Photo: Bloomberg TV
Borrowing costs are down today in Spain, and people think it might be because Spain is getting closer to biting the bullet and officially requesting more aid.This is key because it’s the aide request, it’s thought, that would make, the ECB spring into action and start acting in a concerted effort to drive down sovereign yields.
The reason people are hopeful of action on Spain is an interview yesterday on BloombergTV of European economic minister Olli Rehn, in which he said that Spain has an open mind about asking for aid.
You can click here to see the interview, or read the parial transcript provided to us below.
Rehn on the Commission being ready to act on aid request:
“The commission is ready to act in order to design and monitor conditionality in order to make it accountable and the euro area states have stated that they are ready to use the existing instruments in order to conduct short-term market stabilisation…We stand ready to act in case there is a request by a member state. My understanding is that the Spanish government has an open mind on this issue but no decisions have been made.”
On whether there’s a quick fix to solve Europe’s problems:
“Unfortunately there is no quick fix. There is no single issue movement that can solve this problem. It requires patient work in terms of improving fiscal prudence and at the same time promising structural reforms to restart economic growth and in the meantime you need short-term stabilisation and that’s why the decisions of the euro area member states as well as of the ECB are so important.”
On rebuilding the foundations of the euro zone:
“The next few months will be important because we will focus both on short-term market stabilisation and at the same time on rebuilding the foundations of the euro zone.”
On what’s happened over the past month:
“We have had a calm August so let’s not stir August further and let’s try to have a boring August so that even the market forces can have some holiday in the second half of August.”
On Greece leaving the euro:
“In my view it is much better for Greece and Europe that Greece will stay as a member of the euro zone. That’s what we are working on and that’s what the Greek government is working on by meeting the conditions that have been set for receiving further assistance from the euro zone.”
On economic imbalances in the EU:
“We have still very significant imbalances in the European economy and then negative bond yields are not a healthy phenomenon. They’re not good for Germany or Finland or Belgium in a sense they are a sign the euro zone economy is not doing well so therefore the key issue is indeed to restore competitiveness and sound public finances.”
On the most troubling economic indicator in Europe right now:
“The most troubling economic indicator is the unemployment rate, which is certainly too high in Europe. And over the whole euro zone, member states and institutions, we in due course will be measured of whether we will be able to reduce unemployment and improve economic growth, sustainable growth.”
On whether he worries about social unrest:
“I worry about the consequences of the current debt crisis, which has been going on for too long. While it is true that there is no quick fix and it takes some time before the rebalances can be corrected, at the same time it is important we take on the short-term market stabilisation, if needed, including on some public finances in the member states, reforms like labour markets in the member states. We can revive the European economy and get out of this crisis.”