Spanish bonds were hit by the poor performance of the ruling Socialists in Sunday's regional elections. At the weekend many thousands of young people occupied a central square in Madrid in direct contravention of a Government edict not to do so at election time. The Spanish police sensibly did nothing. It's all starting to look like the Arab spring comes to Spain. Young Spaniards facing a 45% unemployment rate have a legitimate complaint. They rightly object to their corrupt self serving disinterested politicians of all parties. Sound familiar?
This has not been lost on the money markets. Spanish 10 year bond spreads to bunds blew out to 2.56% meaning Spain is paying almost twice the interest rate of Germany on its sovereign debt at 5.59%. Still well below Greece's huge 17.8% and the Irish 11% with Portugal now at 10.1%.
The Euro fell to an all time low against the Swiss Franc but rose against Sterling! The latter indicates just how incompetent wee George and his crew are. I am not surprised some ex-MPC members notably Charles Goodhart and Wilhem Buiter lambasted the proposed takeover of Financial regulation by the Bank of England. This comes after Jeff Randall's strong attack in Monday's DT on the BoE failures on its monetary policy remit. As an old BoE hand I endorse most of Randall's criticism particularly on the BoE so called inflation forecasting model!
The populace has had enough of the political class and are increasingly taking to the streets. That really worries politicians seeking, as they always do, re-election to the gravy train.The prospect of a domino effect of countries defaulting throughout the Eurozone must be giving the EU 'crats nightmares. Good!
Re the IMF saga I note in the DT that Madame Lagarde also failed, like DSK, to get in to the Grande Ecole d'Administration. The DT also reports wee George has the hots for Christine. Really George! She is old enough to be your mother. Do you have an Oedipus complex?
On a more serious point it is encouraging to see the BRICS and third world countries are demanding a transparent choice of the next IMF head. Maybe not so done a deal after all!
For those who wish to hear my take on Bannerman's defection click on here