Spanish Borrowing Costs Soar as Regional Government Finances Break Down

By: Tuesday July 24, 2012 5:22 pm

The Spanish 10-year bond yield keeps going straight up. It sits now at 7.62%, a high since the creation of the euro. They will need to return to the markets to sell bonds on August 2, and if the yields are at the same rate, it will be very difficult for them to finance them.


Germany Warms to Greek Exit, Looking Past Consequences

By: Monday July 23, 2012 2:48 pm

In addition to Spain’s woes, the other major crisis in Europe’s lap at the moment is the potential exit of Greece from the currency union, which Germany sees as more and more manageable. But experts believe a Greek exit will set in motion a series of consequences that will be harmful to Germany and other countries in Europe.

Europe Staggered by New Round of Debt Crisis

By: Friday July 20, 2012 6:17 pm

Markets on the continent are melting down, particularly due to the increased Spanish borrowing costs. As I explained yesterday, the votes in Germany to approve the bailout of Spanish banks, which was reiterated by the Eurozone, effectively reversed the results of the EU Summit by making it explicit that the Spanish government would be on the hook for the bailout funds, rather than direct injections into the banks themselves.

Rajoy Announces New Spanish Austerity Measures

By: Wednesday July 11, 2012 11:25 am

Yesterday, the Eurozone leadership granted Spain some allowances on its austerity program, with the budget targets eased for this year and next. But getting to those targets would still require further austerity measures, and Spanish PM Mariano Rajoy announced them today.

Europe Agrees to Accelerate Spanish Bank Bailout, Decelerate Austerity

By: Tuesday July 10, 2012 8:40 am

Finance Ministers meeting in Europe agreed on a series of measures for Spain. First, they authorized a first installment of 30 billion euros for lending to Spanish banks, subject to approval from Eurozone governments. The money will be distributed by the end of the month, a faster schedule than previously considered. The real question is who is held responsible for the lending, the Eurozone bailout facility or the sovereign government.

Eurozone Reeling Again, as Commitments from EU Summit Rolled Back

By: Monday July 9, 2012 9:20 am

There was fairly unanimous agreement that the most recent EU summit did some good, if for no other reason than it offloaded some of the risk for bank bailouts off of sovereign governments. The European bailout fund would be able to lend directly to the banks, rather than tying only the bank’s sovereign in with it. But now even that structure is unraveling.

Greece Drops Plan to Renegotiate Bailout Terms

By: Friday July 6, 2012 4:00 pm

The way the Greek election worked is that Syriza, the far-left party, said they would completely renegotiate the bailout terms that forced austerity on the country. New Democracy, the center-right legacy party that was part of the grand coalition that negotiated the bailout in the first place, countered that they too would seek a renegotiation, muddying the contrast between the two parties. New Democracy claimed that their terms would be responsible, while Syriza’s intransigence would get Greece tossed out of the euro. A spooked public then narrowly chose New Democracy, based at least in part on these points.

Just a few weeks after the election, it turns out it was all a game.

European Economic Indicators Sharply Worse

By: Monday July 2, 2012 10:45 am

On a day where unemployment in the Eurozone hit a new high of 11.1%, with youth unemployment over double that, German manufacturing is feeling the bite from the slump among export partners. This reminds us that while last week’s agreements may have averted the immediate bank crisis, it hasn’t addressed the underlying economic problems.

EU Summit Yields Surprisingly Tangible Results

By: Friday June 29, 2012 7:35 am

The 2-day EU summit may have produced some actual movement that at least gestures in the direction of better policy.

EU Summit Solution Looks Remote

By: Wednesday June 27, 2012 11:10 am

This EU summit scheduled for tomorrow has all the earmarks of a disaster. First, technocrats released a sovereignty-destroying proposal that would combine all of the worst elements of a fiscal union, not solving the growth imbalance problem while practically mandating austerity from the top, stripping authority from the elected representatives of the various countries.

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