012 The new Spanish PM’s first batch of reforms was bold. The same may be the case of the second batch, to be announced after this week’s Andalusia elections. The main quibble is that Rajoy hasn’t been upfront. That could make the people more cynical about politicians, storing up trouble.
Shame if Spain loses second ECB seat 16 Mar 2012 Wrangling over big euro jobs may leave Madrid with only one ECB seat and Luxembourg, whose population is 1 pct of Spain’s, with two. That would be a mistake. Having Spain fully on board is an asset. And marginalising it would make it harder to deal with if it became a liability.
Haggling on 2012 Spanish deficit misses the point 13 Mar 2012 The EU has agreed to relax the country’s deficit target for 2012 as long as Spain maintains its goal of shrinking it to 3 pct of GDP next year. The compromise allows both sides to save face for now. The problem is that as recession hits, next year’s target remains challenging.
Enel woes reflect euro zone’s new normal 9 Mar 2012 Big cuts to the debt-laden Italian utility’s earnings and payout guidance suggest years of tough going in Spain and Italy. The shares are 40 pct off their 2011 highs, but windfall taxes, slack demand and the sector’s lowest dividend yield mean investors’ pain may not be over yet.
Spain bails out its regions, IMF-style 9 Mar 2012 The state will guarantee a 35 billion euro syndicated loan to local and regional government to pay back suppliers. The move will be a godsend to small businesses. But – like the bailouts of Greece – the risk is it will take the pressure off the regions to shape up.
Spain replaces Italy as bad boy in euro class 6 Mar 2012 Since August, Italy has been the big troubled euro economy, with higher yields than Spain. But Rome’s borrowing costs are now a touch tighter than Madrid’s. Economics and politics are responsible for the flip. The gap could widen further – at least until Italy’s next elections.
Spain must fix absurd electricity market 2 Mar 2012 Power producers have for years been forced to sell electricity at below cost. It’s hard to see how consumers can now be migrated to economic pricing without further damaging the economy. There’s no easy way of normalising the situation. The government faces some hard decisions.