Yields on Spanish 10-year bonds over the past month – Bloomberg
The market reaction to the Spanish bailout continues to validate the infallible eurocrisis trading rule of “buy on the summit, sell on the communiqué”. Why so negative, especially for Spanish sovereign debt?
As has been extensively pointed out, the Spanish rescue is a roundabout way to do a bank recapitalisation. Instead of taking direct equity stakes in the banks, the EFSF/ESM has had to lend via FROB, Spain’s bank rescue fund, thus increasing Spain’s sovereign debt load and raising all sorts of tortuously tricky questions about seniority.
So why do it this way? It’s the old story of policy architecture not reflecting the realities of the world economy. Read more
The ECB's future premises. Image: RTT
I was amused to read in the FT survey of Frankfurt today that the European Central Bank is building itself a new headquarters in Frankfurt. Read more
Marine Le Pen. REUTERS/Pascal Rossignol
The first round of France’s parliamentary polls on Sunday provided another good election night for the Le Pen family.
Not only did Marine Le Pen, leader of the far right National Front, win an impressive 42 per cent of the vote to take a clear lead in the race to capture the Henin-Beaumont constituency in the north of the country: down south in the Vaucluse department, her niece Marion Marechal-Le Pen also took the lead in her seat, outscoring Jean-Michel Ferrand, the incumbent centre-right UMP deputy, and the socialist candidate, with 35 per cent of the vote. Read more
Police detain an opposition activist during a banned anti-Kremlin protest on May 31. AP Photo/Dmitry Lovetsky
Soviet-watchers called it “whataboutism”. This was the Communist-era tactic of deflecting foreign criticism of, say, human rights abuses, by pointing, often disingenuously, at something allegedly similar in the critic’s own country: “Ah, but what about…?”
As several former Soviet republics drift back towards authoritarian ways, whataboutism is making a comeback. For a Briton, it is difficult to talk to Ukrainian officials about the questionable seven-year jailing of opposition leader Yulia Tymoshenko without getting a lecture on the prison terms meted out to several British MPs for expenses fraud.
Now, it seems, Dmitry Peskov, the wily press secretary of Russian president Vladimir Putin, has succumbed. Read more
Anti-narcotic arrests in Mexico City. Reuters/ Daniel Aguilar
Growing calls from Latin America that it’s time to rethink the “War on Drugs” has lead to a near-intoxicating barrage of documents, books, speeches and studies on the subject. Here’s one of the latest – a US Senate report on “Reducing the US demand for illegal drugs”.
Given that some 50,000 people have died in Mexico over the past six years during that country’s battle against organised crime, and that the US spends some $190bn a year on drug enforcement, health care and addiction costs – equivalent to a quarter of its military budget – this is more than a fanciful “nice-to-have” idea. It is surely a must.
Three findings grabbed my attention. First, illegal drug use continues to rise in the US. At 9 per cent of the population, it is now at its highest rate in a decade. Read more
Cypriot and EU flags in the city of Nicosia. Patrick Baz /AFP/GettyImages
Sometimes it’s easy to forget that the Greek crisis is not just financial in nature. It has geopolitical implications that extend beyond whether or not Greece remains in the eurozone.
There is, for example, the potential impact on one of Europe’s longest-running territorial disputes: Cyprus. Whatever events unfold in Greece after next Sunday’s election, the Greek Cypriot-controlled state of Cyprus will continue to be vulnerable because of its financial system’s massive exposure to Greece and because of its decision last year to turn to Russia for a €2.5bn loan. Read more