Rajoy's credibility in doubt, analysts say

Date: Friday 22 Jun 2012

In a story titled 'Rajoy’s Blown Credibility Puts Spain at Risk of Bailout,' Bloomberg has echoed some of the criticism against Spanish Prime Minister Mariano Rajoy for his management of the crisis.

"Rajoy has spent much of the political capital he won seven months ago in the biggest landslide in 30 years, floundering against a crisis that risks making Spain the first $1 trillion economy to need a sovereign bailout, investors and analysts say," Ben Sills writes on Bloomberg.

"Rajoy, singled out by leaders at the Group of 20 summit, has been taunted by opposition lawmakers and commentators as borrowing costs soared to a euro-era record even after Spain’s banks received a 100 billion-euro ($127 billion) lifeline. Rajoy called the rescue a victory that solved lenders’ problems," says Sills.

Sills cites several analysts who pointed to policy reversals and self-contradictions in the run-up to the bank bailout.

"He clearly doesn’t get it," said Swordfish Research Ltd founder Gary Jenkins. "Spain needs someone who can come in and grasps the seriousness of the situation and react to that, not just pretend everything’s okay."

Jonathan Tepper of Variant Perception pointed to the surprise generated by Rajoy's trip to Poland to watch the national soccer team hours after the press conference on the bank bailout. "Things like that make him look completely incompetent," Tepper said.

"The Spanish problem was entirely avoidable," said Thomas Mayer, a Frankfurt-based economic adviser to Deutsche Bank AG. "This has been created by miscommunication."


SC

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