Brussels' austerity drive must be stopped if eurozone is to survive

Spain did not become the next Greece: but only if our financial leaders show they have learned the lessons of the recent past

Looking back in 2012, it was clear that everything had started to go wrong for the euro area. Markets had rallied strongly in the first two months of the year following the decision of the European Central Bank in late 2011 to provide cheap loans to three years in commercial bank credit hungry. Interest rates on bonds of the weaker members of the monetary union has declined, raising hopes that Europe was emerging from the nightmare of debt.

Then on March 2, the new prime minister of Spain, Mariano Rajoy, announced it was abandoning the fiscal deficit target: instead of reducing debt to 4.4% of GDP and I wanted to Brussels, Rajoy points to 5.8%. He was forced to take this down, but only slightly.

There was no immediate explosion, but took a couple of weeks for the financial markets react to news. But in early April, interest rates on 10-year bond returned to Spain where they were in the dark days of 2011. At that time, pressure, and bad economic news continued throughout the spring and summer and late fall, Spain became the fourth country in the euro area needs a plan Rescue of the EU, the ECB and the International Monetary Fund.

This is, in short, the market was the amount seen in 2012 as panoramic Easter was approaching. The idea was: Spain has been a colossal bust of property left to a low growth, high unemployment and more unstable banking sectors. A double dip recession, it will be impossible to reduce the deficit, according to the schedule in Brussels, especially as the appetite of rigor is higher in Madrid at the municipal level.

This makes markets nervous. Greek crisis shows that investors are facing losses of 70% in the case of default, and the markets are not yet convinced of Greece was an isolated incident. They are, therefore, require higher yields on Spanish debt. This adds to the problems of Spain, raising their costs of debt service, higher interest rates in the long run and make a bailout more likely. No wonder the IMF said that Spain faces serious challenges "."

Spain will not need immediate financial assistance, and the good news is that it has sold nearly half of the bond required to cover loans this year. The long-term refinancing operations of the ECB also provide sufficient liquidity to prevent the Spanish banks to go belly up.

But it is hard to describe how things go from bad to worse in the coming months. First, signs that Francis Holland will beat Nicolas Sarkozy in a runoff for the French presidency gives the markets nervous. Therefore, the lack of growth in Spain, it is unlikely that even the watered deficit targets will be affected. There are demonstrations and strikes over austerity. Finally, the government threw in the towel and admit that you need outside help.

• Even this should not be a tragedy if the three preconditions. The first is that politicians of Spain and the level of the euro area to draw lessons from the failure to rescue the last two years. Experience shows that there is a need to move decisively and with speed. The second condition is that there are insufficient funds available for the rescue of the EU and the IMF to meet the fourth largest economy in Europe.
• Finally, there must be. Belatedly recognized that the program of Spain deficit reduction requires a higher growth than austerity The spoils of war available in Europe and the IMF is probably big enough to cope with Spain. But the unshakeable belief in the court at all costs shows that still need to learn lessons.

elevation BSkyB Nicholas Ferguson was applauded by all shareholders. It is not, they fear, the last independent chair ready to reform the boardroom to the needs of satellite broadcasters.
BSkyB is not a standard plate. Of the 12 non-executive directors, four of which are careerists News Corp. and three have been there for over nine years, which does not qualify as independent under the Code of Corporate Governance. Moreover, two of which Ferguson, now exceeds nine years this summer.

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