On Tuesday, the editor of the Financial Times, Lionel Barber, gave the commencement address at Barcelona’s Esade Business School. His theme was the eurozone crisis – but he began with a story from the earlier, headier days of the new millenium, when the Spanish economy was displaying “sustained dynamism”, in the words of the IMF.
In the summer of 2001, I interviewed José María Aznar and Silvio Berlusconi in successive weeks. Aznar was at the height of his powers. He had just successfully pressed for better budget terms at an EU summit, and boasted of quietly smoking a fat cigar until Chancellor Schroeder and others came round to his demands.
A few weeks later I was in Rome at Silvio Berlusconi’s private villa next to the Spanish steps. Inside, the roses were purple, the ceilings were high and the women statuesque. When I insisted in conducting my interview in French, il Cavaliere responded by crooning an old Edith Piaf song. Then I mentioned I had just interviewed his old friend Aznar at the Moncloa. “Well,” said Mr Berlusconi, suddenly serious, “Spain is a great success story. Madrid is one of the great cities, bustling with commerce and trade. If Italy does not reform, it will be overtaken by Spain in the next decade.”
The EU summit that begins on Thursday has enjoyed less fanfare – and less frenzied speculation over its potential outcomes – than many others. But don’t be fooled: it still matters. Here’s why. Read more
We’ve got plenty on the US, as the election draws ever closer, but Spain’s woes are also attracting a great deal of attention:
Here’s what we’ve been chatting about after the weekend:
We’ve enjoyed reading these articles from all over the world:
Welcome to the FT’s live blog assessing the outcome of an extraordinarily dramatic night in Brussels. Markets have responded powerfully with sharp moves in equities, bonds and currencies after EU leaders agreed measures that will see a shift towards central supervision of eurozone banks in exchange for short-term support on Italian and Spanish sovereign debt. We will bring you details of the overnight deal and trace reaction.
18.10: We’re wrapping up the live blog after a day that started very early in Brussels. The action is now shifting over to Berlin, where the German parliament will hold a key vote to approve the ESM and the previously agreed fiscal discipline treaty. For updates on the Bundestag this evening from our own Gerrit Wiesmann, please follow FT.com.
In the meantime, here are some of the highlights from a busy day following the summit’s late-night deal. Read more
Another tumultuous week for the eurozone
Spain reluctantly accepted a bailout for its struggling banks last weekend but it has not restored market confidence – the government’s borrowing costs have soared to their highest level since the birth of the euro. Meanwhile Greece is holding a general election this weekend. No party is likely to win an overall majority, the country’s exit from the eurozone is a distinct possibility and as much as €500 million is leaving its banks each day. Gideon Rachman is joined by Victor Mallet in Madrid, Kerin Hope in Athens and Chris Giles in the studio to discuss the crisis. Read more
Questions? Mariano Rajoy gives a press conference on June 10. Dani Pozo/AFP/GettyImages
The initial rally that greeted news of the eurozone’s €100bn emergency loan for Spanish banks petered out so quickly that you might have missed it altogether if, say, you’d had a lie-in on Monday morning. Clearly this was not how it was meant to be. The eurozone ministers who agreed the deal with Spain on a two hour conference call on Saturday must have hoped it would buy them at least a few full days of investor confidence. Instead, the yield on Spain’s 10-year bonds rose to a fresh euro-era high today. Here are some of the best news stories, analyses and comments on Spain’s so-called ‘bailout-lite’, from the FT and elsewhere: Read more
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
Could the IMF help bail out Spain? Tricky one. As goes the EU, so goes the IMF, only more so. Read more