The Spanish stock market fell 3.77% yesterday and the risk premium topped 382 basis points. These two figures signify that the markets are changing direction and turning bearish. As expected and feared by business owners, the Bárcenas case has finally escalated to a national scandal that is having early negative on the Spanish economy.
This new picture of instability causes markets to question the appearance of transparency and calm in the EU. As we lose our credibility, a shock wave will issue through Europe, and our worst nightmares could come true. Prime Minister Rajoy, the leader of our country and a member of the party that started it, is responsible for clearing up the situation as soon as possible. But he remains silent on the issue, speaking to neither media nor Parliament. When will Rajoy unveil how he plans to punish Bárcenas, his former Treasurer, who has a high chance of ending up in prison if the Ministry of Finance does not impede justice or find solid reasons to not give him tax amnesty.
Rajoy did not require Healthcare Minister Mato to resign for his alleged relation with the Gürtel scandal. Mato could not safely say that he didn't know what happened in his own house, because if what he said was true then he is not qualified for the role. With its credibility in question, what role can the Spanish government play in carrying out pending reforms? Rajoy cannot afford to stand idle as Spain suffers and a bailout becomes inevitable.
