'S&P downgrade may push Spain to seek further bailouts'
RT: Spain has reacted to the downgrade saying it was unexpected. But was it actually unexpected given all the negative data that’s been coming from the country recently?
Miguel-Anxo Murado: No of course it wasn’t unexpected but of course it was quite ironic in a way, because if you come to think of it Standard and Poor’s downgraded Spanish sovereign debt last year because our deficit was too high, now its downgraded it because we are reducing our deficit too quickly and this is of course causing more recession, which is something we have been saying all along.But you can see here the inconsistency of how the markets, and I understand Standard and Poor’s in this case is a spokesperson for the markets, how the markets understand the economy.
RT: It looks like the Spanish government has been boxed into a corner by this downgrade and also the pressure coming from the European Union to accept the bailout package? How independent is Standard and Poor’s in its decisions?
MM: Well, the rating agencies as you know have a mixed reputation to put it mildly, they made lots of mistakes in the start of this crisis, they have some responsibility for it, and the fact is that they made so many mistakes that they don’t affect that much how the markets react, like they used to do. But in the case of Spain, this will have an effect and moreso if Standard and Poor’s says it’s suspected, at least there are rumors about it. It’s also going to downgrade the Spanish banks, or at least eight of the 11 main Spanish banks. If that happens, yes it will put a lot of pressure on the Spanish government to ask for the bailout and this could be the turning point.
RT: Now the situation in Spain, and I think you’ll agree, it has been worsening for years but it seems all the EU can do offer is aid packages in exchange for painful austerity measures. Why does it keep using this remedy which really hasn’t proved to be effective?
MM: Because really the problem is political, it’s not the economy, of course the economy doesn’t look very good, but the problem in Europe is that the European Union doesn’t work as an actual political union and this is the patches that the EU can offer, instead of doing some soul-searching and trying to think how to make this mechanism work, and by mechanism I mean the EU. We behave as different countries, which of course we are part of the same currency, but that is all, we look for ourselves and it’s not working. So you’re right, they’re not offering real solutions, just remedies to kick the can down the road as they say.