Renewed fears in Spain

The market was hoping for a calm Easter holidays. Instead the markets have put in some rather bearish action over the past week, with the Spanish situation getting an increased focus. The Trader has been rather bearish in the Spanish economy and markets. Latest is some vague rumors hitting the markets with regards to Spain leaving the Euro. This is probably premature at this level, but the tone regarding the Spanish mess is getting more aggressive by the day. Some headlines from the Spanish press today ;

Government announces savage cuts in education and healthcare

Rajoy to oversee major shake-up in healthcare funding

Town to decide in cannabis plantation referendum

As we have said many times before; “Espana, everything under the sun”.

From Bloomberg.

Rajoy will spell out his government’s planned reforms to a meeting of People’s Party parliamentary deputies tomorrow, an official in the government’s communications department, who asked not to be named in line with its policy, said in a phone interview yesterday. Health and education, the areas that Rajoy said he would cut, are controlled by regional administrations, and the premier will meet today with Esperanza Aguirre, the head of the Madridregion.

The government will have to consider raising value-added tax if an amnesty designed to raise 2.5 billion from tax evaders fails, Deputy Budget Minister Miguel Ferre was cited as saying in Expansion newspaper today.

“Spain is in an emergency situation,” he was quoted as saying.

Spanish borrowing costs have risen since Rajoy announced on March 2 that his government wouldn’t comply with the 4.4 percent deficit target the previous administration had set with the EU. Euro-region finance ministers then settled on a target of 5.3 percent of gross domestic product for Spain.

Full reading here.

Be sure, there is more to come….