The Bank of Spain is warning against a black market. If the Spanish risk premium ? the extra cost of Spanish debts that the financial markets are asking for?continues to be high, credit will become more expensive and scarcer.
Premiums are around 260 basis points currently. This is partly our fault, but partly because of the Greece collapse and the subsequent impact on the EU.
Both reasons removed cash flows from our country at a time when they were going to work else elsewhere. The Bank of Spain?s warning has forced its supervisor to admit that they were slow in restructuring the savings banks.
To unwind and weaken the austerity package and clean up the industry will encourage the tortuous drifting that is looming ahead. The damage caused by these risk premiums would affect us less if Ordóñez had been more diligent.
