Merkel offers support to Spanish government under fire

Spanish President Mariano Rajoy and German Chancellor Angela Merkel held a joint press conference on Monday in Berlin, during which the Chancellor assured she had not lost confidence in the governing Spanish People’s Party, which currently faces corruption allegations.

“We have a relation of full trust in the Spanish government... I have the impression that the whole Spanish government is working to drive down unemployment, to push through structural reforms,” the Chancellor said.
Mariano Rajoy assured that his government is stable and that the People’s Party might take legal action against those who leaked documents which allegedly prove that the party received undeclared money.

Later the Spanish president went on to describe the reforms already implemented in order to halt the debt crisis and said that new measures, aimed at boosting growth, will be announced shortly. Angela Merkel expressed confidence that the reforms will soon “bear fruit” and promised cooperation on bringing down youth unemployment in Spain by facilitating internships and apprenticeships in Germany for young Spaniards. 

Spanish economy deteriorates further as unemployment rises again in January

The Spanish economy continued to deteriorate at the beginning of 2013 as the latest employment numbers, published today by the country’s Labor Ministry reveal. The jobless figure hit a new record high in January, with 132.055 new unemployed which gives a total number of 4.980.778.

The services sector accounts for 82% of the new unemployed, 8.15% for the agricultural sector, 1.43% for the industrial sector and 0.46% for construction. Also, the number of Social Security holders dropped by 263.243.

Following the release of the unemployment numbers the Spanish risk premium was at 359 points, the 10-year benchmark bond yield at 5.3% and IBEX fell by 0.19%.

French FinMin: Euro too strong

French Finance Minister Pierre Moscovici said in an interview for France 2 television on Sunday that in his opinion the euro was perhaps too strong, boosted last week by signs of improvement in Eurozone’s economic situation as well as the latest decent US NFP report.

Moscovici was worried the currency’s excessive strength might hurt exports. He nevertheless added that he is confident about the French economy and that the 0.8% growth target, established for 2013, could be reached.

Moscovici’s comments caused the euro to drop against the dollar to $1.3597.

Spanish PM faces calls to resign; scandal to destabilize Europe's calm waters?

Spanish Prime Minister Mariano Rajoy continues to face growing criticism after the scandal which hit his party earlier last week, in which allegations were made about illegal payments received by himself and what appear to be a very large list of members from the party he presides.

As it is logical on the political circus, it only took a few days until the main Socialist opposition party asked the Prime Minister to step down. As Bloomberg reports, citing opposition leader Alfredo Perez Rubalcaba during a press conference on Sunday, only a day after Rajoy also made a public appearance to remain still on denial:

Rubalcaba: “Rajoy should resign to make way for another prime minister who can re-establish the strength, credibility and stability that Spain needs,” “Spain needs a strong, credible, and trustworthy government.”

Rajoy said: "If someone believes that because of this harassment that I’ll lose spirit or abandon the task given to me by the Spanish people, then they are wrong. This government has set itself a task and I assure you it won’t be sidetracked.”

The data unveiled by the top selling Spanish newspaper El Pais over alleged illegal donations to key political figures such as Rajoy has sparkled a very tense environment.

The numbers published by El Pais show payments over an 11-year period to Mariano Rajoy worth around 25,000 euros each year from a private fund set up by Barcenas, former PP Treasure and main person accused in the scandal.

From Bloomberg: “In a recession of this magnitude, the worst thing that can happen to the Spanish economy is a political scandal,” said Jose Carlos Diez, chief economist at Intermoney SA in Madrid. “This is a theme that is going to be in the spotlight for a while and could undermine investor confidence if not addressed quickly.”

At present, surveys carried out by Metroscopia in recent days suggest that support towards Rajoy's ruling party is the lowest in the party’s history due to the economic turbulence and the evident corruption to the bone from the party.

There is even some vague chatter that a potential coup to expel the current government is being prepared through a technocratic formation offensive from people within the very same PP party with close links to Euro technocrats and bankers.

As explained in De Verdad by Joan Arnau Digital, when "two strong Spanish newspapers such as El Mundo and El País-authoritative voice of the oligarchy and hegemony - publish on the front page news like this, capable of causing a political earthquake, somebody and someone important must be looking to profit from the scandal."