Editor’s note: This article was first published in May 2011, written on 23 May 2011, the day after Spain’s local and regional elections. The Ibex fall, the rising risk premium, the comparisons with Greece and Portugal and the references to Egypt and Libya reflect that moment.
The Ibex closed the session awash in red, and Spain’s country risk premium shot up. The markets are watching us and aren’t sure yet whether the government’s defeat is good news or not, because from the outside what they see is widespread discontent with a government that is still in office.
The protest camps have been followed very closely by countries such as England, France and the United States, not to mention Asia: for the first time in our blog’s short history, we received more than 1,300 visits from Japan and China, at least according to our statistics, which show traffic and interest in everything related to the #Spanishrevolution movement growing steadily over these 7 days.
While the protesters are delighted to have made the front pages around the world, some haven’t stopped to read what was actually published, and I wouldn’t call it good news. Basically, it says the “Spanish revolution” has punished the current government. Yes, ladies and gentlemen, out there they don’t seem to have realised that we started an apolitical movement against political corruption in general, so all they see is a corrupt socialist government with a year of its term still to run, and that does nothing for foreign investors’ confidence.
Spain will have to pay even more to place its sovereign debt, and that is bad for the future of the Spanish economy. They watch us and compare us with Greece and Portugal, and some countries even think Spain is going through a revolution like those in Egypt or Libya.
We’ve made noise and drawn attention. But just as the election result wasn’t the one hoped for, since blank and spoiled ballots didn’t rise significantly, the outcome as far as the markets are concerned has exposed us to other dangers. That has already shown up on the Spanish stock market, and foreign investment firms will soon steer clear of investing in our country, at least for now.
In short, “Brand Spain” has lost a little more trust.
It’s not all bad news if you believe in the country’s recovery, though: today there are stocks that have dropped as much as 3–4 points, which makes this an ideal moment to buy in.
Further reading
Featured image: Patricia Cattaneo, CC BY-SA 4.0, via Wikimedia Commons.
