Just how bad could the Rajoy slush fund scandal get? What we have so far is a little confusing. From El Pais on Monday:
Answering reporters’ questions for the first time since details emerged late last week about an alleged slush fund his Popular Party (PP) controlled, Prime Minister Mariano Rajoy said on Monday in Berlin that all the information that has been published by the media “is untrue — except for some things.”
Hmm. Rajoy reportedly didn’t clarify which things were true and which were not — although he had already denied allegations he took cash payments from a secret slush fund paid for by construction companies. Read more
El Pais has a nifty interactive whereby you can search the 14 sheets of manuscripts allegedly penned over 18 years by Luis Gutierrez Barcenas, the party manager and treasurer at the heart of the supposed Rajoy “slush fund” scandal in Spain…
Last weekend’s Catalan elections returned perhaps the most difficult-to-read result. Judging by the overall support for separatist parties, there was significant support for at least a referendum on independence. Yet the largest separatist party, the centrist Convergència i Unió, saw its majority in the regional parliament slashed, forcing it to seek a coalition. Read more
The people of Catalonia go to the polls on Sunday. Although it’s just a regional election, the vote is seen as a key gauge of the Catalan independence movement’s strength. And the latest indications are that Catalans are less keen on going it alone as the election day draws nearer. Read more
A report in the Spanish paper El Confidencial says that the Spanish government is considering asking just the IMF for aid in an attempt to bypass Eurogroup conditionality.
It seems quite an unlikely option (and no sources are cited) but it may nevertheless be an indication that the government is feeling increasingly anxious about its ability to hold out on asking for a bailout. Read more
Spain’s fiscal management seems to increasingly be a case of plugging holes, watching new ones appear, ignoring them, then relenting and also plugging those… all while delaying a clearly inevitable request for assistance from Brussels.
On the positive side, the auction on Thursday marked the completion of the country’s planned funding for this year (€86bn, but there’s also €10bn in private placements issuance). On the negative side, the €4.7bn debt sale saw unenthusiastic demand, which has helped spook investors and driven 10-yr yields up. Read more
Spain has been grabbing the headlines all this week and while it may be Friday afternoon, the excitement isn’t over just yet. Moody’s is widely expected to announce whether it’s going to downgrade Spain’s Baa3 credit rating (possibly to junk) Friday after the European markets close. Oliver Wyman’s second audit of the country’s banking system should come out around the same time.
Ahead of all that we wanted to talk you through a quick recap of the latest developments because, as UBS strategist Justin Knight rightly points out, “the areas of concern are now becoming numerous” and it’s making the question of when Spain might request aid increasingly complex. Read more
Maybe it was Mario Draghi pooh-poohing the idea that the ECB might start to withdraw its support for european banks. Or maybe it was just further consideration of Wednesday’s frank words from Spanish prime minister Mariano Rajoy…
Spain is facing an economic situation of extreme difficulty, I repeat, of extreme difficulty, and anyone who doesn’t understand that is fooling themselves.
Europeans tend not to understand American football, not least because the ‘ball’ seems to rarely make contact with the ‘foot’.
But let’s hope Mariano Rajoy, the candidate expected to win Spain’s general election on Sunday, knows the game, or one move in particular: the ‘Hail Mary’, which is a long forward pass made in desperation at the end of the half with only a small chance of success. Read more