2012-07-26
Finally, European finance ministers have reluctantly granted direct injections to the troubled Spanish banks with the condition that the country begin to restructure its finance sector and implement tough austerity measures.
We’ve seen the public backlash that has emerged against this austerity in Spain. Crowds have filled the streets of Madrid, demanding that the government deliver on its past promises. But despite the agreement, Spanish bond yields are still rising and the euro hit its lowest level in more than two years on Monday. The market says the risks are too high. Why? The crisis is spreading; Spain’s indebted regional banks now need help, and investors worry that Spain will become the fourth eurozone country that will be forced to ask for a major bailout to cover its debt payments.
Aidez l’Espagne (Help Spain)
Finally, European finance ministers have reluctantly granted direct injections to the troubled Spanish banks with the condition that the country begin to restructure its finance sector and implement tough austerity measures.
We’ve seen the public backlash that has emerged against this austerity in Spain. Crowds have filled the streets of Madrid, demanding that the government deliver on its past promises. But despite the agreement, Spanish bond yields are still rising and the euro hit its lowest level in more than two years on Monday. The market says the risks are too high. Why? The crisis is spreading; Spain’s indebted regional banks now need help, and investors worry that Spain will become the fourth eurozone country that will be forced to ask for a major bailout to cover its debt payments.
2012-07-14
For some time, I have been monitoring how labor costs affect a nation's competitive stance and its ability to expand its economy through exports. Over the years I’ve watched how the spectacular rise in China’s export volumes have powered the country’s economic growth rate. At the same time, I have seen the slump in demand from European nations hurt their growth and send many a continental economy into recession.
But today news from China may have started to tell a different story. The country's growth fell to 7.6% in the second quarter, its slowest since early 2009, as a property market downturn and weak exports weighed on the world’s second-biggest economy. Not surprisingly, China’s unit labor costs have been rising, albeit marginally, and presage a future that may not look exactly like the past.
Made in China, still?
For some time, I have been monitoring how labor costs affect a nation's competitive stance and its ability to expand its economy through exports. Over the years I’ve watched how the spectacular rise in China’s export volumes have powered the country’s economic growth rate. At the same time, I have seen the slump in demand from European nations hurt their growth and send many a continental economy into recession.
But today news from China may have started to tell a different story. The country's growth fell to 7.6% in the second quarter, its slowest since early 2009, as a property market downturn and weak exports weighed on the world’s second-biggest economy. Not surprisingly, China’s unit labor costs have been rising, albeit marginally, and presage a future that may not look exactly like the past.
2012-07-11
Two weeks ago when I visited Madrid’s Puerto del Sol, I was struck by the lack of protests in this area that has seen so many spectacles throughout history. Today, however, the plaza was filled by thousands of Spanish coal miners who had marched on the capital in protest of government austerity measures.
More than 8,000 miners have been on indefinite strike since the end of May, and more than 1000 of their ranks walked for nearly three weeks from the country’s beleaguered mining regions to make their point to the to the government of Prime Minister Mariano Rajoy, which just hours before had announced fresh austerity measures that should help Madrid cut its budget deficit by €65 billion by 2015.
Backlash: Madrid
Two weeks ago when I visited Madrid’s Puerto del Sol, I was struck by the lack of protests in this area that has seen so many spectacles throughout history. Today, however, the plaza was filled by thousands of Spanish coal miners who had marched on the capital in protest of government austerity measures.
More than 8,000 miners have been on indefinite strike since the end of May, and more than 1000 of their ranks walked for nearly three weeks from the country’s beleaguered mining regions to make their point to the to the government of Prime Minister Mariano Rajoy, which just hours before had announced fresh austerity measures that should help Madrid cut its budget deficit by €65 billion by 2015.
2012-07-06
As I sat in Madrid last week, poring over the details of the eurozone summit, it seemed that Italy and Spain had finally won enough German support to help them reduce their borrowing costs, which have soared to record levels in recent weeks. The Germans, in what appeared to be a victory for the eurozone's southern members, seemed to have somewhat softened their hard-line stance on austerity. Now, for the first time, there appears to be a tentative step toward mutualization of the possible repayment of the debt of Spain and Italy.
Indeed, we are seeing the evaporation of some key barriers to a eurozone solution. One week later, back in Boston, I was encouraged to see the news that within the span of an hour, China’s central bank, the European Central Bank, and the Bank of England stepped up their stimulus operations in a worldwide unified effort to bolster growth.
Eurozone compromise, rate moves: Steps in the right direction
As I sat in Madrid last week, poring over the details of the eurozone summit, it seemed that Italy and Spain had finally won enough German support to help them reduce their borrowing costs, which have soared to record levels in recent weeks. The Germans, in what appeared to be a victory for the eurozone's southern members, seemed to have somewhat softened their hard-line stance on austerity. Now, for the first time, there appears to be a tentative step toward mutualization of the possible repayment of the debt of Spain and Italy.
Indeed, we are seeing the evaporation of some key barriers to a eurozone solution. One week later, back in Boston, I was encouraged to see the news that within the span of an hour, China’s central bank, the European Central Bank, and the Bank of England stepped up their stimulus operations in a worldwide unified effort to bolster growth.
2012-07-03
I arrived in Spain to find a very long line of people waiting for taxis to take them from the airport to the city. I was told that many of the drivers had taken the night off to watch the soccer match. It was the semifinals, pitting Spain against archrival Portugal. When my colleague and I finally got a taxi, the match roared from the radio. "Zero-zero," the driver told us excitedly in his broken English.
It was the first time in my years as a strategist and portfolio manager that I was seeing this country, which has captured world headlines with its banking crisis as well as its soccer success. Had I not known better, I would not have thought this lively city was in the midst of economic, as well as a social, crisis.
Reporting to you live from Madrid
I arrived in Spain to find a very long line of people waiting for taxis to take them from the airport to the city. I was told that many of the drivers had taken the night off to watch the soccer match. It was the semifinals, pitting Spain against archrival Portugal. When my colleague and I finally got a taxi, the match roared from the radio. "Zero-zero," the driver told us excitedly in his broken English.
It was the first time in my years as a strategist and portfolio manager that I was seeing this country, which has captured world headlines with its banking crisis as well as its soccer success. Had I not known better, I would not have thought this lively city was in the midst of economic, as well as a social, crisis.
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