Investors are once again being spooked by political uncertainty from both Spain and Italy as both countries deal with local political difficulties that could derail ongoing and future reform programs.
While markets appear able to shrug off bad economic data, as Spain January unemployment jumps 132k, it is politics once again that has markets worried as Spanish PM Rajoy deals with a corruption scandal over illegal cash payments that could have the potential to seriously damage his government.
Even in Italy the calm waters of recent weeks have hit stormy seas as the general election campaign starts to see a rise in support for Berlusconi which has increased the risks of political deadlock post-election rising here as well....
A team from the IMF visited Madrid at the end of January to check on the
status of aid it had received to recapitalise its banks.
What a bunch of BS ...ohhhh. gooood ...In a statement released today,
the IMF said: "The clean-up of undercapitalized banks has reached an advanced
stage, and key reforms of Spain’s financial sector framework have been either
adopted or designed.
"Indeed, the bulk of all of the measures for the entire program have now been
completed." In particular, it added that action was being taken to address banks' capital
shortfalls.
"This clean-up is a major achievement that should strengthen confidence in
the system and improve its ability to support the real economy," the IMF said.
"Remaining elements of the recapitalization and burden sharing exercise
should be completed in a timely manner and in ways that minimize taxpayer
costs."
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