How to tell when a state is not yet fully confident in the financial markets: it blames the international media reporting on its financial problems for the financial problems themselves.
Italy has long rated the opinions of the FT’s Lex column as newsworthy items in themselves. And a Portuguese minister went on the record last year to attack a Lex headline, of all things (Pigs in muck, which suggested Spain, Greece, Portugal and Italy risked “turning into bacon”). Now the Spanish are getting worried. Two TV crews camped outside the FT’s London offices this morning in an attempt to intercept Elena Salgado, the economy minister, who was due to meet reporters and editors – which they see as an effort to give the FT a dressing down for being “muy crítico” of Spain (the crews stood outside the front door while the Spanish car arrived at the back, so they had to run to get distance shots).
How is it newsworthy that she’s visiting journalists? Well, the Spanish papers are running it as one of their main stories, on the basis that the FT has raised the possibility of Spain having to leave the eurozone (although today Lex raised the idea that Germany could solve the problems in the single currency region by leaving).
What would be newsworthy would be for her to summon Paul Krugman, the New York Times columnist. He identified Spain, rather than Greece, as the eurozone’s weak link last week, prompting Salgado to lash out:
The economy minister denied Spain was a risk to the euro and criticised foreign analysts such as Nobel Prize-winning economist Paul Krugman, who this week said Spain was the euro zone’s “biggest trouble spot”, and foreign media for being too harsh on Spain.
“Maybe there is a lack of comprehension about what the euro means for our economies,” Salgado said on Spanish radio
Ironic that this came shortly after Krugman was being approvingly quoted by José Sócrates, prime minister of Portugal – caught alongside Spain in the unfortunate acronym wars – for saying “deficits saved the world”.
My guess as to why the FT is the target today: the real news is that Salgado is meeting London’s investors in Spain’s sovereign debt in an effort to convince them that the government’s much-criticised plan to cut the budget deficit is enough to avoid a full-blown Greek-style crisis. But the embassy didn’t want to upset these talks by having film crews show her walking into a fund manager such as Pimco, as it would set the discussions off on the wrong note. So instead they leaked the time of her meeting at the FT to give them something to film and talk about.
Luckily for the embassy, the TV crews I chatted with were utterly unaware that they had the wrong target: they thought it was a major event to have a government minister visit a newspaper office, rather than the everyday occurrence it is.
Perhaps there is a real story, though: Salgado cried off at the last minute, sending her officials instead. Spin this in two ways and it is interesting (although note I have no evidence for either – perhaps she’s washing her hair):
1. She’s deliberately snubbing the FT as punishment
2. The crisis is so bad she hasn’t got time to see the FT
So far it is unclear whether the Spanish press has picked one of these stories.
EDIT: Having cried off, she then turned up anyway. Good news for the Spanish economy? Bad news? Or just that it didn’t take as long as she thought to catch up on the market’s negative reaction to the country’s plan to borrow nearly €77bn this year ?
How do you say “conspiracy theory” in Spanish? Ah yes, teoría de la conspiración. José Blanco, Spain’s development minister and the man delegated to explain to London investors on Monday why they should stick with the country’s bonds, thinks there is a conspiracy by financial markets and the international media to take down the euro.
So my colleague Izabella Kaminska pointed out on Alphaville. And the Spanish media went bonkers, because the FT had (quite wrongly) already become the focus of their story about Elena Salgado, the economy minister, visiting London. Here’s El Mundo:
ABC:
And Nueva Tribuna:
Expansión was more rational, treating the story as a minor item, while bloggers – and, for poor Izabella, angry Spanish readers – poured out their scorn at the capitalist system, as exemplified by the FT and the “especuladores” in the bond markets.
They need to pull themselves together. The media is just carrying the message of the markets here: bond buyers see a risk that Spain’s budget plan is not going to be enough to stabilise the deficit and cut borrowing. The Spanish press should be telling their readers the government needs to explain better how it will enforce its cost-cutting plans (the markets remain sceptical given the risk of provoking serious political opposition by doubling up the recession), rather than attacking the international media.
Still, at least the level of outrage helps explain why the Spanish (and perhaps the Portuguese) governments are so touchy about being lumped in with Greece in a certain unfortunate acronym.