TNBiz (TNBiz)
Markets  |  July 23, 2012 10:05:16

Bures: Spanish yields are again seven per cent over the death zone


PRAGUE (MEDIAFAX) - Stock markets finally at the end of last hit and the euro fell to the weakest levels in the last two years. According to chief economist Era Jana Bures Postal Savings Bank is not surprising because in the euro area is twice as much to anybody singing.

Spanish yields jumped up by 27 bps and settled back comfortably above the seven per cent limit beyond which usually starts panic. All this despite the adoption of the preliminary package for Spanish banks on Friday teleconference of eurozone finance ministers.

According to the Economist Bures it has several causes. "Firstly, Spanish banks will help at this time through the Spanish state and inflates its public debt. While next year may be rewritten to help fund a new ESM, from which will go directly to the banks, the Germans continued want guarantees that the final bore Madrid.Deadly loop connecting the problems of national banks with mashed would be maintained, "said Bures.

The second reason, according to him is that the Spanish economy (like many other peripherals) confers a worse outlook for this year and next. Instead of the expected growth of the economy will be forfeited and a half percent growth to return in 2014. Unemployment, according to new expectations have continued to remain around 24 percent terrible.

"The third reason is that the problems begin to escalate Spanish regions. Valencia on Friday asked for a loan from a special fund to support the regions, since almost lost access to market financing. This may be the fate of other regions such as Catalonia, the size of the economy which almost surpasses Portugal . Overall, this will mean more pressure on the bond issue, the central government in Madrid, "said Bures.

And the last reason is that it alone yields over seven percent of the reason for investors to self-fulfilling panic. "Spain is therefore a logical turning increasingly louder with a request to the ECB, which only has enough resources to quickly intervene in national bond markets. ECB in recent weeks but remains a very tough player. Program to buy up the debt of peripheral (SMP) will remain frozen and president Draghi yet refuses further special operations, pointing out that the ECB does not have job descriptions address the financial challenges of nation-states, "Bures said.

Hard lines are shown at the end of the week also in the attitude towards Greece. Pending clarification of the new plan with the Troika (the earliest in September), Greek banks have frozen access to cheap money from the ECB (the ECB will accept as collateral assets Greek)."It may reignite outflow of deposits from the Greek banks and pour a new wave of tension in Spain and Italy. There will therefore still hot summer. Let's see how many times this year will be returning from vacation Chancellor Merkel," said chief economist of Er Postal Savings Bank.

Filip Sušanka, susanka@mediafax.cz

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