Posted on 07/14/2008 8:39:19 AM PDT by DeaconBenjamin
Spain has suspended an auction of sovereign bonds as investors take fright over the country's property crash and accelerating slide into economic crisis.
Spain has suspended an auction of sovreign bonds as investors take fright over the country's property crash and accelerating slide into economic crisis Spanish government officials have been shocked by the intensity of the downturn
The treasury pulled an expected sale of 15-year bonds after probing the market informally, saying it would wait until credit conditions began to calm down. "We are not facing financing problems. We placed a successful three-year note on Wednesday," said a spokesman.
Government officials have been shocked by the intensity of the downturn now engulfing the country. Car sales fell 31pc in June, industrial production has fallen 5.5pc over the past year and the collapsing property sector is shedding almost 100,000 jobs a month.
Miguel Sebastian, the industry minister, said the economy had ground to a halt in the second quarter and was now in "virtual recession".
Standard & Poor's has issued an alert on the banking sector, warning that "the sharp deterioration in economic conditions" would lead to a surge in bad debts. The fears are shared by Miguel Blesa, head of the lender Caja Madrid, who says the wave of defaults are "not just coming, they're galloping". Last week's interest rate rise by the European Central Bank to 4.25pc has tightened the screw further.
Spreads between Spanish bonds and German bunds have risen from four basis points last year to 27 yesterday. While state debt is low, there are concerns that bank losses from housing and commercial real estate could have knock-on effects for the government and possibly complicate euro membership.
(Excerpt) Read more at telegraph.co.uk ...
Europe's Aerospace and Defence Industries Association yesterday held a meeting with ECB president Jean-Claude Trichet to express "deep concern" over the euro exchange rate, now widely believed to be 25pc overvalued against the dollar bloc.
They believe the ECB could steer down the euro if it gave a clear signal that the tightening cycle is over.
Miguel, your economy is just fine, it's your imagination that's a bit off kilter..........
Bush’s fault??
Central banker are overeducated and have always been out of touch with reality. Not to mention that most of their guiding theories are wrong, but like weathermen they are not held accountable.
It seems to me that the Spanish have a Reales crisis.
IOW a lot of pounding the table, finger pointing, and yelling.
This one can be put in the shoulders of the UK housing flippers and major housing developers who overbuilt.
With good reason. With the exchange rate where it is, Boeing will almost certainly win the new tanker bid.
He can see a very big sale disappearing before his eyes.
Everything I read says the Euro is overvalued 25-40% and is on it’s way down for a pretty big settling/downward move. I have not read one article saying the opposite. I am no currency expert, but wouldn’t doubt on a media-driven level if the Euro hasn’t somehow been fluffed up, as EuroSocialism has been.
Full diosclosure, I am disgusted by European cowardice and by the fact they’ve given us two world Wars and the Holocaust in the last century. Oh yeah, and maybe some good chocolate.
I think Spiegel was citing that acronym, or perhaps the London Telegraph.
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